ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 1
ANNUAL REPORT 2021
Zadar, April 2022
Annual financial report of TNG is also available in
iXBRL format
ESMA (European Securities and Markets Authority)
has adopted a new single form of electronic reporting
to improve the reporting system according to
the established International Financial Reporting
Standards (IFRS) by adopting the ESEF regulation
(European Single Electronic Format).
Tankerska Next Generation d.d. has recognized and
seized the opportunity to adapt to the new regula-
tions even before its entry into force, therefore you
can find our annual financial statements (statement
of financial position, statement of comprehensive
income, statement of changes in equity and statement
of cash flows) for 2020 and 2021 in iXBRL format.
2 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Contents
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 3
ANNUAL COMPANY STATUS REPORT FOR YEAR 2021 3
About us 5
Comments from the CEO 6
Market environment 10
Results for the year 2021 16
Fleet operating data 22
Key events in the year 2021 24
Outlook 25
Risk management 26
Related parties 28
Application of the Code of corporate governance 30
Corporate management 32
Non-financial report (ESG) 34
(Addendum 1)
THE SUPERVISORY BOARD REPORT ON THE
EXECUTED SUPERVISION OF TNG’S OPERATIONS IN 2021
(Addendum 2)
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DEC 2021
TOGETHER WITH THE INDEPENDENT AUDITOR’S REPORT
Responsibility for the financial statements
Independent Auditor’s Report
Income statement and statement of other comprehensive income
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes to the financial statements
Financial statements approval
(Addendum 3)
Additional information
(Addendum 4)
DECISION ON DETERMINING ANNUAL FINANCIAL STATEMENTS
(Addendum 5)
DECISION ON THE PROPOSAL TO RECONCILE THE OF LOSS FOR THE YEAR 2021
-
Total number of vessels: 6
ECO design MR Product tankers: 4
ICE class MR Product tankers: 2
TNG’s MR average age –
owned vessels 7,7 years
MT Vukovar, built: 2015
Shipyard: Hyundai Mipo,
S. Korea
ECO design MR product tanker
Length/width: 183/32 m
Cargo capacity: 49,990 dwt
MT Zoilo, built: 2015
Shipyard: Hyundai Mipo,
S. Korea
ECO design MR product tanker
Length/width: 183/32 m
Cargo capacity: 49,990 dwt
MT Dalmacija, built: 2015
Shipyard: SPP Shipyard,
S. Korea
ECO design MR product tanker
Length/width: 183/32 m
Cargo capacity: 49,990 dwt
MT Pag, built: 2015
Shipyard: SPP Shipyard,
S. Korea
ECO design MR product tanker
Length/width: 183/32 m
Cargo capacity: 49,990 dwt
MT Velebit, built: 2011
Shipyard:
3. maj, Croatia
ICE class MR product tanker
Length/width: 195/32 m
Cargo capacity: 52,554 dwt
MT Vinjerac, built: 2011
Shipyard:
3. maj, Croatia
ICE class MR product tanker
Length/width: 195/32 m
Cargo capacity: 51,935 dwt
4 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Tankerska Next Generation
-
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 5
Tankerska Next Generation (“TNG” or “Company”)
is a shipping company focused exclusively on the
MR product tanker segment. The initiator of its
incorporation was Tankerska Plovidba, an estab-
lished Croatian shipping company with a tradition
and experience of many years standing in shipping,
which is providing technical, crew and commercial
management to TNG.
The main markets in which the Company operates is
the international maritime transport of oil products
and edible oil, and therefore provides transport
services to large energy companies, large oil retailers
and large manufacturers of oil and oil products and
various other entities that depend on sea transport.
TNG was incorporated in August 2014, followed
by Tankerska Plovidba contributing its two existing
conventional MR product tankers, cash and one fully
funded eco-design newbuild with expected delivery
in Q4 2015 – m/t Dalmacija. In February 2015 other
investors had the opportunity to partake in the IPO
of TNG. Through IPO, TNG gained strong partners
in institutional and private investors as HRK 208
million (USD 31 million) was raised in the process.
The funds raised through the IPO, together with
bank debt, were utilized to acquire two newbuilding
contracts for MR vessels. First of two – m/t Vukovar
was delivered in April, and the second – m/t Zoilo
in July 2015, both vessels are fully operational from
the day of delivery.
Capital raising continued in Q2 2015 when the manage-
ment saw a good opportunity for the acquisition of
another newbuilding vessel; the major shareholders
contributed another HRK 104 million (USD 16 million)
in June 2015. TNG has utilized raised funds in July
and acquired the contract for a newbuilding vessel
– m/t Pag which was delivered in December 2015,
days after delivery of m/t Dalmacija.
TNG conducts it business operations in a manner
that is believed will enhance its ability to follow its
strategy and maximize value to its shareholders. TNG
aims to timely acquire its vessels, which ensures
efficient use of the capital and minimizes the leverage.
Goal of the fleet management strategy is to increase
cash flow and profitability through outsourcing most
of the management functions to a fleet manager
which will improve the measurability and cost
competitiveness of business because it will allow
TNG to keep its flexible and simple organizational
structure without realizing significant additional
overheads. This will enable the efficient manage-
ment of assets and liabilities of the company and
ensure a stable return to the shareholders.
Key drivers for product tanker companies include
among other global economic recovery and the shift
in refining capacities from West to East. Namely, the
current global trend is dislocating refineries, mainly
from Europe and Australia to the Middle East and
Asia, increasing routes the product tankers must
take in order to connect supply and demand.
The Company’s strategy is to be a reliable, efficient,
and responsible provider of seaborne refined petro-
leum product transportation services and to manage
and expand the Group in a manner that is believed
will enable the Company to increase its distributable
cash flow, enhance its ability to pay dividends and
maximize value to its shareholders. The Company
intends to realize these objectives by pursuing the
following:
Focus on the development of the fleet, and the
acquisition and management of vessels in the product
tanker segment, focusing on product tankers of
medium capacity, which are the main labor force in
the petroleum derivatives market. MR tankers are
flexible because they are small enough that they
can access a wide range of ports, and because of
this flexibility and the possibility of handling the
most common quantities of cargo, are popular with
charterers.
Maintain superior customer service by maintaining
high standards of reliability, safety, environmental
protection, and quality.
Timely procure modern used and/or re-sale tankers
and/or reasonably arrange the newbuildings and
timely sell vessels in line with market conditions.
Increase cash flow and profitability by outsourcing
most of the management functions to a fleet manager.
Management believes that the agreement with an
external management will improve the measurability
and cost competitiveness of business because it will
allow the TNG to expand its fleet without realizing
significant additional overheads.
Maintain a strong balance sheet through moderate
debt in a way to tray to finance future purchases of
with approximately 35-45% of equity capital. This
would facilitate the possibility of using a substan-
tial part of the cash flow to pay dividends, but also
improve conditions in the market as banks, shipyards
and outsourcers prefer better capitalized Contracting
Parties.
About uss
6 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Comments from the CEO
The crude and product tanker markets do not
necessarily always overlap when it comes to their
performance but this time around they have both
been depressed over more quarterly earnings reports
than anyone in shipping cares to remember.
Contrary to 2020, which offered a remarkably uplifting
freight market in H1 that dramatically declined
in H2, last year witnessed crude oil and product
seaborne freight markets desperately looking for a
lifeline during the entire 12 months. The somewhat
moderate ascend in the spot markets seen in Q4
2021 was often commented as a desperately
needed light at the end of the tunnel; which never
fully materialised. In fact it was very short-lived, and
not driven by a structural increase in demand for oil,
moreover it was geographically unevenly spread.
The period from the first half of 2020, which was
characterized by large stockpiling on land as well
as at sea, turning tankers into temporary storage
units, and therefore limiting the available capacity
of tankers, which created greater uplifting pressure
on freight rates, has become a thing of the past.
This time the bright lights were out quicker than
envisioned; dampened by rising crude oil prices which
in turn boosted bunker prices making chartering
deals at “last done” levels less and less attractive
for shipowners eagerly trying to keep head above
water in the spot markets.
As a result, the intensified cash burnout created
additional tensions among tanker owners. This
was bridged by liquidity lifelines in the hope for a
steady stream of older tonnage being discarded in
the foreseeable future giving a boost to the market
recovery. Meanwhile, bracing ourselves for limited
activity in terms of new newbuilding orders being
placed throughout the period became a normality.
A glance at the Baltic Exchange Clean Tanker Index
with an average index of 530 captures the bleak
picture of 2021 and offers little or no grounds to
dispute any of the above within the product tanker
space.
With these concerns in mind the company, as a group
has, more than ever, been exceptionally focused on
vessel operations targeting spot voyages with shorter
ballasts and reducing charter party speeds when
and where obtainable. Patiently planning optimum
ship routing with the assistance of modern forecast
advisories thus avoiding adverse weather wherever
possible have returned positive results which are
encouraging on the environmental GHG emission
level but with inconsequential hope in overturning
an imbalanced freight market.
Looking back, 2020 and 2021 were indeed challenging
for Tankerska Next Generation. The entire fleet had
their regular five-year periodical drydocks in Chinese
yards bringing all of our tankers in compliance with
the International Convention for the Control and
Management of Ships’ Ballast Water. M/t Velebit
concluded its regular five year drydock during May
2021 which included the installation of the ballast
water treatment system, while the drydock and
the installation of the system for m/t Vinjerac was
completed during the first part of Q4 2021.
All the drydockings were concluded within budget.
More specifically, the average cost of delivery
and installation of BWTS and the cost of docking
amounted about to USD 1.65 million per vessel.
Overall, this also meant the vessels were not in
service for a total of (just over) 200 days while out
of about 50% occurred in 2021.
Despite difficult times, Tankerska Next Generation
managed to secure and execute two long-term loan
agreements in the amount of USD 44 million and
USD 35.3 million.
The first loan agreement was concluded jointly with
Credit Agricole Corporate and Investment bank and
Hamburg Commercial bank AG. The Company utilized
the funds for the early repayment of existing loan
facilities maturing in 2021, which partly financed
the purchase of newbuildings M/T Vukovar, M/T
Zoilo and M/T Dalmacija during 2015.
The second loan agreement was sealed with our
current creditor ABN AMRO Bank N.V. The Company
utilized the majority of funds for the early repay-
ment of the existing loan facility of the same creditor
maturing in January 2022, which partly financed
M/T Velebit, M/T Vinjerac and M/T Pag during
2015. The remaining funds will be invested in these
three vessels, in order to maintain their high level
of competitiveness.
By concluding this financial arrangement, the Company
reaffirmed its recognized position in the international
banking market and expanded cooperation with new
international creditors who have placed their trust
with the Company and identified us as a reliable,
long-term partner.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 7
Tanker market conditions remained poor over 2021
further deflating the company’s healthy financial
results accumulated in Q1 and Q2 of 2020. The fleet’s
ECO vessels carrying amounts were reduced by about
5.5% of the estimated market value since the book
value by the Management’s estimates exceeded the
corresponding estimated market value. Therefore,
the Company recorded other revenue based on the
elimination of part of the loss from the impairment
of vessels in the amount of 1.0 million USD (HRK
6.3 million) while the adjustment of the value of
vessels resulted in impairment loss in the amount
of USD 9.9 million (HRK 65.5 million) presented as
an expense in the income statement.
A heated debating topic in 2021 was United Nations
Climate Change Conference (more commonly
referred to as COP26) was where world leaders
were expected to make enhanced commitments
towards mitigating climate change. Progress was
made in terms of government pledges and targets
however, owing to late interventions from India and
China, which weakened a move to end coal power
and fossil fuel subsidies, the conference ended with
the adoption of a less stringent resolution than
some anticipated. Nevertheless, the pact was the
first climate deal to explicitly commit to reducing the
use of coal which in turn could become a potential
mid-term driver for the tanker industry if coal was
to be substituted by oil.
Persistent underinvestment in upstream facilities
and western refineries for more than several years
and the pressure on oil majors and gas companies
to curb emissions will likely lead to peak global
oil production earlier than previously expected,
analysts say.
This would be a perfect scenario for green energy
advocates, net-zero agendas, and the planet if it
weren’t for one simple fact on the opposite end of
the equation: oil demand is rebounding from the
pandemic-driven slump and we might set a new
annual oil demand record as early as the end of
the year.
The energy transition and the various government
plans for net-zero emissions have prompted analysts
to forecast that peak oil demand would occur earlier
than expected just a few years ago. However, as
current investment trends in oil and gas stand,
global oil supply could peak sooner than global oil
demand, opening a supply gap that would lead to
increased instability in the oil market, with spikes in
prices, and, potentially, structurally higher oil prices
by the middle of this decade.
Beyond doubt, geopolitical tensions on top of a
growing disparity between supply and demand will
drive up prices.
We need to find a sustainable balance that looks
a little brighter, where the recent jump in crude
oil prices could be amortized by easing tensions
between Russia and Ukraine and the reviving of
Iran’s nuclear deal, which could potentially support
the recovery of subdued tanker markets.
With the peak of the pandemic now looking to be slow
in retreat across most of the globe and the concerns
and threats of COVID-19 becoming manageable
to a more significant degree, the expectations are
running high for the summer period in the northern
hemisphere, bringing us a chance to see the summer
solstice once again.
The net loss of Tankerska Next Generation in
2021 was HRK 87.0 million (USD 13.2m) as a
result of:
•
The fact global economies were still
struggling to emerge from lockdown
•
Miserable tanker freight markets
•
A USD 9 million impairment due to
strong market depreciation of vessel’s
values
•
A total of almost 100 days spent in
drydock
•
Low time charter coverage
•
Self-financing of ballast water manage-
ment systems
•
Soaring costs of repatriation
Comments from the CEO (continued)
Vessel revenues EBITDA EBIT Net Profit
-$20
-$10
$0
$10
$20
$30
$40
$50
FY 2019 FY 2020 FY 2021
Company Results
8 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Summary of financial results for the past 3 years (u mil. USD)
Summary of commercial results for the past 3 years (in 000 USD)
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021
TNG TCE Net (USD/day) OPEX (USD/day) Clarksons 1-year TC Net - MR tanker owner expectation
0
500
1.000
1.500
2.000
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021
-USD 10,000
USD 0,000
USD 10,000
USD 20,000
USD 30,000
USD 40,000
USD 50,000
USD 60,000
USD 70,000
USD 80,000
USD 90,000
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
MR Pacific basket (TC11 TCE, TC12 TCE) MR Atlantic basket (TC2_37 TCE, TC14 TCE)
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 9
Commercial environment
MR Pacific vs. MR Atlantic basket (USD) - Baltic exchange (Apr ‘22)
Baltic Clean Tanker Index (index points) - Baltic exchange (Apr ‘22)
Contrary to 2020, which offered a remarkably uplifting freight market in H1 that dramatically
declined in H2, last year witnessed crude oil and product seaborne freight markets
desperately looking for a lifeline during the entire 12 months.
10 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Market environment
2021 was loaded, in fact overloaded with global
events. Most of them were overshadowed by
COVID-19 and the race for its antidote. This time
last year the jury was out on whether the durability
of the vaccine-induced immune response and
whether vaccination prevents transmission of the
virus. This would of course prove to be a vital factor
in determining how quick the world would be able
to return to pre 2019 normality.
- The universal topics for the global economy in
2021, with corresponding consequences on the
shipping sectors, which will clearly continue to be
in the focus through 2022;
- COVID-19; which will continue to be a headwind
but has gradually been built in the economies as a
manageable impediment. This is providing we do
not identify new potent mutated infectious variants.
- Supply chain bottlenecks; which drive inflation
should eventually subside.
- Interest / FED rates; also interrelated with infla-
tion risks, are anticipated to be hiked three times
during the course of 2022.
Geopolitical tensions and a growing disparity between
supply and demand; have driven up prices. It is
undeniable that the China, Russia and the United
States are involved in a new era of great-power
competition on a new level.
Although in January last year the number of confirmed
COVID-19 cases exceeded 100 million worldwide,
experts predicted a tamed pandemic would unleash
a new era of global growth. But 2021 had other
ideas: supply chains became disrupted, inflation
spiked across the world, and gross domestic product
(GDP) growth failed forecasts. Then came Omicron,
the latest COVID-19 variant imposing a new series
of restrictions. In late November the World Health
Organization convened an emergency meeting
in Geneva amid concerns over Omicron, a highly
mutated variant of COVID-19 first identified in
South Africa that, at the time, appeared to be more
infectious than Delta.
In the pandemic turmoil of 2021, food prices have
also reached new highs according to the Food
and Agriculture Organization of the U.N. The FAO
Food Price Index (FFPI). A measure of the monthly
change in international prices of a basket of food
commodities, food prices have skyrocketed globally
because of disruptions in the global supply chain,
adverse weather and rising energy prices. The IMF’s
data shows that average food inflation across the
world reached 6.85 percent on an annualized basis
in December, the highest level since their series
started in 2014.
A former chief economist at the International Monetary
Fund sees the world approaching a global food
crisis, and that slower growth, high unemployment
and stressed budgets from governments that have
spent heavily to combat the pandemic had created
“a perfect storm of adverse circumstances.”
Even before the pandemic, global food prices had
been trending upward as disease wiped out much
of China’s pig herd and the U.S. - China trade war
resulted in Chinese tariffs on American agricultural
goods. During the pandemic i.e. in March 2021, the
Ever Given, one of the largest container ships in the
world, demonstrated how fragile and dependent
the world economy was on shipping when it ran
aground and obstructed the Suez Canal, disrupting
global trade.
Two years later, global demand for food remains
strong, but higher fuel prices and shipping costs,
along with other supply chain bottlenecks like a
shortage of truck drivers and shipping containers,
continue to push up prices, according to an economist
at the International Monetary Fund.
After rebounding to an estimated 5.5 percent in 2021,
global growth is expected to decelerate markedly in
2022—to 4.1 percent, reflecting continued COVID-19
flare-ups, diminished fiscal support, and lingering
supply bottlenecks.
The World Bank, Feb 2022
Wikipedia, Feb 2022
New York Times, Feb 2022
UN, Feb 2022
World MR fleet age profile
31st December 2021
25+ years 20-24 years 15-19 years
10-14 years 5-9 years 0-4 years
0,00%
0,50%
1,00%
1,50%
2,00%
2,50%
Rashodovanje kao udio u ukupnoj floti
(u postocima %)
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 11
World MR fleet
2,662 tankers in service
Total dwt capacity: 117,340,470 dwt
238 tankers over 20 years
8.94% of the fleet
175 tankers on order
6.57% of the fleet
121 planned deliveries in 2021
4.65% of the fleet
The product tanker fleet grew by 1,33% in 2021 which
shows slowing down from 2020 and 2019 growth
which amounted 3,3% and 3,6% respectively, which
presents a potential long-term positive impact on
the product tanker market.
During 2021. a total of 59 MR tankers were sent
to scrap which is more than was scrapped during
the last two years altogether (in 2020 a total of 19
tankers were scrapped, while in 2019 a total of 27
tankers were scrapped).
Up to 31st December 2021, 94 deliveries were
reported. The total orderbook stands at 175 tankers,
out of which 111 tankers are expected to be deliv-
ered in 2022
World MR fleet on 31st Dec 2021
Scrapping as a % of total eet
12 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
80
85
90
95
100
105
2020 2021 2022 2023
monthly history monthly forecast annual average
Global crude oil and liquid fuels consumption
(million barrels per day)
80
85
90
95
100
105
2020 2021 2022 2023
monthly history monthly forecast annual average
Global crude oil and liquid fuels production
(million barrels per day)
MARKET ENVIRONMENT
Top shareholders No.shares %
31 Dec 2021
Tankerska plovidba d.d. 4,454,994 51.01
PBZ Croatia Osiguranje OMF 839,000 9.61
Erste Plavi OMF 808,000 9.25
Raiffeisen OMF 752,036 8.61
Raiffeisen DMF 372,103 4.26
Croatia Osiguranje d.d 261,065 2.99
Treasury shares 28,319 0.32
Others 1,221,410 14.00
Total 8,733,345 100.00
HRK 0
HRK 500
HRK 1.000
HRK 1.500
HRK 2.000
HRK 2.500
HRK 3.000
HRK 0
HRK 10
HRK 20
HRK 30
HRK 40
HRK 50
HRK 60
HRK 70
HRK 80
HRK 90
HRK 100
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Price Turnover in 000
Share TPNG-R-A
Share capital: 436,667,250 kn
Issued shares: 8,733,345
Treasury shares 28,319 (31.12.2021.)
Total turnover in 2021: 25.518 mil. kn
Total volume in 2021.: 599,258 dionica
Total trading days: 230 dana
Highest price in 2021.: 49,80 kn
Lowest price in 2021.: 37,20 kn
Average price in 2021.: 42,30 kn
Market Capitalization on 31st Dec 2021:
369.1 million kn @ 42,40 kn
Share price in HRK and turnover in 000 HRK
during 2021:
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 13
Shareholder structure
31st Decemeber 2021
Tankerska Plovidba d.d.
Pension funds
Other institutional and private investors
14 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
The monthly unemployment rate in the OECD area
fell for the eighth consecutive month to 5.4% in
December 2021, down from 5.5% in November,
bringing it to just 0.1 percentage point above the
pre-pandemic rate recorded in February 2020. The
number of unemployed workers across the OECD
area also continued to fall (by 0.7 million) reaching
36.1 million, still 0.5 million above the pre-pandemic
level. In December (or the latest period available), the
unemployment rate was below the pre-pandemic
level in Australia, Chile, France, Iceland, Italy, Lithu-
ania, Luxembourg, the Netherlands, New Zealand,
Portugal, Spain and Turkey (OECD).
Although output and investment in advanced econo-
mies is projected to return to pre-pandemic trends
by next year, they will remain below in emerging
market and developing economies, due to lower
vaccination rates, tighter fiscal and monetary policies,
and more persistent damage from the pandemic.
US Economy
In 2021 the US was off to a cracking start, to put
it mildly. On January 6th supporters of outgoing
President Donald Trump attacked the United States
Capitol, disrupting certification of the 2020 presi-
dential election, and forcing Congress to evacuate.
U.S. crude inventories have shed some 80 million
barrels since the start of 2021 and about 22 million
barrels since the start of 2020. Global crude stock
-
piles are also low.
U.S. consumer prices soared last year by the most in
nearly four decades, draining the purchasing power
of American families and setting the stage for the
Federal Reserve to begin hiking interest rates as
soon as March.
The consumer price index climbed 7% in 2021, the
largest 12-month gain since June 1982, according
to Labor Department data.
The impact of food price inflation has been less
severe in the United States, where food accounts
for less than one-seventh of household spending
on average, and inflation has become broad-based,
spilling into energy, used cars, services and rents
as price increases reach a 40-year high.
Yet American food prices have still risen sharply,
putting a burden on the poorest households who
spend more of their overall budget on food.
China
China’s economy is projected to slow in 2022. After
a strong rebound in the first half of 2021, economic
activity in China cooled rapidly in the second half of
last year. Real GDP growth is projected to reach 8.0
percent this year, before moderating to 5.1 percent
in 2022.
Downside risks to China’s economic outlook have
increased. A severe and prolonged downturn in the
highly leveraged property sector poses another
downside risk which could have significant economy-
wide impacts. Financial contagion is roaring back in
China’s property sector, putting renewed pressure
on Xi Jinping’s government.
Three particular challenges stand out: first, rebalancing
from external to domestic demand and from invest-
ment and industry-led growth to greater reliance
on consumption and services, second shifting from
the significant weight placed on state leadership
and regulation to a greater role for markets and the
private sector, and third transitioning from a high
to a low-carbon economy.
EIA (US Energy Information Administration), Feb 2021.
BIMCO, OPEC, Feb 2021
S&P Global Platts, Jan 2021
Market environment (continued)
$-
$20
$40
$60
$80
$100
$120
$140
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Price of Brent crude oil (USD/barrel)
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 15
Oil prices are at their highest level since 2014
Western oil companies, partly under pressure from
investors and environmental activists, are drilling
fewer wells than they did before the pandemic to
restrain the increase in supply. Industry executives
say they are trying not to make the same mistake
they made in the past when they pumped too much
oil when prices were high, leading to a collapse
in prices. Elsewhere, in countries like Ecuador,
Kazakhstan and Libya, natural disasters and political
turbulence have curbed output in recent months.
On the demand side, much of the world is learning
to cope with the pandemic and people are eager to
shop and travel. Wary of coming in contact with an
infectious virus, many are choosing to drive rather
than taking public transportation. But the most
immediate and critical factor is geopolitical.
In April last year, Russia warned NATO against
sending any troops to aid Ukraine, amid reports of
a large Russian military build-up on its borders. A
potential Russian invasion of Ukraine still has “the
oil market on edge”. “In a tight market, any significant
disruptions could send prices well above $100 per
barrel. On the supply side it is worth noting Russia
produces 10 million barrels of oil a day, or roughly
one of every 10 barrels used around the world on
any given day.
What would it take for oil prices to fall?
Oil prices go up and down in cycles, and there are
several reasons prices could fall in the next few
months. The pandemic is far from over, and China
has shut down several cities to stop the spread of the
virus, slowing its economy and demand for energy.
Russia and the West could reach an agreement that
prevents a Ukraine invasion.
And the United States and its allies could restore
a 2015 nuclear agreement with Iran that former
President Donald J. Trump abandoned. Such a deal
would allow Iran to sell oil much more easily than
now. Analysts think the country could export a million
or more barrels daily if the nuclear deal is revived.
Ultimately, high prices could depress demand for oil
enough that prices begin to come down.
EIA (US Energy Information Administration), Feb 2021
BIMCO, Feb 2021
Market environment (continued)
16 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
In 2021, vessel`s revenues reached HRK 253.9 million (USD 39.8m), which represents an increase from
the level achieved in 2020 when the vessel revenues amounted to HRK 237.0m (USD 35.4m).
Commissions and voyage associated costs amounted to HRK 97.4m (USD 15.2m) in 2021, while in 2020
they added up to HRK 38.1m (USD 5.8m) which was significantly lower. This ascend in expenses can be
attributed to higher exposure to the spot market during 2021 compared to the year before when most
of the vessels were employed on time charter.
Higher exposure to spot market results in achieving a nominally higher revenue, but at the same time has
increased voyage-related costs due to the fact that the ship owner covers the voyage related expenses
like bunkers, port expenses, agency fees etc. while operating on spot market.
Operating expenditures of the fleet in 2021 amounted to HRK 95.9m (USD 15.1m), while general and
administrative expenses were recorded at HRK 6.2m (USD 1.0m), both of these categories of expenses
were held at the similar level as in the same period of 2020.
Profit before interest, taxes, depreciation and amortization (EBITDA) in 2021 amounts to HRK 59.2m
(USD 9.3m), while in 2020 it amounted to HRK 97.3m (USD 14.3m).
Depreciation costs in 2021 amounts to HRK 52.8m (USD 8.3m). All the vessels in operation are depreciated
over an estimated useful life span of 25 years on a linear basis to their residual value, which represents
their scrap value on the international market.
An annual impairment test was performed on 31 December 2021 and it has been determined that the
carrying amount of three vessels exceeds the recoverable amount of the asset. The impairment loss was
determined using the discounted cash flow method of “VesselsValue Ltd.”, London, and a decision was
made to adjust the value of assets in the total amount of HRK 65.5 milion (USD 9.9m)
Simultaneously, the Company recorded other revenue based on the revocation of part of the loss from
the impairment of two vessels in the amount of 6.3 mil. HRK (USD 1.0 m).
During 2021 the Company recorded a net loss which amounted to HRK 86.9m (USD 13.2m). The average
daily TCE of the fleet during 2021 was recorded at USD 11,763.
Results for the year 2021
Selected financials 2021
(‘000 USD)
2021
(‘000 HRK)
2020
(‘000 USD)
2020
(‘000 HRK)
Vessel revenues 39,775 253,870 35,445 236,956
EBITDA 9,254 59,173 14,259 97,165
EBIT (8,880) (59,064) (2,839) (11,317)
Net profit (13,208) (86,989) (5,907) (31,683)
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 17
Financial position 31.12.2021
(‘000 USD)
31.12.2021
(‘000 HRK)
31.12.2020
(‘000 USD)
31.12.2020
(‘000 HRK)
Bank debt
80,737 536,385 76,792 471,431
Cash and cash equivalents
8,334 55,905 5,669 34,804
Net debt
72,393 480,952 71,123 436,627
Capital and reserves
82,530 548,289 94,233 578,496
Gearing ratio
Net debt/(capital and reserves + Net debt)
47% 47% 43% 43%
Tankerska Next Generation concluded 2021 with the gearing ratio of 47%. The gearing ratio is in line with
the Company’s business strategy. In accordance with the repayment plans, we expect that the level of
indebtedness will continuously decrease in the future with regular loan repayments.
During the first quarter of 2021, a long-term loan agreement was signed in the total amount of USD 35.3
million. The loan was concluded with the current creditor ABN AMRO Bank N.V. for a period of 5 years,
and was used for early repayment of the existing loan maturing in January 2022, which partly financed
m/t Velebit, m/t Vinjerac, and the acquisition of newbuilding m/t Pag in 2015.
Following its strategy of maintaining financial stability and liquidity, by concluding this financial arrange-
ment, and in addition to the one previously finalized in Q4/2020, the Company fully implemented the plan
to refinance its credit liabilities maturing in 2021 and 2022 and has now secured competitive refinancing
for the whole fleet for the upcoming five-year period.
During the fourth quarter, the Company secured an additional revolving loan of a parent company in
the amount of USD 3.0 million for the purpose of financing working capital. At the reporting date, USD
9 million was in use out of the total of USD 9 million of a parent company’s revolving loans received.
Expenses summary
2021
(‘000 USD)
2021
(‘000 HRK)
2020
(‘000 USD)
2020
(‘000 HRK)
Commission and voyage related costs (15,161) (97,443) (5,838) (38,132)
Vessel operating expenses (15,398) (97,761) (15,045) (99,486)
General and administrative (999) (6,352) (946) (6,290)
Total operating expenses
(without amortization)
(31,558) (201,556) (21,829) (143,908)
Results for the year 2021
Audited
2021.
(‘000 USD)
2021.
(‘000 HRK)
2020.
(‘000 USD)
2020.
(‘000 HRK)
Vessel revenues 39,775 253,870 35,445 236,956
Total revenues 40,812 260,729 36,088 241,073
Commission and voyage related costs (15,161) (97,443) (5,838) (38,132)
Vessel operating expenses (15,398) (97,761) (15,045) (99,486)
General and administrative (999) (6,352) (946) (6,290)
Total operating expenses (31,559) (201,556) (21,829) (143,908)
EBITDA (Earnings before interest, taxes,
depreciation, and amortization)
9,254 59,173 14,259 97,165
Depreciation and amortization (8,280) (52,771) (8,029) (52,806)
Impairment (9,854) (65,466) (9,069) (55,676)
EBIT (Earnings before interest and taxes) (8,880) (59,064) (2,839) (11,317)
Financial gains 970 6,389 37 307
Financial expenses (5,298) (34,314) (3,105) (20,673)
NET iNCOME (13,208) (86,989) (5,907) (31,683)
Net foreign exchange gains (losses) 1,515 56,845 189 (54,474)
Other comprehensive income (11,693) (30,144) (5,718) (86,157)
Weighted average number of shares
outstanding basic & diluted (thou,) 8,720,145 8,720,145 8,720,145 8,720,145
Net income (loss) per share, basic & diluted (1.51) (9.98) (0.68) (3.63)
Results for the year 2021
18 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Income statement and statement of other comprehensive
income for period from Dec 31st 2020 to Dec 31st 2021
Audited
31.12.2021.
(‘000 USD)
31.12.2021.
(‘000 HRK)
31.12.2020.
(‘000 USD)
31.12.2020.
(‘000 HRK)
NON-CURRENT ASSETS 150,845 1,002,146 163,290 1,002,441
Vessels and equipment 150,845 1,002,146 163,290 1,002,441
Financial assets - - - -
CURRENT ASSETS 18,872 125,380 13,340 81,896
Inventory 2,108 14,004 1,469 9,023
Accounts receivable 7,662 50,905 5,572 34,204
Prepaid expenses and accrued income 758 5,038 630 3,865
Cash and cash equivalents 8,344 55,433 5,669 34,804
TOTAL ASSETS 169,717 1,127,526 176,630 1,084,337
Shareholders’ equity and reserves 82,530 548,289 94,233 578,496
Share capital 68,988 436,667 68,988 436,667
Share premium 10,179 68,426 10,179 68,426
Reserves 9,252 60,118 9,252 60,118
Exchange differences (2,419) 13,365 (3,934) (43,480)
Retained earnings 9,738 56,702 15,655 88,448
NON-CURRENT LIABILITIES 70,699 469,695 64,473 395,803
Interest bearing loans and liabilities 70,699 469,695 64,473 395,803
CURRENT LIABILITIES 16,488 109,542 17,924 110,038
Interest bearing loans and liabilities 10,038 66,690 12,319 75,628
Accounts payable 4,815 31,987 3,780 23,205
Accrued expenses and deferred income 1,635 10,865 1,825 11,205
TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY
169,717 1,127,526 176,630 1,084,337
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 19
Balance sheet at the date of December 31st 2021
Audited
2021
(‘000 USD)
2021
(‘000 HRK)
2020
(‘000 USD)
2020
(‘000 HRK)
Profit before tax (13,208) (86,989) (5,907) (31,683)
Depreciation and amortization 8,280 52,771 8,029 52,806
Impairment 9,854 65,466 9,069 55,676
Reverse impairment (955) (6,342) - -
Changes in working capital (203) (1,452) (3,177) (24,055)
Cash flow from operating activities 3,767 23,454 8,015 52,744
Cash inflows from investing activities - - - -
Cash outflows from investing activities (5,026) (33,669) (5,092) (33,115)
Cash flow from investing activities (5,026) (31,669) (5,092) (33,115)
Cash flow from financing activities 87,392 551,573 2,000 12,319
Cash outflows from financing activities (83,446) (526,486) (9,382) (62,608)
Cash flow from financing activities 3,936 25,023 (7,468) (50,870)
Net increase in cash 2,677 16,808 (4,545) (31,241)
Cash and cash equivalents (beginning of period) 5,669 34,804 10,182 67,712
Effects of exchange rate changes on the balance of
cash
(2) 3,821 32 (1,667)
CASH AND CASH EQUIVALENTS (END OF PERIOD) 8,344 55,433 5,669 34,804
Results for the year 2021
20 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Cash flow statement for period
from Dec 31st 2020 to Dec 31st 2021
Statement of changes in equity for period
from Dec 31st 2020 to Dec 31st 2021
Statement of changes in equity
for the year ended 31 Dec 2021
Paid-in
Capital
Retained
Earnings
Account
Foreign
exchange
translation
reserves
Other
reserves
Share
premium
Purchase
of treasury
shares
Total
(‘000 USD) (‘000 USD) (‘000 USD) (‘000 USD) (‘000 USD) (‘000 USD) (‘000 USD)
Balance at 31 December 2020 68,988 9,748 (3,934) 9,481 10,179 (229) 94,233
Profit for the period - (13,208) - - - - (13,208)
Exchange difference on foreign
operations
- - 1,515 - - - 1,515
Total comprehensive income - (13,208) 1,515 - - - (11,693)
Transferred to reserves in yearly schedule - - - - - - -
Purchase of own shares - (10) - 10 - (10) (10)
Declared dividend - - - - - - -
Balance at 31 December 2021 68,988 (3,470) (2,419) 9,491 10,179 (239) 82,530
Statement of changes in equity
for the year ended 31 Dec 2021
Paid-in
Capital
Retained
Earnings
Account
Foreign
exchange
translation
reserves
Other
reserves
Share
premium
Purchase
of treasury
shares
Total
(‘000 HRK) (‘000 HRK) (‘000 HRK) (‘000 HRK) (‘000 HRK) (‘000 HRK) (‘000 HRK)
Balance at 31 December 2020
436,667 56,765 (43,480) 61,696 68,426 (1,578) 578,496
Profit for the period - (86,989) - - - - (86,989)
Exchange difference on foreign
operations
- - (56,854) - - - (56,854)
Total comprehensive income
-- (86,989) (56,845) - - - (30,144)
Transferred to reserves in yearly schedule - - - - - - -
Purchase of own shares - (63) - 63 - (63) (63)
Declared dividend -
-
- - - - -
Balance at 31 December 2021 436,667 (30,287) 13,365 61,759 68,426 (1,641) 548,289
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 21
Fleet operating data
22 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Currently TNG’s fleet consists of six MR tankers
(Velebit, Vinjerac, Vukovar, Zoilo, Dalmacija and
Pag). The Group owns an operating fleet which
consists of two conventional ice class tankers and
four eco-design modern product tankers with a total
capacity of around 300,000 dwt. As of December
31, 2021, the average age of the vessels in TNG’s
fleet was 7.7 years.
Starting from the third quarter of 2020 the tankers
from TNG’s fleet underwent their regular five year
drydocking together with the installation of BWTS
equipment, and to this date the process is concluded
for all the vessels, including MT Vinjerac which
finished its drydock and installation of BWTS equip-
ment during the fourth quarter of 2021.
Dalmacija
After the redelivery from the time charter contract with
Trafigura Maritime Logistics („Trafigura”) in Q3/2020,
a regular five-year drydock was performed for m/t
Dalmacija, after which the vessel was predominately
employed on the spot market.
Vukovar
During July 2020, the tanker performed a regular
five-year drydock, after which it was delivered to
Exxon Mobil („Exxon”) in August 2020 in accordance
with a three-year time charter contract in the amount
of USD 17,050 per day with the option to extend
for another year at USD 18,000 per day.
Pag
During December 2020, the vessel began its regular
five-year drydock. After the completion of drydock
in January 2021, the vessel continued its employ-
ment on the spot market.
Velebit
The regular five-year drydock and BWTS installation
was performed in early Q2/2021, after which the vessel
is employed on a short-term time charter contract
with Trafigura Maritime Logistics („Trafigura”). After
the expiry of the contract, the vessel is employed
on the spot market.
Zoilo
Following the completion of a regular five-year
drydock carried out in Q3/2020 for m/t Zoilo, a time
charter contract was concluded in mid-November
2020 with the Charterer CSSA Chartering Shipping
Services SA („CSSA”) with a maximum duration of up
to 12 months in Charterer’s option with escalating
hire rates. After the expiry of the afore mentioned
contract in mid May 2021, the vessel was transfered
to the spot market.
Vinjerac
At the beginning of May 2020, a two-year time
charter contract was secured for m/t Vinjerac. The
tanker is under contract with the Charterer Clear-
lake Shipping („Clearlake”) at an agreed hire rate
of USD 15,250 per day, with an option to extend
the contract for a third year with a freight rate of
USD 15,750 per day. In late September the tanker
was delivered to its technical manager in order to
perform the drydock, after which it was redelivered
to its Charterer in the beginning of November.
CURRENT CHARTERING STRATEGY
The total number of days of income from Time
charter in 2021 was 908 days, which is 43.4% of
the total revenue days in that year. The number
of revenue days in 2021 was moderated by 97
days without revenue due to the implementation
of mandatory 5-year dry-docking and installation
of ballast water treatment purifiers on three MR
tankers, which affected the reduction of available
revenue days for employment on the spot market
through Voyage charter.
The average TCE net daily rate for 2021 equates to
USD 11,763, while the average daily vessel operating
expenses (OPEX) in the same period amounted
to USD 6,897 per vessel, which is an increase in
comparison to the last years result, primarily due
to higher cost of crew changes in regards to the
difficulties brought in by the pandemic.
The business year 2021 is characterized by a slightly
lower level of employment of the fleet of 95.6%,
which is moderated by the drydocking m/t Pag, m/t
Vinjerac, m/t Velebit; which accounted for 87 out
of the 97 days without revenue recorded in 2021.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 23
Vessel Capacity
(dwt)
Type Built Shipyard Flag Employment
31 Dec 2021
Daily rate (USD)
Velebit 52,554
ICE class
MR
product
2011
Treći Maj
Croatia
Croatian
Voyage
Charter
SPOT
Vinjerac 51,935
ICE class
MR
product
2011
Treći Maj
Croatia
Croatian
Time Charter
Clearlake
15.250
(till Q2 2022.)
Vukovar 49,990
Eco MR
product
2015
Hyundai Mipo
S.Korea
Croatian
Time Charter
Seariver
17.050
(till Q3 2023.)
Zoilo 49,990
Eco MR
product
2015
Hyundai Mipo
S.Korea
Croatian
Voyage
Charter
SPOT
Dalmacija 49,990
Eco MR
product
2015
SPP
Shipbuilding
S.Korea
Croatian
Voyage
Charter
SPOT
Pag 49,990
Eco MR
product
2015
SPP
Shipbuilding
S.Korea
Croatian
Voyage
Charter
SPOT
Fleet operating data 2019 2020 2021
Time Charter Equivalent rates (USD/day) 14,794 14,250 11,763
Revenue days 2,190 2,079 2,093
Daily vessel operating expenses (USD/day) 6,657 6,823 6,897
Fleet utilization (%) 100% 94.7% 95.6%
Share of time charter revenues in total revenues 57.5% 68.8% 34.9%
0
20
40
60
80
Q1 2020 Q2 2020 Q3 2020 Q4 2020
Number of days in time charter in 2021
DALMACIJA PAG VELEBIT VINJERAC VUKOVAR ZOILO
24 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Key events in 2021
Secured long-term loan facility agreement in the amount
of USD 35.3 million (Q1)
Tankerska Next Generation Shipping Joint Stock Company
(hereinafter: the Company) has signed a long-term loan
facility agreement in an aggregate amount of USD 35.3
million. The loan agreement was concluded with the
current creditor ABN AMRO Bank N.V. for a loan tenor
of 5 years.
The Company will utilize the majority of funds for the
early repayment of the existing loan facility of the
same creditor maturing in January 2022, which partly
financed M/T Velebit, M/T Vinjerac and the purchase of
newbuilding M/T Pag during 2015. The remaining funds
will be invested in the above-mentioned vessels in order
to maintain their high level of competitiveness.
The signing of this financial arrangement confirms the
Company’s recognized position in the international
banking market and provides continuous cooperation
with a prominent international creditor who has placed its
trust with the Company and recognized it as a reliable and
long-term partner. Following its strategy of maintaining
financial stability and liquidity, the Company has now fully
implemented the plan to refinance its credit liabilities
maturing in 2021 and 2022.
By concluding this financial arrangement, in addition to
the one previously finalized in late 2020, the Company
has now secured competitive refinancing for the whole
fleet for the upcoming five-year period.
Annual financial report of TNG published in iXBRL format
(Q2)
ESMA (European Securities and Markets Authority) has
adopted a new single form of electronic reporting to
improve the reporting system according to the established
International Financial Reporting Standards (IFRS) by
adopting the ESEF regulation (European Single Electronic
Format).
Tankerska Next Generation d.d. has recognized and
seized the opportunity to adapt to the new regulations
even before its entry into force, therefore you can find
our annual financial statements (statement of financial
position, statement of comprehensive income, statement
of changes in equity and statement of cash flows) for
2020 in iXBRL format.
Annual General Assembly held (Q3)
Annual General Assembly of Tankerska Next Generation
d.d. (“Company”) was held at the Company’s headquarters
in Zadar on July 2nd, 2021, at 11:00 hours. At the annual
General Assembly 5,912,767 votes were present, repre-
senting 67.9236% of the total share capital with voting
power. All the proposed decisions were adopted by the
required majority of votes.
Decisions of the General Assembly:
1. Decision on loss reconciliation for the business year
2020;
2. Decision on Management Board member liability
discharge for the business year 2020;
3. Decision on Supervisory Board members liability
discharge for the business year 2020;
4. Decision on approval of the Report on remuneration
of members of the Company’s Management and Super-
visory Board for the business year 2020;
5. Decision on the appointment of the auditor for the
business year 2021.
Shares of Tankerska Next Generation included in the
composition of CROBEX and CROBEXtr indices (Q3)
In accordance with the article 4 of the Rules of Procedure
of the Indices Committee from 3rd September 2019,
the Index Committee has concluded, at the meeting on
September 8th 2021, a regular revision of the Zagreb
Stock Exchange indices CROBEX, CROBEXtr, CROBEX10,
CROBEX10tr, CROBEXprime, ADRIAprime, CROBEXplus
and sectoral indices.
The revision was carried out based on the trading data from
March 1st, 2021 to August 31st, 2021. and TANKERSKA
NEXT GENERATION d.d. (trading symbol TPNG, ISIN
HRTPNGRA0000) was included in the composition of
CROBEX and CROBEXtr indices.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 25
Tankerska Next Generation is a shipping company focused
exclusively on the MR product tanker segment and owns
and operates six product tankers, the main markets in
which the Company operates is the international maritime
transport of oil products and edible oils.
At the end of 2021 TNG holds two time charter contracts,
which were signed in accordance with usual market
conditions and are based on industry standard terms
for such agreements. The fleet employment strategy
provided a stable level of income over the medium term,
in which two vessels are employed on time charters
longer than one year, while the remaining two vessels
are operating on the spot market.
Placing the vessels on the spot market maximized the
commercial potential of the vessels in the given moment
and it was also beneficial to the operational efficiency
since it enabled optimal geographical positioning of
the vessels before the dryocks, which resulted in lower
expenses of the five year drydocks itself.
The company continues with intent to employ the
majority of its fleet through a medium to long-term
time charter contracts in order to achieve predict-
able business results and cash flows that support risk
mitigation for the shareholders. In terms of duration,
future employment strategies will depend on market
conditions and the management approach to optimum
fleet management strategy.
The Company is subject to numerous laws and regulations
in the form of international conventions and treaties,
national, state and local laws and national, state and
international regulations in force in the jurisdictions in
which the Company’s vessels operate or are enrolled.
The International Maritime Organization’s Ballast Water
Convention stipulates that after September 2017, an
approved ballast water treatment system must be
installed by the time the IOPP (International Oil Pollu-
tion Prevention) certificate needs to be renewed, which
for TNG means that the systems needed to be installed
on vessels during a cycle of five-year regular drydocks
carried out in 2020 and in 2021.
Following the strategy of five-year drydocks, during
2020 and 2021, the BWTS were installed in five out of
six tankers that had their regular five-year drydocks (m/t
Zoilo, m/t Vukovar, m/t Pag, m/t Velebit and m/t Vinjerac
while m/t Dalmacija had the BWTS installed already as
a newbuilding), therefore achieving full compliance of
the fleet with the International Maritime Organization’s
ballast water convention.
Based on the dockings, we can conclude that the actual
costs are in line with the plan. In other words, the average
cost of delivery and installation of BWTS and the cost
of docking amounted about USD 1.9 million per vessel,
keeping in mind that the Eco tanker m/t Dalmacija was
delivered from the shipyard as a newbuilding with an
already implemented ballast water treatment system,
therefore its cost of drydocking amounted to USD 0.77
million.
According to the provisions of MARPOL from 1 January
2020 the Sulphur content in motor fuel is not allowed
to be greater than 0.50%, and emissions into the
environment will not be allowed to be higher than that.
Following its fleet management strategy TNG opted to
replace cheaper high-sulfur fuel with more expensive
low-sulfur fuel, which has so far proved to be a better
option than installing scrubbers that allow ship opera
-
tors to continue using higher-sulfur fuels which would
in turn bring significant capital expenditures.
These changes in the regulatory environment affected the
operations of TNG in the past period, and other effects
on shipping industry such as geopolitics, environmental
regulations and big data technology have played an
immense but yet inferior role in comparison to the need
for appropriately addressing the scale of the current
crewing crisis, the Covid-19 crisis, its recovery and the
aftermath associated with the new normal.
Overall uncertainty remains a compelling theme in the current
maritime transport environment, which primarily refers to the
volatility of freight rates due to Ukrainian crisis but also puts
emphasis on the challenges shipping companies face in order
to secure seafarers’ repatriation and protect their well-being.
On the corporate side, following its strategy of maintaining
financial stability and liquidity, the Company has now
fully implemented the plan to refinance its credit liabili-
ties maturing in 2021 and 2022 thus avoiding possible
tighter financial conditions on the horizon by securing
competitive refinancing for the fleet for the upcoming
five-year period.
In the forthcoming period, the Company aims to ensure
the sustainability of the business and maximize business
efficiency by managing the Company in a way that is
believed to provide consistent and continuous returns
to its shareholders.
Outlook
26 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Risk management
TNG’s risk management policy in connection to managing
its financial assets can be summarized as follows:
Foreign exchange risk
TNG is exposed to the following currency risks: the
transaction risk, which is the risk of a negative impact
of fluctuations in foreign exchange rates against the
Croatian kuna on TNG’s cash flows from commercial
activities; and the balance sheet risk, which is the risk
that the net value of monetary assets on retranslation of
kuna-denominated balances becomes lower as a result
of changes in foreign exchange rates.
TNG operates internationally and is exposed to changes
of US currency as significant amount of receivables and
foreign revenues are stated in this currency. Current TNG
policies do not include active hedging.
Interest rate risk
Interest rate risk is the risk of change in value of financial
instruments due to changes in market interest rates.
The risk of interest rate in cash flow is a risk that the
interest expenditure on financial instruments will be
variable during the period. As TNG has no significant
interest-bearing assets, its operating income and cash
flows from operations are not significantly exposed to
fluctuations in market interest rates. TNG’s interest rate
risk arises from long-term borrowings. TNG is exposed to
interest rate risk on its long-term borrowings that bear
interest at variable rates.
Potential arranging interest rate swaps with the key
lenders provides for easing the risk of volatility in the
variable interest rate, allowing the company, which
operates in terms of pre-fixed income contracted to
manage the profitability of operations fixing one of the
major cost components.
Credit risk
Credit risk is the risk of failure by one party to meet
commitments to the financial instruments, what could
cause the financial loss to the other party. Maximum
exposure to credit risk is expressed in the highest value
of each of the financial asset in statement of financial
position. Basic financial assets of TNG consist of cash
and of account balance with banks, trade receivables
and other receivables, and of investments. Credit risk in
liquid funds is limited as the counterparty is often the
bank that most international agencies assessed with
high credit ratings.
Liquidity risk
The responsibility for managing liquidity risk rests with
the Management Board which sets an appropriate
liquidity risk management framework for the purpose of
managing its short-term, medium-term and long-term
funding and liquidity requirements. Liquidity risk, which is
considered the risk of financing, is the risk of difficulties
which the TNG may encounter in collecting funds to meet
commitments associated with financial instruments. TNG
has significant interest bearing non-current liabilities for
loans with variable interest that expose TNG to the risk
of cash flows. Company manages liquidity risk through
maintaining adequate reserves and loan facilities, in
parallel to continuously comparing planned and relished
cash flow and maturity of receivables and liabilities.
Price risk
TNG’s activities expose it to price risk associated with
changes in the freight rate. The daily freight rate (the spot
rate) measured in USD per day, has historically been very
volatile. The volatility influences day-to-day operations
in the following ways:
• when rates are low TNG sees it as an opportunity to
increase market exposure, and
• when rates are high TNG will seek to hedge short-term
to medium-term exposure by chartering-out vessels or
by actively trading freight-related derivatives.
In addition, TNG trades its spot exposed vessels in
different pools that reduces the sensitivity to freight rate
volatility by economies of scale and optimization of the
fleet’s geographical position.
Operational risk
Due to the risks involved in seaborne transportation of oil
products as well as due to very stringent requirements by
the “oil majors”, safety and environmental compliance are
TNG’s top operational priorities. The Fleet Manager will
operate TNG’s vessels in a way so as to ensure maximum
protection of the safety and health of staff, the general
public and the environment. TNG and the Fleet Manager
actively manage the risks inherent in TNG’s business and
are committed to eliminating incidents that would threaten
safety and the integrity of the vessels. Fleet Manager
uses a risk management program that includes, among
other, computer-aided risk analysis tools, maintenance
and assessment programs, seafarers competence training
program, and seafarers workshops.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 27
Daily rates
Time charter rates are usually fixed during the term of the
charter. Vessels operating on time charters for a certain
period of time provide more predictable cash flows over
that period of time and yield conservative profitability
margins. Prevailing time charter rates fluctuate on a
seasonal and year-to-year basis reflecting changes in
spot charter rates, expectations about future spot charter
rates and other factors. The degree of volatility in time
charter rates is lower for longer-term time charters as
opposed to shorter term time charters.
Employment strategy based on longer than one year
time charter enables the mitigation of this type of risk.
TNG and its fleet manager are comited to
the following standards, strategies and
insurance:
(“ISO”) 9001 for quality assurance,
ISO 14001 for environmental management systems,
ISO 50001 for energy management systems and Occupa-
tional Health and Safety
“OHSAS”18001 Safety Advisory Services
ISM Code - International safety management code
Company strategy
The Company’s strategy is to be a reliable, efficient and
responsible provider of seaborne refined petroleum product
transportation services and to manage and expand the
Group in a manner that is believed will enable the Company
to increase its distributable cash flow, enhance its ability
to pay dividends and maximize value to its shareholders.
Business operations are based on the timely acquisi-
tion of tankers, ensuring efficient use of raised capital
and debt minimization. Basically, fleet management is
directed towards increasing cash flow and profitability
through outsourcing majority of functions and services,
maintaining a flexible and simple organizational structure
unencumbered with additional overheads. This enables
efficient assets and liabilities management and ensures
a stable dividend return to shareholders.
Chartering strategy
Charterer’s financial condition and reliability is an impor-
tant factor in counterparty risk. TNG generally minimizes
such risks by providing services to major energy corpo-
rations, large trading houses (including commodities
traders), major crude and derivatives producers and other
reputable entities with extenuating tradition in seaborne
transportation.
Insurance
The operation of any ocean-going vessel represents a
potential risk of major losses and liabilities, death or
injury of persons, as well as property damage caused by
adverse weather conditions, mechanical failures, human
error, war, terrorism, piracy and other circumstances or
events. The transportation of oil is subject to the risk of
pollution and to business interruptions due to political
unrest, hostilities, labor strikes and boycotts. In addition,
there is always an inherent possibility of marine disaster,
including oil spills and other environmental mishaps, and
the liabilities arising from owning and operating vessels
in international trade.
As an integral part of operating the vessels, TNG maintains
insurance with first class international insurance providers
to protect against the majority of accident-related risks
in connection with the TNG’s marine operations.
The Company believes that the TNG’s current insurance
program, is adequate to protect TNG against the majority
of accident-related risks involved in the conduct of its
business and that an appropriate level of protection and
indemnity against pollution liability and environmental
damage is maintained. TNG’s goal is to maintain an adequate
insurance coverage required by its marine operations and
to actively monitor any new regulations and threats that
may require the TNG to revise its coverage.
Risk management (continued)
28 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
As of 1 January 2015 the Management agreement and
Non-Competition Agreement have commenced.
Management Agreement (Shipman)
Under the careful supervision of the Management Board,
the Group’s operations are managed by Tankerska (Fleet
Manager) and the Group has entered into a long-term
agreement with the Fleet Manager (Management
Agreement). Pursuant to the Management Agreement,
the Fleet Manager shall provide to the Group commer-
cial, crewing, technical, and certain administrative and
corporate services in exchange for management services
fees. The Management Agreement shall continue until
the 31 December 2026. Management Board believes
that the Group will greatly benefit from the relationship
with Tankerska as it is a vastly experienced and highly
reputable tanker operator which can offer premium
services at favorable rates.
In return for providing the services under the Management
Agreement, TNGI pays the Fleet Manager fees comprised
of the following key components:
Commercial management services fee. TNGI pays a fee
to the Fleet Manager for commercial services it provides
to the Group equal to 1.5% of the gross vessel revenues
Bunkering. All bunkering arrangements will be charged
at USD 1.00 per metric ton. Any cost directly or indirectly
incurred in the process of providing the bunkering services
(including but not limited to agency costs, bunker samples
analysis, bunker surveys, etc.) will be off-budget and
charged to TNGI as contingency costs.
Ship management services fee. TNGI pays a fee to the
Fleet Manager for the ship management services. The fee
is related to the annual international publication BDO LLP
(ex. Moore Stephens) available on the website https://
www.opcostonline.com, which with the use of Shipping
Opcost tool provides an average daily expense for each
type of vessel. The fee TNGI pays to the Fleet Manager
is equal to 67% of the management fee published paid
daily or pro-rata on daily basis for the part of a month.
S&P fee. In the event of a definitive agreement for the
direct purchase, acquisition, sale or disposition of any
vessels entered into by or on behalf of the Group or its
affiliates or their owners, the Fleet Manager shall be
entitled to a fee in the amount of 1% of the aggregate
consideration
Non-Competition Agreement
According to the Non-Competition agreement between
TNG Group and Tankerska Group, the parties have agreed
that Tankerska plovidba nor its affiliates (other than the
Company and its affiliates) shall own, lease, commercially
operate or charter any MR product tanker.
The Non-Competition Agreement automatically terminates,
expires and has no further force and effect on the date
that Tankerska and its affiliates no longer retain direct
or indirect ownership of at least an aggregate of 33% of
Company’s shares.
Subsidiary
Jurisdiction of
incorporation
Shareholder
Ownership
interest
Voting power
TNG International Ltd. Marshall islands TNG d.d. 100% 100%
Pag Shipping LLC Marshall islands TNG International Ltd. 100% 100%
Zoilo Shipping LLC Marshall islands TNG International Ltd. 100% 100%
Vukovar Shipping LLC Marshall islands TNG International Ltd. 100% 100%
Fontana Shipping Company Ltd. Liberia TNG International Ltd. 100% 100%
Teuta Shipping Company Ltd. Liberia TNG International Ltd. 100% 100%
Related parties
PUBLIC
INVESTORS
TANKERSKA
PLOVIDBA
51%
Non-Competition
Agreement
100%
49%
TNG International
Marshall Islands
Croatia
100%
Management Agreement
(Shipman)
Fontana
Liberia
Teuta
Liberia
Vukovar
Marshall Islands
Zoilo
Marshall Islands
York IV
Marshall Islands
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 29
Overview of related party transactions
Tankerska Next Generation International, a subsidiary of Tankerska Next Generation
holds bareboat contracts with companies which own a total of 6 product tankers
30 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Pursuant to Article 272p, in conjunction with Article 250a of the Croatian
Companies Act (Official Gazette No. 111/93, 34/99, 121/99, 52/00,
118/03, 107/07, 146/08, 137 / 09, 125/11, 152/11, 111/12, 68/13,
110/15 and 40/19, hereinafter: ZTD) and in accordance with Article 22 of
the Croatian Accounting Act (Official Gazette No. 78/15, 134 / 15, 120/16
and 116/18 hereinafter: ZOR) the Management Board of TANKERSKA
NEXT GENERATION dd, Zadar, Božidara Petranovića 4 (hereinafter: the
Company or TNG), on 28 April 2022, gives the following
Statement on the application of the Code of Corporate Governance
The Company’s shares have been listed on the Official Market of the
Zagreb Stock Exchange since 12 February 2015. From the moment the
shares are listed on the Official Market of the Zagreb Stock Exchange,
the Company applies the Corporate Governance Code, which was jointly
developed by Croatian Financial Services Supervisory Agency (hereinafter:
CFSSA) and the Zagreb Stock Exchange d.d. Zagreb, (hereinafter: ZSE)
adopted by the CFSSA Decision of 26 April 2007, class: 011-02 / 07-04
/ 28, reg. No .: 326-01-07-2 (Official Gazette No. 46/07, hereinafter:
Code), and the integral text of the Code was published on the website
of the Zagreb Stock Exchange. Taking into account the specifics of the
business model TNG Inc. complies with the provisions of the Code as
reported to the public through the annual survey of corporate govern-
ance which is published on the website of the company (www.tng.hr)
and through other regulated channels.
With a goal to reach the high standards of corporate governance the
Company has adopted its own code of corporate governance, and it
has been prepared according to the Code of Zagreb Stock Exchange and
CFSSA. TNG’s code recognizes the accountability of the Supervisory
Board and Management Board and the importance of transparency
to all the Company’s shareholders, including customers, investors and
regulatory authorities.
During 2021, the Company essentially applied the recommendations
set out in the Code, publishing all information the disclosure of which is
provided by positive regulations and the disclosure of which information
is primarily in the interest of the Company’s shareholders. During the
previous year, the Company published all information, the publication
of which is required by positive regulations, through the Zagreb Stock
Exchange website and on its own website, and informing the public about
the availability of information was carried out through Croatian News
Agency’s OTS service. It also submitted these publications to the official
register of prescribed information at CFSSA.
Supervision over the conduct of the Company’s operations is carried out
by the Supervisory Board in accordance with the provisions of the Croatian
Companies Act. The role of the Supervisory Board is also regulated by
the Company’s Articles of Association and the Rules of Procedure of the
Supervisory Board. Members of the Supervisory Board regularly receive
detailed information on the management and work of the Company in
order to be able to effectively fulfill their supervisory role. The report
of the Supervisory Board on the performed supervision of business
operations is part of the Annual Report of the Company submitted to
the General Assembly.
The Supervisory Board established the Audit Committee as a body that
assists the Supervisory Board and the Management Board in the effec-
tive execution of the tasks of corporate governance, financial reporting
and control of the operations of TNG d.d.
The Company applies the rules of Accounting Policy, harmonized with
International Financial Reporting Standards adopted by the European
Union, which regulate the application of procedures and techniques in
disclosing assets, liabilities, principal, income, expenses and financial
results of the Company in the basic financial statements. The audit of
the annual financial statements of the Company is performed by an
independent auditor, appointed by the General Assembly of the Company.
The Company has established and applies rules and procedures for
receiving, recording, approving and circulating financial and other business
documentation, which ensures multiple supervision and transparency in
the recognition of the Company’s income and expenses. The Company
has not yet established a corporate internal audit that would perform the
function of independent audit and control and inform the Management
Board through audit reports in the form of findings and proposals for
improvement. The Management Board personally supervises all processes
of recognizing the Company’s income and expenses and participates in
the preparation of quarterly, semi-annual and annual financial state-
ments of the Company.
The corporate governance structure of the Company is based on a dualistic
system, which consists of the Management Board and the Supervisory
Board and together with the General Assembly they represent the three
basic bodies of the Company.
Exceptions to compliance with the application of the Corporate
Governance Code are the following:
- The supervisory board has not adopted a decision in which it stated
categories of decisions and legal transactions that require prior approval
by the supervisory board and those decisions about which management
board must consult with the supervisory board before making a decision,
since the Company’s Articles of Association stipulate the circumstances
and conditions when the Supervisory Board’s consent is required.
- The fair value of each material transaction does not have to be confirmed
by an independent expert prior to any such transaction.
- The company has not adopted procedures for the approval and disclosure
of transactions between members of the management or supervisory board
and the company (or a person affiliated with any party). Therefore, the
Audit Committee does not evaluate the effectiveness of these procedures.
- The supervisory board has not set as a target percentage of female
members of the supervisory board and the management board, which
must be achieved in the next five years and adopted a plan for the imple-
mentation of this goal. Notwithstanding the absence of such a goal and
plan, if in the future a female candidate who meets the required qualifica-
tions of expertise appears as a potential candidate for the Management
or Supervisory Board, the candidate will not be discriminated against in
any way in relation to other candidates.
- The supervisory board has not developed a supervisory board profile
which specifies the minimum number of members and combination of
skills, knowledge and education, as well as professional and practical
experience required in the Supervisory Board.
- The Chairman or Deputy Chairman of the Supervisory Board is not
independent, as the Company believes that the Supervisory Board should
reflect the interests of the majority shareholders, therefore it does not
consider it appropriate to comply with this provision of the Code.
- The minimum expected time of commitment of each supervisory board
member is not specified on their appointment.
STATEMENT ON APPLICATION OF THE CODE OF CORPORATE
GOVERNANCE
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 31
- The Company has not adopted internal rules of procedure adopted
by the management board. The position of the Company is that there
is no need to adopt the above rules of procedure while the Manage-
ment Board is one member. For the same reason, the Management
Board does not evaluate its own effectiveness and cooperation with
the Supervisory Board
- Internal company documents do not provide that the members of the
management board must obtain the prior consent of the supervisory
board before accepting appointment to the management board or
supervisory board which is not part of the same group.
- Remuneration policy does not provide that a management board
member may not dispose of the shares assigned to it as part of the
remuneration at least two years from the date on which the shares
were assigned to him or her.
- The Company believes that there is no need to adopt a policy that
determines the nature and scope of risks that the Company must and is
willing to take in order to achieve long-term strategic goals, given that
the Articles of Association, employment contracts and internal regula-
tions define the scope and powers of the Company.
- Due to the organizational specifics, the Company does not have an
established system of internal audit, risk management and internal control.
- The Company’s Articles of Association did not provide for the possibility
for shareholders to exercise their voting right electronically without
restrictions
-Questions raised at the general meeting the company are not available
on its website
General Assembly
The General Assembly of the Company is regularly convened and held
in accordance with legal regulations and the Articles of Association.
All shareholders may participate in the work of the General Assembly
in person or through a proxy. The General Assembly may make valid
decisions if it is attended by shareholders or their representatives whose
shares represent at least 50 (fifty) percent of the share capital of the
Company. Decisions are made at the General Assembly by a majority
of the votes cast, unless a law or Articles of Association stipulates that
another decision is required for a particular decision, ie the fulfillment of
additional conditions. The General Assembly is chaired by the President
of the Supervisory Board of the Company, who may authorize another
person by a special power of attorney. The General Assembly has the
authority or makes decisions in accordance with the provisions of the
Companies Act and the Company’s Articles of Association.
Shareholders have the same rights in the Company under equal condi-
tions. Each share entitles to one vote. Ordinary shares give shareholders
the following fundamental rights: the right to participate and the right
to vote at the General Assembly of the Company; the right to dividend
payment; the right to the payment of the remaining liquidation or
bankruptcy estate of the Company; other rights determined by law.
Amendments to the Company’s Articles of Association are adopted in
the manner determined by the Croatian Companies Act (ZTD).
The ownership structure of the Company as at 31 December 2021 can
be found on page 13 of the Annual Report of the Company for 2021
Management Board
Management Board on 31 December 2021 consists of the sole member,
Mr. John Karavanić, who represents the Company independently and
individually, in accordance with the Company ‘s Articles of Association.
Management Board is appointed and recalled by the Supervisory Board for
a term that lasts up to four years, after which the members of the Board
can be re-appointed. Management board can count up to five members.
The member of the Management Board must meet the conditions
for performing the function of a member of the Management Board
prescribed by the Croatian Companies Act (ZTD), and relevant bylaws
and the Company’s Articles of Association. The member of the Manage-
ment Board must have the professional knowledge, skills and experience
necessary for the independent and autonomous management of the
Company’s business, and in particular for understanding the business and
significant risks of the Company.The suitability of an individual member
of the Management Board for the performance of the respective function
represents the extent to which that person has the characteristics and
meets the prescribed conditions which ensure that he will professionally,
legally, safely and stably perform tasks within his competence.
Supervisory Board
The Supervisory Board of the Company is composed out of five members.
The Supervisory Board can count from three up to nine members, and
each 4 year term of office is decided by the General Assembly of the
Company by a majority of votes. In accordance with the provisions of
the Articles of Association the Supervisory Board gives prior approval
for significant transactions and activities that the Management Board
cannot execute without their consent
The Supervisory Board acts as a collegial body at meetings held at least
once a quarter, at which it discusses and decides on all issues within its
competence prescribed by the Croatian Companies Act (ZTD) and the
Company’s Articles of Association. Decisions of the Supervisory Board
are made by a majority vote of the members present. In 2021, sfive
meetings of the Supervisory Board were held.
The members of the Supervisory Board are noted on the page 33 of
the Annual Report.
Audit Committee
At the 3rd meeting of the Supervisory Board held on January 28, 2016,
the Audit Committee of Tankerska Next Generation d.d. was appointed.
This body was established with the aim of supporting the Management
Board and the Supervisory Board in the effective execution of corporate
governance, financial reporting and control of the Company. In 2021,
the body held four sessions, at which it discussed the financial results
of the Company.
The members of the Supervisory Board are noted on the page 33 of
the Annual Report.
_______________________________________________
In accordance with the provisions of Art. 250a paragraph 4 and Art. 272.p
paragraph I. of ZTD, this Statement is a special section and an integral
part of the Company’s Annual Report for 2021.
STATEMENT ON APPLICATION OF THE CODE OF CORPORATE GOVERNANCE (continued)
32 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
John Karavanić
Chief Executive Officer
Mr. John Karavanić graduated from the Faculty of Economics
in Zagreb in 1992. After graduation, he was employed
with Tankerska plovidba as trainee in the Commercial
Division. From 1993 – 1997 he was a senior officer in
Tanker Division in Tankerska plovidba, and from 1997
-1999 Department Manager in Tanker Department in
the Commercial Division. Between 1999 - 2004 he was a
broker in Alan Shipping (a Tankerska plovidba subsidiary).
He returned to Tankerska plovidba in 2004 to the position
of Chartering Manager and Deputy Commercial Director
within the company. Since 2014 he held a position of
a Project Manager and Deputy Commercial Director in
Tankerska plovidba. Since August 2014 Mr. Karavanić is
the CEO of TNG.
Ivica Pijaca
President of the Supervisory board
Mr.Ivica Pijaca began his professional career in Tankerska
plovidba as a deck cadet from 1992–1993. He graduated
from the Faculty of Maritime Studies in Rijeka in 1998.
The same year he was employed as a 3rd mate in the
Tankerska plovidba fleet. In 1999 he became Assistant
Chartering Manager in Product Tanker Department in
Tankerska plovidba, advancing to the position of Chartering
Manager in Tanker Department in Tankerska plovidba in
2003. Between 2004-2005, Mr Pijaca was a broker in Alan
Shipping (a Tankerska plovidba subsidiary) and a Managing
Director in the same company from 2005-2006. From
2006-2013 Mr Pijaca was Chartering Manager in Tanker
Department in Tankerska plovidba. In 2013 Mr Pijaca
became a Director of Commercial Division, a position he
currently holds in Tankerska plovidba.
Nikola Koščica
Member of the Supervisory board
Mr. Nikola Koščica graduated in Financial Economics at
London Guildhall University in 1996. After the graduation,
he was employed with Dalmatinska banka Inc. between
1997-2001, first as a trainee, later as an analyst in Risk
Management Department of the said bank. Between
2001-2003, he was initially employed as an account
manager and later as head of Corporate Lending Depart-
ment in Zadar Branch of Raiffeisenbank Austria Inc. He
became an employee of Tankerska plovidba in 2004 as a
Risk Manager and since 2013 he holds a position of Director
of Financial Division. Since August 2015, Mr Koščica is
the Management Board member of Tankerska plovidba.
Joško Miliša
Member of the Supervisory board
Mr. Joško Miliša graduated from the Faculty of Electrical
Engineering in Zagreb and in 1992 he started working as
a broker at a brokerage firm Medis, after that he worked
in the consulting companies Consult Invest and ICF as a
consultant on business acquisitions and general consul-
tancy. At Erste Securities Ltd. he occupied the position
of the Head of securities trading and the introduction
of portfolio management. He was appointed in 2000 as
vice-president of the Croatian Privatisation Fund. In early
2002, he co-founded the investment firm ŠTED-CAPITAL
Ltd., which he independently and successfully lead till
mid-2009. Currently he is the CEO of the investment
firm Prosperus Invest Ltd.
Dalibor Fell
Member of the Supervisory board
Mr. Dalibor Fell graduated at the Faculty of Economics and
Business in Zagreb and in 2000 is employed at Raiffeisen-
bank Austria, Treasury and Investment Banking Sector
where, within 8 years,goes from the trainee through
the Director of the Directorate to the Deputy Executive
Director. After that he started his own company and
spent 8 years as a director in a company for business
consulting services. In 2016, he joins Croatia osiguranje
as director of the Investment Division responsible for
managing the assets of the company. During this time,
he served as the chairman of the Supervisory board of
mandatory pension fund management companies owned
by Croatia osiguranje d.d. Currently he is the Chairman of
the Management Board at Quattro logistika d.d
Mario Pavić
Member of the Supervisory board and Audit committee
Mr. Mario Pavić began his professional career in Tankerska
plovidba as cadet between 1993 –1994. He graduated
from the Faculty of Maritime Studies in Split in 1996 with
the degree of nautical engineer. From 1997 to 2002 he
was employed as a deck officer in Tankerska plovidba
fleet. In 2002 he obtained a master degree in Maritime
Engineering Management at the Faculty of Maritime
Studies in Split. Between 2003-2007 he was Tanker
Operations Manager in Tanker Department in Tankerska
plovidba. Between 2007-2012, Mr Pavić was a broker
in Alan Shipping (a Tankerska plovidba subsidiary) and a
Managing Director in the same company from 2012-2013.
Since 2013, Mr Pavić is the Management Board member
of Tankerska plovidba.
Corporate Management
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 33
Ante Gavran
President of the Audit committee
Mr Ante Gavran graduated in 2005 from the Faculty of
Economics and Business in Zagreb, after which in 2009
he finalized the ACCA certification for certified chartered
accountants. He started his professional career in KPMG
Croatia, where he worked in audit as well as financial
advisory. From 2008 – 2013, Mr. Gavran lead risk manage
-
ment and controlling departments in Basler osiguranje
Zagreb, after which he joined Croatia osiguranje i 2014.,
where he managed the finance and accounting depart-
ment of the company.
Genarij Sutlović
Member of the Audit committee
Mr. Genarij Sutlović graduated from the Faculty of
Economics in Rijeka in 1986. After graduation, he was
employed in Tankerska plovidba as an officer from 1987
to 1989. Since 1990, he was employed on the position of
Chief financial accountant from where he was promoted
to Chief Accounting Officer in February 1991. At the
position of Chief Accounting Officer at Tankerska Plovidba
he remained until December 2001 when he moved to
Stambeno Gospodarstvo Tanker, after which he occupied
the position of the Director, while today he remains active
as a counselor. Mr. Sutlović was also a member of the
Audit Committee in Viktor Lenac shipyard in Rijeka.
Supervisory board members as per 31st December 2021:
Mr. Ivica Pijaca, president
Mr. Mario Pavić, deputy president
Mr. Joško Miliša, member
Mr. Dalibor Fell, member
Mr. Nikola Koščica, member
Compensation for the members of supervisory board are
described in the Report on receipts of the Management
Board and the Supervisory Board which is available on
TNG website.
Audit committee as per 31st December 2021:
Mr. Ante Gavran, president
Mr. Mario Pavić, member
Mr. Genarij Sutlović, member
Compensation for the members of Audit committee
amounts to 2,000 kn net per session, members of the
Audit committee who are also members of the Supervisory
board do not receive a compensation.
Attendance of the Supervisory and Audit committee
members during 2021
All sessions of Supervisory board (5 sessions) and Audit
committee (4 sessions) which were held during 2021 were
attended by all members, except at the 37th session of
the Supervisory Board held on 28 Oct 2021 which was
not attended by Mr. Josko Miliša.
Members of the Management and Supervisory board and
Audit committee who own the shares of the company as
per 31st December 2021:
Mr. John Karavanić, CEO,
1,633 company shares,
Mr. Ivica Pijaca, Supervisory board president,
1,840 company shares,
Mr. Nikola Koščica, member of the Supervisory board
1,840 company shares,
Mr. Genarij Sutlović, member of the Audit Committee,
1,001 company shares.
Corporate Management
-
In 2015, United Nations (UN) Member States adopted the 2030 Agenda for Sustainable Development and its
17 Sustainable Development Goals (SDGs). In that same year, at the twenty-first session of the Conference
of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC), Parties to
the UNFCCC adopted the Paris Agreement, addressing the need to fight climate change.
34 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
ESG REPORT
-
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 35
Introduction
Tankerska Next Generation (i.e. the “Company” or
“TNG”) endorses and believes in the benefits of ESG
reporting and considers sustainable development
as a globally important issue, which is why the
shipping industry tends to make their cooperation
conditional on ESG transparency, irrespective of
the sector they come from or operate in. Entities
disclosing ESG statements should strive to comply
with ESG transparency criteria for establishing
business relationships with suppliers, business
partners, credit institutions, investors, and others
but above all to drive progress leaving a better
world to the future.
In the collective view of the management of the
Tankerska Group (i.e. the “Group” consisting of
Tankerska Plovidba, Tankerska Next Generation
and TP Line), Environmental, Social, and Corporate
Governance (ESG) policies have been incorporated
in the common footprint long before the ESG term
was first composed as a consideration of environ-
mental, social and governance factors.
Essentially, the Company acknowledges and
endorses sustainable development as devel
-
opment that meets the needs of the present
without compromising the ability of future
generations to meet their own needs.
Moreover, the Company sees a competitive advantage
and takes its pride in the fact that it competes in a
highly regulated, stringent, international environ-
ment. Tankerska Next Generation is a Shipping
Joint Stock Company incorporated under the Laws
of the Republic of Croatia on the Official Market
of the Zagreb Stock Exchange (“ZSE” / https://zse.
hr/en/company-details/703), regulated by the
Croatian Financial Services Supervisory Agency
(“CFSSA”) subordinated to the European Securities
and Markets Authority (ESMA) which creates a
benchmark for publicly listed companies in the EU.
The key priorities for ESMA include transparency
obligations, risk analysis on green bonds, ESG
investing, convergence of national supervisory
practices on ESG factors, taxonomy, and supervision.
The European Securities and Markets Authority, the
EU’s securities markets regulator, has a published
Strategy on Sustainable Finance. The strategy
sets out how ESMA will place sustainability at the
core of its activities by embedding Environmental,
Social, and Governance (ESG) factors in its work.
Furthermore, the TNG ownership structure comprises
of shares belonging to large investors in Croatia
namely Croatian mandatory and voluntary pension
funds (so called second and third pillar pension
funds) supervised by the Republic of Croatia which
support the goals of the European Union, in its
National Development Strategy that stipulates
that it will direct national and European sources of
funding towards fostering a sustainable economy
and society, recovering and strengthening crisis
resilience, green and digital transition and balanced
regional development until 2030.
The key role in achieving these goals at the local
and global level is played by the financial industry,
whose task is to direct capital flows towards sustain-
able investments, i.e., investments that support
sustainable development goals which are now also
explicitly recognised by Croatian mandatory and
voluntary pension funds as a condicio sine qua non.
The Company acknowledges and supports the view
whereby the issuers on the ZSE disclosing relevant
ESG information needed for this analysis will have
priority when investments are considered.
ESG factors and the application of the ESG reporting
framework enable shipping to integrate environ-
mental, social and governance issues in their long-
term business strategy in a more transparent way.
The ESG reporting process itself can help develop
the infrastructure needed to link strategic goals
with the business model, risks, opportunities,
operational indicators and financial performance.
By nature, market participants and financial advisers
should be less inclined to consider investments in
issuers who have not publicly disclosed relevant
ESG information.
36 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
View
Activities within the shipping industry impact seas
and land-based ecosystems. The vessels we own
emit pollutants to air and water and influence the
living environments of humans and other species
regardless of our best endeavours to minimise this
undesirable effect.
We pledge ourselves to quality in the shipping
industry, to the security and protection of the marine
environment. We are dedicated to those conditions
in the shipping industry that will stimulate quality
and security in shipping.
The Company is committed to doing as little harm
as possible while providing quality services to our
clients. The management is continuously devoted
in actively engaging on environmental issues with
key stakeholders, including customers, society,
authorities and investors.
We protect the environment by exercising constant
care in our operations, and operate our vessels in
accordance with all applicable laws and regulations
and we are committed to continually improving
our environmental performance.
Policy
Due to concern over the risks of climate change,
a number of countries and the IMO have adopted,
or are considering the adoption of, regulatory
frameworks to reduce greenhouse gas emissions
from ships.
Due to climate changes, considered to be one of
the major problems of the present time, environ
-
mental goals are given particular importance. The
year 2016 saw the entry into force of the Paris
Climate Agreement which recognised environmental
sustainability development, i.e. sustainability and
transition to a safe, climate-neutral and circular
economy, as primary goals in ensuring long-term
competitiveness of the EU economy.
Following the Paris Agreement, the European
Commission published a communication titled “The
European Green Deal”, determining in more detail
principles for achieving sustainable economy of the
EU by turning climate and ecological challenges
into opportunities and setting standards that will
allow this to happen in a uniform and fair way.
The Company fully supports IMO’s 2030 and 2050
goals for reducing GHG emissions. Furthermore,
we are actively engaged in defining EU ETS regula
-
tions through a working group within the Croatian
Ministry of Economy and Sustainable Development
(https://www.fzoeu.hr/en/).
Our goal is to have a carbon neutral fleet by 2050.
Hence, we direct most of our decarbonisation
investments towards our efforts to move away
from the use of fossil fuels to power our vessels.
As this is impossible to achieve on a larger scale
with current technology, we are preparing projects
in a so-called transitional stage.
Our mid-term plan for reducing GHG emissions on
our fleet is to run onboard tests with bio-fuel or
other accessible zero-emission fuel.
Short term measures are already in place manifested
through optimized vessel routing, slow steaming,
use of low friction antifouling, and hull monitoring
and cleaning.
Responsible ship recycling
There is policy in place for scrapping older vessels.
All hazardous material is listed in inventory for
easier and safer recycling. According to available
data, nearly 90% of the gross tonnage recycled is
done under poor health, safety and environmental
conditions. There is an urgent need to ensure that
this growth in demand for ship recycling services
will be met by providers with responsible practices.
Although the Company has not dealt with divesting
through ship recycling in its past and has no inten
-
tion to do so in the foreseeable future, the policy
in place is in accordance with EU standards and
subject to future reviews should it be necessary
to bring in line with the EU progress.
ENVIRONMENTALs
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 37
Environmental goals
Tankerska Next Generation possesses certificates
under the standards reflected in International
Standards Organization’s (“ISO”) 9001 for quality
assurance, ISO 14001 for environmental manage-
ment systems, ISO 50001 for energy management
systems and Occupational Health and Safety
Advisory Services (“OHSAS”) 18001.
In terms of effectiveness, our marine pollution
records, show zero incident for several consecu-
tive years and we remain adamant to keep this
clean record and continue to be vigilant. Special
attention is paid to garbage management from an
environmental point of view.
We comply with international conventions to
invasive species and control and install ballast
water treatment systems on our vessels to reduce
the risk of invasive species as we carry cargoes
across ecosystems. The Ballast Water Management
Convention (BWMC) obligates shipowners to have
such systems installed on all vessels by 2024.
The Company is fully compliant with the stated
convention since all of our vessels are equipped
with ballast water treatment systems which are
eliminating invasive species and protecting world-
wide biodiversity.
The last vessel and final vessel in our fleet which
had BWTS installed is m/t Vinjerac which finished
its 5-year drydock in O4 2021.
6 vessels in total
TNG fleet as of 31st Dec ‘21
average vessel age 7.7 years
O pollution cases
recorded during 2021 on TNG fleet
0 collisions / allisions
recorded during 2021 on TNG fleet
6 BWTS installed
TNG fleet 100% compliant with BWMC
38 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
ENVIRONMENTAL
Practice
Good environmental practice has become a second
nature for the Company although the Company has
the ambition to continuously improve in this respect.
Environmental practice goes beyond mere regulations,
but it is noteworthy to emphasise the following is
immanent to global shipping and inherently attrib-
uted to our operations:
• The Company’s vessels are governed by the
requirements set forth in the IMO’s International
Safety Management Code for the Safe Operation
of Ships (“ISM Code”). The ISM Code requires ship
owners, ship managers and bareboat charterers to
develop and maintain an extensive “Safety Manage-
ment 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.
• In addition, the hull and machinery of every
commercial vessel must be classed by a classifica-
tion 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 IMO International Convention
for the Safety of Life at Sea Convention of 1974 (as
from time to time amended and generally referred
to as “SOLAS”).
Our operations have been and will be subject to
numerous laws and regulations in the form of
international conventions and treaties, national,
state and local laws and national, state and inter-
national regulations in force in the jurisdictions in
which our vessels operate or are registered, which
can significantly affect the environmental conduct
and operation of our vessels.
These laws and regulations include, but are not
limited to:
• the U.S. Oil Polluon Act of 1990, or OPA,
• Convenon on Civil Liability for Oil Polluon
Damage of 1969 (as from me to me amended
and generally referred to as CLC Convenon),
• the IMO Internaonal Convenon on Civil Li-
ability for Bunker Oil Polluon Damages of 2001
(as from me to me amended and generally
known as the Bunker Convenon),
• the IMO Internaonal Convenon for the Pre-
venon of Polluon from Ships of 1973 (as from
me to me amended and generally referred to
as MARPOL),
• the IMO Internaonal Convenon on Load
Lines of 1966
• the U.S. Marime Transportaon Security Act
of 2002 and the Internaonal Labour Organiza-
on’s, or ILO’s,
• Marime Labour Convenon of 2006 (“MLC”).
In addion, we are subject to requirements
imposed by various naonal and internaonal
agencies and regulatory bodies, including, but
not limited to:
• Requirements of the U.S. Coast Guard, the
U.S. Environmental Protecon Agency (“EPA”).
Compliance with such laws, regulations and require-
ments, where applicable, may require coverage (or
the provision of other financial assurances) with
respect to pollution incidents.
We are constantly educating crews and employees
on importance of voyage optimization and encour-
aging them to use it to achieve maximum efficiency
that technology allows.
Due to the high risks involved in seaborne trans-
portation of oil products as well as due to very
stringent requirements by the “oil majors”, safety
and environmental compliance are the Group’s top
operational priorities. The Company’s vessels operate
in a way so as to ensure maximum protection of the
safety and health of staff, the general public and
the environment.
The Company actively manages the risks inherent
in the Company’s business and are committed to
eliminating incidents that would threaten safety
and the integrity of the vessels. The Company is
also committed to reducing emissions and waste
generation, hence there has also been a spin-off
effect to our offices whereby office stationery and
beverages need to be made of environmentally
friendly and degradable components in the aim to
promote safety and environmental protection.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 39
ENVIRONMENTAL EFFECTS
Energy efficiency and environmental protection
Efficient use of energy onboard Tankerska Next Gen-
eration fleet’s vessels is one of the primary goals set by
the Company in order to preserve natural resources and
reduce emissions of harmful gases into the atmosphere
in order to help reduce the effects of climate change.
The policy of managing the TNG fleet is that all vessels
and operations comply with all necessary requirements
to protect the environment and operate in accordance
with international conventions, administration and oth-
er applicable regulations, which would help to achieve
the goals of sustainable development of the United Na-
tions.
Environmental protection and energy efficiency are
achieved through the implementation of the following
guidelines and strategic goals:
Reduction of CO2 emissions
Tankerska Next Generation has four Eco-Design product
tankers in its fleet. Eco vessels have various improve-
ments to its operating systems, such as improved
engines and improved larger propellers which reduce
fuel consumption. The new generation of engines and
other improvements in the operating system on the
eco-designed ships can provide a significant reduction
in fuel consumption and emissions into the atmosphere,
including CO2.
Climate change caused by CO2 emissions pose a threat
to the environment and wildlife and can pose operational
and commercial challenges for the business operations
of Tankerska Next Generation. Work on reducing CO2
emissions into the air and our commitment to curb CO2
emissions and other harmful gases in the atmosphere
has proved positive for the fleet, since in the same way
it helped reduce fuel consumption, and thereby increase
the efficiency of the fleet. Eco-design of our fleet allows
compliance with various regulatory issues, including
emissions (NO, CO, C02, C).
Reduction of Sulfur emissions
Using low-sulfur fuel oil up to max. 0.5% sulfur concen-
tration in accordance with the “IMO 2020 Sulfur Regu-
lation” in order to reduce emissions of harmful gases
into the atmosphere. This strategy has been imple-
mented to TNG fleet since the end of 2019.
Ballast Water Treatment
By realizing the plan to implement the ballast water
treatment system (BWTS) on m/t Vukovar, m/t Zoilo
and m/t Pag during 2020 and with the installations of
BWTS on m/t Vinjerac and m/t Velebit in 2021, our fleet
significantly reduced its environmental impact.
Other guidelines and strategic goals for environmental
protection are achieved by:
- Taking precautions to protect through the environ-
ment in which the Company’s ships operate and high
standards in operating and maintaining Company’s
ships.
- Commitment to continuous improvements in our
environmental performance and pollution prevention
across all our activities while responding to hazards
quickly, efficiently and with the minimum possible im-
pact to the environment and natural resources.
- Correct treatment and handling of cargo products be-
ing transported, bunker and lubrication oils purchased,
paints, chemicals, solvents, other consumables mate-
rials and in order to comply with statutory rules and
regulations.
- Assessing identified risks for possible environmental
impacts originating from the various environmental as-
pects of shipping business.
- Training the crew to prevent accidental and whenever
possible operational discharges of pollutants to the en-
vironment.
- All shore based and shipboard personnel of the Com-
pany are strictly required to adhere to this Policy by ful-
ly complying with all requirements of the Company as
well as all applicable industry, administration, national
and international regulations.
For the purpose of supporting good practices aimed at fostering sustainable development, Hanfa
(Croatian Financial Services Supervisory Agency) and the Zagreb Stock Exchange have adopted the
Corporate Governance Code (hereinafter: the Code) https://zse.hr/en/corporate-governance-code/1780,
establishing the obligation for issuers to comply with sustainable development principles. The purpose
of the Code is to promote effective governance and accountability in companies whose shares are
listed on the regulated market of the Zagreb Stock Exchange.
Article 83 of the Code “Corporate social responsibility” lays down the obligation for companies to
adopt and publicly disclose the impact assessment policy relating to the impact that their activities
exert on the environment and community, human and workers’ rights protection, and prevention and
sanctioning of bribery and corruption.
The Code also requires issuers to disclose information that relates to good corporate governance rules
(“G”) in general, but also information relating to companies’ strategies, taking account of the potential
impact of their activities on the environment and community (“E”), promotion of ethical behaviour,
respect for human rights and positive and stimulating working environment (“S”). That way, the obliga-
tion for issuers has been established to disclose part of relevant ESG information (ESG reporting) for all
entities subject to the Corporate Governance Code, which includes those share issuers on the regulated
market that are not subject to non-financial reporting requirements pursuant to the Accounting Act.
Tankerska Next Generation has submitted the Code of Corporate Governance Questionnaire for 2020
which can be reviewed at https://eho.zse.hr/en/issuer-announcements/view/36974 and aims to submit
the questionnaire of 2021 by it prescribed date of publishment.
The Corporate Governance Code, adopted on 15 October 2019, significantly improved the corporate
governance framework, while companies whose shares are listed on the regulated market were faced
with challenges of complying with the recommendations of the Corporate Governance Code and
achieving higher standards of corporate governance culture.
The companies whose shares are listed on ZSE (Zagreb Stock Exchange) in the Republic of Croatia,
with the exception of shares of closed-ended investment funds, started to apply the Code on 1 January
2020. Notwithstanding this date, companies were required to inform Hanfa of their compliance with
the Code, i.e. their corporate governance practices also for the year starting on 1 January 2019, via
new questionnaires in order to identify the existing practices and to monitor progress in the years
following the entry into force of the Code.
The initial level of companies’ compliance with the Code was presented in the 2019 Annual Report on
Corporate Governance, while this Annual Report on Corporate Governance gives the degree of compli-
ance with the Code starting from the date of its application (1 January 2020) and provides a comparison
with the compliance data from the previous year. Rankings can be reviewed on the following link:
https://www.hanfa.hr/publications/annual-report-on-corporate-governance
Company’s Board members and top management are not politically active, nor members of any political
party.
CORPORATE GOVERNANCE
40 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 41
Corporate Governance goals
Corporate governance code
Compliant - TNG listed on ZSE
Ethical behaviour
Business ethics and conduct
Financial reporting
Framework within accounting standard
Responsible supply chain
Sustainable practices
“The Corporate Governance Code, adopted on 15 October 2019, significantly improved the
corporate governance framework, while companies whose shares are listed on the regulated
market were faced with challenges of complying with the recommendations of the Corporate
Governance Code and achieving higher standards of corporate governance culture”
42 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
CORPORATE GOVERNANCE EFFECTS
Good practices of Corporate governance
Tankerska Next Generation as a business entity that operates
and develops its business in the Croatian and international
market, is aware of the importance of responsible and ethical
conduct of business entities as a necessary precondition for
developing quality relations and loyal competition between
business partners, and for the effective functioning of the
market and the integration of the Croatian economy. The
Company is developing and operating in accordance with
good corporate governance practice and strives to practice
business strategies and business policies which result in
transparent and efficient business operations and quality
relations with the business environment in which it operates.
Corporate responsibility
Alongside with compliance with good practices of corporate
governance, the key of successful and timely conducted
transport is vessel maintenance. That is the cornerstone
of good market relations with our clients. Well maintained
vessels are key to ensure on-time delivery and a smooth
voyage. It can prevent expensive delays, idle costs and
repairs, and ultimately keep crew and cargo from undue risks.
All our vessels are equipped with modern technologies that
are safer for the nature and the environment. Technology
is considered as good as the people who operate it. That
is precisely the reason we take care that all our employees
are well aware of the ship’s equipment and systems, and
that is the reason why we constantly hold trainings and
lectures. We build new vessels in close cooperation with
shipyards, sharing our experience and know how in the
design process as well as during the actual construction.
We order our vessels exclusively in shipyards which can
achieve the highest world standards.
Anti-corruption
Corruption impedes access to global markets and constitutes
barriers for economic and social development around the
world. For businesses in the maritime sector, corruption
also escalates costs, endangers the safety and well-being
of the crew and poses legal and reputational risk. Although
good business relations in different parts of the world
are differently defined and denominated, Tankerska Next
Generation adopted a zero tolerance on corruption and this
attitude is held in our business relationships.
Anticorruption program obliges all employees of Tankerska
Next Generation, regardless of the level and position that
they have to report any attempt of corruptive behavior
towards them or others. In achieving these goals, employee
training, alongside control is a key tool. Anti-corruption
training sessions are conducted through daily individual
training of our employees, while the code of conduct of our
employees is defined in the Code of Corporate Governance
of Tankerska Next Generation.
In order to ensure an efficient fight against corruption
employees of Tankerska Next Generation, whether on land
or at sea, have continuous access to local intranet through
which they can promptly report any form of corruption to
the designated department.
Contribution to economic prosperity and optimization of
delivery channels
Tankerska Next Generation regularly and transparently
calculates and pays taxes, contributions and other fees
pursuant to the regulations of the Republic of Croatia.
By doing this, the Company contributes substantially to
the functioning and development of numerous activities
important to everyday life in the community. TNG keeps
proper accounting records, which will at any time with
reasonable accuracy present the financial position of
the Company and comply with the Croatian Accounting
Law and IFRS, and adjusts its reporting to new standards
according to the current regulation i.e. ESEF (European
Single Electronic Format).
Tankerska Next Generation seeks to optimize the delivery
chains in which it operates and thus contribute to the
efficiency of its operations, and the operations of all parties,
and interest groups involved in the delivery channels. Every
day lost due to barriers in the supply chain drives up the
costs, but if coupled with understanding and customer
experiences from the field, inefficiencies can be eliminated.
TNG endures on it through the adjustment of its business
with a variety of industrial protocols and by adopting
quality standards.
Furthermore, we are looking for the highest quality standards
from our suppliers, as well as to comply with ethical guidelines
that must include respect for fundamental human rights,
labor standards, the attitude towards the environment and
employee standards. Furthermore, we are looking for the
highest quality standards from our suppliers, as well as to
comply with ethical guidelines that must include respect for
fundamental human rights, labor standards, the attitude
towards the environment and employees.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 43
44 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
SOCIAL RESPONSIBILITY
View
For a company to be socially responsible, it first
needs to be accountable to itself and its stakeholders.
Companies that adopt Corporate Social Responsibility
(CSR) programs have often grown their business to
the point where they can give back to society which
we continue to do. CSR helps both society and the
brand image of companies.
Policy
Responsible business conduct, which demonstrates
that the company can be trusted to act fairly and
ethically, is a prerequisite for long-term success. It
also contributes to the sustainable development of
the Croatian economy.
When taking decisions on the company’s strategy
and business plan, the management and supervisory
boards should consider the impact of their proposed
actions on their stakeholders, the environment and
society; and on the company’s reputation.
The company’s employees and other stakeholders
such as customers, suppliers, public authorities
and local communities all have an interest in the
company’s activities.
Regular engagement with these stakeholders can
help the company to understand their views and
concerns and provide an opportunity to explain the
company’s position in a positive way.
The supervisory and management boards shall
ensure that the company’s strategy takes account
of the potential environmental and social impact of
its activities, and that its policies, culture and values
promote ethical behaviour, respect for human rights,
sustainable diversity and gender equality in a sound
and stimulating work environment. The supervisory
and management boards should agree and adopt
policies on:
- how environmental and social impacts of the
company’s activities are assessed, and how the
associated risks are managed.
- how human rights and the rights of employees
are safeguarded; and
- how corruption and bribery will be prevented and
sanctioned.
When the management board seeks the supervisory
board’s prior approval on decisions, the supporting
documents should explain how the recommended
action is consistent with the policies.
The supervisory and management boards should
jointly identify who they consider to be the company’s
key stakeholders. The management board should
ensure that there are effective mechanisms in place
for regular engagement with those stakeholders,
and that the supervisory board is informed of the
results of that engagement.
The supervisory board should be entitled to organise
meetings with external stakeholders where it
considers it necessary to improve its understanding
of matters relevant to the company, including their
views on the company’s performance and reputation.
The president of the management board should be
notified in advance of such contacts.
The mandate for each committee should specify the
purposes for which the president of the committee
can communicate directly with the company’s stake-
holders and the procedure to be followed.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 45
“Central idea is to provide meaningful work that allows people to reach their full potential”
Practice
Social responsibility, in our case exceeds corpo-
rate social responsibility (CRS) standards. The
Company promotes a multi layered approach
whereby social responsibility helps a company be
socially accountable to itself i.e. its employees, its
seafarers, its stakeholders, and the public; in our
case, namely the local community. By practicing
corporate social responsibility, companies become
conscious of the kind of impact they are having on
all aspects of society.
Tankerska Plovidba as a founder and TNG’s majority
owner has directly influenced Zadar’s economy
and economic development, directly improving
the quality of life and increasing the wealth of the
town and its surroundings. It continues to do so
through TNG as well.
The Group continued to be successful even during
the difficult times of the not-so-distant Croatian
struggle for international recognition and independ-
ence, continuing with business as normal and
contributing to the battle for sovereignty in various
ways, from manpower to material and financial
contributions,
Tankerska Plovidba, who manages TNG’s crewing
has always been proud to have excellent seafarers
and employees. Retention rate is among highest
in the industry, reflecting TNG’s goal to be an
attractive employer.
There is an internal fund designated to help injured
or sick seafarer while if individuals become incapable
of sailing, as well as scholarship program for ex
seafarers’ offspring.
We have been taking Covid-19 related problems as
priority and doing our best to minimize crew change
delays and frustration. Understanding that longer
stays at sea and care for the loved ones on shore
can cause anxiety and uncertainty among seafarers,
we established a hotline for professional mental
health care which they can use anonymously free
of charge. To help maintain physical health, each
ship is equipped with gym and various entertain-
ment systems. On the shoreside every employee
is covered and encouraged to perform medical
check-ups on an annual basis.
The Group and the Company also support local
hospital needs from time to time by supplying
various medical equipment.
We are participating in Shell’s program “Partners in
safety”, which showed excellent results in injury and
incident prevention. Board members and company
directors are visiting ships on a regular basis and
have meetings with crew. Safety is a main topic,
but crew wellbeing and company policies are also
discussed.
It is in our policy to protect crews and ships trans-
iting through high-risk area by embarking armed
guards and giving additional bonuses to crew to
express our gratitude to their loyalty in difficult
circumstances. Nevertheless, every crewmember
is given chance to decline and disembark before
entering a high-risk area.
Although shipping is historically known as male-
dominated industry, we are encouraging women in
the hiring process to have a more diverse structure.
There is option for all seafarers and employees to
anonymously report corruption, sexual harass-
ment, or any malicious practice attempt.
Our central idea is to provide meaningful work
that allows people to reach their full potential.
Our employees feel recognized, valued, and cared
for as individuals as a result of our diverse and
inclusive work culture.
Diversity and inclusion also serve to improve the
Group’s image as an employer, allowing employees
to feel more valued and respected by the company
they work for. According to industry statistics,
companies that implement long-term diversity
and inclusion initiatives can increase on-the-job
efforts and staff retention while also earning their
employees’ confidence. To put it simply, gender
equality and diversity are crucial elements of a
company’s corporate social responsibility.
SOCIAL RESPONSIBILITY
46 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Gender equality and diversity
Even though shipping has traditionally been a
male-dominated profession, we are welcoming
women’s aspirations to participate in the employ-
ment process in order to create a more diverse
organization. Improving our personnel diversity
also allows us to better reflect and comprehend
the complex global context in which we operate. We
respect the values and cultures of our employees and
business partners. We do not accept discrimination
with respect to gender, ethnicity, religion, sexual
orientation, handicap or age.
As a Company, we promote diversity and believe
that it is our responsibility not to discriminate any
of our employees. Discrimination prevents people
from reaching their full potential, leads to inequality,
and makes society less stable and prosperous.
We are committed to providing equal employment
and career opportunities for qualified applicants and
employees. We respect the right to associate freely,
to join – or not join – unions and we encourage a
constructive dialogue about working conditions.
Throughout the year,the Group achieved significant
progress toward our diversity and inclusion objec-
tives. As of the end of 2021, the Groups’s onshore
workforce has a male-female gender ratio of 65% -
35%, which shows improval from the 68%-32% ratio
in 2020. Recognizing and effectively harnessing the
numerous differences that people bring to work is
a never-ending challenge which is welcome.
Having policies and standards in place that support
employees’ various choices and career trajectories
is an important step in developing an inclusive
culture, which is why we are proud of our overall
shore personnel retention rate of 100% for 2021.
In regard to the offshore personnel, Tankerska Next
Generation averaged 95% retention rate for Senior
Officers, 74% retention rate for Junior Officers and
74% Crew retention rate.
Training, Health and Safety
The Company aspires to promote health and safety
measures that keep employees safe and secure
while also increasing the Company’s operational
productivity. A safe and healthy workplace not only
minimizes the risks from injury and disease among
our employees, but it also reduces operational costs
by reducing safety incidents, absenteeism, and
turnovers, while also improving employee morale.
To put it another way, safety is beneficial both the
Company and its individuals.
We maintained an exceptional record in terms of
worker health and safety, and were committed to
setting industry-leading Quality, Health, Safety,
Security, and Environment (QHSSE) standards.
In 2021, the Company recorded Lost Time Injury
frequency one year rolling average (LTIF) of 0,78
for the Company in 2021 and 0,86 in 2020. Zero
fatalities were recorded in both 2021 and 2020.
Employee engagement initiatives were increased in
2021 in order to further assist, motivate, and connect
with our employees. For example, the Group’s top
management executives visited several vessels
to encourage and motivate the seafarers. Where
this was not possible, our top management video
conferenced the vessel’s crew.
Despite the pandemic, the Companymanaged to
organize training sessions and educate our employees
and crew, with 80% of the offshore personnel attending
the Seagull e-learning programme in 2021.
SOCIAL RESPONSIBILITY
TNG 2021 in numbers:
Senior officers retention rate: 95%
Junior officers retention rate: 74%
Crew / ratings retention rate: 74%
Seafarers Seagull e-learning
programme attendance: 80%
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 47
Gender balance men 65%- women 35%
Tankerska Group at 31st Dec ‘21
0,78 LTIF recorded in 2021
0,86 LTIF recorded in 2020
134 seafarers in 2021
81% retention rate for 2021
3 shore based personnel
100% retention rate for 2021
Social responsibility goals
p
48 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
SOCIAL RESPONSIBILITY EFFECTS
Stimulating workplace
Tankerska Next Generation is actively involved in creating
a positive, safe and motivating working environment for
all employees through: Opportunities for lifelong learning
and investment in the competence of its employees
through professional training, incentives for innovation,
recognizing individuals and teams which achieve best
results, the system of rewarding the employees and the
possibility of career development within the Group, a high
degree of safety in the workplace, recreation and social
-
izing through sports, flexible working hours and modern
workplace with all necessary tools to work.
Culture of diversity
Even though shipping is considered a male dominated
area, the Group encourages employment of women, both
on land and sea. TNG and its fleet manager Tankerska
Plovidba through 67 years of tradition developed a
culture that appreciates differences which is manifested
in equal opportunities for all employees, regardless of
sex, race, or religion. We see diversity of our employees
as an advantage which brings added value to business
and helps achieving Company objectives.
Professionals who contribute the community
Continuous service reliability requires that shipowners are
able to bring the right competencies and leadership skills
into play on each trip. Recognizing that the workforce
at sea is instrumental in this ambition, TNG wants to
attract and retain the best people and be the preferred
employer in the market.
On-board training, early action on maintenance and high-
quality workmanship are continuous priorities to TNG
to deliver a consistent and safe service to customers.
Reliability and customer understanding have been strong
contributory factors in TNG landing a series of long-term
contracts.
Our crew is highly qualified, motivated and proud of
their teamwork, they know their colleagues and vessels,
as well as the operations which certainly contributes
to homogeneity and success teams. Employed on the
tankers of the Tankerska Next Generation is a crew with
a significant share from Zadar County, which significantly
contributes to the development of our region since the
gross salaries of seafarers employed on TNG ships are
above the Croatian average.
Cooperation with the academic community
Tankerska Next Generation and its employees make
themselves available to respond to numerous inquiries
from the academic community, we participate in many
polls, and our employees are disposed to provide assis-
tance to students researching maritime and economic
topics in their presentations and dissertations.
Care for health, safety and future
Regular medical check-ups are organized for all employees
in the Company once a year, the check-ups include the
highest level of diagnostics at a prominent hospital. The
results of medical examinations are thoroughly analyzed,
and preventive health measures are undertaken to reduce
diseases of employees.
The Company contracted the collective accident insur-
ance with hospital days for all employees, which provides
additional employees safety in the workplace and outside
of it, as are insured in case of accident, illness, disability,
serious neurological condition, and death.
A monthly payment from the Company in the voluntary
pension fund for each employee ensures the long-term
savings and additional benefits that are thus achieved,
so that our employees can better dedicate their business
tasks. In this way, our employees provide independent
savings with regular returns.
Zero accidents
Operating at sea involves health, safety and security risks
that must always be managed carefully to safeguard
the crew, the cargo, the environment and the vessel. A
healthy and safe working environment for employees
comes before anything else. All employees must return
home from work safely.
Tankerska Next Generation’s ambition is zero accidents
and that the Company operates by the principle that no
injury or environmental incident is acceptable. To support
our safety culture, TNG has in place a safety management
system and safety policy, compliant with the International
Safety Management Code. Each year we monitor the
standards of Health, Safety, Quality, Environmental &
Energy Management for the fleet.
TNG’s product tankers are constantly tested by the
inspectors of large oil companies and the port authori-
ties to determine that the fleet is maintained according
to regulatory and safety requirements of navigation.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 49
SOCIAL RESPONSIBILITY (ADDENDUM)
Corporate social responsibility in the local community has been incorporated in the Group’s business
model from its inception back in 1955 by which the Group made a concerted effort to operate in ways
that enhance rather than degrade society and the environment.
We have always resisted the temptation of taking benefits in the short term if doing so would compro-
mise our basic long-term goals of building the company and it’s reputation for quality and reliability, in
a sustainable way.
The Group takes pride in the establishing of the Maritime high school in 1957. Since then, the Group has
been providing financial support through scholarships and several thousand students have proudly earned
a diploma from the school, mostly in the nautical and marine engineering departments. The majority of
them found their first employment on Tankerska’s ships.
All officers on board Tankerska’s vessels come from traditional maritime families in the Zadar area, sailing
with us throughout their careers. The officers are predominantly educated at the local Nautical School
subsidized by the company; and continue their education and training at the Nautical Faculties in Croatia
which all have close ties with Tankerska.
CSR activities can help forge a stronger bond between employees and companies, boost morale, and
help both employees and employers feel more connected with the world around them.
Unfortunate events in Ukraine
With reference to the latest political turmoil, we again feel called to the line of duty to support our ratings
on board our vessels which are mainly Ukrainian.
Given the unfortunate events in Ukraine, we want to express our empathy and demonstrate our respon-
sibility towards our Ukrainian seafarers on board and their families at home, regardless of their political
spectrum.
We aim to ensure the Company’s management will be able to provide best solutions and utmost protec-
tion in these extraordinary circumstances.
The ratings are encouraged to directly get in contact with the Company’s DPA for any information via their
respective e-mail addresses and have frequent one-to-one sessions with the Company’s top management.
The Company has provided the Ukrainian crew members with additional free internet to be able to contact
their next of kin without any mobile data restrictions.
Raised concerns about the possibility of repatriation to Ukraine and possibilities of payment of salary to
Ukrainian bank accounts are being dealt with collectively with extreme flexibility from our side, consid-
ering each specific situation.
Tankerska Next Generation will endeavour to provide any assistance to families of crew members fleeing
from war affected regions.
Psychological assistance has been provided if they may have concerns that may endanger your welfare,
mental health or life you may use counselling services through the website www.seafarerswelfare.org/
ance conditions, and the reduction of administrative barriers to business.
p
Indicator Unit 2020 2021
Employees
Total number of seafarers Headcount
132 131
Total number of employees - shore based Headcount 3 3
Seagoing personnel retention rate % (headcount) 86% 81%
Shore based personnel retention rate % (headcount) 100% 100%
Diversity
Gender with lowest representation - ashore (women) % (headcount)
0% 0%
Gender with lowest representation - seagoing (women) % (headcount) 1% 1%
EU employees % (headcount) 98% 95%
NON-EU employees % (headcount) 2% 5%
Health & Safety
Fatalities Headcount
0 0
Lost-time injury frequency (LTIF) on TNG fleet Per million exposure hours 0,86 0,78
Pollutions > barrel 0 0
ESG in numbers
50 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
Social indicators
Denitions: Health and Safety
A fatality is a death resulting directly from a work-related injury regardless of the length of time
between the injury and death.
Lost Time Injury Frequency (LTIF) rate is a calculation used to determine the frequency of lost time
injuries (LTIs). The calculation is based upon the number of lost time injures within a given period
divided by the total number of hours worked in that period. This calculation yields a gure that repre-
sents the number of lost time injuries per hour worked during the period in question.
The denition of LTIF follows the standard practice among shipping companies.
ESG u brojkama
p
ESG in numbers (continued)
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 51
Governance indicators
Indicator Unit 2020 2021
Management and Supervisory Boards
Members Headcount
6 6
Gender with lowest representation (women) Headcount 0 0
Supervisory board members attendance % 93% 96%
Supervisory board members attendance % 100% 100%
Business ethics Policies
Anti-corruption Policy
Yes Yes
Anti-bribery Policy
Yes Yes
Whistleblower Policy
Yes Yes
Code of conduct and ethics
Yes Yes
Code of corporative governance
Yes Yes
Remuneration Policy
Yes Yes
Fleet Indicator
(%) 2021
compared
to 2020 2021
MR product tankeri
EEOI (g CO2/Tonx-mile)
92% 12.37
MR fleet travelled ~20% more miles in 2021
comapred to 2020 CO2 (mt)
103% 100,170
SOx (mt)
120% 137.57
NOx (mt)
84% 2,005.30
Environmental indicators
EU taxonomy
The EU Taxonomy (“Taxonomy”) requires public interest entities to first reveal the extent to which their
activities are covered by the Taxonomy, and then to report whether their activities are sustainable within
the Taxonomy’s criteria.
The majority of TNG’s activities are shipping and related services, which are generally regarded as activities
eligible under the Taxonomy 6.10 - Sea and coastal freight water transport, vessels for port operations
and auxiliary activities.
Purchase, financing, chartering (with or without crew) and operation of vessels designed and equipped
for transport of freight or for the combined transport of freight and passengers on sea or coastal waters,
whether scheduled or not. Purchase, financing, renting and operation of vessels required for port operations
and auxiliary activities, such as tugboats, mooring vessels, pilot vessels, salvage vessels and ice-breakers.
The economic activities in this category could be associated with several NACE codes, in particular for
TNG’s operations it is the H50.2 in accordance with the statistical classification of economic activities
established by Regulation (EC) No 1893/2006.
Since TNG’s economic activity in this category does not fulfil the substantial contribution criterion speci-
fied in point 1 (a) of the Section, the activity self-apprased as a transitional activity as referred to in Article
10(2) of Regulation (EU) 2020/852, since it partly complies with the important technical screening criteria
set out in the Section.
52 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
EU taxonomy
Turnover
Turnover, as defined by the Taxonomy, is commonly equated to revenue, as defined by IFRS and recog-
nized in the consolidated income statement Revenues are generally regarded to be eligible under the EU
Taxonomy, except that chartering out vessels is not considered an eligible activity. This means that their
actions cannot significantly contribute to the reduction of greenhouse gas emissions and thus substan-
tially contribute to the achievement of the first two environmental goals, climate change mitigation and
adaptation to climate change.
- KPU revenues / 0.0% of revenues can be linked to adaptation and mitigation of climate change in 2021.
Operating expenses
Operating expenses, as defined by the Taxonomy, are expenses directly linked to chartering, maintaining,
and operating vessels, and are comparable to vessel operating costs as reported in the consolidated
income statement. Capital expenditures are generally regarded to be eligible under the EU Taxonomy.
Operating expenses can make a significant contribution to reducing greenhouse gas emissions and thus
greatly contribute to achieving the first two environmental goals, climate change mitigation and climate
change adaptation.
The conclusion is that due to the use of fuel with a sulfur level below 0.1% as a fuel and a significant item
of operating costs of the TNG fleet, operating costs can be partially included in pollution prevention and
control and partially included in the category “Do not cause significant damage” with USD 1.7 million out
of a total of USD 49.7 million in operating expenses.
- KPU opex / 3.4% of operating costs can be linked to climate change mitigation in 2021.
Capital expenditures
Capital expenditures related to vessels and equipment and expenditures related to newbuildings as set
out in the Consolidated Financial Statements are considered equivalent to capital expenditures as defined
in the Taxonomy. Capital expenditures are generally regarded to be eligible under the EU Taxonomy.
Capital expenditures can make a significant contribution to reducing greenhouse gas emissions and thus
greatly contribute to achieving the first two environmental goals, climate change mitigation and climate
change adaptation
The conclusion is that due to the capital investmenta in TNG fleet ballast water treatment systems as
the largest capital expenditure in 2021 and other capital expenditures related to the protection and
restoration of biodiversity and ecosystems, capital expenditures can be partially classified as “Do not
cause significant damage” since for this goal USD 1.94 million was invested in vessels and equipment
out of a total of USD 4.74 million in capital investment.
- KPU capex / 40.9% of capital expenditures can be linked to adaptation to climate change in 2021.
TNG’s activities and their eligibilty under the Taxonomy which equates to Technical screening which by
self-appraisal adhere to criteria as follows: Do no significant harm (‘DNSH’) for the categories od Capital
expenditures and Operating expenses.
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 53
54 | TNG d.d. | ANNUAL COMPANY STATUS REPORT for the year 2021
EVENTS AFTER THE BALANCE SHEET DATE
Impact of COVID-19 on the Company’s business activities
Currently, the COVID-19 pandemic has a greater impact on the Company’s operations in the form of difficult repatriation
of seafarers, inability to replace crew in a timely manner, difficult operational procurement and delivery of consuma-
bles and equipment. The impact of the pandemic on the financial operations of the Company is present, but it is less
significant in the part where the Company secured revenues based on Time charter.
The Company has taken a number of preventive measures in order to minimize operational risks, protect the interests
of the Company and individuals on board and enable uninterrupted operations.
The Ukrainian crisis
The events following the Russian military intervention in Ukraine have fueled a rapidly growing crisis, bringing devas-
tating effects on Ukraine’s population but also on the future of the Russian economy, its future role in international
trade, and serious consequences for global transport, energy and goods markets. Russia rightly considers itself an
energy giant especially in the field of fossil fuels.
In just a few weeks, the conflict in Ukraine has fundamentally disrupted a decades-long energy relationship between
Europe and Russia. Europe realizes that it cannot detach from Russia overnight because it still relies on Russian energy.
Nevertheless, Russia’s role in the European and global energy system is taking on a new, highly negative insignia.
Following the invasion, the US, UK and EU (and a number of other countries) imposed severe economic sanctions,
aimed at curbing Russia’s influence globally, largely by preventing transactions with a growing number of designated
entities and restricting the country’s access to foreign reserves and liquidity. Such measures have major implications
for Russia’s economic stability.
The current restrictions and sanctions, which can have both a significant direct and indirect impact on global shipping,
could be broadly classified into three key risk areas:
1. Restrictions based on persons / entities, including sanctioned persons and sanctions relating to banks
2. Geographical restrictions
3. Restrictions on Prohibited Activities
It is necessary to emphasize the fluidity of the situation regarding sanctions against Russia and Russian legal and
natural persons.
Russia is the world’s second largest oil exporter and supplies Europe with 45% of its natural gas, 45% of coal and 25%
of its oil. Moreover, hydrocarbons are the backbone of the Russian economy. In 2019, (before the fall in prices due to
COVID), revenues from oil and natural gas accounted for 40% of the country’s budget. And oil and gas accounted for
almost half of Russia’s total commodity exports in 2021.
One of the issues related to the impact of tougher sanctions on Russia, and the possible opening of new seaways, is
to what extent China (and to some extent India) can help mitigate their impact.
Large energy companies such as Shell, ExxonMobil and Equinor are giving up investments dating back decades. Public
opinion and shareholder pressure are hampering their willingness to buy Russian oil on the open market. Russia will
have to turn elsewhere in its search for buyers. About 20% of Russian oil goes to China, but Russia’s turn to the East is
limited by geology, geography and geopolitics. All the above will certainly affect the redrawing of the new energy map
of the world and thus inevitably the tonne mile in shipping.
Due to the extremely dynamic, complex and constantly changing circumstances, including measures of restrictions
and sanctions against individual natural and legal persons, we are currently unable to quantify and qualify the impact
of the full range of changes to the Company’s operations, whereby global recession, as a worst-case scenario, cannot
be excluded if the supply of fossil fuels and agricultural products from Eastern Europe becomes completely cut off.
In addition to the foregoing, no other events or transactions have occurred after December 31, 2021 that would have
a material effect on TNG’s financial statements as at or for the period thereafter or are of such significance to TNG’s
business activities that they would require disclosure in the notes to the financial statements.
Annual company status report for the year 2021
Signed on behalf of the Management Board by:
John Karavanić,
Member of the Management Board
Tankerska Next Generation d.d.
Zadar, April 29th, 2022
ANNUAL COMPANY STATUS REPORT for the year 2021 | TNG d.d. | 55
SUPERVISORY BOARD REPORT FOR 2021
TANKERSKA NEXT GENERATION d.d.
Pursuant to Article 263, paragraph 3, Article 280, paragraph 3, and Article 300c and d. of the Companies Act (Official
Gazzette, no. 152/11 - consolidated text, 111/12 and 68/13), the Supervisory Board TANKERSKA NEXT GENERATION Inc.
at its 40. session held on 29th April 2022 adopted the
THE SUPERVISORY BOARD OF TANKERSKA NEXT GENERATION’S REPORT ON THE EXECUTED SUPERVISION OF THE
COMPANY’S OPERATIONS IN 2021
Tankerska Next Generation (TNG) is a company incorporated in August 2014. which owns and operates a fleet of MT
product tankers which provides international seaborne transportation services of derivates, chemicals, and oil to the
national oil companies, oil majors, and derivates, chemicals and oil traders. The main markets in which the Company
operates is the international maritime transport of oil products and edible oil, and therefore provides transport services
to large energy companies, large oil retailers and large manufacturers of oil and oil products and various other entities
that depend on sea transport.
Today TNG operates a fleet of 6 vessels, two conventional MR ice class product tankers MT Velebit and MT Vinjerac,
and four modern ECO designed MR product tankers; MT Zoilo, MT Vukovar, MT Dalmacija i MT Pag.
In 2021, as of August 21, 2019, the Supervisory Board performed consisting of the following members: Ivica Pijaca -
President, Mario Pavić, Deputy President; Nikola Koščica, Joško Miliša and Dalibor Fell, members. The Supervisory
Board’s mandate is over a four-year term.
During 2021, the shipping market continued to face the negative effects of the COVID-19 pandemic and the fact that
global economies are still struggling to emerge from the lockdown. The somewhat moderate ascend in the spot markets
seen in the fourth quarter of 2021 was very short-lived. A glance at the Baltic Exchange Clean Tanker Index with an
average index of 530 during the year, we can undoubtedly conclude that a gloomy picture of the product tanker markets
was recorded in 2021.
At the date of this report, the Company has four active time charter contracts, three of which are longer than one year.
During 2021, the Company held a total of four time charters of various periods, three of which were from 2020 for the
vessels Vinjerac, Vukovar and Zoilo, while one short-term time charter for up to 4 month for Velebit was contracted
during the second quarter of 2021. All time charters were concluded in accordance with usual market practices and
based on standard industry terms for such contracts. Due to poor market conditions and low levels of hires and rates,
at the end of 2021 the Company had only two active time charter contracts (for Vinjerac and Vukovar).
Tankerska Next Generation d.d. had a total of 908 time charter days in 2021, which was significantly lower than in 2020
(1,466 days), primarily due to low spot and time-charter freight rates on the product tanker markets throughout the
year and partly due to scheduled regular five-year dry-docking of the fleet on the vessels Pag, Velebit and Vinjerac.
Despite the relatively poor market conditions that characterized the 2021 and a significant number of days out of
exploitation (97 days) mostly due to regular five-year dry-docking, Tankerska Next Generation achieved EBITDA of 9,238
million US dollars, relying on vessels with running time charters , with a smaller contribution from vessels operating in
the spot market in the last quarter of the year when a moderate rise was recorded in the spot markets.
During 2021, three vessels from TNG’s fleet successfully completed their five-year docking, thus completing the cycle
of dry-docking and ballast water treatment installation on all vessels in the fleet.
The business year 2021 will go down with a slightly lower level of employment of the fleet at 95.6%, primarily due to
the dry-docking of m/t Pag, m/t Velebit and m/t Vinjerac; which accounts for 87 out of a total of 97 recorded days with
no revenue.
Days out of service due to regular dry-docking were recorded as follows:
Pag in Q1 / 2021, including the installation of BWTS,
lasting 19.31 days, out of a total of 42.94 days in dry-docking, initially planned for 25 days
Velebit in Q2 / 2021, including the installation of BWTS,
lasting 29.76 days, initially planned for 30 days
Vinjerac in Q2-Q3 / 2021, including the installation of BWTS,
lasting 38.27 days, initially planned for 30 days
Total number of drydocking days in 2021: 87
During the first session in 2022, the Supervisory Board was presented with the decision of the Management Board on
the value adjustment of tangible assets. This decision establishes that there are reasons for impairment of assets i.e.
vessels owned by subsidiaries as of December 31
st
2021, as a result, the provisions of IAS 36 “Impairment of assets”
should apply.
Significant impairment losses on ships are recognized as an expense in the income statement. The impairment loss is
USD 9,854,085.67. At the same time, for two vessels, portion of the impairment loss was reversed and recognized as
revenue in the income statement in the amount of USD 954,560.64.
Impairment losses and reversals of impairment losses will be disclosed by the Company in the Notes to the financial
statements in accordance with International Financial Reporting Standards.
TNG ended the business year 2021 with HRK 253.9 million (USD 39.8 million) in vessel revenues, which is an increase of
7.1% compared to vessel revenues generated in 2020 in the amount of HRK 237.0 million (35.4 million USD). This change
is the result of greater exposure to the spot markets where the ship-owner generates nominally higher revenue, but is
also burdened by higher voyage costs due to the nature of the business in which the ship-owner covers voyage-related
costs such as bunker fuel, port and agency fees and other costs.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in 2021 amounted to HRK 59.1 million (USD 9.2
million), and decreased compared to the previous year when it amounted to HRK 97.3 million (USD 14.3 million) and is
moderated by the impairment loss of the vessels.
Average TCE net daily freight rates in 2021 were $ 11,763 and average daily operating ship costs for 2021 were $6,897,
and are higher than the previous year’s level, primarily due to higher seafarer repatriation costs caused by the pandemic
and partly increased lubricant prices, spare parts and other operating costs.
By adapting the strategy to current market conditions, management seeks to ensure a sufficient level of flexibility and
mitigate current volatility. The ratio of ship employment the spot market and on time charters enabled Tankerska Next
Generation to reposition ships in geographically more favorable regions for more adequate and successful dry-dockings
and the ability to respond to expected long-term positive trends in the freight market in a timely manner.
Following the dry-dockings and adjustments and technical changes related to the regulatory environment in the past
period, during the next quarters TNG’s management will focus on activities aimed at achieving an optimal employment
structure and providing the necessary resources to continue a balanced business.
The report of the Supervisory Board was compiled for 2021 and covers the period of operation of Tankerska Next
Generation d.d. from January 1, 2021 to December 31, 2021.
The Supervisory Board of the Company, according to the powers given by the provisions of the Companies Act and the
Articles of Association, continuously monitored the conduct of the Company during 2021, making decisions and
conclusions during five meetings held in 2021. Through the Audit Committee, additional emphasis was placed on the
area of external audit and comprehensive consideration and minimization of business risks.
Supervising the management of the Company's operations during 2021, the Supervisory Board discussed key issues
related to the operations of the Company and its subsidiaries and was regularly reported by the Company's
Management Board. The Supervisory Board was informed by the Company's Management Board about all important
business events, implementation of five-year mandatory dry-docking, installation of BWTS, refinancing of existing loans,
regulatory requirements, income and expenses, impairments of assets and general business conditions. The
Management Board regularly submitted quarterly, semi-annual and annual verbal and written business reports to the
Supervisory Board.
During 2021, a total of 5 sessions of the Supervisory Board were held, attended by all members of the Supervisory
Board, except for the 37th session, in which one member was absent.
At its meeting in February 2021, the Supervisory Board gave its consent to the refinancing of ABN AMRO Bank's facility
for the vessels M/T Pag, M/T Vinjerac and M/T Velebit.
At its session in April 2021, the Supervisory Board unanimously adopted the first ESEF report of the Company for 2020,
which made TNG one of the first companies listed on the Zagreb Stock Exchange to prepare and publish noted report.
Also, at the mentioned session, the Supervisory Board adopted the first report of the Company on the remuneration of
of the Management Board and the Supervisory Board members for 2020, prepared in accordance with the adopted
Remuneration Policy adopted in 2020.
Reviewing the management of the Company, the Supervisory Board determined that the Company in 2021 operated in
accordance with the laws, the Articles of Association and the decisions of the General Assembly of the Company.
The Supervisory Board, within the legal deadlines and in accordance with the provisions of Article 300. c. of the
Companies Act, examined the Annual Financial Statements of the Company and its subsidiaries for the year ending
December 31
st
2021 together with the opinion of the independent auditor Deloitte d.o.o. Zagreb, Zagrebtower,
Radnička 80 (Auditor), submitted by the Management Board.
The Supervisory Board also received a Report on Related Party Transactions in accordance with Article 497 of the
Companies Act from the Management Board.
The Supervisory Board determined that the Annual Financial Statements of the Company for the year ended 31
December 2021 were prepared in accordance with the balance in the Company's books of account and show the correct
asset and business condition of the Company and its subsidiaries.
The company operates in a specific business environment where business processes and the manner of reporting are
regulated by special regulations, the Maritime Code, which prescribes the manner of keeping business books, reporting
and other regulatory obligations to state administration bodies.
In accordance with this finding, the Supervisory Board approves the Annual Financial Statements for 2021 and the
Auditor's opinion, whereby pursuant to Article 300d of the Companies Act, the Management Board and the Supervisory
Board determined the Annual Financial Statements of the Company.
An integral part of the Annual Financial Statements of the Company and its subsidiaries for the business year ended 31
December 2021 are:
1. Statement of profit or loss and other comprehensive income;
2. Report on the financial position of the company;
3. Cash flow statement;
4. Report on changes in equity;
5. Notes to the financial statements:
6. Annual report on the condition of the Company and its subsidiaries
7. Independent auditor's opinion.
The Supervisory Board examined the Annual Report of the Management Board on the operations of the Company and
its subsidiaries for 2021 and determined that it has accurately and objectively presented the current business situation
and the state of the Company and its subsidiaries and approved the Annual Report of the Management Board and the
state of the Company and its subsidiaries for the business year 2021.
The Management Board presented to the Supervisory Board a proposal for a decision on loss reconcile for 2021, which
determines that the company Tankerska Next Generation d.d. in the business year ending 31 December 2021,
generated a loss in the amount of HRK 86,988,823.67 and proposes that the loss in the amount of HRK 86,988,823.67
be compensated from retained earnings from previous years in the amount of HRK 56,701,883.11 and partly from
capital reserves in the amount of HRK 30,286,940.56.
The Supervisory Board agrees with the above proposal of the Decision on covering the loss of Tankerska Next Generation
d.d. for 2021 and proposes to the General Assembly of the Company to obtain such a decision.
Ivica Pijaca
President of the Supervisory board
Tankerska Next Generation d.d. Zadar
Annual report
For the year ended 31 December 2021
together with Independent Auditor's Report
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to
ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions,
the original language version of the report takes precedence over this translation.
Content
Tankerska Next Generation d.d., Zadar
Page
Responsibility for the financial statements
1
Independent Auditor's Report
2-8
Statement of profit or loss and other comprehensive income
9
Statement of financial position
10
Statement of cash flows
11
Statement of changes in shareholders’ equity
12-13
Notes to the financial statements
14-70
Responsibility for the financial statements
1
Pursuant to the Accounting Act of the Republic of Croatia, the Managing Board is responsible for ensuring
that financial statements are prepared for each financial year in accordance with International Financial
Reporting Standards (IFRSs), as adopted by the European Union (the EU) which give a true and fair view of
the financial position at the reporting date and results of operations of Tankerska Next Generation d.d. and
its subsidiaries (hereinafter: “TNG”) for that period.
After making enquiries, the Management Board has a reasonable expectation that TNG has adequate
resources to continue in operational existence for the foreseeable future. Accordingly, the Management Board
has prepared these financial statements under the assumption that TNG will continue as a going concern.
In preparing those financial statements, the Management Board is responsible for:
• selecting suitable accounting policies and then applying them consistently;
• making reasonable and prudent judgments and estimates;
• following applicable accounting standards and disclosing and explaining any material departures in the
financial statements; and
• preparing the financial statements under the going-concern assumption unless the assumption is
inappropriate.
The Management Board is responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of TNG and for its compliance with the Croatian Accounting Act.
The Management Board is also responsible for safeguarding the assets of TNG, and hence for taking
reasonable steps for the prevention and detection of embezzlement and other illegal acts.
The Management Board authorised these financial statements for issue on 29
th
of April 2022.
Signed on behalf of the Management Board by:
John Karavanić,
Member of the Management Board
Tankerska Next Generation d.d.
Božidara Petranovića 4
23000 Zadar
Republic of Croatia
29
th
of April 2022
The company was registered at Zagreb Commercial Court: MBS 030022053; paid-in initial capital: Kn 44,900.00; Company Directors: Marina Tonžetić, Dražen Nimčević
and Katarina Kadunc; Bank: Privredna banka Zagreb d.d., Radnička cesta 50, 10 000 Zagreb, bank account no. 2340009–1110098294; SWIFT Code: PBZGHR2X IBAN:
HR3823400091110098294.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte
organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which
cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not
those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/en/about to learn more.
© 2022. For information, contact Deloitte Croatia.
Deloitte d.o.o.
ZagrebTower
Radnička cesta 80
10 000 Zagreb
Croatia
OIB: 11686457780
Tel: +385 (0) 1 2351 900
Fax: +385 (0) 1 2351 999
www.deloitte.com/hr
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Tankerska Next Generation d.d., Zadar
Opinion
We have audited the accompanying financial statements of Tankerska Next Generation d.d., Zadar and its
subsidiaries (hereinafter jointly referred to as “TNG”), which comprise the statement of financial position at 31
December 2021, and the statement of profit or loss and other comprehensive income, the statement of changes
in shareholders’ equity and the statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies (“financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of TNG at 31
December 2021, its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs), as adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with the Act on Auditing and International Standards on Auditing (ISAs).
Our responsibilities under those standards are described further in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of TNG in accordance with the International
Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and have
fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter
We draw attention to Note 1 General information, which describes that these financial statements comprise of
the financial statements of Tankerska Next Generation d.d. and its foreign subsidiaries that Tankerska Next
Generation d.d. controls and for which it is in obligation to keep business records and prepare financial
statements for the full operations in the country and abroad according to the article 429.a paragraph 4. of the
Maritime Code (Official Gazette of the Republic of Croatia “Narodne novine” nos. 181/04., 76/07., 146/08.,
61/11., 56/13., 26/15. and 17/19.) has the obligation to maintain business records and prepare financial
statements for integrated domestic and foreign operations, including all shipping companies in its majority
ownership that perform the economic activities using the ships the net tonnage of which is included in the
tonnage tax assessment. Our opinion is not modified in respect of this matter.
Key Audit Matters
The key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the annual financial statements for the current period. These matters were addressed in the context of
our audit of the annual financial statements as a whole, and in forming our opinion thereon, but we do not
provide a separate opinion on these matters.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation.
INDEPENDENT AUDITOR'S REPORT (continued)
Key audit matter (continued)
Valuation of vessels
For accounting policies regarding the identified key audit matter refer to Note 2e, 2f, 2h, 2i and 2j. For
additional information refer to Note 7 and 14 in the financial statements.
As at 31 December 2021 the carrying amount of the vessels managed by TNG was HRK 1,002,146 thousand
(2020: HRK 1,002,441 thousand) i.e. USD 150,845 thousand (2020: 163,290 thousand).
As per IAS 36 “Impairment of assets” at the end of each reporting period, Management is required to assess
whether there is any indication that an asset may be impaired (i.e. its carrying amount may be higher than
its recoverable amount). If there is an indication that an asset may be impaired, then the asset's recoverable
amount must be calculated.
An impairment loss is recognized in profit or loss whenever the carrying amount of an asset exceeds its
recoverable amount.
The Management has obtained fair values based on independent sources and has also prepared impairment
tests based on discounted cash flows for all vessels within the fleet, when preparing the annual financial
statements. Testing is based on the estimated recoverable amounts per cash-generating unit, defined as the
higher of fair value less estimated costs of disposal and value in use.
The key assumptions for estimating the value of ships relate to, among the other assumptions, to the
expected long-term freight rates under time and voyage charter contracts and the average expected number
of days in service, the daily expected operating cost within the medium-capacity tanker product sector (MR2)
in which the Company operates both the discount rate and the estimated value of the steel at the time of
scrapping. In order to obtain these valuations, the key assumptions are determined based on the average
estimates derived from the available valuations of independent international maritime analysts.
Auditor’s approach to the Key Audit Matters
Our procedures in relation to management’s impairment assessment of vessels included:
• assessing the value-in-use models developed by the Management Board, including the consideration of
the valuation methodology and the reasonableness of the underlying key assumptions and inputs based on
our knowledge of the operations and the relevant industry and relying on the available supporting evidence
such as cost budgets and forecasts and data observed on the market, which relate to future freight hires,
interests rates and other. Furthermore, we reviewed the commitments contained in the underlying
contracts;
• assessing the key assumptions made by the Management, including its consideration of the expected
future short- and long-term rates, daily running costs, WACC, useful lives, residual values and
macroeconomic assumptions;
• examining, on a test-basis, the committed cash inflows and cash outflows in the value-in-use calculation;
• checking the calculations of fair value less cost of disposal for vessels done by the Management Board,
including a comparison of the carrying amounts of the vessels with available valuations prepared by an
external and independent ship valuation broker;
• assessing the useful lives and residual values applied by the Management.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation
INDEPENDENT AUDITOR'S REPORT (continued)
Other Information
Management is responsible for the other information. The other information comprises the information included
in the Annual Report, but does not include the financial statements and our auditor’s report.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. With respect to the
Management Report and the Corporate Governance Statement, which are included in the Annual Report, we
have also performed the procedures prescribed by the Accounting Act. These procedures include examination
of whether the Management Report includes required disclosures as set out in the Articles 21, 22 and 24 of the
Accounting Act and whether the Corporate Governance Statement includes the information specified in the
Articles 22 and 24 of the Accounting Act.
Based on the procedures performed during our audit, to the extent we are able to assess it, we report that:
1. Information included in the other information is, in all material respects, consistent with the attached
annual financial statements.
2. Management Report has been prepared, in all material respects, in accordance with Article 21 and 24
of the Accounting Act.
3. Corporate Governance Statement has been prepared, in all material aspects, in accordance with the
Article 22, paragraph 1, items 3 and 4 of the Accounting Act, and includes also the information from
Article 22, paragraph 1, point 2, 5, 6 and 7, and Article 24, paragraph 2 of the noted Act.
Based on the knowledge and understanding of the Company and its environment, which we gained during our
audit of the financial statements, we have not identified material misstatements in the other information.
Responsibilities of the Management and Supervisory Boards for the financial statements
The Management Board is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRSs adopted by the European Union and for such internal control as the Management Board
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Management Board is responsible for assessing the ability of TNG to
continue as a going concern, including, where appropriate, whether the use of the going concern basis of
accounting is appropriate. The use of the going concern basis of accounting is appropriate unless the
Management Board either intends to liquidate TNG or to cease operations, or has no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing TNG’s financial reporting process.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation
INDEPENDENT AUDITOR'S REPORT (continued)
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by Management.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management. Conclude on the appropriateness of
management’s 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 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 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the 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, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation
INDEPENDENT AUDITOR'S REPORT (continued)
Auditor’s Reporting on Compliance with the Commission Delegated Regulation (EU) No. 2018/815 for the
Presentation of the Annual Report and Audited Financial Statements in European Single Electronic Format
(“ESEF”)
Report on the auditor's reasonable assurance of compliance of the annual financial statements (“financial
statements”) prepared pursuant to Article 462 paragraph 5 of the Capital Market Act applying the requirements
of Delegated Regulation (EU) 2018/815 specifying a single electronic format reporting for the issuers (“ESEF
Regulation”). We undertook a reasonable assurance engagement on whether the audited financial statements
of TNG for the financial year ended 31 December 2021 have been prepared for public disclosure under Article
462 paragraph 5 of the Capital Market Act and are contained in the electronic file 74780000Y04HB9CIA883-2021-
12-31-en.zip, in all material aspects prepared in accordance with the requirements of the ESEF Regulation.
Responsibilities of Management and those charged with governance
The Management Board is responsible for the preparation and content of the financial statements in accordance
with the ESEF Regulation.
In addition, the Management Board is responsible for maintaining an internal control system that reasonably
ensures the preparation of financial statements without material non-compliance with the reporting
requirements of the ESEF Regulation, whether due to fraud or error.
The Management Board of the Company is also responsible for:
• Public disclosure of financial statements contained in the annual report in the current XHTML format.
• Selection and use of XBRL tags in accordance with the requirements of the ESEF Regulation.
Those in charge for governance are responsible for overseeing the preparation of financial statements in ESEF
format as part of the financial reporting process.
Auditor’s Responsibility
Our responsibility is to carry out a reasonable assurance engagement and to express the conclusion, based on
the audit evidence gathered, as to whether the financial statements are free from material non-compliance with
the requirements of the ESEF Regulation. We conducted our reasonable assurance engagement in accordance
with the International Standard on Assurance Engagements 3000 (revised) – Assurance Engagements Other than
Audits or Reviews of Historical Financial Information (ISAE 3000) published by the International Auditing and
Assurance Standards Board. In accordance with this standard, we are required to plan and perform the
engagement in order to obtain reasonable assurance for providing a conclusion.
Quality control
• We have conducted the engagement in compliance with independence and ethical requirements as
provided by the Code of Ethics for Professional Accountants issued by the International Ethics Standards
Board for Accountants. The code is based on the principles of integrity, objectivity, professional
competence and due diligence, confidentiality and professional conduct. We are in compliance with the
International Standard on Quality Control (ISQC 1) and accordingly maintain an overall management
control system, including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and statutory requirements.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation
INDEPENDENT AUDITOR'S REPORT (continued)
Auditor’s Reporting on Compliance with the Commission Delegated Regulation (EU) No. 2018/815 for the
Presentation of the Annual Report and Audited Financial Statements in European Single Electronic Format
(ESEF) (continued)
Conducted procedures
Within the scope of the work performed, we have carried out the following audit procedures:
• We have read the requirements of the ESEF Regulation.
• We have gained an understanding of the Company's internal control processes relevant to the
application of the requirements of the ESEF Regulation.
• We have identified and assessed the risks of material misstatement with the ESEF Regulation due to
fraud or error.
• Based on this, we devised and designed procedures to respond to the assessed risks and to obtain
reasonable assurance for the purpose of expressing our conclusion.
The aim of our procedures was to assess whether:
• Financial statements, which are included in the annual report, prepared in the current XHTML format.
• The information contained in the financial statements required by the ESEF Regulation is tagged and all
tags meet the following requirements:
o XBRL markup language was used.
o The basic taxonomy elements listed in the ESEF Regulation with the closest accounting
significance were used, unless an additional taxonomy element was created in accordance with
Annex IV to the ESEF Regulations.
o Tags comply with the common tagging rules under the ESEF Regulation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Conclusion
In our opinion, based on the procedures performed and the evidence obtained, the financial statements of TNG
presented in ESEF format, contained in the above electronic file and pursuant to Article 462 paragraph 5 of the
Capital Market Act are prepared for public disclosure and that they in all material determinants comply with the
requirements of Articles 3, 4 and 6 of the ESEF Regulation for the year ended 31 December 2021.
In addition to this conclusion, as well as the opinions contained in this Independent Auditor's Report for the
accompanying financial statements and annual report for the year ended 31 December 2021, we do not provide
any opinion on the information contained in these representations or other information contained in the above
file.
This version of the auditor`s report is translation from the original, which was prepared in the Croatian language. All possible care has been taken to ensure that
the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language
version of the report takes precedence over this translation
For signatures, please refer to the
original Croatian auditor`s report,
which prevails.
INDEPENDENT AUDITOR'S REPORT (continued)
Other reporting obligations prescribed by EU Regulation no. 537/2014 of the European Parliament and of the
Council and the Audit Act
The General Assembly of TNG appointed us an Auditor of the Company on July 2, 2021 for the purpose of auditing
the accompanying financial statements. Our uninterrupted engagement lasts for a total of eight years and relates
to the period from 1 January 2014 to 31 December 2021.
We affirm the following:
• Our audit opinion on the accompanying financial statements is consistent with an additional report
issued to the TNG Audit Committee on April 28, 2022, in accordance with Article 11 of Regulation (EU)
No. 537/2014 of the European Parliament and of the Council;
• No unauthorized non-broadcasting services referred to in Article 5 paragraph 1 of Regulation (EU) No.
537/2014 of the European Parliament and of the Council were provided.
In addition to the services provided by the TNG and the companies under its control, we did not provide services
other than those services that were published in the Annual Report.
The engagement partner on the audit resulting in this independent auditor’s report is Marina Tonžetić.
Marina Tonžetić,
Director and Certified Auditor
Zagreb, 29
th
of April 2022
Deloitte d.o.o.
Radnička cesta 80
10 000 Zagreb
Republic of Croatia
Statement of profit or loss and other comprehensive income
for the year ended 31 December 2021
(all amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 9
Notes
2021
2021
2020
2020
USD
HRK
USD
HRK
REVENUE
Vessel revenue
3
Other income
3
Total income
OPERATING EXPENSES
Voyage expenses
4
(15,161 )
(97,443 )
(5,838 )
(,38,132 )
Vessel operating expenses
5
(15,398 )
(97,761 )
(15,045 )
(99,486 )
Depreciation
6
(8,280 )
(52,771 )
(8,029 )
(52,806 )
Vessel value adjustment
7
(9,854 )
(65,466 )
(9,069 )
(55,676 )
General and administrative
expenses
8
(999 )
(6,352 )
(946 )
(6,290 )
Total operating expenses
(49,692 )
(319,793 )
(38,927 )
(252,390 )
Profit from operations
(8,880 )
(59,064 )
(2,839 )
(11,317 )
Financial income
9
Financial expenses
10
(5,298 )
(34,314 )
(3,105 )
(20,673 )
Net financial
income/(expense)
(4,328 )
(27,925 )
(3,068 )
(20,366 )
Tonnage tax
11
Earnings before tax
(13,208 )
(86,989 )
(5,907 )
(31,683 )
Income tax
12
Profit (loss) of the year
(13,208 )
(86,989 )
(5,907 )
(31,683 )
Attributable to:
Owners of the parent
(13,208 )
(86,989 )
(5,907 )
(31,683 )
Non-controlling interests
(13,208 )
(86,989 )
(5,907 )
(31,683 )
Other comprehensive
income
Items not reclassified
subsequently to profit or loss
Exchange differences on
translation of foreign
operations
(54,474 )
Total comprehensive
income
(11,693 )
(30,144 )
(5,718 )
(86,157 )
Attributable to:
Owners of the parent
(11,693 )
(30,144 )
(5,718 )
(86,157 )
Non-controlling interests
(11,693 )
(30,144 )
(5,718 )
(86,157 )
Earnings per share, basic and
diluted
13
(1.51 )
(9.98 )
(0.68 )
(3.63 )
The accompanying notes form an integral part of these financial statements.
Statement of financial position
for the year ended 31 December 2021
(all amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 10
At 31
December
2021
At 31
December
2021
At 31
December
2020
At 31
December
2020
Notes
USD
HRK
USD
HRK
NON-CURRENT ASSETS
Vessels and equipment
14
Financial assets
Total non-current assets
CURRENT ASSETS
Inventories
15
Trade and other receivables
16
Prepaid expenses and accrued
income
17
Cash and cash equivalents
18
Total current assets
Total assets
SHAREHOLDERS’ EQUITY
AND RESERVES
Share capital
19
Share premium
Reserves
19
Exchange differences - positive
19
Exchange differences - negative
(2,419 )
(3,934 )
(43,480 )
Retained earnings
Profit (loss) of the year
(13,208 )
(86,989 )
(5,907 )
(31,683 )
Total capital and reserves
NON-CURRENT LIABILITIES
Interest-bearing loans and
borrowings
20
Total non-current liabilities
CURRENT LIABILITIES
Interest-bearing loans and
borrowings
20
Trade and other payables
21
Accrued expenses and deferred
income
22
Total current liabilities
Total liabilities
Total shareholders’ equity and
liabilities
The accompanying notes form an integral part of these financial statements.
Statement of cash flows
for the year ended 31 December 2021
(all amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 11
2021
2021
2020
2020
Notes
USD
HRK
USD
HRK
OPERATING ACTIVITIES
Profit (loss) for the year
(13,208 )
(86,989 )
(5,907 )
(31,683 )
Adjusted by:
Depreciation
14
Vessel value adjustment
14
Reversal of impairment losses
(955 )
(6,342 )
Interest expense
10
Interest income
9
(3 )
(16 )
(12 )
(82 )
Exchange differences from related-
party transactions
9
(967 )
(6,373 )
Net change in foreign exchange
differences
9, 10
(25 )
(225 )
Changes in working capital
Increase in current receivables
(2,672 )
(18,629 )
(3,430 )
(23,969 )
Increase in inventories
15
(636 )
(4,139 )
(663 )
(3,945 )
Decrease in current liabilities
21, 22
Interest paid
(2,556 )
(16,290 )
(3,040 )
(20,411 )
Interest received
Cash flows from operating
activities
INVESTING ACTIVITIES
Cash paid for purchases of vessels
and equipment
21, 14
(5,024 )
(31,661 )
(5,014 )
(32,612 )
Other expenditures
(2 )
(8 )
(78 )
(503 )
Cash flows from investing
activities
(5,026 )
(31,669 )
(5,092 )
(33,115 )
FINANCING ACTIVITIES
Received loans
Repayments of received loans
(83,446 )
(526,486 )
(9,382 )
(62,608 )
Dividends paid
Share buy-back
(10 )
(64 )
(86 )
(581 )
Cash flows from financing
activities
(7,468 )
(50,870 )
Net (decrease)/increase in cash
and cash equivalents
(4,545 )
(31,241 )
Effects of exchange rate changes
on the balance of cash
(2 )
(1,667 )
Cash and cash equivalents at
beginning of period
Cash and cash equivalents at end
of period
18
The accompanying notes form an integral part of these financial statements.
Statement of changes in shareholders’ equity
for the year ended 31 December 2021
(all amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 12
Share
capital
Retained
earnings
Foreign-
exchange
differences
reserve
Other
reserves
Share
premium
Purchase
of own
shares
Total
USD
USD
USD
USD
USD
USD
USD
Balance at 31 December 2019
(4,123 )
(143 )
Profit (loss) for the year
(5,907 )
(5,907 )
Exchange differences on translation of
foreign operations
Total comprehensive income
(5,907 )
(5,718 )
Transfer of other reserves
(177 )
Share buy-back
(86 )
(86 )
(86 )
Paid dividend
Balance at 31 December 2020
(3,934 )
(229 )
Profit (loss) for the year
(13,208 )
(13,208 )
Exchange differences on translation of
foreign operations
Total comprehensive income
(13,208 )
(11,693 )
Transfer of other reserves
Share buy-back
(10 )
(10 )
(10 )
Paid dividend
Balance at 31 December 2021
(3,470 )
(2,419 )
(239 )
The accompanying notes form an integral part of these financial statements.
Statement of changes in shareholders’ equity (continued)
for the year ended 31 December 2021
(all amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 13
The accompanying notes form an integral part of these financial statements.
Share
capital
Retained
earnings
Foreign-
exchange
differences
reserve
Other
reserves
Share
premium
Purchase
of own
shares
Total
HRK
HRK
HRK
HRK
HRK
HRK
HRK
Balance at 31 December 2019
(997 )
Profit (loss) for the year
(31,683 )
(31,683 )
Exchange differences on translation of
foreign operations
(54,474 )
(54,474 )
Total comprehensive income
(31,683 )
(54,474 )
(86,157 )
Transfer of other reserves
(1,167 )
Share buy-back
(581 )
(581 )
(581 )
Paid dividend
Balance at 31 December 2020
(43,480 )
(1,587 )
Profit (loss) for the year
(86,989 )
(86,989 )
Exchange differences on translation of
foreign operations
Total comprehensive income
(86,989 )
(30,144 )
Transfer of other reserves
Share buy-back
(63 )
(63 )
(63 )
Paid dividend
Balance at 31 December 2021
(30,287 )
(1,641 )
Notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 14
1. GENERAL INFORMATION
History and incorporation
nd
of August 2014. The Company's registered seat is in Zadar, Božidara Petranovića 4 .
The Company’s registered activities comprise the following:
1. Sea and coastal cargo transport
2. Sea and coastal passenger water transport
3. Services in sea transport :
− Service activities incidental to sea transportation;
− Rescue or removal of vessels or other property that may be subject to rescue on the sea
surface, or if it is immersed, on the sea bottom;
− Salvage and towage of ships and other maritime activities;
− Supply of ships, boat and yachts with motor fuel;
− Pilotage in coastal waters of the Republic of Croatia ;
− Intermediation incidental to water transportation;
− Rental of vessels;
− Domestic and international road passenger and freight transport;
− Agency activities involved in the domestic and international sale of machinery, industrial
equipment, ships and aircraft;
− Wholesale of liquid and gaseous oils and related products;
− Building of ships and floating structures;
− Supervision services to building of ships and floating structures;
− Repair and maintenance of ships and boats.
The Company conducts its activities through its related party Tankerska Next Generation International Ltd.,
Marshall Islands.
Governance and management
In the period from 1 January 2021 to the issuance of these financial statements the members of the
Supervisory Board were as follows:
Ivica Pijaca
Chairman of the Supervisory Board
Mario Pavić
Deputy Chairman of the Supervisory Board
Nikola Koščica
Member of the Supervisory Board
Joško Miliša
Member of the Supervisory Board
Dalibor Fell
Member of the Supervisory Board
Notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 15
1. GENERAL INFORMATION (CONTINUED)
The Management Board consists of one member - Mr. John Karavanić.
In the period from 1 January 2021 to the issuance of these financial statements the members of the Audit
Committee were as follows:
Ante Gavran
Chairman of the Audit Committee
Mario Pavić
Member of the Audit Committee
Genarij Sutlović
Member of the Audit Committee
At 31 December 2021, there were 3 persons employed at the Company’s administration (31 December 2020:
3 employees). At 31 December 2021 the crew of subsidiary Tankerska Next Generation International Ltd.
consisted of 131 seamen on a contract basis (31 December 2020: 132 seamen on a contract basis).
The ownership structure as at 31 December 2021 is set out below:
Number of
shares
Ownership
interest in %
4,454,994
51.01
PBZ Croatia Osiguranje Mandatory pension fund - category B
839,000
9.61
Erste Plavi Mandatory pension fund - category B
808,000
9.25
Raiffeisen Mandatory pension fund - category B
752,036
8.61
Raiffeisen Voluntary pension fund
372,103
4.26
Other institutional and private investors
1,507,212
17.26
8,733,345
100.00
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 16
1. GENERAL INFORMATION (CONTINUED)
These financial statements for the period ended 31 December 2021 comprise of the financial statements of
Tankerska Next Generation d.d. and its foreign subsidiaries (shipping companies operating internationally)
that Tankerska Next Generation d.d. controls from a single administrative seat and under single governance
body, and for which it is in obligation to keep business records and prepare financial statements for the full
operations in the country and abroad according to the article 429.a paragraph 4. of the Maritime Code (Official
Gazette of the Republic of Croatia “Narodne novine” nos. 181/04., 76/07., 146/08., 61/11., 56/13., 26/15. and
17/19.) has the obligation to maintain business records and prepare financial statements for integrated
domestic and foreign operations, including all shipping companies in its majority ownership that perform the
economic activities using the ships the net tonnage of which is included in the tonnage tax assessment.
As subsidiaries of Tankerska Next Generation d.d. may not have the obligation, pursuant to the applicable
legislation in the relevant domicile countries, to maintain business records and prepare financial statements
in the respective countries of domicile, Tankerska Next Generation d.d. presents the assets and liabilities,
revenue and expenses of its subsidiaries in its financial statements, as specified in the Accounting Act and
the Profit Tax Act and in accordance with the requirements of International Financial Reporting Standard
adopted by the European Union ("IFRS").
The financial statements for the year ended 31 December 2021 were authorised for issue in accordance with
the underlying decision of the Management Board. Pursuant to the Croatian Companies Act, they have to be
approved by the Supervisory Board.
The accounting policies set out below were applied consistently to all the periods presented.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 17
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
Statement of compliance
The financial statements are prepared in accordance with International Financial Reporting Standards
(IFRSs), as adopted by the European Union.
Initial application of new amendments to the existing standards effective for the current reporting
period
TNG adopted the following amendments to the existing standards issued by the International Accounting
Standards Board (IASB) and adopted by the EU are effective for the current reporting period:.
• Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and
Measurement”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and
IFRS 16 “Leases” - Interest Rate Benchmark Reform — Phase 2 adopted by the EU on 13 January
2021 (effective for annual periods beginning on or after 1 January 2021),
• Amendments to IFRS 16 “Leases” - Covid-19-Related Rent Concessions beyond 30 June 2021
adopted by the EU on 30 August 2021 (effective from 1 April 2021 for financial years starting, at the latest,
on or after 1 January 2021),
• Amendments to IFRS 4 Insurance Contracts “Extension of the Temporary Exemption from
Applying IFRS 9” adopted by the EU on 16 December 2020 (the expiry date for the temporary exemption
from IFRS 9 was extended from 1 January 2021 to annual periods beginning on or after 1 January 2023).
The adoption of amendments to the existing standards has not led to any material changes in the Company’s
financial statements.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 18
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Standards and amendments to the existing standards issued by IASB and adopted by the EU but not
yet effective
At the date of authorization of these financial statements, the following amendments to the existing standards
were issued by IASB and adopted by the EU and which are not yet effective:
• Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure of Accounting Policies
adopted by the EU on 2 March 2022 (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” –
Definition of Accounting Estimates adopted by the EU on 2 March 2022 (effective for annual periods
beginning on or after 1 January 2023),
• Amendments to IAS 16 “Property, Plant and Equipment” - Proceeds before Intended Use adopted
by the EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
• Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous
Contracts - Cost of Fulfilling a Contract adopted by the EU on 28 June 2021 (effective for annual periods
beginning on or after 1 January 2022),
• Amendments to IFRS 3 “Business Combinations” - Reference to the Conceptual Framework with
amendments to IFRS 3 adopted by the EU on 28 June 2021 (effective for annual periods beginning on
or after 1 January 2022),
• IFRS 17 “Insurance Contracts” including amendments to IFRS 17 issued by IASB on 25 June 2020 -
adopted by the EU on 19 November 2021 (effective for annual periods beginning on or after 1 January
2023),
• Amendments to various standards due to “Improvements to IFRSs (cycle 2018 -2020)” resulting
from the annual improvement project of IFRS (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view
to removing inconsistencies and clarifying wording - adopted by the EU on 28 June 2021 (The
amendments to IFRS 1, IFRS 9 and IAS 41 are effective for annual periods beginning on or after 1
January 2022. The amendment to IFRS 16 only regards an illustrative example, so no effective date is
stated.).
New standards and amendments to the existing standards issued by IASB but not yet adopted by the
EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International
Accounting Standards Board (IASB) except for the following new standards and amendments to the existing
standards, which were not endorsed for use in EU as at date of publication of financial statements (the
effective dates stated below is for IFRS as issued by IASB):
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 19
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New standards and amendments to the existing standards issued by IASB but not yet adopted by the
EU (continued)
• IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January
2016) - the European Commission has decided not to launch the endorsement process of this interim
standard and to wait for the final standard,
• Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as
Current or Non-Current (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities arising from
a Single Transaction (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in
Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture and further amendments (effective date deferred indefinitely until the research project
on the equity method has been concluded),
• Amendments to IFRS 17 “Insurance contracts” - Initial Application of IFRS 17 and IFRS 9 –
Comparative Information (effective for annual periods beginning on or after 1 January 2023).
The Company anticipates that the adoption of these new standards and amendments to the existing
standards will have no material impact on the financial statements of the Company in the period of initial
application.
Hedge accounting for a portfolio of financial assets and liabilities whose principles have not been adopted by
the EU remains unregulated.
According to the Company’s estimates, the application of hedge accounting to a portfolio of financial assets
or liabilities pursuant to IAS 39: “Financial Instruments: Recognition and Measurement” would not
significantly impact the financial statements, if applied as at the balance sheet date.
a) Functional and presentation currency
The functional currency of TNG is the Croatian kuna (HRK).
TNG presents its financial statements in two currencies, the Croatian kunas (HRK) according to the regulation
of the Republic of Croatia and the US dollars (USD) according to the industry and business practice of its
foreign subsidiaries. The conversion of USD into HRK as the functional currency and the currency in which
all business events are recorded, is performed in accordance with the relevant accounting standards and as
requirement by IAS 21: The Effects of Changes in Foreign Exchange Rates. (note 2.d).
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a) Functional and presentation currency (continued)
Accordingly, financial statements are stated in Croatian kunas and converted to US dollars as follows:
• Current exchange rate effective at the end of the financial year was applied for all asset and liability
items except for the positions of the share capital and reserves which are carried at historical cost
converted into USD as of the transaction date.
• For profit and loss and other comprehensive income items such as cash flow statements, the exchange
rate on the transaction date was applied.
Exchange differences arising on translation of foreign operations presented in US dollars are credited or
debited to Shareholders’ equity and reserves.
The exchange rates applied in the conversion of the financial statements presented in Croatian kunas to US
dollars were as follows:
USD/HRK
2021
31 December
6.643548
USD/HRK
2020
31 December
6.139039
The amounts in the financial statements are rounded to the nearest thousand.
b) Use of estimates and judgements
The preparation of the financial statements in accordance with IFRSs requires from management to make
own judgements, estimates and assumptions that affect the application of accounting policies as well as
reported amounts of assets and liabilities, income and expenses. Actual results could differ from those
estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised 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 the current and
future periods.
Key sources of estimation uncertainty and assumptions that affect the application of policies with significant
effect on the amounts recognized in the financial statements are disclosed in paragraph 2.gg) of this note.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c) Basis of preparation
The financial statements are prepared on the basis of historical expense, with the exception of financial
instruments that are stated at fair value.
The financial statements have been prepared under the going-concern assumption.
The financial statements TANKERSKA NEXT GENERATION d.d. include the assets, liabilities, revenues and
expenses of the following subsidiaries fully (100 %) owned by Tankerska Next Generation d.d.:
1. Tankerska Next Generation International Ltd., Majuro, Marshall Islands;
2. Fontana Shipping Company Limited, Monrovia, Liberia;
3. Teuta Shipping Company Ltd., Monrovia, Liberia;
4. Vukovar Shipping, LLC, Majuro, Marshall Islands;
5. Zoilo Shipping, LLC, Majuro, Marshall Islands and
6. Pag Shipping, LLC, Majuro, Marshall Islands
The carrying amount of direct and indirect investments of Tankerska Next Generation d.d. in its subsidiaries
at 31 December 2021:
USD
HRK
ownership
share%
1.
Tankerska Next Generation International Ltd.,
Majuro, Marshall Islands
75,938
491,258
100.00
2.
Fontana Shipping Company Limited, Monrovia,
Liberia
25,088
162,298
100.00
3.
Teuta Shipping Company Ltd., Monrovia,
Liberia
6,280
40,625
100.00
4.
Vukovar Shipping, LLC, Majuro, Marshall
Islands
15,170
98,140
100.00
5.
Zoilo Shipping, LLC, Majuro, Marshall Islands
14,571
94,263
100.00
6.
Pag Shipping, LLC, Majuro, Marshall Islands
16,142
104,514
100.00
Total
153,189
991,098
100.00
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d) Foreign currencies
Transactions of foreign operations denominated in a foreign currency are translated to the functional currency
at the transaction-date exchange rates. At each date of the statement of financial position, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at that date. Any gain or loss arisen
from a change in the exchange rate subsequent to the transaction date is included in the profit and loss
account and reported within financial income and financial expenses respectively.
Assets and liabilities of foreign operations are translated into domestic currency according to the middle
exchange rate of Croatian National Bank valid on the reporting date, while for revenues and expenses and
cash flows the middle exchange rate on the transaction date is applied. All exchange differences arisen on
the retranslation are recognised in a separate component of equity.
Exchange differences resulting from the retranslation of the net investment in foreign entities are included in
equity under translation reserve. On the sale of a foreign operation, the exchange differences are transferred
to profit or loss.
e) Property, plant and equipment
Individual items of property, plant and equipment, including vessels (see 2.h and 2.ff), that meet the
recognition requirements for assets are measured at cost. Cost includes the purchase price and all costs
directly associated with bringing an asset to a working condition for its intended use. Items and equipment
are recognised as non-current assets if their useful life is longer than one year and their unit cost exceeds
HRK 3,500.
Subsequent to initial recognition, items of property, plant and equipment are recognised at cost less
accumulated depreciation and any accumulated impairment losses.
Gains and losses from the disposal of the property, plant and equipment are recognised within other revenues
or expenses in the statement of profit or loss and other comprehensive income depending on the result.
Subsequently incurred expenditure on an already recognised item of property, plant and equipment is
capitalised, i.e. added to the cost when it is probable that the expenditure will bring further economic benefits
and improve the item's performance beyond the one previously assessed. All other subsequent expenditure
is recognised as an expense in the period in which it is incurred.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e) Property, plant and equipment (continued)
Depreciation is provided separately for each major asset (vessels) based on a depreciable period of 25 years,
whereas for minor assets it is provided on the basis of the relevant groups of assets. Depreciation is
accounted for according to the expected useful life and the rates derived from it, depending on the group and
subgroup of property, plant and equipment, using the straight-line method.
The estimated useful life for individual categories of assets is as follows:
- company vehicle 5 years
- computers and telecom equipment 4 years
Depreciation of those assets commences when they are ready for use.
f) Impairment of non-current intangible and tangible assets
At each reporting date, the carrying amounts of TNG's assets are reviewed to identify whether there is any
indication that the assets may be impaired. If any such indication exists, the recoverable amount of an asset
is estimated.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Assets with the right of use in accordance with IFRS 16 are considered to be non-financial assets. Therefore,
they are within the scope of the application of IAS 36. Impairment losses are recognised in the income
statement whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable
amount.
The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets not
yet available for use are estimated at each reporting date.
Impairment losses recognised in respect of individual cash generating units are allocated so as to, first, reduce
the carrying amount of goodwill allocated to the cash generating unit (or groups of units) and then
proportionally the carrying amounts of other assets within the unit (or group of units).
The Management Board performs impairment tests based on discounted cash flows for the entire fleet, at
annually when preparing the year-end financial statements. Tests are based on the estimated recoverable
amounts, defined as the higher of fair value less estimated costs of disposal or value in use. Key assumptions
regarding valuation of vessels are long-term charter rates from time charter and the average expected number
of working days, the daily expected operating cost within the medium range tanker product sector (MR2) in
which TNG operates, the discount rate and the estimated scrap value of the steel at the time of demolition.
Impairment losses on goodwill are not reversed. In respect of other assets, an impairment loss is reversed
when there is an indication that the previously recognised impairment loss is either reduced or no longer
exists, based on a review performed at each reporting date. Impairment losses are reversed if there has been
a change in the estimates used to determine the recoverable amount. 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 accumulated depreciation or amortisation, if no impairment loss had been recognised.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g) Vessel operating costs
TNG is responsible for vessel operating costs, which include crewing, repairs and maintenance, lubricants,
insurance, spares, stores, registration and communication, sundries and management fees (technical
management, crew management and insurance arrangements).
h) Depreciation of vessels
The carrying amount of each vessel is its initial cost at the time of delivery or acquisition (except for vessels
acquired in a business combination, which are measured at the acquisition-date fair value) less accumulated
depreciation and impairment. Depreciation of vessels is provided to write down the cost to the residual value
over the estimated useful life of a ship by applying the straight-line method, starting from the date of the
original delivery i.e. acquisition. The estimated useful life of TNG’s vessels is 25 years from the date of
accepting a ship from the shipyard, in line with the industry practice for identical ships. The estimated useful
life of a ship takes into account the ship design, the commercial characteristics and factors as well as any
regulatory restrictions.
Because of volatile and cyclical tendencies of the scrap prices, the estimated residual value of a vessel does
not need to represent the market value at a certain point of time.
Extending the estimated useful life of a vessel or increasing the residual value will result in a reduced
depreciation charge for the year and extended future depreciable periods. A reduced useful life of a ship or a
lower residual value will result in a higher depreciation charge for the year.
i) Dry-docking
TNG performs periodical dry-dock surveys, repairs and certain modifications to its ships. The dry-docking
costs include all costs directly attributable to the dry-docking for the purpose of meeting the regulatory
requirements, improvements that may extend the economic life of a ship, enhance its ability to generate
revenue or its overall performance. The direct costs include shipyard costs, the costs of the hull preparation
and painting, hull and mechanical component inspection, the inspection of the steel construction, mechanical
and electrical works. The costs associated with regular maintenance and repairs during dry-docking are
recognised as expenses as incurred.
j) Vessel impairment and dry-docking costs
TNG reviews the carrying amounts of the vessels, including the dry-docking costs, whenever events or market
circumstances indicate that the carrying amount of the assets or the related inputs, i.e. time charters, if any,
may not be recoverable.
Where a need to recognise an impairment is identified, the recoverable amount of a vessel is estimated as
the higher of value in use, determined on the basis of the discounted future cash flows or vessels fair value
less selling costs (mostly based on the market price).
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 25
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
j) Vessel impairment and dry-docking costs (continued)
Where, as a result of the review, the recoverable amount is identified to be lower than the carrying amount of
an asset, the carrying amount is reduced to the asset’s estimated recoverable amount.
Impairment losses are included in profit or loss whenever the carrying amount of a ship exceeds the ship’s
recoverable amount. An impairment loss is reversed when there is an indication that the impairment loss
recognised in a prior period is either reduced or no longer exists. 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, if no impairment loss had been recognised. A reversal of impairment is
recognized as income immediately.
k) Financial assets
TNG initially recognizes financial asset allocation into business models and accordingly conducts a test of
contractual cash flows. Subsequent measurement depends on allocation and test of contracted cash flows.
Classification depends on the purpose for which the financial asset has been acquired. The Management
determines the classification of financial assets at initial recognition and evaluates that decision at each
reporting date. Given the characteristics and management of credit risk, TNG classifies its financial assets
into the following business models, and consequently certain categories of measurements:
i. Financial assets in the business model held to collect - receivables from customers and other
receivables, cash and cash equivalents. With the requirement of passing the cash flow test,
which consists solely of principal payments and interest on the outstanding principal, financial
assets are measured at amortized cost in this business model.
ii. Financial assets in the business model held to collect and sell - In this business model TNG
holds financial assets managing liquidity risk. In this business model, subject to the requirement
of passing the cash flow test, which consists solely of principal payments and interest on the
outstanding principal, financial assets are measured at fair value through other comprehensive
income.
iii. Financial assets in the business model held to collect and sell - in this business model TNG
holds the financial assets it trades. In this business model, financial assets are measured at fair
value through profit or loss.
(I) Financial assets measured at amortized cost
TNG measures financial assets at amortized cost if both of the following conditions are met:
• Financial assets are held within the business model for the purpose of holding financial assets for
the purpose of collecting contractual cash flows,
• Contractual terms of financial assets arise from certain dates for cash flows that are solely principal
payments and interest on the outstanding principal amount.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 26
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
k) Financial assets (continued)
Financial assets at amortized cost are subsequently measured using the effective interest rate method and
are subject to impairment. Gains and losses are recognized in the income statement when the property
ceases to be recognized, changed or reduced.
Financial assets at amortized cost include receivables from customers and other receivables, payable costs
for the future period and accrued income, as well as deposits.
If the contractual terms of a financial asset change significantly or a partial or full write-off of contracted cash
flows occurs, the financial asset is derecognised, and new financial assets that are subject to retest are initially
recognized.
The significance of a change in contractual terms is calculated by applying the original effective interest rate
to cash flows due to a change in contractual terms. The difference arising from the original contracted cash
flows and calculated in this way is recorded in the statement of comprehensive income if it is insignificant,
while in the case of significant cash, derecognition is performed as previously stated. TNG defines the
significance of a change in contractual terms at the qualitative and quantitative level during each change in
the terms of an individual contract.
(II) Financial assets at fair value through profit or loss
This category includes financial assets held for trading. Financial assets are classified in this category if they
are acquired primarily for the purpose of short-term sales or if so determined by the Management Board.
Assets in this category are classified as short-term assets other than derivative financial instruments.
(III) Financial assets at fair value through other comprehensive income
TNG measures financial assets at fair value through other comprehensive income if both of the following
conditions are met:
• Financial assets are held within the business model for the purpose of holding financial assets for
the purpose of collecting or selling contractual cash flows,
• Contractual terms of financial assets arise from certain dates for cash flows that are solely principal
payments and interest on the outstanding principal amount.
For debt instruments at fair value through other comprehensive income, interest income, exchange rate
differences, write-downs or write-offs are recognized in the income statement and are calculated in the same
way as for financial assets measured at amortized cost. The remaining fair value changes are recognized in
other comprehensive income. After the cessation of recognition, the cumulative change in fair value
recognized in other comprehensive income is recognized in the income statement and included under
"Financial income / (expense)".
Financial assets at fair value through other comprehensive income are included in fixed assets unless the
Management intends to sell an investment within a period of 12 months from the balance sheet date.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 27
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
k) Financial assets (continued)
Financial assets at fair value through other comprehensive income are stated at fair value, except for
investments in equity instruments that are not quoted in an active market and whose fair value cannot be
measured reliably; then it is stated at the cost of the investment.
All purchased and sold financial assets are recognized on the date of the transaction, i.e. on the date on
which the TNG is obliged to buy or sell the asset. Investments are initially recognized at fair value plus
transaction costs for all financial assets that are not stated at fair value through profit or loss. Financial assets
are derecognised when the rights to receive cash flows from the investment are expired or when the TNG
has transferred all the material risks and rewards of ownership.
Changes in the fair value of monetary securities denominated in foreign currencies and classified as available
for sale are used to analyse exchange rate differences resulting from changes in the amortized cost of
securities and other changes in book value of securities.
Interest income and revaluation differences are recognized in the income statement and other changes in the
carrying amount of other comprehensive income. Changes in the fair value of a financial asset that is allocated
to a business model of holding for the purpose of billing and sale and, consequently, measured at fair value
through other comprehensive income.
The fair value of listed equity investments is based on current bid prices. If the market for a financial asset is
not active, the TNG establishes fair value using valuation techniques that take into account recent
transactions under normal trading conditions and comparison with other similar instruments, discounted cash
flow analysis and price setting models, maximum using market information and minimally relying on
information specific to the business entity.
TNG recognizes an Expected Credit Loss (ECL) for all debt instruments that are not measured at fair value
through profit or loss. Expected loan losses are based on the difference between contractual cash flows and
all cash flows that TNG expects to receive. Expected loan losses are calculated on the basis of the historical
loss rate, resulting from uncollected cash flows per financial instrument. This loss rate applies to the financial
assets of the degree defined below.
For credit exposures for which there has been no significant increase in credit risk from initial recognition,
expected credit losses are recognized for credit losses arising from the probability of default in the next 12
months (expected 12-months credit losses). For credit exposures with a significant increase in credit risk from
initial recognition, a correction is required for expected credit losses throughout the life of the facility,
regardless of the time of borrowing (lifelong expected credit losses). For customer and contractual
receivables, TNG applies a simplified approach to calculating expected credit losses and therefore does not
monitor credit risk changes but recognizes a value adjustment based on expected life-long expected credit
loss at the end of each reporting period. Financial assets are written off when there is no reasonable
expectation of collection.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
l) Receivables
Receivables represent the right to receive certain amounts from customers or other debtors as a result of
TNG’s operations. Receivables from customers and other receivables are initially recognized at fair value and
are subsequently measured at amortized cost using the effective interest rate method, less any impairment
losses for expected credit losses
m) Inventories
Inventories are carried at the lower of cost and net realisable value. Stocks of materials, spare parts and small
inventory are carried at purchase costs. Cost of material and spare parts are based on first-in, first-out basis
(FIFO). Small items are written off when put into use. Cost includes the cost of the inventory purchase and
other costs directly attributable to bringing inventories to their present location and condition.
n) Cash and cash equivalents
For the purposes of the statement of financial position and the statement of cash flows, cash and cash
equivalents consist of cash in hand and balances with banks as well as of other highly liquid investments with
initial maturities less than three months that are subject to an insignificant risk of changes in their value.
o) Share capital
The share capital consists of ordinary shares. Costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity.
Consideration paid to redeem own capital stock, including directly attributable costs, is recognised as a
deduction in equity. Redeemed stock is classified as own (treasury) shares and represents a deduction from
the total capital and reserves.
p) Dividends
Dividends are recognised in the statement of changes in shareholders’ equity as a liability in the period in
which they are approved by the Company's shareholders General Assembly.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
r) Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value of the proceeds received, less
attributable transaction costs. In subsequent periods, interest-bearing loans and borrowings are stated at
amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs)
and the redemption value is recognised in the income statement over the period of the borrowings on an
effective interest basis. Changes in the contractual terms of interest-bearing loans and borrowings are subject
to the same accounting policies as changes in the contractual terms of financial assets.
s) Provisions
Provisions are recognized only when TNG has a present obligation (legal or constructive) as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate can be made of the amount of the obligation.
Provisions are determined by discontinuing the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate, the risks specific to the
liability.
t) Trade and other payables
Trade payables are measured initially at fair value and are carried subsequently at amortised cost.
u) Employee benefits
Contributions payable into mandatory pension funds are recognised in profit or loss as an expense as
incurred.
Provisions for bonuses to employees are recognised based on TNG’s formal plan and when past practice
has created a valid expectation by the management or key employees that they will receive a bonus and the
amount if bonus can be determined before the financial statements are issued. Liabilities for bonuses are
expected to be settled within 12 months from the reporting date and are measured at the expected amount
payable.
Short-term employee benefits are not discounted and are recognised as expenses when the related service
is provided.
A provision is recognised in an amount expected to be paid as a current cash bonus or profit distribution plan
if TNG has a present legal or constructive obligation to pay that amount on the grounds of a past service of
the employee and if the obligation can be reliably measured.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
v) Leases
Before each contract, TNG assesses whether a contract is subject to a lease. The contract includes or is a
lease, if it transfers the right of control of usage for the given asset in a certain period in exchange of a
compensation. In the assessment of the right of control of usage for the given asset, TNG makes use of the
lease definition in IFRS 16.
Before the start or modification of a contract that contains a lease, TNG allocates a compensation in the
contract for each part of the lease on basis of its relatively independent price.
(I) Initial recognition
When TNG acts as a lessee in a lease, usually both the asset with the right of use and the associated liability
are presented in the statement of the financial position at the day when the asset was made available to TNG.
(II) Initial measurement of the right-of-use asset
The lessee is obligated to measure the right-of-use asset at its cost at the beginning of the lease. The cost of
the right-of-use asset includes the following:
• The amount of the initial measurement of the liability per lease,
• All lease payments made at the beginning of the lease or before that day, reduced to the amount of
the subventions received for the lease,
• All initial direct costs that occur for the lessee, and
• A cost estimation, that the lessee will pay before the release of the asset, the renovation of the
location of the asset or the return of the asset in the condition which was predetermined by the
circumstances of the lease. The lessee's liability for these costs occur at the date of the beginning of
the lease or as a consequence of usage of the certain asset over time.
(III) Initial liability measurement per lease
On the starting date of the lease, the lessee has the obligation to measure the liability per lease at its carrying
amount which have not been paid until this date. The payment has to be discounted with the interest rate
emerging from the lease, if it is possible to determine it directly. If the interest rate cannot be determined
directly; the lessee is obligated to use the marginal interest rate of the lessee's debt.
At the beginning of a lease, the payments included in the measurement of the liability per lease include the
following payments for the certain right-of-use asset during the lease period, which were not paid until the
beginning of the lease:
• Fixed payments reduced by the amount of subventions received for the lease,
• Variable lease payments that depend of the index or rate, initially measured with the index or rate
that were prevailing at the date of the lease beginning,
• Amounts that are expected to be paid by the lessee based on guarantees for the remaining value,
• The price of the potential acquisition, if it is certain that the lessee will realize his option,
• The penalty payment for the termination of the lease, if the lease period inherits the possibility that
the lessee will terminate the lease.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
v) Leases (continued)
(IV) Subsequent measurement of the right-of-use asset
The lessee acknowledges the right-of-use asset subsequently in accordance with the applied cost model of
IAS 16 — Property, Plant and Equipment. Upon amortization of the right-of-use asset, the lessee is obligated
to apply the amortization requirements of IAS 16 — Property, Plant and Equipment.
(V) Subsequent measurement of liabilities per lease
After the beginning date of the lease, the lessee is obligated to measure the liability:
(a) Increasing the carrying amount to maintain the interest on the liability per lease,
(b) Decreasing the carrying amount to maintain the lease payments, and
(c) Repeated carrying amount measurement to maintain changes of the lease, or to maintain revised lease
payments that were fixed.
(VI) Lease changes
Lease changes can be:
(a) Changes (modifications) of the contract which are considered as a separate lease, and
(b) Changes (modifications) of the contract which are not considered as a separate lease
Contractual changes which are considered as a separate lease occur in two situations:
(a) If with the change (modification) increases the leasing amount resulting in additional right-of-use asset.
(b) If the compensation for the lease increases by the amount which reflects the individual price of the
increase of extent and all adequate refinements such as the individual price to maintain the circumstances
of the contract.
In the occurrence of a change (modification) of the lease contract which are considered a separate lease, it
is essential to reassess the initial recognition in accordance with (I) the initial recognition, (II) the initial
measurement of the right-of-use asset and (III) the initial measurement of liabilities per lease. The repeated
recognition is essentially to be conducted by the day the changes (modifications) enter in force.
Changes (modifications) which are not considered as a separate lease concern:
(a) If the change (modification) decreases the extent of the lease,
(b) Every other change (modification) of a lease contract.
In the occurrence of a decreased lease extent, it is essential to decrease the right-of-use asset and the
liabilities with the new discount rate. The difference between the initial amount and the new recognition is
acknowledged through the Statement of profit or loss. The remaining changes (modifications) of the lease
contract lead to the revision of liabilities with the new discount rate, such as adjustments in the identical
amount in the position of right-of-use assets. From the caption of these changes, there are no direct effects
on the statement of profit or loss.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 32
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
v) Leases (continued)
(VII) TNG does not apply this standard on:
(a) Short-term leases, and
(b) Leases of low value assets.
For short-term leases (lease period is 12 months or less) and leases of low value assets, TNG has decided
on a straight presentation of the lease expense in accordance with IFRS 16. These expenses are presented
in the section of „General and administrative expenses“ in the statement of profit or loss and other
comprehensive income.
For leases, where TNG is the lessor, the differences in financial leases and operative leases are executed in
accordance with IFRS 16. Leases are classified as a financial lease, if nearly all risks and advantages related
to asset ownership are transferred to the lessee during the lease period. The remaining leases are classified
as operative leases.
z) Taxation
TNG assesses its corporate income tax in accordance with Croatian laws.
Income tax expense comprises current and deferred taxes. Income tax expense is recognised in the income
statement to the extent of the tax relating to items within shareholder’s equity and reserves when the expense
is recognised under shareholder’s equity and reserves.
Current tax represents tax expected to be paid on the basis of taxable profit for the year, using the tax rate
enacted at the reporting date and adjusted by any tax liabilities from prior-years. Deferred tax is provided
using the balance sheet liability method, taking into account temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax arises from the expected realisation or settlement of the carrying amounts of assets and liabilities
measured at the tax rates in enacted or substantively enacted at the reporting date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
TNG is under the tonnage tax regime for a period of ten years, starting from 1 January 2014. Companies
qualifying under the relevant provisions of the Maritime Code that have opted for the tonnage tax must remain
subject to this regime for a period of 10 years. The qualifying requirement is that the company must be a
shipping company subject to corporate income tax in Croatia based on any profits that accrue to it. It must
also operate qualifying ships, and most importantly, it must carry out the strategic and commercial
management of the qualifying ships in Croatia.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 33
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
aa) Vessel revenue
In accordance with IFRS 15, the entity recognizes revenue when (or to the extent that) the entity fulfils the
obligation to execute by transferring the promised goods or service to the customer (i.e. the asset). Assets
have been transferred when (or to the extent that) the buyer obtains control over that asset. Property control
refers to the ability to manage the use of property and to realize virtually all the remaining benefits of it. Control
includes the ability to prevent other entities from managing the use of the property and benefiting from it.
Control can be transferred over time or at a particular time.
Charter (hire) revenues are realized from the business activities from charter contracts which can be time
charter and voyage charter type of contracts.
A contract based on a time charter consists of placing a vessel at a disposal for a specified period of time and
used by the charterer as a replacement for the payment of a certain daily hire. The contractual obligation at
time charter is fulfilled during the term of the charter, starting from the moment the vessel is delivered to the
charterer until it is redelivered to TNG. Time charters are considered as operating leases and therefore do
not fall within the scope of IFRS 15 because (i) the vessel is a recognizable asset (ii) the TNG has no right to
be replaced and (iii) the charterer has the right to control the vessel 's use during the term of the charter hire
and acquires economic benefits of such use.
For a business on the basis of voyage charter, the vessel is engaged in a voyage between two or more ports.
TNG transfers control over the service over the time and hence, over the time, fulfils the obligation to execute
and recognizes revenue. The obligation begins to be satisfied by handing over a notice of readiness within
dates agreed with the charterer. TNG has determined that its voyage charters consist of a sole obligation to
carry the cargo within a certain timeframe. Consequently, the obligation to execute the charter is equally
satisfied as voyage is progressing and, as a result, the revenue is recognized linearly during the day of voyage
from the beginning of the loading of the cargo to the end of the cargo discharging.
TNG uses output method of progress measurement to complete fulfilment of past performance obligations.
By way of income tax, income is recognized on the basis of a direct measurement of the value of the goods
or services transferred to a particular date for the charterer in relation to the remaining goods or services
promised by the contract. TNG recognizes revenue at inception in the amount eligible for invoicing, as it is
entitled to compensation from the charterer in an amount directly corresponding to the value.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 34
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
aa) Vessel revenue (continued)
Commission costs are amortized over the term of the charter (hire) unless the depreciation period is one year
or less, which is recognized as the expense when incurred.
Costs arising from the discharge port of the previous voyage charter to the loading port of the next charter
hire (the so-called ballast leg), and voyage expenses incurred through the fulfilment of the voyage charter,
are capitalized as the costs of the charter fulfilment and are written off (depreciated) over the term of the
charter starting on the date of loading of the cargo until the day on which the cargo is unloaded, on a
systematic basis consistent with the transfer of the service to which those costs relate, unless the amortization
period is one year or less, in which case it is recognized as the expense when incurred. Costs are delayed
only if they (i) relate directly to the signed or expected voyage charter, (ii) create or increase the resources to
be used to meet the obligations under the contract, and (iii) the cost recovery is expected.
The voyage charter arrangements contain terms and conditions in relation to time period given for loading
and unloading. Demurrage represents a form of variable fee (which increases or reduces the compensation
promised by the charter). It is necessary to estimate it at the beginning of the charter using the expected value
method or the most probable amount, and update its estimate of variable fees during the charter period.
Revenue from Time charter contracts is usually fixed over the life of the contract. Vessels sailing under Time
charter over a period of time allow for more predictable cash flows during that time period.
The structure of the fright rate in the case of a Time charter consists of a pre-agreed fixed daily fright rate for
the use of the vessel, which is paid to the ship-owner semi-monthly or monthly in advance during a certain
period.
Voyage charter revenue can be fixed or can be defined in such a way that the ship-owner receives the freight
calculated by multiplying the ton of loaded cargo with the freight rate per ton of cargo for pre-determined
loading or unloading ports, based on which the ship-owner at the beginning of the contract using the expected
value method or the most probable amount can reliably estimate the expected amount of compensation to
which they will be entitled in exchange for the performance of a contractual obligation or service to the
charterer.
bb) Other vessel revenue
The other revenue consists mainly of revenue from demurrage realized from the charterer in court
proceedings. Other revenues are recognised as they arise.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 35
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
cc) Commissions and voyage related costs
Commissions are realized in two basic forms: address commission and brokerage commission.
The address commission is the commission payable by the ship owner to the charterer regardless of the
charter type and is expressed as a percentage of the freight or hire. The commission is a reimbursement to
the charterer for costs incurred in relation to the chartering of the vessel either to third-party brokers or by the
charterer's shipping department.
Brokerage commission is payable under a time charter on hire. A commission under a voyage charter is
payable on freight, and may be payable on dead freight and demurrage.
Voyage-related costs are typically paid by the vessel owner under voyage charters and by the customer
(charterer) under time charters. TNG distinguishes between major and minor voyage-related costs.
Most of the voyage-related costs are incurred in connection with the employment of the fleet on the spot
market (Voyage Charter) and under COAs (Contracts of Affreightment). Major voyage-related costs include
bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees, extra war
risks insurance and any other expenses related to the cargo are typically paid by the customer.
Minor voyage-related costs, such as draft surveys, tank cleaning, postage and other minor miscellaneous
costs incidental to a voyage, are typically paid by TNG. All voyage-related costs are recognised on an accrual
basis of accounting.
dd) General and administrative expenses
General and administrative expenses, which comprise of administrative staff costs, management costs, office
expenses, audit, legal and professional fees, travel and other expenses associated with the administration,
are recognized as an expense when incurred.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 36
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ee) Net financial income / (expense)
Net financial income/(expense) comprises interest accrued on loans and borrowings, interest income on
deposits and advances, dividend income, foreign exchange gains and losses, gains and losses on financial
assets at fair value through profit or loss.
Interest income is recognised in the statement of profit or loss on an accrual basis of accounting taking into
account the effective yield (i.e. using the effective interest rate). Dividend income is recognised in the
statement of profit or loss at the date when the right of TNG to receive dividends is established.
ff) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended use
or sale. Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other
borrowing costs are recognised in net profit or loss for the period in which they are incurred.
gg) Significant accounting estimates and judgements
In applying TNG’s accounting policies, the key areas of management judgement, other than those involving
estimates, that have the most significant impact on the amounts reported in the financial statements are as
follows:
Income tax
The income tax calculation is performed in accordance with the current interpretations of the applicable
legislation. TNG is under the tonnage tax regime for a period of ten years, starting from 1 January 2014.
Companies qualifying under the relevant provisions of the Maritime Code that have opted for the tonnage tax
must remain subject to this regime for a period of 10 years. The qualifying requirement is that the company
must be a shipping company subject to corporate income tax in Croatia based on any profits that accrue to
it. It must also operate qualifying ships, and most importantly, it must carry out the strategic and commercial
management of the qualifying ships in Croatia.
Impairment of financial assets
At each reporting date, TNG estimates whether there has been a significant increase in credit risk for financial
instruments from initial recognition. When making an estimate, the TNG uses changes in the risk of default
due to the expected life of the financial instrument rather than the change in expected loan losses. To make
an estimate, it compares the risk of non-payment arising from the financial instrument to the reporting date
with the risk of default being incurred for the financial instrument at the date of initial recognition and takes
into account reasonable and acceptable information..
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 37
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
gg) Significant accounting estimates and judgements (continued)
Provisions for contingent liabilities
TNG recognises a provision based on legal actions initiated against it that are probable of requiring an outflow
of TNG’s resources to settle its obligation, and a reliable estimate of the amount can be made. In assessing
the provision, TNG takes into account the professional legal advice.
Depreciation of vessels
The residual value is estimated as the lightweight tonnage (lwt) of each vessel multiplied by an estimated
scrap value (cost of steel) per ton, which is USD 410 per ton, representing a five-year average market price
of steel scrap for the Indian subcontinent for 2014, determined based on the data publicly available on the
Clarksons Shipping Intelligence Network website (http://www.clarksons.net/sin2010) hosted by Clarkson
Research Services Limited, London, England, determined as the arithmetic mean of the scrap steel price
expressed in USD/ldt for a five-year time horizon that includes years prior to 2014, as follows:
for the data type 78038 - Indian Sub Continent Handysize Bulker Demolition Prices; and
for the data type 42653 - Indian Sub Continent Handysize Bulker Demolition Prices: Other Tankers.
The arithmetic mean calculated by the individual data type, depending on the lower value, is used as the five-
year average market price of scrap steel for Indian subcontinent for the purpose of calculating the scrap value
of a ship. If the five-year average market price of scrap steel for Indian subcontinent increases or decreases
by 20 percent from the price applied in the previous year, this is identified as a change in the estimate of the
residual value.
Vessel impairment and dry-docking costs
The fair value less costs to sell is estimated based on the inputs from independent brokers, and the value in
use is determined as the net present value of future cash flows from a vessel over the vessel’s useful life. In
determining the value in use, certain inputs into the estimated future cash flow calculations are predictable in
their nature (including expected daily hire rates, vessel`s operating expenses, discounting interest rate and
the average steel price as a secondary raw material), including revenue estimates under the existing
contracts. Certain assumptions underlying the future cash flow estimates are less predictable, such as the
expected daily hires beyond existing contracts and residual values, as they rely on inputs such as spot and
time charter market rates and the expected residual value, which are volatile due to their long-term nature.
hh) Operating segments
In accordance with IFRS 8: Operating segments requirements, TNG monitors its business in one segment
only, according to the specifics of the industry. Vessel revenue recognition and measurement is disclosed in
Note 2.aa) and 2.bb), whereas vessel revenue is disclosed in Note 3, and other disclosures related to the
operating segment in note 2.e) and Note 14.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 38
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
hh) Operating segments (continued)
2021
GEOGRAPHICAL REPRESENTATION OF CUSTOMERS AND
ASSOCIATED REVENUES
Country
(%)
Singapore
43.6%
USA
33.8%
Switzerland
13.6%
Bahrein
3.6%
UAE
3.0%
Netherlands
1.2%
Katar
0.6%
Norway
0.6%
Total
100.0%
2020
GEOGRAPHICAL REPRESENTATION OF CUSTOMERS AND
ASSOCIATED REVENUES
Država
(%)
Singapore
48.8%
USA
28.4%
Mexico
9.7%
Switzerland
4.7%
Republic of Korea
2.9%
United Kingdom
1.7%
Malta
1.6%
Norway
1.3%
Bermuda
0.8%
Panama
0.1%
Italy
0.1%
Total
100.0%
The Company does business with international customers who, in accordance with the specifics of the
industry, do business in (or with) other countries, therefore, the above geographical representation of
customers does not necessarily correlate with the directions of movement, loading or unloading of cargo
and/or provided transport services.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 39
3. REVENUE
VESSEL REVENUE
USD
2021
HRK
2021
USD
2020
HRK
2020
Charter (hire) revenue
39,775
253,870
35,445
236,956
- Voyage charter
23,657
151,492
7,262
47,582
- Time charter
13,883
87,751
24,389
163,522
- Demurrage
2,235
14,627
3,794
25,852
Total
39,775
253,870
35,445
236,956
The total number of days of income from Time charter in 2021 was 908 days, which is 43.4% of the total
revenue days in that year. The number of revenue days in 2021 was lower by 97 days due to the
implementation of mandatory 5-year dry-docking and installation of ballast water treatment purifiers on 3 MR
tankers, which affected the reduction of available revenue days for employment on the spot market through
Voyage charter.
The Company has no variable payments based on Time charter revenue.
OTHER REVENUE
USD
2021
HRK
2021
USD
2020
HRK
2020
Other vessel revenue
54
341
619
3,965
Reversal of impairment losses
955
6,342
-
-
Other management revenue
28
176
24
152
Total
1,037
6,859
643
4,117
The obligation to execute a contract based on a Voyage charter is fulfilled in proportion to the passage of time
and as a result, revenue is recognized linearly during the voyage duration from the start of loading of cargo
upon discharging of cargo.
The tanker market does not recognize the form of a typical contract in an international application that defines
the fulfilment of the obligation under item "demurrage" within the defined time frame. Pursuant to the
aforementioned demurrage, it receives a liability treatment with an undefined maturity. Income from
demurrage is defined as the time spent loading or unloading cargo over the time specified in the Voyage
charter party. The average maturity of receivables from demurrage is from 3 to 6 months. As the Company
performs thorough background check of the counterparty at the moment of making the deal on the spot
market, there is a very high degree of certainty that the claim will be settled, but at the same time such
obligations of the charterer will have a longer time horizon of settlement.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 40
3. REVENUES (CONTINUED)
The following tables briefly outline the terms of time charter during the period ending 31 December 2021
and 31 December 2020:
2021
No.
Name of
the vessel
Year of
construction
Type
Date delivered
Expiration
date of the
contract
Price
($/Day)
1
Vinjerac
2011
MR PRODUKT
TANKER
13.05.2020
14.05.2022
15,250
2
Vukovar
2015
MR PRODUKT
TANKER
21.08.2020
21.08.2023
17,050
2020
No.
Name of
the vessel
Year of
construction
Type
Date delivered
Expiration
date of the
contract
Price
($/Day)
1
Vinjerac
2011
MR PRODUKT
TANKER
13.05.2020
14.05.2022
15,250
2
Velebit
2011
MR PRODUKT
TANKER
05.12.2020
17.01.2021
16,000
3
Vukovar
2015
MR PRODUKT
TANKER
21.08.2020
21.08.2023
17,050
4
Zoilo
2015
MR PRODUKT
TANKER
23.11.2020
21.02.2021
12,421
The total future gurantted revenue from time charters (net of commission), are as follows:
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Up to 1 year
8,163
54,234
12,552
77,057
Between 1 and 5 years
3,923
26,063
12,086
74,196
Total
12,086
80,297
24,638
151,253
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 41
4. VOYAGE EXPENSES
USD
2021
HRK
2021
USD
2020
HRK
2020
Fuel oil (Bunker)
8,517
54,754
2,800
18,357
Port costs
4,493
28,924
1,472
9,422
Commissions to brokers and agents
1,135
7,254
822
5,464
Fee for managing commercial
operations - related parties
599
3,832
534
3,508
Other voyage-related costs
417
2,679
210
1,381
Total
15,161
97,443
5,838
38,132
The increase in voyage-related costs can be attributed to the greater exposure to the spot market during
2021, compared to the previous year when significantly more vessels were employed under time charter
contracts. With greater exposure to the spot market, the shipowner generates nominally higher revenue, but
is also burdened by higher costs due to the nature of the business in which the shipowner covers voyage-
related costs such as fuel, port and agency fees and other costs.
5. VESSEL OPERATING EXPENSES
USD
2021
HRK
2021
USD
2020
HRK
2020
/i/ Crew costs
8,971
57,202
8,907
58,577
/ii/ Consumables
1,111
6,768
1,163
8,055
/iii/ Maintenance costs
2,110
13,451
2,103
13,814
Management fee for other activities –
related parties
1,198
7,584
1,238
8,195
/iv/ General vessel expenses
1,270
8,075
1,144
7,564
Insurance costs
738
4,681
490
3,281
Total
15,398
97,761
15,045
99,486
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 42
5. VESSEL OPERATING EXPENSES (CONTINUED)
Under the Management Agreement, Tankerska plovidba d.d. as the Fleet Manager has the obligation to
provide operational and commercial management, crewing, insurance arrangements, vessel purchases and
sale, required vessels supplies, including fuels. Under the Management Agreement, the Fleet Manager also
receives a vessel management fee based on an international publication BDO LLP (ex. Moore Stephens)
also available on the website https://www.opcostonline.com, with regards to Shipping Opcost tool, specifies
the average daily cost for each type of vessel, which is determined as 67 percent of the amount specified in
this publication. Seafarers forming vessel crew are hired in accordance with the underlying agreements with
the Fleet Manager or its related parties performing seafarer’s recruiting activities. The fee is calculated
monthly or on a pro-rata daily basis for a period below one month, and the Fleet Manager charges the actual
crew expenses to operating expenses of TNG.
/i/ Crew costs
USD
2021
HRK
2021
USD
2020
HRK
2020
Crew salaries
7,552
48,157
7,536
49,582
Crew travel expenses
849
5,416
796
5,221
Victuals
470
2,995
472
3,105
Other crew expenses
100
634
103
669
Total
8,971
57,202
8,907
58,577
/ii/ Consumables
USD
2021
HRK
2021
USD
2020
HRK
2020
Small inventory items, paints and
varnishes, chemicals and gases
729
4,629
726
4,838
Lubricants and greases
382
2,139
437
3,217
Total
1,111
6,768
1,163
8,055
/iii/ Maintenance costs
USD
2021
HRK
2021
USD
2020
HRK
2020
Spare parts
1,197
7,646
1,294
8,519
Maintenance and repairs
913
5,805
809
5,295
Total
2,110
13,451
2,103
13,814
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 43
5. VESSEL OPERATING EXPENSES (CONTINUED)
/iv/ Overheads
USD
2021
HRK
2021
USD
2020
HRK
2020
Postage, telephone and
telecommunications
238
1,515
231
1,518
Other overhead costs
457
2,917
337
2,236
Other overhead costs – related
parties
575
3,643
576
3,810
Total
1,270
8,075
1,144
7,564
6. DEPRECIATION
USD
2021
HRK
2021
USD
2020
HRK
2020
Depreciation of vessels (Note 14)
8,279
52,766
8,028
52,800
Depreciation of other tangible assets
(Note 14)
1
5
1
6
Total
8,280
52,771
8,029
52,806
In 2021 vessel depreciation charge includes the depreciation charge on dry-docking costs for the vessels
„Velebit“, „Vinjerac“, „Vukovar“, „Dalmacija“, „Zoilo“ and „Pag“in the amount of HRK 5.8 million, i.e. USD 911
thousand (2020: vessels „Velebit“, „Vinjerac“, „Vukovar“, „Dalmacija“ and „Zoilo“ in the amount of HRK 2.5
million, i.e. USD 382 thousand).
7. VESSEL VALUE ADJUSTMENT
USD
2021
HRK
2021
USD
2020
HRK
2020
Vessel value adjustment (Note 14)
9,854
65,466
9,069
55,676
Total
9,854
65,466
9,069
55,676
The Company has determined that there are reasons for the impairment of the asset - vessels „Pag“, „ Velebit“
and „ Vinjerac“ and the impairment loss is recognized in the income statement in the amount of HRK 65.5
million or USD 9.9 million (vessels „Dalmacija“, „Pag“, „Vukovar“ and „Zoilo“ in the amount of HRK 55.7
million, i.e. USD 9.1 million).
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 44
7. VESSEL VALUE ADJUSTMENT (CONTINUED)
2021
MARKET VALUE
BOOK
VALUE
DIFFERENCE
USD
HRK
USD
HRK
USD
HRK
COMPANY –
VESSEL
Fontana Shipping
Company Limited –
VELEBIT
19,081
126,769
23,000
152,805
(3,919)
(26,036)
Fontana Shipping
Company Limited –
VINJERAC
19,710
130,944
24,383
161,988
(4,673)
(31,044)
Pag Shipping LLC -
PAG
28,350
188,345
29,612
196,731
(1,262)
(8,386)
Impairment loss as an
expense in the
income statement
67,141
446,058
76,995
511,524
(9,854)
(65,466)
2020
MARKET VALUE
BOOK
VALUE
DIFFERENCE
USD
HRK
USD
HRK
USD
HRK
COMPANY –
VESSEL
Vukovar Shipping LLC
– VUKOVAR
29,292
179,827
31,337
192,382
(2,045)
(12,555)
Zoilo Shipping LLC –
ZOILO
29,495
181,074
31,627
194,162
(2,132)
(13,088)
Pag Shipping LLC -
PAG
29,158
179,002
30,994
190,277
(1,836)
(11,275)
Teuta Shipping
Company Ltd. -
DALMACIJA
29,013
178,115
32,069
196,873
(3,056)
(18,758)
Impairment loss as an
expense in the
income statement
116,958
718,018
126,027
773,694
(9,069)
(55,676)
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 45
7. VESSEL VALUE ADJUSTMENT (CONTINUED)
The recoverable amount of the ship is estimated as the value in use determined on the basis of the discounted
future cash flow (Notes 2f, 2j and 2gg). When calculating the recoverable amount in 2021, discount rates
ranging from 5.786% to 5.987% were used depending on the age and specificity of each vessel. When
calculating the recoverable amount in 2020, a discount rate ranging from 5.999% to 6.167% was used.
8. GENERAL AND ADMINISTRATIVE EXPENSES
USD
2021
HRK
2021
USD
2020
HRK
2020
Costs of guarantees for bank loans –
related parties
333
2,104
265
1,775
Staff expenses /i/
257
1,636
249
1,635
Corporate services – related parties
72
459
72
475
Bank charges
36
231
29
190
Statutory audit services
31
196
23
158
Rental costs
-
-
7
49
Rental costs – related parties
11
68
8
56
Other external services
75
471
64
435
Other expenses
184
1,187
229
1,517
Total
999
6,352
946
6,290
/i/ Staff expenses
USD
2021
HRK
2021
USD
2020
HRK
2020
Net salaries
137
871
134
880
Taxes and contributions
109
696
105
688
Reimbursement of costs to
employees
10
64
9
61
Professional education
1
5
1
6
Total
257
1,636
249
1,635
Costs reimbursed to employees comprise daily allowances, overnight accommodation and transport related
to business travels, commutation allowance, and reimbursement of costs for the use of personal cars for
business purposes and similar.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 46
9. FINANCIAL INCOME
USD
2021
HRK
2021
USD
2020
HRK
2020
Foreign exchange gains
-
-
25
225
Foreign exchange gains – related
companies
967
6,373
-
-
Interest income
3
16
12
82
Total
970
6,389
37
307
10. FINANCIAL EXPENSES
USD
2021
HRK
2021
USD
2020
HRK
2020
Foreign exchange losses
2,489
16,488
-
-
Foreign exchange losses – related
companies
-
-
179
1,103
Interest expense
2,737
17,357
2,926
19,570
Interest expense – related
companies
72
469
-
-
Total
5,298
34,314
3,105
20,673
11. TONNAGE TAX
The tonnage tax regime has been introduced into the Croatian maritime legislation by amendments to the
Maritime Code effective since 1 January 2014. According to the relevant provisions of the Maritime Code,
qualifying companies may choose to have their shipping activities taxed based on the net tonnage of their
fleet or based on their actual profits. Companies qualifying under the relevant provisions of the Maritime Code
that have opted for the tonnage tax must remain subject to this regime for a period of 10 years. The qualifying
requirement is that the company must be a shipping company subject to corporate income tax in Croatia
based on any profits that accrue to it. It must also operate qualifying ships, and most importantly, it must carry
out the strategic and commercial management of the qualifying ships in Croatia.
TNG is under the tonnage tax regime for a period of ten years, starting from 1 January 2014.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 47
11. TONNAGE TAX (CONTINUED)
TNG is subject to tonnage taxation for the following ships:
According to the ruling of the Ministry of Maritime Affairs, Transport and Infrastructure, the tonnage tax for
vessels of TNG for 2021 is included in the liabilities of Tankerska Plovidba d.d. as the controlling (parent)
company.
TONNAGE TAX CALCULATION
Net tonnage of ship
Annual tonnage tax based on ships’
tonnage for every 100 units of net
tonnage
0 -1,000 net tonnage
HRK 270
1,001-10,000 net tonnage
HRK 230
10,001 – 25,000 net tonnage
HRK 150
25,001 – 40,000 net tonnage
HRK 95
Over 40,000 net tonnage
HRK 55
A taxpayer pays a tax advance on the basis of a tax return for the previous tax period. The advance is paid
monthly at the end of the month for the previous month in the installment that is received when the tax liability
for the previous tax period is divided by the number of months of the same period or in the case of the first
tax period after entering the taxation system on the basis of a tax liability assessment data from the application
to the tonnage tax system. The taxpayer is obliged to submit a tax return to the Tax administration office for
the previous calendar year at the latest four months after the end of the calendar year. In the same period
tonnage tax needs to be paid for the previous year.
12. INCOME TAX
According to the relevant provisions of the Maritime Code, qualifying companies may choose to have their
shipping activities taxed based on the net tonnage of their fleet or based on their actual profits. According to
2021 corporate income tax return, TNG had no income tax liability for the year in Croatia as the Company is
subject to tonnage taxation.
Date of entry into the
regime
Annual tax
prepayment in
HRK
Velebit
1 January 2014
31,329
Vinjerac
1 January 2014
31,227
Vukovar
29 April 2015
28,236
Zoilo
27 July 2015
28,236
Dalmacija
27 November 2015
28,863
Pag
4 December 2015
29,058
Total
176,949
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 48
13. EARNINGS PER SHARE
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Net profit (loss) for the year
(13,208)
(86,989)
(5,907)
(31,683)
Weighted average number of
shares outstanding at the year-end,
basic and diluted:
8,720,145
8,720,145
8,720,145
8,720,145
Earnings per share, basic and
diluted
(1,51)
(9,98)
(0,68)
(3,63)
Basic and diluted earnings per share are same, as TNG has no dilutive potential ordinary shares.
14. PROPERTY, PLANT AND EQUIPMENT
Vessels and equipment
Vessels and
equipment
Assets in preparation
Total
USD
HRK
USD
HRK
USD
HRK
COST
At 31 December
2020
199,697
1,225,945
1,294
7,947
200,991
1,233,892
Additions
-
-
1,939
12,875
1,939
12,875
Activation of asset
3,233
21,475
(3,233)
(21,475)
-
-
Write-offs
(21,154)
(140,540)
-
-
(21,154)
(140,540)
Elimination of part of
reversed impairment
loss
1,268
8,427
-
-
1,268
8,427
Exchange differences
(Note 2,d)
(7)
100,704
-
653
(7)
101,357
At 31 December
2021
183,037
1,216,011
-
-
183,037
1,216,011
ACCUMULATED
DEPRECIATION
At 31 December
2020
40,108
246,224
-
-
40,108
246,224
Depreciation
7,369
46,957
-
-
7,369
46,957
Write-offs
(11,300)
(75,074)
-
-
(11,300)
(75,074)
Elimination of part of
reversed impairment
loss
314
2,086
314
2,086
Exchange differences
(Note 2,d)
(1)
22,230
-
-
(1)
22,230
At 31 December
2021
36,490
242,423
-
-
36,490
242,423
CARRYING
AMOUNT
At 31 December
2020
159,589
979,721
1,294
7,947
160,883
987,668
At 31 December
2021
146,547
973,588
-
-
146,547
973,588
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 49
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Net book value of equipment as of 31.12.2021 amounts to HRK 396.6 thousand (31.12.2020: HRK 495.8
thousand). The largest item within the equipment is the company vehicle, while the rest refers to the
computers and other office equipment of the TNG office. The depreciation cost of this equipment amounts to
HRK 102.8 thousand in 2021 (HRK 14.4 thousand in 2020).
Vessels and equipment include vessels in the Time charter. The net book value of vessels chartered in Time
charter as at 31 December 2021 amounted to HRK 243,951 thousand (2020: HRK 641,786 thousand). The
cost of depreciation of vessels in the Time charter for 2021 amounted to HRK 14,999 thousand (2020: HRK
34,864 thousand). The cost of value adjustment of these vessels amounted to HRK 57,080 thousand for 2021
(2020: HRK 25,642 thousand).
Dry-docking costs
Vessels and
equipment
Assets in preparation
Total
USD
HRK
USD
HRK
USD
HRK
COST
At 31 December 2020
3,470
21,296
164
1,003
3,634
22,299
Additions
-
-
2,802
18,621
2,802
18,621
Activation of asset
2,966
19,708
(2,966)
(19,708)
-
-
Exchange differences
-
1,750
-
84
-
1,834
At 31 December 2021
6,436
42,754
-
-
6,436
42,754
ACCUMULATED
DEPRECIATION
At 31 December 2020
1,227
7,526
-
-
1,227
7,526
Depreciation
911
5,814
-
-
911
5,814
Exchange differences
-
856
-
-
-
856
At 31 December 2021
2,138
14,196
-
-
2,138
14,196
CARRYING AMOUNT
At 31 December 2020
2,243
13,770
164
1,003
2,407
14,773
At 31 December 2021
4,298
28,558
-
-
4,298
28,558
Grand total:
Vessels and
equipment
Assets in preparation
Total
USD
HRK
HRK
USD
USD
HRK
CARRYING AMOUNT
At 31 December 2020
161,832
993,491
1,458
8,950
163,290
1,002,441
At 31 December 2021
150,845
1,002,146
-
-
150,845
1,002,146
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 50
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Vessels and equipment
Vessels and equipment
Assets in preparation
Total
USD
HRK
USD
HRK
USD
HRK
COST
At 31 December
2019
209,180
1,391,025
416
2,767
209,596
1,393,792
Additions
-
-
2,892
17,754
2,892
17,754
Activation of asset
2,014
12,361
(2,014)
(12,361)
-
-
Write-offs
(11,497)
(70,580)
-
-
(11,497)
(70,580)
Exchange
differences (Note
2,d)
-
(106,861)
-
(213)
-
(107,074)
At 31 December
2020
199,697
1,225,945
1,294
7,947
200,991
1,233,892
ACCUMULATED
DEPRECIATION
At 31 December
2019
34,889
232,002
-
-
34,889
232,002
Depreciation
7,647
50,323
-
-
7,647
50,323
Write-offs
(2,428)
(14,904)
-
-
(2,428)
(14,904)
Exchange
differences (Note
2,d)
-
(21,197)
-
-
-
(21,197)
At 31 December
2020
40,108
246,224
-
-
40,108
246,224
CARRYING
AMOUNT
At 31 December
2019
174,291
1,159,023
416
2,767
174,707
1,161,790
At 31 December
2020
159,589
979,721
1,294
7,947
160,883
987,668
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 51
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Vessels and equipment (continued)
Dry-docking costs
Vessels and
equipment
Assets in preparation
Total
USD
HRK
USD
HRK
USD
HRK
COST
At 31 December 2019
1,313
8,723
-
-
1,313
8,723
Additions
-
-
2,321
14,246
2,321
14,246
Activation of asset
2,157
13,243
(2,157)
(13,243)
-
-
Exchange differences
-
(670)
-
-
-
(670)
At 31 December 2020
3,470
21,296
164
1,003
3,634
22,299
ACCUMULATED
DEPRECIATION
At 31 December 2019
845
5,613
-
-
845
5,613
Depreciation
382
2,483
-
-
382
2,483
Exchange differences
-
(570)
-
-
-
(570)
At 31 December 2020
1,227
7,526
-
-
1,227
7,526
CARRYING AMOUNT
At 31 December 2019
468
3,110
-
-
468
3,110
At 31 December 2020
2,243
13,770
164
1,003
2,407
14,773
Grand total:
Vessels and
equipment
Assets in preparation
Total
USD
HRK
USD
HRK
USD
HRK
CARRYING AMOUNT
At 31 December 2019
174,759
1,162,133
416
2,767
175,175
1,164,900
At 31 December 2020
161,832
993,491
1,458
8,950
163,290
1,002,441
In line with the adopted docking policy, the dry-docking costs (including class renewal surveys) are
capitalised, i.e. added to the carrying amount of the vessel recognised in the accounts of Tankerska Next
Generation International Ltd., and are amortised on a straight-line basis over the five-year period until the
next survey.
In 2021, TNG invested HRK 18,621 thousand, i.e. USD 2,802 thousand for the dry-docking expenses (2020:
HRK 14,246 thousand or USD 2,321 thousand).
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 52
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At 31 December 2021 no borrowing costs were capitalised (31 December 2020: HRK 0).
At 31 December 2021 the total net book value of assets pledged as collateral for received loans amounts to
HRK 973,192 thousand, i.e. USD 146,487 thousand (31 December 2019: HRK 979,225 thousand, i.e. USD
159,508 thousand).
15. INVENTORIES
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Lubricants and greases
673
4,469
594
3,652
Fuel
1,276
8,478
732
4,490
Food supplies
159
1,057
143
881
Small inventory
4
28
4
25
Value adjustment of small inventory
(4)
(28)
(4)
(25)
Total
2,108
14,004
1,469
9,023
TNG expects the settlement of the presented inventory items within twelve months from the date of this report.
16. TRADE AND OTHER RECEIVABLES
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Trade receivables
7,646
50,795
5,512
33,838
Receivables from the State and other
institutions
5
35
11
68
Receivables from employees
3
21
4
27
Other receivables
8
54
44
264
Other receivables – related companies
-
-
1
7
Total
7,662
50,905
5,572
34,204
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 53
16. TRADE AND OTHER RECEIVABLES (CONTINUED)
Age structure of overdue receivables:
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
1 -90 days
4,855
32,252
1,445
8,870
91 -180 days
7
46
311
1,912
181 - 365 days
135
894
2,490
15,289
Over 365 days
68
485
-
-
Total
5,065
33,677
4,246
26,071
The financial stability of the charterer and his reliability are important factors, which influence the contracting
risk. The aforementioned risk is minimized by TNG through the cooperation with large energy companies,
large petroleum dealers and their derivatives, large manufacturers of petroleum and its derivatives and other
exclusively reputable entities that have a strong reputation and a long-lasting tradition of maritime transport.
Although the maturity of contractual payments is exceeded by more than 30 days, the Management Board
considers that the expected credit losses do not have a material impact on the financial statements, as there
is no specific maturity date for receivables other than for Time charter hires and Voyage charter freights which
is a common practice in shipping. Consequently, the Management of TNG has calculated and estimated that
the expected credit losses are not material, given that these are primarily demurrages from reputable
charterers with whom TNG has been cooperating for many years. Trade and other receivables are allocated
to Tier 2 in accordance with the requirements of IFRS 9: Financial Instruments.
17. PREPAID EXPENSES AND ACCRUED INCOME
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Prepaid expenses
757
5,035
630
3,865
Accrued income
1
3
-
-
Total
758
5,038
630
3,865
Prepaid expenses relate to the amounts of financing costs paid in the current period, and relate to future
periods and are accrued in the loan repayment period.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 54
18. CASH AND CASH EQUIVALENTS
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Cash with banks
5,114
33,973
4,561
27,998
Deposits
3,133
20,814
1,000
6,139
Cash in hand
97
646
108
667
Total
8,344
55,433
5,669
34,804
19. SHARE CAPITAL AND RESERVES
As of 31 December 2021, the authorised, issued and paid-up share capital comprised of 8,733,345 ordinary
shares with no par value (31 December 2020: 8,733,345 shares). The ordinary shareholders are entitled to
receive dividends, as declared from time to time and are entitled to one vote per share at meetings of TNG’s
Shareholders General Assembly. The immediate parent of Tankerska Next Generation d.d. is Tankerska
plovidba d.d. The ultimate parent is Betriebsstiftung Tankerska Plovidba d.d. Privatstiftung, a private
foundation with the registered office in Austria. Beneficiaries of the foundation are the employees of
Tankerska plovidba d.d.
In accordance with the adopted Treasury Share Buy-Back Programme (hereinafter: The New Programme)
by the decision of the Company's Management Board of October 29, 2020, the Company acquired 1,399
shares in the reporting period.
As at 31 December 2021, the Company held 28,319 treasury shares (31 December 2020: 26,920). Reserves
for treasury shares were formed from the Company's profit in the amount of HRK 1,641 thousand (31
December 2020: HRK 1,578 thousand).
As at 31 December 2021 the amount of regulatory reserves within other reserves amounts to HRK 5,118
thousand (31 December 2020: HRK 5,118 thousand). The regulatory reserve arised according to Croatian
law that prescribes 5% profits for the year, decreased by the amount of losses from the previous year, to be
transferred to the respective reserve until it, along with other reserves, reaches 5% issued share capital. The
regulatory reserve, in the amount of 5% of the issued share capital, can be used to cover losses of the current
and previous years.
As at 31 December 2021, the balance of other reserves was HRK 55,000 thousand (31 December 2020: HRK
55,000 thousand).
Exchange differences includes all foreign exchange differences arisen on the conversion of the financial
statements of foreign operations.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 55
20. INTEREST BEARING LOANS AND BORROWINGS
Interest-bearing loans and borrowings in 2021:
Long-term interest-bearing loans and borrowings
USD
31.12.2021
HRK
31.12.2021
Secured bank loans
71,737
476,593
Loans - related parties
9,000
59,792
Total
80,737
536,385
Current portion
(10,038)
(66,690)
Long-term portion
70,699
469,695
Short-term interest-bearing liabilities
USD
31.12.2021
HRK
31.12.2021
Current portion of long-term interest bearing loans and
borrowings
Secured bank loans
10,038
66,690
Total
10,038
66,690
Interest-bearing loans and borrowings in 2020:
Long-term interest-bearing loans and borrowings
USD
31.12.2020
HRK
31.12.2020
Secured bank loans
76,792
471,431
Total
76,792
471,431
Current portion
(12,319)
(75,628)
Long-term portion
64,473
395,803
Short-term interest-bearing liabilities
USD
31.12.2020
HRK
31.12.2020
Current portion of long-term interest bearing loans and
borrowings
Secured bank loans
12,319
75,628
Total
12,319
75,628
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 56
20. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
Repayment terms and conditions for interest bearing liabilities at 31 December 2021 are as follows:
HRK
Total
1 year or less
2 -5 years
After 5
years
Secured bank loans
476,593
66,690
409,903
-
Loans - related parties
59,792
-
59,792
-
At 31 December 2021
536,385
66,690
469,695
-
USD
Total
1 year or less
2 -5 years
After 5
years
Secured bank loans
71,737
10,038
61,699
-
Loans - related companies
9,000
-
9,000
-
At 31 December 2021
80,737
10,038
70,699
-
Repayment terms and conditions for interest bearing liabilities at 31 December 2020 are as follows:
HRK
Total
1 year or
less
2 -5 years
After 5 years
Secured bank loans
471,431
75,628
395,803
-
At 31 December 2020
471,431
75,628
395,803
-
USD
Total
1 year or
less
2 -5 years
After 5 years
Secured bank loans
76,792
12,319
64,473
-
At 31 December 2020
76,792
12,319
64,473
-
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 57
20. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
Average interest rate calculated based on paid interest for the year ended 2021 amounts to 3.639%,
whereas average interest rate calculated based on paid interest for the year ended 2020 amounted to
4.134%
In 2021, TNG withdrew in full the funds of the loan for refinancing existing loans with commercial banks
for the vessels "Vukovar", "Zoilo", "Dalmacija", "Velebit", "Vinjerac" and "Pag" in the total amount of USD
78.4 million, and loan funds for the purpose of financing working capital with a related company in the
total amount of USD 9.0 million.
The security instruments for the loans consist of common and typical instruments provided for this type
of transactions and include, but are not limited to the first priority mortgage of the vessel, assignment of
the first-priority security, revenue and earnings of the vessel, the time charter and business accounts
and first priority pledge over the shares of the vessel owner.
Additionally, Tankerska plovidba d.d. issued a corporate guarantee in 2015 in favour of TNG, to
guarantee for the repayment of the loans if the Company is not in capacity to fulfil obligations in time
and in full, as wall as maintain the minimum ownership interest in TNG of above 50 percent.
The loan covenants specify the minimum market value of the ship and of each additional credit
enhancement, in the amount of 140% of the outstanding loan balance. Failure to meet this requirement
can be resolved by the borrower, either by providing an additional guarantee or early repayment of the
loan. In addition to the above requirements, the borrower must maintain a minimum liquidity on its
transaction account per vessel, depending on the lender and employment scheme, in the amount of
USD 333 thousand to USD 600 thousand.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 58
21. TRADE AND OTHER PAYABLES
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Total trade payables:
4,042
26,857
3,044
18,688
(i) Trade payables
3,271
21,734
1,215
7,460
(iI) Trade payables – related
parties
771
5,123
1,829
11,228
Liabilities to employees
745
4,946
705
4,329
Taxes, contributions and other
duties payable
8
55
10
56
Liabilities in respect of profit
distributions
8
54
9
54
Other current liabilities
10
61
11
74
Other current liabilities – related
parties
2
14
1
4
Total
4,815
31,987
3,780
23,205
Structure of trade payables by currency:
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
USD
3,624
24,085
2,687
16,498
EUR
297
1,971
246
1,511
HRK
48
317
11
66
GBP
-
-
-
-
OTHER CURRENCIES
73
484
100
613
Total
4,042
26,857
3,044
18,688
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 59
22. ACCRUED EXPENSES AND DEFERRED INCOME
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Accrued loan interest
176
1,173
351
2,155
Other accrued expenses
-
2
38
236
Deferred income
1,459
9,690
1,436
8,814
Total
1,635
10,865
1,825
11,205
Deferred income is revenue from freight from voyage charter contracts paid on time or calculated in the current
period, which relates to the next accounting period. The accounting policies disclosed in Note 2 and Note 3
are also applicable to deferred income.
23. RELATED-PARTY TRANSACTIONS
TNG has no related parties other than Tankerska plovidba d.d., Croatia, Tankerska Plovidba International
Ltd, Marshall Islands and Donat Maritime Corporation, Liberia. Set out below are transactions carried out
during the year between TNG and Tankerska plovidba d.d.
Subsidiaries and key shareholders
USD
2021
HRK
2021
USD
2020
HRK
2020
Purchases from related parties
Tankerska plovidba d.d.
2,788
17,690
2,693
17,819
Total
2,788
17,690
2,693
17,819
Receivables form related parties
Tankerska Plovidba International Ltd.
-
-
1
7
Total
-
-
1
7
Liabilities to related companies
Tankerska plovidba d.d.
727
4,832
1,829
11,228
Tankerska Plovidba International Ltd.
45
297
-
-
Donat Maritime Corporation
1
8
1
4
Total
773
5,137
1,830
11,232
Loan liabilities to related companies
Tankerska Plovidba International Ltd
9,000
59,792
-
-
Total
9,000
59,792
-
-
The transactions between related parties are carried out under usual market terms and conditions. The
vessels of TNG are managed by Tankerska plovidba d.d. as the Fleet Manager, which provides to TNG
commercial, HR, technical and certain administrative and corporate services for a fee. Tankerska plovidba
d.d. ensures a crew to the TNG fleet through its related party Donat Maritime Corporation Liberia.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 60
23. RELATED-PARTY TRANSACTIONS (CONTINUED)
Key management personnel
The key management personnel consist of the sole member of the Board. The total management
remuneration paid for 2021 amounts HRK 1,114 thousand, i.e. USD 175 thousand (2020: HRK 1,113
thousand, i.e., USD 170 thousand). The fees of the Supervisory Board for the year amount to HRK 515
thousand, i.e. USD 81 thousand (2020: HRK 515 thousand or USD 78 thousand). On 31 December 2021, the
members of the executive management and the Supervisory Board held 5,313 shares of the Company (at 31
December 2020: HRK 5,313 shares). The Company did not provide any loans to the members of its
Supervisory Board (31 December 2020: HRK 0).
24. FINANCIAL INSTRUMENTS
TNG’s activities expose the Company to a variety of financial risks, including the effects of: market risk
(including foreign exchange risk, interest rates and price risk), credit risk and liquidity risk. The exposure to
credit risk, interest rate risk and foreign exchange risk arises in the usual course of TNG’s operations.
Risk management policies associated with managing financial resources may be briefly summarized as
follows:
Foreign exchange risk
TNG is exposed to the following currency risks: the transaction risk, which is the risk of a negative impact of
fluctuations in foreign exchange rates against the Croatian kuna on TNG's cash flows from commercial
activities; and the balance sheet risk, which is the risk that the net value of monetary assets on retranslation
of kuna-denominated balances becomes lower as a result of changes in foreign exchange rates.
TNG operates internationally and is exposed to changes of the US dollar, as significant amounts of
receivables and foreign revenues are denominated in this currency. TNG currently does not use any active
hedging against the changes in the foreign exchange rates.
Apart from US dollar, TNG undertakes certain transactions in other foreign currency and is hence exposed to
a foreign exchange risk.
The carrying amounts of TNG’s foreign-currency denominated monetary assets and liabilities at the end of
the reporting period are provided in the table below:
2021 HRK
Assets
Liabilities
Assets - Liabilities
2021
2021
2021
USD
106,177
566,545
(460,368)
EUR
10
1,971
(1,961)
Other foreign currencies
16
484
(468)
Total
106,203
569,000
(462,797)
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 61
24. FINANCIAL INSTRUMENTS (CONTINUED)
Foreign exchange risk (continued)
2020 HRK
Assets
Liabilities
Assets - Liabilities
2020
2020
2020
USD
68,491
494,605
(426,114)
EUR
50
1,511
(1,461)
Other foreign currencies
16
618
(602)
Total
68,557
496,734
(428,177)
The impact of a 10-percent change in the USD exchange rate on cash items denominated in USD (10-percent
strengthening/weakening against the Croatian kuna):
2021 HRK
Impact of the USD changes
Effect on:
+10%
-10%
(Loss)/profit
(26,477)
26,477
Cash flow (outflow) / inflow
(19,559)
19,559
2020 HRK
Impact of the USD changes
Effect on:
+10%
-10%
(Loss)/profit
43
(43)
Cash flow (outflow) / inflow
(42,655)
42,655
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes of market
interest rates. The cash-flow interest rate risk is a risk that the interest expense on financial instruments may
vary during the period. As TNG has no significant interest-bearing assets, its operating income and cash flows
from operations are not significantly exposed to fluctuations in market interest rates. TNG’s interest rate risk
arises from its long-term loans. TNG is exposed to interest rate risk on its long-term borrowings at variable
rates (see Note 20).
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 62
24. FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate risk (continued)
2021
One-year interest expense
Current interest
expense in HRK
Libor rate change
Interest expense
(increase)/decrease in
USD
Interest expense
(increase)/decrease in
HRK
14,953
1%
(680)
(4,520)
-1%
230
1,527
2020
One-year interest expense
Current interest
expense in HRK
Libor rate change
Interest expense
(increase)/decrease in
USD
Interest expense
(increase)/decrease in
HRK
12,776
1%
(501)
(3,078)
-1%
119
729
Price risk
TNG’s activities expose it to price risk associated with changes in the freight rate (hire). The daily hire rate
(the spot rate) measured in USD per day, has historically been very volatile. The volatility influences day-to-
day operations.
Through time charter hires with reputable charterers in the short and medium term, TNG is capable to prevent
exposures to price risk changes of the volatile sport market.
TNG seeks to minimise its exposure to price changes of daily hire rates by basing its business activity on the
years of experience of the Fleet Manager which, through timely reactions and positioning of vessels, results
in optimal utilization of the fleet and maximization of hire rates in the given market circumstances.
Credit risk
Credit risk is the risk of failure by one party to meet its commitments to the other party under a financial
instruments, resulting in a loss to the other party. Maximum exposure to credit risk is represented by the
highest amount of each financial asset reported in the statement of financial position. The key financial assets
of TNG consist of cash and balances on accounts with banks, trade and other receivables. Credit risk
associated with liquid funds is limited, as the counterparty is often a bank receiving a high credit rating from
most international rating agencies.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 63
24. FINANCIAL INSTRUMENTS (CONTINUED)
Credit risk (continued)
As noted in Note 16, although the maturity of contractual payments is exceeded by more than 30 days, the
Management Board considers that expected credit losses do not have a material impact on the financial
statements, as late payment is a common practice in shipping. Consequently, the Management of TNG has
calculated and estimated that the expected credit losses are not material, given that these are primarily
demurrages from reputable charterers with whom TNG has been cooperating for many years.
Allocation of financial assets by degrees as at 31 December 2021 and 31 December 2020, as required by
IFRS 9:
Degree
31. December 2021
31. December 2020
USD
HRK
USD
HRK
Financial assets at amortized
cost:
Receivables from customers
and other receivables
Degree 2
7,662
50,905
5,572
34,204
Cash and cash equivalents
Degree 2
8,344
55,433
5,669
34,804
Total financial assets
16,006
106,338
11,241
69,008
There were no transitions by degrees during 2021, compared to 2020.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Management, which has built an
appropriate liquidity risk management framework for the management of the company’s short, medium and
long-term funding and liquidity management requirements. Liquidity risk, which is considered the risk of
financing, is the risk that TNG may encounter difficulties in recovering the funds owed to it to meet its
commitments associated with financial instruments. TNG has significant long-term loan debt at variable rates,
which exposes it to the cash-flow risk. TNG manages liquidity risk by maintaining adequate reserves and lines
of credit, by continuously monitoring forecast and actual cash flows as well as the maturities of its receivables
and payables.
Liquidity and interest rate risk tables
The following tables detail the remaining contractual maturities of TNG’s non-derivative financial liabilities and
the expected maturities for its non-derivative financial assets. The contractual maturity is defined as the
earliest date on which TNG can be required to make the payment. Disclosures of non-derivative financial
assets and liabilities are necessary for understanding the manner in which TNG manages its liquidity risk, as
it is managed based on net amounts of financial assets and liabilities.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 64
24. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk (continued)
2021 HRK
Up to 1
month
1 to 3
months
3
months
to 1
year
1 to 5
years
Over
5 years
Total
ASSETS
2021
Interest-bearing
11,958
8,858
-
-
-
20,816
Non-interest bearing
85,527
-
-
-
-
85,527
TOTAL
97,485
8,858
-
-
-
106,343
LIABILITIES
2021
Interest-bearing
130
16,120
60,036
509,320
-
585,606
Non-interest bearing
30,457
1,167
349
-
-
31,973
TOTAL
30,587
17,287
60,385
509,320
-
617,579
Liquidity gap
66,898
(8,429)
(60,385)
(509,320)
-
(511,236)
2020 HRK
Up to 1
month
1 to 3
months
3
months
to 1
year
1 to 5
years
Over
5 years
Total
ASSETS
2020
Interest-bearing
-
6,140
-
-
-
6,140
Non-interest bearing
62,551
-
-
-
-
62,551
TOTAL
62,551
6,140
-
-
-
68,691
LIABILITIES
2020
Interest-bearing
26,713
31,570
30,664
426,589
-
515,536
Non-interest bearing
23,073
40
306
-
-
23,419
TOTAL
49,786
31,610
30,970
426,589
-
538,955
Liquidity gap
12,765
(25,470)
(30,970)
(426,589)
-
(470,264)
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 65
24. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk (continued)
Categories of financial instruments
31. December 2021
31. December 2020
USD
HRK
USD
HRK
Financial assets at amortized cost:
Receivables from customers and other
receivables
7,662
50,905
5,572
34,204
Prepaid expenses and accrued income
758
5,038
630
3,865
Cash and cash equivalents
8,344
55,433
34,804
67,712
Deposits over three months
-
-
-
-
Total financial assets
16,764
111,376
11,871
72,873
Financial liabilities at amortized cost:
Borrowings on which interest is charged
80,737
536,385
76,792
471,431
Trade and other payables
4,815
31,987
3,780
23,205
Accruals and deferred income
1,635
10,865
1,825
11,205
Total financial liabilities
87,187
579,237
82,397
505,841
Fair value of financial instruments
Methods of estimation and assumptions in determining fair value
The fair values of financial assets and financial liabilities are determined as follows:
• the fair value of financial assets and financial liabilities traded on active liquid markets, under standard
conditions, is determined at the prices quoted on the market;
• the fair value of other financial assets and other financial liabilities is determined in accordance with pricing
models based on the analysis of discounted cash flows using prices from known market transactions and
prices offered for similar instruments;
• the fair value of interest rate swaps is calculated as the present value of estimated future cash flows and
discounted on the basis of the yield curves derived from the quoted interest rates,
In 2021, TNG did not have the financial assets to be reduced to fair value (2020: 0).
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 66
24. FINANCIAL INSTRUMENTS (CONTINUED)
Fair value of financial instruments (continued)
Fair value indicators are recognized in the statement of financial position
The fair value of financial instruments is recognized on the underlying of the following indicators:
1. indicator level - fair value indicators are derived from (non-harmonized) prices quoted on active markets
for equities and similar liabilities;
2. indicator level - fair Value Indicators are derived from other data on assets or liabilities that are not quoted
at level 1, either directly (i.e. as prices), either indirectly (i.e. derived from their prices) and
3. indicator level - indicators derived using valuation methods in which inputs or assets are used as input
data, which are not based on available market data.
On December 31, 2021 the amounts presented in the statement of cash, short-term deposits, receivables,
short-term liabilities, accrued expenses and other financial instruments correspond to their market value.
Capital management
The primary objective of TNG in managing its capital is to ensure financial support to the operations and
maximize shareholder value. TNG manages its capital by taking into account changes in the economic
conditions. In order to maintain or adjusts the capital structure, TNG may adjust dividend payable to the
shareholders, the return on investment, or issue new shares. There were no changes to objectives, policies
and processes during the period ended 31 December 2021 nor 31 December 2020. TNG supervises its capital
through the gearing ratio calculated as follows:
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 67
24. FINANCIAL INSTRUMENTS (CONTINUED)
Capital management (continued)
2021
USD
HRK
Total interest-bearing debt (long-term and short-term
borrowings) (Note 20)
80,737
536,385
Less: Cash and cash equivalents (Note 18)
8,344
55,433
Net debt
72,393
480,952
Equity and reserves
82,530
548,289
Total equity, reserves and net debt
154,923
1,029,241
Gearing ratio
47%
2020
USD
HRK
Total interest-bearing debt (long-term and short-term
borrowings) (Note 20)
76,792
471,431
Less: Cash and cash equivalents (Note 18)
5,669
34,804
Net debt
71,123
436,627
Equity and reserves
94,233
578,496
Total equity, reserves and net debt
165,356
1,015,123
Gearing ratio
43%
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 68
25. CONTINGENT LIABILITIES AND COMMITMENTS
Operating lease commitments, with the Company as the lessee
The Company has operating lease commitments for the properties it uses under operating lease
arrangements, Total future minimum payments under operating leases are as follows:
USD
31.12.2021
HRK
31.12.2021
USD
31.12.2020
HRK
31.12.2020
Up to 1 year
11
75
9
56
Between 1 and 5 years
45
298
37
224
After 5 years
56
373
46
280
Total
112
746
92
560
Legal cases
TNG has no significant litigations.
26. EVENTS AFTER THE BALANCE SHEET DATE
Impact of COVID-19 on the Company's business activities
Currently, the COVID-19 pandemic has a greater impact on the Company's operations in the form of difficult
repatriation of seafarers, inability to replace crew in a timely manner, difficult operational procurement and
delivery of consumables and equipment. The impact of the pandemic on the financial operations of the
Company is present, but it is less significant in the part where the Company secured revenues based on Time
charter.
The Company has taken a number of preventive measures in order to minimize operational risks, protect the
interests of the Company, individuals on board and the environment while enableing uninterrupted operations.
The Ukrainian crisis
The events following the Russian–Ukrainian conflict on Ukrainian land have fueled a rapidly growing crisis,
bringing devastating effects on Ukraine's population but also on the future of the Russian economy, its future
role in international trade, and serious consequences for global transport, energy and goods markets. Russia
rightly considers itself an energy giant especially in the field of fossil fuels.
In just a few weeks, the conflict in Ukraine has fundamentally disrupted a decades-long energy relationship
between Europe and Russia. Europe realizes that it cannot detach from Russia overnight because it still relies
on Russian energy. Nevertheless, Russia's role in the European and global energy system is taking on a new,
highly negative insignia.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 69
26. EVENTS AFTER THE BALANCE SHEET DATE (CONTINUED)
The Ukrainian crisis (continued)
Following the invasion, the US, UK and EU (and a number of other countries) imposed severe economic
sanctions, aimed at curbing Russia's influence globally, largely by preventing transactions with a growing
number of designated entities and restricting the country's access to foreign reserves and liquidity. Such
measures have major implications for Russia's economic stability.
The current restrictions and sanctions, which can have both a significant direct and indirect impact on global
shipping, could be broadly classified into three key risk areas:
1. Restrictions based on persons / entities, including sanctioned persons and sanctions relating to banks
2. Geographical restrictions
3. Restrictions on Prohibited Activities
It is necessary to emphasize the fluidity of the situation regarding sanctions against Russia and Russian legal
and natural persons.
Russia is the world's second largest oil exporter and supplies Europe with 45% of its natural gas, 45% of coal
and 25% of its oil. Moreover, hydrocarbons are the backbone of the Russian economy. In 2019, before the
fall in prices due to COVID, revenues from oil and natural gas accounted for 40% of the country's budget.
And oil and gas accounted for almost half of Russia's total commodity exports in 2021.
One of the issues related to the impact of tougher sanctions on Russia, and the possible opening of new
seaways, is to what extent China (and to some extent India) can help mitigate their impact.
Large energy companies such as Shell, ExxonMobil and Equinor are giving up investments dating back
decades. Public opinion and shareholder pressure are hampering their willingness to buy Russian oil on the
open market. Russia will have to turn elsewhere in its search for buyers. About 20% of Russian oil goes to
China, but Russia's turn to the East is limited by geology, geography and geopolitics. All the above will
certainly affect the redrawing of the new energy map of the world and thus inevitably the tonne mile in
shipping.
Due to the extremely dynamic, complex and constantly changing circumstances, including measures of
restrictions and sanctions against individual natural and legal persons, we are currently unable to quantify
and qualify the impact of the full range of changes to the Company's operations, whereby global recession,
as a worst-case scenario, cannot be excluded if the supply of fossil fuels and agricultural products from
Eastern Europe becomes completely cut off.
In addition to the foregoing, no other events or transactions have occurred after December 31, 2021 that
would have a material effect on TNG's financial statements as at or for the period thereafter or are of such
significance to TNG's business activities that they would require disclosure in the notes to the financial
statements.
Notes to the financial statements (continued)
For the year ended 31 December 2021
(All amounts are expressed in thousands of USD and thousands of HRK)
Tankerska Next Generation d.d., Zadar 70
27. APPROVAL OF THE FINANCIAL STATEMENTS
These financial statements, set out on pages 9 to 70, were approved by the Management and authorised for
issue on 29
th
April 2022.
Signed on behalf of TNG on 29
th
April 2022 by:
John Karavanić,
Member of the Management Board
Addtional
information
IMPORTANT INDUSTRY TERMS AND CONCEPTS
The Group uses a variety of industry terms and concepts when analysing its own performance. These include the
following:
Revenue Days. Revenue Days represent the total number of calendar days the Group’s vessels were in possession
of the Group during a period, less the total number of Off-Hire Days during that period generally associated with
repairs, drydocking or special or intermediate surveys.
Consequently, Revenue Days represent the total number of days available for a vessel to earn revenue. Idle days,
which are days when a vessel is available to earn revenue, yet is not employed, are included in Revenue Days.
The Group uses Revenue Days to explain changes in its net voyage revenues (equivalent to time charter earnings)
between periods.
Off-Hire Days. Off-Hire Days refer to the time a vessel is not available for service due primarily to scheduled and
unscheduled repairs or drydocking.
When a vessel is off-hire, or not available for service, the charterer is generally not required to pay the charter
hire rate and the Group will be responsible for all costs, including the cost of fuel bunkers unless the charterer is
responsible for the circumstances giving rise to the lack of availability. Prolonged off-hire may obligate the vessel
owner to provide a substitute vessel or permit the charter termination.
The Group’s vessels may be out of service, that is, off-hire, for several reasons: scheduled drydocking, special
surveys, vessel upgrade or maintenance or inspection, which are referred to as scheduled off-hire; and unsched-
uled repairs, maintenance, operational deficiencies, equipment breakdown, accidents/incidents, crewing strikes,
certain vessel detentions or similar problems, or charterer’s failure to maintain the vessel in compliance with its
specifications and contractual and/or market standards (for example major oil company acceptances) or to man a
vessel with the required crew, which is referred to as unscheduled off-hire.
Operating Days. Operating Days represent the number of days the Group’s vessels are in operation during the year.
Operating Days is a measurement that is only applicable to owned and not bareboated or chartered-in vessels.
Where a vessel is under the Group’s ownership for a full year, Operating Days will generally equal calendar days.
Days when a vessel is in a dry dock are included in the calculation of Operating Days as the Group still incurs vessel
operating expenses.
Operating Days are an indicator of the size of the fleet over a period of time and affect both revenues and expenses
recorded during that period.
(Net) Time Charter Equivalent (TCE). TCE is a standard shipping industry performance measure used primarily to
compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage
charters, because charter hire rates for vessels on voyage charters are generally not expressed per day as charter
hire rates for vessels on time charters are. Therefore the net equivalent of a daily time voyage rate is expressed
in net daily time charter rate.
(Net) TCE earnings. The Group defines time charter equivalent earnings, or TCE earnings, as vessel revenues less
commissions and voyage-related costs (both major and minor) during a period.
TCE earnings is a measure of performance of a vessel or a fleet, achieved on a given voyage or voyages and it is
expressed in US dollars per day. The Group’s definition of TCE earnings may not be the same as that used by other
companies in the shipping or other industries.
(Net) TCE rates. The Group defines time charter equivalent rates, or TCE rates, as vessel revenues less commission
and voyage related costs (both major and minor) during a period divided by the number of Revenue Days during
that period.
TCE rates is a measure of the average daily revenue performance of a vessel or a fleet, achieved on a given voyage
or voyages and it is expressed in US dollars per day. TCE rates correspond to the net voyage earnings per day. The
Group’s definition of TCE rates may not be the same as that used by other companies in the shipping or other
industries.
Important industry terms and concepts | TNG d.d. |
The Group uses the foregoing methodology for calculating TCE rates and TCE earnings in cases of both time charter
and voyage charter contracts.
Gross Time Charter rates (GTC rates). The Group defines gross time charter rates, or GTC rates, as vessel revenues
during a period divided by the number of Revenue Days during that period.
GTC rates should reflect the average daily charter rate of a vessel or a fleet and is expressed in US dollars per day.
The Group’s definition of GTC rate may not be the same as that used by other companies in the shipping or other
industries.
Daily vessel operating expenses. Daily vessel operating expenses is a metric used to evaluate the Group’s ability
to efficiently operate vessels incurring operating expenses and to limit these expenses.
Daily vessel operating expenses represent vessel operating expenses divided by the number of Operating Days of
vessels incurring operating expenses and is expressed in US dollars per day.
Average number of vessels. Historical average number of owned vessels consists of the average number of vessels
that were in the Group’s possession during a period. The Group uses average number of vessels primarily to highlight
changes in vessel operating costs.
Fleet utilization. Fleet utilization is the percentage of time that the Group’s vessels generate revenues. The shipping
industry uses fleet utilization to measure a company’s efficiency in finding employment for its vessels and in
minimizing the number of days that its vessels are off-hire for reasons such as scheduled repairs, drydocking,
surveys or other reasons other than commercial waiting time.
Fleet utilization is calculated by dividing the number of Revenue Days during a period by the number of Operating
Days during that period.
Important chartering contracts
The Group’s performance can be affected by some of the following types of charter contracts:
Time charter. Time charter is a contract under which a charterer pays a fixed daily hire rate on a semi-monthly or
monthly basis for a fixed period of time for using the vessel. Subject to any restrictions in the charter, the charterer
decides the type and quantity of cargo to be carried and the ports of loading and unloading. Under a time charter
the charterer pays substantially all of the voyage-related costs (etc. port costs, canal charges, cargo manipulation
expenses, fuel expenses and others). The vessel owner pays commissions on gross voyage revenues and the vessel
operating expenses (etc. crew wages, insurance, technical maintenance and other).
Time charter rates are usually fixed during the term of the charter. Vessels operating on time charters for a certain
period of time provide more predictable cash flows over that period of time, but can yield lower profit margins than
vessels operating under voyage charters in the spot market during periods characterized by favourable market
conditions. Prevailing time charter rates fluctuate on a seasonal and year-on-year basis reflecting changes in spot
charter rates, expectations about future spot charter rates and other factors. The degree of volatility in time charter
rates is lower for longer-term time charters compared to shorter-term time charters.
Voyage charter. Voyage charter involves the carriage of a specific amount and type of cargo from a specific loading
port(s) to a specific unloading port(s) and most of these charters are of a single voyage nature. The owner of the
vessel receives one payment derived by multiplying the tonnes of cargo loaded on board by the cost per cargo
tonne. The owner is responsible for the payment of all expenses including commissions, voyage-related costs,
operating expenses and capital costs of the vessel. The charterer is typically responsible for any costs associated
with any delay at the loading or unloading ports. Voyage charter rates are volatile and fluctuate on a seasonal and
year-on-year basis.
Other charters. Besides the two most common charters (time and voyage) the shipping industry provides other
types of contracts between the ship owner and the charterer.
| TNG d.d. | Important industry terms and concepts
Bareboat charter. Bareboat charter is a contract pursuant to which the vessel owner provides the vessel to the
charterer for a fixed period of time at a specified daily rate, and the charterer provides for all of the vessel’s operating
expenses in addition to the commissions and voyage related costs, and generally assumes all risk of operation. The
charterer undertakes to maintain the vessel in a good state of repair and efficient operating condition and drydock
the vessel during the term of the charter consistent with applicable classification society requirements.
Time charter trip. Time charter trip is a short term time charter where the vessel performs a single voyage between
loading port(s) and unloading port(s). Time charter trip has all the elements of a time charter including the upfront
fixed daily hire rate.
Important financial and operating terms and concepts
The Group uses a variety of financial and operational terms and concepts when analysing its own performance.
These include the following:
Vessel revenues. The Group generates revenues by charging customers for the transportation of their oil products
using its own vessels. Historically, the Operating Fleet’s services have generally been provided under time charters
although the Group may enter into voyage charters in the future. The following describes these basic types of
contractual relationships:
Time charters, under which the vessels are chartered to customers for a fixed period of time at rates that are
generally fixed; and
Voyage charters, under which the vessels are chartered to customers for shorter intervals that are priced on a
current or “spot” market rate.
The table below illustrates the primary distinctions among these types of charters and contracts:
Time Charter Voyage Charter
Typical contract lenght 1-5 years
Single voyages, consecutive voyages
and contracts of affreighment (COA)
Hire rate basis Daily Varies
Commercial fee The Group pays The Group pays
Commissions The Group pays The Group pays
Major Vessel related costs Customer pays The Group pays
Minor Vessel related costs The Group pays The Group pays
Vessel operating costs The Group pays The Group pays
Off-hire Customer does not pay Customer does not pay
Under a time charter the charterer pays substantially all of the voyage-related costs. The vessel owner pays
commissions on gross vessel revenues and also the vessel operating expenses. Time charter rates are usually
fixed during the term of the charter.
Important industry terms and concepts | TNG d.d. |
Vessels operating under time charters provide more predictable cash flows over a given period of time, but can yield
lower profit margins than vessels operating under voyage charters in the spot market during periods character-
ized by favourable market conditions. Prevailing time charter rates fluctuate on a seasonal and year-on-year basis
reflecting changes in spot charter rates, expectations about future spot charter rates and other factors. The degree
of volatility in time charter rates is lower for longer-term time charters as opposed to shorter-term time charters.
Other revenues. Other revenues primary includes revenues from charterers for other services and revenues from
profit commission on insurance policies.
Commercial fee. Commercial fees expenses include fees paid to the Fleet Manager, under the Management Agree-
ment, for providing the Group with chartering and commercial management services.
Commissions. Commissions are realized in two basic forms: addressed commission and brokerage commission.
Addressed commission is commission payable by the ship owner to the charterer, regardless of charter type and is
expressed as a percentage of the freight or hire. This commission is a reimbursement to the charterer for costs incurred
in relation to the chartering of the vessel either to third party brokers or by the charterer’s shipping department.
Brokerage commission is payable under a time charter on hire. Subject to the precise wording of the charter, the
broker’s entitlement to commission will therefore only arise when the charterers remit hire or is recovered by some
other means. Commission under a voyage charter is payable on freight, and may also be payable on deadfreight
and demurrage.
Voyage-related costs. Voyage-related costs are typically paid by the ship owner under voyage charters and by the
customer under time charters. Voyage-related costs are all expenses which pertain to a specific voyage. The Group
differs major and minor voyage-related costs.
Most of the voyage-related costs are incurred in connection with the employment of the fleet on the spot market
(voyage charter) and under COAs (contracts of affreightment). Major voyage-related costs include bunker fuel
expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees, extra war risks insurance and
any other expenses related to the cargo are typically paid by the customer.
Minor voyage-related expenses such as draft surveys, tank cleaning, postage and other minor miscellaneous
expenses related to the voyage may occur and are typically paid by the ship owner. From time to time, the ship
owner may also pay a small portion of above mentioned major voyage-related costs.
Vessel operating costs. The Group is responsible for vessel operating costs which include crewing, repairs and
maintenance, lubricants, insurance, spares, stores, registration and communication and sundries.
Vessel operating costs also includes management fees paid to the Fleet Manager, under the Management Agreement,
for providing the Group with technical and crew management, insurance arrangements and accounting services.
The largest components of vessel operating costs are generally crews and repairs and maintenance. Expenses for
repairs and maintenance tend to fluctuate from period to period because most repairs and maintenance typically
occur during periodic drydocking. These expenses may tend to increase as these vessels mature and thus the extent
of maintenance requirements expands.
Depreciation and amortization. The Group depreciates the original cost, less an estimated residual value, of its
vessels on a straight-line basis over each vessel’s estimated useful life. The estimated useful life of 25 years is the
Management Board’s best estimate and is also consistent with industry practice for similar vessels. The residual
value is estimated as the lightweight tonnage of each vessel multiplied by an estimated scrap value (cost of steel)
per tone. The scrap value per tone is estimated taking into consideration the historical Indian sub-continent five
year scrap market rate.
Depreciation expense typically consists of charges related to the depreciation of the historical cost of the vessels
(less an estimated residual value) over the estimated useful lives of the vessels and charges relating to the depre-
ciation of upgrades to vessels, which are depreciated over the shorter of the vessel’s remaining useful life or the
life of the renewal or upgrade. The Group reviews the estimated useful life of vessels at the end of each annual
reporting period.
| TNG d.d. | Important industry terms and concepts
Drydocking and surveys (special and intermediate). The vessels are required to undergo planned drydocking for
replacement of certain components, major repairs and maintenance of other components, which cannot be carried
out while the vessels are operating, approximately every 30 months or 60 months depending on the nature of
work and external requirements. The Group intend to periodically drydock each of vessels for inspection, repairs
and maintenance and any modifications to comply with industry certification or governmental requirements. The
number of drydocking undertaken in a given period and the nature of the work performed determine the level of
drydocking expenses.
Vessel impairment. The carrying amounts of the vessels are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indications exists, the vessel`s recoverable amount is
estimated. Vessels that are subject to deprecation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be fully recoverable. The carrying values of the vessels
may not represent their fair market value at any point in time since the market prices of second-hand vessels tend
to fluctuate with changes in charter rates and the cost of newbuilds. Historically, both the charter rates and vessel
values have been cyclical in nature.
Management Board’s judgment is critical in assessing whether events have occurred that may impact the carrying
value of the vessels and in developing estimates of future cash flows, future charter rates, vessel operating expenses,
and the estimated useful lives and residual values of those vessels. These estimates are based on historical trends
as well as future expectations. Management Board’s estimates are also based on the estimated fair values of their
vessels obtained from independent ship brokers, industry reports of similar vessel sales and evaluation of current
market trends.
General and administrative expenses. General and administrative expenses comprise of the administrative staff
costs, management costs, office expenses, audit, legal and professional fees, travel expenses and other expenses
relating to administration.
Interest expense and finance costs. Interest expense and finance costs comprise of interest payable on borrowings
and loans and foreign exchange gains and losses.
Tonnage tax. The tonnage tax regime is introduced into the Croatian maritime legislation by new amendments to
the Maritime Act and is applicable from January 1, 2014. According to the relevant provisions of the Maritime Act
(“Maritime Act”), qualifying companies may choose to have their shipping activities taxed on the basis of the net
tonnage of their fleet instead of on the basis of their actual profits. Companies, having opted for the tonnage tax,
must remain subject to this regime for the following 10 years. The qualifying company has to be a shipping company
liable under the Croatian corporate tax on any profits it generates. Furthermore, it must operate the vessels which
satisfy all applicable requirements, and most importantly, the qualifying company must be carrying out the strategic
and commercial management activities of vessels in Croatia.
In the tonnage tax system, the shipping operations shifted from taxation of business income to tonnage-based
taxation. Under the tonnage tax regime, the tax liability is not calculated on the basis of income and expenses as
under the normal corporate taxation, but is based on the controlled fleet’s notional shipping income, which in turn
depends on the total net tonnage of the fleet under management.
Summary of expenses. Under voyage charters, the Group will be responsible for commissions, all vessel voyage-
related costs and operating expenses. Under time charters, the charterer generally pays commissions, operating
expenses and minor voyage-related costs. For both types of contracts the Group is responsible to pay fees to the
Fleet Manager, under the Management Agreement.
Important industry terms and concepts | TNG d.d. |
| TNG d.d. | Important industry terms and concepts
The table below illustrates the payment responsibilities of the ship owner and charterer under a time and voyage
charter.
Cautionary note regarding forward-looking statements
Certain statements in this document are not historical facts and are forward-looking statements. They appear in
a number of places throughout this document. From time to time, the Group may make written or oral forward-
looking statements in reports to shareholders and in other communications. Forward-looking statements include
statements concerning the Group’s plans, objectives, goals, strategies, future events, future revenues or perfor-
mance, capital expenditure, financing needs, plans or intentions relating to acquisitions, competitive strengths and
weaknesses, business strategy and the trends which the Group anticipates in the industries and the political and
legal environment in which it operates and other information that is not historical information.
Words such as „believe“, „anticipate“, „estimate“, „expect“, „intend“, „predict“, „project“, „could“, „may“, „will“, „plan“
and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of
identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not
be achieved. Prospective investors should be aware that a number of important factors could cause actual results
to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-
looking statements.
When relying on forward-looking statements, investors should carefully consider the foregoing factors and other
uncertainties and events, especially in light of the political, economic, social and legal environment in which the
Group operates. Such forward-looking statements speak only as of the date on which they were made. Accord-
ingly, the Company does not undertake any obligation to update or revise any of them, whether as a result of new
information, future events or otherwise, other than as required by applicable laws and the Zagreb Stock Exchange
Rules. The Company makes no representation, warranty or prediction that the results anticipated by such forward-
looking statements will be achieved, and such forward-looking statements represent, in each case, only one of
many possible scenarios and should not be viewed as the most likely or standard scenario.
Zadar, April 29
th
, 2022
Pursuant to the article 300.d, and in accordance with the provisions of Article 300.c of the Croatian
Companies Act, the Supervisory Board of Tankerska Next Generation Inc., at its meeting held on April 29
th
,
2022, passed the following
DECISION
on determining annual financial statements
I
Supervisory board approves the Annual Report for 2021 of Tankerska Next Generation Inc. which consists
of: Income Statement and statement of other comprehensive income, Statement of financial position,
Statement of cash flows, Statement of changes in equity, Notes to the financial statements, Company status
report and Independent auditors report by Deloitte Ltd. audit company from Zagreb.
II
Following approval from the first paragraph of this Decision, the Annual Financial Statements of Tankerska
Next Generation for the year 2021 are determined by the Management Board and the Supervisory Board.
President of the Supervisory Board
Ivica Pijaca
Zadar, April 29th, 2022
Pursuant to the Croatian Companies Act and the Articles of association of the Company, the
Management Board and the Supervisory Board of Tankerska Next Generation Inc., at its meeting held
on April 29
th
2022, passed the following
DECISION
on the proposal to reconcile the of loss for the year 2021
I
It has been determined that Tankerska Next Generation Inc. in the year ending December 31st, 2021
realized a loss in the amount of HRK 86,988,823.67.
The loss in the amount of HRK 86,988,823.67 shall be offset in part through retained earnings from
previous years in the amount of HRK 56,701,883.11 and in part from capital reserves in the amount of
HRK 30,286,940.56.
II
This proposal will be proposed to the General Assembly by the Management Board and the Supervisory
Board of the Company.
Management Board President of the Supervisory Board
John Karavanić Ivica Pijaca
TPNG-R-A 2021
TANKERSKA NEXT GENERATION d.d.
Božidara Petranovića 4
23 000 Zadar
Croatia
Tel: +385 23 202 135
e-mail: tng@tng.hr
www.tng.hr