ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FRONTLINE PLC
1
CONTENTS
BOARD OF DIRECTORS AND OTHER OFFICERS 3
STATEMENT OF THE MEMBERS OF THE BOARD OF DIRECTORS AND OTHER RESPONSIBLE
PERSONS OF THE COMPANY FOR THE FINANCIAL STATEMENTS 5
CORPORATE GOVERNANCE REPORT 6
REMUNERATION REPORT 14
MANAGEMENT REPORT 18
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS 46
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 47
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 48
CONSOLIDATED STATEMENTS OF CASH FLOWS 50
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 53
PARENT COMPANY FINANCIAL STATEMENTS AND NOTES 106
INDEPENDENT AUDITOR’S REPORT 124
Throughout this annual report, the "Company," "we," "us" and "our" all refer to Frontline plc and its subsidiaries. We use the
term deadweight ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons, which is equivalent to 1,000
kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. The Company operates oil tankers of
two sizes: very large crude carriers, or VLCCs, which are between 200,000 and 320,000 dwt, and Suezmax tankers, which are
vessels between 120,000 and 170,000 dwt. The Company also operates LR2/Aframax tankers, which are clean product tankers
and range in size from 111,000 to 115,000 dwt. Unless otherwise indicated, all references to "USD," "US$" and "$" in this
annual report are U.S. dollars.
Frontline Plc – Annual Report and Financial Statements 2022
FRONTLINE PLC
BOARD OF DIRECTORS AND OTHER OFFICERS
2022
Our directors and executive officers, along with start or end date to the extent applicable to the reporting period, are as follows:
Name
Position Start date End date
Ola Lorentzon Chairman and Non-Executive Director not applicable not applicable
John Fredriksen Non-Executive Director not applicable not applicable
James O'Shaughnessy
Non-Executive Director and Audit Committee Chairman not applicable not applicable
Ole B. Hjertaker
Non-Executive Director May 2, 2022 not applicable
Steen Jakobsen Non-Executive Director May 2, 2022 not applicable
Marios Demetriades Non-Executive Director and Audit Committee member October 4, 2022 not applicable
Tor Svelland Non-Executive Director not applicable May 2, 2022
Jens Martin Jensen Non-Executive Director not applicable September 30, 2022
Lars H. Barstad Chief Executive Officer of Frontline Management AS not applicable not applicable
Inger M. Klemp Chief Financial Officer of Frontline Management AS not applicable not applicable
Certain biographical information about each of our current directors and executive officers is set forth below.
Ola Lorentzon has been Director of the Company since May 2015. Mr. Lorentzon was the Managing Director of Frontline
Management AS, a subsidiary of the Company, from April 2000 until September 2003. Mr. Lorentzon has served as a director
of Flex LNG Ltd. since June 2017 and is also a director and Chairman of Golden Ocean and a director of Erik Thun AB. Mr
Lorentzon was appointed Chairman of the Company in May 2021.
John Fredriksen has served as a Director of the Company since November 3, 1997. Mr. Fredriksen was a director of Frontline
2012 at the date of the merger between the Company and Frontline 2012 Ltd. Mr. Fredriksen is also a Director of a related party
Golden Ocean, a Bermuda company listed on Nasdaq and the OSE whose principal shareholder is Hemen. As of March 2023,
Mr. Fredriksen also serves on the Supervisory Board of Euronav.
James O'Shaughnessy has been a Director and member of the Audit Committee of the Company since September 2018. Mr.
O'Shaughnessy served as an Executive Vice President, Chief Accounting Officer and Corporate Controller of Axis Capital
Holdings Limited up to March 26, 2012. Prior to that Mr. O'Shaughnessy has among others served as Chief Financial Officer of
Flagstone Reinsurance Holdings and as Chief Accounting Officer and Senior Vice President of Scottish Re Group Ltd., and
Chief Financial Officer of XL Re Ltd. at XL Group plc. Mr. O'Shaughnessy received a Bachelor of Commerce degree from
University College, Cork, Ireland and is both a Chartered Director, Fellow of the Institute of Chartered Accountants of Ireland
and an Associate Member of the Chartered Insurance Institute of the UK. Mr. O'Shaughnessy also serves as a director and
member of the audit committees of SFL, Golden Ocean, Archer Limited, Avance Gas, ST Energy Transition I Ltd., CG
Insurance Group and Catalina General.
Ole B. Hjertaker has been a Director of the Company since May 2022. Mr. Hjertaker is employed by SFL Management AS
and has served as Chief Executive Officer since July 2009, prior to which he served as Chief Financial Officer from September
2006. Prior to joining SFL, Mr. Hjertaker was employed in the Corporate Finance division of DNB Markets, a leading shipping
and offshore bank. Mr. Hjertaker has extensive corporate and investment banking experience, mainly within the maritime/
transportation industries, and holds a Master of Science degree from the Norwegian School of Economics and Business
Administration. Mr. Hjertaker also serves as a director of SFL Corporation Ltd. and as chairman of NorAm Drilling AS.
Steen Jakobsen has served as a director of Flex LNG Ltd. since March 2021. Mr. Jakobsen joined Saxo Bank in 2000 and
serves as Chief Investment Officer. Mr. Jakobsen was the founder of then Saxo Bank’s renowned Outrageous Predictions. Prior
to joining Saxo Bank, he worked with Swiss Bank Corp, Citibank, Chase Manhattan, UBS and served as Global Head of
Trading, FX and Options at Christiania (now Nordea). Mr. Jakobsen graduated from the University of Copenhagen in 1989
with a MSc in Economics.
Marios Demetriades has been a Director of the Company since October 2022 and member of the audit committee since
November 2022. Mr. Demetriades is an experienced financial services professional with significant experience as a Non-
Executive Director in various listed and private companies in the banking, infrastructure and shipping industries, namely as
Frontline Plc – Annual Report and Financial Statements 2022 3
Non-Executive Director and Chairman of the audit and risk committees of Gordian Holdings Ltd.; Non-Executive Director and
member of the audit and risk committees of FxPro Financial Services Ltd.; Non-Executive Director, Chairman of the audit
committee and member of the risk and compliance committees of BnkPro Europe Ltd and BnkPro Ltd.; and Non-Executive
Director and Deputy Chairman of ADS Maritime Holdings. He previously served as the Minister of Transport,
Communications and Works for the Republic of Cyprus from 2014 to 2018 and held various positions in the accounting,
investment and banking sectors. He is a qualified Chartered Accountant and Chartered Financial Analyst holder and a member
of the CFA Institute, the Institute of Chartered Accountants in England and Wales and the Institute of Certified Public
Accountants of Cyprus (ICPAC). Mr. Demetriades is a Cypriot citizen and resides in Cyprus.
Lars H. Barstad has served as Chief Executive Officer of Frontline Management AS since October 2020, and as Commercial
Director since 2015. Mr. Barstad has close to 18 years’ experience in the wider shipping and oil trading industry, firstly as
Director of Imarex Pte Ltd (now Marex) in Singapore. He joined Glencore Ltd in 2007, working in London as head of FFA
trading. In 2012 he moved to Noble Group Ltd, heading up their freight derivatives desk in London with a cross commodities
mandate. Mr. Barstad holds a BSc in Financial Economics from BI Norwegian Business School.
Inger M. Klemp has served as Chief Financial Officer of Frontline Management AS since June 1, 2006 and served as principal
financial officer of Frontline 2012 at the date of the merger between the Company and Frontline 2012 Ltd. Mrs. Klemp has
served as a director of Independent Tankers Corporation Limited since February 2008 and has served as Chief Financial Officer
of Golden Ocean from September 2007 to March 2015. Mrs. Klemp served as Vice President Finance from August 2001 until
she was promoted in May 2006. Mrs. Klemp graduated as MSc in Business and Economics from the Norwegian School of
Management (BI) in 1986. Prior to joining the Company, Mrs. Klemp was Assistant Director Finance in Color Group ASA and
Group Financial Manager in Color Line ASA, an OSE listed company and before that was Assistant Vice President in Nordea
Bank Norge ASA handling structuring and syndication of loan facilities in the international banking market and a lending
officer of Danske Bank A/S.
K. C. SAVERIADES & CO. LLC
COMPANY SECRETARY
John Kennedy Street,
IRIS House, Office 740B,
3106 Limassol, Cyprus
Frontline Plc – Annual Report and Financial Statements 2022 4
FRONTLINE PLC
STATEMENT OF THE MEMBERS OF THE BOARD OF DIRECTORS AND OTHER RESPONSIBLE
PERSONS OF THE COMPANY FOR THE FINANCIAL STATEMENTS
2022
In accordance with Article 9 sections (3c) and (7) of the Transparency Requirements (Securities for Trading on Regulated
Markets) Law of 2007, 2009, 2012 and 2016 of Cyprus (“Law”) we, the members of the Board of Directors and other
responsible persons for the consolidated financial statements and the financial statements of Frontline Plc (“the Company”), for
the year ended December 31, 2022 confirm that, to the best of our knowledge:
a) the consolidated financial statements and the financial statements of the Company for the year ended December 31, 2022
which are presented on pages 46 to 123.
(i) were prepared in accordance with International Financial Reporting Standards, as adopted by the European Union in
accordance with provisions of Article 9, section 4 of the Law, and
(ii) give a true and fair view of the assets and liabilities, the financial position and the profit or losses of Frontline Plc, and the
business that are included in the financial statements as a total, and
b) the Management Report provides a fair review of the developments and the performance of the business as well as the
financial position of Frontline Plc, together with a description of the principal risks and uncertainties that they are facing.
Limassol, April 27, 2023
Frontline Plc – Annual Report and Financial Statements 2022 5
FRONTLINE PLC
CORPORATE GOVERNANCE REPORT
2022
Introduction
The Company was registered and is validly existing and in good standing as a Cyprus public company limited by shares, under
registration number 442213 as from December 30, 2022 following its redomiciliation from Bermuda to Cyprus pursuant to the
provisions of sections 354 B-H of the Cyprus Companies’ Law Cap. 113 (the “Law”).
The Amended and Restated Memorandum and Articles of Association of the Company were approved by a special resolution of
the shareholders of the Company dated December 20, 2022 and were rendered effective by operation of law on December 30,
2022, the date on which the Company was officially redomiciled to Cyprus. The purposes and powers of the Company are set
forth in section 3(1)-(44) of the Company’s Memorandum of Association.
Prior to the redomiciliation, Frontline Ltd.’s ordinary shares were listed on the New York Stock Exchange (“NYSE”) and Oslo
Stock Exchange (“OSE”) under the symbol “FRO.” Upon effectiveness of the Redomiciliation, the Company’s ordinary shares
continue to be listed on the NYSE and OSE. The NYSE is our primary listing and the OSE is our secondary listing.
Part A
In accordance with section 4.4(1) of the Oslo Børs Rule Book II, as a Company registered in Cyprus with a secondary listing on
the OSE and with Norway as its host state, we may prepare our corporate governance report in accordance with a code of
practice equivalent to the Norwegian Code of Practice for Corporate Governance that is applicable in the state where we are
registered or in our primary market. We do not use the code of practice applicable in our primary market as pursuant to an
exception under the NYSE listing standards available to foreign private issuers, we are not required to comply with all of the
corporate governance practices followed by U.S. companies under the NYSE listing standards. As such, we have prepared this
corporate governance report in accordance with the Cyprus Stock Exchange Corporate Governance Code 5th revised edition -
January 2019 ("CSE Code") which is publicly available on the Cyprus Stock Exchange's website at www.cse.com.cy.
The Company is not required to comply with the CSE Code, the Norwegian Code of Practice for Corporate Governance, or the
corporate governance practices followed by U.S. companies under the NYSE listing standards. The Company has reported the
extent to which its current corporate governance practices align with the principles and underlying applicable provisions of the
CSE Code on a comply or explain basis. The Company's corporate governance practices as documented herein are applicable
throughout the consolidated group to which it belongs.
Part B
The Company's current corporate governance practices align with the principles and underlying applicable provisions of the
CSE Code, except as follows:
• Α.1.2 and A.1.3 - The Board does not currently have a formal schedule of matters specifically reserved for its decision.
Although a schedule has not yet been formalized, the required matters as per the provision are subject to the Board of
Directors' decisions.
• A.2.2 - The Board of Directors is comprised of non-executive directors only who are responsible for overseeing our
management led by our Chief Executive Officer. The Board of Directors considers this to be an appropriate
governance and management structure.
• A.4.1 - The Nomination Committee is comprised of two directors neither of which is designated as the Chairman. The
designation of a Chairman is not considered necessary given the composition of the committee.
• B.1 - The Company does not have a formalized policy on executive Director’s remuneration and for fixing the
remuneration packages of individual Directors. The Company is in the process of preparing a formal remuneration
policy.
• B.3 (Disclosure): The Company’s Report on Corporate Governance should contain a statement of the remuneration
policy and related criteria as well as details of the remuneration of the Executive and Non-Executive Directors. The
Company does not have a formalized policy on executive Director’s remuneration and for fixing the remuneration
packages of individual Directors. The Company is in the process of preparing a formal remuneration policy.
• C.3.7 - The Board has not appointed an executive as the Compliance with Code of Corporate Governance Officer as
the Company is not required to comply with such a code.
Frontline Plc – Annual Report and Financial Statements 2022 6
• C.3.10 - the Company's internal audit function does not follow the International Standards for the Professional practice
of Internal Auditing, of the International Institute of Internal Auditors. Instead, the Company's internal audit function
follows the relevant standards to support Management's annual report on internal control over financial reporting as
described in the report.
Corporate Governance Report 2022
The Board of Directors believes that sound corporate governance constitutes a fundamental factor in achieving the Company's
business strategy for the long-term benefit of its shareholders and all other stakeholders. The Board of Directors acknowledges
that there is an on-going process of formulating corporate governance practices based on both international and local
conditions. In light of the above, the following confirmations and reports are made:
1. Board of Directors
The Board of Directors is comprised of the following non-executive directors who are responsible for overseeing our
management:
Name Age
Position
Ola Lorentzon 73 Chairman and Non-Executive Director
John Fredriksen 78 Non-Executive Director
James O'Shaughnessy
59 Non-Executive Director and Audit Committee Chairman
Ole B. Hjertaker
56 Non-Executive Director
Steen Jakobsen 58 Non-Executive Director
Marios Demetriades 51 Non-Executive Director and member of the Audit Committee
The Company's objective is to appoint board members with diversified educational and professional backgrounds in order to
reflect a sufficiently wide range of experiences of corporate finance and/or the shipping industry, irrespective of age or gender.
As permitted under Cyprus law and our Articles of Association, four members of our Board of Directors, Mr. Ola Lorentzon,
Mr. James O'Shaughnessy, Mr. Steen Jakobsen and Mr. Marios Demetriades are independent.
The Directors may exercise all the powers of the Company (save than those powers vested by Law or the Articles of
Association to the General Meeting) including but not limited to borrowing or raising money, charging or mortgaging the
Company’s undertaking, property or uncalled capital, issuing of debentures, debenture stock and other securities as security for
any debt, loss or obligation of the Company or any third party and managing the day to day business affairs of the Company.
The Directors may grant retirement pensions or annuities or other gratuities or allowances including allowances on death to any
Director or to the widow of or the dependents of any Director in respect of services rendered by him to the Company.
Furthermore, the Company may make payments towards insurances or trusts in respect of a Director and may include rights in
respect of such pensions, annuities and allowances in a Director’s terms of engagement, without being precluded from granting
such retirement pensions or annuities or other gratuities or allowances not as a part and independently of the terms of any
engagement but upon the retirement, resignation or death of a Director as the Board of Directors may decide. The Directors
may also establish and maintain any employees’ share scheme, share option or share incentive scheme approved by ordinary
resolution of the shareholders whereby selected employees (including Directors) are given the opportunity of acquiring shares
in the capital of the Company.
Pursuant to the Articles of Association the following Directors’ Committees each comprising of two Directors have been
constituted:
i. Audit Committee;
ii. Nomination Committee;
iii. Remuneration Committee.
Our Audit Committee currently consists of two independent directors, Mr. James O'Shaughnessy, the Audit Committee
Chairman and Financial Expert, and Mr. Marios Demetriades.
Frontline Plc – Annual Report and Financial Statements 2022 7
Our nomination committee, established in February 2023, consists of one independent director, Mr. Ola Lorentzon, and one
director, Mr. Ole B. Hjertaker, and is responsible for identifying and recommending potential candidates to become board
members and recommending directors for appointment to board committees.
Our remuneration committee, established in February 2023, consists of two independent directors, Mr. Ola Lorentzon and Mr.
Marios Demetriades, and is responsible for establishing the executive officers' compensation and benefits.
The Board of Directors met 20 times in the year ended December 31, 2022.
Subsequent to the redomiciliation from Bermuda to Cyprus, all the scheduled board meetings held each year are in principle
physically held in Cyprus unless exceptionally another location is appropriate.
Pursuant to the Articles of Association and the Law, the minimum number of Directors shall be not less than two and pursuant
to the Articles of Association the maximum number shall be limited to seven. The minimum and maximum number of directors
can be increased or decreased by ordinary resolution of the General Meeting. Save if the majority of the Directors are residents
of Cyprus the majority of Directors may not be resident of the same jurisdiction.
The Law and the Articles of Association do not prohibit a director from being a party to or otherwise having an interest in any
transaction or arrangement with the Company or in which the Company is otherwise interested. However a Director who is in
any way, whether directly or indirectly interested in a contract or proposed contract with the Company shall declare the nature
of his interest at a meeting of the Directors in accordance with the procedure specified by the Law. Furthermore pursuant to
Article 93 of the Articles of Association any Director or any company or partnership which or of which any Director is a
shareholder, partner or director may transact with the Company and share in the profits of any contract or arrangement with the
Company as if he were not a Director and to personally gain any profit or benefit that may result as a consequence of such
contract or arrangement. A Director shall not vote on any subject in respect of such contract or arrangement and if he does so
vote his vote shall not be counted and shall also not be counted for the purpose of determining whether a quorum is present at
the meeting of the Directors.
Directors are elected or re-elected by an ordinary resolution of the shareholders in General Meeting. In the premises, a person
holding a majority of voting shares of the Company will be able to elect all of the Directors and to prevent the election of any
person whom such shareholder does not wish to be elected. There are no provisions for cumulative voting in the Law or the
Articles of Association of the Company and the Company’s Articles of Association do not contain any super-majority voting
requirements.
Pursuant to the Articles of Association, Directors hold office for a period of one year from the date of their appointment or until
the following Annual General Meeting of the Company (if their appointment was effected after the date of the previous Annual
General Meeting) whereby they shall be eligible at the following Annual General Meeting to re-election for subsequent one
year terms.
The existing Directors and the shareholders by ordinary resolution in General Meeting have the right to appoint at any time and
from time to time any persons as Directors either to fill a vacant position or in addition to the existing directors subject to the
maximum number specified in the Articles of Association.
There are also procedures in the Articles of Association for the removal of one or more directors by the shareholders before the
expiration of his or her term of office. Shareholders holding 5% or more of the voting shares of the Company may require the
Directors to convene a shareholder meeting to consider a resolution for the removal of a director or place a proposal for such
resolution in the agenda of a General Meeting already called by Directors. Such resolution can be approved by simple majority
of the shareholders notwithstanding anything in the Articles of Association or in any agreement between the Company and such
Director. Such removal shall be without prejudice to any claim the Director may have for damages for breach of any contract of
service between him and the Company. Any vacancy created by such removal may be filled at the meeting by the election of
another person by the shareholders or in the absence of such election, by the Directors.
Pursuant to the Articles of Association the office of Director shall be vacated if the Director:
i. becomes bankrupt or makes any arrangement or composition with his creditors generally;
ii. becomes prohibited from being a Director by reason of (a) being convicted of an offence in connection with the
promotion, formation or management of a company and (b) a Cyprus Court of appropriate jurisdiction has
consequently issued an injunction prohibiting such Director from taking part in the management of a company for a
period not exceeding five years;
Frontline Plc – Annual Report and Financial Statements 2022 8
iii. becomes of unsound mind;
iv. resigns by notice in writing to the Company; or
v. shall for more than six months have been absent without permission of the Directors from at least three consecutive
duly convened meetings of the Directors.
Pursuant to the Law, any provision whether contained in the articles of association or in any contract with a company to
discharge any director of the company or to cover against any liability that under any rule of law he would otherwise have in
respect of any negligence, omission, breach of duty or breach of trust such officer may be guilty of, shall be void. However, it is
possible for a company to indemnify any such officer for any liability arising in him for the defense of any proceedings whether
civil or criminal in which a judgement was made in his favor or in which he was acquitted.
In alignment with the Law, the Articles of Association (Article 143) provide that the Directors shall be indemnified and secured
harmless out of the assets and profits of the Company from and against all actions, costs, charges, losses, damages and expenses
which they or any of them shall or may incur by reason of any contract entered into or any act done, concurred in or omitted in
or about the execution of their duties except such (if any) as they shall incur or sustain by or through their own willful act,
neglect or default.
2. Director's Remuneration
The Company established a Remuneration Committee in February 2023, comprising two independent directors, Mr. Ola
Lorentzon and Mr. Marios Demetriades. The Company is in the process of preparing a formal remuneration policy. Refer to the
2022 Remuneration Report for further details.
3. Accountability and Audit
We currently have an Audit Committee, which is responsible for overseeing the quality and integrity of our financial statements
and our accounting, auditing and financial reporting practices, our compliance with legal and regulatory requirements, the
independent auditor's qualifications, independence and performance and our internal audit function. In 2018, Mr. James
O'Shaughnessy was appointed to serve on the Audit Committee. Mr. James O'Shaughnessy is the Chairperson of the Audit
Committee and the Audit Committee Financial Expert. In 2022, Mr. Marios Demetriades was appointed to serve on the Audit
Committee. We have determined that a director may sit on the board of three or more audit committees and such simultaneous
service would not impair the ability of such member to effectively serve on the Board or Audit Committee. Under Cyprus law,
we are required to have an audit committee with a majority of independent members. The Audit Committee Charter, which is
available on the Company's website, has been adopted by the Board of Directors and governs the operation of the Audit
Committee.
Disclosure Controls and Procedures
Management assessed the effectiveness of the design and operation of the Company's disclosure controls and procedures as of
the end of the period covered by this annual report as of December 31, 2022. Based upon that evaluation, the principal
executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective
as of the evaluation date.
Management's annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process designed by, or under the supervision of, the Company's principal
executive and principal financial officers and effected by the Company's Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
i. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
ii. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made
only in accordance with the authorizations of Company's management and directors; and
Frontline Plc – Annual Report and Financial Statements 2022 9
iii. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted the evaluation of the effectiveness of the Company's internal controls over financial reporting using the
control criteria framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its
report entitled Internal Control-Integrated Framework (2013).
Our management with the participation of our principal executive officer and principal financial officer assessed the
effectiveness of the design and operation of the Company's internal controls over financial reporting as of December 31, 2022.
Based upon that evaluation, our management with the participation of our principal executive officer and principal financial
officer concluded that the Company's internal controls over financial reporting are effective as of December 31, 2022.
Changes in internal control over financial reporting
There were no changes in the Company's internal controls over financial reporting that occurred during the period covered by
this annual report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over
financial reporting.
Going concern
The Company intends to continue to function as a going concern for the next twelve months. We believe that cash on hand and
borrowings under our current and committed credit facilities, along with cash generated from operating activities will be
sufficient to fund our requirements for, at least, the twelve months from the date of this annual report.
4. Relationship with Shareholders
Shareholders Meetings
Pursuant to the Law and Article 51 of the Articles of Association each year the Company shall hold a general meeting as its
annual general meeting in addition to any other meetings in that year and shall specify the meeting as such in the notices calling
it and no more than 15 months shall elapse between the date of one annual general meeting and that of the next. The annual
general meeting statutory requirement cannot be waived. All general meetings other than annual general meetings shall be
designated as extraordinary general meetings. All business shall be deemed special that is transacted at an extraordinary general
meeting and also all that is transacted at an annual general meeting with the exception of declaring a dividend, the consideration
of the accounts, balance sheets and reports of Directors and auditors, the re-election of Directors and the appointment of and
fixing of auditors’ remuneration.
Pursuant to Article 56 of the Company’s Articles of Association the necessary quorum for any general meeting annual or
extraordinary shall be at least three (3) members present in person or by proxy and entitled to vote. The Law does not impose
specific quorum requirements for any specific transactions. If the Company has one shareholder, such shareholder present in
person or by proxy shall constitute quorum for any general meeting.
Subject to the provisions of section 126 (1A) of the Law the Directors upon application by shareholders of the Company who
hold at the date of filing of the application no less than 1/20
th
of the paid-up capital of the Company carrying the right to vote
must immediately duly convene an extraordinary general meeting for the purposes specified in such application.
Subject to the provisions of sections 127 (B)(1)(a)(b) of the Law any shareholder or shareholders which hold at least 5% of the
issued share capital representing at least 5% of total voting rights shall have the right to add an item to the agenda of an annual
general meeting provided that each such item is accompanied by stated reasons justifying its inclusion or a proposed resolution
for approval at the general meeting and place a proposed resolution on a matter on the agenda of a general meeting.
Extraordinary General Meetings may also be called at the discretion of the Directors.
Frontline Plc – Annual Report and Financial Statements 2022 10
There shall be a 21 day notice in writing at least for all general meetings but in the case of a general meeting other than the
annual general meeting or a meeting for the passing of a special resolution there shall be a 14 day notice provided the Company
offers technical facilitation to its shareholders to vote through electronic means and a special resolution that shortens the notice
period to 14 days has been approved in the immediately preceding annual general meeting or at a meeting conducted after that
meeting. The Directors may fix any date as the record date for determining those shareholders entitled to receive notice of and
vote at a meeting.
Pursuant to Article 80 of the Company’s Articles of Association a resolution in writing approved by shareholders which in total
represent at least 75% of voting shares shall be valid and effective as if the same had seen passed at a validly convened general
meeting of the Company, provided that at least 28 clear days notice of the intention to propose the resolution is given to or
served on all shareholders entitled to receive the resolution notice and to vote on the proposed resolution.
All general meetings are to be held at such time and place as the Directors shall determine. Following the Company’s
redomiciliation to Cyprus the Directors have resolved that all general meetings of the Company shall be held in Cyprus.
Actions requiring the sanction and approval of the General Meeting
The key matters which require the approval of the shareholders include the following:
1. Amendment of the Memorandum and Articles of Association (which requires approval of at least 75% of voting
shares);
2. Increase of share capital (which requires a simple majority when at least half of the issued share capital is represented.
In any other case a majority of 2/3rds of the votes corresponding to the issued share capital represented is required);
3. Reduction of share capital including the reduction of the share premium reserve account (which requires approval of at
least 75% of voting shares);
4. Consolidation and division of all or any of the share capital into shares of a larger or smaller amount (which requires a
simple majority);
5. Variation of the rights attached to any class of shares (which requires a simple majority when at least half of the issued
share capital is represented. In any other case a majority of 2/3rds of the votes corresponding to the issued share capital
represented is required);
6. Issue of new shares with preferred, deferred or other special rights or such restrictions whether in regard to dividend,
voting, return of capital or otherwise (which requires a simple majority);
7. Conditions under which redeemable preference shares are liable to be redeemed at the option of the Company or the
shareholders (which requires approval of at least 75% of voting shares);
8. Purchase of Company’s own shares (which requires approval of at least 75% of the voting shares);
9. Cross Border Merger whether the Company is the surviving or absorbed entity (which requires approval of at least
75% of voting shares);
10. Approval of a plan or contract involving the transfer/sale of shares or any class of shares (which requires approval by
the holders of shares not less than 9/10ths of the value of the shares to be transferred);
11. Removal of Directors (which requires a simple majority).
The above stated voting approval percentages are set by the Law and as such cannot be varied or modified by the Company’s
Articles of Association.
The shareholders are not permitted to pass any resolutions relating to the management of the Company’s business affairs unless
there is a pre-existing provision in the Company’s Articles of Association which confers such rights on the shareholders.
Shareholders’ Rights
Frontline Plc – Annual Report and Financial Statements 2022 11
The shares of the Company are ordinary shares which do not confer redemption, conversion, sinking fund rights or other special
rights to its holders. Pursuant to the Law and Article 66 of the Articles of Association every member shall have one vote for
each share he holds. The shareholders of the Company are entitled to a percentage of dividends equal to their respective
shareholding percentages in the issued share capital of the Company. There are no limitations on the right of non-Cypriots or
non-residents of Cyprus to hold or vote on the Company’s ordinary shares.
Article 5 of the Company’s Articles of Association provides that the unissued authorized ordinary shares proposed to be issued
pari passu with existing issued ordinary shares shall be at the disposal of the Directors which may exercise the powers of the
Company without prior shareholder approval (subject to the Pre-Emption Right stated below) to offer, allot, grant options over
or grant any right or rights to subscribe for such newly issued shares.
Pursuant to the Law and Article 21 of the Articles of Association all additional shares proposed to be issued for cash
consideration shall, prior to issuance, be first offered to the existing shareholders in the nearest proportion to the number of
shares already held by them at a date prescribed by the directors and such offer shall be made by a notice fixing the number of
shares that provide a right to purchase shares which each shareholder is entitled to be allotted and restricting the time (which
shall be not less than 14 days) in which the offer if not accepted shall be deemed as having been declined and under such
circumstances the Directors may allot or otherwise dispose such shares in their discretion (the “Pre-Emption Right”).
The Pre-Emption Right cannot be excluded or restricted in the Articles of Association, but only by a decision of the
shareholders in General Meeting. If the directors propose to the General Meeting an exclusion or restriction of the Pre-Emption
Right they have the obligation to submit to the general meeting a written report stating the reasons for the restriction or
exclusion of the Pre-Emption Right and justifying the issuing price proposed. The proposed restriction or exclusion may be
specific to a specific proposed share issue or general provided that the maximum number of shares and the maximum period
during which the relevant shares may be issued are indicated. The restriction or exclusion of the Pre-Emption Right requires
shareholder approval by simple majority when at least half of the issued share capital is represented. In any other case a
majority of 2/3
rds
of the votes corresponding to the issued share capital represented is required.
Pursuant to the Law and Article 50 of the Company’s Articles of Association the Company in General Meeting may approve by
special resolution (75% and over of voting shares) the purchase or acquisition of its own shares either directly or through a
person acting in his own name but on behalf of the Company. Pursuant and subject to the provisions of the Law, the monetary
consideration of the act of acquisition by the Company of its own shares must be paid from the realized but not distributed
profits of the Company.
The maximum period permitted for the Company to hold its own shares is two years. The consideration price for the acquisition
of own shares shall not exceed by more than 5% the average market price of the Company’s shares during the last five stock
exchange meetings prior to making of the purchase. The total nominal value of shares which can be acquired may not at any
time exceed 10% of the issued share capital or 25% of the average value of the transactions which have been traded over the
last thirty days prior to the acquisition, whichever of these amounts is the smallest.
Trusts
In alignment with the relevant provisions of the Law, Article 10 of the Articles of Association states that no person shall be
recognized by the Company as holding any share upon any trust and the Company shall not be compelled or bound in any way
to recognize any interest in any share equitable or otherwise or any other rights in respect to any share except an absolute right
to the entirety thereof in the registered holder subject to the proviso that the Company may if it so desires and has been notified
in writing thereof, recognize the existence of a trust on any share although it may not register the same in the Register of the
Company.
In the premises the Company’s relationship is with the registered holder of the shares. If the registered holder holds the shares
in trust for someone else (the beneficial owner) the beneficial owner may give instructions to the registered holder on how to
vote on the shares. Conversely, the registered shareholder in exercising his right to appoint a proxy to attend and vote on its
behalf in a general meeting, it may appoint the beneficial owner as the registered holder’s proxy.
Major Shareholdings
The following table presents certain information as of April 27, 2023, regarding the ownership of our ordinary shares with
respect to each shareholder whom we know to beneficially own more than 5% of our outstanding ordinary shares.
Frontline Plc – Annual Report and Financial Statements 2022 12
Owner
Number of
shares %*
Hemen Holding Ltd.** 79,145,703 35.6 %
*Based on issued share capital of 222,622,889.
** C.K. Limited is the trustee of two trusts (the “Trusts”) settled by Mr. John Fredriksen, one of our directors. The Trusts
indirectly hold all of the shares of Hemen and Greenwich Holdings Limited, the sole shareholder of Hemen. Accordingly, C.K.
Limited, as trustee, may be deemed to beneficially own the 79,145,703 ordinary shares of Frontline that are owned by Hemen
and beneficially owned by Greenwich Holdings Limited representing 35.6% of the issued and outstanding ordinary shares of
Frontline. The beneficiaries of the Trusts are members of Mr. Fredriksen’s family. Mr. Fredriksen is neither a beneficiary nor a
trustee of either Trust. Therefore, Mr. Fredriksen has no economic interest in the ordinary shares of Frontline described above
and Mr. Fredriksen disclaims any control over such ordinary shares of Frontline, save for any indirect influence he may have
with C.K. Limited, as the trustee of the Trusts, in his capacity as the settlor of the Trusts.
Our major shareholders have the same voting rights as our other shareholders. We are not aware of any arrangements, the
operation of which may at a subsequent date result in a change in control of the Company.
Frontline Plc – Annual Report and Financial Statements 2022 13
FRONTLINE PLC
REMUNERATION REPORT
2022
Introduction
As a company incorporated in Cyprus and listed on the Oslo Stock Exchange, we are committed to providing transparency and
accountability to our stakeholders. In accordance with the Directive 2007/36/EC, as amended by Directive (EU) 2017/828
(together, the "Directive"), we are pleased to present our remuneration report, which outlines the details of our executive
remuneration and benefits package. The report has been prepared by the Board of Directors of Frontline plc in accordance with
the Cyprus Stock Exchange ("CSE") Corporate Code of Governance 5th Editions (Updated) January 2019 and the requirements
of the Encouragement of the Long-Term Active Participation of the Shareholders Law of 2021, Law 111(I)/2021.
The Report comprises remuneration to the Company's Chief Executive Officer ("CEO"), who has been employed by Frontline
Management AS, a subsidiary of Frontline plc for the financial year 2022, along with members of the Board of Directors (the
"Board"). For the year ended December 31, 2022 the reporting Company had no employees. The purpose of the Report is to
provide a comprehensive, clear and understandable overview of awarded and due gross salary and remuneration to the Board
for the last financial year.
The Company will present this report to the Annual General Meeting in 2023. The Company is in the process of preparing a
formal remuneration policy for presentation to the Annual General Meeting in 2023, along with the report for approval.
Remuneration committee
The Company established a Remuneration Committee in February 2023, comprising two independent directors, Mr. Ola
Lorentzon and Mr. Marios Demetriades. Prior to its establishment, the remuneration of the CEO was determined by the Board
with the overall objective to enhance shareholder value, by aligning the interests of shareholders and the CEO, as well as
attracting and retaining qualified personnel.
The remuneration of the CEO is split between fixed and variable components. The variable component is split between share-
based compensation, linked to the long-term performance of the Company, along with a cash bonus, linked to the performance
of the Company in the year. The fixed component, which includes salary and other benefits such as pension, is reviewed
annually by the Board of Directors to ensure that it is aligned with the overall objectives of the Company's remuneration.
The Board of Directors
The remuneration of members of the Board consists of an annual fixed fee determined annually by the general meeting of the
Company and to not exceed $0.6 million in aggregate for the year ended December 2022 and grants under the Company's long-
term incentive scheme as noted below. In addition, members of the audit committee receive additional fees for such service.
No variable remuneration has been reclaimed for the Directors or CEO in relation to the year ended December 31, 2022.
Long-term incentive scheme
In December 2021, the Board approved the grant of 1,280,000 synthetic options to employees and board members according to
the rules of the Company’s synthetic option scheme approved on December 7, 2021. The synthetic options have a five year
term expiring in December 2026. The vesting period is 12 months for the first 27.5% of options, 24 months for the next 27.5%
of options and 36 months for the final 45% of options. The synthetic options will be settled in cash based on the difference
between the market price of the Company’s shares on the date of exercise and the exercise price.
Summary of Company performance
Profit for the period increased by $432.0 million in the year ended December 31, 2022 as compared to the year ended
December 31, 2021. For a full analysis of the Company performance please see our Consolidated Financial Statements and
Management report for the year ended December 31, 2022.
Frontline Plc – Annual Report and Financial Statements 2022 14
Total remuneration of the Directors and CEO
Our Directors and CEO, along with start or end date to the extent applicable to the reporting period, are as follows:
Name
Position Start date End date
Ola Lorentzon Chairman and Non-Executive Director not applicable not applicable
John Fredriksen Non-Executive Director not applicable not applicable
James O'Shaughnessy
Non-Executive Director and Audit Committee Chairman not applicable not applicable
Ole B. Hjertaker
Non-Executive Director May 2, 2022 not applicable
Steen Jakobsen Non-Executive Director May 2, 2022 not applicable
Marios Demetriades Non-Executive Director and Audit Committee member October 4, 2022 not applicable
Tor Svelland Non-Executive Director not applicable May 2, 2022
Jens Martin Jensen Non-Executive Director not applicable September 30, 2022
Lars H. Barstad Chief Executive Officer of Frontline Management AS not applicable not applicable
Table 1 – Total remuneration of the Directors & CEO
Fixed Variable
Pension
expense
Total
Proportion
fixed
Proportion
variable
(in thousands of $)
Base
salary
Fees
Other
benefits
One-
year
variable
Multi-
year
variable
Ola Lorentzon
— 150 — 238 — — 388 39 % 61 %
John Fredriksen
— 60 — 119 — — 179 34 % 66 %
James O'Shaughnessy
— 85 — 119 — — 204 42 % 58 %
Ole B. Hjertaker — 40 — — — — 40 100 % — %
Steen Jakobsen
— 40 — — — — 40 100 % — %
Marios Demetriades
— 15 — — — — 15 100 % — %
Tor Svelland
— 41 — — — — 41 100 % — %
Jens Martin Jensen
— 34 — — — — 34 100 % — %
Lars H. Barstad
376 — — 820 — 22 1,218 33 % 67 %
Total
376 465 — 1,296 — 22 2,159 40 % 60 %
Fixed fees are payable for services rendered as members of the Board of Directors.
Base salary is payable as remuneration for executive services.
Other benefits includes the provision of medical and other insurance benefits.
One-year variable includes:
• annual bonuses which have been paid or accrued during the reported financial year. Such bonuses are at the discretion
of the Board.
• the fair value of the synthetic options, as calculated based on the difference between the exercise price and market
price of the underlying shares on the vesting date, which as a result of the fulfilment of predetermined performance
criteria where the time span of the relevant performance criteria did not exceed one year, were granted or offered in
previous years but that vested during the reported financial year. No options were exercised in the year.
Multi-year variable includes the total fair value of the synthetic options, as calculated based on the difference between the
exercise price and market price of the underlying shares on the vesting date, which as a result of the fulfilment of a
predetermined performance criteria, where the time span of the relevant performance criteria exceeds one year, were granted or
offered in previous years but that vested during the reported financial year. No such options vested in 2022.
Frontline Plc – Annual Report and Financial Statements 2022 15
Pension expense includes the contributions that took place in the reported financial year to a defined contribution pension
scheme.
In December 2021, the Board approved the grant of 1,280,000 synthetic options to employees and board members according to
the rules of the Company’s synthetic option scheme approved on December 7, 2021. The synthetic options have a five year
term expiring in December 2026. The vesting period is 12 months for the first 27.5% of options, 24 months for the next 27.5%
of options and 36 months for the final 45% of options. The exercise price is NOK 71, which shall increase by NOK 5 on each
of December 7, 2023, and December 7, 2024, and will further be adjusted for any distribution of dividends made before the
relevant synthetic options are exercised. The synthetic options will be settled in cash based on the difference between the
market price of the Company’s shares and the exercise price on the date of exercise. The synthetic options are not subject to a
retention period.
The below table details the number of options granted to each individual in respect of the three vesting periods noted above:
Opening balance Closing balance
Name Vesting date
Options held at
the beginning of
the year
Options vested Options lapsed
Options awarded
and unvested
Ola Lorentzon
07/12/2022 44,000 (44,000) — —
Ola Lorentzon
07/12/2023 44,000 — — 44,000
Ola Lorentzon
07/12/2024 72,000 — — 72,000
John Fredriksen
07/12/2022 22,000 (22,000) — —
John Fredriksen
07/12/2023 22,000 — — 22,000
John Fredriksen
07/12/2024 36,000 — — 36,000
James O'Shaughnessy
07/12/2022 22,000 (22,000) — —
James O'Shaughnessy
07/12/2023 22,000 — — 22,000
James O'Shaughnessy
07/12/2024 36,000 — — 36,000
Tor Svelland
07/12/2022 22,000 (22,000) —
Tor Svelland
07/12/2023 22,000 (22,000) —
Tor Svelland
07/12/2024 36,000 (36,000) —
Lars H. Barstad
07/12/2022 110,000 (110,000) — —
Lars H. Barstad
07/12/2023 110,000 — — 110,000
Lars H. Barstad
07/12/2024 180,000 — — 180,000
Total
800,000 (198,000) (80,000) 522,000
At the grant date, the Company's underlying share price was NOK 65. On December 7, 2022, the date on which the first tranche
of synthetic options vested, the Company's underlying share price was NOK 123.60.
Frontline Plc – Annual Report and Financial Statements 2022 16
Comparative information on the change of remuneration
The below data
(in thousands of $)
2022 vs
2021
2021 vs
2020
2020 vs
2019
2019 vs
2018
2018 vs
2017
Change in remuneration
Non-executives
Ola Lorentzon
36 54 — — —
John Fredriksen
(36) (54) — — —
James O'Shaughnessy
(34) 49 — 51 19
Ole B. Hjertaker 40 — — — —
Steen Jakobsen
40 — — — —
Marios Demetriades
15 — — — —
Tor Svelland
(19) 40 20 — —
Jens Martin Jensen
34 — — — —
Other non-executives
— (47) (23) — —
Executives
Lars H. Barstad
264 295 64 — —
Other executives
— (963) (49) 22 14
Total
340 (626) 12 73 33
Change in Company performance
Change in profit or loss for the period
490,498 (427,836) 272,903 148,852 255,981
The calculation includes fees, salary, bonus, pension and other benefits payable to directors and the CEO by the Company and
its subsidiaries. The calculation excludes share-based variable remuneration for directors and the CEO of the Company. "Other
non-executives" is comprised of remuneration paid to those directors not remunerated in the reported financial year. "Other
executives" is comprised of remuneration paid to other executive officers not remunerated in the reported financial year.
Profit is derived from our consolidated financial statements prepared in accordance with International Financial Reporting
Standards for the years ended December 31, 2022 and 2021. Profit for the years ended December 31, 2020, 2019, 2018 and
2017 is derived from our consolidated financial statements prepared in accordance with accounting principles generally
accepted in the United States of America.
Frontline Plc – Annual Report and Financial Statements 2022 17
FRONTLINE PLC
MANAGEMENT REPORT
2022
The Board of Directors presents its report together with the audited financial statements of Frontline Plc (“Frontline” or the
“Company”) for the year ended December 31, 2022.
HISTORY AND DEVELOPMENT OF THE COMPANY
The Company
We are Frontline plc, an international shipping company incorporated in Cyprus as a public limited liability company
(Company No. 442213). Our registered and principal executive offices are located at 8, John Kennedy Street, Iris House, Off.
740B, 3106 Limassol, Cyprus, and our telephone number at that address is + 35725-588767.
At a Special General Meeting on December 20, 2022, the Company's shareholders agreed to redomicile the Company to the
Republic of Cyprus under the name of Frontline plc (the “Redomiciliation”). The business, assets and liabilities of Frontline
Ltd. and its subsidiaries prior to the Redomiciliation are the same as Frontline plc immediately after the Redomiciliation on a
consolidated basis, as well as its fiscal year. In addition, the directors and executive officers of the Frontline plc immediately
after the Redomiciliation are the same individuals who were directors and executive officers, respectively, of Frontline Ltd.
immediately prior to the Redomiciliation. On December 30, 2022, the Registrar of Companies and Official Receiver of the
Republic of Cyprus issued a temporary redomiciliation certificate, and the Redomiciliation has therefore taken effect.
At the same meeting, the Company's shareholders approved an increase of Frontline’s authorized share capital from
$500,000,000 (divided into 500,000,000 ordinary shares, par value $1.00), to $600,000,000 (divided into 600,000,000 ordinary
shares, par value $1.00), by the creation of an additional 100,000,000 ordinary shares, par value $1.00, with such newly created
ordinary shares to be of the same category and have the same rights and to rank pari passu with the existing ordinary shares in
all respects.
Prior to the Redomiciliation from Bermuda to Cyprus, Frontline Ltd.’s ordinary shares were listed on the NYSE and OSE under
the symbol “FRO.” Upon effectiveness of the Redomiciliation, the Company’s ordinary shares continue to be listed on the
NYSE and OSE and commenced trading under the new name Frontline plc and the new CUSIP number M46528101 and the
new ISIN CY0200352116 on the NYSE on January 3, 2023 and on the OSE on January 13, 2023. Frontline plc’s Legal Entity
Identifier number was not affected by the Redomiciliation and remains the same.
We are engaged primarily in the ownership and operation of oil and product tankers. We operate through subsidiaries located in
Cyprus, Bermuda, India, the Marshall Islands, Liberia, Norway, the United Kingdom, China and Singapore. We are also
involved in the charter, purchase and sale of vessels.
The address of the Company's internet site is www.frontlineplc.cy. The information on our website is not incorporated by
reference into this annual report.
Vessel Acquisitions, Disposals, Redeliveries and Newbuilding Contracts of the Company
In May 2021, the Company entered into an agreement for the acquisition through resale of six latest generation ECO-type
VLCC newbuilding contracts at the Hyundai Heavy Industries ("HHI") shipyard in South Korea for an aggregate purchase price
of $565.8 million. The Company took delivery of the VLCC newbuildings, Front Alta, Front Tweed, Front Tana, and Front
Gaula from HHI, in April, June, August, and October 2022, respectively. As of December 31, 2022, the Company’s
newbuilding program consisted of two scrubber-fitted VLCCs, Front Orkla and Front Tyne, which were delivered in January
2023. As of December 31, 2022, total installments of $45.1 million had been paid in connection with the Company’s remaining
newbuilding program, and remaining commitments amounted to $144.8 million which were paid in the first quarter of 2023, of
which $130.0 million was financed by committed term loan facilities.
In November 2021, Frontline announced that it has entered into an agreement whereby the Company will sell four of its
scrubber-fitted LR2 tankers built in 2014 and 2015 for an aggregate sale price of $160.0 million to SFL Tanker Holding Ltd., a
company related to Hemen, our largest shareholder. In December 2021, two LR2 tankers were delivered to new owners. In
January 2022 the remaining two LR2 tankers were delivered to new owners.
Frontline Plc – Annual Report and Financial Statements 2022 18
In April 2022, the Company announced that its subsidiary, Frontline Shipping Limited ("FSL"), had agreed with SFL
Corporation Ltd. (“SFL”) to terminate the long-term charters for the 2004-built VLCCs, Front Force and Front Energy, upon
the sale and delivery of the vessels by SFL to an unrelated third party. Frontline agreed to a total compensation payment to SFL
of $4.5 million for the termination of the current charters. The charters terminated and the vessels were delivered to the new
owners in April 2022. The Company recorded a loss on termination of $0.4 million, including the termination payment, in the
second quarter of 2022.
In January 2023, the Company sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder,
for gross proceeds of approximately $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 are expected to generate
net cash proceeds of approximately $63.8 million, and the Company expects to record a gain on sale of approximately $9.7
million and $2.0 million, respectively, in the first quarter of 2023.
BUSINESS OVERVIEW
As of December 31, 2022, the Company’s fleet consisted of 70 vessels, with an aggregate capacity of approximately 13.1
million DWT:
(i) 66 vessels owned by the Company (21 VLCCs, 27 Suezmax tankers, 18 LR2/Aframax tankers);
(ii) four vessels that are under the Company’s commercial management (two Suezmax tankers, and two Aframax tankers).
Furthermore, as of December 31, 2022, the Company’s newbuilding program consisted of two VLCCs which were delivered in
January 2023.
As of December 31, 2022, the Company’s owned fleet included 40 scrubber fitted vessels (17 VLCCs, 19 Suezmax tankers and
four LR2/Aframax tankers). Additional scrubber installations are planned on two owned VLCCs in 2023. Following these
scrubber installations, including the delivery of two scrubber-fitted vessels under our newbuilding program in January 2023 and
the sale of two vessels with scrubbers in January and February 2023, 64% of our owned fleet will have scrubbers installed.
Our vessels operate worldwide and therefore management does not evaluate performance by geographical region as this
information is not meaningful.
We own various vessel owning and operating subsidiaries. Our operations take place substantially outside of the United States.
Our subsidiaries, therefore, own and operate vessels that may be affected by changes in foreign governments and other
economic and political conditions. We are engaged in transporting crude oil and its related refined petroleum products and our
vessels operate in the spot and time charter markets. Our VLCCs are specifically designed for the transportation of crude oil
and, due to their size, are primarily used to transport crude oil from the Middle East Gulf to the Far East, Northern Europe, the
Caribbean and the Louisiana Offshore Oil Port, or LOOP. Our Suezmax tankers are similarly designed for worldwide trading,
but the trade for these vessels is mainly in the Atlantic Basin, Middle East and Southeast Asia. Our LR2/ Aframax tankers are
designed to be flexible, able to transport primarily refined products, but also fuel and crude oil from smaller ports limited by
draft restrictions. The vessels will normally trade between the larger refinery centers around the world, being the Gulf of
Mexico, Middle East, Rotterdam and Singapore.
We are committed to providing quality transportation services to all of our customers and to developing and maintaining long-
term relationships with the major charterers of tankers. Increasing global environmental concerns have created a demand in the
petroleum products/crude oil seaborne transportation industry for vessels that are able to conform to the stringent environmental
standards currently being imposed throughout the world.
The tanker industry is highly cyclical, experiencing volatility in profitability, vessel values and freight rates. Freight rates are
strongly influenced by the supply of tanker vessels and the demand for oil transportation. Refer to "Item 5. Operating and
Financial Review and Prospects-Overview" for a discussion of the tanker market in 2021 and 2022.
Similar to structures commonly used by other shipping companies, our vessels are all owned by, or chartered to, separate
subsidiaries or associated companies. Frontline Management Cyprus Ltd, Frontline Management AS, Frontline Corporate
Services Ltd and Frontline Management (Bermuda) Limited, all wholly owned subsidiaries, which we refer to collectively as
Frontline Management, support us in the implementation of our decisions. The board of directors is responsible for all strategic
decisions of the Company. Frontline Management is responsible for the operational and commercial management of our ship
owning subsidiaries, including chartering and insurance, in the execution of the board's strategy. Each of our vessels is
registered under the Marshall Islands or Hong Kong flag.
Frontline Plc – Annual Report and Financial Statements 2022 19
Strategy
Our principal focus is the transportation of crude oil and related refined petroleum cargoes for major oil companies and large oil
trading companies. We seek to optimize our income and adjust our exposure through actively pursuing charter opportunities
whether through spot charters, time charters, bareboat charters, sale and leasebacks, straight sales and purchases of vessels,
newbuilding contracts and acquisitions.
We presently operate VLCCs, Suezmax and Aframax tankers in the crude oil tanker market and LR2 tankers in the refined
product market. Our preferred strategy is to have some fixed charter income coverage for our fleet, predominantly through time
charters, and trade the balance of the fleet on the spot market. We focus on minimizing time spent in ballast by "cross trading"
our vessels, typically with voyages loading in the Middle East Gulf discharging in Northern Europe, followed by a trans-
Atlantic voyage to the U.S. Gulf of Mexico and, finally, a voyage from either the Caribbean, US Gulf or West Africa to the Far
East/Indian Ocean. We believe that operating a certain number of vessels in the spot market, enables us to capitalize on a
potentially stronger spot market as well as to serve our main customers on a regular non term basis. We believe that the size of
our fleet is important in negotiating terms with our major clients and charterers. We also believe that our large fleet enhances
our ability to obtain competitive terms from suppliers, ship repairers and builders and to produce cost savings in chartering and
operations.
Our business strategy is primarily based upon the following principles:
• emphasizing operational safety and quality maintenance for all of our vessels and crews;
• ensuring that the work environment on board and ashore always meet the highest standards complying with all safety
and health regulations, labor conditions and respecting human rights;
• complying with all current and proposed environmental regulations;
• outsourcing technical management and crewing;
• continuing to achieve competitive operational costs;
• achieving high utilization of our vessels;
• achieving competitive financing arrangements;
• achieving a satisfactory mix of term charters, contracts of affreightment, or COAs, and spot voyages; and
• developing and maintaining relationships with major oil companies and industrial charterers.
We continue to have a strategy of outsourcing, which includes the outsourcing of management, crewing and accounting
services to a number of third party and competing suppliers. The technical management of our vessels is provided by third party
ship management companies. Pursuant to management agreements, each of the third party ship management companies
provides ship maintenance, crewing, technical support, shipyard supervision and related services to us. A central part of our
strategy is to benchmark operational performance and cost level amongst our ship managers. Currently, our vessels are crewed
with Russian, Ukrainian, Croatian, Romanian, Indian and Filipino officers and crews, or combinations of these nationalities.
Environmental, Social & Governance
The Company's latest ESG report can be found on its website at https://www.frontlineplc.cy/about-frontline-ltd/environmental-
social-governance-esg/. The information on the Company’s website is not incorporated by reference into this document. In the
past, environmental issues have dominated ESG discussions in the shipping industry. However, the COVID-19 pandemic and
ever-increasing regulatory environment have resulted in a more balanced sustainability landscape. Identifying and addressing
ESG risks and opportunities are at the core of Frontline’s business strategy.
We continue to invest in the expansion and modernization of our fleet as demonstrated by the delivery of four LR2 tanker
newbuildings and two latest generation ECO-type VLCCs in 2021, the delivery of four VLCCs newbuildings in 2022 and the
delivery of two VLCC newbuildings in 2023. Our long-term focus on maintaining a modern, energy efficient fleet has
positioned us well to mitigate the risks and capitalize on the opportunities provided by the ever-increasing environmental laws
and regulations. As part of our energy efficiency project, “Decarbonization journey towards IMO 2030-2050”, we have fully
digitalized our ship performance data into our digital monitoring platform, Veracity. Our daily operations include closely
monitoring, managing, and reporting ESG-related key performance indicators, or KPIs, such as energy efficiency and health
and safety metrics. Based on our 2022 emissions data verified by DNV GL, our owned fleet outperformed the IMO’s and the
Poseidon Principles’ decarbonization trajectories.
Our number one priority is the health and safety of our people, including the thousands of seafarers employed by the ship
management companies we partner with. Safety first, no compromises. The COVID-19 pandemic has placed great demands on
Frontline Plc – Annual Report and Financial Statements 2022 20
our people, none more so than our ship crew members, and we are extremely grateful for their hard work and dedication during
this challenging time. Our seafarers have endured quarantine and extensive test-regimes to safeguard people and society. To
address some of these challenges we have supported our ship managers with the implementation of well-being initiatives
ensuring that all seafarers have access to mental health support by rolling out a digital platform that gives seafarers access to a
doctor, psychologist, and dietician at their discretion.
We have a comprehensive compliance program led by our dedicated compliance officer which helps us conduct our business in
an honest and ethical manner. This includes robust policies and procedures, intended to mitigate the risks of our industry and
operations, annual risk assessments by external advisors, training for all employees, management and the Board of Directors,
third party audits, internal systems and controls, remediation, and investigations, as well as quarterly reporting to the Audit
Committee. As a result, we can monitor and comprehend emerging challenges arising not only from laws, regulations, and
public authorities, but also from the expectations of our key stakeholders, such as investors, banks and customers.
Our response to the acute challenges that we have faced in recent years, most notably the COVID-19 pandemic and IMO
regulations, is testimony to the resilience and agility of the sustainability framework we have implemented and our ability to not
only overcome such challenges but thrive when doing so. We believe our sustainability strategy can create long-term value and
allow us to balance the interests and expectations of all our stakeholders, including investors, analysts, employees, customers,
suppliers and communities.
Seasonality
Historically, oil trade and, therefore, charter rates increased in the winter months and eased in the summer months as demand
for oil and oil products in the Northern Hemisphere rose in colder weather and fell in warmer weather. The tanker industry, in
general, has become less dependent on the seasonal transport of heating oil than a decade ago as new uses for oil and oil
products have developed, spreading consumption more evenly over the year. This is most apparent from the higher seasonal
demand during the summer months due to energy requirements for air conditioning and motor vehicles.
Customers
No single customer in the years ended December 31, 2022 and December 31, 2021, accounted for 10% or more of the
Company's consolidated revenues.
Competition
The market for international seaborne crude and oil products transportation services is highly fragmented and competitive.
Seaborne oil transportation services are generally provided by two main types of operators: major oil company captive fleets
(both private and state-owned) and independent ship-owner fleets. In addition, several owners and operators pool their vessels
together on an ongoing basis, and such pools are available to customers to the same extent as independently owned-and-
operated fleets. Many major oil companies and other oil trading companies, the primary charterers of the vessels owned or
controlled by us, also operate their own vessels, and use such vessels not only to transport their own crude oil but also to
transport crude oil for third party charterers in direct competition with independent owners and operators in the tanker charter
market. Competition for charters is intense and is based upon price, location, size, age, condition and acceptability of the vessel
and its manager. Competition is also affected by the availability of other size vessels to compete in the trades in which the
Company engages. Charters are, to a large extent, brokered through international independent brokerage houses that specialize
in finding the optimal ship for any cargo based on the aforementioned criteria. Brokers may be appointed by the cargo shipper
or the ship owner.
The Company's Vessels
The following table sets forth certain information regarding the fleet that we operated as of December 31, 2022:
Vessel Built Approximate Dwt. Flag Type of Employment
(1)
Tonnage Owned
VLCCs
Front Kathrine 2009 298,000 MI Spot market
Front Queen 2009 298,000 MI Spot market
Front Eminence (2) 2009 321,000 MI Spot market
Frontline Plc – Annual Report and Financial Statements 2022 21
Front Endurance 2009 321,000 MI Spot market
Front Cecilie 2010 297,000 MI Spot market
Front Signe 2010 297,000 MI Spot market
Front Duke 2016 299,000 MI Spot market
Front Duchess 2017 299,000 MI Spot market
Front Earl 2017 303,000 MI Spot market
Front Prince 2017 301,000 MI Spot market
Front Empire 2018 303,000 MI Spot market
Front Princess 2018 302,000 MI Spot market
Front Defender 2019 299,000 MI Spot market
Front Discovery 2019 299,000 MI Spot market
Front Dynamic 2020 299,000 MI Spot market
Front Driva 2019 319,000 MI Spot market
Front Nausta 2019 319,000 MI Spot market
Front Alta 2022 300000 MI Spot market
Front Tweed 2022 300000 MLT Spot market
Front Tana 2022 300000 MI Spot market
Front Gaula 2022 300000 MI Spot market
Suezmax Tankers
Front Ull 2014 157,000 MI Spot market
Front Idun 2015 157,000 MI Spot market
Front Thor 2010 157,000 MI Spot market
Front Loki 2010 157,000 MI Spot market
Front Odin 2010 157,000 MI Spot market
Front Njord 2010 157,000 MI Spot market
Front Balder (2) 2009 156,000 MI Spot market
Front Brage 2011 157,000 MI Spot market
Front Crown 2016 157,000 MI Spot market
Front Challenger 2016 157,000 MI Spot market
Front Classic 2017 157,000 MI Spot market
Front Clipper 2017 157,000 MI Spot market
Front Crystal 2017 157,000 MI Spot market
Front Coral 2017 158,000 MI Spot market
Front Cosmos 2017 158,000 MI Spot market
Front Cascade 2017 157,000 MI Spot market
Front Sparta
2019 157,000 HK Spot market
Front Samara 2019 157,000 HK Spot market
Front Siena 2019 157,000 HK Spot market
Front Singapore 2019 157,000 HK Spot market
Front Seoul 2019 157,000 HK Spot market
Front Santiago 2019 157,000 HK Spot market
Front Savannah 2019 157,000 HK Spot market
Front Suez 2019 157,000 HK Spot market
Front Shanghai 2019 157,000 HK Spot market
Front Silkeborg 2019 157,000 HK Spot market
Front Cruiser 2020 157,000 MI Spot market
Frontline Plc – Annual Report and Financial Statements 2022 22
LR2/Aframax Tankers
Front Ocelot 2016 110,000 MI Spot market
Front Cheetah 2016 110,000 MI Spot market
Front Lynx 2016 110,000 MI Spot market
Front Cougar 2016 110,000 MI Spot market
Front Leopard 2016 110,000 MI Spot market
Front Jaguar 2016 110,000 MI Spot market
Front Altair 2016 110,000 MI Spot market
Front Antares 2017 110,000 MI Spot market
Front Vega 2017 110,000 MI Spot market
Front Sirius 2017 110,000 MI Spot market
Front Castor 2017 110,000 MI Spot market
Front Pollux 2017 110,000 MI Spot market
Front Capella 2017 110,000 MI Spot market
Front Polaris 2018 110,000 MI Spot market
Front Fusion 2021 110,000 MI Spot market
Front Future 2021 110,000 MI Spot market
Front Favour (3) 2021 110,000 MI Time charter
Front Feature (4) 2021 110,000 MI Time charter
1. Time Charter includes those contracts with durations in excess of six months.
2. In January 2023, the Company sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front
Balder.
3. In September 2022, the Company entered into a fixed rate time charter to a third party for a three year period.
4. In August 2022, the Company entered into a fixed rate time charter to a third party for a three year period.
Key to Flags:
MI – Marshall Islands, HK – Hong Kong, MLT - Malta.
Other than our interests in the vessels described above, we do not own any material physical properties. We lease office space
in Limassol, Cyprus from an unaffiliated third party. Frontline Management AS leases office space, at market rates, in Oslo,
Norway from Seatankers Management Norway AS (formerly Bryggegata AS), a company indirectly affiliated with Hemen, our
principal shareholder. We also have other leased properties, which are not considered material. Further details of our lease
commitments can be found in Note 19. to our consolidated financial statements.
REVIEW OF DEVELOPMENTS, POSITION AND PERFORMANCE OF THE COMPANY'S BUSINESS
Overview
As of December 31, 2022, the Company’s fleet consisted of 70 vessels, with an aggregate capacity of approximately 13.1
million DWT:
(i) 66 vessels owned by the Company (21 VLCCs, 27 Suezmax tankers, 18 LR2/Aframax tankers); and
(ii) four vessels that are under the Company’s commercial management (two Suezmax tankers, and two Aframax tankers).
As of December 31, 2022, the Company’s newbuilding program consisted of two scrubber-fitted VLCCs, Front Orkla and Front
Tyne, which were delivered in January 2023.
Frontline Plc – Annual Report and Financial Statements 2022 23
A full fleet list is provided in "Item 4. Information on the Company - D. Property, Plants and Equipment" showing the vessels
that we own, lease and charter-in as of December 31, 2022. See Note 26 to our audited Consolidated Financial Statements
included herein for changes in our vessels subsequent to December 31, 2022.
Fleet Changes
A summary of the changes in the vessels that we own, lease and charter-in for the years ended December 31, 2022 and 2021 is
summarized in the table below.
2022 2021
VLCCs
At start of period 19 19
Other acquisitions/newbuilding deliveries 4 2
Disposal/lease termination (2) —
Redelivered — (2)
At end of period 21 19
Suezmax tankers
At start and end of period 27 27
LR2/Aframax tankers
At start of period 20 18
Other acquisitions/newbuilding deliveries — 4
Disposal/lease termination (2) (2)
At end of period 18 20
Total
At start of period 66 64
Other acquisitions/newbuilding deliveries 4 6
Disposal/lease termination (4) (2)
Chartered-in/ redelivered — (2)
At end of period 66 66
1. The table above excludes vessels commercially managed on behalf of third parties and related parties.
Summary of Fleet Employment
Frontline Plc – Annual Report and Financial Statements 2022 24
As discussed below, our vessels are operated under time charters and voyage charters.
As of December 31,
2022 2021
Number of
vessels
Percentage
of fleet
Number of
vessels
Percentage
of fleet
VLCCs
Spot 21 100 % 19 100 %
Time charter — — % — — %
21 100 % 19 100 %
Suezmax tankers
Spot 27 100 % 22 81 %
Time charter — — % 5 19 %
Market related time charter — — % — — %
27 100 % 27 100 %
LR2/Aframax tankers
Spot 16 89 % 20 100 %
Time charter 2 11 % — — %
18 100 % 20 100 %
Total fleet
Spot 64 97 % 61 92 %
Market related time charter — — % — — %
Time charter 2 3 % 5 8 %
66 100 % 66 100 %
Market Overview and Trend Information
The statistical data provided in this section has been taken from the International Energy Agency, or IEA, Fearnleys and
Clarksons Research, both independent third-party maritime research companies. The figures quoted below are estimates and
may vary from estimates provided by other research services. The overviews set forth below are based on information, data and
estimates derived from industry sources available as of the date of this annual report, and there can be no assurances that such
trends will continue or that any anticipated developments referenced in such section will materialize. This information, data and
estimates involve several assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on
various factors. You are cautioned not to give undue weight to such information, data, and estimates. We have not
independently verified any third-party information, verified that more recent information is not available and undertake no
obligation to update this information unless legally obligated.
Recent years have been characterized by slowing growth in the global crude oil tanker fleet. In 2022 42 VLCCs were delivered.
In 2023 only 26 VLCCs are scheduled to be delivered, representing fleet growth of 2.9%. Only two vessels are confirmed for
delivery in both 2025 and 2026. At the end of 2022, the VLCC fleet totaled 872 vessels and the Suezmax tanker fleet totaled
602 vessels after 33 vessels were delivered during the year. The total orderbook in this segment consists of only 10 vessels,
representing 1.7% of the existing fleet. The LR2 product tanker fleet totaled 407 vessels at the end of 2022.
The estimated average spot charter rate for a VLCC trading on a standard ‘TD3C’ voyage between the Middle East and China
in 2022 was an estimated daily Time Charter Equivalent rate ("TCE rate") of $16,900. This compares to an estimated negative
daily TCE rate of $520 in 2021. The average rate for a Suezmax tanker trading on a standard ‘TD20’ voyage between West
Africa and Rotterdam in 2022 was an estimated daily TCE rate of $29,000. This compares to an estimated daily TCE rate of
$3,500 in 2021. The average rate for an LR2 product tanker trading on a standard ‘TC1’ voyage between the Middle East and
Japan was an estimated daily TCE rate of $33,800 in 2022. This compares to an estimated daily TCE rate of $5,900 in 2021.
Frontline Plc – Annual Report and Financial Statements 2022 25
Crude oil demand and the world economy continues its recovery from the COVID-19 pandemic, particularly in Asia. The IEA
estimates that world oil demand in 2023 will be 101.9 million barrels per day, or mbpd, rising by 2 mbpd by the end of the year,
following the steep recovery of 3.3 mbpd in 2022.
The IEA estimated that world oil supply is expected to grow by 1.2 mbpd in 2023. World oil supply was estimated to be steady
at 100.8 mbpd as we entered 2023. With Russian oil production declining and limited gains expected from the rest of the
OPEC+ bloc, non-OPEC+ producers will lead world supply growth in 2023. For the year, global oil supply growth is expected
to be led by the United States, Brazil, Norway, Canada and Guyana.
The war between Russia and the Ukraine continues to disrupt supply chains. The Group of Seven, or G7, countries tightened
the sanctions environment for Russian oil and product throughout 2022, lastly with a ban on the seaborne transportation of
Russian crude and refined oil products and provisions of related services that came into force in December 2022 and February
2023. An oil price cap regime was put in force at the same time, by way of exception, on crude oil and products bought below a
certain price. The cap levels were introduced at $60 per barrel for crude, and $100 per barrel for diesel and other related
products. The cap is expected to be reviewed on a quarterly basis. An absolute prohibition has been imposed on imports of
Russian crude and products into the EU, the United Kingdom and U.S. As Russian crude and product exports continue under
the price cap regime, the ton-mile expansion seen in 2022 is expected to continue in 2023.
Results of Operations
Total operating revenues and voyage expenses
Change
(in thousands of $) 2022 2021 $ %
Voyage charter revenues 1,345,964 663,995 681,969 102.7
Time charter revenues 71,791 71,236 555 0.8
Administrative income 12,453 14,150 (1,697) (12.0)
Total operating revenues 1,430,208 749,381 680,827 90.9
Other income 8,040 4,060 3,980 98.0
Voyage expenses and commissions 605,544 392,697 212,847 54.2
Voyage charter revenues increased in the year ended December 31, 2022 as compared to the year ended December 31, 2021
primarily due to:
• an increase of $513.0 million due to increased market rates,
• an increase of $107.6 million due to the delivery of five Suezmax tankers, four LR2/Aframax tankers and one VLCC
on to voyage charters as a result of the time charters coming to an end between January 2021 and December 2022,
• an increase of $92.9 million due to the delivery of four LR2/Aframax tanker newbuildings and four VLCC
newbuildings since January 1, 2021, and
• an increase of $39.9 million due to the delivery of two 2019-built VLCCs.
These factors were offset by:
• a decrease of $43.8 million due to the sale of four LR2/Aframax tankers, and
• a decrease of $27.6 million due to the termination of leases for four VLCCs since January 2020.
Time charter revenues increased in the year ended December 31, 2022 as compared to the year ended December 31, 2021
primarily due to:
• an increase of $26.3 million due to the delivery of eight vessels, including three newbuildings, on to long-term and
short-term time charters in 2022.
This increase was offset by:
Frontline Plc – Annual Report and Financial Statements 2022 26
• a decrease of $25.0 million due to the termination of long-term and short-term time charters on 10 vessels between
January 2021 and December 2022.
Voyage expenses and commissions increased in the year ended December 31, 2022 as compared to the year ended December
31, 2021 primarily due to:
• an increase of $140.2 million due to increased bunker costs,
• an increase of $34.8 million due to the delivery of five Suezmax tankers, four LR2/Aframax tankers and one VLCC on
to voyage charters as a result of the time charters coming to an end between January 2021 and December 2022,
• an increase of $32.4 million due to the delivery of four LR2/Aframax tanker newbuildings and four VLCC
newbuildings since January 1, 2021,
• an increase of $25.1 million due to increased commissions and port costs, and
• an increase of $19.9 million due to the delivery of two 2019-built VLCCs.
These factors were offset by:
• a decrease of $25.1 million due to the sale of four LR2/Aframax tankers, and
• a decrease of $14.6 million due to the termination of the lease for two VLCCs in January 2021 and two VLCCs in
January 2022.
Administrative income primarily comprises the income earned from the technical and commercial management of related party
and third party vessels and newbuilding supervision fees derived from related parties. The decrease in the year ended December
31, 2022 as compared to the year ended December 31, 2021 was primarily due to:
• a decrease in administrative related and miscellaneous recharges of $2.9 million as a result of the launch of a shared
services entity in October 2021, and
• a decrease in technical management fees earned of $0.5 million.
These factors were offset by:
• an increase in newbuilding supervision fees of $0.9 million as a result of an increase in the number of newbuildings
under management, and
• an increase in commercial management fees of $0.8 million as a result of new commercial management agreements
since January 1, 2021.
Other income
Change
(in thousands of $) 2022 2021 $ %
Gain on settlement of claims 3,998 — 3,998 —
Gain on sale of vessel 4,596 3,226 1,370 42.5
Loss on termination of vessel lease (431) — (431) —
Gain (loss) on pool arrangements (141) 315 (456) (144.8)
Other gains 18 519 (501) (96.5)
8,040 4,060 3,980 98.0
In the year ended December 31, 2022, the Company recorded an arbitration award of $2.5 million in relation to the failed sale
of Dewi Maeswara and $1.5 million gain on the settlement of insurance claims for Front Altair.
In the year ended December 31, 2021, the Company entered into an agreement to sell four of its scrubber fitted LR2 tankers at a
combined purchase price of $160.0 million to SFL Tanker Holding Ltd., a company related to Hemen, its largest shareholder.
Two vessels were delivered to the new owners in December 2021 and the remaining two vessels were delivered to the new
owners in January 2022. After repayment of debt on the vessels, the transaction generated total net cash proceeds of $68.6
million, with net cash proceeds of $35.1 million recorded in the year ended December 31, 2022. The Company recorded a gain
on sale in relation to the first two vessels of $3.2 million in the year ended December 31, 2021 and a gain of $4.6 million in the
year ended December 31, 2022.
Frontline Plc – Annual Report and Financial Statements 2022 27
In the year ended December 31, 2022, the Company announced that its subsidiary FSL has agreed with SFL to terminate the
long-term charters for the 2004-built VLCCs, Front Force and Front Energy, upon the sale and delivery of the vessels by SFL
to an unrelated third party. The Company agreed to a total compensation payment to SFL of $4.5 million for the termination of
the current charters. The charters terminated and the vessels were delivered to the new owners in April 2022. The Company
recorded a loss on termination of $0.4 million in the year ended December 31, 2022.
In the year ended December 31, 2022, the Company recorded a $0.1 million loss (2021: $0.3 million gain) related to the
pooling arrangement with SFL between two of its Suezmax tankers, Front Odin and Front Njord, and two SFL vessels
Glorycrown and Everbright.
In the year ended December 31, 2022, the Company recorded other gains of $0.02 million (2021: $0.5 million) in relation to the
settlement of miscellaneous claims.
Contingent rental income
Change
(in thousands of $) 2022 2021 $ %
Contingent rental income (623) (3,606) 2,983 (82.7)
Contingent rental income in the year ended December 31, 2022 and in the year ended December 31, 2021 relates to the
Company's charter party contracts with SFL and is primarily due to the fact that the actual profit share payable of nil (2021:
$0.3 million) was $0.6 million less (2021: $3.6 million less) than the amount accrued in the lease obligation payable when the
leases were recorded at fair value.
Ship operating expenses
Change
(in thousands of $) 2022 2021 $ %
Ship operating expenses 175,164 164,246 10,918 6.6
Ship operating expenses are the direct costs associated with running a vessel and include crew costs, vessel supplies, repairs and
maintenance, lubricating oils and insurance.
Ship operating expenses increased in the year ended December 31, 2022 as compared to the year ended December 31, 2021
primarily due to:
• an increase of $14.2 million due to the delivery of four LR2/Aframax tanker newbuildings, four VLCC newbuilding
and the delivery of two 2019-built VLCCs since January 1, 2021,
• an increase of $9.7 million due to higher running costs, partially counterbalanced by a decrease of $1.1 million in crew
related costs related to COVID-19, and
• an increase of $4.2 million due to additional repairs.
These factors were partially offset by:
• a decrease of $10.2 million due to the sale of four LR2/Aframax tankers, and
• a decrease of $5.9 million due to the termination of the lease for four VLCCs since January 2021.
Administrative expenses
Change
(in thousands of $) 2022 2021 $ %
Administrative expenses 47,374 26,424 20,950 79.3
Administrative expenses increased in the year ended December 31, 2022 as compared to the year ended December 31, 2021
primarily due to:
• a $10.1 million increase in legal and professional fees in connection with proposed combination with Euronav, and
Frontline Plc – Annual Report and Financial Statements 2022 28
• an $8.0 million increase staff costs primarily due to the increase in variable remuneration, including an increase in
expenses resulting from the revaluation of the synthetic option liability.
Depreciation
Change
(in thousands of $) 2022 2021 $ %
Depreciation 165,170 165,205 (35) —
Depreciation expense increased in the year ended December 31, 2022 as compared to the year ended December 31, 2021
primarily due to:
• an increase of $14.7 million due to the delivery of four LR2/Aframax tanker newbuildings, four VLCC newbuilding
and the delivery of two 2019-built VLCCs since January 1, 2021,
• an increase of $0.8 million primarily due to EGCS and BWTS additions, and
• an increase of $0.3 million in depreciation of capitalized dry dock costs.
These factors were offset by:
• a decrease of $6.3 million due to the sale of four LR2/Aframax tankers, and
• a decrease of $8.9 million due to the termination of the lease for four VLCCs since January 2021, and
• a decrease of $0.5 million in relation to office lease right-of-use assets.
Finance income
Change
(in thousands of $) 2022 2021 $ %
Interest income 1,463 119 1,344 1,129.4
Foreign currency exchange gain 16 — 16 —
Other financial income — 2 (2) (100.0)
1,479 121 1,358 1,122.3
Interest income in the year ended December 31, 2022 and the year ended December 31, 2021 relates to interest received on
bank deposits and the shareholder loan to TFG Marine Pte. Ltd. ("TFG Marine").
Foreign currency exchange differences relate to movements of U.S. dollar against other currencies used in day-to-day
transactions.
Finance expense
Change
(in thousands of $) 2022 2021 $ %
Interest expense 98,712 61,506 37,206 60.5
Foreign exchange gain loss — 116 (116) (100.0)
Gain on interest rate swaps (53,623) (17,509) (36,114) 206.3
Other financial expenses 241 131 110 84.0
45,330 44,244 1,086 2.5
Finance expense increased in the year ended December 31, 2022 as compared to the year ended December 31, 2021 primarily
due to:
• an increase of $32.2 million related to the increase in benchmark interest rates on the Company’s floating rate debt,
• an increase of $5.7 million as a result of the additional drawdowns on the senior unsecured facility with an affiliate of
Hemen since January 1, 2021,
• an increase of $5.5 million due to additional borrowings relating to the delivery of four newbuildings in 2022, and
Frontline Plc – Annual Report and Financial Statements 2022 29
• an increase of $0.3 million in amortization of debt issuance costs.
These factors are partially offset by:
• a decrease of $4.8 million due to termination of the lease for two VLCC vessels and a sale of two LR2 tankers in 2022,
• a decrease of $1.6 million as a result of higher capitalized borrowing costs in relation to the newbuilding program, and
• the increase of gain on interest rate swaps to $53.6 million in 2022 from $17.5 million in 2021, respectively.
Foreign currency exchange differences relate to movements of U.S. dollar against other currencies used in day-to-day
transactions.
Other financial expenses relate to bank charges.
Gain on marketable securities
Change
(in thousands of $) 2022 2021 $ %
Gain on marketable securities 58,359 7,677 50,682 660.2
In the year ended December 31, 2022, the Company acquired 13,664,613 shares in Euronav. The transaction price paid to
acquire the 13,664,613 Euronav shares was $175.5 million which was the fair value of the 19,091,910 Frontline shares issued
based on the Frontline share price as of the transaction dates. The transaction date fair value of the Euronav shares based on the
Euronav share price was $167.7 million which resulted in a realized loss of $7.8 million upon the initial recognition of the
transactions and a subsequent unrealized gain of $65.1 million in the period.
In the year ended December 31, 2021, the Company sold 1.3 million shares in Golden Ocean for proceeds of $13.4 million and
recognized a gain on marketable securities sold of $7.9 million.
Share of results of associated company
Change
(in thousands of $) 2022 2021 $ %
Share of results of associated company 14,243 (724) 14,967 (2,067.3)
In the year ended December 31, 2022 a share of profit of TFG Marine of $14.8 million (2021: $0.7 million loss) was
recognized.
In the year ended December 31, 2022, the Company recognized a share of losses of $0.6 million (2021: nil) of FMS Holdco
Limited.
See Note 16 to our audited Consolidated Financial Statements included herein for further details on our equity method
investments.
Dividends received
Change
(in thousands of $) 2022 2021 $ %
Dividends received 1,579 18,367 (16,788) (91.4)
The decrease in dividends received in the year ended December 31, 2022 primarily due to the recognition of a distribution in
the previous year from Den Norske Krigsforsikring for Skib, or DNK, the Norwegian Shipowners Mutual War Risk Insurance
Association. The Company's share of the distribution was $17.9 million, before withholding tax of $4.5 million. This was
partially offset by the receipt of dividends from investments in marketable securities of $1.6 million in 2022, of which $1.2
million related to the newly acquired investment in Euronav.
Tax
Frontline Plc – Annual Report and Financial Statements 2022 30
Change
(in thousands of $) 2022 2021 $ %
Income tax benefit (expense) (412) (4,633) 4,221 (91.1)
Income tax decreased by $4.2 million in the year ended December 31, 2022 as compared to the year ended December 31, 2021
primarily due to the $4.5 million of withholding tax in relation to the receipt of a distribution of $17.9 million in the previous
year.
Liquidity and capital resources
We operate in a capital intensive industry and have historically financed our purchase of tankers and other capital expenditures
through a combination of cash generated from operations, equity capital and borrowings from commercial banks. Our ability to
generate adequate cash flows on a short and medium term basis depends substantially on the trading performance of our vessels
in the market. Historically, market rates for charters of our vessels have been volatile. Periodic adjustments to the supply of and
demand for oil and product tankers causes the industry to be cyclical in nature. We expect continued volatility in market rates
for our vessels in the foreseeable future with a consequent effect on our short and medium term liquidity.
Our funding and treasury activities are conducted within corporate policies to increase investment returns while maintaining
appropriate liquidity for our requirements. Cash and cash equivalents are held primarily in U.S. dollars with some balances held
in British pounds, Euros, Norwegian kroner and Singapore dollars.
Our short-term liquidity requirements relate to payment of operating costs (including dry docking), funding working capital
requirements, repayment of debt financing, payment of newbuilding installments, payment of commitments for upgrading
vessels such as for EGCS and BWTS, and maintaining cash reserves against fluctuations in operating cash flows. Sources of
short-term liquidity include cash balances, short-term investments and receipts from our customers. Revenues from time
charters are generally received monthly or fortnightly in advance while revenues from voyage charters are received upon
completion of the voyage.
As of December 31, 2022 and 2021 we had cash and cash equivalents of $254.5 million and $113.1 million, respectively. As of
December 31, 2022 and 2021, we had restricted cash balances of nil. Restricted cash does not include cash balances of $54.4
million (2021: $67.0 million), which represents 50% (2021: 64%) of the cash required to be maintained by the financial
covenants in our loan agreements. The Company is permitted to satisfy up to 50% of the cash requirement by maintaining a
committed undrawn credit facility with a remaining availability of greater than 12 months.
Furthermore, FSL, a wholly owned subsidiary of the Company and the chartering counterparty with SFL with respect to the two
VLCCs leased from them at December 31, 2021, has agreed to certain dividend restrictions as a result of the amendment of the
terms of the long-term charter agreements in May 2015. In order to make or pay any dividend or other distribution to the
Company, FSL shall demonstrate a cash buffer of $2.0 million per vessel both prior to and following such payment, and
following payment of the next monthly hire due plus any profit share accrued under the agreement. As of December 31, 2021
the cash held by FSL was $2.0 million, and these amounts are included in "Cash and cash equivalents". As of December 31,
2022, the Company had redelivered the two vessels leased from SFL.
Our interest rate swaps can require us to post cash as collateral based on their fair value. As of December 31, 2022 and 2021, no
cash was posted as collateral in relation to our interest rate swaps.
As of December 31, 2022, the remaining commitments for the Company's two newbuilding contracts amounted to $144.8
million, all of which was paid in 2023, and of which $130.0 million was financed by committed term loan facilities.
As of December 31, 2022, the Company has committed to the purchase of scrubber equipment from Clean Marine AS, a related
party, for two vessels owned by the Company, with a remaining financial commitment of $0.7 million, excluding installation
costs, due in 2023.
As of December 31, 2022, the Company has no further commitments for the purchase of BWTS.
As of December 31, 2022, 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
December 31, 2022, 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
Frontline Plc – Annual Report and Financial Statements 2022 31
maximum liability under this guarantee is $6.0 million and there are no amounts payable under this guarantee as at December
31, 2022.
In February 2023, the Company repaid $60.0 million of its $275.0 million senior unsecured credit facility with an affiliate of
Hemen. Up to $125.3 million remains available following the repayment.
In March 2023, the Company entered into eight 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 June 2023 to December 2024. The total commitment amounted to $37.1 million,
$13.2 million of which is expected to be paid in 2023 and $23.9 million of which is expected to be paid in 2024.
We believe that cash on hand and borrowings under our current and committed credit facilities, along with cash generated from
operating activities will be sufficient to fund our requirements for, at least, the twelve months from the date of this annual
report.
Medium to Long-term Liquidity and Cash Requirements
Our medium and long-term liquidity requirements include payment of newbuilding installments, funding the equity portion of
investments in new or replacement vessels and repayment of bank loans. Additional sources of funding for our medium and
long-term liquidity requirements include new loans, refinancing of existing arrangements, equity issues, public and private debt
offerings, vessel sales, sale and leaseback arrangements and asset sales.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated.
(in thousands of $) 2022 2021
Net cash provided by operating activities 385,330 85,261
Net cash used in investing activities (257,320) (374,419)
Net cash provided by financing activities 13,442 227,510
Net change in cash and cash equivalents 141,452 (61,648)
Cash and cash equivalents at beginning of year 113,073 174,721
Cash and cash equivalents at end of year 254,525 113,073
Net cash provided by operating activities
Net cash provided by operating activities increased by $300.1 million in the year ended December 31, 2022 as compared to the
year ended December 31, 2021.
Net cash provided by operating activities was primarily impacted by: (i) overall market conditions as reflected by TCE rates,
(ii) the size and composition of our fleet that we own, lease and charter-in, (iii) whether our vessels were operated under time
charters or voyage charters, and (iv) changes in operating assets and liabilities.
i. Our reliance on the spot market contributes to fluctuations in cash flows from operating activities as a result of its
exposure to highly cyclical tanker rates. Any increase or decrease in the average TCE rates earned by our vessels will
have a positive or negative comparative impact, respectively, on the amount of cash provided by operating activities.
TCE represents operating revenues less other income and voyage expenses. TCE is therefore impacted by both
movements in operating revenues, as determined by market freight rates, and voyage expenses, which are primarily
comprised of bunker expenses, port charges and canal tolls. In 2022, average market quoted TCE rates increased for
VLCCs, Suezmax tankers and LR2 product tankers as compared to 2021, see "Item 5. Operating Financial Review and
Prospects - A. Operating Results" The net increase in average quoted market rates led to a $510.8 million increase in
cash provided by operating activities for the year ended December 31, 2022, due to higher operating revenues. The
increase in rates was offset by the increase in bunker prices and port costs, also a component of TCE, and ship
operating expenses in 2022 compared to 2021, which resulted in a $174.1 million decrease in cash provided by
operating activities.
ii. Detailed information on the size and composition of our fleet, along with whether our vessels were operated under
time charters or voyage charters, including changes between the periods presented, is disclosed in "Item 5. Operating
Frontline Plc – Annual Report and Financial Statements 2022 32
Financial Review and Prospects - A. Operating Results". Changes in the size and composition of our fleet resulted in a
net increase in cash provided by operating activities of $63.2 million. The increase is primarily due to the delivery of
four newbuilding VLCCs, four newbuilding LR2 tankers and two 2019 built VLCCs, offset by the sale of four LR2
tankers and a redelivery of two VLCCs, between January 1, 2021 and December 31, 2022. These changes led to an
increase of $72.9 million in cash received from revenues. The aforementioned increase was partially offset by the
increase in cash paid for voyage expenses, ship operating expenses and interest of $9.8 million.
iii. The net increase in vessels trading under voyage charters in 2022 as compared to 2021 resulted in a $66.2 million
increase in cash provided by operating activities, as the previous time charters were at lower rates than the prevailing
spot market on the date of redelivery.
iv. Changes in operating assets and liabilities resulted in a decrease in cash provided by operating activities of $111.5
million. The movement in working capital balances are impacted by the timing of voyages, and also by the timing of
fueling and consumption of fuel on board our vessels. Revenues for vessels that operate under time charters are
typically billed in advance, whereas revenues under voyage charters are typically billed upon completion of a voyage.
In 2021, the hire rates increased in the fourth quarter. In 2022, the rates continued rising, increasing significantly in the
fourth quarter reaching an all-time high for LR2 tankers. This movement resulted in a net decrease in cash generated
from settlements of trade receivables. In addition, increased bunker prices caused a corresponding increase in
inventories held, which adversely impacted cash provided by operating activities. The aforementioned were offset by
the high volume of accrued operating expenses settled in 2021, in comparison to those settled in 2022, resulting in an
increase in cash provided by operating activities.
The above factors were offset by a decrease in net cash provided by operating activities due to the following:
• a $22.4 million increase in interest expense and debt issuance costs primarily as a result of additional drawdowns on
the Company's fixed and floating rate facilities,
• a net decrease of $15.1 million in cash provided by operating activities due to the decrease in administrative expenses
and administrative income,
• the receipt of a dividend distribution from DNK of $13.4 million, after withholding tax of $4.5 million in 2021, and
• a $4.2 million increase in non-capitalized costs relating to upgrades.
Net cash used in investing activities
Net cash used in investing activities of $257.3 million in 2022 comprised mainly of:
• additions to newbuildings, vessels and equipment of $335.8 million, consisting of $303.0 million in respect of the four
newbuildings delivered in the period and the installments paid for the two remaining newbuilding contracts, $15.0
million paid for various vessel upgrades and $17.9 million capitalized dry docking costs, and
• $1.5 million in relation to additional investment in associated companies.
This was offset by:
• $80.0 million proceeds from the sale of two LR2 tankers,
Net cash used in investing activities of $374.4 million in 2021 comprised mainly of:
• additions to newbuildings, vessels and equipment of $473.8 million, consisting of $276.3 million in respect of the four
newbuildings delivered in the period and the installments paid for the six remaining newbuilding contracts, $180.9
million paid for the acquisition of two 2019-built VLCCs, $11.5 million capitalized dry docking costs and $5.2 million
paid for various vessel upgrades, and
• $0.4 million in relation to the purchase of marketable securities.
This was offset by:
• $80.0 million proceeds from the sale of two LR2 tankers,
• $14.1 million proceeds from the sale of marketable securities, and
• a $5.6 million settlement in relation to the sale of Seateam Management in October 2020.
Net cash provided by financing activities
Frontline Plc – Annual Report and Financial Statements 2022 33
Net cash provided by financing activities in 2022 of $13.4 million was primarily due to:
• debt drawdowns of $651.2 million
These items were partially offset by:
• debt repayments of $597.8 million,
• cash dividends of $33.4 million paid, and
• lease repayments of $6.6 million.
Net cash provided by financing activities in 2021 of $227.5 million was primarily due to:
• debt drawdowns of $403.9 million, and
• the issuance of 5,838,658 new ordinary shares as part of the Company's ATM program and options exercise which
generated net proceeds of $52.4 million.
These items were partially offset by:
• debt repayments of $219.5 million, and
• lease repayments of $9.3 million.
FINANCIAL RESULTS
The Company's profit after tax was $475.5 million for the year ended December 31, 2022 compared to a loss after tax of
$15.0 million for the year ended December 31, 2021. The total assets of the Company as of December 31, 2022 were
$4,768.4 million and the net assets were $2,259.9 million, compared to $4,106.6 million and $1,642.0 million, respectively, as
of December 31, 2021.
See the Consolidated Financial Statements accompanying Notes included herein for further details.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties that the Company faces relate to tanker market volatility, ESG factors, operations,
compliance, and cyber security as follows:
Tanker market volatility
Historically, the tanker industry has been highly cyclical, with volatility in profitability, charter rates and asset values resulting
from changes in the supply of, and demand for, tanker capacity and changes in the supply of and demand for oil and oil
products. These factors may adversely affect the rates payable and the amounts we receive in respect of our vessels. The
conflict in Ukraine is disrupting energy production and trade patterns, including shipping in the Black Sea and elsewhere, and
its impact on energy prices and tanker rates, which initially have increased, is uncertain. Our ability to re-charter our vessels on
the expiration or termination of their current spot and time charters and the charter rates payable under any renewal or
replacement charters will depend upon, among other things, economic conditions in the tanker market and we cannot guarantee
that any renewal or replacement charters we enter into will be sufficient to allow us to operate our vessels profitably. Our
revenues are affected by our strategy to employ some of our vessels on time charters, which have a fixed income for a pre-set
period of time as opposed to trading ships in the spot market where their earnings are heavily impacted by the supply and
demand balance. If we are not able to obtain new contracts in direct continuation with existing charters or for newly acquired
vessels, or if new contracts are entered into at charter rates substantially below the existing charter rates or on terms otherwise
less favorable compared to existing contracts terms, our revenues and profitability could be adversely affected.
The factors that may influence demand for tanker capacity include:
• the supply of and demand for oil and oil products;
• the supply of and demand for alternative energy sources
• global and regional economic and political conditions, including developments in international trade, national oil
reserves policies, fluctuations in industrial and agricultural production;
Frontline Plc – Annual Report and Financial Statements 2022 34
• national policies regarding strategic oil inventories (including if strategic reserves are set at a lower level in the future
as oil decreases in the energy mix);
• regional availability of refining capacity and inventories compared to geographies of oil production regions;
• changes in seaborne and other transportation patterns, including changes in the distances over which tanker cargoes are
transported by sea;
• increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the
development of new, pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil
pipelines in those markets;
• currency exchange rates, most importantly versus USD;
• weather, acts of God and natural disasters;
• competition from alternative sources of energy and from other shipping companies and other modes of transport;
• international sanctions, embargoes, import and export restrictions, nationalizations, piracy, terrorist attacks and armed
conflicts, including the ongoing conflict between Russia and Ukraine;
• legal and regulatory changes including regulations adopted by supranational authorities and/or industry bodies, such as
safety and environmental regulations and requirements by major oil companies; and
• diseases and viruses, affecting livestock and humans, including pandemics, such as the COVID-19 outbreak.
The factors that influence the supply of tanker capacity include:
• current and expected purchase orders for tankers;
• the number and size of newbuilding orders and deliveries, as may be impacted by the availability of financing for new
vessels and shipping activity;
• the number of shipyards and ability of shipyards to deliver vessels;
• any potential delays in the delivery of newbuilding vessels and/or cancellations of newbuilding orders;
• availability of financing for new vessels and shipping activity;
• the degree of recycling of older vessels, depending, amongst other things, on recycling rates and international
recycling regulations;
• the number of vessel casualties;
• technological advances in tanker design and capacity;
• tanker freight rates, which are affected by factors that may affect the rate of newbuilding, swapping and laying up of
tankers;
• port and canal congestion;
• slow-steaming of vessels;
• the price of steel and vessel equipment;
• the number of conversions of tankers to other uses or conversions of other vessels to tankers;
• the number of tankers that are out of service, namely those that are laid-up, dry docked, awaiting repairs or otherwise
not available for hire;
• business disruptions, including supply chain disruptions and congestion, due to natural or other disasters or otherwise,
such as the ongoing COVID-19 pandemic, and any lockdown measures imposed by governments in regions whose
economic conditions have a direct correlation demand for tanker products, including China;
• changes in government and industry environmental and other regulations that may limit the useful lives of tankers;
• changes in national or international regulations that may effectively cause reductions in the carrying capacity of
vessels or early obsolescence of tonnage.
• environmental concerns and uncertainty around new regulations in relation to, amongst others, new technologies
which may delay the ordering of new vessels; and
• government subsidies of shipbuilding;
In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up
include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs,
costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, and the efficiency and
Frontline Plc – Annual Report and Financial Statements 2022 35
age profile of the existing tanker fleet. The factors affecting the supply and demand for tankers have been volatile and are
outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable, including those
discussed above. Market conditions were volatile in 2022 and continued volatility may reduce demand for transportation of oil
over longer distances and increase the supply of tankers to carry that oil, which may have a material adverse effect on our
business, financial condition, results of operations, cash flows, ability to pay dividends and existing contractual obligations.
ESG factors
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain
institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in
recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and
activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate
capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do not adapt to
or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are
perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal
requirement to do so, may suffer from reputational damage, costs related to litigation, and the business, financial condition, and/
or stock price of such a company could be materially and adversely affected.
We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on
climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result,
we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and
lenders remain invested in us and make further investments in us, especially given the highly focused and specific trade of
crude oil transportation in which we are engaged. Such ESG corporate transformation calls for an increased resource allocation
to serve the necessary changes in that sector, increasing costs and capital expenditure. If we do not meet these standards, our
business and/or our ability to access capital could be harmed.
MEPC 75 introduced draft amendments to Annex VI which impose new regulations to reduce greenhouse gas emissions from
ships. These amendments introduce requirements to assess and measure the energy efficiency of all ships and set the required
attainment values, with the goal of reducing the carbon intensity of international shipping. To achieve a 40% reduction in
carbon emissions by 2023 compared to 2008, shipping companies are required to include: (i) a technical requirement to reduce
carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (ii) operational carbon intensity
reduction requirements, based on a new operational carbon intensity indicator (“CII”). The EEXI is required to be calculated for
ships of 400 gross tonnage and above. The IMO and MEPC will calculate “required” EEXI levels based on the vessel’s
technical design, such as vessel type, date of creation, size and baseline. Additionally, an “attained” EEXI will be calculated to
determine the actual energy efficiency of the vessel. A vessel’s attained EEXI must be less than the vessel’s required EEXI.
Non-compliant vessels will have to upgrade their engine to continue to travel. With respect to the CII, the draft amendments
would require ships of 5,000 gross tonnage to document and verify their actual annual operational CII achieved against a
determined required annual operational CII. The vessel’s attained CII must be lower than its required CII. Vessels that
continually receive subpar CII ratings will be required to submit corrective action plans to ensure compliance. MEPC 79 also
adopted amendments to MARPOL Annex VI, Appendix IX to include the attained and required CII values, the CII rating and
attained EEXI for existing ships in the required information to be submitted to the IMO Ship Fuel Oil Consumption Database.
The amendments will enter into force on May 1, 2024.
MEPC 76 adopted amendments to the International Convention on the Control of Harmful Anti-Fouling Systems on Ships,
2001, or the AFS Convention, which have been entered into force on January 1, 2023. From this date, all ships shall not apply
or re-apply anti-fouling systems containing cybutryne on or after January 1, 2023; all ships bearing an anti-fouling system that
contains cybutryne in the external coating layer of their hulls or external parts or surfaced on January 1, 2023 shall either:
remove the anti-fouling system or apply a coating that forms a barrier to this substance leaching from the underlying non-
compliance anti-fouling system. The Company does not currently apply anti-fouling systems containing cybutryne.
The Glasgow Climate Pact, an agreement reached at the COP26, calls for signatory states to voluntarily phase out unabated coal
usage and fossil fuels subsidies. COP26 also produced the Clydebank Declaration, in which 22 signatory states (including the
United States and the United Kingdom) announced their intention to voluntarily support the establishment of zero-emission
shipping routes. Governmental and investor pressure to voluntarily participate in these green shipping routes could cause the
Company to incur significant additional expenses to “green” our vessels.
Additionally, certain investors and lenders may exclude oil transport companies, such as us, from their investing portfolios
altogether due to ESG factors. These limitations in both the debt and equity capital markets may affect our ability to grow as
Frontline Plc – Annual Report and Financial Statements 2022 36
our plans for growth may include accessing the equity and debt capital markets. If those markets are unavailable, or if we are
unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business
strategy, which would have a material adverse effect on our financial condition and results of operations and impair our ability
to service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor,
report and comply with wide ranging ESG requirements. The occurrence of any of the foregoing could have a material adverse
effect on our business and financial condition.
Operational risk
The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:
• loss of life or harm to seafarers;
• a marine accident or disaster;
• environmental accidents and pollution;
• cargo and property losses or damage; and
• business interruptions caused by mechanical failure, human error, war, terrorism, piracy, political action in various
countries, labor strikes, or adverse weather conditions.
Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an
accident or oil spill or other environmental disaster may harm our reputation as a safe and reliable tanker operator.
The hull and machinery of every commercial vessel must be certified as being "in class" by a classification society authorized
by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the
applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. All of our
vessels are certified as being “in class” by all the applicable Classification Societies (e.g., American Bureau of Shipping,
Lloyd's Register of Shipping or DNV GL).
A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's
machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-
year period. We expect our vessels to be on special survey cycles for hull inspection and continuous survey cycles for
machinery inspection. Every vessel is also required to be dry docked every two and a half to five years for inspection of its
underwater parts.
Compliance with the above requirements may result in significant expense. If any vessel does not maintain its class or fails any
annual, intermediate or special survey, the vessel will be unable to trade between ports and will be unemployable and
uninsurable, which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry
cargo or be employed, or any such violation of covenants, could have a material adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay dividends.
The operation of our vessels is affected by the requirements set forth in the IMO's International Safety Management Code, (the
“ISM Code”). The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive
"Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth
instructions and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to comply
with the ISM Code, we may be subject to increased liability, including the invalidation of existing insurance or a decrease of
available insurance coverage for our affected vessels and such failure may result in a denial of access to, or detention in, certain
ports. The U.S. Coast Guard and European Union authorities enforce compliance with the ISM and International Ship and Port
Facility Security Code, or the ISPS Code, and prohibit non-compliant vessels from trading in U.S. and European Union ports.
This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Given that the IMO continues to review and introduce new regulations, it is impossible to predict what additional regulations, if
any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.
Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such
conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional
conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing
business and which may materially adversely affect our operations. We are required by various governmental and quasi-
governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.
Frontline Plc – Annual Report and Financial Statements 2022 37
Further, government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected
to become stricter in the future and may require us to incur significant capital expenditures on our vessels to keep them in
compliance.
The operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant
environmental damage, and a catastrophic spill could exceed the insurance coverage available. Compared to other types of
vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other
cause, due to the high flammability and high volume of the oil transported in tankers.
Further, our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad
weather and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions,
human error, war, terrorism, piracy and other circumstances or events. Changing economic, regulatory and political conditions
in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of
waterways, piracy, terrorism, labor strikes and boycotts. These hazards may result in death or injury to persons, loss of revenues
or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships and
market disruptions, delay or rerouting.
If our vessels suffer damage, they may need to be repaired at a dry docking facility. The costs of dry dock repairs are
unpredictable and may be substantial. We may have to pay dry docking costs that our insurance does not cover at all or in full.
The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may
adversely affect our business and financial condition. In addition, space at dry docking facilities is sometimes limited and not all
dry docking facilities are conveniently located. We may be unable to find space at a suitable dry docking facility or our vessels
may be forced to travel to a dry docking facility that is not conveniently located relative to our vessels' positions. The loss of
earnings while these vessels are forced to wait for space or to travel to more distant dry docking facilities may adversely affect
our business and financial condition. Further, the involvement of our vessels in a serious accident or the total loss of any of our
vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or
safeguard our vessels, we may be unable to prevent any such damage, costs or loss which could negatively impact our business,
financial condition, results of operations, cash flows and ability to pay dividends.
For vessels on voyage charters, fuel oil, or bunkers, is a significant, if not the largest, expense. Changes in the price of fuel may
adversely affect our profitability to the extent we have vessels on voyage charters. The price and supply of fuel is unpredictable
and fluctuates based on events outside our control, including geopolitical developments, such as the ongoing conflict in the
Ukraine region, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil
producing countries and regions, regional production patterns and environmental concerns. Any future increase in the cost of
fuel may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.
In addition, the entry into force, on January 1, 2020, of the 0.5% global sulfur cap in marine fuels used by vessels that are not
equipped with sulfur oxide scrubbers under MARPOL Annex VI may lead to changes in the production quantities and prices of
different grades of marine fuel by refineries and introduces an additional element of uncertainty in fuel markets, which could
result in additional costs and adversely affect our cash flows, earnings and results from operations.
Bunker prices have increased significantly during 2021 and have continued rising during 2022. Prices for very low sulfur fuel
oil, or VLSFO, in Singapore started at around $415 per metric ton in January 2021 and reached $620 per metric ton by the end
of December 2021, an increase of about 50%. During 2022, our bunker costs rose as a result of conflict in Ukraine. The price of
VLSFO has increased significantly as a result of the conflict in Ukraine and, indicatively, the price for VLSFO in Singapore
reached approximately $1,100 per metric ton in July 2022, but has since decreased. As of February 9, 2023, the price of VLSFO
in Singapore was approximately $656 per metric ton but uncertainty regarding its future direction remains.
Compliance risks
None of our vessels called on ports located in countries or territories that are the subject of country-wide or territory-wide
sanctions or embargoes imposed by the U.S. government or other applicable governmental authorities (“Sanctioned
Jurisdictions”) in 2022 in violation of applicable sanctions or embargo laws. Although we intend to maintain compliance with
all applicable sanctions and embargo laws, and we endeavor to take precautions reasonably designed to mitigate such risks, it is
possible that, in the future, our vessels may call on ports located in Sanctioned Jurisdictions on charterers’ instructions and/or
Frontline Plc – Annual Report and Financial Statements 2022 38
without our consent. If such activities result in a violation of sanctions or embargo laws, we could be subject to monetary fines,
penalties, or other sanctions, and our reputation and the market for our ordinary shares could be adversely affected.
U.S. sanctions exist under a strict liability regime. A party need not know it is violating sanctions and need not intend to violate
sanctions to be liable. We could be subject to monetary fines, penalties, or other sanctions for violating applicable sanctions or
embargo laws even in circumstances where our conduct, or the conduct of a charterer, is consistent with our sanctions-related
policies, unintentional or inadvertent.
The laws and regulations of these different jurisdictions vary in their application and do not all apply to the same covered
persons or proscribe the same activities. In addition, the sanctions and embargo laws and regulations of each jurisdiction may
be amended to increase or reduce the restrictions they impose over time, and the lists of persons and entities designated under
these laws and regulations are amended frequently. Moreover, most sanctions regimes provide that entities owned or controlled
by the persons or entities designated in such lists are also subject to sanctions. The U.S. and EU both have enacted new
sanctions programs in recent years. Additional countries or territories, as well as additional persons or entities within or
affiliated with those countries or territories, have, and in the future will, become the target of sanctions. These require us to be
diligent in ensuring our compliance with sanctions laws. Further, the U.S. has increased its focus on sanctions enforcement with
respect to the shipping sector. Current or future counterparties of ours may be affiliated with persons or entities that are or may
be in the future become the subject of sanctions imposed by the United States, EU and and/or other international bodies. If we
determine that such sanctions require us to terminate existing or future contracts to which we, or our subsidiaries, are party or if
we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected, or we may
suffer reputational harm.
As a result of Russia’s actions in Ukraine, the U.S., EU and United Kingdom, together with numerous other countries, have
imposed significant sanctions on persons and entities associated with Russia and Belarus, as well as comprehensive sanctions
on certain areas within the Donbas region of Ukraine, and such sanctions apply to entities owned or controlled by such
designated persons or entities. These sanctions adversely affect our ability to operate in the region and also restrict parties
whose cargo we may carry. Sanctions against Russia have also placed significant prohibitions on the maritime transportation of
seaborne Russian oil, the importation of certain Russian energy products and other goods, and new investments in the Russian
Federation. These sanctions further limit the scope of permissible operations and cargo we may carry.
Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations in 2022,
and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as
the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in
fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business,
and could result in our reputation and the market for our securities to be adversely affected and/or some investors deciding, or
being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment
policies or restrictions that prevent them from holding securities of companies that have contracts with countries or territories
identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to
divest from, our common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may
violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and
those violations could in turn negatively affect our reputation. Investor perception of the value of our common stock may be
adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in countries or
territories that we operate in.
Our operations will be subject to numerous laws and regulations in the form of international conventions and treaties, national,
state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are
registered, which can significantly affect the ownership and operation of our vessels. Compliance with such laws and
regulations, where applicable, may require installation of costly equipment or operational changes and may affect the resale
value or useful lives of our vessels. Compliance with such laws and regulations may require us to obtain certain permits or
authorizations prior to commencing operations. Failure to obtain such permits or authorizations could materially impact our
business results of operations, financial conditions and ability to pay dividends by delaying or limiting our ability to accept
charterers. We may also incur additional costs in order to comply with other existing and future regulatory obligations,
including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters,
maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other
financial assurance of our ability to address pollution incidents.
A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or
the suspension or termination of our operations. Environmental requirements can also affect the resale value or useful lives of
Frontline Plc – Annual Report and Financial Statements 2022 39
our vessels, could require a reduction in cargo capacity, ship modifications or operational changes or restrictions, could lead to
decreased availability of insurance coverage for environmental matters or could result in the denial of access to certain
jurisdictional waters or ports or detention in certain ports. Under local, national and foreign laws, as well as international
treaties and conventions, we could incur material liabilities, including clean-up obligations and natural resource damages
liability, in the event that there is a release of hazardous materials from our vessels or otherwise in connection with our
operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous
substances, which could subject us to liability, without regard to whether we were negligent or at fault. We could also become
subject to personal injury or property damage claims relating to the release of hazardous substances associated with our existing
or historic operations. Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines
and other sanctions, including, in certain instances, seizure or detention of our vessels, and could harm our reputation with
current or potential charterers of our tankers. We will be required to satisfy insurance and financial responsibility requirements
for potential oil (including marine fuel) spills and other pollution incidents. Although we have insurance to cover certain
environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims
will not have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, many environmental requirements are designed to reduce the risk of pollution, such as from oil spills, and our
compliance with these requirements could be costly. To comply with these and other regulations, including: (i) the sulfur
emission requirements of Annex VI of the International Convention for the Prevention of Marine Pollution from Ships, or
“MARPOL”, which instituted a global 0.5% (lowered from 3.5% as of January 1, 2020) sulfur cap on marine fuel consumed by
a vessel, unless the vessel is equipped with an exhaust gas cleaning system, an EGCS or scrubber, and (ii) the International
Convention for the Control and Management of Ships’ Ballast Water and Sediments of the International Maritime
Organization, or IMO, which requires vessels to install expensive ballast water treatment systems, or BWTS, we may be
required to incur additional costs to meet new maintenance and inspection requirements, develop contingency plans for
potential spills, and obtain insurance coverage. The increased demand for low sulfur fuels may increase the costs of fuel for our
vessels that do not have scrubbers. Additional conventions, laws and regulations may be adopted that could limit our ability to
do business or increase the cost of doing business and which may materially and adversely affect our operations.
We have incurred increased costs to comply with these revised standards. Additional or new conventions, laws and regulations
may be adopted that could require, among others, the installation of expensive emission control systems and could adversely
affect our business, results of operations, cash flows and financial condition. Low sulfur fuel is more expensive than standard
marine fuel containing 3.5% sulfur content and may become more expensive or difficult to obtain as a result of increased
demand. If the cost differential between low sulfur fuel and high sulfur fuel is significantly higher than anticipated, or if low
sulfur fuel is not available at ports on certain trading routes, it may not be feasible or competitive to operate our vessels on
certain trading routes without installing scrubbers or without incurring deviation time to obtain compliant fuel. Scrubbers may
not be available to be installed on such vessels at a favorable cost or at all if we seek them at a later date. Further, there is risk
that if the fuel spread between high sulfur fuel oil and low sulfur fuel oil decreases, we may not be able to recover the
investments we have made in our scrubbers with our expected timeframes or at all. As of December 31, 2022, 40 of the vessels
owned by the Company are fitted with scrubbers, of which 18 vessels were delivered to the Company with scrubbers fitted, and
two further scrubber installations are planned in 2023. As of December 31, 2022, the Company has incurred $87.8 million since
2018 on the purchase and installation of scrubbers on 28 vessels, of which two were sold in 2021, two were sold in 2022 and
the leases on two vessels were terminated in 2022.
Furthermore, depending on the date of the International Oil Pollution Prevention, or IOPP, renewal survey, existing vessels
constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019. For most
vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate
unwanted organisms. Ships constructed on or after September 8, 2017 are to comply with the D-2 standards on or after
September 8, 2017. As of December 31, 2022, the Company has incurred $21.0 million since 2018 to comply with these
regulations.
Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit, or VGP program and
the U.S. National Invasive Species Act, or NISA, are currently in effect to regulate ballast discharge, exchange and installation,
the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, requires that the U.S.
Environmental Protection Agency, or EPA, develop national standards of performance for approximately 30 discharges, similar
to those found in the VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for
Vessel Incidental Discharge National Standards of Performance under VIDA. Within two years after the EPA publishes its final
Vessel Incidental Discharge National Standards of Performance, the U.S. Coast Guard must develop corresponding
implementation, compliance and enforcement regulations regarding ballast water. The new regulations could require the
installation of new equipment, which may cause us to incur substantial costs.
Frontline Plc – Annual Report and Financial Statements 2022 40
We continue to evaluate different options in complying with IMO and other rules and regulations.
We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption.
We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business
conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977, or the FCPA
and other anti-bribery legislation. We are subject, however, to the risk that we, our affiliated entities or our or their respective
officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including
the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of
operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In
addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting,
investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our
senior management. Though we have implemented monitoring procedures and required policies, guidelines, contractual terms
and audits, these measures may not prevent or detect failures by our agents or intermediaries regarding compliance.
We may be, from time to time, involved in various litigation matters and arbitration proceedings. These matters may include,
among other things, contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic
tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course
of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect
of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may
have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain
solvent which may have a material adverse effect on our financial condition. Please see notes 24 and 26 to our consolidated
financial statements.
Cyber security risk
We rely on our computer systems and network infrastructure across our operations, including on our vessels. The safety and
security of our vessels and efficient operation of our business, including processing, transmitting and storing electronic and
financial information, are dependent on computer hardware and software systems, which are increasingly vulnerable to security
breaches and other disruptions. Any significant interruption or failure of our information systems or any significant breach of
security could adversely affect our business and results of operations.
Our vessels rely on information systems for a significant part of their operations, including navigation, provision of services,
propulsion, machinery management, power control, communications and cargo management. We have in place safety and
security measures on our vessels and onshore operations to secure our vessels against cyber-security attacks and any disruption
to their information systems. However, these measures and technology may not adequately prevent security breaches despite
our continuous efforts to upgrade and address the latest known threats. A disruption to the information system of any of our
vessels could lead to, among other things, wrong routing, collision, grounding and propulsion failure.
Beyond our vessels, we rely on industry accepted security measures and technology to securely maintain confidential and
proprietary information maintained on our information systems. However, these measures and technology may not adequately
prevent security breaches. The technology and other controls and processes designed to secure our confidential and proprietary
information, detect and remedy any unauthorized access to that information were designed to obtain reasonable, but not
absolute, assurance that such information is secure and that any unauthorized access is identified and addressed appropriately.
Such controls may in the future fail to prevent or detect, unauthorized access to our confidential and proprietary information. In
addition, the foregoing events could result in violations of applicable privacy and other laws. If confidential information is
inappropriately accessed and used by a third party or an employee for illegal purposes, we may be responsible to the affected
individuals for any losses they may have incurred as a result of misappropriation. In such an instance, we may also be subject to
regulatory action, investigation or liable to a governmental authority for fines or penalties associated with a lapse in the
integrity and security of our information systems. Furthermore, from May 25, 2018, data breaches on personal data, as defined
in the General Data Protection Regulation 2016/679 (EU), could lead to administrative fines up to €20 million or up to 4% of
the total worldwide annual turnover of the company, whichever is higher.
Our operations, including our vessels, and business administration could be targeted by individuals or groups seeking to
sabotage or disrupt such systems and networks, or to steal data, and these systems may be damaged, shutdown or cease to
function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or
viruses, other cyber-security incidents or otherwise). For example, the information systems of our vessels may be subject to
threats from hostile cyber or physical attacks, phishing attacks, human errors of omission or commission, structural failures of
Frontline Plc – Annual Report and Financial Statements 2022 41
resources we control, including hardware and software, and accidents and other failures beyond our control. The threats to our
information systems are constantly evolving, and have become increasingly complex and sophisticated. Furthermore, such
threats change frequently and are often not recognized or detected until after they have been launched, and therefore, we may be
unable to anticipate these threats and may not become aware in a timely manner of such a security breach, which could
exacerbate any damage we experience.
We may be required to expend significant capital and other resources to protect against and remedy any potential or existing
security breaches and their consequences. A cyber-attack could result in significant expenses to investigate and repair security
breaches or system damages and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and
diminished customer confidence. In addition, our remediation efforts may not be successful and we may not have adequate
insurance to cover these losses.
The unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could
disrupt our business and could have a material adverse effect on our business, results of operations, cash flows and financial
condition.
Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in connection
with the ongoing conflicts between Russia and Ukraine. To the extent such attacks have collateral effects on global critical
infrastructure or financial institutions, such developments could adversely affect our business, operating results and financial
condition. At this time, it is difficult to assess the likelihood of such threat and any potential impact at this time.
USE OF FINANCIAL INSTRUMENTS BY THE COMPANY
The Company uses financial instruments which results in exposure to the following risks:
Interest Rate Risk
The Company is exposed to the impact of interest rate changes primarily through its floating-rate borrowings that require the
Company to make interest payments based on SOFR and LIBOR. Significant increases in interest rates could adversely affect
operating margins, results of operations and ability to service debt. The Company uses interest rate swaps to reduce its exposure
to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs
associated with its floating-rate debt. The Company is exposed to the risk of credit loss in the event of non-performance by the
counterparty to the interest rate swap agreements.
As of December 31, 2022, the Company's outstanding debt which was at variable interest rates, net of the amount subject to
interest rate swap agreements, was $1,634.2 million. Based on this, a one percentage point increase in annual LIBOR and SOFR
interest rates would increase its annual interest expense by approximately $16.3 million, excluding the effects of capitalization
of interest.
Currency Risk
The majority of the Company's transactions, assets and liabilities are denominated in U.S. dollars, its functional currency.
Certain of its subsidiaries report in British pounds, Norwegian kroner or Singapore dollars and risks of two kinds arise as a
result: a transaction risk, that is, the risk that currency fluctuations will have an effect on the value of cash flows; and a
translation risk, which is the impact of currency fluctuations in the translation of foreign operations and foreign assets and
liabilities into U.S. dollars in the consolidated financial statements.
Inflation
Significant global inflationary pressures (such as the war between Russia and the Ukraine) increase operating, voyage, general
and administrative, and financing costs. Historically, shipping companies are accustomed to navigating in shipping downturns,
coping with inflationary pressures and monitoring costs to preserve liquidity, as they typically encourage suppliers and service
providers to lower rates and prices.
Although inflation has had a moderate impact on our vessel operating expenses, insurance and corporate overheads,
management does not consider inflation to be a significant risk to direct costs in the current and foreseeable economic
environment. Oil transportation is a specialized area and the number of vessels is increasing. There will therefore be an
increased demand for qualified crew and this has and will continue to put inflationary pressure on crew costs. However, in a
shipping downturn, costs subject to inflation can usually be controlled because shipping companies typically monitor costs to
preserve liquidity and encourage suppliers and service providers to lower rates and prices in the event of a downturn.
Frontline Plc – Annual Report and Financial Statements 2022 42
Price Risk
Our exposure to equity securities price risk arises from marketable securities held by the Company which are listed equity
securities and are carried at FVTPL unless the election to present subsequent changes in the investment's fair value in OCI is
made.
Interest Rate Swap Agreements
In February 2016, the Company entered into an interest rate swap with DNB whereby the floating interest on notional debt of
$150.0 million was switched to fixed rate. The contract had a forward start date of February 2019. In the year ended December
31, 2020, the Company entered into three interest rate swaps with DNB whereby the floating interest rate on notional debt
totaling $250.0 million was switched to a fixed rate. In the year ended December 31, 2020, the Company entered into two
interest rate swaps with Nordea Bank whereby the floating interest rate on notional debt of $150.0 million was switched to a
fixed rate. The reference rate for our interest rate swaps is LIBOR. The aggregate fair value of these swaps as of December 31,
2022 was an asset of $54.0 million (2021: $9.7 million, 2020: nil) and a liability of nil (2021: $5.7 million, 2020: $19.3
million). The fair value (Level 2) of the Company’s interest rate swap agreements is the estimated amount that the Company
would receive or pay to terminate the agreements at the reporting date, taking into account, as applicable, fixed interest rates on
interest rate swaps, current interest rates, forward rate curves and the current credit worthiness of both the Company and the
derivative counterparty. The estimated fair value is the present value of future cash flows. The Company recorded a gain on
these interest rate swaps of $53.6 million in 2022 (2021: gain of $17.5 million).
See Note 20 to our audited Consolidated Financial Statements included herein for further details.
DIVIDENDS
In December 2015, our Board approved implementing a dividend policy to distribute quarterly dividends to shareholders equal
to or close to earnings per share adjusted for non-recurring items. In February 2023, we declared a dividend of $0.30 per share
for the third quarter and a dividend of $0.77 per share for the fourth quarter of 2022. In August 2022, we declared a dividend of
$0.15 per share for the second quarter of 2022. No dividends were declared in 2021. The timing and amount of dividends, if
any, is at the discretion of the Board. We cannot guarantee that our Board will declare dividends in the future. The Board does
not recommend any further dividend for 2022.
SHARE CAPITAL AND PREMIUM
Authorized capitalization
The authorized share capital of the Company as of December 31, 2022 is $600,000,000 (2021: $500,000,000) divided into
600,000,000 shares (2021: 500,000,000) of $1.00 par value each, of which 222,622,889 shares (December 31, 2021:
203,530,979 shares and December 31, 2020: 197,692,321 shares) of $1.00 par value each are in issue and fully paid.
Reconciliation of the Number of Ordinary Shares Outstanding through December 31, 2022
Shares outstanding at December 31, 2019 196,894,321
Number of ordinary shares issued in connection with our share option scheme 798,000
Shares outstanding at December 31, 2020 197,692,321
Number of ordinary shares issued in connection with the ATM Program 5,499,658
Number of ordinary shares issued in connection with our share option scheme 339,000
Shares outstanding at December 31, 2021 203,530,979
Number of ordinary shares issued in connection with share exchange transaction 19,091,910
Shares outstanding at December 31, 2022 222,622,889
ATM Program
In June 2020, we entered into an equity distribution agreement with Morgan Stanley & Co. LLC for the offer and sale of up to
$100.0 million of ordinary shares through an at-the-market offering program (the “2020 ATM Program”). In the year ended,
December 31, 2020, we issued zero shares pursuant to the 2020 ATM Program. In the year ended December 31, 2021, we
issued 5,499,658 shares for combined gross proceeds of $51.2 million.
Share options
Frontline Plc – Annual Report and Financial Statements 2022 43
In January 2020, the Company issued 798,000 ordinary shares under its share option scheme to Robert Hvide Macleod, former
Chief Executive Officer of Frontline Management AS, at a strike price of $7.30 per share.
In July 2021, the Company issued 339,000 ordinary shares under its share option scheme at a strike price of $5.70 per share.
The shares were issued to John Fredriksen (198,000 shares), Inger M. Klemp (120,000 shares), and Ola Lorentzon (21,000
shares). See Note 22 for further details.
Euronav share acquisition
On May 28, 2022, the Company announced that it agreed to acquire in privately negotiated share exchange transactions with
certain shareholders of Euronav a total of 5,955,705 shares in Euronav, representing 2.95% of the outstanding shares in
Euronav as of this date, in exchange for a total of 8,337,986 ordinary shares of Frontline. Frontline received the $0.06 dividend
that was paid on June 8, 2022 by Euronav in respect of these 5,955,705 shares.
On June 10, 2022, the Company announced that it agreed to acquire in privately negotiated transactions with certain
shareholders of Euronav a total of 7,708,908 shares in Euronav, representing 3.82% of the outstanding shares in Euronav as of
this date, in exchange for a total of 10,753,924 shares in Frontline.
As of December 31, 2022, the Company held 13,664,613 shares in Euronav, as a result of the above transactions. The acquired
shares were initially recognized at their fair value of $167.7 million and the Company recorded a loss of $7.8 million in relation
to these transactions, being the difference between the transaction price to acquire these shares and their fair value as of the
transaction dates. The transaction price paid to acquire these shares was $175.5 million, which was the fair value of the
Frontline's shares as of the transaction dates.
In connection with the above-referenced privately negotiated share exchange transactions, Frontline entered into a share lending
arrangement with Hemen to facilitate settlement of such transactions. Pursuant to such arrangement Hemen delivered an
aggregate of 19,091,910 Frontline shares to the exchanging Euronav holders in June 2022 and Frontline agreed to issue to
Hemen the same number of Frontline shares in full satisfaction of the share lending arrangement. This share issuance to Hemen
was completed in August 2022.
BOARD OF DIRECTORS
The members of the Board of Directors as of December 31, 2022 and at the date of this report, as well as changes in the
composition during 2022 are shown on page 3. See the Corporate Governance and Renumeration reports for further detail on
the distribution of responsibilities and compensation of the Board of Directors.
DIRECTORS’ INTEREST IN THE SHARE CAPITAL OF THE COMPANY
As of April 27, 2023, the beneficial interests of our directors and officers in our ordinary shares were as follows:
Director or Officer
Ordinary
shares
of $1.00 each
Options to
acquire ordinary shares
which have vested
Percentage of
ordinary shares
outstanding
Ola Lorentzon 24,000
—
Less than 1%
John Fredriksen 198,000
—
Less than 1%
James O'Shaughnessy
—
—
—
Ole B. Hjertaker
—
— —
Steen Jakobsen
—
—
—
Marios Demetriades —
—
—
Lars H. Barstad
—
— —
Inger M. Klemp 300,000
— Less than 1%
EVENTS AFTER THE BALANCE SHEET DATE
See Note 26 to our audited Consolidated Financial Statements included herein for further details.
Frontline Plc – Annual Report and Financial Statements 2022 44
BRANCHES
The Company did not operate through any branches during the year.
INDEPENDENT AUDITORS
The independent auditors, PricewaterhouseCoopers Limited, who were appointed on December 20, 2022, have expressed their
willingness to continue in office. A resolution giving authority to the Board of Directors to fix their remuneration will be
proposed at the Annual General Meeting.
On behalf of the Board of Directors of Frontline Plc
member of the Audit Committee
Li
Frontline Plc – Annual Report and Financial Statements 2022 45
Frontline plc
Consolidated Statements of Profit or Loss for the years ended December 31, 2022 and 2021
(in thousands of $, except per share data)
Note 2022 2021
Operating revenues and other income
Revenues 5 1,430,208 749,381
Other income 5 8,040 4,060
Total operating revenues and other income 1,438,248 753,441
Operating expenses
Voyage expenses and commission 6 605,544 392,697
Ship operating expenses 6 175,164 164,246
Administrative expenses 6 47,374 26,424
Depreciation 13, 14 165,170 165,205
Contingent rental income 23 (623) (3,606)
Total operating expenses 992,629 744,966
Net operating income 445,619 8,475
Other income (expenses)
Finance income 7 1,479 121
Finance expense 7 (45,330) (44,244)
Gain on marketable securities 10 58,359 7,677
Share of results of associated company 16 14,243 (724)
Dividends received 1,579 18,367
Net other expenses 30,330 (18,803)
Profit (loss) before income taxes 475,949 (10,328)
Income tax expense 8 (412) (4,633)
Profit (loss) for the period 475,537 (14,961)
Profit (loss) attributable to the shareholders of the Company 475,537 (14,961)
Basic earnings (loss) per share attributable to shareholders of the Company 9 $2.22 $(0.08)
Diluted earnings (loss) per share attributable to shareholders of the Company 9 $2.22 $(0.08)
See accompanying Notes that are an integral part of these Consolidated Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 46
Frontline plc
Consolidated Statements of Comprehensive Income for the years ended December 31, 2022 and 2021
(in thousands of $)
Note 2022 2021
Comprehensive income (loss)
Profit (loss) for the period
475,537
(14,961)
Items that may be reclassified to profit or loss:
Foreign currency translation gain
226
28
Other comprehensive income (loss) 226 28
Comprehensive income (loss) 475,763 (14,933)
Comprehensive income (loss) attributable to the shareholders of the Company
475,763
(14,933)
See accompanying Notes that are an integral part of these Consolidated Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 47
Frontline plc
Consolidated Statements of Financial Position as of December 31, 2022 and 2021 and January 1, 2021
(in thousands of $)
Note
December 31,
2022
December 31,
2021
January 1,
2021
ASSETS
Current Assets
Cash and cash equivalents 254,525 113,073 174,721
Restricted cash 20 — — 14,928
Marketable securities 10 236,281 2,435 8,474
Trade and other receivables 11 139,467 73,532 63,924
Related party receivables 23 13,485 11,676 13,255
Inventories 6 107,114 80,787 57,858
Voyages in progress 5 110,638 38,492 34,705
Prepaid expenses and accrued income 14,255 8,899 7,725
Other current assets 5 5,285 3,851 2,729
Total current assets 881,050 332,745 378,319
Non-current assets
Newbuildings 12 47,991 130,633 48,498
Vessels and equipment 13 3,650,652 3,467,300 3,300,456
Right-of-use assets 14 3,108 48,794 61,944
Goodwill 15 112,452 112,452 112,452
Derivative instruments receivable 20 53,993 9,675 —
Investment in associated companies 16 16,302 555 1,279
Loan notes receivable 23, 26 1,388 1,388 1,388
Other non-current assets 1,507 3,055 7,197
Total assets 4,768,443 4,106,597 3,911,533
LIABILITIES AND EQUITY
Current liabilities
Short-term debt and current portion of long-term debt 18 277,854 198,665 234,887
Current portion of obligations under leases 19 1,024 8,723 12,358
Related party payables 23 31,248 36,250 19,853
Trade and other payables 17 81,533 43,364 55,002
Total current liabilities 391,659 287,002 322,100
Non-current liabilities
Long-term debt 18 2,112,460 2,126,910 1,908,924
Obligations under leases 19 2,372 43,979 52,644
Derivative instruments payable 20 — 5,673 19,261
Other non-current payables 17 2,053 992 3,739
Total liabilities 2,508,544 2,464,556 2,306,668
Equity
Share capital 21 222,623 203,531 197,692
Additional paid in capital 604,687 448,291 402,021
Contributed surplus 1,004,094 1,004,094 1,004,094
Accumulated other reserves 454 228 200
Retained earnings (deficit) 428,513 (13,631) 1,330
Frontline Plc – Annual Report and Financial Statements 2022 48
Total equity attributable to the shareholders of the Company 2,260,371 1,642,513 1,605,337
Non-controlling interest (472) (472) (472)
Total equity 2,259,899 1,642,041 1,604,865
Total liabilities and equity 4,768,443 4,106,597 3,911,533
See accompanying Notes that are an integral part of these Consolidated Financial Statements.
On April 27, 2023, the Board of Directors of Frontline Plc authorized these consolidated financial statements for issue.
Frontline Plc – Annual Report and Financial Statements 2022 49
Frontline plc
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
(in thousands of $)
Note 2022 2021
Profit (loss) for the period 475,537 (14,961)
Adjustments to reconcile profit (loss) for the period to net cash provided by
operating activities:
Net finance expense 7 43,851 44,123
Depreciation 13, 14 165,170 165,205
Other operating gains 5 (4,596) (3,225)
Loss on lease terminations 5 431 —
Amortization of acquired time charters (2,806) (5,045)
Contingent rental income 23 (623) (3,606)
Gain on marketable securities 10 (58,359) (7,677)
Share of results from associated company 16 (14,243) 724
Stock option expense 22 4,700 185
Other, net 674 —
Changes in operating assets and liabilities:
Trade accounts receivable 11 (59,581) (22,449)
Other receivables 11 (6,351) 7,216
Inventories (26,410) (22,929)
Voyages in progress (72,146) (3,787)
Prepaid expenses and accrued income (5,356) (1,174)
Other current assets (1,435) (1,128)
Trade accounts payable 17 5,667 (5,533)
Accrued expenses 17 30,022 (3,485)
Related party balances 23 (6,813) 18,968
Other current liabilities 678 135
Change in restricted cash 20 — 14,928
Other (387) (2,816)
Interest paid (83,039) (60,477)
Debt issuance costs paid 18 (4,349) (8,050)
Interest received 5,094 119
Net cash provided by operating activities 385,330 85,261
Investing activities
Additions to newbuildings, vessels and equipment 12, 13 (335,815) (473,761)
Purchase of shares 10 — (357)
Proceeds from sale of vessels 23 80,000 80,000
Investment in associated company 16 (1,505) —
Net cash inflow on sale of subsidiary — 5,625
Proceeds from sale of marketable securities 10 — 14,074
Net cash used in investing activities (257,320) (374,419)
Financing activities
Net proceeds from issuance of shares 21 — 52,447
Proceeds from issuance of debt 18 651,248 403,868
Repayment of debt 18 (597,834) (219,521)
Repayment of obligations under leases (2,123) (9,284)
Frontline Plc – Annual Report and Financial Statements 2022 50
Lease termination payments 23 (4,456) —
Cash dividends paid 9 (33,393) —
Net cash provided by financing activities 13,442 227,510
Net change in cash and cash equivalents 141,452 (61,648)
Cash and cash equivalents at beginning of year 113,073 174,721
Cash and cash equivalents at end of year 254,525 113,073
Supplemental disclosure of cash flow information:
Income taxes paid 199 4,986
See accompanying Notes that are an integral part of these Consolidated Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 51
Frontline plc
Consolidated Statements of Changes in Equity for the years ended December 31, 2022 and 2021
(in thousands of $, except number of shares)
Note 2022 2021
Number of shares outstanding
Balance at the beginning of the year 203,530,979 197,692,321
Shares issued on exercise of options 21 — 339,000
Shares issued under ATM program 21 — 5,499,658
Shares issued in connection with Euronav share acquisition 21 19,091,910 —
Balance at the end of the year 222,622,889 203,530,979
Share capital
Balance at the beginning of the year 203,531 197,692
Shares issued on exercise of options 21 — 339
Shares issued under ATM program 21 — 5,500
Shares issued in connection with Euronav share acquisition 21 19,092 —
Balance at the end of the year 222,623 203,531
Additional paid in capital
Balance at the beginning of year 448,291 402,021
Stock compensation expense 22 — (338)
Shares issued on exercise of options 21 — 1,593
Shares issued under ATM program 21 — 45,015
Shares issued in connection with Euronav share acquisition 21 156,396 —
Balance at the end of year 604,687 448,291
Contributed surplus
Balance at the beginning of year 1,004,094 1,004,094
Balance at the end of year 1,004,094 1,004,094
Accumulated other reserves
Balance at the beginning of year 228 200
Other comprehensive income (loss) 226 28
Balance at the end of year 454 228
Retained earnings (deficit)
Balance at the beginning of year (13,631) 1,330
Profit (loss) for the period 475,537 (14,961)
Cash dividends 9 (33,393) —
Balance at the end of year 428,513 (13,631)
Total equity attributable to the shareholders of the Company 2,260,371 1,642,513
Non-controlling interest
Balance at the beginning of year (472) (472)
Balance at the end of year (472) (472)
Total equity 2,259,899 1,642,041
See accompanying Notes that are an integral part of these Consolidated Financial Statements
Frontline Plc – Annual Report and Financial Statements 2022 52
Frontline plc
Notes to Consolidated Financial Statements
1. GENERAL INFORMATION
Frontline plc (formerly Frontline Ltd.), the Company or Frontline, is an international shipping company formerly incorporated
in Bermuda as an exempted company under the Bermuda Companies Law of 1981 on June 12, 1992. At a Special General
Meeting on December 20, 2022, the Company's shareholders agreed to redomicile the Company to the Republic of Cyprus
under the name of Frontline plc (the “Redomiciliation”). The Company was officially redomiciled to Cyprus on December 30,
2022.
The business, assets and liabilities of Frontline Ltd. and its subsidiaries prior to the Redomiciliation are the same as Frontline
plc immediately after the Redomiciliation on a consolidated basis, as well as its fiscal year. In addition, the directors and
executive officers of the Frontline plc immediately after the Redomiciliation are the same individuals who were directors and
executive officers, respectively, of Frontline Ltd. immediately prior to the Redomiciliation.
Prior to the Redomiciliation, Frontline Ltd.’s ordinary shares were listed on the New York Stock Exchange (“NYSE”) and Oslo
Stock Exchange (“OSE”) under the symbol “FRO.” Upon effectiveness of the Redomiciliation, the Company’s ordinary shares
continue to be listed on the NYSE and OSE and commenced trading under the new name Frontline plc and the new CUSIP
number M46528101 and the new ISIN CY0200352116 on the NYSE on January 3, 2023 and on the OSE on January 13, 2023.
Frontline plc’s Legal Entity Identifier number was not affected by the Redomiciliation and remains the same.
The Company operates oil tankers of two sizes: VLCCs, which are between 200,000 and 320,000 dwt, and Suezmax tankers,
which are vessels between 120,000 and 170,000 dwt, and operates LR2/Aframax tankers, which are clean product tankers, and
range in size from 110,000 to 115,000 dwt. The Company operates through subsidiaries located in Cyprus, Bermuda, Liberia,
the Marshall Islands, Norway, the United Kingdom, Singapore and China. The Company is also involved in the charter,
purchase and sale of vessels.
As of December 31, 2022, the Company's fleet consisted of 70 vessels, with an aggregate capacity of approximately 13.1
million DWT:
(i) 66 vessels owned by the Company (21 VLCCs, 27 Suezmax tankers and 18 LR2/Aframax tankers);
(ii) four vessels that are under the Company's commercial management (two Suezmax tankers and two Aframax tankers).
As of December 31, 2022, the Company’s newbuilding program consisted of two scrubber-fitted VLCCs at Hyundai Heavy
Industries ("HHI"), both of which were delivered in January 2023.
2. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of presentation
Our consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union. See Note 3 for disclosures related to the first-time adoption of IFRS.
The financial statements were approved by the Board of Directors on April 27, 2023, and authorized for issue.
2. Use of judgements and estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of the Company's accounting policies and the reported amounts of assets
and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of which are the basis of making the
judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed periodically. Revisions to estimates are recognized in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Frontline Plc – Annual Report and Financial Statements 2022 53
Information about judgements and area where significant estimates have been made in applying accounting policies that have
the most significant effects on the amounts recognized in the consolidated financial statement is included in the following notes:
• Note 13 - Depreciation: The cost of the vessels less estimated residual value is depreciated on a straight-line basis over
the vessels' estimated remaining economic useful lives. The selection of an appropriate useful economic life requires
significant estimation. In addition, residual value may vary due to changes in market prices on scrap. See policy 8.3.
for further details.
Change in useful life of vessels
Historically the Company has applied a 25 year useful economic life to its vessels. The Company reviews estimated
useful lives and residual values each year. Estimated useful lives may change due to changed end user requirements,
costs related to maintenance and upgrades, technological development and competition as well as industry,
environmental and legal requirements. Specifically, the Company has noted that many of our customers apply stringent
vetting requirements to vessels to ensure that the most rigorous technical standards are adhered to in their value chain.
As a result, many customers apply age criteria to the vessels they are willing to charter. In recent years, the Company
has noted a two-tier market forming, with vessels under 20 years of age, or lower, favored by top tier charterers, and
vessels over 20 years being considered candidates for recycling, or being utilized in markets other than the spot market
in which we primarily compete. Furthermore, as a result of the increased focus on environmental factors for both
owners and investors it is expected that the competitive age threshold for a vessel may decrease as costs to comply
with upcoming regulations may increase moving forward. As of December 31, 2022, the Company has revised the
estimated useful life of its vessels from 25 years to 20 years as a result of its analysis of the aforementioned factors.
This change in estimate will be applied prospectively from January 1, 2023 and will not result in any restatement to the
current or prior year consolidated financial statements. Based on the Frontline fleet as of December 31, 2022, adjusted
for the sale of Front Eminence and Front Balder, the change in estimated useful life is expected to increase
depreciation expense by approximately $59.0 million for the year ended December 31, 2023. The change in estimate is
unrelated to the adoption of IFRS.
• Note 13 - Vessel impairment: The carrying amounts of the Company's vessels or right-of-use assets may not represent
their fair market value at any point in time since the market prices of secondhand vessels tend to fluctuate with
changes in charter rates and the cost of newbuildings. Historically, both charter rates and vessel values tend to be
cyclical. When events and changes in circumstances indicate that the carrying amount of the asset or Cash Generating
Unit ("CGU") might not be recovered, the Company performs an impairment test whereby the carrying amount of the
asset or CGU is compared to its recoverable amount, which is the greater of its value in use, based on discounted cash
flows, and its fair value less cost to sell. In developing estimates of future cash flows in order to assess value in use,
the Company must make assumptions about future performance, with significant assumptions being related to charter
rates, ship operating expenses, utilization, dry docking and other capital requirements, residual value, the estimated
remaining useful lives of the vessels and the probability of lease terminations for right-of-use assets. These
assumptions are based on historical trends as well as future expectations. See policy 10.2. for further details.
• Note 15 - Goodwill impairment: The process of evaluating the potential impairment of goodwill is highly subjective
and requires significant judgment at many points during the analysis. Our future operating performance may be
affected by potential impairment charges related to goodwill. Events or circumstances may occur that could negatively
impact our ordinary share price, including changes in our anticipated revenues and profits and our ability to execute on
our strategies. See policy 10.2. for further details.
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Company uses market
observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs
used in the valuation techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value
hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the
Frontline Plc – Annual Report and Financial Statements 2022 54
lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair
value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 10 - Marketable securities
• Note 13 - Vessel impairment
• Note 15 - Goodwill impairment
• Note 20 - Financial instruments; and
• Note 22 - Share options
3. Principles of consolidation
The consolidated financial statements include the accounts for us and our wholly and majority owned subsidiaries.
Intercompany accounts and transactions have been eliminated on consolidation. The results of acquired companies are included
in our Consolidated Statement of Profit or Loss from the date of acquisition.
For investments in which we have significant influence over the operating and financial policies, the equity method of
accounting is used. Accordingly, our share of the earnings and losses of these companies are included in the share of results of
associated company in the accompanying Consolidated Statements of Profit or Loss.
4. Foreign currency
Our functional currency is the U.S. dollar. Transactions in foreign currencies are translated to U.S. dollars at the foreign
exchange rate applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
statement of financial position date are translated to U.S. dollars at the foreign exchange rate applicable at that date. Non-
monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Foreign exchange differences arising on translation are generally recognized in
profit or loss.
5. Financial Instruments
Recognition and initial measurement
Trade and other receivables and trade and other payables are initially recognized when they are originated. All other financial
assets and financial liabilities (including financial assets designated as Fair Value through Other Comprehensive Income
("FVOCI")) are initially recognized on the trade date, which is the date that the Company becomes a party to the contractual
provisions of the instrument.
Financial assets (except equity instruments designated as Fair Value through Profit or Loss ("FVTPL") and FVOCI which are
measured at fair value) are initially measured at their transaction price.
Financial liabilities are recognized initially at their transaction price less any directly attributable transaction costs.
The fair values of equity investments are based on quoted prices.
Financial assets and liabilities are not offset and are presented gross in the Consolidated Statement of Financial Position unless
the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the
liability simultaneously.
5.1. Financial assets
Classification and subsequent measurement
On initial recognition, a financial asset is classified and measured at: amortized cost; FVOCI- equity instrument; or FVTPL.
The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is
managed and its contractual cash flow characteristics.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for
managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period
following the change in the business model.
Frontline Plc – Annual Report and Financial Statements 2022 55
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
• It is held within a business model whose objectives is to hold assets to collect contractual cash flows; and
• Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present
subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Marketable securities
Marketable securities held by the Company are listed equity securities and are classified and measured at FVTPL unless the
election to present subsequent changes in the investment's fair value in OCI is made. No such elections have been made by the
Company.
Derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of
the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards
of ownership and it does not retain control of the financial asset.
5.2. Financial liabilities
Classification and subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL.
A financial liability is classified as at FVTPL if it is a derivative. Financial liabilities at FVTPL are measured at fair value and
gains and losses are recognized in profit or loss.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense is
recognized in profit or loss unless the interest is capitalized as borrowing costs. Non-derivative financial liabilities comprise
loans and borrowings, lease liabilities and trade and other payables.
Derecognition
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expired. The
Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are
substantially different, in which case a new financial liability based on the modified terms is recognized.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.
5.3. Derivative financial instruments
The Company enters into interest rate and bunker swap transactions from time to time to hedge a portion of its exposure to
floating interest rates and movements in bunker prices. These transactions involve the conversion of floating rates into fixed
rates over the life of the transactions without an exchange of underlying principal. The fair values of the interest rate and bunker
swap contracts are recognized as assets or liabilities. None of the interest rate and bunker swaps qualify for hedge accounting.
Changes in fair values of the interest rate swap contracts are recognized in profit or loss within Finance expense. Cash outflows
and inflows resulting from derivative contracts are presented as cash flows from operations in the Consolidated Statement of
Cash Flows.
6. Cash and cash equivalents
Frontline Plc – Annual Report and Financial Statements 2022 56
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash
equivalents that are restricted as to their use are classified as Restricted cash in the Consolidated Statement of Financial
Position. Changes in restricted cash are classified and presented on the Consolidated Statement of Cash Flows based on the
nature of the underlying transaction.
7. Inventories
Inventories comprise principally of bunkers and lubricating oils and are stated at the lower of cost and net realizable value. Cost
is determined on a first-in, first-out basis. Bunkers and lubricating oils expense is recognized in profit or loss upon
consumption.
8. Vessels and equipment
8.1 Owned assets
Vessels and items of equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset. The cost of assets includes;
• The cost of materials and direct labour;
• Any other costs directly attributable to bringing the assets to a working condition for their intended use; and
• Capitalized borrowing costs.
Gains and losses on disposal of a vessel or of another item of equipment are determined by comparing the net proceeds from
disposal with the carrying amount of the vessel or the item of equipment and are recognized in profit or loss. For the sale of
vessels, transfer of risks and rewards usually occurs upon delivery of the vessel to the new owner.
8.2 Newbuildings
Newbuildings represent vessels under construction and are carried at the amounts paid or payable according to the installments
in the contract and capitalized borrowing costs. Installments are often linked to milestones such as signing of contract, steel
cutting, keel laying, launching and delivery. Borrowing costs are capitalized during construction of newbuildings based on
accumulated expenditures for the applicable project at the Company's current weighted average rate of borrowing.
Refer to accounting policy 10.2. for impairment considerations for owned vessels and newbuildings.
8.3. Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of vessels and items of
equipment. Right-of-use assets are depreciated using the straight-line method from the commencement date to the end of the
lease term, unless the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the
right-of-use asset will be depreciated over the useful life of the underlying asset.
The cost of the vessels less estimated residual value is depreciated on a straight-line basis over the vessels' estimated remaining
economic useful lives. The estimated economic useful life of the Company's vessels was 25 years. Depreciation methods, useful
lives and residual values are reviewed annually and adjusted prospectively, if appropriate. As explained in policy 2.2., as of
December 31, 2022, the Company has revised the estimated useful life of its vessels from 25 years to 20 years. This change in
estimate will be applied prospectively from January 1, 2023 and will not result in any restatement to the current or prior year
consolidated financial statements. Other equipment, excluding vessel upgrades, is depreciated over its estimated remaining
useful life, which approximates 5 years. The residual value for owned vessels is calculated by multiplying the lightweight
tonnage of the vessel by the market price of scrap per tonne.
The Company capitalizes and depreciates the costs of significant replacements, renewals and upgrades to its vessels over the
shorter of the vessel’s remaining useful life or the life of the renewal or upgrade. Costs that are not capitalized are recorded as a
component of direct vessel operating expenses during the period incurred. Expenses for routine maintenance and repairs are
expensed as incurred. Advances paid in respect of vessel upgrades in relation to exhaust gas cleaning systems ("EGCS") and
ballast water treatment systems ("BWTS") are included within "other non-current assets", until such time as the equipment is
installed on a vessel, at which point it is transferred to "Vessels and equipment".
8.4. Dry docking – component approach
Our vessels are required by their respective classification societies to go through a dry dock at regular intervals. In general,
vessels below the age of 15 years are docked every 5 years and vessels older than 15 years are docked every 2.5 years.
Significant components of property, plant and equipment with differing depreciation methods or lives are depreciated
Frontline Plc – Annual Report and Financial Statements 2022 57
separately. Major inspection or overhaul costs, such as dry docking, are identified and accounted for as a separate component
and depreciated over the period to the next scheduled dry docking (2.5 - 5 years). A portion of the initial cost of a vessel is
allocated to the dry docking component upon delivery based on the age of the vessel and an estimate of the expected dry dock
cost and depreciated over the period to the next scheduled dry docking. When a dry docking is performed, the carrying amount
of any remaining unamortized dry docking costs related to previous dry docks (due to any difference between the estimated and
actual time between dry docks) is derecognized. Costs associated with routine repairs and maintenance are expensed as incurred
including routine maintenance performed while the vessel is in dry dock.
9. Goodwill
We allocate the cost of acquired companies to identifiable tangible and intangible assets and liabilities acquired, with the
remaining amount being classified as goodwill. When the excess is negative, a bargain purchase gain is recognized immediately
in profit or loss. After initial recognition goodwill is measured at cost less accumulated impairment losses, refer to accounting
policy 10.2.
10. Impairment
10.1 Non-derivative financial assets
Financial instruments and contract assets
The gross carrying amount of a financial asset and contract assets is written off when the Company has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. The Company assesses allowances for its
estimate of expected credit losses based on historical experience, other currently available evidence, and reasonable and
supportable forecasts about the future, including the use of credit default ratings from third party providers of credit rating data.
The Company assesses credit risk in relation to its lease receivables using a portfolio approach. The Company's main portfolio
segments include (i) state-owned enterprises, (ii) oil majors, (iii) commodities traders and (iv) related parties. In addition, the
Company performs individual assessments for customers that do not share risk characteristics with other customers (for
example a customer under bankruptcy or a customer with known disputes or collectability issues). The Company makes
significant judgements and assumptions to estimate its expected losses.
Debt issuance costs
Debt issuance costs, including debt arrangement fees, are capitalized and amortized using the effective interest method over the
term of the relevant loan. Amortization of debt issuance costs is included in interest expense. If a loan is repaid early, any
unamortized portion of the related debt issuance costs is expensed in the period in which the loan is repaid. Debt modifications
are accounted for prospectively and any applicable new debt issuance costs are deferred and amortized together with the
existing unamortized debt issuance costs as of the date of the modification. The Company has recorded debt issuance costs as a
direct deduction from the carrying amount of the related debt.
10.2. Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than inventory and contract assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable
amount is estimated. Goodwill is tested annually for impairment.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or cash generating units ("CGUs").
Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of
the combination.
The recoverable amount of an asset or CGU is the greater of its fair value less cost to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU. Future cash flows are based on
current market conditions, historical trends as well as future expectations.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses
are recognized in profit or loss.
An impairment loss recognized for goodwill shall not be reversed. For other assets, an impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
Frontline Plc – Annual Report and Financial Statements 2022 58
Owned vessels, newbuildings and vessel right-of-use assets
When events and changes in circumstances indicate that the carrying amount of the asset or CGU might not be recovered, the
Company performs an impairment test whereby the carrying amount of the asset or CGU is compared to its recoverable
amount, which is the greater of its value in use, based on discounted cash flows, and its fair value less cost to sell. We define
our CGU as a single vessel as each vessel generates cash inflows that are largely independent of the cash inflows from other
vessels. In assessing whether there is any indication that a vessel may be impaired, the Company considers internal and external
indicators, including but not limited to:
• the estimated market values for our vessels received from independent ship brokers have declined during the period
significantly more than we would expect as a result of the passage of time or normal use. The ship brokers assess each
vessel based on, among others, age, yard, deadweight capacity and compare this to market transactions.
• significant changes with an adverse effect on the Company have taken place during the period, or will take place in the
near future, in the legal and regulatory environment in which the Company operates, and the tanker market, including
negative developments in actual and forecasted time charter equivalent rates ("TCE rates").
• market interest rates have increased during the period, and the increase is likely to affect the discount rate used in
calculating a vessel’s value in use and decrease the asset’s recoverable amount materially.
• the carrying amount of the net assets of the Company is more than its market capitalization.
• evidence is available of obsolescence or physical damage of a vessel.
• significant changes with an adverse effect on the Company have taken place during the period, or are expected to take
place in the near future, in the extent to which, or manner in which, a vessel is used or is expected to be used.
• evidence that the economic performance of a vessel is, or will be, worse than expected, including:
◦ actual or forecasted TCE rates are significantly worse than expected;
◦ cash flows for acquiring a vessel, or subsequent cash needs for operating or maintaining it, are significantly
higher than expected;
◦ actual net cash flows or operating profit are significantly worse than expected;
◦ a significant decline in budgeted net cash flows or operating profit; or
◦ operating losses or net cash outflows.
If such impairment indicators are identified, the vessel’s recoverable amount is estimated. In developing estimates of future
cash flows in order to assess value in use, the Company must make assumptions about future performance, with significant
assumptions being related to charter rates, ship operating expenses, utilization, dry docking and other capital requirements,
residual value, the estimated remaining useful lives of the vessels and the probability of lease terminations for vessels held
under lease. These assumptions are based on historical trends as well as future expectations. Specifically, in estimating future
charter rates, management takes into consideration rates currently in effect for existing time charters and estimated daily time
charter equivalent rates for each vessel class for the unfixed days over the estimated remaining lives of each of the vessels. The
estimated daily time charter equivalent rates used for unfixed days are based on a combination of (i) internally developed
forecasts, and (ii) historical rates, based on quarterly average rates published by an independent third party maritime research
service, for a historical period determined based on management's judgment of past and ongoing shipping cycles. Recognizing
that the transportation of crude oil is cyclical and subject to significant volatility based on factors beyond the Company's
control, management believes the use of estimates based on the combination of internally forecast rates and historical average
rates calculated as of the reporting date to be reasonable.
Estimated outflows for operating expenses and dry docking requirements are based on historical and budgeted costs and are
adjusted for assumed inflation. Finally, utilization is based on historical levels achieved and estimates of a residual value are
consistent with the pattern of scrap rates used in management's evaluation of salvage value. Other capital requirements for
newbuildings are primarily based on amounts payable according to the installments in the contract.
The weighted average cost of capital ("WACC") used to calculate the value in use of our assets has been calculated to reflect
the industry-weighted average return on debt and equity using observable market data.
The more significant factors that could impact management's assumptions regarding time charter equivalent rates include (i)
loss or reduction in business from significant customers, (ii) unanticipated changes in demand for transportation of crude oil
and oil products, (iii) changes in production of or demand for oil, generally or in particular regions, (iv) greater than anticipated
levels of tanker newbuilding orders or lower than anticipated levels of tanker scrapping, and (v) changes in rules and
regulations applicable to the tanker industry, including legislation adopted by international organizations such as IMO and the
EU or by individual countries. Although management believes that the assumptions used to evaluate potential impairment are
reasonable and appropriate at the time they were made, such assumptions are highly subjective and likely to change, possibly
materially, in the future. Tanker charter rates are volatile and can experience long periods at depressed levels. Future
assessments of vessel impairment would be adversely affected by reductions in vessel values and charter rates.
Frontline Plc – Annual Report and Financial Statements 2022 59
Goodwill
Goodwill is not amortized, but rather reviewed for impairment annually, or more frequently if impairment indicators arise. The
Company has one group of CGUs for the purpose of assessing potential goodwill impairment and has selected September 30 as
its annual goodwill impairment testing date.
A CGU is impaired when its carrying amount exceeds its recoverable amount. In assessing whether the recoverable amount of a
CGU to which goodwill has been allocated is less than its carrying amount, the Company assesses relevant events and
circumstances, including (i) macroeconomic conditions; (ii) industry and market conditions; (iii) changes in cost factors that
may impact earnings and cash flows; (iv) overall financial performance; (v) other entity specific events such as changes in
management, strategy, customers or key personnel (vi) other events and (vii) if applicable, changes in the Company's share
price, both in absolute terms and relative to peers.
The recoverable amount of the Company is the greater of its fair value less cost to sell and value in use. We estimate the fair
value less cost to sell of the Company based on its market capitalization plus a control premium, as needed. Control premium
assumptions require judgment and actual results may differ from assumed or estimated amounts. The fair value measurement
takes into account Level 1, Level 2 and Level 3 inputs. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the Company. Future cash flows are based on current market conditions, historical trends as well as future
expectations.
11. Revenue and expense recognition
11.1. Voyage charters
In a voyage charter contract, the charterer hires the vessel to transport a specific agreed-upon cargo for a single voyage. The
consideration in such a contract is determined on the basis of a freight rate per metric ton of cargo carried or occasionally on a
lump sum basis. The charterer is responsible for any short loading of cargo or "dead" freight. The voyage charter party
generally has standard payment terms with freight paid on completion of discharge. The voyage charter party generally has a
"demurrage" clause. As per this clause, the charterer reimburses us for any potential delays exceeding the allowed laytime as
per the charter party clause at the ports visited, which is recorded as voyage revenue. As such, demurrage is considered variable
consideration under the contract. Estimates and judgments are required in ascertaining the most likely outcome of a particular
voyage and actual outcomes may differ from estimates. Such estimates are reviewed and updated over the term of the voyage
charter contract. In a voyage charter contract, revenue recognition begins to be satisfied once the vessel commences loading the
cargo.
In a voyage contract, the Company bears all voyage related costs such as fuel costs, port charges and canal tolls. To recognize
costs incurred to fulfill a contract as an asset, the following criteria shall be met: (i) the costs relate directly to the contract, (ii)
the costs generate or enhance resources of the entity that will be used in satisfying performance obligations in the future and
(iii) the costs are expected to be recovered. The costs incurred during the period prior to commencement of loading the cargo,
primarily bunkers, are deferred as they represent setup costs and recorded as a current asset and are subsequently amortized on a
straight-line basis as we satisfy the performance obligations under the contract. Costs incurred to obtain a contract, such as
commissions, are also deferred and expensed over the same period. Costs incurred during the performance of a voyage are
expensed as incurred.
Voyage charters contain a lease component if the contract (i) specifies a specific vessel asset; and (ii) has terms that allow the
charterer to exercise substantive decision-making rights, which have an economic value to the charterer and therefore allow the
charterer to direct how and for what purpose the vessel is used. Voyage charter revenues and expenses are recognized ratably
over the estimated length of each voyage, which the Company has assessed commence on loading of the cargo.
Voyage and other contracts not qualifying as leases are accounted for under the provisions of IFRS 15 Revenue from Contracts
with Customers. The Company has determined that its voyage charter contracts that qualify for accounting under IFRS 15
consist of a single performance obligation of transporting the cargo within a specified time period. Therefore, the performance
obligation is met evenly as the voyage progresses, and the revenue is recognized on a straight-line basis over the voyage days
from the commencement of loading to completion of discharge. Contract assets with regards to voyage revenues are reported as
"Voyages in progress" as the performance obligation is satisfied over time. Voyage revenues typically become billable and due
for payment on completion of the voyage and discharge of the cargo, at which point the receivable is recognized within "Trade
and other receivables".
Frontline Plc – Annual Report and Financial Statements 2022 60
The Company has taken the practical expedient not to disclose the aggregate amount of the transaction price allocated to the
performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period as the performance
obligations are part of contracts having an original expected duration of one year or less.
11.2. Time and bareboat charters
In a time charter voyage, the vessel is hired by the charterer for a specified period of time in exchange for consideration which
is based on a daily hire rate. Generally, the charterer has the discretion over the ports visited, shipping routes and vessel speed.
The contract/charter party generally provides typical warranties regarding the speed and performance of the vessel. The charter
party generally has some owner protective restrictions such that the vessel is sent only to safe ports by the charterer and carries
only lawful or non-hazardous cargo. In a time charter contract, we are responsible for all the costs incurred for running the
vessel such as crew costs, vessel insurance, repairs and maintenance and lubes. The charterer bears the voyage related costs
such as bunker expenses, port charges, and canal tolls during the hire period. The performance obligations in a time charter
contract are satisfied over the term of the contract beginning when the vessel is delivered to the charterer until it is redelivered
back to us. The charterer generally pays the charter hire in advance of the upcoming contract period. The lease component of
time charter contracts, bareboat charter contracts and voyage charter contracts which we consider to be leases are accounted for
under IFRS 16 Leases, and revenues are recorded over the term of the charter as a service is provided. When a time charter
contract is linked to an index, we recognize revenue for the applicable period based on the actual index for that period.
11.3. Administrative income
Administrative income primarily comprises income earned from the commercial and technical management of related party and
third party vessels and newbuilding supervision fees derived from related parties and third parties. Administrative income is
recognized over time on a straight-line basis using the accruals method as the services are provided and performance
obligations are met.
12. Other income
Other income relates to (i) gains on the sale of vessels, which are recognized when the vessel has been delivered and
substantially all risks have been transferred and are determined by comparing the proceeds received with the carrying value of
the vessel, (ii) cash inflows in relation to settlements of claims (including the settlement of insurance and legal claims), (iii)
gains and losses on the termination of leases before the expiration of the lease term, which are accounted for by derecognizing
the carrying value of the right-of-use asset and lease obligation, with a gain or loss recognized for the difference. Gains and
losses on the termination of leases are accounted for when the lease is terminated and the vessel is redelivered to the owners,
and iv) gains and losses from pooling and other revenue sharing arrangements where the Company is considered the principal
under the charter parties and records voyage revenues and costs gross, with the adjustments required as a result of the revenue
sharing arrangement being recognized as other operating gains or losses.
13. Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
13.1. As a lessee
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at the amount equal to the lease liability adjusted by initial direct costs incurred by the lessee. Adjustments
may also be required for any payments made at or before the commencement date, less any lease incentives received.
After lease commencement, the Company measures the right-of-use asset using a cost model, namely at cost less accumulated
depreciation and accumulated impairment. The right-of-use asset is subsequently depreciated using the straight-line method. In
addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental
borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lessee's incremental
borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security,
the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
Lease payments included in the measurement of the lease liability comprise the following:
• Fixed payments;
Frontline Plc – Annual Report and Financial Statements 2022 61
• Variable lease payments that depend on an index or a rate;
• Amounts expected to be payable under a residual value guarantee, and;
• The exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an
optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Company is reasonably certain not to terminate early.
The Company has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It
is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in
the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its
assessment of whether the purchase or extension option is reasonably certain to be exercised or a termination option is
reasonably certain not to be exercised. When the lease liability is remeasured in this way, a corresponding adjustment is made
to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-to-use asset
has been reduced to zero.
Lease and non-lease components in the contracts are separated and the non-lease components are expensed as incurred and
classified based on the nature of the expense.
Short-term leases and leases of low-value assets
The Company has elected not to recognize certain right-of-use assets and lease liabilities for leases of low-value assets and
short-term leases (i.e., leases with an original term of 12-months or less), including IT equipment. The Company recognizes the
lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Refer to accounting policy 10.2. for impairment considerations for vessel right-of-use assets.
13.2. As a lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance or operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major
part of the economic life of the asset.
If the lease qualifies as an operating lease, e.g. time charter contracts and the lease component of voyage charter contracts, the
leased asset remains on the statement of financial position of the lessor and continues being depreciated. The Company
separates the lease and non-lease component in the contract, with the lease component qualified as operating lease and the non-
lease component accounted for under IFRS 15. The Company makes significant judgments and assumptions to separate lease
components from non-lease components of our contracts. For purposes of determining the standalone selling price of the vessel
lease and non-lease components of the Company’s time charters and voyage charters, the Company uses the residual approach
given that vessel rates are highly variable depending on shipping market conditions. The Company believes that the standalone
transaction price attributable to the non-lease component is more readily determinable than the price of the lease component
and, accordingly, the price of the service components is estimated using cost plus a margin and the residual transaction price is
attributed to the lease component. Refer to the Revenue policy for further details of the accounting for the lease and the non-
lease component.
14. Share-based compensation
The fair value of the amount payable to beneficiaries in respect of synthetic options, which are settled in cash, is recognized as
an expense with a corresponding liability, over the period during which the beneficiaries become unconditionally entitled to
payment. The fair value of the liability is remeasured at each reporting period.
15. Dividends received
The Company records dividends received in the period in which they are declared and receivable.
16. New standards and interpretations not yet adopted
Frontline Plc – Annual Report and Financial Statements 2022 62
New and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the
Company’s financial statements are disclosed below. The below list includes the new standards and amendments that we
believe are the most relevant for the Company:
Amendments to IAS 1 Presentation of Financial statements: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying
liabilities as current or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification
The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied
retrospectively. The Company is currently assessing the impact of the amendments, however, the adoption is not expected to
have a material impact on its consolidated financial statements.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements, in
which it provides guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The
amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for
entities to disclose their 'significant' accounting policies with a requirement to disclose their 'material' accounting policies and
adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after January 1, 2023 with earlier application
permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the application of the
definition of 'material' to accounting policy information, an effective date for these amendments is not necessary.
The Company is currently assessing the amendments to determine the impact they will have on the Company’s accounting
policy disclosures.
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting
Estimates
In February, 2021, the IASB issued amendments to IAS 8 to clarify how companies should distinguish changes in accounting
policies from changes in accounting estimates. The distinction is important because changes in accounting estimates are applied
prospectively only to future transactions and other future events, but changes in accounting policies are generally also applied
retrospectively to past transactions and other past events.
The amendments are effective for annual periods beginning on or after January 1, 2023 with early application permitted.
3. CHANGE IN ACCOUNTING POLICIES
First-time adoption of IFRS
These financial statements for the year ended December 31, 2022 are the first the Company has prepared in accordance with
IFRS as adopted by the European Union. Accordingly, the Company has prepared financial statements that comply with IFRS
applicable as of December 31, 2022, together with the comparative period ended December 31, 2021, as described in the basis
of preparation (Note 2). In preparing the financial statements, the Company’s opening statement of financial position was
prepared as of January 1, 2021, the Company’s date of transition to IFRS.
This note explains the principal adjustments made by the Company when transitioning to IFRS from its previous reporting
framework, accounting principles generally accepted in the United States of America ("U.S. GAAP") as of January 1, 2021, as
well as for the year ended December 31, 2021.
Exemptions applied
Frontline Plc – Annual Report and Financial Statements 2022 63
IFRS 1, First-Time Adoption of International Financial Reporting Standards, allows first-time adopters certain exemptions
from the requirement to apply IFRS effective at December 31, 2022 retrospectively. The Company has availed itself of certain
of these exemptions as follows:
• The Company has elected not to apply IFRS 3, Business Combinations, retrospectively to business combinations that
occurred prior to the adoption of IFRS.
• The Company has elected to use the practical expedient in IFRS 15, Revenue from Contracts with Customers, to not
restate contracts that are completed at the transition date, January 1, 2021. IFRS 1 defines a completed contract as a
contract for which the entity has transferred all of the goods or services as identified in accordance with previous
GAAP.
Effect of transition to IFRS
The main differences identified as a result of the transition to IFRS are as follows:
• Our vessels are required by their respective classification societies to go through a dry dock at regular intervals. In
general, vessels below the age of 15 years are docked every 5 years and vessels older than 15 years are docked every
2.5 years. Unlike Frontline's previous accounting policy under U.S. GAAP whereby such costs were expensed as
incurred, IFRS requires significant components of property, plant and equipment with differing depreciation methods
or lives to be depreciated separately. Under IFRS, major inspection or overhaul costs, such as dry docking, should be
identified and accounted for as a separate component and depreciated over the period to the next scheduled dry
docking (2.5 - 5 years). A portion of the initial cost of a vessel is allocated to the dry docking component upon delivery
and depreciated over the period to the next scheduled dry docking. When a dry docking is performed, the carrying
amount of any remaining unamortized dry docking costs related to previous dry docks (due to any difference between
the estimated and actual time between dry docks) is derecognized. Costs associated with routine repairs and
maintenance are expensed as incurred including routine maintenance performed while the vessel is in dry dock
• Leases were classified as either operating leases or finance leases under U.S. GAAP, while under IFRS there is only
one classification when the Company is a lessee. Under U.S. GAAP, rent expense related to leases classified as
operating leases is presented in a single line item depending on the nature of the underlying asset and recorded on a
straight-line basis whereas under IFRS, interest expense on lease liabilities and amortization of right-of-use assets are
presented separately.
• Under U.S. GAAP, short-term obligations should be reclassified as non-current at the balance sheet date if the
borrower has both the intent and ability to refinance the short-term obligation on a long-term basis. In lieu of actually
issuing a new long-term obligation, a borrower can evidence its ability to refinance on a long-term basis by entering
into a financing agreement before the financial statements are issued. This accounting treatment is not permitted under
IFRS.
The impact of the transition to IFRS on the Consolidated Statements of Financial Position when transitioning from U.S. GAAP
as of January 1, 2021, and December 31, 2021 are described in detail below. Additionally, the impact of the transition to IFRS
on the Consolidated Statements of Profit or Loss, Consolidated Statement of Comprehensive Income, and the Consolidated
Statement of Cash Flows for the year ended December 31, 2021 are described in detail further below. U.S. GAAP figures
presented below are based on the Company's Annual Report on Form 20-F for the year ended December 31, 2021, which was
filed with the Securities and Exchange Commission on March 17, 2022.
Reconciliation of Consolidated Statement of Financial Position as at January 1, 2021
(in thousands of $) Note U.S. GAAP
Effect of
transition to
IFRS IFRS
ASSETS
Current Assets
Cash and cash equivalents 174,721 — 174,721
Restricted cash 14,928 — 14,928
Marketable securities 1 2,639 5,835 8,474
Marketable securities pledged to creditors 1 5,835 (5,835) —
Trade and other receivables 2 — 63,924 63,924
Trade accounts receivable, net 2 40,974 (40,974) —
Related party receivables 13,255 — 13,255
Frontline Plc – Annual Report and Financial Statements 2022 64
Other receivables 2 22,950 (22,950) —
Inventories 57,858 — 57,858
Voyages in progress 34,705 — 34,705
Prepaid expenses and accrued income 7,725 — 7,725
Other current assets 2,729 — 2,729
Total current assets 378,319 — 378,319
Non-current assets
Newbuildings 48,498 — 48,498
Vessels and equipment 3 3,307,144 (6,688) 3,300,456
Vessels and equipment under finance leases, net 4a 53,518 (53,518) —
Right-of-use assets under operating leases 4a 8,426 (8,426) —
Right-of-use assets 4a — 61,944 61,944
Goodwill 112,452 — 112,452
Investment in associated companies 1,279 — 1,279
Loan notes receivable 1,388 — 1,388
Other non-current assets 7,197 — 7,197
Total assets 3,918,221 (6,688) 3,911,533
LIABILITIES AND EQUITY
Current liabilities
Short-term debt and current portion of long-term debt 6, 8 167,082 67,805 234,887
Current portion of obligations under finance leases 4b 7,810 (7,810) —
Current portion of obligations under operating leases 4b 4,548 (4,548) —
Current portion of obligations under leases 4b — 12,358 12,358
Related party payables 19,853 — 19,853
Trade and other payables 5 — 55,002 55,002
Trade accounts payable 5 7,860 (7,860) —
Accrued expenses 5, 8 42,529 (42,529) —
Derivative instruments payable 9 19,261 (19,261) —
Other current liabilities 5 12,418 (12,418) —
Total current liabilities 281,361 40,739 322,100
Non-current liabilities
Long-term debt 6 1,968,924 (60,000) 1,908,924
Obligations under finance leases 4c 48,467 (48,467) —
Obligations under operating leases 4c 4,177 (4,177) —
Obligations under leases 4c — 52,644 52,644
Derivative instruments payable 9 — 19,261 19,261
Other non-current payables 7 3,739 — 3,739
Total liabilities 2,306,668 — 2,306,668
Equity
Share capital 197,692 — 197,692
Additional paid in capital 402,021 — 402,021
Contributed surplus 1,004,094 — 1,004,094
Accumulated other reserves 10 200 — 200
Retained earnings 3 8,018 (6,688) 1,330
Total equity attributable to the shareholders of the Company 1,612,025 (6,688) 1,605,337
Frontline Plc – Annual Report and Financial Statements 2022 65
Non-controlling interest (472) — (472)
Total equity 1,611,553 (6,688) 1,604,865
Total liabilities and equity 3,918,221 (6,688) 3,911,533
IFRS adjustments of Consolidated Statement of Financial Position as at January 1, 2021
1. "Marketable securities pledged to creditors" of $5.8 million, which were presented separately under U.S. GAAP, were
reclassified into "Marketable securities" under IFRS.
2. "Trade accounts receivable, net" of $41.0 million and "Other receivables" of $23.0 million", which were presented
separately under U.S. GAAP, were reclassified into "Trade and other receivables" under IFRS.
3. Dry docking costs incurred prior to January 1, 2021 were expensed as incurred within Ship operating expense under
Frontline’s historical accounting policy in accordance with U.S. GAAP. Under IFRS, significant components of
property, plant and equipment with differing depreciation methods or lives are required to be depreciated separately. A
portion of the initial cost of a vessel is allocated to the dry docking component upon delivery and depreciated over the
period to the next scheduled dry docking. This resulted in a net measurement and recognition adjustment which
decreased Vessels and equipment and Retained earnings by $6.7 million as follows:
a. the carrying amount of unamortized dry docking costs at January 1, 2021 were capitalized as a separate
component of Vessels and equipment which increased Vessels and equipment and Retained earnings by
$26.2 million.
b. a portion of the initial cost of vessels delivered prior to January 1, 2021 was allocated to the dry docking
component upon delivery and depreciated over the period to the next scheduled dry docking which decreased
Vessels and equipment and Retained earnings by $32.9 million.
4. Leases were classified as either operating leases or finance leases under U.S. GAAP, while under IFRS there is only
one classification when the Company is a lessee which resulted in the following reclassification adjustments:
a. "Vessels and equipment under finance leases, net" of $53.5 million and "Right-of-use assets under operating
leases" of $8.4 million, which were presented separately under U.S. GAAP, were reclassified into "Right-of-
use assets" under IFRS.
b. "Current portion of obligations under finance leases" of $7.8 million and "Current portion of obligations
under operating leases" of $4.5 million, which were presented separately under U.S. GAAP, were reclassified
into “Current portion of obligations under leases” under IFRS.
c. "Obligations under finance leases" of $48.5 million and "Obligations under operating leases" of $4.2 million,
which were presented separately under U.S. GAAP, were reclassified into “Obligations under leases” under
IFRS.
5. "Trade accounts payable" of $7.9 million, "Accrued expenses" of $42.5 million and "Other current liabilities" of
$12.4 million, which were presented separately under U.S. GAAP, were reclassified into "Trade and other payables"
under IFRS.
6. Under U.S. GAAP, short-term obligations should be reclassified as non-current at the balance sheet date if the
borrower has both the intent and ability to refinance the short-term obligation on a long-term basis. In lieu of actually
issuing a new long-term obligation, a borrower can evidence its ability to refinance on a long-term basis by entering
into a financing agreement before the financial statements are issued. In accordance with U.S. GAAP, the Company
presented the non-current portion of a loan facility refinanced in February 2021 as long-term debt as of January 1,
2021. This accounting treatment is not permitted under IFRS which resulted in a reclassification adjustment which
increased Short-term debt and current portion of long-term debt and decreased Long-term debt by $60.0 million as of
January 1, 2021.
7. "Other long-term liabilities" of $3.7 million under U.S. GAAP was renamed "Other non-current payables" under IFRS.
8. Accrued interest expense of $7.8 million, which was presented within "Accrued expenses" under U.S. GAAP was
reclassified into "Short-term debt and current portion of long-term debt" under IFRS.
9. "Derivative instruments payable", which was classified as a current liability in accordance with the Company's
accounting policies under U.S. GAAP, was reclassified to a non-current liability under IFRS based on the contractual
maturity dates.
10. "Accumulated other comprehensive income" of $0.2 million under U.S. GAAP was renamed "Accumulated other
reserves" under IFRS.
Reconciliation of Consolidated Statement of Financial Position as at December 31, 2021
(in thousands of $) Note U.S. GAAP
Effect of
transition to
IFRS IFRS
Frontline Plc – Annual Report and Financial Statements 2022 66
ASSETS
Current Assets
Cash and cash equivalents 113,073 — 113,073
Marketable securities 2,435 — 2,435
Trade and other receivables 1 — 73,532 73,532
Trade accounts receivable, net 1 63,423 (63,423) —
Related party receivables 11,676 — 11,676
Other receivables 1 10,109 (10,109) —
Inventories 80,787 — 80,787
Voyages in progress 38,492 — 38,492
Prepaid expenses and accrued income 8,899 — 8,899
Other current assets 3,851 — 3,851
Total current assets 332,745 — 332,745
Non-current assets
Newbuildings 130,633 — 130,633
Vessels and equipment 2 3,477,801 (10,501) 3,467,300
Vessels and equipment under finance leases, net 3a 44,880 (44,880) —
Right-of-use assets under operating leases 3a 3,914 (3,914) —
Right-of-use assets 3a — 48,794 48,794
Goodwill 112,452 — 112,452
Derivative instrument receivable 9,675 — 9,675
Investment in associated companies 555 — 555
Loan notes receivable 1,388 — 1,388
Other non-current assets 3,055 — 3,055
Total assets 4,117,098 (10,501) 4,106,597
LIABILITIES AND EQUITY
Current liabilities
Short-term debt and current portion of long-term debt 7 189,286 9,379 198,665
Current portion of obligations under finance leases 3b 7,601 (7,601) —
Current portion of obligations under operating leases 3b 1,122 (1,122) —
Current portion of obligations under leases 3b — 8,723 8,723
Related party payables 36,250 — 36,250
Trade and other payables 4 — 43,364 43,364
Trade accounts payable 4 2,327 (2,327) —
Accrued expenses 4, 7 42,836 (42,836) —
Derivative instruments payable 8 5,673 (5,673) —
Other current liabilities 4 7,580 (7,580) —
Total current liabilities 292,675 (5,673) 287,002
Non-current liabilities
Long-term debt 2,126,910 — 2,126,910
Obligations under finance leases 3c 40,865 (40,865) —
Obligations under operating leases 3c 3,114 (3,114) —
Obligations under leases 3c — 43,979 43,979
Derivative instruments payable 8 — 5,673 5,673
Other non-current payables 5 992 — 992
Total liabilities 2,464,556 — 2,464,556
Frontline Plc – Annual Report and Financial Statements 2022 67
Equity
Share capital 203,531 — 203,531
Additional paid in capital 448,291 — 448,291
Contributed surplus 1,004,094 — 1,004,094
Accumulated other reserves 6 228 — 228
Retained (deficit) earnings 2 (3,130) (10,501) (13,631)
Total equity attributable to the shareholders of the Company 1,653,014 (10,501) 1,642,513
Non-controlling interest (472) — (472)
Total equity 1,652,542 (10,501) 1,642,041
Total liabilities and equity 4,117,098 (10,501) 4,106,597
IFRS adjustments of the Consolidated Statement of Financial Position as at December 31, 2021
1. "Trade accounts receivable, net" of $63.4 million and "Other receivables" of $10.1 million", which were presented
separately under U.S. GAAP, were reclassified into "Trade and other receivables" under IFRS.
2. Dry docking costs incurred prior to January 1, 2021 and in the year ended December 31, 2021 were expensed as
incurred within Ship operating expense under Frontline’s historical accounting policy in accordance with U.S. GAAP.
Under IFRS, significant components of property, plant and equipment with differing depreciation methods or lives are
required to be depreciated separately. A portion of the initial cost of a vessel is allocated to the dry docking component
upon delivery and depreciated over the period to the next scheduled dry docking. This resulted in a net measurement
and recognition adjustment which decreased Vessels and equipment and Retained earnings by $10.5 million as
follows:
a. the carrying amount of unamortized dry docking costs at January 1, 2021 were capitalized as a separate
component of Vessels and equipment which increased Vessels and equipment and Retained earnings by $26.2
million.
b. a portion of the initial cost of vessels delivered prior to January 1, 2021 was allocated to the dry docking
component upon delivery and depreciated over the period to the next scheduled dry docking which decreased
Vessels and equipment and Retained earnings by $32.9 million.
c. the dry docking costs in the year ended December 31, 2021 which were expensed as incurred under U.S
GAAP were capitalized as a separate component of Vessels and equipment which increased Vessels and
equipment and Retained earnings by $11.4 million.
d. depreciation expense on capitalized dry docking costs and the write off of the carrying amount of
unamortized dry docking costs on vessels sold in the year ended December 31, 2021 resulted in a decrease in
Vessels and equipment and Retained earnings of $13.3 million and $1.8 million, respectively.
3. Leases were classified as either operating leases or finance leases under U.S. GAAP, while under IFRS there is only
one classification when the Company is a lessee which resulted in the following reclassification adjustments:
a. "Vessels and equipment under finance leases, net" of $44.9 million and "Right-of-use assets under operating
leases" of $3.9 million, which were presented separately under U.S. GAAP, were reclassified into "Right-of-
use assets" under IFRS.
b. "Current portion of obligations under finance leases" of $7.6 million and "Current portion of obligations
under operating leases" of $1.1 million, which were presented separately under U.S. GAAP, were reclassified
into "Current portion of obligations under leases" under IFRS.
c. "Obligations under finance leases" of $40.9 million and "Obligations under operating leases" of $3.1 million,
which were presented separately under U.S. GAAP, were reclassified into “Obligations under leases” under
IFRS.
4. "Trade accounts payable" of $2.3 million, "Accrued expenses" of $42.8 million and "Other current liabilities" of
$7.6 million, which were presented separately under U.S. GAAP, were reclassified into "Trade and other payables"
under IFRS.
5. "Other long-term liabilities" of $1.0 million under U.S. GAAP was renamed "Other non-current payables" under IFRS.
6. "Accumulated other comprehensive income" of $0.2 million under U.S. GAAP was renamed "Accumulated other
reserves" under IFRS.
7. Accrued interest expense of $9.4 million, which was presented within "Accrued expenses" under U.S. GAAP was
reclassified into "Short-term debt and current portion of long-term debt" under IFRS.
8. "Derivative instruments payable", which was classified as a current liability in accordance with the Company's
accounting policies under U.S. GAAP, was reclassified to a non-current liability under IFRS based on the contractual
maturity dates.
Frontline Plc – Annual Report and Financial Statements 2022 68
Reconciliation of Consolidated Statement of Profit or Loss for the year ended December 31, 2021
(in thousands of $) Note U.S. GAAP
Effect of
transition to
IFRS IFRS
Operating revenues and other income
Voyage charter revenues 1a 663,995 (663,995) —
Time charter revenues 1a 71,236 (71,236) —
Revenues 1a, 1b — 749,381 749,381
Other income 1b, 1c, 2c 14,150 (10,090) 4,060
Total operating revenues and other income 749,381 4,060 753,441
Other operating gains 1c 5,893 (5,893) —
Operating expenses
Voyage expenses and commission 392,697 — 392,697
Contingent rental income (3,606) — (3,606)
Ship operating expenses 2a 175,607 (11,361) 164,246
Charter hire expenses 3a 2,695 (2,695) —
Administrative expenses 3b 27,891 (1,467) 26,424
Depreciation 2b, 3 147,774 17,431 165,205
Total operating expenses 743,058 1,908 744,966
Net operating income 12,216 (3,741) 8,475
Other income (expenses)
Finance income 4 — 121 121
Interest income 4 119 (119) —
Finance expense 5 — (44,244) (44,244)
Interest expense 5 (61,435) 61,435 —
Gain on marketable securities 7,677 — 7,677
Share of results of associated company (724) — (724)
Foreign currency exchange loss 5 (116) 116 —
Gain on derivatives 5 17,509 (17,509) —
Dividends received 6 — 18,367 18,367
Other non-operating items, net 6 18,239 (18,239) —
Net other expenses (18,731) (72) (18,803)
Loss before income taxes (6,515) (3,813) (10,328)
Income tax expense (4,633) — (4,633)
Loss for the period (11,148) (3,813) (14,961)
Loss attributable to the shareholders of the Company (11,148) (3,813) (14,961)
Basic loss per share attributable to shareholders of the
Company $(0.06) $(0.02) $(0.08)
Diluted loss per share attributable to shareholders of the
Company $(0.06) $(0.02) $(0.08)
IFRS adjustments to the Consolidated Statement of Profit or Loss for the year ended December 31, 2021
1. The presentation of operating revenues and other income was adjusted as follows:
a. "Voyage charter revenues" and "Time charter revenues" under U.S. GAAP were reclassified to "Revenue"
under IFRS.
Frontline Plc – Annual Report and Financial Statements 2022 69
b. "Administrative income" of $14.2 million presented as "Other income" under U.S. GAAP was reclassified to
"Revenue" under IFRS.
c. "Other operating gains" of $5.9 million under U.S. GAAP was reclassified to "Other income" under IFRS.
2. Dry docking costs incurred prior to January 1, 2021 and in the year ended December 31, 2021 were expensed as
incurred within Ship operating expense under Frontline’s historical accounting policy in accordance with U.S. GAAP.
Under IFRS, significant components of property, plant and equipment with differing depreciation methods or lives are
required to be depreciated separately. A portion of the initial cost of a vessel is allocated to the dry docking component
upon delivery and depreciated over the period to the next scheduled dry docking. This resulted in the following
measurement and recognition adjustments:
a. the dry docking costs in the year ended December 31, 2021 which were expensed as incurred under U.S
GAAP were capitalized as a separate component of Vessels and equipment which decreased Ship operating
expense by $11.4 million.
b. depreciation expense on capitalized dry docking costs resulted in an increase in Depreciation of $13.3 million.
c. the write off of the carrying amount of unamortized dry docking costs on vessels sold in the year ended
December 31, 2021 resulted in a $1.8 million decrease in the gains on sales recognized within Other income.
3. Under U.S. GAAP, rent expense related to leases classified as operating leases is presented in a single line item
depending on the nature of the underlying asset and recorded on a straight-line basis whereas under IFRS, interest
expense on lease liabilities and amortization of right-of-use assets are presented separately. This resulted in the
following reclassification adjustments:
a. Charterhire expense of $2.7 million under U.S. GAAP in relation to two vessels leased in from a third party
on time charters that were classified as leases, was reclassified to Depreciation under IFRS.
b. Administrative expenses of $1.5 million under U.S. GAAP in relation to office leases was reclassified to
Depreciation under IFRS.
4. "Interest income" of $0.1 million which was presented separately under U.S. GAAP, was reclassified to "Finance
income" under IFRS.
5. "Interest expense" of $61.4 million, "Gain on derivatives" of $17.5 million and "Foreign currency exchange loss" of
$0.1 million, which were presented separately under U.S. GAAP, were reclassified to "Finance expense" under IFRS.
6. "Other non-operating items, net" of $18.4 million under U.S. GAAP was reclassified to "Dividends received" under
IFRS.
Reconciliation of Consolidated Comprehensive Income for the year ended December 31, 2021
(in thousands of $) Note U.S. GAAP
Effect of
transition to
IFRS IFRS
Profit (loss) 1 (11,148) (3,813) (14,961)
Items that may be reclassified to profit or loss:
Foreign currency translation gain (loss) 28 — 28
Other comprehensive income (loss) 28 — 28
Comprehensive income (loss) (11,120) (3,813) (14,933)
Comprehensive income (loss) attributable to the shareholders
of the Company (11,120) (3,813) (14,933)
IFRS adjustments to the Consolidated Comprehensive Income for the year ended December 31, 2021
1. Refer to the IFRS adjustments to the Consolidated Statement of Profit or Loss for the year ended December 31, 2021
section above.
Reconciliation of Consolidated Statement of Cash Flows for the year ended December 31, 2021
(in thousands of $) Note U.S. GAAP
Effect of
transition to
IFRS IFRS
Net loss for the period 1 (11,148) (3,813) (14,961)
Frontline Plc – Annual Report and Financial Statements 2022 70
Adjustments to reconcile loss for the period with net cash
provided by operations:
Net finance expense 6 — 44,123 44,123
Depreciation 2b, 3 147,774 17,431 165,205
Amortization of deferred charges 6a 5,208 (5,208) —
Other operating gains 2c (5,058) 1,833 (3,225)
Amortization of acquired time charters (5,045) — (5,045)
Contingent rental income (3,606) — (3,606)
Gain on marketable securities (7,677) — (7,677)
Share of results from associated company 724 — 724
Gain on derivatives 6a (23,262) 23,262 —
Stock option expense 4 — 185 185
Other, net 4 430 (430) —
Changes in operating assets and liabilities:
Trade accounts receivable (22,449) — (22,449)
Other receivables 7,216 — 7,216
Inventories (22,929) — (22,929)
Voyages in progress (3,787) — (3,787)
Prepaid expenses and accrued income (1,174) — (1,174)
Other current assets (1,128) — (1,128)
Trade accounts payable (5,533) — (5,533)
Accrued expenses 6b (1,911) (1,574) (3,485)
Related party balances 18,968 — 18,968
Other current liabilities 135 — 135
Change in restricted cash 5 — 14,928 14,928
Other (2,816) — (2,816)
Interest paid 6b — (60,477) (60,477)
Debt issuance costs paid 7 — (8,050) (8,050)
Interest received 6b — 119 119
Net cash provided by operating activities 62,932 22,329 85,261
Investing activities
Additions to newbuildings, vessels and equipment 2a (462,400) (11,361) (473,761)
Purchase of shares (357) — (357)
Net proceeds from sale of vessel 80,000 — 80,000
Net cash inflow on sale of subsidiary 5,625 — 5,625
Proceeds from sale of marketable securities 14,074 — 14,074
Net cash used in investing activities (363,058) (11,361) (374,419)
Financing activities
Net proceeds from issuance of shares 52,447 — 52,447
Proceeds from issuance of debt 403,868 — 403,868
Repayment of debt (219,521) — (219,521)
Repayment of obligations under leases 3 (5,194) (4,090) (9,284)
Debt fees paid 7 (8,050) 8,050 —
Net cash provided by financing activities 223,550 3,960 227,510
Net change in cash and cash equivalents 5 (76,576) 14,928 (61,648)
Cash and cash equivalents at beginning of year 5 189,649 (14,928) 174,721
Cash and cash equivalents at end of year 113,073 — 113,073
Frontline Plc – Annual Report and Financial Statements 2022 71
IFRS adjustments to the Consolidated Statement of Cash Flows for the year ended December 31, 2021
1. Refer to the IFRS adjustments to the Consolidated Statement of Profit or Loss for the year ended December 31, 2021
section above.
2. Dry docking costs incurred prior to January 1, 2021 and in the year ended December 31, 2021 were expensed as
incurred within Ship operating expense under Frontline’s historical accounting policy in accordance with U.S. GAAP.
Under IFRS, significant components of property, plant and equipment with differing depreciation methods or lives are
required to be depreciated separately. Accordingly, the carrying amount of unamortized dry docking costs at December
31, 2021 were capitalized as a separate component of Vessels and equipment and depreciated over the period to the
next scheduled dry docking (2.5 - 5). This resulted in the following measurement and recognition adjustments:
a. the dry docking costs paid in the year ended December 31, 2021 were capitalized as a separate component of
Vessels and equipment which increased Additions to newbuildings, vessels and equipment by $11.4 million.
b. depreciation expense on capitalized dry docking costs resulted in an increase in Depreciation of $13.3 million.
c. the write off of the carrying amount of unamortized dry docking costs on vessels sold in the year ended
December 31, 2021 resulted in a $1.8 million decrease in the gains on sales recognized within Other operating
gains.
3. Under U.S. GAAP, rent expense related to leases classified as operating leases is presented in a single line item
depending on the nature of the underlying asset and recorded on a straight-line basis whereas under IFRS, interest
expense on lease liabilities and amortization of right-of-use assets are presented separately. This resulted in the
following reclassification adjustments:
a. Charterhire expense of $2.7 million under U.S. GAAP in relation to the leased-in vessels, FPMC Noble and
FPMC Melody, was reclassified to Depreciation under IFRS which resulted in a corresponding increase in
Repayment of obligations under leases.
b. Administrative expenses of $1.5 million under U.S. GAAP in relation to office leases was reclassified to
Depreciation under IFRS which resulted in a corresponding increase in Repayment of obligations under
leases.
4. "Other, net" of $0.2 million under U.S. GAAP was reclassified to "Stock option expense" under IFRS.
5. The "Change in restricted cash" of $14.9 million was presented within operating activities under IFRS.
6. The presentation of net finance expenses was adjusted as follows:
a. "Amortization of deferred charges" of $5.2 million and "Gain on derivatives" of $23.3 million were
reclassified to "Net finance expense".
b. "Interest paid" of $60.5 million and "Interest received" of $0.1 million were presented separately, which
resulted in an adjustment to accrued expenses of $1.6 million.
7. "Debt fees paid" of $8.1 million presented within financing activities under U.S. GAAP was presented as "Debt
issuance costs paid" within operating activities under IFRS.
4. SEGMENT INFORMATION
The Company and the chief operating decision maker, or CODM, measure performance based on the Company's overall return
to shareholders based on consolidated profit or loss. The CODM does not review a measure of operating result at a lower level
than the consolidated group. Consequently, the Company has only one reportable segment: tankers. The tankers segment
includes crude oil tankers and product tankers.
The Group's internal organizational and management structure does not distinguish any geographical segments.
No customers in the years ended December 31, 2022 and 2021 individually accounted for 10% or more of the Company's
consolidated operating revenues.
5. REVENUE AND OTHER INCOME
The accounting treatment of revenue is described in accounting policies (Note 2).
The lease and non-lease components of our revenues in the year ended December 31, 2022 were as follows:
Frontline Plc – Annual Report and Financial Statements 2022 72
(in thousands of $)
Lease Non-lease Total
Voyage charter revenues
601,057 744,907 1,345,964
Time charter revenues
45,515 26,276 71,791
Administrative income — 12,453 12,453
Total revenues
646,572 783,636 1,430,208
The lease and non-lease components of our revenues in the year ended December 31, 2021 were as follows:
(in thousands of $)
Lease Non-lease Total
Voyage charter revenues
166,014 497,981 663,995
Time charter revenues
49,785 21,451 71,236
Administrative income — 14,150 14,150
Total revenues
215,799 533,582 749,381
Certain voyage expenses are capitalized between the previous discharge port, or contract date if later, and the next load port and
amortized between load port and discharge port. $5.3 million of contract assets were capitalized in the year ended December 31,
2022 (2021: $5.2 million) as Other current assets, of which $2.5 million was amortized up to December 31, 2022 (2021: $2.6
million), leaving a remaining balance of $2.9 million (2021: $2.6 million) as of December 31, 2022. $2.6 million of contract
assets were amortized in the year ended December 31, 2022 in relation to voyages in progress at the end of December 31, 2021.
No impairment losses were recognized in the period.
Administrative income primarily comprises the income earned from the technical and commercial management of related party
and third party vessels and newbuilding supervision fees derived from related parties.
As at December 31, 2022, 2021 and January 1, 2021, the Company reported the following contract assets in relation to its
contracts with customers:
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Voyages in progress
60,620 27,467 23,559
Trade accounts receivable
67,397 45,258 27,814
Related party receivables
9,913 5,397 7,195
Other current assets
2,896 2,748 1,853
Total
140,826 80,870 60,421
Other income in the years ended December 31, 2022 and 2021 were as follows:
(in thousands of $) 2022 2021
Gain on settlement of claims 3,998 —
Other gains 18 519
Gain on sale of vessels 4,596 3,226
Loss on termination of leased vessels (431) —
Gain (loss) on pool arrangements (141) 315
Total 8,040 4,060
In the year ended December 31, 2022, the Company recorded other gains of $0.02 million (2021: $0.5 million) in relation to the
settlement of miscellaneous claims.
In the year ended December 31, 2022, the Company recorded an arbitration award of $2.5 million in relation to the failed sale
of Dewi Maeswara and $1.5 million gain on the settlement of insurance claims for Front Altair.
Frontline Plc – Annual Report and Financial Statements 2022 73
In November 2021, the Company announced that it had entered into an agreement to sell four of its scrubber fitted LR2 tankers
for an aggregate sales price of $160.0 million to SFL Tanker Holding Ltd., a company related to Hemen, its largest shareholder.
Two vessels were delivered to the new owners in December 2021 and the remaining two vessels were delivered to the new
owners in January 2022. After repayment of debt on the vessels, the transaction generated total net cash proceeds of $68.6
million, with net cash proceeds of $35.1 million recorded in the year ended December 31, 2022. The Company recorded a gain
on sale in relation to the first two vessels of $3.2 million in the year ended December 31, 2021 and a gain of $4.6 million in the
year ended December 31, 2022.
In April 2022, the Company announced that its subsidiary Frontline Shipping Limited had agreed with SFL to terminate the
long-term charters for the 2004-built VLCCs, Front Force and Front Energy, upon the sale and delivery of the vessels by SFL
to an unrelated third party. The Company recognized a non-cash reduction in lease obligations of $46.6 million in the year
ended December 31, 2022 in respect of these vessels. The Company agreed to a total compensation payment to SFL of $4.5
million for the termination of the current charters. The charters terminated and the vessels were delivered to the new owners in
April 2022. The Company recorded a loss on termination of $0.4 million in the year ended December 31, 2022.
In the year ended December 31, 2022, the Company recorded a $0.1 million loss (2021: $0.3 million gain) related to the
pooling arrangement with SFL between two of its Suezmax tankers Front Odin and Front Njord and two SFL vessels
Glorycrown and Everbright.
6. OPERATING EXPENSES
Voyage expenses and commissions
(in thousands of $) 2022 2021
Commissions 46,029 22,239
Bunkers 416,830 237,166
Other voyage related expenses 142,685 133,292
605,544 392,697
For vessels operated in the spot market, voyage expenses are paid by the shipowner while voyage expenses for vessels under a
time charter contract, are paid by the charterer. No inventory write-downs were recognized as an expense in the period.
The majority of other voyage expenses are port costs, agency fees and agent fees paid to operate the vessels on the spot market.
Port costs vary depending on the number of spot voyages performed, number and type of ports.
Ship operating expenses
(in thousands of $) 2022 2021
Technical management expenses 66,238 56,007
Crew costs 96,283 96,915
Insurances 12,643 11,324
175,164 164,246
Ship operating expenses are the direct costs associated with running a vessel and include crew costs, vessel supplies, repairs and
maintenance, lubricating oils and insurances. The technical management of our vessels is provided by third party ship
management companies.
Administrative expenses
Frontline Plc – Annual Report and Financial Statements 2022 74
(in thousands of $) 2022 2021
Total compensation to employees and directors 22,442 13,325
Office and administrative expenses 12,105 10,544
Audit, legal and consultancy 12,827 2,555
47,374 26,424
The statutory auditor charged fees of $0.1 million in respective of audit services for the audit of the financial statements. No
other fees were charged by the statutory auditor.
Total compensation to employees and directors:
(in thousands of $) 2022 2021
Directors fees 465 329
Wages and salaries 15,247 9,504
Stock option expense 4,700 153
Social security costs 1,130 1,751
Pension costs 772 1,401
Other staff related costs 128 187
22,442 13,325
The average number of employees employed by the Company and its subsidiaries in the year ended December 31, 2022 was 79
(2021: 82).
7. NET FINANCE EXPENSE
(in thousands of $) 2022 2021
Interest income 1,463 119
Foreign exchange gains 16 —
Other financial income — 2
Finance income 1,479 121
Interest expense on financial liabilities measured at amortized cost 92,222 52,328
Interest leasing 937 3,968
Gain on interest rate swaps (53,623) (17,509)
Foreign exchange losses — 116
Amortization of debt issuance costs 5,553 5,210
Other financial expenses 241 131
Finance expense 45,330 44,244
Net finance expense (43,851) (44,123)
8. INCOME TAXES
Certain of the Company's subsidiaries are tax resident in Cyprus, Singapore, China, Norway and the United Kingdom and are
subject to income tax in their respective jurisdictions. Such taxes are not material to our consolidated financial statements and
related disclosures for the year ended December 31, 2022.
Cyprus
Under the provisions of Cyprus tax laws, such income shall be included in the estimation of taxable income to be taxed at the
rate of 12.5%.
Frontline Plc – Annual Report and Financial Statements 2022 75
Frontline intends to apply for treatment under the Cypriot tonnage tax system. In line with the tonnage tax legislation, the
Company will pay tax calculated on the basis of the net tonnage of the qualifying vessels the Company owns, charters or
manages. The option for tonnage tax should be valid for ten years. Tonnage tax payable in relation to our vessel owning
subsidiaries are recorded as ship operating expenses in the Consolidated Statements of Profit or Loss.
United States
For the year ended December 31, 2022, the Company did not accrue U.S. income taxes as the Company is not engaged in a
U.S. trade or business and is exempted from a gross basis tax under Section 883 of the U.S. Internal Revenue Code.
Under Section 863(c)(2)(A) of the Internal Revenue Code, 50% of all transportation revenue attributable to transportation
which begins or ends in the United States shall be treated as from sources within the United States where no Section 883
exemption is available. Such revenue is subject to 4% tax. No revenue tax has been recorded in voyage expenses and
commissions in the year ended December 31, 2022 (2021: nil).
Other Jurisdictions
In the year ended December 31, 2021, the Company received a distribution from Den Norske Krigsforsikring for Skib
(“DNK”), the Norwegian Shipowners Mutual War Risk Insurance Association, in the amount of $17.9 million which was
subject to withholding tax of $4.5 million which the Company recognized as income tax expense in the year ended December
31, 2021.
The Company does not have any unrecognized tax benefits, material accrued interest or penalties relating to income taxes.
9. EARNINGS PER SHARE
Basic earnings per share is computed based on the income available to ordinary shareholders and the weighted average number
of shares outstanding. Diluted earnings per share includes the effect of the assumed conversion of potentially dilutive
instruments. The impact of stock options using the treasury stock method was anti-dilutive in 2021 as the Company recorded
net losses for the year and the exercise price was higher than the average share price; therefore 58,000 options were excluded
from the calculation in 2021.
The weighted average number of shares outstanding for the purpose of calculating basic and diluted earnings per share for the
year ended December 31, 2022 was 214,011,000, which includes the impact of the 19,091,910 shares issued to Hemen for no
cash consideration in connection with the Euronav NV ("Euronav") share acquisition.
The components of the numerator and the denominator in the calculation of basic and diluted earnings per share are as follows:
(in thousands of $) 2022 2021
Profit (loss) attributable to the shareholders of the Company
475,537 (14,961)
(in thousands)
Weighted average number of basic and diluted shares
214,011 198,965
Cash dividends per share declared $0.15 $0.00
10. MARKETABLE SECURITIES
Marketable securities held by the Company are listed equity securities. In the year ended December 31, 2022 the Company
received dividends of $1.6 million (2021: $0.5 million) from its investments in marketable securities.
A summary of the movements in marketable securities for the years ended December 31, 2022 and 2021 is presented in the
table below:
Frontline Plc – Annual Report and Financial Statements 2022 76
(in thousands of $) 2022 2021
Balance at the beginning of the year 2,435 8,475
Marketable securities acquired 167,709 357
Proceeds from sale of marketable securities — (14,074)
Gain on sale of marketable securities — 7,881
Unrealized gain (loss) on marketable securities held at end of the year 66,137 (204)
Balance at the end of the year 236,281 2,435
Avance Gas
As of December 31, 2022 and 2021, the Company held 442,384 shares in Avance Gas. In the year ended December 31, 2022,
the Company recognized an unrealized gain of $0.9 million (2021: loss of $0.4 million) in relation to the shares held in Avance
Gas.
SFL
As of December 31, 2022 and 2021, the Company held 73,165 shares in SFL. In the year ended December 31, 2022, the
Company recognized an unrealized gain of $0.1 million (2021: gain of $0.1 million) in relation to the shares held in SFL.
Golden Ocean
As of December 31, 2022 and 2021, the Company held 10,299 (2020: 1,270,657) shares in Golden Ocean.
In the year ended December 31, 2021, the Company purchased 55,959 Golden Ocean shares for $0.4 million and sold these
shares for proceeds of $0.7 million.
In the year ended December 31, 2021, the Company sold 1.3 million shares in Golden Ocean for proceeds of $13.4 million and
recognized a gain on marketable securities sold of $7.9 million.
In the year ended December 31, 2022, the Company recognized an unrealized loss of $0.01 million (2021: gain of $0.1 million)
in relation to the shares still held in Golden Ocean.
Euronav
On May 28, 2022, the Company announced that it agreed to acquire in privately negotiated share exchange transactions with
certain shareholders of Euronav a total of 5,955,705 shares in Euronav, representing 2.95% of the outstanding shares in
Euronav as of this date, in exchange for a total of 8,337,986 ordinary shares of Frontline. Frontline received the $0.06 dividend
per share that was paid on June 8, 2022 by Euronav in respect of these 5,955,705 shares.
On June 10, 2022, the Company announced that it agreed to acquire in privately negotiated transactions with certain
shareholders of Euronav a total of 7,708,908 shares in Euronav, representing 3.82% of the outstanding shares in Euronav as of
this date, in exchange for a total of 10,753,924 shares in Frontline.
In connection with the above-referenced privately negotiated share exchange transactions, Frontline entered into a share lending
arrangement with Hemen to facilitate settlement of such transactions. Pursuant to such arrangement, Hemen delivered an
aggregate of 19,091,910 Frontline shares to the exchanging Euronav holders in June 2022 and Frontline agreed to issue to
Hemen the same number of shares of Frontline in full satisfaction of the share lending arrangement. The shares were issued to
Hemen in August 2022.
As of December 31, 2022, the Company held 13,664,613 shares in Euronav, as a result of the above transactions. The acquired
shares were initially recognized at their fair value of $167.7 million and the Company recorded a realized loss of $7.8 million in
relation to these transactions, being the difference between the transaction price to acquire these shares and their fair value as of
the transaction dates. The transaction price paid to acquire these shares was $175.5 million, which was the fair value of the
Frontline's shares as of the transaction dates.
Based on the Euronav share price as of December 31, 2022, the fair value of the shares held in Euronav was $232.8 million,
which resulted in an unrealized gain of $65.1 million.
Frontline Plc – Annual Report and Financial Statements 2022 77
11. TRADE AND OTHER RECEIVABLES
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Receivables from contracts with customers 67,397 45,258 27,814
Lease receivables 55,608 18,165 13,160
Claims receivable 1,489 1,097 3,022
Advances 2,959 1,263 1,911
Agent receivables 843 149 2,229
Other receivables 11,171 7,600 15,788
139,467 73,532 63,924
Receivables from contracts with customers and lease receivables are presented net of allowances for doubtful accounts of
$4.4 million as of December 31, 2022 (December 31, 2021: $1.9 million, January 1, 2021: $2.6 million).
Claims receivable is primarily attributable to insurance claims.
Other receivables are presented net of allowances for doubtful accounts amounting to nil as of December 31, 2022 (December
31, 2021: nil, January 1, 2021: nil).
12. NEWBUILDINGS
Movements in the two years ended December 31, 2022 are summarized as follows:
(in thousands of $)
Balance at January 1, 2021 48,498
Installments and other costs paid and payable 274,248
Transfer to Vessels and equipment (194,162)
Capitalized borrowing costs 2,049
Balance at December 31, 2021 130,633
Installments and other costs paid and payable 299,963
Transfer to Vessels and equipment (386,241)
Capitalized borrowing costs 3,636
Balance at December 31, 2022 47,991
The following table sets forth certain details of our newbuildings delivered in the two years ended December 31, 2022:
Vessel name Vessel type Date of delivery
Front Gaula VLCC October 2022
Front Tana VLCC August 2022
Front Alta VLCC April 2022
Front Tweed VLCC June 2022
Front Feature LR2 November 2021
Front Favour LR2 September 2021
Front Future LR2 April 2021
Front Fusion LR2 March 2021
As of January 1, 2021, the Company's newbuilding program comprised four LR2 tankers, all of which were delivered in the
year ended December 31, 2021.
Frontline Plc – Annual Report and Financial Statements 2022 78
As of December 31, 2021, the Company’s newbuilding program consisted of six VLCCs, four of which were delivered in the
year ended December 2022.
As of December 31, 2022, the Company’s newbuilding program consisted of two VLCCs, which were delivered in January
2023.
Refer to Note 13 for impairment considerations.
13.
VESSELS AND EQUIPMENT
Movements in the two years ended December 31, 2022 are summarized as follows:
(in thousands of $)
Vessels and
equipment
Dry dock
component Total
Cost
As of January 1, 2022 4,089,351 107,616 4,196,967
Additions 16,483 17,850 34,333
Transferred from new buildings 380,859 5,382 386,241
Disposals (95,975) (4,411) (100,386)
As of December 31, 2022 4,390,718 126,437 4,517,155
Accumulated depreciation
As of January 1, 2022 (666,860) (62,807) (729,667)
Charge for the period (145,623) (16,324) (161,947)
Disposals 22,137 2,974 25,111
As of December 31, 2022 (790,346) (76,157) (866,503)
Net book value
As of December 31, 2022 3,600,372 50,280 3,650,652
Cost
As of January 1, 2021 3,805,768 94,396 3,900,164
Additions 189,193 12,740 201,933
Transferred from new buildings 189,035 5,127 194,162
Disposals (94,645) (4,647) (99,292)
As of December 31, 2021 4,089,351 107,616 4,196,967
Accumulated depreciation
As of January 1, 2021 (550,082) (49,626) (599,708)
Charge for the period (136,482) (15,995) (152,477)
Disposals 19,704 2,814 22,518
As of December 31, 2021 (666,860) (62,807) (729,667)
Net book value
As of December 31, 2021 3,422,491 44,809 3,467,300
As of January 1, 2021 3,255,686 44,770 3,300,456
In the year ended December 31, 2022, the Company;
• completed the installation of Exhaust Gas Cleaning Systems on eight vessels;
• took delivery of four VLCC newbuildings, Front Alta, Front Tweed, Front Tana and Front Gaula;
• sold two LR2 tankers, Front Lion and Front Panther; and
Frontline Plc – Annual Report and Financial Statements 2022 79
• performed dry docks on 14 vessels.
In the year ended December 31, 2021, the Company;
• completed the installation of EGCS on two vessels and the installation of BWTS on one vessel;
• took delivery of two VLCCs, Front Driva and Front Nausta;
• took delivery of four LR2 newbuildings, Front Favour, Front Feature, Front Fusion and Front Future;
• sold two LR2 tankers, Front Puma and Front Tiger; and
• performed dry docks on 11 vessels.
Impairment
As of January 1, 2021
To determine whether detailed impairment testing was required for our owned vessels, including newbuildings, at the date of
transition to IFRS, the Company assessed whether there was any indication that our vessels may be impaired as of January 1,
2021 by considering internal and external indicators. Based on this assessment, we observed that the estimated market values
received from independent ship brokers was less than the carrying amount of the majority of our vessels. This was considered
to be an impairment indicator and as such, the recoverable amount of all our vessels was estimated based on the value in use
calculation using cash flow projections. The estimated recoverable amounts of all our vessels were significantly greater than the
carrying amounts and no impairment loss was recognized.
As of December 31, 2021
To determine whether further detailed impairment testing was required for our owned vessels, including newbuildings, as of
December 31, 2021, the Company assessed whether there was any indication that our vessels may be impaired as of this date by
considering internal and external indicators. Based on this assessment, we observed that the estimated market values received
from independent ship brokers continued to be less than the carrying amount of the majority of our vessels. This was considered
to be an impairment indicator and as such, the recoverable amounts of all our vessels was estimated based on the value in use
calculation using cash flow projections. The estimated recoverable amount of all our vessels were significantly greater than the
carrying amounts and no impairment loss was recognized.
As of December 31, 2022
To determine whether it was necessary to re-estimate the recoverable amounts of our owned vessels, including newbuildings, as
of December 31, 2022, the Company assessed whether any events had occurred that would eliminate the difference calculated
between the carrying amounts and recoverable amounts as of December 31, 2021. Based on this assessment, we observed that
the estimated market values received from independent ship brokers had increased significantly during the period for all our
vessels and actual and forecasted TCE rates and operating results had also improved significantly. Furthermore, the estimated
recoverable amounts of all our vessels as of December 31, 2021 were not sensitive to possible impairment indicators including
the change in useful life of our vessels from 25 to 20 years. Accordingly, we did not re-estimate our vessel's recoverable
amounts as of December 31, 2022 and no impairment loss was recognized.
14. RIGHT OF USE ASSETS
Movements in the two years ended December 31, 2022 are summarized as follows:
Frontline Plc – Annual Report and Financial Statements 2022 80
(in thousands of $) Offices Vessels Total
Cost
As of January 1, 2022 11,719 103,888 115,607
Additions 159 — 159
Lease termination — (103,888) (103,888)
Disposals (483) — (483)
As of December 31, 2022 11,395 — 11,395
Accumulated depreciation
As of January 1, 2022 (7,805) (59,008) (66,813)
Depreciation charge for the period (926) (2,297) (3,223)
Lease termination — 61,305 61,305
Disposals 483 — 483
Translation differences (39) — (39)
As of December 31, 2022 (8,287) — (8,287)
Net book value
As of December 31, 2022 3,108 — 3,108
Cost
As of January 1, 2021 11,719 113,329 125,048
Lease termination — (9,441) (9,441)
As of December 31, 2021 11,719 103,888 115,607
Accumulated depreciation
As of January 1, 2021 (5,916) (57,188) (63,104)
Depreciation charge for the period (1,467) (11,261) (12,728)
Lease termination — 9,441 9,441
Translation differences (422) — (422)
As of December 31, 2021 (7,805) (59,008) (66,813)
Net book value
As of December 31, 2021 3,914 44,880 48,794
As of January 1, 2021 5,803 56,141 61,944
As of December 31, 2021 and January 1, 2021, the Company leased in two vessels from SFL, on time charters that were
classified as leases, the 2004-built VLCCs Front Force and Front Energy. In April 2022, the Company announced that its
subsidiary Frontline Shipping Limited had agreed with SFL to terminate the long-term charters for these vessels upon the sale
and delivery of the vessels by SFL to an unrelated third party.
As of January 1, 2021, the Company leased in two vessels from a third party on time charters that were classified as leases
which were terminated in the year end December 31, 2021 when the vessels were redelivered to the owners.
The right-of-use assets for offices relate to lease agreements for office space.
For further details on the Company's leases see note 19.
Frontline Plc – Annual Report and Financial Statements 2022 81
15. GOODWILL
(in thousands of $) Goodwill
Accumulated
impairment
losses
Net Carrying
Value
Balance as of January 1, 2021, December 31, 2021 and 2022 225,273 (112,821) 112,452
Impairment
For impairment testing purposes, goodwill was allocated to one group of CGUs, the Company.
As of January 1, 2021
The recoverable amount of the Company was determined based on its fair value, less cost to sell, estimated using its market
capitalization plus a control premium. The Company's market capitalization as of January 1, 2021 was $1,229.6 million (based
on a share price of $6.22) compared to its carrying value of approximately $1,604.9 million. The Company reviewed merger
transactions in North America with values of over $25.0 million in the 12 months ended January 1, 2021, global deals between
public companies of more than $100.0 million in the last 3 years and global marine transport sector transactions of more than
$100.0 million in the last 5 years and calculated average control premiums (based on the one month average share price before
the bid). Using 32.5% as the average of the range as of January 1, 2021, the fair value of the Company was calculated as
$1,629.3 million. The excess of the fair value of the Company over the carrying value was such that the Company concluded
that there was no requirement for an impairment.
As of December 31, 2021
The recoverable amount of the Company was determined based on its fair value, less cost to sell, estimated using its market
capitalization plus a control premium. The Company's market capitalization as of December 31, 2021 was $1,439.0 million
(based on a share price of $7.07) compared to its carrying value of approximately $1,642.0 million. The Company reviewed
merger transactions in North America with values of over $25.0 million in the 12 months ended December 31, 2021, global
deals between public companies of more than $100.0 million in the last 3 years and global marine transport sector transactions
of more than $100.0 million in the last 5 years and observed average control premiums (based on the one month average share
price before the bid) of between 29.3% to 32.2%. Using 30.7% as the average of the range as of December 31, 2021, the fair
value of the Company was calculated as $1,880.7 million. The excess of the fair value of the Company over the carrying value
was such that the Company concluded that there was no requirement for an impairment.
As of December 31, 2022
The recoverable amount of the Company was determined based on its fair value, less cost to sell, estimated using its market
capitalization. The Company's market capitalization as of December 31, 2022 was $2,702.6 million (based on a share price of
$12.14) compared to its carrying value of approximately $2,259.9 million. The excess of the fair value of the Company over the
carrying value was such that the Company concluded that there was no requirement for an impairment.
If our ordinary share price declines this could result in an impairment of some or all of the $112.5 million of goodwill. In the
absence of a control premium, a share price of $9.65 per share as of December 31, 2022 would have resulted in the recoverable
amount equaling the carrying amount.
16. INVESTMENT IN ASSOCIATED COMPANIES
FMS Holdco
As of December 31, 2021 and January 1, 2021, Frontline owned an effective 17.34% interest in Clean Marine AS through its
34.7% equity interest in FMS Holdco, which was accounted for under the equity method.
In the year ended December 31, 2022, the Company entered into an agreement to subscribe for 433 shares in FMS Holdco for
$1.5 million. Furthermore, FMS Holdco entered into a sale and purchase agreement to acquire the remaining 50% of the issued
share capital of Clean Marine AS. Following the transactions, Frontline owns an effective 43.6% interest in Clean Marine AS
through its 43.6% equity interest in FMS Holdco, which is accounted for under the equity method.
The carrying value of the investment as of December 31, 2022 was $1.5 million (2021: $0.6 million) as a result of the
additional investment in 2022. In the year ended December 31, 2022, a share of losses of Clean Marine AS of $0.6 million
(2021: nil) was recognized.
Frontline Plc – Annual Report and Financial Statements 2022 82
TFG Marine
In January 2020, the joint venture agreement with Golden Ocean and companies in the Trafigura Group to establish a leading
global supplier of marine fuels was completed. As a result, Frontline took a 15% interest in the joint venture company, TFG
Marine, and made a $1.5 million shareholder loan to TFG Marine. In the year ended December 31, 2020, $0.1 million of the
shareholder loan was converted to equity. There was no change in ownership interest as a result of this transaction as each
shareholder converted a portion of shareholder debt to equity in reference to their respective ownership interest. Frontline
concluded that it is able to exercise significant influence over TFG Marine as a result of its equity shareholding and board
representation and therefore its investment is accounted for under the equity method.
The carrying value of the investment at December 31, 2022 was $14.8 million (2021: nil). In the year ended December 31,
2022, a share of profits of TFG Marine of $14.8 million (2021: $0.7 million loss) was recognized.
17. TRADE AND OTHER PAYABLES
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Trade payables 7,994 2,327 7,860
Accrued voyage expenses 38,617 18,306 16,582
Accrued ship operating expenses 16,252 11,063 10,180
Accrued administrative expenses 9,359 3,773 7,293
Deferred charter revenue — 3,124 5,687
Other 9,311 4,771 7,400
Total current trade and other payables 81,533 43,364 55,002
Other 2,053 992 3,739
Total other non-current payables 2,053 992 3,739
Frontline Plc – Annual Report and Financial Statements 2022 83
18. INTEREST BEARING LOANS AND BORROWINGS
A summary of outstanding debt as of December 31, 2022 and 2021 and January 1, 2021 is as follows:
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
U.S. dollar denominated floating rate debt
$252.4 million term loan facility 242,908 281,009 319,112
$34.8 million term loan facility 34,814 39,348 43,880
$250.7 million term loan facility 129,912 185,627 250,738
$100.8 million term loan facility 85,399 93,075 100,750
$328.4 million term loan facility (CEXIM) 184,981 200,255 215,529
$321.6 million term loan facility (CEXIM) 184,183 203,163 222,145
$110.5 million term loan facility (ING) 84,469 91,709 98,949
$104.0 million term loan facility (Credit Suisse) 100,141 98,166 105,178
$110.5 million term loan facility (Credit Suisse #2) 96,125 103,116 110,107
$544.0 million lease financing (ICBCL) 459,918 490,500 521,071
$42.9 million term loan facility (Credit Suisse) 36,942 39,325 41,708
$62.5 million term loan facility (Credit Agricole) 53,820 57,292 60,764
$133.7 million term loan facility (CEXIM) 123,367 131,229 —
$58.5 million term loan facility (SEB) 55,250 58,500 —
$58.5 million term loan facility (KFW) 55,250 58,500 —
$130.0 million term loan facility (DNB) 127,562 — —
$65.0 million term loan facility (ABN) 65,000 — —
$65.0 million term loan facility (ING) 64,187 — —
Total U.S. dollar denominated floating rate debt 2,184,228 2,130,814 2,089,931
U.S. dollar denominated fixed rate debt
$275.0 million revolving credit facility 209,700 209,700 60,000
Total U.S. dollar denominated fixed rate debt 209,700 209,700 60,000
Secured borrowings — — 6,251
Debt issuance costs (23,113) (24,318) (20,176)
Accrued interest expense 19,499 9,379 7,805
Total debt 2,390,314 2,325,575 2,143,811
Short-term debt and current portion of long-term debt 277,854 198,665 234,887
Long-term portion of debt 2,112,460 2,126,910 1,908,924
Frontline Plc – Annual Report and Financial Statements 2022 84
Movements in the year ended December 31, 2022 are summarized as follows:
(in thousands of $)
December 31,
2021 Proceeds Repayments
December 31,
2022
Total U.S. dollar denominated floating rate debt 2,130,814 651,248 (597,834) 2,184,228
Total U.S. dollar denominated fixed rate debt 209,700 — — 209,700
Secured borrowings — — — —
Debt issuance costs (24,318) (23,113)
Accrued interest expense 9,379 19,499
Total debt 2,325,575 651,248 (597,834) 2,390,314
Short-term debt and current portion of long-term debt 198,665 277,854
Long-term portion of debt 2,126,910 651,248 (597,834) 2,112,460
Movements in the year ended December 31, 2021 are summarized as follows:
(in thousands of $)
January 1,
2021 Proceeds Repayments Other
December 31,
2021
Total U.S. dollar denominated floating rate debt 2,089,931 250,687 (209,804) — 2,130,814
Total U.S. dollar denominated fixed rate debt 60,000 149,700 — — 209,700
Secured borrowings 6,251 3,481 (9,717) (15) —
Debt issuance costs (20,176) (24,318)
Accrued interest expense 7,805 9,379
Total debt 2,143,811 403,868 (219,521) (15) 2,325,575
Short-term debt and current portion of long-term debt 234,887 198,665
Long-term portion of debt 1,908,924 403,868 (219,521) (15) 2,126,910
A summary of the Company's interest bearing loans and borrowings as of December 31, 2022 is as follows:
$252.4 million term loan facility
In July 2022, the Company entered into a senior secured term loan facility with a number of banks in an amount of up to
$252.4 million to refinance the $328.6 million loan facility maturing in February 2023. The new facility matures in September
2027, 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. In August 2022, the Company drew down $252.4 million and repaid the
outstanding balance of the original facility of $262.0 million. The facility is fully drawn down as of December 31, 2022.
$34.8 million term loan facility
In October 2022, the Company entered into a senior secured term loan facility in an amount of up to $34.8 million to refinance
the $50.0 million loan facility maturing in March 2023. The new facility matures in December 2027, carries an interest rate of
SOFR plus a margin of 180 basis points and has an amortization profile of 20 years commencing on the delivery date from the
yard. In November 2022, the Company drew down $34.8 million and repaid the outstanding balance of the original facility of
$35.9 million. The facility is fully drawn down as of December 31, 2022.
$250.7 million term loan facility
In November 2020, the Company entered into a senior secured term loan facility with a number of banks in an amount of up to
$250.7 million to refinance the $466.5 million loan facility maturing in April 2021. The new facility matures in May 2025,
carries an interest rate of LIBOR plus a margin of 190 basis points and has an amortization profile of 18 years commencing on
the delivery date from the yard. In November 2020, the Company drew down $250.7 million and repaid the outstanding balance
of the original facility of $252.4 million. In the year ended December 31, 2021, the sale of two LR2 tankers resulted in a
prepayment of $46.5 million under the facility. The facility is fully drawn down as of December 31, 2022.
$100.8 million term loan facility
In November 2020, the Company entered into a senior secured term loan facility with ING and Credit Suisse in an amount of
up to $100.8 million to refinance the $109.2 million loan facility maturing in June 2021. The new facility matures in November
2025, carries an interest rate of LIBOR plus a margin of 190 basis points and has an amortization profile of 17 years
commencing on the delivery date from the yard. In November 2020, the Company drew down $100.8 million and repaid the
outstanding balance of the original facility of $84.3 million. The facility is fully drawn down as of December 31, 2022.
Frontline Plc – Annual Report and Financial Statements 2022 85
$328.4 million term loan facility (CEXIM)
In August 2016, the Company signed a senior secured term loan facility in an amount of up to $328.4 million with China Exim
Bank. The facility matures in 2029, carries an interest rate of LIBOR plus a margin in line with the Company’s other credit
facilities and has an amortization profile of 18 years. The Company drew down $109.0 million in the year ended December 31,
2016 in connection with one LR2 tanker and two Suezmax tanker newbuildings, which were delivered in the year. The
Company drew down a further $165.9 million in the year ended December 31, 2017 in connection with two Suezmax tankers
and three LR2/Aframax tankers delivered in the year. The facility is fully drawn down as of December 31, 2022.
$321.6 million term loan facility (CEXIM)
In February 2017, the Company signed a second senior secured term loan facility in an amount of up to $321.6 million. The
facility provided by China Exim Bank is insured by China Export and Credit Insurance Corporation. The facility matures in
2033, carries an interest rate of LIBOR plus a margin in line with the Company’s other credit facilities and has an amortization
profile of 15 years. The Company drew down $252.7 million in the year ended December 31, 2017 in connection with four
Suezmax tankers and three LR2/Aframax tankers delivered in the period. The Company drew down $32.0 million in the year
ended December 31, 2018 in connection with one LR2 tanker delivered in the period. The facility is fully drawn down as of
December 31, 2022.
$110.5 million term loan facility (ING)
In June 2017, the Company signed a senior secured term loan facility in an amount of up to $110.5 million with ING. The
facility matures in 2023, carries an interest rate of LIBOR plus a margin of 190 basis points and has an amortization profile of
18 years. The Company drew down $55.3 million in the year ended December 31, 2017 in connection with one VLCC
delivered in the period. The Company drew down $55.3 million in the year ended December 31, 2019 in connection with one
VLCC delivered in the period. The Company extended the facility by $4.1 million in the year ended December 31, 2019 and
drew down the $4.1 million in connection with the installation of an EGCS on the VLCC delivered in the period. The facility is
fully drawn down as of December 31, 2022.
$104.0 million term loan facility (Credit Suisse)
In April 2022, the Company entered into a senior secured term loan facility with Credit Suisse AG in an amount of
$104.0 million to refinance the $110.5 million loan facility maturing in 2023. The new facility matures in May 2028, 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. In May 2022, the Company drew down $104.0 million and repaid the outstanding balance of the original
facility of $96.4 million. The facility is fully drawn down as of December 31, 2022.
$110.5 million term loan facility (Credit Suisse #2)
In June 2017, the Company signed a senior secured term loan facility in an amount of up to $110.5 million with Credit Suisse.
The facility matures in 2024, carries an interest rate of LIBOR plus a margin of 190 basis points and has an amortization profile
of 18 years. The Company drew down $54.9 million in the year ended December 31, 2018 in connection with one VLCC
delivered in the period. The Company drew down $55.3 million in the year ended December 31, 2019 in connection with one
VLCC delivered in the period. The Company extended the facility by $15.0 million in the year ended December 31, 2019. The
facility is fully drawn down as of December 31, 2022.
$544.0 million lease financing (ICBCL)
In March 2020, the Company signed a sale-and-leaseback agreement in an amount of $544.0 million with ICBCL to finance the
cash amount payable upon closing of the Acquisition, which took place on March 16, 2020. The lease financing has a tenor of
seven years, carries an interest rate of LIBOR plus a margin of 230 basis points, has an amortization profile of 17.8 years and
includes purchase options for the Company throughout the term with a purchase obligation at the end of the term. The
Company is precluded from accounting for the sale of the vessels due to the purchase obligation at the end of the term which
prevents the lessor from obtaining control of the vessels and as such the lease has been accounted for as a secured borrowing,
with the vessels recorded under "Vessels and equipment". The facility is fully drawn down as of December 31, 2022.
$42.9 million term loan facility (Credit Suisse)
In November 2019, the Company signed a senior secured term loan facility in an amount of up to $42.9 million with Credit
Suisse to partially finance the delivery of one Suezmax tanker. The facility matures five years after the vessel's delivery date,
carries an interest rate of LIBOR plus a margin of 190 basis points and has an amortization profile of 18 years. In May 2020,
the Company drew down $42.9 million under the facility in connection with the delivery of one Suezmax tanker. The facility is
fully drawn down as of December 31, 2022.
$62.5 million term loan facility (Crédit Agricole)
Frontline Plc – Annual Report and Financial Statements 2022 86
In May 2020, the Company signed a senior secured term loan facility in an amount of up to $62.5 million with Crédit Agricole
to partially finance the delivery of one VLCC. The facility matures five years after the vessel's delivery date, carries an interest
rate of LIBOR plus a margin of 190 basis points and has an amortization profile of 18 years. In June 2020, the Company drew
down $62.5 million under the facility in connection with the delivery of one VLCC. The facility is fully drawn down as of
December 31, 2022.
$133.7 million term loan facility (CEXIM)
In November 2020, the Company entered into a senior secured term loan facility with CEXIM and Sinosure in an amount of up
to $133.7 million to partially finance four LR2 tanker newbuildings. The facility has a tenor of 12 years, carries an interest rate
of LIBOR plus a margin in line with the Company’s other credit facilities and has an amortization profile of 17 years
commencing on the delivery date from the yard. The Company drew down $33.4 million in March 2021, $33.4 million in April
2021, $33.4 million in September 2021 and $33.4 million in November 2021 under the facility to partially finance the delivery
of four LR2 tankers. The facility is fully drawn down as of December 31, 2022.
$58.5 million term loan facility (SEB)
In September 2021, the Company entered into a senior secured term loan facility in an amount of up to $58.5 million with SEB
to partially finance the acquisition of one 2019-built VLCC. 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. In October 2021, the Company took delivery of the vessel and drew down $58.5 million under the facility to partially
finance the delivery. The facility is fully drawn down as of December 31, 2022.
$58.5 million term loan facility (KFW)
In September 2021, the Company entered into a senior secured term loan facility in an amount of up to $58.5 million with KFW
to partially finance the acquisition of one 2019-built VLCC. 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. In November 2021, the Company took delivery of the vessel and drew down $58.5 million under the facility to partially
finance the delivery. The facility is fully drawn down as of December 31, 2022.
$130.0 million term loan facility (DNB)
In October 2021, the Company entered into a senior secured term loan facility in an amount of up to $130.0 million with DNB
to partially finance the acquisition of two of the six resale VLCC newbuilding contracts. 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 Company drew down $65.0 million in April 2022 and $65.0 million in June 2022 to
partially finance the delivery of the 2022 built VLCCs, Front Alta and Front Tweed. The facility is fully drawn down as of
December 31, 2022.
$65.0 million term loan facility (ABN)
In December 2021, the Company entered into a senior secured term loan facility in an amount of up to $65.0 million from ABN
AMRO Bank N.V. to partially finance the acquisition of one of the six resale VLCC newbuilding contracts. 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. In October 2022, the Company drew down $65.0 million to partially
finance the delivery of the 2022 built VLCC Front Gaula. The facility is fully drawn down as of December 31, 2022.
$65.0 million term loan facility (ING)
In December 2021, the Company entered into a senior secured term loan facility in an amount of up to $65.0 million from ING
Bank to partially finance the acquisition of one of the six resale VLCC newbuilding contracts. 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 includes a sustainability margin adjustment linked to the fleet
sustainability score. In August 2022, the Company drew down $65.0 million to partially finance the delivery of the 2022 built
VLCC Front Tana. The facility is fully drawn down as of December 31, 2022.
$65.0 million term loan facility (KFW)
In December 2021, the Company entered into a senior secured term loan facility in an amount of up to $65.0 million from KFW
to partially finance the acquisition of one of the six resale VLCC newbuilding contracts. The facility has a tenor of 5 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 is fully undrawn as of December 31, 2022. In January 2023, the Company took
delivery of the VLCC newbuilding, Front Tyne, from HHI and drew down $65.0 million under this facility to partially finance
the delivery.
Frontline Plc – Annual Report and Financial Statements 2022 87
$65.0 million term loan facility (Crédit Agricole)
In December 2021, the Company entered into a senior secured term loan facility in an amount of up to $65.0 million from
Crédit Agricole to partially finance the acquisition of one of the six resale VLCC newbuilding contracts. The facility has a tenor
of 5 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 is fully undrawn as of December 31, 2022. In January 2023, the
Company took delivery of the VLCC newbuilding, Front Orkla, from HHI and drew down $65.0 million under this facility to
partially finance the delivery.
$275.0 million revolving credit facility
In June 2016, the Company signed a $275.0 million senior unsecured facility agreement with an affiliate of Hemen, the
Company's largest shareholder. The original facility carried an interest rate of 6.25% and was available to the Company for a
period of 18 months from the first utilization date and was repayable in full on the 18 months anniversary of the first utilization
date. There were no scheduled loan repayments before this date. The facility does not include any financial covenants.
As of January 1, 2021, the Company had an outstanding balance of $60.0 million and up to $215.0 million remained available
and undrawn under this facility. The balance outstanding was included in short-term debt as of January 1, 2021.
In February 2021, the Company extended the terms of the facility by 12 months to May 2022. In November 2021, the Company
extended the terms of the facility by 12 months to May 2023. In the year ended December 31, 2021, the Company drew down
$149.7 million under the facility to finance installments for the six VLCCs under construction, the deposits on two 2019 built
VLCCs and for general corporate purposes. As of December 31, 2021, $65.3 million remained available and undrawn under
this facility. The balance outstanding of $209.7 million was included in long-term debt as of December 31, 2021.
In November 2022, the Company extended the facility by 12 months to May 2024 at an interest rate of 8.50% and otherwise on
same terms. The balance outstanding of $209.7 million is included in long-term debt as of December 31, 2022.
Secured borrowings
As of January 1, 2021, the Company had entered into a forward contract to repurchase the 1.3 million shares of Golden Ocean
in March 2021 for $6.2 million, with the shares recorded in marketable securities and a liability recorded as of January 1, 2021
within short-term debt for $6.3 million, after adjusting for the effect of foreign exchange. The Company was required to post
collateral of 20% of the total repurchase price for the duration of the agreement which was held in restricted cash as of January
1, 2021. In the year ended December 31, 2021, the Company sold the Golden Ocean shares previously held as marketable
securities.
Debt restrictions
The Company's loan agreements contain loan-to-value clauses, which could require the Company to post additional collateral or
prepay a portion of the outstanding borrowings should the value of the vessels securing borrowings under each of such
agreements decrease below required levels. In addition, the loan agreements contain certain financial covenants, including the
requirement to maintain a certain level of free cash, positive working capital and a value adjusted equity covenant. Restricted
cash does not include cash balances $54.4 million (2021: $67.0 million, 2020: $103.5 million), which represents 50% (2021:
64%, 2020: 100%) of the cash required to be maintained by the financial covenants in our loan agreements. The Company is
permitted to satisfy up to 50% of the cash requirements by maintaining a committed undrawn credit facility with a remaining
availability of greater than 12 months.
Failure to comply with any of the covenants in the loan agreements could result in a default, which would permit the lender to
accelerate the maturity of the debt and to foreclose upon any collateral securing the debt. Under those circumstances, the
Company might not have sufficient funds or other resources to satisfy its obligations. The Company was in compliance with all
of the financial covenants contained in the Company's loan agreements as of December 31, 2022 and 2021.
Assets pledged
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Vessels 3,650,325 3,466,782 3,300,176
Debt issuance costs
Frontline Plc – Annual Report and Financial Statements 2022 88
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Debt issuance costs (46,039) (41,691) (31,129)
Accumulated amortization 22,926 17,373 10,953
(23,113) (24,318) (20,176)
The Company paid $4.3 million of debt issuance costs in the year ended December 31, 2022 (2021: $8.1 million).
19. LEASES
At December 31, 2021, the Company leased in two vessels from SFL on time charters that were classified as leases, the 2004-
built VLCCs Front Force and Front Energy. In April 2022, the Company announced that its subsidiary Frontline Shipping
Limited had agreed with SFL to terminate the long-term charters for these vessels upon the sale and delivery of the vessels by
SFL to an unrelated third party.
As of January 1, 2021, the Company leased in two vessels from a third party on time charters that were classified as leases
which were terminated in the year end December 31, 2021 when the vessels were redelivered to the owners.
The Company is also committed to make rental payments under leases for office premises. Certain of these leases include
variable lease elements linked to inflation indexes. Such variable payments have been estimated at the time of recognition on
the index at that time and are included in the minimum lease payments.
Rental expense
The future minimum lease payments under the Company's leases as at December 31, 2022 are as follows:
(in thousands of $)
2023 1,103
2024 1,206
2025 1,237
Total minimum lease payments 3,546
Less: Imputed interest (150)
Present value of obligations under leases 3,396
The future minimum lease payments under the Company's leases as at December 31, 2021 are as follows:
(in thousands of $)
2022 12,235
2023 12,753
2024 12,054
2025 12,810
2026 11,705
Thereafter 1,641
Total minimum lease payments 63,198
Less: Imputed interest (10,496)
Present value of obligations under leases 52,702
Total cash outflows for leases was $2.9 million and $11.8 million for the years ended December 31, 2022 and 2021,
respectively. Expense for office leases was $0.9 million and $1.5 million for the years ended December 31, 2022 and 2021,
respectively. The Company incurred lease expenses of $2.2 million (2021: $8.6 million) in relation to the leased-in vessels,
Front Energy and Front Force. The Company incurred lease expenses of nil (2021: $2.7 million) in relation to two vessels
leased in from a third party on time charters that were classified as leases. Interest expense incurred in relation to the leased-in
vessels is disclosed in Note 7. The weighted-average discount rate based on the Company's incremental borrowing rate, or IBR,
Frontline Plc – Annual Report and Financial Statements 2022 89
in relation to the leases was 2.7% (2021: 7.1%) for the year ended December 31, 2022 and the weighted-average remaining
lease term was three years (2021: five years) as of December 31, 2022.
Rental income
Two LR2 tankers were on fixed rate time charters as of December 31, 2022. One LR2 tanker and two VLCCs were on fixed
rate time charters as of January 1, 2021, the terms of which all ended in the year ended December 31, 2021. In addition, the
Company agreed to charter-out five Suezmax tankers to an unrelated third party, for a period of 3 years commencing in August
2019, at a daily base rate of $28,400 plus 50% profit share. The terms for the five Suezmax tankers ended in the year ended
December 31, 2022. The minimum future revenues to be received under fixed rate contracts as of December 31, 2022 are as
follows:
(in thousands of $)
2023 24,090
2024 24,156
2025 15,954
Total minimum lease payments 64,200
The minimum future revenues to be received under fixed rate contracts as of December 31, 2021 were as follows:
(in thousands of $)
2022 28,968
Total minimum lease payments 28,968
Profit share to be earned under our chartering arrangements has been excluded from the minimum future revenues above. Our
revenues from these leases have been included within time charter revenues in the Consolidated Statement of Profit or Loss,
which solely relates to leasing revenues.
The two LR2 tankers on fixed rate time charters as of December 31, 2022 have an option for a 1 year extension.
The cost and accumulated depreciation of vessels leased to third parties under time charters as of December 31, 2022 were
$100.1 million and $3.9 million, respectively (December 31, 2021: $328.0 million and $21.0 million, respectively, January 1,
2021: $509.5 million and $49.4 million, respectively).
In the year ended December 31, 2022, the Company recognized profit share income of $7.0 million in relation to five time
charters (2021: nil), within Revenues in the Consolidated Statements of Profit or Loss.
For further details on the Company's right-of-use assets see note 14.
Frontline Plc – Annual Report and Financial Statements 2022 90
20. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
Accounting classifications and fair values
The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their levels
in the fair value hierarchy.
December 31, 2022 December 31, 2021 January 1, 2021
(in thousands of $)
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Financial assets measured at fair value through
profit or loss
Derivative instruments receivable - non-current 53,993 53,993 9,675 9,675 — —
Marketable securities 236,281 236,281 2,435 2,435 8,474 8,474
Financial assets not measured at fair value
Cash and cash equivalents 254,525 254,525 113,073 113,073 174,721 174,721
Restricted cash — — — — 14,928 14,928
Receivables 139,467 139,467 73,532 73,532 63,924 63,924
Loan notes receivable 1,388 1,388 1,388 1,388 1,388 1,388
Financial liabilities measured at fair value
Derivative instruments payable - non current — — 5,673 5,673 19,261 19,261
Financial liabilities not measured at fair value
Trade and other payables 81,533 81,533 43,364 43,364 55,002 55,002
Floating rate debt
2,201,543
2,201,543
2,138,009
2,138,009
2,097,110
2,097,110
Fixed rate debt 211,884 212,203 211,884 206,552 66,876 65,348
(in thousands of $)
Dec 31, 2022
Fair Value
Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or
loss
Derivative instruments receivable - non-current 53,993 — 53,993 —
Marketable securities 236,281 236,281 — —
Financial assets not measured at fair value
Cash and cash equivalents 254,525 254,525 — —
Loan notes receivable 1,388 — 1,388 —
Financial liabilities not measured at fair value
Floating rate debt 2,201,543 — 2,201,543 —
Fixed rate debt 212,203 — — 212,203
Frontline Plc – Annual Report and Financial Statements 2022 91
(in thousands of $)
Dec 31, 2021
Fair Value
Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or
loss
Derivative instruments receivable - non-current 9,675 — 9,675 —
Marketable securities 2,435 2,435 — —
Financial assets not measured at fair value
Cash and cash equivalents 113,073 113,073 — —
Loan notes receivable 1,388 — 1,388 —
Financial liabilities measured at fair value
Derivative instruments payable - non current 5,673 — 5,673 —
Financial liabilities not measured at fair value
Floating rate debt 2,138,009 — 2,138,009 —
Fixed rate debt 206,552 — — 206,552
(in thousands of $)
Jan 1, 2021
Fair Value
Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or
loss
Marketable securities 8,474 8,474 — —
Financial assets not measured at fair value
Cash and cash equivalents 174,721 174,721 — —
Restricted cash 14,928 14,928 — —
Loan notes receivable 1,388 — 1,388 —
Financial liabilities measured at fair value
Derivative instruments payable - non current 19,261 — 19,261 —
Financial liabilities not measured at fair value
Floating rate debt 2,097,110 — 2,097,110 —
Fixed rate debt 65,348 — 6,251 59,097
Measurement of fair values
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 1, Level 2 and Level 3 fair values, as well as the
significant unobservable inputs that were used.
Financial instruments measured at fair value
Type Valuation Techniques Significant unobservable inputs
Interest rate swaps
Fair value was determined based on
the market value.
Not applicable.
Marketable securities
Fair value was determined based on
the actual trading of the securities.
Not applicable.
Financial instruments not measured at fair value
Type Valuation Techniques Significant unobservable inputs
Floating rate debt Discounted cash flow. Not applicable.
Fixed rate debt Discounted cash flow. Discount rate.
Assets Measured at Fair Value on a Recurring Basis
Frontline Plc – Annual Report and Financial Statements 2022 92
The fair value (level 2) of interest rate swaps is the present value of the estimated future cash flows that the Company would
receive or pay to terminate the agreements at the statement of financial position date, taking into account, as applicable, fixed
interest rates on interest rate swaps, current interest rates, forward rate curves and the credit worthiness of both the Company
and the derivative counterparty.
Marketable securities are listed equity securities for which the fair value as of the statement of financial position date is the
aggregate market value based on quoted market prices (level 1).
Transfers between Level 1, 2 and 3
There were no transfers between these levels in 2022 and 2021.
Financial risk management
In the course of its normal business, the Company is exposed to the following risks:
• Credit risk
• Liquidity risk
• Market risk (interest rate risk, foreign currency risk, and price risk)
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company's risk
management framework.
Credit risk
Trade and other receivables
At the balance sheet date all trade and other receivables were with (i) state-owned enterprises, (ii) oil majors, (iii) commodities
traders and (iv) related parties. Based on past experience, there was only a small impact on doubtful amounts at year-end. Based
on individual analyses, provisions for doubtful debtors were not material for the years ended December 31, 2022 and 2021. In
addition, no customers individually accounted for 10% or more of total revenue in 2022 and 2021 (see Note 4). The maximum
exposure to credit risk is represented by the carrying amount of each financial asset.
Past due amounts are not credit impaired as collection is still considered to be likely and management is confident the
outstanding amounts can be recovered. Amounts not past due are also with customers with high credit worthiness and are
therefore not credit impaired.
Loan note receivables
Loan note receivables consist of the $1.4 million loan to TFG Marine (see Note 16). As at December 31, 2022 and December
31, 2021, this loan had no maturity date, and was not credit impaired as there is no credit risk exposure for the Company.
Cash and cash equivalents
The Company held cash and cash equivalents of $254.5 million at December 31, 2022 (2021: $113.1 million, 2020: $174.7
million). The cash and cash equivalents are held with Skandinaviska Enskilda Banken, or SEB, HSBC, Royal Bank of Scotland,
DNB Bank ASA and Nordea Bank Norge, or Nordea, Crédit Agricole, Credit Suisse AG, Standard Chartered Bank Singapore,
and Citibank N.A. The Company’s concentration of credit risk with respect to cash and cash equivalents is not considered
significant as substantially all of the amounts are carried with a diversified portfolio of banks and financial institution
counterparties.
Restricted cash
Our interest rate swaps can require us to post cash as collateral based on their fair value which is classified as restricted cash. As
of December 31, 2022 and 2021, no cash was posted as collateral in relation to our interest rate swaps and secured borrowings
(January 1, 2021: $13.4 million).
Derivatives
The Company is exposed to the risk of credit loss in the event of non-performance by the counterparty to the interest rate swap
agreements. Interest rate swap agreements are entered into with banks and financial institution counterparties, which are rated
AA-, based on rating agency S&P.
Liquidity risk
Frontline Plc – Annual Report and Financial Statements 2022 93
Liquidity risk is the risk that the Company will not be able to meet its financial obligations if they fall due. The Company’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due. The Company has entered into several loan facilities whose maturities are spread over different years (see Note 18).
The following are the remaining contractual maturities of financial liabilities:
Contractual cash flows at December 31, 2022
(in thousands of $)
Carrying
Value Total
Less than 1
year
Between 1
and 5 years
More than 5
years
Non derivative financial liabilities
Floating rate debt 2,178,430 2,201,543 275,670 1,555,143 370,730
Fixed rate debt 211,884 211,884 2,184 209,700 —
Obligations under leases 3,396 3,396 1,024 2,372 —
Trade and other payables 81,533 81,533 81,533 — —
Contractual cash flows at December 31, 2021
(in thousands of $)
Carrying
Value Total
Less than 1
year
Between 1
and 5 years
More than 5
years
Non derivative financial liabilities
Floating rate debt 2,113,691 2,138,009 196,481 1,279,839 661,689
Fixed rate debt 211,884 211,884 2,184 209,700 —
Obligations under leases 52,702 52,702 8,723 42,362 1,617
Trade and other payables 43,364 43,364 43,364 — —
Derivative financial liabilities
Interest rate swaps 5,673 5,673 — 5,673 —
Contractual cash flows at January 1, 2021
(in thousands of $)
Carrying
Value Total
Less than 1
year
Between 1
and 5 years
More than 5
years
Non derivative financial liabilities
Floating rate debt 2,076,935 2,097,111 168,011 1,294,494 634,606
Fixed rate debt 66,876 66,876 66,876 — —
Obligations under leases 65,002 65,002 12,358 39,949 12,695
Trade and other payables 55,002 55,002 55,002 — —
Derivative financial liabilities
Interest rate swaps 19,261 19,261 — 2,991 16,270
The Company has secured bank loans that contain loan covenants. A future breach of covenant may require the Company to
repay the loan earlier than indicated in the above table. For more details on these covenants, see Note 18. Fixed and floating rate
debt include expected payments of accrued interest as at the reporting date. It is not expected that the cash flows included in the
table above (the maturity analysis) could occur significantly earlier, or at significantly different amounts than stated above.
Market risk
Interest rate risk
The Company is exposed to the impact of interest rate changes primarily through its floating-rate borrowings that require the
Company to make interest payments based on SOFR and LIBOR. Significant increases in interest rates could adversely affect
Frontline Plc – Annual Report and Financial Statements 2022 94
operating margins, results of operations and ability to service debt. The Company uses interest rate swaps to reduce its exposure
to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs
associated with its floating-rate debt. On December 31, 2022 the Company had interest rate swaps in place and approximately
25% (2021: 26%) of the floating interest rates were switched to fixed rate.
Managing interest rate benchmark reform and associated risks
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some
interbank offered rates (IBORs) with alternative nearly risk-free rates (RFR) (referred to as ‘IBOR reform’). The Company has
transitioned certain of its financial instruments to RFR (see Note 18) and has exposures to IBORs on its remaining financial
instruments that will be replaced or reformed as part of these market-wide initiatives. The Company anticipates that IBOR
reform will not materially impact its risk management strategy.
Cash flow sensitivity analysis for variable rate instruments
As of December 31, 2022, the Company's outstanding debt which was at variable interest rates, net of the amount subject to
interest rate swap agreements, was $1,634.2 million. Based on this, a one percentage point increase in annual LIBOR and SOFR
interest rates would increase its annual interest expense by approximately $16.3 million, excluding the effects of capitalization
of interest.
Interest rate swap agreements
In February 2016, the Company entered into an interest rate swap with DNB whereby the floating interest on notional debt of
$150.0 million was switched to fixed rate. The contract had a forward start date of February 2019.
In the year ended December 31, 2020, the Company entered into three interest rate swaps with DNB whereby the floating
interest rate on notional debt totaling $250.0 million was switched to a fixed rate.
In the year ended December 31, 2020, the Company entered into two interest rate swaps with Nordea Bank whereby the
floating interest rate on notional debt totaling $150.0 million was switched to a fixed rate.
The reference rate for our interest rate swaps is LIBOR.
The aggregate fair value of these swaps at December 31, 2022 was an asset of $54.0 million (December 31, 2021: $9.7 million,
January 1, 2021: nil ) and a liability of nil (December 31, 2021: $5.7 million, January 1, 2021: $19.3 million). The fair value
(Level 2) of the Company’s interest rate swap agreements is the estimated amount that the Company would receive or pay to
terminate the agreements at the reporting date, taking into account, as applicable, fixed interest rates on interest rate swaps,
current interest rates, forward rate curves and the current credit worthiness of both the Company and the derivative
counterparty. The estimated fair value is the present value of future cash flows. In the year ended December 31, 2022, the
Company recorded a gain on these interest rate swaps of $53.6 million (2021: gain of $17.5 million).
The interest rate swaps are not designated as hedges and are summarized as of December 31, 2022 as follows:
Notional Amount Inception Date Maturity Date Fixed Interest Rate
($000s)
150,000 February 2019 February 2026 2.1970 %
100,000 March 2020 March 2027 0.9750 %
50,000 March 2020 March 2027 0.6000 %
100,000 March 2020 March 2025 0.9000 %
100,000 April 2020 April 2027 0.5970 %
50,000 April 2020 April 2025 0.5000 %
550,000
Foreign currency risk
The majority of the Company's transactions, assets and liabilities are denominated in U.S. dollars, its functional currency.
Certain of its subsidiaries report in British pounds, Norwegian kroner or Singapore dollars and risks of two kinds arise as a
result: a transaction risk, that is, the risk that currency fluctuations will have an effect on the value of cash flows; and a
translation risk, which is the impact of currency fluctuations in the translation of foreign operations and foreign assets and
liabilities into U.S. dollars in the consolidated financial statements.
Frontline Plc – Annual Report and Financial Statements 2022 95
Price risk
Our exposure to equity securities price risk arises from marketable securities held by the Company which are listed equity
securities and are carried at FVTPL unless the election to present subsequent changes in the investment's fair value in OCI is
made. See Note 10 for further details.
Capital management
We operate in a capital intensive industry and have historically financed our purchase of tankers and other capital expenditures
through a combination of cash generated from operations, equity capital and borrowings from commercial banks. Our ability to
generate adequate cash flows on a short and medium term basis depends substantially on the trading performance of our vessels
in the market. Our funding and treasury activities are conducted within corporate policies to increase investment returns while
maintaining appropriate liquidity for our requirements.
The Company’s objectives when managing capital are to:
• safeguard our ability to continue as a going concern, so that we can continue to provide returns for shareholders and
benefits for other stakeholders, and
• maintain an optimal capital structure to reduce the cost of capital.
The Company's loan agreements contain loan-to-value clauses, which could require the Company to post additional collateral or
prepay a portion of the outstanding borrowings should the value of the vessels securing borrowings under each of such
agreements decrease below required levels. In addition, the loan agreements contain certain financial covenants, including the
requirement to maintain a certain level of free cash, positive working capital and a value adjusted equity covenant. Failure to
comply with any of the covenants in the loan agreements could result in a default, which would permit the lender to accelerate
the maturity of the debt and to foreclose upon any collateral securing the debt.
21. SHARE CAPITAL
Authorized capitalization
The authorized share capital of the Company as of December 31, 2022 is $600,000,000 (2021: $500,000,000) divided into
600,000,000 shares (2021: 500,000,000) of $1.00 par value each, of which 222,622,889 shares (December 31, 2021:
203,530,979 shares and January 1, 2021: 197,692,321 shares) of $1.00 par value each are in issue and fully paid.
ATM program
In June 2020, the Company entered into an equity distribution agreement with Morgan Stanley & Co. LLC for the offer and
sale of up to $100.0 million of ordinary shares of the Company through an at-the-market offering program (the "ATM
program"). In the year ended December 31, 2021, the Company issued 5,499,658 shares for combined gross proceeds of
$51.2 million.
Share options
In the year ended December 31, 2021, the Company issued 339,000 ordinary shares under its share option scheme at a strike
price of $5.70 per share. The shares were issued to John Fredriksen (198,000 shares), Inger M. Klemp (120,000 shares), and
Ola Lorentzon (21,000 shares).
Euronav share acquisition
On May 28, 2022, the Company announced that it agreed to acquire in privately negotiated share exchange transactions with
certain shareholders of Euronav a total of 5,955,705 shares in Euronav, representing 2.95% of the outstanding shares in
Euronav as of this date, in exchange for a total of 8,337,986 ordinary shares of Frontline. Frontline received the $0.06 dividend
that was paid on June 8, 2022 by Euronav in respect of these 5,955,705 shares.
On June 10, 2022, the Company announced that it agreed to acquire in privately negotiated transactions with certain
shareholders of Euronav a total of 7,708,908 shares in Euronav, representing 3.82% of the outstanding shares in Euronav as of
this date, in exchange for a total of 10,753,924 shares in Frontline.
Frontline Plc – Annual Report and Financial Statements 2022 96
As of December 31, 2022, the Company had acquired 13,664,613 shares in Euronav as a result of the above transactions. The
transaction price paid to acquire these shares was $175.5 million, which was the fair value of the shares acquired as of the
transaction dates.
In connection with the above-referenced privately negotiated share exchange transactions, Frontline entered into a share lending
arrangement with Hemen to facilitate settlement of such transactions. Pursuant to such arrangement Hemen delivered an
aggregate of 19,091,910 Frontline shares to the exchanging Euronav holders in June 2022 and Frontline agreed to issue to
Hemen the same number of Frontline shares in full satisfaction of the share lending arrangement. This share issuance to Hemen
was completed in August 2022.
The following table summarizes the movement in the number of shares outstanding during the years ended December 31, 2022
and December 31, 2021:
Outstanding shares at January 1, 2021 197,692,321
Shares issued under ATM program 5,499,658
Shares issued on exercise of options 339,000
Outstanding shares at December 31, 2021 203,530,979
Shares issued in connection with Euronav share acquisition 19,091,910
Outstanding shares at December 31, 2022 222,622,889
22. SHARE OPTIONS
The Company's share option scheme, or Frontline Scheme, permits the Board of Directors, at its discretion, to grant options to
acquire shares in the Company to employees and directors of the Company or its subsidiaries. The subscription price for all
options granted under the scheme is reduced by the amount of all dividends declared by the Company in the period from the
date of grant until the date the option is exercised, provided the subscription price is never reduced below the par value of the
share. The vesting periods of options granted under the Frontline Scheme will be specific to each grant. There is no maximum
number of shares authorized for awards of equity share options and authorized, unissued or treasury shares of the Company
may be used to satisfy exercised options.
In July 2016, the Company granted 1,170,000 share options, with an exercise price of $8.00 per share, to directors and officers
in accordance with the terms of the Frontline Scheme. One third of the options vested over one year, one third vested over two
years and one third vested over three years. The options had a five year term which expired in July 2021.
In November 2018, the Company granted 180,000 share options, with an exercise price of $7.40 per share, to employees in
accordance with the terms of the Frontline Scheme. All options vested in July 2019. The options had a thirty-three month term
which expired in July 2021.
In December 2021, the Board of Directors approved the grant of 1,280,000 synthetic options to employees and board members
according to the rules of the Company’s synthetic option scheme approved on December 7, 2021. The synthetic options have a
five year term expiring in December 2026. The vesting period is 12 months for the first 27.5% of options, 24 months for the
next 27.5% of options and 36 months for the final 45% of options. The synthetic options will be settled in cash based on the
difference between the market price of the Company’s shares and the exercise price on the date of exercise, and as such, have
been classified as a liability.
The fair value of the granted option awards was estimated on the date of grant using a Black-Scholes option valuation model
with the following assumptions:
July 2016 November 2018 December 2021
Risk free interest rate 0.69% 2.78% 1.04%
Expected life (years) 3.5 1.6 3.4
Expected volatility 79.80% 38.24% 58.42%
Expected dividend yield 0.00% 0.00% 0.00%
Frontline Plc – Annual Report and Financial Statements 2022 97
The risk-free interest rate was estimated using the interest rate on three year U.S. treasury zero coupon issues for the options
granted in July 2016 and December 2021 and on prorated one to two and year U.S. treasury zero coupon issues for the options
granted in November 2018. The volatility was estimated using historical share price data. The dividend yield was estimated at
0% as the exercise price is reduced by all dividends declared by the Company from the date of grant to the exercise date. It was
assumed that all of the options granted in July 2016, November 2018 and December 2021 will vest.
Exercises and forfeitures of July 2016 and November 2018 grants
The initial exercise price for the options granted in July 2016 and November 2018 was reduced by the amount of dividends paid
after the date of grants. As of December 31, 2022 and 2021 1,350,000 of these options had vested. As of December 31, 2022
and 2021 43,000 of these options had been forfeited. In the year ended December 31, 2022, no options were exercised. In the
year ended December 31, 2021, 339,000 options were exercised and the Company issued 339,000 shares for proceeds of
$1.9 million. In the year ended December 31, 2021, 130,000 options were exercised and settled for a cash payment of
$0.3 million. As of December 31, 2022 and 2021, no options remained exercisable. As of December 31, 2022 and 2021, there
was no unrecognized stock compensation expense related to non-vested options. No stock compensation expense was
recognized in the years ended December 31, 2022 and 2021.
The weighted average grant-date fair value of the options granted in 2016 was $4.06 per share and $1.53 per share for the
options granted in 2018.
Exercises and forfeitures of December 2021 grant
The initial exercise price for the synthetic options granted in December 2021 was reduced by the amount of dividends paid after
the date of grant. As of December 31, 2022, 330,000 of these options had vested. As of December 31, 2022, 80,000 options had
been forfeited and no options were exercised. As of December 31, 2022, 330,000 options remained exercisable. The subsequent
remeasurement of fair value of the synthetic options resulted in an expense of $4.7 million (2021: $0.2 million) for the year
ended December 31, 2022.
As of December 31, 2022, the weighted average exercise price of these options was $7.64 and the Company's share price was
$12.14.
The weighted average fair value of the options granted in 2021 was $6.54 per share. The synthetic options had a fair value of
$8.4 million (2021: $3.3 million) as of December 31, 2022 and the Company recorded a liability of $4.9 million (2021:
$0.2 million) as of December 31, 2022 in the Consolidated Statements of Financial Position. The intrinsic value of liabilities
which had vested as of December 31, 2022 was $1.7 million (2021: nil).
23. RELATED PARTY TRANSACTIONS AND AFFILIATED COMPANIES
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.
SFL Transactions
SFL was the counterparty to the leases for the 2004-built VLCCs, Front Force and Front Energy, which the Company held as
Right-of-use assets at December 31, 2021. In April 2022, the Company announced that its subsidiary Frontline Shipping
Limited had agreed with SFL to terminate the long-term charters for these vessels upon the sale and delivery of the vessels by
SFL to an unrelated third party. The Company agreed to a total compensation payment to SFL of $4.5 million for the
termination of the charters. The charters terminated and the vessels were delivered to the new owners in April 2022. The
Company recorded a loss on termination of $0.4 million in the year ended December 31, 2022.
Furthermore, Frontline Shipping Limited ("FSL"), a wholly owned subsidiary of the Company and the chartering counterparty
with SFL had agreed to certain dividend restrictions. In order to make or pay any dividend or other distribution to the Company,
FSL shall demonstrate a cash buffer of $2.0 million per vessel both prior to and following such payment, and following
payment of the next monthly hire due plus any profit share accrued under the agreement. As of December 31, 2022 the cash
held by Frontline Shipping Limited, with respect to the leases was nil (2021: $2.0 million, January 1, 2021: $15.6 million), and
these amounts were included in "Cash and cash equivalents".
Frontline Plc – Annual Report and Financial Statements 2022 98
A summary of leasing transactions with SFL in the years ended December 31, 2022 and 2021 are as follows;
(in thousands of $) 2022 2021
Charter hire paid (principal and interest) 1,980 7,830
Lease termination (receipts) payments 4,456 —
Lease interest expense 937 3,895
Contingent rental income (623) (3,606)
Remaining lease obligation — 48,466
Contingent rental income recorded in 2022 was primarily due to the fact that the profit share expense accrued in the lease
obligation payable when the leases were recorded at fair value at the time of Frontline's merger with Frontline 2012 Ltd. was
$0.6 million higher than the actual profit share expense payable to SFL, as no profit share was payable for the period. The
Company recorded contingent rental income of $3.6 million in 2021 primarily due to the fact that the actual profit share
expense payable of $0.3 million was $3.6 million less than the amount accrued in the lease obligation payable when the leases
were recorded at fair value at the time of the merger between the Company and Frontline 2012 Ltd.
In January 2014, the Company commenced a pooling arrangement with SFL, between two of its Suezmax tankers Front Odin
and Front Njord and two SFL vessels Glorycrown and Everbright. In the year ended December 31, 2022, the Company
recognized a loss of $0.1 million (2021: $0.3 million gain) in relation to the pooling arrangement which is payable from SFL.
In November 2021, the Company announced that it had entered into an agreement to sell four of its scrubber fitted LR2 tankers
for an aggregate sale price of $160.0 million to SFL Tanker Holding Ltd., a company related to Hemen, its largest shareholder.
Two vessels were delivered to the new owners in December 2021 and the remaining two vessels were delivered to the new
owners in January 2022. After repayment of debt on the vessels, the transaction generated total net cash proceeds of $68.6
million, with net cash proceeds of $35.1 million recorded in the year ended December 31, 2022. The company recorded a gain
on sale in relation to the first two vessels of $3.2 million in the year ended December 31, 2021 and a gain of $4.6 million in the
year ended December 31, 2022.
Transactions with associated companies
In September 2022, the Company increased its investment in Clean Marine AS through FMS Holdco by $1.5 million. FMS
Holdco entered into a sale and purchase agreement with Clue AS for the purchase of Clue's equity share interests in Clean
Marine Pte. Ltd. Following the transaction, Frontline owns an effective 43.60% interest in Clean Marine AS which is accounted
for under the equity method. As at December 31, 2022, the value of investment in Clean Marine AS was $1.5 million (2021:
$0.6 million). In the year ended December 31, 2022, a share of losses of Clean Marine AS of $0.6 million (2021: $nil) was
recognized.
The Company accounts for its 15% of the share capital of TFG Marine under the equity method. In the year ended December
31, 2022, a share of profits of TFG Marine of $14.8 million (2021: $0.7 million losses) was recognized. As a result of the losses
up to December 31, 2021, the Company advanced a shareholder loan of $1.5 million to TFG Marine in 2021. The Company
subsequently converted $0.1 million of the shareholder loan to equity. The Company has also entered into a bunker supply
arrangement with TFG Marine, under which it has paid $434.4 million (2021: $240.5 million) to TFG Marine in the year ended
December 31, 2022 and $14.8 million (2021: $20.6 million and January 1, 2021: $5.4 million) remains due as of December 31,
2022. The Company has also 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 December 31, 2022 and
2021, 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, the Company 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 of December 31, 2022
and 2021.
Transactions with other affiliates of Hemen
In June 2016, the Company signed a $275.0 million senior unsecured facility agreement with an affiliate of Hemen, the
Company's largest shareholder. As of January 1, 2021, up to $215.0 million remained available and undrawn. In November
2021, the Company extended the terms of the facility by 12 months to May 2023. In the year ended December 31, 2021, the
Company drew down $149.7 million under the facility to finance installments for the six VLCCs under construction, the
Frontline Plc – Annual Report and Financial Statements 2022 99
deposits on two 2019 built VLCCs and for general corporate purposes. In November 2022, the Company extended the terms of
the facility by 12 months to May 2024 at an interest rate of 8.50% and otherwise on same terms. As of December 31, 2022,
$209.7 million (2021: $209.7 million) drawn from this facility has been recorded as long-term debt. In the year ended
December 31, 2022, the Company recognized interest expense of $13.3 million (2021: $8.2 million).
In the year ended December 31, 2022, the Company chartered two (2021: five) of its vessels to an affiliate of Hemen. The
charters had terms of less than 6 months. The Company recognized revenue of $5.6 million (2021: $2.9 million) in relation to
these charters in the year ended December 31, 2022.
Summary
A summary of income (expenses) from related party transactions for the years ended December 31, 2022 and 2021 are as
follows:
(in thousands of $) 2022 2021
Seatankers Management Co. Ltd 866 1,810
SFL 3,751 2,555
Golden Ocean 3,061 3,912
Seatankers Management Norway AS (516) (461)
Alta Trading UK Limited 5,617 2,942
Seadrill Limited — 277
Archer Limited — 143
Flex LNG Ltd 1,242 1,637
Avance Gas 2,191 2,404
TFG Marine 627 786
Front Ocean Management (1,966) (252)
Other related parties 9 208
Amounts earned from other related parties comprise office rental income, technical and commercial management fees,
newbuilding supervision fees, freights, administrative services and interest income. Amounts paid to related parties comprise
primarily rental for office space, support staff costs, corporate administration and guarantee fees.
Related party balances
A summary of balances due from related parties at December 31, 2022 and 2021 and January 1, 2021 is as follows:
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
SFL 3,505 3,886 4,835
Seatankers Management Co. Ltd 1,368 1,546 3,578
Archer Limited — 30 88
Golden Ocean 6,964 3,376 2,336
Seadrill Limited — 625 25
Alta Trading UK Limited 60 280 1,263
Flex LNG Ltd 303 425 366
TFG Marine 28 199 16
Avance Gas 695 737 540
Front Ocean Management 473 402 —
Other related parties 89 170 208
13,485 11,676 13,255
A summary of balances due to related parties at December 31, 2022, 2021 and January 1, 2021 is as follows:
Frontline Plc – Annual Report and Financial Statements 2022 100
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
SFL 6,702 6,878 8,978
Seatankers Management Co. Ltd 351 2,226 3,147
Golden Ocean 8,470 6,016 2,040
Flex LNG Ltd 158 191 143
TFG Marine 14,831 20,605 5,369
Front Ocean Management 286 — —
Avance Gas 450 334 176
31,248 36,250 19,853
Transactions with key management personnel
The total amount of the remuneration earned by all directors and key management personnel for their services as follows:
(in thousands of $) 2022 2021
Total remuneration 3,767 784
of which:
Paid in capacity as directors 1,678 377
Other remuneration 2,089 407
The Directors annually review the remuneration of the members of key management personnel. Directors' fees are approved
annually at the AGM. No pensions were paid to directors or past directors. No compensation was paid to directors or past
directors in respect of loss of office. Total remuneration consists of a fixed and a variable component and can be summarized as
follows:
(in thousands of $) 2022 2021
Total fixed remuneration 863 689
of which:
Cost of pension 22 24
Total variable remuneration 2,904 96
of which:
Share based payments 2,679 96
In July 2021, the Company issued 339,000 ordinary shares under its share option scheme at a strike price of $5.70 per share.
The shares were issued to John Fredriksen (198,000 shares), Inger M. Klemp (120,000 shares), and Ola Lorentzon (21,000
shares).
In December 2021, the Board of Directors approved the grant of 1,280,000 synthetic options to employees and board members
according to the rules of the Company’s synthetic option scheme approved on December 7, 2021. The synthetic options have a
five year term expiring in December 2026. The vesting period is 12 months for the first 27.5% of options, 24 months for the
next 27.5% of options and 36 months for the final 45% of options. The synthetic options will be settled in cash based on the
difference between the market price of the Company’s shares and the exercise price on the date of exercise, and as such, have
been classified as a liability.
See Note 5, Note 10, Note 16, Note 18, Note 24 and Note 26 for details regarding other related party transactions and balances.
24. COMMITMENTS AND CONTINGENCIES
As of December 31, 2022, 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
December 31, 2022, there are no amounts payable under this guarantee. In addition, should TFG Marine be required to provide
Frontline Plc – Annual Report and Financial Statements 2022 101
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
December 31, 2022.
As of December 31, 2022, the Company has committed to the purchase of scrubber equipment from Clean Marine AS, a related
party, for two vessels owned by the Company, with a remaining financial commitment of $0.7 million, excluding installation
costs, due in 2023. The Company has paid $6.5 million to Clean Marine AS for scrubber equipment in the year ended
December 31, 2022.
As of December 31, 2022, the Company has entered into two forward bunker purchase arrangements with TFG Marine, a
related party, for the delivery of 1,000 MT of low sulfur bunker fuel per month and 1,000 MT of high sulfur bunker fuel per
month for delivery in January 2023 to December 2023. The contracts obligate the Company to purchase and take delivery of the
physical fuel at a price of $650 per MT of low sulfur bunker fuel and $465 per MT of high sulfur bunker fuel. As of December
31, 2022, the remaining commitments amounted to $13.4 million, all of which is expected to be paid in 2023.
As of December 31, 2022, total installments of $45.1 million had been paid in connection with the Company’s remaining
newbuilding program, and remaining commitments amounted to $144.8 million which were paid in January 2023, of which
$130.0 million was financed by committed term loan facilities.
The Company insures the legal liability risks for its shipping activities with mutual protection and indemnity associations, who
are members of the International Group of P&I Clubs. As a member of these mutual associations, the Company is subject to
calls payable to the associations based on the Company's claims record in addition to the claims records of all other members of
the associations. A contingent liability exists to the extent that the claims records of the members of the associations in the
aggregate show significant deterioration, which result in additional calls on the members.
The Company is a party, as plaintiff or defendant, to several lawsuits in various jurisdictions for unpaid charter hire, demurrage,
damages, off-hire and other claims and commercial disputes arising from the operation of its vessels, in the ordinary course of
business or in connection with its acquisition activities. The Company believes that the resolution of such claims will not have a
material adverse effect on the Company's operations or financial condition individually and in the aggregate.
Following assignments of two property leases in 2015, each to a related party, the Company through one of its subsidiaries has
guaranteed the remaining outstanding payments due under the leases of $1.8 million as of December 31, 2022 (2021: $3.2
million). The Company does not believe that it will be required to make any payments under these guarantees and has not
recorded a liability in the statement of financial position in this respect.
25. GROUP ENTITIES
Name
Country of
Incorporation
Ownership and
Voting Percentage
Frontline Management (Bermuda) Ltd Bermuda 100%
Frontline Corporate Services Ltd United Kingdom 100%
Frontline Management AS Norway 100%
Frontline 2012 Ltd. Bermuda 100%
Frontline Chartering Services Inc. Liberia 100%
Frontline Shipping Singapore Pte Ltd. Singapore 100%
Frontfleet Ltd Bermuda 100%
Frontfleet II Ltd Bermuda 100%
Front Thor Inc. Liberia 100%
Front Odin Inc. Liberia 100%
Front Loki Inc. Liberia 100%
Front Njord Inc. Liberia 100%
Front Ull Inc Liberia 100%
Front Idun Inc Liberia 100%
Frontline Plc – Annual Report and Financial Statements 2022 102
Front King Inc. Liberia 100%
Front Queen Inc. Liberia 100%
Front Sovereign Inc. Liberia 100%
Front Monarch Inc. Liberia 100%
Front Eminence Inc. Liberia 100%
Front Endurance Inc. Liberia 100%
Front Duke Inc. Republic of the Marshall Islands 100%
Front Brage Inc. Liberia 100%
Front Balder Inc. Liberia 100%
Front Challenger Inc. Liberia 100%
Front Crown Inc. Liberia 100%
Front Coral Inc. Liberia 100%
Front Crystal II Inc. Liberia 100%
Front Classic Inc. Liberia 100%
Front Clipper Inc. Liberia 100%
Front Cosmos Inc. Liberia 100%
Front Cascade Inc. Liberia 100%
Front Duchess Inc. Republic of the Marshall Islands 100%
Sea Hull L0037 Corp. Liberia 100%
Sea Hull L0044 Corp. Liberia 100%
Sea Hull L0045 Corp. Liberia 100%
Sea Hull L0046 Corp. Liberia 100%
Front Cheetah Inc. Liberia 100%
Front Cougar Inc. Liberia 100%
Front Aphrodite Inc. Liberia 100%
Front Athena Inc. Liberia 100%
Front Hebe Inc. Liberia 100%
Front Hera Inc. Liberia 100%
Front Altair Inc. Liberia 100%
Front Antares Inc Liberia 100%
Front Vega Inc. Liberia 100%
Front Sirius Inc. Liberia 100%
Front Castor Inc. Liberia 100%
Front Pollux Inc. Liberia 100%
Front Capella Inc. Liberia 100%
Front Polaris Inc. Liberia 100%
Front Earl Inc. Liberia 100%
Front Empire Inc. Liberia 100%
Front Prince I Inc. Liberia 100%
Front Princess I Inc. Liberia 100%
Front Defender Inc. Liberia 100%
Front Discovery Inc. Liberia 100%
Front Cruiser Inc. Liberia 100%
Front Dynamic I Inc. Liberia 100%
Front Favour Inc. Republic of the Marshall Islands 100%
Front Feature Inc. Republic of the Marshall Islands 100%
Front Future Inc. Liberia 100%
Frontline Plc – Annual Report and Financial Statements 2022 103
Front Fusion Inc. Liberia 100%
White Flag Ventures XXXVI LLC Republic of the Marshall Islands 100%
White Flag Ventures XXXIX LLC Republic of the Marshall Islands 100%
White Flag Ventures XL LLC Republic of the Marshall Islands 100%
White Flag Ventures XLI LLC Republic of the Marshall Islands 100%
White Flag Ventures XLII LLC Republic of the Marshall Islands 100%
White Flag Ventures XLIII LLC Republic of the Marshall Islands 100%
White Flag Ventures XLIV LLC Republic of the Marshall Islands 100%
White Flag Ventures XLV LLC Republic of the Marshall Islands 100%
White Flag Ventures XLVI LLC Republic of the Marshall Islands 100%
White Flag Ventures XLVII LLC Republic of the Marshall Islands 100%
Hull 3240 Inc. Republic of the Marshall Islands 100%
Hull 3241 Inc. Republic of the Marshall Islands 100%
Hull 3283 Inc. Republic of the Marshall Islands 100%
Hull 3284 Inc. Republic of the Marshall Islands 100%
Hull 3285 Inc. Republic of the Marshall Islands 100%
Hull 3286 Inc. Republic of the Marshall Islands 100%
Front Driva Inc. Republic of the Marshall Islands 100%
Front Nausta Inc. Republic of the Marshall Islands 100%
Frontfleet Chartering Inc. Republic of the Marshall Islands 100%
26. SUBSEQUENT EVENTS
In January 2023, the Company took delivery of the VLCC newbuilding, Front Orkla, from HHI and drew down $65.0 million
under its senior secured term loan facility with Crédit Agricole to partially finance the delivery. 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 took delivery of the VLCC newbuilding, Front Tyne, from HHI and drew down $65.0 million
under its senior secured term loan facility with KFW to partially finance the delivery. 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 January 2023, the Company sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder,
for gross proceeds of approximately $61.0 million and $39.5 million, respectively. The vessels were delivered to the new
owners in January and February, respectively. After repayment of existing debt on the vessels, the transactions are expected to
generate net cash proceeds of approximately $63.6 million, and the Company expects to record a gain on sale of approximately
$9.7 million and $2.0 million, respectively, in the first quarter of 2023.
In January 2023, the Company terminated a combination agreement (the “Combination Agreement”) for a stock-for-stock
combination with 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 Frontline 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 Frontline.
On January 28, 2023, the Company received from Euronav an arbitration request for proceedings on the merits of the
termination. The arbitral tribunal has been constituted and a timetable for the arbitration will be set in principle by the end of
April 2023. Frontline once again maintains that its decision to terminate the Combination Agreement was entirely lawful.
In February 2023, the Company received $1.4 million in loan repayment and $7.3 million in dividends from TFG Marine.
In February 2023, the Company repaid $60.0 million of its $275.0 million senior unsecured credit facility with an affiliate of
Hemen. Up to $125.3 million remains available following the repayment.
Frontline Plc – Annual Report and Financial Statements 2022 104
In March 2023, the Company entered into eight 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 June 2023 to December 2024. The total commitment amounted to $37.1 million,
$13.2 million of which is expected to be paid in 2023 and $23.9 million of which is expected to be paid in 2024.
Frontline Plc – Annual Report and Financial Statements 2022 105
Index to parent company Financial Statements of Frontline plc
Statements of Profit or Loss for the years ended December 31, 2022 and 2021 107
Statements of Comprehensive Income for the years ended December 31, 2022 and 2021 108
Statements of Financial Position as of December 31, 2022 and 2021 and January 1, 2021 109
Statements of Cash Flows for the years ended December 31, 2022 and 2021 110
Statements of Changes in Equity for the years ended December 31, 2022 and 2021 111
Notes to Financial Statements 112
Frontline Plc – Annual Report and Financial Statements 2022 106
Frontline plc
Parent company financial statements and notes
Statements of Profit or Loss for the years ended December 31, 2022 and 2021
(in thousands of $)
Note 2022 2021
Share of net profit/(loss) from subsidiaries accounted for using the equity
method 8 449,647 (22,047)
Dividends received 5, 6 1,579 18,367
451,226 (3,680)
Operating expenses
Administrative expenses 3 20,543 5,445
Total operating expenses 20,543 5,445
Net operating income (loss) 430,683 (9,125)
Other expenses
Net finance expense 4 (13,267) (8,229)
Gain on marketable securities 6 58,129 6,848
Total other expenses 44,862 (1,381)
Profit (loss) before income taxes 475,545 (10,506)
Income tax expense 5 (8) (4,455)
Profit (loss) for the period 475,537 (14,961)
Profit (loss) attributable to the shareholders of Frontline plc 475,537 (14,961)
See accompanying Notes that are an integral part of these Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 107
Frontline plc
Parent company financial statements and notes
Statements of Comprehensive Income for the years ended December 31, 2022 and 2021
(in thousands of $)
Note 2022 2021
Comprehensive income (loss)
Profit (loss) for the period
475,537
(14,961)
Items that may be reclassified to profit or loss:
Foreign currency translation gain
226
28
Other comprehensive income (loss) 226 28
Comprehensive income (loss) 475,763 (14,933)
Comprehensive income (loss) attributable to the shareholders of Frontline plc
475,763
(14,933)
See accompanying Notes that are an integral part of these Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 108
Frontline plc
Parent company financial statements and notes
Statements of Financial Position as of December 31, 2022 and 2021 and January 1, 2021
(in thousands of $)
Note
December 31,
2022
December 31,
2021
January 1,
2021
ASSETS
Current Assets
Cash and cash equivalents 1,643 3,096 2,396
Restricted cash 10 — — 1,538
Marketable securities 6 235,511 1,895 5,926
Trade and other receivables 7 568 874 6,002
Total current assets 237,722 5,865 15,862
Non-current assets
Investments in subsidiaries 8 2,244,345 1,853,624 1,660,406
Total assets 2,482,067 1,859,489 1,676,268
LIABILITIES AND EQUITY
Current liabilities
Short-term debt and current portion of long-term debt 10 2,184 2,184 66,876
Trade and other payables 9 8,123 4,736 3,779
Total current liabilities 10,307 6,920 70,655
Non-current liabilities
Long-term debt 10 209,700 209,700 —
Other non-current payables 9 1,689 356 276
Total liabilities 221,696 216,976 70,931
Equity
Share capital 222,623 203,531 197,692
Additional paid in capital 604,687 448,291 402,021
Contributed surplus 1,004,094 1,004,094 1,004,094
Accumulated other reserves 454 228 200
Retained earnings (deficit) 428,513 (13,631) 1,330
Total equity attributable to the shareholders of Frontline plc 2,260,371 1,642,513 1,605,337
Total liabilities and equity 2,482,067 1,859,489 1,676,268
See accompanying Notes that are an integral part of these Financial Statements.
On April 27, 2023, the Board of Directors of Frontline Plc authorized these parent company financial statements for issue.
Frontline Plc – Annual Report and Financial Statements 2022 109
Frontline plc
Parent company financial statements and notes
Statements of Cash Flows for the years ended December 31, 2022 and 2021
(in thousands of $)
Note 2022 2021
Profit (loss) for the year 475,537 (14,961)
Adjustments to reconcile profit (loss) for the period to net cash provided by
operating activities:
Net finance expense 4 13,267 8,229
Share of results from subsidiaries 8 (449,647) 22,047
Gain on marketable securities 6 (58,129) (6,848)
Changes in operating assets and liabilities:
Trade and other receivables 7 304 5,130
Trade and other payables 9 4,721 1,036
Change in restricted cash 10 — 1,538
Other (2,684) 32
Distributions received from subsidiaries 8 113,599 59,923
Interest paid (13,288) (6,695)
Interest received 29 1
Net cash provided by (used in) operating activities 83,709 69,432
Investing activities
Purchase of shares 6 — (357)
Contributions paid to subsidiaries 8 (51,769) (275,169)
Proceeds from sale of marketable securities 6 — 11,236
Net cash used in investing activities (51,769) (264,290)
Financing activities
Net proceeds from issuance of shares 12 — 52,109
Proceeds from issuance of debt 10 — 153,181
Repayment of debt 10 — (9,732)
Cash dividends paid (33,393) —
Net cash provided by financing activities (33,393) 195,558
Net change in cash and cash equivalents (1,453) 700
Cash and cash equivalents at beginning of year 3,096 2,396
Cash and cash equivalents at end of year 1,643 3,096
Supplemental disclosure of cash flow information:
Income taxes paid 7 4,455
See accompanying Notes that are an integral part of these Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 110
Frontline plc
Parent company financial statements and notes
Statements of Changes in Equity for the years ended December 31, 2022 and 2021
(in thousands of $, except number of shares)
Note 2022 2021
Number of shares outstanding
Balance at the beginning of the year 203,530,979 197,692,321
Shares issued on exercise of options 12 — 339,000
Shares issued under ATM program 12 — 5,499,658
Shares issued in connection with Euronav share acquisition 12 19,091,910 —
Balance at the end of the year 222,622,889 203,530,979
Share capital
Balance at the beginning of the year 203,531 197,692
Shares issued on exercise of options 12 — 339
Shares issued under ATM program 12 — 5,500
Shares issued in connection with Euronav share acquisition 12 19,092 —
Balance at the end of the year 222,623 203,531
Additional paid in capital
Balance at the beginning of year 448,291 402,021
Stock compensation expense 13 — (338)
Shares issued on exercise of options 12 — 1,593
Shares issued under ATM program 12 — 45,015
Shares issued in connection with Euronav share acquisition 12 156,396 —
Balance at the end of year 604,687 448,291
Contributed surplus
Balance at the beginning of year 1,004,094 1,004,094
Balance at the end of year 1,004,094 1,004,094
Accumulated other reserves
Balance at the beginning of year 228 200
Other comprehensive income (loss) 226 28
Balance at the end of year 454 228
Retained earnings (deficit)
Balance at the beginning of year (13,631) 1,330
Profit (loss) for the period 475,537 (14,961)
Cash dividends (33,393) —
Balance at the end of year 428,513 (13,631)
Total equity attributable to the shareholders of Frontline plc 2,260,371 1,642,513
Total equity 2,260,371 1,642,513
See accompanying Notes that are an integral part of these Financial Statements.
Frontline Plc – Annual Report and Financial Statements 2022 111
Frontline plc
Parent company financial statements and notes
Notes to Financial Statements
1. GENERAL INFORMATION
Frontline plc (formerly Frontline Ltd.), is the parent company of the Frontline plc group, the Company or Frontline, an
international shipping company formerly incorporated in Bermuda as an exempted company under the Bermuda Companies
Law of 1981 on June 12, 1992. At a Special General Meeting on December 20, 2022, the Company's shareholders agreed to
redomicile the Company to the Republic of Cyprus under the name of Frontline plc (the “Redomiciliation”). The Company was
officially redomiciled to Cyprus on December 30, 2022.
The business, assets and liabilities of Frontline Ltd. and its subsidiaries prior to the Redomiciliation are the same as Frontline
plc immediately after the Redomiciliation on a consolidated basis, as well as its fiscal year. In addition, the directors and
executive officers of the Frontline plc immediately after the Redomiciliation are the same individuals who were directors and
executive officers, respectively, of Frontline Ltd. immediately prior to the Redomiciliation.
Prior to the Redomiciliation, Frontline Ltd.’s ordinary shares were listed on the New York Stock Exchange (“NYSE”) and Oslo
Stock Exchange (“OSE”) under the symbol “FRO.” Upon effectiveness of the Redomiciliation, the Company’s ordinary shares
continue to be listed on the NYSE and OSE and commenced trading under the new name Frontline plc and new CUSIP number
M46528101 and new ISIN CY0200352116 on the NYSE on January 3, 2023 and on the OSE on January 13, 2023. Frontline
plc’s LEI number was not be affected by the Redomiciliation and remains the same.
Frontline plc is the holding company of equity investments in subsidiaries. Frontline plc, through its subsidiaries, operates oil
tankers of two sizes: VLCCs, which are between 200,000 and 320,000 dwt, and Suezmax tankers, which are vessels between
120,000 and 170,000 dwt, and operates LR2/Aframax tankers, which are clean product tankers, and range in size from 110,000
to 115,000 dwt. Frontline plc's subsidiaries are located in Cyprus, Bermuda, Liberia, the Marshall Islands, Norway, the United
Kingdom, Singapore and China. Frontline plc, through its subsidiaries, is also involved in the charter, purchase and sale of
vessels.
2. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of presentation
The parent financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union ("EU").
These financial statements are the first financial statements being prepared for Frontline plc. The opening balance sheet date is
January 1, 2021. No prior financial statements have been issued under another reporting standards, so no reconciliation is
disclosed. The standards in effect for 2022 are applied for all periods presented.
These parent company financial statements should be read in connection with the Consolidated financial statements of
Frontline, published together with these financial statements. With the exceptions described below, Frontline plc applies the
accounting policies of the group, as described in Note 2 Significant Accounting Policies, and reference is made to this note for
further details.
The financial statements were approved by the Board of Directors on April 27, 2023, and authorized for issue.
2. Subsidiaries
Investments in subsidiaries are accounted for using the equity method. Under the equity method of accounting, the investments
are initially recognized at cost and adjusted thereafter to recognize Frontline’s share of the post-acquisition profits or losses of
the subsidiary in profit or loss, and Frontline’s share of movements in other comprehensive income of the subsidiary in other
comprehensive income. Where Frontline’s share of losses in an equity-accounted investment equals or exceeds its interest in the
entity, Frontline does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other
entity. The carrying amount of equity-accounted investments is tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Frontline Plc – Annual Report and Financial Statements 2022 112
Long-term receivables for which settlement is neither planned nor likely to occur in the foreseeable future are treated as part of
the equity accounted investments in subsidiaries. Dividends from subsidiaries are recognized in the separate financial
statements of Frontline plc when the entity’s right to receive the dividend is established. The dividend is recognized as a
reduction to the carrying amount of the investment.
3. EXPENSES
Administrative expenses
(in thousands of $) 2022 2021
Directors fees 465 329
Stock compensation expense 4,700 153
Office and administrative expenses 3,302 3,467
Audit, legal and consultancy 12,076 1,496
20,543 5,445
The Company had no employees in the year ended December 31, 2022 and December 31, 2021. No pensions were paid to
directors or past directors. Stock compensation expense $1.2 million related to directors (2021: $0.05 million) see note 13 and
note 14. The statutory auditor charged fees $0.1 million in respective of audit services for the audit of the financial statements.
No other fees were charged by the statutory auditor.
4. NET FINANCE EXPENSE
(in thousands of $) 2022 2021
Interest income 29 1
Foreign exchange gains 17 36
Finance income 46 37
Interest expense 13,288 8,254
Other financial expenses 25 12
Finance expense 13,313 8,266
Net finance expense (13,267) (8,229)
5. INCOME TAXES
Certain of Frontline's subsidiaries are tax resident in Cyprus, Singapore, China, Norway and the United Kingdom and are
subject to income tax in their respective jurisdictions. The tax paid by subsidiaries of Frontline plc that are subject to income tax
is included in Share of net profit/(loss) from subsidiaries accounted for using the equity method in the Statements of Profit or
Loss.
Cyprus
Under the provisions of Cyprus tax laws, such income shall be included in the estimation of taxable income to be taxed at the
rate of 12.5%.
Frontline plc intends to apply for treatment under the Cypriot tonnage tax system. In line with the tonnage tax legislation,
Frontline plc, through its subsidiaries, will pay tax calculated on the basis of the net tonnage of the qualifying vessels the
subsidiaries own, charter or manage. The option for tonnage tax should be valid for ten years.
United States
For the year ended December 31, 2022, Frontline plc did not accrue U.S. income taxes as Frontline plc is not engaged in a U.S.
trade or business and is exempted from a gross basis tax under Section 883 of the U.S. Internal Revenue Code.
Frontline Plc – Annual Report and Financial Statements 2022 113
Under Section 863(c)(2)(A) of the Internal Revenue Code, 50% of all transportation revenue attributable to transportation
which begins or ends in the United States shall be treated as from sources within the United States where no Section 883
exemption is available. Such revenue is subject to 4% tax. No revenue tax has been recorded in the year ended December 31,
2022 (2021: nil).
Other Jurisdictions
In the year ended December 31, 2021, Frontline plc received a distribution from Den Norske Krigsforsikring for Skib (“DNK”),
the Norwegian Shipowners Mutual War Risk Insurance Association, in the amount of $17.9 million which was subject to
withholding tax of $4.5 million which Frontline plc recognized as income tax expense in the year ended December 31, 2021.
Frontline plc does not have any unrecognized tax benefits, material accrued interest or penalties relating to income taxes.
6. MARKETABLE SECURITIES
Marketable securities held by Frontline plc are listed equity securities accounted for fair value through profit or loss. In the year
ended December 31, 2022 Frontline plc received dividends of $1.6 million (2021: $0.5 million) from its investments in
marketable securities.
A summary of the movements in marketable securities for the years ended December 31, 2022 and 2021 is presented in the
table below:
(in thousands of $) 2022 2021
Balance at the beginning of the year 1,895 5,926
Marketable securities acquired 167,709 357
Proceeds from sale of marketable securities — (11,236)
Gain on sale of marketable securities — 7,002
Unrealized gain (loss) on marketable securities held at end of the year 65,907 (154)
Balance at the end of the year 235,511 1,895
Avance Gas
As of December 31, 2022 and 2021, Frontline plc held 329,669 shares in Avance Gas. In the year ended December 31, 2022,
Frontline plc recognized an unrealized gain of $0.7 million (2021: loss of $0.3 million) in relation to the shares held in Avance
Gas.
SFL
As of December 31, 2022 and 2021, Frontline plc held 73,165 shares in SFL. In the year ended December 31, 2022, Frontline
plc recognized an unrealized gain of $0.1 million (2021: gain of $0.1 million) in relation to the shares held in SFL.
Golden Ocean
As of December 31, 2022 and 2021, Frontline plc held nil (2020: 837,533) shares in Golden Ocean.
In April 2021, Frontline purchased 55,959 Golden Ocean shares in connection with the exercise of subscription rights in the
subsequent offering for $0.4 million. In the year ended December 31, 2021 Frontline plc sold all Golden Ocean shares and
recognized a gain on marketable securities sold of $7.0 million.
Euronav
On May 28, 2022, Frontline announced that it agreed to acquire in privately negotiated share exchange transactions with certain
shareholders of Euronav a total of 5,955,705 shares in Euronav, representing 2.95% of the outstanding shares in Euronav as of
this date, in exchange for a total of 8,337,986 ordinary shares of Frontline. Frontline received the $0.06 dividend per share that
was paid on June 8, 2022 by Euronav in respect of these 5,955,705 shares.
On June 10, 2022, Frontline announced that it agreed to acquire in privately negotiated transactions with certain shareholders of
Euronav a total of 7,708,908 shares in Euronav, representing 3.82% of the outstanding shares in Euronav as of this date, in
exchange for a total of 10,753,924 shares in Frontline.
Frontline Plc – Annual Report and Financial Statements 2022 114
In connection with the above-referenced privately negotiated share exchange transactions, Frontline entered into a share lending
arrangement with Hemen to facilitate settlement of such transactions. Pursuant to such arrangement Hemen delivered an
aggregate of 19,091,910 Frontline shares to the exchanging Euronav holders in June 2022 and Frontline agreed to issue to
Hemen the same number of shares of Frontline in full satisfaction of the share lending arrangement. The shares were issued to
Hemen in August 2022.
As of December 31, 2022, the Company held 13,664,613 shares in Euronav, as a result of the above transactions. The acquired
shares were initially recognized at their fair value of $167.7 million and the Company recorded a realized loss of $7.8 million in
relation to these transactions, being the difference between the transaction price to acquire these shares and their fair value as of
the transaction dates. The transaction price paid to acquire these shares was $175.5 million, which was the fair value of the
Frontline's shares as of the transaction dates.
Based on the Euronav share price as of December 31, 2022, the fair value of the shares held in Euronav was $232.8 million,
which resulted in an unrealized gain of $65.1 million in relation to the shared held in Euronav.
7. TRADE AND OTHER RECEIVABLES
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Prepaid expenses 509 569 165
Related party receivables 9 252 161
Other receivables 50 53 5,676
Total trade and other receivables 568 874 6,002
Other receivables are presented net of allowances for doubtful accounts amounting to nil as of December 31, 2022 (December
31, 2021: nil, January 1, 2021: nil).
8. INVESTMENTS IN SUBSIDIARIES
A summary of the movements in investments in subsidiaries for the years ended December 31, 2022 and 2021 is presented in
the table below:
(in thousands of $) 2022 2021
Balance at the beginning of the year 1,853,624 1,660,406
Net income/(loss) from subsidiaries 449,647 (22,047)
Foreign currency translation effects 2,904 19
Distributions paid to parent company (113,599) (59,923)
Contributions received from parent company 51,769 275,169
Balance at the end of the year 2,244,345 1,853,624
All Frontline plc's subsidiaries are wholly owned. See Note 25 Group Entities in the Consolidated Financial Statements for a
table with Frontline plc's subsidiaries for the years 2022 and 2021.
9. TRADE AND OTHER PAYABLES
Frontline Plc – Annual Report and Financial Statements 2022 115
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
Trade payables 1,345 56 —
Accrued administrative expenses 3,158 1,092 653
Related party payables — 3,335 1,801
Other 3,620 253 1,325
Total current trade and other payables 8,123 4,736 3,779
Other 1,689 356 276
Total other non-current payables 1,689 356 276
10. INTEREST BEARING LOANS AND BORROWINGS
A summary of outstanding debt as of December 31, 2022 and 2021 and January 1, 2021 is as follows:
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
U.S. dollar denominated fixed rate debt
$275.0 million revolving credit facility 209,700 209,700 60,000
Total U.S. dollar denominated fixed rate debt 209,700 209,700 60,000
Secured borrowings — — 6,251
Accrued interest expense 2,184 2,184 625
Total debt 211,884 211,884 66,876
Short-term debt and current portion of long-term debt 2,184 2,184 66,876
Long-term portion of debt 209,700 209,700 —
Movements in the year ended December 31, 2022 are summarized as follows:
(in thousands of $)
December 31,
2021 Proceeds Repayments
December 31,
2022
U.S. dollar denominated fixed rate debt
$275.0 million revolving credit facility 209,700 — — 209,700
Total U.S. dollar denominated fixed rate debt 209,700 — — 209,700
Accrued interest expense 2,184 2,184
Total debt 211,884 — — 211,884
Short-term debt and current portion of long-term debt 2,184 2,184
Long-term portion of debt 209,700 — — 209,700
Movements in the year ended December 31, 2021 are summarized as follows:
(in thousands of $)
January 1,
2021 Proceeds Repayments
December 31,
2021
U.S. dollar denominated fixed rate debt
$275.0 million revolving credit facility 60,000 149,700 — 209,700
Total U.S. dollar denominated fixed rate debt 60,000 149,700 — 209,700
Secured borrowings 6,251 3,481 (9,732) —
Accrued interest expense 625 2,184
Total debt 66,876 153,181 (9,732) 211,884
Short-term debt and current portion of long-term debt 625 2,184
Long-term portion of debt 66,251 153,181 (9,732) 209,700
Frontline Plc – Annual Report and Financial Statements 2022 116
$275.0 million revolving credit facility
In June 2016, Frontline plc signed a $275.0 million senior unsecured facility agreement with an affiliate of Hemen, Frontline's
largest shareholder. The original facility carried an interest rate of 6.25% and was available to Frontline plc for a period of 18
months from the first utilization date and was repayable in full on the 18 months anniversary of the first utilization date. There
were no scheduled loan repayments before this date. The facility does not include any financial covenants.
As of January 1, 2021, Frontline plc had an outstanding balance of $60.0 million and up to $215.0 million remained available
and undrawn under this facility. The balance outstanding was included in short-term debt as of January 1, 2021.
In February 2021, Frontline plc extended the terms of the facility by 12 months to May 2022. In November 2021, Frontline plc
extended the terms of the facility by 12 months to May 2023. In the year ended December 31, 2021, Frontline plc drew down
$149.7 million under the facility to part finance Frontline plc's subsidiary activities and general corporate purposes. As of
December 31, 2021, $65.3 million remained available and undrawn under this facility. The balance outstanding of $209.7
million was included in long-term debt as of December 31, 2021.
In November 2022, Frontline plc extended the facility by 12 months to May 2024 at an interest rate of 8.50% and otherwise on
same terms. The balance outstanding of $209.7 million is included in long-term debt as of December 31, 2022.
Secured borrowings
As of January 1, 2021, Frontline plc had entered into a forward contract to repurchase the shares of Golden Ocean in March
2021 for $6.2 million, with the shares recorded in marketable securities and a liability recorded as of January 1, 2021 within
short-term debt for $6.3 million, after adjusting for the effect of foreign exchange. Frontline plc was required to post collateral
of 20% of the total repurchase price for the duration of the agreement which was held in restricted cash as of January 1, 2021.
In the year ended December 31, 2021, Frontline plc sold the Golden Ocean shares previously held as marketable securities.
Frontline plc paid no debt issuance costs in the year ended December 31, 2022 (2021: nil).
11. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
Accounting classifications and fair values
The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their levels
in the fair value hierarchy.
December 31, 2022 December 31, 2021 January 1, 2021
(in thousands of $)
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Financial assets measured at fair value through
profit or loss
Marketable securities 235,511 235,511 1,895 1,895 5,926 5,926
Financial assets not measured at fair value
Cash and cash equivalents 1,643 1,643 3,096 3,096 2,396 2,396
Restricted cash — — — — 1,538 1,538
Trade and other receivables 568 568 874 874 6,002 6,002
Financial liabilities not measured at fair value
Trade and other payables 9,812 9,812 5,092 5,092 4,055 4,055
Fixed rate debt 211,884 212,203 211,884 206,552 66,876 65,348
Frontline Plc – Annual Report and Financial Statements 2022 117
(in thousands of $)
Dec 31, 2022
Fair Value
Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or
loss
Marketable securities 235,511 235,511 — —
Financial assets not measured at fair value
Cash and cash equivalents 1,643 1,643 — —
Financial liabilities not measured at fair value
Fixed rate debt 212,203 — — 212,203
(in thousands of $)
Dec 31, 2021
Fair Value
Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or
loss
Marketable securities 1,895 1,895 — —
Financial assets not measured at fair value
Cash and cash equivalents 3,096 3,096 — —
Financial liabilities not measured at fair value
Fixed rate debt 206,552 — — 206,552
(in thousands of $)
Jan 1, 2021
Fair Value
Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or
loss
Marketable securities 5,926 5,926 — —
Financial assets not measured at fair value
Cash and cash equivalents 2,396 2,396 — —
Restricted cash 1,538 1,538 — —
Financial liabilities not measured at fair value
Fixed rate debt 65,348 — 6,251 59,097
Measurement of fair values
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 1, Level 2 and Level 3 fair values, as well as the
significant unobservable inputs that were used.
Financial instruments measured at fair value
Type Valuation Techniques Significant unobservable inputs
Marketable securities
Fair value was determined based on
the actual trading of the securities.
Not applicable.
Financial instruments not measured at fair value
Type Valuation Techniques Significant unobservable inputs
Fixed rate debt Discounted cash flow. Discount rate.
Marketable securities are listed equity securities for which the fair value as of the statement of financial position date is the
aggregate market value based on quoted market prices (level 1).
Transfers between Level 1, 2 and 3
Frontline Plc – Annual Report and Financial Statements 2022 118
There were no transfers between these levels in 2022 and 2021.
Financial risk management
In the course of its normal business, Frontline plc is exposed to the following risks:
• Credit risk
• Liquidity risk
• Market risk (interest rate risk, foreign currency risk and price risk)
Frontline plc's activities do not substantially differ from the Frontline’s group. See Note 20 Financial Instruments - Fair Values
And Risk Management in the Consolidated financial statements.
The following are the remaining contractual maturities of financial liabilities:
Contractual cash flows at December 31, 2022
(in thousands of $)
Carrying
Value Total
Less than 1
year
Between 1
and 5 years
More than 5
years
Non derivative financial liabilities
Fixed rate debt 211,884 211,884 2,184 209,700 —
Trade and other payables 8,123 8,123 8,123 — —
Contractual cash flows at December 31, 2021
(in thousands of $)
Carrying
Value Total
Less than 1
year
Between 1
and 5 years
More than 5
years
Non derivative financial liabilities
Fixed rate debt 211,884 211,884 2,184 209,700 —
Trade and other payables 4,736 4,736 4,736 — —
Contractual cash flows at January 1, 2021
(in thousands of $)
Carrying
Value Total
Less than 1
year
Between 1
and 5 years
More than 5
years
Non derivative financial liabilities
Fixed rate debt 66,876 66,876 66,876 — —
Trade and other payables 3,779 3,779 3,779 — —
12. SHARE CAPITAL
Authorized capitalization
The authorized share capital of Frontline plc as of December 31, 2022 is $600,000,000 (2021: $500,000,000) divided into
600,000,000 shares (2021: 500,000,000) of $1.00 par value each, of which 222,622,889 shares (December 31, 2021:
203,530,979 shares and January 1, 2020: 197,692,321 shares) of $1.00 par value each are in issue and fully paid.
ATM program
In June 2020, Frontline plc entered into an equity distribution agreement with Morgan Stanley & Co. LLC for the offer and sale
of up to $100.0 million of ordinary shares of the Company through an at-the-market offering program. In the year ended
December 31, 2021, the Company issued 5,499,658 shares for combined gross proceeds of $51.2 million.
Share options
Frontline Plc – Annual Report and Financial Statements 2022 119
In the year ended December 31, 2021, Frontline plc issued 339,000 ordinary shares under its share option scheme at a strike
price of $5.70 per share. The shares were issued to John Fredriksen (198,000 shares), Inger M. Klemp (120,000 shares), and
Ola Lorentzon (21,000 shares).
Euronav share acquisition
On May 28, 2022, Frontline announced that it agreed to acquire in privately negotiated share exchange transactions with certain
shareholders of Euronav a total of 5,955,705 shares in Euronav, representing 2.95% of the outstanding shares in Euronav as of
this date, in exchange for a total of 8,337,986 ordinary shares of Frontline. Frontline received the $0.06 dividend that was paid
on June 8, 2022 by Euronav in respect of these 5,955,705 shares.
On June 10, 2022, Frontline announced that it agreed to acquire in privately negotiated transactions with certain shareholders of
Euronav a total of 7,708,908 shares in Euronav, representing 3.82% of the outstanding shares in Euronav as of this date, in
exchange for a total of 10,753,924 shares in Frontline.
As of December 31, 2022, Frontline had acquired 13,664,613 shares in Euronav as a result of the above transactions. The
transaction price paid to acquire these shares was $175.5 million, which was the fair value of the shares acquired as of the
transaction dates.
In connection with the above-referenced privately negotiated share exchange transactions, Frontline entered into a share lending
arrangement with Hemen to facilitate settlement of such transactions. Pursuant to such arrangement Hemen delivered an
aggregate of 19,091,910 Frontline shares to the exchanging Euronav holders in June 2022 and Frontline agreed to issue to
Hemen the same number of Frontline shares in full satisfaction of the share lending arrangement. This share issuance to Hemen
was completed in August 2022.
The following table summarizes the movement in the number of shares outstanding during the years ended December 31, 2022
and December 31, 2021;
Outstanding shares at January 1, 2021 197,692,321
Shares issued under at-the-market offering program 5,499,658
Shares issued on exercise of options 339,000
Outstanding shares at December 31, 2021 203,530,979
Shares issued in connection with Euronav share acquisition 19,091,910
Outstanding shares at December 31, 2022 222,622,889
13. SHARE OPTIONS
Frontline plc's share option scheme, or Frontline Scheme, permits the Board of Directors, at its discretion, to grant options to
acquire shares in Frontline plc to employees and directors of Frontline plc or its subsidiaries. The subscription price for all
options granted under the scheme is reduced by the amount of all dividends declared by Frontline plc in the period from the
date of grant until the date the option is exercised, provided the subscription price is never reduced below the par value of the
share. The vesting periods of options granted under the Frontline Scheme will be specific to each grant. There is no maximum
number of shares authorized for awards of equity share options and authorized, unissued or treasury shares of Frontline plc may
be used to satisfy exercised options.
In July 2016, Frontline plc granted 1,170,000 share options, with an exercise price of $8.00 per share, to directors and officers
in accordance with the terms of the Frontline Scheme. One third of the options vested over one year, one third vested over two
years and one third vested over three years. The options had a five year term which expired in July 2021.
In November 2018, Frontline plc granted 180,000 share options, with an exercise price of $7.40 per share, to employees in
accordance with the terms of the Frontline Scheme. All options vested in July 2019. The options had a thirty-three month term
which expired in July 2021.
Frontline Plc – Annual Report and Financial Statements 2022 120
In December 2021, the Board of Directors approved the grant of 1,280,000 synthetic options to employees and board members
according to the rules of Frontline plc’s synthetic option scheme approved on December 7, 2021. The synthetic options have a
five year term expiring in December 2026. The vesting period is 12 months for the first 27.5% of options, 24 months for the
next 27.5% of options and 36 months for the final 45% of options. The synthetic options will be settled in cash based on the
difference between the market price of the Company’s shares and the exercise price on the date of exercise, and as such, have
been classified as a liability.
The fair value of the granted option awards was estimated on the date of grant using a Black-Scholes option valuation model
with the following assumptions:
July 2016 November 2018 December 2021
Risk free interest rate 0.69% 2.78% 1.04%
Expected life (years) 3.5 1.6 3.4
Expected volatility 79.80% 38.24% 58.42%
Expected dividend yield 0.00% 0.00% 0.00%
The risk-free interest rate was estimated using the interest rate on three year U.S. treasury zero coupon issues for the options
granted in July 2016 and December 2021 and on prorated one to two and year U.S. treasury zero coupon issues for the options
granted in November 2018. The volatility was estimated using historical share price data. The dividend yield was estimated at
0% as the exercise price is reduced by all dividends declared by Frontline plc from the date of grant to the exercise date. It was
assumed that all of the options granted in July 2016, November 2018 and December 2021 will vest.
Exercises and forfeitures of July 2016 and November 2018 grants
The initial exercise price for the options granted in July 2016 and November 2018 was reduced by the amount of dividends paid
after the date of grants. As of December 31, 2022 and 2021 1,350,000 of these options had vested. As of December 31, 2022
and 2021 43,000 of these options had been forfeited. In the year ended December 31, 2022, no options were exercised. In the
year ended December 31, 2021, 339,000 options were exercised and Frontline plc issued 339,000 shares for proceeds of
$1.9 million. In the year ended December 31, 2021, 130,000 options were exercised and settled for a cash payment of
$0.3 million. As of December 31, 2022 and 2021, no options remained exercisable. As of December 31, 2022 and 2021, there
was no unrecognized stock compensation expense related to non-vested options. No stock compensation expense was
recognized in the years ended December 31, 2022 and 2021.
The weighted average grant-date fair value of the options granted in 2016 was $4.06 per share and $1.53 per share for the
options granted in 2018.
Exercises and forfeitures of December 2021 grant
The initial exercise price for the synthetic options granted in December 2021 was reduced by the amount of dividends paid after
the date of grant. As of December 31, 2022, 330,000 of these options had vested. As of December 31, 2022, 80,000 options had
been forfeited and no options were exercised. As of December 31, 2022, 330,000 options remained exercisable. The subsequent
remeasurement of fair value of the synthetic options resulted in an expense of $4.7 million (2021: $0.2 million) was recognized
in the year ended December 31, 2022.
As of December 31, 2022, the weighted average exercise price of these options was $7.64 and the Company's share price was
$12.14.
The weighted average fair value of the options granted in 2021 was $6.54 per share. The synthetic options had a fair value of
$8.4 million (2021: $3.3 million) as of December 31, 2022 and Frontline plc recorded a liability of $4.9 million (2021: $0.2
million) as of December 31, 2022 in the Consolidated Statements of Financial Position. The intrinsic value of liabilities which
had vested as of December 31, 2022 was $1.7 million (2021: nil).
14. RELATED PARTY TRANSACTIONS AND AFFILIATED COMPANIES
Frontline plc, through its subsidiaries, 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.
Frontline Plc – Annual Report and Financial Statements 2022 121
A summary of Frontline plc's subsidiary transactions with related parties is provided in note 23 of the Consolidated Financial
Statements of Frontline.
Transactions with other affiliates of Hemen
In June 2016, Frontline plc signed a $275.0 million senior unsecured facility agreement with an affiliate of Hemen, its largest
shareholder. As of January 1, 2021, up to $215.0 million remained available and undrawn. In November 2021, Frontline plc
extended the terms of the facility by 12 months to May 2023. In the year ended December 31, 2021, Frontline plc drew down
$149.7 million under the facility to finance its subsidiaries and for general corporate purposes. In November 2022, Frontline plc
extended the terms of the facility by 12 months to May 2024 at an interest rate of 8.50% and otherwise on same terms. As of
December 31, 2022, $209.7 million (2021: $209.7 million) drawn from this facility has been recorded as long-term debt. In the
year ended December 31, 2022, Frontline plc recognized interest expense of $13.3 million (2021: $8.2 million).
Related party balances
A summary of balances due from related parties at December 31, 2022 and 2021 and January 1, 2021 is as follows:
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
SFL — 171 63
Golden Ocean — 70 64
Other related parties 9 11 34
9 252 161
A summary of balances due to related parties at December 31, 2022, 2021 and January 1, 2021 is as follows:
(in thousands of $)
December 31,
2022
December 31,
2021
January 1,
2021
SFL — 781 181
Seatankers Management Co. Ltd — — 914
Golden Ocean — 2,255 432
Flex LNG Ltd — 165 111
Avance Gas — 134 163
— 3,335 1,801
Transactions with key management personnel
The total amount of the remuneration earned by all directors and key management personnel for their services as follows:
(in thousands of $) 2022 2021
Total remuneration 3,144 329
The Directors annually review the remuneration of the members of key management personnel. Directors' fees are approved
annually by the AGM. Total remuneration consists of a fixed and a variable component and can be summarized as follows:
(in thousands of $) 2022 2021
Total fixed remuneration 465 329
Total variable remuneration 2,679 96
of which:
Share based payments 2,679 96
In July 2021, the Company issued 339,000 ordinary shares under its share option scheme at a strike price of $5.70 per share.
The shares were issued to John Fredriksen (198,000 shares), Inger M. Klemp (120,000 shares), and Ola Lorentzon (21,000
shares).
Frontline Plc – Annual Report and Financial Statements 2022 122
In December 2021, the Board of Directors approved the grant of 1,280,000 synthetic options to employees and board members
according to the rules of the Company’s synthetic option scheme approved on December 7, 2021. The synthetic options have a
five year term expiring in December 2026. The vesting period is 12 months for the first 27.5% of options, 24 months for the
next 27.5% of options and 36 months for the final 45% of options. The synthetic options will be settled in cash based on the
difference between the market price of Frontline’s shares and the exercise price on the date of exercise, and as such, have been
classified as a liability.
15. COMMITMENTS AND CONTINGENCIES
As of December 31, 2022, Frontline plc 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
December 31, 2022, 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 December
31, 2022.
16. SUBSEQUENT EVENTS
In January 2023, Frontline plc terminated a combination agreement (the “Combination Agreement”) for a stock-for-stock
combination with 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 Frontline 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.
On January 28, 2023, Frontline plc received from Euronav an arbitration request for proceedings on the merits of the
termination. The arbitral tribunal has been constituted and a timetable for the arbitration will be set in principle by the end of
April 2023. Frontline once again maintains that its decision to terminate the Combination Agreement was entirely lawful.
In February 2023, Frontline plc repaid $60.0 million of its $275.0 million senior unsecured credit facility with an affiliate of
Hemen. Up to $125.3 million remains available following the repayment.
Frontline Plc – Annual Report and Financial Statements 2022 123
PricewaterhouseCoopers Ltd, City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus
P O Box 53034, CY-3300 Limassol, Cyprus
T: +357 25 - 555 000, F:+357 - 25 555 001, www.pwc.com.cy
PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No.143594). Its registered office is at PwC Central, 43 Demostheni Severi Avenue, CY-1080
Nicosia. A list of the company’s directors, including for individuals the present and former (if any) name and surname and nationality, if not Cypriot and for legal entities the
corporate name, is kept by the Secretary of the company at its registered office. PwC refers to the Cyprus member firm, PricewaterhouseCoopers Ltd and may sometimes
refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
Independent Auditor’s Report
To the Members of Frontline Plc
Report on the Audit of the Consolidated Financial Statements and the
Parent Company Financial Statements
Our opinion
In our opinion, the accompanying consolidated financial statements of Frontline Plc and its
subsidiaries (together the “Group”) and the parent company financial statements of Frontline Plc
(the “Company”) give a true and fair view of the financial position of the Group and the Company as
at 31 December 2022, and of their financial performance and their cash flows for the year then
ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and the requirements of the Cyprus Companies Law, Cap. 113.
What we have audited
We have audited the consolidated financial statements and the parent company financial
statements which are presented in pages 46 to 123 and comprise:
● the consolidated statements of financial position and the statements of financial position of the
Company as at 31 December 2022;
● the consolidated statements of profit or loss and statements of profit or loss of the Company for
the year then ended;
● the consolidated statements of comprehensive income and the statements of comprehensive
income of the Company for the year then ended;
● the consolidated statements of cash flows and statements of cash flows of the Company for the
year then ended;
● the consolidated statements of changes in equity and the statements of changes in equity of the
Company for the year then ended; and
● the notes to the consolidated financial statements and the parent company financial
statements, which include a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the consolidated
financial statements and the parent company financial statements is International Financial
Reporting Standards as adopted by the European Union and the requirements of the Cyprus
Companies Law, Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements and the Parent Company Financial Statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We remained independent of the Group and the Company throughout the period of our
appointment in accordance with the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International Independence
Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of
the consolidated financial statements and the parent company financial statements in Cyprus and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code.
Key audit matters incorporating the most significant risks of material misstatements,
including assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements and the parent company financial statements
of the current period. These matters were addressed in the context of our audit of the consolidated
financial statements and the parent company financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter How our audit addressed the Key Audit Matter
First-time adoption of IFRS as adopted by the
European Union - Impairment testing
As described in Notes 2 and 3 to the consolidated financial
statements, following the redomiciliation of the Company to
Cyprus, the Company and the Group are preparing their
first financial statements in accordance with IFRS 1 “First-
Time Adoption of International Financial Reporting
Standards” (“IFRS 1”).
Management has identified all the relevant differences. For
the Group the most significant change involving judgment
in relation to the adoption of IFRS 1 relates to the adoption
of IAS 36 “Impairment of Assets” regarding the impairment
assessment of the Group’s “Newbuildings” and “Vessels and
equipment” for the Group (collectively “long-lived assets
held and used by the Group”. The Group ’s “Newbuildings”
and “Vessels and equipment” were $48.5 million and
$3,300.5 million, respectively, as of January 1, 2021, and,
$130.6 million and $3,467.3 million, respectively, as of
December 31, 2021.
Addressing the matter involved performing procedures
and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial
statements and parent company financial statements.
These procedures included testing the effectiveness of
controls related to management’s impairment indicator
assessment for long-lived assets held and used by the
Group, including controls over development of estimated
market values based on external appraisals of the
newbuildings and vessels, and development of actual and
budgeted net cash flows generated by the vessels.
These procedures also included, among others, testing
management’s process for assessing impairment
indicators; testing the completeness, accuracy and
relevance of underlying data and evaluating the
significant assumptions used by management.
Key Audit Matter How our audit addressed the Key Audit Matter
For the Company the most significant change involving
judgment in relation to the adoption of IFRS 1 relates to the
adoption of IAS 36 “Impairment of Assets” regarding the
impairment assessment of the Company’s investment in
subsidiaries since the Company has not previously prepared
parent company financial statements and has applied a
policy to equity account for its investments in subsidiaries.
The Company’s “Investment in subsidiaries” were $1,660.4
million as of January 1, 2021, and $1,853.6 million, as of
December 31, 2021.
Management reviews the carrying amounts of non-financial
assets for potential impairment whenever events or changes
in circumstances indicate that the carrying amount of the
asset or cash-generating unit may not be fully recoverable.
Indicators of impairments are identified based on a
combination of factors which includes significant
management judgments and assumptions, such as
development of estimated market values based on external
appraisals of the newbuildings and vessels, and
developments of actual and budgeted net cash flows
generated by the vessels.
The principal considerations for our determination that
performing procedures relating to the impairment
assessment for long-lived assets held and used by the
Company is a key audit matter is the significant judgment
by management in assessing the impairment indicators.
Further, management prepared their review of impairment
indicators for the first time based on IFRS, following the
transition to IFRS from its previous reporting framework,
accounting principles generally accepted in the United
States of America ("U.S. GAAP"). This in turn led to a high
degree of auditor judgment, effort and subjectivity in
performing procedures to evaluate the significant
assumptions used by management, such as development of
estimated market values based on external appraisals of the
newbuildings and vessels, and development of actual and
budgeted and discounted cash flows generated by the
vessels which could also have an impact on the Company’s
Investment in subsidiaries.
Evaluating management’s assumptions related to
development of estimated market values based on
external appraisals of the newbuildings and vessels, and
development of actual and budgeted net cash flows
generated by the vessels, involved evaluating whether the
assumptions used by management were reasonable
considering (i) the consistency with external market and
industry data and (ii) whether the assumptions were
consistent with evidence obtained in other areas of the
audit.
Further, we performed procedures to evaluate the
conversion from U.S. GAAP to IFRS, in particular IAS 36
- Impairment of Assets. In addition, we had discussions
with management on key ar eas of judgments used in
their process and performed audit procedures including
the review of accounting transition papers prepared by
management, test of details of the transition adjustments,
and audit of the consolidated financial statements
disclosures required for first-time adoption of IFRS and
related controls.
We read Notes 2, 3, 12 and 13 of the consolidated
financial statements and assessed the content as
appropriate.
No matters of consequence arose from our procedures.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises
the information included in the Statement of the Members of the Board of Directors and Other
Responsible Persons of the Company for the Financial Statements, the Corporate Governance
Report, the Remuneration Report and the Management Report but does not include the
consolidated financial statements and the parent company financial statements and our auditor’s
report thereon.
Our opinion on the consolidated financial statements and the parent company financial statements
does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the consolidated financial statements and the parent company
financial statements, our responsibility is to read the other information identified above and, in
doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements and the parent company financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for
the Consolidated Financial Statements and the Parent Company Financial
Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements
and the parent company financial statements that give a true and fair view in accordance with
International Financial Reporting Standards as adopted by the European Union and the
requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of consolidated financial statements
and parent company financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements and the parent company financial statements,
the Board of Directors is responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Board of Directors either intends to liquidate the
Group and the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s and the Company’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
and the Parent Company Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements and the parent company financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements and the parent company financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the consolidated financial statements
and the parent company financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
● Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s and the Company’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors.
● Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s and the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements and the parent company financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group and the Company to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of consolidated financial statements
and parent company financial statements, including the disclosures, and whether the
consolidated financial statements and parent company financial statements represent the
underlying transactions and events in a manner that achieves a true and fair view.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements and the parent
company financial statements of the current period and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the
following information in our Independent Auditor’s Report, which is required in addition to the
requirements of International Standards on Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Company on 20 December 2022 at the Special General
Meeting of Shareholders, for the audit of the consolidated financial statements and the parent
company financial statements for the year ended 31 December 2022. Our appointment represents a
total period of uninterrupted engagement appointment of 1 year.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated financial statements and the parent
company financial statements expressed in this report is consistent with the additional report to the
Audit Committee of the Company, which we issued on 27 April 2023 in accordance with Article 11
of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation
537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-
audit services which were provided by us to the Group or to the Company and which have not been
disclosed in the consolidated financial statements and the parent company financial statements or
the management report.
European Single Electronic Format
We have examined the digital files of the European Single Electronic Format (ESEF) of Frontline
Plc for the year ended 31 December 2022 comprising an XHTML file which includes the
consolidated and parent company financial statements for the year then ended and XBRL files with
the marking up carried out by the entity of the consolidated statements of financial position as at 31
December 2022, and the consolidated statements of profit or loss and, consolidated statements of
comprehensive income, consolidated statements of changes in equity and consolidated statements
of cash flows for the year then ended, and all disclosures made to the consolidated financial
statements or made by cross-reference therein to other parts of the annual financial report for the
year ended 31 December 2022 that correspond to the elements of Annex II of the EU Delegated
Regulation 2019/815 of 17 December 2018 of the European Commission, as amended from time to
time (the “ESEF Regulation”) (the “digital files”).
The Board of Directors of Frontline Plc is responsible for preparing and submitting the
consolidated and parent company financial statements for the year ended 31 December 2022 in
accordance with the requirements set out in the ESEF Regulation.
Our responsibility is to examine the digital files prepared by the Board of Directors of Frontline Plc.
According to the Audit Guidelines issued by the Institute of Certified Public Accountants of Cyprus
(the “Audit Guidelines”), we are required to plan and perform our audit procedures in order to
examine whether the content of the consolidated and parent company financial statements
included in the digital files correspond to the consolidated and parent company financial
statements we have audited, and whether the format and marking up included in the digital files
have been prepared in all material respects, in accordance with the requirements of the ESEF
Regulation.
In our opinion, the digital files examined correspond to the consolidated and parent company
financial statements, and the consolidated financial statements included in the digital files, are
presented and marked-up, in all material respects, in accordance with the requirements of the
ESEF Regulation.
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
● In our opinion, based on the work undertaken in the course of our audit, the management
report has been prepared in accordance with the requirements of the Cyprus Companies Law,
Cap. 113, and the information given is consistent with the consolidated financial statements and
the parent company financial statements.
● In light of the knowledge and understanding of the Group and the Company and their
environment obtained in the course of the audit, we are required to report if we have identified
material misstatements in the management report. We have nothing to report in this respect.
● In our opinion, based on the work undertaken in the course of our audit, the information
included in the corporate governance statement in accordance with the requirements of
subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap.
113, have been prepared in accordance with the requirements of the Cyprus Companies Law,
Cap. 113, and is consistent with the consolidated financial statements and the parent company
financial statements.
● In our opinion, based on the work undertaken in the course of our audit, the corporate
governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi)
and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.
● In light of the knowledge and understanding of the Group and the Company and their
environment obtained in the course of the audit, we are required to report if we have identified
material misstatements in the corporate governance statement in relation to the information
disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies
Law, Cap. 113. We have nothing to report in this respect.
Other Matter
This report, including the opinion, has been prepared for and only for the Company’s members as a
body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors
Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to whose knowledge this report may
come to.
The consolidated financial statements of Frontline Plc, for the year ended 31 December 2021,
prepared in accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP") were audited by PricewaterhouseCoopers AS who expressed an unmodified
opinion on those statements on 17 March 2022. PricewaterhouseCoopers Limited assumed office as
statutory auditor following its redomiciliation to the Republic of Cyprus on 30 December 2022.
The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas.
Tasos Nolas
Certified Public Accountant and Registered Auditor
for and on behalf of
PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
City House, 6 Karaiskakis Street,
CY-3032 Limassol, Cyprus
28 April 2023
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