Annual
report
Shareholder letter
Quick facts
Highlights 2018
01
04
06
Special report
US Crude Export
12
Directors’ report
Vision and Mission
Company profile
Highlights 2018
Corporate Governance
Statement
The Euronav Group
Activity report
26
27
28
48
78
Products and services
82
In house Ship Management 85
Fleet of the Euronav group
as of 31 December 2018
88
Corporate Social
Responsibility
Health, Safety, Quality,
Environment and Society
Human resources
Glossary
94
103
108
Euronav’s shareholders’ structure
According to the information available to the Company at the
time of preparing this annual report on March 18, 2019 and
taking into account the latest transparency declarations or
other officially filed information with supervising authorities,
the shareholders’ structure is as shown in the table:
Shareholder
Number of shares Percentage
Châteauban SA
Saverco NV*
Euronav (treasury shares)
Other
Total
18,462,007
15,335,000
3,370,544
8.391%
6.970%
1.532%
182,857,162
83.108%
220,024,713
100.00%
1 Including shares held directly or indirectly by or for the benefit of the
ultimate beneficial owner
Shareholders’ diary 2019
TUESDAY 30 APRIL 2019
Announcement of first quarter results 2019
THURSDAY 9 MAY 2019
Annual General Meeting of Shareholders 2019
THURSDAY 8 AUGUST 2019
Announcement of final half year results 2019
TUESDAY 13 AUGUST 2019
Half year report 2019 available on website
TUESDAY 29 OCTOBER 2019
Announcement of third quarter results 2019
THURSDAY 23 JANUARY 2020
Announcement of fourth quarter results 2019
Representation by the persons responsible
for the financial statements and for the
management report
Carl E. Steen, Chairman of the Board of Directors, Mr. Patrick
Rodgers, CEO and Mr. Hugo De Stoop, CFO, hereby certify
that, to the best of their knowledge,
(a) the consolidated financial statements as of and for the
year ended December 31, 2018, which have been prepared in
accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position and results of
Euronav NV and the entities included in the consolidation, and
(b) the annual report includes a true and fair view of the
evolution of the activities, results and situation of Euronav NV
and the entities included in the consolidation, and contains a
description of the main risks and uncertainties they may face.
Key figures
CONSOLIDATED STATEMENT OF PROFIT OR LOSS 2011 - 2018
(In thousands of USD)
2018
2017
2016
2015
2014
2013
Restated*
2012
2011
Revenues
EBITDA**
EBIT
Net profit
600,024
513,368
684,265
846,507
473,985
304,622
410,701
394,457
238,245
273,360
476,478
613,770
202,767
100,096
120,719
128,368
(35,443)
43,488
248,715
403,564
41,814
(36,862)
(56,794)
(40,155)
(110,070)
1,383
204,049
350,301
(45,797)
(89,683)
(118,596)
(95,986)
TCE*** year average
2018
2017
2016
2015
2014
2013
2012
2011
VLCC
Suezmax
Spot Suezmax
23,005
30,481
15,783
27,773
22,131
18,002
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
In USD per share
2018
2017
2016
2015
2014
2013
2012
2011
Number of shares****
191,994,398 158,166,534
158,262,268 155,872,171 116,539,017
50,230,437
50,000,000
50,000,000
EBITDA
EBIT
Net profit
1.24
(0.18)
(0.57)
1.73
0.27
0.01
3.01
1.57
1.29
3.94
2.59
2.25
1.74
0.36
(0.39)
1.99
(0.73)
(1.79)
2.41
(1.14)
(2.37)
2.57
(0.80)
(1.92)
In EUR per share
2018
2017
2016
2015
2014
2013
2012
2011
Rate of exchange
1.1450
1.1993
1.0541
1.0887
1.2141
1.3791
1.3194
1.2939
EBITDA
EBIT
Net profit
History of dividend
per share
Dividend
Of which interim div. of
1.08
(0.16)
(0.50)
1.44
0.23
0.01
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)
2018
2017
2016
2015
2014
2013
2012
2011
0.12
0.06
0.12
0.77*****
0.06
0.55
1.69
0.62
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
* The comparative figures 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 significant cost of financing. EBITDA should not be considered a substitute for profit/(loss) attributable to us or
cash flow from operating activities prepared in accordance with IFRS as adopted by the European Union or as a measure of profitability or liquidity. The definition of EBITDA used here may
not be comparable to that used by other companies.
*** Time Charter Equivalent
**** Excluding 1,237,901 shares held by the Company in 2018 (2017: 1,042,415 shares)
***** The total gross dividend paid in relation to 2018 of USD 0.12 per share is the sum of the interim dividend paid in October 2018 in addition to the proposed amount of USD 0.06 per share
proposed to the Annual Shareholder’s Meeting of 9 May 2019.
****** Ratio is based on the actual exchange rate EUR/USD on the day of the dividend announcement if any.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2011 - 2018
(In thousands of USD)
ASSETS
Non-current assets
Current assets
31.12.2018 31.12.2017 31.12.2016 31.12.2015 31.12.2014 31.12.2013 31.12.2012
31.12.2011
3,606,210
521,141
2,530,337
280,636
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
TOTAL ASSETS
4,127,351
2,810,973
3,046,911
3,040,746
3,096,360
1,920,761
2,362,879
2,451,316
LIABILITIES
Equity
Non-current liabilities
Current liabilities
2,260,523
1,579,706
287,122
1,846,361
805,872
158,740
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
TOTAL LIABILITIES
4,127,351
2,810,973
3,046,911
3,040,746
3,096,360
1,920,761
2,362,879
2,451,316
* The comparative figures for 2013 have been restated following the application of IFRS 10 & IFRS 11 on Joint Arrangements.
The
Euronav
Share
DAILY VOLUME OF TRADED SHARES 2018
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
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3
SHARE PRICE EVOLUTION 2018 (in USD)
10
9.5
9
8.5
8
7.5
7
6.5
Shareprice Euronext Brussels
in USD
Shareprice NYSE in USD
7
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3
Dear Shareholder
Euronav had a very busy twelve months. The first half of the year 2018 was focused
on consolidating the merger with Gener8 Maritime announced in December 2017.
This counter cyclical transaction required a great deal of work to not only integrate
the incoming fleet (+ 40%) but also satisfy financial and regulatory requirements
with our counterparties. The Euronav team continued to be dynamic in managing the
fleet with a series of Suezmax and LR1 sales which, along with the Gener8 merger,
reduced the average age of both our Suezmax and VLCC fleets. It is pleasing to note
that the hard work and dedication of our employees was recognised by industry awards
acknowledging financing initiatives, best in class operational performance and for
environmental protection. These included the prestigious Lloyds List awards for Tanker
operator and Deal of the Year for the Gener8 merger.
Euronav is in the
right position
to navigate the
next phase of
the crude tanker
cycle.
Yours sincerely,
Carl E. Steen
Chairman
For most of the year Euronav faced one of the most difficult freight markets in the tanker
industry in recent times. A reduced cargo supply from self-imposed OPEC production
cuts and excess supply of large tankers provided sustained downward pressure on
freight rates until the final quarter of the year. The challenging trading environment
did drive recycling of older tonnage with over 40 VLCC equivalents leaving the global
fleet - a level not seen since 1985. This rebalancing between vessel supply and demand
is a positive development with fleet maturity returning to longer term averages, further
driving pressure for sustained vessel recycling. The effect of this fleet rebalancing
near equilibrium was evidenced with the return of VLCC rates toward their longer term
averages (USD 40,000 per day) at the end of the year.
Despite the testing freight environment Euronav continued to maintain a strong balance
sheet with liquidity at USD 670 million at year-end. The fixed income streams from our
longer term charters and FSO contracts underpinned the fixed dividend of USD 12 cents
per share for the full year. This was augmented with a further return of value toward the
year-end with share buy-backs initiated following a disconnect between the share price
and the underlying asset value of the company.
Asset prices are often a lead indicator in the tanker market and there we saw an
interesting development: new build asset prices for VLCCs and Suezmaxes rose by 14%
and 10% respectively. This increase vindicates our decision to proceed with the counter
cyclical merger with Gener8 Maritime.
The new IMO fuel regulations will come into force in January 2020. Shipping operators
will only be allowed to use fuel with a maximum 0.5% sulphur content. Euronav
embraces the IMO 2020 regulations and looks forward to adopting the directive properly,
universally and without delay.
Euronav is also committed to achieving and maintaining the highest standards of
corporate governance and social responsibility. Inclusion for the second time in the
Bloomberg International Gender Equality Index (2018 and 2019) reflects delivery of this
responsibility. The Board and Management look forward to driving further improvement
in initiatives of this sort going forward.
In February 2019 Paddy Rodgers signalled his intent to stand down as CEO of Euronav.
The Board would like to thank Paddy for his stewardship of the company during 19
years.
Euronav has achieved a considerable amount during 2018. By consolidating a counter
cyclical merger whilst maintaining low financial leverage and access to liquidity,
Euronav positioned itself with a robust financial structure backed by a strong
operational management team providing confidence in navigating the next phase of the
crude tanker cycle.
4
QUICK FACTS
Quick facts
2,900
PEOPLE
2,700 seafarers of many different
nationalities work aboard Euronav
vessels. Their nationalities are marked
by a dot on the map alongside.
In addition, Euronav has approximately
200 employees (including contractors
and temporary assignments) throughout
in Antwerp,
its shore-based offices
Piraeus, London, Nantes, Singapore
and Hong Kong. This geographical span
reflects a deep-rooted maritime history
and culture built up over generations.
EURN
LISTED
EURONEXT
EURN
LISTED
NYSE
EURN
LISTED
EURONEXT
EURN
LISTED
NYSE
On 31 December 2018
QUICK FACTS
5
Proportionate
EBITDA*
261,329
**
VESSELS The world’s largest,
independent, publicly listed
crude tanker platform
74
1 LR1
0.5 million barrels
AVERAGE AGE: 14.7 YEARS
**
26
Suezmax
1 million barrels
AVERAGE AGE: 10 YEARS
43 VLCC
2 million barrels
AVERAGE AGE: 5.8 YEARS
2 V-Plus
3 million barrels
AVERAGE AGE: 16 YEARS
2 FSO
2.8 million barrels
AVERAGE AGE: 16 YEARS
* Proportionate EBITDA in thousands of USD
** Including 1 Suezmax asset held for sale
6
HIGHLIGHTS 2018
HIGHLIGHTS
2018
23 JANUARY 2018
Euronav was selected from ten sectors and the only Belgian listed company to join
the inaugural 2018 Bloomberg International Gender-Equality Index. The reference
index measures gender equality across internal company statistics, employee policies,
external community support and engagement, and gender-conscious product offerings.
26 MARCH 2018
Suezmax Cap Quebec (2018 - 156,600 dwt) was delivered into the Euronav fleet. This
vessel was the first of four Ice Class Suezmax vessels progressively starting seven-year
contracts with a leading global refinery player from delivery during 2018.
When taking delivery of the Cap Quebec, the Company paid USD 44.1 million (including
the final instalment).
25 APRIL 2018
Euronav took delivery of the Cap Pembroke (2018 - 156,600 dwt) against the payment of
the remaining instalments of USD 43.5 million in aggregate. This vessel was the second
of four Ice Class Suezmax vessels progressively starting seven-year contracts with a
leading global refinery player from delivery during 2018.
8 JUNE 2018
Euronav NV sold the Suezmax Cap Jean (1998 - 146,643 dwt) for USD 10.6 million. The
Company recorded a capital gain of approximately USD 10.6 million. The sale of the Cap
Jean was part of a fleet rejuvenation program.
27 JUNE 2018
Euronav Tankers NV acquired the V-Plus Seaways Laura Lynn (2003 - 441.561 dwt)
from Oceania Tanker Corporation, a subsidiary of International Seaways for USD 32.5
million. Euronav renamed the V-Plus as Oceania and registered it under the Belgian
flag. The Seaways Laura Lynn was the only other V-plus in the global tanker fleet -
Euronav was also owner of the other one, the TI Europe (2002 - 442,470 dwt), providing
the Company with a significant strategic opportunity.
HIGHLIGHTS 2018
7
8 AUGUST 2018
Euronav took delivery of the third Suezmax the Cap Port Arthur (2018 - 156,600 dwt)
with the fourth and last vessel from Hyundai Heavy Industries due for delivery at the
end of August. During the second quarter a total of USD 43.6 million was made in
instalment payments towards the construction of the two remaining Suezmax vessels
at Hyundai Heavy Industries with an outstanding balance of USD 86.6 million at the end
of the second quarter. These vessel orders were accompanied by four seven-year time
charter contracts.
22 AUGUST 2018
Euronav sold the Suezmax Cap Romuald (1998 - 146,640 dwt) for USD 10.6 million. The
Company recorded a capital gain of approximately USD 9 million. The sale of the Cap
Romuald was part of a fleet rejuvenation program.
29 AUGUST 2018
Euronav took delivery of the Cap Corpus Christi (2018 - 156,600 dwt) against the
payment of the remaining instalments of USD 43.6 million in aggregate. All of the four
Suezmax vessels delivered during 2018 were accompanied by seven-year time charter
contracts.
31 OCTOBER 2018
Euronav entered into a sale agreement regarding the Suezmax vessel Felicity (2009
- 157,667 dwt) with a global supplier and operator of offshore floating platforms. A
capital loss on the sale of approximately USD 3.0 million had been recorded in Q4
2018. The cash generated on this transaction after repayment of debt was USD 34.7
million. The vessel was delivered to her new owners and would be converted into an
FPSO and therefore left the worldwide trading fleet in 2019. The sale - the eighth
vessel successfully introduced by Euronav into an offshore project - demonstrated
Euronav’s capability to generate value for its stakeholders and reflected its reputation
for providing high quality operational tonnage for the offshore sector.
29 NOVEMBER 2018
Euronav sold the LR1 vessel Genmar Companion (2004 - 72,768 dwt). A capital loss
on the sale of approximately USD 0.2 million has been recorded in Q4 2018. The cash
generated on this transaction after repayment of debt was USD 6.3 million. The LR1
Genmar Companion joined the Euronav fleet as part of the Gener8 merger in June
2018 and was always a non-core asset to the Company.
11 DECEMBER 2018
Euronav received the award for 'Deal of the year 2018' for its merger with Gener8
Maritime at Lloyds List Global Awards in London.
8
HIGHLIGHTS 2018
2018, the
year in
which
Euronav NV
and Gener8
Maritime,
Inc.
conclude
their
merger
On 16 May 2018, Gener8 Maritime, Inc. (or 'Gener8') announced their special
shareholders’ meeting on 11 June 2018 to vote on the proposed merger with Euronav
as contemplated by the merger agreement announced in December 2017. Gener8
would become a wholly-owned subsidiary of Euronav. On 12 June, Euronav successfully
concluded the merger with Gener8. Euronav received the award for ‘Deal of the
Year 2018’ for this merger at the Lloyds List Global Awards in London. The merger
with Gener8 was a challenging transaction from an operational, financial and legal
perspective. Some key highlights:
•
•
•
21 December 2017: The Boards of Euronav and Gener8 announced agreement on a
stock-for-stock merger for the entire issued and outstanding share capital of Gener8
pursuant to which Gener8 would become a wholly-owned subsidiary of Euronav.
16 May 2018: Gener8 announced their special shareholders’ meeting to vote on
the proposed merger with Euronav as contemplated by the previously announced
merger agreement.
11 June 2018: Gener8’s shareholders approved the merger between the two
companies by which, upon the closing of the merger, Gener8 became a wholly-
owned subsidiary of Euronav. Holders of 81% of the outstanding shares of Gener8
cast their vote, of which 98% approved the merger.
HIGHLIGHTS 2018
9
•
•
12 June 2018: Euronav announced that it had successfully concluded the merger
with Gener8. The 60.8 million new shares issued to Gener8 shareholders as
consideration for the transaction began trading on the NYSE. It marked an
important milestone in the continued development of Euronav. Completing this
transaction provided the crude tanker market with a global player of substantial
size, accommodating clients’ demand for flexibility and scale solutions to their
transportation requirements.
14 June 2018: In conjunction with the merger with Gener8, Euronav sold six
VLCCs to International Seaways for a total consideration of USD 434 million which
included USD 123 million in cash and USD 311 million in the form of assumption
of the outstanding debt related to the vessels. The six vessels were the Gener8
Miltiades (2016 - 301,038 dwt), Gener8 Chiotis (2016 - 300,973 dwt), Gener8 Success
(2016 - 300,932 dwt), Gener8 Andriotis (2016 - 301,014 dwt), Gener8 Strength (2015
- 300,960 dwt) and Gener8 Supreme (2016 - 300,933 dwt).
Special report
12
SPECIAL REPORT
US CRUDE
EXPORT
(Source: EIA, Bloomberg)
US Crude consumption
US Crude production
US Crude imports
DRIVING STRUCTURAL EXPANSION AND CHANGE IN THE
GLOBAL LARGE TANKER MARKET
The term “US crude exports” has become an all-encompassing part of the crude
tanker lexicon over the past few years. This year’s special report looks at how this
phenomenon has come about, the implications for the global oil market and for crude
tankers in particular of this dynamic expansion of US crude production since 2009.
A SHORT HISTORY LESSON
Following the oil crisis in October 1973 which saw OPEC proclaiming an embargo on
exports to nations perceived as supporting Israel during the Yom Kippur War, the price
of crude quadrupled between October 1973 and March 1974. In response, the US passed
the Energy Policy and Conservation Act of 1975 as part of a comprehensive energy
policy including creation of the Strategic Petroleum Reserve but also the banning (with
some exceptions largely Canada and Mexico), of domestically produced crude oil from
export.
US CRUDE CONSUMPTION, PRODUCTION AND IMPORTS 1970-2018
(in million bpd)
12,000
Arab oil
embargo
US Crude export ban
US repeal
crude export ban
10,000
8,000
6,000
4,000
2,000
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1
0
2
1
0
2
1
/
1
0
/
1
0
3
1
0
2
1
/
1
0
/
1
0
4
1
0
2
1
/
1
0
/
1
0
5
1
0
2
1
/
1
0
/
1
0
6
1
0
2
1
/
1
0
/
1
0
7
1
0
2
1
/
1
0
/
1
0
8
1
0
2
1
/
1
0
/
1
0
The crude export ban contributed to a static structure of the US oil picture from the
mid-1980s onwards - modestly rising consumption fed by rising imports as domestic
production more or less halved between the mid-1980s and 2009.
SPECIAL REPORT
13
…then the shale revolution from 2009 - changing US oil and tanker markets for good
The driver in changing this dynamic was the growth of US shale taking US oil output
from 5 million bpd to over 9 million bpd between 2009-14. Shale can largely take the
credit for ratcheting up the political and economic pressure to repeal the export ban in
December 2015.
Pressures mount and finally the export ban is lifted
Rising domestic production meant US refinery bargaining power rose as the domestically
produced oil was effectively “landlocked” due to the export ban. As production rose so did
pressure to repeal the ban as the powerful US oil lobby argued future investment in US
energy projects was at risk given the lack of access to international markets. President
Obama duly lifted the ban on 18 December 2015 as part of a wider package of energy reform.
EVERYTHING CHANGES: US CRUDE EXPORTS TAKE OFF
Once the export ban was lifted charterers didn’t waste time to fill the new demand
channel. Growth has been explosive, doubling from 700 thousand bpd in 2016 to 1.4
million bpd the following year and a further 50% growth during 2018.
WE HAVE LIFT OFF - US CRUDE EXPORTS TAKE OFF POST 2015
REPEAL OF THE BAN (in million bpd)
3,500
3,000
2,500
2,000
1,500
1,000
500
(Source: DoE, Bloomberg, WoodMac)
4
1
0
2
1
Q
4
1
0
2
2
Q
4
1
0
2
3
Q
4
1
0
2
4
Q
5
1
0
2
1
Q
5
1
0
2
2
Q
5
1
0
2
3
Q
5
1
0
2
4
Q
6
1
0
2
1
Q
6
1
0
2
2
Q
6
1
0
2
3
Q
6
1
0
2
4
Q
7
1
0
2
1
Q
7
1
0
2
2
Q
7
1
0
2
3
Q
7
1
0
2
4
Q
8
1
0
2
1
Q
8
1
0
2
2
Q
8
1
0
2
3
Q
8
1
0
2
4
Q
9
1
0
2
1
Q
9
1
0
2
Y
F
0
2
0
2
Y
F
Increasingly the trade lanes have become long haul and in particular toward Asia as the
following chart illustrates. For the tanker market this is important as it means longer
distances to take the crude to the customer and thus decreases available tanker capacity.
US TO EAST ASIA - CRUDE EXPORTS FIND A NEW HOME
100%
80%
60%
40%
20%
0%
(Source: CSFB)
Others
OECD Europe
Asia
Canada
2015
2016
2017
2018
14
SPECIAL REPORT
US CRUDE BARREL CONTINUES TO GET LIGHTER AND LIGHTER
US oil production is getting increasing “light”. In simple terms the API gravity
(measurement of how heavy a crude grade is compared to water) of each barrel is rising
so US oil is becoming increasingly lighter and sweeter with lower sulphur content in
the incremental barrel. In the chart below it shows the progression of this trend since
2000. This has important implications ahead of IMO 2020 as the application of the new
fuel regulations for shipping will result in greater focus on the sulphur content of each
barrel. With a lower sulphur content per barrel US shale oil could, in theory, become
more critical to the global refinery complex post 2020 as these barrels will require less
refining and have more flexibility in a post IMO 2020 world. This is something analysed
in greater detail in the IMO regulations section.
(Source: Citigroup)
US CRUDE BARREL BECOMING LIGHTER
Ultra Light
Light & Sweet
Medium & Sweet
Medium & Medium Sour
Medium & Sour
Heavy & Sour
100%
80%
60%
40%
20%
0%
2000
2005
2010
2016
2017
WHY THIS MATTERS - IMPLICATIONS FOR TANKER MARKETS
TON MILE GROWTH - US TO ASIA AS GOOD AS IT GETS FOR LARGE TANKERS
The emergence of a sustained and growing trade route between the US and Asia is key
for the large crude tanker market. As the chart below shows, the ton mile effect (how
far the crude is actually transported) is huge - a typical US to Asia route being more
than double that of average voyages in the past decade. One particular driver of this is
the Panama Canal.
TON-MILE GROWTH - FOR TANKERS US TO ASIA IS AS GOOD AS IT GETS
(nautical miles)*
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
* VLCC, Suezmax
(Source: Clarksons)
Global Average laden
distance past 10 years
Middle East to Far East
US to Far East
SPECIAL REPORT
15
PANAMA CANAL - NO GO FOR VLCC
Despite being extended in 2016, the locks on the Panama canal cannot fit a VLCC and
only a partially laden Suezmax. Therefore in order to make the voyage to East Asia there
are no shortcuts for the most efficient tankers for such a long haul trade - namely a
VLCC (2 million bbl capacity) or Suezmax (1million bbl capacity). The toll rates on the
Panama Canal mean a partially laden Suezmax (70%) would require freight rate of USD
45 thousand per day or more to make the Panama canal voyage comparable.
PANAMA CANAL
EURONAV SUEZMAX SHIP
BEAM: 45 m
EURONAV VLCC SHIP
BEAM: 55 m
Draft Suezmax ± 17 m
(fully laden)
Depth New Panama
locks ± 15.2 m
BEAM SUEZMAX:
45 m
PANAMA LOCKS:
55 m
DEMAND GROWTH - CRUDE IS HEADING EAST
US production growth of 5 million bbls since 2009 is the supply side of the story; the
demand growth is all in the Asia Pacific region. Matching these forces is the job of large
scale tankers. The chart below shows how slow growth for crude has been across the
globe since 2006 - apart from the Asia Pacific region which, driven by population growth
and infrastructure investment, is demanding more than 10 million bbls per day more
than it did just over a decade ago.
DESTINATION EAST - DEMAND GROWTH FOR CRUDE OIL SINCE 2006
(millions barrel per day change in demand 2006-2018 for crude oil)
12
10
8
6
4
2
0
-2
(Source: Clarksons)
Europe
Africa
America
Middle East
FSU
Asia Pacific
16
SPECIAL REPORT
The maths is all about shale. Incremental oil production (US shale) is rising 15,000
nautical miles away from the location of incremental oil consumption growth (East
Asia). This used to be about 5-6,000 nautical miles when West Africa, Middle East and
the North Seas was supplying the marginal barrel.
US CRUDE EXPORTS OUTPACING IMPORTS MEANING INCREASED
DEMAND FOR SHIPPING (average distance import/export in nautical miles)
10,000
8,000
6,000
4,000
2,000
(Source: EIA)
Imports distance
Exports distance
5
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t
c
O
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c
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p
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n
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t
c
O
7
1
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2
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c
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2
-
b
e
F
8
1
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-
r
p
A
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2
-
n
u
J
8
1
0
2
-
g
u
A
8
1
0
2
-
t
c
O
The impact in terms of sailing distances can already be seen as the above chart
illustrates. Since 2017 average distance of crude exports has outpaced imports. This
trend is expected to continue as a combination of rising US shale volumes of lighter oil,
increased export facilities coming on stream from 2019 onwards and East Asia demand
continuing to grow.
US REFINERY DIET - WE ONLY WANT THE HEAVY STUFF
The focus of the US refinery sector is on the US Gulf Coast where around 50% of the
refineries reside. Given historical investment patterns, to some extent driven by the US
crude export ban between 1975 - 2015, US refiners have set themselves up to receive
heavy sour crude barrels. The following chart shows how the API Gravity content
(the higher the number the sweeter/lighter the crude) of the refinery throughput has
remained stable but the barrels being imported have become heavier. With the US
shale revolution producing (increasingly) light sweet crude this has meant additional
barrel produced by the US has had a natural bias to be exported.
US CRUDE IMPORTS - GETTING HEAVIER
34.0
32.0
30.0
28.0
26.0
24.0
22.0
(Source: EIA, Euronav)
API Gravity of US Refinery Throughout
API Gravity of US crude import
0
0
-
n
a
J
0
0
-
p
e
S
1
0
-
y
a
M
2
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a
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p
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3
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-
y
a
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n
a
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4
0
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p
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5
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y
a
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6
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n
a
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p
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y
a
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n
a
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8
0
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p
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S
9
0
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y
a
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1
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n
a
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0
1
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p
e
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1
1
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y
a
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2
1
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n
a
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2
1
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p
e
S
3
1
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y
a
M
4
1
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n
a
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4
1
-
p
e
S
5
1
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y
a
M
6
1
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n
a
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6
1
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p
e
S
7
1
-
y
a
M
8
1
-
n
a
J
8
1
-
p
e
S
KEY US SHALE GROWTH IS ALREADY CLOSE TO PORT
Permian has been the shale field driving overall production growth over the past 4 years
with over 2 million bpd alone coming from this field largely located in Texas adjacent to
the US Gulf coast and ready for export.
US SHALE - KEY GROWTH NODES ARE CLOSE TO US GULF COAST -
ESPECIALLY PERMIAN
Bakken
2019
2015
SPECIAL REPORT
17
Crude markets
will increasingly
segregate the
barrel according
to its sulphur
content.
Marcellus
Utica
Niobrara
Permian
Haynesville
2019
2015
Eagle Ford
2019
2015
(Source: EIA)
IMO 2020 REGULATIONS - COULD THIS BRING ANOTHER LEG OF GROWTH?
From 1st of January 2020 world shipping will have to move to lower sulphur or compliant
fuel with a sulphur content of 0.5% per barrel rather than the current limit of 3.5%. Only
if a scrubber is fitted the current fuel with a sulphur content of 3.5% can be used. Only
approximately 2,500 out of a global fleet of 70,000 ships are expected to be fitted with
this technology by 2020 and therefore global crude markets will increasingly segregate
the barrel according to its sulphur content. Theoretically US shale is producing (ever)
lighter crude with low sulphur content meaning it will be easier to breakdown for
a refinery and its low sulphur content makes it ideal as core constituent of the new
compliant fuel which will require circa 3-4 million bbl per day to be produced to satisfy
shipping demand. This underlying boost to US shale could be sustained over several
years as disruption from IMO 2020 is expected to last until 2024/25.
IMO 2020 TO BRING ANOTHER POTENTIAL LEG OF GROWTH FOR US
CRUDE EXPORTS?
3500
3000
2500
2000
1500
1000
500
0
5
1
0
2
-
2
1
-
8
1
6
1
0
2
-
2
0
-
8
1
6
1
0
2
-
4
0
-
8
1
6
1
0
2
-
6
0
-
8
1
6
1
0
2
-
8
0
-
8
1
6
1
0
2
-
0
1
-
8
1
6
1
0
2
-
2
1
-
8
1
7
1
0
2
-
2
0
-
8
1
7
1
0
2
-
4
0
-
8
1
7
1
0
2
-
6
0
-
8
1
7
1
0
2
-
8
0
-
8
1
7
1
0
2
-
0
1
-
8
1
7
1
0
2
-
2
1
-
8
1
8
1
0
2
-
2
0
-
8
1
8
1
0
2
-
4
0
-
8
1
8
1
0
2
-
6
0
-
8
1
8
1
0
2
-
8
0
-
8
1
8
1
0
2
-
0
1
-
8
1
8
1
0
2
-
2
1
-
8
1
-12
-10
-8
-4
-2
0
2
4
(Source: Bloomberg)
WTI Brent spread
US crude exports
18
SPECIAL REPORT
The chart above highlights the strong and close correlation between US crude export
volumes and the level of spread between Brent and WTI - with most US shale being
priced off WTI. Lower WTI prices encourage foreign buyers to stock up on US supplies.
Conventional wisdom suggests a gap of USD 3-4 per barrel between the two indices
is sufficient to encourage exports. This price differential is obviously reduced should
shipping costs fall, which with more investment in the US Gulf Coast making direct
export of US crude via VLCC (ie no reverse lightering) possible, this should help
underpin this trade.
IT’S A VLCC GAME BABY!
In the same way an individual flying from the US to East Asia would prefer to take one
flight partly for convenience but more likely cost - large crude cargoes are no different.
COST COMPARISON OF 2M BARREL CARGO BETWEEN KEY TANKER
CATEGORIES
Vessel Information
Vessel Crude Oil Capacity in Barrels
Handlings required for Shipping 2 million Barrels of Crude Oil
Cargo Quantity in Metric Tons
Gross Voyage Expenses Per Handling
Bunker Expenses at USD 250/M.T.
Loading Port Disbursments
Canal Transit Expenses
Insurance Premiums
Aframax
Suezmax
VLCC
800,000
3
100,000
313,398
20,000
-
34,000
1,000,000
2
135,000
420,307
22,000
-
50,000
2,000,000
1
285,000
616,495
30,000
-
60,000
Total Gross Expenses:
367,398
492,307
706,495
Net Freight estimation per Voyage
Cargo Quantity in Metric Tons
Rate in USD per Metric Ton
World Scale
Gross Freight in USD
Brokerage Commission of 2.50%
100,000
18,11
85
1,539,350
38,484
135,000
18,11
55
1,344,668
33,617
285,000
18,11
45
2,322,608
58,065
Total Net Freight (Gross Freight - Total Gross Exp. - Comissions)
1,133,468
818,744
1,558,048
Gross Voyage Expenses for Shipping 2 million Barrels of Crude Oil
Total Gross Expenses per Voyage
Handlings required for shipping 2 million Barrels of Crude Oil
Total Gross Expenses:
Plus rokerage Commission of 2.50%
367,398
3
1,102,194
27,555
492,307
2
984,614
24,615
Total Gross Expenses for Shipping 2 million Barrels of Crude Oil
1,129,749
1,009,229
706,495
1
706,495
17,662
724,157
SPECIAL REPORT
19
It is more cost efficient - as the table shows - to take 1x VLCC cargo than multiples of
either Suezmax or Aframax. Nearly USD 0.5 million per 2 million barrel cargo is saved
on a comparable basis. This “scale” game has other implications for US port and export
infrastructure as is demonstrated by the current race to build out infrastructure in the
US Gulf and the strategic importance of the LOOP facility - something considered in
greater detail later.
US EXPORT TRADE - REQUIRES DOLLARS AND CONTACTS - NOT AVAILABLE TO
EVERYONE
The large tanker market is very fragmented in terms of its ownership structure. There
are over 100 different owners of the 750 VLCCs in operation and a similar number for
the 500 Suezmax tankers that operate globally. The industry is also not only capital
intensive (a new VLCC has a price ticket of over USD 93 million today) but also requires
high levels of working capital, which increases with the length of a voyage. For long
voyages, this is a prohibitive amount for many owners primarily those private operators
with limited access to capital. A private owner will have to finance a voyage, usually
ballasting (empty) in the hope of gaining a cargo upon reaching say the US Gulf from the
AG (Arabian Gulf) after 30 days at working capital and fuel cost of circa USD 1 million.
CHALLENGE FOR PRIVATE TANKER OPERATORS TO BREAK INTO THE
ATLANTIC BASIN TRADE
Reposition Ballast Voyage AG to US Gulf Coast
Opex: 30 days x ca USD 9k per day= USD 270k
Fuel cost: 30 days x 60 tonnes p/d x USD 400p/t= USD
7205k
(Source: Euronav)
Congregation point of large tankers
This can then result in potentially long uncertain wait for a cargo - all at the shipowner’s
expense.
Also vetting standards tend to be higher for those engaged in Atlantic trades compared
to other locations meaning they may not qualify for many cargoes. In addition, the
crude tanker market is becoming more industrial in its operation. With only 20-30 key
customers to serve, such customers are increasingly demanding scale solutions to
their requirements often backed with strategic relationships or partnerships. This is
where pooling is growing in importance (See 2016 special paper from Euronav - www.
euronav.com/investors/company-news-reports/special-reports/getting-smarter-
through-pooling/).
WHAT DOES IT ALL MEAN FOR A SHIPOWNER?
During the second half of 2018 more US exports were heading for Europe as the marginal
barrel was too light even for Asian refiner tastes. Going forward not every barrel is
going to head East. Assuming a split between Asia and Europe of 75%/25% then every 1
million barrels of US crude export would require approximately an additional 34 VLCCs.
20
SPECIAL REPORT
(Source: Euronav)
CHALLENGE FOR PRIVATE TANKER OPERATORS TO BREAK INTO THE
ATLANTIC BASIN TRADE
US Gulf Coast - Europe route
US Gulf Coast - Far East route
1mbpd x 365 days = 365m barrels
365m barrels = 2m capacity per VLCC = 183 cargoes
183 cargoes / 16 annual journeys for VLCC USG C – F East
= 12 VLCCs
1mbpd x 365 days = 365m barrels
365m barrels = 2m capacity per VLCC = 183 cargoes
183 cargoes / 4.5 annual journeys for VLCC USG C – F East
= 41 VLCCs
Assume 25% US export
Assume 75% US export
STRATEGIC IMPLICATIONS OF US AS NET ENERGY EXPORTER
Late in 2018 the US exported more crude and crude related products (source: Citi) than
it imported and in December 2018 it was confirmed that the US had made entry into the
top 10 crude exporters in the world (source: JODI). This is a complete shift in incentives
for the US, as from end 2019 it is likely to benefit from higher, rather than lower crude
oil prices. The change has been impressive: from 12 million bpd net short in oil and
relative production in 2008 to 1.2 million net short in 2018 (source: EIA). A shift in US
incentives as a consequence will have implications far beyond shipping.
US GULF COAST CRUDE INFRASTRUCTURE - TODAY AND TOMORROW
(Source: RBN Energy)
Oiltanking
Jupiter
Trafigura
Tallgrass
Enterprise PP
LOOP
Beaumont
St. James
Houston
Seabrook
Texas City
Freeport
Port Fourchon
Corpus Cristi
Brownsville
INFRASTRUCTURE RACE IN THE US GULF COAST
The US Gulf Coast is the location for a highly competitive investment programme as
competing ports attempt to grab a slice of the US crude export expansion. Most focus
has been on the pipelines from the shale fields to the coast. There is, however, also
active investment on port expansion (including dredging to accommodate VLCCs in
certain ports such as Corpus Christi), storage facilities and offshore terminals. These
offshore “pop up” oil terminals - highlighted in the chart on previous page - allow
VLCCs to load and discharge without entering a port and could provide a strong growth
driver once onshore pipeline development is completed in second half of 2019.
EXPORT POTENTIAL - UBS FORECAST 7M CAPACITY TODAY BEFORE
EXPANSION PLANS (million bpd capacity)
SPECIAL REPORT
21
Offshore 'pop-
up' oil terminals
could provide a
strong growth
driver for shale oil
in the US.
14.25
1.24
2.7
16
14
12
10
8
6
4
2
0
1.4
1.7
(Source: UBS)
Theoretical Crude Export Capacity
7.2
Docking
Imports of Crude and Dirty Product
Exports of Dirty Product
Exports of Crude
Remaining Crude Export Capacity
With crude export volumes rising, the high cost of reverse lightering has created this
“frenzy” to build offshore ports that can handle fully laden VLCCs. Whilst US crude
exports could double or triple from current levels it is unlikely that all of the current
offshore terminal facilities planned will get built.
EXPORT POTENTIAL FROM THE US GULF COAST
Planned
0.5M BPD
Existing pipeline
4.7M BPD
Planned
0.9M BPD
Existing pipeline
0.3M BPD
Planned
2.2M BPD
Existing pipeline
1.6M BPD
Beaumont
St. James
Houston
Seabrook
Texas City
Port Fourchon
Freeport
8.25M BPD
3.5M BPD
Corpus Cristi
1.25M BPD
Brownsville
(Source: UBS, RBN Energy, Euronav)
22
SPECIAL REPORT
CONCLUSION
US crude exports are a key and critical driving force in wider US oil markets and already
have had a profound impact on the crude tanker shipping structure in only 40 months
since the crude ban was repealed in December 2015.
An accident of history - namely 40 years of an export ban - has helped create a structure
on the US Gulf Coast which is now the focus of substantial capital investment in port,
infrastructure and offshore terminals trying to position US crude exports for multi-year
expansion. This will assist in driving US crude export capacity to between 5-7 million
bpd over the next 2-3 years.
An accident of geography - namely the Panama Canal being unable to accommodate
vessels the size of a fully laden VLCC - the category of choice for such a long haul
voyage to the Far East - is often overlooked as part of the growth trajectory of US crude
exports. This means exports from the US will have to travel the maximum distance
given the key consumer and driver of demand is from East Asia.
Adding to these historical “accidents” are several other supportive factors. Firstly, the
US produced shale oil volumes continue to get lighter - and the barrels demanded by
the US refinery complex get heavier. The incremental barrel being produced by the US
is therefore likely to be exported. Secondly, IMO 2020 fuel regulations will likely drive
increased demand for the very light sweet crude that the US is producing as the new
regulations are likely to segregate the sulphur content of the barrel. Thirdly, ton mile
expansion should continue as volumes rise from the US to Asia.
To conclude, the dynamism that the US shale revolution coupled with the capability
to export crude from the US from December 2015 has brought profound change to
the wider oil and shipping markets. However this process still has further to run.
The capital investment currently ongoing to improve export and pipeline capacity will
underpin potential for US exports between 5-7 million bbls per day in the medium
term supported by continued structural demand growth from Asia, regulatory change
from IMO 2020 and economics requiring VLCCs as the transport of choice for US
crude exports.
What is reverse lightering
Loading VLCCs via reverse lightering is an interim and costly alternative to
loading directly from a deepwater terminal. Panamax and Aframax tankers
used to shuttle crude from land-based ports to VLCCs offshore tankers are
typically leased out for three-day periods to get one transfer done. That means
that for an Aframax tanker that typically hauls 800 thousand bbl of crude, four
separate trips would be required to fill one VLCC. Filling a supertanker that way
would take at least 12 days in the most efficient scenario, and cost as much as
USD 600,000 in chartering costs.
Compare these costs and logistics to that of a VLCC-capable deepwater terminal.
Several terminals are designing loading arms that can move 2 MMbbl in a 24-
hour period, significantly improving efficiency. With U.S. crude export volumes
now high enough to fill nearly one 2 million bbl VLCC a day, there is a big push
on to develop new offshore terminals capable of fully loading the supertankers
off the coasts of Texas and Louisiana. There also are at least a couple of efforts
under way to develop onshore terminals capable of fully loading VLCCs at
SPECIAL REPORT
23
(Source: UBS, RBN Energy, Euronav)
Reverse Lightered
Direct Export
Harbor Island and at Ingleside, TX, both of which are near the entrance to the
Corpus Christi Ship Channel.
Those exported barrels have increasingly sought Asia as a primary market for
U.S.-sourced crude, and the most cost-efficient way to transport large volumes
of oil from the Gulf Coast to China, South Korea, Japan, India and other buyers
there is to use VLCCs. It is estimated that nearly half of all of the crude exported
from existing land-based ports along the Gulf Coast in the first 10 and a half
months of 2018 were transferred via reverse lightering as the chart on below
illustrates.
US CRUDE EXPORTS FROM GULF COAST 2018
(M BBLS CRUDE EXPORT VOLUMES) 1-16 NOVEMBER 2018
200
180
160
140
120
100
80
60
40
20
0
Louisiana
Beaumont
Houston
Corpus Christi
The importance of LOOP
LOOP, located in 110-foot-deep waters 18 miles off Port Fourchon, LA, is the
only Gulf Coast terminal currently capable of fully loading VLCCs. Originally
designed as an import-only terminal, and operational since 1979, in early 2018
modifications were made to its facilities to allow crude to be loaded onto VLCCs
and sent abroad. LOOP remains the only gulf coast port that can fully load 2
million bbl VLCC which for economic reasons have emerged as the transporter
of choice for crude exports to Asia. LOOP has indicated that in 2019 it expects to
load and send out about one VLCC per month, on average.
LOOP’s offshore facility consists of a marine terminal, as well as three single-
point mooring bases (SPMs) each located about a mile and a half from the
terminal. VLCCs either offload or load at these SPMs. The marine terminal is
connected to LOOP’s Clovelly storage and distribution hub in Galliano, LA, via
the 48-inch-diameter, 1.7 million bpd/d LOOP Pipeline, which has been modified
to allow for crude to flow either from the marine terminal to Clovelly or from
Clovelly to the terminal.
Directors'
report
26
DIRECTORS' REPORT
Vision and
Mission
Vision
•
•
•
To lead responsibly the global crude oil tanker industry.
To seize every opportunity to reshape our industry in an era of unprecedented
changes.
To promote and support sustainable programs to minimize the environmental
impact of our industry.
Mission
FOR OUR SOCIETY
To deliver an essential source of energy in ways that are 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 objectives by
providing flexible, global high-quality and reliable services.
FOR OUR SHAREHOLDERS AND CAPITAL PROVIDERS
To create significant long-term value by strategically planning financial and investment
decisions while efficiently, consistently and transparently act as good stewards of
capital.
FOR OUR EMPLOYEES
To attract, inspire and enable talented, hard-working people to develop themselves
in order to contribute to our business and its vision in a challenging and rewarding
environment.
DIRECTORS' REPORT
27
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 18 March
2019, Euronav owns and manages a fleet of 72 vessels. The Company, incorporated in
Belgium, is headquartered in Antwerp. Worldwide Euronav employs approximately 200
people on shore (including temporary assignments and contractors) and has offices
throughout Europe and Asia. Over 2,700 people work on the vessels. Euronav is listed
on Euronext Brussels and on the NYSE under the symbol EURN.
Company
profile
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 adapting its balance
sheet leverage and liquidity position in accordance with the sources of its revenues
which can be fixed (long term FSO Income and/or TC portfolio) or floating (pool and
spot revenues).
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.
By 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.
Euronav has
progressed
from a family
operation with
17 vessels to the
largest crude
tanker company
in the world with
72 vessels, listed
on both Euronext
and NYSE.
28
DIRECTORS' REPORT
DIRECTORS’
REPORT:
Highlights
2018
Overview of the Market
OIL DEMAND, PRODUCTION AND BUNKER COSTS
Following a number of years of low freight rates and a struggling tanker market the
majority of market participants expected a freight market rebound in 2018. This did
happen, albeit with a slight delay compared to what the mainstream view was at the
start of the year of a tanker market recovery by the half way point of the year. The market
recovery did materialise but not until towards the end of the third quarter, leaving many
tanker owners in tight cashflow positions for large parts of the year.
2018 began with a significant oversupply of tonnage on the back of a heavy delivery
programme in the previous year in both the VLCC and the Suezmax segments, combined
with restriction in the supply of oil from an extended OPEC production cut. This left
sustained pressure on the freight market through the winter months.
The price of oil was on an upward trajectory for most of 2018 but in spite of this the
demand for oil remained robust and saw an annual increase of 1.3% or 1.27 million bpd,
mainly driven by strong global economic growth. The largest contributors to global oil
demand growth in 2018 were China, India and the US. China has seen increased demand
from the non-state owned teapot refineries that have started new crude distillation
units and therefore pulling in more crude, and the country has surpassed the US as the
world’s largest crude importer. In India the country’s economy has picked up and rising
income levels have boosted oil demand with a rise in construction activities and growth
in the sales of cars, trucks and scooters. Oil demand growth in the US was mainly
due to additional demand from the petrochemical sector which has been increasing
capacity. Extra demand for heating oil was also generated due to a prolonged winter
season. Global oil demand began to show signs of weakening towards the end of the
year on signs of a slowing global economy caused partly by the looming US-China trade
war along with weaker than expected performance in the Euro zone.
The price of oil peaked in early October with Brent trading above USD 86 per barrel.
There was a perceived tightness in the market on the oil supply side with OPEC still
producing at reduced levels, supply constraints in Venezuela due to political tension in
the country and the introduction of sanctions by the US on Iran with the aim to reduce
the country’s exports to nil. All these factors combined with robust demand drove up the
price of oil to a level not seen since 2014. Oil prices then experienced a dramatic drop
and Brent ended the year at close to USD 50 per barrel. A number of factors caused
this drop; Saudi Arabia ramped up oil production in October to backfill for a reduction
WORLD OIL DEMAND (in million bpd)
105
100
95
90
85
80
75
(Source: IEA)
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
in Iranian exports on the announcement of sanctions against the country. However,
unexpectedly the US decided to issue waivers that allowed for Iran to export oil to some
customers and its production levels did not drop as much as expected. At the same
time production in the US continued to ramp up and with improved infrastructure in
the US Gulf region these barrels had better access to the market. There was too much
oil around at a time when the demand for oil was weakening and this caused the price
collapse.
In December 2018 OPEC agreed with a group of allies, including Russia, to a new
production cut to remove 1.2 million bpd from the market starting in January 2019,
albeit from a baseline production level based on October 2018 numbers, when output
was relatively high. This production cut will run for an initial period of 6 months.
WORLD OIL PRODUCTION (in million bpd)
DIRECTORS' REPORT
29
2018 began with
a significant
oversupply
of tonnage
combined with a
restriction in the
supply of oil.
105
100
95
90
85
80
75
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(Source: IEA)
30
DIRECTORS' REPORT
While rising oil supply led to a drop in oil price this was also the event that finally
led to a recovery in the crude shipping market. The return of OPEC barrels, rising
US exports and record Chinese imports have set a scene where the number of crude
cargoes increased significantly and many of these incremental cargoes were destined
for long haul destinations. In particular export barrels from the US have provided a lot
of support to crude tanker demand as most of the demand for these exports comes
from the Far East. There was some concern that the trade war between the US and
China might impact the ability for the US to find buyers for its exports, but the barrels
were diverted to other markets, providing similar tonnemiles, such as South Korea,
Japan, Taiwan and Singapore. More recently direct US exports to China have restarted.
With infrastructure development continuing we expect to see further expansions to the
US export market in 2019.
While the demand for tankers rose to a level that had significant impact only in the fourth
quarter of 2018 the tanker supply side story started earlier in the year. As alluded to
earlier, the year started with a vast oversupply of tonnage and the influx of new vessels
into the market continued for the first few months of the year, in particular the Suezmax
segment saw a newbuilding delivery programme that was very front heavy. Total delivery
numbers for the year added up to 31 Suezmaxes, 15 of which were delivered during the
first quarter, while 39 new VLCCs were added to the market, more evenly spread out
through the year. We saw about 30% of vessels scheduled for delivery at the outset of the
year having their delivery dates deferred, which meant a more manageable programme
than the two previous years.
The other side to the tanker supply side story is fleet exits, and this is where we have seen
great progress in 2018. Both in the VLCC and in the Suezmax segment recycling became
a strong and welcome feature with a total of 33 VLCCs and 20 Suezmax vessels removed
from the trading to be recycled and a further two VLCCs exiting the fleet for conversion to
FPSO. This left the market with a net fleet growth of 6 VLCCs and 11 Suezmaxes which in
percentage terms equates to 0.8% and 2.1% respectively. This elevated level of recycling
activity resulting in limited fleet growth over the year allowed the fleet expansion seen
in the previous two years to be absorbed and has at year-end left the tanker market in a
relative equilibrium in terms of vessel supply and demand.
The strong vessel exit programme enjoyed in 2018 was helped by a couple of factors.
Recycling prices have risen to above USD 18 million for a VLCC and USD 10 million for a
Suezmax, negative cash flow pressure on older tonnage from challenged freight markets
VLCC CARGO EVOLUTION (cargoes per month)
300
250
200
150
100
50
(Source: TI VLCC Database)
2017
2018
2014
2015
2016
Jan
Feb Mar
Apr May
Jun
Jul
Aug
Sep
Oct Nov Dec
DIRECTORS' REPORT
31
for most of the year, low utilisation and growing pressure from incoming regulatory
changes have all provided support for recycling through the first three quarters of the
year. Recycling activity understandably slowed down during the fourth quarter when
owners enjoyed a higher freight rate environment.
Another factor that has supported a tighter tonnage balance in 2018 is the sanctions
imposed on Iran. While waivers have allowed for some level of continued crude and
condensate export from the country the sanctions have also impacted the country’s
national fleet, which cannot trade freely with international customers and is therefore
not in direct competition with the general market. In addition, a number of vessels in
the national fleet have been used for domestic floating storage of oil that cannot find
receivers.
32
DIRECTORS' REPORT
TANKER MARKETS
The average Time Charter Equivalent (TCE) obtained by the Company’s owned VLCC
fleet trading in the Tankers International (TI) Pool was USD 23,005 per day for 2018
compared to USD 28,119 per day in 2017.
The average earnings of Euronav’s VLCC time charter fleet was USD 33,338 per day in
2018, compared to USD 39,629 per day for 2017.
The average TCE obtained by the Company’s Suezmax spot fleet traded by Euronav
directly was USD 15,783 per day in 2018, compared to USD 18,085 per day in 2017.
The average earnings of Euronav’s Suezmax time charter fleet was USD 30,481 per day
in 2018, compared to USD 22,131 per day in 2017.
WORLD FLEET VLCC EARNINGS (TCE)
100,000
80,000
60,000
40,000
20,000
0
-20,000
(Source - TI VLCC Database)
TI Actual in USD
BDTI (Baltic Exchange Dirty Tanker
Index Evolution) VLCC TCE
(avg of TD1 and TD3)
01 Jan 2014
01 Jan 2015
01 Jan 2016
01 Jan 2017
01 Jan 2018
01 Jan 2019
BALTIC EXCHANGE DIRTY TANKER INDEX RATE EVOLUTION (WS)
200
175
150
125
100
75
50
25
(Source: TI VLCC Database)
TD20 - West Africa / Cont
TD6 - Black Sea / Med
2010
2011
2012
2013
2014
2015
2016
2017
2018
BALTIC EXHANGE DIRTY TANKER INDEX RATE EVOLUTION (WS)
DIRECTORS' REPORT
33
130
110
90
70
50
30
10
2010
2011
2012
2013
2014
2015
2016
2017
2018
Fleet Growth
At the start of the year the global VLCC fleet consisted of 720 vessels while the Suezmax
fleet comprised 514 vessels. The market saw a smaller influx of newbuildings over the
year compared to the previous two years with 39 additional VLCCs and 31 new Suezmax
vessels delivered. In terms of fleet exits a total of 33 VLCCs and 20 Suezmaxes left
the trading fleet during 2018. This represents a net fleet growth of 0.8% and 2.1%
respectively, which is the lowest level of growth seen in the market for a while.
Looking forward the tanker markets still expect a significant influx of newbuildings in
2019, in particular in the VLCC segment where companies have been ordering ships
to renew their fleets, and we have also seen increased activity from newly emerged
investment companies which are ordering vessels on a more speculative basis.
(Source: TI VLCC Database)
TD1 - Arabian Gulf / US Gulf
TD3 - Arabian Gulf / Japan
TD15 - West Africa / China
34
DIRECTORS' REPORT
(Source: Clarksons)
Additions
Forecast additions
Removals
Removals scenario
(Source: Clarksons)
Additions
Forecast additions
Removals
Removals scenario
Ordering activity was particularly prevalent at the beginning of 2018 but this slowed
down through the middle and end of the year. In total the market counted 33 new VLCCs
orders in 2018 while contracts for 10 new Suezmaxes were concluded.
With the regulatory requirements for ballast water management systems and sulphur
emissions imminent, there is continuous focus on whether older vessels in particular
are still economical to run. This will likely provide an incentive for owners of this type of
tonnage to consider an exit strategy rather than facing special or intermediate surveys.
VLCC FLEET DEVELOPMENT (Vessels)
80
60
40
20
0
-20
-40
-60
70
47
50
39
24
-14
20
-4
31
10
0
-4
-15
-13
-33
-36
-22
-32
2014
2015
2016
2017
2018
2019
2020
2021
2022
SUEZMAX FLEET DEVELOPMENT (Vessels)
60
40
20
0
-20
-40
-60
51
26
31
33
-3
-12
-11
-20
8
-7
9
-2
15
-28
2
0
-14
-24
2014
2015
2016
2017
2018
2019
2020
2021
2022
DIRECTORS' REPORT
35
The Top 3 active
regions for
future FSO/FPSO
projects are
Southeast Asia,
Africa and Brazil.
FSO and FPSO market1
By the end of 2018 there were 395 floating production systems in service or available
worldwide among which were 174 FPSOs and 98 FSOs. This does not include 26
FPSOs that are available for reuse. In addition there are two FPSOs that are out of
service for extended repairs.
In total 49 production floaters, six FSOs and four MOPUs are currently on order, which
is the same as early this year. New orders are unlikely to keep up with the 22 deliveries
scheduled in 2019, so the backlog is expected to decline into the low 40’s by year-end.
Currently, there are 226 floater projects in the appraisal, planning or bidding or final
design stage that may require a floating production or storage system. Of these
projects, 64 are in the bidding or final design stage and another 120 floater projects
are in the planning phase. For these planned projects, the major hardware contracts
are planned between 2021 to 2023 but studies are still ongoing to assess the economic
viability of the projects, particularly those in deep water and harsh environments.
Finally, 42 projects are in the appraisal stage.
The most active region for future projects would be Southeast Asia with a total of 43
potential floater projects planned. Next is Africa with 42 projects. Brazil remains in third
place with 33 projects. The remaining regions have fewer potential projects including
Gulf of Mexico (22), Northern Europe (21), Southwest Asia / Middle East (18), Australia
(16), South America and the Mediterranean (9 each), Canada and China (5 each).
Over 50% of the facilities responsible for production floater fabrication and conversion
are based in Asia. Keppel and Samsung continue to be the busiest yards each with at
least six projects underway.
1 Floating storage and offloading / floating
production storage and offloading market.
36
DIRECTORS' REPORT
(Source: Energy Maritime Associates Pte Ltd)
Bidding / Final design
Planning
Appraisal
PROJECTS IN PLANNING, APPRAISAL AND FINAL DESIGN
PHASE BY REGION
50
45
40
35
30
25
20
15
10
5
0
9
12
26
22
8
8
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C
Euronav fleet
On 18 March 2019 Euronav’s owned and operated fleet consists of 72 vessels being two
V-Plus vessels, two FSO vessels (both owned in 50%-50% joint venture), 43 VLCCs and
25 Suezmaxes.
At the time of preparing this report (18 March 2019), Euronav’s tonnage profile is as
follows:
VLCC and V-Plus owned
VLCC chartered in
Suezmax owned
FSO owned (50%)
Total owned and controlled tonnage
14,012,406.00 dwt
1,229,136.00 dwt
3,920,217.00 dwt
864,046.00 dwt
20,025,805.00 dwt
Euronav’s vessels have an aggregate carrying capacity of approximately 20 million
dwt. On 18 March 2019 the weighted average age of the Company’s trading fleet was
approximately 8,6 years.
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 fleets
worldwide and comprises on 18 March 2019 65 vessels of which 42 vessels operated
by Euronav. The average age of Euronav’s owned and operated VLCC fleet on 18 March
2019 is 5,8 years.
Part of Euronav’s Suezmax fleet is chartered out on long-term contracts. On 18 March
2019 the average age of the Suezmax fleet is approximately 10,4 years.
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.
DIRECTORS' REPORT
37
Most Gener8 vessels remain under third party ship management. Euronav exclusively
cooperates with top tier Third Party managers and has put in place a manage-the
managers programme to safeguard the quality of its services.
Overview of the year 2018*
THE FIRST QUARTER
For the first quarter of 2018, the Company had a net loss of USD (39.1) million or
USD (0.25) per share (first quarter 2017: USD 34.3 million or USD 0.22 per share).
Proportionate EBITDA (a non IFRS-measure) would have been USD 30.7 million (first
quarter 2017: USD 106.1 million). The average daily TCE obtained by the Company’s
fleet in the TI Pool was approximately USD 18,725 per day (first quarter 2017: USD
40,528 per day). The TCE of the Euronav VLCC fleet fixed on long-term charters,
including profit shares when applicable, was USD 34,000 per day (first quarter 2017:
USD 41,147 per day). The average daily TCE obtained by the Suezmax spot fleet was
approximately USD 14,000 per day (first quarter 2017: USD 24,000 per day). The TCE
of the Euronav Suezmax fleet fixed on long-term time charters, including profit shares
when applicable, was USD 23,850 per day (first quarter 2017: USD 23,880 per day).
In general in 2018 time charter fixtures above 12 months were scarce in both the VLCC
and the Suezmax segment. Typically charterers and traders were interested in Time
Charter deals for a shorter term and often index related.
January
Euronav
On 23 January 2018 Euronav announced that the company has been selected from
ten sectors and the only Belgian listed company to join the inaugural 2018 Bloomberg
Gender - Equity Index ("GEI").
The reference index measures gender equality across internal company statistics,
employee policies, external community support and engagement, and gender-
conscious product offerings. Euronav is the first Belgian headquartered Company and
only transportation or shipping company in the index.
In the market
DHT Lotus (VLCC, 2011) chartered by Stasco for 1 year at USD 17,500 per day plus profit
share.
Pacific M. (VLCC, 2019) chartered by BP for 1+1+1 years at USD 33,000 per day (options
at USD 34,000 per day). The vessel will be fitted with scrubbers.
DHT Edelweiss (VLCC, 2018) chartered by Northern Petroleum for 1 year at USD 17,800
per day plus profit share.
* The financial information in this section is
based on consolidated figures under IFRS.
38
DIRECTORS' REPORT
New Pearl (VLCC, 2011) chartered by ExxonMobil for 6 months at USD 28,000 per day.
Nordic Castor (Suezmax, 2004) chartered by Cepsa for 1 year at USD 17,000 per day.
Eagle San Jose (Suezmax, 2018) chartered by Repsol for 4 + 1 years at USD 19,650 per
day plus profit share.
Sea Amber (Suezmax, 2016) chartered by Equinor for 1 year at USD 19,000 per day.
February
Euronav
On 1st of February 2018 the Company received a transparency notification from
Châteauban SA, a holding company part of the CLdN-Cobelfret group whose main
activities are in bulk shipments, ro-ro shipments and port companies. Following the
acquisition of voting securities or voting rights on 31 January 2018, Châteauban SA held
10% of the voting rights in the Company on the date of the notification.
In the market
2 Daewoo newbuildings (VLCC, 2019) chartered by GS Caltex for 5 years at USD 32,500
per day.
KHK Empress (VLCC, 2019) and KHK Majesty (VLCC, 2019) chartered by BP for 3 years
at USD 33,000 per day. The vessels will be fitted with scrubbers
SKS Sinni (Suezmax, 2003) chartered by Trafigura for 6 + 6 months at USD 14,000 per
day + USD 16,300 per day.
March
Euronav
On 26 March 2018 Suezmax Cap Quebec (2018 - 156,600 dwt) was delivered into the
Euronav fleet. This vessel was the first of four Ice Class Suezmax vessels progressively
starting seven-year contracts with a leading global refinery player from delivery during
2018.
When taking delivery of the Cap Quebec, the Company paid USD 45.5 million (including
the final instalment). In addition, the Company paid for a total of USD 12.4 million worth
of instalments towards the construction of the three remaining Suezmax vessels at
Hyundai Heavy Industries which were due for delivery between March and September.
In the market
Almi Atlas (VLCC, 2018) and Almi Titan (VLCC, 2018) chartered by Koch for 1 + 1 years at
USD 22,000 per day. The vessels are reportedly fitted with scrubbers.
Australis (VLCC, 2003) chartered by Petroineos for 2 +1 years at USD 20,000 per day.
The C. Challenger (VLCC, 2013) chartered by Koch for 1 + 1 years at USD 20,000 per day
(option at USD 22,000 per day).
C. Progress (VLCC, 2012) chartered by Unipec for 1 + 1 years at USD 20,000 per day
(option at USD 22,000 per day).
Energy Triumph (Suezmax, 2018) chartered by Vitol for 1 year at USD 16,800 per day
plus profit share.
THE SECOND QUARTER
The Company had a net half year loss of USD (51.6) million or USD (0.31) per share (first
semester 2017: USD 10.1 million or USD 0.06 per share). Proportionate EBITDA (a non-
IFRS measure) for the same period would have been USD 98.8 million (first semester
DIRECTORS' REPORT
39
2017: USD 151.8 million). For the second quarter of 2018 the average daily TCE obtained
by the Company’s fleet in the TI Pool was approximately USD 16,751 per day (second
quarter 2017: USD 28,351 per day). The TCE of the Euronav VLCC fleet fixed on long-term
charters, including profit shares when applicable, was USD 34,976 per day (second quarter
2017: USD 41,480 per day). The average daily TCE obtained by the Suezmax spot fleet was
approximately USD 12,883 per day (second quarter 2017: USD 17,341 per day). The TCE of
the Euronav Suezmax fleet fixed on long-term time charters, including profit shares when
applicable, was USD 20,882 per day (second quarter 2017: USD 21,651 per day).
April
Euronav
On 25 April 2018 Euronav took delivery of the Cap Pembroke (2018 - 156,600 dwt)
against the payment of the remaining instalments of USD 43.5 million in aggregate.
This vessel was the second of four Ice Class Suezmax vessels progressively starting
seven-year contracts with a leading global refinery player from delivery during 2018.
On 25 April 2018 the Company received a transparency notification from Wellington
Management Group LLP. Following the acquisition of voting securities or voting rights
on 24 April 2018, Wellington Management Group LLP held 5.05% of the voting rights in
the Company on the date of the notification.
In the market
FPMC C Melody (VLCC, 2011) and FPMC C Noble (VLCC, 2012) chartered by Frontline for
2 years at USD 22,000 per day.
Bunga Kasturi Enam (VLCC, 2008) chartered by Reliance for 1 year at USD 20,000 per
day.
Densa Whale (Suezmax, 2012) and Densa Orca (Suezmax, 2012) chartered by Vitol for 1
year at USD 13,500 per day.
Almi Voyager (Suezmax, 2014) chartered by Stena for 1 year at USD 15,000 per day plus
profit share.
May
Euronav
On 9 May 2018 the General Meeting of Shareholders approved the annual accounts for
the year ended December 31, 2017, as well as a gross dividend of USD 0.12 per share.
In the market
Erbil (VLCC, 2016) and the Baghdad (VLCC, 2016) chartered by AISSOT for 5 years at
USD 23,500 per day.
Karbala (VLCC, 2010) chartered by AISSOT for 5 years at USD 20,500 per day.
Almi Galaxy (Suezmax, 2012) chartered by Stena for 1 year at USD 15,000 per day plus
profit share.
June
Euronav
On 8 June 2018 Euronav sold the Suezmax Cap Jean (1998 - 146,643 dwt) for USD 10.6
million. The sale of the Cap Jean is part of a fleet rejuvenation program.
On 11 June 2018 Euronav NV and Gener8 Maritime, Gener 8 Inc. announced that
Gener8's shareholders had approved the merger between the two companies by which,
upon the closing of the merger, Gener8 would become a wholly-owned subsidiary of
Euronav. Holders of 81% of the outstanding shares of Gener8 cast their vote, of which
98% approved the merger.
40
DIRECTORS' REPORT
On 12 June 2018 Euronav successfully concluded the merger with Gener8.
60,815,764 new ordinary shares were issued to Gener8 shareholders as consideration
for the transaction and began trading on the NYSE. The merger created the leading
independent large crude tanker operator in the world.
On 14 June 2018 Euronav received a transparency notification from Victrix NV of passive
crossing of the 5% threshold following the capital increase dated 12 June 2018.
On 14 June 2018 Euronav received a transparency notification from Châteauban SA
of passive undercrossing of the 10% threshold following the capital increase dated 12
June 2018.
On 14 June 2018 Euronav successfully sold 6 modern, Chinese built VLCCs to
International Seaways for a total consideration of USD 434 million. This included USD
123 million in cash consideration and USD 311 million in the form of assumption of the
outstanding debt related to the vessels. This was an important part of the wider Gener8
Maritime transaction as it allowed Euronav to retain leverage around target level of
50% and to retain substantial liquidity going forward. The six vessels were the Gener8
Miltiades (2016 - 301,038 dwt), Gener8 Chiotis (2016 - 300,973 dwt), Gener8 Success
(2016 - 300,932 dwt), Gener8 Andriotis (2016 - 301,014 dwt), Gener8 Strength (2015 -
300,960 dwt) and Gener8 Supreme (2016 - 300,933 dwt).
On 15 June 2018 Euronav received a transparency notification from M&G Investment
Management Limited of passive undercrossing of the 5% threshold following the capital
increase dated 12 June 2018.
On 15 June 2018 Euronav received a transparency notification from Wellington
Management Group LLP of passive undercrossing of the 5% threshold following the
capital increase dated 12 June 2018.
On 18 June 2018 Euronav received a transparency notification from Saverco NV of
passive undercrossing of the 10% threshold following the capital increase dated
12 June 2018.
On 27 June 2018 Euronav Tankers NV acquired the V-Plus Seaways Laura Lynn (2003 -
441.561 dwt) from Oceania Tanker Corporation, a subsidiary of International Seaways
for USD 32.5 million. Euronav renamed the V-Plus as Oceania and registered it under
the Belgian flag. The Seaways Laura Lynn was the only other V-plus in the global tanker
fleet - Euronav was also owner of the other one, the TI Europe (2002 - 442,470 dwt),
providing the Company with a significant strategic opportunity.
In the market
2 x ACOL newbuildings (VLCC, 2020) chartered by ExxonMobil for 3 years at USD 35,000
per day. The vessels will be fitted with scrubbers.
Chios (Suezmax, 2016) chartered by Equinor for 3 years at USD 21,700 per day.
Aegean Dream (Suezmax, 2016) chartered by Equinor for 2 years at USD 20,500 per day.
THE THIRD QUARTER
For the third quarter 2018, the Company had a net loss of USD (58.7) million or USD
(0.27) per share (third quarter 2017: net loss USD (28.1) million or USD (0.18) per share).
Proportionate EBITDA (a non-IFRS measure) for the same period would have been USD
50.9 million (third quarter 2017: USD 46.2 million). The TCE obtained by the Company’s
VLCC fleet in the TI Pool was approximately USD 17,773 per day (third quarter 2017:
USD 18,875 per day). The TCE of the Euronav VLCC fleet fixed on long-term charters,
including profit shares when applicable, was USD 31,374 per day (third quarter 2017:
DIRECTORS' REPORT
41
USD 39,875 per day). The average daily TCE obtained by the Suezmax spot fleet was
approximately USD 14,919 per day (third quarter 2017: USD 15,670 per day). The TCE
of the Suezmax fleet fixed on long-term time charters, including profit shares when
applicable, was USD 29,624 per day (third quarter 2017: USD 21,210 per day).
In the third quarter 2018 Euronav started successfully the integration of the Gener8
fleet by transferring 3 Gener8 vessels to Euronav NV. On 6 September 2018 the Suezmax
Gener8 Harriet G was the first vessel to join the Euronav fleet and at the same time
was renamed Statia as well as registered under Belgian flag (former Liberian flag).
The VLCC Gener8 Hera was renamed Drenec and reflagged from the Marshall Islands
flag to the Liberian flag on 10 September 2018. As from 28 September 2018 the VLCC
Gener8 Hector is known as Heron and remained under the Liberian flag.
July
In the market
Tonegawa (VLCC, 2018) chartered by Koch for 3 years at USD 30,000 per day.
Lita (VLCC, 2018) chartered by ExxonMobil for 7 years at USD 31,000 per day.
No long term Suezmax deals done in July.
August
Euronav
On 8 August 2018, Euronav took delivery of the third Suezmax the Cap Port Arthur (2018
- 156,600 dwt) with the fourth and last vessel from Hyundai Heavy Industries due for
delivery at the end of August. During the second quarter a total of USD 43.6 million was
made in instalment payments towards the construction of the two Suezmax vessels at
Hyundai Heavy Industries.
On 22 August 2018 Euronav sold the Suezmax Cap Romuald (1998 - 146,640 dwt) for USD
10.6 million. The sale of the Cap Romuald is part of a fleet rejuvenation program.
On 29 August 2018 Euronav took delivery of the Cap Corpus Christi (2018 - 156,600 dwt)
against the payment of the remaining instalments of USD 43.6 million in aggregate.
In the market
Ascona (VLCC, 2019) chartered by BP for 3 years at USD 34,000 per day. The vessel will
be fitted with scrubbers.
42
DIRECTORS' REPORT
New Energy (VLCC, 2016) chartered by BP for 1 year at USD 20,000 per day.
Papalemos (VLCC, 2018) chartered by Vitol for 1 year at USD 24,000 per day.
Wasit (VLCC, 2017) and Nasiryah (VLCC, 2017) chartered by AISSOT for 1 year at USD
29,000 per day.
Istanbul (Suezmax, 2015) chartered by Stena for 1 year at USD 16,000 per day.
17 February (Suezmax, 2008) chartered by Dragun for 6+6+6 months at USD 14,750 per
day + USD 15,250 per day + USD 16,250 per day.
September
In the market
New Champion (VLCC, 2018) chartered by Koch for 3 years at USD 29,750 per day.
Chryssi (VLCC, 2000) chartered by IOC for 1 year at USD 18,900 per day.
Milos (Suezmax, 2016) chartered by Vitol for 6 months at USD 15,850 per day plus profit
share, with a 1 year option at USD 19,000 per day plus profit share.
THE FOURTH QUARTER
For the fourth quarter 2018, the Company had a net profit of USD 0.1 million or
USD 0.00 per share (fourth quarter 2017: USD 19.4 million or USD 0.12 per share).
Proportionate EBITDA (a non-IFRS measure) would have been USD 108.5 million
(fourth quarter 2017: USD 95.7 million). For the full year ending December 31, 2018
a net loss was recorded of USD (110) million or USD (0.57) per share (2017: USD 1.4
million or USD 0.01 per share). The TCE obtained by the Company’s fleet in the TI pool
was for the fourth quarter approximately USD 34,959 per day (fourth quarter 2017:
USD 25,889 per day). The TCE of the Euronav VLCC fleet fixed on long-term charters,
including profit shares when applicable, was USD 31,797 per day (fourth quarter 2017:
USD 35,399 per day). The TCE obtained by the Suezmax spot fleet was approximately
USD 20,553 per day for the fourth quarter (fourth quarter 2017: USD 15,891 per day).
The earnings of the Euronav Suezmax fleet fixed on long-term time charters, including
profit shares when applicable, were USD 40,256 per day for the fourth quarter (fourth
quarter 2017: USD 21,417 per day).
Time charter equivalent for the full year:
In USD
VLCC spot
2018
2017
23,005 per day
28,119 per day
VLCC time charter
33,338 per day
39,629 per day
Suezmax spot
15,783 per day
18,085 per day
Suezmax time charter
30,481 per day
22,131 per day
In the fourth quarter 2018 the integration of the former Gener8 fleet to Euronav NV was
completed with the following 18 former Gener8 vessels:
DIRECTORS' REPORT
43
Euronav fleet
expanded with
18 former Gener8
vessels.
* MI = Marshall Islands
** Renaming and reflagging completed on 20
February 2019
*** Renaming and reflagging scheduled for the
second quarter of 2019
VLCC
Former name
New name
Former
flag*
New
flag
Andaman
Liberian
Liberian
Dia
MI
Liberian
Dalma
MI
Liberian
Alboran
Liberian
Liberian
Amundsen
Liberian
Liberian
Donoussa
MI
Liberian
Arafura
Liberian
Belgian
Dominica
MI
Liberian
Hatteras
Liberian
Liberian
Aegean
Liberian
Belgian
Daishan
MI
Liberian
Aral
Liberian
Belgian
Desirade
MI
Liberian
Gener8
Perseus
Gener8
Athena
Gener8
Hercules
Gener8
Nautilus
Gener8
Ethos
Gener8
Apollo
Gener8
Macedon
Gener8
Neptune
Gener8
Nestor
Gener8
Oceanus
Gener8
Atlas
Gener8
Constantine
Gener8
Ares
SUEZMAX
Date
3 October
2018
5 October
2018
8 October
2018
15 October
2018
18 October
2018
26 October
2018
7 November
2018
12 November
2018
23 November
2018
26 November
2018
27 November
2018
7 December
2018
31 December
2018
Former name
New name
Former
flag*
New
flag
Date
Gener8
St. Nikolas
Gener8
Kara G
Gener8
George T
Gener8
Maniate
Gener8
Spartiate
Sapphira
MI
Belgian
Selena
Liberian
Belgian
Sienna**
MI
Belgian**
Sofia
MI
Greek
Stella***
MI
Greek***
8 October
2018
16 October
2018
5 December
2018
10 December
2018
16 December
2018
44
DIRECTORS' REPORT
October
Euronav
Euronav paid an interim dividend of USD 0.06 per share for the first half of 2018.
The dividend was payable as from 8 October 2018.
On 31 October 2018 Euronav entered into a sale agreement regarding the Suezmax
vessel Felicity (2009 - 157,667 dwt) with a global supplier and operator of offshore
floating platforms. A capital loss on the sale of approximately USD 3.0 million was
recorded in Q4 2018. The cash generated on this transaction after repayment of
debt was USD 34.7 million. The vessel was delivered to her new owners and would
be converted into an FPSO and therefore left the worldwide trading fleet in 2019. The
sale - the eighth vessel successfully introduced by Euronav into an offshore project -
demonstrated Euronav’s capability to generate value for its stakeholders and reflected
its reputation for providing high quality operational tonnage for the offshore sector.
In the market
Maria P. Lemos (VLCC, 2018) chartered by Mercuria for 1 year at USD 31,500 per day.
Bunga Kasturi Dua (VLCC, 2005) chartered by Koch for 6+6 months at USD 27,000 per
day.
Nordic Cygnus (Suezmax, 2018) chartered by Vitol for 3 years at USD 21,000 per day.
November
Euronav
On 29 November 2018 Euronav sold the LR1 vessel Genmar Companion (2004 - 72,768
dwt). A capital loss on the sale of approximately USD 0.2 million was recorded in Q4
2018. The cash generated on this transaction after repayment of debt was USD 6.3
million. The vessel was delivered to her new owners on 29 November 2018. The LR1
Genmar Companion joined the Euronav fleet as part of the Gener8 merger in June 2018
and was always a non-core asset to the Company.
In the market
Xin Mao Yang (VLCC, 2018) chartered by Trafigura for 1 year at USD 30,000 per day.
Brighoil Gem (VLCC, 2013) and Brighoil Galaxy (VLCC, 2012) chartered by Shell for
1 year at an index linked rate.
Shamrock (Suezmax, 2011) chartered by Trafigura for 9 months at USD 19,000 per day.
December
Euronav
On 11 December 2018 Euronav received the award for 'Deal of the Year 2018' for its
merger with Gener8 Maritime at Lloyds List Global Awards in London.
In the market
Eco Leader (VLCC, 2016) chartered by Hyundai Glovis for 1 year at USD 38,000 per day.
Loire (Suezmax, 2016) and Namsen (Suezmax, 2016) chartered by BP for 3 years at USD
27,000 per day.
DIRECTORS' REPORT
45
Events occurred after the end of the financial year ending
31 December 2018
As part of its capital allocation strategy, Euronav has the option of buying its own
shares back should the Board and Management believe that there is a substantial value
disconnect between the share price and the real value of the Company. This return of
capital is in addition to the fixed dividend of USD 0.12 per share paid each year. The
Company started buying back shares opportunistically on 19 December 2018. Euronav
may continue to buy back its own shares opportunistically. The extent to which it does
and the timing of these purchases, will depend upon a variety of factors, including
market conditions, regulatory requirements and other corporate considerations.
On 2 January 2019 Euronav announced that the company has purchased 545,486 of its
own shares on Euronext Brussels for an aggregate cost of EUR 3,471,506.67. Following
these transactions, the Company at that time owned 1,237,901 own shares (0.56% of
the total outstanding shares).
On 9 January 2019 Euronav delivered the Suezmax vessel Felicity (2009 - 157,667 dwt)
to a global supplier and operator of offshore floating platforms in accordance with a
sale agreement dated 31 October 2018. A capital loss on the sale of approximately USD
3.0 million has been recorded in Q4 2018. The cash generated on this transaction after
repayment of debt will be USD 34.7 million. The vessel will be converted into an FPSO
and therefore leave the worldwide trading fleet.
On 10 January 2019 Euronav announced that the company has purchased 430,000 of
its own shares on Euronext Brussels between 2 January 2019 and 9 January 2019 for
an aggregate cost of EUR 2,842,804. These transactions are in addition to the share
buyback transactions announced on 2 January 2019. Following these transactions,
the Company at that time owned 1,667,901 own shares (0.76% of the total outstanding
shares).
On 10 January 2019 Euronav acquired the VLCC vessel Nautic (2008 - 307,284 dwt)
from Euronav Tankers NV in accordance with a purchase agreement dated 2 January
2019, for the amount of USD 33,4 million in aggregate, after lifting the purchase
option mentioned in the time charter agreement dated 30 March 2015. The vessel was
renamed Nautica and now trades on the spot market.
46
DIRECTORS' REPORT
On 17 January 2019 Euronav proudly announced that the company has again been
included in the Bloomberg International Gender-Equality Index ("GEI"). The reference
index measures gender equality across internal company statistics, employee policies,
external community support and engagement, and gender-conscious product offerings.
On 21 January 2019 Euronav announced that the company has purchased 444,143 of its
own shares on Euronext Brussels between 10 January 2019 and 18 January 2019 for
an aggregate cost of EUR 2,990,483.32. These transactions are in addition to the share
buyback transactions announced on 2 January 2019 and 10 January 2019. Following
these transactions, the Company at that time owned, 2,112,044 own shares (0.96% of
the total outstanding shares).
On 4 February 2019 Euronav’s CEO Paddy Rodgers announced his decision to step down
from his role as CEO during 2019. Euronav commenced a recruitment process for a new
CEO with Paddy remaining in his position until a successor is appointed to facilitate an
efficient transition period.
On 7 February 2019 Euronav acquired the VLCC vessel Sara (2011 - 323,183 dwt) from
Euronav Tankers NV in accordance with a purchase agreement dated 22 January 2019,
for the amount of USD 57.4 million in aggregate. The vessel now trades on the spot
market.
On 11 February 2019 Euronav entered into a sale agreement regarding the LR1 Genmar
Compatriot (2004 - 72,768 dwt) for USD 6.75 million. The Company will record a
capital gain of approximately USD 0.4 million in the second quarter. The LR1 Genmar
Compatriot joined the Euronav fleet as part of the Gener8 merger in June 2018 and
was always a non-core asset to the Company. The vessel is expected to be delivered
delivered to her new owners in the course of April 2019, after which the Euronav owned
and operated fleet will consist of 72 top segment vessels.
On 13 February 2019 Euronav announced that the Company had purchased 532,829 of
its own shares on Euronext Brussels between 4 February 2019 and 12 February 2019
for an aggregate cost of EUR 3,648,561.70. These transactions were in addition to the
share buyback transactions announced on 2 January 2019, 10 January 2019 and 21
January 2019. Following these transactions, the Company at that time owned 2,644,873
own shares (1.20% of the total outstanding shares).
On 22 February 2019 Euronav announced that the Company had purchased 139,299 of
its own shares on Euronext Brussels between 13 February 2019 and 21 February 2019
for an aggregate cost of EUR 973,631.50. These transactions were in addition to the
share buyback transactions announced on 2 January 2019, 10 January 2019, 21 January
2019 and 13 February 2019. Following these transactions, the Company at that time
owned 2,784,172 own shares (1.27% of the total outstanding shares).
In February 2019 Euronav decided to set up a branch office in Geneva, Switzerland. In
the strategy of the company to protect the environment and be prepared for the IMO
2020 regulation, the purpose of this branch will be to conduct the new activities with
respect to compliant fuel, including procurement of compliant fuel on the wholesale
market. This will allow the group to keep track of the market and buy the compliant fuel
when convenient. One vessel of the fleet will be used as floating storage.
On 6 March 2019 Euronav announced that the Company had purchased 360,000 of its
own shares on Euronext Brussels between 25 February 2019 and 28 February 2019 for
an aggregate cost of EUR 2,500,641. These transactions were in addition to the share
buyback transactions announced on 2 January 2019, 10 January 2019, 21 January 2019,
13 February 2019 and 22 February 2019. Following these transactions, the Company at
that time owned 3,144,172 own shares (1.43% of the total outstanding shares).
DIRECTORS' REPORT
47
On 18 March 2019 Euronav announced that the Company had purchased 226,372 of
its own shares on Euronext Brussels between 7 March 2019 and 11 March 2019 for an
aggregate cost of EUR 1,569,993.62. These transaction were in addition to the share buy
back transactions announced on 2 January 2019, 10 January 2019, 21 January 2019, 13
February 2019, 22 February 2019 and 6 March 2019. Following these transactions, the
Company at that time owned 3,370,544 own shares (1,53% of the total outstanding shares).
Prospects for 2019
Global oil demand growth is expected to remain at relatively strong levels in 2019 at
1.4%. This will see the average daily oil demand surpassing 100 million barrels per day
for the first time. Incremental demand will come predominantly from China and India,
but also from the US.
Assuming OPEC production will continue at restrained levels for the first half of the
year and then continue at last year’s levels for the remainder of the year the market
could see global oil supply increase by 0.7%. The US will account for the majority of
this increase with the IEA currently estimating production growth of 1.3 million barrels
per day. Another important contributor to incremental supply in 2019 is Brazil, where
delays to a number of projects that were due to commence production last year have
pushed the incremental barrels into 2019. Brazil is set to add 360 thousand barrels per
day this year.
This geographical imbalance of incremental demand and supply is positive for the
crude tanker markets. The Atlantic basin has become a front haul market and as a
result Owners have to ballast their ships, sometime all the way from the Far East, in
order to load in this region. This trend will only develop further in 2019 and this will take
capacity out of the market with a tightening effect.
In terms of fleet growth 2019 is expected to see a large influx of newbuildings in the
VLCC segment with 70 new ships expected, in particular during the first half of the year,
while the Suezmax market is expecting a more moderate newbuilding programme with
33 vessels. A number of market factors will help to absorb these new ships, such as
increased demand for large tankers due to the expansion in US exports, vessels going
into countercyclical drydocking to retrofit scrubbers, and there is the potential for an
increased number of vessels going into storage as the market prepares for the IMO
2020 deadline. We also anticipate recycling activity to continue in 2019, perhaps not to
the same extent as we saw last year but with 3%-4% of the fleet aged 20 years or older
there is some natural contenders for the recycling yards.
All things considered 2019 is expected to present a turning point in the freight market.
While the market will still be challenging in the first half of the year with OPEC production
cuts in place, a front loaded newbuilding delivery programme and refinery maintenance
brought forward to the second quarter to be ready for the IMO 2020 deadline, most
market participants expect the second half to improve: OPEC will potentially resume
more normal production levels, the US will continue a strong export programme with
much of this crude destined for the Far East, while a significant number of tankers will
take time out of the market for drydocking to retrofit scrubber systems. The market
appears to be reaching a point of equilibrium where tanker owners can once again
enjoy the volatility and freight rate improvements that a more balanced tanker market
tends to present.
48
DIRECTORS' REPORT
Corporate
Governance
Statement
Introduction
REFERENCE CODE
Euronav has adopted the Belgian Code on Corporate Governance (dated 12 March
2009) as its reference code. The code can be consulted on the website of the Belgian
Corporate Governance Committee: www.corporategovernancecommittee.be.
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 23 January 2015, the New York Stock Exchange Corporate Governance rules for
Foreign Private Issuers are also applicable to the Company. The Company has also
registered and become a reporting company under the U.S. Securities and Exchange
Act of 1934, as amended. As a result of this listing, the Company 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.
1. CAPITAL, SHARES AND SHAREHOLDERS
1.1 Capital and shares
On 31 December 2018 the registered share capital of Euronav amounted to USD
239,147,505.82 and was represented by 220,024,713 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 Treasury shares
On 31 December 2018 Euronav held 1,237,901 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.
1.3 Shareholders and shareholders’ structure
According to the information available to the Company at the time of preparing this
annual report on 18 March 2019 and taking into account the latest declarations, the
shareholders’ structure is as shown in the table:
Shareholder
Châteauban SA
Saverco NV*
Euronav (treasury shares)
1 Including shares held directly or indirectly by
or for the benefit of the ultimate beneficial
owner
Other
Total
Number of shares
Percentage
18,462,007
15,335,000
3,370,544
182,857,162
220,024,713
8.391%
6.97%
1.532%
83.108%
100.00%
2. BOARD OF DIRECTORS AND BOARD COMMITTEES
2.1 Board of Directors
During 2018 the composition of the Board of Directors was as follows:
Name
Carl E. Steen
Type of
mandate
Chairman –
Independent
Director
First appointed
as director
End term
of office
2015
AGM 2022
Paddy Rodgers
Director - CEO
2003
AGM 2020
DIRECTORS' REPORT
49
6.97% Saverco NV
8.39% Châteauban SA
1.53% Euronav
(treasury shares)
Shareholders’
structure
Euronav NV on
18 March 2019
83.10% Other��
6.97% Saverco NV
Daniel R.
Bradshaw
William
Thomson1
Anne-Hélène
Monsellato
Ludovic
Saverys
Grace Reksten
Skaugen
Steven Smith2
Director
Independent
director
Independent
director
Director
Independent
Director
Independent
director
2004
2011
2015
AGM 2019
12 June 2018
83.10% Other��
AGM 2022
AGM 2021
AGM 2020
2018
2016
2018
AGM 2021
8.39% Châteauban SA
1.53% Euronav
(treasury shares)
1 Mr William Thomson, who was reappointed at
the AGM 2018 for two years, resigned from the
Board of Directors directly after the closing of
the merger with Gener8 Maritime Inc. on 12
June 2018.
2 Mr Steven Smith was appointed Independent
Director at the AGM of 9 May 2018 on condition
that the merger with Gener8 Maritime Inc.
would be closed, which event took place on 12
June 2018.
Carl E. Steen - Independent Director - Chairman
Carl E. Steen was co-opted Director and appointed Chairman of the Board of Directors
with effect immediately after the Board meeting of 3 December 2015. Mr. Steen is also
a member of the Audit and Risk Committee and the Remuneration 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. Mr. Steen is also a member of the Board of Directors of CMB.
Paddy Rodgers - Director - CEO
Patrick Rodgers became Chief Executive Officer of Euronav in 2000 and has served
on Euronav’s Board of Directors since June 2003. He joined Euronav as a member of
the Executive Committee in 1995 and was appointed Chief Financial Officer in 1998.
Since 2011, he has served as Director and Chairman of the International Tanker Owners
Pollution Federation Fund (ITOPF). Mr. Rodgers was elected to the Executive Committee
of Intertanko in May 2017. From 1990 to 1995 he worked at CMB Group as in-house
Lawyer and subsequently as Shipping Executive moving to Euronav when it became
a subsidiary for tanker investments of the CMB Group. He graduated with an LLB in
Law from University College London in 1981 and qualified to practice in 1984 having
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50
DIRECTORS' REPORT
passed law society entrance exams after studying at the College of Law, Guildford in
1982. In 1984 he joined Bentley, Stokes & Lowless as a Solicitor and in 1986 he moved
to Johnson, Stokes & Master in Hong Kong where he practiced until 1990.
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 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).
William Thomson - Independent Director - until 12 June 2018
William Thomson has served on the Board of Directors since 2011 and was a member
of the Remuneration Committee and 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.
Anne-Hélène Monsellato - Independent Director
Anne-Hélène Monsellato serves on the Board of Directors since her appointment at the
Annual General Meeting (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. Since June 2017, Mrs. Monsellato serves on the Board
of Directors of Genfit, a biopharmaceutical company listed on Euronext, and is the
Chairman of the Audit Committee. Mrs. Monsellato is an active member of the French
National Association of Directors 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.
DIRECTORS' REPORT
51
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.
Grace Reksten Skaugen - Independent Director
Grace Reksten Skaugen serves on the Board of Directors since the AGM of 12 May
2016 as an Independent Director and is Chairman of the Remuneration Committee and
a member of 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 and a Board member of Investor AB and
Lundin Petroleum AB. In 2009 she was one of the founders of the Norwegian Institute
of Directors, of which she continues to be a member 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.
52
DIRECTORS' REPORT
1 Mr William Thomson resigned from the Board
of Directors with effect immediately after the
closing of the merger with Gener8 Maritime
Inc. on 12 June 2018.
2 Mr Steven Smith was appointed Independent
Director at the AGM of 9 May 2018 on
condition that the merger with Gener8
Maritime Inc. would be closed, which event
took place on 12 June 2018.
Steven Smith - Independent Director
Euronav's Annual Shareholders' Meeting of 9 May 2018 approved the appointment of
Mr. Steven Smith as Independent Director subject to the closing of the merger with
Gener8 Maritime. He also became a member of the Remuneration Committee and
the Audit and Risk Committee. Since 2011 he is the Managing Partner and a Member
of the Investment Committee at Aurora Resurgence Fund, a USD 550 million special
situations/distressed for control fund.From 2001 till 2011, Mr. Smith held a variety of
leadership positions at UBS Investment Bank and served on the Americas Executive
Committee and Global Management Committee. Previously, he worked as a Managing
Director at Credit Suisse and Donaldson, Lukfin & Jenrette/Credit Suisse, where he
was a member of the restructuring and leveraged finance groups. Mr. Smith started
his career in restructuring and leveraged finance at the law firm of Latham & Watkins
where he worked as an Associate till 1992. Steven Smith is a Member of the California
Bar Association and has FINRA Series 7, 63 and 24 Qualifications. In 1985 he obtained
a Juris Doctor/MBA degree from the ULCA School of Law/Anderson School of
Management in Los Angeles. He also holds a Bachelor of Arts in English and American
Literature from the University of California, San Diego.
Composition
The Board of Directors currently consists of seven members. One member has an
executive function; six are non-executive Directors of which four are Independent
Directors in the meaning of Article 526ter of the Belgian Company Code and Annex
2 of the Corporate Governance Charter 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 can be appointed for a period not
exceeding four years per mandate. 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 2018 the Board of Directors formally met six 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
Carl E. Steen
Paddy Rodgers
Type of
mandate
Chairman -
Independent Director
Director -
CEO
Meetings
attended
6 out of 6
6 out of 6
Daniel R. Bradshaw
Director
5 out of 6
William Thomson1
Anne-Hélène
Monsellato
Independent
Director
Independent
Director
1 out of 1
6 out of 6
Ludovic Saverys
Director
6 out of 6
Grace Reksten Skaugen
Steven Smith2
Independent
Director
Independent
Director
5 out of 6
4 out of 4
DIRECTORS' REPORT
53
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 thirty three times in 2018.
Activity report 2018
In 2018, Euronav’s Board of Directors deliberated on:
• HR processes, Balanced Score Card, KPIs and 360° assessment of the CEO;
• hedging policy;
•
IMO 2020 and related matters (scrubber policy, compliant fuel procurement
strategy);
• Health, Safety, Quality and Enviroment (HSQE);
•
•
•
risk management
regulation (water based treatment systems, recycling);
the acquisition of the Suezmax Cap Pembroke from Hyundai Samho Heavy
Industries Co. Ltd.;
the acquisition of the Suezmax Cap Quebec from Hyundai Samho Heavy Industries
Co. Ltd.;
the senior secured term loan facility for four Suezmax newbuilding vessels;
the registration of Greek Mortgage on the Cap Quebec;
the delivery of the Suezmax Cap Port Arthur and Cap Corpus Christi;
the sale of of the Suezmax Cap Jean;
the Kexim facility agreement in view of the merger with Gener8 Maritime;
the possibility to opportunistically buy back own shares in the market;
the proposed merger with Gener8 Maritime Inc.;
the sale of Suezmax Cap Romuald to Somap International Pte. Limited;
the transfer of the Gener8 fleet to Euronav NV;
the USD 200M revolving credit facility;
the Board review and appointment of The Board Practice.
•
•
•
•
•
•
•
•
•
•
•
•
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 2018 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.
54
DIRECTORS' REPORT
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.
2.2 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.
As at 31 December 2018 the composition of the Audit and Risk Committee was as
follows:
Name
Anne-Hélène Monsellato1
(Chairman)
Carl E. Steen
Daniel R. Bradshaw
Steven Smith
End term
of office
Independent
Director
2022
2022
2019
2021
X
X
X
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.
In light of the changes in regulation relating to the mandatory tendering and rotation of
company auditors the Audit and Risk Committee informs that it will advise the Board of
Directors to hold a public tender in 2020 regarding the position of the external auditor.
Activity report 2018
In 2018 the Audit and Risk Committee convened eight times. The attendance rate of the
members was as listed below:
Name
Type of mandate
1 Mr Thomson resigned from the Board of
Directors on 12 June 2018 and subsequently
was no longer member of the Audit and Risk
Committee as from this date.
2 Mr Smith was appointed Independent Director
and member of the Audit and Risk Committee
at the AGM of 9 May 2018 on condition that
the merger with Gener8 Maritime Inc. would
be closed, which event took place on 12 June
2018.
Anne-Hélène Monsellato
(Chairman)
Carl E. Steen
Daniel R. Bradshaw
William Thomson 1
Steven Smith 2
Meetings
attended
8 out of 8
8 out of 8
Independent
Director
Independent
Director
Director
8 out of 8
Independent
Director
Independent
Director
3 out of 3
5 out of 5
During these meetings, the key elements discussed within the Audit and Risk
Committee included financial statements, impairment methodology, assumptions and
DIRECTORS' REPORT
55
depreciations, cash management, external and internal audit reports, the internal audit
function, and in particular cybersecurity, old and new financing, accounting policies,
matters related to the Sarbanes-Oxley Act, the annual report on Form 20-F, certain
company policies, the impact of new IFRS rules, risk management/risk register, debt
covenants and whistleblowing reporting.
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 minimum three
Directors, two of which are Independent Directors.
As at 31 December 2018, the Remuneration Committee was composed as follows:
Name
End term
of office
Independent
Director
Grace Reksten Skaugen (Chairman)
Ludovic Saverys
Carl E. Steen
Steven Smith
2020
2021
2022
2021
X
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, incentives, bonuses etc.
in line with suitable industry benchmarks.
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 2018
In 2018 the Remuneration Committee met seven times. The attendance rate of the
members was as listed hereafter:
Name
Grace Reksten Skaugen (Chairman)
William Thomson1
Ludovic Saverys
Carl E. Steen
Steven Smith2
Type of
mandate
Independent
Director
Independent
Director
Attended
meetings
7 out of 7
2 out of 2
Director
7 out of 7
Independent
Director
Independent
Director
5 out of 5
5 out of 5
1 Mr Thomson resigned from the Board of
Directors on 12 June 2018 and subsequently
was no longer member of the Remuneration
Committee as from this date.
2 Mr Smith was appointed Independent Director
and member of the Remuneration Committee
at the AGM of 9 May 2018 on condition that
the merger with Gener8 Maritime Inc. would
be closed, which event took place on 12 June
2018.
56
DIRECTORS' REPORT
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 31 December 2018, 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.
As of 31 December 2018, the Corporate Governance and Nomination Committee was
composed as follows:
Name
Daniel R. Bradshaw (Chairman)
Anne-Hélène Monsellato
Grace Reksten Skaugen
End term
of office
Independent
Director
2019
2022
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 2018
In 2018 the Corporate Governance and Nomination Committee met five times. The
attendance rate of the members was as follows:
Name
Type of
mandate
Attended
meetings
Daniel R. Bradshaw (Chairman)
Director
5 out of 5
Anne-Hélène Monsellato
Grace Reksten Skaugen
Independent
Director
Independent
Director
5 out of 5
5 out of 5
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 as well as Board education and leadership development.
DIRECTORS' REPORT
57
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.
The Executive Committee in 2018 is composed as follows:
Name
Paddy Rodgers
Hugo De Stoop
Alex Staring
Egied Verbeeck
Title
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
General Counsel
Powers and activity report 2018
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 2018 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.
In 2018 an external evaluation of the Board of Directors and its committees was
conducted by The Board Practice, an independent consultancy, by means of
questionnaires, interviews and research. The members were asked to reflect on the
effectiveness of meetings, interaction between the Board and Executive Committee,
composition of Committee’s, the focus points and the operation of the Board of
Directors as well as the particular Committee(s) they are member of. This resulted in
a consent between the members of the Board of Directors that the composition of the
Board and its Committees is adequate and the focus should remain on the organization
of the Company, strategy and the requirement to strengthen succession planning whilst
maintaining a strong balance sheet.
58
DIRECTORS' REPORT
4. REMUNERATION REPORT
The remuneration report describes Euronav’s executive remuneration policy and how
executive compensation levels are set. The Remuneration Committee oversees the
executive compensation policies and plans.
4.1 Euronav 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 including
members of the Executive Committee 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.
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 using suitable industry benchmarks.
The Remuneration Committee meets at least twice a year and has the following main
responsibilities which are further outlined in its terms of reference:
•
•
•
•
•
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.
DIRECTORS' REPORT
59
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 AGM.
As per decision of the AGM held on 9 May 2018, the gross fixed annual remuneration
remains at EUR 60,000 for the members of the Board of Directors and at EUR 160,000
for the Chairman. The meeting further resolved that each director, including the
chairman, shall receive an attendance fee of EUR 10,000 for each Board meeting
attended. The aggregate annual amount of the attendance fee shall however not exceed
EUR 40,000. The gross fixed annual remuneration of Mr. Daniel R. Bradshaw was set at
EUR 20,000. It was also decided to grant him an attendance fee of EUR 10,000 for each
Board meeting attended.
For their mandate within the Audit and Risk Committee, the members received an
annual remuneration of EUR 20,000 and the Chairman received a remuneration of
EUR 40,000. Each member of the Audit and Risk Committee, including the Chairman,
received an additional attendance fee of EUR 5,000 per Committee attended with a
maximum of EUR 20,000 per year.
For their mandate within the Remuneration Committee 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.
60
DIRECTORS' REPORT
The remuneration in 2018 of the members of the Board of Directors is reflected in the
table below:
In euro:
Name
Fixed
fee
Attendance
fee Board
Audit and Risk
Committee
Remuneration
Attendance fee
Corporate Governance
Attendance fee
TOTAL
Committee
Remuneration
and Nomination
Corporate Governance
Attendance fee
Audit and Risk
Committee
Committee
Committee
and Nomination
Committee
Carl E. Steen
160,000.00
40,000.00
20,000.00
20,000.00
2,500.00
10,000.00
0.00
252,500.00
Paddy Rodgers
0.00
0.00
0.00
0.00
0.00
Daniel R. Bradshaw
20,000.00
40,000.00
20,000.00
7,500.00
20,000.00
127,500.00
William Thomson1
30,000.00
20,000.00
10,000.00
10,000.00
2,500.00
10,000.00
0.00
0.00
82,500.00
Anne-Hélène Monsellato
60,000.00
40,000.00
40,000.00
20,000.00
0.00
0.00
5,000.00
20,000.00
185,000.00
Ludovic Saverys
60,000.00
40,000.00
Grace Reksten
60,000.00
40,000.00
0.00
0.00
0.00
5,000.00
20,000.00
0.00
0.00
125,000.00
0.00
7,500.00
20,000.00
5,000.00
20,000.00
152,500.00
0.00
20,000.00
0.00
0.00
0.00
0.00
0.00
0.00
1Mr William Thompson resigned from the Board
of Directors with effect immediately after the
Annual General Meeting (AGM) of 9 May 2018.
Steven Smith
35,000.00
30,000.00
11,666.67
15,000.00
2,916.67
15,000.00
0.00
0.00
109,583.34
TOTAL
425,000.00
250,000.00
101,666.67
85,000.00
20,416.67
75,000.00
17,500.00
60,000.00
1,034,583.34
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, company performance
and individual employees’ abilities and achievements of specific objectives.
The Remuneration Committee decides annually on the remuneration of the
members of the Executive Committee. Variable remuneration is determined on the
basis of financial performance, achievement of budget, Health, Safety, Quality and
Environmental factors and individual KPI’s. There is a gateway for bonus participation
which relates to no major environmental issue during the course of the bonus period.
In the framework of the variable remuneration, the Board of Directors also approved a
2018 transaction based incentive plan relating to meeting share price triggers over a
5-year period reflecting the strategic success of the merger with Gener8 Maritime Inc.
DIRECTORS' REPORT
61
Name
Fixed
fee
Attendance
Audit and Risk
fee Board
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
Carl E. Steen
160,000.00
40,000.00
20,000.00
20,000.00
2,500.00
10,000.00
Paddy Rodgers
0.00
0.00
0.00
Daniel R. Bradshaw
20,000.00
40,000.00
20,000.00
0.00
20,000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
252,500.00
0.00
0.00
7,500.00
20,000.00
127,500.00
William Thomson1
30,000.00
20,000.00
10,000.00
10,000.00
2,500.00
10,000.00
0.00
0.00
82,500.00
Anne-Hélène Monsellato
60,000.00
40,000.00
40,000.00
20,000.00
0.00
0.00
5,000.00
20,000.00
185,000.00
Ludovic Saverys
60,000.00
40,000.00
0.00
5,000.00
20,000.00
0.00
0.00
125,000.00
Grace Reksten
60,000.00
40,000.00
0.00
7,500.00
20,000.00
5,000.00
20,000.00
152,500.00
0.00
0.00
Steven Smith
35,000.00
30,000.00
11,666.67
15,000.00
2,916.67
15,000.00
0.00
0.00
109,583.34
TOTAL
425,000.00
250,000.00
101,666.67
85,000.00
20,416.67
75,000.00
17,500.00
60,000.00
1,034,583.34
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)
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 reviewed in accordance with a range of industry
benchmarks. A detailed benchmark exercise was carried out in 2018 including
published data from pan-European multinationals of a similar size and business
complexity with similar fixed asset and safety cultures to Euronav, global shipping
companies and Belgian listed corporate benchmark data. After reference to the
detailed benchmark data, the ABS awarded is then based on the experience of
the postholders, required competencies and responsibilities of the position. The
Remuneration Committee increased the ABS payable to members of the Executive
Committee with effect from July 2018.
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DIRECTORS' REPORT
Executive Bonus plan (variable)
The remuneration structure includes an Executive Bonus which considers the following
elements: Company performance 40%, meeting budget targets 30%, improvements
in Health, Safety, Quality and Environmental performance 15%, and individual
achievement of objectives 15%. There is a gateway to the plan of no major HSE issue
during the course of the bonus year. Payment is recommended by the Remuneration
Committee to the Board of Directors. If the 4 targets are reached, this will potentially
result in an Executive Bonus equal to 100% of ABS Performance. Such assessment
against the 4 targets was made following the end of the 2018 financial year on the pre-
audited results. The Remuneration Committee made recommendations to the Board of
Directors in January 2019 for payments under this Executive Bonus plan which were
approved in the same month.
In light of the very considerable achievement of the Chief Executive Officer in relation
to 2 of his KPI’s in connection with the transformative merger and integration of
the Gener8 Maritime, Inc. into Euronav and thus establishing the company as the
largest independently publicly listed award winning oil tanker shipping company,
the Remuneration Committee awarded Mr. Patrick (Paddy) Rodgers a bonus of EUR
1,975,000 using their discretionary powers under the plan rules for the Board of
Directors to approve.
Assessment Process of KPIs for the members of the Executive Committee
As outlined above, personal KPIs will be agreed annually by the Board of Directors
upon recommendation of the Remuneration Committee, and these form 15% of the
consideration for the Executive Bonus plan.
At year-end all members of the Executive Committee perform a self-assessment of
their performance. This self-assessment is reviewed by and discussed with the other
Executive Committee members. The results of this self-assessment is submitted to the
Remuneration Committee for recommendations to the Board of Directors as part of the
bonus consideration.
Transaction Based Incentive Plan (TBIP) (variable)
The members of the Executive Committee have been granted a TBIP in the form of
phantom stock. The vesting and settlement of the TBIP is spread over a time frame
of five years and its intention is equally to encourage retention of the members of the
Executive Committee and reward business success through meeting the higher share
price triggers achieved following the merger with Gener8 Maritime, Inc. The phantom
stock awarded matures in four tranches as follows:
• First tranche of 12% vesting when share price reaches USD 12
• Second tranche of 19% vesting when share price reaches USD 14
• Third tranche of 25% vesting when share price reaches USD 16
• Fourth tranche of 44% vesting when share price reaches USD 18
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 volatile as shipping,
a vesting period over five years is reasonable. The Board of Directors is further of the
opinion that the TBIP ensures long-term shareholder alignment.
The number of Phantom Stock Units that are offered under the terms of the TBIP
amounts to 1,200,000. Other senior employees may be invited to the LTIP by the Board
of Directors upon recommendation of the Remuneration Committee.
DIRECTORS' REPORT
63
Employee (Ship and Shore) Bonus payments
Ship and Shore based staff annual performance bonuses. The Remuneration Committee
recommended that these be awarded at similar levels to 2017, recognising the effort
to manage the integration of the Gener8 Maritime, Inc. into the rest of Euronav, or for
colleagues not involved in the merger to pick up increased workload to ensure the normal
business performance requirements were met during a period of merger activities.
The Remuneration Committee additionally noted that Euronav managed a significant
proportion of the integration activities without incurring substantial discretionary
external costs when making this recommendation to the Board of Directors.
4.4 Remuneration of the Executive Committee
Remuneration of the Chief Executive Officer
The remuneration in 2018 of the CEO is reflected in the table below:
In EUR:
Paddy
Rodgers
Fixed remuneration
Variable remuneration
Pension and benefits Other components
562,000
1,975,000
0
44,831
In the event of termination of the CEO’s employment he would be entitled to a
compensation equivalent to one year’s salary and compensation for LTIPs forfeited
according to Good Leaver provisions.
No loans or advances were granted to the CEO.
Remuneration of the other members of the Executive Committee
The remuneration in 2018 of the members of the Executive Committee (excluding the
CEO) is reflected in the table below:
In EUR:
Three
members
Fixed remuneration
Variable remuneration
Pension and benefits Other components
1,117,263
Cash: 854,700
LTIP: O*
38,672
75,065
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.
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.
* LTIP discussions are ongoing
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DIRECTORS' REPORT
4.5 Long Term Incentive Plans include TBIP
LTIP 2014
Within the framework of a stock option plan, the Board of Directors granted on 16
December 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
525,000
525,000
350,000
350,000
LTIP 2015
On 12 February 2015 within the framework of a management incentive plan, the Board
of Directors granted 65,433 Restricted Stock Units (RSUs) and 236,590 stock options.
On 18 March 2019 the situation is as follows:
LTIP 2015
Granted
Vested
Exercised
CEO
CFO
COO
General Counsel
80,518
58,716
54,614
42,742
80,518
58,716
54,614
42,742
0
0
0
0
The exercise price of the options is EUR 10.0475.
RSU
CEO
CFO
COO
General Counsel
Number of units granted
22,268
16,239
15,105
11,821
The RSU’s all vested automatically on the third anniversary of the grant which was 18
February 2018.
DIRECTORS' REPORT
65
* The CEO waived further entitlements under
the LTIP as a result of termination of his
employment, announced by press release on 4
February 2019.
LTIP 2016
On 2 February 2016 within the framework of a Phantom Stock Plan, the Board of
Directors granted 54,616 phantom stock units. On 18 March 2019 the situation is as
follows:
LTIP 2016
Granted
Vested
CEO
CFO
COO
General Counsel
17,116
20,728
8,009
8,762
5,705
13,818
5,338
5,840
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 9 February
2017, as follows:
LTIP 2017
Granted
Vested
CEO
CFO
COO
General Counsel
Investor Relations Manager
17,819
20,229
12,557
9,808
6,036
-*
6,743
4,186
3,269
2,012
The phantom stock units 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.
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DIRECTORS' REPORT
LTIP 2018
Within the framework of a Phantom Stock Plan 148,113 phantom stock units were
granted to the Executive Committee and the Investor Relations Manager on 16 February
2018, as follows:
LTIP 2018
Granted
Vested
CEO
CFO
COO
General Counsel
Investor Relations Manager
46,652
37,620
36,480
27,360
6,319
0
0
0
0
0
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 7.2368 which equals the weighted average of the
share price of the three days following the announcement of the preliminary full year
results of 2017.
TBIP
The members of the Executive Committee have been granted a TBIP in the form of 1.2
million phantom shares.
TBIP
CEO
CFO
COO
General Counsel
Investor Relations Manager
Global Head of HR
General Manager Hellas
Granted
Vested
400,000
300,000
150,000
170,000
80,000
50,000
50,000
0
0
0
0
0
0
0
The vesting and settlement of the TBIP is spread over a timeframe of five years.
The phantom stock awarded matures in four tranches as follows:
• First tranche of 12% vesting when share price reaches USD 12
• Second tranche of 19% vesting when share price reaches USD 14
• Third tranche of 25% vesting when share price reaches USD 16
• Fourth tranche of 44% vesting when share price reaches USD 18
Transaction Based Incentive Plan
See section 4.3 above.
DIRECTORS' REPORT
67
4.6 Remuneration of the Auditor KPMG Bedrijfsrevisoren-Réviseurs d’Entreprises
(KPMG)
Permanent representative: Patricia Leleu
For 2018, the worldwide audit and other fees in respect of services provided by the
statutory auditor KPMG can be summarized as follows:
In USD
2018
2017
Audit services for the annual
financial statements
Audit related services
Tax services
Other non-audit services
909,897
870,324
409,360
6,180
10,076
7,987
22,104
0
TOTAL
1,335,513
900,415
The limits prescribed by Article 133/2 §1 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.
These risks (as described in more detail in the ‘Risk Factors’ section in this annual
report) are the following:
•
•
•
•
•
•
strategic: capital allocation, strategic partnerships, risks relating to the TI Pool,
the joint ventures and associates, risks related to communication to stakeholders;
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, the integration of acquired activities, the adequate protection
of critical data and infrastructure from unauthorized use or theft, including cyber-
criminality and the 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;
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, commercial disagreements between major countries.
As part of the reference framework Euronav:
•
laid down its ethical values and business conduct rules in the ‘Code of Business
Conduct and Ethics’ and the ‘Dealing Code’;
• has also included these values and rules in the Staff Handbook for all its employees;
clearly documented its corporate structure, organization chart and job descriptions
•
(and hence tasks, responsibilities and reporting lines);
• clearly specified the delegations of authority for key decisions;
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DIRECTORS' REPORT
•
•
ensures proper communication between local management and Executive
Committee throughout various committees such as management committee, pool
committee, revenue committee, insurance committee, …;
has embedded group policies in the main business processes, which Euronav
applies group-wide, covering areas such as: fixed assets, financial statement
close, procurement, order-to-cash, hedging, IT systems and infrastructure, human
resources and payroll, treasury, tax, insurances,…
Euronav also has developed a ‘Health, Safety, Quality and Environmental (HSQE)
Management System’ which integrates health, safety, environment and quality
management into a system that fully complies with the ISM Code for the ‘Safe Operation
of Ships and Pollution Prevention’.
To support the financial reporting, Euronav has a 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 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 for the purpose of reviewing and
analysing 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 CFO
and to the Audit and Risk Committee.
Euronav has appointed KPMG as its external auditor to verify its financial results and
compliance with Belgian legislation. The external auditor issues a report at least twice
a year which they submit to the Audit and Risk Committee. They are also invited to
attend the AGM to present their report.
5.1 Hedging policy
Euronav may hedge part of its exposure to changes in interest rates on borrowings
and all borrowings contracted for the financing of vessels are on the basis of a floating
interest rate, increased by a margin. The Group does not hold or trade derivatives for
speculative purposes. Euronav uses derivative financial 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.
DIRECTORS' REPORT
69
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 23 October 2003. Following the acquisition of the Tanklog fleet and
Euronav’s express desire to operate the vessels under Greek flag, Euronav was deemed
eligible for tonnage tax in Greece. As a result, for a ten-year period, Euronav’s profits
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 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.
In 2017 and early 2018 the Company took note of the correspondence between the
Belgian authorities and the European Commission within the framework of a request
for extension of the state aid to the maritime industry by Belgium. The draft law
including the by the Commission's requested legislative changes has been reviewed
by the Company. We do not expect any adverse effect of these changes to our existing
tonnage tax regime.
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.
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DIRECTORS' REPORT
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.
Declines in charter rates, vessel values and other market deterioration could cause us to
incur impairment charges
We evaluate the carrying amounts of our vessels to determine if events have occurred
that would require an impairment of their carrying amounts. The recoverable amount
of vessels is reviewed based on events and changes in circumstances that would
indicate that the carrying amount of the assets might not be recovered. The review
for potential impairment indicators and projection of future cash flows related to the
vessels is complex and requires us to make various estimates relating to, among
other things, vessel values, future freight rates, earnings from the vessels, discount
rates and economic life of vessels. Many of these items have historically experienced
volatility. We evaluate the recoverable amount as the higher of fair value less costs
to sell and value in use. If the recoverable amount is less than the carrying amount
of the vessel, the vessel is deemed impaired. The carrying values of our vessels may
not represent their fair market value at any point in time because the new market
prices of secondhand vessels tend to fluctuate with changes in charter rates and the
cost of newbuildings. For the years ended 31 December 2018 and 2017, we evaluated
the recoverable amount of our vessels and we did not recognize an impairment loss.
Factors that we considered in our estimate are described in the Critical Accounting
policies. In particular, our estimate for future TCE rates is based on a weighted average
of past shipping cycles, including management judgment for the ongoing cycle, is used
as forecast charter rates.
In the past, the Group used a fixed cut of 10 years to define a shipping cycle. In recent
years, this 10-year average has become more volatile and therefore less reliable. By
defining a shipping cycle from peak to peak over the last 20 years, it is shown that the
duration of a shipping cycle varies from 4 years to 7 years in the last 15 years and could
be longer. Therefore, a fixed 10-year cut is no longer representative of a shipping cycle.
Management therefore decided to focus more on full shipping cycles, defined from a
peak to the next peak and apply a weighting (which includes management judgment)
to the past cycles. The current cycle is forecasted based on management judgment
based on analyst reports and past experience. By using this approach, volatility has
been reduced as both better and worse years are taken into account. Under the old
approach, when taking a fixed 10-year cut, the average TCE rate will be high when a
worse year is removed from the population and low when a better year is removed from
the population.
Any impairment charge incurred as a result of further declines in charter rates could
negatively affect our business, financial condition, operating results or the trading price
of our ordinary shares.
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 (geo-)political circumstances and events, 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
DIRECTORS' REPORT
71
possible accidents, and that it is also adequately covered against environmental damage
and pollution, as required by relevant legislation and standard practices in the sector.
However, there is no guarantee that such insurance will remain available at rates
which are regarded as reasonable by the Company, or that such insurance will remain
sufficient to cover all losses incurred by Euronav or the cost of each compensation
claim made against Euronav, or that its insurance policies will cover the loss of income
resulting from a vessel becoming non-operational. Should compensation claims
be made against Euronav, its vessels may be impounded or subject to other judicial
procedures.
Euronav’s activities are subject to important environmental legislation which may cause
Euronav’s expenditure to increase abruptly
Euronav’s activities are subject to extensive, changing 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 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 per currency 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
72
DIRECTORS' REPORT
trade. Euronav has established sufficient current insurance against possible accidents
and environmental damage and pollution as requested by relevant legislation and
standard practices in the sector. However, there is no guarantee that such insurance
will remain available at rates which are regarded as reasonable by Euronav or that
such insurance will remain sufficient to cover all losses incurred or the cost of each
compensation claim made against Euronav, or that its insurance policies will cover the
loss of income resulting from a vessel becoming non-operational. Should compensation
claims be made against Euronav, its vessels may be impounded or subject to other
judicial procedures.
Refinancing of loans may not always be possible
There is no assurance that Euronav will be able to repay or refinance its facilities on
acceptable terms or at all as they become due upon their respective maturity dates.
Financial markets and debt markets are not always open independently of the situation
of Euronav and the lack of debt finance may adversely affect Euronav’s operations
business and results of operations.
The amendments by IMO to Annex VI to MARPOL subject ocean-going vessels to stringent
emissions controls (“IMO 2020”) which may cause us to incur substantial costs.
On 1 January 2020, the International Maritime Organisation (IMO) will implement a
new regulation for a 0.50% global sulphur cap for marine fuels. Under the new global
cap, ships will have to use marine fuels with a sulphur content of no more than 0.50%
against the current limit of 3.50% in an effort to reduce the amount of sulphur oxide.
Euronav may incur costs to comply with these revised standards. Additional or new
conventions, laws and regulations may be adopted that could require the installation
of expensive emission control systems and could adversely affect Euronav’s business,
results of operations, cash flows and financial condition.
Euronav has opted not to install scrubbers and continues to work closely with suppliers
and producers on alternative mechanisms ahead of 1 January 2020, including the
procurement of physical low-sulphur fuel oil directly on the wholesale market and
storage thereof at sea on a Euronav owned vessel, with a view to secure availability
of qualitative compliant oil and to capture volatility in prices between HFO and LSFO.
The procurement of large quantities of LSFO implies a commodity price risk upon
fluctuations in the prices of the procured commodity between the time of the purchase
and the consumption. Euronav may implement financial strategies with a view to
limiting this risk. The storage and onward consumption of the procured commodity
may require Euronav to blend, co-mingle or otherwise combine, handle or manipulate
such commodities which imply certain operational risks that may result in loss of or
damage to the procured commodities.
DIRECTORS' REPORT
73
Risks relating to the TI Pool, 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, 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 or
vessel and possible oil pollution, which could adversely impact its business, results of
operations, cash flows, financial condition and ability to pay dividends.
Euronav is subject to risks related to the adequate protection of critical data and
infrastructure from unauthorized use or any other form of cyber-criminality
Euronav’s activities are subject to risk of discontinuity due to unauthorized use, theft,
sabotage, viruses or any other disruptive activity on the Company’s IT infrastructure,
which could impact the confidentiality, integrity and availability of data and/or IT
systems. Euronav has implemented, amongst other things, business continuity plans, a
regularly tested IT controls framework, continuous access monitoring and independent
penetration testing in our offices and on board of our vessels. The Company’s controls
also include compliance to existing related rules & legislation and implement full
adherence to the EU General Data Protection Regulation, as approved on 14 April 2016.
6. INFORMATION TO BE INCLUDED IN THE ANNUAL REPORT AS PER ARTICLE 34 OF
THE ROYAL DECREE OF 14 NOVEMBER 2007
6.1 Capital structure
At the time of preparing this report, the registered share capital of Euronav amounts to
USD 239,147,505.82 and is represented by 220,024,713 shares without par value. The
shares are in registered or dematerialized form. Per 18 March 2019, Euronav holds
3,370,544 own shares.
At the time of preparing this report, no convertible bonds or perpetual preferred equity
74
DIRECTORS' REPORT
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 for 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.
6.5 Appointment and replacement of Directors
The articles of association (Article 17 and following) and section III.2 of the Euronav
Corporate Governance Charter contain specific rules concerning the (re)appointment,
the 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
DIRECTORS' REPORT
75
* Treatment of capital losses and capital gains
As part of its distribution policy Euronav will
continue to include exceptional capital losses
when assessing additional dividends but
also continue to exclude exceptional capital
gains when assessing additional dividend
payments.
* Treatment of Deferred Tax Assets (DTA) and
Deferred Tax Liabilities (DTL)
As part of its distribution policy Euronav will
not include non-cash items affecting the
results such as DTA or DTL.
to increase the share capital of the Company. By decision of the Shareholders’ Meeting
held on 13 May 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.
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’).
The current dividend payment policy as adopted by the Board is the following: the
Company intends to pay a minimum fixed dividend of at least USD 0.12 in total per share
per year provided (a) the Company has in the view of the Board, sufficient balance sheet
strength and liquidity combined (b) with sufficient earnings visibility from fixed income
contracts. In addition, if the results per share are positive and exceed the amount of
the fixed dividend, that additional income* will be allocated to either: additional cash
dividends, share buy-back, accelerated amortization of debt or the acquisition of
vessels which the Board considers at that time to be accretive to shareholders’ value.
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 reconfirmed the Euronav Code of Business Conduct and Ethics
at its meeting of 19 December 2018. 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.
9. MEASURES REGARDING INSIDER DEALING AND MARKET MANIPULATION
In view of Regulation (EU) No 596/2014 of the European Parliament and of the Council
of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive
2003/6/EC of the European Parliament and of the Council and Commission Directives
2003/124/EC, 2003/125/EC and 2004/72/EC (the ‘Market Abuse Regulation’ or ‘MAR’),
at its meeting of 19 December 2018, the Board of Directors reconfirmed the Company’s
Dealing Code and Policies and Procedures to Detect and Prevent Insider Trading, also
76
DIRECTORS' REPORT
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 two women with varying yet complementary knowledge bases
and fields of experience. The Board of Directors has been made aware of the law of
28 July 2011 on gender diversity and the recommendations issued by the Corporate
Governance and Nomination Committee following the enacting of the law with regard
to the representation of women on Boards of Directors of listed companies.
In January 2018 Euronav was selected as one of over 100 companies from ten sectors
to join the inaugural 2018 Bloomberg International Gender-Equality Index (GEI). This
comprehensive index measures gender equality across internal company statistics,
employee policies, external community support and engagement, and gender-
conscious product offerings. Inclusion in this index recognises efforts made by Euronav
to create a work environment that supports gender equality and the growing demand
for diverse and inclusive workplaces.
In order to become a participant in this Index, Euronav submitted a survey created by
Bloomberg in partnership with third-party experts Catalyst, Women's World Banking,
Working Mother Media, National Women's Law Center and National Partnership for
Women & Families. Those included on this year’s index scored at or above a global
threshold established by Bloomberg to reflect disclosure and the achievement or
adoption of best-in-class statistics and policies.
As at 31 December 2018, the Executive Committee consists of four men, three of whom
are based in Belgium and one in the U.K. They all hold academic degrees in various
disciplines such as Law, Finance, Shipping, and Science. Before they started working
with Euronav, they were employed in the financial, legal and shipping sector. Their ages
vary between 44 and 59 years old and include their average experience of 12 years in
their current executive position.
As of 1 January 2019, Brian Gallagher and Stamatis Bourboulis were also appointed
as a member of the Executive Committee. The Executive Committee now consists of 6
men, three of whom are based in Belgium, two in the U.K. and one in Greece.
DIRECTORS' REPORT
77
As at 31 December 2018 the Senior Management (HR Group Head, Secretary General,
General Manager Nantes office, HSQE Manager) consists of two men and two women
(one is based in the UK, one in Belgium, one in France and one in Greece). They all have
an academic degree in various disciplines (Economics, Law, History, and Shipping).
They started their careers in the financial, legal and shipping sector and have been
working in their current Euronav role for an average of five years. Their ages vary
between 41 and 61 years old.
12. APPROPRIATION ACCOUNTS
The result to be allocated for the financial year amounts to USD -116,605,793.35.
Together with the transfer of USD 155,523,252.50 from the previous financial year and
a withdrawal to the available reserves of USD 48,090,805.12, this gives a profit balance
to be appropriated of: USD 87,008,264.27.
The Board of Directors will propose to the Annual Shareholder’s meeting of 9 May 2019
to distribute a gross dividend in the amount of USD 0.06 per share to all shareholders.
Subject to shareholder approval, this would bring the total gross dividend paid in
relation to 2018 to USD 0.12. Taking into account the gross dividend of USD 0.06 per
share already paid in October 2018, a balance of a gross amount of USD 0.06 per share
will be payable as from 24 May 2019. The share will trade ex-dividend as from 15 May
2019 (record date 16 May 2019). The dividend to holders of Euronav shares listed and
tradeable 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:
• capital and reserves
• dividends
• carried forward
USD 3,955,371.60
USD 26,402,965.56
USD 56,649,927.11
18 March 2019
Board of Directors
The Euronav
Executive
Committee
consists of six
persons with
backgrounds in
finance, legal
and shipping,
from Belgium, the
U.K. and Greece.
78
DIRECTORS' REPORT
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. The Nantes office and the Antwerp office also
provide crew management for Euronav’s trading oil tankers.
Euronav Ship Management (Hellas) Ltd
Euronav Ship Management (Hellas) Ltd, established in Athens, Greece, in 2005 as a
branch office to Euronav NV, 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.
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 four wholly owned subsidiaries
and three 50% joint venture companies (one of which is in process of winding up). 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, and E.S.M.C. Euro-Ocean Ship Management (Cyprus) Ltd, a
ship management company that handles the crew management of the FSOs.
TI Asia Ltd and TI Africa Ltd, 50 per cent. joint venture companies with a company which
belongs to the International Seaways (INSW) group, are the owners of respectively the
FSO Asia and FSO Africa, both currently employed at the Al Shaheen field offshore
Qatar. The 50 per cent. joint venture company Kingswood Co. Ltd. with a company which
belongs to the Oak Maritime group fully owns Seven Seas Shipping Ltd. which following
the termination of the relevant joint venture sold the VLCC it owned to Euronav NV. Both
Kingswood Co. Ltd. and Seven Seas Shipping Ltd. are now in process of winding up.
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 1st of January 2016.
Euronav MI II Inc.
In the fourth quarter of 2017, Euronav NV incorporated a new wholly-owned subsidiary,
Euronav MI Inc., a company incorporated and existing under the laws of the Republic
of the Marshall Islands, for the purposes of the upcoming merger (the 'Merger') with
Gener8 Maritime, Inc. ('Gener8'). Pursuant to the merger agreement entered into
between Euronav and Gener8 on 20 December 2017, Euronav MI Inc. merged with
and into Gener8 upon closing of the Merger on 12 June 2018, with Gener8 being the
surviving corporation wholly owned by Euronav NV. At the same time, the name of the
surviving corporation was changed into Euronav MI II Inc.
As the ultimate parent company of the Gener8 group prior to closing of the Merger,
Euronav MI II Inc. still owns certain direct and indirect subsidiaries most of which served
as special purpose shipowning companies within the Gener8 group. Following the sale
of the assets held by them (to Euronav NV or, in case of non-core assets, to third party
DIRECTORS' REPORT
79
buyers) Euronav intends to simplify the group’s corporate structure by liquidating the
said subsidiaries and closing the New York office.
Tankers UK Agencies Ltd. (TI Pool)
In 2017, the corporate structure of Tankers International pool (“TI Pool”) was rationalized.
Under the new structure, the shares of Tankers UK Agencies Ltd. (“TUKA”), fully held
at the time by Tankers International LLC (“TI LLC”), an entity incorporated under the
laws of the Marshall Islands, were distributed to the two remaining founding members
of the TI Pool (namely Euronav NV and International Seaways INC) to form a 50-50 joint
venture.
Additionally, a new company, Tankers International Ltd. ("TIL"), was incorporated
under the laws of the United Kingdom, and is now fully owned by TUKA. TIL became
the disponent owner of all of the vessels in the TI Pool as all the vessels are now time
chartered to TIL at a floating rate equivalent to the average spot rate achieved by the
pool times the pool point assigned to each vessel.
* to be dissolved
This new structure allowed the TI Pool to arrange for a credit line financing in order to
lower the working capital requirement for the Pool participants which potentially can
attract additional pool participants.
Current structure
Euronav NV Belgium
100%
100%
100%
100%
100%
100%
100%
50%
Euronav
Ship Management
SAS France
Euronav
Shipping NV
Belgium
Euronav
Tankers NV
Belgium
Euronav SAS
Euronav(UK)
Agencies Ltd
France
United Kingdom
Euronav
Hong Kong Ltd
Hong Kong
Euronav MI II Inc.
Tankers UK
Agencies Ltd
Marshall Islands
United Kingdom
50%
Tankers
International
LLC
Marshall Islands
100%
100%
50%
Euronav Ship
Management
(Antwerp)
Branch Office
Belgium
Euronav Ship
Management
(Hellas) Ltd
Liberia
Kingswood
Marshall
Islands*
100%
Euronav
Singapore
Pte. Ltd
100%
Euronav
Luxembourg
SA
50%
TI Africa
Ltd
50%
TI Asia
Ltd
Singapore
Luxembourg
Hong Kong
Hong Kong
100%
E.S.M.C.
Euro-Ocean
Ship Manage
ment Ltd
Cyprus
100%
Tankers
International
Ltd
UK
100%
100%
Euronav Ship
Management
(Hellas)
Branch Office
Greece
Seven Seas
Shipping Ltd
Marshall
Islands*
100%
100%
TI Africa
Qatar
Branch
Qatar
TI Asia
Qatar
Branch
Qatar
Activity
report
82
ACTIVITY REPORT
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 18
March 2019 the Euronav core fleet (owned and operated) has a weighted average age of
8.5 years. Euronav operates its fleet both on the spot and the period market.
0-5 years old
6-10 years old
Average age
profile
of Euronav
owned and managed
VLCC
and V-Plus
> 15 years old��
VLCC fleet
42%
THE TANKERS INTERNATIONAL (TI) POOL
Euronav’s entire owned VLCC fleet flies Belgian, Greek, French, Liberian, Marshall
27%
Islands or Panamese flag. Euronav is a founding member of the TI Pool, which
commenced operation in January 2000. The TI Pool was established by Euronav and
27%
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
4%
largest modern fleets available in the world. 42 Euronav VLCC's participated in the pool
on 18 March 2019. 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.
11-15 years old
6-10 years old
42%
27%
Suezmax fleet
Euronav’s entire owned Suezmax fleet flies Belgian, Greek or Liberian Flag. The use
of a national flag together with operational and maintenance standards in terms of
age and performance, enables Euronav to employ part of its fleet on time charter.
0-5 years old
> 15 years old��
27%
4%
11-15 years old
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ACTIVITY REPORT
83
16%
Average age
profile
of Euronav
owned and managed
Suezmax
> 15 years old��
0-5 years old
6-10 years old
11-15 years old
0-5 years old
44%
20%
20%
Euronav chooses to employ a part of its Suezmax fleet on long-term time charter. This
strategy allows the Company to benefit from a source of secure, steady and visible
flow of income. Another part of the Suezmax fleet is traded on the spot market. On 18
March 2019 Euronav owns and employs 25 Suezmax vessels which are traded on the
spot market.
16%
> 15 years old��
6-10 years old
44%
20%
20%
11-15 years old
Far East
US Gulf
Mid East
Europe
U
S
G
ulf – A
sia
VLCC
Suezmax
Both VLCC and Suezmax
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
Asia
M
i
d Eas t - A s i a
M
i
d
E
a
s
t
–
Pacific Rim
FSO and FPSO market*
The FSO system is one of the most commercially viable concepts for remote or deep-
water oil field developments. For areas where the production platform has no storage
capabilities (fixed platform, MOPU, spar, TLP, semi) and no pipeline infrastructure,
FSOs are perfect because of their very large storage capacity and ability to be moored
in almost any water depth. With limited oil processing infrastructure on deck, they are
relatively simple to convert to FPSOs.
An FPSO is a floating production system that receives fluids (crude oil, water,…) from a
subsea reservoir through risers, which then separate fluids into crude oil, natural gas,
water and impurities within the topsides production facilities onboard. Crude oil stored
in the storage tanks of the FPSO is offloaded onto shuttle tankers to go to market or for
further refining onshore.
* See the annual report glossary for further
details.
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84
ACTIVITY REPORT
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.
Each offshore unit is unique because of the logistical requirements and additional
engineering 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 environmental and geological 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.
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.
There is an established market for leasing FSOs, which can help commercialize remote
or marginal fields. The offshore industry is a highly technical one with many risk factors
but with an equally high reward.
Euronav
In May 2017, Euronav's joint venture with International Seaways ("INSW") signed a five
year contract with North Oil Company ("NOC"), the new operator of the Al-Shaheen oil
field, whose shareholders are Qatar Petroleum Oil & Gas Limited and Total E&P Golfe
Limited for the FSO AFRICA and FSO ASIA, immediately following the previous service
contract.
Euronav engaged in The Maersk Oil Qatar (MOQ) project (cf. below) because of the
specific assets that it 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 and Oceania (fully owned by Euronav) are 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.
ACTIVITY REPORT
85
In house Ship
Management
The majority of the fleet is managed by three wholly-owned subsidiaries: Euronav Ship
Management SAS, Euronav SAS and Euronav Ship Management (Hellas) Ltd. Euronav
has also established an office in Singapore, Euronav Singapore Pte Ltd, to enhance
the support services offered to the vessels that frequently call Asian ports. The skills
of its seagoing officers, crew and 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 majority of its fleet of modern crude oil carriers ranging
from Suezmax to Very Large and V-Plus (also known as Ultra Large Crude Oil Carriers)
and FSO (Floating Storage and Offloading). 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. The
Management team, superintendents, internal and external shipping expert 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 TMSA reviews and
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 and aims to safety, environmental
protection, security and quality excellence of the Fleet’s operation. Euronav is devoted
to a teamwork culture where people work together for the overall success of the
Company, on shore and at sea.
Euronav practices genuine performance planning and appraisal, training and
development, and encourages 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:
• Proven experience in managing oil tankers;
• Experienced officers and crews with professional credentials;
• Professional relations based on merit and trust;
• Commitment to improving the quality of working life at sea and crew wellbeing;
• 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;
• Open communication and transparency in reporting.
86
ACTIVITY REPORT
Full range of services
The Euronav Group provides a full range of ship management services:
• Full technical services;
• Fleet personnel comprising experienced motivated officers and crew;
•
Comprehensive integrated 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;
Project management for:
•
•
•
•
- newbuilding supervision, including pre- and post-contract consultancy and
technical support;
- FSO conversions;
- upgrade of assets for improved operational efficiency;
• Commercial management;
• Operational management.
Euronav utilizes a set of clearly defined Key Performance Indicators (KPIs) for its ship
management services as well as standardized inspection reports which are thoroughly
evaluated to facilitate the measurement of:
• Health & Safety performance;
• Environmental performance;
• Security (including Cybersecurity) performance;
• Navigation performance;
• Vessel reliability;
• Crew and shore staff retention and wellbeing;
• Vessel energy efficiency;
• Vetting and port state controls;
• Planned and condition-based maintenance;
• 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.
ACTIVITY REPORT
87
In addition to the in house managed fleet, Euronav maintains close relations and
cooperation with high quality ship managers which manage part of the fleet.
A dedicated Euronav team is managing the relationship and ensures that the services
rendered to Euronav ships are in accordance with Euronav standards. The relationship
is offering opportunities for interaction and sharing of experience between the Euronav
ship management and ship management partners while at the same time providing
flexibility for potential expansion.
Euronav Ship
Management
Partners
88
ACTIVITY REPORT
Fleet of the
Euronav
group as of
31 December
2018
Marsh I = Marshall Islands
1 In 2018 the Hojo, the Newton, the Nautica,
and the Noble have been in dry-dock and
underwent a special survey (standard
procedure for ships every five years). The Hojo
in Shekou (January), the Nautica in Shekou
(January), the Newton in Shenzen (July) and
the Noble in Shenzen (March).
Owned VLCCs and V-Plus
Name
Aegean
Alboran
Alex
Alice
Alsace
Amundsen
Andaman
Anne
Antigone
Aquitaine
Arafura
Aral
Ardeche
Daishan
Dalma
Desirade
Dia
Dominica
Donoussa
Drenec
Owned
Built
Dwt
Draft
Flag
Length (m)
Shipyard
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2016
2016
2016
2016
2012
2017
2016
2016
2015
2017
2016
2016
2017
2007
2007
2016
2015
2015
2016
2016
299,999
298,991
299,445
299,320
320,350
298,991
299,392
299,533
299,421
298,767
298,991
299,999
298,642
306,005
306,543
299,999
299,999
299,999
299,999
299,999
21.62
21.62
21.60
21.60
22.50
21.62
21.62
21.60
21.60
21.62
21.62
21.62
21.62
22.49
22.49
21.53
21.52
21.54
21.54
21.53
Belgian
Liberian
Belgian
Belgian
French
Liberian
Liberian
French
Greek
Belgian
Belgian
Belgian
Belgian
Liberian
Liberian
Liberian
Liberian
Liberian
Liberian
Liberian
332.97
332.97
333.00
333.00
330.00
332.97
332.97
333.00
333.00
333.00
332.97
333.0
333.00
332.0
332.0
336.0
336.0
336.0
336.0
336.0
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Samsung H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Daewoo H.I.
Daewoo H.I.
Daewoo H.I.
Daewoo H.I.
Daewoo H.I.
Daewoo H.I.
Daewoo H.I.
Europe
Hakata
Hakone
Hatteras
Heron
Hirado
Hojo1
Ilma
Ingrid
Iris
Nautica1
Nectar
Newton1
Noble1
Oceania
Sandra
Sara
Simone
Sonia
TI Hellas
V.K. Eddie
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2002
2010
2010
2017
2017
2011
2013
2012
2012
2012
2008
2008
2009
2008
2003
2011
2011
2012
2012
2005
2005
441,561
302,550
302,624
297,363
297,363
302,550
302,965
314,000
314,000
314,000
307,284
307,284
307,284
307,284
441,561
323,527
323,183
313,988
314,000
319,254
305,261
24.53
21.03
21.03
21.62
21.62
21.03
21.64
22.37
22.38
22.37
22.72
22.72
22.30
22.72
24.53
21.32
22.62
22.10
22.10
22.52
22.42
French
French
Greek
Liberian
Liberian
Greek
Belgian
Belgian
Belgian
Belgian
Liberian
Liberian
Belgian
Belgian
Belgian
French
French
Belgian
French
Belgian
Panama
ACTIVITY REPORT
89
380.00
333.00
333.00
333.00
333.00
333.00
Daewoo H.I.
Universal
Universal
Hanjin Subic
Hanjin Subic
Universal
330.00
Japan Marine United
319.03
319.03
333.14
321.67
321.60
321.66
321.67
380.00
319.57
319.57
319.57
319.57
332.99
332.00
Hyundai H.I.
Hyundai H.I.
Hyundai H.I.
Dalian S.I.
Dalian S.I.
Dalian S.I.
Dalian S.I.
DSME
STX O&S
STX O&S
STX O&S
STX O&S
Hyundai H.I.
Daewoo H.I.
VLCCs Bareboat
Name
Nautilus
Navarin
Neptun
Nucleus
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
Length (m)
Liberian
Liberian
Marsh I
Liberian
321.70
321.65
321.70
321.64
Shipyard
Dalian S.I.
Dalian S.I.
Dalian S.I.
Dalian S.I.
90
ACTIVITY REPORT
Owned Suezmax vessels
Name
Cap Charles
Cap Corpus
Christi
Cap
Diamant
Cap Felix2
Cap
Guillaume
Cap Lara
Cap Leon2
Cap
Pembroke
Cap
Philippe
Cap Pierre
Cap Port
Arthur
Cap Quebec
Cap
Theodora2
Cap Victor
Capt.
Michael
Filikon
Finesse2
Fraternity
Gener8
George T
Maria
Sapphira
Selena
Sofia
Statia
Stella
Owned
100%
Built
2006
Dwt
158,881
Draft
17.00
Flag
Length (m)
Shipyard
Greek
274.00
Samsung H.I.
100%
2018
156,600
17.15
Greek
277.00
Hyundai H.I.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2001
160,044
15.62
Greek
277.32
Hyundai H.I.
2008
158,765
17.02
Belgian
274.00
Samsung H.I.
2006
158,889
17.00
Greek
274.00
Samsung H.I.
2007
2003
158,826
159,049
17.00
17.02
Greek
Liberian
274.00
274.29
Samsung H.I.
Samsung H.I.
2018
156,600
17.15
Greek
277,00
Hyundai H.I.
2006
158,920
17.00
Greek
274.00
Samsung H.I.
2004
159,083
17.02
Liberian
274.29
Samsung H.I.
2018
156,600
17.15
Greek
277.00
Hyundai H.I.
2018
156,600
17.15
Greek
277.00
Hyundai H.I.
2008
158,819
17.00
Greek
274.00
Samsung H.I.
2007
158,853
17.00
Greek
274.00
Samsung H.I.
2012
157,648
17.00
Greek
274.82
Samsung H.I.
2002
2003
2009
149,989
149,994
157,714
15.95
15.95
17.02
Liberian
Liberian
Belgian
274.20
274.20
274.20
Universal
Universal
Samsung H.I.
2007
150,205
16.02
Marsh I
274.2
Universal
2012
2008
2007
2010
2006
2011
157,523
150,205
150,205
165,000
150,205
165,000
17.00
16.02
16.02
17.17
16.02
17.17
Greek
Belgian
Belgian
Greek
Belgian
Greek
274.82
274.20
274.20
274.19
274.20
274.19
Samsung H.I.
Universal
Universal
Hyundai H.I.
Universal
Hyundai H.I.
2 Cap Felix, the Cap Leon, the Cap Theodora and
the Finesse have been dry-dock and underwent
a special survey (standard procedure for ships
every five years). The Cap Felix in Shenzen
(May), the Cap Leon in Shenzen (November),
the Cap Theodora in Shenzen (December) and
the Finesse in Shekou (January).
ACTIVITY REPORT
91
Owned FSOs (Floating, Storage and Offloading)
Name
Owned
FSO Africa
FSO Asia
50%
50%
Built
2002
2002
Dwt
442,000
442,000
Draft
24.53
24.53
Flag
Length (m)
Marsh I
Marsh I
380.00
380.00
Shipyard
Daewoo H.I.
Daewoo H.I.
LR1 vessels sold in the course of 2018 and 2019
Name
Owned
Built
Dwt
Draft
Flag
Length (m)
Shipyard
Genmar
Companion 3
Genmar
Compatriot 4
100%
100%
2004
2004
72,768
12.48
Palau
228.60
Dalian S.I.
72,768
12.48
Bermuda
228.60
Dalian S.I.
3 Vessel sold on 1st of November 2018 and
delivered to its new owners on 29 November
2018.
4 Vessel sold on 11 February 2019 and to be
delivered to its new owners in April 2019.
Corporate Social
Responsibility
94
CORPORATE SOCIAL RESPONSIBILITY
Health,
Safety,
Quality,
Environment
and Society
(HSQE & S)
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.
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:
• Fitness: providing necessary equipment on board;
• 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).
For our society:
To transport our
essential source
of energy in a
manner that is
economically,
socially and
environmentally
viable now and in
the future.
CORPORATE SOCIAL RESPONSIBILITY
95
MANAGEMENT OF EMERGENCIES
There are potential risks adhered to the shipping industry for the people, the
environment, the assets and the Company. Such risks relate to personal injury,
release of oil or substances to the environment, security and cybersecurity threats,
navigational hazards and damage to company's reputation.Hence, the focus on safety
of our people, the protection of the environment and the safety of transportation are
of paramount importance in our organization. To deal with possible emergencies, the
following procedures have been put into place:
•
•
•
•
•
•
Emergency and Contingency Manual (ECM) dealing with all possible emergencies
other than 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;
Panama Canal SOPEP (PC SOPEP) dealing with similar emergencies and the
response in transiting Panama Canal;
Company's and Ship Specifc CyberSecurity Manuals, dealing with cybersecurity
controls and potential threats
• Ship Security Plans (SSP) dealing with Maritime security controls
•
A range of Table Top Exercises (TTX): emergency drills including officers, vessel
staff and external participants such as qualified individual or salvage and fire
experts;
Monthly security drills on board dealing with possible security and cybersecurity
threats.
•
Quality
By focusing on quality, Euronav ensures 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.
INTERNATIONAL SHIP MANAGEMENT (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 French Administration for French flag vessels, as well as from Belgian
Maritime Inspectorate for the Belgian flag vessels and from Bureau Veritas on behalf
of the Marshall Islands Flag Administration. It is also in possession of the Certification
for Quality Management Systems (ISO 9001 (RvA*)), Certification for Environmental
Management Systems (ISO 14001 (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 Liberian 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 (RvA) as well as
14001 (RvA) certifications are obtained by the American Bureau of Shipping.
* RvA (Dutch Accreditation Council - “Raad
voor Accreditatie” in Dutch) and UKAS
(United Kingdom Accreditation Service) are
organizations responsible for determining, in
the public interest, the technical competence
and integrity of companies such as those
offering testing, calibration and certification
services. Accreditations are provided by
certifications bodies directly. However, Euronav
chose to be also audited by subject certification
bodies as those accreditations increase
credibility.
96
CORPORATE SOCIAL RESPONSIBILITY
TRAINING
Euronav built a comprehensive system of continuous training programs and seminars
both on board and ashore, ensuring 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.
ANTI-CORRUPTION
Euronav is committed to conduct all of its business operations around the world in an
honest, fair, transparent and ethical manner. The Anti-Corruption Policy is applicable to
employees and persons who act on behalf of Euronav in a long-term relationship such
as commercial agents, sub-contractors, consultants, brokers, lawyers and accountants.
Specific attention is given to dealing with those ‘Third Party Associates’ which are
required to certify their compliance with the Anti-Corruption Policy. In general, any third
parties who intend to trade with Euronav are subject to detailed scrutiny by the Internal
Control department, which also considers the appropriateness of the business relation
in view of the Company’s Anti-Corruption Policy in addition to the Third Party Risk
Policy. Euronav’s Code of Business Conduct and Ethics also offers guidelines for the
relationships with colleagues, customers, suppliers and government agencies. An in-
house training of the Company’s policies and codes is conducted on a regular basis for
all employees. Any concerns in relation to the Anti-Corruption Policy or inappropriate
conduct of employees or business relationships in the commercial business environment,
may be raised through the Company’s Whistleblower Hotline Platform.
Environment
Euronav aims for safety and 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.
During quarterly management review meetings, management reassesses and
implements initiatives regarding the Company’s environmental performance. Euronav
also actively participates in several industry associations (Intertanko, Helmepa, Namepa,
TSCF, Oil Majors and Industry Conferences and Classification Societies Committees)
which promote safe and environmentally sound ship design and operations.
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 is part of
the solution to the challenges of air emissions and global warming which the world
faces today.
Euronav’s dedication to reducing emissions is demonstrated by:
•
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.
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:
CORPORATE SOCIAL RESPONSIBILITY
97
Certain aspects of the organisation’s
operations have been excluded, due to a lack
of data availability. These account for less than
0.3% of total emissions so are not considered
material. This includes electricity from two
one-person offices and business travel from
Northern Marine Management ships. Values
have been rounded so may not tally completely
in Table 1.
•
•
•
Installing devices that improve propulsion efficiency;
Installing 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 and results in lower carbon emissions, as well as reducing the toxic effect
of the paint on marine life;
• Hull and propeller cleaning based on observation;
• Slow steaming as part of voyage optimization where necessary;
•
Installing hardware and software for close monitoring of a vessel’s speed and
consumption performance.
The data below show that Euronav’s efforts do result in a substantial decrease of
greenhouse gas emissions.
ANNUAL GREENHOUSE GAS EMISSIONS
Euronav recognises the important role the shipping sector has in addressing climate
change and seeks to develop a climate strategy to enable effective action. To help
set targets and measure progress, 2017 has been set as Euronav’s baseline carbon
footprint year.
The merger with Gener8 resulted in the acquisition of 21 ships in 2018. This material
increase in the size of Euronav’s operations require that the 2017 carbon footprint
is rebaselined to account for these changes. Consequently, both the 2017 and 2018
carbon footprints now include the annual emissions from the additional fleet for both
full years.
Total organisational emissions have been normalised by total freight moved, which
results in an emissions intensity of 3.07 gCO2 e/t.km, compared with 3.14 gCO2 e/t.km
in 2017.
Type of Emissions
Scope 1 (Direct)
Scope 2 (Indirect Energy)
Scope 3 (Indirect Other)
2017 Emissions
(tCO2e)1
3,280,090
2018 Emissions
(tCO2e)
2,944,250
192
635,781
278
583,517
Total
3,916,062
3,528,045
% Change
-10%
45%
-8%
-10%
Scope 1: Emissions from Euronav’s sources that are controlled directly by the company,
including the combustion of fuel from vehicles and vessels, and building operations.
Scope 2: Emissions from imported energy, such as purchased electricity, heat or steam.
Scope 3: Emissions from non-owned sources that are related to the company’s activities.
This includes business travel, the Well-to-Tank emissions related to the processing of
fuels, and the transmission and distribution of electricity.
Results
Euronav’s carbon footprint for the 2018 calendar year was 3,528,045 tonnes of CO2
equivalent, a decrease of 10% in comparison with 2017.
The emissions intensity of Euronav’s operations has decreased by 2.2%, from 3.14 gCO2
e/t.km in 2017 to 3.07 gCO2 e/t.km in 2018.
83.5% of total emissions originate from fuel used by ships, with a further 16.2% of total
emissions from the well-to-tank extraction and processing of these fuels. Business
travel contributes 0.4% of total emissions.
98
CORPORATE SOCIAL RESPONSIBILITY
Methodology
In line with the main requirements of the GHG Protocol, all Scope 1 and 2 emissions
have been reported for the period 1st January – 31st December 2018. Scope 3 business
travel and energy related emissions have also been calculated and reported.
The disclosed emissions cover all sources within Euronav’s operational control. As
such, we have included all operations that are directly managed by us, or for third party
managed vessels adhering to our ‘Ship Management Agreements’ and leased ships.
Emissions from lone workers in Doha and Hong Kong, and business travel from
Northern Marine Management, an external management company, have been excluded
due to a lack of data availability. These will be immaterial when compared to emissions
from shipping fuel.
The Gener8 ships were acquired with effect from 1st July 2018, and actual data for
these ships was used from this point until the 31st December 2018. This data was pro-
rated to cover the whole of 2018. The total emissions from actual and pro-rated data for
2018 were then also added to the 2017 footprint to set a robust baseline against which
to compare emissions in future years.
HANDLING OF WASTE
During normal vessels’ operations, Euronav tries to reduce vessels’ waste to a
maximum by:
• 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;
Placing 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 implement the following safety, quality and
environmental objectives:
•
Provide a safe working environment ashore and afloat by encouraging all employees
to identify potentially unsafe conditions or practices and to undertake corrective
measures;
• Take effective measures to avoid pollution incidents;
•
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;
•
• Reduce waste;
• Consider environmental issues in all design and development projects;
•
•
Introduce efficient fuel saving measures;
Continuously improve safety management skills 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;
Participate in the voluntary global search and rescue system (AMVER).
•
•
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GLOBAL MARITIME FORUM
Euronav participates to the Global Maritime Forum, an international not-for-profit
organization committed to shaping the future of global seaborne trade to increase
sustainable long-term economic development and human wellbeing. To serve its
mission, the Forum convenes leaders from across the maritime community with policy-
makers, NGOs, experts, and other influential decision-makers and opinion shapers
from all geographies in a community of purpose to discuss collective challenges and to
work together on developing new solutions and recommendations for action. In order
to do so, the Forum identifies, develops and shares new insights and key issues on
the global agenda and facilitates collaborative projects and initiatives that can deliver
long-term impact and sustainable change. One of their goals is to contribute to the IMO
strategy regarding the reduction of Green House Gas (GHG) emissions.
SHIP RECYCLING
Although our fleet is young, vessel recycling is an important matter which Euronav is
actively working on. 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. Other
notations (i.e. ENVIRO) have also proved their significance. These documents need 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 and/or other notations (i.e. ENVIRO). Euronav Fleet will
undergo surveys to establish the inventory of Hazardous Material within 2019.
Society
HUMAN RIGHTS
At Euronav the human rights of our personnel both on board and offshore is a very
important aspect of the Company’s management. We believe the greatest impact of our
business on human rights lays in the area of human rights in the workplace on board. It
is indeed in the workplace on board where a great number of persons from all kinds of
nationalities and believes work and live together, day in day out, without the opportunity
to return to their family every evening.
More specifically, Euronav focuses on the wellbeing of its seafarers by providing fair
working conditions on board through offering fitness facilities, healthy food prepared
in compliance with the safety standards in addition to extensive pre-joining medical
examinations. Euronav also endeavors to ensure equal and non-discriminatory
treatment and offers ample opportunities for continuous education. To ensure the
personnel a continuous development of their skills and in order to maintain the
quality of service, Euronav foresees a level of care and training for its employees
both on board and offshore by setting measurable annual objectives and KPIs. The
Company’s vision on equal and non-discriminatory treatment is detailed in the Code
of Conduct, the Staff Handbook and supervised by the Compliance Officer. Both
policies have chapters with respect to the social and ethical behavior that is expected
from Euronav personnel.
Euronav has adopted a Whistleblower Protection Policy in order to protect individuals
who want to lawfully raise a legitimate concern. If an individual does not feel
comfortable reporting concerns to a supervisor or manager, he or she can use a free
telephone service or web-based platform that enables him or her to report a concern in
complete confidentiality. Euronav's Whistleblower Hotline is hosted by an independent
third party, in order to ensure a straightforward, confidential, secure and convenient
way of reporting. Whenever a complaint is made, the Chairman of the Audit and Risk
Committee and the General Counsel will receive a notification and they will be in charge
of the investigation of the complaint.
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CORPORATE SOCIAL RESPONSIBILITY
COMMUNITY INVOLVEMENT
Euronav wants to positively impact 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. A few of the charities to
which Euronav contributes financially, in line with its policy, are described hereafter.
Benefit for children 2017
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 2017 Valero Texas Open
Benefit for Children Golf Classic and the Valero Texas Open contributed USD 11 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 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’s mission is to
develop advanced technologies to rid the world’s oceans of plastic. The organization
was founded in 2013 by Boyan Slat (1994), a Dutch student. In 2014 the United Nations
Environment Program awarded Slat with the ‘Champion of the Earth’ accolade. The
Ocean Cleanup has received over USD 31 million in funding since inception. In 2018 they
will start the cleanup, by deploying their very first cleanup system in the Great Pacific
Garbage Patch, after which they will scale up to a fleet of around 50 systems. They
estimate to be able to remove 50 % of the Great Pacific Garbage Patch within five years’
time from full-scale deployment.
The Care
The Association of Care is a Panhellenic Association which facilitates prevention,
information and support for people with cerebral palsy, mental retardation and Down
syndrome. Founded in 2008 in Piraeus, the organization provides community service
to families fleeing while seeking help for health problems. They adopt families,
focusing on children with special abilities and help them in various ways by offering
basic necessities and accommodating care thanks to collaboration with health
specialists.
Mitera - Center for the Protection of the Child of Attica
The center hosts 102 children ranging from infants to children six years of age. Roughly
half the children who reside at the center are orphans; others were abandoned by their
biological parents. A number of children cope with physical or mental disabilities such
as Down syndrome. Single pregnant women also receive aid as the center covers their
birth expenses.
ARGO Foundation for Seamen's children with special needs
ARGO is dedicated to assisting families of Greek seamen of which the children battle
with intellectual deprival, autism or infirmities. The organization offers education
and care to those with special needs. The charity was founded in 1985 by seamen’s
wives with disabled children. Nowadays, Piraeus based ARGO arranges services for 60
individuals from 17 to 45 years old, mainly children of seamen, with medium and heavy
learning disabilities.
Doctors without Borders
Doctors without Borders
international humanitarian non-governmental
organization (NGO) best known for its projects in war-torn regions and developing
countries affected by endemic diseases. In 2017, over 30,000 personnel provided
is an
CORPORATE SOCIAL RESPONSIBILITY
101
medical aid in over 70 countries. The organization was founded in the aftermath of the
Biafra secession in 1971, by a small group of French doctors and journalists who sought
to expand accessibility to medical care across national boundaries and irrespective of
race, religion, creed or political affiliation.
Hatzikyriakio - foundation for orphans
Hatzikyriakio Childcare Institution admits girls six years of age and older, coming from
disturbed family backgrounds facing serious financial and social issues. Along with
accommodation, the Institution provides these girls with a well-rounded education
preparing them to become responsible and self-dependent adults, with love and
emotional support being the key factors in the Institution’s mission.
SOS Children's Villages
SOS Children's Villages is an independent non-governmental international development
organization which strives to meet the needs and protect the interests and rights of
children since 1949. The organization's work focuses on abandoned, destitute and
orphaned children requiring family-based child care.
The Ark of the World - caring for poor, underprivileged children and families
The Ark of the World is a charity that welcomes and cares for abandoned children. The
Ark operates a main facility in Kolonos, one of the poorest districts in the Greek capital
and two additional centers near Ioannina and the island of Chios. The Ark has cared for
thousands of children since its founding. Currently 200 children, of which three quarters
are Greek, as well as others from nations throughout the world who ended up on the
streets of Athens receive care. The Ark operates as an orphanage, caring for newborns
and children up to 18 years old, as well as a day-care center for low-income families
whose parents need a safe place to leave their children while they go to work. Over the
years The Ark started assisting low-income single mothers to ensure the children stay
with their mothers instead of being institutionalized. The Ark also provides a safe haven
for mothers who need protection from abusive partners.
United Way Canada- Centraide
United Way is a charity organisation that supports over 200 community groups and
initiatives in the area of Quebec with a mission to reduce poverty and social exclusion.
Valero Energy Inc. is supporting this organisation as it has a refinery in St. Romuald,
Levis. Euronav, as a strong partner has joined forces with Valero, to support United Way
in its quest to improve lives by engaging individuals and mobilizing collective action.
Le Grand Défi Pierre Lavoie
Euronav is contributing to this fundraising event which takes place in Quebec by
supporting the Pilots’ team of lower St Lawrence river. The proceeds are offered mainly
to elementary schools with limited resources in order to invest in promoting healthy
lifestyle habits, as well as to the Pierre Lavoie Foundation to support research on
orphan diseases.
Education
SCHOOL AND TRAINING PROGRAM
Euronav has a long history of supporting apprentices, cadets, interns and trainees on
our ships and in our shore based offices. Being committed to learning about life at sea
and about obtaining the special skills needed to be successful in this environment are
key factors to inviting young professionals to join our Company. Having the capability
and potential to thrive in this challenging sector are vital characteristics we look for in
students.
We work with the following prestigious higher education bodies to take students,
apprentices, graduates and cadets into our ships for practical training, and this includes
a limited number of student sponsorships:
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CORPORATE SOCIAL RESPONSIBILITY
• National Technical University of Athens,
•
Technological Education Institute of Piraeus, Naval Architects and Marine
Engineers,
• University of Piraeus, School of Maritime and Industrial Studies,
• University of the Aegean, School of Shipping, Trade and Transport,
• French Maritime School (Ecole Supérieure de la Marine Marchande),
• Antwerp Maritime Academy.
The Company attends student events to discuss the opportunities involved in maritime
careers and to encourage wider environmental debate. In 2018 we supported Isalos.net,
an educational initiative which invites students of marine academies and universities
in maritime studies to conferences. Its panel consists of executives and experts in
the maritime industry and from other well established companies in Greece. In 2018
Euronav participated in four Isalos.net events.
The Euronav Nantes office participates in the local school Ship Owner Careers Day,
which shares information about the shipping sector with young people who are
contemplating their future careers. We also invite high potential 5th year students
to Junior Officers Conferences. Our Athens office has been supporting the Engineer
School of Marine Academies in Chios and Macedonia to visit the engine makers’
factories in Germany and Italy for wider understanding.
Euronav Ship Management (Hellas) Ltd is participating in internship programs of Greek
Universities, focusing on 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.
The Euronav Antwerp office participates in the Open Campus Day of the Antwerp
Maritime Academy, where we present our Company and share information with
students considering a career at sea. Each year during the summer months, we
also give students of the Antwerp Maritime Academy the opportunity to do a Cadet
traineeship on board our vessels to experience the life and work of a seafarer. This
training program is established in cooperation with the Royal Belgian Ship Owners’
Association. In 2018 we hired eight Cadets in this program, in the Deck Department.
Additionally, Euronav collaborated with AIESEC, an international student body which
helps young people discover and develop their potential. The specific program in
2018 was named International Kindergarten with the scope to eliminate any form of
xenophobia and school bullying for students, three to six years old. Euronav supported
international AIESEC students who visited Greece to run this program in selected
kindergartens in Athens.
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103
Human
resources
* Crew on board at Euronav vessels on 31
December 2018
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 Antwerp, Piraeus,
London, Nantes, Singapore and Hong Kong, Euronav has approximately 200 employees
(including contractors and temporary assignments). This geographic span across
Europe reflects a deep-rooted maritime history and culture built up over generations.
Over 2,700 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 has 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,
whom 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.
TOTAL OFFICERS AND APPRENTICES ON BOARD = 628*
3 Colombia
1 Netherlands
1 Italy
3 Pakistan
40 Ukraine
10 Russia
25 Romania
3 Poland
95 Philippines
56 Panama
20 Indonesia
53 Croatia
1 Spain
2 Georgia
1 Montenegro
1 Ecuador
26 Belgium
79 Bulgaria
1 Canada
1 Cyprus
40 France
165 Greece
1 Honduras
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CORPORATE SOCIAL RESPONSIBILITY
TOTAL RATINGS ON BOARD = 688*
1 Guatemala
117 Slovenia
1 Russia
11 Romania
1 Chile
21 Indonesia
96 Honduras
440 Philippines��
OUR CULTURE
Euronav is an integrated shipping services provider with high quality standards and
ambitious goals. To empower its people to meet these challenges, Euronav’s identity is
characterized by:
• Common values 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;
• Quality and professionalism in matters large and small;
• Communication and a no-blame culture cultivated by example.
* Crew on board at Euronav vessels on
31 December 2018
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CORPORATE SOCIAL RESPONSIBILITY
105
We encourage 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 act 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.
ACCOMPLISHMENTS IN 2018
In 2018 the human resources department has invested a great deal of work in the
following areas:
•
•
•
•
•
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 took place from December
2018 through January 2019, using an established 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;
HR software: internal procedure for the selection and evaluation of new software to
cover the expanding needs of the Company;
Maritime HR Association (part of Spinnaker Global): active participation to the
forum of which Euronav is a founding member.
For our
employees:
To inspire and
enable talented,
hard-working
people to
achieve their
career goals
in a healthy,
challenging
and rewarding
environment.
Glossary
108
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.
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.
GLOSSARY
109
Crude oil - Oil in its natural state that has not been refined or altered.
DWT - Deadweight Tonnage - 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.
Double hull - A design of tanker with double sides and a double bottom. The spaces
created between the double sides and bottom are used for ballast and provide a
protective distance between the cargo tanks and the outside world.
Draft - The vertical distance measured from the lowest point of a ship’s hull to the water
surface. Draft marks are cut into or welded onto the surface of a ship’s plating. They are
placed forward and aft on both sides of the hull and also amidships. The Plimsoll lines
which designate maximum drafts allowed for vessels under various conditions are also
found amidships.
Dry-dock - An out-of-service period during which planned repairs and maintenance
are carried out, including all 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.
110
GLOSSARY
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.
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.
LR1/LR2 - Abbreviations for Long Range oil tankers. Tankers with approx. 50-80,000
dwt (LR1) and approx. 80-120,000 dwt. (LR2).
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.
P&I Insurance - Protection and indemnity 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.
Reverse lightering - Loading VLCCs via reverse lightening is an interim and costly
GLOSSARY
111
alternative to loading directly from a deepwater terminal. Panamax and Aframax
tankers are used to shuttle crude from land-based ports to offshore VLCCs.
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.
Spar - Single Point Mooring and Reservoir - A spar is a type of floating oil platform
typically used in very deep waters and is named for logs used as buoys in shipping that
are moored in place vertically. Spar production platforms have been developed as an
alternative to conventional platforms.
Special Survey - The survey required by the Classification Society that usually takes
place every five years and usually in a dry-dock. During the Special Survey all vital
pieces of equipment and compartments and steel structures are opened up and
inspected by the classification surveyor.
Spill - Oil getting into the sea, in any amount, for any reason.
Spot (Voyage) Charter - A charter for a particular vessel to transport a single cargo
between specified loading port(s) and discharge port(s) in the immediate future.
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 loaded through the Suez Canal.
This is generally considered to be between 120,000 and 199,999 dwt and mostly about
150,000 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.
112
GLOSSARY
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.
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.
Tonnage Tax Regime - An alternative way of calculating taxable income of operating
qualifying ships. Taxable profits are calculated by reference to the net tonnage of the
qualifying vessels a company operates, independent of the actual earnings (profit or
loss).
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.
GLOSSARY
113
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 Report Programme (SIRE) which requires six-monthly 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.
VLCC Equivalent - The capacity of 1 VLCC or 2 Suezmax vessels.
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.
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.
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.
NOTES
NOTES
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.
This report can be
downloaded on our website:
www.euronav.com
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Financial
report
Financial
report
Consolidated financial statements
Notes to the consolidated financial statements
Statutory financial statements Euronav NV
Statutory auditor's report to the general meeting of Euronav NV as of and
for the year ended December 31, 2018
02
07
105
108
2
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands of USD)
Assets
Non-current assets
Vessels
Assets under construction
Other tangible assets
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
TOTAL ASSETS
Equity and Liablities
Equity
Share capital
Share premium
Translation reserve
Hedging reserve
Treasury shares
Retained earnings
Equity attributable to owners of the Company
Non-current liabilities
Bank loans
Other notes
Other payables
Employee benefits
Provisions
Total non-current liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Bank loans
Other borrowings
Provisions
Total current liabilities
Note
December 31, 2018
December 31, 2017*
8
8
8
-
10
25
9
11
-
12
3
13
13
-
13
13
-
15
15
17
16
20
17
-
15
15
20
3,520,067
-
1,943
105
38,658
43,182
2,255
2,271,500
63,668
1,663
72
160,352
30,595
2,487
3,606,210
2,530,337
305,726
282
173,133
42,000
521,141
136,797
191
143,648
-
280,636
4,127,351
2,810,973
239,148
1,702,549
411
(2,698)
(14,651)
335,764
173,046
1,215,227
568
-
(16,102)
473,622
2,260,523
1,846,361
1,421,465
148,166
1,451
4,336
4,288
1,579,706
87,225
41
138,537
60,342
977
287,122
653,730
147,619
539
3,984
-
805,872
61,355
11
47,361
50,010
3
158,740
TOTAL EQUITY AND LIABILITIES
4,127,351
2,810,973
* The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated.
The accompanying notes on pages 7 to 104 are an integral part of these consolidated financial statements.
FINANCIAL REPORT
3
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(in thousands of USD except per share amounts)
Note
2018
Jan. 1 - Dec 31, 2018
2017*
Jan. 1 - Dec 31, 2017
2016*
Jan. 1 - Dec 31, 2016
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
Total operating expenses
RESULT FROM OPERATING ACTIVITIES
Finance income
Finance expenses
Net finance expenses
Gain on bargain purchase
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)
4
8
4
5
5
5
8
3
24
8
-
5
6
6
24
25
7
-
14
14
14
14
600,024
19,138
4,775
623,937
(141,416)
(185,792)
(31,114)
(273)
(2,995)
-
(270,582)
(111)
(66,232)
513,368
36,538
4,902
554,808
(62,035)
(150,427)
(31,173)
(21,027)
-
-
(229,777)
(95)
(46,868)
684,265
50,397
6,996
741,658
(59,560)
(160,199)
(17,713)
(2)
-
(24,150)
(227,664)
(99)
(44,051)
(698,515)
(541,402)
(533,438)
(74,578)
15,023
(89,412)
(74,389)
23,059
16,076
(109,832)
(238)
(110,070)
(110,070)
(0.57)
(0.57)
13,406
7,266
(50,729)
(43,463)
-
30,082
25
1,358
1,383
1,383
0.01
0.01
208,220
6,855
(51,695)
(44,840)
-
40,495
203,875
174
204,049
204,049
1.29
1.29
191,994,398
191,994,398
158,166,534
158,297,057
158,262,268
158,429,057
* The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated.
The accompanying notes on pages 7 to 104 are an integral part of these consolidated financial statements.
4
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands of USD)
Note
2018
Jan. 1 - Dec 31, 2018
2017*
Jan. 1 - Dec 31, 2017
2016*
Jan. 1 - Dec 31, 2016
Profit/(loss) for the period
(110,070)
1,383
204,049
Other comprehensive income/ (expense),
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
16
6
13
25
Other comprehensive income/ (expense),
net of tax
Total comprehensive income/ (expense),
for the period
Attributable to:
Owners of the company
120
(157)
(2,698)
(459)
(3,194)
64
448
-
483
995
(646)
170
-
1,224
748
(113,264)
2,378
204,797
(113,264)
2,378
204,797
* The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated.
The accompanying notes on pages 7 to 104 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands of USD)
Note
Share
capital
Share
premium
Translation
reserve
Hedging
reserve
Treasury
shares
Retained
earnings
Total
equity
FINANCIAL REPORT
5
(50)
-
170
170
-
-
-
-
-
120
120
-
448
448
-
-
-
568
568
-
-
-
Balance at January 1, 2016
173,046
1,215,227
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE AT DECEMBER 31, 2016
173,046
1,215,227
Balance at January 1, 2017
173,046
1,215,227
Profit (loss) for the period
Total other comprehensive income
Total comprehensive income
Transactions with owners of the
company
Dividends to equity holders
Equity-settled share-based payment
Total transactions with owners
-
-
-
22
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE AT DECEMBER 31, 2017
173,046
1,215,227
Balance at January 1, 2018
Adjustment on initial application of
IFRS 15 (net of tax)
Adjustment on initial application of
IFRS 9 (net of tax)
Balance at January 1, 2018
adjusted *
Profit (loss) for the period
Total other comprehensive income
(expense)
Total comprehensive income
Transactions with owners of the
company
Issue of ordinary shares related to
business combinations
Dividends to equity holders
Treasury shares acquired
Treasury shares sold
Equity-settled share-based payment
1
1
-
-
13
13
13
13
22
173,046
1,215,227
-
-
-
-
-
-
-
-
-
-
66,102
487,322
-
-
-
-
-
-
-
-
Total transactions with owners
66,102
487,322
173,046
1,215,227
568
(157)
(2,698)
(157)
(2,698)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,283)
529,809
1,905,749
-
-
-
204,049
578
204,049
748
204,627
204,797
-
(6,889)
3,070
(216,838)
-
(2,339)
406
(216,838)
(6,889)
731
406
(3,819)
(218,771)
(222,590)
(16,102)
515,665
1,887,956
(16,102)
515,665
1,887,956
-
-
-
-
-
-
1,383
547
1,383
995
1,930
2,378
(44,286)
313
(44,286)
313
(43,973)
(43,973)
(16,102)
473,622
1,846,361
(16,102)
473,622
1,846,361
-
-
(1,729)
(1,729)
(16)
(16)
(16,102)
471,877
1,844,616
-
-
-
-
(110,070)
(110,070)
(339)
(3,194)
(110,409)
(113,264)
-
553,424
-
(3,955)
5,406
-
(22,629)
-
(3,112)
37
(22,629)
(3,955)
2,294
37
1,451
(25,704)
529,171
BALANCE AT DECEMBER 31, 2018
239,148
1,702,549
411
(2,698)
(14,651)
335,764
2,260,523
*The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated but the
opening balance of 2018 has been adjusted following the application of IFRS 15 on Revenue Recognition.
The accompanying notes on pages 7 to 104 are an integral part of these consolidated financial statements.
6
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of USD)
Note
2018
Jan. 1 - Dec 31, 2018
2017*
Jan. 1 - Dec 31, 2017
2016*
Jan. 1 - Dec 31, 2016
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
Income tax (benefits)/expenses
Share of profit of equity-accounted investees,
net of tax
Net finance expenses
(Gain)/loss on disposal of assets
Equity-settled share-based payment transactions
Amortization of deferred capital gain
Gain on bargain purchase
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 or from business
combinations, net of cash acquired
Proceeds from sale of subsidiaries
Net cash from (used in) investing activities
(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
8
-
3
24
-
7
25
6
8
5
-
24
-
11
11
11
10-11
17
17
17
17
17
16
-
6-18
6-11
25
8
8
8
-
8
25
25
24
24
13
15
15
15
13
(110,070)
289,311
270,582
111
2,995
-
(42)
239
(16,076)
74,389
(18,865)
37
(1,000)
(23,059)
(114,533)
33
(23,589)
(6,393)
(3,413)
(77,876)
(8,181)
(11,000)
18,839
(2,265)
(1,304)
616
(67)
(67,209)
3,409
-
841
(237,476)
26,762
(588)
(1)
-
134,097
-
126,288
140,960
190,042
(1,661)
983,882
(1,115,894)
(3,849)
(22,643)
1,383
225,527
229,777
95
-
-
(160)
(1,358)
(30,082)
43,463
(15,511)
313
(1,010)
-
22,083
(52)
5,938
(1,499)
(3,648)
28,773
1,165
1,014
(6,727)
(3,726)
18
827
11
(39,595)
636
1,250
211,295
(176,687)
96,880
(1,203)
(11)
29
40,750
-
-
-
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
438,202
(342,502)
223,016
(178)
(18)
38
22,047
3,737
(6,755)
-
(40,242)
(100,615)
-
526,024
(710,993)
(5,874)
(44,133)
(6,157)
740,286
(774,015)
(4,436)
(216,838)
Net cash from (used in) financing activities
(160,165)
(234,976)
(261,160)
FINANCIAL REPORT
7
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(in thousands of USD)
Note
2018
Jan. 1 - Dec 31, 2018
2017*
Jan. 1 - Dec 31, 2017
2016*
Jan. 1 - Dec 31, 2016
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
of which restricted cash
12
-
12
-
30,718
143,648
(1,233)
(63,923)
206,689
882
76,427
131,663
(1,401)
173,133
143,648
206,689
79
115
146
*The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated.
The accompanying notes on pages 7 to 104 are an integral part of these consolidated financial statements.
Notes to the consolidated financial statements for the year
ended 31 December 2018
Note 1 - Significant accounting policies
Note 2 - Segment reporting
Note 3 - Assets and liabilities held for sale and discontinued operations
Note 4 - Revenue and other operating income
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 - Major exchange rates
Note 27 - Audit fees
Note 28 - Subsequent events
Note 29 - Statement on the true and fair view of the consolidated financial statements
and the fair overview of the management report
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
8
FINANCIAL REPORT
its subsidiaries (together referred to as the “Group”) and the Group’s interests 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 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.
Time charters provide the Group with a fixed and stable cash flow for a known period
of time. Time charters may help the Group mitigate, in part, its 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 its 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 Group believes will
enable it 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 reference to a market index
and in accordance with a formula provided in the applicable charter contract.
The Group currently deploys its two FSOs as floating storage units under service
contracts with North Oil Company, 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 as of December 31, 2018.
This is the first set of the consolidated financial statements in which IFRS 15 Revenue
from Contracts with Customers and IFRS 9 Financial Instruments have been applied.
FINANCIAL REPORT
9
Changes to significant accounting policies are described in Note 2.(e). All other
accounting policies have been consistently applied for all periods presented in the
consolidated financial statements unless disclosed otherwise.
The consolidated financial statements were authorized for issue by the Board of
Directors on March 19, 2019.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis
except for the following material items in the statement of financial position:
• Derivative financial instruments are measured at fair value
• Non-current assets held for sale are recognized at fair value if it is lower than their
carrying amount
(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 recognized in the period in which the estimate is revised if
the revision affects only that period, or in the period of the revision and future periods
if the revision affects both current and future periods.
Information about critical judgements in applying accounting policies that have the most
significant effect on the amounts recognized in the consolidated financial statement is
included in the following note:
• Note 8 – Impairment
• Note 24 – Business Combination
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:
• 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 valuation
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
10
FINANCIAL REPORT
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 and Risk 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 categorized into different levels in
a fair value hierarchy based on the inputs used in the valuation techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
• Level 3: inputs for the asset or liability that are not based on observable market
data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorized
in different levels of the fair value hierarchy, then the fair value measurement is
categorized in its entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included
in Note 18.
(e) Changes in significant accounting policies
The Group adopted IFRS 15 Revenue from Contracts with Customers (see A) and IFRS
9 Financial Instruments (see B) on January 1, 2018. A number of other new standards
are effective from January 1, 2018 but they do not have a material effect on the Group's
financial statements.
The effect of initially applying these standards is mainly attributed to the following:
•
recognizing revenue for spot voyages on a load-to-discharge basis instead of a
discharge-to-discharge basis (see A);
• capitalizing the voyage expenses incurred between the portdate on which the
contract was concluded and the next load port if they qualify as fulfillment costs
and if they are expected to be recovered (see A);
• an increase in impairment losses recognized on financial assets (see B).
Costs incurred to fulfill a contract are recognized as an asset if and only if all of the
following criteria are met:
•
•
the costs relate directly to a contract;
the costs generate or enhance resources of the entity that will be used in satisfying
performance obligations in the future; and
the costs are expected to be recovered.
•
A. IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much
and when revenue is recognized. It replaced IAS 18 Revenue, IAS 11 Construction
Contracts and related interpretations. The Group has adopted IFRS 15 using the
cumulative effect method (without practical expedients), with the effect of initially
applying this standard recognized at the date of initial application (i.e. January 1, 2018).
Accordingly, the information presented for 2017 has not been restated
- i.e. it is presented, as previously reported, under IAS 18, IAS 11 and related
interpretations. Additionally, the disclosure requirements in IFRS 15 have not been
applied to comparative information.
FINANCIAL REPORT
11
The following table summarizes the impact, net of tax, of transition to IFRS 15 on
retained earnings at January 1, 2018.
(in thousands of USD)
Impact of adopting IFRS 15
at January 1, 2018
Retained earnings
Revenue for spot voyages
Recognition capitalized fulfillment costs
Impact at January 1, 2018
(4,422)
2,693
(1,729)
The following tables summarize the impacts of adopting IFRS 15 on the Group's
statement of financial position as at December 31, 2018 and its statement of profit or
loss and OCI for the year then ended for each of the line items affected. There was no
material impact on the Group's statement of cash flows for the year ended December
31, 2018.
IMPACT ON THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2018
(in thousands of USD)
ASSETS
Non-current assets
Current assets
Trade and other receivables
TOTAL ASSETS
EQUITY AND LIABILITIES
Amounts without
adoption of IFRS 15
Adjustments
As reported
3,606,210
532,894
317,479
0
(11,753)
(11,753)
3,606,210
521,141
305,726
4,139,104
(11,753)
4,127,351
Equity
Retained earnings
Equity attributable to owners of the Company
Non-current liabilities
Current liabilities
Trade and other payables
347,517
2,272,276
1,579,706
287,122
87,225
(11,753)
(11,753)
0
0
0
335,764
2,260,523
1,579,706
287,122
87,225
TOTAL EQUITY AND LIABILITIES
4,139,104
(11,753)
4,127,351
IMPACT ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OCI
For the year ended 31 December 2018
(in thousands of USD)
Amounts without
adoption of IFRS 15
Adjustments
As reported
Shipping income
Revenue
Total shipping income
Operating expenses
Voyage expenses and commissions
Total operating expenses
RESULT FROM OPERATING ACTIVITIES
PROFIT (LOSS) FOR THE PERIOD
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD
610,549
634,462
(141,917)
(699,016)
(64,554)
(100,046)
(103,240)
(10,525)
(10,525)
501
501
(10,024)
(10,024)
(10,024)
600,024
623,937
(141,416)
(698,515)
(74,578)
(110,070)
(113,264)
12
FINANCIAL REPORT
Spot voyages: under IAS 18, revenue for these contracts was recognized over time on
discharge-to-discharge basis and the expenses were recognized over the same period.
Under IFRS 15, revenue from spot voyages is also recognized over time but on a load-
to-discharge basis. Therefore, revenue is recognized later under IFRS 15 than under
IAS 18. The impacts of these changes on items other than revenue are a decrease in
trade and other receivables. Furthermore the voyage expenses incurred between the
portdate on which the contract was concluded and the next load port are capitalized if
they qualify as fulfillment costs and if they are expected to be recovered.
IFRS 15 did not have a significant impact on the Group’s accounting policies with respect
to other revenue streams and revenue recognition (see Note 1 - 2.(o) and Note 4).
B. IFRS 9 Financial Instruments
IFRS 9 sets out requirements for recognizing and measuring financial assets, financial
liabilities and some contracts to buy or sell non-financial items. This standard replaces
IAS 39 Financial Instruments: Recognition and Measurement.
As a result of the adoption of IFRS 9, the Group has adopted consequential
amendments to IAS 1 Presentation of Financial Statements, which require impairment
of financial assets to be presented in a separate line item in the statement of profit
or loss. Impairment losses on financial assets are not presented separately in the
statement of profit or loss, because the amount is not material. The impairment loss
on trade receivables has been presented in 'general and administrative expenses'. The
impairment loss on the other financial assets has been presented as part of the line
'finance expenses'.
Additionally, the Group has adopted consequential amendments to IFRS 7 Financial
Instruments: Disclosures that are applied to disclosures about 2018 but have not been
applied to comparative information.
The Group has applied the exemption not to restate comparative information for
prior periods with respect to classification and measurement (including impairment).
Differences in the carrying amounts of financial assets and financial liabilities resulting
from the adoption of IFRS 9 are recognized in retained earnings as at 1 January 2018.
Accordingly, the information presented for 2017 has not been restated and does not
generally reflect the requirements of IFRS 9, but rather those of IAS 39.
The following table summarizes the impact, net of tax, of transition to IFRS 9 on the
opening balance of retained earnings.
(in thousands of USD)
Impact of adopting IFRS 9
at January 1, 2018
Retained earnings
Recognition of expected credit losses under IFRS 9
Impact at January 1, 2018
(16)
(16)
The details of new significant accounting policies and the nature and effect of the
changes to previous accounting policies are set out below.
i. Classification and measurement of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for financial assets: measured
at amortized cost, fairvalue through other comprehensive income ('FVOCI') and fair
value through profit or loss ('FVTPL'). The classification of financial assets under IFRS
9 is generally based on the business model in which a financial asset is managed
and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39
categories of held to maturity, loans and receivables and available for sale. Under IFRS
9, derivatives embedded in contracts where the host is a financial asset in the scope of
FINANCIAL REPORT
13
the standard are never separated. Instead, the hybrid financial instrument as a whole
is assessed for classification.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and
measurement of financial liabilities.
The adoption of IFRS 9 has not had a significant effect on the Group's accounting
policies related to financial liabilities and derivative financial instruments.
The following table and the accompanying notes below explain the original measurement
categories under IAS 39 and the new measurement categories under IFRS 9 for each
class of the Group's financial assets and financial liabilities as at January 1, 2018.
(in thousands of USD)
Financial assets
Original classification
under IAS 39
New classification
under IFRS 9
Original carrying
amount under IAS 39
New carrying amount
under IFRS 9
Forward exchange contracts
used for hedging
Non-current receivables
Trade and other receivables
Cash and cash equivalents
Fair value -
hedging instrument
Loans and receivables
Loans and receivables
Loans and receivables
Fair value -
hedging instrument
Amortized cost
Amortized cost
Amortized cost
467
160,352
112,000
143,648
416,467
467
160,352
111,984
143,648
416,451
Total financial assets
(in thousands of USD)
Financial liabilities
Secured bank loans
Unsecured notes
Unsecured other borrowings
Trade and other payables
Advances received on contracts
Total financial liabilities
Original classification
under IAS 39
New classification
under IFRS 9
Original carrying
amount under IAS 39
New carrying amount
under IFRS 9
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
Other financial
liabilities
701,091
147,619
50,010
51,335
539
701,091
147,619
50,010
51,335
539
950,594
950,594
The effect of adopting IFRS 9 on the carrying amounts of financial assets at January 1,
2018 relates solely to the new impairment requirements, as described further below.
14
FINANCIAL REPORT
Trade and other receivables that were classified as loans and receivables under IAS 39
are now classified at amortized cost. An increase of USD 16 thousand in the allowance
for impairment over these receivables was recognized in opening retained earnings at
January 1, 2018 on transition to IFRS 9.
The USD 16 thousand is the only difference between the carrying amount of financial assets
under IAS39 to the carrying amount under IFRS9 on transition to IFRS9 on 1 January 2018.
ii. Impairment of financial assets
IFRS 9 replaces the 'incurred loss' model in IAS 39 with an 'expected credit loss' (ECL)
model. The new impairment model applies to financial assets measured at amortized
cost, contract assets and debt investments at FVOCI, but not to investments in equity
instruments. Under IFRS 9, credit losses are recognized earlier than under IAS 39.
Impact of the new impairment model
For assets in the scope of the IFRS 9 impairment model, impairment losses are
generally expected to increase and become more volatile. The Group has determined
that the application of IFRS 9's impairment requirements at January 1, 2018, results in
an additional impairment allowance as follows.
(in thousands of USD)
Loss allowance at December 31, 2017 under IAS 39
Additional impairment recognized at January 1, 2018 on:
Trade and other receivables as at December 31, 2017
Additional trade receivables recognized on adoption of IFRS 15
Loss allowance at January 1, 2018 under IFRS 9
0
16
0
16
Trade and other receivables
The ECLs were calculated based on actual credit loss experience over the past ten years,
taking into account reasonable and supportable forecast of future economic conditions.
iii. Hedge accounting
The Group has elected to adopt the new general hedge accounting model in IFRS 9. This
requires the Group to ensure that hedge accounting relationships are aligned with its
risk management objectives and strategy and to apply a more qualitative and forward-
looking approach to assessing hedge effectiveness.
There were no instruments designated as hedging instrument as at December 31, 2017
and accordingly there is no impact on the Group's consolidated financial statements for
the year ended December 31, 2017.
(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:
•
•
the fair value of the consideration transferred; plus
the recognized 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 recognized amount (generally fair value) of the identifiable assets acquired
and liabilities assumed.
•
FINANCIAL REPORT
15
When the excess is negative, a bargain purchase gain is recognized immediately in
profit or loss.
The consideration transferred does not include amounts related to the settlement
of pre-existing relationships. Such amounts generally are recognized in profit or
loss. Transaction costs, other than those associated with the issue of debt or equity
securities, that the Group incurs in connection with a business combination are
expensed as incurred. Any contingent consideration payable is measured at fair value
at the acquisition date. If the contingent consideration is 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 recognized in profit or
loss.
(ii) Non-controlling interests (NCI)
NCI 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 derecognizes the assets and liabilities of the
subsidiary, any non-controlling interests and the other components of equity related to
the subsidiary. Any surplus or deficit arising on the loss of control is recognized 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 a FVOCI or FVTPL 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 recognized 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
16
FINANCIAL REPORT
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 unrealized gains arising from intra-
group transactions, are eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions with equity-accounted investees are
eliminated against the underlying asset to the extent of the Group’s interest in the
investee. Unrealized losses are eliminated in the same way as unrealized 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. 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. Foreign exchange differences arising
on translation are generally recognized in profit or loss. However, foreign currency
differences arising from the translation of the following items are recognized in OCI:
• a financial liability designated as a hedge of the net investment in a foreign operation
to the extent that the hedge is effective; and
• qualifying cash flow hedges to the extent that the hedges are effective.
(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 recognized directly in equity (Translation reserve).
When a foreign operation is disposedof, 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 recognizes loans and receivables on the date that they are originated.
All other financial assets are recognized initially on the trade date, which is the date
that the Group becomes a party to the contractual provisions of the instrument.
The Group derecognizes 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 recognized 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 realize the asset and settle the
liability simultaneously.
The fair values of quoted investments are based on current bid prices. If the market
for a financial asset is not active (and for unlisted securities), the Group establishes
fair value by using valuation techniques. These include the use of recent arm’s
length transactions, reference to other instruments that are substantially the same,
discounted cash flow analysis, and option pricing models refined to reflect the issuer’s
specific circumstances.
FINANCIAL REPORT
17
Non-derivative financial assets - Policy applicable from 1 January 2018
On initial recognition, a financial asset is classified as measured at: amortized cost;
FVOCI - debt investment; FVOCI - equity instrument; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the
Group changes its business model for managing financial assets, in which case all
affected financial assets are reclassified on the first day of the first reporting period
following the change in the business model.
A financial asset is measured at amortized cost if it meets both of the following
conditions and is not designated as at FVTPL:
•
it is held within a business model whose objectives is to hold assets to collect
contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
•
A debt investment is measured at FVOCI if it meets both of the following conditions and
is not designated as at FVTPL:
•
it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
•
On initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to present subsequent changes in the investment's fair value in OCI.
This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described
above are measured at FVTPL. This includes all derivative financial assets. On initial
recognition, the Group may irrevocably designate a financial asset that otherwise meets
the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so
eliminates or significantly reduces an accounting mismatch that would otherwise arise.
A financial asset (unless it is a trade receivable without a significant financing
component that is initially measured at the transaction price) is initially measured at
fair value plus, for an item not at FVTPL, transaction costs that are directly attributable
to its acquisition.
Non-derivative financial assets - Assessment whether contractual cash flows are solely
payments of principal and interest: Policy applicable from 1 January 2018
For the purposes of this assessment, 'principal' is defined as the fair value of the
financial asset on initial recognition. 'Interest' is defined as consideration for the time
value of money and for the credit risk associated with the principal amount outstanding
during a particular period of time and for other basic lending risks and costs (e.g.
liquidity risk and administrative costs), as well as a profit margin.
18
FINANCIAL REPORT
In assessing whether the contractual cash flows are solely payments of principal and
interest, the Group considers the contractual terms of the instrument. This includes
assessing whether the financial asset contains a contractual term that could change the
timing or amount of contractual cash flows such that it would not meet this condition.
In making this assessment, the Group considers:
• contingent events that would change the amount or timing of cash flows;
•
• prepayment and extension features; and
•
terms that may adjust the contractual coupon rate, including variable-rate features;
terms that limit the Group's claim to cash flows from specified assets (e.g. non-
resource features).
A prepayment feature is consistent with the solely payments of principal and interest
criterion if the prepayment amount substantially represents unpaid amounts of
principal and interest on the principal amount outstanding, which may include
reasonable additional compensation for early termination of the contract. Additionally,
for a financial asset acquired at a discount or premium to its contractual par amount, a
feature that permits or requires prepayment at an amount that substantially represents
the contractual par amount plus accrued (but unpaid) contractual interest (which may
also include reasonable additional compensation for early termination) is treated as
consistent with this criterion if the fair value of the prepayment feature is insignificant
at initial recognition.
FINANCIAL REPORT
19
Non-derivative financial assets -
Subsequent measurement and gains and losses: Policy applicable from 1 January 2018
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including
any interest or dividend income, are recognized in profit or loss.
Financial assets at amortized cost
Debt investments at FVOCI
Equity investments at FVOCI
These assets are subsequently measured at amortized cost using the effective interest
method. The amortized cost is reduced by impairment losses (see (ii) below). Interest
income, foreign exchange gains and losses and impairment are recognized in profit or
loss. Any gain or loss on derecognition is recognized in profit or loss.
These assets are subsequently measured at fair value. Interest income calculated
using the effective interest method, foreign exchange gains and losses and impairment
are recognized in profit or loss. Other net gains and losses are recognized in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
These assets are subsequently measured at fair value. Dividends are recognized as
income in profit or loss unless the dividend clearly represents a recovery of part of the
cost of the investment. Other net gains and losses are recognized in OCI and are never
reclassified to profit or loss.
Non-derivative financial assets - Policy applicable before 1 January 2018
The Group classified its 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 determined the classification of its investments at initial recognition and
re-evaluated this designation at every reporting date.
Loans and receivables
Loans and receivables were financial assets with fixed or determinable payments that
were not quoted in an active market. Such assets were recognized initially at fair value
plus any directly attributable transaction costs. Subsequent to initial recognition, loans
and receivables were measured at amortized cost using the effective interest method,
less any impairment losses.
They arose when the Group provided money, goods or services directly to a debtor with
no intention of trading the receivable. They were included in current assets, except for
maturities greater than 12 months after the balance sheet date. These were classified
as non-current assets. Loans and receivables were included in trade and other
receivables in the statement of financial position.
Held-to-maturity financial assets
If the Group had the positive intent and ability to hold debt securities to maturity, then
such financial assets were classified as held-to-maturity. Held-to-maturity financial
assets were recognized initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, held-to-maturity financial assets were
measured at amortized cost using the effective interest method, less any impairment
losses. Held-to-maturity financial assets comprised debentures.
(ii) Non-derivative financial liabilities
The Group initially recognizes 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 recognized initially on the trade
date, which is the date that the Group becomes a party to the contractual provisions of
the instrument.
The Group derecognizes a financial liability when its contractual obligations are
discharged, cancelled,expired or substantially modified.
Non-derivative financial liabilities are recognized initially at fair value less any directly
20
FINANCIAL REPORT
attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortized cost using the effective interest method.
Non-derivative financial liabilities comprise loans and borrowings, bank overdrafts,
and trade and other payables.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s
cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
(iii) Share capital
Ordinary share capital
Ordinary share capital is classified as equity. Incremental costs directly attributable to
the issue of ordinary shares are recognized as a deduction from equity, net of any tax
effects.
Repurchase of share capital
When share capital recognized as equity is repurchased, the amount of the consideration
paid, including directly attributable costs, net of any tax effects, is recognized 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 recognized as an increase in equity, and the
resulting surplus or deficit on the transaction is presented in retained earnings.
(iv) Derivative financial instruments
Derivative financial instruments and hedge accounting - Policy applicable from 1
January 2018
The Group from time to time may enter into derivative financial instruments to hedge
its exposure to market fluctuations, foreign exchange and interest rate risks arising
from operational, financing and investment activities.
On initial designation of the derivative as hedging instrument, the Group formally
documents the economic 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, at the
inception of the hedge relationship, 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 designated. On an ongoing
basis, the Group assesses whether the hedge relationship continues and is expected
to continue to remain highly effective using retrospective and prospective quantitative
and qualitative analyses.
Derivative financial instruments are recognized 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 recognized 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 recognized in OCI and
presented in the hedging reserve in equity. The amount recognized 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 recognized
immediately in profit or loss.
FINANCIAL REPORT
21
The Group designates only the change in fair value of the spot element of forward
exchange contracts as the hedging instrument in cash flow hedging relationships. The
change in fair value of the forward element of forward exchange contracts ('forward
points') is separately accounted for as a cost of hedging and recognized in a costs of
hedging reserve within equity.
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. When hedge accounting for cash flow hedges is discontinued,
the amount that has been accumulated in the hedging reserve remains in equity until,
for a hedge of a transaction resulting in the recognition of a non-financial item, it is
included in the non-financial item's cost on its initial recognition or, for other cash flow
hedges, it is reclassified to profit or loss in the same period or periods as the hedged
expected future cash flows affect profit or loss. If the hedged future cash flows are 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 recognized immediately
in profit or loss.
Derivative financial instruments and hedge accounting - Policy applicable before 1
January 2018
The policy applied in the comparative information presented for 2017 is similar to that
applied for 2018. However, for all cash flow hedges, including hedges of transactions
resulting in the recognition of non-financial items, the amounts accumulated in the
cash flow hedge reserve were reclassified to profit or loss in the same period or periods
during which the hedged expected future cash flows affected profit or loss.
(v) Compound financial instruments
Compound financial instruments issued by the Group comprise Notes denominated
in USD that can be converted to ordinary shares at the option of the holder, when the
number of shares is fixed and does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognized at
the fair value of a similar liability that does not have an equity conversion option. The
equity component is initially recognized 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.
22
FINANCIAL REPORT
Subsequent to initial recognition, the liability component of a compound financial
instrument is measured at amortized cost using the effective interest method. The
equity component of a compound financial instrument is not remeasured.
Interest related to the financial liability is recognized in profit and loss. On conversion,
the financial liability is reclassified to equity and no gain or loss is recognized.
(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.
(ii) Intangible assets
Intangible assets that are acquired by the Group and have finite useful lives are measured
at cost less accumulated amortization 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 capitalized 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) Amortization
Amortization is charged to the income statement on a straight-line basis over the
estimated useful lives of the intangible assets from the date they are available for use.
The estimated useful lives are as follows:
• Software:
3 - 5 years
Amortization methods, useful lives and residual values are reviewed at each reporting
date and adjusted if appropriate.
(j) Vessels, property, plant and equipment
(i) Owned assets
Vessels and items of property, plant and equipment are stated at cost or deemed cost
less accumulated depreciation (see below) and impairment losses (refer to accounting
policy (k)).
Cost includes expenditure that is directly attributable to the acquisition of the asset.
The cost of self-constructed assets includes the following:
• The cost of materials and direct labour;
• Any other costs directly attributable to bringing the assets to a working condition
for their intended use;
• When the Group has an obligation to remove the asset or restore the site, an
estimate of the costs of dismantling and removing the items and restoring the site
on which they are located; and
• Capitalized 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
FINANCIAL REPORT
23
equipment (refer to accounting policy (j) vii).
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
recognized in profit or loss.
For the sale of vessels, transfer of risk and rewards usually occurs upon delivery of the
vessel to the new owner.
(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. Vessels, property, 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 recognized in the Group’s statement of
financial position.
(iii) 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.
(iv) Subsequent expenditure
Subsequent expenditure is capitalized 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 derecognized. All other
expenditure is recognized in the consolidated statement of profit or loss as an expense
as incurred.
(v) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized as part of the cost of that asset.
(vi) 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:
tankers
•
• FSO/FpSO/FPSO
• plant and equipment
• fixtures and fittings
• other tangible assets
• dry-docking
20 years
25 years
5 - 20 years
5 - 10 years
3 - 20 years
2.5 - 5 years
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FINANCIAL REPORT
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.
(vii) 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.
Components installed during dry-dock with a useful life of more than 1 year are
amortized over their estimated useful-life.
(k) Impairment
Policy applicable from 1 January 2018
IFRS 9 replaces the 'incurred loss' model in IAS 39 with an 'expected credit loss' (ECL)
model. The new impairment model applies to financial assets measured at amortized
cost, contract assets and debt investments at FVOCI, but not to investments in equity
instruments. Under IFRS 9, credit losses are recognized earlier than under IAS 39.
The financial assets at amortized cost consist of trade and other receivables, cash and
cash equivalents and non-current receivables.
Under IFRS 9, loss allowances are measured on either of the following bases:
• 12-month ECLs: these are ECLs that result from possible default events within the
•
12 months after the reporting date; and
lifetime ECLs: these are ECLs that result from all possible default events over the
expected life of a financial instrument.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for
the following, which are measured as 12-month ECLs:
• debt securities that are determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which credit risk (i.e. the risk of default
occuring over the expected life of the financial instrument) has not increased
significantly since initial recognition.
Loss allowances for trade receivables are measured at an amount equal to lifetime
ECLs.
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECLs, the Group considers reasonable
and supportable information that is relevant and available without undue cost or effort.
This includes both quantitative and qualitative information and analyses, based on the
Group's historical experience and informed credit assessment and including forward-
looking information.
The Group assumes that the credit risk on a financial asset has increased significantly
if it is more than 30 days past due.
The Group considers a financial asset to be in default when:
•
the borrower is unlikely to pay its credit obligations to the Group in full, without
recourse by the Group to actions such as realising security (if any is held); or
the financial asset is more than 90 days past due.
•
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. Derivatives are entered into
with banks and financial institution counterparties, which are rated A- to AA+, based
on rating agency S&P.
FINANCIAL REPORT
25
The maximum period considered when estimating ECLs is the maximum contractual
period over which the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e. the difference between cash flows due
to the entity in accordance with the contract and cash flows that the Group expects to
receive). ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at
amortized cost and debt securities at FVOCI are credit-impaired. A financial asset
is 'credit-impaired' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Presentation of impairment
Loss allowances for financial assets measured at amortized cost are deducted from the
gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is recognized in OCI, instead of being
recorded in the statement of profit or loss.
Impairment losses related to trade and other receivables, including contract assets, are
presented separately in the statement of profit or loss. However, due to the insignificant
impact of IFRS 9 on the financial statements, no reclassification was done for the year
ended December 31, 2018.
Impairment losses on other financial assets are not presented separately in the
statement of profit or loss and OCI, because the amount is not material. It has been
presented as part of the line 'finance expenses'.
Policy before 1 January 2018
(i) Non-derivative financial assets
A financial asset not classified as at fair value through profit or loss was assessed
at each reporting date to determine whether there was objective evidence that it was
impaired.
A financial asset was impaired if there was 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 could
be estimated reliably.
Objective evidence that financial assets were 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 would enter bankruptcy,
adverse changes in the payment status of borrowers or issuers, economic conditions
that correlated 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 was objective evidence of impairment.
Financial assets measured at amortized cost
The Group considered evidence of impairment for financial assets measured at
amortized cost (loans and receivables and held-to-maturity financial assets) at both a
specific asset and collective level. All individually significant assets were assessed for
specific impairment. Those found not to be specifically impaired were then collectively
assessed for any impairment that had been incurred but not yet identified. Assets that
were not individually significant are collectively assessed for impairment by grouping
26
FINANCIAL REPORT
together assets with similar risk characteristics.
In assessing collective impairment, the Group used 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 were
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 amortized cost was
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 were recognized 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 recognized. When an event occurring after the impairment
was recognized causes the amount of impairment loss to decrease, the decrease in
impairment loss was reversed through profit or loss.
Equity-accounted investees
An impairment loss in respect of an equity-accounted investee was measured by
comparing the recoverable amount of the investment with its carrying amount. An
impairment loss is recognized in profit or loss, and was reversed if there had 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.
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 recognized in profit or loss.
An impairment loss recognized 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 amortization, if no impairment loss had been recognized.
(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 REPORT
27
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 recognized in profit or loss. Gains are not recognized in
excess of any cumulative impairment loss.
Once classified as held for sale, intangible assets and property, plant and equipment
are no longer amortized 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
recognized as an employee benefit expense in profit or loss in the periods during which
related services are rendered by employees. Prepaid contributions are recognized 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. The calculation of defined contribution obligations is performed annually
by a qualified actuary using the projected unit credit method.
(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 recognized 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 recognized 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 recognized 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
recognized immediately in profit or loss. The Group recognizes gains and losses on the
settlement of a defined plan when the settlement occurs.
(iii) Other long term employee benefits
The Group’s net obligation in respect of long-term employee benefits, other than pension
plans, is the amount of future benefit that employees have earned in return for their
service in the current and prior periods. The obligation is calculated using the projected
unit credit method and is discounted to its present value and the fair value of any related
assets is deducted. The discount rate is the yield at the reporting date on AA credit rated
bonds that have maturity dates approximating the terms of the Group’s obligations and
28
FINANCIAL REPORT
that are denominated in the currency in which the benefits are expected to be paid.
Remeasurements are recognized in profit or loss in the period in which they arise.
(iv) Termination benefits
Termination benefits are recognized 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 recognized 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 recognized 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 recognized as an expense, with a corresponding increase in
equity, over the vesting period of the awards. The amount recognized 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
recognized 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. The amount is remeasured at each reporting date
and at settlement based on the fair value of the phantom stock units. Any changes in
the liability are recognized in profit or loss.
(n) Provisions
A provision is recognized 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
FINANCIAL REPORT
29
assessments of the time value of money and, where appropriate, the risks specific to the
liability. The unwinding of the discount is recognized 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 aggregated time charter revenues to
determine aggregated pool Time Charter Equivalent revenue (“TCE”). Aggregated 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. The Group does not recognize time charter revenues
during periods that vessels are offhire. Payment is typically done on every first day
of the upcoming month during the charter period. There is no significant financing
component.
(iii) Spot voyages
As from 1 January 2018, the Group applied IFRS 15. Voyage portrevenue is recognized
over time for spot charters on a load-to-discharge basis. Progress is determined based
on time elapsed. Voyage expenses are expensed as incurred unless they are incurred
between the date on which the contract was concluded and the next load port. They
are then capitalized if they qualify as fulfillment costs and if they are expected to be
recovered. The effect of initially applying IFRS 15 is described in Note 1 - 2(e).
When our vessels cannot start or continue performing its obligation due to other
factors such as port delays, a demurrage is paid, a day rate which is agreed in the time
charter party. Demurrage which occurs at the discharge port is recognized as incurred.
As demurrage is often a commercial discussion between Euronav and the charterer,
the outcome and total compensation received for the delay is not always certain. As
such, Euronav only recognizes the revenue which is highly probable to be received. No
revenue is recognized if the collection of the consideration is not probable. The amount
of revenue recognized is estimated based on historical data. The Group updates its
estimate at each reporting date.
Payment is typically done at the end of the voyage. There is no specific financing
component.
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FINANCIAL REPORT
(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 control usually occurs upon delivery of the vessel to the new
owner.
(q) Leases
Lease payments
Payments made under operating leases are recognized in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are recognized
as an integral part of the total lease expense, over the term of the lease. Minimum lease
payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each
period during the lease term so as to produce a constant period rate of interest on the
remaining balance of the liability.
(r) Finance income and finance cost
Net financing costs comprise interest payable on borrowings calculated using the
effective interest rate method, dividends on redeemable preference shares, interest
receivable on funds invested, dividend income, foreign exchange gains and losses,
and gains and losses on hedging instruments that are recognized in the consolidated
statement of profit or loss (refer to accounting policy (h)).
The 'effective interest rate' is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the financial instrument to:
•
•
the gross carrying amount of the financial asset; or
the amortized cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the
gross carrying amount of the asset (when the asset is not credit-impaired) or to the
amortized cost of the liability.
Interest income is recognized in the consolidated statement of profit or loss as it accrues,
taking into account the effective yield on the asset. Dividend income is recognized in the
consolidated statement of profit or loss on the date that the dividend is declared.
The interest expense component of finance lease payments is recognized 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 recognized in profit or loss except to the extent that it relates to a business
combination, or items recognized 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 recognized 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 recognized
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 recognized is based on the expected manner of realization
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
FINANCIAL REPORT
31
they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognized only to the extent that it is probable that future
taxable profits will be available against which the asset can be utilized. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realized.
In application of an IFRIC agenda decision on IAS 12 Income taxes, tonnage tax is not
accounted for as income taxes in accordance with IAS 12 and is not presented as part of
income tax expense in the income statement but is shown as an administrative expense
under the heading Other operating expenses.
(t) Segment reporting
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any of the Group’s other 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 organizational and management structure does not distinguish
any geographical segments.
(u) Discontinued operations
A discontinued operation is a component of the Group’s business that represents a
separate major line of business or geographical area of operations that has been
disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to
resale. Classification as a discontinued operation occurs upon disposal or when
the operation meets the criteria to be classified as held for sale, if earlier. When an
operation is classified as a discontinued operation, the comparative statement of profit
or loss is represented as if the operation had been discontinued from the start of the
comparative period.
(v) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet
effective for the year ended 31 December 2018, and have not been applied in preparing
these consolidated financial statements:
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 sheet lease 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. This standard has been endorsed by the
EU. The Group doesn't expect the adoption of IFRS 16 to impact its ability to comply with
loan covenants.
Leases where the Group is a lessee
The Group will adopt IFRS 16 as of January 1, 2019, using the modified retrospective
approach with optional practical expedients and where comparative figures remain
the same as presented before. The Group will apply the practical expedient not to
recognize leases with a remaining lease term less than one year as of January 1,
2019. The practical expedients low value leases, hindsight, discount rate, and no initial
32
FINANCIAL REPORT
direct costs will not be used. Lease and non-lease components in the contracts will be
separated. The Group expects to recognize new assets and liabilities for its operating
leases for bare boat charters, office rental and company cars. 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 the right-of-use of
the underlying assets and interest expense on lease liabilities.
For the four bare boat charters for the vessels Nautilus, Nucleus, Neptun and Navarin,
the Group expects to recognize a right of use asset and lease liability of USD 86.7M
which is the present value at January 1, 2019 of the future lease payments. The right
of use asset was measured based on the option of right of use asset equalizing with
the lease liability. The right of use asset will be corrected for the effect of a previously
deferred gain on the sale and leaseback of these vessels for USD 3.0 million and will be
depreciated over the remaining lease term till December 15, 2021.
For the office leases, the Group expects to recognize a right of use asset and lease
liability of USD 18.4M. The right of use asset will be corrected by the practical expedient
impairment assessment based on the onerous contract analysis option for USD
5.3 million. The right of use assets will also be reduced by USD 11.4 million which
represents the lease receivable related to subleases that qualify as finance lease under
IFRS 16. Company cars are not expected to have a material impact. The Group will
use the short-term lease exemption for all the lease contracts with a remaining lease
term of less than one year. Accordingly, those lease payments will be recognized as an
expense and there will be no impact on transition.
Leases where the Group is a lessor
As a lessor the Group leases out some of its vessels under long-term time charter
agreements and a number of vessels are employed in the TI Pool under floating time
charter agreements. Further the Group subleases office space to third parties in
certain leased offices of Euronav UK and Euronav MI II Inc (formerly Gener8 Maritime
Inc.). The Group expects to recognize USD 11.4M lease receivable related to sublease
agreements that qualify as finance lease.
Vessels employed by the TI Pool do not meet the definition of a lease under IFRS 16
and accordingly will be accounted for under IFRS 15 Revenue from Contracts with
Customers. This will not have a material impact on the Group’s consolidated revenue.
For certain vessels employed under long-term time charter agreements, the adoption
of IFRS 16 will require the Group to separate the lease and non-lease component in
the contract, with the lease component qualified as operating lease and the non-lease
component accounted for under IFRS 15. While additional disclosure might be required,
this will not have a material impact for the Group.
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) issued
on 12 October 2017, clarifies how companies should account for long-term interests in
an associate or joint venture, to which the equity method is not applied, using IFRS 9.
The amendments are effective for annual periods beginning on or after 1 January 2019,
with early adoption permitted. The amendments are not expected to have a material
impact on the Group’s consolidated financial statements. These amendments have
been endorsed by the EU.
IFRIC 23 Uncertainty over Income Tax Treatments issued on 7 June 2017, clarifies
how to apply the recognition and measurement requirements in IAS 12 when there is
uncertainty over income tax treatments. In such a circumstance, an entity shall recognize
and measure its current or deferred tax asset or liability applying the requirements
in IAS 12 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates determined applying this Interpretation. An entity is required to
assume that a tax authority with the right to examine and challenge tax treatments will
FINANCIAL REPORT
33
examine those treatments and have full knowledge of all related information. Detection
risk is not considered in the recognition and measurement of uncertain tax treatments.
The entity should measure the impact of the uncertainty using the method that best
predicts the resolution of the uncertainty; either the most likely amount method or the
expected value method. The interpretation is effective for annual periods beginning
on or after 1 January 2019, with earlier adoption permitted. The amendments are not
expected to have a material impact on the Group’s consolidated financial statements.
This interpretation has been endorsed by the EU.
Annual improvements to IFRSs 2015-2017 Cycle, issued on 12 December 2017, covers
the following minor amendments:
•
•
•
•
IFRS 3 Business Combinations: the amendments clarify that a company
remeasures its previously held interest in a joint operation when it obtains control
of the business.
IFRS 11 Joint Arrangements: the amendments clarify that a company does not
remeasure its previously held interest in a joint operation when it obtains joint
control of the business.
IAS 12 Income Taxes: the amendments clarify that a company accounts for all
income tax consequences of dividend payments consistently with the transactions
that generated the distributable profits - i.e. in profit or loss, OCI or equity.
IAS 23 Borrowing Costs: the amendments clarify that a company treats as part of
general borrowings any borrowing originally made to develop an asset when the
asset is ready for its intended use or sale.
The amendments are effective for annual reporting periods beginning on or after 1
January 2019 with earlier application 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.
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) issued on 7
February 2018, clarifies that on amendment, curtailment or settlement of a defined
benefit plan, the current service cost and net interest for the remainder of the
annual reporting period are calculated using updated actuarial assumptions - i.e.
consistent with the calculation of a gain or loss on the plan amendment, curtailment
or settlement.
The amendment also clarifies that an entity first determines any past service cost, or
a gain or loss on settlement, without considering the effect of the asset ceiling. This
amount is recognized in profit or loss. The entity then determines the effect of the asset
ceiling after plan amendment, curtailment or settlement. Any change in that effect is
recognized in other comprehensive income (except for amounts included in net interest).
The amendments are effective for annual periods beginning on or after 1 January 2019
and are applied prospectively. 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.
Amendment to IFRS 3 Business Combinations, issued on 22 October 2018, provides
more guidance on the definition of a business. The amendment includes an election
to use a concentration test. This is a simplified assessment that will result in an asset
acquisition if substantially all of the fair value of the gross assets is concentrated in
a single identifiable asset or a group of similar identifiable assets. If one does not
apply the concentration test, or the test is failed, then the assessment focuses on the
existence of substantive process.
The amendment applies to businesses acquired in annual periods beginning on or after
1 January 2020 with earlier application permitted. The amendment has not yet been
endorsed by the EU.
34
FINANCIAL REPORT
Amendments to IAS 1 and IAS 8: Definition of Material was issued on 31 October 2018
clarifying the definition of ‘Material’ and aligning the definition of ‘material’ across
the standards. The new definition states that “information is considered material,
if omitting, misstating or obscuring it could reasonably be expected to influence
decisions that primarily users of general purpose financial statements make on
the basis of those financial statements, which provide information about a specific
reporting entity”. The amendments clarify that materiality will depend on the nature
or magnitude of information. The amendments are effective prospectively for annual
periods beginning on or after 1 January 2020 with earlier application permitted. The
amendment has not yet been endorsed by the EU. On 29 March 2018, the IASB has
issued Amendments to References to the Conceptual Framework in IFRS Standards
(Amendments to CF). The Conceptual Framework sets out the fundamental concepts
of financial reporting that guides the Board in developing IFRS Standards. It helps to
ensure that the Standards are conceptually consistent and that similar transactions
are treated the same way, providing useful information for investors and others. The
Conceptual Framework also assists companies in developing accounting policies
when no IFRS Standard applies to a particular transaction; and it helps stakeholders
to understand the Standards better.
Key changes include:
•
Increasing the prominence of stewardship in the objective of financial reporting,
which is to provide information that is useful in making resource allocation
decisions.
• Reinstating prudence, defined as the exercise of caution when making judgements
under conditions of uncertainty, as a component of neutrality.
• Defining a reporting entity, which might be a legal entity or a portion of a legal entity.
• Revising the definition of an asset as a present economic resource controlled by the
entity as a result of past events.
• Revising the definition of a liability as a present obligation of the entity to transfer
an economic resource as a result of past events.
• Removing the probability threshold for recognition, and adding guidance on
derecognition.
• Adding guidance on the information provided by different measurement bases, and
explaining factors to consider when selecting a measurement basis.
• Stating that profit or loss is the primary performance indicator and that, in principle,
income and expenses in other comprehensive income should be recycled where the
relevance or faithful representation of the financial statements would be enhanced.
The amendments are effective for annual periods beginning on or after 1 January 2020,
whereas the Board will start using the revised Conceptual Framework immediately.
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 large 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.
FINANCIAL REPORT
35
The Group has one client in the Tankers segment that represented 7% of the Tankers
segment total revenue in 2018 (2017: one client which represented 10% and in 2016 two
clients which represented each 10%). All the other clients represent less than 7% of
total revenues of the Tankers segment.
The Group has a unique client in the FSO segment.
The Group's internal organizational and management structure does not distinguish
any geographical segments.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands of USD)
December 31, 2018
December 31, 2017
Tankers
FSO
Less:
Equity-
accounted
investees
Total
Tankers
FSO
Less:
Equity-
accounted
investees
Total
Assets
Vessels
Assets under construction
Other tangible assets
Intangible assets
Receivables
Investments in equity accounted
investees
Deferred tax assets
3,520,067
-
1,943
105
38,658
1,915
2,255
150,029
-
-
-
-
(150,029) 3,520,067
-
1,943
105
38,658
-
-
-
-
2,271,500
63,668
1,663
72
163,382
168,100
-
-
-
10,739
(168,100) 2,271,500
63,668
1,663
72
160,352
-
-
-
(13,769)
-
41,267
43,182
1,229
(1,229)
2,255
1,695
2,487
-
28,900
30,595
223
(223)
2,487
Total non-current assets
3,564,943
151,258
(109,991) 3,606,210 2,504,467
179,062
(153,192) 2,530,337
Total current assets
521,536
15,784
(16,179)
521,141
281,132
11,581
(12,077)
280,636
TOTAL ASSETS
4,086,479
167,042
(126,170) 4,127,351 2,785,599
190,643
(165,269) 2,810,973
Equity and liabilities
Total equity
2,219,648
40,874
1 2,260,523 1,820,887
25,473
1 1,846,361
Bank and other loans
Other notes
Other payables
Deferred tax liabilities
Employee benefits
Provisions
1,421,465
148,166
1,451
-
4,336
4,288
97,480
-
355
4,283
-
-
(97,480) 1,421,465
148,166
1,451
-
4,336
4,288
-
(355)
(4,283)
-
-
653,730
147,619
539
-
3,984
-
162,762
-
-
1,680
-
-
(162,762)
-
-
(1,680)
-
-
653,730
147,619
539
-
3,984
-
Total non-current liabilities
1,579,706
102,118
(102,118) 1,579,706
805,872
164,442
(164,442)
805,872
Total current liabilities
287,124
24,050
(24,052)
287,122
158,840
728
(828)
158,740
TOTAL EQUITY AND LIABILITIES
4,086,478
167,042
(126,169) 4,127,351 2,785,599
190,643
(165,269) 2,810,973
36
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(in thousands of USD)
2018
2017
2016
Tankers
FSO
Less: Equity-
accounted
investees
Total
Tankers
FSO
Total
Tankers
FSO
Total
Less: Equity-
accounted
investees
Less: Equity-
accounted
investees
Shipping income
Revenue
Gains on disposal of vessels/ other tangible assets
Other operating income
600,025
19,138
4,775
49,155
-
72
(49,156)
-
(72)
600,024
19,138
4,775
513,398
36,538
4,902
59,513
-
234
(59,543)
-
(234)
513,368
36,538
4,902
704,766
50,397
6,765
65,125
-
327
(85,626)
-
(96)
684,265
50,397
6,996
Total shipping income
623,938
49,227
(49,228)
623,937
554,838
59,747
(59,777)
554,808
761,928
65,452
(85,722)
741,658
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
Total operating expenses
RESULT FROM OPERATING ACTIVITIES
Finance income
Finance expenses
Net finance expenses
Gain on bargain purchase
Share of profit (loss) of equity accounted investees
(net of income tax)
(141,416)
(185,793)
(31,114)
(273)
(2,995)
-
(270,582)
(111)
(66,235)
(698,519)
(74,581)
15,023
(89,412)
(1)
(9,637)
-
-
-
-
(18,071)
-
(425)
(28,134)
-
21,093
160
(3,795)
1
9,638
-
-
-
-
18,071
-
428
(141,416)
(185,792)
(31,114)
(273)
(2,995)
-
(270,582)
(111)
(66,232)
(62,035)
(150,390)
(31,173)
(21,027)
-
-
(229,777)
(95)
(46,871)
-
-
-
-
-
(30)
(304)
(9,157)
304
9,120
(476)
(9,679)
4,221
13,958
(62,035)
(150,427)
(31,173)
(21,027)
-
-
(229,777)
(95)
(46,868)
(63,305)
(164,478)
(17,713)
(1)
-
(24,150)
(233,368)
(99)
(44,152)
-
-
-
-
-
(80)
(59,560)
(160,199)
(17,713)
(2)
-
(24,150)
(227,664)
(99)
(44,051)
-
(1)
-
-
181
(18,071)
18,071
(18,071)
23,775
28,138
(698,515)
(541,368)
(27,562)
27,528
(541,402)
(547,266)
(28,306)
42,134
(533,438)
(21,090)
(74,578)
13,470
32,185
(32,249)
13,406
214,662
37,146
(43,588)
208,220
(160)
3,795
15,023
(89,412)
7,267
(50,730)
197
(1,026)
7,266
(50,729)
6,864
(52,420)
57
(2,552)
(66)
3,277
6,855
(51,695)
(74,389)
(3,635)
3,635
(74,389)
(43,463)
(829)
(43,463)
(45,556)
(2,495)
3,211
(44,840)
23,059
220
-
-
-
15,856
23,059
16,076
-
150
29,932
30,082
-
334
-
-
-
40,161
40,495
Profit (loss) before income tax
(125,691)
17,458
(1,599)
(109,832)
(29,843)
31,356
(1,488)
25
169,440
34,651
(216)
203,875
Income tax expense
(238)
(1,599)
1,599
(238)
1,358
(1,488)
1,488
174
(216)
216
174
Profit (loss) for the period
(125,929)
15,859
Attributable to:
Owners of the company
(125,929)
15,859
-
-
(110,070)
(110,070)
(28,485)
29,868
169,614
34,435
(28,485)
29,868
1,383
169,614
34,435
-
1,358
1,383
-
-
-
204,049
204,049
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of USD)
2018
2017
2016
Tankers
FSO
Less: Equity-
accounted
investees
Total
Tankers
FSO
Total
Tankers
FSO
Total
Less: Equity-
accounted
investees
Less: Equity-
accounted
investees
Net cash from (used in) operating activities
Net cash from (used in) investing activities
Net cash from (used in) financing activities
Capital expenditure
843
190,042
(160,165)
(238,065)
40,672
-
(42,164)
(40,674)
-
42,164
841
190,042
(160,165)
-
-
(238,065)
211,310
(40,243)
(234,921)
(177,901)
49,684
(49,698)
(78,421)
78,367
211,295
(40,242)
(234,976)
427,926
(90,891)
(264,714)
(38,737)
(9,724)
36,483
438,202
(100,615)
(261,160)
(177,901)
(342,698)
-
(342,698)
49,013
(32,929)
-
-
-
-
-
-
-
33
(198)
1,027
829
-
-
-
1
-
-
-
-
-
FINANCIAL REPORT
37
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(in thousands of USD)
2017
2016
Tankers
FSO
Total
Tankers
FSO
Less: Equity-
accounted
investees
Total
Tankers
FSO
Less: Equity-
accounted
investees
Total
2018
Less: Equity-
accounted
investees
Gains on disposal of vessels/ other tangible assets
Shipping income
Revenue
Other operating income
Total shipping income
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
600,025
19,138
4,775
49,155
(49,156)
-
72
-
(72)
600,024
19,138
4,775
513,398
36,538
4,902
59,513
-
234
(59,543)
-
(234)
513,368
36,538
4,902
704,766
50,397
6,765
65,125
-
327
(85,626)
-
(96)
684,265
50,397
6,996
623,938
49,227
(49,228)
623,937
554,838
59,747
(59,777)
554,808
761,928
65,452
(85,722)
741,658
(141,416)
(185,793)
(31,114)
(273)
(2,995)
-
(270,582)
(111)
(66,235)
(1)
(9,637)
9,638
(18,071)
18,071
(425)
428
(141,416)
(185,792)
(31,114)
(273)
(2,995)
-
(270,582)
(111)
(66,232)
(62,035)
(150,390)
(31,173)
(21,027)
-
-
(229,777)
(95)
(46,871)
(304)
(9,157)
-
-
-
-
(18,071)
-
(30)
304
9,120
-
-
-
-
18,071
-
33
(62,035)
(150,427)
(31,173)
(21,027)
-
-
(229,777)
(95)
(46,868)
(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)
-
23,775
-
181
(59,560)
(160,199)
(17,713)
(2)
-
(24,150)
(227,664)
(99)
(44,051)
Total operating expenses
(698,519)
(28,134)
28,138
(698,515)
(541,368)
(27,562)
27,528
(541,402)
(547,266)
(28,306)
42,134
(533,438)
RESULT FROM OPERATING ACTIVITIES
(74,581)
21,093
(21,090)
(74,578)
13,470
32,185
(32,249)
13,406
214,662
37,146
(43,588)
208,220
Finance income
Finance expenses
Net finance expenses
15,023
(89,412)
160
(3,795)
(160)
3,795
15,023
(89,412)
7,267
(50,730)
197
(1,026)
(74,389)
(3,635)
3,635
(74,389)
(43,463)
(829)
Gain on bargain purchase
Share of profit (loss) of equity accounted investees
(net of income tax)
23,059
220
15,856
23,059
16,076
-
150
-
-
(198)
1,027
829
-
7,266
(50,729)
6,864
(52,420)
57
(2,552)
(66)
3,277
6,855
(51,695)
(43,463)
(45,556)
(2,495)
3,211
(44,840)
29,932
30,082
-
334
-
-
-
-
40,161
40,495
Profit (loss) before income tax
(125,691)
17,458
(1,599)
(109,832)
(29,843)
31,356
(1,488)
25
169,440
34,651
(216)
203,875
Income tax expense
Profit (loss) for the period
Attributable to:
Owners of the company
(238)
(1,599)
1,599
(238)
1,358
(1,488)
1,488
(125,929)
15,859
(110,070)
(28,485)
29,868
(125,929)
15,859
(110,070)
(28,485)
29,868
-
-
174
(216)
216
174
169,614
34,435
1,383
169,614
34,435
-
-
204,049
204,049
-
1,358
1,383
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of USD)
2017
2016
Tankers
FSO
Total
Tankers
FSO
Less: Equity-
accounted
investees
Total
Tankers
FSO
Less: Equity-
accounted
investees
Total
2018
Less: Equity-
accounted
investees
Net cash from (used in) operating activities
Net cash from (used in) investing activities
Net cash from (used in) financing activities
Capital expenditure
843
190,042
(160,165)
(238,065)
40,672
(40,674)
(42,164)
42,164
841
190,042
(160,165)
(238,065)
211,310
(40,243)
(234,921)
(177,901)
49,684
-
(78,421)
(49,698)
1
78,367
211,295
(40,242)
(234,976)
427,926
(90,891)
(264,714)
49,013
-
(32,929)
(38,737)
(9,724)
36,483
438,202
(100,615)
(261,160)
-
-
(177,901)
(342,698)
-
-
(342,698)
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38
FINANCIAL REPORT
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)
December 31,
2018
December 31,
2017
December 31,
2016
Vessels
Of which in Tankers segment
Of which in FSO segment
42,000
42,000
-
-
-
-
-
-
-
(in thousands of USD)
(Estimated)
Sale price
Book
Value
Asset Held
For Sale
Impairment
loss
(Expected)
Loss
At January 1, 2018
-
-
-
-
Assets transferred to assets held for sale
Felicity
42,000
44,995
42,000
(2,995)
At December 31, 2018
-
-
42,000
(2,995)
-
-
-
As of December 31, 2017 and per December 31, 2016, the Group had no assets held for
sale.
On October 31, 2018, the Company sold the Suezmax Felicity (2009 - 157,667 dwt), for
USD 42.0 million. This vessel was accounted for as a non-current asset held for sale
as at December 31, 2018, and had a carrying value of USD 45.0 million as of that date.
The vessel was delivered to its new owner on January 9, 2019. The impairment loss on
this vessel amounted to USD (3.0) million and has been recorded in the consolidated
statement of profit or loss for the twelve months ended December 31, 2018.
Discontinued operations
As of December 31, 2018 and December 31, 2017, the Group had no operations that
meet the criteria of a discontinued operation.
FINANCIAL REPORT
39
Note 4 - Revenue and other operating income
The Group has adopted IFRS 15 using the cumulative effect method (without practical
expedients), with the effect of initially applying this standard recognized at the date of
initial application (i.e. January 1, 2018). Accordingly, the information presented for 2017
has not been restated - i.e. it is presented, as previously reported, under IAS 18, IAS 11
and related interpretations (Note 1 - 2.(e).A).
In the following table, revenue is disaggregated by type of contract.
(in thousands of USD)
2018
2017
Note
Tankers
FSO
Less:
Equity-
accounted
investees
Total
Tankers
FSO
Less:
Equity-
accounted
investees
Total
Pool Revenue
Spot Voyages
Time Charters
Total revenue
-
-
19
277,394
247,392
75,238
-
-
49,155
-
-
(49,155)
277,394
247,392
75,238
249,334
145,360
118,705
-
-
59,513
(31)
-
(59,513)
249,303
145,360
118,705
600,024
49,155
(49,155)
600,024
513,399
59,513
(59,544)
513,368
Other operating income
-
-
-
-
4,775
-
-
-
4,902
For the accounting treatment of revenue, we refer to the accounting policies (o) - Revenue.
Revenue from spot voyages falls within the scope of IFRS 15 'Revenue from Contracts
with Customers'. Pool revenue and time charters are lease income in scope of IAS 17.
The increase in revenue is mostly related to the increase in pool and spot voyage
revenue which is due to an increase in the fleet size as a consequence of the business
combination with Gener8 Maritime Inc. (Note 24). This increase was partially offset by
lower revenue from time charters due to unfavorable market conditions and a lower
number of vessels on time charter.
Other operating income includes revenues related to the daily standard business
operation of the fleet and that are not directly attributable to an individual voyage.
Note 5 - Expenses for shipping activities and other expenses
from operating activities
VOYAGE EXPENSES AND COMMISSIONS
(in thousands of USD)
Note
2018
Commissions paid
Bunkers
Other voyage related expenses
-
-
-
Total voyage expenses and commissions
(8,193)
(103,920)
(29,303)
(141,416)
2017
(4,895)
(45,249)
(11,891)
(62,035)
2016
(6,724)
(36,372)
(16,464)
(59,560)
The voyage expenses and commissions increased in 2018 compared to 2017 because a
lower proportion of vessels were on time charter contract in 2018 and due to an increase
in the fleet size as a consequence of the business combination with Gener8 Maritime Inc.
40
FINANCIAL REPORT
(Note 24). For vessels operated on the spot market, voyage expenses are paid by the
shipowner while voyage expenses for vessels under a time charter contract, are paid by
the charterer. Voyage expenses for vessels operated in a Pool, are paid by the Pool.
The majority of other voyage expenses are port costs, agency fees and agent fees paid
to operate the vessels on the spot market. Port costs vary depending on the number of
spot voyages performed, number and type of ports.
VESSEL OPERATING EXPENSES
(in thousands of USD)
Operating expenses
Insurance
Note
-
-
2018
2017
2016
(172,589)
(13,203)
(139,832)
(10,595)
(148,554)
(11,645)
Total vessel operating expenses
(185,792)
(150,427)
(160,199)
CHARTER HIRE EXPENSES
(in thousands of USD)
Charter hire
Bare boat hire
Total charter hire expenses
The operating expenses relate mainly to the crewing, technical and other costs to
operate tankers. In 2018 these expenses were higher compared to 2017 due to an
increase in the fleet size as a consequence of the business combination with Gener8
Maritime Inc. (Note 24).
Note
19
19
2018
6
(31,120)
(31,114)
2017
(62)
(31,111)
(31,173)
2016
(16,921)
(792)
(17,713)
The bareboat charter-hire expenses in 2018 and 2017 are entirely attributable to the
sale and leaseback agreement of four VLCCs (Nautilus, Navarin, Neptun and Nucleus),
under a five year bareboat contract agreed on December 16, 2016.
GENERAL AND ADMINISTRATIVE EXPENSES
(in thousands of USD)
Note
Wages and salaries
Social security costs
Provision for employee benefits
Equity-settled share-based payments
Other employee benefits
Employee benefits
Administrative expenses
Tonnage Tax
Claims
Provisions
Total general and administrative expenses
Average number of full time equivalents
(shore staff)
-
-
16
22
-
-
-
-
-
-
2018
(16,247)
(3,746)
(616)
(37)
(7,607)
(28,253)
(33,485)
(4,436)
(100)
42
(66,232)
2017
(12,853)
(2,511)
(827)
(313)
(3,148)
(19,652)
(22,579)
(4,772)
(25)
160
(46,868)
2016
(12,754)
(2,532)
(261)
(406)
(3,178)
(19,131)
(21,264)
(4,246)
(13)
603
(44,051)
161.77
150.49
139.44
The general and administrative expenses which include amongst others: shore staff
FINANCIAL REPORT
41
wages, director fees, office rental, consulting and audit fees and Tonnage Tax, increased
in 2018 compared to 2017.
This increase was mainly related to the merger with Gener8 Maritime Inc., which had an
impact on wages and salaries and other employee benefits due to a higher number of staff
and severance payments and an impact on administrative expenses due to an increase
in legal and other fees (USD 5.0 million, see Note 24) and additional office rent expenses.
Note 6 - Net finance expense
RECOGNIZED IN PROFIT OR LOSS
(in thousands of USD)
Interest income
Foreign exchange gains
Finance income
Interest expense on financial liabilities measured at
amortized cost
Fair value adjustment on interest rate swaps
Other financial charges
Foreign exchange losses
Finance expense
Net finance expense recognized in profit or loss
2018
4,106
10,917
15,023
(67,956)
(2,790)
(6,802)
(11,864)
(89,412)
(74,389)
2017
655
6,611
7,266
(38,391)
-
(5,819)
(6,519)
(50,729)
(43,463)
2016
217
6,638
6,855
(39,007)
-
(4,577)
(8,111)
(51,695)
(44,840)
Interest income, which mainly consists of interest income from bank deposits, increased
due to the merger with Gener8 Maritime Inc. and due to an increase in deposit rates.
Interest expense on financial liabilities measured at amortized cost increased during
the year ended December 31, 2018, compared to 2017. This increase was attributable to
the interest on the senior unsecured bond of USD 150 million which was issued on May
31, 2017 and an increase in the average outstanding debt during the year as a result of
the new credit facilities entered into 2018 (see Note 15) and credit facilities in relation to
the merger with Gener8 Maritime Inc. combined with increased interest rates.
Fair value adjustment on interest rate swaps are interest rate swaps which were
acquired in the Gener8 Maritime Inc. deal and of which the fair value at acquisition
is amortized over the remaining duration of the swap via the fair value adjustment of
interest rate swaps (see Note 13).
Other financial charges increased in 2018 compared to 2017, which was primarily
attributable to commitment fees paid for available credit lines, of which the total
availability increased in 2018.
42
FINANCIAL REPORT
The above finance income and expenses include the following in respect of assets
(liabilities) not recognized at fair value through profit or loss:
(in thousands of USD)
Total interest income on financial assets
Total interest expense on financial liabilities
Total other financial charges
Recognized directly in equity
Foreign currency translation differences for foreign
operations
Cash flow hedges - effective portion of changes in fair value
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
(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)
2018
4,106
(67,956)
(6,802)
(157)
(2,698)
(2,855)
(2,855)
(2,855)
(157)
(2,698)
2017
655
(38,391)
(5,819)
448
-
448
448
448
448
-
2016
217
(39,007)
(4,577)
170
-
170
170
170
170
-
(37)
(37)
(195)
(6)
(201)
(238)
2018
(85)
(85)
1,473
(30)
1,443
1,358
2017
60
60
220
(106)
114
174
2016
Note 7 - Income tax benefit (expense)
2018
2017
2016
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
(29.58)%
(109,832)
32,488
(33.99)%
25
(8)
(33.99)%
203,875
(69,297)
(50)
9
(1,037)
-
(962)
(33,602)
4,690
(1,774)
499
10
-
7,146
(710)
(13,918)
10,175
(1,836)
(8,090)
70
-
1,118
(1,718)
64,637
13,761
(307)
Total taxes
0.22 %
(238)
5,430.01 %
1,358
0.09 %
174
* DTA = Deferred Tax Asset
In application of an IFRIC agenda decision on ‘IAS 12 Income taxes’, tonnage tax is not
FINANCIAL REPORT
43
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. The amount
paid for tonnage tax in the year ended December 31, 2018 was USD 4.4 million (see Note 5).
Note 8 - Property, plant and equipment
(in thousands of USD)
Note
Vessels Vessels under
construction
Other tangible
assets
Prepayments
Total PPE
Balance at December 31, 2016
2,383,163
86,136
At January 1, 2016
Cost
Depreciation & impairment losses
Net carrying amount
Acquisitions
Acquisitions through business combinations
Disposals and cancellations
Depreciation charges
Transfers
Translation differences
-
-
-
24
-
-
-
-
-
-
-
-
-
-
-
-
-
24
-
24
-
3
-
-
At January 1, 2017
Cost
Depreciation & impairment losses
Net carrying amount
Acquisitions
Disposals and cancellations
Depreciation charges
Transfers
Translation differences
Balance at December 31, 2017
At January 1, 2018
Cost
Depreciation & impairment losses
Net carrying amount
Acquisitions
Acquisitions through business combinations
Disposals and cancellations
Disposals and cancellations through
business combinations
Depreciation charges
Transfer to assets held for sale
Transfers
Translation differences
Balance at December 31, 2018
At December 31, 2018
Cost
Depreciation & impairment losses
Net carrying amount
3,477,605
(1,189,569)
93,890
-
2,482
(1,434)
2,288,036
93,890
1,048
250,912
120,280
(143,457)
(227,306)
94,698
-
86,944
-
-
-
(94,698)
-
175
-
(7)
(358)
5
(86)
777
3,748,135
(1,364,972)
86,136
-
2,373
(1,596)
2,383,163
86,136
125,486
(81,389)
(229,429)
73,669
-
51,201
-
-
(73,669)
-
2,271,500
63,668
777
1,203
(9)
(348)
-
40
1,663
3,595,692
(1,324,192)
63,668
-
3,545
(1,882)
2,271,500
63,668
1,663
45,750
1,704,250
(7,814)
(434,000)
(270,018)
(44,995)
255,394
-
3,520,067
-
-
4,927,324
(1,407,257)
3,520,067
191,726
-
-
-
-
-
(255,394)
-
-
-
-
-
588
345
(75)
-
(564)
-
-
(14)
1,943
4,274
(2,331)
1,943
On March 26, April 25, August 8 and August 29, 2018, Euronav took delivery of the
2
-
2
3
-
-
-
(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
177,890
(81,398)
(229,777)
-
40
2,336,831
3,662,905
(1,326,074)
2,336,831
238,064
1,704,595
(7,889)
(434,000)
(270,582)
(44,995)
-
(14)
3,522,010
4,931,598
(1,409,588)
3,522,010
44
FINANCIAL REPORT
Suezmaxes Cap Quebec (2018 – 156,600 dwt), Cap Pembroke (2018 – 156,600 dwt),
Cap Port Arthur (2018 - 156,600 dwt) and the Cap Corpus Christi (2018 - 156,600 dwt)
respectively. These were the 4 vessels under construction as at December 31, 2017
from Hyundai Heavy Industries.
On June 29, 2018, Euronav announced that it has acquired the ULCC Seaways Laura
Lynn from Oceania Tanker Corporation, a subsidiary of International Seaways. Euronav
renamed the ULCC as Oceania and registered it under the Belgian flag. Euronav Tankers
bought the Seaways Laura Lynn (2003 - 441,561 dwt) from International Seaways for
USD 32.5 million.
In 2018, the Finesse, Nautic, Noble, Hojo, Cap Felix, Newton and Cap Leon have been
dry-docked. The cost of planned repairs and maintenance is capitalized and included
under the heading acquisitions and is depreciated over their estimated useful life (2.5-5
years).
DISPOSAL OF ASSETS – GAINS/LOSSES
(in thousands of USD)
Note
Sale price
Book Value
Gain Deferred Gain
Loss
Famenne - Sale
Nautilus - Sale
Navarin - Sale
Neptun - Sale
Nucleus - Sale
Other
At December 31, 2016
TI Topaz - Sale
Flandre - Sale
Cap Georges - Sale
Artois - Sale
Other
At December 31, 2017
Cap Jean - Sale
Cap Romuald - Sale
Companion - Sale
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,016
43,250
47,250
47,250
47,250
38
24,195
32,208
36,739
37,534
36,974
9
13,821
11,042
10,511
9,716
10,276
31
-
(500)
(1,500)
(1,500)
(1,500)
-
223,054
167,659
55,397
(5,000)
20,790
45,000
9,310
21,780
29
41,817
24,693
801
14,077
9
-
20,307
8,509
7,703
20
96,909
81,398
36,538
10,175
10,282
6,305
-
-
1,319
6,495
-
10,175
8,963
-
-
-
-
-
-
-
(2)
(2)
(21,027)
-
-
-
-
(21,027)
-
-
(190)
(83)
(273)
-
-
-
-
-
-
-
-
-
-
-
At December 31, 2018
26,762
7,814
19,138
On May 8, 2018, the Group sold the Suezmax Cap Jean (1998 – 146,643 dwt) for a net
sale price of USD 10.2 million. The gain on that sale of USD 10.2 million was recorded
upon delivery of the vessel to its new owner in the second quarter of 2018.
On June 25, 2018, the Group sold the Suezmax Cap Romuald (1998 - 146,643 dwt) for a
net sale price of USD 10.3 million. The Company recorded a gain of USD 9.0 million on
the sale upon delivery to its new owner on August 22, 2018.
On November 1, 2018, the Group sold the LR1 Companion (2004 - 72,749 dwt) for USD
6.3 million. The vessel came as part of the Gener8 transaction and was a non-core
asset. The Company recorded a loss of USD 0.2 million on the sale upon delivery to its
new owner on November 29, 2018.
FINANCIAL REPORT
45
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:
• Weighted average of past and ongoing shipping cycles and for the weighting factors
applied, including management judgement for the ongoing cycle, is used as forecast
charter rates
• Weighted Average Cost of Capital ('WACC') of 7.70% (2017: 9.70% and 2016: 6.43%)
• 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. In the past, the Group used a fixed cut of 10 years to define a shipping
cycle. As management is assessing continuously the resilience of its projections to
the business cycles that can be observed in the tankers market, it concluded that a
business cycle cycles.approach provided a better long-term view of the dynamics at
play in the industry. By defining a shipping cycle from peak to peak over the last 20
years and including management's expectation of the completion of the current cycle,
management is better able to capture the full length of a business cycle while also
giving more weight to recent and current market experience. The current cycle is
forecasted based on management judgement, analyst reports and past experience.
The impairment test did not result in a requirement to record an impairment loss in
2018. With an increase of the WACC of 300bps to 10.70%, the analysis would also indicate
that the carrying amount of the vessels as of December 31, 2018 is not impaired. This
weighting and forecasting of the ongoing cycle is based on management judgement,
but none of the full cycles, with or without management forecasting of the ongoing
cycle or the sole use of the ongoing cycle would lead to an impairment.
When using 10-year historical charter rates in this impairment analysis, the impairment
analysis indicates that an impairment is required for the tanker fleet of USD 47.9 million
(2017 and 2016: no impairment). When using 5-year historical charter rates in this
impairment analysis, the impairment analysis indicates that no impairment is required
for the tanker fleet (2017: USD 5.7 million and 2016: no impairment), and when using
1-year historical charter rates in this impairment analysis, the impairment analysis
indicates that an impairment is required for the tanker fleet of USD 92.7 million (2017:
USD 427.3 million and 2016: no impairment).
FSO
In the context of the valuation of the Group's investments in the respective joint
ventures, the Group also performed an impairment test on the FSO vessels owned by
TI Asia Ltd and TI Africa Ltd. 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:
• Weighted Average Cost of Capital ('WACC') of 7.70% (2017: 9.70% and 2016: 6.43%)
• 25 year useful life with residual value equal to zero
This assessment did not result in a requirement to record an impairment loss in
2018. Even with an increase of the WACC of 300bps, there was no need to record
an impairment loss in 2018. 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 unfixed periods.
46
FINANCIAL REPORT
The FSO Asia and the FSO Africa were on a timecharter contract to Maersk Oil Qatar
until July 22, 2017 and September 22, 2017, respectively. On May 14, 2017, the joint
ventures between the Group and International Seaways, signed a contract for five
years for the FSO Africa and FSO Asia in direct continuation of the current contractual
service. The contract was signed with North Oil Company, the new operator of the
Al-Shaheen oil field, whose shareholders are Qatar Petroleum Oil & gas Limited and
Total E&P Golfe Limited.
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 no vessels under construction as at December 31, 2018. As at December
31, 2017 the Group had four vessels under construction for an aggregate amount of
USD 63.7 million (2016: USD 86.1 million). The amounts presented within "Vessels
under construction" related to the four Ice Class Suezmax vessels from Hyundai Heavy
Industries. These vessels were delivered during 2018.
Capital commitment
As at December 31, 2018 the Group had no capital commitments. As at December 31,
2017 the Group's total capital commitment amounted to USD 185.9 million. These can
be detailed as follows:
As at December 31, 2017 payments scheduled for
(in thousands of USD)
Total
2018
2019
2020
Commitments in respect of VLCCs
Commitments in respect of Suezmaxes
Commitments in respect of FSOs
TOTAL
-
185,922
-
-
185,922
-
185,922
185,922
-
-
-
-
-
-
-
-
As at December 31, 2018 payments scheduled for
(in thousands of USD)
Total
2019
2020
2021
Commitments in respect of VLCCs
Commitments in respect of Suezmaxes
Commitments in respect of FSOs
TOTAL
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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)
ASSETS
LIABILITIES
Provisions
Employee benefits
Unused tax losses & tax credits
Offset
Balance at December 31, 2017
Employee benefits
Unused tax losses & tax credits
Offset
Balance at December 31, 2018
1
44
2,442
2,487
-
2,487
37
2,218
2,255
-
2,255
-
-
-
-
-
-
-
-
-
-
-
FINANCIAL REPORT
47
NET
1
44
2,442
2,487
37
2,218
2,255
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)
ASSETS
LIABILITIES
ASSETS
LIABILITIES
December 31, 2018
December 31, 2017
Deductible temporary differences
Taxable temporary differences
Tax losses & tax credits
Offset
Total
274
8
86,568
86,850
(12,162)
74,688
-
(12,162)
-
(12,162)
12,162
-
357
7
89,528
89,892
(14,231)
75,661
-
(14,231)
-
(14,231)
14,231
-
The unrecognized deferred tax assets in respect of tax losses and tax credits relates
to tax losses carried forward, investment deduction allowances and excess dividend
received deduction. 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 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.
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.
48
FINANCIAL REPORT
In December 2017, changes to the Belgian corporate income tax rate were enacted,
lowering the rate to 29.58% as from 2018 and to 25% from 2020. These changes have
been reflected in the calculation of the amounts of deferred tax assets and liabilities
in respect of Belgian Group entities as at December 31, 2018 and December 31, 2017.
MOVEMENT IN DEFERRED TAX BALANCES DURING THE YEAR
(in thousands of USD)
Balance at
Jan 1, 2016
Recognized
in income
Recognized
in equity
Translation
differences
Balance at
Dec 31, 2016
Provisions
Employee benefits
Unused tax losses & tax credits
Total
(in thousands of USD)
Provisions
Employee benefits
Unused tax losses & tax credits
Total
(in thousands of USD)
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
Balance at
Jan 1, 2017
Recognized
in income
Recognized
in equity
Translation
differences
Balance at
Dec 31, 2017
31
37
896
964
(32)
2
1,473
1,443
-
-
-
-
2
5
73
80
1
44
2,442
2,487
Balance at
Jan 1, 2018
Recognized
in income
Recognized
in equity
Translation
differences
Balance at
Dec 31, 2018
1
44
2,442
2,487
(1)
(5)
(195)
(201)
-
-
-
-
-
(2)
(29)
(31)
-
37
2,218
2,255
(in thousands of USD)
December 31, 2018
December 31, 2017
Note 10 - Non-current receivables
Shareholders loans to joint ventures
Derivatives
Other non-current receivables
Investment
Total non-current receivables
28,665
7,930
2,062
1
38,658
159,733
-
618
1
160,352
The shareholders loans to joint ventures as of December 31, 2018 and December
31, 2017 did not bear interest. Please refer to Note 25 for more information on the
shareholders loans to joint ventures.
The derivatives relates to the fair market value of the Interest Rate Swaps, acquired
through the acquisition of Gener8 Maritime Inc. and two forward cap contracts which
were entered into 2018 (see Note 13).
The increase in other non-current receivables is relates to an increase of cash
guarantees and deposits, acquired in the merger with Gener8 Maritime Inc.
FINANCIAL REPORT
49
The maturity date of the non-current receivables is as follows:
(in thousands of USD)
December 31, 2018
December 31, 2017
7,206
-
725
541
30,186
38,658
-
-
-
-
160,352
160,352
December 31, 2018
December 31, 2017
64,923
17,765
750
39,734
2,140
180,414
305,726
32,758
12,465
52
24,797
-
66,725
136,797
Receivable:
Within 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
Because the shareholders loans are perpetual non-amortizing loans, these non-
current receivables are presented as maturing after 5 years.
Note 11 - Trade and other receivables - current
(in thousands of USD)
Trade receivables
Accrued income
Accrued interest
Deferred charges
Deferred fulfillment costs
Other receivables
Total trade and other receivables
The increase in trade receivables mainly relates to the merger with Gener8 Maritime
Inc. and due to the increase in market freight rates compared to prior year-end.
The increase in accrued income and deferred charges relates to a higher number of
vessels on the spot market, primarily as a result of the merger with Gener8 Maritime
Inc.
Fulfillment costs represent primarily bunker costs incurred between the date on which
the contract of a spot voyage charter was concluded and the next load port. These
expenses are deferred according to IFRS 15 Revenue from Contracts with Customers
and are amortized on a systematic basis consistent with the pattern of transfer of
service.
The increase in other receivables relates to income to be received by the Group from the
Tankers International Pool. These amounts increased in 2018 due to a higher number
of vessels in the Pool as a result of the merger with Gener8 Maritime Inc. and improving
freight market conditions at the end of 2018.
For currency and credit risk, we refer to Note 18.
50
FINANCIAL REPORT
Note 12 - Cash and cash equivalents
(in thousands of USD)
December 31, 2018
December 31, 2017
Bank deposits
Cash at bank and in hand
TOTAL
Of which restricted cash
62,500
110,633
173,133
79
102,200
41,448
143,648
115
NET CASH AND CASH EQUIVALENTS
173,133
143,648
The bank deposits as at December 31, 2018 had an average maturity of 6 days (2017:
16 days).
Note 13 - Equity
NUMBER OF SHARES ISSUED
(in shares)
December 31,
2018
December 31,
2017
December 31,
2016
On issue at 1 January
Issued in business combination
159,208,949
60,815,764
159,208,949
-
159,208,949
-
On issue at 31 December - fully paid
220,024,713
159,208,949
159,208,949
Upon the completion of the merger transaction with Gener8 Maritime Inc. on June 12,
2018 60,815,764 new ordinary shares were issued at a stock price of USD 9.10 each (see
Note 24) increasing the number of shares issued to 220,024,713 shares (see Note 14).
This resulted in an increase of USD 66.1 million share capital and USD 487.3 million
share premium.
At December 31, 2018, the share capital is represented by 220,024,713 shares. The
shares have no nominal value.
As at December 31, 2018 the authorized share capital not issued amounts to USD
83,898,616 (2017 and 2016: USD 150,000,000) or the equivalent of 77,189,888 shares
(2017 and 2016: 138,005,652 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.
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, through two of its JV companies in connection to the USD 220.0 million
facility raised in March 2018 (Note 15), entered on June 29, 2018 in several Interest
Rate Swaps (IRSs) for a combined notional value of USD 208.8 million (Euronav’s share
amounts to 50%). These IRSs are used to hedge the risk related to the fluctuation of
the Libor rate and qualify as hedging instruments in a cash flow hedge relationship
FINANCIAL REPORT
51
under IFRS 9. These instruments have been measured at their fair value; effective
changes in fair value have been recognized in OCI and the ineffective portion has been
recognized in profit or loss. These IRSs have a remaining duration between three and
four years matching the repayment profile of that facility and mature on July 21, 2022
and September 22, 2022 for FSO Asia and FSO Africa respectively. The fair value of
these instruments at December 31, 2018 amounted to USD (0.9) million (100%), which
was entirely reflected in OCI at the level of the JV companies (Note 25).
The Group, through the acquisition of Gener8 Maritime Inc. on June 12, 2018, acquired
several IRSs for a combined notional value of USD 668.0 million. These IRSs are used
to hedge the risk related to the fluctuation of the Libor rate and qualify as hedging
instruments in a cash flow hedge relationship under IFRS 9. These instruments have
been measured at their fair value; effective changes in fair value have been recognized
in OCI and the ineffective portion has been recognized in profit or loss. These IRSs
have a remaining duration between one and two years matching the repayment profile
of that facility and mature in September 2020. The fair value of these instruments
at December 31, 2018 amounted to USD 7.2 million and USD (1.2) million has been
recognized in OCI.
The Group, through the long term charter parties with Valero for two Suezmaxes (Cap
Quebec and Cap Pembroke), entered on March 28, 2018 and April 20, 2018, in two IRSs
for a combined notional value of USD 86.8 million. These IRSs are used to hedge the risk
related to the fluctuation of the Libor rate and qualify as hedging instruments in a cash
flow hedge relationship under IFRS 9. These instruments have been measured at their
fair value; effective changes in fair value have been recognized in OCI and the ineffective
portion has been recognized in profit or loss. These IRSs have the same duration as the
long term charter parties matching the repayment profile of the underlying USD 173.6
million facility and mature on March 28, 2025. The fair value of these instruments at
December 31, 2018 amounted to USD (1.0) million (see Note 17) and USD (1.0) million
has been recognized in OCI.
The Group entered on December 7, 2018 into two forward cap contracts (CAPs) with a
strike at 3.25% starting on October 1, 2020, to hedge against future increase of interest
rates with a notional value of USD 200.0 million and qualify as hedging instruments in
a cash flow hedge relationship under IFRS 9. These instruments have been measured
at their fair value; effective changes in fair value have been recognized in OCI and the
ineffective portion has been recognized in profit or loss. These CAPs have a maturity
date at October 3, 2022. The fair value of these instruments at December 31, 2018
amounted to USD 0.7 million (see Note 10) and USD (0.5) million has been recognized
in OCI.
Treasury shares
As of December 31, 2018 Euronav owned 1,237,901 of its own shares, compared to
1,042,415 of shares owned on December 31, 2017. In the twelve months period ended
December 31, 2018, Euronav bought back 545,486 shares at an aggregate cost of USD
4.0 million and delivered 350,000 shares upon the exercise of share options. These
350,000 treasury shares had an aggregate weighted average cost of USD 5.4 million
and Euronav recognized a loss of USD 3.1 million in retained earnings upon the delivery
of these treasury shares to the share option holders. The total net proceeds amounted
to USD 2.3 million.
Dividends
On May 9, 2018, the Annual Shareholders' meeting approved a full year dividend of USD
0.12 per share. Taking into account the interim dividend approved in August 2017 in the
amount of USD 0.06 per share, the dividend paid after the AGM was USD 0.06 per share.
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.
52
FINANCIAL REPORT
During its meeting of August 8, 2018, the Board of Directors of Euronav approved an
interim dividend for the first semester 2018 of USD 0.06 per share. The interim dividend
of USD 0.06 per share was payable as from October 8, 2018. The interim dividend to
holders of Euronext shares was paid in EUR at the USD/EUR exchange rate of the
record date.
On March 19, 2019, the Board of Directors decided to propose to the Annual
Shareholders' meeting to be held on May 9, 2019, to approve a full year dividend of USD
0.12 per share. Taking into account the interim dividend approved in August 2018 in the
amount of USD 0.06 per share, the expected dividend payable after the AGM should be
USD 0.06 per share.
The total amount of dividends paid in 2018 was USD 22.6 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 December 2018, the holders exercised the remaining 350,000 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 2018.
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.
This has been converted into a cash-settled incentive plan in the course of 2018. As
of December 31, 2018, all the stock options remained outstanding but all remaining
RSUs were exercised in the first quarter of 2018. 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 2018 with
respect to the LTIP 2015 was USD 37.000.
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 stock units were granted on February
2, 2016 and one-third was vested on the second anniversary. As of December 31, 2018,
36,411 phantom stocks were outstanding. 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 income recognized in the consolidated statement
of profit or loss during 2018 was USD 0.2 million.
FINANCIAL REPORT
53
Long term incentive plan 2017
The Group's Board of Directors implemented in 2017 an additional long term
incentive plan for key management personnel. Under the terms of this LTIP, key
management personnel are 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 66,449 phantom
stock units were granted on February 9, 2017 and all remain outstanding as of
December 31, 2018. The LTIP 2017 qualifies as a cash-settled share-based payment
transaction. The Company recognizes a liability in respect of its obligations under
the LTIP 2017, 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 2018 was USD 0.2 million.
Long term incentive plan 2018
The Group’s Board of Directors implemented in 2018 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 154,432 phantom stock units were granted on February 16,
2018 and all remain outstanding as of December 31, 2018. The LTIP 2018 qualifies as a
cash-settled share-based payment transaction. The Company recognizes a liability in
respect of its obligations under the LTIP 2018, 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 2018 was USD 0.5 million.
54
FINANCIAL REPORT
Note 14 - Earnings per share
Basic earnings per share
The calculation of basic earnings per share at December 31, 2018 was based on a
result attributable to ordinary shares of USD (110,069,928) (December 31, 2017: USD
1,382,530 and December 31, 2016: USD 204,049,212) and a weighted average number of
ordinary shares outstanding during the period ended December 31, 2018 of 191,994,398
(December 31, 2017: 158,166,534 and December 31, 2016: 158,262,268), calculated as
follows:
RESULT ATTRIBUTABLE TO ORDINARY SHARES
(in thousands of USD except share and per share information)
2018
2017
2016
Result for the period
Weighted average number of ordinary shares
Basic earnings per share (in USD)
(110,070)
191,994,398
(0.57)
1,383
158,166,534
0.01
204,049
158,262,268
1.29
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
(in shares)
Shares issued
Treasury shares
Shares
outstanding
Weighted
number of
shares
On issue at January 1, 2016
159,208,949
466,667
158,742,282
158,742,282
Issuance of shares
Purchases of treasury shares
Withdrawal of treasury shares
Sales of treasury shares
-
-
-
-
-
692,415
-
(116,667)
-
(692,415)
-
116,667
-
(575,005)
-
94,991
On issue at December 31, 2016
159,208,949
1,042,415
158,166,534
158,262,268
On issue at January 1, 2017
159,208,949
1,042,415
158,166,534
158,166,534
Issuance of shares
Purchases of treasury shares
Withdrawal of treasury shares
Sales of treasury shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
On issue at December 31, 2017
159,208,949
1,042,415
158,166,534
158,166,534
On issue at January 1, 2018
159,208,949
1,042,415
158,166,534
158,166,534
Issuance of shares
Purchases of treasury shares
Withdrawal of treasury shares
Sales of treasury shares
60,815,764
-
-
-
-
545,486
-
(350,000)
60,815,764
(545,486)
-
350,000
33,823,562
(13,917)
-
18,219
On issue at December 31, 2018
220,024,713
1,237,901
218,786,812
191,994,398
Diluted earnings per share
For the twelve months ended December 31, 2018, the diluted earnings per share (in
USD) amount to (0.57) (2017: 0.01 and 2016: 1.29). At December 31, 2018, December 31,
2017 and December 31, 2016, 236,590 options issued under the LTIP 2015 were excluded
from the calculation of the diluted weighted average number of shares because their
effect would have been anti-dilutive.
FINANCIAL REPORT
55
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 and restricted stock units were to be converted into ordinary shares.
(in shares)
2018
2017
2016
Weighted average of ordinary shares outstanding (basic)
191,994,398
158,166,534
158,262,268
Effect of share-based payment arrangements
-
130,523
166,789
Weighted average number of ordinary shares (diluted)
191,994,398
158,297,057
158,429,057
There are no more remaining outstanding instruments at December 31, 2018 and
December 31, 2017 which can give rise to dilution, except for the Euronav stock options of
the LTIP 2015.
Note 15 - Interest-bearing loans and borrowings
(in thousands of USD)
Note
Bank loans
Other notes
More than 5 years
Between 1 and 5 years
More than 1 year
Less than 1 year
At January 1, 2017
New loans
Scheduled repayments
Early repayments
Other changes
Balance at December 31, 2017
More than 5 years
Between 1 and 5 years
More than 1 year
Less than 1 year
Balance at December 31, 2017
More than 5 years
Between 1 and 5 years
More than 1 year
Less than 1 year
At January 1, 2018
New loans
Scheduled repayments
Early repayments
Acquisitions through business combinations
Other changes
Balance at December 31, 2018
More than 5 years
Between 1 and 5 years
More than 1 year
Less than 1 year
Balance at December 31, 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
24
24
-
-
-
330,491
635,952
966,443
119,119
1,085,562
326,014
(43,743)
(667,250)
508
701,091
157,180
496,550
653,730
47,361
701,091
157,180
496,550
653,730
47,361
701,091
973,550
(84,493)
(825,691)
1,106,736
(311,191)
1,560,002
433,662
987,803
1,421,465
138,537
1,560,002
-
-
-
-
-
150,000
-
-
(2,381)
147,619
-
147,619
147,619
-
147,619
-
147,619
147,619
-
147,619
-
-
(205,710)
205,710
547
148,166
-
148,166
148,166
-
148,166
Total
330,491
635,952
966,443
119,119
1,085,562
476,014
(43,743)
(667,250)
(1,873)
848,710
157,180
644,169
801,349
47,361
848,710
157,180
644,169
801,349
47,361
848,710
973,550
(84,493)
(1,031,401)
1,312,446
(310,644)
1,708,168
433,662
1,135,969
1,569,631
138,537
1,708,168
56
FINANCIAL REPORT
The amounts shown under "New Loans" and "Early Repayments" include drawdowns
and repayments under revolving credit facilities during the year.
Bank Loans
On October 13, 2014, the Group entered into a USD 340.0 million senior secured credit
facility with a syndicate of banks. 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-amortizing 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, Hojo, Hakone, Hirado and Hakata. On
October 22, 2014 a first drawdown under this facility was made to repay a former 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, 2018 and December 31,
2017, the outstanding balances on this facility were USD 184.8 million and USD 111.7
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. The facility is 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 which will mature on 1 July 2022 and carries a rate of LIBOR plus a margin of
195 bps. As of December 31, 2018 and December 31, 2017, the outstanding balances
under this facility were USD 165.0 million and USD 330.0 million, respectively. This
facility is currently secured by 17 of our wholly-owned vessels.
On November 9, 2015, the Group entered into a USD 60.0 million unsecured revolving
credit facility which will mature on November 9, 2020 carrying a rate of LIBOR plus
a margin of 2.25%. As of December 31, 2018 and December 31, 2017, there were no
outstanding balances under this facility.
FINANCIAL REPORT
57
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 were related to, and were secured by, the vessels
owned by Fiorano and Larvotto at the date of the aforementioned transaction. As of
December 31, 2018 and December 31, 2017, the outstanding balances on these facilities
were USD 0 million and USD 48.7 million, respectively. Both loan facilities were repaid
in full on September 25, 2018 and December 11, 2018, respectively.
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, 2018 and December 31, 2017, the outstanding balances on this facility were USD
150.0 million and USD 118.0 million, respectively. The credit facility is secured by the
aforementioned 11 vessels.
On January 30, 2017, the Group signed a loan agreement for a nominal amount of USD
110.0 million with the purpose of financing the Ardeche and the Aquitaine (see Note
8). On April 25, 2017, following a successful syndication, the loan was replaced with a
new Korean Export Credit facility for a nominal amount of USD 108.5 million with Korea
Trade Insurance Corporation or “K-sure” as insurer. The new facility is comprised of (i)
a USD 27.1 million commercial tranche, which bears interest at LIBOR plus a margin
of 1.95% per annum and (ii) a USD 81.4 million tranche insured by K-sure which bears
interest at LIBOR plus a margin of 1.50% per annum. The facility is repayable over a term
of 12 years, in 24 installments at successive six month intervals, each in the amount of
USD 3.6 million together with a balloon installment of USD 21.7 million payable with the
24th installment on January 12, 2029. The K-sure insurance premium and other related
transaction costs for a total amount of USD 3.2 million are amortized over the lifetime
of the instrument using the effective interest rate method. As of December 31, 2018
and December 31, 2017, the outstanding balances on this facility were USD 97.7 million
and USD 104.9 million, respectively in aggregate. This facility is secured by the VLCCs
the Ardeche and the Aquitaine. The facility agreement contains a provision that entitles
the lenders to require us to prepay to the lenders, on January 12, 2024, with 180 days’
notice, their respective portion of any advances granted to us under the facility. The
facility agreement also contains provisions that allow the remaining lenders to assume
an outgoing lender’s respective portion(s) of the advances made to us or to allow us
to suggest a replacement lender to assume the respective portion of such advances.
On March 22, 2018, the Group signed a senior secured credit facility for an amount of
USD 173.6 million with Kexim, BNP and Credit Agricole Corporate and Investment bank
acting also as Agent and Security Trustee. The purpose of the loan was to finance up
to 70 per cent of the aggregate contract price of the four Ice Class Suezmax vessels
that have been delivered over the course of 2018. The new facility was comprised of (i)
a USD 69.4 million commercial tranche, which bears interest at LIBOR plus a margin
of 2.0% per annum and (ii) a USD 104.2 million ECA tranche which bears interest at
LIBOR plus a margin of 2.0% per annum. The commercial tranche is repayable by 24
equal consecutive semi-annual installments, each in the amount of USD 0.6 million per
vessel together with a balloon installment of USD 3.5 million payable with the 24th and
last installment on August 24, 2030. The ECA tranche is repayable by 24 consecutive
semi-annual installments, each in the amount of USD 1.1 million per vessel and last
installment on August 24, 2030. Transaction costs for a total amount of USD 1.6 million
are amortized over the lifetime of the instrument using the effective interest rate
method. As of December 31, 2018 the outstanding balance on this facility was USD
170.2 million in aggregate.
Lenders of the facility have a put option on the 7th anniversary of the facility, for which
58
FINANCIAL REPORT
a notice has to be served 13 months in advance requesting a prepayment of their
remaining contribution. After receiving notice, the Group will have to either repay the
relevant contribution on the 7th year anniversary or to transfer this contribution to
another acceptable lender. The put option can only be exercised if the employment of
the vessel at that time is not satisfactory to the lenders.
As a result of the business combination on June 12, 2018, Euronav assumed the
USD 633.0 million senior secured loan facility from Gener8 Maritime Inc. This facility
provided for term loans up to the aggregate approximate amount of USD 963.7 million,
which is comprised of a tranche of term loans to be made available by a syndicate of
commercial lenders up to the aggregate approximate amount of USD 282.0 million (the
“Commercial Tranche”), a tranche of term loans to be fully guaranteed by the Export-
Import Bank of Korea (“KEXIM”) up to the aggregate approximate amount of up to USD
139.7 million (the “KEXIM Guaranteed Tranche”), a tranche of term loans to be made
available by KEXIM up to the aggregate approximate amount of USD 197.4 million (the
“KEXIM Funded Tranche”) and a tranche of term loans insured by Korea Trade Insurance
Corporation (“K-Sure”) up to the aggregate approximate amount of USD 344.6 million
(the “K-Sure Tranche”). TheCommercial Tranche with a final maturity on September 28,
2022, bears interest at LIBOR plus a margin of 2.75% per annum and is reduced in 10
remaining installments of consecutive three-month interval and a balloon repayment
at maturity in 2022. The KEXIM Guaranteed Tranche, with a final maturity on February
28, 2029, bears interest at LIBOR plus a margin of 1.50% per annum and is reduced
in 39 remaining installments of consecutive three-month interval. The KEXIM Funded
Tranche, with a final maturity on February 28, 2029, bears interest at LIBOR plus a
margin of 2.60% per annum and is reduced in 39 remaining installments of consecutive
three-month interval. The K-Sure Tranche, with a final maturity on February 28,
2029, bears interest at LIBOR plus a margin of 1.70% per annum and is reduced in 39
remaining installments of consecutive three-month interval. This facility is secured by
FINANCIAL REPORT
59
13 of our wholly-owned vessels. As of December 31, 2018, the outstanding balance on
this facility was USD 604.8 million in aggregate.
As a result of the business combination on June 12, 2018, Euronav assumed the USD
581.0 million senior secured loan facility from Gener8 Maritime Inc. This facility with a
final maturity on September 3, 2020 bears interest at LIBOR plus a margin of 3.75% per
annum and was reduced in 9 remaining installments of consecutive six-month interval
and a final USD 77.4 million repayment is due at maturity in 2020. This facility was
secured by 10 of our wholly-owned vessels and a pledge of certain of our and Gener8
Maritime Sub II vessel owning subsidiaries’ respective bank accounts. On September
17, 2018, the Group repaid this facility in full (USD -139.7 million) using a portion of the
borrowings under the new USD 200.0 million senior secured credit facility.
On September 7, 2018, the Group signed a senior secured credit facility for an amount
of USD 200.0 million. The Group used the proceeds of this facility to refinance all
remaining indebtedness under the USD 581.0 million senior secured loan facility, the
USD 67.5 million secured loan facility (Larvotto), and the USD 76.0 million secured
loan facility (Fiorano). This facility is secured by 9 of our wholly-owned vessels. This
revolving credit facility is reduced in 12 installments of consecutive six- month interval
and a final USD 55.0 million repayment is due at maturity in 2025. This facility bears
interest at LIBOR plus a margin of 2.0% per annum plus applicable mandatory costs. As
of December 31, 2018, the outstanding balance on this facility was USD 200.0 million.
Undrawn borrowing facilities
At December 31, 2018, Euronav and its fully-owned subsidiaries have undrawn credit
line facilities amounting to USD 498.9 million committed for at least one year (2017:
USD 607.4 million).
60
FINANCIAL REPORT
Terms and debt repayment schedule
The terms and conditions of outstanding loans were as follows:
(in thousands of USD)
Curr. Nominal
interest
rate
Year of
mat.
Facility
size
Drawn Carrying
value
Facility
size
Drawn Carrying
value
December 31, 2018
December 31, 2017
Secured vessels loan 192M
USD
Secured vessels Revolving loan 148M*
USD
Secured vessels Revolving loan 750M*
USD
Secured vessels Revolving loan 409.5M*
USD
Secured vessels loan 76M
Secured vessels loan 67.5M
Secured vessels loan 27.1M
Secured vessels loan 81.4M
Secured vessels loan 69.4M
Secured vessels loan 104.2M
Secured vessels loan 89.7M
Secured vessels loan 221.4M
Secured vessels loan 126.8M
Secured vessels loan 195.7M
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
Secured vessels Revolving loan 200.0M*
USD
Unsecured bank facility 60M
USD
libor
+2.25%
libor
+2.25%
libor
+1.95%
libor
+2.25%
libor
+1.95%
libor
+1.5%
libor
+1.95%
libor
+1.50%
libor +
2.0%
libor
+2.0%
libor
+1.5%
libor
+1.7%
libor
+2.6%
libor
+2.75%
libor
+2.0%
libor
+2.25%
2021
79,762
79,762
78,746
111,666
111,666
110,156
2021
147,559
105,000
105,000
147,559
-
-
2022
395,289
165,000
162,002
485,017
330,000
325,519
2023
316,060
150,000
147,541
362,780
118,000
114,634
2020
2020
-
-
-
-
-
-
23,563
23,563
23,563
25,173
25,173
25,173
2029
26,459
26,459
24,711
26,911
26,911
24,876
2029
71,236
71,236
70,507
78,020
78,020
77,171
2030
68,263
68,263
68,263
2030
101,961
101,961
100,490
2029
85,295
85,295
85,295
2029
210,459
210,459
210,459
2029
120,553
120,553
120,553
2022
188,481
188,481
188,481
2025
200,000
200,000
197,955
-
-
-
-
-
-
-
2020
60,000
-
-
60,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total interest-bearing bank loans
2,071,375 1,572,467 1,560,002 1,320,688
713,332
701,091
*The total amount available under the revolving loan Facilities depends on the total value of the fleet of tankers securing the facility.
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.
Other notes
Curr. Nominal
interest
rate
December 31, 2018
December 31, 2017
Year of
mat.
Facility
size
Drawn Carrying
value
Facility
size
Drawn Carrying
value
(in thousands of USD)
Unsecured notes
USD
7.50%
2022
150,000
150,000
148,166
150,000
150,000
147,619
Total interest-bearing bank loans
150,000
150,000
148,166
150,000
150,000
147,619
FINANCIAL REPORT
61
On May 31, 2017, the Group successfully completed a new senior unsecured bond issue
of USD 150.0 million with a fixed coupon of 7.50% and maturity in May 2022. The net
proceeds from the bond issue are being used for general corporate purposes. The
related transaction costs for a total of USD 2.7 million are amortized over the lifetime of
the instrument using the effective interest rate method. Since October 23, 2017, these
unsecured bonds are listed on the Oslo stock exchange.
Other borrowings
On June 6, 2017, the Group signed an agreement with BNP to act as dealer for a Treasury
Notes Program with a maximum outstanding amount of 50 million Euro. On October
1, 2018, KBC has been appointed as an additional dealer in the agreement and the
maximum amount has been increased from 50 million Euro to 150 million Euro. As of
December 31, 2018, the outstanding amount was USD 60.3 million or 52.7 million Euro
(December 31, 2017: USD 50.0 million or 41.7 million Euro). The Treasury Notes are
issued on an as needed basis with different durations not exceeding 1 year, and initial
pricing is set to 60 bps over Euribor. The company enters into FX forward contracts to
manage the currency risks related to these instruments issued in Euro compared to the
USD Group functional currency. The FX contracts have the same nominal amount and
duration as the issued Treasury Notes and they are measured at fair value with changes
in fair value recognized in the consolidated statement of profit or loss. On December
31, 2018, the fair value of these forward contracts amounted to USD 0.5 million. The
change in fair value of these derivatives was recorded in the consolidated statement of
profit or loss.
Transaction and other financial costs
The heading 'Other changes' in the first table of this footnote reflects the sale of certain
subsidiaries to International Seaways (see Note 24) and 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 2018, the Group recognized
USD 4.2 million of amortization of financing costs. The Group recognized USD 1.6
million of directly attributable transaction costs as a deduction from the fair value of
the USD 173.6 million senior secured amortizing loan facility entered into March 22,
2018 and USD 2.2 million of directly attributable transaction costs as a deduction from
the fair value of the USD 200.0 million senior secured amortizing loan facility entered
into September 7, 2018.
Interest expense on financial liabilities measured at amortized cost increased during
the year ended December 31, 2018, compared to 2017 (2018: USD -68.0 million,
2017: USD -38.4 million). This increase was attributable to the interest on the senior
unsecured bond of USD 150 million which was issued on May 31, 2017 and an increase
in the average outstanding debt during the year as a result of the new credit facilities
entered into 2018 and credit facilities in relation to the merger with Gener8 Maritime
Inc. Other financial charges increased in 2018 compared to 2017 (2018: USD -6.8
million, 2017: USD -5.8 million) which was primarily attributable to commitment fees
paid for available credit lines.
62
FINANCIAL REPORT
RECONCILIATION OF MOVEMENTS OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES
(in thousands of USD)
Liabilities
Equity
Note
Loans and
borrow-
ings
Other
Notes
Other
borrow-
ings
Share
capital /
premium
Reserves
Treasury
shares
Retained
earnings
Total
Balance at January 1, 2017
1,085,562
-
- 1,388,273
120
(16,102)
515,665 2,973,518
Changes from financing cash
flows
Proceeds from issue of other
notes
Proceeds from loans and
borrowings
Proceeds from issue of other
borrowings
Transaction costs related to
loans and borrowings
Repayment of borrowings
Dividend paid
Total changes from
financing cash flows
Other changes
Liability-related
Amortization of transaction
costs
Total liability-related other
changes
Total equity-related other
changes
BALANCE AT DECEMBER 31,
2017
15
15
15
15
15
-
-
150,000
326,014
-
-
-
(3,174)
(2,700)
(710,993)
-
-
-
-
-
50,010
-
-
-
(388,153)
147,300
50,010
15
3,682
319
3,682
319
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
448
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
326,014
50,010
(5,874)
-
(44,133)
(710,993)
(44,133)
(44,133)
(234,976)
-
-
4,001
4,001
2,090
2,538
701,091
147,619
50,010 1,388,273
568
(16,102)
473,622 2,745,081
FINANCIAL REPORT
63
RECONCILIATION OF MOVEMENTS OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES
(CONTINUED)
(in thousands of USD)
Liabilities
Equity
Note
Loans and
borrow-
ings
Other
Notes
Other
borrow-
ings
Share
capital /
premium
Reserves
Treasury
shares
Retained
earnings
Total
Restated balance at January 1,
2018
Changes from financing cash
flows
Proceeds from loans and
borrowings
Proceeds from issue of other
borrowings
Proceeds from sale of treasury
shares
Purchase treasury shares
Transaction costs related to
loans and borrowings
Repayment of borrowings
Dividend paid
Total changes from
financing cash flows
Other changes
Liability-related
Acquisitions through business
combinations
Sale of loans through disposal
of subsidiaries
Amortization of transaction
costs
Total liability-related other
changes
Total equity-related other
changes
BALANCE AT DECEMBER 31,
2018
701,091
147,619
50,010 1,388,273
568
(16,102)
471,877 2,743,336
15
15
13
13
15
15
-
973,550
-
-
-
(3,849)
-
-
-
-
-
(910,184)
-
(205,710)
-
-
10,332
-
-
-
-
-
59,517
(205,710)
10,332
24
1,106,736
205,710
24
(310,968)
15
3,626
-
547
799,394
206,257
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
973,550
10,332
5,406
(3,112)
2,294
(3,955)
-
-
-
-
-
(3,955)
(3,849)
-
(22,643)
(1,115,894)
(22,643)
1,451
(25,755)
(160,165)
-
-
-
-
- 1,312,446
-
-
(310,968)
4,173
- 1,005,651
553,424
(2,855)
-
(110,358)
440,211
1,560,002
148,166
60,342 1,941,697
(2,287)
(14,651)
335,764 4,029,033
64
FINANCIAL REPORT
The amounts recognized in the balance sheet are as follows:
Note 16 - Employee benefits
(in thousands of USD)
December 31, 2018
December 31, 2017
December 31, 2016
NET LIABILITY AT BEGINNING OF PERIOD
(3,984)
(2,846)
(2,038)
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
NET LIABILITY
Amounts in the balance sheet:
Liabilities
Assets
NET LIABILITY
(616)
120
144
(4,336)
(3,538)
2,970
(568)
(3,768)
(4,336)
(4,336)
-
(4,336)
(827)
64
(375)
(3,984)
(3,537)
2,760
(777)
(3,207)
(3,984)
(3,984)
-
(3,984)
(261)
(646)
99
(2,846)
(2,846)
2,117
(729)
(2,117)
(2,846)
(2,846)
-
(2,846)
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 plans - are uninsured and unfunded. The unfunded
obligations include provisions in respect of LTIP 2016, LTIP 2017 and LTIP 2018 (see
Note 13).
The Group expects to contribute the following amount to its defined benefit pension
plans in 2019: USD 284,722.
FINANCIAL REPORT
65
Note 17 - Trade and other payables
(in thousands of USD)
December 31, 2018
December 31, 2017
Advances received on contracts in progress, between 1 and 5 years
Derivatives
Total non-current other payables
Trade payables
Accrued expenses
Accrued payroll
Dividends payable
Accrued interest
Deferred income
Other payables
Total current trade and other payables
402
1,049
1,451
16,266
42,524
5,595
146
10,833
7,754
4,107
87,225
539
-
539
19,274
22,518
3,596
160
1,762
10,020
4,025
61,355
The derivatives relate to the interest rate swap derivatives in connection to the USD
173.6 million facility related to the two Suezmaxes Cap Quebec and Cap Pembroke.
The increase in accrued expenses is mainly related to a higher proportion of vessels
on the spot market and a higher number of bunkers already delivered in 2018 but not
invoiced yet.
The increase in accrued payroll is mainly due to the merger with Gener8 Maritime Inc.
(see Note 24).
The increase in accrued interest is related to the new credit facilities entered into 2018.
66
FINANCIAL REPORT
Note 18 - Financial instruments - Fair values and risk
management
The effect of initially applying IFRS 9 on the Group's financial instruments is described
in Note 1. Due to the transition method chosen, comparative information has not been
restated to reflect the new requirements.
Accounting classifications 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.
(in thousands of USD)
Carrying amount
Fair value
Note
Fair value
- Hedging
instru-
ments
Financial
assets at
amortized
cost
Other
financial
liabilities
Total
Level 1
Level 2
Level 3
Total
December 31, 2017
Financial assets
measured at fair value
Forward exchange
contracts
Financial assets not
measured at fair value
Non-current receivables
Trade and other
receivables *
Cash and cash equivalents
Financial liabilities not
measured at fair value
Secured bank loans
Unsecured other notes
Unsecured other
borrowings
Trade and other payables *
Advances received on
contracts
-
10
11
12
15
15
15
17
17
467
467
-
-
-
-
-
-
-
-
-
-
-
-
160,352
112,000
143,648
416,000
-
-
-
-
-
-
-
-
-
-
-
-
467
467
160,352
112,000
143,648
416,000
-
-
-
-
701,091
147,619
701,091
147,619
-
149,630
706,056
-
50,010
50,010
51,335
51,335
539
539
950,594
950,594
-
-
-
-
-
-
467
-
467
-
-
-
128,427
128,427
-
-
-
-
-
-
-
-
-
706,056
149,630
-
-
-
FINANCIAL REPORT
67
(in thousands of USD)
Carrying amount
Fair value
Note
Fair value
- Hedging
instru-
ments
Financial
assets at
amortized
cost
Other
financial
liabilities
Total
Level 1
Level 2
Level 3
Total
December 31, 2018
Financial assets
measured at fair value
Forward exchange
contracts
Interest rate swaps
Forward cap contracts
Non-current assets held
for sale
Financial assets not
measured at fair value
Non-current receivables
Trade and other
receivables *
Cash and cash equivalents
Financial liabilities
measured at fair value
Interest rate swaps
Financial liabilities not
measured at fair value
Secured bank loans
Unsecured other notes
Unsecured other
borrowings
Trade and other payables*
Advances received on
contracts
15
10
10
3
10
11
12
17
15
15
15
17
17
484
7,205
725
-
-
-
-
42,000
8,414
42,000
-
-
-
-
30,728
263,186
173,133
467,047
1,049
1,049
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
484
7,205
725
42,000
50,414
30,728
263,186
173,133
467,047
1,049
1,049
-
-
-
-
-
-
-
-
484
7,205
725
42,000
-
-
-
1,049
1,560,002
148,166
1,560,002
148,166
-
144,156
1,575,196
-
60,342
60,342
79,442
79,442
402
402
1,848,354
1,848,354
-
-
-
-
-
-
-
-
-
-
484
7,205
725
42,000
26,047
26,047
-
-
-
-
-
-
-
-
-
-
1,049
1,575,196
144,156
-
-
-
*Deferred charges, deferred fulfillment costs and VAT receivables (included in other receivables) (see Note 11), deferred income and VAT payables (included in
other payables) (see Note 17), which are not financial assets (liabilities) are not included.
Measurement of fair values
Valuation techniques and significant unobservable inputs
Level 1 fair value was determined based on the actual trading of the unsecured notes,
due in 2022, and the trading price on December 26, 2018. The following tables show
the valuation techniques used in measuring Level 1, Level 2 and Level 3 fair values, as
well as the significant unobservable inputs used.
68
FINANCIAL REPORT
Financial instruments measured at fair value
Type
Valuation Techniques
Significant unobservable inputs
Forward exchange contracts
Interest rate swaps
Forward cap contracts
Forward pricing: the fair value is determined
using quoted forward exchange rates
at the reporting date and present value
calculations based on high credit quality
yield curve in the respective currencies.
Swap models: the fair value is calculated
as the present value of the estimated future
cash flows. Estimates of future floating-rate
cash flows are based on quoted swap rates,
futures prices and interbank borrowing
rates.
Fair values for both the derivative and the
hypothetical derivative will be determined
based on a software used to calculate the
net present value of the expected cash flows
using LIBOR rate curves, futures and basis
spreads.
Not applicable
Not applicable
Not applicable
Non-current assets held for sale
Sales price
Not applicable
Financial instruments not measured at fair value
Type
Valuation Techniques
Significant unobservable inputs
Non-current receivables
(consisting primarily of shareholders' loans)
Other financial liabilities
(consisting of secured and unsecured
bank loans)
Other financial notes
(consisting of unsecured notes)
Discounted cash flow
Discount rate and forecasted cash flows
Discounted cash flow
Discount rate
Not applicable
Not applicable
Transfers between Level 1, 2 and 3
There were no transfers between these levels in 2017 and 2018.
Financial risk management
In the course of its normal business, the Group is exposed to the following risks:
• Credit risk
• Liquidity risk
• 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 management framework. The Board of Directors has
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
FINANCIAL REPORT
69
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 reviews of risk management controls and procedures,
the results of which are reported to the Audit and Risk Committee.
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 one client representing 7% of the
Tankers segment's total revenue in 2018 (see Note 2) only represented 0.54% of the
total trade and other receivables at December 31, 2018 (2017: one client representing
0.03%). The maximum exposure to credit risk is represented by the carrying amount of
each financial asset.
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
2018
2017
262,795
19,463
20,169
3,299
305,726
124,243
2,071
9,784
699
136,797
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, 2018 52.24% (2017: 45.37%) of the total current 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 credit impaired.
Non-current receivables
Non-current receivables mainly consist of shareholder's loans to joint ventures (see
Note 10). As at December 31, 2018 and December 31, 2017, these receivables had no
maturity date and were not impaired.
Cash and cash equivalents
The Group held cash and cash equivalents of USD 173.1 million at December 31, 2018
(2017: USD 143.6 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).
Derivatives
Derivatives are entered into with banks and financial institution counterparties, which
are rated A- to AA+, based on rating agency S&P.
Guarantees
The Group's policy is to provide financial guarantees only for subsidiaries and joint
ventures. At December 31, 2018, the Group has issued a guarantee to certain banks
in respect of the new credit facilities entered into 2018 which were granted to 2 joint
ventures (see Note 25). At December 31, 2017, there were no outstanding guarantees
towards joint ventures.
70
FINANCIAL REPORT
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.
The following are the remaining contractual maturities of financial liabilities:
(in thousands of USD)
Note
Carrying
Amount
Total
Less than
1 year
Between
1 and 5 years
More than
5 years
Contractual cash flows December 31, 2017
Non derivative financial liabilities
Bank loans and other notes
Other borrowings
Current trade and other payables *
Non-current other payables
Derivative financial liabilities
Interest rate swaps
Forward exchange contracts
15
15
17
17
17
17
848,710
50,010
51,335
-
950,055
1,009,508
50,010
51,335
-
1,110,853
83,039
50,010
51,335
-
184,384
750,722
175,747
-
-
750,722
-
-
175,747
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Contractual cash flows December 31, 2018
(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 and other notes
Other borrowings
Current trade and other payables *
Non-current other payables
Derivative financial liabilities
Interest rate swaps
Forward exchange contracts
15
15
17
17
17
17
1,708,168
60,342
79,471
-
1,847,981
2,034,794
60,342
79,471
-
2,174,607
364,122
60,342
79,471
-
503,935
1,176,317
-
-
-
1,176,317
494,355
-
-
-
494,355
-
-
-
2,627
-
2,627
461
-
461
1,628
-
1,628
538
-
538
*Deferred income (see Note 17), which are not financial liabilities, are not included.
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, 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.
FINANCIAL REPORT
71
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. The Group has a strategy of operating the
majority of its fleet on the spot market but tries to keep a certain part of the fleet
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 the spot tanker freight market (VLCC and
Suezmax) per day would have increased (decreased) profit or loss by the amounts
shown below:
(effect in thousands of USD)
2018
Profit or loss
1,000 USD
Increase
2017
2016
Profit or loss
Profit or loss
1,000 USD
Decrease
1,000 USD
Increase
1,000 USD
Decrease
1,000 USD
Increase
1,000 USD
Decrease
19,332
(19,323)
13,420
(13,420)
14,140
(14,140)
Interest rate risk
Euronav interest rate management general policy is to borrow at floating interest rates
based on LIBOR plus a margin. The Euronav Corporate Treasury Department monitors
the Group's interest rate exposure on a regular basis. From time to time and under
the responsibility of the Chief Financial Officer, different strategies to reduce the risk
associated with fluctuations in interest rates can be proposed to the Board of Directors
for their approval. The Group hedges 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 may
use 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, 2018, the Group had such instruments in place (December 31, 2017: no
instruments) and approximately 50% of the floating interest rates have been hedged.
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
2018
2017
-
148,166
148,166
1,620,344
1,620,344
-
147,619
147,619
751,101
751,101
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
72
FINANCIAL REPORT
(effect in thousands of USD)
December 31, 2016
Variable rate instruments
Interest rate swaps
Cash Flow Sensitivity (Net)
December 31, 2017
Variable rate instruments
Interest rate swaps
Cash Flow Sensitivity (Net)
December 31, 2018
Variable rate instruments
Interest rate swaps
Cash Flow Sensitivity (Net)
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.
Profit or loss
Equity
50 BP
Increase
50 BP
Decrease
50 BP
Increase
50 BP
Decrease
(5,315)
-
(5,315)
(4,685)
-
(4,685)
(4,238)
-
(4,238)
5,315
-
5,315
4,685
-
4,685
4,238
-
4,238
-
-
-
-
-
-
-
-
-
-
-
-
-
6,201
6,201
-
(6,116)
(6,116)
Currency risk
The Group policy is to monitor its material non-functional currency transaction
exposure so as to allow for natural coverage (revenues in the same currency than
the expenses) whenever possible. When natural coverage is not deemed reasonably
possible (for example for long term commitments), the Company manages its material
non-functional currency transaction exposure on a case-by-case basis, either by
entering into spot foreign currency transactions, foreign exchange forward, swap or
option contracts.
The Group’s exposure to currency risk is related to its operating expenses expressed
in Euros and to Treasury Notes denominated in Euros. In 2018 about 12.85% (2017:
16.49% and 2016: 17.4%) of the Group’s total operating expenses were incurred in
Euros. Revenue and borrowings are expressed in USD only, except for instruments
issued under the Treasury Notes Program (Note 15).
(effect in thousands of USD)
EUR
USD
EUR
USD
EUR
USD
December 31, 2018
December 31, 2017
December 31, 2016
Trade payables
Operating expenses
Treasury Notes
(6,311)
(89,761)
(60,342)
(9,955)
(608,754)
-
(7,891)
(89,289)
(50,010)
(11,383)
(452,113)
-
(8,725)
(92,608)
-
(9,383)
(440,830)
-
FINANCIAL REPORT
73
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. As such there is no impact of this program on the
Group's consolidated statement of profit or loss for the year ending December 31, 2018
(2017: no impact and 2016: loss of USD 0.9 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)
Equity
Profit or loss
2018
2017
2016
491
(7,888)
211
(7,113)
532
(10,025)
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.
Cash flow hedges
At December 31, 2018, the Group held the following instruments to hedge exposures to
changes in interest rates.
(in thousands of USD)
Interest rate risk
Interest rate swaps
Net exposure
Average fixed interest rate
1-6 months
6-12 months
More than 1 year
Maturity
(23,895)
1.95%
(23,921)
1.95%
(199,565)
1.95%
At December 31, 2018, the Group has 2 forward interest cap options with a notional
amount of USD 200.0 million starting on October 1, 2020.
At December 31, 2017, the Group held no instruments to hedge exposures to changes
in interest rates.
The amounts at the reporting date relating to items designated as hedged items were
as follows.
(in thousands of USD)
Interest rate risk
Variable-rate instruments
Cap option
Change in value used
for calculating hedge
ineffectiveness
Cash flow hedge
reserve
2,191
507
(2,191)
(507)
74
FINANCIAL REPORT
The amounts relating to items designated as hedging instruments and hedge
ineffectiveness were as follows.
(in thousands of USD)
2018
During the period 2018
Nominal
amount
Carrying
amount -
Assets
Carrying
amount - Lia-
bilities
Line item in
the statement
of financial
position
where the
hedging
instrument is
included
Changes in
the value of
the hedging
instrument
recognized in
OCI
Hedge inef-
fectiveness
recognized in
profit or loss
Line item in
profit or loss
that includes
hedge ineffec-
tiveness
Interest rate risk
Interest rate swaps
Forward cap options
707,871
200,000
7,205
725
1,049
Receivables,
other payables
(2,191)
(2,783)
-
Receivables
(507)
(7)
Finance
expenses
Finance
expenses
During 2018, no amounts were reclassified from hedging reserve to profit or loss.
The following table provides a reconciliation by risk category of components of equity
and analysis of OCI items, net of tax, resulting from cash flow hedge accounting.
(in thousands of USD)
Hedging reserve
Balance at January 1, 2018
Cash flow hedges
Change in fair value interest rate risk
Change in fair value interest rate risk
-
(2,698)
(2,698)
Master netting or similar agreements
The Group enters into derivative transactions under 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:
• an amount of current assets that, on a consolidated basis, exceeds current liabilities.
Current assets may include undrawn amounts 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%
FINANCIAL REPORT
75
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:
• effect changes in management of the Group's vessels;
•
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.
•
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. 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, 2018, December 31, 2017 and December 31, 2016, 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, 2018, as described above:
1.
2.
3.
4.
current assets on a consolidated basis (including available credit lines of USD
498.9 million) exceeded current liabilities by USD 741.1 million
aggregated cash was USD 672.0 million
cash was USD 173.1 million
ratio of Stockholders’ Equity to Total Assets was 54.8%
In the course of 2017, the Company updated its dividend policy which is still applied in
2018.
The Board has adopted the following current dividend payment policy: the Company
intends to pay a minimum fixed dividend of at least USD 0.12 in total per share per
year provided (a) the Company has in the view of management and the board, sufficient
balance sheet strength and liquidity combined (b) with sufficient earnings visibility from
fixed income contracts.
76
FINANCIAL REPORT
In addition, if the results per share are positive and exceed the amount of the fixed
dividend, that additional income* will be allocated to either: additional cash dividends,
share buy-back, accelerated amortization of debt or the acquisition of vessels which we
consider at that time to be accretive to shareholders’ value.
* Treatment of capital losses and capital gains: As part of its distribution policy Euronav
will continue to include exceptional capital losses when assessing additional dividends
but also continue to exclude exceptional capital gains when assessing additional
dividend payments.
* Treatment of Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL)
As part of its distribution policy Euronav will not include non-cash items affecting the
results such as DTA or DTL.
As part of its capital allocation strategy, Euronav has the option of buying its own
shares back should the Board and Management believe that there is a substantial value
disconnect between the share price and the real value of the Company. This return
of capital is in addition to the fixed dividend of USD 0.12 per share paid each year. On
December 31, 2018, the Company had purchased 545,486 of its own shares on Euronext
Brussels. Following these transactions, the Company owned 1,237,901 own shares
(0.56% of the total outstanding shares) at year-end.
The Company started buying back shares on December 19, 2018 and has announced
several additional share buybacks since January 2, 2019. Euronav may continue to buy
back its own shares opportunistically. The extent to which it does and the timing of
these purchases, will depend upon a variety of factors, including market conditions,
regulatory requirements and other corporate considerations.
FINANCIAL REPORT
77
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 3
years under non-cancellable leases are as follows:
(in thousands of USD)
December 31, 2018
December 31, 2017
Less than 1 year
Between 1 and 5 years
More than 5 years
Total future lease payments
(32,120)
(63,404)
-
(95,524)
(32,120)
(95,524)
-
(127,644)
Options to extend the charter period, if any, have not been taken into account when
calculating the future minimum lease payments.
The Group entered into five year leaseback agreements 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 5 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.
The future minimum lease payments under 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, 2018
December 31, 2017
Less than 1 year
Between 1 and 5 years
More than 5 years
Total non-cancellable operating lease rentals
(4,213)
(15,757)
(4,810)
(24,780)
(2,287)
(7,224)
(1,227)
(10,738)
Due to the merger with Gener8 Maritime Inc., the lease rentals for office space as at
December 31, 2018 include the leased office in New York (see Note 20).
78
FINANCIAL REPORT
(in thousands of USD)
Bareboat charter
Time charter
Office rental
Total recognized in profit and loss
Amounts recognized in profit and loss
2018
2017
2016
(31,120)
6
(3,484)
(34,598)
(31,111)
(62)
(2,136)
(33,309)
(792)
(16,921)
(2,219)
(19,932)
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 4 years
under non-cancellable leases are as follows:
(in thousands of USD)
December 31, 2018
December 31, 2017
Less than 1 year
Between 1 and 5 years
More than 5 years
Total future lease receivables
151,039
394,721
113,721
659,482
103,007
147,967
31,793
282,767
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, 2018, Euronav and its subsidiaries, without joint ventures, have future
minimum lease receivables less than one year of USD 53.1 million (2017: USD 54.4
million), future minimum lease receivables between 1 and 5 years of USD 133.1 million
(2017: USD 0.0 million) and future minimum lease receivables of more than 5 years of
USD 113.7 million (2017: USD 0.0 million).
Following the rationalization of the TI Pool structure in 2017 (see Note 23), Tankers
International Ltd. ("TIL") became the disponent owner of all of the vessels in the TI
Pool as all the vessels are now time chartered with a duration of 1 year to TIL at a
floating rate equivalent to the average spot rate achieved by the pool times the pool
points assigned to each vessel. At December 31, 2018, 41 of our VLCC vessels were
employed in the TI Pool under such floating time charters. Given the variable nature of
the time charter rates, there are no minimum lease receivables for these contracts and
therefore, these floating time charters are not included in the table above.
FINANCIAL REPORT
79
The future minimum lease receivables under non-cancellable operating lease rentals
for office space with an average duration of 5 years are receivable as follows:
(in thousands of USD)
December 31, 2018
December 31, 2017
Less than 1 year
Between 1 and 5 years
More than 5 years
Total non-cancellable operating lease rentals
1,741
8,918
3,216
13,876
726
2,903
233
3,862
The above operating lease rentals receivable relate entirely to the Group's leased offices
for Euronav UK and Gener8 Maritime Subsidiary II Inc. Euronav UK has sublet part
of the office space to four different subtenants, starting in 2014 and Gener8 Maritime
Subsidiary II Inc. has sublet their entire office starting in December 2018.
Amounts recognized in profit and loss
(in thousands of USD)
Bareboat charter
Time charter
Office rental
Total recognized in profit and loss
2018
2017
2016
-
75,238
846
76,084
-
118,705
840
119,545
-
140,227
878
141,105
Note 20 - Provisions and contingencies
In 2004, Gener8 Maritime Subsidiary II Inc. entered into a non-cancellable lease
for office space. This lease started at December 1, 2004 and would have expired on
September 30, 2020. On July 14, 2015 this lease was extended for an additional 5 years
until September 30, 2025. The facilities have been sub-let for the remaining lease term,
but changes in market conditions have meant that the rental income is lower than the
rental expense. The obligation for the future payments, net of expected rental income,
has been provided for.
Furthermore, 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.
(in thousands of USD)
Note
Onerous contract
Balance at January 1, 2018
Assumed in a business combination
Provisions used during the year
Balance at December 31, 2018
Non-current
Current
Total
24
-
-
-
-
5,303
(38)
5,265
4,288
977
5,265
Total
-
5,303
(38)
5,265
4,288
977
5,265
80
FINANCIAL REPORT
(in thousands of EUR)
Total remuneration
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 in local currency to all non-executive
directors for their services as members of the board and committees (if applicable) is
as follows:
2018
1,035
2017
1,015
2016
1,145
The Nomination 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 summarized as follows:
(in thousands of EUR)
2018
2017
2016
Total fixed remuneration
of which
Cost of pension
Other benefits
Total variable remuneration
of which
Share-based payments
1,231
39
75
1,153
299
1,176
35
58
1,331
597
1,175
35
57
1,042
351
All amounts mentioned refer to the Executive Committee in its official composition
throughout 2018.
The remuneration of the CEO can be summarized as follows:
(in thousands of GBP)
Total fixed remuneration
of which
Cost of pension
Other benefits
Total variable remuneration
of which
Share-based payments
FINANCIAL REPORT
81
2017
2016
407
-
13
528
233
405
-
11
437
171
2018
537
-
40
1,866
118
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 2016 the Company
bought back 692,415 shares and delivered 116,667 shares upon the exercise of share
options. In 2018 the Company bought back 545,486 shares and delivered 350,000 shares
upon the exercise of share options. 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. As of December 31, 2018, all the stock options remained
outstanding but all RSUs were exercised in 2018. 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. One-third was vested on the second anniversary. On
February 9, 2017 the board of directors granted 66,449 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. On February 16, 2018 the board
of directors granted 154,432 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 2018 CMB invoiced a total amount of
USD 1,151 (2017: USD 34,928 and 2016: USD 17,731).
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 185,326 in
2018 (2017: USD 179,079 and 2016: USD 175,572). This lease expires on August 31, 2021.
The Group subleases office space in its 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 50-50 joint venture with
82
FINANCIAL REPORT
International Seaways. Under this sublease, the Company received in 2018 a rent of
USD 227,089 (2017: USD 218,894 and 2016: USD 232,882). 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 Vice Chairman, Marc Saverys, or the Saverco
Shareholders.
Pursuant to the registration rights agreement, each of the Saverco Shareholders
as a group were able to piggyback on the others’ demand registration. The Saverco
Shareholders were only treated as having made their request if the registration
statement for such shareholder group’s shares was declared effective. Once Euronav is
eligible to do so, commencing 12 calendar months after the Ordinary Shares have been
registered under the Exchange Act, the Saverco Shareholders could require Euronav to
file shelf registration statements permitting sales by them of ordinary shares into the
market from time to time over an extended period. The Saverco Shareholders could also
exercise piggyback registration rights to participate in certain registrations of ordinary
shares by Euronav. All expenses relating to the registrations, including the participation
of Euronav's executive management team in two marketed roadshows and a reasonable
number of marketing calls in connection with one-day or overnight transactions, can be
borne by Euronav. The registration rights agreement also contained provisions relating
to indemnification and contribution. There were no specified financial remedies for
non-compliance with the registration rights agreement. At December 31, 2018, no
rights were exercised by any of the parties under the registration rights agreement.
Transactions with subsidiaries and joint ventures
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 20 May, 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).
FINANCIAL REPORT
83
Balances and transactions between the Group and its subsidiaries have been eliminated
on consolidation and are not disclosed in this note. Details of outstanding balances and
transactions between the Group and its joint ventures are disclosed below:
As of and for the year ended December 31, 2017
(in thousands of USD)
TI Africa Ltd
TI Asia Ltd
Kingswood Co. Ltd
Tankers Agencies (UK) Ltd
Total
As of and for the year ended December 31, 2018
TI Africa Ltd
TI Asia Ltd
Tankers Agencies (UK) Ltd
Tankers International LLC
Total
Trade
receivables
Trade
payables
Shareholders
Loan
Turnover
Dividend
Income
30
130
-
134
294
66
79
-
46
191
50
-
-
137
187
25
-
70
-
95
100,115
62,647
-
-
162,762
28,665
-
-
-
28,665
372
372
-
-
744
381
381
-
-
762
-
-
1,250
-
1,250
-
-
-
-
-
Guarantees
The Group provided guarantees to financial institutions that provided credit facilities to
joint ventures of the Group. As of December 31, 2018, the total amount outstanding under
these credit facilities was USD 186.1 million, of which the Group guaranteed USD 93.0
million. As of December 31, 2017, there were no outstandings under JV loan agreements
and there were no guarantees (see Note 25).
Note 22 - Share-based payment arrangements
Description of share-based payment arrangements:
At December 31, 2018, 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.
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")
Total Share options
583,000
583,000
583,000
1,750,000
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
84
FINANCIAL REPORT
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 recognized 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 had to meet the first 2 vesting conditions listed above.
Long term incentive plan 2015 (Cash-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') which will be paid out in cash, 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. In the course of 2018, this
long term incentive plan has been converted into a cash-settled plan. As of December
31, 2018, all the stock options remained outstanding but all RSU's were excercised.
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.
Long term incentive plan 2017 (Cash-settled)
The Group's Board of Directors implemented in 2017 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 66,449 phantom stock units
were granted on February 9, 2017.
Long term incentive plan 2018 (Cash-settled)
The Group's Board of Directors implemented in 2018 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 154,432 phantom stock units
were granted on February 16, 2018.
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.
FINANCIAL REPORT
85
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
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
2.270
6.070
5.770
40%
303
-
1%
2.260
6.070
5.770
40%
467
-
1%
2.120
6.070
5.770
40%
730
-
1%
1.853
10.050
10.0475
39.63%
365
8%
0.66%
1.853
10.050
10.0475
39.63%
730
8%
0.66%
1.853
10.050
10.0475
39.63%
1,095
8%
0.66%
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.
The fair value of the RSUs under the 2015 LTIP was measured with reference to the
Euronav share price at the grant date. All the RSUs under the LTIP 2015 and the
remaining options under the share option program 2013 were exercised in 2018.
The liability in respect of its obligations under the LTIP 2016, LTIP 2017 and LTIP 2018
is 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. One-third of the
phantom stocks granted on February 2, 2016 was vested on the second anniversary,
36,411 phantom stocks remained outstanding as of December 31, 2018. All of the
phantom stocks granted on February 9, 2017 and February 16, 2018 respectively,
remained outstanding as of December 31, 2018. The Company’s share price was EUR
10.613 at the grant date of the LTIP 2016, EUR 7.268 at the grant date of the LTIP 2017
and EUR 7.237 at the grant date of the LTIP 2018, and was EUR 6.22 as at December
31, 2018.
Expenses recognized in profit or loss
For details on related employee benefits expense, see Note 5 and Note 16. The expenses
related to the LTIP 2016, LTIP 2017 and LTIP 2018 (USD 0.5 million) are included in the
Provision for employee benefits.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of options under the 2013 share
option program and the 2015 LTIP are as follows:
(figures in EUR)
Number of options
2018
Weighted average
exercise price 2018
Number of options
2017
Weighted average
exercise price 2017
Outstanding at January 1
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at December 31
Vested at December 31
586,590
0
(350,000)
0
236,590
236,590
7.495
0
7.335
0
7.732
0
586,590
0
0
0
586,590
507,726
7.495
0
0
0
7.495
0
86
FINANCIAL REPORT
In 2018 the Company bought back 545,486 shares and delivered 350,000 shares upon
the exercise of share options under the 2013 program. In 2017 Euronav did not buy back
or dispose of any own shares.
The weighted-average share price at the date of exercise for the share options exercised
in 2018 was EUR 7.335.
Note 23 - Group entities
Country of
incorporation
Consolidation
method
Ownership interest
December 31,
2018
December 31,
2017
December 31,
2016
Parent
Euronav NV
Subsidiaries
Euronav Tankers NV
Euronav Shipping NV
Euronav (UK) Agencies Limited
Euronav Luxembourg SA
Euronav sas
Euronav Ship Management sas
Euronav Ship Management
Antwerp (branch office)
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
Euronav MI II Inc
Gener8 Maritime Subsidiary II Inc.
Gener8 Maritime Subsidiary New IV Inc.
Gener8 Maritime Management LLC
Gener8 Maritime Subsidiary V Inc.
Gener8 Maritime Subsidiary VIII Inc.
Gener8 Maritime Subsidiary
Inc.
GMR Zeus LLC
GMR Atlas LLC
GMR Hercules LLC
GMR Ulysses LLC
GMR Posseidon LLC
Victory Ltd.
Vision Ltd.
GMR Spartiate LLC
GMR Maniate LLC
GMR St Nikolas LLC
GMR George T LLC
GMR Kara G LLC
GMR Harriet G LLC
GMR Orion LLC
GMR Argus LLC
GMR Spyridon LLC
GMR Horn LLC
GMR Phoenix LLC
GMR Strength LLC
GMR Daphne LLC
GMR Defiance LLC
Belgium
full
100.00%
100.00%
100.00%
Belgium
Belgium
UK
Luxembourg
France
France
full
full
full
full
full
full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Liberia
full
100.00%
100.00%
100.00%
Hong Kong
Cyprus
Singapore
Hong Kong
Hong Kong
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Bermuda
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Liberia
Liberia
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Liberia
Marshall Islands
Liberia
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
100.00%
100.00%
100.00%
NA
NA
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
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
100.00%
100.00%
100.00%
100.00%
100.00%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
FINANCIAL REPORT
87
Country of
incorporation
Consolidation
method
Ownership interest
December 31,
2018
December 31,
2017
December 31,
2016
Marshall Islands
Bermuda
Bermuda
Bermuda
Liberia
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
full
Marshall Islands
Hong Kong
Hong Kong
UK
Marshall Islands
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%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
50.00%
50.00%
50.00%
50.00%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
NA
NA
Subsidiaries
GMR Elektra LLC
Companion Ltd.
Compatriot Ltd.
Consul Ltd.
GMR Agamemnon LLC
Gener8 Neptune LLC
Gener8 Athena LLC
Gener8 Apollo LLC
Gener8 Ares LLC
Gener8 Hera LLC
Gener8 Constantine LLC
Gener8 Oceanus LLC
Gener8 Nestor LLC
Gener8 Nautilus LLC
Gener8 Macedon LLC
Gener8 Noble LLC
Gener8 Ethos LLC
Gener8 Perseus LLC
Gener8 Theseus LLC
Gener8 Hector LLC
Gener8 Strength Inc.
Gener8 Supreme Inc.
Gener8 Andriotis Inc.
Gener8 Militiades Inc.
Gener8 Success Inc.
Gener8 Chiotis Inc.
Gener8 Tankers 1 Inc.
Gener8 Tankers 2 Inc.
Gener8 Tankers 3 Inc.
Gener8 Tankers 4 Inc.
Gener8 Tankers 5 Inc.
Gener8 Tankers 6 Inc.
Gener8 Tankers 7 Inc.
Gener8 Tankers 8 Inc.
Joint ventures
Kingswood Co. Ltd
TI Africa Ltd
TI Asia Ltd
Tankers Agencies (UK) Ltd
Tankers International LLC
Associates
Tankers International LLC
Marshall Islands
equity
NA
NA
40.00%
In 2016, the Group transferred its equity interests 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 was
dissolved.
In the fourth quarter of 2017, Euronav NV incorporated a new subsidiary, Euronav MI Inc.
88
FINANCIAL REPORT
In 2017, the corporate structure of Tankers International pool (“TI Pool”) was
rationalized. Under the new structure, the shares of Tankers UK Agencies (“TUKA”),
fully held at the time by Tankers International LLC (“TI LLC”), an entity incorporated
under the laws of the Marshall Islands, were distributed to the two remaining founding
members of the TI Pool, (namely Euronav NV and International Seaways INC), to form
a 50-50 joint venture.
Further, following the withdrawal in December 2017 of one of its members, TI LLC,
which was previously an associate of the Group, became a joint venture of the Group as
from that time.
Additionally, a new company, Tankers International Ltd. ("TIL"), was incorporated under
the laws of the United Kingdom, and is fully owned by TUKA. TIL is the disponent owner
of all of the vessels in the TI Pool as all the vessels are now time chartered to TIL at
a floating rate equivalent to the average spot rate achieved by the pool times the pool
points assigned to each vessel.
This new structure allowed the TI Pool to arrange for a credit line financing in order to
lower the working capital requirement for the Pool participants which potentially can
attract additional pool participants.
At December 31, 2018, the Group held 50% of the voting rights in TUKA but held 61% of
the outstanding shares that participate in the result of the entity.
At December 31, 2018, the Group held 50% of the voting rights in TI LLC but held 59%
of the outstanding shares that participate in the result of the entity.
In 2018 two subsidiaries, Fiorano Shipholding Ltd and Larvotto Shipholding Ltd were
dissolved.
Due to the merger with Gener8 Maritime Inc. on June 12, 2018 as set out in Note 24,
the Group acquired new subsidiaries. Those subsidiaries were used by Gener8 mostly
as SPV to own individual vessels. All of the vessels have been transferred to Euronav
NV in 2018. The Group intends to liquidate a majority of those subsidiaries as soon as
possible.
The Group holds 100% of the voting rights in all of its subsidiaries.
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.
Share swap
On June 2, 2016, the Group entered into a share swap and claim transfer agreement
whereby:
• 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.
FINANCIAL REPORT
89
Fair value at acquisition date
15,110
(21,498)
39,973
33,585
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 were fully consolidated as from June 2, 2016 until their liquidation
in 2018.
With this transaction, the Group became 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.
Consideration transferred
(in thousands of USD)
Cash
Shares in Fontvieille and Moneghetti
Shareholders' loan receivable
Total consideration transferred
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 for the year ended December 31, 2016. If the acquisition had
occurred on 1 January 2016, management estimates that the Group’s consolidated
revenue for the year ended December 31, 2016 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 1 January 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 was recognized in
the consolidated statement of profit or loss for the year ended December 31, 2016,
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 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.
90
FINANCIAL REPORT
(in thousands of USD)
Property, plant and equipment
Trade receivables
Cash and cash equivalents
Loans and borrowings
Trade and other payables
Total identifiable net assets acquired
Identifiable assets acquired and liabilities assumed
The following table summarizes the recognized amounts of assets acquired and
liabilities assumed at the acquisition date.
Note
Fair value at acquisition date
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
The transaction did not give rise to the recognition of any goodwill:
Goodwill
(in thousands of USD)
Fair value at acquisition date
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
-
Merger with Gener8 Maritime, Inc. ('Gener8')
On June 11, 2018, the Group announced that Gener8's shareholders approved the
merger that day between the two companies by which Gener8 became a wholly-owned
subsidiary of Euronav. Gener8 Maritime Inc. a corporation incorporated under the laws of
the Republic of the Marshall Islands, was a leading U.S.-based provider of international
seaborne crude oil transportation services, resulting from a transformative merger
between General Maritime Corporation, a well-known tanker owner, and Navig8 Crude
Tankers Inc., a company sponsored by the Navig8 Group, an independent vessel pool
manager. General Maritime Corporation was founded in 1997 and has been an active
owner and operator in the crude tanker sector. At the date of the merger, Gener8 owned
a fleet of 29 tankers on the water, consisting of 21 VLCC vessels, 6 Suezmax vessels,
and 2 Panamax vessels, with an aggregate carrying capacity of approximately 7.4
million dwt, which includes 19 “eco” VLCC newbuildings delivered from 2015 through
2017 equipped with advanced, fuel-saving technology, that were constructed at highly
reputable shipyards.
Euronav believes that the merger will be accretive to the shareholders of both
companies and is consistent with previously set expansion criteria of Euronav. The
merger created the world’s leading independent crude tanker operator with 72 large
crude tankers focused predominately on the VLCC and Suezmax asset classes and
two FSO vessels in joint venture and provide tangible economies of scale via pooling
arrangements, procurement opportunities, reduced overhead and enhanced access
to capital.
FINANCIAL REPORT
91
Furthermore it will offer a well-capitalised, highly liquid company for investors to
participate in the tanker market. and through commitment to the Tankers International
Pool (a spot market-oriented tanker pool), provide the lowest commercial fees as a
percentage of revenue in the sector upon closing of the merger.
The "Exchange Ratio" of 0.7272 Euronav shares for each share of Gener8 resulted
in the issuance of 60,815,764 new ordinary shares on June 12, 2018. The Exchange
Ratio implied a premium of 35% paid on Gener8 shares based on the closing share
prices on December 20, 2017. The merger resulted in Euronav shareholders owning
approximately 72% of the issued share capital of the combined entity and Gener8
shareholders owning approximately 28% (based on the fully diluted share capital of
Euronav and fully diluted share capital of Gener8). Euronav as the combined entity
remain listed on NYSE and Euronext under the symbol "EURN".
Subsequently, Euronav sold certain subsidiaries owning six VLCCs to International
Seaways ("INSW") for a total cash payment of USD 141.0 million of which USD 120.0
million was received on June 14, 2018, the date of closing. The remaining balance of
USD 20.9 million was paid in Q4. This sale was an important part of the wider merger
with Gener8 Maritime transaction as it allows Euronav to retain leverage around a level
of 50% and to retain substantial liquidity going forward. The six vessels are the Gener8
Miltiades (2016 – 301,038 dwt), Gener8 Chiotis (2016 – 300,973 dwt), Gener8 Success
(2016 – 300,932 dwt), Gener8 Andriotis (2016 – 301,014 dwt), Gener8 Strength (2015
– 300,960 dwt) and Gener8 Supreme (2016 – 300,933 dwt). The assets and liabilities
of these companies were recognized at fair value on the date of the closing of the
merger. This fair value took into consideration the provisions of the sale and purchase
agreement with INSW and accordingly, no result was recorded on this transaction.
(in USD)
Total Business combinations
83,267,426
362,613
83,630,039
0.7272
60,815,764
9.1
553,423,452
Gener8 shares outstanding
RSU
Total Gener8 shares
Ratio
Issued Euronav shares
Closing price Euronav on June 11, 2018
Total consideration transferred
Contribution to revenue and profit/loss
Since their acquisition by the Group on June 12, 2018, the acquired companies
contributed revenue of USD 16.5 million and a loss of USD 43.7 million to the Group’s
consolidated results for the year ended December 31, 2018. If the acquisition had
occurred on 1 January 2018, management estimates that the Group’s consolidated
revenue for the year ended December 31, 2018 would have been USD 665.5 million and
consolidated loss for the twelve month period ended December 31, 2018 would have
been USD (160.1) 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 1 January 2018.
Acquisition related costs
The Group incurred approximately USD 5.0 million relating to external legal fees, due
to dilligence costs and advisory fees. These acquisition-related costs for the business
combination were expensed as incurred and are included in 'General and administrative
expenses'.
Repayment Blue mountain note
As part of the Merger Agreement and the Letter agreement between Gener8 and
certain affiliates of BlueMountain Capital Management LLC, the Senior Note with a
92
FINANCIAL REPORT
carrying value of USD 205.7 million was prepaid on June 12, 2018. The repayment of the
Senior Notes was financed in full by Euronav under its existing liquidity (cash at hands
and credit facilities) (see Note 15).
Bank loans
At the time of the merger, Gener8 had three senior secured credit facilities: (i) the
KEXIM Credit Agreement, (ii) the Nordea Credit Agreement and (iii) the Sinosure Credit
Agreement of which the first two were assumed by Euronav in the merger and the latter
was acquired by INSW when they acquired certain subsidiaries owning six VLCCs. Prior
to the merger, Gener8 was not in compliance with the interest expense coverage ratio
covenant for which they obtained short-term waivers from its lenders. Following the
merger, the Kexim Credit Agreement was amended to align the covenants with the
other senior credit facilities of the Group, resolving the non compliance. The Group,
in advance negotiations to refinance the Nordea Credit Agreement, decided not to
amend this senior secured credit facility and as such, given the non compliance and
remaining duration of the short-term waiver, classified the entire facility as short term.
On September 17, 2018, this facility was repaid in full.
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
Total
Gener8 Subsidiaries
INSW Subsidiaries
Vessels
Other tangible assets
Intangible assets
Receivables
Current assets
Cash and cash equivalents
Loans and borrowings
Provision onerous contracts
Current liabilities
8
-
-
-
-
-
15
20
-
1,704,250
345
152
16,750
79,459
126,288
(1,312,446)
(5,303)
(33,012)
1,270,250
345
152
9,599
64,829
126,288
(1,001,478)
(5,303)
(29,160)
Total identifiable net assets acquired
576,482
435,522
434,000
-
-
7,151
14,629
-
(310,968)
-
(3,852)
140,960
(in thousands of USD)
Fair value at acquisition date
Consideration transferred
Total identifiable net assets acquired
Bargain Purchase
553,423
576,482
23,059
The transaction resulted in a bargain purchase gain of USD 23.1 million as the fair value of
assets acquired and liabilities assumed exceeded the total of the fair value of consideration
paid. Euronav’s management has reassessed whether they had correctly identified all of
the assets acquired and all of the liabilities assumed and this excess remains.
Euronav’s management believes that the bargain purchase price is a direct consequence
of Gener8 limited liquidity and its shares trading under the net asset value per share
prior to and at the time of the agreed ratio as well as a small uptick in the fair value of
the vessels between the time of the agreed exchange ratio and the date of the merger
when the valuation of the vessels was assessed.
This gain was recognized in the consolidated statement of profit or loss for 2018, under
the heading ‘Gain on bargain purchase’.
FINANCIAL REPORT
93
As at June 12, 2018, the gross contractual amounts receivable acquired amounted to
USD 98.2 million and the amounts expected not to collect amounted to USD 2.0 million
which gives a net amount receivable of USD 96.2 million (see table above, sum of
receivables and current assets).
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
December 31, 2018
December 31, 2017
43,182
-
43,182
-
-
-
30,595
-
30,595
-
-
-
94
FINANCIAL REPORT
ASSOCIATES
(in thousands of USD)
Carrying amount of interest at the beginning of the period
Group's share of profit (loss) for the period
Dividend in kind (shares TUKA) distributed by associate (Note 23)
Reclassification of associate to joint venture (Note 23)
Carrying amount of interest at the end of the period
JOINT VENTURES
December 31, 2018
December 31, 2017
-
-
-
-
-
1,546
149
(1,559)
(136)
-
The following table contains a roll forward of the balance sheet amounts with respect to the Group’s joint ventures:
(in thousands of USD)
Gross balance
Offset investment with shareholders loan
Balance at January 1, 2016
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
Balance at December 31, 2016
Group's share of profit (loss) for the period
Group's share of other comprehensive income
Dividends received from joint ventures
Dividend in kind (shares TUKA) received from
associate (Note 23)
Reclassification of associate to joint venture
(Note 23)
Movement shareholders loans to joint ventures
Gross balance
Offset investment with shareholders loan
Balance at December 31, 2017
Group's share of profit (loss) for the period
Group's share of other comprehensive income
Movement shareholders loans to joint ventures
Gross balance
Offset investment with shareholders loan
Balance at December 31, 2018
ASSET
LIABILITY
Investments in
equity accounted
investees
Shareholders loans
Investments in
equity accounted
investees
Shareholders loans
(38,095)
58,520
20,425
40,161
1,224
4,646
(3,737)
(23,478)
-
15,981
(3,298)
20,165
16,867
29,933
483
(1,250)
1,559
136
-
27,565
3,030
30,595
16,076
(459)
-
43,182
-
43,182
317,749
(58,520)
259,229
-
-
-
-
-
(18,499)
(95,738)
203,512
(20,165)
183,348
-
-
-
-
-
(40,750)
162,763
(3,030)
159,733
-
-
(134,097)
28,666
-
28,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FINANCIAL REPORT
95
The Group’s share on upstream transactions in 2016 related 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 in 2016 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.
The decrease in the balance of shareholders’ loans to joint ventures in 2018 is primarily
due to the USD 220.0 million senior secured credit facility which TI Asia Ltd. and TI
Africa Ltd. entered into March 29, 2018. The shareholders loans were partially repaid
by using a part of the proceeds of this new borrowing. In this context, the Company
provided a guarantee for the revolving tranche of the above credit facility.
Joint venture
Segment
Description
Great Hope Enterprises Ltd
Kingswood Co. Ltd
Seven Seas Shipping Ltd
Fiorano Shipholding Ltd
Larvotto Shipholding Ltd
Fontvieille Shipholding Ltd
Moneghetti Shipholding Ltd
Tankers Agencies (UK) Ltd
Tankers International LLC
TI Africa Ltd
TI Asia Ltd
Tankers No operating activities, liquidated in 2016
Tankers
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. Wholly owned subsidiary of
Kingswood Co. Ltd.
Single ship company, owner of 1 Suezmax, acquired Bretta's equity interest in 2016
(liquidated in 2018)
Single ship company, owner of 1 Suezmax, acquired Bretta's equity interest in 2016
(liquidated in 2018)
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
Parent company of Tankers International Ltd
The manager of the Tankers International Pool who commercially manages the
majority of the Group's VLCCs
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)*
Tankers
Tankers
Tankers
Tankers
Tankers
Tankers
Tankers
FSO
FSO
* FSO Asia and FSO Africa are on a time charter
contract to North Oil Company (NOC), the new
operator of Al Shaheen field, until mid 2022.
96
FINANCIAL REPORT
The following table contains summarized financial information for all of the Group’s
joint ventures:
(in thousands of USD)
Asset
Asset
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
Net assets (100%)
Group's share of net assets
Shareholders loans to joint venture
Net Carrying amount 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
Great Hope
Enterprises
Ltd
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32)
-
(16)
-
Kingswood
Co. Ltd
Seven Seas
Shipping Ltd
Fiorano
Shipholding Ltd
Fontvieille
Larvotto
Moneghetti
Shipholding Ltd
Shipholding Ltd
Shipholding Ltd
TI Africa Ltd
TI Asia Ltd
Total
50%
946
-
76
-
-
-
2
-
1,020
510
-
510
-
-
-
-
-
12
-
6
-
50%
-
-
3,221
555
946
-
132
-
2,143
1,072
-
1,072
-
13,646
(3,344)
(3)
-
7,469
-
3,735
-
50%
50%
50%
50%
50%
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
7,182
(2,047)
(223)
-
1,146
-
573
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,404
(2,037)
(377)
500
250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
198,826
189,821
38,206
26,928
276,498
863
(40,329)
(20,165)
137,615
117,451
65,188
(18,209)
(400)
(326)
36,515
-
-
-
-
-
192,344
182,519
47,889
36,591
132,763
-
76,899
75,343
30,571
15,285
65,897
15,285
65,897
65,063
(17,933)
(4,703)
(106)
32,359
2,448
16,180
1,224
392,116
372,340
89,392
64,074
410,207
-
77,896
75,343
(6,595)
(3,298)
203,512
16,867
183,348
171,855
(47,548)
(6,531)
(432)
80,322
2,448
40,161
1,224
6,901
(1,929)
(288)
1,082
7,471
(2,049)
(537)
1,270
541
635
18,257
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(in thousands of USD)
Asset
Asset
Great Hope
Enterprises
Ltd
Kingswood
Co. Ltd
Seven Seas
Fiorano
Shipping Ltd
Shipholding Ltd
Fontvieille
Shipholding Ltd
Larvotto
Shipholding Ltd
Moneghetti
Shipholding Ltd
TI Africa Ltd
TI Asia Ltd
Total
50%
50%
50%
50%
50%
50%
50%
50%
FINANCIAL REPORT
97
-
-
-
-
-
-
-
-
-
-
-
-
-
6,404
(2,037)
(377)
-
500
-
250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,901
(1,929)
(288)
-
1,082
-
541
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,471
(2,049)
(537)
-
1,270
-
635
-
198,826
189,821
38,206
26,928
276,498
-
863
-
(40,329)
(20,165)
137,615
-
117,451
65,188
(18,209)
(400)
(326)
36,515
-
18,257
-
192,344
182,519
47,889
36,591
132,763
-
76,899
75,343
30,571
15,285
65,897
15,285
65,897
65,063
(17,933)
(4,703)
(106)
32,359
2,448
16,180
1,224
392,116
372,340
89,392
64,074
410,207
-
77,896
75,343
(6,595)
(3,298)
203,512
16,867
183,348
171,855
(47,548)
(6,531)
(432)
80,322
2,448
40,161
1,224
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
Net assets (100%)
Group's share of net assets
Shareholders loans to joint venture
Net Carrying amount 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 other comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32)
(16)
50%
946
76
-
-
-
-
2
-
-
-
-
-
-
-
6
-
12
1,020
510
-
510
3,221
555
946
132
2,143
1,072
1,072
13,646
(3,344)
(3)
7,469
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,182
(2,047)
(223)
1,146
Group's share of profit (loss) for the period
3,735
573
98
FINANCIAL REPORT
Note 25 - Equity-accounted investees (Continued)
The following table contains summarized financial information for all of the Group’s
joint ventures:
(in thousands of USD)
At December 31, 2017
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 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
Asset
Kingswood
Co. Ltd
Seven Seas Shipping
TI Africa Ltd
TI Asia Ltd
Tankers Agencies
(UK) Ltd
(see Note 23)
TI LLC
(see Note 23)
Total
Asset
50%
629
-
-
-
-
-
111
-
518
259
-
259
-
-
-
-
-
(2)
-
(1)
-
Ltd
50%
-
-
993
689
629
-
91
-
273
137
-
137
61
130
65
-
-
-
-
-
-
200,231
128,653
50%
182,298
171,612
12,639
4,062
766
(6,060)
(3,030)
100,115
97,085
61,015
(18,209)
(90)
383
34,269
17,135
-
-
-
-
-
50%
175,826
164,587
10,521
1,968
-
-
687
57,007
28,503
62,647
28,503
62,647
58,011
(17,933)
(1,961)
(3,359)
25,467
966
12,734
483
50%
363
-
149,650
1,889
147,453
43,000
2,560
1,559
1,559
-
-
-
-
-
-
-
-
-
-
-
-
50%
98
-
1,108
975
232
136
-
136
-
-
-
-
-
-
-
-
-
-
-
-
-
359,214
336,199
174,912
8,608
329,514
-
150,083
43,000
54,530
27,565
162,762
30,595
159,732
119,087
(36,142)
(2,052)
(2,976)
59,865
966
29,932
483
FINANCIAL REPORT
99
At December 31, 2017
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 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
Asset
Kingswood
Co. Ltd
50%
629
-
-
-
-
-
-
-
-
-
-
-
-
-
111
518
259
-
259
(2)
(1)
(in thousands of USD)
Asset
Seven Seas Shipping
Ltd
TI Africa Ltd
TI Asia Ltd
Tankers Agencies
(UK) Ltd
(see Note 23)
TI LLC
(see Note 23)
Total
50%
-
-
993
689
629
-
91
-
273
137
-
137
-
61
-
-
-
130
-
65
-
50%
182,298
171,612
12,639
4,062
200,231
-
766
-
(6,060)
(3,030)
100,115
-
97,085
61,015
(18,209)
(90)
383
34,269
-
17,135
-
50%
175,826
164,587
10,521
1,968
128,653
-
687
-
57,007
28,503
62,647
28,503
62,647
58,011
(17,933)
(1,961)
(3,359)
25,467
966
12,734
483
50%
363
-
149,650
1,889
-
-
147,453
43,000
2,560
1,559
-
1,559
-
-
-
-
-
-
-
-
-
50%
98
-
1,108
-
-
-
975
-
232
136
-
136
-
-
-
-
-
-
-
-
-
359,214
336,199
174,912
8,608
329,514
-
150,083
43,000
54,530
27,565
162,762
30,595
159,732
119,087
(36,142)
(2,052)
(2,976)
59,865
966
29,932
483
100
FINANCIAL REPORT
Note 25 - Equity-accounted investees (Continued)
The following table contains summarized financial information for all of the Group’s
joint ventures:
(in thousands of USD)
At December 31, 2018
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 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
Asset
Kingswood
Co. Ltd
50%
522
-
-
-
-
-
6
-
516
258
-
258
-
-
-
-
-
(2)
-
(1)
-
Loans and borrowings
On March 29, 2018, TI Asia Ltd. and TI Africa Ltd. entered into a USD 220.0 million senior
secured credit facility. The facility consists of a term loan of USD 110.0 million and a
revolving loan of USD 110.0 million for the purpose of refinancing the two FSOs as well
as for general corporate purposes. The Company provided a guarantee for the revolving
credit facility tranche. The fair value of this guarantee is not significant given the long
term contract both FSOs have with North Oil Company, which results in sufficient
repayment capacity under these facilities. Transaction costs for a total amount of USD
2.2 million are amortized over the lifetime of the instrument using the effective interest
rate method. As of December 31, 2018 the outstanding balance on this facility was USD
186.1 million in aggregate.
All bank loans in the joint ventures are secured by the underlying FSO.
Seven Seas Shipping
TI Africa Ltd
TI Asia Ltd
Tankers Agencies
(UK) Ltd
(see Note 23)
TI LLC
(see Note 23)
Total
Ltd
50%
792
696
522
-
-
-
1
-
269
134
-
134
-
1
-
-
-
-
-
(5)
(2)
50%
154,553
153,404
9,119
484
130,068
70,080
24,400
23,867
9,205
4,602
28,665
4,602
28,665
49,129
(18,209)
(3,857)
(1,585)
15,742
(477)
7,871
(239)
Asset
50%
147,962
146,654
22,450
2,561
74,171
67,551
23,699
23,015
72,542
36,271
36,271
-
-
49,180
(17,933)
(3,733)
(1,611)
15,977
(441)
7,989
(220)
50%
306
-
289,431
2,487
286,825
64,500
2,912
1,774
1,774
749,229
(71)
(2,571)
(216)
352
-
-
-
-
-
-
-
50%
288
48
-
240
141
-
141
-
-
-
-
-
-
-
-
-
-
-
-
-
10
303,343
300,058
322,080
6,227
204,760
137,631
334,979
111,382
85,683
43,181
28,665
43,181
28,665
847,540
(36,213)
(10,161)
(3,412)
32,074
(918)
16,076
(459)
(in thousands of USD)
Asset
Seven Seas Shipping
Ltd
TI Africa Ltd
TI Asia Ltd
Tankers Agencies
(UK) Ltd
(see Note 23)
TI LLC
(see Note 23)
Total
FINANCIAL REPORT
101
50%
-
-
792
696
522
-
1
-
269
134
-
134
-
1
-
-
-
(5)
-
(2)
-
50%
154,553
153,404
9,119
484
130,068
70,080
24,400
23,867
9,205
4,602
28,665
4,602
28,665
49,129
(18,209)
(3,857)
(1,585)
15,742
(477)
7,871
(239)
50%
147,962
146,654
22,450
2,561
74,171
67,551
23,699
23,015
72,542
36,271
-
36,271
-
49,180
(17,933)
(3,733)
(1,611)
15,977
(441)
7,989
(220)
50%
306
-
289,431
2,487
-
-
286,825
64,500
2,912
1,774
-
1,774
-
749,229
(71)
(2,571)
(216)
352
-
-
-
50%
-
-
288
-
-
-
48
-
240
141
-
141
-
-
-
-
-
10
-
-
-
303,343
300,058
322,080
6,227
204,760
137,631
334,979
111,382
85,683
43,181
28,665
43,181
28,665
847,540
(36,213)
(10,161)
(3,412)
32,074
(918)
16,076
(459)
At December 31, 2018
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 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
Asset
Kingswood
Co. Ltd
50%
522
-
-
-
-
-
6
-
516
258
-
258
-
-
-
-
-
-
-
(2)
(1)
102
FINANCIAL REPORT
The following table summarizes the terms and debt repayment profile of the bank loans
held by the joint ventures:
(in thousands of USD)
TI Asia Ltd revolving loan 54M*
TI Asia Ltd loan 54M*
TI Africa Ltd revolving loan 56M*
TI Africa Ltd loan 56M*
Curr. Nominal
interest
rate
USD
USD
USD
USD
libor
+2.0%
libor
+2.0%
libor
+2.0%
libor
+2.0%
December 31, 2018
December 31, 2017
Year of
mat.
Facility
size
Drawn Carrying
value
Facility
size
Drawn Carrying
value
2022
45,671
45,671
45,283
2022
45,671
45,671
45,283
2022
47,362
47,362
46,974
2022
47,362
47,362
46,974
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total interest-bearing bank loans
186,067
186,067
184,513
*The mentioned secured bank loans were subject to loan covenants.
Loan covenant
As of December 31, 2018, all joint ventures were in compliance with the covenants, as
applicable, of their respective loans.
Interest rate swaps
In connection to the USD 220.0 million facility, the JV's entered in several Interest Rate
Swap (IRSs) instruments for a combined notional value of USD 208.8 million (Euronav’s
share amounts to 50%). These IRSs are used to hedge the risk related to the fluctuation of
the Libor rate and qualify as hedging instruments in a cash flow hedge relationship under
IFRS 9. These instruments are measured at their fair value; effective changes in fair value
have been recognized in OCI and the ineffective portion has been recognized in profit or
loss. These IRSs have a remaining duration between three and four years matching the
repayment profile of that facility and mature on July 21, 2022 and September 22, 2022 for
FSO Asia and FSO Africa respectively (see Note 13).
Vessels
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 the Group 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 of December 31, 2018, December 31, 2017 and
December 31, 2016.
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
Note 26 - Major exchange rates
FINANCIAL REPORT
103
2018
6,227
3,385
-
2017
8,608
4,304
-
The following major exchange rates have been used in preparing the consolidated financial statements:
1 XXX =x,xxxx USD
closing rates
average rates
December 31,
2018
December 31,
2017
December 31,
2016
2018
2017
2016
EUR
GBP
1.1450
1.2800
1.1993
1.3517
1.0541
1.2312
1.1838
1.3374
1.1249
1.2880
1.1061
1.3662
104
FINANCIAL REPORT
Note 27 - Audit fees
The audit fees for the Group amounted to USD 0.9 million (2017: USD 0.9 million and
2016: USD 1.0 million). During the year the statutory auditor and persons professionally
related to him performed additional audit related services amounting to USD 0.4 million
(2017: USD 0.0 million and 2016: USD 0.0 million) and tax services for fees of USD 0.0
million (2017: USD 0.0 million and 2016: 0.0 million). The 2018 audit related services
mainly relate to the merger with Gener8 Maritime Inc.
Note 28 - Subsequent events
Since the start of 2019, Euronav continued to buy back its own shares and owns on
March 18, 2019 a total of 3,370,544 shares (1.53% of the total outstanding shares).
On October 31, 2018, the Company sold the Suezmax Felicity (2009 - 157,667 dwt), for
USD 42.0 million. This vessel was accounted for as a non-current asset held for sale as
at December 31, 2018. The vessel was delivered to its new owner on January 9, 2019.
A transaction-based bonus plan in relation to the Gener8 transaction has been offered to
key management personnel and has been approved by the beneficiaries in January 2019.
On February 4, 2019, Euronav’s CEO Paddy Rodgers announced his decision to step
down from his role as CEO during 2019. Euronav commenced a recruitment process
for a new CEO with Paddy remaining in his position until a successor is appointed to
facilitate an efficient transition period. Paddy is leaving Euronav in a strong position
with sector low leverage, substantial liquidity and operational flexibility to take on the
challenges from the tanker market going forward.
On February 20, 2019, Euronav sold the LR1 Genmar Compatriot (2004 - 72,768 dwt)
for USD 6.75 million. The Company will record a capital gain of approximately USD 0.4
million in the second quarter of 2019 upon delivery to its new owner.
Note 29 - Subsequent events
No events occurred subsequent to December 31, 2018 that would require adjustment to
or disclosure in these consolidated financial statements.
Note 30 - Statement on the true and fair view of the
consolidated financial statements and the fair overview of
the management report
Mr. Carl Steen, Chairman of the Board of Directors, Mr. Patrick Rodgers, CEO and Mr. Hugo
De Stoop, CFO, hereby certify that, to the best of their knowledge, (a) the consolidated
financial statements as of and for the year ended December 31, 2018, which have been
prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union, give a true and fair view of the assets, liabilities, financial
position and results of Euronav NV and the entities included in the consolidation, and (b)
the annual report includes a true and fair view of the evolution of the activities, results
and situation of Euronav NV and the entities included in the consolidation, and contains a
description of the main risks and uncertainties they may face.
Euronav NV Statutory Accounts 2018
ASSETS
(in USD)
FIXED ASSETS
Intangible assets
Tangible assets
Vessels
Land and buildings
Plant, machinery and equipment
Furniture and vehicles
Leasing and other similar rights
Other tangible assets
Assets under construction and advance payments
Financial assets
Enterprises accounted for using the equity method
1. Participating interests
2. Amounts receivable
Other companies
1. Participating interests
2. Amounts receivable
Other financial assets
1. Shares
2. Amounts receivable and cash guarantees
FINANCIAL REPORT
105
December 31, 2018
December 31, 2017
3,878,186,694
2,239,821,475
171
3,234,676,149
3,234,204,835
-
-
298,697
-
16,212
156,405
643,510,374
608,869,677
34,640,697
-
-
-
-
55,841
2,014,576,306
1,950,750,134
-
-
141,639
-
16,212
63,668,322
225,189,328
55,446,224
169,743,104
-
-
-
-
CURRENT ASSETS
1,060,707,409
244,244,671
Amounts receivable after one year
Trade debtors
Other amounts receivable
Amounts receivable within one year
Trade debtors
Other amounts receivable
Investments
Own shares
Other investments and deposits
Cash at bank and in hand
Deferred charges and accrued income
7,621,384
-
7,621,384
909,725,583
98,744,402
810,981,181
67,316,207
8,816,207
58,500,000
27,369,425
48,674,810
-
-
-
93,096,932
33,046,609
60,050,323
103,106,293
9,606,293
93,500,000
18,010,779
30,030,667
TOTAL ASSETS
4,938,894,103
2,484,066,146
106
FINANCIAL REPORT
LIABILITIES
(in USD)
December 31, 2018
December 31, 2017
CAPITAL AND RESERVES
2,073,407,170
1,662,992,477
Capital
Issued capital
Share premium account
Revaluation Surpluses
Reserves
Legal reserve
Reserves not available for distribution
1. Own shares
2. Other
Untaxed reserves
Reserves available for distribution
Result carried forward
PROVISIONS FOR LIABILITIES AND CHARGES
Provisions and deferred taxes
Provisions for liabilities and charges
3. Major repairs and maintenance
4. Other liabilities and charges
CREDITORS
Amounts payable after one year
Financial debts
2. Unsubordinated debentures
3. Leasing and other similar obligations
4. Credit institutions
5. Convertible loans
6. Other amounts payable
Trade Debts
1. Suppliers
Other amounts payable
Amounts payable within one year
Current portion of amounts payable after one year
Financial debts
1. Credit institutions
Trade debts
1. Suppliers
Advances received on contracts in progress
Taxes, remuneration and social security
1. Taxes
2. Remuneration and social security
Other amounts payable
Accrued charges and deferred income
239,147,506
239,147,506
1,702,549,244
-
75,060,493
17,304,612
8,816,207
293,227
48,646,447
-
56,649,927
173,046,122
173,046,122
1,215,227,175
-
119,195,927
17,304,612
9,606,293
293,227
48,646,447
43,345,347
155,523,253
2,437,103
2,890,028
2,437,103
2,890,028
-
2,437,103
-
2,890,028
2,863,049,830
818,183,640
1,443,340,172
672,971,576
-
-
1,383,340,172
-
60,000,000
-
-
1,383,724,901
134,126,913
-
-
612,971,576
-
60,000,000
-
-
122,828,599
47,361,382
60,341,500
50,009,611
22,928,569
-
10,802
1,964,811
1,164,352,306
35,984,757
14,322,229
-
10,802
1,392,105
9,732,470
22,383,466
TOTAL LIABILITIES
4,938,894,103
2,484,066,146
INCOME STATEMENT OF EURONAV NV
(in USD)
December 31, 2018
December 31, 2017
FINANCIAL REPORT
107
Operating income
Turnover
Other operating income
Operating charges
Services and other goods
Remuneration, social security costs and pensions
Depreciation of and other amounts written off formation expenses,
intangible and tangible fixed assets
Increase (+); Decrease (-) in amounts written off stocks,
contracts in progress and trade debtors
Increase (+); Decrease (-) in provisions for liabilities and charges
Other operating charges
Operating result
Financial income
Income from financial fixed assets
Income from current assets
Other financial income
Financial charges
Interest and other debt charges
Amounts written down current assets excl trade debts, stocks
Other financial charges
Profit on ordinary activities before taxes
Extraordinary income
Gain on disposal of fixed assets
Other extraordinary income
Extraordinary charges
Amounts written off current assets
Provisions for extraordinary liabilities and charges
Loss on disposal of fixed assets
Other extraordinary charges
Profit for the year before taxes
Income taxes
Income taxes
Profit for the year
578,184,655
553,316,727
24,867,928
656,640,801
444,601,335
7,818,781
493,445,647
466,745,610
26,700,037
502,392,966
291,792,205
4,531,002
204,117,608
204,110,075
-
(452,926)
556,003
(78,456,146)
12,469,788
-
1,915,508
10,554,280
67,425,820
2,451,309
41,407,346
23,567,165
(133,412,178)
20,674,208
20,674,208
-
-
-
-
-
-
(112,737,970)
3,867,823
3,867,823
(116,605,793)
73,219
1,268,194
618,271
(8,947,319)
31,812,973
-
26,777,013
5,035,960
39,649,825
(1,288,304)
28,203,334
12,734,795
(16,784,172)
16,883,277
16,883,277
-
20,929,945
-
-
20,929,945
-
(20,830,840)
4,192,986
4,192,986
(25,023,826)
108
FINANCIAL REPORT
Statutory auditor’s report to the general meeting of Euronav
NV on the consolidated financial statements as of and for the
year ended December 31, 2018
In the context of the statutory audit of the consolidated financial statements of Euronav
NV (“the Company”) and its subsidiaries (jointly “the Group”), we provide you with
our statutory auditor’s report. This includes our report on the consolidated financial
statements for the year ended December 31, 2018, as well as other legal and regulatory
requirements. Our report is one and indivisible.
We were appointed as statutory auditor by the general meeting of May 11, 2017, in
accordance with the proposal of the board of directors issued on the recommendation
of the audit and risk committee. Our mandate will expire on the date of the general
meeting deliberating on the annual accounts for the year ending December 31, 2019.
We have performed the statutory audit of the consolidated financial statements of
Euronav NV for 15 consecutive financial years.
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
Unqualified opinion
We have audited the consolidated financial statements of the Group as of and for
the year ended December 31, 2018, 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 of December
31, 2018, 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 4,127,351 and the
consolidated statement of profit or loss shows a loss for the year of USD’000 110,070.
In our opinion, the consolidated financial statements give a true and fair view of the
Group’s equity and financial position as of December 31, 2018 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.
Basis for our unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”)
as adopted in Belgium. In addition, we have applied the ISAs as issued by the IAASB
applicable for the current accounting year while these have not been adopted in Belgium
yet. Our responsibilities under those standards are further described in the “Statutory
auditors’ responsibility for the audit of the consolidated financial statements” section
of our report. We have complied with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Belgium, including the independence
requirements.
We have obtained from the board of directors and the Company’s officials 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 opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
FINANCIAL REPORT
109
Impairment of vessels
We refer to Note 8 of the consolidated financial statements and to the accounting
policies in Note 1.2(k) of the consolidated financial statements.
Description
As of December 31, 2018, the carrying value of the Group’s vessels was USD‘000
3,520,067.
The Group assessed whether indications existed at December 31, 2018 that the carrying
value of vessels may be impaired. Next, the Group estimated the recoverable amount
as of December 31, 2018 for each of the smallest groups of assets that generate largely
independent cash flows (the cashgenerating units or “CGUs”).
Euronav defines its CGUs 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 CGU.
The Group determined the recoverable amount of each CGU as the greater of the CGU’s
value-in-use (“VIU”) and its fair value less costs to sell.
The Group concluded that the recoverable amount of each CGU exceeded the CGU’s
carrying value at December 31, 2018 and consequently, that no impairment loss needed
to be recorded as of December 31, 2018.
Determining the amount of impairment losses, if any, to be recorded requires the
Group to exercise significant judgment and make important assumptions, particularly
in relation to
•
•
•
the determination of the Group’s CGUs;
the estimation of a CGU’s fair value less costs to sell; and
the estimation of a CGU’s value-in-use, including the estimation of vessels’
remaining useful lives, future freight or hire rates, future operating expenses and
the applicable discount rates.
We identified impairment of vessels as a key audit matter because the carrying values
of these assets are material to the consolidated financial statements and also because
of the significant management judgment and estimation required in assessing potential
impairment which could be subject to error or potential management bias.
Our audit procedures
Our audit procedures to assess potential impairment of vessels included the following:
• Assessing the design, implementation and operating effectiveness of the Group’s
key controls over the assessment of vessel impairment;
• Challenging the Group’s assessment of potential indicators of impairment based
on our own expectations developed from our knowledge of the Group, the Group’s
business and the industry in which the Group operates;
• Assessing the Group’s identification of CGUs, with reference to our understanding of
the Group’s business and the requirements of the prevailing accounting standards;
• Assessing whether vessels were operating in a pool as of December 31, 2018, with
reference to externally obtained vessel pooling information;
• Challenging the Group’s VIU calculations for each CGU by comparing the assumptions
used by the Group with our knowledge of the Group, the Group’s business and the
industry in which the Group operates, in particular for the assumptions relating to
vessels’ remaining useful lives, forecast freight and hire rates and forecast vessel
operating expenses;
• Challenging the Group’s method to forecast freight and hire rates based on our
knowledge of the Group, the Group’s business and the industry in which the Group
110
FINANCIAL REPORT
operates, as well as by comparing the Group’s assumptions to those used by other
companies in the same industry;
• Comparing the forecast freight and hire rates and the forecast vessel operating
expenses used in the Group’s VIU calculations to respectively actual freight and
hire rates earned by the Group and actual vessel operating expenses incurred by
the Group in recent years;
• Specifically with respect to the vessels on long-term time charters and the floating
storage operations vessels operated by two of the Group’s joint ventures, assessing
their respective remaining useful life and forecast hire rates used in the Group’s
VIU calculations with reference to time charter contracts in place for these vessels;
• With the assistance of our internal valuation specialists, comparing the discount
rates applied in the VIU calculations with externally derived data as well as with
discount rates adopted by other companies in the same industry; and
• Performing sensitivity analyses on the discount rates applied and the forecast
freight and hire rates used by the Group to assess what changes thereto would
result in a different conclusion being reached, and assessing whether there were
any indications of management bias in the selection of these assumptions.
Furthermore, we assessed the appropriateness of the Group’s disclosures in respect
of vessel impairment, which are included in Note 8 of the consolidated financial
statements.
Fair value of vessels acquired from Gener8 Maritime Inc. and impact of events during
the measurement period
We refer to Note 24 of the consolidated financial statements and to the accounting
policies in Note 1.2 (f) (i.) of the consolidated financial statements.
Description
On June 12, 2018, Euronav NV completed the acquisition of Gener8 Maritime Inc. for a
total consideration of USD 553.4 million. The consideration for the acquisition consisted
of 60,815,764 new shares of Euronav NV and resulted in an increase in share capital
of USD 66.1 million and an increase in share premium of USD 487.3 million. The total
identifiable net assets acquired amounted to USD 576.5 million resulting in a bargain
purchase gain of USD 23.1 million as of December 31, 2018. Vessels represent the
most significant asset acquired from Gener8 Maritime Inc. with a fair value of USD
1,704 million as of June 12, 2018. Since vessels values are not directly observable on
the market, the determination of the fair value of the vessels for the purpose of the
purchase price allocation requires significant judgment. Judgement is also involved in
determining completeness and fair value impact of additional information becoming
available in the measurement period.
FINANCIAL REPORT
111
Our audit procedures
Our audit procedures to assess the appropriateness of the fair value of the vessels
and of the fair value adjustments recognized during the measurement period were the
following:
• Assessing the design, implementation and operating effectiveness of the Group’s
key controls over the valuation of the vessels acquired from Gener8 Maritime
Inc. and the identification and assessment of the impact of additional information
becoming available during the measurement period;
• Comparing the fair value used by the Group with those received from third-party
brokers;
• Challenging the fair value used by the Group based on our understanding of
Gener8 Maritime Inc.’ business and pre-merger financial position and based on our
knowledge of the industry in which the Group operates as well as by performing
trend and sensitivity analyses, and considering the impact of subsequent events;
• Assessing the competence, ability and objectivity of the brokers used by the Group;
and
• Assessing the appropriateness of the accounting for significant fair value
adjustments, including those in the measurement period, with reference to the
business combination accounting standard.
Furthermore, we assessed the appropriateness of the Group’s disclosures in respect
of the Gener8 Maritime Inc. business combination, which are included in Note 24 of the
consolidated financial statements.
Board of directors’ responsibilities 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 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.
In preparing the consolidated financial statements, the board of directors is
responsible for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of
accounting unless the board of directors either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Statutory auditor’s responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance as to whether the consolidated
financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic
decisions of the users taken on the basis of these consolidated financial statements.
When performing our audit we comply with the legal, regulatory and professional
requirements applicable to audits of the consolidated financial statements in Belgium.
As part of an audit in accordance with ISAs, we exercise professional judgement and
maintain professional skepticism throughout the audit. We also perform the following
procedures:
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FINANCIAL REPORT
•
Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control;
• Obtain an understanding of internal controls relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the board of directors;
• Conclude on the appropriateness of the board of directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors’ report to the
related disclosures in the consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors’ report. However, future events or
conditions may cause the Group to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner
that achieves fair presentation; and
• Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the audit and risk committee regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit. We also
provide the audit and risk committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
For the matters communicated with the audit and risk committee, we determine
those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter.
OTHER LEGAL AND REGULATORY REQUIREMENTS
Responsibilities of the Board of Directors
The board of directors is responsible for the preparation and the content of the board
of directors’ annual report on the consolidated financial statements and the other
information included in the annual report.
Statutory auditor’s responsibilities
In the context of our mandate and in accordance with the Belgian standard (revised in
2018) which is complementary to the International Standards on Auditing as applicable
in Belgium, our responsibility is to verify, in all material respects, the board of directors’
annual report on the consolidated financial statements, and the other information
included in the annual report, and to report on these matters.
FINANCIAL REPORT
113
Aspects concerning the board of directors’ annual report on the consolidated financial
statements and other information included in the annual report
Based on specific work performed on the board of directors’ annual report on the
consolidated financial statements, we are of the opinion that this report is consistent
with the consolidated financial statements for the same period and has been prepared
in accordance with article 119 of the Companies’ Code. In the context of our audit of
the consolidated financial statements, we are also responsible for considering, in
particular based on the knowledge gained throughout the audit, whether the board of
directors’ annual report on the consolidated financial statements and other information
included in the annual report:
• Shareholder letter, Quick facts, Highlights and Special Report; and
•
Activity Report
contain material misstatements, or information that is incorrectly stated or misleading.
In the context of the procedures carried out, we did not identify any material
misstatements that we have to report to you.
Information about the independence
• Our audit firm and our network have not performed any engagement which is
incompatible with the statutory audit of the consolidated financial statements and
our audit firm remained independent of the Group during the term of our mandate.
• The fees for the additional engagements which are compatible with the statutory
audit referred to in article 134 of the Companies’ Code were correctly stated and
disclosed in the notes to the consolidated financial statements.
Other aspect
• This report is consistent with our additional report to the audit and risk committee
on the basis of Article 11 of Regulation (EU) No 537/2014. Antwerp, April 8, 2019
KPMG Réviseurs d'Entreprises / Bedrijfsrevisoren
Statutory Auditor
represented by
Patricia Leleu
Réviseur d’Entreprises / Bedrijfsrevisor
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Verslag van de commissaris aan de algemene vergadering
van Euronav NV over de geconsolideerde jaarrekening voor
het boekjaar afgesloten op 31 december 2018
In het kader van de wettelijke controle van de geconsolideerde jaarrekening van Euronav
NV (de “Vennootschap”) en zijn dochterondernemingen (samen de “Groep”), leggen
wij u ons commissarisverslag voor. Dit bevat ons verslag over de geconsolideerde
jaarrekening voor het boekjaar afgesloten op 31 december 2018, alsook de overige door
wet- en regelgeving gestelde eisen. Dit vormt een geheel en is ondeelbaar.
Wij werden benoemd in onze hoedanigheid van commissaris door de algemene
vergadering van 11 mei 2017, overeenkomstig het voorstel van het bestuursorgaan
uitgebracht op aanbeveling van het auditcomité. Ons mandaat loopt af op de datum
van de algemene vergadering die beraadslaagt over de jaarrekening afgesloten op 31
december 2019. Wij hebben de wettelijke controle van de geconsolideerde jaarrekening
van Euronav NV uitgevoerd gedurende 15 opeenvolgende boekjaren.
VERSLAG OVER DE GECONSOLIDEERDE JAARREKENING
Oordeel zonder voorbehoud
Wij hebben de wettelijke controle uitgevoerd van de geconsolideerde jaarrekening de
Groep over het boekjaar afgesloten op 31 december 2018 opgesteld in overeenstemming
met de International Financial Reporting Standards (IFRS) zoals goedgekeurd door de
Europese Unie en met de in België van toepassing zijnde wettelijke en reglementaire
voorschriften. Deze geconsolideerde jaarrekening omvat de geconsolideerde balans
op 31 december 2018, alsook de geconsolideerde winst- en verliesrekening, het
geconsolideerd overzicht van gerealiseerde en niet-gerealiseerde resultaten, het
geconsolideerd mutatieoverzicht van het eigen vermogen en het geconsolideerd
kasstroomoverzicht over het boekjaar afgesloten op die datum evenals de toelichting
bestaande uit een overzicht van de belangrijkste gehanteerde grondslagen voor
financiële verslaggeving en overige
informatieverschaffing. Het totaal van de
geconsolideerde balans bedraagt USD’000 4.127.351 en de geconsolideerde winst- en
verliesrekening sluit af met een verlies van het boekjaar van USD’000 110.070.
Naar ons oordeel geeft de geconsolideerde jaarrekening een getrouw beeld van het
vermogen en de financiële toestand van de Groep op 31 december 2018, alsook van zijn
geconsolideerde resultaten en van zijn geconsolideerde kasstromen over het boekjaar
dat op die datum is afgesloten, in overeenstemming met de International Financial
Reporting Standards (IFRS) zoals goedgekeurd door de Europese Unie en met de in
België van toepassing zijnde wettelijke en reglementaire voorschriften.
Basis voor het oordeel zonder voorbehoud
Wij hebben onze controle uitgevoerd volgens de internationale controlestandaarden
(ISA’s) zoals van toepassing in België. Wij hebben bovendien de door IAASB
goedgekeurde internationale controlestandaarden toegepast die van toepassing
zijn op de huidige afsluitdatum en nog niet goedgekeurd op nationaal niveau. Onze
verantwoordelijkheden op grond van deze standaarden zijn verder beschreven in
de sectie “Verantwoordelijkheden van de commissaris voor de controle van de
geconsolideerde jaarrekening” van ons verslag. Wij hebben alle deontologische
vereisten die relevant zijn voor de controle van de geconsolideerde jaarrekening in
België nageleefd, met inbegrip van deze met betrekking tot de onafhankelijkheid.
Wij hebben van het bestuursorgaan en van de aangestelden van de Vennootschap de
voor onze controle vereiste ophelderingen en inlichtingen verkregen.
Wij zijn van mening dat de door ons verkregen controle-informatie voldoende en
geschikt is als basis voor ons oordeel.
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115
Kernpunten van de controle
Kernpunten van onze controle betreffen die aangelegenheden die naar ons professioneel
oordeel het meest significant waren bij de controle van de geconsolideerde jaarrekening
van de huidige verslagperiode. Deze aangelegenheden zijn behandeld in de context
van onze controle van de geconsolideerde jaarrekening als geheel en bij het vormen
van ons oordeel hierover, en wij verschaffen geen afzonderlijk oordeel over deze
aangelegenheden.
Bijzondere waardevermindering van schepen
We verwijzen naar Toelichting 8 van de geconsolideerde jaarrekening en naar
de waarderingsgrondslagen in Toelichting 1.2(k) van de geconsolideerde
jaarrekening.
Omschrijving
Op 31 december 2018 bedroeg de boekwaarde van de schepen van de Groep USD ‘000
3.520.067.
De Groep onderzocht of er indicaties waren op 31 december 2018 dat de boekwaarde
van de schepen een bijzonder waardeverminderingsverlies had ondergaan.
Vervolgens raamde de Groep de realiseerbare waarde op 31 december 2018 voor elk van
de kleinste groepen van activa die grotendeels onafhankelijke kasstromen genereren
(de “kasstroomgenererende entiteiten” of “KGE”).
Euronav bepaalt haar KGEs als een enkel schip tenzij dit schip opereert in een pool, in
welk geval dergelijk schip gezamenlijk met de overige schepen in de pool als een KGE
beschouwd wordt.
De Groep bepaalde de realiseerbare waarde van elke KGE op basis van de
gebruikswaarde van de KGE, of van de reële marktwaarde minus de verkoopkosten van
de KGE indien deze hoger was.
De Groep concludeerde dat op 31 december 2018 de realiseerbare waarde van elke
KGE hoger was dan de boekwaarde van de KGE en bijgevolg, dat er geen bijzondere
waardeverminderingsverliezen dienden erkend te worden op 31 december 2018.
Bij het bepalen of er bijzondere waardeverminderingsverliezen dienen erkend te
worden, en bij het bepalen van het bedrag van dergelijke verliezen, moet de Groep
belangrijke beoordelingen maken en belangrijke veronderstellingen maken, in het
bijzonder met betrekking tot
• het bepalen van de KGEs van de Groep;
• het ramen van de reële marktwaarde minus verkoopkosten van een KGE; en
• het ramen van de gebruikswaarde van een KGE, inclusief het ramen van de
resterende nuttige levensduur van de schepen, van de toekomstige vrachttarieven
of verhuurtarieven en van de gepaste verdisconteringsvoeten.
Wij identificeerden de beoordeling van bijzondere waardeverminderingen van schepen
als een kernpunt van controle omdat de boekwaarden van deze activa materieel
zijn voor de geconsolideerde jaarrekening en ook omdat de bepaling van mogelijke
bijzondere waardeverminderingen belangrijke beoordelingen en inschattingen vereist
vanwege de leiding van de Groep, welke onderhevig zouden kunnen zijn aan fouten of
mogelijke vooringenomenheid.
Onze controlewerkzaamheden
Onze controlewerkzaamheden voor de beoordeling van mogelijke bijzondere
waardeverminderingsverliezen van schepen bestonden uit hetgeen volgt:
• Beoordelen van het ontwerp, de
implementatie en de werking van de
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belangrijkste controles van de Groep over de beoordeling van bijzondere
waardeverminderingsverliezen van schepen;
• Onderzoeken van de beoordeling door de Groep van mogelijke indicaties van
bijzondere waardeverminderingsverliezen, op basis van onze eigen verwachtingen
die we ontwikkelden uit onze kennis van de Groep, van de activiteiten van de Groep
en van de sector waarin de Groep werkzaam is;
• Beoordelen de door de Groep geïdentificeerde KGE op basis van onze kennis van de
activiteiten van de Groep en van de vereisten van de boekhoudkundige normen die
van toepassing zijn;
• Beoordelen of schepen in een pool opereerden op 31 december 2018, met verwijzing
•
•
naar extern verkregen informatie inzake de pooling van schepen;
In vraag stellen van de berekening door de Groep van de gebruikswaarde van elk
KGE, door de veronderstellingen die de Groep hiervoor maakte te toetsen aan onze
kennis van de Groep, van de werkzaamheden van de Groep en de sector waarin de
Groep werkzaam is, in het bijzonder wat betreft de inschattingen van de resterende
nuttige gebruiksduur van schepen, de geraamde toekomstige vrachttarieven en
verhuurtarieven en de geraamde toekomstige werkingskosten;
In vraag stellen van het gebruik door de Groep in zijn methode om de vrachttarieven
en verhuurtarieven te voorspellen, op basis van onze kennis van de Groep, van
de werkzaamheden van de Groep en de sector waarin de Groep werkzaam is,
alsook middels een vergelijking van de inschattingen die de Groep gebruikt met
de inschattingen die andere vennootschappen gebruiken die werkzaam zijn in de
zelfde sector;
• Vergelijken van de geraamde toekomstige vrachttarieven, verhuurtarieven en
werkingskosten gebruikt door de Groep in zijn berekening van de gebruikswaarde
met de werkelijke vrachttarieven en verhuurtarieven die de Groep behaalde en de
werkelijke werkingskosten van de Groep in recente jaren;
• Specifiek voor de schepen die op lange termijn verhuurd worden en de floating
storage operations (“FSO”) – schepen die uitgebaat worden door twee joint ventures
van de Groep, beoordelen van hun respectievelijke resterende nuttige gebruiksduur
en geraamde toekomstige verhuurtarieven die de Groep gebruikte in zijn berekening
van de gebruikswaarde, met verwijzing naar lopende verhuurcontracten voor deze
schepen;
• Met de assistentie van onze interne waarderingsspecialisten, vergelijken van
de verdisconteringsvoeten die de Groep toepaste in zijn berekening van de
gebruikswaarde met externe databronnen en met verdisconteringsvoeten die
andere vennootschappen hanteren die werkzaam zijn in de zelfde sector; en
• Uitvoeren van sensitiviteitsanalyses op de toegepaste verdisconteringsvoeten en
de geraamde toekomstige vrachttarieven en verhuurtarieven, om te beoordelen in
welke mate veranderingen in deze inschattingen tot een andere conclusie zouden
leiden, en beoordelen of er indicaties waren van mogelijke vooringenomenheid
vanwege de leiding van de Groep bij het maken van deze inschattingen.
Daarnaast beoordeelden wij de gepastheid van de door de Groep in Toelichting 8
van de geconsolideerde jaarrekening verstrekte toelichtingen inzake bijzondere
waardeverminderingsverliezen op schepen.
Reële waarde van de schepen overgenomen van Gener8 Maritime Inc. En impact van
gebeurtenissen tijdens de waarderingsperiode
We verwijzen naar Toelichting 24 van de geconsolideerde jaarrekening en naar de
waarderingsgrondslagen in Toelichting 1.2 (f) (i.) van de geconsolideerde jaarrekening.
Omschrijving
Op 12 juni 2018 rondde Euronav NV de acquisitie van Gener8 Maritime Inc. af voor een
totale vergoeding van USD 553,4 miljoen. De vergoeding voor de acquisitie bestond uit
60.815.764 nieuwe aandelen van Euronav NV en resulteerde in een verhoging van het
aandelenkapitaal van USD 66,1 miljoen en een verhoging van de uitgiftepremie van
USD 487,3 miljoen. De totale verworven netto identificeerbare activa bedroegen USD
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117
576,5 miljoen, wat resulteerde in een winst ten gevolge van een voordelige koop van
USD 23,1 miljoen op 31 december 2018. Schepen vertegenwoordigen het belangrijkste
actief verworven van Gener8 Maritime Inc. met een reële waarde van USD 1.704 miljoen
op 12 juni 2018. Aangezien de waarden van de schepen niet direct waarneembaar zijn
op de markt, vereist de bepaling van de reële waarde van de schepen in het kader
van de toewijzing van de aankoopprijs een hoge graad van beoordelingsvermogen.
Beoordelingsvermogen is ook nodig bij het bepalen van de volledigheid en reële
waarde-impact van aanvullende
informatie die beschikbaar wordt tijdens de
waarderingsperiode.
Onze controlewerkzaamheden
Onze controlewerkzaamheden voor de beoordeling van de geschiktheid van de reële
waarde van de schepen en van de tijdens de waarderingsperiode opgenomen reële
waarde-aanpassingen bestonden uit hetgeen volgt:
• Beoordelen van het ontwerp, de implementatie en de werking van de belangrijkste
controles van de Groep over de waardering van de schepen die zijn overgenomen
van Gener8 Maritime Inc. en de identificatie en beoordeling van de impact van
aanvullende informatie die beschikbaar komt tijdens de waarderingsperiode;
• Vergelijken van de reële waarde gebruikt door de Groep met diegene ontvangen van
•
externe makelaars;
In vraag stellen van de reële waarde van de Groep op basis van onze kennis van de
activiteiten van Gener8 Maritime Inc. en haar financiële positie vóór de fusie en op
basis van onze kennis van de sector waarin de Groep werkzaam is, alsmede door
het uitvoeren van trend- en gevoeligheidsanalyses, en rekening houdend met de
impact van gebeurtenissen na de acquisitie datum;
• Beoordeling van de kwalificaties, bekwaamheid en objectiviteit van de makelaars
die door de Groep worden gebruikt; en
• Beoordeling van de geschiktheid van de boekhoudkundige verwerking
in de
van significante aanpassingen aan reële waarde,
waarderingsperiode, rekening houdend met de vereisten van de van toepassing
zijnde waarderingsgrondslagen met betrekking tot Bedrijfscombinaties.
inclusief diegene
Daarnaast beoordeelden wij de gepastheid van de door de Groep in Toelichting 24 van
de geconsolideerde jaarrekening verstrekte toelichtingen inzake de bedrijfscombinatie
met Gener8 Maritime Inc
Verantwoordelijkheden van het bestuursorgaan voor het opstellen van de
geconsolideerde jaarrekening
Het bestuursorgaan is verantwoordelijk voor het opstellen van de geconsolideerde
jaarrekening die een getrouw beeld geeft in overeenstemming met de International
Financial Reporting Standards (IFRS) zoals goedgekeurd door de Europese Unie en
met de in België van toepassing zijnde wettelijke en reglementaire voorschriften,
alsook voor de interne beheersing die het bestuursorgaan noodzakelijk acht voor het
opstellen van de geconsolideerde jaarrekening die geen afwijking van materieel belang
bevat die het gevolg is van fraude of van fouten.
Bij het opstellen van de geconsolideerde jaarrekening is het bestuursorgaan
verantwoordelijk voor het inschatten van de mogelijkheid van de Groep om zijn continuïteit
te handhaven, het toelichten, indien van toepassing, van aangelegenheden die met
continuïteit verband houden en het gebruiken van de continuïteitsveronderstelling,
tenzij het bestuursorgaan het voornemen heeft om de Groep te liquideren of om de
bedrijfsactiviteiten te beëindigen of geen realistisch alternatief heeft dan dit te doen.
Verantwoordelijkheden van de commissaris voor de controle van de geconsolideerde
jaarrekening
Onze doelstellingen zijn het verkrijgen van een redelijke mate van zekerheid over de
vraag of de geconsolideerde jaarrekening als geheel geen afwijking van materieel
belang bevat die het gevolg is van fraude of van fouten en het uitbrengen van een
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FINANCIAL REPORT
commissarisverslag waarin ons oordeel is opgenomen. Een redelijke mate van
zekerheid is een hoog niveau van zekerheid, maar is geen garantie dat een controle die
overeenkomstig de ISA’s is uitgevoerd altijd een afwijking van materieel belang ontdekt
wanneer die bestaat. Afwijkingen kunnen zich voordoen als gevolg van fraude of fouten
en worden als van materieel belang beschouwd indien redelijkerwijs kan worden
verwacht dat zij, individueel of gezamenlijk, de economische beslissingen genomen
door gebruikers op basis van deze geconsolideerde jaarrekening, beïnvloeden.
Bij de uitvoering van onze controle leven wij het wettelijk, reglementair en normatief
kader dat van toepassing is op de controle van de geconsolideerde jaarrekening in
België na.
Als deel van een controle uitgevoerd overeenkomstig de ISA’s, passen wij professionele
oordeelsvorming toe en handhaven wij een professioneel-kritische instelling gedurende
de controle. We voeren tevens de volgende werkzaamheden uit:
• het identificeren en inschatten van de risico’s dat de geconsolideerde jaarrekening
een afwijking van materieel belang bevat die het gevolg is van fraude of van fouten,
het bepalen en uitvoeren van controlewerkzaamheden die op deze risico’s inspelen
en het verkrijgen van controle-informatie die voldoende en geschikt is als basis voor
ons oordeel. Het risico van het niet detecteren van een van materieel belang zijnde
afwijking is groter indien die afwijking het gevolg is van fraude dan indien zij het
gevolg is van fouten, omdat bij fraude sprake kan zijn van samenspanning, valsheid
in geschrifte, het opzettelijk nalaten om transacties vast te leggen, het opzettelijk
verkeerd voorstellen van zaken of het doorbreken van de interne beheersing;
• het verkrijgen van inzicht in de interne beheersing die relevant is voor de
controle, met als doel controlewerkzaamheden op te zetten die in de gegeven
omstandigheden geschikt zijn maar die niet zijn gericht op het geven van een
oordeel over de effectiviteit van de interne beheersing van de Groep;
de
dat
het
• het
concluderen
• het evalueren van de geschiktheid van de gehanteerde grondslagen voor financiële
verslaggeving en het evalueren van de redelijkheid van de door het bestuursorgaan
gemaakte schattingen en van de daarop betrekking hebbende toelichtingen;
door
bestuursorgaan
gehanteerde
continuïteitsveronderstelling aanvaardbaar is, en het concluderen, op basis van de
verkregen controle-informatie, of er een onzekerheid van materieel belang bestaat
met betrekking tot gebeurtenissen of omstandigheden die significante twijfel
kunnen doen ontstaan over de mogelijkheid van de Groep om zijn continuïteit te
handhaven. Indien wij concluderen dat er een onzekerheid van materieel belang
bestaat, zijn wij ertoe gehouden om de aandacht in ons commissarisverslag te
vestigen op de daarop betrekking hebbende toelichtingen in de geconsolideerde
jaarrekening, of, indien deze toelichtingen inadequaat zijn, om ons oordeel aan te
passen. Onze conclusies zijn gebaseerd op de controle-informatie die verkregen
is tot de datum van ons commissarisverslag. Toekomstige gebeurtenissen of
omstandigheden kunnen er echter toe leiden dat de Groep zijn continuïteit niet
langer kan handhaven;
• het evalueren van de algehele presentatie, structuur en
inhoud van de
geconsolideerde jaarrekening, en van de vraag of de geconsolideerde jaarrekening
de onderliggende transacties en gebeurtenissen weergeeft op een wijze die leidt
tot een getrouw beeld; en
• het verkrijgen van voldoende en geschikte controle-informatie met betrekking tot
de financiële informatie van de entiteiten of bedrijfsactiviteiten binnen de Groep
gericht op het tot uitdrukking brengen van een oordeel over de geconsolideerde
jaarrekening. Wij zijn verantwoordelijk voor de aansturing van, het toezicht op en
de uitvoering van de groepscontrole. Wij blijven ongedeeld verantwoordelijk voor
ons oordeel.
Wij communiceren met het auditcomité onder meer over de geplande reikwijdte
en timing van de controle en over de significante controlebevindingen, waaronder
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119
eventuele significante tekortkomingen in de interne beheersing die wij identificeren
gedurende onze controle.
Wij verschaffen aan het auditcomité tevens een verklaring dat wij de relevante
deontologische voorschriften over onafhankelijkheid hebben nageleefd, en wij
communiceren met hen over alle relaties en andere zaken die redelijkerwijs onze
onafhankelijkheid kunnen beïnvloeden en, waar van toepassing, over de daarmee
verband houdende maatregelen om onze onafhankelijkheid te waarborgen.
Uit de aangelegenheden die met het auditcomité zijn gecommuniceerd bepalen wij
die zaken die het meest significant waren bij de controle van de geconsolideerde
jaarrekening van de huidige verslagperiode, en die derhalve de kernpunten van onze
controle uitmaken. Wij beschrijven deze aangelegenheden in ons verslag, tenzij het
openbaar maken van deze aangelegenheden is verboden door wet- of regelgeving.
OVERIGE DOOR WET- EN REGELGEVING GESTELDE EISEN
Verantwoordelijkheden van het bestuursorgaan
Het bestuursorgaan is verantwoordelijk voor het opstellen en de inhoud van het
jaarverslag over de geconsolideerde jaarrekening en de andere informatie opgenomen
in het jaarrapport.
Verantwoordelijkheden van de commissaris
In het kader van ons mandaat en overeenkomstig de Belgische bijkomende norm (herzien
in 2018) bij de in België van toepassing zijnde internationale controlestandaarden (ISA’s),
is het onze verantwoordelijkheid om, in alle van materieel belang zijnde opzichten, het
jaarverslag over de geconsolideerde jaarrekening en de andere informatie opgenomen
in het jaarrapport, te verifiëren, alsook verslag over deze aangelegenheden uit te
brengen.
Aspecten betreffende het jaarverslag over de geconsolideerde jaarrekening en
andere informatie opgenomen in het jaarrapport
Na het uitvoeren van specifieke werkzaamheden op het jaarverslag over de
geconsolideerde jaarrekening, zijn wij van oordeel dat dit jaarverslag over de
geconsolideerde jaarrekening overeenstemt met de geconsolideerde jaarrekening voor
hetzelfde boekjaar en is opgesteld overeenkomstig het artikel 119 van het Wetboek van
vennootschappen.
In de context van onze controle van de geconsolideerde jaarrekening zijn wij tevens
verantwoordelijk voor het overwegen, in het bijzonder op basis van de kennis verkregen
in de controle, of het jaarverslag over de geconsolideerde jaarrekening en de andere
informatie opgenomen in het jaarrapport, zijnde:
• Brief aan de aandeelhouders, Hoogtepunten, Bijzonder Verslag; en
• Activiteitenverslag
een afwijking van materieel belang bevatten, hetzij informatie die onjuist vermeld is of
anderszins misleidend is. In het licht van de werkzaamheden die wij hebben uitgevoerd,
hebben wij geen afwijking van materieel belang te melden
Vermeldingen betreffende de onafhankelijkheid
• Ons bedrijfsrevisorenkantoor en ons netwerk hebben geen opdrachten die
onverenigbaar zijn met de wettelijke controle van de geconsolideerde jaarrekening
verricht en ons bedrijfsrevisorenkantoor is in de loop van ons mandaat onafhankelijk
gebleven tegenover de Groep.
• De honoraria voor de bijkomende opdrachten die verenigbaar zijn met de wettelijke
controle bedoeld in artikel 134 van het Wetboek van vennootschappen werden
120
FINANCIAL REPORT
correct vermeld en uitgesplitst in de toelichting bij de geconsolideerde jaarrekening.
Andere vermelding
• Huidig verslag is consistent met onze aanvullende verklaring aan het auditcomité
bedoeld in artikel 11 van de verordening (EU) nr. 537/2014.
Antwerpen, 8 april 2019
KPMG Bedrijfsrevisoren
Commissaris
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Patricia Leleu
Bedrijfsrevisor
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Hugo De Stoop
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