CONSOLIDATED FINANCIAL STATEMENTS –

GROUP ANNUAL REPORT 201 7

2017 Annual Report

Board of Director's Report 2017 > page 3 – page 5 Consolidated statement of comprehensive income 2017 > page 6 Consolidated statement of financial position 2017 > page 7 - page 8 Consolidated cash flow statement 2017 > page 9 Consolidated statement of changes in equity 2017 > page 10 Notes to the consolidated financial statements > page 11 – page 31 Responsibility statement > page 32 Corporate Governance > page 33 Separate income statement 2017 > page 35 Separate financial position 2017 > page 36 Separate cash flow statement 2017 > page 37 Notes to the separate financial statements > page 38 – page 49 Independent auditor's report 2017 > 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 2017

During the first half of 2017 Oslo Benchmark index moved sideways with only small movements. In the second half of the year, and especially in the third quarter, Oslo Stock Exchange gradually had a positive development that resulted in a positive return for 2017. Oslo Børs Benchmark Index increased by 19% in 2017, while the Energy Index increased by approximately 13%.

The changes in the group structure throughout 2017, has all been related to the investment in SD Standard Drilling Plc (SD). SD has through 2017 and into 2018 completed several equity placements in order to acquire a portfolio of Platform Supply Vessels (PSV). The Group has participated in these placements. However, the level of participation has not been uniform, thereby the Groups ownership and level of control of the investment has been changed several times. As this variation has been in the range of 15 % to over 20 % of the voting rights, the assessment of significant influence or not has been altered. The investment was reclassified from Associate to Available-for-sale financial assets to Associate in the first quarter. In fourth quarter, it is reclassified as Associate again. Post balance sheet events call for a new assessment in first quarter of 2018. Except for this, the major change in the investment has been the disposal of the available-for-sale investment in NEL ASA.

The Group's largest investments at the end of the year except for the Vallhall subsidiaries were Pareto Bank ASA, SD Standard Drilling Plc and Vistin Pharma ASA.

FINANCIAL RESULTS 2017 (GROUP)

The Group reports a total comprehensive income for 2017 of MNOK 20.5 (2016: MNOK -96.4).

The major items of the Groups net comprehensive income consist of income from lease and operation of property MNOK 18.4 and net gain on available-for-sale financial assets of MNOK 54.6. Change in available-for-sale assets generated other comprehensive income of MNOK -36.3. The net gain on available-for-sale financial assets, and the other comprehensive income, should the seen in relation to each other, as they origin from the same assets.

Gross income for 2017 was MNOK 74.0 (2016: MNOK 135.6).

Total operating expenses for 2017 were MNOK 21.8 (2016: MNOK 24.9). The operating expenses of 2017 includes the reversal of former write-offs on receivables of MNOK 1.2.

Net operating profit for 2017 was MNOK 52.2 (2016: MNOK 110.7).

Operating profit before interest, taxes, depreciation and amortization (EBITDA) for 2017 was MNOK 59.4 (2016: MNOK 112.2). The EBITDA can be derived as described directly and unadjusted from the statement of income. Net financial items for 2017 were NOK 0.8 million (2016: MNOK 0.9).

Earnings per share for 2017 were NOK 0.20 (2016: NOK 0.39), based on the net profit to shareholders of MNOK 54.4 (2016: MNOK 108.8).

As of year-end, the Company had 271 shareholders and 266,149,831 shares outstanding. The average number of shares outstanding throughout the year was also 266,149,831. The Company's 20 largest shareholders controlled about 97.8% of the total number of shares outstanding at year-end.

LIQUIDITY AND CASH FLOW

The net cash balance as of 31 December 2017 was TNOK 27,084 (2016: TNOK 439,060). The net change in cash over the year was TNOK -411,976 (2016: TNOK 12,454). Of the change in cash in 2017, TNOK -391,240 is repayment to the shareholders.

FINANCIAL POSITION

As of 31 December 2017, the Group's total assets amounted to MNOK 491.7 (2016: MNOK 863.9). Total equity to shareholders of parent company was MNOK 410.9 (2016: MNOK 784.1).

It is the opinion of the Board of Directors that the Group is in a sound financial position with an equity ratio of about 88.9 % (2016: 93.5 %.) 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 tax audit as referred to in the 2015 and 2016 has been finalized with final report dated 26 may 2017. The report does not entail any impact for the financial statements of 2017. This is further described in note 11 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 17.

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 2017.

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 directly involved in any research or development projects, and has not recognized any such costs during 2017.

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 2017 of MNOK 139.4 (2016: net loss MNOK -3.4).

Gross revenues for 2017 were MNOK 146.9 (2016 MNOK 5.0).

Total operating expenses for 2017 were MNOK 8.3 (2016: MNOK 9.4).

Operating profit before interest, taxes, depreciation and amortization (EBITDA) for 2017 was MNOK 138.5 (2016: MNOK -4.8).

Net financial items for 2017 were MNOK 0.8 (2016: MNOK 1.0).

The Board of Directors proposes that the net profit for 2017 of MNOK 139.4 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 2017.

SUBSEQUENT EVENTS

The associated company S.D. Standard Drilling Plc has after the date of the balance sheet completed an equity placement. The Groups ownership has thereby been diluted from 20.22 % to 18.38 %. References are made to note 21 – Subsequent events for further information.

INVESTMENT IN SHARES

The Group has during 2017 invested an additional MNOK 96 in SD Standard Drilling Plc, which at year-end is considered an associate with a value of value of MNOK 139. The Group has disposed of its investment in NEL ASA, an investment set at fair value of MNOK 53 per 2016.

GOING CONCERN AND DIVIDEND

The Group is currently in a sound position with a net book equity ratio of 88.9 % 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

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

NOK 1000	2017	2016








































Number of shares outstanding at period end	266 149 831	266 149 831

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

NOK 1000	NOTE	31 Dec 2017	31 Dec 2016

ASSETS
Non-current assets
Avaliable-for-sale financial assets	17,19	230 152	298 480
Fixed assets	10	92 611	89 513
Associates	4	139 323	36 223
Total non-current assets		462 085	424 216

Current assets
Trade receivables and other receivables	8	1 233	160
Other current assets	7	1 278	466
Cash and equivalents	6,17	27 084	439 060
Total current assets		29 594	439 685

TOTAL ASSETS		491 679	863 901

NOK 1000	NOTE	31 Dec 2017	31 Dec 2016

EQUITY AND LIABILITIES
Equity
Share capital	13	2661	286733
Own shares	13		$-20583$
Other paid in equity	13	859 577	987329
Total paid-in-capital		862 239	1 253 479
Accumulated losses		$-503798$	$-558148$
Other components of equity		52 413	88753
Non-controlling interests		26 218	23 685
Total equity		437 071	807768

LIABILITIES
Non-current liabilities
Long-term interest bearing debt	12,17	42 000	46 000
Deferred tax	11	241	173
Total non-current liabilities		42 241	46 173

Current liabilities
Short-term interest bearing debt	12	4 0 0 0	4 0 0 0
Tax payable		36	14
Trade and other payables		2 1 7 4	1410
Other current liabilities and accruals	9	6 1 5 8	4535
Total current liabilities		12 3 6 8	9959
Total liabilities		54 609	56 133

		0.01C70	002001

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD 01.01. – 31.12.

NOK 1000	NOTE	2017	2016

Profit before tax		56 987	110 540
Profit share from associates		-4 006	1 074
Depreciation	10	2 711	2 632
Net loss/(-gain) from AVA asset		-54 621	-116 656
Foreign exchange losses/(gains)		-480	136
Interest paid		1 571	1 767
Interest received		-1 833	-2 679
Income tax paid		-14	-109
Increase/decrease receivables and prepayments		-1 885	908
Increase/decrease payables and accruals		2 387	695
Net cash flow from operating activities		817	-1 693

Investment in AVA Financial assets	19	-98 698	-184 160
Divestment in AVA Financial assets		86 697	257 809
Net divestment/(-investment) trading		-	466
Interest received		1 833	2 679
Investment in fixed assets		-5 809	-38
Net cash flow from investing activities		-15 978	76 755

Repayments of long term borrowings	12	-4 000	-4 000
Payment of interest	12	-1 571	-1 767
Dividends paid to non-controlling interests		-	-4 070
Dividends and repayments to controlling interests		-391 240	-
Acquisition of own shares		-	-52 637
Net cash flow from financing activities		-396 811	-62 473

Net change in cash and cash equivalents		-411 972	12 589

Cash and equivalents at beginning of period		439 060	-
Net foreign exchange differences (unrealised)		-5	-136
Cash and equivalents at end of period		27 084	439 060

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

2017	Paid-in-capital			Other capital
NOK 1000	Issued capital	Own shares	Other equity	Accumulated losses	Available for sale reserve	Exchange difference currency translations	Non controlling interests	Total
Equity as at 1 January 2017	286 733	-20 583	987 329	-558 149	90 917	-2 164	23 685	807 768
Net profit/(-loss)	-	-	-	54 350			2 533	56 883
Other comprehensive income	-	-	-		-36 263	-78		-36 340
Total comprehensive
income	-	-	-	54 350	-36 263	-78	2 533	20 543
Cancellation of own shares	-20 583	20 583	-	-	-	-	-	-
Dividens/repayment to
shareholders	-263 488	-	-127 752	-	-	-	-	-391 240
Equity per ending balance
31 December 2017	2 661	-	859 577	-503 799	54 654	-2 241	26 218	437 071

2016		Paid-in-capital				Other capital

						Exchange
					Available	difference	Non
	Issued	Own	Other paid	Accumulated	for sale	currency	controlling
NOK 1000	capital	shares	in equity	losses	reserve	translations	interests	Total
Equity as at 1 January 2016	286 733	-	924 814	-572 318	296 887	-1 317	26 112	960 911
Net profit/(-loss)	-	-	-	108 738			1 643	110 380
Other comprehensive income
Total comprehensive	-	-	-	-	-205 970	-846		-206 816
income	-	-	-	108 738	-205 970	-846	1 643	-96 436
Reclassification merged
equity*	-	-	94 569	-94 569	-	-	-	-
Acquired own shares	-	-20 583	-32 054	-	-	-	-	-52 637
Dividends to minority
interests Equity per ending balance	-	-	-	-	-	-	-4 070	-4 070

NOTES TO CONSOLIDATED FINANCIAL STATEMENT

NOTE 1 – CORPORATE INFORMATION

Saga Tankers ASA ("the Company") is a public limited liability 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 2017, were approved by the Board of Directors on 30 April 2018, and will be presented for approval at the Annual General Meeting on 25 May 2018.

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 years presented, unless otherwise stated.

Basis of preparation

The financial statements for Saga Tankers for the financial year 2017 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.

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.

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.

Associates

The associate SD Standard Drilling Plc, operates as an investment entity with fair value changes over profit and loss. The Group assess the fair value reported from the associate. This is done by examining the implicit value of the underlying assets, benchmarking towards transactions of similar assets and/or quoted prices on equity instruments that is expected to reflect the fair value of such assets. As for SD Standard Drilling Plc, the entity is also listed on Oslo Axess, hence the market value of the company has been used to concur that the fair value is within reasonable range of the market value.

The judgement of whether the group imposes significant influence or not over the investment is subject to an assessment of several factors, whereas share of voting-rights is the principle factor. If the share of votes controlled by the group is 20 % or more, significant influence is considered present unless hard evidence state otherwise. This hard evidence could be in form of shareholders agreements that clearly curtails the investors' leeway. For investments where the group controls less than 20 %, factors as board representation, shareholder-structure and other factors that could give rise to further influence is also taken into consideration in order to assess on whether significant influence is presented regardless of voting rights below the 20 % threshold. The investment in SD Standard Drilling Plc was for the period January 2017 until November 2017 ranging from 14.9 % to 18.2 % of the outstanding shares, and was assessed to be an Available-for-sale financial asset in this period. The company assessed that it did not have significant influence. Actual ownership and influence in a listed company was considered to be the decisive factor. The fact that the company had mutual chairman and received certain services did not in fact lead to significant influence. References are made to note 4 for further information.

Available-for-sale financial assets

Available-for-sale financial assets are valued at fair value. In cases where the fair value is not available through market values in quoted prices, the marked value is estimated through benchmarking, estimates from independent values and other sources.

Summary of significant accounting policies

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. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services rendered, stated net of discounts, returns and value added taxes.

Revenue from investment and trading of financial instruments

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 influence of the investment, in which case the investment will be classified as associate. See the group accounting policy describing Financial Instruments below.

In cases where as an investment changes classification between associate and available-for-sale assets either way, the investment is derecognized and recognized in its new classification based on its fair value as of time of derecognition/recognition. The highest level achievable according to the IFRS fair-value hierarchy will be applied.

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

(i) Fixed assets

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 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 statement of 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

Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative

The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Group has provided the information for both the current and the comparative period in note 12, which is reconcilable towards the cash-flow statement.

Standards issued but not yet effective

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments

The Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement requirements of IFRS 9. It expects to continue measuring at fair value all financial assets currently held at fair value. Quoted equity shares currently held as available-for-sale with gains and losses recorded in OCI will, instead, be measured at fair value through profit or loss, which will increase volatility in recorded profit or loss. The AFS reserve of TNOK 54.654 related to those securities in amount, which is currently presented as accumulated OCI, will be reclassified to retained earnings.

IFRS 15 Revenues from Contracts with Customers

The new standard is not considered to have significant impact for the Group.

IFRS 16 Leases

The new standard is not considered to have significant impact for the Group.

NOTE 3 – 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	2017	2016
NOK 1000
Outcome
Net loss/gain from available-for-sale assets	54 621	116 656
Revenues from lease and operation of property (other income)	18 357	18 252
Sundry income (other income)	1 001	729

Budget
Net income financial assets	*	*
Revenues from lease and operation of property		17 730
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 4 – INVESTMENT IN ASSOCIATES

NOK 1000	2017	2016
At January 1	36 223	38 143
Reclassified to Available-for-sale financial assets*	-36 223	-
Acquisition*	134 911	-
Share of profit**	4 006	-1 074
Currency exchange differences**	407	-846
At 31 December	139 323	36 223

* The investment in SD Standard Drilling Plc was reclassified to Available-for-sale financial assets as per January 2017 due to dilution in ownership from 46.16 % down to 15.43 %. The 15.43 % ownership was assessed by the group, according to accounting policies as described in note 2 subsection Significant accounting judgements, estimates and assumptions, to be below level of significant influence. The fact that the group and the investment has mutual chairman, and also received certain supporting services from the same organisation was also taken into consideration in the assessment of level of influence. As per 1 November 2017, the ownership was increased to 20.22 %. Due to the increased control, the investment was once again deemed as an associate. The fluctuations in the degree of control in the investment is a result of changes in share of ownership and voting rights following several share issuance in SD Standard Drilling. The exit as Available-for-sale financial asset and entry as associate in November has been treated as an ordinary sale/acquisition valued at the fair value based on the quoted share price at this moment, in accordance with the accounting policies as described in note 2. References are also made to note 21 Subsequent events.

** For 2017, the share of profit and currency exchange differences are limited to the period of November and December.

Market value of the investment according to quoted prices:

		Shares held by	Share price at Oslo	Market value
Name	Date	Group	Axess (NOK)	(Nok 1000)
SD Standard Drilling Plc	31 December 2016	120 945 797	1,40	169 324
SD Standard Drilling Plc	31 December 2017	102 985 303	1,39	143 150

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

	NOK 1000

31 December 2017
	Country of					% Interest
Name	Incorporation Assets			Liabilities Revenues Profit		held
SD Standard Drilling Plc***	Cyprus	166 968	259	4 279	4 006	20,22 %
		166 968	259	4 279	4 006

NOK 1000
31 December 2016
	Country of					% Interest
Name	Incorporation Assets			Liabilities Revenues Profit		held
SD Standard Drilling Plc	Cyprus	36 915	692	923	-1 074	46,16 %
		36 915	692	923	-1 074

*** Associate in the period 1 November 2017 to 31 December 2017. Share of revenues and profit is therefore limited to this period.

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

NOK 1000
31 December 2017
	Country of
Name	Incorporation Assets			Liabilities Revenues Profit
SD Standard Drilling Plc	Cyprus	825 817	1 280	-3 702	-9 676
		825 817	1 280	-3 702	-9 676

NOK 1000
31 December 2016
	Country of
Name	Incorporation Assets			Liabilities Revenues Profit
SD Standard Drilling Plc	Cyprus	79 968	1 500	2 000	-2 327
		79 968	1 500	2 000	-2 327

NOTE 5 – OPERATING EXPENSES

NOK 1000	2017	2016
Employee benefit expenses
Salaries	7 266	7 887
Social security costs	1 016	1 135
Pension expenses	109	24
Other personnel expenses	107	94
Total employee benefit expenses	8 498	9 139

Number of man-years	7	7

Other operating expenses
Fees	5 007	5 389
Other operating expenses Vallhall sports arena	5 317	6 467
Travel expenses and membership fees	56	80
* Loss on receivables	-1 178	3
Other expenses	1 386	1 240
Total administrative expenses	10 588	13 178

*Reversal of loss on trade receivables has been made in 2017 as the receivables has been successfully collected. References are made to note 8.

Remuneration to the Board of Directors and executive management

2017
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	2 018	-	-	-
Martin Nes	Chairman	-	-	-	140
Øystein Stray Spetalen	Board member	-	-	-	100
Kristin Hellebust	Board member	-	-	-	100
Yvonne Litsheim Sandvold	Board member	-	-	-	100
Total remuneration		2 018	-	-	440

2016
NOK 1000
Name	Position	Salary and bonus
			Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	2 518	-	-	-
Martin Nes	Chairman	-	-	-	140
Øystein Stray Spetalen	Board member	-	-	-	100
Kristin Hellebust	Board member	-	-	-	100
Yvonne Litsheim Sandvold	Board member	-	-	-	100

The Group had no outstanding loans or guarantees in favour of any member of the Board of Directors or company management in 2017.

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 2017, 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 2017.

AUDIT FEES

2017	2016

550	706
38	-
-	-
33	33
621	740

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

NOTE 6 – CASH AND CASH EQUIVALENTS

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

NOK 1000	31 Dec 2017	31 Dec 2016

US Dollars	198	43
Norwegian kroner	26 886	439 015
GB Pounds	-	2
Total cash and cash equivalents	27 084	439 060

Restricted cash
Employee tax accounts	953	677

All cash deposits are held in financial institutions with a long term credit ratings of minimum A+ according to Standard & Poor's. Reference are made to note 17 for further information.

Interest income is earned at floating interest rates.

NOTE 7 – OTHER CURRENT ASSETS

NOK 1000	31 Dec 2017	31 Dec 2016

Other receivables	658	4
Prepayments	352	256
Unbilled revenue	267	205
Total other current assets	1 278	466

NOTE 8 – TRADE RECEIVABLES AND OTHER RECEIVABLES

The outstanding amount of trade receivables at 31 December 2017 was TNOK 1,380 (31 December 2016 of TNOK 829). The Group has booked a reserve for loss on trade receivables and other receivables totalling TNOK 147.The reserve has been decreased with TNOK 1,178 over the profit and loss in 2017, thereby reducing the Groups net other operating expenses.. References are made to note 5 regarding the reversal of former losses. Trade receivables are related to rental income for the Vallhall Arena and services rendered to the tenants.

NOTE 9 – OTHER CURRENT LIABILITIES

NOK 1000	31 Dec 2017	31 Dec 2016

Public duties payable	1 316	908
Deferred revenue	105	11
Accrued interest	199	240
Other current liabilities	4 538	3 377
Total other current liabilities	6 158	4 535

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 10 – FIXED ASSETS

			Capitalized
		Machinery &	costs - work in
	Buildings	equipment	progress	Land	Total
2017
NOK 1000
Acquisition cost, opening balance 01.01.17	91 529	4 357	38	199	96 122
Acquisitions during the period	5 730	79	-	-	5 809
Disposals during the period	-	-	-	-	-
Acquisition cost at 31.12.17	97 259	4 436	38	199	101 931

Accumulated depreciation, opening balance
01.01.17	-5 441	-1 169	-	-	-6 609
Depreciation	-2 520	-192	-	-	-2 711
Accumulated depreciation disposed assets	-	-	-	-	-
Accumulated depreciation at 31.12.17	-7 961	-1 360	-	-	-9 321

Net book value at 31.12.17	89 298	3 075	38	199	92 611

			Capitalized
		Machinery &	costs - work in
	Buildings	equipment	progress	Land	Total
2016
NOK 1000
Acquisition cost, opening balance 01.01.16	91 529	4 319	38	199	96 084
Acquisitions during the period	-	38	-	-	38
Disposals during the period	-	-	-	-	-
Acquisition cost at 31.12.16	91 529	4 357	38	199	96 122

Accumulated depreciation, opening balance
01.01.16	-3 182	-796	-	-	-3 978
Depreciation	-2 259	-373	-	-	-2 632
Accumulated depreciation disposed assets	-	-	-	-	-
Accumulated depreciation at 31.12.16	-5 441	-1 169	-	-	-6 609

Net book value at 31.12.16	86 088	3 188	38	199	89 513

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

NOTE 11 – TAX

NOK 1000	2017	2016

Current tax expense	36	75
Deferred tax expense	68	85
Tax expense	104	159

Reconciliation of tax expenses
Net profit before tax	56 987	110 540

Tax expense based on nominal tax rate of 24 % (25% for 2016)	13 677	27 635
Permanente differences	-8 714	-26 361
Change in other tax benefits receivables	-6 168	-2 974
Change in not recognized deferred tax assets	1 319	1 866
Tax effect on deferred tax due to change of tax rate*	-10	-7
Tax expense	104	159

Reconciliation of deferred tax (-)/deferred tax assets*
Fixed and other assets	117 048	128 362
Net tax loss carried forward	11 931	10 673
Share in partnership	-340	-301
Deferred tax assets	128 638	138 734
Net deferred tax assets not recognized	128 879	138 907
Deferred tax (-)/deferred tax assets in the balance sheet	-241	-173

Tax on other comprehensive income
Other comprehensive income	36 340	-206 816
Income tax related to other comprehensive income	-	-

* Tax rate for 2016 was 25 %, and for 2017 it was 24 %. Tax rate for 2018 as set by the Norwegian Parliament 12 December 2017 is 23 %. The rate of 23 % has therefore been applied to calculate future tax liabilities and assets as at 31 December 2017.

NOTE 12 – INTEREST BEARING DEBT

NOK 1000	31 Dec 2017	31 Dec 2016

Long term interest bearing debt	42 000	46 000
Current portion of long-term debt	4 000	4 000
Accrued interest	199	240
Total interest bearing debt	46 199	50 240

NOK 1000	2017	2016
Opening balance 1. December	50 240	54 261
Accrued interest for the year	1 530	1 746
Instalments paid	-4 000	-4 000
Interest payments	-1 571	-1 767
Ending balance 31. December	46 199	50 240

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 89,298 reference note 10.

Interest rate of the mortgage as of 31 December 2017 is 3.00 % p.a.

NOTE 13 – ISSUED CAPITAL AND SHAREHOLDERS

Issued capital
2017
NOK 1000	Number of shares	Share capital	Own shares	Other paid in capital
Opening balace 01.01.2017	286 732 611	266 151	-20 582 780	987 329
Cancellation of own shares	-20 582 780		20 582 780
Repayment to shareholders		-263 488		-127 752
Ending balance 31.12.2017	266 149 831	2 661	-	859 577

2016
	Number of			Other paid in
NOK 1000	shares	Share capital	Own shares	capital
Opening balace 01.01.2016	286 732 611	286 734	-	1 019 383
Acquired own shares		-20 583	-20 582 780	-32 054
Ending balance 31.12.2016	286 732 611	266 151	-20 582 780	987 329

The nominal value per share was reduced from NOK 1,00 to NOK 0.01 by repayment to shareholders as decided by the general meeting 4 July 2017. As of 31 December 2017the nominal value was NOK 0.01 per share.

All issued shares have a nominal value of NOK 0.01 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 2017 the Company had 271 shareholders. The Company's largest shareholders are presented in the table below.

The 20,582,780 treasury-shares that were acquired during 2016, was deleted as decided by the general meeting 24 may 2017.

Overview of the largest shareholders as per 31.12.2017

03.01.2018 NAME	Of total shares
1 ØYSTEIN STRAY SPETALEN *	64,94 %
2 ALLUM HOLDING AS *	15,59 %
3 APOLLO ASSET LIMITED	3,19 %
4 PARK LANE FAMILY OFFICE AS	2,73 %
5 FERNCLIFF AS *	2,34 %
6 BJØRN BAKKEN	1,56 %
7 UTHALDEN A/S	1,46 %
8 WIECO AS	0,96 %
9 TIGERSTADEN AS	0,94 %
10 BJØRN HÅVARD BRÆNDEN	0,71 %
11 STATE STREET BANK AND TRUST COMP	0,66 %
12 BJØRN OLSEN	0,45 %
13 BHB CAPITAL MANAGEMENT AS	0,42 %
14 KÅRE KLAVENES	0,36 %
15 DIRK BLAAUW	0,30 %
16 JÆDEREN AS	0,30 %
17 GREENWAY AS	0,26 %
18 GUNERIUS INVEST AS	0,23 %
19 VERPENTANGEN AS	0,22 %
20 CONSUS FX AS	0,17 %
Total	97,80 %

* Controlled by board member Øystein Stray Spetalen, representing 82.87 % of outstanding shares.

Shareholders per country per 31.12.2017

	Shares	Owner's share %
Norway	255 536 151	96,012 %
Monaco	8 500 000	3,194 %
USA	1 764 597	0,663 %
Great Britain	181 374	0,068 %
Sweden	58 415	0,022 %
Switzerland	48 494	0,018 %
France	39 300	0,015 %
Germany	10 000	0,004 %
Belgium	6 500	0,002 %
Denmark	5 000	0,002 %
Total	266 149 831	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 increase the share capital through issuance of new shares

The Board held as per 31 December 2017 authorization to issue up to 133,074,915 new shares. The authorization may be utilised on one or several occasions.

Power of attorney to repurchase own shares

The Board held authorization to repurchase own shares as per 31 December 2017 limited to 10 % of total shares issued.

Authorization to raise convertible loans

The Board held no authorization to raise convertible bonds as per 31 December 2017.

Stock option arrangements

The Company/Group held no stock option or synthetic stock option agreements as of 31 December 2017.

Shares owned by the Board, Management and their Related Parties

2017	# 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	82,87 %

2016	# 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	82,87 %

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

NOTE 14 – 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 held no such treasury shares as of 31 December 2017.

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 2017.

NOK 1000	2017	2016
Net profit/(loss) attributable to the shareholders	54 350	108 738
Number of shares
Weighted average number of ordinary shares outstanding	266 149 831	279 767 379
Weighted average number of shares outstanding, diluted	266 149 831	279 767 379
Number of shares outstanding at period end	266 149 831	266 149 831

NOK per share
Basic and diluted earnings per share	0,20	0,39

NOTE 15 – 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 2017 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

2017
NOK 1000	Sales to related parties	Purchase from related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS	-	986	-	-

2016
	Sales to	Purchase from	Amounts owed by	Amounts owed to
NOK 1000	related parties	related parties	related parties	related parties
Tycoon Industrier AS	-	875	-	-

NOTE 16 – SUBSIDIARIES

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

Subsidiaries	Country of incorporation	Ownership share	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.

Combined condensed profit and loss and financial position for Vallhall entities (Vallhall Fotballhall KS, Vallhall Fotballhall AS and Vallhall Fotballhall Drift AS), whereas the non-controlling interest in the Group is sourced:

NOK 1000	2017	2016
NET PROFIT/LOSS FOR THE YEAR (-)	5 601	3 633
Attributable to:
Non-controlling interests	2 533	1 643
Shareholders' interests	3 068	1 991

NOK 1000	31 Dec 2017	31 Dec 2016
ASSETS
Non-current assets	92 611	93 557
Current assets	10 706	11 314
TOTAL ASSETS	103 316	104 872

EQUITY AND LIABILITIES
Equity
Controlling interests	27 555	28 704
Non-controlling interests	26 218	23 685
Total equity	53 773	52 389
LIABILITIES
Non-current liabilities	42 241	50 000
Current liabilities	7 302	2 482
TOTAL EQUITY AND LIABILITIES	103 316	104 872

NOTE 17 – 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

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 230.2 million (2016: NOK 298.5 million).

At 31 December 2017, 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	2017	2016	2017	2016
Oslo Stock Exchange	-	-	7 883	1 109
Oslo Axess	-	-	533	-212
Total	-	-	8 416	897

Decrease of 5 %:

NOK 1000			Impact on other
	Impact on post-tax profit		components of equity
Index	2017	2016	2017	2016
Oslo Stock Exchange	-	-	-7 883	-1 109
Oslo Axess	-	-	-533	212
Total	-	-	-8 416	-897

For 2016 - the sensitivity analysis 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, 2017, the only material assets and liabilities denominated in foreign currencies is the associate SD Standard Drilling Plc.

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

At December 31 2017, 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 6.966 and +/(-) TNOK 200.

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 July 27, 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, 2017 was NOK 28.3 million (2016: NOK 439.1 million).

Concentration of credit risk exists to the extent that at December 31, 2017 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	2017	2016

Cash and cash equivalents
DnB	A+	Norway	18 655	417 724
Nordea	AA-	Norway	8 428	21 336
Total			27 084	439 060

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 1 000 per quarter until final settlement in May 2024. Hence the loan will have a revolving current portion of TNOK 4 000 until May 2023.

NOK 1000
	Initial loan	Jun 2014 -	Jan 2018 -
Instalment plan long term debt	May 2014	Dec 2017	Feb 2024	May 2024

Opening balance loan	-	60 000	46 000	20 000
Release loan	60 000	-	-	-
Instalment 1 000 per quarter	-	-14 000	-26 000	-
Balloon-payment	-	-		-20 000

Closing balance loan	60 000	46 000	20 000	-

Interest payed/estimated interest payments*		6 321	6 030	197

* Accrued interest is settled at each instalment. Estimated future interest payments are made at current interest rate at 3.00 % 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 27,084 (2016: TNOK 439,060) and other liquid assets of TNOK 1,233 (2016: TNOK 160) 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 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 2017. 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	2017	2016
Listed shares (Level 1)	224 936	289 877
Non-listed shares (Level 2)	5 216	8 604
Total	230 152	298 480

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;
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

NOTE 18 – 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.

2017
	Carrying		Fair value
NOK 1000	amount Fair value		Hierarchy
Loans and receivables
Cash and cash equivalents	27 084	27 084	1
Trade receivables	1 233	1 233	2

Available-for-sale assets
Available-for-sale shares	230 152	230 152	1 & 2

Other investments
Associates	139 323	143 150	1, 2 & 3

Other financial liabilities
Long term interest bearing debt	42 000	42 000	2
Short term interest bearing debt	4 000	4 000	2
Trade payables	2 174	2 174	2
Other current liabilities	6 158	6 158	2

2016
	Carrying		Fair value
NOK 1000	amount Fair value		Hierarchy
Loans and receivables
Cash and cash equivalents	439 060	439 060	1
Trade receivables	160	160	2

Available-for-sale assets
Available-for-sale shares	298 480	298 480	1 & 2

Other investments
Associates	36 223	169 324	1, 2 & 3

Other financial liabilities
Long term interest bearing debt	46 000	46 000	2
Short term interest bearing debt	4 000	4 000	2
Trade payables	1 410	1 410	2
Other current liabilities	4 535	4 535	2

NOTE 19 – 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:

	31 Dec 2017	31 Dec 2016
NOK 1000
At 1 January	298 480	461 908
Additions	98 698	184 160
Assets received through merger and demerger (Note 2)	-	-
Currency translations	-	-
Impairment*	-3 388	-
Increase/(Decrease) in value recognized as other comprehensive income	-36 263	-205 970
Reclassified as associate due to increased influence	-132 525	-
Reclassified from associates due to dilution and loss of significant influence	36 223	-
Disposals	-31 074	-141 618
At 31 December	230 152	298 480
Less non-current portion	-230 152	-298 480
Current portion	-	-

Fair value hierarchy	31 Dec 2017	31 Dec 2016
Listed shares Level 1	224 936	289 877
Non-listed shares Level 2	5 216	8 604
Total	230 152	298 480

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

Available-for-sale financial assets include the following:

Equity securities	2017	2016
Pareto Bank ASA, market price	199 576	190 101
NEL ASA, market price	-	52 593
PSV Opportunity II DIS, fair value assessment from third parties	5 216	8 604
Vistin Pharma ASA, market price	25 361	47 183

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

An impairment of TNOK 3,388 was made for the Group during 2017 (2016: none).

NOTE 20 – DIVIDENDS PAID AND PROPOSED

Dividends in form of repayment of capital have been paid during 2017. References are made to Consolidated changes in equity regarding this repayment. The board of Directors has decided not to distribute any dividends in 2018 based on the financial year of 2017.

NOTE 21 – SUBSEQUENT EVENTS

The associated company S.D Standard Drilling Plc has in at 2 March 2018 completed a private placement through issuance of 66,666,667 new shares. Saga Tankers has been allocated a total of 2,860,942 of these new shares, corresponding to 4.29% of the new shares. Saga Tankers ownership in S.D Standard Drilling Plc has thereby been diluted from 20.22 % down to 18.38%, and a new assessment of control will be made in the first quarter of 2018.

CORPORATE GOVERNANCE

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

Please see the Company's website for information about the Company's deviations from the NUES guidelines during 2017.

SEPARATE FINANCIAL

STATEMENT SAGA TANKERS ASA

PARENT COMPANY INCOME STATEMENT FOR THE PERIOD 01.01. – 31.12.

NOK 1000	NOTE	2017	2016
OPERATING INCOME
Net gain on financial assets	2	145 930	4 291
Other Income	2	1 001	729
TOTAL OPERATING INCOME		146 931	5 020

OPERATING EXPENSES
Net loss on financial assets		-	-
Employee benefit expenses	3	3 431	4 341
Administration expenses	3	4 890	5 050
TOTAL OPERATING EXPENSES		8 321	9 390

NET OPERATING PROFIT/LOSS (-)		138 610	-4 370

FINANCIAL INCOME/EXPENSES (-)
Interest income		998	1 426
Interest expense		-0	-0
Reversal of impairment /(impairment of financial assets)	5	25 698	11 894
Net foreign exchange gain/(loss)		-25 857	-12 301
NET FINANCIAL INCOME/EXPENSES (-)		839	1 019

NET PROFIT BEFORE TAX		139 449	-3 351

Taxes	9	-	-

NET PROFIT/LOSS (-) FOR THE YEAR		139 449	-3 351

ATTRIBUTABLE TO
Accumulated losses		139 449	-3 351

NOK 1000	NOTE	31 Dec 2017	31 Dec 2016

ASSETS
Non-current assets
Shares and other financial assets	12	155 612	156 604
Shares in subsidiaries	8	50 856	259 591
Associated companies	13	96 302
Total non-current assets		302 770	416 195

Current assets
Intercompany receivables	5	25 212	2 3 5 5
Other current assets		168	82
Cash and equivalents	$\overline{4}$	2 1 4 7	140 197
Total current assets		27527	142 634

TOTAL ASSETS		330 297	558829

EQUITY AND LIABILITIES
Equity
Share capital	10	2661	286 733
Own shares	10		$-20583$
Other paid in equity	10	859 577	987329
Total paid-in-capital		862 238	1 253 479
Accumulated losses	10	$-558227$	$-69767$
Total equity		304 011	555 803

LIABILITIES
Current liabilities
Intercompany payables	14	22 000
Trade and other payables		84	52
Public duties payable		594	495
Other current liabilities		3607	2 4 7 9
Total current liabilities		26 285	3 0 2 6
Total liabilities		26 285	3026

TOTAL EQUITY AND LIABILITIES		330 297	558829

PARENT COMPANY CASH FLOW STATEMENT FOR THE PERIOD 01.01 – 31.12

NOK 1000	NOTE	2017	2016

Profit before tax		139 449	-3 351
Impairment financial assets / (Reversal of impairment)		-25 698	-11 894
Loss/(-gain) on sale financial asset		-145 930	-4 291
Foreign exchange losses/(gains)		-	12 301
Income tax paid	9	-	-
Increase/decrease receivables and prepayments		-86	32
Increase/decrease payables and accruals		1 259	-353
Net cash flow from operating activities		-31 006	-7 556

Investment in Financial assets non current	12	-2 396	-171 658
Divestment in Financial assets non current		-	22 642
Dividends from Financial assets non current		5 053	-
Net divestment/(-investment) trading		-	463
Investment in associates		-96 302	-
Net cash flow from intercompany receivables		-	-
Net payment from/(to) associated companies and subsidiaries		352 000	4 931
Net cash flow from investing activities		258 355	-143 622

Acquisition of own shares		-	-52 637
Repayment to shareholders		-391 240	-
Net cash flow from financing activities		-391 240	-52 637

Net change in cash and cash equivalents		-163 891	-203 815

Cash and equivalents at beginning of period		140 197	344 000
Net foreign exchange differences (unrealised)		25 842	13
Cash and equivalents at end of period		2 147	140 197

NOTES TO THE PARENT COMPANY 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 31.12.2017.

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	2017	2016
NOK 1000

Net income financial assets*	145 930	4 291
Services rendered	1 001	729

Of the net income financial assets in 2017 totalling TNOK 145,930, TNOK 144,265 is net dividends, group contribution and impairment for the investment in the subsidiary Strata Marine & Offshore AS.

NOTE 3 – SPECIFICATION OF EXPENSES

The expenses for the financial years are specified below:

NOK 1000	2017	2016
Employee benefit expenses
Salaries	2 565	3 332
Board fees	440	440
Social security costs	398	535
Pension expenses	18	18
Other personnel expenses	10	15
Total employee benefit expenses	3 431	4 341

Number of employees	2	2

Other operating expenses
Consultancy fees	4 083	4 218
Other operating expenses	807	831
Total other operating expenses	4 890	5 050

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

NOK 1000	2017	2016
Audit fees including VAT
Audit services	316	370
Other attestation services	38	-
Tax services	-	-
Other non-audit services	33	-
Total	387	370

Remuneration to the Board of Directors and executive management for the period 01.01.17 – 31.12.17

2017
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	2 018	-	-	-
Martin Nes	Chairman	-	-	-	140
Øystein Stray Spetalen	Board member	-	-	-	100
Kristin Hellebust	Board member	-	-	-	100
Yvonne Litsheim Sandvold	Board member	-	-	-	100
Total renumeration		2 018	-	-	440

2016
NOK 1000
Name	Position	Salary and bonus	Other benefits	Pension cost	Director's fees
Espen Lundaas	CEO/CFO	2 518	-	-	-
Martin Nes	Chairman	-	-	-	140
Øystein Stray Spetalen	Board member	-	-	-	100
Kristin Hellebust	Board member	-	-	-	100
Yvonne Litsheim Sandvold	Board member	-	-	-	100
Total renumeration		2 518	-	-	440

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 2017.

Guidelines for determining salaries and other compensation for company management:

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 500 has been granted for the year 2017. 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 through 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 rights to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2017.

NOTE 4 – CASH AND CASH EQUIVALENTS

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

NOK 1000	31 Dec 2017	31 Dec 2016

US Dollars	197	41
Norwegian kroner	1 950	140 156
Total cash and cash equivalents	2 147	140 197

Restricted cash
Employee tax accounts	446	372

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 2017	31 Dec 2016

Saga Agnes	1 457	1 492
Saga Chelsea AS	285	322
Saga Julie AS	217	254
Saga Unity AS	253	289
Strata Marine & Offshore AS	23 000	-
Intercompany short-term loans	25 212	2 355

Impairment/ (reversal of impairment)

NOK 1000	2017	Accumulated

Saga Agnes	-4 810	94 323
Saga Chelsea AS	-4 879	96 939
Saga Julie AS	-7 186	142 606
Saga Unity AS	-8 824	174 922
Strata Marine & Offshore AS	-	-
Impairment of loan	-25 698	508 790

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

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 509 million to a book value of NOK 25 million. The impairment has been reversed with NOK 25.7 million in 2017, as a result of currency effects.

Face value and net value of intercompany loans

NOK 1000	31 Dec 2017	31 Dec 2016

Face value	534 002	536 844
Impairment	-508 790	-534 488
Net book value	25 212	2 355

NOTE 6 –LEASE AGREEMENTS

The company currently hold no own fixed assets.

Annual rental of non-financial assets

The company lease agreement for office space is currently being renegotiated as the former agreement has expired and there has been a relocation to new premises. The level of rent for office space is nevertheless not expected to be substantially different from the previous contract.

NOTE 7 – RELATED PARTIES

Remuneration to executives is disclosed in note 3, and balance with group companies is disclosed in note 5 and note 14.

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 2017 are limited to office rent including mutual costs, and services rendered regarding support for financial reporting.

RELATED PARTY TRANSACTIONS

2017
NOK 1000	Sales to related parties	Purchase from related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS	-	859	-	-

2016
NOK 1000	Sales to related parties	Purchase from related parties	Amounts owed by related parties	Amounts owed to related parties
Tycoon Industrier AS	-	794	-	-

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:

			Consolidated
			in the Group	Share	Net book	Net book
			financial	capital/	value 31	value 31
	Country of	Ownership/	statements	partner	December	December
NOK 1000	incorporation	Voting rights	from	capital	2017	2016

Saga Agnes	Norway	100 %	2010	1 000	-	-
Saga Chelsea AS	Norway	100 %	2010	1 000	-	-
Saga Julie AS	Norway	100 %	2010	1 000	-	-
Saga Unity AS	Norway	100 %	2010	1 000	-	-
Vallhall Fotballhall KS	Norway	54,8 %	2014	35 000	9 664	14 594
Vallhall Fotballhall AS	Norway	54,8 %	2014	5 500	2 864	2 864
Vallhall Fotballhall Drift AS	Norway	55,2 %	2014	501	427	427
Strata Marine & Offshore AS*	Norway	100 %	2015	1 000	37 901	246 636
Total				46 001	50 856	264 522

* The net book value of Strata Marine & Offshore AS has been reduced through reimbursement of capital.

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
		Accumulated
		as at 31
	Recognized	December
NOK 1000	2017	2017

Saga Agnes*	-	100 452
Saga Chelsea AS*	-	114 874
Saga Julie AS*	-	112 939
Saga Unity AS*	-	113 987
Strata Marine & Offshore AS**	208 735	208 735
Impairment subsidiaries	208 735	650 989

*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.

** The impairment of Strata Marine & Offshore AS has been made on basis of the equity as an estimate of recoverable amount. The impairment is a result of dividends paid to Saga Tankers ASA during 2017.

NOTE 9 – INCOME TAX

NOK 1000	2017	2016

Current tax expense	-	-
Deferred tax expense	-	-
Tax effect of group contribution	-	-
Tax expense	-	-

Reconciliation of tax expense
Net income before tax	351 572	-3 351

Tax expense based on nominal tax rate*	33 468	-838
Tax effect of permanent differences	-34 563	-754
Not recognized deferred tax assets	1 095	1 591
Tax expense	-	-

Reconciliation of deferred tax (-) / deferred tax assets*
Tangible assets	-3	-4
Receivables	105 968	110 541
Net tax loss carried forward**	3 161	2 238
Net deferred tax assets	109 126	112 775
Net deferred tax assets not recognized	-109 126	-112 775
Deferred tax (-)/ deferred tax assets in the balance sheet	-	-

Tax payable
Current tax expense	-	-
Deferred tax expense	-	-
Tax payable	-	-

* Tax rate for 2016 was 25%, and for 2017 it was 24%. Tax rate for 2018 as set by the Norwegian Parliament 12 December 2017 is 23%. The rate of 23% has therefore been applied to calculate future tax liabilities and assets as at 31 December 2017.

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

The tax audit, as described in the annual reports of 2015 and 2016, was finalized in 2017. The outcome of the report does not effect the financial statements for the company. Adjustments has been made to paid in equity – however this is strictly tax position for the shareholders, not the company.

NOTE 10 – ISSUED CAPITAL AND SHAREHOLDERS

Issued capital 2017

		Number of
	Number of	outstanding	Share	Own	Other	Accumulated
	shares issued	shares	capital	shares	equity	losses	Total
NOK 1000

Equity per 31 December 2015	286 732 609	286 732 609	286 733		924 814	-599 756	611 791
Net profit/loss (-) for the year 2016		-				-3 351	-3 351
Reclassification merged equity*		-			94 569	-94 569	-
Acquisition of own shares**		-20 582 780		-20 583	-32 054		-52 637
Equity per 31 December 2016	286 732 609	266 149 829	286 733	-20 583	987 329	-697 676	555 803
Net profit/loss (-) for the year 2017		-				139 449	139 449
Cancellation of own shares	-20 582 780		-20 583	20 583			-
Repayment to shareholders			-263 488		-127 752		-391 240
Equity per 31 December 2017	266 149 829	266 149 829	2 661	-	859 577	-558 227	304 012

The nominal value per share as of 31 December 2016 was NOK 1 per share, for all of the Company's shares. Through repayment to shareholders as decided by the general meeting 4 July 2017, this was reduced by NOK 0.99 per share. The nominal value per share is thereby NOK 0.01 per share as of 31 December 2017.

Board authorizations:

Power of attorney to increase the share capital through issuance of new shares

The Board held as per 31 December 2017 authorization to issue up to 133,074,915 new shares. The authorization may be utilised on one or several occasions.

Power of attorney to repurchase own shares

The Board held authorization to repurchase own shares as per 31 December 2017 limited to 10 % of total shares issued.

Authorization to raise convertible loans

The Board held no authorization to raise convertible bonds as per 31 December 2017.

Stock option arrangements

The Company/Group held no stock option or synthetic stock option agreements as of 31 December 2017.

As of 31 December 2017 the Company had 271 shareholders.

03.01.2018 NAME		Of total shares
	1 ØYSTEIN STRAY SPETALEN *	64,94 %
	2 ALLUM HOLDING AS *	15,59 %
	3 APOLLO ASSET LIMITED	3,19 %
	4 PARK LANE FAMILY OFFICE AS	2,73 %
	5 FERNCLIFF AS *	2,34 %
	6 BJØRN BAKKEN	1,56 %
	7 UTHALDEN A/S	1,46 %
	8 WIECO AS	0,96 %
	9 TIGERSTADEN AS	0,94 %
	10 BJØRN HÅVARD BRÆNDEN	0,71 %
	11 STATE STREET BANK AND TRUST COMP	0,66 %
	12 BJØRN OLSEN	0,45 %
	13 BHB CAPITAL MANAGEMENT AS	0,42 %
	14 KÅRE KLAVENES	0,36 %
	15 DIRK BLAAUW	0,30 %
	16 JÆDEREN AS	0,30 %
	17 GREENWAY AS	0,26 %
	18 GUNERIUS INVEST AS	0,23 %
	19 VERPENTANGEN AS	0,22 %
	20 CONSUS FX AS	0,17 %
	Total	97,80 %

Shares owned by the Board, Management and their Related Parties

2017	# 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	82,87 %

2016	# 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	82,87 %

* 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 2017.

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 17 in 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

	2017	2016
NOK 1000
At 1 January	156 604	3 760
Additions	2 396	171 658
Disposals	-	-18 815
Reclassified as associates	-	-
Impairment	-3 388	-
At 31 December	155 612	156 604

Shares and other financial assets include the following

NOK 1000
	2017	2016
Listed shares	150 396	148 000
Non-listed shares	5 216	8 604
Total	155 612	156 604

The financial assets are denominated in NOK and are measured at cost. The financial assets have been impaired with TNOK 3,388 in 2017 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 2017	-
Aquisitions and capital increases	96 302
At 31 December 2017	96 302

Financials for associates:

NOK 1000
31 December 2017
Name	Country of Incorporation Assets		Liabilities	Revenues	Profit	% Interest held
SD Standard Drilling Plc	Cyprus	825 817	1 280	-3 702	-9 676	20,219%*

NOK 1000
31 December 2016
Name	Country of Incorporation Assets		Liabilities	Revenues	Profit	% Interest held
SD Standard Drilling Plc	Cyprus	79 968	1 500	2 000	-2 327	46,02%*

* The investment of 46.02 % share in SD Standard Drilling Plc had a carrying value of nil at the end of 2016, as the company has formerly reimbursed capital exceeding the initial investment of Saga. SD Standard Drilling Plc has during 2017 completed several equity-issues, whereas Saga Tankers ASA has participated to some extend- leading up to an ownership of 20.219 % at the end of 2017. References are made to note 15 for further information regarding additional equity issues in 2018.

NOTE 14 – INTERCOMPANY PAYABLES

Net book value

	31 December	31 December
NOK 1000	2017	2016
Strata Marine & Offshore AS	22 000	-
Intercompany payables	22 000	-

NOTE 15 – SUBSEQUENT EVENTS

References are made to note 13 associates.

SAGA TANKERS 2017 ANNUAL REPORT > PAGE 49

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

INVESTOR RELATIONS Phone: +47 23 01 49 14 e-mail: [email protected]

AI assistant

Saga Pure — Annual Report 2017

3730_10-k_2018-04-30_f62113e7-ca80-439a-9688-6777cbab4ad5.pdf

CONTENTS

2017 Annual Report

BOARD OF DIRECTOR'S REPORT

A LOOK BACK ON 2017

FINANCIAL RESULTS 2017 (GROUP)

LIQUIDITY AND CASH FLOW

FINANCIAL POSITION

RISK FACTORS

HEALTH, SAFETY AND ENVIRONMENT (HSE)

CORPORATE SOCIAL RESPONSIBILITY

FINANCIAL RESULTS OF PARENT COMPANY

CORPORATE GOVERNANCE

SUBSEQUENT EVENTS

INVESTMENT IN SHARES

GOING CONCERN AND DIVIDEND

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD 01.01. – 31.12.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENT

NOTE 1 – CORPORATE INFORMATION

NOTE 2 – ACCOUNTING POLICIES

Basis of preparation

Going concern

Basis of consolidation

Subsidiaries

Associates

Significant accounting judgments, estimates and assumptions

Associates

Available-for-sale financial assets

Summary of significant accounting policies

Depreciation of fixed assets

Recognition other income

Revenue from investment and trading of financial instruments

Dividend Income

Foreign currency

Impairment of non-financial assets

(i) Fixed assets

Impairment of financial assets

(ii) Assets classified as available for sale

Financial instruments

Trade receivables and other receivables

Trade payables and other payables

Cash, cash equivalents and cash flow statement

Financial liabilities

Provisions

Equity

Ordinary taxation

Financial position classification

Related parties

Contingent liabilities

Events after financial position date

New and amended standards adopted by the group

Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative

Standards issued but not yet effective

IFRS 9 Financial Instruments

IFRS 15 Revenues from Contracts with Customers

IFRS 16 Leases

NOTE 3 – OPERATING SEGMENTS

NOTE 4 – INVESTMENT IN ASSOCIATES

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

NOTE 5 – OPERATING EXPENSES

Remuneration to the Board of Directors and executive management

Guidelines for determining salaries and other compensation for company management

Stock options program to Board members and Company employees

AUDIT FEES

NOTE 6 – CASH AND CASH EQUIVALENTS

NOTE 7 – OTHER CURRENT ASSETS

NOTE 8 – TRADE RECEIVABLES AND OTHER RECEIVABLES

NOTE 9 – OTHER CURRENT LIABILITIES

NOTE 10 – FIXED ASSETS

NOTE 11 – TAX

NOTE 12 – INTEREST BEARING DEBT

Material loan agreements

NOTE 13 – ISSUED CAPITAL AND SHAREHOLDERS

Overview of the largest shareholders as per 31.12.2017

Shareholders per country per 31.12.2017

Saga Pure Annual Report 2017