AMERICAN SHIPPING COMPANY ASA

2017 ANNUAL REPORT

American Shipping

Mission: to be the preferred ship owning and leasing partner to the US Jones Act market Company

CONTENT

KEY FIGURES	3
KEY EVENTS 2017	4
THIS IS AMERICAN SHIPPING COMPANY	5
FLEET OVERVIEW	6
PRIMARY TRADE ROUTES	7
COMPANY STRUCTURE	8
COMPANY HISTORY	9
GOALS AND STRATEGIES	10
MANAGEMENT	11
BOARD OF DIRECTORS	12
BOARD OF DIRECTORS' REPORT	13
BOARD RESPONSIBILITY STATEMENT	20

ANNUAL ACCOUNTS - GROUP 22

	Consolidated Statement of Financial Position	22
	Consolidated Income Statement	23
	Consolidated Statement of Comprehensive Income	23
	Consolidated Statement of Changes in Equity	24
	Consolidated Cash Flow Statement	25
	Notes to the Consolidated Accounts	26
Note 1:	Accounting principles	26
NOTE 2:	Wages and other personnel expenses	30
NOTE 3:	Other operating expenses	31
NOTE 4:	Financial items	31
NOTE 5:	Tax	32
NOTE 6:	Property, plant and equipment	35
NOTE 7:	Interest-bearing long-term receivables	36
NOTE 8:	Other receivables	36
NOTE 9:	Derivative financial assets and liabilities	37
	NOTE 10: Earnings per share	37
	NOTE 11: Paid in capital	38
	NOTE 12: Subsidiaries and associates	38
	NOTE 13: Interest-bearing loans and liabilities	40
	NOTE 14: Operating leases	42
	NOTE 15: Deferred revenues and other payables	42
	NOTE 16: Financial instruments	43
	NOTE 17: Shares owned or controlled	48
	NOTE 18: Transactions and agreements with related parties	50
	NOTE 19: Agreements with OSG	50
	NOTE 20: Events after the balance sheet date	51

ANNUAL ACCOUNTS - PARENT 53

	Statement of Financial Position	53
Income Statement		54
Cash Flow Statement		55
Notes to the Accounts		56
Note 1:	Accounting principles	56
Note 2:	Other operating and financial expenses	57
Note 3:	Shares in subsidiaries and associates	58
Note 4:	Tax	60
Note 5:	Long-term receivables	61
Note 6:	Total equity	62
Note 7:	Other long term interest-bearing debt	64
Note 8:	Cash and cash equivalents	64
Note 9:	Shares owned by the board of directors and
	the senior management	64
	Note 10: Guarantees	65

AUDITORS' REPORT 66 SHARE AND SHAREHOLDER INFORMATION 70 CORPORATE GOVERNANCE 73

KEY FIGURES

Profit and loss items		2017	2016	2015

Operating revenues	USD million	87.8	88.0	87.8
EBITDA	USD million	84.8	85.1	84.9
Net income	USD million	13.3	7.1	9.7
Normalized EBITDA	USD million
Reported EBITDA	USD million	84.8	85.1	84.9
Profit share	USD million	-	10.2	11.1
DPO	USD million	3.8	3.9	3.3
Normalized EBITDA	USD million	88.6	99.2	99.3
Cash flow
Cash flow from operating activities	USD million	51.0	56.7	50.9
Cash flow from investing activities	USD million	15.1	-	-
Cash flow used in financing activities	USD million	(63.2)	(38.6)	(110.9)
Cash as of 31 December	USD million	54.3	51.4	33.3
Balance sheet
Interest bearing debt	USD million	628.4	664.4	670.8
Equity	USD million	186.9	195.7	216.4
Total assets	USD million	847.1	889.4	905.0
Equity ratio	Percent	22.1%	22.0%	23.9%
The AMSC share
Share price as of 31 December	NOK	23.90	24.30	26.50
Dividend per share	NOK	2.59	3.99	3.42
Dividend per share	USD	0.32	0.48	0.42
Dividend yield	Percent	10.8%	16.4%	12.4%

ANNUAL REPORT 2017 - 3

KEY EVENTS 2017

BOND REFINANCING

In February 2017, AMSC successfully refinanced the unsecured bond through the placement of new five year USD 220 million senior unsecured bond. The bond was widely placed to investors in the U.S., U.K. and Nordic region. Settlement was on 22 February 2017 with final maturity date on 22 February 2022. The new bond issue has a fixed coupon of 9.25%. On 14 June 2017, the bond was listed on the Oslo Stock Exchange under the ticker AMTI01.

INVESTMENT IN PHILLY TANKERS

Philly Tankers completed the sale of its last three product tanker contracts and related assets to a subsidiary of Kinder Morgan, Inc. in 2017. AMSC received distributions from Philly Tankers amounting to USD 12.5 million in 2017, which were used to repay a portion of the subordinated loan.

CONTINUED DIVIDENDS

For the financial year 2017, the Company declared dividends of USD 0.32 per share, USD 19.4 million in total.

LISTING ON OTCQX

In November 2017, the Company's ordinary shares were approved to trade on the OTCQX Best Market in the United States. AMSC's ordinary shares are available for trading in the United States on OTCQX under the symbol "ASCJF".

FINANCIAL CALENDAR 2018

25 April Annual General Meeting 2018 23 May 1st quarter interim results 2018 24 August 2nd quarter interim results 2018 15 November 3rd quarter interim results 2018 (dates subject to change)

THIS IS AMERICAN SHIPPING COMPANY

American Shipping Company ASA (AMSC) was established in 2005, and is listed on the Oslo Stock Exchange with the ticker AMSC. The business model of AMSC is to own and bareboat charter out U.S. built vessels to qualified U.S. citizen operators, making the Company a pure play Jones Act owner. The objective of the business model is to generate a stable and predictable cash flow from long term bareboat leases 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 voyage and time charters to major oil companies and refineries. 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 OTC-listed company which ordered and subsequently sold four product tankers.

AMSC is headquartered in Lysaker, Norway, with its principal operating subsidiaries located in Pennsylvania, USA.

FLEET OVERVIEW

VESSEL	DESIGN	TYPE	BUILT		BAREBOAT CHARTERS TO OSG
				DELIVERY - 2019	BEYOND 2019
Overseas Houston	Veteran Class MT 46	MR	2007	BBC	BBC Options
Overseas Long Beach	Veteran Class MT 46	MR	2007	BBC	BBC Options
Overseas Los Angeles	Veteran Class MT 46	MR	2007	BBC	BBC Options
Overseas New York	Veteran Class MT 46	MR	2008	BBC	BBC Options
Overseas Texas City	Veteran Class MT 46	MR	2008	BBC	BBC Options
Overseas Boston	Veteran Class MT 46	MR	2009	BBC	BBC Options
Overseas Nikiski	Veteran Class MT 46	MR	2009	BBC	BBC Options
Overseas Martinez	Veteran Class MT 46	MR	2010	BBC	BBC Options
Overseas Anacortes	Veteran Class MT 46	MR	2010	BBC	BBC Options
Overseas Tampa	Veteran Class MT 46	ST	2011	BBC	BBC Options

Tampa was converted to a shuttle tanker and is on a 10 year BBC backed by a 10 year TC

ANNUAL REPORT 2017 - 6

ANNUAL REPORT 2017 - 7

COMPANY STRUCTURE

COMPANY HISTORY

2005

Aker American Shipping ASA (AKASA) established and listed on Oslo Stock Exchange
Closed a ten ship bareboat charter agreement with Overseas Shipholding Group, Inc. (OSG), with ships delivered between 2007 and 2011

2007

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

2008

Name changed to American Shipping Company ASA and trading ticker changed from AKASA to AMSC

2009

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

2014

Began paying quarterly dividends
Overseas Tampa converted to a shuttle tanker for a ten year time charter to Shell beginning in 2015
Invested USD 25 million for a 19.6% stake in Philly Tankers AS with orders for four product tankers

2013

Launched major recapitalization of the Company, completed in 2014, which raised USD 128 million in cash and increased equity by USD 166 million

2012

Extended maturity of vessel debt to June 2016
Achieved bareboat charter extensions with OSG to December 2019

2011

Extended maturity of the NOK bond for 6 years

2015

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

2016

First Philly Tankers newbuild contract and related assets sold to subsidiaries of Kinder Morgan. Transaction proceeds distributed during 2017, with a final liquidation proceed during 2018

2017

Raised USD 220 million senior unsecured bond used to refinance the outstanding bond with maturity in February 2018
Received USD 12.5 million in distributions from Philly Tankers from its sale of all four product tanker newbuild contracts

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
Have a modern, safe and operationally friendly fleet
Explore and invest in value creating opportunities for our stakeholders
Ensure an optimal use of capital

MANAGEMENT

PÅL MAGNUSSEN PRESIDENT / CEO

Mr. Magnussen was appointed President and CEO of AMSC effective 1 January 2015. He previously served as the Company's CFO from 1 June 2014. A Norwegian national, Mr. Magnussen comes from the position as Director of the Investment Banking Division in DNB Markets where he 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 a seat on the Board of Philly Tankers AS. 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 BAKKE CFO

Mr. Bakke was appointed CFO of AMSC effective 4 April 2016. He has 14 years of corporate finance, shipping and offshore experience of which 10 years with DVB Corporate Finance in London and Oslo and previously with Chartered Accountants Moore Stephens and Credit Suisse, both in London. Mr. Bakke has advised multiple offshore, shipping and private equity firms on a variety of M&A deals and holds a MSC in Shipping, Trade and Finance from Cass Business School and BA in Business Studies from University of Greenwich. Mr. Bakke is a Norwegian national and holds 25,000 shares in the company through MB Capital AS.

LEIGH JAROS Controller

Ms. Jaros joined American Shipping Company as Controller in July 2008. Ms. Jaros has over 15 years of 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.

BOARD OF DIRECTORS

ANNETTE MALM JUSTAD Chairman

Ms. Justad has been a member of American Shipping Company ASA's Board of Directors since December 2007. From 2006 through 2010, she held the position of CEO of Eitzen Maritime Services ASA, a Norwegian marine shipping services Company. Prior to that she has held various positions in large companies such as Yara International ASA, Norgas Carriers/ IM Skaugen ASA, and Norsk Hydro ASA. Ms. Justad is a member of the Board of Port of London Authority, Odfjell, Awilco LNG ASA, Store Norske Kulkompani AS and Small Turbine Partners AS. Ms. Justad holds a Master degree of Technology Management from MIT (Sloan School)/ NTH/NHH in addition to a MSc in Chemical Engineering from NTH. Ms. Justad is a Norwegian citizen. Ms. Justad holds 4 523 shares in the Company and has no stock options. She has been re-elected for the period 2017-2019.

PETER D. KNUDSEN Board member

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 a Board member of Uglands Rederi AS. He is a Norwegian citizen and holds 2,000 shares of stock in the Company through Vilja AS. Mr. Knudsen has been a Board Member of American Shipping Company ASA since 2012 and has been re-elected for the period 2016-2018.

AUDUN STENSVOLD Board member

Audun Stensvold is currently Investment Director of Aker ASA. Prior to his appointment as an investment director, he was CFO and Investment Director for Converto, which manages the Aker-owned Converto Capital Fund. He has also served as Vice President of Aker's M&A and Business Development team. Before joining Aker, Mr Stensvold worked as a strategy and finance consultant for Selmer, and as a financial analyst for DnB NOR. Mr Stensvold holds a Masters degree in Business and Economics from the Norwegian School of Economics (NHH). Mr Stensvold is a Norwegian citizen and holds zero shares in the Company. Mr. Stensvold was elected to the Board of Directors at the Company's Annual General Meeting in 2016 for the period 2016-2018.

THE GROUP'S BUSINESS ACTIVITIES

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 2017, 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 tanker market, and domiciled in Tampa, Florida.

The main entities in the AMSC Group (the "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 longterm 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 shortterm market fluctuations, and, in addition, earning a share of the profits generated by the bareboat charterers' operations in the time or voyage charter markets.

In accordance with this policy, all of AM-SC'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 employs the vessels on voyage and time charters to major oil companies, refineries and trading companies. The fixed bareboat charter period for nine of the vessels expires in December 2019, while one vessel (the Overseas Tampa) 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 2017 Bond refinancing

The Company, through its wholly owned subsidiary ATI, successfully refinanced the unsecured bond through the placement of a new, five year USD 220 million senior unsecured bond. The bond was widely placed to investors in the U.S., U.K. and Nordic region. Settlement was on 22 February 2017 with final maturity date on 22 February 2022. The new bond issue has a fixed coupon of 9.25%. In June 2017, the bond was listed on the Oslo Stock Exchange under the ticker AMTI01.

Investment in Philly Tankers AS ("PTAS")

PTAS completed the sale of its last three product tankers to Kinder Morgan during 2017. As a result of the sale of the vessels, PTAS distributed excess cash to its shareholders following delivery of each vessel. During 2017, AMSC received distributions from PTAS of USD 12.5 million net of tax. The funds were used to pay down on the subordinated loan from Aker ASA in accordance with the loan agreement. AMSC owns 19.6% of PTAS and holds a seat on its Board of Directors. During 2017, AMSC recognized a gain of USD 7.1 million representing its share of the profit of PTAS. In addition, AMSC recognized a USD 2.9 million write-down as a result of the difference between the initial equity investment booked at cost and subsequent capital distributions from PTAS. During 2018, PTAS will initiate steps to liquidate the company and then distribute its remaining available cash to its shareholders. AMSC will receive its pro-rata share of the dividends and liquidation proceeds, expected to be approximately USD 16 million net of tax. AMSC will use the proceeds to repay the remainder of the loan from Aker ASA, approximately USD 10 million in principal and accrued interest. In total, AMSC expects to receive USD 28.5 million in gross after tax proceeds from the initial USD 25 million investment in PTAS.

Continued dividend

For the financial year 2017, the Company declared dividends of USD 0.32 per share, USD 19.4 million in total. The Board of Directors was granted authorization to pay these dividends based on the Company's annual accounts for 2016 at the Annual General Meeting in 2017. Although the Jones Act market faced a downturn in 2016 and 2017, the Company's fixed bareboat revenue currently supports this dividend level.

Listing on OTCQX

In November 2017, the Company's ordinary shares were approved to trade on the OTCQX Best Market in the United States. The OTCQX International Tier of the OTCQX Best Market is designed for established, investor-focused international companies that meet high financial standards, follow best practice corporate governance, are current in their home country financial reporting and have been sponsored by a professional third-party advisor. The OTC-QX market is considered by the SEC as an "established public market" for the purpose of determining the public market price of a security. Trading on OTCQX indicates that a company is committed to providing a transparent market for its investors and maintaining high financial and operating standards. AMSC's ordinary shares are available for trading in the United States on OTCQX under the symbol "ASCJF".

Stable cash flow

Normalized EBITDA, calculated as operating profit before depreciation (EBITDA), plus profit share, plus the Deferred Principal Obligation ("DPO"), was USD 88.7 million for 2017 and USD 99.2 million in 2016. AMSC discloses Normalized EBIT-DA in order to provide meaningful supplemental information to management and investors as the Company believes this measure enhances an understanding of the Company's operating earnings.

The profit share is not currently included in reported EBITDA as it is used to reduce the OSG credit, the amount of AMSC's profit sharing that OSG retains prior to having an obligation to remit profit sharing payments to AMSC. After the OSG credit has been reduced to zero (balance of USD 5.4 million as of 31 December 2017), AMSC will recognize profit share revenue and receive its 50% share of the subsequent profit in cash.

The DPO is a receivable from OSG which originated from deferred cash payments of a portion of the daily bareboat charter rate for five of AMSC's ships for the first seven

years. The DPO is repaid to AMSC over 18 years including interest unless the bareboat charter is terminated earlier at which time the DPO becomes due immediately.

Normalized EBITDA (USD millions) 2017 2016 Operating profit before depreciation 84.8 85.1 Profit share (see note 19) - 10.2 DPO 3.8 3.9

Normalized EBITDA 88.7 99.2

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 2017, AMSC had operating revenues of USD 87.8 million versus operating revenues of USD 88.0 million in 2016, a reflection of the Company's stable, predictable business model. Revenues are recognized on a monthly basis and represent the income from the bareboat charter agreements. There were no profits generated under the profit sharing agreement with OSG in 2017. All profits generated under the profit sharing agreement in 2016 were used to offset the credit balance, therefore no profit sharing revenue was recognized in 2016. In the agreement with OSG, the "OSG credit" is the amount of AMSC's profit sharing that OSG retains prior to having an obligation to remit profit sharing payments to AMSC. After the OSG credit has been fully reduced to zero, AMSC will receive its 50% share of the subsequent profit in cash. The Company's operating profit before interest, taxes, depreciation and amortization (EBITDA) amounted to USD 84.8 million in 2017 compared to USD 85.1 million in 2016.

Depreciation was USD 33.9 million in 2017 versus USD 34.3 million in 2016. AMSC's operating profit (EBIT) was USD 51.0 million in 2017 versus USD 50.8 million in 2016.

Net financial items were negative USD 40.0 million in 2017 compared to negative USD 33.7 million in 2016. Net financial items of negative USD 40.0 million in 2017 consist primarily of net interest expense of USD 42.8 million and other financial expenses of USD 3.1 million, offset by a gain on the investment in PTAS of USD 4.2 million and unrealized, non-cash gain on the mark-to-market valuation of interest rate swap agreements of USD 1.7 million. Net financial items of negative USD 33.7 million in 2016 consist primarily of net interest expense of USD 35.3 million and other financial expenses of USD 1.9 million, offset by gain on investment in Philly Tankers of USD 2.7 million, unrealized, non-cash gain on the mark-to-market valuation of interest rate swap agreements of USD 0.7 million and foreign exchange gain of USD 0.1 million. Net interest expense in 2017 was affected by one-off costs of USD 4.8 million related to the refinancing of the bond maturing February 2018.

Net profit before tax for 2017 and 2016 was USD 11.0 million and USD 17.0 million, respectively.

Non-cash deferred income tax benefit was USD 5.8 million in 2017 (USD 9.9 million expense in 2016). As a result of the recently passed U.S. federal tax reform legislation, which reduced the federal corporate income tax rate from 35% to 21%, AMSC booked a one-time non-cash tax benefit of USD 5.8 million in the fourth quarter 2017. The Company is required to revalue its net deferred tax liability based on the new lower tax rate.

Income tax expense in 2017 was USD 3.5 million (0 in 2016), consisting of USD 2.6 million relating to AMSC's share of the income from its investment in Philly Tankers and state franchise taxes of USD 0.9 million.

AMSC's 2017 net income was USD 13.3 million versus USD 7.1 million in 2016. The 2017 basic and diluted earnings per share (EPS) were USD 0.22. The corresponding figures for 2016 were USD 0.12, 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 2017 was positive USD 51.0 million (USD 56.7 million in 2016).

Net cash flow from investing activities was positive USD 15.1 million, representing gross proceeds from PTAS in 2017 (0 in 2016). There were no investments made in 2017 or 2016.

Net cash flow from financing activities in 2017 was negative USD 63.2 million, which included USD 28.3 million in vessel debt installments, USD 13.3 million paid on the Aker ASA subordinated loan, USD 22.1 million in dividends paid/return of capital and USD 3.8 million in loan fees paid, offset by USD 4.3 million net received from the bond refinancing. Net cash flow from financing activities in 2016 was negative USD 38.6 million, which included USD 10.1 million in vessel debt installments, USD 27.9 million in dividends paid/return of capital and USD 0.6 million in loan fees paid.

Statement of financial position and liquidity

As of 31 December 2017, American Shipping Company had cash on deposit with banks totaling USD 54.3 million. Of this

total amount, USD 2.3 million is cash held for specified uses. The corresponding amounts for 2016 were USD 51.4 million in cash on deposit with banks and USD 2.3 million in cash held for specified uses.

Other current assets were USD 0.2 million as of 31 December 2017 (USD 0.3 million as of 31 December 2016).

Property, plant and equipment as of 31 December 2017 was USD 745.6 million (USD 779.5 million as of 31 December 2016), and includes ten vessels.

Interest-bearing long-term receivables totaled USD 28.7 million as of 31 December 2017 (USD 30.6 million as of 31 December 2016) and represent the DPO due from OSG.

Equity accounted investees totaled USD 16.6 million as of 31 December 2017 and represent AMSC's investment in Philly Tankers (USD 27.6 million as of 31 December 2016).

At 31 December 2017, total assets were USD 847.1 million (USD 889.4 million as of 31 December 2016).

At 31 December 2017, total equity was USD 186.9 million. The equity ratio was 22.1% of total assets. Corresponding amounts for 2016 were USD 195.7 million and 22.0%, respectively.

Total current liabilities as of 31 December 2017 were USD 48.5 million, consisting of USD 28.3 million for short-term interest bearing debt and USD 20.2 million for deferred revenues, accrued interest and other payables. The corresponding total current liabilities as of 31 December 2016 were USD 40.2 million, consisting of USD 28.3 million for short-term interest bearing debt and USD 11.9 million for deferred revenues, accrued interest and other payables.

Non-current liabilities totaled USD 611.7 million at 31 December 2017, consisting of bank debt of USD 381.5 million related to the ten vessels owned by AMSC, a bond issue of USD 220.0 million, a subordinated loan from Aker ASA of USD 6.7 million and deferred tax liability of USD 11.6 million, offset by unamortized loan fees of USD 8.1 million. Non-current liabilities totaled USD 653.6 million at 31 December 2016, consisting of bank debt of USD 410.0 million related to the ten vessels owned by AMSC, a bond issue of USD 212.8 million, a subordinated loan from Aker ASA of USD 20.0 million, the long term portion of the mark-tomarket valuation of the interest rate swap contracts of USD 0.1 million and deferred tax liability of USD 17.4 million, offset by unamortized loan fees of USD 6.7 million.

Tax position

AMSC has federal net operating losses in carryforward (NOLs) as of 31 December 2017 of USD 567.1 million in the U.S. and USD 119.3 million in Norway. These NOLs have been generated since 2005 from the tax losses of the Company, which in the U.S. are mostly due to the accelerated depreciation of the vessels for tax purposes (10 years) and in Norway are mainly due to the interest cost on the previous bond.

be subject to such limitations. Beginning in 2018 through 2021, the deduction for interest expense will be limited to 30% of EBITDA. Starting in 2022, interest deductions may not exceed 30% of EBIT. Disallowed interest deductions can generally be carried forward indefinitely. This limitation could restrict the amount of AMSC's interest costs to reduce taxable income in certain years.

During 2017, the Company evaluated its state tax position based on the operation of the vessels. In the past, the Company filed state taxes only in Pennsylvania, based on the commercial domicile of the U.S. subsidiaries. The Company concluded that, based on the evolution of state tax laws, it has had nexus in states where the vessels have operated. The effect of this change in nexus is an overall reduction in the state effective tax rate. The Company expects to file historical tax returns in states the vessels have had nexus and amended returns in Pennsylvania during 2018. AMSC has booked the appropriate tax expenses, as well as deferred tax assets and liabilities, in those states where the Company has nexus.

See note 5 in the consolidated accounts for further information.

RISKS Counterparty risk and charter renewal risk

The risks facing AMSC principally relate to the operational and financial performance of OSG and from OSG's operation of our vessels, re-chartering risk as well as overall Jones Act market risk.

Since OSG is currently AMSC's only counterparty, AMSC is exposed to OSG's credit risk. As charterer of all of the Company's vessels, OSG continued to service its financial obligations to AMSC in 2017 on time, including USD 3.8 million in payments on the DPO receivable. The fixed bareboat charter period for nine of the vessels expires in December 2019, with the tenth expiring in June 2025. OSG has until December 2018 to declare its extension options on the nine vessels expiring in December 2019. Subsequently, OSG has options to renew the bareboat charters for the life of the vessels under terms that are similar to the existing arrangements.

Although there is a risk that OSG may not declare some or all of its options to extend the bareboat charters upon expiry of the fixed period, the Board's principal assumption is that OSG will continue to employ our vessels going forward.

However, in the event that one or several of the extension options are not declared, AMSC will seek to re-charter the relevant vessel(s) to other Jones Act operators or directly to end users in the Jones Act tanker trade.

AMSC continues to closely monitor its employment and counterparty 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.

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. Following the

successful bond refinancing earlier in 2017, no debt maturities are due before Q4 2020. The majority of the bank debt matures in Q4 2020 with the remaining approximately 20% maturing in 2025. The bond matures in February 2022.

Through the vessel financing, 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 409.8 million as of 31 December 2017).

AMSC is subject to financial covenants under the secured bank loans relating to minimum liquidity and collateral, and leverage and debt service ratios. AMSC is subject to financial covenants under the bond related to minimum liquidity and maximum leverage. AMSC was in compliance with all of its debt covenants as of 31 December 2017.

THE GOING CONCERN ASSUMPTION

In view of AMSC's financial position, the Board confirms the going concern assumptions and that the 2017 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 ("AMSC ASA") shows a profit for the year 2017 of USD 3.0 million, due to lower interest expenses and gains on its investment in PTAS. AMSC ASA is the Norwegian parent company owning 100% of the U.S. subsidiaries and owning the 19.6% share of Philly Tankers. The most significant transaction for the parent company during 2017 was the refinancing of the bond loan.

The Board of Directors proposes that the profit for the year be allocated as shown below:

Dividend payments	USD 22.1 million
Transferred from
share premium	(USD 22.1 million)
Transferred to
other equity	USD 3.0 million
Total allocated	USD 3.0 million

The Board of Directors was granted authorization to pay dividends based on the Company's annual accounts for 2016 at the Annual General Meeting in 2017, which is valid up to the Company's Annual General Meeting in 2018 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 0.08 per share (USD 4.8 million in aggregate) on 13 February 2018. The dividend was paid on 1 March 2018.

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. 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 73 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.

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	Audun Stensvold

Further description of the Board Members is on page 12.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the Norwegian Accounting Act §3-3, section c, the Board has assessed AMSC's 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. OSG is one of the largest ship operators in the U.S. Jones Act and OSG has a commitment to meeting and exceeding environmental regulations and social responsibility and safety 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 2017.

The Company has three full time employees who are senior executives who work in offices in the United States and Norway. 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 2017, 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.

The U.S. Jones Act tanker market remained soft in 2017 compared to the strong markets seen during 2013-15. However towards the end of 2017 there were signs of market recovery. On the back of increased oil prices (Brent spot moving from ~USD 57 at the beginning of 2017 to ~USD 67 per barrel at year-end), U.S. shale oil production increased substantially during 2017. Additional pipeline capacity allowed previous landlocked oil to be accessible at the U.S. Gulf coast where crude was exported on international tankers or transported to domestic refining centers by Jones Act tankers. Moreover, during the second half of 2017 the price spread between U.S. crude oil available for shipment in the U.S. Gulf and its foreign equivalents, most notably Bonny Light and Brent widened. The discounted U.S. domestic crude incentivizes U.S. Northeast refiners to shift their crude oil purchasing patterns toward domestic crude sourced in the U.S. Gulf as opposed to foreign crudes. Increased demand for shale oil from U.S. Northeast refiners removes capacity from the intra gulf crude and clean trades to the much longer U.S. Gulf to the U.S. Northeast route which leads to an upward pressure on vessel charter rates.

The clean product trade, which is mainly clean cargoes carried from the U.S. Gulf refining areas into the state of Florida, has shown encouraging signs of increased demand during 2017. In addition, the cold weather in the U.S. Northeast led to numerous vessels being deployed on longer distance voyages from the U.S. Gulf to terminals in the Philadelphia and New York areas towards the end of 2017. Since the main arteries for clean products to the U.S. Northeast (the Colonial and Plantation pipelines) are reportedly running at full or

near-full capacity, incremental demand for clean products is primarily met by foreign imports or domestically refined products delivered by Jones Act tankers from the U.S. Gulf.

Two tankers exited the fleet in 2016 followed by four ATBs in 2017, including one ATB that suffered an explosion. The latter incident is likely to increase scrutiny of other older assets and potentially increase the pace at which older assets will be removed from the fleet going forward. The commercial viability of operating older assets is diminishing as they are unable to obtain long-term employment following the completion of their current time charters and must undergo upcoming expensive dry dockings. Given the relatively small size of the Jones Act tanker and ATB fleet, small levels of supply contraction can have a disproportionate effect on the rate environment. There have been no new orders for Jones Act tankers and there are no tankers and

only two ATBs left in the orderbook for delivery during 2018. The trend towards scrapping older tankers and ATBs is expected to continue during 2018.

Although the Jones Act tanker market was soft for most of 2017, the Company expects that a combination of the factors described above – namely, increased shale production, rising Northeast consumption of domestic crude, and accelerated vessels scrapping – may improve the supply and demand balance and thereby increase vessel utilization and drive charter rates to stronger levels during 2018. As previously mentioned, the fixed bareboat charter period for nine of the vessels expires in December 2019, with notice on the extension options due from OSG in December 2018. In the event that one or several of the extension options are not declared, AMSC will seek to re-charter the relevant vessel(s) to other Jones Act operators or directly to end users in the Jones Act tanker trade.

Following a successful refinancing earlier in 2017 and no debt maturities due until Q4 2020, AMSC has shifted its focus to further develop growth opportunities going forward. As a Jones Act tonnage provider, the Company is in a unique position to capitalize on select opportunities within the Jones Act segment. Any expansion would aim to diversify the fleet composition, market exposure, and customer base as well as provide accretion for shareholders.

Lysaker, 14 March 2018 The Board of Directors American Shipping Company ASA

Annette Malm Justad Peter D. Knudsen Audun Stensvold

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 2017 (Annual Report 2017).

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 2017. 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 2017.

To the best of our knowledge:

The consolidated and parent annual financial statements for 2017 have been prepared in accordance with the applicable accounting standards.

Lysaker, 14 March 2018 The Board of Directors American Shipping Company ASA

Annette Malm Justad Peter D. Knudsen Audun Stensvold Chairman Board Member Board Member

Pål Magnussen President/CEO

The consolidated and parent annual financial statements give a true and fair view of the assets, liabilities, financial position and profit as a whole as of and for the year ended 31 December 2017 for the group and the parent company.

The Board of Directors' Report for the group and the parent company includes a

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

true and fair review of:

face

	ANNUAL ACCOUNTS
GROUP

AMERICAN SHIPPING COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION	22
CONSOLIDATED INCOME STATEMENT	23
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	24
CONSOLIDATED CASH FLOW STATEMENT	25

NOTES TO THE CONSOLIDATED ACCOUNTS 26

NOTE 1:	ACCOUNTING PRINCIPLES	26
NOTE 2:	WAGES AND OTHER PERSONNEL EXPENSES	30
NOTE 3:	OTHER OPERATING EXPENSES	31
NOTE 4:	FINANCIAL ITEMS	31
NOTE 5:	TAX	32
NOTE 6:	PROPERTY, PLANT AND EQUIPMENT	35
NOTE 7:	INTEREST-BEARING LONG-TERM RECEIVABLES	36
NOTE 8:	OTHER RECEIVABLES	36
NOTE 9:	DERIVATIVE FINANCIAL ASSETS AND LIABILITIES	37
	NOTE 10: EARNINGS PER SHARE	37
	NOTE 11: PAID IN CAPITAL	38
	NOTE 12: SUBSIDIARIES AND ASSOCIATES	38
	NOTE 13: INTEREST-BEARING LOANS AND LIABILITIES	40
	NOTE 14: OPERATING LEASES	42
	NOTE 15: DEFERRED REVENUES AND OTHER PAYABLES	42
	NOTE 16: FINANCIAL INSTRUMENTS	43
	NOTE 17: SHARES OWNED OR CONTROLLED	48
	NOTE 18: TRANSACTIONS AND AGREEMENTS WITH
	RELATED PARTIES	50
	NOTE 19: AGREEMENTS WITH OSG	50
	NOTE 20: EVENTS AFTER THE BALANCE SHEET DATE	51

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		31. Dec.	31. Dec.
Amounts in USD thousands	Note	2017	2016

ASSETS
Property, plant and equipment	6	745 636	779 490
Interest-bearing long-term receivables	7	28 681	30 625
Derivative financial assets	9	1 647	-
Equity accounted investees	12	16 686	27 559
Total non-current assets		792 650	837 674
Other receivables	8	210	307
Tax receivable		-	12
Cash held for specified uses		2 321	2 347
Cash and cash equivalents		51 948	49 046
Total current assets		54 479	51 712
Total assets		847 129	889 386
EQUITY AND LIABILITIES
Share capital and share premium	11	244 422	266 485
Accumulated deficit		(57 550)	(70 843)
Total equity attributable to equity holders of the parent		186 872	195 642
Total equity		186 872	195 642
Interest-bearing loans	13	600 067	636 034
Deferred tax liabilites	5	11 613	17 440
Derivative financial liabilities	9	-	57
Total non-current liabilities		611 680	653 531
Interest-bearing loans	13	28 333	28 333
Deferred revenue s and other payables	15	18 814	11 880
Tax payable	5	1 430	-
Total current liabilites		48 577	40 213
Total liabilites		660 257	693 744
Total equity and liabilities		847 129	889 386

Lysaker, 14 March 2018 The Board of Directors American Shipping Company ASA Annette Malm Justad Peter D. Knudsen Audun Stensvold Pål Magnussen

Chairman Board Member Board Member President/CEO

ANNUAL REPORT 2017 - 22

CONSOLIDATED INCOME STATEMENT

Amounts in USD thousands	Note	2017	2016
Operating revenues		87 801	88 042
Wages and other personnel expenses	2	(1 140)	(1 131)
Other operating expenses	3	(1 828)	(1 791)
Operating profit before depreciation		84 833	85 120
Depreciation	6	(33 854)	(34 336)
Operating profit		50 979	50 784
Net income from equity accounted investees	4	4 180	2 668
Financial income	4	3 823	2 711
Financial expenses	4	(47 973)	(39 121)
Income before income tax		11 010	17 042
Income tax (expense) / benefit	5	2 299	(9 932)
Net income for the year *)		13 308	7 110

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Amounts in USD thousands (except per share)	Note	2017	2016
Net income for the year		13 308	7 110
Other comprehensive income for the period, net of tax		-	-
Total comprehensive income for the year *)		13 308	7 110
Basic and diluted earnings per share	10	0.22	0.12

*) Applicable to common shareholders of the parent company.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Amounts in USD thousands	Note	Share Capital	Share Premium	Accum. deficit	Total equity
Restated balance at 31 December 2015		96 366	198 006	(77 943)	216 429
Total comprehensive income for the year		-	-	7 110	7 110
Repurchase of treasury shares		-	-	(43)	(43)
Proceeds from sale of treasury shares		-	-	33	33
Dividends paid / return of capital	11	-	(27 887)	-	(27 887)
Balance at 31 December 2016		96 366	170 119	(70 843)	195 642
Total comprehensive income for the year		-	-	13 308	13 308
Repurchase of treasury shares		-	-	(82)	(82)
Proceeds from sale of treasury shares		-	-	67	67
Dividends paid / return of capital	11	-	(22 063)	-	(22 063)
Balance at 31 December 2017		96 366	148 056	(57 551)	186 871

CONSOLIDATED CASH FLOW STATEMENT

Amounts in USD thousands	Note	2017	2016
Net income before taxes		11 010	17 040
Non-cash profit according to equity method and other non-cash items		1 426	1 959
Unrealized (gain) interest swaps	9	(1 704)	(688)
Net interest expense	4	42 827	35 316
Depreciation	6	33 854	34 336
(Increase)/decrease in:
Other current assets	8	(379)	(322)
Other long-term operating assets	7	1 944	1 944
Increase/(decrease) in:
Accrued liabilities and other payables	15	(6 459)	(2 351)
Interest paid	4	(33 640)	(32 537)
Interest received	4	2 120	2 023
Net cash flow from operating activities		50 999	56 720
Distributions received from equity accounted investee	12	15 056	-
Net cash flow used in investing activities		15 056	-
Repayment of interest bearing loans	13	(257 416)	(10 097)
Loan fees paid	13	(3 685)	(610)
Proceeds from interest bearing debt	13	220 000	-
Repurchase of treasury shares		(82)	(43)
Proceeds from sale of treasury shares		67	33
Dividends paid / return of capital	11	(22 063)	(27 887)
Net cash flow from financing activities		(63 179)	(38 605)
Net change in cash and cash equivalents		2 876	18 115
Cash and cash equivalents, including cash for specified uses as of 1 January		51 393	33 278
Cash and cash equivalents, including cash for specified uses as of 31 December		54 269	51 393

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 2018 for adoption by the General Meeting on 25 April 2018.

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 over which AMSC Group has control. 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 in the statement of financial position 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 non-current 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 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 end of the reporting period.

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, carry-forward 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 carry-forward 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 end of the reporting period.

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 the end of reporting period 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 based on broker quotes, 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. Lease revenues related to fixed term vessel bareboat charter agreements are recognized straight line over the charter period. Revenue related to profit sharing agreements (see note 19) is recognized when the amount becomes fixed and determinable.

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 15:

IFRS 15 Revenue from Contracts with Customers establishes 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. The new standard will, however, not replace the existing guidance related to lease contracts within the scope of IAS 17. IFRS 15 is effective for annual periods beginning on or after 1 January 2018. The new standard is not expected to have significant impact on the financial statements of American Shipping Company. The Group will implement IFRS 15 according to the cumulative retrospective method, to contracts that are not completed contracts at 1 January 2018. Comparable figures for 2017 will not be restated. However, the Group's assessment is that it would not have had significant effects on the 2017 comparative figures, and does not expect any effect on equity 1 January 2018.

IFRS 16:

IFRS 16 Leases is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted. IFRS 16 replaces the existing guidance in IAS 17 Leases. IFRS 16 eliminates the current dual accounting model for lessees and will establish a single on-balance sheet-accounting model that is similar to the current finance lease accounting under IAS 17.

Due to the fact that American Shipping Company is primarily a lessor and lessor accounting under IFRS 16 to a large extent remains similar to current practice, the adoption of the new standard is not expected to have significant impact on the financial statements of American Shipping Company.

IFRS 9 Financial Instruments (effective from 1 January 2018)

The standard will replace IAS 39 Financial Instruments Recognition and Measurement. The standard includes revised guidance on classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets. The standard also introduces new general hedge accounting requirements, however AMSC does not apply hedge accounting to forward interest rate swaps held.

• Classification – Financial assets

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. The standard contains three principal classification categories: measured at amortized costs, Fair value to Other Comprehensive Income (FVOCI) and Fair value to Profit and Loss (FVTPL).

Based on its assessment and the nature of financial assets held by AMSC, the Company expects the current classifications of the financial instruments held as at 31 December 2017 will not have a significant impact on the consolidated financial statements as of 1 January 2018.

• Impairment – Financial assets and contract assets

IFRS 9 replaces the "incurred loss" model in IAS 39 with a forward-looking "expected credit loss" (ECL) model. The new impairment model will apply to financial assets measured at amortized cost or FVOCI and contract assets, except for equity instruments. Under IFRS 9, loss allowance will be measured based on either "12-month ECLs" or "lifetime ECLs". The Company will apply the simplified approach and apply "lifetime ECLs" for all trade receivables and contract assets. Based on the Company's assessment, no significant changes in loss allowance are deemed necessary in order to satisfy the impairment requirement under IFRS 9. The Company does not expect significant impact on the consolidated

The transition to IFRS 9 will generally be applied retrospectively, with the following exemptions:

financial statements from the adoption of the new impairment model.

The Company will adopt the exemption allowing it not to restate comparative information for prior years with respect to classification and measurement changes, including impairment measurement. Any impact from the adoption of IFRS 9 will be recognized as an adjustment to the opening balance of the equity as of 1 January 2018.
IFRS 9 is not applied to financial assets or financial liabilities that have been derecognized at the initial application on 1 January 2018.

NOTE 2: WAGES AND OTHER PERSONNEL EXPENSES

Wages and other personnel expenses consist of:

Amounts in USD thousands	2017	2016

Wages and bonuses	976	965
Social security contributions	119	128
Pension costs	19	21
Other expenses	26	17
Total expense	1 140	1 131
Average number of employees	3	3
Number of employees at year-end	3	3

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	2017	2016

Rent and leasing expenses	72	70
Other operating expenses	1 756	1 721
Total other operating expenses	1 828	1 791

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 2017 and 2016 included only ordinary audit fees, other assurance services and tax services and were as follows:

Ordinary audit fee	100	84
Other assurance services	9	6
Tax services	47	86
Total	156	176

NOTE 4: FINANCIAL ITEMS

Amounts in USD thousands	2017	2016
Net income from equity accounted investee	4 180	2 668
Financial income
Interest income	2 120	2 023
Change in mark to market value of interest rate swaps	1 703	688
Financial income	3 823	2 711
Financial expenses
Interest expense	(44 947)	(37 339)
Net foreign exchange gain/(loss)	58	121
Other financial expenses	(3 084)	(1 903)
Financial expenses	(47 973)	(39 121)
NET FINANCIAL ITEMS	(39 970)	(33 742)

Interest income in 2017 includes interest received from Overseas Shipholding Group ("OSG") of USD 1.8 million on the DPO receivable (see note 7) and interest earned on bank deposits of USD 0.3 million. Interest income in 2016 includes interest received from Overseas Shipholding Group ("OSG") of USD 2.0 million on the DPO receivable.

NOTE 4: FINANCIAL ITEMS (CONTINUED)

The Company has interest rate swaps, related to a portion of its vessel debt financing, with BNP Paribas ("BNP"), Credit Agricole Corporate & Investment Bank ("CACIB") and Skandinaviska Enskilda Banken AB ("SEB"). 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.

Net income from equity accounted investees in 2017 reflects the Company's 19.6% share of net income of Philly Tankers AS ("PTAS") under the equity method totaling USD 7.1 million (related to the sale of the final three vessel contracts and related assets by PTAS to Kinder Morgan). In addition, AMSC recognized a USD 2.9 million write-down in 2017 as a result of the difference between the initial equity investment booked at cost and subsequent capital distributions from PTAS (refer to note 12 for further information).

Net income from equity accounted investees in 2016 reflects the Company's 19.6% share of net income of PTAS related to the sale of the first vessel contract.

Interest expense in 2017 includes interest paid of USD 31.4 million, a USD 2.2 million premium paid on the prepayment of the previous bond in February 2017 and USD 2.6 million non-cash write-off of the unamortized bond discount. Interest expense in 2016 includes interest paid of USD 32.5 million.

Net foreign exchange gain in 2017 and 2016 relates to the translation of cash held in NOK into USD.

Other financial expenses in 2017 and 2016 relate to amortization of loan fees of USD 2.6 million and USD 1.9 million, respectively.

NOTE 5: TAX

INCOME TAX EXPENSE

Recognized in the income statement:

Amounts in USD thousands	2017	2016
Current tax expense/(benefit):
Current year	3 528	-
Total current tax expense/(benefit)	3 528	-

Deferred tax expense/(benefit):
Origination and reversal of temporary differences	(5 827)	9 932
Total deferred tax expense/(benefit)	(5 827)	9 932
Total income tax expense/(benefit) in income statement	(2 299)	9 932

NOTE 5: TAX (CONTINUED)

Reconciliation of effective tax rate:

Amounts in USD thousands	2017	2016

Profit/(loss) before tax	11 010	17 043
Expected tax expense/(benefit) using nominal Norwegian tax rate of 24% / 25%	2 642	4 261

Effect of differences between nominal Norwegian tax rate and U.S. federal
and state tax rate	955	3 873
Franchise taxes	867	-
Foreign exchange	17 094	1 350
Tax losses for which no deferred income tax asset was recognised, net of
benefit recognized	103	1 170
Utilization of Norwegian tax losses for which no deferred tax asset was
previously booked	(14 858)	-
U.S. federal and state tax benefit of change in effective rates	(8 204)	-
Other differences	(898)	(720)
Total income tax expense/(benefit) in income statement	(2 299)	9 932

The foreign exchange difference arises as the Company's functional currency is USD, whilst the tax calculation in Norway is performed based on the accounts in NOK. As such, the tax calculation for the Company is in NOK, but presented in USD. In addition, there is a foreign exchange component of the Norwegian operating losses carried forward.

In December 2017, the U.S. passed federal tax reform legislation effective from 2018 which is expected to impact AMSC in several ways. The federal tax rate was reduced from 35% to 21%. The Company is required to revalue its net deferred tax liability based on the new lower tax rate, and it recognized a one-time non-cash tax benefit of USD 5.8 million in 2017 related to the revaluation. The legislation also includes limitations on the use of net operating losses in carryforward. Losses generated in 2018 and after can offset only 80% of taxable income. AMSC's current NOLs would not be subject to such limitations. Beginning in 2018 through 2021, the deduction for interest expense will be limited to 30% of EBITDA. Starting in 2022, interest deductions may not exceed 30% of EBIT. Disallowed interest deductions can generally be carried forward indefinitely. This limitation could restrict the amount of AMSC's interest costs to reduce taxable income in certain years.

INCOME TAX EXPENSE

During 2017, AMSC recognized income tax expense of USD 2.7 million relating to its share of the income from its investment in PTAS (0 in 2016) and income tax expense of USD 0.9 million in state franchise taxes (0 in 2016).

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 2017 for the Group was primarily Norway, the U.S., and other local states in the U.S. where the vessels operate.

NOTE 5: TAX (CONTINUED)

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

United States
Amounts in USD thousands	2017	2016

Net operating losses	129 696	216 940
Financial derivatives	(386)	24
Vessels	(147 023)	(241 537)
Other	6 100	7 133
Net deferred tax assets/(liabilities)	(11 613)	(17 440)
Net deferred tax assets not recorded	-	-
Net deferred tax assets/(liabilities)	(11 613)	(17 440)

The Group has federal tax losses carryforward as of 31 December 2017 of USD 567.1 million in the U.S., the last of which expires in 2037.

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 in carryforward as of that date are subject to annual limitations. The NOLs subject to limitations totaled USD 381.3 million.

Based on the IRC 382 limits, AMSC expects to be able to utilize USD 45.6 million in 2018 and USD 12.6 million per year from 2019-2033 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. Therefore, USD 146.1 million of the total IRC 382 losses of USD 381.3 million NOLs have not been used through 31 December 2017 and are carried forward.

The Group's U.S. Federal tax losses in carryforward are comprised of the remaining IRC 382 limited NOLs of USD 235.2 million and the losses through 31 December 2017 of USD 331.9 million. There are no restrictions on the use of the USD 331.9 million net operating loss, the last of which expires in 2037.

In 2017, the Company recognized a deferred tax benefit of USD 4.1 million (USD 8.1 million expense in 2016) related to U.S. Federal income taxes. Of that amount, a one-time benefit of USD 5.8 million was a result of the lower U.S. federal tax rate from 35% to 21%.

In 2017, the Company recognized a deferred tax benefit of USD 1.7 million (USD 1.8 million expense in 2016) related to income taxes in the states where the vessels have operated. The tax benefit is mainly due to the reduction in the state effective tax rate due to the apportionment of income and losses to multiple states.

Norway
Amounts in USD thousands	2017	2016

Operating losses	27 448	26 928
Net deferred tax assets/(liabilities)	27 448	26 928
Net deferred tax assets not recorded	(27 448)	(26 928)
Net deferred tax assets/(liabilities)	-	-

The Group has net operating losses in carryforward as of 31 December 2017 of USD 119.3 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 2017 are shown below:

Amounts in USD thousands	Ships
Cost balance at 1 January 2017	1 076 563
Cost balance at 31 December 2017	1 076 563
Depreciation at 1 January 2017	297 073
Depreciation charge for the year	33 854
Depreciation at 31 December 2017	330 927
Book value at 31 December 2017	745 636
Movements in property, plant and equipment for 2016 are shown below:
Amounts in USD thousands	Ships
Cost balance at 1 January 2016	1 076 563
Cost balance at 31 December 2016	1 076 563
Depreciation at 1 January 2016	262 737
Depreciation charge for the year	34 336
Depreciation at 31 December 2016	297 073
Book value at 31 December 2016	779 490
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 400 per ton (2016: USD 310) less estimated costs of disposal.

SECURED PROPERTY, PLANT AND EQUIPMENT

At 31 December 2017 vessels with a carrying amount of USD 745.6 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 2017 or 2016.

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"). The DCF assumes that OSG renews the lease terms under their extension options for the remaining useful lives of the vessels under similar conditions as the fixed lease term.

NOTE 7: INTEREST-BEARING LONG-TERM RECEIVABLES

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

Amounts in USD thousands	2017	2016
Balance at beginning of period	30 625	32 569
DPO revenue	-	-
Repayments of principal	(1 944)	(1 944)
Interest accreted	-	-
Balance at end of period	28 681	30 625

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 2017 and 2016, OSG made 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	2017	2016

Prepaid fees / withheld taxes	210	307
Total	210	307

NOTE 9: DERIVATIVE FINANCIAL ASSETS AND LIABILITIES

Derivative financial assets and liabilities comprise the following items:

Amounts in USD thousands	2017	2016

Fair value of interest rate swaps	1 647	-
Derivative financial assets	1 647	-

Fair value of interest rate swaps	-	57
Derivative financial liabilities	-	57

Under the BNP loan facility, the Company entered into interest rate swaps for USD 300 million of the principal amount of the loan. As of 31 December 2017 and 2016 the market value of derivative financial instruments was positive USD 1.6 million and negative USD 57 thousand, respectively. The fair value of the interest swaps is based on broker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments. 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 negative impact of USD 27 thousand and positive USD 1 thousand on the fair value of interest rate swaps at 31 December 2017 and 2016, 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 data)	2017	2016
Profit/(loss) attributable to equity holders of the Company for the period for determination of earnings per share	13 308	7 110
Weighted average number of ordinary shares in issue	60 616 505	60 616 505
Basic and diluted earnings per share	0.22	0.12

NOTE 11: PAID IN CAPITAL

The issued share capital of AMSC as of 31 December 2017 is 60,616,505 ordinary shares, each with a par value of NOK 10, fully paid. No common shares were issued in 2017. The Annual General Meeting (AGM) in 2017 granted an authorization to the Board to purchase 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. These authorizations are valid up to the AGM in 2018.

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 2016	96 366	198 006	294 372
Dividends paid / return of capital	-	(27 887)	(27 887)
31 December 2016	96 366	170 119	266 485
Dividends paid / return of capital	-	(22 063)	(22 063)
31 December 2017	96 366	148 056	244 422

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.

2017	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%. The unsecured bond is issued by ATI. 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.

NOTE 12: SUBSIDIARIES AND ASSOCIATES (CONTINUED)

ASSOCIATES Philly Tankers AS

In 2014, AMSC made an equity investment of USD 25 million in Philly Tankers AS ("PTAS") and owns 19.6% of the Oslo, Norway based company. Philly Tankers was formed in Q3 2014 and is registered on the Norwegian OTC market. Philly Tankers ordered four 50,000 dwt product tankers from Philly Shipyard ("PHLY", formerly Aker Philadelphia Shipyard) which were delivered and sold 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.

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

As a result of the sale to Kinder Morgan, PTAS has distributed excess cash to its shareholders following delivery of each vessel. During 2017, AMSC received distributions from PTAS of USD 12.5 million net of tax (USD 15.1 million before tax). During 2018, PTAS will initiate steps to liquidate the company and then distribute its remaining available cash to its shareholders. AMSC will receive its pro-rata share of the dividends and liquidation proceeds, expected to be approximately USD 16 million net of tax. AMSC will use the proceeds to repay the loan from Aker ASA, approximately USD 10 million in principal and accrued interest. In total, AMSC expects to receive USD 28.5 million in gross after tax proceeds from the initial USD 25 million investment in PTAS.

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

Amounts in USD thousands	2017	2016
Non-current assets	-	68 590
Current assets	85 715	57 863
Non-current liabilities	-	-
Current liabilities	(581)	(690)
Net assets	85 134	125 763
Group's share of net assets (19.6%)	16 686	24 649
Excess of AMSC's investment over its share of equity in associates	-	2 910
Carrying amount of interest in associate	16 686	27 559
Net profit of Philly Tankers AS consolidated	36 166	11 596

The following table shows the reconciliation between the opening and closing balance of equity accounted investees:

2017	2016
27 559	24 874
7 089	2 685
(15 056)	-
(2 906)	-
16 686	27 559

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	2017	2016
Non-current liabilities
Secured loans	376 653	403 251
Unsecured bond issues	216 743	212 783
Subordinated loan from Aker ASA	6 671	20 000
Total long term interest bearing loans	600 067	636 034
Current liabilities
Current portion of secured loans	28 333	28 333
Total interest-bearing short term debt	28 333	28 333

Summary of secured loans as of 31 December	2017	2016

BNP Paribas gross borrowings	278 561	298 717
CIT Bank gross borrowings	131 250	139 583
Less unamortized loan fees	(4 825)	(6 715)
Total secured loans	404 986	431 585

The secured loans are structured in two separate facilities; one being a USD 300 million initial facility secured by eight vessels with a syndicate of banks with BNP Paribas as agent, and the other an initial 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. The loans have been repaid to USD 278.5 million and USD 131.3 million, respectively, at year-end 2017.

The Company entered into mandatory five year interest rate swaps in December 2015 at an average rate of 164 bps for USD 210 million of the debt. During 2016, the Company entered into four year interest rate swaps at an average rate of 93 bps for USD 90 million of the debt. The average margin on the secured vessel debt is 325 bps.

Unsecured bond issue as of 31 December Maturity 2017 2016 Bond balance at beginning of period 2022 212 783 210 370



	New bond raised	220 000	-
Repayment of old bond (215 598) -
Plus write-off of discount 2 815 2 413
Less unamortized loan fees (3 257) -
Total unsecured bond issue 216 743 212 783

NOTE 13: INTEREST-BEARING LOANS AND LIABILITIES (CONTINUED)

On 9 February 2017, American Tanker, Inc. ("ATI"), a fully owned subsidiary of AMSC, completed the successful placement of a five year USD 220 million senior unsecured bond. The bond was widely placed to investors in the U.S., U.K., and Nordic region. Ocean Yield, a subsidiary of Aker ASA, was allocated 22.7% of the new bond. Settlement was on 22 February 2017, with final maturity date on 22 February 2022. The bond has a fixed coupon of 9.25%. On 14 June 2017, ATI listed the USD 220 million unsecured bonds on the Oslo Stock Exchange under the ticker AMTI01.

The net proceeds from the bond were used to refinance the previous bond which had a maturity in February 2018.

Subordinated loan from Aker ASA	Maturity	2017	2016
Principal amount	2021	6 671	20 000
Total Subordinated Loan		6 671	20 000

As part of the bank debt refinancing in 2015, 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.

During 2017, AMSC paid USD 13.3 million towards the Aker loan from proceeds received from Philly Tankers.

The following table shows the reconciliation between the opening and closing balance of interest-bearing loans:

	2017	2016

Balance at beginning of period	664 367	670 777

Repayment of debt	(257 415)	(10 097)
Payment of loan fees	(3 685)	(610)
Issuance of debt	220 000	-
Amortization of loan fees and discount	5 133	4 297

Balance at end of period	628 400	664 367

RESTRICTIONS ON DIVIDEND PAYMENTS

Subject to certain exceptions, as of 31 December 2017, 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. Beginning in 2019, dividends may be paid only if all ships remain on bareboat charter contract.

FINANCIAL COVENANTS

AMSC was in compliance with all of its debt covenants as of 31 December 2017.

NOTE 14: OPERATING LEASES

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

Amounts in USD thousands	2017	2016
Less than one year	87 801	87 801
Between one and five years	115 256	193 913
More than five years	22 846	31 989
Total	225 903	313 703

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. The non-cancellable bareboat charter revenue backlog totals approximately USD 225.9 million as of 31 December 2017. 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. The extension options must be exercised 12 months prior to the expiration date.

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

Amounts in USD thousands	2017	2016

Less than one year	45	44
Between one and five years	61	15
More than five years	-	-
Total	106	59

In 2017, AMSC extended the lease for the Kennett Square office by two years to April 2020.

NOTE 15: DEFERRED REVENUES AND OTHER PAYABLES

Trade and other payables comprise the following items:

Amounts in USD thousands	2017	2016
Trade accounts payable	18	206
Accrual of financial costs	10 810	3 729
Other short-term interest free liabilities	7 986	7 945
Total	18 814	11 880

Financial costs include interest accrued but unpaid on the unsecured bond issue and subordinated Aker loan. Other short-term interest free liabilities at 31 December 2017 and 2016 include deferred revenue from OSG of USD 7.5 million because OSG makes monthly lease payments in advance and other accrued costs of USD 0.5 million (USD 0.4 million at 31 December 2016).

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. The Company entered into mandatory five year interest rate swaps in December 2015 for a portion of the secured bank debt.

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	2017	2016

Loans and receivables	28 891	30 932
Cash and cash equivalents	51 948	49 046
Cash held for specified uses	2 321	2 347
Total	83 160	82 325

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	2017	2016
Type of counterparty:
End-user customer *)	28 681	30 625
Other receivables	210	307
Total	28 891	30 932

*) 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.

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

31. December 2017 Amounts in USD thousands	Book value	Contract. 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)	220 000	(308 800)	(10 175)	(10 175)		(20 350) (268 100)	-
Long-term interest bearing external liabilities (gross)	416 482	(494 461)	(23 882)	(23 845)	(48 838)	(334 714)	(63 182)
Total as of 31 December 2017	636 482	(803 261)	(34 057)	(34 020)		(69 188) (602 814)	(63 182)

31. December 2016 Amounts in USD thousands	Book value	Contract. 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)	212 783	(233 196)	(7 512)	(7 637)	(218 047)	-	-
Long-term interest bearing external liabilities (gross)	458 300	(559 477)	(23 285)	(23 555)	(47 539)	(393 194)	(71 903)
Derivative financial liabilities
Interest rate swaps	57	(1 400)	(610)	(316)	(299)	(175)	-
Total as of 31 December 2016	671 140	(794 073)	(31 407)	(31 508)	(265 885) (393 369)		(71 903)

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.

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 2017 or 31 December 2016.

Exposure to currency risk

The company's exposure to currency risk at 31 December 2017 and 2016 primarily related to amounts denominated in NOK, as follows:

Amounts in USD thousands	2017	2016

Gross balance sheet exposure
Trade payables (-)	(11)	(22)
Cash	18	301
Gross balance sheet exposure	7	279
Estimated forecast expenses (-)	(2 345)	(2 275)
Gross forecasted exposure	(2 345)	(2 275)
Forward exchange contracts	-	-
Net exposure	(2 338)	(1 996)

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 had an immaterial impact on the Group's earnings before tax for the years ended 31 December 2017 and 2016. This analysis assumes that all other variables remain constant.

Exposure to interest rate risk

The Group is exposed to fluctuations in interest rates for its variable interest rate debt related to the bank financing. With regards to the BNP financing, the Group has entered into interest swap agreements to lock in the interest rate paid. The bond issued in 2017 has a fixed interest rate.

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	2017	2016
Increase/(decrease)
Bank deposits	513	443
Financial liabilities	(7 546)	(3 664)
Interest swap	5 560	6 925
P&L sensitivity (net)	(1 473)	3 704

For 2017 and 2016, estimates of the interest swap valuation following the change in interest rates are based on broker quotes, 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 2017 and 2016, 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 2017, the unsecured bond was listed on the Oslo stock exchange and therefore transferred from level 3 to level 2.

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 2017 are as follows:

Amounts in USD thousands	Carrying amount 2017	Fair value 2017	Fair value hierarchy	Valuation technique
Interest-bearing receivables from external companies, maturity greater than 3 years	28 681	23 343	3	Discounted cash flows at 10%
Interest swap used for economic hedging:
Assets	1 647	1 647	2	Market comparison from a third party
Unsecured bonds (gross)	(220 000)	(215 188)	2	OSE trading price at year-end
Secured loans (gross)	(409 811)	(411 793)	2	Discounted cash flows at 4.0%
Subordinated loans (gross)	(6 671)	(8 665)	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 2016 are as follows:

Amounts in USD thousands	Carrying amount 2016	Fair value 2016	Fair value hierarchy	Valuation technique
Interest-bearing receivables from external companies, maturity greater than 3 years	30 625	24 699	3	Discounted cash flows at 10%
Interest swap used for economic hedging:
Liabilities	(57)	(57)	2	Market comparison from a third party
Unsecured bonds (gross)	(212 783)	(206 965)	3	Discounted cash flows at 10%
Secured loans (gross)	(438 300)	(454 613)	2	Discounted cash flows at 4.0%
Subordinated loans (gross)	(20 000)	(19 775)	2	Discounted cash flows at 10.25%

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 2017

Name	Position	Company	No. of shares

Pål Magnussen	President and CEO	AMSC	50 000
Morten Bakke	CFO	AMSC	25 000
Annette Malm Justad	Chairman of the Board	AMSC	4 523
Peter Knudsen	Board Member	AMSC	2 000

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 2017

Name	Position	Company	Remuneration

Annette Malm Justad	Chairman	AMSC	57 806
Audun Stensvold	Board Member	AMSC	44 613
Peter Knudsen	Board Member	AMSC	44 613
Total Directors' fee			147 032

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 2017.

The Directors' fee for Audun Stensvold has been paid to Aker ASA.

Remuneration to the Nomination Committee

The nomination committee of AMSC has the following members: Arild Støren Frick and Christine Rødseter. Remuneration earned by each member of the committee in 2017 was NOK 33,000 (USD 3,840).

Guidelines for remuneration of Senior Management

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.

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.

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 (CONTINUED)

In 2017, 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 2017.

During 2017, Mr. Magnussen was awarded 350,000 synthetic shares. Under his synthetic share agreement, the total bonus earned during 2017 was USD 123 thousand. In addition, Mr. Magnussen was awarded an additional bonus of USD 37 thousand in 2017. The cap on his salary for 2017 was NOK 7 million. During 2017, Mr. Bakke was awarded 200,000 synthetic shares, resulting in bonus earned of USD 71 thousand. The cap on his salary for 2017 was NOK 4 million. During 2017, Ms. Jaros was awarded 50,000 synthetic shares, resulting in bonus earned of USD 16 thousand. The cap on Ms. Jaros' salary was USD 253 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 2017, Mr. Bakke purchased 25,000 shares through MB Capital AS 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 2017

			Base salary	Bonus	Other Benefits	Pension Contribution	Total (USD)	Severance pay
Pål Magnussen	CEO	Jan. - Dec.	344 231	160 892	4 099	8 492	517 714	6 months
Morten Bakke	CFO	Jan. - Dec.	220 308	70 528	3 079	8 370	302 285	6 months
Leigh Jaros	Controller	Jan. - Dec.	180 048	16 000	2 473	2 007	200 528	6 months

The above amounts reflect salary and bonus earned during 2017, and include Norwegian vacation pay.

Remuneration to Senior Management during 2016

			Base salary	Bonus	Other Benefits	Pension Contribution	Total (USD)	Severance pay
Pål Magnussen	CEO	Jan. - Dec.	301 532	177 828	7 090	9 184	495 634	6 months
Morten Bakke	CFO	Apr. - Dec.	127 087	70 276	2 436	9 174	208 973	6 months
Leigh Jaros	Controller	Jan. - Dec.	174 308	23 123	2 281	1 997	201 709	6 months

The Company had no bonus accrued as of 31 December 2016.

The above amounts reflect cash payments made to senior management during the calendar year 2016.

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.

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. The principal balance as of 31 December 2017 was USD 6.7 million, plus USD 3.3 million in accrued interest.

The Group has service agreements with Aker ASA and Aker US Services, LLC 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.

NOTE 19: AGREEMENTS WITH OSG (CONTINUED)

When drydock expenses are covered, AMSC's portion of the profit share must 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 the OSG credit has been fully reduced to zero, AMSC will receive its 50% of subsequent profits under the formula above in cash and will recognize profit sharing revenue. AMSC's portion of the profit can never be negative on an annual basis. For the full year 2017 the profit share was zero. The calculation of profit sharing for the full year 2017 is shown with aggregated, rounded figures in USD millions below.

AMSC's 50% share of the profit (0 for 2017) is used to reduce the OSG credit. The cumulative balance as of the end of 2017 and 2016 for the OSG credit is shown in the table below and as described above, must be covered prior to AMSC being entitled to receive profit share from OSG:

Beginning balance as of 31 Dec. 2016	Accrued interest	Reduction	Ending balance as of 31 Dec. 2017

			5.4


			Ending balance
as of 31 Dec. 2015	interest	Reduction	as of 31 Dec. 2016

13.8	1.3	(10.2)	4.9
	4.9 Beginning balance	0.5 Accrued	-

NOTE 20: EVENTS AFTER THE BALANCE SHEET DATE

On 13 February 2018, the Board authorized a quarterly dividend payment of USD 0.08 per share (USD 4.8 million in aggregate) to the shareholders of AMSC on record as of 21 February 2018. The dividend was paid on 1 March 2018.

AMERICAN SHIPPING COMPANY

PARENT ANNUAL ACCOUNTS

STATEMENT OF FINANCIAL POSITION	53
INCOME STATEMENT	54
CASH FLOW STATEMENT	55

NOTES TO THE ACCOUNTS 56

NOTE 1:	ACCOUNTING PRINCIPLES	56
NOTE 2:	OTHER OPERATING AND FINANCIAL EXPENSES	57
NOTE 3:	SHARES IN SUBSIDIARIES AND ASSOCIATES	58
NOTE 4:	TAX	60
NOTE 5:	LONG-TERM RECEIVABLES	61
NOTE 6:	TOTAL EQUITY	62
NOTE 7:	OTHER LONG TERM INTEREST-BEARING DEBT	64
NOTE 8:	CASH AND CASH EQUIVALENTS	64
NOTE 9:	SHARES OWNED BY THE BOARD OF DIRECTORS
	AND THE SENIOR MANAGEMENT	64
	NOTE 10: GUARANTEES	65

STATEMENT OF FINANCIAL POSITION

Amounts in USD thousands Note 2017 2016 ASSETS Investment in associates 3 16 686 27 559 Shares in subsidiaries 3 35 932 302 493 Deferred tax asset 4 198 92 Long-term receivable group companies 5 85 663 84 148 Total financial non-current assets 138 479 414 292 Total non-current assets 138 479 414 292 Other short-term receivables 202 1 178 Cash and cash equivalents 8 33 356 2 239 Total current assets 33 558 3 417 Total assets 172 037 417 709 EQUITY AND LIABILITIES Share capital 96 366 96 366 Share premium reserve 143 207 170 119 Total paid in capital 239 573 266 485 Other equity (83 060) (86 060) Total retained earnings (83 060) (86 060) Total equity 6 156 513 180 425 Bond obligation 7 - 212 783 Other interest-bearing debt 7 6 899 20 383 Total long-term liabilities 6 899 233 166 Tax payable 4 92 - Dividend payable 6 4 849 - Other short-term debt 3 684 4 118 Total short-term liabilities 8 625 4 118 Total equity and liabilities 172 037 417 709		31. Dec.	31. Dec.

Lysaker, 14 March 2018 The Board of Directors American Shipping Company ASA

INCOME STATEMENT

Amounts in USD thousands	Note	2017	2016

Operating revenues		60	50
Other operating expenses	2	(1 791)	(1 640)
Operating loss		(1 731)	(1 590)
Interest income from group companies		8 381	8 546
Net income from equity accounted investees	2	4 180	2 668
Other interest and financial income	2	2 963	3 139
Other interest and financial expenses	2 7	(8 223)	(19 170)
Loss after financial items		5 570	(6 407)
Deferred income tax benefit	4	106	92
Income tax expense	4	(2 660)	-
Profit / (loss) for the period		3 016	(6 315)
Allocation of net profit / (loss):
Profit / (loss)		3 016	(6 315)
Other equity	6	(3 016)	6 315
Total		-	-

CASH FLOW STATEMENT

Amounts in USD thousands	Note	2017	2016
Profit / (loss) before tax		5 570	(6 407)
Unrealized foreign exchange (gain)/loss and unpaid interest expense		2 323	(4 048)
Non-cash income from equity accounted investee		(4 183)	(2 686)
Changes in short term receivables		976	(1 096)
Changes in short term liabilities		(4 024)	183
Cash flow from operating activities		662	(14 054)
Changes in long term investments	3 5	281 616	36 989
Cash flow from investing activities		281 616	36 989
Repayment of bond obligation	7	(215 598)	-
Dividends / return of capital paid	6	(22 063)	(27 887)
Repurchase of treasury shares	6	(82)	(43)
Proceeds from sale of treasury shares	6	67	33
Proceeds from / (repayments of) other interest-bearing debt	7	(13 485)	(97)
Cash flow from financial activities		(251 161)	(27 995)
Cash flow for the year		31 117	(5 061)
Cash and cash equivalents 1 January		2 239	7 300
Cash and cash equivalents 31 December		33 356	2 239

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. A write down will be recorded based on the Company's share of the associates' equity value.

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 2017 was 8.21 and the average rate during 2017 was 8.25 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 (24%) 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 short-term 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 40 thousand (without VAT) for ordinary audit was expensed in 2017. For more information on fees paid to KPMG, see note 3 in the consolidated accounts.

The Company has no other employees than the CEO and CFO. See note 17 in the consolidated accounts for more information regarding remuneration to senior management. Board of directors expenses were USD 180 thousand in 2017.

Other interest and financial inome in 2017 includes USD 2.9 million of guaranty fees from its subsidiaries.

Other interest and financial expenses in 2017 includes interest on the bond of USD 2.4 million and one-time refinacing fees of USD 4.8 million, both related to the bond which was fully repaid and extinguished during 2017, and interest expense on the Aker loan of USD 1.0 million.

NOTE 3: SHARES IN SUBSIDIARIES AND ASSOCIATES

This item comprises the following as of 31 December 2017:

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	35 932	35 932
Philly Tankers AS	19.6%	19.6%	Oslo, Norway	19 592	16 686
Total shares				55 524	52 618
		ATHC
Subsidiaries' 2017 results after tax in USD thousands		10 312
Subsidiaries' equity attributable to common shareholders at 31 December 2017 in USD thousands		60 366

American Shipping Company ASA ("AMSC ASA") is the Norwegian parent company and is listed on Oslo Børs. AMSC ASA owns ATHC 100%. 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 2017 or 2016.

During 2017, USD 45.2 million was paid from ATHC to AMSC as a return of capital and corresponding reduction in AMSC's investment in subsidiaries. The funds were used for general corporate purposes, including interest and dividend payments. In addition, AMSC received USD 221.4 million as a repayment of capital from subsidiaries to repay the bond.

ASSOCIATES

Philly Tankers AS

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

NOTE 3: SHARES IN SUBSIDIARIES AND ASSOCIATES (CONTINUED)

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

Amounts in USD thousands	2017	2016

Non-current assets	-	68 590
Current assets	85 715	57 863
Non-current liabilities	-	-
Current liabilities	(581)	(690)
Net assets	85 134	125 763
Group's share of net assets (19.6%)	16 686	24 649
Excess of AMSC's investment over its share of equity in associates	-	2 910
Carrying amount of interest in associate	16 686	27 559
Net profit of Philly Tankers AS	36 166	11 596

The following table shows the reconciliation between the opening and closing balance of investments in associates:

Amounts in USD thousands	2017	2016

Balance at beginning of period	27 559	24 874
Group's share of PTAS profit (19.6%)	7 089	2 685
Distributions from PTAS	(15 056)	-
Write-down initial investment booked at cost	(2 906)	-
Balance at end of period	16 686	27 559

NOTE 4: TAX

The table below shows the difference between book and tax values at the end of 2017 and 2016, and the amounts of deferred taxes at these dates and the change in deferred taxes.

Norwegian tax payable:
Amounts in USD thousands	2017	2016

Profit/(loss) before tax USD accounts in USD	5 570	(6 407)
Difference between NOK and USD accounts	76 902	7 781
Result before tax measured in NOK for taxation purposes	82 472	1 374
Permanent differences	(69 050)	(2 540)
Change in temporary differences	(10 684)	-
Other differences	(4 203)	-
FX effect on opening balance of loss carried forward	(5 675)	(2 382)
Estimated result for tax purposes	(7 141)	(3 548)
Utilization of loss carried forward	-	-
Taxable income / (loss)	(7 141)	(3 548)
Tax payable	-	-

The result before taxes in NOK are different from the result before taxes in USD primarily due to currency exchange differences. The foreign exchange difference arises as the Company's functional currency is USD, whilst the tax calculation in Norway is performed based on the accounts in NOK. As such, the tax calculation for the Company is in NOK, but presented in USD.

Norwegian deferred tax:
Amounts in USD thousands	2017	2016

Operating loss carried forward	119 341	112 200
Deferred tax asset, 23 percent / 24 percent	27 448	26 928
Restrictions regarding balance tax asset	(27 448)	(26 928)
Book value tax asset	-	-

U.S. tax payable:
Amounts in USD thousands	2017	2016

Profit before tax	7 068	2 365
Permanent differences	(736)	(2 473)
Estimated result for tax purposes	6 332	(108)
Effective tax rate	42%	42%
Current income tax expense charged to the income statement	2 660	-

NOTE 4: TAX (CONTINUED)

U.S. deferred tax:
Amounts in USD thousands	2017	2016

Other differences	706	121
Operating loss carried forward	-	108
Deferred tax asset 28% / 40%	198	92
Book value tax asset	198	92

U.S. tax expense/(benefit):
Amounts in USD thousands	2017	2016
Current payable tax charged to the income statement	2 660	-
Change in deferred tax	(106)	(92)
Total tax (benefit)	2 554	(92)

AMSC is recording U.S. taxes in the income statement and balance sheet related to the U.S. income taxes on AMSC's investment in Philly Tankers. This is due to Philly Tankers having elected to be taxed as a partnership under the Internal Revenue Code, with the consent of its shareholders. As such, AMSC as a shareholder separately accounts for their pro rata shares of the Company's income, deductions, losses and credits in their separate income tax returns.

NOTE 5: LONG-TERM RECEIVABLES

Long-term receivables are:

Amounts in USD thousands	2017	2016
American Tanker, Inc. (ATI)	85 663	84 148
Total	85 663	84 148

As of 31 December 2017, AMSC holds a USD 26.5 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 2017) and with an option to pay in kind semi-annually. During 2017, ATI paid USD 2.5 million in interest payments to AMSC. The ATI note is payable on demand by AMSC.

In 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%, with an option to pay in kind each quarter. The balance as of 31 December 2017 is USD 59.1 million. During 2017, ATI paid USD 4.4 million in interest payments to AMSC. 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:

2017 Amounts in USD thousands	Share capital	Share premium	Total paid- in capital	Other equity	Total equity
Equity as of 1 January 2017	96 366	170 119	266 485	(86 060)	180 425
Repurchase of treasury shares	-	-	-	(82)	(82)
Proceeds from sale of treasury shares	-	-	-	67	67
Dividends paid / return of capital	-	(22 063)	(22 063)	-	(22 063)
Dividend payable	-	(4 849)	(4 849)	-	(4 849)
Net result	-	-	-	3 016	3 016
Equity as of 31 December 2017	96 366	143 207	239 573	(83 060)	156 513

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 2017. During 2017, 25,000 treasury shares were purchased and subsequently sold to Morten Bakke through MB Capital AS under his share purchase agreement and lock-up restrictions.

Subsequent to year-end, the Board declared a dividend/return of capital of USD 0.08 per share (USD 4.8 million in aggregate) on 13 February 2018. The dividend was paid on 1 March 2018.

2016 Amounts in USD thousands	Share capital	Share premium	Total paid- in capital	Other equity	Total equity
Equity as of 1 January 2016	96 366	198 006	294 372	(79 733)	214 639
Repurchase of treasury shares	-	-	-	(43)	(43)
Proceeds from sale of treasury shares	-	-	-	33	33
Dividends paid / return of capital	-	(27 887)	(27 887)	-	(27 887)
Net result	-	-	-	(6 315)	(6 315)
Equity as of 31 December 2016	96 366	170 119	266 485	(86 060)	180 425

No treasury shares were held as of 31 December 2016. During 2016, 30,000 treasury shares were purchased and subsequently sold to Pål Magnussen under his share purchase agreement and lock-up restrictions.

NOTE 6: TOTAL EQUITY (CONTINUED)

The shares were owned by the following 20 largest parties as of 31 December 2017:

Name	Number	Percent
AKER CAPITAL AS	11 557 022	19.1%
DNB NOR MARKETS, AKSJEHAND/ANALYSE	9 308 799	15.4%
SKANDINAVISKA ENSKILDA BANKEN AB	9 182 520	15.1%
GOLDMAN SACHS & CO. LLC	3 957 902	6.5%
THE BANK OF NEW YORK MELLON SA/NV	3 461 121	5.7%
TRETHOM AS	1 411 111	2.3%
CREDIT SUISSE SECURITIES (USA) LLC	1 243 762	2.1%
GOLDMAN SACHS INTERNATIONAL	969 269	1.6%
J.P. MORGAN SECURITIES LLC	852 825	1.4%
UBS SWITZERLAND AG	800 000	1.3%
NORDNET LIVSFORSIKRING AS	770 357	1.3%
SKANDINAVISKA ENSKILDA BANKEN AB	689 782	1.1%
STATE STREET BANK AND TRUST COMP	507 729	0.8%
B.O. STEEN SHIPPING AS	500 000	0.8%
RO	500 000	0.8%
SES AS	500 000	0.8%
HERFO FINANS AS	475 000	0.8%
CITIBANK, N.A.	400 673	0.7%
EUROCLEAR BANK S.A./N.V.	363 501	0.6%
BEDDINGEN FINANS AS	313 216	0.5%
Total 20 largest shareholders	47 764 589	78.8%
Other shareholders	12 851 916	21.2%
Total	60 616 505	100.0%

NOTE 7: OTHER LONG TERM INTEREST-BEARING DEBT

The bond obligation is as follows as of 31 December 2017:

Amounts in USD thousands	Maturity	Balance	Interest Rate
Bond balance at beginning of period	2018	212 783	LIBOR + 6.0%
Repayment of bond		(215 598)
Plus write-off of discount		2 815	*)
Total unsecured bond issue		-

*) Included in other interest and financial expenses.

On 9 February 2017, American Tanker, Inc. ("ATI"), a fully owned subsidiary of AMSC, completed the successful placement of a five year USD 220 million senior unsecured bond. The proceeds from the bond issue, plus USD 1.4 million in cash, were received by AMSC from ATI to repay the previous bond, including accrued interest and call price.

Subordinated loan from Aker ASA as of 31 December 2017:

Amounts in USD thousands	Maturity	Balance	Interest Rate
Principal amount	2021	6 672	10.25%
Total subordinated loan		6 672

As part of the bank debt refinancing in 2015, 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. Accrued interest on the loan as of 31 December 2017 is USD 3.3 million. 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.

During 2017, AMSC paid USD 13.3 million towards the Aker loan from proceeds received from Philly Tankers.

NOTE 8: CASH AND CASH EQUIVALENTS

There is no restricted cash, except cash in a tax withholding account for employees' salaries of USD 86 thousand at 31 December 2017.

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.

ANNUAL REPORT 2017 - 64

NOTE 10: GUARANTEES

The company has made the following guarantees:

		Amount
Description	Beneficiary	(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.

ANNUAL REPORT 2017 - 65

KPMG AS, a Norwegian limited liability company and member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.	Oslo Alta	Elverum Finnsnes	Mo i Rana Molde	Stord Straume
Statsautoriserte revisorer - medlemmer av Den norske Revisorforening	Arendal Bergen Bodø	Hamar Haugesund Knarvik	Skien Sandefiord Sandnessigen Tynsel	Tromsø Trondheim
	Department	Kristiansand	Chainnnor	Algermel

We applied professional scepticism and critically
As at 31 December 2017 the Group has
assessed management's judgment. Our work
reported Property, Plant and Equipment of USD
746 million, which includes vessels on operating
included the following procedures:
lease contracts with customers.
We assessed the cash flow forecast
from lease contracts by agreeing to
Management reviews Property, Plant and
underlying contracts,
Equipment for potential impairment whenever
We challenged and analyzed
$\bullet$
events or changes in circumstances indicate that
management's assumptions related to
the carrying amount of an asset may not be
extensions of the bareboat contracts,
recoverable.
and the discount rates applied with
reference to market data.
Management uses significant judgment in
We evaluated the forecasted residual
determining recoverable amounts of the vessels,
values.
by making assumptions related to expected
We performed our own independent
$\bullet$
future cash flows.
sensitivity calculations to quantify the
downside changes to management's

Due to the potential impact on the Group's
models required to result in impairment.
consolidated financial statements given the size
of the balance and the current economic
We obtained corroborating evidence for
environment, and the auditor judgment required
management's conclusions, including
when evaluating whether management's
independent vessel valuation reports.
assumptions are reasonable and supportable,
the assessment of the carrying amount of
Property, Plant and Equipment was considered

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 0.364 per share (USD 22.1 million) in 2017. 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 2017 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 2016, valid up to the Company's Annual General Meeting in 2018. 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 2017, 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.

SHARES AND SHARE CAPITAL

As of 31 December 2017, 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 2017 accounts).

As of 31 December 2017, the Company had 1,876 shareholders, of whom 6.1 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 2017.

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.

In November 2017, the Company´s ordinary shares were approved to trade on the OTCQX Best Market in the United States under the symbol ASCJF.

SIGNIFICANT SHAREHOLDER

American Shipping Company ASA's largest shareholder is Aker Capital AS, which holds 19.1 percent of the Company's shares.

SHARE AND SHAREHOLDER INFORMATION

In the event agreements are entered into between related companies, the boards of directors and other parties involved in the decision-making 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 2017 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 2018.

SHARE INCENTIVE PROGRAM

The Company currently does not have any share or stock option plans, but the Annual General Meeting 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.

20 LARGEST SHAREHOLDERS

as of 31 December 2017

Shareholder	Number of shares held	Ownership (in %)
AKER CAPITAL AS	11 557 022	19.1%
DNB NOR MARKETS, AKSJEHAND/ANALYSE	9 308 799	15.4%
SKANDINAVISKA ENSKILDA BANKEN AB	9 182 520	15.1%
GOLDMAN SACHS & CO. LLC	3 957 902	6.5%
THE BANK OF NEW YORK MELLON SA/NV	3 461 121	5.7%
TRETHOM AS	1 411 111	2.3%
CREDIT SUISSE SECURITIES (USA) LLC	1 243 762	2.1%
GOLDMAN SACHS INTERNATIONAL	969 269	1.6%
J.P. MORGAN SECURITIES LLC	852 825	1.4%
UBS SWITZERLAND AG	800 000	1.3%
NORDNET LIVSFORSIKRING AS	770 357	1.3%
SKANDINAVISKA ENSKILDA BANKEN AB	689 782	1.1%
STATE STREET BANK AND TRUST COMP	507 729	0.8%
B.O. STEEN SHIPPING AS	500 000	0.8%
RO	500 000	0.8%
SES AS	500 000	0.8%
HERFO FINANS AS	475 000	0.8%
CITIBANK, N.A.	400 673	0.7%
EUROCLEAR BANK S.A./N.V.	363 501	0.6%
BEDDINGEN FINANS AS	313 216	0.5%
Total 20 largest shareholders	47 764 589	78.8%
Other shareholders	12 851 916	21.2%
Total	60 616 505	100.0%

GEOGRAPHIC DISTRIBUTION

as of 31 December 2017

	Number of	Ownership
Nationality	shares held	(in %)

Non-Norwegian shareholders	12 794 071	21.1%
Norwegian shareholders	47 822 434	78.9%
Total	60 616 505	100.0%

SHARE AND SHAREHOLDER INFORMATION

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 [email protected].

FINANCIAL REPORTING

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

OWNERSHIP STRUCTURE

as of 31 December 2017

Shares owned	Number of shareholders	Percent of share capital
1-100	272	0.02%
101-1000	642	0.59%
1001-10,000	705	4.45%
10,001-100,000	216	10.76%
100,001-500,000	28	10.42%
over 500,000	13	73.76%
Total	1 876	100.00%

unable to receive the electronic version of interim and annual reports, may subscribe to the printed version by contacting American Shipping Company.

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.

2017 SHARE DATA

The Company's total market capitalization as of 31 December 2017 was NOK 1,449 million. During 2017, a total of 25,944,767 American Shipping Company ASA shares traded. The shares traded on 251 trading days.

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
Generate stable cash flow from long term bareboat charters
Have a modern, safe and operationally friendly fleet
Explore and invest in value creating opportunities for our shareholders
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 2017 was USD 186.9 million corresponding to an equity ratio of 22.1 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 70-72 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 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 2018.

EQUAL TREATMENT OF SHAREHOLD-ERS 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' pre-emptive 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 year-end. 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 shareholder-elected 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 12 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), Peter Knudsen and Audun Stensvold. 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 2018.

THE WORK OF THE BOARD OF DIREC-TORS

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, decision-making 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, thus the Company deviates from The Code of Practice in this respect. 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. 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 2017 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 4 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.

American Shipping Company

NORWAY OFFICE

Mail: P.O.Box 230 1326 Lysaker, Norway

Visiting: Building B, Oksenøyveien 10 1366 Lysaker, Norway

Pål L. Magnussen [email protected]

Morten Bakke [email protected]

U.S. OFFICE

415 McFarlan Road, Suite 205 Kennett Square, PA 19348 USA Tel: +1 (484) 732-3021 Fax: +1 (484) 732-3022

Leigh Jaros [email protected]

EMAIL

[email protected]

AI assistant

AMSC ASA — Annual Report 2017

3533_10-k_2018-04-04_c6de1cfb-313b-4900-b29a-62dc84372cbc.pdf

2017 ANNUAL REPORT

CONTENT

ANNUAL ACCOUNTS - GROUP 22

ANNUAL ACCOUNTS - PARENT 53

AUDITORS' REPORT 66 SHARE AND SHAREHOLDER INFORMATION 70 CORPORATE GOVERNANCE 73

KEY FIGURES

KEY EVENTS 2017

BOND REFINANCING

INVESTMENT IN PHILLY TANKERS

CONTINUED DIVIDENDS

LISTING ON OTCQX

FINANCIAL CALENDAR 2018

THIS IS AMERICAN SHIPPING COMPANY

FLEET OVERVIEW

COMPANY STRUCTURE

COMPANY HISTORY

2005

2007

2008

2009

2014

2013

2012

2011

2015

2016

2017

GOALS AND STRATEGIES

MANAGEMENT

BOARD OF DIRECTORS

THE JONES ACT MARKET

KEY EVENTS 2017 Bond refinancing

Investment in Philly Tankers AS ("PTAS")

Continued dividend

Listing on OTCQX

Stable cash flow

Normalized EBITDA (USD millions) 2017 2016 Operating profit before depreciation 84.8 85.1 Profit share (see note 19) - 10.2 DPO 3.8 3.9

REVIEW OF THE ANNUAL ACCOUNTS

Profit and loss accounts

Cash flow

Statement of financial position and liquidity

Tax position

RISKS Counterparty risk and charter renewal risk

Financial risk and risk management

THE GOING CONCERN ASSUMPTION

Parent company accounts and allocation of income for the year

Corporate governance and internal control

CORPORATE SOCIAL RESPONSIBILITY

OUTLOOK

BOARD RESPONSIBILITY STATEMENT

To the best of our knowledge:

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE CONSOLIDATED ACCOUNTS

NOTE 1: ACCOUNTING PRINCIPLES

CORPORATE INFORMATION

STATEMENT OF COMPLIANCE

BASIS FOR PREPARATION

USE OF ESTIMATES

GROUP ACCOUNTING, CONSOLIDATION PRINCIPLES AND EQUITY INVESTEES

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

Functional currency

Transactions and balances

PROPERTY, PLANT AND EQUIPMENT

IMPAIRMENT OF LONG-LIVED ASSETS

LEASES

OTHER NON-CURRENT ASSETS

TRADE RECEIVABLES

CASH AND CASH EQUIVALENTS

SHARE CAPITAL

INTEREST-BEARING LIABILITIES

INCOME TAXES

Current income taxes

Deferred income taxes

AMSC ASA Annual Report 2017