Company: ASC
Filing Date: 2025-03-07
Form Type: 20-F
Source: 0001558370-25-002500
Chunk: 103

Company: Ardmore Shipping Corp
Filing Date: 2025-03-07
Form: 20-F
Item: Item 5
Chunk 103
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 revenue to calculate TCE rates (as defined below).

Vessel Operating Expenses. We are responsible for vessel operating expenses, which include crew, repairs and maintenance and insurance costs, and fees paid to technical managers of our vessels. The largest components of our vessel operating expenses are generally crews 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 drydockings. We expect these expenses to increase as our fleet matures and to the extent that it expands.

Drydocking. We must periodically drydock each of our vessels for inspection, and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 to 60 months. The deferred expenditures of drydockings for a given vessel are amortized on a straight-line basis to the next scheduled drydocking of the vessel.

Depreciation. Depreciation expense typically consists of charges related to the depreciation of the historical cost of our fleet (less an estimated residual value) over the estimated useful lives of the vessels and charges relating 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. We depreciate our vessels over an estimated useful life of 25 years from the vessel’s initial delivery from the shipyard, on a straight-line basis to their residual scrap value. For the year ended December 31, 2024, depreciation is based on cost less the estimated residual scrap value of $400 per lightweight ton (“lwt”).

Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures relates to the amortization of drydocking expenditures over the estimated period to the next scheduled drydocking on a straight-line basis.

Time Charter Equivalent (“ TCE”) Rate. TCE rate, a non-GAAP measure, represents voyage revenues less voyage expenses divided by revenue days. We principally use TCE, a non-GAAP financial measure, because we believe it provides additional meaningful information to us about the deployment of our vessels and their performance than revenue, the most directly comparable financial measure under U. S. GAAP. TCE is determined on a discharge-to-discharge basis, which is different from how we record revenue under U. S. GAAP. Under discharge-to-discharge, revenue is recognized beginning from the discharge of cargo from the prior voyage to the anticipated discharge of cargo in the current voyage, and voyage expenses are recognized as incurred.