Scorpio Tankers Inc. — 2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone Q4 filing; the filing text does not provide a clear set of separate fourth-quarter results. Financial statements are audited and prepared under IFRS as issued by the IASB.
Business context and financial performance
Scorpio Tankers transports refined petroleum products worldwide. At year-end, its fleet comprised 131 owned, finance-leased or chartered-in vessels. The business is heavily exposed to spot tanker rates through commercial pools, most of which are managed by related parties.
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Vessel revenue | $540.8 million | $915.9 million | Down 41% |
| TCE revenue, non-IFRS | $537.3 million | $907.9 million | Down 41% |
| Daily TCE | $11,466 | $19,655 | Down 42% |
| Operating income (loss) | $(90.5) million | $245.3 million | Turned to a loss |
| Net income (loss) | $(234.4) million | $94.1 million | Turned to a loss |
| Basic loss (earnings) per share | $(4.28) | $1.72 | |
| Operating cash flow | $73.3 million | $419.4 million | Down 83% |
Revenue fell as exceptional 2020 rates—boosted by oil-market contango and floating storage—reversed, while demand and tanker rates remained subdued in 2021. Revenue days rose 1%, partially offsetting lower daily TCE. Vessel operating costs were broadly flat at $334.8 million, but average operating cost per day increased 3% to $6,959. No vessel or goodwill impairment was recorded in 2021; 2020 included $14.2 million of vessel impairment and $2.6 million of goodwill impairment.
Cash, debt and liquidity
- Cash and cash equivalents were $230.4 million at December 31, 2021, compared with $187.5 million a year earlier. Investing cash outflow was $52.3 million; financing cash inflow was $21.9 million.
- Total reported financing obligations were approximately $3.16 billion at year-end, including secured borrowings, sale-and-leaseback liabilities, IFRS 16 lease liabilities and unsecured notes. The filing reports approximately $3.14 billion of interest-bearing debt and lease obligations in its discussion of indebtedness.
- Current assets were $289.2 million and current liabilities were $527.8 million, a working-capital deficit of approximately $238.6 million. Management nevertheless projected adequate resources to meet commitments for at least 12 months from the report date, taking pending vessel sales into account.
- Near-term obligations included $69.7 million principal on Convertible Notes due May 2022, vessel-linked maturities, and a $17.5 million vessel facility due in December 2022. Management highlighted covenant and refinancing risk if market conditions deteriorate.
- Operating cash flow declined substantially alongside revenue. Cash interest paid was $114.7 million in 2021. Dividends paid totaled $23.3 million, or $0.40 per share for the year; the Board later declared a $0.10-per-share quarterly dividend paid in March 2022.
Material changes, outlook and notable items
- In 2021, the company issued $119.4 million of 3% Convertible Notes due 2025 and exchanged $81.5 million principal of 2022 notes for 2025 notes, recording a $5.5 million exchange loss. It also issued $41.9 million principal of 7% Senior Notes due 2025.
- Subsequent to year-end, Scorpio agreed to sell 12 LR1s and two MRs; six LR1 sales had closed by the report date. It also agreed to sell another MR. Management estimated aggregate net liquidity of about $196.6 million from the sales after debt repayments and selling costs. The filing expected an approximately $48.0 million first-quarter 2022 loss on the initial sales and a further approximately $5.3 million loss related to the additional MR agreement.
- Management described a potential recovery in oil demand but expected continued commodity-market volatility; it provided no specific earnings or revenue guidance. Spot rates, fleet supply, oil-product demand, COVID-19 impacts and geopolitical developments remain key uncertainties.
- Vessel impairment estimates are sensitive to freight-rate and discount-rate assumptions. At year-end, a 5% reduction in forecast charter rates would have produced an estimated $46.0 million impairment; a 1 percentage-point increase in the discount rate would have produced an estimated $12.5 million impairment.
- Other material risks include variable-rate debt and LIBOR transition, restrictive financial and collateral covenants, environmental compliance spending, fuel costs, vessel values, and counterparty and insurance risks. The company reported compliance with its financial covenants at December 31, 2021.
- Ukraine-related sanctions and disruption to Russian oil trade were identified as potential risks in the report’s subsequent-events discussion. The company reported no material pending legal proceedings and stated that disclosure controls and internal control over financial reporting were effective. The auditor issued an unqualified opinion and identified vessel impairment assessment as a critical audit matter.
Important facts for investors to verify
- Whether the contracted vessel sales closed on schedule, the final proceeds and debt repayments, and the realized losses versus management’s estimates.
- How the 2022 note maturity and other near-term obligations were funded, and whether covenant headroom and liquidity remained adequate after vessel disposals.
- Current pool TCE rates and revenue days by vessel class, given the sharp 2021 decline and high spot-market exposure.
- Related-party pool and management arrangements: pool revenue was $535.0 million in 2021, and the pools and key managers are related parties.
- Whether charter-rate and vessel-value assumptions support carrying values, particularly given the disclosed impairment sensitivities.
- Future dividend decisions, scrubber and ballast-water system spending, and the effect of interest-rate and benchmark-rate changes on financing costs.