AMSC ASA — Annual Report 2015

Apr 6, 2016

Annual Report 2015

This is American Shipping Company

The business model of American Shipping Company ASA (AMSC) is to own and bareboat charter out U.S. built 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 nine modern handy size product tankers and one modern handy size shuttle tanker, all built at Philly Shipyard (PHLY), a leading U.S. shipyard (formerly named Aker Philadelphia 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 charters the vessels out on time charters to major 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 four product tankers to be built at PHLY.

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

• Split of Aker American Shipping's ship owning operations from its ship building operations, establishing Aker Philadelphia Shipyard ASA (AKPS)
• Obtained take-out financing for the ten vessels and issued NOK 700 million bond for investments in vessels and operations

• Took delivery of the first three product tankers

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

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

2008 2009 2010

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

2005 2007

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

• Aker ASA reduced its ownership interest to 19.9% in compliance with U.S. Jones Act foreign ownership restrictions
• Name changed from Aker American Shipping ASA to American Shipping Company ASA. Trading ticker also changed from AKASA to AMSC

• Took delivery of two more product tankers

• Took delivery of two product tankers

• Sold second shuttle tanker contract to OSG

• Took delivery of final product tanker in build series with AKPS

• Extended maturity of the NOK bond for 6 years

2011 2012 2013 2014 2015

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

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

charter with Shell

• 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

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

• Began paying quarterly dividends of USD 0.10 per share
• OSG emerged from Chapter 11 bankruptcy with all of AMSC's agreements assumed as part of OSG's plan of reorganization
• Overseas Tampa was converted to a shuttle tanker for a ten year time charter to Shell beginning in 2015

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

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

• Philly Tankers secured long-term time charters on its first two ships, declared its two options and entered into agreement to sell all four tanker contracts upon delivery
• Quarterly dividend growth of 3% over 2014 and guided on 15% dividend growth for 2016

Key Events 2015

Contents

In review

• 2 Key events 2015
• 3 Key figures 2015
• 5 Goals and strategies

Performance 2015

• 6 Board of directors' report
• 11 Board responsibility statement
• 12 Annual accounts group
• 12 Consolidated statement of financial position
• 13 Consolidated income statement and consolidated statement of comprehensive income
• 14 Consolidated statement of changes in equity
• 15 Consolidated cash flow statement
• 16 Notes to the consolidated accounts
• 33 Annual accounts parent company
• 33 Statement of financial position
• 34 Income statement and cash flow statement
• 35 Notes to the accounts
• 40 Auditor's report
• 42 Share and shareholder information

Our organization and governance

• 45 Corporate governance
• 49 Presentation of the board of directors
• 50 Presentation of management
• 51 Contact information

Financial calendar 2016

27 April	Annual General Meeting 2016
24 May	1st quarter interim results 2016
17 August	2nd quarter interim results 2016
16 November	3rd quarter interim results 2016

(Dates subject to change)

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

The USD 450 million is structured in two separate facilities; one being a USD 300 million facility secured by eight vessels and the other a USD 150 million facility secured by two vessels. The new loans, along with approximately USD 45 million of cash, repaid the previous secured vessel debt and prepaid the interest rate swap contracts under the old loan. On a combined basis, the secured debt has an average weighted tenor of 6 years and average weighted interest cost of LIBOR plus 325 bps margin.

Investment in Philly Tankers

Philly Tankers secured long-term time charters for two of its newbuildings and declared its two options with PHLY with deliveries in 2017. Philly Tankers agreed to sell its four product tanker contracts to a subsidiary of Kinder Morgan, Inc. for a total consideration of USD 568 million.

Deferred Principal Obligation (DPO) and dividend growth

2015 saw the first quarter with no DPO accruals and with full cash effect from DPO payments from OSG. Going forward, DPO repayments and interest will provide positive cash flow to AMSC over the next 18 years. During 2015, the Company paid dividends of USD 0.412 per share, USD 25 million in total, a 3% increase from the quarterly dividend in 2014. The total dividend for 2016 is expected to grow by approximately 15% compared to 2015.

Key Figures 2015

Profit and loss items		2015	2014
Operating revenues	USD million	87.8	87.6
EBITDA	USD million	84.9	84.5
Net income	USD million	14.7	23.0
Normalized EBITDA
Reported EBITDA	USD million	84.9	84.5
Profit share	USD million	11.1	5.7
DPO	USD million	3.3	1.0
Normalized EBITDA	USD million	99.3	91.2
Cash flow		2015	2014
Cash flow from operating activities	USD million	50.9	38.1
Cash flow from investing activities	USD million	-	(25.0)
Cash flow from financing activities	USD million	(110.9)	60.6
Cash as of 31 December	USD million	33.3	93.3
Balance sheet		2015	2014
Interest bearing debt	USD million	670.8	728.4
Equity	USD million	224.2	234.5
Total assets	USD million	907.0	999.7
Equity ratio	Percent	24.7%	23.5%
The AMSC share		2015	2014
Share price as of 31 December	NOK	26.5	37.5
Dividend per share	NOK	3.29	1.86
Dividend per share	USD	0.41	0.30
Dividend yield	Percent	12.4%	5.0%

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 2015

Introduction

American Shipping Company ASA ("AMSC" or the "Company") is a ship owning and lease finance company with a modern fleet of nine product tankers and one shuttle tanker operating in the U.S. domestic ("Jones Act") trades. During 2015, 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 tankers. American Shipping Company ASA is domiciled in Lysaker, 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 vessels 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 charters the vessels out on time charters to major oil companies. The fixed bareboat charter period for all vessels expires in December 2019 (except the Overseas Tampa, which

expires in 2025). Subsequently, 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 Philly Shipyard ("PHLY", formerly named 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 2015

Bank refinancing

In November 2015, funding was completed on USD 450 million of new secured vessel debt and a USD 20 million subordinated loan. The new loans, along with approximately USD 45 million of cash, repaid the previous secured vessel debt of USD 492.4 million, which had a maturity in June 2016, and prepaid the interest rate swap contracts under the old loan of USD 14.2 million. The USD 450 million is structured in two separate facilities; one being a USD 300 million facility secured by eight vessels and the other a USD 150 million facility secured by two vessels. As part of the refinancing, the Company entered into a USD 20 million subordinated loan with Aker ASA. The loan is expected to be repaid with proceeds from Philly Tankers

AS. On a combined basis, the secured debt has an average weighted tenor of 6 years and average weighted interest cost of LIBOR plus 325 bps margin. The Company entered into mandatory five year interest rate swaps at an average rate of 164 bps for USD 210 million of the new debt. Subsequent to year-end, the Company entered into four year interest rate swaps at an average rate of 93 bps for USD 90 million of the new debt. In connection with the refinancing, the Company agreed with the holders of the unsecured bond that the cash interest will increase from 50% to 100% from the time of funding of the vessel debt refinancing and that the Company will not use its option to extend the bond beyond the final maturity date in February 2018.

Investment in Philly Tankers AS

During the first quarter of 2015, Philly Tankers ("PT") secured long-term time charters for two of its newbuildings, scheduled for delivery in Q4 2016 and Q1 2017. In July 2015, PT declared its two options with PHLY with deliveries in 2017. Also in the third quarter of 2015, PT agreed to sell its four product tanker contracts to a subsidiary of Kinder Morgan, Inc. for a total consideration of USD 568 million. The sale is expected to occur immediately before delivery of each ship, scheduled between Q4 2016 and Q4 2017. AMSC owns 19.6% of PT and holds a seat on its Board of Directors.

Deferred Principal Obligation (DPO) receivable

The fourth quarter of 2015 was the first quarter with no DPO revenue accruals and with full cash effect from DPO payments from OSG, representing USD 1.0 million for the quarter. Going forward, DPO repayments from OSG and interest will provide positive cash flow to AMSC over the next 18 years. In 2016, AMSC expects to receive USD 3.9 million of DPO related payments.

Dividend

During 2015, the Company paid dividends of USD 0.412 per share, USD 25 million in total, a 3% increase over the quarterly dividend in 2014. The total dividend for 2016 is expected to grow by approximately 15% compared to 2015. Normalized EBITDA, calculated as reported EBITDA plus profit share plus DPO, was USD 99.3 million for 2015, up 9% from 2014.

Normalized EBITDA (USD millions)	2015	2014
Reported EBITDA	84.9	84.5
Profit share	11.1	5.7
DPO	3.3	1.0
Normalized EBITDA	99.3	91.2

Review of the annual 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 2015, AMSC had operating revenues of USD 87.8 million versus operating revenues of USD 87.6 million in 2014 as the full fleet was in operation for the full year 2015 and 2014. Revenues are recognized on a monthly basis and represent the income from the bareboat charter agreements. All profits generated under the profit sharing agreement with OSG in 2015 and 2014 were used to offset the deficit balance, therefore no profit sharing revenue was recognized in 2015 or 2014. The deficit balance must be repaid before OSG is required to make profit sharing payments in cash. The Company's operating profit before interest, taxes, depreciation and amortization (EBITDA) amounted to USD 84.9 million in 2015 compared to USD 84.5 million in 2014.

Depreciation was USD 34.2 million in 2015 versus USD 33.9 million in 2014. AMSC's operating profit (EBIT) was USD 50.7 million in 2015 versus USD 50.6 million in 2014.

Net financial items were negative USD 36.6 million in 2015 compared to negative USD 27.4 million in 2014. Net financial items of negative USD 36.6 million in 2015 consist primarily of net interest expense of USD 43.8 million, other financial expenses of USD 5.1 million, and foreign exchange loss of USD 0.2 million, offset by unrealized, non-cash gain on the mark-to-market valuation of interest rate swap agreements of USD 12.5 million. 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.

Deferred income tax benefit was USD 0.6 million in 2015 (expense of USD 0.3 million in 2014).

AMSC's 2015 net income was USD 14.7 million versus USD 23.0 million in 2014. The 2015 basic and diluted earnings per share (EPS) were USD 0.24. The corresponding figures for 2014 were USD 0.38, for both basic and diluted EPS.

Cash flow

The Company's operating cash flow is primarily composed of bareboat charter hire and DPO received less interest paid. Total net cash flow from operating activities in 2015 was positive USD 50.9 million (USD 38.1 million in 2014).

There were no investments made in 2015. Total cash used for investing activities in 2014 was USD 25 million for the investment in Philly Tankers AS.

Net cash flow from financing activities in 2015 was negative USD 110.9 million, which included USD 41.0 million in vessel debt installments, USD 44.8 million net cash used for refinancing, USD 25 million in dividends paid/return of capital and USD 0.1 net cash used for purchase of treasury shares. 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.

Statement of financial position and liquidity

As of 31 December 2015, American Shipping Company had cash on deposit with banks totaling USD 33.3 million. Of this total amount, USD 1.6 million is cash held for specified uses. The corresponding amounts for 2014 were USD 93.3 million in cash on deposit with banks and USD 8.1 million in cash held for specified uses.

Other current assets were USD 0.4 million as of 31 December 2015 (USD 0.4 million as of 31 December 2014).

Property, plant and equipment as of 31 December 2015 was USD 813.8 million (USD 848.0 million as of 31 December 2014), and includes ten vessels.

Interest-bearing long-term receivables totaled USD 32.6 million as of 31 December 2015 (USD 33.2 million as of 31 December 2014) and represent the Deferred Principal Obligation ("DPO") due from OSG.

A deferred tax asset of USD 2.0 million for federal deferred tax was booked as of 31 December 2015 (0 as of 31 December 2014).

Other long-term assets totaled USD 24.9 million and represent AMSC's investment in Philly Tankers.

At 31 December 2015, total assets were USD 907.0 million (USD 999.7 million as of 31 December 2014).

At 31 December 2015, total equity was USD 224.2 million. The equity ratio was 24.7% of total assets. Corresponding amounts for 2014 were USD 234.6 million and 23.5%, respectively.

Total current liabilities as of 31 December 2015 were USD 20.3 million, consisting of USD 10.2 million for shortterm interest bearing debt, USD 9.5 million for deferred revenues and other payables and USD 0.6 million for the short term portion of the mark-to-market valuation of the interest rate swap contracts. The corresponding total current liabilities as of 31 December 2014 were USD 81.2 million, consisting of USD 52.2 million for shortterm interest bearing debt, USD 9.1 million for deferred revenues and other payables and USD 19.9 million for the short term portion of the mark-to-market valuation of the interest rate swap contracts.

Non-current liabilities totaled USD 662.5 million at 31 December 2015, consisting of bank debt of USD 430.2 million related to the ten vessels owned by AMSC, a bond payable of USD 210.4 million, a subordinated loan from Aker ASA of USD 20.0 million, the long term portion of the mark-to-market valuation of the interest rate swap contracts of USD 0.2 million and deferred tax liability of USD 1.7 million. 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.

Tax position

AMSC has net operating losses in carryforward (NOLs) as of 31 December 2015 of USD 487.9 million in the U.S. and USD 108.7 million in Norway. 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 addition to holding leases that represent AMSC's entire backlog of USD 401.7 million at year-end, at 31 December 2015, OSG also owes AMSC USD 32.6 million of long-term receivables related to the Deferred Principal Obligation (DPO). OSG has serviced 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 2018 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 partially 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 for USD 300 million of its vessel debt (USD 448.4 million as of 31 December 2015). As of 31 December 2015, the bond carries a floating interest rate of LIBOR (London Inter Bank Offered Rate) plus a margin of 6.0% per annum.

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. 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 2015, this risk is not considered significant as of year-end. The Company's equity under the covenant calculation was USD 225.0 million as of 31 December 2015. The Company currently views this risk as minimal.

AMSC is subject to financial covenants under the secured bank loans relating to minimum liquidity and collateral, and leverage and debt service ratios. AMSC was in compliance with all of its debt covenants as of 31 December 2015.

The going concern assumption

In view of AMSC's financial position, the Board confirms the going concern assumptions and that the 2015 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 2015 of USD 14.1 million, mostly related to financing activities. The Board of Directors proposes that the loss for the year be allocated as shown below:

Dividend payments	USD 25.0 million
Transferred from share
premium	(USD 25.0 million)
Transferred from other equity	(USD 14.1 million)
Total allocated	(USD 14.1 million)

The Board of Directors was granted authorization to pay dividends based on the Company's annual accounts for 2014 at the Annual General Meeting in 2015, which

is valid up to the Company's Annual General Meeting in 2016 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 0.107 per share (USD 6.5 million in aggregate) on 16 February 2016. The dividend was paid on 3 March 2016.

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 45 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:

Chairman	Annette Malm Justad
Board Member	Peter D. Knudsen
Board Member	Kristian Røkke

Further description of the Board Members is on page 49.

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 three 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 2015.

The Company has three full time employees who are 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 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 2015, 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 remained active during 2015, although international crude oil prices fell sharply. Time charter rates remained strong during 2015, reflecting a tight market for U.S. Jones Act tankers in which demand exceeded supply. During Q1 2015, long-term time charters were secured by Philly Tankers for two of its newbuildings, scheduled for delivery in Q4 2016 and Q1 2017. In July 2015, Philly Tankers declared its two options with PHLY with deliveries in 2017. The four ship transaction between Philly Tankers and Kinder Morgan, which was signed after the end of the second quarter, demonstrated that shipping remains an attractive and sustainable alternative for U.S. domestic transportation of oil and products. As of year-end 2015, there were 36 tankers and 45 ATBs in operation. In addition, there were 13 tankers and 7 ATBs on order, plus a limited number of options. The continued weakness in crude oil prices has introduced uncertainty to the long term shale oil production level, which potentially impacts the demand for Jones Act tankers going forward. Limited availability for new delivery slots at the two shipyards currently able to build Jones Act product tankers supports a further robust U.S. Jones Act product tanker market in the medium to long term. In the short term it is expected that the market will soften driven by falling U.S. onshore oil production. The fixed charter agreements with OSG secure AMSC's leasing backlog of USD 402 million from bareboat charter revenues. Any profit sharing contribution will come in addition to the fixed bareboat charter revenues. Although the bareboat contracts for nine of the ships expire in December 2019, we expect that OSG will utilize the renewal options and continue to lease the vessels long term due to the favorable base bareboat rate representing a lower cost of capital compared to current newbuilding costs.

To date, profits generated under our profit sharing agreement with OSG (approximately USD 22 million for 2015) have been applied to offset the Company's deficit balances with OSG which must be reduced before profit sharing is payable to AMSC. 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.

Lysaker, 14 March 2016 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

Board Responsibility statement

Today, the Board of Directors and the President/CEO 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 ended 31 December 2015 (Annual Report 2015).

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 2015. 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 2015.

To the best of our knowledge:

The consolidated and parent annual financial statements for 2015 have been prepared in accordance with the applicable accounting standards.

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 2015 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

Annette Malm Justad Peter D. Knudsen Kristian Røkke

Lysaker, 14 March 2016 The Board of Directors American Shipping Company ASA

Chairman Board Member Board Member

Pål Magnussen President/CEO

American Shipping Company ASA Group

Consolidated Statement of Financial Position as of 31 December

Amounts in USD thousands	Note	2015	2014
ASSETS
Property, plant and equipment	6	813 826	847 990
Deferred tax assets	5	2 020	-
Interest-bearing long-term receivables	7	32 569	33 204
Other non-current assets	12	24 874	24 926
Total non-current assets		873 289	906 120
Other receivables	8	250	112
Tax receivable		167	136
Cash held for specified uses		1 541	8 107
Cash and cash equivalents		31 737	85 201
Total current assets		33 695	93 556
Total assets		906 984	999 676
EQUITY AND LIABILITIES Share capital and share premium	11	294 372	319 372
Accumulated deficit		(70 135)	(84 827)
Total equity attributable to equity holders of the parent		224 237	234 545
Total equity		224 237	234 545
Interest-bearing loans	13	660 630	676 157
Deferred tax liabilites	5	1 720	275
Derivative financial liabilities - long term portion	9	153	7 514
Total non-current liabilities		662 503	683 946
Interest-bearing loans	13	10 148	52 205
Deferred revenues and other payables	15	9 504	9 060
Derivative financial liabilities - short term portion	9	592	19 920
Total current liabilites		20 244	81 185
Total liabilites		682 747	765 131
Total equity and liabilities		906 984	999 676

Annette Malm Justad Peter D. Knudsen Kristian Røkke

Lysaker, 14 March 2016 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	2015	2014
Operating revenues		87 788	87 641
Wages and other personnel expenses	2	(956)	(1 059)
Other operating expenses	3	(1 943)	(2 045)
Operating profit before depreciation		84 889	84 537
Depreciation	6	(34 165)	(33 865)
Operating profit		50 724	50 672
Financial income	4	14 650	32 208
Financial expenses	4	(51 239)	(59 623)
Income before income tax		14 134	23 257
Income tax expense	5	575	(275)
Net income for the year (1)		14 709	22 982

American Shipping Company ASA Group

Consolidated Statement of Comprehensive Income

Amounts in USD thousands (except per share amounts)		2015	2014
Net income for the year		14 709	22 982
Other comprehensive income for the period, net of tax		-	-
Total comprehensive income for the year (1)		14 709	22 982
Basic and diluted earnings per share	10	0.24	0.38

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

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 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
Total comprehensive income for the year	-	-	14 709	14 709
Repurchase of treasury shares	-	-	(63)	(63)
Proceeds from sale of treasury shares	-	-	45	45
Dividends paid / return of capital	-	(25 000)	-	(25 000)
Balance at 31 December 2015	96 366	198 006	(70 136)	224 236

American Shipping Company ASA Group

Consolidated Cash Flow Statement

Amounts in USD thousands	Note	2015	2014
Net income before taxes		14 135	23 257
Unrealized foreign exchange (gain)/loss and other non-cash items		7 697	(1 578)
Unrealized (gain) interest swaps	9	(12 512)	(20 132)
Net interest expense	4	43 814	48 436
Depreciation	6	34 165	33 865
(Increase)/decrease in:
Other current assets	8	(364)	(230)
Other long-term operating assets	7	634	(3 622)
Increase/(decrease) in:
Accrued liabilities and other payables	15	(1 851)	(1 644)
Interest paid	4	(36 576)	(41 457)
Interest received	4	1 698	1 216
Net cash flow from operating activities		50 840	38 111
Investment in equity accounted investee	12	-	(25 000)
Net cash flow used in investing activities		-	(25 000)
Repayment of credit facilities and settlement of related interest rate swaps	13	(547 338)	(48 435)
Loan fees paid Proceeds from interest bearing debt		(8 514) 470 000	(709) -
Proceeds from share capital		-	127 917
Repurchase of treasury shares		(63)	(891)
Proceeds from sale of treasury shares		45	692
Dividends paid / return of capital		(25 000)	(18 000)
Net cash flow from financing activities		(110 870)	60 574
Net change in cash and cash equivalents		(60 029)	73 685
Cash and cash equivalents, including current cash for specified uses as of 1 January		93 308	19 623
Cash and cash equivalents, including current cash for specified uses as of
31 December		33 279	93 308

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 Oksenøyveien 10, P.O. Box 230, NO-1366 Lysaker, 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 14 March 2016.

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 or 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, and impairment. 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 influence 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 prospectively.

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 or settlements of existing 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 from 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 defined contribution pension plans that cover 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 financing 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 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).

NEW STANDARDS AND INTERPRETATIONS ADOPTED

Standards and interpretations that are issued up to the date of issuance of the consolidated financial statements, but not yet effective, are disclosed below. The Group's intention is to adopt the relevant new and amended standards and interpretations when they become effective, subject to EU approval before the consolidated financial statements are issued.

Standards issued but not yet adopted

IFRS 9 Financial Instruments. IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

The Group is currently assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 9.

IFRS 15 Revenue from Contracts with Customers. IFRS 15 established a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Group is currently assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 15.

IFRS 16 Leases. IFRS 16 replaces existing guidance in IAS 17 Leases. IFRS 16 eliminates the current dual accounting model for leases and will establish a single, on-balance sheet accounting model that is similar to the current finance lease accounting under IAS 17. The Group is currently assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 16, however given that AMSC's operations are limited to lessor leasing activity, this is not expected to have a significant impact to the Group.

Note 2: Wages and other personnel expenses

Wages and other personnel expenses consist of:

Amounts in USD thousands	2015	2014
Wages and accrued bonuses	825	804
Social security contributions	100	225
Pension costs	14	17
Other expenses	17	13
Total expense	956	1 059
Average number of employees	3	3
Number of employees at year-end	3	2

The Group has a defined contribution plan for its employees which provides for a contribution based upon a fixed matching amount plus 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	2015	2014
Rent and leasing expenses	45	61
Other operating expenses	1 898	1 984
Total other operating expenses	1 943	2 045

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

Amounts in USD thousands	2015	2014
Ordinary audit fee	123	139
Other attestation work	-	21
Other assurance services	20	-
Tax services	62	4
Total	205	164

Note 4: Financial items

Amounts in USD thousands	2015	2014
Financial income
Interest income	2 138	2 547
Change in mark to market value of interest rate swaps	12 512	20 132
Other financial income	-	9 529
Financial income	14 650	32 208
Financial expenses
Interest expense	(45 952)	(50 983)
Net foreign exchange gain/(loss)	(188)	(5 106)
Other financial expenses	(5 099)	(3 534)
Financial expenses	(51 239)	(59 623)
NET FINANCIAL ITEMS	(36 589)	(27 415)

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

The Company has interest rate swaps, related to its vessel debt financing, with BNP Paribas ("BNP"). During 2015, at the closing of the refinancing, the Company paid USD 14.2 million to terminate the prior interest rate swaps. The Company subsequently entered into new interest rate swaps for a portion of the new loan. Estimates of the fair value of the interest rate swaps are obtained from a third party, with an adjustment for the Company's credit risk 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 20).

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

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

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

Note 5: Tax

INCOME TAX EXPENSE Recognized in the income statement

Amounts in USD thousands	2015	2014
Current tax expense/(benefit):
Current year	-	-
Total current tax expense/(benefit)	-	-
Deferred tax expense/(benefit):
Origination and reversal of temporary differences	(575)	275
Total deferred tax expense/(benefit)	(575)	275
Total income tax expense/(benefit) in income statement	(575)	275

Reconciliation of effective tax rate

Amounts in USD thousands	2015	2014
Profit/(loss) before tax	14 135	23 257
	27%	27.0%
Expected tax expense/(benefit) using nominal Norwegian tax rate of 27%	3 816	6 279
Effect of differences between nominal Norwegian tax rate and U.S. federal and state tax rate	4 099	4 734
Foreign exchange	(5 984)	(4 314)
Tax losses for which no deferred income tax asset was recognised, net of benefit recognized	(2 512)	(2 411)
Other differences	6	(4 013)
Total income tax expense/(benefit) in income statement	(575)	275

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 2015 for the Group was primarily Norway, 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	2015	2014
Net operating losses	209 864	185 774
Financial derivatives	309	11 385
Vessels	(216 748)	(191 885)
Other	6 875	6 984
Net deferred tax assets/(liabilities)	300	12 258
Net deferred tax assets not recorded	-	(12 258)
Net deferred tax assets/(liabilities)	300	-

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

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

	(USD millions)
2016	111.1
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. tax losses to reduce U.S. taxable income. Any net tax losses recovered but not used in a year will carry over to the following year.

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

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

In 2015, the Company recognized a deferred tax expense of USD 1.4 million (USD 0.3 million in 2014) related to income taxes in the Commonwealth 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.

Norway

Amounts in USD thousands	2015	2014
Operating losses	27 163	23 231
Financial instruments	-	-
Other	-	-
Net deferred tax assets/(liabilities)	27 163	23 231
Net deferred tax assets not recorded	(27 163)	(23 231)
Net deferred tax assets/(liabilities)	-	-

The Group has net operating losses in carryforward as of 31 December 2015 of USD 108.7 million in Norway, with no expiration date. Deferred tax assets 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.

Note 6: Property, plant and equipment

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

Amounts in USD thousands	Ships
Cost balance at 1 January 2015	1 076 563
Cost balance at 31 December 2015	1 076 563
Depreciation at 1 January 2015	228 572
Depreciation charge for the year	34 165
Depreciation at 31 December 2015	262 737
Book value at 31 December 2015	813 826

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

Amounts in USD thousands	Ships
Cost balance at 1 January 2014	1 076 563
Cost balance at 31 December 2014	1 076 563
Depreciation at 1 January 2014	194 707
Depreciation charge for the year	33 865
Depreciation at 31 December 2014	228 572
Book value at 31 December 2014	847 990
Depreciation period	30 years
Depreciation method	straight-line

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

Secured property, plant and equipment

At 31 December 2015 vessels with a carrying amount of USD 813.8 million are subject to a registered debenture to secure bank loans (see note 13).

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

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 2015 or 2014.

Elements of the DCF, which is used to determine the recoverable amount, include assumptions for bareboat charter hire, profit sharing, asset lives, 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	2015	2014
Balance at beginning of period	33 204	29 582
DPO revenue Repayments of principal	577 (1 653)	3 069 (778)
Interest accreted	441	1 331
Balance at end of period	32 569	33 204

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

Note 8: Other receivables

Trade and other receivables consist of the following items:

Amounts in USD thousands	2015	2014
Advance payments to suppliers	250	112
Total	250	112

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

Note 9: Derivative financial assets and liabilities

Derivative financial assets and liabilities comprise the following items:

Amounts in USD thousands	2015	2014
Fair value of interest rate swaps	745	27 434
Derivative financial liabilities	745	27 434

In connection with refinancing the BNP loan, the Company prepaid the interest rate swaps for USD 14.2 million. Under the new BNP loan facility, the Company entered into new interest rate swaps for USD 210 million of the principal amount of the loan. As of 31 December 2015 and 2014 the market value of derivative financial instruments was negative USD 0.7 million and USD 27.4 million, respectively. The fair value of the interest swaps is obtained from 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 12 thousand and USD 0.5 million on the fair value of interest rate swaps at 31 December 2015 and 2014, respectively.

Refer to note 16 for additional information regarding financial instruments.

Note 10: Earnings per share

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

Amounts in USD thousands (except share and per share data)	2015	2014
Profit/(loss) attributable to equity holders of the Company for the period for determination of earnings per share	14 709	22 982
Weighted average number of ordinary shares in issue	60 616 505	60 205 903
Basic and diluted earnings per share	0.24	0.38

Note 11: Paid in capital

The current authorized share capital of AMSC is 66,678,505 ordinary shares. The issued share capital of AMSC as of 31 December 2015 is 60,616,505 ordinary shares, each with a par value of NOK 10, fully paid. No common shares were issued in 2015. On 3 January 2014, 30,475,492 ordinary shares 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.

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 2014	42 462	137 946	180 408
Equity issued	53 904	103 060	156 964
Dividends paid / return of capital	-	(18 000)	(18 000)
31 December 2014	96 366	223 006	319 372
Dividends paid / return of capital	-	(25 000)	(25 000)
31 December 2015	96 366	198 006	294 372

Note 12: Subsidiaries and associates

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

2015	AMSC's common holding %	AMSC's voting share %	Principal place of business	Country
American Tanker Holding Company, Inc. (ATHC)	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 Shipping Company ASA ("AMSC ASA") is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100% and is the issuer of the outstanding bond obligations. ATHC, ATI and ASC are intermediary holding companies. Each of the Company's ten vessels are owned by an individual leasing company, ASC Leasing I - X, Inc. Each of the individual leasing companies have contracts directly with OSG and vessel debt directly with BNP Paribas or CIT Bank 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 19.6% of the Oslo, Norway based company. Philly Tankers was formed in Q3 2014 and is listed on the Norwegian OTC market. Philly Tankers has orders for four 50,000 dwt product tankers from Philly Shipyard ("PHLY", formerly Aker Philadelphia Shipyard) with deliveries between Q4 2016 and Q4 2017. AMSC also holds a seat on the Board of Directors of Philly Tankers. In 3Q 2015, Philly Tankers AS agreed to sell its four product tanker contracts to a subsidiary of Kinder Morgan, Inc. with the assignment to take place immediately before delivery of each ship. AMSC is investigating alternatives to monetize its 25,000 shares in Philly Tankers. The investment in Philly Tankers is recorded using the equity method.

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

Amounts in USD thousands	2015	2014
Non-current assets	111 760	111 760
Current assets	409	590
Non-current liabilities	-	-
Current liabilities	(95)	(75)
Net assets	112 074	112 275
Group's share of net assets (19.6%)	21 966	22 006
Excess of AMSC's investment over its share of equity in associates	2 907	2 920
Carrying amount of interest in associate	24 874	24 926
Net loss of Philly Tankers AS	(201)	(431)

Capital Management 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.

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	2015	2014
Non-current liabilities
Secured loans	430 260	474 872
Unsecured bond issues	210 370	201 285
Subordinated loan from Aker ASA	20 000	-
Total long term interest bearing loans	660 630	676 157
Current liabilities
Current portion of secured loans	10 148	52 205
Total interest-bearing short term debt	10 148	52 205
Summary of secured Loans as of 31 December	2015	2014
BNP Paribas gross borrowings	300 480	531 557
CIT Bank gross borrowings	147 917	-
Less unamortized loan fees	(7 989)	(4 480)
Sum Secured Loans	440 408	527 077

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

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

Unsecured bond issue as of 31 December	Maturity	2015	2014
Bond balance at beginning of period	2018	201 285	199 571
Interest added to bonds outstanding		6 672	7 091
Foreign currency impact		-	1 955
Gain on de-recognition		-	(10 054)
Plus amortization of discount and capitalized fees		2 413	2 722
Sum Unsecured bond issue		210 370	201 285

On 16 February 2007 AMSC issued a NOK 700 million bond. The interest rate on the bond is LIBOR plus a margin of 6.0% (6.4067% as of 31 December 2015).

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.

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

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

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

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

Subordinated loan from Aker ASA	Maturity	2015	2014
Principal amount	2021	20 000	-
Sum Subordinated Loan		20 000	-

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

Restrictions on dividend payments

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

Under the bond loan and the OSG agreement, cash dividends in the first half of 2016 must not exceed USD 13 million. In addition to the above dividend restrictions, the Company's bond loan restricts the payment of dividends by AMSC such that any payments 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.

Financial covenants

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

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

Note 14: Operating leases

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

Amounts in USD thousands	2015	2014
Less than one year	88 041	86 972
Between one and five years	272 571	351 444
More than five years	41 132	45 766
Total	401 744	484 182

The fixed term of AMSC's bareboat charters of its vessels to OSG have a common maturity date in December 2019, with the exception of the Overseas Tampa which expires in 2025. In connection with the conversion of the Overseas Tampa to a shuttle tanker in 2014, the bareboat charter was extended by ten years. The non-cancellable bareboat charter revenue backlog totals approximately USD 401.7 million as of 31 December 2015. 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	2015	2014
Less than one year	43	45
Between one and five years	59	20
More than five years	-	-
Total	102	65

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

Note 15: Deferred revenues and other payables

Trade and other payables comprise the following items:

Amounts in USD thousands	2015	2014
Trade accounts payable	130	103
Accrual of financial costs	1 521	1 230
Other short-term interest free liabilities	7 853	7 727
Total	9 504	9 060

Other short-term interest free liabilities at 31 December 2015 include deferred revenue from OSG of USD 7.5 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 2014 include deferred revenue from OSG of USD 7.3 million and other accrued costs of USD 0.4 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	2015	2014
Loans and receivables	32 819	33 316
Cash and cash equivalents	31 737	85 201
Cash held for specified uses	1 541	8 107
Total	66 097	126 624

AMSC regularly monitors the financial health of the financial institutions which it uses for cash management services and in which it makes deposits 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	2015	2014
Type of counterparty:
End-user customer (1)	32 569	33 204
Other receivables	250	112
Total	32 819	33 316

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

Liquidity 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 and CIT loans, the Group has established cash earnings 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 20). 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 2015
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 bonds (gross)	210 370	(245 120)	(6 801)	(6 876)	(13 640)	(217 803)	-
Long-term interest bearing external liabilities (gross)	468 397	(563 415)	(12 675)	(14 333)	(44 589)	(387 273)	(104 545)
Derivative financial liabilities
Interest rate swaps	745	(1 218)	(319)	(333)	(107)	(459)	-
Total as of 31 December 2015	679 512	(809 753)	(19 795)	(21 542)	(58 336)	(605 535)	(104 545)

	31 December 2014
Amounts in USD thousands	Book 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 bonds (gross)	208 617	(264 169)	(3 910)	(3 408)	(10 316)	(246 535)	-
Long-term interest bearing external liabilities (gross)	531 557	(555 193)	(33 318)	(34 930)	(486 581)	(364)	-
Derivative financial liabilities
Interest rate swaps	27 434	(28 022)	(10 643)	(9 581)	(7 798)	-	-
Total as of 31 December 2014	767 609	(847 384)	(47 871)	(47 919)	(504 695)	(246 899)	-

Currency 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 20), the NOK denominated bond was converted to USD. As a result of this conversion, the Company's currency risk is minimal going forward.

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

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

Exposure to currency risk

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

Amounts in USD thousands	2015	2014
Gross balance sheet exposure
Trade payables (-)	(70)	(38)
Bond	-	-
Cash	1 855	3 848
Gross balance sheet exposure	1 785	3 810
Estimated forecast expenses (-)	(2 090)	(1 856)
Gross forecasted exposure	(2 090)	(1 856)
Forward exchange contracts	-	-
Net exposure	(305)	1 954

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 decreased the Group's earnings before tax by approximately USD 0.1 million for the year ended 31 December 2015 and approximately USD 0.3 million for the year ended 31 December 2014. This analysis assumes that all other variables remain constant.

AMSC is subject to a covenant in its bond obligation that requires the Company to maintain a minimum level of USD 50.0 million of consolidated equity (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 20 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 bank and bond financing. With regards to a portion of the BNP 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 thal all other variables remain constant.

Amounts in USD thousands	2015	2014
Increase/(decrease)
Bank deposits	664	1 209
Financial liabilities	(3 204)	(2 121)
Interest swap	7 922	7 706
P&L sensitivity (net)	5 382	6 794

For 2015 and 2014, estimates of the interest swap valuation following the change in interest rates are obtained from a third party, with an adjustment for 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 2015 and 2014, 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 2015, there were no transfers between categories.

The fair values of financial instruments, the related fair value hierarchy, together with the carrying amounts shown in the balance sheet as of 31 December 2015 are as follows:

Amounts in USD thousands	Carrying amount 2015	Fair value 2015	Fair value hierarchy	Valuation technique
Interest-bearing receivables from external companies, maturity greater than 3 years	32 569	26 044	3	Discounted cash flows at 10%
Interest swap used for economic hedging: Liabilities				Market comparison
	(745)	(745)	2	from a third party
Unsecured bonds (gross)	(210 370)	(198 882)	3	Discounted cash flows at 10%
Secured loans (gross)	(448 397)	(447 580)	2	Discounted cash flows at 3.7%
Subordinated loans (gross)	(20 000)	(17 872)	2	Discounted cash flows at 10.25%

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

In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that 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 2014 are as follows:

Amounts in USD thousands	Carrying amount 2014	Fair value 2014	Fair value hierarchy	Valuation technique
Interest-bearing receivables from external companies,				Discounted cash
maturity greater than 3 years	33 204	28 806	3	flows at 10%
Interest swap used for economic hedging:
Liabilities				Market comparison
	(27 434)	(27 434)	2	from a third party
Unsecured bond issue (gross)				Market comparison
	(208 617)	(198 187)	3	from a third party
Secured loans (gross)				Discounted cash
	(531 557)	(532 259)	2	flows at 2.3%

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

Financial instruments measured at fair value

Type	Valuation technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value measurement
Interest rate swaps	Market comparison technique: The fair values are based on broker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments.	Not applicable	Not applicable

Note 17: Shares owned or controlled by the president and chief executive officer, board of directors and senior employees of the American Shipping Company Group

Shares in American Shipping Company ASA of 31 December 2015

Name	Position	Company	No. of shares
Pål Magnussen	President and CEO	AMSC	20 000
Annette Malm Justad	Chairman of the Board	AMSC	4 523

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

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

REMUNERATION TO THE BOARD OF DIRECTORS THROUGH 31 DECEMBER 2015

Name	Position	Company	Remuneration
Annette Malm Justad	Chairman	AMSC	66 764
Lars Solbakken	Board Member - former	AMSC	14 851
Peter Knudsen	Board Member	AMSC	54 169
Kristian Røkke	Board Member	AMSC	39 316
Sum Directors' fee			175 100

The Chairman and the Board of Directors have not received benefits other than Directors' fees. The Board of Director's term runs from 1 April through 31 March and the above remuneration reflects cash payments to board members during the calendar year 2015.

REMUNERATION TO THE NOMINATION COMMITTEE

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

GUIDELINES FOR REMUNERATION OF SENIOR MANAGEMENT

Advisory guidelines

The basis of remuneration of senior management has been developed in order to create a performance-based system which is founded on the Company'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 is 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 2015, the senior management received a base salary in addition to a variable pay based on the award of synthetic shares in order to align 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 2015.

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

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

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

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

REMUNERATION TO SENIOR MANAGEMENT DURING 2015

						Pension
			Base salary	Bonus	Other Benefits	Contribution	Total (USD)	Severance pay
Pål Magnussen Morten Hofstad	CEO CFO	Jan. - Dec. Jul. - Dec.	290 033 98 452	145 673 42 165	58 913 17 660	7 772 -	502 391 158 277	6 months 6 months
Leigh Jaros	Controller	Jan - Dec.	157 133	20 600	-	1 573	179 305	6 months

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

REMUNERATION TO SENIOR MANAGEMENT DURING 2014

						Pension
			Base salary	Bonus	Other Benefits	Contribution	Total (USD)	Severance pay
Dag Fasmer Wittusen	CEO	Jan. - Dec.	362 213	830 826	54 215	16 431	1 263 685	6 months
Pål Magnussen	CFO	Jun. - Dec.	132 373	64 496	24 109	-	220 978	6 months
Leigh Jaros	Controller	Jan - Dec.	156 228	37 321	-	968	194 517	6 months

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

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

Note 18: Transactions and agreements with related parties

AMSC's largest shareholder is a subsidiary of Aker ASA which holds 19.1 percent of the Company's shares. Kristian Røkke, Board member of AMSC, 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 2015.

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

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

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

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

Note 19: Agreements with OSG

AMSC's only customer is OSG. The key agreements with OSG include the bareboat charter agreements, DPO agreements and profit sharing agreement. Under the bareboat charter agreements, OSG pays AMSC a fixed daily rate for leasing the vessels and OSG is responsible for operating costs and 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 defered payment of a portion of the daily bareboat charter hire for the first seven years of vessels 1-5. This deferred payment accrued on a daily basis to a maximum of USD 7.0 million per vessel and is now repayable over 18 years after the initial 7 year period. Under the profit sharing agreement, AMSC and OSG share 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 pay down a USD 18.2 million credit (plus accrued interest at 9.5% p.a. since December 2009) negotiated with OSG, which is the amount of AMSC's profit sharing OSG retains prior to having an obligation to remit profit sharing payments to AMSC. After having paid down the OSG credit, AMSC will be entitled to receive 50% of profits under the formula above in cash and will recognize profit sharing revenue. As an example, the calculation of profit sharing for the full year 2015 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 are amortized through an adjustment to profit sharing over ten years.

AMSC's 50% share of the profit (USD 11.1 million for 2015) is used to reduce the OSG credit. The cumulative balance as of the end of 2015 for the 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:

Balance per Q4 2015:

	Beginning balance as of Q1 2015	Interest	Reduction	Ending balance as of Q4 2015
OSG credit	22.6	1.8	(11.1)	13.3

Balance per Q4 2014:

	Beginning balance as of Q1 2014	Interest	Reduction	Ending balance as of Q4 2014
OSG credit	25.9	2.3	-5.6	22.6

Note 20: Recapitalization

On 2 December 2013, AMSC announced the launch of a recapitalization of the Company ("Recapitalization"). During January 2014, the 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 then-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 21: Events after the balance sheet date

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

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

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

American Shipping Company ASA

Statement of Financial Position as of 31 December

Amounts in USD thousands	Note	2015	2014
ASSETS
Shares in subsidiaries and associates	3	352 355	352 381
Long-term receivable group companies	5	87 603	32 188
Total financial non-current assets		439 958	384 569
Total non-current assets		439 958	384 569
Other short-term receivables		82	63
Cash and cash equivalents	8	7 300	72 624
Total current assets		7 382	72 687
Total assets		447 340	457 256
EQUITY AND LIABILITIES
Share capital		96 366	96 366
Share premium reserve		198 006	223 006
Total paid in capital		294 372	319 372
Other equity		(79 733)	(65 601)
Total retained earnings		(79 733)	(65 601)
Total equity	6	214 639	253 771
Bond obligation	7	210 370	201 285
Other interest-bearing debt		20 481	527
Total long-term liabilities		230 851	201 812
Other short-term debt		1 850	1 673
Total short-term liabilities		1 850	1 673
Total equity and liabilities		447 340	457 256

Lysaker, 14 March 2016 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

American Shipping Company ASA Income Statement

Amounts in USD thousands	Note	2015	2014
Operating revenues		69	127
Other operating expenses	2	(1 460)	(1 897)
Operating loss		(1 391)	(1 770)
Interest income from group companies		3 675	2 890
Other interest and financial income	7	45	579
Other interest and financial expenses	2	(16 443)	(20 959)
Loss after financial items		(14 114)	(19 260)
Taxes	4	-	-
Loss for the period		(14 114)	(19 260)
Allocation of net loss:
Loss		(14 114)	(19 260)
Other equity	6	14 114	19 260
Total		-	-

American Shipping Company ASA

Cash Flow Statement

Amounts in USD thousands	2015	2014
Loss before tax	(14 114)	(19 260)
Unrealized foreign exchange (gain)/loss and unpaid interest expense	5 645	10 252
Changes in short term receivables	(20)	985
Changes in short term liabilities	(56)	(1 570)
Cash flow from operating activities	(8 545)	(9 593)
Other changes in long term investments	(51 714)	(27 468)
Cash flow from investing activities	(51 714)	(27 468)
Proceeds from equity raised	-	127 917
Dividends / return of capital paid	(25 000)	(18 000)
Repurchase of treasury shares	(63)	(891)
Proceeds from sale of treasury shares	45	692
Proceeds from / (repayments of) other interest-bearing debt	19 953	(90)
Cash flow from financial activities	(5 065)	109 628
Cash flow for the year	(65 324)	72 567
Cash and cash equivalents 1 January	72 624	57
Cash and cash equivalents 31 December	7 300	72 624

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.

CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS

Assets and liabilities are presented as current when they are due within one year or they are part of the operating cycle. Other assets and liabilities are classified as non-current.

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

Non-current receivables are measured at cost less impairment losses that are not considered to be temporary. Non-current liabilities are initially valued at transaction value less attributable transaction cost. Subsequent to initial recognition, interest bearing non-current borrowings are measured at amortized cost with any difference between cost and redemption value being recognized in the

income statement over the period of the borrowing on an effective interest basis.

Trade and other receivables are recognized at the original invoiced amount less allowances for expected losses. Provision for expected losses is considered on an individual basis.

The bond loan is initially recorded at fair value and subsequently is accounted for at amortized cost.

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). 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 2015 was 8.81 and the average rate during 2015 was 8.14 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 (2015: 25%; 2014: 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 57 thousand (without VAT) for ordinary audit was expensed in 2015. For more information on fees paid to KPMG, see note 3 in the consolidated accounts.

Pa˚ l Magnussen was appointed to the position of President and CEO effective 1 January 2015. Morten Hofstad was appointed to the position of CFO effective 1 July 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 and CFO. Board of directors expenses were USD 201 thousand in 2015.

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

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

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)	100%		100% Kennett Square, PA	327 481	327 481
Philly Tankers AS	19.6%	19.6%	Oslo, Norway	24 874	24 874
Total shares				352 355	352 355
		ATHC
Subsidiaries' 2015 results after tax in USD thousands		28 845
Subsidiaries' equity attributable to common shareholders at
31 December 2015 in USD thousands		335 964

American Shipping Company ASA ("AMSC ASA") is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100% and 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 or CIT Bank 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 2015 or 2014.

ASSOCIATES

Philly Tankers AS

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

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

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

Amounts in USD thousands	2015	2014
Non-current assets	111 760	111 760
Current assets	409	590
Non-current liabilities	-	-
Current liabilities	(95)	(75)
Net assets	112 074	112 275
Group's share of net assets (19.6%)	21 966	22 006
Excess of AMSC's investment over its share of equity in associates	2 907	2 920
Carrying amount of interest in associate	24 874	24 926
Net loss of Philly Tankers AS	(201)	(431)

Note 4: Tax

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

Tax payable:

Amounts in USD thousands	2015	2014
Profit/(loss) before tax USD accounts in USD	(14 114)	(19 261)
Difference between NOK and USD accounts	(22 162)	(15 977)
Result before tax measured in NOK for taxation purposes	(36 276)	(35 237)
Permanent differences	1	219
Change in temporary differences	-	7 820
Estimated result for tax purposes	(36 275)	(27 198)
Utilization of loss carried forward	-	-
Taxable income	(36 275)	(27 198)
Tax payable	-	-

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

Deferred tax:

Amounts in USD thousands	2015	2014
Other differences	-	-
Operating loss carried forward	(108 651)	(86 042)
Total differences	(108 651)	(86 042)
Deferred tax asset, 25 / 27 percent	(27 163)	(23 231)
Restrictions regarding balance tax asset	27 163	23 231
Book value tax asset	-	-
Taxes:
Amounts in USD thousands	2015	2014
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	2015	2014
American Tanker, Inc. (ATI)	87 603	32 188
Total	87 603	32 188

As of 31 December 2015, AMSC holds a USD 35.4 million loan to ATI. The loan to ATI is unsecured and bears interest at the higher of 9.5% or LIBOR plus 7% (9.5% at 31 December 2015). The ATI note is payable on demand by AMSC, provided that demand may not be made prior to 30 June 2016.

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

Note 6: Total equity

Changes in equity are:

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

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

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

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.

The shares were owned by the following 20 largest parties as of 31 December 2015:	Number	Percent
CONVERTO CAPITAL FUND AS	11 557 022	19.1%
GOLDMAN SACHS & CO EQUITY SEGREGAT	9 558 736	15.8%
SKANDINAVISKA ENSKILDA BANKEN AB	9 182 520	15.1%
EUROCLEAR BANK S.A./N.V. ('BA')	4 199 799	6.9%
DNB NOR MARKETS, AKSJEHAND/ANALYSE	3 919 169	6.5%
THE BANK OF NEW YORK MELLON SA/NV	3 402 788	5.6%
DBSI - 090-9011 3-1-4	2 677 748	4.4%
JP MORGAN CLEARING CORP.	1 842 238	3.0%
CITIBANK, N.A.	1 390 263	2.3%
TRETHOM AS	1 255 555	2.1%
UBS SWITZERLAND AG	800 113	1.3%
J.P. MORGAN CHASE BANK N.A. LONDON	700 000	1.2%
RO	700 000	1.2%
PERSHING LLC	608 613	1.0%
STATE STREET BANK & TRUST COMPANY	458 416	0.8%
NORDNET LIVSFORSIKRING AS	457 254	0.8%
CLEARSTREAM BANKING S.A.	443 122	0.7%
THE BANK OF NEW YORK MELLON SA/NV	330 404	0.5%
CREDIT SUISSE SECURITIES (USA) LLC	318 826	0.5%
KLP AKSJENORGE INDEKS	317 110	0.5%
Total, 20 largest shareholders	54 119 696	89.3%
Other shareholders	6 496 809	10.7%
Total	60 616 505	100.0%

Note 7: Other long term interest-bearing debt

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

Amounts in USD thousands	Maturity	Balance	Interest Rate
Bond balance at beginning of period	2018	201 285	LIBOR + 6.0%
Interest added to bonds outstanding		6 672	(1)
Less unamortized discount and capitalized fees		2 413	(1)
Sum Unsecured bond issue		210 370

(1) Included in other interest and financial expenses.

On 16 February 2007 AMSC issued a NOK 700 million bond. The interest rate on the bond is LIBOR plus a margin of 6.0% (6.4067% as of 31 December 2015).

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.

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

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

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

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

Note 8: Cash and cash equivalents

There is no restricted cash.

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

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

Note 10: Guarantees

The company has made the following guarantees:

Description	Beneficiary	Amount (USD thousands)	Guarantee party
Senior secured credit facility	Agent (BNP Paribas), Arranger, Lenders and Hedging Banks	300 000	ASC Leasing I-VII and IX, Inc.
Senior secured credit facility	Agent (CIT Bank), Security Trustee and Lenders	150 000	ASC Leasing VIII and X, Inc.

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

	Offices in:
KPMG AS, a Norwegan kinited iability company and member firm of the 10°MG network of independent inember firms affiliated with KPMG Intervational Cooperative ("KPMG International"), a Saess entity Statsautonnerte rewageer - medlemmer av Den norske Reveartonerung	Oslo Alta Anendal Bergen Bode Elverum Finnsnes	Hlamar Hisugesund Knarvk Kristiansane Larvik Mo - Rana Molde	Sitien Sandelined Sandverstener Stavenpot Stord Straume Trammo	rondivan Tymset Tansberg Aresund

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 0.412 per share (USD 25 million) in 2015. The dividends were classified for accounting purposes as repayment of previously paid in share premium.

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 2015 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 2014, valid up to the Company's Annual General Meeting in 2016. 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 facilities and the bond loan. Subject to certain exceptions, as of 31 December 2015, the BNP and CIT credit agreements restrict the payment of dividends by AMSC and its subsidiaries. Specifically, AMSC and its subsidiaries may pay cash dividends only if there is no default and the Company is in compliance with its financial covenants under the loans. Under the BNP facility, beginning in 2019, dividends may be paid only if BNP has received confirmation from AMSC that the bareboat charters have been extended by OSG. Under the bond loan and the OSG agreement, cash dividends in the first half of 2016 must not exceed USD 13 million. In

addition to the above dividend restrictions, the Company's bond loan restricts the payment of dividends by AMSC such that any payments 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.

Shares and share capital

As of 31 December 2015, 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 2015 accounts).

As of 31 December 2015, the Company had 1,074 shareholders, of whom 9.2 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 2015.

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 2015 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 2016.

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.

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 ir@amshipco.com.

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.

20 largest shareholders

as of 31 December 2015

Shareholder	Number of shares held	Ownership (in %}
CONVERTO CAPITAL FUND AS	11 557 022	19.1%
GOLDMAN SACHS & CO EQUITY SEGREGAT	9 558 736	15.8%
SKANDINAVISKA ENSKILDA BANKEN AB	9 182 520	15.1%
EUROCLEAR BANK S.A./N.V. ('BA')	4 199 799	6.9%
DNB NOR MARKETS, AKSJEHAND/ANALYSE	3 919 169	6.5%
THE BANK OF NEW YORK MELLON SA/NV	3 402 788	5.6%
DBSI - 090-90113-1-4	2 677 748	4.4%
JP MORGAN CLEARING CORP.	1 842 238	3.0%
CITIBANK, N.A.	1 390 263	2.3%
TRETHOM AS	1 255 555	2.1%
UBS SWITZERLAND AG	800 113	1.3%
J.P. MORGAN CHASE BANK N.A. LONDON	700 000	1.2%
RO	700 000	1.2%
PERSHING LLC	608 613	1.0%
STATE STREET BANK & TRUST COMPANY	458 416	0.8%
NORDNET LIVSFORSIKRING AS	457 254	0.8%
CLEARSTREAM BANKING S.A.	443 122	0.7%
THE BANK OF NEW YORK MELLON SA/NV	330 404	0.5%
CREDrT SUISSE SECURITIES (USA) LLC	318 826	0.5%
KLP AKSJENORGE INDEKS	317 110	0.5%
Total 20 largest shareholders	54 119 696	89.3%
Other shareholders	6 496 809	10.7%
Total	60 616 505	100.0%

Geographic distribution of shareholders

as of 31 December 2015

Nationality	Number of shares held	Ownership (in %)
Non-Norwegian shareholders	29 626 575	48.9%
Norwegian shareholders	30 989 930	51.1%
Total	60 616 505	100.0%

Ownership structure by number of shares held

as of 31 December 2015

Shares owned	Number of shareholders	Percent of share capital
1 – 100	221	0.01%
101 – 1 000	388	0.32%
1 001 – 10 000	351	2.11%
10 001 – 100 000	81	4.10%
100 001 – 500 000	19	8.01%
over 500 000	14	85.45%
Total	1 074	100.00%

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.

2015 share data

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

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 5 of this report and in the Board of Director's report.

Equity and dividends Equity

The Group's book equity as of 31 December 2015 was USD 224.2 million corresponding to an equity ratio of 25 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 42- 44 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 2015 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 2016.

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 Arild Støren Frick (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 three 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 49 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.

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

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 three employees, who all 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 CFO and Controller and reported to the Board monthly.

Because of the inherent segregation of duties matters caused by having only three 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 an accounting firm, 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 2015 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 2 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 four categories of ordinary auditing, other attestation services, tax assistance and other assurance 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 chairman of the board of Store Norske Spitsbergen Kulkompani AS and SeaBird Exploration Plc, a member of the Board of Port of London Authority, Odfjell, and Awilco LNG ASA. Ms. Justad holds a Master degree of Technology Management from NTH/MIT (Sloan School)/NHH in addition to a MSc in Chemical Engineering from NTH. Ms. Justad is a Norwegian citizen. Ms. Justad holds 4,523 shares in the Company and has no stock options. She has been elected for the period 2015-2017.

Peter D. Knudsen

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

Kristian Røkke

Kristian Røkke is currently CEO of Akastor ASA, a publicly listed oil service investment company. He has previously served as CEO of Philly Shipyard ASA and later as Chairman. Mr. Røkke is a Board Member of TRG Holding AS, which owns 66.7% of Aker ASA. 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

Pa˚ l 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 50,000 shares in the Company.

Morten Hofstad CFO

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

Oksenøyveien 10, P.O. Box 230 1366 Lysaker, 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 2015

© 2016 American Shipping Company All rights reserved www.americanshippingco.com