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AMSC ASA — Annual Report 2014
Mar 26, 2015
3533_iss_2015-03-26_e65c7681-12b2-40c1-83a1-9b2b8b970cd7.pdf
Annual Report
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Annual Report 2014
Contents
In review
- 1 Company overview
- 3 Goals and strategies
Performance 2014
- 4 Board of directors' report
- 9 Board responsibility statement
10 Annual accounts - group
- 10 Consolidated statement of financial position
- 11 Consolidated income statement and consolidated statement of comprehensive income
- 12 Consolidated statement of changes in equity
- 13 Consolidated cash flow statement
- 14 Notes to the consolidated accounts
30 Annual accounts - parent company
- 30 Statement of financial position
- 31 Income statement and statement of comprehensive income
- 31 Cash flow statement
- 32 Notes to the accounts
- 37 Auditor's report
- 39 Share and shareholder information
Our organization and governance
- 42 Corporate governance
- 46 Presentation of the board of directors
- 47 Presentation of management
- 48 Contact information
This is American Shipping Company
The business model of American Shipping Company ASA (AMSC) is to own and bareboat charter out U.S. built product tankers to qualified U.S. citizen operators, who in turn time charter out the vessels in the U.S. domestic Jones Act market in a profit sharing arrangement with AMSC. The objective of the business model is to generate a stable cash flow from long term bareboat charters protected from short term market fluctuations, with upside potential through profit sharing arrangements with the charterers.
AMSC currently owns ten modern 46,000 dwt MR product tankers built at Aker Philadelphia Shipyard (AKPS), a leading U.S. shipyard. All ten vessels are on long term fixed rate bareboat charters with Overseas Shipholding Group Inc. (OSG), together with a profit sharing agreement with OSG. OSG's strategy is to time charter out the vessels to major U.S. oil companies. OSG has options to renew the bareboat charters for the life of the vessels. AMSC also owns an equity stake in Philly Tankers AS, a Norwegian company listed OTC with orders for two product tankers to be built at AKPS and options for two additional product tankers. These newbuilds provide AMSC with upside potential in the U.S. Jones Act market.
AMSC is headquartered in Oslo, Norway, and listed on the Oslo Stock Exchange, with its principal operating subsidiaries located in Pennsylvania, USA.
Financial calendar 2015
| 22 April | Annual General Meeting 2015 |
|---|---|
| 13 May | 1st quarter interim results |
| 13 August | 2nd quarter interim results |
| 29 October | 3rd quarter interim results |
(Dates subject to change)
-History
2014
- Completed a major recapitalization of the Company which raised approximately USD 128 million in cash and increased
- equity by approximately USD 166 million OSG emerged from Chapter 11 bankruptcy with all of AMSC's agreements assumed as part of OSG's plan of
- reorganization Overseas Tampa was converted to a shuttle tanker for a ten year time charter
- to Shell beginning in 2015 Invested USD 25 million in Philly Tankers AS, a pure play U.S. Jones Act shipping company with orders for two product tankers and options for two additional tankers
2013
- Launched major recapitalization of the Company including USD 120 million private placement, conversion of subordinated debt to equity and amend-
- ments to vessel debt and bond loan Negotiated agreement with OSG for conversion of one of the ten product tankers into a shuttle tanker for a long
- term time charter with Shell OSG remained in Chapter 11; all charter hire payments were made in accordance with the bareboat charter agreements
2012
- Negotiated extension of maturity of vessel debt to June 2016 Achieved bareboat charter extensions
- with OSG to December 2019 OSG filed for Chapter 11 bankruptcy
- protection
2011
- Took delivery of final product tanker in
- build series with AKPS Extended maturity of the NOK bond for
- 6 years Maintained ongoing compliance with conditions of OSG Settlement
2010
- Took delivery of two product tankers Sold second shuttle tanker contract to
- OSG
2009
- Finalized settlement agreement with OSG that settled all commercial disputes between the companies Took delivery of two additional tankers;
- sold first of two shuttle tanker contracts to OSG
2008
- Aker ASA reduced its ownership interest to 19.9% in compliance with U.S. Jones
- Act foreign ownership restrictions Name changed from Aker American Shipping ASA to American Shipping Company ASA. Trading ticker also changed from AKASA to AMSC Took delivery of two more product tankers
2007
- Obtained take-out financing for the ten vessels and issued NOK 700 million bond for investments in vessels and
- operations Split of Aker American Shipping's ship owning operations from its ship building operations, establishing Aker
- Philadelphia Shipyard ASA (AKPS) Took delivery of the first three product tankers
2005
- Closed a ten ship bareboat charter agreement with Overseas Shipholding Group, Inc. (OSG) and placed corresponding ten ship order at Philadelphia
- Shipyard Aker American Shipping ASA (AKASA) established, Philadelphia Shipyard acquired and company listed on Oslo Stock Exchange.
Goals and Strategies
Be a preferred ship owning and lease finance company in the Jones Act market
- Generate stable cash flow from long term bareboat charters protected from short term market fluctuations, with upside potential through profit sharing arrangements with the charterers
- Work closely with charterers to ensure that maximum value is gained from each of the time charters and the profit sharing arrangements
- Maintain stringent controls on all costs associated with the management of AMSC
Have a modern, safe and operationally friendly fleet
Explore and invest in value creating opportunities for our stakeholders
Apply the tools of financial engineering to ensure an optimal use of capital
Board of Directors' Report for 2014
Introduction
American Shipping Company ASA ("AMSC" or the "Company") is a ship owning and lease finance company with a modern fleet of ten product tankers operating in the U.S. domestic ("Jones Act") trades. During 2014, all ten tankers were in operation on long term bareboat charters to Overseas Shipholding Group, Inc. and its subsidiaries (collectively "OSG"), one of the largest operators in the Jones Act market, and domiciled in New York.
The Group's business activities
The main entities in the AMSC Group ("Group") are the Norwegian holding company American Shipping Company ASA and its wholly owned U.S. subsidiaries American Tanker Holding Company, Inc. (ATHC), American Tanker, Inc. (ATI), American Shipping Corporation (ASC), and the ten single purpose leasing companies (ASC Leasing I through X, Inc.), each owning one of the ten product tankers. American Shipping Company ASA is domiciled in Oslo, Norway, and listed on the Oslo Stock Exchange, with the U.S. subsidiaries located in Kennett Square, Pennsylvania.
AMSC's business model is to own and long-term bareboat charter-out product tankers for operation in the U.S. Jones Act market, earning fixed bareboat charter revenues generating stable cash flows to protect against short-term market fluctuations, and, in addition, earning a share of the profits generated by the bareboat charterers' operations in the time charter markets.
In accordance with this policy, all of AMSC's vessels are on long-term fixed rate bareboat charters with OSG, together with a profit sharing agreement which gives AMSC the upside of sharing the profits generated by OSG. OSG's strategy is to time charter-out the vessels to major U.S. oil companies and refiners. The initial fixed bareboat charter period for all vessels expires in December 2019 (except the
Overseas Tampa, which was extended by ten years to 2025. Afterwards, OSG has options to renew the bareboat charters for the life of the vessels under terms that are similar to the existing arrangements.
The vessels were built at Aker Philadelphia Shipyard, Inc., a leading U.S. shipyard and delivered between 2007 and 2011.
The Company has no research and development activity.
The Jones Act market
The U.S. cabotage law, commonly referred to as the Jones Act, requires all commercial vessels transporting cargoes between points in the United States to be U.S. built, owned, operated and manned by U.S. citizens, and registered under the U.S. flag.
AMSC's operation in the Jones Act market is made possible by the lease finance exception of the Jones Act, which permits foreign ownership of the ships under certain conditions. Compliance with the lease finance exception requires, among other things, that the vessels be bareboat chartered to qualified U.S. citizen operators, such as OSG.
Key events 2014
AMSC Recapitalization
In January 2014, AMSC completed a recapitalization of the Company ("Recapitalization") which resulted in a significantly stronger balance sheet and cash position, providing flexibility to facilitate refinancing its debt structure, the ability to pay quarterly dividends starting in Q2 2014 (in the form of repayment of capital) and opportunities to consider accretive growth strategies going forward. The Recapitalization included:
- A private placement of USD 120 million, or 24.5 million shares sold at an issue price of NOK 30 per share
-
A subsequent offering of USD 12.4 million, or 2.5 million shares sold at an issue price of NOK 30 per share
-
Conversion of the subordinated loan from Converto Capital Fund AS ("Converto") of USD 29.3 million into 5,975,492 new shares in the Company at the subscription price in the offering
- Bond amendments including conversion of the NOK denominated bond into USD, eliminating foreign currency fluctuations, payment of 50% cash interest, a call option, and an option to extend the maturity by three years to February 2021
- Amendments to bank and bond agreements to ease dividend restrictions. AMSC paid dividends of USD 0.30 per share during 2014 in the form of repayment of capital
The Recapitalization increased the Company's equity by approximately USD 167 million. Refer to footnote 21 in the consolidated accounts for more details.
OSG emerged from Chapter 11
OSG emerged from Chapter 11 bankruptcy protection on 5 August 2014 when its plan of reorganization ("Plan") became effective. As expected, under the terms of the Plan, all of AMSC's agreements with OSG were assumed and accepted on the effective date. As charterer of all of our vessels, OSG continued to service its financial obligations to AMSC in 2014 on time, including the first installments on the deferred principal obligation (DPO; refer to footnote 7 in the consolidated accounts for more details). In the Board's view, OSG emerged from bankruptcy as a stronger company, and the Plan included a USD 1.5 billion rights offering and USD 1.6 billion in proforma debt. As of the effective date of 5 August 2014, OSG had liquidity of approximately USD 338 million, including cash on hand of USD 188 million and two undrawn revolving credit facilities of USD 75 million each. The first maturity of OSG's debt does not occur until 2018.
Converted Overseas Tampa to a shuttle tanker
During 2014, OSG converted the Overseas Tampa to a shuttle tanker for a ten year time charter to Shell beginning in 2015. As part of the conversion agreement, the bareboat charter for the vessel was extended by ten years and the conversion costs which were paid by OSG will be amortized through the profit sharing over ten years.
Investment in Philly Tankers AS
AMSC invested USD 25 million in Philly Tankers AS, along with AKPS and other financial investors including funds managed by affiliates of Apollo Global Management, LLC. AMSC owns approximately 20% of Philly Tankers and holds a seat on its Board of Directors. Philly Tankers has firm orders for two 50,000 dwt product tankers to be constructed at AKPS with deliveries in Q4 2016 and Q1 2017. There are also options for two additional product tankers with deliveries in 2017. Philly Tankers was created as a pure play Jones Act shipping company and the investment in Philly Tankers is in accordance with AMSC's business strategy. AMSC has no further funding commitments. During Q1 2015, long-term time charters were secured on the two firm newbuildings.
Review of the annual accounts
AMSC prepares and presents its consolidated accounts according to International Financial Reporting Standards (IFRS) as adopted by the EU, and has one operating segment.
Profit and loss accounts
In 2014, AMSC had operating revenues of USD 87.6 million versus operating revenues of USD 87.4 million in 2013 as the full fleet was in operation for the full year 2014 and 2013. Revenues are recognized on a monthly basis and represent the income from the bareboat charter agreements. No revenue from the profit sharing arrangement with OSG was recognized in 2014 or 2013, as profits generated were used to offset the deficit balances which must be repaid before OSG is required to make profit sharing payments. The Company's operating profit before interest, taxes, depreciation and amortization (EBITDA) amounted to USD 84.5 million in 2014 compared to USD 84.2 million in 2013.
Depreciation was USD 33.9 million in 2014 versus USD 33.5 million in 2013. AMSC's operating profit (EBIT) was USD 50.6 million in 2014 versus USD 50.7 million in 2013.
Net financial items were negative USD 27.4 million in 2014 compared to negative USD 19.8 million in 2013. Net financial items of negative USD 27.4 million in 2014 consist primarily of net interest expense of USD 48.4 million, other financial expenses of USD 3.5 million, and foreign exchange loss of USD 5.1 million, offset by unrealized, non-cash gain on the mark-to-market valuation of interest rate swap agreements of USD 20.1 million and gain on the derecognition of the bond associated with the Recapitalization of USD 9.5 million. Net financial items of negative USD 19.8 million in 2013 consist primarily of net interest expense of USD 53.3 million, other financial expenses of USD 3.5 million, offset by unrealized foreign exchange gain of USD 16.9 million and unrealized, non-cash gain on the mark-to-market valuation of interest rate swap agreements of USD 20.1 million.
Deferred income tax expense was USD 0.3 million in 2014 (0 in 2013).
AMSC's 2014 net income was USD 23.0 million versus USD 30.9 million in 2013. The 2014 basic and diluted earnings per share (EPS) were USD 0.38. The corresponding figures for 2013 were USD 1.12, for both basic and diluted EPS.
Cash flow
The Company's operating cash flow is primarily composed of bareboat charter hire received. Total net cash flow from operating activities in 2014 was positive USD 38.1 million (USD 41.3 million in 2013).
Total cash used for investing activities in 2014 was USD 25 million for the investment in Philly Tankers AS. There were no investments made during 2013.
Net cash flow from financing activities in 2014 was USD 60.6 million, which included USD 127.9 million in cash received in the Recapitalization, USD 49.1 million related to the pay down of the vessel debt financing, USD 18 million in dividends paid/return of capital and USD 0.8 net cash used for purchase of treasury shares. Net cash flow from financing activities was negative USD 44.1 million in 2013 related to the pay down of the vessel debt financing.
Statement of financial position and liquidity
As of 31 December 2014, American Shipping Company had cash on deposit with banks totaling USD 93.3 million. Of this total amount, USD 8.1 million is cash held for specified uses. The corresponding amounts for 2013 were USD 19.6 million in cash on deposit with banks and USD 7.3 million in cash held for specified uses.
Other current assets were USD 0.3 million as of 31 December 2014 (USD 1.8 million as of 31 December 2013). The decrease relates to prepaid costs for the Recapitalization.
Property, plant and equipment as of 31 December 2014 was USD 848.0 million (USD 881.9 million as of 31 December 2013), and includes ten vessels.
Interest-bearing long-term receivables totaled USD 33.2 million as of 31 December 2014 (USD 29.6 million as of 31 December 2013) and represent the Deferred Principal Obligation ("DPO") due from OSG.
Other long-term assets totaled USD 24.9 million and represent AMSC's investment in Philly Tankers.
At 31 December 2014, total assets were USD 999.7 million (USD 932.9 million as of 31 December 2013).
At 31 December 2014, total equity was USD 234.6 million. The equity ratio was 23.5% of total assets. Corresponding amounts for 2013 were USD 72.8 million and 8%, respectively.
Total current liabilities as of 31 December 2014 were USD 81.1 million, consisting of USD 19.9 million for the short term portion of the mark-to-market valuation of the interest rate swap contracts, USD 9.0 million for trade payables and deferred revenues and USD 52.2 million for short-term interest bearing debt. The corresponding total current liabilities as of 31 December 2013 were USD 81.7 million, consisting of USD 22.4 million for the short term portion of the mark-to-market valuation of the interest rate swap contracts, USD 11.0 million for trade payables and deferred revenues and USD 48.3 for shortterm interest bearing debt.
Non-current liabilities totaled USD 684.0 million at 31 December 2014, consisting of bank debt of USD 474.9 million related to the ten vessels owned by AMSC, a bond payable of USD 201.3 million, the long term portion of the mark-to-market valuation of the interest rate swap contracts of USD 7.5 million and deferred tax liability of USD 0.3 million. Non-current liabilities totaled USD 778.4 million at 31 December 2013,
consisting of bank debt of USD 524.5 million related to the ten vessels owned by AMSC, a bond payable of USD 199.6 million, a subordinated loan of USD 29.1 million and the long term portion of the mark-to-market valuation of the interest rate swap contracts of USD 25.2 million. The bank debt matures in 2016 and the bond payable matures in 2018, excluding the option for AMSC to extend the maturity to 2021 which became effective with the Recapitalization. As part of the Recapitalization the subordinated loan was converted to equity and the terms of the bond loan were substantially modified. For more details please refer to the covenant discussion under Risks.
Tax position
AMSC has net operating losses in carryforward (NOLs) as of 31 December 2014 of USD 431.8 million in the U.S. and USD 86.0 million in Norway. Deferred tax assets in excess of deferred tax liabilities have not been recognized in respect of these items because it is not currently considered probable based on historical results that future taxable profit in the short term will be available against which the Group can utilize the benefits therefrom. These NOLs have been generated since 2005 from the tax losses of the Company, which are mostly due to the accelerated depreciation of the vessels for tax purposes (10 years).
On 3 January 2014, the U.S. subsidiaries experienced a change of ownership as defined by Internal Revenue Code Section 382 due to a greater than 50% shift in the owners of AMSC stock. The utilization of the net operating losses carryforward as of that date are subject to annual limitations.
See footnote 5 in the consolidated accounts for further information.
Risks
The risks facing AMSC principally relate to the operational and financial performance of OSG and from OSG's operation of our vessels, as well as overall Jones Act market risk.
Financial risk and risk management
AMSC's activities expose it to a variety of financial risks: market risk, currency risk, interest rate risk, counterparty risk, price risk, credit risk, and liquidity risk. AMSC's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on AMSC's financial performance. AMSC uses derivative financial instruments to hedge certain risk exposure.
OSG is AMSC's principal counterparty credit risk. In November 2012, OSG filed a petition with the U.S. Bankruptcy Court for the District of Delaware for relief under Chapter 11 of the Bankruptcy Code. In addition to holding leases that represent all of AMSC's backlog of USD 484.2 million at year-end, at 31 December 2014, OSG also owes AMSC USD 33.2 million of long-term receivables related to the Deferred Principal Obligation (DPO). OSG emerged from bankruptcy on 5 August 2014 when its plan of reorganization became effective. All of AMSC's contracts with OSG were assumed on the effective date and OSG has continued servicing its financial obligations to AMSC on time.
AMSC operates in a business environment that is capital intensive. The Company is dependent upon having access to long-term funding for the vessels and other loan facilities to the extent its own cash flow from operations is insufficient to fund its operations. Refinancing is not required before 2016 and is therefore not considered a significant risk in the near term.
Through both the vessel financing and the bond, the Company is exposed to fluctuations in interest rates on its long-term debt. The interest rate risk related to the vessel financing is mitigated by the use of interest rate swap agreements to hedge the interest rate risk. The Company entered into interest rate swaps to convert its floating rate debt to fixed rates under their USD 770 million vessel loan facility (which has been paid down to USD 531.6 million as of 31 December 2014). As of 31 December 2014, the bond carries a floating interest rate of LIBOR (London Inter Bank Offered Rate) plus a margin of 6.0% per annum. As of 3 January 2014, the NOK bond was converted into USD thereby virtually eliminating currency risk.
AMSC is subject to a covenant in its bond agreement that requires the Company to maintain a minimum level of USD 50.0 million of consolidated equity, excluding, cumulative unrealized gains and losses on the interest rate swaps. Consolidated equity for the Company is primarily impacted through the results of its operations. With the conversion of the bond into USD in January 2014, the foreign currency translation risk has been substantially eliminated. In addition, with
the Recapitalization completed in January 2014, the Company's equity position has been improved by approximately USD 157 million. Another factor that could impact the equity debt covenant is an impairment charge related to the vessels. Given that the vessel market remained strong during 2014, this risk is not considered significant as of year-end. The Company's equity under the covenant calculation was USD 262.0 million as of 31 December 2014. The Company currently views this risk as minimal.
The going concern assumption
In view of AMSC's financial position, the Board confirms the going concern assumptions and that the 2014 annual accounts have been prepared based on the assumption of a going concern.
Parent company accounts and allocation of income for the year
The profit and loss account of American Shipping Company ASA shows loss for the year 2014 of USD 19.3 million, mostly related to financing activities. The timing of recognition of the Recapitalization under the Norwegian Accounting Act and generally accepted accounting principles in Norway in 2013 differed from the 2014 recognition under International Financial Reporting Standards as adopted by the EU in the Group accounts. The Board of Directors proposes that the income for the year be allocated as shown below:
| Dividend payments | - |
|---|---|
| Other equity | negative USD 19.3 million |
| Total allocated | negative USD 19.3 million |
Based on the equity level of the Company, the Board began authorizing the payment of dividends during Q2 2014, which are classified as return of capital. The Board of Directors was granted authorization to pay dividends based on the Company's annual accounts for 2013 at the Annual General Meeting in 2014, which is valid up to the Company's Annual General Meeting in 2015 subject to the Board evaluating the liquidity position of the Company. Such authorization facilitates payment of dividend by the Board of Directors on a quarterly basis.
Subsequent to year-end, the Board declared a dividend/return of capital of USD 0.103 per share (USD 6.25 million in aggregate) on 12 February 2015. The dividend was paid on 27 February 2015.
Corporate governance and internal control
American Shipping Company ASA's corporate governance policy exists to ensure an appropriate division of roles among the company's owners, board of directors, and executive management. Such a separation of roles ensures that goals and strategies are prepared, adopted corporate strategies are implemented, and the results achieved are subject to verification and follow-up. Applying these principles also contributes to satisfactory group wide monitoring and verification of activities. An appropriate division of responsibilities and satisfactory internal controls will contribute to the greatest possible value creation over time, to the benefit of shareholders and other stakeholders. AMSC's corporate governance guidelines are presented in greater detail on page 46 of this annual report and it is the Board's opinion that the Company's corporate governance policy is effectively applied. Based on the relatively simple business model and small size of the Company's staff, the Board believes that adequate steps have been taken to mitigate the internal control risk such as the
Board's monthly review of results compared to budget and a third party review of cash disbursements.
Good corporate governance, that is, proper board conduct and company management, are key to AMSC's efforts to build and maintain trust. AMSC is committed to maintaining an appropriate division of responsibilities between the Company's governing bodies, its Board of Directors, and management. AMSC has compared the Norwegian requirements and recommendations on corporate governance for listed companies with the Company's own corporate governance procedures and practice. The findings show that the Company is in compliance with respect to the requirements and substantially in conformance with those recommendations. The Company's board chairman is elected at the Company's annual shareholders' meeting and the shareholder-elected directors are elected for two year terms.
The Board members of AMSC are as follows:
Board Member Kristian Røkke
Chairman Annette Malm Justad Board Member Peter D. Knudsen
Further description of the Board Members is on page 50.
Corporate Social Responsibility
In accordance with the Norwegian Accounting Act §3-3, section c, the Board has reviewed AMSC's policies and management of Corporate Social Responsibility (CSR) in the following areas: human rights, labor standards, environment and corruption.
AMSC's modern, double-hulled tanker fleet meets the current requirements of the U.S. Coast Guard. Under its lease agreements, OSG is responsible for the day to day operation of the vessels. In addition, the ships' crews are managed by OSG through a labor union. OSG is one of the largest ship operators in the world and we believe OSG has a commitment to meeting and exceeding environmental regulations and human rights and labor standards.
Because AMSC has only two employees, the Company has a limited direct environmental impact. Since all of AMSC's vessels are operated by OSG, we do not have formal policies covering safety of personnel, workers' rights and the
environment. Nevertheless, our policy is to meet our responsibilities by choosing a reputable business partner to operate our vessels and by following the laws and regulations applicable to our employees. We believe both AMSC and OSG share a common commitment to work safely and in a manner that protects and promotes the health and well-being of the employees and the environment. OSG is obligated to notify AMSC if (i) any of the vessels are involved in an accident involving repairs, the cost of which is likely to exceed \$500,000, (ii) events have occurred whereby any of the vessels are likely to become a total loss, or (iii) any of the vessels have been arrested or someone has exercised or purports to exercise a lien on the vessel. If OSG makes a claim under its hull policy in connection with an accident involving damage to the vessel in excess of \$500,000, AMSC would be notified by the hull underwriters. There have been no such reported incidents during 2014.
The Company has two full time employees who are both senior executives who work in offices in the United States and Norway. As a result, AMSC has not felt it necessary to develop a formal human resources policy. AMSC has agreements with Aker ASA and Aker U.S. Services, LLC (formerly Resource Group International) which primarily include office services, accounting and tax services. The Company allows a flexible working schedule and work location for its employees.
American Shipping Company ASA seeks to be an attractive employer, focused on employee retention, and maintains a working environment with competitive compensation and benefits that is open and fair. AMSC is committed to providing equal opportunity regardless of race, ethnic background, gender, religion, age or any other legally protected status. Because the Company has so few employees, its human resource policies, including those on discrimination, are not formalized but follow the laws and practices customary to the geographical location of each of its offices.
At year-end 2014, one of AMSC's employees is a woman (Controller). In addition, the chairman of the board of directors is a woman.
The Company values open communication and the Board takes a hands on approach to AMSC's governance. With the small size of AMSC's staff and the location and nature of its operations, the Board sees the risk of corruption as low although it has implemented formal procedures to address risks related to segregation of duties inherent in a company with so few employees. AMSC does not have any other initiatives ongoing to address corruption.
Outlook
The U.S. Jones Act market, which has been in existence since 1920, is expected to remain in existence and thereby protect and preserve the need for all commercial vessels transporting cargoes between points in the United States to be U.S. built, owned, operated and manned by U.S. citizens, and registered under U.S. flag.
Trade fundamentals that impact the U.S. Jones Act product fleet continued to improve during 2014, although international crude oil prices fell sharply. Time charter rates increased further during 2014, reflecting the tight market for U.S. Jones Act tankers in which demand exceeds supply. As of year-end 2014, there were 14
product tankers and 4 ATBs on order, plus a limited number of options. This will bring the total number of ships operating in the oil and chemical segment to 91 units. The recent fall in crude oil prices has introduced uncertainty to the long term shale oil production level, which potentially impacts the demand for Jones Act tankers in the future. However, due to the momentum in shale oil production growth, it is expected that shale oil production will remain at high levels going forward. With limited availability for new delivery slots at the two shipyards currently able to build product tankers, it is expected that the Jones Act tanker market will remain firm going forward. Lifting or modifying the 40 year old U.S. export ban on crude oil has been widely discussed over the past months, however no conclusion seems imminent. AMSC is following the discussion closely. The fixed charter agreements with OSG secure AMSC's leasing backlog of USD 484 million from bareboat charter revenues. Any profit sharing contribution will come in addition to the fixed bareboat charter revenues.
To date, profits generated under our profit sharing agreement with OSG have been applied to offset the Company's deficit balances with OSG (approximately USD 11 million for 2014). The extent of profit sharing contributions will depend on the time charter rates obtained by OSG as well as OSG's ability to operate the vessels in a cost efficient manner. With increasing time charter rates, however, prospects for cash profit sharing are steadily improving.
Oslo, 17 March 2015 The Board of Directors American Shipping Company ASA
Annette Malm Justad Peter D. Knudsen Kristian Røkke
Pål Magnussen President/CEO
Chairman Board Member Board Member
Board Responsibility statement
Today, the Board of Directors and the General Manager reviewed and approved the Board of Directors' Report and the consolidated and parent company annual financial statements for American Shipping Company ASA as of and for the year ending 31 December 2014 (Annual Report 2014).
American Shipping Company ASA's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional disclosure requirements in the Norwegian Accounting Act. The separate financial
statements for American Shipping Company ASA have been prepared in accordance with the Norwegian Accounting Act and Norwegian accounting standards as of 31 December 2014. The Board of Directors' Report for the group and the parent company is in accordance with the requirements in the Norwegian Accounting Act and Norwegian Accounting Standard no. 16 as of 31 December 2014.
To the best of our knowledge:
The consolidated and parent annual financial statements for 2014 have been prepared in accordance with the applicable accounting standards.
Oslo, 17 March 2015 The Board of Directors American Shipping Company ASA
Annette Malm Justad Peter D. Knudsen Kristian Røkke Chairman Board Member Board Member
Pål Magnussen President/CEO
The consolidated and parent annual financial statements give a true and fair view of the assets, liabilities, financial position and profit (or loss) as a whole as of and for the year ended 31 December 2014 for the group and the parent company.
The Board of Directors' Report for the group and the parent company includes a true and fair review of:
- the development and performance of the business and the position of the group and the parent company
- the principal risks and uncertainties the group and the parent company face
American Shipping Company ASA Group
Consolidated Statement of Financial Position as of 31 December
| Amounts in USD thousands | Note | 2014 | 2013 |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | 6 | 847 990 | 881 856 |
| Interest-bearing long-term receivables | 7 | 33 204 | 29 581 |
| Other non-current assets | 12 | 24 926 | - |
| Total non-current assets | 906 120 | 911 437 | |
| Trade and other receivables | 8 | 112 | 1 533 |
| Tax receivable | 136 | 289 | |
| Cash held for specified uses | 8 107 | 7 283 | |
| Cash and cash equivalents | 85 201 | 12 340 | |
| Total current assets | 93 556 | 21 445 | |
| Total assets | 999 676 | 932 882 | |
| EQUITY AND LIABILITIES Share capital and share premium |
11 | 319 372 | 180 408 |
| Accumulated deficit | (84 827) | (107 610) | |
| Total equity attributable to equity holders of the parent | 234 545 | 72 798 | |
| Total equity | 234 545 | 72 798 | |
| Interest-bearing loans Deferred tax liabilities Derivative financial liabilities - long term portion |
13 5 9 |
676 157 275 7 514 |
753 176 - 25 214 |
| Total non-current liabilities | 683 946 | 778 390 | |
| Interest-bearing loans Trade and other payables Derivative financial liabilities - short term portion |
13 15 9 |
52 205 9 060 19 920 |
48 346 10 996 22 352 |
| Total current liabilites | 81 185 | 81 694 | |
| Total liabilites | 765 131 | 860 084 | |
| Total equity and liabilities | 999 676 | 932 882 |
Annette Malm Justad Peter D. Knudsen Kristian Røkke
Oslo, 17 March 2015 The Board of Directors American Shipping Company ASA
Pål Magnussen President/CEO
Chairman Board Member Board Member
American Shipping Company ASA Group
Consolidated Income Statement
| Amounts in USD thousands | Note | 2014 | 2013 |
|---|---|---|---|
| Operating revenues | 87 641 | 87 353 | |
| Wages and other personnel expenses | 2 | (1 059) | (1 472) |
| Other operating expenses | 3 | (2 045) | (1 643) |
| Operating profit before depreciation | 84 537 | 84 238 | |
| Depreciation | 6 | (33 865) | (33 521) |
| Operating profit | 50 672 | 50 717 | |
| Financial income | 4 | 32 208 | 21 710 |
| Financial expenses | 4 | (59 623) | (41 518) |
| Gain/(loss) before income tax | 23 257 | 30 909 | |
| Income tax expense | 5 | (275) | - |
| Net income/(loss) for the year (1) | 22 982 | 30 909 |
American Shipping Company ASA Group
Consolidated Statement of Comprehensive Income
| Amounts in USD thousands (except per share amounts) | 2014 | 2013 | |
|---|---|---|---|
| Net income/(loss) for the year | 22 982 | 30 909 | |
| Other comprehensive income for the period, net of tax | - | - | |
| Total comprehensive loss for the year (1) | 22 982 | 30 909 | |
| Basic earnings/(loss) per share Diluted earnings/(loss) per share |
10 10 |
0.38 0.38 |
1.12 1.12 |
(1) Applicable to common shareholders of the parent company.
American Shipping Company ASA Group Consolidated Statement of Changes in Equity
| Amounts in USD thousands | Share Capital | Share Premium |
Accumulated deficit |
Total equity |
|---|---|---|---|---|
| Balance at 31 December 2012 | 42 462 | 137 946 | (138 519) | 41 889 |
| Total comprehensive income for the year | - | - | 30 909 | 30 909 |
| Balance at 31 December 2013 | 42 462 | 137 946 | (107 610) | 72 798 |
| Total comprehensive income for the year | - | - | 22 982 | 22 982 |
| Equity issued | 53 904 | 103 060 | - | 156 964 |
| Repurchase of treasury shares | - | - | (891) | (891) |
| Proceeds from sale of treasury shares | - | - | 692 | 692 |
| Dividends paid / return of capital | - | (18 000) | - | (18 000) |
| Balance at 31 December 2014 | 96 366 | 223 006 | (84 827) | 234 545 |
American Shipping Company ASA Group
Consolidated Cash Flow Statement
| Amounts in USD thousands | Note | 2014 | 2013 |
|---|---|---|---|
| Net income/(loss) before tax | 23 257 | 30 909 | |
| Unrealized foreign exchange gain/loss and other non-cash items | (1 578) | (13 262) | |
| Unrealized (gain) interest swaps | 9 | (20 132) | (20 105) |
| Net interest expense | 4 | 48 436 | 53 269 |
| Depreciation | 6 | 33 865 | 33 521 |
| (Increase)/decrease in: | |||
| Other current assets | 8 | (230) | (1 523) |
| Other long-term operating assets | 7 | (3 622) | (6 574) |
| Increase/(decrease) in: | |||
| Accrued liabilities and other payables | 15 | (1 644) | 3 400 |
| Interest paid | 4 | (41 457) | (38 386) |
| Interest received | 4 | 1 216 | 29 |
| Net cash flow from operating activities | 38 111 | 41 278 | |
| Equity investment | 12 | (25 000) | - |
| Net cash flow used in investing activities | (25 000) | - | |
| Repayment of interest bearing loans | 13 | (49 144) | (44 046) |
| Proceeds from share capital | 127 917 | - | |
| Repurchase of treasury shares | (891) | - | |
| Proceeds from sale of treasury shares | 692 | - | |
| Dividends paid / return of capital | (18 000) | - | |
| Net cash flow from financing activities | 60 574 | (44 046) | |
| Net change in cash and cash equivalents | 73 685 | (2 768) | |
| Effects of changes in exchange rates on cash | 4 | - | (10) |
| Cash and cash equivalents, including current cash for specified uses as of 1 January | 19 623 | 22 401 | |
| Cash and cash equivalents, including current cash for specified uses as of | |||
| 31 December | 93 308 | 19 623 |
American Shipping Company ASA Group
Notes to the consolidated accounts
-Note 1: Accounting principles
CORPORATE INFORMATION
American Shipping Company ASA (the Company, the Group or AMSC) is incorporated and domiciled in Norway. The address of the main office is Fjordalleen 16, P.O. Box 1423 Vika, NO-0115 Oslo, Norway. American Shipping Company ASA is listed on the Oslo Stock Exchange.
The principle activity of the business is to purchase and bareboat charter out product tankers, shuttle tankers and other vessels to operators and end users in the U.S. Jones Act market.
STATEMENT OF COMPLIANCE
The consolidated financial statements of American Shipping Company ASA and all its subsidiaries (AMSC) have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).
These accounts have been approved for issue from the Board of Directors on 17 March 2015.
BASIS FOR PREPARATION
These consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. Fair value is defined as the price that would be received to sell an asset of paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The consolidated financial statements are presented in USD (thousands), except when indicated otherwise.
USE OF ESTIMATES
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts in the financial statements. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods.
Critical accounting estimates and assumptions include revenue recognition, accounting for property, plant and equipment, impairment and accounting for financial instruments. The significant factors that affect these estimates and
assumptions are detailed in the accompanying financial statements and footnotes.
GROUP ACCOUNTING, CONSOLIDATION PRINCIPLES AND EQUITY INVESTEES
The consolidated financial statements of AMSC Group include the financial statements of the parent company American Shipping Company ASA and its subsidiaries. Subsidiaries are those entities in which AMSC Group either owns, directly or indirectly, over fifty percent of the voting rights, or otherwise has the power to govern their operating and financial policies. All intercompany transactions have been eliminated in the consolidated results.
Associates are entities in which AMSC has significant interest but not control or joint control. Interests in associates are accounted for using the equity method. Investments in associates are initially recognized at cost, which includes transaction costs. Subsequently the consolidated financial statements include AMSC's share of the profit or loss and other comprehensive income of equity accounted investees.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Functional currency
Items included in the financial statements of each subsidiary in the Group are initially recorded in the functional currency, i.e. the currency that best reflects the economic substance of the underlying events and circumstances relevant to that subsidiary.
The consolidated financial statements are presented in United States dollars (USD), which is the functional and reporting currency of the parent company and subsidiaries.
Transactions and balances
Foreign currency transactions are translated into USD using the exchange rates prevailing at the dates of the transactions. Receivables and liabilities in foreign currencies are translated into USD at the exchange rates ruling on the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Foreign exchange differences arising in respect of operating business items are included in operating profit in the appropriate income statement account, and those arising in respect of financial assets and liabilities are recorded as a net financial item.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment acquired by Group companies are stated at historical cost. Vessels are depreciated to their salvage value on a straight-line basis and adjusted for impairment charges, if any. Each vessel's salvage value is equal to the product of its lightweight tonnage and an estimated scrap rate less estimated costs of disposal. The carrying value of the property, plant and equipment on the balance sheet represents the cost less accumulated depreciation and any impairment charges. Cost includes expenditures that are directly attributable to the acquisition of the asset. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed.
Expected useful lives and salvage value estimates of long-lived assets are reviewed annually and, where they differ significantly from previous estimates, depreciation is changed accordingly.
Ordinary repairs and maintenance costs, to the extent they are AMSC's responsibility, are charged to the income statement during the financial period in which they are incurred. The cost of improvements is included in the asset's carrying amount when it is probable that the Group will derive future economic benefits in excess of the originally assessed standard of performance of the existing asset. Improvements are depreciated over the useful lives of the related assets.
IMPAIRMENT OF LONG-LIVED ASSETS
Property, plant and equipment and other noncurrent assets are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable, mainly independent, cash flows. An impairment loss is the amount by which the carrying amount of the assets exceeds the recoverable amount. The recoverable amount is the higher of the asset's net selling price and its value in use. The value in use is determined by reference to discounted cash flows. Most critical in determining the value in use of vessels is determining the estimated profit share on existing contracts and estimating future revenues from new leases. These estimates are primarily influenced by expectations of future demand in the Jones Act market.
A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount, however not to an extent higher than the carrying amount that would have been determined had no impairment loss been recognized in prior years.
LEASES
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases
OTHER NON-CURRENT ASSETS
Other non-current assets represent a long-term receivable balance due from a customer which is accounted for using the amortized cost method.
TRADE RECEIVABLES
Trade receivables are carried at their anticipated realizable value, which is the original invoice amount less an estimated valuation allowance for impairment of these receivables. A valuation allowance for impairment of trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.
Cash held for specified uses is restricted to debt service payments.
SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, is deducted from equity.
INTEREST-BEARING LIABILITIES
All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the interest-bearing liabilities. Amortized cost is calculated by taking into account any issue costs, and any discount or premium.
Gains and losses are recognized in net profit or loss when the liabilities are derecognized, for instance due to significant modifications to financing agreements.
INCOME TAXES
Current income taxes
Income tax receivable and payable for the current period are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and tax law as used to compute the amount are those that are enacted or substantively enacted at the balance sheet date.
Deferred income taxes
Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognized for all deductible temporary differences, carryforward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax assets and unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Expected utilization of tax losses are not discounted when calculating the deferred tax asset.
Deferred income tax assets are recognized when it is probable that they will be realized. Determining probability requires the Group to estimate the sources of future taxable income from operations and reversing taxable temporary differences. Determining these amounts is subject to uncertainty and is based primarily on expected earnings from existing contracts and expected profit sharing participation.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
PROVISIONS
A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The amount of the provision is the present value of the risk adjusted expenditures expected to be required to settle the obligation, determined using the estimated risk free interest rate as the discount rate. Where discounting is used, the carrying amount of provision increases in each period to reflect the unwinding of the discount by the passage of time. This increase is recognized as interest expense.
PENSIONS
The Group has a defined contribution pension plan that covers its employees whereby contributions are paid to qualifying pension plans. Once the contributions have been paid, there are no further payment obligations. Plan contributions are charged to the income statement in the period to which the contributions relate.
Accounting for derivative financial instruments and hedging activities
Derivative financial instruments are recognized initially and on a recurring basis at fair value. AMSC currently has no derivative instruments that qualify for hedge accounting under IFRS.
Changes in the fair value of any derivative instruments are recognized immediately in the income statement.
In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. Estimates of the fair value of foreign currency contracts and interest rate swaps are obtained from a third party based upon market inputs, with an adjustment for the Company's credit risk as described in note 9. The fair value of derivative short-term and long-term financial liabilities is disclosed in note 16 regarding financial instruments.
RELATED PARTY TRANSACTIONS
All transactions, agreements and business activities with related parties are, in the Group's opinion, conducted on an arm's length basis according to ordinary business terms and conditions.
REVENUE RECOGNITION
Revenue is recognized only if it is probable that future economic benefits will flow to American Shipping Company, and these benefits can be measured reliably. Revenues related to fixed term vessel bareboat charter agreements are recognized over the charter period. Revenue related to profit sharing agreements is recognized when the amount becomes fixed and determinable. Revenue related to the deferred principal obligation (note 7) is discounted in cases where a payment period extends beyond 12 months.
SEGMENT INFORMATION
AMSC has only one operating segment. All operations and bareboat charter revenues are in the U.S.
BASIC AND DILUTED EARNINGS PER SHARE
The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders adjusted for preferred share dividends using the weighted average number of shares outstanding during the year after deduction of the average number of treasury shares held over the period. The calculation of diluted earnings per share is consistent with the calculation of basic earnings per share while giving effect to all dilutive potential ordinary shares that were outstanding during the period. The Group currently has no potentially dilutive shares outstanding.
EVENTS AFTER THE BALANCE SHEET DATE
A distinction is made between events both favorable and unfavorable that provide evidence of conditions that existed at the balance sheet date (adjusting events) and those that are indicative of conditions that arose after the balance sheet date (non-adjusting events). Financial statements will only be adjusted to reflect adjusting events (although there are disclosure requirements for non-adjusting events).
RECENTLY ISSUED ACCOUNTING STANDARDS AND PRONOUNCEMENTS
There have not been any new IFRS standards or interpretations issued after the completion of the annual consolidated financial statements for the year ended 31 December 2014 that have a significant impact on AMSC's financial reporting.
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12, Disclosure of Interests in Other Entities and the amendments to IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures were adopted effective 1 January 2014. Given the nature of the Company's structure and investment activities, the adoption of these standards and amendments did not have a material impact on the consolidated financial statements, but did result in additional disclosures.
-
Note 2: Wages and other personnel expenses
Wages and other personnel expenses consist of:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Wages and accrued bonuses | 804 | 1 338 |
| Social security contributions | 225 | 109 |
| Pension costs | 17 | 10 |
| Other expenses | 13 | 15 |
| Total expense | 1 059 | 1 472 |
| Average number of employees | 3 | 2 |
| Number of employees at year-end | 2 | 2 |
The Group has a defined contribution plan for its employees which provides for a contribution based upon a fixed matching amount plus discretionary percentage of salaries. This expense is included in pension costs above.
-Note 3: Other operating expenses
Other operating expenses consist of:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Rent and leasing expenses | 61 | 81 |
| Other operating expenses | 1 984 | 1 563 |
| Total other operating expenses | 2 045 | 1 643 |
Other operating expenses primarily relate to selling, general and administrative expenses including legal and outside consulting costs and fees to auditors for the American Shipping Company ASA Group. Audit expenses for 2014 and 2013 included only ordinary audit fees and other attestation services and were as follows:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Ordinary audit fee | 139 | 144 |
| Other attestation work | 21 | 104 |
| Tax assistance | 4 | - |
| Total | 164 | 248 |
-Note 4: Financial items
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Financial income | ||
| Interest income | 2 547 | 1 605 |
| Change in mark to market value of interest rate swaps | 20 132 | 20 105 |
| Other financial income | 9 529 | - |
| Financial income | 32 208 | 21 710 |
| Financial expenses | ||
| Interest expense | (50 983) | (54 875) |
| Net foreign exchange gain/(loss) | (5 106) | 16 856 |
| Other financial expenses | (3 534) | (3 499) |
| Financial expenses | (59 623) | (41 518) |
| NET FINANCIAL ITEMS | (27 415) | (19 808) |
Interest income in 2014 includes income on bank deposits of USD 0.6 million, interest accreted on the DPO receivable from Overseas Shipholding Group ("OSG") (see note 7) of USD 1.3 million and interest received from OSG of USD 0.6 million. Interest income in 2013 includes interest accreted on the DPO receivable from OSG of USD 1.6 million.
The Company has interest rate swaps, related to its take-out financing, with BNP Paribas ("BNP"). Estimates of the fair value of the interest rate swaps are obtained from a third party, with an adjustment for the Company's credit risk as described in note 9.
Other financial income in 2014 relates to the de-recognition of the bond associated with the Recapitaliztion of AMSC (see note 21).
Interest expense in 2014 includes interest paid to BNP of USD 35.6 million and interest relating to the bond of USD 15.4 million, of which USD 5.9 million was paid in cash, USD 7.1 million was payment-in-kind and USD 2.4 million was the amortization of the initial fair market gain recognized as additional interest expense over the remaining term of the bond. Interest expense in 2013 includes interest paid to BNP of USD 39.1 million, accrued interest relating to the NOK denominated bond of USD 13.2 million and accrued interest relating ot the USD 20.0 million loan from Converto Capital Fund AS ("Converto") of USD 2.6 million.
Net foreign exchange loss in 2014 relates to the conversion of the NOK denominated bond into USD and the translation of NOK cash into USD. Net foreign exchange gain in 2013 relates to the translation of the NOK denominated bond into USD (see note 13).
Other financial expenses in 2014 relate to amortization of lending fees of USD 3.4 million and loss on the investment in Philly Tankers AS of USD 0.1 million. Other financial expenses in 2013 relate to amortization of lending fees.
-Note 5: Tax
INCOME TAX EXPENSE Recognized in the income statement
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Current tax expense/(benefit): | ||
| Current year | - | - |
| Total current tax expense/(benefit) | - | - |
| Deferred tax expense: | ||
| Origination and reversal of temporary differences | 275 | - |
| Total deferred tax expense | 275 | - |
| Total income tax expense/(benefit) in income statement | 275 | - |
Reconciliation of effective tax rate
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Profit/(loss) before tax | 23 257 | 30 909 |
| 27.0% | 28.0% | |
| Expected tax expense/(benefit) using nominal Norwegian tax rate of 27% / 28% | 6 279 | 8 655 |
| Effect of differences between nominal Norwegian tax rate and U.S. federal and state tax rate | 4 734 | 3 930 |
| Foreign exchange | (4 314) | (4 666) |
| Tax losses for which no deferred income tax asset was recognised | (2 411) | (7 691) |
| Other differences | (4 013) | (228) |
| Total income tax expense/(benefit) in income statement | 275 | - |
DEFERRED TAX ASSETS AND LIABILITIES
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority, which through 31 December 2014 for the Group was primarily the U.S., and the Commonwealth of Pennsylvania.
Deferred tax assets and (liabilities) were as follows at 31 December:
| United States | ||
|---|---|---|
| Amounts in USD thousands | 2014 | 2013 |
| Net operating losses | 185 774 | 164 371 |
| Financial derivatives | 11 385 | 19 739 |
| Vessels | (191 885) | (166 330) |
| Other | 6 984 | 9 259 |
| Net deferred tax assets/(liabilities) | 12 258 | 27 039 |
| Net deferred tax assets not recorded | (12 258) | (27 039) |
| Net deferred tax assets/(liabilities) | - | - |
Norway
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Operating losses | 23 231 | 19 406 |
| Financial instruments | - | (2 579) |
| Other | - | - |
| Net deferred tax assets/(liabilities) | 23 231 | 16 827 |
| Net deferred tax assets not recorded | (23 231) | (16 827) |
| Net deferred tax assets/(liabilities) | - | - |
Deferred assets have not been recognized in respect of the following items
The Group has net operating losses in carryforward as of 31 December 2014 of USD 431.8 million in the U.S., the last of which expires in 2034, and USD 86.0 million in Norway, with no expiration date. Deferred tax assets in excess of deferred tax liabilities have not been recognized in respect of these items because it is not probable that future taxable profit in the short term will be available against which the Group can utilize the benefits therefrom.
On 3 January 2014, American Tanker Holding Company, Inc. (ATHC) and subsidiaries experienced a change of ownership in the U.S. as defined by Internal Revenue Code Section 382 due to a greater than 50% shift in owners of AMSC stock. The utilization of the net operating losses carryforward as of that date are subject to annual limitations. Net operating losses in carryforward as of that date are estimated to be recovered and useable based on the following schedule (subject to certain exceptions):
| (USD millions) | |
|---|---|
| 2015 | 72.5 |
| 2016 | 38.6 |
| 2017 | 34.9 |
| 2018 | 45.6 |
| 2019-2033* | 189.6 |
| 381.3 |
* From 2019-2033, AMSC expects to be able to utilize USD 12.6 million per year of its U.S. net operating losses to reduce U.S. taxable income. Any net operating losses recovered but not used in a year will carry over to the next year.
The Group's net operating losses in carryforward are comprised of the IRC 382 losses of USD 381.3 million and the losses through 31 December 2014 of USD 50.5 million. There are no restrictions on the use of the USD 50.5 million net operating loss.
In 2014, the Company recognized a deferred tax expense of USD 0.3 million related to income taxes in the Commonwealth of Pennsylvania. Under Pennsylvania tax regulations, the entities in the Group cannot be consolidated for state tax purposes. As a result, the Company must recognize a state deferred tax liability for those separate legal entities in which gross tax liabilities exceed gross tax assets.
Note 6: Property, plant and equipment
-
Movements in property, plant and equipment for 2014 are shown below:
| Amounts in USD thousands | Ships | Total |
|---|---|---|
| Cost balance at 1 January 2014 | 1 076 563 | 1 076 563 |
| Cost balance at 31 December 2014 | 1 076 563 | 1 076 563 |
| Depreciation at 1 January 2014 | 194 707 | 194 707 |
| Depreciation charge for the year | 33 865 | 33 865 |
| Depreciation at 31 December 2014 | 228 572 | 228 572 |
| Book value at 31 December 2014 | 847 990 | 847 990 |
Movements in property, plant and equipment for 2013 are shown below:
| Amounts in USD thousands | Ships | Total |
|---|---|---|
| Cost balance at 1 January 2013 | 1 076 563 | 1 076 563 |
| Cost balance at 31 December 2013 | 1 076 563 | 1 076 563 |
| Depreciation at 1 January 2013 Depreciation charge for the year |
161 186 33 521 |
161 186 33 521 |
| Depreciation at 31 December 2013 | 194 707 | 194 707 |
| Book value at 31 December 2013 | 881 856 | 881 856 |
| Depreciation period Depreciation method |
30 years straight-line |
Each vessel's salvage value is equal to the product of its lightweight tonnage and an estimated scrap rate of USD 400 per ton less estimated costs of disposal.
Secured property, plant and equipment
At 31 December 2014 vessels with a carrying amount of USD 848.0 million are subject to a registered debenture to secure bank loans (see note 13).
The BNP credit facility is secured by, among other things, a first preferred mortgage on each of the ten product tankers, which is granted when such vessel is delivered, and a blanket lien on substantially all assets of the owners of those vessels. In addition, the BNP credit facility is secured by collateral assignments of the earnings and bareboat charters for those vessels (and certain related guarantees of those bareboat charters and related supplemental indemnifications by OSG), and collateral assignments of the shipbuilding contracts and insurances for each of the ten product tankers, which are granted when such vessel is delivered.
Determination of recoverable amounts/Fair value
The Company evaluated any potential impairment of its vessels. Based on its analysis, which included third party appraisals and a discounted cash flows ("DCF") approach, the Company concluded that no impairment of vessels occurred in 2014 or 2013.
The third party appraisals were higher in 2014 from 2013 based upon continued strong market conditions in the U.S. Jones Act during 2014. Elements of the DCF, which is used to determine the recoverable amount, include assumptions for bareboat charter hire, profit sharing, asset lives, salvage value and the Company's weighted average cost of capital ("WACC").
Note 7: Interest-bearing long-term receivables
-
-
Financial interest-bearing long-term receivables consist of the following items:
| Amounts in USD thousands | Interest rate | 2014 | Interest rate | 2013 |
|---|---|---|---|---|
| Other interest-bearing long-term receivables | 6.06% | 33 204 | 6.06% | 29 581 |
| Total | 33 204 | 29 581 |
Other interest-bearing long-term receivables relate to a deferred principal obligation (DPO). Pursuant to the current charter and financing agreements, OSG America L.P. (OSG) has the right to defer payment of a portion of the bareboat charter hire for the first five vessels during the initial seven year fixed bareboat charter periods. OSG will pay a reduced bareboat charter rate and assume the DPO. The DPO accrues on a daily basis to a maximum liability of USD 7.0 million per vessel subject to adjustments as defined in the agreements. The DPO during the initial seven year period is discounted using the estimated market discount rate at lease inception. After the initial seven years, the DPO is repaid over 18 years including interest unless the bareboat charter is terminated earlier at which time the DPO becomes due immediately. During 2014, OSG began repayments on the first three vessels delivered under the arrangement, and those vessels' cash bareboat charter hire resumed to its full contractual amount. Interest accreted to the receivable in 2014 was USD 1.3 million (USD 1.6 million in 2013). Principal and interest payments on the first three vessels during 2014 totaled USD 0.8 million and USD 0.6 million, respectively.
Note 8: Trade and other receivables
Trade and other receivables consist of the following items:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Advance payments to suppliers | 112 | 1 533 |
| Other short-term interest-free receivables | - | - |
| Total | 112 | 1 533 |
Advance payments to suppliers as of 31 December 2014 include prepaid fees and deferred costs.
Advance payments to suppliers as of 31 December 2013 include prepaid fees relating to the AMSC Recapitalization (see note 21).
-Note 9: Derivative financial assets and liabilities
Derivative financial assets and liabilities comprise the following items:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Fair value of interest rate swaps | 27 434 | 47 566 |
| Derivative financial liabilities | 27 434 | 47 566 |
In connection with the BNP loan, interest rate swap agreements were entered into in 2007 and extended during 2012 as part of the BNP loan extension (see note 13). As of 31 December 2014 and 2013 the market value was negative USD 27.4 million and USD 47.6 million, respectively. The fair value of the interest swaps is obtained from a third party. In accordance with IAS 39, the Company considered the impact its own credit risk would have on the valuation in the market. It therefore adjusted the risk-free discount rate to include a credit spread of 200 basis points. The result of the credit spread differential had a positive impact of USD 0.5 million and USD 1.2 on the fair value of interest rate swaps at 31 December 2014 and 2013, respectively.
Refer to note 16 for additional information regarding financial instruments.
Note 10: Earnings per share
-
Basic and diluted earnings/(loss) per share are calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares.
| Amounts in USD thousands (except share and per share data) | 2014 | 2013 |
|---|---|---|
| Profit/(loss) attributable to equity holders of the Company for the period for determination of earnings per share |
22 982 | 30 909 |
| Weighted average number of ordinary shares in issue | 60 205 903 | 27 600 000 |
| Basic and diluted earnings per share | 0.38 | 1.12 |
-Note 11: Paid in capital
The current authorized share capital of AMSC is 66,678,505 ordinary shares. The issued share capital of AMSC as of 31 December 2014 is 60,616,500 ordinary shares, each with a par value of NOK 10, fully paid. On 3 January 2014, 30,475,492 ordinary shares were issued in connection with a private placement and debt conversion. A subsequent offering resulted in 2,541,013 new common shares on 23 January 2014. No common shares were issued in 2013.
The changes in equity are:
| Common shares of equity holders of the parent |
||||
|---|---|---|---|---|
| Amounts in USD thousands | Share Capital |
Share premium |
Total paid in equity |
|
| 1 January 2013 | 42 462 | 137 946 | 180 408 | |
| 31 December 2013 | 42 462 | 137 946 | 180 408 | |
| Equity issued | 53 904 | 103 060 | 156 964 | |
| Dividends paid / return of capital | - | (18 000) | (18 000) | |
| 31 December 2014 | 96 366 | 223 006 | 319 372 |
Note 12: Subsidiaries and associates
-
The subsidiaries included in the American Shipping Company ASA's Group account were as follows. Companies owned directly by American Shipping Company ASA are highlighted.
| 2014 | AMSC's common holding % |
AMSC's voting share % |
Principal place of business |
Country |
|---|---|---|---|---|
| American Tanker Holding Company, Inc. (ATHC) (1) | 100% | 100% | Kennett Square, PA | USA |
| American Tanker, Inc. (ATI) | 100% | 100% | Kennett Square, PA | USA |
| American Shipping Corporation (ASC) | 100% | 100% | Kennett Square, PA | USA |
| ASC Leasing I - X, Inc. (10 legal entities) | 100% | 100% | Kennett Square, PA | USA |
| 2013 | AMSC's common holding % |
AMSC's voting share % |
Principal place of business |
Country |
| American Tanker Holding Company, Inc. (ATHC) (1) | 100% | 100% | Kennett Square, PA | USA |
| American Tanker, Inc. (ATI) | 100% | 100% | Kennett Square, PA | USA |
| American Shipping Corporation (ASC) | 100% | 100% | Kennett Square, PA | USA |
| ASC Leasing I - X, Inc. (10 legal entities) | 100% | 100% | Kennett Square, PA | USA |
| American Tanker II, Inc. (ATI II) | 100% | 100% | Kennett Square, PA | USA |
| American Shipping Corporation II (ASC II) | 100% | 100% | Kennett Square, PA | USA |
| American Tanker III, Inc. (ATI III) | 100% | 100% | Wilmington, DE | USA |
(1) ATHC was formed in 2009 and is now the holder of shares of ATI, previously owned directly by AMSC.
During 2014, American Tanker II, Inc. (ATI II) group and American Tanker III, Inc. (ATI III) group were liquidated due to inactivity. This was the only change from 2013.
American Shipping Company ASA ("AMSC ASA") is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100% and holds the bond debt. ATHC, ATI and ASC are intermediary holding companies. Each of the Company's ten vessels are owned by an individual leasing company, ASC Leasing I - X, Inc. Each of the individual leasing companies have contracts directly with OSG and vessel debt directly with BNP Paribas which are covered by overall agreements that tie the arrangements together through either a framework agreement and/or guarantees.
ASSOCIATES
Philly Tankers AS
In 2014, AMSC made an equity investment of USD 25 million in Philly Tankers AS ("Philly Tankers") and owns 20% of the Oslo, Norway based company. Philly Tankers was formed in Q3 2014 and is listed on the Norwegian OTC market. Philly Tankers has orders for two 50,000 dwt product tankers from Aker Philadelphia Shipyard with deliveries in Q4 2016 and Q1 2017 and has options for two additional product tankers with deliveries in 2017. AMSC also holds a seat on the Board of Directors of Philly Tankers. The investment in Philly Tankers is recorded using the equity method.
The following table summarizes the financial information of Philly Tankers as included in its own financial statements.
| Amounts in USD thousands | 2014 |
|---|---|
| Non-current assets | 118 875 |
| Current assets | 590 |
| Non-current liabilities | - |
| Current liabilities | (75) |
| Net assets | 119 390 |
| Group's share of net assets (20%) | 23 878 |
| Excess of AMSC's investment over its share of equity in associate | 1 048 |
| Carrying amount of interest in associate | 24 926 |
| Net loss | (431) |
Capital Management Risk
AMSC's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, while maintaining an optimal capital structure to minimize the cost of capital. To meet these capital structure objectives, AMSC will review annually with its Board any proposed dividends, covenant requirements as well as any needs to raise additional equity for future business opportunities or to reduce debt.
Restrictions on dividend payments
Subject to certain exceptions, as of 31 December 2014, the BNP credit agreement restricts the payment of dividends by American Shipping Company ASA ("AMSC") and American Shipping Corporation ("ASC"). Specifically, AMSC may pay cash dividends only if immediately following payment of the dividend, the Company on a consolidated basis (i) has at least USD 10 million of unencumbered cash, and (ii) has a "NIBD-to-vessel value ratio of not more than 85%, where "NIBD" means interest-bearing debt minus cash on hand, and "vessel value" means the fair market value of the vessels as determined within the last 12 months by an independent broker, provided that any dividend distribution in 2014 shall not exceed USD 18 million, any dividend distributioned in 2015 shall not exceed USD 25 million and any dividend distribution in the first half of 2016 shall not exceed USD 13 million. These restrictions also apply under the bond loan and the OSG agreement. ASC may pay dividends only if it has a Fixed Charge Coverage Ratio of at least 1.05:1.0 for the most recent 12-month period and satisfies certain other requirements. In that case, it may pay a dividend of up to 50 percent of Net Cash Earnings for the most recent 12-month period. Dividends may be paid by the leasing companies to ASC, by American Tanker, Inc. ("ATI") to American Tanker Holding Company, Inc. ("ATHC"), and by ATHC to AMSC.
In addition to the above dividend restrictions, the Company's bond loan, after amendments on 3 January 2014, restricts the payment of dividends by AMSC such that any payments made after the BNP loan is refinanced shall be subject to a minimum equity to total asset ratio of 20% and shall remain above 20% immediately after such dividend payment has been made (increasing to 25% from 28 February 2018) and that AMSC is current with all of its interest payments.
Subject to certain exceptions, the BNP Credit Agreement prohibits ATI and its subsidiaries from lending money, or making investments in other entities, including their affiliates. ATI may, however, make capital contributions to ASC, and ASC may make capital contributions to the leasing companies. These restrictions do not apply to AMSC or ATHC.
Subject to certain exceptions, the BNP credit agreement also prohibits ATI and its subsidiaries from incurring additional indebtedness other than intercompany loans from AMSC or ATHC that are due no earlier than the maturity date of the BNP loan and are fully subordinated to the BNP loan. In addition, the BNP credit agreement prohibits ATI and its subsidiaries from making any prepayment on any indebtedness (other than the BNP loan), including any prepayment on subordinated indebtedness owing to AMSC or ATHC. These restrictions do not apply to AMSC or ATHC.
-Note 13: Interest-bearing loans and liabilities
Following is information about the contractual terms of AMSC's interest-bearing loans and borrowings.
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Non-current liabilities | ||
| Secured loans | 474 872 | 524 460 |
| Unsecured bond issues | 201 285 | 199 571 |
| Subordinated loan from Converto Capital Fund AS | - | 29 145 |
| Total long term interest bearing loans | 676 157 | 753 176 |
| Current liabilities | ||
| Current portion of secured loans | 52 205 | 48 346 |
| Total interest-bearing short term debt | 52 205 | 48 346 |
| Secured Loans as of 31 December | Maturity 2014 |
2013 |
| BNP Paribas gross borrowings June-2016 |
531 557 | 579 993 |
| Less unamortized loan fees | (4 480) | (7 187) |
| Sum Secured Loans | 527 077 | 572 806 |
Under the BNP loan agreement, there is a step up in the margin in 2015 of 0.5% per annum.
In connection with the BNP facility, AMSC has entered into interest rate swap agreements which, in effect, locks in the interest rate AMSC pays to BNP. The Company's interest rate swap agreements were also extended and blended into new fixed rates at the same time the vessel debt was extended. The new fixed interest rates vary between 5.1% and 7.9% per annum.
| Unsecured bond issue as of 31 December | Maturity | 2014 | 2013 |
|---|---|---|---|
| Bond at nominal value and accrued interest – beginning of period | 2018 | 199 571 | 114 170 |
| Interest added to bonds outstanding | 7 091 | 88 335 | |
| Cumulative foreign currency impact | 1 955 | (2 625) | |
| Gain on fair market value | (10 054) | - | |
| Less amortization of discount and capitalized fees | 2 722 | (309) | |
| Sum Unsecured bond issue | 201 285 | 199 571 |
On 16 February 2007 AMSC issued a NOK 700 million bond. The interest rate on the bond is NIBOR plus a margin of 4.75% and was changed to LIBOR plus a margin of 6.0% as of 3 January 2014 (6.2356% as of 31 December 2014).
As part of the AMSC Recapitalization, the bond terms were amended and effective on 3 January 2014. The amendments included: amend the terms of the bond so as to include a prepayment option, to amend the all-PIK-interest structure to 50/50 PIK/cash interest (and subsequent increase in cash interest portion following a refinancing of the BNP loan), to convert the denomination of the bond from NOK to USD (with a concurrent change in margin from NIBOR + 475 bp to LIBOR + 600 bp), to modify the dividend restrictions, and to give the Company an option to extend the maturity from 28 February 2018 to 28 February 2021. Due to the significance of the modifications of the bond terms, the Bond Loan is treated as a new loan, with the old loan being derecognized and the modified loan being recognized at fair value with a resulting initial gain to the fair market discount in 2014, which will be recognized as additional interest expense over the remaining term. The gain on the fair market value differs from the gain recognized in the income statement due to the deduction of transaction costs.
Aker ASA, through a subsidiary, holds 93% of the bond loan.
The covenants on the Company's bond require that consolidated equity excluding cumulative unrealized gains and losses on the interest rate swaps be maintained at a level not less than USD 50 million at a quarterly measurement date.
As of 31 December 2014, consolidated shareholders equity for determining compliance with debt covenants was approximately USD 262.0 million (at yearend, consolidated equity of USD 234.6 million plus USD 27.4 million of cumulative loss interest rate swaps).
| Subordinated loan from Converto Capital Fund AS | Maturity | 2014 | 2013 |
|---|---|---|---|
| Principal amount | 2018 | - | 20 000 |
| Interest added to principal | - | 9 145 | |
| Sum Subordinated Loan | - | 29 145 |
In connection with the Restructuring, the loan, including accrued interest, was converted to 5,975,492 new shares as of 3 January 2014.
Note 14: Operating leases
-
-
Non-cancellable operating lease rentals for bareboat charter hire are receivable as follows:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Less than one year | 86 972 | 84 456 |
| Between one and five years | 351 444 | 350 614 |
| More than five years | 45 766 | 87 801 |
| Total | 484 182 | 522 871 |
The fixed term of AMSC's bareboat charters of its vessels to OSG have a common maturity date in December 2019, with the exception of the Overseas Tampa. In connection with the conversion of the Overseas Tampa to a shuttle tanker in 2014, the bareboat charter was extended by ten years. The noncancellable bareboat charter revenue backlog totals approximately USD 484.2 million as of 31 December 2014. In addition, OSG has options to extend the charter terms for one, three or five years for the remaining useful lives of the vessels under similar conditions as the fixed lease term.
Non-cancellable operating lease rentals for office space are payable as follows:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Less than one year | 45 | 44 |
| Between one and five years | 20 | 65 |
| More than five years | - | - |
| Total | 65 | 109 |
In 2013 AMSC signed a lease for office space in Kennett Square, Pennsylvania through April 2016.
Note 15: Trade and other payables
Trade and other payables comprise the following items:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Trade accounts payable | 103 | 1 385 |
| Accrual of financial costs | 1 230 | 1 331 |
| Other short-term interest free liabilities | 7 727 | 8 280 |
| Total | 9 060 | 10 996 |
Other short-term interest free liabilities at 31 December 2014 include deferred revenue from OSG of USD 7.3 million because OSG makes monthly lease payments in advance and other accrued costs of USD 0.4 million. Other short-term interest free liabilities at 31 December 2013 include deferred revenue of USD 7.1 million and other accrued costs of USD 1.2 million.
-Note 16: Financial instruments
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, cash-flow interest-rate risk and foreign exchange risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk-management is carried out under policies approved by the Board of Directors. The Board of Directors provides principles for overall financial risk management as well as policies covering specific areas such as foreign exchange risk, interest-rate risk, credit risk, and use of derivative financial instruments and non-derivative financial instruments.
Exposure to credit, interest rate and currency risk arises in the normal course of the Group's business. Derivative financial instruments are used from time to time to hedge exposure to fluctuations in foreign exchange rates and interest rates for business purposes.
Credit risk
The carrying amount of financial assets represents the maximum credit exposure.
At 31 December the maximum exposure to credit risk is as follows:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Loans and receivables | 33 316 | 31 114 |
| Cash and cash equivalents | 85 201 | 12 340 |
| Cash held for specified uses | 8 107 | 7 283 |
| Total | 126 624 | 50 737 |
AMSC regularly monitors the financial health of the financial institutions which it uses for cash management services and in which it makes deposits and other investments. AMSC responds to changes in conditions affecting its deposit relationships as situations warrant.
Receivables are to be collected from the following types of counterparties:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Type of counterparty: | ||
| End-user customer (1) | 33 204 | 29 581 |
| Other receivables | 112 | 1 533 |
| Total | 33 316 | 31 114 |
(1) Due to the nature of the Group's operations, revenues and related receivables, including the DPO, are currently concentrated amongst OSG and its affiliates. The Group continually evaluates the credit risk associated with customers.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. With regards to making the debt service payments on the BNP loan, the Group has established cash retention accounts whereby all charter hire payments are deposited and utilized for debt service prior to being available for general corporate purposes. AMSC is subject to a covenant in its bond obligation that requires the Company to maintain a minimum level of USD 50.0 million of consolidated equity adjusted for cumulative unrealized gains and losses on interest rate swap agreements (see note 13). A default on this covenant triggers a cross default on all the Company's credit facilities. The risk of a breach of the equity covenant has been significantly reduced with the Recapitalization (see note 21). If the Company's equity falls below the required minimum, the Company can request a waiver or an amendment to the covenant from the bondholders via a bondholders meeting. It can not be determined if the bondholders would approve such a waiver or amendment to the covenant.
The following are the contractual maturities of financial liabilities including interest payments:
| 31 December 2014 | ||||||
|---|---|---|---|---|---|---|
| Book value | Contractual cash flow |
6 mths and less |
6-12 mths | 1-2 years | 2-5 years | More than 5 years |
| - | ||||||
| 531 557 | (555 193) | (33 318) | (34 930) | (486 581) | (364) | - |
| 27 434 | (28 022) | (10 643) | (9 581) | (7 798) | - | - |
| 767 609 | (847 384) | (47 871) | (47 919) | (504 695) | (246 899) | - |
| 208 617 | (264 169) | (3 910) | (3 408) | (10 316) | (246 535) |
| 31 December 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Amounts in USD thousands | Book value | Contractual cash flow |
6 mths and less |
6-12 mths | 1-2 years | 2-5 years | More than 5 years |
| Non-derivative financial liabilities | |||||||
| Unsecured bond issues (gross) | 199 879 | (267 255) | (3 233) | (3 234) | (7 173) | (253 615) | - |
| Long-term interest bearing external liabilities (gross) | 609 138 | (618 976) | (31 036) | (32 763) | (68 237) | (486 819) | (121) |
| Derivative financial liabilities | |||||||
| Interest rate swaps | 47 566 | (49 066) | (11 615) | (11 058) | (19 101) | (7 292) | - |
| Total as of 31 December 2013 | 856 583 | (935 297) | (45 884) | (47 055) | (94 511) | (747 726) | (121) |
Currency risk
American Shipping Company is exposed to foreign currency risk related to certain cash accounts; however, the Group may enter into foreign exchange derivative instruments, from time to time, to mitigate that risk. See additional discussion under Liquidity Risk. As part of AMSC's Recapitalization (see note 21), the NOK denominated bond was converted to USD. As a result of this conversion, the Company's currency risk is minimal going forward.
The Group incurs foreign currency risk on purchases and borrowings that are denominated in a currency other than USD. The currency giving rise to this risk is primarily NOK.
Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognized in the income statement. Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the monetary items are recognized as part of "net financing costs" (see note 4). The Company did not have any exchange contracts at 31 December 2014 or 31 December 2013.
Exposure to currency risk
The company's exposure to currency risk at 31 December 2014 and 2013 primarily related to amounts denominated in NOK, as follows:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Gross balance sheet exposure | ||
| Trade payables (-) | (38) | (696) |
| Bond | - | (199 571) |
| Cash | 3 848 | 46 |
| Gross balance sheet exposure | 3 810 | (200 221) |
| Estimated forecast expenses (-) | (1 856) | (1 735) |
| Gross forecasted exposure | (1 856) | (1 735) |
| Forward exchange contracts | - | - |
| Net exposure | 1 954 | (201 956) |
Sensitivity analysis
In managing interest rate and currency risks the Group aims to reduce the impact of short-term fluctuations on the Group's earnings. Over the longer term, however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.
It is estimated that a general strengthening of ten percent in the value of the USD against the NOK would have improved the Group's earnings before tax by approximately USD 14.1 million for the year ended 31 December 2014 and approximately USD 17.8 million for the year ended 31 December 2013. This analysis assumes that all other variables remain constant. The sensitivity analysis is primarily impacted by the bond which was converted from NOK to USD in 2014.
AMSC is subject to a covenant in its bond obligation that requires the Company to maintain a minimum level of USD 50.0 million of consolidated equity (see note 13). Consolidated equity for the Company is primarily impacted through the results of its operations.
As part of the AMSC Recapitalization, the bond terms were amended and effective on 3 January 2014. The amendments included the conversion of the bond from NOK into USD, substantially eliminating the currency risk. In addition, the Recapitalization increased the Company's equity by approximately USD 157 million. See note 21 for details of the amendments and financial statement impact.
Exposure to interest rate risk
The Group is exposed to fluctuations in interest rates for its variable interest rate debt related to the bond financing. With regards to the BNP takeout financing, the Group has entered into interest swap agreements to lock in the interest rate paid.
Sensitivity analysis
An increase of 100 basis points in interest rates in the reporting year would have increased /(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Increase/(decrease) | ||
| Bank deposits | 1 209 | 209 |
| Financial liabilities | (2 121) | (2 017) |
| Interest swap | 7 706 | 13 179 |
| P&L sensitivity (net) | 6 794 | 11 371 |
For 2014 and 2013, estimates of the interest swap valuation following the change in interest rates are obtained from a third party, with an adjustment for the Company's credit risk as described in note 9.
Fair values
Fair value hierarchy
IFRS requires companies to disclose certain information about how fair value is determined in a "fair value hierarchy" for financial instruments recorded at fair value, which for AMSC are derivative financial instruments, or disclosures about fair value measurements which have been identified below. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 includes assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly.
The only financial instruments that the Company accounts for at fair value are the interest rate swaps as of 31 December 2014 and 2013, which are classified in the Level 2 category described above. The Company's policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. During the year ended 31 December 2014, there were no transfers between categories
The fair values of financial instruments, the related fair value hierarchy, together with the carrying amounts shown in the balance sheet as of 31 December 2014 are as follows:
| Amounts in USD thousands | Carrying amount 2014 | Fair value 2014 | Fair value hierarchy |
|---|---|---|---|
| Interest-bearing receivables from external companies, maturity | |||
| greater than 3 years | 33 204 | 28 806 | 2 |
| Interest swap used for economic hedging: | |||
| Liabilities | (27 434) | (27 434) | 2 |
| Unsecured bond issue (gross) | (208 617) | (198 187) | 2 |
| Secured loans (gross) | (531 557) | (532 259) | 2 |
The fair value of cash, accounts receivable and accounts payable approximate the carrying values due to their short-term nature.
For 2014, the fair value of the interest-bearing receivables from external companies is calculated based on the present value of the gross principal balance or the present value of the future cash flows, both discounted at a rate of 10.0%.
The fair value of the unsecured bond issue was obtained from a third party, using observable inputs.
The fair value of fixed interest long-term debt is calculated based on the present value of future principle and interest cash flows, discounted at the market rate of 2.3% for 2014.
In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
The fair values of financial instruments, the related fair value hierarchy, together with the carrying amounts shown in the balance sheet as of 31 December 2013 are as follows:
| Amounts in USD thousands | Carrying amount 2013 | Fair value 2013 | Fair value hierarchy |
|---|---|---|---|
| Interest-bearing receivables from external companies, maturity | |||
| greater than 3 years | 29 581 | 28 609 | 2 |
| Interest swap used for economic hedging: | |||
| Liabilities | (47 566) | (47 566) | 2 |
| Unsecured bond issue (gross) | (199 879) | (189 885) | 2 |
| Secured loans (gross) | (579 993) | (580 819) | 2 |
| Subordinated loans (gross) | (29 145) | (29 145) | 2 |
The fair value of cash, accounts receivable and accounts payable approximate the carrying values due to their short-term nature.
For 2013, the Company assumed that the DPO is fully recoverable based on its analysis of the OSG bankruptcy case and alternatives, and the probability that OSG would continue performing under the integrated contract (see note 20 for details). For 2013, the fair value of the interest-bearing receivables from external companies was calculated based on the present value of the gross principal balance, discounted at a rate of 10.0%.
The fair value of the unsecured bond issue was obtained from a third party, using observable inputs and trading data for the security.
The fair value of fixed interest long-term debt is calculated based on the present value of future principle and interest cash flows, discounted at the market rate of 2.2% for 2013.
Note 17: Shares owned or controlled by the president and chief executive officer,
board of directors and senior employees of the American Shipping Company Group
Shares in American Shipping Company ASA of 31 December 2014
-
-
| Name | Position | Company | No. of shares |
|---|---|---|---|
| Pål Magnussen | President and CEO | AMSC | - |
| Annette Malm Justad | Chairman of the Board | AMSC | 4 523 |
Dag Fasmer Wittusen, President and CEO, resigned from the Company on 31 December 2014. At the time of his resignation, Mr. Wittusen owned 313,216 shares in the Company. On 19 January 2015, Pål Magnussen purchased 20,000 shares of the Company.
There is no share option agreement between American Shipping Company ASA and senior management or Directors.
REMUNERATION TO THE BOARD OF DIRECTORS THROUGH 31 DECEMBER 2014
| Name | Position | Company | Remuneration |
|---|---|---|---|
| Annette Malm Justad | Chairman | AMSC | 72 908 |
| Lars Solbakken | Board Member - former | AMSC | 56 840 |
| Peter Knudsen | Board Member | AMSC | 56 840 |
| Kristian Røkke | Board Member | - | |
| Sum Directors' fee | 186 588 |
Ms. Justad and Mr. Knudsen provided consulting services to the Company. Their work was approved by the Board of Directors. The compensation received by Ms. Justad was NOK 49,500. Mr. Knudsen received compensation totaling NOK 57,350. The Board of Director's term runs from 1 April through 31 March and the above remuneration reflects cash payments to board members during the calendar year 2014.
REMUNERATION TO THE NOMINATION COMMITTEE
AMSC's nomination committee was elected at the Company's annual general meeting in 2014. No compensation was paid during 2014.
GUIDELINES FOR REMUNERATION OF SENIOR MANAGEMENT
Advisory guidelines
The basis of remuneration of the senior management has been developed in order to create a performance-based system which is founded on the Company's values. This system of reward was designed to contribute to the achievement of good financial results and increase in shareholder value.
The senior management receives a base salary and may also be granted a variable pay as further detailed under "Binding guidelines" below.
The senior management are entitled to 6 months' severance payment. Except for this, the members of the management are not entitled to special benefits beyond ordinary severance pay during available termination notice periods. The senior management participate in a standard pension and insurance scheme.
Binding guidelines
In 2014, the senior management received a base salary in addition to a variable pay based on the award of synthetic shares in order to align performance payments with shareholder value creation. The system is based on awarding a certain number of synthetic shares to each member of the management team. The holder of the synthetic shares receives cash payments equal to the dividend paid to the shareholders. Further, the annual share price increase, if any, is paid as a cash bonus at the end of the year. There is a cap on the maximum compensation payable to each member of the management team. The remuneration of the senior management is in accordance with the guidelines for remuneration for 2014.
During 2014, Mr. Wittusen was awarded 350,000 synthetic shares in the Company. Under his synthetic share agreement, the total bonus paid during 2014 was USD 105 thousand. The cap on his salary was NOK 7 million. During 2014, Mr. Magnussen was awarded 200,000 synthetic shares, resulting in bonus payments of USD 60 thousand. The cap on his salary for 2014 was NOK 3.5 million. During 2014, Ms. Jaros was awarded 50,000 synthetic shares, resulting in bonus payments of USD 15 thousand. The cap on Ms. Jaros' salary is USD 200 thousand per year. For 2015, Mr. Magnussen has 350,000 synthetic shares and the cap on his annual compensation has been set at NOK 7 million.
The Company also has an incentive scheme for the management, where the Company can offer the management to purchase shares in the Company, subject to lock-up restrictions, with a view to incentivize long-term value creation and performance by the management. During 2014, Mr. Wittusen purchased 100,000 shares with a price reduction of 20% to the closing price to compensate for the lock-up restrictions on the shares for a period of three years. In accordance with his bonus agreement, he received a bonus of NOK 1.7 million, reflecting the difference in the price paid at the time of the purchase and the subscription price in the private placement in the Company.
The Company does not offer share option programs to the management.
REMUNERATION TO SENIOR MANAGEMENT DURING 2014
| Base salary | Bonus | Other Benefits | Pension Contribution |
Total (USD) | Severance pay | ||
|---|---|---|---|---|---|---|---|
| Dag Fasmer Wittusen | Jan. - Dec. | 362 213 | 830 826 | 54 215 | 16 431 | 1 263 685 | 6 months |
| Pål Magnussen | Jun. - Dec. | 132 373 | 64 496 | 24 109 | - | 220 978 | 6 months |
| Leigh Jaros | Jan. - Dec. | 156 228 | 37 321 | - | 968 | 194 517 | 6 months |
The Company has no bonus accrued as of 31 December 2014.
REMUNERATION TO SENIOR MANAGEMENT DURING 2013
| Base salary | Bonus | Other Benefits | Pension Contribution |
Total (USD) | Severance pay | ||
|---|---|---|---|---|---|---|---|
| Dag Fasmer Wittusen | Jan. - Dec. | 403 836 | 315 475 | 49 766 | 10 468 | 779 545 | 6 months |
| Leigh Jaros | Jan. - Dec. | 129 388 | 13 000 | - | 702 | 143 090 | 6 months |
In addition, the Company had an accrued bonus of USD 0.9 million as of 31 December 2013. This amount is accrued but not payable unless certain bonus criteria are met.
The above amounts reflect cash payments made to senior management during the calendar years 2014 and 2013, respectively.
-Note 18: Transactions and agreements with related parties
Transactions
The Group has service agreements with Aker ASA and Aker US Services LLC (formerly known as Resource Group International) which provide certain specified accounting, financial and administrative services. Upon Aker ASA's sale of its majority ownership in the Company in 2008, Aker ASA and its subsidiaries are no longer related parties. The cost of these services was not significant, however they are important to the Company's operations.
The Company believes that related party transactions are made on terms equivalent to those that prevail in arm's length transactions. Kristian Røkke, Board member of AMSC, is also a Board member of TRG Holding AS, which owns 66.7% of the total outstanding shares of Aker ASA as of 31 December 2014.
-
Note 19: Agreements with OSG
AMSC's only customer is OSG. The key agreements with OSG include the bareboat charter agreements, DPO agreements and profit sharing agreement. Under the bareboat charter agreements, OSG pays AMSC a fixed daily rate for leasing the vessels and OSG is responsible for operating costs and maintenance of the vessels. The fixed terms of the bareboat charters run through December 2019 (except the Overseas Tampa, which is fixed to 2025), with options for OSG to extend the charters for 1, 3 or 5 years for the useful lives of the vessels. Under the DPO agreement (see note 7), OSG defers payment of a portion of the daily bareboat charter hire for the first seven years of vessels 1-5. This deferred payment accrues on a daily basis to a maximum of USD 7.0 million per vessel and becomes repayable over 18 years after the initial 7 year period. Under the profit sharing agreement, AMSC and OSG share in the profits from OSG's operations of AMSC's 10 vessels. The calculation of profit to share is made on an aggregated fleet level. The calculation thus starts with total vessel revenue, subtracted by defined cost elements, as described below.
| Time Charter Hire | Fleet revenue |
|---|---|
| Less: | |
| BBC hire | Bareboat rate paid from OSG to AMSC |
| OPEX | Crew, maintenance & repairs, insurance, fees & vetting, lubes |
| OSG profit layer | Fixed daily rate of USD 4,000/day per vessel |
| Management fee | Fixed daily rate plus annual escalation |
| Auditor expenses | Actual OSG auditor expenses |
| Amortization of start-up costs | Amortized through December 2019 |
| Amortization of conversion costs | Amortized over ten years |
= Profit to share before Drydock Reserve Provision, Drydock Reserve True-Up Income subject to Profit Share before covering drydocking costs
The profit to share is then reduced by a drydock reserve provision, adjusted for a drydock reserve true-up once a drydock has been completed. The drydock reserve provision includes the estimated costs for each Intermediary Repair Period (IRP), which occurs every 3 years and each special survey occurring every 5 years.
When drydock expenses are covered, AMSC's portion of the profit share will start paying off on the USD 18.2 million OSG credit (plus accrued interest at 9.5% p.a. since December 2009). After having paid down the OSG credit, AMSC will be entitled to receive 50% of profits under the formula above in cash and will recognize profit sharing revenue. As an example, the calculation of profit sharing for the full year 2014 is shown with aggregated, rounded figures in USD millions below. During 2014, the Overseas Tampa was converted to a shuttle tanker for a time charter to Shell, beginning in 2015. During the conversion period, the vessel did not earn time charter hire. As part of the conversion agreement, the conversion costs which were paid by OSG will be amortized through an adjustment to profit sharing over ten years.
AMSC's 50% share of the profit (USD 5.6 million for 2014) is used to reduce the OSG credit. The cumulative balance as of the end of 2014 for the OSG credit is shown in the table below and as described above, must be covered prior to AMSC being entitled to receive profit share from OSG:
| Beginning balance as of Q1 2014 |
Interest | Reduction | Ending balance as of Q4 2014 |
|
|---|---|---|---|---|
| OSG credit | 25.9 | 2.4 | -5.7 | 22.6 |
-Note 20: Contingencies
On 14 November 2012, Overseas Shipholding Group, Inc. and certain of its subsidiaries (collectively "OSG"), which have all of AMSC's vessels on bareboat charter, filed a petition with the U.S. Bankruptcy Court for the District of Delaware for relief under Chapter 11 of the U.S. Bankruptcy Code. In addition to holding leases that represent all of AMSC's backlog of USD 484.2 million at 31 December 2014, OSG also owes USD 33.2 million of long-term receivables related to the DPO. OSG emerged from Chapter 11 bankruptcy protection on 5 August 2014 when its plan of reorganization ("Plan") became effective. As expected, under the terms of the Plan, all of AMSC's agreements with OSG were assumed and accepted on the effective date. As charterer of all of our vessels, OSG continued to service its financial obligations to AMSC in 2014 on time, including the first installments on the DPO. During 2014, OSG converted the Overseas Tampa to a shuttle tanker for a ten year time charter to Shell beginning in 2015. As part of the conversion agreement, the bareboat charter for the vessel was extended by ten years.
-Note 21: Recapitalization
On 2 December 2013, AMSC announced the launch of a recapitalization of the Company ("Recapitalization"). During January 2014, the Recapitalization was successfully completed. The Recapitalization included, among other things:
- Š The raising of NOK 735 million or approximately USD 120 million, in gross proceeds from an equity private placement (the "Private Placement"). The book-building was completed on 2 December 2013, and resulted in an issuance of a total of 24,500,000 new shares, at a subscription price of NOK 30 per share.
- Š A conversion of USD 29,267,718 owed to Converto Capital Fund AS ("Converto") under a subordinated loan (the "Converto Loan") into 5,975,492 new shares in the Company (the "Debt Conversion") at the same subscription price as the Private Placement. No amounts remain outstanding under the Converto Loan after the conversion. In connection with the Debt Conversion, Converto has entered into a lock- up agreement regarding its shareholding in the Company, for a period of six months following the date of the Debt Conversion.
- Š A subsequent offering to those shareholders of the Company that did not participate in the Private Placement (the "Subsequent Offering"), resulting in a subscription of 2,541,013 new shares at the same issue price as the Private Placement.
- Š Agreement with the lenders under the Company's existing bank facility agreement with BNP Paribas SA as lender and agent (the "Bank Facility") to modify the dividend restrictions under the Bank Facility, to allow payment of cash dividends and cash interest payment on the Company's senior unsecured bond loan ("FRN American Shipping ASA Senior Unsecured Callable PIK Bond Issue 2007/2012") (the "Bond Loan"), and to permit the inclusion of a prepayment option in the Bond Loan.
- Š Agreement with the bondholders in the Bond Loan to amend the terms of the Bond Loan so as to include a prepayment option, to amend the all-PIKinterest structure to 50/50 PIK/cash interest (and subsequent increase in cash interest portion following a refinancing of the Bank Facility), to convert the denomination of the bond from NOK to USD (with a concurrent change in margin from NIBOR + 475 bp to LIBOR + 600 bp), to modify the dividend restrictions, and to give the Company an option to extend the maturity from 28 February 2018 to 28 February 2021. Due to the significance of the modifications of the bond terms, the Bond Loan is treated as a new loan, with the old loan being de-recognized and the modified loan being recognized at fair value with a resulting initial gain to the fair market discount in 2014, which will be recognized as additional interest expense over the remaining term.
The new shares from the Private Placement and the Debt Conversion were registered with the Norwegian Registry of Business Enterprises (Nw. Foretaksregisteret) on 3 January 2014. After the registration, the registered share capital of AMSC was NOK 580,754,920 comprising of 58,075,492 shares each with a par value of NOK 10.00.
The share capital increase pertaining to the new shares issued through the Subsequent Offering was registered with the Norwegian Registry of Business Enterprises (Nw. Foretaksregisteret) on 23 January 2014. After the registration, the registered share capital of AMSC is NOK 606,165,050 comprising of 60,616,505 shares each with a par value of NOK 10.00.
Note 22: Events after the balance sheet date
-
On 12 February 2015, the Board authorized a quarterly dividend payment of USD 0.103 per share (USD 6.25 million in aggregate) to the shareholders of AMSC on record as of 18 February. The dividend was paid on 27 February 2015 and was classified as a return of capital.
American Shipping Company ASA Statement of Financial Position as of 31 December
| Amounts in USD thousands | Note | 2014 | 2013 |
|---|---|---|---|
| ASSETS | |||
| Shares in subsidiaries and associates | 3 | 352 381 | 327 803 |
| Long-term receivable group companies | 5 | 32 188 | 29 298 |
| Total financial non-current assets | 384 569 | 357 101 | |
| Total non-current assets | 384 569 | 357 101 | |
| Other short-term receivables | 8 | 63 | 117 176 |
| Cash and cash equivalents | 8 | 72 624 | 57 |
| Total current assets | 72 687 | 117 233 | |
| Total assets | 457 256 | 474 334 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 96 366 | 42 462 | |
| Share premium reserve | 223 006 | 137 946 | |
| Equity related to shares to be issued | - | 145 175 | |
| Total paid in capital | 319 372 | 325 583 | |
| Other equity | (65 601) | (46 142) | |
| Total retained earnings | (65 601) | (46 142) | |
| Total equity | 6 | 253 771 | 279 441 |
| Bond obligation | 7 | 201 285 | 191 034 |
| Other interest-bearing debt | 527 | 617 | |
| Total long-term liabilities | 201 812 | 191 651 | |
| Other short-term debt | 1 673 | 3 242 | |
| Total short-term liabilities | 1 673 | 3 242 | |
| Total equity and liabilities | 457 256 | 474 334 |
Oslo, 17 March 2015 The Board of Directors American Shipping Company ASA
Annette Malm Justad Peter D. Knudsen Kristian Røkke Chairman Board Member Board Member
Pål Magnussen President/CEO
American Shipping Company ASA
Income Statement
| Amounts in USD thousands | Note | 2014 | 2013 |
|---|---|---|---|
| Operating revenues | 127 | 109 | |
| Other operating expenses | 2 | (1 897) | (1 865) |
| Operating loss | (1 770) | (1 756) | |
| Interest income from group companies | 2 890 | 2 630 | |
| Other interest and financial revenues | 7 | 579 | 26 402 |
| Other interest and financial expenses | 2 | (20 959) | (15 929) |
| Income/(loss) after financial items | (19 260) | 11 347 | |
| Taxes | 4 | - | - |
| Profit/(loss) for the period | (19 260) | 11 347 | |
| Allocation of net profit: | |||
| Profit | (19 260) | 11 347 | |
| Other equity | 6 | 19 260 | (11 347) |
| Total | - | - |
American Shipping Company ASA
Cash Flow Statement
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Profit/(loss) before tax | (19 260) | 11 347 |
| Unrealized foreign exchange (gain)/loss and unpaid interest expense | 10 252 | 463 |
| (Gain) on derecognition of bond | - | (9 529) |
| Changes in short term receivables | 985 | (825) |
| Changes in short term liabilities | (1 570) | 439 |
| Cash flow from operating activities | (9 593) | 1 895 |
| Other changes in long term investments | (27 468) | (2 876) |
| Cash flow from investing activities | (27 468) | (2 876) |
| Proceeds from equity raised | 127 917 | - |
| Dividends / return of capital paid | (18 000) | - |
| Repurchase of treasury shares | (891) | - |
| Proceeds from sale of treasury shares | 692 | - |
| Proceeds from / (repayments of) other interest-bearing debt | (90) | 617 |
| Cash flow from financial activities | 109 628 | 617 |
| Cash flow for the year | 72 567 | (364) |
| Cash and cash equivalents 1 January | 57 | 421 |
| Cash and cash equivalents 31 December | 72 624 | 57 |
American Shipping Company ASA: Notes to the accounts
-Note 1: Accounting principles
The annual report is prepared according to the Norwegian Accounting Act and generally accepted accounting principles in Norway.
Subsidiaries and investment in associates
Subsidiaries are valued by the cost method in the company accounts. The investment is valued at the cost of acquiring shares in the subsidiary, providing that a write down is not required. A write down to fair value will be carried out if the reduction in value is caused by circumstances which may not be regarded as incidental, and deemed necessary by generally accepted accounting principles. Write downs are reversed when the cause of the initial write down is no longer present.
If dividends exceed withheld profits after acquisition, the exceeding amount represents reimbursement of invested capital, and the distribution will be subtracted from the value of the acquisition in the balance sheet.
Investments in associates are valued by the equity method. The investment is valued at the cost of acquiring the shares, with an adjustment for the Company's share of the associate's profit or loss.
Balance sheet classification
-
Net current assets comprise creditors due within one year. Other entries are classified as fixed assets and/or long-term creditors.
Current assets are valued at the lower of acquisition cost or fair value. Short-term creditors are recognized at nominal value.
Fixed assets are valued at the cost of acquisition. In the case of non-incidental reduction in value, the asset will be written down to the fair value amount. Long-term creditors are recognized at nominal value.
The bond loan is recorded at fair value.
Trade and other receivables
Trade receivables and other current receivables are recorded in the balance sheet at nominal value less provisions for doubtful accounts.
Foreign currency translation
The company's functional currency is U.S. dollars (USD) since all bareboat charter revenues and most of the group's expenses are in USD. Foreign currency transactions are translated into USD using the exchange rates prevailing at the dates of the transactions. Receivables and liabilities in foreign currencies are translated into USD at the exchange rates ruling on the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. The NOK/ USD foreign exchange rate as of 31 December 2014 was 7.41 and the average rate during 2014 was 6.35 NOK/USD.
Short term investments
Short term investments (stocks, short-term bonds, liquid placements and shares) are valued at the lower of acquisition cost or fair value at the balance sheet date. Dividends and other distributions are recognized as other investment income.
Income tax
Tax expenses in the profit and loss account comprise both tax payable for the accounting period and changes in deferred tax. Deferred tax is calculated at the percent on the basis of existing temporary differences (27%) between accounting profit and taxable profit together with tax deductible deficits at year end. Temporary differences, both positive and negative, are balanced out within the same period. Deferred tax assets are recorded in the balance sheet to the extent it is more likely than not that the tax assets will be utilized.
Cash flow statement
The cash flow statement is presented using the indirect method. Cash and cash equivalents includes cash, bank deposits and other shortterm highly liquid deposits with original maturities of three months or less.
Revenue recognition
The Company's revenues consist of management fees charged to foreign subsidiaries and are recognized when they become due and payable.
Pensions
The Company has a defined contribution pension plan that covers its employees whereby contributions are paid to qualifying pension plans. Once the contributions have been paid, there are no further payment obligations. Plan contributions are charged to the income statement in the period to which the contributions relate.
Use of estimates
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts in the profit and loss statement, the measurement of assets and liabilities and the disclosure of contingent assets and liabilities on the balance sheet date. Actual results can differ from these estimates.
Contingent losses that are probable and quantifiable are expensed as occurred.
Certain prior year reclassifications were made to conform to current year presentation.
Note 2: Other operating and financial expenses
Fees to the auditors of USD 36 thousand (without VAT) for ordinary audit was expensed in 2014. For more information on fees paid to KPMG, see note 3 in the consolidated accounts.
As of 1 June 2014, the Company employed Pa˚ l Magnussen as its CFO. Dag Fasmer Wittusen held the position of President and CEO through 31 December 2014. Mr. Magnussen was appointed to the position of President and CEO effective 1 January 2015. See note 17 in the consolidated accounts for more information regarding remuneration to senior management. The Company has no other employees than the CEO. Board of directors expenses were USD 223 thousand in 2014.
Other interest and financial revenues in 2014 include USD 0.6 million of interest received on bank deposits.
Other interest and financial expenses in 2014 includes interest on the bond of USD 15.4 million, USD 5.1 million of foreign exchange losses and USD 0.5 million of other financial expenses.
Note 3: Shares in subsidiaries and associates
This item comprises the following as of 31 December 2014:
| Amounts in USD thousands | Ownership of common shares (%) |
Voting rights (%) |
Business address |
Historical cost |
Book value |
|---|---|---|---|---|---|
| American Tanker Holding Company, Inc. (ATHC) (1) | 100% | 100% Kennett Square, PA | 327 455 | 327 455 | |
| American Tanker III, Inc. (ATI III) (2) | 100% | 100% | Wilmington, DE | 380 | - |
| Philly Tankers AS | 20% | 20% | Oslo, Norway | 24 926 | 24 926 |
| Total shares | 352 761 | 352 381 | |||
| ATHC | ATI III | ||||
| Subsidiaries' 2014 results after tax in USD thousands | 32 402 | (26) | |||
| Subsidiaries' equity attributable to common shareholders at | |||||
| 31 December 2014 in USD thousands | 307 093 | - |
(1) ATHC was formed in 2009 and is now the holder of shares of ATI, previously owned directly by AMSC. The book value is net of USD 2.5 million in impairment charges taken in 2010. The ATI II group was liquidated in 2014.
During 2013, American Shipping Company ASA (AMSC) received USD 1.1 million from ATHC as a reimbursement of invested capital.
(2) American Tanker III, Inc. was liquidated in 2014. AMSC received a liquidating distribution of USD 21.7 thousand and recorded a loss on the investment in 2014 of USD 357.8 thousand.
American Shipping Company ASA ("AMSC ASA") is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100% and has the bond debt. ATHC, ATI and ASC are intermediary holding companies. Each of the ten vessels are owned by each individual leasing company, ASC Leasing I - X, Inc. Each of the individual leasing companies have contracts directly with OSG and vessel debt directly with BNP Paribas which are covered by overall agreements that tie the arrangements together through either a framework agreement and/or guarantees.
AMSC analyzes the value of its investments in subsidiaries on an annual basis, or sooner if conditions change or events occur which could cause the carrying values to change. Detailed analysis, including discounted cash flows and third party appraisals, are prepared and reviewed by management supporting the carrying value of each of its investments. AMSC considers many factors, including the appropriate cost of capital, asset lives, market values and likelihood of events, in reviewing its investment value. No impairment was recognized in 2014 or 2013.
ASSOCIATES
-
Philly Tankers AS
In 2014, AMSC made an equity investment of USD 25 million in Philly Tankers AS ("Philly Tankers") and owns 20% of the Oslo, Norway based company. Philly Tankers was formed in Q3 2014 and is listed on the Norwegian OTC market. Philly Tankers has orders for two 50,000 dwt product tankers from Aker Philadelphia Shipyard with deliveries in Q4 2016 and Q1 2017 and has options for two additional product tankers with deliveries in 2017. AMSC also holds a seat on the Board of Directors of Philly Tankers. The investment in Philly Tankers is recorded using the equity method.
The following table summarizes the financial information of Philly Tankers as included in its own financial statements.
| Amounts in USD thousands | 2014 |
|---|---|
| Non-current assets | 118 875 |
| Current assets | 590 |
| Non-current liabilities | - |
| Current liabilities | (75) |
| Net assets | 119 390 |
| Group's share of net assets (20%) | 23 878 |
| Excess of AMC's investment over its share of equity in associates | 1 048 |
| Carrying amount of interest in associate | 24 926 |
| Net Loss | (431) |
-Note 4: Tax
The table below shows the difference between book and tax values at the end of 2013 and 2012, and the amounts of deferred taxes at these dates and the change in deferred taxes.
Tax payable:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Profit/(loss) before tax USD accounts in USD | (19 261) | 11 348 |
| Difference between NOK and USD accounts | (15 977) | (16 663) |
| Result before tax measured in NOK for taxation purposes | (35 237) | (5 315) |
| Permanent differences | 219 | (812) |
| Change in temporary differences | 7 820 | (9 551) |
| Estimated result for tax purposes | (27 198) | (15 678) |
| Utilization of loss carried forward | - | - |
| Taxable income | (27 198) | (15 678) |
| Tax payable | - | - |
The result before taxes in NOK are different from the result before taxes in USD primarily due to currency exchange differences.
Deferred tax:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Other differences | - | 9 551 |
| Operating loss carried forward | (86 042) | (71 873) |
| Total differences | (86 042) | (62 322) |
| Deferred tax asset, 27 percent / 28 percent | (23 231) | (16 827) |
| Restrictions regarding balance tax asset | 23 231 | 16 827 |
| Book value tax asset | - | - |
Taxes:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Current payable tax charged to the income statement Change in deferred tax |
- - |
- - |
| Total tax cost | - | - |
-Note 5: Long-term receivables
Long-term receivables are:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| American Tanker, Inc. (ATI) | 32 188 | 29 298 |
| Total | 32 188 | 29 298 |
The receivables have the following installment plan:
| Amounts in USD thousands | 2014 | 2013 |
|---|---|---|
| Maturity within five years | 32 188 | 29 298 |
| Maturity later than five years | - | - |
| Total | 32 188 | 29 298 |
The interest conditions on the receivables are at market conditions.
The loan to ATI is unsecured and bears interest at the higher of 9.5% or LIBOR plus 5.75% (9.5% at 31 December 2014). The ATI note is payable on demand by AMSC, provided that demand may not be made prior to the "Unsecured Note Maturity Date", which is the maturity date of the Vessel Loans (30 June 2016).
-Note 6: Total equity
Changes in equity are:
| 2014 Amounts in USD thousands |
Share capital | Share premium | Shares to be issued |
Total paid-in capital |
Other equity | Total equity |
|---|---|---|---|---|---|---|
| Equity as of 1 January 2014 | 42 462 | 137 946 | 145 175 | 325 583 | (46 142) | 279 441 |
| Issuance of shares on 3 January 2014 | 49 756 | 95 419 | (145 175) | - | - | - |
| Issuance of shares on 23 January 2014 | 4 148 | 7 641 | - | 11 789 | - | 11 789 |
| Repurchase of treasury shares | - | - | - | - | (891) | (891) |
| Proceeds from sale of treasury shares | - | - | - | - | 692 | 692 |
| Dividends paid / return of capital | - | (18 000) | - | (18 000) | - | (18 000) |
| Net result | - | - | - | - | (19 260) | (19 260) |
| Equity as of 31 December 2014 | 96 366 | 223 006 | - | 319 372 | (65 601) | 253 771 |
On 3 January 2014, AMSC issued 30,475,492 common shares, increasing the share capital to NOK 580.8 million, comprising 58,075,492 shares each with a par value of NOK 10.00 per share. The resulting equity increase was recorded on 31 December 2013 when AMSC was legally entitled to the consideration for the shares.
On 23 January 2014, through a subsequent offering, a total of 2,541,013 ordinary shares were issued at a par value of NOK 10 per share. The total outstanding shares of AMSC are 60,616,505 shares each with a par value of NOK 10 per share.
No treasury shares were held as of 31 December 2014. During 2014, 100,000 treasury shares were purchased and subsequently sold to Dag Wittusen under his share purchase agreement and lock-up restrictions. Subsequent to year-end, the Company purchased 20,000 treasury shares, which were sold to Pål Magnussen under a share purchase agreement and lock-up restrictions.
| 2013 Amounts in USD thousands |
Share capital | Share premium | Shares to be issued |
Total paid-in capital |
Other equity | Total equity |
|---|---|---|---|---|---|---|
| Equity as of 1 January 2013 | 42 462 | 137 946 | - | 180 408 | (57 489) | 122 919 |
| Equity related to shares to be issued | - | - | 145 175 | 145 175 | - | 145 175 |
| Net result | - | - | - | - | 11 347 | 11 347 |
| Equity as of 31 December 2013 | 42 462 | 137 946 | 145 175 | 325 583 | (46 142) | 279 441 |
| The shares were owned by the following 20 largest parties as of 31 December 2014: | Number | Percent | ||||
| CONVERTO CAPITAL FUND AS | 11 557 022 | 19.1% | ||||
| SKANDINAVISKA ENSKILDA BANKEN AB | 9 182 520 | 15.1% | ||||
| GOLDMAN SACHS & CO EQUITY SEGREGAT | 7 693 142 | 12.7% | ||||
| DNB NOR MARKETS, AKSJEHAND/ANALYSE | 3 919 537 | 6.5% | ||||
| EUROCLEAR BANK S.A./N.V. ('BA') | 3 555 976 | 5.9% | ||||
| THE BANK OF NEW YORK MELLON SA/NV | 3 071 756 | 5.1% | ||||
| DBSI—090-9011 3-1-4 | 2 930 057 | 4.8% | ||||
| JP MORGAN CLEARING CORP. | 1 985 119 | 3.3% | ||||
| PERSHING LLC | 1 266 450 | 2.1% | ||||
| THOM EIGEL INGVAR | 1 222 222 | 2.0% | ||||
| CREDIT SUISSE SECURITIES (USA) LLC | 1 147 734 | 1.9% | ||||
| UBS AG | 864 995 | 1.4% | ||||
| J.P. MORGAN CHASE BANK N.A. LONDON | 712 500 | 1.2% | ||||
| RO LARS | 700 000 | 1.2% | ||||
| MSCO EQUITY FIRM ACCOUNT | 549 034 | 0.9% | ||||
| MERRILL LYNCH PROF. CLEARING CORP | 487 453 | 0.8% | ||||
| NORDNET PENSJONSFORSIKRING | 397 558 | 0.7% | ||||
| MORGAN STANLEY & CO. LLC | 372 735 | 0.6% | ||||
| CITIBANK, N.A. | 372 145 | 0.6% | ||||
| CLEARSTREAM BANKING S.A. | 357 088 | 0.6% | ||||
| Total, 20 largest shareholders | 52 345 043 | 86.4% | ||||
| Other shareholders | 8 271 462 | 13.6% | ||||
| Total | 60 616 505 | 100.0% |
-
Note 7: Other long term interest-bearing debt
The bond obligation is as follows as of 31 December 2014:
| Amounts in USD thousands | Maturity | Balance | Interest Rate |
|---|---|---|---|
| Bond at nominal value and accrued interest - beginning of period | 2018 | 199 571 | LIBOR + 6.0% |
| Interest added to bonds outstanding | 7 091 | (1) | |
| Cumulative foreign currency impact | 1 955 | (1) | |
| Gain on fair market value | (10 054) | ||
| Less unamortized discount and capitalized fees | 2 722 | (1) | |
| Sum Unsecured bond issue | 201 285 |
(1) Included in other interest and financial expenses.
On 16 February 2007 AMSC issued a NOK 700 million bond. The interest rate on the bond is NIBOR plus a margin of 4.75% and was changed to LIBOR plus a margin of 6.0% as of 3 January 2014 (6.2356% as of 31 December 2014).
As part of the AMSC Recapitalization, the bond terms were amended and effective on 3 January 2014. See note 21 in the consolidated accounts for details of the amendments and financial statement impact. Due to the significance of the modifications of the bond terms, the bond was treated as a new loan as of 27 December 2013, with the old loan being de-recognized and the modified loan being recognized at fair value with a resulting initial gain to the fair market discount, which will be recognized as additional interest expense over the remaining term. The gain on fair market value differs from the gain recognized in the income statement due to the deduction of transaction costs.
Aker ASA, through a subsidiary, holds 93% of the bond loan.
The covenants on the Company's bond require that consolidated equity excluding cumulative unrealized gains and losses on the interest rate swaps be maintained at a level not less than USD 50 million at a quarterly measurement date.
As of 31 December 2014, consolidated shareholders equity for determining compliance with debt covenants was approximately USD 262.2 million (at yearend, consolidated equity of USD 234.6 million plus USD 27.4 million of cumulative loss interest rate swaps). As part of AMSC's Recapitalization (see note 21 in the consolidated accounts), the bond was converted to USD. As a result of this conversion, the Company's currency risk is minimal going forward.
Note 8: Cash and cash equivalents
There is no restricted cash.
-
-
Other short-term receivables in 2013 mostly relate to the proceeds from the equity raised as part of the Recapitalization (see note 21 in the consolidated accounts). This amount (USD 116.9 million) was subsequently received by the Company on 3 January 2014.
Note 9: Shares owned by the board of directors and the senior management
For information regarding shares owned by the members of the board of directors and the senior management, see note 17 in the Consolidated Accounts.
-Note 10: Guarantees
The company has made the following guarantees:
Description Beneficiary Amount (USD thousands) Guarantee party
Senior secured credit facility BNP Paribas 770 000 ASC Leasing I-X, Inc.
| Offices in: | |||
|---|---|---|---|
| Oslo Alta Arendal |
Haugesund Knarvik Kristiansand |
Stavanger Stord Straume |
|
| Bergen | Larvik | Tromsa | |
| KPMG AS, a Norwegian member firm of the KPMG network of independent | Bodø | Mo i Rana | Trondhaim |
| member firms affiliated with KPMG International Cooperative ("KPMG | Elverum | Molde | Tynset |
| nternational"), a Swiss entity. | Finnsnes | Narvik | Tønsberg |
| Grimstad | Sandefiord | Alesund | |
| Statsautoriserte revisorer - medlemmer av Den norske Revisorforening. | Hamar | Sandnessiøen |
Share and shareholder information
American Shipping Company is committed to maintaining an open and direct dialogue with its shareholders, potential investors, analysts, brokers, and the financial community in general. The timely release of information to the market that could affect the Company's share price helps ensure that American Shipping Company ASA's share price reflects its underlying value.
American Shipping Company's goal is that the Company's shareholders will, over time, receive competitive returns on their investment. The Board considers the amount of dividend, if any, to be recommended for approval by the shareholders on an annual basis. The recommendation is based upon earnings for the year just ended, the financial situation at the relevant point in time and applicable restrictions under AMSC's financial agreements.
Dividends
The Company paid dividends totaling USD 0.30 per share (USD 18 million) in 2014. The dividends were classified for accounting purposes as repayment of previously paid in share premium.
Recent changes to the Norwegian Public Limited Liability Companies Act allows for the Board of Directors to pay dividends on the basis of an authorization from the General Meeting. At the 2014 Annual General Meeting, the Board of Directors were granted an authorization to pay dividends up to an approved amount at their discretion based on the Company's annual accounts for 2013, valid up to the Company's Annual General Meeting in 2015. Such authorization facilitated payment of dividend by the Board of Directors on a quarterly basis.
Payment of dividends by AMSC is subject to restrictions under its vessel debt facility and the bond loan, under which the Company can pay dividends only if immediately following payment of the dividend, the Company on a consolidated basis (i) has at least US\$ 10 million of unencumbered cash, and (ii) has an "NIBDto-vessel value" ratio of not more than 85%, where "NIBD" means interest-bearing debt minus cash-on-hand, and "vessel value" means the fair market value of the vessels as determined within the past 12 months by an independent broker, provided that any dividend distribution in 2014 shall not exceed US\$ 18 million, any dividend distribution in 2015 shall not exceed US\$ 25 million, and any dividend distribution in the first half of 2016 shall not exceed US\$ 13 million.
Shares and share capital
As of 31 December 2014, American Shipping Company ASA had 60 616 505 ordinary common shares; each share with a par value of NOK 10 (see Note 11 to the Company's 2014 accounts).
On 3 January 2014, the Company issued 24,500,000 new shares pursuant to a private placement of approximately USD 120 million and converted outstanding debt to 5,975,492 new shares in accordance with resolutions made by an Extraordinary General Meeting of the Company held on 27 December 2013. On 23 January 2014, the Company issued 2,541,013 new shares pursuant to a resolution by the Board of Directors under an authorization granted by the Extraordinary General Meeting on 27 December 2013. The new shares were issued pursuant to a subsequent offering of shares to shareholders that did not participate in the private placement.
As of 31 December 2014, the Company had 1,285 shareholders, of whom 9.7 percent were non-Norwegian shareholders.
American Shipping Company ASA currently has a single share class. Each share is entitled to one vote, but is subject to certain voting and ownership restrictions due to the fact that the Company is operating under an exception from the U.S. ownership requirement in the Jones Act (see Articles of Association available on the Company's web page). The Company held no own (treasury) shares as of 31 December 2014.
Stock-exchange listing
The Company's shares are listed on the Oslo Stock Exchange's main (OSEBX) list (ticker: AMSC). American Shipping Company's shares are registered in the Norwegian Central Securities Depository; the shares have the securities registration number ISIN NO 0010272065. DNB Bank is the Company's registrar.
Significant shareholder
American Shipping Company ASA's largest shareholder is Converto Capital Fund AS, which holds 19.1 percent of the Company's shares.
From time to time, agreements are entered into between two or more former related companies. The boards of directors and other parties involved in the decisionmaking processes related to such agreements are all critically aware of the need to handle such matters in the best interests of the involved companies, in accordance with good corporate governance practice and on an arm's length basis. If needed, external, independent opinions are sought.
Current Board authorizations
The Annual General Meeting in 2014 granted an authorization to the Board to purchase own (treasury) shares in connection with the Company's incentive scheme for employees. The Board was also granted an authorization to increase the share capital in connection with strengthening of the Company's equity capital or to raise equity capital for future investments within the Company's scope of operations.
The Board of Directors has authorization to pay dividends, to facilitate payment of dividends on a quarterly basis.
All of these Board authorizations are valid up to the Annual General Meeting in 2015.
Share incentive program
The Company currently does not have any share or stock option plans, but the Annual General Meeting in 2014 approved the establishment of an incentive program for its employees, giving the Board of Directors the ability to offer its employees to purchase shares in the Company on favorable terms, subject to certain lock-up restrictions.
Investor relations
American Shipping Company ASA seeks to maintain an open and direct dialogue with shareholders, financial analysts, and the financial market in general.
Visitors to American Shipping Company's website at www.americanshippingco. com can subscribe to email delivery of American Shipping Company news releases.
Save the environment – read reports online
Annual reports are published on the Company's website (www.americanshippingco.com) at the same time as they are made available via website release by the Oslo Stock Exchange: www.newsweb.no (ticker: AMSC).
American Shipping Company ASA encourages its shareholders to subscribe to the Company's annual reports via the electronic delivery system of the Norwegian Central Securities Depository (VPS). Please note that VPS services (VPS Investortjenester) are designed primarily for Norwegian shareholders. Subscribers to this service receive annual reports in PDF format by email.
Electronic distribution is the fastest channel for accessing Company information; it is also cost-effective and environmentally friendly.
Quarterly reports, which are generally only distributed electronically, are available from the Company's website and other sources. Shareholders who are unable to receive the electronic version of interim and annual reports, may subscribe to the printed version by contacting American Shipping Company.
American Shipping Company's press releases and investor relations (IR) publications for the current and prior year are available at the Company's website: www.americanshippingco.com. This online resource includes the Company's quarterly and annual reports, prospectuses, corporate presentations, articles of association, financial calendar, and its Investor Relations and Corporate Governance policies, along with other information.
Shareholders can contact the Company at [email protected].
20 largest shareholders
as of 31 December 2014:
| Shareholder | Number of shares held | Ownership (in %) |
|---|---|---|
| CONVERTO CAPITAL FUND AS | 11 557 022 | 19.1% |
| SKANDINAVISKA ENSKILDA BANKEN AB | 9 182 520 | 15.1% |
| GOLDMAN SACHS & CO EQUITY SEGREGAT | 7 693 142 | 12.7% |
| DNB NOR MARKETS, AKSJEHAND/ANALYSE | 3 919 537 | 6.5% |
| EUROCLEAR BANK S.A./N.V. ('BA') | 3 555 976 | 5.9% |
| THE BANK OF NEW YORK MELLON SA/NV | 3 071 756 | 5.1% |
| DBSI-090-9011 3-1-4 | 2 930 057 | 4.8% |
| JP MORGAN CLEARING CORP. | 1 985 119 | 3.3% |
| PERSHING LLC | 1 266 450 | 2.1% |
| THOM EIGEL INGVAR | 1 222 222 | 2.0% |
| CREDIT SUISSE SECURITIES (USA) LLC | 1 147 734 | 1.9% |
| UBS AG | 864 995 | 1.4% |
| J.P. MORGAN CHASE BANK N.A. LONDON | 712 500 | 1.2% |
| RO LARS | 700 000 | 1.2% |
| MSCO EQUITY FIRM ACCOUNT | 549 034 | 0.9% |
| MERRILL LYNCH PROF. CLEARING CORP | 487 453 | 0.8% |
| NORDNET PENSJONSFORSIKRING | 397 558 | 0.7% |
| MORGAN STANLEY & CO. LLC | 372 735 | 0.6% |
| CITIBANK, N.A. | 372 145 | 0.6% |
| CLEARSTREAM BANKING S.A. | 357 088 | 0.6% |
| Total 20 largest shareholders | 52 345 043 | 86.4% |
| Other shareholders | 8 271 462 | 13.6% |
| Total | 60 616 505 | 100.0% |
Geographic distribution of shareholders
as of 31 December 2014
| Nationality | No. of shares held | Ownership (in %) |
|---|---|---|
| Non-Norwegian shareholders | 29 218 274 | 48.2% |
| Norwegian shareholders | 31 398 231 | 51.8% |
| Total | 60 616 505 | 100.0% |
Ownership structure by number of shares held
as of 31 December 2014
| Shares owned | Number of shareholders |
Percent of share capital |
|---|---|---|
| 1 – 100 | 241 | 0.01% |
| 101 – 1 000 | 503 | 0.42% |
| 1 001 – 10 000 | 410 | 2.42% |
| 10 001 – 100 000 | 93 | 4.54% |
| 100 001 – 500 000 | 23 | 9.53% |
| Over 500 000 | 15 | 83.08% |
| Total | 1 285 | 100.00% |
Annual shareholders' meeting
American Shipping Company ASA's annual shareholders' meeting is normally held in late March or April. Written notification is sent to all shareholders individually or to shareholders' nominee. To vote at shareholders' meetings, shareholders (or their duly authorized representatives) must either be physically present, vote by proxy or vote electronically prior to the shareholders' meeting.
2014 share data
The Company's total market capitalization as of 31 December 2014 was NOK 2,273.1 million. During 2014, a total of 46,341,177 American Shipping Company ASA shares traded. The shares traded on 250 trading days.
Share price development in 2014
| 2014 share data | ||
|---|---|---|
| Highest traded | NOK | 54.75 |
| Lowest traded | NOK | 29.20 |
| Share price as of 31 Dec. | NOK | 37.50 |
| Share price change 1 Jan-31Dec | -1.83% | |
| Shares issued as of 31 Dec. | 60 616 505 | |
| Own (treasury) shares as of 31 Dec. | 0 | |
| Shares issued and outstanding as of 31 Dec. | 60 616 505 | |
| Market capitalization as of 31 Dec. | NOK million | 2 237.1 |
Corporate governance
American Shipping Company ASA's focus is on building a premier ownership position in the Jones Act market to create maximum value for its shareholders. Good corporate governance will help to reduce risk and ensure sustainable value creation.
The Board of Directors of American Shipping Company ASA has reviewed and updated the Company's principles for corporate governance. The Board's statement of corporate governance is included in the annual report. The principles are based on the Norwegian Code of Practice for Corporate Governance, dated 30 October 2014 (the "Code of Practice"), the principles set out in the Continuing Obligations of stock exchange listed companies from the Oslo Stock Exchange, and the relevant Norwegian background law such as the Norwegian Accounting Act and the Norwegian Public Limited Liability Companies Act. The Code of Practice is available at www.nues.no and the Continuing Obligations of stock exchange listed companies may be found at www.oslobors.no.The principles also apply to American Shipping Company ASA's subsidiaries where relevant.
The following presents American Shipping Company ASA's (hereinafter American Shipping Company, AMSC, the Company or the Group) practice regarding each of the recommendations contained in the Code of Practice. Any deviations from the recommendations are found under the item in question. In addition to the Code of Practice, the Norwegian Accounting Act § 3-3b stipulates that companies must provide a report on their policies and practices for corporate governance either in the annual report or in a document referred to in the annual report. This report is integrated in this corporate governance statement.
Purpose
American Shipping Company's Corporate Governance principles are intended to ensure an appropriate division of roles and responsibilities among the Company's owners, its Board of Directors, and its executive management and that the Company's activities are subject to satisfactory control. These principles contribute to the greatest possible value creation
over time, to the benefit of owners and other stakeholders. It is the responsibility of the Board of Directors of AMSC to ensure that the Company implements sound corporate governance.
Values and ethical guidelines
The Board has adopted AMSC's corporate values and ethical guidelines. The corporate values are presented below.
Safety, Quality & Environment mindset
We take personal responsibility because we care
Delivering results
We deliver consistently and strive to beat our goals
Customer drive
Building customer trust is key to our business
People and teams
All our major achievements are team efforts
Hands-on management
We know our business and get things done
Open and direct dialogue
We encourage early and honest communication
Business
The Company's business model is to own and bareboat charter vessels for operation in the U.S. Jones Act market through its wholly owned subsidiary leasing companies. The corporate structure of American Shipping Company, through its operating subsidiaries in the United States, is in conformance with the applicable requirements of the Jones Act. All of its vessels are fully qualified to participate in the domestic maritime trades of the United States.
Pursuant to clause 3 of the Company's Articles of Association, the objective of the Company is "to own and carry out industrial business and other activities related hereto, including ownership of vessels, capital management and other functions for the group, as well as participation in or acquisition of other companies."
The function of the business purpose clause is to ensure that shareholders have control of the business and its risk profile, without limiting the Board or management's ability to carry out strategic and financially viable decisions within the defined purpose. The Group's financial goals and main strategies are as follows:
- Be a preferred ship owning and lease finance company in the Jones Act market
- Have a modern, safe and operationally friendly fleet
- Explore and invest in value creating opportunities for our shareholders
- Apply the tools of financial engineering to ensure an optimal use of capital
These goals and strategies are presented in more detail on page 3 of this report and in the Board of Director's report.
Equity and dividends Equity
The Group's book equity as of 31 December 2014 was USD 234.8 million corresponding to an equity ratio of 23 percent. The Company's Board of Directors frequently monitors the Company's equity level according to the Norwegian Public Limited Liability Companies Act Sections 3-4 and 3-5. As such, the Company regards the Group's current equity as sound.
Dividends
American Shipping Company's dividend policy is included in the section "Shares and shareholder information", on pages 39- 41 of this annual report. The Company's goal is that its shareholders shall, over
time, receive competitive returns on their investment. Any payment of dividend will be based upon the Group's earnings for the last year ended and other factors, the financial situation at the relevant point in time and applicable restrictions under AMSC's financial agreements and applicable laws and regulations.
Board authorizations
The Board's proposals for Board authorizations to increase the Company's share capital are to be limited to defined issues and to be valid only until the next Annual General Meeting.
The Annual General Meeting in 2014 granted an authorization to the Board to purchase own (treasury) shares in connection with the Company's incentive scheme for employees. The Board was also granted an authorization to increase the share capital in connection with strengthening of the Company's equity capital or to raise equity capital for future investments within the Company's scope of operations.
The Board of Directors has authorization to pay dividends, to facilitate payment of dividends on a quarterly basis.
All of these Board authorizations are valid up to the Annual General Meeting in 2015.
Equal treatment of shareholders and transactions with close associates
The Company has a single class of shares, and all shares carry the same rights in the Company. However, the shares are subject to certain ownership and voting restrictions due to the fact that the Company is operating under an exception from the U.S ownership requirement in the Jones Act (see the Company's Articles of Association Section 8, which are available on the Company's web page).
Equal treatment of all shareholders is crucial. If existing shareholders' preemptive rights are waived upon an increase in share capital, the Board must justify the waiver. Transactions in own (treasury) shares must be executed on the Oslo Stock Exchange or by other means at the listed price.
If there are material transactions between the Company and a shareholder, board member, member of executive management, or a party closely related to any of the aforementioned, the Board shall ensure that independent valuations are available.
American Shipping Company has prepared guidelines designed to ensure that members of the Board of Directors and executive management notify the Board of any direct or indirect stake they may have in agreements entered into by the Group.
See information on transactions with related parties in Note 18 to the consolidated accounts.
Freely negotiable shares
American Shipping Company's shares are freely negotiable. However, the transferability of shares is subject to certain voting and ownership restrictions on "Shipping Operators" due to the fact that the Company is operating under an exception from the U.S ownership requirement in the Jones Act. A "Shipping Operator" is defined in the Company's Articles of Association as a person or entity that operates any vessel for hire or directly or indirectly controls, is controlled by, or is under common control with any company or person who operates any vessel for hire. For further details, see the Company's Articles of Association Section 8, which are available on the Company's web page.
General Meetings
The Board encourages shareholders to participate in its General Meetings. It is the Board's priority to hold the Annual General Meeting as early as possible after the yearend. Notices convening General Meetings, with comprehensive documentation relating to the items on the agenda, including the recommendations from the Nomination Committee, are made available on the Company's website no later than 21 days prior to the General Meeting. The deadline for shareholders to register to the shareholders' meetings is set as close to the date of the meeting as possible and the deadline for registration may not expire earlier than five days prior to the date of the General Meeting.
The notice materials include a thorough explanation of all procedures for registration, voting and attendance. The proxy form includes instructions for representation at the meeting through a proxy and allows shareholders to nominate a person who will be available to vote on behalf of the shareholders. In addition, to the extent possible, the proxy form includes separate voting instructions to be given for each matter to be considered by the meeting. The shareholders may also
vote electronically in advance of the General Meeting.
Pursuant to the Company's Articles of Association, the Chairman of the Board or an individual appointed by the Chairman of the Board will chair shareholder's meetings. Thus, the Articles of Association of the Company deviates from the Code of Practice in this respect. Having the Chairman of the Board or a person appointed by her chairing the General Meetings simplifies the preparations for the General Meetings significantly. To the extent possible, board members and the auditor attend annual shareholders' meetings.
The shareholders are invited to vote on the composition of the Board of Directors proposed by the Nomination Committee as a group, and not on each board member separately. Hence, the Company deviates from the Code of Practice in this regard as it is important to the Company that the Board of Directors works in the best possible manner as a team, and that the background and competence of the board members complement each other.
Minutes of General Meetings are published as soon as practically possible via the Oslo Stock Exchange messaging service www.newsweb.no (ticker: AMSC) and on the Company's website www.americanshippingco.com.
Nomination Committee
Pursuant to American Shipping Company's Articles of Association, the Nomination Committee recommends candidates for members of the Board of Directors. The Nomination Committee also makes recommendations as to remuneration of Board members and members of the Nomination Committee. The current members of the Nomination Committee, as elected by the General Meeting, are Trond Brandsrud (chair) and Christine Rødsæther.
The General Meeting of the Company has adopted guidelines for the Nomination Committee. According to these guidelines, the Nomination Committee shall emphasize that candidates for the Board have the necessary experience, competence and capacity to perform their duties in a satisfactory manner. Furthermore, attention should be paid to ensure that the Board can function effectively as a collegiate body. A reasonable representation with regard to gender and background should also be emphasized, and the Nomination Committee should present its nomination of Directors to the Board, and also justify its nominations. The guidelines for the Nomination Committee are available on the Company's website.
The Chairman of the Nomination Committee has the overall responsibility for the work of the committee. In the exercise of its duties, the Nomination Committee may contact, amongst others, shareholders, the Board of Directors, management and external advisors. The Nomination Committee shall also ensure that its recommendations are endorsed by the largest shareholders. The Company will provide their shareholders with information on how to submit proposals to the Nomination Committee for candidates for election to the Board of Directors on the Company's website.
Board composition and independence
The Company does not have a corporate assembly since the Company has only two employees.
Pursuant to the Company's Articles of Association and corporate governance policy, the Board comprises between three and nine members, which are elected for a period of two years. Further, up to three shareholder-elected deputy board members may be elected annually. The Chairman of the Board is elected by the General Meeting. The Board may elect a Deputy Board Chairman.
The majority of the shareholderelected Board members are to be independent of the Company's executive management, its significant business associates and its significant shareholders. Representatives of American Shipping Company's executive management shall not be board members. The current composition of the Board is presented on page 46 of this annual report, which also includes the board members' expertise, capabilities and independence. The current members of the Board are Annette Malm Justad (Chairman), Kristian Røkke and Peter Knudsen. Two of the three members of the Board are independent of the Company's significant shareholders and significant business associates. The Company encourages the board members to invest in the Company shares, and the shareholdings of the board members are presented in Note 17 to the consolidated accounts. The board members represent a combination of expertise, capabilities, and experience from various finance, industry,
and non-governmental organizations. Based on the current board members' experience and expertise, the Board functions effectively as a collegiate body.
One of the three shareholder-elected Board members is up for election in 2015.
The work of the Board of Directors
The Board of American Shipping Company annually adopts a plan for its work, emphasizing goals, strategies, and implementation. Also, the Board has adopted informal guidelines that regulate areas of responsibility, tasks, and division of roles of the Board, Chairman, and CEO. These instructions also feature rules governing Board schedules, rules for notice and chairing of Board meetings, decisionmaking rules, the CEO's duty and right to disclose information to the Board, professional secrecy, impartiality, and other issues. In general, four ordinary board meetings are convened each year, with one meeting held every quarter.
To ensure a more independent consideration of matters of a material nature in which the Chairman is, or has been, personally involved, the Board's consideration of such matters should be chaired by another member of the Board. The Board itself assesses the need to elect a deputy chairman.
The Norwegian Public Limited Liability Companies Act requires that companies listed on a regulated market shall have an audit committee. Due to the small size of the Company's Board, the entire Board of Directors acts as the audit committee. The majority of the members of the audit committee are independent of the Company's operations.
With the exception of the audit committee, the Board has not deemed it necessary to establish other board committees at this time. The Board has considered appointing a remuneration committee in order to help ensure thorough and independent preparation of matters relating to compensation paid to executive personnel. However, due to the small size of the Board and since no members of the executive personnel are also members of the Board of Directors, the Board does not deem it necessary to appoint a remuneration committee at this time. If the Board decides to appoint a remuneration committee, the membership of the committee shall be restricted to members of the Board who are independent of the Company's executive personnel.
The Board evaluates its own performance and expertise once a year.
Risk management and internal control
The Board is to ensure that the Company maintains solid in-house control practices and appropriate risk management systems tailored to the Company's business activities and its values and ethical guidelines. The Board annually reviews the Company's most important risk areas and internal control systems and procedures, and the main elements of these assessments are mentioned in the Board of Directors' report.
Audit Committee
The Audit Committee has reviewed the Company's internal reporting systems, internal control and risk management and had dialogue with the Company's auditor. The Audit Committee has also considered the auditor's independence.
AMSC's financial policies ensure follow-up of financial risk. Key targets are identified by the Board and management to ensure timely control of currency exposure, interest rate exposure and compliance with loan covenants.
Financial Statement Close Process
Consolidation and control over the financial statement close process is the Controller's responsibility. The Company's current business includes bareboat chartering of its ten vessels and therefore means that the activities of its employees are managing the financing of vessels and overhead. The Company has a small organization with two employees, who both have direct communication with the Board of Directors. Meetings between management, the external auditor and members of the Board, to identify significant accounting issues or other issues are held prior to completion of the annual report and in connection with management's reporting to the Audit Committee. The purpose of these meetings is to focus on new and amended accounting principles or other issues in the financial statements. Financial results and cash development are analyzed and compared to the budget by the CEO and Controller and reported to the Board monthly.
Because of the inherent segregation of duties matters caused by having only two employees, special actions have been implemented. A third party consultant performs a quarterly review of the Company's cash disbursements from its operating accounts in the U.S. and provides a report to the Audit Committee. In Norway, disbursements are managed by accounting services purchased from a shareholder, with normal control procedures in place such as management approval of invoices for payment and two signatories required for payments.
The Board of Directors approves the Company's yearly budget and reviews deviations to the budget on a monthly basis.
Remuneration of the Board of Directors
Board remuneration is to reflect the Board's responsibility, expertise, time spent, and the complexity of the business. Remuneration does not depend on American Shipping Company's financial performance and the Company does not grant share options to the board members. Board members and companies with whom they are associated must not take on special tasks for the Company beyond their Board appointments unless such assignments are disclosed to the full Board and remuneration for such additional duties is approved by the Board. The Chairman and the Board of Directors have not received benefits other than directors' fees.
Additional information on remuneration paid to board members for 2014 is presented in Note 17 to the consolidated accounts.
Remuneration of executive management
The Board has adopted guidelines for remuneration of executive management in accordance with the Norwegian Public Limited Company Act section 6-16a. Salary and other remuneration of American Shipping Company's CEO are determined by the Board of Directors.
The Board's guidelines for remuneration of executive management will be made available as a separate appendix to the agenda for the Annual General Meeting. The statement will include information on which aspects of the guidelines are advisory, and which, if any, is binding. The shareholders will be able to vote separately on these aspects of the guidelines.
Information and communications
The Board of Directors has established guidelines for the reporting of financial and other information and is based on openness and on equal treatment of shareholders, the financial community, and other interested parties. The long-term goal of American Shipping Company's investor relations activities is to ensure the Company's access to capital at competitive terms and to ensure shareholders' correct pricing of shares.
These goals are to be accomplished through correct and timely distribution of information that can affect the Company's share price; the Company is also to comply with current rules and market practices, including the requirement of equal treatment. All stock exchange notifications and press releases are made available on the Company's website www.americanshippingco.com; stock exchange notices are also available from www.newsweb.no. All information that is distributed to shareholders is simultaneously published on American Shipping Company's website. The Company's financial calendar is also found on page 1 of this annual report.
Take-overs
The overriding principle is equal treatment of shareholders. The principles are based on the bidder, the Company and the management all having an independent responsibility for fair and equal treatment of the shareholders in a takeover process, and that company operations are not unnecessarily disturbed. It is the responsibility of the Board to ensure that the shareholders are kept informed and that they have reasonable time to assess the offer.
Unless the Board has particular reasons for so doing, it will not take steps to prevent or obstruct a take-over bid for the Company's business or shares, nor use share issue authorizations or other measures to hinder the progress of the bid, without such actions being approved by the shareholders' meeting after the takeover offer has become public knowledge.
If an offer is made for the Company's shares, the Board will make a statement to the shareholders that provides an assessment of the bid, the Board's recommendations, and reasons for these recommendations. If the Board cannot make a recommendation to the shareholders, the Board shall explain their reasoning for no such recommendation. For each bid, an assessment will be made as to the necessity of bringing in independent expertise. In a situation where a competing bid is made and the bidder has a connection to any member of the Board or executive personnel, or if the bidder is a main shareholder, the Board shall seek an independent valuation. The valuation is to be recorded in the Board's statement.
Transactions that have the effect of sale of the Company or a major component of it are to be decided on by shareholders at a shareholders' meeting.
Auditor
The auditor will make an annual presentation to the Board of a plan for the auditing work for the year. Further, the auditor is to provide the Board with an annual written confirmation that the requirement of independence has been met.
The auditor participates in at least one Board meeting annually, including the meeting prior to the Annual General Meeting. At this meeting, the auditor reviews any material changes in the Company's accounting policies, comments on any material estimated accounting figures and reports all material matters on which there has been disagreement between the auditor and the executive management of the Company. The auditor also presents to the Board a review of the Company's internal control procedures, including identified weaknesses and proposals for improvements.
One meeting a year is held between the auditor and the Board, at which no representatives of executive management are present. Auditors are to provide the Board with an annual overview of services other than auditing that have been supplied to the Company. Remuneration for auditors, presented in Note 3 to the consolidated accounts, is stated for the two categories of auditing and other attestation services. In addition, these details are presented at the Annual General Meeting. The auditor has provided the Board of Directors with written confirmation of its independence.
Presentation of the Board of Directors
Annette Malm Justad
Chairman
Ms. Justad has been a member of American Shipping Company ASA's Board of Directors since December 2007. From 2006 through 2010, she held the position of CEO of Eitzen Maritime Services ASA, a Norwegian marine shipping services Company. Prior to that she has held various positions in large companies such as Yara International ASA, Norgas Carriers/IM Skaugen ASA, and Norsk Hydro ASA. Ms. Justad is a member of the Board of Port of London Authority, Odfjell, Awilco LNG ASA, Store Norske Kulkompani AS and Small Turbine Partners AS. Ms. Justad holds a Master degree of Technology Management from MIT (Sloan School)/ NTH/NHH in addition to a MSc in Chemical Engineering from NTH. Ms. Justad is a Norwegian citizen. Ms. Justad holds 4,523 shares in the Company and has no stock options. She has been elected for the period 2013-2015.
Peter D. Knudsen
Peter D. Knudsen has been the CEO of Jason Shipping ASA (Camillo Eitzen & Co. ASA) from November 2008 until January 2012, and CEO of Eitzen Maritime Services ASA (EMS) from June 2011 to October 2011. He has also served as member of the Board of Directors in Eitzen Chemical ASA and Eitzen Maritime Services ASA. He has previously worked with Christiania Bank and Kreditkasse/Nordea Bank for 15 years, and came from the position as General Manager of Nordea Bank in Singapore. Mr. Knudsen has also been employed with GIEK, Den norske Creditbank, Jøtun Fonds and Stemoco Shipping. He holds an MBA from Oslo Business School / Arizona State University (1979). Mr. Knudsen is currently a member of the Board of Directors in Uglands Rederi AS, Grimstad (since May 2011) including various subsidiaries. Mr. Knudsen is also the Chairman of the Board of Directors of OSX listed Rem Offshore ASA. He is a Norwegian citizen and holds zero shares of stock in the Company. Mr. Knudsen was elected to the Board of Directors at the Company's Extraordinary General Meeting on 7 March 2012 and was elected for the period 2014-2016.
Kristian Røkke
Kristian Røkke is currently the Chairman of Aker Philadelphia Shipyard (AKPS). He has previously served as SVP Operations and President & CEO of AKPS. Mr. Røkke has experience in offshore service and shipbuilding from several companies in the Aker group. Mr. Røkke is a Board Member of TRG Holding AS, which owns 66.7% of Aker ASA, in addition to being a Board Member of Philly Tankers AS. Mr. Røkke holds an MBA from The Wharton School, University of Pennsylvania. Mr. Røkke is both a Norwegian and United States citizen. He holds zero shares of stock in the Company. Mr. Røkke was elected to the Board of Directors at the Company's Extraordinary General Meeting on 1 December 2014 and was elected for the period 2014-2016.
Presentation of Management
Pål Magnussen President / CEO
Mr. Magnussen was appointed President and CEO of AMSC effective 1 January 2015. He previously served as the Company's CFO from 1 June 2014. A Norwegian national, Mr. Magnussen comes from the position as Director of the Investment Banking Division in DNB Markets where he has worked since 2007 focusing on the shipping and offshore sectors. Prior to that he worked for five years as Vice President of Corporate Banking in DNB Bank's shipping and offshore division. He has significant experience from international shipping finance and has been based in New York, Singapore and Oslo. Mr. Magnussen holds an MBA from Columbia University, New York, and a Master of Science from the Norwegian School of Management, Oslo. He holds 20,000 shares in the Company.
Leigh Jaros Controller
Ms. Jaros joined American Shipping Company as Controller in July 2008. Ms. Jaros has over 10 years of progressively responsible corporate financial experience including financial reporting, analysis and budgeting. Ms. Jaros was employed by Aker Philadelphia Shipyard as its Accounting Supervisor prior to joining AMSC. Ms. Jaros holds a Bachelor of Science in Finance and Economics from West Chester University. Ms. Jaros is a U.S. citizen and holds zero shares of stock in the Company.
American Shipping Company ASA Oslo Office
Fjordalleen 16, P.O. BOX 1423, Vika, NO-0115 Oslo, NORWAY Tel: + 47 24 13 00 00, Fax: + 47 24 13 01 06
U.S. Office
415 McFarlan Road, Suite 205 Kennett Square, PA 19348 USA Tel: + 1 (484) 732-3021, Fax: +1 (484) 732-3022
Project management: RR Donnelley
Photo/illustrations: All photos courtesy of American Shipping Company ASA
Layout/production: RR Donnelley
American Shipping Company
Annual report 2014
© 2015 American Shipping Company All rights reserved www.americanshippingco.com