Frontline Plc — Investor Presentation 2024

Feb 29, 2024

Fourth Quarter Presentation Feb 2024

MATTERS DISCUSSED IN THIS DOCUMENT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES SAFE HARBOR PROTECTIONS FOR FORWARD-LOOKING STATEMENTS IN ORDER TO ENCOURAGE COMPANIES TO PROVIDE PROSPECTIVE INFORMATION ABOUT THEIR BUSINESS. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING PLANS, OBJECTIVES, GOALS, STRATEGIES, FUTURE EVENTS OR PERFORMANCE, AND UNDERLYING ASSUMPTIONS AND OTHER STATEMENTS, WHICH ARE OTHER THAN STATEMENTS OF HISTORICAL FACTS.

FRONTLINE DESIRES TO TAKE ADVANTAGE OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND IS INCLUDING THIS CAUTIONARY STATEMENT IN CONNECTION WITH THIS SAFE HARBOR LEGISLATION. THE WORDS "BELIEVE," "ANTICIPATE," "INTENDS," "ESTIMATE," "FORECAST," "PROJECT," "PLAN," "POTENTIAL," "MAY," "SHOULD," "EXPECT" "PENDING" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS.

THE FORWARD-LOOKING STATEMENTS IN THIS DOCUMENT ARE BASED UPON VARIOUS ASSUMPTIONS, MANY OF WHICH ARE BASED, IN TURN, UPON FURTHER ASSUMPTIONS, INCLUDING WITHOUT LIMITATION, MANAGEMENT'S EXAMINATION OF HISTORICAL OPERATING TRENDS, DATA CONTAINED IN FRONTLINE'S RECORDS AND OTHER DATA AVAILABLE FROM THIRD PARTIES. ALTHOUGH FRONTLINE BELIEVES THAT THESE ASSUMPTIONS WERE REASONABLE WHEN MADE, BECAUSE THESE ASSUMPTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT AND ARE BEYOND FRONTLINE'S CONTROL, YOU CANNOT BE ASSURED THAT FRONTLINE WILL ACHIEVE OR ACCOMPLISH THESE EXPECTATIONS, BELIEFS OR PROJECTIONS. THE INFORMATION SET FORTH HEREIN SPEAKS ONLY AS OF THE DATES SPECIFIED AND FRONTLINE UNDERTAKES NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENT TO CONFORM THE STATEMENT TO ACTUAL RESULTS OR CHANGES IN EXPECTATIONS OR CIRCUMSTANCES.

IMPORTANT FACTORS THAT, IN FRONTLINE'S VIEW, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION: THE STRENGTH OF WORLD ECONOMIES AND CURRENCIES, GENERAL MARKET CONDITIONS, INCLUDING FLUCTUATIONS IN CHARTERHIRE RATES AND VESSEL VALUES, CHANGES IN DEMAND IN THE TANKER MARKET, INCLUDING BUT NOT LIMITED TO CHANGES IN OPEC'S PETROLEUM PRODUCTION LEVELS AND WORLD WIDE OIL CONSUMPTION AND STORAGE, CHANGES IN FRONTLINE'S OPERATING EXPENSES, INCLUDING BUNKER PRICES, DRYDOCKING AND INSURANCE COSTS, THE MARKET FOR FRONTLINE'S VESSELS, AVAILABILITY OF FINANCING AND REFINANCING, ABILITY TO COMPLY WITH COVENANTS IN SUCH FINANCING ARRANGEMENTS, FAILURE OF COUNTERPARTIES TO FULLY PERFORM THEIR CONTRACTS WITH US, CHANGES IN GOVERNMENTAL RULES AND REGULATIONS OR ACTIONS TAKEN BY REGULATORY AUTHORITIES, POTENTIAL LIABILITY FROM PENDING OR FUTURE LITIGATION, GENERAL DOMESTIC AND INTERNATIONAL POLITICAL CONDITIONS, POTENTIAL DISRUPTION OF SHIPPING ROUTES DUE TO ACCIDENTS OR POLITICAL EVENTS, VESSEL BREAKDOWNS, INSTANCES OF OFF-HIRE AND OTHER IMPORTANT FACTORS. FOR A MORE COMPLETE DISCUSSION OF THESE AND OTHER RISKS AND UNCERTAINTIES ASSOCIATED WITH FRONTLINE'S BUSINESS, PLEASE REFER TO FRONTLINE'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING, BUT NOT LIMITED TO, ITS ANNUAL REPORT ON FORM 20-F.

THIS PRESENTATION IS NOT AN OFFER TO PURCHASE OR SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE OR SELL, ANY SECURITIES OR A SOLICITATION OF ANY VOTE OR APPROVAL.

Highlights

Strongest full year result in fifteen years

Reported earnings basis load to discharge

• Profit of \$118.4 million, or \$0.53 per basic and diluted share for the fourth quarter of 2023
• Adjusted profit of \$102.2 million, or \$0.46 per basic and diluted share for the fourth quarter of 2023
• Reported revenues of \$415.0 million for the fourth quarter of 2023

• Declared a cash dividend of \$0.37 per share for the fourth quarter of 2023
• Took delivery of 11 VLCCs from Euronav NV as part of the acquisition of 24 VLCCs in the fourth quarter of 2023 and a further 12 vessels in January 2024 with the last VLCC expected to be delivered within the first quarter of 2024

• Entered into agreements to sell its five oldest VLCCs and one of its oldest Suezmax tankers for an aggregate net sales price of \$335.0 million in January 2024. After repayment of existing debt on the vessels the transactions are expected to generate net cash proceeds of approximately \$238.0 million
• In the process of refinancing eight Suezmax tankers and 16 LR2 tankers expected to generate net cash proceeds of approximately \$408.0million
• The net cash proceeds of approximately \$646.0 million expected to be generated from sale and refinancing of vessels, will enable Frontline to fully repay the Hemen shareholder loan and the amount drawn under the \$275.0 million senior unsecured revolving credit facility with an affiliate of Hemen in relation to the Acquisition

Profit Statement – Highlights

FRONTLINE

	2023	2023	2022
(in thousands of \$ except per share data)	Oct - Dec	Jul - Sep	Jan - Dec
Total operating revenues (net of voyage expenses)*	256 897	232 135	824 664
Other income	-	400	8 040
Ship operating expenses	(44 941)	(44 102)	(175 164)
Administrative expenses	(13 889)	(15 298)	(47 374)
EBITDA	227 497	200 339	682 164
EBITDA adj*	198 065	173 034	601 377
Interest expense adj*	(41 775)	(37 724)	(95 081)
Profit	118 371	107 743	475 537
Profit adj*	102 150	80 813	341 952
Basic and diluted earnings per share	0,53	0,48	2,22
Basic and diluted earnings per share adjusted	0,46	0,36	1,60
Dividend per share	0,37	0,30	1,22

Notes

• Adjusted net income in the fourth quarter increased by \$21.4 million compared with the third quarter, primarily due to an increase in our TCE earnings, due to higher TCE rates, partially offset by fluctuations in other income and expenses.
• The adjustments in the fourth quarter of 2023 consist of:
  • \$29.1 million gain on marketable securities,
  • \$0.1 million share of results of associated companies,
  • \$13.2 million unrealized loss on derivatives and
  • \$0.2 million of dividends received.

Note: Diluted earnings per share is based on 222,623 and 222,623 weighted average shares (in thousands) outstanding for Q4 2023 and Q3 2023, respectively *See Appendix 1 for reconciliation to nearest comparable GAAP figures

Balance Sheet - Highlights

	2023	2023	2022
(in \$) millions	Dec 31	Sep 30	Dec 31
Assets
Cash	308	285	255
Other current assets	420	570	627
Non-current assets
Vessels and newbuildings	4 635	3 567	3 709
Goodwill	112	112	112
Prepaid consideration	349	-	-
Other non-current assets	58	65	73
Total assets	883 5	4 600	4 776
Liabilities and Equity
Short term debt and current portion of long term debt	262	365	258
Obligations under leases	1	1	1
Other payables current	146	111	132
Non-current liabilities
Long term debt	3 194	1 890	2 112
Obligations under leases	1	2	2
Other non-current payables	0	5	2
Non-controlling interest	(0)	(0)	(0)
Frontline plc stockholders' equity	2 278	2 226	2 268
Total liabilities and equity	883 5	4 600	4 776

• Strong liquidity of \$416 million in cash and cash equivalents, including undrawn amount of senior unsecured revolving credit facility, marketable securities and minimum cash requirements bank as per 31.12.23
• No remaining newbuilding commitments and no meaningful debt maturities until 2027

Fleet Composition and Cash breakeven / Opex

One of the youngest and most energy-efficient fleets in the industry

Competitive cash breakeven rates and Opex

Competitive cash breakeven rates of \$25.700 fleet average, including dry dock costs for five VLCCs and four SMAX tankers in 2024 Q4-23 fleet average opex excl. drydock \$7.300

Note: Daily cash breakeven in USD based on FY 2024.

Frontline delivers on long-term financing of \$2.4 billion asset transaction

…with sale of older vessels and refinancing of 24 vessels

From the Q3-23 presentation

Net cash proceeds of approx. \$646m

• Expected to be generated from sale and refinancing of vessels
• This will enable Frontline to fully repay the Hemen shareholder loan and the amount drawn under the \$275.0 million senior unsecured revolving credit facility with an affiliate of Hemen in relation to the Acquisition

Current Market Narrative

• Middle East tension, Red Sea / Aden situation and tonmiles implications
• US increasing pressure on "Dark Fleet" and Russian price cap evasions
• High activity in contracting market, Suezmax and VLCC
• Saudi maintain cuts as other OPEC members resist and non-OPEC production grows, sustainable?

Red Sea Situation

• Bab El-Mandeb straits between Yemen and Djibouti unsafe for passage for responsible owners. Attacks now randomly targeting anyone, even Russian linked vessels
• Traffic through Suez down 40-50% for tankers, but Russian "fleet" still pushing through
• Trade patterns are adjusting to COGH routing, more BBL´s move on VLCC, products favor LR2 (and LR3/Suezmax)

Orderbooks

In 2024:	Fleet	15 +	% above 15	20 +	% above 20	Orderbook	% of Fleet
VLCC	885	297	33.56 %	133	15.03 %	20	2.3 %
Suezmax	608	237	38.98 %	109	17.93 %	59	9.7 %
LR2	431	130	30.16 %	32	7.42 %	97	22.5 %
Total Fleet	1924	664	34.51 %	274	14.32 %	173	9.1 %

On order Sum on order 20Y+

of vessels

Delivered Sum on order Scrapped 20Y+

Highlight on the VLCC Fleet

Large Order Backlogs – Pushing Delivery dates for tankers

Summary

Frontline delivers on long-term financing of \$2.4 billion asset transaction

• Sale of non-eco vessels and refinancing at competitive terms covering the 24 VLCC acquisition
• All vessels delivered, doubling our VLCC footprint, increasing earnings days by more than 30%
• Security situation in Red Sea / Gulf of Aden add to ton-miles benefitting the larger carriers
• Increased activity in contracting for Suezmax and VLCC as fleet age composition demands it !
• Short- and medium-term Oil demand remains firm, non-OPEC supply grows
• Frontlines scalable operational platform has digested our fleet expansion as the markets positive grind continues

Average Weighted Earnings All Tankers

Questions & Answers

www.frontlineplc.cy

Appendix 1 Non-GAAP measures reconciliation

(in thousands of \$ except per share)	FY 2023	Q4 2023	Q3 2023	Q2 2023	Q1 2023	FY 2022
Total operating revenues net of voyage expenses and commission
Total operating revenues	1,802,184	415,004	377,085	512,763	497,332	1,430,208
Voyage expenses and commission	(618,595)	(158,107)	(145,051)	(156,610)	(158,827)	(605,544)
Total operating revenues net of voyage expenses and commission	1,183,589	256,897	232,034	356,153	338,505	824,664
Adjusted profit
Profit	656,414	118,371	107,743	230,674	199,626	475,537
Add back:
Loss on marketable securities	23,968	—	—	20,795	3,173	12,005
Share of losses of associated company	1,690	—	1,690	—	—	92
Unrealized loss on derivatives (1)	20,950	13,211	375	—	7,364	1,116
Loss on termination of leases	—	—	—	—	—	431
Less:
Unrealized gain on derivatives (1)	(6,075)	—	—	(6,075)	—	(51,108)
Gain on marketable securities	(46,957)	(29,074)	(17,883)	—	—	(70,364)
Share of results of associated company	(5,073)	(118)	—	(1,217)	(3,738)	(14,335)
Amortization of acquired time charters	—	—	—	—	—	(2,806)
Gain on sale of vessels	(21,960)	—	—	(9,251)	(12,709)	(4,618)
Gain on settlement of insurance and other claims	(397)	—	—	—	(397)	(3,998)
Dividends received	(36,852)	(240)	(11,112)	(24,973)	(527)	(1,579)
Adjusted profit	585,708	102,150	80,813	209,953	192,792	340,373
Weighted average number of ordinary shares (basic and diluted)	222,623	222,623	222,623	222,623	222,623	214,011
Adjusted basic and diluted earnings per share	\$ 2.63	\$ 0.46	\$ 0.36	\$ 0.94 \$	0.87	\$ 1.59
EBITDA
Profit	656,414	118,371	107,743	230,674	199,626	475,537
Add back:
Finance expense	171,336	55,419	38,110	32,390	45,417	45,330
Income tax expense	391	226	4	161	—	425
Depreciation	230,942	60,018	58,282	57,096	55,546	165,170
Less:
Finance income	(18,065)	(6,537)	(3,800)	(4,855)	(2,873)	(1,479)
Income tax benefit	(186)	—	—	—	(186)	(13)
Amortization of acquired time charters	—	—	—	—	—	(2,806)
EBITDA	1,040,832	227,497	200,339	315,466	297,530	682,164
Adjusted EBITDA
EBITDA	1,040,832	227,497	200,339	315,466	297,530	682,164
Add back:
Loss on marketable securities	23,968	—	—	20,795	3,173	12,005
Share of losses of associated company	1,690	—	1,690	—	—	92
Loss on termination of leases	—	—	—	—	—	431
Less:
Gain on marketable securities	(46,957)	(29,074)	(17,883)	—	—	(70,364)
Share of results of associated company	(5,073)	(118)	—	(1,217)	(3,738)	(14,335)
Gain on sale of vessels	(21,960)	—	—	(9,251)	(12,709)	(4,618)
Gain on settlement of insurance and other claims	(397)	—	—	—	(397)	(3,998)
Dividend received
	(36,852)	(240)	(11,112)	(24,973)	(527)	(1,579)

This presentation describes: Total operating revenues net of voyage expenses and commission ("Total operating revenues (net of voyage expenses)", Adjusted profit (loss) ("Profit (loss) adj") and related per share amounts, Adjusted Earnings Before Interest, Tax, Depreciation & Amortisation ("Adjusted EBITDA" or "EBITDA adj") and Adjusted Interest Expense ("Interest expense adj"), which are not measures prepared in accordance with IFRS ("non-GAAP").

We believe the non-GAAP financial measures provide investors with a means of analyzing and understanding the Company's ongoing operating performance.

The non-GAAP financial measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided.

(1) Adjusted profit has been revised to only exclude the unrealized gain (loss) on derivatives to give effect to the economic benefit/cost provided by our interest rate swap agreements. A reconciliation of the gain (loss) on derivatives and adjusted interest expense is as follows:

(in thousands \$)	FY 2023	Q4 2023	Q3 2023	Q2 2023	Q1 2023	FY 2022
Unrealized gain (loss) on derivatives	(14,875)	(13,211)	(375)	6,075	(7,364)	49,992
Interest income on derivatives	22,914	6,283	6,116	5,551	4,964	3,631
Gain (loss) on derivatives	8,039	(6,928)	5,741	11,626	(2,400)	53,623
Adjusted interest expense
Finance expense Unrealized gain (loss) on derivatives	171,336 (14,875)	55,419 (13,211)	38,110 (375)	32,390 6,075	45,417 (7,364)	45,330 49,992
Other financial expenses	(876)	(433)	(11)	(363)	(69)	(241)
Adjusted interest expense	155,585	41,775	37,724	38,102	37,984	95,081