Euronav announces final half year results 2014

During its meeting of 27 August 2014, the Board of Directors of Euronav NV approved the final consolidated financial statements for the period ended 30 June 2014. This press release refers also to the one distributed on 23 July 2014.

The half year report including a full version of the condensed consolidated interim financial statements for the six months ended 30 June 2014, prepared in accordance with IAS 34 and including the auditor’s review report and the statement on the true and fair view of the condensed consolidated interim financial statements and the fair overview of the interim management report, can be downloaded on www.euronav.com.

So far in the third quarter, the Euronav VLCC fleet operated in the Tankers International pool, has earned on average USD 22,855per day and 38% of the available days have been fixed. The spot Suezmax fleet operated by Euronav directly has earned on average USD 23,531 per day and 73% of the available days have been fixed.

As announced in our first quarter earnings release, the company is applying the new accounting standards IFRS 10 and IFRS 11 as of 1 January 2014. As a result, the consolidation method applied to joint ventures has changed. Consequently, all the joint ventures in which the company has an interest have now been accounted for, using the equity method and reported in the income statement under the line: “Share of profit (loss) of equity accounted investees”. For more details about the impact of the first-time adoption of IFRS 10 and IFRS 11, please see note “v” included in the notes to the consolidated financial statements for the period ended 31 December 2013 in our annual report 2013.

If the company would have continued to apply the proportionate consolidation method for its joint ventures for the first half of 2014, the EBITDA would have been USD 101.0 million (first half 2013: USD 73.1 million), the EBIT would have been USD 18.9 million (first half 2013: USD -10.0 million) and the result after taxation would have remained the same.

Highlights and activity report for the first half year of 2014

January
On 2 January 2014 the VLCC Ardenne Venture (2004 – 318,658 dwt) was delivered to its new owners after the sale announced on 14 November 2013, for USD 41.7 million. The capital gain for Euronav of approximately USD 2.2 million was recognized in the first quarter of 2014.

On 3 January 2014 Euronav entered into a contract to acquire fifteen VLCCs for a total acquisition price of USD 980 million payable as the vessels are being delivered. The vessels have an average age of 4 years and are being operated in the Tankers International pool of which Euronav is a founding member. Deliveries of 14 vessels took place between late February and July. The last vessel (TBN Sandra (2011 – 323,527 dwt)) is expected to be delivered between the fourth quarter of 2014 and the first quarter of 2015.

On 7 January 2014 Euronav sold its oldest double-hulled VLCC Luxembourg (1999 – 299,150 dwt) for USD 28 million to an unrelated third party, resulting in a capital gain of USD 6.4 million, which was recognised upon delivery to its new owner on 28 May 2014. The vessel was wholly owned by Euronav. The vessel will be converted into a FPSO and will therefore leave the world VLCC trading fleet.

On 10 January 2014 Euronav received USD 50 million gross proceeds upon the issuance of 5,473,571 of the company’s ordinary shares in an equity offering at EUR 6.70 per share (based on the USD/EUR exchange rate of USD 1.3634 in effect on 6 January 2014). The proceeds of the offering were used to partially finance the Maersk acquisition.

On 13 January 2014 Euronav issued 60 perpetual convertible preferred equity securities, each with a denomination of USD 2.5 million, which are convertible into the company’s existing ordinary shares at the holders’ option. The proceeds of the issuance are being used to strengthen the company’s balance sheet liquidity, to diversify funding sources, and for general corporate and working capital purposes.

February
On 4 February 2014 Euronav issued USD 235.5 million in aggregate principal amount of 7-year redeemable unsecured bonds. The bonds were issued at 85% of their principal amount and bear interest at a rate of 5.95% per annum for the first year, payable semi-annually in arrears, which will increase to 8.50% per annum for the second and the third years and will further increase to 10.20% per annum from year four until maturity in 2021. The company may redeem the bonds at any time at par. The proceeds of the bonds were used to partially finance the Maersk acquisition.

On 5 February 2014 Euronav agreed to charter-in two vessels for a period of 12 months, the VLCC Maersk Hojo (2013 – 302,965 dwt) and the VLCC Maersk Hirado (2011 – 302,550 dwt), with the option to extend the charter for an additional 12 months. The time charters respectively commenced on 24 March 2014 and 3 May 2014 upon delivery of the vessel.

On 6 February 2014 Euronav issued 9,459,286 ordinary shares upon the conversion of 30 out of the 60 issued and outstanding perpetual convertible preferred equity securities. The remaining 30 outstanding perpetual convertible preferred equity securities may be converted into ordinary shares at any time at the holders’ option at a price of USD 7.928715 per share. The company has the option to convert the perpetual convertible preferred equity securities if the share price reaches a certain level over a certain period of time and the ordinary shares have been admitted to listing on the New York Stock Exchange or the Nasdaq Stock Exchange.

On 20 February 2014 Euronav took delivery of the first vessel from Maersk: the Nautilus (2006 – 307,284 dwt).

On 24 February 2014 Euronav received gross proceeds of USD 300 million upon the issuance of 32,841,528 of our ordinary shares in an equity offering at EUR 6.70 per share (based on the USD/EUR exchange rate of USD 1.3634 in effect on 6 January 2014). The proceeds of the offering were used to partially finance the Maersk acquisition.

On 25 February 2014 Euronav took delivery of the second vessel from Maersk: the Nucleus (2007 – 307,284 dwt).

March
On 1 March 2014, Euronav Ship Management Antwerp (ESMA) took over the ship management of the vessel FSO Africa (2002 – 442,000 dwt), owned by TI Africa Ltd. Her sister vessel FSO Asia (2002 – 442,000 dwt) is already managed by ESMA as from the conversion of the vessel into an FSO in 2009. The transition of management was carried out as planned.

Between 1 January and 10 March 2014 Euronav’s share capital increased several times following the exercise of the conversion option of convertible bonds issued in 2013 and maturing in 2018. That resulted in a share capital of USD 130,950,898.60 represented by 120,479,757 ordinary shares.

In March 2014 the company agreed to extend the period of the purchase option on the Antarctica (2009 – 315,981 dwt) and the Olympia (2008 – 315,981 dwt) by one month, until April 30th 2014.

On 25 March 2014 Euronav signed a new USD 500 million senior secured credit facility. The facility was available as from 25 March 2014 for the purpose of financing the acquisition of the Maersk Tankers fleet. The credit facility has a 6-year maturity as from closing of the syndication and bears interest at a rate based on LIBOR plus a margin of 2.75%.

April
On 9 April 2014 Euronav redeemed all of the convertible bonds issued in 2013 and maturing in 2018 not converted before 2 April 2014.

On 22 April 2014 Euronav’s share capital was increased following the exercise of the conversion option of the last outstanding convertible bond issued in 2013, for which the company received a conversion notice prior to the deadline for redemption. That resulted in the issuance of 14,101 new ordinary shares and in a share capital of USD 130,966,225.15 represented by 120,493,858 ordinary shares. None of the convertible bonds maturing in 2018 remain outstanding.

In April 2014 the option to purchase from Euronav the Olympia (2008 – 315,981 dwt) and the Antarctica (2009 – 315,981 dwt) was exercised by a third party for an aggregate purchase price of USD 178 million. The USD 20 million option fee that the company received in January 2011 was deducted from the purchase price. Euronav expects to deliver the Olympia in September 2014 and the Antarctica in January 2015, respectively. Both vessels remain employed under their current time charter contracts until their respective delivery dates. The sale will result in an estimated combined loss of USD 7.4 million which was recorded in the second quarter of 2014.

May
On 9 May 2014 Euronav took delivery of the third vessel from Maersk: the Navarin (2007 – 307,284 dwt).

June
In the course of June 2014 Euronav took delivery of another five vessels from Maersk: the Sara (2011 – 323,183 dwt), the Newton (2009 – 307,284 dwt), the Ilma (2012 – 314,000 dwt), the Nautic (2008 – 307,284 dwt) and the Ingrid (2012 – 314,000 dwt).

EURONAV TANKER FLEET
On 29 July 2014 Euronav took delivery of the fourteenth vessel from Maersk: the Iris (2012 – 314,000 dwt).

Given the current circumstances in the tanker market, the Board of Euronav NV has carefully reviewed all potential impairment indicators such as the current freight rates environment as well as the current market value of the fleet compared to its carrying amount. The Board tested the assets for impairment and at this point does not believe that an impairment loss needs to be recorded on its tankers. The Board will continue to closely monitor developments in the tanker market during the second half of 2014 and review possible impairment indicators again at the end of the current year.

The Board of Directors, represented by Peter G. Livanos, its Chairman, and the Executive Committee, represented by Paddy Rodgers, Chief Executive Officer and Hugo De Stoop, Chief Financial Officer, hereby confirm, in the name and for account of Euronav that, to the best of their knowledge, the condensed consolidated interim financial statements for the six months ended 30 June 2014 which have been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the European Union, give a true and fair view, of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation as a whole. The half year management report includes a fair overview of the important events that have occurred during the first half year and of the major transactions with the related parties, and their impact on the condensed consolidated interim financial statements, together with a description of the principal risks and uncertainties for the remainder of the financial year.
Source: Euronav