|
|
FRONTLINE LTD.
(registrant)
|
||
|
|
|
||
Dated: August 29, 2019
|
|
By:
|
/s/ Inger M. Klemp
|
|
|
|
|
Name: Inger M. Klemp
|
|
|
|
|
Title: Principal Financial Officer
|
|
|
|
|
||
|
|
|
• |
Net income attributable to the Company was $1.1 million, or $0.01 per share, for the second quarter of 2019.
|
• |
Net income attributable to the Company was $4.2 million, or $0.02 per share adjusted for certain non-cash items for the second quarter of 2019.
|
• |
Reported spot average daily time charter equivalent (“TCE”) for VLCCs, Suezmax tankers and LR2/Aframax tankers in the second quarter were $25,600, $16,200 and $18,100, respectively.
|
• |
For the third quarter of 2019, we estimate spot TCE of $28,000 contracted for 83% of vessel days for VLCCs. The estimated spot TCE is provided using the load-to-discharge method of accounting. We expect the spot TCE for the full
quarter to be lower primarily due to impact of ballast days at the end of the quarter.
|
• |
In May and June 2019, the Company entered into agreements to purchase a Suezmax tanker resale and a VLCC resale both under construction in Korea and expected to be delivered in May 2020. In June 2019, the Company ordered two LR2
newbuildings from SWS, China, expected to be delivered in January and March 2021.
|
• |
In August 2019, the Company entered into a non-binding term sheet together with Trafigura Group and Golden Ocean Group Limited (“Golden Ocean”) to establish a JV for the supply of marine fuels.
|
• |
In August 2019, the Company entered into a sale and purchase agreement with Trafigura Maritime Logistics (“TML”) to acquire ten Suezmax tankers built in 2019. Five vessels will be chartered back to Trafigura on three-year time
charters at a daily rate of $28,400 with a 50% profit share above the base rate.
|
Average daily time charter equivalents ("TCEs")
|
||||||
($ per day)
|
Spot
|
Spot estimates
|
% covered
|
Estimated average daily BE rates
|
||
Q2 2019
|
Q1 2019
|
2018
|
Q3 2019
|
2019
|
||
VLCC
|
25,600
|
35,700
|
18,300
|
28,000
|
83%
|
24,500
|
SMAX
|
16,200
|
28,200
|
17,300
|
18,300
|
70%
|
21,300
|
LR2
|
18,100
|
24,000
|
14,900
|
16,800
|
68%
|
16,200
|
(i) |
48 vessels owned by the Company (14 VLCCs, 16 Suezmax tankers, 18 LR2/Aframax tankers);
|
(ii) |
three VLCCs that are under finance 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 $)
|
Q2 2019
|
Q1 2019
|
Six months ended June 2019
|
Six months ended June 2018
|
||||
Net income (loss) attributable to the Company
|
1.1
|
40.0
|
41.1
|
(36.5
|
)
|
|||
Add back:
|
||||||||
Loss on termination of vessel lease, net of cash paid
|
—
|
—
|
—
|
5.8
|
||||
Unrealised loss on marketable securities
|
—
|
1.4
|
1.4
|
0.3
|
||||
Loss on derivatives
|
5.6
|
4.1
|
9.7
|
—
|
||||
Less:
|
||||||||
Gain on derivatives
|
—
|
—
|
—
|
(7.0
|
)
|
|||
Unrealised gain on marketable securities
|
(1.7
|
)
|
—
|
(1.7
|
)
|
(0.8
|
)
|
|
Share of results of associated company
|
(0.8
|
)
|
—
|
(0.8
|
)
|
—
|
||
Release of accrued dry docking costs
|
—
|
—
|
—
|
(2.1
|
)
|
|||
Gain on sale of shares
|
—
|
—
|
—
|
(1.0
|
)
|
|||
Net income attributable to the Company adjusted for certain non-cash items
|
4.2
|
45.5
|
49.7
|
(41.3
|
)
|
|||
(in thousands)
|
||||||||
Weighted average number of ordinary shares
|
170,069
|
169,821
|
169,946
|
169,809
|
||||
(in $)
|
||||||||
Basic earnings (loss) per share
|
0.01
|
0.24
|
0.24
|
(0.21
|
)
|
|||
Basic earnings per share adjusted for certain non-cash charges
|
0.02
|
0.27
|
0.29
|
(0.24
|
)
|
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
|
8688637
|
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
|
8688637
|
2018
Apr-Jun
|
2019
Apr-Jun
|
CONDENSED CONSOLIDATED INCOME STATEMENT
(in thousands of $)
|
2019
Jan-Jun
|
2018
Jan-Jun
|
2018
Jan-Dec
|
|||||
166,821
|
193,408
|
Total operating revenues
|
431,683
|
336,442
|
742,266
|
|||||
(554
|
)
|
1,711
|
Other operating gain (loss)
|
969
|
(6,670
|
)
|
10,206
|
|||
94,461
|
90,664
|
Voyage expenses and commission
|
188,176
|
183,500
|
377,772
|
|||||
(6,450
|
)
|
(1,524
|
)
|
Contingent rental (income) expense
|
(2,555
|
)
|
(13,145
|
)
|
(19,738
|
)
|
32,116
|
37,693
|
Ship operating expenses
|
70,425
|
66,849
|
130,623
|
|||||
6,173
|
2,140
|
Charterhire expenses
|
4,244
|
8,490
|
21,244
|
|||||
9,221
|
10,988
|
Administrative expenses
|
20,880
|
18,769
|
37,294
|
|||||
31,755
|
28,318
|
Depreciation
|
55,719
|
63,546
|
122,566
|
|||||
167,276
|
168,279
|
Total operating expenses
|
336,889
|
328,009
|
669,761
|
|||||
(1,009
|
)
|
26,840
|
Net operating income (loss)
|
95,763
|
1,763
|
82,711
|
||||
256
|
413
|
Interest income
|
674
|
396
|
843
|
|||||
(24,110
|
)
|
(23,244
|
)
|
Interest expense
|
(46,685
|
)
|
(45,712
|
)
|
(93,275
|
)
|
—
|
—
|
Gain on sale of shares
|
—
|
1,026
|
1,026
|
|||||
802
|
1,683
|
Unrealized gain (loss) on marketable securities
|
302
|
491
|
(3,526
|
)
|
||||
—
|
842
|
Share of results of associated company
|
842
|
—
|
246
|
|||||
(556
|
)
|
(27
|
)
|
Foreign currency exchange loss
|
(173
|
)
|
(1,164
|
)
|
(869
|
)
|
1,869
|
(5,582
|
)
|
Gain (loss) on derivatives
|
(9,682
|
)
|
6,954
|
4,256
|
|||
138
|
55
|
Other non-operating items
|
92
|
94
|
506
|
|||||
(22,610
|
)
|
980
|
Net income (loss) before income taxes and non-controlling interest
|
41,133
|
(36,152
|
)
|
(8,082
|
)
|
||
(59
|
)
|
25
|
Income tax expense
|
(17
|
)
|
(73
|
)
|
(316
|
)
|
|
(22,669
|
)
|
1,005
|
Net income (loss)
|
41,116
|
(36,225
|
)
|
(8,398
|
)
|
||
(191
|
)
|
77
|
Net (income) loss attributable to non-controlling interest
|
(3
|
)
|
(276
|
)
|
(482
|
)
|
|
(22,860
|
)
|
1,082
|
Net income (loss) attributable to the Company
|
41,113
|
(36,501
|
)
|
(8,880
|
)
|
||
(0.13
|
)
|
0.01
|
Basic earnings (loss) per share attributable to the Company ($)
|
0.24
|
(0.21
|
)
|
(0.05
|
)
|
||
|
||||||||||
2018
Apr-Jun |
2019
Apr-Jun |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands of $)
|
2019
Jan-Jun |
2018
Jan-Jun |
2018
Jan-Dec |
|||||
—
|
||||||||||
(22,669
|
)
|
1,005
|
Net income (loss)
|
41,116
|
(36,225
|
)
|
(8,398
|
)
|
||
727
|
(36
|
)
|
Foreign exchange gain (loss)
|
70
|
889
|
893
|
||||
727
|
(36
|
)
|
Other comprehensive income (loss)
|
70
|
889
|
893
|
||||
(21,942
|
)
|
969
|
Comprehensive income (loss)
|
41,186
|
(35,336
|
)
|
(7,505
|
)
|
||
—
|
||||||||||
191
|
(77
|
)
|
Comprehensive (income) loss attributable to non-controlling interest
|
3
|
276
|
482
|
||||
(22,133
|
)
|
1,046
|
Comprehensive income (loss) attributable to the Company
|
41,183
|
(35,612
|
)
|
(7,987
|
)
|
||
(21,942
|
)
|
969
|
Comprehensive income (loss)
|
41,186
|
(35,336
|
)
|
(7,505
|
)
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of $)
|
Jun 30 2019
|
Dec 31 2018
|
||
ASSETS
|
||||
Current assets
|
||||
Cash and cash equivalents
|
90,793
|
66,484
|
||
Restricted cash
|
1,254
|
1,420
|
||
Marketable securities
|
978
|
836
|
||
Marketable securities pledged to creditors
|
8,552
|
8,392
|
||
Other current assets
|
192,151
|
231,113
|
||
Total current assets
|
293,728
|
308,245
|
||
Non-current assets
|
||||
Newbuildings
|
26,205
|
52,254
|
||
Vessels and equipment, net
|
2,605,477
|
2,476,755
|
||
Vessels under finance lease, net
|
84,709
|
90,676
|
||
Right of use assets under operating leases
|
17,260
|
—
|
||
Investment in finance lease
|
10,822
|
10,979
|
||
Investment in associated company
|
4,088
|
6,246
|
||
Goodwill
|
112,452
|
112,452
|
||
Other long-term assets
|
14,316
|
20,234
|
||
Total non-current assets
|
2,875,329
|
2,769,596
|
||
Total assets
|
3,169,057
|
3,077,841
|
||
LIABILITIES AND EQUITY
|
||||
Current liabilities
|
||||
Short term debt
|
128,091
|
120,479
|
||
Current portion of obligations under finance lease
|
11,042
|
11,854
|
||
Current portion of obligations under operating lease
|
8,907
|
—
|
||
Other current liabilities
|
89,858
|
81,885
|
||
Total current liabilities
|
237,898
|
214,218
|
||
Non-current liabilities
|
||||
Long term debt
|
1,624,097
|
1,610,293
|
||
Obligations under finance lease
|
82,280
|
87,930
|
||
Obligations under operating lease
|
8,698
|
—
|
||
Other long-term liabilities
|
1,196
|
1,183
|
||
Total non-current liabilities
|
1,716,271
|
1,699,406
|
||
Commitments and contingencies
|
||||
Equity
|
||||
Frontline Ltd. equity
|
1,214,667
|
1,163,800
|
||
Non-controlling interest
|
221
|
417
|
||
Total equity
|
1,214,888
|
1,164,217
|
||
Total liabilities and equity
|
3,169,057
|
3,077,841
|
2018
Apr-Jun
|
2019
Apr-Jun
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of $)
|
2019
Jan-Jun
|
2018
Jan-Jun
|
2018
Jan-Dec
|
|||||
OPERATING ACTIVITIES
|
||||||||||
(22,669
|
)
|
1,005
|
Net income (loss)
|
41,116
|
(36,225
|
)
|
(8,398
|
)
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||
32,373
|
28,959
|
Depreciation and amortization of deferred charges
|
56,941
|
64,767
|
125,038
|
|||||
554
|
—
|
Other operating loss (gain)
|
—
|
6,670
|
(10,308
|
)
|
||||
(6,450
|
)
|
(1,525
|
)
|
Contingent rental (income) expense
|
(2,556
|
)
|
(13,145
|
)
|
(21,273
|
)
|
—
|
—
|
(Gain) on sale of shares
|
—
|
(1,026
|
)
|
(1,026
|
)
|
|||
(784
|
)
|
(1,683
|
)
|
Unrealised (gain) loss on marketable securities
|
(302
|
)
|
(473
|
)
|
3,526
|
|
—
|
(842
|
)
|
Share of results of associated company
|
(842
|
)
|
—
|
(246
|
)
|
||
(1,560
|
)
|
6,158
|
(Gain) loss on derivatives
|
10,874
|
(6,578
|
)
|
(3,190
|
)
|
||
629
|
121
|
Other, net
|
654
|
1,693
|
743
|
|||||
(893
|
)
|
10,886
|
Change in operating assets and liabilities
|
34,951
|
(2,438
|
)
|
(38,695
|
)
|
||
1,200
|
43,079
|
Net cash provided by operating activities
|
140,836
|
13,245
|
46,171
|
|||||
INVESTING ACTIVITIES
|
||||||||||
(17,072
|
)
|
(87,735
|
)
|
Additions to newbuildings, vessels and equipment
|
(147,579
|
)
|
(203,243
|
)
|
(216,310
|
)
|
—
|
2,210
|
Finance lease payments received
|
2,210
|
2,471
|
5,336
|
|||||
—
|
—
|
Investment in associated company
|
—
|
—
|
(6,000
|
)
|
||||
—
|
—
|
Return of loan to associated company
|
3,000
|
—
|
—
|
|||||
—
|
—
|
Purchase of shares from non-controlling interest
|
(269
|
)
|
—
|
—
|
||||
—
|
—
|
Proceeds from sale of shares
|
—
|
17,757
|
17,757
|
|||||
(17,072
|
)
|
(85,525
|
)
|
Net cash used in investing activities
|
(142,638
|
)
|
(183,015
|
)
|
(199,217
|
)
|
FINANCING ACTIVITIES
|
||||||||||
51,355
|
89,515
|
Proceeds from debt
|
144,765
|
243,236
|
298,871
|
|||||
(27,757
|
)
|
(58,975
|
)
|
Repayment of debt
|
(124,446
|
)
|
(54,002
|
)
|
(172,412
|
)
|
(2,963
|
)
|
(2,180
|
)
|
Repayment of capital leases
|
(3,355
|
)
|
(6,163
|
)
|
(10,094
|
)
|
—
|
9,316
|
Net proceeds from issuance of shares
|
9,316
|
—
|
85
|
|||||
—
|
(335
|
)
|
Debt fees paid
|
(335
|
)
|
—
|
—
|
|||
(386
|
)
|
—
|
Dividends paid
|
—
|
(386
|
)
|
(386
|
)
|
||
20,249
|
37,341
|
Net cash (used in) provided by financing activities
|
25,945
|
182,685
|
116,064
|
|||||
4,377
|
(5,105
|
)
|
Net change in cash and cash equivalents and restricted cash
|
24,143
|
12,915
|
(36,982
|
)
|
|||
113,424
|
97,152
|
Cash and cash equivalents and restricted cash at start of period
|
67,904
|
104,886
|
104,886
|
|||||
117,801
|
92,047
|
Cash and cash equivalents and restricted cash at end of period
|
92,047
|
117,801
|
67,904
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of $ except number of shares)
|
2019
Jan-Jun |
2018
Jan-Jun
|
2018
Jan- Dec
|
|||
NUMBER OF SHARES OUTSTANDING
|
||||||
Balance at beginning of period
|
169,821,192
|
169,809,324
|
169,809,324
|
|||
Shares issued
|
1,146,900
|
—
|
11,868
|
|||
Balance at end of period
|
170,968,092
|
169,809,324
|
169,821,192
|
|||
SHARE CAPITAL
|
||||||
Balance at beginning of period
|
169,821
|
169,809
|
169,809
|
|||
Shares issued
|
1,147
|
—
|
12
|
|||
Balance at end of period
|
170,968
|
169,809
|
169,821
|
|||
ADDITIONAL PAID IN CAPITAL
|
||||||
Balance at beginning of period
|
198,497
|
197,399
|
197,399
|
|||
Stock compensation expense
|
438
|
676
|
1,025
|
|||
Adjustment on repurchase of non-controlling interest
|
(70
|
)
|
—
|
—
|
||
Shares issued
|
8,169
|
—
|
73
|
|||
Balance at end of period
|
207,034
|
198,075
|
198,497
|
|||
CONTRIBUTED CAPITAL SURPLUS
|
||||||
Balance at beginning and end of period
|
1,090,376
|
1,090,376
|
1,090,376
|
|||
OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||
Balance at beginning of period
|
224
|
2,227
|
2,227
|
|||
Other comprehensive income (loss)
|
70
|
889
|
893
|
|||
Adjustment on adoption of changes in ASC 825
|
—
|
(2,896
|
)
|
(2,896
|
)
|
|
Balance at end of period
|
294
|
220
|
224
|
|||
RETAINED DEFICIT
|
||||||
Balance at beginning of period
|
(295,118
|
)
|
(272,503
|
)
|
(272,503
|
)
|
Net income (loss) attributable to the Company
|
41,113
|
(36,501
|
)
|
(8,880
|
)
|
|
Adjustment on adoption of ASC 606
|
—
|
(16,631
|
)
|
(16,631
|
)
|
|
Adjustment on adoption of changes in ASC 825
|
—
|
2,896
|
2,896
|
|||
Balance at end of period
|
(254,005
|
)
|
(322,739
|
)
|
(295,118
|
)
|
EQUITY ATTRIBUTABLE TO THE COMPANY
|
1,214,667
|
1,135,741
|
1,163,800
|
|||
NON-CONTROLLING INTEREST
|
||||||
Balance at beginning of period
|
417
|
321
|
321
|
|||
Net income (loss) attributable to non-controlling interest
|
3
|
276
|
482
|
|||
Adjustment on repurchase of non-controlling interest
|
(199
|
)
|
—
|
—
|
||
Dividend paid to non-controlling interest
|
—
|
(386
|
)
|
(386
|
)
|
|
Balance at end of period
|
221
|
211
|
417
|
|||
TOTAL EQUITY |
1,214,888
|
1,135,952
|
1,164,217
|
(in thousands of $)
|
2019
Jan-Jun
|
2018
Jan- Jun
|
2018
Jan-Dec
|
|||
Net income attributable to the Company
|
41,113
|
(36,501
|
)
|
(8,880
|
)
|
|
(in thousands)
|
||||||
Weighted average number of ordinary shares
|
169,946
|
169,809
|
169,810
|