Second quarter report 2012Announcement no. 30 / 21 August 2012 Second quarter report 2012 Page 1 of 22TORM recognized a loss before tax of USD 59 million in the second quarter of2012 before special items of USD -73 million. “The financial results in thesecond quarter of 2012 were negatively affected by the challenging marketconditions as well as TORM’s difficult financial situation. TORM experiencesfull support for a final restructuring agreement from all involved parties,”says CEO Jacob Meldgaard. • The financial results were adversely affected by TORM’s financial situation.EBITDA for the second quarter of 2012 was a loss of USD 23 million includingnegative mark-to-market non-cash adjustments of USD 8 million and loss fromsale of vessels of USD 5 million in a jointly controlled company, compared toan EBITDA gain of USD 30 million in the second quarter of 2011. Impairmentlosses from FR8 accounted for USD 42 million in the second quarter of 2012,compared to no impairment losses in the same period of 2011. In addition,financial expenses for the second quarter of 2012 include USD 18 million inrestructuring costs. The result before tax for the second quarter of 2012 was aloss of USD 132 million, compared to a loss of USD 24 million in the sameperiod of 2011. • The product tanker freight rates continued to be under pressure in the secondquarter of 2012, as global economic indicators were sluggish. In the West, MRfreight rates were negatively affected by weaker US East Coast product demandand higher US refinery utilization. In the East, the freight markets for LR2and LR1 vessels saw an increase in activity in June mainly due to the effectsof the jet oil arbitrage from the Arabian Gulf to Europe. In general, themarkets are still suffering from tonnage oversupply. • The bulk market experienced positive freight rate movements in April 2012 asa result of the South American grain season, which was replaced by a negativemarket sentiment due to the macroeconomic uncertainty and events like theIndonesian commodity export ban. The second quarter of 2012 continued to see ahigh influx of newbuildings in all main segments. • As stated in announcement no. 14 dated 4 April 2012 and further elaborated inannouncement no. 20 dated 23 April 2012, TORM is still working closely with itsbanks and time charter partners on a financing and restructuring plan. • The completion of a restructuring agreement is a prerequisite for TORM’scontinued operation. • TORM’s cost program has led to a reduction of administration costs to USD 17million in the second quarter of 2012, equivalent to a reduction of 7% comparedto the same period of 2011. • In the second quarter of 2012, TORM sold its shares in a JV entity which mainasset was the 2007-built LR1 vessel, TORM Ugland. This led to a loss of USD 5million which is booked under results from jointly controlled entities. • The book value of the fleet excluding financial lease vessels as of 30 June2012 was USD 2,193 million. Based on broker valuations, TORM’s fleet excludingfinancial lease vessels had a market value of USD 1,370 million as of 30 June2012. TORM estimates the fleet's total long-term earning potential each quarterbased on future discounted cash flows. The estimated value for the fleet as at30 June 2012 supports the book value. • Net interest-bearing debt amounted to USD 1,852 million in the second quarterof 2012 compared to USD 1,838 million as at 31 March 2012. • Cash totalled USD 17 million at the end of the second quarter of 2012 and theCompany has no available credit lines. TORM has no order book and therefore noCAPEX related hereto. As at 20 August 2012 the cash totalled USD 33 million. • Booked equity amounted to USD 435 million as at 30 June 2012, equivalent toUSD 6.2 per share (excluding treasury shares), giving TORM an equity ratio of17%. • As at 30 June 2012, TORM had covered 12% of the remaining tanker earning daysin 2012 at USD/day 14,300 and 4% of the earning days in 2013 at USD/day 15,005.119% of the remaining bulk earning days in 2012 are covered at USD/day 12,148and 27% of the 2013 earnings days at USD/day 17,454. • The financial result for 2012 is subject to considerable uncertainty givenTORM’s financial situation and the changes to the Company’s business model thatmay follow. Consequently, TORM has decided not to provide earnings guidance for2012 until the comprehensive, long-term financing solution is in place. TeleconferenceContact TORM A/STORM will be holding a teleconference for financial analystsand investors at 15:00 Danish time today. Please call 10minutes before the conference is due to start on +45 32714607 (from Europe) or +1 887 491 0064 (from the USA). Thepresentation documents can be downloaded from TORM'swebsite.Tuborg Havnevej 18, DK-2900 Hellerup, DenmarkTel.: +45 39 17 92 00 / Fax: +45 39 17 93 93www.torm.comJacob Meldgaard, CEO, tel.: +45 39 17 92 00Roland M. Andersen, CFO, tel.: +45 39 17 92 00Christian Søgaard-Christensen, IR, tel.: +45 30 76 12 88Key figures*) Gains/losses from sale of vessels and the mark-to-market adjustments of'Other financial assets' are not annualized when calculating the return on equity.**) Gains/losses from sale of vessels are not annualized when calculating theReturn on Invested Capital. Q1-Q2 Q1-Q2Million USD Q2 2012 Q2 2011 2012 2011 2011Income statementRevenue 272.3 335.7 582.9 606.1 1,305.2Time charter equivalent earnings (TCE) 102.6 178.8 254.6 326.3 644.3Gross prof it 0.6 39.1 27.9 66.9 81.0EBITDA -22.9 29.5 -30.0 33.6 -43.8Operating prof it (EBIT) -98.5 -7.0 -139.6 -39.5 -388.6Prof it/(loss) before tax -132.1 -23.7 -210.6 -68.6 -451.4Net prof it/(loss) -132.1 -24.3 -210.8 -69.6 -453.0Balance sheetTotal assets 2,543.8 3,201.8 2,543.8 3,201.8 2,779.2Equity 434.5 1,036.9 434.5 1,036.9 643.8Total liabilities 2,109.3 2,164.9 2,109.3 2,164.9 2,135.4Invested capital 2,274.4 2,857.7 2,274.4 2,857.7 2,425.1Net interest bearing debt 1,851.8 1,823.9 1,851.8 1,823.9 1,786.8Cash flowFrom operating activities -19.5 -30.2 -76.1 -41.3 -74.8From investing activities 5.9 60.3 11.1 93.4 168.2Thereof investment in tangible f ixed assets -4.4 -34.4 -48.5 -102.4 -118.4From f inancing activities 0.9 -25.4 -3.8 -25.0 -127.8Total net cash f low -12.7 4.7 -68.8 27.1 -34.4Key financial figuresGross margins:TCE 37.7% 53.3% 43.7% 53.8% 49.4%Gross prof it 0.2% 11.6% 4.8% 11.0% 6.2%EBITDA -8.4% 8.8% -5.1% 5.5% -3.4%Operating prof it -36.2% -2.1% -23.9% -6.5% -29.8%Return on Equity (RoE) (p.a.)*) -98.0% -10.7% -75.2% -12.9% -51.5%Return on Invested Capital (RoIC) (p.a.)**) -16.8% -1.7% -11.2% -2.8% -14.4%Equity ratio 17.1% 32.4% 17.1% 32.4% 23.2%Exchange rate USD/DKK, end of period 5.90 5.16 5.90 5.16 5.75Exchange rate USD/DKK, average 5.80 5.18 5.73 5.32 5.36Share related key figuresEarnings per share, EPS USD -1.9 -0.3 -3.0 -1.0 -6.5Diluted earnings per share, EPS USD -1.9 -0.3 -3.0 -1.0 -6.5Cash f low per share, CFPS USD -0.3 -0.4 -1.1 -0.6 -1.1Share price, end of period (per share of DKK 5 each) DKK 2.1 21.7 2.1 21.7 3.7Number of shares, end of period Million 72.8 72.8 72.8 72.8 72.8Number of shares (excl. treasury shares), average Million 69.6 69.5 69.6 69.669.6 Announcement no. 30 / 21 August 2012 Second quarter report 2012 3 of 22ResultsIn general, TORM’s financial results have been negatively affected by thecombination of adverse market conditions and the uncertainty about the Company’s difficult financialsituation. The result before tax for the second quarter of 2012 was a loss of USD 132million, compared to a loss of USD 24 million in the same period of 2011. The result before depreciation (EBITDA) forthe second quarter of 2012 was a loss of USD 23 million, compared to a gain of USD 30 million in the same periodof 2011. In addition, the result was negatively impacted by mark-to-market non-cash adjustments of USD 8 millionin total, compared to a gain of USD 2 million in the same period of 2011.The Tanker Division reported an operating loss of USD 42 million in the secondquarter of 2012, compared to an operating profit of USD 1 million in the same period last year. The sale ofshares in a JV entity which main asset was the 2007-built LR1 vessel, TORM Ugland led to a loss of USD 5 million inthe second quarter of 2012. The Bulk Division had an operating loss in the second quarter of 2012 of USD 13million, compared to a loss of USD 7 million in the second quarter of 2011.Other (not allocated) activities include an impairment loss on FR8 of USD 42million and financial expenses of USD 18 million in costs related to the restructuring of the Company’s capitalstructure. The activity in TORM’s 50% ownership in FR8 Holding Pte. Ltd. is included in“not-allocated” Profit/(loss) by segmentMillion USDTanker Bulk Not Tanker Bulk NotDivision Division allocated Total Division Division allocated TotalRevenue 232.6 39.7 0.0 272.3 484.0 98.9 0.0 582.9Port expenses, bunkers and commissions -137.0 -24.6 0.0 -161.6 -275.7 -58.1 0.0-333.8 Freight and bunkers derivatives -0.1 -8.0 0.0 -8.1 -0.5 6.0 0.0 5.5Time charter equivalent earnings 95.5 7.1 0.0 102.6 207.8 46.8 0.0 254.6Charter hire -43.7 -16.9 0.0 -60.6 -94.9 -50.1 0.0 -145.0Operating expenses -40.4 -1.0 0.0 -41.4 -80.0 -1.7 0.0 -81.7Gross profit (Net earnings from shipping activities) 11.4 -10.8 0.0 0.6 32.9-5.0 0.0 27.9 Prof it from sale of vessels 0.0 0.0 0.0 0.0 -15.9 0.0 0.0 -15.9Administrative expenses -14.8 -1.7 0.0 -16.5 -29.7 -3.4 0.0 -33.1Other operating income 0.3 0.1 0.0 0.4 0.8 0.1 0.0 0.9Share of results of jointly controlled entities -5.5 0.0 -1.9 -7.4 -5.4 0.0-4.4 -9.8 EBITDA -8.6 -12.4 -1.9 -22.9 -17.3 -8.3 -4.4 -30.0Impairment losses on jointly controlled entities 0.0 0.0 -41.5 -41.5 0.0 0.0-41.5 -41.5 Amortizations and depreciation -33.5 -0.6 0.0 -34.1 -66.8 -1.3 0.0 -68.1Operating profit (EBIT) -42.1 -13.0 -43.4 -98.5 -84.1 -9.6 -45.9 -139.6Financial income - - 3.2 3.2 - - 6.8 6.8Financial expenses - - -36.8 -36.8 - - -77.8 -77.8Profit/(loss) before tax - - -77.0 -132.1 - - -116.9 -210.6Tax - - 0.0 0.0 - - -0.2 -0.2Net profit/(loss) for the period - - -77.0 -132.1 - - -117.1 -210.8Q2 2012 Q1-Q2 2012Announcement no. 30 / 21 August 2012 Second quarter report 2012 4 of 22Outlook and coverageThe financial result for 2012 is subject to considerable uncertainty givenTORM’s financial situation and the changes to the Company’s business model that may follow. Consequently, TORM hasdecided not to provide earnings guidance for 2012 before a comprehensive, long-term financing solutionis in place. With 13,782 earning days for 2012 open as at 30 June 2012, a change of USD/dayof 1,000 in freight rates will currently impact the profit before tax by approx. USD 14 million.As at 30 June 2012, TORM had covered 12% of the remaining earning days in 2012in the Tanker Division at USD/day 14,300 and 119% of the remaining earning days in the Bulk Division atUSD/day 12,148. The table below shows the figures for the period from 1 July to 31 December 2012. 2013and 2014 are full year figures. 2012 2013 2014 2012 2013 2014Ow ned daysLR2 1,600 3,187 3,267LR1 1,281 2,509 2,509MR 7,069 13,997 14,075Handy size 2,013 3,975 3,944Tanker Division 11,963 23,667 23,795Panamax 364 726 694Handymax - - -Bulk Division 364 726 694Total 12,326 24,393 24,489T/C in days T/C in costs (USD/day)LR2 366 726 725 20,733 20,729 20,916LR1 2,009 2,979 2,210 22,387 23,881 24,000MR 1,830 3,590 3,267 13,643 13,905 14,135Handy size - - - - - -Tanker Division 4,205 7,295 6,202 18,437 18,658 18,443Panamax 1,465 2,690 3,046 16,050 16,231 16,157Handymax 307 363 363 15,827 15,995 15,995Bulk Division 1,772 3,053 3,409 16,011 16,203 16,140Total 5,977 10,348 9,611 17,718 17,934 17,626Total physical days Covered daysLR2 1,966 3,913 3,992 216 278 225LR1 3,290 5,488 4,719 534 365 175MR 8,899 17,587 17,342 1,182 743 -Handy size 2,013 3,975 3,944 54 - -Tanker Division 16,168 30,962 29,997 1,985 1,386 400Panamax 1,829 3,416 3,740 1,843 79 -Handymax 307 363 363 693 948 869Bulk Division 2,136 3,779 4,103 2,536 1,027 869Total 18,303 34,741 34,100 4,521 2,413 1,269Coverage rates (USD/day)LR2 11% 7% 6% 14,838 17,005 17,099LR1 16% 7% 4% 15,109 15,666 15,666MR 13% 4% 0% 13,911 13,932 -Handy size 3% 0% 0% 12,681 - -Tanker Division 12% 4% 1% 14,300 15,005 16,472Panamax 101% 2% 0% 12,209 18,065 -Handymax 226% 261% 239% 11,983 17,403 17,644Bulk Division 119% 27% 21% 12,148 17,454 17,644Total 25% 7% 4% 13,093 16,047 17,275Fair value of f reight rate contracts that are mark-to-market in the incomestatement (USD million): Contracts not included above 0.0Contracts included above 2.5NotesActual no. of days can vary from projected no. of days primarily due to vesselsales and delays of vessel deliveries. T/C in costs do not include potential extra payments from prof itsplit arrangements. Covered %Announcement no. 30 / 21 August 2012 Second quarter report 2012 5 of 22Tanker DivisionThe product tanker freight rates continued to be under pressure in the secondquarter of 2012, as global economic indicators were sluggish. Most notably, this included the continuedEuropean financial crisis and decreasing GDP growth in both China and the USA, which negatively impacted theglobal oil consumption and subsequently the oil product transportation.In the West, MR freight rates were negatively affected by the closed gasolineand diesel arbitrage between the European Continent and the USA, weaker US East Coast product demand and higherutilization in the US refineries. In addition, the MR freight rates were hampered by an overallmigration of vessels from the East. In the East, the freight rates for LR2 and LR1 vessels increased during Junemainly due to the jet oil arbitrage opening to Europe, which also had positive spill-over effects on the activitiesin the Arabian Gulf. Palm oil exports from Indonesia climbed ~10% in June compared to May, but the overall palm oilexports have declined since the end of 2008, mainly due to the European financial crisis and subsequent lowerdemand. The global product tanker fleet grew by ~1% in the second quarter of 2012(source: SSY). In general, the markets are still suffering from tonnage oversupply.The Tanker division’s results continued to be adversely affected by TORM’sfinancial situation. However, the Company outperformed spot benchmarks across all segments; but, the generalmarket sentiment in the second quarter of 2012 was weaker than last year. TORM achieved LR2 spot rates ofUSD/day 10,206 in the second quarter of 2012, which was at the same level as in the second quarter lastyear. The segment is still affected by substitution from the Aframax and Suezmax newbuildings and general oversupplyof tonnage. The LR1 spot rates were at USD/day 11,237, down by 26% year-on-year, and TORM’s largest segment(MR) was at USD/day 11,510, down by 25% year-on-year. The Handysize spot rates were at USD/day10,939, down by 18% year-onyear. The Tanker Division’s operating loss for the second quarter of 2012 was USD 42million, compared to a gain of USD 1 million in the same period 2011. Mark-to-market effects were negativewith USD 1 million. Q4 11 Q1 12 Q2 12 ChangeQ2 11- Q2 12LR2 (Aframax, 90-110,000 DWT)Available earning days 1,153 1,158 1,092 899 854 -26%Spot rates1) 10,612 10,836 11,959 10,814 10,206 -4%TCE per earning day2) 12,542 12,423 15,647 7,865 14,157 13% 12,649Operating days 1,183 1,196 1,121 1,001 1,001 -15%Operating expenses per operating day3) 5,781 6,721 6,133 5,976 7,001 21% 6,458LR1 (Panamax 75-85,000 DWT)Available earning days 2,164 2,208 2,081 2,076 1,879 -13%Spot rates1) 15,174 9,841 7,678 12,515 11,237 -26%TCE per earning day2) 14,962 9,467 9,020 12,977 11,747 -21% 10,758Operating days 637 644 644 637 637 0%Operating expenses per operating day3) 6,135 6,481 6,419 6,389 5,798 -5% 6,272MR (45,000 DWT)Available earning days 4,373 4,511 4,477 4,681 4,362 0%Spot rates1) 15,315 11,749 14,080 14,363 11,510 -25%TCE per earning day2) 15,867 12,910 13,335 14,082 11,418 -28% 12,959Operating days 3,549 3,496 3,496 3,557 3,549 0%Operating expenses per operating day3) 6,629 6,732 5,929 6,743 6,756 2% 6,540Handysize (35,000 DWT)Available earning days 996 992 978 989 981 -2%Spot rates1) 13,403 10,582 9,483 12,823 10,939 -18%TCE per earning day2) 11,983 12,020 9,809 13,122 12,189 2% 11,790Operating days 1,001 1,012 1,012 1,001 1,001 0%Operating expenses per operating day3) 5,183 5,436 6,919 5,577 5,686 10% 5,90412 monthavg.Tanker Division Q2 11 Q3 111) Spot rates = Time Charter Equivalent Earnings for all charters with lessthan 6 months duration = Gross freight income less bunker, commissions and portexpenses. 2) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker,commissions and port expenses. 3) Operating expenses are related to owned vessels.Announcement no. 30 / 21 August 2012 Second quarter report 2012 6 of 22Bulk DivisionThe bulk market experienced positive freight rate movements in April 2012 as aresult of the South American grain season, which was replaced by a negative market sentiment due to themacroeconomic uncertainty and events like the Indonesian commodity export ban.In the Pacific spot market, the Cape market continued its dismal performance asa result of continued tonnage inflow, high iron ore prices and high stock levels in the Chinese ports withfreight rates dropping to USD/day 3- 4,000. Freight rates in the Panamax segment were about USD/day 7-10,000throughout the period. The reduced trade volumes from the Indonesian export ban especially affected the Handymaxsegment where freight rates temporarily dropped to USD/day 3-4,000 and later increased to USD/day 8-9,000.In the Atlantic spot market, the freight rates for Panamax initially benefittedfrom the South American grain season, reaching USD/day 15-16,000 only to drop back in May to USD/day 4-5,000and finally improving towards the end of June to USD/day 7-8,000. The Handymax segment continued to showstrength – especially for South American and West African activities on iron ore, sugar and grains – withfronthaul freight rates at USD/day ~20,000.The number of newbuilding deliveries in the second quarter of 2012 continued atsimilar high levels as realized in the first quarter of 2012 with 76 Capesize, 102 Panamax and 95 Handymax vesselsbeing delivered (source: SSY).TORM experienced a continued high number of waiting days and ballasting time inthe second quarter of 2012 due to the adverse effects from the Company’s financial situation. TORM’sPanamax time charter equivalent (TCE) earnings in the second quarter of 2012 were USD/day 9,647 or 40% belowthe same period in 2011. The realized TCE earnings for Handymax during the second quarter of 2012 wereUSD/day 4,353, which is 65% lower than in the same period of 2011. The Handymax earnings have been negativelyaffected by position voyages by the end of the quarter.The Bulk Division’s result was an operating loss of USD 13 million, whichincluded negative mark-to-market effects on unrealized bunker hedge of USD 10 million.Q2 12 ChangeQ2 11- Q2 12Panamax (60-80,000 DWT)Available earning days 2,068 2,279 3,127 1,848 1,447 -30%TCE per earning day2) 16,015 12,140 14,357 9,670 9,647 -40% 11,998Operating days 182 184 184 182 182 0%Operating expenses per operating day3) 3,904 5,126 3,896 3,934 5,130 31% 4,522Handymax (40-55,000 DWT)Available earning days 1,133 1,152 1,361 642 260 -77%TCE per earning day2) 12,554 12,510 13,403 11,763 4,353 -65% 12,105Operating days - - - - - - -Operating expenses per operating day3) - - - - - - -Q2 11 Q3 11 Q4 11 Q1 12 12 monthavg.Bulk Division1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker,commissions and port expenses. 2) Operating expenses are related to owned vessels.Announcement no. 30 / 21 August 2012 Second quarter report 2012 7 of 22Fleet developmentDuring the second quarter of 2012, TORM sold its shares in the JV entity thatowned the LR1 vessel, TORM Ugland. Following the sale, TORM’s owned fleet consists of 66 product tankersand two dry bulk vessels. TORM does not have any newbuildings on order. At the end of the second quarter of2012, outstanding CAPEX relating to the order book was thus zero, compared to USD 167 million in the same periodof 2011. TORM’s operated fleet as at 30 June 2012 is shown in the table below. Inaddition to the 68 owned vessels, TORM had chartered-in 25 product tankers and 11 bulk vessels on longer timecharter contracts (minimum one year contracts) and five bulk vessels on shorter time charter contracts (lessthan one year contracts). Another 18 product tankers were either in pools or under commercial management with TORM.# of vesselsQ1 2012 Changes Q2 2012 2012 2013 2014 2015Owned vesselsLR2 9.0 - 9 .0LR1 7.5 -0.5 7.0MR 39.0 - 39.0Handysize 11.0 - 11.0Tanker Division 66.5 -0.5 66.0 - - - -Panamax 2.0 - 2 .0Handymax - -Bulk Division 2 .0 - 2 .0 - - - -Total 68.5 -0.5 68.0 - - - -T/C-in vessels with contract period >= 12 monthsLR2 2.0 - 2 .0LR1 16.0 -3.0 13.0MR 12.0 -2.0 10.0Handysize - -Tanker Division 30.0 -5.0 25.0 - - - -Panamax 11.0 -2.0 9.0 1 .0 1 .0 2 .0Handymax 2.0 - 2 .0Bulk Division 13.0 -2.0 11.0 1.0 1 .0 2 .0 -Total 43.0 -7.0 36.0 1.0 1 .0 2 .0 -T/C-in vessels with contract period < 12="" monthslr2lr1mrhandysizetanker="" division="" -="" -="" -panamax="" 3.0="" -="" 3="" .0handymax="" 2.0="" -="" 2="" .0bulk="" division="" 5="" .0="" -="" 5="" .0total="" 5.0="" -="" 5="" .0pools/commecial="" management="" 20.0="" -2.0="" 18.0total="" fleet="" 136.5="" -9.5="" 127.0current="" fleetnewbuildings="" and="" t/c-in="" deliverieswith="" a="" period="">= 12 monthsAnnouncement no. 30 / 21 August 2012 Second quarter report 2012 8 of 22Notes on the financial reportingAccounting policiesThe interim report for the period 1 January – 30 June 2012 is presented inaccordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and additional Danishdisclosure requirements for interim reports of listed companies. The interim report has been preparedusing the accounting policies as for the Annual Report for 2011. The accounting policies aredescribed in more detail in the Annual Report for 2011. As from 1 January 2012, TORM has implemented theamendment to IFRS 7 regarding disclosures about transfer of financial assets. The amendedstandard has not affected recognition and measurement in TORM's interim report for the firsthalf of 2012. The interim report of the second quarter of 2012 is unaudited, in line with thenormal practice. Income statementThe gross profit for the second quarter of 2012 was USD 1 million, compared toUSD 39 million for the corresponding period in 2011.The second quarter of 2012 was not impacted by gains from sale of vessels,whereas the second quarter of 2011 had a gain of USD 7 million from sale of vessels.Administrative costs in the second quarter of 2012 were USD 17 million, compared to USD 18 million in the secondquarter of 2011. The result before depreciation (EBITDA) for the second quarter of 2012 was aloss of USD 23 million, compared to a profit of USD 30 million for the corresponding period of2011. Loss from sales of vessels constituted USD 5 million in the second quarter of 2012, whichis booked under results from jointly controlled entities.Impairment losses on jointly controlled entities (FR8) constituted USD 42million for the second quarter of 2012, subsequently the book value is set to USD 0 million. Incomparison, there was no impairment in the second quarter of 2011.Depreciation in the second quarter of 2012 was USD 34 million, USD 3 millionlower than the second quarter of 2011. This decrease was due to vessel sales during first halfof 2012. The primary operating result for the second quarter of 2012 was a loss of USD99 million, compared to a loss of USD 7 million in the same quarter of 2011.The second quarter of 2012 was negatively impacted by mark-to-market non-cashadjustments of USD 8 million in total: Negative USD 11 million in connection with FFA/bunkerderivatives and the positive net effect from other financial derivatives amounting to USD 3million. The second quarter of 2011 had positive mark-to-market non-cash adjustments of USD 2 million.Financial expenses of USD 37 million include USD 18 million in restructuringcosts – primarily fees to advisors of the Company and the Company’s creditors related to the work on arestructuring agreement.The result after tax was a loss of USD 132 million in the second quarter of2012, as against a loss of USD 24 million in the second quarter of 2011.AssetsTotal assets were down from USD 2,779 million as at 31 December 2011 to USD2,544 million as at 30 June 2012. The book value of the fleet excluding financial lease vessels asof 30 June 2012 was USD 2,193 million. Based on broker valuations, TORM’s fleet excluding financiallease vessels had a market value of USD 1,370 million as of 30 June 2012. TORM estimates thefleet's total long-term earning potential each quarter based on future discounted cash flows. Theestimated value for the fleet as at 30 June 2012 supports the book value.DebtNet interest-bearing debt was USD 1,852 million as at 30 June 2012, compared toUSD 1,838 million as at 31 March 2012. As at 30 June 2012, TORM was in breach of itsfinancial covenants Announcement no. 30 / 21 August 2012 Second quarter report 2012 9 of 22under the existing loan agreements. As at 30 June 2012, TORM did not have astandstill agreement with the bank group and therefore the Company no longer has the right to deferpayments until such time as the final restructuring agreement has been entered into.EquityEquity declined in the second quarter of 2012 from USD 569 million as at 31March 2012 to USD 435 million primarily due to the loss during the period. Equity as a percentageof total assets was 17% as at 30 June 2012, compared to 23% as at 31 December 2011.TORM held 3,230,432 treasury shares as at 30 June 2012, equivalent to 4.4% ofthe Company's share capital. This is the same level as of 31 March 2012.LiquidityTORM had cash of USD 17 million at the end of the second quarter of 2012 and nocredit lines available. TORM has no order book and therefore no CAPEX related hereto. As at20 August 2012 the cash totalled USD 33 million.Post balance sheet eventsNo subsequent events have occurred after the balance sheet date which wouldmaterially affect the financial performance of the Company.Financial calendarTORM's third quarter report for 2012 will be published on 7 November 2012.TORM's complete financial calendar can be found at www.torm.com/investor-relations.About TORMTORM is one of the world’s leading carriers of refined oil products as well asa significant player in the dry bulk market. The Company operates a fleet of approximately 125 modern vessels in cooperation with other respectedshipping companies sharing TORM’s commitment to safety, environmental responsibility and customer service.TORM was founded in 1889. The Company conducts business worldwide and isheadquartered in Copenhagen, Denmark. TORM’s shares are listed on NASDAQ OMX Copenhagen (ticker: TORM) and on NASDAQ in New York(ticker: TRMD). For further information, please visit www.torm.com.Safe Harbor statements as to the futureMatters discussed in this release may constitute forward-looking statements.Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerningplans, objectives, goals, strategies, future events or performance, and underlying assumptions and statements other than statements of historicalfacts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon furtherassumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other dataavailable from third parties. Although TORM believes that these assumptions were reasonable when made, because these assumptions are inherentlysubject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, TORM cannotguarantee that it will achieve or accomplish these expectations, beliefs or projections.Important factors that, in our view, could cause actual results to differmaterially from those discussed in the forward- looking statements include the strength of the world economy and currencies, changes in charter hire ratesand vessel values, changes in demand for “tonne miles” of oil carried by oil tankers, the effect of changes in OPEC’s petroleum productionlevels and worldwide oil consumption and storage, changes in demand that may affect attitudes of time charterers to scheduled andunscheduled dry-docking, changes in TORM’s operating expenses, including bunker prices, dry-docking and insurance costs, changes in the regulation ofshipping operations, including requirements for double hull tankers or actions taken by regulatory authorities, potential liability from pending orfuture litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts byterrorists. Risks and uncertainties are further described in reports filed by TORM with theUS Securities and Exchange Commission, including the TORM Annual Report on Form 20-F and its reports on Form 6-K. Forward-lookingstatements are based on management’s current evaluation, and TORM is only under an obligation to update and change the listed expectations to theextent required by law. Announcement no. 30 / 21 August 2012 Second quarter report 2012 10 of 22Statement by the Board of Directors and Executive ManagementThe Board and Management have today discussed and adopted this interim reportfor the period 1 January – 30 June 2012.This interim report is unaudited and was prepared in accordance with theInternational Financial Reporting Standards for Interim Financial Reporting, IAS 34, as adopted by the EU andadditional disclosure of listed Danish companies.Reference is made to the Annual Report for 2011’s note 2 to the consolidatedfinancial statements “Liquidity, capital resources, going concern and subsequent events”, in which it is statedthat the successful outcome of the current negotiations with TORM’s banks and other stakeholders to secure theimplementation of the comprehensive financing and restructuring plan outlined in the conditionalframework agreement in principle is a prerequisite for TORM’s continued operation. In a forced sale, or if TORM isotherwise not able to continue as a going concern, the net value of the Company’s assets, liabilities and offbalance sheet items would be significantly lower than the current carrying amounts.We believe the accounting practices used are reasonable, and that this interimreport gives a true and accurate picture of the Group's assets, debt, financial position, results and cash flows.Copenhagen, 21 August 2012Executive ManagementBoard of DirectorsJacob Meldgaard, CEORoland M. Andersen, CFONiels Erik Nielsen, ChairmanChristian Frigast, Deputy ChairmanJesper JarlbækKari Millum GardarnarRasmus Johannes HoffmannAnnouncement no. 30 / 21 August 2012 Second quarter report 2012 11 of 22Consolidated income statementMillion USD Q2 2012 Q2 2011 Q1-Q2 2012 Q1-Q2 2011 2011Revenue 272.3 335.7 582.9 606.1 1,305.2Port expenses, bunkers and commissions -161.6 -159.9 -333.8 -289.7 -675.0Freight and bunkers derivatives -8.1 3.0 5.5 9.9 14.1Time charter equivalent earnings 102.6 178.8 254.6 326.3 644.3Charter hire -60.6 -99.6 -145.0 -176.2 -398.3Operating expenses -41.4 -40.1 -81.7 -83.2 -165.0Gross profit (Net earnings from shipping activities) 0.6 39.1 27.9 66.9 81.0Prof it f rom sale of vessels 0.0 7.1 -15.9 1.4 -52.6Administrative expenses -16.5 -17.7 -33.1 -34.8 -71.2Other operating income 0.4 2.3 0.9 2.5 3.2Share of results of jointly controlled entities -7.4 -1.3 -9.8 -2.4 -4.2EBITDA -22.9 29.5 -30.0 33.6 -43.8Impairment losses on jointly controlled entities -41.5 0.0 -41.5 0.0 -13.0Impairment losses on tangible and intangible assets 0.0 0.0 0.0 0.0 -187.0Amortizations and depreciation -34.1 -36.5 -68.1 -73.1 -144.8Operating profit (EBIT) -98.5 -7.0 -139.6 -39.5 -388.6Financial income 3.2 -0.5 6.8 2.0 9.9Financial expenses -36.8 -16.2 -77.8 -31.1 -72.7Profit/(loss) before tax -132.1 -23.7 -210.6 -68.6 -451.4Tax 0.0 -0.6 -0.2 -1.0 -1.6Net profit/(loss) for the period -132.1 -24.3 -210.8 -69.6 -453.0Earnings/(loss) per share, EPSEarnings/(loss) per share, EPS (USD) -1.9 -0.3 -3.0 -1.0 -6.5Earnings/(loss) per share, EPS (DKK)* -11.0 -1.8 -17.4 -5.3 -34.9Diluted earnings/(loss) per share, (USD) -1.9 -0.3 -3.0 -1.0 -6.5Diluted earnings/(loss) per share, (DKK)* -11.0 -1.8 -17.4 -5.3 -34.9*) The key figures have been translated from USD to DKK using the averageUSD/DKK exchange change rate for the period in question. Announcement no. 30 / 21 August 2012 Second quarter report 2012 12 of 22Consolidated income statement per quarterMillion USD Q2 12 Q1 12 Q4 11 Q3 11 Q2 11Revenue 272.3 310.6 367.3 331.8 335.7Port expenses, bunkers and commissions -161.6 -172.2 -202.5 -182.8 -159.9Freight and bunkers derivatives -8.1 13.6 5.1 -0.9 3.0Time charter equivalent earnings 102.6 152.0 169.9 148.1 178.8Charter hire -60.6 -84.4 -118.6 -103.5 -99.6Operating expenses -41.4 -40.3 -39.5 -42.3 -40.1Gross profit (Net earnings from shipping activities) 0.6 27.3 11.8 2.3 39.1Prof it f rom sale of vessels 0.0 -15.9 -54.0 0.0 7.1Administrative expenses -16.5 -16.6 -19.6 -16.8 -17.7Other operating income 0.4 0.5 0.3 0.4 2.3Share of results of jointly controlled entities -7.4 -2.4 1.1 -2.9 -1.3EBITDA -22.9 -7.1 -60.4 -17.0 29.5Impairment losses on jointly controlled entities -41.5 0.0 -13.0 0.0 0.0Impairment losses on tangible and intangible assets 0.0 0.0 -187.0 0.0 0.0Amortizations and depreciation -34.1 -34.0 -35.6 -36.1 -36.5Operating profit (EBIT) -98.5 -41.1 -296.0 -53.1 -7.0Financial income 3.2 3.6 8.4 -0.5 -0.5Financial expenses -36.8 -41.0 -25.1 -16.5 -16.2Profit/(loss) before tax -132.1 -78.5 -312.7 -70.1 -23.7Tax 0.0 -0.2 -0.3 -0.3 -0.6Net profit/(loss) for the period -132.1 -78.7 -313.0 -70.4 -24.3Earnings/(loss) per share, EPSEarnings/(loss) per share, EPS (USD) -1.9 -1.1 -4.5 -1.0 -0.3Diluted earnings/(loss) per share, (USD) -1.9 -1.1 -4.5 -1.0 -0.3Announcement no. 30 / 21 August 2012 Second quarter report 2012 13 of 22Consolidated statement of comprehensive incomeMillion USD Q2 2012 Q2 2011 Q1-Q2 2012 Q1-Q2 2011 2011Net profit/(loss) for the period -132.1 -24.3 -210.8 -69.6 -453.0Other comprehensive income:Exchange rate adjustment arising on translationof entities using a measurement currency dif ferentf rom USD -0.4 0.0 0.3 0.0 -0.4Fair value adjustment on hedging instruments -7.2 -13.4 -9.1 -10.1 -29.7Value adjustment on hedging instruments transferredto income statement 5.7 -0.1 9.9 0.8 1.7Fair value adjustment on available for sale investments -0.6 -0.1 -0.3 0.1 8.7Transfer to income statement on sale of available for saleinvestments 0.0 0.0 0.0 0.0 0.0Other comprehensive income after tax -2.5 -13.6 0.8 -9.2 -19.7Total comprehensive income -134.6 -37.9 -210.0 -78.8 -472.7Announcement no. 30 / 21 August 2012 Second quarter report 2012 14 of 22Consolidated balance sheet – Assets30 June 30 June 31 DecemberMillion USD 2012 2011 2011NON-CURRENT ASSETSIntangible assetsGoodwill 0.0 89.2 0.0Other intangible assets 1.8 2.0 1.9Total intangible assets 1.8 91.2 1.9Tangible fixed assetsLand and buildings 1.6 2.0 2.0Vessels and capitalised dry-docking 2,260.5 2,485.2 2,258.6Prepayments on vessels 0.0 136.8 69.2Other plant and operating equipment 7.0 9.1 8.1Total tangible f ixed assets 2,269.1 2,633.1 2,337.9Financial assetsInvestment in jointly controlled entities 0.8 69.5 50.3Loans to jointly controlled entities 0.0 9.2 8.2Other investments 11.9 3.1 11.6Other financial assets 0.0 0.2 0.0Total f inancial assets 12.7 82.0 70.1TOTAL NON-CURRENT ASSETS 2,283.6 2,806.3 2,409.9CURRENT ASSETSBunkers 63.6 59.9 84.6Freight receivables 144.1 117.7 140.2Other receivables 21.2 24.6 26.0Other financial assets 0.0 4.1 0.0Prepayments 14.6 28.4 11.8Cash and cash equivalents 16.7 147.1 85.5260.2 381.8 348.1Non-current assets held for sale 0.0 13.7 21.2TOTAL CURRENT ASSETS 260.2 395.5 369.3TOTAL ASSETS 2,543.8 3,201.8 2,779.2Announcement no. 30 / 21 August 2012 Second quarter report 2012 15 of 22Consolidated balance sheet – Equity and liabilities30 June 30 June 31 DecemberMillion USD 2012 2011 2011EQUITYCommon shares 61.1 61.1 61.1Treasury shares -17.3 -17.3 -17.3Revaluation reserves 5.9 -2.4 6.2Retained profit 409.9 1,002.5 620.0Proposed dividends 0.0 0.0 0.0Hedging reserves -29.0 -11.1 -29.8Translation reserves 3.9 4.1 3.6TOTAL EQUITY 434.5 1,036.9 643.8LIABILITIESNon-current liabilitiesDeferred tax liability 53.4 54.0 53.7Mortgage debt and bank loans 0.0 1,701.8 0.0Finance lease liabilities 30.5 75.2 29.4Deferred income 5.8 0.0 6.4TOTAL NON-CURRENT LIABILITIES 89.7 1,831.0 89.5Current liabilitiesMortgage debt and bank loans 1,792.7 190.7 1,794.6Finance lease liabilities 45.3 3.3 48.3Trade payables 79.8 48.9 115.6Current tax liabilities 0.9 1.8 1.2Other liabilities 99.7 80.0 85.0Acquired liabilities related to options on vessels 0.0 1.0 0.0Deferred income 1.2 8.2 1.2TOTAL CURRENT LIABILITIES 2,019.6 333.9 2,045.9TOTAL LIABILITIES 2,109.3 2,164.9 2,135.4TOTAL EQUITY AND LIABILITIES 2,543.8 3,201.8 2,779.2Announcement no. 30 / 21 August 2012 Second quarter report 2012 16 of 22Consolidated statement of changes in equity as at 1 January – 30June 2012Consolidated statement of changes in equity as at 1 January – 30June 2011Common Treasury Retained Proposed Revaluation Hedging Translation Totalshares shares profit dividends reserves reserves reservesMillion USDEquity at 1 January 2012 61.1 -17.3 620.0 0.0 6.2 -29.8 3.6 643.8Comprehensive income for the year:Net prof it/(loss) for the year - - -210.8 - - - - -210.8Other comprehensive income for the year - - - - -0.3 0.8 0.3 0.8Total comprehensive income for the year - - -210.8 - -0.3 0.8 0.3 -210.0Disposal treasury shares, cost - - - - - - - 0.0Loss from disposal of treasury shares - - - - - - - 0.0Share-based compensation - - 0.7 - - - - 0.7Total changes in equity Q1-Q2 2012 0.0 0.0 -210.1 0.0 -0.3 0.8 0.3 -209.3Equity at 30 June 2012 61.1 -17.3 409.9 0.0 5.9 -29.0 3.9 434.5Common Treasury Retained Proposed Revaluation Hedging Translation Totalshares shares profit dividends reserves reserves reservesMillion USDEquity at 1 January 2011 61.1 -17.9 1,072.3 0.0 -2.5 -1.8 4.1 1,115.3Comprehensive income for the year:Net prof it/(loss) for the year - - -69.6 - - - - -69.6Other comprehensive income for the year - - - - 0.1 -9.3 0.0 -9.2Total comprehensive income for the year - - -69.6 - 0.1 -9.3 0.0 -78.8Disposal treasury shares, cost - 0.6 - - - - - 0.6Loss from disposal of treasury shares - - -0.6 - - - - -0.6Share-based compensation - - 0.4 - - - - 0.4Total changes in equity Q1-Q2 2011 0.0 0.6 -69.8 0.0 0.1 -9.3 0.0 -78.4Equity at 30 June 2011 61.1 -17.3 1,002.5 0.0 -2.4 -11.1 4.1 1,036.9Announcement no. 30 / 21 August 2012 Second quarter report 2012 17 of 22Consolidated statement of cash flowsQ1-Q2 Q1-Q2Million USD Q2 2012 Q2 2011 2012 2011 2011Cash flow from operating activitiesOperating prof it -98,5 -7,0 -139,6 -39,5 -388,6Adjustments:Reversal of prof it/(loss) f rom sale of vessels 0,0 -7,1 15,9 -1,4 52,6Reversal of amortizations and depreciation 34,1 36,5 68,1 73,1 144,8Reversal of impairment of jointly controlled entities 41,5 0,0 41,5 0,0 13,0Reversal of impairment of tangible and intangible assets 0,0 0,0 0,0 0,0 187,0Reversal of share of results of jointly controlled entities 7,4 1,3 9,8 2,4 4,2Reversal of other non-cash movements 11,2 -5,3 1,7 -12,0 -6,8Dividends received 0,4 0,0 0,4 0,0 0,0Dividends received f rom jointly controlled entities 0,0 0,3 0,0 1,0 1,4Interest received and exchange rate gains -0,2 2,9 0,0 6,5 5,0Interest paid and exchange rate losses -2,9 -17,9 -20,9 -33,7 -67,0Advisor fees related to financing and restructuring plan -18,0 0,0 -40,0 0,0 0,0Income taxes paid/repaid 0,0 0,0 -0,5 -1,2 -2,7Change in bunkers, receivables and payables 5,5 -33,9 -12,5 -36,5 -17,7Net cash flow from operating activities -19,5 -30,2 -76,1 -41,3 -74,8Cash flow from investing activitiesInvestment in tangible f ixed assets -4,4 -34,4 -48,5 -102,4 -118,5Loans to jointly controlled entities 8,2 0,6 8,2 1,1 2,1Sale of equity interests and securities 1,8 0,0 1,8 0,0 0,0Sale of non-current assets 0,3 94,1 49,6 194,7 284,5Net cash flow from investing activities 5,9 60,3 11,1 93,4 168,1Cash flow from financing activitiesBorrow ing, mortgage debt 0,0 60,3 22,5 87,0 87,0Borrow ing, f inance lease liabilities 0,1 46,8 0,1 46,8 46,8Repayment/redemption, mortgage debt 0,0 -130,7 -26,4 -156,2 -254,1Repayment/redemption, f inance lease liabilities 0,8 -1,8 0,0 -2,6 -7,5Net cash flow from financing activities 0,9 -25,4 -3,8 -25,0 -127,8Net cash flow from operating, investing and financing activities -12,7 4,7-68,8 27,1 -34,5 Cash and cash equivalents, beginning balance 29,4 142,4 85,5 120,0 120,0Cash and cash equivalents, ending balance 16,7 147,1 16,7 147,1 85,5Announcement no. 30 / 21 August 2012 Second quarter report 2012 18 of 22Consolidated quarterly statement of cash flowsMillion USD Q2 12 Q1 12 Q4 11 Q3 11 Q2 11Cash flow from operating activitiesOperating prof it -98,5 -41,1 -296,0 -53,1 -7,0Adjustments:Reversal of prof it/(loss) f rom sale of vessels 0,0 15,9 54,0 0,0 -7,1Reversal of amortizations and depreciation 34,1 34,0 35,6 36,1 36,5Reversal of impairment of jointly controlled entities 41,5 0,0 13,0 0,0 0,0Reversal of impairment of tangible and intangible assets 0,0 0,0 187,0 0,0 0,0Reversal of share of results of jointly controlled entities 7,4 2,4 -1,1 2,9 1,3Reversal of other non-cash movements 11,2 -9,5 -0,5 5,7 -5,3Dividends received 0,4 0,0 0,0 0,0 0,0Dividends received f rom jointly controlled entities 0,0 0,0 0,2 0,2 0,3Interest received and exchange rate gains -0,2 0,2 -0,2 -1,3 2,9Interest paid and exchange rate losses -2,9 -18,0 -19,5 -13,8 -17,9Advisor fees related to f inancing and restructuring plan -18,0 -22,0 0,0 0,00,0 Income taxes paid/repaid 0,0 -0,5 -0,4 -1,1 0,0Change in bunkers, receivables and payables 5,5 -18,0 14,9 3,8 -33,9Net cash flow from operating activities -19,5 -56,6 -13,0 -20,6 -30,2Cash flow from investing activitiesInvestment in tangible f ixed assets -4,4 -44,1 -11,6 -4,4 -34,4Loans to jointly controlled entities 8,2 0,0 0,5 0,5 0,6Sale of equity interests and securities 1,8 0,0 0,0 0,0 0,0Sale of non-current assets 0,3 49,3 75,4 14,4 94,1Net cash flow from investing activities 5,9 5,2 64,4 10,4 60,3Cash flow from financing activitiesBorrow ing, mortgage debt 0,0 22,5 0,0 0,0 60,3Borrow ing, f inance lease liabilities 0,1 0,0 0,0 0,0 46,8Repayment/redemption, mortgage debt 0,0 -26,4 -59,4 -38,5 -130,7Repayment/redemption, f inance lease liabilities 0,8 -0,8 -2,3 -2,6 -1,8Net cash flow from financing activities 0,9 -4,7 -61,7 -41,1 -25,4Net cash flow from operating, investing and financing activities -12,7 -56,1-10,3 -51,3 4,7 Cash and cash equivalents, beginning balance 29,4 85,5 95,8 147,1 142,4Cash and cash equivalents, ending balance 16,7 29,4 85,5 95,8 147,1Announcement no. 30 / 21 August 2012 Second quarter report 2012 19 of 22NotesNote 1 - Impairment testAs at 30 June 2012, Management performed a review of the recoverable amount ofthe assets by assessing the recoverable amount for the significant assets within the Tanker Division, the Bulk Divisionand the investment in 50% of FR8. Based on the review, Management concluded that:• Assets within the Tanker Division were not further impaired as of 30 June2012 as the value in use exceeds the carrying amount.• Assets within the Bulk Division were not impaired as the fair value lesscosts to sell exceeded the carrying amount by USD 25 million.• The carrying amount of the investment in FR8 was impaired by USD 42 millionin addition to the impairment losses previously recognized.Tanker divisionThe methodology used for calculating the value in use is unchanged compared tothe annual report for 2011 and accordingly the freight rate estimates in the period 2012 to 2015 are based on theCompany's business plans, which in 2014 and 2015 assume a gradual increase towards the 10-year historic average spot freightrate. The freight rates from 2016 are based on the 10-year historic average spot freight rates from Clarksons adjusted by theinflation rate. The WACC of 8.0% (30 June 2011: 8.2%) is unchanged compared to 31 December 2011.The 10-year historic average spot freight rates as of 30 June 2012 are asfollows: • LR2 USD/day 26,878 (30 June 2011: USD/day 28,335)• LR1 USD/day 22,582 (30 June 2011: USD/day 23,702)• MR USD/day 20,034 (30 June 2011: USD/day 20,495)Management believes that these major assumptions are reasonable.The calculation of value in use is very sensitive to changes in the keyassumptions which are considered to be related to the future development in freight rates, the WACC applied as discounting factor inthe calculations and the development in operating expenses. The sensitivities have been assessed as follows, all otherthings being equal: • A decrease in the Tanker freight rates of USD/day 500 would result in afurther impairment of USD 138 million for the Tanker Division.• An increase of the WACC of 1.0% would result in a further impairment of USD197 million for the Tanker Division. • An increase of the operating expenses of 5.0% would result in a furtherimpairment of USD 86 million for the Tanker DivisionIt should be emphasized that in a forced sale the recoverable amount of thevessels would be significantly lower than the carrying amount under a going concern assumption.FR8The book value of the investment in FR8 has been impaired by USD 42 million (1April – 30 June 2011: USD 0 million) to zero. Announcement no. 30 / 21 August 2012 Second quarter report 2012 20 of 22Note 2 - Vessels and capitalized dry-docking30 June 30 June 31 Dec.USD million 2012 2011 2011Cost:Balance at 1 January 2,999.3 3,113.9 3,113.9Exchange rate adjustment 0.0 0.0 0.0Additions 6.2 7.9 20.7Disposals -49.6 -216.7 -334.6Transferred to/f rom other items 102.9 199.3 199.3Transferred to non-current assets held for sale 0.0 -31.8 0.0Balance 3,058.8 3,072.6 2,999.3Depreciation and impairments:Balance at 1 January 740.7 553.8 553.8Exchange rate adjustment 0.0 0.0 0.0Disposals -8.7 -43.2 -67.8Depreciation for the year 66.3 70.9 140.6Impairment loss 0.0 16.3 97.8Transferred to/f rom other items 0.0 -10.4 16.3Balance 798.3 587.4 740.7Carrying amount 2,260.5 2,485.2 2,258.6Note 3 - Prepayments on vessels30 June 30 June 31 Dec.USD million 2012 2011 2011Cost:Balance at 1 January 69.2 243.3 243.3Additions 41.7 92.8 94.8Disposals -8.0 0.0 -7.8Transferred to/f rom other items -102.9 -199.3 -199.3Transferred to non-current assets held for sale 0.0 0.0 -61.8Balance 0.0 136.8 69.2Depreciation and impairments:Balance at 1 January 0.0 16.3 16.3Transferred to/f rom other items 0.0 -16.3 -16.3Balance 0.0 0.0 0.0Carrying amount 0.0 136.8 69.2Announcement no. 30 / 21 August 2012 Second quarter report 2012 21 of 22Note 4 - Mortgage debt and bank loans30 June 30 June 31 Dec.Million USD 2012 2011 2011Mortgage debt and bank loansTo be repaid as follow s:Falling due w ithin one year 1,792.7 190.7 1,794.6Falling due between one and tw o years 0.0 283.0 0.0Falling due between tw o and three years 0.0 154.1 0.0Falling due between three and four years 0.0 272.1 0.0Falling due between four and five years 0.0 591.0 0.0Falling due after five years 0.0 401.6 0.0Carrying amount 1,792.7 1,892.5 1,794.6As at 30 June 2012, TORMs equity ratio of 17.1% and cash at bank at USD 16.7million resulted in a breach of its financial covenants under the existing loan agreements. As at 30 June 2012, TORMtherefore does not have an unconditional right to defer payments on the loans for more than 12 months and the mortgage debt andbank loans are in principle payable on demand. Accordingly the mortgage debt and bank loans are classified as currentliabilities in the balance sheet. As at 21 August 2012, none of these defaults have been remediated.Note 5 - Segment informationMillion USDTanker Bulk Not Tanker Bulk NotDivision Division allocated Total Division Division allocated TotalRevenue 484.0 98.9 0.0 582.9 478.4 127.7 0.0 606.1Port expenses, bunkers and commissions -275.7 -58.1 0.0 -333.8 -238.3 -51.4 0.0-289.7 Freight and bunkers derivatives -0.5 6.0 0.0 5.5 0.3 9.6 0.0 9.9Time charter equivalent earnings 207.8 46.8 0.0 254.6 240.4 85.9 0.0 326.3Charter hire -94.9 -50.1 0.0 -145.0 -94.8 -81.4 0.0 -176.2Operating expenses -80.0 -1.7 0.0 -81.7 -81.6 -1.6 0.0 -83.2Gross profit (Net earnings from shipping activities) 32.9 -5.0 0.0 27.9 64.02.9 0.0 66.9 Prof it from sale of vessels -15.9 0.0 0.0 -15.9 1.8 -0.4 0.0 1.4Administrative expenses -29.7 -3.4 0.0 -33.1 -28.9 -5.9 0.0 -34.8Other operating income 0.8 0.1 0.0 0.9 2.4 0.1 0.0 2.5Share of results of jointly controlled entities -5.4 0.0 -4.4 -9.8 1.4 0.0 -3.8-2.4 EBITDA -17.3 -8.3 -4.4 -30.0 40.7 -3.3 -3.8 33.6Impairment losses on jointly controlled entities 0.0 0.0 -41.5 -41.5 0.0 0.00.0 0.0 Amortizations and depreciation -66.8 -1.3 0.0 -68.1 -71.5 -1.6 0.0 -73.1Operating profit (EBIT) -84.1 -9.6 -45.9 -139.6 -30.8 -4.9 -3.8 -39.5Financial income - - 6.8 6.8 - - 2.0 2.0Financial expenses - - -77.8 -77.8 - - -31.1 -31.1Profit/(loss) before tax - - -116.9 -210.6 - - -32.9 -68.6Tax - - -0.2 -0.2 - - -1.0 -1.0Net profit/(loss) for the period - - -117.1 -210.8 - - -33.9 -69.6BALANCE SHEETTotal non-current assets 2,234.0 37.7 11.9 2,283.6 2,628.0 102.9 75.4 2,806.3The activity in TORM's 50% ow nership of FR8 Holding Pte. Ltd. is included in'Not-allocated'. Q1-Q2 2012 Q1-Q2 2011During the year, there have been no transactions betw een the Tanker Divisionand the Bulk Division, and therefore all revenue derives f rom external customers.Announcement no. 30 / 21 August 2012 Second quarter report 2012 22 of 22Note 6 - Post balance sheet date eventsNo subsequent events have occurred af ter the balance sheet date w hich w ouldmaterially af fect the f inancial performance of the Company. Note 7 - Accounting policiesThe interim report for the period 1 January – 30 June 2012 is presented inaccordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and additional Danish disclosure requirements for interim reports oflisted companies. The interim report has been prepared using the accounting policies as for the Annual Report for 2011. The accounting policiesare described in more detail in the Annual Report for 2011. As f rom January 1 2012, TORM has implemented the amendment to IFRS 7 regardingdisclosures about transfer of f inancial assets. The amended standard have not af fected recognition and measurement in TORM's interimreport for the f irst half of 2012. The interim report of the second quarter of 2012 is unaudited, in line with the normal practice.