Nordic TaNkers

Nordic TaNkers

Annual Report 2009

CVR no. 76 35 17 16

Nordic Tankers A/S Annual Report 2009

2

CompanyNordic Tankers A/SSønderlandsgade 44DK-7500 HolstebroCVR no.: 76 35 17 16Registered office: HolstebroWebsite: www.nordictankers.com

SubsidiariesNordic Copenhagen Shipping Co. Pte. Ltd., Singapore, wholly ownedNordic Oslo Shipping Co. Pte. Ltd., Singapore, wholly owned

Jointly controlled entitiesNordic Seaarland Tankers B.V., the Netherlands, 50-100% holding, joint venture

Board of DirectorsFlemming Krusell Sørensen, ChairmanAttorney-at-law Sven Rosenmeyer Paulsen, Deputy ChairmanJens Fehrn-ChristensenCEO, LLM Mogens BuschardCEO Jesper Tullin

Executive Board CEO Tommy ThomsenCFO Christian Hassel

AuditorsDeloitte Statsautoriseret Revisionsaktieselskab

Company data

3

Company data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Management’s review . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Consolidated financial highlights . . . . . . . . . . . . . . . . . . . . 6

Financial performance and outlook . . . . . . . . . . . . . . . . . . 8

Product tankers – operations and markets 2009. . . . . . . . 10

Chemical tankers – operations and markets 2009 . . . . . . 11

Financial review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fleet description and pools. . . . . . . . . . . . . . . . . . . . . . . . 16

Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Statutory corporate governance statement. . . . . . . . . . . . 20

Shareholder information . . . . . . . . . . . . . . . . . . . . . . . . . 22

Group chart Nordic Tankers A/S . . . . . . . . . . . . . . . . . . . . 24

Board of Directors and Executive Board . . . . . . . . . . . . . . 25

Management statement. . . . . . . . . . . . . . . . . . . . . . . . . . 26

Independent auditor’s report . . . . . . . . . . . . . . . . . . . . . . 27

Financial statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Consolidated and parent company statement of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . 29

Consolidated and parent company balance sheet. . . . . . . 30

Consolidated and parent company statement of changes in equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Consolidated and parent company cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Fleet list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Contents

5Management’s review

Management’s review

To the investors of Nordic Tankers A/S

2009 was in many ways a year of change for Nordic Tankers. Following a long, turbulent period in 2008 and the beginning of 2009, an extraordinary general meeting elected a new Board of Directors on 2 February 2009 with strong competencies in shipping and finance. Klaus Kjærulff was elected Chairman. The new Board of Directors made a targeted effort to rebuild Nordic Tanker’s reputation as a serious and dedicated shipping company and to restore shareholder and stakeholder confidence in the Company.

At the general meeting on 23 April 2009, the Board of Directors presented the “Rebound 2012” strategy featuring two tracks – one to maintain and develop the existing busi-ness model as a tonnage provider and one to explore the possibilities of turning the Company into a full-service ship-ping line through partnerships, alliances or mergers. Moreo-ver, the Board of Directors would seek to build a shareholder structure that would ensure a stable and productive future development and prevent new, destructive attacks on the Company. On 1 May 2009, the Company hired Jens Pontop-pidan as new CEO.

Nordic Tankers took delivery of three new vessels in 2009; the LR1 product tanker Nordic Anne, which is wholly owned by Nordic Tankers, was delivered in April, while the two handy-size product tankers Nordic Agnetha and Amy, which are co-owned with Italy-based Zacchello Group, were delivered in May and July. Including these newbuildings, the Nordic Tankers fleet totals ten vessels with an average age of 2.6 years, which is a very young age compared with other shipping companies.

Operations were affected by the international financial crisis, the abrupt slowdown in the world economy and the resulting adverse consequences for the shipping industry. Freight rates for the Company’s product and chemical tankers continued to fall and remained historically low for the major part of the year. This impacted earnings as well as the value of the Company’s vessels, and the Board of Directors wrote down the value of the Company’s fleet on two occasions by a total of USD 84.8 million.

The Board of Directors and the Executive Board worked hard to implement the strategy, which resulted in the announcement on 26 November of the agreement with Clipper on a combination of the product and chemi-cal tanker operations of the two shipping companies. The agreement was conditional upon the support of the Nordic Tankers shareholders, and as many as 98.6% of the votes cast at an extraordinary general meeting held on 17 December 2009 were in favour of the agreement. More-over, the proposed resolution for a rights issue was passed with 98.5% of the votes cast. In keeping with the strategy adopted in April, the agreement turned Nordic Tankers into a full-service shipping line through the transfer of the

Clipper chemical tanker organisation and, moreover, it created a more stable shareholder structure with Clipper as a major shareholder that completely supports Nordic Tankers’ future strategy and focus on shipping operations.

Following the completion of the transaction on 7 January 2010, Nordic Tankers owns and operates some 70 product and chemical tankers and has become a key global operator in this segment. In future, the management will pursue a strategy of profitable growth and focus on long-term value creation. As a result of the transaction, a new Executive Board comprising CEO Tommy Thomsen and CFO Christian Hassel was appointed.

The Company reported a loss after tax of USD 94.5 mil-lion for 2009. Financial results were negatively affected by the extraordinary write-downs on the company’s tankers of USD 84.8 and the historically weak market conditions resulting from the global financial crisis. As a consequence of the poor market conditions, the Company’s capital base is weak – in spite of a significant capital injection by Clipper in connection with the transaction – and a strengthening of the capital base has top priority in the work agenda of the Board of Directors and the Executive Board. This implies a strong focus on costs and internal improvements and an ongoing dialogue with the Company’s creditors about necessary facilities and respite arrangements as well as preparation of a share issue with pre-emption rights for existing shareholders, which is expected to be carried out in the second quarter of 2010.

The Board of Directors considers the financial results to be unsatisfactory.

In connection with the extraordinary general meeting on 17 December 2009, Chairman Klaus Kjærulff unfortunately had to resign from the Board of Directors because of a non-competition clause he had signed with his former employer. Our thanks are due to Klaus Kjærulff for having led Nordic Tankers through very difficult times and eventually complet-ing the transaction with Clipper.

We would like to thank the many loyal shareholders who supported the Company in connection with the combina-tion with Clipper’s tanker operations. We look forward to developing the Company into a significant player in our two business segments. The markets are still historically weak, but it is in times like these that opportunities arise to intro-duce changes that will ensure long-term profitable growth. We hope for the shareholders’ continued support in our ef-fort to rebuild the capital base of the Company and develop the business further.

Flemming K. Sørensen Tommy Thomsen Chairman of the Board of Directors CEO

6 Management’s review

Consolidated financial highlights

Unless otherwise stated, key figures and ratios have been calculated in accordance with the standards laid down by the Danish Society of Financial Analysts in “Recommendations & Financial Ratios 2005”. See definitions on page 75. * The key figures and ratios have been calculated exclusively for the continuing activities. ** The financial ratios are not defined in the Danish Society of Financial Analysts’ guidelines “Recommendations & Financial Ratios 2005”.

2009 2008 2007 2006 2005Key figures USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Revenue 29,960 45,303 37,084 28,105 27,318

Gross profit 11,013 26,635 24,287 17,755 18,773

EBITDA 7,359 39,208 34,220 17,093 26,479

Operating profit/loss (EBIT) -88,544 20,227 26,079 11,440 22,807

Earnings from continuing operations -94,552 4,607 16,347 7,751 22,807

Earnings from discontinued operations 0 0 5,275 943 0

Net financials -5,980 -12,017 -7,355 -4,093 -1,759

Profit/loss for the year -94,552 4,607 21,622 8,694 18,648

Profit/loss for the year, parent company’s share -94,552 4,607 20,501 8,505 18,296

Comprehensive income -94,368 2,714 29,854 8,546

Invested capital 207,786 223,982 244,825 173,324 47,659

Net working capital (NWC) 232 -2,588 1,702 2,825 1,141

Equity 20,557 115,254 112,538 55,322 46,854

Balance sheet total 220,705 245,526 259,793 182,820 82,176

Investments in property, plant and equipment 76,887 51,991 63,598 129,628 16,349

Net interest-bearing debt 187,350 105,461 128,891 117,065 -4,195

Cash earnings -19,825 14,290 24,007 11,382 20,731

Average number of full-time employees 2 2 2 2 1

Number of shares, current 7,180,000 7,180,000 7,180,000 1,300 1,300

Ratios

Gross margin (%)* 36.8% 58.8% 65.5% 63.2% 68.7%

Operating margin (%)* -295.5% 44.6% 70.3% 40.7% 83.5%

Operating margin before sale of vessels and write-downs (%)* -12.4% 22.5% 34.2% 40.7% 51.6%

Equity ratio (%)** 9.3% 46.9% 43.3% 30.3% 57.0%

Return on invested capital (%)* -41.0% 8.6% 12.5% 10.4% 60.9%

Return on equity (%) -139.2% 4.0% 25.8% 17.0% 49.8%

Assets/equity 10.74 2.13 2.31 3.30 1.75

Financial gearing 9.11 0.92 1.15 2.12 -0.09

Operating asset gearing 10.11 1.94 2.18 3.13 1.02

Revenue/invested capital* 0.14 0.19 0.18 0.25 0.73

Net working capital/revenue* -3.9% -1.0% 6.1% 10.1% 4.2%

Key figures - shares

Earnings per share, USD -13.21 0.64 3.29

Net asset value per share, USD 2.9 16.1 15.7

Market price per share, DKK 26 40 103


Financial resultsIn addition to the parent company, the consolidated finan-cial statements of Nordic Tankers include the subsidiaries Nordic Copenhagen Shipping Co. Pte. Ltd. and Nordic Oslo Shipping Co. Pte. Ltd. and the jointly controlled entity Nor-dic Seaarland Tankers B.V.

The group reported a loss after tax of USD 94.6 million for 2009, down from a profit after tax of USD 4.6 million for 2008. The loss meets the latest expectations for a loss after tax of USD 92-94 million as announced on 26 November 2009. The results include write downs of the Company’s vessels of USD 84.8 million, which is consistent with expec-tations. Revenue amounted to USD 30.0 million, down from USD 45.3 in 2008.

At 31 December 2009, the Company’s equity totalled USD 20.6 million as against USD 115.3 million at the end of 2008. The operation of the Company’s vessels before write-downs and tax resulted in a loss of USD 9.7 million for 2009, which is consistent with expectations.

The annual results were negatively affected by write-downs of USD 84.8 million on the Company’s vessels. As a consequence of these write-downs, the parent company’s financial statements included a write-down of investments in subsidiaries and jointly controlled entities of USD 4.2 mil-lion and USD 49.2 million, respectively.

Despite more ship-days in 2009 compared with 2008, operating expenses were on a par with 2008 and amounted to USD 18.9 million in 2009. Staff costs and external costs fell from USD 6.0 million in 2008 to USD 3.7 million. The fall is primarily attributable to staff costs because an adjustment of liabilities for wages and salaries of USD 0.8 million was made in 2009. In 2008, this adjustment amounted to USD -0.8 million. The net result was a small expense for wages and salaries of USD 0.6 million.

For further information on earnings and costs relating to the Company’s vessels, please see the section on operations and markets.

StrategyBefore the completion of the transaction with Clipper on 7 January 2010, Nordic Tankers was a so-called tonnage provider, which means that the Company owns vessels, but that their commercial operation is outsourced. The Com-pany had also outsourced the technical operation of the vessels as well as the greater part of the administrative func-tions. In future, Nordic Tankers will be a full-service shipping company with own commercial and technical management and own administrative functions.

As a result of the transaction, the Company has for-mulated a new strategy with focus on the operation of chemical tankers. The chemical tanker segment is rather fragmented, and the management expects to play an active

part in the consolidation process in the coming years. The product tanker segment will be of secondary focus, but may be developed further over time if attractive opportunities present themselves. The Company’s six product tankers are in market leading pools administered by recognised shipping lines, and the Company has no plans at this stage to change this arrangement.

The new vision announced at the Company’s general meeting on 17 December 2009 is as follows: To become a leading global operator of chemical and product tankers, known for the best employees and the highest efficiency.

Moreover, the Company has stated an ambition to have more than 150 vessels in its fleet by the end of 2013 (own and chartered vessels as well as vessels in commercial management), an operating margin of at least 20% and an equity ratio of at least 30%.

The enlargement of the fleet may be achieved by attract-ing more vessels to the Company’s commercial and technical management, by chartering vessels at attractive terms and conditions and by acquiring new vessels in the market. Due to the Company’s rather thin capital base, focus will be on enlargement of the fleet through the two first mentioned suggestions. Any growth in own or chartered tonnage as well as tonnage in management will, however, only be accepted to the extent that the growth is expected to be commercially viable and thus expected to create value for the Company’s shareholders.

The Company’s operating margin and equity ratio are a long way away from the above-mentioned ambition, and an operating margin of 20% is only obtainable in a normalised market situation where the rates are higher than at present. The equity ratio is expected to be realised through improved earnings combined with economies of scale through profit-able, selective fleet growth and further share issues to the extent deemed appropriate and possible.

Outlook for 2010Because of the financial crisis and the negative develop-ment of the global economy, it is very difficult to predict the market situation in 2010. Against this background, 2010 looks like a difficult year, and the Company expects revenue to be in the region of USD 60-65 million and EBITDA to be between USD 4 million and 8 million. Moreover, we expect to report a loss before tax of between USD 20 million and 25 million before any write-downs on vessels or other items and a loss of between USD 28 million and 33 million before any write-downs on vessels but after a write-down on ac-quired goodwill of approx. USD 8 million. Earnings expecta-tions before write-downs reflect the historically low freight rates and the great uncertainty that plague the shipping industry.

Financial performance and outlook


The reason for the expected write-down of acquired goodwill of about USD 8 million is that the Company, according to IFRS, must calculate the value of the shares of Nordic Tankers issued to Clipper as payment for the contribution of ownership interests in vessels at the quoted market price of the Nordic Tankers shares at the time of the transfer of control of the companies on 7 January 2010. The quoted market price was DKK 27.70 per share, whereas the transaction price, which reflected the relative fair value of the contribution, amounted to DKK 16.86 per share. The difference between the quoted price and the transaction price agreed between the parties is about USD 8 million, and the Company expects that this difference will first have to be recognised as goodwill and then written down in the financial statements for 2010. As the difference in value increases equity correspondingly in connection with the contribution, equity will not be affected by the expected write-down.

For further information on acquisition of enterprises in 2010, please see note 25.

Capital resources and liquidityThe Company’s capital base has weakened as a result of the deteriorating market conditions. A strengthening of the capital base has top priority in the work agenda of the Board of Directors and the Executive Board.

Based on the most recent expectations for 2010, the Company considers its liquidity and capital resources to be adequate, even if the rights issue is not completed, to sup-port continuing operations as well as current and antici-pated investments at least until the end of 2010.

Based on the earnings expectations for 2010 and ongoing and planned investments as well as the extension granted of the time for payment of instalments on certain bank loans until the beginning of 2012, the Company’s total cash flow for 2010 is projected to be between USD -17 and -20 mil-lion. The management assesses that this negative cash flow may be financed partly through the Company’s liquidity of approx. USD 12 million at the beginning of the year, partly by undrawn borrowing facilities of USD 10 million, including a new credit facility of USD 7.5 million made available by Clipper.

As a result of continued uncertainty about the develop-ment of the freight market, there is greater uncertainty than normal about the Company’s earnings expectations, and the Company has limited financial resources to absorb any negative deviations from the management’s expecta-tions for earnings performance, investments and liquidity. Therefore, the management is preparing a share issue in the second quarter of 2010 with pre-emption rights for existing shareholders in order to strengthen the Company’s capital base and liquidity.

Company historyNordic Tankers is a shipping company emerging from the general partnership K/S Difko XLVII (47). This company was founded in 1984 as part of an order for three product tank-ers at the now closed B&W Shipyard in Copenhagen. The vessels were delivered in 1986 and 1987 and were chartered on 15-year bareboat contracts with purchase options for the charterers. In 1991, the charterers exercised their options on one of the vessels.

In February 2000, the charterers of the two remaining tankers could no longer meet their contractual obligations because of poor market conditions. Consequently, K/S Difko XLVII (47) took over their company, Nordic Shipping I/S (now Nordic Tankers A/S). In this connection, a contract was made with A/S Dampskibsselskabet TORM for commercial operation of the vessels which were then operated in TORM’s LR1 pool.

From 2000 and onwards, freight rates generally devel-oped positively and Nordic Tankers built up its financial resources, which made it possible to invest in further ton-nage. Among other things, this resulted in the acquisition of chemical tankers that were operated in cooperation with Eitzen Chemicals A/S.

Tonnage tax was introduced in Denmark in 2001, and K/S Difko XLVII (47) decided to enter Nordic Tankers for the scheme from and including the financial year 2001/02.

In April 2006, Nordic Tankers set up a joint company – Nordic Seaarland Tankers B.V. – with Netherlands-based Seaarland Shipping Management B.V., which is owned by the Italian shipping group – Zacchello Group. The company joined the tonnage tax scheme in the Netherlands. Nordic Seaarland Tankers B.V. invests in handy-size product tank-ers. These vessels are operated by Maersk Tankers in the Handytanker pool. In preparation for the company’s admis-sion to OMX Copenhagen Stock Exchange, K/S Difko XLVII (47) on 23 May 2007 allotted shares in Nordic Tankers to its approximately 5,700 investors. At the beginning of 2008, K/S Difko XLVII (47) was wound up.

Forward-looking statementsThis report contains forward looking statements reflecting the management’s current beliefs concerning future events and financial results. Statements relating to 2010 are inherently subject to uncertainty and Nordic Tankers’ actual results may thus differ from expectations. Factors which could cause actu-al results to deviate from the expectations include, but are not limited to, changes in macroeconomic and political conditions – especially on the Company’s main markets, changes in Nor-dic Tankers’ freight rate assumptions and operating expenses, volatility of rates and vessel prices, regulatory changes, possible disruptions of traffic and operations resulting from outside events, etc. This annual report does not constitute an invitation to buy or sell shares in Nordic Tankers A/S.


The year was characterised by the negative development in the global economy, and freight rates remained at a histori-cally low level throughout most of the period. After a brief improvement in February, the product tanker market was hit hard by the slow-down in global activity.

Bunker prices were also weak at the beginning of the year and fell to about USD 240 per ton. However, this was not enough to compensate for the fall in freight rates, and unlike freight rates, bunker prices increased in the second quarter, which put further pressure on earnings.

This tendency continued throughout most of the second half of the year, and the handy-size segment in particular was negatively affected by the disappointing demand for oil in Europe and the USA. The LR1 tankers were used to store gas oil and jet fuel. This use was intensified in Sep-tember and continued for the rest of the year, which helped improve rates in this segment.

Continued use of vessel capacity as storage space and a ‘cold’ winter resulted in a general improvement of the product tanker market at the end of the year, though freight rates at end-2009 were still below the levels of preceding years.

Market outlook for 2010 The product tanker market was negatively affected by a declining demand for oil. After a year which saw demands fall, we expect the global demand for oil to pick up again in 2010. The development in USA and Europe, which are the largest consumers of oil, is of particular importance to Nordic Tankers.

Like in 2009, a large number of new product tankers will be delivered in 2010. We will also see a phasing out of old single hull tankers, which according to the IMO rules must be phased out in 2010.

Nordic Tankers expects a net growth in the product tanker fleet in 2010, which is expected to have a negative impact on freight rates. However, disappointing earnings and limited access to funding may cause an acceleration in the phasing out of old, loss-making tonnage.

All in all, Nordic Tankers estimates that daily earnings in 2010 will be on the same level as 2009. A positive develop-ment in the global economy and the demand for oil and an increase in the phasing out of old tonnage would have a positive impact on earnings.

Because of the weak market, the pools that Nordic Tank-ers participates in have a lower contribution ratio compared with previous years. Consequently, there is increased uncer-tainty about the earnings expectations for 2010.

Product tankers – operations and markets 2009

0

20

40

60

80

100

120

d/08 j/09 f/09 m/09 a/09 m/09 j/09 j/09 a/09 s/09 o/09 n/09 d/09

37,000 mts petrol Europe-USA 55,000 mts naphtha Saudi Arabia - Japan

Index 100 = December 2008

Source: Nordic Tankers

Development in earnings, product tankers 2009


The development in the chemical tanker segment was similar to the development in the product tanker segment. The freight rates in the chemical tanker segment opened the year at a low level. Throughout the entire year, rates were also under pressure from a general fall in both spot and contract cargoes.

The Company’s City class vessels participated in the Eitzen City Class Pool throughout 2009. A great portion of the employment was generated from shipment of refined oil cargoes. Thus, the earnings of these vessels did, to a high degree, follow the smaller product tankers, whose earnings were very unsatisfactory.

Market outlook for 2010 Following the transaction with Clipper on 7 January 2010, Nordic Tankers has increased its exposure in and focus on chemical tankers. An important change has been the takeo-ver of five 6,000 dwt chemical tankers with tanks of stain-less steel. These vessels can carry more types of chemicals compared with the Company’s other vessels.

Moreover, Nordic Tankers manages about 55 chemical tankers for Clipper and other shipping companies. These vessels have coated tanks or tanks of stainless steel. Thus, Nordic Tankers will, to a higher degree than previously, be sensitive towards the development in the chemical tanker market.

The growth in the volume of chemical cargoes follows the development in the global economy. Following a fall in 2009, we expect 2010 to be characterised by global growth. However, the entry of new chemical tankers is expected to depress rates in 2010.

Nordic Tankers has specific focus on contract coverage in chemical tankers, and we expect a coverage of about 50% in 2010. However, this will depend on the actual cargo volumes under the Company’s shipping contracts.

All in all, 2010 will be a challenging year for the chemi-cal tankers; however, the phasing out of old tonnage and strong growth in the global economy might have a positive impact on earnings.

Chemical tankers – operations and markets 2009


ThE gROuPFinancial results for the year and equity – figures in ( ) = 2008The Company reported a loss after tax of USD 94.6 million for the year (USD +4.6 million). Loss before tax amounted to USD 94.5 million (USD +8.2 million). The loss meets the latest expectations for a loss after tax of USD 92-94 million as announced on 26 November 2009. Revenue amounted to USD 30.0 million, down from USD 45.3 in 2008.

No vessels were sold in 2009. In 2008, profit on sale of vessels (NORDIC LISBETH) totalled USD 18.5 million before tax.

The financial results were negatively affected by write-downs on the Company’s vessels. In 2009, deteriorating market conditions resulting from the global financial crisis resulted in write-downs of USD 84.8 million on the Com-pany’s vessels. The write-downs are distributed among the segments as follows: the LR1 segment USD 8.3 million, the chemical tanker segment USD 21.6 million and the handy-size segment USD 54.9 million. In 2008, the value of the Company’s chemical tankers was written down by USD 8.5 million. For further information on write-downs, please see note 12. As a consequence of these write-downs, the par-ent company’s financial statements included a write-down of investments in subsidiaries and jointly controlled entities of USD 4.2 million and USD 49.2 million, respectively.

Equity amounted to USD 20.6 million (USD 115.3 million), corresponding to a fall of 82.2%. Key elements of the fall in equity are as follows:

The group’s vessels are recognised in the balance sheet at cost less accumulated depreciation and write-downs. The carrying amount of the vessels is currently compared with their earnings potential and indications of value.

If there are indications of impairment exceeding the an-nual depreciation, a write-down to the lower recoverable amount will be made.

The assumptions applied in the calculation of the recover-able amount are set out in note 12.

Other valuations for accounting purposes and estimates are described in note 1 “Accounting policies”.

RevenueRevenue, in the form of freight receipts, fell by USD 15.3 million to USD 30.0 million, a fall of 34%, which is primarily due to significantly lower freight rates in 2009 compared with 2008. In the LR1 segment, rates have diminished by more than one half, in the handy-size tanker segment the fall amounted to 40% and in the chemical tanker segment the fall amounted to 24%.

LR1 product tankers LR1 product tanker operations in 2009, in the form of ship-days, were down 26% on 2008. Freight receipts fell by USD 6.9 million, which, among other things, is due to the sale of NORDIC LISBETH in December 2008. Prior to the delivery of NORDIC ANNE on 20 April 2009, the Company had no LR1 product tankers. Fewer ship-days and significantly lower freight rates thus explain the fall in freight receipts.

handy-size tankersHandy-size tanker operations in 2009, in the form of ship-days, increased by 26% on 2008, which was attributable to the delivery of the 50% owned product tankers NOR-DIC AGNETHA on 9 May 2009 and AMY on 7 July 2009. Freight receipts amounted to USD 13.8 million (USD 18.2 million), corresponding to a fall of 24%. The increase in ship-days was thus not enough to make up for the signifi-cantly lower freight rates.

Chemical tankersChemical tanker operations, in the form of ship-days, remained almost unchanged compared with last year. This segment was also affected by the lower freight rates. Thus, freight receipts amounted to USD 13.0 million, down from USD 17.0 million in 2008, corresponding to a fall of 23%.

The Company’s total operating expenses for all segments came to USD 18.9 million, which is on a par with last year and by and large as expected.

For further information, please see the segment data in note 3.

Financial income and expenses, netNet financial expenses amounted to USD 6.0 million (USD 12.0 million). The fall was attributable to increasing interest income, falling interest expenses relating to mortgage debt

Financial review

Equity development in million USD

Equity at 1 January 2009 115.3

Loss for the year -94.6

Fair value adjustment of derivative financial instruments held to hedge future cash flows -2.6

Transferred to the income statement for a cash flow hedge 2.8

Costs related to the capital increase completed on 7 January 2010 -0.3

Equity at 31 December 2009 20.6


and a significantly lower write-down on the investment in Tower Group shares in 2009 compared with 2008. For further information, please see notes 8 and 9.

TaxThe Company’s tax payment is calculated according to the rules and regulations of the Danish Tonnage Tax Act, includ-ing a USD 3.5 million tax in 2008 on profit from the sale of vessels. For further information, please see note 10.

AssetsAt 31 December 2009, the Company’s balance sheet amounted to USD 220.6 million, a fall of USD 24.8 million, or 10.1%.

Non-current assets fell by USD 19.0 million to USD 89.5 million. The fall was attributable to depreciation and write-downs as well as the acquisition of the product tankers NORDIC ANNE, NORDIC AGNETHA and AMY.

Equity and liabilitiesThe group’s equity fell, primarily due to the write-down of the value of the vessels, by USD 94.7 million to USD 20.6 million, corresponding to 82.2%. No dividend was declared in 2009. Group liabilities increased by USD 69.9 million to USD 200.1 million. Non-current liabilities increased by USD 79.2 million in 2009 to USD 188.8 million as a result of the raising of loans to finance new tonnage.

Cash flowsOperations contributed USD 4.3 million (USD 23.1 million). Financial income and expenses and taxes negatively affected cash flows from operating activities by USD 9.7 million in 2009 (USD -12.9 million). Total cash flows from operating activities amounted to a negative USD 5.4 million in 2009 (USD +10.2 million).

In 2009, a total of USD 76.9 million (USD 52.0 million) was invested in new vessels. No vessels were sold in 2009. In 2008, the sale of vessels affected the cash flow from in-vesting activities by USD 68.1 million. Total cash flows from investing activities amounted to a negative USD 76.9 million (USD +13.0 million).

Cash flows from financing activities amounted to USD 72.7 million in 2009 (USD -21.3 million). In 2009, loans raised to finance new vessels amounted to USD 82.0 million and repayment of debt finance amounted to USD 9.2 mil-lion. In 2008, loans raised to provide financing amounted to USD 61.5 million and repayment of debt finance amounted to USD 82.8 million.

In 2009, the group’s cash and cash equivalents fell by USD 9.5 million to USD 2.6 million. Cash and cash equivalents at year-end consisted exclusively of bank deposits in USD and DKK.

PARENT COMPANyFinancial results for the year and equity – figures in ( ) = 2008The parent company reported a loss after tax of USD 78.5 million for the year (USD +3.4 million). Loss before tax amounted to USD 78.5 million (USD +7.0 million).

No vessels were sold in 2009. In 2008, profit on sale of vessels (NORDIC LISBETH) totalled USD 18.5 million before tax.

The financial results were negatively affected by write-downs on the Company’s vessels. In 2009, deteriorating market conditions resulting from the global financial crisis resulted in write-downs of USD 17.6 million on the parent company’s vessels. The write-downs are distributed among the segments as follows: the LR1 segment USD 8.3 mil-lion and the chemical tanker segment USD 9.3 million. In 2008, the value of the Company’s chemical tankers was written down by USD 6.2 million. For further information on write-downs, please see note 12. A consequence of the write-downs on vessels in subsidiaries and jointly controlled entities was that write-downs of investments in subsidiaries and jointly controlled entities of USD 4.2 million and USD 49.2 million, respectively, were recognised in the parent company’s financial statements. For further information on the write-downs, please see notes 13 and 14.

The parent company’s equity amounted to USD 20.6 million (USD 99.4 million), corresponding to a fall of 79.3%. Key elements of the fall in equity are as follows:

The parent company’s vessels are recognised in the balance sheet at cost less accumulated depreciation and write-downs. The carrying amount of the vessels is currently com-pared with their earnings potential and value indicators.

If there are indications of impairment exceeding the an-nual depreciation, a write-down to the lower recoverable amount will be made.

Development in parent company’s equity in million USD

Equity at 1 January 2009 99.4

Loss for the year -78.5

Fair value adjustment of derivative financial instruments held to hedge future cash flows -2.8

Transferred to the income statement for a cash flow hedge 2.8

Costs related to the capital increase completed on 7 January 2010 -0.3

Equity at 31 December 2009 20.6


The assumptions applied in the calculation of the recover-able amount are set out in note 12.

Other valuations for accounting purposes and estimates are described in note 1 “Accounting policies”.

RevenueRevenue, in the form of freight receipts, fell by USD 9.0 million to USD 9.6 million, a fall of 48%, which is primarily due to significantly lower freight rates in 2009 compared with 2008. The LR1 product tankers had 89 fewer ship-days because of the sale of NORDIC LISBETH, and freight rates fell by more than 50%. The chemical tankers saw freight rates fall by 24%.

The parent company’s total operating expenses came to USD 7.1 million, which is on a par with last year and by and large as expected.

Financial income and expenses, netNet financial expenses amounted to USD 3.0 million (USD 7.0 million). The fall is attributable to increasing interest income, falling interest expenses relating to mortgage debt and a significantly lower write-down on the investment in Tower Group shares in 2009 compared with 2008. For further information, please see notes 8 and 9.

TaxThe parent company’s tax payment is calculated according to the rules and regulations of the Danish Tonnage Tax Act, including a USD 3.5 million tax in 2008 on profit from the sale of vessels. For further information, please see note 10.

AssetsAt 31 December 2009, the parent company’s balance sheet amounted to USD 98.9 million, a fall of USD 31.2 million, or 24%.

The parent company’s non-current assets fell by USD 23.0 million to USD 89.5 million. The fall was attributable to depreciation and write-downs as well as the acquisition of the product tanker NORDIC ANNE.

Equity and liabilitiesThe parent company’s equity fell, primarily due to the write-down of the value of vessels and investments, by USD 78.8 million to USD 20.6 million, corresponding to 79.3%. No dividend was declared in 2009. The parent company’s liabili-ties increased by USD 47.6 million to USD 78.4 million. The parent company’s non-current liabilities increased by USD 50.7 million in 2009 to USD 70.8 million as a result of the raising of loans to finance new tonnage.

Parent company’s cash flowsOperations contributed a negative USD 2.3 million (USD +8.9 million). Financial income and expenses and taxes negatively affected cash flows from operating activities by USD 6.2 million in 2009 (USD -7.7 million). Total cash flows from operating activities amounted to a negative USD 8.5 million in 2009 (USD +1.2 million).

In 2009, a total of USD 42.3 million (USD 0.0 million) was invested in new vessels. No vessels were sold in 2009. In 2008, the sale of vessels affected the cash flow from invest-ing activities by USD 68.1 million. Total cash flows from investing activities amounted to a negative USD 49.4 million (USD +54.2 million).

Cash flows from financing activities amounted to USD 50.5 million in 2009 (USD -49.6 million). In 2009, loans raised to finance new vessels amounted to USD 51.0 million and repayment of debt finance amounted to USD 0.6 mil-lion. In 2008, loans raised to provide financing amounted to USD 26.8 million and repayment of debt finance amounted to USD 76.5 million.

In 2009, the parent company’s cash and cash equivalents fell by USD 7.4 million to USD 0.1 million. Cash and cash equivalents at year-end consisted exclusively of bank depos-its in USD and DKK.


Product tankers

LR1 product tankersLR1 product tankers are 60-79,000 dwt vessels (Panamax size) with 70-100,000 cubic meter epoxy-painted cargo space. These vessels primarily sail with large quantities of refined oil products from the place of production to other parts of the world. Examples include naphtha from the Mid-dle East to the Far East, diesel from the Far East to Europe, jet fuel from the Middle East to Europe or petrol from the Baltic countries to North America. Even products such as crude oil, which could previously only be shipped in vessels designed for this purpose, may now be shipped in LR1 tankers because today the hold of this vessel type can be cleaned so thoroughly that it can carry a great number of different products.

Together with the major Aframax/LR2 product tankers, the LR1 tankers are often the first vessels to be directly affected by seasonal fluctuations derived from the demand for heat-ing oil during winter in the northern hemisphere, increased activity (petrol and jet fuel) during the main holiday periods, maintenance of major industrial plants, refineries, etc.

Following the sale of NORDIC LISBETH, Nordic Tankers did not operate any LR tankers at the end of 2008, however, a newbuilding, which was ordered in 2006, was on order. The newbuilding NORDIC ANNE was delivered from New Times Shipbuilding in China on 20 April 2009.

handy-size product tankersThe handy-size product tankers include 25-40,000 dwt vessels. Their main practice field is shipment of refined oil products and IMO2 and IMO3 classified chemical cargoes, including vegetable oils. The areas served include the Medi-terranean, the Black Sea, North-West Europe, South East Asia and the Caribbean. Vegetable oils are typically carried from South East Asia to Europe.

Nordic Tankers’ partner in the handy-size segment is Italy-based Zacchello Group. In 2006, a jointly controlled shipping company was established in the Netherlands, Nor-dic Seaarland Tankers B.V., which has signed a commercial management agreement with Seaarland Shipping Manage-ment and a technical management agreement with Motia for all the vessels in the joint shipping company. Both of these companies are part of the Zacchello group.

At end-December 2009, the company operated five handy-size tankers.

NORDIC AGNETHA was delivered on 9 May 2009, and AMY was delivered on 7 July 2009.

Chemical tankersThe 13,000 dwt chemical tankers of this segment meet the IMO2 requirements for tankers carrying lighter chemicals. However, since the pool is primarily employed in transport of refined oil cargoes, the cargoes have often been identi-cal with the cargoes carried by the Company’s handy-size tankers.

Nordic Tankers’ partner in the chemical tanker segment is Norway-based Eitzen Chemical A/S.

At end-December 2009, the Company operated a total of four chemical tankers.

PoolsThe establishment of pools is a cooperation between several shipping companies on employment of their vessels in a specific segment. The vessels employed in a pool are often of comparable size, capacity and quality.

Pools are widespread in the international shipping industry. They improve service for customers and exploit the benefits of scale. The pool managers of the individual pools market all the vessels employed in their pool as a single coherent fleet. By employing a large number of almost identical ves-sels in one pool, customers are offered the right vessel – at the right place – at the requested time.

All vessels of the Nordic Tankers fleet are employed in pools that are all characterised as being leading within their segments.

LR1At end-2009, Nordic Tankers operated the product tanker NORDIC ANNE in this segment. Nordic Tankers is a member of TORM’s LR1 pool.

TORM introduced the pool concept for LR1 tankers in 1990. Today, this pool includes five shipping companies with 38 tankers, and six newbuildings are scheduled for delivery in 2009-10. The members of the pool are TORM,

Fleet description and pools

Nordic Anne

Holding 100%

Year of construction 2009

Shipyard New Times, China

Deadweight 73,500

Number of cargo spaces/cubic 12 / 83,000 m3

Length 228.6 m

Main engine MAN B&W

Horsepower 14,000

Speed, loaded 15.0 knots


Reederei “Nord” Klaus E. Oldendorff Ltd., Gotland Shipping (Bahamas) Ltd., Difko A/S, Nordic Tankers A/S and Skagerack Invest Limited.

handytankersNordic Tankers’ vessels are, via its cooperation with Seaar-land Shipping Management, employed in Maersk Tankers’ Handytankers Pool, which includes five shipping companies with 117 tankers in the 27-51,000 dwt segment, and nine newbuildings are scheduled for delivery in 2009-10. The members of the pool are Maersk Tankers, Seaarland Ship-ping Management, Motia, Chemikalien Seetransport and d’Amico Tankers.

City ClassNordic Tankers was also a member of Eitzen Chemical’s City Class Pool in 2009. It was established in 2005 by Eitzen, Nordic Tankers and Brøvig. Today, the pool includes four shipping companies with 26 vessels in the 10-15,000 dwt segment, and ten vessels are scheduled for delivery in 2009-10. The members of the City Class Pool are Eitzen Chemical, Nordic Tankers, Lloyds Fond and Rigel Schiffahrs GMBH.

The agreement with the City Class Pool was terminated in 2010 as a result of the transaction with Clipper.

Nordic Ruth Nordic Pia Nordic hanne Nordic Agnetha Amy

Holding 75% 75% 100% 50% 50%

Year of construction 2000 2006 2007 2009 2009

Shipyard Daedong, GSI, GSI, Hyundai-Mipo, Hyundai-Mipo, South Korea China China South Korea South Korea

Deadweight 35,820 38,471 38,396 37,400 37,400

Number of cargo spaces/ 12 / IMO3 12 / IMO3 12 / IMO3 12 / IMO2 12 / IMO2IMO class and cubic 42,316 m3 43,625 m3 43,444 m3 42,500 m3 42,500 m3

Length 183.0 m 183.0 m 182.86 m 184.0m 184.0m

Main engine Sulzer MAN B&W MAN B&W MAN B&W MAN B&W

Horsepower 11,100 10,710 10,710 9,600 9,600

Speed, loaded 14.4 knots 15.2 knots 15.2 knots 15 knots 15 knots

handysize product tankers

Nordic Copenhagen Nordic Oslo Nordic Stockholm Nordic helsinki

Holding 100% 100% 100% 100%

Year of construction 2005 2005 2007 2007

Shipyard Hyundai-Samho, Hyundai-Samho, Hyundai-Samho, INP Sekwang, South Korea South Korea South Korea South Korea

Deadweight 12,959 12,975 12,885 13,035

Number of cargo spaces/ 12/ IMO2 12 / IMO2 12 / IMO2 12 / IMO2 IMO class and cubic 13,341 m3 13,344 m3 13,347 m3 13,652 m3

Length 127.2 m 127.2 m 127.2 m 128.6 m

Main engine MAN B&W MAN B&W MAN B&W MAN B&W

Horsepower 5,500 5,500 5,500 6,060

Speed, loaded 13.4 knots 13.4 knots 13.4 knots 13. 5 knots

Chemical tankers


The Executive Board currently identifies risks considered to have the most significant effect on the group’s financial position and business performance and plans any measures deemed relevant to limit the group’s sensitivity to such risks.

Risks and measures are reviewed at least annually with the Board of Directors.

Financing of Company operationsAt 31 December 2009, Nordic Tankers’ finance loans to-talled USD 190 million.

The loan agreements stipulate minimum requirements (financial covenants) for liquidity, equity ratio and debt ratio, based on the market value of the vessels, among other things. At certain times during the year 2009, some of the financial covenants were not met.

In April, the jointly controlled entity failed to meet the debt ratio requirements. The situation was solved through the payment of extraordinary instalments following payment by the parties, including Nordic Tankers A/S. In the autumn of 2009, the group no longer met the debt ratio require-ments and minimum liquidity requirements, which led to a renegotiation of the loan agreements. The result was an addendum to the loan agreements in November 2009 which provided for deferment of instalments on the loans and reduced debt ratio requirements and minimum liquidity requirements and increased the lender’s margin.

At 31 December 2009, the parent company and its subsi-dies failed to meet the minimum liquidity requirement. The situation was remedied through the conclusion of another addendum to the loan agreement in January 2010 in con-nection with the group’s acquisition of a number of Clipper operations.

Despite the group’s low capital resources, the financial covenants are expected to be met, based on the group’s expectations for future earnings, cash flow and the develop-ment in the value of vessels, etc.

hR and outsourcingUntil the end of 2009, the Company had two employees, who made up the Executive Board, while the day-to-day management of the Company was outsourced to business partners who undertook commercial management, technical management and administrative tasks.

Fluctuations in bunker oil pricesOil prices, and hence the price of the bunker oil used by ves-sels as fuel, fluctuate widely.

Total variable expenses for operating the company’s vessels depend very much on the price of bunker oil. If oil prices were to rise, it is uncertain whether such an increase could be wholly or partially set off against increased freight rates.

The manager of the individual pools, in which the compa-ny’s vessels are included, decides, in cooperation with the in-dividual companies, whether to hedge bunker requirements.

Commercial management and pool contractsThe Company has contracted with third parties for the com-mercial management of the Company’s vessels and pool ar-rangements. Nordic Tankers endeavours to make contracts with leading pool managers.

Shared ownership of vesselsThe Company owns vessels jointly with one other shipping company, Zacchello Group. With respect to these vessels, the Company is highly dependent on agreement with the co-owner when it comes to important decisions on the vessels, including their sale and changes in employment and management.

Moreover, the Company is to a certain extent dependent on the co-owner meeting its financial obligations.

Foreign exchange risksThe Company’s foreign exchange exposure is quite low as the majority of the Company’s income and expenses are in the same currency (USD = functional currency); however, it will be financially hedged if and when deemed necessary by the management.

The Company’s financial reporting and earnings are in USD, whereas the share price on NASDAQ OMX Copenha-gen is in DKK; consequently, an investment in the Compa-ny’s shares will mean significant exposure to changes in the USD/DKK exchange rate.

Following the transaction with Clipper, the Company has become sensitive to fluctuations in the EURO as part of the freight receipts are in EURO and related loans are in EURO. DKK exposure has increased as a result of significantly higher staff and administrative costs, which are denomi-nated in DKK.

Interest rate riskAt 31 December 2009, Nordic Tankers’ net interest-bearing debt amounted to USD 187 million. The Company has hedged about 50% of the interest rate risk associated with this debt for a period of between one and two years. Consequently, the Company continues to be sensitive to fluctuations, especially in interest on USD. Based on the net interest-bearing debt at 31 December 2009, an interest rate increase of one percentage point would result in an increase in the Company’s annual interest expenses of about USD 1.0 million before tax.

The Company’s loans are denominated in USD and are floating-rate loans.The management continually monitors the interest market and assesses the need for hedging.

Risk management


This statutory corporate governance statement covers the financial period 1 January to 31 December 2009.

Financial reporting processThe Board of Directors and the Executive Board are respon-sible for the group’s internal control and risk management in connection with the financial reporting process, including observance of relevant statutory rules and regulations in connection with financial reporting.

Control environment The Executive Board receives monthly reports from the commercial and technical managers, which are compared against the budgets, and the Executive Board prepares a report which is considered and assessed at the next Board of Directors meeting.

The preparation of interim and annual reports has been outsourced to Difko Administration A/S and is as such covered by Difko’s control systems. The most important contributors to the financial reporting process are thus Difko and reports from subsidiaries and jointly controlled entities, which are subject to independent audit pursuant to the leg-islation applicable in the country of their registered office.

Difko receives, on behalf of Nordic Tankers, quarterly financial reporting briefs from subsidiaries at vessel level. The reporting is conducted in accordance with reporting guidelines ensuring observance of the group’s accounting policies.

Prior to publication of quarterly and annual reports, a committee meeting and a Board meeting are held. Audit committee members, the Executive Board, the Company’s auditor and representatives of Difko, who are responsible for the presentation of the financial statements, participate in the audit committee meeting. At the meeting, the reports are reviewed and an overall assessment is made of the risks associated with the financial reporting process.

At the Board meeting, the audit committee members re-port to the Board of Directors. The financial statements are reviewed and explained relative to the budget and expecta-tions. Moreover, any estimates and assessments used in the financial reporting are discussed and decided on.

Corporate governanceNordic Tankers is committed to maintaining a high standard of corporate governance, and the Board of Directors cur-rently reviews the framework and principles for the overall governance of the Company. The aim is to achieve long-term growth in shareholder value.

The Company is in compliance with the majority of the recommendations given in ”Recommendations for corpo-rate governance” made public by NASDAQ OMX Copenha-gen. The main deviations are in the following areas:

Composition of the Board of DirectorsThe Company has not at the present time found it necessary to fix a retirement age for directors as the Company empha-sises the importance of a Board of Directors composed of members with considerable relevant professional experience.

The Company has not yet prepared independent de-scriptions of the tasks, duties and responsibilities of the Chairman and Deputy Chairman of the Board of Directors. The duties are described in part in the rules of procedure adopted by the Board of Directors.

Audit committeeIn the spring of 2009, the Board of Directors set up an audit committee comprising three members. In 2009, the com-mittee held six meetings. The Company’s management and the Company’s auditor also participated in the meetings. The main objective of the committee is to assist the Board of Directors in:

• Overseeing the financial reporting process.• Monitoring the efficiency of the Company’s internal con-

trol systems and risk management systems.• Overseeing the statutory audit of the financial statements. • Overseeing and controlling the independence of the

auditors, including in particular the provision of non-audit services to the Company.

In 2009, the work of the audit committee included:

• Review of interim reports.• Analysis of financial risks.• Review of impairment tests of the Company’s vessels.• Auditor agreement and auditors’ fees.• Quality assurance and independence of auditors.

The audit committee submits a report on its work to the Board of Directors not later than on the Board meeting im-mediately following an audit committee meeting.

After the closing of the financial year, the audit commit-tee was discontinued as the duties of the audit committee will be taken over by the Board of Directors.

Because of the limited number of employees in the Company so far, there was no reason for having employee representatives on the Board.

Remuneration of the Board of Directors and the Execu-tive BoardThe Board of Directors has not formulated an actual remu-neration policy, but it currently reviews remuneration for the members of the Board of Directors and the Executive Board to make sure that it reflects their duties and responsibilities. The Board of Directors has decided not to disclose the remu-

Statutory corporate governance statement


neration or retirement benefit plan applicable to individual members of the management.

No incentive schemes have been offered to the Board of Directors and the Executive Board; consequently, no overall guidelines have been drawn up for such schemes.

At the annual general meeting to be held on 22 April 2010, a resolution will be proposed for the adoption of: ”General guidelines for incentive pay to members of the Board of Directors, the Executive Board and other em-ployees”. Moreover, a resolution may be proposed for the authorisation of the Board of Directors to issue warrants to members of the Executive Board and other employees.

Corporate Social Responsibility (CSR)Nordic Tankers has a responsibility for contributing to a glo-bal, sustainable development – economically, socially and environmentally. One of Nordic Tankers’ three basic values

is integrity, which emphasises the Company’s will and desire to be mindful of its social responsibility. The Company has launched a number of initiatives in this field, but has not yet formulated any strategy or policy for the area. In January 2010, the Company supplemented its ownership of vessels with its own operating organisation and is planning on ac-celerating efforts to systematise already existing initiatives in the area and identifying any further initiatives that may be launched. Later, these projects are expected to form the basis of the formulation of a strategy and policy in the area.


Shareholder information

Share data

Listed on: NASDAQ OMX Copenhagen

Share capital: DKK 71,800,000 – after the transaction with Clipper DKK 125,882,860

Nominal value: DKK 10

Shares issued: 7,180,000 – after the transaction with Clipper 12,588,286 shares

Share classes: One

Votes per share: One

Bearer share: Yes

Restriction on voting rights: No

Restricted negotiability: No

Security ID code: DK0060083996

Temporary ID code: DK0060209179

Movements in the Company’s share priceThe closing price at year-end 2009 was DKK 26. A fall of 35% compared with end-2008. The fall and movements in the Company’s share price are on a par with blue chip ship-ping shares – see the below graphs.

Investor relationsThe aim of Nordic Tankers’ investor relations policy is to ensure a high level of information to the Company’s share-holders through:

• Transparency

• Reliability

• Accessibility

The tools for ensuring that the Company lives up to this objective are:

• The website – www.nordictankers.com – contains news in brief and background information about Company operations and management.

• Nordic Nyt – a newsletter for shareholders featuring in-depth articles.

Shareholder structure At 25 March 2010, Nordic Tankers had 6,096 shareholders, of which 96.9% were registered shareholders.

On 25 March 2010, the following shareholders held more than 5% of the share capital and voting rights:

Clipper A/S: 3,894,932 shares (31% exclusive of treas-ury shares) – reported on 7 January 2010

The Company’s shares are covered by the following analyst: Finn Bjarke Petersen, Nordea - transportation, tel.: +45 33335723.

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Relative price

Nordic Tankers A/S

A. P Møller - Maersk B

Eitzen Chemical

D/S Torm

Index value of 100 as at 1 January 2009


Treasury sharesThe Board of Directors of Nordic Tankers has been author-ised by the general meeting in the period until the next annual general meeting to acquire a maximum of nom. DKK 7,180,000 treasury shares, corresponding to 718,000 shares or 10% of the share capital.

At year-end 2009, Nordic Tankers held nom. DKK 240,000 treasury shares, corresponding to 24,000 shares.

The acquisition hereof was part of the preparations for the IPO, and the Company has not acquired treasury shares since its listing in 2007.

Dividend policy No dividend will be distributed for the financial year 2009, and Nordic Tankers does not expect to distribute any dividend for the financial year 2010 either. In the years to come, the Company will seek to improve its equity ratio and pursue an active investment policy, including focus on the expansion of the fleet. The Company will strive to increase earnings and generate sufficient capital to distribute divi-dend.

Material agreementsThe group has arranged a credit line of up to USD 190 mil-lion. The agreement includes a ”Change of Control” clause relating to situations in which control of the Company changes. The effect of the clause is that the loans must be repaid not later than 60 days after a “Change of Control” situation has occurred, unless approved by the lending bank.

Change of control of the Company has no impact on other material agreements.

Procedures for election of members to the Board of DirectorsThe members of the Board of Directors are elected at the general meeting, except for those elected pursuant to the provisions of the Danish Public Limited Companies Act on employee representation.

The number of directors elected by the general meet-ing totals 5-8. Directors are elected for one year at a time. Retired directors can be re-elected.

Procedures for making amendments to the articles of associationResolutions to amend the Company’s articles of associa-tion are passed at the general meeting pursuant to sections 65a(2), 65b(1) or (5) or section 79(1) or (2) of the Danish Public Limited Companies Act. Any proposal for amend-ing the articles of association that a shareholder wishes to present at the annual general meeting must be submitted in writing to the Board of Directors not later than 15 February in the year in which the annual general meeting is held.

Financial calendar 2010

25 March Annual report 22 April Annual general meeting 26 May Interim report for Q1 2010 26 August Interim report for H1 2010 25 November Interim report for Q3 2010

Releases made public via NASDAQ OMX Copenhagen in 2009

02.02. Management changes, liquidity and sale of tonnage in Nordic Tankers A/S 02.02. New Board of Directors of Nordic Tankers A/S 03.02. Management situation and financial position 11.02. Steen Bryde, Brian Søholt Petersen and Jesper Bo Nielsen reported to the Danish Fraud Squad 11.02. Minutes of extraordinary general meeting held on 2 February 2009 18.02. Decisions by the former Board of Directors on the sale of tonnage 25.02. Decisions by the former Board of Directors on the sale of tonnage 11.03. Nordic Tankers announces downward adjustment of expectations for 2008 26.03. Annual Report of Nordic Tankers for 2008 07.04. Notice to convene annual general meeting to be held on 23 April 2009 21.04. Nordic Tankers’ first vessel to sail under the Danish flag 22.04. Updated strategy 23.04. Minutes of annual general meeting 30.04. New CEO 06.05. Minutes of annual general meeting held on 23 April 2009 11.05. Nordic Tankers receives new handy-size tanker 28.05. Interim report for Q1 2009 27.08. Interim report for H1 2009 23.10. Company announcement regarding article in Dag- bladet Børsen 25.11. Re. Berlingske Business’ comment on Nordic Tankers 26.11. Interim report for Q3 2009 26.11. Nordic Tankers and Clipper join forces to establish major Danish tanker operator 26.11. Financial calendar 2010 01.12. Notice to convene extraordinary general meeting to be held on 17 December 2009 17.12. Re. the chairmanship of Nordic Tankers 17.12. Outcome of extraordinary general meeting held on 17 December 2009 18.12. Articles of association after the extraordinary general meeting held on 17 December 2009


group chart Nordic Tankers A/S – 31 December 2009

Nordic Tankers A/S

Subsidiaries

Nordic CopenhagenShipping Co. Pte. Ltd.,

wholly owned

Nordic SeaarlandTankers B.V.Netherlands

Nordic Hanne, wholly ownedNordic Ruth and Pia, 75% holding

Nordic Agnetha and Amy, 50% holding

Nordic Copenhagenwholly owned

Jointly controlled entities

Nordic OsloShipping Co. Pte. Ltd.,

wholly owned

Nordic Oslowholly owned

Nordic Anne, Nordic Stockholm,

Nordic HelsinkiAll wholly owned


Board of Directors

Flemming Krusell SørensenBorn 1948. Chairman of the Board of Directors. Elected to the Board of Directors on 2 February 2009.

Educated in banking. Has worked at Kjøbenhavns Han-delsbank as Arbitrage Manager in Luxembourg and in Varde Bank as Liquidity and International Director. From 1995 in Difko Administration, responsible for shipping companies. Member of the Executive Board from 2000-2006. Managing Director of Nordic Tankers from 2006-2008.

Sven Rosenmeyer PaulsenBorn 1947. Deputy Chairman of the Board of Directors. Elected to the Board of Directors on 2 February 2009. At-torney with additional maritime law education abroad. Entitled to appear before the Supreme Court and special-ises in maritime law, ship financing, shipbuilding contracts, purchase and sale of ships, and insurance and contracts of the shipping industry. Partner in law firm Kromann Reumert 1981-2007. Member of the Board of Sydbank A/S, among others.

MogensBuschardBorn 1944. Elected to the Board of Directors the first time in 2005. LLM. Has been employed in government services for a number of years. Subsequently, self-employment in invest-ment. Managing Director of Danstig ApS and other invest-ment firms. Member of the boards of several foundations and corporations. Among the initiators of the formation of Nordic Tankers A/S and its first Chairman of the Board of Directors.

Jens Fehrn-ChristensenBorn 1952. Elected to the Board of Directors on 2 Febru-ary 2009. MSc (Economics and Business Administration). Has more than 25 years of experience as a manager in the shipping industry. From 1992 Economic and Finance Director in Dampskibsselskabet Norden A/ S. 2000-2007 CFO and member of the management of Dampskibsselskabet Norden A/S. Chairman of the board of NCS Holding A/S, Meyer & Bukdahl A/S and member of the boards of Sun-Air of Scandinavia A/S, Maritime Museum Fund and Hansi & Janus Larsens Familielegat.

Jesper TullinBorn 1966. Elected to the Board of Directors on 2 February 2009. Mercantile education, Copenhagen Business School. Founder of Finansgruppen A/S - majority shareholder and CEO of the company. Chairman of the boards of the follow-ing companies: Pilbæk Administration A/S, Finansgruppen Erhverv A/S, Ejendomsselskabet af 25. marts 2003 A/S and Scorpion Investment A/S. Member of the boards and CEO of the following companies: Bækgården Invest A/S, Finans-gruppen A/S, Finansgruppen Projekt A/S, Finansgruppen International A/S, and Finansgruppen Administration A/S. Member of the board of Finansgruppen Nordic A/S.

Executive Board

Tommy ThomsenBorn 1957. CEO. Shipping education from A.P. Møller-Mærsk. International Senior Management Program, Harvard Business School. From 1978-2007 employed by A.P. Møller-Mærsk and held various positions, i.a. Vice President of Mærsk Tankers from 1991 to 1995 and CEO of Mærsk Inc., USA from 1995 to 2001 and shipowner/partner from 2001 to 2007. CEO of Clipper Tankers 2008-2009. Partner of Clipper.

Christian hasselBorn 1963. CFO. LLM from the University of Copenhagen 1988, MBA from INSEAD in 1992. Employed by the law firm of Kromann Reumert from 1988 to 1991. Adviser, McKinsey & Company, from 1993 to 1996. Partner and CEO of Carnegie Investment Banking from 1997 to 2008. Execu-tive Adviser, Clipper, 2009. Member of the boards of Nordic Ferry Services A/S and Sydfynske A/S.

Board of Directors and Executive Board


Management statement

We have today considered and approved the annual report of Nordic Tankers A/S for the financial year 1 January - 31 December 2009.

The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed companies.

In our opinion, the consolidated financial statements and parent financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 December 2009 and of their fiancial performance and their cash flows for the financial year 1 January - 31 December 2009.

Further, in our opinion the management commentary gives a true and fair review of the development in the Group‘s and the Parent’s operations and financial matters, the results of the Group and the Parent for the year and the financial position as a whole, and describes the significant risks and uncertainties facing the Group and the Parent.

We recommend that the annual report be adopted at the annual general meeting.

Copenhagen, 25 March 2010.

Executive Board Tommy Thomsen Christian Hassel CEO CFO

Board of Directors Flemming K. Sørensen Sven Rosenmeyer Paulsen Jens Fehrn-Christensen formand næstformand

Mogens Stig Buschard Jesper Tullin


To the shareholders of Nordic Tankers A/S

Report on the consolidated financial statements and parent financial statementsWe have audited the consolidated financial statements and parent financial statements of Nordic Tankers A/S for the fi-nancial year 1 January - 31 December 2009, which comprise the comprehensive income statement, balance sheet, state-ment of changes in equity, cash flow statement and notes, including the accounting policies, for the Group as well as the Parent. The consolidated financial statements and par-ent financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed companies.

Management’s responsibility for the consolidated financial statements and parent financial statementsManagement is responsible for the preparation and fair presentation of consolidated financial statements and par-ent financial statements in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed compa-nies. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements and parent financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making ac-counting estimates that are reasonable in the circumstances.

Auditor’s responsibility and basis of opinionOur responsibility is to express an opinion on these consoli-dated financial statements and parent financial statements based on our audit. We conducted our audit in accordance with Danish and International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable as-surance whether the consolidated financial statements and parent financial statements are free from material misstate-ment.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the con-solidated financial statements and parent financial state-ments. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements and parent financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair

presentation of consolidated financial statements and par-ent financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the rea-sonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consoli-dated financial statements and parent financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualification.

OpinionIn our opinion, the consolidated financial statements and parent financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 December 2009, and of their financial performance and their cash flows for the financial year 1 January - 31 December 2009 in accordance with International Financial Reporting Stand-ards as adopted by the EU and additional Danish disclosure requirements for listed companies.

Statement on the management commentaryManagement is responsible for preparing a management commentary that contains a fair review in accordance with the Danish Financial Statements Act.

Our audit did not include the management commen-tary, but we have read it pursuant to the Danish Financial Statements Act. We did not perform any procedures other than those performed during the audit of the consolidated financial statements and parent financial statements.

Based on this, we believe that the disclosures in the man-agement commentary are consistent with the consolidated financial statements and parent financial statements.

Aarhus, 25 March 2010

DeloitteStatsautoriseret Revisionsaktieselskab

Per Buhl Nielsen Jesper Meto State Authorised State Authorised Public Accountant Public Accountant

Independent auditor’s report

28

Notes

1. Accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . 36

2. Significant accounting estimates, assumptions and uncertaintiess . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3. Consolidated segment information . . . . . . . . . . . . . . 45

4. Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

5. Profit on sale of vessels . . . . . . . . . . . . . . . . . . . . . . . 49

6. Depreciation and write-downs. . . . . . . . . . . . . . . . . . 49

7. Write-down of investments . . . . . . . . . . . . . . . . . . . . 49

8. Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

9. Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

10. Tax on profit/loss for the year. . . . . . . . . . . . . . . . . . . 51

11. Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

12. Property, plant and equipment. . . . . . . . . . . . . . . . . . 52

13. Investments in subsidiaries. . . . . . . . . . . . . . . . . . . . . 54

14. Investments in jointly controlled entities. . . . . . . . . . . 55

15. Receivables from sales etc.. . . . . . . . . . . . . . . . . . . . . 56

16. Available-for-sale financial assets . . . . . . . . . . . . . . . . 56

17. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

18. Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

19. Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

20. Finance loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

21. Trade payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

22. Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

23. Remuneration for auditors appointed by the general meeting . . . . . . . . . . . . . . . . . . . . . . . 61

24. Changes in working capital . . . . . . . . . . . . . . . . . . . . 61

25. Acquisition of enterprises in 2010 . . . . . . . . . . . . . . . 62

26. Contingent liabilities, collateral and contractual obligations . . . . . . . . . . . . . . . . . . . . . . . 66

27. Foreign exchange, interest rate and credit risks and application of financial instruments. . . . . . . . . . . 67

28. Related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

29. Shareholder relations. . . . . . . . . . . . . . . . . . . . . . . . . 74

30. Events occurring after the balance sheet date . . . . . . 74

Financial statements


Consolidated and parent company statement of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Consolidated and parent company balance sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Consolidated and parent company statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Consolidated and parent company cash flow statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

29

Parent company group

2008 2009 2009 2008 USD 1000 USD 1000 Note USD 1000 USD 1000

18,653 9,615 Revenue 29,960 45,303

-7,751 -7,189 Operating expenses -18,947 -18,668

10,902 2,426 gross profit 11,013 26,635

-2,511 -227 Staff costs 4 -278 -2,526

-3,213 -3,176 Other external costs -3,376 -3,446

18,545 0 Profit from sale of vessels 5 0 18,545

-9,683 -21,064 Depreciation and write-downs 6 -95,903 -18,981

14,040 -22,041 Operating profit/loss (EBIT) -88,544 20,227

0 -4,243 Write-down of investments in subsidiaries 7 0 0

0 -49,236 Write-down of investments in jointly controlled entities 7 0 0

1,072 1,621 Financial income 8 1,389 791

-8,112 -4,584 Financial expenses 9 -7,369 -12,808

7,000 -78,483 Profit/loss before tax -94,524 8,210

-3,561 -36 Tax on profit/loss for the year 10 -28 -3,603

3,439 -78,519 Profit/loss for the year -94,552 4,607

Transferred to the income statement in relation to 555 2,781 hedging of cash flows 2,781 565

Fair value adjustment of derivative financial instruments -2,179 -2,754 held to hedge future cash flows -2,597 -2,458

-1,624 27 Other comprehensive income 184 -1,893

1,815 -78,492 Comprehensive income -94,368 2,714

Distribution of profit/loss for the year

3,439 -78,519 Parent company’s shareholders -94,552 4,607

0 0 Minority interests 0 0

3,439 -78,519 -94,552 4,607

Distribution of comprehensive income for the year

1,815 -78,492 Parent company’s shareholders -94,368 2,714

0 0 Minority interests 0 0

1,815 -78,492 -94,368 2,714

Earnings per share excl. minority interests (EPS) 11 -13.2 0.6

Consolidated and parent company statement of comprehensive income


30 Financial statements

Consolidated and parent company balance sheet

Assets



49,968 81,616 Vessels 207,554 207,423

10,380 0 Prepayments on vessels 0 19,147

60,348 81,616 Property, plant and equipment 12 207,554 226,570

12,082 7,839 Investments in subsidiaries 13 0 0

40,055 0 Investments in jointly controlled entities 14 0 0

52,137 7,839 Financial assets 0 0

112,485 89,455 Total non-current assets 207,554 226,570

249 275 Lubricant stocks 1,135 890

642 2,253 Receivables from sales, etc. 15 6,222 3,386

6,747 5,954 Loans to subsidiaries 0 0

2,314 779 Other receivables 798 2,320

0 0 Receivables from business partner 2,236 0

9,703 8,986 Receivables 9,256 5,706

242 135 Available-for-sale financial assets 16 135 242

7,472 71 Cash 17 2,625 12,118

17,666 9,467 Current assets 13,151 18,956

130,151 98,922 Assets 220,705 245,526

31Financial statements

Liabilities and equity



12,826 12,826 Share capital 18 12,826 12,826

25,959 25,630 Share premium 25,630 25,959

63,568 -14,951 Retained earnings -24,861 69,691

-2,445 -2,418 Reserve for hedging transactions -2,615 -2,799

-527 -527 Reserve for foreign currency translation adjustments -60 -60

0 0 Reserve for fair value adjustments 9,632 9,632

99,381 20,560 Equity, parent company’s shareholders 20,552 115,249

0 0 Equity, minority interests 5 5

99,381 20,560 Total equity 20,557 115,254

20,147 70,820 Finance loans 20 188,804 109,653

20,147 70,820 Non-current liabilities 188,804 109,653

0 0 Finance loans 20 1,171 7,926

1,769 3,025 Trade payables 21 4,658 3,083

3,509 14 Corporation tax 14 3,509

0 1,324 Provisions 7 0 0

5,345 3,179 Other payables 22 5,501 6,101

10,623 7,542 Current liabilities 11,344 20,619

30,770 78,362 Total liabilities 200,148 130,272

130,151 98,922 Liabilities and equity 220,705 245,526


Consolidated and parent company statement of changes in equity

Reserves Reserves for fair value Equity for foreign adjustments attribu- Reserves currency in connection table to Share Share for hedging translation with step Retained minority Total capital premium transactions adjustments acquisitions earnings interests equity USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Equity at 1 January 2008 12,826 25,959 -906 -60 9,632 65,084 3 112,538

Minority interests 2 2

Comprehensive income for the financial year -1,893 4,607 2,714

Equity at 31 December 2008 12,826 25,959 -2,799 -60 9,632 69,691 5 115,254

Reserves Reserves for fair value Equity for foreign adjustments attribu- Reserves currency in connection table to Share Share for hedging translation with step Retained minority Total capital premium transactions adjustments acquisitions earnings interests equity USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Equity at1 January 2009 12,826 25,959 -2,799 -60 9,632 69,691 5 115,254

Costs related to the capital increase on 7 January 2010 -329 -329

Comprehensive income for the financial year 184 -94,552 -94,368

Equity at 31 December 2009 12,826 25,630 -2,615 -60 9,632 -24,861 5 20,557

Consolidated statement of changes in equity 2009

Consolidated statement of changes in equity 2008


Reserves for foreign Reserves currency Share- Share for hedging translation Retained Total capital premium transactions adjustments earnings equity USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Equity at 1 January 2008 12,826 25,959 -821 -527 60,129 97,566

Comprehensive income for the financial year -1,624 3,439 1,815

Equity at 31 December 2008 12,826 25,959 -2,445 -527 63,568 99,381

Reserves for foreign Reserves currency Share- Share for hedging translation Retained Total capital premium transactions adjustments earnings equity USD 1000 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Equity at 1 January 2009 12,826 25,959 -2,445 -527 63,568 99,381

Costs related to the capital increase on7 January 2010 -329 -329

Comprehensive income for the financial year 27 -78,519 -78,492

Equity at 31 December 2009 12,826 25,630 -2,418 -527 -14,951 20,560

Parent company statement of changes in equity 2009

Parent company statement of changes in equity 2008

Definitions of reserves, etc.

Share premium account comprises the premium on issued shares in 2007 less related issue costs.

hedging reserves represent the cumulative net change in the fair value of hedging transactions qualifying for hedging of future cash flows and where the hedged transaction has yet to be realised.

Reserves for foreign currency translation adjustments include the cumulative foreign currency translation ad-justments relating to the change in 2006 in presentation currency from DKK to USD and subsequent foreign currency translation adjustments resulting from translation of net items relating to enterprises and investments in currencies other than USD.

Fair value adjustment reserves in connection with step acquisitions record cumulative fair value adjustments in connection with step acquisition of enterprises.


Consolidated and parent company cash flow statement



14,040 -22,041 Operating profit/loss (EBIT) -88,544 20,227

9,683 21,064 Depreciation and write-downs 95,903 18,981

-18,545 0 Profit/loss from sale of vessels 0 -18,545

3,712 -1,358 Changes in working capital 24 -3,010 2,448

8,890 -2,335 Cash flows from primary operations 4,349 23,111

535 1,621 Financial income received 1,389 254

-5,201 -4,258 Financial expenses paid -7,526 -9,897

-3,019 -3,518 Corporation tax paid -3,565 -3,311

1,205 -8,490 Cash flows from operating activities -5,353 10,157

-15,350 -1,550 Acquisition, etc, of financial assets 0 0

0 -42,332 Acquisition, etc of property, plant and equipment -76,887 -51,991

68,108 0 Sale of property, plant and equipment 0 68,108

-3,154 0 Acquisition of available-for-sale financial assets 0 -3,154

4,626 0 Collection of receivables from jointly controlled entities 0 0

0 -6,307 Loans to jointly controlled entities 0 0

0 793 Loans to subsidiaries 0 0

54,230 -49,396 Cash flows from investing activities -76,887 12,963

26,835 51,045 Financing raised 81,995 61,485

-76,473 -560 Repayments on loan facilities -9,248 -82,762

-49,638 50,485 Cash flows from financing activities 72,747 -21,277

5,797 -7,401 Cash flows for the year -9,493 1,843

1,675 7,472 Cash and cash equivalents at 1 January 12,118 10,275

7,472 71 Cash and cash equivalents at 31 December 17 2,625 12,118


1

Accounting policies

The annual report of Nordic Tankers A/S, which includes the consolidated financial statements and the financial state-ments of the parent company, has been prepared in accord-ance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure re-quirements for annual reports of listed companies (reporting class D); cf. IFRS order issued pursuant to the Danish Finan-cial Statements Act. In addition, the annual report complies with International Financial Reporting Standards (IFRS issued by the International Accounting Standards Board (IASB).

The financial statements have been prepared in accord-ance with the historical cost convention except where fair value accounting is specifically required by IFRS.

The functional currency of the parent company and all significant subsidiaries and jointly controlled entities is USD, and the presentation currency of the group is USD.

The accounting policies have been consistently applied and are described below.

Implementation of new and revised standards and interpretationsThe annual report for 2009 has been prepared in accord-ance with the new and revised standards (IFRS/IAS) and new interpretations (IFRIC), which apply to financial years starting on or after 1 January 2009:

Standards affecting presentation and disclosure

Standards and interpretations that may affect the financial results or the financial positionThe application of new and revised standards and interpre-tations have not affected the consolidated financial state-ments or the parent company financial statements.

Standards and interpretations not yet effectiveAt the time of publication of this annual report, a series of new and revised standards and interpretations have not yet taken effect or been adopted by the EU and have, conse-quently, not been incorporated into the annual report:

Implementation of the revised IFRS 3, Business Combina-tions, will, among other things, mean that with effect from the financial year 2010, the group must recognise acquisi-tion costs and changes in contingent consideration associ-ated with business combination transactions directly in the income statement. Moreover, the revised standard allows recognition of 100% of the goodwill, even though the acquired part of a company amounts to less than 100%.

Implementation of IFRS 9 Financial Instruments: Classi-fication and Measurement will mean that financial assets, except for unlisted shares, which under the current ac-counting policies are classified as available-for-sale financial assets with recognition of fair value adjustments in other comprehensive income with effect from the financial year 2013 must be classified as financial assets at fair value through profit or loss. With effect from the financial year 2013, unlisted shares must be classified as financial assets at fair value through other comprehensive income. Moreover, the group’s investments in unlisted shares whose fair value cannot be measured reliably, which are therefore measured at cost today, must be measured at fair value upon imple-mentation of IFRS 9.

The management does not expect the implementation of the new and revised standards and interpretations to have any significant effect on the annual report for the coming financial years.

Consolidated financial statementsThe consolidated financial statements include Nordic Tank-ers A/S (parent company) and the enterprises (subsidiaries) which are controlled by the parent company. Control is presumed to exist when the parent company, directly or in-directly, owns more than 50% of the voting rights or in any other way can or does exercise a controlling influence.

Entities which are by agreement managed jointly with one or more other enterprises are considered to be jointly controlled entities which are accounted for by proportionate consolidation.

Basis of consolidationThe consolidated financial statements have been prepared

Notes

IAS 1 (2007) introduces new termi-nology in statements of accounts and changes to the format and contents of the statements of accounts. The revised version requires the presenta-tion of a statement of comprehen-sive income, but has otherwise not affected the consolidated financial statements or the parent company financial statements. The revised IFRS 7 requires additional information about fair value meas-urements and liquidity risk. The group has decided not to publish comparative figures in the con-solidated financial statements and parent company financial statements pursuant to the transitional provisions of the revised standard.

Revised IAS 1, Presentation of Financial State-ments (September 2007)

Revised IFRS 7, Financial Instru-ments: Disclosures (March 2009)


on the basis of the accounts of Nordic Tankers A/S and its subsidiaries and jointly controlled entities. The consolidated financial statements have been prepared by adding together items of a uniform nature. The accounts used for consolida-tion purposes have been prepared in accordance with the group’s accounting policies.

Intercompany income and expenses, intercompany bal-ances and dividends as well as profit and loss from inter-company transactions have been eliminated on consolida-tion.

Subsidiaries’ items are recognised in full in the consoli-dated financial statements. Minority interests’ proportionate share of results is included as part of consolidated results for the year and as a separate part of group equity.

Investments in jointly controlled entities are recognised and measured in the consolidated financial statements pro rata with the group’s ownership interest and presented on a line-by-line basis in the consolidated financial statements.

The proportionate share of the results of the entities after tax and elimination of unrealised proportionate intercom-pany profits and losses and less impairment loss relating to goodwill is recognised in the income statement. The proportionate share of all transactions and events recog-nised directly in the equity of the jointly controlled entity is recognised in group equity.

Participation in poolsNordic Tankers A/S generates practically all its revenue through pool arrangements. Total pool revenue is gener-ated from each vessel participating in the pool. The pool measures revenue based on the contractual rates and the duration of each voyage, and revenue is recognised in the income statement upon delivery of service in accordance with the terms and conditions of the charter parties.

The pools are regarded as jointly controlled operations, and the group’s share of items in the income statement and balance sheet in the respective pools is accounted for by recognising a proportional share, based on participation in the pool, combining items of a uniform nature. The group’s share of pool revenue is primarily dependent on the number of days the group’s vessels have been available for the pools in relation to the total available pool earning days during the period.

Business combinationsNewly acquired or newly established enterprises are rec-ognised in the consolidated financial statements as of the date of acquisition or establishment. The date of acquisition is the date on which control of the enterprise is effectively transferred. Enterprises that have been sold or wound up are recognised in the consolidated financial statements until the date of the sale or the winding-up. The date of sale is

the date on which control of the enterprise is effectively transferred to a third party.

On the acquisition of new enterprises, the purchase method is applied according to which the identifiable assets, liabilities and contingent liabilities of the newly acquired enterprises are measured at their fair values at the date of acquisition. However, non-current assets acquired as part of a business combination that meet the criteria to be classi-fied as held for sale are measured at fair value less estimated costs to sell.

When a business combination is achieved in stages, the enterprise is recognised for the period until control is acquired separately for each transaction, including as an as-sociate or jointly controlled entity. Upon acquisition of con-trol of the enterprise, the identifiable assets, liabilities and contingent liabilities of the enterprise are measured at their fair values at the date of acquisition for both new acquisi-tions and any existing interests in the enterprise. On initial recognition, fair value adjustments relating to the group’s existing interests are treated as a revaluation, and increases in carrying amounts are recognised directly in equity under revaluation reserves, while reductions are recognised in the income statement. The acquired assets, liabilities and contin-gent liabilities are not revalued after initial recognition.

Newly acquired jointly controlled entities are recognised in the consolidated financial statements from the date the joint control commences. Entities that have been sold or wound up are recognised in the consolidated income statement until the date of the sale or the winding-up. The date of sale is the date on which joint control of the entity ceases.

Restructuring costs are only recognised in the pre-acqui-sition balance sheet to the extent that they constitute a liability for the acquired entity. Account is taken of the tax effect of the revaluations made.

The cost of an enterprise consists of the fair value of the consideration paid plus costs directly attributable to the acquisition of the enterprise. If the final determination of the consideration is conditional on one or more future events, ad-justments are recognised in cost to the extent that the events are probable and the consideration can be measured reliably.

The excess (goodwill) of the cost of the business combi-nation over the fair value of the acquired assets, liabilities and contingent liabilities is recognised as an asset under intangibles and is tested for impairment at least once every year. If the carrying amount of the asset exceeds its recover-able amount, it is written down to the lower recoverable amount.

If negative goodwill arises, the calculated fair values and the calculated cost of the enterprise are reassessed. If, after reassessment, the fair value of the acquired assets, liabilities and contingent liabilities continues to exceed the cost, the balance is credited to the income statement.


Profit or loss from the sale or winding up of subsidiariesProfits or losses from the sale or winding up of subsidiaries are stated as the difference between the sum received from the sale or winding up and the carrying amount of the net assets at the time of selling or winding up, including good-will, accumulated foreign currency translation adjustments recognised directly in equity and expected costs of sale or winding up. The selling price is measured at fair value of the consideration received.

Foreign currency translationOn initial recognition, transactions in currencies other than the functional currency of each enterprise are translated using the exchange rate ruling at the date of the transac-tion. Receivables, payables and other monetary items in foreign currencies, which have not been settled at the bal-ance sheet date, are translated using the rate of exchange ruling at the balance sheet date. Any exchange differences arising between the rate of exchange ruling at the date of the transaction and the rate of exchange ruling at the date of payment and the balance sheet date, respectively, are recognised in the income statement as financial income and expenses, net. Property, plant and equipment, intangibles, inventories and other non-monetary assets purchased in foreign currencies and measured using historical costs are translated using the rate of exchange ruling at the date of the transaction. Non-monetary items that are revalued at fair value are translated using the rate of exchange ruling at the date of the revaluation.

Upon recognition in the consolidated financial statements of enterprises with functional currencies other than USD, the income statements are translated at the average ex-change rates for the respective months, unless these deviate materially from the actual exchange rates ruling at the dates of the transactions. If so, the actual exchange rates are used. Balance sheet items are translated using the exchange rates ruling at the balance sheet date.

Exchange differences arising from translation of balance sheet items at the beginning of the year at the rates of exchange ruling at the balance sheet date and from transla-tion of income statements from average rates of exchange to the rates of exchange ruling at the balance sheet date for enterprises presenting financial statements in another currency than USD are recognised directly in equity. Cor-respondingly, exchange differences arising from changes made directly in the equity of these enterprises are also recognised directly in equity.

Translation adjustments of receivables from or payables to subsidiaries which are considered to be part of the parent company’s total investment in the said subsidiary are also recognised directly in equity in the consolidated financial

statements if the receivables or payables are denominated in another currency than USD.

Exchange differences arising from translation of the group’s share of equity at the beginning of the year at the rate of exchange ruling at the balance sheet date and from translation of the share of the results for the year from aver-age rate of exchange to the rate of exchange ruling at the balance sheet date are recognised directly in equity.

Derivative financial instrumentsDerivative financial instruments, primarily interest rate swaps, are used for hedging purposes.

Derivative financial instruments are initially measured at fair value on the contract date. Directly attributable costs associated with the purchase or issue of the financial instru-ment are added to derivative financial instruments where subsequent fair value adjustments are recognised in equity.

Derivative financial instruments are subsequently meas-ured at fair value at the balance sheet date.

Changes in the fair value of derivative financial instru-ments designated as and qualifying for recognition as effec-tive hedges of future transactions are recognised directly in equity. When the hedged transactions are realised, accu-mulated changes are recognised as part of the cost of the transactions.

Changes in the fair value of derivative financial instru-ments used to hedge net investments in foreign enterprises are recognised directly in equity to the extent that the hedge is effective. On disposal of the foreign enterprise in ques-tion, the accumulated value changes are transferred to the income statement.

Derivative financial instruments that do not qualify for hedge accounting are classified as held for trading and measured at fair value, and changes in fair value are recognised in the income statement as financial income or expenses as they occur.

Segment informationNordic Tankers A/S operates three segments: LR1 product tankers, handy-size tankers and chemical tankers. There used to be four segments, but the multipurpose segment was discontinued during the 2007 financial year. This seg-mentation is based on Nordic Tanker A/S’ internal manage-ment and reporting structure. The segment information follows the group’s risks, accounting policies and manage-ment control.

The group only has one geographical segment as the group regards the global market as a single market, and individual fleet units are not restricted to specific regions or parts of the world.

Segment income and expenses and segment assets and liabilities include items directly attributable to each segment


and those items which can be reliably allocated to individual segments. Non-allocated items primarily relate to assets and liabilities as well as income and expenses associated with the group’s administrative functions, investing activities, income taxes etc.

Non-current assets in the segments include the assets used directly in the operation of the segment, including intangibles and property, plant and equipment.

Current assets in the segments include the assets directly associated with the operation of the segment, including in-ventories, trade receivables, other receivables, prepayments and cash.

Segment liabilities include all operating liabilities, includ-ing trade payables, provisions and other payables.

TaxCorporate income tax payable by the parent company has been provided for at a rate of 25% of taxable income calcu-lated pursuant to the Danish Tonnage Tax Act. The company has opted for the tonnage tax scheme for a binding period of 10 years, which expires at the end of 2011. Under the tonnage tax scheme, the calculation of taxable income is not based on income and expenses as for normal corpora-tion tax. Taxable income is instead calculated on the basis of the tonnage used with the addition of net interest income and gains on disposal of vessels acquired pre-2007.

Corporate income tax payable by the jointly controlled entities has been provided for in accordance with Dutch tonnage tax rules, whereas no tax, apart from withholding tax on interest to the parent company, is payable by the subsidiaries in Singapore pursuant to local rules.

On disposal of vessels acquired pre-2007, deferred tax is provided for at a rate of 25% of the taxable gains realisable on their carrying amount. Taxable gains are calculated as the difference between the carrying amount of vessels and their taxable acquisition price. Adjustments of deferred tax as a result of a change in the carrying amount of vessels when applying depreciation are recognised in the income state-ment.

Discontinued operations and non-current assets held for saleDiscontinued operations are significant business areas that have been sold or are classified as held for sale pursuant to a plan. Subsidiaries held exclusively for resale are considered to be discontinued operations.

The results of discontinued operations are presented in the income statement as a separate item consisting of the operating profit or loss after tax from the operation and any profits or losses resulting from fair value adjustments or the sale of the operations and associated liabilities.

Non-current assets and groups of assets held for sale are

presented separately in the balance sheet as current assets. Liabilities directly associated with such assets are presented as current liabilities in the balance sheet.

Non-current assets held for sale are not depreciated but are written down to the lower of carrying amount and fair value less estimated costs of sale.

Income statement

RevenueIncome, including revenue, is recognised in the income statement when:

• the income creating activities have been carried out on the basis of a binding agreement

• the income can be measured reliably

• it is probable that the economic benefits associated with the transaction will flow to the group

• costs relating to the transaction can be measured reliably

Revenue comprises freight and demurrage receipts from the vessels and gains and losses from forward freight agree-ments designated as hedges. Revenue is recognised when it meets the general criteria mentioned above and the stage of completion can be measured reliably. Accordingly, freight and demurrage receipts are recognised at selling price upon delivery of service in accordance with the charter parties concluded.

Operating expensesOperating expenses include costs relating to the opera-tion and maintenance of vessels, including costs relating to crew not employed by consolidated enterprises. Operating expenses are recognised as incurred.

Staff costsStaff costs comprise wages and salaries, social security and pension costs, etc. and are recognised as incurred.

Other external costsOther external costs comprise administrative expenses, which include the cost of offices, administrative service partners, etc.

Financial income and expenses, netFinancial income and expenses include interest income and interest expenses, realised and unrealised exchange gains and losses on payables and transactions in foreign curren-cies, mortgage amortisation premium/allowance as well as additions and allowances under the on-account tax scheme.


Interest income and expenses are accrued on the basis of the principal and the effective interest rate. The effective interest rate is the discount rate that is used to discount ex-pected future payments related to the financial asset or the financial liability in order for the present value of such asset or liability to match its carrying amount.

Dividends from investments are recognised when the right to receive payment has been established, which is typically when the dividend has been approved by the general meeting.

Balance sheet

Property, plant and equipment

VesselsVessels are measured at cost less accumulated depreciation and write-downs. The cost comprises the cost of acquisition and any expenses directly related to the acquisition until the time when the asset is ready for use, including interest expenses incurred during the period of construction.

All major components of vessels except for dry-docking assets are depreciated on a straight-line basis to the estimated residual value over their estimated useful lives, which Nordic Tankers A/S estimates to be 25 years. The management considers that a 25-year depreciable life is consistent with that used by other shipping companies with comparable tonnage. Depreciation is based on cost less the estimated residual value. Residual value is estimated as the lightweight tonnage of each vessel multiplied by scrap value per ton.

The useful life and residual value of the vessels are re-viewed at least at each financial year-end based on market conditions, regulatory requirements and the group’s busi-ness plans.

Moreover, the group evaluates the carrying amount of the vessels to determine whether events have occurred that indicate impairment and would require an adjustment of the carrying amounts.

Prepayments on vessels under construction are recognised as instalments paid and prepayments.

DockingThe fleet of own vessels is required to undergo planned dry-dockings for major repairs and maintenance, which cannot be carried out while the vessels are operating. Dry-dockings are generally required every 30-60 months depending on the nature of the work. Costs relating to dry-dockings are capitalised and depreciated on a straight-line basis over the estimated period until the next docking. The residual value is estimated at nil.

A portion of the cost of acquiring a new vessel is allocated to the components expected to be replaced or refurbished at the next dry-docking. For newbuildings, the initial dry-docking asset is estimated on the basis of the expected costs related to the first-coming docking, which is based on experience with similar vessels. For second-hand ves-sels, a dry-docking asset is also segregated and capitalised separately, however, taking into account the normal docking intervals of the vessel. At subsequent dry-dockings, the asset comprises the actual docking costs incurred.

Impairment of property, plant and equipmentThe carrying amounts of property, plant and equipment with finite useful lives are evaluated at the balance sheet date to determine whether there are indications of impairment. If an indication of impairment is identified, the recoverable amount of the asset is estimated in order to determine the need for recognising an impairment loss and the extent hereof.

If an asset does not generate cash flows that are in-dependent from other assets, the recoverable amount is determined for the smallest cash-generating unit to which the asset belongs.

The recoverable amount is defined as the higher of the fair value of the asset or the cash-generating unit less costs to sell and the value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market as-sessments of the time value of money, the risks specific to the asset or the cash-generating unit for which the esti-mates of future cash flows have not been adjusted.

If the recoverable amount of the asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. An impairment loss for cash-generating units is allocated to the assets of the unit, but no asset will be reduced to a lower value than its fair value less expected costs to sell.

Impairment losses are recognised in the income state-ment. Where an impairment loss subsequently reverses as a result of changes in assumptions used to determine the recoverable amount, the carrying amount of the asset or cash-generating unit is increased to the revised recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit. Impairment of goodwill is not reversed.

InventoriesInventories consist of oils and lubricants, etc. and are meas-ured at cost using the FIFO method or the net realisable value, whichever is lower.


ReceivablesReceivables comprise trade receivables, loans and other re-ceivables. Receivables are classified as loans and receivables that are financial assets, with fixed or determinable pay-ments, that are not quoted in an active market and which are not derivative financial instruments.

Receivables are initially measured at fair value and subse-quently at amortised cost, which usually equals the nominal value less provisions for bad debts. Write down is done individually using a provisions account.

PrepaymentsPrepayments recognised under assets comprise paid-up expenses relating to the subsequent financial year. Prepay-ments are measured at cost.

Other securities and equity investmentsOther securities and investments recognised under current assets comprise listed bonds and equity investments in en-terprises that are not subsidiaries, jointly controlled entities or associates. Other securities and investments are classified as available-for-sale financial assets. Available-for-sale finan-cial assets are financial assets that are not derivative financial instruments and which are either classified as available for sale or which cannot be classified as loans or receivables, financial assets measured at fair value through the income statement or held-to-maturity financial assets.

On initial recognition, other securities and investments are measured at fair value on the trade date plus costs directly attributable to the acquisition. The securities are subse-quently measured at fair value at the balance sheet date, and changes in fair value are recognised directly in equity. On the sale or disposal of the securities, accumulated fair value adjustments are recognised in the income statement.

If there are clear indications of impairment and when there is objective evidence of impairment of a permanent nature, a write-down to fair value will be made through the income statement. Significant or prolonged impairment of the fair value is deemed to constitute objective evidence.

Fair value is determined as the market price for listed securities and estimated fair value determined on the basis of market information and generally accepted valuation methods for other securities. Own investments that are not traded in an active market and whose fair value cannot be reliably measured, are measured at cost.

DividendDividend is recognised as a liability at the time of approval by the general meeting.

Treasury sharesAcquisition costs and consideration for treasury shares

and dividend on treasury shares are recognised directly as retained earnings in equity.

ProvisionsProvisions are recognised when the group has a legal or constructive obligation as a result of past events, for which it is probable that an outflow of resources embodying eco-nomic benefits will be required to settle the obligation.

Provisions are measured as the best estimate of the expenditure required to settle the obligation at the balance sheet date. Provisions with an expected maturity of more than one year from the balance sheet date are measured at present value.

Non-current financial liabilities (finance loans)Finance loans are initially measured at fair value less any transaction costs. Finance loans are subsequently measured at amortised cost. This means that the difference between the amount on initial recognition and the redemption value is recognised in the income statement as a financial ex-pense over the term of the loan using the effective interest method.

Lease commitmentsLease payments relating to operating leases are recognised using the straight-line method in the income statement over the term of the leases.

Other financial liabilitiesOther financial liabilities comprise bank loans, trade paya-bles and other payables to public authorities, etc.

Other financial liabilities are initially measured at fair value less any transaction costs. Liabilities are subsequently meas-ured at amortised cost using the effective interest method. Accordingly, the difference between the proceeds and the nominal value is recognised in the income statement as a financial expense over the term of the loan.

Deferred incomeDeferred income recognised under liabilities comprises re-ceived income for recognition in subsequent financial years. Deferred income is measured at cost.

Cash flow statementThe consolidated and parent company cash flow statements are presented using the indirect method and show cash flows from operating, investing and financing activities as well as cash and cash equivalents at the beginning and end of the year.

Cash flows from acquisition and divestment of enterprises are shown separately under cash flows from investing activi-ties. Cash flows from acquired enterprises are recognised in


the cash flow statement from the time of their acquisition, and cash flows from divested enterprises are recognised up to the time of sale.

Cash flows from operating activities are stated as the op-erating profit or loss, adjusted for non-cash operating items and changes in working capital, less corporation tax paid attributable to operating activities.

Cash flows from investing activities include payments in connection with the acquisition and divestment of enter-prises and financial assets and the acquisition, development, improvement and sale, etc. of intangibles and property, plant and equipment.

Cash flows from financing activities comprise changes in the parent company’s share capital and related costs as well as raising and repayment of loans, instalments on interest-bearing debt, acquisition of treasury shares and payment of dividend.

Cash flows in other currencies than the functional cur-rency are recognised in the cash flow statement using aver-age exchange rates for the respective months, unless these deviate materially from the actual exchange rates ruling at the dates of the transactions. If so, the actual exchange rates are used.

Cash and cash equivalents comprise cash less any bank overdrafts which form an integral part of the group’s cash management.

Supplementary accounting policies for the parent company

Investments in subsidiaries and jointly controlled entities in the financial statements of the parent companyInvestments in subsidiaries and jointly controlled entities are measured at cost.

If the cost price exceeds the recoverable amount of the investment, it is written down to this lower amount.

The recoverable amount is defined as the higher of the fair value of the subsidiary or jointly controlled entity less costs of sale and the value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money, the risks specific to the enterprise in question for which the estimates of future cash flows have not been adjusted.


2

Significant accounting estimates, assumptions and uncertainties

Many items cannot be measured reliably, but must be esti-mated. Such estimates consist of assessments based on the most recent information available at the time of preparing the financial statements. It may be necessary to change pre-vious estimates as a result of changes in the assumptions on which the estimates were based or due to new information, further experience or subsequent events.

Significant accounting estimatesIn connection with the practical application of the account-ing policies described, the management has made the following significant accounting estimates that have had a significant impact on the financial statements:

Carrying amount of vesselsThe group evaluates the carrying amount of the vessels to determine whether events have occurred that would require an adjustment of the amounts. The valuation of vessels is reviewed based on events and changes in circumstances indicating that the carrying amount of the assets might not be recovered. In assessing the recoverable amount, the group reviews significant indicators of potential impairment such as purchase and selling prices and general market conditions. Moreover, market valuations from leading and independent international ship brokers are obtained on an annual basis to support the valuation of vessels.

When an indication of impairment is identified, the discounted future cash flows are compared to the carrying amount of the vessels. If they are lower than the carrying amount, an impairment loss is recognised as the difference between the fair value and the carrying amount. If an indi-cation of impairment is identified, the need for recognising an impairment loss according to IFRS is assessed by compar-ing the carrying amount of the vessels to the higher of the net realisable value of the vessels and the discounted future cash flows.

The review of impairment indicators and projection of future discounted cash flows is complex and requires the group to make various estimates, including of future freight rates, earnings from vessels and discount rates. All of these factors have been historically volatile.

The carrying amount of the group’s vessels may not necessarily represent their actual market value at any point in time as market prices of second-hand vessels to a certain degree fluctuate with changes in charter rates and the cost of newbuildings. If the estimated future cash flows or re-lated assumptions change permanently, it may be necessary to reduce the carrying amount of the vessels.

Write-downs of USD 8.5 million on the group’s four ves-sels in the chemical tanker segment were recognised in the

financial year 2008 and write-downs of USD 84.8 million on all the group’s vessels were recognised in 2009, cf. note 12.

Special liabilitiesIn 2008, contracts and agreements were entered into by

the former management which the Company considers to be unlawful and non-binding on the Company and, there-fore, contests. Thus, there is uncertainty about the degree to which the Company must meet the obligations under these contracts and agreements.

The management made a careful assessment of the risks and scope and made provisions for liabilities in the order of USD 2 million in the annual report for 2008, including esti-mated costs relating to investigation and clarification of the extent of the liabilities. About USD 1.2 million for staff costs and about USD 0.8 million for other external costs. In the 2009 financial year, some of the liabilities were clarified and paid, and at end-2009, the management made provisions for the rest of the liabilities in the order of USD 0.6 million. Total estimated liabilities are provided for under current liabilities. The impact on the financial results was as follows: for 2009, USD +0.8 million and for 2008, USD -2.0 million.

Capital resources and liquidityBased on the most recently announced expectations for

2010, the Company considers its liquidity and capital re-sources adequate, even if the rights issue is not completed, to support continuing operations as well as ongoing and planned investments at least until the end of 2010.

Based on the earnings expectations for 2010 and ongoing and planned investments as well as the extension granted for the payment of instalments on the Company’s bank loan until the beginning of 2012, the Company’s total cash flow for 2010 is projected to be between USD -17 and -20 mil-lion. The management assesses that this negative cash flow may be financed partly through the Company’s liquidity of approx. USD 12 million at the beginning of the year, partly by undrawn borrowing facilities of USD 10 million, including the new credit facility of USD 7.5 million made available by Clipper.

As a result of continued uncertainty about the develop-ment of the freight market, there is greater uncertainty than normal about the Company’s earnings expectations, and the Company has limited financial resources to absorb any negative deviations from the management’s expecta-tions for earnings performance, investments and liquidity. Therefore, the management is preparing a share issue in the second quarter of 2010 with pre-emption rights for existing shareholders in order to strengthen the Company’s capital base and liquidity.


3

Consolidated segment information

The group adopted IFRS 8, Operating Segments, for the first time for the financial year 2009.

The adoption of IFRS 8 has not resulted in any changes in the identification of the group’s segments.

Types of freight services generating earnings for the segmentsThe group’s internal reporting to the Board of Directors of the parent company, which guides Board decisions on dis-tribution of resources and assessment of segment results, is focused on the categories of vessel types/sizes operating on different markets, however, there may be some overlapping between markets. The operating segments under IFRS 8 are as follows:

Revenue represents sales to extra-group customers alone. In 2008 and 2009, the group did not provide freight services to one single customer for more than 10% of total group revenue.

The accounting policies governing presentation of segment information are consistent with the accounting policies applied by the group, cf. note 1. Operating profit/loss for the segments reflects the earnings generated by each segment. Total operating profit/loss for the segments is equal to the EBIT less non-allocated joint operating and ad-ministrative expenses, including remuneration for the group management team. Financial income and financial expenses for the segments reflect results of interest-bearing assets and interest-bearing debt directly attributable to the seg-ments. Thus, segment results reflect the results reported

to the Board of Directors of the parent company, which guide Board decisions and assessments on segment results.

In order to be able to assess segment results and distribu-te resources between the segments, the Board of Directors also monitor long-term property, plant and equipment and financial assets as well as non-current liabilities in the form of ship loans relating to the individual segment. All assets and liabilities in the group are allocated to the respective segments, expect for jointly owned cash, loans to jointly controlled entities, available-for-sale financial assets and bank loans.

The Board of Directors also monitors the group’s capital expenditure.

Information on the group’s segments is listed in note 3.

Vessel type Description Market

LR1 product tankers Tankers of about 70,000 dwt Freight of refined oil products

Handy-size tankers Tankers of 35,000 - 40,000 dwt Freight of refined oil products and IMO3 products

Chemical tankers Tankers of about 13,000 dwt Freight of refined oil products and IMO2 products


3


Income statement

LR1 Product handy-size Chemical Not Continuing tankers tankers tankers allocated operations

2009 2009 2009 2009 2009 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Revenue 3,166 13,761 13,033 0 29,960

Operating expenses -2,181 -7,157 -9,615 6 -18,947

gross profit 985 6,604 3,418 6 11,013

Staff costs -84 -365 -375 546 -278

Other external costs -331 -1,268 -1,352 -425 -3,376

Depreciation -1,339 -5,183 -4,546 0 -11,068

Write-downs -8,306 -54,953 -21,576 0 -84,835

Operating profit/loss -9,075 -55,165 -24,431 127 -88,544

Financial income 1 0 0 1,388 1,389

Financial expenses -1,027 -3,851 -2,053 -438 -7,369

Profit/loss before tax -10,101 -59,016 -26,484 1,077 -94,524

Tax on profit/loss for the year -22 9 0 -15 -28

Profit/loss for the year -10,123 -59,007 -26,484 1,062 -94,552

Other segment information:

Segment assets 44,939 95,911 77,256 2,599 220,705

Capital expenditure 42,333 34,554 0 0 76,887

Segment liabilities 38,597 97,474 56,572 7,505 200,148

Ship-days (number) 251 1,108 1,451

Gross profit per ship-day (USD 1000) 4 6 2

For further information, please see note 12 on impairment tests of vessels.



Income statement

LR1 Product handy-size Chemical Not Continuing tankers tankers tankers allocated operations

2008 2008 2008 2008 2008 USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

Revenue 10,099 18,192 17,012 0 45,303

Operating expenses -2,911 -6,353 -9,368 -36 -18,668

gross profit/loss 7,188 11,839 7,644 -36 26,635

Staff costs -216 -388 -378 -1,544 -2,526

Other external costs -280 -823 -967 -1,376 -3,446

Depreciation -1,129 -4,701 -4,651 0 -10,481

Write-downs 0 0 -8,500 0 -8,500

Profit from sale of vessels 18,545 0 0 0 18,545

Operating profit/loss 24,108 5,927 -6,852 -2,956 20,227

Financial income 12 79 119 581 791

Financial expenses -1,735 -4,201 -3,652 -3,220 -12,808

Profit/loss before tax 22,385 1,805 -10,385 -5,595 8,210

Tax on profit/loss for the year -3,500 -20 -31 -52 -3,603

Profit/loss for the year 18,885 1,785 -10,416 -5,647 4,607

Other segment information:

Segment assets 12,553 121,209 97,387 14,377 245,526

Capital expenditure 51,034 957 51,991

Segment liabilities 4,334 74,944 25,568 25,426 130,272

Ship-days (number) 340 875 1,435

Gross profit per ship-day (USD 1000) 21 14 5

For further information, please see note 12 on impairment tests of vessels.

48

4

Staff costs



2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

-326 -323 Remuneration for the Board of Directors -374 -341

-1,307 -688 Wages and salaries -688 -1,307

-810 833 Adjustment of liabilities relating to wages and salaries 833 -810

-67 -48 Defined contribution plans -48 -67

-1 -1 Other social security costs -1 -1

-2,511 -227 -278 -2,526

2 2 Average number of employees 2 2

Crew aboard vessels is not included in the average number of employees as they are not employeed by the group. Wages and salaries are included under operating expenses. A member of the Executive Board has a company car. The related costs incurred are included under other external costs.

Remuneration for senior executives Members of the Board of Directors and the Executive Board of the parent company and other executives receive the following remuneration:

group

Board of Directors Executive Board

2009 2008 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

Remuneration for the Board of Directors -338 -341 -36 0

Wages and salaries 0 0 -688 -1,307

Defined contribution plans 0 0 -48 -67

-338 -341 -772 -1,374

Adjustment of liabilities relating to wages and salaries 0 0 833 -810

-338 -341 61 -2,184

Parent company

Board of Directors Executive Board

2009 2008 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

Remuneration for the Board of Directors -323 -326 0 0

Wages and salaries 0 0 -688 -1,307

Defined contribution plans 0 0 -48 -67

-323 -326 -736 -1,374

Adjustment of liabilities relating to wages and salaries 0 0 833 -810

-323 -326 97 -2,184


5

Profit on sale of vessels


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

70,160 0 Selling price 0 70,160

-2,052 0 Costs of sale 0 -2,052

-49,563 0 Carrying amount 0 -49,563

18,545 0 0 18,545

The profit recorded in 2008 by the parent company and the group relates to the sale of the LR1 tanker NORDIC LISBETH.

7

Write-down of investments


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

0 -4,243 Write-down of investments in subsidiaries 0 0

0 -4,243 Write-downs in subsidiaries 0 0

0 -41,605 Write-down of investments in jointly controlled entities 0 0

0 -6,307 Write-down of loans to jointly controlled entities 0 0

Provisions for recourse guarantee commitment relating to 0 -1,324 jointly controlled entities 0 0

0 -49,236 Write-downs in jointly controlled entities 0 0

0 -53,479 0 0

6

Depreciation and write-downs


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

-3,483 -3,505 Depreciation, vessels -11,068 -10,481

-6,200 -17,559 Write-downs, vessels -84,835 -8,500

-9,683 -21,064 -95,903 -18,981


8

Financial income


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

36 1,319 Interest on bank deposits, etc, 1,319 140

499 232 Interest on receivables 0 8

535 1,551 Interest income from financial assets not measured at fair value 1,319 148

537 70 Foreign exchange gains 70 643

1,072 1,621 Total financial income 1,389 791

9

Financial expenses


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

-4,036 -976 Interest on mortgage debt -3,601 -8,643

0 0 Interest on bank loans 0 0

-261 -386 Interest on current liabilities -454 -294

-4,297 -1,362 Interest expenses -4,055 -8,937

-1 -3 Bank fees -21 -24

-145 0 Borrowing costs 0 -145

0 0 Garantee commission 0 0

-203 -331 Foreign exchange loss -405 -226

-2,911 -107 Impairment of available-for-sale financial assets -107 -2,911

Fair value adjustments transferred from equity relating -555 -2,781 to hedging of future cash flows -2,781 -565

-8,112 -4,584 Total financial expenses -7,369 -12,808

-7,040 -2,963 Net financials -5,980 -12,017


10

Tax on profit/loss for the year


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

-3,509 -22 Tax for the year -14 -3,533

0 0 Changes in deferred tax 0 0

-3,509 -22 Tax on profit/loss for the year -14 -3,533

-52 -14 Other taxes -14 -70

-3,561 -36 -28 -3,603

Tax on profit for the year may be specified as follows:

7,000 -78,483 Profit/loss before tax -94,524 8,210

-7,000 78,483 Of which under the tonnage tax or other schemes 94,524 -8,210

0 0 Calculated tax, 25% 0 0

3,485 0 Tax on profit from sale of vessels 0 3,485

24 22 Tonnage tax 22 48

0 0 Adjustment of tax for previous years -8 18

52 14 Tax on interests 14 52

3,561 36 28 3,603

The company opted for the tonnage tax scheme with effect from the 2002 accounting period and with binding effect until end-2011. The company did not own any vessels on entry into the tonnage tax scheme; consequently, the company has no deferred taxes from the transitional period.

11

Earnings per share group

2009 2008 USD 1000 USD 1000

Profit/loss for the year -94,552 4,607

Number of shares used in calculation of earnings per share

Average number of outstanding shares 7,180,000 7,180,000

Average number of treasury shares -24,000 -24,000

Number of shares used in calculation 7,156,000 7,156,000

USD USD

Earnings per share for continuing and discontinued operations -13,21 0,64

Calculation of diluted earnings per share is not relevant.


12

Property, plant and equipment – group

Prepayment on Prepayment on Vessels and vessels under Vessels and vessels under docking construction docking construction

2009 2009 2008 2008 USD 1000 USD 1000 USD 1000 USD 1000


Cost at 1 January 222,973 19,147 225,226 18,952

Additions 96,034 0 51,796 195

Disposals 0 -19,147 -54,049 0

Cost at 31 December 319,007 0 222,973 19,147

Revaluations at 1 January 9,632 0 9,632 0

Additions 0 0 0 0

Cost at 31 December 9,632 0 9,632 0

Depreciation and write-downs at 1 January -25,182 0 -10,687 0

Depreciation for the year -11,068 0 -10,481 0

Write-downs for the year -84,835 0 -8,500 0

Reversal on disposal 0 0 4,486 0

Depreciation and write-downs at 31 December -121,085 0 -25,182 0

Carrying amount at 31 December 207,554 0 207,423 19,147


Property, plant and equipment – parent company

Prepayment on Prepayment on Vessels and vessels under Vessels and vessels under docking construction docking construction

2009 2009 2008 2008 USD 1000 USD 1000 USD 1000 USD 1000


Cost at 1 January 59,203 10,380 113,252 10,380

Additions 52,712 0 0 0

Disposals 0 -10,380 -54,049 0

Cost at 31 December 111,915 0 59,203 10,380

Depreciation and write-downs at 1 January -9,235 0 -4,038 0

Depreciation for the year -3,505 0 -3,483 0

Write-downs for the year -17,559 0 -6,200 0

Reversal on disposal 0 0 4,486 0

Depreciation and write-downs at 31 December -30,299 0 -9,235 0

Carrying amount at 31 December 81,616 0 49,968 10,380

Impairment tests of vessels

As a result of a fall in the fair value of the Company’s ves-sels, cf. ship brokers’ assessments and the general uncer-tainty about market developments, the Company has identi-fied indicators of impairment of the Company’s vessels. Therefore, the Company assessed the recoverable amounts of its vessels as at 31 December 2008 and 31 December 2009 in connection with the preparation of the financial statements.

The recoverable amount is calculated for each of the Company’s vessels, which is defined as the smallest cash-generating unit, for which it is possible to calculate the value in use and the fair value.

The value in use calculations were carried out using cash flow projections over the vessels’ expected useful lives, based on approved budgets and estimates for the first three years, the estimated subsequent development and a weighted discount rate of 8.3% p.a. after tax for 2008 and of 9.2% p.a. after tax for 2009.

The fair values less costs of sale were calculated on the basis of the average of the market assessments made by two independent ship brokers.

The recoverable amounts of the vessels were in 2008 determined on the basis of value in use calculations as the value in use in 2008 was higher than the fair value less costs of sale in every case.

In connection with the preparation of the financial state-ments for 2009, the recoverable amounts of the vessels were determined on the basis of the fair value less costs of sale, which at end-2009 were higher than the value in use.

Write-downs of USD 8.5 million on the group’s four ves-sels in the chemical tanker segment were recognised in the financial year 2008 and write-downs of USD 84.8 million on all the group’s vessels were recognised in 2009.

The key assumptions used in the value in use calculations are the following:

• Cash flows are based on normal earnings over the remain-ing useful lives of the vessels, based on the vessels’ expect-ed useful lives of 25 years, cf. the accounting policies.

• Freight rates for the first three years have been estimated based on experience, knowledge of the market and input from the company’s business partners. As of the fourth year, freight rates in the relevant segments are estimated to see an annual increase of 3%.


13

Investments in subsidiaries

Parent company

2008 2009 USD 1000 USD 1000

12,082 12,082 Cost at 1 January

0 0 Additions relating to acquisition of enterprises

0 0 Disposals relating to the divestment of enterprises

12,082 12,082 Cost at 31 December

0 0 Value adjustments at 1 January

0 -4,243 Write-downs for the year

0 -4,243 Value adjustments at 31 December

12,082 7,839 Carrying amount at 31 December

The parent company’s subsidiaries are: Nordic Copenhagen Shipping Co. Pte. Ltd. Singapore. Wholly owned. Nordic Oslo Shipping Co. Pte. Ltd. Singapore. Wholly owned. As a result of a fall in the fair value of the Company’s vessels, cf. assessments by ship brokers and the general uncertainty about the market development, the parent company has identified indicators of impairment of Nordic Tankers A/S’ invest-ments in subsidiaries compared with the carrying amount. Therefore, the Company assessed the recoverable amounts of its investments as at 31 December 2009.

The recoverable amount was determined as the fair value of the investments, corresponding to the net value of the invest-ments calculated at the fair value of vessels and other assets and liabilities. The assessment was based on the assessments of the Company’s vessels referred to in note 12.

The recoverable amount was lower than the carrying amount; consequently, the investments were written down by USD 4.2 million to the calculated recoverable amount of USD 7.8 million.

• Operating and administrative expenses for the first three years are estimated based on experience with the vessels concerned, good knowledge of the market and expected cost development. As of the fourth year, expenses are estimated to see an annual increase of 3%.

• Docking costs are estimated based on experience and future docking plans. Docking costs are estimated to see an annual increase of 3%.

The recoverable amount of the vessels is to a great extent dependent on the development of the freight market. To-day’s market makes it very difficult to predict the future

market situation for tankers, and there is a risk that the current financial crisis will continue or deteriorate at the same time as the supply of tanker capacity will remain high or increase further, which would keep freight rates at the current level or reduce them to a lower level. If fluctuations in the freight rates differ from the management’s estimate, this may have a strong positive or negative impact on the recoverable amounts.

The management has made its best estimate of the de-velopment of the freight market, both in the next 1-3 years and in the longer term, however, its estimate is associated with great uncertainty.


14

Investments in jointly controlled entities

Parent company

2008 2009 USD 1000 USD 1000

24,705 40,055 Cost at 1 January

15,350 1,550 Additions relating to acquisition of equity investments

0 0 Disposals relating to disposal of equity investments

40,055 41,605 Cost at 31 December

0 0 Value adjustments at 1 January

0 -41,605 Write-downs for the year

0 -41,605 Value adjustments at 31 December

40,055 0 Carrying amount at 31 December

The jointly controlled entities are: Nordic Seaarland Tankers B.V., the Netherlands, joint venture, operation of a wholly-owned handy-size tanker, and two 50% and two 75.01% holdings in handy-size tankers. The table below shows the jointly controlled entities’ share of results included in the consolidated income statement and principal items included in the consolidated balance sheet at 31 December 2008 and 2009 in compliance with IFRS:

group

2009 2008 USD 1000 USD 1000

Revenue 13,761 18,192

Operating expenses -7,157 -6,353

Other expenses -6,807 -5,912

Net financials -3,851 -4,122

-4,054 1,805

Non-current assets 91,416 116,997

Current assets 4,495 4,212

Non-current liabilities 96,175 68,241

Current liabilities 7,367 46,563

As a result of a fall in the fair value of the Company’s vessels, cf. assessments by ship brokers and the general uncertainty about the market development, the parent company has identified indicators of impairment of Nordic Tankers A/S’ invest-ments in jointly controlled entities compared with the carrying amount. Therefore, the Company assessed the recoverable amounts of its investments as at 31 December 2009.

The recoverable amount was determined as the fair value of the investments, corresponding to the net value of the invest-ments calculated at the fair value of vessels and other assets and liabilities. The assessment was based on the assessments of the Company’s vessels referred to in note 12.

As the recoverable amount was negative, write-downs of USD 41.6 million were recognised, corresponding to the carrying amount before write-downs.

56

16

Available-for-sale financial assets

Available-for-sale financial assets comprise listed Danish shares acquired for USD 3,153 thousand in 2008. The shares were measured at a fair value of USD 135 thousand calculated at the market price at 31 December 2009, which resulted in a further write-down in 2009 of USD 107 thousand compared with a write-down of USD 2,911 thousand in 2008.

The holding’s significant and prolonged impairment is deemed by the company to constitute objective evidence of impairment of a permanent nature; consequently, the write-down was recognised in the income statement.


15

Receivables from sales etc.


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

642 2,253 Receivables from pool arrangements 6,222 3,386

Group revenue derives from pool arrangements. Receivables from pool arrangements reflect the difference between recognised revenue and freight settlements received. The receivables are not past due, and following an individual assessment, no write-downs were made.

17

Cash


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

7,472 71 Cash and bank deposits 2,625 12,118

The group’s cash consists primarily of deposits in reputable banks, and no special credit risk is deemed to be associated with the cash. The group’s and parent company’s cash has been pledged as security for finance loans. Bank deposits carry floating interest rates.


18

Share capital


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

12,826 12,826 Share capital at 1 January 12,826 12,826

0 0 Capital increase 0 0

12,826 12,826 Share capital at 31 December 12,826 12,826

The share capital consists of 7,180,000 shares of DKK 10. The shares have not been divided into classes, and there are no special rights attached to the shares.

2008 2009 shares shares

7,180,000 7,180,000 Number of shares at 1 January

0 0 Capital increase through bonus shares

0 0 Capital increase through IPO

7,180,000 7,180,000 Number of shares at 31 December

19

Treasury shares

Parent company and group

Nominal value % of share capital

2008 2009 2008 2009 2008 2009 shares shares DKK DKK % %

Treasury shares at 1 January 24,000 24,000 240,000 240,000 0.33% 0.33%

Acquisition 0 0 0 0% 0%

Disposal 0 0 0 0 0% 0%

Treasury shares at 31 December 24,000 24,000 240,000 240,000 0.33% 0.33%

In 2007, before the flotation on the stock exchange, the company acquired nominally DKK 240 thousand treasury shares for USD 448 thousand as part of its preparations for stock exchange listing. Following the listing, the company has not exercised the option to acquire treasury shares.


20

Finance loans – group 2009 2008 USD 1000 USD 1000

Payables to credit institutions are recognised in the balance sheet as follows:


Current liabilities 1,171 7,926

189,975 117,579

Nominal value 191,091 118,412

At 31 December, the group had the following loans and credits:

2009 2008 Carrying Carrying Fixed/ amount amountCurrency Maturity Floating USD 1000 USD 1000

USD 2015 Floating 0 20,855

USD 2021 Floating 20,363 20,827

USD 2021 Floating 17,212 20,827

USD 2022 Floating 71,340 0

USD 2022 Floating 10,800 11,200

USD 2023 Floating 11,000 11,600

USD 2025 Floating 29,622 33,103



Borrowing costs -1,247 -1,021

Calculated interest not yet due on finance loans 132 188

189,975 117,579

Of which falling due within one year 1,171 7,926

188,804 109,653

Falling due within one year 1,171 7,926

Falling due between one and two years 1,874 6,959

Falling due between two and three years 39,569 6,959

Falling due between three and four years 12,366 6,959

Falling due between four and five years 12,366 6,959

Falling due after 5 years 122,629 81,817

189,975 117,579


Finance loans – parent company 2009 2008 USD 1000 USD 1000

Payables to credit institutions are recognised in the balance sheet as follows:


Current liabilities 0 0

70,820 20,147

Nominal value 71,340 20,855

At 31 December, the parent company had the following loans and credits:

2009 2008 Carrying Carrying Fixed/ amount amountCurrency Maturity Floating USD 1000 USD 1000


USD 2015 Floating 0 20,855

Borrowing costs -643 -711

Calculated interest not yet due on finance loans 123 3

70,820 20,147

Of which falling due within one year 0 0

70,820 20,147

Falling due within one year 0 0

Falling due between one and two years 0 0

Falling due between two and three years 17,173 0

Falling due between three and four years 4,907 0

Falling due between four and five years 4,907 0

Falling due after 5 years 43,833 20,147

70,820 20,147

The fair value of the group’s and parent company’s liabilities other than provisions corresponds to the carrying amount because of the floating rates. Amounts of future maturities do not include interest payments. The loan agreements stipu-late minimum requirements (financial covenants) for liquidity, equity ratio and debt ratio, based on the market value of the vessels, among other things. At certain times during the year 2009, some of the financial covenants were not met.

In May, the jointly controlled entities failed to meet the debt ratio requirements. The situation was solved through the payment of extraordinary instalments following payment by the shareholders, including Nordic Tankers A/S.

In the autumn of 2009, the group no longer met the debt ratio requirements or minimum requirements for liquidity,

which led to a renegotiation of the loan agreements. The re-sult was an addendum to the loan agreements in November 2009 which provided for deferment of instalments on the loans and reduced debt ratio requirements and minimum liquidity requirements and increased the lender’s margin.

At 31 December 2009, the parent company and its subsi-dies failed to meet the minimum liquidity requirement. The situation was remedied through the conclusion of another addendum to the loan agreement in January 2010 in con-nection with the group’s acquisition of a number of Clipper operations. Despite the group’s low capital resources, the financial covenants are expected to be met, based on the group’s expectations for future earnings, cash flow and the development in the value of vessels, etc.


21

Trade payables


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

1,693 2,945 Suppliers of goods and services 4,578 2,519

76 80 Other suppliers 80 564

1,769 3,025 4,658 3,083

The carrying amount corresponds to the fair value of the liabilities.

22

Other payables


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

Wages, salaries. A tax, social security contributions, 65 112 holiday pay, etc. payable 112 65

2,401 2,418 Derivative financial instruments 2,615 2,754

2,879 649 Other expenses payable 1,381 3,282

0 0 Payables to business partners 1,393 0

5,345 3,179 5,501 6,101

The carrying amount of payables relating to A tax, social security contributions, holiday pay, etc., financial instruments and expenses payable correspond to the fair value of the liabilities. The holiday pay obligations represent the group’s obligation to pay wages during the holidays that employees have accrued at the balance sheet date for payment during the subsequent financial year. Payables to business partners represent the group’s share of the shareholder loans to the jointly controlled entities provided by the business partner.


23

Remuneration for auditors appointed by the general meeting

Remuneration for the parent company’s auditor appointed by the general meeting for the financial year.


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

70 76 Statutory audit 118 70

0 51 Other assurance reports 51 4

0 21 Tax consultancy 38 7

75 188 Non-audit services 188 64

145 336 395 145

24

Changes in working capital


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

403 -26 Changes in amounts tied up in inventories on vessels -245 293

-174 -76 Changes in receivables -3,550 -494

3,483 -1,256 Changes in trade payables, etc. 785 2,649

3,712 -1,358 -3,010 2,448


25

Acquisition of enterprises in 2010

After the closing of the financial year, Nordic Tankers A/S has from Clipper acquired a controlling interest and the majority of voting rights in a number of companies with effect from 7 January 2010. The aim of the acquisitions was to expand the Group’s operations within the chemical tanker segment, partly through ownership of vessels, partly through offering of management services.

The acquisitions in brief:

• Acquisition of a controlling interest and the majority of voting rights in four limited partnership companies own-ing one chemical tanker each and the entire ownership interest and all the voting rights in a company owning one chemical tanker as well as all ownership interests and vot-ing rights in four limited partnership companies.

• Acquisition of the entire ownership interest and all voting rights in two companies specialising in commercial and technical management, respectively.

As the acquisitions of the shipowning companies and the management companies were carried out at the same time and between the same parties, the acquisitions are conside-red to be one acquisition.

In connection with the issue of new shares in Nordic Tank-ers A/S as part of the consideration, Clipper has become a major shareholder in Nordic Tankers A/S with a holding of about 31%. Since the original shareholders of Nordic Tank-ers A/S still hold the majority of the voting rights, Nordic Tankers is considered to be the acquirer, regardless of the fact that Clipper is the largest shareholder.

The acquired companies and the preliminary calculation of the consideration and the allocation hereof may be specified as follows:

Ownership Voting interest share Consid- Primary Acquisition acquired acquired eration Name operations date % % uSD1000

2010

A/S Nordic Inge, Copenhagen Ownership and operation of vessel 07.01.2010 100 100

K/S Nordic Marianne, Copenhagen Ownership and operation of vessel 07.01.2010 95 95

K/S Nordic Nadja, Copenhagen Ownership and operation of vessel 07.01.2010 90 90

K/S Nordic Nelly, Copenhagen Ownership and operation of vessel 07.01.2010 95 95

K/S Nordic Nora, Copenhagen Ownership and operation of vessel 07.01.2010 95 95

Limited partnership companies: General partners of each one 07.01.2010 100 100 Nordic Marianne ApS of the four acquired limited Nordic Nadja APS partnership companies Nordic Nelly ApS Nordic Nora ApS

Shipowning companies, total 31,796

Nordic Tankers Management A/S, Commercial management of vessels 07.01.2010 100 100Copenhagen

Clipper Marine Services A/S Technical management of vessels 07.01.2010 100 100 (expected to change name to Nordic Tankers Marine A/S)

Management companies, total 14,281

Total consideration 46,077


Total uSD1000

Non-current assets

Vessels 70,750

Tools and equipment 45

Total non-current assets 70,795

Current assets

Inventories 579

Trade receivables 2,779

Other receivables 15,131

Cash 9,221

Total current assets 27,710

Total assets 98,505

Non-current liabilities

Ship loans 46,082

Current liabilities

Repayments on ship loans 6,178

Trade payables 2,347

Other payables 13,514

Total current liabilities 22,039

Net assets acquired 30,384

Goodwill 16,660

Minority interests (967)

Total consideration 46,077

Cash acquired, cf. above (9,221)

Deferred contingent consideration (6,061)

Consideration in shares at market price (20,740)

Consideration in shares at transaction price (4,905)

Consideration in instruments of debt (14,371)

Cash consideration (9,221)


Acquisition of the Shipowning companiesConsideration for the Shipowning companies was in the form of a non-cash contribution through the issue of 5,408,296 new shares in Nordic Tankers A/S and issuance of instruments of debt of USD 6,151 thousand. According to the agreement, the share issue was completed at a price of DKK 16.86 per share, corresponding to USD 17,528 thou-sand at the date of acquisition, and the total consideration amounted to USD 23,679 thousand.

The instruments of debt of USD 6,151 thousand carry interest at 10% p.a. and are repayable during the period 31 December 2012 – 31 December 2014. Interest is added to the debt and will be paid concurrently with the repayment of the debt instruments. The instruments of debt will be subordinate to Nordic Tankers A/S’ lending banks.

In order to give a true and fair view of the value, the man-agement has decided to base the value of the consideration for acquired ownership interests in the Shipowning compa-nies on the basis of fair value measurements of the propor-tionate share of the fair value of the acquired operations as well as the fair value of Nordic Tankers used to determine the terms of trade.

Since none of the companies involved in the transaction with the Shipowning companies held significant values apart from the chemical tankers, the fair values of Nordic Tank-ers and the Shipowning companies were calculated on the basis of a valuation of the vessels based on an average of two international, independent ship brokers’ assessment of the market value of the individual vessels. The market value assessments of Nordic Tankers’ vessels, adjusted for debt and other monetary net assets, were compared to the value of the ownership interests in the contributed Shipowning companies, which was calculated using the same procedure. Consequently, the new shares in Nordic Tankers were issued at a transaction price of DKK 16.86 per share.

In the opinion of the group, the stated transaction price reflects the fair value per share of the group immediately before the transaction.

However, according to the provisions of IFRS on acquisi-tions, the value of the shares of Nordic Tankers A/S issued to Clipper as payment for the contributed ownership interests in the Shipowning companies must be determined using the quoted market price of the Nordic Tankers shares at the time of the transfer of control of the companies, which was on 7 January 2010, irrespective of the fact that the parties to the transaction, including the shareholders of Nordic Tankers A/S with a qualified majority, have approved the use of a price of DKK 16.86 per share and irrespective of the fact that the above valuations result in a price of DKK 16.86 per share. However, the consideration for Other Inves-tors’ contribution of ownership interests in the Shipowning companies is determined using the agreed price of DKK

16.86 per share as the acquisition of the minority interests in the Shipowning companies from Other Investors is con-sidered independent transactions and not part of the overall negotiations regarding the acquisition. Other Investors were just offered the possibility of contributing their ownership interests in the Shipowning companies at the same terms and conditions as Clipper.

Exclusively for the purpose of the accounting treatment of the acquisition of the Shipowning companies, the considera-tion for the contributed ownership interests in the Shipown-ing companies has been calculated as follows:

uSD 1000

Issue of 3,894,932 shares to Clipper 20,740 of DKK 10 at a price of DKK 27.70 (at an exchange rate of USD 520.21)

Issue of 1,513,364 shares to Other Investors 4,905 of DKK 10 at a price of DKK 16.86 (at an exchange rate of USD 520.21)

Issue of instruments of debt 6,151

31,796

The use of the quoted market price of Nordic Tankers A/S shares as at 7 January 2010 is expected to result in a subsequent write-down of goodwill of USD 8,117 thousand calculated as the difference between the carrying amount of the consideration of USD 31,796 thousand and the above-mentioned valuation of the Shipowning companies of USD 23,679 thousand.

Acquisition of the Management companiesThe acquisition of the Management companies is paid for with a contingent deferred consideration and issuance of a debt instrument of USD 8,220 thousand.

Nordic Tankers A/S must pay a contingent deferred consideration for the acquisition of Nordic Tankers Man-agement A/S and Clipper Marine Services A/S (expected to change its name to Nordic Tankers Marine A/S on 16 April 2010) of between USD 7,500 thousand and USD 15,000 thousand, depending on the financial performance before tax of the two companies during the four-year period 2010-2013, based on an annual statement. Not later than in May of each of the financial years 2011-2013, the contingent deferred payment must be paid by way of a payment on ac-count of 50% of the preceding financial year’s positive earn-ings, and a final adjustment of the payment will be made in May 2014. If the accumulated financial results before tax for the four-year period do not exceed USD 4,000 thou-sand, a minimum payment of USD 7,500 thousand will be triggered, whereas accumulated financial results before tax

65

for the four-year period in excess of USD 8,000 thousand will trigger a maximum payment of USD 15,000 thousand. Moreover, it has been agreed that the seller of the Manage-ment companies must compensate Nordic Tankers A/S for any financial losses before tax for the financial years 2010-2012 with a maximum payment of USD 11,000 thousand. The total contingent deferred consideration for the Manage-ment companies will thus amount to between USD 3,500 thousand and USD 15,000 thousand.

Nordic Tankers A/S finds it probable that the total consid-eration will amount to USD 15,000 thousand, however, the loss guarantee is expected to result in a payment to Nordic Tankers A/S in the amount of USD 4,630 thousand. The fair value of the additional probable consideration of net USD 10,370 thousand amounted to USD 6,061 at the date of acquisition.

The debt instrument of USD 8,220 thousand carries interest at 10% p.a. and is repayable during the period 31 December 2012 – 31 December 2014. Interest is added to the debt and will be paid concurrently with the repayment of the debt instrument. The instrument of debt will be sub-ordinate to Nordic Tankers A/S’ lending banks.

Nordic Tankers A/S’ acquisition costs initially amounted to USD 851 thousand, of which USD 796 thousand has been included as administrative expenses in the statement of comprehensive income for the financial year 1 January 2009 – 31 December 2009, while the remaining portion of USD 55 thousand will be included as administrative expenses in the statement of comprehensive income for the financial year 1 January 2010 – 31 December 2010.

Net assets acquired include trade receivables at a fair value of USD 2,779 thousand, which corresponds to the nominal value as none of the receivables are considered to be uncollectible.

As regards the acquisition of the Shipowning companies, Nordic Tankers A/S considers the fair value of the contrib-uted assets to be at least equal to the total consideration of USD 23,679 thousand plus the value of the minority interests in the acquired company based on the transaction price agreed between the seller and the group for the issued shares.

As regards the acquisition of the Management compa-nies, a consideration is paid which exceeds the fair value of the identifiable assets, liabilities and contingent liabilities acquired. This positive difference (goodwill) is primarily attributable to knowhow acquired of technical and commer-cial management. Such intangible assets do not qualify for separate recognition.

Goodwill is not expected to be deductible for tax pur-poses.

The minority interests in the Shipowning companies have been recognised at the value at the date of acquisition, corresponding to USD 967 thousand. The minority interests have been measured at fair value based on the same criteria used for the assessment of the contributed assets, including that vessels have been evaluated at market price in accord-ance with brokers’ assessments.



26

Contingent liabilities, collateral and contractual obligations

The parent company has provided a guarantee under which it assumes primary liability to lenders in Nordic Oslo Ship-ping and Nordic Copenhagen Co. Pte. Ltd., Singapore for finance loans which at 31 December 2009 amounted to USD 21.8 million.

Moreover, the parent company has provided a guarantee to the lender for the group’s share of the involvement in Nordic Seaarland Tankers B.V., which amounted to USD 98.3 million at 31 December 2009.

The following has been provided as security vis-à-vis the parent company’s lenders:

• The group’s vessels have been pledged as security. The carrying amount totals USD 207.6 million.

• Cash, USD 2.6 million for the group and USD 0.1 million for the parent company, has been pledged as security.

• The parent company’s investment in subsidiaries, USD 7.8 million, has been pledged as security.

• The group’s freight receipts and insurances taken out in respect of the vessels have been pledged as security.

Contractual obligationsNordic Tankers A/S has entered into an administration agree-ment with Difko Administration A/S. The agreement was terminated on 31 December 2009 and will expire on 31 March 2010. In 2009, the annual fee, including extra work, amounted to DKK 3.9 million, which is index-linked.

Further obligations after the close of the financial yearAfter the close of the financial year, Nordic Tankers A/S has completed transactions with Clipper, and in this connection the Company has guaranteed a loan in the amount of EUR 8.9 million and entered as a limited partner with a remain-ing liability of EUR 25.4 million.


27

Foreign exchange, interest rate and credit risks and application of financial instruments


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

242 135 Available-for-sale financial assets 135 242

242 135 Available-for-sale financial assets 135 242

642 2,253 Receivables from sales 6,222 3,386

6,747 5,954 Loans to subsidiaries 0 0

2,314 779 Other receivables 798 2,320

7,472 71 Cash 2,625 12,118

17,175 9,057 Loans and receivables 9,645 17,824

Derivative financial instruments used to hedge future cash flows 2,445 2,418 (interest rate swaps and collar) 2,615 2,799

2,445 2,418 Financial liabilities used as hedging instruments 2,615 2,799

20,147 70,820 Finance loans 189,975 117,579

1,769 3,025 Trade payables 4,658 3,083

2,944 761 Other payables 1,493 3,347

24,860 74,606 Financial liabilities measured at amortised cost 196,126 124,009


Fair value hierarchy for financial instruments measured at fair value in the balance sheetFinancial instruments measured at fair value are classified below in accordance with the fair value hierarchy:

• Quoted prices in an active market for identical instruments (level 1).

• Quoted prices in an active market for similar assets or liabilities or other valuation methods where all significant inputs are based on observable market data (level 2).

• Valuation methods where any significant inputs are not based on observable market data (level 3).

Methods and assumptions in determining fair value

Listed sharesThe holding of listed shares is measured at listed prices and price quotes.

Derivative financial instrumentsForward exchange transactions and interest rate swaps are measured according to generally accepted valuation methods based on relevant observable swap curves and exchange rates.

Level 1 Level 2 Level 3 Total2009 DKK 1000 DKK 1000 DKK 1000 DKK 1000

Listed shares 135 - - 135

Available-for-sale financial assets 135 - - 135

Derivative financial instruments held to hedge future cash flows - 2,615 - 2,615(interest rate swaps and interest rate collar)

Financial liabilities used as hedging instruments - 2,615 - 2,615

In accordance with the transitional provisions of the revised IFRS 7 regarding the fair value hierarchy, no comparative figures have been stated for this information. There were no transfers between level 1 and level 2 during the financial year.


The group’s risk management policyDue to its operations, investments and financing, the group is exposed to fluctuations in foreign exchange rates and the level of interest. The parent company monitors and man-ages the group’s financial risks centrally and coordinates the group’s liquidity management, including funding and invest-ment of excess liquidity. The group pursues a finance policy which operates with a low risk profile, ensuring the foreign exchange, interest and credit risks arise only on the basis of commercial factors. Thus, it is group policy to exclusively use financial instruments to hedge risks.

For further information on accounting policies and meth-ods, including recognition criteria and bases of measure-ment, please see the section on accounting policies.

Foreign exchange risksThe group’s foreign enterprises are only mildly sensitive to exchange rate fluctuations as earnings and costs are denom-inated in USD.

The parent company is only mildly sensitive to exchange rate fluctuations as earnings and costs are primarily de-nominated in USD, except for staff costs and administrative expenses, which are denominated in DKK. Transactions in DKK and other currencies are not hedged.

It is group policy not to hedge limited foreign exchange risks.

As a result of the fact that the group’s and parent com-pany’s earnings and costs as well as assets and liabilities are denominated and measured in USD the foreign exchange risk is very limited, and no hedging instruments have been used to hedge cash flows or assets and liabilities.

Because of the insignificant foreign exchange risk, no sensitivity analysis of fluctuations between USD and DKK has been prepared.

Interest rate riskIt is group policy to hedge interest rate risks on the group’s borrowings when the management assesses that interest payments may be hedged at a satisfactory level compared with the associated costs. Hedging is generally accomplished using interest rate swaps, under which floating-rate loans are converted to fixed-rate loans, or using interest rate col-lars, under which maximum and minimum rates of interest are fixed for the portion covered.

groupThe fair value of the group’s outstanding interest rate swaps contracted to hedge interest rate risks on floating-rate loans amounts to a liability, USD -2,066 thousand (31 December 2008: a value of USD 1,614 thousand). The outstanding interest rate swaps have a nominal value of USD 89,500 thousand and run until 30 September 2010 (USD 27,500

thousand) and 29 June 2012 (USD 62,000 thousand) (31 December 2008: 27,500 and 31 December 2007: USD 27,500 and run until 2010). Moreover, the group has an interest rate swap with a nominal value of USD 30,000 thousand which runs from 24 May 2010 to 29 June 2012.

The fair value of the group’s outstanding interest rate col-lar contracted to hedge interest rate risks (maximum/mini-mum rate of interest) on floating-rate loans amounts to a liability, USD -548 thousand (31 December 2008: a value of USD -1,148 thousand). The outstanding interest rate collar has a nominal value of USD 30,000 thousand and runs until 24 May 2010 (31 December 2008: USD 30,000 thousand).

The group’s bank deposits are held in call accounts and carry a floating rate of interest.

Interest rate fluctuations affect the group’s finance loans. A one percentage point increase in interest rates compared with the realised interest level would have had an adverse impact of USD 1.0 million (2008: USD 1.2 million) on results for the year and equity. A corresponding fall in interest rates would have had a corresponding positive impact on results for the year and equity.

Parent companyThe fair value of the parent company’s outstanding inter-est rate swaps contracted to hedge interest rate risks on floating-rate loans amounts to a liability, USD -1,870 thou-sand (31 December 2008: a value of USD -1,254 thousand). The outstanding interest rate swaps have a nominal value of USD 82,500 thousand and run until 30 September 2010 (USD 20,500 thousand) and 29 June 2012 (USD 62,000 thousand) (31 December 2008: 27,500 and 31 December 2007: USD 27,500 and run until 2010). Moreover, the par-ent company has an interest rate swap with a nominal value of USD 30,000 thousand which runs from 24 May 2010 to 29 June 2012.

The fair value of the parent company’s outstanding interest rate collar contracted to hedge interest rate risks (maximum/minimum rate of interest) on floating-rate loans amounts to a liability, USD -548 thousand (31 December 2008: a value of USD 1,148 thousand). The outstanding interest rate collar has a nominal value of USD 30,000 thou-sand and runs until 24 May 2010 (31 December 2008: USD 30,000 thousand).

The parent company’s bank deposits are held in call ac-counts and carry a floating rate of interest.

Interest rate fluctuations affect the parent company’s finance loans. A one percentage point increase in interest rates compared with the realised interest level would have had an adverse impact of USD 0.6 million (2008: USD 0.8 million) on results for the year and equity. A corresponding fall in interest rates would have had a corresponding posi-tive impact on results for the year and equity.


Within Between After Of which 1 year 2-5 years 5 years Total fixed-rate

USD 1000 USD 1000 USD 1000 USD 1000 USD 1000

31.12.2009

Receivables from sales 6,222 0 0 6,222 0

Cash and cash equivalents 2,625 0 0 2,625 0

Finance loans -1,171 -66,175 -122,629 -189,975 0

Collar -492 -810 0 -1,302 0

Interest rate swaps -3,544 -2,915 0 -6,459 0

3,640 -69,900 -122,629 -188,889 0

31.12.2008



Finance loans -7,926 -27,836 -81,817 -117,579 0

FX Forward 196 0 0 196 196

Collar -1,745 -749 0 -2,494 0


4,344 -29,647 -81,817 -107,120 196

Within Between After Of which 1 year 2-5 years 5 years Total fixed-rate


31.12.2009


Cash and cash equivalents 71 0 0 71 0

Finance loans 0 -26,987 -43,833 -70,820 0

Collar -492 -810 0 -1,302 0


-1,502 -30,712 -43,833 -76,047 0

31.12.2008

Receivables from sales 642 0 0 642 0


Finance loans 0 0 -20,147 -20,147 0

FX Forward 196 0 0 196 196

Collar -1,745 -749 0 -2,494 0


5,085 -1,811 -20,147 -16,873 196

Date of revaluation/maturity – group

Date of revaluation/maturity – parent company


The group’s and parent company’s interest-bearing financial assets and liabilities expose them to interest rate risks. In respect of the group’s and parent company’s financial assets and liabilities, the following contractual dates of reassess-ment and maturity, whichever is earlier, are listed below.

Liquidity risksIt is group policy in connection with borrowing, etc to ensure the greatest possible flexibility through a diversifica-

tion strategy whereby borrowings are spread across dates of maturity and renegotiation, including spread across fixed loans and overdraftstyle facilities.

The group aims at having sufficient cash resources to enable it always to make appropriate arrangements in the event of unforeseen fluctuations in cash outflows.

Cash resources are monitored on a current basis.Group and parent company cash resources consist of cash

and undrawn borrowing facilities.

Maturities of financial liabilities are specified in the notes. Group and parent company cash resources consist of cash and undrawn borrowing facilities.

Maturities of financial liabilities are specified below, divided into the time intervals used in the group’s liquidity management. The specified amounts represent the amounts falling due, including future interest, calculated at the inter-est rate ruling at the balance sheet date.

Credit risksIt is group policy to cooperate with recognised pool partners and business partners on management of the group’s earn-ing conditions and the operation of vessels so as to minimise credit risks.

The group’s credit risk relates to receivables from pool arrangements contracted with recognised business partners. Consequently, this credit risk is deemed to be absolutely minimal and so receivables are not hedged.

The group’s maximum credit risk associated with receiva-bles corresponds to their carrying amounts.

Optimisation of capital structureThe Company’s management currently assesses whether the capital structure of the group complies with company and shareholder interests. The overall goal is to ensure a capital structure which supports long-term growth and at the same time maximises yield by optimising the balance between equity and debt, taking into due consideration any obliga-tions to lenders.

The group’s capital structure is composed of finance loans and equity.

Consolidated equity accounted for 9.3% (31 December 2008: 46.9%) of the balance sheet total.

The actual return on consolidated equity amounted to -139.2% in 2009 (2008: 4.0%).

The prospectus for the IPO in 2007 stated that Nordic Tankers did not expect to distribute dividend for the first 2-3 years. The company would instead pursue an active invest-ment policy. This strategy has been retained.

Breach of loan agreement termsThe group has not neglected or breached any loan agree-ment terms in the financial year or the comparative year.


2008 2009 2009 2008 USD 1000 USD 1000 USD 1000 USD 1000

Cash resources consist of the following:

7,472 71 Cash 2,625 12,118

7,345 0 Undrawn borrowing facilities 0 7,345

14,817 71 2,625 19,463


Between Between Witin 6 and 12 1 and 5 After 6 months months years 5 years Total


2009

Non-derivative financial liabilities

Finance loans -3,748 -3,749 -87,640 -138,736 -233,873

Trade payables -4,658 0 0 0 -4,658

Other payables -1,506 0 0 -1,393 -2,899

-9,912 -3,749 -87,640 -140,129 -241,430

Derivative financial instruments

Derivative financial instruments used to hedge -2,663 -1,373 -3,725 0 -7,761future cash flows

-12,575 -5,122 -91,365 -140,129 -249,191

2008

Non-derivative financial liabilities

Finance loans -5,374 -5,374 -38,367 -88,265 -137,380

Trade payables -3,083 0 0 0 -3,083

Other payables -3,347 -3,509 0 0 -6,856

-11,804 -8,883 -38,367 -88,265 -147,319

Derivative financial instruments

Derivative financial instruments used to hedge -1,515 -1,915 -1,811 0 -5,241future cash flows

-13,319 -10,798 -40,178 -88,265 -152,560

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Related parties with a controlling interestThere are no related parties with a controlling interest in Nordic Tankers A/S.

Board of Directors and Executive BoardNordic Tankers A/S group’s related parties with a control-ling interest include the members of the Board of Directors and the Executive Board of the company as well as their related family members. Moreover, companies in which the above-mentioned persons hold significant interests are also considered related parties. For further information, please see note 4 concerning remuneration for the Board of Direc-tors and the Executive Board.

The company has engaged in transactions with mem-bers of the Board of Directors and companies controlled by members of the Board of Directors in the form of consulting services, which may be shown separately as follows:

Financial year 2008In 2008, former member of the Board of Directors of Nordic Tankers A/S Kurt Bjørndal provided communications consul-tancy services to Nordic Tankers through the company B&G Kommunikation A/S (“B&G Kommunikation”). Kurt Bjørndal resigned from the Board of Directors on 23 April 2008. B&G’s fees amounted to DKK 214 thousand in 2008.

The law firm Bang & Regnarsen represented by former member of the Board of Directors Mads Roikjer received legal fees in the amount of DKK 1,572 thousand in 2008.

In 2008, former member of the Board of Directors Jesper Bo Nielsen received fees in the amount of USD 1,200 thousand via his company Nitasco ApS. In connection with the payment of the fee, Nitasco Aps claimed compensation for an exchange loss of DKK 831 thousand. The existing management of the company contests the claim.

In 2008, the former management signed on behalf of Nordic Tankers A/S a transfer agreement with Bryde Grup-

pen ApS represented by the former member of the Board of Directors Steen Bryde on occupation of the premises at Lautrupsgade 7, 6th floor (including deposit and rent due) together with IT equipment and furniture for a total of DKK 2,870 thousand. The claim has not been paid as the existing management contests the claim and considers the agree-ment void.

Financial year 2009In January 2009, the former management, which resigned on 2 February 2009, signed on behalf of Nordic Tankers A/S the following agreements and contracts which the existing management considers void and therefore contests:

• Executive service agreement with former CEO and member of the Board of Directors Steen Bryde, who has advanced a claim for DKK 6,340 thousand.

• Employment contract for the position of CFO with the former member of the Board of Directors Brian Petersen, who has advanced a claim for DKK 2,014 thousand.

• Consignment agreement on the sale of vessels with Nitas-co ApS and Nitasco Maritime ApS represented by former member of the Board of Directors Jesper Bo Nielsen involv-ing an up-front fee of USD 1,000 thousand and a monthly fee for 30 months of DKK 200 thousand.

• In January 2009, Nitasco ApS represented by former member of the Board of Directors Jesper Bo Nielsen also advanced a claim for an additional consulting fee of DKK 2,300 thousand in connection with the sale of Nordic Lisbeth in 2008.

Moreover, the following related party transactions occurred in 2009: Member of the Board of Directors Sven Rosen-meyer Paulsen received a fee of DKK 80 thousand for legal services.

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Related parties


Name Nominal holding holding (%) holding (shares)

Mogens Buschard 4,142,000 5.77% 414,200

Sven Rosenmeyer Paulsen 0 0.00% 0

Jens Fehrn-Christensen 0 0.00% 0

Jesper Tullin 750,000 1.04% 75,000

Flemming Krusell Sørensen 47,980 0.07% 4,798

Claus Breitenbauch 127,000 0.18% 12,700

Jens Pontoppidan 0 0.00% 0

holdings of shares by members who were serving on the Board of Directors and the Executive Board at 31 December 2009:


Other related partiesOther related parties with whom Nordic Tankers A/S has had transactions:

• Subsidiaries, cf. list in note 13.

• Jointly controlled entities, cf. list in note 14.

Transactions with subsidiaries:

• No dividends in 2008 and 2009.

• Loans to subsidiaries of USD 6,747 thousand at 31 De-cember 2008 and USD 5,954 thousand at 31 December 2009.

Transactions with jointly controlled entities:

• Loans to jointly controlled entities of USD 6,307 thousand in 2009, which were written down to zero on 31 Decem-ber 2009.

• Guarantees to lenders loaning money to jointly controlled entities, cf. note 26.

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Shareholder relations

30

Events occurring after the balance sheet date

Nordic Tankers A/S has registered the following shareholders with more than 5% of the voting rights or nominal value of the share capital: Clipper: 3,894,932 shares (31% exclusive of treasury shares) – reported on 7 January 2010. Following the transaction with Clipper, Mogens Buschard is no longer a major shareholder holding more than 5% of the voting rights.

After the close of the financial year, Nordic Tankers A/S has completed transactions with Clipper, cf. note 25, Acquisi-tion of enterprises in 2010. No other significant events have occurred after the balance sheet date.


Definitions and calculation formulas Unless otherwise stated, key figures and ratios have been calculated in accordance with the standards laid down by the Danish Society of Financial Analysts in “Recommendations & Financial Ratios 2005”.

Cash earnings are defined as results for the year distributed to the shareholders of the parent company plus the share of amortisation, depreciation and impairment losses attribut-able to the parent company’s ownership interest.

Net interest-bearing debt is defined as the sum of finance loans less cash and cash equivalents.

Invested capital is defined as net working capital (NWC) plus property, plant and equipment and intangibles and less other provisions and other non-current operating liabilities.

The equity ratio is defined as equity divided by total as-sets. This financial ratio is not defined in the Danish Society of Financial Analysts’ guidelines “Recommendations & Financial Ratios 2005”.

Net working capital (NWC) is defined as inventories, receivables and other current operating assets less trade payables and other liabilities other than provisions as well as other current operating liabilities.

Gross margin (%) Gross profit * 100 Revenue

Operating margin (%) Operating profit * 100 Revenue

Equity ratio (%) Equity * 100 Balance sheet total

Return on invested capital (%) EBIT * 100 Average invested capital

Return on equity (%) Profit * 100 Average equity of parent company

Assets/equity Total asssets Total equity

Financial gearing Net interest-bearing debt Total equity

Operating asset gearing Invested capital Total equity

Revenue/ invested capital Revenue Average invested capital

Net working capital/revenue Average net working capital (NWC) Revenue

76

Fleet list


year of Vessel size Sale /Vessel construction dwt. holding Company acquisition

Product tanker LR1

Nordic Anne 2009 73,000 100% Nordic Tankers A/S Ordered 2006

Product tanker handy-size

Nordic Ruth 2000 35,820 75,01% Nordic Seaarland Acquired 2006

Nordic Pia 2006 38,500 75,01% Nordic Seaarland Acquired 2006

Nordic Hanne 2007 38,500 100% Nordic Seaarland Acquired 2008

Nordic Agnetha 2009 37,400 50,01% Nordic Seaarland Ordered 2006

Amy 2009 37,400 50,01% Nordic Seaarland Ordered 2006

Chemical tanker

Nordic Copenhagen 2005 12,959 100% Nordic Copenhagen Shipping Acq. 50% 29/6-07

Nordic Oslo 2005 12,075 100% Nordic Oslo Shipping Acq. 50% 2/7-07

Nordic Stockholm 2007 12,800 100% Nordic Tankers A/S Acquired 15/8-07

Nordic Helsinki 2007 13,000 100% Nordic Tankers A/S Acquired 15/8-07

Vessel Partner Pool Pool manager Technical manager

Product tanker LR1

Nordic Anne Torm Pool Torm LR1 EMS Ship Management

Product tanker handy-size

Nordic Ruth Zacchello Group Handytankers Maersk Tankers Seaarland Shipping Management

Nordic Pia Zacchello Group Handytankers Maersk Tankers Seaarland Shipping Management

Nordic Hanne Zacchello Group Handytankers Maersk Tankers Seaarland Shipping Management

Nordic Agnetha Zacchello Group Exp. Maersk Pool Maersk Tankers

Amy Zacchello Group Exp. Maersk Pool Maersk Tankers

Chemical tanker

Nordic Copenhagen Eitzen Chemical Eitzen City Class Pool Eitzen Chemical EMS Ship Management

Nordic Oslo Eitzen Chemical Eitzen City Class Pool Eitzen Chemical EMS Ship Management

Nordic Stockholm Eitzen City Class Pool Eitzen Chemical EMS Ship Management

Nordic Helsinki Eitzen City Class Pool Eitzen Chemical EMS Ship Management

Photographer: Eberhard Petzold. Photographer board: Erik Brahl.

Graphic production: Rounborgs grafiske hus, Holstebro

Nordic TaNkersNordic Tankers A/S

Harbour HouseSundkrogsgade 21DK-2100 CopenhagenDenmark

Phone +45 3910 9000Fax +45 3910 9001

www.nordictankers.com

Nordic TaNkers

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