[20-F] TORM plc Files Annual Report (Foreign Issuer)
Filing Impact
Filing Sentiment
Form Type
20-F
TORM plc, a UK-incorporated product tanker owner, files its annual Form 20-F outlining operations, governance and extensive risk factors. The company operates a global fleet of product tankers managed from Denmark, the UK and several international subsidiaries, reporting under IFRS in U.S. dollars.
TORM highlights the highly cyclical and volatile nature of the product tanker market, macroeconomic pressures such as inflation, high interest rates and geopolitical conflicts, and dependence on a single segment as key risks. Time charter equivalent rates declined from $36,061/day in 2024 to $28,783/day in 2025, while independent broker values for its fleet fell by about 13.3% in 2025, excluding vessel sales and acquisitions.
The report discusses extensive regulatory and environmental exposure, including IMO rules, EU ETS and FuelEU Maritime, EU Taxonomy, ESG-driven capital access, sanctions compliance and piracy and war risks on major routes. As of December 31, 2025, TORM had 101,332,707 Class A common shares outstanding and an average fleet age of 12 years, facing competition from newer, more fuel-efficient tonnage.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _________________ to _________________ | |
OR | |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report: | |
Commission file number: 001-38294
(Exact name of Registrant as specified in its charter) |
(Translation of Registrant’s name into English) |
(Jurisdiction of incorporation or organization) |
(Address of principal executive offices) |
+ |
(Name, Telephone, E-mail and/or Facsimile, and address of Company Contact Person) |
Securities registered or to be registered pursuant to section 12(b) of the Act.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Securities registered or to be registered pursuant to section 12(g) of the Act.
NONE |
(Title of class) |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE |
(Title of class) |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As of December
31, 2025, there were 101,332,707 of the Registrant’s Class A common shares outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ | No | ☐ |
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
Yes | ☐ | ☒ |
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ | No | ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ | No | ☐ |
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth Company. See the definitions of
“large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.S 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☐ | U.S. GAAP | |
☒ | ||
☐ | Other |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 | ☐ | Item 18 | ☐ |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes | ☐ | No |
Table of Contents
PART I | 1 |
ITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 1 |
ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE | 1 |
ITEM 3 KEY INFORMATION | 1 |
ITEM 4AUNRESOLVED STAFF COMMENTS | 49 |
ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 49 |
ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 62 |
ITEM 7MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 68 |
ITEM 8FINANCIAL INFORMATION | 69 |
ITEM 9THE OFFER AND LISTING | 70 |
ITEM 10ADDITIONAL INFORMATION | 70 |
ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 84 |
ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 84 |
PART II | 85 |
ITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 85 |
ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 85 |
ITEM 15CONTROLS AND PROCEDURES | 85 |
ITEM 16[RESERVED] | 86 |
ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT | 86 |
ITEM 16BCODE OF ETHICS | 86 |
ITEM 16DEXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 86 |
ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 86 |
ITEM 16FCHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 86 |
ITEM 16GCORPORATE GOVERNANCE | 86 |
ITEM 16HMINE SAFETY DISCLOSURE | 88 |
ITEM 16IDISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 88 |
ITEM 16JINSIDER TRADING POLICIES | 88 |
ITEM 16KCYBERSECURITY | 88 |
PART III | 91 |
ITEM 17FINANCIAL STATEMENTS | 91 |
ITEM 18FINANCIAL STATEMENTS | 91 |
ITEM 19EXHIBITS | 91 |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to
encourage companies to provide prospective information about their business. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which
are statements other than statements of historical facts. We desire to take advantage of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are issuing this cautionary statement in connection therewith. Our disclosure and analysis
in this annual report pertaining to our operations, cash flows and financial position, including, in particular, the likelihood of our success
in developing and expanding our business, include forward-looking statements. Statements that are predictive in nature, that depend
upon or refer to future events or conditions, or that include words such as, but are not limited to, “expects,” “anticipates,” “intends,”
“plans,” “believes,” “estimates,” “targets,” “projects,” “forecasts,” “potential,” “continue,” “possible,” “likely,” “may,” “could,”
“should” and similar expressions may identify forward-looking statements.
All statements in this annual report that are not statements of either historical or current facts are forward-looking statements. These
forward-looking statements are based on current expectations, estimates, assumptions and projections about the business and our future
financial results and readers should not place undue reliance on them. Forward-looking statements include, but are not limited to, such
matters as:
•our future operating or financial results;
•global and regional economic and political conditions;
•our business strategy and expected capital spending or operating expenses, including dry-docking and insurance costs;
•statements about shipping market trends, including charter rates and factors affecting supply and demand;
•our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures,
acquisitions and other general corporate activities;
•our ability to enter into time charters after our current charters expire and our ability to earn income in the spot market;
•the future price of our Class A common shares; and
•our expectations of the availability of vessels to purchase, the time it may take to construct new vessels, and vessels’ useful
lives.
Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict and are subject to
risks and uncertainties that are described more fully in “Item 3. Key Information—D. Risk Factors.” Any of these factors or a
combination of these factors could materially affect our future results of operations and the ultimate accuracy of the forward-looking
statements. These factors and the other risk factors described in this annual report are not necessarily all of the important factors that
could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other
unknown or unpredictable factors also could harm our results, including, but are not limited to, the following:
•changes in governmental rules and regulations or actions taken by regulatory authorities;
•inflationary pressure and central bank policies intended to combat overall inflation and rising interest rates and foreign
exchange rates;
•the impact that any discontinuance, modification or other reform or the establishment of alternate reference rates have on the
Company’s floating interest rate debt instruments;
•increased cost of capital or limited access to funding due to European Union, or EU, Taxonomy or relevant territorial
taxonomy regulations;
•general domestic and international political conditions or events, including “trade wars” and the war between Russia and
Ukraine, and the developments in the Middle East, including vessel attacks in the Red Sea and the Israel-Iran conflict, which
remain ongoing as of this annual report;
•international sanctions against, among others, Russian oil and oil products;
•changes in economic and competitive conditions affecting our business, including market fluctuations in charter rates and
charterers’ abilities to perform under existing time charters;
•changes in the supply and demand for vessels comparable to ours and the number of newbuildings under construction;
•the highly cyclical nature of the industry that we operate in;
•the loss of a large customer or significant business relationship;
•changes in worldwide oil production and consumption and storage;
•risks associated with any future vessel construction;
•our expectations regarding the availability of vessel acquisitions and our ability to complete acquisition transactions planned;
•availability of skilled crew members or other employees and the related labor costs;
•work stoppages or other labor disruptions by our employees or the employees of other companies in related industries;
•the impact of increasing scrutiny and changing expectations from investors, lenders and other market participants with
respect to our Environmental, Social and Governance, or ESG, policies;
•compliance with the Foreign Corrupt Practices Act of 1977, or FCPA, or other applicable regulations relating to bribery;
•effects of new products and new technology in our industry, including the potential for technological innovation to reduce the
value of our vessels and charter income derived therefrom;
•new environmental regulations and restrictions, whether at a global level stipulated by the International Maritime
Organization, or IMO, and/or imposed by regional or national authorities such as the European Union or individual countries;
•the impact of an interruption in or failure of our information technology, or IT, and communications systems, including the
impact of cyber-attacks, upon our ability to operate;
•potential conflicts of interest involving members of our board of directors, or Board of Directors, and senior management
team, or Senior Management Team;
•the failure of counterparties to fully perform their contracts with us;
•changes in credit risk with respect to our counterparties on contracts;
•our dependence on key personnel and our ability to attract, retain and motivate key employees;
•adequacy and cost of insurance coverage;
•our ability to obtain indemnities from customers;
•changes in laws, treaties or regulations;
•our incorporation under the laws of England and Wales and the different rights to relief that may be available compared to
other countries, including the United States, or U.S.;
•government requisition of our vessels during a period of war or emergency;
•the arrest of our vessels by maritime claimants;
•any further changes in U.S. trade policy that could trigger retaliatory actions by the affected countries;
•the impact of restrictions on trade, including the imposition of new tariffs, port fees and other import restrictions by the U.S.
on its trading partners and the imposition of retaliatory tariffs by China and the European Union on the U.S., and potential
further protectionist measures and/or further retaliatory actions by others, including the imposition of tariffs or penalties on
vessels calling in key export or import ports such as the U.S., European Union and/or China;
•the amendment, termination or any other material change to a relationship governed by a treaty, fees and other import
restrictions;
•potential disruption of shipping routes due to accidents, climate-related incidents, including adverse weather and natural
disasters, environmental factors, political events, public health threats, acts by terrorists or acts of piracy on ocean-going
vessels;
•damage to storage and receiving facilities;
•potential liability from future litigation and potential costs due to environmental damage and vessel collisions;
•the length and number of off-hire periods and dependence on third-party managers; and
•other factors discussed in “Item 3. Key Information - D. Risk Factors” in this annual report.
You should not place undue reliance on forward-looking statements contained in this annual report because they are statements about
events that are not certain to occur as described or at all. All forward-looking statements in this annual report are qualified in their
entirety by the cautionary statements contained in this annual report. These forward-looking statements are made only as of the date of
this report. These forward-looking statements are not guarantees of our future performance, and actual results and future developments
may vary materially from those projected in the forward-looking statements.
We have based these statements on assumptions and analyses formed by applying our experience and perception of historical trends,
current conditions, expected future developments and other factors we believe are appropriate in the circumstances. All future written
and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section. We undertake no obligation, and specifically decline any obligation,
except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this annual report
might not occur.
EXPLANATORY NOTE AND PRESENTATION OF OUR FINANCIAL AND OPERATING DATA
Throughout this annual report on Form 20-F, we incorporate information responsive to the items hereof by reference to our "glossy"
annual report for the year ended December 31, 2025, or the Annual Report 2025. Therefore, the information contained in this annual
report should be read in conjunction with the Annual Report 2025, which was furnished to the U.S. Securities and Exchange
Commission, or the SEC, on Form 6-K on February 26, 2026. The content of quotations, websites and other sources contained in the
sections of the Annual Report 2025 referenced herein are not incorporated by reference into this Form 20-F.
Unless otherwise indicated, the term “TORM plc” refers solely to TORM plc and the terms “we,” “us,” “our,” the “Company,”
“TORM” and the “Group” refer to TORM plc and its consolidated subsidiaries.
Unless otherwise indicated, all references to “U.S. dollars,” “USD,” and “$” in this annual report are to the lawful currency of the
United States of America, references to “£” is to the lawful currency of the United Kingdom, and references to “DKK” is to the lawful
currency of Denmark. We use the term deadweight ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons, each of
which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry.
Our Class A common shares of TORM plc are issued and traded on Nasdaq Copenhagen A/S, or Nasdaq Copenhagen, under the symbol
“TRMD A” and on the Nasdaq Stock Market LLC in New York, or Nasdaq New York, under the symbol “TRMD”.
All commercial and technical management of our fleet of product tankers is led out of the Denmark office of TORM A/S and the United
Kingdom office of TORM plc as wells as our subsidiaries in India, the Philippines, the U.S., Singapore, and the United Arab Emirates.
See “Item 4. Information on the Company.”
We are therefore subject to the applicable corporate governance rules of Nasdaq New York, the United Kingdom Corporate Governance
Code, or the UK Corporate Governance Code, the United Kingdom Listing Authority's Disclosure and Transparency Rules and the
applicable rules and regulations applicable to companies admitted to trading and official listing on Nasdaq Copenhagen. Further, in
relation to our bond issuance we are subject to the rules and regulations applicable to companies trading bonds on Euronext Oslo Børs.
We report our consolidated financial results in U.S. dollars and in accordance with International Financial Reporting Standards
Accounting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, which also comply with reporting
requirements under English law.
Accordingly, this document includes the audited consolidated financial statements of TORM plc as of December 31, 2025, 2024 and
2023 and for the years ended December 31, 2025, 2024 and 2023, which have been prepared in accordance with IFRS.
Enforcement of Civil Liabilities
We are a public limited company incorporated under the laws of England and Wales, and substantially all of our directors and officers
are non-residents of the U.S.. A substantial portion of our assets, including the subsidiaries of TORM plc, and our directors and
executive officers are located outside the U.S.. As a result, it may be difficult for shareholders of TORM plc to effect service within the
U.S. upon directors, officers and experts who are not residents of the U.S. or to enforce judgments in the U.S.. In addition, there can be
no assurance as to the enforceability in the United Kingdom against us or our respective directors, officers and experts who are not
residents of the U.S., or in actions for enforcement of judgments of U.S. courts, of liabilities predicated solely upon the federal securities
laws of the U.S..
1
PART I
ITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3 KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Summary of Risk Factors
The below bullets summarize the principal risk factors related to an investment in the Company.
•The product tanker sector is cyclical and volatile, and this may lead to reductions and volatility in our charter rates when we
charter out our vessels, in vessel values and in our results of operations.
•Our business is affected by macroeconomic conditions, including rising oil prices, high interest rates, market volatility,
economic uncertainty, and supply chain constraints.
•Our revenues are derived substantially from a single segment, the product tanker segment, which exposes us to adverse
developments in the product tanker market and which may adversely affect our future performance, results of operations,
cash flows and financial position.
•A shift in consumer demand away from oil and oil products towards other energy sources or changes to trade patterns for
refined oil products may have a material adverse effect on our business.
•We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect our
results of operations, cash flows and financial position.
•We are subject to international safety, environmental and recycling regulations and requirements imposed by classification
societies that can adversely affect our results of operations, cash flows and financial position.
•Climate change and greenhouse gas, or GHG, regulations may adversely impact our operations and markets.
•Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our ESG
policies may impose additional costs on us or expose us to additional risks.
•If our vessels suffer damage due to the inherent operational risks of the product tanker industry, we may experience
unexpected dry-docking costs and delays or total loss of our vessels.
•If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of
operations, cash flows and financial position.
•Our operations outside the U.S. expose us to global risks, such as political instability, terrorist or other attacks, war,
international hostilities, economic sanctions, and, global public health concerns, or other trade restrictions, which may affect
the seaborne transportation industry and could adversely affect our business.
•If our vessels call at ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S.
government, the European Union, the United Nations or other governmental authorities, or engage in other transactions or
dealings that would be violative of applicable sanctions laws, it could lead to monetary fines or other penalties and adversely
affect our reputation and the market for our Class A common shares and its trading price.
2
•If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive
international product tanker market, which would negatively affect our financial condition and our ability to expand our
business.
•We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our earnings.
•We are subject to certain risks with respect to entering into new time charter-in contracts due to our dependence on spot
charters.
•An inability to effectively time investments in and divestments of vessels could prevent the implementation of our business
strategy and negatively impact our results of operations and financial condition.
•A substantial portion of our revenues is derived from a limited number of customers, and the loss of any of these customers
could result in a significant loss of revenues and cash flow.
•We may not be able to meet our ongoing operations and working capital needs and may not be able to obtain additional
financing in the future on acceptable terms or at all.
•As our product tanker fleet ages, we are exposed to increased operating costs and decreased competitiveness, which could
adversely affect our earnings, and the risks associated with older vessels could adversely affect our ability to obtain profitable
charters.
•Obligations associated with being a U.S.-listed public company require significant resources and management attention, and
we incur increased costs as a result of being a U.S.-listed public company.
•U.S. tax authorities could treat us as a "passive foreign investment company", or PFIC, which could have adverse U.S.
federal income tax consequences to U.S. shareholders.
•Insurance may be difficult to obtain, or if obtained, may not be adequate to cover our losses that may result from our
operations due to the inherent operational risks of the product tanker industry.
•Cyber incidents can affect the confidentiality, availability, and integrity of our IT systems, and could negatively impact our
business, including our ability to service customers, and may have a material adverse effect on our compliance, reputation,
future performance, results of operations, cash flows, and financial position.
•We have a significant amount of financial debt and servicing our current or future indebtedness limits funds available for
other corporate purposes.
•Our financial and operational flexibility is restricted by the covenants contained in our debt facilities, and we may be unable
to comply with the restrictions and financial covenants imposed in such facilities.
•Volatility of interest rate benchmarks under our financing agreements could affect our profitability, earnings and cash flow.
•Change of control and mandatory repayment provisions contained in certain of our debt facilities may lead to a foreclosure of
our vessels.
•The majority of our Class A common shares are held by a limited number of shareholders, which may create conflicts of
interest.
•We are subject to the United Kingdom Bribery Act 2010, or UK Bribery Act, the FCPA and potentially other anti-corruption
laws that apply in the countries where we do business, as well as export control laws, customs laws, sanctions laws and other
laws impacting our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other
remedial measures and legal expenses, which could adversely affect our business, results of operations and financial
condition.
The following risks relate principally to the industry in which we operate and our business in general. The occurrence of any of the risk
factors described herein could have a material adverse effect on our future performance, results of operations, cash flows and our
financial position. We may also be subject to other material risks that as of the date of this annual report are not currently known to us or
that we currently deem immaterial but which may significantly impair our business.
Risks Related to Our Business and Our Industry
The product tanker sector is cyclical and volatile, and this may lead to reductions and volatility in our charter rates when we
charter out our vessels, in vessel values and in our results of operations.
We are a pure-play product tanker company, meaning that most of our revenues are generated from operating our product tanker fleet.
The product tanker market is cyclical in nature, which leads to volatility in freight rates, vessel values and industry profitability. In 2024,
we realized time charter equivalent, or TCE, rates of $36,061/day and, in 2025, we realized TCE rates of $28,783/day. The factors
affecting the supply and demand for product tankers are beyond our control, and the nature, timing and degree of changes in industry
conditions are unpredictable and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions.
3
Factors affecting the supply and growth of product tanker capacity include:
•supply and demand for energy resources, including oil and petroleum products, seaborne transportation of such energy
resources, and alternative energy resources;
•recycling and scrapping rates, influenced by vessel age, emission compliance costs, and second-hand market liquidity;
•the number and size of newbuilding orders and deliveries and any potential delays in the delivery of newbuilding vessels and/
or cancellations of newbuilding orders;
•the number of vessels used for floating storage;
•the number of vessels recycled for obsolescence or subject to casualties;
•the number of vessels under sanctions and hence not able to trade on the mainstream market;
•prevailing and expected future freight and charter hire rates;
•the number of product tankers trading with crude or “dirty” oil products;
•costs of bunkers and fuel oil and their impact on vessel speed;
•the efficiency, age and sophistication of the world product tanker fleet;
•the number of shipyards and ability of shipyards to deliver vessels;
•availability of financing including with respect to new vessels and shipping activity;
•available interest rates and financing margins;
•port and canal congestion;
•potential disruption, including supply chain disruptions, of shipping route due to accidents, political events and armed
conflicts;
•technological advances in the design, capacity, propulsion technology, and fuel consumption efficiency of vessels;
•government and industry regulation of maritime transportation practices, particularly environmental protection laws and
regulations that may limit the useful lives of vessels, including ballast water management, low sulfur fuel consumption
regulations, and reductions in carbon dioxide, or CO2, emissions;
•developments in international trade, including refinery additions and closures;
•price of steel and vessel equipment;
•the number of conversions of tankers to other uses or conversions of other vessels to tankers;
•the number of vessels that are out of service, namely those that are laid up, dry-docked, undergoing surveys, awaiting repairs
or upgrades or otherwise not available for hire;
•product imbalances and hence lack of or surplus supply in certain regions (affecting the level of trading activity);
•the phasing of maritime shipping into the EU Emission Trading Scheme, or the EU ETS, which applies to all large ships of
5,000 gross tonnage or above;
•speed of vessel operation; and
•crew availability.
Demand for product tankers is primarily determined by the quantity of cargo to be transported and the distance from origin to
destination. The demand is affected by a number of external factors including:
•demand for increased use of renewable and alternative energy resources, and competition from other shipping companies and
other modes of transportation;
•world and regional economic conditions;
•increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the
development of new, pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil
pipelines in those markets;
•any restrictions on crude oil production imposed by the Organization of the Petroleum Exporting Countries, or OPEC, and
non-OPEC oil producing countries;
•the regulatory environment and other legal developments;
•environmental issues and concerns;
•currency exchange rates;
•the distance over which oil and oil products are to be moved by sea;
•changes in seaborne and other transportation patterns;
•climate, weather and natural disasters;
4
•global and regional economic and political conditions, including “trade wars” and developments and disruptions in
international trade, including the imposition of tariffs and fees, national oil reserves policies, refinery additions and closures,
and fluctuations in industrial and agricultural production and work stoppages;
•international sanctions, embargoes, import and export restrictions, nationalizations, piracy, vessel attacks, wars or other
armed conflicts, and other international hostilities, terrorist activities and strikes; and
•availability of financing and changes in interest rates.
The factors affecting the supply and demand for product tankers have been volatile and are outside of our control, and the nature,
timing, and degree of changes in industry conditions are unpredictable. Market conditions have been volatile in recent years and there
will be a risk to demand for transportation of oil and petroleum products over longer distances and increase the supply of product
tankers, which may have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to pay
dividends and existing contractual obligations.
Our business is affected by macroeconomic conditions, including rising oil prices, high interest rates, market volatility,
economic uncertainty, and supply chain constraints.
Various macroeconomic factors, including rising inflation, high interest rates, global supply chain constraints, downturns in the
worldwide economy and the effects of overall economic conditions and uncertainties such as those resulting from the current and future
conditions in the global financial markets, could materially adversely affect our business, results of operations, financial condition and
ability to pay dividends. Inflation and rising interest rates may negatively impact us by increasing our operating costs and our cost of
borrowing. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our
business and our ability to raise capital on favorable terms, or at all. Adverse economic conditions also affect demand for goods and oil.
Reduced demand for these or other products could result in significant decreases in rates we obtain for chartering our ships. In addition,
the cost for crew members, oils and bunkers, and other supplies may increase. We may also experience losses on our cash and
investment holdings due to failures of financial institutions and other parties. Difficult economic conditions may also result in a higher
rate of losses on our accounts receivable due to credit defaults.
The global economy continues to face a number of actual and potential challenges, including the war between Ukraine and Russia and
conflicts in the Middle East, potential disruption of shipping routes due to ongoing vessel attacks in the Red Sea, current trade tension
between the U.S. and China, political instability in Venezuela, the Middle East and the South China Sea region and other geographic
countries and areas, Russia and North Atlantic Treaty Organization, or NATO, tensions, China and Taiwan disputes, terrorist or other
attacks, war (or threatened war) or international hostilities, banking crises or failures, real estate crises and significant inflationary
pressures.
Certain banks that have historically been significant lenders to the shipping industry may reduce or cease lending activities in the
shipping industry. New banking regulations, including larger capital requirements and the resulting policies adopted by lenders, could
reduce lending activities. We may experience difficulties obtaining financing commitments in the future if current or future lenders are
unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity, capital or solvency issues. Our
ability to issue additional equity at prices that will not be dilutive to our existing shareholders or preclude us from issuing equity at all
may be adversely impacted by changes to the global financial markets and current economic conditions.
We cannot be certain that financing or refinancing will be available on acceptable terms or at all. If financing or refinancing is not
available when needed, or is available only on unfavorable terms, we may be unable to meet our future obligations as they come due.
Our failure to obtain such funds could have a material adverse effect on our business, results of operations and financial condition, as
well as our cash flows, including cash available for dividends to our shareholders. In the absence of available financing, we also may be
unable to take advantage of business opportunities or respond to competitive pressures.
Conducting business in Venezuela may subject us to legal, regulatory, political, and other risks that could have an adverse effect
on our operations and financial results.
Conducting business in Venezuela may subject us to legal, regulatory, political, currency, security, and/or nationalization of assets and
economic risks. Venezuela is extremely well endowed with natural resources such as petroleum, natural gas, iron ore, gold, bauxite,
diamonds and other minerals, and its economy is heavily dependent on export of natural resources to key trading partners. According to
the OPEC 2025 Annual Statistical Bulletin (60th edition), Venezuela had the world’s largest proven crude oil reserves in 2024. Political,
economic, and geopolitical developments in Venezuela could alter crude oil supply, trade flows, and shipping routes, generating
volatility in prices, port disruptions, logistics costs, and insurance costs, among other effects. Following the arrest and extradition of
Venezuela's former President Nicolás Maduro in January of 2026, the Trump Administration has indicated a likely shift in U.S.
sanctions policy concerning the sale and transportation of Venezuelan oil, and the U.S. Department of the Treasury’s Office of Foreign
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Assets Control, or OFAC, has subsequently issued general licenses authorizing certain activities and transactions involving Venezuelan-
origin oil and the sale of U.S.-origin diluents to Venezuela. Notwithstanding these recent measures, it remains unknown to what extent
Venezuelan sanctions will be retained, expanded or otherwise modified by the U.S., or the effect that any such actions or any actions
taken by other countries in response will have on us or our industry, but such measures along with continuing political uncertainty could
have an adverse effect on our business, financial conditions, and results of operations.
Our revenues are derived substantially from a single segment, the product tanker segment, which exposes us to adverse
developments in the product tanker market and which may adversely affect our future performance, results of operations, cash
flows and financial position.
Substantially all of our revenues are derived from a single market, the tanker segment, and therefore, our financial results depend on the
development and growth in this segment. External factors that affect the product tanker market will have a significant impact on our
business. Freight rates and asset prices have been volatile. Any adverse development in the product tanker segment, including in respect
of freight rates or the prices of our vessels, would have a material adverse impact on our future performance, results of operations, cash
flows and financial position. Further, our lack of diversification makes us increasingly vulnerable to adverse developments in the
international product tanker market, and this could have a greater material adverse impact on our future performance, results of
operations, cash flows and financial position than it would if we maintained more diverse lines of business.
An oversupply of product tanker capacity may lead to reductions in charter hire rates, vessel values and profitability.
The supply of product tankers is affected by a number of factors such as supply and demand for energy resources, including oil and
petroleum products, supply and demand for seaborne transportation of such energy resources and the current and expected purchase
orders for newbuildings. If the capacity of new product tankers delivered exceeds the capacity of product tankers being recycled and
converted to non-trading tankers, overall industry capacity in the product tanker will increase. If the supply of product tanker capacity
increases, and if the demand for product tanker capacity decreases or does not increase correspondingly, charter rates could materially
decline, which may also negatively affect freight rates and the value of our vessels. In 2025, the value of our product tanker fleet, based
on independent broker quotes, decreased by approximately 13.3% (excluding vessels that we sold and/or acquired during 2025). A
reduction in charter rates and the value of our vessels may have a material adverse effect on our future performance, results of
operations, cash flows, financial position, ability to pay dividends and compliance with current or future covenants with respect to any
of our financing arrangements.
An over-supply of product tankers as well as the uncertainty surrounding the impact of the sanctions on Russian exports of crude oil and
petroleum products has already resulted in an increase in product tanker charter hire rate volatility. In addition, product tankers may be
“cleaned up” from “dirty/crude” trades and swapped back into the product tanker market, which would increase the available tanker
tonnage able to transport refined oil products and which may affect the supply and demand balance for product tankers. Furthermore, as
portion of the tanker fleet has been sanctioned mainly related to Russian, Venezuelan and Iranian trade of oil, any potential lifting of
sanctions on vessels may affect net supply of the mainstream tonnage. All this could have a material adverse effect on our future
performance, results of operations, cash flows and financial position.
Our results of operations are subject to seasonal fluctuations, which may adversely affect our results of operations, cash flows
and financial position.
We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, freight rates. This
seasonality may result in quarter-to-quarter volatility in operating results. The product tanker segment is typically stronger in the fall and
winter months in anticipation of increased consumption of oil and petroleum products in the northern hemisphere and, as a result,
revenues are typically stronger in fiscal quarters ending December 31 and March 31. This seasonality could have a material adverse
effect quarter to quarter on our future performance, results of operations, cash flows and financial position.
However, there may be periods in the northern hemisphere when the expected seasonal strength does not materialize to the extent
required to support sustainable profitable rates due to tanker overcapacity.
A shift in consumer demand away from oil and oil products towards other energy sources or changes to trade patterns for
refined oil products may have a material adverse effect on our business.
A significant portion of our earnings are related to the oil industry. A shift in or disruption of the consumer demand from oil towards
other energy resources, such as wind energy, solar energy, hydrogen energy, nuclear energy, renewable energy, electricity, natural gas,
or liquified natural gas, or LNG, will potentially affect the demand for our product tankers. While the International Energy Agency, or
the IEA, forecasts “peak oil”, the year when the maximum volume of oil is consumed, to be around 2030 based on countries' stated
energy policies and targets. In the IEA's latest World Energy Outlook report from November 2025, the agency introduced a scenario
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where oil demand would not peak at least before 2050. Nevertheless, a shift in consumer demand away from oil and oil products could
have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various sources of production,
locations of consumption, pricing differentials and seasonality, and, more recently, government sanctions. Changes to the trade patterns
of refined oil products may have a significant negative or positive impact on the ton-mile and therefore the demand for our product
tankers. This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and
petroleum products worldwide.
The IEA noted in its Global Electric Vehicles, or EV, Outlook 2025 that more than 20% of new cars sold globally were electric in 2024,
up from around 18% in 2023. The sales of electric cars grew by approximately 35% in the first quarter of 2025, as compared with the
first quarter of 2024, and over one million more electric cars were sold in the first three months in 2025 compared with the same period
in 2024. As reflected in the IEA Stated Policies Scenario (STEPS), every other car sold globally in 2035 is set to be electric based on
today’s energy, climate and industrial policy settings. The IEA has also stated that, the rapid uptake of EVs of all types avoids six
million barrels per day (mb/d) of oil demand in the STEPS in 2030, and over 10 mb/d in 2035. A growth in EVs or a slowdown in
imports or exports of crude or petroleum products worldwide may result in decreased demand for our vessels and lower charter rates,
which could have a material adverse effect on our business, results of operations, cash flows, financial condition, and ability to make
cash distributions.
Acts of piracy on ocean-going vessels could adversely affect our business.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Arabian
Sea, the Red Sea, Suez Canal, the Gulf of Aden off the coast of Somalia, Sulu Sea, Celebes Sea, the Malacca and Singaporean Straits,
the Indian Ocean, and, in particular, the Gulf of Guinea region off the coast of Nigeria, which has experienced a continuous presence of
piracy incidents in recent years. Sporadic incidents of robbery are also reported in many parts of Asia and South America. The political
turmoil in the Middle East region may also lead to collateral damages in waters off Yemen as well as in the Gulf of Oman or Arabian
Gulf. In February 2024, one TORM vessel that was externally managed serving U.S. interests was targeted by the Houthi group. The
targeted attempt was effectively averted by U.S. naval forces. The current diplomatic crisis between Gulf Co-operation Council
countries may lead to an uncertain security situation in the Middle East region.
The security arrangements made for ship staff and vessels to counteract the ever-evolving security threat and to comply with Best
Management Practices to Deter Piracy and Enhance Maritime Security in the Red Sea, Gulf of Aden, the Gulf of Guinea region, Indian
Ocean and Arabian Sea add to the cost of operations of our ships.
Our vessels often trade in “war risk” areas due to the nature of our business. Due to the above issues when vessels trade in such areas,
the insurance premiums are increased significantly to cover for the additional risks. In such circumstances, crew and security equipment
costs, including costs which may be incurred to the extent we employ onboard security guards, could increase. We may not be
adequately insured to cover losses from these incidents, which could have a material adverse effect on us.
In addition, hijacking as a result of an act of piracy against our vessels, or vessels we may acquire, or an increase in cost or
unavailability of insurance for our vessels, or vessels we may acquire, could have a material adverse impact on our business, results of
operations, cash flows, financial condition, and ability to pay dividends and may result in loss of revenues, increased costs, and
decreased cash flows to our customers, which could impair their ability to make payments to us under our charters. The above factors
could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Rising fuel, or bunker, prices may adversely affect our profits.
Since we primarily employ our vessels in the spot market, we expect that fuel, or bunkers, will typically be the largest expense in our
shipping operations for our vessels. The cost of fuel, including the fuel efficiency or capability to use lower priced fuel, can also be an
important factor considered by charterers in negotiating charter rates. While we believe that we can transfer increased cost to the
customer and will experience a competitive advantage as a result of increased bunker prices due to the greater fuel efficiency of our
vessels compared to the average global fleet, changes in the price of fuel may adversely affect our profitability. The price and supply of
fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, and armed conflicts,
supply and demand for oil and gas, actions by OPEC, and other oil and gas producers, economic or other sanctions levied against oil and
gas producing countries, war and unrest in oil producing countries and regions, regional production patterns and environmental
concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of our
business versus other forms of transportation, such as truck or rail.
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Upon redelivery of vessels at the end of a time charter, we may be obliged to repurchase the fuel on board at prevailing market prices,
which could be materially higher than fuel prices at the inception of the time charter period. Additionally, our returns are impacted by
the use of scrubbers, which allow us to consume high-sulfur fuel oil, or HSFO, under certain circumstances, as it is typically cheaper
than very low sulfur fuel oil, or VLSFO. However, if the price differential (spread) between VLSFO and HSFO narrows, the financial
benefit of using scrubbers may decline, affecting our overall returns As a result, an increase in the price of fuel may adversely affect our
profitability.
We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect our
results of operations, cash flows and financial position.
Our vessels operate worldwide and are thus subject to numerous international laws, rules, regulations, conventions and treaties.
Moreover, our vessels are registered, flagged, and call in ports in multiple countries where the applicable flag and/or port state rules,
regulations and laws can differ. This complex web of rules, regulations, conventions, treaties and laws can be dynamic and influence the
cost of owning and operating our vessels.
These numerous and sometimes conflicting laws and regulations include, among others, data privacy requirements (in particular the
European General Data Protection Regulation, enforceable as from May 25, 2018 and the EU-U.S. Privacy Shield Framework, as
adopted by the European Commission on July 12, 2016), labor relations laws, tax laws, anti-competition regulations, import and trade
restrictions, export requirements, U.S. laws such as the FCPA and other U.S. federal laws and regulations established by the OFAC,
local laws such as the UK Bribery Act or other local laws which prohibit corrupt payments to governmental officials or certain
payments or remunerations to customers.
Compliance with environmental laws, regulations, and standards, where applicable, may require installation of costly equipment or
operational changes and may affect the resale value or useful lives of our vessels, or vessels we acquire, or resale prices or useful lives
of our vessels or require reductions in capacity, vessel modifications, or operational changes or restrictions. We may also incur
additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to
air emissions, the management of ballast waters, maintenance and inspection, development and implementation of emergency
procedures, and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a
material adverse effect on our business, results of operations, cash flows, and financial condition. A failure to comply with applicable
laws and regulations may result in administrative and civil penalties, criminal sanctions, or the suspension or termination of our
operations. Failure to comply with these requirements could lead to decreased availability of or more costly insurance coverage for
environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports.
Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and
attention of our Senior Management Team. Though we have implemented monitoring procedures and required policies, guidelines,
contractual terms and audits, these measures may not prevent or detect failures by our agents or intermediaries regarding compliance.
Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could
subject us to liability without regard to whether we were negligent or at fault. To avoid liability in those cases, parties may have to show
they fall into an exception and took all reasonable precautionary steps to prevent a pollution incident. Thus, for remediation of
environmental damage, the liability can include fines, penalties, criminal liability and costs for natural resource damages. In our case,
these could harm our reputation with current or potential charterers of our product tankers.
We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other
pollution incidents. Although we arrange insurance to cover environmental risks, there can be no assurance that such insurance will be
sufficient to cover all the risks or that any claims will not have a material adverse effect on our future performance, results of operations,
cash flows and financial position.
Please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the Shipping
Industry” for a discussion of the environmental and other regulations applicable to us.
We are subject to international safety, environmental and recycling regulations and requirements imposed by classification
societies that can adversely affect our results of operations, cash flows and financial position.
The operation of our vessels, or vessels we acquire, is affected by the requirements set forth in the United Nations’ IMO’s The
International Safety Management, or ISM Code which provides an international standard, for the Safe Operation of Ships and Pollution
Prevention. The ISM Code requires ship owners, ship managers, and bareboat charterers to develop and maintain an extensive “Safety
Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and
procedures for safe operation and for dealing with emergencies. We expect that any vessels that we acquire in the future will be ISM
Code-certified when delivered to us. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to
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increased liability, invalidate existing insurance, or decrease available insurance coverage for the affected vessels (and any available
insurance coverage may be a higher cost) and may result in a denial of access to, or detention in, certain ports, including U.S. and EU
ports.
In addition, the hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of
registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of
the country of registry of the vessel and the International Convention for Safety of Life at Sea. If a vessel does not maintain its class
and/or fails any annual survey, intermediate survey, or special survey, the vessel will be unable to trade between ports and will be
unemployable, which will negatively impact our revenues and results from operations and may breach one or more covenants in our
loan agreements.
The 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, or the Hong Kong
Convention, which entered into force in June 2025, aims to ensure ships, being recycled once they reach the end of their operational
lives, do not pose any unnecessary risks to the environment, human health and safety. As such, each ship sent for recycling will have to
carry an inventory of its hazardous materials. Ships will be required to have surveys to verify their inventory of hazardous materials
initially, throughout their lives and prior to the ship being recycled.
On November 20, 2013, the European Parliament and the Council of the European Union adopted the European Union Ship Recycling
Regulation, or EU SRR, which retains the requirements of the Hong Kong Convention and requires that certain commercial seagoing
vessels flying the flag of a EU member state may be recycled only in facilities included on the European list of permitted ship recycling
facilities.
Moreover, vessels are required to set up and maintain an Inventory of Hazardous Materials. Such a system includes information on the
hazardous materials with a quantity above the threshold values specified in relevant EU resolutions and are identified in ship’s structure
and equipment. This inventory should be properly maintained and updated, especially after repairs, conversions or unscheduled
maintenance on board the ship.
Under the EU SRR, commercial EU-flagged vessels of 500 gross tonnage and above may be recycled only at shipyards included on the
European List of Authorised Ship Recycling Facilities, or the European List. As of December 31, 2025, all our EU-flagged vessels met
this tonnage specification. The combined capacity of the European List facilities may prove insufficient to absorb the total recycling
volume of EU-flagged vessels. This circumstance, taken in tandem with the possible decrease in cash sales, may result in longer wait
times for divestment of recyclable vessels as well as downward pressure on the purchase prices offered by European List shipyards.
Furthermore, facilities located in the major ship recycling countries generally offer significantly higher vessel purchase prices, and as
such, the requirement that we utilize only European List shipyards may negatively impact revenue from the residual values of our
vessels.
In addition, the European Waste Shipment Regulation, or the EWSR, requires that non-EU flagged ships departing from EU ports be
recycled only in Organization for Economic Cooperation and Development, or OECD, member countries. In March 2018, the
Rotterdam District Court ruled that the sale of four recyclable vessels by third-party Dutch ship owner Seatrade to cash buyers, who
then reflagged and resold the vessels to non-OECD country recycling yards, were effectively indirect sales to non-OECD country yards,
in violation of the EWSR. If EU member state courts widely adopt this analysis, it may negatively impact revenue from the residual
values of our vessels and we may be subject to a heightened risk of non-compliance, due diligence obligations and costs in instances
where we sell older ships to cash buyers.
For more information, please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other
Regulations in the Shipping Industry”.
Several countries have announced a ban on using open-loop scrubbers in their ports and inland waters.
To comply with IMO 2020 0.5% global sulfur cap, shipowners have different options: switching to low-sulfur fuels, burning distillates,
using LNG or installing an exhaust gas cleaning system, commonly known as a scrubber, on board their vessels. Scrubbers are currently
an accepted measure in complying with IMO 2020. Scrubbers can be designed either as “closed-loop” or “open-loop”. Open-loop
scrubbers discharge the “cleaned” washwater into the ocean. We have opted to install hybrid-prepared open-loop scrubbers on board all
of our vessels, which in the future can be refitted at further costs into a hybrid scrubber that can operate as both open and closed loops. It
has been widely discussed whether scrubbers in general, and in particular open-loop scrubbers, represent an environmentally sound
option. Some ports and regions, including Singapore, China, Malaysia, Germany, Kenya and certain states within the U.S., have already
prohibited the discharge of washwater from open-loop scrubbers. Prior to investing in scrubbers, we evaluated scrubber economics, and
the effects of local regulations have already been considered to only have a limited negative impact on the investment at this time.
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Further material restrictions on the use of open-loop scrubbers would likely result in vessels having to use low-sulfur fuel for longer
periods, which in general comes at a higher cost compared to using closed-loop scrubbers.
Climate change and greenhouse gas regulations may adversely impact our operations and markets.
Due to concern over the risk of climate change, a number of countries and the IMO have adopted, or are considering the adoption of,
regulatory frameworks to reduce GHG emissions. These regulatory measures may include, among others, adoption of cap and trade
regimes, carbon taxes, increased efficiency standards and incentives or mandates for renewable energy. Since January 1, 2020, IMO
regulations have required vessels to comply with a global cap on the sulfur in fuel oil used on board of 0.5%. Additionally in 2023,
IMO's Marine Environment Protection Committee, or MEPC, 80 adopted a revised strategy - the "2023 IMO Strategy - on Reduction of
GHG Emissions from Ships", identifies "levels of ambition" to reduce GHG emissions. At MEPC 84, in Spring 2025, a new set of
interim measures named "The Net Zero Framework" were approved, however in October 2025 at an Extraordinary MEPC sessions, the
decision for adoption was postponed by 12 months. The outlook for adoption and implementation of "The Net Zero Framework" is
surrounded by significant uncertainty.
The European Commission has added shipping to the ETS as of 2024 with a phase-in period. Shipowners will need to purchase and
surrender a number of emission allowances that represent their MRV-recorded carbon emission exposure for a specific reporting period.
The person or organization responsible for the compliance with the Emissions Trading System, or EU ETS, should be the shipping
company, defined as the shipowner or any other organization or person, such as the manager or the bareboat charterer, that has assumed
the responsibility for the operation of the ship from the shipowner. The regulation phase is 40% for verified emissions from 2024, 70%
for 2025 and 100% for 2026. Compliance with the Maritime EU ETS will result in additional compliance and administration costs to
properly incorporate the provisions of the Directive into our business routines. Additional EU regulations which are part of the EU’s Fit-
for-55, could also affect our financial position in terms of compliance and administration costs when they take effect.
In January 2025, the FuelEU Maritime regulation came into force as a part of the EU’s Fit-for-55. This requires shipping companies to
gradually lower the GHG intensity in the fuels being consumed on voyages involving EU ports. Shipping companies are thus required to
purchase more expensive fuels such as biofuels for lowering the GHG intensity. Failure in doing so will trigger penalty payments to
obtain compliance.
Territorial taxonomy regulations in geographies where we are operating and are regulatorily liable, such as European Union Taxonomy,
or EU Taxonomy, might jeopardize the level of access to capital. For example, the EU has already introduced a set of criteria for
economic activities which should be framed as ‘green’, called EU Taxonomy. As long as we are an EU-based company meeting the
Non-Financial Reporting Directive prerequisites, we will be eligible for reporting our Taxonomy eligibility and alignment. Based on the
current version of the Regulation, companies that own assets shipping fossil fuels are considered as not aligned with EU Taxonomy. The
outcome of such provision might be either an increase in the cost of capital and/or gradually reduced access to financing as a result of
financial institutions’ compliance with EU Taxonomy.
Additionally, under MEPC 75, all ships above 400 gross tonnage must have an approved Ship Energy Efficiency Management Plan, or
SEEMP, on board. For ships above 5,000 gross tonnage, the SEEMP needs to include certain mandatory content. Effective January 1,
2023, MEPC 75 amended the International Convention for the Prevention of Pollution from Ships of 1973, as from time to time
amended, or MARPOL, Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil by ships in Arctic waters on and after
July 1, 2024.
MEPC 76 adopted amendments to the International Convention on the Control of Harmful Anti-Fouling Systems on Ships, 2001, which
entered into force on January 1, 2023. From this date, all ships shall not apply or re-apply anti-fouling systems containing cybutryne on
or after January 1, 2023; all ships bearing an anti-fouling system that contains cybutryne in the external coating layer of their hulls or
external parts or surfaced on January 1, 2023 shall either: remove the anti-fouling system or apply a coating that forms a barrier to this
substance leaching from the underlying non-compliance anti-fouling system.
In addition, although the emissions of GHGs from international shipping currently are not subject to the Kyoto Protocol or the Paris
Agreement, a new treaty may be adopted in the future that includes restrictions on shipping emissions. Compliance with changes in
laws, regulations and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could
increase our costs related to acquiring new vessels, operating and maintaining our existing vessels and require us to install new emission
controls, acquire allowances or pay taxes related to our GHG emissions or administer and manage a GHG emissions program. Revenue
generation and strategic growth opportunities may also be adversely affected. If not in compliance with certain key indicators, then we
also face the risk of losing the ability to obtaining financing or re-financing with “green” or “sustainability” loans.
For more information, please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other
Regulations in the Shipping Industry”.
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Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our ESG
policies may impose additional costs on us or expose us to additional risks.
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain
institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices, especially as
they relate to the environment health and safety, diversity, labor conditions and human rights in recent years, and have placed increasing
importance on the implications and social cost of their investments. Failure to adapt to or comply with evolving investor, lender or
other industry shareholder expectations and standards or the perception of not responding appropriately to the growing concern for ESG
issues, regardless of whether there is a legal requirement to do so, may damage such a company’s reputation or stock price, resulting in
direct or indirect material and adverse effects on the company’s business and financial condition.
The increase in shareholder proposals submitted on environmental matters and, in particular, climate-related proposals in recent years
indicates that we may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on
climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be
required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested
in us and make further investments in us. If we do not meet these standards, our business and/or our ability to access capital could be
harmed.
Additionally, certain investors and lenders may exclude oil transport companies, such as us, from their investing portfolios altogether
due to ESG. These limitations in both the debt and equity capital markets may affect our ability to grow as our plans for growth may
include accessing the equity and debt capital markets. If those markets are unavailable, or if we are unable to access alternative means of
financing on acceptable terms, or at all, we may be unable to implement our business strategy, which would have a material adverse
effect on our financial condition and results of operations and impair our ability to service our indebtedness. Further, it is likely that we
will incur additional costs and require additional resources to monitor, report and comply with wide ranging ESG requirements.
Members of the investment community are also increasing their focus on ESG disclosures, including disclosures related to GHGs and
climate change in the energy industry in particular, and diversity and inclusion initiatives and governance standards among companies
more generally. As a result, we may face increasing pressure regarding our ESG disclosures. The occurrence of any of the foregoing
could have an adverse effect on our business and financial condition.
Moreover, from time to time, in alignment with our sustainability priorities, we may establish and publicly announce goals and
commitments in respect of certain ESG items. While we may create and publish voluntary disclosures regarding ESG matters from time
to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may
not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long
timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters. If we
fail to achieve or improperly report on our progress toward achieving our environmental goals and commitments, the resulting negative
publicity could adversely affect our reputation and/or our access to capital.
Finally, organizations that provide information to investors on corporate governance and related matters have developed ratings
processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their
investment and voting decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with
fossil fuel-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of
investment to other, non-fossil fuel markets, which could have a negative impact on our access to and costs of capital.
Declines in charter rates and other market deterioration could cause us to incur impairment charges.
In accordance with IFRS, we review the carrying amounts of assets on a quarterly basis to determine any indication of impairment either
due to a significant decline in market value or in the cash flows expected to be generated by the vessels. In case of such indication, the
recoverable amounts of the assets are estimated as the higher of the net realizable value and the value in use in accordance with the
requirements of applicable accounting standards. The value in use is the present value of the future cash flows expected to derive from
an asset. For the purpose of assessing net realizable values, our management estimates the market values of the individual vessels, for
which the most important parameters are the vessels’ tons deadweight, the shipyard they were built at and age. Our Senior Management
Team uses internal as well as external sources of information, including two internationally recognized shipbrokers’ valuations.
Accordingly, the carrying values of our vessels may not represent their fair market value at any point in time because the market prices
of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. In 2025, the value of our product
tanker fleet, based on independent broker values, decreased by approximately 13.3% (when excluding vessels sold and/or acquired
during 2025). As a result of further declines in charter rates or vessel values, we may in the future need to record impairment losses and
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loss from sale of vessels, which could have a material adverse effect on our future performance, results of operations, cash flows and
financial position. We did not record an impairment charge during the year ended December 31, 2025. Please see the consolidated
financial statements as of and for the year ended December 31, 2025 and the accompanying notes included herewith for details on the
impact of changes in charter rates and other key assumptions.
If our vessels suffer damage due to the inherent operational risks of the product tanker industry, we may experience unexpected
dry-docking costs and delays or total loss of our vessels.
The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes will be at risk of being damaged or lost
because of events such as marine and environmental disasters, bad weather and other acts of God, business interruptions caused by
mechanical failures, unexpected tank corrosion, grounding, fire, explosions and collisions, human error, war, terrorism, piracy, diseases,
crew strikes and/or boycotts and other circumstances or events. Changing economic, regulatory and political conditions in some
countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy,
terrorism, labor strikes and boycotts.
Compared to other types of vessels, tanker vessels are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist
attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tanker vessels. Damage to the
environment could also result from our operations, particularly through spillage of fuel, lubricants or other chemicals and substances
used in operations, or extensive uncontrolled fires. These hazards may result in death or injury to persons, loss of revenue or property,
payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships and reputation, delay or
rerouting, governmental fines, penalties or restrictions, any of which may subject us to litigation. As a result, we could be exposed to
substantial liabilities not recoverable under our insurances. Further, the involvement of our vessels in a serious accident could harm our
reputation as a safe and reliable vessel operator and lead to a loss of business.
In addition, international shipping is subject to various security and customs inspection and related procedures in countries of origin and
destination and trans-shipment points. Inspection procedures can result in the seizure of the cargo and/or our vessels, delays in the
loading, offloading or delivery and the levying of customs duties, fines or other penalties against us. It is possible that changes to
inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures
could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of
cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our future performance,
results of operations, cash flows and financial position.
The protection & indemnity insurance coverage that we have arranged for our vessels covers the vessel owner’s liabilities towards the
owner of any damaged cargo, subject to standard international conventions limiting such liability. If our vessels suffer damage, they
may need to be repaired at a dry-docking facility. The costs of dry-dock repairs are unpredictable and may be substantial. We may have
to pay dry-docking costs that our insurance does not cover in full. The loss of earnings while these vessels are being repaired and
repositioned as well as the actual cost of these repairs would decrease the Company’s earnings. In addition, space at dry-docking
facilities is sometimes limited and not all dry-docking facilities are conveniently located. We may be unable to find space at a suitable
dry-docking facility or the vessels may be forced to travel to a dry-docking facility that is not conveniently located in relation to the
vessels’ positions. The loss of earnings while these vessels are forced to wait for space or to sail to more distant dry-docking facilities
could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of
operations, cash flows and financial position.
We employ masters, officers and crews to man our vessels. Potential labor disputes or labor interruption, including work stoppages,
strikes and/or work disruptions, if not resolved in a timely and cost-effective manner, may lead to industrial action or other labor unrest
that could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our future
performance, results of operations, cash flows, financial position, distribution of dividends or the trading price of our Class A common
shares.
Our operations outside the U.S. expose us to global risks, such as political instability, terrorist or other attacks, war,
international hostilities, economic sanctions, and global public health concerns, or other trade restrictions, which may affect the
seaborne transportation industry and could adversely affect our business.
We are an international company and primarily conduct our operations outside of the U.S., and our business, results of operations, cash
flows, financial condition and ability to pay dividends, if any, in the future may be adversely affected by changing economic, political
and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector
of the economy that is likely to be adversely impacted by the effects of political conflicts, geopolitical events, terrorist or other attacks,
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war (or threatened war) and international hostilities. The response of the U.S. and others to terrorist attacks, as well as the threat of
future terrorist attacks around the world, continues to cause uncertainty in the world’s financial markets and may affect our business,
operating results, and financial condition. Continuing conflicts and recent developments in Venezuela, Ukraine, the Middle East, the
South China Sea region and increased tensions between the U.S. and China, Russia, Iran and certain terrorist organizations, as well as
the presence of U.S. or other armed forces in various regions, may lead to additional acts of terrorism and armed conflict around the
world, which may contribute to further economic instability in the global financial markets. As a result of the above, insurers have
increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. These uncertainties could also
adversely affect our ability to obtain additional financing on terms acceptable to us or at all. Any of these occurrences could have a
material adverse impact on our operating results, revenues and costs. Additionally, events in other jurisdictions, could impact global
markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other
regulatory matters could in turn adversely impact our business and operations.
Prolonged periods of geopolitical instability may affect key tanker routes, such as those in the Red Sea, Black Sea, Suez Canal and Strait
of Hormuz. In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt
international shipping, particularly in the Arabian Gulf region, in the Black Sea in connection with the conflict between Russia and
Ukraine, and in the Red Sea in connection with the conflict between Israel and Hamas. Acts of terrorism and piracy have also affected
vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia, among others.
Similarly, the geopolitical conflict in the Middle East and the related drone and missile attacks of commercial vessels in the important
trade choke point of the Red Sea have led to a redirection of increasing numbers of vessels sailing around the Cape of Good Hope
instead of transiting the Suez Canal and Red Sea, increasing vessel sailing times and thereby demand for vessels. A solution to this
conflict would remove additional demand for vessels.
In 2022, the U.S., the United Kingdom and the European Union, among other countries, also announced various economic sanctions
against Russia in connection with the aforementioned conflicts in the Ukraine region. The ongoing conflict could result in the
imposition of further economic sanctions or new categories of export restrictions against individuals or entities in or connected to
Russia. While in general much uncertainty remains regarding the global impact of the continuation of the conflict in Ukraine, and any
potential resolution thereof, it is possible that such tensions could adversely affect the Company’s business, financial condition,
operating results, and cash flows. However, even though the likelihood (as well as timing) of reversal of sanctions is very uncertain, a
potential removal of these sanctions could lead to a (partial) return of trade flows to the pre-sanction levels and thereby a lower demand
for tankers, that could adversely affect our earnings. Furthermore, it is possible that third parties with whom we have charter contracts or
banking relationships may be impacted by events in Russia and Ukraine, which could adversely affect our operations.
The U.S. has issued several Executive Orders that prohibit certain transactions related to Russia, including prohibitions on the import of
certain Russian energy products into the U.S. (including crude oil, petroleum, petroleum fuels, oils, liquefied natural gas and coal), and
all new investments in Russia by U.S. persons, among other prohibitions and export controls, and has issued numerous determinations
authorizing the imposition of sanctions on persons who operate or have operated in the energy, metals and mining, and marine sectors of
the Russian Federation economy, among others. Designations under these sanctions programs are continuing, including in October 2025
against Lukoil, Rosneft, and certain of their subsidiaries. Increased restrictions on these sectors, or the expansion of sanctions to new
sectors, may pose additional risks that could adversely affect our business and operations.
Furthermore, the U.S., in conjunction with the G7, agreed on September 2, 2022 to implement a Russian petroleum “price cap policy”
which prohibits a variety of specified services related to the maritime transport of Russian Federation origin crude oil and petroleum
products, including trading/commodities brokering, financing, shipping, insurance (including reinsurance and protection and
indemnity), flagging, and customs brokering. An exception exists to permit such services when the price of the seaborne Russian oil into
non-EU countries does not exceed the relevant price cap; but implementation of this price exception relies on a recordkeeping and
attestation process that requires each party in the supply chain of seaborne Russian oil to demonstrate or confirm that oil has been
purchased at or below the price cap. Further, effective as of February 27, 2025, the U.S. has also prohibited the provision of petroleum
services in certain specified circumstances, including for the provision of services for products purchased at or below the
aforementioned price caps. As of September 2025, the European Union, United Kingdom and Canada also agreed to lower their price
cap on Russian crude oil from $60 to $47.60 per barrel, and which was further reduced to $44.10 effective February 1, 2026, based on
an automatic dynamic pricing adjustment setting the cap at 15% below the average market price for Russian crude oil during the
relevant reference period. Violations of the petroleum services prohibition or the price cap policy, including the risk that information,
documentation, or attestations provided by parties in the supply chain are later determined to be false or insufficient may pose additional
risks adversely affecting our business. While much uncertainty remains, the potential that the European Union, in conjunction with the
G7, might replace the price cap policy in favor of a full maritime services ban for Russian crude oil exports and/or other petroleum
products may also pose further risks that could adversely affect our business.
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Our business could also be adversely impacted by trade tariffs, trade embargoes or other economic sanctions that limit trading activities
by the U.S. or other countries against countries in the Middle East, Asia or elsewhere as a result of terrorist attacks, hostilities or
diplomatic or political pressures, including as a result of ongoing tensions involving Russia, Iran, and China and the current conflict in
the Middle East.
Governments may also turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping
demand. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic
conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of
goods exported from regions globally, (b) the length of time required to transport goods and (c) the risks associated with exporting
goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other
associated costs, which could have an adverse impact on our charterers’ business, operating results and financial condition and could
thereby affect their ability to make timely charter hire payments to us. This could have a material adverse effect on our business,
financial condition and operating results.
In particular, there is significant uncertainty about the future relationship between the U.S. and China and other exporting countries,
such as Canada, Mexico, and the European Union, among others, with respect to trade policies, treaties, government regulations, and
tariffs, some of which remain subject to legal challenge. For example, in April 2025, the Office of the USTR enacted vessel service fees
under Section 301 of the Trade Act of 1974 which were imposed as scheduled beginning on October 14, 2025, but were suspended for
one year as of November 10, 2025 as a result of broader trade negotiations between the U.S. and China, after China’s Ministry of
Transport had announced retaliatory port fees applicable to certain vessels calling at Chinese ports that were built or flagged in the U.S.
or owned or operated by certain U.S.-linked persons. China’s retaliatory service fees on U.S. vessels were also suspended for a period of
one year on the same date. On February 20, 2026, President Trump invoked a flat tariff of 10%, which was subsequently increased to
15% the following day, on almost all U.S. imports under Section 122 of the Trade Act of 1974, which allows for temporary import
surcharges. The temporary import surcharge took effect on February 24, 2026.
Given the magnitude of these port-related fees and the many uncertainties surrounding their implementation, it is not possible at this
time to fully predict the ultimate financial impact to the Company. However, if these fees continue to be levied, port fees for our vessels
or vessels we charter and our operating costs for voyages calling at United States or Chinese ports could materially increase, which
could have an adverse effect on our business, financial condition, and results of operations.
If our vessels call at ports located in countries or territories that are the subject of sanctions or embargoes or engage in other
transactions or dealings in violation of applicable sanctions laws, it could lead to monetary fines or other penalties and adversely
affect our reputation and the market for our Class A common shares and its trading price.
Although we intend to maintain compliance with all applicable sanctions and embargo laws, and we endeavor to take precautions
reasonably designed to mitigate such risk, it is possible that, in the future, our vessels may call at ports located in sanctioned countries or
territories, or engage in other such transactions or dealings that would be violative of applicable sanctions, on our charterers’
instructions and/or without our consent. If such activities result in a violation of sanctions or embargo laws, we could be subject to
monetary fines, penalties, or other sanctions, and our reputation and the market for our ordinary shares could be adversely affected.
The applicable sanctions and embargo laws and regulations vary in their application, and by jurisdiction, as they do not all apply to the
same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or
expanded over time. The U.S., United Kingdom, and European Union have enacted new and more aggressive sanctions programs in
recent years. Additional countries or territories, as well as additional persons or entities within or affiliated with those countries or
territories, have, and in the future will, become the target of sanctions. These require us to be diligent in ensuring our compliance with
sanctions laws. The past few years have seen increased implementation of sanctions and embargoes imposed against trading with certain
countries by in particular the U.S., the European Union, the United Kingdom, and the United Nations. Our operations are currently and
may in the future become subject to various economic and trade sanctions.
Further, our lenders may determine that any non-compliance with applicable sanctions and embargoes imposed by the United Kingdom,
the European Union, the United Nations, or the U.S. constitute an event of default under current or future debt facility agreements. An
event of default may lead to an acceleration of the repayment of debt under the facility in question and, due to the cross-default
provisions, under all other facilities as well, which could have a material adverse effect on our future performance, results of operations,
cash flows and financial position, and could lead to bankruptcy or other insolvency proceedings.
Charterers and other parties that we have previously entered into contracts with regarding our vessels may be affiliated with persons or
entities that are now or may soon be the subject of sanctions or embargoes imposed by the U.S., the United Kingdom, the European
Union, and/or other international bodies. If we determine that such sanctions require us to terminate existing or future contracts to which
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we, or our subsidiaries, are a party or if we are found to be in violation of such applicable sanctions, our results of operations may be
adversely affected, or we may suffer reputational harm.
As a result of Russia’s war against Ukraine and the war between Israel and Hamas, the U.S., European Union and United Kingdom,
together with numerous other countries, have imposed significant economic sanctions which may adversely affect our ability to operate
in the region and also restrict parties whose cargo we carry.
Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations in 2025, and
intend to maintain such compliance, there can be no assurance that we will be in compliance in the future. Any such violation could
result in fines, penalties, vessel detentions or blacklistings or other sanctions that could severely impact our ability to access U.S. capital
markets and conduct our business and could result in our reputation and the market for our securities to be adversely affected and/or in
some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may
have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries
identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from,
our Class A common shares may adversely affect the price at which our Class A common shares trade. Additionally, some investors
may decide to divest their interest, or not to invest, in our company simply because we do business with companies that do business in
sanctioned countries. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations, and those violations
could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if
we engage in certain other activities, such as entering into charters with individuals or entities that are not controlled by the governments
of countries or territories that are the subject of certain U.S. sanctions or embargo laws, or engaging in operations associated with those
countries or territories pursuant to contracts with third parties that are unrelated to those countries or territories or entities controlled by
their governments. Investor perception of the value of our Class A common shares may also be adversely affected by the consequences
of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries, which may have a material
adverse effect on our future performance, results of operations, cash flows and financial position.
Maritime claimants could arrest or attach our vessels, which would have a negative effect on our cash flows.
Crew members, suppliers of goods and services to a vessel, shippers of cargo, and other parties may be entitled to a maritime lien
against that vessel for unsatisfied debts, claims or damages.
In many jurisdictions, a maritime lienholder may enforce its lien by "arresting" or "attaching" a vessel through foreclosure proceedings.
The arrest or attachment of one or more of our vessels, or vessels we may acquire, could result in a significant loss of earnings for the
related off-hire period. In addition, in jurisdictions where the "sister ship" theory of liability applies, a claimant may arrest the vessel
which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same
owner. In countries with “sister ship” liability laws, claims might be asserted against us or any of our vessels for liabilities of any other
vessels we may own. Any of those events could have an adverse effect on our business, operating results, cash flows, financial
condition, and ability to pay dividends.
Governments could requisition our vessels during a period of war or emergency, which may have an adverse effect on our
future performance, results of operations, cash flows and financial position.
A government of a vessel’s registry could requisition for title or hire or seize one or more of our vessels. Requisition for title occurs
when a government takes control of a vessel and becomes the owner. Requisition for hire occurs when a government takes control of a
vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency.
Even if we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of the
payment would be uncertain. Although none of our vessels have been requisitioned by a government for title or hire, a government
requisition of one or more of our vessels in the future may adversely affect our future performance, results of operations, cash flows and
financial position.
Technological innovation and quality and efficiency requirements from our customers could reduce our charter hire income
and the value of our vessels.
Our customers, in particular those in the oil industry, have a high and increasing focus on quality and compliance standards with their
suppliers across the entire supply chain, including the shipping and transportation segment. Our continued compliance with these
standards and quality requirements is vital for our operations. Charter hire rates and the value and operational life of a vessel are
determined by a number of factors including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed,
fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking
facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its
maintenance and the impact of the stress of operations. Our vessels have an average age of 12 years as of December 31, 2025, and if
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new vessels are built that are more efficient or more flexible or have longer physical lives than the current eco vessels or vessels that we
may acquire, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments
we receive for our vessels and the resale value of our vessels could significantly decrease, which may have a material adverse effect on
our results of operations, charter hire payments, resale value of vessels, cash flows and financial condition.
Technological developments which affect global trade flows and supply chains may affect the demand for our vessels.
By reducing the cost of labor through automation and digitization and empowering consumers to demand goods whenever and wherever
they choose, technology is changing the business models and production of goods in many industries. Consequently, supply chains are
being pulled closer to the end-customer and are required to be more responsive to changing demand patterns. As a result, fewer
intermediate and raw inputs are traded, which could lead to a decrease in shipping activity. If automation and digitization become more
commercially viable and/or production becomes more regional or local, total containerized trade volumes would decrease, which would
adversely affect demand for maritime fuels and hence demand for our services. Supply chain disruptions caused by geopolitical events,
rising tariff barriers and environmental concerns may also accelerate these trends.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
Our vessels may call in ports where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of
crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether
with or without the knowledge of any of our crew, we may face reputational damage and governmental or other regulatory claims or
restrictions, and our vessels may be detained for a prolonged period of time, which could have an adverse effect on our business, results
of operations and financial condition. Under some jurisdictions, vessels used for the conveyance of illegal drugs could be subject to
forfeiture, resulting in forfeiture of the vessel to the government of such jurisdiction.
Risks Related to Our Company
If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive international
product tanker market, which would negatively affect our financial condition and our ability to expand our business.
Our ability to achieve positive cash flows is subject to freight rates, financial, regulatory, legal, technical and other factors, many of
which are beyond our control. In addition, the operation of product tankers and transportation of petroleum products is extremely
competitive, and reduced demand for transportation of oil and oil products could lead to increased competition, especially in our capital
intensive and highly fragmented industry. Competition arises primarily from other product tanker owners, including major oil
companies as well as independent product tanker companies, some of whom have greater resources than we do. Competition for the
transportation of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the
product tanker and its operators to the charterers. Our ability to operate our vessels profitably depends on a variety of factors, including,
but not limited to (i) loss or reduction in business from significant customers, (ii) unanticipated changes in demand for transportation of
crude oil and petroleum products, (iii) changes in production of or demand for oil and petroleum products, (iv) greater than anticipated
levels of tanker newbuilding orders or lower than anticipated levels of tanker recycling, (v) increases in the cost of bunkers, and (vi)
changes in rules and regulations applicable to the tanker industry, including legislation adopted by international organizations such as
IMO and the European Union or by individual countries. Additionally, if we expand our business or provide new services in new
geographic regions, we may not be able to compete profitably. New markets may require different skills, knowledge, or strategies than
we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than
we do.
We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our earnings.
We employ the majority of our vessels on spot voyage charters or short-term time charters and generate a significant portion of our
revenue from the spot market. The spot charter market may fluctuate significantly based upon product tanker and oil supply and
demand. The successful operation of our vessels in the competitive spot charter market depends on, among other things, obtaining
profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling ballast to pick up
cargo. The spot market is very volatile, and, in the past, there have been periods when spot charter rates have declined below the
operating cost of vessels. During 2025, our product tanker fleet realized average spot TCE earnings of $ 28,703/day. If future spot
charter rates decline, we may be unable to operate our vessels trading in the spot market profitably, meet our obligations, including
payments on indebtedness, or pay dividends in the future. Furthermore, as charter rates for spot charters are fixed for a single voyage,
which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in
realizing the benefits from such increases, which may have a material adverse effect on our future performance, results of operations,
cash flows and financial position.
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Our ability to renew the charters on our vessels on the expiration or termination of our current charters, or on vessels that we may
acquire in the future, or the charter rates payable under any replacement charters and vessel values will depend upon, among other
things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel
capacity and changes in the supply and demand for the seaborne transportation of energy resources.
We are subject to certain risks with respect to entering into new time charter-in contracts due to our dependence on spot
charters.
We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations
could cause us to suffer losses or negatively impact our results of operations and cash flows.
We have the opportunity to charter-in additional vessels for longer or shorter periods. Because we employ the majority of our vessels on
spot voyage charters or short-term time charters, we may be exposed to changes in the freight rates that are significantly below the hire
to be agreed in a time charter-in contract. This exposure could have a material adverse effect on our future performance, results of
operations, cash flows and financial position.
We have entered, and may enter in the future, into various contracts that are material to the operation of our business, including bunker,
interest rate and foreign exchange hedging contracts, employ vessels on Contracts of Affreightment, or COAs, time charters and voyage
charters, and enter into newbuilding contracts with shipyards. Such agreements subject us to counterparty risks. The ability and
willingness of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are
beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore
industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels and various expenses.
Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities and/or uncertain
industry conditions. In addition, in depressed market conditions, our charterers and customers may no longer need a vessel that is
currently under charter or contract or may be able to obtain a comparable vessel at lower rates. As a result, charterers and customers
may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts, and it may be
difficult for us to secure substitute employment for such vessel. Furthermore, any new charter arrangements we secure in the spot
market or on time charters may be at lower rates. Should a counterparty fail to honor its obligations under agreements with us or attempt
to renegotiate our agreements, we could sustain significant losses, which could have a material adverse effect on our future
performance, results of operations, cash flows, financial position and ability to pay dividends to holders of our common shares in the
amounts anticipated or at all and compliance with covenants in our loan agreements. To reduce our counterparty risk, we perform a
credit check on the prospective customers, however, we cannot guarantee that this process reveals the embedded default risk. In
addition, if the charterer of a vessel in our fleet that is used as collateral under one or more of our loan agreements defaults on its charter
obligations to us, such default may constitute an event of default under our loan agreements, which may allow the bank to exercise
remedies under our loan agreements.
To reduce our counterparty risk, we perform a credit check on the prospective customers, however, we cannot guarantee that this
process reveals the embedded default risk. Although we assess the creditworthiness of our counterparties, a prolonged period of difficult
industry conditions could lead to changes in a counterparty’s liquidity and increase our exposure to credit risk and bad debts. In
addition, we may offer extended payment terms to our customers in order to secure contracts, which may lead to more frequent
collection issues and adversely affect our financial results and liquidity.
We received cargo claims as a result of a customer’s inability to honor its indemnification obligations, and failure to recover
damages for these claims could adversely affect our business with an immaterial effect.
TORM received two cargo claims, both relating to one of TORM’s customers having issued indemnities to allow TORM for discharge
of cargoes, without the customer being able to honor those indemnity obligations. Both cases involved irregular activities by the
customer in relation to the handling of bills of lading. Legal action has been initiated by TORM in the United Kingdom and in India
against the customer and a number of individual owners and management representatives. During 2022 and 2023, we settled both of the
cargo claims. Failure to recover damages from claims could adversely affect our business although with an immaterial effect. TORM’s
mitigation activities include, but are not limited to, credit assessment of all customers and contract clauses requiring documentation of
the receiver stated in the bills of lading. TORM has adopted a policy that in some cases will require the customer to document that a
discharge to a party - other than the receiver/consignee stated in the bill of lading - is in agreement with such receiver/consignee.
We are subject to certain risks with respect to our counterparties on our newbuilding construction contracts, and the failure of
our counterparties to meet their obligations under our newbuilding contracts could cause us to suffer losses or otherwise
adversely affect our business.
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As of the date of this annual report, we do not have any contracts for newbuilding vessels, and we may enter into contracts for
newbuilding vessels in the future. Timely delivery of any newbuildings we may acquire in the future, are subject to our counterparties
meeting their obligations. We are therefore exposed to the risk of failure, cost overruns, delayed delivery, technical problems, quality or
engineering problems and other counterparty risks. A number of shipping construction companies have reportedly been experiencing
financial challenges. Any such financial challenges may affect operations and the timely delivery of newbuildings. Significant delays
could adversely affect our financial position, operating results, and cash flows. If we already committed to a third party the use of the
vessel upon construction completion, then we may breach such commitment and be subject to pay related damages, such as any
increased costs the counterparty pays to secure an alternate vessel to use. Additionally, failure to complete a project on time may result
in the delay of revenue from that vessel, and we may continue to incur costs and expenses related to delayed vessels, such as supervision
expenses. Furthermore, a cancellation due to financial difficulties or bankruptcy of a shipyard could imply that pre-delivery installments
are not recovered or are recovered only after long arbitration that can last occasionally several years.
Measures have been taken to supervise the quality of the work completed at the shipyard where our newbuildings are being constructed.
In the past we have obtained refund guarantees for the pre-delivery installments as security for pre-delivery installment payments paid.
We can provide no assurance that these, or any other measures we may take, will fully mitigate these risks, and any failure by a
counterparty to meet its obligations in relation to the newbuildings may result in delays or cancellations of the delivery of the
newbuildings, renegotiation of terms, delayed renewal of our product tanker fleet and consequent deterioration of our competitive
position, any of which may result in significant losses for us which could have a material adverse effect on our future performance,
results of operations, cash flows and financial position.
An inability to effectively time investments in and divestments of vessels could prevent the implementation of our business
strategy and negatively impact our results of operations and financial condition.
Our strategy is to own and operate a fleet large enough to provide global coverage, but no larger than what the demand for our services
can support over a longer period by both contracting newbuildings and through acquisitions and disposals in the second-hand market.
Our business is greatly influenced by the timing of investments and/or divestments and contracting of newbuildings. If we are unable to
identify the optimal timing of such investments, divestments or contracting of newbuildings in relation to the shipping value cycle due
to capital restraints, this could have a material adverse effect on our competitive position, future performance, results of operations, cash
flows and financial position.
An increase in operating costs would decrease our earnings and have a material adverse effect on our future performance,
results of operations, cash flows and financial position.
Our vessel operating expenses include the costs of crew, provisions, deck and engine stores, insurance, security measures and
maintenance and repairs and lubricants. Those expenses depend on a variety of factors, many of which are beyond our control and
subject to development in the market of the respective input. Voyage expenses include bunkers (fuel), port and canal charges. If our
vessels suffer damage, they may need to be repaired at a dry-docking facility. The costs of dry-dock repairs are unpredictable and can be
substantial. Some of these costs, primarily relating to insurance, crewing and enhanced security measures, have been increasing on a
relative basis and may increase further in the future. Increases in any of these expenses could decrease our earnings and available cash.
We may expand our fleet through the acquisition of secondhand vessels. When purchasing and managing second-hand vessels, we are
exposed to unforeseen operating costs and vessels off-hire. Second-hand vessels are typically acquired without a warranty period, and
while we generally inspect second-hand vessels prior to purchase, such inspections may not fully reveal the condition of the vessel. We
may therefore be required to perform repair and maintenance resulting in additional operating costs. Any such hidden defects or
problems, when detected may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may
become liable to third parties.
A substantial portion of our revenues is derived from a limited number of customers, and the loss of any of these customers
could result in a significant loss of revenues and cash flow.
We currently derive substantially all of our revenues from a limited number of customers. During 2025, 20 customers accounted for
approximately 72% of our revenue. If these customers cease doing business or do not fulfill their obligations under the charters of our
vessels, due to the increasing financial pressure on these customers or otherwise, and we are not able to find a replacement charter, or if
we encounter any difficulties in our relationships with these charterers, our results of operations, cash flows and financial condition
could be adversely affected.
We may not be able to meet our ongoing operations and working capital needs and may not be able to obtain additional
financing in the future on acceptable terms or at all.
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As of December 31, 2025, TORM had available liquidity including undrawn committed facilities of $562.3 million, comprising of cash
and cash equivalents including restricted cash of $163.5 million and undrawn committed credit facilities amounting to $398.8 million.
Restricted cash was $5.4 million.
If we do not generate sufficient cash flows from our operations to finance our ongoing operations and working capital needs, including
funding for, among other things, our newbuilding commitments, we may need to procure additional funding in the future in the public
or private equity or debt capital markets. Adequate sources of funding may not be available when needed or may not be available on
terms acceptable to us. Our ability to obtain such additional capital or financing will in part depend on prevailing market conditions as
well as the financial position of our business and our operating results, which may affect our efforts to arrange additional financing on
satisfactory terms. If new shares are issued, it may result in a dilution of the existing shareholders. There can be no assurance that we
will be able to maintain or obtain required loan or equity financing to meet any additional working capital or capital investment needs.
In line with industry practice, our suppliers provide us with short-term credit, or short-term supply credits, to purchase, among other
things, bunkers and other petroleum products. If our short-term supply credits are reduced or withdrawn, this could have a material
adverse effect on our business, results of operations, cash flows and financial position.
In addition, if available and satisfactory funding is insufficient at any time in the future, we may be unable to respond to competitive
pressures or customers’ requirements regarding vessel maintenance and fleet age or take advantage of business opportunities. Failure to
obtain additional financing at all or at a higher than anticipated cost could have a material adverse effect on our business, results of
operations, cash flows and financial position and could lead to bankruptcy or other insolvency proceedings.
As our product tanker fleet ages, we are exposed to increased operating costs and decreased competitiveness, which could
adversely affect our earnings, and the risks associated with older vessels could adversely affect our ability to obtain profitable
charters.
In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. As of December 31, 2025, the
average age of our owned tanker fleet is approximately 12 years. As our fleet ages, we will incur increased costs. Older vessels are
typically less fuel-efficient and more costly to maintain than newer vessels due to improvements in engine technology, as well as
accumulated damage and wear. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to
charterers. Governmental regulations, including environmental regulations, safety or other equipment standards related to the age of
vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities
in which our vessels may engage. As our vessels age, market conditions might not justify those expenditures or enable us to operate our
vessels profitably during the remainder of their useful lives.
If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in
our fleet upon the expiration of their remaining useful lives. Our cash flows and income are dependent on the revenues earned by the
chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results
of operations, financial condition and ability to pay dividends would be adversely affected. Any funds set aside for vessel replacement
will not be available for cash distributions and dividends.
Any failure to pass vessel inspections by classification societies and other private and governmental entities and operate our
vessels may have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Poor performance in the new OCIMF inspection regime (SIRE 2.0) may cause TORM to experience a decline in tradability and
lead to additional vessel inspections.
Our vessels are subject to inspections from government and private entities, and we are required to obtain permits, licenses and
certificates for the operation of our vessels as well as vetting or other types of commercial and operational approvals. In addition, the
hull and machinery of every commercial vessel must be classed by a classification society authorized by the vessel’s country of registry.
Classification societies are non-governmental, self-regulating organizations and certify that a vessel is safe and seaworthy in accordance
with the applicable rules and regulations of the country of registry of the vessel. A vessel must undergo various mandatory surveys. A
vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year
period. The Company’s vessels are on survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every
vessel is subject to statutory annual, intermediate and special surveys in a five-year cycle, this will include two surveys of the vessel’s
underwater areas. If any vessel fails any survey, the vessel may be unable to trade between ports and therefore be unemployable, which
may have a material adverse effect on our future performance, results of operations, cash flows and financial position. We could also be
in violation of provisions in our charters, insurance coverage, covenants in our loan agreements and ship registration requirements.
Our vessels also undergo inspections with a view towards compliance under the Ship Inspection Report Programme, or SIRE, and the
U.S. Coast Guard, or USCG, requirements. At the end of 2024, the Oil Companies International Marine Forum, or OCIMF,
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implemented a more comprehensive inspection process by introducing its Ship Inspection Report Program 2.0, or SIRE 2.0. This new
program facilitates a risk-based approach assessing the safety and quality of a vessel and its crew on an ongoing basis. TORM has
allocated appropriate resources for the new standards, and the implementation has progressed as planned and is operating effectively.
However, poor performance in these inspections may cause TORM to experience a decline in tradability and lead to additional vessel
inspections.
If we cannot meet our customers’ quality and compliance requirements, we may not be able to operate our vessels profitably.
Customers, and in particular those in the oil industry, have a high and increasing focus on quality and compliance standards with their
suppliers across the entire value chain, including the shipping and transportation segment. Our continuous compliance with these
standards and quality requirements is vital for the Company’s operations. Related risks could materialize in multiple ways, including a
sudden and unexpected breach in quality and/or compliance concerning one or more vessels, a continuous decrease in the quality
concerning one or more vessels occurring over time. Moreover, continuously increasing requirements from oil industry constituents can
further complicate our ability to meet the standards. Any non-compliance by the Company, either suddenly or over a period of time, on
one or more vessels, or an increase in requirements by oil operators above and beyond what we deliver, may have a material adverse
effect on our future performance, results of operations, cash flows and financial position.
Obligations associated with being a U.S.-listed public company and internal control requirements require significant resources
and management attention, and we incur increased costs as a result of being a U.S.-listed public company.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the other
rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, and the listing and other requirements
of Nasdaq New York. The various financial and other reporting obligations place significant demands on our management,
administrative, operational and accounting resources and cause us to incur significant legal, accounting and other expenses that we
would not otherwise incur. These rules and regulations increase our legal and financial compliance costs and may divert our Senior
Management Team’s attention to ensure compliance and make some activities more time-consuming and costly. We may need to
upgrade our systems or create new systems, implement additional financial and management controls, reporting systems and
procedures, create or outsource an internal audit function and hire additional accounting and finance staff. If we are unable to
accomplish these objectives in a timely and effective fashion, our ability to comply with the financial reporting requirements and other
rules that apply to reporting companies could be impaired. We cannot accurately predict the amount of the additional costs we may
incur in the future, the timing of such costs or the degree of impact that our Senior Management Team's attention to these matters will
have on our business.
Sarbanes-Oxley requires, among other things, that we maintain and periodically evaluate our internal control over financial reporting as
well as disclosure controls and procedures. Section 404(a) of the Sarbanes-Oxley Act requires that our Senior Management Team assess
and report annually on the effectiveness of our internal controls over financial reporting and identify any material weaknesses in our
internal controls over financial reporting. Compliance with Section 404(a) requires substantial accounting expenses and significant
management efforts. The costs of compliance with the foregoing requirement may have a material adverse effect on our future
performance, results of operations, cash flows and financial condition. Additionally, Section 404(b) of the Sarbanes-Oxley Act requires
the external auditor to attest to, and report on, our Senior Management Team's assessment of our internal controls over financial
reporting, which will increase the overall cost of compliance. Evolving regulatory expectations, including new or amended Public
Company Accounting Oversight Board, or PCAOB, standards, such as the PCAOB’s Quality Control Standard QC 1000, which is
scheduled to take effect on December 15, 2026, may further increase the cost and complexity of compliance.
Any failure to maintain effective internal control over financial reporting could have a material adverse effect on our business,
prospects, liquidity, results of operations and financial condition. While we did not identify any material weaknesses or significant
deficiencies in our internal controls under the current assessment for the year ended December 31, 2025, we cannot be certain at this
time that our internal controls will be considered effective in future assessments and that our independent registered public accounting
firm would reach a similar conclusion. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject
to delisting of our Class A common shares from Nasdaq New York and/or Nasdaq Copenhagen, fines, sanctions and other regulatory
action.
Beginning with accounting periods starting on or after January 1, 2026, the updated United Kingdom Corporate Governance Code
introduces enhanced requirements under Provision 29, including board‑level monitoring and annual declarations of the effectiveness of
all material controls—financial, operational, reporting, and compliance‑related. These obligations will require continued strengthening
of our risk‑management and internal‑control framework, expanded control testing, and increased board oversight. Failure to comply
with these expanded governance expectations, or to provide the required disclosures in our annual report, could likewise expose us to
regulatory or reputational risks.
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The cumulative impact of these regulatory, governance, and reporting requirements may increase the overall cost of compliance and
divert resources from other strategic initiatives. We cannot accurately predict the future costs of compliance or the full extent of the
operational demands these obligations may impose.
Failure to obtain or retain highly skilled personnel, including key executives, key employees or key consultants, could adversely
affect our operations.
We require highly skilled personnel to operate our business. There can be no assurance that we will be able to attract and retain such
employees on reasonable terms in the future. Our ability to attract and retain employees and management in the future may be affected
by circumstances beyond our control. Competition for skilled and other labor required for our operations has increased in recent years as
the number of ocean-going vessels in the worldwide fleet has increased. If this expansion continues and is coupled with improved
demand for seaborne shipping services in general, shortages of qualified personnel could further create and intensify upward pressure on
wages and make it more difficult for us to staff and service vessels. In addition, we employ staff and vessel crews in a number of
countries, all of which are covered by international rules of employment. Changes are made on an ongoing basis to international rules of
employment and this may have a material influence on our flexibility in manning our vessels.
There can be no guarantee that the services of the current directors and Senior Management Team will be retained, or that suitably
skilled and qualified individuals can be identified and employed, which may adversely impact our ability to commercial and financial
performance. The loss of the services of any of the directors or other members of the Senior Management Team may have a material
adverse effect on our commercial and financial performance as well.
Such developments could adversely affect our ability to attract and retain qualified employees and members of the Senior Management
Team on reasonable terms in the future and, in turn, could adversely affect our future performance, results of operations, cash flows and
financial position.
U.S. tax authorities could treat us as a ‘‘passive foreign investment company’’, which could have adverse U.S. federal income
tax consequences to U.S. shareholders.
A foreign corporation will be treated as a PFIC for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any
taxable year consists of certain types of ‘‘passive income’’ or (2) at least 50% of the average value of the corporation’s assets produce or
are held for the production of those types of ‘‘passive income’’. For purposes of these tests, ‘‘passive income’’ includes dividends,
interest and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are
received from unrelated parties in connection with the active conduct of a trade or business. For the purposes of these tests, income
derived from the performance of services does not constitute ‘‘passive income’’. U.S. shareholders of a PFIC are subject to certain
reporting obligations and a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the
distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.
Based on our current and proposed method of operation, we do not believe that we are or that we expect to become, a PFIC with respect
to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering and
voyage chartering activities as services income rather than rental income. Accordingly, we believe that our income from these activities
does not constitute ‘‘passive income’’, and the assets that we own and operate in connection with the production of that income do not
constitute assets that produce or are held for the production of “passive income”.
Although there is no direct legal authority under the PFIC rules addressing our method of operation, there is substantial legal authority
supporting our position, consisting of the Code, legislative history, case law and United States Internal Revenue Service, or the IRS,
pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other
tax purposes. However, it should be noted that there is also authority that characterizes time charter income as rental income rather than
services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept our position,
and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would
not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations or the
composition of our income or assets change. If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S.
shareholders will face adverse U.S. federal income tax consequences and will incur certain information reporting obligations that may
be onerous. Under the PFIC rules, unless those shareholders make an election available under the Code (which election could itself have
adverse tax consequences for such shareholders), such shareholders would be liable to pay U.S. federal income tax at the then prevailing
income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common
shares, as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period of the common shares.
Please see “Item 10. Additional Information—E. Taxation –U.S. Federal Income Taxation of U.S. Holders—Passive Foreign
Investment Company Status and Significant U.S. Federal Income Tax Consequences” for a more comprehensive discussion.
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We may have to pay tax on U.S. source income, which would reduce our earnings.
Under the U.S. Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross shipping income of a vessel owning or
chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not
both begin and end, in the U.S. may be subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation
qualifies for exemption from tax under Section 883 of the Code or under the terms of a U.S. income tax treaty.
We and/or one or more of our subsidiaries (collectively referred to as “we” for purposes of this paragraph) may qualify for exemption
from tax under the terms of the U.S.-U.K. Income Tax Treaty or the U.S.-Denmark Income Tax Treaty. Whether we so qualify depends,
among other things, on whether we satisfy the Limitation on Benefits article of the applicable U.S. income tax treaty. In particular, we
would generally satisfy the Limitation on Benefits article if we can establish that we are engaged in the active conduct of a trade or
business in the U.K. or Denmark, whichever is applicable, our U.S. source shipping income is derived in connection with, or is
incidental to, such trade or business, and such trade or business activity in the applicable treaty jurisdiction is substantial in relation to
our trade or business activity in the U.S.. Given the legal and factual uncertainties in making the foregoing determination, there can be
no assurance that we will be able to qualify for exemption from tax under a U.S. income tax treaty, or that the IRS or a court of law will
agree with our determination in this regard.
If we or our subsidiaries are not entitled to the exemption under Section 883 of the Code or under the terms of a U.S. income tax treaty
for any taxable year, we and our subsidiaries would be subject to a 4% U.S. federal income tax on gross U.S. source shipping income
for such taxable year. The imposition of this taxation could have a negative effect on our business and result in decreased earnings
available for distribution to our shareholders. For example, if the benefits of Section 883 and the applicable U.S. income tax treaties
were unavailable for our taxable year ended December 31, 2025, we estimate that our U.S. federal income tax liability for such taxable
year would have increased by approximately $ 9.5 million, although our U.S. federal income tax liability for future taxable years would
vary depending upon the amount of U.S. source shipping income that we earn in each such year. See “Item 10. Additional Information
—E. Taxation—United States Federal Income Taxation of the Company” for a more comprehensive discussion.
Changes to the tonnage tax or the corporate tax regimes applicable to us, or to the interpretation thereof, may impact our
future operating results.
TORM is currently subject to tonnage tax schemes in Denmark, U.K. and the U.S. If our participation in the tonnage tax scheme is
abandoned, or if our level of investments and activities is significantly reduced (e.g. from significant or fully disposal of the Danish
owned fleet), we may have to pay, in part or in full, a non-current tax liability related to held over gains, which as of December 31, 2025
is $ 45.2 million.
Additional taxes may be payable as a result of a change in other tax laws of any country in which we operate or a change in complex tax
laws that affect our international operations.
In the event that tonnage tax schemes or other tax laws are changed in the future, our overall tax burden could increase, which could
have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Moreover, through our acquisition of Marine Exhaust Technology A/S, we are exposed to changes to the corporate tax regimes of
Denmark, China and Hong Kong.
Insurance may be difficult to obtain, or if obtained, may not be adequate to cover our losses that may result from our operations
due to the inherent operational risks of the product tanker industry.
We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull
and machinery insurance, protection and indemnity insurance, which includes pollution risks, crew insurance and war risk insurance.
However, we may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on
us. Additionally, our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to
take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any
significant uninsured or under-insured loss or liability could have a material adverse effect on our business, results of operations, cash
flows and financial condition and our available cash. In addition, we may not be able to obtain adequate insurance coverage at
reasonable rates in the future during adverse insurance market conditions.
Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain
due to increased premiums or reduced or restricted coverage for losses caused by terrorist acts generally.
We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material
adverse effect on us.
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We and our activities are subject to both U.K. and foreign laws and regulations many of which include legal standards, which are
subject to interpretation, and we are party to agreements and transactions, involving matters of assessment of interests of various
stakeholders and valuation of assets, liabilities and contractual rights and obligations. Furthermore, we may be subject to the jurisdiction
of courts or arbitration tribunals in many different jurisdictions.
Our counterparties and other stakeholders or authorities may dispute our compliance with laws and regulations or contractual
undertakings or the assessments made by us in connection with our business and the entry into agreements or transactions. The outcome
of any such dispute or legal proceedings is inherently uncertain and may include payment of substantial amounts in legal fees and
damages or that a transaction or agreement is deemed invalid or voidable. Such proceedings or decisions could have a material adverse
effect on our future performance, results of operations, cash flows and financial position. With respect to any litigation, our insurance
may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding
such lawsuit. If cases or proceedings in which we may be involved are determined to our disadvantage, it may result in fines, default
under our debt facilities, damages or reputational damage and could have a material adverse effect on our future performance, results of
operations, cash flows and financial position.
Fluctuations in exchange rates and non-convertibility of currencies could result in losses to us.
As a result of our international operations, we are exposed to fluctuations in foreign exchange rates due to parts of our revenues being
received and operating expenses paid in currencies other than U.S, dollars. We use U.S. dollars as the functional currency because the
majority of the Company’s transactions are denominated in U.S. dollars. Thus, the Company’s exchange rate risk is related to cash
flows not denominated in U.S. dollars, and we have historically generated almost all revenues and incurred the majority part of our
expenses in U.S. dollars. The primary risk relates to transactions denominated in Danish Krone, or DKK, Euro, or EUR, Indian Rupee,
or INR, Singapore Dollar, or SGD, or other major currencies, which relate to administrative and operating expenses. Accordingly, we
may experience currency exchange losses if we have not fully hedged our exposure to a foreign currency. A change in exchange rates
could have a material adverse impact on our future performance, results of operations, cash flows and financial position.
Investment in derivative instruments such as freight forward agreements could result in losses to us.
We use the derivative markets and take positions in derivative instruments, such as forward freight agreements, or FFAs, for the
purposes of hedging our exposure to fluctuations in the charter market, interest rates, foreign exchange rates and bunker prices. Our
financing agreements set forth limitations on our level of FFAs exposure and prohibit speculation on interest rates, foreign exchange and
bunker swaps. From time to time, we may take positions in such derivative instruments, and as a result we may incur derivative
exposure that could have a material adverse effect on our future performance, results of operations, cash flows and financial position. If
liquidity in these derivative markets decreases or disappears, it could make it difficult or more expensive for us to perform such hedging,
which could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
U.S. and other non-U.K. holders of our Class A common shares may not be able to exercise pre-emptive subscription rights or
participate in future offerings.
Holders of our Class A common shares have certain pre-emption rights with respect to certain of our issuances unless those rights are
disapplied by virtue of a shareholder's resolution at a general meeting. Securities laws of certain jurisdictions may restrict the ability for
shareholders in such jurisdictions to participate in any future issuances of shares carried out on a pre-emptive basis. Shareholders
residing or domiciled in the U.S., as well as certain other countries, may not be able to exercise their pre-emption rights or participate in
future capital increases or securities issuances, including in connection with an offering below market value, unless we decide to comply
with local requirements and, in the case of the U.S., unless a registration statement is effective, or an exemption from the registration
requirements of the Securities Act of 1933, as amended, or the Securities Act, is available with respect to such rights.
In such cases, shareholders resident in such non-U.K. jurisdictions may experience a dilution of their shareholding, possibly without
such dilution being offset by any compensation received in exchange for subscription rights. No assurance can be given that local
requirements will be complied with or that any registration statement would be filed in the U.S. or other relevant jurisdictions, or that
another exemption from the registration requirements of the Securities Act or laws of other relevant jurisdictions would apply, so as to
enable the exercise of such holders’ pre-emption rights or participation in any future securities issuances.
We may be exposed to fraudulent behavior, which may have a material adverse effect on our future performance, results of
operations, cash flows and financial position.
The risk of fraud is inherent in all industries and is not specific to the shipping industry. However, historically, the shipping industry has
experienced an increased risk of fraud and fraudulent behavior. We have established a system of internal controls to prevent and detect
fraud and fraudulent behavior. However, there can be no assurance that our fraud prevention measures are sufficient to prevent or
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mitigate our exposure to fraud or fraudulent behavior in the future, and any such behavior can have a material adverse effect on our
future performance, results of operations, cash flows and financial position.
Cybersecurity incidents can affect the confidentiality, availability, and integrity of our IT systems, and could negatively impact
our business, including our ability to service customers, and may have a material adverse effect on our compliance, reputation,
future performance, results of operations, cash flows, and financial position.
Information systems are vulnerable to security breaches by computer hackers and cyber terrorists. We rely on industry-accepted security
measures and technology to securely maintain confidential and proprietary information kept on our information systems. We employ a
24/7 Security Operations Center with real-time monitoring to detect and respond to potential cyber-attacks. In addition, we continuously
scan our systems for new vulnerabilities, conduct regular risk assessments and perform annual penetration tests to identify
vulnerabilities and evolving threats.
We have increased investments in our cybersecurity by establishing a dedicated IT Risk and Security team. These investments include,
but are not limited to, security solutions (e.g. a privileged access management solution), security services (e.g. 24/7 incident response
service), and user awareness training, such as phishing simulations.
Additionally, there continues to be significant evolution and developments in the use of artificial intelligence technologies, including
generative artificial intelligence. As part of services provided by third-party application providers the risks are assessed as part of the
normal risk assessments. Internally, we deploy Microsoft CoPilot to a limited number of employees following a thorough training
program to ensure awareness and knowledge on the use of artificial intelligence, or AI. We have established a DTAT and AI team to
govern and integrate AI into our operations and implemental technical security protocols as part of the overall Microsoft security setup.
At this stage, we do not expect AI to cause increased risk to our industry or business.
Despite our preventive and detective IT security controls, there is no guarantee that these will prevent a cybersecurity incident from
occurring. For this reason, we have also created business continuity plans to allow our operations to continue for one week following a
cybersecurity incident where a majority of our IT services are compromised. Additionally, we have created disaster recovery plans to
ensure that we are capable to restore our critical IT services following a cybersecurity attack. All plans and procedures are being
reviewed and tested on an annual basis. Our assessment shows that the potential loss of revenue from a cybersecurity attack that would
cause a two-week compromise on our systems would be considered minor.
As of the date of this annual report, we have not experienced any material cybersecurity incident which would be disclosable under SEC
guidelines. We are also not aware of any material risks from cybersecurity threats that are reasonably likely to materially affect the
Company, including our business strategy, results of operations or financial condition.
For additional information on our cybersecurity policies, please see "Item 16K. Cybersecurity."
Risks Relating to Our Indebtedness
We have a significant amount of financial debt and servicing our current or future indebtedness limits funds available for other
corporate purposes.
As of December 31, 2025, we had interest-bearing debt, which includes mortgage debt and bank loans, finance lease liabilities net of
loan receivables of $1,011.9 million and cash and cash equivalents, including restricted cash, of $163.5 million. Net debt totaled $848.4
million.
We may also incur additional debt in the future. This level of debt could adversely affect our ability to obtain additional financing for
working capital or other capital expenditures on favorable terms. Future creditors may subject us to certain limitations on our business
and future financing activities as well as certain financial and operational covenants. Such restrictions may prevent us from taking
actions that otherwise might be deemed to be in the best interest of us and our shareholders.
In January 2024, we issued five-year senior unsecured bonds of $200 million, or the Bonds. The Bonds will carry a fixed coupon of
8.25%, payable semi-annually. We used the net proceeds from the issuance of the Bonds to partly finance the acquisition of five of the
eight LR2 eco vessels announced in November 2023 and for general corporate purposes. Each potential investor in the Bonds must
determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i) have
sufficient knowledge and experience to make a meaningful evaluation of the Bonds; (ii) have access to and knowledge of the
appropriate analytical tools to evaluate an investment in the Bonds; (iii) have sufficient financial resources and liquidity to bear the risks
associated with investment in the Bonds; (iv) understand the terms of the Bonds and the behavior of the relevant financial markets; and
(v) be able to evaluate possible scenarios for economic interest rate and other factors that may affect its investment. Our ability to make
scheduled payments on or to refinance its obligations under the Bonds will depend upon our financial and operating performance, which
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in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may be
beyond the Issuer's control.
Debt service obligations require us and will require us in the future to dedicate a substantial portion of our cash flows from operations to
payments on principal and interest on our interest-bearing debt, which could limit our ability to obtain additional financing, make capital
expenditures and acquisitions and/or carry out other general corporate activities in the future. Any such obligations may also limit our
flexibility in planning for, or reacting to, changes in our business and the industry where we operate or detract from our ability to
successfully withstand a downturn in our business or the economy in general.
Our ability to service our debt will, among other things, depend on our future financial and operating performance, which will be
affected by prevailing economic conditions as well as financial, business, regulatory, competitive, technical and other factors, some of
which are beyond our control. If our cash flow is not sufficient to service our current or future indebtedness, we will be forced to take
action such as reducing or delaying business activities, acquisitions or investments, selling assets, restructuring or seeking additional
capital, which may not be available to us on acceptable terms or at all. We may not be able to effect any of these remedies on
satisfactory terms, without the consent of our existing lenders or at all. Additionally, a default under any indebtedness or other financial
agreement by a subsidiary may constitute an event of default under other borrowing arrangements pursuant to cross-default provisions.
Our inability to service and repay our debt upon maturity could have a material adverse effect on our future performance, results of
operations, cash flows and financial position and could lead to bankruptcy or other insolvency proceedings.
Our financial and operational flexibility is restricted by the covenants contained in our debt facilities, and we may be unable to
comply with the restrictions and financial covenants imposed in such facilities.
Our current debt facilities impose restrictions on our financial and operational flexibility. Our debt facilities impose, and any future debt
facility may impose, covenants and other operating and financial restrictions on our ability to, among other things, pay dividends,
charter-in vessels, incur additional debt, sell vessels or refrain from procuring the timely release of arrested vessels. Our debt facilities
require us to maintain various financial ratios, including a specified minimum liquidity requirement, a minimum equity requirement and
a collateral maintenance requirement. Our ability to comply with these restrictions and covenants is dependent on our future
performance and our ability to operate our fleet and may be affected by events beyond our control, including fluctuating vessel values.
We may therefore need to seek permission from our lenders in order to engage in certain corporate actions. Our lenders’ and other
financing counterparties’ interests may differ from ours and we may not be able to obtain their permission when needed. Such
restrictions may prevent us from taking actions that otherwise might be deemed to be in the best interest of the Company and our
shareholders, and it may further affect our ability to operate our business moving forward, particularly our ability to incur debt, make
capital expenditures or otherwise take advantage of potential business opportunities as they arise.
Failure to comply with the covenants and financial and operational restrictions under our debt facilities may lead to an event of default
under those agreements. An event of default may lead to an acceleration of the repayment of debt and/or foreclosure on the collateral
securing the debt. In addition, any default or acceleration under our existing debt facilities or agreements governing our other existing or
future indebtedness is likely to lead to an acceleration of the repayment of debt under any other debt instruments that contain cross-
acceleration or cross-default provisions. If all or a part of our indebtedness is accelerated, we may not be able to repay that indebtedness
or borrow sufficient funds to refinance that debt, which could have a material adverse effect on our future performance, results of
operations, cash flows and financial position and could lead to bankruptcy or other insolvency proceedings.
As of December 31, 2025, we were in compliance with the financial covenants contained in our debt facilities.
Volatility of interest rate benchmarks under our financing agreements could affect our profitability, earnings and cash flow.
As certain of our current financing agreements have, and our future financing arrangements may have, floating interest rates, typically
based on the Secured Overnight Financing Rate, or SOFR, movements in interest rates could negatively affect our financial
performance.
In order to manage our exposure to interest rate fluctuations under SOFR or any other variable interest rate, we have a financial policy
in place outlining minimum level of hedging. No assurance can however be given that the use of these derivative instruments, if any,
may effectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark
to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral,
which may impact our free cash position.
Volatility in applicable interest rates among our financing agreements presents a number of risks to our business, including potential
increased borrowing costs for future financing agreements or unavailability of or difficulty in attaining financing, which could in turn
have an adverse effect on our profitability, earnings and cash flow.
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Change of control and mandatory repayment provisions contained in certain of our debt facilities may lead to a foreclosure of
our vessels.
The terms of certain of our debt facilities require us to repay the outstanding borrowings thereunder in full if there is a change of control.
A change of control occurs if any person or group acting in concert obtains direct or indirect control of the Company, including the
ability to cast more than 50% of voting rights, appoint or remove a majority of the Board of Directors, direct our operating or financial
policies, or beneficially own more than 50% of our share capital. Such a change may result from a sale of shares by existing
shareholders or a capital increase that dilutes current ownership. Because our major shareholders are not restricted from selling their
shares, we cannot assure that they will retain their positions. Any mandatory repayment triggered by a change of control could lead to
foreclosure on all or part of our fleet and could materially and adversely affect our operations, liquidity, and financial condition,
potentially resulting in insolvency.
Risks Relating to an Investment in Our Class A Common Shares
The majority of our Class A common shares are held by a limited number of shareholders, which may create conflicts of
interest.
A large portion of our Class A common shares are beneficially held by a limited number of shareholders, including Njord Luxco, a
company affiliated with Oaktree and its affiliates and Hafnia Limited, or Hafnia. Oaktree owns 26,425,059 Class A common shares, or
approximately 26.08% of our issued and outstanding Class A common shares and Hafnia owns 14,156,061 Class A common shares, or
approximately 13.97% of our issued and outstanding Class A common shares. One or a limited number of shareholders may have the
ability, either acting alone or together as a group, to influence or determine the outcome of specific matters submitted to our
shareholders for approval, including the election and removal of directors, the execution of mergers or other strategic transactions, and
amendments to the Articles of Association such as changes to our issued share capital or any merger or acquisition. Our Articles of
Association contain certain restrictions on us undertaking certain actions unless the approval by certain of our directors and/or a
particular majority of our shareholders is obtained. Such restrictions may hamper or impede our ability to take certain corporate actions
in a timely manner or at all. Any changes to the composition of the Board of Directors may lead to material changes to our business
going forward.
An active and liquid market for our Class A common shares may not develop or be sustained.
TORM plc’s Class A common shares trade on both Nasdaq New York and Nasdaq Copenhagen. Active and liquid trading markets
generally result in lower bid ask spreads and more efficient execution of buy and sell orders for market participants. Since the listing of
our Class A common shares on Nasdaq New York, a limited number of our Class A common shares have traded on Nasdaq New York.
If a more active trading market for our Class A common shares does not develop, the price of the Class A common shares may be more
volatile, and it may be more difficult and time-consuming to complete a transaction in the Class A common shares, which could have an
adverse effect on the realized price of the Class A common shares, or we could be delisted from Nasdaq New York. We cannot predict
the price at which our Class A common shares will trade and cannot guarantee investors can sell their shares at or above the issuance
price. There is no assurance that a more active and liquid trading market for our Class A common shares will develop or be sustained in
the U.S..
We cannot guarantee that our Board of Directors will declare dividends.
Our Board of Directors may, in its sole discretion, from time to time, declare and pay cash dividends in accordance with our Articles of
Association, applicable law and in accordance with loan agreements. We can only distribute dividends to shareholders out of funds
legally available for such payments. Our Board of Directors makes determinations regarding the payment of dividends in its sole
discretion, and there is no guarantee that we will be able to or decide to pay dividends to shareholders in the future. Pursuant to our
distribution policy, we intend to distribute on a quarterly basis excess liquidity above a fixed threshold cash level as at the balance sheet
day. For each quarter, the threshold cash level will be determined as the product of cash requirement per vessel and the number of
owned and leased vessels in our fleet as at the balance sheet day. Excess liquidity is determined as our readily available liquidity less the
threshold cash level. The cash requirement per vessel has been fixed at: $1.8 million since September 30, 2022. Any changes to our
dividend policy could adversely affect the market price of our common shares. For a description of the amended distribution policy
approved by the Board of Directors on March 7, 2024, please see “Item 8. Financial Information—A. Consolidated Statements and
Other Financial Information—Distribution Policy”.
In addition, the markets in which we operate our vessels are volatile, and we cannot predict with certainty the amount of cash, if any,
that will be available for distribution as dividends in any period. We may also incur expenses or liabilities or be subject to other
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circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution as dividends, including as
a result of the risks described herein. If additional financing is not available to us on acceptable terms, our Board of Directors may
determine to finance or refinance acquisitions with cash from operations, which would reduce the amount of any cash available for the
payment of dividends. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Distribution
Policy”.
Additional factors that could affect our ability to pay dividends include statutory and contractual limitations on the ability of our
subsidiaries to pay dividends to us, including under current or future debt arrangements, economic conditions, including macroeconomic
impacts on our business and financial condition, such as inflationary pressure, and other factors the Board of Directors may deem
relevant.
We may issue additional securities without shareholder approval, which may dilute ownership interests of existing shareholders
and may depress the market of our securities.
We may issue additional securities of equal or senior rank to existing securities, without shareholder approval, in a number of
circumstances. At the Company’s 2024 Annual General Meeting of Shareholders, our Board of Directors was granted certain
authorizations to increase our issued share capital, both with and without pre-emption rights to the existing shareholders. These share
authorities expire on April 10, 2029.
The issuance by us of additional securities of equal or senior rank to existing securities may have the following effects:
•our existing shareholders’ proportionate ownership interest in us may decrease;
•the amount of cash available for dividends or interest payments may decrease;
•the relative voting strength of previously issued outstanding securities may be diminished; and
•the market price of our securities may decline.
In accordance with our remuneration policy, our Board of Directors has, as part of the long-term incentive program, or the LTIP,
granted certain members of our management and employees Restricted Share Units, or RSUs, in the form of restricted stock options.
The RSUs aim at incentivizing the employees to seek to improve the performance of the Company and thereby our share price for the
mutual benefit of themselves and our shareholders. There was an aggregate of 4,856,527 RSUs outstanding as of December 31, 2025.
Subject to vesting, each RSU entitles the holder to acquire one Class A common share. The RSUs will vest over a three-year period
from the grant date with an original exercise price for each Class A common share of DKK 136.3, 204.5 or 153.2, depending on the year
that the RSUs were granted. In 2025, an incentive program was granted on similar terms as outlined above with the exceptions that the
strike price for these RSUs is set to one U.S. cent and that all the RSUs will vest on October 1, 2028. Vested RSUs may be exercised for
a period of 360 days from each vesting date. The exercise price on the RSUs may be adjusted by the Board of Directors to reflect
dividend payments made to shareholders. Assuming full vesting and exercise of RSUs outstanding as of December 31, 2025, this would
result in the issuance of 4,856,527 additional Class A common shares representing approximately 4.79% of our issued and outstanding
Class A common shares. Please see “Item 10. Additional Information-A. Share Capital-Restricted Share Units”.
Our share price may be highly volatile, and future sales of our Class A common shares could cause the market price of our
Class A common shares to decline.
The market price of TORM plc’s shares, has historically fluctuated over a wide range and may continue to fluctuate significantly in
response to many factors, such as actual or anticipated fluctuations in our operating results, changes in financial estimates by securities
analysts, economic and regulatory trends, general market conditions, rumors and other factors, many of which are beyond our control.
Both the broader equity markets and the shipping sector have experienced periods of elevated volatility, at times not fully reflecting the
underlying operating performance of individual companies. If the volatility in the market continues or worsens, it could have a material
adverse effect on the market price of our Class A common shares and impact a potential sale price if holders of our Class A common
shares decide to sell their shares.
In addition, a large proportion of our Class A common shares are held by a limited number of shareholders. A potentially limited free
float due to shareholder concentration may have a negative impact on the liquidity of our Class A common shares and may result in a
low trading volume, which could have an adverse effect on the market price and result in increased volatility.
Further, future sales or availability for sale of our Class A common shares may materially affect the price of our Class A common
shares. Sales of substantial amounts of Class A common shares, including sales by Njord Luxco or Hafnia, or the perception that such
sales could occur, may adversely affect the market price of our Class A common shares.
27
In addition, the market price and trading volume of our Class A common shares have very recently and at certain other times in the past
exhibited, and may continue to exhibit, high volatility, including within a single trading day. A proportion of our common shares may
be traded by short sellers which may put pressure on the supply and demand for our Class A common shares, creating further price
volatility. In particular, a possible “short squeeze” due to a sudden increase in demand of our common shares that largely exceeds
supply may lead to sudden extreme price volatility in our Class A common shares. Investors may purchase our common shares to hedge
existing exposure in our common shares or to speculate on the price of our common shares. Speculation on the price of our common
shares may involve long and short exposures. To the extent aggregate short exposure exceeds the number of common shares available
for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our common shares for
delivery to lenders of our common shares. Those repurchases may in turn, dramatically increase the price of our common shares until
investors with short exposure are able to purchase additional common shares to cover their short position. This is often referred to as a
“short squeeze.” Following such a short squeeze, once investors purchase the shares necessary to cover their short position, the price of
our common shares may rapidly decline. A short squeeze could lead to volatile price movements in our shares that are not directly
correlated to the performance or prospects of our company and could cause purchasers of our common shares to incur substantial losses.
In addition, some companies that have experienced volatility in the market price of their common shares have been subject to securities
class-action litigation. If instituted against us, such litigation could result in substantial costs and diversion of management’s attention
and resources, which could materially and adversely affect our business, financial condition, operating results and growth prospects.
There can be no guarantee that the price of our common shares will remain at or rise above its post-distribution level or that future sales
of our common shares will not be at prices lower than those initially distributed or sold to investors.
We are thus unable to predict when such instances of trading volatility will occur or how long such dynamics may last. Therefore, we
cannot assure you that you will be able to sell any of our Class A common shares you may have purchased at a price greater than or
equal to its original purchase price, or that you will be able to sell our common shares at all.
Future issuances and sales of our Class A common shares could cause the market price of our Class A common shares to
decline.
As of the date of this annual report, our issued (and fully paid up) share capital is $1,013,327.07, which is represented by 101,332,707
Class A common shares. Issuances and sales of a substantial number of Class A common shares in the public market, or the perception
that these issuances or sales could occur, may depress the market price for our Class A common shares. Such sales could also impair our
ability to raise additional capital through the sale of our equity securities in the future. Our shareholders may incur dilution from any
future equity offering.
Risks Related to Being an English Company Listing Class A Common Shares
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation organized in
Delaware.
We are incorporated under the laws of England and Wales. The rights of holders of our Class A common shares are governed by
English law, including the provisions of the U.K. Companies Act 2006, or the UK Companies Act, and by our Articles of Association.
These rights may differ in certain respects from the rights of shareholders in typical U.S. corporations organized in Delaware. The
principal differences are set forth in “Description of Class A Common Shares” contained in Exhibit 2.4 to this annual report.
We are subject to the UK Bribery Act, the U.S. Foreign Corrupt Practices Act and potentially other anti-corruption laws that
apply in the countries where we do business, as well as export control laws, customs laws, sanctions laws and other laws
impacting our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial
measures and legal expenses, which could adversely affect our business, results of operations and financial condition.
Our operations are subject to anti-corruption laws, including the UK Bribery Act, the FCPA, as amended, and potentially other anti-
corruption laws that apply in countries where we do business. We and our commercial partners operate in a number of jurisdictions that
may pose a risk of potential UK Bribery Act or FCPA violations, and we participate in collaborations and relationships with third parties
whose actions could potentially subject us to liability under the UK Bribery Act, the FCPA, or other anti-corruption laws. In addition,
we cannot predict the nature, scope or effect of future regulatory requirements to which our internal operations might be subject or the
manner in which existing laws might be administered or interpreted.
We are also subject to other laws and regulations governing our international operations, including regulations administered by the
governments of the United Kingdom and the U.S., and authorities in the European Union, including applicable export controls,
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economic sanctions, customs requirements, anti-boycott requirements, and currency exchange regulations (collectively, “Trade Control
Laws.
While we maintain policies and procedures reasonably designed to ensure compliance with applicable anti-corruption laws and Trade
Control Laws, there is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption
laws (including the UK Bribery Act or the FCPA) or other legal requirements, including Trade Control Laws. If we are not in
compliance with the UK Bribery Act, the FCPA and/or other anti-corruption laws or Trade Control Laws, we may be subject to criminal
and civil penalties, disgorgement and other sanctions, remedial measures and legal expenses, which could have an adverse impact on
our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the UK
Bribery Act, the FCPA, other anti-corruption laws or Trade Control Laws by the United Kingdom, the U.S. or other authorities could
also have a material adverse impact on our reputation, our future performance, results of operations, cash flows and financial position.
U.S. investors may have difficulty enforcing civil liabilities against the Company, our directors or members of our Senior
Management Team and the experts named in the Company's annual report.
We are incorporated under the laws of England and Wales, and our executive offices are located outside of the U.S.. Our officers and
the majority of our directors reside outside the U.S., and all or a substantial portion of our assets and the assets of such persons are
located outside the U.S.. As a result, it may be difficult for you to serve legal process on us or our directors or officers or have any of
them appear in a U.S. court, or enforcing any judgments obtained in U.S. courts to the extent assets located in the U.S. are insufficient to
satisfy the judgments. The U.S. and the United Kingdom do not currently have a treaty providing for the recognition and enforcement of
judgments, other than arbitration awards, in civil and commercial matters. The enforceability of any judgment of a U.S. federal or state
court in England will depend on the laws and any treaties in effect at the time, including conflicts of laws principles (such as those
bearing on the question of whether an English court would recognize the basis on which a U.S. court had purported to exercise
jurisdiction over a defendant). In this context, there is doubt as to the enforceability in England of civil liabilities based solely on the
federal securities laws of the U.S.. In addition, awards for punitive damages in actions brought in the U.S. or elsewhere may be
unenforceable in the England. An award for monetary damages under the U.S. securities laws would likely be considered punitive if it
did not seek to compensate the claimant for loss or damage suffered and was intended to punish the defendant.
Civil liabilities based upon the securities and other laws of the U.S. may not be enforceable in original actions instituted in
England or in actions instituted in England to enforce judgments of U.S. courts.
Civil liabilities based upon the securities and other laws of the U.S. may not be enforceable in original actions instituted in England or in
actions instituted in England to enforce judgments of U.S. courts. Actions for the enforcement of judgments of U.S. courts might be
successful only if the English court confirms the jurisdiction of the U.S. court and is satisfied that:
•the effect of the enforcement judgment is not manifestly incompatible with English public policy or natural justice;
•the judgment was not obtained on the basis of fraud;
•the judgment did not violate the human rights of the defendant;
•the judgment is final and conclusive;
•the judgment is not incompatible with a judgment rendered in England or with a subsequent judgment rendered abroad that
might be enforced in England;
•a claim was not filed outside England after the same claim was filed in England, while the claim filed in England is still
pending;
•the judgment was not obtained on the basis of fraud;
•the English courts did not have jurisdiction to rule on the matter; and
•the judgment submitted to the English court is authentic.
English law and provisions in our Articles of Association may have anti-takeover effects that could discourage an acquisition of
us by others, even if an acquisition would be beneficial to our shareholders, and may prevent attempts by our shareholders to
replace or remove our current Senior Management Team.
Certain provisions of English law and our Articles of Association may have the effect of delaying or preventing a change in control of
us or changes in our Senior Management Team. For example, English law and our Articles of Association include provisions that
establish an advance notice procedure for shareholder approvals to be brought before a general meeting of our shareholders, including
proposed nominations of persons for election to our Board of Directors. Such provisions could delay or prevent hostile takeovers and
changes in control or changes in our Senior Management Team. In addition, these provisions may adversely affect the market price of
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our Class A common shares or inhibit fluctuations in the market price of our Class A common shares that could otherwise result from
actual or rumored takeover attempts.
The United Kingdom City Code on Takeovers and Mergers, or the UK Takeover Code, does not currently apply to the Company. If at
the time of a takeover offer the UK Takeover Code would apply, we would be subject to a number of rules and restrictions, including -
but not limited to - the following: (i) our ability to enter into deal protection arrangements with a bidder would be extremely limited; (ii)
we might not, without the approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an
offer, such as issuing shares or carrying out acquisitions or disposals; and (iii) we would be obliged to provide equality of information to
all bona fide competing bidders.
Changing laws and evolving reporting requirements could have an adverse effect on our business.
We are subject to data protection laws under United Kingdom legislation, and any breaches of such legislation could adversely affect
our business, reputation, results of operations and financial condition. Our ability to obtain, retain and otherwise manage personal data is
governed by data protection and privacy requirements and regulatory rules and guidance. In the United Kingdom, we must comply with
the Data Protection Act 2018 in relation to processing certain personal data. The application of data privacy laws is often uncertain, and
as business practices are challenged by regulators, private litigants and consumer protection agencies, it is possible that these laws may
be interpreted and applied in a manner that is inconsistent with our data protection practices. Additionally, under European data
protection laws, distributing personal data into the U.S. may constitute an offense. Any breaches of such legislation could have a
material adverse effect on our business, reputation, results of operations and financial condition. For more information on our
cybersecurity policies, please see "Item 16K. Cybersecurity."
Pre-emption rights for U.S. and other non-United Kingdom holders of shares may be unavailable.
In the case of certain increases in our issued share capital, under English law, existing holders of shares are entitled to pre-emption
rights to subscribe for such shares, unless shareholders disapply such rights by a special resolution at a shareholders’ meeting. These
pre-emption rights have been disapplied by TORM plc’s shareholders in respect of certain new issuances, see “Item 10. Additional
Information—A. Share Capital”, and we shall propose equivalent resolutions in the future once the initial period of disapplication has
expired. In any event, U.S. Holders of common shares in United Kingdom companies are customarily excluded from exercising any
such pre-emption rights they may have, unless a registration statement under the Securities Act is effective with respect to those rights,
or an exemption from the registration requirements thereunder is available. We do not intend to file any such registration statement, and
we cannot assure prospective U.S. investors that any exemption from the registration requirements of the Securities Act or applicable
non-U.S. securities laws would be available to enable U.S. or other non-United Kingdom holders to exercise such pre-emption rights or,
if available, that we will utilize any such exemption.
Our tax liabilities may change in the future.
While we believe that being incorporated in England and Wales and resident for tax purposes in the United Kingdom should help us
maintain a competitive worldwide effective corporate tax rate, we cannot give any assurance as to what our effective tax rate will be.
This is, among other things, because of uncertainties regarding the tax policies of all the jurisdictions where we operate our business and
uncertainties regarding the application to our structure, which is complex, of the tax laws of various jurisdictions, including, without
limitation, Denmark, the U.S. and the United Kingdom. Because of this uncertainty, our actual effective tax rate may vary from our
expectation and that variance could be material. The G20 and the Organization for Economic Co-Operation and Development are
currently focused on the taxation of multinational corporations as part of the Base Erosion and Profit Shifting Project, or BEPS. The
implementation of BEPS outcomes in the jurisdictions in which we operate may have an impact on our effective tax rate, which, in turn,
could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay, results of operations
and financial results.
We are subject to income and other taxes in the U.S. and foreign jurisdictions, and our results of operations and financial results may be
affected by tax and other initiatives around the world. For instance, there is a high level of uncertainty in today’s tax environment
stemming from global initiatives put forth by the OECD two-pillar base erosion and profit shifting project. In October 2021, members of
the OECD put forth two proposals: (i) Pillar One reallocates profit to the market jurisdictions where sales arise versus physical presence;
and (ii) Pillar Two compels multinational corporations with €750 million or more in annual revenue to pay a global minimum tax of
15% on income received in each country in which they operate. The reforms aim to level the playing field between countries by
discouraging them from reducing their corporate income taxes to attract foreign business investment. Over 140 countries agreed to enact
the two-pillar solution to address the challenges arising from the digitalization of the economy and, in 2024, these guidelines were
declared effective and must now be enacted by those OECD member countries.
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We are subject to Pillar Two as of January 1, 2024 as our revenue exceeded the threshold of €750 million in 2022 and 2023. As the
majority of our companies’ revenue consists of shipping income, it is assessed that this income will be excluded from the Global Anti-
Base Erosion, or GloBE, income with reference to the shipping carveout described in Article 3.3 of the model rules.
Based on our fiscal year for 2025, we have prepared a preliminary Transitional Country-by-Country Reporting, or CbCR, Safe Harbor
assessment concluding that we expect to be eligible for the Transitional CbCR Safe Harbor in a majority of jurisdictions in which we are
present. As of December 31, 2025, the calculated top-up tax does not have a material impact on our financial results.
TORM plc and certain of its subsidiaries have entered and may in the future enter into internal agreements which must be at
market value or on terms no more favorable than would have been agreed if the transaction was not conducted on an intra-
group basis.
We have global operations, and the functions related to owning and operating a global scale product tanker fleet are spread across
various subsidiaries, including crewing, technical maintenance, chartering and ownership of vessels. Cross-border business within our
foreign subsidiaries and TORM plc can be complicated. We will likely enter into further agreements by and among our subsidiaries on
the one hand and TORM plc on the other hand in the future. To ensure compliance with transfer pricing regulations, such transactions
must in general be conducted on arm’s length basis. We believe that these transactions are on arm’s length terms, but no assurance can
be given that we would not have been able to secure more favorable terms from third parties.
Regarding any cross-border transactions, we may face significant compliance challenges with the regulations and administrative
requirements around transfer pricing, as they differ from country to country. Tax authorities are increasingly sophisticated in the way
they operate and are focusing more closely on transfer pricing in companies that transact cross-border business.
The Danish Tax Authorities may challenge whether TORM plc is entitled to Danish withholding tax exemption on dividends
from TORM A/S.
TORM plc is a tax resident of the United Kingdom and owns 100% of the shares of TORM A/S and should be entitled to the benefit of
the double tax treaty entered into between Denmark and the United Kingdom. The double tax treaty reduces dividend withholding tax to
nil for wholly-owned subsidiaries (where the relevant conditions are satisfied). In order for the double tax treaty to apply, TORM plc
must be considered the beneficial owner of the dividends and must not be subject to Danish anti-abuse rules.
The Danish tax authorities have, in a binding ruling from May 2024, confirmed that a non-Danish holding company, located in a state
with whom Denmark has a double tax treaty, was the beneficial owner of a dividend distribution from a Danish subsidiary. In their
ruling, the Danish tax authorities emphasized that the dividend received was not in any way determined or pre-determined to be
distributed further up the chain from the non-Danish company.
We believe that the group structure, the level of business activity carried out in the United Kingdom by TORM plc, the economic risk of
TORM plc and TORM plc’s right to dispose of dividends received and that no part of the dividend from TORM A/S to TORM plc is
pre-determined to be distributed up the chain from TORM plc, justify that TORM plc is the beneficial owner of dividends received from
TORM A/S, that TORM plc is not a conduit entity and that Danish anti-abuse rules should not apply.
Consequently, we believe that dividends distributed from TORM A/S to TORM plc should be exempt from Danish dividend
withholding tax according to the double tax treaty entered into between Denmark and the United Kingdom (so long as a claim is made
and the treaty relief is granted). If all of the applicable conditions in the double tax treaty between the United Kingdom and Denmark are
not fulfilled, Danish withholding taxes of 27% (potentially reduced to 22%) will be triggered on such dividend distributions.
ITEM 4INFORMATION ON THE COMPANY
A. History and Development of the Company
The Company
The Company was founded as TORM A/S in 1889 by Captain Ditlev E. Torm and Christian Schmiegelow. Within the first ten years,
the fleet of TORM A/S consisted of four vessels, and in 1905 TORM A/S became listed on the Copenhagen Stock Exchange. As of the
date of this annual report, we operate a fleet of 93 owned or chartered-in vessels and our Class A common shares are listed on both
Nasdaq Copenhagen and Nasdaq New York under the symbols “TRMD A” and “TRMD,” respectively.
TORM plc is a public limited company incorporated under the laws of England and Wales on October 12, 2015 under the name Anchor
Admiral Limited with company number 09818726. Anchor Admiral Limited was renamed TORM Limited on November 26, 2015, and
TORM Limited was renamed TORM plc on January 20, 2016. TORM plc’s registered office is at 4th Floor | 120 Cannon Street
London, EC4N 6AS, United Kingdom. Our telephone number at this address is +44 203 795 2794. Our main commercial and technical
31
activities are managed out of our office at Tuborg Havnevej 18, DK-2900 Hellerup, Denmark. Our telephone number at that address is
+45 39 17 92 00. We also have nine offices located in Mumbai (India), New Delhi (India), Pune (India), Manila (Philippines), Cebu
(Philippines), Singapore (Singapore), Houston (Texas, USA), Wilmington (Delaware, USA) and Dubai (United Arab Emirates). Our
website is www.torm.com. The SEC maintains an Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address of the SEC’s Internet site is www.sec.gov. None of the
information contained on these websites is incorporated into or forms a part of this annual report.
In December 2017, we effected a direct listing of our Class A common shares on Nasdaq New York. Our Class A common shares
commenced trading on Nasdaq New York under the symbol “TRMD” on December 11, 2017. As a result of our listing on Nasdaq New
York, our Class A common shares may be traded on both Nasdaq New York and Nasdaq Copenhagen. All of our outstanding Class A
common shares are identified by CUSIP G89479 102 and ISIN GB00BZ3CNK81.
Acquisitions, Dispositions, Deliveries and Capital Investments
Vessel Acquisitions
On November 6, 2025, we announced the acquisition of one 2010-built LR2 vessel. We took delivery TORM Gauri on November 10,
2025.
In the fourth quarter of 2025, we agreed to acquire six 2014-2018-built MR vessels and two 2016-built LR2 vessels. We took delivery
of five of the MR vessels before year-end renamed TORM Delhi (November 17, 2025), TORM Dover (November 21, 2025), TORM
Dubai (November 26, 2025), TORM Davao (December 1, 2025), and TORM Freedom (December 16, 2025). The remaining vessels
will be delivered in the first quarter of 2026.
Previous years
On July 15, 2024, we announced the acquisition of eight second-hand MR vessels for a total consideration of $340 million, consisting of
cash consideration of $238 million and the issuance of approximately 2.65 million shares. We took delivery of TORM Diwata (July 29,
2024), TORM Durga (September 2, 2024), TORM Damini (September 5, 2024), TORM Dulce (October 3, 2024), TORM Doris
(October 28, 2024), TORM Dagny (October 31, 2024), TORM Daphne (November 25, 2024) and TORM Deborah (November 26,
2024).
On March 7, 2024, we announced the agreement to purchase one 2011-built LR2 eco vessel for a total cash consideration of $51.5
million consisting of cash consideration of $30.9 million and the issuance of approximately 0.6 million shares. The vessel TORM
Genesis was delivered on April 24, 2024.
On November 9, 2023, we announced the acquisition of eight eco LR2 vessels built in 2010-2012 for a total cash consideration of $399
million, consisting of cash consideration of $239 million and the issuance of approximately 5.5 million shares. We took delivery of all
eight LR2 vessels: TORM Gwendolyn (January 3, 2024), TORM Gabriella (January 8, 2024), TORM Gwyneth (January 11, 2024),
TORM Ganga (January 22, 2024), TORM Gitte (January 22, 2024), TORM Gemma (March 18, 2024), TORM Gloria (March 20, 2024)
and TORM Grace (April 1, 2024).
During the fourth quarter of 2023, we entered into an agreement for four 2015-2016 MR eco product tanker vessels for a total cash
consideration of $75.0 million and the issuance of 2.68 million common shares. We took delivery of each of the four MR eco product
tanker vessels: TORM Diana (November 27, 2023), TORM Dagmar (December 13, 2023), TORM Denise (January 3, 2024) and
TORM Danica (January 5, 2024).
On March 16, 2023, we entered into an agreement to purchase three 2013-built MR eco product tanker vessels for a total cash
consideration of $48.5 million and the issuance of 1.42 million Class A common shares. The MR vessels, TORM Beatrice, TORM
Birgitte and TORM Belis, which were all built at a "tier 1" Korean yard, have fuel-efficient eco vessel specifications and were delivered
to us on May 15, 2023, May 16, 2023 and June 5, 2023, respectively. The cash portion of the consideration was financed through
traditional bank financing, and in connection with each of the three deliveries, we issued one third of the total share issuance,
corresponding to 50% of the total consideration.
During January 2023, we entered into two agreements to acquire seven 2011 - 2013 LR1 vessels for a total cash consideration of $233.0
million. All vessels are built at well-known Korean and Chinese shipyards and were financed by sale and leaseback agreements with a
Chinese financial institution. During 2023, we took delivery of the seven LR1 vessels, TORM Emilie (February 22, 2023), TORM Eva
(March 3, 2023), TORM Integrity (March 21, 2023), TORM Innovation (March 24, 2023), TORM Emma (March 28, 2023), TORM
Evelyn (April 19, 2023) and TORM Evolve (May 4, 2023).
32
Vessel Dispositions
In the first quarter of 2025, we sold and delivered three 2005-built MR vessels, TORM Ragnhild, TORM Resilience, and TORM
Thames, that were delivered to their new owners on March 17, 2025, March 24, 2025, and March 24, 2025, respectively.
In the second quarter of 2025, we sold one 2008-built LR2 vessel, TORM Mathilde, that was delivered to its new owner on 21 May
2025. We also sold two 2008-built MR vessels, TORM Discoverer and TORM Voyager, that were delivered to their new owners on 11
July 2025 and 10 September 2025 respectively.
In the third quarter of 2025, we sold one 2007-built MR vessel, TORM Adventurer, that was delivered to its new owner on 19
November 2025.
For a description of recent acquisitions and dispositions, please see “Item 4. — A. History and Development of the Company — Recent
Developments.”
Previous years
During the second quarter of 2024, we sold one MR vessel, TORM Eric, that was delivered to its new owner on June 5, 2024.
In late November 2024 and early December 2024, TORM entered into agreements to sell one 2005-built MR vessel (TORM Helvig)
and one 2006-built MR vessel (TORM Republican), respectively, that were delivered to the new owners on December 23, 2024 and
December 30, 2024, respectively.
During the second quarter of 2023, we sold one MR vessel, TORM Sara, that was delivered to its new owner on May 22, 2023.
During the third quarter of 2023, we sold one MR vessel, TORM Freya, that was delivered to its new owner on August 21, 2023 and
two LR1 vessels, TORM Estrid and TORM Ismini, that were delivered to their new owners on November 1, 2023 and November 9,
2023, respectively.
During the fourth quarter of 2023, we sold one LR2 vessel, TORM Marina, that was delivered to its new owner on November 23, 2023,
and we sold three MR vessels, TORM Kansas, TORM Thyra, and TORM Hardrada, that were delivered to their new owners on
December 4, 2023, December 11, 2023 and December 27, 2023, respectively.
During the fourth quarter of 2023, we sold two LR1 vessels, TORM Signe and TORM Sofia, that were delivered to their new owners on
January 8, 2024 and January 9, 2024, respectively, as well as one MR vessel, TORM Loke, which was delivered to its new owner on
January 5, 2024.
Scrubber Investments
As of December 31, 2025, we successfully installed scrubbers on 85 of our vessels. Further we plan to install scrubbers on an additional
four vessels in 2026, thus 89 vessels are expected to be fitted with scrubbers before the end of 2026, with the remaining vessels
continuing to use compliant fuels with 0.5% sulfur content.
Sale and Leaseback Transactions
In 2025, we exercised purchase options for 22 leaseback vessels, six LR2 vessels, seven LR1 and nine MR vessels. 14 vessels has been
redelivered to TORM transitioning them to full ownership. The rest will be redelivered in 2026.
Previous years
There were no sale and leaseback transactions in 2024.
In the first quarter of 2023, we took delivery of five LR1 vessels built in 2011-2013, TORM Emilie, TORM Eva, TORM Integrity,
TORM Innovation and TORM Emma, financed by sale and leaseback financing transactions which included purchase options during
the lease period.
In the second quarter of 2023, we took delivery of two LR1 vessels built in 2011, TORM Evelyn and TORM Evolve, financed by sale
and leaseback financing transactions which included purchase options during the lease period.
Time Charter Agreements
During 2025, we entered into four new time charter-out contracts for three LR2 vessels (TORM Gauri, TORM Grace and TORM
Hannah) and one MR vessel (TORM Lilly), at a rate of $28,209 per day.
Previous years
33
During 2024, we entered into four new time charter-out contracts for four LR2 vessels, TORM Genesis, TORM Grace, TORM Hermia
and TORM Houston, at a rate of $ 44,000 per day.
During the third quarter of 2023, we entered into two two-year time charter-out contracts for two LR2 vessels at a rate of $43,000 per
day.
For information about our financing agreements, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital
Resources—Our Financing Agreements”.
Recent Developments
On January 6, 2026, following the closing of the Hafnia Share Purchase (as defined below) on December 22, 2026 and in accordance
with our Articles of Association, the Board of Directors determined that the threshold date defined in the Articles of Association (being
the first time at which Oaktree and its affiliates have ceased to beneficially own at least one-third of the Company’s issued shares,
excluding any shares held in treasury) occurred on January 6, 2026. As a result, the Class B share and the Class C share were redeemed
and cancelled in accordance with our Articles of Association and no further Class B shares or Class C shares can then be issued. These
events occurred after the reporting date and do not give rise to adjustments to the consolidated financial statements for the year ended 31
December 2025.
In January 2026, TORM delivered TORM Maren, which was held for sale as at 31 December 2025, to new owners.
In January and February 2026, TORM Houston and TORM Emilie were repurchased from sale-and-leaseback owners following the
exercise of purchase options called by TORM in the end of 2025. The remaining six vessels for which purchase options were also called
in the end of 2025 will be repurchased from sale-and-leaseback owners during the remaining part of the first half of 2026.
During January and February 2026, TORM took delivery of one 2018-build MR vessel, TORM Fortune, and one 2016-build LR2
vessel, TORM Helga.
In January 2026, TORM made an amendment and restatement to the Syndicate Facilities 2025 to finance eight vessel acquisitions
entered into during the second half of 2025, increasing the total commitment by USD 158.9m. As of the date of this report, drawdowns
have been made for seven of the eight vessel. The maturity of the Syndicate Facilities 2025 remains unchanged.
TORM’s Board of Directors has on the date of this report declared an interim dividend for the fourth quarter 2025 of USD 0.70 per
share to be paid to shareholders corresponding to an expected total dividend payment of USD 70.9m. The distribution for the quarter is
equivalent to 82% of net profit and reflects the Distribution Policy. The payment date is 25 March 2026 to all shareholders on record as
of 12 March 2026, and the ex-dividend date is 11 March 2026 for the shares listed on Nasdaq OMX Copenhagen and 12 March 2026
for the shares listed on Nasdaq New York. The dividends have not been recognized as liabilities as at 31 December 2025 and there are
no tax consequences.
B. Business Overview
Our Business
We are one of the world’s largest carriers of refined oil products. Our activities are primarily the transportation of clean petroleum
products, such as gasoline, jet fuel, kerosene, naphtha and gas oil, and occasionally dirty petroleum products, such as fuel oil. We are
active in all larger vessel classes of the product tanker market from MR to LR2 tankers. For an overview of the specifications of our
fleet, reference is made to “TORM Fleet development” on page 32 of our Annual Report 2025. See “Item 4. Information on the
Company-B. Business Overview.”
We have an extensive in-house operating and management platform which performs commercial, administrative and technical
management for our vessels. Through this integrated platform, we handle the commercial management of all our vessels and the
technical management of all our owned vessels, other than three vessels technically managed by an unaffiliated third party. In addition,
we conduct all vessel sale and purchase activities in-house, leveraging relationships with shipbrokers, shipyards, financial institutions
and other shipowners.
Environmental, Social and Governance
For further information on ESG issues, reference is made to pages 34-105 of the Annual Report 2025 and TORM’s separate
Responsibility Report that can be found on our webpage www.torm.com. None of the information contained on this website is
incorporated into or forms a part of this annual report.
Our Business Strategy
34
For information on our business strategy, reference is made to “Business Model and Strategic Choices” on pages 8-16 of the Annual
Report 2025.
The Product Tanker Industry
For information on the product tanker industry, reference is made to “Market Review” on pages 19-20 of the Annual Report 2025. For
information on the risks associated with operating within the product tanker market, see “Item 3. Key Information—D. Risk Factors—
Risks Related to Our Business and Our Industry.”
Our Fleet
The following table sets forth summary information regarding our fleet of owned product tankers, including the vessels that we charter
in as of December 31, 2025.
Vessel Name | Type | DWT | Year Built | Ownership | Shipyard(1) | |||||
TORM GABRIELLA | LR2 | 119,456 | 2010 | Owned | Hyundai | |||||
TORM GANGA | LR2 | 119,456 | 2010 | Owned | Hyundai | |||||
TORM GAURI | LR2 | 119,456 | 2010 | Owned | Hyundai | |||||
TORM GEMMA | LR2 | 119,456 | 2012 | Owned | Hyundai | |||||
TORM GENESIS | LR2 | 119,456 | 2011 | Owned | Hyundai | |||||
TORM GITTE | LR2 | 119,456 | 2010 | Owned | Hyundai | |||||
TORM GLORIA | LR2 | 119,456 | 2011 | Owned | Hyundai | |||||
TORM GRACE | LR2 | 119,456 | 2012 | Owned | Hyundai | |||||
TORM GWENDOLYN | LR2 | 119,456 | 2010 | Owned | Hyundai | |||||
TORM GWYNETH | LR2 | 119,456 | 2010 | Owned | Hyundai | |||||
TORM HANNAH | LR2 | 109,999 | 2016 | Owned | GSI Nansha | |||||
TORM HELLERUP | LR2 | 114,000 | 2018 | Owned | GSI Nansha | |||||
TORM HELENE | LR2 | 114,000 | 2021 | Owned | GSI Nansha | |||||
TORM HERMIA | LR2 | 114,000 | 2018 | Owned | GSI Nansha | |||||
TORM HERDIS | LR2 | 114,000 | 2018 | Owned | GSI Nansha | |||||
TORM HILDE | LR2 | 114,000 | 2018 | Owned | GSI Nansha | |||||
TORM HOUSTON | LR2 | 114,000 | 2022 | Leased (3) | GSI Nansha | |||||
TORM KIARA | LR2 | 114,445 | 2015 | Owned | Hyundai | |||||
TORM KIRSTEN | LR2 | 114,445 | 2015 | Owned | Hyundai | |||||
TORM KRISTINA | LR2 | 114,323 | 2015 | Owned | Hyundai | |||||
TORM MAREN²⁾ | LR2 | 109,672 | 2008 | Owned | Dalian Shipbuilding | |||||
TORM VENTURE | LR1 | 73,700 | 2007 | Owned | New Century SB | |||||
TORM ELISE | LR1 | 75,000 | 2020 | Owned | GSI Nansha | |||||
TORM ELIZABETH | LR1 | 75,000 | 2020 | Owned | GSI Nansha | |||||
TORM EVELYN | LR1 | 74,606 | 2011 | Leased (4) | Hyundai Mipo | |||||
TORM EVOLVE | LR1 | 74,554 | 2011 | Leased (4) | Hyundai Mipo | |||||
TORM EVA | LR1 | 74,552 | 2011 | Leased (4) | Hyundai Mipo | |||||
TORM EMMA | LR1 | 75,000 | 2012 | Leased (5) | STX SB | |||||
TORM EMILIE | LR1 | 75,013 | 2013 | Leased (3) | STX SB | |||||
TORM INTEGRITY | LR1 | 73,800 | 2013 | Leased (5) | New Times SB | |||||
TORM INNOVATION | LR1 | 73,847 | 2013 | Leased (5) | New Times SB | |||||
TORM AGNES | MR | 49,999 | 2011 | Owned | GSI Liwan | |||||
TORM AGNETE | MR | 49,999 | 2010 | Owned | GSI Liwan | |||||
TORM ALEXANDRA | MR | 49,999 | 2010 | Leased (3) | GSI Liwan | |||||
TORM ALICE | MR | 49,999 | 2010 | Leased (3) | GSI Liwan | |||||
TORM ALLEGRO | MR | 46,184 | 2012 | Owned | Brod. Trogir | |||||
TORM ALMENA | MR | 49,999 | 2010 | Owned | GSI Liwan | |||||
TORM AMALIE | MR | 49,999 | 2011 | Owned | GSI Liwan | |||||
TORM AMORINA | MR | 46,184 | 2012 | Owned | Brod. Trogir | |||||
TORM ANABEL | MR | 49,999 | 2012 | Owned | GSI Liwan | |||||
TORM ARAWA | MR | 49,999 | 2012 | Owned | GSI Liwan | |||||
TORM ASLAUG | MR | 49,999 | 2010 | Owned | GSI Liwan | |||||
TORM ASTRID | MR | 49,999 | 2012 | Owned | GSI Liwan |
35
Vessel Name | Type | DWT | Year Built | Ownership | Shipyard(1) | |||||
TORM ATLANTIC | MR | 49,999 | 2010 | Owned | GSI Liwan | |||||
TORM AUSTRALIA | MR | 51,737 | 2011 | Owned | Hyundai Mipo | |||||
TORM CAVATINA | MR | 46,200 | 2010 | Owned | Brod. Trogir | |||||
TORM CORRIDO | MR | 46,156 | 2011 | Owned | Brod. Trogir | |||||
TORM DIWATA | MR | 49,746 | 2014 | Owned | Hyundai Mipo | |||||
TORM INDIA | MR | 49,999 | 2010 | Owned | Hyundai Mipo | |||||
TORM LAURA | MR | 49,999 | 2008 | Owned | GSI Liwan | |||||
TORM LEADER | MR | 46,070 | 2009 | Owned | Brod. Trogir | |||||
TORM LENE | MR | 49,999 | 2008 | Owned | GSI Liwan | |||||
TORM LILLY | MR | 49,999 | 2009 | Owned | GSI Liwan | |||||
TORM LOTTE | MR | 49,999 | 2009 | Owned | GSI Liwan | |||||
TORM LOUISE | MR | 49,999 | 2009 | Owned | GSI Liwan | |||||
TORM MALAYSIA | MR | 51,737 | 2011 | Owned | Hyundai Mipo | |||||
TORM NEW ZEALAND | MR | 51,737 | 2011 | Owned | Hyundai Mipo | |||||
TORM BIRGITTE | MR | 49,995 | 2013 | Owned | STX SB | |||||
TORM BELIS | MR | 49,995 | 2013 | Owned | STX SB | |||||
TORM BEATRICE | MR | 49,995 | 2013 | Owned | STX SB | |||||
TORM PHILIPPINES | MR | 49,999 | 2010 | Owned | Hyundai Mipo | |||||
TORM SINGAPORE | MR | 51,737 | 2011 | Owned | Hyundai Mipo | |||||
TORM SOLUTION | MR | 49,999 | 2019 | Owned | GSI Nansha | |||||
TORM SOVEREIGN | MR | 49,999 | 2017 | Owned | Hyundai Mipo | |||||
TORM SPLENDID | MR | 49,999 | 2020 | Owned | GSI Nansha | |||||
TORM STELLAR | MR | 49,999 | 2020 | Owned | GSI Nansha | |||||
TORM STRENGTH | MR | 49,999 | 2019 | Owned | GSI Nansha | |||||
TORM STRONG | MR | 49,999 | 2019 | Owned | GSI Nansha | |||||
TORM SUBLIME | MR | 49,999 | 2019 | Owned | GSI Nansha | |||||
TORM SUCCESS | MR | 49,999 | 2019 | Owned | GSI Nansha | |||||
TORM SUPREME | MR | 49,999 | 2017 | Owned | Hyundai Mipo | |||||
TORM THOR | MR | 49,842 | 2015 | Owned | Sungdong SB | |||||
TORM THUNDER | MR | 49,842 | 2015 | Owned | Sungdong SB | |||||
TORM TIMOTHY | MR | 49,842 | 2015 | Owned | Sungdong SB | |||||
TORM TITAN | MR | 49,842 | 2016 | Owned | Sungdong SB | |||||
TORM TORINO | MR | 49,842 | 2016 | Owned | Sungdong SB | |||||
TORM TROILUS | MR | 49,842 | 2016 | Owned | Sungdong SB | |||||
TORM DANICA | MR | 49,999 | 2015 | Owned | Hyundai Mipo | |||||
TORM DENISE | MR | 49,999 | 2015 | Owned | Hyundai Mipo | |||||
TORM DAGMAR | MR | 49,999 | 2015 | Owned | Hyundai Mipo | |||||
TORM DIANA | MR | 49,999 | 2016 | Owned | Hyundai Mipo | |||||
TORM DURGA | MR | 49,680 | 2014 | Owned | Hyundai Mipo | |||||
TORM DAMINI | MR | 49,746 | 2014 | Owned | Hyundai Mipo | |||||
TORM DORIS | MR | 49,680 | 2015 | Owned | Hyundai Mipo | |||||
TORM DAGNY | MR | 49,635 | 2015 | Owned | Hyundai Mipo | |||||
TORM DEBORAH | MR | 49,680 | 2015 | Owned | Hyundai Mipo | |||||
TORM DAPHNE | MR | 49,746 | 2015 | Owned | Hyundai Mipo | |||||
TORM DULCE | MR | 49,680 | 2014 | Owned | Hyundai Mipo | |||||
TORM DAVAO | MR | 49,990 | 2014 | Owned | Hyundai Mipo | |||||
TORM DELHI | MR | 49,990 | 2014 | Owned | Hyundai Mipo | |||||
TORM DOVER | MR | 49,990 | 2014 | Owned | Hyundai Mipo | |||||
TORM DUBAI | MR | 49,990 | 2014 | Owned | Hyundai Mipo | |||||
TORM FREEDOM | MR | 49,683 | 2017 | Owned | GSI Nansha |
(1) As used in this annual report,
Hyundai refers to Hyundai Heavy Industries Co. Ltd., South Korea; Dalian Shipbuilding refers to Dalian Shipbuilding Industry Co.
Ltd., China; New Century SB refers to New Century Shipbuilding Co. Ltd., China; STX SB refers to STX Offshore and Shipbuilding
Co. Ltd., South Korea; Hyundai Mipo refers to Hyundai Mipo Dockyard Co. Ltd., South Korea; GSI refers to Guangzhou Shipyard
36
International Co., Ltd, China (either Nansha or Liwan); Brod. Trogir refers to Brodotrogir Shipyard Trogir, Croatia; Sungdong SB refers
to Sungdong Shipbuilding & Marine Engineering Co. Ltd., South Korea; STX SB (Jinhae) refers to STX Shipbuilding Co., Ltd., South
Korea; and New Times SB refers to New Times Shipbuilding Co., Ltd., China.
(2) Indicates that the vessels are assets held-for-sale.
(3) Vessels were sold and leased back on bareboat charter with contract expirations in 2026. We have purchase options for two of the
four vessels. No sales were recorded under IFRS and hence the vessels have not been derecognized from our balance sheet and we
recorded a corresponding financial liability for the cash we received.
(4) Vessels were sold and leased back on bareboat charter with a contract expiration in 2026. We have called purchase options for the
vessels. No sale was recorded under IFRS and hence the vessel has not been derecognized from our balance sheet and we recorded a
corresponding financial liability for the cash we received.
(5) Vessels were sold and leased back on bareboat charter with a contract expiration in 202. We have called purchased options for the
vessels. No sale was recorded under IFRS and hence the vessel has not been derecognized from our balance sheet and we recorded a
corresponding financial liability for the cash we received.
Employment of Our Product Tanker Fleet
Our current strategy is to employ our vessels worldwide primarily in the spot market. We believe that this will enable us to take
advantage of potential increases in product tanker hire rates in the near term. We may seek to employ some of our vessels on longer-
term time charter contracts, if customer needs and expected returns make this more attractive. Employing vessels on longer-term
contracts may provide us with the benefits of stable cash flows and high utilization rates. In addition, from time to time, we may employ
our vessels on shorter-term charters and under COAs and we may enter into forward freight agreements. Reference is made to the
Glossary on page 223 of the Annual Report 2025 for the definitions of Spot Market, Time Charter, COA and Bareboat Charter.
Coverage of Our Fleet
For information on the coverage of our fleet, including the definitions of certain key terms related to the coverage of our fleet, reference
is made to “Market Drivers and Outlook” on pages 29 – 30 of the Annual Report 2025 and to the Glossary on page 223 of the Annual
Report 2025.
Management of Our Fleet
For information on management of our fleet, reference is made to “Business Model and Strategic Choices” on pages 8 – 13 of the
Annual Report 2025.
Customers
Tanker
We generate revenue by charging customers for the transportation of primarily refined oil products and occasionally crude oil. Many of
our largest customers in the product tanker, or Tanker, segment are companies operating in the oil industry such as major oil companies,
state-owned oil companies and international trading houses. The Tanker segment is comprised of TORM’s LR1, LR2 and MR vessels,
which are operated collectively as a combined internal pool, employed principally in the spot market and actively managed to meet the
needs of our customers in that market, particularly regarding the location of vessels meeting required specifications. All vessels in the
Tanker segment can handle multiple sizes of refined oil cargos and sail all seas and oceans, over both short and long distances. Given
the technical specifications and capacity of the vessels, the Tanker segment is relatively homogenous with a very high degree of
interoperability.
Marine Engineering
TORM has a controlling interest in its joint venture entity Marine Exhaust Technology (Hong Kong) Ltd., through which TORM
provides services in the marine engineering, or Marine Engineering, segment which consist of developing and producing advanced
green marine equipment. Some of TORM’s contracts with customers relate to the sale of marine engineering equipment with installation
services. Customers obtain control of the marine engineering equipment with installation services when the goods are delivered to the
customer, they have completed commissioning and delivery has been accepted by the customers. When without installation services,
customers obtain control of the marine engineering equipment when the goods are delivered to and have been accepted by the
customers.
Customer Concentration
37
During 2025, our 20 largest customers accounted for approximately 71% of our total revenue. No customer in the tanker segment
accounted for more than 10% of our total revenues.
Competition
We operate in markets that are highly competitive. We compete for charters on the basis of price, vessel location, size, age and
condition of the product tankers as well as our reputation as an operator. We compete primarily with owners and operators of product
tankers in the MR, LR1 and LR2 fleets. We believe that the ownership of product tankers is fragmented and divided among major oil
companies and independent product tanker owners. The fragmented competitive landscape can be illustrated by our market position.
Although we have one of the largest owned fleets, according to industry sources, our owned fleet constitutes approximately 3% of the
existing global product tanker fleet (in dwt terms).
TORM considers the global product tanker market as a whole, and as the individual vessels are not limited to specific parts of the world,
the Group has only one geographical segment for the Tanker segment. Further, the internal management reporting does not provide
geographical information for either the Tanker segment or the Marine Engineering segment. Consequently, geographical segment
information on revenue from external customers or non-current segment assets for the Tanker segment or the Marine Engineering
segment are not provided.
Seasonality
Historically, oil trade—and consequently, charter rates—rose during winter and eased in summer, driven by seasonal demand
fluctuations in the Northern Hemisphere. However, the product tanker industry has become less affected by these patterns, as
geopolitical developments and other market dynamics now play a more dominant role.
Patents, Licenses and Trademarks
We have no material patents and do not use any licenses other than ordinary IT licenses.
We have trademarks registered the rights to our Company’s name (TORM) and logo (the TORM flag) in all relevant jurisdictions
including Denmark, the European Union, Bahrain, Brazil, Singapore, the United Arab Emirates and the U.S..
We have registered our primary domains: www.torm.com, www.torm.dk and www.torm.eu. None of the information contained on our
websites is incorporated into or forms a part of this annual report.
Environmental and Other Regulations in the Shipping Industry
Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international
conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels and other vessels we
may acquire may operate or are registered relating to safety and health and environmental protection including the storage, handling,
emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for
damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expenses, including
vessel modifications and implementation of certain operating procedures.
A variety of government and private entities subject our vessels (and other vessels we may acquire) to both scheduled and unscheduled
inspections. These entities include the local port authorities (applicable national authorities such as the USCG, harbor masters or
equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators.
Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels and
other vessels we may acquire. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in
the temporary suspension of the operation of one or more of the vessels in our product tanker fleet or lead to the invalidation or
reduction of our insurance coverage. We believe that the heightened levels of environmental and quality concerns among insurance
underwriters, regulators and charterers have led to greater inspection and safety requirements on all vessels and may accelerate the
recycling of older vessels throughout the industry. Each of our vessels is inspected by a surveyor of the classification society once every
year within the window period for the annual survey, every two to three years for intermediate survey and every four to five years for
special surveys. Should any defects be found, the classification surveyor generally issues a notation or recommendation for appropriate
repairs, which have to be made by the shipowner within the time limit effected. Vessels may be required, as part of the annual and
intermediate survey process, to be dry-docked for inspection of the underwater parts of the vessel and for necessary repair stemming
from the inspection. Special surveys frequently require dry-docking.
Increasing environmental concerns have created a demand for product tankers that conform to stricter environmental standards. We are
required to maintain operating standards for all of our vessels and other vessels we may acquire that emphasize operational safety,
quality maintenance, continuous training of our officers and crews and compliance with applicable local, national, and international
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regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and
regulations, and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our
operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we
cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful
lives of our vessels and other vessels we may acquire. In addition, a future serious marine incident that causes significant adverse
environmental impact could result in additional legislation or regulation that could negatively affect our profitability.
International Maritime Organization
The IMO, the United Nations agency for maritime safety and the prevention of pollution of vessels, has adopted MARPOL, the
International Convention for the Safety of Life at Sea of 1974, or the SOLAS Convention, the International Convention on Standards of
Training, Certification and Watchkeeping for Seafarers, or STCW, and the International Convention on Load Lines of 1966. MARPOL
establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, the handling and
disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to dry bulk and LNG
carriers as well as oil tankers, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to
oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively;
Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI
was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020.
In 2013, the IMO’s MEPC adopted a resolution amending MARPOL Annex I Condition Assessment Scheme, or CAS. These
amendments became effective on October 1, 2014, and require compliance with the 2011 International Code on the Enhanced
Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers, or the ESP Code, which provides for enhanced inspection
programs. CAS is not applicable to our vessels. In January 2023, amendments to the ESP Code relating to thickness measurements at
the first renewal survey of double hull oil tankers became effective. For ships older than 15 years, we carry our voluntary Condition
Assessment program, or CAP, rating along with ESP. We may need to make certain financial expenditures to maintain CAP rating.
Air Emissions
In September 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets
limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone
depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks and the shipboard
incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to
be established with more stringent controls on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from
certain tankers and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as
polychlorinated biphenyls), are also prohibited. We believe that all our vessels are currently compliant in all material respects with these
regulations.
The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone
depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among
other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. On October 27,
2016, MEPC 70 agreed to implement a global limit of 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from
January 1, 2020. This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels or certain exhaust gas cleaning
systems. Ships are now required to obtain bunker delivery notes and International Air Pollution Prevention Certificates from their flag
states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5%
sulfur on ships became effective on March 1, 2020. Fuels with higher sulfur content than required by Reg. 14 of Annex VI can still be
delivered to a ship, provided the ship uses equivalent measures, such as scrubbers, pursuant to Regulation 4. These regulations subject
ocean-going vessels to stringent emissions controls and may cause us to incur additional costs, which cannot be reasonably estimated.
Sulfur content standards are even stricter within certain “Emission Control Areas,” or ECAs. As of January 1, 2015, ships operating
within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Currently, the IMO has designated five ECAs,
including specified portions of the Baltic Sea area, Mediterranean Sea area, North Sea area, North American area and U.S. Caribbean
Sea area. Ocean-going vessels in these areas will be subject to stringent emission controls and may cause us to incur additional costs.
Other certain areas including areas in China that are subject to local regulations also impose stricter emission controls. In July 2023,
MEPC 80 announced three new ECA proposals, including the Canadian Arctic waters and the Norwegian Sea, which should take effect
in March 2027. MEPC 83 also approved the Northeast Atlantic Ocean as an ECA and is expected to take effect in 2028. If other ECAs
are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or port
operations by vessels are adopted by the U.S. Environmental Protection Agency, or the EPA, or the states where we operate, compliance
with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.
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The amended Annex VI also established new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending
on their date of installation. Tier III nitrous oxide, or NOx, standards were designed for the control of NOx produced by vessels and
apply to ships that operate in the North American and U.S. Caribbean Sea ECAs with marine diesel engines installed and constructed on
or after January 1, 2016. Tier III requirements could apply to additional areas designated for Tier III NOx in the future. At MEPC 70
and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021.
The Canadian-Arctic ECA for NOx will also be effective starting from March 1, 2026, for ships built on or after January 1, 2025. For
the Norwegian Sea ECA, the NOx Tier III engine certification requirement will apply to ships (i) with building contracts placed on or
after March 1, 2026, (ii) in the absence of a building contract, constructed on or after September 1, 2026, or (iii) delivered on or after
March 1, 2030. For the North-East Atlantic ECA, the requirement is expected to apply to ships (i) contracted on or after January 1,
2027, (ii) in the absence of a building contract, constructed on or after July 1, 2027, or (iii) delivered on or after January 1, 2031. The
EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010. Tier III requirements could apply to additional
areas designated for Tier III NOx in the future. In April 2025, MEPC 83 also adopted amendments (expected to enter into force late
2026 and early 2027) to the NOx Technical Code 2008, which allows ships to optimize fuel consumption based on their operational
profile, thus improving energy efficiency, while ensuring compliance with NOx emission requirements. As a result of these designations
or similar future designations, we may be required to incur additional operating or other costs.
MEPC 70 Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage
to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced
on January 1, 2019. The IMO used such data as part of its initial roadmap (through 2023) for developing its strategy to reduce
greenhouse gas emissions from ships, as discussed further below. MEPC 83 approved draft amendments to make the IMO’s data
collection system more accessible to the public through an anonymized database.
As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required
to develop and implement SEEMP, and new ships must be designed in compliance with minimum energy efficiency levels per capacity
mile as defined by the EEDI.
MEPC 75 amended Annex VI to impose new regulations to reduce GHG emissions from ships. These amendments introduce
requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing
the carbon intensity of international shipping. The requirements include (1) a technical requirement to reduce carbon intensity based on
a new Energy Efficiency Existing Ship Index, or EEXI, and (2) operational carbon intensity reduction requirements, based on a new
operational carbon intensity indicator, or CII. The attained EEXI is required to be calculated for ships of 400 gross tonnage and above,
in accordance with different values set for ship types and categories. With respect to the CII, the draft amendments would require ships
of 5,000 gross tonnage to document and verify their actual annual operational CII achieved against a determined required annual
operational CII. All ships above 400 gross tonnage must also have an approved SEEMP on board. For ships above 5,000 gross tonnage,
the SEEMP needs to include certain mandatory content.
MEPC 79 adopted amendments to MARPOL Annex VI, Appendix IX to include the attained and required CII values, the CII rating and
attained EEXI for existing ships in the required information to be submitted to the IMO Ship Fuel Oil Consumption Database. MEPC 79
also revised the Energy Efficiency Design Index calculation guidelines to include a CO2 conversion factor for ethane, a reference to the
updated ITCC guidelines, and a clarification that in case of a ship with multiple load line certificates, the maximum certified summer
draft should be used when determining the deadweight. These amendments entered into force on May 1, 2024. In April 2025, MEPC 83
adopted amendments to the 2021 Guidelines on operational carbon intensity reduction factors, which outline methods for determining
CII reduction factors from 2023 and now includes newly defined factors from 2027 to 2030.
We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that
could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash
flows and financial condition.
Safety Management System Requirements
The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The Convention of
Limitation of Liability for Maritime Claims, or the LLMC, sets limitations of liability for a loss of life or personal injury claim or a
property claim against shipowners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.
Under Chapter IX of the SOLAS Convention, or the ISM Code, our operations are also subject to environmental standards and
requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system
that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures
for operating its vessels safely and for responding to emergencies. We rely upon the safety management system that we and our
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technical management team have developed for compliance with the ISM Code. The failure of a vessel owner or bareboat charterer to
comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected
vessels and may result in a denial of access to, or detention in, certain ports.
The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate
evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can
obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state (or
recognized organization on behalf of the flag administration), under the ISM Code. We have obtained applicable documents of
compliance for our offices and safety management certificates for all of our vessels as required by the IMO. The document of
compliance and safety management certificate are renewed as required.
Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in length must have
adequate strength, integrity and stability to minimize risk of loss or pollution. Goal-based standards amendments in SOLAS regulation
II-1/3-10 entered into force in 2012, and from July 1, 2016 with respect to new oil tankers and bulk carriers. The SOLAS Convention
regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and oil tankers, which entered into force on January 1,
2012, requires that all oil tankers and bulk carriers of 150 meters in length and above, for which the building contract is placed on or
after July 1, 2016, satisfy applicable structural requirements conforming to the functional requirements of the International Goal-based
Ship Construction Standards for Bulk Carriers and Oil Tankers. All our vessels comply with these requirements as applicable.
Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels to be in
compliance with the International Maritime Dangerous Goods Code, or IMDG Code. Effective January 1, 2018, the IMDG Code
includes (1) the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2)
marking, packing and classification requirements for dangerous goods, and (3) mandatory training requirements. Amendments which
took effect on January 1, 2020 also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods,
including (1) provisions regarding IMO type 9 tank, (2) abbreviations for segregating groups, and (3) special provisions for carriage of
lithium batteries and of vehicles powered by flammable liquids or gas. Additional amendments, which came into force on June 1, 2022,
include (1) addition of a definition of dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for
medical/clinical waste, (4) addition of various ISO standards for gas cylinders, (5) a new handling code, and (6) changes to stowage and
segregation provisions.
The IMO has also adopted STCW. As of February 2017, all seafarers are required to meet the STCW standards and to be in possession
of a valid STCW certificate.
Furthermore, cybersecurity guidance and regulations have been developed in an attempt to combat cybersecurity threats. On July 16,
2025, the U.S. Coast Guard’s final rule, Cybersecurity in the Martine Transportation System, went into effect. Under this rule, all
regulated entities are required to develop Cybersecurity and Cyber Incident Response Plans, designate a Cybersecurity Officer to
implement plans, and to report certain cyber incidents to the National Response Center. This might cause companies to create
additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact of
these regulations is hard to predict at this time.
In June 2022, SOLAS also set out new amendments that took effect January 1, 2024, which include new requirements for: (1) the design
for safe mooring operations, (2) the Global Maritime Distress and Safety System, (3) watertight integrity, (4) watertight doors on cargo
ships, (5) fault-isolation of fire detection systems, (6) life-saving appliances, and (7) safety of ships using LNG as fuel. These new
requirements may impact the cost of our operations.
Pollution Control and Liability Requirements
The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of
the signatories to such conventions. For example, the IMO adopted the International Convention for the Control and Management of
Ships’ Ballast Water and Sediments, or the BWM Convention, in 2004. The BWM Convention entered into force on September 8,
2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless or avoid the uptake or discharge of
new or invasive aquatic organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing
regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory
concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.
The MEPC maintains guidelines for approval of ballast water management systems (G8). Ships over 400 gross tons generally must
comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters. The “D-2
standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the
IOPP renewal dates. The standards have been in force since 2019, and for most ships, compliance with the D-2 standard will involve
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installing on-board systems to treat ballast water and eliminate unwanted organisms. Ballast water management systems, which include
systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or physical
characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3). Since September 8, 2024,
all ships must meet the D-2 standard. Costs of compliance with these regulations may be substantial. Additionally, in November 2020,
MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of the ballast water management
system for the initial survey or when performing an additional survey for retrofits. This analysis will not apply to ships that already have
an installed BWM system certified under the BWM Convention. These amendments entered into force on June 1, 2022. In December
2022, MEPC 79 agreed that it should be permitted to use ballast tanks for temporary storage of treated sewage and grey water. MEPC
79 also established that ships are expected to return to D-2 compliance after experiencing challenging uptake water and bypassing a
BWM system should only be used as a last resort.
In addition to the BWM Convention, many countries already regulate the discharge of ballast water carried by vessels from country to
country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering
its waters from another country to conduct mid-ocean ballast water exchange, or undertake some alternate measure, and to comply with
certain reporting requirements.
The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols
in 1976, 1984, and 1992, and amended in 2000, or the CLC. Under the CLC and depending on whether the country in which the damage
results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner may be strictly liable for pollution damage caused in the
territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed certain
limits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights. The limits on liability
have since been amended so that the compensation limits on liability were raised. The right to limit liability is forfeited under the CLC,
where the spill is caused by the shipowner’s actual fault, and under the 1992 Protocol, where the spill is caused by the shipowner’s
intentional or reckless act or omission, where the shipowner knew pollution damage would probably result. The CLC requires ships
over 2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a
single incident. We have protection and indemnity insurance for environmental incidents. Protection and indemnity associations, or P&I
Clubs, in the International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates. All
of our vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force.
The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to
impose strict liability on ship owners (including the registered owner, bareboat charterer, manager, or operator) for pollution damage in
jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships
over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable
national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC). With respect to
non-ratifying states, liability for spills or releases of oil carried as fuel in a ship’s bunkers typically is determined by the national or other
domestic laws in the jurisdiction where the events or damages occur.
Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such as
the U.S., where the CLC or the Bunker Convention has not been adopted, various legislative schemes or common law govern, and
liability is imposed either on the basis of fault or on a strict-liability basis.
In 1996, the IMO created the International Convention on Liability and Compensation for Damage in Connection with the Carriage of
Hazardous and Noxious substances by Sea, or the HNS Convention. The HNS Convention aims to ensure adequate, prompt and
effective compensation for damage that may result from shipping accidents involving hazardous and noxious substances. The HNS
Convention has not yet entered into force, but if it does, compliance with the HNS Convention could entail additional capital
expenditures or otherwise increase the costs of our operations. The HNS Convention will enter into effect 18 months after its
ratification.
In November 2014 and May 2015, the IMO’s Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the
International Code for Ships Operating in Polar Water, or the Polar Code. The Polar Code entered into force on January 1, 2017. The
Polar Code covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters
relevant to ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution
prevention as well as recommendatory provisions. Ships intending to operate in the applicable areas must have a Polar Ship Certificate
as well as a Polar Water Operational Manual. The Polar Code applies to new ships constructed after January 1, 2017. After January 1,
2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or
renewal survey.
Anti-Fouling Requirements
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In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships, or the Anti-fouling
Convention, which entered into force on September 17, 2008 and prohibits the use of organotin compound coatings to prevent the
attachment of mollusks and other sea life to the hulls of vessels. Vessels over 400 gross tons engaged in international voyages will also
be required to undergo an initial survey before the vessel is put into service or before an International Anti-fouling System Certificate is
issued for the first time; and subsequent surveys when the anti-fouling systems are altered or replaced. Vessels of 24 meters in length or
more but less than 400 gross tonnage engaged in international voyages will have to carry a Declaration on Anti-fouling Systems signed
by the owner or authorized agent. We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-
fouling Convention.
In June 2021, MEPC 76 adopted amendments to the Anti-fouling Convention to include controls on the biocide cybutryne; ships may
not apply cybutryne or re-apply anti-fouling systems containing that substance. In addition, ships are required to remove or apply a
coating to anti-fouling systems with cybutryne. Ships which are affected by this ban on cybutryne must receive an updated IAFS
Certificate no later than two years after the entry into force of these amendments. Ships which are not affected must receive an updated
IAFS Certificate at the next Anti-fouling application to the vessel. These amendments entered into force on January 1, 2023.
Wreck Removal
The Nairobi Convention on the Removal of Wrecks, or the Wreck Removal Convention, entered into force on April 14, 2015 and
contains obligations for shipowners to effectively remove wrecks located in a member state’s exclusive economic zone or equivalent
200 nautical miles zone. The Wreck Removal Convention places strict liability, subject to certain exceptions, on a vessel owner for
locating, marking and removing the wreck of any owned vessel deemed to be a hazard due to factors such as its proximity to shipping
routes, traffic density and frequency, type of traffic and vulnerability of port facilities as well as environmental damage. It also makes
government certification of insurance, or other form of financial security for such liability, compulsory for ships of 300 gross tonnage
and above.
Member states may intervene in certain situations. They can remove, or have removed, wrecks that pose a danger or impediment to
navigation or that may be expected to result in major harmful consequences to the marine environment, or damage to the coastline or
related interests, of one or more member states. The same applies for a ship that is about, or may reasonably be expected, to sink or to
strand as set forth in the Wreck Removal Convention. The cost of such removal and other measures falls on the vessel owner.
Should one of our vessels become a wreck subject to the Wreck Removal Convention, substantial costs may be incurred in addition to
any losses suffered as a result of the loss of the vessel.
Compliance Enforcement
Non-compliance with the ISM Code or other IMO regulations may subject the shipowner or bareboat charterer to increased liability,
may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some
ports. The USCG and EU authorities (and other authorities in a number of countries) have indicated that vessels not in compliance with
the ISM Code by applicable deadlines will be prohibited from trading in U.S. and EU ports, respectively. As of the date of this report,
each of our vessels is ISM Code certified. However, there can be no assurance that such certificates will be maintained in the future. The
IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by
the IMO and what effect, if any, such regulations might have on our operations.
United States Regulations
The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act
The U.S. Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and clean-up of
the environment from oil spills. OPA affects all “owners and operators” whose vessels trade or operate within the U.S., its territories and
possessions or whose vessels operate in U.S. waters, which includes the U.S.’ territorial sea and its 200 nautical mile exclusive
economic zone around the U.S.. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability
Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on
land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or
chartering by demise, the vessel. Both OPA and CERCLA impact our operations.
Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results
solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages
arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA defines these other damages
broadly to include:
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i)injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
ii)injury to, or economic losses resulting from, the destruction of real and personal property;
iii)net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property or
natural resources;
iv)loss of subsistence use of natural resources that are injured, destroyed or lost;
v)lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and
vi)net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection
from fire, safety or health hazards, and loss of subsistence use of natural resources.
OPA contains statutory caps on liability and damages; such caps do not apply to direct clean-up costs. Effective November 12, 2019, the
USCG adjusted the limits of OPA liability for an oil tanker, other than a single-hull oil tanker, over 3,000 gross tons liability to the
greater of $2,300 per gross ton or $19,943,400 (subject to periodic adjustment for inflation). On December 23, 2022, the USCG issued a
final rule to adjust the limitation of liability under the OPA. Effective March 23, 2023, the new adjusted limits of OPA liability for an oil
tanker, other than a single-hull oil tanker, over 3,000 gross tons liability to the greater of $2,500 per gross ton or $21,521,300 (subject to
periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an
applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting
pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. Similarly, the limitation on
liability does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party
knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities;
or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the
Intervention on the High Seas Act.
CERCLA contains a similar liability regime related to hazardous substances (which include petroleum products that are contaminated
with hazardous substances) whereby owners and operators of vessels are liable for clean-up, removal and remedial costs as well as
damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and
health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or
omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0
million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These
limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release
of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of
applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible
person fails or refuses to provide all reasonable cooperation and assistance as requested in connection with response activities where the
vessel is subject to OPA.
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA
both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to
meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may
satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a
guarantee. We comply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable
certificates of financial responsibility.
OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within
their boundaries, provided they accept, at a minimum, the levels of liability established under OPA. Some states have enacted legislation
providing for unlimited liability for oil spills, and many U.S. states that border a navigable waterway have enacted environmental
pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a
hazardous substance. Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within
their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations
defining tanker owners’ responsibilities under these laws. These laws have been more stringent than U.S. federal law. The Company
intends to comply with all applicable state regulations in the ports that the Company’s vessels call.
We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the
damage from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business and results of
operation.
Other United States Environmental Initiatives
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The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990), or CAA, requires the EPA to promulgate standards
applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery
requirements for certain cargos when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas.
The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards
in each state. Although state-specific SIPs may include regulations concerning emissions resulting from vessel loading and unloading
operations by requiring the installation of vapor control equipment. Our vessels operating in such regulated port areas with restricted
cargos are equipped with vapor recovery systems that satisfy these existing requirements.
The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters,
unless authorized by a duly issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized
discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the
remedies available under OPA and CERCLA.
The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of
equipment on our vessels and other vessels we may acquire to treat ballast water before it is discharged or the implementation of other
port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels and other vessels
we may acquire from entering U.S. Waters. The EPA will regulate these ballast water discharges and other discharges incidental to the
normal operation of certain vessels within U.S. waters pursuant to the Vessel Incidental Discharge Act, or VIDA, which was signed into
law on December 4, 2018 and replaces the 2013 Vessel General Permit, or VGP, program and current Coast Guard ballast water
management regulations adopted under the U.S. National Invasive Species Act. VIDA establishes a new framework for the regulation of
vessel incidental discharges under the CWA, requires the EPA to develop performance standards for those discharges within two years
of enactment and requires the U.S. Coast Guard to develop implementation, compliance and enforcement regulations within two years
of EPA’s promulgation of standards. In October 2024, the EPA finalized its rule on Vessel Incidental Discharge Standards of
Performance, with an effective date of November 8, 2024, which means that the USCG must now develop corresponding regulations
regarding ballast water within two years of that date. Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding
ballast water treatment remain in force and effect until the EPA regulations are finalized. Non-military, non-recreational vessels greater
than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent, or NOI, or
retention of a PARI form and submission of annual reports. We have submitted NOIs for our vessels where required. Compliance with
the EPA, USCG, and state regulations could require the installation of ballast water treatment equipment on our vessels or the
implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from
entering U.S. waters.
Additionally, California legislation effective on January 1, 2021, establishes increased fines for oil spills in California State waters. The
legislation doubles certain existing fines up to a maximum of $1,000,000 for each violation, with each day or partial day of a violation
being considered a separate violation and empower courts to impose a new additional fine of up to $1,000 per gallon of oil spilt in
excess of 1,000 gallons. In each case a fine may be imposed if the violator knowingly caused, or reasonably should have known that
their actions would lead to, an oil spill into Californian State waters.
European Union Regulations
In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting
substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually
or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also
lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships
or where human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and
increased civil liability claims. Regulation (EU) 2015/757 of the European Parliament and of the Council of April 29, 2015 (amending
EU Directive 2009/16/EC) governs the monitoring, reporting and verification of CO2 emissions from maritime transport and, subject to
some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report CO2 emissions annually, which may
cause us to incur additional expenses. As of January 2019, large ships calling at EU ports have been required to collect and publish data
on CO2 emissions and other information. In July 2020, the European Parliament’s Committee on Environment, Public Health and Food
Safety voted in favor of the inclusion of vessels of 5,000 gross tons and above in the EU ETS.
On September 15, 2020, the European Parliament voted to include GHG emissions from the maritime sector in the European Union’s
carbon market, the EU ETS as part of its “Fit-for-55” legislation to reduce net GHG emissions by at least 55% by 2030. This will
require shipowners to buy permits to cover these emissions. On December 18, 2022, the Environmental Council and European
Parliament agreed on a gradual introduction of obligations for shipping companies to surrender allowances equivalent to a portion of
their carbon emissions: 40% for verified emissions from 2024, 70% for 2025 and 100% for 2026. Most large vessels will be included in
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the scope of the EU ETS from the start. Big offshore vessels of 5,000 gross tonnage and above are included in the 'MRV' on the
monitoring, reporting and verification of CO2 emissions from maritime transport regulation from 2025 and in the EU ETS from 2027.
General cargo vessels and off-shore vessels between 400-5,000 gross tonnage are included in the MRV regulation from 2025 and their
inclusion in EU ETS will be reviewed in 2026. Furthermore, starting from January 1, 2026, the ETS regulations will expand to include
emissions of two additional GHG: NOx and methane.
In January 1, 2025, the European Union adopted the FuelEU Maritime regulation, a proposal included in the "Fit-for-55" legislation.
FuelEU Maritime sets requirements on the annual average GHG intensity of energy used by ships trading within the European Union or
European Economic Area. This intensity is measured as GHG emissions per energy unit (gCO2e/MJ) and, in turn, GHG emissions are
calculated in a well-to-wake perspective. The calculation takes into account emissions related to the extraction, cultivation, production
and transportation of fuel, in addition to emissions from energy used on board the ship. The baseline for the calculation is the average
well-to-wake GHG intensity of the fleet in 2020: 91.16 gCO2e/MJ. This will start at a 2% reduction in 2025, increasing to 6% in 2030,
and accelerating from 2035 to reach an 80% reduction by 2050.
Responsible recycling and scrapping of ships is becoming an increasingly important issue for shipowners and charterers alike as the
industry strives to replace old ships with cleaner, more energy efficient models. The recognition of the need to impose recycling
obligations on the shipping industry is not new. In 2009, the IMO oversaw the creation of the Hong Kong Convention, which sets
standards for ship recycling. The Hong Kong Convention entered into force in June 2025. Parties to the Convention now have two years
to implement the requirements of the Convention in their respective jurisdictions and ensure that the highest possible ship recycling
standards and in well run and green ship recycling yards are created/maintained.
The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-
risk ships, as determined by type, age and flag as well as the number of times the ship has been detained. The European Union also
adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. The
regulation also provided the European Union with greater authority and control over classification societies, by imposing more
requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply.
Furthermore, the European Union has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and
auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex
VI relating to the sulfur content of marine fuels. In addition, the European Union imposed a 0.1% maximum sulfur requirement for fuel
used by ships at berth in the Baltic Sea, the North Sea and the English Channel (the so called Sox-Emission Control Area). As of
January 2020, the EU member states must also ensure that ships in all EU waters, except the Sox-Emission Control Area, use fuels with
a 0.5% maximum sulfur content.
Greenhouse Gas Regulations
Currently, the emissions of GHGs from international shipping are not subject to the Kyoto Protocol to the United Nations Framework
Convention on Climate Change, which entered into force in 2005, or the Kyoto Protocol, and pursuant to which adopting countries have
been required to implement national programs to reduce GHG emissions. International negotiations are continuing with respect to a
successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more
than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce
GHG emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into
force on November 4, 2016 and does not directly limit GHG emissions from ships. The U.S. is not a party to the Paris Agreement.
In April 2018, nations at the MEPC 72 adopted an initial strategy to reduce GHG emissions from ships. The initial strategy identifies
“levels of ambition” to reduce GHG emissions and notes that technological innovation, alternative fuels and/or energy sources for
international shipping will be integral to achieve the ambitions.
In July 2023, MEPC 80 adopted the 2023 IMO Strategy — on Reduction of GHG Emissions from Ships, which builds upon the initial
strategy’s levels of ambition. The revised levels of ambition include (1) further decreasing the carbon intensity from ships through
improvement of energy efficiency; (2) reducing carbon intensity of international shipping; (3) increasing adoption of zero or near-zero
emissions technologies, fuels, and energy sources; and (4) achieving a net zero GHG emissions from international shipping. from
international shipping. Furthermore, the following indicative checkpoints were adopted in order to reach net zero GHG emissions from
international shipping: (i) reduce the total annual GHG emissions from international shipping by at least 20%, striving for 30%, by
2030, compared to 2008 levels; and (ii) reduce the total annual GHG emissions from international shipping by at least 70%, striving for
80%, by 2040, compared to 2008 levels. As part of the 2023 IMO Strategy, MPEC also created the IMO Net-zero Framework, which
will combine mandatory emissions limits and GHG pricing across the industry. The IMO Net-zero Framework was approved at MEPC
83 for potential adoption in spring 2026 and will eventually be included in Annex VI. Under these draft regulations, ships will be
required to reduce their annual GHG fuel intensity, or GFI, calculated using the well-to-wake approach and ships emitting above GFI
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thresholds will have to acquire remedial units to balance its deficit emissions, while those using zero or near-zero GHG technologies
will be eligible for financial rewards.
As noted above, the 70th MEPC meeting in October 2016 adopted a mandatory data collection system (DCS) that requires ships above
5,000 gross tons to report consumption data for fuel oil, hours under way, and distance traveled. Unlike the EU MRV (see below), the
IMO DCS covers any maritime activity carried out by ships, including dredging, pipeline laying, ice-breaking, fish-catching, and off-
shore installations. The SEEMPs of all ships covered by the IMO DCS must include a description of the methodology for data
collection and reporting. After each calendar year, the aggregated data are reported to the flag state. If the data has been reported in
accordance with the requirements, the flag state issues a statement of compliance to the ship. Flag states subsequently transfer this data
to an IMO ship fuel oil consumption database, which is part of the Global Integrated Shipping Information System platform. IMO will
then produce annual reports, summarizing the data collected. Thus, currently, data related to the GHG emissions of ships above 5,000
gross tons calling at ports in the European Economic Area must be reported in two separate, but largely overlapping, systems: the EU
MRV, which applies since 2018, and the IMO DCS, which applies since 2019. The proposed revision of Regulation (EU) 2015/757
adopted on February 4, 2019, aims to align and facilitate the simultaneous implementation of the two systems, although it is still not
clear when the proposal will be adopted.
IMO’s MEPC 76 adopted amendments to MARPOL Annex VI that requires ships to reduce their greenhouse gas emissions. The
Revised MARPOL Annex VI entered into force on November 1, 2022. The revised Annex VI includes carbon intensity measures
(requirements for ships to calculate their EEXI) following technical means to improve their energy efficiency and to establish their
annual operational carbon intensity indicator and rating. MEPC 76 also adopted guidelines to support implementation of the
amendments.
The European Union made a unilateral commitment to reduce overall GHG emissions from its member states from 20% of 1990 levels
by 2020. The European Union also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period from 2013 to
2020. As of January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on CO2
emissions and other information. Under the European Climate Law, the European Union committed to reduce its net GHG emissions by
at least 55% by 2030 through its “Fit-for-55” legislation package. As part of this initiative, the European Union’s carbon market, EU
ETS, has been extended to cover CO2 emissions from all large ships entering EU ports starting January 2024.
In the U.S, the EPA issued a finding that GHGs endanger the public health and safety, adopted regulations to limit GHG emissions from
certain mobile sources and proposed regulations to limit GHG emissions from large stationary sources. However, in March 2017, the
Trump administration issued an executive order to review and possibly eliminate the EPA’s plan to cut GHG emissions, and on August
13, 2020, the EPA released rules rolling back standards to control methane and volatile organic compound emissions from new oil and
gas facilities. In early 2021, the Biden administration directed the EPA to publish a proposed rule suspending, revising, or rescinding
certain of these rules. The resulting final rule was issued in December 2023. However, the current administration is delaying these
requirements limiting methane emissions and is considering repealing the measure altogether. Therefore, it is unclear how such
environmental regulations could affect our operations.
Any passage of climate control legislation or other regulatory initiatives by the IMO, the European Union, the U.S. or other countries
where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement that restricts
emissions of GHGs could require us to make significant financial expenditures which we cannot predict with certainty at this time. Even
in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea
level changes or certain weather events.
Maritime Labor Convention
The International Labour Organization, or ILO, is a specialized agency of the UN with headquarters in Geneva, Switzerland. The ILO
adopted the Maritime Labor Convention 2006, or MLC 2006, which entered into force on August 20, 2013. A Maritime Labor
Certificate and a Declaration of Maritime Labor Compliance are required to ensure compliance with the MLC 2006 for all ships above
500 gross tons in international trade. These documents will provide prima facie evidence that the vessels are in compliance with the
requirements of the MLC 2006. The Maritime Labor Certificate and Declaration of Maritime Labor Compliance will be subject to
inspection by port state control when vessels enter the ports of other countries that have ratified the MLC 2006. In addition, vessels
flying the flag of countries that have not ratified the MLC 2006 are also subject to inspection with respect to working and living
conditions for seafarers when those vessels enter in port of countries where the MLC 2006 is in force. Amendments to MLC 2006 were
adopted in 2014, 2016 and 2018.
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There are costs associated with complying with the MLC 2006, and the methods to be used by port state control to check and ensure
compliance are currently unclear. Given the uncertain interpretation of the MLC 2006 and the local legislation enacting it in various
countries, there are risks associated with ensuring proper compliance.
Vessel Security Regulations
Since the terrorist attacks of September 11, 2001 in the U.S., there have been a variety of initiatives intended to enhance vessel security
such as the U.S. Maritime Transportation Security Act of 2002, or MTSA. To implement certain portions of the MTSA, the USCG
issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the
jurisdiction of the U.S. and at certain ports and facilities, some of which are regulated by the EPA.
Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates
compliance with the International Ship and Port Facility Security Code, or the ISPS Code. The ISPS Code is designed to enhance the
security of ports and ships against terrorism. Additionally, to trade internationally, a vessel must attain an International Ship Security
Certificate, or ISSC, from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid
certificate may be detained, expelled from or refused entry at port until they obtain an ISSC.
The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel
security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention
security requirements and the ISPS Code. Future security measures could have a significant negative financial impact on us. We intend
to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.
The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off
the coast of Somalia, including the Gulf of Aden, Arabian Sea area and the West Africa area including the Gulf of Guinea. Substantial
loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of
uninsured losses could significantly affect our business. Costs may be incurred in taking additional security measures in accordance
with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.
Inspection by Classification Societies
Every seagoing vessel must be “classed” by a classification society. The classification society certifies that the vessel is “in-class,”
signifying that the vessel has been built and maintained in accordance with the rules of the classification society. In addition, where
surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will
undertake them on application or by official order, acting on behalf of the authorities concerned and will certify that such vessel
complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country
is a member.
The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the
flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.
For maintenance of the class, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special
equipment classed are required to be performed as follows:
•Annual Surveys. For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical
plant, and where applicable for special equipment classed, within three months before or after each anniversary date of the
date of commencement of the class period indicated in the certificate.
•Intermediate Surveys. Extended annual surveys are referred to as intermediate surveys and are to be carried out either at or
between the second and third Annual Surveys after Special Periodical Survey No. 1 and subsequent Special Periodical
Surveys. Those items which are additional to the requirements of the Annual Surveys may be surveyed either at or between
the second and third Annual Surveys. After the completion of the No. 3 Special Periodical Survey, the following Intermediate
Surveys are of the same scope as the previous Special Periodical Surveys.
•Special Periodical Surveys (or Class Renewal Surveys). Class renewal surveys, also known as Special Periodical Surveys, are
carried out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, and should be
completed within five years after the date of build or after the crediting date of the previous Special Periodical Survey. At the
special survey, the vessel is thoroughly examined, including ultrasonic-gauging to determine the thickness of the steel
structures. Should the thickness be found to be less than the minimum class requirements, the classification society would
prescribe steel renewals. A Special Periodical Survey may be commenced at the fourth Annual Survey and be continued with
completion by the fifth anniversary date. Substantial amounts of money may have to be spent for steel renewals to pass a
special survey if the vessel experiences excessive wear and tear.
As mentioned above, for vessels that are more than 15 years old, the Intermediate Survey may also have a considerable financial impact.
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At an owner’s application, the surveys required for class renewal (for tankers only the ones in relation to machinery and automation)
may be split according to an agreed schedule to extend over the entire five-year period. This process is referred to as continuous survey
system. All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period,
unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not
exceed five years.
Most vessels are subject also to a minimum of two examinations of the outside of a vessel’s bottom and related items during each five-
year special survey period. Examinations of the outside of a vessel’s bottom and related items are normally to be carried out with the
vessel in dry-dock, but an alternative examination while the vessel is afloat by an approved underwater inspection may be considered.
Such an examination is to be carried out in conjunction with the Special Periodical Survey, and in this case the vessel must be in dry-
dock. For vessels older than 15 years (after the third Special Periodical Survey), the bottom survey must always be in the dry-dock. In
all cases, the interval between any two such examinations is not to exceed 36 months.
In general, during the above surveys, if any defects are found, the classification surveyor will require immediate repairs or issue a
‘‘recommendation’’ which must be rectified by the shipowner within prescribed time limits.
Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in-class” by a classification society
which is a member of the International Association of Classification Societies , or IACS. All our vessels are certified as being “in-class”
by American Bureau of Shipping, Lloyds Register or Bureau Veritas who are all members of IACS. All new and second-hand vessels
that we purchase must be certified prior to their delivery under our standard purchase contracts and memoranda of agreement. If the
vessel is not certified on the scheduled date of closing, we have no obligation to take delivery of the vessel.
For further information on ESG issues, reference is made to pages 34 – 105 of the Annual Report 2025 and TORM’s separate ESG
Report that can be found on our webpage www.torm.com. None of the information contained on this website is incorporated into or
forms a part of this annual report.
Risk of Loss and Liability Insurance
General
The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or
damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In
addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the
liabilities arising from owning and operating vessels in international trade. OPA, which in certain circumstances imposes virtually
unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive economic zone of the U.S.
for certain oil pollution accidents in the U.S., has made liability insurance more expensive for shipowners and operators trading in the
U.S. market. We carry insurance coverage as customary in the shipping industry. However, not all risks can be insured, specific claims
may be rejected, and we might not be always able to obtain adequate insurance coverage at reasonable rates.
Marine and War Risks Insurance
We have in force marine hull and machinery, war risks insurance as well as P&I, bunker and cash insurances for all of our vessels.
Our marine hull and machinery insurance covers risks of particular and general average and actual or constructive total loss from
collision, fire, grounding, engine breakdown and other insured named perils up to an agreed amount per vessel. Our war risks insurance
covers the risks of particular and general average and actual or constructive total loss from acts of war and civil war, terrorism, piracy,
confiscation, seizure, capture, vandalism, sabotage and other war-related named perils. We have also arranged coverage for increased
value for each vessel. Under this increased value coverage, in the event of total loss of a vessel, we will be able to recover amounts in
excess of those recoverable under the hull and machinery policy in order to compensate for additional costs associated with replacement
of the loss of the vessel. Each vessel is covered up to at least its fair market value at the time of the insurance attachment and subject to a
fixed deductible per each single accident or occurrence but excluding actual or constructive total loss.
Protection and Indemnity Insurance
Protection and indemnity insurance, or P&I insurance, is provided by mutual P&I Clubs, and covers our third-party liabilities in
connection with our shipping activities. This coverage includes third-party liability and other expenses relating to injury or death of
crew or passengers, loss or damage to cargo, claims arising from collisions with other vessels, damage to third-party property, pollution
arising from oil or other substances, and salvage and towing including wreck removal. P&I insurance is a mutual maritime insurance,
where the coverage (for open-end risks) is provided by mutual associations.
Our current P&I insurance coverage for pollution is $1 billion per vessel per incident and approximately $3.1 billion per vessel for other
types of collective Overspill P&I Claims, such as wreck removal.
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The 12 P&I Clubs that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered
into a pooling agreement to reinsure each P&I Club's liabilities. The International Group’s website states that the pool provides a
mechanism for sharing all claims in excess of $10 million up to, currently, approximately $3.1 billion, with the ability to reinstate
coverage if a claim exceeds this amount.
As TORM is a member of a P&I Club which in turn is a member of the International Group, we are subject to calls payable to the
entered P&I Clubs based on our claim records as well as the claim records of all other members (shipowners) of the individual P&I
Clubs and members of the shipping pool of P&I Clubs comprising the International Group.
Any (non-oil pollution) claims which exceed the limit available under the main reinsurance contract ($2.1 billion) fall back to the pool
for distribution to each club in proportion to each club's relative "overspill limit". This calculation defines the maximum amount that
each club can be asked to contribute to an "overspill claim". In theory, this final layer of claims pooling takes the total amount available
for any one (non-oil pollution) claim to approximately $8 billion.
Permits and Authorizations
We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with
respect to our vessels. The permits, licenses and certificates that are required depend upon several factors, including the commodity
transported, the waters in which the vessel operates, the nationality of the vessel’s crew and the age of the vessel. We have obtained all
permits, licenses and certificates currently required to permit our vessels to operate. Additional laws and regulations, environmental or
otherwise, may be adopted, which could limit our ability to do business or increase the cost of us doing business.
C. Organizational Structure
As of December 31, 2025, TORM plc, TORM A/S and other subsidiaries, owned 83 of the vessels in our product tanker fleet and
bareboat chartered in 10 vessels with an option or obligation to buy back the vessels and expect to apply the same ownership structure
for each additional vessel that we acquire in the future, through separate wholly-owned subsidiaries.
A list of our significant subsidiaries is filed herewith as Exhibit 8.1.
D. Property, Plants and Equipment
Our only material physical assets consist of our vessels. For at description of our fleet, see “Item 4. Information on the Company B.
Business Overview.” Other than our interests in the vessels, we do not own any material physical properties. We lease offices in the
London (United Kingdom), Hellerup (Denmark), Mumbai (India), New Delhi (India), Pune (India), Manila (Philippines), Cebu
(Philippines), Singapore (Singapore), Houston (Texas, USA), Wilmington (Delaware, USA), and Dubai (UAE).
ITEM 4AUNRESOLVED STAFF COMMENTS
None.
ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following presentation of management’s discussion and analysis of results of operations and financial condition should be read in
conjunction with our audited consolidated financial statements and related notes. You should also carefully read the following
discussion with the sections of this annual report entitled “Cautionary Statement Regarding Forward-Looking Statements”,
“Explanatory Note and Presentation of Our Financial and Operating Data”, “Item 3. Key Information—D. Risk Factors”, “Item 4.
Information on the Company—B. Business Overview”. This discussion contains forward-looking statements that reflect our current
views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors such as those set forth in “Item 3. Key Information—D. Risk Factors” and
elsewhere in this annual report.
The audited consolidated financial statements as of and for the years ended December 31, 2025, 2024 and 2023 have been prepared in
accordance with IFRS as issued by the IASB. The financial statements are presented in U.S. dollar millions unless otherwise indicated.
The discussion included in the following sections covers our operating results in 2025 compared with 2024. For the discussion of our
operating results in 2024 compared with 2023, reference is made to “Item 5. Operating and Financial Review and Prospects” included in
our 2024 Annual Report on Form 20-F, filed with the SEC on March 6, 2025.
This annual report includes certain financial measures that have not been prepared in accordance with IFRS and are not recognized
measures of financial performance or liquidity under IFRS. In addition to the financial information contained in this annual report
presented in accordance with IFRS, certain “non-IFRS financial measures” (as defined in Regulation G or Item 10(e) of Regulation S-
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K under the Securities Act) have been included in this annual report. These non-IFRS measures should not be considered as alternatives
to operating income, cash flows from operating activities or any other performance measures derived in accordance with IFRS. These
measures have important limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of
our results as reported under IFRS.
Non-IFRS measures
Certain non-IFRS measures included in our financial and operating data have been derived from amounts calculated in accordance with
IFRS but are not themselves IFRS measures. They should not be viewed in isolation as alternatives to the equivalent IFRS measure,
rather they should be read in conjunction with the equivalent IFRS measure. The non-IFRS measures include TCE earnings, Gross
profit, Adjusted EBITDA, loan-to-value ratio and net interest-bearing debt.
The Senior Management Team believes that these non-IFRS measures are both useful and necessary to present in our financial and
operating data, because they are used by the Senior Management Team for internal performance analysis, the presentation of these
measures facilitates an element of comparability with other companies, although the Senior Management Team's measures may not be
calculated in the same way as similarly titled measures reported by other companies, and because these measures are useful in
connection with discussions with the investment community.
Non-IFRS Measures | Year ended December 31, | ||||
(USD million) | 2025 | 2024 | |||
Time charter equivalent (TCE) earnings – Tanker segment | 909.7 | 1134.8 | |||
Gross profit | 665.5 | 895.6 | |||
Adjusted EBITDA | 577.5 | 844.2 | |||
Net interest-bearing debt | 848.4 | 947.6 | |||
Loan-to-value (LTV) – Tanker segment | 29.4 | % | 26.8 | % | |
Time Charter Equivalent (TCE) earnings. We define TCE earnings, a performance measure, as revenue after port expenses, bunkers and
commissions including freight and bunker derivatives from the Tanker segment. We report TCE earnings, a non-IFRS measure, because
we believe it provides additional meaningful information to investors in conjunction with revenue, the most directly comparable IFRS
measure, given it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping
company’s performance irrespective of changes in the mix of charter types (i.e. spot charters, time charters and bareboat charters) under
which the vessels may be employed between the periods. Below is presented a reconciliation from revenue to TCE earnings.
Reconciliation to revenue - Tanker segment | Year ended December 31, | |||
(USD million) | 2025 | 2024 | ||
Revenue | 1,314.2 | 1,544.0 | ||
Port expenses, bunkers and commissions | (404.5) | (409.2) | ||
Time charter equivalent (TCE) earnings - Tanker segment | 909.7 | 1,134.8 | ||
Gross profit. We define Gross profit as revenue less port expenses, bunkers and commissions, other cost of goods sold, charter hire and
operating expenses. We report gross profit, a non-IFRS measure, because we believe it provides additional meaningful information to
investors to assess our operating performance, as Gross profit measures the net earnings from core activities.
Computation of gross profit | Year ended December 31, | |||
(USD million) | 2025 | 2024 | ||
Revenue – all segments | 1,339.5 | 1,559.2 | ||
Port expenses, bunkers and commissions and other cost of goods sold | (421.6) | (418.5) | ||
Operating expenses | (252.4) | (245.1) | ||
Gross profit | 665.5 | 895.6 | ||
EBITDA. We define EBITDA as earnings before financial income and expenses, depreciation, impairment, amortization and taxes.
EBITDA is used as a supplemental financial measure by our Senior Management Team and external users of financial statements, such
as lenders, to assess our operating performance as well as compliance with the financial covenants and restrictions contained in our
financing agreements. We believe that EBITDA assists our Senior Management Team and investors in evaluating our operations by
increasing comparability of our performance from period to period. This increased comparability is achieved by excluding the
potentially disparate effects of interest, depreciation, impairment, amortization, and taxes. These are items which could be affected by
51
various changing financing methods and capital structures, and which may significantly affect profit/(loss) between periods. Including
EBITDA as an alternative performance measure, benefits investors in selection between investment alternatives.
EBITDA excludes some, but not all, items that affect profit/ (loss), and these items may vary among other companies and may therefore
not be directly comparable. The following table reconciles EBITDA to net profit/ (loss), the most directly comparable IFRS financial
measure, for the periods presented.
Due to temporary fluctuations of the fair value of freight and bunker derivatives, our Senior Management Team believes that an
adjustment for unrealized gains/losses on freight and bunker derivatives helps to increase comparability in EBITDA developments.
EBITDA and the adjusted EBITDA are calculated as follows:
Reconciliation to net profit | Year ended December 31, | |||
(USD million) | 2025 | 2024 | ||
Net profit for the year | 286.0 | 611.5 | ||
Tax | 9.2 | (2.0) | ||
Financial expenses | 74.4 | 74.1 | ||
Financial income | (13.3) | (24.8) | ||
Depreciation and amortization | 214.5 | 192.0 | ||
EBITDA | 570.8 | 850.8 | ||
Reconciliation to EBITDA | ||||
EBITDA | 570.8 | 850.8 | ||
Fair value adjustments on freight and bunker derivatives | 6.7 | (6.6) | ||
Adjusted EBITDA | 577.5 | 844.2 | ||
Net interest-bearing debt. Net interest-bearing debt is defined as borrowings (current and non-current), less loan receivables and cash
and cash equivalents, including restricted cash. Net interest-bearing debt depicts the net capital resources, which cause net interest
expenditure and interest rate risk and which, together with equity, are used to finance our investments. As such, we believe that net
interest-bearing debt is a relevant measure, which our Senior Management Team uses to measure the overall development of our use of
financing, other than equity. Such measure may not be comparable to similarly titled measures of other companies. Net interest-bearing
debt is calculated as follows:
Net interest-bearing debt | Year ended December 31, | |||
(USD million) | 2025 | 2024 | ||
Borrowings (current and non-current)¹⁾ | 1,016.3 | 1,243.3 | ||
Loan receivables | (4.4) | (4.5) | ||
Cash and cash equivalents, including restricted cash | (163.5) | (291.2) | ||
Net interest-bearing debt | 848.4 | 947.6 | ||
1) Borrowings include long-term and short-term borrowings, excluding capitalized loan costs. Please refer to Note 19 for information on
capitalized loan costs.
Loan-to-value, or LTV, ratio. Loan-to-value (LTV) ratio is defined as vessel values divided by net borrowings of the vessels. LTV
describes the net debt ratio of our vessels and is used by us to describe the financial situation, the liquidity risk as well as to express the
future possibilities to raise new capital through new loan facilities.
52
Loan-to-value (LTV) - Tanker segment | Year ended December 31, | ||||
(USD million) | 2025 | 2024 | |||
Vessel values, including newbuildings (broker values) | 3,177.5 | 3,582.9 | |||
Vessel values of purchased secondhand vessels not delivered (broker values) | 150.6 | – | |||
Other committed investment capital expenditure | 15.5 | 23.0 | |||
Total vessel values | 3,343.6 | 3,605.9 | |||
Borrowings | 1,011.3 | 1,241.3 | |||
- Debt on Land and buildings and Other plant and operating equipment | (8.8) | (8.4) | |||
Committed liability capital expenditure | 141.5 | 23.0 | |||
Loan receivables | (4.4) | (4.5) | |||
Cash and cash equivalents incl. restricted cash | (155.6) | (284.9) | |||
Total (loan) | 984.0 | 966.5 | |||
Loan-to-value (LTV) - Tanker segment | 29.4 | % | 26.8 | % | |
1) Borrowings include long-term and short-term borrowings, excluding capitalized loan costs. Please refer to Note 19 for information on
capitalized loan costs.
A. Operating Results
Primary Factors Affecting Results of Operations
Reference is made to “Financial Review 2025-Primary Factors Affecting Results of Operations” on page 26 of our Annual Report 2025.
Other Important Financial and Operational Terms and Concepts of TORM plc
The Company uses a variety of other financial and operational terms and concepts. These include the following:
•Voyage expenses. Voyage expenses are all expenses related to a particular voyage, including any bunker fuel expenses, port
expenses, cargo loading and unloading expenses, canal tolls and agency fees. These expenses are subtracted from shipping
revenues to calculate TCE Rates.
•Vessel operating costs. Vessel operating costs include crewing, repairs and maintenance (excluding capitalized dry-docking),
insurance, consumable stores, lube oils, communication expenses and technical management fees. The largest components of
our vessel operating costs are generally crewing and repairs and maintenance. Expenses for repairs and maintenance tend to
fluctuate from period to period because most repairs and maintenance typically occur during periodic dry-dockings. We
expect these expenses to increase as our fleet matures and to the extent that it expands.
•Charter hire. Charter hire consists of (i) money paid to the vessel owner by a charterer for the use of a vessel under a time
charter or bareboat charter and (ii) amortization of the fair value of time charter contracts acquired. Such payments to vessel
owners are usually made during the course of the charter every 30 days in advance or in arrears by multiplying the daily
charter rate by the number of days and, under a time charter only, subtracting any time the vessel was deemed to be off-hire.
Under a bareboat charter such payments are usually made monthly and are calculated on a 360 or 365-day calendar year
basis.
•Dry-docking. We must periodically dry-dock each of our vessels for inspection and any modifications to comply with
industry certification or regulatory requirements. Generally, each vessel is dry-docked every 30 to 60 months.
•Depreciation. Depreciation expenses typically consist of charges related to the depreciation of the historical cost of our fleet
(less an estimated residual value and any impairment losses recognized) over the estimated useful lives of the vessels and
charges related to the depreciation of upgrades to vessels which are depreciated over the shorter of the vessel’s remaining
useful life or the life of the renewal or upgrade. Dry-docking costs are capitalized and depreciated on a straight-line basis
over the estimated period until the next dry-docking.
Factors You Should Consider When Evaluating the Results of TORM plc
The Company faces a number of risks associated with our industry and must overcome a variety of challenges to utilize our competitive
strengths in order to profitably implement our business strategy. These risks include, among other things: the highly cyclical tanker
industry, dependence on spot market voyage charters, fluctuating charter values, increase in fuel prices, changing economic, political
and governmental conditions affecting our industry and business, international sanctions, embargoes, import and export restrictions,
nationalizations and wars, material changes in applicable laws and regulations, full performance by counterparties, particularly
53
charterers, maintaining customer relationships, delay in deliveries or non-deliveries from shipyards, piracy attacks, maintaining
sufficient liquidity, financing availability and terms and management turnover. See “Item 3. Key Information—D. Risk Factors”.
Results of Operations of TORM plc
We operate within two segments: (i) the Tanker segment and (ii) the Marine Engineering segment. The below tables have been provided
at a group level and the analysis has been broken out into segments where the movements are material.
The information below should be read in conjunction with TORM plc’s audited consolidated financial statements as of and for the years
ended December 31, 2025 and 2024 and the section of this annual report entitled “Explanatory Note and Presentation of Our Financial
and Operating Data”. Some of the information contained in this section, including information about TORM plc’s plans and strategies
for our business and our expected sources of financing, contains forward-looking statements that involve risks and uncertainties. Current
and potential investors should read “Item 3. Key Information-D. Risk Factors” for information on certain factors that may have a
material adverse effect on TORM plc’s future performance, results of operations, cash flows and financial position.
TORM plc operates in a global industry where, among other things, freight rates are denominated and settled in U.S. dollars, and a
majority of the cost base of TORM plc is denominated and settled in U.S. dollars. Consequently, TORM plc’s financial reporting is in
U.S. dollars.
Financial highlights for TORM plc
Reference is made to the relevant “Key Figures” on page 4 and “Financial Review 2025” on pages 21 - 27 of our Annual Report 2025.
Consolidated financial information as of and for the years ended December 31, 2025 and 2024
Income statement
The table below presents financial information derived from TORM plc’s income statement for the years ended December 31, 2025 and
2024.
Financial information from Income statement for TORM plc for the years ended December 31, 2025 and 2024
Year Ended December 31, | ||||
(USD million) | 2025 | 2024 | ||
Revenue | 1,339.5 | 1,559.2 | ||
Port expenses, bunkers and commissions and other cost of goods sold | (421.6) | (418.5) | ||
TCE earnings – Tanker segment | 909.7 | 1,134.8 | ||
Gross profit | 665.5 | 895.6 | ||
EBITDA | 570.8 | 850.8 | ||
Operating profit | 356.3 | 658.8 | ||
Profit before tax | 295.2 | 609.5 | ||
Net profit for the year | 286.0 | 611.5 | ||
Revenue
Total revenue was $1,339.5m for the year ended December 31, 2025, which represents a decrease of $219.8m compared to the year
ended December 31, 2024. This decrease was primarily driven by lower revenue due to changes in market conditions as further
explained in the TCE section below.
Port expenses, bunkers and commissions and other cost of goods sold
Total port expenses, bunkers and commissions and other cost of goods sold were $421.6m for the year ended December 31, 2025, which
represents an increase of $3.1m compared to the year ended December 31, 2024. Bunkers amounted to 58%, port expenses to 29%, and
commissions, other voyage expenses and other cost of goods sold to 13% respectively of the total port expenses, bunkers and
commissions and other cost of goods sold for the year ended December 31, 2025. Bunkers amounted to 67%, port expenses to 26%, and
commissions and other voyage expenses to 7% of the total port expenses, bunkers and commissions for the year ended December 31,
2024.
The increase can be attributed to higher cost of goods sold in MET segment by $6.1m partially offset by the decrease in the tanker
segment which can primarily be attributed to decreased bunker expenses of $34.6m partly offset by increased port expenses of $12.7m,
54
increased losses on realized and unrealized derivative financial instruments regarding freight and bunkers of $14.8m, and increased
expenses related to EU allowances and FuelEU compliance of $5.5m.
TCE earnings - Tanker Segment
LR2 | LR1 | MR | Total | ||||||
Year-end 2024 | |||||||||
Available TCE earning days | 6,859 | 3,531 | 20,897 | 31,287 | |||||
TCE per earning day, USD | 44,824 | 36,998 | 33,026 | 36,061 | |||||
TCE earnings, USD million Year-end 2024 | 315.5 | 130.1 | 689.2 | 1,134.8 | |||||
Year-end 2025 | |||||||||
Available TCE earning days | 7,375 | 3,614 | 20,851 | 31,840 | |||||
Change | 8 | % | 2 | % | — | % | 2 | % | |
TCE per earning day, USD | 35,850 | 28,262 | 26,374 | 28,783 | |||||
Change | (20) | % | (24) | % | (20) | % | (20) | % | |
Effect on TCE earnings from change in the available TCE earning days, USD million | 23.3 | 3.1 | (1.5) | 24.9 | |||||
Effect on TCE earnings from change in TCE per earning day, USD million | (67.9) | (31.6) | (137.1) | (236.6) | |||||
Other | (14.5) | 0.5 | 0.6 | (13.4) | |||||
TCE earnings, USD million Year-end 2025 | 256.4 | 102.1 | 551.2 | 909.7 |
TCE earnings were $909.7m for the year ended December 31, 2025, representing a decrease of $225.1m compared to the year ended
December 31, 2024. This decrease was primarily driven by lower revenue following changes in market conditions.
The operating environment in 2025 continued to be shaped by geopolitical uncertainty, affecting trading patterns and vessel availability.
Ongoing Red Sea disruptions, expanded sanctions on Russian exports, and refinery closures in Europe and the U.S. supported demand
for transportation of refined oil products. The decrease in 2025 compared to 2024 was impacted by higher revenue in the first half of
2024, where product tanker earnings benefited from elevated ton-mile demand as attacks near the Bab al-Mandeb Strait led to
widespread rerouting around the Cape of Good Hope. From the second half of 2024 and into 2025, this effect was largely offset by
crude tankers cannibalizing LR2 trades of clean petroleum products, substantially reducing revenue compared to the first half of 2024.
During 2025, crude tanker cannibalization returned to historically normal levels. The ton-mile effect also declined year-on-year,
although it remained above pre-Red Sea disruption levels in 2023, partly offsetting the positive impact from reduced crude tanker
cannibalization. The decrease in revenue was partly offset by an increase in earning days of 553 days equivalent to 1.8% compared to
2024.
In 2025, TORM’s product tanker fleet realized TCE earnings of $28,783/day, down by 20% compared to 2024, as denoted in the table
above.
55
Gross profit
Year ended | Year ended | |||
December 31, | December 31, | |||
(USD million) | 2025 | 2024 | ||
Revenue | 1,339.5 | 1,559.2 | ||
Port expenses, bunkers and commissions and other cost of goods sold | (421.6) | (418.5) | ||
Operating expenses | (252.4) | (245.1) | ||
Gross profit | 665.5 | 895.6 |
TORM plc’s gross profit for the year ended December 31, 2025 was $665.5m compared to $895.6m for the year ended December 31,
2024 corresponding to a decrease of $230.1m. The decrease was mainly driven by decreases in revenue and port expenses, bunkers, and
commissions for the Tanker segment and an increase in operating expenses due to 272 additional operating days compared to 2024 and
increased operating expenses per day of 2.2% compared to 2024, stemming from general price increases combined with costs related to
recently acquired second-hand vessels partly offset by the divestment of older tonnage.
The total TORM fleet had 1,287 off-hire and dry-docking days, corresponding to 3.9% of operating days in 2025. This compares to
1,568 off-hire and dry-docking days in 2024, or 4.8% of operating days. The lower relative share of operating days in 2025 compared
to 2024 is driven by 19 delivered vessels in 2024 compared to six in 2025, several of which went into drydocking immediately after
takeover.
EBITDA
Year ended | Year ended | |||
December 31, | December 31, | |||
(USD million) | 2025 | 2024 | ||
Gross profit | 665.5 | 895.6 | ||
Profit from sale of vessels | 19.0 | 51.3 | ||
Administrative expenses | (113.8) | (95.6) | ||
Other operating income and expenses | 0.1 | (0.5) | ||
EBITDA | 570.8 | 850.8 |
TORM plc’s EBITDA was $570.8m for the year ended December 31, 2025, compared to $850.8m for the year ended December 31,
2024, corresponding to a decrease of $280.0m. The decrease was mainly driven by the same factors as gross profit and additionally a
decrease in the profit from sale of vessels and higher administrative expenses.
Administrative expenses increased to $113.8m for the year ended December 31, 2025, compared to $95.6m for the year ended
December 31, 2024.The primary factors were a donation to the TORM Foundation of $6.9m and increased wage expenses of $5.4m
related to an increased workforce and general salary regulations. The development is supported by additional expenses of $3.9m as a
result of the introduction of a new 2025 retention program for certain employees and the CEO and an acceleration of the vesting date for
the previous 2023 retention program. For more information, refer to Note 5 - Staff Costs.
56
Operating profit
Year ended December 31, | Year ended December 31, | ||
(USD million) | 2025 | 2024 | |
EBITDA | 570.8 | 850.8 | |
Depreciation and amortization | (214.5) | (192.0) | |
Operating profit | 356.3 | 658.8 |
TORM plc’s operating profit was $356.3m for the year ended December 31, 2025, compared to an operating profit of $658.8m for the
year ended December 31, 2024, corresponding to a decrease of $302.5m The decrease was mainly driven by the same factors as
EBITDA and higher depreciation expenses. Depreciation amounted to $214.5m for the year ended December 31, 2025, compared to
$192.0m for the year ended December 31, 2024.
Profit before tax
Year ended December 31, | Year ended December 31, | ||
(USD million) | 2025 | 2024 | |
Operating profit | 356.3 | 658.8 | |
Financial income | 13.3 | 24.8 | |
Financial expenses | (74.4) | (74.1) | |
Profit before tax | 295.2 | 609.5 |
TORM plc’s profit before tax was $295.2m for the year ended December 31, 2025, compared to $609.5m for the year ended December
31, 2024, corresponding to a decrease of $314.3m.
Financial income decreased to $13.3m for the year ended December 31, 2024, compared to $24.8m for the year ended December 31,
2024, due to lower cash levels and thus lower interest income on bank balances.
Net Profit for the year
TORM plc reported a net profit for the year ended December 31, 2025 of $286.0m, compared to a net profit of $611.5m for the year
ended December 31, 2024, a decrease of $325.5m. The decrease is due to factors explained in all the above explanations.
Balance sheet
TORM’s total assets for the Group decreased by $102.6m to $3,367.0m as of December 31, 2025, mainly driven by a decrease of the
total assets for the Tanker segment of $108.1m to $3,347.9m. The reduction in the Tanker segment was primarily driven by a lower
balance of cash and cash equivalents, including restricted cash of $129.3m, mainly due to utilizing available liquidity in connection with
a major refinancing to reduce borrowings and concurrently strengthen TORM’s financial flexibility through increased revolving credit
facilities.
As of December 31, 2025, the carrying amount of vessels and capitalized drydocking in the Tanker segment amounted to $2,806.8m
compared to $2,843.9m at end of 2024. This decrease was due to the divestment including delivery to new owners of seven older
vessels of $127.2m, depreciation of $209.1m, offset by the investment in and delivery of six new second-hand vessels including
capitalized drydocking of $299.2m. From the vessel divestments during 2025, profit from sale of vessels was $33.5m lower than 2024
due to fewer vessel transactions and generally lower market value of vessels compared to 2024.
Based on the average broker valuations from two internationally recognized shipbrokers, TORM’s fleet on water had a market value of
$3,177.5m as of December 31, 2025, 12.8% (2024: 26.0%) above the carrying value for the TORM Group of $2,816.6m.
In 2025, total equity for the Group increased by $127.8m to $2,202.6m. The increase was primarily driven by the net profit for the year
of $286.0m and share-based compensation of $34.1m, offset by dividends paid of $199.7m.
TORM's total liabilities for the Group decreased by $230.4m to $1,164.4m as of December 31, 2025, mainly driven by a decrease of the
total liabilities for the Tanker segment of $231.7m to $1,151.4m. The development is primarily due to a decrease in current and non-
current borrowings of $226.3m to $998.0m, of which the majority relate to the refinancing of the two existing syndicated loans as well
as lease agreements covering 22 vessels.
57
B. Liquidity and Capital Resources
Overview
Our primary application of cash relates to operating expenses, financial expenses (interest payment, debt repayment and leasing
payments) and capital expenditures, primarily investments in vessels and other assets, such as scrubbers. Payment of amounts
outstanding under "Our Financing Agreements" (more fully discussed below) along with payment of charter hire for chartered-in
vessels and all other commitments that we have entered into are made from the cash available to us. Our primary sources of cash are
cash flows from operations, our financing agreements (more fully discussed below), new debt or equity financings and sale of vessels.
As of December 31, 2025, TORM’s cash and cash equivalents, including restricted cash totaled $163.5m (2024: $291.2m, 2023:
$295.6m), and undrawn and committed credit facilities as listed below amounted to $398.8m (2024: $323.6m, 2023: $342.5m).
Reference is made to Note 2 “Liquidity, Capital Resources and Subsequent Events" on pages 163 - 164 and Note 19 “Effective Interest
Rate, Outstanding Borrowings” on pages 184 - 185 and Note 22 “Contractual Rights and Obligations” on page 186 of our Annual
Report 2025, for further specifications.
For the discussion of Liquidity and Capital Resources for the year ended December 31, 2024, reference is made to “Item 5. Operating
and Financial Review and Prospects” included in our 2024 Annual Report on Form 20-F, filed with the SEC on March 6, 2025.
TORM’s interest rate risk generally relates to interest-bearing borrowings. All TORM’s loans for financing vessels are denominated in
USD. Please refer to Note 19 for additional information on borrowings. At the end of 2025, TORM had fixed 74.1% (2024: 82.7%,
2023: 86.9%) of the debt then outstanding with interest rate swaps, fixed rate leasing debt and senior unsecured bond corresponding to
an amount of $742.8m. $414.2m of this amount is hedged at an interest rate of 2.76% plus margin with interest rate swaps with maturity
in the period 2026-2030.
As of December 31, 2025, TORM had no short-term loans other than any short-term part of the facilities included in the table entitled
below. See “Item 5. Operating and Financial Review and Prospects B. Liquidity and Capital Resources - Our Financing Agreements”
for a description of the repayment schedule. As part of our day-to-day operations, we have accounts payable.
We are of the opinion that our working capital is adequate to meet our present requirements for the next twelve months following the
date of this annual report.
The table below gives an overview of our long-term bank loans and finance leases.
Financing Agreements, including long-term and short-term mortgage debt, bank loans and finance leases as of December 31,
2025 of TORM plc.
Total Outstanding Debt as of December 31, 2025 | Undrawn Amount as of December 31, 2025 | |||||
Facility | Maturity per facility | (USD millions) | (USD millions) | |||
Senior Unsecured Bonds | 2029 | 200.0 | ||||
Syndicated Facilities 2025 | 2030 | 248.1 | 285.0 | |||
Danish Ship Finance Facility 2020 | 2031 | 211.0 | ||||
ING Facility 2023 | 2029 | 44.8 | ||||
HCOB Facility 2024 | 2031 | 43.8 | 45.2 | |||
KfW Facility 2019 | 2032 | 28.8 | ||||
Credit Agricole Facility 2025 | 2031 | 68.6 | 68.6 | |||
Bocomm Leasing Facilities 2019-2021 | 2026 | 28.9 | ||||
Springliner Leases | 2026 | 21.9 | ||||
China Merchant Bank Financial Leasing | 2026 | 106.7 | ||||
1,002.6 | 398.8 |
58
Our Financing Agreements
As of December 31, 2025, we were in compliance with the financial covenants contained in our debt facilities.
Loan agreements
Syndicated Facilities 2025
On July 24, 2025, we entered into a combined secured term loan facility agreement of $338.5 million and working capital facility
agreement of $338.5 million for aggregate borrowings of $677.0 million, or the Syndicated Facilities 2025. The Syndicated Facilities
2025 (both the term loan and the working capital facility) was entered into with Danske Bank, Nordea, DNB, SEB, ING, ABN AMRO,
Crédit Agricole CIB, BNP Paribas, Société Générale and First Citizen Bank and refinanced 47 vessels, built from 2009 to 2020, that
served as collateral under the facility. $230.0 million of the Syndicated Facilities 2025 is to repurchase and refinance 17 sale and leased-
backed vessels that we have or we intend to buy back once the repurchase option is available. TORM plc is the borrower and TORM A/
S and vessel-owning-entities owned directly or indirectly by TORM plc are guarantors under the Syndicated Facilities 2025. The
Syndicated Facilities 2025 includes an extension option pushing final maturity of July 24, 2030 with one year. The Syndicated Facilities
2025 bears an interest rate of SOFR compounded in arrears plus a margin of 1.55% and is payable in quarterly installments with a
balloon at maturity. The Syndicated Facilities 2025 is secured by first priority mortgages over the security vessels, as well as first
priority assignments in respect of each of the vessel’s insurances and earnings and irrevocable joint and several guarantees from the
guarantors. The revolving credit facility subjects us to a commitment fee on the undrawn amount of 35% of the margin. The lenders
have provided funding commitments pro rata between both facilities in the Syndicated Facilities 2025.
The Syndicated Facilities 2025 contains the following financial covenants:
•Equity Ratio. A ratio of equity to total assets of no less than 25%; and
•Minimum cash requirement. Minimum cash and cash equivalents, excluding restricted cash greater than or equal to the higher
of (i) $45 million and (ii) 5% of our total debt.
First drawdown was made on August 8, 2025.
Credit Agricole Facility 2025
On July 3, 2025 we entered into a combined secured term loan facility agreement of $90.0 million and working capital facility
agreement of $90.0 million for aggregate borrowings of $180.0 million, or the Credit Agricole Facilities 2025. The facilities (both the
term loan and the working capital facility) were entered into with Credit Agricole, Sumitomo Mitsui Trust Bank, SBI Shinsei Bank,
Limited, The Shizuoka Bank Ltd. Singapore Branch and Development Bank of Japan Inc. The Credit Agricole Facilities 2025 finance
five vessels built from 2015 to 2022, that served as collateral under the facilities. TORM plc is the borrower and TORM A/S as
guarantor. The Credit Agricole Facilities 2025 bear an interest rate of SOFR compounded in arrears plus a margin of 1.55% and is
payable in quarterly installments with a balloon at maturity. Final maturity is June 30, 2031.
The Credit Agricole Facilities 2025 contain the following financial covenants:
•Equity Ratio. A ratio of equity to total assets of no less than 25%; and
•Minimum cash requirement. Minimum cash and cash equivalents, excluding restricted cash greater than or equal to the higher
of (i) $45 million and (ii) 5% of our total debt.
First drawdown was made on July 25, 2025.
HCOB Facility 2024
On October 4, 2024, TORM entered into a secured term loan facility with HCOB for $161.5 million to refinance existing agreements
and financing additional two MR vessels, or the HCOB Facility 2024. The HCOB Facility 2024 consists of a term loan facility of $87.5
million and a revolving credit facility of 74.1 million. The HCOB Facility 2024 financed 13 vessels built from 2007 to 2014, which
served as collateral under the agreement. TORM plc is the borrower and TORM A/S and vessel-owning-entities owned directly or
indirectly by TORM plc are guarantors under the HCOB Facility 2024. The HCOB Facility 2024 has a tenor of five years with a final
maturity date of March 31, 2031, bears an interest rate of SOFR compounded in arrears plus a margin of 2.55% and is payable in
quarterly installments with a balloon payment at maturity. The HCOB Facility 2024 is secured by first priority mortgages over the
security vessels, as well as first priority assignments in respect of each of the vessel’s insurances and earnings and irrevocable joint and
several guarantees from the guarantors.
The HCOB Facility 2024 contains the following financial covenants:
•Equity Ratio. A ratio of equity to total assets of no less than 25%; and
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•Minimum cash requirement. Minimum cash and cash equivalents, excluding restricted cash greater than or equal to the higher
of (i) $45 million and (ii) 5% of our total debt.
The drawdown was made on October 23, 2024.
KfW Facility 2019
On July 29, 2019, we entered into a secured term loan facility with KfW IPEX-Bank GMBH, or the KfW Facility 2019, which provided
us with borrowings of up to $45.5 million to partially finance the purchase of two MR newbuildings, TORM A/S is the borrower and
the owner of the vessels under the KfW Facility 2019 and TORM plc is the guarantor. China Export & Credit Insurance Corporation is
the export credit insurance provider. The KfW Facility 2019 has a term of 12 years, bears interest at a rate of SOFR compounded in
arrears plus a margin of 1.85% per annum and is repayable in bi-annual installments and two balloon payments 12 years after drawdown
on each tranche. The KfW Facility 2019 is secured by first priority mortgages over the security vessels, as well as first priority
assignments in respect of each of the vessel’s insurances, earnings and account and irrevocable joint and several guarantees from the
guarantors. The KfW Facility 2019 contain substantially the same financial covenants, default provisions, undertakings and restrictions
as contained in the Syndicated Facilities 2025.
On January 17, 2020, a drawdown for one MR vessel was made and on May 4, 2020, a drawdown on the other MR vessel was made.
DSF Facilities 2020-2024
On October 21, 2020, we entered into a secured term loan facility agreement with Danmark Skibskredit A/S, or the DSF Facility 2020,
for borrowings of up to $150.3 million. The DSF Facility 2020 financed eight newer vessels, which served as collateral under the
agreement. TORM plc was the borrower and TORM A/S and vessel-owning-entities owned directly or indirectly by TORM plc were
guarantors under the DSF Facility 2020. The tenor of the facility was seven years with a final maturity date of November 1, 2027, it had
an interest rate of London Interbank Offered Rate, or LIBOR, plus a margin of 2.10% and is payable in quarterly installments with a
balloon payment at maturity. The DSF Facility 2020 was secured by first priority mortgages over the security vessels, as well as by first
priority assignments in respect of each of the vessel’s insurances and earnings and irrevocable joint and several guarantees from the
guarantors.
On January 5, 2021, we agreed with DSF to add an additional facility agreement to the DSF Facility 2020, or the First DSF Additional
Facility, for borrowings up to $56.4 million. The First DSF Additional Facility financed two MR vessels which served as collateral
under the agreement together with the vessels provided as security under the DSF Facility 2020. The facility had a tenor of six years and
ten months with a final maturity date of November 1, 2027, had an interest rate of LIBOR plus a margin of 2.10% and was payable in
quarterly installments with a balloon payment at maturity.
On June 3, 2021, we agreed with DSF to add an additional facility agreement to the DSF Facility 2020, or the Second DSF Additional
Facility, for borrowings up to $60.0 million. The Second DSF Additional Facility financed two LR2 vessels, which served as collateral
under the agreement together with the vessels provided as security under the DSF Facility 2020 and the First DSF Additional Facility.
The facility had a tenor of six years and five months with a final maturity date of November 1, 2027, had an interest rate of LIBOR plus
a margin of 2.00% and is payable in quarterly installments with a balloon payment at maturity. The DSF Facility2020, the First DSF
Additional Facility and the Second DSF Additional Facility are collectively referred to as the DSF Facilities, as may be further
amended.
On December 11, 2023, we agreed with DSF to amend and extend the above DSF Facilities and change interest reference rate from
LIBOR to SOFR in accordance with US reference interest rate reform. The consolidated facility consists of a $140.1 million term
facility. This facility finances nine vessels built from 2010 to 2019 and bears interest rate of SOFR compounded in arrears plus a margin
of 1.85% per annum and a balloon payment at final maturity, which was extended by two year to November 1, 2029. The facility will
have a margin of 2.00% from November 1, 2027.
On December 11, 2023, we obtained a commitment for $105 million for four vessels built in 2015 and 2016, which was drawn at the
end of February 2024, or the DSF Facility 2023. DSF Facility 2 bears interest rate of SOFR compounded in arrears plus a margin of
1.80% per annum and has quarterly installments and a balloon payment at final maturity, which is November 1, 2029.
On October 8, 2024, we agreed with DSF, or DSF Facility 2024, and, together with the DSF Facilities and the DSF Facility 2023, the
DSF Facilities 2020-2024, to finance one MR vessel built in 2015 and which bears interest rate of SOFR compounded in arrears plus a
margin of 1.90% per annum and a balloon payment at final maturity, which is November 1, 2031.
The DSF Facilities contain the following financial covenants:
•Equity Ratio. A ratio of equity to total assets of no less than 25%; and
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•Minimum cash requirement. Minimum cash and cash equivalents, excluding restricted cash greater than or equal to the higher
of (i) $45 million and (ii) 5% of our total debt.
ING Facility 2023
On December 11, 2023, we entered into a secured term loan facility agreement for $57.9 million and financed three vessels, built in
2015, that served as collateral under the facility, or the ING Facility 2023. The ING Facility 2023 refinances vessels previously financed
by DSF. TORM plc is the borrower and TORM A/S and TORM Tanker Corporation vessel-owning-entities owned directly or indirectly
by TORM plc are guarantors under the facilities agreement. The agreement has a tenor of six years with a final maturity date of
December 31, 2029. The ING Facility 2023 bears an interest rate of SOFR compounded in arrears plus a margin of 1.90% and is
payable in quarterly installments with a balloon at maturity. The agreement is secured by first priority mortgages over the security
vessels, as well as first priority assignments in respect of each of the vessel’s insurances and earnings and irrevocable joint and several
guarantees from the guarantors. ING has a 100% pledge in the issued and outstanding shares of capital stock on the vessel owner
TORM Tanker Corporation.
The ING Facility 2023 contains the following financial covenants:
•Equity Ratio. A ratio of equity to total assets of no less than 25%; and
•Minimum cash requirement. Minimum cash and cash equivalents, excluding restricted cash greater than or equal to the higher
of (i) $45 million and (ii) 5% of our total debt.
The drawdown was made on December 28, 2023.
Leasing Agreements
As of December 31, 2025, we had the following financial lease facilities:
Springliner Leasing Agreement
On September 10, 2019, we entered into a financial sale and lease-back agreement with Springliner for $39.3 million, or the Springliner
Leasing Agreement. The Springliner Leasing Agreement included two vessels built in 2010. TORM A/S is the bareboat charter and
Springliner is the owner of vessel. The Springliner Leasing Agreement has a tenor of seven years with final maturity on August 31,
2026. The agreement includes a fixed bareboat charter hire of $5,700/day and is payable in monthly installments. TORM A/S holds a
purchase option on the vessels. The Springliner Leasing Agreement has no financial covenants.
BoComm Leasing Agreements
On December 19, 2019 and May 10, 2021, we entered into financial sale and lease-back agreements with Bank of Communications, or
BoComm, for $179.8 million, or the BoComm Leasing Agreements. The BoComm Leasing Agreements included five vessels built in
2015 and in 2018 and newbuildings delivered in 2021 and 2022. TORM A/S is the bareboat charter and BoComm is the owner of
vessel. The BoComm Leasing Agreements have a tenor of 8 years and 10 years with final maturity in 2029 and 2031, respectively.
During 2025, TORM exercised repurchase option and the agreement has been fully repaid as of January 2026, with the last vessel being
redelivered to TORM in January 2026.
CMBFL Leasing Agreements
On April 28, 2022, February 2, 2023 and February 16, 2023, we entered into financial sale and lease-back agreements with China
Merchant Bank Financial Leasing, or CMBFL, for $224.5 million, or the CMBFL Leasing Agreements. The CMBFL Leasing
Agreements included eight vessels built in 2011 to 2016. TORM A/S is the bareboat charter and CMBFL is the owner of vessel. The
agreement has a tenor that ranges from seven to 10.5 years with final maturity between April 12, 2030 to January 8, 2033. For seven
vessels the agreement includes an accelerated fixed rate bareboat charter hire of $16,500/day for the first three years and thereafter
bareboat charter will be $8,455/day for the remaining period and is payable in monthly installments. The last vessel bareboat charter is
$9,690/day and is payable in monthly installments. TORM A/S holds a purchase option on the vessels. During 2025, TORM exercised
eight repurchase options, with one vessel delivered in 2025 and the other vessels are scheduled to be redelivered in 2026. The CMBFL
Leasing Agreements have no financial covenants.
Debt capital market Agreements
As of December 31, 2025, we had the following debt capital market facilities:
Senior unsecured bond
On January 24, 2024, TORM issued a USD denominated senior unsecured bond on the Oslo Stock Exchange for $200 million. TORM
plc is the issuer. The bond has a fixed interest rate of 8.25%, paid semi-annually and final maturity on January 25, 2029. TORM has a
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tap-issue option to issue an additional $50 million under the same documentation and interest rate. The senior unsecured bond is a senior
unsecured obligation and ranks equally with all of our existing and future senior unsecured and unsubordinated debt, is effectively
subordinated to our existing and future secured debt. The bond contains early redemption call options, with the first exercise in July
2027 with a strike price of $103.3 and then bi-annual call options with a falling strike price of $100.5 in July 2028. The senior
unsecured bond requires us to comply with certain covenants, including financial covenants, restrictions on consolidations and mergers
or sales of assets.
The senior unsecured bond contains the following financial covenants:
•Equity Ratio. A ratio of equity to total assets of no less than 25%; and
•Minimum cash requirement. Minimum cash and cash equivalents, excluding restricted cash greater than or equal to the higher
of (i) $45 million and (ii) 5% of our total debt.
Cash Flow
Consolidated cash flow for the years ended December 31, 2025 and 2024
For the discussion of cash flows for the year ended December 31, 2025 compared to December 31, 2024, reference is made to
“Financial Review 2025 - Liquidity and Cash Flow” on page 25 and to our Consolidated Cash Flow Statement for the Year Ended
December 31, 2025 and 2024 on page 157 of our Annual Report 2025.
For the discussion of cash flows for the year ended December 31, 2024 compared to December 31, 2023, reference is made to “Item 5.
Operating and Financial Review and Prospects” included in our 2024 Annual Report on Form 20-F, filed with the SEC on March 6,
2025.
There are no material restrictions on the ability of subsidiaries with material cash amounts to transfer funds to TORM plc.
Capital Expenditures of TORM plc
The table below presents our capital expenditures for the years ended December 31, 2025, 2024 and 2023.
Capital Expenditures | |||||
(USD million) | 2025 | 2024 | 2023 | ||
Acquisition of vessels and capitalized dry-docking | 298.4 | 792.7 | 476.0 | ||
Prepayments on vessels | 17.5 | 111.5 | 126.6 | ||
Total | 315.9 | 904.2 | 602.6 |
Capital expenditures for the years ended December 31, 2025, 2024 and 2023 consisted primarily of investments in vessels and
capitalized dry-docking.
TORM invested a total of $315.9m during 2025 compared to $904.2m and $602.6m invested during 2024 and 2023, respectively.
For 2025, TORM plc’s investments related to the acquisition of vessels and capitalized dry-docking amounted to $298.4m compared to
$792.7m and $476.0m in 2024 and 2023, respectively. For the year ended December 31, 2025, TORM’s prepayments on purchased not
delivered secondhand vessels amounted to $17.5m compared to $111.5m and $126.6m for the years ended December 31, 2024 and
2023, respectively.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information
Reference is made to “Market Review” on pages 19 - 20 of the Annual Report 2025 and to “Item 3. Key Information—D. Risk Factors
—Risks Related to Our Business and Our Industry”.
E. Critical Accounting Estimates
The preparation of financial statements in conformity with IFRS requires estimates and assumptions that influence the value of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the value of revenue and
expenses during the reporting period. These estimates and assumptions are affected by the accounting policies applied. An accounting
estimate is considered critical if the estimate requires the executive management’s position on matters that are subject to significant
uncertainty, if different estimates could reasonably have been applied, or if changes in the estimate that would have a material impact on
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the financial position or results of operations are reasonably likely to occur from financial period to financial period. Our Senior
Management Team believes that the accounting estimates employed for the historical financial statements for TORM plc are appropriate
and the resulting balance sheet items are reasonable. However, future results of TORM plc could differ from original estimates requiring
adjustments to balance sheet items in future periods.
Reference is made to “Financial Review 2025 - Assessment of Impairment of Assets” on page 25, Note 1- “Accounting Policies,
Critical Accounting Estimates and Judgments” on page 162 and Note 12-”Impairment Testing” on pages 179 - 180, each in the Annual
Report 2025.
ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Set forth below are the names, ages and positions of the directors, board observers and Senior Management Team of TORM plc. At the
end of the one-year term, a director may seek re-election.
The business address of each of our directors and Senior Management Team is TORM plc, 4th Floor | 120 Cannon Street, London,
EC4N 6AS, United Kingdom.
Name | Age | Position | Date of expiry of current term (for directors) | |||
Simon Mackenzie Smith | 66 | Chairman | 2026 Annual General Meeting | |||
Christopher Helmut Boehringer | 55 | Board Member | 2026 Annual General Meeting | |||
Annette Malm Justad | 67 | Board Member | 2026 Annual General Meeting | |||
Pär Göran Trapp | 64 | Board Member | 2026 Annual General Meeting | |||
Rasmus Johannes Skaun Hoffman | 48 | Board Observer (Employee Representative) (1) | ||||
Liv Kjær | 41 | Board Observer (Employee Representative) (1) | ||||
Jacob Balslev Meldgaard | 57 | Executive Director and Chief Executive Officer of TORM A/S (2) | ||||
Kim Balle | 57 | Chief Financial Officer of TORM A/S (2) | ||||
Lars Christensen | 59 | Senior Vice President and Head of Projects of TORM A/S (2) | ||||
Jesper Søndergaard Jensen | 56 | Senior Vice President and Head of Technical Division of TORM A/S (2) |
(1) Board Observers are appointed by the Company’s Board of Directors and may be removed by the Board of Directors at any time for
any reason. Board Observers can attend and speak at meetings of the Board of Directors but cannot vote.
(2) Each officer listed in the table above is a member of our Senior Management Team.
On September 11, 2025, Hafnia entered into a sale and purchase agreement, or Hafnia Purchase Agreement, with OCM Njord Holdings
S.a r.l., or OCM Njord, pursuant to which Hafnia agreed to purchase 14,156,061 Class A common shares from OCM Njord, at a price of
$22.00 per share, or $311,433,342 in aggregate cash proceeds to OCM Njord, or the Hafnia Share Purchase. The Hafnia Share Purchase
closed on December 22, 2025. As a result of Hafnia Share Purchase and in accordance with our Articles of Association, the Board of
Directors determined that the threshold date defined in the Articles (being the first time at which Oaktree and its affiliates have ceased to
beneficially own at least one-third of the Company’s issued shares, excluding any shares held in treasury) occurred on January 6, 2026.
As a result, the Class B share and the Class C share were redeemed and cancelled in accordance with our Articles of Association and no
further Class B shares or Class C shares can then be issued. Thus, Mr. David Weinstein, former Class B director, Deputy Chairman and
Senior Independent Director, left the Board of Directors effective January 6, 2026. Pursuant to the Hafnia Purchase Agreement,
December 16, 2025, Simon Mackenzie Smith was appointed to the Board of Directors as the new independent chairman of the Board of
Directors.
Biographical information concerning the directors and our Senior Management Team is set forth below.
Simon Mackenzie Smith serves and has served as Chairman of our Board of Directors since December 2025. In addition, Mr.
Mackenzie Smith has served as Chairman of TORM’s Nomination Committee and Transaction Committee and is a member of the
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Remuneration Committee since December 2025. Mr. Mackenzie Smith is currently Chair of Dowlais Group plc and a non-executive
director at Interpath Limited. Prior to this he had a 35-year career in corporate finance and investment banking. He has held senior
leadership positions, most recently as chair of Corporate and Investment Banking UK and Ireland at Bank of America Merrill Lynch.
He brings extensive experience advising international companies in energy and related asset-intensive industries. Simon Mackenzie
Smith is a chartered accountant, having qualified with KPMG in 1985.
Christopher Helmut Boehringer serves and has served as a member of our Board of Directors since 2015 and previously served as
Chairman of our Board of Directors from August 2015 until December 2025. In addition, during this period, Mr. Boehringer served as
Chairman of TORM’s Nomination Committee and Remuneration Committee. Mr. Boehringer is Managing Director and Head of
Europe, Oaktree Capital Management (International) Limited and has held various executive positions within Oaktree since 2006. Mr.
Boehringer also serves as a member of the board of directors of Utmost Group Limited, Marco Capital Holdings Limited, Draslovka a.s.
and Oaktree Capital Management (International) Limited. Mr. Boehringer holds a Bachelor of Arts in Economics from Harvard
University and a Master of Business Administration from INSEAD.
Annette Malm Justad serves and has served as a member of our Board of Directors since April 2020. Ms. Justad is also a member of
TORM's Audit Committee, Nomination Committee, Remuneration Committee, Risk Committee and the Transaction Committee. Ms.
Justad is a partner at Recore Norway AS and serves as chair of the board of directors of Store Norske Spitsbergen Kulkompani AS and
Småkraft AS. She is a member of the board of directors of Awilco LNG ASA, PowerCell Sweden AB and Bakkegruppen AS. Ms.
Justad has more than 25 years of executive experience from the shipping industry, including chief executive officer of the Oslo listed
Eitzen Maritime Services ASA from 2006-2010. Ms. Justad holds a Master of technology management from the Norwegian University
of Science and Technology/Massachusetts Institute of Technology/Norwegian School of Economics and a Master of Chemical
Engineering from the Norwegian University of Science and Technology.
Pär Göran Trapp serves and has served as a member of our Board of Directors since August 2015. In addition, Mr. Trapp is Chairman
of TORM’s Audit Committee and Risk Committee, and is a member of the Remuneration, Nomination and Transaction Committee. Mr.
Trapp was with Morgan Stanley from 1992 to 2013 where he started as crude oil trader, then became Head of Oil Products Trading
Europe & Asia, Global Head of Oil Trading and Head of Commodities EMEA. Prior to joining Morgan Stanley, Göran Trapp was a
crude oil trader at Statoil. Göran Trapp is a cofounder of energy advisory boutique Energex Partners and Chairman of Energex Partners
Ltd. Mr. Trapp holds a Master of Science in Economics and Business Administration from the Stockholm School of Economics.
Rasmus Johannes Skaun Hoffmann is and has been a Board Observer since April 2016 and previously served as a member of our
Board of Directors since April 2011. Mr. Hoffmann has been employed with us since 2003 and serves as a chief engineer. Mr.
Hoffmann also serves on the board of directors of TORM A/S and of the TORM Foundation since 2013. Mr. Hoffmann holds a
Bachelor of Science from Frederikshavn School of Marine and Technical Engineering / MARTEC.
Liv Kjær is and has been a Board Observer since April 17, 2024. Liv Kjær has been employed with TORM since 2014 and serves as
Head of Agency & Process Excellence having previously been employed as Regional Team Leader of Operations Denmark. Ms. Kjær
holds an Executive MBA in Shipping and Logistics.
Jacob Meldgaard serves and has served as the Chief Executive Officer of TORM A/S since April 2010. Prior to joining TORM, Mr.
Meldgaard served as executive vice president and as a member of the executive management of Dampskibsselskabet NORDEN A/S.
Mr. Meldgaard served as chairman of the board of directors of Danish Shipping until May 2023, he is now board member of Danish
Shipping, Danish Ship Finance A/S, International Chamber of Shipping, Copenhagen International School, and the TORM Foundation.
Mr. Meldgaard holds a Bachelor of Commerce in international trade from the Copenhagen Business School and attended the Advanced
Management Program at Wharton Business School and Harvard Business School.
Kim Balle serves and has served as the Chief Financial Officer of TORM A/S since December 2019. Prior to joining TORM, Mr. Balle
served as Group Chief Financial Officer of CASA A/S since 2017, executive positions in DLG a.m.b.a. from 2014 to 2017 including
Group Chief Financial Officer, executive positions in Danske Bank from 2012 to 2014 including Head of Corporate & Institutional
Banking and Head of Domestic Clients. Mr. Balle is chairman of TORM A/S and the TORM Foundation and currently serves and has
served as a member of the board of directors since 2017 for Nordea Invest and Lind Capital as well as since 2025 for Velliv. In 2024,
Mr. Balle became a member of the board of directors and the chairman of the audit committee of Liewood A/S. He holds a Bachelor of
Science in Financing and Credit and a Master of Business Administration from the Copenhagen Business School and executive
educations from Harvard Business School, INSEAD, University of Oxford and Copenhagen Business School.
Lars Christensen serves and has served as the Senior Vice President and Head of Projects of TORM A/S since May 2011. Prior to
joining TORM, Mr. Christensen served as Managing Director of Navitaship, Vice President of Maersk Broker, Manager at Maersk K.K
and Shipbroker at EA Gibson Shipbrokers. Mr. Christensen holds a Certificate in international trade from the Copenhagen Business
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School, a Master of Business Administration from IMD and attended the Executive Management Program at Columbia Business
School. Mr. Christensen is a member of the board of directors of TORM Singapore, chairman of the Luise Andresen Foundation and
Lindcom A/S. He is also a member of the board of directors of Andresen Invest A/S, Ferrum A/S, Ferrum Holding A/S and Speditør
Andresens Mindefond.
Jesper Søndergaard Jensen serves and has served as the Senior Vice President and Head of Technical Division of TORM A/S since
September 2014. Prior to joining TORM, Mr. Jensen served as Senior Vice President and Technical Manager at Clipper Group and
Fleet Group Manager, Manager and Chief Engineer at Maersk Group. Mr. Jensen holds a Bachelor of Technology Management in
Marine Engineering from the Maritime and Polytechnic College in Denmark and an Executive Master of Business Administration from
Henley Business School and Advanced Management Program at Harvard Business School. Mr. Jensen is chairman of the board of
directors of ME Production Denmark and China and is a director of the Clean Shipping Alliance and PJ Circular Engineering.
B. Compensation
At the 2025 Annual General Meeting held on April 16, 2025, our shareholders reapproved the remuneration policy, with effect from the
date of the meeting, which includes overall guidelines for incentive pay for the Board of Directors and our Senior Management Team
(defined below). During 2025, the Remuneration Committee wished to undertake a further review of the remuneration policy that was
approved by the shareholders at the 2025 Annual General Meeting. The Committee reviewed the policy and, in particular, the section
related to fees paid to our Non-Executive Directors and the Chief Executive Officer and concluded that no changes to the Company’s
Remuneration Policy were necessary. The Company is required, under the United Kingdom Companies Act 2006, to prepare a
Remuneration Report for each financial year.
For information about compensation to our non-executive directors, reference is made to page 131 of the “Remuneration Committee
Report” in the Annual Report 2025.
Executive Management Compensation
Our Senior Management Team, which is comprised of Jacob Meldgaard, our Executive Director and principal executive officer of
TORM plc, the Chief Executive Officer of TORM A/S, Kim Balle, our principal financial officer and the Chief Financial Officer of
TORM A/S, Jesper Jensen, the Head of the Technical Division of TORM A/S and Lars Christensen, the Head of Projects of TORM A/
S, receive compensation consisting of a fixed base salary, cash-based bonus incentives paid out in 2025 under our performance bonus
program, discussed below, and customary executive fringe benefits. We have not granted loans, issued guarantees or undertaken similar
obligations to or on behalf of members of our Senior Management Team.
In 2025, the aggregate compensation paid by the Group to Jacob Meldgaard for his role as Executive Director and principal executive
officer of TORM plc and as the Chief Executive Officer of TORM A/S amounted to $2,585,656, which includes the fee payable to Mr.
Meldgaard for his service on the Board of Directors. We have not allocated funds to provide pension, retirement or similar benefits to
Mr. Meldgaard.
In 2025, the aggregate compensation paid by the Group to the other members of our Senior Management Team (excluding Mr.
Meldgaard) was $2,361,291, which includes an aggregate of $170,572 allocated for pensions for these individuals.
Incentive Schemes
Compensation of our Senior Management Team includes the eligibility to participate in a variable incentive-based pay with a
combination of share options, restricted share units and other share-based awards. We have in place a LTIP, pursuant to which our
Board of Directors may grant certain employees and executive officers share options, RSUs, in the form of restricted stock options, or
other share-based awards. See “Item 10. Additional Information”.
For information on RSUs granted to Mr. Meldgaard pursuant to the LTIP, reference is made to the “Remuneration Committee Report -
Long-Term Incentive Program-Restricted Share Units Granted” on page 129 of the Annual Report 2025.
During 2025, the members of our Senior Management Team other than Mr. Meldgaard were granted an aggregate of 382,800 RSUs as
part of each executive’s annual grant. Each RSU entitles the other members of our Senior Management Team to acquire one Class A
common share, subject to a three-year vesting period, with one third of the grant amount vesting at each anniversary date. The RSUs
were issued with an original exercise price of DKK 162.38 per Class A common share for a period of twelve months after the vesting
date. The exercise price on the RSUs may be adjusted by the Board of Directors to reflect dividend payments made to shareholders.
Assuming 100% vesting and based on the Black-Scholes model, the aggregate RSU grant in 2025 to the other members of our Senior
Management Team would be approximately $1,084,554. In addition, the members of our Senior Management Team were granted a total
of 382,500 retention RSUs. The strike price for these RSUs is set to one US cent and all the RSUs will vest on 01 October 2028. In
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addition, the members of our Senior Management Team were granted a total of 305,043 RSUs following exercise of RSUs granted in
2022 and 2023 to reflect the payment of dividends since the grant date. The exercise price for each RSU was USD 0.01.
Performance Bonus Program 2025
For information on the cash performance bonus received by Mr. Meldgaard for the financial year 2025, reference is made to
“Remuneration Committee Report -Performance Bonus 2025” on page 128 of the Annual Report 2025.
During the financial year 2025, the members of our Senior Management Team other than Mr. Meldgaard received cash performance
bonuses in an aggregate amount of $458,029 which is directly linked to the fulfillment of specific performance metrics, which include
developments in the price of our shares and our cost base (up to 50% of the base salary of each executive).
C. Board Practices
Our Board of Directors maintains overall responsibility for the Company and its strategy and is entrusted with various tasks including
appointment and supervision of our Executive Director, Mr. Jacob Meldgaard, and establishment of strategic, accounting, organizational
and financial policies.
Our Board of Directors has delegated the day-to-day management of our business to our Executive Director. This includes our
operational development and responsibility for implementing the strategies and overall decisions approved by the Board of Directors.
The Executive Director also serves the position as Chief Executive Officer of TORM A/S, our largest subsidiary. Transactions of an
unusual nature or of major importance may only be effected by our Executive Director on the basis of a special authorization granted by
our Board of Directors. In the event that certain transactions cannot await approval by our Board of Directors, taking into consideration
the best interests of the Company, our Executive Director, to the extent possible, shall obtain the approval of the Chairman of our Board
of Directors and ensure that the Board of Directors is subsequently given notice of such transactions passed. Transactions of an unusual
nature or of major importance are defined in our board guidelines for our Board of Directors and include, among other things, the
acquisition and disposal of vessels.
For a description and terms of reference of the committees of our Board of Directors, reference is made to “TORM's Governance
Structure” on page 110 and the individual reports of our Audit Committee, Risk Committee, Nomination Committee and Remuneration
Committee on pages 115 - 140 of our Annual Report 2025.
Board Committees
Audit Committee
We have established an Audit Committee, which is responsible for assisting the Board of Directors in fulfilling its responsibilities
relating to the oversight of the quality and integrity of the accounting, auditing, and financial and ESG reporting of TORM. As of the
date of this annual report, our Audit Committee is comprised of two independent non-executive directors, Mr. Pär Göran Trapp
(Chairman) and Ms. Annette Justad. The Board of Directors has determined that Mr. Trapp is our “audit committee financial expert” for
the purposes of SEC rules and regulations. Each member of the Audit Committee qualifies as “independent” under Nasdaq listing
standards applicable to a foreign private issuer.
Remuneration Committee
We have established a Remuneration Committee, which is responsible for assisting the Board of Directors in reviewing the Senior
Management Team’s performance, development, and remuneration, as well as TORM’s general remuneration policies, and for setting
the compensation of the Company's executive officers, reviewing the Company’s incentive and equity-based compensation plans, and
reviewing and approving employment and severance agreements. As of the date of this annual report, the Remuneration Committee is
comprised of three directors: Ms. Annette Justad (Chairman), Mr. Simon Mackenzie Smith, and Mr. Pär Göran Trapp. Mr. Trapp and
Ms. Justad qualify as “independent” under Nasdaq listing standards applicable to a foreign private issuer.
Nomination Committee
We have established a Nomination Committee, which is responsible for reviewing the structure, size, and composition (including skills,
knowledge, experience, and diversity) of the Board of Directors, making recommendations to the Board of Directors regarding any
changes, and considering succession plans for the Chief Executive Officer, directors and others. As of the date of this annual report, the
Nomination Committee is comprised of three directors: Mr. Simon Mackenzie Smith (Chairman), Ms. Annette Justad and Pär Göran
Trapp. Mr. Trapp and Ms. Justad qualify as “independent” under Nasdaq listing standards applicable to a foreign private issuer.
Risk Committee
We have established a Risk Committee, which is responsible for assisting the Board of Directors in fulfilling its responsibilities relating
to the oversight of the quality and effectiveness of the company-wide risk management program including strategic, operational,
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compliance, HSSE-related, financial, credit, market, reputational and other risk. comprised of three members. As of the date of this
annual report, the Risk Committee is comprised of two directors: Mr. Pär Göran Trapp (Chairman) and Ms. Annette Justad. Mr. Trapp
and Ms. Justad qualify as "independent" under Nasdaq listing standards applicable to a foreign private issuer.
Transaction Committee
We have established a Transaction Committee, which is responsible for reviewing and approving significant transactions outside the
ordinary course of business and ensuring that such transactions are evaluated thoroughly, align with the Company’s strategic objectives
and comply with governance standards. The Transaction Committee operates under a mandate from the Board of Directors to provide
timely oversight and decision-making on matters requiring swift execution while maintaining transparency and accountability. As of the
date of his annual report, the Transaction Committee is comprised of Mr. Simon Mackenzie Smith (Chairman), Ms. Annette Justad and
Mr. Pär Göran Trapp.
For more information, please see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management”.
Employment Agreements
Mr. Jacob Meldgaard
We may dismiss Mr. Meldgaard with twelve months’ notice to the end of a month, and Mr. Meldgaard may terminate his contract with
six months’ notice to the end of a month. Mr. Meldgaard is not entitled to other kinds of remuneration resulting from a retirement from
the Company other than performance bonuses earned, if any.
Mr. Meldgaard is subject to global non-competition and non-solicitation clauses for a period of twelve months. For the effective period
of these clauses, Mr. Meldgaard is entitled to monthly compensation compared to 100% of his base salary. The non-competition clause
may be terminated with one month’s notice. However, whether one or both of the non-competition and non-solicitation clauses are
effective, the compensation only becomes payable once.
In case of a change of control, as further defined in Mr. Meldgaard’s service agreement, Mr. Meldgaard may, within three months from
the date of the change, terminate his employment with six months’ notice, in which case certain non-competition and non-solicitation
clauses will be shortened.
Under mandatory Danish law, non-competition clauses cannot be enforced after expiry of the notice period if the termination is effected
by the Company without Mr. Meldgaard having given reasonable cause for the dismissal.
Other Members of the Senior Management Team
We may dismiss the other members of the Senior Management Team (excluding Mr. Meldgaard) with nine to twelve months’ notice
(varying length depending on position and seniority). Each of these executives may all terminate his contract with four to six months’
notice (varying length depending on position).
Based on the current seniority, these current members of our Senior Management Team are not entitled to other kinds of remuneration
upon retirement from the Company, other than performance bonuses earned, if any.
These other members of the Senior Management Team are subject to global non-competition clauses for a period of up to twelve
months (depending on position). For the effective period of the clauses, these other members of the Senior Management Team are
entitled to a monthly compensation compared to 100% of their respective base salary.
The non-competition clauses may be terminated. Under mandatory Danish law, non-competition clauses cannot be enforced after expiry
of the notice period if the termination is effected by the Company without the members of the Senior Management Team having given
reasonable cause for their dismissal.
Clawback Policy
In December 2023, TORM adopted a policy regarding the recovery of erroneously awarded compensation, or Clawback Policy, in
accordance with the applicable rules of The Nasdaq Stock Market and Section 10D and Rule 10D-1 of the Exchange Act. In the event
TORM is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirements under
U.S. securities laws or otherwise erroneous data or if TORM determines there has been a significant misconduct that causes material
financial, operational or reputational harm, TORM shall be entitled to recover a portion or all of any incentive-based compensation
provided to certain executives who, during a three-year period preceding the date on which an accounting restatement is required,
received incentive compensation based on the erroneous financial data that exceeds the amount of incentive-based compensation the
executive would have received based on the restatement.
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The Remuneration Committee administers the Company’s Clawback Policy and has discretion, in accordance with the applicable laws,
rules and regulations, to determine how to seek recovery under the Clawback Policy and may forego recovery if it determines that
recovery would be impracticable.
Cybersecurity
Our Chief Financial Officer has overall risk ownership and accountability to control such risk. The Chief Financial Officer ensures the
formulation of cybersecurity strategies and follows up on the implementation of these strategies which is delegated to the Head of
Group IT and the Chief Information Securiy Officer, or CISO, who set targets, assess risks, develop policies and procedures, and
execute our cybersecurity efforts. The Head of Group IT and the CISO regularly reports to the Risk Committee and the overall Board of
Directors, which ultimately oversees cybersecurity risks and initiatives. The Risk Committee monitors the progress of TORM’s
cybersecurity efforts and together with the Chief Financial Officer ensures integrity of reporting. For more information on our
cybersecurity risk management and strategy and governance, please see “Item 16K. Cybersecurity.”
D. Employees
As of December 31, 2025, we employed approximately 481 people in our offices in China, Denmark, India, the Philippines, Singapore,
United Arab Emirates, the U.S., and the United Kingdom, excluding seafarers, who work on our vessels.
E. Share Ownership
The table below shows, in relation to each of our directors and members of our Senior Management Team, the total number of shares
owned and the total number of RSUs held as of February 26, 2026. The RSUs granted to our Executive Director, Jacob Meldgaard,
were received for his role as Chief Executive Officer of TORM A/S. For any arrangements that involve employees in the capital of the
Company, please refer to “Item 10. Additional Information A.- Restricted Share Units” and for Restricted Share Units granted to the
Chief Executive Officer, please refer to Note 5 of this annual report on Form 20-F.
Directors and Executive officers | Class A common shares held | Unvested RSUs | Vested RSUs | ||
Simon Mackenzie Smith ** | 0 | - | - | ||
Christopher H. Boehringer | 21,204 | - | - | ||
David Weinstein*** | 5,000 | - | - | ||
Göran Trapp | 0 | - | - | ||
Annette Malm Justad | 0 | - | - | ||
Jacob Meldgaard | 602,599 | 1,010,400 | 789,166 | ||
All other executive officers in the aggregate | * | 1,148,102 | 1,070,644 |
*Our remaining executive officers individually each own less than 1% of our outstanding shares.
** Pursuant to the Hafnia Purchase Agreement, on December 16, 2025, Simon Mackenzie Smith was appointed to the Board of
Directors as the new independent chairman of the Board of Directors.
***As a result of Hafnia Share Purchase and in accordance with our Articles of Association, the Board of Directors determined
that the threshold date defined in the Articles (being the first time at which Oaktree and its affiliates have ceased to beneficially own at
least one-third of the Company’s issued shares, excluding any shares held in treasury) occurred on January 6, 2026. As a result, the
Class B share and the Class C share were redeemed and cancelled in accordance with our Articles of Association and no further Class B
shares or Class C shares can then be issued. Thus, Mr. David Weinstein, former Class B director, Deputy Chairman and Senior
Independent Director, left the Board of Directors effective January 6, 2026.
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
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ITEM 7MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth the beneficial ownership of our Class A common shares, par value $0.01 per share, as of the date of this
annual report, by beneficial owners of 5% or more of the common shares. All of our shareholders, including the shareholders listed in
the table below, are entitled to one vote for each share held.
Class A Common Shares | |||
Beneficially Owned | |||
Name | Number | Percentage(1) | |
Njord Luxco(2)(3)(4) | 26,425,059 | 26.08% | |
Hafnia Limited(3)(4) | 14,156,061 | 13.97% | |
(1)Calculated based on 101,332,707 Class A common shares outstanding as of December 31, 2025.
(2)According to Schedule 13D filed with the SEC on September 14, 2020 and information provided by Njord Luxco, the business
address of Njord Luxco is OCM Njord Holdings S.a r.l, 26A, Boulevard Royal L-2449, Luxembourg, Luxembourg. The
majority shareholder of Njord Holdings is OCM Luxembourg OPPS IX Sarl. The majority shareholder of OCM Luxembourg
OPPS IX Sarl is Oaktree Opportunities Fund IX, L.P. The general partner of Oaktree Opportunities Fund IX, L.P. is Oaktree
Opportunities Fund IX GP, L.P. The sole director of Oaktree Opportunities Fund IX GP, L.P. is Oaktree Opportunities Fund IX
GP, Ltd. The sole director of Oaktree Opportunities Fund IX GP, Ltd. is Oaktree Capital Management, L.P. The general
partner of Oaktree Capital Management, L.P. is Oaktree Capital Management GP, LLC. The general partner of Oaktree Capital
Management GP, LLC is Atlas OCM Holdings, LLC. The names of each of the directors and executive officers of Atlas OCM
Holdings, LLC are Howard S. Marks, Bruce A. Karsh, Jay S. Wintrob, John B. Frank and Sheldon M. Stone who, by virtue of
their membership interests in Oaktree Capital Group, LLC and Atlas OCM Holdings, LLC may be deemed to share voting and
dispositive power with respect to the shares of TORM plc held by Njord Holdings. The address for all of the entities and
individuals identified above is c/o Oaktree Capital Management, L.P., 333 S. Grand Avenue, 28th Floor, Los Angeles,
California 90071.
(3)Based on the Schedule 13D filed by Hafnia Limited on December 22, 2025.
(4)As a result of the Hafnia Share Purchase, Hafnia purchased 14,156,061 Class A common shares from OCM Njord, at a price of
$22.00 per share, or $311,433,342 in aggregate cash proceeds to OCM Njord.
As of December 31, 2025, Njord Luxco beneficially owned 26,425,059 Class A common shares, or 26.08% (2024: 40,581,120 Class A
common shares, 41.49%; 2023: 51,006,538 Class A common shares, 59.15%).
As of December 31, 2025, we had 4,856,526 RSUs outstanding. Subject to vesting, each RSU entitles the holder to acquire one Class A
common share.
As of February 25, 2026, we had 4,856,526 RSUs outstanding. Subject to vesting, each RSU entitles the holder to acquire one Class A
common share.
As of December 31, 2025, our sole shareholder of record located in the U.S. was Cede & Co., a nominee of The Depository Trust
Company, which held 43,293,495 Class A common shares, representing 42.72% of our issued and outstanding Class A common shares
on that date.
As of February 9, 2026, our sole shareholder of record located in the U.S. was Cede & Co., a nominee of The Depository Trust
Company, which held 42,232,390 Class A common shares, representing 41.68% of our issued and outstanding Class A common shares
on that date.
No corporation or foreign government owns more than 50% of our outstanding common shares. We are not aware of any arrangements,
known by the Company, the operation of which may at a subsequent date result in a change in control of the Company.
B. Related Party Transactions
Remuneration of our directors and Senior Management Team is disclosed in “Item 6. Directors, Senior Management and Employees-B.
Compensation”.
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Mr. Boehringer is a partner and a managing director of Oaktree Capital Management (International) Limited. Oaktree affiliates manage
(indirectly) the Company’s controlling shareholder, Njord Luxco. Oaktree has interests in numerous businesses, including businesses
which may compete directly or indirectly with the Group. Mr. Boehringer may from time to time be involved in influencing the business
or strategy of such businesses.
To our knowledge, there have been no other transactions with related parties during the periods required to be presented.
C. Interest of Experts and Counsel
Not applicable.
ITEM 8FINANCIAL INFORMATION
A. Consolidated Statements and other Financial Information
Please see the section of this annual report on Form 20-F entitled “Item 18. Financial Statements”.
Legal Proceedings
We are from time to time and currently a party to various legal proceedings arising in the ordinary course of business. We seek to
maintain commercial liability insurance for such cases, and to the extent that we find that a specific claim is covered by insurance, our
policy is to make no reservations in our accounts except for other related costs such as deductibles payable by us under the insurance
policies.
TORM is involved in certain legal proceedings and disputes. It is the Senior Management Team’s opinion that the outcome of these
proceedings and disputes should not have any material impact on TORM’s financial position, results of operations and cash flows.
Distribution Policy
Reference is made to “Investor Information-Distribution Policy” on page 142 of our Annual Report 2025.
On March 6, 2025, the Board of Directors approved a dividend of $0.60 per share, with a total dividend payment of approximately
$58.5 million in line with our distribution policy. The dividend payment was made on April 2, 2025, to shareholders of record as of
March 20, 2025, with the ex-dividend date on March 19, 2025 for the shares listed on Nasdaq Copenhagen and March 20, 2025 for the
shares listed on Nasdaq New York. The dividend payment has not been recognized as a liability and there are no tax consequences.
On May 8, 2025, the Board of Directors approved a dividend of $0.40 per share, with a total dividend payment of approximately $39.1
million in line with our distribution policy. The dividend payment was made on June 4, 2025, to shareholders of record as of May 22,
2025, with the ex-dividend date on May 21, 2025 for the shares listed on Nasdaq Copenhagen and May 22, 2025 for the shares listed on
Nasdaq New York. The dividend payment has not been recognized as a liability and there are no tax consequences.
On August 14, 2025, the Board of Directors approved a dividend of $0.40 per share, with a total dividend payment of approximately
$39.2 million in line with our distribution policy. The dividend payment was made on September 3, 2025, to shareholders of record as
of August 22, 2025, with the ex-dividend date on August 21, 2025 for the shares listed on Nasdaq Copenhagen and August 22, 2025 for
the shares listed on Nasdaq New York. The dividend payment has not been recognized as a liability and there are no tax consequences.
On November 6, 2025, the Board of Directors approved a dividend of $0.62 per share, with a total dividend payment of approximately
$62.8 million in line with our distribution policy. The dividend payment was made on December 3, 2025, to shareholders of record as of
November 20, 2025, with the ex-dividend date on November 19, 2025 for the shares listed on Nasdaq Copenhagen and November 20,
2025 for the shares listed on Nasdaq New York. The dividend payment has not been recognized as a liability and there are no tax
consequences.
Our Board of Directors may, in its sole discretion, from time to time, declare and distribute dividends in accordance with our Articles of
Association and applicable law. Any decision to distribute dividends will be at the sole discretion of the Board of Directors. Dividends
which are declared as interim dividends do not need to be approved by the shareholders at our annual general meeting.
We can give no assurance that dividends will be declared and paid in the future or the amount of such dividends if declared and paid.
For a discussion of certain risk factors that may affect our ability to pay dividends, see “Item 3. Key Information—A. Risk Factors”. For
a description of the restrictions on the payment of dividends contained in our financing agreements, see “Item 5. Operating and
Financial Review and Prospects—B. Liquidity and Capital Resources—Our Financing Agreements”. For a discussion of the material
tax consequences regarding the receipt of dividends we may declare, see “Item 10. Additional Information— E. Taxation”.
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B. Significant Changes
For significant events that occurred after the date of the annual financial statements, reference is made to ‘Note 2 – Liquidity, Capital
Resources and Subsequent Events’, page 164 in our Annual Report 2025. For description of important events and achievements during
2025, reference is made to "Letter from the CEO and Chair", pages 4 - 5, and "Financial Review 2025", pages 21 - 27, both in our
Annual Report 2025.
ITEM 9THE OFFER AND LISTING
Our Class A common shares currently trade on Nasdaq Copenhagen under the symbol “TRMD A” and on Nasdaq New York under the
symbol “TRMD”. See “Item 10. Additional Information”.
ITEM 10ADDITIONAL INFORMATION
A. Share Capital
Issued and Authorized Capitalization
As of December 31, 2025, our share capital consisted of 101,332,707 Class A common shares, par value $0.01 per share, one Class B
share, par value $0.01 per share, and one Class C share, par value $0.01 per share. As of the date of this annual report, our share capital
consisted of 101,332,707 Class A common shares. As of December 31, 2025 and the date of this annual report, we do not have any
shares held in treasury.
As a result of Hafnia Share Purchase and in accordance with our Articles of Association, the Board of Directors determined that the
threshold date defined in the Articles (being the first time at which Oaktree and its affiliates have ceased to beneficially own at least
one-third of the Company’s issued shares, excluding any shares held in treasury) occurred on January 6, 2026. As a result, the Class B
share and the Class C share were redeemed and cancelled in accordance with our Articles of Association and no further Class B shares
or Class C shares can then be issued.
On May 22, 2025, we cancelled 493,371 treasury shares that we purchased in share buybacks on Nasdaq Copenhagen in 2016 and 2020
to rectify the fact that these repurchases were not made in accordance with the UK Companies Act, which distinguishes between
buybacks effected through “market purchases” and “off-market purchases.” We effected these buybacks under “market purchase”
resolutions; however, for purposes of the UK Companies Act, Nasdaq Copenhagen is an overseas exchange, making it ineligible for
buybacks conducted under the “market purchase” provisions. The cancellation of the affected treasury shares will not affect the rights
attached to, or result in any other change to, any of our other shares (or their nominal value).
At the Company’s 2016 Annual General Meeting of Shareholders, the Board of Directors was granted certain authorizations to increase
our issued share capital, both with and without pre-emption rights to the existing shareholders. These share authorities expired on March
14, 2021. The Board of Directors sought renewal of this existing authority at the 2020 Annual General Meeting and this resolution was
approved and will apply until the close of business on April 14, 2025. The Board of Directors sought renewal of this existing authority
at the 2024 Annual General Meeting and this resolution was approved and will apply until the close of business on April 10, 2029. For
a description of the share authorities granted to our Board of Directors, reference is made to “Director’s Report—Share Capital” on page
147 of our Annual Report 2025.
Our Shares
Class A common shares. Each outstanding Class A common share, par value $0.01 per share, has (i) on a poll, one (1) vote on all
matters at a general meeting (other than the election or removal of the Deputy Chairman), (ii) pre-emption rights upon any new issue of
equity securities (including Class A common shares) for cash (unless otherwise provided by the United Kingdom Companies Act or our
Articles of Association or as disapplied by the relevant shareholders’ resolution) and (iii) the right to receive dividends, as well as
liquidation proceeds and other distributions, that we may declare from time to time. The Class A common shares are not redeemable,
either in full or in part.
Class B share. The one formerly outstanding Class B share, par value $0.01, was held by a trustee on behalf of our minority
shareholders (the Class A common shareholders other than Njord Luxco or its affiliates) pursuant to the terms of a minority trust deed,
which is filed as Exhibit 2.2 to this annual report. The Class B share had (i) one vote at our general meetings, (ii) no pre-emptive
subscription rights in relation to any issue of new shares of other classes and (iii) effectively carries no right to receive dividends,
liquidation proceeds or other distributions from us. The holder of the Class B share had the right to elect one member to our Board of
Directors (the Deputy Chairman) as well as appoint one Board Observer. On January 6, 2026, the Board of Directors determined that the
threshold date defined the Articles of Association (being the first time at which Oaktree and its affiliates have ceased to beneficially own
at least one-third of the issued shares, excluding any shares held in treasury) has occurred. As the ownership stake held by Oaktree and
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its affiliates is now below the one‐third threshold, the position and authority of the Class B director is extinguished. As a result, our
Deputy Chairman and Senior Independent Director, David Weinstein, left the Board of Directors effective as of January 6, 2026.
Class C share. The one formerly outstanding Class C share, par value $0.01, was held by Njord Luxco. The holder of the Class C share
had 350,000,000 votes at our general meetings on specified matters. The Class C share had no pre-emption rights in relation to any issue
of new shares of other classes and carries no right to receive dividends, liquidation proceeds, or other distributions from the Company.
The Class C share could not be transferred or pledged, except to an affiliate of Njord Luxco. As noted above, on January 6, 2026, the
Class C share was redeemed and cancelled in accordance with our Articles of Association and no further Class C shares can be issued.
Our Share History
As of December 31, 2023, TORM’s total share capital was $862,256.86 consisting of 86,225,684 Class A common shares, one Class B
share and one Class C share, each with a par value of $0.01 per share.
As of December 31, 2024, TORM’s total share capital was $978,140.53 consisting of 97,814,051 Class A common shares, one Class B
share and one Class C share, each with a par value of $0.01 per share.
As of December 31, 2025, TORM’s total share capital was $1,013,327.09 consisting of 101,332,707 Class A common shares, one Class
B share and one Class C share, each with a par value of $0.01 per share.
As of February 26, 2026, TORM's total share capital was $1,013,327.07 consisting of 101,332,707 Class A common shares.
Reconciliation of the Number of Class A Common Shares Outstanding as of the Date of this Annual Report
Shares outstanding at December 31, 2023 | 86,225,684 |
Number of Class A common shares issued in connection with exercise of RSUs | 1,345,438 |
Number of Class A common shares issued in connection with acquisition of vessels | 10,242,929 |
Shares outstanding at December 31, 2024 | 97,814,051 |
Number of Class A common shares issued in connection with exercise of RSUs | 3,263,458 |
Number of Class A common shares issued in connection with acquisition of vessels | 748,569 |
Cancellation of Class A treasury shares | (493,371) |
Shares outstanding as of December 31, 2025 | 101,332,707 |
Number of Class A common shares issued in connection with exercise of RSUs | 0 |
Number of Class A common shares issued in connection with acquisition of vessels | 0 |
Shares outstanding as of February 26, 2026 | 101,332,707 |
Share Capital Increases
On March 14, 2025, we increased our share capital by 175,463 Class A common shares (corresponding to a nominal value of $1,754.63)
as a result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to $979,895.16
divided into 97,989,514 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of $0.01.
On March 21, 2025, we increased our share capital by 262,294 Class A common shares (corresponding to a nominal value of $2,622.94)
as a result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to $982,518.10
divided into 98,251,808 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of $0.01.
On April 4, 2025, we increased our share capital by 12,406 Class A common shares (corresponding to a nominal value of $124.06) as a
result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to $982,642.16 divided
into 98,264,214 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of $0.01.
On April 28, 2025, we increased our share capital by 18,769 Class A common shares (corresponding to a nominal value of $187.69) as a
result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to $982,829.85 divided
into 98,282,983 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of $0.01.
On May 19, 2025, we increased our share capital by 151,581 Class A common shares (corresponding to a nominal value of $1,515.81)
as a result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to $984,345.66
divided into 98,434,564 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of $0.01.
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On June 4, 2025, we increased our share capital by 11,236 Class A common shares (corresponding to a nominal value of $112.36) as a
result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to $979,524.31 divided
into 97,952,429 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of $0.01.
On November 12, 2025, we increased our share capital by an aggregate of 2,395,426 Class A common shares (corresponding to a
nominal value of $23,954.26) as a result of the increase in 748,569 Class A common shares (corresponding to a nominal value of
$7,485.69) in connection with the delivery of one LR2 vessel and the increase in 1,646,857 Class A common shares (corresponding to a
nominal value of $16,468.57) as a result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital
amounted to $1,003,478.57 divided into 100,347,855 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class
C share of $0.01.
On November 14, 2025, we increased our share capital by 970,646 Class A common shares (corresponding to a nominal value of
$9,706.46) as a result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to
$1,013,185.03 divided into 101,318,501 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of
$0.01.
On November 21, 2025, we increased our share capital by 14,206 Class A common shares (corresponding to a nominal value of
$142.06) as a result of the exercise of a corresponding number of RSUs. After the capital increase, our share capital amounted to
$1,013,327.09 divided into 101,332,707 Class A common shares of $0.01 each, one Class B share of $0.01 and one Class C share of
$0.01.
Cancellation of Treasury Shares
On May 22, 2025, we cancelled 493,371 treasury shares that we purchased in share buybacks on Nasdaq Copenhagen in 2016 and 2020
to rectify the fact that these repurchases were not made in accordance with the UK Companies Act, which distinguishes between
buybacks effected through “market purchases” and “off-market purchases.” We effected these buybacks under “market purchase”
resolutions; however, for purposes of the UK Companies Act, Nasdaq Copenhagen is an overseas exchange, making it ineligible for
buybacks conducted under the “market purchase” provisions. The cancellation of the affected treasury shares will not affect the rights
attached to, or result in any other change to, any of our other shares (or their nominal value).
Restricted Share Units
In accordance with TORM’s Remuneration Policy, the Board of Directors has, as part of the LTIP, granted certain employees RSUs in
the form of restricted stock options. The RSUs aim at retaining and incentivizing the employees to seek to improve the performance of
TORM and thereby the TORM share price for the mutual benefit of themselves and the shareholders of TORM. Each RSU granted
under the LTIP entitles its holder to acquire one Class A common share, subject to vesting.
In 2023, the Board of Directors agreed to grant a total of 1,248,153 to other members of the Management Team, or the 2023 RSUs. The
2023 RSUs were issued on the same vesting terms as the 2018, 2019, 2020, 2021 and 2022 RSUs and had an exercise price of DKK
220.6 at time of allocation, corresponding to the daily average closing price on Nasdaq Copenhagen across the 90-calendar day period
before March 16, 2023, the date of publication of the Annual Report 2022, plus a premium of 15%. The exercise period for vested RSUs
will be 360 days.
Also in 2023, the Board of Directors agreed to grant a total of 1,333,222 to other members of the Management Team, or the 2023
Retention RSUs. The 2023 Retention RSUs will vest on March 1, 2026 and had an exercise price of $0.01 at the time of allocation.
In 2024, the Board of Directors agreed to grant a total of 1,214,986 to other members of the Management Team, or the 2024 RSUs. The
2024 RSUs were issued on the same vesting terms as the 2018-2023 RSUs and had an exercise price of DKK 258.4 at time of
allocation, corresponding to the average of 90 calendar days preceding the publication of TORM plc’s 2023 Annual Report plus a 15%
premium. Vested RSUs may be exercised for a period of 360 days from each vesting date.
Also in 2024, the Board of Directors agreed to grant a total of 16,430, 11,146 and 3,120 RSUs to other members of the Management
Team, or the 2021 Additional RSUs, 2022 Additional RSUs and 2023 Additional RSUs, respectively). The 2021 Additional RSUs will
vest on issue and had an exercise price of $0.01 at the time of allocation.
In 2025, the Board of Directors agreed to grant a total of 1,326,087 to other members of the Management Team, or the 2025 RSUs. The
2025 RSUs were issued on the same vesting terms as the 2018-2024 RSUs and had an exercise price of DKK 162.38 at time of
allocation, corresponding to the daily average closing price on Nasdaq Copenhagen across the 90-calendar day period before March 6,
2025, the date of publication of the Annual Report 2024 plus a premium of 15%. The exercise period for vested RSUs will be 360 days.
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Also in 2025, the Board of Directors agreed to grant a total of 1,293,434 to other members of the Management Team, or the 2025
Retention RSUs. The 2025 Retention RSUs will vest on October 1, 2028 and have an exercise price of $0.01.
Additionally, 1,300,815 of the 2022 RSUs, 563,144 of the 2023 RSUs, 1,587,146 of the 2023 Retention RSUs, 20,021 of the 2021
Additional RSUs, 179,876 of the 2022 Additional RSUs, and 995,300 of the 2023 Additional RSUs, have been exercised.
As of December 31, 2025, a total number of 4,856,526 RSUs were outstanding.
Based on the Black-Scholes model, the theoretical market value of the RSU allocations in 2023. 2024, and 2025, around the time of
issuance, was calculated at $64.4 million, $10.0 million, and $27.8 million respectively. See “Item 6. Directors, Senior Management and
Employees-B. Compensation” and “-E. Share Ownership”.
B. Memorandum and Articles of Association
The description of TORM plc’s Memorandum and Articles of Association is incorporated by reference to our Registration Statement on
Form 20-F (Registration No. 001-38294), as amended, which was filed with the SEC on November 24, 2017. The Company’s Articles
of Association are filed as Exhibit 1.1 hereto and are incorporated by reference into this annual report.
C. Material Contracts
We refer you to “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Our Financing
Agreements” with respect to our credit facilities, and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions” with respect to our related party transactions for a discussion of the agreements that we consider to be both material and
outside the ordinary course of business during the two-year period immediately preceding the date of this annual report. Other than
these contracts, we have no other material contracts, other than contracts entered into in the ordinary course of business, to which we are
a party.
D. Exchange Controls
Under United Kingdom law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or
restrictions, that affect the remittance of dividends, interest or other payments to non-resident holders of our common shares.
E. Taxation
U.S. Federal Income Tax Considerations
The following are the material U.S. federal income tax consequences to us and our U.S. Holders and Non-U.S. Holders, each as defined
below, of our activities and the ownership and disposition of our common shares. This discussion does not purport to deal with the tax
consequences of owning common shares relevant to all categories of investors, some of which, such as banks, insurance companies, real
estate investment trusts, regulated investment companies, grantor trusts, tax-exempt organizations, dealers in securities or currencies,
traders in securities that elect the mark-to-market method of accounting for their securities, investors whose functional currency is not
the U.S. dollar, investors that are or own our common shares through partnerships or other pass-through entities, investors that own,
actually or under applicable constructive ownership rules, 10% or more of our common shares, persons that will hold the common
shares as part of a hedging transaction, “straddle” or “conversion transaction,” persons who are deemed to sell the common shares under
constructive sale rules, persons required to recognize income for U.S. federal income tax purposes no later than the taxable year in
which such income is included on an “applicable financial statement,” persons subject to the “base erosion and anti-avoidance” tax and
persons who are liable for an alternative minimum tax, may be subject to special rules. The following discussion of U.S. federal income
tax matters is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the
U.S. Department of the Treasury, or the Treasury Regulations, all as in effect or in existence on the date of this annual report, and all of
which are subject to change, possibly with retroactive effect. This discussion does not address any aspect of state, local or any U.S.
federal tax considerations other than income taxation, such as estate or gift taxation or unearned income Medicare contribution taxation.
This discussion deals only with holders who hold the common shares as a capital asset. The discussion below is based, in part, on the
description of our business as described in this annual report and assumes that we conduct our business as described in this annual
report. Unless otherwise noted, references in the following discussion to the “Company,” “we,” “our,” and “us” are to TORM plc and its
subsidiaries on a consolidated basis.
United States Federal Income Taxation of the Company
Taxation of Operating Income: In General
We anticipate that substantially all of our gross income will be derived from the use and operation of vessels in international commerce,
and that this income will principally consist of freights from the transportation of cargos, hire or lease income from voyage or time
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charters and the performance of services directly related thereto, which we refer to as “shipping income”. Unless exempt from U.S.
federal income taxation under Section 883 of the Code, under Article 8 of the U.S.-United Kingdom Income Tax Treaty or under Article
8 of the U.S.-Denmark Income Tax Treaty, we will be subject to U.S. federal income taxation, in the manner discussed below, to the
extent our shipping income is considered for U.S. federal income tax purposes to be derived from sources within the U.S.
Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end in the U.S., will be
considered for U.S. federal income tax purposes to be 50% derived from sources within the U.S. Shipping income attributable to
transportation that both begins and ends in the U.S. will be considered to be 100% derived from sources within the U.S. We are not
permitted by law to engage in transportation that gives rise to 100% U.S. source shipping income.
Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources
outside the U.S. Shipping income derived from sources outside the U.S. will not be subject to any U.S. federal income tax.
We do not expect that we or our subsidiaries to qualify for exemption from tax under Section 883 of the Code, although we and our
subsidiaries may qualify in the future if there is a change in our capital structure. See below for a discussion of the requirements for
qualification under Section 883.
We and/or one or more of our subsidiaries (collectively referred to as “we” for purposes of this paragraph) may qualify for exemption
from tax under the terms of the U.S.-United Kingdom Income Tax Treaty or U.S.-Denmark Income Tax Treaty. Whether we so qualify
depends, among other things, on whether we satisfy the Limitation on Benefits article of the applicable U.S. income tax treaty. In
particular, we would generally satisfy the Limitation on Benefits article if we can establish that we are engaged in the active conduct of
a trade or business in the United Kingdom or Denmark, whichever is applicable, our U.S. source shipping income is derived in
connection with, or is incidental to, such trade or business, and such trade or business activity in the applicable treaty jurisdiction is
substantial in relation to our trade or business activity in the U.S.. Additionally, we may also be able to satisfy the Limitation on
Benefits article of the U.S.-Denmark Income Tax Treaty if we can establish that our principal class of shares is regularly traded on a
recognized stock exchange, such as Nasdaq Copenhagen, and either (i) primarily traded on a recognized stock exchange located in
Denmark, or (ii) our primary place of management and control is in Denmark, our country of residence. For this purpose, our Class A
common shares would generally be considered our primary class of shares if the Class A common shares represent more than 50% of
the voting power and value of the Company. Additionally for this purpose, our Class A common shares would be treated as regularly
traded if the Class A common shares are traded in more than de minimis quantities each quarter, and if the aggregate number of Class A
common shares traded during the prior taxable year is at least 6% of the average number of Class A common shares during such prior
taxable year. Given the legal and factual uncertainties in making the foregoing determination, there can be no assurance that we will
qualify for exemption from tax under a U.S. federal income tax treaty, or that the IRS or a court of law will agree with our determination
in this regard.
Exemption Under Section 883 of the Code
Under Section 883 of the Code and the Treasury Regulations promulgated thereunder, or Section 883, we and each of our subsidiaries
that derives U.S. source shipping income will qualify for exemption from U.S. federal income tax under Section 883 in respect of such
shipping income if, in relevant part:
•we and each such subsidiary is organized in a “qualified foreign country” which, as defined, is a foreign country that grants
an equivalent exemption from tax to corporations organized in the U.S. in respect of the shipping income for which
exemption is being claimed under Section 883, which we refer to as the “country of organization requirement”; and either
•more than 50% of the value of our stock is owned actually or constructively under specified attribution rules by “qualified
shareholders” (which as defined includes, among other things, individuals who are “residents” of qualified foreign countries
and corporations that are organized in qualified foreign countries and meet the Publicly-Traded Test discussed immediately
below), which we refer to as the “50% Ownership Test,” or
•our stock is “primarily” and “regularly” traded on an “established securities market” in our country of organization, in
another country that grants an “equivalent exemption” to U.S. corporations or in the U.S., which we refer to as the “Publicly-
Traded Test”.
As the IRS has recognized the United Kingdom, our country of incorporation, and each of the countries of incorporation of our
subsidiaries, including Denmark, as a qualified foreign country in respect of the shipping income for which exemption is being claimed
under Section 883, we and each of our subsidiaries satisfy the country of organization requirement. Therefore, each of our subsidiaries
will be exempt from U.S. federal income tax with respect to our U.S. source shipping income if we satisfy either the “50% Ownership
Test” or the “Publicly-Traded Test” and certain substantiation and reporting requirements are met, thereby allowing each of our
subsidiaries to satisfy the 50% Ownership Test. We do not anticipate to satisfy the 50% Ownership Test. Our ability to satisfy the
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Publicly-Traded Test is discussed below, and if we satisfy the Publicly-Traded Test, each of our subsidiaries can satisfy the 50%
Ownership Test since each would be owned by a qualified shareholder for such purposes.
The Treasury Regulations provide, in pertinent part, that a class of stock of a foreign corporation will be considered to be “primarily
traded” on an established securities market in a country (such as Nasdaq Copenhagen) if the exchange is designated under a Limitations
on Benefits article in a U.S. income tax treaty, and if the number of shares of such class of stock that are traded during any taxable year
on all established securities markets in that country exceeds the number of shares of such class that are traded during that taxable year
on established securities markets in any other single country. Currently, our shares are primarily traded on Nasdaq Copenhagen for
purposes of the “primarily traded” test, although this may change in future years.
The Treasury Regulations provide further that stock of a foreign corporation will be considered to be “regularly traded” on an
established securities market only if: (i) one or more classes of stock of the corporation that, in the aggregate, represents more than 50%
of the stock of the corporation, by voting power and value, is listed on such established securities market, (ii) each such class of stock is
traded on such established securities market, other than in de minimis quantities, on at least 60 days during the taxable year, and (iii) the
aggregate number of shares of such stock traded on such established securities market is at least 10% of the average number of shares of
such stock outstanding during such taxable year. Even if this were not the case, the Treasury Regulations provide that the trading
frequency and trading volume tests will be deemed satisfied with respect to a class of stock that is traded on an established securities
market in the U.S. if such stock is regularly quoted by dealers making a market in such stock. Although we have a class of stock that is
listed on the Nasdaq New York, an established securities market in the U.S., we do not anticipate satisfying the requirement that our
stock be “regularly traded” on an established securities market under the quantitative testing rules.
Even if our common stock was considered to be “regularly traded” on an established securities market, the Treasury Regulations
provide, in pertinent part, that a class of stock of a foreign corporation will not be considered to be “regularly traded” on an established
securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class of stock are
owned, within the meaning of the Treasury Regulations, on more than half the days during such taxable year by persons who each own
5% or more of the vote and value of the outstanding shares of such class of stock, which persons we refer to as “5% shareholders” and
the rule as the “5% override rule”.
For purposes of identifying our 5% shareholders, we are permitted to rely on Schedule 13G and Schedule 13D filings with the SEC.
Even if our stock was considered “regularly traded” on an established securities market, we believe the 5% override rule would have
been triggered and that we would not be able to rely on Section 883 for exemption from U.S. federal income taxation on our U.S. source
shipping income.
Therefore, if we cannot qualify for benefits under an applicable U.S. income tax treaty, we would be subject to U.S. taxation on our U.S.
source shipping income. We intend to take the position that we qualify for benefits of the U.S.-U.K. income tax treaty for purposes of
Section 883. Therefore, we expect to be exempt from U.S. federal income taxation on U.S. source shipping income.
U.S. Federal Income Taxation in the Absence of Section 883 or Treaty Exemption
4% Gross Basis Tax Regime. To the extent the benefits of Section 883 or an applicable U.S. income tax treaty are unavailable, our U.S.
source shipping income which is not considered to be “effectively connected” with the conduct of a U.S. trade or business, as discussed
below, would be subject to a 4% U.S. federal income tax imposed by Section 887 of the Code on a gross basis, without the benefit of
deductions, which we refer to as the “4% gross basis tax regime”. As under the sourcing rules described above, no more than 50% of
our shipping income would be treated as derived from U.S. sources, the maximum effective rate of U.S. federal income tax on our
shipping income should never exceed 2% under the 4% gross basis tax regime.
Net Basis and Branch Tax Regimes. To the extent the benefits of Section 883 or an applicable U.S. income tax treaty are unavailable
and the U.S. source shipping income of a subsidiary is considered to be “effectively connected” with the conduct of a U.S. trade or
business, as discussed below, any such “effectively connected” U.S. source shipping income, net of applicable deductions, would be
subject to the U.S. federal income tax currently imposed at the corporate rate of 21%. In addition, such subsidiary may be subject to the
U.S. branch profits tax, at a rate of 30% or such lower rate as may be provided by an applicable U.S. income tax treaty, on earnings
“effectively connected” with the conduct of such U.S. trade or business, as determined after allowance for certain adjustments, and on
certain interest paid or deemed paid attributable to the conduct of a relevant subsidiary’s U.S. trade or business
U.S. source shipping income will be considered “effectively connected” with the conduct of a U.S. trade or business only if:
•we have, or are considered to have, a fixed place of business in the U.S. involved in the earning of shipping income; and
•substantially all of our U.S. source shipping income is attributable to regularly scheduled transportation, such as the operation
of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages
that begin or end in the U.S..
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We do not intend to have, or permit circumstances that would result in having, substantially all of our U.S. source shipping income be
attributable to regularly scheduled transportation. Based on the foregoing and on the expected mode of our shipping operations, we
expect that none of our U.S. source shipping income will be “effectively connected” with the conduct of a U.S. trade or business.
U.S. Taxation of Gain on Sale of Vessels.
Regardless of whether we qualify for exemption under Section 883 of the Code or the applicable U.S. income tax treaty, we do not
expect to be subject to U.S. federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to
occur outside of the U.S. under U.S. federal income tax principles. In general, a sale of a vessel will be considered to occur outside of
the U.S. for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the U.S.. It is
expected that any sale of a vessel by us will be considered to occur outside of the U.S..
U.S. Tonnage Tax Regime
TORM Tanker Corporation has elected to be treated under the tonnage tax regime in the U.S. with respect to its income derived from
qualifying shipping activities based on the net tonnage of the corporation’s qualifying U.S. flagged vessels.
Pursuant to this regime, TORM’s vessel-owning corporation in the U.S. will be subject to U.S. tax based predominantly upon the net
tonnage of the vessels rather than income generated from operating the vessels (i.e., operating income). Based upon the net tonnage of
our current U.S. vessels and the applicable rate of taxation, our U.S. subsidiary is expected to be liable for approximately $13,000 of
U.S. tonnage tax for the year ended December 31, 2025.
In the event that tonnage tax schemes or other tax laws are changed in the future, our overall tax burden could increase, which could
have a material adverse effect on our future performance, results of operations, cash flows and financial position.
U.S. Federal Income Taxation of U.S. Holders
As used herein, the term “U.S. Holder” means a beneficial owner of our common shares that is a U.S. citizen or resident for U.S. federal
income tax purposes, a U.S. corporation or other U.S. entity taxable as a corporation, an estate, the income of which is subject to U.S.
federal income taxation regardless of its source, or a trust if (i) a court within the U.S. is able to exercise primary jurisdiction over the
administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust
has a valid election in effect to be treated as a U.S. person.
If a partnership holds our common shares, the U.S. federal income tax treatment of a partner will generally depend upon the status of the
partner and upon the activities of the partnership. If you are a partner in a partnership holding our common shares, you are encouraged
to consult your own tax advisor.
Distributions
Subject to the discussion of PFICs below, any distributions made by us with respect to our common shares to a U.S. Holder will
generally constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income
tax principles.
Dividends paid with respect to our common shares to a U.S. Holder that is an individual, trust or estate, which we refer to as a “U.S.
Individual Holder”, may be eligible for preferential U.S. federal income tax rates provided that (1) we are a “qualified foreign
corporation”, (2) the U.S. Individual Holder has owned our common shares for more than 60 days during the 121-day period beginning
60 days before the date on which our common shares become ex-dividend, (3) we are not a PFIC for the taxable year of the dividend or
the immediately preceding taxable year (which we do not believe we are, have been or will be) and (4) the U.S. Individual Holder is not
under an obligation to make related payments with respect to positions in substantially similar or related property.
We will be treated as a “qualified foreign corporation” if we qualify for benefits of a comprehensive income tax treaty to which the U.S.
is a party, such as the U.S.-U.K. Income Tax Treaty or the U.S.-Denmark Income Tax Treaty, or if our common shares are readily
tradable on an established securities market in the U.S.. We believe we qualify for the benefits of the U.S.-U.K. Income Tax Treaty or
the U.S.-Denmark Income Tax Treaty, both of which are comprehensive income tax treaties, and our common shares are readily
tradable on an established securities market in the U.S. because they are listed on Nasdaq New York. Therefore, we believe that any
dividends paid by us to a U.S. Individual Holder on our common shares are eligible for these preferential rates. Any dividends paid by
us which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Holder.
Distributions in excess of our current and accumulated earnings and profits will be treated first as a non-taxable return of capital to the
extent of the U.S. Holder’s tax basis in its common shares on a dollar-for-dollar basis and thereafter as capital gain. U.S. Holders that
are corporations will generally not be entitled to claim a dividend received deduction with respect to any distributions they receive from
us. Dividends paid on our common shares will generally be treated as “passive category income” or, in the case of certain types of U.S.
Holders, “general category income”, for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.
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Special rules may apply to any “extraordinary dividend” — generally, a dividend in an amount which is equal to or in excess of 10% of
a shareholder’s adjusted basis (or fair market value in certain circumstances) or dividends received within a one-year period that, in the
aggregate, equal or exceed 20% of a shareholder’s adjusted tax basis (or fair market value upon the shareholder’s election) in a share of
our common stock — paid by us. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend
income”, then any loss derived by a non-corporate U.S. holder from the sale or exchange of such common shares will be treated as long-
term capital loss to the extent of such dividend.
Dividends will be generally included in the income of U.S. Holders at the U.S. dollar amount of the dividend (including any non-U.S.
taxes withheld therefrom), based upon the exchange rate in effect on the date of the distribution. In the case of foreign currency received
as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the
foreign currency equal to its U.S. dollar value on the date of receipt. Any gain or loss recognized upon a subsequent sale or other
disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. However, an individual
whose realized foreign exchange gain does not exceed U.S. $200 will not recognize that gain, to the extent that there are not expenses
associated with the transaction that meet the requirement for deductibility as a trade or business expense (other than travel expenses in
connection with a business trip or as an expense for the production of income).
Sale, Exchange or other Disposition of Our Common Shares
Subject to the discussion of PFIC status below, a U.S. Holder will generally recognize taxable gain or loss upon a sale, exchange or
other disposition of our common shares in an amount equal to the difference between the amount realized by the U.S. Holder from such
sale, exchange or other disposition and the U.S. Holder’s adjusted tax basis in the common shares. A U.S. Holder’s adjusted tax basis in
its common shares generally will be the U.S. Holder’s purchase price for the common shares, reduced (but not below zero) by the
amount of any distribution on such common shares that was treated as a nontaxable return of capital to such U.S. Holder. Such gain or
loss will be capital gain or loss and will be treated as long-term capital gain or loss if the U.S. Holder’s holding period in the common
shares is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as
U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject
to certain limitations.
If the sale of our common shares is subject to withholding or other foreign taxes, such as a non-resident capital withholding tax, it is
possible that the foreign taxes may not be creditable, but instead be deductible if the taxpayer itemizes his or her deductions. Investors
should consult their tax advisors in this regard.
Passive Foreign Investment Company Status and Significant U.S. Federal Income Tax Consequences
Special U.S. federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a PFIC, for U.S.
federal income tax purposes. In general, a foreign corporation will be treated as a PFIC with respect to a U.S. shareholder in such
foreign corporation if, for any taxable year in which such shareholder holds stock in such foreign corporation, either:
•at least 75% of the corporation’s gross income for such taxable year consists of passive income (for example dividends,
interest, capital gains and rents derived from other than in the active conduct of a rental business), or
•at least 50% of the average value of the assets held by the corporation during such taxable year produces, or is held for the
production of, passive income, which we refer to as “passive assets”.
For purposes of determining whether we are a PFIC, cash will generally be treated as an asset held for the production of passive income.
Income earned or deemed earned by us in connection with the performance of services would not constitute passive income. By
contrast, rental income would generally constitute passive income unless we are treated under specific rules as deriving the rental
income in the active conduct of a rental business. Also, for purposes of determining whether we are a PFIC, we will be treated as
owning our proportionate share of the assets and as receiving directly our proportionate share of the income of any corporation in which
we own at least 25% by value of the stock of such corporation.
Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a PFIC with respect
to any taxable year. Although there is no legal authority directly on point, our belief is based principally on the position that, for
purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering and
voyage chartering activities of us and our subsidiaries should constitute active income from the performance of services rather than
passive, rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our subsidiaries
own and operate in connection with the production of such income, in particular the vessels, should not constitute passive assets for
purposes of determining whether we are a PFIC. We anticipate that substantially all of our gross income will be derived from time and
voyage charters and the performance of services directly related thereto, and that substantially all of the vessels in our fleet will be
engaged in such activities.
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We believe there is substantial legal authority supporting our position consisting of the Code, legislative history, case law and IRS
pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other
tax purposes. However, there is no direct legal authority under the PFIC rules addressing our specific method of operation, and there is
authority which characterizes time charter income as rental income rather than services income for other tax purposes. In the absence of
any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position.
In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year,
we cannot assure that the nature or extent of our operations, or the composition of our income or assets, will not change and that we will
not become a PFIC in the future.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different U.S.
federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a “Qualified Electing Fund”, which
election we refer to as a “QEF election”. As an alternative to making a QEF election, a U.S. Holder should be able to make a “mark-to-
market” election with respect to our common shares, as discussed below.
If we were to be treated as a PFIC for any taxable year, a U.S. Holder would also be subject to special U.S. federal income tax rules in
respect of such U.S. Holder’s indirect interest in any of our subsidiaries that are also treated as PFICs. Such a U.S. Holder would be
permitted to make a QEF election in respect of any such subsidiary, as long as we timely provide the information necessary for such
election, which we currently intend to do in such circumstances, but such a U.S. Holder would not be permitted to make a mark-to-
market election in respect of such U.S. Holder’s indirect interest in any such subsidiary. In addition, if we were to be treated as a PFIC
for any taxable year, and a U.S. Holder actually or constructively own common shares that exceed certain thresholds, a U.S. Holder
would be required to file a Form 8621 with its U.S. federal income tax return for that year with respect to such Holder’s common shares.
Substantial penalties apply to any failure to timely file a Form 8621, unless the failure is shown to be due to reasonable cause and not
due to willful neglect. Also, in the event that a U.S. Holder is required to file a Form 8621 and does not do so, the statute of limitations
on the assessment and collection of U.S. federal income taxes for such person for the related tax year may not close until three years
after the date that the Form 8621 is filed. The application of the PFIC rules is complicated, and U.S. Holders are encouraged to consult
with their tax advisors regarding the application of such rules in their circumstances.
U.S. Federal Income Taxation of U.S. Holders Making a Timely QEF Election
If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an “Electing Holder”, the Electing Holder must report
each year for U.S. federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if any, for our taxable
year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received by the
Electing Holder with respect to its commons shares. No portion of such inclusions of ordinary earnings will be entitled to the
preferential U.S. federal income tax rates applicable to certain dividends discussed above. Net capital gain inclusions of certain non-
corporate U.S. holders may be eligible for preferential capital gains rates. The Electing Holder’s adjusted tax basis in the common
shares will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been
previously taxed will result in a corresponding reduction in the adjusted tax basis in the common shares and will not be taxed again once
distributed. An Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses that we incur with
respect to any taxable year. An Electing Holder can generally recognize capital gain or loss on the sale, exchange or other disposition of
our common shares. A U.S. Holder would make a QEF election with respect to any taxable year that our company is a PFIC by filing an
IRS Form 8621 with his U.S. federal income tax return. If we became aware that we were to be treated as a PFIC for any taxable year,
we would provide each U.S. Holder with all necessary information in order to make the QEF election described above. A U.S. Holder
who is treated as constructively owning shares in any of our subsidiaries which are treated as PFICs would be required to make a
separate QEF election with respect to each such subsidiary when we are a PFIC.
U.S. Federal Income Taxation of U.S. Holders Making a “Mark-to-Market” Election
Alternatively, if we were to be treated as a PFIC for any taxable year and our common shares are treated as “marketable stock”, as we
believe will be the case, a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our common shares,
provided the U.S. Holder completes and files an IRS Form 8621 in accordance with the relevant instructions and related Treasury
Regulations. If that election is made, the U.S. Holder would generally include as ordinary income in each taxable year the excess, if any,
of the fair market value of the common shares at the end of the taxable year over such Holder’s adjusted tax basis in the common shares.
The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in the
common shares over its fair value at the end of the taxable year, but only to the extent of the net amount previously included in income
as a result of the mark-to-market election. A U.S. Holder’s tax basis in its common shares would be adjusted to reflect any such income
or loss amount. Gain realized on the sale, exchange or other disposition of our common shares would be treated as ordinary income, and
any loss realized on the sale, exchange or other disposition of the common shares would be treated as ordinary loss to the extent that
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such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder. A mark-to-market election
would likely not be available for any of our subsidiaries that are treated as PFICs.
U.S. Federal Income Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election
Finally, if we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a QEF election or a “mark-to-
market” election for that year, whom we refer to as a “Non-Electing Holder,” would be subject to special rules with respect to (1) any
excess distribution (i.e. the portion of any distributions received by the Non-Electing Holder on our common shares in a taxable year in
excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if
shorter, the Non-Electing Holder’s holding period for the common shares) and (2) any gain realized on the sale, exchange or other
disposition of our common shares. Under these special rules:
•the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the
common shares;
•the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary
income and would not be entitled to the preferential U.S. federal income tax rates applicable to certain dividends discussed
above; and
•the amount allocated to each of the other taxable years would be subject to tax at the highest rate in effect for the applicable
class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the
resulting tax attributable to each such other taxable year.
These adverse U.S. federal income tax consequences would not apply to a pension or profit sharing trust or other tax-exempt
organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of our common shares. If a Non-
Electing Holder who is an individual dies while owning our common shares, such Holder’s successor would generally not receive a
step-up in tax basis with respect to such common shares.
U.S. Federal Income Taxation of “Non-U.S. Holders”
A beneficial owner of our common shares that is not a U.S. Holder (and not an entity treated as a partnership) is referred to herein as a
“Non-U.S. Holder”.
Distributions
Non-U.S. Holders will generally not be subject to U.S. federal income tax or withholding tax on dividends received with respect to our
common shares, unless the dividends are “effectively connected” with the Non-U.S. Holder’s conduct of a trade or business in the U.S.
or, if the Non-U.S. Holder is entitled to the benefits of an applicable U.S. income tax treaty with respect to those dividends, those
dividends are attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.
Sale, Exchange or Other Disposition of Common Shares
Non-U.S. Holders will generally not be subject to U.S. federal income tax or withholding tax on any gain realized upon the sale,
exchange or other disposition of our common shares unless: (i) the gain is “effectively connected” with the Non-U.S. Holder’s conduct
of a trade or business in the U.S. or, if the Non-U.S. Holder is entitled to the benefits of an applicable U.S. income tax treaty with
respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S. or (ii) the Non-
U.S. Holder is an individual who is present in the U.S. for 183 days or more during the taxable year of disposition and other conditions
are met.
If the Non-U.S. Holder is engaged in a U.S. trade or business for U.S. federal income tax purposes, the income from the common
shares, including dividends on the underlying common shares and the gain from the sale, exchange or other disposition of the common
shares that is “effectively connected” with the conduct of that U.S. trade or business, will generally be subject to U.S. federal income tax
in the same manner as discussed in the previous section relating to the U.S. federal income taxation of U.S. Holders. In addition, in the
case of a corporate Non-U.S. Holder, such Non-U.S. Holder’s earnings and profits that are attributable to the “effectively connected”
income, subject to certain adjustments, may be subject to an additional U.S. federal branch profits tax at a rate of 30% or at a lower rate
as may be specified by an applicable U.S. income tax treaty.
Backup Withholding and Information Reporting
In general, dividend payments, or other taxable distributions, and payment of the gross proceeds on a sale or other disposition of our
common shares, made within the U.S. to you will be subject to information reporting requirements. In addition, such payments will be
subject to “backup withholding” if you are a non-corporate U.S. Holder and you:
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•fail to provide an accurate taxpayer identification number;
•are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal
income tax returns; or
•in certain circumstances, fail to comply with applicable certification requirements.
Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their
status on an appropriate IRS Form W-8.
If you sell your common shares to or through a U.S. office of a broker, the payment of the proceeds is subject to both U.S. backup
withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise
establish an exemption. If you sell your common shares through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid
to you outside the U.S., then information reporting and backup withholding will generally not apply to that payment. However, U.S.
information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, including a payment made
to you outside the U.S., if you sell your common shares through a non-U.S. office of a broker that is a U.S. person or has some other
contacts with the U.S.
Backup withholding is not an additional tax. Rather, you may generally obtain a refund of any amounts withheld under backup
withholding rules that exceed your U.S. federal income tax liability by filing a refund claim with the IRS.
Individuals who are U.S. Holders (and to the extent specified in the applicable Treasury Regulations, certain individuals who are Non-
U.S. Holders and certain U.S. entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code and the
applicable Treasury Regulations) are required to file an IRS Form 8938 (Statement of Specified Foreign Financial Assets) with
information relating to each such asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time
during the taxable year or $50,000 on the last day of the taxable year. Substantial penalties apply to any failure to timely file an IRS
Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, the statute of
limitations on the assessment and collection of U.S. federal income tax with respect to a taxable year for which the filing of an IRS
Form 8938 is required may not close until three years after the date on which the IRS Form 8938 is filed. Specified foreign financial
assets would generally include our common shares, unless the common shares are held in an account maintained by a U.S. “financial
institution” (as defined in Section 6038D of the Code). U.S. Holders (including U.S. entities) and Non-U.S. Holders are encouraged to
consult their own tax advisors regarding their reporting obligations under Section 6038D of the Code.
Danish Tax Considerations
The following is a summary of certain Danish tax considerations relating to an investment in TORM plc. The summary describes the
Danish tax implications pertaining to dividends paid from TORM A/S to TORM plc, and a sale of Class A common shares by TORM
plc.
The summary does not purport to constitute exhaustive tax or legal advice. It is specifically to be noted that the summary does not
address all possible tax consequences relating to an investment in the shares of TORM plc. The summary is based solely upon the tax
laws of Denmark in effect on the date of this annual report. Danish tax laws may be subject to changes, which could change the future
taxation.
Changes in Global Tax Laws
Long-standing international tax initiatives that determine each country’s jurisdiction to tax cross-border international trade and profits
are evolving as a result of, among other things, initiatives such as the Anti-Tax Avoidance Directives, as well as the Base Erosion and
Profit Shifting reporting requirements, mandated and/or recommended by the European Union, G8, G20 and Organization for Economic
Cooperation and Development, including the imposition of a minimum global effective tax rate for multinational businesses regardless
of the jurisdiction of operation and where profits are generated (Pillar Two). As these and other tax laws and related regulations change
(including changes in the interpretation, approach and guidance of tax authorities), our financial results could be materially impacted.
Given the unpredictability of these possible changes and their potential interdependency, it is difficult to assess whether the overall
effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow, but such changes could
adversely affect our financial results.
On December 12, 2022, the EU member states agreed to implement the OECD’s Pillar Two global corporate minimum tax rate of 15%
on companies with revenues of at least €750 million effective from 2024. Various countries, including the United Kingdom, have either
adopted implementing legislation or are in the process of drafting such legislation. Any new tax law in a jurisdiction where we conduct
business or pay tax could have a negative effect on our company.
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Sale of Class A common shares by TORM plc
Shareholders not resident in Denmark will normally not be subject to Danish tax on gains realized on the sale of shares, irrespective of
the ownership period and equity interest. However, Danish anti-avoidance rules should be observed as these rules may, if certain
conditions are met, result in a requalification of tax-exempt capital gains into dividends, which could trigger Danish withholding taxes.
These rules could apply in a number of situations, such as in connection with a related party sale of shares against cash and in unrelated
third-party transactions in connection with the transfer of shares to a new holding company (controlled by a third party) against shares
and cash. For example, this could be the case, if dividends from TORM A/S cannot be received tax exempt by TORM plc. The rules
should only apply to intra-group transactions as well as situations where TORM plc or a group-related company receives an ownership
share in the group acquiring the shares in TORM A/S.
Dividends distributed to the holders of Class A common shares of TORM A/S to TORM plc
Under Danish tax law, dividends paid on shares in a Danish company to a foreign company are normally subject to dividend
withholding tax of 27%. However, the foreign company receiving the dividends will as a main rule be subject to a final Danish
withholding tax of 22% provided the recipient files certain documentation and reclaims the excess tax from the Danish tax authorities.
Dividends paid on shares in a Danish company are as a starting point exempt from Danish withholding tax when the foreign receiving
company owns at least 10% of the Danish distributing company, the foreign receiving company is tax resident in a state which has a tax
treaty with Denmark, or is covered by the Parent-Subsidiary Directive and the Danish taxation should be reduced or eliminated in
accordance with a tax treaty or the Parent-Subsidiary Directive between Denmark and the state in which the receiving company is
domiciled.
When considering whether a tax treaty or the Parent-Subsidiary Directive can be applied (thereby enabling exemption from Danish
withholding taxes on dividend distributions), the Danish tax authorities do consider a number of other criteria, including whether the
foreign receiving company is the beneficial owner, and whether the structure can be challenged based on general anti-avoidance rules
introduced in 2015, as subsequently amended.
In recent years, the Danish tax authorities have focused on the issue of beneficial ownership, with a number cases being decided by the
Danish Supreme Court on how the term “beneficial ownership” should be determined. The courts and the Danish tax authorities are, in
their approach, not specifically focused on substance but are generally focusing on actual flows of funds. Consequently, the Danish tax
authorities might, depending on the specific flow of funds, treat even intermediary non-Danish holding companies that have significant
substance as conduit companies for Danish tax purposes. During a potential audit, the Danish tax authorities are, therefore, likely to
assess the beneficial ownership based on whether dividends received by an intermediary holding company from a Danish entity have
been re-routed up the ownership chain as e.g., dividends, interest or other contributions or considerations (i.e., the character of the funds
flow is not necessarily a primary concern).If these conditions for exemption are not fulfilled, Danish withholding tax of 27%
(potentially reduced to 22%) will be triggered on such dividend distributions from TORM A/S.
Share transfer tax and stamp duties
No Danish share transfer tax or stamp duties are payable on direct or indirect transfer of the shares of TORM A/S.
United Kingdom Tax Considerations
The following statements do not constitute tax advice and are intended only as a general guide to current United Kingdom law and HM
Revenue and Customs, or HMRC, published practice, which may not be binding on HMRC, as of the date of this document (which are
both subject to change at any time, possibly with retrospective effect). They relate only to certain limited aspects of the United Kingdom
tax treatment of the beneficial owners of the Class A common shares. They are intended to apply only to shareholders who are resident
only in the United Kingdom for United Kingdom tax purposes (unless the context requires otherwise) and, if individuals, who are
domiciled in the United Kingdom and to whom split-year treatment does not apply. The statements below only relate to persons who are
and will be the absolute beneficial owners of the Class A common shares and who hold, and will hold, the Class A common shares
through the Depository Trust Company as investments (and not as securities to be realized in the course of a trade). The statements
below are not exhaustive and may not apply to certain shareholders, such as dealers in securities, broker dealers, insurance companies
and collective investment schemes, shareholders who are exempt from taxation, shareholders who hold their shares through an
Individual Savings Account or a Self-Invested Personal Pension and shareholders who have (or are deemed to have) acquired the Class
A common shares by virtue of an office or employment. Such persons may be subject to special rules. This summary does not address
any inheritance tax considerations.
Prospective purchasers of the Class A common shares who are in any doubt as to their tax position should consult an appropriate
professional adviser.
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Taxation of Dividends
General
TORM plc is not required to make any withholding or deduction for or on account of United Kingdom tax in respect of dividends on the
Class A common shares, irrespective of whether the shareholder receiving the dividend is resident in or outside the United Kingdom.
Individual Shareholders
United Kingdom resident individual Shareholders may be subject to income tax on dividends they receive from the Company. The first
£500 of dividend income that the United Kingdom resident individuals receive in each tax year is taxed at a rate of 0%, or the Nil Rate
Amount.
Dividend income that is within the Nil Rate Amount counts towards an individual’s basic or higher rate limits – and will therefore affect
the taxation of other income received and any capital gains realized by the individual in the tax year. It may also affect the level of
savings allowance to which they are entitled. In calculating into which tax band any dividend income over the Nil Rate Amount falls,
dividend income is treated as the “top slice” of an individual’s income.
Any dividend income received by a United Kingdom resident individual Shareholder in excess of the Nil Rate Amount will be subject
to income tax at a rate of 8.75%, to the extent that it is within the basic rate band, 39.35%, to the extent that it is within the higher rate
band and 38.1%, to the extent that it is within the additional rate band.
Corporate Shareholders
Shareholders within the charge to United Kingdom corporation tax which are “small companies” (for the purposes of United Kingdom
taxation of dividends) will generally not expect to be subject to tax on dividends from the Company. A “small company” for the
purposes of United Kingdom taxation of dividends means broadly a company that is a micro or small enterprise as defined in the Annex
to Commission Recommendation 2003/361/EC of May 6, 2003 subject to certain exceptions.
Other shareholders within the charge to United Kingdom corporation tax will not be subject to tax on dividends from the Company as
long as the dividends fall within an exempt class and certain conditions are met. For example: dividends paid to companies holding less
than 10% of the issued share capital of the payer (or any class of that share capital, which here refers to the Class A common shares) are
generally dividends that fall within an exemption in respect of “portfolio holdings” (subject to other conditions being met and the
application of relevant anti-avoidance rules). Other exemptions may also apply (subject to the applications of relevant anti-avoidance
rules).
Shareholders Resident outside the United Kingdom
Where a shareholder resident for tax purposes outside the United Kingdom carries on a trade, profession or vocation in the United
Kingdom and the dividends are a receipt of that trade or, in the case of corporation tax, the Class A common shares are held by or for a
United Kingdom permanent establishment through which a trade is carried on, the shareholder may be liable to United Kingdom tax on
dividends paid by the Company.
Taxation of Chargeable Gains
Individual Shareholders
A disposal of the Class A common shares may give rise to a chargeable gain (or allowable loss) for the purposes of United Kingdom
capital gains tax, depending on the circumstances and subject to any available exemption or relief. The rate of capital gains tax in
respect of shareholdings is 18% for individuals who are subject to income tax at the basic rate and 24% to the extent that an individual’s
chargeable gains, when aggregated with his or her income chargeable to income tax, exceed the basic rate band for income tax purposes.
An individual shareholder is entitled to realize an exempt amount of gains (£3,000 in the 2024/25 tax year) in each tax year without
being liable to tax.
A shareholder who is an individual and who has ceased to be resident in the United Kingdom for taxation purposes (or has become
treated as resident outside the United Kingdom for the purposes of a double tax treaty (‘‘Treaty non-resident’’)) for a period of five tax
years or shorter, and who disposes of the Class A common shares during that period may in some circumstances also be liable, on his or
her return to the United Kingdom, to United Kingdom capital gains tax on that gain, subject to any available exemptions or reliefs.
Corporate Shareholders
Where a shareholder is within the charge to United Kingdom corporation tax, including cases where it is not resident (for tax purposes)
in the United Kingdom, a disposal of the Class A common shares may give rise to a chargeable gain (or allowable loss) for the purposes
of United Kingdom corporation tax at (typically) a rate of 25% (though some companies pay different rates), depending on the
83
circumstances and subject to any available exemption or relief. Indexation allowance may reduce the amount of chargeable gain on
shares obtained prior to 2018, but may not create or increase any allowable loss. Special rules may apply to match disposals with
multiple acquisitions of the Class A common shares.
Shareholders Resident outside the United Kingdom
A shareholder that is not resident in the United Kingdom (and, in the case of an individual, is not temporarily non-resident) for United
Kingdom tax purposes, and whose Class A common shares are not held in connection with carrying on a trade, profession or vocation in
the United Kingdom will generally not be subject to United Kingdom tax on chargeable gains on the disposal of the Class A common
shares.
Stamp Duty and Stamp Duty Reserve Tax, or SDRT
The comments in this section relating to stamp duty and SDRT apply whether or not a shareholder is resident or domiciled in the United
Kingdom. Special rules may apply to shareholders such as market makers, brokers, dealers and intermediaries.
Following the European Court of Justice decision in HSBC Holdings Plc and Vidacos Nominees Ltd v The Commissioners for Her
Majesty’s Revenue & Customs (C-569/07) and the First-tier Tax Tribunal decision in HSBC Holdings Plc and The Bank of New York
Mellon Corporation v The Commissioners for Her Majesty’s Revenue & Customs (TC/2009/16584), HMRC has confirmed that 1.5%
SDRT is no longer payable on new shares issued into a clearance service or depositary receipt system, nor on transfers to a clearance
service or depositary receipt system where such transfers are integral to the raising of new capital. Following the United Kingdom’s exit
from the European Union, the United Kingdom government amended the relevant sections of the Finance Act 1986, as part of the
Finance Act 2024, in order to prevent the 1.5% charge from taking effect when depositary receipts are issued or transferred as part of
qualifying arrangements to raise new capital. We recommend that advice is sought before any payment of the 1.5% charge is made.
No stamp duty should be payable on the acquisition or transfer of the beneficial ownership of the Class A common shares held by a
nominee for a person whose business is or includes the provision of clearance services where that acquisition or transfer is settled within
the clearance service and there is no physical instrument of transfer. An agreement for the transfer of such Class A common shares
should also not give rise to a SDRT liability, provided that no election has been made under section 97A of the United Kingdom
Finance Act 1986 which is applicable to such Class A common shares. We understand that no such election has been made by the
Depository Trust Company as with respect to the Class A common shares.
Any instrument of transfer of the Class A common shares that are not held by a nominee for a person whose business is or includes the
provision of clearance services will generally attract stamp duty at a rate of 0.5% of the amount or value of the consideration for the
transfer (rounded up, if necessary, to the next multiple of £5). No stamp duty is chargeable on an instrument transferring shares where
the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected by the
instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds £1,000. An
unconditional agreement for such transfer, or a conditional agreement which subsequently becomes unconditional, will also generally be
liable to SDRT at the rate of 0.5% of the amount or value of the consideration for the transfer, but such liability will be cancelled if the
agreement is completed by a duly stamped instrument of transfer within six years of the date of the agreement, or if the agreement was
conditional, the date the agreement became unconditional. Where stamp duty is paid, any SDRT previously paid should be repaid on the
making of an appropriate claim generally with interest.
Therefore, a transfer of title in the Class A common shares or an agreement to transfer such shares from within the Depository Trust
Company system out of the Depository Trust Company system, and any subsequent transfers or agreements to transfer outside the
Depository Trust Company system, will generally attract a charge to United Kingdom stamp duty and/or United Kingdom SDRT at a
rate of 0.5% of any consideration. Shareholders should note in particular that a redeposit of the Class A common shares into the
Depository Trust Company system, including by means of a transfer into a depositary receipt system, will generally attract United
Kingdom stamp duty and/or United Kingdom SDRT at the higher rate of 1.5%.
United Kingdom Tonnage Tax Regime
Each of TORM plc and TORM VesselCo UK Ltd. have elected to be subject to the tonnage tax regime in the United Kingdom with
respect to its income derived from qualifying shipping activities based on the net tonnage of the Group’s qualifying Danish-flagged
vessels owned and operated by the United Kingdom companies.
Pursuant to this regime, the Group’s vessel-owning companies in the United Kingdom will be subject to United Kingdom corporation
tax based predominantly upon the net tonnage of the vessels rather than income generated from operating the vessels (i.e., operating
income).
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In the event that tonnage tax schemes or other tax laws are changed in the future, the Company’s overall tax burden could increase,
which could have a material adverse effect on the Group’s future performance, results of operations, cash flows and financial position.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits are
available from http://www.sec.gov. In addition, shareholders may visit the Investors section of our website at www.torm.com or request
a copy of our filings at no cost by writing or telephoning us at the following address:
TORM plc
Tuborg Havnevej 18
DK-2900 Hellerup, Denmark
Tel: +45 39 17 92 00
None of the information contained on our website is incorporated into or forms a part of this annual report.
I. Subsidiary Information
Not applicable.
J. Annual Report to Security Holders
We intend to submit any annual report provided to shareholders in electronic format as an exhibit to a current report on Form 6-K.
Please see “Item 19. Exhibits- Annual Report” for the sections of our Annual Report 2025 that are incorporated by reference into this
annual report.
ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Note 24—"Risks Associated with TORM’s Activities” on pages 191 - 193 of our Annual Report 2025.
ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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PART II
ITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports
under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to the Senior Management Team, including the Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving their objectives.
We carried out an evaluation under the supervision, and with the participation of the Senior Management Team, including our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e) under the Securities Act of 1934) as of December 31, 2025.
Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of December 31, 2025 to provide reasonable assurance that (1) information required to be disclosed by us
in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SEC’s rules and forms, and (2) that such information is accumulated and communicated to the Senior Management Team, including
our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and
procedures can only provide reasonable assurance of achieving their control objectives.
B. Management’s Annual Report on Internal Control Over Financial Reporting
In accordance with Rule 13a-15(f) of the Exchange Act, the Senior Management Team of the Company is responsible for the
establishment and maintenance of adequate internal controls over financial reporting for the Company. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with IFRS as issued by the IASB. The Company’s system of internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as issued by the IASB, and
that receipts and expenditures of the Company are being made only in accordance with authorizations of the Senior Management Team
and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposal of the Company’s assets that could have a material effect on the financial statements. The Senior
Management Team has performed an assessment of the effectiveness of the Company’s internal controls over financial reporting as of
December 31, 2025 based on the provisions of Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO, in 2013. Based on our assessment, the Senior Management Team determined
that the Company’s internal controls over financial reporting were effective as of December 31, 2025.
C. Attestation Report of the Registered Public Accounting Firm
The independent registered public accounting firm that audited the consolidated financial statements, EY Godkendt
Revisionspartnerselskab, has issued an attestation report on the effectiveness of the Company's internal control over financial reporting
as of December 31, 2025, appearing on page F-75 of the financial statements filed as part of this annual report.
D. Changes in Internal Control Over Financial Reporting
There were no significant changes in our internal control over financial reporting during the year that ended December 31, 2025 that
have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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ITEM 16[RESERVED]
ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Mr. Göran Trapp, who serves as the Chairman of our Audit Committee, qualifies as an
“audit committee financial expert” and that he is “independent” in accordance with The Nasdaq Stock Market LLC and SEC rules.
ITEM 16BCODE OF ETHICS
We have adopted a code of ethics, which we refer to as our Business Principles, which applies to all entities in the TORM Group and its
employees (both shore-based and at sea), directors and officers. A copy of the Business Principles is filed herewith as Exhibit 11.1. We
have also posted a copy of our Business Principles on our website at www.torm.com/responsibility/reports-and-policies. None of the
information contained on this website is incorporated into or forms a part of this annual report. We will provide any person, free of
charge with a copy of our Business Principles upon written request to our offices at: Tuborg Havnevej 18, DK-2900 Hellerup, Denmark.
ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company’s principal accountant for 2025 was EY Godkendt Revisionspartnerselskab (PCAOB ID: 1757 ).
Reference is made to Note 6—“Remuneration to Auditors Appointed at the Parent Company’s Annual General Meeting” on page 171
of our Annual Report 2025.
ITEM 16DEXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
During the year ended December 31, 2025, no issuer or affiliate purchases of our equity securities were made.
ITEM 16FCHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16GCORPORATE GOVERNANCE
Pursuant to an exception under Nasdaq New York listing standards available to foreign private issuers, we are not required to comply
with many of the corporate governance practices followed by U.S. companies under the Nasdaq New York listing standards.
Accordingly, we are exempt from many of Nasdaq New York’s corporate governance practices other than the requirements regarding
the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq
New York corporate governance practices and the establishment and composition of an audit committee and a formal written audit
committee charter. In connection with the listing of our Class A common shares on Nasdaq New York, we have certified to Nasdaq
New York that our corporate governance practices are in compliance with, and are not prohibited by, English Law. Set forth below is a
list of the significant differences between our current or potential corporate governance practices and Nasdaq New York standards
applicable to listed U.S. companies.
Independence of Board of Directors. Nasdaq New York requires that a U.S.-listed company maintain a majority of independent
directors. As of December 31, 2025 and as of the date of this annual report, our Board of Directors consists of five directors, two of
which are considered “independent” under Rule 10A-3 promulgated under the Exchange Act and under the rules of Nasdaq New York:
Ms. Annette Justad and Mr. Pär Göran Trapp. Under English law and our Articles of Association, our Board of Directors is not required
to consist of a majority of independent directors. Under the United Kingdom Corporate Governance Code, to which we are subject, a
majority of our Board of Directors is required to be independent. However, the determination of independence is different from Nasdaq
New York standards, and we may choose to deviate from this requirement in the future as long as we explain why we have done so in
our annual report. On January 6, 2026, David Weinstein resigned from the Board of Directors after the Company reached the threshold
required to maintain a Class B common shareholder, resulting in the termination of the Class B common shareholder structure and the
discontinuation of the Class B Director role. In addition, on January 6, 2026, the Board of Directors determined that the threshold date
defined in the Articles (being the first time at which Oaktree and its affiliates ceased to beneficially own at least one third of the issued
shares) occurred. As a direct result, the C-share was redeemed and cancelled following which the C-share right to vote 350,000,000
shares has ceased as from the threshold date.
Remuneration Committee. Nasdaq New York requires that a listed U.S. company have a remuneration committee consisting only of
independent directors. Under English law and our Articles of Association, our Remuneration Committee is not required to consist
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entirely of independent directors. The United Kingdom Corporate Governance Code requires this committee to be comprised of
independent directors and requires the chairman of the Board of Directors not to be the chair of the Remuneration Committee. TORM's
Chairman of the Board of Directors, Mr. Mackenzie Smith, is considered independent and does not chair the Remuneration Committee.
For more information, see “Corporate Governance – Statement of Compliance with the United Kingdom Corporate Governance Code”
on page 124 of our Annual Report 2025.
Audit Committee. Nasdaq New York requires, among other things, that a listed U.S. company have an audit committee comprised of
entirely independent directors under Rule 10A-3 promulgated under the Exchange Act. The United Kingdom Corporate Governance
Code requires an audit committee to be comprised of three, or in the case of smaller companies, two, independent directors, but we may
choose to deviate from this requirement in the future as long as we explain why in our annual report. As of the date of this annual report,
our Audit Committee is comprised of our independent directors following David Weinstein's resignation from the Board of Directors on
January 6, 2026. The Board of Directors considers the present arrangements appropriate and effective for TORM’s needs and will
review the opportunity to appoint an additional independent non‑executive director to the Board of Directors and, subsequently, to the
Audit Committee when suitable candidates are identified.
Executive Sessions. Nasdaq New York requires that the independent directors of a U.S.-listed company have regularly scheduled
meetings, at which only independent directors are present, or executive sessions. The United Kingdom Corporate Governance Code
requires that the Chairman of the Board of Directors hold meetings with non-executive directors without the executives present and that,
led by the senior independent director, the non-executive directors meet without the Chairman present at least annually to appraise the
Chairman’s performance and on such other occasions as necessary.
Shareholder Approval of Securities Issuances. Nasdaq New York requires that a listed U.S. company obtain the approval of its
shareholders prior to issuances of securities in certain circumstances. In lieu of this requirement, we have elected to follow applicable
practices of England and Wales for authorizing issuances of securities, which generally require (i) shareholder approval (a) by ordinary
resolution to grant the directors authority to allot shares and (b) by special resolution to grant the directors authority to allot shares free
of pre-emption rights (which approvals have already been granted by shareholders pursuant to the Company’s shareholders resolutions
dated March 15, 2016, as renewed pursuant to the Company’s shareholders resolutions dated April 15, 2020 and further renewed
pursuant to the Company’s shareholders resolutions dated April 16, 2025), that will apply until the close of business on April 10, 2029;
(ii) board approval; and (iii) in certain circumstances, board approval specific to the Company including pursuant to Articles 8 and 137
of the Company’s Articles of Association, but these practices do not follow additional corporate governance guidelines that would apply
to companies listed on the Main Board of the London Stock Exchange.
Shareholder Approval of Equity Compensation Plans. Nasdaq New York requires that shareholders be given the opportunity to vote on
all equity-compensation plans and material amendments thereto, with limited exceptions for inducement awards, certain grants, plans
and amendments in the context of mergers and acquisitions, and specific types of plans. In lieu of this requirement, we have elected to
follow the applicable practices of England and Wales for authorizing such plans, which do not generally require shareholder approval
(except (i) in certain circumstances not applicable to the Company or (ii) where the issue of shares, or right to subscribe for or
agreement to issue shares, requires further shareholder approval pursuant to applicable law beyond the shareholder approvals currently
existing pursuant to the Company’s shareholder resolutions dated March 15, 2016, subsequently renewed on April 15, 2020 and further
renewed pursuant to the Company’s shareholders resolutions dated April 16, 2025), that will apply until the close of business on April
10, 2029). Certain plans also require certain special director approval requirements to be met pursuant to Articles 137.3 and 137.4.4 of
the Company’s Articles of Association.
Corporate Governance Guidelines. Nasdaq New York requires U.S. companies to adopt and disclose corporate governance guidelines.
The guidelines must address, among other things: director qualification standards, director responsibilities, director access to
management and independent advisers, director compensation, director orientation and continuing education, management succession
and an annual performance evaluation. The UK Corporate Governance Code requires the Company to report on its compliance with the
UK Corporate Governance Code in accordance with the “comply or explain” principle. The Company’s position with respect to
compliance (or non-compliance) with the individual recommendations of the UK Corporate Governance Code is required to be
disclosed in the Company’s Annual Report and accounts. In addition, the Company includes on its website a detailed analysis of its
compliance (or non-compliance) with the UK Corporate Governance Code in its corporate governance statement.
Board of Directors’ Remuneration Reports. Under Section 420(1) of the UK Companies Act, we are required to produce a directors’
remuneration report for each fiscal year. The directors’ remuneration reports must include (i) a directors’ remuneration policy, which is
subject to a binding shareholder vote at least once every three years and (ii) an annual report on remuneration in the financial year being
reported on and how the current policy will be implemented in the next financial year, which is subject to an annual advisory
shareholder vote. The UK Companies Act requires that remuneration payments to directors of the Company and payments to them for
88
loss of office must be consistent with the approved directors’ remuneration policy or, if not, must be specifically approved by the
shareholders at a general meeting.
Disclosure of Third-Party Director and Nominee Compensation. Nasdaq New York requires U.S. companies to disclose the material
terms of all agreements and arrangements between any director or nominee for director, and any person or entity other than the
Company, a Third Party, relating to compensation or other payment in connection with such person’s candidacy or service as a director
of the Company, except for such agreements and arrangements that (i) relate only to reimbursement of expenses in connection with
candidacy as a director; (ii) existed prior to the nominee’s candidacy and the nominee’s relationship with the Third Party has been
publicly disclosed in certain filings under the Exchange Act; or (iii) have been disclosed in certain other filings applicable to domestic
issuers. Under the UK Companies Act, directors have a statutory duty not to accept benefits from third parties conferred by reason of (a)
his or her being a director or (b) his or her doing (or not doing) anything as a director. However, as this is a general statutory duty of the
directors, the Company may give authority for the receipt of benefits from third parties which would otherwise be a breach of duty.
Such benefits would have to be consistent with the approved directors’ remuneration policy or, if not, would need to be specifically
approved by the shareholders at a general meeting. Directors additionally have a statutory duty to avoid conflicts of interest under the
UK Companies Act and should declare any interest in agreements or arrangements which could give rise to such conflict so that non-
conflicted directors can make judgment as to whether a conflict has arisen and/or authorize such conflict.
Director Nominations. Nasdaq New York requires that director nominees to U.S. companies’ boards of directors be selected or
recommended either by the vote of the board’s independent directors or by a nomination committee comprised solely of independent
directors. In accordance with United Kingdom law and our Articles of Association, our Nomination Committee, which is required to be
composed of a majority of independent non-executive directors, identifies individuals qualified to become members of the Board of
Directors and recommends nominees for election as members of the Board of Directors at the Company’s annual general meeting of
shareholders or to fill vacancies, as needed.
Proxy Solicitation. Nasdaq New York requires U.S. companies to solicit proxies from and provide proxy statements to shareholders for
all shareholder meetings and to provide copies of proxy solicitation materials to Nasdaq New York. As a foreign private issuer, we are
not required to follow Nasdaq New York’s proxy solicitation rules, and consistent with United Kingdom law and our Articles of
Association, we will notify our shareholders of meetings between 14 and 28 days prior to the meeting date. The notification will
contain, among other things, information regarding business to be transacted at the meeting.
ITEM 16HMINE SAFETY DISCLOSURE
Not applicable.
ITEM 16IDISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16JINSIDER TRADING POLICIES
Our Board of Directors has adopted an insider trading policy governing the purchase, sale and other dispositions of our securities by our
directors, Senior Management Team and employees. A copy of our insider trading policy is included as Exhibit 11.2 to this annual
report.
ITEM 16KCYBERSECURITY
Risk management and strategy
Company conducts severity and materiality assessments to the disclosure phase. The purpose of these procedures is to ensure that
TORM complies with statutory and regulatory requirements such as the: (i) Commission’s cybersecurity policy requiring registrants to
disclose material cybersecurity incidents on Form 6-K and to disclose on an annual basis material information regarding its
cybersecurity risk management, strategy and governance on Form 20-F; and (ii) Network and Information Security Directive 2 (NIS2
Directive) from the European Union which aims to achieve a high common level of cybersecurity across Member States.
These policies are intended to apply to all cybersecurity incidents with material or critical risk impact to the Company’s employees,
assets and third parties , including customers, external consultants, vendors, and suppliers. An incident (or collection of related incidents)
is considered material if there is a substantial likelihood that a reasonable shareholder would consider it important in making an
investment decision, or if it would have significantly altered the "total mix" of information made available.
89
The company is continuously reassessing its IT risks. In 2025, the estimated likelihood that a cybersecurity incident would occur
integrity, and availability of systems and data used by TORM, to reduce the risk of information security incidents, and to ensure
compliance with relevant legislation.
The Company has a defined cybersecurity incident response policy based on the Sysadmin Audit, Network and Security, or SANS,
incident response framework. The purpose of the incident response policy is to ensure that TORM detects, responds to and reports
security incidents to minimize impact, prevent foreseen future incidents and to comply with regulatory requirements.
To proactively manage cybersecurity risks, the Company has defined an IT risk management policy based on ISO27005 and integrated
the following procedures: (i) Crisis Management Procedure; (ii) Security Incident Management Procedure, (iii) Business Continuity
Procedure; (iv) Disaster Recovery Procedure; (v) Disclosure Procedure, and (vi) Data Breach Response.
To ensure that the Company can comprehensively respond to cybersecurity incidents, the Company has developed and maintained
certain procedures including, but not limited to, identifying, and maintaining inventory of critical IT assets, securing defined lines of
communication, providing employees with cybersecurity awareness training, testing incident response plans annually and training the
Board of Directors and the Senior Management Team on our cybersecurity policies.
The Company has established a detection procedure whereby it deploys a monitoring system that analyzes correlated events from
multiple systems and notifies IT of incidents that should be investigated and assessed. The Company has also implemented procedures
to continuously monitor vulnerabilities in its systems to proactively mitigate these vulnerabilities before a potential exploit.
Additionally, the Company shall attempt to contain the incident’s impact and intend to remediate or remove any malware or other
artifacts introduced by the attacks. In case a significant cybersecurity incident occurs, the Company shall compile a detailed examination
management policy which is based on Control Objectives for Information and Related Technologies, or COBIT, 2019 control
objectives. The policy applies to any third-party person, independent consultant, organization, or legal entity, including supplier,
vendors, or business partners with whom TORM contracts for IT products and services. The Company performs due diligence on its
third-party management to ensure that the performance of the supplier, IT security measures and third-party risks are regularly reviewed
Governance
Policy updated and communicated to relevant stakeholders in the TORM Group. Furthermore, it is the head of Group IT’s responsibility
to ensure that these policies are reviewed at least once a year and re-approved by the Risk Committee of the Board of Directors.
critical assets, vulnerabilities, threats and existing controls. Based on the risk assessment, risks are prioritized for risk treatment to
comply with the defined risk appetite and exceptions are escalated to the risk owner (the Chief Financial Officer) for approval.
Cybersecurity risks are being continuously monitored and the risk registers for vessels and office are being reviewed on an annual basis.
the formulation of cybersecurity strategies and follows up on the implementation of these strategies, which are delegated to the Head of
Group IT and the CISO, who, together, set targets, asses risks, develop policies and procedures, and execute our cybersecurity efforts.
The Senior Management Team’s cybersecurity experience
information officer and Head of IT with enterprise responsibility for information security. Apart from this, the Head of Group IT is
90
Certified in Cybersecurity (CC) from ISC2, has attended the NIS2 Executive Program by Bech-Bruun and is attending the NIS2
Executive Network also at Bech-Bruun.
The Company has a dedicated CISO with more than 10 years of experience in the cybersecurity field to head the IT Risk and Security
team and to lead the continuous work on increasing the cybersecurity maturity in the Company.
The Chief Financial Officer has extensive experience from senior positions in banking and from heading up the Company’s IT and Risk
Management Division for more than five years. The Chief Financial Officer is responsible for IT, as well as Risk Management, and has
focused intensively on information security, including cybersecurity, and followed a designated NIS2 Executive Program.
The Chief Executive Officer has extensive experience from senior management positions in the shipping industry for over 25 years. As
Chief Executive Officer and a member of the Board of Directors, he has had the overall managerial responsibility for the Company’s
Cybersecurity Threats
confidentiality, availability and integrity of our IT systems, and could negatively impact our business, including our ability to service
customers, and may have a material adverse effect on our compliance, reputation, future performance, results of operations, cash flows
and financial position.”
91
PART III
ITEM 17FINANCIAL STATEMENTS
See “Item 18. Financial Statements.”
ITEM 18FINANCIAL STATEMENTS
The financial statements required by this item accompany this annual report in the form of our Annual Report 2025 (see Item 19).
ITEM 19EXHIBITS
Annual Report
The following pages from our Annual Report 2025, furnished to the SEC on Form 6-K, dated February 26, 2026, are incorporated by
reference into this annual report on Form 20-F. The content of quotations, websites and other sources referenced on these pages of
the Annual Report 2025 are not incorporated by reference into this Form 20-F.
Section | Page(s) in the Annual Report 2025 | ||
Key Figures | 6 | ||
Business Model and Strategic Choices | 8 - 17 | ||
Review and Outlook | 19 - 31 | ||
Market Review | 19 - 20 | ||
Financial Review 2025 - Liquidity and Cash Flow; Assessment of Impairment of Assets; Primary Factors Affecting Results of Operations | 25 - 26 | ||
Market Drivers and Outlook | 29 - 30 | ||
TORM Fleet Development | 32 | ||
Sustainability Statement | 34 - 105 | ||
TORM's Governance Structure | 110 | ||
Board of Director Committee Reports | 115 - 140 | ||
Investor Information - Distribution Policy | 142 | ||
Directors’ Report - Share Capital | 147 | ||
Glossary | 223 |
92
List of Exhibits
1.1 | Memorandum and Articles of Association(1) | ||
2.1 | Form of Class A Common Share Certificate(1) | ||
2.2 | B Share Minority Trust Deed, dated May 30, 2016(1) | ||
2.3 | Equity Warrant Instrument, dated March 15, 2016(1) | ||
2.4 | Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934(3) | ||
4.1 | TORM plc 2023 Management Long-Term Incentive Plan(4) | ||
4.2 | TORM plc 2024 Management Long-Term Incentive Plan(5) | ||
4.3 | TORM plc 2025 Management Long-Term Incentive Plan | ||
8.1 | List of Subsidiaries | ||
11.1 | TORM’s Business Principles(2) | ||
11.2 | TORM's Insider Trading Policy(4) | ||
12.1 | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer | ||
12.2 | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer | ||
13.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
13.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
15.1 | Consent of EY Godkendt Revisionspartnerselskab | ||
97.1 | Policy Relating to Recovery of Erroneously Awarded Compensation(4) | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||
XML | Extracted XBRL Instance Document |
(1) Filed as an exhibit to the Company’s Registration Statement on Form 20-F (Registration No. 001-38294) on November 24, 2017, as
amended, and incorporated by reference herein.
(2) Filed as an exhibit to the Company’s Annual Report filed on Form 20-F on March 8, 2018, and incorporated by reference herein.
(3) Filed as an exhibit to the Company’s Annual Report filed on Form 20-F on March 11, 2020, and incorporated by reference herein.
(4) Filed as an exhibit to the Company’s Annual Report filed on Form 20-F on March 7, 2024, and incorporated by reference herein
(5) Filed as an exhibit to the Company’s Annual Report filed on Form 20-F on March 6, 2025, and incorporated by reference herein
F-1
Financial Statements
Consolidated Financial Statements | ||
Consolidated Income statement for the years ended December 31, 2025, 2024 and 2023 | F-2 | |
Consolidated Statement of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 | F-3 | |
Consolidated Balance Sheet for the years ended December 31, 2025, 2024 and 2023 | F-4 | |
Consolidated Statement of Changes in Equity for the years ended December 31, 2025, 2024 and 2023 | F-6 | |
Consolidated Cash Flow Statement for the years ended December 31, 2025, 2024 and 2023 | F-8 | |
Notes to the Consolidated Financial Statements for the years ended December 31, 2025, 2024 and 2023 | F-9 |
F-2
Consolidated Income Statement
January 01 - December 31, 2025
USDm | Note | 2025 | 2024 | 2023 | ||||
Revenue | 3,4 | |||||||
Port expenses, bunkers, commissions, and other cost of goods and services sold | ( | ( | ( | |||||
Operating expenses | 5 | ( | ( | ( | ||||
Profit from sale of vessels | 27 | |||||||
Administrative expenses | 5,6 | ( | ( | ( | ||||
Other operating income and expenses | ( | |||||||
Depreciation and amortization | 9,10,11 | ( | ( | ( | ||||
Operating profit (EBIT) | ||||||||
Financial income | 7 | |||||||
Financial expenses | 7 | ( | ( | ( | ||||
Profit before tax | ||||||||
Tax | 8 | ( | ( | |||||
Net profit for the year | ||||||||
Net profit for the year attributable to: | ||||||||
TORM plc shareholders | ||||||||
Non-controlling interest | ( | ( | ||||||
Net profit for the year | ||||||||
Earnings per share for TORM plc shareholders | ||||||||
Basic earnings per share (USD) | 30 | |||||||
Diluted earnings per share (USD) | 30 |
F-3
Consolidated Statement of Comprehensive Income
January 01 - December 31, 2025
USDm | 2025 | 2024 | 2023 | |||
Net profit for the year | ||||||
Other comprehensive income/(loss): | ||||||
Items that may be reclassified to profit or loss: | ||||||
Exchange rate adjustment arising from translation of entities using a functional currency different from USD | ( | |||||
Fair value adjustment on hedging instruments | ||||||
Fair value adjustment on hedging instruments transferred to income statement | ( | ( | ( | |||
Tax on other comprehensive income | ||||||
Items that may not be reclassified to profit or loss: | ||||||
Remeasurements of net pension and other post-retirement benefit liability or asset | ( | |||||
Other comprehensive income/(loss) after tax | ( | ( | ( | |||
Total comprehensive income for the year | ||||||
Total comprehensive income for the year attributable to: | ||||||
TORM plc shareholders | ||||||
Non-controlling interest | ( | ( | ||||
Total comprehensive income for the year |
F-4
Consolidated Balance Sheet
As of December 31, 2025
USDm | Note | 2025 | 2024 | 2023 | |||
ASSETS | |||||||
Intangible assets | |||||||
Goodwill | 9,12 | ||||||
Other intangible assets | 9 | ||||||
Total intangible assets | |||||||
Tangible fixed assets | |||||||
Land and buildings | 10,11 | ||||||
Vessels and capitalized dry-docking | 10,11,12,20 | ||||||
Prepayments on vessels | 10 | ||||||
Other non-current assets under construction | |||||||
Other plant and operating equipment | 10 | ||||||
Total tangible fixed assets | |||||||
Financial assets | |||||||
Investments in joint ventures | |||||||
Loan receivables | |||||||
Deferred tax asset | 8 | ||||||
Other investments | |||||||
Total financial assets | |||||||
Total non-current assets | 3 | ||||||
Current assets | |||||||
Inventories | 13 | ||||||
Trade receivables | 14 | ||||||
Other receivables | 15 | ||||||
Prepayments | 16 | ||||||
Cash and cash equivalents incl. restricted cash | 31 | ||||||
Current assets excluding assets held for sale | |||||||
Assets held for sale | 27 | ||||||
Total current assets | |||||||
TOTAL ASSETS |
USDm | Note | 2025 | 2024 | 2023 | |||
EQUITY AND LIABILITIES | |||||||
Equity | |||||||
Common shares | 17 | ||||||
Share premium | |||||||
Treasury shares | 17 | ( | ( | ||||
Hedging reserves | |||||||
Translation reserves | ( | ( | ( | ||||
Other reserves | |||||||
Retained profit | |||||||
Equity attributable to TORM plc shareholders | |||||||
Non-controlling interest | |||||||
Total equity | |||||||
Liabilities | |||||||
Non-current liabilities | |||||||
Non-current tax liability related to held-over gains | 8 | ||||||
Deferred tax liability | 8 | ||||||
Borrowings | 11,19,20,22 | ||||||
Other non-current liabilities | 18 | ||||||
Total non-current liabilities | |||||||
Current liabilities | |||||||
Borrowings | 11,19,20,22 | ||||||
Trade payables | 22 | ||||||
Current tax liabilities | |||||||
Other liabilities | 18,22 | ||||||
Provisions | |||||||
Prepayments from customers | |||||||
Total current liabilities | |||||||
Total liabilities | |||||||
TOTAL EQUITY AND LIABILITIES |
F-6
Consolidated Statement of Changes in Equity
January 01 - December 31, 2025
USDm | Common shares | Share premium | Treasury shares ¹⁾ | Hedging reserves | Translation reserves | Other reserves | Retained profit | Equity attributable to shareholders of TORM plc | Non- controlling interest | Total |
Equity as of January 01, 2023 | - | - | ||||||||
Comprehensive income/loss for the year: | ||||||||||
Net profit/(loss) for the year | — | — | — | — | — | — | - | |||
Other comprehensive income/(loss) for the year²⁾ | — | — | — | - | — | — | - | - | - | |
Tax on other comprehensive income | — | — | — | — | — | — | — | |||
Total comprehensive income/(loss) for the year | - | - | ||||||||
Capital increases ³⁾ | — | — | — | — | — | — | ||||
Transaction costs of capital increase | — | - | — | — | — | — | — | - | — | - |
Share-based compensation | — | — | — | — | — | — | — | |||
Dividends paid | — | — | — | — | — | — | - | - | — | - |
Total changes in equity 2023 | - | - | ||||||||
Equity as of December 31, 2023 | - | - | ||||||||
Comprehensive income/loss for the year: | ||||||||||
Net profit/(loss) for the year | — | — | — | — | — | — | - | |||
Other comprehensive income/(loss) for the year ²⁾ | — | — | — | - | - | — | - | - | - | - |
Tax on other comprehensive income | — | — | — | — | — | — | — | |||
Total comprehensive income/(loss) for the year | - | - | - | |||||||
Capital increase ³⁾ | — | — | — | — | — | — | ||||
Transaction costs of capital increase | — | - | — | — | — | — | — | - | — | - |
Capital reduction ⁴⁾ | — | - | — | — | — | — | — | |||
Share-based compensation | — | — | — | — | — | — | — | |||
Dividends paid | — | — | — | — | — | — | - | - | — | - |
Total changes in equity 2024 | - | - | - | |||||||
Equity as of December 31, 2024 | - | - |
F-7
Consolidated Statement of Changes in Equity
January 01 - December 31, 2025
USDm | Common shares | Share premium | Treasury shares ¹⁾ | Hedging reserves | Translation reserves | Other reserves | Retained profit | Equity attributable to shareholders of TORM plc | Non- controlling interest | Total |
Equity as of January 01, 2025 | - | - | ||||||||
Comprehensive income/(loss) for the year: | ||||||||||
Net profit/(loss) for the year | — | — | — | — | — | — | ||||
Other comprehensive income/ (loss) for the year ²⁾ | — | — | — | - | — | — | - | - | ||
Tax on other comprehensive income | — | — | — | — | — | — | — | |||
Total comprehensive income/(loss) for the year | - | |||||||||
Capital increases ³⁾ | — | — | — | — | — | — | — | |||
Transaction costs of capital increase | — | - | — | — | — | — | — | - | — | - |
Capital reduction ⁵⁾ | — | - | — | — | — | — | — | |||
Treasury share cancellation ¹⁾ | — | — | — | — | - | — | — | |||
Share-based compensation | — | — | — | — | — | — | — | |||
Dividends paid | — | — | — | — | — | - | — | - | — | - |
Total changes in equity 2025 | - | - | - | |||||||
Transactions with non-controlling interests | — | — | — | — | — | — | - | - | - | - |
Equity as of December 31, 2025 | - |
approved by the court, in order to create additional distributable reserves to support: (i) the future payment by the Company of dividends
to its shareholders; and (ii) potential share buybacks should it be desirable to do so.
approved by the court, in order to create additional distributable reserves to support: (i) the future payment by the Company of dividends
to its shareholders; and (ii) potential share buybacks should it be desirable to do so.
F-8
Consolidated Cash Flow Statement
January 01 - December 31, 2025
USDm | Note | 2025 | 2024 | 2023 | |||
Cash flow from operating activities | |||||||
Net profit for the year | |||||||
Adjustments: | |||||||
Profit from sale of vessels | ( | ( | ( | ||||
Depreciation and amortization | 9,10 | ||||||
Financial income | 7 | ( | ( | ( | |||
Financial expenses | 7 | ||||||
Tax expenses/(income) | 8 | ( | |||||
Other non-cash movements | 28 | ||||||
Interest received and realized exchange gains | |||||||
Interest paid and realized exchange losses | ( | ( | ( | ||||
Income taxes paid | ( | ( | ( | ||||
Change in inventories, receivables and payables, etc. | 28 | ( | |||||
Net cash flow from operating activities |
USDm | Note | 2025 | 2024 | 2023 | |||
Cash flow from investing activities | |||||||
Investment in tangible fixed assets ¹⁾ | ( | ( | ( | ||||
Investment in intangible fixed assets | ( | ( | ( | ||||
Sale of tangible fixed assets | 27 | ||||||
Change in restricted cash | ( | ||||||
Net cash flow from investing activities | ( | ( | ( | ||||
Cash flow from financing activities | |||||||
Proceeds, borrowings | 19 | ||||||
Repayment, borrowings | 19 | ( | ( | ( | |||
Vessel lease extinguishment prepayment | ( | ||||||
Dividends paid | ( | ( | ( | ||||
Capital increase ¹⁾ | 17 | ||||||
Transaction costs share issue | ( | ( | ( | ||||
Transactions with non-controlling interests | ( | ||||||
Net cash flow from financing activities | ( | ( | ( | ||||
Net cash flow from operating, investing, and financing activities | ( | ( | |||||
Cash and cash equivalents as of January 01 | |||||||
Cash and cash equivalents as of December 31 | |||||||
Restricted cash as of December 31 | 31 | ||||||
Cash and cash equivalents, including restricted cash as of December 31 |
non-cash share issues in relation to the acquisition of one (2024: nineteen , 2023: five ) vessels. Please refer to Note 18 for further
reference.
F-9
Notes to the consolidated financial statements
Note 1 | Accounting Policies, Critical Accounting Estimates and Judgments | F-10 | ||
Note 2 | Liquidity, Capital Resources and Subsequent Events | F-17 | ||
Note 3 | Segment | F-20 | ||
Note 4 | Revenue from Contracts with Customers | F-25 | ||
Note 5 | Staff Costs | F-27 | ||
Note 6 | Remuneration to Auditors Appointed at the Parent Company’s Annual General Meeting | F-31 | ||
Note 7 | Financial Items | F-32 | ||
Note 8 | Tax | F-33 | ||
Note 9 | Intangible Assets | F-36 | ||
Note 10 | Tangible Fixed Assets | F-37 | ||
Note 11 | Leasing | F-41 | ||
Note 12 | Impairment Testing | F-44 | ||
Note 13 | Inventories | F-46 | ||
Note 14 | Trade Receivables | F-47 | ||
Note 15 | Other Receivables | F-48 | ||
Note 16 | Prepayments | F-48 | ||
Note 17 | Common Shares and Treasury Shares | F-49 | ||
Note 18 | Other Liabilities | F-50 | ||
Note 19 | Effective Interest Rate, Outstanding Borrowings | F-52 | ||
Note 20 | Collateral Security for Borrowings | F-54 | ||
Note 21 | Guarantee Commitments and Contingent Liabilities | F-54 | ||
Note 22 | Contractual Rights and Obligations | F-55 | ||
Note 23 | Derivative Financial Instruments | F-57 | ||
Note 24 | Risks Associated with TORM’s Activities | F-61 | ||
Note 25 | Financial Instruments | F-66 | ||
Note 26 | Related Party Transactions | F-67 | ||
Note 27 | Assets Held for Sale and Non-Current Assets Sold During the Year | F-68 | ||
Note 28 | Cash Flows | F-68 | ||
Note 29 | Entities in the Group | F-69 | ||
Note 30 | Earnings per Share and Dividend per Share | F-71 | ||
Note 31 | Cash and Cash Equivalents, Including Restricted Cash | F-72 |
F-10
Overview of Business
TORM plc is a shipping company that primarily owns and operates a fleet of product tankers and is engaged in the marine engineering
industry. TORM plc is a public company limited by shares and is incorporated in England and Wales. Its registered number is
09818726, and its registered address is 4th Floor , 120 Cannon Street , London , EC4N 6AS, United Kingdom (“UK”) .Unless otherwise
indicated, the terms “TORM plc” and “Parent Company” refers solely to TORM plc and the terms “we”, “us”, “our”, the ”Company”,
and the “Group” refer to TORM plc and its consolidated subsidiaries which include TORM A/S.
TORM plc is listed on Nasdaq in Copenhagen, Denmark, under the symbol “TRMD A”, on Nasdaq in New York, the United States,
under the symbol “TRMD”, as well as having bonds listed on Oslo Stock Exchange, Norway.
Basis of Preparation
The consolidated financial statements of the Group have been prepared in accordance with UK-adopted International Accounting
Standards (“UK-adopted IAS”) and with the provisions of the Companies Act 2006. The consolidated financial statements are also
prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”)
and IFRS as adopted by the European Union (“EU”), as applied to financial periods beginning on or after January 01, 2025 and
additional disclosure requirements for listed companies (class D) in accordance with the Danish Financial Statements Act.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, except
where fair value accounting is specifically required by IFRS.
The functional currency of the Company is USD, and the Company applies USD as the presentation currency in the preparation of the
consolidated financial statements.
Going Concern
As of 31 December 2025, TORM’s available liquidity including undrawn and committed facilities was USD 562.3 m, including a total
cash position of USD 163.5 m (including restricted cash of USD 5.4 m). TORM’s net interest-bearing debt was USD 848.4 m, and the net
loan-to-value ratio was 29.4 % (Tanker segment only). Further information on TORM’s objectives and policies for managing our capital,
our financial risk management objectives, and our exposure to credit and liquidity risk can be found in financial statement Note 24.
TORM monitors its funding position throughout the year to ensure that it has access to sufficient funds to meet the forecasted cash
requirements and loan commitments, and to monitor compliance with the financial covenants in its loan facilities, details available in
financial statement Note 2.
A key element for TORM’s financial performance in the going concern period relates to the increased geopolitical risks and trade
disputes. TORM’s base case assumes that these dynamics will persist. TORM monitors the general development in the geopolitical
situation and potential effects on the product tanker market. In the base case, TORM has sufficient liquidity and headroom for all the
covenant limits. The principle risks and uncertainties facing TORM are set out on pages 14 - 17 in the Annual Report 2025.
In addition to the base case, TORM has developed a reverse stress case. The reverse stress case covers the lowest TCE rate that only just
meets the minimum liquidity covenant and the lowest vessel values that do not breach any of the facilities’ minimum-security values in
the period. In the reverse stress case, with TCE rates significantly below the lowest rolling four-quarter average observed since 2000 on
each vessel class basis accompanied by a corresponding decline in vessel values, TORM maintains sufficient headroom on liquidity and
covenants throughout the going concern period.
The Board of Directors has considered TORM’s cash flow forecasts and the expected compliance with TORM’s financial covenants for
the period until 31 March 2027. Based on this review, the Board of Directors has a reasonable expectation that taking reasonably
possible changes in trading performance and vessel valuations into account, TORM will be able to continue in operation and comply
with our financial covenants for the period until 31 March 2027. Accordingly, TORM continues to adopt the going concern basis in
preparing our financial statements.
F-11
NOTE 1 – continued
Adoption of New or Amended IFRS Standards
IASB has issued a number of new or amended accounting standards (IFRS) and interpretations (IFRIC). TORM has implemented the
following standards and amendments issued by the IASB and adopted by the UK and the EU in the consolidated financial statements for
2025:
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
For the new standards and amendments, it is assessed that application of these effective on January 01, 2025 has not had any accounting
or disclosure impact on the consolidated financial statements in 2025.
The below have been issued by the IASB and adopted by the UK and the EU but have not yet come into effect for consolidated financial
statements of
Annual Improvements to IFRS Accounting Standards - Volume 11 (January 2026
Amendments to IFRS 9 and IFRS 7: Amendments to the Classification and Measurement of Financial Instruments (January 2026)
Amendments to IFRS 9 and IFRS 7: Contracts Referencing Nature dependent Electricity (January 2026)
IFRS 18 Presentation and Disclosure in Financial Statements (January 2027)
The below have been issued by the IASB and not yet adopted by the UK and the EU and not yet come into effect:
•IFRS 19 Subsidiaries without Public Accountability: Disclosures (January 2027)
•IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture issued in
September 2014 (deferred indefinitely)
TORM has assessed the accounting standards and interpretations above and TORM does not expect the new standards to have any
material impact on neither TORM’s figures nor the disclosures, except IFRS 18.
IFRS 18 introduces new requirements for presentation within the consolidated income statement, including specified totals and
subtotals. Furthermore, it is required to classify all income and expenses within the consolidated income statement into one of five
categories: operating, investing, financing, income taxes and discontinued operations.
The standard also requires disclosure of management-defined performance measures, subtotals of income and expenses, which will have
a limited impact as TORM already disclose alternative performance measures.
TORM expects only limited impact from IFRS 18 on the consolidated income statement primarily related to reclassification of interest
income from cash and cash equivalents, certain financial expenses and exchange rate differences into the respective operating and
investing categories of the consolidated income statement with a similar impact on the consolidated cash flow statement from these
items.
In addition, financial items arising from financing facilities will be reclassified into the financing activities of the consolidated cash flow
statement.
F-12
NOTE 1 – continued
Accounting Policies
The Group’s material Accounting Policy information is provided below in combination with the accounting policies described in each
of the individual notes to the consolidated financial statements as outlined in the following notes:
•Segment reporting
•Revenue from contracts with customers
•Staff costs
•Intangible assets
•Tangible fixed assets
•Leasing
•Impairment
•Inventories
•Financial items
•Trade receivables
•Tax
•Other liabilities
•Borrowings
•Derivative financial instruments
•Earnings per share
The consolidated financial statements comprise the financial statements of the parent company, TORM plc and entities controlled by the
Company and its subsidiaries. Control is achieved when the Company has all the following:
•Power over the investee
•Exposure, or rights, to variable returns from its involvement with the investee
•The ability to use its power over the investee to affect the amounts of the investor’s returns
TORM reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are
sufficient to give it the practical ability to direct the relevant activities unilaterally. The Company considers all facts and circumstances
in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
•The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders
•Potential voting rights held by the Company, other vote holders, or other parties
•Rights arising from other contractual arrangements
•Any additional facts and circumstances which indicate that the Company has, or does not have, the current ability to direct the
relevant activities at the time when decisions need to be made, including voting pattern at previous shareholders’ meetings
Entities in which the Group exercises significant but not controlling influence are regarded as associated companies and are accounted
for using the equity method.
Companies which are managed jointly by agreement with one or more companies and therefore are subject to joint control (joint
ventures) are accounted for using the equity method.
F-13
NOTE 1 – continued
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ends when the Company loses control
over the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated income statement and other comprehensive income from the date on which the Company obtains control until the date
when the Company loses control over the subsidiary.
The consolidated financial statements are prepared using consistent accounting policies and eliminating intercompany transactions,
The functional currency of all significant entities, including subsidiaries and associated companies, is United States Dollars (USD)
because the Company’s vessels operate in international shipping markets, in which income and expenses are settled in USD, and
because the Company’s most significant assets and liabilities in the form of vessels and related liabilities are denominated in USD.
Transactions in currencies other than the functional currency are translated into the functional currency at the transaction date. Cash,
receivables and payables and other monetary items denominated in currencies other than the functional currency are translated into the
functional currency at the exchange rate at the balance sheet date. Gains or losses due to differences between the exchange rate at the
transaction date and the exchange rate at the settlement date or the balance sheet date are recognized in the income statement under
“Financial income” and “Financial expenses”.
The reporting currency of the Company is USD. Upon recognition of entities with functional currencies other than USD, the financial
statements are translated into USD. Income statement items are translated into USD at the exchange rate for each transaction, whereas
balance sheet items are translated at the exchange rate as of the balance sheet date. Exchange differences arising from the translation of
financial statements into USD are recognized as a separate component in “Other comprehensive income”. On the disposal of an entity,
the cumulative amount of the exchange differences recognized in the separate component of equity relating to that entity is transferred
to the income statement as part of the gain or loss on disposal.
Port expenses, bunkers, and commissions and other costs of goods and services sold
Port expenses, bunker fuel consumption, commissions, and other costs of goods sold are recognized as incurred. To the extent that the
costs are recoverable, costs directly attributable to relocate the vessel to the load port are capitalized and amortized over the course of
the transportation period.
Gains and losses on forward bunker contracts, forward freight agreements (FFA) as well as write-down for losses on trade receivables
are included in this line.
Operating expenses, which comprise crew expenses, repair and maintenance expenses, and tonnage duty, are expensed as incurred.
Profit from sale of vessels
Profit from sale of vessels is recognized at the time of delivery to the buyer, representing the difference between the sales price less
costs to sell and the carrying value of the vessel.
Administrative expenses
Administrative expenses, which comprise administrative staff costs, management costs, office expenses, and other expenses relating to
administration, are expensed as incurred.
Other operating expenses and income
Other operating expenses primarily comprise management fees paid to commercial and technical managers for managing the fleet,
profits and losses deriving from the disposal of fixed assets other than vessels as well as claims and disputes provisions.
F-14
NOTE 1 – continued
Depreciation and impairment losses comprise depreciation of tangible fixed assets for the year as well as the write-down of the value of
assets by the amount by which the carrying amount of the asset exceeds its recoverable amount. In the event of indication of
impairment, the carrying amount is assessed, and the value of the asset is written down to its recoverable amount equal to the higher of
value in use based on net present value of future earnings from the assets and its fair value less costs to sell.
Subsequent reversal of impairment losses is recognized if the recoverable amount exceeds the carrying amount to the extent that the
carrying amount does not exceed the carrying amount without any historical impairment losses.
Balance Sheet
Financial assets are initially recognized on the settlement date at fair value plus transaction costs, except for financial assets at fair value
through profit or loss, which are recognized at fair value. Financial assets are derecognized when the rights to receive cash flows from
the assets have expired or have been transferred.
Investments in joint ventures comprise investments in companies which by agreement are managed jointly with one or more companies
and therefore are subject to joint control and in which the parties have rights to the net assets of the joint venture. Joint ventures are
accounted for using the equity method. Under the equity method, the investment in joint ventures is initially recognized at cost and
thereafter adjusted to recognize TORM’s share of the profit or loss in the joint venture. When TORM’s share of losses in a joint venture
exceeds the investment in the joint venture, TORM discontinues recognizing its share of further losses. Additional losses are recognized
only to the extent that TORM has incurred legal or constructive obligations or made payments on behalf of the joint venture.
Treasury shares are recognized as a separate component of equity at cost. Upon subsequent disposal of treasury shares, any
consideration is also recognized directly in equity.
Interim dividends are recognized when paid. Any year-end dividend is recognized as a liability at the date of approval at the AGM.
Other non-current liabilities consist of long-term employee-related liabilities related to the frozen Danish holiday funds in connection
with the transition to the new Danish Holiday Act. TORM has elected to keep the holiday funds until the employees, covered at the
transition date, reach the age of retirement. The liability is remeasured annually based on an index rate published by the Holiday
Trade payables are recognized at the fair value of the item purchased and are subsequently measured at amortized cost.
Deferred income relates to amounts received from customers in advance of the related performance obligations being satisfied.
F-15
NOTE 1 – continued
The cash flow statement shows how income and changes in the balance sheet items affect cash and cash equivalent, i.e. how cash is
generated or used in the period. The cash flow statement is presented in accordance with the indirect method commencing with “Net
profit/(loss) for the year”.
Cash flow from operating activities converts income statement items from the accrual basis of accounting to cash basis. Starting with
“Net profit/(loss) for the year”, non-cash items are reversed, and actual payments are included. Further, the change in working capital is
taken into account.
Cash flow from investing activities comprises the cash used or received in the purchase and sale of tangible fixed assets and financial
assets as well as cash from business combinations.
Cash flow from financing activities comprises changes in the cash used or received in borrowings (amount of new borrowings and
repayments), purchases or sales of treasury shares, dividends paid to shareholders.
Cash and cash equivalents including restricted cash comprise cash and short-term bank deposits with an original maturity of three
months or less. The carrying amount of these assets is approximately equal to their fair value. Cash and cash equivalents including
restricted cash at the end of the reporting period are shown in the consolidated cash flow statement and can be reconciled to the related
items in the consolidated balance sheet.
The restricted cash balance relates to cash provided as security for initial margin calls and negative market values on derivatives as well
as a sale and leaseback transaction prepayment to be released upon delivery of the vessel.
The preparation of financial statements in accordance with IFRS requires the Management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are
affected by the way TORM applies its accounting policies. An accounting estimate is considered critical if the estimate requires the
Management to make assumptions about matters subject to significant uncertainty, if different estimates could reasonably have been
used, or if changes in the estimate that would have a material impact on the Company’s financial position or results of operations are
reasonably likely to occur from period to period. The Management believes that the accounting estimates applied are appropriate and the
resulting balances are reasonable. However, actual results could differ from the original estimates requiring adjustments to these
balances in future periods.
The Management also makes various accounting judgments in the preparation of the consolidated financial statements which can affect
the amounts recognized.
Judgments
The Management has assessed that TORM has two cash-generating units (CGUs), being the Tanker Fleet and the Marine Engineering
cash-generating units. The Tanker Fleet is comprised of TORM’s LR1, LR2 and MR vessels, which are largely interchangeable, and the
cash flows generated by them are interdependent. These vessels are operated via the One TORM platform collectively as a combined
internal pool, employed principally in the spot market, and actively managed to meet the needs of our customers in that market,
particularly regarding the location of vessels meeting required specifications and the price of transport rather than vessel class. Given
the technical specifications and capacity of vessels, the Tanker Fleet is relatively homogenous with a very high degree of
interoperability. All vessels in the Tanker Fleet can handle multiple sizes of cargo and sail all seas and oceans, over both shorter and
long distances. The Tanker Fleet is monitored and managed on an aggregated level as one pool, i.e. each vessel or vessel class does not
generate cash inflows which are largely independent of those from other vessels or vessel classes. The MR vessels acquired in prior
years with chemical trading capability are operated as all other product tanker vessels and thus included in the Tanker Fleet CGU.
F-16
NOTE 1 – continued
In addition, the activities within the Marine Engineering segment represent a single CGU because cash inflows are generated
independent of the cash inflows from the Tanker Fleet from serving the existing external customer base of the Marine Engineering
segment.
Estimates
Carrying amounts of vessels
The Company evaluates the carrying amounts of the vessels to determine if events have occurred which would require a modification of
their carrying amounts. The recoverable amount of vessels is reviewed based on events or changes in circumstances which would
indicate that the carrying amount of its vessels might not be recoverable.
In assessing the recoverability of the vessels, the Company reviews certain indicators of potential impairment or indication of any past
impairment losses that should be reversed. If an indication of impairment or reversal of past impairment is identified, the need for
recognizing an impairment loss or a recognition of a reversal of a past impairment loss is assessed by comparing the carrying amount of
the vessels to the higher of the fair value less costs of disposal and the value in use.
The Management assesses indicators of impairment that include, but are not limited to, broker vessel values, time charter rates, weighted
average cost of capital, and any other adverse impacts from current economic, environmental, and geopolitical uncertainty, as well as
the carrying amount of the net assets against the market capitalization.
The fair value less cost of disposal of the vessels is based on the market approach which considers the valuations from two
internationally acknowledged shipbrokers with appropriate qualifications and recent experience in the valuation of vessels. The
shipbrokers’ primary input is deadweight tonnage, yard, and age of the vessel. The fair value assumes that the vessels are in good and
seaworthy condition and with prompt, charter-free delivery.
The assessment of the value in use is based on projection of future discounted cash flows related to the vessels which is complex and
requires the Company to make various estimates including future freight rates, utilization, earnings from the vessels, future operating
expenses and capital expenditure including dry-docking costs and discount rates
All these factors have been historically volatile, especially the freight rates. The carrying amounts of TORM’s vessels may not represent
their fair market value at any point in time, as market prices of second-hand vessels to a certain degree tend to fluctuate with changes in
freight rates and the cost of newbuildings. However, if the estimated future cash flow or related assumptions in the future change, an
impairment write-down or reversal of impairment may be required.
For more information refer to Note 12.
F-17
Liquidity and Capital Resources
As of December 31, 2025, TORM’s cash and cash equivalents, including restricted cash totaled $163.5 m (2024: $291.2 m, 2023:
$295.6 m), and undrawn and committed credit facilities as listed below amounted to $398.8 m (2024: $323.6 m, 2023: $342.5 m).
Debt Facility | Maturity | Outstanding amount 2025 (USDm) | Outstanding amount 2024 (USDm) | Outstanding amount 2023 (USDm) | |
Senior Unsecured Bonds | 2029 | ||||
Syndicated Facilities 2023 | Repaid | ||||
Syndicated Facilities 2025 | 2030 | ||||
Danish Ship Finance Facility 2020 | 2031 | ||||
ING Facility 2023 | 2029 | ||||
HCOB Facility 2023 | Repaid | ||||
HCOB Facility 2024 | 2031 | ||||
KfW Facility 2019 | 2032 | ||||
Credit Agricole Facility 2025 | 2031 | ||||
Other credit facilities | 2026 | ||||
Total |
In 2025, TORM signed an Amendment and Restatement of the Syndicated Facilities agreement whereby the existing vessels were
refinanced and the company received commitment to finance additional 17 vessels that were previously leased and being repurchased.
Until the end of 2025, ten out of the 17 vessels were redelivered to TORM and utilized in this facility. The new Syndicated Facilities
agreement has an extension option until 2031 that can be exercised in 2026. In 2025, TORM also signed a new facility agreement with
Credit Agricole to finance five vessels that were previously leased and being repurchased. Until the end of 2025, four out of the five
vessels were redelivered to TORM and utilized in this facility. In addition to the scheduled repayments, TORM made repayments to
HCOB and reduced the facility due to the sale of older vessels. As of 31 December 2025, the scheduled minimum payments on
mortgage debt and bank loans in 2026 amount to USD128.2 m.
Undrawn Facility | Maturity | Undrawn amount 2025 (USDm) | Undrawn amount 2024 (USDm) | Undrawn amount 2023 (USDm) | |
Syndicated Facilities 2025 - RCF | 2030 | ||||
Credit Agricole Facility 2025 - RCF | 2031 | ||||
HCOB Facility 2024 - RCF | 2031 | ||||
Syndicated Facilities 2023 - RCF | Cancelled | ||||
Syndicated Facilities 2024 - RCF | Cancelled | ||||
HCOB Facility 2023 - RCF | Cancelled | ||||
DSF Additional Facility | Cancelled | ||||
Syndicated Bridge to Bond Facility | Cancelled | ||||
Total |
In 2025, TORM combined the Syndicated 2023 RCF and the Syndicated 2024 RCF into one revolving credit facility as part of the
Amendment and Restatement of the Syndicated Facilities. TORM also has a new revolving credit facility with Credit Agricole as part of
the new facility agreement. The amount of this revolving credit facility will increase following the refinancing on the last vessel in
January 2026. During 2025, the revolving credit facility with HCOB was reduced due to sold vessels.
F-18
NOTE 2 – continued
Lease Facility | Maturity | Outstanding amount 2025 (USDm) | Outstanding amount 2024 (USDm) | Outstanding amount 2023 (USDm) | |
Bocomm Leasing Facilities 2019-2021 | 2026 | ||||
Springliner Leases | 2026 | ||||
China Development Bank Financial Leasing | Repaid | ||||
China Merchant Bank Financial Leasing | 2026 | ||||
Total |
In 2025, TORM exercised purchase options on 22 vessels and financed 14 vessels delivered within the year with mortgage debt. TORM
repurchased nine vessels from China Development Bank Financial Leasing and one from China Merchant Bank Financial Leasing. In
2025, TORM repurchased four out of five vessels from Bocomm Leasing.
TORM manages its capital structure for the Group as a whole in order to support our spot-based vessel employment profile. This is done
through a conservative leverage, a strong liquidity position and limited off-balance sheet commitments. TORM continously stress tests
the capital structure and liquidity position as well as prepares cash flow forecasts to make sure the capital structure remains robust to
potential risks. Besides the liquidity position, the main considerations are loan-to-value ratio, Distribution Policy, CAPEX
commitments, terms and sources of funding vessel investments, hedging of financial market risks and fleet employment strategy,
hereunder entering into FFA contracts.
On March 2024, TORM amended the Distribution Policy with effect from the first quarter of 2024. With this TORM intends to
distribute on a quarterly basis excess liquidity above a threshold liquidity level. The threshold liquidity level will be determined as the
sum of i) the product of liquidity requirement per vessel and the number of owned and leased vessels in TORM’s fleet as at the balance
sheet day and ii) a discretionary element determined by the Board taking into consideration TORM’s capital structure, strategic
opportunities, future obligations and market trends.
TORM’s debt facilities include financial covenants related to:
•Minimum liquidity (cash and cash equivalents minimum amount requirement at all times)
•Minimum security value (loan-to-value for individual borrowings)
•Equity ratio (minimum level)
Financial covenants should be complied with on a daily basis, and is reported to counterparties on a quarterly basis. During 2025, 2024
and 2023, TORM did not have any covenant breaches, and the Management has assessed that a covenant breach in the near future is
remote. Please refer to Note 19 for further information on facilities with financial covenants.
Subsequent Events
On 06 January 2026, Hafnia Limited completed the previously announced purchase of approximately 14.2 million TORM A-shares,
representing 13.97 % of the Company’s issued share capital at 31 December 2025. Following the transaction, and as Oaktree’s
shareholding had fallen below one third of the issued A-shares prior to completion, the special governance rights attached to the
Company’s B-share and C-share lapsed in accordance with the Articles of Association, and both shares were formally redeemed in early
January 2026. These events occurred after the reporting date and do not give rise to adjustments to the consolidated financial statements
for the year ended 31 December 2025.
In January 2026, TORM delivered TORM Maren, which was held for sale as at 31 December 2025, to new owners.
In January and February 2026, TORM Houston and TORM Emilie were repurchased from sale-and-leaseback owners following the
exercise of purchase options called by TORM in the end of 2025. The remaining six vessels for which purchase options were also called
in the end of 2025 will be repurchased from sale-and-leaseback owners during the remaining part of the first half of 2026.
During January and February 2026, TORM took delivery of one 2018-build MR vessel, TORM Fortune, and one 2016-build LR2
vessel, TORM Helga.
In January 2026, TORM made an amendment and restatement to the Syndicate Facilities 2025 to finance eight vessel acquisitions
entered into during the second half of 2025, increasing the total commitment by USD 158.9 m. As of the date of this report, drawdowns
have been made for seven of the eight vessel. The maturity of the Syndicate Facilities 2025 remains unchanged.
TORM’s Board of Directors has on the date of this report declared an interim dividend for the fourth quarter 2025 of USD0.70 per share
to be paid to shareholders corresponding to an expected total dividend payment of USD70.9 m. The distribution for the quarter is
F-19
equivalent to 82 % of net profit and reflects the Distribution Policy. The payment date is 25 March 2026 to all shareholders on record as
of 12 March 2026, and the ex-dividend date is 11 March 2026 for the shares listed on Nasdaq OMX Copenhagen and 12 March 2026
for the shares listed on Nasdaq New York. The dividends have not been recognized as liabilities as at 31 December 2025 and there are
no tax consequences.
F-20
Segment Reporting - Consolidated Income Statement
USDm | 2025 | 2024 | 2023 | ||||||||||||
Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | ||||
Revenue | ( | ( | ( | ||||||||||||
Port expenses, bunkers, and commissions | ( | ( | ( | ( | ( | ( | |||||||||
Other cost of goods and services sold | ( | ( | ( | ( | ( | ( | |||||||||
Operating expenses | ( | ( | ( | ( | ( | ( | |||||||||
Profit from sale of vessels | |||||||||||||||
Administrative expenses | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||
Other operating income and expenses | ( | ( | |||||||||||||
Depreciation and amortization | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||
Operating profit (EBIT) | ( | ( | ( | ||||||||||||
Financial income | |||||||||||||||
Financial expenses | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||
Profit before tax | ( | ( | ( | ||||||||||||
Tax | ( | ( | ( | ( | ( | ( | |||||||||
Net profit for the year | ( | ( | ( | ||||||||||||
entities on tanker vessels within the Tanker segment. All revenue from the Tanker segment is derived from external customers.
F-21
NOTE 3 – continued
USDm | 2025 | 2024 | 2023 |
Geographical allocation of revenue | |||
UK | |||
All other countries | |||
Total |
Countries contributing more than 10% of TORM's revenue | 2025 | 2024 | 2023 | |||
USDm | % of total | USDm | % of total | USDm | % of total | |
Switzerland | ||||||
United States | ||||||
United Arab Emirates | ||||||
Revenue is allocated to countries based on the customer’s ultimate parent domicile.
F-22
Segment Reporting - Consolidated Balance Sheet
USDm | 2025 | 2024 | 2023 | |||||||||||
Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | |||
ASSETS | ||||||||||||||
Intangible assets | ||||||||||||||
Goodwill | ||||||||||||||
Other intangible assets | ||||||||||||||
Total intangible assets | ||||||||||||||
Tangible fixed assets | ||||||||||||||
Land and buildings | ||||||||||||||
Vessels and capitalized dry-docking | ( | ( | ( | |||||||||||
Prepayments on vessels | ||||||||||||||
Other non-current assets under construction | ( | ( | ||||||||||||
Other plant and operating equipment | ||||||||||||||
Total tangible fixed assets | ( | ( | ( | |||||||||||
Financial assets | ||||||||||||||
Investments in joint ventures | ||||||||||||||
Loan receivables | ||||||||||||||
Deferred tax asset | ||||||||||||||
Other investments | ||||||||||||||
Total financial assets | ||||||||||||||
Total non-current assets | ( | ( | ( | |||||||||||
Inventories | ||||||||||||||
Trade receivables | ( | |||||||||||||
Other receivables | ||||||||||||||
Prepayments | ||||||||||||||
Cash and cash equivalents incl. restricted cash | ||||||||||||||
Current assets excluding assets held for sale | ( | |||||||||||||
Assets held for sale | ||||||||||||||
Total current assets | ( | |||||||||||||
TOTAL ASSETS | ( | ( | ( | |||||||||||
F-23
NOTE 3 – continued
Segment Reporting - Consolidated Balance Sheet
USDm | 2025 | 2024 | 2023 | |||||||||||
Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | Tanker segment | Marine Engineering segment | Inter- segment elimination | Total | |||
EQUITY AND LIABILITIES | ||||||||||||||
Total equity | ( | ( | ( | |||||||||||
Liabilities | ||||||||||||||
NON-CURRENT LIABILITIES | ||||||||||||||
Non-current tax liability related to held-over gains | ||||||||||||||
Deferred tax liability | ||||||||||||||
Borrowings | ||||||||||||||
Other non-current liabilities | ||||||||||||||
Total non-current liabilities | ||||||||||||||
CURRENT LIABILITIES | ||||||||||||||
Borrowings | ||||||||||||||
Trade payables | ||||||||||||||
Current tax liabilities | ||||||||||||||
Other liabilities | ( | |||||||||||||
Provisions | ||||||||||||||
Prepayments from customers | ( | ( | ( | |||||||||||
Total current liabilities | ( | ( | ( | |||||||||||
Total liabilities | ( | ( | ( | |||||||||||
TOTAL EQUITY AND LIABILITIES | ( | ( | ( | |||||||||||
Non-current asset additions during the year: | ||||||||||||||
Goodwill | ||||||||||||||
Other intangible assets | ||||||||||||||
Land and buildings | ||||||||||||||
Vessels and capitalized dry-docking | ( | ( | ||||||||||||
Prepayments on vessels | ||||||||||||||
Other non-current assets under construction | ( | ( | ||||||||||||
Other plant and operating equipment | ||||||||||||||
Total non-current asset additions | ( | ( | ||||||||||||
F-24
NOTE 3 – continued
USDm | 2025 | 2024 | 2023 | |||
UK | ||||||
Denmark | ||||||
Singapore | ||||||
USA | ||||||
Other countries | ||||||
Non-current assets |
Accounting Policies
primarily comprise transportation of refined oil products such as gasoline, jet fuel, and naphtha, and the Marine Engineering segment for which the services provided primarily
comprise developing and producing advanced and green marine equipment.
Transactions between the segments are based on market-related prices and are eliminated at Group level.
TORM considers the global product tanker market as a whole, and as the individual vessels are not limited to specific parts of the world, the Group has only one geographical
segment for the Tanker segment. Further, the internal management reporting does not provide geographical information for either the Tanker segment or the Marine Engineering
segment. Consequently, geographical segment information on revenue from external customers or non-current segment assets for the Tanker segment or the Marine Engineering
F-25
USDm | 2025 | 2024 | 2023 | |
Disaggregation of revenue | ||||
Transportation of oil products and chemicals | ||||
Scrubbers and related services | ||||
Welding and mounting | ||||
Others | ||||
Total revenue | ||||
Tanker segment | ||||
Marine Engineering segment | ||||
Intersegment elimination | ( | ( | ( | |
Total revenue |
USDm | 2025 | 2024 | 2023 | |
Customer contract balances | ||||
Trade receivables | ||||
Customer contract assets¹⁾ | ||||
Customer contract liabilities²⁾ | ( | ( | ( | |
Total |
1) Recognized in prepayments.
2) Recognized in prepayments from customers.
Refer to Note 14 for further information on trade receivables. Customer contract assets primarily relate to prepaid voyage expenses until
the cargo load date. During the year, $2.4 m was recognized relating to customer contracts entered in 2024 (2024: $2.5 m relating to
2023, 2023: $3.0 m relating to 2022). Customer contract liabilities primarily relate to prepaid charter hire and prepayments received by
customers in connection with scrubber installations. The change in customer contract liabilities during the year is primarily caused by a
change in prepaid charter hire of $4.0 m.
Accounting policies
Income is recognized in the income statement when:
•The income generating activities have been carried out on the basis of a binding agreement
•The income can be measured reliably
•It is probable that the economic benefits associated with the transaction will flow to the Company
Revenue comprises freight, charter hire, and demurrage revenue from the vessels as well as Marine Engineering revenue. Revenue is
recognized when or as performance obligations are satisfied by transferring services to the customer, i.e. over time, provided that the
stage of completion can be measured reliably. Revenue is measured as the consideration that the Group expects to be entitled to. Freight
revenue including charter hire and demurrage (and related voyage costs) are recognized in the income statement according to the entered
charter parties from the date of load to the date of delivery of the cargo (discharge). The completion is determined using the load-to-
discharge method based on the percentage of the estimated duration of the voyage completed at the reporting date because the customer
receives the benefit during the voyage as it is provided.
Cross-over voyages
For cross-over voyages (voyages in progress at the end of a reporting period), the uncertainty and the dependence on estimates are
greater than for finalized voyages. The Company recognizes a percentage of the estimated revenue for the voyage equal to the
percentage of the estimated duration of the voyage completed at the balance sheet date. The estimate of revenue is based on the expected
duration and destination of the voyage.
F-26
NOTE 4 – continued
When recognizing revenue, there is a risk that the actual number of days it takes to complete the voyage will differ from the estimate.
The contract for a single voyage may state several alternative destination ports. The destination port may change during the voyage, and
the rate may vary depending on the destination port. Changes to the estimated duration of the voyage as well as changing destinations
and weather conditions will affect the voyage expenses.
Demurrage revenue
Freight contracts contain conditions regarding the amount of time available for loading and discharging of the vessel. If these conditions
are breached, TORM is compensated for the additional time incurred in the form of demurrage revenue. Demurrage revenue is
recognized in accordance with the terms and conditions of the charter parties. Upon completion of the voyage, the Company assesses
the time spent in port, and a demurrage claim based on the relevant contractual conditions is submitted to the charterers. The claim will
often be met by counterclaims due to differences in the interpretation of the agreement compared to the actual circumstances of the
additional time used. Based on previous experience, 97 % of the demurrage claim submitted is recognized as demurrage revenue upon
initial recognition. For cross-over voyages, an estimate of incurred demurrage is recognized at the balance sheet date.
The Company receives the demurrage payment upon reaching final agreement on the amount, which could be up to approximately 100
days after the original demurrage claim was submitted. Any adjustments to the final agreement are recognized as demurrage revenue.
Marine Engineering revenue
Some of the Group’s contracts with customers relate to the sale of marine engineering equipment with installation services. Customers
obtain control of the marine engineering equipment with installation services when the goods are delivered to the customer, they have
completed commissioning and delivery has been accepted by the customers. When without installation services, customers obtain
control of the marine engineering equipment when the goods are delivered to and have been accepted by the customers.
Revenue is thus recognized upon the customers obtaining control. There is generally only one performance obligation related hereto.
A warranty provision is recognized for expected repair costs related to warranty claims for sold marine engineering equipment within
the standard warranty period of one year . These provisions are recognized when the equipment is sold and are based on historical
experience. The warranty provision estimates are updated annually.
F-27
Employee Information
Staff costs included in operating expenses relate to the 105 seafarers employed under Danish contracts (2024: 109 , 2023:105 ).
The average number of employees is calculated as a full-time equivalent (FTE).
The Executive Director is, in the event of termination by the Company, entitled to a severance payment of up to 12 months' salary.
USDm | 2025 | 2024 | 2023 | |||
Total staff costs | ||||||
Staff costs included in operating expenses | ||||||
Staff costs included in administrative expenses | ||||||
Total | ||||||
Staff costs comprise the following | ||||||
Wages and salaries | ||||||
Share-based compensation | ||||||
Pension costs | ||||||
Other social security costs | ||||||
Other staff costs | ||||||
Total | ||||||
Average number of permanent employees | ||||||
Seafarers | ||||||
Land-based | ||||||
Total |
At the end of 2025 TORM has a pool of 3,804 (2024: 3,677 , 2023: 3,271 ) seafarers.
The majority of seafarers on vessels are on short-term contracts. The average number of seafarers on board vessels on short-term
contracts in 2025 was 1,753 (2024: 1,721 , 2023: 1,625 ).
Total seafarers’ costs in 2025 were $148.7 m (2024: $141.4 m, 2023: $127.1 m), which is included in “Operating expenses” of which
$138.8 m (2024: $131.8 m, 2023: $118.5 m) pertains to cost for seafarers on board vessels on short term contracts and $9.9 m (2024:
$9.6 m, 2023: $8.6 m) pertains to cost for seafarers employed under the Danish contract as indicated in the staff costs table above.
USD '000 | 2025 | 2024 | 2023 | |||
Non-Executive Board and Committee remuneration, short term | ||||||
Christopher H. Boehringer | ||||||
David N. Weinstein | ||||||
Göran Trapp | ||||||
Annette Malm Justad | ||||||
Total |
F-28
NOTE 5 – continued
Executive Management
USD '000 | Salary | Taxable benefits | Annual performance bonus | Share-based payment | Total | |||||
Executive Management remuneration | ||||||||||
Jacob Meldgaard | ||||||||||
2023, TORM A/S¹⁾ | ||||||||||
2023, TORM plc¹⁾ | ||||||||||
2024, TORM A/S¹⁾ | ||||||||||
2024, TORM plc¹⁾ | ||||||||||
2025, TORM A/S¹⁾ | ||||||||||
2025, TORM plc¹⁾ |
1) Paid by legal entity as noted.
Senior Management Team
The aggregated compensation expensed by the Group to the three (2024: three , 2023: three ) other members of the Senior Management
Team in 2025 (excluding CEO Jacob Meldgaard) was $10.5 m (2024: $9.5 m, 2023: $7.5 m), which includes an aggregate of $0.2 m
(2024: $0.1 m, 2023: $0.1 m) allocated for pensions (defined contribution plans) and share-based payment of $8.2 m (2023: $7.5 m, 2022:
$6.0 m) for these individuals.
Retention | Ordinary | Ordinary | Ordinary | Retention | |||||
Grant Date | Sep 23, 2025 | Mar 06, 2025 | Mar 07, 2024 | Mar 29, 2023 | Mar 29, 2023 | ||||
RSU LTIP grant¹⁾ | |||||||||
Exercise price per share | $ | DKK | DKK | DKK | $ | ||||
RSU grant value assuming 100% vesting | $ | $ | $ | $ | $ |
TORM operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the
grant of shares is recognized as an expense and allocated over the vesting period. Employment in TORM throughout the period is in
most cases a prerequisite for upholding the full vesting rights in the RSU program. For voluntary leavers subject to the Danish Stock
Options Act, the RSUs will vest in accordance with the vesting schedule, but for all other leavers, all unvested RSUs shall be
immediately forfeited for no consideration. Options are granted under the plan for no consideration and carry no dividend or voting
rights.
In accordance with its Remuneration Policy, TORM has granted the CEO a number of Restricted Share Units (RSUs). There are no
performance conditions associated with this grant of RSUs.
Refer to Long-Term Incentive Program – restricted share units granted to the Executive Director in the remuneration report of the
Annual Report 2025 for further information. RSUs granted to the CEO vest in equal installments over three years .
F-29
NOTE 5 – continued
Vested RSUs may be exercised for a period of 360 days from each vesting date. Details of the CEO’s awards and interests in Restricted
Share Units are set out in the remuneration report of the Annual Report 2025.
The single figure remuneration table for the CEO does not include any amounts in relation to the RSU awards as there are no
performance conditions associated with this grant of RSUs.
As detailed in announcement no. 9 issued on March 29, 2023, the CEO was granted a total of 255,200 RSUs which will vest in equal
amounts over the next three years . The first amount could be exercised from January 01, 2024. The exercise price for each RSU is DKK
Annual Report plus a 15 % premium adjusted for the dividend payment related to TORM’s fourth quarter 2022 results. Vested RSUs
may be exercised for a period of 360 days from each vesting date. In addition to the RSUs granted above, the CEO is granted a total of
RSUs is set to one US cent and that all RSUs will vest on March 01, 2026. As stated in Company Announcement No. 21, the Board of
Directors has resolved to accelerate the vesting date to November 07, 2025.
As detailed in announcement no. 9 issued on 7 March 2024, the CEO was granted a total of 255,200 RSUs which will vest in equal
amounts over the next three years . The first amount could be exercised from 1 January 2025. The exercise price for each RSU is DKK
Annual Report plus a 15 % premium. Vested RSUs may be exercised for a period of 360 days from each vesting date.
As detailed in announcement no. 2 issued on 6 March 2025, the CEO was granted a total of 255,200 RSUs which will vest in equal
amounts over the next three years . The first amount could be exercised from 1 January 2026. The exercise price for each RSU is DKK
Annual Report plus a 15 % premium. Vested RSUs may be exercised for a period of 360 days from each vesting date. In addition to the
RSUs granted above, as detailed in announcement no. 21 issued on 23 September 2025, the CEO is granted a total of 500,000 RSUs in
the Additional Retention Program on similar terms as outlined above, with the exception that the strike price for these RSUs is set to one
US cent and that all RSUs will vest on 1 October 2028.
Long-term employee benefit obligations
The obligation comprises an obligation under the incentive programs to deliver Restricted Share Units in TORM plc at a determinable
price to the entity's key personnel, including the CEO. The RSUs granted entitle the holder to acquire one TORM A-share.
Number of shares (1,000) | 2025 | 2024 | 2023 | |||
Outstanding as of January 01 | ||||||
Granted during the period¹⁾ | ||||||
Exercised during the period | ( | ( | ( | |||
Expired/forfeited during the period | ( | ( | ( | |||
Outstanding as of December 31 | ||||||
Exercisable as of December 31 |
1) Includes additional 1,158,938 (2024: 36,259 , 2023: 0 ) RSUs granted in 2025 to adjust for the impact of dividends on the share price
in accordance with the original terms of the grant. No modifications to the terms of the grant in the RSU program have occurred.
In 2023, the Board of Directors agreed to grant a total of 1,248,153 RSUs to other management. The vesting period of the program is
value of the options granted in 2023 was determined using the Black-Scholes model and amounts to USD10.8 m. The average remaining
contractual life for the restricted shares as of 31 December 2023 was 1.5 years and as of 31 December 2024 was 1 year and as of
31 December 2025 was 0.0 years. In addition to the RSUs granted above, the other management is granted a total of 1,333,222 RSUs in
the Additional Retention Program on similar terms as outlined above, with the exception that the strike price for these RSUs is set to one
US cent and that all RSUs will vest on 1 March 2026. As stated in Company Announcement No. 21, the Board of Directors has resolved
to accelerate the vesting date to 07 November 2025. The fair value of the options in the Additional Retention Program granted in 2023
was determined using the Black-Scholes model and amounts to $40.4 m.
F-30
In 2024, the Board of Directors agreed to grant a total of 1,214,986 RSUs to other management. The vesting period of the program is
value of the options granted in 2024 was determined using the Black-Scholes model and amounts to USD8.1 m. The average remaining
contractual life for the restricted shares as of 31 December 2024 was 1.5 years and as of 31 December 2025 was 1 year.
In 2025, the Board of Directors agreed to grant a total of 1,326,087 RSUs to other management. The vesting period of the program is
value of the options granted in 2025 was determined using the Black-Scholes model and amounts to USD3.3 m. The average remaining
contractual life for the restricted shares as of 31 December 2025 is 1.5 years. In addition to the RSUs granted above, the other
management is granted a total of 1,293,434 RSUs in the Additional Retention Program on similar terms as outlined above, with the
exception that the strike price for these RSUs is set to one US cent and that all RSUs will vest on 1 October 2028. The fair value of the
options in the Additional Retention Program granted in 2025 was determined using the Black-Scholes model and amounts to USD
Wages, salaries, social security contributions, holiday and sick leave, bonuses, and other monetary and non-monetary benefits are
recognized in the year in which the employees render the associated services. Please also refer to the Accounting Policy for share-based
payment.
The Group has entered into defined contribution plans only. Pension costs related to defined contribution plans are recorded in the
income statement in the year to which they relate.
The Group makes equity-settled share-based payments to certain employees, which are measured at fair value at the date of grant and
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares which will eventually vest. The fair
value of the share schemes is calculated using the Black-Scholes model at the grant date.
F-31
MEETING
USDm | 2025 | 2024 | 2023 | |||
Audit fees | ||||||
Fees payable to the Company's auditor for the audit of the Company's annual accounts | ||||||
Audit of the Company's subsidiaries pursuant to legislation | ||||||
Total audit fees | ||||||
Non-audit fees | ||||||
Audit-related services | ||||||
Others | ||||||
Total non-audit fees | ||||||
Total |
Under SEC regulations, the remuneration of the auditor of $2.0 m (2024: $2.3 m, 2023: $1.5 m) is required to be presented as follows:
Audit fees $1.6 m (2024: $1.8 m, 2023: $1.4 m), audit-related fees $0.4 m (2024: $0.5 m, 2023: $0.1 m), tax fees $0.0 m (2024: $0.0 m,
2023: $0.0 m), and all other fees $0.0 m (2024: $0.0 m, 2023: $0.0 m.).
TORM's Audit Committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our
independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services.
F-32
USDm | 2025 | 2024 | 2023 | |||
Financial income | ||||||
Interest income from cash and cash equivalents, including restricted cash ¹⁾ | ||||||
Exchange rate adjustments, including gain from forward exchange rate contracts | ||||||
Other financial income | ||||||
Total | ||||||
Financial expenses | ||||||
Interest expenses on borrowings ¹⁾ | ||||||
Financial expenses arising from lease liabilities regarding right-of-use assets | ||||||
Exchange rate adjustments, including loss from forward exchange rate contracts | ||||||
Commitment fee | ||||||
Amortization of interest rate swaps | ||||||
Ineffectiveness on interest rate swaps | ( | ( | ( | |||
Other financial expenses | ||||||
Total | ||||||
Total financial items | ( | ( | ( |
1) Interest for financial assets and liabilities not at fair value through profit and loss.
Accounting Policies
Financial income comprises interest income, realized and unrealized exchange rate gains relating to transactions in currencies other than
the functional currency, realized gains from other equity investments and securities, unrealized gains from securities, dividends
received, and other financial income. Interest is recognized in accordance with the accrual basis of accounting considering the effective
interest rate. Dividends from other investments are recognized when the right to receive payment has been decided, which is typically
when the dividend has been declared and can be received without conditions.
Financial expenses
Financial expenses comprise interest expenses, financing costs of leases liabilities, realized and unrealized exchange rate losses relating
to transactions in currencies other than the functional currency, realized losses from other equity investments and securities, unrealized
losses from securities, and other financial expenses including payments under interest rate hedge instruments. Interest is recognized in
accordance with the accrual basis of accounting considering the effective interest rate.
F-33
USDm | 2025 | 2024 | 2023 | |||
Tax on profit for the year | ||||||
Current tax for the year | ||||||
Adjustments related to previous years | ( | ( | ||||
Adjustment of deferred tax | ( | |||||
Income tax charge for the year | ( | |||||
Tonnage tax charge for the year | ||||||
Total | ( |
The net movement in deferred tax of $6.7 m for the year ended December 31, 2025 consists of the reversal of the recognised deferred tax
assets on account for corporate interest restriction and carry forward of losses. . TORM has unutilized corporate interest restriction
(CIR) balance of $22.2 m (2024: $3.2 m, 2023: $2.1 m) and unabsorbed tax losses of $38.7 m as on 31 December 2025 (2024: $28.4 m,
2023: $21.0 m). TORM has not recognised deferred tax assets on $60.9 m (2024: $2.2 m, 2023: $2.2 m) out of unutilized CIR and
unabsorbed tax losses of which trading losses of $2.2 m (2024: $2.2 m, 2023: $2.2 m) resulted prior to 2017 that may not be used to offset
taxable profit due to a high degree of uncertainty of future taxable profits.
The majority of the Group's taxable income is located in Denmark, and therefore the majority of the tax base is subject to Danish tax
legislation. The Group has elected to participate in the Danish, UK and US tonnage tax regime. The Danish and UK tonnage regime
participation is binding until 2034.
The Group expects to participate in the tonnage tax regimes after the binding period and, as a minimum, to maintain an investment and
activity level equivalent to that at the time of entering the tonnage tax scheme.
Under the different tonnage tax regimes that TORM is subject to, income and expenses from shipping activities are not subject to direct
taxation, and accordingly, an effective rate reconciliation has not been provided, as it would not provide any meaningful information.
Instead, the taxable income is calculated from:
•The net tonnage of the vessels used to generate the income from shipping activities
•A rate applicable to the specific net tonnage of the vessels based on a sliding scale
Corporate income tax is primarily levied on the Group’s non-vessel-related activities. The effective tax rate of the Group is 3.2 % (2024:
USDm | 2025 | 2024 | 2023 | |||
Deferred tax assets | ||||||
Deferred tax assets related to Corporate Interest Restriction | ||||||
Deferred tax assets related to trading losses | ||||||
Other temporary differences | ||||||
Deferred tax assets before offset | ||||||
Offset against deferred tax liabilities from Corporate Interest Restriction | ( | ( | ||||
Offset against deferred tax liabilities from trading losses | ( | ( | ||||
Offset from tax liabilities | ( | |||||
Deferred tax assets, net as of December 31 | ||||||
Deferred tax liabilities | ||||||
Deferred tax liabilities arising from changes in equity | ||||||
Other temporary differences | ||||||
Deferred tax liabilities before offset | ||||||
Offset against tax liabilities arising from changes in equity | ( | ( | ||||
Offset from tax assets | ( | |||||
Deferred tax liabilities in the balance sheet |
F-34
NOTE 8 – continued
Deferred tax assets and liabilities are offset and reported net where appropriate within territories.
Deferred tax at the balance sheet date have been measured using the appropriate enacted tax rates and are reflected in these financial
statements and all deferred tax movements arise from the origination and reversal of temporary differences.
Deferred tax assets are recognized to the extent that the realization of the relaxed tax benefit through future taxable profits is probable.
The deferred tax liability is derived from temporary differences between the accounting and tax values of derivative financial
instruments of $2.0 m (2024: $5.9 m, 2023: $8.5 m).
USDm | 2025 | 2024 | 2023 | |||
Non-current tax liability related to held-over gains | ||||||
Balance as of December 31 |
The non-current tax liability related to held-over gains is the undiscounted income tax payable calculated on the realized gain on sale of
vessels which came from corporate income taxation into the Danish tonnage tax scheme upon initial application in 2001 (the held-over
gain reflected in the transition account under the Danish tonnage tax scheme). This tax liability will become payable, in part or in full, if
the Danish owned fleet of vessels is significantly or fully disposed of, or if operated to the end of it’s useful life and sold for scrap.
If TORM discontinues its participation in the Danish tonnage tax scheme, a deferred tax liability would arise in relation to the vessels
held by the Group and taken out of the tonnage tax scheme. The Management considers this to be a remote scenario.
The Group operates in a wide variety of jurisdictions, in some of which the tax law is subject to varying interpretations and potentially
inconsistent enforcement. As a result, there can be practical uncertainties in applying tax legislation to the Group's activities. Whilst the
Group considers that it operates in accordance with applicable tax law, there are potential tax exposures in respect of its operations, the
impact of which cannot be reliably estimated but could be material.
Accounting Policies
Pillar Two Tax Effects
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. Under the
legislation, the parent company will be required to pay, in UK, top-up tax on profits of its subsidiaries that are taxed at an effective tax
rate of less than 15%. The main jurisdictions in which exposures to this tax may exist include Denmark, Singapore and the US.
As the majority of these companies’ revenue consists of international shipping income, it is assessed that this income will be excluded
from the GloBE income with reference to the shipping carve out described in Article 3.3.
TORM has applied the exception in IAS 12 'Income Taxes' to recognizing and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes.
Based on our fiscal year for 2025, the Group has prepared a preliminary Transitional Country-by-Country Reporting (CbCR) Safe
Harbour assessment concluding that we expect to be eligible for the Transitional CbCR Safe Harbour in a majority of jurisdictions in
which we are present. As of December 31, 2025, the calculated top-up tax does not have a material impact on our financial result.
F-35
NOTE 8 – continued
Tax expenses comprise the expected income tax charge for the year in accordance with IAS 12 as well as tonnage tax related to the
Group’s vessels for the year. The income tax charge for the year includes adjustments relating to previous years and the change in
deferred tax for the year. However, income tax relating to items in other comprehensive income is recognized directly in the statement
of other comprehensive income.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax is calculated at the income tax rates which are expected
to apply in the period when the liability is settled or the asset is realized, based on the laws which have been enacted or substantially
enacted at the balance sheet date. The deferred tax is charged through the income statement except when it relates to other
comprehensive income items. No deferred tax is recognized related to assets and liabilities, including vessels which are subject to
tonnage tax.
The expected income tax payable on the taxable profits for the year is classified as current tax in the balance sheet. Income taxes
expected to fall due after more than one year are classified as non-current liabilities or assets in the balance sheet. Income tax is
measured using tax rates enacted or substantially enacted at the balance sheet date and includes any adjustment to tax payable in respect
of previous years. Current and non-current income tax balances are not discounted.
F-36
USDm | 2025 | 2024 | 2023 | |||
GOODWILL | ||||||
Cost: | ||||||
Balance as of January 01 | ||||||
Exchange rate adjustments | ( | |||||
Balance as of December 31 | ||||||
Impairment: | ||||||
Balance as of January 01 | ||||||
Balance as of December 31 | ||||||
Carrying amount |
USDm | 2025 | 2024 | 2023 | |||
OTHER INTANGIBLE ASSETS | ||||||
Cost: | ||||||
Balance as of January 01 | ||||||
Exchange rate adjustments | ||||||
Additions | ||||||
Transfer from other items | ||||||
Disposals | ( | |||||
Balance as of December 31 | ||||||
Amortization: | ||||||
Balance as of January 01 | ||||||
Amortization for the year | ||||||
Transfer from other items | ||||||
Disposals | ( | |||||
Balance as of December 31 | ||||||
Carrying amount |
The carrying amount of goodwill was allocated to the Marine Enginering cash-generating unit in 2022.
Accounting Policies
Goodwill is measured as the excess of the cost of the business combination over the fair value of the acquired assets, liabilities, and
contingent liabilities and is recognized as an asset under intangible assets. For each business combination, TORM elects whether to
measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred and included in administrative expenses. Goodwill is not amortized as it is considered
to have an indefinite useful life, but the recoverable amount of goodwill is assessed annually. For impairment testing purposes, goodwill
is on initial recognition allocated to the cash generating unit expected to benefit from the synergies of the combination. If the
recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is first allocated to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss for goodwill is not reversed in a subsequent period.
Other intangible assets consist of software and customer list acquired in connection with the Marine Exhaust Technology A/S
acquisition. Other intangible assets are measured at cost less accumulated amortization and impairment losses. Other intangible assets
are considered as having finite useful lives and are amortized on a straight-line basis over:
•Software: 3 years
•Customer list: 7 years
F-37
USDm | 2025 | 2024 | 2023 | |||
LAND AND BUILDINGS | ||||||
Cost: | ||||||
Balance as of January 01 | ||||||
Exchange rate adjustment | ( | ( | ( | |||
Additions | ||||||
Disposals | ( | ( | ( | |||
Balance as of December 31 | ||||||
Depreciation: | ||||||
Balance as of January 01 | ||||||
Exchange rate adjustment | ||||||
Disposals | ( | ( | ( | |||
Depreciation for the year | ||||||
Balance as of December 31 | ||||||
Carrying amount as of December 31 |
USDm | 2025 | 2024 | 2023 | |||
VESSELS AND CAPITALIZED DRY-DOCKING | ||||||
Cost: | ||||||
Balance as of January 01 | ||||||
Additions | ||||||
Disposals | ( | ( | ( | |||
Transferred from prepayments | ||||||
Transferred to assets held for sale | ( | ( | ( | |||
Balance as of December 31 | ||||||
Depreciation: | ||||||
Balance as of January 01 | ||||||
Disposals | ( | ( | ( | |||
Depreciation for the year | ||||||
Transferred to assets held for sale | ( | ( | ( | |||
Balance as of December 31 | ||||||
Impairment: | ||||||
Balance as of January 01 | ||||||
Transferred to assets held for sale | ( | ( | ( | |||
Balance as of December 31 | ||||||
Carrying amount as of December 31 |
F-38
NOTE 10 – continued
Included in the carrying amount for “Vessels and capitalized dry-docking” are capitalized dry-docking costs in the amount of $132.8 m
(2024: $108.2 m, 2023: $75.1 m).
Included in the carrying amount for “Vessels and capitalized dry-docking” are vessels on time charter leases (as lessor) in the amount of
$242.1 m (2024: $395.5 m, 2023: $169.8 m). Please refer to Note 22 for expected redelivery of the vessels.
In 2025 TORM took delivery of 1 (2024: 19 , 2023: 5 ) vessel in connection with partly share-based transactions for a total purchase
price of $34.0 m (2024: $864.5 m, 2023: $173.0 m). The fair value of the vessels is based on the market approach which considers the
valuations from two internationally acknowledged shipbrokers with appropriate qualifications and recent experience in the valuation of
vessels. The shipbrokers’ primary input is deadweight tonnage, yard, and age of the vessel. The fair value assumes that the vessels are in
good and seaworthy condition and with prompt, charter-free delivery.
USDm | 2025 | 2024 | 2023 | |||
PREPAYMENTS ON VESSELS | ||||||
Cost: | ||||||
Balance as of January 01 | ||||||
Additions | ||||||
Transferred to vessels | ( | ( | ( | |||
Balance as of December 31 | ||||||
Carrying amount as of December 31 |
USDm | 2025 | 2024 | 2023 | |||
OTHER PLANT AND OPERATING EQUIPMENT | ||||||
Cost: | ||||||
Balance as of January 01 | ||||||
Adjustments to prior years | ||||||
Exchange rate adjustment | ( | |||||
Additions | ||||||
Disposals | ( | ( | ( | |||
Transfers | ( | |||||
Balance as of December 31 | ||||||
Depreciation: | ||||||
Balance as of January 01 | ||||||
Adjustments to prior years | ||||||
Exchange rate adjustment | ( | |||||
Disposals | ( | ( | ( | |||
Depreciation for the year | ||||||
Transfers | ( | |||||
Balance as of December 31 | ||||||
Carrying amount as of December 31 | ||||||
F-39
NOTE 10 – continued
For information on assets provided as collateral security, please refer to Note 20. Please refer to Note 12 for information on impairment
testing.
Accounting Policies
Vessels consist of owned vessels and vessels financed via sale and leaseback transactions. Vessels are measured at cost less
accumulated depreciation and accumulated impairment losses. Costs comprise acquisition costs and costs directly related to the
acquisition up until the time when the asset is ready for use, including interest expenses incurred during the period of construction. In
partly share-based acquisitions, vessels are measured at fair value at the delivery date, where the purchase price is compared to
valuations from two internationally acknowledged shipbrokers with appropriate qualifications and recent experience in the valuation of
vessels and adjusted if a material difference is identified. All major components of vessels (scrubbers, etc.) except for dry-docking costs
are depreciated on a straight-line basis to the estimated residual value over their estimated useful life. Different drivers such as TORM’s
short and long-term climate targets, the revised IMO’s Green House Gas Strategy, and other new regulation and policies with increased
focus on carbon reduction on both short and long-term impact the determination of the estimated useful life. Considering the different
drivers, TORM estimates the useful life to be 25 years for newbuildings - in line with previous years and with what is used by other
shipowners with comparable tonnage. Depreciation is based on costs less the estimated residual value. Residual value is estimated as the
lightweight tonnage of each vessel multiplied by the recycling prices per ton. TORM has completed phasing in green recycling prices in
the calculation of residual values by applying a weighted average of green recycling and conventional recycling prices, while using a 3 -
year average to limit volatility. The useful life and the residual value of the vessels are reviewed at least at each financial year-end based
on market conditions, regulatory requirements, and TORM’s business plans.
TORM also evaluates the carrying amounts to determine if events have occurred which indicate impairment and would require a
modification of the carrying amounts at the reporting date. Prepayment on vessels is measured at costs incurred.
Dry-docking
Approximately every 24 and 60 months, depending on the nature of work and external requirements, the vessels are required to undergo
planned dry-dockings for replacement of certain components, major repairs, and major maintenance of other components, which cannot
be carried out while the vessels are operating. These dry-docking costs are capitalized and depreciated on a straight-line basis over the
estimated period until the next dry-docking. The residual value of such components is estimated at nil. The useful life of the dry-docking
costs is reviewed at least at each financial year-end based on market conditions, regulatory requirements, and TORM’s business plans.
A portion of the cost of acquiring a new vessel is allocated to the components expected to be replaced or refurbished at the next dry-
docking. Depreciation thereof is carried over the period until the next dry-docking. For newbuildings, the initial dry-docking asset is
estimated based on the expected costs related to the first-coming dry-docking, which again is based on experience and history of similar
vessels. For second-hand vessels, a dry-docking asset is also segregated and capitalized separately, taking into account the normal
docking intervals of the vessels.
At subsequent dry-dockings, the costs comprise the actual costs incurred at the dry-docking yard. Dry-docking costs may include the
cost of hiring crews to carry out replacements and repairs, the cost of parts and materials used, the cost of travel, lodging and
supervision of Company personnel as well as the cost of hiring third-party personnel to oversee a dry-docking. Dry-docking activities
include, but are not limited to, the inspection, service on turbocharger, replacement of shaft seals, service on boiler, replacement of hull
anodes, applying of anti-fouling and hull paint, steel repairs as well as refurbishment and replacement of other parts of the vessel.
Prepayments on vessels
Prepayments consist of prepayments related to the purchase of second-hand vessels not yet delivered and to newbuilding contracts for
vessels not yet delivered which also include the share of borrowing costs directly attributable to the acquisition of the underlying vessel.
When a vessel is delivered, the prepaid amount is reallocated to the financial statement line “Vessels and capitalized dry-docking”.
F-40
NOTE 10 – continued
Land and buildings and other plant and operating equipment
Land and buildings and other plant and operating equipment consist of leaseholds regarding office buildings, leasehold improvements,
company cars, IT equipment, and software and is measured at historical cost less accumulated depreciation and any impairment loss.
Any subsequent cost is included in the asset’s carrying amount or recognized as a separate asset only when it is probable that future
economic benefits are associated with the item and the cost of the item can be measured reliably. Depreciation is based on the straight-
line method over the estimated useful life of the assets. The current estimates are:
•Land and buildings
•Office buildings: Over the shorter of the remaining leasing term and the estimated useful life
•Leasehold improvements: Over the shorter of the remaining leasing term and the estimated useful life
•Other plant and operating equipment:
•Company cars: Over the lease term, typically 3 years
•IT equipment: 3 –5 years
•Software: 3 –5 years
•Other equipment 3 –15 years
The depreciation commences when the asset is available for use, i.e. when it is in the location and condition necessary for it to be
capable of operating in the manner intended by the Management. For a right-of-use asset, depreciation commences at the
Assets are classified as held-for-sale if the carrying amount will be recovered principally through a sales transaction rather than through
continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject to
terms which are usual and customary for sales of such assets, and when its sale is highly probable. The Management must be committed
to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Assets held for sale mainly refer to vessels being sold and are measured at the lower of their previous carrying amount and fair value
less costs to sell. Gains are recognized on delivery to the new owners in the income statement in the item “Profit from sale of vessels”.
Anticipated losses are recognized at the time when the asset is classified as held-for-sale in the item “Impairment losses on tangible and
intangible assets”.
F-41
TORM leases office buildings, some vehicles, and other administrative equipment. Except for short-term leases and leases of low-value
assets, each lease is reflected on the balance sheet as a right-of-use asset with a corresponding lease liability. The right-of-use assets are
included in the financial statement line item in which the corresponding underlying assets would be presented if they were owned.
Please refer to Note 10.
USDm | Land and buildings | Other plant and operating equipment | ||
Cost: | ||||
Balance as of January 01, 2025 | ||||
Exchange rate adjustments | ( | |||
Additions | ||||
Disposals | ( | ( | ||
Balance as of December 31, 2025 | ||||
Depreciation: | ||||
Balance as of January 01, 2025 | ||||
Exchange rate adjustment | ||||
Disposals | ( | ( | ||
Depreciation for the year | ||||
Balance as of December 31, 2025 | ||||
Carrying amount as of December 31, 2025 |
USDm | Land and buildings | Other plant and operating equipment | ||
Cost: | ||||
Balance as of January 01, 2024 | ||||
Exchange rate adjustments | ( | |||
Additions | ||||
Disposals | ( | ( | ||
Balance as of December 31, 2024 | ||||
Depreciation: | ||||
Balance as of January 01, 2024 | ||||
Exchange rate adjustments | ||||
Disposals | ( | ( | ||
Depreciation for the year | ||||
Balance as of December 31, 2024 | ||||
Carrying amount as of December 31, 2024 |
F-42
NOTE 11 – continued
USDm | Land and buildings | Other plant and operating equipment | ||
Cost: | ||||
Balance as of January 01, 2023 | ||||
Exchange rate adjustments | ( | |||
Additions | ||||
Disposals | ( | |||
Balance as of December 31, 2023 | ||||
Depreciation: | ||||
Balance as of January 01, 2023 | ||||
Exchange rate adjustments | ( | |||
Disposals | ( | |||
Depreciation for the year | ||||
Balance as of December 31, 2023 | ||||
Carrying amount as of December 31, 2023 |
December 31, 2025:
Land and buildings | Other plant and operating equipment | ||||
No. of right-of-use assets leased | |||||
Range of remaining term | years | years | |||
Average remaining lease term | years | years | |||
No. of leases with extension options | |||||
No. of leases with options to purchase | |||||
No. of leases with termination options |
Lease liabilities regarding right-of-use assets are included on the balance sheet under “Borrowings”.
USDm | 2025 | 2024 | 2023 | |||
Maturity analysis - contractual undiscounted cash flow | ||||||
Less than one year | ||||||
One to five years | ||||||
Total undiscounted lease liabilities as of December 31 | ||||||
Lease liabilities included under “Borrowings” as of December 31 | ||||||
Non-current | ||||||
Current |
F-43
NOTE 11 – continued
Extension and termination options are included in several leases in order to optimize operational flexibility in terms of managing
contracts. The lease term determined by TORM is the non-cancellable period of a lease, together with any extension/termination options
if these are/are not reasonably certain to be exercised.
Lease payments not recognized as a liability
TORM has elected not to recognize a lease liability for short-term leases (leases of an expected term of 12 months or less) or for leases
of low-value assets. Payments made under such leases are expensed on a straight-line basis. The expenses relating to payments not
recognized as a lease liability are insignificant.
Cash outflow for leases
The total cash outflow for leases amounts to $3.6 m (2024: $3.6 m, 2023: $3.2 m.
Accounting policies
corresponding lease liabilities at the lease commencement date, except for short-term leases and leases of low value. For these leases,
TORM recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Agreements to charter in vessels and to lease land and buildings and other plant and operating equipment for which TORM substantially
has the control are recognized on the balance sheet as right-of-use assets and initially measured at cost, which comprises the initial
amount of the lease liabilities adjusted for any lease payments made at or before the commencement date. Subsequently the right-of-use
assets are measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are depreciated and written
down under the same accounting policy as the assets owned by the Company or over the lease period depending on the lease terms.
The corresponding lease obligation is recognized as a liability in the balance sheet under “Borrowings” and initially measured at the
present value of the lease payments that are not paid at the commencement date. The Company uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily determinable. Subsequently lease liabilities are
measured at amortized cost using the effective interest method, where the lease liabilities are remeasured when there is a change in
future lease payments.
Leases to charter out vessels are classified as operating leases as the leases are short-term in nature and usually less than one year.
Chartered-out vessels are presented as part of Vessels and capitalized dry-docking. Please refer to Note 6. The lease income is
recognized in the income statement on a straight-line basis over the lease term.
Following a sale transaction, for agreements to immediately charter in the related vessels (sale and leaseback) but for which TORM
maintains substantially all the risks and rewards incidental to economic ownership including repurchase options at lower value that the
initial sales price, the proceeds received are presented as a financial liability in “Borrowings”. No gain or loss is recorded, and the asset
remains recognized on the balance sheet under Vessels and capitalized dry-docking.
F-44
The Management of TORM has assessed that TORM has two CGUs being the Tanker Fleet and the Marine Engineering cash-
generating unit.
The Tanker Fleet is comprised of TORM’s LR1, LR2 and MR vessels, which are operated collectively as a combined internal pool,
employed principally in the spot market and actively managed to meet the needs of our customers in that market, particularly regarding
the location of vessels meeting required specifications. All vessels in the Tanker Fleet can handle multiple sizes of refined oil cargos and
sail all seas and oceans, over both short and long distances. Given the technical specifications and capacity of the vessels, the Tanker
Fleet is relatively homogenous with a very high degree of interoperability. The Tanker Fleet includes a few MR vessels with chemical
trading capability, which are operated as all other tanker vessels.
The Marine Engineering segment represent a single CGU because cash inflows are generated independent of the cash inflows from the
Tanker Fleet from serving the existing external customer base of the Marine Engineering segment.
Tanker Fleet
As of 31 December 2025 and 31 December 2024, the Management has assessed indicators of impairment that include, but are not
limited to, broker vessel values, time charter rates, weighted average cost of capital, any other adverse impacts from current economic,
environmental, and geopolitical uncertainty. Vessel values from two 12.8 %
(2024: 26.0 %) above the carrying value of the vessels in the Tanker Fleet CGU, supporting the carrying amount. Consequently, the
Management did not determine the recoverable amount of the CGU as no indicators were identified.
Generally, fluctuations in product tanker vessel values are driven by shifts in global trade patterns, freight rate volatility, and changes in
the effective supply of tankers. Geopolitical events such as sanctions or disruptions to key transit routes can quickly tighten or loosen
available tonnage, influencing asset prices. Additionally, movements of vessels between clean product and dirty trades also reshape
supply dynamics, creating periods of scarcity or oversupply.
disposal.
Recoverable amount | Excess values (recoverable amount less carrying amount) ¹⁾ | |||||||||||
2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||
CGU | USDm | USDm | USDm | USDm | USDm | USDm | ||||||
Tanker Fleet ²⁾ | N/A | N/A | N/A | N/A | ||||||||
Total | N/A | N/A | N/A | N/A | ||||||||
1) Included in the excess value is the outstanding installments for purchased not delivered vessels.
2) No
December 31, 2025 and December 31, 2024
As noted above, the recoverable amount of the Tanker Fleet CGU was not determined as no indicators of impairment were identified.
Additionally, no
10.
F-45
NOTE 12 – continued
December 31, 2023
As of December 31, 2023, the assessment of the recoverable amount of the Tanker Fleet is based on the fair value less cost of disposal
of the vessels. The recoverable amount of the Tanker Fleet as of December 31, 2023 amounts to $3,495.0 m, and is based on the market
approach which considers the valuations from two internationally acknowledged shipbrokers with appropriate qualifications and recent
experience in the valuation of vessels. The shipbrokers’ primary input is deadweight tonnage, yard, and age of the vessel. The fair value
assumes that the vessels are in good and seaworthy condition and with prompt, charter-free delivery. The fair value less costs of disposal
of the vessels is determined to be within Level 3 of the fair value hierarchy.
We have assessed the impact from climate changes and the potential adverse impact on vessel values, however, no specific adjustments
in this respect have been reflected in the impairment testing of the Tanker Fleet given the recoverable amount has been based on the fair
value less costs of disposal. Further discussion can be found in the Audit Committee Report, page 102 and TCFD pages 87-89 in the
Annual Report for 2023. We continue to monitor the development closely, and we continuously work on more specific plans for our
ambition to have zero CO2 emissions from operating our fleet by 2050, which may impact our impairment testing in the future.
Based on this review, the Management concluded that as of December 31, 2023 assets within the Tanker Fleet were not impaired as fair
value less costs of disposal exceeded the carrying amount by $952.1 m.
2023.
Marine Engineering
The assessment of the recoverable amount of the Marine Engineering cash-generating unit is based on value in use. The result of the
impairment test showed an excess value of $20.4 m, (2024: $28.6 m, 2023: $9.8 m). compared to the carrying amount. No impairment of
goodwill was recognized.
Accounting Policies
Non-current assets are reviewed at the reporting date to determine any indication of impairment including a significant decline in either
the assets’ market value, increase in market rates of return, or in the cash flows expected to be generated by the fleet. At least annually,
or if impairment indicator(s) exists, an impairment test on a CGU level will be performed. A CGU is determined as the smallest group
of assets that generates independent cash inflows. An asset/CGU is impaired if the recoverable amount is below the carrying amount.
The recoverable amount of the CGU is estimated as the higher of fair value less costs of disposal and value in use. The value in use is
the present value of the future cash flows expected to be derived from a CGU, utilizing a pre-tax discount rate that reflects current
market estimates of the time value of money and the risks specific to the unit for which the estimates of future cash flows have not been
adjusted. If the recoverable amount is less than the carrying amount of the cash generating unit, the carrying amount is reduced to the
recoverable amount.
The impairment loss is recognized immediately in the income statement. Where an impairment loss subsequently reverses, the carrying
amount of the CGU is increased to the revised estimate of the recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined, had no impairment loss been recognized in prior years.
For the purpose of assessing impairment, assets, time charter and bareboat contracts are grouped at the lowest levels at which
F-46
USDm | 2025 | 2024 | 2023 | |||
Bunkers | ||||||
Lubeoil | ||||||
EU Emission Allowances | ||||||
Other | ||||||
Balance as of 31 December |
During 2025, bunker inventories of $247.2 m (2024:$278.2 m, 2023: $272.4 m) were recognized as an expense in Port expenses, bunkers,
commissions, and other cost of goods and services sold.
During 2025, lubeoil inventories of $8.8 m (2024: $8.1 m, 2023: $7.5 m) were recognized as an expense in Operating expenses.
During 2025, EU Emission Allowances inventories of $10.3 m (2024: $5.0 m, 2023: $0.0 m) were recognized as an expense in Port
expenses, bunkers, commissions, and other cost of goods and services sold.
During 2025, other inventories of $17.1 m (2024: $9.3 m, 2023: $22.7 m were recognized as an expense in Port expenses, bunkers,
commissions, and other cost of goods and services sold.
Accounting Policies
Bunkers, lubeoil and other inventories are stated at the lower of cost in accordance with the FIFO-principle and net realizable value.
Cost of bunkers and lubeoil includes expenditure incurred in acquiring bunkers and lubeoil including delivery costs less discounts. The
cost of other inventories consists of raw materials and components based on direct costs, direct payroll costs and a proportionate share
of indirect production costs. Indirect production costs include the proportionate share of capacity costs directly relating hereto, which
are allocated on the basis of the normal capacity of the production facility.
At January 01, 2024 the EU Emission Trading System was extended to maritime transport emissions, where shipping companies must
surrender allowances to cover emissions related to EU port calls. EU Emission Allowances are purchased in connection with TORM's
cargo transportation only, similar to a tax on purchase of bunkers. TORM has no intention of selling or trading the allowances.
In the absence of any specific IFRS standards or IFRIC interpretations on accounting for emission rights of carbon dioxide generated as
part of the EU Emission Trading scheme (EU ETS), and considering the above, EU Emission Allowances are treated similar to bunker
inventories. The following policies are applied for EU Emission Allowances:
The emission rights are considered as a part of the bunker consumption for the delivery of transportation services and thus recognized
as inventories at their acquisition cost.
As these allowances are utilized during the voyage, the carrying amount of these allowances are recognized as an expense against a
liability in the period in which the associated revenue is recognized.
F-47
USDm | 2025 | 2024 | 2023 | |||
Analysis as of December 31 of trade receivables: | ||||||
Gross trade receivables: | ||||||
Not due | ||||||
Due < 30 days | ||||||
Due between 30 and 180 days | ||||||
Due > 180 days | ||||||
Total gross | ||||||
Allowance for expected credit loss | ||||||
Total net |
The Management makes allowances for expected credit losses based on “the simplified approach” according to IFRS 9 to provide for
expected credit losses, which permits the use of the lifetime expected loss provision for all trade receivables.
In 2024, as a result of improved collection efforts and decreased losses on trade receivables, the Management reassessed the accounting
estimates included in the expected credit loss allowance matrix. The outcome of the reassessment resulted in an updated allowance
matrix, reversing allowances of $5.9 m in 2024.
Expected credit loss for receivables overdue 180 days or less is 0 %-3 %, depending on the category of the receivable. Expected credit
loss for receivables overdue more than 180 days is 10 %-100 %, depending on the category of the receivable. Expected credit loss for
receivables overdue more than one year is 50 %-100 %, also depending on the category of the receivable. For all “legal” cases,
allowances of 100 % are made.
USDm | 2025 | 2024 | 2023 | |||
Allowance for expected credit loss | ||||||
Balance as of January 01 | ||||||
Provisions for the year | ||||||
Provisions reversed during the year | ( | ( | ( | |||
Balance as of December 31 |
Allowance for expected credit loss of trade receivables has been recognized in the income statement under “Port expenses, bunkers,
commissions, and other costs of goods sold”.
Allowance for expected credit loss of trade receivables is calculated using an aging factor as well as specific customer knowledge and is
based on a provision matrix on days past due.
Accounting Policies
Outstanding trade receivables and other receivables which are expected to be realized within 12 months from the balance sheet date are
classified as “Trade receivables” or “Other receivables” and presented as current assets.
Receivables are, at initial recognition, measured at their transaction price less allowance for expected credit losses over the lifetime of
the receivable and are subsequently measured at amortized cost adjusted for changes in expected credit losses. Derivative financial
instruments included in other receivables are measured at fair value.
Expected credit losses are, at initial recognition, determined using an aging factor as well as a specific customer knowledge such as
customers’ ability to pay, considering historical information about payment patterns, credit risks, customer concentrations, customer
creditworthiness as well as prevailing economic conditions. The estimates are updated subsequently, and if the debtor’s ability to pay is
becoming doubtful, expected credit losses are calculated on an individual basis. When there are no reasonable expectations of
recovering the carrying amount, the receivable is written off in part or entirely.
F-48
USDm | 2025 | 2024 | 2023 | |||
Derivative financial instruments | ||||||
Escrow accounts | ||||||
Marine Engineering work in progress | ||||||
Vessel sale | ||||||
Other | ||||||
Balance as of December 31 |
The carrying amount is a reasonable approximation of fair value due to the short-term nature of the receivables. Please refer to Note 25
USDm | 2025 | 2024 | 2023 | |||
Prepaid operating expenses | ||||||
Prepaid bareboat hire | ||||||
Prepaid customer contract assets | ||||||
Vessel lease extinguishment prepayment | ||||||
Other prepayments | ||||||
Balance as of December 31 |
F-49
Common shares | 2025 | 2024 | 2023 | |||||
Nominal value per share (USD) | Number of shares | Number of shares | Number of shares | |||||
A-shares | ||||||||
B-shares | ||||||||
C-shares | ||||||||
Total |
During the year, the share capital was increased by 4,012,027 A-shares with a nominal value of $40,120.27 . The total amount including
share premium amounted to $19.3 m. $17.0 m was non-cash increases in conjunction with the acquisition of 1 vessel, and $2.3 m was
contributed in cash in connection with exercise of Restricted Share Units.
During 2024, the share capital was increased by 11,588,367 A-shares with a nominal value of $115,883.67 .The total amount including
share premium amounted to $331.7 m. $319.2 m was a non-cash increase in conjunction with the acquisition of nineteen vessels, and
$12.5 m was contributed in cash in connection with exercise of Restricted Share Units.
During 2023, the share capital was increased by 3,914,385 A-shares with a nominal value of $39,143.85 . The total amount including
share premium amounted to $92.7 m. $86.5 m was a non-cash increase in conjunction with the acquisition of five vessels, and $6.2 m was
contributed in cash in connection with exercise of Restricted Share Units.
The A-shares are listed on Nasdaq in Copenhagen and Nasdaq in New York and are publicly available for trading. Each A-share carries
shares carry no other rights or obligations. The B-share has one vote at the General Meetings, has no pre-emption rights in relation to
any issue of new shares of other classes, and carries no right to receive dividends, liquidation proceeds, or other distributions from
TORM.
The holder of the B-share has the right to elect one member to the Board of Directors (being the Deputy Chair), up to three alternates as
well as one Board Observer. The B-share cannot be transferred or pledged, except for a transfer to a replacement trustee.
The C-share represents 350,000,000 votes at the General Meetings in respect of certain Specified Matters, including election of
members to the Board of Directors (including the Chair, but excluding the Deputy Chair) and certain amendments to the Articles of
Association proposed by the Board of Directors. The C-share has no pre-emption rights in relation to any issue of new shares of other
classes and carries no right to receive dividends, liquidation proceeds, or other distributions from TORM. The C-share cannot be
transferred or pledged, except to an affiliate of Njord Luxco.
The B-share and the C-share are redeemable by TORM in the event that (i) TORM has received written notification from Njord Luxco
(or its affiliates) that Njord Luxco and its affiliates (as defined in the Articles of Association) hold less than 1/3 in aggregate of TORM’s
issued and outstanding shares, (ii) 5 business days have elapsed from the Board of Directors’ receipt of such written notice either
without any Board member disputing such notice or with at least 2/3 of the Board members confirming such notice, and (iii) both of the
B-share and the C-share are redeemed at the same time.
After the end of the year, subsequent changes were made to the B- and C-shares. Refer to Note 2 for description of subsequent events.
F-50
NOTE 17 – continued
Treasury shares | 2025 | 2024 | 2023 | |||
Number of shares '000 | ||||||
Balance as of January 01 | ||||||
Cancellations | - | |||||
Balance as of December 31 |
2025 | 2024 | 2023 | |||||
Nominal value USD '000 | |||||||
Balance as of January 01 | |||||||
Cancellations | ( | ||||||
Balance as of December 31 | |||||||
Treasury shares - continued | 2025 | 2024 | 2023 | ||||
Percentage of share capital | |||||||
Balance as of January 01 | % | % | % | ||||
Cancellations | ( | % | % | % | |||
Dilution due to capital increases | ( | % | % | ||||
Balance as of December 31 | % | % | % |
At the 2025 Annual General Meeting on April 16, 2025, our shareholders approved the application for a court order from the
Companies Court in England and Wales to effect the cancellation of 493,371 treasury shares that we purchased in share buybacks on
Nasdaq Copenhagen A/S in 2016 and 2020. On May 15, 2025, the Court approved the cancellation. The cancellation of these treasury
shares was intended to rectify the fact that these repurchases were not made in accordance with the UK Companies Act, which
distinguishes between buybacks effected through “market purchases” and “off-market purchases.” We effected these buybacks under
“market purchase” resolutions; however, for purposes of the UK Companies Act, Nasdaq Copenhagen A/S is an overseas exchange,
making it ineligible for buybacks conducted under the “market purchase” provisions. The cancellation of the affected treasury shares did
not affect the rights attached to, or result in any other change to, any of our other shares (or their nominal value).
As of December 31, 2024, the Company's holding of treasury shares represented 493,371 shares, (2023: 493,371 shares) of $0.01 each
at a total nominal value of $0.0 m (2023: $0.0 m) and a market value of $9.6 m (2023: $14.9 m).
Restricted Share Units
Key management participates in an LTIP program, which gives the right to buy TORM shares at a predefined share price. Please refer to
note 5.
F-51
USDm | 2025 | 2024 | 2023 | |||
Accrued operating expenses | ||||||
Accrued interest | ||||||
Wages and social expenses | ||||||
Accrued administration expenses | ||||||
Derivative financial instruments | ||||||
EU Emission Allowances | ||||||
Other | ||||||
Balance as of December 31 | ||||||
Hereof non-current | ||||||
Hereof current |
The carrying amount is a reasonable approximation of fair value due to the short-term nature of the payable. Please refer to Note 25 for
further information on fair value hierarchies.
Accounting Policies
fair value.
F-52
2025 | 2024 | 2023 | ||||||||||||||||||
USDm | Fixed/ floating | Maturity | Effective interest¹⁾ | Carrying value²⁾ | Maturity | Effective interest¹⁾ | Carrying value²⁾ | Maturity | Effective interest¹⁾ | Carrying value²⁾ | ||||||||||
Borrowings | ||||||||||||||||||||
Bond Facility⁵⁾ | Fixed | 2029 | % | 2029 | % | — | ||||||||||||||
CMBFL³⁾ | Fixed | 2026 | % | 2033 | % | 2033 | % | |||||||||||||
Springliner (USD)³⁾ | Fixed | 2026 | % | 2026 | % | 2026 | % | |||||||||||||
CDBL³⁾ | Fixed | — | % | 2032 | % | 2032 | % | |||||||||||||
BoComm 2 (USD)³⁾ | Floating | 2026 | % | 2032 | % | 2032 | % | |||||||||||||
Credit Agricole Facility⁵⁾ | Floating | 2031 | % | — | — | |||||||||||||||
DSF Facility⁵⁾ | Floating | 2031 | % | 2029 | % | 2029 | % | |||||||||||||
DSF Facility 2⁵⁾ | Floating | 2029 | % | 2029 | % | 2029 | % | |||||||||||||
DSF Facility 3⁵⁾ | Floating | 2031 | % | 2031 | % | — | ||||||||||||||
HCOB Facility⁵⁾ | Floating | 2031 | % | 2031 | % | 2029 | % | |||||||||||||
ING⁵⁾ | Floating | 2029 | % | 2029 | % | 2029 | % | |||||||||||||
KFW Facility⁵⁾ | Floating | 2032 | % | 2032 | % | 2032 | % | |||||||||||||
Syndicate Facility 2025⁵⁾ | Floating | 2030 | % | — | % | — | % | |||||||||||||
Other credit facilities | Floating | 2026 | % | 2026 | % | 2026 | % | |||||||||||||
BoComm 3 (USD)³⁾ | Floating | — | % | 2029 | % | 2029 | % | |||||||||||||
Syndicate Facility 2023⁵⁾ | Floating | — | % | 2029 | % | 2028 | % | |||||||||||||
Total borrowings and weighted average effective interest rate⁴⁾ | % | % | % | |||||||||||||||||
Borrowing costs | ( | ( | ( | |||||||||||||||||
Right-of-use lease liabilities | ||||||||||||||||||||
Total | ||||||||||||||||||||
Hereof non-current | ||||||||||||||||||||
Hereof current | ||||||||||||||||||||
1) Effective interest rate includes deferred borrowing costs.
2) Because of the floating interest rate, the carrying value of the Group's borrowings is approximately equal to the fair value except for
fixed rate borrowings, where the fair value amounts to $321.4 m (2024: $544.8 m, 2023: $402.8 m (compared to a total carrying value
as of December 31, 2025 of $328.6 m, 2024: $521.0 m, 2023: $372.7 m).
3) Lease debt recognized under sale and leaseback arrangement with repurchase options (accounted for as finance transactions).
4) Please refer to Note 23 for average interest rate including hedges.
5) Facility with financial covenant. Total carrying value amounts to $845.0 m as of December 31, 2025 (2024: $776.3 m, 2023:
In addition to the facilities above, TORM had undrawn credit facilities of $398.8 m as of December 31, 2025. Please refer to Note 2 for
further information on the Company’s liquidity and capital resources and Notes 23 and 24 for further information on interest rate swaps
and financial risks.
F-53
NOTE 19 – continued
Cash movements | Non-cash movements | |||||||||
USDm | Opening balance as of January 01, 2025 | Borrowings | Repayments | Other changes | End balance as of December 31, 2025 | |||||
Borrowings | ( | |||||||||
Total | ( | |||||||||
Cash movements | Non-cash movements | |||||||||
USDm | Opening balance as of January 01, 2024 | Borrowings | Repayments | Other changes | End balance as of December 31, 2024 | |||||
Borrowings | ( | |||||||||
Total | ( | |||||||||
Cash movements | Non-cash movements | |||||||||
USDm | Opening balance as of January 01, 2023 | Borrowings | Repayments | Other changes | End balance as of December 31, 2023 | |||||
Borrowings | ( | |||||||||
Total | ( | |||||||||
Accounting Policies
Borrowings are initially measured at fair value less transaction costs. Mortgage debt and bank loans are subsequently measured at
amortized cost. This means that the difference between the net proceeds at the time of borrowing and the nominal amount of the loan is
recognized in the income statement as a financial expense over the term of the loan applying the effective interest method.
When terms of existing financial liabilities are renegotiated, or other changes regarding the effective interest rate occur, TORM
performs a test to evaluate whether the new terms are substantially different from the original terms. If the new terms are substantially
different from the original terms, TORM accounts for the change as an extinguishment of the original financial liability and the
F-54
The total carrying amount of vessels which have been provided as security for borrowings amounts to $2,792 m as of December 31,
2025 (2024: $2,827 m, 2023: $2,070 m), including transferred ownership under sale and leaseback arrangements accounted for as
financing transactions, where the vessels are not derecognized and where vessels are provided as security for lease debt.
$0.0 m (2024:$0.7 m, 2023: $0.7 m) in floating charge in Marine Exhaust Technology A/S have been provided as security for loans to
other lenders.
$0.0 m (2024: $0.3 m, 2023: $0.4 m) in floating charge in Marine Exhaust Technology A/S have been provided as security for loans to
banks.
In the current year zero shares (2024: zero shares, 2023: 10,500 shares) in ME Production A/S with a book value of $0.0 m (2024:
$0.0 m, 2023: $2.1 m) have been provided as security for loans to the lenders of Marine Exhaust Technology A/S.
$6.7 m (2024: $6.2 m, 2023: $6.6 m) in floating charge in ME Production A/S with a book value of $8.2 m (2024: $7.4 m, 2023: $10.5 m)
have been provided as security for loans to banks.
Please refer to Note 1 for further information.
The guarantee commitments of the Group are less than $0.1 m (2024: $0.1 m, 2023: $0.1 m) and relate to guarantee commitments to
Danish Shipping.
The Group is involved in certain other legal proceedings and disputes. It is the Management's opinion that the outcome of these
proceedings and disputes will not have any material impact on the Group's financial position, results of operations, and cash flows.
F-55
The following table summarizes the Group's contractual obligations as of December 31, 2025.
USDm | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||
Borrowings ¹⁾ | ||||||||||||||
Interest payments related to scheduled interest fixing | ||||||||||||||
Estimated variable interest payments ²⁾ | ||||||||||||||
Committed scrubber installations ³⁾ | ||||||||||||||
Trade payables and other obligations | ||||||||||||||
Total |
The following table summarizes the Group's contractual obligations as of December 31, 2024.
USDm | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||
Borrowings ¹⁾ | ||||||||||||||
Interest payments related to scheduled interest fixing | ||||||||||||||
Estimated variable interest payments ²⁾ | ||||||||||||||
Committed scrubber installations ³⁾ | ||||||||||||||
Trade payables and other obligations | ||||||||||||||
Total |
The following table summarizes the Group's contractual rights as of December 31, 2023
USDm | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||
Borrowings ¹⁾ | ||||||||||||||
Interest payments related to scheduled interest fixing | ||||||||||||||
Estimated variable interest payments ²⁾ | ||||||||||||||
Secondhand vessel commitments | ||||||||||||||
Committed scrubber installations ³⁾ | ||||||||||||||
Trade payables and other obligations | ||||||||||||||
Total |
1) The presented amounts to be repaid do not include directly related borrowing costs arising from the issuing of the loans of $13.2 m
(2024: $17.0 m. 2023: $13.9 m), which are amortized over the term of the loans. Borrowing costs capitalized during the year amount to
$6.8 m (2024: $7.3 m, 2023: $9.0 m).
2) Variable interest payments are estimated based on the forward rates for each interest period including hedging instruments
3) Commitments for pollution reduction installations
F-56
NOTE 22 – continued
TORM has contractual rights to receive future payments as lessor of vessels on time charter and bareboat charter to customers.
The following table summarizes the Group's contractual rights as of December 31, 2025
USDm | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||
Contractual rights - as lessor: | ||||||||||||||
Charter hire income for vessels ⁵⁾ | ||||||||||||||
Total |
The following table summarizes the Group's contractual rights as of December 31, 2024
USDm | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||
Contractual rights - as lessor: | ||||||||||||||
Charter hire income for vessels ⁵⁾ | ||||||||||||||
Total |
The following table summarizes the Group's contractual rights as of December 31, 2023
USDm | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||
Contractual rights - as lessor: | ||||||||||||||
Charter hire income for vessels ⁵⁾ | ||||||||||||||
Total |
5) Charter hire income for vessels on time charter is recognized under "Revenue". During the years revenue from time charter
amounted to $129.3 m (2024: $145.6 m, 2023: $43.8 m)
The average period until redelivery of the vessels for the period ended December 31, 2025 was 2.0 years (2024: 1.8 years, 2023:1.6
years).
F-57
Please refer to Note 25 for further information on fair value hierarchies.
USDm | 2025 | 2024 | 2023 | |||
Fair value of derivatives: | ||||||
Derivative financial instruments regarding freight and bunkers: | ||||||
Forward freight agreements — fair value through profit and loss | ||||||
Bunker swaps — fair value through profit and loss | ( | ( | ||||
Bunker swaps — hedge accounting | ( | |||||
Derivative financial instruments regarding interest and currency exchange rate: | ||||||
Forward exchange contracts — hedge accounting | ( | |||||
Interest rate swaps — hedge accounting | ||||||
Fair value of derivatives as of December 31 |
Financial | Financial | |||
USDm | assets | liabilities | ||
2025 | ||||
Offsetting financial assets and financial liabilities: | ||||
Gross amount | ( | |||
Offsetting amount | ( | |||
Net amount presented in the balance sheet | ( |
Financial | Financial | |||
USDm | assets | liabilities | ||
2024 | ||||
Offsetting financial assets and financial liabilities: | ||||
Gross amount | ( | |||
Offsetting amount | ||||
Net amount presented in the balance sheet | ( |
Financial | Financial | |||
USDm | assets | liabilities | ||
2023 | ||||
Offsetting financial assets and financial liabilities: | ||||
Gross amount | ( | |||
Offsetting amount | ( | |||
Net amount presented in the balance sheet | ( |
Derivative financial instruments assets are offset against derivative financial instruments liabilities where the counterparty is identical,
where TORM has legal right to offset and intends to settle on a net basis.
Hedging of risks with derivative financial instruments is made with a ratio of 1 :1 and where hedge items can be a portion of exposure.
Sources of ineffectiveness are mainly derived from differences in timing and interest base rate. Any ineffective portions of the cash flow
hedges are recognized in the income statement as financial items. Value adjustments of the effective part of cash flow hedges are
recognized directly to other comprehensive income. Gains and losses on cash flow hedges are transferred upon realization from the
hedging reserve into the income statement.
F-58
NOTE 23 - continued
FFAs are used to mitigate fluctuations in the freight rates of vessels with a duration of 0-24 months. The FFAs are not designated for
hedge accounting.
Forward exchange contracts with a fair value of $0.9 m (net gain) are designated as hedge accounting relationships to hedge a part of
TORM payments in 2026 regarding administrative and operating expenses denominated in DKK with a notional value of DKK 341.3 m
(2024: DKK 348.9 m 2023: DKK 325.5 m).
Interest rate swaps with a fair value of $8.3 m (net gain) applying the USD Secured Overnight Financing Rate ("SOFR") compounded in
arrears are designated as hedge accounting relationships to fix a part of TORM's interest payments during the period 2026-2030 with a
notional value of $414.2 m (2024: $498.7 m, 2023: $923.0 m).
Bunker swaps with a fair value $0.0 m are designated as hedge accounting relationships and are used to reduce the exposure to
fluctuations in bunker prices for fixed voyages denominated in MT with a notional value of MT 2,400 (2024: MT 9,000 , 2023: MT
2025 | Notional value | Unit | 2026 | 2027 | After 2027 | |||||
Forward exchange contracts (USD/DKK) ¹⁾ | DKKm | |||||||||
Interest rate swaps ²⁾ | USDm | |||||||||
Bunker swaps ³⁾ | MT |
1) The average hedge of USD/DKK currency was 6.4
2) The average interest rate was 2.76 % p.a. plus margin
3) The average price of the hedging instruments was $391.0
Hedge accounting | Expected maturity | |||||||||
2024 | Notional value | Unit | 2025 | 2026 | After 2026 | |||||
Forward exchange contracts (USD/DKK) ¹⁾ | DKKm | |||||||||
Interest rate swaps ²⁾ | USDm | |||||||||
Bunker swaps ³⁾ | MT | |||||||||
1) The average hedge of USD/DKK currency was 6.8
2) The average interest rate was 1.29 p.a. plus margin.
3) The average price of the hedging instruments was $391.0
Hedge accounting | Expected maturity | |||||||||
2023 | Notional value | Unit | 2024 | 2025 | After 2025 | |||||
Forward exchange contracts (USD/DKK) ¹⁾ | DKKm | |||||||||
Interest rate swaps ²⁾ | USDm | |||||||||
Bunker swaps ³⁾ | MT | |||||||||
1) The average hedge of USD/DKK currency was 6.8
2) The average interest rate was 1.45 p.a. plus margin.
3) The average price of the hedging instruments was $539.2
TORM only enters into interest derivatives under established ISDA agreements supported with or without credit support annexes with
predefined credit thresholds.
Cash collateral of $5.4 m (2024: $11.3 m, 2023: $27.9 m) has been provided as security for the agreements relating to derivative financial
instruments, which does not meet the offsetting criteria in IAS 32, but which can be offset against the net amount of the derivative asset
and derivative liability in case of default, and insolvency, or bankruptcy in accordance with associated collateral arrangements.
NOTE 23 - continued
F-59
TORM did not enter into any enforceable netting arrangements.
Further details on derivative financial instruments are provided in Notes 24 and 25.
income statements and equity in 2025, 2024 and 2023.
Income statement | Other comprehensive income | Equity | |||||||
USDm | Port expenses, bunkers, and commissions | Financial items | Operating expenses | Admini- strative expenses | Transfer to income statement | Fair value adjustment | Hedging reserves as of December 31 | ||
2025 | |||||||||
Forward freight agreements | ( | ||||||||
Bunker swaps | ( | ( | ( | ||||||
Forward exchange contracts | ( | ||||||||
Interest rate swaps | ( | ( | |||||||
Total | ( | ( | |||||||
2024 | |||||||||
Forward freight agreements | |||||||||
Bunker swaps | ( | ||||||||
Forward exchange contracts | ( | ( | ( | ( | |||||
Interest rate swaps | ( | ||||||||
Total | ( | ( | ( | ||||||
2023 | |||||||||
Forward freight agreements | |||||||||
Bunker swaps | ( | ( | |||||||
Forward exchange contracts | ( | ||||||||
Interest rate swaps | ( | ||||||||
Total | ( | ( | |||||||
The hedging reserves as of December 31 relates to derivatives used for cash flow hedge for open hedging instruments, only. Certain
interest rate swaps fair value change are considered ineffective and is recognized in "Financial expenses" in the income statement.
Please refer to page F-57 for a full overview of the fair value of hedge instruments.
Please refer to Note 21 for further information on commercial and financial risks.
F-60
NOTE 23 - continued
Accounting Policies
Derivative financial instruments, primarily forward currency exchange contracts, forward freight agreements, interest rate hedges, and
forward contracts regarding bunker purchases are entered into to mitigate risks relating to future fluctuations in prices and interest rates,
etc. on future committed or anticipated transactions. TORM applies hedge accounting under the specific rules on cash flow hedges,
when appropriate, as described below for each type of derivative.
directly in “Other comprehensive income”. When the hedged transaction is recognized in the income statement, the cumulative value
adjustment recognized in “Other comprehensive income” is transferred to the income statement and included in the same line as the
hedged transaction. Portion of the changes in fair value deemed to be ineffective is recognized immediately in the income statement.
Changes in the fair value of derivative financial instruments not designated as hedges are recognized in the income statement. While
effectively reducing cash flow risk in accordance with the Company’s Risk Management Policy, certain forward freight agreements and
forward contracts regarding bunker purchases do not qualify for hedge accounting. Changes in fair value of these derivative financial
instruments are therefore recognized in the income statement under “Financial income” or “Financial expenses” for interest rate swaps
and under “Port expenses, bunkers and commissions” for forward freight agreements and forward bunker contracts.
F-61
TORM’s overall risk tolerance and inherited exposure to risks is divided into five main categories:
•Emerging risks
•Industry and market risks
•Operational risks
•Compliance and IT risks
•Financial risks
The risks described below under each of the five categories are considered to be among the most significant and quantifiable risks for
TORM.
Emerging Risks
Industry-changing risks, such as the substitution of oil for other energy sources and radical changes in transportation patterns, are
considered to have a relatively high potential impact but are long-term risks. The Management continues to monitor long-term strategic
risks to ensure the earliest possible mitigation of potential risks and develop the necessary capabilities to exploit opportunities created by
the same risks.
Please refer to the Risk Management section in our Sustainability Statement under E1 Climate Change section on page 64 in the Annual
Report 2025 for a detailed description of emerging risks.
Industry and Market Risks
Industry and market-related risk factors relate to changes in the markets and in the political, economic, and physical environment which
the Management cannot control, such as freight rates and vessel and bunker prices.
Freight rate fluctuations
TORM’s income is primarily generated from voyages carried out using the Company’s fleet of vessels. As such, TORM is exposed to
the considerable volatility which characterizes freight rates for such voyages.
It is TORM’s strategy to seek a certain exposure to this risk, as volatility also represents an opportunity because earnings have
historically been higher in the day-to-day market compared to time charters. The fluctuations in freight rates for different routes may
vary substantially. However, TORM aims to reduce the sensitivity to the volatility of such specific freight rates by actively seeking the
optimal geographical positioning of the fleet and by optimizing the services offered to customers. Please refer to Note 12 for details on
impairment testing.
Tanker freight income is to a certain extent covered against general fluctuations through the use of physical contracts such as cargo
contracts and time charter agreements with durations of 6 -36 months . In addition, TORM uses derivative financial instruments such as
forward freight agreements (FFAs) with coverage of typically 0 -24 months ahead, based on market expectations and in accordance with
TORM’s risk management policies.
During 2025, 6.7 % (2024: 8.5 %, 2023: 12.6 %) of the 31,840 earning days deriving from operating the Company’s tankers were covered
in this way. Physical time charter contracts accounted for 80.4 % (2024: 65.6 %, 2023: 8.5 %) of overall coverage. In 2025, the Company
sold FFAs with a notional contract value of $82.6 m (2024: $82.6 m, 2023: $213.9 m) and bought FFAs with a notional contract value of
2023: 5,400,000 metric tons), and the total notional volume bought was 2,725,000 metric tons (2024: 250,000 metric tons, 2023: 0
metric tons). At the end of 2025, the coverage of available earning days for 2026 was 8.5 % through time charters, current spot voyages
and cargo contracts (2024: 12.8 %, 2023: 11.3 %).
FFA trade and other freight-related derivatives are subject to specific policies and guidelines approved by the Risk Committee,
including trading limits, stop-loss policies, segregation of duties, and other internal control procedures.
F-62
NOTE 24 – continued
All things being equal and to the extent the Company’s vessels have not already been chartered out at fixed rates, a freight rate change
of USD/day 1,000 would lead to the following changes in profit before tax based on the expected number of earning days for the
coming financial year:
Sensitivity to changes in freight rates
USDm | 2026 | 2025 | 2024 | |||
Decrease in freight rates of USD/day 1,000: | ||||||
Changes in profit/loss before tax for the following year | ( | ( | ( | |||
Changes in equity for the following year | ( | ( | ( |
Sales and purchase price fluctuations
As an owner of vessels, TORM is exposed to risks associated with changes in the value of the vessels, which can vary considerably
during their useful lives. As of December 31, 2025, the carrying value of the fleet was $2,792.2 m (2024: $2,826.7 m, 2023: $2,070.2 m).
Based on broker valuations, TORM’s fleet had a market value of $3,177.5 m as of December 31, 2025 (2024: $3,582.9 m, 2023:
$3,080.9 m).
Bunker price fluctuations
The cost of fuel oil consumed by the vessels, known in the industry as bunkers, accounted for 63.0 % (2024: 69.0 % 66.6 %) of the total
voyage costs in 2025 and is by far the biggest single cost related to a voyage.
TORM is exposed to fluctuations in bunker prices which are not reflected in the freight rates achieved by TORM. To reduce this
exposure, TORM hedges the bunker exposure with oil product instruments to the extent bunker element in the freight rates achieved is
considered fixed.
Bunker trade is subject to specific risk policies and guidelines approved by the Risk Committee including trading limits, stop-loss, stop-
gain and stop-at-zero policies, segregation of duties and other internal control procedures
TORM only hedges bunker exposure whenever the freight is fixed beyond one month. In 2025, 1.0 % (2024: 6.0 %, 2023: 17.7 %) of
TORM’s total bunker purchase was hedged through bunker hedging contracts. At the end of 2025, TORM had covered 1 % (2024: 7 %,
2023: 5.0 %) of its bunker requirements for 2026. The total bunker exposure is estimated to be approximately 480,916 metric tons.
All things being equal, a price change of 10 % per ton of bunker oil (without subsequent changes in freight rates) would lead to the
following changes in expenditure based on the expected bunker consumption in the spot market:
Sensitivity to changes in the bunker price
USDm | 2026 | 2025 | 2024 | |||
Increase in the bunker prices of 10% per ton: | ||||||
Changes in profit/loss before tax for the following year | ( | ( | ( | |||
Changes in equity for the following year | ( | ( | ( |
Operational Risks
Operational risks are risks associated with the ongoing operations of the business and include risks such as the safe operation of vessels,
the availability of experienced seafarers and staff, terrorism, piracy as well as insurance and counterparty risk.
F-63
NOTE 24 – continued
Insurance Coverage
During the fleet’s operation, various casualties, accidents, and other incidents may occur which may result in financial losses for
TORM. For example national and international rules, regulations, and conventions could mean that TORM may incur substantial
liabilities if a vessel is involved in an oil spill or emission of other environmentally hazardous agents.
To reduce the exposure to these risks, the fleet is insured against such risks to the extent possible. The total insurance program
comprises a broad cover of risks in relation to the operation of vessels and transportation of cargo, including personal injury,
environmental damage and pollution, cargo damage, third-party casualty and liability, hull and machinery damage, total loss, and war.
All TORM’s owned vessels are insured for an amount corresponding to their market value plus a margin to cover any fluctuations.
Liability risks are covered in line with international standards. It is TORM’s policy to cooperate with financially sound international
insurance companies with a credit rating of BBB or better, presently some 14 -16 companies along with
P&I clubs are members of the internationally recognized collaboration, International Group of P&I clubs, and TORM’s vessels are each
insured for the maximum amount available in the P&I system. At the end of 2025, the aggregate insured value of hull and machinery
and interest for TORM’s owned vessels amounted to $3,400.0 m (2024: $4,318.5 m 2023: $2,340.0 m).
Counterparty Risk
Counterparty risk is an ever-present challenge demanding close monitoring to manage and decide on actions to minimize possible
losses. The maximum counterparty risk associated is equal to the values recognized in the balance sheet. A consequential effect of the
counterparty risk is loss of income in future periods, e.g. counterparties not being able to fulfill their responsibilities under a time
charter, a contract of affreightment, or an option. The main risk is the difference between the fixed rates under a time charter or a
contract of affreightment and the market rates prevailing upon default. This characterizes the method for identifying the market value of
a derivative instrument.
TORM has a close focus on its risk policies and procedures to ensure that risks managed in the day-to-day business are kept at agreed
levels, and that changes in the risk situation are brought to the Management’s attention.
TORM’s counterparty risks are primarily associated with:
•Receivables, cash and cash equivalents, including restricted cash
•Contracts of affreightment with a positive fair value
•Derivative financial instruments and commodity instruments with a positive fair value
Receivables, cash, and cash equivalents, including restricted cash
The majority of TORM’s customers are companies operating in the oil industry. It has been assessed that these companies are, to a great
extent, subject to the same risk factors as those identified for TORM.
A major part of TORM’s freight revenues stem from a small group of customers. In 2025, one customer accounted for 8 % of TORM’s
freight revenues (2024: one accounted for 8 %, 2023: one accounted for 8 %). The concentration of earnings on a few customers requires
extra attention to credit risk. TORM has a Credit Policy under which continued credit evaluations of new and existing customers take
place. For long-standing customers, payment of freight normally takes place after a vessel’s cargo has been discharged. For new and
smaller customers, TORM’s credit risk is limited as freight is usually paid prior to the cargo’s discharge, or, alternatively, a suitable
bank guarantee is placed in lieu thereof.
Because of the payment patterns mentioned above, TORM’s receivables primarily consist of receivables from voyages in progress at
year-end and outstanding demurrage. For the past five years, TORM has not experienced any significant losses in respect of charter
payments or any other freight agreements. With regard to the collection of original demurrage claims, TORM’s average stands at 96.0 %
(2024: 98.4 %, 2023: 98.6 %), which is considered to be satisfactory given the differences in interpretation of events. In 2025, demurrage
represented 12 % (2024: 13.0 %, 2023: 16.0 %) of the total freight revenues. Please refer to Note 1 for more details on recognition of
demurrage claims into revenue.
F-64
NOTE 24 – continued
Excess liquidity is placed on deposit accounts with major banks with strong and acceptable credit ratings or invested in secure papers
such as American or Danish government bonds, or triple AAA-rated money market funds. Cash is invested with the aim of getting the
highest possible yield, while maintaining a low counterparty risk, and having adequate liquidity reserves for possible investment
opportunities or to withstand a sudden drop in freight rates.
Derivative Financial Instruments and Commodity Instruments
In 2025, 100 % (2024: 100 %, 2023: 100 %) of TORM’s forward freight agreements (FFAs) were traded via clearing houses or over-the-
counter (OTC). Trade via clearing houses effectively reduces counterparty credit risk by daily clearing of balance and OTC trades are
only done with investment grade counterparties. Over-the-counter fuel swaps have restrictively been entered into with major oil
companies, banks, or highly reputed partners with a satisfactory credit rating. TORM also trades FX and interest derivatives. All such
derivatives were entered into with investment grade counterparties.
Financial risks
Financial risks relate to TORM’s financial position, financing, and cash flows generated by the business, including foreign exchange
risk and interest rate risk. TORM’s liquidity and capital resources are described in Note 2.
Foreign Exchange Risk
TORM uses USD as its functional currency because most of the Company’s transactions are denominated in USD. The foreign
exchange risk is thereby limited to cash flows not denominated in USD. The primary risk relates to transactions denominated in DKK,
EUR, and SGD and relates to administrative and operating expenses.
The part of TORM’s expenses denominated in currencies other than USD accounts for approximately 61.2 % (2024: 57.8 %, 2023:
administrative and operating expenses in DKK and EUR for 2026 are approximately DKK 502.6 m, whereof 67.9 % (2024: 69.1 %, 2023:
USD/DKK currency rate is 6.41 . FX exposure is hedged in its entirety for all risks.
TORM assumes identical currency risks arising from exposures in DKK and EUR.
Sensitivity to Changes in the USD/DKK and USD/EUR Exchange Rate
before tax and equity as follows:
USDm | 2026 | 2025 | 2024 | |||
Effect of a 10% increase of DKK and EUR: | ||||||
Changes in profit/loss before tax for the following year | ( | ( | ( | |||
Changes in equity for the following year | ( | ( | ( |
Interest rate risk
TORM’s interest rate risk generally relates to interest-bearing borrowings. All TORM’s loans for financing vessels are denominated in
USD. Please refer to Note 19 for additional information on borrowings. At the end of 2025, TORM had fixed 74.1 % (2024: 82.7 %,
2023: 86.9 %) of the debt then outstanding with interest rate swaps, fixed rate leasing debt and senior unsecured bond corresponding to
an amount of $742.8 m. $414.2 m of this amount is hedged at an interest rate of 2.76 % plus margin with interest rate swaps with maturity
in the period 2026-2030.
F-65
NOTE 24 – continued
Sensitivity to Changes in Interest Rates
USDm | 2026 | 2025 | 2024 | |||
Effect of a 1%-point increase in interest rates: | ||||||
Changes in profit/loss before tax for the following year | ( | ( | ( | |||
Changes in equity for the following year |
Liquidity risk
TORM’s strategy is to ensure continuous access to funding sources by maintaining a robust capital structure and a close relationship
with several financial partners. As of December 31, 2025, TORM’s loan portfolio was spread across 14 different banks.
As of December 31, 2025, TORM maintains a liquidity reserve of $163.5 m in cash and cash equivalents, including restricted cash,
combined with $398.8 m in undrawn and committed credit facilities. Cash is only placed in banks or Money Market Funds with an
investment grade rating. For further information on contractual obligations, including a maturity analysis, please refer to Note 22.
F-66
Observable input (Level 2) | Financial instruments measured at fair value | Financial instruments measured at amortized cost | Total carrying value | |||||
2025 | ||||||||
Financial assets | ||||||||
Loan receivables¹⁾ | ||||||||
Trade receivables¹⁾ | ||||||||
Other receivables³⁾ | ||||||||
Cash and cash equivalents, including restricted cash¹⁾ | ||||||||
Total | ||||||||
Financial liabilities | ||||||||
Borrowings¹⁾²⁾ | ||||||||
Other non-current liabilities | ||||||||
Trade payables¹⁾ | ||||||||
Other liabilities¹⁾³⁾ | ||||||||
Total | ||||||||
2024 | ||||||||
Financial assets | ||||||||
Loan receivables¹⁾ | ||||||||
Trade receivables¹⁾ | ||||||||
Other receivables³⁾ | ||||||||
Cash and cash equivalents, including restricted cash¹⁾ | ||||||||
Total | ||||||||
Financial liabilities | ||||||||
Borrowings¹⁾²⁾ | ||||||||
Other non-current liabilities | ||||||||
Trade payables¹⁾ | ||||||||
Other liabilities¹⁾³⁾ | ||||||||
Total | ||||||||
2023 | ||||||||
Financial assets | ||||||||
Loan receivables¹⁾ | ||||||||
Trade receivables¹⁾ | ||||||||
Other receivables³⁾ | ||||||||
Cash and cash equivalents, including restricted cash¹⁾ | ||||||||
Total | ||||||||
Financial liabilities | ||||||||
Borrowings¹⁾²⁾ | ||||||||
Other non-current liabilities | ||||||||
Trade payables¹⁾ | ||||||||
Other liabilities¹⁾³⁾ | ||||||||
Total |
1) Due to the short maturity, the carrying value is considered to be an appropriate expression of the fair value
2) See Note 20
3) Derivative financial instruments are presented in the balance sheet line "Other receivables" and "Other liabilities"
Fair value hierarchy for financial instruments measured at fair value in the balance sheet
Below, please find the fair value hierarchy for financial instruments measured at fair value in the balance sheet. The financial
instruments in question are grouped into levels 1 to 3 based on the degree to which the fair value is observable.
•Level 2 fair value measurements are those derived from input other than quoted prices included in Level 1 which are
observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)
F-67
NOTE 25 - Continued
Methods and assumptions in determining fair value of financial instruments
Derivative part of other receivables and other liabilities
The fair value of derivatives in other receivables and other liabilities is measured using accepted valuation methods with input variables
such as yield curves, forward curves, spreads, etc. and compared to financial counterparties to ensure acceptable valuations. The
As of December 31, 2025 TORM’s ultimate controlling party is Brookfield Oaktree Holdings, LLC, a limited liability company
incorporated in the USA. The immediate controlling shareholder is OCM Njord Holdings S.á.r.l. (Njord Luxco).
After the end of the year, subsequent changes were made to the B- and C-shares. Refer to Note 2 for description of subsequent events.
Shareholders' contribution and dividends paid are disclosed in the consolidated statement of changes in equity. Dividends to related
parties are paid out based on the related parties’ ownership of shares.
The remuneration of key management personnel, which consists of the Board of Directors, Executive Director and the Senior
Management Team, is disclosed in Note 5.
F-68
USDm | 2025 | 2024 | 2023 | |||
Assets held for sale | ||||||
Number of vessels held for sale end of period | ||||||
Carrying amount | ||||||
Sold and delivered during the year | ||||||
Number of vessels | ||||||
Vessel sales price (CF) ¹⁾ | ||||||
Carrying amount of vessels and capitalized dry-docking | ( | ( | ( | |||
Bunker and lube oil cost | ( | ( | ( | |||
Transaction costs (CF) ²⁾ | ( | ( | ( | |||
Profit on sale | ||||||
Sold last year and delivered during the year | ||||||
Number of vessels | ||||||
Vessel sales price (CF) ¹⁾ | ||||||
Carrying amount of assets held for sale | ( | |||||
Bunker and lube oil cost | ( | |||||
Transaction costs (CF) ²⁾ | ( | |||||
Profit on sale | ||||||
USDm | 2025 | 2024 | 2023 | |||
Reversal of other non-cash movements: | ||||||
Exchange rate adjustments | ( | |||||
Share-based payments | ||||||
Fair value adjustments on derivative financial instruments | ( | ( | ||||
Reversal of provisions adjustments | ( | |||||
Other adjustments | ( | ( | ||||
Total |
USDm | 2025 | 2024 | 2023 | |||
Change in inventories, receivables, and payables: | ||||||
Change in inventories | ( | ( | ||||
Change in receivables | ( | |||||
Change in prepayments | ( | ( | ||||
Change in trade payables and other liabilities | ||||||
Total | ( |
F-69
Entity | Country | ||||
TORM plc | United Kingdom | ||||
Investments in subsidiaries ⁵⁾: | |||||
Entity owned by TORM plc | Country | Ownership ⁴⁾ | |||
TORM A/S | Denmark | % | |||
TORM Singapore Pte. Ltd. | Singapore | % | |||
TORM VesselCo UK Limited ⁷⁾ | United Kingdom | % | |||
VesselCo 9 Pte. Ltd. | Singapore | % | |||
VesselCo 10 Pte. Ltd. ¹⁾ | Singapore | % | |||
VesselCo 12 Pte. Ltd. | Singapore | % | |||
OCM Singapore Njord Holdings Hardrada, Pte. Ltd ²⁾ | Singapore | % | |||
TORM Tanker Corporation ⁶⁾ | USA | % | |||
Entity owned by subsidiaries | Country | Ownership ⁴⁾ | |||
TORM Shipping India Private Limited ³⁾ | India | % | |||
OMCI Marine Services Private Limited ³⁾ | India | % | |||
TORM Middle East DMCC | United Arab Emirates | % | |||
TORM USA LLC ⁶⁾ | USA | % | |||
TORM SHIPPING (PHILS.), INC. | Philippines | % | |||
Marine Exhaust Technology A/S | Denmark | % | |||
ME Production A/S | Denmark | % | |||
Gale Energy ApS | Denmark | % | |||
Marine Exhaust Technology (Hong Kong) Ltd. | China | % | |||
ME Production (Zhejiang) Co, Ltd. | China | % | |||
Suzhou ME Production Technology Co, Ltd.⁶⁾ | China | % |
1) Entities dissolved in the financial year ended December 31, 2023.
2) Entities dissolved in the financial year ended December 31, 2025.
3) Entities with different reporting periods: Indian entities have a financial reporting period that runs from April 01 to March 31 as
required by the Indian government's laws and legislations.
4) For all subsidiaries, ownership and voting rights are the same except for TORM SHIPPING (PHILS.), INC where voting rights are
5) All subsidiaries are consolidated in full.
6) Entities not audited.
7) TORM VesselCo UK Limited (a UK subsidiary, registration number: 15772160) will take advantage of the audit exemption set out
within section 479A of the Companies Act 2006 for the year ended December 31, 2025.
F-70
NOTE 29 - continued
Interest in legal entities included as joint ventures:
The Danish joint venture, Long Range 2 A/S has been dissolved during the year. There has been no activity in the joint venture during
the year and the comparison years.
Denmark | India | Philippines |
Tuborg Havnevej 18 | 2nd Floor | 7th Floor |
DK-2900 Hellerup | Leela Business Park | Salcedo Towers, 169 |
Denmark | Andheri-Kurla Road | HV dela Costa Street |
Andheri (E) | Salcedo Village, | |
Mumbai 400059 | Makati City | |
India | Philippines 1227 | |
Singapore | United Kingdom | USA |
6 Battery Road #27-02 | 4th Floor | Suite 1625 |
Six Battery Road | 120 Cannon Street | 2500 City West |
Singapore 049909 | London, EC4N 6AS | Boulevard |
Singapore | United Kingdom | 77042, Houston , Texas |
USA | ||
Denmark | China | Hong Kong |
Sandholm 7 | 208 Longward Road | Room 12, 10/F |
9900 Frederikshavn | Zhapu Town Ping Hu | Kwai Cheong Centre |
Denmark | Jiaxing City | No. 50 Kwai Cheong Road |
Zhejiang Provice | Kwai Chung, New Territories | |
China | Hong Kong | |
United Arab Emirates | ||
DMCC Business Centre | ||
AU Tower 15-G | ||
JLT Cluster I | ||
Dubai, UAE | ||
United Arab Emirates | ||
F-71
2025 | 2024 | 2023 | ||||
Earnings per share | ||||||
Net profit/(loss) for the year attributable to TORM plc shareholders (USDm) | ||||||
Million shares | ||||||
Weighted average number of shares | ||||||
Weighted average number of treasury shares | ( | ( | ( | |||
Weighted average number of shares outstanding | ||||||
Dilutive effect of outstanding share options | ||||||
Weighted average number of shares outstanding incl. dilutive effect of share options | ||||||
Basic earnings/(loss) per share (USD) | ||||||
Diluted earnings/(loss) per share (USD) |
2025 | 2024 | 2023 | ||||
Dividend per share | ||||||
Declared dividend per share (USD) | ||||||
Declared dividend for the year (USDm) | ||||||
Proposed dividend per share for approval at the annual general meeting (USD) | ||||||
Proposed dividend for approval at the annual general meeting (USDm) | ||||||
Dividends paid per share (USD) | ||||||
Dividends paid during the year (USDm) | ||||||
Number of shares | ||||||
Number of shares, end of period (million) | ||||||
Number of treasury shares, end of period (million) | ( | ( | ||||
Number of shares outstanding, end of period (million) |
Accounting Policies
the weighted average number of common shares outstanding during the period. Treasury shares are not included in the calculation.
Purchases of treasury shares during the period are weighted based on the remaining period.
Diluted earnings per share are calculated by adjusting the consolidated profit or loss available to common shareholders and the weighted
average number of common shares outstanding for the effects of all potentially dilutive shares. Such potentially dilutive common shares
are excluded when the effect of including them would be to increase earnings per share or reduce a loss per share.
F-72
2025 | 2024 | 2023 | ||||
Cash at banks and on hand | ||||||
Cash and cash equivalents | ||||||
Cash provided as security for initial margin calls and negative market values on derivatives, etc.¹⁾ | ||||||
Restricted cash | ||||||
Cash and cash equivalents, including restricted cash |
1) The counterparties have an obligation to return any excess cash provided as security to the Group upon settlement or early
F-73
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of TORM plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TORM plc (the Company) as of December 31, 2025, 2024 and 2023,
the related consolidated income statements, statements of comprehensive income, statements of changes in equity and cash flow
statements for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company at December 31, 2025, 2024 and 2023, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2025, in conformity with IFRS Accounting Standards as issued by the International
Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our
report dated February 26, 2026, expressed an unqualified opinion thereon.
Basic for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to
the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures
to which it relates.
F-74
Vessel impairment indicator assessment
Description of the Matter | At December 31, 2025, the carrying value of the Company’s vessels and capitalized dry-docking was USD 2,792 million. As discussed in Notes 1 and 12 to the consolidated financial statements, the Company assesses impairment indicators at each reporting date or whenever events or changes in circumstances would indicate that the carrying amounts of its vessels might not be recoverable in accordance with IAS 36 Impairment of Assets. The Company prepares the impairment indicator assessment at the cash generating unit (CGU) level, which has been determined as the LR1, LR2 and MR vessels (the Tanker Fleet) as they are operated collectively, are largely interchangeable and the cash flows generated by them are interdependent from other vessels. In assessing vessel impairment indicators, the Company monitors the fair value of the vessels, which was calculated as the average of two valuations prepared by independent shipbrokers. Based on the assessment, the Company concluded that the no vessel impairment indicators required the Company to prepare an impairment test as of December 31, 2025. | |
Auditing the Company’s vessel impairment indicator assessment was complex due to the significant judgment required by Management in determining the CGUs and determining whether impairment indicators required the Company to prepare an impairment test. The vessel impairment indicator with significant judgment was Management’s assessment of the fair value of the vessels using independent shipbroker valuations, which use a combination of vessel specific inputs such as size, yard and age of the vessels and assumptions based on market data, including recent comparable vessel transactions. | ||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over the Company’s impairment indicator assessment process, including controls over the identification of CGUs and review of the vessels’ fair value. | |
We performed audit procedures on the impairment indicator assessment that included, among others, re- evaluating management’s CGU determination by assessing their analysis in respect of the smallest group of assets that generate largely independent cash flows. We inspected evidence used in Management's determination of the collective operation and homogenous nature of the Tanker Fleet in relation to the CGU determination. We evaluated the determination of the fair value of the vessels by comparing them to the average of two valuations prepared by independent shipbrokers. We performed inquiries with the independent shipbrokers regarding the valuation methodology applied and input data used and evaluated their competence, capabilities and objectivity. We involved our valuation specialists to assist with our audit procedures specific to the valuation of the Tanker Fleet and evaluating the methodology applied by Management’s specialists. We tested the input data used for the valuation of the vessels in the Tanker Fleet by comparing vessel specific inputs with vessel records and supporting documentation as well as evidence obtained in other areas of the audit. We further performed a retrospective comparison of historical sales prices of vessels with the independent broker valuations near the time of disposal and compared the valuations to recent market data for comparable vessels. We assessed the adequacy of the Company’s disclosures in Notes 1 and 12 to the consolidated financial statements. |
/s/ EY Godkendt Revisionspartnerselskab
We have served as the Company’s auditor since 2020.
February 26, 2026
F-75
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of TORM plc
Opinion on Internal Control Over Financial Reporting
We have audited TORM plc’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)
(the COSO criteria). In our opinion, TORM plc (the Company) maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the 2025 consolidated financial statements of the Company and our report dated February 26, 2026, expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ EY Godkendt Revisionspartnerselskab
Copenhagen, Denmark
February 26, 2026
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the
undersigned to sign this annual report on its behalf.
TORM PLC | ||||
By: | /s/ Jacob Meldgaard | |||
Name: Jacob Meldgaard | ||||
Title: Executive Director and Principal Executive Officer | ||||
Date: February 26, 2026
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