annual report 2010

4

5contents

Contents

5 contents

6 Group Key Figures 2006-2010

8 2010 in brief

10 Management Review

18 Financial Review

20 statutory corporate Governance statement

22 Internal control

24 Risk Management

26 corporate social Responsibility (csR)

29 shareholders Information

31 company Group structure

32 Board of Directors and executive Board

36 Management statement

37 Independent Auditor’s Report

40 Financial statements

47 List of notes

48 notes

98 Definitions and calculation formulas

6 FInAncIAL hIGhLIGhts

Amounts in USD thousand 2010 2009 2008 2007 2006

Income statement

Revenue* 104,845 29,960 45,303 37,084 28,105

time charter equivalent revenue (tce Revenue)* 72,319 29,960 45,303 37,084 28,105

eBItDA 3,518 7,359 39,208 34,220 17,093

operating result (eBIt) -27,572 -88,544 20,227 26,079 11,440

net financials -341 -5,980 -12,017 -7,355 -4,093

Result -28,054 -94,552 4,607 21,622 8,694

comprehensive income -26,223 -94,368 2,714 29,854 8,546

Balance sheet og cash-flow data

Invested capital 279,836 207,786 223,982 244,825 173,324

net working capital (nWc) 9,282 841 -2,588 1,702 2,825

equity 58,624 20,557 115,254 112,538 55,322

Balance sheet total 311,336 220,705 245,526 259,793 182,820

Investments in property, plant and equipment 7,248 96,034 51,991 63,598 129,628

net interest bearing debt 221,282 187,350 105,461 128,891 117,065

cash flow from operating activities -5,840 -5,353 10,157 15,396 8,256

cash flow of the year 15,469 -9,493 1,843 4,644 -16,311

Group Key Figures 2006-2010

7FInAncIAL hIGhLIGhts

Amounts in USD thousand 2010 2009 2008 2007 2006

Financial Ratios

eBItDA margin (%)** 4.9% 24.6% 86.5% 92.3% 60.8%

net result margin (%)** -38.8% -315.6% 10.2% 58.3% 30.9%

equity ratio (%) 18.5% 9.3% 46.9% 43.3% 30.3%

Return on invested capital (%)** -9.9% -42.6% 9.0% 10.7% 6.6%

Return on equity (%) ** -47.9% -460.0% 4.0% 19.2% 15.7%

Financial gearing 3.77 9.11 0.92 1.15 2.12

net working capital/revenue (%) 4.8% -2.9% -1.0% 6.1% 10.1%

Key figures shares

earnings per share UsD -0.99 -13.21 0.64 3.29 -

net asset value per share UsD, year end 1.53 2.90 16.10 15.70 -

Market price per share DKK, year end 7.15 26.00 40.00 103.00 -

Market price per share UsD, year end 1.27 5.01 7.57 20.05

exchange rate UsD/DKK, year end 5.61 5.19 5.28 5.14 -

Average number of full time employees*** 145 2 2 2 2

Average number of shares 28,157,163 7,180,000 7,180,000 4,386,396 1,300

number of shares, year end 37,764,888 7,180,000 7,180,000 7,180,000 1,300

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 2010”.

* From 2010 revenue and tce revenue are different, due to the change in scope of the company’s operations.

** the key figure have not been calculated in accordance with the recommendations. the definition and calculation formulas can be found on page 98.

*** Includes 22 seafarers.

8 2010 In BRIeF

• NordicTankersrealisedresultsinlinewithexpectationscommunicatedtothestockexchangeduringtheyear.TCErevenuewas UsD 72 million, eBItDA was UsD 4 million and the net result was a loss of UsD 20 million before write-downs of acquired goodwill of UsD -14 million and currency exchange gains of UsD 6 million. And a loss of UsD 28 million after write-down of acquired goodwill.

• TheBoardofDirectorsconsidersthefinancialresultstobeunsatisfactory,butasexpectedinlightoftheprevailingmarketsituation.

• Industrialproductionpickedupinmostregionsduring2010andtheeconomyslowlycameoutofthecrisis,butcontinueddeliveries of new tonnage kept freight rates for all tanker segments at historically low levels throughout the year.

• Supplygrowthislikelytoeaseoffduring2011and2012,mostlikelyleadingtoagradualreturntohigherfreightrates,buttheearly part of 2011 saw rates remaining at the low levels of 2010, and the company thus expects another difficult year.

• Efficiencydriveswereinitiatedaswasasimplificationofthecorporateandvesselowningstructure,allwiththeobjectiveoftrimming the cost base while maintaining the competences needed to profitably grow once the market turns.

• AtransactionwithClipperwascompletedinJanuary2010,includingthecontributionof5stainlesssteelvessels,anorganisa-tionofapproximately120peopleandaninjectionofliquidfunds.

• Vesselsownedorundermanagementincreasedfrom10to70duringtheyearandtheCompanychangedfromoperatingasatonnage provider to becoming a full service shipping company.

• AnewBoardofDirectorswaselectedinApril2010consistingequallyofexistingandnewmembersandanewExecutiveBoardwasappointedinJanuary2010.

• InApril/May2010theCompanycarriedoutafullysubscribedrightsissue,raisingatotalofUSD42millionfromexistingandnew shareholders. siva Group of India became a new significant shareholder with 24% of the shares, while clipper maintained their31%shareholdingthroughcashinjectionandconversionofdebt.

• NordicTankers’Asianpresencewasstrengthenedthroughaco-operationagreementwithSingapore-basedWomar.Theinformalco-operationwassubsequentlyformalisedthroughtheformationofajointpoolcompanyoperationalasof1February2011.

• NordicTankersbegancharteringintonnageduringsecondhalf2010,inordertograduallybuildatimecharteractivitywhilethe market remains weak.

• InlinewithNordicTankers’values,corporatesocialresponsibility(CSR)willplayanincreasinglyimportantroleintheCom-pany’s future course of action underpinning the business and with a primary focus on health & safety, environment & climate, general welfare and training for its employees.

• Inordertoaligntheinterestsoftheemployeeswiththoseofshareholders,theAnnualGeneralMeetingauthorisedtheBoardof Directors to introduce a company-wide warrant program for land-based employees.

• Toremainflexibleintermsoffutureneedsforfurthercapital,anExtraordinaryGeneralMeetingon5November2010adopteda proposal for a reduction of the nominal value of the shares of nordic tankers, which was implemented on 14 February 2011.

2010 in briefNordic Tankers realised results in line with expectations communicated to the stock exchange during the year.

9

10 MANAGEMENTREVIEW

Management Review

2010 saw a new beginning for nordic tankers, as the company transformed itself from a tonnage provider to a full service shipping company, by incorporating clipper’s chemical tanker activities. shore based staff increased from two to approximately 130, vessels owned or under management grew from 10 to 70 and the company began offering a complete palette of shipping related services. A new Board of Directors was elected in April consisting equally of existing and new members and in collabo-rationwiththenewExecutiveBoardappointedinJanuaryimmediatelysettoworkontheimplementationofNordicTankers’newgrowthstrategy,the“NordicAmbition”.ThetransactionwithClipperinvolvedamuchneededcapitalinjectionthatenabledthe company to organise itself in the early months of the year. Much energy went into the creation of a new nordic tankers culture based on three core values “Integrity, Passion and can-do”. All employees actively contributed to the process, resulting in a strengthened nordic tankers identity, and the nordic tankers’ brand was strengthened by a new and sharper logo. At the same time the company carefully prepared the next step in its growth strategy, namely the capital increase which would further strengthen the company’s capital base.

In April/May 2010 the company carried out a successful rights issue, raising a total of UsD 42 million from existing and new shareholders. the proceeds strengthened the company’s equity ratio and allowed management to continue its growth efforts through inter alia chartering of vessels. In connection with the rights issue siva Group of India became a new large shareholder with 24% of the shares, while clipper maintained their 31% shareholding through conversion of debt. nordic tankers has thus further strengthened its shareholder structure, enabling management to focus on profitably growing the company with the support of two large and supportive industrial shareholders.

Although industrial production picked up significantly in most regions during 2010 and the world economy slowly came out of the financial crisis, freight rates for all tanker segments remained under pressure and at historically low levels throughout the year. Demand for the company’s services grew as a result of the dawning optimism in world investments and trade, but supply growth in all tanker segments continued to outgrow demand by a wide margin, thus further aggravating the imbalance between tonnage and freight. towards the end of 2010 supply growth especially in the chemical segment began to ease off although it remained at a level above demand growth.

In order to strengthen nordic tankers’ presence in the Far east an informal co-operation with singapore-based Womar was startedinJune2010,initiallyinvolvingjointmarketingofcoatedchemicaltankersinthe10-25,000deadweighttons(dwt),andwithaviewtoformalisetheactivitiesinajointpoolcompanyatalaterstage.NordicTankersinitiallycontributed4ownedanda number of managed vessels to the pool. the venture developed well and consequently a 50/50 owned pool structure was put in place and became operational as of 1 February 2011.

During the third and fourth quarters of 2010, nordic tankers began chartering in tonnage, in order to gradually build a time charter activity while the market remains weak, as it is management’s belief that such activity will be a valuable addition to the owned fleet once the market improves.

For 2010 nordic tankers realised results in line with expectations communicated to the stock exchange during the year. tce revenue was UsD 72 million, eBItDA (earnings before depreciation, amortisation, interest and tax) was UsD 4 million and the net result was a loss of UsD 20 million before write-downs of acquired goodwill of UsD -14 million and currency exchange gains of UsD 6 million. And a loss of UsD 28 million after write-down of acquired goodwill. the Board of Directors considers the financial results to be unsatisfactory, but as expected in light of the prevailing market situation.

11MANAGEMENTREVIEW

throughout 2010 the company continued the focus on improving its competitiveness. efficiency drives were initiated in several areasaswasasimplificationofthecorporateandvesselowningstructure,allwiththeobjectiveoftrimmingthecostbasewhilemaintaining the competencies needed to profitably grow once the market turns.

In line with nordic tankers’ values, corporate social responsibility (csR) will play an increasingly important role in the company’s future course of action, as an integrated part of its business strategy. As a company responsible for hundreds of people and multiple vessels at sea, nordic tankers’ primary focus in this area will be on health & safety, environment & climate, general welfare and training for its employees.

In order to align the interests of the employees with those of shareholders, the Annual General Meeting authorised the Board of Directors to introduce a company-wide warrant program for land-based employees, which was very well received and further bolstered the positive sentiment in the organisation.

the Board of Directors constantly strives to position the company for the future – for positive as well as negative developments to the extent possible. In order to remain flexible in terms of future needs for further capital, the Board decided to propose to an extraordinary General Meeting a reduction of the nominal value of the shares of nordic tankers. While such reduction allows nordic tankers an increased flexibility in terms of issuing shares at the prevailing market price, there were no negative effects to the share price as the number of shares remained unchanged. Following a three month notice period the capital reduction was implemented on 14 February 2011.

We would like to thank our more than 6,000 shareholders who continued to support the company throughout 2010 notably in connection with the rights issue, and our employees on land and at sea for their dedication and continuous pursuit of still better performance in the face of very difficult market conditions. We look forward to continuing our efforts to realise the “nordic Ambi-tion”, and to fulfill our vision by developing nordic tankers into a leading global operator of chemical and product tankers known for the best employees and the highest efficiency. We hope for continued support from long-term as well as new shareholders in our future efforts

Knud Pontoppidan tommy thomsen chairman of the Board of Directors chief executive officer

12 cheMIcAL tAnKeRs oPeRAtIon 2010 AnD oUtLooK 2011

(2009 figures in paranthesis)

At the end of 2010 the chemical tanker segment consisted of 9 fully or partly owned vessels, 5 chartered vessels, ap-proximately 50 vessels in commercial management, approximately 35 vessels in technical management and most of the organisation taken over from clipper in January2010.Thesegmenttimechar-ter equivalent revenue (tce revenue) increased to UsD 53 million (UsD 13 million) due to the expanded operational scale including increased owned tonnage, chartering activities and management activities. operating costs amounted to UsD 50 million (UsD 11 million) due to the enlarged scale of operations includ-ing the in-sourcing of commercial, tech-nical and administrative activities during the year and eBItDA amounted to UsD 3 million (UsD 2 million). the net result was a loss of UsD 22 million (UsD -24 million). the loss decreased primarily as an effect of write-downs on acquired goodwill of UsD 14 million compared to write-downs on vessels of UsD 22 mil-lion in 2009. this was counterbalanced by increased depreciations of UsD 10 million (UsD 5 million) due to an increase in owned vessels from 4 to 9.

Freight rates continued the trend from 2009 and remained at historical low levels throughout 2010. the first quar-ter of 2010 showed slight optimism, however, near easter it became evident that the optimism was not sustainable, and rates and activity fell back to an all-time low.

the growth in the global economy was a positive driver but the imbalance be-tween supply and demand continued, caused by the arrival of a large number of chemical tanker new-buildings espe-cially in the coated segment.

the cost side for vessel owners increased significantly during 2010 with increases in crew costs and a significant increase in bunker prices being the dominating factors. While the average bunker price in Rotterdam per metric ton (mt.) was UsD 355 in 2009, it increased to an average of UsD 464 in 2010, reaching UsD 500 towards the end of the year.

With an increased focus on deployment optimisation, nordic tankers managed to reduce the number of idle days for the operated fleet (owned vessels and vessels in commercial management) by 50% and the number of ballast days by 15% compared to 2009. however, as a consequence of the increase in bunker

prices of more than 30% the average time charter equivalent (tce) for 2010 dropped by 5.9% compared to 2009.

nordic tankers maintained its focus on optimising its portfolio of contract cov-erage (cargo contracts) during 2010, securing new important contracts and abandoning contracts where competition drove freight rates down to unacceptable levels. All in all nordic tankers man-aged to maintain a healthy and slightly increased coverage for the chemical tanker fleet in 2010, and have secured a solid base for further strengthening this position during 2011.

nordic tankers’ owned chemical tank-ers consist of five 6,000 dwt stainless steel vessels and four 13,000 dwt coated vessels. the 6,000 dwt vessels primary trade in nordic tankers’ business in northwestern europe with a relatively high contract coverage of approximately 65%, which has been favorable in the pre-vailing depressed markets. the 13,000 dwt vessels in contrast have a relatively low contract coverage of approximately 25% and thus have been more exposed to the weak freight rates in the spot market.

During the latter part of 2010 nordic tankers initiated its time charter ac-tivity and has so far secured 7 modern

Chemical tankers operation 2010 and outlook 2011

At the end of 2010 Nordic Tankers operated 64 chemical tankers. During 2010 the company started a joint commercial operation with Singapore based Womar, it started a time charter operation and initiated a 19,000 dwt stainless steel pool. During 2011 Nordic Tankers will continue to focus its efforts on consolidation. Rates are expected to remain at a depressed level in 2011, but with a slight increase in earnings expected during the second half of 2011.

13cheMIcAL tAnKeRs oPeRAtIon 2010 AnD oUtLooK 2011

stainless steel chemical tankers for time charter, thus gradually increasing its presence in the stainless steel seg-ment which Management believes will be the first to eventually see a change in the current supply/demand balance.

InJune2010NordicTankersstartedjointcommercialoperationof10,000dwtto 25,000 dwt coated chemical tankers with singapore based Womar. In the early part of 2011 this co-operation was formalised by the formation of nordic womar,ajointpoolmanagementcom-pany operating initially approximately 40 vessels. It is the ambition that the jointpoolcompanyshalldriveconsolida-tion in this segment and through added commercial flexibility increase earnings for the vessels participating in the pools.

During the year nordic tankers set up a 19,000 dwt stainless steel chemical tanker pool with an ambition to grow the pool and eventually become a leading operator of vessels this size. the vessels are primarily deployed in nordic tankers’ world-wide service offering.

the net increase in the world chemical tanker fleet is expected to continue in 2011 however at a reduced pace. For the stainless steel fleet nordic tankers expects the supply/demand imbalance to level out over the summer 2011 as the number of new-buildings delivered will decrease significantly compared to previous years.

In the first half of 2011 nordic tankers expects to see freight rates at the de-pressed levels seen during the latter part of 2010, but expects a slight increase in earnings starting during the second half of the year. this positive trend is ex-pected to materialise earlier in the stain-less steel segment than in the coated segment, where the net growth in the world wide fleet is expected to continue throughout the year and only level out during 2012.

nordic tankers will continue to focus on consolidation during 2011, partly through the operation of the nordic womar pool and partly through operation and growth of the 19,000 dwt stainless steel pool which nordic tankers formed during 2010. simultaneously, focus will remain on exploiting time charter opportunities especially in the stainless steel segment that will arise as a direct consequence of the depressed market.

We anticipate that the high bunker prices will continue at least for the first half of 2011, and while nordic tankers have a policy of covering bunker exposure either through bunker clauses or hedging, the bunker clauses typically leave open a bunker price range in which fluctuations may influence tce revenues negatively in times of increasing bunker prices.

14 PRoDUct tAnKeRs – oPeRAtIons 2010 AnD oUtLooK 2011

(2009 figures in paranthesis)

the product tanker segment consists of the full or partial ownership of 6 ves-sels, all being commercially operated in external pools. the segment time char-ter equivalent revenue (tce revenue) increased to UsD 20 million (UsD 17 million) and operating costs amounted to UsD 12 million (UsD 11 million) due to full year impact from the three vessels deliveredinMay-July2009,andEBITDAincreased to UsD 8 million (UsD 6 mil-lion) for the same reason. the net result in the product tanker segment increased to UsD 2 million (UsD -64 million) pri-marily reflecting zero write-downs in 2010 compared to the write-downs of UsD 63 million taken in the segment in 2009.

Freight rates continued the trend from 2009 and remained at very low levels throughout 2010.

the growth in the global economy was a positive driver, but the supply and de-mand balance continued to be negative as a large number of product tanker new-buildings entered the market. Part of the new-buildings delivered during 2010 were vessels being delayed or postponed during 2009.

the cost side for the owners worsened significantly during 2010 with increases in crew costs and significant increases in bunker prices being the dominating fac-tors, as mentioned above in the section on chemical tankers.

second hand values for the bigger prod-uct tankers saw an increase in the sec-ond quarter of 2010. this increase was predominantly based on speculation as the underlying spot and t/c markets did not improve to the same degree. the sec-ond hand value of the handy size product tankers did not fluctuate as much as the MR’s and LR’s, and towards the end of Q3 2010 the second hand values dropped back to the low levels seen early in the year.

nordic tankers moved the LR1 vessel nordic Anne from the torm LR1 pool to the newly established hafnia Pool during 2010, while the handy size product tank-ers remained in the Maersk handytank-ers Pool.

the net increase of the world product tanker fleet is expected to continue in 2011 at more or less the same pace as in 2010. Due to this continued increase in supply versus the lower expected in-crease in demand we foresee that 2011 will be another difficult year for the prod-uct tanker market.

We anticipate that the high bunker prices will continue at least for the first half of 2011, further exacerbated by the devel-opments in the Middle east.

scrapping is expected to continue to be significant during 2011 as access to fi-nance continues to be difficult, earnings will be under pressure and operating costs continue to increase. the scrapping however will not be able to significantly change the supply/demand balance.

Product tankers – operations 2010 and outlook 2011

Nordic Tankers maintained full or partial ownership of its 6 product tankers in 2010. They are all operated in external pools, the handy size product tankers in the Maersk Handytankers Pool and the LR1 vessel in the Hafnia Pool. The Company foresee that 2011 will be another difficult year in the product tanker market.

15EVENTSoCCURRINGAFTERThEBAlANCEShEETDATE

on12January2011NordicTankersandWomar Logistics reached an agreement toestablishajointlyownedindepend-ent pool management company with the name of “nordic womar”. nordic womar will initially manage two pools of coated chemical tankers with a total of approximately 40 vessels in the 10,000 to 25,000 dwt segment. the agreement wasmade incontinuationofthe jointmarketing agreement that commenced 1June2010,whereNordicTankersandWomar started marketing each others’ coated chemical tankers in the range of 10,000 to 17,000 dwt in their individual areas of primary marketing strength. Based on a constructive cooperation in theinitialphasetheenteringintojointpool management was a natural next step.

on27January2011NordicTankersan-nounced that it had taken an additional two chemical tankers of 16,000 dwt on time charter. the sister vessels, which were built in Italy in 2001 and 2004, are equipped with 25 stainless steel tanks and live up to IMo’s requirements to be able to carry all types of chemicals. the charters follow nordic tankers’ strategy of using the current weak market to in-crease the time charter fleet, which now consists of 7 chemical tankers between 12,000 and 20,000 dwt – all with stain-less steel tanks. the vessels have been

chartered in for periods between one and three years and are deployed partly in nordic tankers’ Americas trade and partly in nordic tankers’ global service.

on 14 February 2011 nordic tankers completed the reduction of the compa-ny’s share capital from DKK 377,648,880, nominal value to DKK 37,764,888 nomi-nal value, as decided at the company’s extraordinary General Meeting on 5 no-vember 2010, providing the company with an increased flexibility in relation to further issuance of shares. the capital reduction was carried out by a reduction of the denomination of all of the shares issued by the company from DKK 10 nominal value to DKK 1 nominal value, and was allocated to a separate reserve, pursuant to section 188(1)(3) of the Dan-ish companies Act.

on 28 February 2011 nordic tankers an-nounced the acquisition of the remaining partofNordicSeaarlandTankersB.V.fromitsjointventurepartnerMarcoPoloSeatradeB.V.Theacquiredsharesrep-resent an ownership interest equivalent to 1.5 handy size product tanker, and the acquisition increases nordic tankers’ to-tal ownership of product tankers from 4.5 vessels up to 6 fully owned vessels, namely 5 handy size vessels of approxi-mately 37,000 dwt and one LR1 vessel of 73,000 dwt. since 2006 nordic tank-

ersanditspartnerhavejointlyownedthe 5 handy size product tanker vessels through the company nordic seaarland TankersB.V.,ofwhichNordicTankersowned a total of 3.5 vessels (one vessel 100% and between 50% and 75% of the four other vessels). nordic tankers now acquires two 25% stakes and two 50% stakes and thus now owns all 5 vessels fully. All 5 vessels will continue to be employed in the Maersk handytankers Pool. the purchase price is partly set-tled through an assumption of bank debt related to the vessels and partly through an earn-out mechanism related to the future earnings and sales proceeds.

on 4 March 2011 nordic tankers carried out a directed issue of 1,181,809 new shares to former minority investors in the five stainless steel vessels acquired from clipper and other investors in January2010.Theproceedsfromtheissue consisted of ownership shares in four different chemical tankers, in total equal to 0.25 vessel, and cancellation of interest bearing vendor notes issued in January2010withaprincipalofapproxi-mately UsD 600 thousand. the share issue increased nordic tankers’ share capital by 3.1% from 37,764,888 shares to 38,946,697 shares, and as the share issue constituted less than 10% of the outstanding share capital no prospectus was required. the share issue was based

Events occurring after the balance sheet date

Nordic Tankers and Womar Logistics formed a jointly owned poolmanagement company: “Nordic womar”. The Company have taken additional two stainless steel chemical tankers on time charter. And has also completed the reduction of the company’s share capital, acquired the remaining part of Nordic Saarland Tankers B.V. and carried out a direct issue to former minority investors.

16 EVENTSoCCURRINGAFTERThEBAlANCEShEETDATE

on a partial utilization of the authorisation given to the Board of Directors by the General Meeting on 5 november 2010 and included in clause 4.3 of nordic tank-

ers’ articles of association. the shares were issued at DKK 7.426 which was the average share price over the five bank days prior to the issue date, and which

in the opinion of the board reflected the prevailing market rate of the share.

17oUtLooK FoR 2011

supply growth is likely to ease off further during 2011, especially in the stainless steel chemical tanker segment, but also to some extent for epoxy coated chemi-cal tankers and product tankers. once the already delivered tonnage has been absorbed by the expected continued growth in tonnage demand, management believes that the reduced supply growth rate will lead to a more balanced sup-ply/demand picture, and thus a gradual return to higher freight rates. A further positive factor is the very low ordering over the past 2-3 years in the company’s chemical tanker segment that has con-tinued into 2011, and bodes well for the supply/demand balance over the coming years.

even though freight rates are expected to gradually improve during the latter half of 2011, the early part of the year has seen rates remaining at the low levels of 2010, and the company thus expects yet another challenging year. Revenue - which is a combination of time charter equivalent revenue (tce revenue) from owned and chartered tonnage and man-agement fees from vessels under man-agement - is expected to be in the region of UsD 95 – 105 million and eBItDA (earnings before interest, depreciation, amortisation and tax) is expected to be UsD 10 – 20 million. the result before tax is expected to be a loss of 15 - 25 million before any write-downs on ves-sels or other assets and before currency

gain/loss etc.. At this point in time no write-downs have been made, but a con-tinuing weak or even weakening market may lead to a need for such measures during the year.

the agreement with the company’s banks on deferral of installments on certain of the company’s loans contin-ues throughout 2011, and consequently negative cash flow is expected to be limited to between UsD 0 and -10 mil-lion. Based on the current cash position and the forecast for 2011, the company expects to have sufficient financing for the remainder of 2011.

Theaboveexpectationsaresubjecttosignificant uncertainties due to the pre-vailing global situation related both to the effects of the aftermath of the fi-nancial crisis and to current geopolitical events and natural disasters. Further, a number of market factors outside nor-dic tankers’ sphere of influence, such as the general development in freight rates, exchange rates and bunker prices are difficult to predict. Freight rates are still at a historically low level, and the pace with which a change in the prevail-ing supply/demand balance will influence this is uncertain.

Outlook for 2011

Even though freight rates are expected to gradually improve during the latter half of 2011, the company expects still another very difficult and loss-making year.

18 FINANCIAlREVIEW2010

Financial highlights of the Group in 2010 (2009 figures in parenthesis)

the group reported a net loss of UsD 28 million for 2010 (UsD -95 million) and a pre-tax loss of UsD 28 million (UsD -95 million) thus meeting expectations for a pre-tax loss of UsD 28-33 million. the re-sult includes UsD 14 million write-downs of acquired goodwill as further explained in the quarterly reports for Q1 and Q3 2010. Pre-tax loss before write-downs and exchange rate gains was UsD 20 mil-lion and thus better than expectations of a loss before write-downs and currency exchange rate gains of UsD 20-25 mil-lion. Revenue - which is a combination of time charter equivalent revenue (tce) from owned and chartered tonnage and management fees from vessels under management - amounted to UsD 72 mil-lion (UsD 30 million), thus slightly higher than the expected UsD 65-70 million, as a consequence of the increased ac-tivities, while eBItDA (earnings before depreciation, amortisation, interest and tax) amounted to UsD 4 million (UsD 7 million), meeting the expectations of UsD 3-6 million.

At 31 December 2010 the Group’s book equity totaled 59 million (UsD 21 million) representing an equity ratio of 19% (9%). the significant increase in the equity ratio is primarily a result of the transaction with ClippercompletedinJanuary2010andthe rights issue completed in May 2010.

tce revenuetce revenue amounted to UsD 72 million (UsD 30 million) due to the significant changes in the scale and scope of the company’s activities. the number of fully or partly owned vessels increased from 10 to 15 and a total of 5 vessels were taken on time charter during the latter half of 2010. Approximately 50 vessels were in pool or commercial manage-ment during the year earning commercial management fees for the company, and approximately 35 of these were also in technical management earning an ad-ditional technical management fee for the company.

operating coststotal operating costs amounted to UsD 69 million (UsD 23 million) as a direct consequence of the change from being a tonnage provider with insignificant inter-nal costs to a full service shipping com-pany with own organisation and own op-eration of vessels. staff costs amounted to UsD 17 million (UsD 0.3 million) while oPeX (operating expenditures) related to the vessels technically managed by nordic tankers amounted to UsD 33 mil-lion (UsD 19 million). time charter hire related to the five vessels taken on time charter during the second half of 2010 amounted to UsD 9 million (UsD 0).

Depreciation and write-downsPlanned depreciation on the company’s owned vessels amounted to UsD 17 mil-

lion (UsD 11 million), an increase of 50% related to the increase in owned tonnage from 10 to 15 vessels and to deprecia-tions related to a total of 9 dry-dock-ings carried out in 2010. Write-downs amounted to UsD 14 million (UsD 85 million) and were related to write-down of goodwill acquired in connection with the transaction with clipper.

Financial income and expensesnet financial expenses amounted to UsD 0 million (UsD 6 million) consisting of financial expenses of UsD 14 million (UsD 7 million), primarily interest on the company’s loans, and financial income of UsD 14 million (UsD 1 million) primar-ily consisting of realised and unrealised currency gains of UsD 6 million and an adjustmentofadeferredcontingentcon-sideration of UsD 6 million related to the acquisition of activities from clipper.

taxthe company’s tax payment is primar-ily calculated according to the rules and regulations of the Danish tonnage tax Act. For further information please refer to note 10 to the financial statements.

Assets, equity and liabilitiesAt 31 December 2010, the company’s balance sheet amounted to UsD 311 million (UsD 221 million), an increase of 40% primarily due to the acquisition of ownership interests in 5 chemical tank-ersinJanuary2010.Non-currentassets

Financial Review

The group reported a net loss of USD 28 million for 2010 and a pre tax loss of USD 28 million thus meeting expectations for a pre tax loss of USD 28-33 million. The equity of the company was USD 59 million corresponding to an equity ratio of 19%.

19FINANCIAlREVIEW2010

(predominantly vessels) increased from to UsD 271 million (UsD 208 million), an increase of 30% due to the above men-tioned acquisition, while cash increased to UsD 18 million (UsD 3 million) as a consequenceofthecashinjectionincon-nection with the transaction with clipper inJanuaryandthesuccessfulcomple-tion of the rights issue in May.

the group’s equity amounted to UsD 59 million (UsD 21 million), corresponding to an equity ratio of 19% (9%). total li-abilities amounted to UsD 253 million (UsD 200 million) as a result of debt as-sumed in connection with the acquisition of vessels from clipper.

non-current finance loans (ship loans) amounted to UsD 233 million (UsD 190 million), of which UsD 190 million (UsD 190 million) are UsD denominated while UsD 43 million (UsD 0) are eUR loans. nordic tankers has an agreement in place with its financing banks on deferral of the instalments payable under the UsD denominated loans in 2010 and 2011, while instalments are paid on the eUR denominated loans. Applicable interest is paid on all loans on an ongoing basis. An agreement is in place that makes pos-sible a repayment of the amount deferred in five tranches during 2012 and 2013, and the company entertains an ongo-ing dialogue with its financing banks on how to structure these and future loan repayments in view of the continuing de-pressed market situation. the company is confident that constructive solutions will continue to be forthcoming. For fur-ther information please refer to note 19 to the financial statements.

Working capitalnet working capital was UsD 9 million (UsD 1 million), as a consequence of the change in activities where trade debtors increased to UsD 11 million (UsD 6 mil-lion) and other receivables increased to UsD 7 million (UsD 3 million). stock of lubricants increased to UsD 4 million (UsD 1 million). these increases were partly offset mainly by an increase in other liabilities to UsD 7 million (UsD 5 million).

cash flowoperations contributed UsD 7 million (UsD 4 million), while financial income, financial expenses and taxes negatively affected operating cash flow by UsD -13 million in 2010 (UsD -10 million). total cash flows from operating activi-ties amounted to UsD -6 million (UsD -5 million).

cash flow from investing activities amounted to UsD 1 million (UsD -77 million), positively affected by cash in-jectionofUSD9millionintheClippertransaction offset by investments in dry-dockings. cash flow from financing activi-ties amounted to UsD 20 million (UsD 73 million). the positive 2010 financing cash flow is primarily related to the cash raised in the rights issue of UsD 29 mil-lion, while the larger positive financing cash flow in 2009 was attributable to new debt raised in connection with the acquisition of three vessels.

cash flow for the year thus amounted to UsD 15 million (UsD -9 million), bringing the cash balance at year end to UsD 18 million (UsD 3 million).

Parent companythe parent company reported a net loss of UsD 23 million (UsD -79 million). At 31 December 2010 the parent compa-ny’s total assets amounted to UsD 178 million (UsD 99 million), an increase of 80% as a consequence of the acquisi-tion of two vessels from singapore based subsidiaries and the clipper transaction. the parent company’s equity increased to UsD 63 million (UsD 21 million) due to the transaction with clipper and the rights issue. the parent company’s li-abilities increased to UsD 115 million (UsD 78 million).

20 STATUToRyCoRPoRATEGoVERNANCESTATEMENT

this statutory corporate governance statement covers the financial period 1 Januaryto31December2010.

Corporate Governancenordic tankers is committed to main-taining a high standard of corporate governance, and the Board of Directors currently 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 majorityoftherecommendationsgivenin ”Recommendations for corporate gov-ernance” issued 8 April 2010 and made public by nAsDAQ oMX copenhagen. Fol-lowing is a brief description of the main deviations from the recommendations:

Composition of the board of directorsFor the time being nordic tankers A/s sees no need for setting an age limit for board members as the company attaches great importance to the board consisting of members with considerable relevant business experience.

TheCompanyhasnotmadejobandre-sponsibility descriptions for the chair-man and the vice-chairman. some of the tasks are described in the Board’s rules of procedure.

At present, the company has no employ-ee representatives on the board.

the company has not developed a de-scription of competencies desired repre-sented on the Board of Directors.

Remuneration of the Board of Directors and the Executive Boardon 22 April 2010 the General Meet-ing adopted the overall guidelines for incentive pay to the board of directors, management and employees of nordic TankersA/S.on23June2010theBoardof Directors of the company established an incentive scheme in the form of a war-rant program for the executive Board and the company’s land based employees. the warrant program has a 2 year vest-ing period and thereby deviates from the recommended minimum 3 years vesting period. It has been a priority to ensure that the employees perceive the initial grants of warrants as “tangible” com-ponents of the remuneration, and thus a shorter vesting period has been chosen. the company will continuously evaluate the optimal vesting period of potential future grants, with due consideration of the recommendations

Information and submission of informationNordicTankersA/Spublishesthemajorpart of information about the company in both Danish and english. considering

that most of the company’s sharehold-ers are Danish, the company will publish certain information in Danish only. In the long term, however, the company intends to publish all information in both Danish and english.

Time allocated to board work and the number of board membershipsMr. henrik Lund Dal, one of the board members of the company, is on the man-agement team of a live company and has more than three ordinary board mem-berships or one chairmanship and one ordinary board membership in companies which are not part of the group. thus, Mr. henrik Lund Dal does not meet the corpo-rate governance recommendation regard-ing the number of board memberships.

Assessment of the performance of the board of directors and managementthe board does not have an assessment procedure according to which the perfor-mance, results and composition of the board and the individual board members, including the chairman, are evaluated on a regular basis. Further, the board does not have a systematic assessment pro-cedure with a view to improving the board work and criteria for the assessment.

Board Committeesthe Board of Directors has established an Audit committee and a compensation

Statutory Corporate Governance statement

Nordic Tankers is committed to maintaining a high standard of corporate governance and the Board of Directors currently reviews the framework and principles ofr the overall governance of the Company. The aim is to achieve long-term growth in shareholder value.

21STATUToRyCoRPoRATEGoVERNANCESTATEMENT

committee. the protocols for these com-mittees, as well as the activities during the year, are currently not published on the company’s website. no other com-mittees are currently deemed necessary as other relevant issues are handled by the full Board of Directors.

Whistleblowerthe company has established a whistle-blower system for the seagoing employ-ees, but at the moment there is no formal system for other personnel.

Plan for risk managementnordic tankers has identified the risks to which the company is exposed and has drafted a plan outlining risk management

measures in this connection. Manage-ment is working on further systemizing the company’s risk management due to changes in the company’s scope of busi-ness in 2010.

For further information on nordic tankers corporate Governance policies refer to the company website www.nordictank-ers.com

22 InteRnAL contRoL

Control environmentFollowing the acquisition of the clipper activities the complexity of the com-pany’s organisational structure and activities has increased significantly. Management has set authorities and procedures for committing the company and guidelines for segregation of duties and compliant behavior for both shore based and sea based activities has been communicated.

In order to ensure a uniform and com-pliant internal reporting nordic tankers Management has in 2010 commissioned an implementation of a consolidation tool which has been implemented in 2010.

Financial reporting processthe Board of Directors and the execu-tive Board are responsible 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 con-nection with financial reporting.

the Board of Directors receives a month-ly report from nordic tankers’ Manage-ment, which is presented and discussed in the ensuing Board meeting.

As of 7 January 2010 the Companyassumed responsibility for preparing interim and annual reports from Difko Administration A/s to whom it had previ-ously been outsourced.

Prior to publication of quarterly and an-nual reports, an Audit committee meet-ing and a Board meeting are held. Audit committee members, the executive Board and the company’s auditor par-ticipate 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 com-mittee members report to the Board of Directors. the financial statements are reviewed and explained relative to the budget and expectations.

Moreover, any estimates and assess-ments used in the financial reporting are discussed and decided on.

Compliance testingoperational and financial controlling of internal procedures and processes is being performed in order to ensure compliance and to mitigate the risk of fraud. Weak controls and non-adherence to internal procedures are reported to Management.

Internal Control

Following the acquisition of the Clipper activities, management has set authorities and procedures for committing the Company and guidelines for segregation of duties and compliant behavior for both shore and sea based activities has been communicated.

23

RIsK MAnAGeMent24

Market risksnordic tankers’ turnover is generated exclusively from the activities within the company’s two operating segments; chemical tankers and product tankers. the company is therefore exposed to significant risks relating to these two market segments. Freight rates and mar-ket values of the vessels owned by the company are the main risk elements, but also nordic tankers ability to attract and retain vessels in commercial and techni-cal management constitutes a risk for the company.

Operational risks nordic tankers has relative high con-tract coverage in the chemical tanker segment, and the company strives to offer a sustainable value proposition to its customers. For the product tanker segment the vessels have been placed in leading pools. consequently, nordic tankers is dependent on the pools ability to attract customers and offer a product which is among the best in the market.

TheCompanyownsvesselsjointlywithone other shipping company, Zacchello Group. With respect to these vessels, the company is dependent on agree-ment with the co-owner when it comes to important decisions on the vessels, including their sale and changes in em-ployment and management. Moreover, the company is to a certain extent de-pendent on the co-owner meeting its

financial obligations. After the balance sheet date nordic tankers has in Febru-ary 2011 acquired the remaining shares inthejointventureresultingina100%ownership of the companies.

Bunker pricestotal variable expenses for operating the company’s vessels are to a large extent dependant on the price of bunker oil. If oil prices were to rise, it is uncertain whether such an increase could be whol-ly or partially set off against increased freight rates.

Financial risksFinancing of Company operationsAt 31 December 2010, nordic tankers’ finance loans totaled UsD 239 million (2009 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. the company has agreed with the financing banks to de-fer installments on nordic tankers’ UsD bank loans and temporise the financial covenants on these loans in the period 2010 and 2011. During 2010 nordic tank-ers has not been in breach of financial covenants and Management expects to adhere to the financial covenants in 2011.

Liquidity risks In the current market situation access to liquidity is an important factor for the company’s development. nordic tank-ers monitors liquidity carefully and has taken a number of steps to strengthen the company’s liquidity situation. A num-ber of savings initiatives have been im-plemented ashore as well as at sea with due consideration to safety and quality of operations. Further, the company com-pleted a rights issue in 2010 which sig-nificantly improved the cash position of the company. Management continues to work actively with banks and investors to ensure that the company will miti-gate the liquidity risk and be positioned to take advantage of improved market conditions.

Foreign exchange risksthe company’s foreign exchange expo-sure has increased following the acquisi-tion of the clipper activities. the expo-sure is mainly towards eUR and DKK as a significant part of operating expenses for the chemical tankers are denominated in eUR, G&A expenses are mainly denomi-nated in DKK and the company has loans in eUR. the foreign exchange exposure will be financially hedged if and when deemed necessary by Management.

the company’s financial reporting and earnings are in UsD, whereas the share price on nAsDAQ oMX copenhagen is in DKK; consequently, an investment in the

Risk Management

The Executive Board continuously 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.

25RIsK MAnAGeMent

company’s shares will mean significant exposure to changes in the UsD/DKK exchange rate.

Interest rate riskthe company’s loans are fixed interest loans denominated in eUR and floating rate loans denominated in UsD. Man-agement continually monitors the inter-est market and assesses the need for hedging.

At 31 December 2010, nordic tankers’ net interest-bearing debt with variable interest rate amounted to UsD 190 mil-lion (2009 UsD 190 million). the com-pany had hedged approximately 50% of the interest rate risk associated with this debt for a period of between one and five years. consequently, the company con-tinues to be sensitive to fluctuations, especially in the UsD interest rate.

Credit risknordic tankers makes credit evalua-tions of existing and new customers on a continued basis. For smaller custom-ers and newer customers it is custom to require freight to be paid before cargo release. For customers with whom nor-dic tankers has a long period of relation-ship freight is typically paid after cargo release.

Vision & Strategythe new vision first announced at the company’s General Meeting on 17 De-cember 2009 is: “to become a leading global operator of chemical and product tankers, known for the best employees and the highest efficiency.”nordic tankers is a full-service shipping company with own commercial and technical management and own administrative functions. the company’s strategy has a primary focus on the operation of chemical tankers, and as the chemical tanker segment is quite fragmented Management expects to play an ac-tive role in its consolidation over the coming years. In the product tanker segment the company will initially be a tonnage provider, but the segment may be developed further over time if attractive opportunities arise. the company’s six product tankers are operated in market leading pools and the company currently has no plans to change this arrangement.the company’s strategy, the “nordic Ambition” includes operational and financial targets of 1)operating more than 150 vessels by the end of 2013 (own and chartered vessels as well as vessels in pools/commercial management), and 2)reach-ing an operating margin of at least 20% and an equity ratio of at least 30%. the enlargement of the fleet may be achieved by attracting more vessels to the company’s commercial and pool management, by chartering vessels at attractive terms and conditions and by acquiring new vessels in the market preferably in return for shares. Any growth in own or chartered tonnage as well as tonnage in pools or management will, however, only be accepted to the extent that the growth is expected to be commercially viable and thus create value for the company’s shareholders. the targeted operating margin and equity ratio are ambitious targets, and an operating margin of 20% is only deemed obtainable in a more normalised market situation where the rates increase from the current historically low levels.

26 coRPoRAte socIAL ResPonsIBILIty (csR)

Introduction

During the past year of operation many initiatives relating to csR have taken place, although not under the headline of csR. During 2011, csR will be organ-ised in a way that these initiatives are managed in a more consistent manner, so progress can be tracked and results reported.

As a first step towards a more struc-tured approach to csR, the company will report the csR initiatives that have taken place, following the 10 principles of the United nations Global compact. the report includes our csR policy, the activi-ties that have taken place during 2010 and the results wherever possible. the report also includes our plans for 2011.

FrameworkAt this stage, the company will focus our csR initiatives on areas within our sphere of control: employees in nordic tank-ers, at sea and ashore, and assets either owned and/or technically managed by nordic tankers. We will also participate actively in csR initiatives across the in-dustry, through participation and in the csR committee in the Danish shipown-ers’ Association and by following guide-lines and supporting initiatives in IMo.

to nordic tankers csR is not about char-ity, but it is about assuming responsibility and taking part in the fundamental and universal challenges concerning environ-

ment and climate, business ethics, basic human rights and labour standards. thus nordic tankers’ efforts will focus on sup-porting and taking initiatives in areas that support long-term sustainable growth globally, nationally and in the company.

Overall CSR policy nordic tankers have formulated the fol-lowing overall csR policy:

In nordic tankers, we will actively initi-ate and participate in activities related to csR, and we will incorporate csR initiatives in our strategy at any given time. We will focus its efforts on areas related to health & safety, environment & climate and general welfare and train-ing. nordic tankers will strive to continu-ously improve itself in these fields and communicate openly with stakeholders about results. As with everything else in nordic tankers, csR challenges will be met with a can-do attitude, and will be solved with integrity and passion.

Human & Labour rights

With respect to human and labour rights, nordic tankers has two main focus ar-eas: safety and welfare, both at sea and ashore.

A young fleet with modern accom-modation and safety featuresnordic tankers operates a modern fleet with an average age of only 5,9 years.

nordic tankers owned vessels are built at shipyards with high standards, thus thefarmajorityofthevesselsmanagedby nordic tankers Marine have a high safety and welfare standard compared to the industry average at such.

nordic tankers Marine continuously strives to improve the safety and wel-fare on board our vessels. the aim is to avoid accidents, harming people, the environment or assets, and to ensure a high retention rate among our seafarers.

to follow-up on the safety on the vessels a number of KPI’s have been established and thoroughly monitored on a monthly basis. these KPI’s include among others: Lost time Incidents (the so called LtIs) and near Misses. Lost time Incidents are work related incidents resulting in absence from work on a scheduled work shiftonthedayfollowingtheinjury.

the LtI frequency is an international standard calculated by multiplying the number of LtI’s with a factor between 1.000.000 (one million) hours and the actual number of working hours on board our vessels and is calculated 12 months backwards. the goal setting for the fleet for 2010 was 1,20 with an ac-tual 2010 result of 1,80 equal to a total of 8 LtI’s onboard 37 vessels in 2010. none of these LtI’s resulted in the death of any seafarer, but any incident to any seafarer is one too many. All incidents are thoroughly investigated and correc-

Corporate social responsibility (csR)

Nordic Tankers focus its CSR efforts in areas related to health & safety, environment & climate, general welfare and training for its employees.

27coRPoRAte socIAL ResPonsIBILIty (csR)

tive measures set in motion whenever possible.

near Misses are important to identify and report, as it enables the company to prevent accidents and incidents from occurring. We have a goal for each vessel to report minimum 4 near Misses per month. the result was 3,24 reports per vessel per month which is at an accept-able level. statistically we have seen that the vessel with most near Miss reports over the past two years actually has not had any accident or incidents for two years in a row.

seafarers or anybody else may report any non-compliance with rules and poli-cies regarding safety, environment, and welfare through nordic tankers open re-porting system accessible on the nordic tankers web-site.

Correct procedures are one thing, culture is anothernordic tankers Marine has all the safety procedures and all the KPIs needed to manage its vessels safely. But proce-dures are one thing, and culture is an-other. Although safety is a natural part of a seafarer culture, we believe that it is an area where we should never reach a level of complacency, an area that can con-stantly be improved. During 2011, nordic tankers will develop a plan that brings safety to the “top of mind” of all nordic tankers people, at sea and on shore.

A global challenge: Piracy Piracy remainsamajor threat to thesafety and peace of mind of the seafar-ers, their families and the company when passing through the Gulf of Aden and

off the coast of somalia and Kenya. Ac-cording to the International Maritime Bureau, during 2010 there were 222 (untill november) pirate attacks, versus 212 same period in 2009. nordic tankers havefortunatelynotsufferedanyhijack-ings, or any attacks on their vessels. We participate in the Piracy committee in the Danish ship owner’s Association, which we find to be the correct way to assert our influence and put pressure on governments to co-operate and do something against this serious threat to the safety of seafarers and global trade.

nordic tankers operated vessels only pass through this area by military es-cort in the eU Group transit system (eU Gts). seafarers can ask to disembark a vessel if it is scheduled to transit the affected areas. Procedures for passing through the areas are constantly updated and are strictly adhered to. Procedures include guidelines on speed, maneuver-ability, communication, the compulsory installation of razor blade barbed wire and much more. the vessels will be in close contact with the company secu-rity officer (cso) before and during the transit.

the threat situation is assessed on an ongoingbasis,andproceduresadjustedaccordingly.

Being a seafarer in Nordic Tankersseafarers on nordic tankers vessels are all employed in accordance with ILo standards outlined in our safety Man-agement system. the new Maritime Labour convention of 2006 is about to be implemented in nordic tankers and shall be fully implemented during 2011.

All company seafarers are meeting the standards outlined in stcW 95 (standard training, certification and Watch keep-ing) for training and certification. In ad-dition to our existing training programs a competence Management system will be implemented during 2011 to enable our seafarers to drive our performance to an even higher level.

transparency in operation and good communication between sea and shore is vital to our operations and the welfare of the seafarers and their families. the vessels technically managed by nordic tankers Marine have all the infrastruc-ture necessary as vessels had satellite equipment installed on board during 2009 and 2010, meaning that all seafar-ers now have internet and e-mail access. Being in touch with your loved ones on a regular basis is an important part of the welfare at sea.

seafarers receive monthly reports and a regular newsletter: seALInK with in-formation specifically targeted for the life on board.

nordic tankers Marine aims to have the best employees. one of the contributing factors to reach the ambitions is to be able to attract and retain the right talent. In 2010 the retention ashore at nordic tankers Marine was 100% and at sea 90% - a satisfactory retention which is high compared with the industry.

28 coRPoRAte socIAL ResPonsIBILIty (csR)

A safe and healthy culture ashoreDuring December 2010 nordic tankers did a workplace assessment at the of-fice in copenhagen, where employees were asked to answer a large number of questions relating to their physical and mental wellbeing at the workplace. the main conclusion from the workplace assessment was that nordic tankers have generally satisfied, and highly mo-tivated employees, with a high degree of co-operation between employees, de-partmentsandtheirmanagers.TheAPValso indicated areas for improvement. An action plan to improve in these areas has been made and will be implemented during 2011.

nordic tankers has a range of offers to enable employees to stay healthy and enhance their physical wellbeing. All employees are covered by health insur-ance, and other offers at the main office in copenhagen include:

• Canteenwithmanyhealthyalterna-tives

• Accesstofitnessfacilitiesandphysio-therapist at the workplace

• Staffclubwithvariousactivities

Whereas safety at sea is a natural part of seafarer culture, this is not necessarily the case to the same extend ashore. As mentioned above, nordic tankers will develop a plan that brings safety to the “top of mind” of all nordic tankers peo-ple, at sea and on shore.

Environment and Climate

nordic tankers wishes to focus its en-vironmental efforts on a reduction of co2 and sox emissions at sea, and a reduction of power usage and travelling ashore.

Ship efficiency matters for both the environment and the bottom linethe shipping industry is responsible for close to 80% of the global transporta-tion of goods and for approximately 3% of the world’s total co2 emissions. compared to other means of transporta-tion, shipping is by far the most energy efficient. nordic tankers still wishes to continually reduce its emissions. As fuel costs account for a significant amount of a vessel’s voyage costs, there is also a financial incentive in reducing the con-sumption of fuel.

Within 2011 nordic tankers will imple-ment a ship efficiency energy Man-agement Plan (seeMP). the plan will include programs for voyage optimisa-tion, propulsion resistance management, machine optimisation and instructions on cargo handling optimization and energy conservation awareness.

All vessels in nordic tankers slow steam, if the schedule allows for slow steaming, which is the case on approximately 75% of all voyages. slow steaming means that a vessels sails at less than maximum speed, reducing both fuel costs and co2 emissions. nordic tankers also complies with international guidelines of burning low sulphur fuel oil. Areas requiring the

use of low sulphur fuel oil are increas-ing, reducing the overall sox emissions. nordic tankers have not calculated the total co2 emission of its fleet, but will put this into practice during 2011.

A detailed plan for Iso 14001 certifica-tion of technical organization of nordic tankers has been developed during 2010, and it is expected to complete the certi-fication by the end of 2011. Iso 14001 is a framework for a holistic strategic approach to the organisation’s environ-mental policy and planning. For higher impact reductions in greenhouse gas emissions on our own vessels, we believe that this is a global challenge that needs to be dealt with at a global level. nordic tankers supports, participates and rati-fies all such initiatives through the Danish shipowner’s Assocation and IMo.

IT contributes too During 2010 all the It infrastructure of nordic tankers was outsourced to a datacenter and in this process all serv-ers and back-up was virtualized. our partner focuses on innovative technolo-gies and green data solutions resulting in considerable energy and space usage reductions. so not only does it reduce the electricity bill of nordic tankers, but it also reduces co2 emissions from the It used by nordic tankers, and the disposal of physical servers and back-up media.

During 2011, we plan to implement a new printer solution that will take ad-vantage of newer green technologies such as power saving features and the use of fixed ink.

29shARehoLDeRs InFoRMAtIon

Share data as of 31 December 2010Listed on: nAsDAQ oMX copenhagen

share capital: DKK 377,648,880

nominal value: DKK 10

shares issued: 37,764,888 shares

share classes: one

Votespershare:one

Bearer share: yes

Restriction on voting rights: no

Restricted negotiability: no

security ID code: DK0060083996

on 14 February 2011 the capital reduc-tion authorised by an extraordinary Gen-eral Meeting on 5 november 2010 was completed, bringing the nominal value of each share to DKK 1 and the nominal share capital to DKK 37,764,888, while the number of shares issued was un-changed at 37,764,888.

on 4 March 2011 nordic tankers carried out a directed issue of 1,181,809 new shares to former minority investors in the five stainless steel vessels acquired from clipper and other investors in January2010.TheissueincreasedNor-dic tankers’ share capital by 3.1% from 37,764,888 shares to 38,946,697 shares.

Movements in the Company’s share price as of 31 December 2010the closing price at year-end 2010 was DKK 7.15, a decrease of 72% compared

with year-end 2009 (DKK 26). the move-ments in 2010 are shown in below graph. the background for the significant de-cline in April/May was the rights issue, where existing shareholders had the possibility to subscribe two new shares for each existing share, at a subscription price of DKK 10 each.

Investor relationsthe aim of nordic tankers’ investor re-lations policy is to ensure a high level of information to the company’s share-holders. the tools for ensuring that the Companymeetsthisobjectiveare:

• Thewebsite–www.nordictankers.com– contains news in brief and background information about company operations and management.

• NordicNews–anewsletterforshare-holders featuring in-depth articles is dis-tributed to registered shareholders and available on the company’s website.

Shareholder structureAt 31 December 2010 nordic tankers had 6,213 registered shareholders, rep-resenting 95.46% of the capital.

on 31 December 2010 the following shareholders held more than 5% of the share capital and voting rights:

• ClipperGroup:30.94%-reportedon7January2010

• SivaGroup:23.47%-reportedon19May 2010

Shareholders Information

J F M A M J J A S O N D

Nordic Tankers A/S – share price 2010

30

25

20

15

10

5

0

the company’s shares are covered by the following analyst: FinnBjarkePetersen,Nordea–transportation,telephone+453333-5723.

30 shARehoLDeRs InFoRMAtIon

Treasury sharesthe Board of Directors of nordic tank-ers has been authorised by the General Meeting in the period until the next An-nual General Meeting to acquire a maxi-mum of 3,776,488 treasury shares, cor-responding to 10% of the share capital, at 31 December 2010.

At year-end 2010 nordic tankers held nominally DKK 240,000 treasury shares, corresponding to 24,000 shares. the ac-quisition hereof was part of the prepara-tions for the IPo, and the company has not acquired treasury shares since its listing in 2007.

Dividend policyno dividend will be distributed for the financial year 2010, and nordic tankers does not expect to distribute any dividend for the financial year 2011 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, and will to the extent possible simultaneously strive to generate sufficient capital to distribute dividends.

Procedures for election of members to the Board of Directorsthe members of the Board of Directors are elected at the general meeting, ex-cept for those elected pursuant to the provision of the Danish companies Act on employee representation.

the number of directors elected by the general meeting is between five and eight. Directors are elected for one year at a time, and can be re-elected.

Procedures for making amendments to the articles of associationResolutions to amend the company’s articles of association are passed at the general meeting. Any proposal for amending the articles of association that a shareholder wishes to present at the annual general meeting must be submit-ted in writing to the Board of Directors not later than 6 weeks before the annual general meeting.

Financial calendar 201131 March 2011 Annual Report 2010

29 April 2011 Annual general meeting

24 May 2011 Interim report for Q1 2011

23 August 2011 Interim report for h1 2011

22 november 2011 Interim report for Q3 2011

HistoryNordicTankerswasuntilJanuary2010atonnageprovideremergingfromthegeneralpartnershipK/SDifkoXlVIIfoundedin1984inconnectionwiththeacquisition of three product tankers at B&W shipyard in copenhagen. From 2000 and onwards freight rates generally developed positively and nordic tankers built up its financial resources and invested in further tonnage. In April2006NordicTankerssetupacompanyjointlyownedwiththeItalianshipping group Zacchello that invested in handy-size product tankers, oper-ated by Maersk tankers in the handytanker pool. on 23 May 2007 K/s Difko XlVIIallottedsharesinNordicTankerstoitsapproximately5,700investorsin preparation for the nordic tankers’ admission to the oMX copenhagen stock exchange. In December 2009 the Board of Directors recommended and the General Meeting adopted a combination of nordic tankers with parts of clipper tankers, transforming the company from a tonnage provider to a full service shipping company. During 2010 the company pursued its newly developed growth strategy the “nordic Ambition”.

31coMPAny GRoUP stRUctURe

Company Group Structure

Nordic Nadja ApS

K/S Nordic Nadja

Nordic Nelly ApS

K/S Nordic Nelly

Nordic Nora ApS

K/S Nordic Nora

Nordic Marianne ApS

K/S Nordic Marianne

Nordic Inge A/S

Nordic Tankers A/S

Nordic Tankers Management A/S

Nordic Tankers Trading A/S

Nordic Tankers Marine A/S

Nordic SeaarlandTankers B.V.*

Nordic Copenhagen Shipping Co. Pte. Ltd**

Nordic OsloShipping Co. Pte. Ltd**

Nordic Tankers (USA) Inc.

Nordic Tankers (Columbia) Ltda.

Nordic Tankers Marine SIA.

100%

89%

100%

94%

100%

94%

100%

94%

100%

100%

100%

70%

100%

100%

100%100%

51%

100%

* simplified, as nordic tankers owns different percentages in the different share classes of the company, but on average nordic tankers own 70%.

** In process of liquidation.

32 BoARDoFDIRECToRSANDEXECUTIVEBoARD

Board of Directors

Knud Pontoppidanchairman of the Board. chairman of the compensation committee.

Born 1944. elected to the Board of Direc-tors on 22 April 2010.

Background: Former chairman and Managing Director of Danish shipowners’ Association and ExecutiveVicePresidentinA.P.Møller-Mærsk A/s.

education:llM(cand.jur.),UniversityofCopenha-gen.

other management duties, etc (Den-mark): Member of the Board of Directors of sea-Mall A/s and Absalon A/s.

Qualifications: Long managerial experience as ceo and chairman, large international network in the shipping industry, extensive experi-ence in political and legal matters.

considered independent.

Erik BartnesDeputy chairman of the Board. Member of the compensation committee.

Born 1959. elected to the Board of Direc-tors on 22 April 2010.

Background: chairman of Pareto – one of the leading nordic investment banks within shipping.

education:Msc (economics), University of Fribourg, switzerland.

other management duties, etc (Den-mark):none

Qualifications: More than 25 years experience in the shipping industry, and extensive finan-cial knowledge.

considered independent.

Mogens BuschardMember of the Audit committee.

Born 1944. elected to the Board of Direc-tors the first time in 2005.

Background:Previously employed in government ser-vices and subsequently self-employed within investment. Among the initiators of the formation of nordic tankers A/s and its first chairman of the Board of Directors.

education: llM(cand.jur.),UniversityofCopenha-gen.

other management duties, etc (Den-mark): Member of the Board of Directors of Kragholmen shipping A/s, A/s De Forenede Kaffesurrogat- og cichoriefab-rikker,C.F.Rich&SønnerA/Sandvariousfoundations. Managing Director of vari-ous investment firms.

Qualifications: Many years of experience as shipping investor, legal knowledge and detailed knowledge of the history of nordic tank-ers A/s.

considered independent.

Jens Fehrn-Christensenchairman of the Audit committee.

Born 1952. elected to the Board of Direc-tors on 2 February 2009.

Background:From 1992 to 2007 with Dampskibs-selskabet norden A/s, most recently as cFo and member of the executive Board from 2000 to 2007.

education: Msc (economics and Business Adminis-tration), copenhagen Business school.

other management duties, etc (Den-mark): chairman of the Board of Directors of ncs holding A/s and Meyer & Bukdahl A/s. Member of the Board of Directors ofSun-AirofScandinaviaA/S,Johs.Ras-mussen,SvebølleA/S.

Qualifications: More than 25 years experience as a man-ager in the shipping industry, financial and accounting knowledge and extensive insight in risk management.

considered independent.

Henrik Lund DalBorn 1955. elected to the Board of Direc-tors on 22 April 2010.

Board of Directors and executive Board

33BoARDoFDIRECToRSANDEXECUTIVEBoARD

Background:Partner in clipper Group. More than 30 years shipping and financial experience fromA.P.Møller-Maersk andClipperGroup.

education: Shipping education fromA.P.Møller-Mærsk. hD(R). Management courses, IMD.

other management duties, etc (Den-mark): chief executive officer of clipper Group A/s. chairman or Member of the Board of Directors of various clipper Group A/s subsidiaries and associated companies. chairman of the Board of Directors of he-luda Invest A/s and A/s Lund Dal Invest.

Qualifications: extensive shipping, financial and ac-counting knowledge.

not considered independent, due to rela-tionshipwithmajorshareholderClipperGroup.

Sven Rosenmeyer PaulsenMember of the compensation committee.

Born 1947. elected to the Board of Direc-tors on 2 February 2009.

Background: Attorney specialised in maritime law, ship financing, shipbuilding contracts, purchase and sale of ships, and insur-ance and contracts related to the ship-ping industry. entitled to appear before the supreme court of Denmark. Partner in the law firm Kromann Reumert from 1981 to 2007.

education: llM(cand.jur.),UniversityofCopenha-gen. Additional maritime law education abroad.

other management duties, etc (Den-mark): Member of the Board of Directors of sydbank A/s.

Qualifications: extensive experience in maritime law, ship financing, shipbuilding contracts, sale and purchase of ships, insurance and contracts of the shipping industry and the general practice of law.

considered independent.

Saravana SivasankaranBorn 1985. elected to the Board of Direc-tors on 5 november 2010.

Background:chief operating officer and Director at siva Group. Member of the board/execu-tive board in various companies related totheSivaGroupincludingJ.B.Uglandshipping A/s, crossbridge shipping sin-gapore Pte. Ltd. and Winwind oy.

education: University degree from carnegie Mellon University, United states (electrical and computer science engineering).

other management duties, etc (Den-mark): none

Qualifications: International managerial experience, extensive financial knowledge.

not considered independent, due to re-lationshipwithmajorshareholderSivaGroup.

Executive Board

Tommy ThomsenBorn 1957. chief executive officer (ceo) since7January2010.

Background: From 1978 – 2007 employed by A.P. Møller-Mærskinvariouspositions, i.a.VicePresidentandheadofMærskTank-ers from 1991 to 1995, ceo of Mærsk Inc., UsA from 1995 to 2001 and ship-owner/partner from 2001 to 2007. ceo of clipper tankers 2008 – 2009.

education: Shipping education fromA.P.Møller-Mærsk, International senior Manage-ment Program, harvard Business school.

other management duties, etc (Den-mark): none.

Qualifications: More than 30 years experience in the shipping industry, extensive manage-ment experience as ceo and chairman of international shipping companies.

Christian HasselBorn 1963. chief Financial officer (cFo) since7January2010.

34 BoARDoFDIRECToRSANDEXECUTIVEBoARD

Background: Lawyer with the law firm Kromann Re-umert from 1988 to 1991, management consultant with McKinsey & company from 1993 to 1996, Partner and ceo of carnegie Investment Banking from 1997 to 2008 and executive Adviser to clipper in 2009.

education: LLM from the University of copenhagen 1988, MBA from InseAD 1992.

other management duties, etc (Den-mark): Member of the Board of Directors of Dan-ske Færger A/s.

Qualifications: extensive experience within corporate finance, equity capital markets and M&A transactions, financial accounting, strat-egy development and legal issues.

Board members’ ownership of shares in Nordic Tankers A/S at 31 December 2010

Board member Shares ownedKnud Pontoppidan 100,000

erik Bartnes 300,000

Mogens Buschard 602,600

JensFehrn-Christensen 0

henrik Lund Dal* 402,313

sven Rosenmeyer Paulsen 20,000

saravana sivasankaran* 0

*excluding shares owned by clipper and siva, respectively.

the picture on the following page: From left saravana sivasankaran, Mogens Buschard, ErikBartnes,henriklundDal,JensFehrn-Christensen,KnudPontoppidanandSvenRosenmeyer Paulsen.

35

36 MAnAGeMent stAteMent

WehavetodayconsideredandapprovedtheannualreportofNordicTankersA/Sforthefinancialyear1January–31December2010.

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 company financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 December 2010 and of their financial performance and their cash flows for the financialyear1January–31December2010.

Further, in our opinion the management review 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, 31 March 2011

Management statement

Executive Board

tommy thomsen christian hassel ceo cFo

Board of Directors

Knud Pontoppidan erik Bartnes chairman of the Board of Directors Deputy chairman of the Board of Directors

MogensStigBuschard JensFehrn-Christensen henriklundDal

sven Rosenmeyer Paulsen saravana sivasankaran

37InDePenDent AUDItoR’s RePoRt

To the shareholders of Nordic Tankers A/S

Report on the consolidated financial statements and the parent company financial statementsWe have audited the consolidated financial statements and the parent company financial statements of nordic tankers A/s for the financial year 2010, which comprise statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flow and notes for the group as well as for the parent company. the consolidated financial statements and the parent company financial statements are prepared in accordance with International Financial Reporting standards as adopted by the eU and additional Danish disclosure requirements for listed companies.

Board of Directors’ and Executive Board’s responsibility for the consolidated financial statements and the parent company financial statementsthe Board of Directors and executive Board are responsible for the presentation and preparation of consolidated financial state-ments and parent company financial statements that provide a fair presentation in accordance with International Financial Reporting standards as adopted by the eU and Danish disclosure requirements for listed companies. this responsibility includes designing, implementing and maintaining internal control relevant for the presentation and preparation of consolidated financial statements and parent company financial statements that provide a fair presentation, free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reason-able in the circumstances.

Auditor’s responsibility and basis of opinionour responsibility is to express an opinion on the consolidated financial statements and the parent company 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 assurance about whether the consolidated financial statements and the parent company financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statementsandtheparentcompanyfinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingthe assessment of the risks of material misstatements in the consolidated financial statements and the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s presentation and preparation of consolidated financial statements and parent company financial statements that provide a fair presentation in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness on the entity’s internal control. An audit also includes evaluating the appropriate-ness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and executive Board, as well as the overall presentation of the consolidated financial statements and the parent company financial statements.

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

the audit has not resulted in any qualification.

OpinionIn our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the group’s and parent company’s financial position at 31 December 2010 and of the results of the group’s and parent company’s

Independent Auditor’s Report

38 InDePenDent AUDItoR’s RePoRt

operations and cash flow for the financial year 2010 in accordance with International Financial Reporting standards as adopted by the eU and additional Danish disclosure requirements for listed companies.

Statement on the management’s reviewthe Board of Directors and executive Board are also responsible for the preparation of a management’s review that includes a fair review in accordance with Danish disclosure requirements for listed companies.

the audit has not included the management’s review. Pursuant to the Danish Financial statements Act, we have, however, read the management’s review. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements.

on this basis, it is our opinion that the information in the management’s review is consistent with the consolidated financial statements and the parent company financial statements.

copenhagen, on 31 March 2011

Grant thornton Incorporated state Authorised Public Accountants

ThomasWraaeholm ChristianF.Jakobsen state Authorised Public Accountant state Authorised Public Accountant

39

40 FInAncIAL stAteMents

statement of comprehensive income for the period 1January-31December

Financial Statements

Parent Company Group

Note Amounts in USD thousand 2010 2009 2010 2009

3 Revenue 27,870 9,615 104,845 29,960

3 Voyagerelatedexpenses -10,526 - -32,526 -

Time charter equivalent revenue (TCE revenue) 17,344 9,615 72,319 29,960

3 expenses related to the operation of vessels -9,714 -7,189 -33,074 -18,947

3 time charter hire -4,852 - -9,346 -

3,4 staff costs -1,515 -227 -16,966 -278

3,5 other external costs -1,655 -3,176 -9,415 -3,376

Earnings before depreciation (EBITDA) -392 -977 3,518 7,359

3,6 Depreciation -4,490 -3,505 -16,779 -11,068

3,6 Write-downs - -17,559 -14,311 -84,835

Operating result (EBIT) -4,882 -22,041 -27,572 -88,544

7 Write-down of investments in subsidiaries -17,525 -4.243 - -

7 Write-downofinvestmentsinjointlycontrolledentities - -47,912 - -

3,8 Financial income 11,416 1,621 13,983 1,389

3,9 Financial expenses -11,660 -5,908 -14,324 -7,369

Result before tax -22,651 -78,483 -27,913 -94,524

3,10 tax on result for the period 84 -36 -141 -28

Result -22,567 -78,519 -28,054 -94,552

41FInAncIAL stAteMents

statement of comprehensive income for the period 1January-31December(continued)

Parent Company Group

Note Amounts in USD thousand 2010 2009 2010 2009

Result -22,567 -78,519 -28,054 -94,552

Reserveforforeigncurrencytranslationadjustment - - 0 -

transferred to the income statement in relation to hedging of cash flows 2,442 2,781 2,569 2,781

Fairvalueadjustmentoffinancialinstruments -807 -2,754 -738 -2,597

Other comprehensive income 1,635 27 1,831 184

Comprehensive income -20,932 -78,492 -26,223 -94,368

Distribution of result

Parent company -22,567 -78,519 -27,876 -94,552

non-controlling interest - - -178 -

-22,567 -78,519 -28,054 -94,552

Distribution of comprehensive income

Parent company -20,932 -78,492 -26,045 -94,368

non-controlling interest - - -178 -

-20,932 -78,492 -26,223 -94,368

11 earnings per share excl. minority interests (ePs) - - -0.99 -13.21

11 Diluted earnings per share -0.99 -13.21

FInAncIAL stAteMents

Parent Company Group

Note Amounts in USD thousand 2010 2009 2010 2009

non-current assets

12 Goodwill - - 2,345 -

Intangible assets - - 2,345 -

13 Vesselsanddocking 111,752 81,616 268,888 207,554

13 Plant, equipment and prepayments 35 - 130 -

Tangible assets 111,788 81,616 269,018 207,554

14 InvestmentinJointventures - - - -

15,26 Investment in subsidiaries 40,253 7,839 -

18 other financial assets 91 135 91 135

Financial assets 40,344 7,974 91 135

Total non-current assets 152,131 89,590 271,454 207,689

Current assets

Lubricant stocks 2,706 275 3,669 1,135

16 trade receivables 3,842 2,253 11,103 6,222

Receivables related companies 9,148 5,954 - -

corporate tax 84 - - -

17 other receivables 4,847 779 7,017 3,034

Total receivables 20,627 9,261 21,789 10,391

18 cash & cash equivalents 4,864 71 18,093 2,625

Total current assets 25,491 9,332 39,883 13,016

Total assets 177,622 98,922 311,336 220,705

statement of financial position – Assets as of 31 December

42

43FInAncIAL stAteMents

Parent Company Group

Note Amounts in USD thousand 2010 2009 2010 2009

share capital 64,740 12,826 64,740 12,826

Retained earnings parent -1.114 -14,951 -6,240 -24,861

Reserves -783 22,685 -784 32,587

Equity, parent company 62,843 20,560 57,716 20,552

equity, non-controlling interests - - 908 5

Total equity 62,843 20,560 58,624 20,557

Liabilities

19 Finance loans etc. 98,717 70,820 233,370 188,804

21 Provisions 3,956 1,933 809 609

Total Non-current liabilities 102,673 72,753 234,179 189,413

19 Finance loans etc. 128 - 6,005 1,171

20 trade payables 2,261 3,025 5,211 4,658

corporate tax - 14 20 14

22 other liabilities 9,717 2,570 7,297 4,892

Total current liabilities 12,106 5,609 18,533 10,735

Total liabilities 114,779 78,362 252,712 200,148

Liabilities and equity 177,622 98,922 311,336 220,705

statement of financial position – equity and liabilities as of 31 December

44 FInAncIAL stAteMents

Amounts in USD thousandShare-capital

Share- premium

Retained earnings

Reserve for cur-

rency ad-justments

Reserved for fair

value of financial

instru-ments

Total equity

Shareholders’ equity as of 1 January 2010 12,826 25,630 -14,951 -527 -2,418 20,560

Adjustment1January -25,630 25,101 527 -2

share-based payment - - 160 - - 160

Issue of new shares 51,914 - 15,248 - 67,162

cost related to issue of new share - - -4,105 - - -4,105

transactions with owners 51,914 - 11,303 - - 63,217

Retained earnings - - -22,567 - - -22,567

Other comprehensive income:

transferred to the income statement in relation to hedging of cash flows - - - - 2,442 2,442

Fairvalueadjustmentoffinancialinstru-ments - - - -807 -807

total comprehensive income - - -22,567 - 1,635 -20,932

Shareholders’ equity as of 31 December 2010 64,740 - -1,114 - -783 62,843

Shareholders’ equity as of 1 January 2009 12,826 25,959 63,568 -527 -2.445 99,381

cost related to issue of new share - -329 - - - -329

transactions with owners - -329 - - -329

Retained earnings - - -78,519 - - -78,519

Other comprehensive income:

transferred to the income statement in relation to hedging of cash flows - - - - 2,781 2,781

Fairvalueadjustmentoffinancialinstru-ments - - - - -2,754 -2,754

total comprehensive income - - -78,519 - 27 -78,492

Shareholders´ equity as of 31 December 2009 12,826 25,630 -14,951 -527 -2,418 20.560

For information about treasury shares and share capital see note 23.

statement of changes in equity – Parent company

45FInAncIAL stAteMents

Amounts in USD thousandShare-capital

Share- pre-

miumRetained earnings

Re ser-ve for

cur-rency

adjust-ments

Reser-ved

for fair value of

financial instru-ments

Reserved for fair

value ad-justment

in connec-tion with acquis i-

tions

Equity parent

com-pany

Non- con-

trolling interest

Equity group

Shareholders’ equity as of 1 January 2010

12,826 25,630 -24,861 -60 -2,615 9,632 20,552 5 20,557

Adjustment1January - -25,630 35,195 60 - -9,632 -7 -5 -12

share-based payment - - 160 - - - 160 - 160

Issue of new shares 51,914 - 15,248 - - - 67,162 1,086 68,248

cost related to issue of new share - - -4,105 - - - -4,105 - -4,105

transactions with owners 51,914 - 11,303 - - - 63,217 1.086 64,302

Retained earnings - - -27,876 - - - -27,876 -178 -28,054

Other comprehensive income;

Reserve for foreign currency trans-lationadjustment - - - 0 - - 0 - 0

transferred to the income statement in relation to hedging of cash flows - - - - 2,569 - 2,569 - 2,569

Fairvalueadjustmentoffinancialinstruments - - - - -738 - -738 - -738

total comprehensive income - - -27,876 0 1,831 - -26,045 -178 -26,223

Shareholders’ equity as of 31 December 2010

64,740 - -6,240 0 -784 - 57,716 908 58,624

Shareholders’ equity as of 1 January 2009

12,826 25,959 69,691 -60 -2,799 9,632 115,249 5 115,254

cost related to issue of new share - -329 - - - - -329 - -329

transactions with owners - -329 - - - - -329 - -329

Retained earnings - - -94,552 - - - -94,552 - -94,552

Other comprehensive income;

transferred to the income statement in relation to hedging of cash flows - - - - 2,781 - 2,781 - 2,781

Fairvalueadjustmentoffinancialinstruments - - - - -2,597 - -2,597 - -2,597

total comprehensive income - - -94,552 - 184 - -94,368 - -94,368

Shareholders’ equity as of 31 December 2009

12,826 25,630 -24,861 -60 -2,615 9,632 20,552 5 20,557

statement of changes in equity – Group

46 FInAncIAL stAteMents

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Operating result (EBIT) -4,882 -22,041 -27,572 -88,544

Depreciation and writedown 4,490 21,064 31,090 95,903

share-based payment 160 - 160 -

changes in inventories -2,430 -26 -1,941 -245

changes in receivables -3,317 -76 -2,128 -3,550

changes in liabilities 9,314 -1,256 7,098 785

Received financial income 17 1,621 127 1,389

Paid financial expenses -5,350 -4,258 -12,546 -7,526

Paid taxes during the year 97 -3,518 -128 -3,565

Cash flow from operating activities -1,901 -8,490 -5,840 -5,353

Investments in tangible assets -34,661 -42,332 -7,242 -76,887

Investment in financial assets -70 -1,550 -70 -

loanstojointlycontrolledentities - -6,307 - -

Loans to subsidiaries - 793 - -

Acquisition of subsidiaries -696 8,525 -

other net investment in subsidiaries -4.953 - -61 -

Cash flow for investment activities -40,380 -49,396 1,152 -76,887

Payment on mortgage debt - -560 -5,234 -9,248

Financing raised 21,800 51,045 - 81,995

expenses regarding issue of new shares -3,409 - -3,409 -

Proceeds from issue of new shares 28,682 - 28,799 -

Cash flow from financing activities 47,073 50,485 20,156 72,747

Cash flow of the year 4,793 -7,401 15,469 -9,493

Cash as of 1 January 71 7,472 2.625 12,118

Cash end of period 4,864 71 18,093 2,625

statement of cash flow for the period 1January-31December

47LIst oF notes

note 1 significant accounting estimates

note 2 Accounting Policy

note 3 segment reporting

note 4 staff cost

note 5 Auditor fee

note 6 Depreciation and amortisation

note 7 Write-down investments

note 8 Financial income

note 9 Financial expenses

note 10 tax

note 11 earnings per share (ePs)

note 12 Intangible assets

note 13 tangible assets

Note14 Investmentinjointventure

note 15 Investments in subsidiaries

note 16 trade receivables

note 17 other receivables

note 18 Financial risks and financial Instruments

note 19 Finance loans

note 20 trade payables

note 21 Provisions

note 22 other liabilities

note 23 treasury and share capital

note 24 Related party transactions

note 25 Incentive plans

note 26 Acquisition of enterprices in 2010

note 27 contigent liabilities and contractual obligations

note 28 significant events after the balance date

List of Notes

48 sIGnIFIcAnt AccoUntInG estIMAtes, AssUMPtIons AnD UnceRtAIntIes

the annual report of nordic tankers A/s, which includes the consolidated financial statements and the financial statements of the parent company, has been pre-pared in accordance with International Financial Reporting standards (IFRs) as adopted by the eU and additional Dan-ish disclosure requirements for annual reports of listed companies (reporting class D). In addition, the annual report complies with International Financial Reporting standards as issued by the International Accounting standards Board (IAsB). the accounting policies are described in note 2.

In connection with the preparation of the financial statements, management applies estimates and assumptions. such estimates and assumptions are based on the most recent information available at the time of preparing the financial state-ments. the most significant estimates relates to:

• measurementofgoodwill• measurementoftangibleassets• recognitionofdeferredtaxassets• measurementofcontingentconsidera-tion etc.• recognitionofprovision

the estimates and assumptions are based on premises that management find reasonable, but which are uncertain or unpredictable. It may be necessary to change previous estimates as a result of future changes in the assumptions, new information, further experience or subsequent events.

Measurement of goodwill and tangible assets Goodwill recognised at the time of acqui-sitions is tested for impairment at least annually and vessels if there are indica-tions of impairment.

the company evaluates the carrying amount of goodwill, vessels and other net assets within two cash generating units - chemical tankers and product tankers - to determine whether events have occurred that would require an

adjustmenttotherecognisedvalueofthe net assets.

the impairment tests are based on dis-counted future cash flow models and net realisable values assessed by lead-ing and independent international ship brokers, which are compared to the car-rying amount of the assets within the cash generating units. the impairment tests are prepared based on assumptions including future freight rates, earnings from vessels and management activities as well as discount rates. All of these factors have been historically volatile. the carrying amount of the group’s ves-sels may not necessarily represent their actual market value at any point in time as market prices of second-hand ves-sels to a certain degree fluctuate with changes in charter rates and the cost of new-buildings. If the estimated fu-ture cash flows or related assumptions change permanently, it may be necessary to reduce the carrying amount of vessels and goodwill for the cash generating unit in question.

During 2010 impairments losses were recognised with UsD 14.3 million. note 6 provides more information about the impairment tests performed.

Depreciation periodsDepreciation on vessels is material for theCompany.Vesselsaredepreciatedover their useful live, which management estimates to be 25 years, to a residual value. the estimates are reassessed regularly based on available information. changes to estimates of useful lives and residual values may affect the annual depreciation.

Recognition of deferred tax assets entities in the group are taxed in accord-ance with the Danish tonnage tax Act for shipping activities, general tax legislation for other activities and net financial in-come and local tax legislation for foreign entities.

Deferred tax assets arising from unused tax losses are recognised to the extent

that management expects such to be offset in future taxable income.

note 10 provides more information about the unrecognised tax assets.

Measurement of contingent consideration etc. As part of the consideration for nordic tankers acquisition of the shares in nordic tankers Management A/s and nordic tankers Marine A/s from clip-per, it was agreed that nordic tankers A/s will pay clipper a deferred contin-gent consideration of between UsD 7.5 million and UsD 15.0 million and that thepurchasepricewouldbeadjustedfor losses incurred from the commercial and technical management activities in the period 2010-2012.

the fair values of the deferred contingent payment and the loss compensation are based on the net present value of the expected future cash flows. the effect of future periods of a change in the esti-mates is encumbered with uncertainty.

note 18 provides more information about the contingent consideration.

Recognition of provisionsIn 2008, contracts and agreements were entered into by the former management which the company considers to be un-lawful and non-binding on the company and, therefore contests. thus, there is uncertainty about the degree to which the company must meet the obligations under these contracts and agreements. Following the ongoing assessment man-agement has recognised a provision of UsD 0.6 million at 31 December 2010 regarding the outstanding matters.

1. Significant accounting estimates, assumptions and uncertainties

49AccoUntInG PoLIcIes

2. Accounting policies

General information

Basis of preparationthe annual report of nordic tankers A/s, which includes the consolidated financial statements and the financial statements of the parent company, has been pre-pared in accordance with International financial Reporting standards (IFRs) as adopted by the eU and additional Dan-ish disclosure requirements for annual reports of listed companies (reporting class D). In addition, the annual report complies with International Financial Reporting standards as issued by the International Accounting standards Board (IAsB).

the accounting policies are consistent with those applied to the annual report for 2009 with the exception of the ad-justments resulting from the imple-mentation of new and revised standards and interpretation as described below. comparative figures have been restated with regard to certain reclassifications in some notes etc.

Implementation of new and revised standards and interpretationsthe annual report for 2010 has been prepared in accordance with the new and revised standards (IFRs/IAs) and new interpretations (IFRIc), which are relevant to and effective for the Group’s financial statements for the annual pe-riodbeginning1January2010:

• IFRS3BusinessCombinations(Re-vised 2008)• IAS 27Consolidated andSeparateFinancial statements (Revised 2008)• ImprovementstoIFRSs2009

Adoption of IFRs 3 Business combina-tions (Revised 2008):the revised standard on business com-binations(IFRS3R) introducedmajorchanges to the accounting requirements for business combinations. It retains the majorfeaturesofthepurchasemethodof accounting, now referred to as the ac-quisition method. the most significant

changes in IFRs 3R that had an impact on the Group’s acquisition in 2010 are as follows:

• Acquisition-relatedcostsofthecom-bination are recorded as an expense in the income statement. Previously, these costs would have been accounted for as part of the cost of the acquisition,

• Contingentconsiderationismeasuredat fair value at the acquisition date. sub-sequent changes are generally recog-nised in statement of comprehensive income. Previously, contingent consid-eration was recognised at the acquisition date only if its payment was probable and changeswererecognisedasanadjust-ment to goodwill,

• Theassetsacquiredandliabilitiesas-sumed are generally measured at their acquisition-date fair values unless IFRs 3R provides an exception and provides specific measurement rules.

IFRs 3R has been applied prospectively to business combinations for which the acquisitiondateisonorafter1January2010. For the year ended 31 December 2010, the adoption of IFRs 3R has af-fected the accounting for the Group’s acquisition of companies from the clipper Groupwithpositivefairvalueadjustmentof UsD 6 million of the contingent con-sideration. Basic and diluted earnings per share for the current period have increased by UsD 0.23, as result hereof.

Business combinations for which the ac-quisitiondateisbefore1January2010have not been restated.

Adoption of IAs 27 consolidated and separate Financial statements (Revised 2008):the adoption of IFRs 3R required that the revised IAs 27 (IAs 27R) is adopted at the same time. IAs 27R introduced changes to the accounting requirements for transactions with non-controlling (formerly called ‘minority’) interests and the loss of control of a subsidiary. similar to IFRs 3R, these changes to IAs 27R

are applied prospectively. the adoption of IAs 27R have no significant impact on the financial statements.

Adoption of Improvements to IFRss 2009 (Issued in April 2009):the Improvements to IFRss 2009 made several minor amendments to IFRs standards.

the applications of new and revised standards and interpretations under the improvementprojecthavenosignificanteffect to the financial statements.

Standards and interpretations not yet effectiveAt the date of authorisation of these fi-nancial statements, certain new stand-ards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group. IAsB has so far issued a new IFRs 9 and IFRIc 19 as well as changes to IAs 24 andanumberofminoradjustmentsaspart of the 2010 Improvements etc.

IFRs 9 Financial Instruments: Recogni-tion and Measurement is being issued in phases. to date, the chapters dealing with recognition, classification, meas-urement and de-recognition of financial assets and liabilities have been issued. Further chapters dealing with impair-ment methodology and hedge accounting are still being developed.

Management anticipates that all of the relevant pronouncements will be adopt-ed in the Group’s accounting policies for the first period beginning after the effec-tive date of the pronouncement. Manage-ment does not expect the implementa-tion of the new and revised standards and interpretations to have any significant ef-fect on the Groups financial statements.

50 AccoUntInG PoLIcIes

Accounting Policy

Recognition and measurementIncome is recognised in the income statement when generated. Assets and liabilities are recognised in the balance sheet when it is probable that any future economic benefit will flow to or from the company and the value can be reliably measured.

on initial recognition, assets and liabili-ties are measured at cost. subsequently, assets and liabilities are measured as described below for each item.

Consolidated financial statementsthe consolidated financial statements include nordic tankers A/s (parent com-pany) and the enterprises (subsidiaries) which are controlled by the parent com-pany. control is presumed to exist when the parent company, directly or indirectly, 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 man-aged jointly with one or more otherenterprisesareconsideredtobejointlycontrolled entities which are accounted for by proportionate consolidation.

Basis of consolidationthe consolidated financial statements have been prepared on the basis of the accounts of nordic tankers A/s and its subsidiariesandjointlycontrolledenti-ties. the consolidated financial state-ments have been prepared by adding together items of a uniform nature. the accounts used for consolidation purposes have been prepared in accordance with the group’s accounting policies.

Intercompany income and expenses, in-tercompany balances and dividends as well as profit and loss from intercom-pany transactions have been eliminated on consolidation. subsidiaries’ items are recognised in full in the consolidated financial statements. non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s

profit or loss and net assets that is not held by the company.

Investments in jointlycontrolledenti-ties 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 intercompany profits and losses is recognised in the income statement. the proportionate share of all transactions and events recognised directly in the equity of the jointlycontrolledentityisrecognisedingroup equity.

Business combinationsFor business combinations occurring since1January2010,therevisedrequire-ments of IFRs 3R have been applied. the cost of an acquisition is measured as the aggregate of the consideration transferred by the Group to obtain con-trol of a subsidiary. the consideration transferred is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the company, which includes the fair value of any as-set or liability arising from a contingent consideration arrangement. Acquisition costs incurred are expensed.

the date of acquisition is the date on which control of the enterprise is effec-tively 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. Account is taken of the tax effect of the revaluations made.

the excess (goodwill) of the cost of the business combination over the fair val-ue 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 recoverable 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 reas-sessment, the fair value of the acquired assets, liabilities and contingent liabilities continues to exceed the cost, the balance is credited to the income statement.

subsequent change to the fair value of the contingent consideration is in accord-ance with IAs 39 recognised in compre-hensive income.

Priorto1January2010,businesscombi-nations were accounted under the previ-ous version of IFRs 3.

Profit or loss from the sale up of subsidiariesProfits or losses from the sale, winding up or loss of control in subsidiaries are stated as the difference between the sum received from the sale, winding up or the fair value at the time of loss of control and the carrying amount of the net as-sets at the time of selling, winding up or loss of control, including goodwill, ac-cumulated foreign currency translation adjustmentsrecogniseddirectlyinequityand expected costs of sale or winding up. the selling price is measured at fair value of the consideration received.

Foreign currency translationthe functional and presentation currency of the parent company is UsD.

on initial recognition, transactions in cur-rencies other than the functional cur-rency of each enterprise are translated using the exchange rate at the date of the transaction.

Receivables, payables and other mon-etary items in foreign currencies, which

51AccoUntInG PoLIcIes

have not been settled at the balance sheet date, are translated using the rate of exchange at the balance sheet date. Any exchange differences arising between the rate of exchange at the date of the transaction and the rate of exchange at the date of payment and the balance sheet date, respectively, are recognised in the income statement as financial income and expenses.

Property, plant and equipment, intangi-bles, inventories and other non-monetary assets purchased in foreign currencies and measured using historical costs are translated using the rate of exchange at the date of the transaction. non-mone-tary items that are revalued at fair value are translated using the rate of exchange at the date of the revaluation.

Upon recognition in the consolidated fi-nancial statements of enterprises with functional currencies other than UsD, the income statements are translated at the average exchange rates for the respec-tive months. Balance sheet items are translated using the exchange rates rul-ing 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 at the balance sheet date and from translation of income statements from average rates of exchange to the rates of exchange at the balance sheet date are recognised as other comprehensive income. corre-spondingly, exchange differences arising from changes made directly in the equity of these enterprises are also recognised as other comprehensive income.

Derivative financial instrumentsDerivative financial instruments, primar-ily interest rate swaps, are used for hedg-ing purposes. Derivative financial instru-ments are initially measured at fair value on the contract date. Derivative financial instruments are subsequently measured at fair value at the balance sheet date.

changes in the fair value of derivative financial instruments designated as and qualifying for recognition as effec-

tive hedges of future transactions are recognised in other comprehensive in-come. When the hedged transactions are realised, accumulated changes are recognised as part of the cost of the transactions.

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

Segment informationFollowing the business combination with companies from the clipper Group, nordic tankers A/s has defined two segments: product tankers and chemi-cal tankers. Previously nordic tankers A/s operated 3 segments. the revised segment presentation is based on nordic tanker A/s’ internal management and reporting structure. comparable figures havebeenadjustedfortherevisedseg-ment reporting.

the segment information follows the group’s risks, accounting policies and management control. the group only has one geographical segment as the group regards the global market as a single market, and individual vessels are not restricted to specific regions or parts of the world.

segment income and expenses and seg-ment assets and liabilities include items directly attributable to each segment and those items which can be reliably allocat-ed to individual segments. non-allocated items are costs not directly related to the segments, financial items, tax etc.

non-current assets in the segments in-clude the assets used directly in the op-eration of the segment, including intangi-bles 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 receiv-ables, prepayments and cash. segment

liabilities include all operating liabilities, including trade payables, provisions and other payables.

the presentation of segments only in-cludes tangible assets.

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 operat-ing profit or loss after tax from the opera-tion and any profits or losses resulting fromfairvalueadjustmentsorthesaleofthe operations and associated liabilities.

the asset or disposal group is classified as ‘held for sale’ and presented separate-ly in the statement of financial position. Liabilities are classified as ‘held for sale’ and presented as such in the statement of financial position if they are directly associated with a disposal group.

Assets and liabilities from discontinued operations and assets held for sale ex-cept financial assets are measured at the lower of carrying amount and fair value less costs to sell. Assets held for sale are not depreciated.

Share-based payment on23June2010theBoardofNordictankers exercised the authority given at the General Meeting on 22 April 2010 and introduced a warrant scheme for the company’s executive Board and employ-ees. the scheme is equity-settled and recognised according to IFRs 2, share-based Payment, which requires compa-nies to measure the equity instruments at fair value at the grant date and to rec-ognise them as an expense under staff costs allocated over the vesting period. the related set-off entry is recognised in equity. the fair value at the grant date

52 AccoUntInG PoLIcIes

is calculated using the Black-scholes model.

Statement of comprehensive income

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

•The income creating activities havebeen carried out on the basis of a bind-ing agreement•Theincomecanbemeasuredreliably•Itisprobablethattheeconomicben-

efits associated with the transaction will flow to the group•Costsrelatingtothetransactioncan

be measured reliably

Revenue comprises freight, time charter hire, demurrage, commission, commer-cial and technical management fees. Revenue is recognised when it meets the general criteria mentioned above and the stage of completion can be measured re-liably. Accordingly, freight and demurrage receipts are recognised at selling price upon delivery of service in accordance with the charter parties concluded.

nordic tankers A/s generates part of its revenue through pool arrangements. total pool revenue is generated 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 recog-nised in the income statement upon delivery of service in accordance with the terms and conditions of the char-ter parties on a time charter equivalent basis.Thepoolsareregardedasjointlycontrolled 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 participa-tion 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 rela-

tion to the total available pool earning days during the period.

Voyage related expensesthese are expenses related to nordic tankers own vessels which are not man-agedinapoolorontimecharter.Voyagerelated expenses consist mainly of bun-kers, port expenses and commissions. Voyagerelatedexpensesarerecognisedas incurred.

Operating expensesoperating expenses include costs relat-ing to the operation and maintenance of vessels, including costs relating to crew. 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 adminis-trative expenses, which include the cost of offices, personnel costs and adminis-trative costs.

Depreciation and write downsDepreciation on fixed assets pertains mainly to vessels and dry-dockings (see ‘Property, plant and equipment, vessels’ and ‘Dockings’ for the description of de-preciation principles).

Write downs are made when impairment tests shows that the value of goodwill or fixed assets is impaired.

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 currencies, mortgage amorti-sation premium/allowance as well as additions and allowances under the on-account tax scheme.

Interest income and expenses are ac-crued on the basis of the principal and the effective interest rate. the effective interest rate is the discount rate that is used to discount expected future pay-ments related to the financial asset or the financial liability in order for the pre-sent value of such asset or liability to match its carrying amount.

Dividends from investments are recog-nised when the right to receive payment has been established, which is typically when the dividend has been approved by the General Meeting.

Taxcorporate income tax payable by the par-ent company has been provided for at a rate of 25% of taxable income calculated according to the Danish tonnage tax Act for shipping activities and according to general tax legislation for other activities and net financial income. the company andDanishsubsidiariesarejointlytaxed.

on disposal of vessels acquired pre-2007 gains calculated as the difference be-tween the carrying amount of vessels and their taxable acquisition price are tax is provided for at a rate of 25% of the taxable.

corporate income tax payable by foreign entities is provided for in accordance with local legislation.

Deferred tax assets are recognised to the extent that it is probable that they can be utilised against future taxable income.

Minority interestsMinority interests include the part of net profit that is attributable to minority shareholders.

Earnings per share and diluted earnings per shareearnings per share is calculated as the profit or loss for the year compared to the weighted average of the issued shares in the financial year. the basis for the cal-culation of diluted earnings per share is the weighted average number of shares

53AccoUntInG PoLIcIes

inthefinancialyearadjustedforthedilu-tive effect of warrants.

Statement of financial position

Intangible assetsIntangible assets pertain to goodwill which is measured at cost less write downs. Goodwill is not amortised, but tested for impairment at least annually. Goodwill is attributed to cash-generating units.

Property, plant and equipmentProperty, plant and equipment includes vessels, upgrade costs, dockings and of-fice and It equipment, and are measured at cost less accumulated depreciation and impairment losses.

the cost comprises the cost of acquisi-tion 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. other borrowing costs are taken to the income statement.

Depreciation is charged over the expect-ed economic lives of the assets, and the depreciation methods, expected lives and residual values are reassessed indi-vidually for the assets at the end of each financial year.

Vessels:Vesselsaremeasuredatcostlessaccu-mulated depreciation and write-downs. Allmajorcomponentsofvesselsexceptfor dry-docking assets are depreciated on a straight-line basis to the estimated residual value over their estimated use-ful lives, which nordic tankers A/s es-timates to be 25 years. Depreciation is based on cost less the estimated residual value. Residual value is estimated as the light weight tonnage of each vessel mul-tiplied by scrap value per ton.

the useful life and residual value of the vessels are reviewed at least at each fi-nancial year-end based on market condi-tions, regulatory requirements and the

group’s business plans. Moreover, the group evaluates the carrying amount of the vessels to determine whether events have occurred that indicate impairment andwouldrequireanadjustmentofthecarrying amounts.

Prepayments on vessels under construc-tion are recognised as installments paid.

Docking:the fleet of own vessels is required to undergoplanneddrydockingsformajorrepairs and maintenance, which cannot be carried out while the vessels are op-erating. Dry-dockings are generally re-quired every 30-60 months depending on the nature of the work. costs relating to dry-dockings are capitalised and de-preciated on a straight-line basis over a period of 30 months. 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 new buildings, the initial dry-docking asset is estimated on the basis of the expected costs re-lated to the first-coming docking, which is based on experience with similar ves-sels. At subsequent dry-dockings, the asset comprises the actual docking costs incurred.

office and It equipment:office and It equipment is depreciated on a straight-line basis over the estimat-ed useful lives, which does not exceed 5 years.

Impairment tests Goodwill recognised is allocated to the appropriate cash generating unit and impairment testing is made on each re-porting date by assessing the carrying amount of goodwill and other net assets within the defined cash generating units. Furthermore, the 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 within the defined each cash generating unit. If an

indication of impairment is identified, the recoverable amount of the asset is esti-mated 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 independent from other assets, the recoverable amount is determined for the smallest cash-generating unit to which the asset belongs. the recover-able 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 assessments of the time value of money, the risks specific to the asset or the cash-generating unit for which the estimates of future cash flows have not beenadjusted.Forvessels,thefairvalueis usually determined based on the esti-mated selling price assessed by external brokers less costs to sell.

If the recoverable amount of the asset or cash-generating unit is estimated to be less than its carrying amount, the car-rying amount is reduced to the recov-erable amount. An impairment loss for cash-generating units is first allocated to goodwill and subsequently to the as-sets of the unit, but no asset will be re-duced to a lower value than its fair value less expected costs to sell. Impairment losses are recognised in the statement of comprehensive income.

If an impairment loss subsequently is reversed for other assets than good 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.

54 AccoUntInG PoLIcIes

InventoriesInventories consist of oils and lubricants, etc. and are measured at cost using the FIFo method or the net realisable value, whichever is lower.

ReceivablesReceivables comprise trade receivables, loans and other receivables. Receivables are classified as loans and receivables that are financial assets, with fixed or determinable payments, that are not quoted in an active market and which are not derivative financial instruments. Receivables are initially measured at fair value and subsequently at amortised cost, which usually equals the nominal value less provisions for bad debts. Write down is done individually using a provi-sions 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 rec-ognised under current assets comprise listed bonds and equity investments in enterprises that are not subsidiaries, jointlycontrolledentitiesorassociates.

other securities and investments are classified as available-for-sale financial assets. Available-for-sale financial as-sets are financial assets that are not derivative financial instruments and can-not 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. the securities are subsequently meas-ured at fair value at the balance sheet date, and changes in fair value are rec-ognised in other comprehensive income.

on the sale or disposal of the securities, accumulatedfairvalueadjustmentsrec-

ognised in other comprehensive income is reclassified to profit or loss. If there are clear indications of impairment and whenthereisobjectiveevidenceofim-pairment of a permanent nature, a write-down to fair value will be made through the statement of comprehensive income.

DividendDividend is recognised as a liability at the time of approval by the General Meeting. Dividend proposed by Management in respect of the year is stated under equity.

Treasury sharesAcquisition costs and consideration for treasury shares and dividend on treas-ury shares are recognised directly as retained earnings in equity.

ProvisionsProvisions are recognised when the group has a legal or constructive obliga-tion as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be re-quired to settle the obligation. Provisions are measured as the best estimate of the expenditure required to settle the obliga-tion 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. Fi-nance 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 expense 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 payables and other payables to public authorities, etc. other finan-cial liabilities are initially measured at fair valueless any transaction costs. Li-abilities are subsequently measured at amortised cost using the effective inter-est method. Accordingly, the difference between the proceeds and the nominal value is recognised in the income state-ment as a financial expense over the term of the loan.

Deferred incomeDeferred income recognised under li-abilities comprises received income for recognition in subsequent financial years. Deferred income is measured at nominal value.

Cash flow statement

the consolidated and parent company cash flow statements are presented us-ing the indirect method and show cash flows from operating, investing and fi-nancing activities as well as cash and cash equivalents at the beginning and end of the year.

cash flows from operating activities are stated as the operating profit or loss, ad-justedfornon-cashoperatingitemsandchanges in working capital, less corpo-ration tax paid attributable to operating activities.

cash flows from investing activities in-clude payments in connection with the acquisition and divestment of enterprises and financial assets and the acquisition, development, improvement and sale, etc. of intangibles and property, plant and equipment.

55AccoUntInG PoLIcIes

cash flows from acquisition and divest-ment of enterprises are shown sepa-rately under cash flows from investing activities. 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 financing activities com-prise changes in the parent company’s share capital and related costs as well as raising and repayment of loans, install-ments on interest bearing debt, acquisi-tion of treasury shares and payment of dividend.

cash flows in other currencies than the functional currency are recognised in the cash flow statement using 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 ex-change 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 companyInvestmentsinsubsidiariesandjointlycontrolled 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 recover-able amount is defined as the higher of thefairvalueofthesubsidiaryorjointlycontrolled 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 mar-ket assessments of the time value of money, the risks specific to the enterprise in question for which the estimates of futurecashflowshavenotbeenadjusted.

Dividends received from subsidiaries and associates are recognised in statement of comprehensive income.

56 seGMent InFoRMAtIon

Group 2010

Product Chemical NotAmounts in USD thousand tankers tankers allocated Total

Freight revenue 19,762 69,398 - 89,160

Management fees - 14,810 - 14,810

other revenue - 875 - 875

total revenue 19,762 85,084 - 104,845

Voyagerelatedexpenses - -32,526 - -32,526

Time charter equivalent revenue (TCE revenue) 19,762 52,558 - 72,319

expenses related to the operation of vessels -11,351 -21,723 - -33,074

time charter hire - -9,346 - -9,346

staff costs - -12,464 -4,501 -16,966

other external costs -254 -6,479 -2,683 -9,415

Earnings before income taxes and depreciations (EBITDA) 8,156 2,546 -7,184 3,518

Depreciation -6,577 -10,202 - -16,779

Write-downs - -14,311 - -14,311

Operating result (EBIT) 1,579 -21,967 -7,184 -27,572

Financial income - - 13,983 13,983

Financial expenses - - -14,324 -14,324

Result before tax 1,579 -21,967 -7,526 -27,913

tax on result for the period - - -141 -141

Result 1,579 -21,967 -7,666 -28,054

the presentation of segment information waschangedwitheffectfrom1January2010 so that segments under IFRs 8 are presented in accordance with the inter-nal reporting structure. the change has resulted in the presentation of two seg-ments – Product tankers and chemical tankers - compared with three previously, following the amalgamation of the LR1 and handy-size segments.

Items under staff and other external costs are allocated to the chemical tank-ers segment, with headcount percentage as allocation key. the headcount allo-cated is defined by employees working

within the chemical tankers operation and the allocation key is revised at year end. corporate functions are considered non-segment activities and therefore in-cluded as unallocated.

Financial income and expenses, and tax for the group are attributable to unallocated activities. comparative fig-ures have been restated to reflect the changed segment reporting.

Disclosures regarding the segments:no single customer represented more than 10% of total Group revenue.

In 2010 and 2009, the Group only rec-ognised revenue arising from rendering of services.

there are no significant revenue transac-tions between the segments.

the accounting policies governing pres-entation of segment information are consistent with the accounting policies applied by the group, refer note 2.

3. Segment information

57seGMent InFoRMAtIon

Inventory consumption/(bunkers) included in the voyage related expenses amount to - -15,328 - -15,328

Other segment information:

tangible assets -128,775 -140,243 - -269,018

Intangible assets - -2,345 - -2,345

Investments in the chemical tanker segment arise from the acquisition of new enterprises. For furhter information refer note 26.

Group 2009

Product Chemical NotAmounts in USD thousand tankers tankers allocated Total

Freight revenue 16,927 13,033 - 29,960

total revenue 16,927 13,033 - 29,960

Voyagerelatedexpenses - - - -

Time charter equivalent revenue (TCE revenue) 16,927 13,033 - 29,960

expenses related to the operation of vessels -9.338 -9.615 6 -18,947

staff costs -449 -375 546 -278

other external costs -1,599 -1,352 -425 -3,376

Earnings before income taxes and depreciations (EBITDA) 5,541 1,691 127 7,359

Depreciation -6,522 -4,546 - -11,068

Write-downs -63,259 -21,576 - -84,835

Operating result (EBIT) -64,240 -24,431 127 -88,544

Financial income - 1,389 1,389

Financial expenses - - -7,369 -7,369

Result before tax -64,240 -24,431 5,853 -94,524

tax on result for the period - - -28 -28

Result -64,240 -24,431 5,881 -94,552

Other segment information:

tangible assets 134,485 73,069 207,554

Intangible assets - - - -

58 stAFF costs

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Staff costs

Wages and salaries -1,340 -178 -14,406 -229

contribution based pension -107 -48 -1,230 -48

other social seciruty expenses -1 -1 -538 -1

other staff expenses -3 - -632 -

share-based payment -64 - -160 -

Total staff costs -1,515 -227 -16,966 -278

(of which:)

Board of Directors:

Remuneration to the Board of Directors -318 -323 -330 -374

Executive Board:

salary -1,022 -688 -1,022 -688

Adjustmentofsalaryprovision - 833 - 833

contribution based pension -107 -48 -107 -48

share-based payment -64 - -64 -

Total remuneration -1,511 -226 -1,523 -277

Average numbers of employees convert to full-time 2 2 145 2

Members of the executive Board have contracts of employement containing standard conditions for members of the management of Danish listed companies, including with regard to the periods of notice that both parties are required to give and competition clauses. If the executive Board´s contracts of employment are terminated by nordic tankers, without there having been mis-conduct on the part of the relevant member of the executive Board, said person has the right to compensation, which, depending of the circumstances, may amount to maximum of two years’ salary and pension contributions.

For 2009, crew aboard vessels is not included in the average number of employees as they were not employeed by the group. Wages and salaries are included under operating expenses.

Information about share-based payment refer note 25.

4. Staff costs

59Fees to BoARD AUDItoR

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Fees to the statutory auditor*

statutory audit of annual accounts -54 -76 -105 -118

other assurance services -6 -51 -6 -51

tax advices -29 -21 -47 -38

other assistance -108 -188 -132 -188

Total fees -197 -336 -290 -395

* 2009: Deloitte 2010: Grant thornton

5. Fees to board auditor

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Depreciation and amortisation

Depreciation - tangible assets -4,490 -3,505 -16,772 -11,068

Profit/loss from disposed fixed assets - - -6 -

total depreciation and amortisation -4,490 -3,505 -16.779 -11,068

Write down

Write down - intangible assets - - -14,311 -

Write down - tangible assets - -17,559 - -84.835

Total write down - -17,559 -14,311 -84,835

Total depreciation and write-down -4,490 -21,064 -31,090 -95,903

Impairment tests:

the write-down on goodwill attributes to the chemical tanker segment.

In accordance with IAs 36, intangible assets are tested for impairment at least annually and property, plant and equipment are tested if there are indications of impairment. Based on the internal management reporting nordic tankers has defined two seg-ments being the product tanker segment and the chemical tanker segment, which are managed separately and have separate cash flows. consequently, each segment has been defined as a cash generating unit for which impairment tests are performed in accordance with IAs 36.

Inthefirstquarterof2010,USD16.7millionofgoodwillwasrecognisedatthebusinesscombinationon7January2010per-taining to the chemical tanker segment. During 2010 goodwill has been written down with UsD 14.3 million, as the impairment tests performed recessitated write-downs.

Management’s estimates and the impairment tests are amongst others value in use calculations based on the expected devel-opment of the freight market, 5-year business plans and growth equal to expected inflation. Discount rates between 6.0-8.0% after tax have been used. Because of the current market situation the estimates are associated with significant uncertainty.

6. Depreciation and amortisation

60 WRIte-DoWns In sUBsIDIARIes

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Write-down of investments in subsidiaries -17,525 -4,243 - -

Total write-down of investments in subsidiaries -17,525 -4.243 - -

Write-down of investments in jointly controlled entities etc.

Write-downofinvestmentsinjointlycontrolledentities - -41,605 - -

Write-downofloanstojointlycontrolledentities - -6,307 - -

Total write-down of investments in jointly controlled entities etc. - -47,912 - -

nordic oslo and nordic copenhagen have been sold from two subsidiaries to the parent nordic tankers A/s. the fair value of the two subsidiaries is considered to be equal to the equity value hereafter and a write-down of UsD 3.2 million has thus been made in the parent company.

Further UsD 14.3 million was written down on investments in subsidiaries based on the impairment tests performed, and relates tothegoodwillrecognisedatthebusinesscombinationon7January2010pertainingtothechemicaltankersegment.Furtherinformation refer note 6.

Further information about investment in subsidiaries refer note 15.

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Financial income

Financial income from bank and deposit contracts 12 1,319 18 1,319

Financial income from related companies 123 - - -

Incomefromexchangerateadjustments 4,857 70 7,507 70

net gain on financial liabilities at fair value 6,176 - 6,176 -

Effectofdiscountingonfairvalueadjustment 243 - 243 -

other financial income 4 232 38 -

Total financial income 11,416 1,621 13,983 1,389

7. Write-downs of investments in subsidiaries

8. Financial income

61FInAncIAL eXPenses

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Financial expenses

Financial expenses to bank -456 -3 -509 -21

Interest on mortgage debt -2,883 -976 -9,227 -3,601

Fairvalueadjustmentstransferredfromequity relating to hedge of future cash flows -2,442 -2,781 -2,569 -2,781

Impairment of available-for-sale financial assets -114 -107 -114 -107

Expensesfromexchangerateadjustments -3,394 -331 -1,338 -405

other financial expenses -2,370 -1,710 -566 -454

Total financial expenses -11,660 -5,908 -14,324 -7,369

Total net financials -244 -4,287 -341 -5,980

9. Financial expenses

62 tAX FoR the yeAR

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Tax for the year

current tax 84 -36 -141 -28

AdjustmentdeferredTAX - - - -

Tax for the year recognised in the income statement 84 -36 -141 -28

tax on income for the year is explained as follows:

Income before company tax -22,651 -78,483 -27,913 -94,524

of which under the tonnage tax or other schemes 4,882 78,483 11,009 94,524

Adjustedincome -17,769 - -16,904 -

Calculated tax (25%) -4,442 - -4,226 -

tonnage tax 44 22 91 22

Withholding tax and foreign taxes - 14 - 14

Adjustmentduetodifferenttaxschemes,foreignentities - - 602 -

Deferred tax asset, not recognised 787 - 1,681 -

Adjustmentfornondeductibleexpenses 131 - 131 -

Adjustmentfornontaxableincome -1,604 - -1,736 -

Adjustmentforwrite-downsandprovisions 4,894 - 3,577 -

other permanent differences 106 - 21 -

Adjustmentoftaxforpreviousyears - - - -8

-84 36 141 28

no current or deferred tax has been recognised in other comprehensive income

the company opted for the tonnage tax scheme with effect from the 2002 accounting period. 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.

no deferred tax assets or liabilities are recognised 31 December 2010. the tax asset of non-recognised tax losses and tax credits carried forward, with certain limitations in subsidiaries, amounts to UsD 5.0 million (2009: UsD 3.9) for the group, and UsD 0.3 million (2009: UsD 0.0) for the parent.

Therearenounrecognisedtaxliabilitiesassociatedwithinvestmentsinforeignsubsidiariesandjointventures.

10. Tax for the year

63eARnInGs PeR shARe (ePs)

Group

Amounts in USD thousand 2010 2009

Earnings per share (EPS)

Profit for the Parent company´s shareholders -27,876 -94,552

number of shares used in calculation of earnings per share:

Average number of outstanding shares 28,157,163 7,180,000

Averagenumberoftreasurysharesat1January -24,000 -24,000

Number of shares used in calculation 28,133,163 7,156,000

earnings per share for continuing and discontinued operations -0.99 -13.21

Diluted earnings per share -0.99 -13.21

In accordance with IAs 33, the weighted average number of shares, when calculating diluted earnings, equals calculation of earnings per share, as the inclusion of potential shares would improve earnings per share.

As of 31 December 2010 the following warrants are excluded by calculating the average number of shares in calculating diluted earnings per share: 1,232,000 -

2010-programme refer note 25.

11. Earnings per share (EPS)

64 IntAnGIBLe Assets

2010

Amounts in USD thousand Goodwill

Costsasof1January -

Additions at business combination 16,656

Disposals during the year -

Cost as of 31 December 16,656

Amortisationandwrite-downsof1January -

Amortisation during the year -

Write-down during the year -14,311

Disposals during the year -

Amortisation and write-downs as of 31 December -14,311

Book value as of 31 December 2,345

Geographical split of intangible assets - Group 2010

Denmark 2,345

other -

2,345

no intangible assets were recognised in 2009.

Further information about the impairment test and wirte-down refer note 6.

12. Intangible assets – Group 2010

65IntAnGIBLe Assets

13. Tangible assets

Prepayment on vessels Vessel and under Plant and Amounts in USD thousand Docking contruction Equipment Total

Group 2010

Costsasof1January 319,007 - - 319,007

Additions during the year 77,877 35 320 78,233

Disposals during the year - - -7 -7

Cost as of 31 December 396,884 35 312 397,232

Revaluationsof1January 9,632 - - 9,632

Additions during the year -9,632 - - -9,632

Revaluation as of 31 December - - - -

Depreciationandwrite-downsof1January -121,085 - - -121,085

Adjustment1January 9,632 - - 9,632

Depreciation during the year -16,544 - -218 -16,762

Disposals during the year - - 1 1

Depreciation as of 31 December -127,997 - -217 -128,214

Book value as of 31 December 268,888 35 95 269,018

the carrying amount of vessels pledged as security for finance loans in the Group amounts to UsD 268,888 thousand.

Additions relating to business combinations 70,750 - 235 70,985 Addition of tonnage 7,127 35 85 7,248

Total additions during the period 77,877 35 320 78,233

Geographical split of tangible assets

Denmark 181,394

the netherlands 87,529

other 95

269,018

66 tAnGIBLe Assets

Prepayment on vessels Vessel and under Plant and Amounts in USD thousand Docking contruction Equipment Total

Group 2009

Costsasof1January 222,973 19,147 - 242,120

Additions during the year 76,887 - - 76,887

transfer 19,147 -19,147 - -

Cost as of 31 December 319,007 - - 319,007

Revaluationsof1January 9,632 - - 9,632

Additions during the year - - - -

Revaluation as of 31 December 9,632 - - 9,632

Depreciationof1January -25,182 - - -25,182

Depreciation during the year -11,068 - - -11,068

Write-down during the year -84,835 - - -84,835

Disposals during the year - - - -

Depreciation as of 31 December -121,085 - - -121,085

Book value as of 31 December 207,554 - - 207,554

the carrying amount of vessels pledged as security for finance loans in the Group amounts to UsD 207,554 thousand.

Geographical split of tangible assets

Denmark 81,616

the netherlands 91,416

other 34,522

207,554

67tAnGIBLe Assets

Prepayment on vessels Vessel and under Plant and Amounts in USD thousand Docking contruction Equipment Total

Parent Company 2010

Costsasof1January 111,915 - - 111,915

Additions during the year 34,626 35 - 34,661

Disposals during the year - - - -

Cost as of 31 December 146.541 35 - 146.576

Depreciationandwrite-downsof1January -30,299 - - -30,299

Depreciation during the year -4,490 - - -4,490

Write-down during the year - - - -

Disposals during the year - - - -

Depreciation as of 31 December -34,789 - - -34,789

Book value as of 31 December 111,752 35 - 111,788

the parent company’s vessels have been pledged as security and the carrying amount for 2010 totals UsD 111,752 thousand.

Prepayment on vessels Vessel and under Plant and Amounts in USD thousand Docking contruction Equipment Total

Parent company 2009

Costsasof1January 59,203 10,380 - 69,583

Additions during the year 42,332 - - 42,332

transfer 10,380 -10,380 - -

Cost as of 31 December 111,915 - - 111,915

Depreciationof1January -9,235 - - -9,325

Depreciation during the year -3,505 - - -3,505

Write-down during the year -17,559 - - -17,559

Disposals during the year - - - -

Depreciation as of 31 December -30,299 - - -30,299

Book value as of 31 December 81,616 - - 81,616

the parent company’s vessels have been pledged as security and the carrying amount for 2009 totals UsD 81,616 thousand.

68 JoINTVENTURES

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

TheGrouphasthefollowingsignificantinterestsinjoint ventures:

NordicSeaarlandTankersB.V.,theNetherlands,jointventure, operation of a wholly-owned handy-size tanker, and two 50,01% and two 75.01% holdings in handy-size tankers. Thecompaniesarejointlycontrolledbasedontheagreements.

Thetablebelowshowsthejointlycontrolledentities’share of results included in the consolidated income statement and principal items included in the consolidated balance sheet in compliance with IFRs:

current assets 6,726 4,495

non-current assets 87,529 91,416

current lianilities 399 7,367

non-current liabilities 97,458 96,175

time charter equivalent revenue (tce revenue) 14,948 13,761

total expenses -17,442 -17,815

-2,494 -4,054

Investment in jointly controlled entities

Costasof1January 41,605 40,055

Additions during the year - 1,550

Cost as of 31 December 41,605 41,605

Write-downasof1January -41,605 -

Write-down during the year - -41,605

Write-down as of 31 December -41,605 -41,605

Carrying amount as of 31 December - -

Provisionsregardingguaranteestowardsjointlycontrolledentitiesaredescribedinnote21.

on28February2011NordicTankersA/ScompletedtheacquisitionoftheremainingsharesinNordicSeearlandB.V.correspondingtoownershipinterestequivalentto1.5handysizeproducttankerandtherebyendedthejointventurewiththeZacchellogroup.

For further information refer note 28.

14. Joint ventures

69

Parent Company

Amounts in USD thousand 2010 2009

Costasof1January 12,082 12,082

Additions during the year 49,939 -

Cost as of 31 December 62,021 12,082

Write-downasof1January -4,243 -

Write-downs during the year -17,525 -4,243

Write-down as of 31 December -21,768 -4,243

Carrying amount as of 31 December 40,253 7,839

Ownership Voting Company summary Primary operations Domicile % right %

Subsidiaries for Nordic Tankers A/S

nordic tankers Management A/s Management conpany Denmark 100 100

nordic tankers Marine A/s technical management Denmark 100 100

A/s nordic Inge shipowning company Denmark 100 100

K/s nordic Marianne shipowning company Denmark 95 95

K/SNordicNadja Shipowningcompany Denmark 90 90

K/s nordic nelly shipowning company Denmark 95 95

K/s nordic nora shipowning company Denmark 95 95

nordic copenhagen shipping co. Pte. Ltd* shipowning company singapore 100 100

nordic oslo shipping co. Pte. Ltd* shipowning company singapore 100 100

Subsidiary for Nordic Tankers Management A/S

nordic tankers trading A/s commercial management Denmark 100 100

Subsidiaries for Nordic Tankers Trading A/S

nordic tankers (UsA) Inc. commercial management UsA 100 100

nordic tankers (columbia) Ltda. commercial management columbia 51 51

Subsidiary for Nordic Tankers Marine A/S

nordic tankers Marine sIA crew Management Latvia 100 100

General partnership companies

nordic Marianne Aps General partners of each Denmark 100 100

NordicNadjaApS oneofthe4acquired Denmark 100 100

nordic nelly Aps limited partnership Denmark 100 100

nordic nora Aps companies Denmark 100 100

* In process of liquidation.

on7January2010,NordicTankersacquiredthemajorityofvotingrightsandthusacontrollinginterestinanumberofcompanies.For furhter information refer note 26.

two vessels; nordic oslo and nordic copenhagen have been sold from two subsidiaries to their parent nordic tankers A/s. the fair value of the two subsidiaries is considered to be equal to the equity and a write down of UsD 3.2 million have thus been made in the parent company.

15. Investments in subsidiaries

INVESTMENTINSUBSIDIARIES

70 TRADERECEIVABlES

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Receivables from pool arrangements 1,216 2,253 4,318 6,222

Receivables from freight 1,781 - 4,251 -

other receivables 845 - 2,535 -

Total trade receivables 3,842 2,253 11,103 6,222

the carrying amount corresponds to the fair value of the receivables.

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Purchasepriceadjustment 870 - 870 -

Pre-payments and deposits 1,796 512 2,137 518

other receivables 2,181 267 4,010 2,516

Total other receivables 4,847 779 7,017 3,034

the carrying amount corresponds to the fair value of the receivables.

16. Trade receivables

17. Other receivables

71FInAncIAL RIsKs AnD FInAncIAL InstRUMents

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

Classification of financial instruments

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Listed shares 21 135 21 135

others shares 70 - 70 -

Available-for-sale financial assets 91 135 91 135

Purchasepriceadjustment 870 - 870 -

Financial assets measured at fair value in the income statement 870 - 870 -

trade receivables 3,842 2,253 11,103 6,222

Receivables from related companies 9,148 5,954 - -

other receivables 3,977 779 6,147 3,034

cash 4,864 71 18,093 2,625

Loans, receivables and cash 21,831 9,057 35,343 11,881

Derivative financial instruments used to hedge future cash flows (interest rate swaps and collar) 783 2,418 783 2,615

Financial liabilities used as hedging instruments 783 2,418 783 2,615

Finance loans 93,419 70,820 233,949 189,975

trade payables 2,261 3,025 5,211 4,658

Payables to related companies 6,227 - - -

other payables 2,707 152 6,514 2,277

Financial liabilities measured at amortised cost 104,614 73,997 245,674 196,910

contingent consideration 5,426 - 5,426 -

Financial liability measured at fair value in the income statement 5,426 - 5,426 -

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:

•Quotedpricesinanactivemarketforidenticalinstruments(level1).

•Quotedpricesinanactivemarketforsimilarassetsorliabilitiesorothervaluationmethodswhereallsignificantinputsarebased on observable market data (level 2).

•Valuationmethodswhereanysignificantinputsarenotbasedonobservablemarketdata(level3).

18. Financial risks and financial instruments

72 FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Methods and assumptions in determining fair value

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

other shares:other shares are measured at fair value by applying valuation methods.

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

contingent consideration:Thefairvalueassessmentofthedeferredcontingentpaymentandthepurchasepriceadjustmentisthenetpresentvalueoftheexpectedcashflowfromthedeferredcontingentpaymentandthepurchasepriceadjustmentcombined.Theeffectoffutureperiods of a change in the estimates is not disclosed, as this estimating is impracticable.

Anincreaseinthediscountfactorlevel(themajorbaseparameter),by1percentagepointrelativetothediscountfactorlevelon the balance sheet date would have had a positive effect on UsD 0.1 - 0.2 million on the Group´s results of operations and equity.

Group - 2010 USD 1,000 Level 1 Level 2 Level 3 Total

Listed shares 21 - - 21

other shares - - 70 70

Available-for-sale financial assets 21 - 70 91

Purchasepriceadjustment - - 870 870

Financial assets measured at fair value in the income statement - - 870 870

Derivative financial instruments held to hedge future cash flows (interest rate swaps and interest rate collar) - 783 - 783

Financial liabilities used as hedging instruments - 783 - 783

contingent consideration - - 5,426 5,426

Financial liability measured at fair value in the income statement - - 5,426 5,426

Group - 2009 USD 1,000 Level 1 Level 2 Level 3 Total

Listed shares 135 - - 135

other shares - - - -

Available-for-sale financial assets 135 - - 135

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

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

73FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Parent Company - 2010 USD 1,000 Level 1 Level 2 Level 3 Total

Listed shares 21 - - 21

other shares - - 70 70

Available-for-sale financial assets 21 - 70 91

Purchasepriceadjustment - - 870 870

Financial assets measured at fair value in the income statement - - 870 870

Derivative financial instruments held to hedge future cash flows (interest rate swaps and interest rate collar) - 783 - 783

Financial liabilities used as hedging instruments - 783 - 783

contingent consideration - - 5,426 5,426

Financial liability measured at fair value in the income statement - - 5,426 5,426

Parent Company - 2009 USD 1,000 Level 1 Level 2 Level 3 Total

Listed shares 135 - - 135

other shares -

Available-for-sale financial assets 135 - - 135

Derivative financial instruments held to hedge future cash flows (interest rate swaps and interest rate collar) - 2,418 - 2,418

Financial liabilities used as hedging instruments - 2,418 - 2,418

Movements in Level 3: Group and Parent Company

USD 1,000 2010 2009

Liabilities:

Balance, beginning of period - -

Additions during the year 11,005 -

Recognised in income statement, profit and loss -5,579 -

Balance, end of period 5,426 -

Assets

Balance, beginning of period - -

Additions during the year 5,014 -

Recognised in income statement, profit and loss 840

settlements during the year -4,914 -

Balance, end of period 940 -

there were no transfers between level 1 and level 2 during the financial year.

74 FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Policy for managing financial risksDue 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 manages the group’s financial risks centrally and coordinates the group’s liquidity management, including funding and investment 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 use financial instruments to hedge risks. For further information on accounting policies and methods, including recognition criteria and bases of measurement, see the section on accounting policies in note 2.

Currency risksthe group’s foreign enterprises are only mildly sensitive to exchange rate fluctuations as earnings and costs are primarily denominated in UsD. the parent company is sensitive to exchange rate fluctuations as earnings are primarily denominated in UsD, whereas vessels operating expenses, staff costs, administrative and part of the financing expenses and loans are partly denominated in DKK and eUR. no financial hedges has been made for the DKK and eUR exposure in 2010, however, the proceeds in DKK from the rights issue completed in May 2010 has been used as coverage for the exposure. the group policy is to review the currency exposure and hedge the risk if this is significant. the sensitivity towards changes in exchange rates is approx. UsD 0.1-0.2 million for each percentage change in UsD towards DKK and eUR combined.

Interest rate risksIt 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.

Group: the 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 -0.8 million (31 December 2009: a value of UsD -2 million). the outstanding interest rate swaps have a nominal valueofUSD184million(31December2009:USD90million).USD92millionrununtil29June2012andUSD92millionrunfrom29June2012to29June2015.

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 1.9 million (2009: UsD 1.0 million) on results for the year and equity. A corresponding decrease in interest rates would have had a corresponding positive impact on results for the year and equity.

Parent company: the fair value of the parent company’s outstanding interest rate swaps contracted to hedge interest rate risks on floating-rate loans amounts to a liability, UsD -0.8 million (31 December 2009: a value of UsD -2 million). the outstanding interest rate swaps haveanominalvalueofUSD184million(31December2009:USD90million).USD92millionrununtil29June2012andUSD92millionrunfrom29June2012to29June2015.

the parent company’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 0.8 million (2009: UsD 0.8 million) on results for the year and equity. A corresponding decrease in interest rates would have had a corresponding positive impact on results for the year and equity.

Date of revaluation/maturity – Groupthe 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 assetsand liabilities, the following contractual dates of reassessment and maturity, whichever is earlier, are listed below.

75FInAncIAL RIsKs AnD FInAncIAL InstRUMents

31.12.2010 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

cash and cash equivalents 18,093 - - 18,093

Finance loans, fixed -5,880 -37,630 - -43,510

Finance loans, floating -128 -156,602 -33,709 -190,439

contingent considerations, fixed - -5,426 - -5,426

Interest rate swaps -1,709 926 - -783

Total 10,376 -198,732 -33,709 -222,065

31.12.2009 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

cash and cash equivalents 2,625 - - 2,625

Finance loans, floating -1,171 -67,963 -120,841 -189,975

collar -549 - - -549

Interest rate swaps -1,228 -838 - -2,066

Total -323 -68,801 -120,841 -189,965

Date of revaluation/maturity – Parent Company

31.12.2010 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

cash and cash equivalents 4,864 - - 4,864

Finance loans, fixed - -660 -660

Finance loans, floating -128 -92,631 - -92,759

contingent considerations, fixed - -5,426 -5,426

Interest rate swaps -1,709 926 -783

Total 3,027 -97,791 - -94,764

31.12.2009 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

cash and cash equivalents 71 - - 71

Finance loans, fixed - - - -

Finance loans, floating -16 -50,919 -19,885 -70,820

collar -549 - - -549

Interest rate swaps -1,031 -838 - -1,869

Total -1,525 -51,757 -19,885 -73,167

76 FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Liquidity risks It is group policy in connection with borrowing, etc to ensure the greatest possible flexibility through a diversification strategy whereby borrowings are spread across dates of maturity and renegotiation, including spread across fixed loans and overdraft style 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.

In May 2010 nordic tankers completed a successful share issue of UsD 41.5 million in gross proceeds which was contributed as cash contribution and through conversion of debt. the improved cash position together with undrawn credit facilities from clipper oftotalUSD10milion,andof3January2011USD12.5million,aswellasthefactthatNordicTankershasamoratoriumonthemajorityofthedebtmeansthatNordicTankersexpectstohavesufficientliquiditytomeetthecompany’sobligationsin2011.the current cash position as per 31 December 2010 is UsD 18 million and the company’s total cash flow for 2011 is expected to be between UsD 0 million and -10 million.

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

cash resources consist of the following:

cash 4,864 71 18,093 2,625

Undrawn borrowing facilities 10,000 - 10,000 -

Total 14,864 71 28,093 2,625

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 liquid-ity management. the specified amounts represent the amounts falling due, including future interest, calculated at the interest rate ruling at the balance sheet date.

Parent Company - 2010 Book value Within Between After USD 1,000 1 year 2-5 years 5 years Total

Non-derivative financial liabilities

Finance loans, fixed -660 - -966 - -966

Finance loans, floating -92,759 -3,154 -100,865 - -104,019

contingent consideration, fixed -5,426 - -7,500 - -7,500

trade payables -2,261 -2,261 - - -2,261

Payables to subsidiaries -6,227 -6,227 - - -6,227

other payables -2,707 -2,707 - - -2,707

Total -110,040 -14,349 -109,331 - -123,680

Derivative financial instruments

Derivative financial instruments used to hedge future cash flows -783 -1,709 926 - -783

Total -110,823 -16,058 -108,405 - -124,463

77FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Parent Company - 2009 Book value Within Between After USD 1,000 1 year 2-5 years 5 years Total

Non-derivative financial liabilities

Finance loans, floating -70,820 -2,351 -57,001 -20,458 -79,810

trade payables -3,025 -3,025 - - -3,025

other payables -152 -152 - - -152

Total -73,997 -5,528 -57,001 -20,458 -82,987

Derivative financial instruments

Derivative financial instruments used to hedge future cash flows -2,418 -1,580 -838 - -2,418

Total -76,415 -7,108 -57,839 -20,458 -85,405

Group - 2010 Book value Within Between After USD 1,000 1 year 2-5 years 5 years Total

Non-derivative financial liabilities

Finance loans, fixed -43,510 -7,302 -41,693 - -48,995

Finance loans, floating -190,439 -6,763 -173,786 -34,755 -215,304

contingent consideration, fixed -5,426 - -7,500 -7,500

trade payables -5,211 -5,211 - - -5,211

other payables -6,514 -6,514 - - -6,514

Total -251,100 -25,790 -222,979 -34,755 -283,524

Derivative financial instruments

Derivative financial instruments used to hedge future cash flows -783 -1,709 926 -783

Total -251,883 -27,499 -222,053 -34,755 -284,307

78 FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Group - 2009 Book value Within Between After USD 1,000 1 year 2-5 years 5 years Total

Non-derivative financial liabilities

Finance loans, floating -189,975 -7,497 -87,640 -138,736 -233,873

trade payables -4,658 -4,658 - - -4,658

other payables -2,277 -884 - -1,393 -2,277

Total -196,910 -13,039 -87,640 -140,129 -240,808

Derivative financial instruments

Derivative financial instruments used to hedge future cash flows -2,615 -1,777 -838 - -2,615

Total -199,525 -14,816 -88,478 -140,129 -243,723

Optimisation of capital structure subsequent to the acquisition of the clipper activities Management has assessed 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 obligations to lenders into consideration. the group’s capital structure is composed of finance loans and equity. Whereas equity in after Q1 2010 ac-counted for 10.8% of the balance sheet total following the acquisition of the clipper activities (up from 9.3% as per 31 December 2009) this was found to be insufficient. therefore, a rights issue was completed in May 2010 whereby the comany raised UsD 41millionthroughcashinjectionandconversionofdebt.Therebytheequityratioimprovedto21.7%bytheendofQ22010.Asper 31 December 2010 equity was 18.5% of the balance sheet total.

Breach of loan agreement terms the group has not neglected or breached any loan agreement terms in the financial year or the comparative year.

Credit risks Itisgrouppolicytocooperatewithrecognisedpoolpartnersandonlygrantcredittooilmajorsandotherfirstclasscustomersin order to minimise credit risks. As such, the group’s credit risk relates to receivables from these first class customers and oil majorsinthechemicaltankersegmentandfrompoolarrangementscontractedwithrecognisedbusinesspartnersintheproducttanker segment. there are no overdue receiveables and no reservations have been made. the credit risk is deemed to be minimal and consequently receivables are not hedged. the group’s maximum credit risk associated with receivables corresponds to their carrying amounts.

Parent Company - 2010 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

Non-derivative financial assets

trade receivables 3,842 - - 3,842

Receivables related companies 9,148 - - 9,148

other receivables 4,380 - 467 4,847

Total 17,370 - 467 17,837

79FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Parent Company - 2009 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

Non-derivative financial assets

trade receivables 2,253 - - 2,253

Receivables related companies 5,954 - - 5,954

other receivables 779 - - 779

Total 8,986 - - 8,986

Group 2010 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

Non-derivative financial assets

trade receivables 11,103 - - 11,103

other receivables 6,550 - 467 7,017

Total 17,653 - 467 18,120

Group 2009 Between After USD 1,000 Within 1 year 2-5 years 5 years Total

Non-derivative financial assets

trade receivables 6,222 - - 6,222

other receivables 3,034 - - 3,034

Total 9,256 - - 9,256

80 FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Parent Company

Amounts in USD thousand 2010 2009

Payables to lenders are recognised in the balance sheet as follows:

non-current liabilities 98,717 70,820

current liabilities 128 -

98,845 70,820

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

Currency Fixed/floating 2010 2009

UsD floating 92,495 70,697

UsD fixed 660 -

contingent consideration fixed 5,426 -

calculated interest not yet due on finance loans 264 123

98,845 70,820

Due within one year 128 16

Due between 1-2 years 22,802 -

Due between 2-3 years 24,134 6,293

Due between 3-4 years 10,089 35,941

Due between 4-5 years 41,692 8,685

Due after 5 years - 19,885

98,845 70,820

Contingent consideration: In connection with the acquisition of the management activities from clipper Group, it was agreed that the payment for the activities would be made as a contingent consideration depending on the financial performance of nordic tankers Management A/s and nordic tankers Marine services A/s during the period 2010-2013. the payment will amount to between UsD 7.5 million and UsD 15.0 million depending on the financial results. Moreover, the seller will compensate the buyer for any losses during the years 2010-2012 up to a maximum of UsD 11 million. thus, the total consideration may amount to between UsD -3.5 million and UsD 15 million.

ThecontingentconsiderationwasrecognisedatafairvalueofUSD11.0millionatthebusinesscombination7January2010.Based on updated budgets prepared in third quarter 2010 management expects a reduced payment for the activities over the period2010-2013,andthefairvalueofthecontingentconsiderationisreducedtoUSD5.4million.ThefairvalueadjustmentofUsD 5.6 million has in accordance with IFRs 3 been recognised in the statement of comprehensive income as financial income, refer note 8.

19. Finance loans

81FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Group

Amounts in USD thousand 2010 2009

Payables to lenders are recognised in the balance sheet as follows:

non-current liabilities 233,370 188,804

current liabilities 6,005 1,171

239,375 189,975

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

Currency Fixed/floating 2010 2009

UsD floating 189,953 189,843

UsD fixed 660 -

eUR fixed 42,850 -

contingent consideration fixed 5,426 -

calculated interest not yet due on finance loans 487 132

239,375 189,975

Due within one year 6,005 1,171

Due between 1-2 years* 53,883 1,874

Due between 2-3 years 37,232 41,571

Due between 3-4 years 56,380 12,259

Due between 4-5 years 52,166 12,259

Due after 5 years 33,709 120,841

239,375 189,975

*the company has an option to defer approximately UsD 20 million of the UsD 54 million.

82 FInAncIAL RIsKs AnD FInAncIAL InstRUMents

Fair value of loans with fixed interest rate

Maturity Fair value Nominel value

UsD 2014 6,216 6,086

eUR 2014 11,529 11,278

eUR 2014 6,585 6,717

eUR 2014 6,868 6,735

eUR 2014 6,868 6,476

eUR 2015 11,913 11,644

49,978 48,935

the fair value of the group’s and parent company’s finance loans in UsD with floating interest corresponds to the carrying amount.

Amounts of future maturities do not include interest payments.

the loan agreements stipulate minimum requirements (financial covenants) for liquidity, equity ratio and debt ratio, based on themarketvalueofthevessels,amongotherthings.Further,theNordicSeaarlandjointventurehasagreedtoacashsweepmechanismwherebyexcesscashwillbeusedtorepaythejointventureloans.

the financial covenants are all met as per 31 December 2010 and are expected to be met in 2011, based on the group’s expecta-tions for future earnings, cash flow and the development in the value of vessels, etc.

83

84 tRADe PAyABLes

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

suppliers of goods and services 1,605 2,945 3,360 4,578

other suppliers 556 80 1,851 80

Total trade payables 2,261 3,025 5,211 4,658

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

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Provisions for recourse guarantee commitment relatingtojointlycontrolledentities 3,147 1,324 - -

other provisions 809 609 809 609

Total provisions 3,956 1,933 809 609

Provisionsasof1January 1,933 609 609 609

Additions during the year 2,023 1,324 200 -

Disposals during the year - - - -

Provisions as of 31 December 3,956 1,933 809 609

Parent Due within Due between Due after USD 1,000 1 year 2-5 years 5 years Total

2010 - 3,956 - 3,956

2009 - 1,933 - 1,933

Group

2010 - 809 - 809

2009 - 609 - 609

NordicTankersistheguarantorforthepro-rateshareoftheloansgrantedtoNordicSeearlandTankersB.V.

20. Trade payables

21. Provisions

85otheR LIABILItIes

Parent Company Group

Amounts in USD thousand 2010 2009 2010 2009

Derivative financial instruments 783 2,418 783 2,615

Payables to related companies 6,227 - - -

other payables 2,707 152 6,514 2,277

Total other liabilities 9,717 2,570 7,297 4,892

the carrying amount of payables relating to tax, social security contributions, holiday pay, etc., financial instruments and expenses payable correspond to the fair value of the liabilities.

22. Other liabilities

Parent Company and Group

Amounts in USD thousand 2010 2009

Treasurysharesat1January 24,000 24,000

Acquisitions - -

Disposal - -

Treasury shares at 31 December 24,000 24,000

nominal value

Treasurysharesat1January 240,000 240,000

Acquisitions - -

Disposal - -

Treasury shares at 31 December 240,000 240,000

% of share capital

Treasurysharesat1January 0,33% 0,33%

Acquisitions -0,27% 0,00%

Disposal 0,00% 0,00%

Treasury shares at 31 December 0,06% 0,33%

23. Treasury and share capital

86 tReAsURy AnD shARe cAPItAL

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.

Share capital 31 December 2010 the share capital 31 December 2010 consisted of 37,764,888 shares of DKK 10. the shares have not been divided into classes, and there are no special rights attached to the shares.

the share capital in 2009 consisted 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.

Transactions on the share capital have been the following:

Amounts in USD thousand 2010 2009 2008 2007 2006

Sharecapitalasof1January 12,826 12,826 12,826 206 206

Issue of new shares 51,914 - - 12,620 -

Share capital as of 31 December 64,740 12,826 12,826 12,826 206

Number of shares:

Sharesat1January 7,180,000 7,180,000 7,180,000 1,300 1,300

Issue of new shares 30,584,888 - - 7,178,700 -

Shares as of 31 December 37,764,888 7,180,000 7,180,000 7,180,000 1,300

on 14 February 2011 nordic tankers completed the reduction of the company’s share capital from DKK 377,648,880, nominal value to DKK 37,764,888 nominal value, as decided at the company’s extraordinary General Meeting on 5 november 2010, providing the company with an increased flexibility in relation to further issuance of shares.

on 4 March 2011 nordic tankers carried out a directed issue of 1,181,809 new shares to former minority investors in the five stainlesssteelvesselsacquiredfromClipperandotherinvestorsinJanuary2010.TheissueincreasedNordicTankers’sharecapital by 3.1% from 37,764,888 shares to 38,946,697 shares, and as the share issue constituted less than 10% of the outstanding share capital no prospectus was required. the share issue was based on a partial utilization of the authorization given to the Board of Directors by the General Assembly on 5 november 2010 and included in clause 4.3 of nordic tankers’ articles of association. the shares were issued at DKK 7.43 which was the average share price over the five bank days prior to the issue date, and which in the opinion of the board reflected the prevailing market rate of the share. the proceeds from the issue consisted of ownership shares in four different chemical tankers, in total equal to 0.25 vessel, and cancellation of interest bearing vendor notes issued inJanuary2010withaprincipalofapproximatelyUSD600thousand.

87ReLAteD PARty tRAnsActIons

Amounts in USD thousand 2010 2009

Related party transactions Parent Company

Board of Directors and Executive Board:

nordic tankers A/s’ related parties with a controlling 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.

the company has engaged in transactions with members of the Board of Directors and executive Board and companiesRelated party transactions Parent company controlled by these in the form of consulting services, which may be shown separately as follows:

•MemberoftheBoardofDirectorsSvenRosenmeyerPaulsenreceivedafeeforlegalservices. - -15

Related parties with a significant interest:

clipper Group and siva Group holds significant interests and are considered related parties.

the company has engaged in transactions with clipper as follows:

•Purchasepriceadjustment 3,281 -

Jountly controlled entities:

Guaranteestolendersloaningmoneytojointlycontrolledentitiescanbefoundinnote26

FurtherinformationandoverviewofJointlycontrolledentitiescanbefoundinnote14

Subsidiaries:

transactions with subsidiaries:

•Nodividendsin2010and2009.

•loanstosubsidiaries - 5,954

nordic tankers A/s purchase of vessels from nordic oslo shipping co. Pte. Ltd. and nordic copenhagen shipping co. Pte. Ltd., singapore 32,987 -

technical & crew Management fee (expense):

nordic tankers A/s purchase of technical Management services from nordic tankers Marine A/s 312 -

commercial Management fee (expense):

nordic tankers A/s purchase of commercial Management services from nordic tankers Management A/s 494 -

24. Related party transactions

88 ReLAteD PARty tRAnsActIons

Amounts in USD thousand 2010 2009

Related party transactions Group

In addition to the above the following related parties transactions are recorded at Group level:

Related parties with a significant interest:

clipper Group and siva Group holds significant interests and are considered related parties.

the Group has engaged in transactions with clipper as follows:

•ServicelevelAgreement(SlA),coveringadministrativeservices(expense) 1,101 -

•CommercialandTechnicalManagement(income) 13,522 -

Subsidiaries:

Management fee (expense):

nordic tankers Marine A/s purchase of Management services from nordic tankers Marine sIA 414 -

nordic tankers Management A/s purchase of Management services from nordic tankers UsA Inc. 4,301 -

nordic tankers Management A/s purchase of Management services from nordic tankers (columbia) Ltda. 424 -

Guarantees provided to subsidiaries can be found in note 27.

Further information and overview of subsidiaries can be found in note 15.

Information on further inter-company transactions and balances can be found in notes 8 and 9.

Apart from Group inter-company transactions, mentioned above, renumeration of the Board of Directors, president of the company and managerial staff, (note 4), and the warrant programmes (note 25), there are no significant transactions with related parties.

transactions with subsidiaries are eliminated in the consolidated accounts, in accordance with the Accounting Policies in note 2.

For description of contingent liabilities related to previous manament can be found in note 27.

89

Share-based payment InordertoreflecttheCompany’sobjectiveofattractingandretainingqualifiedemployees,therebyensuringlong-termvaluefor the shareholders, nordic tankers A/s has established a share-based compensation programmes by way of a warrant plan for the company’s management and employees.

Warrants InJune2010theBoardofDirectorsgrantedwarrantstotheCompany´smanagementandemployees,refertablebelow.

the warrants were granted in accordance with the authorisations given to the Board of Directors by the sharebolders. the Board of Directors has fixed the terms of and the size of the grants of warrants, taking into account authorisations from the sharehold-ers, the company’s guidelines for incentive pay, to the extent applicable, an assessment of expectations of the recipient´s work efforts and contribution to the company´s growth, as well as the need to motivate and retain the recipient. In addition, the war-rantsgrantedaresubjecttotheprovisionsoftheDanishPublicCompaniesActregardingterminationofemployeespriortotheirexerciseofwarrantsinthecaseofrecipientswhoaresubjecttotheact.

the terms of the warrant plans are included in the Articles of Association.

the exercise price and exercise periods for the individual grants are stated in the table below.

Outstanding Addition Outstanding as of during Options Termina- as of 31 1 January the year exercised Forfeited tions December

2010 programme -

executive Board - 550,000 - - - 550,000

other employees - 683,500 - -57,500 - 626,000

Retired employees as of 31 December - 56,000 - - - 56,000

Total - 1,289,500 - -57,500 - 1,232,000

numbers of warrants which can be exercised as of 31 December 2010 -

25. Incentive plans

INCENTIVEPlANS

90 INCENTIVEPlANS

2010 programme

Specification of parametres for BlackScholes model

Avearge share price (DKK) 9.40

share exercise price (DKK) 10.00

expected volatility rate 45%

Average duration – number of months 36

expected dividend per share -

Risk-fee interest rate 1.93%

the fair value of the warrants on grant has been determined applying the Blackscholes model in DKK. 2.46

the expected volatility is based analysis of peers within the market

no further features of the option grant were incorporated into the measurement of the fair value

2010

Weighted average exercise price (DKK)

outstandingasof1January -

Granted during the year 10.00

Forfeited 10.11

outstanding af of 31 December 10.21

2009 2010

Recognised costs, UsD thousand - 160

Vesting and exercise periodsThewarrantsarevestingintheperiod23June2010upto23June2012,andcanbeexercisedwhollyorpartlyintheperiodfrom24June2012uptoandincluding24June2014.

Warrants should be exercised within a period of four weeks after the publication of the company’s annual reports or interim re-ports. the first period in which warrants granted can be exercised is the four-week period after the publication of the company’s interim report 2012, and the last period in which warrants granted can be exercised is the four-week period after the publication of the company’s annual report for 2013.

TheexercisepricehasbeenfixedatDKK10withtheadditionof4%p.a.calculatedfrom23June2010anduntiltheexercisetakes place.

91AcQUIsItIon oF enteRPRIses In 2010

on7January2010,NordicTankersacquiredthemajorityofvotingrightsandthusacontrollinginterestinanumberofcompa-nies. the aim of the acquisitions was to expand nordic tankers’ operations within the chemical tanker segment, partly through ownership of vessels, partly through offering of management services. the acquisitions comprised the following shipowning companies and management companies (all with registered offices in copenhagen):

Name Type Primary operations Domicile Owner-ship %

Voting right %

A/s nordic Inge shipowning company ownership and operation of vessel

Denmark 100 100

K/s nordic Marianne shipowning company ownership and operation of vessel

Denmark 95 95

K/SNordicNadja shipowning company ownership and operation of vessel

Denmark 90 90

K/s nordic nelly shipowning company ownership and operation of vessel

Denmark 95 95

K/s nordic nora shipowning company ownership and operation of vessel

Denmark 95 95

nordic Marianne Aps Limited partnership companyGeneral partners of each one of the 4 acquired limited partners-hip company

Denmark 100 100

NordicNadjaApS Limited partnership company Denmark 100 100

nordic nelly Aps Limited partnership company Denmark 100 100

nordic nora Aps Limited partnership company Denmark 100 100

nordic tankers Management A/s

Management conpany commercial management of vessels

Denmark 100 100

nordic tankers Marine A/s

Management conpany technical management of vessels

Denmark 100 100

the acquisitions in brief:

•Acquisitionofacontrollinginterestandthemajorityofvotingrightsinfourlimitedpartnershipcompaniesowningonechemicaltanker 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 voting rights in four limited partnership companies.

•Acquisitionoftheentireownershipinterestandallvotingrightsintwocompaniesspecialisingincommercialandtechnicalmanagement, respectively.

As the acquisitions of the shipowning companies and the management companies were carried out at the same time and be-tween the same parties, the acquisitions are considered to be one acquisition. As a result of the issue of new shares in connection withthetransaction,ClipperhasbecomeamajorshareholderinNordicTankerswithaholdingofabout31%.SincetheoriginalshareholdersofNordicTankersstillholdthemajorityofthevotingrights,NordicTankersisconsideredtobetheacquirer.Theacquired assets and liabilities, distribution of the consideration of UsD 46.1 million and cash flows in connection with the trans-action may be specified as follows:

26. Acquisition of enterprises in 2010

92 AcQUIsItIon oF enteRPRIses In 2010

Non-current assets Amounts in USD thousand

Vessels 70,750

tools and equipment 235

Total non-current assets 70,985

Current assets

Lubricant stocks 579

trade receivables 2,779

other receivables 8,271

cash 9,221

Total Current assets 20,850

Total assets 91,835

Non-current liabilities

Finance loans 46,082

Total non-current liabilitites 46,082

Current liabilities

Finance loans 6,178

trade payables 2,347

other payables 6,840

Total current liabilities 15,365

Net assets acquired 30,388

Goodwill 16,656

Minority interests -967

Total consideration 46,077

cash acquired, cf. above -9,221

Deferredcontingentconsiderationandpurchasepriceadjustment -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

costs relating to the issue 696

Acquisition of enterprises, net -8,525

93AcQUIsItIon oF enteRPRIses In 2010

the minority interests are recognised on the transaction date at the proportionate share of the fair value of identified net assets. the consideration consists of deferred contingent consideration, shares and instruments of debt.

the contingent consideration depends on the financial performance of nordic tankers Management A/s and nordic tankers Marine A/s during the period 2010-2013 and may amount to between UsD 7.5 million and UsD 15.0 million depending on the financial results. Moreover, the seller will compensate the buyer for any losses during the years 2010-2012, however, up to a maximum of UsD 11 million. thus, the total consideration may amount to between UsD -3.5 million and UsD 15 million and has been recognised at the fair value at the date of acquisition, corresponding to UsD 6.1 million.

A total of 5,408,296 consideration shares were issued, of which 3,894,932 shares were issued at a market price of DKK 27.70 per share or a total of UsD 20.7 million, and 1,513,364 shares were issued at the fair value on the transaction date, corresponding to DKK 16.68 per share or a total of UsD 4.9 million. Following the transaction, the total number of shares increased to 12,588,296.

For furhter information about impairment test of goodwill see note 6.

Forfurhterinformationaboutfairvalueadjustmentofcontingentconsiderationrefernote18.

Effects of the acquisition for the Group in 2010 on:

Amounts in USD thousand

Revenue 56,863

Result after tax -5,808

IftheacquisitionhadoccurredonJanuary1,revenueandresultaftertaxwouldnothavebeenaffectedsignificantly.

94 contInGent LIABILItIes, contRActUAL oBLIGAtIons

Parent company and Group

Amounts in USD thousand 2010 2009

the parent company has provided guarantee to lenders in nordic oslo ship shipping and nordic copenhagen co. Pte. Ltd., singapore finance loans. a)” - 21,800

the parent company has provided guarantee to the lender for the group’s share oftheinvolvementinNordicSeaarlandTankersB.V.a) 97,951 98,300

Administration agreement with Difko Administration A/s - 751

Guaranteed loan in connection with completed transaction between nordic tankers A/s and clipper 11,132 12,761

Liability entered as limited partner in connection with completed transaction between nordic tankers A/s and clipper 44,453 36,418

Uncalled capital in general partnership subsidiaries 24,045 -

Operational leasing:

Leasing obligations for cars and time-charter agreements.

the agreements are irrevocable up to 36 months.

– Due during the next year 26,303 -

– Due between 2 and 5 years 48,774 -

total expense recognised in the statement of comprehensive Income 9,467 -

Rental commitments:

Rental agreements for offices facilities.

the rental agreements are irrevocable from 27 to 48 months

– Due during the next year 1,692 -

– Due between 2 and 5 years 3,815 -

total expense recognised in the statement of comprehensive Income 1,048 -

Collaborative agreements:

contractual obligations with It service partners, are irrevocable up to 36 months

– Due during the next year 498 -

– Due between 2 and 5 years 755 -

Lawsuits

nordic tankers A/s is not involved in any lawsuits or arbitration cases which could have essential influence on the income statement of the Parent company or the Group’s financial position or result. the company has provided for expected outcome of legal matters regarding the dispositions of the previous management.

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

•Thegroup’svesselshavebeenpledgedassecurity.ThecarryingamounttotalsUSD268.9million

•Cash,USD18.1millionforthegroupandUSD4.9millionfortheparentcompany,hasbeenpledgedassecurity

•Theparentcompany’sinvestmentinsubsidiaries,USD4.6million,hasbeenpledgedassecurity

•Thegroup’sfreightreceiptsandinsurancestakenoutinrespectofthevesselshavebeenpledgedassecurity

27. Contingent liabilities and contractual obligations

95

96 SIGNIFICANTEVENTSAFTERThEBAlANCEDATE

on1February2011WomarholdingsPte.ltd.andNordicTankersA/Sformedajointventurecompany‘NordicwomarPte.ltd.’,a pool management company incorporated in singapore. nordic womar manages two pools of coated chemical tankers in the 10,000-25,000 dwt segment.

on 14 February 2011 nordic tankers A/s completed a capital decrease from a total share capital of DKK 377,648,880 nominal value to DKK 37,764,888 nominal value. the balance amount of DKK 339,883,992 was allocated to a separate reserve, pursuant to section 188(1)(3) of the Danish companies Act.

on28February2011NordicTankersacquiredtheremainingpartofNordicSeaarlandTankersB.V.fromitsjointventurepartnerMarcoPoloSeatradeB.V.Theacquiredsharesrepresentanownershipinterestequivalentto1handysizeProductTankers.

Name Type Primary operations Domicile

Ownership approxi-

mately %Voting

right %

NordicSeaarlandTankersB.V. Management company

ownership and operation of vessel

the netherlands 30 50

NordicC.V. ship owning company

ownership and operation of vessels

the netherlands 25 50

ColomboMarineC.V. ship owning company

ownership and operation of vessels

the netherlands 50 50

Nordic100C.V. ship owning company

ownership and operation of vessel

the netherlands 0 50

DelfmanShippingB.V. Limited partnership company

General partner of each of the 3 acquired limited partnership companies

the netherlands 100 100

TheacquisitionsconsistedoftheremainingpartoftheNordicSeaarlandTankersB.V.includingallvotingrights

As the acquisitions of the ship owning companies and the management company were carried out at the same time and between the same parties, the acquisitions are considered to be one acquisition. the acquired assets and liabilities, preliminary distribution of the consideration of UsD 0.1 million and cash flows in connection with the transaction may be specified as follows:

Amounts in USD thousand

non-current assets

Vessels 41,240

total non-current assets 41,240

current assets

Lubricant stocks 128

trade receivables 1,266

cash 678

total current assets 2,072

Total assets 43,312

28. Significant events after the balance date

97SIGNIFICANTEVENTSAFTERThEBAlANCEDATE

non-current liabilities

Finance loans 42,960

total non-current liabilities 42,960

current liabilities

trade payables 147

other payables 1,089

total current liabilities 1,236

Net assets acquired -884

Goodwill 1,018

Minority interests -

Total consideration 134

Deferred contingent consideration -133

cash acquired 678

Acquisition of enterprises, net 678

the deferred contingent consideration depends on the financial performance of m.t. Amy, which at the date of acquisition cor-responds to an estimated fair value of UsD 0.1 million.

NordicTankersenteredthejointventurewithZacchelloGroupin2006andtheentitieshaveuntil28February2011beenjointlycontrolled. the fair value of the equity interest in the acquired entities was at the acquisition date considered to be UsD 0.1 million.TheeffectoffairvalueadjustmentofthesharesheldbyNordicTankersbeforetheacquisitionisexpectedtobeagainin of UsD 2 - 4 million.

At the acquisition of the companies, a consideration is paid which exceeds the fair value of the identifiable assets, liabilities and contingent liabilities acquired. this positive difference (goodwill) is referable to expected synergies from combining operations ofNordicSeaarlandTankersB.V.andNordicTankers.Thegoodwillisnotdeductiblefortaxpurposes.

on 4 March 2011 nordic tankers A/s carried out a directed share issue of 1,181,809 shares to former minority investors in the fivestainlesssteelvesselsacquiredfromClipperGroupandotherinvestorsinJanuary2010.TheissueincreasedNordicTank-ers’ share capital by 3.1% from DKK 37,764,888, nominal value, to DKK 38,946,697, nominal value. the share issue was based on a partial utilization of the authorization given to the Board of Directors by the General Assembly on 5 november 2010 and included in clause 4.3 of nordic tankers’ articles of association. the shares were issued at a price of DKK 7.426 per share of DKK 1, nominal value, which was the average share price over the last five bank days prior to the issue date, and which in the opinion of the board reflects the prevailing market rate of the share. the proceeds from the issue consisted of ownership shares in four differentchemicaltankers,intotalequalto0.25vessel,andcancellationofinterestbearingvendornotesissuedinJanuary2010with a principal of approximately UsD 600 thousand.

98 DeFInItIons AnD cALcULAtIon FoRMULAs

Unless otherwise stated, key figures and ratios have been calculated in accord-ance with the standards laid down by

the Danish society of Financial Analysts in “Recommendations & Financial Ratios 2010”.

eBItDA margin (%) eBItDA

tce revenue

net result margin (%) Result

tce revenue

equity ratio (%) equity * 100

Balance sheet total

Return on invested capital (%) eBIt * 100

year end, invested capital

Return on equity (%) Result * 100

year end equity of the Group

Financial gearing net interest-bearing debt

year end equity

net working capital/revenue (%) Average net working capital * 100

Revenue

net interest-bearing debt is defined as the sum of finance loans less cash and cash equivalents. Invested capital is de-fined as net working capital (nWc) plus property, plant and equipment and intan-gibles and less other provisions and other non-current operating liabilities. the eq-uity ratio is defined as equity divided by total assets. this financial ratio is not defined in the Danish society of Financial Analysts’ guidelines “Recommendations & Financial Ratios 2010”. net working capital (nWc) is defined as inventories, receivables and other current operating assets less trade payables and other li-abilities other than provisions as well as other current operating liabilities.

Definitionsand calculation formulas