The aim of our company strategy is to pursue long-term value creation and alignment with the core purpose and values of Euronav, taking into consideration the interests of all stakeholders. There are four key pillars supporting the execution and implementation of our strategy.
The Supervisory Board is the ultimate supervisory body of the Company. It is responsible for the general policy and strategy of the Company and has the power to perform all acts that are exclusively reserved to it by the Code of Companies and Associations. The Supervisory Board drafts all reports and proposals in accordance with books 12 and 14 of the Code of Companies and Associations. It supervises the Management Board in making decisions related to the day-to-day management of the Company. Euronav believes that strong governance standards are key to driving the delivery of shareholder value. Both Supervisory and Management boards apply the highest standards of ethics, diversity and governance.
Euronav operates in a deeply cyclical industry. There are many macro factors beyond our control, such as a fragmented supply side and around 20 to 30 customers for our commoditised service. Consequently, the Company manages its balance sheet in a very conservative manner. We apply what we call a liquidity runway of two years to our balance sheet. This means that we have sufficient or adequate liquidity to manage our business through two years of sustained low freight rates. Within our financial structure we also have a self-imposed limit of 50% maximum leverage on a loan to value basis. Our capital allocation strategy is to invest during the cycle where possible on a counter cyclical basis as per figure 6. Net Income derived from our asset base during the cycle is distributed each quarter as a dividend or share buy back with a minimum of USD 12 cents per share per annum, given the fixed income contribution from assets such as the FSO.
Euronav adopts an integrated approach towards the management of our fleet. Whilst we outsource around 12% of our fleet management, we keep the majority of this management in house. Ship management is operated out of our Athens office.
Sustainability is a core value at Euronav as it ensures the long-term health and success of our people, our business and the environment we work in. It involves a commitment to safety and sound environmental practices, as well as an innovative approach to the use of technology and information. In short, Sustainability is part of Euronav’s DNA. In 2005 we set our company motto as “the ocean is our environment”. With the accelerating forces of a global energy transition this motto and application of sustainability across all facets of our tanker business has never been more important.
In the eyes of management at Euronav, sustainability does not just mean operating the business to the highest ethical standards possible with a strong focus on decarbonisation. When a business model disproportionately places the focus on non-financial management, it is not credible as a going concern. It is not therefore financially viable and will be of little use to its customers or stakeholders. We pride ourselves on managing our operations on a sustainable basis and increasingly within the guidelines or frameworks set by initiatives such as the Poseidon Principles.