Annual Report 2015 - Zetta ASfiles.zetta.no/.../amsc_2015_annual_report_final.pdf · In review Key...

Annual Report 2015

Split of Aker American Shipping’s ship owning operations from its ship building operations,establishing Aker Philadelphia Shipyard ASA (AKPS)

Obtained take-out financing for the ten vessels and issued NOK 700 million bond for investments in vessels and operations

Took delivery of the first three product tankers

2005 2007

Aker ASA reduced its ownership interest to 19.9% in compliance with U.S. Jones Act foreign ownership restrictions

Name changed from Aker American Shipping ASA to American Shipping Company ASA. Trading ticker also changed from AKASA to AMSC

Took delivery of two more product tankers

Took delivery of two product tankers

Sold second shuttle tanker contract to OSG

Finalized settlement agreement with OSG that settled all commercial disputes between the companies

Took delivery of two additional tankers; sold first of two shuttle tanker contracts to OSG

2008 2009 2010

Aker American Shipping ASA (AKASA) established,Philadelphia Shipyard acquired and company listed on Oslo Stock Exchange.

Closed a ten ship bareboat charter agreement with Overseas Shipholding Group, Inc. (OSG) and placedcorresponding ten ship order at Philadelphia Shipyard

This is AmericanShipping CompanyThe business model of American Shipping Company ASA (AMSC) is to own and bareboat charter out U.S. built tankersto qualified U.S. citizen operators, who in turn time charter out the vessels in the U.S. domestic Jones Act market in aprofit sharing arrangement with AMSC. The objective of the business model is to generate a stable cash flow from longterm bareboat charters protected from short term market fluctuations, with upside potential through profit sharingarrangements with the charterers.

AMSC currently owns nine modern handy size product tankers and one modern handy size shuttle tanker, all built atPhilly Shipyard (PHLY), a leading U.S. shipyard (formerly named Aker Philadelphia Shipyard). All ten vessels are on longterm fixed rate bareboat charters with Overseas Shipholding Group Inc. (OSG), together with a profit sharing agreementwith OSG. OSG charters the vessels out on time charters to major oil companies. OSG has options to renew thebareboat charters for the life of the vessels. AMSC also owns an equity stake in Philly Tankers AS, a Norwegiancompany listed OTC with orders for four product tankers to be built at PHLY.

AMSC is headquartered in Lysaker, Norway, and listed on the Oslo Stock Exchange, with its principal operatingsubsidiaries located in Pennsylvania, USA.

Negotiated extension of maturity of vessel debt to June 2016

Achieved bareboat charter extensions with OSG to Decem-ber 2019

OSG filed for Chapter 11 bankruptcy protection

Completed a majorrecapitalization of the Company which raised approximately USD 128 million in cash and increased equity by approximately USD 166 million

Launched major recapitalization of the Company including USD 120 million private placement, conversion of subordinated debt to equity and amendments to vessel debt and bond loan

Negotiated agreement with OSG for conversion of one of the ten product tankers into a shuttle tanker for a long term time charter with Shell

Refinancing of secured vessel debt completed with USD 450 million in new secured debt

Philly Tankers secured long-term time charters on its first two ships, declared its two options and entered into agreement to sell all four tanker contracts upon delivery

Quarterly dividend growth of 3% over 2014 and guided on 15% dividend growth for 2016

Took delivery of final product tanker in build series with AKPS

Extended maturity of the NOK bond for 6 years

2011 2012 2013 2014 2015

Overseas Tampa was converted to a shuttle tanker for a ten year time charter to Shell beginning in 2015

Invested USD 25 million in Philly Tankers with orders for two product tankers and options for two additional tankers

Began paying quarterly dividends of USD 0.10 per share

OSG emerged from Chapter 11 bankruptcy with all of AMSC’s agreements assumed as part of OSG’s plan of reorganization

In review

Key events 2015

Key Events 2015

Contents

In review

2 Key events 2015

3 Key figures 2015

5 Goals and strategies

Performance 2015

6 Board of directors’ report

11 Board responsibility statement

12 Annual accounts – group

12 Consolidated statement of financialposition

13 Consolidated income statement andconsolidated statement ofcomprehensive income

14 Consolidated statement of changes inequity

15 Consolidated cash flow statement

16 Notes to the consolidated accounts

33 Annual accounts – parent company

33 Statement of financial position

34 Income statement and cash flowstatement

35 Notes to the accounts

40 Auditor’s report

42 Share and shareholder information

Our organization and governance

45 Corporate governance

49 Presentation of the board of directors

50 Presentation of management

51 Contact information

Financial calendar 201627 April Annual General Meeting 201624 May 1st quarter interim results 201617 August 2nd quarter interim results 201616 November 3rd quarter interim results 2016

(Dates subject to change)

Refinancing of secured vessel debt completedwith USD 450 million in new secured debt.The USD 450 million is structured in two separate facili-ties; one being a USD 300 million facility secured byeight vessels and the other a USD 150 million facilitysecured by two vessels. The new loans, along withapproximately USD 45 million of cash, repaid the pre-vious secured vessel debt and prepaid the interest rateswap contracts under the old loan. On a combinedbasis, the secured debt has an average weighted tenorof 6 years and average weighted interest cost of LIBORplus 325 bps margin.

Investment in Philly TankersPhilly Tankers secured long-term time charters for two ofits newbuildings and declared its two options with PHLYwith deliveries in 2017. Philly Tankers agreed to sell itsfour product tanker contracts to a subsidiary of KinderMorgan, Inc. for a total consideration of USD 568 million.

Deferred Principal Obligation (DPO) and dividendgrowth2015 saw the first quarter with no DPO accruals and withfull cash effect from DPO payments from OSG. Goingforward, DPO repayments and interest will provide positivecash flow to AMSC over the next 18 years. During 2015,the Company paid dividends of USD 0.412 per share, USD25 million in total, a 3% increase from the quarterly divi-dend in 2014. The total dividend for 2016 is expected togrow by approximately 15% compared to 2015.

2 American Shipping Company annual report 2015

In review

Key figures 2015

American Shipping Company annual report 2015 3

Key Figures 2015

Profit and loss items 2015 2014

Operating revenues USD million 87.8 87.6EBITDA USD million 84.9 84.5Net income USD million 14.7 23.0Normalized EBITDA

Reported EBITDA USD million 84.9 84.5Profit share USD million 11.1 5.7DPO USD million 3.3 1.0

Normalized EBITDA USD million 99.3 91.2

Cash flow 2015 2014

Cash flow from operating activities USD million 50.9 38.1Cash flow from investing activities USD million - (25.0)Cash flow from financing activities USD million (110.9) 60.6Cash as of 31 December USD million 33.3 93.3

Balance sheet 2015 2014

Interest bearing debt USD million 670.8 728.4Equity USD million 224.2 234.5Total assets USD million 907.0 999.7Equity ratio Percent 24.7% 23.5%

The AMSC share 2015 2014

Share price as of 31 December NOK 26.5 37.5Dividend per share NOK 3.29 1.86Dividend per share USD 0.41 0.30Dividend yield Percent 12.4% 5.0%

In review

Goals and Strategies


Goals and Strategies

Be a preferred ship owning and lease financecompany in the Jones Act market

� Generate stable cash flow from long term bareboat charters protected from shortterm market fluctuations, with upside potential through profit sharing arrangementswith the charterers

� Work closely with charterers to ensure that maximum value is gained from each ofthe time charters and the profit sharing arrangements

� Maintain stringent controls on all costs associated with the management of AMSC

Have a modern, safe and operationally friendly fleet

Explore and invest in value creating opportunities forour stakeholders

Apply the tools of financial engineering to ensure anoptimal use of capital

Performance 2015

Board of directors’ report

Board of Directors’ Report for 2015

IntroductionAmerican Shipping Company ASA(“AMSC” or the “Company”) is a ship own-ing and lease finance company with amodern fleet of nine product tankers andone shuttle tanker operating in the U.S.domestic (“Jones Act”) trades. During2015, all ten tankers were in operation onlong term bareboat charters to OverseasShipholding Group, Inc. and its subsidiaries(collectively “OSG”), one of the largestoperators in the Jones Act market, anddomiciled in New York.

The Group’s business activitiesThe main entities in the AMSC Group(“Group”) are the Norwegian holdingcompany American Shipping CompanyASA and its wholly owned U.S. subsidiariesAmerican Tanker Holding Company, Inc.(ATHC), American Tanker, Inc. (ATI),American Shipping Corporation (ASC), andthe ten single purpose leasing companies(ASC Leasing I through X, Inc.), each own-ing one of the ten tankers. American Ship-ping Company ASA is domiciled in Lysaker,Norway, and listed on the Oslo StockExchange, with the U.S. subsidiarieslocated in Kennett Square, Pennsylvania.

AMSC’s business model is to own andlong-term bareboat charter-out vessels foroperation in the U.S. Jones Act market,earning fixed bareboat charter revenuesgenerating stable cash flows to protectagainst short-term market fluctuations,and, in addition, earning a share of theprofits generated by the bareboat charter-ers’ operations in the time charter markets.

In accordance with this policy, all ofAMSC’s vessels are on long-term fixed ratebareboat charters with OSG, together witha profit sharing agreement which givesAMSC the upside of sharing the profitsgenerated by OSG. OSG charters the ves-sels out on time charters to major oilcompanies. The fixed bareboat charterperiod for all vessels expires in December2019 (except the Overseas Tampa, which

expires in 2025). Subsequently, OSG hasoptions to renew the bareboat charters forthe life of the vessels under terms that aresimilar to the existing arrangements.

The vessels were built at Philly Shipyard(“PHLY”, formerly named Aker PhiladelphiaShipyard, Inc.), a leading U.S. shipyard anddelivered between 2007 and 2011.

The Company has no research anddevelopment activity.

The Jones Act market

The U.S. cabotage law, commonly referredto as the Jones Act, requires all commer-cial vessels transporting cargoes betweenpoints in the United States to be U.S. built,owned, operated and manned by U.S. citi-zens, and registered under the U.S. flag.

AMSC’s operation in the Jones Actmarket is made possible by the leasefinance exception of the Jones Act, whichpermits foreign ownership of the shipsunder certain conditions. Compliance withthe lease finance exception requires,among other things, that the vessels bebareboat chartered to qualified U.S. citizenoperators, such as OSG.

Key events 2015Bank refinancing

In November 2015, funding was completedon USD 450 million of new secured vesseldebt and a USD 20 million subordinatedloan. The new loans, along with approx-imately USD 45 million of cash, repaid theprevious secured vessel debt ofUSD 492.4 million, which had a maturity inJune 2016, and prepaid the interest rateswap contracts under the old loan of USD14.2 million. The USD 450 million is struc-tured in two separate facilities; one being aUSD 300 million facility secured by eightvessels and the other a USD 150 millionfacility secured by two vessels. As part ofthe refinancing, the Company entered intoa USD 20 million subordinated loan withAker ASA. The loan is expected to berepaid with proceeds from Philly Tankers

AS. On a combined basis, the secured debthas an average weighted tenor of 6 yearsand average weighted interest cost ofLIBOR plus 325 bps margin. The Companyentered into mandatory five year interestrate swaps at an average rate of 164 bpsfor USD 210 million of the new debt. Sub-sequent to year-end, the Company enteredinto four year interest rate swaps at anaverage rate of 93 bps for USD 90 millionof the new debt. In connection with therefinancing, the Company agreed with theholders of the unsecured bond that thecash interest will increase from 50% to100% from the time of funding of the ves-sel debt refinancing and that the Companywill not use its option to extend the bondbeyond the final maturity date inFebruary 2018.

Investment in Philly Tankers AS

During the first quarter of 2015, Philly Tank-ers (“PT”) secured long-term time chartersfor two of its newbuildings, scheduled fordelivery in Q4 2016 and Q1 2017. In July2015, PT declared its two options with PHLYwith deliveries in 2017. Also in the third quar-ter of 2015, PT agreed to sell its four producttanker contracts to a subsidiary of KinderMorgan, Inc. for a total consideration of USD568 million. The sale is expected to occurimmediately before delivery of each ship,scheduled between Q4 2016 and Q4 2017.AMSC owns 19.6% of PT and holds a seaton its Board of Directors.

Deferred Principal Obligation (DPO)receivable

The fourth quarter of 2015 was the firstquarter with no DPO revenue accruals andwith full cash effect from DPO paymentsfrom OSG, representing USD 1.0 million forthe quarter. Going forward, DPO repay-ments from OSG and interest will providepositive cash flow to AMSC over the next18 years. In 2016, AMSC expects toreceive USD 3.9 million of DPO relatedpayments.


Performance 2015


DividendDuring 2015, the Company paid dividendsof USD 0.412 per share, USD 25 million intotal, a 3% increase over the quarterlydividend in 2014. The total dividend for2016 is expected to grow by approximately15% compared to 2015. NormalizedEBITDA, calculated as reported EBITDAplus profit share plus DPO, was USD99.3 million for 2015, up 9% from 2014.Normalized EBITDA (USDmillions) 2015 2014

Reported EBITDA 84.9 84.5

Profit share 11.1 5.7

DPO 3.3 1.0

Normalized EBITDA 99.3 91.2

Review of the annual accountsAMSC prepares and presents its con-solidated accounts according to Interna-tional Financial Reporting Standards (IFRS)as adopted by the EU, and has one operat-ing segment.

Profit and loss accountsIn 2015, AMSC had operating revenues ofUSD 87.8 million versus operating revenuesof USD 87.6 million in 2014 as the full fleetwas in operation for the full year 2015 and2014. Revenues are recognized on amonthly basis and represent the incomefrom the bareboat charter agreements. Allprofits generated under the profit sharingagreement with OSG in 2015 and 2014were used to offset the deficit balance,therefore no profit sharing revenue wasrecognized in 2015 or 2014. The deficitbalance must be repaid before OSG isrequired to make profit sharing payments incash. The Company’s operating profitbefore interest, taxes, depreciation andamortization (EBITDA) amounted to USD84.9 million in 2015 compared to USD84.5 million in 2014.

Depreciation was USD 34.2 million in2015 versus USD 33.9 million in 2014.AMSC’s operating profit (EBIT) was USD50.7 million in 2015 versus USD50.6 million in 2014.

Net financial items were negative USD36.6 million in 2015 compared to negativeUSD 27.4 million in 2014. Net financialitems of negative USD 36.6 million in 2015consist primarily of net interest expense ofUSD 43.8 million, other financial expensesof USD 5.1 million, and foreign exchangeloss of USD 0.2 million, offset by unrealized,non-cash gain on the mark-to-market valu-ation of interest rate swap agreements ofUSD 12.5 million. Net financial items of

negative USD 27.4 million in 2014 consistprimarily of net interest expense of USD48.4 million, other financial expenses ofUSD 3.5 million, and foreign exchange lossof USD 5.1 million, offset by unrealized,non-cash gain on the mark-to-market valu-ation of interest rate swap agreements ofUSD 20.1 million and gain on the de-recognition of the bond associated with theRecapitalization of USD 9.5 million.

Deferred income tax benefit was USD0.6 million in 2015 (expense of USD0.3 million in 2014).

AMSC’s 2015 net income was USD14.7 million versus USD 23.0 million in2014. The 2015 basic and diluted earningsper share (EPS) were USD 0.24. The corre-sponding figures for 2014 were USD 0.38,for both basic and diluted EPS.

Cash flowThe Company’s operating cash flow isprimarily composed of bareboat charterhire and DPO received less interest paid.Total net cash flow from operating activitiesin 2015 was positive USD 50.9 million (USD38.1 million in 2014).

There were no investments made in2015. Total cash used for investing activ-ities in 2014 was USD 25 million for theinvestment in Philly Tankers AS.

Net cash flow from financing activitiesin 2015 was negative USD 110.9 million,which included USD 41.0 million in vesseldebt installments, USD 44.8 million net cashused for refinancing, USD 25 million in divi-dends paid/return of capital and USD 0.1net cash used for purchase of treasuryshares. Net cash flow from financing activ-ities in 2014 was USD 60.6 million, whichincluded USD 127.9 million in cash receivedin the Recapitalization, USD 49.1 millionrelated to the pay down of the vessel debtfinancing, USD 18 million in dividends paid/return of capital and USD 0.8 net cash usedfor purchase of treasury shares.

Statement of financial position andliquidityAs of 31 December 2015, American Ship-ping Company had cash on deposit withbanks totaling USD 33.3 million. Of thistotal amount, USD 1.6 million is cash heldfor specified uses. The correspondingamounts for 2014 were USD 93.3 million incash on deposit with banks and USD8.1 million in cash held for specified uses.

Other current assets were USD0.4 million as of 31 December 2015 (USD0.4 million as of 31 December 2014).

Property, plant and equipment as of31 December 2015 was USD 813.8 million(USD 848.0 million as of 31 December2014), and includes ten vessels.

Interest-bearing long-term receivablestotaled USD 32.6 million as of 31 December2015 (USD 33.2 million as of 31 December2014) and represent the Deferred PrincipalObligation (“DPO”) due from OSG.

A deferred tax asset of USD 2.0 millionfor federal deferred tax was booked as of31 December 2015 (0 as of 31 December2014).

Other long-term assets totaled USD24.9 million and represent AMSC’s invest-ment in Philly Tankers.

At 31 December 2015, total assetswere USD 907.0 million (USD 999.7 millionas of 31 December 2014).

At 31 December 2015, total equity wasUSD 224.2 million. The equity ratio was24.7% of total assets. Correspondingamounts for 2014 were USD 234.6 millionand 23.5%, respectively.

Total current liabilities as of31 December 2015 were USD 20.3 million,consisting of USD 10.2 million for short-term interest bearing debt, USD 9.5 millionfor deferred revenues and other payablesand USD 0.6 million for the short term por-tion of the mark-to-market valuation of theinterest rate swap contracts. The corre-sponding total current liabilities as of31 December 2014 were USD 81.2 million,consisting of USD 52.2 million for short-term interest bearing debt, USD 9.1 millionfor deferred revenues and other payablesand USD 19.9 million for the short termportion of the mark-to-market valuation ofthe interest rate swap contracts.

Non-current liabilities totaled USD662.5 million at 31 December 2015,consisting of bank debt of USD430.2 million related to the ten vesselsowned by AMSC, a bond payable of USD210.4 million, a subordinated loan fromAker ASA of USD 20.0 million, the longterm portion of the mark-to-market valu-ation of the interest rate swap contracts ofUSD 0.2 million and deferred tax liability ofUSD 1.7 million. Non-current liabilitiestotaled USD 684.0 million at 31 December2014, consisting of bank debt of USD474.9 million related to the ten vesselsowned by AMSC, a bond payable of USD201.3 million, the long term portion of themark-to-market valuation of the interestrate swap contracts of USD 7.5 million anddeferred tax liability of USD 0.3 million.


Performance 2015


Tax position

AMSC has net operating losses in carryfor-ward (NOLs) as of 31 December 2015 ofUSD 487.9 million in the U.S. and USD108.7 million in Norway. These NOLs havebeen generated since 2005 from the taxlosses of the Company, which are mostlydue to the accelerated depreciation of thevessels for tax purposes (10 years).

On 3 January 2014, the U.S. sub-sidiaries experienced a change of owner-ship as defined by Internal Revenue CodeSection 382 due to a greater than 50%shift in the owners of AMSC stock. The uti-lization of the net operating lossescarryforward as of that date are subject toannual limitations.

See footnote 5 in the consolidatedaccounts for further information.

RisksThe risks facing AMSC principally relate tothe operational and financial performanceof OSG and from OSG’s operation of ourvessels, as well as overall Jones Act marketrisk.

Financial risk and risk management

AMSC’s activities expose it to a variety offinancial risks: market risk, currency risk,interest rate risk, counterparty risk, pricerisk, credit risk, and liquidity risk. AMSC’soverall risk management program focuseson the unpredictability of financial marketsand seeks to minimize potential adverseeffects on AMSC’s financial performance.AMSC uses derivative financial instrumentsto hedge certain risk exposure.

OSG is AMSC’s principal counterpartycredit risk. In addition to holding leases thatrepresent AMSC’s entire backlog of USD401.7 million at year-end, at 31 December2015, OSG also owes AMSC USD32.6 million of long-term receivablesrelated to the Deferred Principal Obligation(DPO). OSG has serviced its financial obli-gations to AMSC on time.

AMSC operates in a business environ-ment that is capital intensive. The Com-pany is dependent upon having access tolong-term funding for the vessels and otherloan facilities to the extent its own cashflow from operations is insufficient to fundits operations. Refinancing is not requiredbefore 2018 and is therefore not consid-ered a significant risk in the near term.

Through both the vessel financing andthe bond, the Company is exposed to fluc-tuations in interest rates on its long-term

debt. The interest rate risk related to thevessel financing is partially mitigated by theuse of interest rate swap agreements tohedge the interest rate risk. The Companyentered into interest rate swaps to convertits floating rate debt to fixed rates for USD300 million of its vessel debt (USD448.4 million as of 31 December 2015). Asof 31 December 2015, the bond carries afloating interest rate of LIBOR (London InterBank Offered Rate) plus a margin of6.0% per annum.

AMSC is subject to a covenant in itsbond agreement that requires the Companyto maintain a minimum level of USD50.0 million of consolidated equity, exclud-ing, cumulative unrealized gains and losseson the interest rate swaps. Consolidatedequity for the Company is primarilyimpacted through the results of its oper-ations. Another factor that could impact theequity debt covenant is an impairmentcharge related to the vessels. Given that thevessel market remained strong during 2015,this risk is not considered significant as ofyear-end. The Company’s equity under thecovenant calculation was USD 225.0 millionas of 31 December 2015. The Companycurrently views this risk as minimal.

AMSC is subject to financial covenantsunder the secured bank loans relating tominimum liquidity and collateral, and lever-age and debt service ratios. AMSC was incompliance with all of its debt covenantsas of 31 December 2015.

The going concern assumptionIn view of AMSC’s financial position, theBoard confirms the going concern assump-tions and that the 2015 annual accountshave been prepared based on the assump-tion of a going concern.

Parent company accounts andallocation of income for the yearThe profit and loss account of AmericanShipping Company ASA shows loss for theyear 2015 of USD 14.1 million, mostlyrelated to financing activities. The Board ofDirectors proposes that the loss for theyear be allocated as shown below:

Dividend payments USD 25.0 million

Transferred from sharepremium (USD 25.0 million)

Transferred from other equity (USD 14.1 million)

Total allocated (USD 14.1 million)

The Board of Directors was granted author-ization to pay dividends based on theCompany’s annual accounts for 2014 atthe Annual General Meeting in 2015, which

is valid up to the Company’s Annual Gen-eral Meeting in 2016 subject to the Boardevaluating the liquidity position of theCompany. Such authorization facilitatespayment of dividend by the Board of Direc-tors on a quarterly basis.

Subsequent to year-end, the Boarddeclared a dividend/return of capital ofUSD 0.107 per share (USD 6.5 million inaggregate) on 16 February 2016. The divi-dend was paid on 3 March 2016.

Corporate governance and internalcontrol

American Shipping Company ASA’s corpo-rate governance policy exists to ensure anappropriate division of roles among thecompany’s owners, board of directors, andexecutive management. Such a separationof roles ensures that goals and strategiesare prepared, adopted corporate strategiesare implemented, and the results achievedare subject to verification and follow-up.Applying these principles also contributesto satisfactory group wide monitoring andverification of activities. An appropriatedivision of responsibilities and satisfactoryinternal controls will contribute to thegreatest possible value creation over time,to the benefit of shareholders and otherstakeholders. AMSC’s corporate gover-nance guidelines are presented in greaterdetail on page 45 of this annual report andit is the Board’s opinion that the Compa-ny’s corporate governance policy is effec-tively applied. Based on the relativelysimple business model and small size ofthe Company’s staff, the Board believesthat adequate steps have been taken tomitigate the internal control risk such as theBoard’s monthly review of results com-pared to budget and a third party review ofcash disbursements.

Good corporate governance, that is,proper board conduct and companymanagement, are key to AMSC’s efforts tobuild and maintain trust. AMSC is commit-ted to maintaining an appropriate divisionof responsibilities between the Company’sgoverning bodies, its Board of Directors,and management. AMSC has comparedthe Norwegian requirements and recom-mendations on corporate governance forlisted companies with the Company’s owncorporate governance procedures andpractice. The findings show that theCompany is in compliance with respect tothe requirements and substantially in con-formance with those recommendations.


Performance 2015


The Company’s board chairman is electedat the Company’s annual shareholders’meeting and the shareholder-elected direc-tors are elected for two year terms.

The Board members of AMSC are asfollows:

Chairman Annette Malm JustadBoard Member Peter D. KnudsenBoard Member Kristian Røkke

Further description of the Board Membersis on page 49.

Corporate Social Responsibility

In accordance with the Norwegian Account-ing Act §3-3, section c, the Board hasreviewed AMSC’s policies and manage-ment of Corporate Social Responsibility(CSR) in the following areas: human rights,labor standards, environment and corrup-tion.

AMSC’s modern, double-hulled tankerfleet meets the current requirements of theU.S. Coast Guard. Under its lease agree-ments, OSG is responsible for the day today operation of the vessels. In addition,the ships’ crews are managed by OSG

through a labor union. OSG is one of thelargest ship operators in the world and webelieve OSG has a commitment to meetingand exceeding environmental regulationsand human rights and labor standards.

Because AMSC has only three employ-ees, the Company has a limited direct envi-ronmental impact. Since all of AMSC’svessels are operated by OSG, we do nothave formal policies covering safety ofpersonnel, workers’ rights and theenvironment. Nevertheless, our policy is tomeet our responsibilities by choosing areputable business partner to operate ourvessels and by following the laws and regu-lations applicable to our employees. Webelieve both AMSC and OSG share acommon commitment to work safely and ina manner that protects and promotes thehealth and well-being of the employees andthe environment. OSG is obligated to notifyAMSC if (i) any of the vessels are involvedin an accident involving repairs, the cost ofwhich is likely to exceed $500,000,(ii) events have occurred whereby any ofthe vessels are likely to become a totalloss, or (iii) any of the vessels have beenarrested or someone has exercised or

purports to exercise a lien on the vessel. IfOSG makes a claim under its hull policy inconnection with an accident involvingdamage to the vessel in excess of$500,000, AMSC would be notified by thehull underwriters. There have been no suchreported incidents during 2015.

The Company has three full timeemployees who are senior executives whowork in offices in the United States andNorway. As a result, AMSC has not felt itnecessary to develop a formal humanresources policy. AMSC has agreementswith Aker ASA and Aker U.S. Services, LLC(formerly Resource Group International)which primarily include office services andtax services. The Company allows a flexibleworking schedule and work location for itsemployees.

American Shipping Company ASAseeks to be an attractive employer,focused on employee retention, and main-tains a working environment with com-petitive compensation and benefits that isopen and fair. AMSC is committed to pro-viding equal opportunity regardless of race,ethnic background, gender, religion, age orany other legally protected status. Because


Performance 2015


the Company has so few employees, itshuman resource policies, including thoseon discrimination, are not formalized butfollow the laws and practices customary tothe geographical location of each of itsoffices.

At year-end 2015, one of AMSC’semployees is a woman (Controller). In addi-tion, the chairman of the board of directorsis a woman.

The Company values open communica-tion and the Board takes a hands onapproach to AMSC’s governance. With thesmall size of AMSC’s staff and the locationand nature of its operations, the Boardsees the risk of corruption as low althoughit has implemented formal procedures toaddress risks related to segregation ofduties inherent in a company with so fewemployees. AMSC does not have any otherinitiatives ongoing to address corruption.

Outlook

The U.S. Jones Act market, which hasbeen in existence since 1920, is expectedto remain in existence and thereby protectand preserve the need for all commercialvessels transporting cargoes betweenpoints in the United States to be U.S. built,owned, operated and manned by U.S. citi-zens, and registered under U.S. flag.

Trade fundamentals that impact theU.S. Jones Act product fleet remainedactive during 2015, although internationalcrude oil prices fell sharply. Time charterrates remained strong during 2015,reflecting a tight market for U.S. Jones Acttankers in which demand exceeded supply.During Q1 2015, long-term time charterswere secured by Philly Tankers for two ofits newbuildings, scheduled for delivery inQ4 2016 and Q1 2017. In July 2015, PhillyTankers declared its two options withPHLY with deliveries in 2017. The four shiptransaction between Philly Tankers andKinder Morgan, which was signed after theend of the second quarter, demonstratedthat shipping remains an attractive andsustainable alternative for U.S. domestictransportation of oil and products. As ofyear-end 2015, there were 36 tankers and45 ATBs in operation. In addition, therewere 13 tankers and 7 ATBs on order, plusa limited number of options. The continuedweakness in crude oil prices hasintroduced uncertainty to the long termshale oil production level, which potentiallyimpacts the demand for Jones Act tankersgoing forward. Limited availability for newdelivery slots at the two shipyards currentlyable to build Jones Act product tankerssupports a further robust U.S. Jones Act

product tanker market in the medium tolong term. In the short term it is expectedthat the market will soften driven by fallingU.S. onshore oil production. The fixedcharter agreements with OSG secureAMSC’s leasing backlog of USD402 million from bareboat charter revenues.Any profit sharing contribution will come inaddition to the fixed bareboat charter rev-enues. Although the bareboat contracts fornine of the ships expire in December 2019,we expect that OSG will utilize the renewaloptions and continue to lease the vesselslong term due to the favorable base bare-boat rate representing a lower cost of capi-tal compared to current newbuilding costs.

To date, profits generated under ourprofit sharing agreement with OSG(approximately USD 22 million for 2015)have been applied to offset the Company’sdeficit balances with OSG which must bereduced before profit sharing is payable toAMSC. The extent of profit sharing con-tributions will depend on the time charterrates obtained by OSG as well as OSG’sability to operate the vessels in a cost effi-cient manner. With increasing time charterrates, however, prospects for cash profitsharing are steadily improving.

Lysaker, 14 March 2016The Board of Directors

American Shipping Company ASA

Annette Malm Justad Peter D. Knudsen Kristian RøkkeChairman Board Member Board Member

Pål MagnussenPresident/CEO


Performance 2015

Board responsibility statement

Board Responsibility statementToday, the Board of Directors and thePresident/CEO reviewed and approved theBoard of Directors’ Report and the con-solidated and parent company annualfinancial statements for American ShippingCompany ASA as of and for the year ended31 December 2015 (Annual Report 2015).

American Shipping Company ASA’sconsolidated financial statements havebeen prepared in accordance with Interna-tional Financial Reporting Standards asadopted by the EU and additional dis-closure requirements in the NorwegianAccounting Act. The separate financialstatements for American Shipping Com-

pany ASA have been prepared in accord-ance with the Norwegian Accounting Actand Norwegian accounting standards as of31 December 2015. The Board of Directors’Report for the group and the parent com-pany is in accordance with the require-ments in the Norwegian Accounting Actand Norwegian Accounting Standard no.16 as of 31 December 2015.

To the best of our knowledge:

The consolidated and parent annual finan-cial statements for 2015 have been pre-pared in accordance with the applicableaccounting standards.

The consolidated and parent annualfinancial statements give a true and fairview of the assets, liabilities, financial posi-tion and profit (or loss) as a whole as of andfor the year ended 31 December 2015 forthe group and the parent company.

The Board of Directors’ Report for thegroup and the parent company includes atrue and fair review of:

� the development and performance ofthe business and the position of thegroup and the parent company

� the principal risks and uncertainties thegroup and the parent company face






Performance 2015

Annual accounts - group

American Shipping Company ASA Group

Consolidated Statement of Financial Positionas of 31 December

Amounts in USD thousands Note 2015 2014

ASSETS

Property, plant and equipment 6 813 826 847 990Deferred tax assets 5 2 020 -Interest-bearing long-term receivables 7 32 569 33 204Other non-current assets 12 24 874 24 926

Total non-current assets 873 289 906 120

Other receivables 8 250 112Tax receivable 167 136Cash held for specified uses 1 541 8 107Cash and cash equivalents 31 737 85 201

Total current assets 33 695 93 556

Total assets 906 984 999 676

EQUITY AND LIABILITIESShare capital and share premium 11 294 372 319 372Accumulated deficit (70 135) (84 827)

Total equity attributable to equity holders of the parent 224 237 234 545

Total equity 224 237 234 545

Interest-bearing loans 13 660 630 676 157Deferred tax liabilites 5 1 720 275Derivative financial liabilities - long term portion 9 153 7 514

Total non-current liabilities 662 503 683 946

Interest-bearing loans 13 10 148 52 205Deferred revenues and other payables 15 9 504 9 060Derivative financial liabilities - short term portion 9 592 19 920

Total current liabilites 20 244 81 185

Total liabilites 682 747 765 131

Total equity and liabilities 906 984 999 676






Performance 2015



Consolidated Income Statement


Operating revenues 87 788 87 641Wages and other personnel expenses 2 (956) (1 059)Other operating expenses 3 (1 943) (2 045)

Operating profit before depreciation 84 889 84 537

Depreciation 6 (34 165) (33 865)

Operating profit 50 724 50 672

Financial income 4 14 650 32 208Financial expenses 4 (51 239) (59 623)

Income before income tax 14 134 23 257

Income tax expense 5 575 (275)

Net income for the year (1) 14 709 22 982


Consolidated Statementof Comprehensive Income

Amounts in USD thousands (except per share amounts) 2015 2014

Net income for the year 14 709 22 982Other comprehensive income for the period, net of tax - -

Total comprehensive income for the year (1) 14 709 22 982

Basic and diluted earnings per share 10 0.24 0.38

(1) Applicable to common shareholders of the parent company.


Performance 2015



Consolidated Statement of Changes in Equity

Amounts in USD thousands Share CapitalShare

PremiumAccumulated

deficitTotal

equity

Balance at 31 December 2013 42 462 137 946 (107 610) 72 798

Total comprehensive income for the year - - 22 982 22 982

Equity issued 53 904 103 060 - 156 964

Repurchase of treasury shares - - (891) (891)

Proceeds from sale of treasury shares - - 692 692

Dividends paid / return of capital - (18 000) - (18 000)


Total comprehensive income for the year - - 14 709 14 709

Repurchase of treasury shares - - (63) (63)

Proceeds from sale of treasury shares - - 45 45

Dividends paid / return of capital - (25 000) - (25 000)



Performance 2015



Consolidated Cash Flow Statement


Net income before taxes 14 135 23 257Unrealized foreign exchange (gain)/loss and other non-cash items 7 697 (1 578)Unrealized (gain) interest swaps 9 (12 512) (20 132)Net interest expense 4 43 814 48 436Depreciation 6 34 165 33 865(Increase)/decrease in:

Other current assets 8 (364) (230)Other long-term operating assets 7 634 (3 622)

Increase/(decrease) in:Accrued liabilities and other payables 15 (1 851) (1 644)

Interest paid 4 (36 576) (41 457)Interest received 4 1 698 1 216

Net cash flow from operating activities 50 840 38 111

Investment in equity accounted investee 12 - (25 000)

Net cash flow used in investing activities - (25 000)

Repayment of credit facilities and settlement of related interest rate swaps 13 (547 338) (48 435)Loan fees paid (8 514) (709)Proceeds from interest bearing debt 470 000 -Proceeds from share capital - 127 917Repurchase of treasury shares (63) (891)Proceeds from sale of treasury shares 45 692Dividends paid / return of capital (25 000) (18 000)

Net cash flow from financing activities (110 870) 60 574

Net change in cash and cash equivalents (60 029) 73 685

Cash and cash equivalents, including current cash for specified uses as of 1 January 93 308 19 623

Cash and cash equivalents, including current cash for specified uses as of31 December 33 279 93 308


Performance 2015



Notes to the consolidated accounts

� Note 1: Accounting principles

CORPORATE INFORMATIONAmerican Shipping Company ASA (the Company,the Group or AMSC) is incorporated and domi-ciled in Norway. The address of the main office isOksenøyveien 10, P.O. Box 230, NO-1366Lysaker, Norway. American Shipping CompanyASA is listed on the Oslo Stock Exchange.

The principle activity of the business is topurchase and bareboat charter out producttankers, shuttle tankers and other vessels tooperators and end users in the U.S. Jones Actmarket.

STATEMENT OF COMPLIANCEThe consolidated financial statements of Ameri-can Shipping Company ASA and all its sub-sidiaries (AMSC) have been prepared inaccordance with International Financial ReportingStandards as adopted by the European Union(IFRS).

These accounts have been approved forissue from the Board of Directors on 14 March2016.

BASIS FOR PREPARATIONThese consolidated financial statements havebeen prepared on a historical cost basis, exceptfor derivative financial instruments that havebeen measured at fair value. Fair value is definedas the price that would be received to sell anasset or paid to transfer a liability in an orderlytransaction between market participants at themeasurement date.

The consolidated financial statements arepresented in USD (thousands), except whenindicated otherwise.

USE OF ESTIMATESThe preparation of financial statements in con-formity with IFRS requires the use of estimatesand assumptions that affect the reportedamounts in the financial statements. Althoughthese estimates are based on management’sbest knowledge of current events and actions,actual results may ultimately differ from thoseestimates.

Estimates and underlying assumptions arereviewed on an ongoing basis. Revisions toaccounting estimates are recognized in theperiod in which the estimates are revised if therevision affects that period or in the period ofrevision and future periods if the revision affectsboth current and future periods.

Critical accounting estimates and assump-tions include revenue recognition, accounting forproperty, plant and equipment, and impairment.The significant factors that affect these estimatesand assumptions are detailed in the accompany-ing financial statements and footnotes.

GROUP ACCOUNTING, CONSOLIDATIONPRINCIPLES AND EQUITY INVESTEESThe consolidated financial statements of AMSCGroup include the financial statements of theparent company American Shipping CompanyASA and its subsidiaries. Subsidiaries are thoseentities in which AMSC Group either owns,directly or indirectly, over fifty percent of the vot-ing rights, or otherwise has the power to governtheir operating and financial policies. All inter-company transactions have been eliminated inthe consolidated results.

Associates are entities in which AMSC hassignificant influence but not control or joint con-trol. Interests in associates are accounted forusing the equity method. Investments in asso-ciates are initially recognized at cost, whichincludes transaction costs. Subsequently theconsolidated financial statements include AMSC’sshare of the profit or loss and other compre-hensive income of equity accounted investees.

FOREIGN CURRENCYTRANSLATION AND TRANSACTIONSFunctional currencyItems included in the financial statements of eachsubsidiary in the Group are initially recorded inthe functional currency, i.e. the currency thatbest reflects the economic substance of theunderlying events and circumstances relevant tothat subsidiary.

The consolidated financial statements arepresented in United States dollars (USD), whichis the functional and reporting currency of theparent company and subsidiaries.

Transactions and balancesForeign currency transactions are translated intoUSD using the exchange rates prevailing at thedates of the transactions. Receivables andliabilities in foreign currencies are translated intoUSD at the exchange rates ruling on the balancesheet date. Foreign exchange gains and lossesresulting from the settlement of such transactionsand from the translation of monetary assets andliabilities denominated in foreign currencies arerecognized in the income statement. Foreignexchange differences arising in respect ofoperating business items are included in operat-ing profit in the appropriate income statementaccount, and those arising in respect of financialassets and liabilities are recorded as a net finan-cial item.

PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment acquired byGroup companies are stated at historical cost.Vessels are depreciated to their salvage value ona straight-line basis and adjusted for impairment

charges, if any. Each vessel’s salvage value isequal to the product of its lightweight tonnageand an estimated scrap rate less estimated costsof disposal. The carrying value of the property,plant and equipment on the balance sheet repre-sents the cost less accumulated depreciationand any impairment charges. Cost includesexpenditures that are directly attributable to theacquisition of the asset. Interest costs on borrow-ings to finance the construction of property, plantand equipment are capitalized during the periodof time that is required to complete and preparethe asset for its intended use. Other borrowingcosts are expensed.

Expected useful lives and salvage valueestimates of long-lived assets are reviewedannually and, where they differ significantly fromprevious estimates, depreciation is changedprospectively.

Ordinary repairs and maintenance costs, tothe extent they are AMSC’s responsibility, arecharged to the income statement during thefinancial period in which they are incurred. Thecost of improvements is included in the asset’scarrying amount when it is probable that theGroup will derive future economic benefits inexcess of the originally assessed standard ofperformance of the existing asset. Improvementsare depreciated over the useful lives of therelated assets.

IMPAIRMENT OF LONG-LIVED ASSETSProperty, plant and equipment and other non-current assets are reviewed for potential impair-ment whenever events or changes incircumstances indicate that the carrying amountof an asset may not be recoverable.

For the purposes of assessing impairment,assets are grouped at the lowest levels for whichthere are separately identifiable, mainlyindependent, cash flows. An impairment loss isthe amount by which the carrying amount of theassets exceeds the recoverable amount. Therecoverable amount is the higher of the asset’snet selling price and its value in use. The value inuse is determined by reference to discountedcash flows. Most critical in determining the valuein use of vessels is determining the estimatedprofit share on existing contracts and estimatingfuture revenues from new leases. These esti-mates are primarily influenced by expectations offuture demand in the Jones Act market.

A previously recognized impairment loss isreversed only if there has been a change in theestimates used to determine the recoverableamount, however not to an extent higher than thecarrying amount that would have beendetermined had no impairment loss been recog-nized in prior years.


Performance 2015


LEASESLeases where a significant portion of the risksand rewards of ownership are retained by thelessor are classified as operating leases.

OTHER NON-CURRENT ASSETSOther non-current assets represent a long-termreceivable balance due from a customer which isaccounted for using the amortized cost method.

TRADE RECEIVABLESTrade receivables are carried at their anticipatedrealizable value, which is the original invoiceamount less an estimated valuation allowance forimpairment of these receivables. A valuationallowance for impairment of trade receivables ismade when there is objective evidence that theGroup will not be able to collect all amounts dueaccording to the original terms of the receivables.

CASH AND CASH EQUIVALENTSCash and cash equivalents comprise cash onhand, deposits held at call with banks, othershort-term highly liquid investments with originalmaturities of three months or less.

Cash held for specified uses is restricted todebt service payments.

SHARE CAPITALOrdinary shares are classified as equity.Incremental costs directly attributable to the issueof new shares options are shown in equity as adeduction, net of tax, from the proceeds. Whereany Group company purchases the Company’sequity share capital (treasury shares), the consid-eration paid, including any directly attributableincremental costs, is deducted from equity.

INTEREST-BEARING LIABILITIESAll loans and borrowings are initially recognizedat cost, being the fair value of the considerationreceived net of issue costs associated with theborrowing.

After initial recognition, interest-bearingloans and borrowings are subsequently meas-ured at amortized cost using the effective interestmethod; any difference between proceeds (net oftransaction costs) and the redemption value isrecognized in the income statement over theperiod of the interest-bearing liabilities. Amor-tized cost is calculated by taking into accountany issue costs, and any discount or premium.

Gains and losses are recognized in net profitor loss when the liabilities are derecognized, forinstance due to significant modifications to orsettlements of existing financing agreements.

INCOME TAXESCurrent income taxesIncome tax receivable and payable for the currentperiod are measured at the amount expected tobe recovered from or paid to the taxation author-ities. The tax rates and tax law as used to com-pute the amount are those that are enacted orsubstantively enacted at the balance sheet date.

Deferred income taxesDeferred income tax is provided, using theliability method, on all temporary differences atthe balance sheet date between the tax bases of

assets and liabilities and their carrying amountsfor financial reporting purposes.

Deferred income tax assets are recognizedfor all deductible temporary differences, carry-forward of unused tax assets and unused taxlosses, to the extent that it is probable that tax-able profit will be available against which thedeductible temporary differences, and the carry-forward of unused tax assets and unused taxlosses can be utilized. The carrying amount ofdeferred income tax assets is reviewed at eachbalance sheet date and reduced to the extentthat it is no longer probable that sufficient taxableprofit will be available to allow all or part of thedeferred income tax asset to be utilized.Expected utilization of tax losses are not dis-counted when calculating the deferred tax asset.

Deferred income tax assets are recognizedwhen it is probable that they will be realized.Determining probability requires the Group toestimate the sources of future taxable incomefrom operations and reversing taxable temporarydifferences. Determining these amounts is sub-ject to uncertainty and is based primarily onexpected earnings from existing contracts andexpected profit sharing participation.

Deferred income tax assets and liabilities aremeasured at the tax rates that are expected toapply to the year when the asset is realized orthe liability is settled, based on tax rates (and taxlaws) that have been enacted or substantivelyenacted at the balance sheet date.

PROVISIONSA provision is recognized when the Group has apresent obligation (legal or constructive) as aresult of a past event and it is probable (i.e. morelikely than not) that an outflow of resourcesembodying economic benefits will be required tosettle the obligation, and a reliable estimate canbe made of the amount of the obligation. Provi-sions are reviewed at each balance sheet dateand adjusted to reflect the current best estimate.

The amount of the provision is the presentvalue of the risk adjusted expenditures expectedto be required to settle the obligation,determined using the estimated risk free interestrate as the discount rate. Where discounting isused, the carrying amount of provision increasesin each period to reflect the unwinding of thediscount by the passage of time. This increase isrecognized as interest expense.

PENSIONSThe Group has defined contribution pensionplans that cover its employees whereby con-tributions are paid to qualifying pension plans.Once the contributions have been paid, there areno further payment obligations. Plan con-tributions are charged to the income statement inthe period to which the contributions relate.

Accounting for derivative financinginstruments and hedging activitiesDerivative financial instruments are recognizedinitially and on a recurring basis at fair value.AMSC currently has no derivative instrumentsthat qualify for hedge accounting under IFRS.

Changes in the fair value of any derivativeinstruments are recognized immediately in theincome statement.

In accordance with its treasury policy, theGroup does not hold or issue derivative financialinstruments for trading purposes. Estimates ofthe fair value of interest rate swaps are obtainedfrom a third party based upon market inputs, withan adjustment for the Company’s credit risk asdescribed in note 9. The fair value of derivativeshort-term and long-term financial liabilities isdisclosed in note 16 regarding financial instru-ments.

RELATED PARTY TRANSACTIONSAll transactions, agreements and business activ-ities with related parties are, in the Group’s opin-ion, conducted on an arm’s length basisaccording to ordinary business terms and con-ditions.

REVENUE RECOGNITIONRevenue is recognized only if it is probable thatfuture economic benefits will flow to AmericanShipping Company, and these benefits can bemeasured reliably. Revenues related to fixed termvessel bareboat charter agreements are recog-nized over the charter period. Revenue related toprofit sharing agreements is recognized when theamount becomes fixed and determinable. Rev-enue related to the deferred principal obligation(note 7) is discounted in cases where a paymentperiod extends beyond 12 months.

SEGMENT INFORMATIONAMSC has only one operating segment. All oper-ations and bareboat charter revenues are in theU.S.

BASIC AND DILUTED EARNINGS PER SHAREThe calculation of basic earnings per share isbased on the profit attributable to ordinary share-holders adjusted for preferred share dividendsusing the weighted average number of sharesoutstanding during the year after deduction of theaverage number of treasury shares held over theperiod. The calculation of diluted earnings pershare is consistent with the calculation of basicearnings per share while giving effect to all dilutivepotential ordinary shares that were outstandingduring the period. The Group currently has nopotentially dilutive shares outstanding.

EVENTS AFTER THE BALANCE SHEET DATEA distinction is made between events both favor-able and unfavorable that provide evidence ofconditions that existed at the balance sheet date(adjusting events) and those that are indicative ofconditions that arose after the balance sheetdate (non-adjusting events). Financial statementswill only be adjusted to reflect adjusting events(although there are disclosure requirements fornon-adjusting events).

NEW STANDARDS AND INTERPRETATIONSADOPTEDStandards and interpretations that are issued upto the date of issuance of the consolidatedfinancial statements, but not yet effective, aredisclosed below. The Group’s intention is toadopt the relevant new and amended standardsand interpretations when they become effective,subject to EU approval before the consolidatedfinancial statements are issued.


Performance 2015


Standards issued but not yet adoptedIFRS 9 Financial Instruments. IFRS 9, publishedin July 2014, replaces the existing guidance inIAS 39 Financial Instruments: Recognition andMeasurement. IFRS 9 includes revised guidanceon the classification and measurement of finan-cial instruments, including a new expected creditloss model for calculating impairment on financialassets, and the new general hedge accountingrequirements. It also carries forward the guid-ance on recognition and derecognition of finan-cial instruments from IAS 39. IFRS 9 is effectivefor annual reporting periods beginning on or after1 January 2018, with early adoption permitted.

The Group is currently assessing the potentialimpact on its consolidated financial statementsresulting from the application of IFRS 9.

IFRS 15 Revenue from Contracts with Cus-tomers. IFRS 15 established a comprehensiveframework for determining whether, how muchand when revenue is recognized. It replacesexisting revenue recognition guidance, includingIAS 18 Revenue, IAS 11 Construction Contractsand IFRIC 13 Customer Loyalty Programs. IFRS15 is effective for annual reporting periodsbeginning on or after 1 January 2018, with earlyadoption permitted. The Group is currentlyassessing the potential impact on its con-

solidated financial statements resulting from theapplication of IFRS 15.

IFRS 16 Leases. IFRS 16 replaces existingguidance in IAS 17 Leases. IFRS 16 eliminatesthe current dual accounting model for leases andwill establish a single, on-balance sheet account-ing model that is similar to the current financelease accounting under IAS 17. The Group iscurrently assessing the potential impact on itsconsolidated financial statements resulting fromthe application of IFRS 16, however given thatAMSC’s operations are limited to lessor leasingactivity, this is not expected to have a significantimpact to the Group.

� Note 2: Wages and other personnel expenses

Wages and other personnel expenses consist of:

Amounts in USD thousands 2015 2014

Wages and accrued bonuses 825 804Social security contributions 100 225Pension costs 14 17Other expenses 17 13

Total expense 956 1 059

Average number of employees 3 3Number of employees at year-end 3 2

The Group has a defined contribution plan for its employees which provides for a contribution based upon a fixed matching amount plus discretionarypercentage of salaries. This expense is included in pension costs above.

� Note 3: Other operating expenses

Other operating expenses consist of:


Rent and leasing expenses 45 61Other operating expenses 1 898 1 984

Total other operating expenses 1 943 2 045

Other operating expenses primarily relate to selling, general and administrative expenses including legal and outside consulting costs and fees to auditorsfor the American Shipping Company ASA Group. Audit expenses for 2015 and 2014 included only ordinary audit fees, other attestation services, otherassurance services and tax services and were as follows:


Ordinary audit fee 123 139Other attestation work - 21Other assurance services 20 -Tax services 62 4

Total 205 164


Performance 2015


� Note 4: Financial items


Financial incomeInterest income 2 138 2 547Change in mark to market value of interest rate swaps 12 512 20 132Other financial income - 9 529

Financial income 14 650 32 208

Financial expensesInterest expense (45 952) (50 983)Net foreign exchange gain/(loss) (188) (5 106)Other financial expenses (5 099) (3 534)

Financial expenses (51 239) (59 623)

NET FINANCIAL ITEMS (36 589) (27 415)

Interest income in 2015 includes income on bank deposits of USD 0.1 million, interest accreted and earned on the DPO receivable from OverseasShipholding Group (“OSG”) (see note 7) of USD 0.4 million and interest received from OSG of USD 1.6 million. Interest income in 2014 includes income onbank deposits of USD 0.6 million, interest accreted on the DPO receivable from OSG of USD 1.3 million and interest received from OSG of USD 0.6 million.

The Company has interest rate swaps, related to its vessel debt financing, with BNP Paribas (“BNP”). During 2015, at the closing of the refinancing, theCompany paid USD 14.2 million to terminate the prior interest rate swaps. The Company subsequently entered into new interest rate swaps for a portion ofthe new loan. Estimates of the fair value of the interest rate swaps are obtained from a third party, with an adjustment for the Company’s credit risk asdescribed in note 9.

Other financial income in 2014 relates to the de-recognition of the bond associated with the Recapitaliztion of AMSC (see note 20).

Interest expense in 2015 includes interest paid of USD 36.7 million. Interest expense in 2014 includes interest paid of USD 41.5 million.

Net foreign exchange loss in 2015 relates to the translation of cash held in NOK into USD. Net foreign exchange loss in 2014 relates to the conversion ofthe NOK denominated bond into USD and the translation of NOK cash into USD (see note 13).

Other financial expenses in 2015 relate to amortization of lending fees of USD 3.1 million and a one-time write off of lending fees relating to the refinancedloan of USD 1.9 million. Other financial expenses in 2014 relate to amortization of lending fees of USD 3.4 million and loss on the equity accounted invest-ment in Philly Tankers AS of USD 0.1 million.

� Note 5: Tax

INCOME TAX EXPENSERecognized in the income statement


Current tax expense/(benefit):Current year - -

Total current tax expense/(benefit) - -

Deferred tax expense/(benefit):Origination and reversal of temporary differences (575) 275

Total deferred tax expense/(benefit) (575) 275

Total income tax expense/(benefit) in income statement (575) 275

Reconciliation of effective tax rate


Profit/(loss) before tax 14 135 23 25727% 27.0%

Expected tax expense/(benefit) using nominal Norwegian tax rate of 27% 3 816 6 279Effect of differences between nominal Norwegian tax rate and U.S. federal and state tax rate 4 099 4 734Foreign exchange (5 984) (4 314)Tax losses for which no deferred income tax asset was recognised, net of benefit recognized (2 512) (2 411)Other differences 6 (4 013)

Total income tax expense/(benefit) in income statement (575) 275


Performance 2015


DEFERRED TAX ASSETS AND LIABILITIESDeferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities andwhen the deferred income taxes relate to the same fiscal authority, which through 31 December 2015 for the Group was primarily Norway, the U.S., and theCommonwealth of Pennsylvania.

Deferred tax assets and (liabilities) were as follows at 31 December:

United States


Net operating losses 209 864 185 774Financial derivatives 309 11 385Vessels (216 748) (191 885)Other 6 875 6 984Net deferred tax assets/(liabilities) 300 12 258Net deferred tax assets not recorded - (12 258)

Net deferred tax assets/(liabilities) 300 -

The Group has tax losses carryforward as of 31 December 2015 of USD 487.9 million in the U.S., the last of which expires in 2035.

On 3 January 2014, American Tanker Holding Company, Inc. (ATHC) and subsidiaries experienced a change of ownership in the U.S. as defined by InternalRevenue Code Section 382 due to a greater than 50% shift in owners of AMSC stock. The utilization of the tax losses carryforward as of that date are sub-ject to annual limitations. Net tax losses carryforward as of that date are estimated to be recovered and useable based on the following schedule (subject tocertain exceptions):

(USD millions)

2016 111.12017 34.92018 45.62019-2033* 189.6

381.3

* From 2019-2033, AMSC expects to be able to utilize USD 12.6 million per year of its U.S. tax losses to reduce U.S. taxable income. Any net tax losses recovered but not used in a year will carry

over to the following year.

The Group’s U.S. Federal tax losses carryforward are comprised of the IRC 382 losses of USD 381.3 million and the losses through 31 December 2015 ofUSD 106.6 million. There are no restrictions on the use of the USD 106.6 million net operating loss, the last of which expires in 2035.

In 2015, the Company recognized a deferred tax benefit of USD 2.0 million (USD 0 million in 2014) related to U.S. Federal income taxes based upon evalua-tion of its firm charter backlog, estimated profit sharing and certain other factors.

In 2015, the Company recognized a deferred tax expense of USD 1.4 million (USD 0.3 million in 2014) related to income taxes in the Commonwealth ofPennsylvania. Under Pennsylvania tax regulations, the entities in the Group cannot be consolidated for state tax purposes. As a result, the Company mustrecognize a state deferred tax liability for those separate legal entities in which gross tax liabilities exceed gross tax assets.

Norway


Operating losses 27 163 23 231Financial instruments - -Other - -Net deferred tax assets/(liabilities) 27 163 23 231Net deferred tax assets not recorded (27 163) (23 231)

Net deferred tax assets/(liabilities) - -

The Group has net operating losses in carryforward as of 31 December 2015 of USD 108.7 million in Norway, with no expiration date. Deferred tax assets inexcess of deferred tax liabilities have not been recognized in respect of these items because it is not probable that future taxable profit in the short term willbe available against which the Group can utilize the benefits therefrom.


Performance 2015


� Note 6: Property, plant and equipment

Movements in property, plant and equipment for 2015 are shown below:

Amounts in USD thousands Ships

Cost balance at 1 January 2015 1 076 563

Cost balance at 31 December 2015 1 076 563

Depreciation at 1 January 2015 228 572Depreciation charge for the year 34 165

Depreciation at 31 December 2015 262 737

Book value at 31 December 2015 813 826

Movements in property, plant and equipment for 2014 are shown below:

Amounts in USD thousands Ships

Cost balance at 1 January 2014 1 076 563

Cost balance at 31 December 2014 1 076 563

Depreciation at 1 January 2014 194 707Depreciation charge for the year 33 865

Depreciation at 31 December 2014 228 572

Book value at 31 December 2014 847 990

Depreciation period 30 yearsDepreciation method straight-line

Each vessel’s salvage value is equal to the product of its lightweight tonnage and an estimated scrap rate of USD 330 per ton (2014: USD 400) less esti-mated costs of disposal.

Secured property, plant and equipmentAt 31 December 2015 vessels with a carrying amount of USD 813.8 million are subject to a registered debenture to secure bank loans (see note 13).

The BNP and CIT credit facilities are secured by, among other things, a first preferred mortgage on eight of the ten product tankers in the case of the BNPfacility, and two of the ten product tankers in the case of the CIT facility. In addition, the credit facilities are secured by collateral assignments of theinsurances, earnings and bareboat charters for those vessels (and certain related guarantees of those bareboat charters and related supplementalindemnifications by OSG) .

Determination of recoverable amounts/Fair valueThe Company evaluated any potential impairment of its vessels. Based on its analysis, which included third party appraisals and a discounted cash flows(“DCF”) approach, the Company concluded that no impairment of vessels occurred in 2015 or 2014.

Elements of the DCF, which is used to determine the recoverable amount, include assumptions for bareboat charter hire, profit sharing, asset lives, salvagevalue and the Company’s weighted average cost of capital (“WACC”).

� Note 7: Interest-bearing long-term receivables

Financial interest-bearing long-term receivables consist of the following items:


Balance at beginning of period 33 204 29 582

DPO revenue 577 3 069Repayments of principal (1 653) (778)

Interest accreted 441 1 331

Balance at end of period 32 569 33 204


Performance 2015


Other interest-bearing long-term receivables relate to a deferred principal obligation (DPO). Pursuant to the current charter and financing agreements, OSGhad the right to defer payment of a portion of the bareboat charter hire for the first five vessels during the initial seven year fixed bareboat charter periods.OSG paid a reduced bareboat charter rate and assumed the DPO. The DPO accrued on a daily basis to a maximum liability of USD 7.0 million per vessel.The DPO during the initial seven year period was discounted using the estimated market discount rate at lease inception. After the initial seven years, theDPO is repaid over 18 years including interest at 6.04% unless the bareboat charter is terminated earlier at which time the DPO becomes due immediately.During 2015 and 2014, OSG began repayments on the five vessels delivered under the arrangement, and those vessels’ cash bareboat charter hireresumed to its full contractual amount.

� Note 8: Other receivables

Trade and other receivables consist of the following items:


Advance payments to suppliers 250 112

Total 250 112

Advance payments to suppliers as of 31 December 2015 and 2014 include prepaid fees.

� Note 9: Derivative financial assets and liabilities

Derivative financial assets and liabilities comprise the following items:


Fair value of interest rate swaps 745 27 434

Derivative financial liabilities 745 27 434

In connection with refinancing the BNP loan, the Company prepaid the interest rate swaps for USD 14.2 million. Under the new BNP loan facility, theCompany entered into new interest rate swaps for USD 210 million of the principal amount of the loan. As of 31 December 2015 and 2014 the market valueof derivative financial instruments was negative USD 0.7 million and USD 27.4 million, respectively. The fair value of the interest swaps is obtained from athird party. In accordance with IAS 39, the Company considered the impact its own credit risk would have on the valuation in the market. It thereforeadjusted the risk-free discount rate to include a credit spread of 200 basis points. The result of the credit spread differential had a positive impact of USD12 thousand and USD 0.5 million on the fair value of interest rate swaps at 31 December 2015 and 2014, respectively.

Refer to note 16 for additional information regarding financial instruments.

� Note 10: Earnings per share

Basic and diluted earnings/(loss) per share are calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted averagenumber of ordinary shares.

Amounts in USD thousands (except share and per share data) 2015 2014

Profit/(loss) attributable to equity holders of the Company for the period for determination of earningsper share 14 709 22 982

Weighted average number of ordinary shares in issue 60 616 505 60 205 903

Basic and diluted earnings per share 0.24 0.38

� Note 11: Paid in capital

The current authorized share capital of AMSC is 66,678,505 ordinary shares. The issued share capital of AMSC as of 31 December 2015 is 60,616,505ordinary shares, each with a par value of NOK 10, fully paid. No common shares were issued in 2015. On 3 January 2014, 30,475,492 ordinary shares wereissued in connection with a private placement and debt conversion. A subsequent offering resulted in 2,541,013 new common shares on 23 January 2014.


Performance 2015


The changes in equity are:

Common shares of equity holdersof the parent

Amounts in USD thousandsShare

CapitalShare

premiumTotal

paid in equity

1 January 2014 42 462 137 946 180 408

Equity issued 53 904 103 060 156 964

Dividends paid / return of capital - (18 000) (18 000)

31 December 2014 96 366 223 006 319 372

Dividends paid / return of capital - (25 000) (25 000)

31 December 2015 96 366 198 006 294 372

� Note 12: Subsidiaries and associates

The subsidiaries included in the American Shipping Company ASA’s Group account were as follows. Companies owned directly by American ShippingCompany ASA are highlighted.

2015AMSC’s common

holding %AMSC’s

voting share %Principalplace of business Country

American Tanker Holding Company, Inc. (ATHC) 100% 100% Kennett Square, PA USAAmerican Tanker, Inc. (ATI) 100% 100% Kennett Square, PA USAAmerican Shipping Corporation (ASC) 100% 100% Kennett Square, PA USAASC Leasing I - X, Inc. (10 legal entities) 100% 100% Kennett Square, PA USA

American Shipping Company ASA (“AMSC ASA”) is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100% and is theissuer of the outstanding bond obligations. ATHC, ATI and ASC are intermediary holding companies. Each of the Company’s ten vessels are owned by anindividual leasing company, ASC Leasing I - X, Inc. Each of the individual leasing companies have contracts directly with OSG and vessel debt directly withBNP Paribas or CIT Bank which are covered by overall agreements that tie the arrangements together through either a framework agreement and/orguarantees.

ASSOCIATESPhilly Tankers ASIn 2014, AMSC made an equity investment of USD 25 million in Philly Tankers AS (“Philly Tankers”) and owns 19.6% of the Oslo, Norway based company.Philly Tankers was formed in Q3 2014 and is listed on the Norwegian OTC market. Philly Tankers has orders for four 50,000 dwt product tankers from PhillyShipyard (“PHLY”, formerly Aker Philadelphia Shipyard) with deliveries between Q4 2016 and Q4 2017. AMSC also holds a seat on the Board of Directors ofPhilly Tankers. In 3Q 2015, Philly Tankers AS agreed to sell its four product tanker contracts to a subsidiary of Kinder Morgan, Inc. with the assignment totake place immediately before delivery of each ship. AMSC is investigating alternatives to monetize its 25,000 shares in Philly Tankers. The investment inPhilly Tankers is recorded using the equity method.

The following table summarizes the financial information of Philly Tankers as included in its own financial statements.


Non-current assets 111 760 111 760Current assets 409 590Non-current liabilities - -Current liabilities (95) (75)Net assets 112 074 112 275Group’s share of net assets (19.6%) 21 966 22 006

Excess of AMSC’s investment over its share of equity in associates 2 907 2 920

Carrying amount of interest in associate 24 874 24 926

Net loss of Philly Tankers AS (201) (431)

Capital Management RiskAMSC’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and bene-fits for other stakeholders, while maintaining an optimal capital structure to minimize the cost of capital. To meet these capital structure objectives, AMSCwill review annually with its Board any proposed dividends, covenant requirements as well as any needs to raise additional equity for future business oppor-tunities or to reduce debt.


Performance 2015


� Note 13: Interest-bearing loans and liabilities

Following is information about the contractual terms of AMSC’s interest-bearing loans and borrowings.


Non-current liabilitiesSecured loans 430 260 474 872Unsecured bond issues 210 370 201 285Subordinated loan from Aker ASA 20 000 -

Total long term interest bearing loans 660 630 676 157

Current liabilitiesCurrent portion of secured loans 10 148 52 205

Total interest-bearing short term debt 10 148 52 205

Summary of secured Loans as of 31 December 2015 2014

BNP Paribas gross borrowings 300 480 531 557CIT Bank gross borrowings 147 917 -Less unamortized loan fees (7 989) (4 480)

Sum Secured Loans 440 408 527 077

On 25 November 2015, funding was completed on USD 450 million of secured vessel debt and USD 20 million of a subordinated loan from Aker ASA. TheUSD 450 million is structured in two separate facilities; one being a USD 300 million facility secured by eight vessels with a syndicate of three banksconsisting of BNP Paribas, SEB and Credit Agricole and the other a USD 150 million facility secured by two vessels with CIT Maritime Finance as SoleArranger and CIT Bank, N.A., Prudential Capital Group and AloStar Bank of Commerce as lenders. As part of the refinancing, the Company entered into aUSD 20 million subordinated loan with Aker ASA.

The refinancing repaid the previous BNP vessel debt of USD 492.4 million, which had a maturity in June 2016. The Company paid USD 8.4 million in feesfor the new borrowing arrangements, which were capitalized and will be amortized as additional interest expense over the term of the loans. The Companyentered into new mandatory five year interest rate swaps at an average rate of 164 bps for USD 210 million of the new debt. Subsequent to year-end, theCompany entered into four year interest rate swaps at an average rate of 93 bps for USD 90 million of the new debt. The average margin on the securedvessel debt is 325 bps.

Unsecured bond issue as of 31 December Maturity 2015 2014

Bond balance at beginning of period 2018 201 285 199 571Interest added to bonds outstanding 6 672 7 091Foreign currency impact - 1 955Gain on de-recognition - (10 054)Plus amortization of discount and capitalized fees 2 413 2 722

Sum Unsecured bond issue 210 370 201 285

On 16 February 2007 AMSC issued a NOK 700 million bond. The interest rate on the bond is LIBOR plus a margin of 6.0% (6.4067% as of 31 December2015).

As part of the AMSC Recapitalization, the bond terms were amended and effective on 3 January 2014. The amendments included: amend the terms of thebond so as to include a prepayment option, to amend the all-PIK-interest structure to 50/50 PIK/cash interest (and subsequent increase in cash interestportion following a refinancing of the BNP loan), to convert the denomination of the bond from NOK to USD (with a concurrent change in margin fromNIBOR + 475 bp to LIBOR + 600 bp), to modify the dividend restrictions, and to give the Company an option to extend the maturity from 28 February 2018to 28 February 2021. Due to the significance of the modifications of the bond terms, the Bond Loan is treated as a new loan, with the old loan being de-recognized and the modified loan being recognized at fair value with a resulting initial gain to the fair market discount in 2014, which will be recognized asadditional interest expense over the remaining term. The gain on the fair market value differs from the gain recognized in the income statement due to thededuction of transaction costs.

In connection with the bank debt refinancing in 2015, the Company agreed with the holders of its unsecured bond that the cash interest element willincrease from 50% to 100% from time of funding of the bank debt refinancing which occurred in Q4 2015 and that the Company will not use its option toextend the bond beyond the final maturity date in February 2018.

Aker ASA, through a subsidiary, holds 93% of the bond loan.

The covenants on the Company’s bond require that consolidated equity excluding cumulative unrealized gains and losses on the interest rate swaps bemaintained at a level not less than USD 50 million at a quarterly measurement date.

As of 31 December 2015, consolidated shareholders equity for determining compliance with debt covenants was approximately USD 225.0 million (at year-end, consolidated equity of USD 224.2 million plus USD 0.8 million of cumulative loss interest rate swaps).


Performance 2015


Subordinated loan from Aker ASA Maturity 2015 2014

Principal amount 2021 20 000 -

Sum Subordinated Loan 20 000 -

As part of the bank debt refinancing, the Company entered into a USD 20 million subordinated loan with Aker ASA. The loan has an interest rate of 10.25percent which is due in one lump sum upon repayment of the loan. The loan is due the earlier of (i) six months after the secured vessel debt becomes dueor (ii) upon receipt of proceeds from Philly Tankers.

Restrictions on dividend paymentsSubject to certain exceptions, as of 31 December 2015, the BNP and CIT credit agreements restrict the payment of dividends by AMSC and its sub-sidiaries. Specifically, AMSC and its subsidiaries may pay cash dividends only if there is no default and the Company is in compliance with its financialcovenants under the loans. Under the BNP facility, beginning in 2019, dividends may be paid only if BNP has received confirmation from AMSC that thebareboat charters have been extended by OSG.

Under the bond loan and the OSG agreement, cash dividends in the first half of 2016 must not exceed USD 13 million. In addition to the above dividendrestrictions, the Company’s bond loan restricts the payment of dividends by AMSC such that any payments shall be subject to a minimum equity to totalasset ratio of 20% and shall remain above 20% immediately after such dividend payment has been made (increasing to 25% from 28 February 2018) andthat AMSC is current with all of its interest payments.

Financial covenantsAMSC is subject to financial covenants under the secured bank loans relating to minimum liquidity and collateral, and leverage and debt service ratios.

AMSC was in compliance with all of its debt covenants as of 31 December 2015.

� Note 14: Operating leases

Non-cancellable operating lease rentals for bareboat charter hire are receivable as follows:


Less than one year 88 041 86 972Between one and five years 272 571 351 444More than five years 41 132 45 766

Total 401 744 484 182

The fixed term of AMSC’s bareboat charters of its vessels to OSG have a common maturity date in December 2019, with the exception of the OverseasTampa which expires in 2025. In connection with the conversion of the Overseas Tampa to a shuttle tanker in 2014, the bareboat charter was extended byten years. The non-cancellable bareboat charter revenue backlog totals approximately USD 401.7 million as of 31 December 2015. In addition, OSG hasoptions to extend the charter terms for one, three or five years for the remaining useful lives of the vessels under similar conditions as the fixed lease term.

Non-cancellable operating lease rentals for office space are payable as follows:


Less than one year 43 45Between one and five years 59 20More than five years - -

Total 102 65

In 2013 AMSC signed a lease for office space in Kennett Square, Pennsylvania through April 2016. In 2015 AMSC extended the lease for the KennettSquare office by two years.

� Note 15: Deferred revenues and other payables

Trade and other payables comprise the following items:


Trade accounts payable 130 103Accrual of financial costs 1 521 1 230Other short-term interest free liabilities 7 853 7 727

Total 9 504 9 060


Performance 2015


Other short-term interest free liabilities at 31 December 2015 include deferred revenue from OSG of USD 7.5 million because OSG makes monthly leasepayments in advance and other accrued costs of USD 0.4 million. Other short-term interest free liabilities at 31 December 2014 include deferred revenuefrom OSG of USD 7.3 million and other accrued costs of USD 0.4 million.

� Note 16: Financial instruments

Financial risk managementThe Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, cash-flowinterest-rate risk and foreign exchange risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks tominimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

Risk-management is carried out under policies approved by the Board of Directors. The Board of Directors provides principles for overall financial riskmanagement as well as policies covering specific areas such as foreign exchange risk, interest-rate risk, credit risk, and use of derivative financial instru-ments and non-derivative financial instruments.

Exposure to credit, interest rate and currency risk arises in the normal course of the Group’s business. Derivative financial instruments are used from timeto time to hedge exposure to fluctuations in foreign exchange rates and interest rates for business purposes.

Credit riskThe carrying amount of financial assets represents the maximum credit exposure.

At 31 December the maximum exposure to credit risk is as follows:


Loans and receivables 32 819 33 316Cash and cash equivalents 31 737 85 201Cash held for specified uses 1 541 8 107

Total 66 097 126 624

AMSC regularly monitors the financial health of the financial institutions which it uses for cash management services and in which it makes deposits andother investments. AMSC responds to changes in conditions affecting its deposit relationships as situations warrant.

Receivables are to be collected from the following types of counterparties:


Type of counterparty:End-user customer (1) 32 569 33 204Other receivables 250 112

Total 32 819 33 316

(1) Due to the nature of the Group’s operations, revenues and related receivables, including the DPO, are currently concentrated amongst OSG and its affiliates. The Group continually evaluates

the credit risk associated with customers.

Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by deliveringcash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity tomeet its liabilities when due, under both normal and stressed conditions.

With regards to making the debt service payments on the BNP and CIT loans, the Group has established cash earnings accounts whereby all charter hirepayments are deposited and utilized for debt service prior to being available for general corporate purposes. AMSC is subject to a covenant in its bondobligation that requires the Company to maintain a minimum level of USD 50.0 million of consolidated equity adjusted for cumulative unrealized gains andlosses on interest rate swap agreements (see note 13). A default on this covenant triggers a cross default on all the Company’s credit facilities. The risk of abreach of the equity covenant has been significantly reduced with the Recapitalization (see note 20). If the Company’s equity falls below the required mini-mum, the Company can request a waiver or an amendment to the covenant from the bondholders via a bondholders meeting. It can not be determined ifthe bondholders would approve such a waiver or amendment to the covenant.


Performance 2015


The following are the contractual maturities of financial liabilities including interest payments:

31 December 2015

Amounts in USD thousands Book valueContractual

cash flow6 mths

and less 6-12 mths 1-2 years 2-5 yearsMore than

5 years

Non-derivative financial liabilitiesUnsecured bonds (gross) 210 370 (245 120) (6 801) (6 876) (13 640) (217 803) -Long-term interest bearing external liabilities (gross) 468 397 (563 415) (12 675) (14 333) (44 589) (387 273) (104 545)

Derivative financial liabilitiesInterest rate swaps 745 (1 218) (319) (333) (107) (459) -

Total as of 31 December 2015 679 512 (809 753) (19 795) (21 542) (58 336) (605 535) (104 545)

31 December 2014

Amounts in USD thousands Book valueContractual

cash flow6 mths

and less 6-12 mths 1-2 years 2-5 yearsMore than

5 years

Non-derivative financial liabilitiesUnsecured bonds (gross) 208 617 (264 169) (3 910) (3 408) (10 316) (246 535) -Long-term interest bearing external liabilities (gross) 531 557 (555 193) (33 318) (34 930) (486 581) (364) -

Derivative financial liabilitiesInterest rate swaps 27 434 (28 022) (10 643) (9 581) (7 798) - -

Total as of 31 December 2014 767 609 (847 384) (47 871) (47 919) (504 695) (246 899) -

Currency riskAmerican Shipping Company is exposed to foreign currency risk related to certain cash accounts; however, the Group may enter into foreign exchangederivative instruments, from time to time, to mitigate that risk. See additional discussion under Liquidity Risk. As part of AMSC’s Recapitalization (seenote 20), the NOK denominated bond was converted to USD. As a result of this conversion, the Company’s currency risk is minimal going forward.

The Group incurs foreign currency risk on purchases and borrowings that are denominated in a currency other than USD. The currency giving rise to thisrisk is primarily NOK.

Foreign exchange gains and losses relating to the monetary items are recognized as part of “net financing costs” (see note 4). The Company did not haveany exchange contracts at 31 December 2015 or 31 December 2014.

Exposure to currency riskThe company’s exposure to currency risk at 31 December 2015 and 2014 primarily related to amounts denominated in NOK, as follows:


Gross balance sheet exposureTrade payables (-) (70) (38)Bond - -Cash 1 855 3 848Gross balance sheet exposure 1 785 3 810Estimated forecast expenses (-) (2 090) (1 856)Gross forecasted exposure (2 090) (1 856)Forward exchange contracts - -

Net exposure (305) 1 954

Sensitivity analysisIn managing interest rate and currency risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer term,however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.

It is estimated that a general strengthening of ten percent in the value of the USD against the NOK would have decreased the Group’s earnings before taxby approximately USD 0.1 million for the year ended 31 December 2015 and approximately USD 0.3 million for the year ended 31 December 2014. Thisanalysis assumes that all other variables remain constant.

AMSC is subject to a covenant in its bond obligation that requires the Company to maintain a minimum level of USD 50.0 million of consolidated equity (seenote 13). Consolidated equity for the Company is primarily impacted through the results of its operations.

As part of the AMSC Recapitalization, the bond terms were amended and effective on 3 January 2014. The amendments included the conversion of thebond from NOK into USD, substantially eliminating the currency risk. In addition, the Recapitalization increased the Company’s equity by approximatelyUSD 157 million. See note 20 for details of the amendments and financial statement impact.


Performance 2015


Exposure to interest rate riskThe Group is exposed to fluctuations in interest rates for its variable interest rate debt related to the bank and bond financing. With regards to a portion ofthe BNP financing, the Group has entered into interest swap agreements to lock in the interest rate paid.

Sensitivity analysisAn increase of 100 basis points in interest rates in the reporting year would have increased /(decreased) equity and profit or loss by the amounts shownbelow. This analysis assumes thal all other variables remain constant.


Increase/(decrease)Bank deposits 664 1 209Financial liabilities (3 204) (2 121)Interest swap 7 922 7 706

P&L sensitivity (net) 5 382 6 794

For 2015 and 2014, estimates of the interest swap valuation following the change in interest rates are obtained from a third party, with an adjustment for theCompany’s credit risk as described in note 9.

Fair valuesFair value hierarchyIFRS requires companies to disclose certain information about how fair value is determined in a “fair value hierarchy” for financial instruments recorded atfair value, which for AMSC are derivative financial instruments, or disclosures about fair value measurements which have been identified below. The fairvalue hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority tounobservable inputs (Level 3). Level 2 includes assets and liabilities whose values are based on quoted prices in markets that are not active or model inputsthat are observable either directly or indirectly.

The only financial instruments that the Company accounts for at fair value are the interest rate swaps as of 31 December 2015 and 2014, which are classifiedin the Level 2 category described above. The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date ofthe event or change in circumstances that caused the transfer. During the year ended 31 December 2015, there were no transfers between categories.

The fair values of financial instruments, the related fair value hierarchy, together with the carrying amounts shown in the balance sheet as of 31 December2015 are as follows:

Amounts in USD thousands Carrying amount 2015 Fair value 2015 Fair value hierarchy Valuation technique

Interest-bearing receivables from external companies,maturity greater than 3 years 32 569 26 044 3

Discounted cashflows at 10%

Interest swap used for economic hedging:Liabilities

(745) (745) 2Market comparison

from a third party

Unsecured bonds (gross)(210 370) (198 882) 3


Secured loans (gross)(448 397) (447 580) 2

Discounted cashflows at 3.7%

Subordinated loans (gross)(20 000) (17 872) 2


The fair value of cash, accounts receivable and accounts payable approximate the carrying values due to their short-term nature.

In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that donot qualify for hedge accounting are accounted for as trading instruments.

The fair values of financial instruments, the related fair value hierarchy, together with the carrying amounts shown in the balance sheet as of 31 December2014 are as follows:

Amounts in USD thousands Carrying amount 2014 Fair value 2014 Fair value hierarchy Valuation technique

Interest-bearing receivables from external companies,maturity greater than 3 years 33 204 28 806 3


Interest swap used for economic hedging:

Liabilities(27 434) (27 434) 2

Market comparisonfrom a third party

Unsecured bond issue (gross)(208 617) (198 187) 3

Market comparisonfrom a third party

Secured loans (gross)(531 557) (532 259) 2


The discounted cash flow valuation model considers the present value of expected payments, discounted using the risk adjusted discount rate noted.


Performance 2015


Financial instruments measured at fair value

Type Valuation technique

Significantunobservable

inputs

Inter-relationshipbetween significant

unobservable inputsand fair valuemeasurement

Interest rate swaps Market comparisontechnique: The fairvalues are based onbroker quotes. Similarcontracts are traded inan active market and thequotes reflect the actualtransactions in similarinstruments.

Not applicable Not applicable

� Note 17: Shares owned or controlled by the president and chief executive officer,

� board of directors and senior employees of the American Shipping Company Group

Shares in American Shipping Company ASA of 31 December 2015

Name Position Company No. of shares

Pål Magnussen President and CEO AMSC 20 000Annette Malm Justad Chairman of the Board AMSC 4 523

On 27 January 2016, Pål Magnussen purchased 30,000 shares in the Company.

There is no share option agreement between American Shipping Company ASA and senior management or Directors.

REMUNERATION TO THE BOARD OF DIRECTORS THROUGH 31 DECEMBER 2015

Name Position Company Remuneration

Annette Malm Justad Chairman AMSC 66 764Lars Solbakken Board Member - former AMSC 14 851Peter Knudsen Board Member AMSC 54 169Kristian Røkke Board Member AMSC 39 316

Sum Directors’ fee 175 100

The Chairman and the Board of Directors have not received benefits other than Directors’ fees. The Board of Director’s term runs from 1 April through31 March and the above remuneration reflects cash payments to board members during the calendar year 2015.

REMUNERATION TO THE NOMINATION COMMITTEEThe nomination committee of AMSC has the folowing members: Arild Støren Frick and Christine Rødseter. Remuneration earned by each member of thecommittee in 2015 was NOK 33,000 (USD 4,330).

GUIDELINES FOR REMUNERATION OF SENIOR MANAGEMENT

Advisory guidelines

The basis of remuneration of senior management has been developed in order to create a performance-based system which is founded on the Company’svalues. This system of reward was designed to contribute to the achievement of good financial results and increase in shareholder value.

The senior management receives a base salary and may also be granted a variable pay as further detailed under “Binding guidelines” below.

The senior management is entitled to 6 months’ severance payment. Except for this, the members of the management are not entitled to special benefitsbeyond ordinary severance pay during available termination notice periods. The senior management participate in a standard pension and insurancescheme.

Binding guidelines

In 2015, the senior management received a base salary in addition to a variable pay based on the award of synthetic shares in order to align performancepayments with shareholder value creation. The system is based on awarding a certain number of synthetic shares to each member of the managementteam. The holder of the synthetic shares receives cash payments equal to the dividend paid to the shareholders. Further, the annual share price increase, ifany, is paid as a cash bonus at the end of the year. There is a cap on the maximum compensation payable to each member of the management team. Theremuneration of the senior management is in accordance with the guidelines for remuneration for 2015.


Performance 2015


During 2015, Mr. Magnussen was awarded 350,000 synthetic shares. Under his synthetic share agreement, the total bonus payment paid during 2015 wasUSD 144.2 thousand. The cap on his salary for 2015 was NOK 7 million. During 2015, Mr. Hofstad was awarded 200,000 synthetic shares, resulting inbonus payments of USD 41.2 thousand. The cap on his salary for 2015 was NOK 3.5 million. During 2015, Ms. Jaros was awarded 50,000 synthetic shares,resulting in bonus payments of USD 20.6 thousand. The cap on Ms. Jaros’ salary was USD 200 thousand per year.

The Company also has an incentive scheme for the management, where the Company can offer the management to purchase shares in the Company,subject to lock-up restrictions, with a view to incentivize long-term value creation and performance by the management.

During 2015, Mr. Magnussen purchased 20,000 shares with a price reduction of 20% to the closing price to compensate for the lock-up restrictions on theshares for a period of three years.

The Company does not offer share option programs to the management.

REMUNERATION TO SENIOR MANAGEMENT DURING 2015

Base salary Bonus Other BenefitsPension

Contribution Total (USD) Severance pay

Pål Magnussen CEO Jan. - Dec. 290 033 145 673 58 913 7 772 502 391 6 monthsMorten Hofstad CFO Jul. - Dec. 98 452 42 165 17 660 - 158 277 6 monthsLeigh Jaros Controller Jan - Dec. 157 133 20 600 - 1 573 179 305 6 months

The Company had no bonus accrued as of 31 December 2015.

REMUNERATION TO SENIOR MANAGEMENT DURING 2014

Base salary Bonus Other BenefitsPension

Contribution Total (USD) Severance pay

Dag Fasmer Wittusen CEO Jan. - Dec. 362 213 830 826 54 215 16 431 1 263 685 6 monthsPål Magnussen CFO Jun. - Dec. 132 373 64 496 24 109 - 220 978 6 monthsLeigh Jaros Controller Jan - Dec. 156 228 37 321 - 968 194 517 6 months

The Company had no bonus accrued as of 31 December 2014.

The above amounts reflect cash payments made to senior management during the calendar years 2015 and 2014, respectively.

� Note 18: Transactions and agreements with related parties

AMSC’s largest shareholder is a subsidiary of Aker ASA which holds 19.1 percent of the Company’s shares. Kristian Røkke, Board member of AMSC, isalso a Board member of TRG Holding AS, which owns 66.7% of the total outstanding shares of Aker ASA as of 31 December 2015.

As part of the bank debt refinancing, the Company entered into a USD 20 million subordinated loan with Aker ASA. The loan has an interest rate of10.25 percent which is due in one lump sum upon repayment of the loan. The loan is due the earlier of (i) six months after the secured vessel debt becomesdue or (ii) upon receipt of proceeds from Philly Tankers.


The Group has service agreements with Aker ASA and Aker US Services, LLC (formerly known as Resource Group International) which provide certainoffice services and tax services. The cost of these services was not significant, however they are important to the Company’s operations.

The Company believes that related party transactions are made on terms equivalent to those that prevail in arm’s length transactions.

� Note 19: Agreements with OSG

AMSC’s only customer is OSG. The key agreements with OSG include the bareboat charter agreements, DPO agreements and profit sharing agreement.Under the bareboat charter agreements, OSG pays AMSC a fixed daily rate for leasing the vessels and OSG is responsible for operating costs and main-tenance of the vessels. The fixed terms of the bareboat charters run through December 2019 (except the Overseas Tampa, which is fixed to 2025), withoptions for OSG to extend the charters for 1, 3 or 5 years for the useful lives of the vessels. Under the DPO agreement (see note 7), OSG defered paymentof a portion of the daily bareboat charter hire for the first seven years of vessels 1-5. This deferred payment accrued on a daily basis to a maximum ofUSD 7.0 million per vessel and is now repayable over 18 years after the initial 7 year period. Under the profit sharing agreement, AMSC and OSG share inthe profits from OSG’s operations of AMSC’s 10 vessels. The calculation of profit to share is made on an aggregated fleet level. The calculation thus startswith total vessel revenue, subtracted by defined cost elements, as described below.

Time Charter Hire Fleet revenue

Less:BBC hire Bareboat rate paid from OSG to AMSCOPEX Crew, maintenance & repairs, insurance, fees & vetting, lubesOSG profit layer Fixed daily rate of USD 4,000/day per vesselManagement fee Fixed daily rate plus annual escalationAuditor expenses Actual OSG auditor expensesAmortization of start-up costs Amortized through December 2019Amortization of conversion costs Amortized over ten years

= Profit to share before Drydock Reserve Provision, DrydockReserve True-Up

Income subject to Profit Share before covering drydocking costs


Performance 2015


The profit to share is then reduced by a drydock reserve provision, adjusted for a drydock reserve true-up once a drydock has been completed. The dry-dock reserve provision includes the estimated costs for each Intermediary Repair Period (IRP), which occurs every 3 years and each special survey occur-ring every 5 years.

When drydock expenses are covered, AMSC’s portion of the profit share will pay down a USD 18.2 million credit (plus accrued interest at 9.5% p.a. sinceDecember 2009) negotiated with OSG, which is the amount of AMSC’s profit sharing OSG retains prior to having an obligation to remit profit sharing pay-ments to AMSC. After having paid down the OSG credit, AMSC will be entitled to receive 50% of profits under the formula above in cash and will recognizeprofit sharing revenue. As an example, the calculation of profit sharing for the full year 2015 is shown with aggregated, rounded figures in USD millionsbelow. During 2014, the Overseas Tampa was converted to a shuttle tanker for a time charter to Shell, beginning in 2015. During the conversion period, thevessel did not earn time charter hire. As part of the conversion agreement, the conversion costs which were paid by OSG are amortized through an adjust-ment to profit sharing over ten years.

215.5

87.3

Net TCrevenue for

2015BBC

Other (opex,agreed OSGprofit layer,

misc)

Drydockprovisions

Profit toshare 2015

94.5

11.5

22.2

AMSC’s 50% share of the profit (USD 11.1 million for 2015) is used to reduce the OSG credit. The cumulative balance as of the end of 2015 for the OSGcredit is shown in the table below and as described above, must be covered prior to AMSC being entitled to receive profit share from OSG:

Balance per Q4 2015:

Beginning balanceas of Q1 2015 Interest Reduction

Endingbalance

as of Q4 2015

OSG credit 22.6 1.8 (11.1) 13.3

Balance per Q4 2014:

Beginning balanceas of Q1 2014 Interest Reduction

Endingbalance

as of Q4 2014

OSG credit 25.9 2.3 -5.6 22.6

� Note 20: Recapitalization

On 2 December 2013, AMSC announced the launch of a recapitalization of the Company (“Recapitalization”). During January 2014, the Recapitalizationwas successfully completed. The Recapitalization included, among other things:

Š The raising of NOK 735 million or approximately USD 120 million, in gross proceeds from an equity private placement (the “Private Placement”). Thebook-building was completed on 2 December 2013, and resulted in an issuance of a total of 24,500,000 new shares, at a subscription price ofNOK 30 per share.

Š A conversion of USD 29,267,718 owed to Converto Capital Fund AS (“Converto”) under a subordinated loan (the “Converto Loan”) into 5,975,492 newshares in the Company (the “Debt Conversion”) at the same subscription price as the Private Placement. No amounts remain outstanding under theConverto Loan after the conversion. In connection with the Debt Conversion, Converto has entered into a lock-up agreement regarding its shareholdingin the Company, for a period of six months following the date of the Debt Conversion.

Š A subsequent offering to those shareholders of the Company that did not participate in the Private Placement (the “Subsequent Offering”), resulting in asubscription of 2,541,013 new shares at the same issue price as the Private Placement.

Š Agreement with the lenders under the Company’s then-existing bank facility agreement with BNP Paribas SA as lender and agent (the “Bank Facility”) tomodify the dividend restrictions under the Bank Facility, to allow payment of cash dividends and cash interest payment on the Company’s seniorunsecured bond loan (“FRN American Shipping ASA Senior Unsecured Callable PIK Bond Issue 2007/2012”) (the “Bond Loan”), and to permit theinclusion of a prepayment option in the Bond Loan.


Performance 2015


Š Agreement with the bondholders in the Bond Loan to amend the terms of the Bond Loan so as to include a prepayment option, to amend the all-PIK-interest structure to 50/50 PIK/cash interest (and subsequent increase in cash interest portion following a refinancing of the Bank Facility), to convert thedenomination of the bond from NOK to USD (with a concurrent change in margin from NIBOR + 475 bp to LIBOR + 600 bp), to modify the dividendrestrictions, and to give the Company an option to extend the maturity from 28 February 2018 to 28 February 2021. Due to the significance of the mod-ifications of the bond terms, the Bond Loan is treated as a new loan, with the old loan being de-recognized and the modified loan being recognized atfair value with a resulting initial gain to the fair market discount in 2014, which will be recognized as additional interest expense over the remaining term.

The new shares from the Private Placement and the Debt Conversion were registered with the Norwegian Registry of Business Enterprises(Nw. Foretaksregisteret) on 3 January 2014. After the registration, the registered share capital of AMSC was NOK 580,754,920 comprising of 58,075,492shares each with a par value of NOK 10.00.

The share capital increase pertaining to the new shares issued through the Subsequent Offering was registered with the Norwegian Registry of BusinessEnterprises (Nw. Foretaksregisteret) on 23 January 2014. After the registration, the registered share capital of AMSC is NOK 606,165,050 comprising of60,616,505 shares each with a par value of NOK 10.00.

� Note 21: Events after the balance sheet date

On 27 January 2016, Pål Magnussen purchased 30,000 shares in AMSC. The price per share was NOK 19.44, constituting a price reduction of 20% tocompensate for the lock-up restrictions on the shares for a period of three years, in accordance with the share purchase agreement entered into betweenthe Company and the CEO.

On 16 February 2016, the Board authorized a quarterly dividend payment of USD 0.107 per share (USD 6.5 million in aggregate) to the shareholders ofAMSC on record as of 24 February 2016. The dividend was paid on 3 March 2016.

On 18 February 2016, the Company entered into new four year interest rate swaps at an average rate of 93 bps for USD 90 million of the new debt.


Performance 2015

Annual accounts - parent company


Statement of Financial Positionas of 31 December


ASSETSShares in subsidiaries and associates 3 352 355 352 381Long-term receivable group companies 5 87 603 32 188

Total financial non-current assets 439 958 384 569

Total non-current assets 439 958 384 569

Other short-term receivables 82 63Cash and cash equivalents 8 7 300 72 624

Total current assets 7 382 72 687

Total assets 447 340 457 256

EQUITY AND LIABILITIESShare capital 96 366 96 366Share premium reserve 198 006 223 006

Total paid in capital 294 372 319 372

Other equity (79 733) (65 601)

Total retained earnings (79 733) (65 601)

Total equity 6 214 639 253 771

Bond obligation 7 210 370 201 285Other interest-bearing debt 20 481 527

Total long-term liabilities 230 851 201 812

Other short-term debt 1 850 1 673

Total short-term liabilities 1 850 1 673

Total equity and liabilities 447 340 457 256






Performance 2015



Income Statement


Operating revenues 69 127Other operating expenses 2 (1 460) (1 897)

Operating loss (1 391) (1 770)

Interest income from group companies 3 675 2 890Other interest and financial income 7 45 579Other interest and financial expenses 2 (16 443) (20 959)

Loss after financial items (14 114) (19 260)

Taxes 4 - -

Loss for the period (14 114) (19 260)

Allocation of net loss:Loss (14 114) (19 260)Other equity 6 14 114 19 260

Total - -


Cash Flow Statement


Loss before tax (14 114) (19 260)Unrealized foreign exchange (gain)/loss and unpaid interest expense 5 645 10 252Changes in short term receivables (20) 985Changes in short term liabilities (56) (1 570)

Cash flow from operating activities (8 545) (9 593)

Other changes in long term investments (51 714) (27 468)

Cash flow from investing activities (51 714) (27 468)

Proceeds from equity raised - 127 917Dividends / return of capital paid (25 000) (18 000)Repurchase of treasury shares (63) (891)Proceeds from sale of treasury shares 45 692Proceeds from / (repayments of) other interest-bearing debt 19 953 (90)

Cash flow from financial activities (5 065) 109 628

Cash flow for the year (65 324) 72 567

Cash and cash equivalents 1 January 72 624 57

Cash and cash equivalents 31 December 7 300 72 624


Performance 2015


American Shipping Company ASA:

Notes to the accounts

� Note 1: Accounting principles

The annual report is prepared according to theNorwegian Accounting Act and generallyaccepted accounting principles in Norway.

Subsidiaries and investment in associatesSubsidiaries are valued by the cost method in thecompany accounts. The investment is valued atthe cost of acquiring shares in the subsidiary,providing that a write down is not required. Awrite down to fair value will be carried out if thereduction in value is caused by circumstanceswhich may not be regarded as incidental, anddeemed necessary by generally acceptedaccounting principles. Write downs are reversedwhen the cause of the initial write down is nolonger present.

If dividends exceed withheld profits afteracquisition, the exceeding amount representsreimbursement of invested capital, and the dis-tribution will be subtracted from the value of theacquisition in the balance sheet.

Investments in associates are valued by theequity method. The investment is valued at thecost of acquiring the shares, with an adjustmentfor the Company’s share of the associate’s profitor loss.

CLASSIFICATION AND VALUATION OFBALANCE SHEET ITEMSAssets and liabilities are presented as currentwhen they are due within one year or they arepart of the operating cycle. Other assets andliabilities are classified as non-current.

Current assets are valued at the lowest ofcost and fair value. Current liabilities are valuedat nominal value at the time of recognition.

Non-current receivables are measured at costless impairment losses that are not considered tobe temporary. Non-current liabilities are initiallyvalued at transaction value less attributable trans-action cost. Subsequent to initial recognition,interest bearing non-current borrowings are meas-ured at amortized cost with any difference betweencost and redemption value being recognized in the

income statement over the period of the borrowingon an effective interest basis.

Trade and other receivables are recognizedat the original invoiced amount less allowancesfor expected losses. Provision for expectedlosses is considered on an individual basis.

The bond loan is initially recorded at fairvalue and subsequently is accounted for atamortized cost.

Trade and other receivablesTrade receivables and other current receivablesare recorded in the balance sheet at nominalvalue less provisions for doubtful accounts.

Foreign currency translationThe company’s functional currency is U.S. dol-lars (USD). Foreign currency transactions aretranslated into USD using the exchange ratesprevailing at the dates of the transactions.Receivables and liabilities in foreign currenciesare translated into USD at the exchange ratesruling on the balance sheet date. Foreignexchange gains and losses resulting from thesettlement of such transactions and from thetranslation of monetary assets and liabilitiesdenominated in foreign currencies are recog-nized in the income statement. The NOK/USDforeign exchange rate as of 31 December 2015was 8.81 and the average rate during 2015 was8.14 NOK/USD.

Short term investmentsShort term investments (stocks, short-termbonds, liquid placements and shares) are valuedat the lower of acquisition cost or fair value at thebalance sheet date. Dividends and other dis-tributions are recognized as other investmentincome.

Income taxTax expenses in the profit and loss accountcomprise both tax payable for the accountingperiod and changes in deferred tax. Deferred tax

is calculated at the percent on the basis of exist-ing temporary differences (2015: 25%; 2014:27%) between accounting profit and taxableprofit together with tax deductible deficits at yearend. Temporary differences, both positive andnegative, are balanced out within the sameperiod. Deferred tax assets are recorded in thebalance sheet to the extent it is more likely thannot that the tax assets will be utilized.

Cash flow statementThe cash flow statement is presented using theindirect method. Cash and cash equivalentsincludes cash, bank deposits and other short-term highly liquid deposits with original maturitiesof three months or less.

Revenue recognitionThe Company’s revenues consist of managementfees charged to foreign subsidiaries and arerecognized when they become due and payable.

PensionsThe Company has a defined contribution pensionplan that covers its employees whereby con-tributions are paid to qualifying pension plans.Once the contributions have been paid, there areno further payment obligations. Plan con-tributions are charged to the income statement inthe period to which the contributions relate.

Use of estimatesThe preparation of the financial statementsrequires management to make estimates andassumptions that affect the reported amounts inthe profit and loss statement, the measurementof assets and liabilities and the disclosure ofcontingent assets and liabilities on the balancesheet date. Actual results can differ from theseestimates.

Contingent losses that are probable andquantifiable are expensed as occurred.

Certain prior year reclassifications weremade to conform to current year presentation.

� Note 2: Other operating and financial expenses

Fees to the auditors of USD 57 thousand (without VAT) for ordinary audit was expensed in 2015. For more information on fees paid to KPMG, see note 3 inthe consolidated accounts.

Pal Magnussen was appointed to the position of President and CEO effective 1 January 2015. Morten Hofstad was appointed to the position of CFO effec-tive 1 July 2015. See note 17 in the consolidated accounts for more information regarding remuneration to senior management. The Company has no otheremployees than the CEO and CFO. Board of directors expenses were USD 201 thousand in 2015.

Other interest and financial revenues in 2015 include USD 45 thousand of interest received on bank deposits.

Other interest and financial expenses in 2015 includes interest on the bond of USD 15.9 million, interest expense on the Aker loan of USD 0.2 million,USD 0.2 million of foreign exchange losses and USD 0.1 million of other financial expenses.


Performance 2015


� Note 3: Shares in subsidiaries and associates

This item comprises the following as of 31 December 2014:

Amounts in USD thousands

Ownershipof commonshares (%)

Voting rights(%)

Businessaddress

Historicalcost

Bookvalue

American Tanker Holding Company, Inc. (ATHC) 100% 100% Kennett Square, PA 327 481 327 481Philly Tankers AS 19.6% 19.6% Oslo, Norway 24 874 24 874

Total shares 352 355 352 355

ATHCSubsidiaries’ 2015 results after tax in USD thousands 28 845Subsidiaries’ equity attributable to common shareholders at31 December 2015 in USD thousands 335 964

American Shipping Company ASA (“AMSC ASA”) is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100% and holdsthe bond debt. ATHC, ATI and ASC are intermediary holding companies. Each of the Company’s ten vessels are owned by an individual leasing company,ASC Leasing I - X, Inc. Each of the individual leasing companies have contracts directly with OSG and vessel debt directly with BNP Paribas or CIT Bankwhich are covered by overall agreements that tie the arrangements together through either a framework agreement and/or guarantees.

AMSC analyzes the value of its investments in subsidiaries on an annual basis, or sooner if conditions change or events occur which could cause the carry-ing values to change. Detailed analysis, including discounted cash flows and third party appraisals, are prepared and reviewed by management supportingthe carrying value of each of its investments. AMSC considers many factors, including the appropriate cost of capital, asset lives, market values and like-lihood of events, in reviewing its investment value. No impairment was recognized in 2015 or 2014.

ASSOCIATESPhilly Tankers ASIn 2014, AMSC made an equity investment of USD 25 million in Philly Tankers AS (“Philly Tankers”) and owns 19.6% of the Oslo, Norway based company.Philly Tankers was formed in Q3 2014 and is listed on the Norwegian OTC market. Philly Tankers has orders for four 50,000 dwt product tankers from PHLYwith deliveries between Q4 2016 and Q4 2017 . AMSC also holds a seat on the Board of Directors of Philly Tankers. In 3Q 2015, Philly Tankers AS agreedto sell its four product tanker contracts to a subsidiary of Kinder Morgan, Inc. with the assignment to take place immediately before delivery of each ship.AMSC is in investigating alternatives to monetize its 25,000 shares in Philly Tankers.

The investment in Philly Tankers is recorded using the equity method.

The following table summarizes the financial information of Philly Tankers as included in its own financial statements.


Non-current assets 111 760 111 760Current assets 409 590Non-current liabilities - -Current liabilities (95) (75)Net assets 112 074 112 275Group’s share of net assets (19.6%) 21 966 22 006Excess of AMSC’s investment over its share of equity in associates 2 907 2 920

Carrying amount of interest in associate 24 874 24 926

Net loss of Philly Tankers AS (201) (431)


Performance 2015


� Note 4: Tax

The table below shows the difference between book and tax values at the end of 2015 and 2014, and the amounts of deferred taxes at these dates and thechange in deferred taxes.

Tax payable:


Profit/(loss) before tax USD accounts in USD (14 114) (19 261)Difference between NOK and USD accounts (22 162) (15 977)Result before tax measured in NOK for taxation purposes (36 276) (35 237)Permanent differences 1 219Change in temporary differences - 7 820Estimated result for tax purposes (36 275) (27 198)Utilization of loss carried forward - -Taxable income (36 275) (27 198)Tax payable - -

The result before taxes in NOK are different from the result before taxes in USD primarily due to currency exchange differences.

Deferred tax:


Other differences - -Operating loss carried forward (108 651) (86 042)Total differences (108 651) (86 042)Deferred tax asset, 25 / 27 percent (27 163) (23 231)Restrictions regarding balance tax asset 27 163 23 231Book value tax asset - -

Taxes:


Current payable tax charged to the income statement - -Change in deferred tax - -

Total tax cost - -

� Note 5: Long-term receivables

Long-term receivables are:


American Tanker, Inc. (ATI) 87 603 32 188

Total 87 603 32 188

As of 31 December 2015, AMSC holds a USD 35.4 million loan to ATI. The loan to ATI is unsecured and bears interest at the higher of 9.5% or LIBOR plus7% (9.5% at 31 December 2015). The ATI note is payable on demand by AMSC, provided that demand may not be made prior to 30 June 2016.

In addition, during 2015, in connection with the vessel debt refinancing, AMSC made a second loan of USD 52.2 million loan to ATI. The loan to ATI isunsecured and bears interest at 10%. The ATI note is payable on demand by AMSC, provided that demand may not be made prior to the maturity date ofthe secured vessel debt.


Performance 2015


� Note 6: Total equity

Changes in equity are:

2015Amounts in USD thousands Share capital Share premium

Shares to beissued

Total paid-incapital Other equity Total equity

Equity as of 1 January 2015 96 366 223 006 - 319 372 (65 601) 253 771Repurchase of treasury shares - - - - (63) (63)Proceeds from sale of treasury shares - - - - 45 45Dividends paid / return of capital - (25 000) - (25 000) - (25 000)Net result - - - - (14 114) (14 114)Equity as of 31 December 2015 96 366 198 006 - 294 372 (79 733) 214 639

The total outstanding shares of AMSC are 60,616,505 shares each with a par value of NOK 10 per share.

No treasury shares were held as of 31 December 2015. During 2015, 20,000 treasury shares were purchased and subsequently sold to Pål Magnussenunder his share purchase agreement and lock-up restrictions. Subsequent to year-end, the Company purchased 30,000 treasury shares, which were soldto Pål Magnussen under a share purchase agreement and lock-up restrictions.

2014Amounts in USD thousands Share capital Share premium

Shares to beissued

Total paid-incapital Other equity Total equity

Equity as of 1 January 2014 42 462 137 946 145 175 325 583 (46 142) 279 441Issuance of shares on 3 January 2014 49 756 95 419 (145 175) - - -Issuance of shares on 23 January 2014 4 148 7 641 - 11 789 - 11 789Repurchase of treasury shares - - - - (891) (891)Proceeds from sale of treasury shares - - - - 692 692Dividends paid / return of capital - (18 000) - (18 000) - (18 000)Net result - - - - (19 260) (19 260)Equity as of 31 December 2014 96 366 223 006 - 319 372 (65 601) 253 771

On 3 January 2014, AMSC issued 30,475,492 common shares, increasing the share capital to NOK 580.8 million, comprising 58,075,492 shares each with apar value of NOK 10.00 per share. The resulting equity increase was recorded on 31 December 2013 when AMSC was legally entitled to the considerationfor the shares.

On 23 January 2014, through a subsequent offering, a total of 2,541,013 ordinary shares were issued at a par value of NOK 10 per share. The total out-standing shares of AMSC are 60,616,505 shares each with a par value of NOK 10 per share.

No treasury shares were held as of 31 December 2014. During 2014, 100,000 treasury shares were purchased and subsequently sold to Dag Wittusenunder his share purchase agreement and lock-up restrictions. Subsequent to year-end, the Company purchased 20,000 treasury shares, which were soldto Pål Magnussen under a share purchase agreement and lock-up restrictions.

The shares were owned by the following 20 largest parties as of 31 December 2015: Number Percent

CONVERTO CAPITAL FUND AS 11 557 022 19.1%GOLDMAN SACHS & CO EQUITY SEGREGAT 9 558 736 15.8%SKANDINAVISKA ENSKILDA BANKEN AB 9 182 520 15.1%EUROCLEAR BANK S.A./N.V. (‘BA’) 4 199 799 6.9%DNB NOR MARKETS, AKSJEHAND/ANALYSE 3 919 169 6.5%THE BANK OF NEW YORK MELLON SA/NV 3 402 788 5.6%DBSI - 090-9011 3-1-4 2 677 748 4.4%JP MORGAN CLEARING CORP. 1 842 238 3.0%CITIBANK, N.A. 1 390 263 2.3%TRETHOM AS 1 255 555 2.1%UBS SWITZERLAND AG 800 113 1.3%J.P. MORGAN CHASE BANK N.A. LONDON 700 000 1.2%RO 700 000 1.2%PERSHING LLC 608 613 1.0%STATE STREET BANK & TRUST COMPANY 458 416 0.8%NORDNET LIVSFORSIKRING AS 457 254 0.8%CLEARSTREAM BANKING S.A. 443 122 0.7%THE BANK OF NEW YORK MELLON SA/NV 330 404 0.5%CREDIT SUISSE SECURITIES (USA) LLC 318 826 0.5%KLP AKSJENORGE INDEKS 317 110 0.5%

Total, 20 largest shareholders 54 119 696 89.3%

Other shareholders 6 496 809 10.7%

Total 60 616 505 100.0%


Performance 2015


� Note 7: Other long term interest-bearing debt

The bond obligation is as follows as of 31 December 2015:

Amounts in USD thousands Maturity Balance Interest Rate

Bond balance at beginning of period 2018 201 285 LIBOR + 6.0%Interest added to bonds outstanding 6 672 (1)

Less unamortized discount and capitalized fees 2 413 (1)

Sum Unsecured bond issue 210 370

(1) Included in other interest and financial expenses.

On 16 February 2007 AMSC issued a NOK 700 million bond. The interest rate on the bond is LIBOR plus a margin of 6.0% (6.4067% as of 31 December2015).

As part of the AMSC Recapitalization, the bond terms were amended and effective on 3 January 2014. The amendments included: amend the terms of thebond so as to include a prepayment option, to amend the all-PIK-interest structure to 50/50 PIK/cash interest (and subsequent increase in cash interestportion following a refinancing of the BNP loan), to convert the denomination of the bond from NOK to USD (with a concurrent change in margin fromNIBOR + 475 bp to LIBOR + 600 bp), to modify the dividend restrictions, and to give the Company an option to extend the maturity from 28 February 2018to 28 February 2021. Due to the significance of the modifications of the bond terms, the Bond Loan is treated as a new loan, with the old loan being de-recognized and the modified loan being recognized at fair value with a resulting initial gain to the fair market discount in 2014, which will be recognized asadditional interest expense over the remaining term. The gain on the fair market value differs from the gain recognized in the income statement due to thededuction of transaction costs.

In connection with the bank debt refinancing in 2015, the Company agreed with the holders of its unsecured bond that the cash interest element willincrease from 50% to 100% from time of funding of the bank debt refinancing which occurred in Q4 2015 and that the Company will not use its option toextend the bond beyond the final maturity date in February 2018.


The covenants on the Company’s bond require that consolidated equity excluding cumulative unrealized gains and losses on the interest rate swaps bemaintained at a level not less than USD 50 million at a quarterly measurement date.

As of 31 December 2015, consolidated shareholders equity for determining compliance with debt covenants was approximately USD 225.0 million (at year-end, consolidated equity of USD 224.2 million plus USD 0.8 million of cumulative loss interest rate swaps).

� Note 8: Cash and cash equivalents

There is no restricted cash.

� Note 9: Shares owned by the board of directors and the senior management

For information regarding shares owned by the members of the board of directors and the senior management, see note 17 in the consolidated accounts.

� Note 10: Guarantees

The company has made the following guarantees:

Description Beneficiary Amount (USD thousands) Guarantee party

Senior secured credit facility Agent (BNP Paribas), Arranger,Lenders and Hedging Banks

300 000 ASC Leasing I-VII and IX, Inc.

Senior secured credit facility Agent (CIT Bank), Security Trusteeand Lenders

150 000 ASC Leasing VIII and X, Inc.

AMSC has also agreed to indemnify OSG for any losses resulting from any breach by a vessel owning company of its obligations under its agreements withOSG.


Performance 2015

Auditor’s report


Performance 2015

Auditor’s report


Performance 2015

Share and shareholder information

Share and shareholder informationAmerican Shipping Company is committed to maintaining an open and direct dialogue with its shareholders,potential investors, analysts, brokers, and the financial community in general. The timely release ofinformation to the market that could affect the Company’s share price helps ensure that American ShippingCompany ASA’s share price reflects its underlying value.

American Shipping Company’s goal is thatthe Company’s shareholders will, overtime, receive competitive returns on theirinvestment. The Board considers theamount of dividend, if any, to be recom-mended for approval by the shareholderson an annual basis. The recommendation isbased upon earnings for the year justended, the financial situation at the relevantpoint in time and applicable restrictionsunder AMSC’s financial agreements.

Dividends

The Company paid dividends totaling USD0.412 per share (USD 25 million) in 2015.The dividends were classified for account-ing purposes as repayment of previouslypaid in share premium.

The Norwegian Public Limited LiabilityCompanies Act allows for the Board ofDirectors to pay dividends on the basis ofan authorization from the General Meeting.At the 2015 Annual General Meeting, theBoard of Directors were granted an author-ization to pay dividends up to an approvedamount at their discretion based on theCompany’s annual accounts for 2014, validup to the Company’s Annual General Meet-ing in 2016. Such authorization facilitatedpayment of dividend by the Board of Direc-tors on a quarterly basis.

Payment of dividends by AMSC issubject to restrictions under its vessel debtfacilities and the bond loan. Subject tocertain exceptions, as of 31 December2015, the BNP and CIT credit agreementsrestrict the payment of dividends by AMSCand its subsidiaries. Specifically, AMSCand its subsidiaries may pay cash divi-dends only if there is no default and theCompany is in compliance with its financialcovenants under the loans. Under the BNPfacility, beginning in 2019, dividends maybe paid only if BNP has received con-firmation from AMSC that the bareboatcharters have been extended by OSG.Under the bond loan and the OSG agree-ment, cash dividends in the first half of2016 must not exceed USD 13 million. In

addition to the above dividend restrictions,the Company’s bond loan restricts thepayment of dividends by AMSC such thatany payments shall be subject to a mini-mum equity to total asset ratio of 20% andshall remain above 20% immediately aftersuch dividend payment has been made(increasing to 25% from 28 February 2018)and that AMSC is current with all of itsinterest payments.

Shares and share capitalAs of 31 December 2015, American Ship-ping Company ASA had 60 616 505 ordi-nary common shares; each share with apar value of NOK 10 (see Note 11 to theCompany’s 2015 accounts).

As of 31 December 2015, the Com-pany had 1,074 shareholders, of whom 9.2percent were non-Norwegian shareholders.

American Shipping Company ASAcurrently has a single share class. Eachshare is entitled to one vote, but is subjectto certain voting and ownership restrictionsdue to the fact that the Company is operat-ing under an exception from the U.S.ownership requirement in the Jones Act(see Articles of Association available on theCompany’s web page). The Company heldno own (treasury) shares as of31 December 2015.

Stock-exchange listingThe Company’s shares are listed on theOslo Stock Exchange’s main (OSEBX) list(ticker: AMSC). American ShippingCompany’s shares are registered in theNorwegian Central Securities Depository;the shares have the securities registrationnumber ISIN NO 0010272065. DNB Bank isthe Company’s registrar.

Significant shareholderAmerican Shipping Company ASA’s largestshareholder is Converto Capital Fund AS,which holds 19.1 percent of the Company’sshares.

From time to time, agreements areentered into between two or more former

related companies. The boards of directorsand other parties involved in the decision-making processes related to such agree-ments are all critically aware of the need tohandle such matters in the best interests ofthe involved companies, in accordancewith good corporate governance practiceand on an arm’s length basis. If needed,external, independent opinions are sought.

Current Board authorizationsThe Annual General Meeting in 2015granted an authorization to the Board topurchase own (treasury) shares in con-nection with the Company’s incentivescheme for employees. The Board was alsogranted an authorization to increase theshare capital in connection withstrengthening of the Company’s equitycapital or to raise equity capital for futureinvestments within the Company’s scopeof operations.

The Board of Directors has author-ization to pay dividends, to facilitate pay-ment of dividends on a quarterly basis.

All of these Board authorizations arevalid up to the Annual General Meeting in2016.

Share incentive programThe Company currently does not have anyshare or stock option plans, but the AnnualGeneral Meeting in 2014 approved theestablishment of an incentive program forits employees, giving the Board of Direc-tors the ability to offer its employees topurchase shares in the Company on favor-able terms, subject to certain lock-uprestrictions.

Investor relationsAmerican Shipping Company ASA seeks tomaintain an open and direct dialogue withshareholders, financial analysts, and thefinancial market in general.

Visitors to American Shipping Compa-ny’s website at www.americanshippingco.com can subscribe to email delivery ofAmerican Shipping Company news releases.


Performance 2015Share and shareholder information

American Shipping Company’s pressreleases and investor relations (IR) pub-lications for the current and prior year areavailable at the Company’s website:www.americanshippingco.com. This onlineresource includes the Company’s quarterlyand annual reports, prospectuses, corpo-rate presentations, articles of association,financial calendar, and its InvestorRelations and Corporate Governance poli-cies, along with other information.

Shareholders can contact the Companyat [email protected].

Save the environment –read reports onlineAnnual reports are published on the Compa-ny’s website (www.americanshippingco.com)at the same time as they are made availablevia website release by the Oslo StockExchange: www.newsweb.no (ticker: AMSC).

American Shipping Company ASAencourages its shareholders to subscribeto the Company’s annual reports via theelectronic delivery system of the NorwegianCentral Securities Depository (VPS). Pleasenote that VPS services (VPS Invest-ortjenester) are designed primarily forNorwegian shareholders. Subscribers tothis service receive annual reports in PDFformat by email.

Electronic distribution is the fastestchannel for accessing Companyinformation; it is also cost-effective andenvironmentally friendly.

Quarterly reports, which are generallyonly distributed electronically, are availablefrom the Company’s website and othersources. Shareholders who are unable toreceive the electronic version of interim andannual reports, may subscribe to theprinted version by contacting AmericanShipping Company.

20 largest shareholdersas of 31 December 2015

Shareholder Number of shares held Ownership (in %}

CONVERTO CAPITAL FUND AS 11 557 022 19.1%GOLDMAN SACHS & CO EQUITY SEGREGAT 9 558 736 15.8%SKANDINAVISKA ENSKILDA BANKEN AB 9 182 520 15.1%EUROCLEAR BANK S.A./N.V. (‘BA’) 4 199 799 6.9%DNB NOR MARKETS, AKSJEHAND/ANALYSE 3 919 169 6.5%THE BANK OF NEW YORK MELLON SA/NV 3 402 788 5.6%DBSI - 090-90113-1-4 2 677 748 4.4%JP MORGAN CLEARING CORP. 1 842 238 3.0%CITIBANK, N.A. 1 390 263 2.3%TRETHOM AS 1 255 555 2.1%UBS SWITZERLAND AG 800 113 1.3%J.P. MORGAN CHASE BANK N.A. LONDON 700 000 1.2%RO 700 000 1.2%PERSHING LLC 608 613 1.0%STATE STREET BANK & TRUST COMPANY 458 416 0.8%NORDNET LIVSFORSIKRING AS 457 254 0.8%CLEARSTREAM BANKING S.A. 443 122 0.7%THE BANK OF NEW YORK MELLON SA/NV 330 404 0.5%CREDrT SUISSE SECURITIES (USA) LLC 318 826 0.5%KLP AKSJENORGE INDEKS 317 110 0.5%

Total 20 largest shareholders 54 119 696 89.3%

Other shareholders 6 496 809 10.7%

Total 60 616 505 100.0%

Geographic distribution of shareholdersas of 31 December 2015

Nationality Number of shares held Ownership (in %)

Non-Norwegian shareholders 29 626 575 48.9%Norwegian shareholders 30 989 930 51.1%

Total 60 616 505 100.0%

Ownership structure by number of shares heldas of 31 December 2015

Shares ownedNumber of

shareholdersPercent of

share capital

1 – 100 221 0.01%101 – 1 000 388 0.32%1 001 – 10 000 351 2.11%10 001 – 100 000 81 4.10%100 001 – 500 000 19 8.01%over 500 000 14 85.45%

Total 1 074 100.00%


Performance 2015

Share and shareholder information

Annual shareholders’ meetingAmerican Shipping Company ASA’s annual shareholders’ meetingis normally held in late March or April. Written notification is sent toall shareholders individually or to shareholders’ nominee. To voteat shareholders’ meetings, shareholders (or their duly authorizedrepresentatives) must either be physically present, vote by proxy orvote electronically prior to the shareholders’ meeting.

2015 share dataThe Company’s total market capitalization as of 31 December2015 was NOK 1,606.3 million. During 2015, a total of 12,200,157American Shipping Company ASA shares traded. The sharestraded on 251 trading days.



Corporate governance

Corporate governanceAmerican Shipping Company ASA’s focus is on building a premier ownership position in the Jones Act mar-ket to create maximum value for its shareholders. Good corporate governance will help to reduce risk andensure sustainable value creation.

The Board of Directors of American Ship-ping Company ASA has reviewed andupdated the Company’s principles forcorporate governance. The Board’s state-ment of corporate governance is includedin the annual report. The principles arebased on the Norwegian Code of Practicefor Corporate Governance, dated30 October 2014 (the “Code of Practice”),the principles set out in the ContinuingObligations of stock exchange listedcompanies from the Oslo Stock Exchange,and the relevant Norwegian backgroundlaw such as the Norwegian Accounting Actand the Norwegian Public Limited LiabilityCompanies Act. The Code of Practice isavailable at www.nues.no and the Continu-ing Obligations of stock exchange listedcompanies may be found atwww.oslobors.no.The principles also applyto American Shipping Company ASA’ssubsidiaries where relevant.

The following presents American Ship-ping Company ASA’s (hereinafter AmericanShipping Company, AMSC, the Companyor the Group) practice regarding each ofthe recommendations contained in theCode of Practice. Any deviations from therecommendations are found under the itemin question. In addition to the Code ofPractice, the Norwegian Accounting Act§ 3-3b stipulates that companies mustprovide a report on their policies andpractices for corporate governance eitherin the annual report or in a documentreferred to in the annual report. This reportis integrated in this corporate governancestatement.

Purpose

American Shipping Company’s CorporateGovernance principles are intended toensure an appropriate division of roles andresponsibilities among the Company’sowners, its Board of Directors, and itsexecutive management and that theCompany’s activities are subject to sat-isfactory control. These principles contrib-ute to the greatest possible value creation

over time, to the benefit of owners andother stakeholders. It is the responsibility ofthe Board of Directors of AMSC to ensurethat the Company implements soundcorporate governance.

Values and ethical guidelinesThe Board has adopted AMSC’s corporatevalues and ethical guidelines. The corpo-rate values are presented below.

Safety, Quality & Environment mindset

We take personal responsibility becausewe care

Delivering results

We deliver consistently and strive to beatour goals

Customer drive

Building customer trust is key to our busi-ness

People and teams

All our major achievements are team efforts

Hands-on management

We know our business and get things done

Open and direct dialogue

We encourage early and honest communi-cation

BusinessThe Company’s business model is to ownand bareboat charter vessels for operationin the U.S. Jones Act market through itswholly owned subsidiary leasing compa-nies. The corporate structure of AmericanShipping Company, through its operatingsubsidiaries in the United States, is inconformance with the applicable require-ments of the Jones Act. All of its vesselsare fully qualified to participate in thedomestic maritime trades of theUnited States.

Pursuant to clause 3 of the Company’sArticles of Association, the objective of theCompany is “to own and carry out

industrial business and other activitiesrelated hereto, including ownership ofvessels, capital management and otherfunctions for the group, as well as partic-ipation in or acquisition of othercompanies.”

The function of the business purposeclause is to ensure that shareholders havecontrol of the business and its risk profile,without limiting the Board or manage-ment’s ability to carry out strategic andfinancially viable decisions within thedefined purpose. The Group’s financialgoals and main strategies are as follows:

� Be a preferred ship owning and leasefinance company in the Jones Actmarket

� Have a modern, safe and operationallyfriendly fleet

� Explore and invest in value creatingopportunities for our shareholders

� Apply the tools of financial engineeringto ensure an optimal use of capital

These goals and strategies are presented inmore detail on page 5 of this report and inthe Board of Director’s report.

Equity and dividendsEquity

The Group’s book equity as of31 December 2015 was USD 224.2 millioncorresponding to an equity ratio of25 percent. The Company’s Board ofDirectors frequently monitors the Compa-ny’s equity level according to the Norwe-gian Public Limited Liability Companies ActSections 3-4 and 3-5. As such, the Com-pany regards the Group’s current equity assound.

DividendsAmerican Shipping Company’s dividendpolicy is included in the section “Sharesand shareholder information”, on pages 42-44 of this annual report. The Company’sgoal is that its shareholders shall, over




time, receive competitive returns on theirinvestment. Any payment of dividend willbe based upon the Group’s earnings forthe last year ended and other factors, thefinancial situation at the relevant point intime and applicable restrictions underAMSC’s financial agreements and appli-cable laws and regulations.

Board authorizationsThe Board’s proposals for Board author-izations to increase the Company’s sharecapital are to be limited to defined issuesand to be valid only until the next AnnualGeneral Meeting.

The Annual General Meeting in 2015granted an authorization to the Board topurchase own (treasury) shares in con-nection with the Company’s incentivescheme for employees. The Board was alsogranted an authorization to increase theshare capital in connection withstrengthening of the Company’s equitycapital or to raise equity capital for futureinvestments within the Company’s scopeof operations.

The Board of Directors has author-ization to pay dividends, to facilitate pay-ment of dividends on a quarterly basis.

All of these Board authorizations arevalid up to the Annual General Meeting in2016.

Equal treatment of shareholders andtransactions with close associatesThe Company has a single class of shares,and all shares carry the same rights in theCompany. However, the shares are subjectto certain ownership and voting restrictionsdue to the fact that the Company is operat-ing under an exception from the U.Sownership requirement in the Jones Act(see the Company’s Articles of AssociationSection 8, which are available on theCompany’s web page).

Equal treatment of all shareholders iscrucial. If existing shareholders’ pre-emptive rights are waived upon an increasein share capital, the Board must justify thewaiver. Transactions in own (treasury)shares must be executed on the OsloStock Exchange or by other means at thelisted price.

If there are material transactionsbetween the Company and a shareholder,board member, member of executivemanagement, or a party closely related toany of the aforementioned, the Board shallensure that independent valuations areavailable.

American Shipping Company hasprepared guidelines designed to ensurethat members of the Board of Directors andexecutive management notify the Board ofany direct or indirect stake they may havein agreements entered into by the Group.

See information on transactions withrelated parties in Note 18 to the con-solidated accounts.

Freely negotiable sharesAmerican Shipping Company’s shares arefreely negotiable. However, the trans-ferability of shares is subject to certainvoting and ownership restrictions on“Shipping Operators” due to the fact thatthe Company is operating under anexception from the U.S ownershiprequirement in the Jones Act. A “ShippingOperator” is defined in the Company’sArticles of Association as a person or entitythat operates any vessel for hire or directlyor indirectly controls, is controlled by, or isunder common control with any companyor person who operates any vessel for hire.For further details, see the Company’sArticles of Association Section 8, which areavailable on the Company’s web page.

General MeetingsThe Board encourages shareholders toparticipate in its General Meetings. It is theBoard’s priority to hold the Annual GeneralMeeting as early as possible after the year-end. Notices convening General Meetings,with comprehensive documentation relat-ing to the items on the agenda, includingthe recommendations from the NominationCommittee, are made available on theCompany’s website no later than 21 daysprior to the General Meeting. The deadlinefor shareholders to register to the share-holders’ meetings is set as close to thedate of the meeting as possible and thedeadline for registration may not expireearlier than five days prior to the date of theGeneral Meeting.

The notice materials include a thor-ough explanation of all procedures forregistration, voting and attendance. Theproxy form includes instructions for repre-sentation at the meeting through a proxyand allows shareholders to nominate aperson who will be available to vote onbehalf of the shareholders. In addition, tothe extent possible, the proxy formincludes separate voting instructions to begiven for each matter to be considered bythe meeting. The shareholders may also

vote electronically in advance of the Gen-eral Meeting.

Pursuant to the Company’s Articles ofAssociation, the Chairman of the Board oran individual appointed by the Chairman ofthe Board will chair shareholder’s meet-ings. Thus, the Articles of Association ofthe Company deviates from the Code ofPractice in this respect. Having the Chair-man of the Board or a person appointed byher chairing the General Meetings sim-plifies the preparations for the GeneralMeetings significantly. To the extent possi-ble, board members and the auditor attendannual shareholders’ meetings.

The shareholders are invited to vote onthe composition of the Board of Directorsproposed by the Nomination Committee asa group, and not on each board memberseparately. Hence, the Company deviatesfrom the Code of Practice in this regard asit is important to the Company that theBoard of Directors works in the best possi-ble manner as a team, and that the back-ground and competence of the boardmembers complement each other.

Minutes of General Meetings are pub-lished as soon as practically possible viathe Oslo Stock Exchange messaging serv-ice www.newsweb.no (ticker: AMSC) andon the Company’s websitewww.americanshippingco.com.

Nomination Committee

Pursuant to American Shipping Company’sArticles of Association, the NominationCommittee recommends candidates formembers of the Board of Directors. TheNomination Committee also makesrecommendations as to remuneration ofBoard members and members of theNomination Committee. The currentmembers of the Nomination Committee, aselected by the General Meeting, are ArildStøren Frick (chair) and ChristineRødsæther.

The General Meeting of the Companyhas adopted guidelines for the NominationCommittee. According to these guidelines,the Nomination Committee shall emphasizethat candidates for the Board have thenecessary experience, competence andcapacity to perform their duties in a sat-isfactory manner. Furthermore, attentionshould be paid to ensure that the Boardcan function effectively as a collegiatebody. A reasonable representation withregard to gender and background shouldalso be emphasized, and the Nomination




Committee should present its nominationof Directors to the Board, and also justifyits nominations. The guidelines for theNomination Committee are available on theCompany’s website.

The Chairman of the NominationCommittee has the overall responsibility forthe work of the committee. In the exerciseof its duties, the Nomination Committeemay contact, amongst others, share-holders, the Board of Directors, manage-ment and external advisors. TheNomination Committee shall also ensurethat its recommendations are endorsed bythe largest shareholders. The Company willprovide their shareholders with informationon how to submit proposals to the Nomi-nation Committee for candidates for elec-tion to the Board of Directors on theCompany’s website.

Board composition and independenceThe Company does not have a corporateassembly since the Company has onlythree employees.

Pursuant to the Company’s Articles ofAssociation and corporate governancepolicy, the Board comprises between threeand nine members, which are elected for aperiod of two years. Further, up to threeshareholder-elected deputy board mem-bers may be elected annually. The Chair-man of the Board is elected by the GeneralMeeting. The Board may elect a DeputyBoard Chairman.

The majority of the shareholder-elected Board members are to beindependent of the Company’s executivemanagement, its significant businessassociates and its significant shareholders.Representatives of American ShippingCompany’s executive management shallnot be board members. The currentcomposition of the Board is presented onpage 49 of this annual report, which alsoincludes the board members’ expertise,capabilities and independence. The currentmembers of the Board are Annette MalmJustad (Chairman), Kristian Røkke andPeter Knudsen. Two of the three membersof the Board are independent of theCompany’s significant shareholders andsignificant business associates. TheCompany encourages the board membersto invest in the Company shares, and theshareholdings of the board members arepresented in Note 17 to the consolidatedaccounts.

The board members represent acombination of expertise, capabilities, andexperience from various finance, industry,and non-governmental organizations.Based on the current board members’experience and expertise, the Board func-tions effectively as a collegiate body.

Two of the three shareholder-electedBoard members are up for election in 2016.

The work of the Board of Directors

The Board of American Shipping Companyannually adopts a plan for its work,emphasizing goals, strategies, andimplementation. Also, the Board hasadopted informal guidelines that regulateareas of responsibility, tasks, and divisionof roles of the Board, Chairman, and CEO.These instructions also feature rulesgoverning Board schedules, rules for noticeand chairing of Board meetings, decision-making rules, the CEO’s duty and right todisclose information to the Board, pro-fessional secrecy, impartiality, and otherissues. In general, four ordinary boardmeetings are convened each year, with onemeeting held every quarter.

To ensure a more independent consid-eration of matters of a material nature inwhich the Chairman is, or has been,personally involved, the Board’s consid-eration of such matters should be chairedby another member of the Board. TheBoard itself assesses the need to elect adeputy chairman.

The Norwegian Public Limited LiabilityCompanies Act requires that companieslisted on a regulated market shall have anaudit committee. Due to the small size ofthe Company’s Board, the entire Board ofDirectors acts as the audit committee. Themajority of the members of the auditcommittee are independent of the Compa-ny’s operations.

With the exception of the audit commit-tee, the Board has not deemed it necessaryto establish other board committees at thistime. The Board has considered appointinga remuneration committee in order to helpensure thorough and independent prepara-tion of matters relating to compensationpaid to executive personnel. However, dueto the small size of the Board and since nomembers of the executive personnel arealso members of the Board of Directors,the Board does not deem it necessary toappoint a remuneration committee at thistime. If the Board decides to appoint aremuneration committee, the membership

of the committee shall be restricted tomembers of the Board who areindependent of the Company’s executivepersonnel.

The Board evaluates its own perform-ance and expertise once a year.

Risk management and internal controlThe Board is to ensure that the Companymaintains solid in-house control practicesand appropriate risk management systemstailored to the Company’s business activ-ities and its values and ethical guidelines.The Board annually reviews the Company’smost important risk areas and internal con-trol systems and procedures, and the mainelements of these assessments are men-tioned in the Board of Directors’ report.

Audit Committee

The Audit Committee has reviewed theCompany’s internal reporting systems,internal control and risk management andhad dialogue with the Company’s auditor.The Audit Committee has also consideredthe auditor’s independence.

AMSC’s financial policies ensurefollow-up of financial risk. Key targets areidentified by the Board and management toensure timely control of currency exposure,interest rate exposure and compliance withloan covenants.

Financial Statement Close Process

Consolidation and control over the financialstatement close process is the Controller’sresponsibility. The Company’s currentbusiness includes bareboat chartering of itsten vessels and therefore means that theactivities of its employees are managingthe financing of vessels and overhead. TheCompany has a small organization withthree employees, who all have directcommunication with the Board of Directors.Meetings between management, theexternal auditor and members of the Board,to identify significant accounting issues orother issues are held prior to completion ofthe annual report and in connection withmanagement’s reporting to the AuditCommittee. The purpose of these meetingsis to focus on new and amended account-ing principles or other issues in the finan-cial statements. Financial results and cashdevelopment are analyzed and comparedto the budget by the CFO and Controllerand reported to the Board monthly.

Because of the inherent segregation ofduties matters caused by having only three




employees, special actions have beenimplemented. A third party consultant per-forms a quarterly review of the Company’scash disbursements from its operatingaccounts in the U.S. and provides a reportto the Audit Committee. In Norway, dis-bursements are managed by accountingservices purchased from an accountingfirm, with normal control procedures inplace such as management approval ofinvoices for payment and two signatoriesrequired for payments.

The Board of Directors approves theCompany’s yearly budget and reviewsdeviations to the budget on a monthlybasis.

Remuneration of the Board ofDirectors

Board remuneration is to reflect theBoard’s responsibility, expertise, timespent, and the complexity of the business.Remuneration does not depend on Ameri-can Shipping Company’s financialperformance and the Company does notgrant share options to the board members.Board members and companies with whomthey are associated must not take on spe-cial tasks for the Company beyond theirBoard appointments unless such assign-ments are disclosed to the full Board andremuneration for such additional duties isapproved by the Board. The Chairman andthe Board of Directors have not receivedbenefits other than directors’ fees.

Additional information on remunerationpaid to board members for 2015 is pre-sented in Note 17 to the consolidatedaccounts.

Remuneration of executivemanagement

The Board has adopted guidelines forremuneration of executive management inaccordance with the Norwegian PublicLimited Company Act section 6-16a. Salaryand other remuneration of American Ship-ping Company’s CEO are determined bythe Board of Directors.

The Board’s guidelines for remuner-ation of executive management will bemade available as a separate appendix tothe agenda for the Annual General Meeting.The statement will include information onwhich aspects of the guidelines are advi-sory, and which, if any, is binding. Theshareholders will be able to vote separatelyon these aspects of the guidelines.

Information and communicationsThe Board of Directors has establishedguidelines for the reporting of financial andother information and is based on open-ness and on equal treatment of share-holders, the financial community, and otherinterested parties. The long-term goal ofAmerican Shipping Company’s investorrelations activities is to ensure the Compa-ny’s access to capital at competitive termsand to ensure shareholders’ correct pricingof shares.

These goals are to be accomplishedthrough correct and timely distribution ofinformation that can affect the Company’sshare price; the Company is also to complywith current rules and market practices,including the requirement of equal treat-ment. All stock exchange notifications andpress releases are made available on theCompany’s websitewww.americanshippingco.com; stockexchange notices are also available fromwww.newsweb.no. All information that isdistributed to shareholders is simulta-neously published on American ShippingCompany’s website. The Company’sfinancial calendar is also found on page 2of this annual report.

Take-oversThe overriding principle is equal treatmentof shareholders. The principles are basedon the bidder, the Company and themanagement all having an independentresponsibility for fair and equal treatment ofthe shareholders in a takeover process,and that company operations are notunnecessarily disturbed. It is the responsi-bility of the Board to ensure that the share-holders are kept informed and that theyhave reasonable time to assess the offer.

Unless the Board has particular rea-sons for so doing, it will not take steps toprevent or obstruct a take-over bid for theCompany’s business or shares, nor useshare issue authorizations or other meas-ures to hinder the progress of the bid,without such actions being approved bythe shareholders’ meeting after the take-over offer has become public knowledge.

If an offer is made for the Company’sshares, the Board will make a statement tothe shareholders that provides an assess-ment of the bid, the Board’s recom-mendations, and reasons for theserecommendations. If the Board cannotmake a recommendation to the share-holders, the Board shall explain their rea-

soning for no such recommendation. Foreach bid, an assessment will be made as tothe necessity of bringing in independentexpertise. In a situation where a competingbid is made and the bidder has a con-nection to any member of the Board orexecutive personnel, or if the bidder is amain shareholder, the Board shall seek anindependent valuation. The valuation is tobe recorded in the Board’s statement.

Transactions that have the effect ofsale of the Company or a major componentof it are to be decided on by shareholdersat a shareholders’ meeting.

AuditorThe auditor will make an annual pre-sentation to the Board of a plan for theauditing work for the year. Further, theauditor is to provide the Board with anannual written confirmation that therequirement of independence has beenmet.

The auditor participates in at least oneBoard meeting annually, including themeeting prior to the Annual General Meet-ing. At this meeting, the auditor reviewsany material changes in the Company’saccounting policies, comments on anymaterial estimated accounting figures andreports all material matters on which therehas been disagreement between the audi-tor and the executive management of theCompany. The auditor also presents to theBoard a review of the Company’s internalcontrol procedures, including identifiedweaknesses and proposals for improve-ments.

One meeting a year is held betweenthe auditor and the Board, at which norepresentatives of executive managementare present. Auditors are to provide theBoard with an annual overview of servicesother than auditing that have been suppliedto the Company. Remuneration for audi-tors, presented in Note 3 to the con-solidated accounts, is stated for the fourcategories of ordinary auditing, other attes-tation services, tax assistance and otherassurance services. In addition, thesedetails are presented at the Annual GeneralMeeting. The auditor has provided theBoard of Directors with written confirmationof its independence.



Presentation of the board of directors

Presentation of the Board of DirectorsAnnette Malm JustadChairman

Ms. Justad has been a member of American Shipping Company ASA’s Board of Directors since December2007. From 2006 through 2010, she held the position of CEO of Eitzen Maritime Services ASA, a Norwegianmarine shipping services Company. Prior to that she has held various positions in large companies such asYara International ASA, Norgas Carriers/IM Skaugen ASA, and Norsk Hydro ASA. Ms. Justad is chairman ofthe board of Store Norske Spitsbergen Kulkompani AS and SeaBird Exploration Plc, a member of the Board ofPort of London Authority, Odfjell, and Awilco LNG ASA. Ms. Justad holds a Master degree of TechnologyManagement from NTH/MIT (Sloan School)/NHH in addition to a MSc in Chemical Engineering from NTH. Ms.Justad is a Norwegian citizen. Ms. Justad holds 4,523 shares in the Company and has no stock options. Shehas been elected for the period 2015-2017.

Peter D. Knudsen

Peter D. Knudsen is the Managing Partner of NorthCape Capital AS. Mr. Knudsen previously worked as CEOof Oslo listed Camillo Eitzen & Co. ASA from November 2008 to February 2012. Prior to Camillo Eitzen & Co.ASA, Mr. Knudsen was employed by Nordea Bank (Shipping Offshore and Oil Services) for 15 years, and hislast position was as a General Manager of Nordea Bank in Singapore. Mr. Knudsen has also been employedwith GIEK, Den norske Creditbank, Jøtun Fonds and Stemoco Shipping. Mr. Knudsen holds an MBA fromArizona State University. Mr. Knudsen is presently the Chairman of the Board of Rem Offshore ASA and Boardmember of Uglands Rederi AS. He is a Norwegian citizen and holds zero shares of stock in the Company. Mr.Knudsen has been a Board Member of American Shipping Company ASA since 2012 and has been re-electedfor the period 2014-2016.

Kristian Røkke

Kristian Røkke is currently CEO of Akastor ASA, a publicly listed oil service investment company. He haspreviously served as CEO of Philly Shipyard ASA and later as Chairman. Mr. Røkke is a Board Member of TRGHolding AS, which owns 66.7% of Aker ASA. Mr. Røkke holds an MBA from The Wharton School, University ofPennsylvania. Mr. Røkke is both a Norwegian and United States citizen. He holds zero shares of stock in theCompany. Mr. Røkke was elected to the Board of Directors at the Company’s Extraordinary General Meetingon 1 December 2014 and was elected for the period 2014-2016.



Presentation of management

Presentation of ManagementPal MagnussenPresident / CEO

Mr. Magnussen was appointed President and CEO of AMSC effective 1 January 2015. He previously served asthe Company’s CFO from 1 June 2014. A Norwegian national, Mr. Magnussen comes from the position asDirector of the Investment Banking Division in DNB Markets where he has worked since 2007 focusing on theshipping and offshore sectors. Prior to that he worked for five years as Vice President of Corporate Banking inDNB Bank’s shipping and offshore division. He has significant experience from international shipping financeand has been based in New York, Singapore and Oslo. Mr. Magnussen holds an MBA from ColumbiaUniversity, New York, and a Master of Science from the Norwegian School of Management, Oslo. He holds50,000 shares in the Company.

Morten HofstadCFO

Mr. Hofstad was appointed Chief Financial Officer in July 2015. A Norwegian national, Mr. Hofstad comes fromthe position of Investment Director with Converto where he was part of the founding team in 2009, beingresponsible for several of Converto Capital Fund’s portfolio companies. Mr. Hofstad has also held a number ofnon- executive directorships in Norwegian public and private companies. Prior to Converto, he worked withincorporate- and investment banking as well as in the oil service industry. Mr. Hofstad holds an MSc in Businessand Economics from the Norwegian School of Economics and Business Administration (NHH) and ITAM,Mexico City. He holds zero shares in the Company.

Leigh JarosController

Ms. Jaros joined American Shipping Company as Controller in July 2008. Ms. Jaros has over 10 years ofprogressively responsible corporate financial experience including financial reporting, analysis and budgeting.Ms. Jaros was employed by Aker Philadelphia Shipyard as its Accounting Supervisor prior to joining AMSC.Ms. Jaros holds a Bachelor of Science in Finance and Economics from West Chester University. Ms. Jaros is aU.S. citizen and holds zero shares of stock in the Company.



Contact Information

American Shipping Company ASANorway OfficeOksenøyveien 10, P.O. Box 2301366 Lysaker, NorwayTel: + 47 24 13 00 00, Fax: + 47 24 13 01 06

U.S. Office415 McFarlan Road, Suite 205Kennett Square, PA 19348 USATel: + 1 (484) 732-3021, Fax: +1 (484) 732-3022


Project management:RR Donnelley

Photo/illustrations:All photos courtesy ofAmerican Shipping Company ASA

Layout/production:RR Donnelley

American Shipping Company

Annual report 2015

© 2016 American Shipping CompanyAll rights reservedwww.americanshippingco.com

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