|
|
FRONTLINE LTD.
(registrant)
|
|
|
|
|
|
Dated: March 1, 2019
|
|
By:
|
/s/ Inger M. Klemp
|
|
|
|
Name: Inger M. Klemp
|
|
|
|
Title: Principal Financial Officer
|
|
|
|
|
|
|
|
● |
Net income attributable to the Company was $25.4 million, or $0.15 per share, for the fourth quarter of 2018.
|
● |
Net income attributable to the Company was $26.3 million, or $0.15 per share adjusted for certain non-cash
items for the fourth quarter of 2018.
|
●
|
Reported spot average daily time charter equivalent (“TCE”) was $28,400 for VLCCs in the fourth quarter,
impacted significantly by a high number of ballast days towards the end of the quarter, deferring revenue recognition into the first quarter of 2019.1 Reported spot TCE for Suezmax tankers and LR2/Aframax tankers were $26,100
and $18,700, respectively.
|
●
|
Spot TCE of $41,300 contracted for 84% of vessel days for VLCCs, spot TCE of $33,300 contracted for 77% of
vessel days for Suezmax tankers and spot TCE of $26,100 contracted for 73% of vessel days for LR2/Aframax tankers, estimated for the first quarter of 2019, including deferred revenue recognition from the fourth quarter of 2018.
|
●
|
In November 2018, the Company extended the terms of its senior unsecured loan facility of up to $275.0
million with an affiliate of Hemen Holding Ltd. by 12 months to November 2020.
|
·
|
In January 2019, the Company increased its ownership interest to 28.9% in Feen Marine Scrubbers Inc.
(“FMSI”).
|
●
|
In January 2019, the Company took delivery of the VLCC newbuilding Front Defender.
|
Average daily time charter equivalents ("TCE")
|
|||||||||
($ per day)
|
Spot
|
Spot estimates
|
% covered
|
Estimated average daily cash BE rates
|
|||||
2018
|
Q4 2018
|
Q3 2018
|
Q2 2018
|
Q1 2018
|
2017
|
Q1 2019
|
2019
|
||
VLCC
|
18,300
|
28,400
|
19,900
|
11,700
|
14,900
|
22,400
|
41,300
|
84%
|
24,400
|
SMAX
|
17,300
|
26,100
|
13,500
|
14,100
|
15,400
|
17,300
|
33,300
|
77%
|
19,900
|
LR2
|
14,900
|
18,700
|
14,300
|
11,700
|
14,800
|
14,400
|
26,100
|
73%
|
16,700
|
(i)
|
46 vessels owned by the Company (12 VLCCs, 16 Suezmax tankers, 18 LR2/Aframax tankers);
|
(ii)
|
three VLCCs that are under capital leases;
|
(iii)
|
one VLCC that is recorded as an investment in finance lease;
|
(iv)
|
two VLCCs chartered in from an unrelated third party; and
|
(v)
|
nine vessels that are under the Company’s commercial management (three VLCCs, two Suezmax tankers, two LR2
tankers and two Aframax oil tankers)
|
(in millions of $)
|
Q4 2018
|
Q3 2018
|
Year ended
December 31, 2018
|
Year ended
December 31, 2017
|
||||||||||||
Net income (loss) attributable to the Company
|
25.4
|
2.2
|
(8.9
|
)
|
(264.9
|
)
|
||||||||||
Add back:
|
||||||||||||||||
Loss on termination of vessel lease, net of cash paid
|
—
|
—
|
5.8
|
3.3
|
||||||||||||
Vessel impairment loss
|
—
|
—
|
—
|
164.2
|
||||||||||||
Goodwill impairment loss
|
—
|
—
|
—
|
112.8
|
||||||||||||
Unrealized loss on marketable securities
|
5.4
|
—
|
5.7
|
—
|
||||||||||||
Loss on derivatives
|
4.7
|
—
|
4.7
|
3.3
|
||||||||||||
—
|
||||||||||||||||
Less:
|
—
|
|||||||||||||||
Gain on derivatives
|
—
|
(2.0
|
)
|
(9.0
|
)
|
(2.5
|
)
|
|||||||||
Share of results of associated company
|
(0.2
|
)
|
—
|
(0.2
|
)
|
—
|
||||||||||
Unrealized gain on marketable securities
|
—
|
(1.4
|
)
|
(2.2
|
)
|
—
|
||||||||||
Release of accrued dry docking costs
|
—
|
—
|
(2.1
|
)
|
—
|
|||||||||||
Gain on sale of shares
|
—
|
—
|
(1.0
|
)
|
—
|
|||||||||||
Gain on termination of lease
|
(8.9
|
)
|
(7.2
|
)
|
(16.1
|
)
|
(20.6
|
)
|
||||||||
Net (loss) income attributable to the Company adjusted for certain non-cash items
|
26.3
|
(8.4
|
)
|
(23.3
|
)
|
(4.4
|
)
|
|||||||||
(in thousands)
|
||||||||||||||||
Weighted average number of ordinary shares
|
169,813
|
169,809
|
169,810
|
169,809
|
||||||||||||
(in $)
|
||||||||||||||||
Basic (loss) earnings per share
|
0.15
|
0.01
|
(0.05
|
)
|
(1.56
|
)
|
||||||||||
Basic (loss) earnings per share adjusted for certain non-cash charges
|
0.15
|
(0.05
|
)
|
(0.14
|
)
|
(0.03
|
)
|
Norway
|
+47 2156 3162
|
Norway toll free
|
800 10392
|
UK
|
+44 (0) 203 009 5710
|
UK Toll Free
|
0 800 376 7425
|
USA
|
+1 917 720 0178
|
USA Toll Free
|
866 869 2321
|
Conference ID
|
1790149
|
UK LocalCall
|
0 844 571 8951
|
UK FreeCall
|
0 808 238 0667
|
Std International
|
+44 (0) 333 300 9785
|
Norway
|
21 03 42 35
|
USA
|
+1 (917) 677-7532
|
USA Toll Free
|
+1 (866) 331-1332
|
Conference ID
|
1790149
|
2017
Oct-Dec
|
2018
Oct-Dec
|
CONDENSED CONSOLIDATED INCOME STATEMENT
(in thousands of $)
|
2018
Jan-Dec
|
2017
Jan-Dec
|
||||
178,580
|
217,050
|
Total operating revenues
|
742,266
|
646,326
|
||||
3
|
8,967
|
Other operating gain
|
10,206
|
2,381
|
||||
79,384
|
94,709
|
Voyage expenses and commission
|
377,772
|
259,334
|
||||
(6,957
|
)
|
(1,712
|
)
|
Contingent rental income
|
(19,738
|
)
|
(26,148
|
)
|
33,394
|
32,463
|
Ship operating expenses
|
130,623
|
135,728
|
||||
1,990
|
5,109
|
Charter hire expenses
|
21,244
|
19,705
|
||||
142,940
|
—
|
Impairment loss on vessels and vessels under capital lease
|
—
|
164,187
|
||||
112,821
|
—
|
Impairment loss on Goodwill
|
—
|
112,821
|
||||
8,884
|
9,305
|
Administrative expenses
|
37,294
|
37,603
|
||||
36,388
|
28,296
|
Depreciation
|
122,566
|
141,748
|
||||
408,844
|
168,170
|
Total operating expenses
|
669,761
|
844,978
|
||||
(230,261
|
)
|
57,847
|
Net operating income (loss)
|
82,711
|
(196,271
|
)
|
||
250
|
287
|
Interest income
|
843
|
588
|
||||
(20,070
|
)
|
(22,961
|
)
|
Interest expense
|
(93,275
|
)
|
(69,815
|
)
|
—
|
246
|
Share of results of associated company
|
246
|
—
|
||||
(123
|
)
|
—
|
Gain (loss) on sale of shares
|
1,026
|
1,061
|
|||
—
|
(5,437
|
)
|
Unrealized loss on marketable securities
|
(3,526
|
)
|
—
|
||
(279
|
)
|
(16)
|
Foreign currency exchange loss
|
(869
|
)
|
(55
|
)
|
|
2,331
|
(4,669
|
)
|
Gain (loss) on derivatives
|
4,256
|
(753
|
)
|
||
62
|
412
|
Other non-operating items
|
506
|
1,213
|
||||
(248,090
|
)
|
25,709
|
Net income (loss) before income taxes and non-controlling interest
|
(8,082
|
)
|
(264,032
|
)
|
|
(181
|
)
|
(219
|
)
|
Income tax expense
|
(316
|
)
|
(290
|
)
|
(248,271
|
)
|
25,490
|
Net income (loss)
|
(8,398
|
)
|
(264,322
|
)
|
|
(161
|
)
|
(110
|
)
|
Net income attributable to non-controlling interest
|
(482
|
)
|
(539
|
)
|
(248,432
|
)
|
25,380
|
Net income (loss) attributable to the Company
|
(8,880
|
)
|
(264,861
|
)
|
|
(1.46
|
)
|
0.15
|
Basic earnings (loss) per share attributable to the Company ($)
|
(0.05
|
)
|
(1.56
|
)
|
2017
Oct-Dec |
2018
Oct-Dec |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands of $)
|
2018
Jan-Dec
|
2017
Jan-Dec |
||||
(248,271
|
)
|
25,490
|
Net income (loss)
|
(8,398
|
)
|
(264,322
|
)
|
|
(688
|
)
|
—
|
Unrealized gain (loss) from marketable securities
|
—
|
1,901
|
|||
(571
|
)
|
—
|
Gain from marketable securities reclassified to statement of operations
|
—
|
(571
|
)
|
||
6
|
(10
|
)
|
Foreign exchange gain (loss)
|
893
|
158
|
|||
(1,253
|
)
|
(10
|
)
|
Other comprehensive income (loss)
|
893
|
1,488
|
||
(249,524
|
)
|
25,480
|
Comprehensive income (loss)
|
(7,505
|
)
|
(262,834
|
)
|
|
161
|
110
|
Comprehensive loss attributable to non-controlling interest
|
482
|
539
|
||||
(249,685
|
)
|
25,370
|
Comprehensive income (loss) attributable to the Company
|
(7,987
|
)
|
(263,373
|
)
|
|
(249,524
|
)
|
25,480
|
Comprehensive income (loss)
|
(7,505
|
)
|
(262,834
|
)
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of $)
|
Dec 31
2018
|
Dec 31
2017
|
||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
66,484
|
104,145
|
||||||
Restricted cash
|
1,420
|
741
|
||||||
Marketable securities
|
836
|
19,231
|
||||||
Marketable securities pledged to creditors
|
8,392
|
10,272
|
||||||
Other current assets
|
231,113
|
187,225
|
||||||
Total current assets
|
308,245
|
321,614
|
||||||
Non-current assets
|
||||||||
Newbuildings
|
52,254
|
79,602
|
||||||
Vessels and equipment, net
|
2,476,755
|
2,342,130
|
||||||
Vessels under capital lease, net
|
90,676
|
251,698
|
||||||
Investment in finance lease
|
10,979
|
21,782
|
||||||
Goodwill
|
112,452
|
112,452
|
||||||
Investment in associated company
|
6,246
|
—
|
||||||
Other long-term assets
|
20,234
|
4,450
|
||||||
Total non-current assets
|
2,769,596
|
2,812,114
|
||||||
Total assets
|
3,077,841
|
3,133,728
|
||||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities
|
||||||||
Short term debt
|
120,479
|
113,078
|
||||||
Current portion of obligations under capital lease
|
11,854
|
43,316
|
||||||
Other current liabilities
|
81,885
|
65,606
|
||||||
Total current liabilities
|
214,218
|
222,000
|
||||||
Non-current liabilities
|
||||||||
Long term debt
|
1,610,293
|
1,467,074
|
||||||
Obligations under capital lease
|
87,930
|
255,700
|
||||||
Other long-term liabilities
|
1,183
|
1,325
|
||||||
Total non-current liabilities
|
1,699,406
|
1,724,099
|
||||||
Commitments and contingencies
|
||||||||
Equity
|
||||||||
Frontline Ltd. equity
|
1,163,800
|
1,187,308
|
||||||
Non-controlling interest
|
417
|
321
|
||||||
Total equity
|
1,164,217
|
1,187,629
|
||||||
Total liabilities and equity
|
3,077,841
|
3,133,728
|
2017
Oct-Dec
|
2018
Oct-Dec
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of $)
|
2018
Jan-Dec
|
2017
Jan-Dec
|
|||||||||||
OPERATING ACTIVITIES
|
|||||||||||||||
(248,271
|
)
|
25,490
|
Net income (loss)
|
(8,398
|
)
|
(264,322
|
)
|
||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|||||||||||||||
36,916
|
28,921
|
Depreciation and amortization of deferred charges
|
125,038
|
143,661
|
|||||||||||
—
|
(8,926
|
)
|
Other operating loss (gain)
|
(10,308
|
)
|
(2,378
|
)
|
||||||||
—
|
(246
|
)
|
Share of results of associated company
|
(246
|
)
|
—
|
|||||||||
(6,957
|
)
|
(3,247
|
)
|
Contingent rental income
|
(21,273
|
)
|
(26,148
|
)
|
|||||||
142,940
|
—
|
Impairment loss on vessels and vessels under capital lease
|
—
|
164,187
|
|||||||||||
112,821
|
—
|
Impairment loss on Goodwill
|
—
|
112,821
|
|||||||||||
—
|
5,437
|
Mark to market on marketable securities
|
3,526
|
—
|
|||||||||||
123
|
—
|
(Gain) on sale of shares
|
(1,026
|
)
|
(1,061
|
)
|
|||||||||
(2,464
|
)
|
5,022
|
(Gain) loss on derivatives
|
(3,190
|
)
|
(93
|
)
|
||||||||
48
|
(1,114
|
)
|
Other, net
|
743
|
1,953
|
||||||||||
(29,804
|
)
|
(16,644
|
)
|
Change in operating assets and liabilities
|
(38,695
|
)
|
1,865
|
||||||||
5,352
|
34,693
|
Net cash provided by operating activities
|
46,171
|
130,485
|
|||||||||||
INVESTING ACTIVITIES
|
|||||||||||||||
(6,075
|
)
|
(12,204
|
)
|
Additions to newbuildings, vessels and equipment
|
(216,310
|
)
|
(713,560
|
)
|
|||||||
2,508
|
2,865
|
Finance lease payments received
|
5,336
|
9,745
|
|||||||||||
—
|
—
|
Investment in associated company
|
(6,000
|
)
|
—
|
||||||||||
—
|
—
|
Purchase of shares
|
—
|
(46,100
|
)
|
||||||||||
1,457
|
—
|
Proceeds from the sale of shares
|
17,757
|
27,412
|
|||||||||||
(2,110
|
)
|
(9,339
|
)
|
Net cash (used in) provided by investing activities
|
(199,217
|
)
|
(722,503
|
)
|
|||||||
FINANCING ACTIVITIES
|
|||||||||||||||
—
|
85
|
Net proceeds from issuance of shares
|
85
|
—
|
|||||||||||
10,116
|
25,000
|
Proceeds from debt
|
298,863
|
683,532
|
|||||||||||
(25,153
|
)
|
(51,661
|
)
|
Repayment of debt
|
(172,412
|
)
|
(83,951
|
)
|
|||||||
(3,062
|
)
|
(2,142
|
)
|
Repayment of capital leases
|
(10,094
|
)
|
(31,854
|
)
|
|||||||
—
|
—
|
Lease termination payments
|
—
|
(19,006
|
)
|
||||||||||
(8
|
)
|
—
|
Debt fees paid
|
8
|
(3,495
|
)
|
|||||||||
—
|
—
|
Dividends paid
|
(386
|
)
|
(51,401
|
)
|
|||||||||
(18,107
|
)
|
(28,718
|
)
|
Net cash provided by (used in) financing activities
|
116,064
|
493,825
|
|||||||||
(14,865
|
)
|
(3,364
|
)
|
Net change in cash and cash equivalents and restricted cash
|
(36,982
|
)
|
(98,193
|
)
|
|||||||
119,751
|
71,268
|
Cash and cash equivalents and restricted cash at start of period
|
104,886
|
203,079
|
|||||||||||
104,886
|
67,904
|
Cash and cash equivalents and restricted cash at end of period
|
67,904
|
104,886
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of $ except number of shares)
|
2018
Jan- Dec
|
2017
Jan-Dec
|
||||||
NUMBER OF SHARES OUTSTANDING
|
||||||||
Balance at beginning of period
|
169,809,324
|
169,809,324
|
||||||
Shares issued
|
11,868
|
—
|
||||||
Balance at end of period
|
169,821,192
|
169,809,324
|
||||||
SHARE CAPITAL
|
||||||||
Balance at beginning of period
|
169,809
|
169,809
|
||||||
Shares issued
|
12
|
—
|
||||||
Balance at end of period
|
169,821
|
169,809
|
||||||
ADDITIONAL PAID IN CAPITAL
|
||||||||
Balance at beginning of period
|
197,399
|
195,304
|
||||||
Stock compensation expense
|
1,025
|
2,095
|
||||||
Shares issued
|
73
|
—
|
||||||
Balance at end of period
|
198,497
|
197,399
|
||||||
CONTRIBUTED CAPITAL SURPLUS
|
||||||||
Balance at beginning of period
|
1,090,376
|
1,099,680
|
||||||
Cash dividends
|
—
|
(9,304
|
)
|
|||||
Balance at end of period
|
1,090,376
|
1,090,376
|
||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||||
Balance at beginning of period
|
2,227
|
739
|
||||||
Adjustment on adoption of ASC 825
|
(2,896
|
)
|
||||||
Other comprehensive income (loss)
|
893
|
1,488
|
||||||
Balance at end of period
|
224
|
2,227
|
||||||
RETAINED EARNINGS
|
||||||||
Balance at beginning of period
|
(272,503
|
)
|
34,069
|
|||||
Net income (loss) attributable to the Company
|
(8,880
|
)
|
(264,861
|
)
|
||||
Adjustment on adoption of ASC 606
|
(16,631
|
)
|
—
|
|||||
Adjustment on adoption of ASC 825
|
2,896
|
—
|
||||||
Cash dividends
|
—
|
(41,711
|
)
|
|||||
Balance at end of period
|
(295,118
|
)
|
(272,503
|
)
|
||||
EQUITY ATTRIBUTABLE TO THE COMPANY
|
1,163,800
|
1,187,308
|
||||||
NON-CONTROLLING INTEREST
|
||||||||
Balance at beginning of period
|
321
|
168
|
||||||
Net income (loss) attributable to non-controlling interest
|
482
|
539
|
||||||
Dividend paid to non-controlling interest
|
(386
|
)
|
(386
|
)
|
||||
Balance at end of period
|
417
|
321
|
||||||
TOTAL EQUITY
|
1,164,215
|
1,187,629
|
(in thousands of $)
|
December 31, 2017
|
Adjustments for
ASC 606
|
January 1, 2018
|
|||||||||
Assets
|
||||||||||||
Voyages in progress
|
38,254
|
(20,303
|
)
|
17,951
|
||||||||
Other current assets
|
13
|
3,071
|
3,084
|
|||||||||
Liabilities
|
||||||||||||
Accrued expenses
|
38,809
|
(601
|
)
|
38,208
|
||||||||
Equity
|
||||||||||||
Accumulated deficit
|
(272,503
|
)
|
(16,631
|
)
|
(289,134
|
)
|
Balance at December 31, 2018
|
||||||||||||
(in thousands of $)
|
As reported
|
Adjustments for
ASC 606
|
Balance without
ASC 606
|
|||||||||
Assets
|
||||||||||||
Voyages in progress
|
59,437
|
(31,850
|
)
|
91,287
|
||||||||
Other current assets
|
5,359
|
5,410
|
(51
|
)
|
||||||||
Liabilities
|
||||||||||||
Accrued expenses
|
37,031
|
(959
|
)
|
37,990
|
||||||||
Equity
|
||||||||||||
Accumulated deficit
|
(295,118
|
)
|
(25,481
|
)
|
(269,637
|
)
|
For the period Jan-Dec 2018
|
||||||||||||
(in thousands of $)
|
As reported
|
Adjustments for
ASC 606
|
Balance without
ASC 606
|
|||||||||
Operating revenues
|
—
|
|||||||||||
VLCC spot
|
296,934
|
(8,300
|
)
|
305,234
|
||||||||
Suezmax spot
|
201,212
|
(3,315
|
)
|
204,527
|
||||||||
LR2 spot
|
184,855
|
67
|
184,788
|
|||||||||
Other
|
59,265
|
—
|
59,265
|
|||||||||
Total operating revenues
|
742,266
|
(11,548
|
)
|
753,814
|
||||||||
—
|
||||||||||||
Voyage expenses
|
—
|
|||||||||||
VLCC
|
166,733
|
(1,504
|
)
|
168,237
|
||||||||
Suezmax
|
107,445
|
(1,052
|
)
|
108,497
|
||||||||
LR2
|
103,303
|
(142
|
)
|
103,445
|
||||||||
Other
|
291
|
—
|
291
|
|||||||||
Total voyage expenses
|
377,772
|
(2,698
|
)
|
380,470
|
||||||||
Net loss attributable to the company
|
(8,880
|
)
|
(8,850
|
)
|
(30
|
)
|
||||||
Basic and diluted loss per share attributable to the Company
|
(0.05
|
)
|
(0.05
|
)
|
—
|
For the period Oct-Dec 2018
|
||||||||||||
(in thousands of $)
|
As reported
|
Adjustments for
ASC 606
|
Balance without
ASC 606
|
|||||||||
Operating revenues
|
—
|
|||||||||||
VLCC spot
|
80,713
|
(16,723
|
)
|
97,436
|
||||||||
Suezmax spot
|
66,692
|
(3,873
|
)
|
70,565
|
||||||||
LR2 spot
|
56,200
|
718
|
55,482
|
|||||||||
Other
|
13,445
|
—
|
13,445
|
|||||||||
Total operating revenues
|
217,050
|
(19,878
|
)
|
236,928
|
||||||||
—
|
||||||||||||
Voyage expenses
|
—
|
|||||||||||
VLCC
|
34,604
|
(3,230
|
)
|
37,834
|
||||||||
Suezmax
|
29,822
|
(956
|
)
|
30,778
|
||||||||
LR2
|
30,227
|
140
|
30,087
|
|||||||||
Other
|
57
|
—
|
57
|
|||||||||
Total voyage expenses
|
94,710
|
(4,046
|
)
|
98,756
|
||||||||
Net income (loss) attributable to the company
|
25,380
|
(15,832
|
)
|
41,212
|
||||||||
Basic and diluted income (loss) per share attributable to the Company
|
0.15
|
(0.09
|
)
|
0.24
|
For the period ended December 31, 2018
|
||||||||||||
(in thousands of $)
|
As reported
|
Adjustments for
ASC 606
|
Balance without
ASC 606
|
|||||||||
Net loss
|
(8,398
|
)
|
(8,850
|
)
|
452
|
|||||||
Change in operating assets and liabilities
|
(38,695
|
)
|
8,850
|
(47,545
|
)
|
|||||||
Net cash provided by operating activities
|
46,171
|
—
|
46,171
|
(in thousands of $)
|
2018
Jan-Dec
|
2017
Jan-Dec
|
||||||
Net income attributable to the Company
|
(8,880
|
)
|
(264,861
|
)
|
||||
(in thousands)
|
||||||||
Weighted average number of ordinary shares
|
169,810
|
169,809
|