Annual
‘16
Letter of the Chairman
Quick facts
Highlights
Special Report: What is the effective size of the operational
world tanker fl eet?
CORPORATE REPORT
Vision and Mission
Company Profi le
DIRECTORS’ REPORT
Highlights 2016
Corporate Governance Statement
The Euronav Group
ACTIVITY REPORT
Products and Services
Ship Management
Fleet of the Euronav Group as per 31 December 2016
CORPORATE SOCIAL RESPONSIBILITY
Health, Safety, Quality, Environment and Society
Human Resources
GLOSSARY
FINANCIAL REPORT
01
02
04
06
12
14
16
30
56
58
62
64
68
74
76
82
KEY FIGURES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS 2009 - 2016
2015
2014
2012
2011
2010
2009
(in thousands of USD)
Revenues
EBITDA**
EBIT
Net profi t
2016
684,265
476,478
248,715
204,049
846,507
613,770
403,564
350,301
2013
*Restated
304,622
100,096
(36,862)
473,985
202,767
41,815
(45,797)
(89,683)
(118,596)
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)
TCE*** year average
2016
2015
2014
2013
2012
2011
2010
2009
VLCC
Suezmax
Spot Suezmax
41,863
26,269
27,498
55,055
35,790
41,686
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
In USD per share
2016
2015
2014
2013
2012
2011
2010
2009
Number of shares****
158,262,268 155,872,171 116,539,017
50,230,437
50,000,000
50,000,000
50,000,000
50,000,000
EBITDA
EBIT
Net profi t
3.01
1.57
1.29
3.94
2.59
2.25
In EUR per share
2016
2015
1.74
0.36
(0.39)
2014
1.99
(0.73)
(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
Rate of exchange
1.0541
1.0887
1.2141
1.3791
1.3194
1.2939
1.3362
1.4406
EBITDA
EBIT
Net profi t
History of dividend per
share
2.86
1.49
1.22
3.62
2.38
2.06
1.43
0.30
(0.32)
1.44
(0.53)
(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)
2016
2015
2014
2013
2012
2011
2010
2009
Dividend
0.77*****
Of which interim div. of
0.55
1.69
0.62
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.10
0.10
0.10
0.10
*
**
The comparative fi gures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements.
EBITDA (a non-IFRS measure) represents operating earnings before interest expense, income taxes and depreciation expense attributable to us. EBITDA is presented to provide
investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. We believe that EBITDA
is useful to investors as the shipping industry is capital intensive which often brings signifi cant cost of fi nancing. EBITDA should not be considered a substitute for profi t/(loss)
attributable to us or cash fl ow from operating activities prepared in accordance with IFRS as issued by the IASB and as adopted by the European Union or as a measure of profi tability
or liquidity. The defi nition of EBITDA used here may not be comparable to that used by other companies.
***
Time Charter Equivalent
****
Excluding 1,042,415 shares held by the Company in 2016 (2015: 466,667 shares)
***** The total gross dividend paid in relation to 2016 of USD 0.77 per share is the sum of the interim dividend paid in September 2016 in addition to the proposed amount of USD 0.22 per
share proposed to the Annual Shareholder’s Meeting of 11 May 2017.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2009 - 2016
(in thousands of USD)
ASSETS
Non-current assets
Current assets
31.12.2016 31.12.2015 31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010 31.12.2009
2,673,523
373,388
2,665,694
375,052
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
TOTAL ASSETS
3,046,911
3,040,746
3,096,360
1,920,761
2,362,879
2,451,316
2,644,214
2,786,666
LIABILITIES
Equity
Non-current liabilities
Current liabilities
1,887,956
969,860
189,095
1,905,749
955,490
179,507
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
TOTAL LIABILITIES
3,046,911
3,040,746
3,096,360
1,920,761
2,362,879
2,451,316
2,644,214
2,786,666
*
The comparative fi gures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements.
The Euronav share
Share price evolution 2016
(in USD)
■ Share price NYSE in USD
■ Share price Euronext Brussels adjusted into USD
Daily volume of traded shares 2016
(aggregate of NYSE and Euronext Brussels)
16
14
12
10
8
6
4
2
Jan
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Convertible notes
On 4 September 2009 the Company issued 1,500 subordinated, fi xed-
rate, non-guaranteed convertible bonds maturing 31 January 2015
for a total of USD 150 million.
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.
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 bore an interest of 6% during
the fi rst fi ve 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 1.372700) per ordinary 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 31 January 2015 the 250 remaining outstanding notes issued in
2009 and due in 2015 with a face value of USD 100,000 each, were
fully redeemed at par. Euronav held 18 of these notes. As of 9 April
2014 all notes due in 2018 were converted or redeemed. Currently,
there are no convertible notes that remain outstanding.
On 6 February 2014 the Company’s share capital was increased
following the voluntary 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
to exercise its right to request the contribution of the 30 outstanding
perpetual convertible preferred equity securities which on 6 February
2015 resulted in the issuance of 9,459,283 new ordinary shares.
Currently, there are no perpetual convertible preferred equity
instruments outstanding.
Euronav’s shareholders’ structure
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 is as
shown in the table:
Shareholder
Saverco NV1
Victrix NV1
Other
Total
Euronav (treasury shares)
Number of shares Percentage
17,026,896
10.69%
9,245,393
1,042,415
5.81%
0.65%
131,894,245
82.84%
159,208,949
100.00%
1 Including shares held directly or indirectly by or for the benefi t of the
ultimate benefi cial owner
Euronav’s shareholders’ structure
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 is as
shown in the table:
Shareholder
Saverco NV1
Victrix NV1
Euronav (treasury shares)
Other
Total
Number of shares Percentage
10.69%
5.81%
0.65%
82.84%
100.00%
17,026,896
9,245,393
1,042,415
131,894,245
159,208,949
Shareholders’ diary 2017
Thursday 11 May 2017
Annual General Meeting of Shareholders 2017
Thursday 10 August 2017
Announcement of fi nal half year results 2017
Thursday 17 August 2017
Half year report 2017 available on website
Tuesday 31 October 2017
Announcement of third quarter results 2017
1 Including shares held directly or indirectly by or for the benefi t of the
ultimate benefi cial owner
Thursday 25 January 2018
Announcement of fourth quarter results 2017
Representation by the persons responsible for the fi nancial
statements and for the management report
The Board of Directors, represented by Carl Steen, its
Chairman, and the Executive Committee, represented by
Paddy Rodgers, CEO, and Hugo De Stoop, CFO, hereby
confi rm that, to the best of their knowledge:
�
�
The fi nancial statements as of 31 December 2016
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 defi ned by these standards, of the assets,
liabilities, fi nancial 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.
Shareholders’ diary 2017
Thursday 11 May 2017
Annual General Meeting of Shareholders 2017
Thursday 10 August 2017
Announcement of fi nal half year results 2017
Thursday 17 August 2017
Half year report 2017 available on website
Tuesday 31 October 2017
Announcement of third quarter results 2017
Thursday 25 January 2018
Announcement of fourth quarter results 2017
Representation by the persons responsible for the fi nancial
statements and for the management report
The Board of Directors, represented by Carl Steen, its
Chairman, and the Executive Committee, represented by
Paddy Rodgers, CEO, and Hugo De Stoop, CFO, hereby
confi rm that, to the best of their knowledge:
�
�
The fi nancial statements as of 31 December 2016
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 defi ned by these standards, of the assets,
liabilities, fi nancial 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
2016 was a year of two halves for the large tanker market. The
first half saw spot market earnings matching if not exceeding
expectations but the second half earnings fell promptly away,
recovering later than anticipated to leave the third and fourth
quarters severely disappointing in comparison with the first
and second quarters. From the strong earnings of the first half,
Euronav could pay generous dividends but most shareholders,
whilst grateful for this, were disappointed with a fall in vessel
values precipitating a fall in the share price.
In view of the uncertainty in the world, particularly as politics may
intervene in business in an unpredictable way, something which
we have not seen for quite some years, Euronav has continued
strengthening its balance sheet whilst simultaneously growing
its fleet. We added two more new VLCCs at the start of 2017. Our
strong focus on the customers’ experience resulted in us being
rewarded additional business for Suezmax newbuildings and an
imminent extension of use for our FSOs.
There is a consensus in outlook for lasting improving GDP
growth in 2017 for the top twenty economies, which should
translate to good demand for oil, particularly as the OPEC cuts
have not created a price spike to levels that might be destructive
of demand.
The tankers under construction, that should be delivered this
year, will impact the market with additional supply weakening
the rate outlook in 2017 and putting pressure on second hand
values of tankers. Tougher environmental regulations are in
the offing, particularly in respect of Water Ballast Management
Convention, which will come into effect this year. We can
expect this will discourage speculative investment and improve
the safety and quality of the world tanker fleet as assurance
of competence increasingly restricts participants to quality
operators. At Euronav, with our quality ship management, we
are fully supportive of initiatives that leverage on in-house
expertise to make tanker shipping cleaner and more reliable.
We have sought to be closely tied with cargo interests as well
as maintaining good liquidity in cash and drawable credit
lines. Euronav is very well positioned for the uncertainties and
opportunities ahead.
With our excellent fleet, strong balance sheet and high quality
professional employees, Euronav is well set to meet the choppy
waters that come with the winds of change. For investors in the
tanker space, Euronav offers a safe harbor with fair prospects.
OPEC returned as the swing producer of oil after a key agreement
with non-OPEC members to reduce oil production for the first
half of 2017. Whilst this caused a sharp reaction in the oil price,
the reaction was not long lived as news of increased production
of shale oil in the U.S. soon followed. At the time of writing this
letter, significant volume is being exported from the U.S. to the
Far East for the first time. This is good business for tankers.
Yours sincerely,
Carl Steen
Chairman
“Our strong focus
on the customers'
experience resulted
in us being rewarded
additional business
for Suezmax
newbuildings and an
extension of use for
our FSOs.
1
Quick
Facts
476,478*
EBITDA
55** VESSELS
THE WORLD’S LARGEST, INDEPENDENT,
QUOTED CRUDE TANKER PLATFORM
2 FSO
2.8 MILLION BARRELS
AVERAGE AGE: 15 YEARS
21 SUEZMAX**
1 MILLION BARRELS
AVERAGE AGE: 12 YEARS
31 VLCC
2 MILLION BARRELS
AVERAGE AGE: 6.6 YEARS
1 V-PLUS
3 MILLION BARRELS
AVERAGE AGE: 15 YEARS
EURN
LISTED
EURONEXT
EURN
LISTED
NYSE
* EBITDA in thousands of USD
** Including hull S909 and hull S910 which are under construction and which are expected to be delivered in the first half of 2018.
2 | QUICK FACTS
3,051
EMPLOYEES
Over 2,900 seafarers of many different nationalities work aboard Euronav
vessels. Their nationalities are marked by a dot on the map above.
In addition, Euronav has approximately 151 employees throughout its shore-
based offices in London, Nantes, Antwerp, Singapore and Piraeus. This
geographical span across Europe reflects a deep-rooted maritime history
and culture built up over generations.
QUICK FACTS | 3
4 | HIGHLIGHTS
Highlights
JANUARY 26, 2016
Euronav takes delivery of the Alice, the second vessel of
the four VLCCs which were acquired as resales of existing
newbuilding contracts in June 2015.
DECEMBER 22, 2016
Together with joint venture partner International Seaways,
Inc., Euronav receives a letter of award for a five-year contract
for the service of its two FSO units.
Euronav also enters into a five-year sale and leaseback
agreement for the VLCCs Nautilus, Navarin, Neptun and
Nucleus with investment vehicles advised by Wafra Capital
Partners Inc. Euronav has leased back the four vessels under
a five-year bareboat contract.
MARCH 24, 2016
Euronav takes delivery of the Alex, the third vessel of the four
VLCCs which were acquired as resales of existing newbuilding
contracts.
MAY 13, 2016
Euronav takes delivery of the Anne, the fourth and last vessel
of the four VLCCs which were acquired as resales of existing
newbuilding contracts.
JUNE 2, 2016
Euronav announces the formation of a commercial joint
venture with Diamond S Management LLC and Frontline Ltd
under the name Suezmax Chartering. The aim of the joint
venture is to create a single point of contact for cargo owners
to access a large fleet of more than 40 modern Suezmax
vessels, including newbuildings, operated on the spot market.
AUGUST 16, 2016
Euronav enters into a binding agreement for the acquisition
through resale of two VLCCs for an aggregate purchase price
of USD 169 million or USD 84.5 million per vessel.
OCTOBER 3, 2016
Euronav signs two long-term time charter contracts of
seven years each starting in 2018 with Valero Energy Inc. for
Suezmax vessels with specialized Ice Class 1C capability and
orders two high specification Ice Class Suezmax vessels to
fulfil these contracts.
DECEMBER 16, 2016
Euronav signs a new USD 410 million senior secured amortizing
revolving credit facility for the purpose of refinancing 11
vessels as well as Euronav’s general corporate purposes.
HIGHLIGHTS | 5
Special
report
WHAT IS THE EFFECTIVE SIZE OF THE
OPERATIONAL WORLD TANKER
FLEET?
With the oil price looking capped by the potential for export of
U.S. shale oil, and with industry opinion formers and analysts
predicting steady demand growth over the coming three to five
years (IEA forecast demand growth 1.4 million barrels per day
2017, 1.2m barrels per day per annum 2018-22), the freight
market will in all likelihood be a supply driven market.
When looking at the supply side most analysts will quite rightly
focus on three main areas:
the orders for new ships that have been placed at the
shipyard with emphasis on the
expected deliveries and then the
CONTRACTING
ORDER BOOK
OPERATIONAL FLEET
projected or likely scrapping of existing older tonnage.
SCRAPPING/OTHER USE
6 | SPECIAL REPORT
FIT TO SAIL?
The utilization of the existing world fleet, the vessels on
the water, varies from time to time. The fleet is subject to
requirements to be ‘in class’, which is part of a regime of
regulations for sea worthiness and incorporates a survey cycle
including periodic dry-docking. Any ship, which is not in class,
is not available for service, nor is any ship that is undergoing
periodic dry-dock, to complete repair, maintenance and survey
for the purpose of staying in class.
This system provides the minimum required standard to
operate as a commercial ship and is common to all types
of vessels. For tankers this is only the start of inspections
that make up the reviews of quality assurance necessary
to trade. The operator/manager of a ship will need to have
a certified management system in compliance with the
International Maritime Organization's (IMO) International
Safety Management Code requirements, called ISM, with a
Document of Compliance (DOC) issued for the company and
a Safety Management Certificate (SMC) issued for each of
the vessels it operates and manages. These certificates are
issued by a recognized Classification Society (“class society”)
acting on behalf of a flag state.
The inspection authorities that derive their authority through
legally constituted bodies are the flag state, which may
authorize class societies to issue on their behalf certificates
required under IMO rules for international navigation. Both
have a permanent interest in the vessel as long as its owner
keeps it registered under their flag or entered with their class
society. There is a second group of interested parties who, on
the other hand have an interest limited to the performance of
particular voyages. These are the Port State Authorities, the
cargo terminal operators, the charterers and cargo interests –
in short the customers or their agents.
SPECIAL REPORT | 7
FIT FOR CARGO?
In respect of the parties related to the cargo, their interest is
limited in time to the period that the vessel is in their employ,
carries their cargo or is in their port or at their terminal, they
need to be assured prior to loading or arrival that the ship’s
operation and performance will meet their requirements. This
provides considerable problems due to the nature of shipping
as a dynamic business affected by the human element, the
perils of the sea and weather, and last but not least, the
cyclicality of the markets. How can the cargo interest be
assured of the required quality during the relevant time when
there is so much potential for change and so little opportunity
to check through physical inspection?
Oil companies originally operated their own fleets and to
some extent this continues. However, as the companies
broke up their logistical integration, one of the first parts to
be outsourced was ship operation. The process then began
of trying to be sure that the service had not only been well
performed but would also be well performed in the future.
Lessons were learned from the other end of the oil business
in the exploration and production industry where outsourcing
became the norm for offshore expertise and drilling and many
lessons were also learned about quality assurance.
FITNESS CHECK UP
The initial point was written maintenance and operation
manuals, which resulted in Guidelines issued by Oil Companies
International Maritime Forum (OCIMF) and constitutes the
basis for a vessel's acceptability and which were instituted into
an international requirement for Chartering.
The next critical point was inspecting against those manuals
to ensure that they were followed and that adherence
was evidenced in the records of the ship. This is known
as vetting, which in its early stages meant an employee
or direct subcontractor of the customer visiting the ship,
whilst in port, to meet the crew and review the ship and its
records. Vetting immediately threw up two problems. For the
inspecting company, the ship and its crew may appear to be
performing in an acceptable manner, but in not rejecting were
they approving? If they were approving, who could rely on the
approval and for how long?
Inspection must take place before the company contracts
for the business that is contemplated, otherwise it is not an
approval for future business. If a voyage (particularly for a
large tanker) takes three months and the vessel needs pre-
approving at a port, then the period of six months looks like
a bare minimum that could be workable for effectiveness of
the approval period. Owners would like it to be much longer
as repeated inspection is burdensome for the ships’ crew, but
shipping is dynamic and the crew changes continuously with
8 | SPECIAL REPORT
service on board being for periods anywhere between three
and nine months for each crew member.
There was also the issue of man power for staffing vetting,
with risk of cost duplication if all oil companies had their own
vetting staff. This combined with periodic review that was
necessary for the Safety Management System (SMS) meant
that more efficient solutions were sought.
For the SMS review OCIMF issued the Tanker Management
Self Assessment (TMSA) program in 2004 as a tool to
help operators measure, assess and improve their safety
management systems. Each tanker operator must report to
OCIMF the results of their own assessment of their SMS based
on a number of KPIs and Best Practices with four levels of
compliance for each one. Oil Companies can then perform
periodical assessment usually every three years of the
operators' SMS, to confirm that the scoring declared by the
operator is verified and to suggest areas in need of attention
or correction.
The vetting system itself was also developed overtime under
the guidance of OCIMF. This resulted in the current system,
which it is fair to say is under continuous review and change.
The following is a description of how OCIMF describes the Ship
Inspection Report Evaluation program (SIRE).
WHAT IS IT?
The Ship Inspection Report Evaluation program, or SIRE
system, is a very large database of up-to-date information
about tankers. Essentially, SIRE has focused tanker industry
awareness on the importance of meeting satisfactory tanker
quality and ship safety standards. Since its introduction, the
SIRE program has received industry-wide acceptance and
participation by both OCIMF members, program recipients
and by ship operators.
Since its introduction, more than 180,000 inspection reports
have been submitted to SIRE. Currently there are over 22,500
reports on over 8,000 vessels for inspections that have
been conducted in the last 12 months. On average program
recipients access the SIRE database at a rate of more than
8,000 reports per month.
HOW DOES IT WORK?
The SIRE program uses a uniform inspection protocol using:
σ Vessel Inspection Questionnaire (VIQ)
σ Uniform SIRE Inspection Report
σ Vessels Particulars Questionnaire (VPQ)
These make the program uniform and provide a level of
transparency.
SIRE has established itself as a major source of crew, technical
and operational information to prospective charterers and other
program users. Its increasing use corresponds with oil industry
efforts to better ascertain whether vessels are well managed
and maintained. It is a risk assessment tool for the charterers.
OCIMF is in no doubt that better informed vetting decisions are
leading to improvements in the quality of ships, accelerating its
continuing drive for safer ships and cleaner seas.
Inspection reports are maintained on the index for a period
of 12 months from the date of receipt and are maintained
on the database for two years. SIRE access is available, at a
nominal cost, to OCIMF members, bulk oil terminal operators,
port authorities, canal authorities, oil, power, industrial or
oil trader companies which charter tankers as a normal part
of their business. It is also available to governmental bodies
which supervise safety and/or pollution prevention in respect
of oil tankers/barges (e.g. Port State Control Authorities,
MOUs, etc.)
WHAT IMPACT HAS IT HAD?
This system combined with the requirement for tankers to
have a double hull has had a significant impact on operational
performance and on oil spills. It has been a success.
It has some important negatives for staff on board. Whilst it
reduces the number of inspections through data sharing via the
SIRE database between several parties, it does not establish
an approval. So, one customer’s acceptable report may be
another customer’s unacceptable level of deficiency. It also
has no period of validity with the customers expressing a view
through the market place that they require a report to have
been filed within six months of using the vessel. As described
above, this inclines an owner to want it to be constantly
up-to-date, effectively requiring inspection at every port. The
inspections occur when the crew is at its busiest and draws
resources to give assurance that the ship is properly run at the
very time when the ship wants all resources available to run
properly. Incidentally, inspections by Port State Authorities
are on the rise independently of SIRE, notwithstanding their
ability to access SIRE and this seems to be an unnecessary
additional burden. Inspection has a business side to it, so from
an owner’s perspective less inspections with more sharing of
results is welcomed.
For owners the biggest change has been from an old style
of relationship building with the customer where repeated
performance, built trust as to future performance, to a
system where service is assured through data sharing and the
relationship has become commoditized. The slight problem
with this approach is that despite all efforts from OCIMF, the
quality of inspections may vary with the individual performing
the inspection. Uniformity is important and each customer will
have specific limitations of which two nearly always crop up.
SPECIAL REPORT | 9
The first and most well-known is the age of the vessel. Most
charterers will not use vessels over 15 years of age to carry
their cargo and in addition most Atlantic Basin terminals will
not accept vessels over 18 years of age. The same is true for
some refiners in China and Northwestern Europe. The second
is less well known but is based on the crew ‘matrix’. This is
based around the period of experience of the officers of a
tanker (usually top 4 in seniority) in the tanker type, the rank or
responsibility and the amount of time employed by the owner.
The differences, in individual company requirements, present
the owners with some complicated calculations in determining
with whom they are at any time qualified to do business. The
business challenge is to be qualified to do business with
everyone all of the time. If this means more inspections,
more crew changes to meet ‘matrix’ requirements, and the
selling of older ships to have a young fleet, so be it, provided
that it delivers a better business model and adequate financial
returns to justify the additional expense.
funding, full and thorough compliance thus improving quality
assurance and performance.
Rather like the mice wanting to put a bell around the neck of
the cat, the industry can see it is a good idea but cannot see
how it can be done.
The system has achieved a first primary goal, an overall
significant reduction in oil spills, so the excellent should not be
in opposition to the good and all ship owners should embrace
the system, and then work to improve it.
THE FUTURE
Other shipping sectors, most notably gas and chemicals,
have a similar system but with a single inspectorate called
CDI, which is independent and funded by the industry –
owners and charterers that would confer an approval in a
WHAT IS THE SANCTION FOR NOT
COMPLYING?
A ship may find it more difficult to be chartered if the requisite
approvals are not in place. In theory this will reduce the
efficiency of the ship causing it to earn less as it will have less
choice in business and be unable to optimize its utilization.
Whilst the point about optimization is true, nevertheless the
ship operates in a dynamic commoditized market. Ironically
if 11 cargoes look for 10 ships the undersupply only becomes
obvious on the last fixture, so the least favored ship may
be faced with the best market conditions, one ship and two
customers with no choice. The volatility of the freight market,
because it is a commodity market, means that the lost
efficiency, due to unfavored approval status, can be easily
compensated by the surge pricing caused by the ‘last in the
shop’ position. It is an unintended consequence but very real.
The role that acceptability of ships through inspection plays
on the market is important. It dominates the working day of
the chartering desks (sales point) of every ship owner and
every customer. The ‘world fleet’ on a graph showing the
ships built that have not yet been scrapped is not the world’s
‘workable fleet’ but no one has yet been able to graph that.
However, this is what constitutes supply! It is the missing x
factor that ruins the predictions of analysts when they foresee
an oversupplied market and then contrary to all forecastable
data there is a surge in the market price due to a shortage
which is not apparent to a market observer, who does not
actively participate!
If the status of tankers, as approved, could be publicized, it
would identify and should stabilize the world’s workable
fleet, reduce supply, increasing freight but guaranteeing by
10 | SPECIAL REPORT
manner not dissimilar to a temporary license to trade. This
would encourage uniformity of inspection as well as clarity of
rules over age of vessel, and qualifications and experience of
officers. The inspectorate would be answerable in terms of its
remit to the members but have separate liability independent
from them. This would allow the inspection results to be more
widely available and consequently minimize uncertainty and
disruption in the market place.
A single regime would surely then suffice for all interested
parties, terminal operators, Port State Authorities, cargo
interests and governmental organizations.
Three other factors may reduce the available fleet: storage
(temporary or permanent); newly delivered ships (which are
untried and have not been operationally inspected); and ex-
dry-dock ships (which may have operational problems with
equipment disassembled or repaired or replaced during the
docking).
All of these developments impact on one simple fact. The
world’s operational tanker fleet is smaller than it may appear.
SPECIAL REPORT | 11
“We intend to pursue excellence
through innovation, know-how and
continuous improvement.
12 | VISION AND MISSION
Vision
and
Mission
VISION
To continue to be recognized 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 continuous improvement.
MISSION
For our society
To transport an essential source of energy in a manner that
is economically, 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 significant and lasting value by strategically
planning financial 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.
VISION AND MISSION | 13
Company
profile
Euronav is a market leader in the transportation and storage
of crude oil and petroleum products. As the world’s largest,
independent quoted crude tanker platform, on March 14,
2017, Euronav owns and manages a fleet of 55 vessels1.
The Company, incorporated in Belgium, is headquartered in
Antwerp. Worldwide Euronav employs 151 people on shore
and has offices throughout Europe and Asia. Over 2,900 people
work on the vessels. Euronav is listed on Euronext Brussels
and on the NYSE under the symbol EURN.
The need to operate a safe and reliable fleet has never been
more crucial and it is the most important strategic objective
for the Company. Euronav aims to be an efficient organization
and to deliver the highest quality and best possible service to
its customers.
Euronav has a long-term strategy through cycle profitability 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 fixed and floating 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 officers, who graduated from the most reputable
maritime academies in the world, on board a modern fleet,
Euronav aims to operate in the top end of the market. The skills
of its directly employed seagoing officers and shore-based
captains and engineers give a competitive edge in maintenance
as well as in operations and delivery of offshore projects.
1 Including hull S909 and hull S910 which are under construction and which
are expected to be delivered in the first half of 2018.
14 | COMPANY PROFILE
“As the world’s
largest, independent
quoted crude tanker
platform, on March
14, 2017, Euronav
owns and manages a
fleet of 551 vessels.
COMPANY PROFILE | 15
Directors
report:
highlights
2016
Overview of
the Market
OIL DEMAND, PRODUCTION AND
BUNKER COSTS
The IMF has estimated the global economic growth for 2016 to
be at 3.1%. As there has been a rebound in several economies,
the prospects in several countries such as Germany, Japan or
Spain have improved. Also, some macroeconomic indicators
were more positive than previous years, such as the evolution
in car sales and usage in certain countries supporting oil
demand. The continued growth in vehicle usage supported
U.S. oil demand and an increase in cars and trucks sales has
done the same in China.
Demand for oil remained typically robust with the International
Energy Agency (IEA) showing a 1.3% increase to 96.6 million
barrels per day (m bpd) for 2016. China oil demand was
estimated at 11.74m bpd for 2016, despite the slowdown in
growth of the Chinese economy, as well as some weakness in
the industrial sector.
Overall, the supply of crude oil continued to be high throughout
2016 and was estimated to be at the same level as global
demand despite the decrease of production in some countries
such as Nigeria and Venezuela. Latest figures were showing
a major rise in Iran’s oil exports which went from 2.86m bpd
in 2015 to 3.46m bpd by the end of 2016 (with October 2016 oil
exports rising to 3.72m bpd). The OPEC cartel’s oil production
reached a historical high level by the end of the final quarter
16 | OVERVIEW OF THE MARKET
of 2016, increasing to 33.6m bpd, with the average for the full
year estimated at 32.3m bpd.
Crude oil prices have been increasing gradually throughout
the majority of 2016 to reach an average for the full year of
USD 40.76 per barrel for the OPEC basket, USD 43.65 for the
Brent Crude (2015: USD 55.96 per barrel) and USD 43.26 for
the WTI Crude (2015: USD 51.33). These rates remained on
average lower than last year.
Bunker fuel is a key operating cost for tanker owners. Bunker
prices have been overall lower than last year in some of the
major producing ports. Prices for the full year were on average
estimated at USD 236 in Fujairah (2015: USD 294), USD 214
in Rotterdam (2015: USD 265) and USD 233 per metric ton in
Singapore (2015: USD 289).
!
World Oil Demand
in million bpd (Source: IEA)
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
World Oil Production
in million bpd (Source: IEA)
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
World VLCC Cargo Evolution
■ 2013 ■ 2014 ■ 2015 ■ 2016
Cargoes per month (Source: TI VLCC database)
100
95
90
85
80
75
100
95
90
85
80
75
260
240
220
200
180
160
140
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
OVERVIEW OF THE MARKET | 17
TANKER MARKET
The average Time Charter Equivalent (TCE) obtained by the
Company’s owned VLCC fleet in the Tankers International (TI)
Pool was about USD 41,863 per day for 2016 (in 2015: USD
55,055 per day).
The earnings of Euronav’s VLCC time charter fleet was
approximately USD 42,618 per day for 2016 (2015: USD 41,981 per
day).
The average daily TCE obtained by the Suezmax spot fleet
traded by Euronav directly, was approximately USD 27,498 per
day in 2016 (2015: USD 41,686 per day).
The earnings of Euronav’s Suezmax time charter fleet was
approximately USD 26,269 per day for 2016 (2015: USD 35,790).
FLEET GROWTH
Several shipbuilding yards were facing structural difficulties
and there have been some order cancellations throughout 2016.
Access to financing has also become more difficult in spite of
asset prices decreasing since the beginning of the year. Despite
this, the large tanker fleet has grown significantly in 2016 as the
number of units added to the VLCC and the Suezmax world fleet
(48 and 24 respectively) in 2016 was greater than in 2015 and only
two VLCCs and one Suezmax left the fleet. By the end of the year,
696 VLCCs and 459 Suezmaxes were recorded (excluding shuttle
and product tankers) in total. The total order book represented
14% of the VLCC world fleet and 17% of the Suezmax world fleet.
World Fleet VLCC Earnings (TCE)
■ BDTI (Baltic Exchange Dirty Tanker Index Evolution)
VLCC TCE
■ TI Actual in USD
(Source: TI VLCC Database)
100,000
80,000
60,000
40,000
20,000
0
-20,000
2010
2011
2012
2013
2014
2015
2016
BDTI (Baltic Exchange Dirty Tanker Index
Rate Evolution (WS))
■ TD6 - Black Sea / Mediterranean
■ TD20 - West Africa / Continental Europe
(Source: Baltic Exhange)
BDTI (Baltic Exchange Dirty Tanker Index
Rate Evolution (WS))
■ TD1 - Arabian Gulf / U.S. Gulf
■ TD3 - Arabian Gulf / Japan
■ TD15 - West Africa / China
(Source: Baltic Exhange)
200
150
125
100
75
50
25
130
110
90
70
50
30
10
2010
2011
2012
2013
2014
2015
2016
2010
2011
2012
2013
2014
2015
2016
18 | OVERVIEW OF THE MARKET
!
VLCC Fleet Development
■ Additions ■ Forecast Additions
■ Scrapped ■ Removals Scenario
(Source: Clarksons)
Suezmax Fleet Development
■ Additions ■ Forecast Additions
■ Scrapped ■ Removals Scenario
(Source: Clarksons)
60
45
30
15
0
-15
-30
-45
-60
62
54
49
49
31
Q4=8
Q3=9
44
Q4=8
44
Q2=12
Q3=10
48
30
24
23
Q1=20
Q2=16
Q1=10
Q2=1
Q1=1
-13
-4
-2
-4
-2
-5
-17
-22
-25
-45
75
60
45
30
42
44
15
38
0
-6
-18
-15
-19
16
-6
0
8
-9
62
Q4=10
Q3=9
Q4=12
Q2=16
15
Q4=2
Q3=3
Q2=4
Q1=6
-3
24
Q1=27
!
-1
-6
-5
-5
Netto:
9
Netto:
37
Netto:
32
Netto:
8
Netto:
11
Netto:
19
Netto:
46
Netto:
31
Netto:
40
Netto:
0
Netto:
5
-30
-60
Netto:
28
Netto:
36
Netto:
25
Netto:
10
Netto:
0
Netto:
0
Netto:
23
Netto:
56
Netto:
12
Netto:
5
Netto:
5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
OVERVIEW OF THE MARKET | 19
FSO AND FPSO MARKET 1
By the end of 2016 there were 382 floating production systems
in service or available worldwide among which 165 FPSOs and
105 FSOs. This does not include 24 FPSOs that are available
for reuse. In addition there is one FPSO that is out of service
for extended repairs.
In total 52 production floaters, six FSOs and six MOPUs are
currently on order which is 11 down since January 2016. This
decline is expected to continue throughout 2017. The order
backlog is expected to decrease over the next 15 to 18 months
reaching levels seen in 2009 to 2010 (32 – 45 units).
Currently, there are 277 floater projects in the appraisal,
planning or bidding or final design stage that may require a
floating production or storage system. Of these projects, 66
are in the bidding or final design stage and another 154 floater
projects are in the planning phase. For these planned projects,
the major hardware contracts are planned between 2018 and
2019 but studies are still ongoing to assess the economic
viability of the projects, particularly those in deep water and
harsh environments. Finally, 57 projects are in the appraisal
stage.
The most active region for future projects would be Africa
with a total of 47 potential floater projects planned. Brazil and
Southeast Asia are next with 41 projects. The remaining regions
with fewer potential projects are Southwest Asia / Middle East
(15), Australia / New Zealand (14), Canada (11), China (10), the
Mediterranean (10) and South America (23). Brazil remains
the largest market for potential floating production units as
some Brazilian developments require multiple units.
Over 50% of the facilities responsible for production floater
fabrication and conversion are based in Asia. Keppel, Samsung
and Hyundai continue to be the busiest yards each with more
than six projects underway.
Projects in planning, appraisal and final design phase by region
50
45
40
35
30
25
20
15
10
5
0
8
17
30
16
12
8
a
c
i
r
f
A
7
20
14
l
i
z
a
r
B
12
19
18
12
11
7
a
i
s
A
t
s
a
e
h
t
u
o
S
2
18
18
11
3
i
a
n
h
C
/
a
i
s
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t
s
a
e
h
t
u
o
S
6
18
14
33
o
c
i
x
e
M
f
o
f
l
u
G
7
15
17
1
e
p
o
r
u
E
n
r
e
h
t
r
o
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15
1
8
2
a
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1
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2
s
e
i
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t
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/
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N
1511
2
10
2
n
a
c
i
r
e
m
A
h
t
u
o
S
r
e
h
t
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1
6
3
n
a
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a
r
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t
i
d
e
M
1
1
n
a
e
b
b
i
r
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9
t
s
a
E
e
l
d
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M
i
/
a
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w
h
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u
o
S
1
n
a
e
c
O
c
fi
i
c
a
P
■ Bidding / final design
■ Planning
■ Appraisal
(Source: Energy Maritime
Associates Pte Ltd)
1 Floating storage and offloading / floating production storage and offloading market.
20 | OVERVIEW OF THE MARKET
EURONAV FLEET
On March 14, 2017 Euronav’s owned and operated fleet
consists of 53 double hulled vessels being one V-Plus vessel,
two FSO vessels (both owned in 50%-50% joint venture), 31
VLCCs, of which four vessels in BB-in, and 19 Suezmaxes.
At the time of preparing this report (March 14, 2017), Euronav’s
tonnage profile is as follows:
VLCC and V-Plus owned
VLCC chartered in
FSO owned
Suezmax owned
8,761,526.00 dwt
1,229,136.00 dwt
442,000 dwt
2,960,599.00 dwt
reimbursement for agreed operating expenses. The signing
of final services contracts remains subject to an agreement
on substantive business terms and no assurance can be given
that such agreement will be reached.
The vast majority of Euronav’s vessels are managed in-house,
which positions its fleet at the top of the market for tanker
assets and services. The benefits that are derived from in-
house management lie 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 fixed rate long-term
business or in the spot market.
TOTAL OWNED AND CONTROLLED
TONNAGE
13,393,260 dwt
OVERVIEW OF THE YEAR 2016
Euronav’s vessels have an aggregate carrying capacity of
approximately 13.39 million dwt. On March 14, 2017 the weighted
average age of the Company’s trading fleet was approximately
8.2 years. After taking delivery of the hull S909 and hull S910
which are under construction and are expected to be delivered
in the first half of 2018, Euronav will own and operate 55 double
hull tankers (including FSO vessels) with an aggregate carrying
capacity of approximately 13.71 million dwt.
The majority of Euronav’s VLCC fleet is operated in the Tankers
International Pool (the “TI Pool”) in the voyage freight market.
The TI Pool is one of the largest modern exclusively double
hulled fleets worldwide and comprises on March 14, 2017, 36
vessels of which 26 vessels operated by Euronav. The average
age of Euronav’s owned VLCC fleet on March 14, 2017 is 6.6
years. In addition, the TI Pool forms a commercial joint venture
with Frontline Ltd since October 6, 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 fleet is chartered out on long-term
contracts. The Euronav Suezmax fleet that is operated on the
spot market is partially traded through Suezmax Chartering,
a commercial joint venture with Diamond S Management LLC
and Frontline Ltd. On March 14, 2017 the average age of the
Suezmax fleet is approximately 12 years.
Both of Euronav’s FSO vessels are chartered out and committed
until the third quarter of 2017. However, on December 22,
joint venture partner International
2016, together with
Seaways, Inc. (“INSW”), Euronav received a letter of award
for a five-year contract for the service of its two FSO units in
direct continuation of the current contractual service on the Al
Shaheen oil field. The existing contracts will remain in force
until expiry in the third quarter of 2017. If negotiations and
documentation are successfully concluded, the new contracts
are expected to generate revenues for the joint venture in
excess of USD 360 million over their full duration, excluding
The first quarter
For the first quarter of 2016, the Company had a net result
of USD 113.5 million or USD 0.72 per share (first quarter
2015: USD 80.9 million or USD 0.55 per share). EBITDA for the
same period was USD 164.0 million (first quarter 2015: 131.3
million). Proportionate EBITDA (a non IFRS-measure) would
have been USD 185.0 million (first quarter 2015: USD 153.8
million). The average daily TCE obtained by the Company’s
fleet in the TI Pool was approximately USD 60,638 per day (first
quarter 2015: USD 50,845 per day). The TCE of the Euronav
VLCC fleet fixed on long-term charters, including profit shares
when applicable, was USD 40,847 per day (first quarter 2015:
USD 44,547 per day). The average daily TCE obtained by the
Suezmax spot fleet was approximately USD 38,386 per day
(first quarter 2015: USD 41,944 per day). The TCE of the
Euronav Suezmax fleet fixed on long-term time charters,
including profit shares when applicable, was USD 32,251 per
day (first quarter 2015: USD 41,593 per day).
January
Euronav
On January 15, 2016 Euronav sold the VLCC Famenne (2001 –
298,412 dwt), one of its two oldest VLCC vessels, for USD 38.4
million. The capital gain on that sale of USD 13.8 million was
recorded at delivery on March 9, 2016.
On January 26, 2016 Euronav took delivery of the second vessel
of the four VLCCs which were acquired as resales of existing
newbuilding contracts as announced on June 16, 2015: VLCC
Alice (2016 - 299,320 dwt).
As reported on January 26, 2016, Euronav bought back 500,000
of its own shares in several transactions from January 15 until
January 25, 2016 at an average price of EUR 9.5256 per share.
In the market
In 2016, the time charter market has been quieter on the
medium to long-term period (over six months) compared to
the year before.
OVERVIEW OF THE MARKET | 21
This was mainly due to a lack of visibility on future market
trends by charterers and traders. Therefore there have been
fewer time charter fixtures over six months recorded on the
market. This was probably exacerbated by the busy order book
and anticipation of weaker freight rates in the medium term.
Whilst most owners interested in concluding time charter
deals preferred longer terms, charterers and particularly
traders were more in favor of shorter-term deals which are
not captured in this report.
VLCC
σ
σ
σ
The highest1 daily rated reported fixture was recorded by
Neve Celeste (2003) chartered out to Dragun USA LLLP
for 24 months at USD 45,500 per day.
The longest and lowest daily rated reported fixture was
recorded by Maran Artemis (2016) chartered out to CSSA
for five years at USD 38,500 per day.
In total about six confirmed VLCC fixtures were reported
on TC over six months in the month of January.
Suezmax
σ
σ
The SKS Skeena (2006) was extended to BP for 12 months
at an undisclosed rate.
In total about two confirmed Suezmax fixtures were
reported on Time Charter ("TC") over six months in the
month of January.
February
In the market
VLCC
σ
σ
σ
The highest1 daily rated reported fixture was recorded
by Ridgebury Pride (2000) chartered out to Shell for 12
months at USD 46,500 per day.
The lowest daily rated and longest reported fixture was
recorded by New Century (2004) chartered out to Shell
for three years at USD 36,500 per day.
In total about three confirmed VLCC fixtures over six
months were reported on TC in the month of February.
Suezmax
σ
σ
σ
σ
The highest1 daily rated reported fixture was recorded
by United Leadership (2005) chartered out to P66 for 12
months at USD 35,000 per day.
The lowest daily rated reported fixture was recorded by
Everbright (2010) chartered out to Shell for 18 months at
USD 33,000 per day.
The longest reported fixture was recorded by Seacross
(2006) chartered out to Shell for 18 months at USD
33,250 per day.
In total about six confirmed Suezmax fixtures over six
months were reported on TC in the month of February.
March
Euronav
On March 24, 2016 Euronav took delivery of the third vessel
of the four VLCCs which were acquired as resales of existing
newbuilding contracts as announced on June 16, 2015: VLCC
Alex (2016 - 299,445 dwt).
In the market
VLCC
σ
σ
σ
σ
The highest1 daily rated reported fixture was recorded by
Sea Horizon (2001) chartered out to ST Shipping for 24
months at USD 40,000 per day.
The lowest daily rated reported fixture was recorded by
Gem No.1 (2016) chartered out to Koch at USD 37,500 per
day for 24 months with an optional period of 12 months.
The longest reported fixture was recorded by Phoenix
Vigor (2009) chartered out to Reliance for three years at
an undisclosed rate.
In total about five confirmed VLCC fixtures over six
months were reported on TC in the month of March.
Suezmax
σ
No fixture over six months was reported on the market in
the month of March.
1 Anything above six months TC.
22 | OVERVIEW OF THE MARKET
The second quarter
The Company had a net half year result of USD 153.7 million
or USD 0.97 per share (first semester 2015: USD 173.3 million
or USD 1.13 per share). EBITDA for the same period was
USD 282.4 million (first semester 2015: USD 298.7 million).
Proportionate EBITDA (a non-IFRS measure) for the same
period would have been USD 298.6 million (first semester
2015: USD 316.1 million). For the second quarter of 2016 the
average daily TCE obtained by the Company’s fleet in the TI
Pool was approximately USD 47,864 per day (second quarter
2015: USD 55,570 per day). The TCE of the Euronav VLCC fleet
fixed on long-term charters, including profit shares when
applicable, was USD 44,382 per day (second quarter 2015:
USD 38,148 per day). The average daily TCE obtained by the
Suezmax spot fleet was approximately USD 33,119 per day
(second quarter 2015: USD 41,886 per day). The TCE of the
Euronav Suezmax fleet fixed on long-term time charters,
including profit shares when applicable, was USD 26,363 per
day (second quarter 2015: USD 35,258 per day).
April
In the market
VLCC
σ
No fixture over six months was reported on the market in
the month of April.
Suezmax
σ
No fixture over six months was reported on the market in
the month of April.
May
Euronav
On May 12, 2016 the Annual General Meeting of Shareholders
approved an additional dividend of USD 0.82 bringing the full
gross dividend to USD 1.69 per share as proposed by the Board
of Directors.
On May 13, 2016 Euronav took delivery of the fourth and last
vessel of the four VLCCs which were acquired as resales of
existing newbuilding contracts as announced on June 16,
2015: the VLCC Anne (2016 – 299,533 dwt).
On May 20, 2016 Euronav announced that it had agreed with
Bretta Tanker Holdings, Inc. ('Bretta') to terminate its Suezmax
joint venture. The joint venture covered four Suezmax vessels:
the Captain Michael (2012 – 157,648 dwt), the Maria (2012 –
157,523 dwt), the Eugenie (2010 – 157,672 dwt) and the Devon
(2011 – 157,642 dwt). Euronav has assumed full ownership of
the two youngest vessels, the Captain Michael and the Maria,
and Bretta has assumed full ownership of the Eugenie and the
Devon.
“Over the first half
of the year, Euronav
took delivery of
the Alice, Alex and
Anne, the last three
of four VLCCs which
were acquired as
resales of existing
newbuilding
contracts.
OVERVIEW OF THE MARKET | 23
“On June 2,
2016 Euronav
started Suezmax
Chartering, a
commercial
joint venture in
collaboration
with Diamond S
Management LLC
and Frontline Ltd.
In the market
VLCC
σ
σ
σ
The highest1 daily rated reported fixture was recorded by
Britanis (2002) chartered out to Litasco for 12 months at
USD 42,000 per day.
The longest and lowest daily rated reported fixture was
recorded by Ulysses (2016) chartered out to Hyundai
Glovis for 40 months at USD 34,000 per day.
In total close to six confirmed VLCC fixtures over six
months were reported on TC in the month of May.
Suezmax
σ
σ
σ
σ
The highest1 daily rated reported fixture was recorded
by Nordic Skier (and RS Tara - more details are added
below) (2005) chartered out to ExxonMobil for 12 months
at USD 28,500 per day.
The lowest daily rated reported fixture was recorded by
Nordic Sprinter (2005) chartered out to ExxonMobil for 18
months at USD 27,700 per day.
The longest reported fixture was recorded by RS Tara
(2016) chartered out to Vitol for 24 months at USD 28,500
per day.
In total about three confirmed Suezmax fixtures over six
months were reported on TC in the month of May.
June
Euronav
On June 2, 2016 Euronav announced the formation of a
commercial joint venture with Diamond S Management LLC
and Frontline Ltd under the name Suezmax Chartering. The
aim of the joint venture is to create a single point of contact for
cargo owners to access a large fleet of more than 40 modern
Suezmax vessels, including newbuildings, operated on the
spot market.
As reported on July 1, 2016, Euronav bought back 192,415 of
its own shares in transactions on June 24, 2016 and June 27,
2016 at an average price of EUR 7.9423 per share.
In the market
VLCC
σ
No fixture over six months was reported on the market in
the month of June.
Suezmax
σ
σ
Densa Whale (2012) and Densa Orca (2012) were
chartered out to Stena for 12 months at USD 22,500 per
day each.
In total two confirmed Suezmax fixtures over six months
were reported on TC in the month of June.
The third quarter
For the third quarter 2016, the Company had a net profit of
USD 0.1 million or USD 0.00 per share (third quarter 2015:
USD 72.2 million or USD 0.46 per share). EBITDA for the
same period was USD 69 million (third quarter 2015: USD 128
million). Proportionate EBITDA (a non-IFRS measure) for the
same period would have been USD 74.6 million (third quarter
2015: USD 149.7 million). The TCE obtained by the Company’s
VLCC fleet in the TI Pool was approximately USD 27,100 per
day (third quarter 2015: USD 52,368 per day). The TCE of the
Euronav VLCC fleet fixed on long-term charters, including
profit shares when applicable, was USD 41,480 per day (third
quarter 2015: USD 43,516 per day). The average daily TCE
obtained by the Suezmax spot fleet was approximately USD
19,045 per day (third quarter 2015: USD 40,048 per day). The
TCE of the Suezmax fleet fixed on long-term time charters,
including profit shares when applicable, was USD 21,576 per
day (third quarter 2015: USD 30,944 per day).
1 Anything above six months TC.
24 | OVERVIEW OF THE MARKET
July
In the market
VLCC
September
In the market
VLCC
σ
σ
σ
The highest1 daily rated reported fixture was recorded by
DHT Amazon (2011) chartered out to CSSA for 16 months
at USD 44,100 per day.
The longest and lowest daily rated reported fixture was
recorded by Gem No. 1 (Koch relet) (2016) chartered out to
CPC for three years at USD 32,700 per day.
In total about six confirmed VLCC fixtures over six
months were reported on TC in the month of July.
Suezmax
σ
In total one fixture over six months was reported on TC
in the month of July by Aegean Unity (2016). No rate was
reported.
August
Euronav
On August 16, 2016 Euronav entered into a binding agreement
for the acquisition through resale of two VLCCs which are
completing construction at Hyundai Heavy Industries for an
aggregate purchase price of USD 169 million or USD 84.5
million per unit.
In the market
VLCC
σ
In total one confirmed VLCC fixture was reported on
TC in the month of August, Nave Buena Suerte (2011)
chartered out to Shell for 12 months. However, no rate
was reported.
Suezmax
σ
No fixture was reported on the market in the month of
August.
1 Anything above six months TC.
σ
In total one confirmed VLCC fixture was reported on TC
in the month of September, Bunga Kasturi Empat (2007)
chartered out to Petronas for 12 months. However, no
rate was reported.
Suezmax
σ
In total one confirmed Suezmax fixture was reported
on TC in the month of September, Summit Spirit (2008)
chartered out to ExxonMobil for 18 months at USD 27,700
per day.
The fourth quarter
For the fourth quarter 2016, the Company had a net profit
of USD 50.3 million or USD 0.32 per share (fourth quarter
2015: USD 104.9 million or USD 0.66 per share). EBITDA was
USD 125.1 million (fourth quarter 2015: USD 174.2 million).
Proportionate EBITDA (a non-IFRS measure) would have been
USD 130.5 million (fourth quarter 2015: USD 182.4 million).
For the full year ending December 31, 2016, the net results
are USD 204 million or USD 1.29 per share (2015: USD 350.3
million or USD 2.25 per share). The TCE obtained by the
Company’s fleet in the TI Pool was for the fourth quarter
approximately USD 33,161 per day (fourth quarter 2015: USD
61,482 per day).
The TCE of the Euronav VLCC fleet fixed on long-term charters,
including profit shares when applicable, was USD 43,833
per day (fourth quarter 2015: USD 41,776 per day). The TCE
obtained by the Suezmax spot fleet was approximately USD
21,243 per day for the fourth quarter (fourth quarter 2015:
USD 41,596 per day). The earnings of the Euronav Suezmax
fleet fixed on long-term time charters, including profit shares
when applicable, were USD 24,662 per day for the fourth
quarter (fourth quarter 2015: USD 36,042 per day).
OVERVIEW OF THE MARKET | 25
Time charter equivalent for the full year:
In USD
VLCC spot
2016
41,863 per day
2015
55,055 per day
VLCC time charter
42,618 per day
41,981 per day
Suezmax spot
27,498 per day
41,686 per day
Suezmax time charter
26,269 per day
35,790 per day
October
Euronav
On October 3, 2016 Euronav signed two long-term time
charter contracts of seven years each starting in 2018 with
Valero Energy Inc. for Suezmax vessels with specialized Ice
Class 1C capability. In order to fulfil these contracts, Euronav
has ordered two high specification Ice Class Suezmax vessels
from Hyundai Heavy Industries shipyard in South Korea.
Delivery of these vessels is expected in early 2018 in good time
for commencement of the charters.
On October 13, 2016 Euronav agreed with Hyundai Heavy
Industries shipyard in South Korea to defer the delivery of the
two VLCC ex-yard resale vessels it purchased on August 16,
2016 to the first quarter of 2017. These vessels, previously
expected to be delivered between October and November
2016, were delivered in January 2017.
On October 27, 2016 the VLCC KHK Vision (2007 – 305,749 dwt),
which was time chartered in, was redelivered to its owner.
In the market
VLCC
σ
No fixture over six months was reported on the market in
the month of October.
Suezmax
σ
σ
σ
The highest1 daily rated and longest reported fixture was
recorded by Sri Vishnu (2000) chartered out to BPCL for
24 months at USD 18,700 per day.
The lowest daily rated reported fixture was recorded by
Maran Cassiopeia (2003) chartered out to Koch for 12
months at USD 10,000 per day with a profit share.
In total two confirmed Suezmax fixtures over six months
were reported on TC in the month of October.
November
Euronav
On November 1, 2016 Euronav agreed to purchase the VLCC
V.K. Eddie (2005 - 305,261 dwt) from its 50% joint venture
Seven Seas Shipping Ltd at a price of USD 39 million. Euronav
received full control of the Daewoo-built vessel on November
23, 2016.
1 Anything above six months TC.
26 | OVERVIEW OF THE MARKET
In the market
VLCC
σ
σ
σ
σ
The highest1 daily rated reported fixture was recorded by
Oceanis (2011) chartered out to Frontline for 12 months
at USD 43,000 per day.
The lowest daily rated reported fixture was recorded by
BW Peony (2011) chartered out to Shell for 12 months
at USD 20,000 (up to USD 30,000 100% for owners and
anything above 50/50% profit share) per day.
One of the longest reported fixtures was recorded by
C. Spirit (2013) chartered out to Curzon for two years at
USD 30,500 per day.
In total close to 11 confirmed VLCC fixtures over six
months were reported on TC in the month of November.
Suezmax
σ
σ
σ
The highest1 daily rated reported fixture was recorded by
Minerva Georgia (2008) chartered out to Petraco for 12
months at USD 29,750 per day.
The lowest daily rated reported fixture was recorded
by Astro Polaris (2004) chartered out to Navig8 for 12
months at USD 21,000 per day.
In total three confirmed Suezmax fixtures over six
months (all three fixed at 12 months) were reported on
TC in the month of November.
December
On December 16, 2016 Euronav signed a new USD 410 million
senior secured amortizing revolving credit facility for the
purpose of refinancing 11 vessels as well as Euronav’s general
corporate purposes. The credit facility was used to refinance
the USD 500 million senior secured credit facility dated March
25, 2014 and will mature on January 31, 2023 carrying a rate
of LIBOR plus a margin of 2.25%.
On December 22, 2016 together with joint venture partner
International Seaways, Inc. (“INSW”), Euronav was awarded
a five-year contract for the service of its two FSO units. The
existing contracts will remain in force until expiry in the
third quarter of 2017. If negotiations and documentation
are successfully concluded, the new contracts are expected
to generate revenues for the joint venture in excess of USD
360 million over their full duration, excluding reimbursement
for agreed operating expenses. The signing of final services
contracts remains subject to an agreement on substantive
business terms and no assurance can be given that such
agreement will be reached.
On December 22, 2016 Euronav also entered into a five-year
sale and leaseback agreement for four VLCC vessels with
investment vehicles advised by Wafra Capital Partners Inc., a
private equity partnership. The four VLCCs are the Nautilus
(2006 - 307,284 dwt), Navarin (2007 - 307,284 dwt), Neptun
“Euronav signed
two long-term time
charter contracts
of seven years with
Valero Energy Inc.
for Suezmax vessels
with specialized Ice
Class 1C capability.
σ
σ
The lowest daily rated reported fixture was recorded by
Trikwong Venture (2012) chartered out to VL8 Pool for 12
months at USD 28,750 per day.
In total close to nine confirmed VLCC fixtures over six
months were reported on TC in the month of December.
Suezmax
σ
No fixture over six months was reported on the market in
the month of December.
(2007 - 307,284 dwt) and Nucleus (2007 - 307,284 dwt). The
terms of the transaction include an aggregate sales price
of USD 186 million, resulting in a capital gain of USD 36.5
million. The leaseback transaction is accounted for as an
operating lease under IFRS and includes certain contingent
elements linked to the fair market value of the vessels during
and at the expiry of the charter period. As per our return to
shareholders’ policy, this capital gain will not be eligible for
dividend distribution. After repayment of the existing debt, the
transaction generated in excess of USD 100 million free cash.
Euronav has leased back the four vessels, which were built
by Dalian Shipbuilding Industry Co., Ltd, under a five-year
bareboat contract at an average rate of USD 22,000 per day
per vessel and at the expiry of each contract the vessels will
be redelivered to their new owners.
In the market
VLCC
σ
The highest1 daily rated reported fixture was recorded
by C. Challenger (2013) chartered out to Curzon for 12
months at USD 30,000 per day.
1 Anything above six months TC.
OVERVIEW OF THE MARKET | 27
EVENTS OCCURRED AFTER THE END
OF THE FINANCIAL YEAR ENDING
DECEMBER 31, 2016
On January 10, 2017 the naming ceremony for the two VLCC
resales, the Ardeche (2017 – 298,642 dwt) and the Aquitaine
(2017 – 298,767 dwt) took place at the Hyundai Samho yard
in Mokpo, South Korea. Euronav took delivery of these on
January 12 and on January 20, 2017 respectively.
On January 30, 2017 the Group signed a loan agreement with
DnB Bank for an amount of USD 110.0 million facility with the
purpose of financing the two VLCCs, as mentioned above, as a
resale of contract.
PROSPECTS FOR 2017
2017 is expected to be a more challenging year on the large
tanker market mainly because of the new building delivery
schedule on the VLCC segment, but mostly on the Suezmax
segment where 62 vessels are scheduled to be delivered as
opposed to 24 in 2016. Freight rates are therefore expected to
be lower than 2016.
OPEC members agreed to cut oil production as from January
2017, in an effort to lift crude prices. The decrease has been
set at 1.2m bpd from the high level of the final quarter of 2016
at 33.6m bpd. Other oil producers such as Russia are expected
to cut an additional 600,000 bpd, but some countries such
as Nigeria are expected to be exempted from the cut. Given
this, and a historic lack of compliance with quotas, it currently
remains unclear what impact the production cut will have on
global crude oil prices, output levels and freight rates as it is
still early to assess if producers have actually adhered to the
cut since the beginning of January 2017.
Whilst the global oil demand outlook for 2016 has been raised
from initial forecasts by 1.5m bpd to 96.3m bpd, 2017 demand
growth is expected to slow down to 1.3m bpd mainly because
of an anticipated oil price increase. 2017 world oil demand
is at the moment estimated by the IEA at 97.51m bpd. This
growth is projected to come mainly from non-OECD countries.
Chinese oil demand is expected to grow to stand at around
12m bpd but some oil experts are suggesting that global
oil demand may have been underestimated mainly due to
underestimation of Chinese oil demand. If China’s demand is
proven to be actually stronger than estimated, then it would
suggest a tighter market and consequently a better than
expected fleet growth absorption for 2017.
With asset prices being at their lowest in recent years, and
access to capital becoming more challenging particularly
for small tanker owners, we anticipate further market
consolidation in 2017. Euronav will remain committed to a
strict capital discipline and an established policy of return to
shareholders.
28 | OVERVIEW OF THE MARKET
“
2017 world oil demand is at the
moment estimated by the IEA
at 97.51m bpd. This growth is
projected to come mainly from
non-OECD countries.
OVERVIEW OF THE MARKET | 29
Corporate
Governance
Statement
Introduction
REFERENCE CODE
Euronav has adopted
the Belgian Code on Corporate
Governance (dated March 12, 2009) as its reference code. The
code can be consulted on the website of the Belgian Corporate
Governance Committee: www.corporategovernancecommittee.be.
The full text of the Corporate Governance Charter can be
consulted on the Company’s website www.euronav.com.
NEW YORK STOCK EXCHANGE LISTING
Following the dual listing on the New York Stock Exchange of
the Company’s shares on January 23, 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 is subject to the U.S.
Sarbanes-Oxley Act of 2002 and to certain U.S. Securities laws
and regulations relating to corporate governance applicable to
reporting companies that are foreign private issuers and are
subject to SEC reporting obligations.
30 | CORPORATE GOVERNANCE STATEMENT
1. CAPITAL, SHARES AND SHAREHOLDERS
1.1 Capital and shares
On December 31, 2016 the registered share capital of Euronav
amounted to USD 173,046,122.14 and was represented by
159,208,949 shares without par value.
The shares are in registered or dematerialized form and may be
traded on the New York Stock Exchange or Euronext Brussels,
depending on in which component of the share register the
shares are registered. Shares may be transferred from one
component to the other after completion of a procedure for
repositioning.
1.2 Convertible bonds
On September 24, 2009
issued 1,500
subordinated, fixed-rate, non-guaranteed convertible bonds
maturing January 31, 2015 for a total of USD 150 million.
the Company
On February 1, 2013 the Company launched an exchange
offer on all outstanding bonds with maturity January 31, 2015
in exchange for newly issued convertible bonds maturing
January 31, 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.
On January 31, 2015 the 250 remaining outstanding notes
issued in 2009 and due in 2015 with a face value of USD 100,000
each, were fully redeemed at par. Euronav held 18 of these
notes. As of 9 April, 2014 all notes due in 2018 were converted
or redeemed. Currently, there are no convertible notes that
remain outstanding.
1.3 Perpetual convertible preferred equity instrument
On January 13, 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 bore
an interest of 6% during the first five 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 1.372700) 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 February 6, 2014 the Company’s share capital was
increased following the voluntary contribution in kind of 30
perpetual convertible preferred equity instruments which
resulted in the issuance of 9,459,286 new shares.
On January 30, 2015 Euronav issued a mandatory contribution
notice to exercise its right to request the contribution of the 30
outstanding perpetual convertible preferred equity securities
which on February 6, 2015 resulted in the issuance of 9,459,283
new shares. Currently, there are no perpetual convertible
preferred equity instruments outstanding.
1.4 Treasury shares
On December 31, 2016 Euronav held 1,042,415 own shares.
Besides the stock option plans for members of the Executive
Committee and potentially senior employees (please refer to
section 4.3. Remuneration policy for the Executive Committee
and 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 December 31, 2016 taken into account the declarations
and information available to the Company at the time, the
shareholders’ structure was as follows:
Shareholder
Saverco NV1
Victrix NV1
Euronav (treasury shares)
Other
TOTAL
Number of shares
Percentage
17,026,896
10.69%
9,245,393
1,042,415
5.81%
0.65%
131,894,245
82.85%
159,208,949
100.00%
Shareholders’ structure Euronav NV on March 14, 2017
10.69% Saverco NV
5.81% Victrix NV
0.65% Euronav NV
(treasury shares)
82.85% Other
1 Including shares held directly or indirectly by or for the benefit of the
ultimate beneficial owner
CORPORATE GOVERNANCE STATEMENT | 31
2. BOARD OF DIRECTORS AND BOARD COMMITTEES
2.1 Board of Directors
During 2016 the composition of the Board of Directors was as
follows:
Name
Carl Steen
Paddy
Rodgers1
Daniel R.
Bradshaw
Type of
mandate
First
appointed
as director
End term of
office
Chairman –
Independent
Director
Director -
CEO
2015
AGM 2018
2003
AGM 2020
Director
2004
AGM 2017
Ludwig Criel2
Director
2003
May 12, 2016
Alexandros
Drouliscos3
Independent
director
2013 March 31, 2016
John Michael
Radziwill4
William
Thomson
Alice
Wingfield
Digby
Director
2013
May 17, 2016
Independent
director
Independent
director
2011
AGM 2018
2012
AGM 2017
Anne-Hélène
Monsellato
Independent
director
2015
AGM 2018
Ludovic
Saverys
Grace
Reksten
Skaugen5
Director
2015
AGM 2018
Independent
Director
2016
AGM 2020
Carl Steen – Independent Director – Chairman
Carl Steen was co-opted Director and appointed Chairman of
the Board of Directors with effect immediately after the Board
meeting of December 3, 2015. Mr. Steen is also a member of the
Audit and Risk Committee. He graduated from Eidgenössische
Technische Hochschule in Zurich, Switzerland in 1975 with
a M.Sc. in Industrial and Management Engineering. After
working as Consultant in a logistical research and consultancy
company, he joined a Norwegian shipping company in 1978
with primary focus on business development. Five years later,
in 1983, he joined Christiania Bank and moved to Luxembourg,
where he was responsible for Germany and later the Corporate
Division. In 1987 Mr. Steen became Senior Vice President within
the Shipping Division in Oslo and in 1992 he took charge of the
Shipping / Offshore and Transport Division. When Christiania
Bank merged with Nordea in 2001 he was made Executive Vice
President within the newly formed organization while adding
the International Division to his responsibilities. Mr. Steen
remained Head of Shipping, Offshore and Oil Services and the
International Division until 2011. Since leaving Nordea, Mr.
Steen has become a non-executive Director for the following
listed companies in the finance, shipping and logistics sectors:
Golar LNG and Golar MLP, both part of the same group and
where he also sits on the Audit Committee, Wilh Wilhelmsen
and Belships.
Paddy Rodgers – Director - CEO
Patrick Rodgers serves 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 Director
and Chairman of the International Tanker Owners Pollution
Federation Fund since 2011. From 1990 to 1995 Mr. Rodgers
worked at CMB group as 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 serves 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 also serves as
Independent Director of GasLog Partners LP (NYSE: GLOP),
a Marshall Islands limited partnership. Since 2010 he serves
as an Independent non-executive Director of IRC Limited, a
company listed in Hong Kong, which operates iron mines in far
Eastern Russia, and which is an affiliate of Petropavlovsk PLC,
a London-listed mining and exploration company. Since 2006
Mr. Bradshaw is an Independent non-executive Director of
Pacific Basin Shipping Company Limited, a company listed in
1 Mr. Paddy Rodgers was re-appointed Director with effect immediately after
the Annual General Meeting ("AGM") of May 12, 2016.
2 Mr. Ludwig Criel’s term of mandate on the Board of Directors expired
immediately after the AGM of May 12, 2016.
3 Mr. Alexandros Drouliscos resigned from the Board of Directors with effect
on March 31, 2016.
4 Mr. John Michael Radziwill resigned from the Board of Directors with effect
on May 17, 2016.
5 Mrs. Grace Reksten Skaugen was appointed Independent Director with
effect immediately after the AGM of May 12, 2016 and became a member
of the Remuneration Committee and of the Corporate Governance and
Nomination Committee as of her appointment.
32 | CORPORATE GOVERNANCE STATEMENT
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 – until May 12, 2016
Ludwig Criel served on the Board of Directors since the
Company’s incorporation in 2003 and was a member of the
Corporate Governance and Nomination Committee until
the expiry of the term of his mandate immediately after the
AGM of May 12, 2016. Mr. Criel is Chairman of De Persgroep
since 1996. Mr. Criel further serves 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
he was made Chief Financial Officer of CMB in 1993. Since
1999 Mr. Criel is Director of the Wah Kwong group in Hong
Kong and also of Bank Degroof Petercam, a major private bank
in Belgium. 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 –
until March 31, 2016
Alexandros Drouliscos served on the Board of Directors since
May 2013 and was a member of the Remuneration Committee
until his resignation with effect on March 31, 2016. 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 Credit Officer and then as
Investment Officer, and subsequently, from 1992 to 1997, as
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.
John Michael Radziwill – Director – until May 17, 2016
John Michael Radziwill served on the Board of Directors since
2013 and was a member of the Health, Safety, Security and
Environmental Committee until his resignation with effect on
May 17, 2016. 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 Department 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
CORPORATE GOVERNANCE STATEMENT | 33
34 | CORPORATE GOVERNANCE STATEMENT
Anne-Hélène Monsellato – Independent Director
Anne-Hélène Monsellato serves on the Board of Directors
since her appointment at the AGM of May 2015, and is the
Chairman of the Audit and Risk Committee and a member of
the Corporate Governance and Nomination Committee. She
can be considered as the Audit and Risk Committee financial
expert for purposes applicable for corporate governance
regulations and Article 96 paragraph 1, 9° of the Belgian
Company Code. Mrs. Monsellato is an active member of the
French National Association of Directors and of the Selection
Committee of Femmes Business Angels since 2013. In
addition, she is serving as the Vice President and Treasurer
of the Mona Bismarck American Center for Art and Culture, a
U.S. public foundation based in New York. From 2005 till 2013,
Mrs. Monsellato served as a Partner with Ernst & Young (now
EY), Paris, after having served as Auditor ⁄ Senior, Manager and
Senior Manager for the firm starting in 1990. During her time
at EY, she gained extensive experience in cross border listing
transactions, in particular with the U.S. She is a Certified
Public Accountant in France since 2008 and graduated from
EM Lyon in 1990 with a degree in Business Management.
Ludovic Saverys – Director
Ludovic Saverys serves on the Board of Directors since
2015 and is a member of the Remuneration Committee and
the Corporate Governance and Nomination Committee. Mr.
Saverys currently serves as Chief Financial Officer of CMB NV
and as General Manager of Saverco NV. He also serves as CFO
and Director of Hunter Maritime Acquisition Corp., a blank
check company listed on NASDAQ. During the time he lived
in New York, Mr. Saverys served as Chief Financial Officer of
MiNeeds Inc. from 2011 till 2013 and as Chief Executive Officer
of SURFACExchange LLC from 2009 till 2013. He started his
career as Managing Director of European Petroleum Exchange
(EPX) in 2008. From 2001 till 2007 he followed several
educational programs at universities in Leuven, Barcelona
and London from which he graduated with M. Sc. degrees in
International Business and Finance.
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.
William Thomson – Independent Director
William Thomson has served on the Board of Directors since
2011 and is the Chairman of the Remuneration Committee
and a member 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
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 serves on the Board of Directors since
May 2012. Mrs. Wingfield Digby currently works at Pritchard-
Gordon Tankers Ltd, where she started as Chartering Manager
in 1999. Since 1995 she serves 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.
CORPORATE GOVERNANCE STATEMENT | 35
Grace Reksten Skaugen – Independent Director (as of May 12,
2016)
Grace Reksten Skaugen serves on the Board of Directors
since the AGM of May 12, 2016 as an Independent Director
and is a member of the Remuneration Committee and the
Corporate Governance and Nomination Committee. Grace
Reksten Skaugen is a member of the HSBC European Senior
Advisory Council (ESAC). In 2009 she founded Infovidi Board
Services Ltd, an independent consulting company. From
2002 till 2015 she was a member of the Board of Directors of
Statoil ASA. She is presently Deputy Chairman of Orkla ASA, a
Board member of Investor AB and Lundin Petroleum AB and
Chairman of NAXS Nordic Access Buyout A/S. In 2006 she was
one of the founders of the Norwegian Institute of Directors, of
which she continues to be the Chairman of the Board. From
1994 till 2002 she was a Director in Corporate Finance in SEB
Enskilda Securities in Oslo. She has previously worked in
the fields of venture capital and shipping in Oslo and London
and carried out research in microelectronics at Columbia
University in New York. She has a doctorate in Laser Physics
from Imperial College of Science and Technology, University of
London. In 1993 she obtained an MBA from the BI Norwegian
School of Management.
Composition
The Board of Directors currently consists of eight members.
One member has an executive function; seven are non-
executive Directors of which five are Independent Directors in
the meaning of Article 526ter of the Belgian Company Code and
Annex 2 of the Corporate Governance Charter and under Rule
10A-3 promulgated under the U.S. Securities Exchange Act of
1934 and under the rules of the NYSE. In addition, Mr. Daniel
R. Bradshaw is considered independent under Rule 10A-3
promulgated under the U.S. Securities Exchange Act of 1934
and under the rules of the NYSE. 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 2016 the Board of Directors formally met five times for a
Board meeting, one time of which the Board of Directors
deliberated via telephone conference. The attendance rate of
the members was the following:
Name
Type of mandate
Carl Steen
Chairman -
Independent Director
Meetings
attended
5 out of 5
Paddy Rodgers1
Director - CEO
5 out of 5
Daniel R.
Bradshaw
Director
4 out of 5
Ludwig Criel2
Director
1 out of 1
Alexandros
Drouliscos3
John Michael
Radziwill4
William
Thomson
Alice Wingfield
Digby
Anne-Hélène
Monsellato
Independent Director
1 out of 1
Director
1 out of 1
Independent Director
5 out of 5
Independent Director
5 out of 5
Independent Director
5 out of 5
Ludovic Saverys
Director
5 out of 5
Grace Reksten
Skaugen5
Independent Director
4 out of 4
1 Mr. Paddy Rodgers was re-appointed Director with effect immediately after
the AGM of May 12, 2016.
2 Mr. Ludwig Criel’s term of mandate on the Board of Directors expired
immediately after the AGM of May 12, 2016.
3 Mr. Alexandros Drouliscos resigned from the Board of Directors with effect
on March 31, 2016.
4 Mr. John Michael Radziwill resigned from the Board of Directors with effect
on May 17, 2016.
5 Mrs. Grace Reksten Skaugen was appointed Independent Director with
effect immediately after the AGM of May 12, 2016 and became a member
of the Remuneration Committee and of the Corporate Governance and
Nomination Committee as of her appointment.
36 | CORPORATE GOVERNANCE STATEMENT
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 responsibilities 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 ten
times in 2016.
Activity report 2016
In 2016 besides the above-mentioned customary agenda
items, Euronav’s Board of Directors deliberated on:
σ
σ
σ
σ
σ
σ
σ
σ
σ
σ
the conditions and limitations to perform buy-back
actions on own shares in the market as authorized by
the General Shareholder’s Meeting of May 13, 2015;
the construction and delivery of two VLCCs, Alex and
Anne in March 2016 and May 2016, respectively;
the reflagging of VLCC Alsace from Greek to French
flag in 2016 and of the V-Plus TI Europe from Belgian to
French flag in September 2016;
the purchase of three VLCCs Nectar, Navarin and
Nautilus from Euronav Shipping NV in October 2016;
the acquisition of two VLCCs Ardeche and Aquitaine
through novation and the delivery of the vessels in
January 2017;
the order of two high specification Ice Class Suezmax
vessels in order to fulfil long-term time charter contracts
of seven years;
the distribution in September 2016 of an interim dividend
in line with the return to shareholders policy;
a sale-and-leaseback transaction of four Chinese built
vessels;
the reorganization of the Committees within the Board
of Directors;
the extension of certain long-term charter parties.
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).
During 2016 there were no transactions to report involving a
conflict of interest at Board level. The policy relating to conflicts
of interest which do not fall under the legal provisions for
conflicts of interest at Board level did not have to be applied.
CORPORATE GOVERNANCE STATEMENT | 37
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.
Powers
The Audit and Risk Committee handles a wide range of financial
reporting, controlling and risk management matters and is
responsible for the appointment, the compensation and the
oversight of the independent auditor. 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.
As at December 31, 2016 the composition of the Audit and Risk
Committee was as follows:
Activity report 2016
In 2016 the Audit and Risk Committee convened ten times. The
attendance rate of the members was as listed below:
Name
Anne-Hélène
Monsellato1
(Chairman)
Carl Steen2
Daniel R.
Bradshaw
William
Thomson
End term
of office
Independent
Director
2018
2018
2017
2018
X
X
X
Name
Type of mandate
Meetings
attended
Anne-Hélène
Monsellato
(Chairman)
Independent Director
10 out of 10
Carl Steen
Independent Director
6 out of 6
Daniel R.
Bradshaw
William
Thomson
Alice Wingfield
Digby1
Director
7 out of 10
Independent Director
8 out of 10
Independent Director
3 out 4
1 Independent Director and expert in accounting and audit related matters
(see biography) in accordance with Article 96 paragraph 1, 9° of the Belgian
Company Code.
2 Mr. Carl Steen became a member of the Audit and Risk Committee as of
the AGM of May 12, 2016.
1 Mrs. Alice Wingfield Digby was a member of the Audit and Risk Committee
until the AGM of May 12, 2016.
38 | CORPORATE GOVERNANCE STATEMENT
these meetings,
During
the key elements discussed
within the Audit and Risk Committee included financial
statements,
impairment assumptions and depreciations,
cash management, external and internal audit reports, old
and new financing, accounting policies, matters related to the
Sarbanes-Oxley Act, the annual report on Form 20-F, certain
company policies, the accounting treatment of the termination
of the joint venture agreement with Bretta, risk management/
risk register and debt covenants. With respect to risk
management, the IT manager gave a detailed presentation for
the Audit and Risk Committee of IT risks and security.
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 three
Directors, two of which are Independent Directors.
As at December 31, 2016, the Remuneration Committee was
composed as follows:
The Remuneration Committee reviews its terms 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 2016
In 2016 the Remuneration Committee met five times. The
attendance rate of the members was as listed hereafter:
Name
Type of mandate
Meetings
attended
William
Thomson
(Chairman)
Alexandros
Drouliscos1
Independent Director
5 out of 5
Independent Director
2 out of 2
Ludovic Saverys
Director
5 out of 5
Grace Reksten
Skaugen
Independent Director
3 out of 3
Name
William
Thomson
(Chairman)
End term
of office
Independent
Director
2018
Ludovic Saverys
2018
Grace Reksten
Skaugen1
2020
X
X
Powers
The Remuneration Committee has
various advisory
responsibilities 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,
industry
incentives, bonuses etc.
benchmarks.
in line with suitable
During these meetings the key elements discussed within the
Remuneration Committee included the remuneration report
in the annual report, the organization of the HR department
in the group, the remuneration of Directors and members of
the Executive Committee, the annual bonus for the members
of the Executive Committee and employees and the set-up
of a long-term incentive plan as well as the development of
a remuneration package for the members of the Executive
Committee.
2.2.3 Corporate Governance and Nomination Committee
Composition
As at December 31, 2016, the Corporate Governance and
Nomination Committee of Euronav counted three members,
two of which are Independent Directors. In this respect,
Euronav is 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. The composition of
the Committee was further determined taking into account
members’ expertise in this area and their availability, given
other Committee memberships.
1 Mrs. Grace Reksten Skaugen became a member of the Remuneration
Committee as of the AGM of May 12, 2016.
1 Mr. Alexandros Drouliscos was a member of the Remuneration Committee
until his resignation from the Board of Directors with effect on March 31, 2016.
CORPORATE GOVERNANCE STATEMENT | 39
As of December 31, 2016, the Corporate Governance and
Nomination Committee was composed as follows:
Name
Type of mandate
Meetings
attended
Name
Daniel R.
Bradshaw
(Chairman)
Anne-Hélène
Monsellato
Grace Reksten
Skaugen1
End term
of office
Independent
Director
2017
2018
2020
X
X
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
Directors 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 2016
In 2016 the Corporate Governance and Nomination Committee
met three times. The attendance rate of the members was as
follows:
Daniel R.
Bradshaw
(Chairman)
Director
3 out of 3
Ludwig Criel1
Director
1 out of 1
Anne-Hélène
Monsellato
Grace Reksten
Skaugen
Independent Director
3 out of 3
Independent Director
2 out of 2
During these meetings the key elements discussed within the
Corporate Governance and Nomination Committee included
the composition of the Board of Directors and its Committees,
including gender diversity considerations, U.S. law and Belgian
law and Corporate Governance requirements, the assessment
of the Board and its Committees, succession planning, Board
education and leadership development, potential candidates
for a Board vacancy and investor roadshows on Corporate
Governance in view of the Annual Shareholders’ Meeting.
In addition, in February and March 2016, the Company
arranged for a Corporate Governance Roadshow for interested
investors, which consisted of one-to-one presentations
over the phone guided by the Chairman of the Corporate
Governance and Nomination Committee. The main purpose
of the roadshow was to set out the recent developments in
relation to corporate governance and the remuneration policy.
The participation of investors was much appreciated by the
Company as this allowed an open discussion with investors
on these matters and it enabled the Company to gain a good
feeling of what investors consider important. The feedback
received from the investors was processed in the course of
2016.
1 Mrs. Grace Reksten Skaugen became a member of the Remuneration
Committee as of the AGM of May 12, 2016.
1 Mr. Ludwig Criel was a member of the Corporate Governance and
Nomination Committee until the expiry of the term of his mandate
immediately after the AGM of May 12, 2016.
40 | CORPORATE GOVERNANCE STATEMENT
2.2.4 Health, Safety, Security and Environmental Committee
Following discussions on the risk register and given the
importance of the matters discussed at the Health, Safety,
Security and Environmental Committee for the Company and
hence the full Board of Directors, the Corporate Governance
and Nomination Committee recommended to the Board that
the health, safety, security and environmental matters should
be discussed at Board level. Hence the Board of Directors
agreed to no longer maintain a separate Health, Safety,
Security and Environmental Committee within the Board.
The Health, Safety, Security and Environmental Committee
was therefore abolished by decision of the Board of Directors
of March 14, 2016.
2.3 Executive Committee
Composition
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.
Powers and activity report 2016
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 2016 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 Executive Committee is composed as follows:
4. REMUNERATION REPORT
Name
Title
Hugo De Stoop
Chief Financial Officer
Paddy Rodgers
Chief Executive Officer
Alex Staring
Chief Operating Officer
Egied Verbeeck
General Counsel
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 remuneration policy
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. All Euronav employees
are subject to an annual performance review process and a
half-year follow up appraisal meeting with their respective
department heads. The execution of this performance review
process is ensured by the Executive Committee.
CORPORATE GOVERNANCE STATEMENT | 41
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 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 remuneration of
members of the Executive Committee, the Committee uses
suitable industry benchmarks.
The Remuneration Committee meets at least twice per year
and has the following main responsibilities which are further
outlined in its terms of reference:
σ
σ
σ
σ
σ
to make recommendations to the Board of Directors
relating to the remuneration policy and the individual
remuneration of the Company’s non-executive and
executive Directors, its Committees, and members of the
Executive Committee;
to make recommendations to the Board of Directors
with respect to policies and principles for performance
reviews of the members of the Executive Committee and
oversee evaluations of the members of the Executive
Committee;
to discuss objectives for the members of the Executive
Committee which subsequently serve as benchmarks for
the evaluation of their performance;
to review annually the remuneration of the members of
the Executive Committee and, on a non-individual basis,
of the group of employees;
to prepare the remuneration report for presentation to
the Annual Shareholders’ Meeting.
4.2 Remuneration policy for executive and non-executive
Directors
The remuneration of Directors 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 per the decision of the Annual General Meeting held in
May 2016, 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 is also member of the
Executive Committee, has waived his Director 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.
42 | CORPORATE GOVERNANCE STATEMENT
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 and
the Corporate Governance and Nomination Committee, the
members received an annual remuneration of EUR 5,000 and
the Chairman received a remuneration of EUR 7,500. Each
member of any of the Committees, including the Chairman,
received an additional attendance fee of EUR 5,000 per
Committee attended with a maximum of EUR 20,000 per year.
At present non-executive Directors do not receive performance
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.
The remuneration in 2016 of the members of the Board of
Directors is reflected in the table below, in euro:
Name
Fixed fee
Attendance
fee Board
160,000.00
40,000.00
15,000.00
15,000.00
Carl Steen1
Paddy Rodgers2
Daniel R. Bradshaw
Ludwig Criel3
Alexandros Drouliscos4
-
60,000.00
15,000.00
15,000.00
John Michael Radziwill5
-
William Thomson
Alice Wingfield Digby6
60,000.00
60,000.00
-
40,000.00
10,000.00
10,000.00
-
40,000.00
40,000.00
Anne-Hélène
Monsellato
60,000.00
40,000.00
40,000.00
20,000.00
5,000.00
15,000.00
180,000.00
Ludovic Saverys
60,000.00
40,000.00
Grace Reksten
Skaugen7
45,000.00
30,000.00
5,000.00
20,000.00
3,750.00
15,000.00
3,750.00
10,000.00
107,500.00
TOTAAL
535,000.00
290,000.00
100,000.00
80,000.00
18,750.00
65,000.00
16,250.00
40,000.00
1,145,000.00
1 Mr. Carl Steen became a member of the Audit and Risk Committee as of
the AGM of May 12, 2016.
2 Mr. Paddy Rodgers was re-appointed Director with effect immediately after
the AGM of May 12, 2016 and has waived his Directors’ fees.
3 Mr. Ludwig Criel’s term of mandate on the Board of Directors expired
immediately after the AGM of May 12, 2016.
Audit and Risk
Committee
Attendance fee
Audit and Risk
Committee
Remuneration
Attendance
fee
Corporate
Governance
Committee
Remuneration
and Nomination
Committee
Committee
Attendance
fee Corporate
Governance
and Nomination
Committee
20,000.00
20,000.00
7,500.00
15,000.00
162,500.00
-
-
-
-
-
-
1,250.00
1,250.00
5,000.00
5,000.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000.00
5,000.00
5,000.00
20,000.00
7,500.00
20,000.00
TOTAL
230,000.00
-
-
31,250.00
31,250.00
167,500.00
110,000.00
125,000.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Name
Fixed fee
Attendance
fee Board
Carl Steen1
Paddy Rodgers2
Daniel R. Bradshaw
Ludwig Criel3
Alexandros Drouliscos4
John Michael Radziwill5
William Thomson
Alice Wingfield Digby6
Anne-Hélène
Monsellato
160,000.00
40,000.00
-
-
60,000.00
15,000.00
15,000.00
60,000.00
60,000.00
-
-
40,000.00
10,000.00
10,000.00
40,000.00
40,000.00
Ludovic Saverys
60,000.00
40,000.00
Grace Reksten
Skaugen7
45,000.00
30,000.00
Audit and Risk
Committee
Attendance fee
Audit and Risk
Committee
Remuneration
Committee
Attendance
fee
Remuneration
Committee
Corporate
Governance
and Nomination
Committee
Attendance
fee Corporate
Governance
and Nomination
Committee
TOTAL
15,000.00
15,000.00
-
-
20,000.00
20,000.00
-
-
-
-
-
-
-
-
-
-
230,000.00
-
7,500.00
15,000.00
162,500.00
60,000.00
40,000.00
40,000.00
20,000.00
-
-
-
20,000.00
5,000.00
-
-
-
1,250.00
1,250.00
-
5,000.00
5,000.00
-
20,000.00
7,500.00
20,000.00
5,000.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,250.00
31,250.00
-
167,500.00
110,000.00
5,000.00
15,000.00
180,000.00
TOTAAL
535,000.00
290,000.00
100,000.00
80,000.00
18,750.00
65,000.00
16,250.00
40,000.00
1,145,000.00
-
-
-
-
5,000.00
20,000.00
-
-
125,000.00
3,750.00
15,000.00
3,750.00
10,000.00
107,500.00
4 Mr. Alexandros Drouliscos resigned from the Board of Directors with effect
on March 31, 2016.
5 Mr. John Michael Radziwill resigned from the Board of Directors with effect
on May 17, 2016.
6 Mrs. Alice Wingfield Digby was a member of the Audit and Risk Committee
until the AGM of May 12, 2016.
7 Mrs. Grace Reksten Skaugen was appointed Independent Director with
effect immediately after the AGM of May 12, 2016 and became a member
of the Remuneration Committee and of the Corporate Governance and
Nomination Committee as of her appointment.
CORPORATE GOVERNANCE STATEMENT | 43
4.3 Remuneration policy for the Executive Committee and the
employees
Euronav’s remuneration packages intend to be fair and
appropriate to attract, retain and motivate management and
to 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 a fixed and a variable element. The
fixed and variable remuneration are determined according
to suitable industry benchmarks for specific positions and
individual employees’ abilities.
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. In the framework
of the variable remuneration, the Board of Directors also
approved a 2017 long term incentive plan (please see section
4.5 below). 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.
Remuneration (fixed and variable)
4
3
2
1
Fix
Variable
1
2
3
4
Annual Base Salary
Success Participation
Individual & Company KPI's
Long Term Incentive Plan
LTIP vests in three phases as from start of year three following the grant date
1. Annual Base Salary (fixed)
The fixed part of the remuneration package is referred to as
the Annual Base Salary (“ABS”). The size of the ABS is based
on the required competencies and responsibilities of the
position.
2. Success Participation Bonus (variable)
The remuneration structure includes a Success Participation
Bonus which varies with the size of the distributable result
during that year. A target distributable result of USD 280 million
was set for 2016. This will be subject annually to review by the
Board of Directors upon recommendation of the Remuneration
Committee. If the target has been reached, this will result
in a Success Participation Bonus equal to 100% of ABS.
The Success Participation Bonus will vary pro rata in the
event that the target has not been reached or has been
outperformed:
Distributable
Result in USD
Success Participation
Bonus (% of ABS)
0 Million
70 Million
140 Million
280 Million
560 Million
710 Million
0%
25%
50%
100%
200%
250%
The Remuneration Committee and the Board of Directors will
always review the Success Participation Bonus against the
background of individual performance. An individual KPI score
below 2/5 excludes eligibility for participation in the Success
Participation Bonus.
3. Management Performance Bonus (variable)
This part of the variable bonus is based on pre-determined
individual KPIs and Company KPIs as approved by the Board
of Directors upon recommendation of the Remuneration
Committee. The Remuneration Committee believes that KPIs
should be SMART and align with strategic priorities. Individual
KPIs include:
σ
σ
standard KPIs that need not necessarily be revisited each
year as they are not linked to specific projects. Examples
of standard KPIs are retention of key talent, management
of leverage so critical in a cyclical business, effective
risk management and spot chartering performance
compared to peers;
project KPIs which will be set annually by the Board of
Directors upon recommendation of the Remuneration
Committee and should be in line with the strategy plan
defined by the Board of Directors. Examples of project
KPIs are successful integration of acquired businesses
and fleets, successful implementation of public capital
raising, public listings and associated regulations such
as Sarbanes-Oxley, development or improvement of
department procedures to meet demands of continuous
efficiency gains.
Performance under the individual KPIs can result in a bonus
amount between 0% and 50% of ABS. In exceptional cases the
bonus can increase to 60% of ABS.
44 | CORPORATE GOVERNANCE STATEMENT
The Management Performance Bonus can, however, be
reduced if and to the extent certain Company KPIs are not met.
These Company KPIs are standard KPIs which need not to be
revised annually and relate to safety, Company recognition,
investor relations and administration. The Company KPIs
impact equally on all members of the Executive Committee
and are intended to guarantee the integrity of the collegial
responsibility of the Executive Committee.
4. Long Term Incentive Plan (“LTIP”) (variable)
The members of the Executive Committee are also entitled to a
LTIP in the form of phantom stock. The vesting and settlement
of the LTIP is spread over a timeframe of four years and its
main intention is to encourage retention of the members of the
Executive Committee. The phantom stock awarded matures
automatically in three equal tranches on the second, third and
fourth anniversary of the award date. By using phantom stock,
the final award value is also linked to future shareholder
value. The Remuneration Committee is of the opinion that in a
market as cyclical as shipping, a vesting period over four years
is reasonable. The Board of Directors is further of the opinion
that the LTIP ensures long-term shareholder alignment.
The LTIP is granted to the members of the Executive
Committee for a value equal to the Management Performance
Bonus. The number of phantom stocks awarded is calculated
using the weighted average closing prices of the share three
days before the grant date which is usually three days after the
publication of each full year preliminary results. Other senior
employees may be invited to the LTIP by the Board of Directors
upon recommendation of the Remuneration Committee.
Assessment Process of KPIs for the members of the Executive
Committee
As outlined above, KPIs will be set annually by the Board
of Directors upon recommendation of the Remuneration
Committee.
At year-end all members of the Executive Committee will
perform a self-assessment of their performance. This self-
assessment will be reviewed by and discussed with the
other Executive Committee members. The results of this
self-assessment will be submitted to the Remuneration
Committee who will then give advice to the Board of Directors
on the performance rating.
CORPORATE GOVERNANCE STATEMENT | 45
4.4 Remuneration of the Executive Committee
Remuneration of the Chief Executive Officer
The remuneration in 2016 of the CEO is reflected in the table below:
In GBP:
Paddy
Rodgers
Fixed
remuneration
Variable
remuneration
Pension and
benefits
Other
components
393,728
Cash: 266,083
LTIP: 110,708
0
11,045
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.
Remuneration of the other members of the Executive Committee
The remuneration in 2016 of the members of the Executive Committee (excluding the CEO) is
reflected in the table
In EUR:
Three
members
Fixed
remuneration
Variable
remuneration
Pension and
benefits
Other
components
1,083,097
Cash: 691,075
LTIP: 309,555
35,024
56,626
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.
Variable remuneration differs amongst the members of the Executive Committee, though
globally and for 2016 it can be stated that the variable remuneration represents 49% of the
global remuneration for all members of the Executive Committee together.
In relation to variable remuneration for all members of the Executive Committee, the Company
has the right to claim the variable remuneration back in case of incorrect financial statements
or fraud, as provided under civil and Company law provisions.
4.5 Long Term Incentive Plans
LTIP 2014
Within the framework of a stock option plan, the Board of Directors granted on December 16,
2013 options on its 1,750,000 treasury shares to the members of the Executive Committee with
an exercise price of EUR 5.7705, as follows:
LTIP 2014
Granted
Vested
Exercised
CEO
CFO
COO
General Counsel
525,000
525,000
350,000
350,000
525,000
525,000
350,000
350,000
350,000
350,000
350,000
350,000
46 | CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT | 47
LTIP 2015
Within the framework of a management incentive plan, the Board of Directors
granted on February 12, 2015 65,433 Restricted Stock Units (RSUs) and
236,590 stock options as follows:
LTIP 2015
Granted
Vested
Exercised
CEO
CFO
COO
General Counsel
RSU
CEO
CFO
COO
General Counsel
80,518
58,716
54,614
42,742
26,839
19,572
18,205
14,247
-
-
-
-
Number of units granted
22,268
16,239
15,105
11,821
The exercise price of the options is EUR 10.0475.
The RSU’s will all vest automatically on the third anniversary of the grant
which is February 18, 2018.
LTIP 2016
Within the framework of a Phantom Stock Plan, the Board of Directors
granted on February 2, 2016, 54,616 phantom stock units as follows:
LTIP 2016
Granted
Vested
CEO
CFO
COO
General Counsel
17,116
20,728
8,009
8,762
-
-
-
-
The phantom stock units will mature one-third each year on the second, third
and fourth anniversary of the award. All of the beneficiaries have accepted
the phantom stock units granted to them. The number of phantom stocks
granted was calculated on the basis of a share price of EUR 10.6134 which
equals the weighted average of the share price of the three days following
the announcement of the preliminary full year results of 2015.
LTIP 2017
Within the framework of a Phantom Stock Plan, 66,448 phantom stock
units were granted to the Executive Committee and the Investor Relations
Manager on February 9, 2017, as follows:
48 | CORPORATE GOVERNANCE STATEMENT
LTIP 2017
Granted
Vested
These risks (as described in more detail in the ‘Risk Factors’
section in this annual report) are the following:
CEO
CFO
COO
General Counsel
Investor Relations
Manager
17,819
20,229
12,557
9,808
6,036
-
-
-
-
-
The phantom stock units will mature one-third each year on
the second, third and fourth anniversary of the award. All
of the beneficiaries have accepted the phantom stock units
granted to them. The number of phantom stocks granted was
calculated on the basis of a share price of EUR 7.2677 which
equals the weighted average of the share price of the three
days following the announcement of the preliminary full year
results of 2016.
4.6 Remuneration of the Auditor Klynveld Peat Marwick
Goerdeler (KPMG)
Permanent representative: Götwin Jackers
For 2016, 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
2016
2015
966,732
653,484
28,559
17,642
150,607
2,063
TOTAL
1,012,934
806,154
The limits prescribed by Article 133 of the Belgian Company
Code were observed.
5. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS
Internal control can be defined as a system developed and
implemented 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.
σ
σ
σ
σ
strategic: capital allocation, strategic partnerships, risks
relating to the TI Pool and VLCC Chartering, the joint
ventures and associates;
economic (including slowing economic growth, freight
rate volatility, oil supply and demand, 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, including bunker supply and management
of crew, the conversion of vessels, the operation of its FSO
activities and effective management of its international
operations;
regulations: if the Company fails to comply with health,
safety and environmental laws, regulations (including
regulations about emissions) or requirements or is
involved in legal proceedings in this regard, its operations
and revenues may be adversely affected;
CORPORATE GOVERNANCE STATEMENT | 49
σ
σ
financing: the Company is subject to operational and
financial restrictions in debt agreements; refinancing of
loans may not always be possible;
geopolitical: terrorist attacks, piracy, civil disturbances
and regional conflicts in any particular country.
As part of the reference framework Euronav:
σ
σ
σ
σ
σ
σ
(and hence
job descriptions
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
Handbook for all its employees;
clearly documented its corporate structure, organization
tasks,
chart and
responsibilities and reporting lines);
clearly specified the delegations of authority for key
decisions;
local
communication
ensures
management and Executive Committee throughout
various committees such as management committee,
pool
insurance
committee,…;
has embedded group policies in the main business
processes, which Euronav applies group-wide, covering
areas such as: fixed assets, financial statement close,
procurement, order-to-cash, hedging,
IT systems,
human resources and payroll, treasury, tax, insurances,…
committee,
committee,
between
revenue
proper
assurance that transactions are recorded in accordance with
generally accepted accounting principles and that provide
reasonable assurance to timely detect unauthorized acquisition
or use or disposition of Company’s assets. Compliance is
monitored by means of annual assessments performed by
the internal audit function and their outcome is reported to
the corporate finance function, 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 established an internal audit function which
purpose is to review and analyze strategic, operational, financial
and IT risks, to conduct specific assignment in accordance
with the annual internal audit plan and to report and discuss
the findings with the Audit and Risk Committee. The scope of
internal audit is both on operations and on internal control over
financial reporting. The Internal Audit Department is staffed
with designated resources, resources from other departments
and external service providers for competencies that are not
available as a part of the Company. Part of the internal audit
work on internal control over financial reporting is outsourced
to a qualified service provider (EY). The Internal Audit Manager
reports both to the CEO and to the Audit and Risk Committee.
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”.
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.
To support the financial reporting, Euronav has a system of
internal control over financial reporting including policies
and procedures to accurately reflect the transactions and
dispositions of assets of the Company, provide reasonable
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
50 | CORPORATE GOVERNANCE STATEMENT
by a margin. The Group does not hold or trade derivatives
for speculative purposes. Euronav uses derivative financial
instruments – 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.
5.2 Risks
Tonnage Tax Regime
Shortly after its incorporation, Euronav applied for treatment
under the Belgian tonnage tax regime. It was declared eligible
for this regime by the Federal Finance Department on October
23, 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 have been
in principle determined nominally on the basis of the tonnage
of the vessels it operated. 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. Nevertheless, Euronav
has decided to apply for the Belgian tonnage tax regime for
those subsidiaries and obtained the authorization for both
subsidiaries in the beginning of 2016.
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 and consumption
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 honor these agreements in full. Under any of these
circumstances, 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
commercial 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
to extensive, changing
Euronav’s activities are subject
environmental legislation. In the past, Euronav has incurred
significant expenses in order to comply with such legislation
and regulations, including spending on changes to vessels
and to operational 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
CORPORATE GOVERNANCE STATEMENT | 51
negative impact on Euronav’s activities, financial situation and
operating results.
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 management 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
52 | CORPORATE GOVERNANCE STATEMENT
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 few years, 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 South China Sea whilst the situation in the Gulf of
Guinea has now more or less stabilized. If these piracy
attacks occur 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, as well as 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 unavailability 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 the wider Western
Indian Ocean area and following consultation with regulatory
authorities, Euronav follows the latest version of 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) in addition to
several maritime industry organizations 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 effects and third party property, which
could adversely impact its business, results of operations,
cash flows, financial condition and ability to pay dividends.
6. INFORMATION TO BE INCLUDED IN THE ANNUAL
REPORT AS PER ARTICLE 34 OF THE ROYAL DECREE OF
NOVEMBER 14, 2007
6.1 Capital structure
At the time of preparing this report, the registered share capital
of Euronav amounts to USD 173,046,122.14 and is represented
by 159,208,949 shares without par value. The shares are in
registered or dematerialized form. Euronav currently holds
1,042,415 own shares.
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 referred to
section 4.5 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
securities 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 shareholder can exercise his voting rights provided he is
validly admitted to the Shareholders’ Meeting and his rights
are not suspended. Pursuant to Article 12 of the articles of
association, 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, the bareboat
charter parties in the framework of sale-and-lease-back
transactions and the long-term incentive plans 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.
the
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
(re)appointment,
contain specific rules concerning
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
Extraordinary General Meeting in accordance with the Belgian
Company Code. Each amendment to the articles of association
requires a qualified majority of votes.
6.7 Authorization granted to the Board of Directors to increase
share capital
The articles of association (Article 5) contain specific rules
concerning the authorization to increase the share capital of
the Company. By decision of the Shareholders’ Meeting held
on May 13, 2015, the Board of Directors has been authorized
to increase the share capital of the Company in one or several
times by a total maximum amount of USD 150,000,000 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 Authorization 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 authorization to acquire or sell
the Company’s own shares. Pursuant to a decision of the
Extraordinary Shareholders’ Meeting of February 24, 2014
which has been adopted in accordance with the relevant legal
provisions, the Company has been authorized 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
CORPORATE GOVERNANCE STATEMENT | 53
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 February 24, 2014 (Article 16 of the
articles of association).
7. APPROPRIATION OF PROFITS
The Board of Directors may from time to time, declare and pay
cash dividends in accordance with the Articles of Association
and applicable Belgian law. The declaration and payment of
dividends, if any, will always be subject to the approval of either
the Board of Directors (in the case of "interim dividends") or
of the shareholders (in the case of "regular dividends" or
"intermediary dividends").
Since April 2015 Euronav has adopted a new "return to
shareholders" policy, pursuant to which the Company
intends to distribute to her shareholders 80% of the annual
net consolidated profit (excluding exceptional items such as
gains on the disposal of vessels), subject to the discretion of
the Board of Directors, the terms of the loan agreements, and
provisions of Belgian law, discussed below. Notwithstanding
the adoption of this policy, the Board of Directors' primary
obligation remains to act in the best interest of the Company
and in doing so the Board of Directors will always consider
alternatives for use of cash that might otherwise be distributed
as dividends. This may include the purchase by Euronav of own
shares, the accelerated amortization of debt or the acquisition
of vessels which the Company considers at that time to be
accretive to shareholders' value. Dividends, if any, will be
paid in two instalments: first as an interim dividend, then as a
balance payment corresponding to the final dividend.
capital expenditures, commitments, investment opportunities,
and the provisions of Belgian law affecting the payment of
dividends to shareholders and other factors. Euronav may
stop paying dividends at any time and cannot assure that the
Company will pay any dividends in the future or of the amount
of such dividends. For instance, Euronav did not declare or pay
any dividends from 2010 until 2014.
In general, under the terms of the debt agreements, Euronav
is not permitted to pay dividends if there is or will be as a
result of the dividend a default or a breach of a loan covenant.
Please see the latest 20-F annual report filings for more
information relating to restrictions on Euronav’s ability to pay
dividends under the terms of the agreements governing the
indebtedness. Belgian law generally prohibits the payment
of dividends unless net assets on the closing date of the last
financial year do not fall beneath the amount of the registered
capital and, before the dividend is paid out, 5% of the net profit
is allocated to the legal reserve until this legal reserve amounts
to 10% of the share capital. No distributions may occur if, as
a result of such distribution, the net assets would fall below
the sum of (i) the amount of the registered capital, (ii) the
amount of such aforementioned legal reserves, and (iii) other
reserves which may be required by the Articles of Association
or by law, such as the reserves not available for distribution
in the event Euronav holds treasury shares. Euronav may not
have sufficient surplus in the future to pay dividends and the
subsidiaries may not have sufficient funds or surplus to make
distributions to the Company. Euronav can give no assurance
that dividends will be paid at all. In addition, the corporate law
of jurisdictions in which the subsidiaries are organized may
impose restrictions on the payment or source of dividends
under certain circumstances.
8. CODE OF CONDUCT
The Board of Directors approved the Euronav Code of Business
Conduct and Ethics at its meeting of December 9, 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. The Code of Business Conduct and
Ethics articulates the policies 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 text of the Code of Business
Conduct and Ethics can be found on the Company’s website
www.euronav.com.
The interim dividend payout ratio may typically be more
conservative than the yearly payout of 80% of net consolidated
profit.
9. MEASURES REGARDING INSIDER DEALING AND
MARKET MANIPULATION
Pursuant to the policy set out above, the Board of Directors will
continue to assess the declaration and payment of dividends
upon consideration of the financial results and earnings,
restrictions in the debt agreements, market prospects, current
In view of Regulation (EU) No 596/2014 of the European
Parliament and of the Council of April 16, 2014 on market
abuse (market abuse regulation) and repealing Directive
2003/6/EC of the European Parliament and of the Council
54 | CORPORATE GOVERNANCE STATEMENT
and Commission Directives 2003/124/EC, 2003/125/EC and
2004/72/EC (the “Market Abuse Regulation” or “MAR”), at
its meeting of September 13, 2016 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, as well as other procedures and safeguards
the Company has implemented in compliance with the Market
Abuse Regulation.
The Officers, Directors, Managers and employees of the
Euronav Group 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 Market Abuse
Regulation are being disclosed at the appropriate time.
10. GUBERNA
As Euronav strongly believes in the merits of corporate
governance 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 center 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 five men and three women with varying
yet complementary knowledge bases and fields of experience.
The Board of Directors has been made aware of the law of
July 28, 2011 on gender diversity and the recommendations
issued by the Corporate Governance and Nomination
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 111,937,465.58. Together with the transfer of USD
218,204,121.21 from the previous financial year, this gives a
profit balance to be appropriated of: USD 330,141,586.79.
It will be proposed to the Annual Shareholders’ Meeting of
May 11, 2017 to distribute a gross dividend in the amount of
USD 0.77 per share to all shareholders. The dividend will be
payable as from May 31, 2017. The share will trade ex-dividend
as from May 22, 2017 (record date May 23, 2017). The dividend
to holders of Euronav shares listed and tradable on Euronext
Brussels will be paid in EUR at the USD/EUR exchange rate of
the record date.
If this proposal is agreed upon, the allocation of profits will be
as follows:
σ
capital and reserves USD 7,898,543.38
σ dividends
σ
carried forward
USD 122,590,890.73
USD 199,652,152.68
March 14, 2017
Board of Directors
CORPORATE GOVERNANCE STATEMENT | 55
The
Euronav
group
EURONAV SHIP MANAGEMENT SAS
Euronav Ship Management SAS, with head office
in
Nantes in the South of Brittany, France and branch office
in Antwerp, Belgium, is besides the traditional shipping
activities, responsible for Euronav’s offshore projects and the
management of vessels for the offshore industry. That includes
tender projects, conversion works as well as performing the
management of these vessels including crewing, technical
procurement, accounting and quality. All vessels are registered
in Belgium, France or the Marshall Islands. That guarantees
high levels of quality, safety and reliability. The Nantes office
and the Antwerp office also provide crew management for
Euronav’s trading oil tankers.
EURONAV SHIP MANAGEMENT
(HELLAS) LTD
In November 2005 Euronav Ship Management (Hellas) Ltd was
established in Piraeus, Greece, as branch office. Euronav Ship
Management (Hellas) Ltd engages in the ship management of
the ocean-going oil tankers of Euronav and the supervision of
the construction of newbuildings. Ship management includes
crewing, technical procurement, accounting, health, safety,
environmental protection and quality assurance, legal advice,
as well as fleet IT support.
56 | EURONAV GROUP
EURONAV (UK) AGENCIES LTD
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.
EURONAV HONG KONG LTD
Euronav Hong Kong Ltd is the holding company of six wholly
owned subsidiaries and three 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 Singapore Pte. Ltd,
Euronav Luxembourg SA, Larvotto Shipholding Ltd, Fiorano
Shipholding Ltd and Euro-Ocean Ship Management Ltd, a ship
management company that handles the crew management
of the FSO Asia and FSO Africa. Larvotto Shipholding Ltd
and Fiorano Shipholding Ltd each own one Suezmax vessel
flying Greek flag. TI Asia Ltd and TI Africa Ltd, 50% joint
venture companies with International Seaways, Inc. (the
legal successor of OSG), are the owners of respectively the
FSO Asia and FSO Africa, both currently employed at the Al
CURRENT STRUCTURE
Shaheen field offshore Qatar. The 50% joint venture company
Kingswood Co., Ltd fully owns Seven Seas Shipping Ltd, which
owned one VLCC flying Panamanian flag and which was sold to
Euronav Luxembourg SA in the fourth quarter of 2016.
GREAT HOPE ENTERPRISES LTD
Great Hope Enterprises Ltd was a 50% joint venture company
incorporated in Hong Kong which owned one VLCC, the
Ardenne Venture, which was delivered to its new owners in
January 2014. Following the sale of this vessel, the company
was dissolved on December 23, 2016.
EURONAV SHIPPING NV AND
EURONAV TANKERS NV
Following the acquisition of 15 VLCCs in January 2014, Euronav
Shipping NV and Euronav Tankers NV were incorporated as
subsidiaries of Euronav NV, in January and February 2014
respectively. Each of these companies applied for the Belgian
tonnage tax regime and obtained the authorization as of
January 1, 2016.
CURRENT STRUCTURE
Euronav NV Belgium
100%
100%
100%
100%
100%
100%
Euronav
Ship Management
SAS France
Euronav
Shipping NV
Belgium
Euronav
Tankers NV
Belgium
Euronav SAS
Euronav UK Ltd
France
United Kingdom
Euronav
Hong Kong Ltd
Hong Kong
100%
100%
50%
100%
100%
100%
100%
50%
50%
100%
Euronav Ship
Management
(Antwerp)
Branch Office
Belgium
Euronav Ship
Management
(Hellas) Ltd
Liberia
Kingswood
Marshall
Islands
Euronav
Singapore
Pte. Ltd
Euronav
Luxembourg
SA
Larvotto
Shipholding
Ltd
Fiorano
Shipholding
Ltd
TI Africa
Ltd
TI Asia
Ltd
Singapore
Luxembourg
Hong Kong
Hong Kong
Hong Kong
Hong Kong
E.S.M.C.
Euro-Ocean
Ship Manage-
ment Ltd
Cyprus
100%
100%
Euronav Ship
Management
(Hellas)
Branch Office
Greece
Seven Seas
Shipping Ltd
Marshall
Islands
EURONAV GROUP | 57
7 | BEDRIJFSPROFIEL
Products
and services
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 March
14, 2017 the Euronav core fleet has a weighted average age
of 8 years. Euronav operates its fleet both on the spot and
the period market. Most of Euronav’s VLCCs are operated in
the Tankers International (TI) Pool. Euronav’s Suezmax fleet
is partly fixed on long-term charter. The Euronav Suezmax
fleet that is operated on the spot market is partially traded
through Suezmax Chartering, a commercial joint venture with
Diamond S Management LLC and Frontline Ltd.
58 | 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.
VLCC fleet
The Tankers International (TI) Pool
Euronav’s entire owned VLCC fleet flies Belgian, Greek,
French, Marshall Islands or Panamanian flag. 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 fleets available in the world. The Pool consisted
of 36 double hull VLCCs on March 14, 2017. By participating in
a pool, Euronav and its customers benefit from the economies
of scale inherent to such an arrangement. Furthermore, the
TI Pool has been able to enhance vessel earnings by improved
utilization (increased proportion of laden days versus ballast
days) through use of combination voyages, contracts of
affreightment and other efficiencies facilitated by the size and
quality of its modern VLCC fleet. 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 profile of Euronav owned
VLCC and V-Plus (and BB-in)
31% 0-5 years old
47% 5-10 years old
19% 10-15 years old
3% >15 years old
PRODUCTS AND SERVICES | 59
Suezmax fleet
Euronav’s entire owned Suezmax fleet flies Greek or Belgian
flag. The use of a national flag 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 fleet on time charter. In order to counterbalance
the spot employment of its VLCC fleet, Euronav chooses to
employ a part of its Suezmax fleet on long-term time charter.
This strategy allows the Company to benefit from a secure,
steady and visible flow of income. On March 14, 2017 Euronav
owns and employs 19 Suezmax vessels which are traded on
the spot market. After taking delivery of hull S909 and hull
S910, Suezmax vessels with specialized Ice Class 1C capability
which are under construction at the Hyundai Heavy Industries
shipyard in South Korea, Euronav will own and employ 21
Suezmaxes. Euronav’s Suezmax charterers are leading oil
majors, refiners and oil traders such as Valero, Petrobras,
Total and Repsol.
Average age profile of Euronav owned
Suezmax (and TC-in)
0% 0-5 years old
32% 5-10 years old
47% 10-15 years old
21% >15 years old
Asia
M
i
d Eas t - A s i a
M
i
d
E
a
s
t
–
Pacific Rim
Far East
US Gulf
Mid East
Europe
W
e
s
t
A
f
r
i
c
a
West Africa
W
e
s
t A
– Euro p e
frica – US G u l f
M
i
d
E
e
a
s
t – E u r op
Mid East – Europe
M id East – U
f
ul
S G
W
e
s
t
A
f
r
i
c
a
-
A
s
i
a
L
atam - Far East
L
E
a
t
a
m - F
u
r
o
p
e - F
ar E
ast
a
r E
a
st
U
S
G
ulf – A
sia
VLCC
Suezmax
Both VLCC and Suezmax
60 | PRODUCTS AND SERVICES
FSO AND FPSO MARKET1
For areas without pipeline infrastructure and where the
production platform has no storage capabilities
(fixed
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 fields
and some have also been converted to FPSOs. Furthermore,
there is an established market for leasing FSOs, which can
help commercialize marginal or remote fields. The FSO
system is now one of the most commercially viable concepts
for remote or deep-water oil field developments.
The offshore industry is a highly technical one with many
risk factors but with an equally high reward. Each offshore
unit is unique because of the additional engineering and
logistical requirements in designing, transporting, installing
and operating facilities in the remote offshore environment
as opposed to onshore production or storage plants. Each
unit is specifically designed for the field’s geological and
environmental characteristics.
FSOs provide field storage (ranging from 60,000 to 3 million
barrels) and offloading in a variety of situations. Most of them
store oil although there are a few LPG or LNG FSOs.
Approximately 45% of FSOs
in service are positioned
in Southeast Asia and another 20% are in West Africa.
The others are mainly spread over the Middle East, India,
Northern Europe, the Mediterranean and Brazil.
The cost of a converted FSO ranges from USD 30 million to
USD 200 million, depending on the size, field location, mooring
and design life. A newbuild FSO can range from USD 100
million to USD 300 million.
1 Floating storage and offloading / floating production storage and offloading
market.
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 specific assets that Euronav owned: two of the
only four V-Plus vessels (also known as ULCCs – Ultra Large
Crude Carriers) that exist in the world, the TI Asia (which
belonged to Euronav) and the TI Africa (which belonged to OSG,
now International Seaways Inc.). 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 field discoveries are
done offshore and many of them are gigantic oil fields (Brazil,
West Africa, Australia) which should require very large FSOs.
Euronav therefore believes there will be a demand for this unit
by offshore field 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 field offshore Qatar
where both converted V-Plus vessels are currently operating
through a 50% joint venture with International Seaways Inc.
Both FSOs are managed in-house by Euronav. On December
22, 2016, together with joint venture partner International
Seaways, Inc. (“INSW”), Euronav received a letter of award
for a five-year contract for the service of its two FSO units in
direct continuation of the current contractual service on the Al
Shaheen oil field. The existing contracts will remain in force
until expiry in the third quarter of 2017. If negotiations and
documentation are successfully concluded, the new contracts
are expected to generate revenues for the joint venture in
excess of USD 360 million over their full duration, excluding
reimbursement for agreed operating expenses. The signing
of final services contracts remains subject to an agreement
on substantive business terms and no assurance can be given
that such agreement will be reached.
PRODUCTS AND SERVICES | 61
“Euronav is
Ship
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.
Fleet management
is conducted by three wholly-owned
subsidiaries: Euronav Ship Management SAS, Euronav SAS and
Euronav Ship Management (Hellas) Ltd. In 2015 Euronav also
established an office in Singapore to enhance the support
services offered to the vessels that frequently call Asian ports.
The skills of its seagoing officers and crew and its shore-based
staff, including skilled and experienced captains and marine
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 the vast majority of its fleet of
modern double hull crude oil carriers ranging from Suezmax
to Very Large and V-Plus and FSO. Euronav’s fleet trades
worldwide in some of the most difficult weather conditions and
sea states, such as the North Atlantic and East Canada, and for
charterers with the strictest requirements. The vessels and
crews are in constant interaction with the shore staff through
regular onboard visits, briefing and debriefing discussions
upon signing on and off, sophisticated communication systems
and conferences ashore and onboard 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 organization, as
well as the vessels, has successfully passed numerous oil
major vetting assessments.
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 to a teamwork culture where people work
together for the overall success of the Company, on shore and
at sea.
62 | SHIP MANAGEMENT
Euronav practices genuine performance planning and
training and development, and encourages
appraisal,
the promotion from within while offering opportunities to
competent professionals to join the Company. Its policies aim
to enhance and reward performance, engage its people and
retain key talent.
Euronav maintains an integrated ship management approach
with the following qualities:
σ proven experience in managing oil tankers;
σ
experienced officers and crews with professional
credentials;
σ professional relations based on merit and trust;
σ
σ
σ
σ
σ
σ
commitment to improving the quality of working life at
sea;
safety and quality assurance including training, auditing
and vetting;
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;
commitment to long-term asset protection and upgrade;
σ open communication and transparency in reporting.
FULL RANGE OF SERVICES
The Euronav Group provides a full range of ship management
services:
σ
σ
full technical services;
fleet personnel comprising experienced officers and
crew;
σ
σ
σ
σ
comprehensive health, safety, quality and environmental
protection management system;
insurance claims handling;
global sourcing of bunkering, equipment and services for
optimum synergies, pricing and quality;
financial, information technology, human resources and
legal services to support the Group’s assets’ values;
σ project management for:
σ
newbuilding supervision, including pre- and post-
contract consultancy and technical support;
σ FSO conversions;
σ
upgrade of assets
efficiency;
σ
commercial management;
σ operational management.
for
improved operational
Euronav utilizes a set of clearly defined Key Performance
Indicators (KPIs) as well as standardized inspection reports
which are thoroughly evaluated to facilitate the measurement
of performance such as:
σ
σ
σ
σ
σ
safety and environmental performance;
vessel reliability;
crew and shore staff retention and wellbeing;
vessel energy efficiency;
vetting and port state controls;
σ planned and condition-based maintenance;
σ
dry-docking planning and repairs based on work list
from dry-dock to dry-dock.
Quarterly management review meetings and weekly fleet
management coordination meetings monitor the trend and set
the course of actions.
SHIP MANAGEMENT | 63
Fleet of the
Euronav group as
per December 31,
2016
Owned VLCC and V-Plus
Name
Alex
Alice
Alsace
Anne
Antigone
Aquitaine1
Ardeche2
Artois5
Owned
100%
100%
100%
100%
100%
100%
100%
100%
Built
2016
2016
2012
2016
2015
2017
2017
2001
64 | FLEET OF THE EURONAV GROUP
Dwt
299,445
299,320
320,350
299,533
299,421
298,767
298,642
298,330
Draft
21.60
21.60
22.50
21.60
21.60
21.62
21.62
21.13
Flag
Belgian
Belgian
Greek
French
Greek
Belgian
Belgian
French
Length (m)
Shipyard
333.00
333.00
330.00
333.00
333.00
333.00
333.00
333.00
Hyundai H.I.
Hyundai H.I.
Samsung H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hitachi Zosen
Length (m)
Shipyard
Name
Owned
Built
Dwt
Famenne3
Flandre
Hakata
Hakone
Hirado
Hojo
Ilma
Ingrid
Iris
Nautic
Nautilus45
Navarin4
Nectar
Neptun4
Newton
Noble
Nucleus4
Sandra5
Sara
Simone
Sonia
TI Europe
TI Hellas
TI Topaz
V.K. Eddie6
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2001
2004
2010
2010
2011
2013
2012
2012
2012
2008
2006
2007
2008
2007
2009
2008
2007
2011
2011
2012
2012
2002
2005
2002
2005
298,412
305,688
302,550
302,624
302,550
302,965
314,000
314,000
314,000
307,284
307,284
307,283
307,284
307,284
307,284
307,284
307,284
323,527
323,183
313,988
314,000
441,561
319,254
319,430
305,261
Draft
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
22.52
22.52
22.42
Flag
French
French
French
Greek
Greek
332.94
332.00
333.00
333.00
333.00
Belgian
330.00
Belgian
Belgian
Belgian
Marsh I
Marsh I
Marsh I
Marsh I
Marsh I
Belgian
Belgian
Marsh I
French
French
Belgian
Belgian
French
Belgian
Belgian
Panama
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
332.99
332.99
332.00
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.
Hyundai H.I.
Hyundai H.I.
Daewoo H.I.
TC Out = time chartered out
Marsh I = Marshall Islands
1 Vessel delivered to Euronav on January 12, 2017
2 Vessel delivered to Euronav on January 20, 2017.
3 Vessel sold on January 20, 2016 and delivered to its new owners on March
9, 2016.
4 Vessels sold on December 16, 2016 as part of a sale and leaseback
agreement. Euronav has leased back the four VLCCs under a five-year
bareboat contract.
5 In 2016 the Nautilus, the Ingrid, the Artois and the Sandra have been in
dry-dock and underwent a special survey (standard procedure for ships
every five years). The Nautilus in Dubai (November), the Ingrid in Singapore
(October), the Artois in Singapore (July) and the Sandra in Qatar (July).
6 On November 23, 2016 Euronav assumed full ownership of the V.K. Eddie
after buying out its former joint venture partner Oak Maritime (Canada) Inc.
FLEET OF THE EURONAV GROUP | 65
VLCC chartered in
Name
Nautilus1
Navarin1
Neptun1
Nucleus1
Owned
100%
100%
100%
100%
Built
2006
2007
2007
2007
Dwt
307,284
307,284
307,284
307,284
Draft
22.72
22.72
22.72
22.72
Flag
Marsh I
Marsh I
Marsh I
Marsh I
Length (m)
Shipyard
321.70
321.65
321.70
321.64
Dalian S.I.
Dalian S.I.
Dalian S.I.
Dalian S.I.
VLCC vessels sold in the course of 2016
Name
Owned
Famenne
0%
Built
2001
Dwt
298,412
Draft
21.13
Flag
French
Length (m)
Shipyard
332.94
Hitachi Zosen
1 Vessels sold on December 16, 2016 as part of a sale and leaseback
agreement. Euronav has leased back the four VLCCs under a five-year
bareboat contract.
66 | FLEET OF THE EURONAV GROUP
Owned Suezmax
Name
Owned
Cap Charles1
Cap Diamant1
Cap Felix
Cap Georges
100%
100%
100%
100%
Cap Guillaume1
100%
Cap Jean
Cap Lara
Cap Leon
Cap Philippe1
Cap Pierre
Cap Romuald
100%
100%
100%
100%
100%
100%
Cap Theodora
100%
Cap Victor1
100%
Capt. Michael1,2
100%
Devon2
Eugenie²
Felicity
Filikon
Finesse
Fraternity
Maria1,2
Hull S909
Hull S910
0%
0%
100%
100%
100%
100%
100%
TBO
TBO
Built
2006
2001
2008
1998
2006
1998
2007
2003
2006
2004
1998
2008
2007
2012
2011
2010
2009
2002
2003
2009
2012
2018
2018
Dwt
158,881
160,044
158,765
146,652
158,889
146,643
158,826
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
156,600
156,600
Owned FSO (Floating, Storage and Offloading)
Name
Owned
FSO Africa
FSO Asia
50%
50%
Built
2002
2002
Dwt
442,000
442,000
Draft
17.00
15.62
17.02
17.00
17.00
16.12
17.00
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
17.15
17.15
Draft
24.53
24.53
Flag
Greek
Greek
Belgian
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Greek
Belgian
Greek
Greek
Belgian
Greek
TBA
TBA
Length (m)
Shipyard
274.00
277.32
274.00
274.06
274.00
274.06
274.00
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
227.00
227.00
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.
Universal
Universal
Samsung H.I.
Samsung H.I.
Hyundai H.I.
Hyundai H.I.
Flag
Marsh I
Marsh I
Length (m)
Shipyard
380.00
380.00
Daewoo H.I.
Daewoo H.I.
1 In 2016 the Cap Guillaume, the Cap Philippe, the Maria, the Cap Victor, the Cap
Diamant and the Capt. Michael have been in dry-dock and underwent a special
survey (standard procedure for ships every five years). The Cap Guillaume
(June), the Cap Philippe (July), the Maria (July) and the the Cap Victor (October) in
Singapore, the Cap Charles in Portugal (September), the Cap Diamant in Bahrain
(August) and the Capt. Michael (December) in Dubai.
2 On May 20, 2016 Euronav announced that it had agreed with Bretta Tanker
Holdings, Inc. to terminate its Suezmax joint ventures covering four Suezmax
vessels: the Captain Michael, the Maria, the Eugenie and the Devon. Euronav
assumed full ownership of the two youngest vessels, the Captain Michael and
the Maria and Bretta has assumed full ownership of the Eugenie and the Devon.
FLEET OF THE EURONAV GROUP | 67
Corporate
Social
Responsibility
Health, Safety,
Quality,
Environment
and Society
CORPORATE SOCIAL RESPONSIBILITY
At Euronav we define Corporate Social Responsibility (CSR)
as responsible citizenship within the environment and
communities in which we operate. We do this by continuously
improving anti-pollution control measures and waste
handling and reducing processes, by maintaining a fleet
of high standards irrespective of the vessels’ age and by
actively contributing to environmental, educational and social
programs, including philanthropy and volunteering.
Moreover, we consider our Health, Safety, Quality and
Environment (HSQE) standards as part of the Company’s wider
CSR policy. The Company’s vision, mission, its Corporate
Governance Charter, Code of Conduct, Compliance Officer
and relevant policies all underpin the Company’s strong
commitment to responsible business and to CSR. 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.
“For our society -
to transport an
essential source
of energy in a
manner that is
economically,
socially and
environmentally
viable now and in
the future.
68
HEALTH
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,
crew wellbeing, physical exercise and storage of food and
nutritional practices.
Health awareness
Targeted for seafarers, the health awareness focuses on the
following main elements:
σ fitness: providing necessary equipment on board;
σ
σ
σ
healthy food: giving healthy food preparation tips and
menus;
food safety: realizing the importance of the receipt and
handling of provisions (personal hygiene in the galley
and the cleaning and disinfection of the aliments);
pre-joining medical examinations are extensive and
above the minimum regulatory standards.
Drug and alcohol policy
Euronav is fully committed to maintaining a safe and healthy
working environment by implementing a strict drug and alcohol
policy. Any violation of that policy, including illegal possession,
consumption, distribution or sale of drugs or alcohol by any
shipboard personnel, shall lead to instant dismissal and will
expose the person to legal proceedings.
SAFETY
Euronav is committed to operating in accordance with the
highest standards of safety in the marine transportation industry
and employs competent and 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 its clients, but especially to
ensuring consistent protection of the environment and working
conditions. Focusing on safety also means making sure the crew
is qualified, regularly trained, informed of current issues and
looked after as far as their health and wellbeing is concerned.
Fleet
The Euronav fleet has been built in the world’s most 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. All vessels are adequately recruited as per needs
and maintained throughout their lifetime. All vessels above 15
years of age have undergone a condition assessment program
(CAP) with the highest rating (CAP 1).
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 why the focus on safety of
transportation is paramount in our organization. To deal with
possible emergencies, the following procedures have been put
into place:
σ
σ
σ
σ
σ
σ
σ
σ
Emergency and Contingency Manual (ECM) dealing with
all possible emergencies other than oil pollution;
Ship Oil Pollution Emergency Plan (SOPEP) dealing with
oil pollution emergencies and the response thereto;
Vessel Response Plan (VRP) dealing with oil pollution
emergencies and the response thereto in U.S. waters (as
required by U.S. 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 Exercises (TTX) with the
participation of vessels and shore management;
weekly emergency drills on board covering a broad range
of emergency scenarios;
monthly security drills on board dealing with possible
security threats.
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 least possible
negative impact on the environment. One way of delivering
the best quality is setting measurable annual objectives and
key performance indicators and regularly monitoring the
actual performance against these. Regular communication
and feedback exchange with the clients, as well as prompt
response to their requests is a key parameter for ensuring the
quality of our services.
ISM compliance
Euronav has developed a Health, Safety, Quality and
Environmental 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 is in possession of an ISM
Document of Compliance (“DOC”) from the Belgian Maritime
Inspectorate for Belgian flag vessels, as well as from Bureau
Veritas on behalf of the Marshall Islands Flag Administration
CORPORATE SOCIAL RESPONSIBILITY | 69
and by the French Administration for the French flag vessels.
It is also in possession of the Certification for Quality
Management Systems (ISO 9001:2008 (RvA)), Certification
for Environmental Management Systems (ISO 14001:2004
(UKAS)) and Certification for Occupational, Health and Safety
Management Systems (OHSAS 18001 (UKAS)) .
Euronav Ship Management (Hellas) Ltd is in possession of a
DOC from the American Bureau of Shipping on behalf of Greek
and Marshall Islands Flag Administration, as well as from the
Belgian Maritime Inspectorate for the Belgian flag vessels
and from the French Flag Administration for the French flag
vessels. The ISO 9001:2008 (RvA) as well as 14001:2004 (RvA)
certifications are obtained by the American Bureau of Shipping.
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. The training needs are
identified during the appraisal process and the training plan is
prepared based on these needs. Training activities are carried
out in a training room or online through a computer-based
program.
ENVIRONMENT
The Company believes that pollution prevention on board 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 our internal Health, Safety, Quality and Environmental
Protection Management System that was developed based on
international and industry standards.
implements
initiatives regarding
During quarterly management review meetings, management
reassesses and
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. 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 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
70 | CORPORATE SOCIAL RESPONSIBILITY
is part of the solution to the challenges of air emissions and
global warming which the world faces today.
Euronav’s dedication to the reduction of emissions
demonstrated by:
is
σ
σ
σ
σ
active Fleet Energy Management i.e. development of plan
and implementation of measures to reduce emissions
and fuel consumption;
the development of an effective policy on reduction of
harmful emissions to air;
the development of an advanced performance
management system including online reporting;
not burning plastics on board the vessels but delivering
them ashore.
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:
σ
σ
σ
installation of devices that improve propulsion efficiency;
installation of electric heaters for minimizing fuel
consumption when the vessel is idle or slow steaming;
painting vessels with modern anti-fouling paint which
improves propulsion efficiency, carbon emissions, as
well as reducing the toxic effect of the paint on marine
life;
σ
σ 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.
σ
Handling of waste
During normal vessels’ operations, Euronav tries to reduce
vessels’ waste to a maximum by:
σ
σ
σ
σ
σ
σ
reducing the plastic packaging on board to a strict
minimum;
recycling packing material;
compacting rubbish prior to discharging;
keeping on board minimum 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 minimize the impact on the
environment.
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
environmental objectives:
σ
σ
σ
σ
σ
σ
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 organizations and government,
trade and industry associations to achieve the 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;
improve safety management skills
continuously
of personnel ashore and on board ships, including
preparing for emergencies 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 analyzing
available records of corrective and preventive actions;
σ
participation to the voluntary global search and rescue
system (AMVER).
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 and the majority of the vessels in
the fleet are carrying a green passport.
CORPORATE SOCIAL RESPONSIBILITY | 71
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, fundraising or donations through options such
as fund-matching or sponsoring specific events.
Benefit for children 2016
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
communities where Valero has major operations. The 2016
Valero Texas Open Benefit for Children Golf Classic and the
Valero Texas Open contributed USD 10.5 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.
The Ocean Cleanup
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 was donated to the Ocean Cleanup. The Ocean Cleanup
develops technologies to extract, prevent and intercept oceanic
plastic pollution to protect wildlife and wildlife habitat.
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 in shipping companies for a couple of months, usually
during the summer. The Company has also been sponsoring
distinguished graduates of these schools.
Euronav Ship Management (Hellas) Ltd has been partly
subsidizing the educational visits of students of the Nautical
Academies of Chios and Macedonia to engine makers’
premises in Germany and Italy.
72 | CORPORATE SOCIAL RESPONSIBILITY
“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.
CORPORATE SOCIAL RESPONSIBILITY | 73
Human
resources
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 offices
in London, Nantes, Antwerp, Singapore and Piraeus, Euronav
has approximately 151 employees. This geographic span
across Europe reflects a deep-rooted maritime history and
culture built up over generations. Over 2,900 seafarers of
many different nationalities work aboard Euronav vessels.
In an environment where there is a shortening supply of
competent seafarers, Euronav has qualified 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 practices genuine performance planning
and appraisal, training and development 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 officers
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 qualifications,
including professionals with engineering, finance, business
administration, legal and humanities backgrounds, who
have specialized in tanker operations, crewing, marine and
technical areas and shipping corporate services. Virtually
everyone speaks at least two languages fluently and half the
staff speaks three or more languages.
“For our employees -
to inspire and enable
talented, hard-
working people
to achieve their
career goals in a
healthy, challenging
and rewarding
environment.
74
Total officers and apprentices on board = 603
2 Pakistan
43 Ukraine
14 Russia
21 Romania
4 Poland
108 Philippines
49 Panama
34 India
1 Italy
2 Colombia
1 Serbia & Montenegro
1 Turkey
3 Georgia
80 Bulgaria
2 Cyprus
41 France
141 Greece
36 Croatia
1 Honduras
Total ratings on board = 715
1 Chile
2 Ukraine
122 El Salvador
1 Russia
18 Romania
111 Honduras
20 Indonesia
1 Peru
439 Philippines
OUR CULTURE
ACCOMPLISHMENTS IN 2016
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 characterized by:
In 2016 the human resources department has invested a great
deal of work in the following areas:
σ
σ
σ
σ
common culture with local authority to act;
high involvement and flexibility 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
aligned with business needs;
σ quality and professionalism in matters large and small;
σ
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.
σ
σ
σ
σ
σ
σ
staff changes: HR has been actively involved in the
selection, recruitment and induction of staff due to the
need for additional resources following the fleet growth;
performance appraisals: the annual performance review
which took place in November / December using a newly
developed online process;
training: the human resources department partnered
with all departments to help define, develop and deliver
customized training solutions. As part of the performance
process, individual training plans were developed for
each staff member across the group as guidance for the
whole year;
further development on internal Eurostaff software for
reporting purposes and audit requirements;
maritime HR forum: active participation to the forum of
which Euronav is a founding member;
All Hands event: the tenth edition of this teambuilding
event took place in Spain and was attended by 142
employees.
HUMAN RESOURCES | 75
1 Canada18 Belgium 76 | GLOSSARY
Glossary
Aframax - A medium-sized 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
refined petroleum products trades may be referred to as an
LR2.
Ballast – Seawater taken into a vessel’s tanks in order to
increase draft, 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
fixed daily or monthly rate for a fixed 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 U.S.
gallons or 158.99 liter. 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 define 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 fixture list.
Bulk cargo - Bulk cargo is commodity cargo that is transported
unpackaged in large quantities. The containment for this type
of cargo is the tanks of the ship.
Charter - Contract entered into with a customer for the use
of the vessel for a specific voyage at a specific rate per unit
of cargo (Voyage Charter), or for a specific period of time at
a specific 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 specified time.
GLOSSARY | 77
Classification Societies - Organizations
that establish
and administer standards for the design, construction and
operational 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 providing
for the transportation between specified points for a specific
quantity of cargo over a specific time period but without
designating specific vessels or voyage schedules, thereby
allowing flexibility in scheduling since no vessel designation
is required. COAs can either have a fixed rate or a market-
related rate.
Crude oil - Oil in its natural state that has not been refined 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 specific Charter
terms.
Dry-dock – An out-of-service period during which planned
repairs and maintenance are carried out, including all
underwater 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 five 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), to process
it and to store it. FPSOs are typically moored offshore ship-
shaped vessels, 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 efficiency 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.
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.
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.
78 | GLOSSARY
MOPU - Mobile Offshore Production Unit.
OCIMF - The Oil Companies International Marine Forum
(OCIMF) is a voluntary association of oil companies with an
interest in the shipment and terminalling of crude oil, oil
products, petrochemicals and gas.
indemnity
Insurance - Protection and
P&I
insurance,
commonly known as P&I insurance, is a form of marine
insurance 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.
Pool points – A system of pool points creates a model for a
ship with a performance equating to the average of those being
pooled. This ship is awarded 100 pool points. All other ships in
the pool are then given more or less pool points adjusted for
the characteristics of each vessel. Pool points, by their nature,
can only be used to address the differences between the ships
as described, and not the ship as performed.
Profit share – 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.
Rate – The cost or revenue for a particular voyage based on a
standard reference, e.g. Worldscale, INTASCALE, ATRS.
Scrapping - The disposal of vessels by demolition for scrap
metal.
Semi - A semi-submersible (semi-submerged ship) is a
specialized 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 - Crude oil that is extracted from oil shale (fine-
grained sedimentary rock containing kerogen) by using
techniques other than the conventional (oil well) method, for
example heating and distillation.
GLOSSARY | 79
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.
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.
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. The 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.
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. These tankers can transport up to one million
barrels of crude oil.
(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,
maintaining 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.
80 | GLOSSARY
Tension Leg Platform (TLP) - 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 meters (about 1,000 ft.) and less than 1,500 meters
(about 4,900 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.
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.
Tramp - As opposed to freight liners, tramp ships trade on the
spot market with no fixed schedule, itinerary or ports-of-call.
Trampers go wherever the cargo is and carry it to wherever it
wants to go, within reason, like taxi cabs.
Ultra Deep Water (UDW) – 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.
Vetting - The Oil Companies International Maritime Forum
(OCIMF) set up a system for inspecting ships to ensure they
are fit for purpose. They use a system called Ship Inspection
(SIRE) which requires six-monthly
Report Programme
inspections. Most cargo moves require a SIRE inspection
within the last six months and each oil company is free to
decide if it considers the inspection report satisfactory. The
SIRE report system can only be viewed by the members of
OCIMF and not by brokers or ship owners.
VLCC – The abbreviation for Very Large Crude Carrier. Tankers
with a capacity between 200,000 and 320,000 dwt. These
tankers can transport up to two million barrels of crude oil.
V-Plus - A crude oil tanker (ULCC or Ultra Large Crude
Carrier) of more than 350,000 dwt which makes it one of the
biggest oil tankers in the world. These tankers can transport
up to 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 | 81
82 | FINANCIAL REPORT
Financial
report
Consolidated financial statements
Notes to the consolidated financial statements
Statutory auditor's report to the general meeting of Euronav NV as of and
for the year ended December 31, 2016
Statutory financial statements Euronav NV
84
92
172
174
Een Nederlandstalige versie van de geconsolideerde jaarrekening zal beschikbaar worden
gesteld 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.
FINANCIAL REPORT | 83
Consolidated statement of financial position
(in thousands of USD)
ASSETS
Non-current assets
Vessels
Assets under construction
Other tangible assets
Prepayments
Intangible assets
Receivables
Investments in equity accounted investees
Deferred tax assets
TOTAL NON-CURRENT ASSETS
Current assets
Trade and other receivables
Current tax assets
Cash and cash equivalents
Non-current assets held for sale
TOTAL CURRENT ASSETS
Note
December 31, 2016
December 31, 2015
8
8
8
8
-
10
25
9
11
-
12
3
2,383,163
86,136
777
-
156
183,914
18,413
964
2,288,036
93,890
1,048
2
238
259,908
21,637
935
2,673,523
2,665,694
166,342
357
206,689
-
373,388
219,080
114
131,663
24,195
375,052
TOTAL ASSETS
3,046,911
3,040,746
84 | FINANCIAL REPORT
Consolidated statement of financial position (continued)
(in thousands of USD)
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Translation reserve
Treasury shares
Retained earnings
EQUITY ATTRIBUTABLE TO OWNERS OF THE
COMPANY
Non-current liabilities
Bank loans
Other payables
Employee benefits
Provisions
TOTAL NON-CURRENT LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Bank loans
Provisions
TOTAL CURRENT LIABILITIES
Note
December 31, 2016
December 31, 2015
-
-
-
13
-
15
17
16
-
17
-
15
-
173,046
1,215,227
120
(16,102)
515,665
173,046
1,215,227
(50)
(12,283)
529,809
1,887,956
1,905,749
966,443
533
2,846
38
969,860
69,859
-
119,119
117
189,095
952,426
590
2,038
436
955,490
79,078
1
100,022
406
179,507
TOTAL EQUITY AND LIABILITIES
3,046,911
3,040,746
The accompanying notes on pages 92 to 171 are an integral part of these consolidated financial statements.
FINANCIAL REPORT | 85
Consolidated statement of profit or loss
(in thousands of USD except per share amounts)
Shipping income
Revenue
Gains on disposal of vessels /
other tangible assets
Other operating income
TOTAL SHIPPING INCOME
Operating expenses
Voyage expenses and commissions
Vessel operating expenses
Charter hire expenses
Loss on disposal of vessels / other tangible assets
Impairment on non-current assets held for sale
Loss on disposal of investments in equity
accounted investees
Depreciation tangible assets
Depreciation intangible assets
General and administrative expenses
2016
Jan. 1 - Dec. 31, 2016
2015
Jan. 1 - Dec. 31, 2015
2014
Jan. 1 - Dec. 31, 2014
Note
4
8
-
5
5
5
8
3
24
8
-
5
684,265
50,397
6,996
846,507
13,302
7,426
473,985
13,122
11,411
741,658
867,235
498,518
(59,560)
(160,199)
(17,713)
(2)
-
(24,150)
(227,664)
(99)
(44,051)
(71,237)
(153,718)
(25,849)
(8,002)
-
-
(210,156)
(50)
(46,251)
(118,303)
(124,089)
(35,664)
-
(7,416)
-
(160,934)
(20)
(40,565)
TOTAL OPERATING EXPENSES
(533,438)
(515,263)
(486,991)
RESULT FROM OPERATING ACTIVITIES
208,220
351,972
Finance income
Finance expenses
NET FINANCE EXPENSES
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
Attributable to:
Owners of the company
Basic earnings per share
Diluted earnings per share
Weighted average number of shares (basic)
Weighted average number of shares (diluted)
6
6
25
7
-
14
14
14
14
6,855
(51,695)
3,312
(50,942)
11,527
2,617
(95,970)
(44,840)
(47,630)
(93,353)
40,495
51,592
30,286
203,875
355,934
(51,540)
174
(5,633)
5,743
204,049
350,301
(45,797)
204,049
350,301
(45,797)
1.29
1.29
2.25
2.22
(0.39)
(0.39)
158,262,268
158,429,057
155,872,171
157,529,562
116,539,018
116,539,018
The accompanying notes on pages 92 to 171 are an integral part of these consolidated financial statements.
86 | FINANCIAL REPORT
Consolidated statement of comprehensive income
(in thousands of USD)
2016
Jan. 1 - Dec. 31, 2016
2015
Jan. 1 - Dec. 31, 2015
2014
Jan. 1 - Dec. 31, 2014
Note
PROFIT/(LOSS) FOR THE PERIOD
204,049
350,301
(45,797)
16
6
18
25
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
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
Attributable to:
Owners of the company
(646)
(44)
(393)
170
-
1,224
748
(429)
-
1,610
(567)
1,291
2,106
1,136
2,437
204,797
351,437
(43,360)
204,797
351,437
(43,360)
The accompanying notes on pages 92 to 171 are an integral part of these consolidated financial statements.
FINANCIAL REPORT | 87
Consolidated statement of changes in equity
(in thousands of USD)
Note
Share
capital
Share
premium
Trans-
lation
reserve
Hedging
reserve
Treasury
shares
Retained
earnings
Capital
and
reserves
Other
equity
interest
Total
equity
BALANCE AT JANUARY 1, 2014
58,937
365,574
946
(1,291)
(46,062)
422,886
800,990
Profit (loss) for the period
Total other comprehensive income
-
-
TOTAL COMPREHENSIVE INCOME
Transactions with owners of the
Company
-
-
-
-
-
-
-
-
- (45,797)
(45,797)
(567)
1,291
-
1,713
2,437
(567)
1,291
-
(44,084)
(43,360)
Issue of ordinary shares
13 53,119
421,881
Issue and conversion
convertible Notes
Issue and conversion perpetual
convertible preferred equity
Equity-settled share-based
payment
13
20,103
89,597
13
10,282
64,718
22
-
-
TOTAL TRANSACTIONS WITH
OWNERS
83,504
576,196
-
-
-
-
-
-
-
-
-
-
- (12,694)
462,306
-
(7,422)
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
BALANCE AT JANUARY 1, 2015
142,441
941,770
379
-
(46,062)
359,180 1,397,708
75,000 1,472,708
-
-
-
-
-
-
800,990
(45,797)
2,437
(43,360)
462,306
102,278
Profit (loss) for the period
Total other comprehensive income
-
-
-
-
-
-
-
-
-
(429)
(429)
TOTAL COMPREHENSIVE INCOME
Transactions with owners
of the Company
Issue of ordinary shares
Conversion perpetual convertible
preferred equity
Dividends to equity holders
Treasury shares sold
Equity-settled share-based
payment
13
20,324
208,738
13
10,281
64,719
-
13
22
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL TRANSACTIONS WITH
OWNERS
30,605
273,457
-
-
-
-
-
-
-
-
-
-
350,301
350,301
1,565
1,136
- 351,866
351,437
-
-
-
350,301
1,136
351,437
-
-
(19,357)
209,705
-
209,705
-
75,000 (75,000)
-
- (138,001)
(138,001)
33,779 (25,516)
-
1,637
8,263
1,637
-
-
-
(138,001)
8,263
1,637
-
33,779 (181,237)
156,604 (75,000)
81,604
BALANCE AT DECEMBER 31, 2015
173,046
1,215,227
(50)
-
(12,283)
529,809 1,905,749
- 1,905,749
88 | FINANCIAL REPORT
Consolidated statement of changes in equity (continued)
(in thousands of USD)
Note
Share
capital
Share
premium
Trans-
lation
reserve
Hedging
reserve
Treasury
shares
Retained
earnings
Capital
and
reserves
Other
equity
interest
Total
equity
BALANCE AT JANUARY 1, 2016
173,046
1,215,227
(50)
-
(12,283)
529,809 1,905,749
- 1,905,749
Profit (loss) for the period
Total other comprehensive income
TOTAL COMPREHENSIVE INCOME
Transactions with owners of the
Company
Dividends to equity holders
Treasury shares acquired
Treasury shares sold
Equity-settled share-based
payment
TOTAL TRANSACTIONS WITH
OWNERS
-
-
-
13
13
22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(170)
(170)
-
-
-
-
-
-
-
-
-
-
-
-
- 204,049
204,049
-
578
748
- 204,627
204,797
-
(216,838)
(216,838)
(6,889)
-
(6,889)
3,070
(2,339)
-
406
731
406
-
-
-
-
-
-
-
204,049
748
204,797
(216,838)
(6,889)
731
406
-
(3,819) (218,771)
(222,590)
-
(222,590)
BALANCE AT DECEMBER 31, 2016
173,046
1,215,227
120
-
(16,102)
515,665 1,887,956
- 1,887,956
The accompanying notes on pages 92 to 171 are an integral part of these consolidated financial statements.
FINANCIAL REPORT | 89
Consolidated statement of cash flows
(in thousands of USD)
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
Loss (gain) on disposal of investments in
equity accounted investees
Provisions
Tax (benefits)/expenses
Share of profit of equity-accounted investees,
net of tax
Net finance expense
(Gain)/loss on disposal of assets
Equity-settled share-based payment
transactions
Amortization of deferred capital gain
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 and
prepayments
Acquisition of intangible assets
Proceeds from the sale of other (in)tangible
assets
Loans from (to) related parties
Proceeds from capital decreases in joint
ventures
Acquisition of subsidiaries, net of cash
acquired
NET CASH FROM (USED IN) INVESTING
ACTIVITIES
90 | FINANCIAL REPORT
2016
Jan. 1 - Dec. 31, 2016
2015
Jan. 1 - Dec. 31, 2015
2014
Jan. 1 - Dec. 31, 2014
Note
-
8
-
3
24
-
7
25
6
8
5
-
-
11
11
11
10-11
17
17
17
17
17
16
-
6-18
6-11
25
8
8
8
-
-
25
25
24
204,049
205,457
227,664
99
-
24,150
(603)
(174)
(40,495)
44,839
(50,395)
406
(34)
38,487
107
(755)
21,049
239
35,905
(6,817)
(138)
(7,547)
(3,591)
(226)
261
(100)
(33,378)
209
23,478
350,301
208,305
210,156
50
-
-
91
5,633
(51,592)
47,630
(5,300)
1,637
-
(57,692)
1
12,330
(13,175)
11,090
(34,654)
1,190
255
(1,649)
6,612
(39,800)
108
(109)
(50,810)
262
275
(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
438,202
450,532
14,782
(342,502)
223,016
(351,596)
112,890
(178)
(18)
38
22,047
3,737
(6,755)
(8,289)
(258)
95
39,785
1,500
-
(1,053,939)
123,609
(123,188)
(19)
22
29,508
1,000
-
(100,615)
(205,873)
(1,023,007)
Consolidated statement of cash flows (continued)
(in thousands of USD)
2016
Jan. 1 - Dec. 31, 2016
2015
Jan. 1 - Dec. 31, 2015
2014
Jan. 1 - Dec. 31, 2014
Note
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
(Purchase of) Proceeds from sale of
treasury shares
Proceeds from new borrowings
Repayment of 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
13
13
13
13
13
15
15
15
-
12
-
12
-
-
-
-
(6,157)
740,286
(774,015)
(4,436)
(216,838)
229,063
(19,357)
-
-
8,263
931,270
(1,367,871)
(8,680)
(138,003)
475,000
(12,694)
150,000
(3,500)
-
1,395,392
(799,891)
(15,284)
(2)
(261,160)
(365,315)
1,189,021
76,427
(120,656)
180,796
131,663
(1,401)
254,086
(1,767)
74,309
(1,019)
206,689
131,663
254,086
The accompanying notes on pages 92 to 171 are an integral part of these consolidated financial statements.
FINANCIAL REPORT | 91
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2016
Note 1 - Significant accounting policies
Note 2 - Segment reporting
Note 3 - Assets and liabilities held for sale and discontinued
operations
Note 4 - Revenue
Note 5 - Expenses
for shipping activities and other
expenses from operating activities
Note 6 - Net finance expense
Note 7 - Income tax benefit (expense)
Note 8 - Property, plant and equipment
Note 9 - Deferred tax assets and liabilities
Note 10 - Non-current receivables
Note 11 - Trade and other receivables - current
Note 12 - Cash and cash equivalents
Note 13 - Equity
Note 14 - Earnings per share
Note 15 - Interest-bearing loans and borrowings
Note 16 - Employee benefits
Note 17 - Trade and other payables
Note 18 - Financial instruments - market and other risks
Note 19 - Operating leases
Note 20 - Provisions and contingencies
Note 21 - Related parties
Note 22 - Share-based payment arrangements
Note 23 - Group entities
Note 24 - Business combinations
Note 25 - Equity-accounted investees
Note 26 - Subsidiaries
Note 27 - Major exchange rates
Note 28 - Audit fees
Note 29 - Subsequent events
Note 30 - Statement on the true and fair view of the
consolidated financial statements and the fair
overview of the management report
incorporated under the laws of Belgium on June 26, 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 chartering strategy of
primarily employing its vessels on the spot market, including
through the Tankers International (TI) Pool and also under
fixed-rate contracts and long-term time charters, which
typically include a profit sharing component.
A spot market voyage charter is a contract to carry a specific
cargo from a load port to a discharge port for an agreed freight
per ton of cargo or a specified total amount. Under spot
market voyage charters, the Company pays voyage expenses
such as port, canal and bunker costs. Spot charter rates
have historically been volatile and fluctuate due to seasonal
changes, as well as general supply and demand dynamics
in the crude oil marine transportation sector. Although the
revenues generated by the Company in the spot market are
less predictable, the Company believes their exposure to this
market provides them with the opportunity to capture better
profit margins during periods when vessel demand exceeds
supply leading to improvements in tanker charter rates. The
Company principally employs and commercially manages
their VLCCs through the TI Pool, a leading spot market-
oriented VLCC pool in which other shipowners with vessels of
similar size and quality participate along with the Company.
The Company participated in the formation of the TI Pool in
2000 to allow themselves and other TI Pool participants,
consisting of third-party owners and operators of similarly
sized vessels, to gain economies of scale, obtain increased
cargo flow of information, logistical efficiency and greater
vessel utilization.
NOTE 1 - SIGNIFICANT ACCOUNTING
POLICIES
1. Reporting Entity
Euronav N.V. (the “Company”) is a company domiciled in
Belgium. The address of the Company’s registered office is De
Gerlachekaai 20, 2000 Antwerpen, 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
maritime shipping and offshore services engaged in the
transportation and storage of crude oil. The Company was
Time charters provide the Company with a fixed and stable
cash flow for a known period of time. Time charters may help
the Company mitigate, in part, their exposure to the spot
market, which tends to be volatile in nature, being seasonal
and generally weaker in the second and third quarters of
the year due to refinery shutdowns and related maintenance
during the warmer summer months. The Group may, when the
cycle matures or otherwise, opportunistically employ more of
their vessels under time charter contracts as the available
rates for time charters improve. The Group may also enter
into time charter contracts with profit sharing arrangements,
which the Company believes will enable them to benefit if the
spot market increases above a base charter rate as calculated
either by sharing sub charter profits of the charterer or by
92 | FINANCIAL REPORT
reference to a market index and in accordance with a formula
provided in the applicable charter contract.
The Group currently deploys their two FSOs as floating storage
units under service contracts with Maersk Oil, in the offshore
services sector.
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) and as
adopted by the European Union on December 31, 2016.
All accounting policies have been consistently applied for all
periods presented in the consolidated financial statements,
unless disclosed otherwise.
The consolidated financial statements were authorised for
issue by the Board of Directors on March 14, 2017.
(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:
σ
Derivative financial instruments are measured at fair
value
(c) Functional and presentation currency
The consolidated financial statements are presented in USD,
which is the Company’s functional and presentation currency.
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
judgements, 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.
FINANCIAL REPORT | 93
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:
The Group recognises transfers between levels of the fair
value hierarchy at the end of the reporting period during which
the change has occurred.
σ Note 8 – Impairment
Information about assumptions and estimation uncertainties
that have a significant risk of resulting in a material adjustment
within the next financial year is included in the following note:
σ
Note 8 – Impairment test: key assumptions underlying
the recoverable amount
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.
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. 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 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.
σ
σ
σ
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.
(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 December 31, 2016 are consistent with
those applied in the preparation of the consolidated financial
statements for the year ended December 31, 2015. The Group
has adopted the following new standards, interpretations
and amendments to standards, including any consequential
amendments to other standards, with a date of initial
application of January 1, 2016:
σ
Amendments to IFRS 10, IFRS 12 and IAS 28: Investment
Entities – Applying the Consolidation Exception
σ Amendments to IAS 1: Disclosure Initiative
σ Annual Improvements to IFRSs 2012-2014 cycle
σ
σ
Amendments to IAS 16 and IAS 38: Clarification of
Acceptable Methods of Depreciation and Amortisation
Amendments to IFRS 11: Accounting for Acquisitions of
Interests in Joint Operations
The adoption of
interpretations and
these standards,
amendments to standards did not have a material impact on
the Group’s consolidated financial statements.
(f) Basis of Consolidation
(i) Business Combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which
control is transferred to 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.
For acquisitions on or after January 1, 2010, the Group
measures goodwill at the acquisition date as:
σ
σ
σ
σ
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 acquiree; less
the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised 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
94 | FINANCIAL REPORT
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
classified 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) Non-controlling interests
Non-controlling interests are measured at their proportionate
share of the acquiree's identifiable net assets at the date of
acquisition. Changes in the Group's interest in a subsidiary
that do not result in a loss of control are accounted for as
equity transactions.
(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 noncontrolling 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. 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.
Interests 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 other comprehensive
income (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 recognized 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
FINANCIAL REPORT | 95
preparing the consolidated financial statements. Unrealised
gains arising from transactions with equity-accounted investees
are eliminated against the investment to the extent of the Group’s
interest in the investee. 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
currencies 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
transferred 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.
96 | FINANCIAL REPORT
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
substantially 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, cash and cash equivalents,
held-to-maturity financial assets and available-for-sale
financial assets. The Company determines the classification
of its investments at initial recognition and reevaluates 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 treasury policy.
Attributable transaction 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.
Assets in this category are classified as current assets if they
are expected to be realised within 12 months of the balance
sheet date.
Loans and receivables
Loans and receivables are financial assets with fixed or
determinable 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.
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.
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 classified
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 currency differences on available-for-sale debt
instruments, are recognised in OCI 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.
Available-for-sale financial assets comprise equity securities
and debt securities.
They are included in non-current assets unless the Company
intends to dispose of the investment within 12 months of the
balance sheet date.
(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.
The Group derecognises a financial liability when its contractual
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
borrowings, bank overdrafts, and trade and other payables.
liabilities comprise
loans and
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
recognized 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.
(iv) Derivative financial instruments
The Group from time to time may enter into derivative financial
instruments to hedge its exposure to market fluctuations,
interest rate risks arising from
foreign exchange and
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 effective”
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.
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:
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 OCI and presented in the
hedging reserve in equity.
The amount recognised in OCI 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 profit or loss as the hedged item. Any ineffective portion
of changes in the fair value of the derivative is recognised
immediately in profit or loss.
FINANCIAL REPORT | 97
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 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
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.
instruments
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
component 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.
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.
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) Goodwill and 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
accumulated 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.
98 | FINANCIAL REPORT
(ii) Intangible assets
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
acquisition is the cash paid or the fair value of any other
consideration given. The cost of an internally generated
intangible asset includes the directly attributable expenditure
of preparing the asset for its intended use.
(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:
σ 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 selfconstructed assets
includes the following:
σ The cost of materials and direct labour;
σ
σ
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
σ Capitalised borrowing costs.
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.
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.
(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.
(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 inception
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 acquisition 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 investment 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.
(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
depreciated from the date that they are available for use.
Internally constructed assets are depreciated, from the date
that the assets are completed and ready for use.
The estimated useful lives of significant items of property,
plant and equipment are as follows:
σ
tankers 20 years
σ FSO/FpSO/FPSO 25 years
σ buildings 33 years
σ plant and equipment 5 - 20 years
σ fixtures and fittings 5 - 10 years
σ other tangible assets 3 - 20 years
σ dry-docking 3 - 5 years
Vessels are estimated to have a zero residual value.
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 components will
be amortized over their estimated useful life (3-5 years).
(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 to determine whether
there is objective evidence that it is impaired.
FINANCIAL REPORT | 99
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.
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 bankruptcy, 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
and amortisation, and the current fair value, less any
impairment loss recognised previously in profit or loss.
100 | FINANCIAL REPORT
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 OCI.
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 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 annually 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 a
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
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 recognised 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
immediately in profit or loss. The Group recognises gains and
losses on the settlement of a defined plan when the settlement
occurs.
FINANCIAL REPORT | 101
(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 profit or loss 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
redundancies 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.
The fair value of the amount payable to beneficiaries in respect
of "phantom stock unit" grants, which are settled in cash,
is recognized as an expense with a corresponding increase
in liabilities over the period during which the beneficiaries
become unconditionally entitled to payment.
102 | FINANCIAL REPORT
The amount
is remeasured at each reporting date at
settlement based on the fair value of the phantom stock units.
Any changes in the liability are recognized in profit or loss.
The Group does not recognize time charter revenues during
periods that vessels are offhire.
(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 recognised as finance cost.
Restructuring
A provision for restructuring is recognized 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 recognized 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 recognizes any impairment
loss on the assets associated with that contract.
(o) Revenue
(i) Pool Revenues
Aggregated revenue recognized 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
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
recognizes 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 operated
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 recognized on a
straight line basis over the periods of such charters, as service
is performed.
(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 prevalent
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
estimates 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
recognizing 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
FINANCIAL REPORT | 103
funds invested, dividend income, foreign exchange gains and
losses, and gains and losses on hedging instruments that
are recognised in the consolidated statement of profit or loss
(refer to accounting policy (h)).
Interest income is recognised in the consolidated statement
of profit or loss 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.
(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 components. 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.
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 recognised directly in equity or in OCI.
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 recognised 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 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.
104 | FINANCIAL REPORT
(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
December 31, 2016, and have not been applied in preparing
these consolidated financial statements:
IFRS 15 Revenue from Contracts with Customers establishes
a comprehensive framework for determining whether, how
much and when revenue is recognized. It replaces existing
revenue recognition guidance, including IAS 18 Revenue,
IAS 11 Construction Contracts, IFRIC 13 Customer Loyalty
Programmes, IFRIC 15 Agreements for the Construction of
Real Estate, IFRIC 18 Transfers of Assets from Customers
and SIC 31 Barter Transactions Involving Advertising Services.
IFRS 15 is effective for the annual reports beginning on or
after January 1, 2018, with early adoption permitted, and has
been endorsed by the EU. Clarifications to IFRS 15 Revenue
from Contracts with Customers (issued on April 12, 2016) have
not yet been endorsed by the EU.
The standard establishes a five-step model that will apply to
revenue earned from a contract with a customer. The standard’s
requirements will also apply to the sale of some non-financial
assets that are not part of the entity’s ordinary activities
(e.g., sales of property or plant and equipment). Extensive
disclosures will be required, including disaggregation of total
revenue, information about performance obligations, changes
in contract asset and liability account balances between
periods and key judgments and estimates.
The guidance permits two methods of adoption: retrospectively
to each prior reporting period presented (full retrospective
method), or the cumulative effect of initially applying the
guidance recognized at the date of initial application (the
cumulative catch-up transition method). The Group currently
anticipates adopting the standard using the cumulative catch-
up transition method. The new standard will be effective for us
beginning January 1, 2018.
The Group is undertaking a comprehensive approach to
assess the impact of the guidance on its business by reviewing
the current accounting policies and practices to identify any
potential differences that may result from applying the new
requirements to the consolidated financial statements.
Part of the Group’s revenue is generated from time charters,
where revenue is recognized on an accrual basis and is
recorded over the term of the charter as the service is
provided. We do not believe the new guidance will have
any impact on this aspect of the Group’s revenue. For spot
charters, we recognize revenue on a discharge-to-discharge
basis in determining the percentage of completion for all
voyage charters. We are in the process of assessing whether
and to which extent the new guidance will have an impact on
this aspect of the Group’s revenue.
The Group is consulting with other shipping companies on
business assumptions, processes, systems and controls to
fully determine revenue recognition and disclosure under the
new standard. The Group’s initial assessment may change as
the Company continues to review the new guidance.
IFRS 16 Leases published on January 13, 2016 makes a
distinction between a service contract and a lease based on
whether the contract conveys the right to control the use of
an identified asset and introduces a single, on-balance lease
sheet accounting model for lessees. A lessee recognizes a
right-of-use asset representing its right to use the underlying
asset and a lease liability representing its obligation to make
lease payments. There are optional exemptions for short-
term leases and leases of low value items. Lessor accounting
remains similar to the current standard – i.e. lessors continue
to classify leases as finance or operating leases. For lessors,
there is little change to the existing accounting in IAS 17
Leases.
IFRS 16 replaces existing leases guidance including IAS
17 Leases, IFRIC 4 Determining whether an Arrangement
contains a Lease, SIC-15 Operating Leases—Incentives and
SIC-27 Evaluating the Substance of Transactions Involving
the Legal Form of a Lease. The standard is effective for
annual periods beginning on or after January 1, 2019. Early
adoption is permitted for entities that apply IFRS 15 Revenue
from Contracts with Customers at or before the date of initial
application of IFRS 16. This new standard has not yet been
endorsed by the EU. No quantitative or qualitative assessment
of the impact of IFRS 16 has been made to date, but the Group
expects that the most significant impact will be that the Group
will recognize new assets and liabilities for its operating leases
as lessee. In addition, the nature and recognition of expenses
related to those leases will change as IFRS 16 replaces the
straight-line operating lease expense with a depreciation
charge for right-of-use assets and interest expense on lease
liabilities. Reference is made to note 19 which includes the
Group’s minimum lease commitments under operating leases
as lessee as at December 31, 2016.
IFRS 9 Financial Instruments published in July 2014 replaces
the existing guidance in IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 includes revised
guidance 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 derecognition of
financial instruments from IAS 39. IFRS 9 is effective for annual
periods beginning on or after January 1, 2018, with early
adoption permitted. This new standard has been endorsed by
the EU. The Group does not plan to early adopt this standard.
The Group is undertaking a comprehensive approach to
assess the impact of the guidance on its business by reviewing
the current accounting policies and practices to identify any
potential differences that may result from applying the new
requirements to the consolidated financial statements .
The disclosure initiative (Amendments to IAS 7) requires
disclosures that enable users of financial statements to
evaluate changes in liabilities arising from financing activities,
including both changes arising from cash flow and non-cash
changes. The amendments are effective for annual periods
beginning on or after January 1, 2017, with earlier adoption
permitted. These amendments have not yet been endorsed by
the EU. The amendments are not expected to have a material
impact on the Group’s consolidated financial statements.
Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments to IAS 12) clarifies the accounting for deferred
tax assets for unrealised losses on debt instruments measured
at fair value. Further, the amendments provide guidance on
estimating probable future taxable profits when assessing the
recognition of deferred tax assets when there are insufficient
taxable temporary differences relating to the same taxation
authority and the same taxable entity. The amendments are
effective for annual periods beginning on or after January
1, 2017, with earlier adoption permitted. The amendments
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.
FINANCIAL REPORT | 105
The amendments 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.
NOTE 2 - 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. The Chief Operating Decision Maker
(CODM) also receives the information 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 two clients in the Tankers segment that
represented 10% each of the Tankers segment total revenue
in 2016 (2015 and 2014: one client which represented 11%). All
the other clients represent less than 10% of total revenues of
the Tankers segment.
The Group did not identify any relevant geographic areas.
Classification and Measurement of Share-based Payment
Transactions (Amendments to IFRS 2) issued on June 20,
2016 covers three accounting areas: the measurement of
cash-settled share-based payments; the classification of
share-based payments settled net of tax withholdings; and
the accounting for a modification of a share-based payment
from cash-settled to equity-settled. The amendments are
effective for annual periods commencing on or after January1,
2018. As a practical simplification, the amendments can be
applied prospectively so that prior periods do not have to be
restated. Retrospective, or early, application is permitted if
companies have the required information. The amendments
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.
Transfers of property assets to/from, investment property
(Amendments to IAS 40) issued on December 8, 2016, clarifies
that a property asset is transferred to, or from, investment
property when and only when there is an actual change
in use. A change in management intention alone does not
support a transfer. The amendments are effective for annual
periods beginning on or after January 1, 2018, with earlier
adoption permitted. The amendments 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.
IFRIC 22 Foreign currency transactions and Advance
consideration issued on December 8, 2016, clarifies the
transaction date to be used to determine the exchange rate for
translating foreign currency transactions involving an advance
payment or receipt. The interpretation is effective for annual
periods beginning on or after January 1, 2018, with earlier
adoption permitted. The amendments 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.
Annual improvements to IFRSs 2014-2016 Cycle, issued on
December 8, 2016, cover the following minor amendments:
σ
σ
σ
IFRS 1 First-time Adoption of IFRS: Outdated exemptions
for first-time adopters of IFRS are removed (effective for
annual periods beginning on or after January 1, 2018);
IFRS 12 Disclosure of Interests in Other Entities: Also
applies to interests that are classified as held for sale or
distribution (effective for annual periods beginning on or
after January 1, 2017) and
IAS 28 Investments in Associates and Joint Ventures:
A venture capital organisation, or other qualifying entity,
may elect to measure its investments in an associate or
joint venture at fair value (effective for annual periods
beginning on or after January 1, 2018, with earlier
adoption permitted).
106 | FINANCIAL REPORT
Consolidated statement of financial position
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
TANKERS
FSO
LESS:
EQUITY-
ACCOUNTED
INVESTEES
TOTAL
TANKERS
FSO
LESS:
EQUITY-
ACCOUNTED
INVESTEES
TOTAL
ASSETS
Vessels
Assets under construction
Other tangible assets
Prepayments
Intangible assets
Receivables
Investments in equity accounted
investees
Deferred tax assets
2,383,163
86,136
777
-
156
204,079
1,546
964
186,170
-
-
-
-
9,414
-
-
(186,170) 2,383,163
86,136
777
-
156
183,914
-
-
-
-
(29,579)
2,448,192
93,890
1,048
2
238
222,692
204,241
-
-
-
-
7,371
(364,397) 2,288,036
93,890
1,048
2
238
259,908
-
-
-
-
29,845
16,867
18,413
1,211
-
20,426
21,637
-
964
935
182
(182)
935
TOTAL NON-CURRENT ASSETS
2,676,821
195,584
(198,882)
2,673,523
2,768,208
211,794
(314,308)
2,665,694
TOTAL CURRENT ASSETS
375,037
43,048
(44,697)
373,388
389,368
26,944
(41,260)
375,052
TOTAL ASSETS
3,051,858
238,632
(243,579)
3,046,911
3,157,576
238,738
(355,568)
3,040,746
EQUITY AND LIABILITIES
TOTAL EQUITY
1,892,836
(4,879)
(1)
1,887,956
1,946,288
(40,540)
1 1,905,749
Bank and other loans
Convertible and other Notes
Other payables
Deferred tax liabilities
Employee benefits
Amounts due to equity-accounted
joint ventures
Provisions
966,443
-
533
-
2,846
203,512
-
1,118
-
-
(203,512)
-
(1,118)
-
-
966,443
-
533
-
2,846
1,018,013
-
590
-
2,038
259,684
-
3,600
-
-
(325,271)
-
(3,600)
-
-
-
38
-
-
-
-
-
38
-
436
-
-
-
-
952,426
-
590
--
2,038
-
436
TOTAL NON-CURRENT LIABILITIES
969,860
204,630
(204,630)
969,860
1,021,077
263,284
(328,871)
955,490
TOTAL CURRENT LIABILITIES
189,162
38,881
(38,948)
189,095
190,211
15,994
(26,698)
179,507
TOTAL EQUITY AND LIABILITIES
3,051,858
238,632
(243,579)
3,046,911
3,157,576
238,738
(355,568)
3,040,746
FINANCIAL REPORT | 107
NOTE 2 - SEGMENT REPORTING (CONTINUED)
Consolidated statement of profit or loss
(in thousands of USD)
Shipping income
Revenue
Gains on disposal of vessels / other tangible assets
Other operating income
2016
LESS: EQUITY-
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
INVESTEES
704,766
50,397
6,765
65,125
(85,626)
-
327
-
(96)
684,265
50,397
6,996
898,495
13,302
6,798
64,504
(116,492)
-
808
-
(180)
846,507
13,302
7,426
510,973
15,315
11,685
64,178
(101,166)
-
323
(2,193)
(597)
473,985
13,122
11,411
2015
LESS: EQUITY-
INVESTEES
2014
LESS: EQUITY-
INVESTEES
TOTAL SHIPPING INCOME
761,928
65,452
(85,722)
741,658
918,595
65,312
(116,672)
867,235
537,973
64,501
(103,956)
498,518
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
Loss on disposal of investments in equity accounted
investees
Depreciation tangible assets
Depreciation intangible assets
General and administrative expenses
(63,305)
(164,478)
(17,713)
(1)
-
(24,150)
(233,368)
(99)
(44,152)
(476)
(9,679)
-
-
-
-
(18,071)
-
(80)
4,221
13,958
-
(1)
-
(59,560)
(160,199)
(17,713)
(2)
-
-
(24,150)
23,775
-
181
(227,664)
(99)
(44,051)
(83,896)
(160,894)
(25,849)
(8,002)
-
(221,399)
(50)
(46,433)
(473)
(10,074)
-
-
13,132
17,250
-
-
-
(71,237)
(153,718)
(25,849)
(8,002)
(136,135)
(131,676)
(35,664)
-
-
(7,416)
(471)
(11,636)
-
-
-
18,303
19,223
-
-
-
(118,303)
(124,089)
(35,664)
-
(7,416)
(18,071)
29,314
(210,156)
(171,920)
(18,071)
29,057
(160,934)
-
(283)
-
465
(50)
(46,251)
(20)
(40,735)
-
(184)
-
354
(20)
(40,565)
TOTAL OPERATING EXPENSES
(547,266)
(28,306)
42,134
(533,438)
(546,523)
(28,901)
60,161
(515,263)
(523,566)
(30,362)
66,937
(486,991)
RESULT FROM OPERATING
ACTIVITIES
Finance income
Finance expenses
214,662
37,146
(43,588)
208,220
372,072
36,411
(56,511)
351,972
14,407
34,139
(37,019)
11,527
6,864
(52,420)
57
(2,552)
(66)
3,277
6,855
51,695
3,313
(52,590)
22
(3,663)
(23)
5,311
3,312
(50,942)
2,625
(98,642)
28
(4,714)
(36)
7,386
2,617
(95,970)
NET FINANCE EXPENSES
(45,556)
(2,495)
3,211
(44,840)
(49,277)
(3,641)
5,288
(47,630)
(96,017)
(4,686)
7,350
(93,353)
Share of profit (loss) of equity accounted investees
(net of income tax)
334
-
40,161
40,495
185
-
51,407
51,592
617
29,669
30,286
PROFIT (LOSS) BEFORE INCOME TAX
169,440
34,651
(216)
203,875
322,980
32,770
184
355,934
(80,993)
29,453
Income tax expense
174
(216)
216
174
(5,633)
184
(184)
(5,633)
5,743
PROFIT (LOSS) FOR THE PERIOD
169,614
34,435
Attributable to:
Owners of the Company
169,614
34,435
-
-
204,049
204,049
317,347
32,954
350,301
(75,250)
29,453
-
-
317,347
32,954
350,301
(75,250)
29,453
(45,797)
-
-
(51,540)
5,743
(45,797)
-
-
-
-
108 | FINANCIAL REPORT
Consolidated statement of profit or loss
(in thousands of USD)
Shipping income
Revenue
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
INVESTEES
INVESTEES
2015
LESS: EQUITY-
2014
LESS: EQUITY-
2016
LESS: EQUITY-
INVESTEES
Gains on disposal of vessels / other tangible assets
Other operating income
704,766
50,397
6,765
65,125
(85,626)
-
327
-
(96)
684,265
50,397
6,996
898,495
13,302
6,798
64,504
(116,492)
-
808
-
(180)
846,507
13,302
7,426
510,973
15,315
11,685
64,178
(101,166)
-
323
(2,193)
(597)
473,985
13,122
11,411
TOTAL SHIPPING INCOME
761,928
65,452
(85,722)
741,658
918,595
65,312
(116,672)
867,235
537,973
64,501
(103,956)
498,518
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
Loss on disposal of investments in equity accounted
investees
Depreciation tangible assets
Depreciation intangible assets
General and administrative expenses
(63,305)
(164,478)
(17,713)
(1)
-
(24,150)
(233,368)
(99)
(44,152)
(476)
(9,679)
4,221
13,958
-
-
-
-
-
(59,560)
(160,199)
(17,713)
(2)
-
(24,150)
(99)
(18,071)
23,775
(227,664)
(80)
181
(44,051)
(83,896)
(160,894)
(25,849)
(8,002)
-
(221,399)
(50)
(46,433)
(473)
(10,074)
-
-
(18,071)
-
(283)
13,132
17,250
-
-
-
29,314
-
465
(71,237)
(153,718)
(25,849)
(8,002)
-
(136,135)
(131,676)
(35,664)
-
(7,416)
(210,156)
(50)
(46,251)
(171,920)
(20)
(40,735)
(471)
(11,636)
-
-
-
(18,071)
-
(184)
18,303
19,223
-
-
-
29,057
-
354
(118,303)
(124,089)
(35,664)
-
(7,416)
(160,934)
(20)
(40,565)
TOTAL OPERATING EXPENSES
(547,266)
(28,306)
42,134
(533,438)
(546,523)
(28,901)
60,161
(515,263)
(523,566)
(30,362)
66,937
(486,991)
RESULT FROM OPERATING
ACTIVITIES
Finance income
Finance expenses
214,662
37,146
(43,588)
208,220
372,072
36,411
(56,511)
351,972
14,407
34,139
(37,019)
11,527
6,864
(52,420)
57
(2,552)
(66)
3,277
6,855
51,695
3,313
(52,590)
22
(3,663)
(23)
5,311
3,312
(50,942)
2,625
(98,642)
28
(4,714)
(36)
7,386
2,617
(95,970)
NET FINANCE EXPENSES
(45,556)
(2,495)
3,211
(44,840)
(49,277)
(3,641)
5,288
(47,630)
(96,017)
(4,686)
7,350
(93,353)
Share of profit (loss) of equity accounted investees
(net of income tax)
334
-
40,161
40,495
185
-
51,407
51,592
617
-
29,669
30,286
PROFIT (LOSS) BEFORE INCOME TAX
169,440
34,651
(216)
203,875
322,980
32,770
184
355,934
(80,993)
29,453
Income tax expense
174
(216)
216
174
(5,633)
184
(184)
(5,633)
5,743
-
PROFIT (LOSS) FOR THE PERIOD
169,614
34,435
204,049
317,347
32,954
Attributable to:
Owners of the Company
169,614
34,435
204,049
317,347
32,954
-
-
350,301
(75,250)
29,453
350,301
(75,250)
29,453
-
-
-
-
(51,540)
5,743
(45,797)
(45,797)
FINANCIAL REPORT | 109
(1)
-
-
-
-
-
-
NOTE 2 - SEGMENT REPORTING (CONTINUED)
Consolidated statement of cash flows
(in thousands of USD)
2016
LESS: EQUITY-
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
Net cash from operating activities
Net cash from (used in) investing activities
Net cash from (used in) financing activities
Capital expenditure
Impairment losses
Impairment losses reversed
427,926
(90,891)
(264,714)
(342,698)
-
-
49,013
-
(32,929)
-
-
-
INVESTEES
(38,737)
(9,724)
36,483
-
-
-
438,202
(100,615)
(261,160)
(342,698)
-
-
2015
LESS: EQUITY-
INVESTEES
505,821
(248,770)
(350,429)
(361,754)
-
-
(20,557)
-
-
-
-
42,897
5,671
-
-
58,747
(114,036)
19,978
40,013
450,532
(205,873)
(365,315)
(1,007,928)
1,168,516
(55,552)
(45,209)
(15,079)
76,057
14,782
(1,023,007)
1,189,021
1,611
(360,143)
(1,178,051)
905
(1,177,146)
-
-
-
-
-
-
-
-
2014
LESS: EQUITY-
INVESTEES
-
-
-
-
110 | FINANCIAL REPORT
Consolidated statement of cash flows
(in thousands of USD)
Net cash from operating activities
Net cash from (used in) investing activities
Net cash from (used in) financing activities
Capital expenditure
Impairment losses
Impairment losses reversed
2016
LESS: EQUITY-
427,926
(90,891)
(264,714)
(342,698)
-
-
49,013
(32,929)
-
-
-
-
INVESTEES
(38,737)
(9,724)
36,483
-
-
-
438,202
(100,615)
(261,160)
(342,698)
-
-
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
TANKERS
FSO
ACCOUNTED
TOTAL
2015
LESS: EQUITY-
2014
LESS: EQUITY-
505,821
(248,770)
(350,429)
(361,754)
-
-
58,747
-
(20,557)
-
-
-
INVESTEES
(114,036)
42,897
5,671
1,611
-
-
450,532
(205,873)
(365,315)
(360,143)
-
-
19,978
(1,007,928)
1,168,516
(1,178,051)
-
-
40,013
-
(55,552)
-
-
-
INVESTEES
(45,209)
(15,079)
76,057
14,782
(1,023,007)
1,189,021
905
-
-
(1,177,146)
-
-
FINANCIAL REPORT | 111
NOTE 3 - 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)
2016
2015
2014
Vessels
Of which in tankers segment
Of which in FSO segment
(in thousands of USD)
-
-
-
24,195
24,195
-
89,000
89,000
-
(ESTIMATED)
SALE PRICE
BOOK
VALUE
ASSET HELD
FOR SALE
(EXPECTED)
GAIN
(EXPECTED)
LOSS
AT JANUARY 1, 2014
-
-
21,510
Assets transferred to assets held for sale
Olympia
Antarctica
Assets sold from assets held for sale
Luxembourg
Olympia
AT DECEMBER 31, 2014
AT JANUARY 1, 2015
Assets transferred to assets held for sale
Famenne
Assets sold from assets held for sale
Antarctica
AT DECEMBER 31, 2015
AT JANUARY 1, 2016
Assets sold from assets held for sale
Famenne
91,560
93,856
89,000
89,000
-
-
-
-
(2,560)
(4,856)
21,510
89,000
(21,510)
(89,000)
6,390
2,380
-
-
-
-
89,000
8,770
(7,416)
89,000
-
89,000
89,000
27,900
91,380
-
-
38,016
24,195
24,195
13,821
91,065
89,000
(89,000)
2,065
-
-
-
-
24,195
15,886
24,195
-
38,016
24,195
(24,195)
13,821
-
-
-
-
-
-
-
AT DECEMBER 31, 2016
-
-
-
13,821
On January 15, 2016, the Company sold the VLCC Famenne
(2001 - 298,412 dwt), for USD 38.4 million. This vessel was
accounted for as a non-current asset held for sale as at
December 31, 2015, and had a carrying value of USD 24.2
million as of the prior year-end. The vessel was delivered to
its new owner on March 9, 2016. Taking into account USD 0.4
million of costs to sell (sales commissions), the gain on the
sale of this vessel amounted to USD 13.8 million. This gain
has been recorded upon delivery of the vessel and is therefore
reflected in the consolidated statement of profit or loss for the
twelve months ended December 31, 2016.
112 | FINANCIAL REPORT
Discontinued operations
As per December 31, 2016, December 31, 2015 and per December 31, 2014 the Group had no operations that meet the criteria of
a discontinued operation.
NOTE 4 - REVENUE
(in thousands of USD)
Pool revenue
Spot voyages
Time charters
NOTE
2016
-
-
19
340,217
203,821
140,227
2015
455,617
264,799
126,091
2014
149,624
192,243
132,118
TOTAL REVENUE
684,265
846,507
473,985
For the accounting treatment of revenue, we refer to the accounting policies (o) - Revenue.
The decrease in revenue is mostly related to the decrease in pool and spot voyage revenue which is due to lower freight market
conditions. This decrease was partially offset by higher revenue from time charters due to an increase in the fleet size.
FINANCIAL REPORT | 113
NOTE 5 - EXPENSES FOR SHIPPING ACTIVITIES AND OTHER EXPENSES FROM
OPERATING ACTIVITIES
Voyage expenses and commissions
(in thousands of USD)
Voyage related expense
Commissions paid
NOTE
-
-
2016
(52,836)
(6,724)
2015
(62,787)
(8,450)
2014
(111,238)
(7,065)
TOTAL VOYAGE EXPENSES AND COMMISSIONS
(59,560)
(71,237)
(118,303)
The majority of voyage expenses are bunkers, port costs and agent fees paid to operate the vessels on the spot market. These
expenses decreased in 2016 compared to 2015 because a higher number of vessels were on time charter contract in 2016. For
vessels under a time charter contract, voyage expenses are paid by the charterer and for vessels operated in a pool, voyage
expenses are paid by the Pool.
Vessel operating expenses
(in thousands of USD)
Operating expenses
Insurance
NOTE
-
-
2016
(148,554)
(11,645)
2015
(142,035)
(11,683)
2014
(112,834)
(11,255)
TOTAL VESSEL OPERATING EXPENSES
(160,199)
(153,718)
(124,089)
The operating expenses relate mainly to the crewing, technical and other costs to operate tankers. In 2016 these expenses
increased compared to 2015, which is mainly related to a higher number of vessels operated by the Group following the delivery
of the vessels acquired in 2015 and 2016.
Charter hire expenses
(in thousands of USD)
Charter hire
Bare boat hire
NOTE
19
19
2016
(16,921)
(792)
2015
(25,849)
-
2014
(32,080)
(3,584)
TOTAL CHARTER HIRE EXPENSES
(17,713)
(25,849)
(35,664)
The decrease in charter hire is mainly due to the redelivery of the two chartered-in vessels VLCC KHK Vision and the
Suezmax Suez Hans, to their owners on October 27, 2016 and November 27, 2016 respectively.
The bareboat charter-hire expenses in 2016 are entirely attributable to the sale and leaseback agreement of four VLCCs (Nautilus,
Navarin, Neptun and Nucleus), under a five-year bareboat contract.
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
NOTE
-
-
16
22
-
-
-
-
2016
(12,754)
(2,532)
(261)
(406)
(3,178)
(19,131)
(25,510)
(13)
603
2015
(12,554)
(2,379)
(108)
(1,637)
(3,715)
(20,392)
(25,749)
(19)
(91)
2014
(10,840)
(2,495)
(85)
(3,994)
(3,075)
(20,489)
(19,228)
(8)
(840)
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES
(44,051)
(46,251)
(40,565)
Average number of full time equivalents (shore staff)
139.44
132.20
113.32
114 | FINANCIAL REPORT
The general and administrative expenses which include
amongst others: shore staff wages, director fees, office rental,
consulting and audit fees and Tonnage Tax, decreased in
2016 compared to 2015. This decrease was mainly due to a
decrease in equity-settled share-based payments, a decrease
in director fees and a decrease in administrative expenses
relating to the Tankers International Pool.
NOTE 6 - NET FINANCE EXPENSE
On the other hand, consulting, audit and other fees increased
implementation and audit of an enhanced
due to the
framework of internal controls. Mortgages and registration
fees increased due to the sale of certain vessels between
Group companies in the course of 2016.
Recognized in profit or loss
(in thousands of USD)
Interest income
Foreign exchange gains
FINANCE INCOME
2016
217
6,638
2015
208
3,103
2014
487
2,131
6,855
3,312
2,617
Interest expense on financial liabilities measured at amortized cost
Fair value adjustment on interest rate swaps
Amortization other Notes
Other financial charges
Foreign exchange losses
(39,007)
-
-
(4,577)
(8,111)
(38,246)
-
(4,127)
(4,355)
(4,214)
(57,948)
-
(31,878)
(3,829)
(2,315)
FINANCE EXPENSE
(51,695)
(50,942)
(95,970)
NET FINANCE EXPENSE RECOGNIZED IN PROFIT OR LOSS
(44,840)
(47,630)
(93,353)
Net finance expenses decreased slightly in 2016 compared to
2015, which is primarily related to the amortization other Notes
which amounted zero in 2016 due to the repayment of the USD
235.5 million bond in the first quarter of 2015. As the bond
was issued below par and in accordance with IFRS, the Group
amortized USD 4.1 million in the first quarter of 2015. Further,
the Group incurred lower interest expenses in 2016 compared
to 2015 following the redemption in 2015 of convertible Notes
and bonds as discussed in Note 15. On the other hand, the
Group recognized USD 5.5 million of unamortized transaction
costs in the consolidated statement of profit or loss upon the
refinancing in 2016 of the March 25, 2014 senior secured credit
facility, as discussed in Note 15.
FINANCIAL REPORT | 115
The finance income and expenses on the previous page 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
Recognized directly in equity
2016
2015
2014
217
(39,007)
(4,577)
208
(42,372)
(4,355)
487
(89,826)
(3,829)
(in thousands of USD)
2016
2015
2014
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 RECOGNIZED DIRECTLY IN EQUITY
Attributable to:
Owners of the Company
NET FINANCE EXPENSE RECOGNIZED DIRECTLY IN EQUITY
Recognized in:
Translation reserve
Hedging reserve
170
-
-
170
170
170
170
-
(429)
-
-
(429)
(429)
(429)
(429)
-
(567)
1,291
-
724
724
724
(567)
1,291
116 | FINANCIAL REPORT
NOTE 7 - INCOME TAX BENEFIT (EXPENSE)
(in thousands of USD)
Current tax
Current period
TOTAL CURRENT TAX
Deferred tax
Recognition of unused tax losses /
(use of tax losses)
Other
TOTAL DEFERRED TAX
TOTAL TAX BENEFIT/(EXPENSE)
Reconciliation of effective tax
Profit (loss) before tax
Tax at domestic rate
Effects on tax of:
Tax exempt profit / loss
Tax adjustments for previous years
Loss for which no DTA (°) has been
recognized
Use of previously unrecognized tax
losses
Non-deductible expenses
Tonnage Tax regime
Effect of share of profit of equity-
accounted investees
Effects of tax regimes in foreign
jurisdictions
2016
60
60
220
(106)
114
174
2015
(98)
(98)
(5,450)
(85)
(5,535)
(5,633)
2014
(9)
(9)
5,507
245
5,752
5,743
2016
203,875
2015
2014
355,934
(51,540)
(33.99)%
(69,297)
(33.99%)
(120,982)
(33.99%)
17,518
(8,090)
70
-
1,118
(1,718)
64,637
13,761
(307)
(144)
17
(4,811)
15,668
(5,225)
91,334
17,536
974
3,039
-
(17,926)
-
(193)
(6,590)
10,294
(400)
TOTAL TAXES
0,09%
174
(1.58%)
(5,633)
(11.14%)
5,743
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 5).
° DTA = Deferred Tax Asset
FINANCIAL REPORT | 117
NOTE 8 - PROPERTY, PLANT AND EQUIPMENT
(in thousands of USD)
AT JANUARY 1, 2014
Cost
Depreciation & impairment losses
NET CARRYING AMOUNT
Acquisitions
Disposals and cancellations
Depreciation charges
Transfer to assets held for sale
Transfers
Translation differences
BALANCE AT DECEMBER 31, 2014
AT JANUARY 1, 2015
Cost
Depreciation & impairment losses
NET CARRYING AMOUNT
Acquisitions
Disposals and cancellations
Depreciation charges
Transfer to assets held for sale
Transfers
Translation differences
NOTE
VESSELS
VESSELS
OTHER
PRE-
UNDER
TANGIBLE
PAYMENTS
CONSTRUCTION
ASSETS
TOTAL
PPE
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,424,978
(990,178)
1,434,800
1,053,939
-
(160,590)
(185,415)
115,600
-
2,258,334
3,342,607
(1,084,273)
2,258,334
257,706
(10,681)
(209,728)
(24,195)
16,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,487
(1,854)
10,000
-
2,437,465
(992,032)
633
10,000
1,445,433
987
(2)
(344)
-
-
(48)
122,201
-
-
-
(115,600)
-
1,177,127
(2)
(160,934)
(185,415)
-
(48)
1,226
16,601
2,276,161
2,997
(1,771)
16,601
-
3,362,205
(1,086,044)
1,226
16,601
2,276,161
93,890
-
-
-
-
-
288
(3)
(428)
-
-
(35)
8,001
(8,000)
-
-
(16,600)
-
359,885
(18,684)
(210,156)
(24,195)
-
(35)
BALANCE AT DECEMBER 31, 2015
2,288,036
93,890
1,048
2
2,382,976
118 | FINANCIAL REPORT
(in thousands of USD)
AT JANUARY 1, 2016
NOTE
VESSELS
VESSELS
OTHER
PRE-
UNDER
TANGIBLE
PAYMENTS
CONSTRUCTION
ASSETS
Cost
Depreciation & impairment losses
-
-
3,477,605
(1,189,569)
93,890
-
2,482
(1,434)
NET CARRYING AMOUNT
2,288,036
93,890
1,048
Acquisitions
Acquisitions through business
combinations
Disposals and cancellations
Depreciation charges
Transfer to assets held for sale
Transfers
Translation differences
BALANCE AT DECEMBER 31, 2016
AT DECEMBER 31, 2016
Cost
Depreciation & impairment losses
-
24
-
-
-
-
-
-
-
250,912
120,280
(143,457)
(227,306)
-
94,698
-
86,944
-
-
-
-
(94,698)
-
2,383,163
86,136
175
-
(7)
(358)
-
5
(86)
777
3,748,135
(1,364,972)
86,136
-
2,373
(1,596)
NET CARRYING AMOUNT
2,383,163
86,136
777
2
-
2
3
-
-
-
-
(5)
-
-
-
-
-
TOTAL
PPE
3,573,979
(1,191,003)
2,382,976
338,034
120,280
(143,464)
(227,664)
-
-
(86)
2,470,076
3,836,644
(1,366,568)
2,470,076
On January 26, March 24, and May 13, 2016, Euronav took
delivery of the second, third and fourth vessel of the four
VLCCs which were acquired as resales of existing newbuilding
contracts as announced on June 16, 2015: VLCC Alice (2016 -
299,320 dwt), VLCC Alex (2016 - 299,445 dwt) and VLCC Anne
(2016 - 299,533 dwt).
On August 16, 2016, the Group entered into a binding agreement
for the acquisition through resale of two VLCCs which were
completing construction at Hyundai Heavy Industries for an
aggregate purchase price of USD 169 million or USD 84.5
million per unit. The first vessel, the Ardeche, was delivered
on January 12, 2017. The second vessel, the Aquitaine, was
delivered on January 20, 2017 (see Note 29).
On November 23, 2016 the Group took delivery of the V.K. Eddie
(2005 - 305,261 dwt), which it purchased from its joint venture
Seven Seas Shipping Ltd (Note 25) for USD 39.0 million. In the
Group's consolidated financial statements, 50% of the USD
9.3 million gain recognized on this transaction by Seven Seas
Shipping Ltd was eliminated.
FINANCIAL REPORT | 119
NOTE 8 - PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
In 2016, the Cap Guillaume, Cap Phillipe, Maria, Sandra, Artois, Cap Diamant, Cap Charles, Cap Victor, Ingrid and Nautilus have
been dry-docked. The cost of planned repairs and maintenance is capitalised and included under the heading acquisitions.
Disposal of assets - Gains/Losses
(in thousands of USD)
NOTE ACQUISITIONS
SALE
PRICE
BOOK
VALUE
GAIN DEFERRED
LOSS
GAIN
Luxembourg - Sale
Olympia - Transfer to assets held
for sale
Olympia - Sale
Antarctica - Transfer to assets
held for sale
Cap Isabella - Sale
Other
AT DECEMBER 31, 2014
Antarctica - Sale
Cap Laurent - Sale
Other
AT DECEMBER 31, 2015
Famenne - Sale
Nautilus - Sale
Navarin - Sale
Neptun - Sale
Nucleus - Sale
Other
3
3
3
3
-
-
3
-
-
3
-
-
-
-
-
-
-
-
-
-
-
27,900
21,510
6,390
89,000
91,560
-
91,380
89,000
2,380
89,000
93,856
-
4,329
-
-
-
4,329
23
13,122
-
-
-
-
-
-
-
-
(2,560)
-
(4,856)
-
-
(7,416)
ACQUISITIONS
SALE
PRICE
BOOK
VALUE
GAIN DEFERRED
LOSS
GAIN
-
-
-
91,065
21,825
-
89,000
10,682
-
ACQUISITIONS
SALE
PRICE
BOOK
VALUE
2,065
11,143
94
13,302
-
-
-
-
-
-
(8,002)
(8,002)
GAIN DEFERRED
LOSS
-
-
-
-
-
-
38,016
43,250
47,250
47,250
47,250
-
24,195
32,208
36,739
37,534
36,974
-
13,821
11,042
10,511
9,716
10,276
32
GAIN
-
(500)
(1,500)
(1,500)
(1,500)
-
-
-
-
-
-
(2)
(2)
AT DECEMBER 31, 2016
55,397
(5,000)
120 | FINANCIAL REPORT
On January 15, 2016, the Company sold the VLCC Famenne
(2001 - 298,412 dwt), for a net sale price of USD 38.0 million.
The capital gain on that sale of USD 13.8 million was recorded
in the first quarter of 2016. The vessel was delivered to its new
owner on March 9, 2016.
On December 16, 2016, the Company entered into a five-year
sale and leaseback agreement for four VLCCs. The four VLCCs
are the Nautilus (2006 – 307,284 dwt), the Navarin (2007 –
307,284 dwt), the Neptun (2007 – 307,284 dwt) and Nucleus
(2007 – 307,284 dwt). The transaction assumed a net en-bloc
sale price of USD 185 million and produced a capital gain of
USD 41.5 million which was recorded in the fourth quarter of
2016. However, because there was a total difference of USD 5.0
million between the fair value of the assets (USD 181 million)
and the sale price (USD 186 million), this excess has been
amortized over the period for which the asset is expected to
be used, in this case, the duration of the lease, i.e. 5 years.
Impairment
Tankers
Euronav defines its cash generating unit as a single vessel,
unless such vessel is operated in a pool, in which case
such vessel, together with the other vessels in the pool, are
collectively treated as a cash generating unit.
The Group has performed an impairment test for tankers
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:
σ
σ
10 year historical average spot freight rates are used as
forecast charter rates
Weighted Average Cost of Capital ('WACC') of 6.43%
(2015: 6.01% and 2014: 5.72%)
σ 20 year useful life with residual value equal to zero
Although management believes that 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 2016. Even with an increase of the WACC of 3%, there
was no need to record an impairment loss in 2016.
Recognizing that the transportation of crude oil and petroleum
products is cyclical and subject to significant volatility based
on factors beyond Euronav's control, Euronav believes the
use of estimates based on the 10-year historical average
rates calculated as of the reporting date to be reasonable as
historically it is, and continues to be, the most appropriate
reflection of a typical shipping cycle. When using 5-year
historical charter rates in this impairment analysis, the
impairment analysis indicates that no impairment is required
for the tanker fleet (2015: USD 123.3 million and 2014: USD
952.0 million), and when using 1-year historical charter rates
in this impairment analysis, the impairment analysis indicates
that no impairment is required for the tanker fleet (2015: no
impairment and 2014: USD 103.7 million).
FSO
For FSOs the impairment assessment has been based on a
value in use calculation to estimate the recoverable amount
from the vessel. This method is chosen as there is no efficient
market for transactions of FSO vessels as each vessel is often
purposely built for specific circumstances. In assessing value
in use, the following assumptions were used:
σ
Weighted Average Cost of Capital ('WACC') of 6.43%
(2015: 6.01% and 2014: 5.72%)
σ 25-year useful life with residual value equal to zero
This assessment did not result in a requirement to record an
impairment loss in 2016. Even with an increase of the WACC
of 3%, there was no need to record an impairment loss in
2016. The value in use calculation for FSOs is based on the
remaining useful life of the vessels as of the reporting date,
and is based on fixed daily rates as well as management's best
estimate of daily rates for future periods. The FSO Asia and the
FSO Africa are on a timecharter contract to Maersk Oil Qatar
until July 22, 2017 and September 22, 2017, respectively.
On December 22, 2016, the Group announced that the joint
venture with International Seaways (“INSW”, see Note 25)
has received a letter of award in relation to a contract for five
years for the service of the FSO Africa and FSO Asia in direct
continuation of the current contractual service. The letter
of award was received from North Oil Company, the future
operator of the Al Shaheen oil field, whose shareholders
are Qatar Petroleum Oil & Gas Limited and Total E&P Golfe
Limited. This award is subject to successful negotiation and
documentation of the services contracts. The intent is that
the new contracts for these custom-made 3 million barrels
capacity units that have been serving the Al Shaheen field
without interruption since 2010 will have a duration of five
years starting at the expiry of the existing contracts with
Maersk Oil Qatar. The existing contracts will remain in force
until expiry in the third quarter of 2017. If negotiations and
documentation are successfully concluded, the new contracts
are expected over their full duration to generate revenues
for the joint venture in excess of USD 360 million, excluding
reimbursement for agreed operating expenses which will be
dealt with on an open book basis. The signing of definitive
services contracts remain subject to the resolution of
substantive business terms and conditions and no assurance
can be given that such resolution will be achieved.
FINANCIAL REPORT | 121
Security
All tankers financed are subject to a mortgage to secure bank
loans (see Note 15).
Vessels on order or under construction
The group has 4 vessels under construction as at December
31, 2016 for an aggregate amount of USD 86.1 million (2015:
USD 93.9 million and 2014: 0). The amounts presented within
"Vessels under construction" relate to the two VLCCs which
were delivered on January 12 and January 20, 2017 from
Hyundai Heavy Industries, as discussed above and two Ice
Class Suezmax vessels from Hyundai Heavy Industries to be
delivered in early 2018.
Capital commitment
As at December 31, 2016 the Group's total capital commitment
amounts to USD 208.8 million (2015: USD 195.9 million). These
can be detailed as follows:
(in thousands of USD)
AS AT DECEMBER 31, 2015 PAYMENTS SCHEDULED FOR
TOTAL
2016
2017
2018
Commitments in respect of VLCCs
Commitments in respect of Suezmaxes
Commitments in respect of FSOs
195,910
-
-
195,910
-
-
TOTAL
195,910
195,910
-
-
-
-
-
-
-
-
(in thousands of USD)
AS AT DECEMBER 31, 2016 PAYMENTS SCHEDULED FOR
Commitments in respect of VLCCs
Commitments in respect of Suezmaxes
Commitments in respect of FSOs
TOTAL
97,035
111,793
-
2017
97,035
24,843
-
2018
-
86,950
-
TOTAL
208,828
121,878
86,950
2019
-
-
-
-
At December 31, 2016, Euronav held the option to purchase
an additional two Ice Class Suezmax vessels from Huynday
Heave Industries (HHI), but Euronav had net yet excercised
this option. The option expires on May 3, 2017.
122 | FINANCIAL REPORT
NOTE 9 - DEFERRED TAX ASSETS AND LIABILITIES
Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
(in thousands of USD)
Provisions
Employee benefits
Unused tax losses & tax credits
Offset
BALANCE AT DECEMBER 31, 2015
Provisions
Employee benefits
Unused tax losses & tax credits
Offset
BALANCE AT DECEMBER 31, 2016
ASSETS
LIABILITIES
169
23
743
935
-
935
31
37
896
964
-
964
-
-
-
-
-
-
-
-
-
-
-
-
NET
169
23
743
935
31
37
896
964
Unrecognized deferred tax assets and liabilities
Deferred tax assets and liabilities have not been recognized in respect of the following items:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Deductible temporary differences
Taxable temporary differences
Tax losses & tax credits
Offset
TOTAL
ASSETS
280
7
105,731
106,018
(25,213)
80,805
LIABILITIES
-
(25,213)
-
(25,213)
25,213
ASSETS
275
-
109,797
110,072
(21,220)
LIABILITIES
-
(21,220)
-
(21,220)
21,220
-
88,852
-
The unrecognized 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 unrecognized tax losses
and tax credits have no expiration date.
A deferred tax asset ('DTA') is recognized 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 generated 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 to 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 taxable profits are probable and therefore no
DTA has been recognized.
in respect of taxable
liabilities
The unrecognized tax
temporary differences relate primarily to tax liabilities in
respect of non distributed reserves of the Group that will be
taxed when distributed. No deferred tax liability has been
recognized because the Group controls whether the liability
will be incurred and management is satisfied that the liability
will not be incurred in the foreseeable future. In addition, no
deferred tax liabilities have been recognized for temporary
differences related to vessels for which the Group expects that
the reversal of these differences will not have a tax effect.
FINANCIAL REPORT | 123
Movement in deferred tax balances during the year
(in thousands of USD)
Provisions
Employee benefits
Unused tax losses & tax credits
TOTAL
BALANCE AT
RECOGNIZED
RECOGNIZED
TRANSLATION
BALANCE AT
JAN 1, 2014
IN INCOME
IN EQUITY
DIFFERENCES
DEC 31, 2014
-
52
828
238
7
5,507
880
5,752
-
-
-
-
-
(7)
(89)
238
52
6,246
(96)
6,536
BALANCE AT
RECOGNIZED
RECOGNIZED
TRANSLATION
BALANCE AT
JAN 1, 2015
IN INCOME
IN EQUITY
DIFFERENCES
DEC 31, 2015
Provisions
Employee benefits
Unused tax losses & tax credits
TOTAL
238
52
6,246
(61)
(24)
(5,450)
6,536
(5,535)
-
-
-
-
(8)
(5)
(53)
(66)
169
23
743
935
BALANCE AT
RECOGNIZED
RECOGNIZED
TRANSLATION
BALANCE AT
JAN 1, 2016
IN INCOME
IN EQUITY
DIFFERENCES
DEC 31, 2016
Provisions
Employee benefits
Unused tax losses & tax credits
TOTAL
169
23
743
935
(121)
15
220
114
-
-
-
-
(17)
(1)
(67)
(85)
31
37
896
964
124 | FINANCIAL REPORT
NOTE 10 - NON-CURRENT RECEIVABLES
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Shareholders loans to joint ventures
Other non-current receivables
Investment
TOTAL NON-CURRENT RECEIVABLES
183,348
565
1
183,914
259,229
678
1
259,908
The shareholders loans to joint ventures as of December 31, 2016 and December 31, 2015 did not bear interest.
Please refer to Note 25 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)
DECEMBER 31, 2016
DECEMBER 31, 2015
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
-
-
-
-
183,914
183,914
-
-
-
-
259,908
259,908
FINANCIAL REPORT | 125
NOTE 11 - TRADE AND OTHER RECEIVABLES - CURRENT
(in thousands of USD)
Trade receivables
Accrued income
Accrued interest
Deferred charges
Other receivables
TOTAL TRADE AND OTHER RECEIVABLES
DECEMBER 31, 2016
DECEMBER 31, 2015
38,695
10,966
33
21,149
95,499
166,342
35,740
31,515
25
20,402
131,398
219,080
The decrease in other receivables relates to income to be received by the Group from the Tankers International Pool. These
amounts decreased in 2016 due to overall declining freight market conditions.
For currency and credit risk, we refer to Note 18.
126 | FINANCIAL REPORT
NOTE 12 - CASH AND CASH EQUIVALENTS
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
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
104,500
102,189
206,689
146
-
206,689
59,205
72,458
131,663
124
-
131,663
The bank deposits as at December 31, 2016 had an average maturity of 10 days (2015: 24 days).
FINANCIAL REPORT | 127
NOTE 13 - EQUITY
Number of shares issued
(in shares)
DECEMBER 31, 2016
DECEMBER 31, 2015
DECEMBER 31, 2014
On issue at January 1
Conversion convertible bonds
Conversion perpetual convertible
preferred equity
Capital increases
ON ISSUE AT DECEMBER 31 -
FULLY PAID
159,208,949
-
-
-
131,050,666
-
9,459,283
18,699,000
54,223,817
18,495,656
9,459,286
48,871,907
159,208,949
159,208,949
131,050,666
On January 20, 2015 the Group announced the commencement
of its underwritten initial public offering (IPO) in the United
States of 13,550,000 ordinary shares. On January 19, 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 received approval to list its ordinary
shares on the New York Stock Exchange (the “NYSE”) under
the symbol “EURN”. On January 28, 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 included the exercise in full by the
underwriters of their overallotment option. The transaction
costs related to this public offering for a total amount of USD
19.4 million were recognized directly in retained earnings.
At December 31, 2016 and December 31, 2015 the share
capital is represented by 159,208,949 shares. The shares have
no par value.
At December 31, 2016, the authorised share capital not issued
amounts to USD 150,000,000 (2015: USD 150,000,000 and
2014: USD 61,525,678) or the equivalent of 138,005,652 shares
(2015: 138,005,652 shares and 2014: 56,605,942 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.
Conversion of perpetual convertible preferred equity
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 January 30, 2015. The aggregate principal amount of USD
75,000,000 was converted to Euronav’s share capital through a
contribution in kind on February 6, 2015 against the issuance
of 9,459,283 shares. These shares are listed on both Euronext
Brussels and the NYSE.
128 | FINANCIAL REPORT
Translation reserve
The translation reserve comprises all foreign exchange
differences arising from the translation of the financial
statements of foreign operations.
Hedging reserve
The Group, in connection to the USD 300 million facility
raised in April 2009 entered in several Interest Rate Swap
(IRSs) instruments for 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 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 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 April 2, 2014.
Treasury shares
As of December 31, 2016 Euronav owned 1,042,415 of its own
shares, compared to 466,667 of shares owned on December
31, 2015. In the twelve months period ended December 31,
2016, Euronav bought back 692,415 shares at an aggregate
cost of USD 6.9 million and delivered 116,667 shares upon
the exercise of share options. These 116,667 treasury shares
had an aggregate weighted average cost of USD 3.1 million
and Euronav recognized a loss of USD 2.3 million in retained
earnings upon the delivery of these treasury shares to the
share option holders. The total net proceeds amounted to USD
0.8 million.
Dividends
On May 12, 2016, the Annual Shareholders' meeting approved
an additional gross dividend in the amount of USD 0.82 per
share to all shareholders. The dividend to holders of Euronav
shares trading on Euronext Brussels was paid in EUR at the
USD/EUR exchange rate of the record date.
During its meeting of August 24, 2016, the Board of Directors
of Euronav approved an interim dividend for the first semester
2016 of USD 0.55 per share. The interim dividend of USD
0.55 per share was payable as from September 30, 2016. The
interim dividend to holders of Euronext shares was paid in
EUR at the USD/EUR exchange rate of the record date.
On March 14, 2017, the Board of Directors decided to propose
to the Annual Shareholders‘ meeting to be held on May 11,
2017, to approve a full year dividend of USD 0.77 per share.
Taking into account the interim dividend approved in August
in the amount of USD 0.55 per share, the expected dividend
payable after the AGM should be USD 0.22 per share. The
total final USD 0.77 dividend per share complies with the
Group’s policy to return 80% of the net profits to shareholders
excluding exceptional items such as gains on the disposal of
vessels.
The total amount of dividends paid in 2016 was USD 216.8
million.
Share-based payment arrangements
On December 16, 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. In March 2016,
the holders exercised 166,667 options and a corresponding
number of treasury shares were sold. The key terms and
conditions did not change after December 31, 2013. The
compensation expense related to this share option program
was recognized in prior periods and therefore, this program
did not have any impact on the consolidated statement of
profit or loss for 2016.
Long-term incentive plan 2015
The Group's Board of Directors implemented in 2015 a long
term incentive plan ('LTIP') for key management personnel.
Under the terms of this LTIP, the beneficiaries will obtain 40%
of their respective LTIP in the form of Euronav stock options,
with vesting over three years and 60% in the form of restricted
stock units ('RSU's'), with cliff vesting on the third anniversary.
In total 236,590 options and 65,433 RSU's were granted on
February 12, 2015. Vested stock options may be exercised
until 13 years after the grant date. The stock options have
an exercise price of EUR 10.0475 and are equity-settled. All
of the stock options and RSUs granted on February 12, 2015
remained outstanding as of December 31, 2016. The fair value
of the stock options was measured using the Black Scholes
formula. The fair value of the RSUs was measured with
reference to the Euronav share price at the grant date. The
total employee benefit expense recognized in the consolidated
statement of profit or loss during 2016 with respect to the LTIP
was USD 0.4 million.
Long-term incentive plan 2016
The Group's Board of Directors implemented in 2016 an
additional long-term incentive plan for key management
personnel. Under the terms of this LTIP, key management
personnel is eligible to receive phantom stock unit grants.
Each phantom stock unit grants the holder a conditional right
to receive an amount of cash equal to the fair market value
of one share of the company on the settlement date. The
phantom stock units will mature one-third each year on the
second, third and fourth anniversary of the award. In total a
number of 54,616 phantom stocks were granted on February
2, 2016 and all remain outstanding as of December 31,
2016. The LTIP 2016 qualifies as a cash-settled share-based
payment transaction. The Company recognizes a liability
in respect of its obligations under the LTIP 2016, measured
based on the Company’s share price at the reporting date, and
taking into account the extent to which the services have been
rendered to date. The compensation expense recognized in
the consolidated statement of profit or loss during 2016 was
USD 0.2 million.
FINANCIAL REPORT | 129
NOTE 14 - EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at December 31,
2016 was based on a result attributable to ordinary shares of
USD 204,049,212 (December 31, 2015: USD 350,300,535 and
December 31, 2014: USD (45,795,933)) and a weighted average
number of ordinary shares outstanding during the period
ended December 31, 2016 of 158,262,268 (December 31, 2015:
155,872,171 and December 31, 2014: 116,539,018), calculated
as follows:
Result attributable to ordinary shares
(in thousands of USD except share and per share information)
2016
2015
2014
Result for the period
Weighted average
Basic earnings per share (in USD)
204,049
158,262,268
1.29
350,301
155,872,171
2.25
(45,797)
116,539,018
(0.39)
Weighted average number of ordinary shares
(in shares)
SHARES ISSUED
TREASURY
SHARES
SHARES
OUTSTANDING
ON ISSUE AT JANUARY 1, 2014
Issuance of shares
Purchases of treasury shares
Withdrawal of treasury shares
Sales of treasury shares
54,223,817
76,826,849
-
-
-
1,750,000
-
-
-
-
52,473,817
76,826,849
-
-
-
WEIGHTED
NUMBER
OF SHARES
52,473,817
64,065,200
-
-
-
ON ISSUE AT DECEMBER 31, 2014
131,050,666
1,750,000
129,300,666
116,539,017
ON ISSUE AT JANUARY 1, 2015
Issuance of shares
Purchases of treasury shares
Withdrawal of treasury shares
Sales of treasury shares
131,050,666
28,158,283
-
-
-
1,750,000
-
-
-
(1,283,333)
129,300,666
28,158,283
-
-
1,283,333
129,300,666
25,842,099
-
-
729,406
ON ISSUE AT DECEMBER 31, 2015
159,208,949
466,667
158,742,282
155,872,171
ON ISSUE AT JANUARY 1, 2016
Issuance of shares
Purchases of treasury shares
Withdrawal of treasury shares
Sales of treasury shares
159,208,949
-
-
-
-
466,667
-
692,415
-
(116,667)
158,742,282
-
(692,415)
-
116,667
158,742,282
-
(575,005)
-
94,991
ON ISSUE AT DECEMBER 31, 2016
159,208,949
1,042,415
158,166,534
158,262,268
130 | FINANCIAL REPORT
Diluted earnings per share
For the twelve months ended December 31, 2016, the diluted
earnings per share (in USD) amount to 1.29 (2015: 2.22 and
2014: (0.39)). At December 31, 2014, 250 convertible Notes and
30 PCPs were excluded from the diluted weighted-average
number of ordinary shares calculation because their effect
would have been anti-dilutive (earnings per share would
increase). At December 31, 2016 and December 31, 2015, no
instruments were excluded from the calculation of the diluted
weighted average number of shares.
Weighted average number of ordinary shares (diluted)
The table below shows the potential weighted number of
shares that could be created if all stock options, restricted
stock units, convertible notes and PCPs were to be converted
into ordinary shares.
(in shares)
2016
2015
2014
WEIGHTED AVERAGE NUMBER OF ORDINARY
SHARES OUTSTANDING (BASIC)
158,262,268
155,872,171
116,539,017
Effect of potential conversion of convertible Notes
Effect of potential conversion of PCPs
Effect of share-based payment arrangements
-
-
166,789
88,689
932,971
635,731
1,079,047
9,459,283
1,750,000
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES (DILUTED)
158,429,057
157,529,562
128,827,347
On January 31, 2015, the last 250 remaining outstanding Notes
due in January 2015, were redeemed at par.
On February 6, 2015, the remaining 30 perpetual convertible
preferred equity instruments were converted as well.
After all the conversions of the convertible Notes and the
PCPs, there are no more remaining outstanding instruments
at December 31, 2015 and December 31, 2016 which can
give rise to dilution, except for the share-based payment
arrangements.
FINANCIAL REPORT | 131
NOTE 15 - INTEREST-BEARING LOANS AND BORROWINGS
NOTE
BANK LOANS
CONVERTIBLE AND
OTHER NOTES
TOTAL
371,595
716,431
1,088,026
146,303
−
231,373
231,373
23,124
371,595
947,804
1,319,399
169,427
1,234,329
254,497
1,488,826
(in thousands of USD)
More than five years
Between one and five years
More than one year
Less than one year
AT JANUARY 1, 2015
New loans
Scheduled repayments
Early repayments
Other changes
BALANCE AT DECEMBER 31, 2015
More than five years
Between one and five years
More than one year
Less than one year
BALANCE AT DECEMBER 31, 2015
More than five years
Between one and five years
More than one year
Less than one year
AT JANUARY 1, 2016
New loans
Scheduled repayments
Early repayments
Acquisitions through business combinations
Other changes
BALANCE AT DECEMBER 31, 2016
More than five years
Between one and five years
More than one year
Less than one year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
-
-
-
-
-
931,270
(109,719)
(999,451)
(3,981)
1,052,448
147,174
805,252
952,426
100,022
1,052,448
147,174
805,252
952,426
100,022
1,052,448
740,286
(60,015)
(714,000)
61,065
5,778
1,085,562
330,491
635,952
966,443
119,119
BALANCE AT DECEMBER 31, 2016
1,085,562
132 | FINANCIAL REPORT
−
(23,200)
931,270
(132,919)
(235,500)
(1,234,951)
4,203
222
−
−
−
−
−
−
−
−
-
−
-
−
−
−
−
−
-
−
−
−
−
−
1,052,448
147,174
805,252
952,426
100,022
1,052,448
147,174
805,252
952,426
100,022
1,052,448
740,286
(60,015)
(714,000)
61,065
5,778
1,085,562
330,491
635,952
966,443
119,119
1,085,562
Bank Loans
On June 22, 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
was comprised of a USD 500.0 million term loan facility and a
USD 250.0 million revolving credit facility, and had 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
was secured by 22 of the Group's wholly-owned vessels. The
term loan was repayable in 11 instalments of consecutive
6-month intervals, with the final repayment due at maturity in
2017. Each revolving advance was repayable in full on the last
day of its applicable interest period. This facility, as amended,
bore interest at LIBOR plus a margin of 3.0% per annum plus
applicable mandatory costs. On September 1, 2015, the Group
repaid this loan in full using a portion of the borrowings under
the USD 750.0 million senior secured amortizing revolving
credit facility concluded on August 19, 2015.
On December 23, 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
acquisition of Alsace, which was mortgaged under the loan.
This facility was 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 February 23, 2017. The
interest rate was LIBOR plus a margin of 2.95% per annum
plus applicable mandatory costs. This USD 65.0 million loan
facility was repaid in full on September 1, 2015 using a portion
of the borrowing under the USD 750.0 million senior secured
amortizing revolving credit facility concluded on August 19,
2015.
On March 25, 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 bore interest at LIBOR plus a margin of
2.75% per annum and was repayable over a term of six years
with maturity in 2020 and was secured by the fifteen (15) Very
Large Crude Carriers (VLCC) from Maersk Tankers Singapore
Pte Ltd The proceeds of the facility were drawn and used to
partially finance the purchase price of the Maersk Acquisition
Vessels. This USD 500.0 million loan facility was repaid in full
on December 21, 2016 using a portion of the borrowing under
the USD 409.5 million senior secured amortizing revolving
credit facility concluded on December 16, 2016.
FINANCIAL REPORT | 133
On October 13, 2014, the Group entered into a 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 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 April 3, 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 a
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 October 22, 2014 a first drawdown
under this facility was made to repay the USD 300 million
secured loan facility, followed by additional drawdowns on
December 22, 2014 and December 23, 2014 for an amount
of 60.3 million and 50.3 million following the delivery of the
Hojo and Hakone respectively. On March 3, 2015 and April 13,
2015 additional drawdowns of 53.4 million and 50.4 million
were made following the delivery of the Hirado and Hakata
respectively. As of December 31, 2016 and December 31,
2015, the outstanding balances on this facility were USD 207.3
million and USD 175.5 million, respectively.
On August 19, 2015, the Group entered into a USD 750.0
million senior secured amortizing revolving credit facility
with a syndicate of banks led by DNB Bank ASA and Nordea
Bank Norge ASA. The facility will be available for the purpose
of (i) refinancing 21 vessels; (ii) financing four newbuilding
VLCCs vessels as well as (iii) Euronav's general corporate
and working capital purposes. The credit facility will mature
on July 1, 2022 and carries a rate of LIBOR plus a margin of
195 bps. As of December 31, 2016 and December 31, 2015,
the outstanding balances under this facility were USD 612.1
million and USD 467.5 million, respectively.
On November 9, 2015, the Group entered into a USD 60.0
million unsecured revolving credit facility with KBC NV, acting
as Bookrunning Mandated Lead Arranger and as Agent. As
of December 31, 2016 and December 31, 2015, there were no
outstanding balances under this facility.
On June 2, 2016, the Group entered into a share swap and
claim transfer agreement (see Note 24) whereby as of that
date, Fiorano Shipholding Ltd and Larvotto Shipholding Ltd
were fully consolidated and all assets acquired and liabilities
assumed were recognized. Their respective loans are related
to, and are secured by, the vessels owned by Fiorano and
Larvotto. As of December 31, 2016, the outstanding balance
on these facilities was USD 57.0 million in total.
On December 16, 2016, the Group entered into a USD 409.5
million senior secured amortizing revolving credit facility for
the purpose of refinancing 11 vessels as well as Euronav’s
general corporate purposes. The credit facility was used to
refinance the USD 500 million senior secured credit facility
dated March 25, 2014 and will mature on January 31, 2023,
carrying a rate of LIBOR plus a margin of 2.25%. As of
December 31, 2016, the outstanding balance on this facility
was USD 222.0 million. The credit facility is secured by the
aforementioned 11 vessels.
134 | FINANCIAL REPORT
Undrawn borrowing facilities
At December 31, 2016, Euronav and its fully-owned subsidiaries have undrawn credit line facilities amounting to USD 355.8 million
(2015: USD 291.1 million).
Terms and debt repayment schedule
The terms and conditions of outstanding loans were as follows:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
NOMINAL
CURR.
INTEREST
RATE
YEAR
FACILITY
DRAWN CARRYING
FACILITY
DRAWN CARRYING
OF MAT.
SIZE
VALUE
SIZE
VALUE
USD libor +2.25%
2021
143,571
143,571
141,501
175,476
175,476
172,778
USD libor +2.25%
2021
147,559
63,700
63,700
147,559
-
-
USD libor +2.75%
2020
-
-
-
428,000
428,000
420,320
USD libor +1.95%
2022
636,536
612,050
605,806
551,023
467,500
459,350
USD libor +2.25%
2023
409,500
222,036
217,600
USD libor +1.225%
2020
27,813
27,813
27,813
USD
libor +1.5%
2020
29,143
29,143
29,143
-
-
-
USD
libor +2.25%
2020
60,000
-
-
60,000
-
-
-
-
-
-
-
-
1,454,121 1,098,312
1,085,562
1,362,058 1,070,976
1,052,448
Secured vessels loan
192M
Secured vessels
Revolving loan 148M*
Secured vessels loan
500M
Secured vessels
Revolving loan 750M*
Secured vessels
Revolving loan 409.5M*
Secured vessels loan
76M
Secured vessels loan
67.5M
Unsecured bank facility
60M
TOTAL
INTEREST-BEARING
BANK LOANS
The facility size 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 total amount available under the Revolving Credit Facility depends on the total value of the fleet of tankers securing the facility.
FINANCIAL REPORT | 135
Convertible and other notes
On September 24, 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 bore interest at a rate of 6.5% per annum, payable semi-
annually in arrears. The initial conversion price was 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% to the
volume weighted average price of Euronav's ordinary shares
on Euronext Brussels on September 3, 2009.
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. In 2013, the Group offered to exchange the
Notes against a new Note which bore 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 exchange offer resulted in
USD 125.0 million 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, while selling in the third
quarter of 2013 the 68 Notes due in 2018 it held after the above
exchange.
During the period from November 12, 2013 through April 22,
2014, the Group issued an aggregate of 20,969,473 existing
ordinary shares upon conversion of USD 124.9 million in
aggregate principal amount of 1,249 Convertible Notes due
2018 at the holders’ option.
On February 20, 2014, the Group exercised its right to redeem
all of the remaining Convertible Notes due in 2018. On April 9,
2014, the Group redeemed the last convertible note due 2018.
On January 31, 2015, the Group redeemed the 250 remaining
outstanding fixed rate unsecured convertible Notes due 2015
with a face value of USD 100,000 each, at par.
On February 4, 2014, the Group issued USD 235.5 million
7-year bonds. These bonds were issued at 85 per cent of their
principal amount and bore interest at a rate of 5.95% per
annum for the first year, payable semi-annually in arrears.
The interest rate would increase to 8.5% per annum for the
second and third year and would increase again to 10.20% per
annum from year four until maturity. The bonds were at any
time redeemable by Euronav at par. These bonds were fully
repaid on February 19, 2015 using the proceeds of the initial
public offering in the US. Of the on issue discount (USD 35.3
million) and the transaction costs (USD 0.7 million), USD 31.9
million was recognized in finance expenses in 2014 and USD
4.1 million was recognized in finance expenses in 2015 (see
Note 6). These amounts are also reflected under the heading
'Other changes' in the first table of this footnote.
Convertible and other notes carrying amount
(in thousands of USD)
2016
2015
Carrying amount of liability at the beginning of the period
Amortization of transaction costs
Redemption of convertible Notes
CARRYING AMOUNT OF LIABILITY AT THE END OF THE
PERIOD
-
-
-
-
23,124
76
(23,200)
-
Transaction and other financial costs
The heading 'Other changes' in the first table of this footnote,
reflects the recognition of directly attributable transaction
costs as a deduction from the fair value of the corresponding
liability, and the subsequent amortization of such costs.
In 2016, the Group recognized USD 10.2 million of amortisation
of financing costs, including USD 5.5 million of remaining
unamortised financing cost upon the refinancing of the USD
500 million senior secured credit facility dated March 25, 2014.
The Group recognized USD 4.4 million of directly attributable
transaction costs as a deduction from the fair value of the
USD 409.5 million senior secured amortising revolving credit
facility concluded on December 16, 2016.
In 2016, finance expenses of the Group were in line with 2015.
In 2015, the Group noted a decrease in finance expenses
(2015: USD -50.9 million, 2014: USD -96.0 million) mainly due
to the repayment of the convertible Notes and the USD 235.5
million 7-year bonds.
136 | FINANCIAL REPORT
NOTE 16 - EMPLOYEE BENEFITS
The amounts recognized in the balance sheet are as follows:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
DECEMBER 31, 2014
Restated*
NET LIABILITY AT BEGINNING
OF PERIOD
Recognized in profit or loss
Recognized 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
(2,038)
(2,108)
(1,900)
(261)
(646)
99
(108)
(44)
222
(85)
(393)
270
(2,846)
(2,038)
(2,108)
(2,846)
2,292
(554)
(2,292)
(852)
539
(313)
(1,725)
(1,525)
1,145
(380)
(1,728)
NET LIABILITY
(2,846)
(2,038)
(2,108)
Amounts in the balance sheet:
Liabilities
Assets
NET LIABILITY
(2,846)
-
(2,846)
(2,038)
-
(2,038)
(2,108)
-
(2,108)
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 2017: USD 238,788.
FINANCIAL REPORT | 137
NOTE 17 - TRADE AND OTHER
PAYABLES
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Advances received on contracts in progress,
between 1 and 5 years
TOTAL NON-CURRENT OTHER PAYABLES
Trade payables
Accrued payroll
Dividends payable
Accrued expenses
Accrued interest
Deferred income
Other payables
TOTAL TRADE AND OTHER PAYABLES
533
533
18,107
2,581
7
29,245
1,150
13,746
5,023
69,859
590
590
23,034
2,719
7
35,189
1,043
16,860
226
79,078
The decrease in accrued expenses is related to less accruals
of spot related voyage expenses and less profit split of the
VLCC KHK Vision due to declining market conditions and the
redeliverment on October 27, 2016.
The increase in other payables is related to the deferred gain
of USD 5.0 million which was the difference between the fair
value and the sale price of the four VLCCs of the sale and
leaseback (see Note 8). This excess was deferred and will be
amortized over the duration of the lease, i.e. 5 years.
138 | FINANCIAL REPORT
NOTE 18 - FINANCIAL INSTRUMENTS - MARKET AND OTHER RISKS
Carrying amounts 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, such as trade and
other receivables and payables.
CARRYING AMOUNT
FAIR VALUE
(in thousands of USD)
DECEMBER 31, 2015
NOTE
LOANS AND
RECEIVABLES
OTHER
FINANCIAL
LIABILITIES
FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
TOTAL
Non-current receivables
Trade and other receivables *
Cash and cash equivalents
10
11
12
259,908
198,678
131,663
590,249
-
-
-
−
259,908
198,678
131,663
590,249
-
-
-
-
256,522
-
-
-
-
-
- 256,522
256,522
-
-
256,522
FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
Secured bank loans
1,052,448
15
-
1,052,448
- 1,070,976
Unsecured bank loans
Trade and other payables *
Advances received on
contracts
15
17
17
DECEMBER 31, 2016
-
-
-
-
-
-
62,218
62,218
590
590
-
-
-
-
-
-
- 1,070,976
-
-
-
-
-
-
1,115,256
1,115,256
- 1,070,976
- 1,070,976
FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE
Non-current receivables
183,914
10
Trade and other receivables *
Cash and cash equivalents
11
12
145,193
206,689
535,796
−
−
−
−
183,914
145,193
206,689
535,796
-
-
-
-
-
-
178,216
-
-
-
- 178,216
178,216
-
-
178,216
FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
Secured bank loans
Unsecured bank loans
Trade and other payables *
Advances received on
contracts
1,085,562
-
56,113
15
15
17
-
-
-
533
17
-
1,085,562
-
56,113
- 1,092,023
-
-
-
-
− 1,092,023
-
-
-
-
533
-
-
-
-
-
1,142,208
1,142,208
- 1,092,023
− 1,092,023
* Deferred charges (see Note 11) and deferred income (see Note 17), which are not financial assets (liabilities) are not included.
FINANCIAL REPORT | 139
Measurement of fair values
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant
unobservable inputs used.
Financial instruments not measured at fair value
Type
Valuation Techniques
Significant unobservable inputs
Non-current receivables (consisting of
shareholders' loans)
Other financial liabilities (consisting of secured
and unsecured bank loans)
Discounted cash flow
Discount rate
Discounted cash flow
Not applicable
Credit risk
Trade and other receivables
The Group has a 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 two clients representing 10% each of
the Tankers segment's total revenue in 2016 (see Note 2) only
represented 3.4% of the total trade and other receivables
at December 31, 2016 (2015: one client representing 2%).
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset.
Transfers between Level 1, 2 and 3
There were no transfers between these levels in 2015 and
2016.
Financial risk management
In the course of its normal business, the Group is exposed to
the following risks:
σ Credit risk
σ Liquidity risk
σ
Market risk (Tanker market risk, interest rate risk and
currency risk)
The Company's Board of Directors has overall responsibility
for the establishment and oversight of the Group's risk
framework. The Board of Directors has
management
established the Audit and Risk Committee, which
is
responsible for developing and monitoring the Group's risk
management policies. The committee reports regularly to the
Board of Directors on its activities.
The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions
and the Group's activities. The Group, through its training and
management standards and procedures, aims to maintain a
disciplined and constructive control environment in which all
employees understand their roles and obligations.
The Group's Audit and Risk Committee oversees how
management monitors compliance with the Group's risk
management policies and procedures, and reviews the
adequacy of the risk management framework in relation
to the risks faced by the Group. The Group's Audit and Risk
Committee is assisted in its oversight role by internal audit.
Internal audit undertakes both regular and ad hoc review of
risk management controls and procedures, the results of
which are reported to the Audit and Risk Committee.
140 | FINANCIAL REPORT
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
2016
155,950
1,261
7,666
1,465
166,342
2015
206,771
5,569
4,216
2,524
219,080
Non current receivables mainly consist of shareholder's loans
to joint ventures (see Note 10). As at December 31, 2016 and
December 31, 2015, these receivables had no maturity date
and were not impaired.
Derivatives
Derivatives are entered
into with banks and financial
institution counterparties, which are rated A- to AA+, based
on rating agency S&P.
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 December
31, 2016, 55.72% (2015: 58.32%) 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 206.7
million at December 31, 2016 (2015: USD 131.7 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 12).
Guarantees
The Group's policy is to provide financial guarantees only for
subsidiaries and joint ventures. At December 31, 2016, the
Group has issued a guarantee to certain banks in respect of
credit facilities granted to 2 joint ventures (see Note 25).
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 incurring
unacceptable losses or risking damage to the Group’s
reputation. The sources of financing are diversified and the
bulk of the loans are irrevocable, long-term and maturities
are spread over different years.
FINANCIAL REPORT | 141
The following are the remaining contractual maturities of financial liabilities:
Contractual cash flows December 31, 2015
(in thousands of USD)
NOTE
CARRYING
AMOUNT
TOTAL
LESS THAN
1 YEAR
BETWEEN 1
AND 5 YEARS
MORE THAN
5 YEARS
NON-DERIVATIVE FINANCIAL LIABILITIES
Bank loans
Current trade and other payables *
Non-current other payables
DERIVATIVE FINANCIAL LIABILITIES
Interest rate swaps
Forward exchange contracts
15
17
17
17
17
Contractual cash flows December 31, 2016
1,052,448
62,218
-
1,114,666
1,174,016
62,218
-
1,236,234
108,395
62,218
-
170,613
906,286
159,335
-
-
906,286
-
-
159,335
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(in thousands of USD)
CARRYING
AMOUNT
TOTAL
LESS THAN
1 YEAR
BETWEEN 1
AND 5 YEARS
MORE THAN
5 YEARS
NON-DERIVATIVE FINANCIAL LIABILITIES
Bank loans
Current trade and other payables *
Non-current other payables
DERIVATIVE FINANCIAL LIABILITIES
Interest rate swaps
Forward exchange contracts
15
17
17
17
17
1,085,562
56,113
-
1,141,675
1,218,702
56,113
-
1,274,815
150,630
56,113
-
206,743
718,950
349,122
-
-
718,950
-
-
349,122
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Deferred income (see Note 17), which are not financial liabilities, are not included.
142 | FINANCIAL REPORT
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. For more details
on these covenants, please see "capital management" below.
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 rates change. It is not expected that the cash flows
included in the table above (the maturity analysis) could occur
significantly earlier, or at significantly different amounts than
stated above.
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 contracts. 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:
2016
PROFIT OR LOSS
2015
PROFIT OR LOSS
2014
PROFIT OR LOSS
1,000 USD
INCREASE
14,140
1,000 USD
DECREASE
(14,140)
1,000 USD
INCREASE
12,972
1,000 USD
DECREASE
(12,972)
1,000 USD
INCREASE
9,941
1,000 USD
DECREASE
(9,941)
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 (interest rate swaps,
caps and floors) to achieve an appropriate mix of fixed and
floating rate exposure as defined by the Group. On December
31, 2016, the Group has no such instruments in place.
At the reporting date, the interest rate profile of the Group's interest-bearing financial instruments was:
(in thousands of USD)
FIXED RATE INSTRUMENTS
Financial assets
Financial liabilities
VARIABLE RATE INSTRUMENTS
Financial liabilities
2016
-
-
-
2015
-
-
-
1,085,562
1,085,562
1,052,448
1,052,448
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 as of that date.
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.
FINANCIAL REPORT | 143
(effect in thousands of USD)
DECEMBER 31, 2014
Variable rate instruments
Interest rate swaps
PROFIT OR LOSS
EQUITY
50 BP
50 BP
50 BP
50 BP
INCREASE
(4,257)
-
DECREASE
4,257
-
INCREASE
-
-
DECREASE
-
-
CASH FLOW SENSITIVITY (NET)
(4,257)
4,257
DECEMBER 31, 2015
Variable rate instruments
Interest rate swaps
(5,670)
-
5,670
-
CASH FLOW SENSITIVITY (NET)
(5,670)
5,670
DECEMBER 31, 2016
Variable rate instruments
Interest rate swaps
(5,315)
5,315
CASH FLOW SENSITIVITY (NET)
(5,315)
5,315
-
-
-
-
-
-
-
-
-
-
-
-
Currency risk
The Group’s exposure to currency risk is related to its operating expenses expressed in Euros.
In 2016 about 17.4% (2015: 17.4% and 2014: 13.5%) of the Group’s total operating expenses were incurred in Euros.
Revenue and the financial instruments are expressed in USD only.
144 | FINANCIAL REPORT
(in thousands of EUR/USD)
EUR
USD
EUR
USD
EUR
USD
DECEMBER 31, 2016
DECEMBER 31, 2015
DECEMBER 31, 2014
Trade payables
Operating expenses
(8,725)
(92,608)
(9,383)
(440,830)
(9,913)
(89,457)
(13,121)
(425,806)
(8,646)
(65,691)
(13,198)
(421,300)
For the average and closing rates applied during the year, we refer to Note 27.
In the past, Euronav had entered into an agreement with a
third party financial advisor with the aim to manage the risk
from adverse movements in EUR/USD exchange rates. The
program used a financial trading strategy called Currency
Overlay Management Strategy which managed the equivalent
of EUR 40.0 million exposures on a yearly basis. The currency
overlay manager conducted foreign-exchange hedging by
selectively placing and removing hedges to achieve the
objectives set by us. On July 29, 2016, Euronav terminated this
agreement.
The net impact of this program on the Group's consolidated
statement of profit or loss for the year ending December 31,
2016 was a loss of USD 0.9 million (2015: loss of USD 1.0
million and 2014: loss of USD 0.1 million).
Sensitivity analysis
A 10 percent strengthening of the EUR against the USD at
December 31, 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)
2016
2015
2014
Equity
Profit or loss
532
(10,025)
473
(9,565)
662
(9,124)
A 10 percent weakening of the EUR against the USD at
December 31, would have had the equal but opposite effect
to the amounts shown above, on the basis that all the other
variables remain constant.
FINANCIAL REPORT | 145
Master netting or similar agreements
transactions under
into derivative
The Group enters
International Swaps and Derivatives Association (ISDA) master
netting agreements. In general, under such agreements
the amounts owned by each counterparty on a single day in
respect of all transactions 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 optimizing its capital structure (mix
between debt and equity). The main objective is to maximise
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 statutory 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:
σ
σ
σ
σ
an amount of current assets that, on a consolidated
basis, exceeds current liabilities. Current assets may
include undrawn amount of any committed revolving
credit facilities and credit lines having a maturity of more
than one year;
an aggregate amount of cash, cash equivalents and
available aggregate undrawn amounts of any committed
loan of at least USD 50.0 million or 5% of the Group's
total indebtedness (excluding guarantees), depending on
the applicable loan facility, whichever is greater;
an amount of cash of at least USD 30.0 million; and
a ratio of Stockholders' Equity to Total Assets of at least
30%.
Further, the Group’s loan facilities generally include an asset
protection clause whereby the fair market value of collateral
vessels should be at least 125% of the aggregate principal
amount outstanding under the respective loan.
The credit facilities discussed above also contain restrictions
and undertakings which may limit the Group and the Group's
subsidiaries' ability to, among other things:
σ effect changes in management of the Group's vessels;
σ
σ
σ
transfer or sell or otherwise dispose of all or a substantial
portion of the Group's assets;
declare and pay dividends, (with respect to each of the
Group's joint ventures, other than Seven Seas Shipping
Limited, no dividend may be distributed before its loan
agreement, as applicable, is repaid in full); and
incur additional indebtedness.
146 | FINANCIAL REPORT
A violation of any of these financial covenants or operating
restrictions contained in the credit facilities may constitute
an event of default under these credit facilities, which,
unless cured within the grace period set forth under the
applicable credit facility, if applicable, or waived or modified
by the Group's lenders, provides them with the right to,
among other things, require the Group to post additional
collateral, enhance equity and liquidity, increase interest
payments, pay down indebtedness to a level where the Group
is in compliance with loan covenants, sell vessels in the fleet,
reclassify indebtedness as current liabilities and accelerate
indebtedness and foreclose liens on the vessels and the other
assets securing the credit facilities, which would impair the
Group's ability to continue to conduct business.
Furthermore, certain of our credit facilities contain a cross-
default provision that may be triggered by a default under
one of our other credit facilities, or those of our 50%-owned
joint ventures. A cross-default provision means that a default
on one loan would result in a default on certain other loans.
Because of the presence of cross-default provisions in certain
of our credit facilities, the refusal of any one lender under
our credit facilities to grant or extend a waiver could result
in certain of our indebtedness being accelerated, even if our
other lenders under our credit facilities have waived covenant
defaults under the respective credit facilities. If our secured
indebtedness is accelerated in full or in part, it would be
very difficult in the current financing environment for us to
refinance our debt or obtain additional financing and we could
lose our vessels and other assets securing our credit facilities
if our lenders foreclose their liens, which would adversely
affect our ability to conduct our business.
As of December 31, 2016, December 31, 2015 and December
31, 2014, the Group was in compliance with all of the covenants
contained in the debt agreements.
With respect to the quantitative covenants as of December 31,
2016, as described above:
1. current assets on a consolidated basis exceeded current
liabilities by USD 540.1 million
2. aggregated cash was USD 562.5 million
3. cash was USD 206.7 million
4. ratio of Stockholders' Equity to Total Assets was 62%
Notwithstanding our Board of Directors’ primary obligation to
act in the best interest of the Company and in doing so always
to consider alternatives for use of cash that might otherwise be
distributed as dividends, such as the purchase by us of our own
shares, the accelerated amortization of debt or the acquisition
of vessels which we consider at that time to be accretive to
shareholders’ value, the Board has adopted the following current
dividend payment policy: the Company intends to distribute to our
shareholders 80% of our annual net consolidated profit excluding
exceptional items (such as gains on the disposal of vessels).
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 5 years under non-cancellable leases are as follows:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Less than 1 year
Between 1 and 5 years
More than 5 years
TOTAL FUTURE LEASE PAYMENTS
(32,120)
(127,644)
-
(159,764)
(15,012)
-
-
(15,012)
Options to extend the charter period, if any, have not been
taken into account when calculating the future minimum
lease payments.
As discussed in Note 8, the Group entered into a five-year
leaseback agreement for four VLCCs on December 16, 2016.
The sale of the vessels occurred on December 22, 2016 and the
charter period has a duration of five years, therefore ending
on December 22, 2021. Under these leaseback agreements,
there is a sellers credit of USD 4.5 million of the sale price that
becomes immediately due and payable by the owners upon
sale of the vessel during the charter period and shall be paid
out of the sales proceeds. It also becomes due to the extent
of 50% of the (positive) difference between the fair market
value of the vessels at the end of the leaseback agreements
and USD 17.5 million (for the oldest VLCC) or USD 19.5 million
(for the other vessels). Furthermore, the Group provides a
residual guarantee to the owners in the aggregate amount of
up to USD 20.0 million in total at the time of redelivery of the
four vessels. The parties also agreed a profit split: if the vessel
is sold at charter expiry, they shall share the net proceeds of
the sale, 75% for owners and 25% for charterers, between
USD 26.5 million and USD 32.5 million (for the oldest VLCC) or
between USD 28.5 million and USD 34.5 million (for the other
vessels).
The Group analysed the classification of the leaseback
agreements based on the primary lease classification criteria
and the supplemental indicators in IAS 17, and determined
that these agreements qualified as operating leases.
Non-cancellable operating lease rentals for office space and company cars with an average duration of 3 years are payable as
follows:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Less than 1 year
Between 1 and 5 years
More than 5 years
TOTAL NON-CANCELLABLE OPERATING
LEASE RENTALS
(2,297)
(5,070)
(1,183)
(8,550)
(2,448)
(6,826)
(2,665)
(11,939)
FINANCIAL REPORT | 147
Amounts recognized in profit and loss
(in thousands of USD)
Bareboat charter
Time charter
Office rental
TOTAL RECOGNIZED IN PROFIT
AND LOSS
2016
(792)
(16,921)
(2,219)
2015
-
(25,849)
(2,581)
2014
(3,584)
(32,080)
(1,579)
(19,932)
(28,430)
(37,243)
Leases as lessor
Future minimum lease receivables
The Group leases out some of its vessels under time charter agreements (operating leases). The
future minimum lease receivables with an average duration of 11 months under non-cancellable
leases are as follows:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Less than 1 year
Between 1 and 5 years
More than 5 years
TOTAL FUTURE LEASE RECEIVABLES
150,450
35,083
-
185,534
217,480
168,416
-
385,896
The amounts shown in the table above include the Group's
share of operating leases of joint ventures.
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.
At December 31, 2016, Euronav and its subsidiaries, without
joint ventures, have future minimum lease receivables less
than one year of USD 108.5 million (2015: USD 152.1 million)
and future minimum lease receivables between 1 and 5 years
of USD 35.1 million (2015: USD 126.5 million).
Non-cancellable operating lease rentals for office space with an average duration of 4 years are
receivable as follows:
(in thousands of USD)
DECEMBER 31, 2016
DECEMBER 31, 2015
Less than 1 year
Between 1 and 5 years
More than 5 years
TOTAL FUTURE LEASE RECEIVABLES
806
2,644
878
4,328
948
3,360
1,854
6,162
148 | FINANCIAL REPORT
The operating lease rentals receivable on the previous page relate entirely to the Group's leased offices for Euronav UK.
Euronav UK has sublet part of the office space to six different subtenants, of which four starting in 2014, one in 2015 and one in
2016.
Amounts recognized in profit and loss
(in thousands of USD)
Bareboat charter
Time charter
Office rental
2016
-
140,227
878
2015
-
126,091
879
2014
-
132,118
337
TOTAL RECOGNIZED IN PROFIT
AND LOSS
141,105
126,970
132,455
FINANCIAL REPORT | 149
FINANCIAL REPORT | 149
NOTE 20 - PROVISIONS AND
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.
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 25)
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
committees (if applicable) is as follows:
(in thousands of EUR)
TOTAL REMUNERATION
2016
1,145
2015
1,591
2014
1,401
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)
2016
2015
2014
TOTAL FIXED REMUNERATION
of which
Cost of pension
Other benefits
1,175
1,176
1,068
35
57
35
57
32
55
TOTAL VARIABLE REMUNERATION
of which
Share-based payments
1,079
2,508
3,530
388
1,126
2,796
150 | FINANCIAL REPORT
All amounts mentioned refer to the Executive Committee in its official composition throughout 2016.
The remuneration of the CEO can be summarised as follows:
(in thousands of GBP)
2016
2015
2014
TOTAL FIXED REMUNERATION
of which
Cost of pension
Other benefits
TOTAL VARIABLE REMUNERATION
of which
Share-based payments
394
-
11
437
171
394
-
11
863
333
375
13
11
1,020
725
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 but with conditions (see Note
22). 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. In 2015 1,283,333 options were exercised. In 2016 the
Company bought back 692,415 shares and delivered 116,667
shares upon the exercise of share options. At the date of this
report, all of the remaining options are vested. In addition, the
Board of Directors has granted on February 12, 2015, 236,590
options and 65,433 restricted stock units within the framework
of a long term incentive plan. Vested stock options may be
exercised until 13 years after the grant date. On February
2, 2016, the Board of Directors granted 54,616 phantom
stock units within the framework of an additional long term
incentive plan. Each unit gives a conditional right to receive
an amount of cash equal to the fair market value of one share
of the company on the settlement date. The phantom stock
units will mature one-third each year on the second, third and
fourth anniversary of the award (see Note 22).
Relationship with CMB
In 2004, Euronav split from Compagnie Maritime Belge (CMB).
CMB renders some administrative and general services to
Euronav. In 2016 CMB invoiced a total amount of USD 17,731
(2015: USD 0 and 2014: USD 17,745).
Relationship with Saverco
Saverco, an entity having significant influence over Euronav
through its 10.69% shareholding and a common board
member, has rendered in the past travel services to Euronav
on a transactional basis. In 2016, Saverco invoiced a total
amount of USD 0 (2015: 0 and 2014: USD 15,828).
Properties
The Group leases office space in Belgium from Reslea N.V., an
entity jointly controlled by CMB and Exmar. Under this lease,
the Group paid an annual rent of USD 175,572 in 2016 (2015:
USD 178,104 and 2014: USD 207,738). This lease expires on
August 31, 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. Mr. Livanos, a former member of our board acting
as permanent representative of TankLog until his resignation
on December 3, 2015, is the Chairman and sole shareholder
of Ceres Shipping. Under this lease, the Group paid an annual
rent of USD 199,873 in 2016 (2015: USD 184,791 and 2014: USD
198,822). This lease expires on December 31, 2017.
The Group subleases office space in its new London, United
Kingdom office, through its subsidiary Euronav (UK) Agencies
Limited, pursuant to sublease agreements, dated September
25, 2014, with GasLog Services UK Limited and Unisea
Maritime Limited, both parties related to Peter Livanos. Under
these subleases, the Company received in 2016 a rent of USD
FINANCIAL REPORT | 151
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.
On July 31, 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 October
8, 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 (see Note 8).
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 25).
On May 20, 2016, the Group announced that it had agreed
with Bretta Tanker Holdings Inc. (“Bretta”) to terminate its
Suezmax joint ventures and to enter into a share swap and
claims transfer agreement. The joint ventures covered four
Suezmax vessels: the Captain Michael (2012 - 157,648 dwt),
the Maria (2012 - 157,523 dwt), the Eugenie (2010 - 157,672
dwt) and the Devon (2011 - 157,642 dwt). Euronav assumed
full ownership of the two companies owning the two youngest
vessels, the Captain Michael and the Maria, and Bretta
assumed full ownership of the two companies owning the
Eugenie and the Devon (see Note 24).
its
Balances and transactions between the Group and
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:
443,643 (2015: USD 495,507 and 2014: USD 169,052). This
sublease expires on April 27, 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
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.
Under this sublease, the Company received in 2016 a rent of
USD 232,882 (2015: USD 260,108 and 2014: USD 88,738). This
sublease expires on April 27, 2023.
Registration Rights
On January 28, 2015, the Group entered into a registration
rights agreement with companies affiliated with our former
Chairman, Peter Livanos, or the Ceres Shareholders, and
companies affiliated with our former 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 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. At
December 31, 2016, no rights were exercised by any of the
parties under the registration rights agreement.
Transactions with subsidiaries and joint ventures
On March 15, 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
in Belle Shipholdings Ltd Peter Livanos, as the permanent
representative of Tanklog Holdings Ltd , notified Euronav’s
Board of Directors which met on March 14, 2013, that pursuant
152 | FINANCIAL REPORT
AS OF END FOR THE YEAR ENDED DECEMBER 31, 2015
(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
366
247
110
176
770
2,114
-
-
-
-
32
30
21
44
-
-
149,615
72,397
28,141
23,507
26,141
17,949
-
-
360
360
687
753
653
609
-
-
TOTAL
3,783
127
317,749
3,423
-
-
-
-
-
-
275
-
275
AS OF END FOR THE YEAR ENDED DECEMBER 31, 2016
(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
TOTAL
241
303
-
-
-
-
-
-
544
-
-
-
-
-
-
-
-
-
137,615
65,897
-
-
-
-
-
-
360
360
265
249
275
287
-
-
-
-
-
-
-
-
28
23,450
203,512
1,795
23,478
Guarantees
The Group has provided guarantees to financial institutions that have provided credit facilities to its joint ventures. As of December
31, 2016 USD 75.3 million (2015: USD 251.6 million) was outstanding under the joint venture loan agreements, of which the Group
has guaranteed USD 37.7 million (2015: USD 125.8 million) (see Note 25).
NOTE 22 - SHARE-BASED PAYMENT ARRANGEMENTS
Description of share-based payment arrangements:
At December 31, 2016, the Group had the following share-based payment arrangements:
Share option programs (Equity-settled)
On December 16, 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.
FINANCIAL REPORT | 153
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
NUMBER OF
INSTRUMENTS
VESTING CONDITIONS CONTRACTUAL LIFE
OF OPTIONS
Options granted to key
management personnel
December 16, 2013 ("Tranche 1")
December 16, 2013 ("Tranche 2")
December 16, 2013 ("Tranche 3")
583,000
583,000
583,000
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
TOTAL SHARE OPTIONS
1,750,000
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 Group's shares had not been listed on a US listing
exchange, then only 2/3 of the shares would be exercisable
and would have to meet the first 2 vesting conditions listed
above.
Long-term incentive plan 2015 (Equity-settled)
The Group's Board of Directors implemented in 2015 a long-
term incentive plan ('LTIP') for key management personnel.
Under the terms of this LTIP, the beneficiaries will obtain 40%
of their respective LTIP in the form of Euronav stock options,
with vesting over three years at anniversary date and 60% in
the form of restricted stock units ('RSU's'), with cliff vesting
on the third anniversary. In total 236,590 options and 65,433
RSU's were granted on February 12, 2015. Vested stock
options may be exercised until 13 years after the grant date.
Long-term incentive plan 2016 (Cash-settled)
The Group's Board of Directors implemented in 2016 an
additional long-term incentive plan for key management
personnel. Under the terms of this LTIP, the beneficiaries
will obtain their respective LTIP in cash, based on the volume
weighted average price of the shares on Euronext Brussels
over the 3 last business days of the relevant vesting period.
The phantom stock units will mature one-third each year on
the second, third and fourth anniversary of the award. In total
a number of 54,616 phantom stocks were granted on February
2, 2016.
Measurement of Fair Value
The fair value of the employee share options under the 2013
program and the 2015 LTIP 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 option
programs were as follows:
(Figures in EUR)
SHARE OPTION PROGRAM 2013
LTIP 2015
TRANCHE 1 TRANCHE 2 TRANCHE 3 TRANCHE 1 TRANCHE 2 TRANCHE 3
1.853
10.050
10.0475
39.63%
1.853
10.050
10.0475
39.63%
1.853
10.050
10.0475
39.63%
2.270
6.070
5.770
40%
2.260
6.070
5.770
40%
2.120
6.070
5.770
40%
303
-
1%
467
-
1%
730
-
1%
365
8%
0.66%
730
8%
0.66%
1,095
8%
0.66%
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
154 | FINANCIAL REPORT
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.
date and taking into account the extent to which the services
have been rendered to date. All of the phantom stocks granted
on February 2, 2016 remained outstanding as of December 31,
2016. The Company’s share price was EUR 10,613 at the grant
date of the LTIP 2016, and was EUR 7.579 as at December 31,
2016.
The fair value of the RSUs under the 2015 LTIP was measured
with reference to the Euronav share price at the grant date.
All of the RSUs granted on February 12, 2015 remained
outstanding as of December 31, 2016 and had not yet vested.
The liability in respect of its obligations under the LTIP 2016 is
measured based on the Company’s share price at the reporting
Expenses recognized in profit or loss
For details on related employee benefits expense, see Note 5.
The expense related to the LTIP 2016 (USD 175,000) is included
in the provision for employee benefits.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of options under the 2013 program and the 2015 LTIP are as follows:
(Figures in EUR)
NUMBER OF
OPTIONS 2016
WEIGHTED
AVERAGE
EXERCISE PRICE
2016
NUMBER OF
OPTIONS 2015
WEIGHTED
AVERAGE
EXERCISE PRICE
2015
Outstanding at January 1
Forfeited during the year
Exercised during the year
Granted during the year
703,257
-
(116,667)
-
7.209
-
5.770
-
1,750,000
-
(1,283,333)
236,590
5.770
-
5.770
10.0475
OUTSTANDING AT DECEMBER 31
586,590
7.495
703,257
7.209
Vested at December 31
428,863
-
466,667
-
In May 2015, the holders exercised 2/3 of the share options
under the 2013 program which resulted in the sale of 1,166,666
treasury shares. In December 2015, an additional 116,667
of share options were exercised under the 2013 program,
resulting in the sale of a corresponding number of treasury
shares. In February 2015, 236,590 share options were granted
related to the 2015 long-term incentive plan.
In 2016 the Company bought back 692,415 shares and
delivered 116,667 shares upon the exercise of share options
under the 2013 program.
The weighted-average share price at the date of exercise for
the share options exercised in 2016 was EUR 8.99 (2015: EUR
11.65).
FINANCIAL REPORT | 155
NOTE 23 - GROUP ENTITIES
COUNTRY OF
INCORPORATION
CONSOLIDATION
METHOD
OWNERSHIP INTEREST
DECEMBER 31,
2016
DECEMBER 31,
2015
DECEMBER 31,
2014
Belgium
full
100.00%
100.00%
100.00%
Belgium
Belgium
UK
Luxembourg
France
France
Liberia
Hong Kong
Cyprus
Singapore
Hong Kong
Hong Kong
Marshall Islands
Marshall Islands
Hong Kong
Hong Kong
Hong Kong
Marshall Islands
Hong Kong
Hong Kong
Marshall Islands
Hong Kong
Hong Kong
Marshall Islands
Marshall Islands
full
full
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%
100.00%
NA
NA
NA
NA
NA
50.00%
NA
NA
50.00%
50.00%
50.00%
40.00%
20.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
NA
NA
NA
NA
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
40.00%
20.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
NA
NA
NA
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%
PARENT
Euronav NV
SUBSIDIARIES
Euronav Tankers NV
Euronav Shipping NV
Euronav (UK) Agencies Ltd
Euronav Luxembourg SA
Euronav SAS
Euronav Ship Management SAS
Euronav Ship Management Ltd
Euronav Ship Management
Hellas (branch office)
Euronav Hong Kong
Euro-Ocean Ship Management
(Cyprus) Ltd
Euronav Singapore
Fiorano Shipholding Ltd
Larvotto Shipholding Ltd
JOINT VENTURES
Africa Conversion Corp.
Asia Conversion Corp.
Fiorano Shipholding Ltd
Fontvieille Shipholding Ltd
Great Hope Enterprises Ltd
Kingswood Co. Ltd
Larvotto Shipholding Ltd
Moneghetti Shipholding Ltd
Seven Seas Shipping Ltd
TI Africa Ltd
TI Asia Ltd
ASSOCIATES
Tankers International LLC
VLCC Chartering Ltd
156 | FINANCIAL REPORT
Although the Group is the owner of 72% (2015: 63%) of the
vessels participating in Tankers International Pool operated
by Tankers International LLC, the Group has no majority of
voting rights as this is based on the actual shares owned
by the Group, which is only 40 percent. Therefore Tankers
International LLC is accounted for as an associate.
In 2015 two joint ventures, Asia Conversion Corporation and
Africa Conversion Corporation, were dissolved.
NOTE 24 - BUSINESS COMBINATIONS
On May 20, 2016, the Group announced the termination of
the joint ventures with Bretta Tanker Holdings, Inc. covering
four Suezmax vessels. Euronav assumed full ownership of
the companies owning the two youngest vessels, the Captain
Michael (2012 - 157,648 dwt) and the Maria (2012 - 157,523
dwt) on June 2, 2016.
On June 2, 2016, the Group entered into a share swap and
claim transfer agreement whereby:
σ
σ
The Group transferred its equity interests in Moneghetti
Shipholding Ltd (hereafter ‘Moneghetti’) and Fontvieille
Shipholding Ltd (hereafter ‘Fontvieille’) and acquired
Bretta Tanker Holdings’ equity interests in Fiorano
Shipholding Ltd (hereafter
‘Fiorano’) and Larvotto
Shipholding Ltd (hereafter ‘Larvotto’); and
The Group transferred its claims arising from the
shareholder loans to Moneghetti and Fontvieille and
acquired Bretta Tanker Holdings’ claims arising from the
shareholder loans to Fiorano and Larvotto.
As a result, the Group’s equity interest in both Fiorano and
Larvotto increased from 50% to 100% giving the Group control
of both companies. The Group no longer has an equity interest
in Moneghetti and Fontvieille. Before the swap agreement,
the Group accounted for the four entities using the equity
method. Following the acquisition, Fiorano and Larvotto are
fully consolidated as of June 2, 2016.
With this transaction, the Group has become the full owner of
the two youngest vessels, the Captain Michael and the Maria,
while Bretta has become the full owner of the Devon and the
Eugenie.
interests
its equity
In 2016, the Group transferred
in
Moneghetti Shipholding Ltd and Fontvielle Shipholding Ltd
and acquired Bretta Tanker Holdings‘ equity interests in
Fiorano Shipholding Ltd and Larvotto Shipholding Ltd. As a
result, the Group’s equity interest in Fiorano Shipholding Ltd
and Larvotto Shipholding Ltd increased from 50% to 100% (see
Note 24). In 2016 one joint venture, Great Hope Enterprises Ltd
has been dissolved.
(in thousands of USD)
FAIR VALUE AT
ACQUISITION
Cash
Shares in Fontvieille and
Moneghetti
Shareholders' loan receivable
TOTAL CONSIDERATION
TRANSFERRED
15,110
(21,498)
39,973
33,585
Contribution to revenue and profit/loss
Since their acquisition by the Group on June 2, 2016, the 2
acquired companies contributed revenue of USD 4.8 million
and a profit of USD 0.1 million to the Group’s consolidated
results. If the acquisition had occurred on January 1, 2016,
management estimates that the Group’s consolidated revenue
would have been USD 698.3 million and consolidated profit for
the twelve month period ended December 31, 2016, would
have been USD 205.1 million. In determining these amounts,
management has assumed that the fair value adjustments,
that arose on the date of acquisition would have been the
same if the acquisition had occurred on January 1 ,2016.
Acquisition related costs
The Group did not incur any material acquisition-related costs
for the business combination, and these costs were expensed
as incurred.
Step acquisition
The transaction resulted in a loss of USD 24.2 million. This
loss has been recognized in the consolidated statement
of profit or loss under the heading ‘Loss on disposal of
investments in equity accounted investees’. In accordance
with IFRS 3 (Business Combinations), Euronav accounted
for this transaction as a step acquisition and therefore had
to re-measure at the acquisition date to fair value Euronav’s
FINANCIAL REPORT | 157
non-controlling equity interest in the two joint ventures it
acquired (loss of USD 13.5 million) as well as to measure at
fair value the consideration transferred, including Euronav’s
interest in the other two joint ventures (loss of USD 10.7
million). At acquisition date, the fair value of the Group’s
non-controlling interest in the two acquired joint ventures
amounted to USD (18.6) million.
Identifiable assets acquired and liabilities assumed
The following table summarizes the recognized amounts of
assets acquired and liabilities assumed at the acquisition
date.
(in thousands of USD)
NOTE
FAIR VALUE AT ACQUISITION DATE
Options granted to key
management personnel
Property, plant and equipment
Trade receivables
Cash and cash equivalents
Loans and borrowings
Trade and other payables
TOTAL IDENTIFIABLE NET
ASSETS ACQUIRED
8
-
-
15
-
120,280
3,685
8,355
(61,065)
(4,086)
67,169
Measurement of fair values
ASSETS ACQUIRED
VALUATION TECHNIQUES
Property, plant and equipment
The price was agreed among parties by reference
to valuation reports by brokers
Goodwill
The transaction did not give rise to the recognition of any
goodwill:
(in thousands of USD)
FAIR VALUE AT ACQUISITION
Consideration transferred
Fair value of pre-existing interests in Larvotto
and Fiorano
Fair value of identifiable net assets
Fair value of shareholders' loan liabilities versus
Bretta Tanker Holdings, transferred to Euronav
GOODWILL
33,585
(18,633)
(67,169)
52,217
-
158 | FINANCIAL REPORT
NOTE 25 - 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
Associates
(in thousands of USD)
Carrying amount of interest at the beginning of the
period
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 PERIOD
The Group distinguishes the following associates:
DECEMBER 31, 2016
DECEMBER 31, 2015
16,867
1,546
18,413
-
-
-
20,425
1,212
21,637
-
-
-
DECEMBER 31, 2016
DECEMBER 31, 2015
1,212
334
-
1,546
1,027
185
-
1,212
ASSOCIATE
SEGMENT
DESCRIPTION
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 which provides customers with a
unique access to the combined fleets of Frontline and Tankers
International Pool
FINANCIAL REPORT | 159
Joint Ventures
The following table contains a roll forward of the balance sheet amounts with respect to the Group’s joint ventures:
(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
(110,702)
133,406
392,922
(133,406)
(5,880)
-
BALANCE AT JANUARY 1, 2014
22,704
259,516
(5,880)
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
29,668
2,106
(1,000)
(9,410)
-
(89,338)
105,643
-
-
-
-
(29,508)
363,414
(105,643)
-
-
-
-
-
(5,880)
-
BALANCE AT DECEMBER 31, 2014
16,305
257,771
(5,880)
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
51,407
1,610
(1,500)
(275)
-
(38,095)
58,520
-
-
-
-
(45,665)
317,749
(58,520)
BALANCE AT DECEMBER 31, 2015
20,425
259,229
Group's share of profit (loss) for the period
Group's share of other comprehensive income
Group's share on upstream transactions
Capital increase/(decrease) in joint ventures
Dividends received from joint ventures
Movement shareholders loans to joint ventures
Business combinations
Gross balance
Offset investment with shareholders loan
40,161
1,224
4,646
(3,737)
(23,478)
-
15,981
(3,298)
20,165
-
-
-
-
(18,499)
(95,738)
203,512
(20,165)
BALANCE AT DECEMBER 31, 2016
16,867
183,348
-
-
5,880
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
160 | FINANCIAL REPORT
The Group’s share on upstream transactions relates to the
buy-out of the joint venture partner to obtain full control of the
VLCC V.K. Eddie. On November 23, 2016, the Group purchased
the VLCC V.K. Eddie from its 50% joint venture Seven Seas
Shipping Ltd. In the Group’s consolidated financial statements,
50% of the gain recognized on this transaction by Seven Seas
Shipping Ltd was eliminated.
The decrease in the balance of shareholders’ loans to joint
ventures since December 31, 2015 is primarily due to the
disposal of two joint ventures and the acquisition of two other
joint ventures on June 2, 2016, as set out in Note 24, resulting
in the settlement or consolidation, respectively, of the Group’s
shareholders’ loan balances versus these entities. For more
details, we refer to the table summarizing the financial
information of the Groups' joint ventures further below.
JOINT VENTURE
SEGMENT
DESCRIPTION
Great Hope Enterprises Ltd
Tankers
Kingswood Co. Ltd
Seven Seas Shipping Ltd
Fiorano Shipholding Ltd
Larvotto Shipholding Ltd
Fontvieille Shipholding Ltd
Moneghetti Shipholding Ltd
TI Africa Ltd
TI Asia Ltd
Africa Conversion Corp
Asia Conversion Corp
Tankers
Tankers
Tankers
Tankers
Tankers
Tankers
FSO
FSO
FSO
FSO
No operating activities, liquidated in 2016
Holding company; parent of Seven Seas Shipping Ltd and to be liquidated in the
future
Formerly owner of 1 VLCC bought in 2016 by Euronav
Single ship company, owner of 1 Suezmax, acquired Bretta's equity interest in 2016
Single ship company, owner of 1 Suezmax, acquired Bretta's equity interest in 2016
Single ship company, owner of 1 Suezmax, sold our equity interest to Bretta in 2016
Single ship company, owner of 1 Suezmax, sold our equity interest to Bretta in 2016
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, liquidated in 2015
No operating activities, liquidated in 2015
* Both FSO Asia and FSO Africa are on a time charter contract to Maersk Oil Qatar (MOQ), the current operator of the
Al Shaheen oil field until mid 2017, and a LOA has been signed with NOC, the new operator of the Al Shaheen field.
FINANCIAL REPORT | 161
The following table contains summarised financial information for all of the Group’s joint ventures:
ASSET
ASSET
LIABILITY
GREAT HOPE
ENTERPRISES
LTD
KINGSWOOD
CO. LTD
SEVEN SEAS
SHIPPING LTD
FIORANO
SHIPHOLDING
LTD
FONTVIEILLE
SHIPHOLDING
LTD
LARVOTTO
MONEGHETTI
TI AFRICA
TI ASIA
TOTAL
AFRICA
ASIA
TOTAL
SHIPHOLDING
SHIPHOLDING
LTD
LTD
CONVERSION
CONVERSION
LTD
LTD
CORP
CORP
50%
-
-
763
278
-
-
130
-
633
317
-
317
-
113
-
(257)
-
4,510
-
2,255
50%
204
-
810
-
-
-
2
-
50%
50%
50%
50%
50%
50%
50%
50%
50%
34,786
34,786
7,473
3,245
6,704
6,500
4,591
4,333
82,883
82,883
5,445
711
84,894
32,063
15,341
4,250
70,670
70,670
6,719
1,136
90,054
34,470
7,773
4,000
77,805
77,805
6,087
1,633
81,494
33,113
16,097
3,970
73,433
73,433
3,786
1,218
86,997
47,750
5,251
4,000
231,370
224,460
795,611
226,239
218,385
784,201
39,864
22,017
64,441
135,388
31,098
61,336
351,057
297,510
998,710
-
104,200
258,096
32,351
13,750
29,426
110,962
27,446
61,749
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)
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
-
-
-
506
15,482
-
-
-
-
-
-
16,305
(3,440)
(2,440)
(5,880)
-
-
-
-
-
7
-
4
-
-
20,462
17,573
17,342
12,109
115,968
74,319
257,773
10,228
(3,360)
(162)
-
3,504
-
17,017
(4,852)
(1,093)
-
(1,453)
-
15,706
(4,603)
(1,100)
-
(2,852)
-
17,092
(4,571)
(1,263)
-
(1,481)
16,047
(4,586)
(1,469)
62,261
64,096
202,560
(18,209)
(17,933)
(58,114)
(1,963)
(7,458)
(14,765)
(1,805)
31,204
-
-
-
-
27,702
4,212
59,336
4,212
1,752
(727)
(1,426)
(741)
(903)
15,602
13,851
29,668
-
-
-
-
-
2,106
2,106
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(in thousands of USD)
AT DECEMBER 31, 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 amortization
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
162 | FINANCIAL REPORT
(in thousands of USD)
AT DECEMBER 31, 2014
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 CARRYING AMOUNT OF INTEREST
IN JOINT VENTURE
REMAINING SHAREHOLDERS LOAN
TO JOINT VENTURE
Revenue
Depreciations and amortization
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
50%
204
810
-
-
-
-
2
-
-
-
-
-
-
-
7
-
4
-
ASSET
ASSET
LIABILITY
GREAT HOPE
KINGSWOOD
SEVEN SEAS
FIORANO
FONTVIEILLE
ENTERPRISES
CO. LTD
SHIPPING LTD
SHIPHOLDING
SHIPHOLDING
LTD
LTD
LARVOTTO
SHIPHOLDING
LTD
MONEGHETTI
SHIPHOLDING
LTD
TI AFRICA
LTD
TI ASIA
LTD
TOTAL
AFRICA
CONVERSION
CORP
ASIA
CONVERSION
CORP
TOTAL
Percentage ownership interest
50%
50%
50%
50%
50%
50%
50%
50%
50%
34,786
34,786
7,473
3,245
6,704
6,500
4,591
4,333
82,883
82,883
5,445
711
84,894
32,063
15,341
4,250
70,670
70,670
6,719
1,136
90,054
34,470
7,773
4,000
77,805
77,805
6,087
1,633
81,494
33,113
16,097
3,970
73,433
73,433
3,786
1,218
86,997
47,750
5,251
4,000
231,370
224,460
795,611
226,239
218,385
784,201
39,864
22,017
64,441
135,388
31,098
61,336
351,057
297,510
998,710
-
104,200
258,096
32,351
13,750
29,426
110,962
27,446
61,749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,880
-
4,880
11,760
-
-
NET ASSETS (100%)
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
17,342
12,109
115,968
74,319
257,773
17,092
(4,571)
(1,263)
-
(1,481)
16,047
(4,586)
(1,469)
-
62,261
64,096
202,560
(18,209)
(17,933)
(58,114)
(1,963)
(7,458)
(14,765)
-
-
-
(1,805)
31,204
-
-
27,702
4,212
59,336
4,212
2,255
1,752
(727)
(1,426)
(741)
(903)
15,602
13,851
29,668
-
-
-
2,106
2,106
10,228
(3,360)
(162)
17,017
(4,852)
(1,093)
15,706
(4,603)
(1,100)
3,504
(1,453)
(2,852)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FINANCIAL REPORT | 163
ASSET
ASSET
LIABILITY
(in thousands of USD)
AT DECEMBER 31, 2015
GREAT HOPE
ENTERPRISES
LTD
KINGSWOOD
CO. LTD
SEVEN SEAS
SHIPPING LTD
FIORANO
SHIPHOLDING
LTD
FONTVIEILLE
SHIPHOLDING
LTD
LARVOTTO
MONEGHETTI
TI AFRICA
TI ASIA
TOTAL
AFRICA
ASIA
TOTAL
SHIPHOLDING
SHIPHOLDING
LTD
LTD
CONVERSION
CONVERSION
CORP
CORP
Percentage ownership interest
50%
50%
50%
50%
50%
50%
50%
50%
50%
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 amortization
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
-
-
102
59
-
-
15
-
87
43
-
43
-
1
-
-
-
3
-
2
-
520
-
489
-
-
-
2
-
33,052
33,052
7,463
1,528
521
-
239
-
78,031
78,031
6,498
552
84,094
27,813
5,981
4,250
65,837
65,837
4,195
186
77,485
30,470
6,656
4,000
215,184
208,030
12,144
880
1,155
-
-
208,405
744,422
200,452
728,794
41,744
30,465
87,727
40,139
75,343
206,518
30,832
28,858
58,601
45,078
303,018
223,552
849,740
1,007
39,755
(5,546)
(14,109)
(6,939)
(9,368)
(76,844)
(4,236)
(76,192)
504
19,878
(2,773)
(7,054)
(3,469)
(4,684)
(38,422)
(2,118)
(38,096)
-
-
28,141
23,507
26,141
17,949
149,615
72,397
317,749
504
19,878
-
-
-
-
-
-
20,425
-
-
-
-
-
(4)
-
-
25,368
16,453
22,672
13,265
111,193
70,279
259,229
18,701
(3,601)
(102)
-
11,791
-
21,050
(4,852)
(530)
-
6,361
-
21,509
(4,832)
(851)
-
6,330
-
64,627
(18,209)
(1,220)
259
35,329
64,382
234,425
(17,933)
(58,628)
(6,106)
(10,623)
106
365
30,580
102,814
-
3,220
3,220
(2)
5,895
3,181
3,165
3,381
2,831
17,664
15,290
51,407
-
-
-
-
-
-
1,610
1,610
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
LTD
50%
73,234
73,234
7,873
1,578
81,424
29,143
6,621
3,970
22,837
(4,571)
(644)
-
6,762
LTD
50%
70,159
70,159
7,219
4,891
79,647
43,750
7,099
4,000
21,317
(4,630)
(1,170)
5,661
-
-
-
164 | FINANCIAL REPORT
LTD
50%
78,031
78,031
6,498
552
84,094
27,813
5,981
4,250
LTD
50%
65,837
65,837
4,195
186
77,485
30,470
6,656
4,000
50%
33,052
33,052
7,463
1,528
521
239
-
-
(in thousands of USD)
AT DECEMBER 31, 2015
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 CARRYING AMOUNT OF INTEREST
IN JOINT VENTURE
REMAINING SHAREHOLDERS LOAN
TO JOINT VENTURE
Revenue
Depreciations and amortization
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%
102
59
-
-
-
-
-
15
87
43
-
43
-
1
-
-
-
3
-
2
-
50%
520
489
-
-
-
-
2
-
-
-
-
-
-
-
-
-
ASSET
ASSET
LIABILITY
GREAT HOPE
KINGSWOOD
SEVEN SEAS
FIORANO
FONTVIEILLE
ENTERPRISES
CO. LTD
SHIPPING LTD
SHIPHOLDING
SHIPHOLDING
LARVOTTO
SHIPHOLDING
LTD
MONEGHETTI
SHIPHOLDING
LTD
TI AFRICA
LTD
TI ASIA
LTD
TOTAL
AFRICA
CONVERSION
CORP
ASIA
CONVERSION
CORP
TOTAL
50%
50%
50%
50%
50%
50%
73,234
73,234
7,873
1,578
81,424
29,143
6,621
3,970
70,159
70,159
7,219
4,891
79,647
43,750
7,099
4,000
215,184
208,030
12,144
880
208,405
744,422
200,452
728,794
41,744
30,465
87,727
40,139
303,018
223,552
849,740
-
1,155
-
75,343
206,518
30,832
28,858
58,601
45,078
NET ASSETS (100%)
1,007
39,755
(5,546)
(14,109)
(6,939)
(9,368)
(76,844)
(4,236)
(76,192)
Group’s share of net assets
504
19,878
(2,773)
(7,054)
(3,469)
(4,684)
(38,422)
(2,118)
(38,096)
Shareholders loans to joint venture
-
28,141
23,507
26,141
17,949
149,615
72,397
317,749
504
19,878
-
-
-
-
-
-
20,425
-
25,368
16,453
22,672
13,265
111,193
70,279
259,229
22,837
(4,571)
(644)
-
6,762
21,317
(4,630)
(1,170)
-
5,661
-
64,627
(18,209)
(1,220)
259
35,329
64,382
234,425
(17,933)
(58,628)
(6,106)
(10,623)
106
365
30,580
102,814
-
3,220
3,220
(2)
5,895
3,181
3,165
3,381
2,831
17,664
15,290
51,407
-
-
-
1,610
1,610
18,701
(3,601)
(102)
21,050
(4,852)
(530)
21,509
(4,832)
(851)
(4)
11,791
6,361
6,330
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FINANCIAL REPORT | 165
ASSET
ASSET
LIABILITY
(in thousands of USD)
AT DECEMBER 31, 2016
GREAT HOPE
ENTERPRISES
LTD
KINGSWOOD
CO. LTD
SEVEN SEAS
SHIPPING LTD
FIORANO
SHIPHOLDING
LTD
FONTVIEILLE
SHIPHOLDING
LTD
LARVOTTO
MONEGHETTI
TI AFRICA
TI ASIA
TOTAL
AFRICA
ASIA
TOTAL
SHIPHOLDING
SHIPHOLDING
LTD
LTD
CONVERSION
CONVERSION
CORP
CORP
Percentage ownership interest
50%
50%
50%
50%
50%
50%
50%
50%
50%
LTD
50%
LTD
50%
946
-
76
-
-
-
2
-
-
-
3,221
555
964
-
132
-
1,020
2,143
510
-
1,072
-
510
1,072
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,182
(2,047)
(223)
-
1,146
-
6,404
(2,037)
(337)
-
500
-
6,901
(1,929)
(288)
7,471
(2,049)
(537)
1,082
1,270
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
198,826
189,821
38,206
26,928
276,498
863
-
-
192,344
392,116
182,519
372,341
132,763
410,207
47,889
36,591
-
76,899
75,343
89,392
64,074
-
77,896
75,343
(40,329)
30,751
(6,595)
(20,164)
15,285
(3,298)
137,615
65,897
203,512
-
15,285
16,867
117,451
65,897
183,348
65,188
(18,209)
(400)
(326)
36,515
-
65,063
171,854
(17,933)
(47,548)
(4,703)
(106)
23,359
2,448
(6,532)
(432)
80,322
2,448
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,735
573
250
541
635
18,257
16,180
40,161
-
-
-
-
1,224
1,224
-
13,646
(3,344)
(3)
-
7,469
-
-
-
-
-
-
12
-
6
-
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 amortization
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32)
-
(16)
-
166 | FINANCIAL REPORT
NET ASSETS (100%)
1,020
2,143
AT DECEMBER 31, 2016
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
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 amortization
Interest Expense
Income tax expense
Other comprehensive income (100%)
GROUP'S SHARE OF PROFIT (LOSS)
FOR THE PERIOD
GROUP'S SHARE OF OTHER
COMPREHENSIVE INCOME
LTD
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
510
1,072
946
-
76
-
-
-
2
-
510
-
-
-
-
-
-
-
6
-
-
-
3,221
555
964
132
-
-
1,072
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(in thousands of USD)
GREAT HOPE
KINGSWOOD
SEVEN SEAS
FIORANO
FONTVIEILLE
ENTERPRISES
CO. LTD
SHIPPING LTD
SHIPHOLDING
SHIPHOLDING
LARVOTTO
SHIPHOLDING
LTD
MONEGHETTI
SHIPHOLDING
LTD
TI AFRICA
LTD
TI ASIA
LTD
TOTAL
AFRICA
CONVERSION
CORP
ASIA
CONVERSION
CORP
TOTAL
ASSET
ASSET
LIABILITY
50%
50%
50%
50%
50%
50%
50%
50%
LTD
50%
LTD
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
198,826
189,821
38,206
26,928
276,498
-
863
-
192,344
392,116
182,519
372,341
47,889
36,591
89,392
64,074
132,763
410,207
-
76,899
75,343
-
77,896
75,343
(40,329)
30,751
(6,595)
(20,164)
15,285
(3,298)
137,615
65,897
203,512
-
15,285
16,867
117,451
65,897
183,348
Profit (loss) for the period (100%)
(32)
12
7,469
1,146
13,646
(3,344)
(3)
7,182
(2,047)
(223)
6,404
(2,037)
(337)
500
-
-
6,901
(1,929)
(288)
-
1,082
-
7,471
(2,049)
(537)
-
1,270
-
65,188
(18,209)
(400)
(326)
36,515
-
65,063
171,854
(17,933)
(47,548)
(4,703)
(106)
23,359
2,448
(6,532)
(432)
80,322
2,448
(16)
3,735
573
250
541
635
18,257
16,180
40,161
-
-
-
1,224
1,224
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FINANCIAL REPORT | 167
NOTE 25 - EQUITY-ACCOUNTED INVESTEES
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. The
tranche related to FSO Asia matures in 2017 and has a rate
of Libor plus a margin of 1.15%. The tranche related to FSO
Africa was matured in August 2013 with a balloon of USD 45.0
million and had a rate of Libor plus a margin of 2.25%. In 2013,
the Africa Tranche was extended until 2015 and on August 28,
2015, it was fully repaid. The total amount drawn under this
facility (Euronav share) on December 31, 2016 was USD 37.7
million (2015: USD 52.1 million and 2014: USD 72.7 million).
In the course of 2008, the joint venture companies Fiorano
Shipholding Ltd, Fontvieille Shipholding Ltd, Larvotto
Shipholding Ltd and Moneghetti Shipholding Ltd concluded
pre and post-delivery senior secured credit facilities to build
a total of 4 Suezmax Vessels.
All bank loans in the joint ventures are secured by the
underlying vessel or FSO.
The following table summarises the terms and debt repayment profile of the bank loans held by the joint ventures:
(in thousands of USD)
DECEMBER 31, 2016
CURRENCY
NOMINAL
INTEREST RATE
YEAR OF
MATURITY
FACILITY
SIZE
DRAWN CARRYING
VALUE
TI Asia Ltd *
Moneghetti Shipholding Ltd *
Fontvieille Shipholding Ltd *
Larvotto Shipholding Ltd *
Fiorano Shipholding Ltd *
USD
USD
USD
USD
USD
libor +1.15%
libor +2.75%
libor +2.75%
libor +1.50%
libor +1.225%
2017
2021
2020
2020
2020
75,343
-
-
-
-
75,343
-
-
-
-
75,343
-
-
-
-
DECEMBER 31, 2015
FACILITY SIZE
DRAWN
CARRYING
104,200
104,200
47,750
34,470
33,113
32,063
47,750
34,470
33,113
32,063
VALUE
104,200
47,750
34,470
33,113
32,063
TOTAL INTEREST-BEARING BANK LOANS
75,343
75,343
75,343
251,595
251,595
251,595
* 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 (all or part of) the loan earlier than expected.
168 | FINANCIAL REPORT
Loan covenant
The OSG’s (Overseas Shipholding Group) Chapter 11 filing in
2012 has had no impact on the continued operations of the
FSO joint ventures, 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. OSG emerged from
Chapter 11 in August 2014. OSG has now been split into OSG
and International Seaways Inc (INSW). INSW is our current JV
partner in the FSOs.
As at December 31, 2016, all joint ventures were in compliance
with the covenants, as applicable, of their respective loans.
(in thousands of USD)
DECEMBER 31, 2016
CURRENCY
NOMINAL
YEAR OF
FACILITY
DRAWN CARRYING
INTEREST RATE
MATURITY
SIZE
VALUE
DECEMBER 31, 2015
FACILITY SIZE
DRAWN
TI Asia Ltd *
Moneghetti Shipholding Ltd *
Fontvieille Shipholding Ltd *
Larvotto Shipholding Ltd *
Fiorano Shipholding Ltd *
USD
USD
USD
USD
USD
libor +1.15%
libor +2.75%
libor +2.75%
libor +1.50%
libor +1.225%
2017
2021
2020
2020
2020
75,343
75,343
75,343
-
-
-
-
-
-
-
-
-
-
-
-
104,200
47,750
34,470
33,113
32,063
104,200
47,750
34,470
33,113
32,063
CARRYING
VALUE
104,200
47,750
34,470
33,113
32,063
TOTAL INTEREST-BEARING BANK LOANS
75,343
75,343
75,343
251,595
251,595
251,595
Interest rate swaps
Two of the Group's JV companies in connection to the FSO
conversion 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 eight years
starting respectively in July 2009 and September 2009 for FSO
Asia and FSO Africa.
Following the restructuring of the service contract related
to the FSO Africa on January 22, 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 of the joint
venture as from 2010 through 2017. Fair value at December
31, 2016: USD -1.3 million (2015: -3.8 million and 2014: USD
-7.0 million).
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
of the joint venture and the ineffective portion is recorded in
profit or loss of the joint venture. Fair value at December 31,
2016: USD -1.4 million (2015: USD -3.4 million and 2014: USD
-6.6 million).
Vessels
On January 2, 2014, Great Hope Entreprise Ltd delivered the
VLCC Ardenne Venture (2004 - 318,658 dwt) to its new owners
after the sale announced on November 14, 2013 for USD 41.7
million. The Group's share in the capital gain amounted to USD
2.2 million and was recognised in the first quarter of 2014.
On June 2, 2016, the Group entered into a share swap and
claim transfer agreement (see Note 24). As a result, the
Group became the full owner of the two youngest vessels, the
Captain Michael (2012 – 157,648 dwt) and the Maria (2012 –
157,523 dwt), while Bretta became the full owner of the Devon
and the Eugenie.
On November 23, 2016, Seven Seas Shipping Ltd delivered the
VLCC V.K. Eddie (2005 – 305,261 dwt) to its new owners after
the sale announced on November 2, 2016 for USD 39.0 million.
Seven Seas Shipping Ltd recognized a gain of USD 9.3 million
on this transaction in the last quarter of 2016. In the Group's
consolidated financial statements, 50% of this gain was
eliminated.
There were no capital commitments as per December 31,
2016, December 31, 2015 and December 31, 2014.
FINANCIAL REPORT | 169
Cash and cash equivalents
(in thousands of USD)
Cash and cash equivalents of the joint ventures
Group's share of cash and cash equivalents
of which restricted cash
2016
64,074
32,037
6,789
2015
40,139
20,069
9,022
NOTE 26 - SUBSIDIARIES
The Group holds 100% of the voting rights in all of its
subsidiaries (see Note 23).
In 2016 the Group entered into a share swap and claim transfer
agreement whereby the Group’s equity interest in both Fiorano
Shipholding Ltd and Larvotto Shipholding Ltd increased from
50% to 100%.
In 2015 one new wholly owned subsidiary, Euronav Singapore
Pte Ltd, incorporated in the second quarter of 2015, was
included in the consolidation scope. 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 vessels acquired from
Maersk in 2014 (see Note 24).
NOTE 27 - 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 DECEMBER 31, 2016 DECEMBER 31, 2015 DECEMBER 31, 2014
2016
2015
2014
EUR
GBP
1.0541
1.2312
1.0887
1.4833
1.2141
1.5587
1.1061
1.3662
1.1154
1.5315
1.3349
1.6521
170 | FINANCIAL REPORT
NOTE 28 - AUDIT FEES
The audit fees for the Group amounted to USD 1.0 million
(2015: USD 0.7 million and 2014: USD 0.5 million). During the
year the statutory auditor and persons professionally related
to him performed additional audit related services amounting
to USD 0.0 million (2015: USD 0.2 million and 2014: USD 1.5
million) and tax services for fees of USD 0.0 million (2015: USD
0.0 million and 2014: 0.1 million). The 2015 and 2014 audit
related services mainly related to the Group's series of capital
transactions, including the Group's US listing.
NOTE 29 - SUBSEQUENT EVENTS
On January 12, 2017, and January 20, 2017, Euronav took
delivery of the VLCCs the Ardeche (2017 – 298,642 dwt) and
the Aquitaine (2017 – 298,768 dwt) respectively.
On January 30, 2017, the Group signed a loan agreement with
DnB Bank for an amount of USD 110.0 million facility with the
purpose of financing the two VLCCs, as mentioned above.
NOTE 30 - STATEMENT ON THE TRUE
AND FAIR VIEW OF THE
CONSOLIDATED FINANCIAL
STATEMENTS AND THE FAIR
OVERVIEW OF THE MANAGEMENT
REPORT
(IFRS)
The Board of Directors, represented by Carl Steen, 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 December 31, 2016,
which have been prepared in accordance with International
Financial Reporting Standards
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.
issued by
FINANCIAL REPORT | 171
STATUTORY AUDITOR'S REPORT TO THE GENERAL MEETING OF EURONAV NV
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2016
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 December 31, 2016, 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 consolidated financial statements
comprise the consolidated statement of financial position as
at December 31, 2016 and the consolidated statements of
profit or loss, 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 3.046.911
and the consolidated statement of profit or loss shows a profit
for the year of USD ‘000 204.049.
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) as adopted in Belgium. 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 Company’s preparation and fair presentation of
172 | FINANCIAL REPORT
the consolidated financial statements in order to design audit
procedures that are appropriate to 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 December 31, 2016 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
in Belgium, our
Standards on Auditing as applicable
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
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.
Brussels, March 14, 2017
KPMG Bedrijfsrevisoren / Réviseurs d'Entreprises
Statutory Auditor
represented by
Götwin Jackers
Bedrijfsrevisor / Réviseur d’Entreprises
FINANCIAL REPORT | 173
STATUTORY FINANCIAL STATEMENTS EURONAV NV
For the period ending on 31/12/2016
DECEMBER 31, 2016
DECEMBER 31, 2015
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
2,439,610,624
147,151
1,794,657,956
644,805,516
270,371,167
-
126,712,521
58,317,989
68,793,482
16,547,175
2,219,814,604
236,021
1,516,093,550
703,485,032
316,162,143
-
160,019,351
63,946,720
45,894,010
46,302,062
2,709,981,791
2,535,976,746
1,707,121,377
173,046,122
1,215,227,175
119,195,927
199,652,153
1,621,834
1,621,834
1,001,238,580
834,515,103
142,408,234
24,315,242
1,717,774,802
173,046,122
1,215,227,175
111,297,384
218,204,121
4,376,042
4,376,042
813,825,902
611,070,981
171,230,667
31,524,255
TOTAL LIABILITIES
2,709,981,791
2,535,976,746
174 | FINANCIAL REPORT
For the period ending on 31/12/2016
DECEMBER 31, 2016
DECEMBER 31, 2015
INCOME STATEMENT OF EURONAV NV
(in USD)
Operating income
Operating charges
Operating result
Financial income
Financial charges
Profit for the year before taxes
Income taxes
RESULT FOR THE YEAR
RESULT FOR THE YEAR AVAILABLE FOR
APPROPRIATION
APPROPRIATION ACCOUNT
(in USD)
Result to be appropriated
Transfer to capital and reserves
Profit carried forward
Distribution of result
669,498,406
(526,102,646)
143,395,760
12,922,237
41,474,177
114,843,820
(2,906,354)
111,937,466
111,937,466
330,141,587
7,898,543
199,652,153
122,590,891
762,117,923
(507,556,612)
254,561,311
9,861,392
(47,968,251)
216,454,452
(3,032,281)
213,422,172
213,422,172
458,136,116
10,671,109
218,204,121
229,260,887
FINANCIAL REPORT | 175
NOTES
REGISTERED OFFICE
De Gerlachekaai 20
B-2000 Antwerp - 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 Antwerp - Belgium
Registered within the jurisdiction of the
Commercial Court of Antwerp -
VAT BE 0860 402 767
Dit verslag is ook beschikbaar in het Nederlands.
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