Saga Pure — Annual Report 2015

Apr 29, 2016

CONSOLIDATED FINANCIAL STATEMENTS -GROUP

ANNUAL REPORT 2015

CONTENTS

2015 Annual Report

Board of Director's Report 2015 > page 3 - page 5 Consolidated statement of comprehensive income 2015 > page 6 Consolidated statement of financial position 2015 > page 7 - page 9 Consolidated cash flow statement 2015 > page 9 Consolidated statement of changes in equity 2015 > page 10 Notes to the consolidated financial statements > page 11 - page 32 Responsibility statement > page 33 Corporate Governance > page 34 Separate income statement 2015 > page 36 Separate financial position 2015 > page 37 Separate cash flow statement 2015 > page 38 Notes to the separate financial statements > page 39 - page 49 Independent auditor's report 2015 > page 50

BOARD OF DIRECTOR'S REPORT

The business activity of the Group is investment and management related to shipping, rig, real estate, stock trading and similar business activities.

A LOOK BACK ON 2015

The year 2015 turned out to be a volatile year for Oslo Stock Exchange with a continuing downturn in the oil price during the year. Oslo Børs Benchmark Index increased by 5.9% in 2015, while the Energy Index decreased by approximately 7.5% and the Oslo Energy Drilling Index decreased by 54%.

The Group merged with Strata Marine & Offshore AS, whereas the shareholders in Strata Marine & Offshore AS received shares in Saga Tankers ASA as settlement. The merger increased the Group equity with MNOK 291.8, and increased the Group investments in available-for-sale financial assets with MNOK 219.6. The merger is considered to be as a business combination under common control, recognized according to the principle of carryover basis accounting.

In May 2015 the Group increased the ownership in SD Standard Drilling Plc from 23.6% to 53.5%. The acquisition triggered a mandatory offer obligation for purchase of the remaining shares in SD Standard Drilling Plc. The Group received acceptance from 8.6% of the outstanding shares resulting in an ownership of 68.5%. Subsequent to the mandatory offer, SD Standard Drilling Plc distributed in total USD 42.2 million by dividend and reduced share premium to the shareholders. In total the Group received USD 28.9 million from the distributions. By the end of 2015 the Group reduced the ownership in SD Standard Drilling Plc to approximately 46%.

The Group's largest investments at the end of the year were NEL ASA, Axactor AB, SD Standard Drilling Plc, Vistin ASA, Weifa ASA and Aqualis ASA.

FINANCIAL RESULTS 2015 (GROUP)

The Group reports a total comprehensive income for 2015 of MNOK 267.2 (2014 MNOK -38.6).

The major items of the Groups net comprehensive income consist of income from lease and operation of property MNOK 18.0, Other gains of MNOK 61.5 from the acquisition of SD Standard Drilling Plc and net loss on available-for-sale financial assets of MNOK -27.7. Change in available-for-sale assets generated other comprehensive income of MNOK 251.8, whereas

investment in NEL ASA contributed with a positive change of MNOK 181.6, and investment in Axator AB contributed with a positive change of MNOK 72.9.

Gross income for 2015 was MNOK 81.5 (2014 MNOK 8.1).

Total operating expenses for 2015 were MNOK 56.8 (2014 MNOK 25.0). The increase in operating expenses is attributable to increased loss on available-for-sale assets, as well as increased activity following the merger with Strata Marine & Offshore AS, and full-year effect of the Vallhall Arena business.

Net operating profit for 2015 was MNOK 24.7 (2014 MNOK-17.0).

Operating profit before interest, taxes. depreciation and amortization (EBITDA) for 2015 was MNOK 15.2 (2014 MNOK 1.6). Net financial items for 2015 were NOK -4.8 million (2014 MNOK $17.1$ ).

Earnings per share for 2015 were NOK 0.07 (2014 NOK 0.00), based on the net profit of MNOK 14.1 (2014 MNOK 0.8).

As of year end, the Company had a total of 228 shareholders and a total of 286,732,611 shares outstanding, the same number of shares being the average number of shares outstanding throughout the year. The Company's 20 largest shareholders controlled about 97.2% of the total number of shares outstanding at year end.

LIQUIDITY AND CASH FLOW

The net cash balance as of 31 December 2015 was TNOK 426.606 (2014: TNOK 297.729). The net change in cash over the year was TNOK 128.877 (2014 TNOK 194.865). Of the change in cash in 2015, TNOK 110.804 is the net result of the acquisition of, dividends from, and subsequently disposal of, SD Standard Drilling Plc.

FINANCIAL POSITION

As of 31 December 2015, the Group's total assets amounted to MNOK 1,020.3 (2014 MNOK 447.3). Total equity to share-holders of parent company was MNOK 934.8 (2014 MNOK 362.4).

It is the opinion of the Board of Directors that the Group is in a sound financial position with an equity ratio of about 94.2 % (2014 86.4 %.) Please see further information described under the Going Concern section.

RISK FACTORS

The Group is exposed to a limited number of risk factors. The most significant risk factors are market risk, legal risk, credit risk and liquidity risk.

Market risk: The Group's investments in shares and other financial instruments expose the Group to market risk in terms of equity price risk. The Group moderates this risk through careful selection of securities for investments.

Legal risk: The Group is currently undergoing a tax audit. The status of this audit is further described in note 12 Taxes.

Credit risk: The Group is exposed to credit risk, inherent in the risk that the counterparty will be unable to pay outstanding amounts in full when due. The Group has normally insignificant amounts of outstanding receivables. However, this risk is also applicable to bank deposits. The risk is limited through the use of financial institutions with solid credit ratings for bank deposits and settlement of transactions.

Liquidity risk: The Group continuously monitors the liquidity requirements, in order to ensure sufficient cash for meeting the operational needs. The Group has no outstanding debt or capital commitments.

Saga Tankers manages these risk factors through internal reporting and control procedures as well as consulting with external advisors. The Group's risk factors are described more detailed in note 18.

HEALTH, SAFETY AND ENVIRONMENT (HSE)

A good and safe working environment has been given a high priority in Saga Tankers. The Group's goal is to ensure that it operates in such a way that no detrimental effects are made on either people or the environment in which we operate. The Group's objective is to ensure safe and secure operations. The business operates in compliance with national and international requirements and regulations. There have been no work-related accidents resulting in sick leave during 2015.

Saga Tankers aims to have a workplace free from discrimination on the basis of gender, sex and race in matters of salary, promotion and recruitment. At year end the Group had six employees.

The Group is not involved in any research or development projects, and has not booked any such costs during 2015.

CORPORATE SOCIAL RESPONSIBILITY

The Group has no formalized guidelines regarding corporate responsibility. However, The Group is constantly focused on conducting its business through a sound code of ethics.

FINANCIAL RESULTS OF PARENT COMPANY

Saga Tankers ASA (the Parent Company) reports a net profit for 2015 of MNOK 9.9 (2014 MNOK 4.2).

Gross revenues for 2015 were MNOK 13.1 (2014 MNOK 0.0).

Total operating expenses for 2015 were MNOK 10.6 (2014 MNOK 15.1).

Operating profit before interest, taxes, depreciation and amortization (EBITDA) for 2015 was MNOK 7.3 (2014 MNOK 29.2).

Net financial items for 2015 were MNOK 7.0 (2014 MNOK 45.8).

The Board of Directors proposes that the net profit for 2015 of MNOK 9.9 is attributed to accumulated losses.

CORPORATE GOVERNANCE

The Group strives to comply with the NUES corporate governance guidelines.

Please see the Company's website for a description of the Corporate Governance policies and information about the Company's deviations from the NUES guidelines during 2015.

SUBSEQUENT EVENTS

At an Extra Ordinary General Assembly held at 11 February 2016, the board of directors was granted authorization to increase the Share capital with up to NOK 143,366,305 through issuance of new shares, corresponding to 50% of the current share capital. Former authorization to increase the share capital with up to NOK 87,916,864 was cancelled.

Furthermore, the board of directors was granted authorization to purchase own shares with a par value of up to NOK 28,673,611, corresponding to 10% of the current share capital.

23 February 2016 Saga Tankers ASA purchased 7 million own shares in the open market at NOK 2.47 per share. This corresponds to 2.44% of the outstanding share capital.

INVESTMENT IN SHARES

Through the merger with Strata Marine & Offshore AS in January 2015, the Group its investment capacity, and strengthened

introduced investments such as Weifa ASA, NEL ASA, Aqualis ASA and Axcator AB to the Group portfolio. At year end the Group's primary investments are NEL ASA with a market value of MNOK 249.2 and Axcator AB with a market value of MNOK 134.3.

GOING CONCERN AND DIVIDEND

The Group is currently in a sound position with a net book equity ratio of 94.2 % and surplus liquidity available.

The Board of Directors and the management has substantial experience and competence within shipping, real estate and the oil, energy and offshore industries, and will continuously pursue potential investments within these industries and within other markets or industries that may appear attractive. The Group expects to make further investments within the next few years

attractive assuming prices and markets. reasonable financing terms and acceptable counterparty risk.

It is expected that the shareholders will receive return on more attractive terms if proceeds are managed by the Group. Hence no suggestions on dividend are made by the Board of Directors.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by EU, while the financial statements for the parent company have been prepared in accordance with the Norwegian Generally accepted Principles (NGAAP). The Board of directors confirms that these annual accounts are based on the going concern assumptions, and that these conditions exist.

Oslo, 28 April 2016 The Board of Directors

Pystem Stray Seklen

Board Member

Welt Kristin Hellebust

Board Member

$\sigma$

Martin Nes Chairman

onne Hitshelm Sandvold

Board Member

CEO

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 01.01. - 31.12.

NOK 1000	NOTE	2015	2014
OPERATING INCOME
Other Income	$\overline{4}$	20 024	8079
Other gains/losses (-)	22	61486
GROSS INCOME		81510	8079
OPERATING EXPENSES
Employee benefit expenses	6	8768	3 4 2 5
Other operating expenses	6	17743	7963
Depreciation	11	2639	1347
Net loss/gain from avaliable-for-sale assets (-)	$\overline{4}$	27 677	9 1 3 6
Other losses/gains (-)			3 1 6 2
TOTAL OPERATING EXPENSES		56827	25 031
NET OPERATING PROFIT/LOSS (-)		24 683	$-16953$
FINANCIAL INCOME/EXPENSES (-)
Interest income		3652	1813
Interest expense		$-1955$	$-1120$
Net foreign exchange gain/loss (-)		$-5475$	16 4 25
Other financial income/expenses (-)		$-999$
NET FINANCIAL INCOME/EXPENSES (-)		$-4777$	17 118
Share of profit from associates	5	$-5644$	753
NET PROFIT BEFORE TAX		14 261	918
Taxes	12	203	88
NET PROFIT/LOSS FOR THE YEAR (-)		14058	830
Attributable to:
Non-controlling interests		$-5801$	419
Shareholders' interests		19859	410
Items that may be subsequeltly reclassified to profit or loss
Change in avaliable-for-sale assets	20	251808	$-39479$
Exchange difference currency translations		1331
OTHER COMPREHENSIVE INCOME		253 139	$-39479$
TOTAL COMPREHENSIVE INCOME		267 197	$-38649$
Attributable to:
Non-controlling interests		$-5801$	419
Shareholders' interests		272 998	$-39069$
Basic and diluted earnings per share to shareholders of the parent company NOK		0,07	0,00
Average number of shares in the period		286 732 611	131 305 569
Number of shares outstanding at period end		286 732 611	175 833 728

The notes on pages 11 to 32 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

NOK 1000	NOTE	31 Dec 2015	31 Dec 2014
ASSETS
Non-current assets
Deferred tax assets	12		1
Avaliable-for-sale financial assets	18,20	461 908	53 158
Fixed assets	11	92 107	94 5 65
Associates	5	38 143
Total non-current assets		592 158	147723
Current assets
Trade receivables and other receivables	9	423	622
Other current assets	8	1 1 1 1	1 2 2 7
Cash and equivalents	7,18	426 606	297 729
Total current assets		428 140	299 579
TOTAL ASSETS		1020298	447 302

The notes on pages 11 to 32 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER (CONTINUED)

NOK 1000	NOTE	31 Dec 2015	31 Dec 2014
EQUITY AND LIABILITIES
Equity
Share capital	14	286 733	175834
Other paid in equity	14	924814	883 696
Total paid-in-capital		1 211 547	1059530
Accumulated losses		$-572317$	$-694519$
Other components of equity		295 569	$-2648$
Non-controlling Interests		26 112	24041
Total equity		960 911	386 404
LIABILITIES
Non-current liabilities
Long-term interest bearing debt	13,18	50 000	54 000
Deferred tax	12	88	÷
Total non-current liabilities		50 088	54.000
Current liabilities
Short-term Interest bearing debt	13	4000	4 0 0 0
Tax payable		49	43
Trade and other payables		421	191
Other current liabilities and accruals	10	4829	2 664
Total current liabilities		9 2 9 9	6899
Total liabilities		59 387	60899
TOTAL EQUITY AND LIABILITIES		1020298	447 302

The notes on pages 10 to 32 are an integral part of these consolidated financial statements.

Pystem Strong Jeklen

Board Member

K Kelon

Kristin Hellebust Board Member

Oslo, 28 April 2016 The Board of Directors

0 Martin Nes Chalrman

onne Litsheim Sandvold

Board Member

Fsnen Lun

CEO

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD $01.01 - 31.12.$

NOK 1000	NOTE	2015	2014
Profit before tax		14 261	918
Profitshare from associates		5 6 4 4	$-753$
Depreciation	11	2639	1 3 4 7
Net loss/(-gain) from AVA asset		27 677	9 1 3 6
Other losses/(-gains)	22	$-61486$	3 1 6 2
Foreign exchange losses/(gains)		5474	$-16425$
Income tax paid		$-108$
Increase/decrease receivables and prepayments		12820	417
Increase/decrease payables and accruals		485	130
Net cash flow from operating activities		7406	$-2070$
Investment in AVA Financial assets	20	$-80460$
Divestment in AVA Financial assets		97 485	167 449
Net divestment/(-investment) trading		$-13762$
Net payments from/(to) associates			3 4 4 7
Net cash effect new subsidiaries	22	267741	12 044
Net cash effect disposal of subsidiaries		$-156947$
Investement in fixed assets		$-173$	$-318$
Net cash flow from investing activities		113884	182 622
Repayments of long term borrowings	13	$-4000$	$-1652$
Dividends paid to non-controlling interests	22	$-23455$
Share issuance costs		$-2$	$-462$
Net cash flow from financing activities		$-27457$	$-2114$
Net change in cash and cash equivalents		93832	178 440
Cash and equivalents at beginning of period		297 729	102 864
Net cash in merger at carryover basis	3	35 106
Net foreign exchange differences (unrealised)		$-62$	16 4 25
Cash and equivalents at end of period		426 606	297 729

The notes on pages 11 to 32 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER

2015
		Other			Exchange	Non-
	Share	paid in		Accumulated Available for difference		controlling
NOK 1000	capital	equity	losses	sale reserve	translations	interests	Total
Equity as at 1 January 2015	175834	883 696	$-694519$		$-2648$	24 041	386 404
Net profit/(-loss)	$\overline{\phantom{0}}$	$\overline{\phantom{a}}$	19859	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$-5801$	14 058
Other comprehensive
income	$\overline{\phantom{000000000000000000000000000000000000$	$\overline{\phantom{m}}$	$\overline{\phantom{a}}$	251808	1331	$\overline{\phantom{m}}$	253 139
Total comprehensive
income			19859	251808	1331	$-5801$	267 197
Merger 1 January 2015
(note 3)	110 899	41 1 18	94 708	45 079			291 803
Shareholders costs	$\overline{a}$		10	$\overline{a}$			10
New minority interests
(note 22)						177916	177 916
Aquired from minorities
(note 22)			7625			$-38075$	$-30450$
Dividends to minority
interests (note 22)						$-23455$	$-23455$
Exit minority interests
(note 22)						$-108513$	$-108513$
Equity per ending balance
31 December 2015	286733	924 814	$-572318$	296 887	$-1317$	26 112	960 911
2014
					Exchange
		Other			difference	Non-
NOK 1000	Share	paid in	Accumulated Available for		currency	controlling
	capital	equity	losses	sale reserve	translations	interests	Total
Equity as at 1 January 2014	86777	883 696	$-790117$	39 479	$-2648$		217 187
Net profit/(-loss)	-		410		$\overline{\phantom{a}}$	419	830
Other comprehensive
income	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\qquad \qquad -$	$-39479$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$-39479$
Total comprehensive
income	$\overline{\phantom{0}}$		410	$-39479$	$\qquad \qquad \blacksquare$	419	$-38649$
Demerger 1 July	89 056	$\overline{\phantom{0}}$	95 650	$\overline{\phantom{0}}$	$-$	23 6 21	208 327
Share Issuance costs	$\overline{a}$	$\overline{a}$	$-462$	$\overline{\phantom{0}}$	$\overline{\phantom{0}}$	$\overline{\phantom{0}}$	$-462$
Equity per ending balance
31 December 2014	175 834	883 696	$-694519$	۳	$-2648$	24 041	386 404

The notes on pages 11 to 32 are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENT

NOTE 1 - CORPORATE INFORMATION

Saga Tankers ASA ("the Company") is a publicly limited company incorporated and domiciled in Norway. The address of the head office is Sjølyst Plass 2, 0278 Oslo. The Company was incorporated on 24 March 2010 and was listed on the Oslo Stock Exchange "Axess"-list on 18 June 2010.

The consolidated financial statements for the year ended 31 December 2015, were approved by the Board of Directors on 28 April 2016, and will be presented for approval at the Annual General Meeting on 27 May 2016.

The business activity of the Group is investment and management related to shipping, rig, real estate, stock trading and similar business activities.

NOTE 2 - ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been applied to all the vears presented, unless otherwise stated.

Basis of preparation

The financial statements for Saga Tankers for the financial year 2015 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The IFRS principles have been applied consistently since incorporation. Below is a summary of the Group's accounting policies to be applied in the consolidated financial statements.

The consolidated financial statements are presented in NOK and all numbers are rounded to the nearest thousands, except where otherwise indicated.

In line with practice, the statement of comprehensive income is presented on a mixed basis (a blend of expenses by nature and function), as this is assessed to be the most relevant and reliable presentation.

Going concern

The financial statements have been prepared on the going concern assumption. For additional information see Board of Director's report.

Basis of consolidation

The consolidated financial statements comprise the financial statements of Saga Tankers ASA and its subsidiaries (the "Group") as of 31 December each year.

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date the control ceases.

The Group merged with Strata Marine & Offshore AS effective in the consolidated financial statements as of 1 January 2015. The transaction is considered to be a combination of entities under common control, and therefore outside the scope of IFRS 3. In the preparation of the financial statement, the Group has chosen to follow the principle of Carryover basis accounting. The comparative financial information for 2014 has not been restated.

The Group demerged with certain assets owned by Ferncliff TIH 1 AS effective in the consolidated financial statements as of 30 June 2014. The transaction is considered to be a combination of entities under common control, and therefore outside the scope of IFRS 3. In the preparation of the financial statement, the Group has chosen to follow the principle of Carryover basis accounting.

The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.

All inter-company transactions and balances are eliminated in the consolidated financial statements.

Associates

Associates are all entities over which the group has significant influence but not control or joint control. This is generally the case when the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the investee after the date of acquisition. The group's investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.

The group's share of post-acquisition profit or loss is recognized in the income statement, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to share of profit/ (loss) of associates in the income statement.

Dilution gains and losses arising in investments in associates are recognized in the income statement.

Significant accounting judgments, estimates and assumptions

The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that may affect assets, liabilities, revenues, expenses and information in notes to the financial statement. Estimates are management's best knowledge based on information available at the date the financial statements are authorized for issue. Actual results may differ from these estimates. Such changes will be recognized when new estimates can be determined with certainty.

Depreciation of fixed assets

Fixed assets are depreciated on a straight-line basis over their expected useful lives. Land is not depreciated.

Recognition other income

Other income related to lease of property and related services. The income is recognised as soon as the services are rendered to the recipients.

Summary of significant accounting policies

Revenue from investment and trading of financial instruments

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the group's activity (i.e. at trade date).

The group indulges in investment and trading of financial instruments as part of its core business. All such instruments are classified as available-for-sale assets, unless the Group exercises significant control of the investment, in which case the investment will be classified as associate. See the group accounting policy describing Financial Instruments below.

Dividend Income

Dividend income is recognised when the right to receive payment is established. The company classifies such income as 'Other Income' on the face of Consolidated Statement of Comprehensive Income.

Foreign currency

The financial statements are presented in NOK, which is also the functional currency for all the companies in the Group.

Transactions in foreign currencies are recorded at the exchange rate in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate at the financial position date. Nonmonetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

Impairment of non financial assets Fixed assets $(i)$

Fixed assets are reviewed for indication of impairment at each reporting date, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized. The recoverable amount is the higher of an assets net selling price and its value in use. The net selling price is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal, while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets if possible, or else for the cash-generating unit.

Impairment of financial assets

For the loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument's fair value using an observable market price.

Reversal of impairment losses recognized in prior years is recorded in profit and loss if there is an indication that previous impairment losses recognized no longer exist or have decreased.

(ii) Assets classified as available for sale

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the criteria referred to in (i) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. IFRS standards indicates that a drop of more than 20% is classified as significant and that if the assets are below the cost price for six to twelve months, the period is considered to be prolonged. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement.

Financial instruments

The group classifies its financial assets and liabilities in the following categories: loans and receivables, other financial liabilities and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are initially recognized at fair value plus directly attributable transaction costs. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest method, less impairment. Gains and losses are recognized in profit and loss when the loans and receivables are de-recognized or impaired, as well as through the amortization process. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the balance sheet.

Available-for-sale financial assets are non-derivatives that are either designated in this category or not designated in any other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. The financial assets are denominated in NOK and are measured at Fair value. Listed shares are valued at quoted market price at each balance sheet date. Partnership shares/other shares acquired just before year end from an independent third parties are deemed to have an acquisition cost considered as its fair value. Other assets in this category not traded in an active market are valued based on valuation techniques, which is considered to be their fair value. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. When securities classified as available for sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as 'Net gains and losses from available-for-sale assets'.

Other financial liabilities: Other financial liabilities are initially recognized at fair value plus directly attributable transaction costs.

After initial recognition other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest method amortization process.

Trade receivables and other receivables

Current trade receivables and other receivables are initially recorded at their fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.

Trade payables and other payables

Current trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

Cash, cash equivalents and cash flow statement

Cash represents cash on hand and deposits with bank that is callable on demand.

Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.

The cash flow statement is prepared using the indirect method.

Financial liabilities

Interest-bearing debt is initially recognized at fair value when the Group becomes a party to the contractual provisions of the instrument. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on the settlement. Financial liabilities are presented as current if the liability is due settled within 12 months after the financial position date, whereas liabilities with the legal right to be settled more than 12 months after the financial position date are classified as non-current.

Financial liabilities are derecognized from the financial position when the contractual obligation expires, is discharged or cancelled. Gains and losses arising on the repurchase, settlement or cancellation of liabilities are recognized respectively in interest income and other financial items and interest and other finance expenses.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognizing of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable 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. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as financial expense.

Equity

Transaction costs related to an equity transaction are recognized directly in equity after deduction of tax.

Ordinary taxation

At year end, all subsidiaries within the Group are subject to the ordinary Norwegian taxation regime. Current income taxes are measured at the amount expected to be paid to (recover from) authorities, deferred tax assets/liabilities are calculated based on temporary differences at the reporting date. Deferred tax assets are recognized to the extent that it is probable that they can be utilized in the future. Dividends and capital gains are taxed according to the Norwegian exemption model.

Financial position classification

Current assets and current liabilities include items due less than one year from the financial position date, and items tied to the operating cycle. The current portion of long-term debt is included as current liabilities.

Related parties

Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence. All transactions between the related parties have been made on an arm's length basis and are settled on a regular basis.

Contingent liabilities

Contingent liabilities are defined as possible obligations that arises from past events whose existence depends on one or more future events not wholly within the control of the entity, or present obligations that are not recognized because it is not probable that they will lead to an outflow or resources.

Contingent liabilities are not recognized on the balance sheet unless arising from assuming assets and liabilities in a business combination. Significant contingent liabilities are disclosed unless the possibility of an outflow of resources embodying economic benefit is a remote one.

Contingent assets are not accounted for unless virtually certain.

Events after financial position date

New information regarding the Group's situation on the financial position date is taken into account in the financial statements. Events occurring after the financial position date, that do not affect the Group on the financial position date but will affect the Group's situation in the future, are disclosed if significant.

New and amended standards adopted by the group

There are no new or amended accounting standards that required the Group to change its accounting policies for the 2015 financial year.

NOTE 3 - MERGER

On 3 June 2015, the merger with Strata Marine & Offshore AS was completed.

All assets and liabilities in Strata Marine & Offshore AS were transferred to the Group. Saga Tankers ASA issued 110 898 883 new shares to the former shareholders of Strata Marine & Offshore AS as settlement for the merger.

The merger is considered as reorganization under common control, and following continuity for accounting purposes as of 1 January 2015.

The Group financials for 2014 has not been restated for comparison purposes.

The effect on the Group balance sheet was as follows:

	Saga Tankers Group	Transferred assets	Saga Tankers Group
NOK 1000	01.01.15 pre merger	and liabilities	01.01.15 post merger
ASSETS
Non-current assets
Deferred tax assets	$\mathbf{1}$		$\mathbf{1}$
Fixed assets	94 5 6 5		94 5 65
Available-for-sale financial assets	53 158	219 607	272 765
Long term receivables		9718	9718
Associates		27086	27086
Total non-current assets	147723	256 411	404 134
Current assets
Trade receivables	622	137	759
Other current assets	1 2 2 7	2 1 3 5	3 3 6 2
Cash and cash equivalents	297 729	35 106	332835
Total Current assets	299 579	37 37 8	336 957
TOTAL ASSETS	447 302	293 789	741091
EQUITY AND LIABILITIES
Equity
Share capital	175 834	110 899	286 733
Other Equity	883 696	41 118	924 813
Total paid-in-capital	1059530	152 017	1 211 546
Accumulated losses	$-694519$	94 708	$-599811$
Other components of equity	$-2648$	45 0 79	42 431
Non-controlling interest	24 041		24 041
Total equity	386 404	291 803	678 207
Non-current liabilities
Long term interest bearing debt	54 000	$\overline{a}$	54 000
Total non-current liabilities	54 000		54 000
Current liabilities
Short-term interest bearing debt	4 0 0 0		4 0 0 0
Tax Payable	43		43
Trade and other payables	728	464	1 1 9 2
Other current liabilities	2 1 2 7	1522	3 6 4 9
Total current liabilities	6899	1986	8885
TOTAL EQUITY AND LIABILITIES	447 302	293 789	741091

NOTE 4 - OPERATING SEGMENTS

The management monitors the net income from investments in financial assets, and the revenues from lease and operation of property on a separate basis. The Group also generates other income such as fees for services rendered, guarantees and such.

Segment information	2015	2014
NOK 1000
Outcome
Net loss/gain from avaliable-for-sale assets	$-27677$	$-9136$
Revenues from lease and operation of property (other income)	18 0 32	8079
Sundry income (other income)	1993
Target
Net income financial assets	$*$	$*$
Revenues from lease and operation of property	18 491	9 1 6 5
Sundry income	**	$**$

* Net income financial assets are impacted by a range of external parameters as well as the management's decisions. The management continuously monitors the return on investments and assesses the risk level, but does not set any long term fixed targets for the outcome.

** Sundry income is considered as irregularly items subject to availability of resources to provide services as well as opportunity to provide. Other income is therefore not subject to projections by the management.

NOTE 5 - INVESTMENT IN ASSOCIATES

NOK 1000	2015	2014
At January 1	$\overline{\phantom{0}}$	15074
Received through merger (note 3)	27 08 6
Reclassified from subsidiary (note 21)	36781	-
Share of profit*	$-25696$	777
Changes in surplus value*	20 053	$-24$
Repayment of capital		$-3447$
Currency exchange differences	1331
Other items directly towards equity	12
Reclassified as subsidiaries	$\overline{ }$	$-12381$
Reclassified to Avaliable-for-sale financial assets**	$-21423$
At 31 December	38 143

* Constitutes net loss associates of TNOK -5 643

** Axactor AB reclassified due to dilution in ownership below significant influence.

The Group's share of the results of its principal associates, and its aggregated assets and liabilities are as follows:

31 December 2015
	Country of					% Interest
Name	Incorporation Assets			Liabilities Revenues Profit		held
Axactor AB (Nickel Mountain Group AB)*	Sweden	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$		$-5675$	$0\%$
SD Standard Drilling Plc**	Cyprus	38 4 10	266	$\overline{\phantom{a}}$	32	46,16 %
		38 410	266		$-5643$

* Associate in the period 1 January 2015 to 30 October 2015. Recognized as Available-for-sale financial assets as of 1 September 2015. Net loss of TNOK -5 675 includes gain on surplus value of TNOK 20,053

** Subsidiary in the period 1 March 2015 to 30 October 2015. Recognized as Associate as of 1 September 2015

31 December 2014
	Country of				% Interest
Name	Incorporation Assets		Liabilities Revenues Profit		held
Vallhall Fotballhall AS	Norway	$\overline{a}$	$-$		$0\%$
Vallhall Fotballhall Drift AS	Norway	a.	$\frac{1}{2}$	602	0%
Vallhall Fotballhall KS	Norway	$\overline{a}$	-	175	0%
		$\overline{\phantom{0}}$		777

Investments shown above classified as associates were reclassified as subsidiaries as the Group acquired a controlling interest in these investments as of 1 July 2014. The Profit disclosed above, is for the period from 1 January 2014 to 30 June 2014.

Total result, assets and liabilities for the associated companies for the complete financial years:

NOK 1000
31 December 2015
	Country of
Name	Incorporation Assets			Liabilities Revenues Profit
Axactor AB (Nickel Mountain Group AB)*	Sweden	633 533	116 226	4 2 4 7	$-159459$
SD Standard Drilling Plc**	Cyprus	83 210	581	$\overline{\phantom{0}}$	$-26757$
		716743	116808	4 2 4 7	$-186216$

NOK 1000
31 December 2014
	Country of
Name	Incorporation Assets			Liabilities Revenues Profit
Vallhall Fotballhall AS	Norway	7 2 4 2	1569	-	401
Vallhall Fotballhall Drift AS	Norway	5 0 3 5	4 1 7 8	10 700	35
Vallhall Fotballhall KS	Norway	106 516	58 749	11 293	4967
		118793	64 496	21993	5 4 0 4

NOTE 6 - OPERATING EXPENSES

NOK 1000	2015	2014
Employee benefit expenses
Salaries	7429	2925
Social security costs	1099	399
Pension expenses	136	49
Other personnel expenses	104	51
Total employee benefit expenses	8768	3 4 2 5
Number of man-years	6	3
Other operating expenses
Fees	7644	4 2 1 7
Other operating costs Vallhall sports arena	5 1 0 8	2459
Travel expenses and membership fees	260	23
Loss on receivables	245	300
Opertaing expenses SD Standard Drilling Plc	2 3 8 8
Other expenses	2099	964
Total administrative expenses	17743	7963

Remuneration to the Board of Directors and executive management

2015
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	2 1 1 8
Martin Nes 1)	Chairman				130
Øystein Stray Spetalen 2)	Board member	$\overline{\phantom{0}}$			110
Kristin Hellebust 3)	Board member				75
Yvonne Litsheim Sandvold 3)	Board member				75
Brita Eilertsen 4)	Board member				25
Total renumeration		2 1 1 8			415
2014
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	1518			-
Øystein Stray Spetalen	Chairman				140
Martin Nes	Board member	۰			100
Brita Eilertsen	Board member				100
Total renumeration		1518		-	340

1) Board member until 27 March 2015. Chairman from that date

2) Chairman until 27 March 2015. Board member from that date

3) From 27 March 2015

4) Until 27 March 2015

Besides a short term loan of MNOK 10 from Øystein Stray Spetalen, effective for 2 months, the Group had no outstanding loans or guarantees in favour of any member of the Board of Directors or company management in 2015. No interest was accrued on the short term loan. Reference are made to note 15 for further information.

Guidelines for determining salaries and other compensation for company management

In accordance with the regulations in paragraph 6-16a in the Norwegian Public Limited Companies Act, the Board of Directors has established a statement regarding remuneration. The focus of the company is to hire qualified managers and to pay according to the market. Salary and remuneration of the CEO and CFO is determined by the Board of Directors, and payments to other employees are determined by the CEO according to guidelines from the Board of Directors. For the fiscal year ending 31 December 2015, the position as CEO and CFO has been occupied by the same employee.

Saga Tankers Group's compensation schemes include only a limited number of benefits in kind. These benefits are offered in line with common practice in international labour markets and typically include personal communication equipment, access to media, and car and parking arrangements.

The Statement on the determination salary and other remuneration for senior executives will be presented at the annual general meeting and made available on the Company's webpage.

Stock options program to Board members and Company employees

No stock options or right to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2015

AUDIT FEES
NOK 1000	2015	2014
Audit fees including VAT
Audit services	1050	754
Other attestation services	179	34
Tax services	2707	1629
Other non-audit services	69	238
Total	4 0 0 5	2655

Fees to the Group's auditors are included in administrative expenses.

NOTE 7 - CASH AND CASH EQUIVALENTS

The Group's cash and cash equivalents are denominated in the following currencies:

NOK 1000	31 Dec 2015	31 Dec 2014
US Dollars	4 2 3 3	90 539
Norwegian kroner	422 370	207 190
GB Pounds	2
Total cash and cash equivalents	426 606	297 729
Restricted cash
Employee tax accounts	930	199

All cash deposits are held in financial institutions with credit ratings of minimum A+ according to Standard and Poor. Reference are made to note 18 for further information.

Interest income is earned at floating interest rates.

NOTE 8-OTHER CURRENT ASSETS

NOK 1000	31 Dec 2015 31 Dec 2014
Other receivables	659	747
Prepayments	225	249
Unbilled revenue	228	232
Total other current assets	1 1 1 1	1 2 2 8

NOTE 9 - TRADE RECEIVABLES AND OTHER RECEIVABLES

The outstanding amount of trade receivables at 31 December 2015 was TNOK 1 722 (31 December 2014 of TNOK 1 722). The Group has booked a reserve for loss on trade receivables and other receivables totalling TNOK 1 340, of which TNOK 240 is an increase in 2015 taken over the profit and loss. Trade receivables are related to rental income for the Vallhall Arena and services rendered to the tenants.

NOTE 10 - OTHER CURRENT LIABILITIES

NOK 1000	31 Dec 2015 31 Dec 2014
Public duties payable	1382	405
Deferred revenue	11	111
Accrued interest	261	298
Other current liabilities	3 1 7 6	1851
Total other current liabilities	4829	2664

Other current liabilities are non-interest bearing. Other current liabilities are normally settled on 30 to 60 day terms. Deferred revenues are revenues invoiced, but not earned per 31 December.

NOTE 11 - FIXED ASSETS

			Capitalized
			Machinery & costs - work in
		Buildings equipement	progress	Land	Total
2015
NOK 1000
Aquisition cost, opening balance 01.01.15	91529	4 1 4 6	38	199	95 911
Acquisitions during the period	$\overline{\phantom{0}}$	189		$\overline{ }$	189
Diposals during the period		$-16$			$-16$
Aquisition cost at 31.12.15	91529	4319	38	199	96 084
Accumulated depreciation, opening balance
01.01.15	$-923$	$-423$		$\overline{\phantom{a}}$	$-1347$
Depreciation	$-2259$	$-380$	-	$\overline{\phantom{0}}$	$-2639$
Accumulated depreciation disposed assets	$\overline{a}$	8	-	٠	8
Accumulated depreciation at 31.12.15	$-3182$	$-796$	-	$\overline{a}$	$-3978$
Net book value at 31.12.15	88 347	3523	38	199	92 107

			Capitalized
			Machinery & costs - work in
	Buildings	equipement	progress	Land	Total
2014
NOK 1000
Aquisition cost, opening balance 01.01.14				$\qquad \qquad \blacksquare$
Assets received through demerger	91529	3828	38	199	95 594
Acquisitions during the period		318			318
Diposals during the period		-	-	٠
Aquisition cost at 31.12.14	91529	4 1 4 6	38	199	95 912
Accumulated depreciation, opening balance
01.01.14
Depreciation	$-923$	$-423$			$-1347$
Accumulated depreciation disposed assets				-
Accumulated depreciation at 31.12.14	$-923$	$-423$			$-1347$
Net book value at 31.12.14	90 605	3723	38	199	94 565

Assets received through demerger

Shares in the Vallhall companies received through the demerger of Ferncliff TIH 1 AS at 1 July 2014, lead to formation of new subsidiaries in the Group. The fixed assets in the new subsidiaries have been treated as additions based on the net carrying value of the assets in the subsidiaries at 1 July 2014.

Depreciation

Assets have been depreciated on a straight-line basis over their expected useful lives as follows:

Buildings:	67 years
Machinery and equipment:	5-10 years
Capitalized cost - Work in progress:	No depreciation before utilization
Land:	No depreciation

Assets received through the demerger are depreciated on a straight-line basis based on the subsidiaries original time of purchase and cost.

NOTE $12 - TAX$

NOK 1000	2015	2014
Current tax expense	114	89
Deferred tax expense	89	$-1$
Tax expense	203	88
Reconciliation of tax expenses
Net profit before tax	14 26 1	918
Tax expense based on nominal tax rate of 27%	3851	248
Permanente differences	$-9024$	3 0 7 5
Change in other tax benefits receivables	$-27227$	252
Change in not recognized deferred tax assets	32 610	$-3486$
Tax effect on deferred tax due to change of tax rate*	$-7$
Tax expense	203	88
Reconciliation of deferred tax (-)/deferred tax assets*
Fixed and other assets	136 688	120 366
Deferred tax loss sale of assets	95 665	103 318
Net tax loss carried forward	61743	56912
Share in partnership	$-286$	$-274$
Deferred tax assets	293 810	280 322
Net deferred tax assets not recognized	293898	280 321
Deferred tax (-)/deferred tax assets in the balance sheet	$-88$	1
Tax on other comprehensive income
Other comprehensive income	253 139	$-39479$
Income tax related to other comprehensive income		-

* Tax rate for 2014 and 2015 is 27%. Tax rate for 2016 as set by the Norwegian Parliament 14 December 2015 is 25%. The rate of 25% has therefore been applied to calculate future tax liabilities and assets as at 31 December 2015.

The Group is currently undergoing a tax audit, where the integrity of certain tax positions has been questioned for the fiscal years of 2012 and 2013. The tax positions in question are deferred tax loss on sale of assets, loss carried forward, and paid in equity. No conclusion has been made by the tax authorities regarding this matter. An annulment of loss on sale of assets and loss carried forward, could lead to tax payable. Regardless of the tax audit, these tax positions in question are not recognized in the balance sheet as deferred tax assets are recognized only to the extent that future utilization is considered probable.

NOTE 13 - INTEREST BEARING DEBT

NOK 1000	31 Dec 2015 31 Dec 2014
Long term interest bearing debt	50 000	54 000
Current portion of long-term debt	4 0 0 0	4 0 0 0
Total interest bearing debt	54 000	58 000

Material loan agreements

In June 2014 a mortgage of TNOK 60 000 was raised. The mortgage is paid in quarterly instalments of TNOK 1 000. The maturity of the mortgage is May 2024, with a balloon payment of TNOK 20 000.

As collateral for the mortgage, two 1.st priority mortgage deeds of TNOK 72 800 and 25 000, totalling TNOK 97 800 has been issued on the property gnr. 122 / bnr. 440, in Oslo. The book value of the collateral is TNOK 88 347 reference note 10.

Interest rate of the mortgage as of 31 December 2015 is 3.35 % p.a.

NOTE 14 - ISSUED CAPITAL AND SHAREHOLDERS

Issued capital

2015
	Number of			Other paid in
NOK 1000	shares	Share capital	Own shares capital
Opening balace 01.01.2015	175 833 728	175834		883 696
Merger 1 January 2015	110 898 883	110899		41 118
Ending balance 31.12.2015	286 732 611	286733		924 814
2014
	Number of			Other paid in
NOK 1000	shares	Share capital	Own shares capital
Opening balace 01.01.2014	86 777 409	86777		883 696
Demerger 1 July 2014	89 056 319	89 056
Ending balance 31.12.2014	175 833 728	175834		883 696

The nominal value per share as of 31 December 2015 was NOK 1 per share.

Reference are made to note 3 for further information regarding merger of 1 January 2015.

All issued shares have a nominal value of NOK 1 and are of equal rights. Saga Tankers ASA is incorporated in Norway, listed on the Oslo Exchange Axess list, and the share capital is denominated in NOK. As of 31 December 2015 the Company had 228 shareholders. The Company's largest shareholders are presented in the table below.

Overview of the largest shareholders as per 31.12.2015

NAME	04.01.2016
1 ØYSTEIN STRAY SPETALEN *	60,28 %
ALLUM HOLDING AS * 2	14,47 %
3 GROSS MANAGEMENT AS	9,56%
AS FERNCLIFF * $\overline{4}$	2,17 %
5 BJØRN BAKKEN	1,45 %
UTHALDEN A/S 6	1,36 %
7 ØYSTEIN IKDAHL	0,97 %
WIECO AS 8	0,89 %
9 BJØRN HÅVARD BRÆNDEN	0,73 %
PARK LANE FAMILY OFFICE AS 10	0,70%
CAMACA AS 11	0,66 %
12 DEUTSCHE BANK AG	0,62%
13 KÅRE KLAVENES	0,59 %
14 TERJE VIRIK	0,55 %
15 BJØRN OLSEN	0,42%
16 BHB CAPITAL MANAGEMENT AS	0,39 %
17 RICIN INVEST AS	0,38 %
KRISTIAN HODNE AS 18	0,37 %
19 GOLDMAN SACHS INTERNATIONAL EQUITY	0,36 %
SKEIE HOLDING AS 20	0,26%
TOTAL	97,17 %

* Controlled by board member Øystein Stray Spetalen, -representing 76.92 % of outstanding shares

Shareholders per country per 31.12.2015

	Shares	Owner's share %
Norway	283 064 377	98,721 %
Great Britain	3 608 925	1,259 %
Switzerland	33 158	0,012 %
Belgium	20 000	0,007 %
Sweden	2651	0,001 %
Luxembourg	2 0 0 0	0,001 %
Netherland	1 0 0 0	0,000 %
Columbia	500	0,000 %
Total	286 732 611	100,000 %

Total paid in capital Please see table above.

Shareholders rights

There are currently no limitations in voting rights or trade limitations related to the Saga Tankers share.

Power of attorney to repurchase own shares

The Board held no authorization to repurchase own shares as per 31 December 2015. However, authorization for repurchasing of up to 28,673,611 shares has been authorized at Extraordinary General Meeting 11 February 2016. Reference note 23 subsequent events.

Authorization to raise convertible loans

The Board held no authorization to raise convertible bonds as per 31 December 2015.

Stock option arrangements

The Company/Group held no stock option or synthetic stock option agreements as of 31 December 2015.

Shares owned by the Board, Management and their Related Parties

2015	# of Shares
Board of Directors*
Martin Nes (Chairman)
Øystein Stray Spetalen	172 841 799
Yvonne Litsheim Sandvold
Kristin Hellebust
Group Management
Espen Lundaas, CEO (CFO)
Related parties
Allum Holding AS**	41 491 339
AS Ferncliff**	6 235 316
Total number of shares held by Board members, Group
management and related parties	220 568 454
Total number of shares held by Board members, Group
management and related parties in % of total outstanding shares	76,92 %

2014	# of Shares
Board of Directors*
Øystein Stray Spetalen (Chairman)	172 841 799
Martin Nes
Brita Eilertsen
Group Management
Espen Lundaas, CEO (CFO)
Related parties
Total number of shares held by Board members, Group
management and related parties	172 841 799
Total number of shares held by Board members, Group
management and related parties in % of total outstanding shares	98,30 %

* Board of Directors was altered in March 2015. Brita Eilertsen left the Board, and Martin Nes was appointed Chairman. New elected board members Yvonne Litsheim Sandvold and Kristin Hellebust.

** Allum Holding AS and AS Ferncliff are companies in which Øystein Stray Spetalen are the sole beneficial owner.

NOTE 15 - EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the company and held as treasury shares. The company has no such treasury shares as of 31 December 2015.

Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares to ordinary shares. The Company does not have any potential dilutive ordinary shares in addition to its ordinary outstanding number of shares as per 31 December 2015.

NOK 1000	2015	2014
Net profit/(loss) attributable to the shareholders	19859	410
Number of shares
Weighted average number of ordinary shares outstanding	286 732 611	131 305 569
Weighted average number of shares outstanding, diluted	286 732 611	131 305 569
Number of shares outstanding at period end	286 732 611	175 833 728
NOK per share
Basic and diluted earnings per share	0.07	0,00

NOTE 16 - RELATED PARTIES

The company is sharing office locations for its head office with Ferncliff Holding AS, a company controlled by Øystein Stray Spetalen, board member, and the Company's largest shareholder. Transactions with related parties during 2015 are limited to office rent including mutual costs, and services rendered regarding support for financial reporting.

All transactions with related parties have been made on an arm's length basis and are settled on a regular basis. Goods and/or services purchased from related parties have been priced at industry standard rates. Transactions with related parties are specified below:

RELATED PARTY TRANSACTIONS

2015
NOK 1000	Sales to	Purchase from related parties related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS		830
2014
NOK 1000	Sales to	Purchase from related parties related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS		345

In addition, the Group had a short term loan of MNOK 10 from its largest shareholder and board member, Øystein Stray Spetalen. The loan had a duration of two months and no interest has been calculated. The basis for the loan was the Groups obligation to raise sufficient cash collateral following the mandatory offer for all outstanding shares in SD Standard Drilling Plc.

NOTE 17 - SUBSIDIARIES

The consolidated financial statements include the financial statements of Saga Tankers ASA and its subsidiaries listed in the table below:

Subsidiaries	Contry of incorporation share	Ownership	Consolidated in the Group financial statements from
Saga Agnes AS	Norway	100 %	2010
Saga Chelsea AS	Norway	100 %	2010
Saga Julie AS	Norway	100 %	2010
Saga Unity AS	Norway	100 %	2010
Vallhall Fotballhall KS	Norway	54,8%	2014
Vallhall Fotballhall AS	Norway	54,8 %	2014
Vallhall Fotballhall Drift AS	Norway	55,2 %	2014
Strata Marine & Offshore AS	Norway	100 %	2015

The subsidiaries have their offices in Oslo, Norway.

SD Standard Drilling Plc has been a subsidiary in the Group from 1 April 2015 to 30 June with an ownership share of 59.8%, from 1 July to 30 September with an ownership share of 68.4%. As of 1 October the company is recognized as an associate with an ownership share of 46.2%. The transactions leading to recognition of subsidiary, acquisition from non-controlling interests and finally derecognition of subsidiary is further described in note 22.

NOTE 18-FINANCIAL RISK MANAGEMENT

Through its activities the Group is exposed to a variety of financial risks: market risk including currency risk, credit risk and liquidity 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. To reduce and manage these risks, management periodically assesses the Group's financial market risk in general. The Group has during 2015 used currency exchange swaps as hedging instrument, and has also taken short positions in certain financial assets. There are no open positions in hedging instruments or derivatives in the Group at balance sheet date.

Equity price risk

The Group invests in both marketable securities on different stock exchanges as well unlisted securities in order to take advantage of market movements in the equity markets.

All marketable securities present a risk of loss of capital. The Group moderates this risk through a careful selection of securities. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The Group's

overall market positions are monitored on a quarterly basis. The Group's maximum exposure to risk at the balance sheet date is NOK 461.9 million (2014: NOK 53.2 million).

At 31 December 2015, the impact of increases/decreases of the Oslo Stock Exchange and Oslo Axess on the group's post-tax profit for the year and on equity would have been as shown below. The analysis is based on the assumption that the equity indexes had increased/decreased by 5% with all other variables held constant and all the group's equity instruments moved according to the historical correlation with the index.

Increase of 5%

NOK 1000	Impact on post-tax profit		Impact on other components of equity
Index	2015	2014	2015	2014
Oslo Stock Exchange		$\overline{\phantom{a}}$	$-6232$
Oslo Axess	$\overline{\phantom{a}}$	-	2 1 0 4	1807
Total	-	۰	$-4129$	1 80

Decrease of 5 %

NOK 1000	Impact on post-tax profit		Impact on other components of equity
Index	2015	2014	2015	2014
Oslo Stock Exchange	$-1542$		7774
Oslo Axess		$-1807$	$-2104$
Total	$-1542$	$-1807$	5 6 7 1

The sensitivity analysis for 2015 derives partially countercyclical outcome. This is a result of the largest investment in the portfolio having a negative correlation with the market over a period, resulting in a negative beta. It can be assumed that this is just a temporary state.

Currency Risk

The value of monetary assets and liabilities denominated in foreign currencies will fluctuate due to changes in foreign exchange rates. The majority of the Group's financial assets and liabilities are denominated in Norwegian Kroner and at December 31 2015, the only material assets and liabilities denominated in foreign currencies expect for the associated SD Standard Drilling Plc are USD bank accounts of USD 480 644, denominated at NOK 4 233 339.

The Group monitors its exposure to currency risk on a regular basis.

At December 31 2014, had the exchange rate between the US Dollar and the Norwegian Kroner increased/(decreased) by 5% with all other variables held constant, the decrease or increase respectively in net assets and the income statement +/(-) TNOK 212.

Tax risk

Saga Tankers is subject to taxation by Norwegian authorities. Any change in taxation regime may affect the payable taxes of Saga Tankers.

Legal risk

The Charterer of the vessel MT Saga Agnes ("Saga Agnes") redelivered the vessel from its contract to the Company on 27 July 2012. After redelivering the vessel to the Group, the Charterers of Saga Agnes AS has presented the Group with a claim of about USD 2 million related to the time charterparty for the vessel "Saga Agnes". The matter will be resolved through arbitration. Saga Tankers ASA acts as guarantor under the named charterparty. No reserves have been made for this claim, as it is considered by the management of the group to be unlikely that the claim will be supported by the arbitration.

Credit Risk

The Group is exposed to credit risk, inherent in the risk that a counterparty will be unable to pay amounts in full when due. Allowances are made for credit losses that have been incurred by the balance sheet date, if any. The maximum exposure to credit risk on cash and cash equivalents and trade and other receivables (ignoring collateral and credit quality) at December 31, 2015 was NOK 426.6 million (2014:NOK 297.7 million).

Concentration of credit risk exists to the extent that at December 31, 2015 all cash and cash equivalents were held at two financial institutions with credit ratings according to Standard & Poor's of A+ or better:

NOK 1000
Counterparty	Rating	Geographical segment	2015	2014
Cash and cash equivalents
DnB	$A+$	Norway	398 136	285 519
Nordea	$AA-$	Norway	28 4 70	12 2 10
Total			426 606	297 729

Liquidity risk

The group monitors rolling forecasts of the group's liquidity requirements to ensure it has sufficient cash to meet operational needs. The group has no outstanding capital commitments.

Long term debt of TNOK 60 000 was raised in the subsidiary Vallhall Fotballhall KS in May 2014. Fixed assets in the subsidiary are used as collateral. No group guarantees has been issued related to the debt. The debt has an instalment plan of TNOK 1000 per quarter until final settlement in May 2024. Hence the loan will have a revolving current portion of TNOK 4000 until May 2023.

NOK 1000
	Initial loan	Jun 2014 -	Jan 2016 -
Instalement plan long term debt	May 2014	Dec 2015	Feb 2024	May 2024
Opening balance loan		60 000	54 000	20 000
Release Ioan	60 000
Instalment 1 000 per quarter		$-6000$	$-34000$
Balloon-payment				$-20000$
End balance loan	60 000	54 000	20 000
Estimated interest payments*		3 0 2 4	10 03 1	220

* Accrued interest is settled at each instalment. Estimated future interest payments are made at current interest rate at 3.35 % per annum. The interest rate is floating and hence subject to change.

At the reporting date, the Group held cash and cash equivalents of TNOK 426 606 (2014: TNOK 297 729) and other liquid assets of TNOK 423 (2014: TNOK 622) that are expected to readily generate cash inflows for managing liquidity risk.

Capital Management

The group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors the available cash and projected capital expenditure requirements so that they can capitalize on attractive investment opportunities when such arise. The Group considers the available cash and the existing credit lines, if any, to be at an appropriate level for the short to medium term.

Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The estimated fair value has been determined by the Group using appropriate market information and valuation methodologies. The different levels have been defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that $\bullet$ is, as prices) or indirectly (that is, derived from prices) (Level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The following table presents the group's financial assets and liabilities that are measured at fair value at 31 December 2014. The fair value of financial instruments does not significantly deviate from their carrying amount.

NOK 1000
Available-for-sale financial assets (Equity securities) in NOK	2015	2014
Listed shares (Level 1)	461908	53 158
Total	461908	53 158

There were no transfers between the levels during the year.

(a) Financial instruments in level 1

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily Oslo Axess, OSE, DAX and FTSE 100 equity investments classified as trading securities or available for sale.

(a) Financial instruments in level 2

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Specific valuation techniques used to value financial instruments include:

• Quoted market prices or dealer quotes for similar instruments; $\bullet$
• Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial $\bullet$ instruments.

NOTE 19 - FINANCIAL INSTRUMENTS

Set out below is a comparison by category for carrying amounts and fair values of all of the Group's financial instruments that are carried in the financial statements.

2015
	Carrying		Fair value
NOK 1000	amount Fair value		Hierarchy
Loans and receivables
Cash and cash equivalents	426 606	426 606		$\mathbf{1}$
Trade receivables	423	423		$\overline{2}$
Available-for-sale assets
Available-for-sale shares	461908	461908
Other financial liabilities
Long term interest bearing debt	50 000	50 000		$\overline{2}$
Short term interest bearing debt	4 0 0 0	4 0 0 0		$\overline{2}$
Trade payables	421	421		$\overline{2}$
Other current liabilities	4829	4829		$\overline{2}$

2014
	Carrying		Fair value
NOK 1000	amount Fair value		Hierarchy
Loans and receivables
Cash and cash equivalents	297729	297 729	$\mathbf{1}$
Trade receivables	622	622	$2 \overline{ }$
Available-for-sale assets
Available-for-sale shares	53 158	53 158	1.
Other financial liabilities
Long term interest bearing debt	54 000	54 000	$\overline{2}$
Short term interest bearing debt	4 0 0 0	4 0 0 0	$\overline{2}$
Trade payables	191	191	$\overline{2}$
Other current liabilities	2664	2 6 6 4	$\overline{2}$

NOTE 20 - AVAILABLE-FOR-SALE FINANCIAL ASSETS

As at year end the Group held the following financial instruments carried at fair value in the statement of financial position:

NOK 1000 At 1 January	53 158 80 460	99 731
Additions
Assets received through merger and demerger (Note 2)	219 607	169 490
Currency translations	9
Impairment*	$-18488$	$-17173$
Increase/(Decrease) in value recognized as other comprehensive income	251808	$-39479$
Reclassified as subsidiaries due to aquistion and gain of control	$-53158$
Reclassified from associates due to dilution and loss of significant influence	21423
Disposals	$-92911$	$-159412$
At 31 December	461 908	53 158
Less non-current portion	$-461908$	$-53158$
Current portion
Fair value hierarchy		31 Dec 2015 31 Dec 2014
Listed shares Level 1	461908	53 158
Total	461 908	53 158

* Impairments are made in cases where shortfall in value is substantial (more then 20%), and/or is considered not to be temporary.

Available-for-sale financial assets include the following:

NOK 1000
Equity sequrities	2015	2014
S.D. Standard Drilling, market price		53 158
NEL ASA, market price	249 159
Axcator AB, market price	134 304
Vistin Pharma ASA, market price	42 071
Weifa ASA, market price	23 5 8 6
Aqualis ASA, market price	12788

All the available-for-sale financial assets shown above are denominated in NOK and are measured at fair value as of year-end.

The Group booked an impairment of TNOK 18 488 during 2015 (2014: TNOK 17 173) related to the investment in Weifa ASA and Aqualis ASA.

NOTE 21 - DIVIDENDS PAID AND PROPOSED

No dividends have been paid during 2014 and 2015. The board of Directors has decided not to distribute any dividends in 2016 based on the financial year of 2015. However, reference is made to note 23 subsequent events regarding purchase of own shares.

NOTE 22 - ACQUISITION AND DISPOSAL OF SUBSIDIARY

During second quarter the Group increased its investment in SD Standard Drilling Plc bringing its total ownership from 18.96% up to 59.77 %. Within the second quarter the Group was assessed to be in control of the company, and the investment was fully consolidated in second quarter with effect from 1 April. The transaction gave rise to a gain of TNOK 67,547, representing the difference between share of net asset value of TNOK 264,353 and purchase price of TNOK 196,806. The disposal in fourth quarter gave rise to a loss of TNOK 6,062, hence a total net gain of TNOK 61,486.

NOK 1000 Fair value 1 April 2015
Assets
Fixed assets	16
Other current assets	906
Available-for-sale financial assets	178
Cash and cash equivalents	441840
Total assets	442 941
Liabilities
Other current liabilities and accruals	671
Total liabilities	671
Net assets value	442 269
Non-controlling share	177916
Shareholders share of net asset value	264 353
Purchase price	196 806
Net gain	67 547

The acquisition in the second quarter resulted in a mandatory offer from the Group for all shares held by non-controlling interests. During third quarter this led to the acquisition of an additional 8.61 % of the company, bringing the total to 68.38 %. The acquisition in third quarter is recognized as an equity transaction between controlling and non-controlling interests. A change in equity of TNOK 7,625 has been recognized based on this transaction, representing the difference of carrying value acquired assets of TNOK 38,075 and acquisition cost of TNOK 30,450.

NOK 1000	Aquisition third quarter
Carrying value aquired assets	38 075
Aquisition cost	30 450
Change in equity	7625

In the fourth quarter, the Group sold shares in the company, bringing the Group ownership down to 46.2 %. The transaction resulted in derecognition of SD Standard Drilling Plc as subsidiary, and recognition of the entity as associate. The disposal of the subsidiary gave rise to a loss of TNOK 6,062.

NOK 1000	Disposal fourth quarter
Equity value disposal	17 703
Consideration	11 643
Net loss	$-6062$

The transactions effects on non-controlling share was as follows:

Non-controlling share
177916
$-38075$
$-7872$
$-23455$
$-108513$

NOK 1000	Cash effect
Cash in subsidiary at aquistition	441840
Accumuleted purchase price first quarter	$-196806$
Purchase price paid prior years (note 19)	53 158
Purchase price third quarter	$-30450$
Net cash flow from new subsidiary	267 741

NOTE 23 - SUBSEQUENT EVENTS

At Extraordinary General Meeting 11 February 2016, the board of directors was given authorization for purchase of up to 28,673,611 own shares in the period until the Annual General Meeting in 2017.

The 23 February the company acquired 7 million own shares in the open market at NOK 2.47 per share. After the transaction Saga Tankers ASA owns a total of 7 million own shares, representing 2.44% of the outstanding share capital.

RESPONSIBILITY STATEMENT

We confirm, to the best of our knowledge, that the financial statements for the period from 1 January 2015 to 31 December 2015 have been prepared in accordance with the applicable accounting standards, and give a true and fair view of the Group and the Company's consolidated assets, liabilities, financial position and results of operations. Furthermore, we confirm that the Report of the Board provides a true and fair view of the development and performance of the business and the position of the Group and the Company, together with a description of the key risks and uncertainty factors that the Group is facing.

Oslo, 28 April 2016 The Board of Directors

Oystem Strey Jeklen

Øystein Stray Spetalen Board Member

de le Kristin Hellebust Board Member

Martin Nes Chairman

onne Litshelm Sandvold

Board Member

CEO

CORPORATE GOVERNANCE

The Group endeavours to comply with the NUES corporate governance guidelines.

$\bar{\mathbf{r}}$

Please see the Company's website for information about the Company's deviations from the NUES guidelines during 2015.

SEPARATE FINANCIAL STATEMENT

SAGA TANKERS ASA

SAGA TANKERS 2015 ANNUAL REPORT > PAGE 35

SEPARATE INCOME STATEMENT FOR THE PERIOD 01.01. -31.12.

NOK 1000	NOTE	2015	2014
OPERATING INCOME
Net gain on financial assets	$\overline{2}$	13 0 73
Other Income	$\overline{2}$	400
TOTAL OPERATING INCOME		13 4 73
OPERATING EXPENSES
Net loss on financial assets			8651
Employee benefit expenses	3	3 3 6 1	2 1 0 8
Administation expenses	$\overline{3}$	7 2 3 6	4 3 0 4
TOTAL OPERATING EXPENSES		10 597	15 062
NET OPERATING PROFIT/LOSS (-)		2876	$-15062$
FINANCIAL INCOME/EXPENSES (-)
Interest income		2 5 8 5	1609
Interest expense		$-2$	-
Impairment of financial assets	5	$-100840$	$-70971$
Net foreign exchange gain/(loss)		105 299	115 205
NET FINANCIAL INCOME/EXPENSES (-)		7042	45 843
NET PROFIT BEFORE TAX		9919	30 780
Taxes	9	65	26 595
NET PROFIT/LOSS (-) FOR THE YEAR		9854	4 1 8 5
ATTRIBUTABLE TO
Accumulated losses		9854	4 1 8 5

SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

NOK 1000	NOTE	31 Dec 2015	31 Dec 2014
ASSETS
Non-current assets
Shares and other financial assets	12	3760	53 158
Subsidiaries	8	264522	17886
Associates	13		¥
Total non-current assets		268 282	71044
Current assets
Intercompany receivables	5	101 274	114278
Other current assets		114	74
Cash and equivalents	$\overline{4}$	344 000	269 740
Total current assets		445 388	384092
TOTAL ASSETS		713 669	455 136
EQUITY AND LIABILITIES
Equity
Share capital	10	286 733	175834
Other paid in equity	10	924 814	883 696
Total paid-in-capital		1211547	1059530
Accumulated losses	10	-599 756	$-704178$
Total equity		611791	355351
LIABILITIES
Current liabilities
Intercompany payables	14	98 500	98 500
Trade and other payables		143	5.
Public duties payable		802	131
Other current liabilities		2 4 3 4	1 1 4 9
Total current liabilities		101879	99.784
Total liabilities		101879	99784
TOTAL EQUITY AND LIABILITIES		713 669	455 136

Dystem Stray Schlen

Øystein Stray Spetalen
Board Member

of Kilo

Kristin Hellebust Board Member

Oslo, 28 April 2016 The Board of Directors

Martin Nes

Chairman

$\ddot{\mathbf{G}}$

Yvonne Litsheim Sandvold

Board Member

Espen Lundaas CEO

SAGA TANKERS 2015 ANNUAL REPORT > PAGE 37

SEPARATE CASH FLOW STATEMENT FOR THE PERIOD 01.01 $-31.12$

NOK 1000	NOTE	2015	2014
Profit before tax		9919	30 780
Impairment financial assets		101 061	88 1 24
Loss/(-gain) on sale financial asset		$-13294$	$-8,502$
Foreign exchange losses/(gains)		$-105299$	$-115205$
Income tax paid	9	$-66$
Increase/decrease receivables and prepayments		$-40$	$-8$
Increase/decrease payables and accruals		2095	767
Net cash flow from operating activities		$-5624$	$-4044$
Investment in Financial assets non current	12	$-180230$
Divestment in Financial assets non current		256801	167 449
Net divestment/(-investemet) trading		$-14100$
Net cash flow from intercompany receivables		13 304
Net payment from/(to) associated companies and subsidiaries		$-50$	3 4 4 7
Net cash flow from investing activities		75725	170896
Share issuance costs			$-462$
Net cash flow from financing activities			$-462$
Net change in cash and cash equivalents		70 101	166 391
Cash and equivalents at beginning of period		269 740	89780
Net foreign exchange differences (unrealised)		4 1 6 0	13 5 69
Cash and equivalents at end of period		344 000	269 740

NOTES TO THE SEPARATE FINANCIAL STATEMENT

NOTE 1 - ACCOUNTING POLICIES

General

The financial statements are presented in accordance with the Norwegian Accounting Act and Norwegian general accepted accounting principles in Norway (NGAAP). The accompanying notes are an integral part of the financial statements. The parent company accounts are presented in NOK which also is the functional currency for the parent company.

Estimates

The management has used estimates and assumptions that may have effect on revenues, costs and the valuation of assets and liabilities in the reporting of the annual financial statements. These assumptions are in accordance with generally accepted accounting policies in Norway.

Currency

Transactions in foreign currencies are recorded at the exchange rate in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate at the financial position date. Realized currency exchange gains or losses are recorded at the time of payment and recognised as financial income/expense. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

Measurement of revenues and costs

Revenues are recognized as they are earned. Cost is recognized in the same reporting period as the corresponding revenues.

Classification and evaluation of balance sheet items

Current assets and short-term liabilities consist of items due for payment within a year after establishment. Other items are recognized as long-term assets or liabilities. Current assets are valued at the lowest of acquisition value or fair value. Short-term liabilities are recorded at the nominal value at the time of establishment. Non-current assets are valued to the value at the time of acquisition less accumulated depreciation. Long-term loans are valued at nominal value at the time of establishment.

Receivables

Receivables are recorded in the balance sheet at nominal value less provision for doubtful accounts. Provisions for doubtful accounts are based on an individual assessment of the different receivables.

Taxes

The income tax in the profit and loss statement consists of taxes payable and changes in deferred taxes. Deferred tax and deferred tax benefit is calculated based on temporary differences between tax bases of assets and liabilities and their carrying amount for financial reporting purposes, and is based on nominal values. Net deferred tax benefit is recorded in the balance sheet only in the event that it is probable that is can be utilized in the foreseeable future. Taxes payable and deferred taxes are recorded directly in equity in the event that the tax items are related to equity transactions.

Shares in subsidiaries

Investments in shares in subsidiaries are accounted for using the cost-method in the statutory accounts. An impairment loss is recognized if the fair value is lower than book value and this is viewed as non-temporary. The impairment loss is reversed to the degree that the fair value improve, and that the improvement is not assumed to be of a short-term nature.

Dividends, Group contribution and other distributions are recognized in the same year as they are recognized in the subsidiary's financial statement. If dividends / Group contribution exceed withheld profits after acquisition, the excess amount represents repayment of invested capital, and the distribution will be deducted from the recognized value of the acquisition in the balance sheet for the parent company.

Investments in associates

Investments in shares in associates are accounted for using the cost-method in the statutory accounts. An impairment loss is recognized if the fair value is lower than book value and this is viewed as non-temporary. The impairment loss is reversed to the degree that the fair value improve, and that the improvement is not assumed to be of a short-term nature.

Investments in other shares

Investments in shares in other shares are accounted for using the cost-method in the statutory accounts, unless considered as part of trading portfolio. An impairment loss is recognized if the fair value is lower than book value and this is viewed as nontemporary. The impairment loss is reversed to the degree that the fair value improve, and that the improvement is not assumed to be of a short-term nature.

Pensions

The company is obligated to have an occupational pension plan. The company meets the requirements for an occupational pension plan in accordance with the Norwegian law on required occupational pensions.

Share-based compensation plans

The Company held no share-based compensation plans as of 31.12.2015.

Cash, cash-equivalents and cash flow statement

Cash and cash-equivalents include cash, bank deposits and other short deposits that are repayable on demand. The cash flow statement is prepared using the indirect method. Restricted bank deposits related to the operations are included in cash equivalents.

NOTE 2 - OPERATING SEGMENTS

The management monitors the net income from investments in financial assets. The Company also generates other income such as fees for services rendered, guarantees and such.

Segment information	2015	2014
NOK 1000
Outcome
Net income financial assets	13 0 73	$-8651$
Services rendered	300
Other income	100

NOTE 3 - SPECIFICATION OF EXPENSES

The expenses for the financial years are specified below:
NOK 1000	2015	2014
Employee benefit expenses
Salaries	2 500	1518
Board fees	415	340
Social security costs	437	238
Pension expenses	3
Other personnel expenses	6	11
Total employee benefit expenses	3 3 6 1	2 1 0 8
Number of employees	2	1
Other operating expenses
Consultancy fees	6 2 5 9	3734
Other operating expenses	977	570
Total other operating expenses 7 2 3 6 4 3 0 4

NOK 1000	2015	2014
Audit fees including VAT
Audit services	604	636
Other attestation services	166	34
Tax services	2 707	1629
Other non-audit services		225
Total	3 4 7 8	2525

Fees to the Group's auditors are included in administration expenses.

Remuneration to the Board of Directors and executive management for the period 01.01.15 - 31.12.15

2015
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	2 1 1 8	$\overline{\phantom{0}}$
Martin Nes 1)	Chairman	-	$\overline{\phantom{0}}$	$\overline{\phantom{0}}$	130
Øystein Stray Spetalen 2)	Board membe	٠	$\overline{\phantom{0}}$		110
Kristin Hellebust 3)	Board membe	-	-		75
Yvonne Litsheim Sandvold 3)	Board membe	$\qquad \qquad \blacksquare$	$\overline{\phantom{a}}$		75
Brita Eilertsen 4)	Board membe				25
Total renumeration		2 1 1 8	٠		415
2014
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	1518
Øystein Stray Spetalen	Chairman				140
Martin Nes	Board membe				100
Brita Eilertsen	Board membe				100
Total renumeration		1518			340

The company had no outstanding loans, guarantees or securities in favour of any member of the Board of Directors, company management or other related parties at year end 2015. However, the company had a short term loan of MNOK 10 from board member and shareholder Øystein Stray Spetalen for a period in 2015.

Guidelines for determining salaries and other compensation for company management:

In accordance with the regulations in paragraph 6-16a in the Norwegian Public Limited Companies Act, the Board of Directors has established a statement regarding remuneration. The focus of the company is to hire qualified managers and to pay according to the market. Salary and remuneration of the CEO and CFO is determined by the Board of Directors, and payments to other employees are determined by the CEO according to guidelines from the Board of Directors.

Saga Tankers Group's compensation schemes include only a limited number of benefits in kind. These benefits are offered in line with what is common practice in international labor markets and typically include personal communication equipment, access to media, and car and parking arrangements.

The CEO/CFO of Saga Tankers ASA has no set bonus scheme. A bonus of TNOK 600 has been granted for the year 2015.The senior executive has a mutual three months termination period, and no contractual agreements for severance compensation in case of termination of employment except for salary trough the termination period. The "Statement on the determination salary and other remuneration for senior executives" will be presented at the annual general meeting and made available on the Company's webpage.

Stock options program to Board members and Company employees

No stock options or right to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2015.

NOTE 4 - CASH AND CASH EQUIVALENTS

The Company's cash and cash equivalents are denominated in the following currencies:

NOK 1000	31 Dec 2015 31 Dec 2014
US Dollars	1592	74838
Norwegian kroner	342 408	194 902
Total cash and cash equivalents	344 000	269 740
Restricted cash
Employee tax accounts	596	98

Interest income is earned at floating interest rates. Restricted cash consists of salary related tax.

NOTE 5 - LOANS TO GROUP COMPANIES

Net book value
NOK 1000	31 Dec 2015 31 Dec 2014
Saga Agnes	19 991	33 175
Saga Chelsea AS	19 29 1	19 216
Saga Julie AS	28 105	28 0 28
Saga Unity AS	33 887	33 860
Intercompany short-term loans	101 274	114 278

Impairment/ (reversal of impairment)

NOK 1000		2015 Accumulated
Saga Agnes	18747	101 299
Saga Chelsea AS	19 2 15	104 065
Saga Julie AS	28 25 9	153 133
Saga Unity AS	34 618	187886
Impairment of loan	100 840	546 383

Intercompany loans consist of loans to the subsidiaries provided prior years from the parent company for acquisitions of vessels and working capital purposes.

As a result of currency effects, the nominal NOK value of the loans increased by NOK 101.1 million through 2015.

The Company has, as per NGAAP, evaluated if there are reasons to believe that any negative change in value adjusted equity of the subsidiaries are permanent and should lead to an impairment of the intercompany receivables, and consequently written down the receivables with NOK 546 million to a book value of NOK 101 million

Debtors which fall due later than one year

NOK 1000	31 Dec 2015 31 Dec 2014
Face value	647 657	559821
Impairment	$-546383$	$-445543$
Net book value	101 274	114 278

NOTE 6 -LEASE AGREEMENTS

The company currently hold no own fixed assets.

Annual rental of non-financial assets

The company has a lease agreement for office space, with a contract period until 30 may 2017 and a mutual termination span of six months. The annual rent for 2015 was TNOK 79. Additional costs TNOK 63 for other mutual costs relating to the premises was also incurred in 2015. It is expected for these costs to remain at approximately this level for the duration of the lease period.

NOTE 7 - RELATED PARTIES

Remuneration to executives is disclosed in note 3, and balance with group companies is disclosed in note 5 and note 12.

Company is sharing office locations for its head office with Ferncliff Holding AS, the holding company of a board member, and the Company's largest shareholder. Transactions with related parties during 2015 are limited to office rent including mutual costs, and services rendered regarding support for financial reporting.

All transactions with related parties have been made on an arm's length basis and are settled on a regular basis. Goods and/or services purchased from related parties have been priced at industry standard rates. Transactions with related parties are specified below:

RELATED PARTY TRANSACTIONS

2015
NOK 1000	Sales to	Purchase from related parties related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS		830
2014
NOK 1000	Sales to	Purchase from related parties related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS		345

NOTE 8 - INVESTMENTS IN SUBSIDIARIES

The consolidated financial statements include the financial statements of Saga Tankers ASA and its subsidiaries listed in the table below:

NOK 1000	Country of	Ownership/ incorporation Voting rigths from	Consolidated in the Group financial statements	Share capital/ partner capital	Net book value 31 December 2015	Net book value 31 December 2014
Saga Agnes	Norway	100 %	2010	1 0 0 0
Saga Chelsea AS	Norway	100 %	2010	1 0 0 0	۰
Saga Julie AS	Norway	100 %	2010	1 0 0 0	۰
Saga Unity AS	Norway	100 %	2010	1 000	-	۰
Vallhall Fotballhall KS	Norway	54,8%	2014	35 000	14 5 9 4	14 5 9 4
Vallhall Fotballhall AS	Norway	54,8%	2014	5 5 0 0	2864	2864
Vallhall Fotballhall Drift AS	Norway	55,2 %	2014	501	427	427
Strata Marine & Offshore AS	Norway	100 %	2015	1 0 0 0	246 636
Total				46 001	264 522	17886

The Saga Agnes AS, Saga Chelsea AS, Saga Julie AS, Saga Unity AS and Strata Marine & Offshore AS have their offices in Sjølyst Plass 2, 0278 Oslo, Norway. Vallhall Fotballhall KS, Vallhall Fotballhall AS and Vallhall Fotballhall Drift AS have their offices at Innspurten 16, 0663 Oslo, Norway.

Impairment

NOK 1000	Recognized 2015	Accumulated as at 31 December 2015
Saga Agnes		100 452
Saga Chelsea AS		114874
Saga Julie AS		112939
Saga Unity AS		113 987
Impairment subsidiaries		442 254

The impairment of the subsidiaries has been made on basis of their equity as an estimate of recoverable amount. The subsidiaries have for the time being no substantial assets other than cash and receivables towards Saga Tankers ASA.

NOTE 9 - INCOME TAX

NOK 1000	2015	2014
Current tax expense		30 198
Deferred tax expense		$-3603$
Tax effect of group contribution
Tax expense		26 595
Reconciliation of tax expense
Net income before tax	9919	30780
Tax expense based on nominal tax rate*	2678	8311
Tax effect of permanent differences	$-7542$	21887
Not recognized deferred tax assets	4864	$-3603$
Tax expense		26 595
Reconciliation of deferred tax (-) / deferred tax assets 27%
Tangible assets	$-5$	$-6$
Receivables	120 216	120 297
Net tax loss carried forward**	4 4 6 7
Net deferred tax assets	124 678	120 290
Net deferred tax assets not recognized	$-124678$	$-120290$
Deferred tax (-)/ deferred tax assets in the balance sheet
Tax payable
Current tax expense	65	30 198
Deferred tax expense		$-3603$
Tax effect of group contribution		$-26595$
Tax payable	65

* Tax rate of 25 % adopted by the Norwegian Parliament 14 December 2015, effective as of 1 January 2016, have been used to calculate deferred taxes. The tax rate was 27 % for revenues in Norway for 2015.

** Net tax loss carried forward is available indefinitely for offset against future taxable profits.

The Group is currently undergoing a tax audit, where the integrity of certain tax positions has been questioned for the fiscal years of 2012 and 2013. The tax positions in question are deferred tax loss on sale of assets, loss carried forward, and paid in equity. No conclusion has been made by the tax authorities regarding this matter. An annulment of loss on sale of assets and loss carried forward, could lead to tax payable. Regardless of the tax audit, these tax positions in question are not recognized in the balance sheet as deferred tax assets are recognized only to the extent that future utilization is considered probable.

NOTE 10 - ISSUED CAPITAL AND SHAREHOLDERS

Issued capital 2015

	Number of	Share		Accumulated
Issues capital	shares	capital	Other equity	losses	Total
NOK 1000
Equity per 31 December 2013	86 777 409	86777	883 696	$-795203$	175 270
Demerger June 2014	89 056 317	89 056	-	87 302	176 358
Share issuance costs		-	-	$-462$	$-462$
Net profit / loss (-) for the year 2014		$\overline{\phantom{0}}$	-	4 1 8 5	4 1 8 5
Equity per 31 December 2014	175 833 726	175 834	883 696	$-704178$	355 351
Merger 1 January 2015	110 898 883	110899	41 118	94 5 6 9	246 586
Net profit/loss (-) for the year 2015		-	-	9854	9854
Equity per 31 December 2015	286 732 609	286733	924 814	$-599756$	611791

The company Strata Marine & Offshore AS merged with a subsidiary of Saga Tankers ASA with effect from 1 January 2015. Saga Tankers ASA issued 110 898 883 new shares to the former shareholders of Strata Marine & Offshore AS as settlement for the transaction. The transaction is considered to be a combination of entities under common control. The principle of Carryover basis accounting has been applied.

Certain assets owned by Ferncliff TIH 1 AS was demerged into Saga Tankers ASA with effect from 30 June 2014. Saga Tankers ASA issued 89 056 317 new shares to the shareholder of Ferncliff TIH 1 AS as settlement for the transaction. The transaction is considered to be a combination of entities under common control. The principle of Carryover basis accounting has been applied.

The nominal value per share as of 31 December.2015 was NOK 1 per share, for all of the Company's shares. All issued shares have a nominal value of NOK 1 and are of equal rights. Saga Tankers ASA is incorporated in Norway, listed on the Oslo Exchange Axess list, and the share capital is denominated in NOK.

Board authorizations

The board of directors had authorizations to increase the share capital with up to NOK 87,916,864, but no authorization for purchase of own shares was outstanding at year end. This authorization has later been cancelled and replaced by new authorizations. See note 15 - Subsequent events for further information.

As of 4 January 2016 the Company had 228 shareholders

NAME	04.01.2016
1 ØYSTEIN STRAY SPETALEN *	60,28 %
ALLUM HOLDING AS * 2	14,47%
GROSS MANAGEMENT AS 3	9,56%
AS FERNCLIFF * $\overline{4}$	2,17%
5 BJØRN BAKKEN	1,45 %
UTHALDEN A/S 6	1,36 %
7 ØYSTEIN IKDAHL	0,97%
WIECO AS 8	0,89%
9 BJØRN HÅVARD BRÆNDEN	0,73 %
10 PARK LANE FAMILY OFFICE AS	0,70 %
CAMACA AS 11	0,66%
DEUTSCHE BANK AG 12	0,62%
13 KÅRE KLAVENES	0,59 %
14 TERJE VIRIK	0,55%
15 BJØRN OLSEN	0,42%
16 BHB CAPITAL MANAGEMENT AS	0,39%
17 RICIN INVEST AS	0,38 %
18 KRISTIAN HODNE AS	0,37 %
GOLDMAN SACHS INTERNATIONAL EQUITY 19	0,36 %
20 SKEIE HOLDING AS	0,26%
OTHER	2.83 %

Shares owned by the Board, Management and their Related Parties

2015	# of Shares
Board of Directors*
Martin Nes (Chairman)
Øystein Stray Spetalen	172 841 799
Yvonne Litsheim Sandvold
Kristin Hellebust
Group Management
Espen Lundaas, CEO (CFO)
Related parties
Allum Holding AS**	41 491 339
AS Ferncliff**	6 235 316
Total number of shares held by Board members, Group
management and related parties	220 568 454
Total number of shares held by Board members, Group
management and related parties in % of total outstanding shares	76,92 %

2014	# of Shares
Board of Directors*
Øystein Stray Spetalen (Chairman)	172 841 799
Martin Nes
Brita Eilertsen
Group Management
Espen Lundaas, CEO (CFO)
Related parties
Total number of shares held by Board members, Group
management and related parties	172 841 799
Total number of shares held by Board members, Group
management and related parties in % of total outstanding shares	98,30 %

* Board of Directors was altered in March 2015. Brita Eilertsen left the Board, and Martin Nes was appointed Chairman. New elected board members Yvonne Litsheim Sandvold and Kristin Hellebust.

** Allum Holding AS and AS Ferncliff are companies in which Øystein Stray Spetalen are the sole beneficial owner.

Shares and stock options by Board members and Group management

No stock options or rights to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2015.

NOTE 11-RISKS

The risk exposure of Saga Tankers ASA is considered to be similar as the risks described for the Saga Tankers Group. References are made to note 17in the Saga Tankers Group consolidated accounts. The sensitivity analysis for the equity instruments in the consolidated accounts will not be applicable to the Company's accounts, due to differences in accounting principles.

NOTE 12 - SHARES AND OTHER FINANCIAL ASSETS

	2015	2014
NOK 1000
At 1 January	53 158	60 232
Additions	180 230	169 026
Disposals	$-2622$	$-158948$
Reclassified as associates	$-226765$
Impairment	$-241$	$-17153$
At 31 December	3760	53 158

Shares and other financial assets include the following

NOK 1000
	2015	2014
Listed shares	3760	53 158
Total	3760	53 158

The financial assets are denominated in NOK and are measured at cost. The financial assets have been impaired with TNOK 241 in 2015 which also is the total accumulated impairment at year end.

NOTE 13 - ASSOCIATES

Book value of associates

	SD Standard Drilling Plc
NOK 1000
At 1 January 2015
Reclassified from shares and other financial assets	226 765
Disposals	$-718$
Dividend classified as repayments	$-226047$
At 31 December 2015

Financials for associates:

NOK 1000
31 December 2015
	Country of					% Interest
Name	Incorporation Assets		Liabilities	Revenues	Profit	held
SD Standard Drilling Plc	Cyprus	83 210	581	$\overline{\phantom{a}}$	$-26757$	46,02 %

NOTE 14 - INTERCOMPANY PAYABLES

Net book value

		31 December 31 December
NOK 1000	2015	2014
Saga Agnes	18 3 5 9	18 3 5 9
Saga Chelsea AS	18873	18873
Saga Julie AS	27 750	27750
Saga Unity AS	33 518	33 518
Intercompany payables	98 500	98 500

NOTE 15 - SUBSEQUENT EVENTS

At Extraordinary General Meeting 11 February 2016, the board of directors was given authorization for purchase of up to 28,673,611 own shares in the period until the Annual General Meeting in 2017.

The 23 February the company acquired 7 million own shares in the open market at NOK 2.47 per share. After the transaction Saga Tankers ASA owns a total of 7 million own shares, representing 2.44% of the outstanding share capital.

AUDITOR'S REPORT

$\sim$ $\sim$

To the Annual Shareholders' Meeting of Saga Tankers ASA

Independent auditor's report

Report on the Financial Statements

We have audited the accompanying financial statements of Saga Tankers ASA, which comprise the financial statements of the parent company and the financial statements of the group. The financial statements of the parent company comprise the balance sheet as at 31 December 2015, and the income statement and cash flow statement, for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements of the group comprise the balance sheet at 31 December 2015, income statement, changes in equity and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

The Board of Directors and the Managing Director's Responsibility for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the financial statements of the parent company in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and fair presentation of the financial statements of the group in accordance with International Financial Reporting Standards as adopted by EU and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap

.......................................

Independent auditor's report - 2015 - Saga Tankers ASA, page 2

Opinion on the financial statements of the parent company

In our opinion, the financial statements of the parent company are prepared in accordance with the law and regulations and present fairly, in all material respects, the financial position for Saga Tankers ASA as at 31 December 2015, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.

Opinion on the financial statements of the group

In our opinion, the financial statements of the group are prepared in accordance with the law and regulations and present fairly, in all material respects, the financial position of the group Saga Tankers ASA as at 31 December 2015, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU.

Report on Other Legal and Regulatory Requirements

Opinion on the Board of Directors' report

Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.

Opinion on Registration and Documentation

Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements ISAE 3000 "Assurance Engagements Other than Audits or Reviews of Historical Financial Information", it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.

Oslo, 28 April 2016 PricewaterhouseCoopers AS

Anders Ellepin

Anders Ellefsen State Authorised Public Accountant (Norway)

SAGA TANKERS ASA +47 23 01 49 14 Sjølyst Plass 2, 0278 Oslo Norway

INVESTOR RELATIONS Phone: +47 23 01 49 14 e-mail: espen.lundaas@sagatankers.no

www.sagatankers.com

SAGA TANKERS 2015 ANNUAL REPORT > PAGE 51

AUDITOR'S REPORT

To the Annual Shareholders' Meeting of Saga Tankers ASA

Independent auditor's report

Report on the Financial Statements

We have audited the accompanying financial statements of Saga Tankers ASA, which comprise the financial statements of the parent company and the financial statements of the group. The financial statements of the parent company comprise the balance sheet as at 31 December 2015, and the income statement and cash flow statement, for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements of the group comprise the balance sheet at 31 December 2015, income statement, changes in equity and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

The Board of Directors and the Managing Director's Responsibility for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the financial statements of the parent company in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and fair presentation of the financial statements of the group in accordance with International Financial Reporting Standards as adopted by EU and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap

Independent auditor's report - 2015 - Saga Tankers ASA, page 2

Opinion on the financial statements of the parent company

In our opinion, the financial statements of the parent company are prepared in accordance with the law and regulations and present fairly, in all material respects, the financial position for Saga Tankers ASA as at 31 December 2015, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.

Opinion on the financial statements of the group

In our opinion, the financial statements of the group are prepared in accordance with the law and regulations and present fairly, in all material respects, the financial position of the group Saga Tankers ASA as at 31 December 2015, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU.

Report on Other Legal and Regulatory Requirements

Opinion on the Board of Directors' report

Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.

Opinion on Registration and Documentation

Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements ISAE 3000 "Assurance Engagements Other than Audits or Reviews of Historical Financial Information", it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.

Oslo, 28 April 2016 PricewaterhouseCoopers AS

Anders Ellefun

Anders Ellefsen State Authorised Public Accountant (Norway)

SAGA TANKERS ASA +47 23 01 49 14 Sjølyst Plass 2, 0278 slo Norway

INVESTOR RELATIONS Phone: +47 23 01 49 14 e-mail: espen.lundaas@sagatankers.no

www.sagatankers.com