Frontline plc 6-K, filed Jun 1, 2023
Frontline plc (FRO)
6-K
2023-06-01
For: 2023-03-31
View Original
Added on
April 10, 2026
About this 6-K
Frontline plc filed this 6-K on June 1, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13A-16 OR 15D-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
For the month of June 2023
Commission File Number: 001-16601
FRONTLINE PLC
(Translation of registrant's name into English)
8, Kennedy Street, Iris House, Off. 740B, 3106 Limmasol, Cyprus
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ X ] Form 40-F [ ]
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 1 is a copy of the press release issued by Frontline plc (the “Company”) on May 31, 2023,
reporting the Company’s results for the first quarter and three months ended March 31, 2023.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
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FRONTLINE PLC
(registrant)
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Dated: June 1, 2023
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By:
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/s/ Inger M. Klemp
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Name: Inger M. Klemp
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Title: Principal Financial Officer
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EXHIBIT 1
INTERIM FINANCIAL INFORMATION
FRONTLINE PLC
FIRST QUARTER 2023
31 May 2023
FRONTLINE PLC REPORTS RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2023
Frontline plc (the “Company” or “Frontline”), today reported unaudited results for the three months ended
March 31, 2023:
Highlights
| • |
Highest first quarter profit since 2008 of $199.6 million, or $0.90 per basic and diluted share for
the first quarter of 2023.
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Adjusted profit of $193.3 million, or $0.87 per basic and diluted share for the first quarter of 2023.
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Declared a cash dividend of $0.70 per share for the first quarter of 2023.
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Reported revenues of $497.3 million for the first quarter of 2023.
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Reported spot TCEs for VLCCs, Suezmax tankers and LR2/Aframax tankers in the first quarter of 2023
were $52,500, $64,000 and $56,300 per day, respectively.
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For the second quarter of 2023, we estimate spot TCE on a load-to-discharge basis of $75,000 contracted for 78% of vessel days for VLCCs, $65,000
contracted for 71% of vessel days for Suezmax tankers and $65,700 contracted for 63% of vessel days for LR2/Aframax tankers.
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Sold the 2010-built Suezmax tanker, Front Njord in May 2023, for aggregate gross proceeds of $44.5 million. After
repayment of existing debt on the vessel, the transaction is expected to generate net cash proceeds of approximately $28.2 million.
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Entered into two fixed rate time charter-out contracts in April 2023 and May 2023 for two LR2/Aframax tankers to third parties on two-year time charters, both at a daily base
rate of $46,500.
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Entered into a senior secured term loan facility in May 2023 for a total amount of up to $129.4 million at attractive terms to refinance an existing term loan facility maturing
in August 2023.
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Lars H. Barstad, Chief Executive Officer of Frontline Management AS, commented:
“Frontline continued to generate elevated cash returns for its shareholders in the first quarter of 2023. The most prominent market development
during the quarter was that China abandoned its zero-tolerance policy in respect of Covid-19 and started reopening. Freight demand and rates remained firm throughout the quarter, defying
historical seasonal patterns. Our constructive long-term outlook is not affected by short-term volatility, as oil demand is expected to rise significantly in the second half of the year. We will continue to position Frontline towards capturing
value, both on assets and period business as we proceed into what we believe may be a very exciting cycle.”
Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added:
“In May 2023, we entered into a senior secured term loan facility for a total amount of up to $129.4 million to refinance an existing term loan
facility with total balloon payment of $80.1 million maturing in August 2023. We intend to use the expected net cash proceeds from the refinancing and from the sale of Front Njord to partially repay our $275.0 million senior unsecured revolving
credit facility.”
Average daily time charter equivalents ("TCEs")1
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($ per day)
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Spot TCE
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Spot TCE estimates
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% Covered
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Estimated average
daily cash
breakeven rates
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Q1 2023
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Q4 2022
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2022
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Q2 2023
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2023
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VLCC
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52,500
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63,200
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31,300
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75,000
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78%
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26,500
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Suezmax
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64,000
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57,900
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37,100
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65,000
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71%
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22,700
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LR2 / Aframax
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56,300
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58,800
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38,500
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65,700
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63%
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16,800
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We expect the spot TCEs for the full second quarter of 2023 to be
lower than the TCEs currently contracted, due to the impact of ballast days at the end of the first quarter. The number of ballast days at the end of the first quarter was
359 for VLCCs, 429 for Suezmax tankers and 216 for LR2/Aframax tankers.
First Quarter 2023 Results
The Company reports profit of $199.6 million for the quarter ended March 31,
2023 compared with profit of $239.1 million in the previous quarter. The adjusted profit2 was $193.3 million
for the first quarter of 2023 compared with adjusted profit of $214.5 million in the previous quarter. The adjustments in the first quarter of 2023 consist of a $12.7 million gain on the sale of vessels, $3.2 million loss on
marketable securities, $3.7 million share of results of associated companies, $7.4 million unrealized loss on derivatives and a $0.4 million gain on settlement of insurance
and other claims. The decrease in adjusted profit from the previous quarter was primarily due to a decrease in our time charter equivalent earnings from $351.6 million in the previous quarter to $337.4 million in the current quarter, due to lower TCE rates, an increase in depreciation expenses of $12.7 million primarily due to the change in useful life of vessels from 25 years to 20 years effective January
1, 2023, partially offset by fluctuations in other income and expenses.
The Company transitioned from its previous reporting framework, accounting principles generally accepted in the United States of America ("U.S.
GAAP") to International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board in its annual financial statements for the year ended December 31, 2022. The condensed consolidated financial statements
included herein are the first interim financial information to be presented by the Company under IFRS. As a result of the transition to IFRS, the profit for the three-month periods ended March 31, 2022 and December 31, 2022 as presented in
accordance with U.S. GAAP in the Company's interim financial information for the respective three month periods decreased by $2.2 million and $1.0 million, respectively, primarily due to the net impact of the capitalization and subsequent
depreciation of dry docking costs.
1 This press
release describes Time Charter Equivalent earnings and related per day amounts, which are not measures prepared in accordance with IFRS (“non-GAAP”). See Appendix 1 for a full description of the measures and reconciliation to the nearest IFRS
measure.
2 This press
release describes adjusted profit (loss) and related per share amounts, which are not measures prepared in accordance with IFRS (“non-GAAP”). See Appendix 1 for a reconciliation to the nearest IFRS measure.
Tanker Market Update
Global oil consumption averaged 99.9 million barrels per day ("mbpd") in the first quarter of 2023 according to the Energy Information
Administration (“EIA”), 0.2 mbpd higher than the previous quarter. Europe continues to be the region where consumption softens, while China was the largest contributor to consumption growth adding 0.7 mbpd compared to last quarter. Global oil
supply remained stable in the first calendar quarter of the year averaging 101 mbpd. According to the EIA global inventories grew during the quarter by an average of 1 mbpd, continuing to put pressure on the oil price. Demand growth is expected to
accelerate in the second half of the year, reaching 103 mbpd in December 2023.
In recent months, the Organization of the Petroleum Exporting Countries (OPEC) made a significant move by implementing production cuts to
stabilize global oil markets. With a focus on balancing supply and demand dynamics, OPEC member countries pledged to collectively reduce their oil production levels from May 2023 onwards. These production cuts aimed to address the excess supply
that had led to a downward pressure on oil prices. In the period leading up to this announcement, however, industry sources observed a distinct increase in exports, especially from middle
eastern producers ahead of the cuts. Preliminary numbers for May 2023 show limited impact from the cuts, and West Africa and parts of Europe appear to comprise a significant portion of the expected volume reduction, potentially limiting the effect
on tanker demand.
We continue to observe the aging of the tanker fleet as new deliveries have slowed with muted recycling activity. According to industry
sources, 12.6% of the VLCC fleet is now above 20 years of age, as the orderbook stands at 1.8% of the current fleet. 14.1% of the Suezmax fleet has passed the 20-year age mark and the current orderbook stands at 3%. The LR2 fleet age profile is
less pronounced, but 4.5% of the fleet has passed 20 years of age. However, for a product carrying vessel the 15-year age mark is equally interesting and 22.8% of the fleet is passing this
threshold in 2023, whilst the orderbook equates to 13.2% of the existing fleet.
China’s reopening is expected to be the key demand and volatility driver for the rest of the year. Chinese refinery throughput was reported by
industry sources to be up by 18.9% in April of 2023 compared to a year ago, to volume equivalent of 14.9 mbpd. With OPEC production cuts, it is likely that the increase in Chinese and Asian demand needs to be sourced from producers further afar,
consequently benefitting tanker utilization and ton-miles. Oil-in-transit remains near all-time high levels, making us optimistic about the market dynamics going forward.
The Fleet
As of March 31, 2023, the Company’s fleet consisted of 69 vessels, with an aggregate capacity of
approximately 13.1 million DWT:
(i) 66 vessels owned by the Company (22 VLCCs,
26 Suezmax tankers, 18 LR2/Aframax tankers); and
(ii) three vessels that are under the Company’s
commercial management (one Suezmax tanker and two Aframax tankers)
The Company took delivery of the two VLCC newbuildings, Front Orkla and Front Tyne in January 2023 following which, there were no remaining
vessels in the Company’s newbuilding program.
In January 2023, the Company sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder, for gross proceeds of
$61.0 million and $39.5 million, respectively. The vessels were delivered to new owners in January and February of 2023, respectively. After repayment of existing debt on the vessels, the transactions generated net cash proceeds of $63.6 million,
and the Company recorded a gain on sale of $9.9 million and $2.8 million, respectively, in the first quarter of 2023.
In May 2023, the Company sold the 2010-built Suezmax tanker, Front Njord, for gross proceeds of $44.5 million. The vessel is expected to be
delivered to the new owner in the second quarter of 2023. After repayment of existing debt on the vessel, the transaction is expected to generate net cash proceeds of approximately $28.2 million, and the Company expects to record a gain on sale of
approximately $9.4 million, in the second quarter of 2023.
As of March 31, 2023, the Company’s owned fleet included 41 scrubber fitted vessels (19 VLCCs, 18 Suezmax tankers and four LR2/Aframax
tankers). Following the additional scrubber installation planned on one owned VLCC in 2023 and the sale of one Suezmax tanker, 65% of the vessels in our fleet will have scrubbers installed.
In April 2023 and May 2023, the Company entered into two fixed rate time charter-out contracts for two LR2/Aframax tankers to third parties on
two-year time charters, both at a daily base rate of $46,500.
Corporate Update
In January 2023, the Company terminated a combination agreement (the “Combination Agreement”) for a stock-for-stock combination with Euronav NV
(“Euronav”) based on an exchange ratio of 1.45 Frontline shares for every 1.0 Euronav share, as certain conditions and assumptions under the Agreement were not met. On January 18, 2023 the Company received from Euronav an emergency arbitration
request for urgent interim and conservatory measures. On February 7, 2023 the emergency arbitration claims filed by Euronav were fully dismissed by the Emergency Arbitrator and Euronav was ordered to reimburse all costs incurred by the Company.
On January 28, 2023, the Company received from Euronav an arbitration request for proceedings on the merits of the termination. The arbitral
tribunal has set a timetable with a hearing planned end of June 2024. The Company continues to maintain that its decision to terminate the Combination Agreement was entirely valid and lawful.
Pursuant to the Company’s stated dividend policy, the Board of Directors declared a dividend of $0.70 per share for the first quarter of 2023.
The record date for the dividend will be June 16, 2023, the ex-dividend date is expected to be June 15, 2023 and the dividend is scheduled to be paid on or about June 30, 2023.
The Company had 222,622,889 ordinary shares outstanding as of March 31, 2023. The weighted average number
of shares outstanding for the purpose of calculating basic and diluted earnings per share for the first quarter of 2023 was 222,622,889.
Financing Update
In January 2023, the Company drew down $65.0 million under its senior secured term loan facility with Crédit Agricole to partially finance the
delivery of the 2023 built VLCC Front Orkla. The facility has a tenor of five years, carries an interest rate of LIBOR plus a margin of 170 basis points and has an amortization profile of 18 years commencing on the delivery date from the yard. The
facility was fully drawn down in January 2023.
In January 2023, the Company drew down $65.0 million under its senior secured term loan facility with KFW to partially finance the delivery of
the 2023 built VLCC Front Tyne. The facility has a tenor of five years, carries an interest rate of LIBOR plus a margin of 170 basis points and has an amortization profile of 20 years commencing on the delivery date from the yard. The facility was
fully drawn down in January 2023.
In February 2023, the Company repaid $60.0 million of its $275.0 million senior unsecured credit facility with an affiliate of Hemen Holding
Ltd., the Company’s largest shareholder. Up to $125.3 million remains available to be drawn following the repayment.
In May 2023, the Company entered into a senior secured term loan facility in an amount of up to $129.4 million from ING to refinance an
existing term loan facility with total balloon payments of $80.1 million due in August 2023. The new facility has a tenor of five years, carries an interest rate of SOFR plus a margin of 180 basis points and has an amortization profile of 18 years
commencing on the delivery date from the yard. The facility includes a sustainability margin adjustment linked to the fleet sustainability score. The existing facility carried an interest rate of LIBOR plus a margin of 190 basis points.
ESG Update
The Company has published its 2022 ESG report (the “2022 ESG Report”), which may be found on its website. None of the information contained on the Company’s website is
incorporated into or forms a part of this document. The Company invites you to read the 2022 ESG report and welcomes any comments or questions you may have on the information presented.
The Company believes its sustainability strategy is the key to balancing the interests and expectations of all its stakeholders, including
investors, analysts, employees, customers, suppliers, and communities, and ultimately creating long-term value.
Expanding and modernizing its fleet remains a key part of the Company’s strategy, and the Company is committed to an investment program towards
vessel acquisitions, newbuildings and retrofits, which can be powered by low or zero carbon fuel solutions. This is demonstrated by the delivery of six state-of-the-art ammonia- ready VLCC newbuildings in 2022 and January 2023. The Company’s fleet
consists of 91% Eco vessels and has an average age of six years, making it one of the youngest and most energy-efficient fleets in the industry. Despite turbulent European conditions, increased demand and high speeds throughout the market, the
Company’s modern and efficient fleet
was able to maintain its emission intensity in 2022 and outperformed the IMO and Poseidon Principles emission trajectories by 16.3% and 13.6%,
respectively.
The Company is proud of the achievements its strategy has delivered in 2022, as detailed in the 2022 ESG report, and looks forward to the
challenges ahead.
Conference Call and Webcast
On May 31, 2023 at 9:00 A.M. ET (3:00 P.M. CET), the Company's management will host a conference call to discuss the results.
Presentation materials and a webcast of the conference call may be accessed on the Company’s website, www.frontlineplc.cy, under the ‘Webcast’
link. The link can also be accessed here.
Telephone conference:
Participants are required to register in advance of the conference using the link provided below. Upon registering, each participant will be
provided with Participant Dial In Numbers, and a unique Personal PIN.
In the 10 minutes prior to call start time, participants will need to use the conference access information provided in the e-mail received at
the point of registering. Participants may also use the call me feature instead of dialing the nearest dial in number.
Online Registration to the call may be accessed via the following link:
Online registration
A replay of the conference call will be available following the live call. Please use below link to access the webcast:
Replay of conference call
None of the information contained in or that forms a part of the Company’s conference calls, website or audio webcasts is incorporated into or
forms part of this release.
Forward-Looking Statements
Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of
historical facts.
Frontline plc and its subsidiaries, or the Company, desires to take advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This report and any other written or oral statements made by us or on our behalf may include
forward-looking statements, which reflect our current views with respect to future events and financial performance and are not intended to
give any assurance as to future results. When used in this document, the words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "will," "may," "should," "expect" and similar expressions, terms or phrases
may identify forward-looking statements.
The forward-looking statements in this report are based upon various assumptions, including without limitation, management's examination of
historical operating trends, data contained in our records and data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties
and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. We undertake no obligation to update any forward-looking
statements, whether as a result of new information, future events or otherwise.
In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results
to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel
values, changes in the supply and demand for vessels comparable to ours, changes in worldwide oil production and consumption and storage, changes in the Company's operating expenses, including bunker prices, dry docking and insurance costs, the
market for the Company's vessels, availability of financing and refinancing, our ability to obtain financing and comply with the restrictions and other covenants in our financing arrangements, availability of skilled workers and the related labor
costs, compliance with governmental, tax, environmental and safety regulation, any non-compliance with the U.S. Foreign Corrupt Practices Act of 1977 (FCPA) or other applicable regulations relating to bribery, the impact of increasing scrutiny and
changing expectations from investors, lenders and other market participants with respect to our ESG policies, general economic conditions and conditions in the oil industry, effects of new products and new technology in our industry, the failure of
counter parties to fully perform their contracts with us, our dependence on key personnel, adequacy of insurance coverage, our ability to obtain indemnities from customers, changes in laws, treaties or regulations, the volatility of the price of
our ordinary shares; our incorporation under the laws of Cyprus and the different rights to relief that may be available compared to other countries, including the United States, changes in governmental rules and regulations or actions taken by
regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, environmental factors, political events, public health
threats, international hostilities including the ongoing developments in the Ukraine region, acts by terrorists or acts of piracy on ocean-going vessels, the length and severity of epidemics and pandemics, including the ongoing global outbreak of
the novel coronavirus ("COVID-19"), and their impacts on the demand for seaborne transportation of petroleum products, the impact of increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to
our Environmental, Social and Governance policies, the impact of port or canal congestion and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission or Commission.
We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. These
forward-looking statements are no guarantee of our future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.
The Board of Directors
Frontline plc
Limassol, Cyprus
May 30, 2023
Ola Lorentzon - Chairman and Director
John Fredriksen - Director
Ole B. Hjertaker - Director
James O'Shaughnessy - Director
Steen Jakobsen - Director
Marios Demetriades - Director
Questions should be directed to:
Lars H. Barstad: Chief Executive Officer, Frontline Management AS
+47 23 11 40 00
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 00
INTERIM FINANCIAL INFORMATION
FIRST QUARTER 2023
Index
CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
SELECTED NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FRONTLINE PLC CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
(in thousands of $, except per share data)
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2023
Jan-Mar
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2022
Jan-Mar
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2022
Jan-Dec
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Revenues
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497,332
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217,441
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1,430,208
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Other income
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14,289
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5,381
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8,040
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Total operating revenues and other income
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511,621
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222,822
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1,438,248
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Voyage expenses and commission
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158,827
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113,651
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605,544
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Ship operating expenses
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43,718
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41,132
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175,164
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Administrative expenses
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12,638
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6,898
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47,374
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Depreciation
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55,546
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40,945
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165,170
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Contingent rental income
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—
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(551)
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(623)
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Total operating expenses
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270,729
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202,075
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992,629
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Net operating income
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240,892
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20,747
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445,619
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Finance income
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2,873
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58
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1,479
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Finance expense
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(45,417)
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7,927
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(45,330)
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Gain (loss) on marketable securities
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(3,173)
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269
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58,359
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Share of results of associated company
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3,738
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(92)
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14,243
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Dividends received
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527
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46
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1,579
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Profit before income taxes
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199,440
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28,955
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475,949
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Income tax benefit (expense)
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186
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13
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(412)
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Profit for the period
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199,626
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28,968
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475,537
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Basic and diluted earnings per share
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$0.90
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$0.14
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$2.22
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of $)
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2023
Jan-Mar
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2022
Jan-Mar
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2022
Jan-Dec
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Profit for the period
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199,626
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28,968
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475,537
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Items that may be reclassified to profit or loss:
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Foreign currency exchange gain (loss)
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53
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(1)
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226
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Other comprehensive income (loss)
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53
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(1)
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226
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Comprehensive income
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199,679
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28,967
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475,763
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FRONTLINE PLC CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of $)
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Mar 31
2023
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Dec 31
2022
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ASSETS
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Current assets
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Cash and cash equivalents
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225,361
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254,525
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Marketable securities
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233,108
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236,281
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Other current assets
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375,003
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390,244
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Total current assets
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833,472
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881,050
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Non-current assets
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Newbuildings
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—
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47,991
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Vessels and equipment
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3,708,885
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3,650,652
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Right-of-use assets
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2,892
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3,108
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Goodwill
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112,452
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112,452
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Investment in associated company
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12,742
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16,302
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Loan notes receivable
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—
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1,388
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Other non-current assets
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48,746
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55,500
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Total non-current assets
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3,885,717
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3,887,393
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Total assets
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4,719,189
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4,768,443
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LIABILITIES AND EQUITY
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Current liabilities
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Short-term debt and current portion of long-term debt
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365,233
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277,854
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Current portion of obligations under leases
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1,052
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1,024
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Other current payables
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108,680
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112,781
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Total current liabilities
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474,965
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391,659
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Non-current liabilities
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Long-term debt
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2,017,392
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2,112,460
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Obligations under leases
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2,140
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2,372
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Other non-current payables
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3,320
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2,053
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Total non-current liabilities
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2,022,852
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2,116,885
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Equity
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Frontline plc equity
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2,221,844
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2,260,371
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Non-controlling interest
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(472)
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(472)
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Total equity
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2,221,372
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2,259,899
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|
Total liabilities and equity
|
4,719,189
|
4,768,443
|
FRONTLINE PLC CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of $)
|
2023
Jan-Mar
|
2022
Jan-Mar
|
2022
Jan-Dec
|
||||
|
OPERATING ACTIVITIES
|
|||||||
|
Profit for the period
|
199,626
|
28,968
|
475,537
|
||||
|
Adjustments to reconcile profit to net cash provided by operating activities:
|
|||||||
|
Net finance expense (income)
|
42,544
|
(7,985
|
)
|
43,851
|
|||
|
Depreciation
|
55,546
|
40,945
|
165,170
|
||||
|
Gain on sale of vessels and equipment
|
(12,709
|
)
|
(4,618
|
)
|
(4,596
|
)
|
|
|
(Gain) loss on marketable securities
|
3,173
|
(269
|
)
|
(58,359
|
)
|
||
|
Share of results of associated company
|
(3,738
|
)
|
92
|
(14,243
|
)
|
||
|
Other, net
|
3,387
|
(1,352
|
)
|
2,376
|
|||
|
Change in operating assets and liabilities
|
7,116
|
(19,194
|
)
|
(142,112
|
)
|
||
|
Debt issuance costs paid
|
(27
|
)
|
(186
|
)
|
(4,349
|
)
|
|
|
Interest paid
|
(40,039
|
)
|
(16,505
|
)
|
(83,039
|
)
|
|
|
Interest received
|
7,837
|
47
|
5,094
|
||||
|
Net cash provided by operating activities
|
262,716
|
19,943
|
385,330
|
||||
|
INVESTING ACTIVITIES
|
|||||||
|
Additions to newbuildings, vessels and equipment
|
(150,714
|
)
|
(13,734
|
)
|
(335,815
|
)
|
|
|
Proceeds from sale of vessels
|
99,130
|
80,000
|
80,000
|
||||
|
Investment in associated company
|
—
|
—
|
(1,505
|
)
|
|||
|
Cash inflows from associated company
|
8,686
|
—
|
—
|
||||
|
Net cash provided by (used in) investing activities
|
(42,898
|
)
|
66,266
|
(257,320
|
)
|
||
|
FINANCING ACTIVITIES
|
|||||||
|
Proceeds from issuance of debt
|
130,000
|
—
|
651,248
|
||||
|
Repayment of debt
|
(140,572
|
)
|
(86,755
|
)
|
(597,834
|
)
|
|
|
Repayment of obligations under leases
|
(204
|
)
|
(1,351
|
)
|
(2,123
|
)
|
|
|
Lease termination payments
|
—
|
—
|
(4,456
|
)
|
|||
|
Dividends paid
|
(238,206
|
)
|
—
|
(33,393
|
)
|
||
|
Net cash provided by (used in) financing activities
|
(248,982
|
)
|
(88,106
|
)
|
13,442
|
||
|
Net change in cash and cash equivalents
|
(29,164
|
)
|
(1,897
|
)
|
141,452
|
||
|
Cash and cash equivalents at start of period
|
254,525
|
113,073
|
113,073
|
||||
|
Cash and cash equivalents at end of period
|
225,361
|
111,176
|
254,525
|
||||
FRONTLINE PLC CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of $ except number of shares)
|
2023
Jan-Mar
|
2022
Jan-Mar
|
2022
Jan-Dec
|
|||
|
NUMBER OF SHARES OUTSTANDING
|
||||||
|
Balance at beginning of period
|
222,622,889
|
203,530,979
|
203,530,979
|
|||
|
Shares issued in connection with Euronav share acquisition
|
—
|
—
|
19,091,910
|
|||
|
Balance at end of period
|
222,622,889
|
203,530,979
|
222,622,889
|
|||
|
SHARE CAPITAL
|
||||||
|
Balance at beginning of period
|
222,623
|
203,531
|
203,531
|
|||
|
Shares issued in connection with Euronav share acquisition
|
—
|
—
|
19,092
|
|||
|
Balance at end of period
|
222,623
|
203,531
|
222,623
|
|||
|
ADDITIONAL PAID IN CAPITAL
|
||||||
|
Balance at beginning of period
|
604,687
|
448,291
|
448,291
|
|||
|
Shares issued in connection with Euronav share acquisition
|
—
|
—
|
156,396
|
|||
|
Balance at end of period
|
604,687
|
448,291
|
604,687
|
|||
|
CONTRIBUTED SURPLUS
|
||||||
|
Balance at beginning of period
|
1,004,094
|
1,004,094
|
1,004,094
|
|||
|
Balance at end of period
|
1,004,094
|
1,004,094
|
1,004,094
|
|||
|
ACCUMULATED OTHER RESERVES
|
||||||
|
Balance at beginning of period
|
454
|
228
|
228
|
|||
|
Other comprehensive income
|
53
|
(1
|
)
|
226
|
||
|
Balance at end of period
|
507
|
227
|
454
|
|||
|
RETAINED EARNINGS (DEFICIT)
|
||||||
|
Balance at beginning of period
|
428,513
|
(13,631
|
)
|
(13,631
|
)
|
|
|
Profit for the period
|
199,626
|
28,968
|
475,537
|
|||
|
Cash dividends
|
(238,206
|
)
|
—
|
(33,393
|
)
|
|
|
Balance at end of period
|
389,933
|
15,337
|
428,513
|
|||
|
EQUITY ATTRIBUTABLE TO THE COMPANY
|
2,221,844
|
1,671,480
|
2,260,371
|
|||
|
NON-CONTROLLING INTEREST
|
||||||
|
Balance at beginning of period
|
(472
|
)
|
(472
|
)
|
(472
|
)
|
|
Balance at end of period
|
(472
|
)
|
(472
|
)
|
(472
|
)
|
|
TOTAL EQUITY
|
2,221,372
|
1,671,008
|
2,259,899
|
FRONTLINE PLC
SELECTED NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Frontline plc is a Cyprus based shipping company engaged primarily in the ownership and operation of oil tankers and product tankers. The
Company’s ordinary shares are listed on the New York Stock Exchange and the Oslo Stock Exchange.
2. ACCOUNTING POLICIES
Basis of accounting
The condensed consolidated financial statements included herein are stated in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board. The condensed consolidated financial statements do not include all of the disclosures required in the annual and interim consolidated financial statements, and should be read in
conjunction with the Company’s annual financial statements included in the Company’s Annual Report for the year ended December 31, 2022, which was filed on April 28, 2023.
Significant accounting policies
The accounting policies adopted in the preparation of these condensed consolidated financial statements are consistent with those followed in
the preparation of the Company’s annual financial statements for the year ended December 31, 2022.
3. EARNINGS PER SHARE
The components of the numerator and the denominator in the calculation of basic and diluted earnings per share are as follows:
|
(in thousands of $)
|
2023
Jan-Mar
|
2022
Jan-Mar
|
2022
Jan-Dec
|
|
Profit for the period
|
199,626
|
28,968
|
475,537
|
|
(in thousands)
|
|||
|
Weighted average number of ordinary shares
|
222,623
|
203,531
|
214,011
|
|
Denominator for diluted earnings per share
|
222,623
|
203,531
|
214,011
|
As of March 31, 2023, the Company had an issued share capital of $222,622,889
divided into 222,622,889 ordinary shares (December 31, 2022: $222,622,889 divided into 222,622,889 ordinary shares) of $1.00 par value
each.
4. OTHER INCOME
In January 2023, the Company sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder, for gross proceeds of
$61.0 million and $39.5 million, respectively. The vessels were delivered to new owners in January and February, respectively. After repayment of existing debt on the vessels, the transactions generated net cash proceeds of $63.6 million, and the
Company recorded a gain on sale of $9.9 million and $2.8 million, respectively, in the first quarter of 2023.
5. NEWBUILDINGS
The Company took delivery of the VLCC newbuildings, Front Orkla and Front Tyne, in January 2023.
As of March 31, 2023, there are no remaining vessels in the Company’s newbuilding program and there are no remaining commitments.
6. DEBT
In January 2023, the Company drew down $65.0 million under its senior secured term loan facility with Crédit Agricole to partially finance the
delivery of the 2023 built VLCC Front Orkla. The facility has a tenor of five years, carries an interest rate of LIBOR plus a margin of 170 basis points and has an amortization profile of 18 years commencing on the delivery date from the yard. The
facility was fully drawn down in January 2023.
In January 2023, the Company drew down $65.0 million under its senior secured term loan facility with KFW to partially finance the delivery of
the 2023 built VLCC Front Tyne. The facility has a tenor of five years, carries an interest rate of LIBOR plus a margin of 170 basis points and has an amortization profile of 20 years commencing on the delivery date from the yard. The facility was
fully drawn down in January 2023.
In February 2023, the Company repaid $60.0 million of its $275.0 million senior unsecured credit facility with an affiliate of Hemen Holding
Ltd. (“Hemen”), the Company’s largest shareholder. Up to $125.3 million remains available to be drawn following the repayment.
7. RELATED PARTY AND AFFILIATED COMPANIES TRANSACTIONS
We transact business with the following related parties and affiliated companies, being companies in which Hemen and companies associated with
Hemen have significant influence or control: SFL, Seatankers Management Norway AS, Seatankers Management Co. Ltd, Golden Ocean, Alta Trading UK Limited, Archer Limited, Flex LNG Ltd, Avance Gas and Front Ocean Management AS. We also own interests
in TFG Marine and Clean Marine AS (through our interest in FMS Holdco) which are accounted for as equity method investments.
The Company accounts for its 15% of the share capital of TFG Marine under the equity method and recorded
$2.5 million share of results in the three months ended March 31, 2023. The Company has also entered into a bunker supply arrangement with TFG Marine, under which it has paid $97.9 million to TFG Marine in the
three months ended March 31, 2023, and $15.9 million remained due as of March 31, 2023. In the three months
ended March 31, 2023, the Company received $1.4 million in loan repayment and $7.3 million in dividends from TFG Marine.
The Company accounts for its investment in Clean Marine AS under the equity method and recorded $1.2 million share of results in the three
months ended March 31, 2023.
Amounts earned from other related parties and affiliated companies comprise office rental income, technical and commercial management fees,
newbuilding supervision fees, freights, corporate and administrative services income and interest income. Amounts paid to related parties and affiliated companies comprise primarily of rental for office space and support staff costs.
See Note 6 and Note 8 for details regarding other related party and affiliated companies transactions and balances.
8. COMMITMENTS AND CONTINGENCIES
As of March 31, 2023, the Company has agreed to provide a $60.0 million guarantee in respect of the
performance of its subsidiaries, and two subsidiaries of an affiliate of Hemen, under a bunker supply arrangement with TFG Marine. As of March 31, 2023, there are no amounts payable under this guarantee. In
addition, should TFG Marine be required to provide a parent company guarantee to its bunker suppliers or finance providers then for any guarantee that is provided by the Trafigura Group and becomes payable, Frontline shall pay a pro rata amount
based on its share of the equity in TFG Marine. The maximum liability under this guarantee is $6.0 million and there are no amounts payable under this guarantee as at March 31, 2023.
The Company has entered into 10 forward bunker purchase arrangements with TFG Marine, a related party,
which obligate the Company to purchase and take delivery of minimum quantities of low sulfur and high sulfur bunker fuel, at fixed prices, over the period from January 2023 to December 2024. As of March 31, 2023, the total remaining commitment
amounted to $47.1 million, $23.2 million of which is expected to be paid in 2023 and $23.9 million of which is expected to be paid in 2024.
9. SUBSEQUENT EVENTS
In May 2023, the Company entered into a senior secured term loan facility in an amount of up to $129.4 million from ING to refinance an
existing term loan facility with total balloon payments of $80.1 million due in August 2023. The new facility has a tenor of five years, carries an interest rate of SOFR plus a margin of 180 basis points and has an amortization profile of 18 years
commencing on the delivery date from the yard. The facility includes a sustainability margin adjustment linked to the fleet sustainability score. The existing facility carried an interest rate of LIBOR plus a margin of 190 basis points.
In May 2023, the Company sold the 2010-built Suezmax tanker, Front Njord, for gross proceeds of $44.5 million. The vessel is expected to be
delivered to the new owner in the second quarter of 2023. After repayment of existing debt on the vessel, the transaction is expected to generate net cash proceeds of approximately $28.2 million, and the Company expects to record a gain on sale of
approximately $9.4 million in the second quarter of 2023.
Pursuant to the Company’s stated dividend policy, the Board of Directors declared a dividend of $0.70 per share for the first quarter of 2023.
The record date for the dividend will be June 16, 2023, the ex-dividend date is expected to be June 15, 2023 and the dividend is scheduled to be paid on or about June 30, 2023.
APPENDIX I - Non-GAAP measures
Reconciliation of adjusted profit or loss
This press release describes adjusted profit (loss) and related per share amounts, which are not measures prepared in accordance with IFRS
(“non-GAAP”). We believe the non-GAAP financial measures provide investors with a means of analyzing and understanding the Company's ongoing operating performance. The non-GAAP financial measures should not be considered in isolation from, as
substitutes for, or superior to financial measures prepared in accordance with IFRS.
|
(in thousands of $)
|
Q1 2023
|
FY 2022
|
Q4 2022
|
Q1 2022
|
||||
|
Adjusted profit (loss)
|
||||||||
|
Profit
|
199,626
|
475,537
|
239,054
|
28,968
|
||||
|
Add back:
|
||||||||
|
Loss on marketable securities
|
3,173
|
12,005
|
—
|
—
|
||||
|
Share of losses of associated companies
|
—
|
92
|
—
|
92
|
||||
|
Unrealized loss on derivatives (1)
|
7,364
|
1,116
|
1,116
|
—
|
||||
|
Loss on termination of leases
|
—
|
431
|
—
|
—
|
||||
|
Less:
|
||||||||
|
Unrealized gain on derivatives (1)
|
—
|
(51,108
|
)
|
—
|
(26,134
|
)
|
||
|
Gain on marketable securities
|
—
|
(70,364
|
)
|
(23,023
|
)
|
(269
|
)
|
|
|
Share of results of associated companies
|
(3,738
|
)
|
(14,335
|
)
|
(2,632
|
)
|
—
|
|
|
Amortization of acquired time charters
|
—
|
(2,806
|
)
|
—
|
(1,244
|
)
|
||
|
Gain on sale of vessels
|
(12,709
|
)
|
(4,618
|
)
|
—
|
(4,618
|
)
|
|
|
Gain on settlement of insurance and other claims
|
(397
|
)
|
(3,998
|
)
|
—
|
(362
|
)
|
|
|
Adjusted profit (loss)
|
193,319
|
341,952
|
214,515
|
(3,567
|
)
|
|||
|
(in thousands)
|
||||||||
|
Weighted average number of ordinary shares
|
222,623
|
214,011
|
222,623
|
203,531
|
||||
|
Denominator for diluted earnings (loss) per share
|
222,623
|
214,011
|
222,623
|
203,531
|
||||
|
(in $)
|
||||||||
|
Basic earnings (loss) per share
|
0.90
|
2.22
|
1.07
|
0.14
|
||||
|
Adjusted basic earnings (loss) per share
|
0.87
|
1.60
|
0.96
|
(0.02
|
)
|
|||
|
Diluted earnings (loss) per share
|
0.90
|
2.22
|
1.07
|
0.14
|
||||
|
Adjusted diluted earnings (loss) per share
|
0.87
|
1.60
|
0.96
|
(0.02
|
)
|
(1) Adjusted profit (loss) has been revised to only exclude the unrealized gain/loss on derivatives to give effect to the economic benefit/cost
provided by our interest rate swap agreements. A reconciliation of the gain/loss on derivatives is as follows:
|
(in thousands of $)
|
Q1 2023
|
FY 2022
|
Q4 2022
|
Q1 2022
|
||||
|
Unrealized gain (loss) on derivatives
|
(7,364
|
)
|
49,992
|
(1,116
|
)
|
26,134
|
||
|
Interest income (expense) on derivatives
|
4,964
|
3,631
|
3,697
|
(1,213
|
)
|
|||
|
Gain (loss) on derivatives
|
(2,400
|
)
|
53,623
|
2,581
|
24,921
|
Reconciliation of Total operating revenues to Time Charter Equivalent and Time Charter
Equivalent per day
Consistent with general practice in the shipping industry, we use TCE as a measure to compare revenue generated from a voyage charter to
revenue generated from a time charter. We define TCE as operating revenues less voyage expenses and commission, administrative income, finance lease interest income and other non-vessel related income. Under time charter agreements, voyage costs,
such as bunker fuel, canal and port charges and commissions are borne and paid by the charterer whereas under voyage charter agreements, voyage costs are borne and paid by the owner. TCE is a common shipping industry performance measure used
primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot charters and time charters) under which the vessels may be employed between the periods. Time charter
equivalent, a non-GAAP measure, provides additional meaningful information in conjunction with operating revenues, the most directly comparable IFRS measure, because it assists management in making decisions regarding the deployment and use of our
vessels and in evaluating their financial performance, regardless of whether a vessel has been employed on a time charter or a voyage charter.
|
(in thousands of $)
|
Q1 2023
|
FY 2022
|
Q4 2022
|
Q1 2022
|
|||||
|
Revenues
|
497,332
|
1,430,208
|
530,141
|
217,441
|
|||||
|
less
|
|||||||||
|
Voyage expenses and commission
|
(158,827
|
)
|
(605,544
|
)
|
(177,295
|
)
|
(113,651
|
)
|
|
|
Other non-vessel items
|
(1,155
|
)
|
(12,254
|
)
|
(1,197
|
)
|
(1,897
|
)
|
|
|
Total TCE
|
337,350
|
812,410
|
351,649
|
101,893
|
Time charter equivalent per day
Time charter equivalent per day ("TCE rate" or "TCE per day") represents the weighted average daily TCE income of vessels of different sizes in
our fleet.
TCE per day is a measure of the average daily income performance. Our method of calculating TCE per day is determined by dividing TCE by onhire
days during a reporting period. Onhire days are calculated on a vessel by vessel basis and represent the net of available days and offhire days for each vessel (owned or chartered in) in our possession during a reporting period. Available days for
a vessel during a reporting period is the number of days the vessel (owned or chartered in) is in our possession during the period. By definition, available days for an owned vessel equal the calendar days during a reporting period, unless the
vessel is delivered by the yard during the relevant period whereas available days for a chartered-in vessel equal the tenure in days of the underlying time charter
agreement, pro-rated to the relevant reporting period if such tenure overlaps more than one reporting period. Offhire days for a vessel during
a reporting period is the number of days the vessel is in our possession during the period but is not operational as a result of unscheduled repairs, scheduled dry docking or special or intermediate surveys and lay-ups, if any.
|
Q1 2023
|
FY 2022
|
Q4 2022
|
Q1 2022
|
|||||
|
Time charter TCE (in thousands of $)
|
||||||||
|
VLCC
|
—
|
—
|
—
|
—
|
||||
|
Suezmax
|
—
|
42,078
|
613
|
12,624
|
||||
|
LR2
|
5,802
|
7,921
|
5,984
|
—
|
||||
|
Total Time charter TCE
|
5,802
|
49,999
|
6,597
|
12,624
|
||||
|
Spot TCE (in thousands of $)
|
||||||||
|
VLCC
|
100,245
|
211,938
|
118,110
|
25,027
|
||||
|
Suezmax
|
152,564
|
313,981
|
142,630
|
33,276
|
||||
|
LR2
|
78,739
|
236,492
|
84,312
|
30,966
|
||||
|
Total Spot TCE
|
331,548
|
762,411
|
345,052
|
89,269
|
||||
|
Total TCE
|
337,350
|
812,410
|
351,649
|
101,893
|
||||
|
Spot days (available days less offhire days)
|
||||||||
|
VLCC
|
1,909
|
6,775
|
1,870
|
1,595
|
||||
|
Suezmax
|
2,384
|
8,464
|
2,462
|
1,971
|
||||
|
LR2
|
1,398
|
6,139
|
1,433
|
1,627
|
||||
|
Spot TCE per day (in $ per day)
|
||||||||
|
VLCC
|
52,500
|
31,300
|
63,200
|
15,700
|
||||
|
Suezmax
|
64,000
|
37,100
|
57,900
|
16,900
|
||||
|
LR2
|
56,300
|
38,500
|
58,800
|
19,000
|
Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and per day amounts may not
precisely reflect the absolute figures.
Estimated average daily cash breakeven rates
The estimated average daily cash breakeven rates are the daily TCE rates our vessels must earn to cover operating expenses including dry docks,
repayments of loans, interest on loans, bareboat hire, time charter hire and net general and administrative expenses for the remainder of the year.
Spot TCE estimates
Spot estimates are provided on a load-to-discharge basis, whereby the Company recognizes revenues over time ratably from commencement of cargo
loading until completion of discharge of cargo. The rates reported are for all contracted days up until the last contracted discharge of cargo for each vessel in the quarter. The actual rates to be earned in the second
quarter of 2023 will depend on the number of additional days that we can contract, and more importantly the number of additional days that each vessel is laden. Therefore, a high number of ballast days at the end of the quarter will limit
the amount of additional revenues to be booked on a load-to-discharge basis. Ballast days are days when a vessel is sailing without cargo and therefore, we are unable to recognize revenues on such days. Furthermore, when a vessel remains
uncontracted at the end of the quarter, the Company will recognize certain costs during the uncontracted days up until the end of the period, whereas if a vessel is contracted, then certain costs can be deferred and recognized over the
load-to-discharge period. The number of ballast days at the end of the first quarter was 359 for VLCCs, 429 for Suezmax tankers and 216 for LR2/Aframax tankers.
The recognition of revenues on a load-to-discharge basis results in revenues being recognized over fewer days, but at a higher rate for those
days. Over the life of a voyage there is no difference in the total revenues and costs to be recognized as compared to a discharge-to-discharge basis.
When expressing TCE per day the Company uses the total available days, net of off hire days and not just the number of days the vessel is
laden.