ANNUAL REPORT 2014 Brief aan de aandeelhouders Letter of the Chairman 01 01 CRUDE OIL: THE PILLAR OF MODERN CIVILISATION RUWE OLIE: PIJLER VAN DE MODERNE SAMENLEVING 02 02 JAARVERSLAG CORPORATE REPORT Letter of the Chairman 01 06 06 02 08 08 10 10 20 20 38 38 DIRECTOR’S REPORT VERSLAG VAN DE RAAD VAN BESTUUR Why Time Charter Equivalent (TCE) Visie – Missie Vision - Mission is not equivalent to Time Charter Hire or Freight is a commodity market Strategie en bedrijfsprofiel Strategy and company profile Highlights 2011 Overzicht 2011 CORPORATE REPORT Corporate Governance statement Verklaring inzake Corporate Governance Groepsstructuur The Euronav Group DIRECTORS’ REPORT ACTIVITEITENVERSLAG ACTIVITY REPORT 08 Vision and Mission 40 40 Products and Services Producten en diensten 11 Company profile 40 • Vervoer van ruwe olie 40 • Tanker shipping 12 Highlights 2014 • Floating, Production, Storage and Offloading (FPSO)/Floating, • Drijvende opslagplatformen en drijvende productie- en 26 Corporate Governance Statement 42 Storage and Offloading (FSO) 42 opslagplatformen (FSO/FPSO) 48 The Euronav Group Scheepsbeheer 44 44 Ship Management ACTIVITY REPORT 46 Vloot 46 Fleet Products and services 50 SOCIAL AND ENVIRONMENTAL REPORT SOCIAAL EN MILIEUVERSLAG - Tanker shipping 50 50 Health, Safety, Quality, Environment and Society Gezondheid, kwaliteit, veiligheid, milieu en samenleving 50 - Floating Production, Storage and Offloading/Floating, 58 Personeelsbeleid Human Resources 58 52 54 Ship Management WOORDENLIJST GLOSSARY 60 60 56 Fleet Storage and Offloading (FPSO/FSO) FINANCIEEL VERSLAG FINANCIAL REPORT SOCIAL AND ENVIRONMENTAL REPORT Geconsolideerde rekeningen Consolidated financial statements Health, Safety, Quality, Environment and Society Notes to the consolidated financial statements Toelichting bij de geconsolideerde rekeningen Human resources Statutory financial statements Euronav NV Statutaire rekeningen Euronav NV GLOSSARY FINANCIAL REPORT Consolidated financial statements Notes to the consolidated financial statements Statutory financial statements Euronav NV 64 64 60 70 70 66 113 113 68 74 80 142 KEY FIGURES CONSOLIDATED STATEMENT OF PROFIT OR LOSS 2007 - 2014 (In thousands of USD) Revenues EBITDA EBIT Net profit 2014 473,985 172,481 2013 *Restated 304,622 82,244 11,527 -54,714 -45,797 -89,683 -118,596 2012 2011 2010 2009 2008 2007 410,701 120,719 -56,794 394,457 128,368 -40,155 -95,986 525,075 260,298 88,152 19,680 467,844 195,265 31,362 -17,614 858,983 657,452 512,579 402,468 563,136 344,027 190,329 101,055 TCE** year average 2014 2013 2012 2011 2010 2009 2008 2007 VLCC Suezmax Spot Suezmax 27,625 25,930 23,382 18,300 22,000 16,600 19,200 24,100 16,300 18,100 27,100 15,400 36,100 30,600 18,000 33,000 31,750 20,800 95,700 41,650 - 44,600 32,200 - In USD per share 2014 2013 2012 2011 2010 2009 2008 2007 Number of shares*** 116,539,017 50,230,437 50,000,000 50,000,000 50,000,000 50,000,000 50,080,137 51,861,762 EBITDA EBIT Net profit In EUR per share 1.48 0.10 -0.39 2014 1.64 -1.09 -1.79 2013 2.41 -1.14 -2.37 2012 2.57 -0.80 -1.92 2011 5.21 1.76 0.39 2010 3.91 0.63 -0.35 2009 13.13 10.24 8.04 2008 6.63 3.67 1.95 2007 Rate of exchange 1.2141 1.3791 1.3194 1.2939 1.3362 1.4406 1.3917 1.4721 EBITDA EBIT Net profit History of dividend per share Dividend Of which interim div. of Pay-out ratio**** 1.22 0.08 -0.32 1.19 -0.79 -1.29 1.83 -0.86 -1.80 1.98 -0.62 -1.48 3.90 1.32 0.29 2.71 0.44 -0.24 9.43 7.35 5.77 4.51 2.50 1.32 2014 2013 2012 2011 2010 2009 2008 2007 0.25 0.00 N/A 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.10 0.10 - 0.10 0.10 - 2.60 1.00 46% 0.80 0.00 64% * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 ** Time charter equivalent *** Excluding 1,750,000 shares held by the Company **** Ratio is based on the actual exchange rate EUR/USD on the day of the dividend announcement if any. CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2007 - 2014 (In thousands of USD) ASSETS Non-current assets Current assets 31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010 31.12.2009 31.12.2008 31.12.2007 2,558,505 537,855 *Restated 1,728,993 191,768 2,065,448 297,431 2,159,442 291,874 2,337,131 307,083 2,500,550 286,116 2,279,701 341,452 2,092,395 182,295 TOTAL ASSETS 3,096,360 1,920,761 2,362,879 2,451,316 2,644,214 2,786,666 2,621,243 2,274,693 LIABILITIES Equity Non-current liabilities Current liabilities 1,472,708 1,328,257 295,395 800,990 874,979 244,792 866,970 1,186,139 309,770 980,988 1,221,349 248,979 1,078,508 1,314,341 251,365 1,071,629 1,463,456 251,581 1,178,326 1,181,793 261,124 984,492 963,340 326,861 TOTAL LIABILITIES 3,096,360 1,920,761 2,362,879 2,451,316 2,644,214 2,796,666 2,621,243 2,274,693 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 The Euronav share Share price evolution 2014 (in EUR) Daily volume of traded shares 2014 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Convertible bonds On 24 September 2009 the Company issued 1,500 subordinated, fixed- rate, non-guaranteed convertible bonds for a total of USD 150 million. In the course of the first quarter of 2012 the Company bought back 68 bonds of its USD 150 million fixed rate senior unsecured convertible bonds, due 2015. The face value of each bond was USD 100,000 and the Company paid an average of USD 78,441. On 1 February 2013 the Company launched an exchange offer on all outstanding bonds with maturity 31 January 2015 in exchange for newly issued convertible bonds maturing 31 January 2018. In aggregate, 1,250 bonds (USD 125 million) were offered meaning that only 250 bonds, maturing in 2015, remained outstanding, representing a total amount of USD 25 million. Euronav offered its 68 notes due 2015 for exchange against notes due 2018. In the course of 2013 Euronav sold these 68 notes due 2018 and bought 5 bonds due 2015 at an average price of USD 92,000 per bond. On 27 February 2014 Euronav purchased another 13 bonds due 2015 at an average price of USD 103,445 per bond. During the period from 12 November 2013 till 22 April 2014 the Company issued an aggregate of 20,969,473 existing ordinary shares upon conversion of USD 124,900,000 in aggregate principal amount of 1,249 convertible bonds due 2018 at the holders’ option. On 20 February 2014 the Company exercised its right to redeem all of the remaining convertible bonds due in 2018. At that time, USD 4.9 million, or less than 10%, in principal amount of the convertible bonds due 2018 originally issued remained outstanding. On 9 April 2014 Euronav redeemed the last convertible bond due 2018 outstanding as of 2 April 2014 for an aggregate of USD 101,227.78, which is the principal amount of a bond (USD 100,000) plus accrued but unpaid interest from 31 January 2014 to (but excluding) 9 April 2014. As a result, after 9 April 2014, no convertible bonds due in 2018 remain outstanding. 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec On 31 January 2015 the 250 remaining outstanding bonds issued in 2009 and due in 2015 with a face value of USD 100,000, have been fully redeemed at par. Euronav held 18 of these bonds. As a result, since that date, no more convertible bonds issued in 2009 and due in 2015 remain outstanding. Perpetual securities On 13 January 2014 Euronav issued 60 perpetual convertible preferred equity instruments for a total issuance amount of USD 150,000,000. The instruments were issued at par and bear an interest of 6% during the first 5 years payable annually in arrears in cash or in shares at the option of the Company. The price against which the instruments can be contributed is EUR 5.776000 (or USD 7.928715 at a EUR/USD exchange rate of 1.3727000) per common share. The Company had an option to force the contribution if (i) the share price reached a certain level over a certain period of time and (ii) the Company had completed a listing in New York (NYSE or NASDAQ). On 6 February 2014 the Company’s share capital was increased following the contribution in kind of 30 perpetual convertible preferred equity instruments which resulted in the issuance of 9,459,286 new ordinary shares. On 30 January 2015 Euronav issued a mandatory contribution notice that it would exercise its right to request the contribution of the 30 outstanding perpetual convertible preferred equity securities. On 6 February 2015 the Company’s share capital was increased following the contribution in kind of 30 perpetual convertible preferred equity instruments which resulted in the issuance of 9,459,283 new ordinary shares. These new shares are listed on both Euronext Brussels and the NYSE but tradeable only on Euronext Brussels. None of the perpetual convertible preferred equity instruments remain outstanding. The Euronav shareholders’ structure Shareholders’ diary 2015 According to the information available to the Company at the time of preparing this annual report and taking into account the latest declarations, the shareholders’ structure and its history is as shown in the table: Shareholder Tanklog Holdings Ltd.1 Saverco NV 1 Victrix NV 1 BlueMountain Capital Management LLC Euronav (treasury shares) Other Total Number of shares Percentage 11.94% 10.69% 5.75% 19,003,509 17,026,896 9,156,893 8,867,209 1,750,000 103,404,442 159,208,949 5.57% 1.10% 64.95% 100.00% 1Including shares held directly or indirectly by or for the benefit of the ultimate beneficial owner. Thursday 30 July 2015 Announcement of second quarter results 2015 Thursday 27 August 2015 Announcement of final half year results 2015 Monday 31 August 2015 Half year report 2015 available on website Thursday 29 October 2015 Announcement of third quarter results 2015 Thursday 28 January 2016 Announcement of fourth quarter results 2015 Representation by the persons responsible for the financial statements and for the management report The Board of Directors, represented by Peter G. Livanos as permanent representative of Tanklog Holdings Limited, its Chairman, and the Executive Committee, represented by Paddy Rodgers, CEO, and Hugo De Stoop, CFO, hereby confirm that, to the best of their knowledge: ■ The financial statements as of 31 December 2014 presented in this annual report were established in accordance with applicable accounting standards (IFRS or standard accounting legislation) and give a true and fair view, as defined by these standards, of the assets, liabilities, financial position and results of Euronav NV. ■ This annual report includes a true and fair view of the evolution of the activities, results and situation of Euronav NV and contains a description of the main risks and uncertainties the Company may face. Dear Shareholder, Having taken over the role of Chairman from Marc Saverys in July 2014, I am both honoured and privileged to be writing you my first Chairman’s Report for Euronav NV. I must start by thanking Marc for his effective leadership of the Company from its start in 1995 to 2014 and above all for his success in guiding us through the cyclical nature of this volatile industry. It is a point of pride to all of us at Euronav that during the four-year downturn in the tanker market from 2010 all obligations were met at a time when so many in the tanker sector compromised their suppliers, customers, employees and capital providers. Marc remains on the Board and continues to contribute as actively as ever. Without doubt the most important event for us in 2014 was the purchase of 15 VLCCs in January. This acquisition was recognised by Lloyd’s List who presented Euronav with the ‘Deal of the Year’ award. We followed this transformational purchase with the further acquisition from Maersk of four additional VLCCs. Euronav ended 2014 with an on the water fleet of 27 VLCCs and 23 Suezmax tankers and our joint venture in two FSOs. Most significantly, as we move into what I believe to be a structural improvement in the tanker freight market, Euronav has a fleet highly levered to the upside with no outstanding capital commitments to any newbuilding program. Funding for the acquisition of these 19 ships came through the successful common equity raise of USD 350 million at the beginning of the year and a 125 million USD common equity raise in July. The July equity offering was oversubscribed and completed in an accelerated book building exercise. The pricing included a minimal discount to the market reflecting the very strong support for Euronav by investors. In January 2015 the Company executed its planned US listing using a structure enabling the continued trading of the Company’s common shares on both the Euronext exchange and now on the NYSE. We feel that this gives Euronav the advantage amongst its peers of allowing access to the Company’s shares by US investors while maintaining its historical strong relationship with the European markets through its Euronext listing. The US listing was oversubscribed, consequently upsized and the greenshoe fully exercised. The proceeds of the new issuance were used to strengthen the balance sheet by paying down an expensive USD 235.5 million bond. We further believe that this increased liquidity in the Company’s shares will be attractive to current and future shareholders. The US listing has also broadened the interest in the Company by analysts. We are now covered by 15 respected industry analysts in the US, Europe and Scandinavia. The evolution of the Euronav share price has continued upwards, rising 19.9% over calendar 2014. Substantial progress has been made in diver- sifying our shareholder base with the free float moving from 38% to 71% since December 2013. In addition, our daily liquidity (shares traded per day) has risen by nearly fivefold. Further balance sheet developments in 2015 for the Company saw a repayment of the sellers’ credit granted to us in 2012 as well as the repay- ment of the outstanding convertible bond issued in 2009. The successful US listing also facilitated the conversion of our perpetual convertible preferred instrument. This has drastically simplified our capital structure and reduced annual interest payments. Turning to the revenue side of our business: the freight markets for both VLCC and Suezmax vessels opened strongly in 2014 but in April and May more refineries than usual shut down for maintenance providing headwinds which lasted through the summer and into the third quarter. It was not until limited fleet growth and increasing demand from the Far East materially demonstrated to ship owners, who were underselling their services, that there was a shortage of ships. The consequence being that rates went progressively higher in the last quarter of the year – culminating with VLCC rates reaching a five-year high in December. In October the Tankers International (TI) pool joined forces with Frontline to form a commercial joint venture named VLCC Chartering. This devel- opment, along with Trafigura, one of the world’s largest commodity traders, joining the pool, has substantially enhanced the presence and leadership role of the TI pool in the VLCC freight market. Euronav is very supportive of TI and continues to be impressed by the thoughtful and innovative approach by its management to enhancing returns for the ship owners who place their vessels into this pool. The fall in crude oil prices during the latter half of the fourth quarter of 2014 was a welcome development for the tanker industry. As oil, in the form of bunker fuel, is a significant cost of ship operations, all owners are benefitting from the higher earnings from their ships as a result of the lower fuel cost. Furthermore, the drop in the price of oil should stimulate additional demand for the commodity as well as the building up of strategic reserves. With limited fleet growth projected for the coming year as well as steady growth in demand and ton-mile expansion, the market winds are set fair for the time being. Operationally, our teams in Greece and Antwerp have successfully assimilated the newly acquired VLCCs into our existing fleet, overcoming the challenge of finding additional competent crews to run these ships while keeping to the very high standards of operational excellence that our clients have come to expect. Nevertheless, our commitment is to safe operations and constant improvement to ensure we keep operational excellence at the forefront of our minds. Safety is a key factor in the success of Euronav. At Euronav we consider the consistent safe operation of our ships as a primary focus for all and a top-down approach drives commitment to safety management practices and procedures. I have made the focus on safety within our group a priority for 2015. In summary, Euronav today encompasses the key elements necessary to capture and preserve shareholder value in the highly volatile tanker freight market. Euronav has a large modern fleet almost entirely exposed to the spot freight market and is consequently highly leveraged to the upside as the cycle turns to stronger freight rates. Euronav is staffed with very experienced shore and shipboard personnel well able to maximize the operational returns of an efficiently run fleet. Commercially we are linked to a best-in-class trading platform that through its critical mass is able to optimize spot business for our open tonnage. Euronav maintains strategically important commercial relationships with first- class counterparties, which will allow a portion of our fleet to secure long-term charters when conditions are favourable that may balance our volatile spot exposure. We recognise and embrace the volatile nature of the tanker markets. We manage our balance sheet through the tanker market cycles looking to deliver shareholder value both through growth and the payment of dividends. The Board and the management are committed to returning value to our shareholders through the cycles and as such the Company, its employees and its shareholders can look forward to the coming years with confidence. Yours sincerely, Peter Livanos, permanent representative of Tanklog Holdings Limited Chairman 1 Why Time Charter Equivalent (TCE) is not equivalent to Time Charter Hire or Freight is a commodity market Time Charter Eq uivalent (TCE) Earnings The expenses of a shipping company fall into two categories. 1. The fi xed daily costs: which arise every day of the year, regardless of the movement or employment of the ship, and are typically called daily costs in the shipping world. They can be listed as follows: depreciation, capital cost, crewing, technical maintenance (including dry-docking), insurance and general administrative expenses. 2. The variable costs: which are the costs related to a voyage (sailing the ship, positioning or even waiting to load or discharge a cargo). They can be listed as follows: bunker (fuel) costs, port costs (including agent costs), canal transit fees, towage and pilotage. Even though they may occur every day, they are not daily costs because they vary hugely as they relate to the service being undertaken and in particular to the fuel consumption of the service undertaken. Waiting might consume only 5 MT of bunker oil a day whilst the consumption of oil when sailing depends on whether the ship is empty (ballast) or laden (with a cargo on board), how much cargo is on board and the speed the ship is sailing. Indeed, consumption is also affected by weather conditions and currents. In ballast, at low speed, in fair weather, the consumption might be as low as 30 MT per day but laden, at high speed, in heavy weather, it could be closer to 100 MT per day. For commercial and business management purposes the vari- able costs of any voyage are deducted from the Freight lump sum (paid by the cargo owner) to derive a Net Freight amount, because these costs are variable with the particularities of the voyage performed, i.e. cargo size, distance, number of ports, etc. The Net Freight amount can then be divided by the number of days that the voyage took to perform (including the time and voyage expenses of positioning of the ship from the last port it discharged a cargo to the port where it will take a new cargo) and this establishes a daily rate of income, which is called the Time Charter Equivalent Earnings (TCE Earnings) which is expressed in USD/day. 2 EURONAV The TCE/day formula can be expressed in the following way: Net Freight ( i.e. Freight lump sum - variable costs) = TCE/day number of days* *from ship leaving port after discharge previous cargo until discharge current cargo The TCE Earnings can be compared to the daily hire paid under fi xed term contract which is called daily Time Charter Hire. However, although comparable, TCE Earnings are not the same as Time Charter Hire. The Time Charter Hire is a defi nite and certain amount that is known when the contract is signed. The TCE is a calculated number which is not known until all of the income for the voyage has been received and all of the expenses paid. Only then the expenses can be netted off from the Freight lump sum in order to arrive to the Net Freight of the voyage. The duration of the voyage is also not certain. If due to bad weather the voyage took longer than expected, the earnings will be less than expected because more bunkers will be consumed and the duration will lengthen so the Net Freight is lower and will be divided by more days. So Voyage Charter, where performance is measured in terms of TCE Earnings, is signifi cantly different to Time Charter, where daily hire rate is fi xed and certain from the start of the contract. The choice of the speed is more complex than it appears The single largest variable cost of a voyage is the bunkers and this varies in direct relationship to the speed at which the voyage is performed. The speed of the laden part of the voyage is agreed with the charterer when the Voyage Charter is negotiated. The ship owner or, if there is one, the time charterer chooses the speed of the vessel for the ballast voyage (when the ship is empty of cargo) sailing the ship to a position where it can load a cargo for the Voyage Charter. In both cases the slower the ship, the lower the fuel cost as consumption will be lower and the faster the ship, then the higher the fuel consumption and therefore the cost. 3 The slower a ship sails, the longer the voyage (more days) but the less fuel it consumes. So the calculation of the TCE will be affected in two ways (as the Freight lump sum remains the same). The Net Freight will go up because of the savings made on the fuel but at the same time it will be divided by more days taking the TCE down. Therefore a ship should only go slower if the cost of fuel, saved by slower sailing, offsets the reduction of the TCE caused by the increase in the number of days the voyage lasted. Finally, if the fuel cost saving justifi es slower sailing then the owner will look to the lost opportunity of the days that could have been spent on the next voyage compared with the improvement in TCE from slower steaming on the current voyage. This is a very important point but the decision must be taken at the start of a voyage (the start of the ballast passage - see Voyage Accounting below) but this is done on the basis of unpredictable assumption regarding the next voyage. At that moment, the current Voyage Charter may not already have been fi xed let alone the one after. Consequently, it is good practice upon discharge to sail at the most economical speed away from the discharge port to a way point (the last point at which the ship has full optionality as to its destination). As an example, on leaving China, this might be Singapore for orders. During this period the vessel is being marketed for its next Voyage Charter. Once the Voyage Charter is contracted, the vessel should proceed at such a speed so as to arrive at the port just in time to load the contracted cargo. It serves no purpose to arrive earlier as waiting adds additional costs against which there is no certain additional income. So in this example arriving early worsens the voyage TCE Earnings. More fuel is consumed going faster and if the ship arrives too early fuel is consumed waiting (to provide minimum energy to run the ship) and there is no additional income. If an earlier cargo lifting date could be contracted then the issue is whether it would add suffi cient additional income to offset the additional cost of fuel for sailing faster. Still, if it does not, then arguably, the days gained may translate into more value in the subsequent voyage but with a high degree of uncertainty which will be lifted only two or more months away and in a market subject to huge volatility. In addition, speeding up means that the global supply of ships is also going up and that, in itself, is likely to reduce the freight market. There is therefore more chance that the value burned in speeding up will NOT be recuperated in the subsequent voyage as there is more chance that the market will be lower by then. In this context it is also important to note that the consumption of fuel, relative to speed, is not uniform and at the top speeds ships consume exponentially more fuel. For VLCC vessels, there is an infl ection point above 13 knots and steaming above this speed, to save a few days, will disproportionately increase the voyage expense compared to the number of days saved. 4 EURONAV It’s a Commodity Stupid! The owner or time charterer of a vessel should always manage bunker costs, as described above, by sailing as slowly as the pattern of trade it is involved in allows. When deciding the speed, at which to sail from a discharge port, the market environment is very important. Average earnings between 2004 and 2008 (inclusive) for VLCCs were USD 70,000 per day, yet within that period voyages were done at USD 300,000 and USD 20,000 and within days, swings could make a difference of tens of thousands of dollars. Daily average tankers freight rate between 2004-2008 ■ Average VLCC 2000-built ■ Average Suezmax 2000-built in USD/day The world VLCC fl eet is small, only around 630 vessels, and each ship will lift somewhere around 5 to 6 cargoes per year depending on the trade and move those cargoes over long distances. So for any cargo movement the number of ships available to load the cargo, due to location and timing, may vary considerably. This is very different from even other tanker trades that are short haul, such as the product trades or localized dirty trades in smaller ships. 250,000 200,000 150,000 100,000 50,000 Many participants and investors follow the global supply of ships and try to present the market as a bull or bear market depending on the overall supply of ships compared to the overall demand for ships. They are often confounded by a precipitous fall in rates in what they have characterized as a bull market; equally they are often denying the possibility of high fi xtures in what they have characterized as a bear market. Yet when one reviews past fi xtures it is apparent that the market can have very large swings within both peak and trough periods. 0 2004 source: Clarksons 2005 2006 2007 2008 This apparent super volatility comes about through the structure of the market. As described above, the earnings of ships come from the movement of cargoes. So when transport is required for a cargo, the cargo owner will instruct the internal shipping department of the cargo owner, who will in turn approach several brokers and sometimes owners directly and will seek to auction 5 the cargo move. The lowest bidder will win the contract, or at least, set the contract rate that clears the market for the other bidders. Each broker hoping to make a commission on the contract conclusion will encourage his owner to be low enough to win the auction. The owners will be guided as to who else is bidding and how low they have to bid to succeed. The owners must have good information to know who is a real competitor and who is not. To be a real competitor a ship must be of the right age, type and class and be acceptable for the customer under the tanker vetting regime. It should also be reliable and so only those ships which are free of cargo and close enough to reach the load port at which the cargo is being prepared on the dates that the cargo owner has specifi ed can realistically compete. This creates a mini market for each and every cargo, which comprises those ships that can work that cargo. This mini market is defi ned by time and distance. If many ships are truly available for the cargo, the mini market auction will take the current market level down, if the number of ships truly available is limited or only one, then provided the owner is aware of this, the market level will go up. This is regardless of the global supply of tankers. The owner is at a disadvantage as the auction is controlled by the cargo owner and because of that, the cargo owner has all the bids. The cargo owner also knows which ships are cleared for him to use and what other cargoes also need to be moved. There is no uniformity of information relating to bids or avail- ability. The owner must have a view on that balance if the true value of the ships position, the commodity, is to be discovered particularly when the market is set so that it could go up. This is the true added value of a pool as it increases market visibility through better information and broadens market knowledge improving pricing. Speed is critical in the management of the spot market, as speeding up (and remember this worsens voyage economics) serves a negative purpose if it accumulates the number of ships bidding on a cargo (increase the supply). It worsens the economics of the voyage that is about to be done and takes the whole market level down. So ship owners and time charterers need to focus on bunker cost management and only speed up when a voyage has been fi xed and then only suffi ciently to arrive just in time for the cargo loading dates. 6 EURONAV The ship owner dilemma Too many ship owners focus on their relative outperformance; whether they do better than other ship owners. Often this leads them to undersell their services in the hope of perceived marginal gains (making sure they get a cargo sooner than later) over the other ship owners. But giving a discount to their services is detrimental because each Voyage Charter is a separate commodity negotiation which needs to be priced, as precisely as possible, to gain real absolute value giving good return to capital. By underselling their services, they may cut waiting time but often the discount is greater than the cost of waiting for the next cargo priced at a higher market. In the long run, the reason why relative value is irrelevant is simply that weak performance does not cause ships to leave the market as demonstrated over the last cyclical downturn. Relative outperformance will almost never deliver appropriate reward to capital… it just lowers the market for all. The only way to resolve this dilemma is to be part of a large platform such as a pool which is actively marketing available tonnage every day. As Euronav transitions to greater public ownership, it will continue to attempt to lead the market in focusing on the requirement for a good return on capital. Shipping is a capital intensive business and if the right returns are not given to capital then the industry will struggle to find access to capital whilst providing the necessary stability in the industry to bring security of supply, increasing environmental awareness, safe and rewarding conditions for employment, in short all of the things that the world expects. Time Charter – A time charter is a lease of a ship by an owner to a lessee (known as a charterer) for a period of time (rather than the performance of a voyage) and paid for by a daily rate of hire usually an agreed dollar amount for each day and pro rata for each part of a day. The time charter daily hire covers the cost of the ship and its crew together with all cost and expenses for the ship to operate. The service provided is to operate the ship to steam the ship between ports, load, store, transport and deliver the cargo under the orders of the time charterer. The costs specifically related to the charterers orders in steaming between ports, loading, storing, transporting and discharging the cargo are known as the voyage related costs and are consequently for the account of the time charterer. Voyage Charter – The carriage of a specific cargo from a load port (typically a terminal at an oil field) to the discharge port (typically a terminal at a refinery) is called a voyage or spot charter for which the cargo owner pays a lump sum usually denominated in US Dollars (it is calculated usually using a system called world scale). The voyage related costs comprise primarily bunker fuel but also port costs, tugs, pilots and any other thing incidental to the cargo carriage. The ship owner, or if there is a time charter, the time charterer will seek to recuperate these costs from the freight paid by the cargo owner but these costs are not a pass through and do not form part of the negotiation. Voyage Accounting – The cargo owner is only interested in the movement of the cargo but the ship owner must reposition the ship after discharging one cargo and before loading another cargo. The costs for this repositioning must be taken into account in the costs of performing the cargo transportation. In most cases it is elected to apply the repositioning costs to the cargo transport just about to be done. In other words a complete accounting voyage is, in most cases, from discharge port to discharge port. The ‘actual’ voyage commences after leaving the last discharge port sailing unladen to a load port, entering that port, loading the cargo and sailing to the discharge port, entering that port and discharging the cargo. The process then starts again. 7 Vision and Mission Vision To continue to be recognised globally as a leader in the shipping and storage of crude oil. We are and intend to remain dedicated to safety, quality, health and environmental protection. We intend to pursue excellence through innovation, know-how and continu- ous improvement. Mission For our society To transport an essential source of energy in a manner that is eco- nomically, socially and environmentally viable now and in the future. For our clients To operate in a manner that contributes to the success of their business by setting increasingly higher standards of quality and reliability. For our shareholders To create signifi cant and lasting value by strategically planning fi nancial and investment decisions while operating in a manner consistent with the highest professional standards. For our employees To inspire and enable talented, hard-working people to achieve their career goals in a healthy, challenging and rewarding environment. 8 EURONAV Vision and Mission 9 10 EURONAV Company profi le Euronav is a market leader in the transportation and storage of crude oil and petroleum products. On 16 March 2015 Euronav owned and manages a fl eet of 52 vessels. The Company, incorporated in Belgium, is headquartered in Antwerp. Euronav employs over 2,400 people worldwide onshore and offshore and has offi ces throughout Europe and Asia. Euronav is listed on Euronext Brussels and on the NYSE under the symbol EURN. The need to operate a safe and reliable fl eet has never been more crucial and it is the most important strategic objective for the Company. Euronav aims to be an effi cient organisation and to deliver the highest quality and best possible service to its customers. Euronav has a long-term strategy through cycle profi tability by managing a balanced portfolio on the spot and the period tanker market as well as on the long-term FSO market thus mixing its sources of revenue between fi xed and fl oating income. Sustainability is a core value at Euronav and ensures the long-term health and success of our people, our business and the environment we work in. It involves a commitment to safety and environmental practices, as well as an innovative approach to the use of technology and information. Employing European offi cers on board a modern fl eet, Euronav aims to operate in the top end of the market. The skills of its directly employed seagoing offi cers and shore-based captains and engineers give a competitive edge in maintenance as well as in operations and delivery of offshore projects. Company profi le 11 Overview of the Market Directors’ Report: Highlights 2014 Overview of the Market Oil demand, production and bunker costs In general, 2014 growth was supported by healthier economies, an improved labour market, a consumer-led growth momentum and improved monetary conditions with investors less worried about debt sustainability. Global economic growth for 2014 was reviewed down to 2.7% mainly due to a weaker than expected fi rst half of the year. This headline GDP growth fi gure masked a contrast between a resurgent US economy (2.4% GDP growth) and specifi c emerging market expansion in China and India (both 7.4%) with fragile growth in Europe (0.9%) and Japan (0%). The situations in Libya and Ukraine have created increased uncertainty which in turn lead to poor investment and exports in those regions. All these factors had an impact on the global economy causing a shift in the oil trading and consumption pattern. World Oil Demand in million bpd (source - IEA) 95 91 87 83 79 75 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12 EURONAV China’s demand for oil continued to grow with oil imports rising above 7 million barrels per day (mbpd) for the fi rst time in December 2014 bringing the full year total for crude imports to a record 308 million tonnes – up nearly 10% year on year. This increase in demand refl ects underlying economic growth, new refi neries coming on line and additional opportunistic imports to fi ll strategic and commercial reserves at lower crude price. This was refl ected in the number of VLCCs heading to China which picked up sharply from end September until the year end. Sustained increases in crude oil supply was a key feature of 2014 with USA crude production continuing to grow to 8.7 mbpd, Iraqi output hitting a 35-year high in December of 3.7 mbpd and expected supply disruptions failing to materialise. Such strong supply was a principal driver, along with OPEC’s decision in November to maintain output, for the dramatic fall in the price of crude during the latter half of Q4 2014. Crude oil prices followed a decreasing trend throughout 2014 to reach on average for the full year USD 98.97 per barrel for the Brent Crude (2013: USD 108.56) and USD 93.22 for the WTI (2013: USD 97.98). Bunker prices mirrored the crude oil price with a fall of around 40% from the peak reached in June. December alone saw a 25% drop with an average price for the month per ton at USD 364 in Fujairah, USD 339 in Rotterdam and USD 362 in Singapore. Prices for the full year were on average estimated at USD 605 in Fujairah, USD 534 in Rotterdam and USD 576 per metric ton in Singapore. The dramatic fall, particularly at the end of the year, in this key operating cost for tanker owners did not have an immediate full impact on reducing voyage related expenses as bunkers purchased at the higher price were still in stock on board ships. Slow steaming has largely remained in place for most owners even when the market was showing signs of strengthening. World Oil Production in million bpd (source - IEA) World Cargo Evolution ■ 2011 ■ 2012 ■ 2013 ■ 2014 Cargoes per month (source - TI VLCC Database) 95 91 87 83 79 75 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Overview of the Market 13 Tanker market During 2014 the crude tanker market moved towards the most balanced it has been in several years. This was reflected with strong freight rates in the first quarter as a combination of robust Asian demand and a severe northern hemisphere cold snap in January. Firm action by owners drove daily rates to multi-year highs for the winter season. BITR Rate Evolution (ws) VLCC trade routes ■ TD1 - Arabian Gulf/US Gulf ■ TD3 - Arabian Gulf/Japan ■ TD4 - West Africa/US Gulf ■ TD15 - West Africa/China (source: Baltic Exchange) 350 300 250 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 BDTI (Baltic Exchange Dirty Tanker Index) Rate Evolution (WS) ■ TD5 - West Africa/US Atlantic Coast ■ TD6 - Black Sea/Mediterranean (source: Baltic Exchange) 450 400 350 300 250 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Spring and summer months are seasonally quieter than the rest of the year but this year the market softened primarily due to one of the largest refinery shutdowns in modern history. From September onward a number of positive drivers emerged. Owners maintained a more bullish stance and were rewarded with higher volumes to the Asian markets which contributed together with lower supply growth of tonnage to rate expansion on key routes. Finally, the dislocation on traditional routes from the location changes in global crude output – most notably the USA and shale – has increased average voyage lengths and thus taken further capacity out of the market as voyages are longer and take more time. All these factors drove the market up to a level not seen in the last 5 years. The average time charter equivalent (TCE) obtained by the Compa- ny’s owned VLCC fleet in the Tankers International (TI) pool was about USD 27,625 per day for 2014 (in 2013: USD 18,300 per day). The earnings of Euronav Suezmax time charter fleet was approxi- mately USD 25,930 per day for 2014 (2013: USD 22,000 per day). The average daily time charter equivalent obtained by the Suezmax spot fleet traded by Euronav directly, was approxima- tely USD 23,382 per day in 2014 (2013: USD 16,600 per day). World Fleet VLCC Earnings (TCE) ■ BDTI (Baltic Exchange Dirty Tanker Index) VLCC TCE ■ TI Actual in USD (source: TI VLCC Database) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 -10,000 -20,000 2010 2011 2012 2013 2014 2015 14 EURONAV Fleet Growth The year 2014 saw negative fleet growth for the Suezmax fleet and very limited growth for the VLCC fleet. The positive dynamics for the tanker sector prompted an increase in orders during the second half of 2014 but with limited yard capacity most of these vessels are not expected to become operational until 2017 at the earliest. VLCC Fleet Development ■ Removals Scenario ■ Scrapped/Removed ■ Forecast Additions ■ Additions Suezmax Fleet Development ■ Removals Scenario ■ Scrapped/Removed ■ Forecast Addition ■ Additions % Fleet Growth (source: Clarksons) % Fleet Growth (source: Clarksons) 80 60 40 20 0 -20 -40 -60 8% 6% 4% 40 2% 24 -11 16 4 -2 -3 -12 0% -2% -4% 50 40 30 20 10 0 -10 -20 53 54 62 49 30 -13 -25 -22 -27 -48 10% 8% 6% 4% 27 20 2% 45 38 45 43 6 4 -7 8 -10 -8 -13 -19 -7 -7 -20 Total 533 Total 539 Total 576 Total 612 Total 620 Total 633 Forecast Total 648 Forecast Total 676 -6% -30 Total 378 Total 397 Total 433 Total 458 Total 478 Total 476 Forecast Total 479 Forecast Total 491 2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016 0% -2% -4% -6% 15 Overview of the Market Floating Storage and Offloading and Floating Storage Production and Offloading (FSO/FPSO) Market FSOs provide offshore field storage and offloading in a variety of situations. To provide offshore field storage of oil and conden- sate, they are primarily used in conjunction with other floating production systems: ■ Fixed platforms ■ MOPUs (Mobile Offshore Production Units) ■ Semis (production Semisubmersibles) ■ TLPs (Tension Leg Platforms) ■ Spars (Single Point Anchor Reservoirs) They are also used as offshore storage/export facilities for onshore production fields and as storage/blending/tranship- ment terminals for crude oil or refined products. Most FSOs store oil, although there are a few LPG (Liquefied Petroleum Gas) or LNG (Liquefied Natural Gas) FSOs. As of 1 January 2015 there were 271 floating production systems in service or available worldwide whereof 93 floating storage/offloading units. There were 8 FSOs (5 conversions, 2 redeployments and 1 newbuilding) awarded in 2014. In the course of 2014, 9 FSOs (6 conversions and 3 newbuildings) were delivered. Around December 2014 there were 9 FSOs (6 conver- sions and 3 newbuildings) under construction. The inventory of FSOs has decreased over the past four years from its highs in 2010 and 2012. This is mainly due to scrapping of 1970’s-built tankers that were being used to store crude or fuel oil. Orders for 33 FSOs have been placed over the past five years which reflects an average of 6.6 annually. Around 12% of these orders involved purpose-built FSOs, with the majority utilizing existing tanker hulls for conversion to an FSO. The number of FSO projects has increased over the past five years and 235 proj- ects (that potentially required a floating production or storage system) are in the bidding, design, planning or appraisal stage. 235 projects involving floating production or storage systems planned or under study ■ Bidding/Final Design ■ Planning ■ Appraisal (source: Energy Maritime Associates Pte Ltd.) 17 16 7 18 12 13 a c i r f A l i z a r B 19 12 7 a i s A t s a E h t u o S 5 15 7 o c i x e M f o f l u G 5 18 3 e p o r u E n r e h t r o N 50 45 40 35 30 25 20 15 10 5 0 16 2 7 4 / a i l a r t s u A d n a l a e Z w e N 3 6 4 n a e n a r r e t i d e M 5 4 1 t s a E e l d d M i / a i s A t s e W h t u o S 2 5 2 i a n h C / a i s A t s a E h t u o S 5 2 a d a n a C 2 2 2 s e i r t n u o C n a c i r e m A h t u o S r e h t O 1 1 n a e b b i r a C 1 d e n fi e d e b o T EURONAV Euronav fl eet Overview of the year 2014 On 16 March 2015 Euronav’s owned and operated fl eet consists of 52 double hulled vessels being 1 V-Plus vessel, 2 FSO vessels (both owned in 50%-50% joint venture), 26 VLCCs (of which 1 in joint venture) and 23 Suezmaxes (of which 4 in joint venture). At the time of writing this report, the delivery of the fourth vessel of the four acquired Japanese-built VLCC vessels as announced on 8 July 2014, the TBN Hakata (2010 – 302,550 dwt), is expected to take place early in the second quarter of 2015. At the time of preparing this report (16 March 2015), Euronav’s tonnage profi le is as follows: VLCC and V-Plus owned VLCC chartered in FSO owned Suezmax owned Suezmax chartered in 8,038,776.50 dwt 305,749.00 dwt 442,000.00 dwt 3,107,299.50 dwt 158,574.00 dwt Total owned and controlled tonnage 12,052,399.00 dwt After taking delivery of the TBN Hakata, Euronav will own and operate 53 double hull tankers (including FSO vessels) with an aggregate carrying capacity of approximately 12.4 million dwt. On 16 March 2015 the weighted average age of the Company’s trading fl eet including the TBN Hakata was approximately 7.5 years. The majority of Euronav’s VLCC fl eet is operated in the Tankers International pool (TI pool) in the voyage freight market. The TI pool is one of the largest modern exclusively double hulled fl eets worldwide and comprises on 16 March 2015 40 vessels of which 24 vessels operated by Euronav. The average age of Euronav’s owned VLCC fl eet on 16 March 2015 is 6.8 years. In addition, the pool formed a commercial joint venture with Frontline since 6 October 2014. This combination is the largest provider of spot VLCC tonnage in the world and is operating under the name VLCC Chartering Ltd. Part of Euronav’s Suezmax fl eet is chartered out on long-term contracts. The other part of the Suezmax fl eet is operated on the spot market by Euronav’s spot desk directly. On 16 March 2015 the average age of the Suezmax fl eet is 9.3 years. Both of Euronav’s FSO vessels are chartered out and committed until 2017. Euronav has in-house ship management which positions its fl eet at the top of the market for tanker assets and services. The benefi ts that are derived from in-house management are in asset maintenance, enhanced customer service and risk management. Charterers are more than ever seeking to do business exclusively with superior quality operators whether through fi xed rate long-term business or in the spot market. Change in accounting policy: fi rst-year adoption of IFRS 10 & IFRS 11 The Company is applying the new accounting standards IFRS 10 and IFRS 11 as of 1 January 2014. As a result, the consolidation method applied to joint ventures has changed. Consequently, all the joint ventures in which the Company has an interest have now been accounted for, using the equity method and are reported in the income statement under the line “Share of profi t (loss) of equity accounted investees”. For more details about the impact of the fi rst-time adoption of IFRS 10 and IFRS 11, please see note “v” of the signifi cant accounting policies included in the notes to the consolidated fi nancial statements for the period ended 31 December 2013 in our annual report 2013 and note “2(e)” in our annual report 2014. The fi rst quarter For the fi rst quarter of 2014, the Company had a net result of USD 1.4 million or USD 0.02 per share (fi rst quarter 2013: USD -10.7 million and USD -0.21 per share). EBITDA for the same period was USD 47.3 million (fi rst quarter 2013: USD 29.2 million). The average daily time charter equivalent rates (TCE) obtained by the Company’s fl eet in the TI pool was approximately USD 34,777 (fi rst quarter 2013: USD 21,000). The TCE of the Euronav Suezmax fl eet fi xed on long-term time charters, including profi t shares when applicable, was USD 27,350 per day (fi rst quarter 2013: USD 23,400 per day) and the average daily TCE obtained by the Suezmax spot fl eet was approximately USD 26,800 (fi rst quarter 2013: USD 16,750). January Euronav The VLCC Ardenne Venture (2004 - 318,658 dwt) was delivered to its new owners under the sale for USD 41.7 million announced on 14 November 2013. The capital gain for Euronav of approximately USD 2.2 million was recognised in the fi rst quarter of 2014. Euronav entered into a contract to acquire fi fteen VLCCs from Maersk Tankers Singapore Pte Ltd. for a total acquisition price of USD 980 million. At the time of the acquisition, the vessels had an average age of 4 years. Euronav sold its oldest double-hulled VLCC Luxembourg (1999 – 299,150 dwt) for USD 28 million resulting in a capital gain of USD 6.4 million, which was recognised upon delivery to its new owner on 28 May 2014. The vessel was wholly owned by Euronav. The vessel will be converted into a FPSO and will therefore leave the world VLCC trading fl eet. Overview of the Market 17 Euronav received USD 50 million gross proceeds upon the issuance of 5,473,571 of the Company’s ordinary shares in an equity offering at EUR 6.70 per share (based on the USD/ EUR exchange rate of USD 1.3634 in effect on 6 January 2014). The proceeds of the offering were used to partially fi nance the acquisition of the fi fteen VLCCs. This capital increase was decided upon in the framework of the authorised capital and with cancellation of the preferential subscription right of the existing shareholders. More information regarding the conditions and the effective consequence thereof is available in the special report of the Board of Directors in this respect which can be accessed on Euronav’s website www.euronav.com. After reaching an agreement with private investors in December 2013, Euronav received USD 150 million gross proceeds upon the issuance of 60 perpetual convertible preferred equity securities, each with a denomination of USD 2.5 million. The proceeds of the issuance were used to strengthen the Company’s balance sheet liquidity, to diversify funding sources and for general corporate and working capital purposes. ■ Maersk Heiwa (2011-VLCC) chartered out to Hyundai for 12 months at USD 24,000 per day. ■ Spyros (2007-VLCC) chartered out to Navig8 for 6 months at USD 24,000 per day. ■ Grand China (2010-VLCC) chartered out to Navig8 for 12 months at USD 32,000 per day. February Euronav Euronav issued USD 235.5 million in aggregate principal amount of 7-year redeemable unsecured bonds. The bonds were issued at 85% of their principal amount with an interest rate of 5.95% per annum for the fi rst year which would increase to 8.50% per annum for the second and the third year and would further increase to 10.20% per annum from year four until maturity in 2021. The Company was entitled to redeem the bonds at any time at par. The proceeds of the bonds were used to partially fi nance the acquisition of 15 VLCCs entered into in January. In the market ■ Maersk Hayama (2011-VLCC) chartered out to Koch for 12 months at USD 25,000 per day. Euronav agreed to charter-in two vessels for a period of 12 months, the VLCC Maersk Hojo (2013 – 302,965 dwt) and the VLCC Maersk Hirado (2011 – 302,550 dwt), with the option to 18 EURONAV offering at EUR 6.70 per share (based on the USD/EUR exchange rate of USD 1.3634 in effect on 6 January 2014). The proceeds of the offering were used to partially fi nance the acquisition of the 15 VLCCs. Euronav took delivery of the second vessel of the 15 vessels acquired in January: the Nucleus (2007 – 307,284 dwt). In the market ■ SKS Skeena (2006-Suezmax) chartered out to BP for 12 months at USD 19,000 per day. ■ Aegean Horizon (2007-Suezmax) chartered out to Koch for 6 months option 6 months at USD 18,000 per day and USD 21,000 per day for the option. March Euronav Euronav Ship Management Antwerp (ESMA) successfully took over the ship management of the vessel FSO Africa (2002 – 442,000 dwt), owned by TI Africa Ltd. Her sister vessel FSO Asia (2002 – 442,000 dwt) is already managed by ESMA as from the conversion of the vessel into an FSO in 2009. The Company agreed to extend the period of the purchase option on the Antarctica (2009 – 315,981 dwt) and the Olympia (2008 – 315,981 dwt) by one month, until 30 April 2014. Euronav signed a new USD 500 million senior secured credit facility. The facility was available as from 25 March 2014 for the purpose of fi nancing the acquisition of 15 VLCCs announced in January 2014. The credit facility has a 6-year maturity as from closing the syndication and bears interest at a rate based on LIBOR plus a margin of 2.75%. In the market ■ Eagle San Antonio (2012-Suezmax) chartered out to Total for 12 months at USD 20,750 per day. The second quarter The Company had a net result of USD -21.3 million (fi rst semester 2013: USD -39.3 million) or USD -0.20 per share (fi rst semester 2013: USD -0.79) for the fi rst semester 2014. EBITDA for the same period was USD 68.6 million (fi rst semester 2013: USD 44.7 million). The fi nancial result is affected by USD 9.3 million of amortisation of fi nancial expenses (non-cash) of which the main part is related to the fi nancing of the acquisition of the 15 VLCCs from Maersk. The average daily TCE obtained by the Company’s fl eet in the TI pool was approximately USD 19,150 (second quarter 2013: USD 14,200). The TCE of the Euronav Suezmax fl eet fi xed on long-term time charters, including profi t Overview of the Market 19 extend the charter for an additional 12 months. The time charters respectively commenced on 24 March 2014 and 3 May 2014 upon delivery of the vessel. Euronav issued 9,459,286 ordinary shares upon the contribution in kind of 30 out of the 60 issued and outstanding perpetual convertible preferred equity securities. This capital increase was decided upon in the framework of the authorised capital and with cancellation of the preferential subscription right of the existing shareholders. More information regarding the conditions and the effective consequence thereof is available in the special report of the Board of Directors in this respect which can be accessed on Euronav’s website www.euronav.com. Euronav released a redemption notice, reporting that Euronav would exercise its right to redeem on 9 April 2014 all of the convertible bonds issued in 2013 and maturing in 2018 not converted before 2 April 2014. Euronav took delivery of the fi rst of the 15 vessels acquired in January: the Nautilus (2006 – 307,284 dwt). Euronav received gross proceeds of USD 300 million upon the issuance of 32,841,528 of our ordinary shares in an equity shares when applicable, was USD 20,170 per day (second quarter 2013: USD 21,000 per day) and the average daily TCE obtained by the Suezmax spot fleet was approximately USD 20,500 (second quarter 2013: USD 18,400). May Euronav Euronav took delivery of the third vessel of the 15 vessels acquired in January: the Navarin (2007 – 307,284 dwt). April Euronav Euronav redeemed all of the convertible bonds issued in 2013 and maturing in 2018 and which were not converted before 2 April 2014. None of the convertible bonds maturing in 2018 remain outstanding. The purchase option to buy the Olympia (2008 – 315,981 dwt) and the Antarctica (2009 – 315,981 dwt) was exercised for an aggregate purchase price of USD 178 million. The USD 20 million option fee that the Company received in January 2011 was deducted from the purchase price. The sale resulted in an estimated combined capital loss of USD 7.4 million which was recorded in the second quarter of 2014. The VLCC Luxembourg (1999 – 299,150 dwt) was delivered to its new owner and a capital gain of USD 6.4 million was recorded in the second quarter of 2014. Between 1 January and 22 April 2014 Euronav’s share capital increased several times following the conversion of conver- tible bonds issued in 2013 and maturing in 2018. These capital increases were decided upon as a result of the conversion of convertible bonds issued in the framework of the authorised capital and with cancellation of the preferential subscription right of the existing shareholders. More information regarding the conditions and the effective consequence thereof is available in the special report in this respect which can be accessed on Euronav’s website www.euronav.com. In the market ■ Yasa Southern Cross (2010-Suezmax) chartered out to Sta- na for 12 months at USD 18,000 per day. ■ Yasa Scorpion (2010-Suezmax) chartered out to Stana for 12 months at USD 18,000 per day. ■ Suez George (2011-Suezmax) chartered out to Vitol for 6 months option 6 months at USD 18,000 per day and USD 19,000 per day for the option. ■ Suez Vasilis (2011-Suezmax) chartered out to Vitol for 6 months option 6 months at USD 18,000 per day and USD 19,000 per day for the option. In the market ■ Bunga Kasturi Tiga (2006-VLCC) chartered out to CPC for 12 months at USD 23,500 per day. June Euronav In the course of June 2014 Euronav took delivery of another five vessels of the 15 vessels acquired in January: the Sara (2011 – 323,183 dwt), the Newton (2009 – 307,284 dwt), the Ilma (2012 – 314,000 dwt), the Nautic (2008 – 307,284 dwt) and the Ingrid (2012 – 314,000 dwt). In the market ■ Monte Toledo (2004-Suezmax) chartered out to Cepsa for 3 years USD 22,000 per day. The third quarter For the third quarter 2014, the Company had a net result of USD -20.6 million (third quarter 2013: USD -27.1 million) or USD -0.16 (third quarter 2013: USD -0.54) per share. EBITDA for the same period was USD 36.3 million (third quarter 2013: USD 16.6 million). The financial result was affected by USD 12.4 million of amortisation of financial expenses (non-cash) of which the main part was related to the financing of the acquisi- tion of the 15 VLCCs in January. The TCE obtained by the Com- pany’s VLCC fleet in the TI pool was approximately USD 25,000 per day (third quarter 2013: USD 14,000 per day). The TCE of the Suezmax fleet fixed on long-term time charters, including profit shares when applicable, was USD 21,500 per day (third quarter 2013: USD 21,000 per day) and the average daily TCE obtained by the Suezmax spot fleet was approximately USD 22,750 (third quarter 2013: USD 17,000). July Euronav Euronav entered into an agreement for the purchase of four modern Japanese built VLCC vessels for an aggregate purchase price of USD 342 million. At the time of their acquisition, the vessels were on average three years old. 20 EURONAV Euronav raised 125 million USD through a private placement of 10,556,808 new shares to institutional investors selected through an accelerated book build offering. The funds raised were used to partially finance its purchase of four VLCC vessels as announced on 8 July 2014. This capital increase was decided upon in the framework of the authorised capital and with cancellation of the preferential subscription right of the existing shareholders. More information regarding the conditions and the effective consequence thereof is available in the special report of the Board of Directors in this respect which can be accessed on Euronav’s website www.euronav.com. The Board of Directors unanimously appointed Mr. Peter G. Livanos as permanent representative of Tanklog Holdings Limited, as Chairman of the Board, with immediate effect in replacement of Mr. Marc Saverys who was appointed Vice-Chairman of the Board of Directors. In the course of July 2014 Euronav took delivery of another 6 vessels of the 15 vessels acquired in January: the Noble (2008 - 307,284 dwt), the Nectar (2008 - 307,284 dwt), the Simone (2012 - 314,000 dwt), the Neptun (2007 - 307,284 dwt), the Sonia (2012 - 314,000 dwt) and the Iris (2012 – 314,000 dwt). In the market ■ Spyros (2007-VLCC) chartered out to Core Petroleum for 12 months at USD 24,750 per day. ■ Cosgrace Lake (2006-VLCC) chartered out to Tesoro for 12 months at USD 24,750 per day. In the market ■ Maran Corona (2003-VLCC) chartered out to BP for 24 months at USD 29,250 per day. ■ Alter Ego (2001-VLCC) chartered out to Core Petroleum for 18 months at USD 25,000 per day. ■ Chloe (2011-VLCC) chartered out to Tesoro for 24 months at USD 25,000 per day. ■ Euronike (2005-Suezmax) chartered out to BP for 12 months option 12 months at USD 19,000 per day with an additional profit share. ■ Eurochampion 2004 (2005-Suezmax) chartered out to BP for 12 months option 12 months at USD 19,300 per day with an additional profit share. ■ Front Ardenne (1997-Suezmax) chartered out to ISS for 12 months at USD 18,250 per day. September Euronav Euronav filed a Registration Statement on Form F-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering of its ordinary shares in the United States of America. The VLCC Olympia (2008 – 315,981 dwt) was delivered to its new owners. The delivery took place earlier than expected resulting in an increased purchase price and a corresponding gain on disposal of assets of USD 2.4 million which was recorded in the third quarter of 2014. ■ Kamakshi Prem (2006-VLCC) chartered out to Trafigura for 24 months at USD 26,000 per day. In the market ■ Ellinis (2007-VLCC) chartered out to BP for 24 months at ■ Eagle San Diego (2012-Suezmax) chartered out to BP for USD 30,000 per day. ■ Four Smile (2001-Suezmax) chartered out to Teekay for 12 months option 12 months at USD 22,850 per day and USD 24,850 per day for the option. ■ SKS Sini (2003-Suezmax) chartered out to Solal for 6 months option 6 months at USD 22,500 per day and USD 22,750 per day for the option. ■ Odessa (2013-Suezmax) chartered out to PDV for 12 months at USD 39,750 per day (coated vessel). 12 months at USD 20,500 per day. ■ Aegean Angel (2004-Suezmax) chartered out to Koch for 6 months option 6 months at USD 20,000 per day and USD 20,400 per day for the option. ■ Suez Rajan (2011-Suezmax) chartered out to Trafigura for 17 months at USD 19,300 per day. August Euronav The owners of the Cap Isabella (2013 – 157,258 dwt), which Euronav had on bareboat charter, decided to sell the vessel. Euronav was entitled to a share of the profit should the selling price exceed a certain threshold and booked a profit of USD 4.3 million in the fourth quarter of 2014. 21 Overview of the Market The fourth quarter The Company had a net result of USD -3.9 million (fourth quarter 2013: USD -23.3 million) for the three months ended 31 December 2014 or USD -0.03 per share (fourth quarter 2013: USD -0.46 per share). EBITDA was USD 67.6 million (fourth quarter 2013: USD 20.9 million). For the full year ending 31 December 2014, the net results are USD -45.8 million (2013: USD -89.7 million) or USD -0.39 per share (2013: USD -1.79 per share). The TCE obtained by the Company’s fleet in the TI pool was for the fourth quarter approximately USD 31,650 per day (fourth quarter 2013: USD 24,000 per day). The earnings of the Euronav Suezmax fleet fixed on long-term time charters, including profit shares when applicable, were USD 30,513 per day for the fourth quarter (fourth quarter 2013: USD 23,400 per day). The TCE obtained by the Suezmax spot fleet was approximately USD 24,248 per day for the fourth quarter (fourth quarter 2013: USD 14,500 per day). In the market ■ Smiti (2005-VLCC) chartered out to HMM for 24 months at USD 28,300 per day. ■ Houston (2012-VLCC) chartered out to Koch for 12 months at USD 30,500 per day. ■ Arion (2001-VLCC) chartered out to BP for 12 months at USD 28,500 per day. ■ Ashna (1999-VLCC) chartered out to Petroineos for 18 months at USD 27,100 per day. ■ 17 February (2008-Suezmax) chartered out to Navig8 for 12 months at USD 21,750 per day. ■ Skamandros (2012-Suezmax) chartered out to BP for 12 months at USD 22,000 per day plus profit share. November In the market ■ Amantea (2002-VLCC) chartered out to Petrobras for 36 months at USD 30,000 per day. Time charter equivalent for the full year: ■ Suez George (2011-Suezmax) chartered out to Vitol for 12 months at USD 25,000 per day. In USD VLCC spot 2014 2013 ■ Suez Vasilis (2011-Suezmax) chartered out to Vitol for 27,625 per day 18,300 per day 12 months at USD 25,000 per day. Suezmax time charter 25,930 per day 22,000 per day Suezmax spot 23,382 per day 16,600 per day October Euronav Euronav operates its spot VLCC tonnage through the Tankers International pool of which it is a founding member. Since 6 October 2014 the pool has been operating in a joint venture with Frontline. This combination is the largest provider of spot VLCC tonnage in the world and is operating under the name VLCC Chartering Ltd. The Suezmax Cap Isabella (2013 – 157,258 dwt), which the Company had on bareboat charter, was delivered to its new owners and the Company booked a profit of USD 4.3 million in the fourth quarter of 2014. Euronav took delivery of the fifteenth and last vessel of the acquisition of 15 VLCCs announced in January 2014: the Sandra (2011 – 323,527 dwt). Euronav signed a new USD 340 million senior secured credit facility comprising (i) a USD 192 million term loan facility and (ii) a USD 148 million non-amortising revolving credit facility for the purpose of partially financing the acquisition of four VLCCs announced on 8 July and refinancing four existing Suezmax vessels. ■ Suez Fuzeyya (2011-Suezmax) chartered out to Vitol for 12 months at USD 25,000 per day. ■ Maran Capella (1998-Suezmax) chartered out to Socar for 12 months at USD 22,000 per day. December Euronav Towards the end of the year Euronav took delivery of the following two VLCCs (both part of the acquisition of four modern Japanese-built VLCC vessels announced on 8 July 2014): the Hojo (2013 – 302,965 dwt) and the Hakone (2010 - 302,624 dwt). In the market ■ Desh Vaibhav (2005-VLCC) chartered out to Hanjin for 7 months at USD 33,000 per day. ■ Gloric (2006-VLCC) chartered out to BP for 12 months at USD 30,000 per day. ■ Patris (2000-VLCC) chartered out to BP for 12 months at USD 33,000 per day. ■ Xin Run Yang (2009-VLCC) chartered out to Trafigura for 12 months at USD 36,000 per day. ■ Aias (2008-Suezmax) chartered out to Repsol for 36 months at USD 26,500 per day. ■ Eagle San Juan (2012-Suezmax) chartered out to BP for 12 months at USD 25,000 per day. ■ Genmar Argus (2000-Suezmax) chartered out to Koch for 12 months option 12 months at USD 26,500 per day and USD 32,000 per day for the option. 22 EURONAV Events occurred after the end of the fi nancial year ending 31 December 2014 On 15 January 2015 the VLCC Antarctica (2009 – 315,981 dwt) was delivered to its new owners for conversion into an FPSO. Delivery was earlier than expected, resulting in an increased purchase price and a corresponding gain on disposal of assets of USD 2.2 million which will be recorded in the fi rst quarter of 2015. On 20 January 2015 Euronav announced the commencement of its underwritten initial public offering in the United States of 13,550,000 ordinary shares. the offering at an issue price per share of USD 12.25. As of this date, Euronav’s shares offered in the United States commenced trading on the New York Stock Exchange (the “NYSE”) under the ticker symbol “EURN.” On the same date Euronav launched its U.S. Exchange which enabled shareholders to reposition their shares that are listed and tradeable on Euronext Brussels into shares listed and tradeable on the NYSE. On 28 January 2015 Euronav announced the closing of its initial public offering of 18,699,000 shares at a public offering price of USD 12.25 per share for gross proceeds of USD 229,062,750. This included the exercise in full by the underwriters of their overallotment option. On 23 January 2015 Euronav announced the upsizing (from the initially announced 13,550,000 shares to 16,260,000 shares) of its initial public offering in the United States as well as pricing of On 30 January 2015 Euronav issued a mandatory contribution notice pursuant to which it would exercise its right to request the contribution in kind of the 30 outstanding perpetual convertible preferred equity securities. Overview of the Market 23 On 31 January 2015 the 250 remaining outstanding fi xed rate senior unsecured convertible bonds, due 2015 with a face value of USD 100,000, have been fully redeemed at par. Euronav held 18 of these bonds. As a result, since that date, no more convertible bonds remain outstanding. On 6 February 2015 Euronav’s share capital was increased following the contribution in kind of 30 perpetual convertible preferred equity instruments issued on 15 December 2013 which resulted in the issuance of 9,459,283 new ordinary shares. These new shares are listed on both Euronext Brussels and the NYSE but tradeable only on Euronext Brussels. There are no more perpetual convertible preferred equity instruments outstanding. On 19 February 2015 Euronav repaid the USD 235.5 million bond issued to partly fi nance the acquisition of 15 VLCCs from Maersk Tankers Singapore Pte Ltd. As the bond was issued below par and in accordance with IFRS, the Company amortised USD 20.4 million (non-cash) in the fourth quarter of 2014 bringing the amortisation related to this bond for the full year 2014 to USD 31.9 million (non-cash) and a further USD 4.1 million (non-cash) in the fi rst quarter of 2015. On 26 February 2015 Euronav took delivery of the VLCC Hirado (2011 – 302,550 dwt) which was part of the acquisition of four modern Japanese-built VLCC vessels announced on 8 July 2014. On 23 March 2015 Euronav closed its U.S. Exchange Offer which enabled shareholders to reposition their shares that are listed and tradeable on Euronext Brussels into shares listed and tradeable on the NYSE. Prospects for 2015 In 2015, according to Clarksons, VLCC deadweight demand is projected to increase by 2.1%. This is largely supported by an expected 7% increase from last year in VLCC crude trade on 24 EURONAV remains constructive for owners as the Suezmax and the VLCC fl eet will expand by only 2-3% over the next two years. This does not include the potential for order slippage, which has continued to remain high (over 30% for both VLCC and Suezmax fl eets on average between 2009 and 2013, according to Drewry’s). Tanker markets should continue to grow but are expected to remain volatile with little or no growth of the VLCC and Suezmax fl eets over the next 18-24 months. A more balanced supply growth coupled with the impact of increased ton-miles should further improve the state of the tanker market for 2015 and beyond. the West-Africa (WAF)-Far East route. The projected growth of Chinese crude imports in 2015 is expected to drive signifi cant growth of VLCC crude trade on this route. Similarly, VLCC crude trade on the Arabian Gulf (AG)-Japan, China, Korea routes is expected to rise by 1% in 2015. Suezmax crude trade volumes are expected to increase by 2% from 2014, also according to Clarksons. This is partially supported by an expectation of a recovery in overall crude trade from both the AG to India and the newer route Caribbean to India. As the Indian refi nery sector is expected to continue to grow in 2015, it is likely that India will source more crude from countries in the Arabian Gulf. Meanwhile, Suezmax crude volumes on the Mediterranean/ Black Sea-United Kingdom and Continent (UKC) routes are projected to increase by 3% from 2014. The tanker fl eet order book is at his lowest since 1997. The prospect over the next two years is positive as the world fl eet growth is expected to be decreasing. On the newbuilding front, given the lead times for building large tankers, the outlook Overview of the Market 25 Corporate Governance Statement Introduction Reference code Euronav has adopted the Belgian Code on Corporate Governance (dated 12 March 2009) as its reference code. The code can be consulted on the website of the Belgian Corporate Governance Committee: www.corporategovernancecommittee.be. Following the capital increases which took place after 31 December 2014, the registered share capital at the time of preparing this report (16 March 2015) amounts to USD 173,046,122.14 and is represented by 159,208,949 shares without par value. For a complete overview of these capital increases, the Company refers to the section “Events occurred after the end of the fi nancial year ending 31 December 2014” in the Director’s report. The full text of the Corporate Governance Charter can be consulted on the Company’s website: www.euronav.com. The shares are in registered or dematerialised form. New York Stock Exchange Listing Following the dual listing on the New York Stock Exchange of the Company’s ordinary shares on 23 January 2015, the New York Stock Exchange Corporate Governance rules for Foreign Private Issuers are also applicable to the Company. The Company has also registered and become a reporting company under the U.S. Securities and Exchange Act of 1934, as amended. As a result of this listing, the Company will become subject to the U.S. Sarbanes-Oxley Act of 2002 and to certain U.S. Securities laws and regulations relating to corporate gover- nance applicable to reporting companies that are foreign private issuers. 1. Capital, shares and shareholders 1.1 Capital and shares On 31 December 2014 the registered share capital of Euronav amounted to USD 142,440,546.45 and was represented by 131,050,666 shares without par value. 1.2 Convertible bonds On 24 September 2009 the Company issued 1,500 subordinated, fi xed-rate, non-guaranteed convertible bonds for a total of USD 150 million. In the course of the fi rst quarter of 2012 the Company bought back 68 bonds of its USD 150 million fi xed rate senior unsecured convertible bonds, due 2015. The face value of each bond was USD 100,000 and the Company paid an average of USD 78,441. On 1 February 2013 the Company launched an exchange offer on all outstanding bonds with maturity 31 January 2015 in exchange for newly issued convertible bonds maturing 31 January 2018. In aggregate, 1,250 bonds (USD 125 million) were offered meaning that only 250 bonds, maturing in 2015, remained outstanding, representing a total amount of USD 25 million. Euronav offered the 68 notes due 2015 for exchange against notes due 2018. In the course of 2013 Euronav sold those 68 notes due 2018 and bought 5 bonds due 2015 at an average price of USD 92,000 per bond. On 27 February 2014 Euronav purchased another 13 bonds due 2015 at an average price of USD 26 EURONAV 103,445 per bond. More details about these transactions can be found in the notes to the consolidated financial statements further in this annual report. During the period from 12 November 2013 till 22 April 2014 the Company issued an aggregate of 20,969,473 ordinary shares upon conversion at the holders’ option of 1,249 convertible bonds due 2018 for an aggregate principal amount USD 124,900,000. an interest of 6% during the first 5 years payable annually in arrears in cash or in shares at the option of the Company. The price against which the instruments could be contributed was EUR 5.776000 (or USD 7.928715 at a EUR/USD exchange rate of 1.3727000) per share. The Company had an option to force the contribution if (i) the share price reached a certain level over a certain period of time and (ii) the Company had completed a listing in New York (NYSE or NASDAQ). On 20 February 2014 the Company exercised its right to redeem all of the remaining convertible bonds due in 2018. At that time, USD 4.9 million or less than 10% in principal amount of the convertible bonds due 2018 originally issued remained outstanding. On 6 February 2014 the Company’s share capital was increased following the contribution in kind of 30 perpetual convertible preferred equity instruments which resulted in the issuance of 9,459,286 new ordinary shares. On 9 April 2014 Euronav redeemed the last convertible bond due in 2018 and outstanding as of 2 April 2014 for an aggregate of USD 101,227.78, which is the principal amount of a bond (USD 100,000) plus accrued but unpaid interest from 31 January 2014 to (but excluding) 9 April 2014. As a result, after 9 April 2014, no convertible bonds due in 2018 remain outstanding. On 31 January 2015 the 250 remaining outstanding bonds issued in 2009 and due in 2015 with a face value of USD 100,000, have been fully redeemed at par. Euronav held 18 of these bonds. As a result, since that date, no more convertible bonds issued in 2009 and due in 2015 remain outstanding. 1.3 Perpetual convertible preferred equity instrument On 13 January 2014 Euronav issued 60 perpetual convertible preferred equity instruments for a total issuance amount of USD 150,000,000. The instruments were issued at par and bear On 30 January 2015 Euronav issued a mandatory contribution notice that it would exercise its right to request the contribution of the 30 outstanding perpetual convertible preferred equity securities. On 6 February 2015 the Company’s share capital was increased following the contribution in kind of 30 perpetual convertible preferred equity instruments which resulted in the issuance of 9,459,283 new ordinary shares. These new shares are listed on both Euronext Brussels and the NYSE but tradeable only on Euronext Brussels. None of the perpetual convertible preferred equity instruments remain outstanding. 1.4 Treasury shares Euronav currently holds 1,750,000 own shares which were bought back at an average price of EUR 18.16. Besides the stock option plans for members of the Executive Committee (please refer to section 4.4. Remuneration policy for the Executive Committee and 27 Corporate Governance Statement the employees further in this Corporate Governance Statement), there are no other share plans, stock options or other rights to acquire Euronav shares in place. 1.5 Shareholders and shareholders’ structure On 31 December 2014 taken into account the declarations and information available to the Company at the time, the share- holders’ structure was as follows: Shareholder Number of shares Percentage Tanklog Holdings Ltd. Saverco NV York Capital Management Global Advisors LLC BlueMountain Capital Management LLC Victrix NV Euronav (treasury shares) Other Total 20,003,509 16,379,539 15.26% 12.50% 12,028,428 9.18% 8,867,209 7,580,345 1,750,000 6.77% 5.78% 1.34% 64,441,636 49.17% 131,050,666 100.00% Taken into account the latest declarations and information available to the Company, the shareholders’ structure (at the time of preparing this report) is as follows: Shareholder Number of shares Percentage Tanklog Holdings Ltd.1 Saverco NV1 Victrix NV1 BlueMountain Capital Management LLC 19,003,509 17,026,896 9,156,893 11.94% 10.69% 5.75% 8,867,209 5.57% Euronav (treasury shares) 1,750,000 1.10% 64.95% 103,404,442 159,208,949 100.00% Other Total 1 Including shares held directly or indirectly by or for the benefit of the ultimate beneficial owner Shareholders’ structure Euronav NV on 16 March 2015 11.94% Tanklog Holdings Ltd. 10.69% Saverco NV 5.75% Victrix NV 5.57% BlueMountain Capital Management LLC 1.10% Euronav NV (treasury shares) 64.95% Other 28 2. Board of Directors and Board Committees 2.1 Board of Directors During 2014 the composition of the Board of Directors was as follows: Name Type of mandate First appointed as director Peter G. Livanos1 Chairman Marc Saverys Vice-Chairman Paddy Rodgers CEO Daniel R. Bradshaw Director Ludwig Criel Director Alexandros Drouliscos Julian Metherell2 Independent director Independent director John Michael Radziwill Director Virginie Saverys3 Director William Thomson Alice Wingfield Digby Independent director Independent director End term of office AGM 2015 AGM 2016 AGM 2016 AGM 2017 AGM 2016 2005 2003 2003 2004 2003 2013 AGM 2017 2014 AGM 2018 2013 2003 AGM 2017 AGM 2016 2011 AGM 2015 2012 AGM 2016 1 Mr. Peter G. Livanos, as a permanent representative of Tanklog Holdings Limited, was appointed Chairman of the Board of Directors on 22 July 2014 in replacement of Mr. Marc Saverys who was appointed Vice-Chairman of the Board of Directors. 2 Mr. Julian Metherell was appointed independent director as of 8 May 2014 and member of the Audit and Risk Committee and the Corporate Governance and Nomination Committee as of his appointment. 3 Mrs. Virginie Saverys, as a permanent representative of Victrix NV, resig- ned from the Board of Directors immediately after the AGM of 8 May 2014. Tanklog Holdings Limited, Peter G. Livanos (permanent representative) – Chairman Peter G. Livanos serves as the Chairman of the Board of the Company through his appointment as the permanent re- presentative of Tanklog Holdings Limited. Mr. Livanos has served on the Company’s Board of Directors since April 2005 and is a member of the Health, Safety, Security and Environmental Committee and the Remuneration Committee. Mr. Livanos is also the Chairman of the Board of Directors of GasLog Ltd. (NYSE: GLOG) (since 2003), where he also served as Chief Executive Officer during the period from 2012 to 2013. In addition, Mr. Livanos is the Chairman and sole shareholder of Ceres Shipping Ltd., or Ceres Shipping, an international shipping group, and currently serves as a director of GasLog Partners LP (NYSE: GLOP), DryLog Ltd., EnergyLog Ltd. and Tanklog Holdings Limited. In addition, Mr. Livanos is a member of the Council of the American Bureau of Shipping and Chairman of the Greek National Committee. In 1989 Mr. Livanos formed Seachem Tankers Ltd., which joined forces with Odfjell in 2000, EURONAV creating Odfjell ASA (OSE: ODF), one of the world’s largest chemical tanker operators. He served on the Board of Directors of Odfjell SE until 2008. Mr. Livanos is a graduate of Columbia University in New York. Marc Saverys – Vice-Chairman Marc Saverys, the Company’s Vice-Chairman, has served on the Board of Directors of the Company since its incorporation in 2003. During the period from 2003 through July 2014, he served as the Chairman of the Board. In 1976 Mr. Saverys joined the chartering department of Bocimar, the dry bulk division of CMB. In 1985 Mr. Saverys established the dry bulk division of EXMAR and in 1991 he became managing director of CMB, a position that he held until September 2014 when he was appointed Chairman of CMB. Mr. Saverys has also served as the Chairman of Delphis NV since March 2004 and as a Board member of Sibelco NV and Mediafin NV since June 2005 and October 2005, respectively. He holds various directorships in companies belonging to the CMB and Euronav group and is the founder and Chairman of the private foundation Durabilis. He graduated with a degree in law from the University of Ghent. Paddy Rodgers – CEO Patrick Rodgers serves and has served on the Board of Directors since June 2003 and has been a member of the Executive Committee since 2004. Mr. Rodgers was appointed Chief Financial Officer of the predecessor of the Company in 1998 and has been Chief Executive Officer since 2000. Since 2005 Mr. Rodgers holds various directorships in companies belonging to the CMB and Euronav group. Mr. Rodgers currently serves as a director and Chairman of the International Tanker Owners Pollution Federation Fund since 2011. From 1990 to 1995 Mr. Rodgers worked at CMB group as an in-house lawyer and subsequently as Shipping Executive. Mr. Rodgers began his career in 1982 as a trainee lawyer with Keene Marsland & Co. In 1984 he joined Bentley, Stokes & Lowless as a qualified lawyer and in 1986 he joined Johnson, Stokes & Master in Hong Kong as a solicitor. Mr. Rodgers graduated in law from University College London in 1981 and from the College of Law, Guildford in 1982. Daniel R. Bradshaw – Director Daniel R. Bradshaw has served on the Board of Directors since 2004, and is a member of the Audit and Risk Committee and the Chairman of the Corporate Governance and Nomination Committee. Since 2014 Mr. Bradshaw has served as an in- dependent director of GasLog Partners LP (NYSE: GLOP), a Marshall Islands limited partnership. Since 2013 Mr. Bradshaw has been a director of Greenship Offshore Manager Pte Ltd. and since 2010 he has served as an independent non-executive director of IRC Limited, a company listed in Hong Kong, which operates iron mines in far eastern Russia, and is affiliate of Petropavlovsk PLC, a London-listed mining and exploration company. Since 2006, Mr. Bradshaw has been a director of Pacific Basin Shipping Company Limited, a company listed in Hong Kong and operating in the Handysize bulk carrier sector. Since 1978 Mr. Bradshaw has worked at Johnson Stokes & Master, now Mayer Brown JSM, in Hong Kong, from 1983 to 2003 as a partner and since 2003 as a senior consultant. From 2003 until 2008 Mr. Bradshaw was a member of the Hong Kong Maritime Industry Council. From 1993 to 2001 he served as Vice-Chairman of the Hong Kong Shipowners’ Association and was a member of the Hong Kong Port and Maritime Board until 2003. Mr. Bradshaw began his career with the New Zealand law firm Bell Gully and in 1974 joined the international law firm Sinclair Roche & Temperley in London. Mr. Bradshaw obtained a Bachelor of Laws and a Master of Laws degree at the Victoria University of Wellington (New Zealand). Ludwig Criel – Director Ludwig Criel has served on the Board of Directors since the Company’s incorporation in 2003 and is a member of the Corporate Governance and Nomination Committee. Mr. Criel has been the Chairman of De Persgroep since 1996. Mr. Criel has served as a director of CMB and of EXMAR NV since 1991. Since 1983 he has held various management functions within the Almabo/EXMAR group and was made Chief Financial Officer of CMB in 1993. In 1999 Mr. Criel was appointed managing director of the Wah Kwong group in Hong Kong. Mr. Criel joined Boelwerf as a project manager in 1976. He is Vice-Chairman of the West of England P&I Club. In 1974 Mr. Criel graduated in applied economic sciences from the University of Ghent. He also holds a degree in management from the Vlerick School of Management. Alexandros Drouliscos – Independent director Alexandros Drouliscos has served on the Board of Directors since May 2013 and is a member of the Audit and Risk Committee and is the Chairman of the Remuneration Committee. Since 1999 he held the position of managing director at a family-owned European bank, Union Bancaire Privée. From 1986 to 1992 Mr. Drouliscos held the position of Vice President at Chase Manhattan Bank NA, working as a Credit Officer and then as an Investment Officer, and subsequently, from 1992 to 1997, as a Senior Vice President at Merrill Lynch. He graduated from the American University in Athens with a Bachelor’s degree in Business Administration in 1982 and then continued his postgraduate studies at Heriott Watt University in Edinburgh, with an M.Sc. in International Banking. Julian Metherell – Independent director Julian Metherell has served on the Board of Directors since May 2014, and is a member of the Audit and Risk Committee and Corporate Governance and Nomination Committee. Mr. Metherell also serves as a director of GasLog Ltd., a NYSE listed owner and operator of LNG carriers (since October 2011), and is the Chief Financial Officer and a director of Genel Energy 29 Corporate Governance Statement Very Large Gas Carriers (VLGC), long-range and medium-range vessels. From 1980 to 2008 Mr. Thomson has been Chairman in several maritime and other companies including Forth Ports Plc, British Ports Federation and Relayfast, and the North of England P&I club. Mr. Thomson previously served as a director of Trinity Lighthouse Service, Tibbett and Britten and Caledonian McBrayne. From 1970 to 1986 he was a director with Ben Line, for which he worked in, amongst others, Japan, Indonesia, Taiwan and Edinburgh. In 1985 he established Edinburgh Tankers and five years later, Forth and Celtic Tankers. After serving with the army for three years, Mr. Thomson began his professional career with Killick Martin Shipbrokers in London. Alice Wingfield Digby – Independent director Alice Wingfield Digby has served on the Board of Directors since May 2012, a member of the Corporate Governance and Nomination Committee, a member of the Remuneration Committee and the Chairman of the Health, Safety, Security and Environmental Committee. Mrs. Wingfield Digby currently works at Pritchard-Gordon Tankers Ltd., where she started as Chartering Manager in 1999. Since 1995 she has served as a member of the Board of Directors of Giles W. Pritchard-Gordon & Co., Pritchard-Gordon Tankers Ltd. and Giles W. Pritchard- Gordon (Shipowning) Ltd., and since 2005 as a member of the Board of Giles W. Pritchard-Gordon (Farming) Ltd. and Giles W. Pritchard-Gordon (Australia) Pty Ltd. Mrs. Wingfield Digby has been a member of the Baltic Exchange since 2002. In the late nineties Mrs. Wingfield Digby joined the chartering department of Mobil before the merger with Exxon in 1999. From 1995 to 1996 she trained with Campbell Maritime Limited, a ship management company in South Shields, and subsequently at British Marine Mutual P&I Club, SBJ Insurance Brokers and J. Hadjipateras in London after returning from working at sea as a deckhand on board a tanker trading around the Eastern Caribbean. In 1996 Mrs. Wingfield Digby was awarded the Shell International Trading and Shipping Award in tanker chartering from the Institute of Chartered Shipbrokers. Plc, a leading independent oil and gas exploration and production company operating in the Kurdistan Region of Iraq (since 2011). Genel Energy Plc, the successor to Vallares Plc, is a publicly listed acquisition company which Mr. Metherell co-founded in April 2011. Mr. Metherell was a partner at the Goldman Sachs Group, Inc., where he served as Chief Executive Officer of the UK investment banking division, prior to which he was a director in the European energy group at Dresdner Kleinwort, a London-based investment bank. Mr. Metherell is a graduate of Manchester University, where he received a B.Sc. degree, and of Cambridge University, where he received an M.B.A. John Michael Radziwill – Director John Michael Radziwill has served on the Board of Directors since 2013 and is a member of the Health, Safety, Security and Environmental Committee. Mr. Radziwill is also the Chief Executive Officer of C Transport Maritime S.A.M. in Monaco (since 2010), prior to which he served in its commercial depart- ment as a Capesize freight trader from 2005 to 2006 and as the head of the sale and purchase division from 2006 through 2010. From 2004 to 2005 Mr. Radziwill worked at H. Clarkson & Co. Ltd. and Seascope Insurance Services Ltd. both in London, England. In 2003 he joined Ceres Hellenic’s Insurance and Claims Department in Piraeus, Greece. Mr. Radziwill also serves as an advisor of SCP Clover Maritime, a company that manages assets and investments for Mr. John Radziwill, his father, and specifically for JM Maritime Investments Inc. and Bretta Tanker Holdings, Inc. Mr. John Michael Radziwill is a member of the American Bureau of Shipping and the Baltic Exchange. Mr. Radziwill graduated from Brown University in 2002 with a BA in Economics, after which he served as Administrative Officer at Ceres Hellenic Enterprise’s New Building Site Office in Koje, South Korea. Victrix NV, Virginie Saverys (permanent representative) – Director Virginie Saverys (1960) graduated in law from the University of Paris in 1983 and is also a translator-interpreter (Institut Supérieur d’Interprétation et de Traduction, Paris, 1983). She started her career in Bocimar’s legal department. She left Bocimar in 1985 to start up the legal department at EXMAR. She managed CMB’s legal department from 1991 until 2006. She is the owner and Chairman of the wine estate Avignonesi (Montepulciano, Tuscany). She has been a director of CMB since 1993 and a director of Euronav since 2003, a position from which she resigned in 2014. William Thomson – Independent director William Thomson has served on the Board of Directors since 2011 and is a member of the Remuneration Committee and the Chairman of the Audit and Risk Committee. Currently and since 2005 Mr. Thomson holds a directors’ mandate in Latsco, established to operate under the British Tonnage Tax Regime 30 EURONAV Composition The Board of Directors currently consists of ten members, two of whom represent the principal shareholders. One member has an executive function; nine are non-executive directors of which four are independent directors in the meaning of Article 526ter of the Belgian Company Code and Annex 2 of the Corporate Governance Charter. The articles of association provide that the members of the Board remain in office for a period not exceeding four years. The Board members are eligible for re-election. The articles of association of the Company do not provide an age limit for the members of the Board. Functioning of the Board of Directors In 2014 the Board of Directors formally met four times. The attendance rate of the members was the following: Name Type of mandate Meetings attended Peter G. Livanos1 Chairman Marc Saverys Vice-Chairman Paddy Rodgers CEO Daniel R. Bradshaw Director Ludwig Criel Director Alexandros Drouliscos Independent director Julian Metherell2 Independent director John Michael Radziwill Director Virginie Saverys3 Director William Thomson Independent director Alice Wingfield Digby Independent director 4 4 4 4 3 4 3 4 1 4 4 1 Mr. Peter G. Livanos, as a permanent representative of Tanklog Holdings Limited, was appointed Chairman of the Board of Directors on 22 July 2014 in replacement of Mr. Marc Saverys who was appointed Vice-Chairman of the Board of Directors. 2 Mr. Julian Metherell was appointed independent director as of 8 May 2014 and member of the Audit and Risk Committee and the Corporate Governance and Nomination Committee as of his appointment. 3 Mrs. Virginie Saverys, as a permanent representative of Victrix NV, resigned from the Board of Directors immediately after the AGM of 8 May 2014. Working procedures The Board of Directors is the ultimate decision-making body of the Company, with the exception of the matters reserved to the shareholders’ meeting as provided by law or the articles of association. In addition to the statutory powers, the responsi- bilities of the Board of Directors are further defined in Article III.1 of the Corporate Governance Charter. All decisions of the Board are taken in accordance with Article 22 of the articles of association which inter alia states that the Chairman has a casting vote in case of deadlock. To date that has not been necessary. Besides the formal meetings, the Board members of Euronav are in contact with each other very regularly, including by conference call, and as it is often difficult to formally meet in case an urgent decision is required, the written decision-making process was used 4 times in 2014. Activity report 2014 In 2014 besides the above-mentioned customary agenda items, Euronav’s Board of Directors deliberated on: ■ the purchase and delivery of 15 VLCCs from Maersk Tankers Singapore Pte Ltd. and the financing of this transaction, in- cluding through a private placement of shares, mezzanine financing and bank debt; ■ the sale of the VLCC Luxembourg; ■ the sale of the VLCCs Olympia and Antarctica; ■ the purchase of another four VLCCs from Maersk Tankers Singapore Pte Ltd. and the financing of this transaction, in- cluding through a private placement of shares by means of an accelerated book build procedure and bank debt; ■ the take-over by Euronav from OSG of the ship management of the FSO Africa; ■ the refinancing of certain Suezmax vessels; ■ conversions of the convertible bond issued in 2013 and ma- turing in 2018 and the early redemption of this bond; ■ the contribution in kind of certain perpetual convertible pre- ferred securities; ■ the conclusion or extension of certain time charter parties for a period of up to 42 months; ■ the preparation and timing of the initial public offering of the Company’s shares in the United States of America and the related exchange offer under the laws of the United States of America; ■ the elaboration and update of certain of the Company’s po- licies and procedures; ■ the change in accounting policy; ■ the re-organisation of the Committees within the Board of Directors; ■ a long-term incentive plan. Procedure for conflicts of interest The procedure for conflicts of interest within the Board of Directors is set out in the Company’s Corporate Governance Charter (section III.7). In the course of 2014 the Board of Directors dealt with a conflict of interest on three occasions for which the provisions of article 523 of the Belgian Company Code were applied. First, in February 2014, the Board of Directors decided to increase Euronav’s share capital within the framework of the authorised capital as a result of a contribution in kind of the receivables represented by certain perpetual convertible preferred securities. 31 Corporate Governance Statement The minutes of the Board of Directors of 6 February 2014 state: “The Chairman then sets out that the following directors – in accordance with article 523 of the Belgian Company Code – have notified the Board of Directors that with respect to a decision or transaction which is the responsibility of the Board of Directors, and more in particular with respect to the decisions to be taken in relation to the agenda of this meeting, they may have a patrimonial interest that conflicts with the interests of the Board of Directors in relation to the decision to be taken, to the extent the Board would decide so. Therefore, they cannot participate in the resolution, nor in the deliberation on this agenda. As a consequence, these directors cannot be taken into account regarding the required quorum or majority. This is also in accordance with Article 22 of the articles of association of the Company. The conflicted directors are: 1. Mr. Saverys Marc […]; 2. the company incorporated under the laws of Cyprus “Tanklog Holdings Limited” […], permanently represented by Mr. Livanos Panagiotis (Peter), […]; 3. the limited liability company Victrix, […], permanently represented by Mrs. Saverys Virginie […]; and 4. Mr. Criel Ludwig […]. Quorum – majority The Chairman declares that four out of six eligible directors are present or represented; that, hence, the majority of the Board of Directors is present or represented and that the Board of Directors has been validly convened and that a quorum of directors is present at this meeting, which as a consequence can validly deliberate and that, to adopt decisions, three of the four directors present or represented must decide to adopt the agenda item. The meeting unanimously concurs with this statement. Determination valid composition of the Board of Directors After this statement of the Chairman of the Board of Directors deter- mines that the majority of the non-conflicted directors are present or represented, that the Board is validly composed to deliberate on the agenda. The meeting unanimously concurs with the foregoing.” Consequently, the other members of the Board of Directors have approved the said capital increase. Secondly, in September 2014, the Board of Directors approved the forced contribution of the then outstanding perpetual preferred equity instruments and the payment of the remaining interest on those securities in cash, at the appropriate time. 32 EURONAV The minutes of the Board of Directors of 3 September 2014 state: “The Company can force the contribution of the PCPs and convert the instrument into ordinary shares upon the Company being listed in the US and the price higher than certain thresholds. There are still 30 PCP instruments outstanding with a face value of USD 75 million. The Board has to decide whether it will force the conversion of all the remaining outstanding PCP into 9,459,286 shares and whether the interest to be paid during the first year will be paid in cash or in 2,837,785 shares. At this point, Mr. Saverys declared having an interest in the proposed decision in accordance with article 523 of the Belgian Company Code. More specifically, Mr. Saverys has a direct or indirect patrimonial interest (or through entities controlled by him or in which he has a Board seat) that conflicts with the interests of the Company with respect to this decision on whether the Board will force the conversion of the remaining outstanding PCPs, as he is involved in the proposed transaction. Therefore, Mr. Saverys cannot participate in the resolu- tion on this matter and cannot be taken into account regarding the required quorum or majority. This is also in accordance with Article 22 of the articles of association of the Company. The conflicted director explained his conflict of interest as follows: as Mr. Saverys, directly or indirectly, holds PCPs, the conflict of interest lies in the fact that if and when the Board decides to force the conversion of the PCPs and determine whether to pay the interest in cash or shares, he has a conflict of a patrimonial nature. The Chairman kindly requested Mr. Saverys to leave the meeting room so the Board can continue the deliberation on this agenda item. The Board resolved that forcing the conversion of the remaining PCPs is desirable for the Company in order to strengthen the balance sheet and avoid having an instrument whose interest will go up on the first two anniversaries. The Board also notes that the holders have the option to convert at any time and they may choose to do so at a time that would be beyond the control of the Company and potentially less convenient for the Company. The consequences of the issue of the Securities for Euronav are that Euronav will pay the interest for the first year (in cash or in shares the Board decides that it will be in cash), with no further interest obligations for the remaining initial contractual duration of the PCPs, which would have increased only with time. In case of issue of new shares upon exercise of the forced contribution and the payment of interest in shares, the voting rights of the existing shareholders as well as their liquidation and dividend rights will be subject to dilution. The maximum potential dilution (as calculated in the Special Report at issuance of the PCPs) for the existing shareholders in the hypothesis that the receivables incorporated in each of the Securities are contributed to Euronav’s capital within 5 years after the issue date and all interests due during such period are paid in shares (but not taking into account dilution resulting from the conversion of Euronav’s existing convertible bonds) was 31.62%. Eight of the nine eligible directors are represented and hence, the majority of the Board of Directors is present and the Board of Directors has been validly convened and can adopt decisions. The Board decides to force the conversion of the PCPs at the appro- priate time and pay the remaining interest in cash. Management is mandated to execute this decision. Mr. Saverys joined the meeting again upon invitation of the Chairman.” Consequently, the other members of the Board of Directors have approved the forced contribution of the perpetual preferred equity instruments and the payment of the remaining interest on those securities in cash, at the appropriate time. Thirdly, in September 2014, the Board of Directors approved the Company’s proposed initial public offering in the United States of America, the concurrent US Exchange Offer and the related repositioning procedure to reposition Euronav shares from Euronext to the NYSE and vice versa. The minutes of the Board of Directors of 26 September 2014 state: “Prior to the opening of the deliberations and resolutions the Chairman of this meeting sets out that Mr. Peter Livanos, as permanent representative of Tanklog Holdings Limited, and Mr. Marc Saverys, Vice-Chairman – in accordance with Article 523 of the Belgian Company Code – have notified the Board that they have a direct or indirect pecuniary interest that conflicts with the interests of the Company in respect of the items to be discussed and decided upon at this meeting. These directors (or entities controlled by them or in which they have a Board seat) may be considering to participate in the IPO Transaction through a possible sale by them of shares in the Company, which may occur in the framework of the Underwriters’ over-allotment option (and which will be inferior in number to the issuance and subscription of the new shares in the framework of the IPO). Hence, these directors have an indirect conflict of interest, more specifically relating to (i) the determination of the issue price of the shares to be issued in the framework of the IPO Transaction, which will also constitute the price that will be paid per share sold in the framework of the Underwriters’ over-allotment option, and (ii) in relation to the approval of the registration rights agreement to be entered into by the Company. Consequently, the procedure of article 523 of the Belgian Company Code is applied for both agenda items. As the issue price of the shares to be issued in the framework of the IPO (and therefore, the price to be paid for the shares sold in the framework of the over-allotment option) will be determined on the basis of a specific procedure, in consultation with the Underwriters, the Board is of the opinion that the pricing will occur in line with applicable market conditions. The Company has accepted to enter into a registration rights agreement with some directors who are or represent reference shareholders. Those shareholders will continue to have a significant stake of the shares of the Company and it is market practice to enter into such agreement considering it will allow them to register (part of all) the remaining shares under the Securities Act. It is in the best interest of the Company to enter into such agreement as when the 33 Corporate Governance Statement directors will use their Registration Rights Agreement overtime, the free float will increase and so should the liquidity of the shares (daily average volume). Therefore, according to the procedure laid down in article 523 of the Belgian Company Code, none of the two aforementioned directors will participate in the deliberation on these items on the agenda nor will they vote on these decisions. As a consequence, these directors cannot be taken into account regarding the required quorum or majority. This is also in accordance with Article 22 of the articles of association of the Company. The Chairman of the meeting declares that all eligible directors are present or represented; that, hence, for all decisions to be decided upon and also on the aforementioned points (pricing of the IPO Transaction and decision on the registration rights agreement), the majority of the Board is present or represented and that the Board has been validly convened and a quorum of directors is present or represented at this meeting, which as a consequence can validly deliberate. In accordance with the applicable legal provisions, the actual capital increase at the moment of the IPO as determined by the terms and conditions of the IPO Transaction will need to be recorded by a notary public. The resolutions in these minutes should therefore be read together with the notarial deed of that date.” Consequently, the other members of the Board of Directors have approved the pricing procedure of the initial public offering in the United States of America and the registration rights agreement. 2.2 Board Committees 2.2.1 Audit and Risk Committee Composition In accordance with Article 526bis §2 of the Belgian Company Code and provision 5.2./4 of Appendix C to the Belgian Corporate Governance Code of 2009, the Audit and Risk Committee is exclusively composed of non-executive directors and a majority of the Committee’s members are independent directors. The Audit and Risk Committee of Euronav counts four members, three of which are independent directors. In 2014 the composition of the Audit and Risk Committee was as follows: Name End term of office Independent director William Thomson1 Alexandros Drouliscos Julian Metherell2 Daniel R. Bradshaw 2015 2017 2018 2017 X X X 1 Independent director and expert in accounting and audit related mat- ters (see biography) in accordance with Article 96 paragraph 1, 9° of the Belgian Company Code. Mr. William Thomson, who had been a member of the Audit and Risk Committee before, was appointed Chairman of the Audit and Risk Committee as of 23 March 2014 in replacement of Mr. Daniel R. Bradshaw who remains member of the Audit and Risk Committee. 2 Mr. Julian Metherell was appointed independent director as of 8 May 2014 and member of the Audit and Risk Committee as of his appointment. Powers The Audit and Risk Committee handles a wide range of financial reporting, controlling and risk management matters. Its main responsibilities and its functioning are described in Annex 3 to the Corporate Governance Charter. The Audit and Risk Committee reviews its term of reference periodically and, where applicable, makes recommendations to the Board of Directors, if changes are useful or required, to ensure the composition, the responsibilities and the powers of the Committee comply with applicable laws and regulations. Activity report 2014 In 2014 the Audit and Risk Committee met seven times. The attendance rate of the members was the following: Name Type of mandate William Thomson Independent director Alexandros Drouliscos Independent director Julian Metherell Independent director Daniel R. Bradshaw Director Meetings attended 7 7 6 7 During these meetings the key elements discussed within the Audit and Risk Committee included financial statements, cash management, exter nal and internal audit reports, old and new financing, accounting policies, certain company policies, risk management and debt covenants. 2.2.2 Remuneration Committee Composition In accordance with Article 526quater §2 of the Belgian Company Code, all members of the Remuneration Committee are non- executive directors, the majority being independent directors. The Remuneration Committee consists of four directors, three of which are independent directors. As a result of a reorganisation of the Committees within the Board of Directors in June 2014, the advisory responsibilities of the former Nomination and Remuneration Committee in relation to the appointment and dismissal of members of the Board of Directors and members of the Executive Committee were entrusted to the new Corporate Governance and Nomination Committee. On this occasion, the former Nomination and Remuneration Committee was renamed Remuneration Committee. 34 EURONAV In 2014 the Remuneration Committee was composed as follows: Name End term of office Independent director Alexandros Drouliscos Peter G. Livanos1 William Thomson Alice Wingfield Digby 2017 2015 2015 2016 X X X 1 As permanent representative of Tanklog Holdings Limited. Powers The Remuneration Committee has various advisory responsi- bilities relating to the remuneration policy of members of the Board of Directors, members of the Executive Committee and employees in general. Annex 4 to the Corporate Governance Charter contains a detailed list of the powers and responsibilities of the Remuneration Committee. The Remuneration Committee makes recommendations to the Board of Directors relating to the remuneration of the non- executive and executive directors and members of the Executive Committee, including variable remuneration, incentives, bonuses etc. in line with suitable industry benchmarks. The Remuneration Committee reviews its term of reference periodically and, where applicable, makes recommendations to the Board of Directors, if changes are useful or required, to ensure the composition, the responsibilities and the powers of the Committee comply with applicable laws and regulations. Activity report 2014 In 2014 the Remuneration Committee met five times. The atten- dance rate of the members was the following: Name Type of mandate Alexandros Drouliscos Independent director Peter G. Livanos1 Director William Thomson Independent director Alice Wingfield Digby Independent director Attended meetings 5 5 5 5 1As permanent representative of Tanklog Holdings Limited. During these meetings the key elements discussed within the Remuneration Committee included the remuneration of directors and members of the Executive Committee, the annual bonus for the members of the Executive Committee and employees and the creation of a long-term incentive plan. 2.2.3 Corporate Governance and Nomination Committee Composition As a result of a reorganisation of the Committees within the Board of Directors in June 2014, the Corporate Governance and Nomination Committee was created and the advisory responsi- bilities of the former Nomination and Remuneration Committee in relation to the appointment and dismissal of members of the Board of Directors and members of the Executive Committee were entrusted to the Corporate Governance and Nomination Committee. In 2014 the Corporate Governance and Nomination Committee of Euronav counted four members, two of which are indepen- dent directors. In this respect, Euronav is not in compliance with provision 5.3./1 of Appendix C to the Belgian Corporate Governance Code of 2009, pursuant to which a nomination Committee should comprise a majority of independent non- executive directors. This non-compliance is a consequence of the reorganization of Euronav’s Board Committees during 2014, in the framework of which it was first envisaged that the Corporate Governance and Nomination Committee would count five members, including three independent directors. However, in order to have a lean and efficient Committee, it was finally decided to limit the number of Committee members to four. The composition of the Committee was determined taking into account members’ expertise in this area and their availability, given other Committee memberships. 35 Corporate Governance Statement In 2014 the Corporate Governance and Nomination Committee was composed as follows: counted three members, among whom one independent director, and was composed as follows: Name End term of office Independent director Name End term of office Independent director Daniel R. Bradshaw Ludwig Criel Julian Metherell1 Alice Wingfield Digby 2017 2016 2018 2016 X X 1Mr. Julian Metherell was appointed independent director as of 8 May 2014 and member of the Corporate Governance and Nomination Committee as of his appointment. Powers The Corporate Governance and Nomination Committee’s role is to assist and advise the Board of Directors in all matters relating to the composition of the Board and its Committees and the composition of the Company’s Executive Committee, to the methods and criteria for appointing and recruiting direc- tors and members of the Executive Committee, evaluating the performance of the Board, its Committees and the Executive Committee, as well as in any other matters relating to corporate governance. Annex 5 to the Corporate Governance Charter contains a detailed list of the powers and responsibilities of the Corporate Governance and Nomination Committee. Activity report 2014 In 2014 the Corporate Governance and Nomination Committee met four times. The attendance rate of the members was the following: Name Type of mandate Daniel R. Bradshaw Director Ludwig Criel Director Julian Metherell Independent director Alice Wingfield Digby Independent director Attended meetings 4 3 3 4 During these meetings the key elements discussed within the Corporate Governance and Nomination Committee included the review of the Company’s policies and procedures and the composition of the Committees within the Board of Directors. 2.2.4 Health, Safety, Security and Environmental Committee Composition As a result of a reorganisation of the Committees within the Board of Directors in June 2014, the Health, Safety, Security and Environmental Committee was created and met for the first time in June 2014. The Health, Safety, Security and Environmental Committee is composed of at least three members of the Board of Directors. In 2014 the Health, Safety, Security and Environmental Committee Peter G. Livanos1 John Michael Radziwill Alice Wingfield Digby2 2015 2017 2016 X 1As permanent representative of Tanklog Holdings Limited. 2 Mrs. Alice Wingfield Digby was appointed Chairman of the Health, Safety, Security and Environmental Committee as of 3 September 2014 in replacement of Mr. Peter G. Livanos as permanent representative of Tanklog Holdings Limited, who remains member of the Health, Safety, Security and Enviromental Committee. Powers The role of the Health, Safety, Security and Environmental Committee is to assist and advise the Board of Directors relating to its responsibilities regarding health, safety, security or environmental matters and general policies in this respect, as well as any corrective action to be taken in case of serious injury or incident. Annex 6 to the Corporate Governance Charter contains a detailed list of the powers and responsibilities of the Health, Safety, Security and Environmental Committee. Activity report 2014 In 2014 the Health, Safety, Security and Environmental Committee met two times. The attendance rate of the members was the following: Name Type of mandate Peter G. Livanos1 Director John Michael Radziwill Director Alice Wingfield Digby Independent director Attended meetings 2 2 2 1 As permanent representative of Tanklog Holdings Limited. During these meetings the key elements discussed within the Health, Safety, Security and Environmental Committee included the review and monitoring of the Company’s policies and targets in relation to the Committee’s responsibilities, the organisation of the ship management department in the Greek office and the prevention of diseases. 2.3 Executive Committee In application of Article 524bis of the Belgian Company Code, the executive management of the Company is entrusted to the Executive Committee chaired by the CEO. The members of the Executive Committee are appointed by the Board of Directors upon proposal by the Chairman of the Board or the Chief Executive Officer and as reviewed by the Corporate Governance and Nomination Committee. 36 EURONAV The Executive Committee is composed as follows: Name Title Hugo De Stoop Chief Financial Officer Paddy Rodgers Chief Executive Officer Alex Staring Chief Operating Officer Egied Verbeeck General Counsel Powers and activity report 2014 The Executive Committee is empowered to take responsibility for the daily operations of the group and the implementation of the policy and strategy approved by the Board of Directors. Its powers are further described in detail in Article V.3 of the Corporate Governance Charter and in Annex 7 to the Corporate Governance Charter. The Executive Committee reports to the Board of Directors through the CEO, enabling the Board of Directors to exercise control on the Executive Committee. Procedure for conflicts of interest The procedure for conflict of interest within the Executive Committee is set out in the Company’s Corporate Governance Charter (section V.4). In the course of 2014 no decision taken by the Executive Committee required the application of the conflict of interest procedure. 3. Evaluation of the Board of Directors and its Committees The main features of the process for evaluating the Board of Directors, its Committees and the individual directors are described in Chapter III.9 of Euronav’s Corporate Governance Charter. The Board of Directors and each of its Committees are expected to undergo a periodical assessment through an independent third party in the course of 2015. 4. Remuneration report The remuneration report describes Euronav’s executive remuneration policy and how executive compensation levels are set. The Remuneration Committee oversees the executive compensation policies and plans. 4.1 Euronav’s reward principle All employees are subject to an annual performance review process, implementation of which is ensured by the Executive Committee. The remuneration policy is part of a framework of employee policies aimed at motivating and retaining current employees, attracting talented new people and helping Euronav employees to perform at consistently high levels. 4.2 Development of the Euronav remuneration policy The policy of remuneration for members of the Executive Committee is set by the Board of Directors on the basis of recommendations by the Remuneration Committee. When formulating its recommendations, in particular for the remu- neration of members of the Executive Committee, the Committee uses suitable industry benchmarks, as set out in detail in point 2.2.2 and 4.4 of this annual report. The general shareholders’ meeting decides upon the remuneration level for directors, as suggested by the Board of Directors pursuant to proposals formulated by the Remuneration Committee. The Remuneration Committee meets at least twice per year during which time it: ■ considers the market factors affecting the Company’s current and future pay practices; ■ evaluates the effectiveness of our remuneration policies in terms of recognising performance and determines the appropriate evolution of the plans; ■ determines the compensation levels of Euronav’s manage- ment team as a whole and individually. 4.3 Remuneration policy for executive and non- executive directors The remuneration is determined on the basis of four regular meetings of the full Board per year. Directors receive an attendance fee for each Board meeting or Committee meeting attended. The actual amount of the remuneration of the directors is approved by the Annual General Meeting. As of the Annual General Meeting held in May 2014 each director received a gross fixed amount per annum of EUR 60,000 for the execution of their mandate and an additional attendance fee of EUR 10,000 per Board meeting attended with a maximum of EUR 40,000 per year. The Chairman received a gross fixed amount of EUR 160,000 per year and an additional attendance fee of EUR 10,000 per Board meeting attended with a maximum of EUR 40,000 per year. The Chief Executive Officer, who was also member of the Executive Committee in 2014, has waived his directors’ fees. For their mandate within the Audit and Risk Committee, the members received an annual remuneration of EUR 20,000 and the Chairman received a remuneration of EUR 40,000. Each member of the Audit and Risk Committee, including the Chairman, received an additional attendance fee of EUR 5,000 per Committee attended with a maximum of EUR 20,000 per year. For their mandate within the Remuneration Committee, the members received an annual remuneration of EUR 5,000 and the Chairman received a remuneration of EUR 7,500. Each member of the Remuneration Committee, including 37 Corporate Governance Statement the Chairman, received an additional attendance fee of EUR 5,000 per Committee attended with a maximum of EUR 20,000 per year. For their mandate within the Corporate Governance and Nomination Committee, the members received an annual remu- neration of EUR 5,000 and the Chairman received a remunera- tion of EUR 7,500. Each member of the Corporate Governance and Nomination Committee, including the Chairman, received an additional fee of EUR 5,000 per Committee attended with a maximum of EUR 20,000 per year. For their mandate within the Health, Safety, Security and Environmental Committee, the members received an annual remuneration of EUR 5,000 and the Chairman received a remu- neration of EUR 7,500. Each member of the Health, Safety, Security and Environmental Committee, including the Chairman, received an additional fee of EUR 5,000 per Committee attended with a maximum of EUR 20,000 per year. related remuneration, such as bonuses or remuneration related shares or share options, nor fringe benefits or pension plan benefits. As such, Euronav ensures the objectivity of non- executive directors and encourages the active participation of all directors for both the meetings of the Board of Directors and the Committee meetings. No loans or advances were granted to any director. 4.4 Remuneration policy for the Executive Committee and the employees Euronav’s remuneration packages intend to be fair and appro- priate to attract, retain and motivate management and be reasonable in view of the Company economics and the relevant practices of comparable peer companies. The Executive Committee and employee compensation packages are composed of two main elements: At present non-executive directors do not receive performance ■ fixed remuneration; ■ variable remuneration. The remuneration in 2014 of the members of the Board of Directors is reflected in the table below: In euro: Name Tanklog Holdings Ltd.1 Marc Saverys Paddy Rodgers2 Daniel R. Bradshaw Ludwig Criel Alexandros Drouliscos Julian Metherell3 John Michael Radziwill William Thomson4 Victrix NV5 Alice Wingfield Digby6 Fixed fee 110,000 110,000 - 60,000 60,000 60,000 45,000 60,000 60,000 15,000 60,000 Attendance fee Board Audit and Risk Committee Attendance fee Audit and Risk Committee 40,000 40,000 - 40,000 40,000 40,000 40,000 40,000 40,000 10,000 40,000 - - - 25,000 - 20,000 15,000 - 35,000 - - - - - 20,000 - 20,000 15,000 - 20,000 - - TOTAL 640,000 370,000 95,000 75,000 Remuneration Committee 4,500 - - - - 5,625 - - 4,500 - 4,500 19,125 1 Mr. Peter G. Livanos, as a permanent representative of Tanklog Holdings Limited, was appointed Chairman of the Board of Directors on 22 July 2014 in replacement of Mr. Marc Saverys who was appointed Vice-Chairman of the Board of Directors. 2Mr. Paddy Rodgers has waived his directors’ fees. 3 Mr. Julian Metherell was appointed independent director as of 8 May 2014 and member of the Audit and Risk Committee and the Corporate Governance and Nomination Committee as of his appointment. 38 Attendance fee Remuneration Committee Corporate Governance Attendance fee Corporate Governance and Nomination and Nomination Committee Committee Health, Safety, Security and Environmental Committee 3,125 Attendance fee Health, Safety, Security and Environmental Committee 10,000 - 20,000 - - - - - - - 20,000 20,000 20,000 80,000 5,625 2,500 2,500 - - - - - - - 2,500 13,125 20,000 15,000 15,000 - - - - - - - 20,000 70,000 - - - - - - - - - - - - - - - 2,500 10,000 3,125 8,750 10,000 30,000 1,401,000 TOTAL 187,625 150,000 0 170,625 117,500 165,625 132,500 112,500 179,500 25,000 160,125 EURONAV Remuneration (fixed and variable) The fixed and variable remuneration are determined according to suitable industry benchmarks for specific positions and individual employees’ abilities. accepted the options granted to them. At the date of this report all of the options have vested and two third is exercisable. The other one third can be exercised as from 1 January 2016 only. The Remuneration Committee decides annually on the remuneration of the members of the Executive Committee. Variable remuneration is determined on the basis of each individual’s performance throughout the year. The Company has no other rights or remedies than the ones provided for by civil law and company law to claim the variable remuneration back, in case it is attributed on the basis of incorrect financial statements. Within the framework of a stock option plan, the Board of Directors on 16 December 2013 granted options on its 1,750,000 treasury shares to the members of the Executive Committee for no consideration. 525,000 options were granted to the CEO and 1,225,000 options were granted to the other members of the Executive Committee. The exercise price of the options is EUR 5.7705. All of the beneficiaries have Within the framework of a management incentive plan, the Board of Directors has granted and the beneficiaries have accepted on 12 February 2015 65,433 Restricted Stock Units (RSU’s) and 236,590 stock options of which 22,268 RSU’s and 80,518 stock options were granted to the CEO and 43,165 RSU’s and 156,072 stock options were granted to the other members of the Executive Committee. The exercise price of the options is EUR 10.0475 with one third of the stock options vesting at each anniversary of the grant. The RSU’s will all vest on the third anniversary of the grant. All of the beneficiaries have accepted the options and RSU’s on the grant date. Variable remuneration differs amongst the members of the Executive Committee, though globally it can be stated that the variable remuneration represents 41% of the global remuner- ation for all members of the Executive Committee together. Attendance fee Remuneration Committee 20,000 - - - - 20,000 - - 20,000 - 20,000 80,000 Corporate Governance and Nomination Committee Attendance fee Corporate Governance and Nomination Committee - - - 5,625 2,500 - 2,500 - - - 2,500 13,125 - - - 20,000 15,000 - 15,000 - - - 20,000 70,000 Health, Safety, Security and Environmental Committee 3,125 - - - - - - 2,500 - - 3,125 8,750 Attendance fee Health, Safety, Security and Environmental Committee 10,000 - - - - - - 10,000 - - 10,000 30,000 TOTAL 187,625 150,000 0 170,625 117,500 165,625 132,500 112,500 179,500 25,000 160,125 1,401,000 4 Mr. William Thomson, who had been a member of the Audit and Risk Committee before, was appointed Chairman of the Audit and Risk Committee as of 23 March 2014 in replacement of Mr. Daniel R. Bradshaw who remains member of the Audit and Risk Committee. 5 Mrs. Virginie Saverys, as a permanent representative of Victrix NV, resigned from the Board of Directors immediately after the AGM of 8 May 2014. 6 Mrs. Alice Wingfield Digby was appointed Chairman of the Health, Safety, Security and Environmental Committee as of 3 September 2014 in replacement of Peter G. Livanos as permanent representative of Tanklog Holdings Limited, who remains member of the Health, Safety, Security and Environmental Committee. 39 The remuneration in 2014 of the members of the Board of Directors is reflected in the table below: In euro: Name Tanklog Holdings Ltd.1 Marc Saverys Paddy Rodgers2 Daniel R. Bradshaw Ludwig Criel Alexandros Drouliscos Julian Metherell3 John Michael Radziwill William Thomson4 Victrix NV5 Alice Wingfield Digby6 Fixed fee 110,000 110,000 - 60,000 60,000 60,000 45,000 60,000 60,000 15,000 60,000 Board 40,000 40,000 - 40,000 40,000 40,000 40,000 40,000 40,000 10,000 40,000 Attendance fee Audit and Risk Committee Attendance fee Audit and Risk Committee 25,000 20,000 20,000 15,000 20,000 15,000 35,000 20,000 4,500 - - - - - - - Remuneration Committee 4,500 - - - - - - - 5,625 4,500 19,125 - - - - - - - TOTAL 640,000 370,000 95,000 75,000 Corporate Governance Statement 4.5 Remuneration of the Executive Committee The remuneration in 2014 of the members of the Executive Committee (excluding the CEO) is reflected in the table below: In euro: Fixed remuneration Variable remuneration Pension and benefits Other components Three members 980,600 734,000 32,384 55,296 The current composition of the Executive Committee is set out in point 2.3 above. No loans or advances were granted to any member of the Executive Committee. The COO is entitled to a compensation equivalent to one year’s salary in the event of termination of his appointment. 4.6 Remuneration of the Chief Executive Officer The remuneration in 2014 of the CEO is reflected in the table below: In GBP: Fixed remuneration Variable remuneration Pension and benefits Other components Paddy Rodgers 351,228 295,296 12,500 10,779 The CEO has an employment contract. In the event of termination of his contract he would be entitled to a compensation equivalent to one year’s salary. No loans or advances were granted to the CEO. 4.7 Remuneration of the Auditor Klynveld Peat Marwick Goerdeler (KPMG) Permanent representatives: Serge Cosijns and Jos Briers For 2014, the worldwide audit and other fees in respect of services provided by the statutory auditor KPMG can be summarized as follows: In USD Audit services for the annual financial statements Audit related services Tax services TOTAL 2014 492,497 1,509,927 71,807 2,074,230 2013 404,190 15,940 31,481 451,611 The limits prescribed by Article 133 of the Belgian Company Code were observed. 40 EURONAV Corporate Governance Statement 41 5. Internal control and risk management systems Internal control can be defined as a system developed and imple- mented by management and which contributes to managing the activities of the Company, its efficient functioning and the efficient use of its resources, all in function of the objectives, the size and the complexity of its activities. Risk assessment can be defined as a process developed to identify possible events which may affect the Company and to manage the risks of the Company within the boundaries of its risk appetite. These risks (as described in more detail in the ‘Risk Factors’ section in this annual report) are the following: ■ economic (including slowing economic growth, inflation or fluctuations in interest and foreign currency exchange rates) and competitive risks (such as greater price competition); ■ operational: risks inherent in the operation of ocean-going vessels and the conversion of vessels and the operation of its FSO activities and effective management of its inter- national operations; ■ regulations: if the Company fails to comply with health, safety and environmental laws, regulations (including regu- lations about emissions) or requirements or is involved in legal proceedings in this regard, its operations and revenues may be adversely affected; ■ financing: the Company is subject to operational and financial restrictions in debt agreements; refinancing of loans may not always be possible; ■ terrorist attacks, piracy, civil disturbances and regional con- flicts in any particular country; ■ risks relating to the TI pool and VLCC Chartering, the joint ventures and associates. As part of the reference framework Euronav: ■ laid down its ethical values and business conduct rules in the ‘Code of Business Conduct and Ethics’ and the ‘Dealing Code’; ■ has also included these values and rules in the Staff Hand- book for all its employees; ■ clearly documented its corporate structure, organisation chart and job descriptions (and hence tasks, responsibilities and reporting lines); ■ clearly specified the delegations of authority for key deci- sions; ■ ensures proper communication between local management and Executive Committee throughout various committees such as management committee, pool committee, revenue committee, insurance committee, …; ■ has embedded group policies in the main business process- es, which Euronav applies group-wide, covering areas such as: fixed assets, hedging, IT systems, human resources, treasury, … Euronav also has developed a “Health, Safety, Quality and Environmental (HSQE) Management System” which integrates health, safety, environment and quality management into a system that fully complies with the ISM Code for the “Safe Operation of Ships and Pollution Prevention”. To support the financial reporting, Euronav has a closing and reporting checklist in place assuring communication of time- lines and clear assignment of tasks and responsibilities. Specific procedures are in place in order to assure completeness of financial accruals. The details are set out in the finance manual. A mandatory training on internal control is organised for all new and current employees. Compliance is monitored by means of annual assessments attended by senior management and their outcome is reported to corporate finance, which presents a consolidated report to the Audit and Risk Committee. More details on the exact role and responsibilities of the Audit and Risk Committee in relation to the internal control and risk management systems can be found in the section on its powers, described above. In addition, the Compliance Officer assesses the application of the Corporate Governance Charter. Euronav has outsourced the internal audit function to Moore Stephens, upon recommendation of the Audit and Risk Committee. Moore Stephens reviews and analyses strategic, operational, financial and IT risks and discusses the findings with the Audit and Risk Committee. Euronav has appointed KPMG as its external auditor to verify its financial results and compliance with Belgian legislation. The external auditor issues a report at least twice a year which they submit to the Audit and Risk Committee. They are also invited to attend the annual general meeting to present their report. 5.1 Hedging policy Euronav hedges part of its exposure to changes in interest rates on borrowings and all borrowings contracted for the financing of vessels are on the basis of a floating interest rate, increased by a margin. The Group does not hold or trade derivatives for speculative purposes. Euronav uses derivative financial instru- ments - such as foreign exchange forward contracts, interest rate swaps, purchase of CAP options, sale of FLOOR options, currency swaps and other derivative instruments – solely to manage its exposure to interest rates and foreign currency exchange rates and to achieve an appropriate mix of fixed and floating rate exposure as defined by the Group. For a more detailed position of Euronav’s financial instruments, we refer to note 18 of the Financial Statements. 42 EURONAV 5.2 Tonnage Tax Regime and Risks Tonnage Tax Regime Shortly after its incorporation, Euronav applied for treat- ment under the Belgian tonnage tax regime. It was declared eligible for this regime by the Federal Finance Department on 23 October 2003. Following the acquisition of the Tanklog fleet and Euronav’s express desire to operate the vessels under Greek flag, Euronav was deemed eligible for tonnage tax in Greece. As a result, for a ten-year period, Euronav’s profits will in principle be determined nominally on the basis of the tonnage of the vessels it operates. After this first ten-year period had elapsed, the tonnage tax regime has been automatically renewed for another ten-year period. This tonnage tax replaces all factors that are normally taken into account in traditional tax calculations, such as profit or loss, operating costs, depreciation, gains and the offsetting of past losses of the revenues taxable in Belgium. Some of Euronav’s subsidiaries are subject to the ordinary Belgian corporate income tax regime, however, which benefit from a tax investment allowance due to the recent acquisitions of certain VLCCs. However, Euronav has decided to apply for the Belgian tonnage tax regime for those subsidiaries. Risks associated to the business Due to the cyclical nature of its activities Euronav’s operating results have experienced fluctuations on an annual or quarterly basis in the past. This will probably remain the case in the future. The fluctuations in Euronav’s operating results are due to various factors, a number of which lie outside Euronav’s control. The tanker market is historically a cyclical one. It is a market that experiences high volatility as a result of changes in supply and demand for seaborne transportation of crude oil. Firstly, the supply of tanker capacity is affected by the number of newly constructed vessels, the scrap percentage of existing tankers and the changes in laws and regulations. Secondly, the demand for tankers is highly sensitive to global and regional market conditions and to crude oil production levels. The nature and timing of all these factors, some of which are of a geopolitical nature, are unpredictable, and may have a significant impact on Euronav’s activities and operating results. Euronav is subject to operational and financial restrictions in debt agreements Euronav’s existing debt agreements impose operational and financial restrictions which have an impact on, and in some respects limit or preclude, among other things, the possibility for Euronav and its subsidiaries of taking on additional debts, pledging securities, selling shares in subsidiaries, making certain investments, entering into mergers and acquisitions, buying and selling of vessels, or paying dividends without the lender’s approval. Euronav’s loan agreements also stipulate a certain minimum ratio of market value for vessels and other securities. The financial institutions may reduce the term of the debt under such loan agreements, and seize the securities used to guarantee the loan in the event of bankruptcy, including Euronav’s failure to honour these agreements in full. Under any of these circum- stances, there is no guarantee that Euronav will have enough funds or other resources to meet all its commitments. Euronav is subject to the risks inherent in the operation of ocean-going vessels Euronav’s activities are subject to various risks, including extremes of weather, negligence of its employees, mechanical defects in its vessels, collisions, severe damage to vessels, damage to or the loss of freight and the interruption of commer- cial activities due to political circumstances, hostilities or strikes. Moreover, the operation of ocean-going vessels is subject to the inherent possibility of maritime disasters such as oil spills and other environmental accidents, and to the obligations arising from the ownership and management of vessels in international trade. Euronav believes that its current insurance policies are sufficient to protect it against possible accidents, and that it is also adequately covered against environmental damage and pollution, as required by relevant legislation and standard practices in the sector. However, there is no guarantee that such insurance will remain available at rates which are regarded as reasonable by the Company, or that such insurance will remain sufficient to cover all losses incurred by Euronav or the cost of each compensation claim made against Euronav, or that its insurance policies will cover the loss of income resulting from a vessel becoming non-operational. Should compensation claims be made against Euronav, its vessels may be impounded or subject to other judicial procedures. Euronav’s activities are subject to important environmental legislation which may cause Euronav’s expenditure to increase abruptly Euronav’s activities are subject to extensive, changing environ- mental legislation. In the past, Euronav has incurred significant expenses in order to comply with such legislation and regula- tions, including spending on changes to vessels and to opera- tional procedures. It expects such expenditure to remain high. Additional laws and regulations could be introduced restricting Euronav’s ability to pursue its activities, or causing its costs to increase substantially. That could have a negative impact on Euronav’s activities, financial situation and operating results. 43 Corporate Governance Statement The prospects for a particular period may not be attained during that period as a result of unpredictable economic cycles Although various analysts provide forecasts regarding the development of the markets, these do not always precisely reflect future freight rates, which tend to be unpredictable. The forecasting of freight rates is difficult due to the uncertain prospects of the global economy. Euronav may need additional capital in the future and may prove unable to find suitable funds on acceptable terms Euronav has made considerable investments in recent years. Although most of these projects are satisfactorily financed, the risk exists that the financial markets will be unable to provide sufficient funds to continue supporting such projects. Euronav’s activities are subject to fluctuations in exchange rates and interest rates, causing pronounced variations in its net results Euronav’s income is mainly expressed in USD, although some operating costs are expressed in other currencies, especially the Euro. This partial mismatch between operating income and expenses could lead to fluctuations in Euronav’s net results. Euronav is subject to risks inherent in conversion of vessels into Floating, Storage and Offloading services operation (FSO) units and the operation of its FSO activities Euronav’s FSO activities are subject to various risks, including delays, cost overruns, negligence of its employees, mechanical defects in its machinery, collisions, severe damage to vessels, damage to or loss of freight, piracy or strikes. In case of delays in delivering FSO under service contract to its end-user, contracts can be amended and/or cancelled. Moreover, the operation of FSO vessels is subject to the inherent possibility of maritime disasters such as oil spills and other environmental accidents, and to the obligations arising from the ownership and manage- ment of vessels in international trade. Euronav has established sufficient current insurance against possible accidents and environmental damage and pollution as requested by relevant legislation and standard practices in the sector. However, there is no guarantee that such insurance will remain available at rates which are regarded as reasonable by Euronav or that such insurance will remain sufficient to cover all losses incurred or the cost of each compensation claim made against Euronav, or that its insurance policies will cover the loss of income resulting from a vessel becoming non-operational. Should compensation claims be made against Euronav, its vessels may be impounded or subject to other judicial procedures. Refinancing of loans may not always be possible There is no assurance that Euronav will be able to repay or refinance its facilities on acceptable terms or at all as they become due upon their respective maturity dates. Financial markets and debt markets are not always open independently of the situation of Euronav and the lack of debt finance may adversely affect Euronav’s operations business and results of operations. Risks relating to the TI pool and VLCC Chartering, the joint ventures and associates may adversely affect Euronav’s operations, business and results of operations Although efforts are made to identify and manage the various potential risks within Euronav in the same way, this is not always possible or enforceable. In the case of the TI pool and VLCC Chartering, joint ventures and associates, differing views from the other partner(s) may arise, as a result of which, according to Euronav, specific treatment of the risks may be limited or even prevented. The different approaches to these risks may lead to consequences other than those which Euronav would have incurred or would have wished to incur, which may adversely affect Euronav’s operations, business and results of operations. Acts of piracy on ocean-going vessels could adversely affect Euronav’s business Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Gulf of Guinea and in the Gulf of Aden off the coast of Somalia. Over the past year, the frequency of piracy incidents in the Gulf of Aden and in the Indian Ocean has decreased significantly, whereas there has been an increase in the Gulf of Guinea and the South China Sea. If these piracy attacks result in regions in which the Company’s vessels are deployed being characterized by insurers as “enhanced risk” areas, premiums payable for such coverage could increase significantly and in extreme circumstances, such insurance coverage may be more difficult to obtain. In addition, crew costs, including costs which may be incurred to the extent the Company employs on board security guards, could increase in such circumstances. Detention as a result of an act of piracy against the Company’s vessels, or an increase in cost, or unavail- ability of insurance for the vessels, could have a material adverse impact on the Company’s business, results of operations, cash flows, financial condition and ability to pay dividends. In response to piracy incidents, particularly in the Gulf of Aden off the coast of Somalia and following consultation with regulatory authorities, Euronav follows BMP4 (Best Management Practices) which is a guide that has been produced jointly by EUNAVFOR, the NATO Shipping Centre and UKMTO (UK Maritime Trade Operations) or the Company may even consider to station armed guards on some of its vessels. Whilst use of armed guards has been proven to deter and prevent the hijacking of the Company’s vessels, it may also increase the risk of liability for death or injury to persons or damage to personal property, which could adversely impact its business, results of operations, cash flows, financial condition and ability to pay dividends. 44 EURONAV 6. Information to be included in the annual report as per Article 34 of the Royal Decree of 14 november 2007 6.1 Capital structure At the time of preparing this report the registered share capital of Euronav NV amounts to USD 173,046,122.14 and is represented by 159,208,949 shares without par value. The shares are in registered or dematerialised form. Euronav currently holds 1,750,000 own shares which were bought back at an average price of EUR 18.16. At the time of preparing this report, no convertible bonds or perpetual preferred equity instruments of the Company were outstanding. Besides the stock option plans for members of the Executive Committee (please refer to section 4.4 of this Corporate Governance Statement), there are no other share plans, stock options or other rights to acquire shares of the Company in place. 6.2 Restrictions on the exercise of voting rights or on the transfer of securities Each share entitles the holder to one vote. There are no secu- rities issued by the Company which would entitle the holder to special voting rights or control. The articles of association contain no restrictions on the voting rights, and each share- holder can exercise his voting rights provided he is validly admitted to the shareholders’ meeting and his rights are not suspended. Pursuant to Article 12 the Company is entitled to suspend the exercise of rights attached to shares belonging to several owners. No person can vote at the shareholders’ meeting using voting rights attached to shares for which the formalities to be admitted to the general meeting as laid down in Article 34 of the articles of association or the law have not been fulfilled in time or accurately. Likewise, there are no restrictions in the articles of association or by law on the transfer of shares. 6.3 General shareholders’ meeting The ordinary general shareholders’ meeting is held in Antwerp on the second Thursday of the month of May, at 11 a.m., at the registered office or any other place mentioned in the convening notices. If such date would be a bank holiday, the annual shareholders’ meeting would take place on the preceding business day. 6.4 Agreements amongst shareholders or other agreements The Board of Directors is not aware of any agreements among major shareholders or any other shareholders that may result in restrictions on the transfer of securities or the exercise of voting rights. The major shareholders have not entered into a shareholders’ agreement or a voting agreement, nor do they act in concert. There are no agreements between the Company and its employees or directors providing in any compensation in case of resignation or dismissal on account of public acquisition offer. Apart from the customary change of control provision in the financing agreements and the long-term incentive plan Euronav has entered into, there are no other important agreements to which the Company is a party and which enter into force, be amended or be terminated, in case of a change of control of the Company following a public offer. 6.5 Appointment and replacement of directors The articles of association (Article 17 and following) and section III.2 of the Euronav Corporate Governance Charter contain specific rules concerning the (re)appointment, replacement and the evaluation of directors. The general shareholders’ meeting appoints the Board of Directors. The Board of Directors submits the proposals for the appointment or re-election of directors - supported by a recommendation of the Corporate Governance and Nomination Committee - to the general shareholders’ meeting for approval. If a director’s mandate becomes vacant in the course of the term for which the director was appointed, the remaining Board members may provisionally fill the vacancy until the following general shareholders’ meeting, which will decide on the final replacement. A director nominated under such circumstances is only appointed for the time required to terminate the mandate of the director whose place he has taken. Appointments of directors are made for a maximum of four years. After the end of his/her term, each director is eligible for re-appointment. 6.6 Amendments to articles of association The articles of association can be amended by the extra ordinary general meeting in accordance with the Belgian Company Code. Each amendment to the articles of association requires a qualified majority of votes. 6.7 Authorisation granted to the Board of Directors to increase share capital The articles of association (Article 5) contain specific rules concerning the authorisation to increase the share capital of the Company. By decision of the shareholders’ meeting held on 24 February 2014, the Board of Directors has been authorised to increase the share capital of the Company in one or several times by a total maximum amount of USD 73,000,000 during a period of five years as from the date of publication of the decision, subject to the terms and conditions to be determined by the Board of Directors. 6.8 Authorisation granted to the Board of Directors to acquire or sell the Company’s own shares The articles of association (Article 15 and 16) contain specific rules concerning the authorisation to acquire or sell the Company’s own shares. Pursuant to a decision of the extra- ordinary shareholders’ meeting of 24 February 2014 which has 45 Corporate Governance Statement been adopted in accordance with the relevant legal provisions, the Company has been authorised to acquire and sell the Company’s own shares or profit shares, without a decision of the shareholders’ meeting being required, for a period of three years as from the publication in the annexes to the Belgian State Gazette of the aforementioned decision, irrespective of whether these include the entitlement to vote, by way of a purchase or an exchange, directly or through a person acting in its own name but for the account of the Company, if such acquisition is necessary to prevent imminent and serious harm to the Company, including a public purchase offer for the Company’s securities (Article 15 of the articles of association). The Board of Directors can, in accordance with the Belgian Company Code, without prior permission of the shareholders’ meeting, to prevent imminent and serious harm to the Company, including a public purchase offer for the Company’s securities, sell acquired shares or profit shares of the Company on the stock exchange or by way of an offer to sell, addressed to all shareholders under the same conditions, during a period of three years as from the publication in the Annexes to the Belgian Official Gazette, of the decision, taken by the general meeting of 24 February 2014 (Article 16 of the articles of association). 7. Appropriation of profits Under its new dividend policy for the group, Euronav intends to distribute at least 80% of its annual net result for future dividends. The yearly dividend is paid in two instalments: first as an interim dividend then as a balance payment corresponding to the final dividend. The interim dividend payout ratio, which may typically be more conservative than the yearly payout of at least 80% of net results, is announced together with the half year results and is paid in September. The final dividend is proposed by the Board of Directors (and is subject to approval by the shareholders). It is announced in March, together with the group full year results and is paid after the approval of shareholders at the annual shareholders meeting which takes place the second Thursday of the month of May and will be paid within the month of May. 8. Code of Conduct The Board of Directors approved the Euronav Code of Business Conduct and Ethics at its meeting of 9 December 2014. The purpose of the Code of Business Conduct and Ethics is to assist all the Euronav employees to enhance and protect the good reputation of Euronav. text of the Code of Business Conduct and Ethics can be found on the Company’s website www.euronav.com. 9. Measures regarding insider dealing and market manipulation In accordance with Directive 2003/6/EC on insider dealing and market manipulation (market abuse), at its meeting of 9 December 2014 the Board of Directors approved an updated version of the Company’s Dealing Code and Policies and Procedures to Detect and Prevent Insider Trading, also called the “Dealing Code”. The Dealing Code includes restrictions on trading in Euronav shares during so called “closed periods”, which have been in application for the first time in 2006. Directors and employees who intend to deal in Euronav shares must first request clearance from the Compliance Officer. Transactions that are to be disclosed in accordance with the Royal Decree of 5 March 2006 are being disclosed at the appropriate time. 10. Guberna As Euronav strongly believes in the merits of corporate gover- nance principles and is keen on further developing its corporate governance structure, Euronav joined Guberna as institutional member at the end of 2006. Guberna (www.guberna.be) is a knowledge centre promoting corporate governance in all its forms and offers a platform for the exchange of experiences, knowledge and best practices. 11. Gender diversity In accordance with provision 2.1 of the Corporate Governance Code, the Board of Directors must be composed in a manner compliant with the principles of gender diversity as well as of diversity in general. The Board of Directors of Euronav currently consists of nine men and one woman with varying yet comple- mentary knowledge bases and fields of experience. The Board of Directors has been made aware of the law of 28 July 2011 on gender diversity and the recommendations issued by the Corporate Governance Committee following the enacting of the law with regard to the representation of women on Boards of Directors of listed companies. 12. Appropriation accounts The result to be allocated for the financial year amounts to USD -67,388,790.62. Together with the transfer of USD 351,904,972.66 from the previous financial year, this gives a profit balance to be appropriated of: USD 284,516,182.04. The Code of Business Conduct and Ethics articulates the poli- cies and guidelines that highlight the values of Euronav, more particularly in its relationship with customers, shareholders and other stakeholders as well as society in general. The full It will be proposed to the annual shareholders’ meeting of 13 May 2015 to distribute a gross dividend in the amount of USD 0.25 per share to all shareholders. The dividend will be payable 46 EURONAV as from 22 May 2015. The share will trade ex-dividend as from 18 May 2015 (record date 19 May 2015). The dividend to holders of Euronext shares will be paid in EUR at the USD/EUR exchange rate of the record date. The proposal put before the annual shareholders’ meeting for the dividend over the fi nancial year 2014 from profi ts carried forward is justifi ed in view of the stronger tanker markets since the end of 2014 which have continued in 2015. The gross dividend of USD 0.25 per share will make a total distribution in the amount of just below USD 40 million (USD 39,802,237.25). This acceleration of returning excess cash to shareholders refl ects the Board’s and management’s commitment to creating and sustaining shareholder value. The USD 0.25 gross dividend per share paid from profi ts carried forward over fi nancial year 2014 is, on this occasion, considered part of the new dividend policy for 2015. ■ capital and reserves ■ dividends ■ carried forward USD 0.00 USD 39,802,237.25 USD 244,713,944.79 27 March 2015 Board of Directors Corporate Governance Statement 47 The Euronav Group Euronav Ship Management SAS Euronav UK Agencies Ltd. Euronav Ship Management SAS, with head offi ce in Nantes in the South of Brittany, France and branch offi ce in Antwerp, Belgium, is besides the traditional shipping activities, primarily responsible for Euronav’s offshore projects and the manage- ment of vessels for the offshore industry. That includes tender projects, conversion works as well as performing the manage- ment of these vessels including crewing, technical procurement, accounting and quality. All vessels are registered in Belgium or France except for two vessels which are registered in the Marshall Islands. That guarantees high levels of quality, safety and reliability. The Nantes offi ce and the Antwerp offi ce also provide crew management for Euronav’s French fl ag and Belgian fl ag trading oil tankers. Euronav Ship Management (Hellas) Ltd. In November 2005 Euronav Ship Management (Hellas) Ltd. was established in Piraeus, Greece, as branch offi ce. Euronav Ship Management (Hellas) Ltd. engages in the ship management of the trading ocean-going oil tankers of Euronav and the super- vision of the construction of newbuildings. Ship management includes crewing, technical, procurement, accounting, safety and quality assurance. The vessels managed by Euronav Ship Management (Hellas) Ltd. are registered in Greece, France, Belgium or the Marshall Islands. Located in the heart of London, Euronav UK Agencies Ltd. is a commercial agency of the Euronav Group. Having a London presence enables Euronav to work closely with the major London-based clients and international brokering houses. At the end of November 2014 Euronav UK Agencies Ltd. moved to a new offi ce: 99 Kings Road, London, SW3 4PA. Euronav Hong Kong Ltd. Euronav Hong Kong Ltd. is the holding company of three wholly- owned subsidiaries and seven 50% joint venture companies. The wholly-owned subsidiaries that fall under Euronav Hong Kong Ltd. are Euronav Ship Management (Hellas) Ltd. (see short summary above), Euronav Luxembourg SA and Euro-Ocean Ship Management Ltd., a ship management company that handles the crew management of the FSO Asia and FSO Africa. TI Asia Ltd. and TI Africa Ltd., 50% joint venture companies with OSG, are the owners of respectively the FSO Asia and FSO Africa, both currently employed at the Al Shaheen fi eld offshore Qatar. Fontvieille Shipholding Ltd., Moneghetti Shipholding Ltd., Fiorano Shipholding Ltd. and Larvotto Shipholding Ltd., 50% joint venture companies with JM Maritime, each own one Suezmax vessel. The 50% joint venture company Kingswood fully owns Seven Seas Shipping Ltd., which owns one VLCC fl ying Panamanian fl ag. 48 EURONAV Great Hope Enterprises Ltd. Great Hope Enterprises Ltd. is a 50% joint venture company which owned one VLCC, the Ardenne Venture, which was delivered to its new owners in January 2014. Current structure Euronav NV Belgium 100% 100% 100% 100% 100% 100% 50% Euronav Ship Management SAS France Euronav Shipping NV Euronav Tankers NV Euronav SAS Euronav UK Ltd. France United Kingdom Euronav Hong Kong Ltd. Hong Kong Great Hope Enterprises Ltd. Hong Kong 100% 100% 50% 100% 50% 50% 50% 50% 50% 50% 50% 50% 100% Euronav Ship Management (Antwerp) Branch Offi ce Belgium Kingswood Euronav Ship Management (Hellas) Ltd. Euronav Luxembourg SA Fontvieille Shipholding Ltd. Moneghetti Shipholding Ltd. Larvotto Shipholding Ltd. Fiorano Shipholding Ltd. Liberia Marshall Islands Luxembourg Hong Kong Hong Kong Hong Kong Hong Kong Africa Conversion Corp. Asia Conversion Corp. TI Africa Ltd. TI Asia Ltd. Marshall Islands Marshall Islands Hong Kong Hong Kong E.S.M.C. Euro-Ocean Ship Manage- ment Ltd. Cyprus 100% 100% Euronav Ship Management (Hellas) Branch Offi ce Greece Seven Seas Shipping Ltd. Marshall Islands The Euronav Group 49 Products and services For our clients To operate in a manner that is intended to contribute to the success of their business by setting increasingly higher standards of quality and reliability. Tanker shipping Euronav is a vertically integrated owner, operator and manager able to provide complete shipping services in addition to the carriage of crude oil on its fleet of modern large tankers. The crude oil seaborne transportation market is cyclical and highly volatile requiring flexible and proactive management of assets in terms of fleet composition and employment. Euronav increases exposure to the market through opportunistically entering the market by chartering vessels from other owners and tonnage providers whilst maintaining a core fleet of high quality owned or controlled tonnage. On 16 March 2015 the Euronav core fleet had a weighted average age of less than 8 years. Euronav operates its fleet both on the spot and the period market. Most of Euronav’s VLCCs are operated in the TI pool. Euronav’s Suezmax fleet is partly fi xed on long-term charter while the other part is operated on the spot market by Euronav directly. 50 EURONAV VLCC fl eet The Tankers International (TI) pool Euronav’s entire owned VLCC fl eet fl ies Belgian, Greek, French, Panamanian or Marshall Islands fl ag. Euronav is a founding member of the TI pool, which commenced operation in January 2000. The TI pool was established by Euronav and other leading tanker companies to meet the global transportation requirements of international oil companies and other major charterers. The TI pool operates one of the largest modern fl eets available in the world. The pool consisted of 40 double hull VLCCs on 16 March 2015. By participating in a pool, Euronav and its customers benefi t from the economies of scale inherent to such an arrangement. Furthermore, the TI pool has been able to enhance vessel earnings by improved utilisation (increased proportion of laden days versus ballast days) through use of combination voyages, contracts of affreightment and other effi ciencies facilitated by the size and quality of its modern VLCC fl eet. By operating together scores of modern vessels, the TI pool aims to have a modern high quality VLCC available in the right place at the right time. Average age profi le of Euronav owned VLCC and V-Plus (and TC-in) 41% 0-5 years old 41% 5-10 years old 18% 10-15 years old Suezmax fl eet Euronav’s entire owned Suezmax fl eet fl ies Greek or Belgian fl ag. The use of a national fl ag together with operational and maintenance standards in terms of age and performance, which are higher than industry norm, enables Euronav to employ part of its fl eet on time charter. In order to counterbalance the spot employment of its VLCC fl eet, Euronav chooses to employ a part of its Suezmax fl eet on long-term time charter. This strategy allows the Company to benefi t from a secure, steady and visible fl ow of income. Euronav owns and employs 23 Suezmax vessels. Euronav’s Suezmax charterers are leading oil majors, refi ners and oil traders such as Valero, Petrobras, Total, Chevron and Sun Oil. On 16 March 2015 Euronav traded 17 Suezmax vessels on the spot market. Far East US Gulf U S G ulf – A sia VLCC Suezmax both VLCC and Suezmax Europe Mid East M i d E a s t West Africa – Eu r p e o M W e s t A f r i c a - A s i a Mid East – Europe Mid East – U f ul S G West A f r i c a W e – st Africa – US Gul f Europe B r a zil - F E u r o p a r E a s t e - F a r E a st Asia i a i d East - A s M i d E a s t – P acific Rim Products and services 51 Average age profi le of Euronav owned Suezmax (and TC-in) 17% 0-5 years old 44% 5-10 years old 39% >10 years old Floating Production, Storage and Offl oading/Floating Storage and Offl oading (FPSO/FSO) For areas without pipeline infrastructure and where the production platform has no storage capabilities (fi xed platform, MOPU, Spar, TLP, Semi), FSOs are perfect because of their very large storage capacity and ability to be moored in almost any water depth. They have no process topsides, which makes them relatively simple to convert from existing tankers, as compared to an FPSO. FSOs can be relocated to other fi elds and some have also been converted to FPSOs. Furthermore, 52 EURONAV there is an established market for leasing FSOs, which can help commercialize marginal or remote fi elds. The FSO system is now one of the most commercially viable concepts for remote or deep-water oil fi eld developments. Euronav’s initial exposure to those markets was with VLCC deployments in the Gulf and in West Africa back in 1998. The Maersk Oil Qatar (MOQ) project (cf. below) was engaged in because of the specifi c assets that Euronav owned: two of the only four V-Plus vessels that exist in the world, the TI Asia (which belonged to Euronav) and the TI Africa (which belonged to OSG). The TI Europe (fully owned by Euronav) is one of the only two remaining unconverted V-Plus vessels worldwide. The Company strongly believes that the long-term employment of this not yet converted unit lies in the offshore market. Most of the new oil fi eld discoveries are done offshore and many of them are gigantic oil fi elds (Brazil, West-Africa, Australia) which should require very large FSOs. Euronav therefore believes there will be a demand for this unit by offshore fi eld operators. By engaging in the MOQ project, Euronav re-entered the offshore market. MOQ awarded two contracts for the provision of FSO services on the Al Shaheen oil fi eld offshore Qatar where both converted V-Plus vessels are currently operating through a 50% joint venture with OSG. Both FSOs are managed in-house by Euronav. Products and services 53 Ship Management Fleet management is conducted by three wholly-owned subsidiaries: Euronav Ship Management SAS, Euronav SAS and Euronav Ship Management (Hellas) Ltd. The skills of its seagoing offi cers and crew and its shore-based staff, including captains and engineers, give Euronav a competitive edge in high quality, maintenance and operation of vessels, as well as project development and execution. Euronav manages in-house a fleet of modern double hull crude oil carriers ranging from Suezmax to Very Large and Ultra Large Crude Oil Carriers and FSO. Euronav’s fleet trades worldwide in some of the most diffi cult weather condi- tions and sea states, to ports and for charterers with the strictest requirements. The vessels and crews are in constant interaction with the shore staff through regular onboard visits, briefi ng and debriefi ng discussions, sophisticated communication means and conferences ashore and on board or in-house training sessions. Superintendents, internal and external auditors, customers, as well as national and international regulatory bodies assess vessel and crew performance. Euronav has excellent relations with all oil majors. The organisation, as well as the vessels, has successfully passed numerous oil major vetting assessments. to a teamwork culture where people work together for the overall success of the Company, on shore and at sea. Euronav practices genuine performance planning and appraisal, training and development, and promotion from within. Its policies aim to enhance and reward performance, engage its people and retain key talent. Euronav delivers and operates high-quality, innovative fl oating production solutions for the offshore oil industry. We do so by cultivating a talented team that works with integrity, communicates openly, serves the community and protects the environment. Euronav maintains an integrated ship management approach with the following qualities: ■ proven experience in managing oil tankers; ■ experienced offi cers and crews with professional credentials; ■ professional relations based on merit and trust; ■ commitment to improving the quality of working life at sea; ■ safety and quality assurance including training, auditing and vetting; All services are provided with the ultimate regard for the health, safety, security, environmental and quality standards applicable to the maritime transportation industry as a primary concern. Euronav is committed to continuous enhancement of the safety, security and quality of the fleet’s operation and employment as well as to the protection of the environment. Euronav is devoted ■ modern and effective computer-based management and training systems; ■ human resources policies where people work together for common goals; ■ hands-on technical management backed by the latest software platforms and communication systems; 54 EURONAV ■ experience in long-term asset protection and upgrade; ■ open communication and transparency in reporting. Full range of services The Euronav Group provides a full range of ship management services: ■ full technical services; ■ fl eet personnel management of experienced offi cers and crew; Euronav utilises a set of clearly defi ned Key Performance Indicators (KPIs) as well as standardized inspection reports which are thoroughly evaluated to facilitate the measurement of performance such as: ■ vessel reliability; ■ crew and shore staff retention and wellbeing; ■ safety and environmental performance; ■ vessel energy effi ciency; ■ vetting and port state controls; ■ planned and condition-based maintenance; ■ dry-docking planning and repairs based on work list from ■ comprehensive health, safety, quality and environmental dry-dock to dry-dock; protection management system; ■ quarterly management review meetings monitor the trend and set the course of actions. ■ insurance & claims handling; ■ global sourcing of bunkering, equipment and services for optimum synergies, pricing and quality; ■ fi nancial, information technology, human resources and legal services to improve performance of the Group’s human, fi nancial and information assets; ■ project management for: - newbuilding supervision, including pre- and post-contract consultancy and technical support; - FSO conversions; - upgrade of assets for improved operational effi ciency; commercial management; operational management. ■ ■ Ship Management 55 Fleet of the Euronav Group as per 31 December 2014 Owned VLCC and V-Plus Owned Built 100% 100% 100% 100% 100% TBO 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2012 2009 2001 2001 2004 2010 2010 2011 2013 2012 2012 2012 2008 2006 2007 2008 2007 2009 2008 2007 2011 2011 2012 2012 2002 Dwt 320,350 315,981 298,330 298,412 305,688 302,550 302,624 302,550 302,965 314,000 314,000 314,000 307,284 307,284 307,284 307,284 307,284 307,284 307,284 307,284 323,527 323,183 314,000 314,000 441,561 Draft 22.50 22.50 21.13 21.13 22.42 21.03 21.03 21.03 21.64 22.37 22.38 22.37 22.72 22.72 22.72 22.72 22.72 22.30 22.72 22.72 21.32 22.62 22.10 22.10 24.53 Flag Greek French French French French French Greek Greek Belgian Belgian Belgian Belgian Marsh I Marsh I Marsh I Marsh I Marsh I Belgian Belgian Marsh I French French Belgian Belgian Belgian Length (m) Shipyard 330.00 333.00 333.00 332.94 332.00 333.00 333.00 333.00 330.00 319.03 319.03 333.14 321.67 321.70 321.65 321.60 321.70 321.66 321.67 321.64 319.57 319.57 319.57 319.57 380.00 Samsung H.I. Hyundai H.I. Hitachi Zosen Hitachi Zosen Daewoo H.I. Universal Universal Universal Japan Marine United Hyundai H.I. Hyundai H.I. Hyundai H.I. Dalian S.I. Dalian S.I. Dalian S.I. Dalian S.I. Dalian S.I. Dalian S.I. Dalian S.I. Dalian S.I. STX O&S STX O&S STX O&S STX O&S Daewoo H.I. Name Alsace Antarctica1 Artois Famenne Flandre1 TBN Hakata2 Hakone Hirado3 Hojo Ilma Ingrid Iris Nautic Nautilus Navarin Nectar Neptun Newton Noble Nucleus Sandra Sara Simone Sonia TI Europe 56 EURONAV Name TI Hellas TI Topaz V.K. Eddie Owned 100% 100% 50% Built 2005 2002 2005 Dwt 319,254 319,430 305,261 Draft 22.52 22.52 22.42 Flag Length (m) Shipyard Belgian Belgian Panama 332.99 332.99 332.00 Hyundai H.I. Hyundai H.I. Daewoo H.I. TC Out = time chartered out Marsh I = Marshall Islands TBN = to be named TBO = to be owned 1In 2014 the Antarctica and the Flandre have been in dry dock and underwent a special survey (standard procedure for ships every 5 years) in Singapore in March and in June respectively. 2Vessel expected to be delivered in the second quarter of 2015. 3Vessel delivered to Euronav on 26 February 2015. VLCC vessels sold in the course of 2014 Name Antarctica4 Luxembourg Olympia Owned 100% 100% 100% Built 2009 1999 2008 Dwt 315,981 299,150 315,981 Draft 22.50 22.02 22.50 Flag Length (m) Shipyard French Marsh I French 333.00 332.06 333.00 Hyundai H.I. Daewoo H.I. Hyundai H.I. 4Vessel delivered to its new owners on 15 January 2015. Owned FSO (Floating, Storage and Offl oading) Name FSO Africa FSO Asia Owned 50% 50% Built 2002 2002 Dwt 442,000 442,000 Draft 24.53 24.53 Flag Length (m) Shipyard Marsh I Marsh I 380.00 380.00 Daewoo H.I. Daewoo H.I. Fleet of the Euronav Group 57 Owned Suezmax Name Owned Built Cap Charles Cap Diamant Cap Felix Cap Georges Cap Guillaume Cap Jean Cap Lara Cap Laurent Cap Leon Cap Philippe Cap Pierre Cap Romuald Cap Theodora Cap Victor Capt. Michael Devon Eugenie5 Felicity5 Filikon Finesse Fraternity5 Maria 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 50% 50% 50% 100% 100% 100% 100% 50% 2006 2001 2008 1998 2006 1998 2007 1998 2003 2006 2004 1998 2008 2007 2012 2011 2010 2009 2002 2003 2009 2012 Dwt 158,881 160,044 158,765 146,652 158,889 146,627 158,826 146,645 159,049 158,920 159,083 146,640 158,819 158,853 157,648 157,642 157,672 157,667 149,989 149,994 157,714 157,523 Draft 17.00 15.62 17.02 17.00 17.00 16.12 17.00 16.12 17.02 17.00 17.02 16.12 17.00 17.00 17.00 17.02 17.02 17.02 15.95 15.95 17.02 17.00 Flag Greek Greek Belgian Greek Greek Greek Greek Greek Greek Greek Greek Greek Greek Greek Greek Greek Greek Belgian Greek Greek Belgian Greek Length (m) Shipyard 274.00 277.32 274.00 274.06 274.00 274.06 274.00 274.06 274.29 274.00 274.29 274.06 274.00 274.00 274.82 274.82 274.00 274.00 274.20 247.20 274.20 274.82 Samsung H.I. Hyundai H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Samsung H.I. Universal Universal Samsung H.I. Samsung H.I. 5In 2014 the Eugenie, the Fraternity and the Felicity have been dry-docked and underwent a special survey. The Eugenie in Setubal, Portugal (October), the Felicity in Constanta, Romania (June) and the Fraternity in Ras Laffan, Qatar (November). Time chartered in VLCC Name KHK Vision Maersk Hirado6 Owned 100% 100% Built 2007 2011 Dwt 305,749 302,550 Draft 22.40 21.03 Flag Length (m) Singapore Singapore 332.00 330.00 Shipyard Daewoo H.I. Universal 6Time charter effective till delivery to Euronav as new owner which took place on 26 February 2015. Time chartered in Suezmax Name Suez Hans Owned 100% Built 2011 Dwt 158,574 Draft 17.17 Flag Length (m) Shipyard Marsh I 274.33 Hyundai H.I. 58 EURONAV Fleet of the Euronav Group 59 Health, Safety, Quality, Environment and Society For our society To transport an essential source of energy in a way that is economically, socially and environmentally viable now and in the future. Corporate Social Responsibility Health At Euronav we defi ne Corporate Social Responsibility (CSR) as responsible citizenship within the environment and communities in which we operate. We do this by replacing obsolete assets to keep a modern fl eet, delivering services that meet the evolving needs of society and attracting and empowering successive generations of professionals. Moreover, we view CSR as being embedded in our Health, Safety, Quality and Environment (HSQE) standards. We believe that all these factors have enabled us to retain the trust and support of our customers, shareholders, employees and the communities in which we operate. Euronav has the will to create a space for all at work, to discuss any issues we might otherwise discuss at home or with friends about the environment. It is our goal to develop realistically achievable targets for reducing the environmental footprint of the Company. The health of Euronav personnel, both on board and ashore is a very important aspect of the Company’s management system. The working environment is regularly monitored for proper health conditions. Health standards and guidelines of Euronav highlight important issues such as general living conditions, physical exercise and storage of food and nutritional practices. Health awareness Targeted for seafarers, the health awareness focuses on three main elements: ■ fi tness: providing necessary equipment on board; ■ healthy food: giving healthy food preparation tips and menus; ■ food safety: realising the importance of the receipt and handling of provisions (personal hygiene in the galley and the cleaning and disinfection of the aliments). Drug and alcohol policy Euronav is fully committed to maintaining a safe and healthy working environment. Illegal possession, consumption, distri- bution or sale of drugs or alcohol by any shipboard personnel shall lead to instant dismissal and will expose the person to legal proceedings. 60 EURONAV Safety Euronav is committed to operating in accordance with the highest standards of safety in the marine transportation industry and employs experienced crew to ensure that its vessels are operated in a safe and environmentally sound manner. By promoting an active safety culture among its personnel, both ashore and on board, Euronav is committed not only to providing a quality service to their clients, but especially to ensuring consistent protection of the environment and working conditions. Focusing on safety also means to make sure our crew is qualified, regularly trained, informed of current issues and looked after as far as their health is concerned. ■ Vessel Response Plan (VRP) dealing with oil pollution emergencies and the response thereto in US waters (as required by US law – Oil Pollution Act 1990); ■ California Contingency Plan (CCP) dealing with oil pollution emergencies and the response in Californian waters; ■ Standard Table Top Exercises (TTX) which are emergency drills including officers, vessel staff and external participants such as qualified individual or salvage and fire experts; ■ Quarterly Tailor made Table Top Exercise (TTX) with the par- ticipation of vessels and shore management; ■ weekly emergency drills on board covering various Fleet The Euronav fleet has been built in the world’s established shipyards and the vessels built for Euronav are constructed in accordance with Euronav’s own specifications, which in many cases exceed the requirements of the international regulatory agencies. Management of emergencies The main potential risk for the environment related to the transport of crude oil is the accidental release of cargo into the sea due to breaching the vessel’s containment, as a result of grounding, collision etc. Hence the focus on safety of transportation is paramount in our organisation. To deal with possible emergencies, the following procedures have been put into place: ■ Emergency and Contingency Manual (ECM) dealing with all possible emergencies other than to oil pollution; ■ Ship Oil Pollution Emergency Plan (SOPEP) dealing with oil pollution emergencies and the response thereto; scenarios. Quality By focusing on quality, Euronav arranges for its employees to receive a level of care and training designed to deliver the best service to its clients, whilst striving to have the less possible negative impact on the environment. One way of delivering the best quality is to set measurable annual objectives and key performance indicators and regularly monitor the actual performance against these. Regular communication and feed- back exchange with the clients, as well as prompt response to their requests is a key parameter for ensuring the quality of our services. Health, Safety, Quality, Environment and Society 61 62 EURONAV ISM compliance Euronav has developed a Health, Safety, Quality and Environ- mental Maritime Management System which integrates health, safety, environment and quality management into one seamless system that fully complies with the ISM Code for the “Safe Operation of Ships and Pollution Prevention”. Certificates Euronav Ship Management SAS obtained ISM certification from the Belgian Maritime Inspectorate and Bureau Veritas on behalf of the Marshall Islands. ISO 9001:2008 certification was obtained from Det Norske Veritas while the Environmental Management System certification (ISO 14001:2004) was obtained from Bureau Veritas Certification. Euronav Ship Management (Hellas) Ltd. has obtained its ISM certificates and Document of Compliance from the American Bureau of Shipping on behalf of Greek and Marshall Islands Flag Administration, from the Belgian Maritime Inspectorate for the Belgian flag vessels and from the French Flag Administration for the French flag vessels. ISO 9001:2008 as well as 14001:2004 certifications were obtained by the American Bureau of Shipping. These certificates were renewed in 2014. Quality shipping for the 21st century In their efforts to eliminate substandard shipping, U.S. Coast Guard has primarily focused on improved methods to identify poor and high quality vessels and to enforce compliance with international and U.S. standards. QUALSHIP 21 is a Marine Safety Initiative implemented by the Coast Guard on January 1, 2001 to identify high quality foreign-flagged ships and to provide incentives to encourage quality operations. High quality ships are recognised and rewarded for their commitment to safety and quality. In 2014 all vessels operated within Euronav were eligible for QUALSHIP 21 and Euronav was proud to see the following 21 of its vessels awarded with QUALSHIP 21: Cap Philippe, Eugenie, Alsace, Devon, Famenne, Filikon, Finesse, Cap Laurent, Cap Leon, Maria, Captain Michael, Cap Theodora, Cap Charles, Cap Guillaume, Cap Lara, Cap Romuald, Cap Victor, Cap Diamant, Cap Georges, Felicity and Nautilus. Indicatively, the eligibility criteria for rewarding non-U.S. flagged quality ships are: ■ no substandard vessel detentions in the U.S. within the pre- vious 36 months; ■ no marine violations or serious marine casualties and no more than one ticket in the U.S. within the previous 36 months; ■ successful U.S. Port State Control (PSC) Safety Exam with- in the previous 12 months; ■ not owned or operated by any company that has been associated with any PSC detention in U.S. waters within the previous 24 months; ■ not certified by a targeted organisation (targeted recognised organisations are any that have points assigned in the U.S. Port State Control Matrix); ■ not registered with a Flag State that has a detention ratio greater than 1.0% and the vessel’s Flag State must have at least 10 distinct arrivals in each of the previous 3 years. Training Euronav has built a comprehensive system of continuous training programs and seminars both on board and ashore which ensures a constant awareness among all personnel in their day-to-day operational duties. Training activities are carried out in a classroom or online through a computer-based program. Environment The Company believes that pollution prevention on board of a ship is a first priority and aims at environmental excellence. In order to accomplish this, key personnel, corporate and contract personnel must clearly adhere to the complete contents of the Health, Safety, Quality and Environmental Protection Management System. During quarterly management review meetings the management reassesses and implements initiatives regarding the Company’s environmental performance. Euronav also actively participates in several industry associations (Intertanko, Helmepa, Namepa, TSCF, Oil Majors and Industry Conferences and Classification Societies Committees) which promote safe and environmentally sound ship design and operations. Through its membership with the Intertanko Safety, Technical and Environmental Committee, the Company has promoted the concept of benchmarking on environmental performance within the shipping industry. Euronav is ISO 14001 certified for Environmental protection. Handling of emissions to the atmosphere World trade and ship numbers have seen a steady increase over recent years, but in parallel there have been economies of scale with larger, more efficient ships. On a per unit basis, emissions both of harmful substances, pollutants and greenhouse gases from ships have been reduced, allowing shipping to assert that it is the most environmentally friendly and the most energy efficient transport mode. Even if shipping will never replace all the other transport modes, more shipping is part of the solution to the challenges of air emissions and global warming which the world faces today. Health, Safety, Quality, Environment and Society 63 Further initiatives The safety of human life and the protection of the environment are primary concerns to Euronav. Euronav is committed to the implementation of the following safety, quality and environ- mental objectives: ■ provide a safe working environment ashore and afloat by encouraging all employees to identify potentially unsafe conditions or practices and to undertake corrective measures; ■ cooperate with maritime organisations and government, trade and industry associations to achieve highest standards of safety and preservation of the environment; ■ protect and preserve resources, preventing pollution by an environmentally conscious operation of vessels; ■ introduction of efficient fuel saving measures; ■ continuously improve safety management skills of personnel ashore and on board ships, including preparing for emergen- cies related both to safety and environmental protection; ■ continuously improve all processes by reviewing the available information against stated policies and objectives, evaluating audit results and analysing available records of corrective and preventive actions. Ship recycling Although our fleet is young, vessel recycling is an important matter on which Euronav is actively working. The green passport is a significant item of the recycling policy and is a document that follows the entire life of a vessel, beginning with its construction. This document needs to be updated on a regular basis by all different parties involved during the life cycle of a vessel. It contains information such as ship particulars, details on the construction yard but, most importantly, information about every product used during the construction and operation of the vessel. Because of the importance of the green passport within the recycling policy, all Euronav’s newbuildings are carrying a green passport, namely: Cap Theodora, Cap Philippe, Cap Guillaume, Cap Charles, Cap Victor, Cap Lara, Cap Felix, Felicity, Fraternity, Eugenie, Devon, Maria, Capt. Michael and Alsace (including Cap Isabella, Olympia and Antarctica that are no longer part of the Euronav fleet). Euronav’s dedication to the reduction of emissions is demon- strated by: ■ the setup of a Fleet Energy Management team, i.e. dedicated resources with the sole objective to plan and implement measures to reduce emissions and fuel consumption; ■ the development of an effective policy on reduction of harm- ful emissions to air; ■ the development of an advanced performance manage- ment system; ■ not burning plastics on board the vessels but delivering them ashore; ■ the participation of Euronav vessels in the performance of lightering operations in the Delaware River with cargo va- pour emission control. Euronav takes a systematic approach towards monitoring the fuel efficiency and evaluating potential improvements in order to reduce the fuel oil consumption and CO2 emissions. Energy efficiency measures include: ■ installation of devices that improve propulsion efficiency (e.g. Mewis duct); ■ installation of electric heaters for minimizing consumption when the vessel is idle or slow steaming; fuel ■ painting vessels with modern anti-fouling paint which im- proves propulsion efficiency, carbon emissions, as well as re- ducing the toxic effect of the paint on marine life; ■ hull and propeller cleaning based on observation; ■ slow steaming as part of voyage optimization; ■ hardware and software installation for close monitoring of a vessel’s speed and consumption performance. Handling of waste During normal vessels’ operations, Euronav tries to reduce to a maximum vessels’ waste by: ■ reducing the plastic packaging on board to a strict minimum; ■ recycling packing material; ■ compacting rubbish prior to discharging; ■ keeping on board cargo residues and delivering ashore at proper reception facilities; ■ participating in the International Maritime Organisation (IMO) initiatives to improve the port reception facilities by reporting any deficiencies by using the IMO relevant questionnaire; ■ sewage treatment plants on board handling the black and grey waters in order to minimise the impact on the environment. 64 EURONAV Luvuyo House Luvuyo House’s principal aim is to help children left behind by aids in the slums around Cape Town, South Africa. Euronav made a donation in order to help finance food, clothing, schooling, medication, housing and the wages of the children’s fulltime caretaker. Education School and training program Euronav Ship Management (Hellas) Ltd. is participating in the Internship programs of Greek Universities, focusing in Marine studies, by offering their students the opportunity to work for a couple of months, usually during the summer. The Company has also been sponsoring distinguished graduates of these schools. Society Community involvement Euronav wants to impact positively on the communities where we live and work. We do this by building relationships and inspiring philanthropy and goodwill both inside and outside the Company. We actively encourage staff to engage in community initiatives and support employee involvement be it volunteering, fund- raising or donations through options such as fund-matching or sponsoring specific events. Benefit for children 2014 The Valero Texas Open Benefit for Children Golf Classic which has been running since 2002 is a project of the Valero Energy Corporation raising money for children’s charities in the commu- nities where Valero has major operations. The 2014 Valero Texas Open Benefit for Children Golf Classic and the Valero Texas Open contributed USD 9 million to children. As for previous years, Euronav specifically requested for its donation to be oriented towards children’s charities based in Quebec where a large number of our vessels trade. ARGO foundation and Doctors Without Borders Rather than sending a traditional Season’s greetings card, Euronav has sent an electronic card to all sea staff and associates. The amount otherwise allocated to cards and postage has been donated to the ARGO foundation for children with special needs and to Doctors Without Borders. Health, Safety, Quality, Environment and Society 65 Human resources For our employees To inspire and enable talented, hard-working people to achieve their career goals in a healthy, challenging and rewarding environment. One cornerstone of the Euronav mission is dedicated to our people: to inspire and enable talented, hard-working people to achieve their career goals in a healthy, challenging and rewarding environment. Throughout its shore-based offi ces in London, Nantes, Antwerp and Piraeus, Euronav has approxi- mately 130 employees. This geographic span across Europe refl ects a deep-rooted maritime history and culture built up over generations. About 2,300 seafarers of many different nationalities work aboard Euronav vessels. In an environment where there is a shortening supply of competent seafarers, Euronav has qualifi ed and experienced masters to man all the vessels. Masters’ conferences and crew conferences are held regularly. Euronav is devoted to a teamwork culture and an environment where people work together for the overall success of the Company, on shore and at sea. Euronav practises genuine performance planning and appraisal, training and develop- ment and promotion from within. Our policies aim to enhance and reward performance, engage our people and retain key talent. We celebrate the diversity in our workforce. Many of our employees and offi cers have a wealth of long service and experience in the business while others are new entrants with fresh perspectives. This commitment and stability enriched with diversity have enabled us to achieve excellent results in an extremely competitive industry. Euronav people bring to the job a rich diversity of educational and professional quali- fi cations, including professionals with engineering, fi nance, business administration, legal and humanities backgrounds who have specialised in tanker operations, crewing, marine Total offi cers and apprentices on board = 551 Total ratings on board = 657 2 Poland 27 Romania 4 Russia 1 Morocco 2 Pakistan 1 Italy 1 Netherlands 14 Belgium 86 Bulgaria 2 Cyprus 31 France 30 Romania 152 El Salvador 103 Honduras 15 Indonesia 1 Nicaragua 2 Peru 42 Croatia 137 Greece 354 Philippines 120 Philippines 52 Panama 29 Indonesia 66 EURONAV and technical areas and shipping corporate services. Virtually everyone speaks at least two languages fl uently and half the staff speaks three or more languages. Accomplishments in 2014 In 2014 the human resources department has invested a great deal of work in the following areas: Our Culture Euronav is an integrated shipping services provider with high quality standards and ambitious goals. To empower its people to meet these challenges, Euronav’s identity is characterised by: ■ staff changes: HR has been actively involved in the selection, recruitment and induction of staff due to the need for addi- tional resources following the recent fl eet growth; ■ performance appraisals: the annual performance review which took place in November/December; ■ common culture with local authority to act; ■ high involvement and fl exibility in which much of the work is carried out by cross-functional, cross-branch, self-directed work teams; ■ clarity in roles, expectations and authorities; ■ professional growth and development opportunities ■ training: the human resources department partnered with all departments to help defi ne, develop and deliver customized training solutions. Individual training plans were written for each staff member across the group as guidance for the whole year; ■ further development on internal Eurostaff software for aligned with business needs; reporting purposes and audit requirements; ■ maritime HR forum: active participation to the forum of which Euronav is a founding member; ■ all hands event: the 8th edition of this event took place in Greece and was attended by 105 employees. ■ quality and professionalism in matters large and small; ■ communication and a no-blame culture cultivated by example. We encourage corporate social responsibility and have values of fairness and responsibility embedded in our operating ethos. We are an equal opportunity employer; people are selected, rewarded and advanced based on performance and merit. We strive to fully comply with law and regulations in the markets in which we operate. Euronav strives to be an exemplary employer among its peers and participates in forums for an open exchange of best practices. Human resources 67 Glossary Aframax – A medium size crude oil tanker of approximately 80,000 to 120,000 deadweight tons. Aframaxes can generally transport from 500,000 to 800,000 barrels of crude oil and are also used in lightering. A coated Aframax operating in the refi ned petroleum products trades may be referred to as an LR2. Ballast – Seawater taken into a vessel’s tanks in order to increase draught, to change trim or to improve stability. Ballast can be taken into cargo tanks, double bottoms, fore and aft peak tanks and/or segregated ballast tanks (SBT). All Euronav vessels are equipped with segregated ballast tanks. Bareboat Charter – A Charter under which a customer pays a fi xed daily or monthly rate for a fi xed period of time for use of the vessel. The customer pays all costs of operating the vessel, including voyage and vessel expenses. Bareboat charters are usually long term. Barrel – A volumetric unit of measurement equal to 42 US gallons or 158.99 litre. There are 6.2898 barrels in one cubic meter. Note that while oil tankers do not carry oil in barrels (although ships once did in the 19th century), the term is still used to defi ne the volume. BITR – Baltic Index Tanker Routes. The Baltic Exchange is a source of independent, freight market data. Information collected from a number of major shipbrokers around the world is collated and published daily. The Exchange publishes the following daily indices: the Baltic Panamax Index, the Baltic Capesize Index, the Baltic Handymax Index and the Baltic International Tanker Routes - clean and dirty. The Exchange also publishes a daily fi xture list. Charter – Contract entered into with a customer for the use of the vessel for a specifi c voyage at a specifi c rate per unit of cargo (Voyage Charter), or for a specifi c period of time at a specifi c rate per unit (day or month) of time (Time Charter). Charterer – The company or person to whom the use of the vessel is granted for the transportation of cargo or passengers for a specifi ed time. Classifi cation Societies – Organizations that establish and administer standards for the design, construction and opera- tional maintenance of vessels. Vessels cannot trade unless they meet these standards. Commercial Management or Commercially Managed – The management of the employment, or chartering, of a vessel and associated functions, including seeking and negotiating employment for vessels, billing and collecting revenues, issuing voyage instructions, purchasing fuel and appointing port agents. Contango – Is a term used in the futures market to describe an upward sloping forward curve. Such a forward curve is said to be “in contango”. Formally, it is the situation where and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery. The opposite market condition to contango is known as backwardation. Contract of Affreightment or COA – An agreement provi- ding for the transportation between specifi ed points for a specifi c quantity of cargo over a specifi c time period but without desig- nating specifi c vessels or voyage schedules, thereby allowing fl exibility in scheduling since no vessel designation is required. COAs can either have a fi xed rate or a market-related rate. Crude Oil – Oil in its natural state that has not been refi ned or altered. Deadweight – Deadweight Tonnage (dwt) – The lifting or carrying capacity of a ship when fully loaded. This measure is expressed in metric tons when the ship is in salt water and loaded to her marks. It includes cargo, bunkers, water, stores, passengers and crew. Demurrage – Additional revenue paid to the ship owner on its Voyage Charters for delays experienced in loading and/or unloading cargo that are not deemed to be the responsibility of the ship owner, calculated in accordance with specifi c Charter terms. 68 EURONAV Double Hull – A design of tanker with double sides and a double bottom. The spaces created between the double sides and bottom are used for ballast and provide a protective distance between the cargo tanks and the outside world. Draft – The vertical distance measured from the lowest point of a ship’s hull to the water surface. Draft marks are cut into or welded onto the surface of a ship’s plating. They are placed forward and aft on both sides of the hull and also amidships. The Plimsoll lines which designate maximum drafts allowed for vessels under various conditions are also found amidships. Dry-dock – An out-of-service period during which planned repairs and maintenance are carried out, including all under- water maintenance such as external hull painting. During the dry-docking, certain mandatory Classification Society inspections are carried out and relevant certifications issued. Modern vessels are designed to operate for 5 years between dry-dockings. Normally, as the age of a vessel increases, the cost and frequency of dry-docking increase. After the third Special Survey, Dry-docks will be conducted every 2.5 years. FPSO – Stands for Floating Production, Storage and Offloading. FPSOs are designed to receive all of the hydrocarbon fluids pumped by nearby offshore platforms (oil and gas), process it and store it. FPSOs are typically moored offshore ship-shaped vessel, with processing equipment, or topsides, aboard the vessel’s deck and hydrocarbon storage below, in the hull of the vessel. FSO – A Floating, Storage and Offloading vessel is commonly used in oil fields where it is not possible or efficient to lay a pipeline to the shore. The production platform will transfer the oil to the FSO where it will be stored until a tanker arrives and connects to the FSO to offload it. IMO – International Maritime Organization – IMO’s main task is to develop and maintain a comprehensive regulatory framework for shipping including safety, environmental concerns, legal matters, technical co-operation, maritime security and the effi- ciency of shipping. The Convention establishing the International Maritime Organization (IMO) was adopted in Geneva in 1948. Intertanko – International Association of Independent Tanker Owners. ISM – International Safety Management is a set of regulations that operators of tankers must comply with, which aims to improve the safety standards of the tanker industry. Knot – A unit of speed equal to one nautical mile (1.852 km) per hour, approximately 1.151 mph. KPI – Key Performance Indicator. A performance indicator or key performance indicator (KPI) is a type of performance measurement. An organization may use KPIs to evaluate its success, or to evaluate the success of a particular activity in which it is engaged. Mewis duct – A device that can be positioned ahead of the propeller. It can significantly enhance the efficiency of the propulsion and can also be retrofitted on an existing ship. It provides significant fuel savings at a given speed. The device consists of a duct together with an integrated fin system. MOPU – Mobile Offshore Production Unit. P&I Insurance – Protection and indemnity insurance, commonly known as P&I insurance, is a form of marine insu- rance provided by a P&I club. A P&I club is a mutual (i.e. a co-operative) insurance association that provides cover for its members, who will typically be ship-owners, ship-operators or charterers. Pool – A pool is a group of similar size and quality vessels with different ship owners that are placed under one administrator or manager. Pools allow for scheduling and other operating efficiencies such as multi-legged charters and Contracts of Affreightment. Profit share – is a mechanism where, depending on the outcome of the negotiations and under certain time charter contracts it is being agreed that the owner of the vessel is entitled to an increase of the agreed base hire rate (minimum or floor) amounting to a certain percentage of the difference between that base rate and the average of rates applicable for a certain period on certain routes. Glossary 69 Rate – The cost or revenue for a particular voyage based on a standard reference, e.g. Worldscale, INTASCALE, ATRS. Suezmax – The maximum size vessel that can sail through the Suez Canal. This is generally considered to be between 120,000 and 199,999 dwt depending on a ship’s dimensions and draft. Scrapping – The disposal of vessels by demolition for scrap metal. Semi – A semi-submersible (semi-submerged ship) is a speci- alised marine vessel used in a number of specific offshore roles such as offshore drilling rigs, safety platforms, oil production platforms and heavy lift cranes. They are designed with good stability and seakeeping characteristics. Other terms include semisubmersible, semi-sub, or simply semi. Shale oil – A crude oil that is extracted from oil shale (fine- grained sedimentary rock containing kerogen) by using techni- ques other than the conventional (oil well) method for example heating and distillation. Spar – Single Point Mooring and Reservoir – A spar is a type of floating oil platform typically used in very deep waters and is named for logs used as buoys in shipping that are moored in place vertically. Spar production platforms have been developed as an alternative to conventional platforms. Special Survey – The survey required by the Classification Society that usually takes place every five years and usually in a dry-dock. During the special survey all vital pieces of equipment and compartments and steel structures are opened up and inspected by the classification surveyor. Spill – Oil getting into the sea, in any amount, for any reason. Spot (Voyage) Charter – A charter for a particular vessel to transport a single cargo between specified loading port(s) and discharge port(s) in the immediate future. Contract rate (spot rate) covers total operating expenses such as port charges, bunkering, crew expenses, insurance, repairs and canal tolls. The charterer will generally pay all cargo-related costs and is liable for Demurrage, if incurred. The rate is usually quoted in terms of Worldscale (see below). Spot Market – The market for the immediate charter of a vessel. (Super) slow steaming – reducing operating speeds in order to save fuel. Operating laden speeds are reduced from 15 knots to 13 knots and operating ballast speeds from 15 knots to 8 knots. Technical Management – The management of the operation of a vessel, including physically maintaining the vessel, maintai- ning necessary certifications and supplying necessary stores, spares and lubricating oils. Responsibilities also generally include selecting, engaging and training crew and could also include arranging necessary insurance coverage. Time Charter (T/C) – A charter for a fixed period of time, usually between one and ten years, under which the owner hires out the vessel to the charterer fully manned, provisioned and insured. The charterer is usually responsible for bunkers, port charges, canal tolls and any extra cost related to the cargo. The charter rate (hire) is quoted in terms of a total cost per day. Subject to any restrictions in the Charter, the customer decides the type and quantity of cargo to be carried and the ports of loading and unloading. Time Charter Equivalent (TCE) – TCE revenues, which are voyage revenues less voyage expenses, serve as an industry standard for measuring and managing fleet revenue and for comparing results between geographical regions and among competitors. TLP – Tension Leg Platform - A tension-leg platform (TLP) or extended tension leg platform (ETLP) is a vertically moored floating structure normally used for the offshore production of oil or gas and is particularly suited for water depths greater than 300 metres (about 1000 ft) and less than 1500 metres (about 4900 ft). Use of tension-leg platforms has also been proposed for wind turbines. Ton-mile – A unit for freight transportation equivalent to a ton of freight moved one mile. 70 EURONAV Ton-mile demand – A calculation that multiplies the average distance of each route a tanker travels by the volume of cargo moved. The greater the increase in long-haul movement compared with shorter haul movements, the higher the increase in ton-mile demand. UDW – Ultra Deep Water – water depth of more than 1500 meters. Vessel Expenses – Includes crew costs, vessel stores and supplies, lubricating oils, maintenance and repairs, insurance and communication costs associated with the operation of vessels. VLCC – The abbreviation for Very Large Crude Carrier. Tankers with a capacity between 200,000 and 320,000 dwt. V-Plus – A crude oil tanker (ULCC or Ultra Large Crude Carrier) of more than 350,000 deadweight tons which makes it one of the biggest oil tankers in the world. These tankers can transport three million barrels or more of crude oil and are mainly used on the same long-haul routes as VLCCs. Voyage Expenses – Includes fuel, port charges, canal tolls, cargo handling operations and brokerage commissions paid by the ship owner under Voyage Charters. These expenses are subtracted from shipping revenues to calculate Time Charter Equivalent revenues for Voyage Charters. Worldscale – The New Worldwide Tanker Nominal Freight Scale is a catalogue of theoretical freight rates expressed as USD per ton for most of the conceivable spot voyages in the tanker trade. The final rate agreed will be determined as a percentage of the ‘Worldscale’ rate, based upon a guaranteed minimum quantity of cargo. That allows for charter parties to cover a wide range of possible voyage options without the need to calculate and negotiate each one separately. Glossary 71 Financial Report - Consolidated fi nancial statements - Notes to the consolidated fi nancial statements - Statutory fi nancial statements Euronav NV 74 80 142 Een Nederlandstalige versie van de geconsolideerde jaarrekening is beschikbaar op de website van de vennootschap www. euronav.com. Een papieren versie van de geconsolideerde jaarrekening in het Nederlands is tevens verkrijgbaar op eenvoudig verzoek. 72 EURONAV Financial Report 73 Consolidated statement of financial position Consolidated statement of financial position (in thousands of USD except per share amounts) Note 31 December 2014 31 December 2013 Restated * 1 January 2013 Restated * ASSETS Current assets Trade and other receivables Current tax assets Cash and cash equivalents Non-current assets held for sale TOTAL CURRENT ASSETS Non-current assets Property, plant and equipment Vessels Other tangible assets Prepayments Intangible assets Receivables Investments in equity-accounted investees Deferred tax assets 10 - 11 2 7 7 7 - 9 24 8 194,733 36 254,086 89,000 95,913 36 74,309 21,510 81,426 27 113,051 52,920 537,855 191,768 247,424 2,276,161 2,258,334 1,226 16,601 29 258,447 17,332 6,536 1,445,433 1,434,800 633 10,000 31 259,535 23,114 880 1,593,503 1,592,837 666 - 79 226,161 21,074 963 TOTAL NON-CURRENT ASSETS 2,558,505 1,728,993 1,841,780 TOTAL ASSETS 3,096,360 1,920,761 2,089,204 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. The accompanying notes on pages 80 to 140 are an integral part of these consolidated financial statements. 74 EURONAV Consolidated statement of financial position (continued) (in thousands of USD except per share amounts) Note 31 December 2014 31 December 2013 Restated * 1 January 2013 Restated * EQUITY AND LIABILITIES Equity Share capital Share premium Translation reserve Hedging reserve Treasury shares Other equity interest Retained earnings - - - 18 12 - - 142,441 941,770 379 - (46,062) 75,000 359,180 58,937 365,574 946 (1,291) (46,062) - 422,886 56,248 353,063 730 (6,721) (46,062) - 509,712 EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 1,472,708 800,990 866,970 Current Liabilities Loans and borrowings Bank loans Convertible and other Notes Trade and other payables Tax liabilities Provisions TOTAL CURRENT LIABILITIES Non-current liabilities Loans and borrowings Bank loans Convertible and other Notes Other payables Deferred tax liabilities Employee benefits Amounts due to equity-accounted joint ventures Provisions 14 14 17 - - 14 14 15 8 16 24 - 169,427 146,303 23,124 125,555 1 412 137,677 137,677 - 107,094 21 - 110,621 110,621 - 133,146 - - 295,395 244,792 243,767 1,319,399 1,088,026 231,373 489 - 2,108 5,880 381 835,908 710,086 125,822 31,291 - 1,900 5,880 - 933,547 800,853 132,694 36,874 - 2,166 5,880 - TOTAL NON-CURRENT LIABILITIES 1,328,257 874,979 978,467 TOTAL EQUITY AND LIABILITIES 3,096,360 1,920,761 2,089,204 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. The accompanying notes on pages 80 to 140 are an integral part of these consolidated financial statements. 75 Financial report Consolidated statement of profit or loss (in thousands of USD except per share amounts) SHIPPING REVENUE Revenue Gains on disposal of vessels/other tangible assets Other operating income TOTAL SHIPPING REVENUE OPERATING EXPENSES Voyage expenses and commissions Vessel operating expenses Charter hire expenses Losses on disposal of vessels/other tangible assets Impairment on non-current assets held for sale Depreciation tangible assets Depreciation intangible assets General and administrative expenses TOTAL OPERATING EXPENSES RESULT FROM OPERATING ACTIVITIES Finance income Finance expenses Note 2014 1 Jan - 31 Dec 2014 2013 1 Jan - 31 Dec 2013 Restated * 3 7 - 4 4 4 7 2 7 - 4 5 5 473,985 13,122 11,411 304,622 8 11,520 498,518 316,150 (118,303) (124,089) (35,664) - (7,416) (160,934) (20) (40,565) (79,584) (105,911) (21,031) (215) - (136,882) (76) (27,165) (486,991) (370,864) 11,527 (54,714) 2,617 (95,970) 1,993 (54,637) NET FINANCE EXPENSES (93,353) (52,644) Share of profit (loss) of equity accounted investees (net of income tax) 24 30,286 17,853 PROFIT (LOSS) BEFORE INCOME TAX (51,540) (89,505) Income tax benefit (expense) PROFIT (LOSS) FOR THE PERIOD Attributable to: Owners of the Company Net income/(loss) per share (basic) Net income/(loss) per share (diluted) Weighted average number of shares (basic) Weighted average number of shares (diluted) 76 6 - 13 13 13 13 5,743 (178) (45,797) (89,683) (45,797) (89,683) (0.39) (0.39) 116,539,018 116,539,018 (1.79) (1.79) 50,230,438 50,230,438 EURONAV Consolidated statement of comprehensive income (in thousands of USD except per share amounts) Note 2014 1 Jan - 31 Dec 2014 2013 1 Jan - 31 Dec 2013 Restated * Profit/(loss) for the period (45,797) (89,683) Other comprehensive income, net of tax Items that will never be reclassified to profit or loss: Remeasurements of the defined benefit liability (asset) Items that are or may be reclassified to profit or loss: Foreign currency translation differences Cash flow hedges - effective portion of changes in fair value Equity-accounted investees - share of other comprehensive income OTHER COMPREHENSIVE INCOME, NET OF TAX 16 5 18 24 (393) 263 (567) 1,291 2,106 2,437 216 5,430 3,077 8,986 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (43,360) (80,697) Attributable to: Owners of the Company (43,360) (80,697) * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. The accompanying notes on pages 80 to 140 are an integral part of these consolidated financial statements. 77 Financial report Consolidated statement of changes in equity (in thousands of USD except per share amounts) BALANCE AT 1 JANUARY 2013 AS REPORTED Impact of changes in accounting policies Balance at 1 January 2013 restated * Profit (loss) for the period Total other comprehensive income Total comprehensive income, restated * Transactions with owners of the Company Issue and conversion convertible Notes Equity-settled share-based payment Total transactions with owners BALANCE AT 31 DECEMBER 2013 RESTATED * Note Share capital Share premium Trans- lation reserve Hedging reserve Treasury shares Retained earnings Capital and reserves Other equity interest Total equity 56,248 353,063 730 (15,221) (46,062) 518,212 866,970 - 866,970 - - - - - - 8,500 - (8,500) - - - 56,248 353,063 730 (6,721) (46,062) 509,712 866,970 - 866,970 - - - - - - - - 216 5,430 - (89,683) - 3,340 (89,683) 8,986 - (89,683) 8,986 - 216 5,430 - (86,343) (80,697) - (80,697) 12 22 2,689 12,511 - - 2,689 12,511 - - - - - - - - - (666) 183 (483) 14,534 183 14,717 - - - 14,534 183 14,717 58,937 365,574 946 (1,291) (46,062) 422,886 800,990 - 800,990 BALANCE AT 1 JANUARY 2014 58,937 365,574 946 (1,291) (46,062) 422,886 800,990 - 800,990 Profit (loss) for the period Total other comprehensive income Total comprehensive income Transactions with owners of the Company Issue of ordinary shares Issue and conversion convertible Notes Issue and conversion perpetual con- vertible preferred equity Equity-settled share-based payment Total transactions with owners - - 12 12 12 22 - - - - - - - - (567) (567) 1,291 1,291 - (45,797) - 1,713 (45,797) 2,437 - (44,084) (43,360) - (45,797) 2,437 - - (43,360) 53,119 421,881 20,103 89,597 10,282 64,718 - - 83,504 576,196 - - - - - - - - - - - - - - (12,694) 462,306 (7,422) 102,278 - 462,306 - 102,278 (3,500) 71,500 75,000 146,500 3,994 3,994 - 3,994 - (19,622) 640,078 75,000 715,078 BALANCE AT DECEMBER 31, 2014 142,441 941,770 379 - (46,062) 359,180 1,397,708 75,000 1,472,708 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. The accompanying notes on pages 80 to 140 are an integral part of these consolidated financial statements. 78 EURONAV Note 2014 1 Jan - 31 Dec 2014 2013 1 Jan - 31 Dec 2013 Restated * Consolidated statement of cash flows (in thousands of USD except per share amounts) Cash flows from operating activities Profit (loss) for the period Adjustments for: Depreciation of tangible assets Depreciation of intangible assets Impairment on non-current assets held for sale Provisions Tax benefits/expenses Share of profit of equity-accounted investees, net of tax Net finance expense Capital gain(loss) on disposal of assets Equity-settled share-based payment transactions Changes in working capital requirements Change in cash guarantees Change in trade receivables Change in accrued income Change in deferred charges Change in other receivables Change in trade payables Change in accrued payroll Change in accrued expenses Change in deferred income Change in other payables Change in provisions for employee benefits Income taxes paid during the period Interest paid Interest received Dividends received from equity-accounted investees NET CASH FROM (USED IN) OPERATING ACTIVITIES Acquisition of vessels Proceeds from the sale of vessels Acquisition of other tangible assets Acquisition of intangible assets Proceeds from the sale of other (in)tangible assets Loans from (to) related parties Proceeds of disposals of joint ventures, net of cash disposed Purchase of joint ventures, net of cash acquired NET CASH FROM (USED IN) INVESTING ACTIVITIES Proceeds from issue of share capital Transaction costs related to issue of share capital Proceeds from issue of perpetual convertible preferred equity Transaction costs related to issue perpetual convertible preferred equity Proceeds from new long-term borrowings Repayment of long-term borrowings Transaction costs related to issue of loans and borrowings Dividends paid NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Net cash and cash equivalents at the beginning of the period Effect of changes in exchange rates NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD - 7 - 2 - 6 24 5 7 4 - 10 10 10 9-10 17 17 17 17 17 16 - 5-17 5-10 24 7 7 7 - - 24 24 24 12 12 12 12 14 14 14 - 11 - 11 (45,797) 217,410 160,934 20 7,416 840 (5,743) (30,286) 93,353 (13,118) 3,994 (112,280) (658) (23,755) (8,577) (2,124) (64,299) (10,512) 166 9,581 (2,016) (10,171) 85 67 (54,449) 421 9,410 14,782 (1,053,939) 123,609 (123,188) (19) 22 29,508 1,000 - (1,023,007) 475,000 (12,694) 150,000 (3,500) 1,395,392 (799,891) (15,284) (2) 1,189,021 180,796 74,309 (1,019) 254,086 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. The accompanying notes on pages 80 to 140 are an integral part of these consolidated financial statements. (89,683) 172,095 136,882 76 - - 178 (17,853) 52,644 (15) 183 (43,442) (1) (79) (1,706) (8,664) (4,036) 19,899 (28) 8,342 (1,065) (56,018) (86) (82) (47,895) 90 - (8,917) - 52,920 (10,325) (30) 24 (11,475) - (3,000) 28,114 - - - - 61,390 (118,770) - (4) (57,384) (38,187) 113,051 (555) 74,309 79 Financial report Notes to the consolidated financial statements for the period ended 31 December 2014 Significant accounting policies 1. Reporting Entity Euronav NV (the “Company”) is a company domiciled in Belgium. The address of the Company’s registered office is De Gerlachekaai 20, 2000 Antwerp, Belgium. The consolidated financial statements of the Company comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associates and joint ventures. Euronav NV is a fully-integrated provider of international mari- time shipping and offshore services engaged in the transporta- tion and storage of crude oil. The Company was incorporated under the laws of Belgium on 26 June 2003, and grew out of three companies that had a strong presence in the shipping industry; Compagnie Maritime Belge NV, or CMB, formed in 1895, Compagnie Nationale de Navigation SA, or CNN, formed in 1938, and Ceres Hellenic formed in 1950. The Company started doing business under the name “Euronav” in 1989 when it was initially formed as the international tanker subsidiary of CNN. Euronav NV charters its vessels to leading international energy companies. The Company pursues a balanced chartering strategy by employing its vessels on a combination of spot market voyages, fixed-rate contracts and long-term time charters, which typically include a profit sharing component. 2. Basis of preparation (a) Statement of compliance These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union on 31 December 2014. All financial information presented in USD has been rounded to the nearest thousand except when otherwise indicated. (d) Use of estimates and judgements The preparation of the consolidated financial statements in conformity with IFRS requires management to make judge- ments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which are the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statement is included in the following note: ■ Note 7 – Impairment Information about assumptions and estimation uncertainties that have a significant risk on resulting in a material adjustment within the next financial year are included in the following note: ■ Note 7 – Impairment test: key assumptions underlying the recoverable amount All accounting policies have been consistently applied for all periods presented in the consolidated financial statements, unless disclosed otherwise. The consolidated financial state- ments were authorised for issue by the Board of Directors on 27 March 2015. Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. (b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: ■ Derivative financial instruments are measured at fair value The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO. (c) Functional and presentation currency The consolidated financial statements are presented in USD, which is the Company’s functional and presentation currency. The valuation team regularly reviews significant unobservable inputs and valuations adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the 80 EURONAV third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Group Audit Committee. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. ■ Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. ■ Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). ■ Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. (e) Changes in accounting policies Except for the changes below, the accounting policies adopted in the preparation of the consolidated financial statements for the year ended 31 December 2014 are consistent with those applied in the preparation of the consolidated financial statements for the year ended 31 December 2013. Other new standards, amend- ments to standards and interpretations that became effective for annual periods beginning on or after 1 January 2014, did not have an impact on the Group’s consolidated financial statements. The Group has adopted the following new standards and amend- ments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2014: ■ IFRS 10 Consolidated Financial Statements (2011) ■ IFRS 11 Joint Arrangements ■ IFRS 12 Disclosure of Interests in Other Entities ■ Amendments to IFRS 10, IFRS 11 and IFRS 12 ■ IAS 28 Investments in Associates and Joint Ventures ■ Amendments to IAS36 Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets IFRS 10 Consolidated Financial Statements introduces a new approach to determining which investees should be consolidated and provides a single model to be applied in the control analysis for all investees and became mandatory for the Group’s 2014 consolidated financial statements, with retrospective application. It does not have a material impact on the Group’s consolidated financial statements and there are no changes to the principle of control and the basis for consolidation. IFRS 11 Joint Arrangements focuses on the rights and obliga- tions of joint arrangements, rather than the legal form (as is currently the case). It distinguishes joint arrangements between joint operations and joint ventures; and always requires the equity method for jointly controlled entities that are now called joint ventures. IFRS 11 has become manda- tory for the Group’s 2014 consolidated financial statements, with retrospective application. The impact resulting from this change in accounting policy on the Group’s consolidated financial statements can be summarised as follows: Condensed consolidated statement of financial position At 31 December 2013 Property, plant and equipment Intangible assets Financial assets Investments in equilty accounted investees Deferred tax assets Trade and other receivables Current tax assets Cash and cash equivalents Non-current assets held for sale TOTAL ASSETS Equity Loans and borrowings (non-current) Other payables (non-current) Employee benefits Amounts due to equity- accounted joint ventures Trade and other payables (current) Tax liabilities (current) Bank loans (current) TOTAL EQUITY AND LIABILITIES As previously reported Impact of change As restated 1,865,685 (420,252) 1,445,433 32 3,773 409 880 - 255,762 32 259,535 22,704 23,113 - 880 117,994 (22,081) 95,913 36 - 36 120,750 (46,441) 74,309 39,414 (17,904) 21,510 2,148,973 (228,212) 1,920,761 800,990 - 800,900 995,599 (159,691) 835,908 52,347 (21,056) 31,291 1,900 - - 5,880 1,900 5,880 114,136 (7,042) 107,094 21 183,980 - (46,303) 21 137,677 2,148,973 (228,212) 1,920,761 81 Financial report Condensed consolidated statement of profit or loss ■ the net recognised amount (generally fair value) of the At 31 December 2013 Revenue Gains on disposal of vessels/other tangible assets Other operating income Expenses for shipping activities Losses on disposal of vessels Depreciation tangible assets Depreciation intangible assets General and administra- tive expenses Result from operating activities Net finance expense Share of profit (loss) of equity accounted investees (net of income tax) Profit (loss) before income tax Income tax benefit (expense) Profit (loss) for the period As previously reported Impact of change As restated 400,901 (96,279) 304,622 8 - 8 12,089 (569) 11,520 (246,386) 39,860 (206,526) (215) - (215) (167,287) 30,405 (136,882) (76) - (76) (27,952) 787 (27,165) (28,918) (25,796) (54,714) (60,996) 8,352 (52,644) 409 17,444 17,853 (89,505) (178) (89,683) - - - (89,505) (178) (89,683) Condensed consolidated statement of cash flows At 31 December 2013 Net cash from (used in) operating activities Net cash from (used in) investing activities Net cash from (used in) financing activities As previously reported Impact of change As restated 26,257 (35,174) (8,917) 42,589 (14,475) 28,114 (93,376) 35,992 (57,384) (f) Basis of Consolidation (i) Business Combinations Business combinations are accounted for using the acquisi- tion method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as: ■ the fair value of the consideration transferred; plus ■ the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquire; less identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recog- nised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is clas- sified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. (ii) Acquisitions of non-controlling interests Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary. (iii) Subsidiaries Subsidiaries are those entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which the control commences until the date on which control ceases. (iv) Loss of control On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. (v) Interests in equity-accounted investees The Group’s interests in equity-accounted investees comprise interest in associates and joint ventures. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. 82 EURONAV A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Interest in associates and joint ventures are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases. Interests in associates and joint ventures include any long- term interests that, in substance, form part of the Group’s investment in those associates or joint ventures and include unsecured shareholder loans for which settlement is neither planned nor likely to occur in the foreseeable future, which, therefore, are an extension of the Group’s investment in those associates and joint ventures. The Group’s share of losses that exceeds its investment is applied to the carrying amount of those loans. After the Group’s interest is reduced to zero, a liability is recognised to the extent that the Group has a legal or constructive obligation to fund the associates’ or joint ventures’ operations or has made payments on their behalf. (vi) Transactions eliminated on consolidation Intragroup balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the Group’s interest in the entity. Unrealised gains arising from transac- tions with associates are eliminated against the investment in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (g) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated to USD at the foreign exchange rate applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign curren- cies at the balance sheet date are translated to USD at the foreign exchange rate applicable at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at rates approximating the exchange rates at the dates of the transactions. Foreign currency differences are recognised directly in equity (Translation reserve). When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss. (h) Financial Instruments (i) Non-derivative financial assets The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated as at fair value through profit and loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such trans- ferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substan- tially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity financial assets and available-for-sale financial assets. The Company determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable transaction 83 Financial report costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, which takes into account any dividend income, are recognised in profit or loss. currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. Financial assets designated as at fair value through profit or loss comprise equity securities that otherwise would have been clas- sified as available for sale. Available-for-sale financial assets comprise equity securities and debt securities. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date. They are included in non-current assets unless the Company intends to dispose of the investment within 12 months of the balance sheet date. LOANS AND RECEIVABLES Loans and receivables are financial assets with fixed or deter- minable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. (ii) Non-derivative financial liabilities The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated as at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acqui- sition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. HELD-TO-MATURITY FINANCIAL ASSETS If the Group has the positive intent and ability to hold debt securities to maturity, then such financial assets are classi- fied as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held-to- maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Held-to-maturity financial assets comprise debentures. AVAILABLE-FOR-SALE FINANCIAL ASSETS Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign The Group derecognises a financial liability when its contrac- tual obligations are discharged, cancelled or expire. Non-derivative financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Non-derivative financial liabilities comprise loans and borrow- ings, bank overdrafts, and trade and other payables. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. (iii) Share capital ORDINARY SHARE CAPITAL Ordinary share capital is classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recog- nised as a deduction from equity, net of any tax effects. REPURCHASE OF SHARE CAPITAL When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and presented in the reserve for own shares. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in share premium. 84 EURONAV (iv) Derivative financial instruments The Group from time to time may enter into derivative financial instruments to hedge its exposure to market fluctuations, foreign exchange and interest rate risks arising from operational, financing and investment activities. On initial designation of the derivative as hedging instrument, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effec- tive” in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80-125 percent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income. designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified to profit or loss. OTHER NON-TRADING DERIVATIVES When a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship, all changes in its fair value are recognised immediately in profit or loss. (v) Compound financial instruments Compound financial instruments issued by the Group comprise Notes denominated in USD that can be converted to ordinary shares at the option of the holder, when the number of shares is fixed and does not vary with changes in fair value. The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity compo- nent is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity component in proportion to their initial carrying amounts. Derivative financial instruments are recognised initially at fair value; attributable transaction costs are expensed as incurred. Subsequent to initial recognition, all derivatives are remeasured to fair value, and changes therein are accounted for as follows: Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured. CASH FLOW HEDGES When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same line item in the statement of comprehensive income as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying amount of the asset when the asset is recognised. In other cases, the amount accumulated in equity is reclassified to profit or loss in the same period that the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the Interest related to the financial liability is recognised in profit and loss. On conversion, the financial liability is reclassified to equity and no gain or loss is recognised. (i) Intangible assets (i) Goodwill Goodwill that arises on the acquisition of subsidiaries is presented as an intangible asset. For the measurement of goodwill at initial recognition, see accounting policy (f). After initial recognition goodwill is measured at cost less accu- mulated impairment losses (refer to accounting policy (k)). In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity accounted investee as a whole. (ii) Other intangible assets Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and impairment losses (see accounting policy k). The cost of an intangible asset acquired in a separate acquisi- tion is the cash paid or the fair value of any other consider- ation given. The cost of an internally generated intangible asset 85 Financial report includes the directly attributable expenditure of preparing the asset for its intended use. For the sale of vessels or other items of property, plant and equipment, transfer of risk and rewards usually occurs upon delivery of the vessel to the new owner. (iii) Subsequent expenditure Subsequent expenditure on intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates and its cost can be measured reliably. All other expenditure is expensed as incurred. (iv) Amortisation Amortisation is charged to the income statement on a straight- line basis over the estimated useful lives of the intangible assets from the date they are available for use. The estimated useful lives are as follows: ■ Software: 3 - 5 years Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (j) Vessels, property, plant and equipment (i) Owned assets Vessels and items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see below) and impairment losses (refer to accounting policy (k)). Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the following: ■ The cost of materials and direct labour; ■ Any other costs directly attributable to bringing the assets to a working condition for their intended use; ■ When the Group has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and ■ Capitalised borrowing costs. Property that is being constructed or developed for future use as investment property is classified as property, plant and equip- ment and stated at cost until construction or development is complete, at which time it is reclassified as investment property. Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment (refer to accounting policy (j) viii). Gains and losses on disposal of a vessel or of another item of property, plant and equipment are determined by comparing the net proceeds from disposal with the carrying amount of the vessel or the item of property, plant and equipment and are recognised in profit or loss. (ii) Leased assets Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases. Plant and equipment acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at incep- tion of the lease, less accumulated depreciation (see below) and impairment losses (refer accounting policy (k)). Lease payments are accounted for as described in accounting policy (q). Other leases are operating leases and are not recognised in the Group’s statement of financial position. (iii) Investment property Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost less accumulated depreciation and impairment losses (refer to accounting policy (k)). As such, the accounting policies as described in note (j) Vessels, property, plant and equipment apply. Cost includes expenditure that is directly attributable to the acqui- sition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the invest- ment property to a working condition for their intended use and capitalised borrowing costs. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. (iv) Assets under construction Assets under construction, especially newbuilding vessels, are accounted for in accordance with the stage of completion of the newbuilding contract. Typical stages of completion are the milestones that are usually part of a newbuilding contract. signing or receipt of refund guarantee, steel cutting, keel laying, launching and delivery. All stages of completion are guaranteed by a refund guarantee provided by the shipyard. (v) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of property, plant and equipment and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other expenditure is recognised in the consolidated statement of profit or loss as an expense as incurred. 86 EURONAV (vi) Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. tive evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably. (vii) Depreciation Depreciation is charged to the consolidated statement of profit or loss on a straight-line basis over the estimated useful lives of vessels and items of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. Vessels and items of property, plant and equipment are depreci- ated from the date that they are available for use, in respect of internally constructed assets, from the date that the asset is completed and ready for use. The estimated useful lives of significant items of property, plant and equipment are as follows: ■ tankers ■ FSO/FpSO/FPSO ■ buildings ■ plant and equipment ■ fixtures and fittings ■ other tangible assets ■ dry-docking 20 years 25 years 33 years 5 - 20 years 5 - 10 years 3 - 20 years 3 - 5 years Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (viii) Dry-docking – component approach Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. Costs associated with routine repairs and maintenance are expensed as incurred including routine maintenance performed whilst the vessel is in dry-dock. After each dry-dock, all the components installed (as replacements or as additional components) during the dry-dock are classified in two categories (according to their estimated lifetime and their respective cost). When the useful life is higher than 1 year, the component is amortised if their cost is higher than the established threshold. The components will then be amortised over their estimated lifetime (3-5 years). The thresholds are reviewed by the Board on an annual basis. (k) Impairment (i) Non-derivative financial assets A financial asset not classified as at fair value through profit or loss is assessed at each reporting date whether there is objec- Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bank- ruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security a significant or prolonged decline in the fair value of the security below its cost is objective evidence of impairment. FINANCIAL ASSETS MEASURED AT AMORTISED COST The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to- maturity financial assets) at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to maturity financial assets. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. AVAILABLE-FOR-SALE FINANCIAL ASSETS Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment 87 Financial report and amortisation, and the current fair value, less any impair- ment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to the application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income. EQUITY-ACCOUNTED INVESTEES An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. (ii) Non-financial assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets (refer to accounting policy (s)), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Goodwill and indefinite-lived intangible assets are tested annu- ally for impairment. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Future cash flows are based on current market conditions, historical trends as well as future expectations. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU’s. Goodwill acquired in a business combination is allocated to groups of CGU’s that are expected to benefit from the synergies of the combination. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGU’s are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGU’s), and then to reduce the carrying amounts of the other assets in the CGU (group of CGU’s) on a pro rata basis. An impairment loss recognised for goodwill shall not be reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (l) Assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets or disposal group are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets or investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains and losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted. (m) Employee benefits (i) Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the services are discounted to their present value. (ii) Defined benefit plans The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit 88 EURONAV method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return of plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recog- nised in profit and loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised imme- diately in profit or loss. The Group recognises gains and losses on the settlement of a defined plan when the settlement occurs. (iii) Other long term employee benefits The Group’s net obligation in respect of long-term employee benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on AA credit rated bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the currency in which the benefits are expected to be paid. Remeasurements are recognised in OCI in the period in which they arise. (iv) Termination benefits Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility or withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redun- dancies are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value. (v) Short-term employee benefit Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. (vi) Share-based payment transactions The grant-date fair value of equity-settled share-based payment awards granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non- market performance conditions at the vesting date. (n) Provisions A provision is recognised when the Group has a legal or constructive obligation that can be estimated reliably, as result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. The provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recog- nised as finance cost. RESTRUCTURING A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for. ONEROUS CONTRACTS A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract. (o) Revenue (i) Pool Revenues Aggregated revenue recognised on a daily basis from vessels operating on voyage charters in the spot market and on contract of affreightment (“COA”) within the pool is converted into an aggregated net revenue amount by subtracting aggregated voyage expenses (such as fuel and port charges) from gross 89 Financial report voyage revenue. These aggregated net revenues are combined with aggregate time charter revenues to determine aggregate pool Time Charter Equivalent revenue (“TCE”). Aggregate pool TCE revenue is then allocated to pool partners in accordance with the allocated pool points earned for each vessel that recognises each vessel’s earnings capacity based on its cargo, capacity, speed and fuel consumption performance and actual on hire days. The TCE revenue earned by our vessels oper- ated in the pools is equal to the pool point rating of the vessels multiplied by time on hire, as reported by the pool manager. (ii) Time - and Bareboat charters Revenues from time charters and bareboat charters are accounted for as operating leases and are recognised on a straight line basis over the periods of such charters, as service is performed. The Group does not recognise time charter revenues during periods that vessels are offhire. (iii) Spot voyages Within the shipping industry, there are two methods used to account for voyage revenues: rateably over the estimated length of each voyage and completed voyage. The recognition of voyage revenues rateably on a daily basis over the estimated length of each voyage is the most preva- lent method of accounting for voyage revenues and the method used by the Group and the pools in which we participate. Under each method, voyages may be calculated on either a load-to- load or discharge-to-discharge basis. In applying its revenue recognition method, management believes that the discharge- to-discharge basis of calculating voyages more accurately esti- mates voyage results than the load-to-load basis. Since, at the time of discharge, management generally knows the next load port and expected discharge port, the discharge-to-discharge calculation of voyage revenues can be estimated with a greater degree of accuracy. Euronav does not begin recognising voyage revenue until a charter has been agreed to by both the Group and the customer, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage because it is only at this time the charter rate is determinable for the specified load and discharge ports and collectability is reasonably assured. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due and associated costs. (p) Gain and losses on disposal of vessels In view of their importance the Group reports capital gains and losses on the sale of vessels as a separate line item in the consolidated statement of profit or loss. For the sale of vessels, transfer of risks and awards usually occurs upon delivery of the vessel to the new owner. (q) Leases LEASE PAYMENTS Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant period rate of interest on the remaining balance of the liability. (r) Finance income and finance cost Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends on redeemable preference shares, interest receivable on funds invested, dividend income, foreign exchange gains and losses, and gains and losses on hedging instruments that are recog- nised in the consolidated statement of profit or loss (refer to accounting policy (h)). Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the consolidated statement of profit or loss on the date that the dividend is declared. The interest expense component of finance lease payments is recognised in the consolidated statement of profit or loss using the effective interest rate method. (s) Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recog- nised directly in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recog- nised for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax recognised, is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. Deferred tax 90 EURONAV assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. In application of an IFRIC agenda decision on IAS 12 Income taxes, tonnage tax is not accounted for as income taxes in accordance with IAS 12 and is not presented as part of income tax expense in the income statement but is shown as an administrative expense under the heading Other operating expenses. (t) Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other compo- nents. The Group distinguishes two segments: the operation of crude oil tankers on the international markets and the floating storage and offloading operations (FSO/FpSO). The Group’s internal organisational and management structure does not distinguish any geographical segments. (u) Discontinued operations A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss is represented as if the operation had been discontinued from the start of the comparative period. (v) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2014, and have not been applied in preparing these consolidated financial statements: IFRIC 21 Levies provides guidance on accounting for levies in accordance with the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The interpretation will become mandatory for the Group’s 2015 consolidated financial state- ments, with retrospective application. This new standard has not yet been endorsed by the EU. It is expected not to have a material impact on the Group’s consolidated financial statements. IFRS 9 Financial Instruments published in July 2014 replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guid- ance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements, which align hedge accounting more closely with risk management. It also carries forward the guidance on recognition and derecogni- tion of financial instruments from IAS 39. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. The Group does not plan to early adopt this standard and the extent of the impact has not yet been determined. Annual Improvements to IFRS 2010-2012 cycle is a collection of minor improvements to 6 existing standards. This collection, which becomes mandatory for the Group’s 2015 consolidated financial statements, is not expected to have a material impact on its consolidated financial statements. Annual Improvements to IFRS 2011-2013 cycle is a collection of minor improvements to 4 existing standards. This collection, which becomes mandatory for the Group’s 2015 consolidated financial statements, is not expected to have a material impact on its consolidated financial statements. Amendments to IAS 19 Employee Benefits – Defined Benefit Plans: Employee Contributions introduce a relief that will reduce the complexity and burden of accounting for certain contributions from employees or third parties. The amend- ments which become mandatory for the Group’s 2015 consoli- dated financial statements, are not expected to have a material impact on the Group’s consolidated financial statements. IFRS 15 Revenue from Contracts with Customers estab- lishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for the annual reports beginning on or after 1 January 2017, with early adoption permitted. This standard has not yet been endorsed by the EU. The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 15. Annual Improvements to IFRS 2012-2014 cycle is a collection of minor improvements to 4 existing standards. This collection, which becomes mandatory for the Group’s 2016 consolidated financial statements, is not expected to have a material impact on our consolidated financial statements. These changes have not yet been endorsed by the EU. 91 Financial report Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) determines that when an entity acquires an interest in a joint operation that is a business, as defined in IFRS 3, it shall apply all of the principles on business combinations accounting in IFRS 3, and other IFRSs, that do not conflict with the guidance in this IFRS. The amendments which become mandatory for the Group’s 2016 consolidated financial statements, are not expected to have a material impact on the Group’s consolidated financial statements. These amendments have not yet been endorsed by the EU. Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) emphasizes that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment. For intangible assets, only in limited circumstances revenue-based amortisa- tion can be permitted. The amendments which become manda- tory for the Group’s 2016 consolidated financial statements, are not expected to have a material impact on the Group’s consoli- dated financial statements. These amendments have not yet been endorsed by the EU. Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) provides guidance on the recognition of the gain or loss when accounting for the sale or contribution of a subsidiary to an associate or joint venture. The amendments which become mandatory for the Group’s 2016 consolidated financial statements, are not expected to have a material impact on the Group’s consolidated financial statements. These amendments have not yet been endorsed by the EU. Notes to the consolidated financial statements for the year ended 31 December 2014 Note 1 - Segment Reporting Note 2 - Assets and liabilities held for sale and discontinued operations Note 3 - Revenue Note 4 - Expenses for shipping activities and other expenses from operating activities Note 5 - Net finance expense Note 6 - Income tax benefit (expense) Note 7 - Property, plant and equipment Note 8 - Deferred tax assets and liabilities Note 9 - Non-current receivables Note 10 - Trade and other receivables - current Note 11 - Cash and cash equivalents Note 12 - Equity Note 13 - Earnings per share Note 14 - Interest-bearing loans and borrowings Note 15 - Non-current other payables Note 16 - Employee benefits Note 17 - Trade and other payables - current Note 18 - Financial instruments - Market and other risks Note 19 - Operating leases Note 20 - Provisions & Contingencies Note 21 - Related parties Note 22 - Share-based Payment arrangements Note 23 - Group entities Note 24 - Equity-accounted investees Note 25 - Subsidiaries Note 26 - Major exchange rates Note 27 - Audit fees Note 28 - Subsequent events Note 29 - Statement on the true and fair view of the consolidated financial statements and the fair overview of the management report 92 EURONAV Note 1 - Segment Reporting The Group distinguishes two operating segments: the operation of crude oil tankers on the international markets (tankers) and the floating production, storage and offloading operations (FSO/ FpSO). These two divisions operate in completely different markets, where in the latter the assets are tailor made or converted for specific long term projects. The tanker market requires a different marketing strategy as this is considered a very volatile market, contract duration is often less than two years and the assets are to a big extent standardized. The segment profit or loss figures and key assets as set out below are presented to the executive committee on at least a quarterly basis to help the key decision makers in evaluating the respective segments. It was decided by the Chief Operating Decision Makers (CODM) to present the figures per segment based on proportionate consolidation for the joint ventures and not by applying equity accounting. The reconciliation between the figures of all segments combined on the one hand and with the consolidated statements of financial position and profit or loss on the other hand is presented in a separate column Equity-accounted investees. The Group has one client in the Tankers segment that repre- sented 11% of the Tankers segment total revenue in 2014 (2013: two clients which represented respectively 14% and 11%). All the other clients represent less than 10% of total revenues of the Tankers segment. The Group’s internal organisational and management structure does not distinguish any geographical segments. Consolidated statement of financial position (in thousands of USD except per share amounts) 31 December 2014 31 December 2013 Restated* Tankers FSO Less: Equity- accounted investees Total Tankers FSO Less: Equity- accounted investees Total ASSETS TOTAL CURRENT ASSETS 551,258 37,510 (50,913) 537,855 227,337 51,159 (86,728) 191,768 Vessels Other tangible assets Prepayments Intangible assets Receivables Investments in equity accounted investees Deferred tax assets 2,428,122 1,226 16,601 29 266,071 1,027 6,536 222,312 - - - 5,602 - - (392,100) - - - (13,226) 16,305 - 2,258,334 1,226 16,601 29 258,447 17,332 6,536 1,614,669 633 10,000 31 295,413 409 880 240,383 - - - 3,755 - - (420,252) 1,434,800 633 10,000 31 259,535 - - - (39,633) 22,705 23,114 - 880 TOTAL NON-CURRENT ASSETS 2,719,612 227,914 (389,021) 2,558,505 1,922,035 244,138 (437,180) 1,728,993 TOTAL ASSETS 3,270,870 265,424 (439,934) 3,096,360 2,149,372 295,297 (523,908) 1,920,761 EQUITY AND LIABILITIES TOTAL EQUITY 1,553,695 (80,987) - 1,472,708 913,533 (112,543) - 800,990 TOTAL CURRENT LIABILITIES Bank and other loans Convertible and other Notes Other payables Deferred tax liabilities Employee benefits Amounts due to equity-accounted joint ventures Provisions 317,849 1,164,975 231,373 489 - 2,108 - 381 22,128 317,451 - 6,832 - - - - (44,582) (394,400) - (6,832) - - 5,880 - 295,395 1,088,026 231,373 489 - 2,108 5,880 381 269,643 797,183 125,822 41,291 - 1,900 - - 28,796 367,988 - 11,056 - - (53,647) (455,085) - (21,056) - - 244,792 710,086 125,822 31,291 - 1,900 - - 5,880 5,880 - - TOTAL NON-CURRENT LIABILITIES 1,399,326 324,283 (395,352) 1,328,257 966,196 379,044 (470,261) 874,979 TOTAL EQUITY AND LIABILITIES 3,270,870 265,424 (439,934) 3,096,360 2,149,372 295,297 (523,908) 1,920,761 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 93 Financial report Note 1 - Segment Reporting (continued) Consolidated statement of profit or loss (in thousands of USD except per share amounts) 2014 2013 Restated* SHIPPING REVENUE Revenue Tankers FSO Less: Equity- accounted investees Total Tankers FSO Less: Equity- accounted investees Total 510,973 64,178 (101,166) 473,985 337,383 63,698 (96,459) 304,622 Gains on disposal of vessels/other tangible assets Other operating income 15,315 11,685 - (2,193) 13,122 8 - - 8 323 (597) 11,411 11,756 333 (569) 11,520 TOTAL SHIPPING REVENUE 537,973 64,501 (103,956) 498,518 349,147 64,031 (97,028) 316,150 OPERATING EXPENSES Voyage expenses and commissions (136,135) (471) 18,303 (118,303) (98,014) (500) 18,930 (79,584) Vessel operating expenses (131,676) (11,636) 19,223 (124,089) (115,209) (11,815) 21,113 (105,911) Charter hire expenses Losses on disposal of vessels/other tangible assets Impairment on non-current assets held for sale (35,664) - (7,416) - - - - - - (35,664) (21,027) - (215) (7,416) - - - - (4) (21,031) - - (215) - Depreciation tangible assets (171,920) (18,071) 29,057 (160,934) (149,215) (18,071) 30,404 (136,882) Depreciation intangible assets (20) - - (20) (76) - - (76) General and administrative expenses (40,735) (184) 354 (40,565) (27,364) (590) 789 (27,165) TOTAL OPERATING EXPENSES (523,566) (30,362) 66,937 (486,991) (411,120) (30,976) 71,232 (370,864) RESULT FROM OPERATING ACTIVITIES 14,407 34,139 (37,019) 11,527 (61,973) 33,055 (25,796) (54,714) Finance income Finance expenses 2,625 28 (36) 2,617 1,998 33 (38) 1,993 (98,642) (4,714) 7,386 (95,970) (58,123) (4,904) 8,390 (54,637) NET FINANCE EXPENSES (96,017) (4,686) 7,350 (93,353) (56,125) (4,871) 8,352 (52,644) Share of profit (loss) of equity accounted investees (net of income tax) 617 - 29,669 30,286 409 - 17,444 17,853 PROFIT (LOSS) BEFORE INCOME TAX (80,993) 29,453 Income tax expense 5,743 - PROFIT (LOSS) FOR THE PERIOD (75,250) 29,453 - - - (51,540) (117,689) 28,184 - (89,505) 5,743 (178) - (45,797) (117,867) 28,184 - - (178) (89,683) Attributable to: Owners of the Company (75,250) 29,453 - (45,797) (117,867) 28,184 - (89,683) * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 94 EURONAV Note 1 - Segment Reporting (continued) Consolidated statement of cash flows (in thousands of USD except per share amounts) 2014 2013 Restated* Tankers FSO Less: Equity- accounted investees Total Tankers FSO Less: Equity- accounted investees Total Net cash from operating activities 19,978 40,013 (45,209) 14,782 41,491 38,497 (88,905) (8,917) Net cash from (used in) investing activities Net cash from (used in) financing activities (1,007,928) - (15,079) (1,023,007) (11,606) - 39,720 28,114 1,168,516 (55,552) 76,057 1,189,021 (67,897) (25,015) 35,528 (57,384) Capital expenditure Impairment losses Impairment losses reversed (1,178,051) - - - - - 905 (1,177,146) (55,630) - - - - - - - - - - - - (55,630) - - * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 95 Financial report Note 2 - Assets and liabilities held for sale and discontinued operations Assets held for sale The assets held for sale can be detailed as follows: (in thousands of USD) Vessels Of which in Tankers segment Of which in FSO segment 2014 2013 Restated* 89,000 89,000 - 21,510 21,510 - (Estimated) Sale price Book Value Asset Held For Sale Expected Gain Expected Loss AT 1 JANUARY 2013, RESTATED * - - 52,920 - Assets transferred to assets held for sale Luxembourg Assets sold from assets held for sale Cap Isabella 28,000 21,510 21,510 6,490 52,920 52,920 (52,920) - AT 31 DECEMBER 2013, RESTATED * 80,920 74,430 21,510 6,490 AT 1 JANUARY 2014 - - 21,510 Assets transferred to assets held for sale Olympia Antarctica Assets sold from assets held for sale Luxembourg Olympia 89,000 89,000 27,900 91,380 91,560 93,856 89,000 89,000 - - - 21,510 89,000 (21,510) (89,000) 6,390 2,380 - - AT 31 DECEMBER 2014 - - 89,000 8,770 (7,416) * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. On 7 January 2014, the Group sold its oldest double-hulled VLCC Luxembourg (1999 – 299,150 dwt), for USD 27.9 million. Because the sale process commenced in 2013 and management had good indications that the sale would occur in the near future, the asset was transferred to non-current assets held for sale as of 31 December 2013. The capital gain on that sale of USD 6.4 million was recorded upon delivery on 28 May 2014. In April 2014, the purchase option to buy the Olympia (2008 – 315,981 dwt) and the Antarctica (2009 – 315,981 dwt) was exercised for an aggregate sale price of USD 178 million of which USD 20 million had been received as an option fee deductible from the purchase price back in January 2011. The sale resulted in a combined loss of USD 7.4 million which was recorded as an impairment on non-current assets held for sale in the second quarter of 2014. The Olympia was delivered to its new owner on 8 September 2014, earlier than expected, resulting in an increased sale price and a corresponding gain on disposal of assets of USD 2.4 million which was recorded in the third quarter of 2014. The Antarctica was delivered on 15 January 2015, earlier than expected, resulting in an increased sale price and a corresponding gain on disposal of assets of USD 2.2 million which will be recorded in the first quarter of 2015. Discontinued operations As per 31 December 2014 and per 31 December 2013 the Group had no operations that meet the criteria of a discontinued operation. 96 - - - - - (2,560) (4,856) EURONAV Note 3 - Revenue (in thousands of USD) Pool Revenue Time Charters Spot Voyages TOTAL REVENUE Note - 19 - 2014 149,624 132,118 192,243 2013 Restated* 49,792 133,396 121,434 473,985 304,622 For the accounting treatment of revenue, we refer to the accounting policies (o) - Revenue. The increase in revenue is mainly related to the increase in the fleet size and improvement of the shipping market in general. Spot Voyages TC&BB Pool 2014 2013 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 97 Financial report Note 4 - Expenses for shipping activities and other expenses from operating activities VOYAGE EXPENSES AND COMMISSIONS (in thousands of USD) Voyage related expense Commissions paid TOTAL VOYAGE EXPENSES AND COMMISSIONS Note 2014 - - (111,238) (7,065) (118,303) 2013 Restated* (73,412) (6,172) (79,584) The majority of voyage expenses are port costs, bunkers and agent fees paid to operate the vessels on the spot market. These expenses increased in 2014 compared to 2013 due to additional port and bunker expenses, due to changes in the Group’s fleet trading pattern and an increase in the number of vessels in the spot market or through the Tankers International Pool. VESSEL OPERATING EXPENSES (in thousands of USD) Operating expenses Insurance Note - - 2014 (112,834) (11,255) 2013 Restated* (97,333) (8,578) TOTAL VESSEL OPERATING EXPENSES (124,089) (105,911) The operating expenses relate mainly to the crewing, technical and other costs to operate tankers. In 2014 these expenses increased compared to 2013, which is mainly related to a higher number of vessels operated by the Group following the delivery of the Maersk Acquisition vessels. CHARTER HIRE EXPENSES (in thousands of USD) Charter hire Bare boat hire TOTAL CHARTER HIRE EXPENSES GENERAL AND ADMINISTRATIVE EXPENSES (in thousands of USD) Wages and salaries Social security costs Provision for employee benefits Equity-settled share-based payments Other employee benefits EMPLOYEE BENEFITS Administrative expenses Claims Provisions TOTAL GENERAL AND ADMINISTRATIVE EXPENSES Average number of full time equivalents Note 19 19 Note - - 16 22 - - - - 2014 (32,080) (3,584) (35,664) 2014 (10,840) (2,495) (85) (3,994) (3,075) (20,489) (19,228) (8) (840) (40,565) 113.32 2013 Restated* (18,029) (3,002) (21,031) 2013 Restated* (9,498) (2,149) 86 (183) (2,137) (13,881) (13,284) - - (27,165) 97.30 The administrative expenses include amongst other director fees, office rental, consulting- and audit fees and Tonnage Tax. Due to the increase in the number of owned vessels in 2014, administrative expenses relating to the Tankers International Pool and Tonnage Tax increased. Because of additional FTE’s in 2014, staff costs went up accordingly in 2014 compared to 2013. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 98 EURONAV Note 5 - Net finance expense RECOGNISED IN PROFIT OR LOSS (in thousands of USD) Interest income Foreign exchange gains FINANCE INCOME Interest expense on financial liabilities measured at amortised cost Fair value adjustment on interest rate swaps Amortisation other Notes Other financial charges Foreign exchange losses FINANCE EXPENSE 2014 487 2,131 2,617 (57,948) - (31,878) (3,829) (2,315) (95,970) 2013 Restated* 98 1,895 1,993 (49,240) 154 - (2,809) (2,742) (54,637) NET FINANCE EXPENSE RECOGNISED IN PROFIT OR LOSS (93,353) (52,644) The above finance income and expenses include the following in respect of assets (liabilities) not at fair value through profit or loss: Total interest income on financial assets Total interest expense on financial liabilities Total other financial charges RECOGNISED DIRECTLY IN EQUITY (in thousands of USD) Foreign currency translation differences for foreign operations Cash flow hedges - effective portion of changes in fair value Cash flow hedges - reclassified to profit or loss NET FINANCE EXPENSE RECOGNISED DIRECTLY IN EQUITY Attributable to: Owners of the Company NET FINANCE EXPENSE RECOGNISED DIRECTLY IN EQUITY Recognised in: Translation reserve Hedging reserve 487 (89,826) (3,829) 2014 (567) 1,291 - 724 724 724 (567) 1,291 98 (49,240) (2,809) 2013 Restated* 216 5,430 - 5,646 5,646 5,646 216 5,430 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 99 Financial report Note 6 - Income tax benefit (expense) (in thousands of USD) Current tax Current period TOTAL CURRENT TAX Deferred tax Recognised unused tax losses TOTAL DEFERRED TAX TOTAL TAX EXPENSE 2014 (9) (9) 5,752 5,752 5,743 2013 Restated* (58) (58) (120) (120) (178) Reconciliation of effective tax Profit (loss) before tax Tax at domestic rate Effects on tax of : Tax exempt profit / loss Loss for which no DTA1 has been recognised Non-deductible expenses Use of unrecognised tax losses, tax credits and tax allowances Tonnage Tax regime Effect of share of profit of equity-accounted investees Effects of tax regimes in foreign jurisdictions 2014 (51,540) 2013 Restated* (89,505) (33.99%) 17,518 (33.99%) 30,423 3,039 (17,926) (193) - (6,590) 10,294 (400) (2,863) - (180) 138 (33,717) 6,068 (47) TOTAL TAXES (11.14%) 5,743 0.20% (178) In application of an IFRIC agenda decision on IAS 12 Income taxes, tonnage tax is not accounted for as income taxes in accordance with IAS 12 and is not presented as part of income tax expense in the consolidated statement of profit or loss but has been shown as an administrative expense under the heading General and administrative expenses (see Note 4) . * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 1 DTA= Deferred Tax Asset 100 EURONAV Note 7 - Property, plant and equipment Vessels Vessels under construction Other tangible assets Prepayments Total PPE (in thousands of USD) AT 1 JANUARY 2013, RESTATED * Cost Depreciation & impairment losses NET CARRYING AMOUNT Acquisitions Disposals and cancellations Depreciation charges Transfer to assets held for sale Transfers Translation differences BALANCE AT 31 DECEMBER 2013, RESTATED * AT 1 JANUARY 2014 Cost Depreciation & impairment losses NET CARRYING AMOUNT Acquisitions Disposals and cancellations Depreciation charges Transfer to assets held for sale Transfers Translation differences 2,506,756 (913,919) 1,592,837 - - (136,527) (21,510) - - 1,434,800 2,424,978 (990,178) 1,434,800 1,053,939 - (160,590) (185,415) 115,600 - BALANCE AT 31 DECEMBER 2014 2,258,334 AT 31 DECEMBER 2014 Cost Depreciation & impairment losses NET CARRYING AMOUNT 3,342,607 (1,084,273) 2,258,334 - - - - - - - - - - - - - - - - - - - - - - - 2,377 (1,711) 666 325 (10) (355) - 7 - - - 10,000 - - - - - 2,509,133 (915,630) 1,593,503 10,325 (10) (136,882) (21,510) - 7 633 10,000 1,445,433 2,487 (1,854) 633 987 (2) (344) - - (48) 1,226 2,997 (1,771) 1,226 10,000 - 2,437,465 (992,032) 10,000 1,445,433 122,201 1,177,127 - - - (115,600) - (2) (160,934) (185,415) - (48) 16,601 2,276,161 16,601 - 3,362,205 (1,086,044) 16,601 2,276,161 ■ On 3 January 2014, the Group signed a contract to acquire fifteen (15) Very Large Crude Carriers (VLCC) from Maersk Tankers Singapore Pte Ltd. for a total acquisition price of USD 980 million, payable as the vessels are being delivered. For this transaction the Group made a prepayment in December 2013 of USD 10 million and a remaining deposit of USD 88 million on 15 January 2014. On 20 and 25 February 2014 Euronav suc- cessfully took delivery of the first two vessels, the Nautilus and Nucleus. ■ In April 2014, a purchase option to buy the Olympia (2008 – 315,981 dwt) and the Antarctica (2009 – 315,981 dwt) was exercised and consequently these vessels were transferred to assets held for sale (see Note 2). ■ On 9 May 2014, the Group successfully took delivery of the third double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Navarin. ■ On 3 June 2014, the Group successfully took delivery of the fourth and fifth double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Sara and Newton. ■ On 11 June 2014, the Group successfully took delivery of the sixth double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Ilma. ■ On 19 June 2014, the Group successfully took delivery of the seventh and eight double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Nautic and Ingrid. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 101 Financial report Note 7 - Property, plant and equipment (continued) ■ On 2 July 2014, the Group successfully took delivery of the ninth and tenth double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Nectar and the Noble. ■ On 9 October 2014, the Group successfully took delivery of the fifteenth and last double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Sandra. ■ On 7 July 2014, the Group successfully took delivery of the eleventh double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Simone. ■ On 17 July 2014, the Group successfully took delivery of the twelfth double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Neptun. ■ On 22 July 2014, the Group successfully took delivery of the thirteenth double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Sonia. ■ On 29 July 2014, the Group successfully took delivery of the fourteenth double-hulled VLCC from Maersk Tankers Singapore Pte Ltd., the Iris. ■ On 8 July 2014, the Group has entered into an additional agreement with Maersk Tankers Singapore Pte Ltd. for the purchase of 4 modern Japanese built VLCC vessels for an aggregate purchase price of USD 342 million including a de- posit of USD 34.2 million. On 19 and 22 December 2014, the Group successfully took delivery of the first two vessels, the Hojo and Hakone. The other two vessels are expected to be delivered in the course of the first quarter of 2015. ■ In 2014, the Antarctica, Flandre, Felicity, Eugenie and Fraternity have been dry-docked. The cost of planned repairs and maintenance is capitalised and included under the heading acquisitions. Disposal of assets - Gain/Losses (in thousands of USD) Note Acquisitions Sale price Book Value Gain Loss Cap Isabella Other AT 31 DECEMBER 2013, RESTATED * Olympia Luxembourg Cap Isabella Other AT 31 DECEMBER 2014 2 - 2 2 - - 215 - 215 52,920 - 52,920 53,135 - 53,135 Acquisitions Sale price Book Value 91,380 27,900 4,329 - 89,000 21,510 - - - - - - - 123,609 110,510 13,122 - 8 8 Gain 2,380 6,390 4,329 23 (215) - (215) Loss - - - - - ■ On 15 March 2013, the Group sold the Suezmax Cap Isabella (2013 – 157,258 dwt) to Belle Shipholdings Ltd. The Cap Isabella was a newbuilding from Samsung Heavy Industries and was sold through a sale and lease back agreement. The net selling price of the vessel was USD 52.9 million while Euronav still had a capital commitment to the yard of USD 55.2 million. As this transaction was signed before the announcement of the 2012 final figures and was the result of negotiations with various parties which started in the financial year 2012, the Group recorded the capital loss of USD 32 million in 2012 with a small adjustment in 2013 of USD 215,000. ■ On 31 July 2014, the Cap Isabella was in its turn sold by its owner, Belle Shipholdings Ltd., a company related to Euronav, to a third-party and was delivered to its new owner on 8 October 2014. As the original sale and lease back agreement between the Group and Belle Shipholdings Ltd. included a profit sharing mechanism for a future sale, a capital gain on disposal of assets was recorded in the fourth quarter of 2014 for a total amount of USD 4.3 mil- lion. ■ On 7 January 2014, the Group sold its oldest double-hulled VLCC Luxembourg (1999 – 299,150 dwt), for USD 27.9 mil- lion. Because the sale process commenced in 2013 and management had good indications that the sale would occur in the near future, the asset was transferred to non-current assets held for sale as of 31 December 2013. The capital gain on that sale was USD 6.4 million which has been re- corded at delivery in 2014. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 102 EURONAV Note 7 - Property, plant and equipment (continued) ■ In April 2014, the purchase option to buy the Olympia (2008 – 315,981 dwt) and the Antarctica (2009 – 315,981 dwt) was exercised for an aggregate sale price of USD 178 million of which USD 20 million had been received as an option fee de- ductible from the purchase price back in January 2011. The sale resulted in a combined loss of USD 7.4 million which was recorded as an impairment on non-current assets held for sale in the second quarter of 2014. The Olympia was de- livered to its new owner on 8 September 2014, earlier than expected, resulting in an increased sale price and a corre- sponding gain on disposal of assets of USD 2.4 million which was recorded in the third quarter of 2014. The Antarctica was delivered on 15 January 2015, earlier than expected, resulting in an increased sale price and a corresponding gain on disposal of assets of USD 2.2 million which will be recorded in the first quarter of 2015. Impairment As a result of the low charter rates and vessels value in 2014, the Group has performed an impairment test whereby the carrying amount of an asset or CGU is compared to its recoverable amount, which is the greater of its value in use and its fair value less cost to sell. In assessing value in use, the following assumptions were used: ■ 10 year historical average spot freight rates are used as forecast charter rates for tankers ■ Weighted Average Cost of Capital (‘WACC’) of 5.72% (2013: 6.38%) ■ 20 year useful life with residual value equal to zero for tank- ers that Although management believes the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are subject to judgment. The impairment test did not result in a requirement to record an impairment loss in 2014. Even with an increase of the WACC of 3%, there was no need to record an impairment loss in 2014. Security All tankers financed are subject to a mortgage to secure bank loans (see Note 14). Vessels on order or under construction The group did not have any vessels under construction or on order, as at 31 December 2014 or 31 December 2013. 103 Financial report Note 7 - Property, plant and equipment (continued) Capital commitment As at 31 December 2014 the Group’s total capital commitment including the Maersk Transaction discussed above amounts to USD 149.4 million (2013: USD 970 million). These can be detailed as follows: (in thousands of USD) Commitments in respect of VLCCs Commitments in respect of Suezmaxes Commitments in respect of FSOs TOTAL (in thousands of USD) Commitments in respect of VLCCs Commitments in respect of Suezmaxes Commitments in respect of FSOs TOTAL As at 31 December 2013 payments scheduled for TOTAL 970,000 - - 2014 970,000 - - 970,000 970,000 2015 2016 - - - - - - - - As at 31 December 2014 payments scheduled for TOTAL 149,400 - - 2015 149,400 - - 149,400 149,400 2016 2017 - - - - - - - - 104 EURONAV Note 8 - Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: (in thousands of USD) Assets Liabilities Employee benefits Unused tax losses & tax credits Offset BALANCE AT 31 DECEMBER 2013, RESTATED* Provisions Employee benefits Unused tax losses & tax credits Offset BALANCE AT 31 DECEMBER 2014 52 828 880 - 880 238 52 6,246 6,536 - 6,536 - - - - - - - - - - - Net 52 828 880 238 52 6,246 6,536 Unrecognised deferred tax assets and liabilities Deferred tax assets and liabilities have not been recognised in respect of the following items: (in thousands of USD) Deductible temporary differences Taxable temporary differences Tax losses & tax credits Offset TOTAL 31 December 2014 31 December 2013 Restated* Assets Liabilities Assets Liabilities 311 - 132,689 133,000 (16,589) 116,411 - (16,589) - (16,589) 16,589 - 352 - 30,148 30,500 (16,587) 13,913 - (16,587) - (16,587) 16,587 - The unrecognised deferred tax assets in respect of tax losses and tax credits are entirely related to tax losses carried forward, investment deduction allowances and excess dividend received deduction. These unrecognised tax losses and tax credits have no expiration date. A deferred tax asset (‘DTA’) is recognised for unused tax losses and tax credits carried forward, to the extent that it is probable that future taxable profits will be available. The Group considers future taxable profits as probable when it is more likely than not that taxable profits will be gener- ated in the foreseeable future. When determining whether probable future taxable profits are available the probability threshold is applied to portions of the total amount of unused tax losses or tax credits, rather than the entire amount. Given the nature of the tonnage tax regime, the Group has a substantial amount of unused tax losses and tax credits for which no future tax profits are probable and therefore no DTA has been recognised. The unrecognised tax liabilities in respect of taxable temporary differences relate to tax liabilities in respect of non distributed reserves of the Group that will be taxed when distributed. No deferred tax liability has been recognised because the Group controls whether the liability will be incurred and manage- ment is satisfied that the liability will not be incurred in the foreseeable future. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 105 Financial report Note 8 - Deferred tax assets and liabilities (continued) Movement in deferred tax balances during the year (in thousands of USD) Employee benefits Unused tax losses & tax credits TOTAL Provisions Employee benefits Unused tax losses & tax credits TOTAL Balance at 1 Jan 2013 Recognised in income Recognised in equity Translation differences Balance at 31 Dec 2013 Restated* 41 922 963 9 (129) (120) - - - 2 35 37 52 828 880 Balance at 1 Jan 2014 Recognised in income Recognised in equity Translation differences Balance at 31 Dec 2014 - 52 828 880 238 7 5,507 5,752 - - - - - (7) (89) (96) 238 52 6,246 6,536 Note 9 - Non-current receivables (in thousands of USD) Shareholders loans to joint ventures Other non-current receivables Investment TOTAL NON-CURRENT RECEIVABLES 31 December 2014 31 December 2013 Restated* 257,771 675 1 258,447 259,517 17 1 259,535 Please refer to Note 24 for more information on the shareholders loans to joint ventures. The maturity date of the non-current receivables is as follows: (in thousands of USD) 31 December 2014 Receivable: Between one and two years Between two and three years Between three and four years Between four and five years More than five years TOTAL NON-CURRENT RECEIVABLES - - - - 258,447 258,447 31 December 2013 Restated* - - - - 259,535 259,535 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 106 EURONAV Note 10 - Trade and other receivables - current (in thousands of USD) Trade receivables Accrued income Accrued intrest Deferred charges Other receivables TOTAL TRADE AND OTHER RECEIVABLES 31 December 2014 31 December 2013 Restated* 48,070 18,342 79 31,492 96,750 194,733 24,315 9,765 14 29,368 32,451 95,913 Note 11 - Cash and cash equivalents (in thousands of USD) Bank deposits Cash at bank and in hand TOTAL Of which restricted cash Less: Bank overdrafts used for cash management purposes NET CASH AND CASH EQUIVALENTS 31 December 2014 31 December 2013 Restated* 146,100 107,986 254,086 - - 254,086 34,254 40,055 74,309 1,750 - 74,309 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 107 Financial report Note 12 - Equity Number of shares issued in shares On issue at 1 January Conversion convertible bonds Conversion perpetual convertible preferred equity Capital increases 31 December 2014 31 December 2013 54,223,817 18,495,656 9,459,286 48,871,907 51,750,000 2,473,817 - - ON ISSUE AT 31 DECEMBER - FULLY PAID 131,050,666 54,223,817 On 10 January 2014, the Group raised USD 50.0 million under the authorised capital against the issuance of 5,473,571 new ordi- nary shares. On 24 February 2014, the meeting of shareholders approved a USD 300 million capital increase against the issuance of 32,841,528 new ordinary shares. The transaction costs related to these capital increases for a total amount of USD 8.6 million were recognised directly in retained earnings. On 14 July 2014, the Group received gross proceeds of USD 125.0 million under the authorised capital against the issu- ance of 10,556,808 new ordinary shares. The transaction costs related to this capital increase for a total of USD 3.9 million were recognised directly in retained earnings. At 31 December 2014 the share capital is represented by 131,050,666 shares. The shares have no par value. At 31 December 2014, the authorised share capital not issued amounts to USD 61,525,678 (2013: USD 47,311,178) or the equiva- lent of 56,605,942 shares (2013: 43,528,067 shares). The holders of ordinary shares are entitled to receive dividends when declared and are entitled to one vote per share at the shareholders’ meetings of the Group. Issue and contribution of perpetual convertible preferred equity On 16 December 2013, Euronav raised USD 150 milllion through a private placement of a perpetual convertible preferred equity instrument (“PCPs”). The instrument was issued in January 2014 at par and bearing an interest of 6% during the first 5 years payable annually in arrears in cash or in shares at the option of the Group. The price against which the PCPs could be contributed was EUR 5.776000 (or USD 7.928715 at EUR/USD exchange rate of 1.3727) per common share. The Group had an option to force the conversion if the share price reached a certain level over a certain period of time and if the Group had completed a listing in New York (NYSE or NASDAQ). The transaction costs related to the issuance of the instru- ment for a total of USD 3.5 million, were recognised in retained earnings. On 6 February 2014, 30 of the 60 perpetual convertible preferred equity instruments issued on 13 January 2014, were converted into share capital, resulting in the issuance of 9,459,286 ordinary shares. On 6 February 2015, the remaining 30 of the 60 perpetual convertible preferred equity instruments issued on 13 January 2014, were converted into share capital, resulting in the issuance of 9,459,283 ordinary shares (see Note 28). Issue and conversion of convertible Notes In the course of 2014, 1,097 of the remaining convertible Notes issued in 2013 and maturing in 2018 were converted into a total of 18,495,656 new ordinary shares. The last outstanding Note issued in 2013 and maturing in 2018 was redeemed on 22 April 2014. The difference between the face value and book value of these converted Notes amounted to USD 7.4 million which was recognised directly in retained earnings. 250 of the convertible Notes issued in 2009 and maturing in 2015 remained outstanding at 31 December 2014. Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial state- ments of foreign operations. Hedging reserve The Group, in connection to the USD 300 million facility raised in April 2009 also entered in several Interest Rate Swap (IRSs) instruments with a combined notional value of USD 300 million. These IRSs have been used to hedge the risk related to the fluctuation of the Libor rate and qualified as hedging instru- ments in a cash flow hedge relationship under IAS 39. These 108 EURONAV instruments have been measured at their fair value; effective changes in fair value have been recognised in equity and the ineffective portion has been recognised in profit or loss. These IRSs had a duration of 5 years matching the repayment profile of that facility and matured on 2 April 2014. Therefore, the fair value of these instruments at 31 December 2014 amounted to USD 0. Dividend limitations The Group is subject to a dividend covenant in relation to its senior secured credit facilities: the dividend shall not exceed 50% of the net income earned in a financial year or part thereof to which that dividend relates, unless the majority of the lenders of those particular facilities agree to a dividend in excess of the said 50%. Treasury shares At 31 December 2014 the Group holds 1,750,000 treasury shares (31 December 2013: 1,750,000 shares). The Group has purchased the shares at an average price of EUR 18.1605 or USD 26.3210. The treasury shares have been deducted from equity and amount to USD 46,061,831 at 31 December 2014 (31 December 2013: USD 46,061,831). Dividends In 2013 and 2014, the directors of the Group proposed not to declare a dividend. Share-based payment arrangements On 16 December 2013, the Group established a share option program that entitles key management personnel to purchase existing shares in the Company. Under the program, holders of vested options are entitled to purchase shares at the market price of the shares at the grant date. Currently this program is limited to key management personnel. The key terms and conditions did not change after 31 December 2013. For this option program a total amount of USD 4.0 million was recognised in the consolidated statement of profit or loss for 2014 (2013: USD 0.2 million). 109 Financial report Note 13 - Earnings per share Basic earnings per share The calculation of basic earnings per share at 31 December 2014 was based on a result attributable to ordinary shares of USD -45,795,933 (2013: USD -89,683,447) and a weighted average number of ordinary shares outstanding during the period ended December 31, 2014 of 116,539,017 (2013: 50,230,438), calculated as follows: Result attributable to ordinary shares (in thousands of USD except share and per share information) 2014 2013 Result for the period Weighted average Basic earnings per share (in USD) Weighted average number of ordinary shares (45,797) 116,539,017 (0.39) (89,683) 50,230,438 (1.79) (in shares) Shares issued Treasury shares Shares outstanding Weighted number of shares ON ISSUE AT 31 DECEMBER 2012 51,750,000 1,750,000 50,000,000 50,000,000 Issuance of shares Purchases of treasury shares Withdrawal of treasury shares Sales of treasury shares 2,473,817 - - - - - - - 2,473,817 230,438 - - - - - - ON ISSUE AT 31 DECEMBER 2013 54,223,817 1,750,000 52,473,817 50,230,438 Issuance of shares Purchases of treasury shares Withdrawal of treasury shares Sales of treasury shares 76,826,849 - - - - - - - 76,826,849 64,065,200 - - - - - - ON ISSUE AT 31 DECEMBER 2014 131,050,666 1,750,000 129,300,666 116,539,017 Diluted earnings per share At 31 December 2014, 250 convertible Notes (2013: 1,348) and 30 PCPs (2013: 0) were excluded from the diluted weighted- average number of ordinary shares calculation because their effect would have been anti-dilutive (2013 and 2014 earnings per share would increase). Number of ordinary shares (diluted) The table below shows the potential number of shares that could be created if all the convertible Notes were to be converted into ordinary shares. (in shares) ORDINARY SHARES OUTSTANDING (BASIC) Effect of potential conversion of convertible Notes Effect of potential conversion of PCPS Effect of Share-based Payment arrangements 2014 2013 116,539,017 50,230,438 1,079,047 9,459,283 1,750,000 18,949,134 - 1,750,000 NUMBER OF ORDINARY SHARES (DILUTED) 128,827,347 70,929,572 110 EURONAV Note 13 - Earnings per share (continued) The number of shares related to a potential conversion of convertible Notes may vary according to potential adjustments of the Conversion Price in certain events such as a change of control, a distribution of a dividend exceeding certain threshold amounts or early voluntary conversion. On 31 January 2013, Euronav launched an invitation to current bondholders to exchange any and all outstanding Notes due in January 2015 for new 6.50% convertible Notes due in January 2018. The conversion price of the new convertible Note was set to EUR 5.65 or USD 7.54. In case of an early voluntary conver- sion an additional number of shares would be made available at the same price as the conversion price to compensate for the unpaid coupons of the first 4 years. 1,250 2015 Notes were tendered for exchange. Notes due in January 2018. In the course of 2013, these Notes were sold. In the course of 2014, all the convertible Notes issued in 2013 and maturing in 2018, were converted to new ordinary shares, except for one which was redeemed at par. On 31 January 2015, the last 250 remaining outstanding Notes due in January 2015, were redeemed at par. On 6 February 2014, 30 of the 60 perpetual convertible preferred equity instruments issued on 10 January 2014, were contributed in kind. On 6 February 2015, the remaining 30 perpetual convert- ible preferred equity instruments were contributed as well. In the beginning of 2012, the Group performed a buyback of 68 Notes issued in 2009 and maturing January 2015. These Notes were exchanged in February 2013 for new 6.50% convertible The following table illustrates all the capital increases that occurred in the course of 2015 and the remaining possible dilution for the outstanding Notes and perpetual convertible equity instruments. Capital Increases in 2015 Date of transaction Amount in USD Issued Ordinary shares Total number ordinary shares on issue ON ISSUE AT 31 DECEMBER 2014 131,050,666 131,050,666 Initial public offering of its ordinary shares in the U.S. Conversion of PCPs (30) 28 January 2015 229,062,750 18,699,000 149,749,666 6 February 2015 10,281,408 9,459,283 159,208,949 TOTAL ON ISSUE AFTER CAPITAL INCREASES 28,158,283 159,208,949 The above transactions resulted in the following capital structure: Shares issued Treasury shares Shares outstanding Weighted number of shares ON ISSUE AT 31 DECEMBER 2014 131,050,666 1,750,000 129,300,666 116,539,017 Issuance of shares Purchases of treasury shares Withdrawal of treasury shares Sales of treasury shares 28,158,283 - - - - - - - 28,158,283 - - - - - - - ON ISSUE YTD 2015 159,208,949 1,750,000 157,458,949 146,479,635 After all the conversions of the convertible Notes and the contributions in kind, there are no more remaining outstanding instruments which can give rise to dilution, except for the share-based payment arrangements. 111 Financial report Note 14 - Interest-bearing loans and borrowings (in thousands of USD) More than 5 years Between 1 and 5 years More than 1 year Less than 1 year AT 1 JANUARY 2013, RESTATED * New loans Scheduled repayments Early repayments Conversion Other changes BALANCE AT 31 DECEMBER 2013, RESTATED * More than 5 years Between 1 and 5 years More than 1 year Less than 1 year BALANCE AT 31 DECEMBER 2013, RESTATED * More than 5 years Between 1 and 5 years More than 1 year Less than 1 year AT 1 JANUARY 2014 New loans Scheduled repayments Early repayments Conversion Other changes BALANCE AT 31 DECEMBER 2014 More than 5 years Between 1 and 5 years More than 1 year Less than 1 year BALANCE AT 31 DECEMBER 2014 Bank loans - 800,853 800,853 110,621 911,474 56,587 (110,621) (9,500) - (177) 847,763 - 710,086 710,086 137,677 847,763 Bank loans - 710,086 710,086 137,677 847,763 1,195,217 (137,545) (660,946) - (10,160) 1,234,329 371,595 716,431 1,088,026 146,303 1,234,329 Convertible and other Notes - 132,694 132,694 - Total - 933,547 933,547 110,621 132,694 1,044,168 6,800 - (500) (15,200) 2,028 125,822 - 125,822 125,822 - 125,822 Convertible and other Notes - 125,822 125,822 - 125,822 200,175 - (1,400) (109,700) 39,600 254,497 - 231,373 231,373 23,124 254,497 63,387 (110,621) (10,000) (15,200) 1,851 973,585 - 835,908 835,908 137,677 973,585 Total - 835,908 835,908 137,677 973,585 1,395,392 (137,545) (662,346) (109,700) 29,440 1,488,826 371,595 947,804 1,319,399 169,427 1,488,826 Bank Loans On 3 April 2009, the Group entered into a USD 300.0 million secured loan facility with a syndicate of banks and Nordea Bank Norge SA as Agent and Security Trustee. This facility had an initial term of five years, which was amended to extend maturity by an additional four years until 2018. The Group used the proceeds of this facility to finance the acquisition of six vessels, Fraternity, Felicity, Cap Felix, Cap Theodora, Antarctica and Olympia, which were pledged as collateral under the loan, and for general corporate and working capital purposes. This facility, as amended, is repayable in consecu- tive quarterly installments and bears interest at LIBOR plus a margin of 3.40% per annum, plus applicable mandatory costs. On 22 October 2014, the Group repaid this loan in full using a portion of the borrowings under the USD 340.0 million Senior Secured Credit Facility. As of 31 December 2014 and 31 December 2013, the outstanding balances on this facility were USD 0 million and USD 211.4 million, respectively. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 112 EURONAV Note 14 - Interest-bearing loans and borrowings (continued) On 22 June 2011, the Group entered into a USD 750.0 million secured loan facility with a syndicate of banks and Nordea Bank Norge SA as Agent and Security Trustee. This facility is comprised of a USD 500.0 million term loan facility and a USD 250.0 million revolving credit facility, and has a term of six years. The main purpose of this facility was to repay and retire the USD 1,600 million facility signed in April 2005. This facility is secured by 22 of the Group’s wholly-owned vessels. The term loan is repayable in 11 instalments of consecutive 6-month intervals, with the final repayment due at maturity in 2017. Each revolving advance is repayable in full on the last day of its applicable interest period. This facility, as amended, bears interest at LIBOR plus a margin of 3.0% per annum plus applicable mandatory costs. Following the sale of the Algarve in October 2012, the Group prepaid USD 18.6 million of the term loan, and the revolving loan facility was reduced by USD 10.2 million. As of 31 December 2014 and 31 December 2013, the outstanding balances on this facility were USD 483.4 million and USD 568.6 million, respectively. On 23 December 2011, the Group entered into a USD 65.0 million secured term loan facility with DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) to finance the acqui- sition of Alsace, which is mortgaged under the loan. This facility is repayable over a term of seven years in ten installments at successive six month intervals, each in the amount of USD 2.15 million together with a balloon installment of USD 43.5 million payable with (and forming part of) the tenth and final repayment on 23 February 2017. The interest rate is LIBOR plus a margin of 2.95% per annum plus applicable mandatory costs. As of 31 December 2014 and 31 December 2013, the outstanding balances on this facility were USD 54.3 million and USD 58.6 million, respectively. On 25 March 2014, the Group entered into a USD 500.0 million senior secured credit facility with DNB Bank ASA, Nordea Bank Norge ASA, and Skandinaviska Enskilda Banken AB (publ). This facility bears interest at LIBOR plus a margin of 2.75% per annum and is repayable over a term of six years with maturity in 2020 and is secured by the fifteen (15) Very Large Crude Carriers (VLCC) from Maersk Tankers Singapore Pte Ltd. The proceeds of the facility will be drawn and used to partially finance the purchase price of the Maersk Acquisition Vessels. As of 31 December 2014, the outstanding balance on this facility was USD 476.0 million. On 13 October 2014, the Group entered into a new USD 340.0 million senior secured credit facility with a syndicate of banks and ING Bank N.V. as Agent and Security Trustee. Borrowings under this facility have been, or are expected to be, used to partially finance the acquisition of the four (4) modern Japanese built VLCC vessels (‘the VLCC Acquisition Vessels’) from Maersk Tankers Singapore Pte Ltd. and to repay USD 153.1 million of outstanding debt and retire the Group’s USD 300.0 million Secured Loan Facility dated 3 April 2009. This facility is comprised of (i) a USD 148.0 million non-amortising revolving credit facility and (ii) a USD 192.0 million term loan facility. This facility has term of 7 years and bears interest at LIBOR plus a margin of 2.25% per annum. This credit facility is secured by eight of our wholly-owned vessels, the Fraternity, Felicity, Cap Felix, Cap Theodora and, upon their respective deliveries, the VLCC Acquisition Vessels. On 22 October 2014 a first drawdown under this facility was made to repay the USD 300 million secured loan facility, followed by additional drawdowns on 22 December 2014 and 23 December 2014 for an amount of 60.3 million and 50.3 million following the delivery of the Hojo and Hakone respectively. As of 31 December 2014, the outstanding balance on this facility was USD 235.2 million. Undrawn borrowing facilities At 31 December 2014, Euronav and its fully-owned subsidiaries have undrawn credit line facilities amounting to EUR 10 million (2013: EUR 15 million). At the same date, an amount of USD 0.4 million (2013: USD 21.3 million) was undrawn on the non- amortising revolving credit facility. At 31 December 2014, an undrawn amount of USD 104.8 million remains under the Group’s USD 340.0 million senior secured credit facility which will be drawn following the deliveries of the Hakata and Hirado in the first quarter of 2015. Loan covenant For the USD 750.0 million secured loan facility, the Group negotiated in the course of 2013 a 2-year relaxation of the Asset Protection clause from 125% down to 110% against an increase of the margin above the LIBOR rate to 3.40%. On 10 April 2014, the Group voluntarily cancelled the waiver after which the margin was reduced to 3.00% and the ratio was set at the original value of 125%. 113 Financial report Note 14 - Interest-bearing loans and borrowings (continued) Terms and debt repayment schedule The terms and conditions of outstanding loans were as follows: (in thousands of USD) 31 December 2014 31 December 2013 Restated* Secured vessels loan Secured vessels Revolving loan** Secured vessels loan Secured vessels loan Secured vessels Revolving loan** Secured vessels loan Secured vessels loan Unsecured bank facility TOTAL INTEREST-BEARING BANK LOANS Curr. Nominal interest rate Year of mat. Face value Carrying value Face value Carrying value USD USD USD USD USD USD USD EUR libor +3.00% libor +3.00% libor +3.40% libor +2.25% libor +2.25% libor +2.75% libor +2.95% euribor +1.00% 2017 2017 2018 2021 2021 2020 2017 2015 253,409 230,372 - 132,829 102,388 476,000 54,250 10,000 252,400 230,000 - 129,485 102,388 465,956 54,100 - 350,079 239,780 211,433 - - - 58,550 25,000 347,845 218,500 209,510 - - - 58,320 13,588 1,259,248 1,234,329 884,842 847,763 The face amount of the vessel loans can be reduced if the value of the collateralized vessels falls under a certain percentage of the outstanding amount under that loan. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. ** The total amount available under the Revolving Credit Facility depends on the total value of the fleet of tankers securing the facility. Convertible and other notes (in thousands of USD) Unsecured convertible Notes Unsecured convertible Notes Unsecured Notes TOTAL CONVERTIBLE AND OTHER NOTES Curr. USD USD USD Nominal interest rate 6.50% 6.50% 5.95% Year of mat. 2015 2018 2021 Face Value 31 December 2014 Carrying value 23,124 - 231,373 25,000 - 235,500 Face Value 31 December 2013 Carrying value 23,517 102,305 - 25,000 109,800 - 260,500 254,497 134,800 125,822 On 24 September 2009, the Group issued USD 150.0 million fixed rate senior unsecured convertible Notes, due 2015. The Notes were issued at 100 per cent of their principal amount and bear interest at a rate of 6.5 per cent per annum, payable semi-annually in arrears. The initial conversion price is EUR 16,283750 (or USD 23,168520 at EUR/USD exchange rate of 1,4228) per share and was set at a premium of 25 per cent to the volume weighted average price of Euronav’s ordinary shares on Euronext Brussels on September 3, 2009. If all of the Notes were to be converted into new ordinary shares at the initial conversion price, 6,474,307 new ordinary shares would be issued, representing 11,12% of Euronav’s share capital on a fully diluted basis. The Notes were convertible between 4 November 2009 and 24 January 2015 into ordinary shares of Euronav at the conversion price applicable at such conversion date and in accordance with the conditions set out in a trust deed in relation to the Notes. Unless previously redeemed, converted or purchased and cancelled, the Notes will be redeemed in cash on 31 January 2015 at 100 per cent of their principal amount. The Notes were added to the official list of the Luxembourg Stock Exchange and are traded on the Luxembourg Stock Exchange’s Euro MTF Market. In the course of the first quarter 2012, the Group repurchased 68 Notes of its USD 150 million fixed rate senior unsecured Notes, due 2015. The face value of each Note is USD 100,000 and the Group paid an average of USD 78,441. In 2013, the Group offered to exchange the Notes against a new Note which bears the same interest rate of 6.5% but which would mature in 2018 and would have a lower conversion price of EUR 5.65. The new Notes had a feature to compensate the bondholders for the forgiven coupons in case of conversion to shares during the first 4 years. The exchange offer resulted in USD 125 millions of Notes (face value) being exchanged for new Notes, including the 68 Notes acquired by the Group in 2012. In the second quarter of 2013, the Group bought back an additional 5 of its Notes due in 2015 for an average price of USD 92,000, while selling in the third quarter of 2013 the 68 Notes due in 2018 it held after the above exchange. 114 EURONAV Note 14 - Interest-bearing loans and borrowings (continued) During the period from 12 November 2013 through 22 April 2014, the Group issued an aggregate of 20,969,473 existing ordinary shares upon conversion of $124,900,000 in aggregate principal amount of 1,249 Convertible Notes due 2018 at the holders’ option. On 20 February 2014, the Group exercised its right to redeem all of the remaining Convertible Notes due in 2018. At that time, $4.9 million, or less than 10%, in principal amount of the Convertible Notes due 2018 originally issued remained outstanding. On April 9, 2014, redeemed the last convertible note due 2018 outstanding as of 2 April 2014 for an aggregate of $101,227.78, which is the principal amount of a note ($100,000) plus accrued but unpaid interest from 31 January 2014 to (but excluding) 9 April 2014. As a result, after 9 April 2014, no Convertible Notes due in 2018 were outstanding. On 4 February 2014, the Group issued USD 235.5 million 7-year bond to the same investors who participated in the USD 350 million capital increase. These bonds were issued at 85 per cent of their principal amount and bear interest at a rate of 5.95% per annum for the first year, payable semi-annually in arrears. The interest rate will increase to 8.5% per annum for the second and third year and will increase again to 10.20% per annum from year four until maturity. The bonds were redeemed on 6 February 2015 at par. The on issue discount of USD 35.3 million and the transaction costs of USD 0.7 million, were amortised over the expected lifetime of the bond. In 2014, USD 31.9 million has been recognised in financial expenses (see Note 5 and Note 28) and is also reflected under the heading ‘other changes’ in the table above. Convertible notes (in thousands of USD) Carrying amount of liability at the beginning of period Interest Amortisation of transaction costs Buyback of Convertible Notes Sale of Convertible Notes Conversion of Convertible Notes CARRYING AMOUNT OF LIABILITY AT THE END OF THE PERIOD 2014 125,822 867 68 (1,354) - (102,279) 23,124 2013 Restated* 132,694 2,448 (1,023) (470) 5,898 (13,725) 125,822 Transaction and other financial costs In 2014, the Group noted an increase in finance expenses (2014: USD -96.0 million, 2013: USD -54.6 million) due to the increase in loans and borrowings, amortisations of additional transaction costs and the amortisation of the under par issuance of the USD 235.5 million 7-year bonds (see Note 5). Amortisations and reversal of transaction costs are reflected under the heading ‘other changes’ in the table above. Note 15 - Non-current other payables (in thousands of USD) More than 5 years Between 1 and 5 years BALANCE AT 31 DECEMBER 2013, RESTATED * More than 5 years Between 1 and 5 years BALANCE AT 31 DECEMBER 2014 Fair Value derivatives Sellers Credit Advances on Contracts - 1,291 1,291 - 30,000 30,000 Fair Value derivatives Sellers Credit - - - - - - - - - 489 - 489 TOTAL - 31,291 31,291 TOTAL 489 - 489 The amount of other payables represents the non-current portion of amounts payable in relation to Interest Rate Swaps (IRS) (see also Note 18) and sellers credit obtained by the Group. The sellers credit was repaid on 28 February 2015, and was transferred to current other payables on 31 December 2014 (see Note 17). The IRS matured in April 2014 and therefore the fair value as at 31 December 2014 is 0 (2013: USD 1.3 million) (see Note 18). * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 115 Financial report Note 16 - Employee benefits The amounts recognised in the balance sheet are as follows: (in thousands of USD) NET LIABILITY AT BEGINNING OF PERIOD Recognised in profit or loss Recognised in other comprehensive income Foreign currency translation differences NET LIABILITY AT END OF PERIOD Present value of funded obligations Fair value of plan assets Present value of unfunded obligations NET LIABILITY Amounts in the balance sheet: Liabilities Assets NET LIABILITY 31 December 2014 31 December 2013 Restated* (1,900) (2,166) 263 -83 (2,108) (1,525) 1,145 (380) (1,728) (2,108) (2,108) - (2,108) (2,166) 86 263 (83) (1,900) (1,495) 1,215 (280) (1,620) (1,900) (1,900) - (1,900) Liability for defined benefit obligations The Group makes contributions to three defined benefit plans that provide pension benefits for employees upon retirement. One plan - the Belgian plan - is fully insured through an insurance company. The second and third - French and Greek plan - are uninsured and unfunded. The Group expects to contribute the following amount to its defined benefit pension plans in 2015: USD 40,325. Note 17 - Trade and other payables - current (in thousands of USD) Trade payables Staff costs Dividends payable Derivatives Accrued expenses Accrued Intrest Deferred income Other payables Sellers credit TOTAL TRADE AND OTHER PAYABLES 31 December 2014 31 December 2013 Restated* 21,844 2,464 8 - 36,838 14,026 10,248 10,127 30,000 125,555 14,756 2,324 14 - 22,873 10,831 13,329 77,307 - 107,094 The amount under other payables relates to the option fee received in January 2011 in cash to sell both the VLCC Antarctica (2009 - 315,981 dwt) and the VLCC Olympia (2008 - 315,981 dwt). The Olympia was sold in 2014 and the corresponding USD 10 million was deducted from the sale price. In 2014, the sellers credit in the amount USD 30 million was reclassified from non-current other payables to current other payables (see Note 15). * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 116 EURONAV Note 18 - Financial instruments - Market and other risks Carrying amounts and and fair values The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Carrying Amount Fair value Note Fair value - Hedging instruments Loans and receivables Other financial liabilities Level 1 Level 2 Level 3 Total (in thousands of USD) 31 December 2013, restated * Financial assets not measured at fair value ** Non-current receivables Trade and other receivables Cash and cash equivalents Financial liabilities measured at fair value Interest rate swaps used for hedging Financial liabilities not measured at fair value ** Secured bank loans Unsecured bank loans Unsecured convertible Notes Trade and other payables Sellers Credit 31 December 2014 Financial assets not measured at fair value ** Non-current receivables Trade and other receivables Cash and cash equivalents 9 10 11 15 14 14 14 17 15 9 10 11 Financial liabilities measured at fair value Interest rate swaps used for hedging 15 Financial liabilities not measured at fair value ** Secured bank loans Unsecured bank loans Unsecured convertible Notes Unsecured other Notes Trade and other payables Advance received on Contracts 14 14 14 14 17 15 - - - - 259,535 95,913 74,309 429,757 - - - - - - - - - - - - - - - - 1,291 1,291 834,175 13,588 125,822 107,094 30,000 - - 169,120 - - 859,842 - - - - - - - - - - - - - - - - - - - 1,291 1,291 859,842 - 169,120 - - - - - - - - - - 1,110,679 169,120 859,842 - 1,028,962 258,447 194,733 254,086 707,266 - - - - - - - - - - - - - - - - - - - - - - - - - - 1,234,329 - 23,124 231,373 125,555 489 - 1,249,248 - - - 25,048 - 236,202 - - - - - - - - - - - - - - - - - - - - - - 1,249,248 - 25,048 236,202 - - - 1,614,870 261,249 1,249,248 - 1,510,497 1,291 1,291 - - - - - - - - - - - - - - - - - - - * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. ** The Group has not disclosed the fair values for financial instruments such as sellers credit and trade and other receivables and payables, because their carrying amounts are a reasonable approximation of fair values. 117 Financial report Note 18 - Financial instruments - Market and other risks (continued) Measurement of fair values Valuation techniques and significant unobservable inputs Level 1 fair value was determined on the actual trading of the unsecured convertible Notes, due in 2015 and the unsecured other Notes, due in 2021 and the trading price on 31 December 2014. The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant unobservable inputs used. Financial instruments measured at fair value Type Forward exchange contracts and interest rate swaps for which no hedge accounting applies Valuation Techniques Market comparison technique: The fair values are based on broker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments Significant unobservable inputs Not applicable Interest rate swaps for which hedge accounting applies Fair value calculation: The fair values are computed by calculating the present value of the future cash flows (Fixed and floating), which depends on the forward rates. The forward rates are calculated on the interest rate curves such as LIBOR. Not applicable Financial instruments not measured at fair value Type Debt Securities * Valuation Techniques Market comparison technique: The valuation is based on the market price of the traded instruments. The contracts are traded in an active market and the quotes reflect the actual transactions. Significant unobservable inputs Not applicable Other financial liabilities ° Discounted cash flow Not applicable * Debt securities consist of the unsecured other notes ° Other financial liabilities include secured and unsecured bank loans 118 EURONAV Note 18 - Financial instruments - Market and other risks (continued) Transfers between Level 1 and 2 There were no transfers in either direction in 2013 and 2014. Financial risk management In the course of its normal business, the Group is exposed to following risks: ■ Credit risk ■ Liquidity risk ■ Market risk (Tanker market risk, intrest rate risk and currency risk) Credit risk Trade and other receivables The Group has no formal credit policy. Credit evaluations - when necessary - are performed on an ongoing basis. At the balance sheet date there were no significant concentrations of credit risk. In particular, the sole client representing 11% of the Tankers segment’s total revenue in 2014 (see Note 1) only represented 3% of the total trade and other receivables at 31 December 2014 (2013: 0.48%). The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the balance sheet. The ageing of trade and other receivables is as follows: (in thousands of USD) Not past due Past due 0-30 days Past due 31-365 days More than one year TOTAL TRADE AND OTHER RECEIVABLES For the ageing of the non-current receivables we refer to Note 9. 2014 177,061 3,301 13,608 761 194,731 2013 93,589 872 1,243 209 95,913 Past due amounts are not impaired as collection is still considered to be likely and management is confident the outstanding amounts can be recovered. As at 31 December 2014 46.15% of the total trade and other receivables relate to TI Pool which are paid after completion of the voyages but which only deals with oil majors, national oil companies and other actors of the oil industry whose credit worthiness is very high. Amounts not past due are also with customers with very high credit worthiness and are therefore not impaired. Cash and cash equivalents The Group held cash and cash equivalents of USD 254.1 million at 31 December 2014 (2013: USD 74.3 million). The cash and cash equivalents are held with bank and financial institution counterparties, which are rated A- to AA+, based on rating agency S&P (see Note 11). Derivatives The derivatives are entered into with banks and financial institu- tion counterparties, which are rated A- to AA+, based on rating agency S&P. Guarantees The Group’s policy is to provide financial guarantees only for subsidiaries and joint ventures. At 31 December 2014, the Group has issued a guarantee to certain banks in respect of credit facilities granted to 6 joint ventures (see Note 24). 119 Financial report Note 18 - Financial instruments - Market and other risks (continued) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incur- ring unacceptable losses or risking damage to the Group’s reputation. Despite the crisis on the financial markets since the summer of 2008, the liquidity risk of the Group remains under control. The sources of finance have been diversified with the first issuance of a convertible Note in September 2009 and the bulk of the loans are irrevocable, long-term and maturities are spread over different years. The following are the remaining contractual maturities of financial liabilities: (in thousands of USD) Note Carrying Amount Total Less than 1 year Between 1 and 5 years More than 5 years Contractual cash flows 31 December 2013, restated* Non derivative financial liabilities Bank loans Convertible Notes Current trade and other payables Non-current other payables Derivative financial liabilities Interest rate swaps Forward exchange contracts in thousands of USD Non derivative financial liabilities Bank loans Convertible and other Notes Current trade and other payables Non-current other payables Derivative financial liabilities Interest rate swaps Forward exchange contracts 14 14 17 15 15 15 14 14 17 15 15 15 847,763 125,822 107,094 30,000 938,569 165,193 107,094 30,000 147,882 8,730 107,094 - 790,687 156,463 - 30,000 1,110,679 1,240,856 263,706 977,150 1,291 - 1,291 1,442 - 1,442 1,442 - 1,442 - - - - - - - - - - Contractual cash flows 31 December 2014 Carrying Amount Total Less than 1 year Between 1 and 5 years More than 5 years 1,234,329 254,497 125,555 - 1,379,638 300,933 125,555 - 185,372 43,358 125,555 - 815,364 257,575 - - 378,902 - - - 1,614,381 1,806,126 354,285 1,072,939 378,902 - - - - - - - - - - - - - - - * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 120 EURONAV Note 18 - Financial instruments - Market and other risks (continued) As disclosed in Note 14, the Group has secured bank loans that contain loan covenants. A future breach of covenant may require the Group to repay the loan earlier than indicated in the above table. The interest payments on variable interest rate loans in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rate change. The future cash flows on derivative instruments may be different from the amount in the above table as interest rates and exchange rates change. Except for these financial liabilities, it is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts. On 19 February 2015, the Group exercised its option to redeem the USD 235.5 million 7-year bond at par. (in thousands of USD) Note Interest swaps with hedge accounting Interest swaps with no hedge accounting Forward exchange contracts used for hedging Dirty value Accrued Intrest CLEAN VALUE AT 1 JANUARY 2013, RESTATED * Effective portion recognised directly in OCI Ineffective portion recognised in profit or loss Dirty value Accrued Intrest CLEAN VALUE AT 31 DECEMBER 2013, RESTATED * Dirty value Accrued Intrest CLEAN VALUE AT 1 JANUARY 2014 Effective portion recognised directly in OCI Ineffective portion recognised in profit or loss Dirty value Accrued Intrest CLEAN VALUE AT 31 DECEMBER 2014 - - - - - - - 15 - - 15 - - - - 15 (6,882) 161 (6,721) 5,430 - (1,443) 152 (1,291) (1,443) 152 (1,291) 1,291 - - - - - - - - - - - - - - - - - - - - (154) - (154) - 154 - - - - - - - - - - - TOTAL (7,036) 161 (6,875) 5,430 154 (1,443) 152 (1,291) (1,443) 152 (1,291) 1,291 - - - - Market risk Tanker market risk The Spot Tanker freight market is a highly volatile global market and the Group cannot predict what the market will be. In order to manage the risk associated to this volatility, the Group has adopted a balanced strategy of operating part of its fleet on the spot market and the other part under fixed time charter contract. The proportion of vessels operated on the spot will vary according to the many factors affecting both the spot and fixed time charter contract markets. Every increase (decrease) of 1,000 USD on a Spot tanker freight market (VLCC and Suezmax)per day would have increased (decreased) profit or loss by the amounts shown below: (effect in thousands of USD): 2014 Profit or loss 2013 Profit or loss 1,000 USD increase 1,000 USD increase 1,000 USD increase 1,000 USD increase 9,941 (9,941) 6,836 (6,836) * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 121 Financial report Note 18 - Financial instruments - Market and other risks (continued) Interest rate risk In the past the Group hedged part of its exposure to changes in interest rates on borrowings. All borrowings contracted for the financing of vessels are on the basis of a floating interest rate, increased by a margin. On a regular basis the Group uses various interest rate related derivatives (IRS, caps and floors) to achieve an appropriate mix of fixed and floating rate exposure as defined by the Group. On 31 December 2014, the Group has no such instruments in place. have been recognised in equity and the ineffective portion has been recognised in profit or loss. These IRS had a duration of 5 years matching the repayment profile of that facility and matured in April 2014 and as a consequence the fair value of these instruments at 31 December 2014 amounted to USD 0 (2013: USD -1,291,121). The senior unsecured convertible Notes of USD 25 million, were issued at a fixed rate of 6.5% per annum. The Group, in connection to the USD 300 million facility raised in April 2009 also entered in several Interest Rate Swap instru- ments for a combined notional value of USD 300 million. These IRSs have been used to hedge the risk related to any fluctuation of the Libor rate and qualify for hedging instruments in a cash flow hedge relationship under IAS 39. These instruments have been measured at their fair value; effective changes in fair value The USD 235.5 million 7-year bonds were issued at 85 per cent of their principal amount and bear interest at a rate of 5.95% per annum for the first year, payable semi-annually in arrears. The interest rate will increase to 8.5% per annum for the second and third year and will increase again to 10.20% per annum from year four until maturity. The bonds were redeemed on 19 February 2015 at par. At the reporting date the interest rate profile of the Group’s interest-bearing financial liabilities was: (in thousands of EUR) Fixed rate instruments Financial assets Financial liabilities Variable rate instruments Financial liabilities Carrying amount 2014 - 254,497 254,497 1,234,329 1,234,329 2013 Restated* - 125,822 125,822 847,763 847,763 Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss nor equity. Cash flow sensitivity analysis for variable rate instruments A change of 50 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. (effect in thousands of USD) 31 December 2013, restated * Variable rate instruments Interest rate swaps Cash flow sensitivity (net) 31 December 2014 Variable rate instruments Interest rate swaps Cash flow sensitivity (net) Profit or loss Equity 50 bp increase 50 bp decrease 50 bp increase 50 bp decrease (4,382) - (4,382) (4,257) - (4,257) 4,382 - 4,382 4,257 - 4,257 - 264 264 - - - - (11) (11) - - - * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 122 EURONAV Note 18 - Financial instruments - Market and other risks (continued) Currency risk The Group’s exposure to currency risk is related to its operating expenses expressed in Euros. In 2014 about 13.5% (2013: 18.3%) of the Group’s total operating expenses were incurred in Euros. Revenue and the financial instruments are expressed in USD only. (in thousands of EUR/USD) Trade payables Operating expenses NET EXPOSURE 31 December 2014 EUR USD 31 December 2013 Restated* USD EUR (8,646) (13,198) (65,691) (421,300) (11,227) (67,985) (21,129) (302,879) (74,337) (434,498) (79,212) (324,008) For the average and closing rates applied during the year, we refer to Note 26. Sensitivity analysis A 10 percent strengthening of the EUR against the USD at 31 December would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. (in thousands of USD) Equity Profit or loss 2014 662 (9,124) 2013 Restated* 74 (8,179) Master netting or similar agreements The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agree- ments. In general, under such agreements the amounts owned by each counterparty on a single day in respect of all trans- actions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. Capital management Euronav is continuously optimising its capital structure (mix between debt and equity). The main objective is to maxi- mise shareholder value while keeping the desired financial flexibility to execute the strategic projects. Some of the Group’s other key drivers when making capital structure decisions are pay-out restrictions and the maintenance of the strong financial health of the Group. Besides the statu- tory minimum equity funding requirements that apply to the Group’s subsidiaries in the various countries, the Group is also subject to covenants in relation to some of its senior secured credit facilities: the ratio of stockholders’ Equity to total assets should be no less than 30% and has been met at year end. When analysing the Group’s capital structure, the same debt/equity classification as applied in the IFRS reporting is used. * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 123 Financial report Note 19 - Operating leases Leases as lessee Future minimum lease payments The Group leases in some of its vessels under time charter and bare boat agreements (operating leases). The future minimum lease payments with an average duration of 11 months under non-cancellable leases are as follows: (in thousands of USD) Less than 1 year Between 1 and 5 years More than 5 years TOTAL FUTURE LEASE PAYMENTS 31 December 2014 31 December 2013 (16,036) (6,110) - (22,146) (11,812) (914) - (12,726) On some of the abovementioned vessels the Group has the option to extend the charter period. These option periods have not been taken into account when calculating the future minimum lease payments. The increase in future minimum lease payments versus the prior year relates to two additional time charter contracts, of which one relating to a Suezmax and one relating to a VLCC. Non-cancellable operating lease rentals for office space with an average duration of 5 years are payable as follows: (in thousands of USD) Less than 1 year Between 1 and 5 years More than 5 years TOTAL NON-CANCELLABLE OPERATING LEASE RENTALS Amounts recognised in profit and loss (in thousands of USD) Bareboat charter Time charter Office rental TOTAL RECOGNISED IN PROFIT AND LOSS 31 December 2014 31 December 2013 (2,439) (8,174) (4,233) (14,846) 2014 (3,584) (32,080) (1,579) (37,243) (1,135) (3,113) (643) (4,891) 2013 (3,002) (18,029) (1,141) (22,172) 124 EURONAV Note 19 - Operating leases (continued) Leases as lessor The Group leases out some of its vessels under time charter agreements (operating leases). The future minimum lease receivables with an average duration of 1 year and 1 month under non-cancellable leases are as follows: Future minimum lease receivables (in thousands of USD) Less than 1 year Between 1 and 5 years More than 5 years TOTAL FUTURE LEASE RECEIVABLES 31 December 2014 31 December 2013 136,304 154,842 - 291,146 79,686 15,929 - 95,615 On some of the abovementioned vessels the Group has granted the option to extend the charter period. These option periods have not been taken into account when calculating the future minimum lease receivables. Amounts recognised in profit and loss (in thousands of USD) Bareboat charter Time charter TOTAL AMOUNTS RECOGNISED IN PROFIT AND LOSS 2014 - 132,118 132,118 2013 - 133,396 133,396 Non-cancellable operating lease rentals for office space with an average duration of 8 years and 3 months are receivable as follows: (in thousands of USD) Less than 1 year Between 1 and 5 years More than 5 years TOTAL NON-CANCELLABLE OPERATING LEASE RENTALS 31 December 2014 31 December 2013 837 3,349 2,791 6,977 - - - - The above operating lease rentals receivable relate entirely to the Group's leased offices for Euronav UK. Euronav UK has sublet part of the office space to three different subtenants, starting in 2014. Note 20 - Provisions & Contingencies The Group is involved in a number of disputes in connection with its day-to-day activities, both as claimant and defendant. Such disputes and the associated expenses of legal representation are covered by insurance. Moreover, they are not of a magnitude that lies outside the ordinary, and their scope is not of such a nature that they could jeopardise the Group’s financial position. 125 Financial report Note 21 - Related parties Identity of related parties The Group has a related party relationship with its subsidiaries (see Note 23) and equity-accounted investees (see Note 24) and with its directors and executive officers (see Note 22). Transactions with key management personnel The total amount of the remuneration paid to all non-executive directors for their services as members of the Board and commit- tees (if applicable) is as follows: (in thousands of EUR) TOTAL REMUNERATION 2014 1,401 2013 1,189 The nominating and remuneration committee annually reviews the remuneration of the members of the executive committee. The remuneration (excluding the CEO) consists of a fixed and a variable component and can be summarised as follows: (in thousands of EUR) TOTAL FIXED REMUNERATION of which Cost of pension Other benefits TOTAL VARIABLE REMUNERATION 2014 1,068 32 55 734 2013 953 32 51 700 All amounts mentioned refer to the executive committee in its official composition throughout 2014. The remuneration of the CEO can be summarised as follows: (in thousands of GBP) TOTAL FIXED REMUNERATION of which Cost of pension Other benefits TOTAL VARIABLE REMUNERATION 2014 2013 375 13 11 295 345 50 11 268 Within the framework of a stock option plan, the Board of Directors has granted on December 16, 2013 options on its 1,750,000 treasury shares to the members of the executive committee for no consideration. 525,000 options were granted to the CEO and 1,225,000 options were granted to the other members of the executive committee. The exercise price of the options is EUR 5.7705. All of the beneficiaries have accepted the options granted to them. At the date of this report 2/3 of the options have vested and 1/3 will vest only if certain conditions (stock price and business related) are met. A maximum of fifty per cent of the options will be exercisable at the latest as from 1 January 2015. The other fifty per cent of the options can be exercised as from 1 January 2016 (see Note 22) . 126 EURONAV Note 21 - Related parties (continued) Relationship with CMB In 2004, Euronav split from Compagnie Maritime Belge (CMB) and currently both have Saverco as a reference shareholder. CMB renders some administrative and general services on an at arms’ length basis. In 2014 CMB invoiced a total amount of USD 17,745 (2013: USD 61,895). 25 September 2014, with Tankers (UK) Agencies Limited, a wholly-owned subsidiary of Tankers International LLC, of which the Group owns 40 per cent of the outstanding interests, which is on arms’-length terms. Under this sublease, the Company received in 2014 a rent of USD $88,738 (2013:0). This sublease expires on 27 April 2023. Relationship with Saverco Saverco, a reference shareholder of Euronav, has rendered travel services on an at arms’ length basis to Euronav on a transactional basis. In 2014, Saverco invoiced a total amount of USD 15,828 (2013: USD 25,533). Relationship with Chartwell Management Inc. Chartwell Management Inc. and Euronav both have Ceres as reference shareholder. Chartwell Management Inc. rendered general services on an at arms’ length basis. In 2014, Chartwell Management Inc. invoiced a total amount of EUR 0 (2013: EUR 40,603). It is management’s expectation that the services of Chartwell Management Inc. no longer will be required as of 2015. Properties The Group leases office space in Belgium from Reslea NV, an entity controlled by Saverco, one of our majority shareholders, on an arms’ length basis. Under this lease, the Group paid an annual rent of $207,738 in 2014 (2013: $199,032). This lease expires on 31 August 2021. The Group leases office space, through our subsidiary Euronav Ship Management Hellas, in Piraeus, Greece, from Nea Dimitra Ktimatiki Kai Emporik S.A., an entity controlled by Ceres Shipping, on an arms’-length basis. Mr. Livanos, a member of our Board acting as permanent representative of TankLog, is the Chairman and sole shareholder of Ceres Shipping. Under this lease, the Group paid an annual rent of $198,822 in 2014 (2013: $188,040). This lease expires on 31 May 2018. The Group subleases office space in its new London, United Kingdom office, through its subsidiary Euronav (UK) Agencies Limited, pursuant to sublease agreements, dated 25 September 2014, with GasLog Services UK Limited and Unisea Maritime Limited, both parties related to Peter Livanos, which is on arms’-length terms. Under these subleases, the Company received in 2014 a rent of USD $169,052 (2013: 0). This sublease expires on 27 April 2023. The Company also subleases office space in its new London, United Kingdom office, through its subsidiary Euronav (UK) Agencies Limited, pursuant to a sublease agreement, dated Registration Rights On 28 January 2015 the Group entered into a registration rights agreement with companies affiliated with our Chairman, Peter Livanos, or the Ceres Shareholders, and companies affili- ated with our Vice Chairman, Marc Saverys, or the Saverco Shareholders. Pursuant to the registration rights agreement, each of the Ceres Shareholders as a group and the Saverco Shareholders as a group will have the right, subject to certain terms and conditions, to require us, on one occasion each beginning 90 days following the closing of the US IPO and ending 12 calendar months after our ordinary shares have been registered in the US, to cause us to register under the US Securities Act our ordinary shares held by them for offer and sale to the public, including by way of an underwritten public offering. Each of the Ceres Shareholders as a group and the Saverco Shareholders as a group will be able to piggyback on the others’ demand registration. The Ceres Shareholders and the Saverco Shareholders are only treated as having made their request if the registration statement for such shareholder group’s shares is declared effective. Once we are eligible to do so, commencing 12 calendar months after the Ordinary Shares have been registered under the Exchange Act, the Ceres Shareholders and the Saverco Shareholders may require us to file shelf registration statements permitting sales by them of ordinary shares into the market from time to time over an extended period. The Ceres Shareholders and the Saverco Shareholders can also exercise piggyback registration rights to participate in certain registrations of ordinary shares by us. All expenses relating to the registrations, including the participation of our executive management team in two marketed roadshows and a reasonable number of marketing calls in connection with one-day or overnight transactions, will be borne by us. The registration rights agreement also contains provisions relating to indemnification and contribution. There are no specified financial remedies for non-compliance with the registration rights agreement. Transactions with subsidiaries and joint ventures On 15 March 2013, the Group sold the Suezmax Cap Isabella (2013 – 157,258 dwt) to Belle Shipholdings Ltd. Peter Livanos, at that time the vice-chairman of the Board of Directors of the Group directly or indirectly holds an important participation 127 Financial report Note 21 - Related parties (continued) in Belle Shipholdings Ltd. Peter Livanos, as the permanent representative of Tanklog Holdings Ltd., notified Euronav’s Board of Directors which met on 14 March 2013, that pursuant to the provisions of the Belgian Code of Companies relating to the existence of conflicts of interest, he had a direct or indirect patrimonial interest that conflicts with the interests of the Company in respect of this sale and therefore, did not participate in the deliberation or the vote that authorised the Group to sell the Cap Isabella on the basis of current market values. The Cap Isabella was a newbuilding from Samsung Heavy Industries. The Group chartered the ship back on bareboat for a fixed period of 2 years with 3 options in favour of the charterer to extend for a further year. In case of a sale by the new owner during the bareboat charter contract the Group would also share in any surplus if the vessel value exceeded a certain threshold. The net selling price of the vessel was USD 52.9 million (see Note 7). On 31 July 2014, the Cap Isabella was in its turn sold by its owner, Belle Shipholdings Ltd., a company related to Euronav, to a third-party and was delivered to its new owner on 8 October 2014. As the original sale and lease back agreement between the Group and Belle Shipholdings Ltd. included a profit sharing mechanism for a future sale, a capital gain on disposal of assets was recorded in the fourth quarter of 2014 for a total amount of USD 4.3 million. The Group has supplied funds in the form of shareholder’s advances to some of its joint ventures at pre-agreed conditions which are always similar for the other party involved in the joint venture in question (see below and Note 24). Balances and transactions between the Group and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of outstanding balances and transactions between the Group and its joint ventures are disclosed below: (in thousands of USD) Trade receivables Trade payables Shareholders Loan Turnover Dividend Income TI Africa Ltd. TI Asia Ltd. Fiorano Shipholding Ltd. Fontvieille Shipholding Ltd. Larvotto Shipholding Ltd. Moneghetti Shipholding Ltd. Great Hope Enterprises Ltd. Kingswood Co. Ltd. 31 DECEMBER 2014 577 325 150 1,906 192 205 - - - - 336 150 323 342 - - 172,055 93,337 26,416 27,792 24,191 19,623 - - 302 361 556 522 565 587 - - 3,355 1,151 363,414 2,893 - - - - - - 9,410 - 9,410 (in thousands of USD ) Trade receivables Trade payables Shareholders Loan Turnover Dividend Income TI Africa Ltd. TI Asia Ltd. Fiorano Shipholding Ltd. Fontvieille Shipholding Ltd. Larvotto Shipholding Ltd. Moneghetti Shipholding Ltd. Great Hope Enterprises Ltd. Kingswood Co. Ltd. 31 DECEMBER 2013 37 565 871 1,071 507 21 - - - - 296 453 280 236 - - 172,055 123,337 25,366 25,992 23,528 20,194 2,450 - - 361 544 499 542 512 - - 3,072 1,265 392,922 2,458 - - - - - - - - - Guarantees The Group has provided guarantees to financial institutions that have provided credit facilities to its joint ventures. As of 31 December 2014 USD 319.8 million (2013: USD 412.4 million) was outstanding under the joint venture loan agreements, of which the Group has guaranteed USD 159.9 million (2013: USD 206.2 million) (see Note 24). 128 EURONAV Note 22 - Share-based Payment arrangements Description of share-based payment arrangements: At 31 December 2014, the Group had the following share-based payment arrangements: holders of vested options are entitled to purchase shares at the market price of the shares at the grant date. Currently this programme is limited to key management personnel. Share option programmes (Equity-settled) On 16 December 2013, the Group established a share option programme that entitles key management personnel to purchase existing shares in the Company. Under the program, The Group intends to use its treasury shares to settle its obligations under this program. The key terms and conditions related to the grants under these programs are as follows: Grant date/employees entitled Options granted to key management personnel 16 December 2013 (“Tranche 1”) 16 December 2013 (“Tranche 2”) 16 December 2013 (“Tranche 3”) Number of instruments 583,000 583,000 583,000 TOTAL SHARE OPTIONS 1,750,000 Vesting Conditions Contractual life of Options Share price to be at least EUR 7,5 Share price to be at least EUR 8,66 Share price to be at least EUR 11,54 and US listing 5 years 5 years 5 years In addition, 50% of the options can only be exercised at the earliest if the shares of the Group are admitted for listing in a recognised US listing exchange platform (the "listing event"). The other 50% can only be exercised one year after the listing event. If the shares are not listed on a US listing exchange, then only 2/3 of the shares will be exercisable and will have to meet the first 2 vesting conditions listed above. 129 Financial report Note 22 - Share-based Payment arrangements (continued) Measurement of Fair Value The fair value of the employee share options has been measured using the Black-Scholes formula. Service and non-market performance conditions attached to the transactions were not taken into account in measuring fair value. The inputs used in measurement of the fair values at grant date for the equity-settled share-based payments plan were as follows: Share option programs (Figures in EUR) Fair value at grant date Share price at grant date Exercise price Expected volatility (weighted average) Expected life (Days) (weighted average) Expected dividends Risk-free interest rate Tranche 1 Tranche 2 Tranche 3 2013 2.270 6.070 5.770 40% 303 - 1% 2.260 6.070 5.770 40% 467 - 1% 2.120 6.070 5.770 40% 730 - 1% Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price, particularly over the historical periods commensurate with the expected term. The expected term of the instruments has been based on historical experience and general option holder behaviour using a Monte Carlo simulation. Expenses recognised in profit or loss For details on related employee benefits expense see Note 4. Reconciliation of outstanding share options The number and weighted-average exercise prices of options under the share option programs are as follows: (Figures in EUR) Outstanding at 1 January Forfeited during the year Exercised during the year Granted during the year OUTSTANDING AT DECEMBER 31 Vested at 31 December Number of options 2014 Weighted average exercise price 2014 Number of options 2013 Weighted average exercise price 2013 1,750,000 5.770 - - - 1,750,000 1,166,167 - - - 5.770 - - - - 1,750,000 1,750,000 - - - - 5.770 5.770 - 130 EURONAV Note 23 - Group entities Country of incorporation Consolidation method Ownership interest 31 December 2014 31 December 2013 Parent Euronav NV Subsidiaries Euronav Tankers NV Euronav Shipping NV Euronav (UK) Agencies Limited Belgium Belgium Belgium UK Euronav Luxembourg SA Luxembourg Euronav sas Euronav Ship Management sas Euronav Ship Management Ltd. Euronav Ship Management Hellas (branch office) Euronav Hong Kong Euro-Ocean Shipmanagement (Cy- prus) Ltd. Joint ventures Africa Conversion Corp. Asia Conversion Corp. Fiorano Shipholding Ltd. Fontvieille Shipholding Ltd. Great Hope Enterprises Ltd. France France Liberia Hong Kong Cyprus Marshall Islands Marshall Islands Hong Kong Hong Kong Hong Kong Kingswood Co. Ltd. Marshall Islands Larvotto Shipholding Ltd. Moneghetti Shipholding Ltd. Hong Kong Hong Kong Seven Seas Shipping Ltd. Marshall Islands TI Africa Ltd. TI Asia Ltd. Associates Hong Kong Hong Kong Tankers International LLC VLCC Chartering Ltd. Marshall Islands Marshall Islands full full full full full full full full full full equity equity equity equity equity equity equity equity equity equity equity equity equity 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 40.00% 20.00% NA NA 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 40.00% NA Although the Group has an economic interest in Tankers International LLC of 74.20 per cent (2013: 41.10 per cent), which is based on the percentage of owned vessels participating in the Tankers International Pool, the Group has no majority of voting rights as this is based on the actual shares owned by the Group which is only 40 per cent. Therefore Tankers International LLC is accounted for as an associate. 131 Financial report Note 24 - Equity-accounted investees (in thousands of USD) Assets Interest in joint ventures Interest in associates TOTAL ASSETS Liabilities * Interest in joint ventures Interest in associates TOTAL LIABILITIES 2014 16,305 1,027 17,332 (5,880) - (5,880) * Some of our joint ventures currently have negative equity for which the Group is a guarantor and is therefore shown as a liability. Associates (in thousands of USD) Carrying amount of interest at the beginning of the year Group’s share of profit (loss) for the period Group’s share of other comprehensive income Carrying amount of interest at the end of the year The Group distinguishes the following associates: Associate Segment Description 2014 409 618 - 1,027 2013 Restated* 22,705 409 23,114 (5,880) - (5,880) 2013 - 409 - 409 Tankers International LLC Tankers VLCC Chartering Ltd. Tankers The manager of the Tankers International Pool who commercially manages the majority of the Group’s VLCCs Chartering joint venture that has the combined access to the combined fleets of Frontline and Tankers International Pool * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. 132 EURONAV Note 24 - Equity-accounted investees (continued) (in thousands of USD) Asset Liability Investments in equity accounted investees Shareholders loans Investments in equity accounted investees Shareholders loans Gross balance Offset investment with shareholders loan BALANCE AT 1 JANUARY 2013* Group’s share of profit (loss) for the period Group’s share of other comprehensive income Capital increase/(decrease) in joint ventures Dividends received from joint ventures Movement shareholders loans to joint ventures Gross balance Offset investment with shareholders loan BALANCE AT 31 DECEMBER 2013* Group’s share of profit (loss) for the period Group’s share of other comprehensive income Capital increase/(decrease) in joint ventures Dividends received from joint ventures Movement shareholders loans to joint ventures Gross balance Offset investment with shareholders loan BALANCE AT 31 DECEMBER 2014 (134,223) 155,297 21,074 17,444 3,077 3,000 - - (110,702) 133,406 22,704 29,668 2,106 (1,000) (9,410) - (89,338) 105,643 16,305 381,447 (155,297) 226,150 - - - - 11,475 392,922 (133,406) 259,516 - - - - (29,508) 363,414 (105,643) 257,771 (5,880) - (5,880) - - - - - (5,880) - (5,880) - - - - - (5,880) - (5,880) - - - - - - - - - - - - - - - - - - * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. As the shipping market and the corresponding revenues are volatile, the Group has opted to give long-term shareholders loans to some of its equity-accounted investees, rather than increasing the capital in these companies. Over the last couple of years these joint ventures have made losses which resulted in a negative equity. As the Group is also a guarantor for these joint ventures and the shareholders loans can not be recalled within one year, the negative equity is offset with these shareholders loans. For more details, we refer to the table summarising the financial information of the Groups’ joint ventures further below. The Group distinguishes the following joint ventures: Joint venture Great Hope Enterprises Ltd. Kingswood Co. Ltd. Seven Seas Shipping Ltd. Fiorano Shipholding Ltd. Fontvieille Shipholding Ltd. Larvotto Shipholding Ltd. Moneghetti Shipholding Ltd. Front Tobago Inc. TI Africa Ltd. TI Asia Ltd. Africa Conversion Corp. Asia Conversion Corp. Segment Tankers Tankers Tankers Tankers Tankers Tankers Tankers Tankers FSO FSO FSO FSO Description Single ship company, owner of 1 VLCC Holding company; parent of Seven Seas Shipping Ltd. Single ship company, owner of 1 VLCC Single ship company, owner of 1 Suezmax Single ship company, owner of 1 Suezmax Single ship company, owner of 1 Suezmax Single ship company, owner of 1 Suezmax No operating activities, liquidated in 2013. Operator and owner of a single floating storage and offloading facility (FSO Africa)* Operator and owner of a single floating storage and offloading facility (FSO Asia)* No operating activities, intention to liquidate No operating activities, intention to liquidate * Both FSO Asia and FSO Africa are on a timecharter contract to Maersk Oil Qatar (MOQ) until respectively mid 2017 and mid 2017, 2018 or 2019 depending on the lifting of the options on the FSO Africa. 133 Financial report Note 24 - Equity-accounted investees (continued) The following table contains summarised financial information for all of the Group's joint ventures: Asset (in thousands of USD) At 31 December 2013* Percentage ownership interest Non-Current assets of which Vessel Current Assets of which cash and cash equivalents Non-Current Liabilities Of which bank loans Current Liabilities Of which bank loans NET ASSETS (100%) Group’s share of net assets Shareholders loans to joint venture NET CARRYING AMOUNT OF INTEREST IN JOINT VENTURE REMAINING SHAREHOLDERS LOAN TO JOINT VENTURE Revenue Depreciations and amortisation Interest Expense Income tax expense Profit (loss) for the period (100%) Other comprehensive income (100%) GROUP’S SHARE OF PROFIT (LOSS) FOR THE PERIOD GROUP’S SHARE OF OTHER COMPREHENSIVE INCOME Great Hope Enterprises Ltd. Kingswood Co. Ltd. Seven Seas Shipping Ltd. Fiorano Shipholding Ltd. Fontvieille Shipholding Ltd. Larvotto Moneghetti Shipholding Shipholding Ltd. Ltd. TI Africa Ltd. TI Asia Ltd. Total Conversion Conversion Total 50% - - 40,494 240 4,645 - 20,907 19,695 14,942 7,471 2,450 50% 109 - 898 - - - 2 - 50% 38,146 38,146 6,785 2,040 10,942 10,833 4,528 4,333 50% 87,735 87,735 6,063 729 97,044 36,313 7,209 4,250 50% 73,463 73,463 5,913 1,223 90,455 38,470 6,507 4,000 50% 82,376 82,376 6,083 1,685 94,139 37,082 6,540 3,970 50% 78,020 78,020 9,173 2,764 92,137 51,750 8,280 5,000 50% 247,797 244,448 54,300 38,795 368,919 13,543 76,556 25,000 50% 240,477 236,317 107,297 45,406 389,167 131,646 28,555 26,103 848,123 840,505 237,006 92,882 1,147,448 319,637 159,084 92,351 1,005 29,461 (10,455) (17,586) (12,220) (13,224) (143,378) (69,948) (221,403) (6,880) (4,880) (11,760) 503 14,731 (5,228) (8,793) (6,110) (6,612) (71,689) (34,974) (110,701) (3,440) (2,440) (5,880) - - 25,366 25,992 23,528 20,194 172,055 123,337 392,922 7,471 503 14,731 - - - - - - 22,705 (3,440) (2,440) (5,880) 2,450 5,477 (2,738) (730) - (1,059) - (530) - - - - - - 4 - 2 - - 20,138 17,199 17,418 13,582 100,366 88,363 259,516 6,572 (3,360) (232) - (1,686) - (843) 15,181 (4,852) (1,166) - 12,551 (4,561) (1,506) - (3,019) (5,861) - - (1,510) (2,931) - - - 3,077 3,077 14,007 (4,571) (1,376) 13,998 (4,586) (1,958) 63,849 (18,209) (1,087) (4,818) (5,038) 31,321 - - - - - - - - - 63,548 (17,933) (8,720) - 25,045 6,154 195,183 (60,810) (16,775) - 34,889 6,154 (2,409) (2,519) 15,661 12,523 17,444 * The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements. Liability Africa Corp. Asia Corp. 50% 50% 6,880 4,880 11,760 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 134 EURONAV (in thousands of USD) At 31 December 2013* Percentage ownership interest Non-Current assets of which Vessel Current Assets of which cash and cash equivalents Non-Current Liabilities Of which bank loans Current Liabilities Of which bank loans NET ASSETS (100%) NET CARRYING AMOUNT OF INTEREST IN JOINT VENTURE REMAINING SHAREHOLDERS LOAN TO JOINT VENTURE Revenue Depreciations and amortisation Interest Expense Income tax expense Profit (loss) for the period (100%) Other comprehensive income (100%) GROUP’S SHARE OF PROFIT (LOSS) FOR THE PERIOD GROUP’S SHARE OF OTHER COMPREHENSIVE INCOME Ltd. 50% - - - 40,494 240 4,645 20,907 19,695 14,942 7,471 2,450 2,450 5,477 (2,738) (730) (1,059) (530) - - - 50% 109 898 - - - - 2 - - - - - - - 4 - 2 - Asset Liability Great Hope Enterprises Kingswood Co. Ltd. Seven Seas Fiorano Fontvieille Shipping Shipholding Shipholding Ltd. Ltd. Ltd. Larvotto Shipholding Ltd. Moneghetti Shipholding Ltd. TI Africa Ltd. TI Asia Ltd. Total Africa Conversion Corp. Asia Conversion Corp. Total 50% 38,146 38,146 6,785 2,040 10,942 10,833 4,528 4,333 50% 87,735 87,735 6,063 729 97,044 36,313 7,209 4,250 50% 73,463 73,463 5,913 1,223 90,455 38,470 6,507 4,000 50% 82,376 82,376 6,083 1,685 94,139 37,082 6,540 3,970 50% 78,020 78,020 9,173 2,764 92,137 51,750 8,280 5,000 50% 247,797 244,448 54,300 38,795 368,919 13,543 76,556 25,000 50% 240,477 236,317 107,297 45,406 389,167 131,646 28,555 26,103 848,123 840,505 237,006 92,882 1,147,448 319,637 159,084 92,351 50% 50% - - - - - - - - - - - - - - - - - - 6,880 - 4,880 - 11,760 - 1,005 29,461 (10,455) (17,586) (12,220) (13,224) (143,378) (69,948) (221,403) (6,880) (4,880) (11,760) Group’s share of net assets 503 14,731 (5,228) (8,793) (6,110) (6,612) (71,689) (34,974) (110,701) (3,440) (2,440) (5,880) Shareholders loans to joint venture - 25,366 25,992 23,528 20,194 172,055 123,337 392,922 - - - 7,471 503 14,731 - - - - - - 22,705 (3,440) (2,440) (5,880) - 20,138 17,199 17,418 13,582 100,366 88,363 259,516 6,572 (3,360) (232) 15,181 (4,852) (1,166) 12,551 (4,561) (1,506) (1,686) (3,019) (5,861) - - - - - - - - - 14,007 (4,571) (1,376) - 13,998 (4,586) (1,958) - (4,818) (5,038) - - 63,849 (18,209) (1,087) - 31,321 - 63,548 (17,933) (8,720) - 25,045 6,154 195,183 (60,810) (16,775) - 34,889 6,154 (843) (1,510) (2,931) (2,409) (2,519) 15,661 12,523 17,444 - - - 3,077 3,077 - - - - - - - - - - - - - - - - - - - - - - - - - - - 135 Financial report Note 24 - Equity-accounted investees (continued) (in thousands of USD) At 31 December 2014 Percentage ownership interest Non-Current assets of which Vessel Current Assets of which cash and cash equivalents Non-Current Liabilities Of which bank loans Current Liabilities Of which bank loans NET ASSETS (100%) Group’s share of net assets Shareholders loans to joint venture NET CARRYING AMOUNT OF INTEREST IN JOINT VENTURE REMAINING SHAREHOLDERS LOAN TO JOINT VENTURE Revenue Depreciations and amortisation Interest Expense Income tax expense Profit (loss) for the period (100%) Other comprehensive income (100%) GROUP’S SHARE OF PROFIT (LOSS) FOR THE PERIOD GROUP’S SHARE OF OTHER COMPREHENSIVE INCOME Great Hope Enterprises Ltd. Kingswood Co. Ltd. Seven Seas Shipping Ltd. Fiorano Shipholding Ltd. Fontvieille Shipholding Ltd. Larvotto Moneghetti Shipholding Shipholding Ltd. Ltd. TI Africa Ltd. TI Asia Ltd. 50% - - 763 278 - - 130 - 633 317 - 50% 204 - 810 - - - 2 - 50% 34,786 34,786 7,473 3,245 6,704 6,500 4,591 4,333 50% 82,883 82,883 5,445 711 84,894 32,063 15,341 4,250 50% 70,670 70,670 6,719 1,136 90,054 34,470 7,773 4,000 50% 77,805 77,805 6,087 1,633 81,494 33,113 16,097 3,970 50% 73,433 73,433 3,786 1,218 86,997 47,750 5,251 4,000 50% 231,370 226,239 39,864 22,017 351,057 - 32,351 13,750 50% 224,460 218,385 64,441 31,098 297,510 104,200 29,426 27,446 795,611 784,201 135,388 61,336 998,710 258,096 110,962 61,749 1,012 30,964 (11,907) (20,438) (13,699) (15,029) (112,174) (38,035) (178,673) (6,880) (4,880) (11,760) 506 15,482 (5,954) (10,219) (6,850) (7,515) (56,087) (19,018) (89,338) (3,440) (2,440) (5,880) - - 26,416 27,792 24,191 19,623 172,055 93,337 363,414 317 506 15,482 - - - - - - 16,305 (3,440) (2,440) (5,880) - 113 - (257) - 4,510 - 2,255 - - - - - - 7 - 4 - - 20,462 17,573 17,341 12,108 115,968 74,319 257,771 10,228 (3,360) (162) - 3,504 - 1,752 17,017 (4,852) (1,093) - (1,453) - (727) 15,706 (4,603) (1,100) - (2,852) - (1,426) - - - 2,106 2,106 17,092 (4,571) (1,263) 16,047 (4,586) (1,469) 62,261 (18,209) (1,963) (1,481) (1,805) 31,204 - - - - - - - - 64,096 (17,933) (7,458) - 27,702 4,212 202,560 (58,114) (14,765) - 59,336 4,212 (741) (903) 15,602 13,851 29,668 Total Conversion Conversion Total Africa Corp. Asia Corp. 50% 50% 6,880 4,880 11,760 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Loans and borrowings In October 2008, TI Asia Ltd. and TI Africa Ltd. concluded a USD 500 million senior secured credit facility. The facility consists of a term loan of USD 180 million which was used to finance the acquisition of two ULCC vessels, the TI Asia and the TI Africa respectively from Euronav and OSG and a project finance loan of USD 320 million which has been used to finance the conversion of the above mentioned vessels into FSO. Following the termination of the original service contract related to the FSO Africa and the signature of a new contract for the FSO Africa with the same client the Tranche of the facility related to FSO Africa was restructured. The tranche related to FSO Asia matures in 2017 and has a rate of Libor + a margin of 1.15%. After the restructuring the tranche related to FSO Africa was maturing in August 2013 with a balloon of USD 45,000,000 and had a rate of Libor + a margin of 2.25%. In 2013, the Africa Tranche was extended until 2015 at which point it will be fully repaid and the margin increased with 50bps to 2.75%. The total amount drawn under this facility (Euronav share) on 31 December 2014 was USD 72,698,234.50. In the course of 2008, the joint venture companies, Fiorano Shipholding Ltd., Fontvieille Shipholding Ltd., Larvotto Shipholding Ltd. and Moneghetti Shipholding Ltd. have concluded pre and post-delivery senior secured credit facilities to build a total of 4 Suezmax Vessels. 136 EURONAV (in thousands of USD) At 31 December 2014 Percentage ownership interest Non-Current assets of which Vessel Current Assets of which cash and cash equivalents Non-Current Liabilities Of which bank loans Current Liabilities Of which bank loans NET ASSETS (100%) NET CARRYING AMOUNT OF INTEREST IN JOINT VENTURE REMAINING SHAREHOLDERS LOAN TO JOINT VENTURE Revenue Depreciations and amortisation Interest Expense Income tax expense Profit (loss) for the period (100%) Other comprehensive income (100%) GROUP’S SHARE OF PROFIT (LOSS) FOR THE PERIOD GROUP’S SHARE OF OTHER COMPREHENSIVE INCOME Ltd. 50% 763 278 130 633 317 - - - - - - - - - - - 113 (257) 4,510 2,255 50% 204 810 - - - - 2 - - - - - - - 7 - 4 - Great Hope Enterprises Kingswood Co. Ltd. Seven Seas Fiorano Fontvieille Shipping Shipholding Shipholding Ltd. Ltd. Ltd. Larvotto Shipholding Ltd. Moneghetti Shipholding Ltd. TI Africa Ltd. TI Asia Ltd. Total Africa Conversion Corp. Asia Conversion Corp. Total 50% 34,786 34,786 7,473 3,245 6,704 6,500 4,591 4,333 50% 82,883 82,883 5,445 711 84,894 32,063 15,341 4,250 50% 70,670 70,670 6,719 1,136 90,054 34,470 7,773 4,000 50% 77,805 77,805 6,087 1,633 81,494 33,113 16,097 3,970 50% 73,433 73,433 3,786 1,218 86,997 47,750 5,251 4,000 50% 231,370 226,239 39,864 22,017 351,057 - 32,351 13,750 50% 224,460 218,385 64,441 31,098 297,510 104,200 29,426 27,446 795,611 784,201 135,388 61,336 998,710 258,096 110,962 61,749 50% 50% - - - - - - - - - - - - - - - - - - 6,880 - 4,880 - 11,760 - 1,012 30,964 (11,907) (20,438) (13,699) (15,029) (112,174) (38,035) (178,673) (6,880) (4,880) (11,760) Group’s share of net assets 506 15,482 (5,954) (10,219) (6,850) (7,515) (56,087) (19,018) (89,338) (3,440) (2,440) (5,880) Shareholders loans to joint venture - 26,416 27,792 24,191 19,623 172,055 93,337 363,414 - - - 317 506 15,482 - - - - - - 16,305 (3,440) (2,440) (5,880) - 20,462 17,573 17,341 12,108 115,968 74,319 257,771 10,228 (3,360) (162) 17,017 (4,852) (1,093) 15,706 (4,603) (1,100) 3,504 (1,453) (2,852) - - - - - - - - - 17,092 (4,571) (1,263) - 16,047 (4,586) (1,469) - (1,481) (1,805) - 62,261 (18,209) (1,963) - 31,204 - 64,096 (17,933) (7,458) - 27,702 4,212 202,560 (58,114) (14,765) - 59,336 4,212 1,752 (727) (1,426) (741) (903) 15,602 13,851 29,668 - - - 2,106 2,106 - - - - - - - - - - - - - - - - - - - - - - - - - - - The following table summarizes the terms and debt repayment profile of the bank loans held by the joint ventures: (in thousands of USD) TI Asia Ltd. * TI Africa Ltd. * Great Hope Enterprises Ltd. Seven Seas Shipping Ltd. Moneghetti Shipholding Ltd. * Fontvieille Shipholding Ltd. * Larvotto Shipholding Ltd. * Fiorano Shipholding Ltd. * Total interest-bearing bank loans Currency USD USD USD USD USD USD USD USD Nominal interest rate libor +1.15% Year of maturity 2017 libor +2.75% libor +2.70% libor +0.80% libor +2.75% libor +2.75% libor +1.50% libor +1.225% 2015 2018 2017 2021 2020 2020 2020 31 December 2014 Carrying value 131,646 Face value 131,646 Face value 31 December 2013 Carrying value 157,750 157,750 13,750 13,667 - - 10,833 51,750 38,470 37,083 36,312 10,833 51,750 38,470 37,083 36,312 38,750 19,950 15,166 56,750 42,470 41,052 40,562 38,546 19,694 15,166 56,750 42,470 41,052 40,562 319,844 319,761 412,450 411,990 * The mentioned secured bank loans are subject to loan covenants such as an Asset Protection clause. A future breach of covenants might require the joint venture to repay (part of) the loan earlier than expected. All bank loans in the joint ventures are secured by the underlying vessel or FSO. 137 Financial report Note 24 - Equity-accounted investees (continued) Loan covenant The OSG’s Chapter 11 filing has had no impact on the continued operations of the FSO joint venture, including the ability of the joint venture to continue to perform its obligations under the existing charters as well as its ability to continue to service its outstanding debt obligations and maintain continued compliance with the covenants under such debt agreements. On 12 November 2012, MOQ issued a waiver to the FSO joint venture agreeing not to exercise its rights to terminate the service contracts. The initial waiver period expired on 15 February 2013 and was subsequently extended to 15 February 2014, with MOQ having the right to terminate such waiver at an earlier date upon occurrence of certain events or after giving a 90-day notice of its intent to do so. In November 2012, the joint venture also obtained waivers of any events of default arising as a result of the commencement of the Chapter 11 Cases from (i) the bank syndicate that funds its loan facilities, (ii) the counterparties to the interest rate swaps agreements described below, and (iii) the bank that has issued performance guarantees of the joint venture’s performance of certain of its obligations under the FSO Africa and FSO Asia service contracts. The initial waiver periods on all such waivers expired on 15 February 2013 and were subsequently extended to 15 February 2014 and again extended until 15 July 2014 subject to the occurrence of certain events. As OSG emerged from Chapter 11 in August 2014, the waivers were not extended. For two secured vessel loans of its joint ventures, the Group negotiated in the course of 2013 with the lenders a 1-year relax- ation of the Asset Protection clause from 125% down to 100% (until 31 December 2013) against an increase of the margin above the LIBOR rate to 2.75%. The margin was reduced to 2.00% at the end of the relaxation period in 2014. The asset protection clause was tested again at the end of April 2014 and the Group was again in compliance with the Asset Protection clause. The waiver was therefore not extended. Intrest rate swaps Two of the Group’s JV companies in connection to the FSO conver- sion project of the TI Asia and TI Africa have also entered in two Interest Rate Swap instruments for a combined notional value of USD 480 million (Euronav’s share amounts to 50%). These IRSs are used to hedge the risk related to any fluctuation of the Libor rate and have a duration of 8 years starting respectively in July 2009 and September 2009 for FSO Asia and FSO Africa. Following the termination of the original service contract related to the FSO Africa on 22 January 2010 and the consecutive reduction of financing, the hedge related to that tranche lost its qualification as hedging instrument in a cash flow hedge relationship under IAS 39. As such the cash flows from this IRS are expected to occur and affect profit or loss as from 2010 through 2017. Fair value at 31 December 2014: USD -7,028,986 (2013: USD -11,264,668). However the hedge related to the financing of FSO Asia still qualifies fully as a hedging instrument in a cash flow hedge relationship under IAS 39. This instrument is measured at fair value; effective changes in fair value are recognised in equity and the ineffective portion is recorded in profit or loss. Fair value at 31 December 2014: USD -6,635,559 (2013: USD -10,846,716). Vessels On 2 January 2014 Great Hope Entreprise Ltd. delivered the VLCC Ardenne Venture (2004 - 318,658 dwt) to its new owners after the sale announced on 14 November 2013 for USD 41,7M. The Group’s share in the capital gain amounts to USD 2.2 million and was recognised in the first quarter of 2014. There were no capital commitments as per 31 December 2014 and 31 December 2013. Cash and cash equivalents Cash and cash equivalents of the joint ventures GROUP’S SHARE OF CASH AND CASH EQUIVALENTS Of which restricted cash 2014 61,336 30,668 15,547 2013 92,882 46,441 16,015 138 EURONAV Note 25 - Subsidiaries The Group holds 100% of the voting rights in all of its subsidiaries (See Note 23). In 2014 two wholly owned subsidiaries (Euronav Shipping NV and Euronav Tankers NV), incorporated in the first quarter of 2014, were added to the consolidation scope. These two subsidiaries became the owner and operator of (part of) the acquired Maersk fleet. In 2013 no new subsidiaries were established or acquired, nor were there any sales or liquidations of subsidiaries. Note 26 - Major exchange rates The following major exchange rates have been used in preparing the consolidated financial statements: closing rates average rates 1 XXX = x.xxxx USD 31 December 2014 31 December 2013 EUR GBP 1.2141 1.5587 1.3791 1.6542 2014 1.3349 1.6521 2013 1.3259 1.5629 Note 27 - Audit fees The audit fees for the Group amounted to USD 0.5 million (2013: USD 0.4 million). During the year the statutory auditor and persons professionally related to him performed additional audit related services amounting to USD 1.5 million (2013: USD 0.02 million) and tax services for fees of USD 0.07 million (2013: 0.03 million). The 2014 audit related services mainly relate to the Group’s series of capital transactions, including the Group’s US listing as disclosed in Note 28. Note 28 - Subsequent events On 31 January 2015, the 250 remaining outstanding fixed rate senior unsecured convertible Notes, due 2015 with a face value of USD 100,000, have been fully redeemed at par. In April 2014, the purchase option to buy the Olympia (2008 – 315,981 dwt) and the Antarctica (2009 – 315,981 dwt) was exercised for an aggregate purchase price of USD 178 million of which USD 20 million had been received as an option fee deductible from the purchase price back in January 2011. As a consequence, the Antarctica was transferred to asset held for sale, and an impairment of USD 4.9 million was recorded in the second quarter of 2014. The Antarctica was delivered to its new owner on 15 January 2015, earlier than expected, resulting in an increased sale price and a corresponding gain on disposal of assets of USD 2.2 million which will be recorded in the first quarter of 2015. On 20 January 2015 the Group announced the commencement of its underwritten initial public offering (IPO) in the United States of 13,550,000 ordinary shares. On 19 January 2015 the closing price of the Company’s ordinary shares on Euronext Brussels was USD 12.94 per share (based upon the Bloomberg Composite Rate of EUR 0.8604 per USD 1.00 in effect on that date). The Company has received approval to list its ordinary shares on the New York Stock Exchange (the “NYSE”) under the symbol “EURN”. On 28 January 2015 the Group announced the closing of its IPO of 18,699,000 common shares at a public offering price of USD 12.25 per share for gross proceeds of USD 229,062,750. This includes the exercise in full by the underwriters of their overallotment option. The Group, in accordance with article 15 of the law of 2 May 2007, confirmed the following overview: Total subscribed capital (USD) before after 142,440,546 162,764,714 Total number of ordinary shares on issue (with voting rights) * 131,050,666 149,749,666 * of which 1,750,000 shares are treasury shares 139 Financial report Following the closing of its IPO on NYSE, the Company repaid on 19 February 2015 the USD 235.5 million bond issued to partly finance the acquisition of 15 VLCCs from Maersk Tankers Singapore Pte Ltd. on 19 February 2015. As the bond was issued below par and in accordance with IFRS, the Company amor- tised USD 20.4 million (non-cash) in the fourth quarter of 2014 bringing the amortisation related to this bond for the full year 2014 to USD 31.9 million (non-cash) and a further USD 4.1 million (non-cash) in the first quarter of 2015. Furthermore, following its IPO, the Group exercised its right to request the conversion of the remaining 30 outstanding perpetual convertible preferred equity securities and issued such notice on 30 January 2015. The aggregate principal amount of USD 75,000,000 was converted to Euronav’s share capital through a contribution in kind on 6 February 2015 against the issuance of 9,459,283 shares. These shares are listed on both Euronext Brussels and the NYSE but tradeable only on Euronext Brussels. Total subscribed capital (USD) before after 162,764,714 173,046,122 Total number of ordinary shares on issue (with voting rights) * 149,749,666 159,208,949 * of which 1,750,000 shares are treasury shares During the course of 2014, the Group’s Board of Directors resolved to adopt a long term incentive plan (‘LTIP’) to be fina- lized and implemented in 2015. Under the terms of this LTIP, key management personnel would obtain 40% of their respective LTIP in the form of Euronav stock options, with vesting over three years (1/3 year) and 60% in the form of restricted stock units (‘RSU’s’), with cliff vesting on the third anniversary. The grant date was 12 February 2015 - the day subsequent to the fourth quarter earnings release on 11 February 2015. In total 236,590 options and 65,433 RSU’s were granted. On 23 March 2015, the Group launched its US Exchange Offer which enables shareholders to reposition their shares of Euronav that are listed and tradable on Euronext Brussels (the “European Shares”) into shares listed and tradable on the New York Stock Exchange. Note 29 - Statement on the true and fair view of the consolidated financial statements and the fair overview of the management report The Board of Directors, represented by Marc Saverys, its Chairman, and the executive committee, represented by Patrick Rodgers, the CEO and Hugo De Stoop, the CFO hereby confirm that, to the best of their knowledge, the consolidated financial statements for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the entities included in the consolidation as a whole, and that the management report includes a fair overview of the important events that have occurred during the financial year and of the major transactions with the related parties, and their impact on the consolidated financial statements, together with a description of the principal risks and uncertainties they are exposed to. 140 EURONAV Statutory auditor’s report to the general meeting of Euronav NV as of and for the year ended 31 December 2014 In accordance with the legal requirements, we report to you in the context of our statutory auditor’s mandate. This report includes our report on the consolidated financial statements as of and for the year ended 31 December 2014, as defined below, as well as our report on other legal and regulatory requirements. Report on the consolidated financial statements - unqualified opinion We have audited the consolidated financial statements of Euronav NV (“the Company”) and its subsidiaries (jointly “the Group”), prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These conso- lidated financial statements comprise the consolidated statement of financial position as at 31 December 2014 and the consolidated statements of profit or loss and comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. The total of the consolidated statement of financial position amounts to USD’000 3.096.360 and the consolidated statement of comprehensive income shows a loss for the year of USD’000 45.797. Board of Directors’ responsibility for the preparation of the consolidated financial statements The Board of Directors is responsible for the preparation of these consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the Board of Directors determines, is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Statutory auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the Group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We have obtained from the Company’s officials and the Board of Directors the explanations and information necessary for performing our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our unqualified opinion Unqualified opinion In our opinion, the consolidated financial statements give a true and fair view of the Group’s equity and consolidated financial position as at 31 December 2014 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. Report on other legal and regulatory requirements The Board of Directors is responsible for the preparation and the content of the annual report on the consolidated financial statements. In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we provide the following additional statement which does not modify the scope of our opinion on the consolidated financial statements: ■ The annual report on the consolidated financial statements includes the information required by law, is consistent, in all material respects, with the consolidated financial statements and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate. Kontich, March 27, 2015 KPMG Réviseurs d’Entreprises / Bedrijfsrevisoren Statutory Auditor represented by Serge Cosijns Réviseur d’Entreprises Bedrijfsrevisor Jos Briers Réviseur d’Entreprises Bedrijfsrevisor 141 Financial report Statutory financial statements for the year ended 31 December 2014 The annual accounts of Euronav NV are given hereafter in summarised form. In accordance with the Company Law, the annual accounts of Euronav NV, together with the annual report and the auditor’s report are deposited with the National Bank of Belgium. The documents can be obtained upon demand at the registered offices of the Company. The auditor did not express any reservations in respect of the annual accounts of Euronav NV. BALANCE SHEET OF EURONAV NV ASSETS (in USD) FIXED ASSETS Intangible assets Tangible assets Financial assets CURRENT ASSETS Amounts receivable after one year Amounts receivable within one year Investments Cash at bank and in hand Deferred charges and accrued income TOTAL ASSETS LIABILITIES (in USD) CAPITAL AND RESERVES Capital Share premium account Reserves Profit carried forward PROVISIONS FOR LIABILITIES AND CHARGES Provisions and deferred taxes CREDITORS Amounts payable after one year Amounts payable within one year Accrued charges and deferred income TOTAL LIABILITIES 142 31/12/2014 31/12/2013 2,302,109,527 22,242 1,410,782,594 891,304,692 365,561,623 - 88,233,118 166,532,880 81,833,354 28,962,271 1,830,111,859 15,945 1,477,747,065 352,348,849 165,302,794 - 56,056,139 55,130,115 24,797,848 29,318,692 2,667,671,151 1,995,414,653 31/12/2014 31/12/2013 1,429,550,809 142,440,546 941,770,042 100,626,275 244,713,945 9,772,443 9,772,443 877,041,935 58,936,522 365,574,165 100,626,275 351,904,973 6,949,457 6,949,457 1,228,347,899 1,111,423,260 981,043,920 208,947,082 38,356,898 898,991,591 171,700,212 40,731,457 2,667,671,151 1,995,414,653 EURONAV INCOME STATEMENT OF EURONAV NV (in USD) Operating income Operating charges Operating result Financial income Financial charges 31/12/2014 406,586,852 (407,099,986) 31/12/2013 315,525,547 (379,786,136) (513,134) (64,260,589) 22,800,294 (90,117,019) 2,309,431 (47,410,104) Profit on ordinary activities before taxes (67,829,859) (109,361,262) Extraordinary income Extraordinary charges 6,673,715 (4,198,720) - (32,059,197) Profit for the year before taxes (65,354,864) (141,420,459) Income taxes (2,033,927) (2,152,858) Profit for the year Result for the year available for appropriation (67,388,791) (67,388,791) (143,573,317) (143,573,317) APPROPRIATION ACCOUNT (in USD) Result to be appropriated Transfer to capital and reserves Profit carried forward Distribution of result 31/12/2014 31/12/2013 284,516,182 - 244,713,945 39,802,237 351,904,973 - 351,904,973 - 143 Financial report Notes 144 EURONAV REGISTERED OFFICE De Gerlachekaai 20 B-2000 Antwerpen - Belgium tel. + 32 3 247 44 11 fax + 32 3 247 44 09 e-mail admin@euronav.com website www.euronav.com RESPONSIBLE EDITOR Hugo De Stoop De Gerlachekaai 20 B-2000 Antwerpen - Belgium Registered within the jurisdiction of the Commercial Court of Antwerp - VAT BE 0860 402 767 Dit verslag is ook beschikbaar in het Nederlands. This report can be downloaded on our website: www.euronav.com