UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F

(Mark One)

[_]                 REPORT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2004

                                       OR

[_]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
                               -------------------------------------------------

Commission file number  000-49650
                       ---------------------------------------------------------


                     AKTIESELSKABET DAMPSKIBSSELSKABET TORM
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                           A/S STEAMSHIP COMPANY TORM
--------------------------------------------------------------------------------
                 (Translation of Registrant's name into English)


                               Kingdom of Denmark
--------------------------------------------------------------------------------
                 (Jurisdiction of incorporation or organization)


                  Tuborg Havnevej 18, DK-2900 Hellerup, Denmark
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to section 12(b) of the Act.

            Title of each class                     Name of each exchange
                                                     on which registered

                                      NONE
--------------------------------------------------------------------------------
Securities registered or to be registered pursuant to section 12(g) of the Act.

Common Shares, par value 10 Danish Kroner per share,*
American Depositary Shares (as evidenced
by American Depositary Receipts),
each representing one (1) common share.
--------------------------------------------------------------------------------
                                (Title of class)

*    Not for trading,  but only in connection with the  registration of American
     Depositary  Shares,  pursuant to the  requirements  of the  Securities  and
     Exchange Commission.

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.

36,400,000 common shares, par value 10 Danish Kroner per share.

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.

                         Yes |X|                No |_|

Indicate by check mark which financial statement item the registrant has elected
to follow.

                       Item 17  |X|           Item 18 |_|

The Company "Aktieselskabet Dampskibsselskabet Torm" is referred to as "TORM" in
this Annual Report.
<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
          AND ADVISERS......................................................1

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE...........................1

ITEM 3.   KEY INFORMATION...................................................1

ITEM 4.   INFORMATION ON THE COMPANY.......................................13

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS.....................32

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.......................60

ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY
          TRANSACTIONS.....................................................64

ITEM 8.   FINANCIAL INFORMATION............................................65

ITEM 9.   THE OFFER AND LISTING............................................65

ITEM 10.  ADDITIONAL INFORMATION...........................................66

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
          ABOUT MARKET RISK................................................78

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN
          EQUITY SECURITIES................................................81

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES..................81

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF
          SECURITY HOLDERS AND USE OF PROCEEDS.............................81

ITEM 15.  CONTROLS AND PROCEDURES..........................................81

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.................................81

ITEM 16B. CODE OF ETHICS...................................................81

ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES...........................81

ITEM 16D. PURCHASES OF EQUITY SECURITIES BY THE
          ISSUER AND AFFILIATED PURCHASES..................................82

ITEM 17.  FINANCIAL STATEMENTS.............................................82

ITEM 18.  FINANCIAL STATEMENTS.............................................84

ITEM 19.  EXHIBITS.........................................................88
<PAGE>

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     Matters discussed in this report may constitute 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 other than statements of historical facts.

     TORM desires to take advantage of the safe harbor provisions of the Private
Securities  Litigation  Reform  Act of 1995  and is  including  this  cautionary
statement in connection with this safe harbor  legislation.  This report and any
other  written  or oral  statements  made  by us or on our  behalf  may  include
forward-looking  statements,  which  reflect our current  views with  respect to
future events and  financial  performance.  When used in this report,  the words
"anticipate,"  "believe," "expect," "intend," "estimate," "forecast," "project,"
"plan,"  "potential,"  "will," "may," "should," and similar expressions identify
forward-looking statements.

     The  forward-looking  statements  in this  report  are based  upon  various
assumptions,  many of which  are  based,  in  turn,  upon  further  assumptions,
including without limitation,  management's  examination of historical operating
trends,  data  contained  in our  records  and other data  available  from third
parties.  Although we believe that these  assumptions were reasonable when made,
because these  assumptions are inherently  subject to significant  uncertainties
and  contingencies  which are  difficult or impossible to predict and are beyond
our  control,  we cannot  assure you that we will  achieve or  accomplish  these
expectations, beliefs or projections.

     In addition to these assumptions and matters discussed elsewhere herein and
in the documents  incorporated by reference  herein,  important factors that, in
our view,  could cause actual results to differ  materially from those discussed
in the  forward-looking  statements  include the strength of world economies and
currencies,  general market  conditions,  including  fluctuations in charterhire
rates and vessel values, changes in demand in the shipping market, including the
effect of changes  in OPEC's  petroleum  production  levels  and  worldwide  oil
consumption and storage,  changes in regulatory  requirements  affecting  vessel
operating  including  requirements  for double hull  tankers,  changes in TORM's
operating  expenses,  including bunker prices,  dry-docking and insurance costs,
changes in  governmental  rules and  regulations  or actions taken by regulatory
authorities, changes in the price of our capital investments, such as the NORDEN
shares, potential liability from pending or future litigation,  general domestic
and international political conditions,  potential disruption of shipping routes
due to accidents,  political  events or acts by terrorists,  and other important
factors  described  from  time to  time  in the  reports  filed  by us with  the
Securities and Exchange Commission, or SEC.
<PAGE>

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     Not Applicable.

ITEM 3. KEY INFORMATION

     Please note:  Throughout this report,  the "Company",  "we", "us" and "our"
all refer to TORM and its subsidiaries.  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 1000  kilograms,  refers to the  maximum  weight of cargo and
supplies that a vessel can carry.

A. Selected Financial Data

     The following table sets forth our selected consolidated financial data for
each of the periods indicated.  The selected consolidated  financial data should
be read in conjunction  with "Operating and Financial  Review and Prospects" and
the consolidated  financial statements and notes thereto, all included elsewhere
within this  document.  The selected  consolidated  financial  data includes the
Liner  activities,  which were sold to A.P.  M0ller-Maersk  A/S on September 16,
2002. The results of the operations attributable to the Liner activities,  which
represent a discontinued  operation,  are presented in two separate lines in the
income statement after net income from continuing operations.  The impact of the
sale of the Liner activities is included herein.

     The consolidated financial statements have been prepared in accordance with
Danish generally accepted accounting  principles,  or Danish GAAP, which differs
in certain respects from United States generally accepted accounting principles,
or U.S. GAAP. The differences between Danish GAAP and U.S. GAAP as applicable to
the  historical   financial   statements  are  summarized  in  Note  17  to  the
consolidated financial statements included herein.
<PAGE>

<TABLE>
<CAPTION>
                                                                  For the year ended December 31
                                               -----------------------------------------------------------------
                                                2000          2001          2002          2003           2004
                                                ----          ----          ----          ----           ----
                                                                   (in thousands of DKK)
<S>                                          <C>           <C>           <C>           <C>           <C>
Statement Data:
Net revenue                                   1,597,221     2,000,713     1,538,618     1,927,996     2,596,410
Port expenses, bunkers, charter hire and
technical running costs                      (1,012,683)   (1,247,245)   (1,236,612)   (1,280,827)   (1,152,673)
                                             ----------    ----------    ----------    ----------    ----------
Gross profit (Net earnings from shipping
activities)                                     584,538       753,468       302,006       647,169     1,443,737
Profit from sale of vessels and interests        11,334        91,790        16,965          (464)            0
Administrative expenses                         (67,275)     (113,404)     (101,342)     (126,119)     (171,656)
Other operating income                           45,350        58,689        55,227        51,368        78,732
Depreciation                                   (249,038)     (177,993)     (158,400)     (176,872)     (210,746)
                                             ----------    ----------    ----------    ----------    ----------
Profit before financial items                   324,909       612,550       114,456       395,082     1,140,067
Financial items (2)                            (168,820)      (96,519)        5,988       656,637     1,193,704
                                             ----------    ----------    ----------    ----------    ----------
Profit before tax                               156,089       516,031       120,444     1,051,719     2,333,771

Tax on profit on ordinary activities            (53,298)     (166,018)      360,190          (692)      (52,556)
                                             ----------    ----------    ----------    ----------    ----------
Profit from continuing operations               102,791       350,013       480,634     1,051,027     2,281,215
Profit before tax from discontinued               5,540        17,417        69,818             0             0
operations (6)
Tax on discontinued operations                        0             0             0             0             0
                                             ----------    ----------    ----------    ----------    ----------
Net profit for the year                         108,331       367,430       550,452     1,051,027     2,281,215

Balance sheet data (as of end of period):
Total assets (3)                              4,040,007     4,049,353     4,013,588     4,893,657     6,778,899
Long term liabilities                         1,951,288     1,519,743     1,735,464     1,700,704     1,822,264
Shareholders' equity                          1,051,147     1,354,741     1,623,391     2,464,306     4,323,682
Common shares                                   182,000       182,000       182,000       182,000       364,000
No. of shares outstanding (1) (4)            36,400,000    36,400,000    36,400,000    36,400,000    36,400,000

Other financial data (1)
Dividends declared per share                        1.0           2.0           1.0           6.0          15.0
Dividends declared per share-USD (5)                0.2           0.3           0.2           1.0           2.6
Earnings per share - basic                          3.0          10.5          15.9          30.3          65.6
Earnings per share - diluted                        3.0          10.5          15.9          29.7          65.1

U.S. GAAP financial data (1)
Profit from continuing  operations before       139,013       518,079        50,628       338,350     1,230,728
income taxes and discontinued operations
Tax benefit (expense) on profit                 (34,821)     (160,650)      (34,874)       11,361       (96,911)
                                             ----------    ----------    ----------    ----------    ----------
Profit from continuing operations               104,192       357,429        15,754       349,711     1,133,817
Profit from discontinued operations (6)           5,540        17,417        69,818             0             0
                                             ----------    ----------    ----------    ----------    ----------

Profit                                          109,732       374,846        85,572       349,711     1,133,817
Earnings per share - basic:
Profit from continuing operations (1)               2.8          10.2           0.5          10.1          32.6
Profit from discontinuing operations (1)            0.2           0.5           2.0           0.0           0.0
Profit (1)                                          3.0          10.7           2.5          10.1          32.6
Earnings per share - diluted:
Profit from continued operations (1)                2.8          10.2           0.5          10.0          32.4
Profit from discontinued operations (1)             0.2           0.5           2.0           0.0           0.0
Profit (1)                                          3.0          10.7           2.5          10.0          32.4
Total assets                                  4,030,941     4,067,887     3,985,551     4,865,250     6,761,154
Long term debt (including capital lease       1,951,288     1,519,743     1,735,464     1,700,704     1,822,264
obligations)
Shareholders' equity                          1,032,118     1,351,725     1,196,372     2,024,025     3,857,893
No. of shares outstanding (1)                36,400,000    36,400,000    36,400,000    36,400,000    36,400,000
</TABLE>

----------
(1)  We increased  the share  capital in May 2004 from nominal DKK 182.0 million
     to nominal DKK 364.0 million through the issue of 18.2 million bonus shares
     of DKK 10 each. The bonus shares were allotted to our existing shareholders
     at the ratio of 1:1.  The  comparative  figures are restated to reflect the
     issue of bonus shares.

(2)  Financial items include in 2004 an unrealized gain on our holding of shares
     in Dampskibsselskabet "NORDEN" A/S of DKK 1,034 million compared to DKK 681
     million in 2003 and DKK 8 million in 2002.

(3)  Total  assets  for each  period  includes  cash  and  bonds  that  serve as
     collateral for certain of our borrowings. This amount was DKK 54 million as
     of December  2004,  DKK 52 million as of December 31, 2003, DKK 186 million
     as of December  31,  2002,  DKK 184 million as of December 31, 2001 and DKK
     207 million as of December 31, 2000. See  "Operating  and Financial  Review
     and Prospects" for further discussion.

(4)  Shares  outstanding as of December 31, 2004 includes  1,566,612 shares that
     we purchased and hold as own shares,  reflected in shareholders' equity. As
     of December 31, 2003 and December  31, 2002 we held  1,762,736  own shares,
     and as of December  31, 2001 we held  1,742,936  own shares  whereas no own
     shares were held in 2000. The  comparative  figures are restated to reflect
     the issue of bonus shares in May 2004.

(5)  Dividends are converted to U.S. dollars based on the exchange rate in place
     at the date of payment.

(6)  Profit (loss) from  discontinued  operations  for 2002 includes the gain of
     DKK 60 million on disposal of the Company's liner activities.

EXCHANGE RATE INFORMATION

     The  following  tables  show,  for the five most  recent  financial  years,
certain  information  regarding  the exchange rate between the Danish Kroner and
the U.S.  dollar,  based  on the noon  buying  rate in New York  City for  cable
transfers of DKK as certified for customs  purposes by the Federal  Reserve Bank
of New York,  expressed in DKK per U.S. dollar.  These rates may differ from the
actual  rates used in the  preparation  of our  financial  statements  and other
financial information appearing in this report.

                                         DKK per U.S. dollar

                            High       Low        Average (1)     Period End

Year ended December 31,
2000 ....................  9.0050     7.2080         8.0953         7.9442
2001 ....................  8.8900     7.8260         8.3710         8.3529
2002 ....................  8.6470     7.0850         7.8862         7.0850
2003 ....................  7.1684     5.9150         6.5774         5.9150
2004 ....................  6.3115     5.4596         5.9891         5.4940

------------
     (1): The average of the  exchange  rates on the last  business  day of each
          month during the relevant period.

                                DKK per U.S. dollar
                       ---------------------------------------
                            High                   Low
                       -----------------    ------------------

Month ended
November 2004 ............ 5.8523                5.5899
December 2005 ............ 5.6178                5.4596
January 2005 ............. 5.7442                5.5161
February 2005 ............ 5.8263                5.6095
March 2005 ............... 5.7818                5.5286
April 2005 ............... 5.8109                5.6894

On May 27, 2005, the exchange rate between the Danish Kroner and the U.S. dollar
was 5.9203.

B. Capitalization and Indebtedness

     Not Applicable.

C. Reason for the Offer and Use of Proceeds

     Not Applicable.

D. Risk Factors

     Some of the following risks relate  principally to the industry in which we
operate and our  business in general.  Other  risks  relate  principally  to the
securities  market and ownership of our American  Depositary Shares or ADSs. Any
of the  risk  factors  could  materially  and  adversely  affect  our  business,
financial condition or operating results and the trading price of our ADSs.

     Additional  risks  and  uncertainties  that we are not  aware of or that we
currently  believe  are  immaterial  may also  adversely  affect  our  business,
financial condition, liquidity or results of operation.

INDUSTRY SPECIFIC RISK FACTORS

     The cyclical  nature of the shipping  industry,  which are at historic high
levels,  may lead to volatile changes in charter rates and vessel values,  which
may adversely affect our earnings

     Charter  rates and vessel  values in the tanker market are at historic high
levels.  We can give you no assurances that this will continue.  If the shipping
industry,  which has been and should  remain  cyclical,  is  depressed  when our
charters or vessel leases expire, or when we want to sell a vessel, our earnings
and available  cash flow may decrease.  Our ability to re-charter our vessels on
the expiration or  termination  of their current  charters and the charter rates
payable under any renewal or replacement  charters will depend upon, among other
things,  economic  conditions  in the tanker and bulk markets.  Fluctuations  in
charter rates and vessel values result from changes in the supply and demand for
vessel  capacity  and  changes  in the  supply  and demand for the cargo that we
carry,  including  refined oil products such as naphtha and gas oil and dry bulk
products such as grain and coal.

     In  addition,  our ability to sell a vessel and the amount of the  proceeds
from such a sale will depend on economic  conditions  in the shipping  industry.
The shipping  industry has experienced  fluctuations in charter rates and vessel
values resulting from changes in the demand for cargoes and in vessel capacity.

     The  factors  affecting  the supply and demand for  vessels  are beyond our
control, and the nature, timing and degree of changes in industry conditions are
unpredictable.  The factors that  influence  demand for tanker and bulk capacity
include:

o    demand for the products that our vessels carry;

o    global and regional economic conditions;

o    global supply of oil and oil products;

o    the distance oil and oil products are to be moved by sea;

o    changes in seaborne and other transportation patterns;

o    efficiency of the world fleet;

o    government and industry regulation;

o    alternative energy sources; and

o    environmental concerns.

     The factors that influence the supply of tanker and bulk capacity include:

o    the number of newbuilding deliveries;

o    the scrapping rate of older vessels and single-hull vessels;

o    government and industry regulation;

o    the number of vessels that are out of service;

o    the demand for oil and oil products;

o    political changes and armed conflicts;

o    developments in international trade;

o    changes in seaborne and other transportation patterns; and

o    market expectations.

     Because the market value of our vessels may fluctuate significantly, we may
incur losses when we sell vessels, which may adversely affect our earnings

     The fair market value of vessels may increase and decrease depending on but
not limited to the following factors:

o    general economic and market conditions affecting the shipping industry;

o    competition from other shipping companies;

o    types and sizes of vessels;

o    other modes of transportation;

o    cost of newbuildings;

o    shipyard capacity;

o    governmental or other regulations;

o    age of vessels;

o    prevailing level of charter rates; and

o    technological advances.

     If we sell  tankers at a time when tanker  prices have fallen and before an
impairment  adjustment is made to our financial  statements,  the sale may be at
less than the vessel's  carrying  amount on our financial  statements,  with the
result that we shall incur a loss and a reduction in earnings.

     Our revenues  experience  seasonal  variations that may affect our earnings
and financial performance

     We operate our tankers in markets that have historically exhibited seasonal
variations in demand and, therefore, charter rates. Tanker markets are typically
stronger in the winter  months in the northern  hemisphere  due to increased oil
consumption.  In addition,  unpredictable  weather patterns in the winter months
tend to disrupt vessel scheduling. The oil price volatility resulting from these
factors has  historically  led to increased oil trading  activities.  Demand for
bulk carriers is not as volatile as that for tankers,  but demand does generally
increase in the spring months in North America as demand for grain increases and
generally falls back during the winter months. More consistent  commodities such
as coal, however, provide some stability to the bulk vessel trade.

     Terrorist  attacks  and  other  acts  of  violence  or war may  affect  the
financial  markets  and  our  business,  results  of  operations  and  financial
condition

     Terrorist attacks such as the attacks on the United States on September 11,
2001 and the United States' continuing response to these attacks, as well as the
threat of future terrorist attacks,  continues to cause uncertainty in the world
financial  markets.  The recent  conflict in Iraq 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,  including  the energy
markets.  These  uncertainties could also adversely affect our ability to obtain
additional financing on terms acceptable to us or at all.

     Future  terrorist  attacks may also  negatively  affect our  operations and
financial  condition and directly  impact our vessels or our  customers.  Future
terrorist attacks could result in increased  volatility of the financial markets
in the United  States and globally and could result in an economic  recession in
the United States or the world. Any of these  occurrences  could have a material
adverse impact on our operating results, revenue, and costs.

     If we violate  environmental laws or regulations,  the resulting  liability
may significantly and adversely affect our earnings and financial condition

     Our  operations  are subject to  extensive  regulation  designed to promote
tanker  safety,  prevent  cargo and bunker  spills  and  generally  protect  the
environment. Local, national and foreign laws, as well as international treaties
and  conventions,  can subject us to material  liabilities in the event that our
vessels release oil and oil products or other hazardous substances. For example,
the United  States Oil  Pollution  Act of 1990,  or OPA,  provides  that owners,
operators and bareboat  charterers are strictly  liable for the discharge of oil
in U.S. waters,  including the 200 nautical mile zone off each coast of the U.S.
OPA provides for  unlimited  liability in some  circumstances,  such as a vessel
operator's  gross  negligence  or  willful  misconduct  or  failure to report an
incident  or   cooperate   in  oil  removal   activities.   However,   in  other
circumstances, OPA limits liability to the greater of USD 1,200 per gross ton or
USD 10 million  per  vessel.  OPA also  permits  states to set their own penalty
limits.   Most  U.S.  states  bordering  navigable  waterways  impose  unlimited
liability  for  discharges of oil in their waters.  The  International  Maritime
Organization,  or IMO,  has adopted a similar  liability  scheme that may impose
strict  liability  for oil  spills,  subject to limits  that do not apply if the
release is caused by the vessel owner's intentional or reckless conduct.

     U.S.  law,  the  law in  many  of the  nations  in  which  we  operate  and
international treaties and conventions that impact our operations also establish
strict rules  governing  vessel  safety and  structure,  training,  inspections,
financial  assurance for potential  cleanup  liability and other matters.  These
requirements  can limit our ability to operate  our  vessels  and  substantially
increase our operating costs.

     Under OPA, all oil tankers that do not have double hulls will be phased out
by 2015 and will not be  permitted  to come to United  States  ports or trade in
United States waters.  In addition,  OPA specifies  annual  inspections,  vessel
manning,  equipment  and other  construction  requirements  that are in  various
stages of development by the U.S. Coast Guard, or USCG, applicable to new and to
existing vessels.

     In December 2003, the IMO adopted a proposed amendment to the International
Convention  for the  Prevention of Pollution  from Ships to accelerate the phase
out of  single-hull  tankers from 2015 to 2010 unless the  relevant  flag states
extend the date to 2015. Moreover,  the IMO or other regulatory bodies may adopt
further  regulations in the future that could adversely  affect the useful lives
of our tankers as well as our inability to generate income from them.

     These  requirements  can  affect the  resale  value or useful  lives of our
vessels.  As a  result  of  accidents  such as the oil  spill in  November  2002
relating to the loss of the M/T Prestige,  a 26-year old single-hull tanker, not
connected  with us.  While all of our tankers are  double-hull,  we believe that
regulation of the tanker  industry  will  continue to become more  stringent and
more  expensive  for us and  for  our  competitors.  Substantial  violations  of
applicable  requirements or a catastrophic release from one of our vessels could
have a  material  adverse  impact on our  financial  condition  and  results  of
operations. Additional laws and regulations may also be adopted that could limit
our ability to do business or increase  the cost of our doing  business and that
could  have a  material  effect  on our  operations.  Government  regulation  of
tankers, particularly in the areas of safety and environmental impact may change
in the future and require us to incur  significant  capital  expenditure  on our
vessels to keep them in compliance.

COMPANY SPECIFIC RISK FACTORS

     Servicing  our debt limits  funds  available  for other  purposes and if we
cannot service our debt, we may lose some or all of our vessels

     We must  dedicate a large part of our cash flow from  operations  to paying
principal and interest on our indebtedness. These payments limit funds available
for working capital,  capital  expenditures  and other purposes.  Our debt level
also makes us vulnerable to economic  downturns and adverse  developments in our
business. If we expand our fleet, we will need to take on additional debt, which
would increase our ratio of debt to equity.  Our inability to service debt could
also lead to acceleration of our debt and the foreclosure of all or a portion of
our fleet.

     Certain of our loan agreements  contain  restrictive  covenants,  which may
limit our liquidity and corporate activities and prevent proper service of debt,
which could result in the loss of our vessels

     Some loan agreements  impose operating and financial  restrictions upon us.
These restrictions may limit our ability to:

o    incur additional indebtedness;

o    create liens on our assets;

o    sell our subsidiaries;

o    make investments;

o    engage in mergers or acquisitions;

o    pay dividends and make capital expenditures;

o    change the management of our vessels or terminate or materially  amend
     the management agreement relating to each vessel; and

o    sell our vessels.

     We may need  permission  from our lenders in order for us to engage in some
corporate  actions.  Our lenders'  interests  may be different  from ours and we
cannot  guarantee  that we will be able to obtain our lenders'  permission  when
needed. This may prevent us from taking actions that are in our best interest.

     Our earnings may be adversely affected if we do not successfully employ our
vessels on time charters, in pools or take advantage of the current spot market

     We employ the majority of our vessels on spot voyage charters or short term
time charters.  Our operating  results will  therefore  depend on the prevailing
charter rates in a given time period.  Charter rates are based in part on supply
and demand and are extremely  competitive.  Significant  fluctuations in charter
rates will result in significant  fluctuations in the utilization of our vessels
and our profitability.  Although we charter out some of our vessels on long term
time  charters  when we want to lock in  favorable  charter  rates and  generate
predictable revenue streams, our vessels that are committed to time charters may
not be available  for spot voyages  during an upswing in the shipping  industry,
when spot voyages might be more  profitable.  We are impacted by any increase or
decrease in market rates.  If rates were to decrease  significantly,  we may not
utilize our fleet fully and our earnings could be adversely impacted.

     We may be unable to attract and retain key  management  personnel and other
employees in the bulk and tanker  industries,  which may  negatively  affect the
effectiveness of our management and our results of operations.

     Our  management  personnel  make key  decisions to maximize our revenue and
earnings in this highly volatile and cyclical industry. Our success will depend,
in part, on our ability to hire and retain key members of our  management  team.
The  loss of any of  these  individuals  could  adversely  affect  our  business
prospects and financial condition.  Difficulty in hiring and retaining qualified
personnel could adversely  affect our results of operations.  We do not maintain
"key man" life insurance on any of our officers.

     Our vessels may suffer damage and we may face unexpected  dry-dock  repairs
that could affect our cash flow and financial condition

     If our owned  vessels  suffer  damage,  they may need to be  repaired  at a
dry-docking  facility  or  other  type of ship  repair  facility.  The  costs of
dry-dock repairs are  unpredictable  and can be substantial.  We may have to pay
dry-docking  costs that are not covered by our  insurance,  which would decrease
earnings.  Repairs  may involve  long  periods of  inactivity,  which may have a
negative effect on earnings and our ability to service our debt.

     Purchasing  and operating  previously  owned,  or  secondhand,  vessels may
result in increased operating costs and vessels off-hire,  which could adversely
affect our earnings

     We own both vessels  constructed for us directly by builders and previously
owned,  or secondhand,  vessels  purchased  from other owners.  While we inspect
secondhand vessels prior to purchase, this does not normally provide us with the
same knowledge about their  condition and cost of any required (or  anticipated)
repairs that we would have had if these  vessels had been built for and operated
exclusively by us.  Generally,  we do not receive the benefit of warranties from
the builders if we buy vessels older than one year.

     In  general,  the costs to  maintain a vessel in good  operating  condition
increase with the age of the vessel. As of December 31, 2004, our fleet of owned
and long term  chartered  vessels  included  five tankers and three bulk vessels
more than 10 years of age.  Older vessels are typically less fuel efficient than
more  recently  constructed  vessels  due to  improvements  in  engine  and hull
technology.  After vessels reach 15 years of age, the majority of charterers and
oil companies may impose  restrictions on vessels that make it more difficult to
trade the vessels with optimal  flexibility.  In addition,  these older  vessels
must meet certain hull  thickness  tests.  Furthermore,  cargo  insurance  rates
increase  for  vessels  over 15 years of age,  making  them  less  desirable  to
charterers.  We, however,  consider a useful lifetime of 25 years to be the best
estimate of the economic lifetime of a vessel.

     Governmental  regulations,  safety or other equipment  standards related to
the age of a vessel may require expenditures for alterations, or the addition of
new  equipment,  to our vessels and may restrict the type of activities in which
the vessels may engage.  We cannot assure you that,  as our vessels age,  market
conditions  will  justify  such  expenditures  or  enable  us  to  operate  them
profitably for the remainder of their useful life.

     Risks involved with operating ocean-going vessels could affect our business
and reputation, which would adversely affect our revenues

     The operation of an ocean-going  vessel carries inherent risks. These risks
include the possibility of:

o    marine disaster;

o    piracy;

o    environmental accidents;

o    cargo and property losses or damage; and

o    business interruptions caused by mechanical failure, human error, war,
     terrorism,  piracy,  political  action  in  various  countries,  labor
     strikes, or adverse weather conditions.

     Any of these  circumstances or events could increase our costs or lower our
revenues. The involvement of one or more of our vessels in an oil spill or other
environmental  disaster may harm our  reputation  as a safe and reliable  vessel
operator which would adversely affect our revenues.

     We may not have  adequate  insurance to compensate us if one of our vessels
is involved in an accident

     We procure  insurance for our fleet against those risks that we believe the
shipping  industry commonly insures against.  These insurances  include hull and
machinery insurance, protection and indemnity insurance, including environmental
damage  and  pollution  insurance  coverage,  and war risk  insurance.  We carry
insurance  against loss of hire as well.  We can give no  assurance  that we are
adequately  insured  against  all risks.  We may not be able to obtain  adequate
insurance coverage at reasonable rates for our fleet in the future. The insurers
may not pay particular claims.  Our insurance  policies contain  deductibles for
which we will be  responsible,  limitations  and  exclusions,  which although we
believe are standard in the shipping  industry,  may  nevertheless  increase our
costs or lower our revenue.

     Maritime claimants could arrest our vessels, which could interrupt our cash
flow

     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 lien
holder may enforce its lien by  arresting  a vessel and  commencing  foreclosure
proceedings.  The  arrest  or  attachment  of one or more of our  vessels  could
interrupt our cash flow and require us to pay a substantial sum of money to have
the arrest lifted.

     In addition, in some jurisdictions, such as South Africa, under the "sister
ship"  theory of  liability,  a  claimant  may arrest  both 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.  Claimants could try to assert
"sister ship"  liability  against one vessel in our fleet for claims relating to
another of our vessels.

     Governments could requisition one or more of our vessels during a period of
war or emergency, resulting in loss of earnings

     A government could requisition for title or seize our vessels.  Requisition
for title  occurs when a  government  takes  control of a vessel and becomes her
owner. Also, a government could requisition one or more of our vessels for hire.
Requisition  for hire occurs  when a  government  takes  control of a vessel and
effectively  becomes  her  charterer  at  dictated  charter  rates.   Generally,
requisitions occur during a period of war or emergency.  Government  requisition
of one or more of our vessels could negatively impact our revenues.

     Our  operations  expose  us to global  risks  that may  interfere  with the
operation of our vessels

     We are an  international  company  and  conduct  our  operations  globally.
Changing economic,  political and governmental conditions in the countries where
we are engaged in business or where our vessels are registered affect us. In the
past, political conflicts, particularly in the Arabian Gulf, resulted in attacks
on vessels,  mining of waterways  and other  efforts to disrupt  shipping in the
area. Acts of terrorism and piracy have also affected vessels trading in regions
such as the  South  China Sea and West  Africa.  Terrorist  attacks  such as the
attacks on the  United  States on  September  11,  2001 and the  United  States'
continuing  response to these attacks, as well as the threat of future terrorist
attacks,  continues  to  cause  uncertainty  in the  world  commercial  markets,
including the energy markets. The recent conflict in Iraq may lead to additional
acts of terrorism,  armed conflict and civil disturbance around the world, which
may  contribute  to  further  instability,  including  in the oil  markets.  The
likelihood of acts of terrorism in the Middle East region and Southeast Asia may
increase as shown by the  attempted  attacks on the Basra Oil  Terminal in April
2004 and the attacks on employees  of Exxon in Yanbu,  Saudi Arabia in early May
2004,  and our  vessels  trading in those  areas may face a higher risk of being
attacked. Future hostilities or other political instability in regions where our
vessels  trade  could  affect  our  trade  patterns  and  adversely  affect  our
operations and performance.

     Because we generate nearly all of our revenues in U.S.  dollars,  but incur
some of our  expenses  in Danish  Kroner  and other  currencies,  exchange  rate
fluctuations could hurt our results of operations.

     In 2004,  we  generated  nearly all of our  revenues  in U.S.  dollars  but
incurred  approximately  83% of our expenses in U.S dollars and 15% was incurred
in Danish Kroner.  A change in exchange rates could lead to  fluctuations in our
reported net income.

     Interest rate  fluctuations  may  significantly  affect our loan  payments,
which could adversely affect our financial condition

     As of December 31, 2004, all of our loans bore interest at floating  rates.
Increases in prevailing  rates could  increase the amounts that we would have to
pay to our lenders.  As of December 31, 2004,  we had entered into interest swap
agreements  expiring  between  2006 and 2009 for  approximately  58% of the then
outstanding  principal  amounts  of our  loans  that  may  mitigate  some of our
exposure to the risk of rising  interest rates.  However,  increases in interest
rates will increase our payments under loans not covered by caps of the interest
rates of our loans and swap agreements and may negatively affect our earnings.

     Because we are a  non-U.S.  corporation,  you may not have the same  rights
that a creditor of a U.S. corporation may have

     Our investors may have more difficulty in protecting their interests in the
face of actions by the management,  directors or controlling  stockholders  than
would   stockholders   of  a  corporation   incorporated   in  a  United  States
jurisdiction.  In addition, the executive officers and administrative activities
and assets of the Company are located outside the United States. As a result, it
may be more  difficult  for  investors to effect  service of process  within the
United  States upon the  Company,  or to enforce  both in the United  States and
outside the United States judgments against the Company in any action, including
actions predicated upon the civil liability provisions of the federal securities
laws of the United States.

     It may be difficult to serve process on or enforce a United States judgment
against our officers, our directors and us

     We are a Danish  company and our executive  offices are located  outside of
the United  States.  Our officers and directors and some of the experts named in
this  registration  statement reside outside of the United States.  In addition,
substantially  all of our assets and the assets of our  officers,  directors and
experts  are located  outside of the United  States.  As a result,  you may have
difficulty  serving  legal  process  within the United  States upon us or any of
these persons or enforcing any judgments  obtained in U.S.  courts to the extent
assets located in the United States are  insufficient  to satisfy the judgments.
In addition,  there is uncertainty as to whether the courts of Denmark would (1)
enforce  judgments of United States courts  obtained  against us or our officers
and directors  predicated on the civil liability provisions of the United States
federal or state securities  laws, or (2) entertain  original actions brought in
Danish  courts  against us or our officers and  directors  predicated  on United
States federal or state  securities  laws. As a result,  it may be difficult for
you to enforce judgments obtained in United States courts against our directors,
officers and non-U.S. experts.

     There may be no active public market for you to resell our ADSs

     The price of our ADSs may be volatile, and may fluctuate due to factors
     such as:

o    actual or anticipated fluctuations in our financial results;

o    mergers and strategic alliances in the shipping industry;

o    market conditions in the industry;

o    changes in government regulation;

o    fluctuations in our quarterly revenues and earnings and those of our
     publicly held competitors;

o    shortfalls in our operating results from levels forecast by securities
     analysts;

o    announcements concerning us or our competitors; and

o    the general state of the securities market.

     Historically,  the  shipping  industry  has been highly  unpredictable  and
volatile.  The market for ADSs in the shipping industry may be equally volatile.
The  Copenhagen  Stock  Exchange  is  smaller  and less  liquid  than the  major
securities  exchanges or markets in the United States. The trading volume of our
shares on the Copenhagen Stock Exchange has been volatile. ADSs representing our
common  shares have been traded in the United  States only since April 16, 2002,
and it may be hard to predict future trading levels or volatility. Consequently,
you may not be able to sell ADSs at the time and at the price you desire.

     Holders  of  ADSs  may  experience  delays  in  receiving  information  and
materials that holders of our common shares may not

     The ADSs are securities  that have been issued by a depositary with whom we
have deposited our common shares. The depositary is responsible for distributing
notices and voting  materials  to holders of the ADSs.  If there is any delay in
such  distributions  on the part of the  depositary,  you may not  receive  such
dividends  or  materials  concurrently  with  holders  of our  common  shares in
Denmark,  and may not receive  such  materials  in time for you to instruct  the
depositary to vote.

     You may receive a smaller  dividend  than what you expected to receive when
the dividend was approved

     Under  Danish  law,  the  board of  directors  proposes  dividends  and the
shareholders  vote whether to accept the proposal or to lower the  dividend.  We
will pay any  dividends in Danish Kroner to our  depository  agent for the ADSs,
and our  depository  agent will  convert  the amounts  into U.S.  dollars at the
relevant  exchange rate and distribute the dividend to you. If the Danish Kroner
depreciates  against the U.S. dollar before our depository agent distributes the
dividend,  you may receive a smaller  dividend than what you expected to receive
at the time the dividend was approved by shareholders.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

     We are Aktieselskabet  Dampskibsselskabet  Torm, or TORM, a Danish shipping
company founded in 1889 under the Danish Companies Act that is engaged primarily
in the  ownership and operation of product  tankers and bulk  carriers.  We have
also  provided  offshore  marine  service  vessels,  but ceased this  service in
December  2003. Our product  tankers  primarily  carry refined  products such as
naphtha, gasoline, gas oil, jet fuel, and diesel oil. Our dry bulk vessels carry
commodities such as coal, iron ore and grain.  Our vessels trade worldwide.  Our
registered  office and  principal  place of business is at Tuborg  Havnevej  18,
DK-2900  Hellerup,  Denmark.  Our  telephone  number  is +45  39179200.  All the
financial information presented in Item 4 is in accordance with Danish GAAP.

     We provide transportation  services by utilizing a fleet of vessels that we
own, charter in on short and long term time charters,  or commercially manage as
the manager of a pool or through  contracts with third party owners.  We charter
in tankers and bulk vessels as are needed by the pools we manage.

     Our primary capital expenditures are in connection with the acquisitions of
vessels.  For the past several  years,  we have been  acquiring  new vessels and
disposing  of older  vessels in our fleet to ensure  compliance  with the safety
requirements of the International Maritime Organization,  or the IMO. During the
past three years, we have entered into contracts to purchase thirteen additional
vessels under construction, or newbuildings, and secondhand vessels, for a total
cost of 520 million U.S. dollars or approximately  DKK 3.1 billion and have sold
one vessel for aggregate  proceeds of  approximately  17 million U.S. dollars or
approximately DKK 0.1 billion.

B. Business Overview

THE FLEET

     Our fleet of  owned,  long  term  chartered  and  partially  owned  vessels
consists of 22 product tankers,  a 50% interest in an additional  product tanker
and nine dry bulk carriers.  The total tonnage of those vessels is approximately
2,042,563 dwt, of which one vessel of approximately  84,000 dwt is owned jointly
with a partner.  In addition,  as of December 31, 2004, we commercially  managed
approximately 53 vessels for third party owners and charterers.

     In 2002, we placed orders for two LR1 75,000 dwt tankers,  both of which we
took  delivery in 2004.  In 2003,  we placed orders for the building of four new
100,000 dwt  product  tankers,  of which we expect to take  delivery in 2006 and
2007.  In January  2004,  we placed an order for the building of one new 100,000
dwt  product  tanker,  which we expect to take  delivery  of in early  2008.  In
October 2004, we acquired two 46,000 dwt product  tanker  newbuildings,  both of
which we expect will be delivered in 2005.

     For an overview of our fleet please refer to Item 4D.

     Our product tanker division is engaged in the transportation of refined oil
products  such as  gasoline,  jet fuel,  naphtha and gas oil. We own and operate
three  sizes of product  carriers.  The largest  vessels are Aframax  tankers of
approximately  100,000 to 105,000 dwt, that primarily  transport naphtha between
the Arabian Gulf and Japan and other East Asiatic countries. The other two sizes
of product tankers, Panamax, which are tankers of approximately 80,000 to 85,000
dwt,  and  Handymax,  which are tankers of  approximately  40,000 to 50,000 dwt,
operate in the above  mentioned  areas and in the U.S.,  Africa,  Europe and the
Caribbean. One of these vessels is owned in joint venture with a partner.

     Our dry bulk vessels  transport  products such as grain, coal and iron ore.
We operate dry bulk vessels of two sizes: Panamax and Handysize. The Panamax dry
bulk vessels, which range between 60,000 and 80,000 dwt, carry iron ore and coal
as well as commodities such as grain, bauxite and fertilizer.  The Handysize dry
bulk  vessels  are  approximately  20,000 to 30,000  dwt and are fitted to carry
logs, but can also carry commodities such as grain, fertilizer and steel.

     In 1997, we diversified  into the operation of  anchor-handling  tug/supply
vessels and other similar  offshore  craft that service oil rigs but ceased this
activity in December 2003.

     Each of our vessel  categories  generates  gross profits (net earnings from
shipping activities) by operating owned and chartered in vessels.  Gross profits
(net  earnings  from  shipping  activities)  generated  by the Liner  service is
included in the item "Profit  before tax from  discontinued  operations"  in the
Income  Statement.  Over the last three financial years the  contribution to net
earnings from shipping activities per division has been as follows:

Division                               2002              2003              2004
--------                               ----              ----              ----

Product Tankers                         98%               80%               56%

Dry Bulk Vessels                        -5%               20%               44%

Liner Service                            6%                0%                0%

Offshore Craft                           1%                0%                0%

     Please refer to Item 5A for a  description  of revenue and gross profit per
division.

PRODUCT TANKER POOLING ARRANGEMENTS

     We employ all of our owned and long term chartered product tankers in three
pooling  arrangements,  the LR2 Pool,  the LR1 Pool and the MR Pool,  along with
vessels from several other shipping companies.  The manager of each pool has the
responsibility  for the  commercial  management  of the  participating  vessels,
including the marketing, chartering, operation and bunker (fuel oil) purchase of
the vessels.  Each pool is administered  by a pool board,  which is comprised of
representatives  of each  pool  participant.  The  pool  boards  set the  pools'
policies and issue directives to the pool managers. The pool participants remain
responsible for all other costs including the financing,  insurance, manning and
technical  management of their  vessels.  The earnings of all of the vessels are
aggregated and divided according to the relative performance capabilities of the
vessel and the actual earning days each vessel is available.

The LR2 Pool

     As of December 31, 2004,  the LR2 Pool was comprised of 18 Aframax  tankers
that are all double-hull and mainly trade clean  petroleum  products.  We formed
LR2 Management A/S, a Danish corporation,  to serve as the commercial manager of
the LR2 Pool.  During 2004, the role of commercial  manager was transferred to a
limited partnership:  LR 2 Management K/S. LR2 Management A/S, which was renamed
Longe Range 2 A/S, is the general partner of the partnership.  We own 50% of all
issued and  outstanding  voting stock of Longe Range 2 A/S and a 50% interest in
LR 2 Management K/S. Maersk Tankers,  one of the pool participants,  also owns a
50% interest in both entities.  The other participants in this pool are Primorsk
Shipping  Corporation  and Reederei "Nord" Klaus E. Oldendorff Ltd. Three of our
owned  vessels  TORM  Valborg,  TORM  Ingeborg  and TORM  Helene  and two of our
chartered in vessels,  TORM Kristina and TORM Gudrun,  currently  participate in
this pool and we have  contracted to add five  newbuildings  to the pool between
2006 and 2008 when the vessels are delivered from the shipbuilding yard. The LR2
pool has also time chartered in one vessel,  the charter of which is expected to
end in January 2006.  If a  participant  wants to sell one of its vessels in the
pool,  it must give notice to the pool board two months in advance of such sale,
and six months  notice is required  for a  participant  to  withdraw  all of its
vessels  from the pool.  No such  notice has been given from  January 1, 2004 to
April 30, 2005.

The LR1 Pool

     As of December 31, 2004, the LR1 Pool consisted of 32 Panamax tankers,  and
we serve as the sole manager of the pool.  The other  participants  in this pool
are Difko, Marinvest Shipping AB, Waterfront Shipping AS, Mitsui OSK Lines Ltd.,
Reederei "Nord" Klaus E. Oldendorff Ltd., LGR di Navigazione S.P.A., Great Basic
Limited and Great Global (Asia)  Limited.  As of December 31, 2004,  five of our
vessels,  TORM  Estrid,  TORM Hilde,  TORM  Margrethe,  TORM Ismini and Kirsten,
participated in this pool, and we had contracted to add two  newbuildings to the
pool in 2005 when the vessels are  delivered  from the  shipbuilding  yard. If a
participant  wants to sell one of its vessels or  withdraw  all of them from the
pool, it must give three months advance notice to the pool board. No such notice
has been given from January 1, 2004 to April 30, 2005.

The MR Pool

     The MR Pool is a pooling  arrangement  we have  entered  into  with  Prisco
Singapore Pte Ltd.,  Sanmar Shipping and LGR Di Navigazione S.P. for the pooling
of 25 Handymax  product  tankers as of December 31,  2004.  We serve as the sole
manager of the MR Pool. As of December 31, 2004,  13 of our vessels,  TORM Mary,
TORM Vita, TORM Gertrud,  TORM Gerd, TORM Gunhild, TORM Asia, TORM Gotland, TORM
Anne, TORM Olga, TORM Thyra, TORM Freya, TORM Alice and TORM Agnete participated
in this pool. If a participant  wants to sell one of its vessels in the pool, it
must give notice to the pool board three months in advance of such sale, and six
months notice is required for a participant  to withdraw all of its vessels from
the pool. No such notice has been given from January 1, 2004 to April 30, 2005.

DRY BULK VESSEL OPERATION

     We operate  both Panamax and  Handysize  vessels in our Bulk  Division.  We
operate our Panamax vessels  ourselves while our Handysize  vessels are operated
through our  participation in the IHC Pool.  Similar to the pooling  arrangement
for our product tankers,  the earnings from the Handysize vessels are aggregated
and divided according to the relative performance capabilities of the vessel and
the actual earning days per vessel.  The pool is  administered  by a pool board,
which is comprised of representatives  of each pool participant.  The pool board
sets the pools'  policies and issues  directives to the pool  manager.  The pool
participants  remain  responsible  for the  financing,  insurance,  manning  and
technical management of their individually owned vessels.

Handysize Pool

     We established a pool called the International  Handybulk Carriers,  or IHC
Pool,  on October 1, 2001,  together  with Pacific  Basin  Shipping  Investments
Limited and Wah Kwong  Shipping  Holdings  Limited.  This pool is  comprised  of
approximately  40 vessels as at  December  31,  2004.  Pacific  Basin  serves as
commercial  manager for the pool.  We have entered two of our owned vessels into
the pool, TORM Arawa and TORM Pacific.

OUR INVESTMENT IN DAMPSKIBSSELSKABET "NORDEN" A/S

     In the  summer  of 2002,  TORM  acquired  a share  holding  in  NORDEN  and
subseqently  launched a public offer on the  Copenhagen  Stock  Exchange for the
remainder  of  NORDEN's  shares.  After the  offer,  TORM owned  727,803  shares
representing  33% - excluding  NORDEN's  own shares - acquired at a price of DKK
361 per share for a total  investment  of DKK 263  million.  As of December  31,
2004,  we were  NORDEN's  single  largest  shareholder  with  33.07% of NORDEN's
outstanding shares, excluding own shares.

     NORDEN,  founded in 1871, is a Danish based shipping  company listed on the
Copenhagen Stock Exchange. NORDEN's focus is on tankers and bulk carriers. As of
December 31, 2004,  NORDEN operated  approximately  123 vessels through a mix of
owned and chartered tonnage.

     Despite the fact that the goal of acquiring NORDEN - to create one shipping
company  combining  TORM's  tanker  activities  with  NORDEN's  strength in bulk
markets - was not realized in 2002, we nonetheless  retained the shareholding in
NORDEN.  This was done not only with the aim of making a merger  possible in the
longer term, but also in view of the investment potential.

     In the autumn of 2004, two of NORDEN's shareholders decided to sell a total
of 20% of the  shares  in  NORDEN  to  Rasmussengruppen  AS.  At the  same  time
Rasmussengruppen  reached an agreement with A/S Motortramp,  which owns 25.7% of
the share  capital,  whereby the two  parties  have  granted  one another  first
refusal  on each  other's  shares  in  NORDEN,  and at the same  time  committed
themselves  not to sell  their  shares  to a third  party  for a  period  of two
years.We currently have no intention to sell the shareholding in NORDEN.

     We had an unrealized  gain of DKK 1,034 million  related to the increase in
the value of the NORDEN shares in 2004.

THE INDUSTRY - TANKERS

     The international product tanker industry provides seaborne  transportation
of refined petroleum products for the oil market. According to industry sources,
tankers  transported  refined oil products  corresponding to  approximately  653
million tons  annually in the fourth  quarter of 2004 showing a 6.7% increase as
compared to fourth quarter 2003. For 2004 as a whole,  industry sources estimate
that  products  trade  increased by 3.9%.  The two main types of operators  that
provide transportation services in the tanker market are:

o    major oil companies; and

o    independent ship owners.

     They provide transportation services for end users such as:

o    oil companies;

o    oil traders;

o    petrochemical companies;

o    government agencies; and

o    power plants.

     According  to industry  sources,  the world  tanker  fleet above 10,000 dwt
consists of approximately  3,119 vessels totaling 308 million dwt or 5.7% higher
as of January 1, 2005 as  compared to the year  before.  Oil  companies  own, or
control through long-term time charters,  approximately one third of the current
world  tanker  capacity.  Independent  ship  owners own or control the other two
thirds.  Oil  companies  use their  fleets not only to  transport  their own oil
products,  but also to compete with the independent ship owners to transport oil
products for others.

     We believe the quality of tanker  vessels and  operations has improved over
the past several  years,  as charterers  and  regulators  increasingly  focus on
safety and protection of the environment. National authorities and international
conventions have historically regulated the oil transportation  industry.  Since
1990,  the emphasis on  environmental  protection  has  increased.  Legislation,
regulations and regulatory organizations such as the OPA, the IMO, protocols and
classification  society procedures demand  higher-quality  tanker  construction,
maintenance,  repair and  operations.  Charterers  of all types,  including  oil
companies,  terminal operators, shippers and receivers are becoming increasingly
selective in their  acceptance  of tankers and are  inspecting  and vetting both
vessels and companies on a periodic  basis.  As these changes have imposed costs
and potential liabilities on tanker owners and operators,  they have also raised
barriers to entry and favored  ship owners with quality  fleets and  operations.
Limitations  imposed by port states and the IMO on trading of older  single-hull
vessels should  accelerate the commercial  obsolescence  of older,  poor-quality
tankers.

     The  industry  identifies  tankers as either  product  tankers or crude oil
tankers on the basis of various factors including  technical  specifications and
trading  histories.  Crude oil  tankers  carry crude oil and  so-called  "dirty"
products such as fuel oils.  Product  tankers carry refined  petroleum  products
such as  gasoline,  jet fuel,  kerosene,  naphtha  and gas oil,  which are often
referred to as "clean" products.

     Product tankers are tankers that typically have cargo handling systems that
are designed to transport  several  different  refined products  simultaneously,
such as gasoline,  jet fuel, kerosene,  naphtha and heating oil, from refineries
to the ultimate consumer. Product tankers generally have coated cargo tanks that
make it easier to clean the tanks between voyages involving  different  cargoes.
This  coating  also  protects  the steel in the tanks  from  corrosive  cargoes.
Product tankers generally range in size from 10,000 dwt to 110,000 dwt.

     Although  product  tankers  are  designed  to carry  dirty as well as clean
products, they generally do not switch between clean and dirty cargoes. A vessel
carrying  dirty cargo must  undergo a cleaning  process  prior to loading  clean
cargo  and many  charterers  want to  eliminate  any risk of  contamination.  In
addition,  specified design,  outfitting and technical factors tend to make some
vessels better suited to handling the physical properties of distinct cargoes.

     Our vessels primarily transport clean products. Our product tankers are all
double-hull  and range in size from 44,000 dwt to 105,000 dwt. They compete with
tankers of similar  size and  quality.  The rates that we are able to obtain for
our vessels are subject to the supply and demand dynamics described below.

Supply and Demand for Tankers

     The supply of, and demand for, tanker capacity  strongly  influences tanker
charter  rates  and  vessel  values  for all  tankers.  Supply  and  demand  has
historically caused fluctuations in tanker charter rates and secondhand values.

     Demand for oil  tankers  is related to the demand for oil and oil  products
and the distance between points of production and points of consumption.  Demand
for refined petroleum products is, in turn, affected by, among other things:

o    general economic conditions, which include increases and decreases in
     industrial production and transportation;

o    oil prices;

o    environmental issues or concerns;

o    climate;

o    competition from alternative energy sources; and

o    regulatory environment.

     The  supply of tanker  capacity  is a  function  of the  number of  tankers
delivered to the fleet relative to the number of tankers  permanently taken from
service when they become  technically or economically  obsolete.  Currently,  it
takes approximately 36 to 48 months from the time a building contract is entered
into before a newbuilding is delivered.  The average age of tankers removed from
service  currently ranges between 21 and 25 years.  Other factors  affecting the
supply of tankers include:

o    the number of combined carriers, or vessels capable of carrying oil or dry
     bulk cargoes, carrying oil cargoes;

o    the number of newbuildings on order and being delivered;

o    the number of tankers in lay-up, which refers to vessels that are in
     storage, dry-docked, awaiting repairs or otherwise not available or out of
     commission; and

o    the number of tankers scrapped for obsolescence or subject to casualties;

o    prevailing and expected future charterhire rates;

o    costs of bunkers, fuel oil, and other operating costs;

o    the efficiency and age of the world tanker fleet;

o    current shipyard capacity; and

o    government and industry regulation of maritime transportation practices,
     particularly environmental protection laws and regulations.

     Environmental  laws and  regulations  are imposing  requirements on vessels
when they  reach 25 years of age that  reduce the amount of cargo they can carry
or require that the vessel be configured in a different way. These  requirements
tend to  impose  costs on those  older  vessels  and make  operating  them  less
economical.

THE INDUSTRY - DRY BULK FLEET

Overview

     The dry bulk  carrier  industry is highly  fragmented  with many owners and
operators of vessels, including proprietary owners who are large shippers of dry
bulk cargo, state-controlled shipping companies and independent operators.

     Dry bulk cargo consists of the major bulk commodities, which are coal, iron
ore and grain and the minor  bulk  commodities  which  include  steel  products,
forest  products,   agricultural  products,  bauxite  and  alumina,  phosphates,
petcoke,  cement,  sugar,  salt,  minerals,  scrap metal and pig iron.  Dry bulk
carriers are generally single deck ships,  which transport unpacked cargo, which
is poured, tipped or placed through hatchways into the hold of the ships.

     Historically,  charter rates for dry bulk carriers have been  influenced by
the demand for, and the supply of, vessel tonnage. The demand for vessel tonnage
is  largely a  function  of the level of  worldwide  economic  activity  and the
distance  between major trade areas.  Supply is primarily  driven by the size of
the  existing  worldwide  dry bulk  carrier  fleet,  scrapping  and  newbuilding
activity. Charter rates and vessel values are determined in a highly competitive
global market and have been characterized by fluctuations since the mid-1980s.

Vessel Types

     Vessels  utilized  in the  carriage  of major bulk  cargoes  are  generally
classified into three categories, based on carrying capacity:

o    Handysize dry bulk carriers (20,000 to 30,000 dwt).  Unlike most larger dry
     bulk  carriers,  Handysize  dry bulk  carriers are equipped with cargo gear
     such as cranes.  This type of vessel is well suited for  transporting  both
     major and minor bulk  commodities  to ports  around the world that may have
     draft restrictions or are not equipped with gear for loading or discharging
     of cargo.

o    Panamax dry bulk carriers (60,000 to 80,000 dwt). Panamax dry bulk carriers
     are designed with the maximum width,  length and draft that will allow them
     to transit  fully  laden  through  the Panama  Canal.  Panamax  vessels are
     primarily  used in the  transport  of major  bulks  such as grain and coal,
     along with some minor bulks like phosphate, petcoke and salt.

o    Capesize  dry bulk  carriers  (100,000  dwt or  above).  Capesize  dry bulk
     carriers  primarily transit from the Atlantic to the Pacific Ocean via Cape
     Horn or the Cape of Good Hope,  hence  their  name.  Capesize  vessels  are
     typically used for long voyages in the coal and iron ore trades.

     In addition to the three  standard  vessel  types,  the world bulk  carrier
fleet also includes  combination  carriers.  These vessels are typically  large,
capable of carrying  either  crude oil or dry bulk cargoes and compete with both
Capesize and Panamax bulk carriers.  The role of  combination  carriers has been
decreasing  since 1990 because such vessels,  which were not built primarily for
the dry cargo  market  but rather  for the oil  tanker  market,  have come to be
considered less desirable by charterers of oil tankers, since their oil carrying
capacity may be limited and they are not strictly  specialized  for the carriage
of oil.

     Set forth below are some of the  characteristics  of the principal  cargoes
carried by dry bulk carriers.

o    Coal. The two categories comprising this segment are steam (or thermal)
     coal, which is used by power utilities, and coking (or metallurgical) coal,
     which is used by steelmakers. Steam coal is primarily transported from
     Australia, South Africa and the United States to Europe and Japan. Coking
     coal is primarily transported from Australia, the United States and Canada
     to Europe and Japan.

o    Iron Ore. Iron ore is primarily transported from Brazil and Australia to
     China, Europe and Japan. The majority of iron ore shipments is carried by
     Capesize dry bulk carriers.

o    Grain. The grain trade includes wheat, wheat flour, coarse grains (corn and
     barley), soybeans and soybean meal. Although the annual volume of the grain
     trade is subject to political factors and weather conditions, shipments
     have remained relatively stable over the past five years. Grain is
     primarily transported from the United States, Canada, Europe, Australia and
     Argentina to the Far East, Latin America and Africa. Handymax and Panamax
     vessels carry approximately 90% of the international seaborne bulktrade
     while Capesize vessels transport the remainder.

     Our dry bulk vessels transport cargoes such as grain, coal and iron ore. We
operate both  Handysize and Panamax dry bulk vessels.  Most of the coal and iron
ore we transport are carried on our Panamax vessels, while both types of vessels
carry grain and fertilizer. The rates that we can achieve for our vessels depend
on the supply and demand dynamics described below.

Demand for Dry Bulk Vessels

     Due to the variety of cargo carried by dry bulk  carriers,  demand for such
vessels  is  dependent  on a number of  factors,  including  world and  regional
economic and political conditions,  developments in international trade, changes
in seaborne and other transportation  patterns,  weather patterns,  crop yields,
armed conflicts, port congestion,  canal closures and other diversions of trade.
Generally,  since larger  ships carry fewer types of cargoes,  demand for larger
vessels is affected by trade patterns in a small number of  commodities.  Demand
for smaller  vessels is more  diversified and is determined by trade in a larger
number of commodities. As a result, charter rates for smaller dry bulk carriers,
such as Handysize dry bulk  carriers,  have tended to be relatively  more stable
than charter rates for larger dry bulk carriers.

Supply of Dry Bulk Carriers

     The size of the  world's  dry bulk  carrier  fleet  changes  as a result of
newbuildings  and  scrapping  or loss  of  vessels.  The  general  trend  in the
development  of the bulk market has always been  closely  linked to the state of
the world economy. The economic downturn in Asia in the late 1990's led to sharp
falls in cargo volumes, and therefore rates, whereas the subsequent recovery has
likewise  acted to  boost  the  sector  with  rates  recovering  to above  those
prevailing prior to the crisis.  In the middle of the third quarter 2003 the dry
bulk  market  reached  historically  high  levels and rates have  remained  high
compared to the previous  years due to a strong  demand from China for iron ore,
coupled  with a very  low  level  of  newbuilding  deliveries  and a low  global
newbuilding order book in the bulk market. The level of expected newbuildings in
the dry bulk sector in the  forthcoming  years remains at a low level due to the
preference by the major shipyards for building container and tanker vessels that
in recent years have been more profitable to the shipyards.

CHARTERING OF THE FLEET

     Vessels can be chartered by customers in a variety of ways.

     The spot market  provides the most frequent  source of  employment  for our
vessels.  In the spot market, the charterer hires the vessel to carry cargo on a
specific  voyage.  The owner  provides  the crew and bears all vessel  operating
costs and voyage costs, including fuel and port costs.

     A charterer and owner can also enter into a time charter for a vessel. Time
charters involve a charterer hiring a vessel for a fixed period, which may range
from a short  number of days to several  years.  Typical  time  charters are for
periods  of  between  six to 36  months.  In a time  charter,  the  owner  bears
operating  costs,  while the  charterer  is  responsible  for the voyage  costs,
including fuel oil.

     A demise  charter,  also  referred to as a bareboat  charter,  involves the
chartering  of a  vessel  for a fixed  period  of time.  However,  unlike a time
charter, a bareboat charter requires the user to pay for all operating expenses,
maintenance of the vessel and voyage costs.

     All of our tanker vessels and Handysize dry bulk vessels  operate in pools.
Within each pool, a vessel may be time  chartered out by the pool  manager,  but
the  charterhire  is divided  among all of the vessels in the pool and therefore
does not  provide  us with the  steady  income  normally  associated  with  time
charters.  Each pool  manager  will  determine  the number of vessels to be time
chartered depending on charterhire rates and pool board strategy. Vessels in our
pools that are not time chartered  generally trade in the spot market.  However,
the pools do enter into contracts of  affreightment,  which provide a guaranteed
fixed income over a period of time.

MANAGEMENT OF THE FLEET

     We  provide  the  operations,   chartering,   technical  support,  shipyard
supervision,  insurance and financing  management  services necessary to support
our fleet. Our chartering staff, as well as our fleet's management personnel, is
mainly  located in our head office in Copenhagen and in our office in Singapore.
Our  staff  makes   recommendations  to  our  senior  management  regarding  the
chartering of our vessels,  as well as identifying when  opportunities  arise to
buy or sell a vessel. We also have offices in Manila, Hamburg and Tokyo, but all
decisions  relating to the vessels we manage are made or approved in our offices
in Copenhagen and Singapore.

SEASONALITY

     The  demand  for  product  tankers  and  bulk  carriers  has   historically
fluctuated  depending  on the  time of  year.  Demand  for  product  tankers  is
influenced by many factors,  including  general economic  conditions,  but it is
primarily  related to demand for  petroleum  products  in the areas of  greatest
consumption.  Accordingly, demand for product tankers generally rises during the
winter  months and falls during the summer  months in the  Northern  hemisphere.
Demand for bulk carriers is not as volatile as that for tankers, but demand does
generally  increase  in the spring  months in North  America as demand for grain
increases and generally  falls back during the winter  months.  More  consistent
commodities  such as coal,  however,  provide some  stability to the bulk vessel
trade.  Moreover,  these are generalized trading patterns that vary from year to
year and there is no  guarantee  that  similar  patterns  will  continue  in the
future.

ENVIRONMENTAL AND OTHER REGULATIONS

     Government regulation  significantly affects the ownership and operation of
our  vessels.  The  various  types of  governmental  regulation  that affect our
vessels include international  conventions,  national,  state and local laws and
regulations  in force in the countries in which our vessels may operate or where
our vessels are  registered.  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.  Various  governmental  and  quasi-governmental
agencies  require  us to  obtain  permits,  licenses  and  certificates  for the
operation  of our  vessels.  Although we believe  that we are  substantially  in
compliance  with  applicable  environmental  and  regulatory  laws  and have all
permits,  licenses and certificates necessary for the conduct of our operations,
future  non-compliance  or failure to maintain  necessary  permits or  approvals
could require us to incur substantial costs or temporarily  suspend operation of
one or more of our vessels.

     We believe  that the  heightened  environmental  and  quality  concerns  of
insurance  underwriters,  regulators  and  charterers  are  leading  to  greater
inspection  and  safety  requirements  on all  vessels  and may  accelerate  the
scrapping of older vessels  throughout  the industry.  Increasing  environmental
concerns  have  created a demand for modern  vessels that are able to conform to
the stricter environmental  standards.  We maintain high operating standards for
all of our vessels  that  emphasize  operational  safety,  quality  maintenance,
continuous  training of our crews and  officers  and  compliance  with U.S.  and
international and other national regulations.

     Our vessels are subject to both scheduled and unscheduled  inspections by a
variety of  governmental  and  private  entities,  each of which may have unique
requirements. These entities include the local port authorities such as the U.S.
Coast Guard, harbor master or equivalent,  classification  societies, flag state
administration  or country of registry,  and charterers,  particularly  terminal
operators and major oil companies which conduct frequent vessel inspections.

Environmental Regulation -- IMO

     The IMO, an agency  organized  in 1959 by the United  Nations,  has adopted
regulations,  which set forth pollution  prevention  requirements  applicable to
tankers. These regulations, which have been implemented in many jurisdictions in
which our vessels operate, provide, in part, that:

o    tankers between 25 and 30 years old must be of double-hull construction or
     of a mid-deck design with double sided construction, unless (1) they have
     wing tanks or double-bottom spaces not used for the carriage of oil, which
     cover at least 30% of the length of the cargo tank section of the hull or
     bottom; or (2) they are capable of hydrostatically balanced loading
     (loading less cargo into a tanker so that in the event of a breach of the
     hull, water flows into the tanker, displacing oil upwards instead of into
     the sea);

o    tankers 30 years old or older must be of double-hull construction or
     mid-deck design with double sided construction; and

o    all tankers will be subject to enhanced inspections.

     Also, under IMO regulations,  a tanker must be of double-hull  construction
or a mid-deck design with  double-sided  construction or be of another  approved
design  ensuring  the same level of  protection  against  oil  pollution  if the
tanker:

o    is the subject of a contract for a major conversion or original
     construction on or after July 6, 1993;

o    commences a major conversion or has its keel, which is a continuous plate
     running the length of the vessel at the middle part of the bottom plating,
     attached on or after January 6, 1994; or

o    completes a major conversion or is a newbuilding delivered on or after July
     6, 1996.

     Under the current  regulations,  starting  in 2004,  and  thereafter,  such
vessels will not be in compliance  with the  configuration  requirements  of the
IMO. As of December 31, 2004, we did not own any single-hull tankers.

     Effective  September 2002, the IMO  accelerated its existing  timetable for
the  phase-out  of  single-hull  oil  tankers.  These  regulations  require  the
phase-out of most  single-hull oil tankers by 2015 or earlier,  depending on the
age of the tanker and whether it has segregated  ballast tanks.  After 2007, the
maximum  permissible age for single-hull tankers will be 26 years. Under current
regulations,  retrofitting  will enable a vessel to operate until the earlier of
25 years of age and the anniversary date of its delivery in 2017.  However, as a
result  of the oil  spill  in  November  2002  relating  to the  loss of the M/T
Prestige,  which was owned by a company not affiliated with us, in December 2003
the Marine  Environmental  Protection  Committee  of the IMO  adopted a proposed
amendment to the  International  Convention for the Prevention of Pollution from
Ships to  accelerate  the phase  out of  single-hull  tankers  from 2015 to 2010
unless the relevant flag states extend the date to 2015. This proposed amendment
came into effect in April 2005. Moreover, the IMO may still adopt regulations in
the future that could adversely affect the remaining useful lives of single-hull
tankers.

     The IMO has also negotiated international conventions that impose liability
for oil pollution in international waters and a signatory's  territorial waters.
In September 1997, the IMO adopted Annex VI to the International  Convention for
the  Prevention  of Pollution  from Ships to address air  pollution  from ships.
Annex VI was  ratified in May 2004 and became  effective  in May 2005.  Annex VI
sets limits on sulfur oxide and nitrogen oxide  emissions from ship exhausts and
prohibits   deliberate  emissions  of  ozone  depleting   substances,   such  as
chlorofluorocarbons.  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.  Compliance with these  regulations could require
the installation of expensive emission control systems and could have an adverse
financial impact on the operation of our vessels. Additional or new conventions,
laws and regulations  may be adopted that could adversely  affect our ability to
manage our ships.

     The requirements  contained in the International Safety Management Code, or
ISM Code,  promulgated  by the IMO,  also  affect our  operations.  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  describing  procedures  for
responding  to  emergencies.  We are certified as an approved ship manager under
the ISM Code.

     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 code requirements for a safety management system.
No vessel  can  obtain a  certificate  unless  its  manager  has been  awarded a
document  of  compliance,   issued  by  each  flag  state  or  by  an  appointed
classification  society,  under the ISM Code.  All of our vessels have  obtained
safety management certificates.

     Noncompliance  with the ISM Code and other IMO  regulations may subject the
ship owner or a 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.  Both the U.S. Coast Guard and
EU authorities  have indicated that vessels not in compliance  with the ISM Code
will be prohibited  from trading in U.S. and European  Union ports,  as the case
may be.

     The IMO has negotiated international  conventions that impose liability for
oil  pollution in  international  waters and a signatory's  territorial  waters.
Additional or new  conventions,  laws and regulations may be adopted which could
limit our ability to do business and which could have a material  adverse effect
on our business and results of operations.

Environmental Regulation--OPA/CERCLA

     The OPA  established  an  extensive  regulatory  and  liability  regime for
environmental  protection and cleanup of oil spills.  OPA affects all owners and
operators  whose vessels trade with the U.S. or its  territories or possessions,
or whose  vessels  operate in the  waters of the U.S.,  which  include  the U.S.
territorial  waters and the two hundred nautical mile exclusive economic zone of
the U.S. The Comprehensive  Environmental  Response,  Compensation and Liability
Act, or CERCLA,  applies to the  discharge of hazardous  substances  (other than
oil) whether on land or at sea. Both OPA and CERCLA impact our operations.

     Under OPA, vessel owners, operators and bareboat or "demise" charterers are
"responsible  parties" who are all liable regardless of fault,  individually and
as a group,  for all  containment  and clean-up costs and other damages  arising
from oil spills  from their  vessels.  These  responsible  parties  would not be
liable if the spill results solely from the act or omission of a third party, an
act  of God or an  act  of  war.  The  other  damages  aside  from  cleanup  and
containment costs are defined broadly to include:

o    natural resource damages and related assessment costs;

o    real and personal property damages;

o    net loss of taxes, royalties, rents, profits or earnings capacity;

o    net cost of public services necessitated by a spill response, such as
     protection from fire, safety or health hazards; and

o    loss of subsistence use of natural resources.

     OPA limits the liability of responsible parties to the greater of USD 1,200
per gross ton or USD 10 million per tanker  that is over 3,000 gross tons.  This
is subject to  possible  adjustment  for  inflation.  OPA  specifically  permits
individual  states to impose  their own  liability  regimes  with  regard to oil
pollution  incidents  occurring  within their  boundaries,  and some states have
enacted   legislation   providing  for  unlimited  liability  for  discharge  of
pollutants  within their waters.  In some cases,  states that have enacted their
own legislation  have not yet issued  implementing  regulations  defining tanker
owners'  responsibilities  under these laws. CERCLA, which applies to owners and
operators  of vessels,  contains a similar  liability  regime and  provides  for
cleanup, removal and natural resource damages. Liability under CERCLA is limited
to the greater of USD 300 per gross ton or USD 5 million  unless the incident is
caused by gross  negligence,  willful  misconduct,  or a  violation  of  certain
regulations,  in which case liability is unlimited. OPA and CERCLA each preserve
the right to recover damages under existing law, including maritime tort law. We
believe  that  we are  in  substantial  compliance  with  OPA,  CERCLA  and  all
applicable state regulations in the ports where our tankers call.

     OPA requires owners and operators of vessels to establish and maintain with
the U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their  potential  strict  liability under OPA. The U.S. Coast Guard has
enacted regulations requiring evidence of financial responsibility in the amount
of USD 1,500 per gross ton for tankers, coupling the OPA limitation on liability
of USD 1,200 per gross ton with the CERCLA  liability limit of USD 300 per gross
ton.  Under  the  regulations,  evidence  of  financial  responsibility  may  be
demonstrated by insurance,  surety bond,  self-insurance or guaranty.  Under OPA
regulations,  an owner or  operator  of more than one tanker will be required to
demonstrate  evidence of  financial  responsibility  for the entire  fleet in an
amount  equal only to the  financial  responsibility  requirement  of the tanker
having the greatest  maximum  liability  under OPA and CERCLA.  We have provided
requisite guarantees and received certificates of financial  responsibility from
the U.S. Coast Guard for each of our vessels required to have one.

     We insure each of our vessels  with  pollution  liability  insurance in the
maximum commercially  available amount of USD 1 billion per vessel per incident.
A catastrophic  spill could exceed the insurance  coverage  available,  in which
event there could be a material adverse effect on our business.

     Under OPA, with certain  limited  exceptions,  all newly built or converted
tankers  operating  in U.S.  waters  must be built with  double-hulls.  Existing
vessels that do not comply with the double-hull  requirement  must be phased out
over a  20-year  period,  from  1995 to 2015,  based on size,  age and  place of
discharge,  unless retrofitted with double-hulls.  Notwithstanding the phase-out
period, OPA currently permits existing  single-hull tankers to operate until the
year 2015 if their operations within U.S. waters are limited to:

o    discharging at the Louisiana Offshore Oil Port, also known as the LOOP; or

o    unloading with the aid of another vessel, a process referred to in the
     industry as lightering, within authorized lightering zones more than 60
     miles off-shore.

     Owners or  operators of tankers  operating  in the waters of the U.S.  must
file vessel  response  plans with the U.S.  Coast Guard,  and their  tankers are
required to operate in compliance  with their U.S. Coast Guard  approved  plans.
These response plans must, among other things:

o    address a "worst case" scenario and identify and ensure, through contract
     or other approved means, the availability of necessary private response
     resources to respond to a "worst case discharge";

o    describe crew training and drills; and

o    identify a qualified individual with full authority to implement cleanup
     actions.

     We have obtained vessel response plans approved by the U.S. Coast Guard for
our vessels  operating in U.S.  waters.  In addition,  the U.S.  Coast Guard has
announced it intends to propose  similar  regulations  requiring  certain tanker
vessels to prepare response plans for the release of hazardous substances.

Environmental Regulation--Other

     Although the U.S. is not a party to these conventions,  many countries have
ratified and follow the liability  scheme  adopted by the IMO and set out in the
International Convention on Civil Liability for Oil Pollution Damage of 1969, or
CLC. Under this convention,  a vessel's  registered owner is strictly liable for
pollution  damage caused in the  territorial  waters of a  contracting  state by
discharge of oil,  subject to some  complete  defenses.  Liability is limited to
approximately  USD  183 per  gross  registered  ton or  approximately  USD  19.3
million, whichever is less. If, however, the country in which the damage results
is a party to the 1992  Protocol  to the CLC,  the  maximum  liability  rises to
approximately  USD 82.7  million.  The limit of  liability  is tied to a unit of
account,  which varies  according to a basket of currencies.  The right to limit
liability  is  forfeited  under the CLC where the spill is caused by the owner's
actual  fault  and  under  the 1992  Protocol,  where the spill is caused by the
owner's  intentional or reckless conduct.  Vessels trading to states,  which are
party to this convention must provide evidence of insurance covering the limited
liability of the owner.  In  jurisdictions  where the CLC has not been  adopted,
various  legislative  schemes or common law  govern,  and  liability  is imposed
either on the basis of fault or in a manner similar to the CLC.

     In addition, most 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. These laws may be more stringent than U.S. federal law.

     Several of our vessels currently carry cargoes to U.S. waters regularly and
we believe  that all of our vessels are  suitable to meet OPA  requirements  and
that they would also qualify for trade if chartered to serve U.S. ports.

European Union and IMO Regulations

     The  IMO has  approved  a  timetable  for the  accelerated  phasing-out  of
single-hull oil tankers. Oil tankers delivered in 1976 and 1977 and which do not
comply with the requirements for protectively  located  segregated ballast tanks
were phased out by January 1, 2005.

     The  total  loss of the oil  tanker  M/T  Erika  off the coast of France on
December 12, 1999  polluted more than 250 miles of French  coastline  with heavy
oil.  Following the spill, the European  Commission  adopted a "communication on
the safety of oil transport by sea," also named the Erika Communication.

     As a part of this,  the  European  Commission  has adopted a proposal for a
general ban on single-hull oil tankers.  The timetable for the ban is similar to
that set by the United  States under OPA in order to prevent oil tankers  banned
from U.S.  waters  from  shifting  their  trades to Europe.  The ban plans for a
gradual phase-out of tankers depending on vessel type:

o    Single-hull oil tankers larger than 20,000 dwt without protective ballast
     tanks around the cargo tanks. This category is proposed to be phased out by
     2005.

o    Single-hull oil tankers larger than 20,000 dwt in which the cargo tank area
     is partly protected by segregated ballast tank. This category is proposed
     to be phased out by 2010.

o    Single-hull tankers below 20,000 dwt. This category is proposed to be
     phased out by 2015.

     Partly in response to the oil spill caused by the sinking of the tanker M/T
Prestige,  a single-hull  tanker owned by an entity that is not affiliated  with
us, in November  2002,  the EU proposed new  regulations  in March of 2003 that,
among other things,  places a ban on the  transportation  of heavy oil grades in
all single-hull  tankers loading or discharging at EU ports.  These  regulations
also accelerate the phase-out schedule of all single-hull  tankers. The European
Union Parliament  ratified these new regulations in July 2003 and the IMO joined
the  phase-out  of  single  hull  tankers  later in  2003.  The  details  of the
regulations are as follows:

o    Single hull tankers built on or before 1980 are immediately barred from
     entering into ports, offshore terminals, or anchor in an area under the
     jurisdiction of an EU member state.

o    Heavy crude oils (API grade <25.7, heavy fuel oils (viscosity> 180 mm2/s),
     bitumen and tar and their emulsion may be carried in double hull tankers
     only.

o    Single-hull non-segregated ballast tankers built on or before 1981 were
     phased out in 2004.

o    Single-hull non-segregated ballast tankers built on or before 1982 will be
     phased out in 2005.

o    All other single-hull tankers will be phased out in 2010.

     Several EU nations have already  implemented an absolute ban on single-hull
tankers  carrying  fuel oil and heavy oil grades.  Spain has banned  single-hull
tankers over 5,000 dwt carrying such cargo from entering her ports as of January
1, 2003.  Italy has  implemented  similar  measures  applicable  to  single-hull
tankers  over 15 years of age in the  summer  of 2003,  and  Spain,  France  and
Portugal have prohibited  single-hull tankers carrying such cargoes from passing
through their 200-mile economic exclusion zones since December 2002.

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 and complies with applicable rules and regulations of the
vessel's  country of registry and the  international  conventions  of which that
country is a member.  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.

     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 between the vessels' class and the
flag state 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,  at  intervals  of  12  months  from  the  date  of
commencement of the class period indicated in the certificate.

     Intermediate   Surveys:   Extended   annual  surveys  are  referred  to  as
intermediate  surveys and typically  are conducted two and one-half  years after
commissioning and each class renewal. Intermediate surveys may be carried out on
the occasion of the second or third annual survey.

     Class  Renewal  Surveys:  Class  renewal  surveys,  also  known as  special
surveys,  are  carried  out  for  the  ship's  hull,  machinery,  including  the
electrical  plant,  and for any  special  equipment  classed,  at the  intervals
indicated  by the  character  of  classification  for the hull.  At the  special
survey, the vessel is thoroughly examined,  including audio-gauging to determine
the thickness of the steel structures.  Should the thickness be found to be less
than class  requirements,  the  classification  society  would  prescribe  steel
renewals.  The  classification  society  may grant a one-year  grace  period for
completion of the special  survey.  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. In lieu of the special survey every four or five years,
depending on whether a grace period was granted,  a shipowner  has the option of
arranging with the classification  society for the vessel's hull or machinery to
be on a  continuous  survey  cycle,  in which every part of the vessel  would be
surveyed within a five-year cycle.

     At an owner's  application,  the surveys  required for class renewal may be
split according to an agreed schedule to extend over the entire period of class.
This process is referred to as continuous class renewal.

     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 also  dry-docked  every 30 to 36 months for  inspection of
the underwater parts and for repairs related to inspections.  If any defects are
found, the  classification  surveyor will issue a condition of class, known as 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.  All our
vessels  are  certified  as being "in class" by Lloyd's  Register  or Det Norske
Veritas. All new and secondhand vessels that we purchase must be certified prior
to their delivery under our standard  contracts and memorandum of agreement.  If
the vessel is not  certified on the date of closing,  we have no  obligation  to
take delivery of the vessel.

RISK OF LOSS AND LIABILITY INSURANCE

General

     The  operation  of any  cargo  vessel  includes  risks  such as  mechanical
failure,  collision,  personal injuries, property loss, cargo loss or damage and
business  interruption  due to  political  circumstances  in foreign  countries,
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 imposes  virtually  unlimited  liability upon
owners,  operators  and demise  charterers  of any vessel  trading in the United
States exclusive economic zone for certain oil pollution accidents in the United
States,  has  made  liability  insurance  more  expensive  for ship  owners  and
operators  trading in the U.S. market.  We carry insurance against loss of hire,
which protects against business interruption following a loss under our hull and
machinery  policy.  This policy does not protect us from business  interruptions
caused by any other losses. While we believe that our present insurance coverage
is adequate,  not all risks can be insured,  and there can be no guarantee  that
any  specific  claim  will be paid,  or that we will  always  be able to  obtain
adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

     We have obtained  marine hull and machinery and war risk  insurance,  which
include  damage to a vessel's  hull and  machinery,  collisions  and the risk of
actual or constructive total loss, for all of our vessels.  The vessels are each
covered up to at least fair market value. Under some circumstances,  salvage and
towing  expenses may be covered.  We also arranged  increased value coverage for
each vessel. Under this increased value coverage,  in the event of total loss of
a vessel,  we will be able to recover for amounts not recoverable under the hull
and machinery policy by reason of any under-insurance.

Protection and Indemnity Insurance

     Protection  and Indemnity  insurance is provided by mutual  protection  and
indemnity  associations,  or P&I  Associations,  which  cover  our  third  party
liabilities in connection with our shipping  activities  including other related
expenses of injury or death of crew, passengers and other third parties, loss or
damage to cargo,  damage to other third-party  property,  pollution arising from
oil or other substances,  and in some circumstances,  salvage,  towing and other
related costs, including wreck removal.  Protection and indemnity insurance is a
form of mutual indemnity insurance,  extended by protection and indemnity mutual
associations,  or  "clubs."  Subject  to  the  "capping"  discussed  below,  our
coverage, except for pollution, is unlimited.

     Our current  protection and indemnity  insurance  coverage for pollution is
USD 1 billion  per vessel per  incident.  The  fourteen  P&I  Associations  that
comprise  the  International  Group  insure  approximately  90% of  the  world's
commercial  tonnage and have entered into a pooling  agreement to reinsure  each
association's liabilities.  Each P&I Association has capped its exposure to this
pooling agreement at USD 4.25 billion.  As a member of a P&I Association,  which
is a member of the  International  Group, we are subject to calls payable to the
associations  based on its claim  records  as well as the claim  records  of all
other  members of the  individual  associations,  and members of the pool of P&I
Associations comprising the International Group.

COMPETITION

     We operate in markets that are highly  competitive  and based  primarily on
supply  and  demand.  We  compete  for  charters  on the basis of price,  vessel
location, size, age and condition of the vessel, as well as on our reputation as
an  operator.  We conclude  our time  charters  and voyage  charters in the spot
market  through the use of brokers,  through whom we negotiate  the terms of the
charters based on market  conditions and experience.  We compete  primarily with
owners of tankers in the Handymax, Panamax and Aframax class sizes in our tanker
division.  Ownership of tankers is highly  fragmented and is divided among major
oil companies and independent  tanker owners. Our bulk vessels also compete with
other vessels of the same type and size.

LEGAL PROCEEDINGS

     We are party,  as  plaintiff  or  defendant,  to a variety of lawsuits  for
damages arising  principally from personal injury and property  casualty claims.
Most claims are  covered by  insurance,  subject to  customary  deductibles.  We
believe that these claims will not,  either  individually  or in the  aggregate,
have a material  adverse  effect on us, our  financial  condition  or results of
operations.  From  time  to  time  in the  future  we may be  subject  to  legal
proceedings and claims in the ordinary course of business,  principally personal
injury,  property casualty claims and contract disputes.  Those claims,  even if
lacking merit,  could result in the  expenditure  of  significant  financial and
managerial resources. We have not been involved in any legal proceedings,  which
may have, or have had a significant effect on our financial position, nor are we
aware of any  proceedings  that  are  pending  or  threatened  which  may have a
significant  effect on our  financial  position,  results of  operations or cash
flows.

C.   Organizational Structure

     The following table set forth our  significant  entities as of December 31,
2004.

Entity                                   Activities

A/S Dampskibsselskabet  TORM             This is the parent company. The company
                                         owns 16 product tankers, a 50% interest
                                         in an additional  product  tanker and 4
                                         bulk  carriers.  This  company  employs
                                         most   of   the   employees   providing
                                         commercial and technical management for
                                         TORM vessels and pool vessels.

Torm Singapore (Pte) Ltd.                100% owned subsidiary. The company owns
                                         4 product  tankers and 3 bulk carriers.
                                         The   company   also    provides   some
                                         commercial and technical management.

Southern Light Shipping Limited          100% owned subsidiary. The company owns
                                         the bulk carrier TORM Arawa.

Eastern Light Shipping Limited           100% owned subsidiary. The company owns
                                         the bulk carrier TORM Pacific.

LR2 Management   K/S                     50% owned limited  partnership.  Maersk
                                         Tankers   ownes  the  other  50%.   The
                                         partnership  acts as pool  manager  for
                                         the LR2 pool.

LR1 Management   K/S                     100%  owned  limited  partnership.  The
                                         partnership  acts as pool  manager  for
                                         the LR1 pool.

MR Management   K/S                      100%  owned  limited  partnership.  The
                                         partnership  acts as pool  manager  for
                                         the MR pool.

     During 2004, we  restructured  the activities of the Group with the primary
aim of  transferring  ownership  of vessels from  single-vessel  entities to A/S
Dampskibsselskabet  TORM and Torm  Singapore  (Pte) Ltd.  thereby  reducing  the
number of significant entities compared to 2003.

D. Property, Plant and Equipment

     We do not  own  any  real  property  other  than  three  small  residential
properties.  We lease office space in Copenhagen and  Singapore.  The Copenhagen
office comprises approximately 2,283 square meters and is leased until September
2014  from  an  unaffiliated  third  party  at a rate  of DKK  3.8  million,  or
approximately USD 689,000 per year, increasing to approximately DKK 5.6 million,
or  approximately  USD 1.0  million  per  year in  2014.  The  Singapore  office
comprises  approximately 120 square meters and is leased until May 31, 2005 at a
rate of SGD 97,970, or approximately USD 60,000 or DKK 327,000, per year from an
unaffiliated  third  party.  Furthermore,  we have leased  three  apartments  in
Singapore.  One is  leased  until  February  2006  at a rate of SGD  44,400,  or
approximately  USD 27,000 or DKK 148,000,  per year from an  unaffiliated  third
party.  One is leased until May 2006 at a rate of SGD 60,000,  or  approximately
USD 37,000 or DKK 200,000,  per year from an  unaffiliated  third party.  One is
leased until October 2006 at a rate of SGD 46,200,  or approximately  USD 28,000
or DKK 154,000, per year from an unaffiliated third party.

     The following table lists our entire fleet of owned and long term chartered
in vessels as of December 31, 2004:

Product Tankers      Year Built      Dwt     Ownership               Flag (1)
---------------      ----------      ---     ---------               --------

Wholly Owned

TORM Helene             1997       99,999    D/S TORM                 DIS
TORM Valborg            2003       99,999    D/S TORM                 NIS
TORM Ingeborg           2003       99,999    D/S TORM                 NIS
TORM Hilde(3)           1990       84,040    D/S TORM                 NIS
TORM Margrethe(3)       1988       84,040    D/S TORM                 DIS
TORM Estrid             2004       74,999    D/S TORM                 DIS
TORM Ismini             2004       74,999    D/S TORM                 DIS
TORM Agnete             1999       47,165    Torm Singapore           Singapore
TORM Freya              2003       45,990    D/S TORM                 DIS
TORM Thyra              2003       45,990    D/S TORM                 DIS
TORM Mary               2002       45,990    D/S TORM                 DIS
TORM Vita               2002       45,940    D/S TORM                 DIS
TORM Gertrud            2002       45,940    D/S TORM                 DIS
TORM Gerd               2002       45,940    D/S TORM                 DIS
TORM Gotland            1995       44,999    D/S TORM                 DIS
TORM Alice              1995       44,999    D/S TORM                 DIS
TORM Gunhild            1999       44,999    D/S TORM                 DIS
TORM Anne               1999       44,990    Torm Singapore           Singapore
TORM Olga(4)            1992       44,646    Torm Singapore           Singapore
TORM Asia(4)            1994       44,367    Torm Singapore           Singapore

Partially Owned

Kirsten (50%)           1988       83,651    D/S TORM                 NIS

Chartered In

TORM Kristina(2)        1999       99,999                             Liberia
TORM Gudrun(2)          2000       99,965                             Liberia

Bulk Carriers        Year Built      Dwt                              Flag
-------------        ----------      ---                              ----
Wholly Owned
TORM Tina               2001       75,966    Torm Singapore           Singapore
TORM Marta              1997       69,638    D/S TORM                 NIS
TORM Marina             1990       69,637    D/S TORM                 DIS
TORM Herdis             1992       69,618    D/S TORM                 NIS
TORM Baltic             1997       69,614    Torm Singapore           Singapore
TORM Marlene            1997       69,548    Torm Singapore           Singapore
TORM Tekla              1993       69,268    D/S TORM                 DIS
TORM Arawa              1997       27,827    Southern Light Shipping  Liberia
TORM Pacific            1997       27,802    Eastern Light Shipping   Liberia

     (1): DIS stands  for the Danish  International  Shipping  Registry  and NIS
          stands for the Norwegian International Shipping Registry.

     (2): On ten-year time charter to TORM expiring in 2010.

     (3): Sold and  delivered  in  January/February  2005  with  five-year  time
          charter back to TORM.

     (4): Sold in 2005.  Torm Olga was  delivered in April 2005 and Torm Asia is
          expected to be delivered in the third quarter of 2005.

     Please refer to Item 5B for information regarding planned investments.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

2004 SUMMARY

     2004 was an outstanding year for TORM.  Historically high freight rates and
high  earnings for both the Tanker and Bulk  divisions  resulted in net earnings
from shipping activities of DKK 1,444 million (as compared to DKK 647 million in
2003).  Coupled with a  significant  increase in the value of the  investment in
Dampskibsselskabet  "NORDEN"  A/S of DKK 1,034  million (as  compared to DKK 681
million in 2003) the Company achieved its best financial  performance to date in
2004.  Net profit for the year was DKK 2,281  million (as  compared to DKK 1,051
million in 2003) and our shareholders  approved a dividend payment of DKK 15 per
share  (as  compared  to  DKK  6  in  2003)  at  the  Annual  General   Meeting,
corresponding to a total dividend payment by the Company of DKK 546 million.

     Rates in the product tanker market were at high levels  throughout the year
and  increased  further  toward  year-end.  As a result of a greater  demand for
heating oils,  product tanker market rates are generally at their highest during
the winter period (i.e. during the fourth and first quarters of the year), after
which rates are  somewhat  lower  during the  summer.  In 2004,  however,  rates
remained at very high levels  throughout  the summer  period and then  increased
further in the fourth quarter - a situation only seen  previously in the product
tanker market in 2001.

     The basis for these high rate levels and substantial  increases was a solid
growth in worldwide  demand,  low inventories of refined products  especially in
the western world - in part due to high oil prices - combined with the fact that
for many  years,  this part of the world has not  increased  refinery  capacity,
causing  increased  distances over which refined  petroleum  products have to be
carried.  This led to a very high  utilization rate of 91.5% for the world fleet
and consequently very high freight rates.  Furthermore,  an increasing number of
market  participants  without  owned  tonnage  or  cargoes  have  added  further
volatility to the market in recent years.

     With a young and modern  fleet,  which  mainly  operates in the spot market
globally,  TORM has been  well  positioned  to take  advantage  of the very firm
tanker market.

     The rates in the bulk market sustained the very firm levels seen at the end
of 2003.  During the first quarter of 2004, bulk freight rates reached  historic
high  levels.  The  background  for these  booming  rates was the  significantly
increased  import of raw materials,  especially in China, but also the result of
growth in other  regions of the  world,  including  India,  and an  increase  in
waiting  days due to limited  port  capacity  thereby  tying up a portion of the
world fleet.

     In the second quarter of 2004, the Chinese  government  adopted a number of
measures aimed at minimizing the risk of overheating the economy, which resulted
in a substantial  drop in bulk freight rates. In the third and fourth  quarters,
however,  rates began to  increase as stocks  reached  more normal  levels,  and
imports of raw materials to China began to rise again.

     In order to cover earnings at the historically high levels in a market with
significant  volatility  we  began  towards  the end of 2003  to  charter  out a
significant  part of the bulk fleet on time  charter,  typically  for periods of
about one year. This coverage was gradually renewed in the final quarter of 2004
and early 2005, and at higher rates,  thereby securing  approximately 65% of the
Bulk division's earnings as of March 1, 2005.

     We continued our fleet renewal and expansion  during 2004. We took delivery
of two LR1 product tankers from the Hyundai yard in Korea and also purchased two
second hand MR product tankers.  In accordance with our strategy to own a young,
modern fleet of product tankers, at the end of 2004, we purchased two MR product
tanker  newbuildings  to be delivered in 2005. Our owned bulk fleet was expanded
during the year  through the  exercise of existing  purchase  options  held on a
number of chartered-in  vessels,  resulting in three Panamax bulk carriers being
added to the owned fleet at favourable prices.

     The three product tanker pools  experienced  further growth  throughout the
year.  Despite an unchanged  number of pool partners the three pools grew by 23%
from 61 vessels to 75 vessels during 2004.

     The  increasing  importance of the markets east of the Suez Canal  combined
with the fact that many of our customers have representation in Singapore led us
to  strengthen  our  office in  Singapore  in 2004.  The new  office  undertakes
numerous functions and charters and operates our own and pool partners' vessels.

     In October 2004, we opened our own recruitment  office in the  Philippines,
which will help ensure our ability to further strengthen and retain the staff of
seagoing  personnel with the  competencies  crucial to  maintaining  the highest
possible  standards.  We believe  that a strong  staff of seagoing  personnel is
important as demand for highly qualified naval officers is increasing strongly.

     The value of TORM's  investment in NORDEN  increased  significantly  during
2004 and NORDEN paid a dividend of DKK 200 million to TORM in 2004.

     The price of TORM's  common  shares and ADSs  reached new highs on both the
Copenhagen  Stock Exchange and the Nasdaq National Market during the year and we
paid a higher  dividend in 2004 than any previous  year.  The share price on the
Copenhagen Stock Exchange increased by more than 150% in 2004.

TRENDS WITHIN THE PRODUCT TANKER AND BULK SEGMENTS

     Some of the  current  key trends  affecting  the two  segments  in which we
operate are:

     1    Relocation of refineries farther away from areas of consumption in the
          western world

     2    Lower inventories

     3    Obtaining capital from the financial markets

     4    The influence of new markets

Relocation of refineries  farther away from areas of  consumption in the western
world

     There has for a number of years been a clear trend that  refining  capacity
has  grown  mainly  in  areas  other  than the  western  world,  while  the most
substantial  consumers of clean petroleum  products have remained in the western
world.

     This trend is the result of increasingly  stringent  environmental focus in
the  western  part of the world  coupled  with the fact  that the oil  producing
nations  wish to retain more of the value  added by the  refining  process.  The
effect of this trend is to increase the distances involved in the transportation
of refined oil products,  which in turn  positively  affects the product  tanker
market.  Consequently,  the trend is for the increase in  consumption of refined
petroleum products in the western world to be mainly supplied by imports,  which
is beneficial to TORM.

Lower inventories

     Inventories  of clean  petroleum  products  were at very low levels  during
2004.  This was the result of  increased  consumption  combined  with the rising
price of crude oil resulting in a number of market  participants  not wishing to
hold excessive inventories.

     Low inventories mean that if, for example,  longer periods of poor weather,
strikes or other events disrupt supply,  market participants will be prepared to
pay very high freight rates.

Obtaining capital from the financial markets

     During the last 5-10 years it has become increasingly common among shipping
companies to raise capital in the financial  markets  through the sale of shares
or corporate bonds, offering new opportunities for financing purchases of fleets
or companies.

     The relatively large risk appetite from financial investors has furthermore
opened a window of opportunity for comparative newcomers to shipping with a view
to raising  capital in the financial  market for the  acquisition  of vessels or
companies.

     Furthermore,  the increasing  focus among  financial  investors on shipping
companies  has resulted in interest  from  private  equity funds who in the past
showed little or no interest in shipping companies as an investment opportunity.

     The fact that capital can be raised in the financial  markets with relative
ease,  taken  together  with  very  strong  freight  rates and the fact that the
shipyards'  order  books for the sizes of vessels  operated  by TORM are largely
filled  until 2008,  which is a  historically  long  period,  has  resulted in a
significant  increase in investor interest,  which when combined with high steel
prices  and a  worsening  currency  situation  has  led to  large  increases  in
newbuilding prices and the prices of second-hand vessels.

The influence of new markets

     "New" markets such as China and India account for a continually  increasing
percentage  of the world's  consumption  of raw materials - for example coal and
oil. This means that freight  rates  affecting  product  tankers as well as bulk
carriers are to an  increasing  extent  dependent on the  developments  in these
countries.

     As an example, there has traditionally been greater demand for oil products
during  the first and  fourth  quarters  of the year,  on the back of demand for
heating oil in the western  world.  However,  the growing  importance of markets
outside the western  world has  lessened  these  seasonal  variations  in recent
years.

     In the  bulk  market,  the  effect  particularly  of China  has  been  very
pronounced.  China's  increasing  import of raw materials from far-away producer
nations has absorbed  significant  capacity.  At the same time,  the increase in
demand during specific  periods of the year has placed heavier demand on certain
load and  discharge  ports,  which do not have the  capacity to handle the large
number of additional vessels arriving to load or discharge. This has resulted in
an increasing  number of waiting days,  thereby  reducing world fleet  capacity.
This development is expected to continue for some time.

TORM'S STRATEGY

Tanker division

     In the Tanker division we have specialized in product  tankers.  This focus
is due to the continued  expectation that this segment of the tanker market over
a longer period of time will grow faster than the tanker market in general. This
expectation  is based on the growth of  refining  capacity  increasingly  taking
place outside the key consuming  areas - the western world - resulting in larger
transportation distances.

     We have for a number of years  focused on the  ownership  and  operation of
quality  tonnage  and as early as 1988 the  Company  took  delivery of its first
double-hulled  product tanker.  The average age of the Company's tanker fleet as
at March 1, 2005,  was 5.0 years - to our  knowledge one of the lowest among the
major tanker owning companies. With an increasing focus from the IMO, the EU and
individual countries and customers, it is our view that in the future it will be
very important to have a double-hull quality fleet to retain a competitive edge.

     TORM's  strategy in the product  tanker  segment has,  since 1989,  been to
focus on the development of the pool concept together with other ship owners who
share our philosophy with regards to quality and service.  The Tanker division's
customers - mainly the large oil  companies and oil traders - have over the past
10-15 years become fewer, but significantly larger, partly the result of mergers
and  acquisitions.  Pooling  gives  TORM and its  partners  critical  mass - and
thereby the possibility to offer our increasingly larger customers the delivery,
capacity and reliability they require in the future. Furthermore,  pooling helps
to reduce the number of waiting  days and to even out  regional  differences  in
freight levels by giving us a presence in several markets at the same time.

     Through  the three pools (MR,  LR1,  and LR2),  we believe  that we and our
partners have achieved a leading position in the world market.  In as much as we
wish to be in a  position  to offer  delivery  reliability  and at the same time
retain our leading  market  position,  the strategy is naturally  focused on the
spot market. Nonetheless, we will to a lesser extent cover a part of our freight
and bunkers price risk as described in item 11.

Bulk division

     In the Bulk division, TORM has chosen to focus on Panamax vessels and, to a
lesser extent,  Handysize  vessels.  The Panamaxes are operated by TORM, whereas
the Handysize vessels are operated within the IHC pool in Hong Kong.

     Our  investments  in the Bulk division is relatively  limited,  although it
increased in 2004 as a result of a strategy partly based on the chartering in of
tonnage for longer periods. When it is considered commercially  advantageous,  a
purchase  option will be  negotiated  as part of the charter  party terms.  This
gives us a  significantly  higher degree of  flexibility  from an investment and
business  perspective as well as hedging of freight rates.  Purchase options are
significant  in the segments of the bulk market  within which we operate in that
the market offers good opportunities for asset management.

     Since the bulk market is in general much more  fragmented  than the product
tanker market, pooling has far less commercial relevance in this market.

     Insofar as market conditions allow, we will generally seek to cover forward
a portion of the volatility by chartering vessels out on period charter.  Should
the spot market fall  drastically  - precisely  the situation we wish to protect
ourselves against - smaller market players may face the problem of survival.  We
believe  that the  hedging  that has taken place has been  ineffective,  since a
market risk is merely replaced by a credit risk.

A. Operating Results

     The financial  information included in the discussion below is derived from
our  consolidated  financial  statements.  The results of our Liner  activities,
which were  disposed of during 2002,  are included  under profit before tax from
discontinued  operations.   The  consolidated  financial  statements  have  been
prepared in accordance  with Danish GAAP,  which differs in certain  significant
respects from U.S.  GAAP.  For a discussion of the primary  differences  between
Danish  GAAP and U.S.  GAAP and a  reconciliation  of profit  and  stockholders'
equity  to  U.S.  GAAP,  please  see  note  17  to  our  consolidated  financial
statements.

                              TORM AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004
                              (in thousands of DKK)

                                             2002          2003          2004
                                             ----          ----          ----

Net revenue                               1,538,618     1,927,996     2,596,410
Port expenses and bunkers                  (555,700)     (621,087)     (497,258)
                                          ---------    ----------    ----------
Time Charter Equivalent Earnings            982,918     1,306,909     2,099,152

Charter hire                               (463,510)     (404,960)     (357,069)
Technical running costs                    (217,402)     (254,780)     (298,346)
                                          ---------    ----------    ----------
Gross  profit (Net earnings from
shipping activities)                        302,006       647,169     1,443,737

Profit on sale of vessels and interests      16,965          (464)            0
Administrative expenses                    (101,342)     (126,119)     (171,656)
Other operating income                       55,227        51,368        78,732
                                          ---------    ----------    ----------
Profit before depreciation                  272,856       571,954     1,350,813

Depreciation                               (158,400)     (176,872)     (210,746)
                                          ---------    ----------    ----------
Profit before financial items               114,456       395,082     1,140,067
Financial items                               5,988       656,637     1,193,704
                                          ---------    ----------    ----------
Profit before tax                           120,444     1,051,719     2,333,771

Tax on profit on ordinary activities        360,190          (692)      (52,556)
                                          ---------    ----------    ----------
Profit from continuing operations           480,634     1,051,027     2,281,215
                                          ---------    ----------    ----------
Profit before tax from discontinued
operations                                   69,818             0             0
Tax on discontinued operations                    0             0             0
                                          ---------    ----------    ----------
Net profit for the year                     550,452     1,051,027     2,281,215
                                          ---------    ----------    ----------

COMPARISON OF THE YEAR ENDED  DECEMBER 31, 2004 AND THE YEAR ENDED  DECEMBER 31,
2003

     Net profit for the year  increased  by 117% to DKK 2,281  million  from DKK
1,051 million in 2003,  corresponding to earnings per share (EPS) of DKK 65.6 in
2004  against DKK 30.3 in 2003.  Excluding an  unrealized  gain on the shares in
Dampskibsselskabet  "NORDEN" A/S of DKK 1,034  million the profit before tax for
the year was DKK 1,300 million,  which is  considerably  higher than expected as
reported at the beginning of the financial  year in our Form 6-K dated March 30,
2004.

     The  considerably  higher profit is primarily the result of freight  rates,
which during most of the year were higher than  expected.  The addition of seven
vessels to TORM's fleet of owned vessels,  of which three vessels had previously
been chartered by the Company,  further contributed to the reported profit since
the addition of these vessels was not included in the  announcement  of expected
profit made at the beginning of the year.

     TORM's total assets  increased  by DKK 1,885  million to DKK 6,779  million
from DKK 4,894 million in the previous year. The most  significant  developments
behind this increase are an increase in the book value of vessels in 2004 of DKK
600 million due to fleet  expansion,  and DKK 1,034 million  relating to a value
adjustment  of the  Company's  investment  in  Dampskibsselskabet  "NORDEN" A/S,
whereas cash at bank and in hand increased by DKK 195 million.

     The  shareholders'  equity  increased  by DKK  1,860  million  to DKK 4,324
million  from DKK 2,464  million  corresponding  to an increase in the  solvency
ratio (refer to item 17 for definition) of 14 percentage  points to 64% from 50%
in 2003. The significant  increase in shareholders'  equity is due mainly to the
profit for the year less  dividend paid out and exchange  rate  adjustment  from
translation of financial  statements in USD to DKK.  TORM's total debt increased
by DKK 25 million to DKK 2,455  million  from DKK 2,430  million in the previous
year.

Net earnings from shipping activities

     Below net earnings from shipping activities are presented on segment level:

<TABLE>
<CAPTION>
DKK million                                    Not                                         Not
                            Tanker   Bulk   Allocated*)   Total 2003   Tanker    Bulk   Allocated*)   Total 2004
--------------------------------------------------------------------   -----------------------------------------
<S>                          <C>     <C>          <C>          <C>     <C>      <C>               <C>      <C>
Net revenue                  1,115    793          20          1,928   1,532    1,064             0        2,596
Port expenses and bunkers     -319   -308           6           -621    -407      -90             0         -497
                            ----------------------------------------   -----------------------------------------
Time charter equivalent
earnings                       796    485          26          1,307   1,125      974             0        2,099
Charter hire                   -84   -310         -12           -405     -81     -276             0         -357
Technical running costs       -195   -43          -17           -255    -237      -70             9         -298
                            ----------------------------------------   -----------------------------------------
Gross profit/(loss)
(Net earnings from
shipping activities)           518    133          -3            647     807      628             9        1,444
</TABLE>

*)   Primarily offshore vessels. The offshore activities ceased in 2003.

     TORM's  total net revenue in 2004 was DKK 2,596  million as compared to DKK
1,928 million in the previous year. TORM's revenue is derived from two segments,
the  Tanker  division  and the Bulk  division.  In the  markets  in which  these
divisions  operate,  the time charter  equivalent  (TCE)  rates,  defined as net
revenue less voyage  expenses  divided by the number of  available  earning days
(days  available  for  service)  is used to compare  freight  rates.  Under time
charter  contracts the charterer pays for the voyage  expenses  whereas the ship
owner  pays  for the  voyage  expenses  under  voyage  charter  contracts.  As a
consequence,  TORM primarily  bases  economic  decisions upon expected TCE rates
rather than on expected net  revenues.  The analysis of our revenue is therefore
primarily based on the development in time charter equivalent  earnings.  TORM's
time charter  equivalent  earnings in 2004 were DKK 2,099 million as compared to
DKK 1,307 million in 2003. Generally higher rates in all segments as well as the
addition  of  tonnage  especially  in the  tanker  segments  LR1 and MR were the
primary reasons behind the increase in TCE rates.

     The  increase  in the time  charter  equivalent  earnings  should be viewed
against the background of the continued  decrease in the USD/DKK  exchange rate.
The average USD/DKK  exchange rate in 2004 decreased by more than 9% compared to
2003. Without this decrease,  the Company's increase in earnings would have been
approximately DKK 1,001 million as compared to the actual DKK 792 million.

Tanker division

     Net revenues in the Tanker  division  increased by 37% to DKK 1,532 million
from DKK 1,115  million in 2003,  whereas the time charter  equivalent  earnings
increased by DKK 329 million or 41% to DKK 1,125 million from DKK 796 million in
the previous year.

     Freight rates  prevailing in the market for TORM's Tanker  division in 2004
were  generally  at very high  levels  largely  throughout  the year.  In normal
circumstances,  the  tanker  market is  strongest  during  the first and  fourth
quarters of the year as a result of demand for oil products  for heating  during
the winter  period.  After a short period during the start of the second quarter
of 2004 when rates fell as expected,  rates firmed again over the summer  period
and further  increased  towards  year-end with a weakening  tendency in December
influenced by a warmer than usual winter in the U.S., which slowed market demand
for crude oil and product tanker vessels.  These developments took place against
the background of a market facing a tight tonnage balance due to a strong demand
for crude oil and clean petroleum  products.  Ton-miles (the weight of the cargo
multiplied by the distance that the cargo is carried) for the tanker market as a
whole,  which indicates the total capacity demand in the market  increased 10.4%
in 2004, whereas the capacity of the world's fleet increased by only 4.2%.

     Demand for transport capacity increased further as a result of historically
low  inventories  of  clean  petroleum  products  in  countries  in the  Western
hemisphere.  This  increase  was partly due to the higher oil price,  increasing
demand and limited refinery capacity in these countries.

     According  to industry  sources,  utilization  of the active  tanker  fleet
reached  91.5%,  which when  combined  with the periods of  off-hire  due to bad
weather, maintenance,  waiting time in ports, etc. is nearly full capacity. This
is the highest  utilization rate registered since measurements  started in 1986.
The high  utilization  rates led to high  volatility in the  different  segments
during the year.

     Taking the year as a whole,  the LR2 segment  achieved  freight  rates that
were on average 22% higher than in the previous year. This increased earnings by
DKK 71 million.  The number of available  earning days  increased by 593 days or
48% from the previous  year, as the delivery of two  newbuildings  in the second
half of 2003 took full effect in 2004.  This resulted in an increase in earnings
of DKK 106 million.

     In the LR1 segment TORM took delivery of two newbuildings  during the year.
The  newbuildings  were the  primary  reason for the  increase  in the number of
available  earning days of 578 days or 68% from the previous year,  resulting in
an increase in earnings of DKK 86 million. The increase in average freight rates
of 11% increased earnings by DKK 23 million from the previous year.

     In the MR segment, we took delivery of two vessels.  Moreover, the addition
of tonnage  was the main  reason  for the  increase  in the number of  available
earning days of 331 days or 8% from the previous year, which increased  earnings
by DKK 38  million.  The  average  freight  rates  were 24%  higher  than in the
previous year, which affected earnings positively by DKK 117 million.

         The continued decrease in the USD/DKK exhange rate resulted in lower
time charter equivalent earnings for the year in the Tanker division by DKK 112
million. The increase in the time charter equivalent earnings in the Tanker
division can be summarized as illustrated in the table below.

Earnings for the Tanker division
--------------------------------------------------------------------------------
A.DKK million                               MR   LR1   LR2   Unallocated   Total

Time charter equivalent earnings 2003      458   125   220         (7)      796
Change in number of earning days            38    86   106         --       230
Change in freight rates                    117    23    71         --       211
                                           ---   ---   ---       ----     -----
                                           613   234   397         (7)    1,237
Change in USD/DKK exchange rate                                            (112)
                                                                          -----
Time charter equivalent earnings 2004                                     1,125
--------------------------------------------------------------------------------

     Contained in time charter equivalent  earnings,  port and bunker expenses -
or voyage  expenses  - rose in 2004 by almost  28% or DKK 88  million to DKK 407
million  from the previous  year  primarily as a  consequence  of the  increased
activity in the form of more vessels, leading to more available earning days and
more port calls.  The average  bunker price for  purchases in 2004 was 6% higher
than in 2003,  which  corresponds  to an increase  in bunker  expenses of DKK 15
million.

     The table below  summarizes  the  earnings  data per quarter for the Tanker
division.

Earnings data for the Tanker division

<TABLE>
<CAPTION>
USD/Day                             2003                   2004                             2004    % Change
                                 Full year        q1        q2        q3        q4     Full year   2003-2004
------------------------------------------------------------------------------------------------------------
<S>                                     <C>       <C>       <C>       <C>       <C>      <C>          <C>
LR2/Aframax vessels
Available earning days for:*)
- Owned vessels                         510       273       273       276       276      1,098        115%
- Time chartered vessels                721       182       177       184       184        726        0.7%
TCE per earning days**)              27,185    32,012    27,896    28,389    47,626     33,116         22%
TRC per earning days***)             (5,799)   (4,453)   (4,898)   (4,148)   (5,285)    (4,754)       (18%)
------------------------------------------------------------------------------------------------------------

LR1/Panamax vessels
------------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                         847       288       319       406       413      1,425         68%
- Time chartered vessels                  0         0         0         0         0          0          0%
TCE per earning days**)              22,429    28,270    23,028    22,998    30,253     24,912         11%
TRC per earning days***)            (6,458)   (6,141)   (5,267)   (5,742)   (7,259)    (6,153)        (5%)
------------------------------------------------------------------------------------------------------------

MR vessels
------------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                       4,015     1,047     1,067     1,054     1,178      4,346          8%
- Time chartered vessels                  0         0         0         0         0          0          0%
TCE per earning days**)              17,307    21,491    20,288    19,890    24,541     21,381         24%
TRC per earning days***)             (5,257)   (5,927)   (5,367)   (5,581)   (6,790)    (5,936)        13%
------------------------------------------------------------------------------------------------------------
</TABLE>

*)   Earning days are the total number of days in the period,  where the vessel
     is ready and available to perform a voyage, i.e. is not in dry-dock etc.
**)  TCE = Time Charter  Equivalent  Earnings = Gross freight income less bunker
     and port expenses.
***) TRC = Technical Running Costs for our owned vessels.

Bulk division

     In the Bulk division net revenue increased by 34% to DKK 1,064 million from
DKK 793  million in the  previous  year,  whereas  the time  charter  equivalent
earnings  increased  by DKK 489 million or 101% to DKK 974 million  from DKK 485
million in 2003.  The increase can almost solely be explained by higher  freight
rates.

     The market for our bulk  carriers  reached  historic  high  levels in 2004,
while rates  fluctuated  significantly  during the year. This occurred against a
background  of increases in the import of raw  materials,  especially  to China,
increasing  worldwide  economic growth plus an increase in the number of waiting
days in various ports brought about by increased  market  activity,  affecting a
large part of the world's  fleet.  Concurrently,  the increase in the world bulk
fleet has been relatively modest for some years, despite the very strong freight
rate levels.

     As freight  rates in the fourth  quarter of 2003 and first  quarter of 2004
increased to levels not seen before,  we considered it  advantageous  to charter
out a substantial part (50%-70%) of the fleet for longer periods - generally for
a period of about 12  months -  thereby  reducing  the risk  inherent  in a bulk
market experiencing such volatility. As a result, our quarterly results achieved
in the Bulk division showed considerably less volatility than the bulk market in
general.

     Freight  rates in the Panamax  segment  were on average 118% higher than in
2003,  increasing  earnings by DKK 513 million.  In this segment, we added three
vessels  to our  fleet  of  owned  vessels  during  the  year.  However,  we had
previously  chartered  in all three  vessels,  but two  additional  vessels were
chartered in starting  July and November  2004,  respectively,  which led to the
increase  in the  number of  available  earning  days by 9% or 482 days from the
previous year. The time charter equivalent earnings in this segment increased by
DKK 37 million as a result.

     In  the  Handysize  segment  earnings  increased  by DKK  57  million  as a
consequence of average freight rates being 93% higher than in the previous year.
This increase was partly offset by a decrease in the number of available earning
days of 202 days,  or 16%,  as tonnage  redelivered  in 2003 took full effect in
2004,  thereby  reducing  earnings,  and an additional  chartered-in  vessel was
redelivered in July 2004. The time charter  equivalent  earnings in this segment
were reduced by DKK 12 million as a result.

     The  increase  of DKK 489  million  in the bulk  vessels'  earnings,  which
adjusted for the lower USD/DKK exchange rate would have been DKK 585 million, is
a clear indication of the continued,  very positive bulker market,  although the
sharp increases in 2003 were followed by higher but more volatile  freight rates
in 2004.  The  increase  in the time  charter  equivalent  earnings  in the Bulk
division can be summarized as illustrated in the table below.

Earnings for the Bulk division
--------------------------------------------------------------------------------
B. DKK million                          Handysize Panamax   Unallocated    Total
Time charter equivalent earnings 2003        72       397         16        485
Change in number of earning days            (12)       37          -         25
Change in freight rates                      57       513          -        570
Other                                         -         -        (10)       (10)
                                           ----      ----       ----       ----
                                            117       947          6      1,070
Change in USD/DKK exchange rate                                             (96)
                                                                          -----
Time charter equivalent earnings 2004                                       974
--------------------------------------------------------------------------------

     Port and bunker expenses - or voyage expenses - which are contained in time
charter equivalent earnings, dropped by 71% or DKK 218 million to DKK 90 million
in 2004 primarily due to the redelivery of several  chartered-in  vessels in the
Panamax  segment in 2004 and our bulk vessels  being  chartered out to a greater
extent on time charters rather than on voyage charters compared to 2003.

         The table below summarizes the earnings data per quarter for the Bulk
division.

<TABLE>
Earnings data for the Bulk division
-----------------------------------
<CAPTION>
                                                                   2004
USD/Day                                     2003 ------------------------------------------      2004     % Change
                                         Full year     q1        q2        q3        q4     Full year    2003-2004
------------------------------------------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>       <C>       <C>        <C>           <C>
Panamax vessels
Available earning days for:*)
- Owned vessels                             841       364       401       540       548      1,853         120%
- Time chartered vessels                  4,287     1,004       950       881       940      3,776         (12%)
TCE per earning days**)                  11,695    23,219    26,501    25,562    26,260     25,534         118%
TRC per earning days***)                 (5,109)   (5,501)   (5,810)   (4,818)   (4,502)    (5,022)         (2%)
------------------------------------------------------------------------------------------------------------------

Handysize vessels
------------------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                             729       182       182       184       184        732           0%
- Time chartered vessels                    529       121       120        52        32        324         (39%)
TCE per earning days**)                   8,706    15,963    16,320    14,806    19,189     16,829          93%
TRC per earning days***)                 (3,058)   (3,112)   (3,302)   (3,556)   (2,651)    (3,173)          4%
------------------------------------------------------------------------------------------------------------------
</TABLE>

*)   Earning days are the total number of days in the period,  where the vessel
     is ready and available to perform a voyage, i.e. is not in dry-dock etc.
**)  TCE = Time Charter  Equivalent  Earnings = Gross freight income less bunker
     and port expenses.
***) TRC = Technical Running Costs for own vessels.

Operation of vessels

     Vessels  chartered in by us do not give rise to technical running costs for
TORM but only to charter hire payments. As compared to 2003, charter hire in the
Tanker  division  decreased by DKK 3 million to DKK 81 million in 2004,  whereas
charter  hire paid in the Bulk  division  dropped  by DKK 34  million to DKK 276
million.  The drop in the Bulk division after  adjustment for the development in
the  USD/DKK  exchange  rate was DKK 6 million and was  primarily  caused by the
delivery of three vessels purchased in 2004 that were previously chartered in.

     The  technical  running  costs for our owned  vessels  increased  by DKK 43
million to DKK 298  million in 2004.  The most  significant  factor  behind this
development  was the increase in the number of  operating  days of 2,530 days or
36%,  primarily  due to the addition of owned vessels in the LR1, MR and Panamax
segments.  The crew  costs for the added  vessels  are  somewhat  lower than the
average for the fleet as of the  beginning  of the year which is the main reason
for the technical  costs not increasing  proportionately  to the increase in the
number of operating days. Our total fleet of owned vessels  incurred 15 off-hire
days in 2004  corresponding  to two per thousand of the number of operating days
compared to 21 off-hire days in 2003  corresponding to three per thousand of the
number of operating days. We regard this as a very positive development.

     Technical running costs are mainly incurred in USD (approximately  50%) and
DKK (approximately  39%). The lower USD/DKK exchange rate offset the increase in
our  technical  running  costs by  approximately  DKK 14.8 million for our total
fleet.

Administrative expenses and other operating income

     Our total  administrative  expenses  increased  from 2003 to 2004 by DKK 46
million to DKK 172 million  mainly due to higher staff costs  including  bonuses
due to a greater  number of positions  in the Company and a general  increase in
salary  levels,  and  expenses  relating  to our  Parent  Company  moving to new
offices,  increased  expenses to Directors' and Officers'  Liability and Company
Reimbursement Insurance and increased travel activities compared to the previous
year.

     Other  operating   income   primarily   comprises  income  from  chartering
commissions  received by TORM in  connection  with the  management  of the three
tanker pools.  Other operating income increased in 2004 by DKK 28 million to DKK
79 million from DKK 51 million in the previous year. As adjusted for the effects
of the lower  USD/DKK  exchange  rate,  the  increase  was DKK 35 million.  This
increase is primarily due to increased  commissions from the three tanker pools.
These  commissions  are based on net revenues in the pools and the increase is a
direct  result of the higher  freight  rates  compared  to 2003 and the  greater
number of vessels in the pools.

Vessels and dry-docking

     The  increase  in  tangible  fixed  assets of DKK 570  million to DKK 3,763
million  is  mainly  attributable  to the  change  in  vessels  and  capitalized
dry-docking. The carrying value of vessels and capitalized dry-docking increased
by DKK 596  million  to DKK 3,540  million.  The  increase  relating  to vessels
amounted to DKK 600  million.  The  addition of new tonnage  amounted to a total
acquisition   cost  of  DKK  1,021  million   resulting   from  two  LR1  tanker
newbuildings,  two MR  tankers  built in 1999 and 1995 as well as three  Panamax
bulk  vessels,  of which one was built in 2001 and two in 1997.  The drop in the
USD against the DKK caused a negative translation  adjustment of DKK 225 million
for the  total  fleet,  and  depreciation  on the  vessels  amounted  to DKK 200
million.  Prepayment on vessels under  construction  decreased by DKK 25 million
among other things due to the abovementioned  deliveries and the decrease in the
USD/DKK exchange rate. During the year additional  prepayments on already agreed
newbuildings were made.

     Depreciation  amounted  to DKK 211  million in 2004 as  compared to DKK 177
million in 2003, an increase of DKK 34 million.  The  increase,  of which DKK 17
million  can be  allocated  to each of the two  divisions,  is due solely to the
expansion of the fleet during 2004. The lower USD/DKK  exchange rate reduced the
total depreciation by DKK 21 million compared to 2003.

     During the fourth quarter of 2004, we added to our  newbuilding  program by
acquiring two MR  newbuildings  from the STX yard in South Korea for delivery in
first  or  second  quarter  of  2005.  By the end of the  year,  the  first  two
installments corresponding to 20% of the total purchase price had been paid.

     The  market  value  of  our  fleet  and   newbuilding   program  (five  LR2
newbuildings and two MR  newbuildings)  exceeded the carrying value of the fleet
including newbuilding  contracts by DKK 3.1 billion at year-end.  This valuation
is  based on the  average  of three  internationally  acknowledged  shipbrokers'
valuations.

Other investments (NORDEN)

     Other investments  mainly comprise our investment of 31.6% of the shares in
NORDEN with a carrying  value of DKK 1,984  million as at  December  31, 2004 as
compared to DKK 950 million in the previous year.

     We continue not to consider NORDEN as an associated  company,  as we do not
have  influence  on  decisions  and are not  represented  on  NORDEN's  board of
directors.  Our investment in NORDEN is valued on the basis of the closing price
on the  Copenhagen  Stock  Exchange on December  31,  2004,  of DKK 2,725.52 per
share.

     Our investment in NORDEN has proved to be extremely  satisfactory.  Against
an initial  investment  of DKK 263  million,  we have as of  December  31,  2004
received  dividends  from NORDEN in the amount of DKK 207 million,  of which DKK
200  million  was  received  in 2004.  The  accumulated  unrealized  gain on the
investment as of December 31, 2004 totals DKK 1,721 million,  of which DKK 1,034
million represents the gain in 2004.

     Our gain on a potential  sale of the NORDEN shares will be tax free after 3
years of  ownership,  or as of  August  2005.  This does not  necessarily  mean,
however, that we have decided to dispose of the investment after this date.

Financing

     Net financial  items in 2004 were positive by DKK 1,194 million as compared
to DKK 657 million in 2003.  The most  significant  reason for the difference is
the large  unrealized gain on the NORDEN shares of DKK 1,034 million as compared
to DKK 681 million in the previous year.  Dividends received amounted to DKK 201
million in 2004,  of which DKK 200  million  was paid on the NORDEN  shares.  In
2003,  dividends received amounted to DKK 8 million,  of which DKK 7 million was
from NORDEN.

     Net interest expenses amounted to DKK 68 million in 2004 as compared to DKK
55 million in 2003. The increase relates to interest expenses, which amounted to
DKK 89 million as compared to DKK 74 million in the previous  year. Net interest
bearing  debt (refer to item 17 for  definition)  was reduced by DKK 212 million
during  the year to DKK 1,486  million  from  1,698  million  in 2003.  However,
mortgage  debt is  denominated  in USD and  amounted to DKK 2,162  million as at
December 31, 2004 as compared to DKK 2,177 million  including  capitalized lease
obligations in the previous year.  Adjusted for the lower USD/DKK exchange rate,
mortgage debt  increased by DKK 179 million to DKK 2,356  million,  which is the
main factor behind the increase in interest expenses.  Please refer to note 7 to
our consolidated  financial statements for a breakdown of financial items in the
income statement and to note 11 for an overview of mortgage debt and bank loans.

     Invested  capital  (refer to item 17 for  definition)  increased by DKK 609
million to DKK 3,795  million  from DKK 3,186  million at the  beginning  of the
year.  The increase can primarily be explained by the addition of tonnage during
the year.  Taking into  account the  development  in net  interest  bearing debt
during 2004, it is evident that the additions are net financed by cash flow from
operations.

Shareholders'  equity  increased by DKK 1,860 million to DKK 4,324 million.  The
considerable growth in shareholders'  equity is mainly due to our net profit for
the year of DKK 2,281 million less dividends paid out during the year of DKK 209
million  excluding  dividends  on  own  shares,  and  the  adjustment  from  the
translation from USD to DKK of DKK 179 million.

Tax on profit for the year

     Tax for the year was an expense of DKK 53 million as compared to an expense
of DKK 1 million in 2003.  TORM  entered into the tonnage  taxation  scheme with
effect from 2001 and has filed tax returns for 2001 through 2003. The assessment
of the tax returns by the tax authorities has not yet been completed and the tax
provision  for the year is therefore  to a great  extent  based on  management's
judgment  regarding the outcome of the  assessment.  Please refer to the section
below regarding tax under the heading "Critical accounting  policies",  Item 10E
and note 8 to our consolidated financial statements for further information.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2003 AND THE YEAR ENDED DECEMBER 31,
2002

     Below net earnings from shipping activities are presented on segment level:

<TABLE>
<CAPTION>
DKK million                                   Not                                         Not
                            Tanker   Bulk   Allocated*)   Total 2002   Tanker    Bulk   Allocated*)   Total 2003
--------------------------------------------------------------------   -----------------------------------------
<S>                          <C>     <C>            <C>        <C>     <C>      <C>       <C>           <C>
Net revenue                   904     592            43        1,539   1,115     793       20           1,928
Port expenses and bunkers    -229    -322            -5         -556    -319    -308        6            -621
                            ----------------------------------------   -----------------------------------------
Time charter equivalent
earnings                      675     270            38          983     796     485       26           1,307
Charter hire                 -200    -242           -21         -464     -84    -310      -12            -405
Technical running costs      -159     -44           -14         -217    -195     -43      -17            -255
                            ----------------------------------------   -----------------------------------------
Gross profit/(loss)
(Net earnings from
shipping activities)          315     -17             4          302     518     133       -3             647
</TABLE>

*) Primarily offshore vessels

The lines listed above are further discussed below.

Net revenue

     TORM's net revenue  was DKK 1,928  million in 2003 as compared to DKK 1,539
million in 2002. Of the DKK 389 million increase in net revenue, DKK 211 million
is attributable to the Tanker division,  while DKK 201 million is related to the
Bulk division.  Our gradual withdrawal from offshore  activities during 2003 and
2002 led to a decrease in net revenue of DKK 23 million compared to 2002.

     The increase in the Tanker  division's  net revenue  should be seen against
the background of the substantial drop in the USD/DKK exchange rate during 2003.
The annual  average  USD/DKK  exchange rate for 2003  decreased by more than 16%
from 2002.  Without this decrease in the USD/DKK  exchange rate, the increase in
the Tanker division's net revenue in 2003 would have been  approximately DKK 432
million.  Generally  higher freight  rates,  which on average were 22% higher in
2003 than in 2002,  and a 29% increase in ship earning days were the reasons for
the increase in tanker revenue. Increased focus on quality tonnage following the
sinking of the  single-hull  crude oil tanker  "Prestige"  in November  2002,  a
general  strike in Venezuela,  which resulted in longer  'ton-mile'  voyages for
cargoes  to the  North  American  market,  and  the war in  Iraq  combined  with
generally low inventories of clean petroleum products resulted in an increase in
freight rates and hence in the increased  earnings in the Tanker  division.  For
the year as a  whole,  tanker  freight  rates  peaked  in March  and  April  and
thereafter continued to weaken until the end of the fourth quarter, when freight
rates,  influenced by demand from Asia,  increased again. Towards the end of the
fourth quarter,  import of crude oil and refined products to the U.S.  increased
due to the arrival of the winter  season,  which  further  increased  the market
demand for crude oil and product  tanker  vessels.  The 29%  increase in earning
days is due to the delivery during 2002 and 2003 of six  MR-newbuildings and two
LR2-newbuildings to our fleet.

Increased Tanker net revenue
----------------------------
                                          DKK mill.     USD mill.
22% increase in charter rates                 213           28
29% increase in earning days                  153           19
Other                                          66            8
                                            -----         -----
Increased earnings                            432           55
USD/DKK exch. rate adjustments               (221)
                                            -----
                                              211

     The DKK 201 million  increase in the Bulk  division's  net  revenue,  which
adjusting for the lower USD/DKK exchange rate would have been  approximately DKK
358 million,  is a clear indication of the  strengthening in the Panamax market.
An  increase in market  demand  leading to higher  freight  rates in the Panamax
segment was the primary  reason for the increase in revenue  from Bulk  vessels.
Generally, 2003 was a positive year for bulk vessels, with freight rates peaking
in the fourth  quarter.  Driven by strong  increases in Chinese  imports of bulk
products, especially for iron ore, combined with limited growth in the number of
newbuildings  entering the market,  freight rates, were on average 61% higher in
2003 than in 2002 and ship earning days  increased by 29% due to the addition of
four chartered-in  vessels during the year due to our positive  expectations for
the bulk market.

Increased Bulk net revenue
--------------------------
                                          DKK mill.    USD mill.
61% increase in charter rates                206           26
29% increase in earning days                  86           11
Other                                         66            8
                                            -----         -----
Increased earnings                           358           45
USD/DKK exch. rate adjustments              (157)
                                            -----
                                             201

Port  Expenses,  Bunkers,  Charter Hire and Technical  Running costs  (Operating
costs)

     Charter  hire and port  expenses  each  represented  30 to 40% of our total
operating costs in 2003,  while technical  running costs and bunker  consumption
each  represented  10 to 20% of our  operating  costs  for the  year.  All items
included in operating  costs are directly  influenced  by changes in the USD/DKK
exchange  rate,  although  technical  running  costs,  or TRC,  only account for
approximately 2/3 of the total costs influenced by the USD.

     Our total port expenses and bunkers, or voyage expenses,  increased in 2003
by approximately 12% or DKK 65 million to DKK 621 million (or by DKK 188 million
when  adjusted for the  decrease in the USD/DKK  exchange  rate).  Of the DKK 65
million  increase  the Tanker  division's  voyage  expenses  increased by DKK 90
million whereas the Bulk division's voyage expenses  decreased by DKK 14 million
and voyage expenses on our offshore vessels decreased by DKK 11 million.  Due to
a drop in the time charter out activity of our tanker  vessels,  voyage expenses
increased more than net revenue in the Tanker  division,  while the opposite was
the case for our bulk  vessels.  The  share of bunker  (fuel  and oil)  expenses
increased  slightly in 2003 compared to 2002,  mainly due to  increasing  bunker
prices in 2002 and the first  quarter of 2003,  after  which the prices  leveled
out.

     Total charter hire for vessels on charter to us decreased in 2003 by DKK 59
million to DKK 405 million. The change consists of a DKK 117 million decrease in
charter  hire in our Tanker  division  and a DKK 67 million  increase in charter
hire in our Bulk division.  Charter hire for our offshore  vessels fell by DKK 9
million.

     The DKK 117 million  decrease in charter hire for the Tanker  division from
DKK 200 million to DKK 83 million is primarily attributable to the redelivery of
the two  chartered-in  LR1 vessels and the lower USD/DKK  exchange  rate,  which
accounted for approximately DKK 17 million of the decrease. After the redelivery
of the two LR1 vessels at year-end 2002 we only had two LR2 long-term  chartered
vessels on charter. Both vessels were on charter throughout 2003.

     The increase in the Bulk division's  charter hire was DKK 67 million,  from
DKK 243 million to DKK 310 million,  which when  adjusted for the lower  USD/DKK
exchange  rate was  approximately  DKK 129 million.  This increase is especially
attributable to an increase in  chartering-in of vessels in the Panamax segment.
The average rate paid on  chartered-in  vessels  increased by 7% due to improved
market  conditions  resulting in an increase in charter rate  expenses of DKK 28
million,  while the increase in chartered-in days by 43% resulted in an increase
in charter rate expenses by DKK 101 million.

     Technical  running  costs  comprise the costs we incur in  connection  with
crewing and  maintaining  our own vessels.  The costs are mainly incurred in USD
(approximately 66%) and DKK (approximately 26%). Technical running costs for our
vessels  increased  by DKK 37  million  to DKK 255  million.  The lower  USD/DKK
exchange   rate  offset  the  increase  in  our   technical   running  costs  by
approximately DKK 34 million for our total fleet.

     For the tanker vessels,  the increase in technical running costs was DKK 36
million, which adjusted for the lower USD/DKK exchange rate, was DKK 63 million,
mainly as an effect of the net addition of six vessels to the MR segment and two
vessels to the LR2 segment  during 2002 and 2003.  Average daily running cost of
our tanker vessels  increased by 2.4% in 2003 from 2002 to USD 5,513 per/day due
to the  weakening of the USD. The  addition of new vessels  increased  operating
days by 1,408 days in the MR segment and 157 days in the LR2 segment.

     The  addition  of two owned  Panamax  vessels to the Bulk  division  in the
second  half of 2003  increased  technical  running  costs by DKK 5 million,  as
compared to 2002, but due to a lower USD/DKK  exchange rate, the Bulk division's
total  technical  running  costs  for 2003  were DKK 43  million,  or only DKK 1
million lower than in 2002. Average daily running cost increased by 6.5% in 2003
from 2002 to USD 4,156  per/day due to the weakening of the USD. The addition of
Panamax vessels increased operating days by 113.

     We do not incur  technical  running costs for vessels that we charter,  but
only charter hire payments.

Gross Profit

     Gross profit is net revenue minus the sum of port  expenses,  bunker costs,
charter hire payments for chartered-in  vessels and technical  running costs for
owned vessels.

     Our LR2 tanker vessels  achieved freight rates that were 23% higher in 2003
than in 2002. The addition of two  newbuildings  in the third and fourth quarter
of 2003, which increased  operating days in the tanker segment by 15%, led to an
increase  in the gross  profit.  In the LR1  segment  there was only a  marginal
increase in earnings  compared to 2002,  despite  freight  rates that on average
were 34% higher than in 2002,  because the number of operating days decreased by
255 or 23% following the redelivery of two chartered-in  vessels towards the end
of 2002. In the MR segment,  we had 57% more  operating days in 2003 compared to
2002, as the delivery of four  newbuildings  in 2002 took full effect in 2003 as
well  as  the  impact  of  two  newbuildings  delivered  in  January  2003.  The
significant increase in the number of operating days combined with freight rates
that  were 24%  higher in 2003 than in 2002  were the  primary  reasons  for the
increase in total net revenue for the Tanker division.

<TABLE>
Earnings data for the Tanker division
-------------------------------------
<CAPTION>
USD/Day                            2002                  2003
                                       --------------------------------------------       2003   % Change
                              Full year      q1         q2         q3         q4       Full year  2002-2003
                              ---------    -------    -------    -------    -------    ---------  ---------
<S>                             <C>        <C>        <C>        <C>        <C>        <C>        <C>
LR2/Aframax vessels
----------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                     357         90         90         97        233        510         43%
- Time chartered vessels            718        180        182        184        175        721          0%
TCE per earning days**)          22,021     31,237     32,804     27,008     19,559     27,185         23%
TRC per earning days***)         (5,466)    (5,651)    (5,816)    (5,660)    (5,769)    (5,799)         6%
----------------------------------------------------------------------------------------------------------

LR1/Panamax vessels
----------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                     846        210        194        220        223        847          0%
- Time chartered vessels            166          0          0          0          0          0       (100%)
TCE per earning days**)          16,738     23,630     26,507     19,670     18,616     22,429         34%
TRC per earning days***)         (6,398)    (5,691)    (7,070)    (4,966)    (6,646)    (6,458)         1%
----------------------------------------------------------------------------------------------------------

MR vessels
----------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                   2,550      1,004      1,000      1,001      1,011      4,015         57%
- Time chartered vessels              8          0          0          0          0          0       (100%)
TCE per earning days**)          13,920     18,355     19,369     15,523     15,188     17,307         24%
TRC per earning days***)         (5,036)    (5,701)    (4,575)    (5,030)    (5,450)    (5,257)         4%
----------------------------------------------------------------------------------------------------------
</TABLE>

*)   Earning days are the total number of days in the period,  where the vessel
     is ready and available to perform a voyage, i.e. is not in dry-dock etc.
**)  TCE = Time Charter  Equivalent  Earnings = Gross freight income less bunker
     and port expenses.
***) TRC = Technical Running Costs for our owned vessels.

     Our Panamax  bulk  vessels saw a 60%  increase in freight  rates in 2003 as
compared to 2002,  after taking into account the effect of hedging  transactions
where we incurred a total expense of USD 13.6 million or DKK 89.6 million.  When
combined with a 48% increase in the number of available operating days, or 1,672
days,  our  Panamax  vessels  comprised  by far the  largest  part  of the  Bulk
division's increase in gross profit. The hedging transactions  referred to above
refer to forward  freight  agreements that we entered into in 2002 and 2003. The
increase  in  the  number  of  available  operating  days  in  2003  was  mainly
attributable to an increase in the chartered-in tonnage of our Bulk division, as
the purchase of two  additional  vessels only took place  towards the end of the
year. In our Handysize  segment the total  increase in net turnover was limited,
as the effect of the improved market was  approximately  offset by a decrease in
the  number  of  operating  days,  which  fell by 15% due to the  redelivery  of
tonnage.

<TABLE>
Earnings data for the Bulk division
-----------------------------------
<CAPTION>

USD/Day                            2002                  2003
                                       --------------------------------------------       2003   % Change
                              Full year     q1          q2         q3         q4       Full year  2002-2003
                              ---------    -------    -------    -------    -------    ---------  ---------
<S>                             <C>        <C>        <C>        <C>        <C>        <C>        <C>
Panamax vessels
----------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                     727        180        170        184        307        841         16%
- Time chartered vessels          2,748        981      1,116      1,191      1,019      4,287         56%
TCE per earning days**)           7,318      9,166     11,905     12,965     14,789     11,695         60%
TRC per earning days***)         (4,766)    (5,208)    (4,592)    (5,496)    (4,388)    (5,109)         7%
----------------------------------------------------------------------------------------------------------

Handysize vessels
----------------------------------------------------------------------------------------------------------
Available earning days for:*)
- Owned vessels                     707        180        182        184        184        729          3%
- Time chartered vessels            768        176        169         92         92        529        (31%)
TCE per earning days**)           5,875      7,526      7,781      8,419     11,424      8,706         48%
TRC per earning days***)         (3,010)    (3,442)    (3,180)    (2,811)    (2,871)    (3,058)         2%
----------------------------------------------------------------------------------------------------------
</TABLE>

*)   Earning days are the total number of days in the period,  where the vessel
     is ready and available to perform a voyage, i.e. is not in dry-dock etc.
**)  TCE = Time Charter  Equivalent  Earnings = Gross freight income less bunker
     and port expenses.
***) TRC = Technical Running Costs for own vessels.

Profit on sale of vessels/interests

     Our profit from sale of vessels and  interests  comprises  the profits from
the sale of vessels, companies, assets and activities as well as the recognition
of  deferred  profits  from  sale/leaseback  transactions.  Profit from sales of
vessels and interests were a loss of DKK 0.5 million in 2003 related to the sale
of the MR product tanker TORM GYDA, as compared to a profit of DKK 17 million in
2002  from  the  recognition  of  deferred  profits  on  certain  sale/leaseback
transactions.

Administrative expenses

     The Company's total administration  expenses increased from 2002 to 2003 by
DKK 25 million to DKK 126 million. Staff costs, including bonuses,  increased by
DKK 15 million,  partly due to an  increased  number of positions in the Company
and a general  increase in salary levels,  and partly due to a bonus paid to the
Company's  employees and  Management.  Salary and wage  increases and additional
positions  comprised  DKK 5 million,  while bonus to  employees  and  Management
increased  by DKK 10  million  compared  to  2002.  Additionally,  office  costs
increased by DKK 2 million,  including  establishing  offices in  Singapore  and
Germany,  which  had full  effect  in 2003.  Furthermore,  the  figure  for 2002
contained  non-recurring  income of DKK 8 million  related  to the  reversal  of
unused provisions.

Other operating income

     Other  operating   income   primarily   comprises  income  from  chartering
commissions  we received in connection  with our  management of the three tanker
pools.  This income is to a large extent offset by the increased  costs we incur
from running the pools, which are recognized as administrative expenses.

Other operating income

DKK million
Other operating income 2002                     55
Asset impairment in 2002                       (12)
22% increase in freight rates                   12
12% increase in pool earning days                6
USD/DKK exchange rate adjustment               (10)
                                              ----
                                                51

     Other  operating  income fell from DKK 55 million in 2002 to DKK 51 million
in 2003, as this item in 2002 included DKK 12 million that was  attributable  to
the reversal of asset impairment in 2002. In addition, the lower average USD/DKK
exchange  rate in 2003 as compared  to 2002 caused a DKK 10 million  decrease in
operating  income.  Adjusting  for the drop in the USD/DKK  exchange  rate,  the
increase  in  other  operating  income  in 2003 as  compared  to 2002 was DKK 18
million or 35%. This increase is primarily attributable to increased commissions
from our three tanker pools and the effect of a 22% increase in freight rates as
compared  to 2002  corresponding  to DKK 12  million.  An increase of 12% in the
number of  earning  days in the pools due to an  increase  in the number of pool
vessels accounted for DKK 6 million.

Depreciation and Write-Downs

     Depreciation mainly consists of depreciation on vessels,  which takes place
over 25 years.  Depreciation  was DKK 177 million in 2003 as compared to DKK 158
million in 2002, or an increase of DKK 19 million.

     In our Tanker  division,  depreciation  increased by DKK 19 million in 2003
compared to 2002,  which  reflects the additions to the fleet that took place in
2002 and 2003. Compared to 2002 the MR segment had a net addition  corresponding
to four vessels  operating  during the entire year whereas the LR2 segment added
what  corresponded to 0.4 vessels that operated during the entire year. The Bulk
division had additions to the Panamax  segment in the second half of 2003 adding
0.3 vessels that operated over the entire year, which increased  depreciation by
DKK 2 million as compared to 2002.

     Depreciation  is  translated  from USD to DKK,  and the fall in the average
USD/DKK  exchange rate from 2002 to 2003 led to reduced  depreciation  of DKK 35
million.

Financial Items

     Financial  items  consist  of  interest  receivables,  exchange  gains  and
dividends,  interest  expenses  on  mortgage  and  bank  debt and  realized  and
unrealized value adjustments.

Financial items                              2002          2003
DKK million

Unrealized gain on NORDEN shares                8           681
Gains on other securities                       7             5
Dividends                                       1             8
Interest income                                30            19
Derivatives                                    43            23
Interest expenses                             -76           -74
Other financial expenses                       -7            -5
                                               --            --
                                                6           657

     Financial  items in 2003  totalled  DKK 657  million as  compared  to DKK 6
million in 2002. The most important reason for this increase is the strong share
price  development  in 2003 of the  Company's  holding  of  NORDEN  shares.  The
unrealized  gain on the NORDEN shares was DKK 681 million in 2003 as compared to
DKK 8 million in 2002,  while  other gains on  securities  were DKK 5 million in
2003 as compared to DKK 7 million in 2002. Dividends received increased from DKK
7 million  in 2002 to DKK 8 million  in 2003.  All of our  financial  items were
earned in DKK.

     Our  interest  income  was DKK 19  million  in 2003 as  compared  to DKK 30
million in 2002 as a result of a  decrease  in the amount of cash and bonds held
and reduced yields on our bond holdings.

     Our derivative financial  instruments generated a positive value adjustment
of DKK 23 million in 2003 as compared to DKK 43 million in 2002 primarily due to
adjustments on our cross currency swaps to fair value.

     Our overall financial  expenses were DKK 79 million in 2003 compared to DKK
83 million in 2002 primarily due to a DKK 4 million loss in our bond  portfolio,
which was  offset by a DKK 6  million  lower  exchange  rate  adjustment  on our
accounts payable/receivable.

     Our Tanker  division had  increased  interest  expenses of DKK 4 million in
2003 due to an increased fleet,  including  interest  expenses of DKK 11 million
due to the  falling  USD/DKK  exchange  rates  as  compared  to  2002.  Our Bulk
division's  interest  expenses were reduced by DKK 4 million,  including a DKK 3
million decrease in vessel mortgage debt and a DKK 1 million decrease due to the
lower average USD/DKK exchange rate as compared to 2002.

Tax on Profit on Ordinary Activities

     Our tax  expense  for 2003 was DKK 1 million as compared to a tax income of
DKK 360  million  in 2002.  Our  2002 tax  income  was  specifically  due to the
inclusion  of a  reversal  of  deferred  tax  liability  of DKK 360  million  in
connection  with the  introduction  of the  tonnage  tax scheme in  Denmark.  We
entered the tonnage tax scheme with effect from 2001.

Profit after Tax from Discontinued Operations

     Profit after tax from discontinued  operations was DKK 0 million in 2003 as
compared to DKK 70 million in 2002,  which was  related to the Liner  activities
that were sold in September 2002.

Vessels and capitalized dry-docking

     The book value of our vessels and dry-docking  assets  increased by DKK 401
million in 2003 to DKK 2,944  million.  The  increase  was  attributable  to the
addition of two Panamax bulk  vessels,  two MR tanker  newbuildings  and two LR2
tanker newbuildings to our fleet and the sale of an 11-year-old MR tanker. Based
on  purchase  prices,  the net  increase  in the book value of our  vessels  and
dry-docking  was DKK 960 million,  but the decline in the USD/DKK  exchange rate
produced a negative valuation adjustment of DKK 393 million, and depreciation on
the vessels of DKK 166 million.

Vessels under construction

     Vessels under construction  decreased by DKK 101 million to DKK 229 million
in 2003.  This  decrease  resulted  from the net  effect of the above  mentioned
vessel deliveries,  the falling USD/DKK exchange rate and additional prepayments
on existing newbuildings as well as newbuildings added in 2003.

     During the second and third quarters of 2003, we increased our  newbuilding
program  through  orders for the  construction  of four LR2 product  tankers for
delivery in 2006 and 2007 from a Chinese yard. The first payment of the purchase
price was made in connection with the closing of the contracts. At year-end 2003
we had a total of 6 vessels under construction.

Other investments

     Other investments,  which increased from DKK 290 million to DKK 976 million
in 2003,  mainly consisted of our investment in approximately  33% of the shares
of NORDEN.

     In June 2002, we purchased  30.8% of NORDEN's  share capital  excluding own
shares, which was followed by a public tender offer to NORDEN's  shareholders at
DKK 360 per share. Upon the expiration of our tender offer on July 29, 2002, the
offer was neither extended nor increased. As of April 30, 2004, we were NORDEN's
single  largest  shareholder,   with  32.96%  of  NORDEN's  outstanding  shares,
excluding own shares. It is our goal to achieve a successful  combination of the
two companies,  which would provide a platform for further growth, and give us a
genuine competitive advantage in the international shipping market place.

     Our  shares  of NORDEN  are  currently  treated  in our  accounts  as other
investments  and are not accounted on an equity basis, as we are not represented
on  NORDEN's  board  of  directors,  do not have any  influence  on  significant
decisions of NORDEN and have access only to financial  information  available to
all  other  investors.  Our  investment  in NORDEN is valued on the basis of the
closing price on the Copenhagen Stock Exchange, which was DKK 1,305.15 per share
as of  December  30,  2003.  Our total  gross  investment  in the NORDEN  shares
reflects an  unrealized  accumulated  gain of DKK 689 million  from the original
investment, which is included in our consolidated financial statements herein as
a financial item.

Mortgage debt and bank loans

     Mortgage  debt,  bank loans,  repayments on mortgage  debt and  capitalized
lease obligations increased by DKK 143 million to DKK 2,177 million in 2003. Our
mortgage  and  leasing  debt  declined  during the year by DKK 35 million to DKK
1,701  million.  Short-term  mortgage  and leasing  debt,  increased  by DKK 178
million,  to DKK 476 million,  mainly as a result of including  the  obligations
regarding  financially  leased  vessels being  included in this item rather than
primarily in long-term  debt. The same applies to another of our vessels,  which
was previously financed with traditional mortgage debt. Ordinary debt repayments
were DKK 262 million in 2003 as  compared  to DKK 220 million in 2002.  In 2003,
borrowings  for the  new  vessels  delivered  to us  during  this  year  and our
newbuilding   program  were  DKK  778  million.   Additionally,   exchange  rate
adjustments reduced mortgage debt by DKK 373 million in total.

B.   Liquidity and capital resources

     Servicing of our obligations under loan agreements, payment of charter hire
for chartered-in vessels and all other commitments that we have entered into are
paid out of the cash generated by our operating  activities.  Our total cash and
cash  equivalents  including bonds amounted to DKK 676 million at the end of the
year against DKK 479 million at the  beginning  of the year,  resulting in a net
increase  in cash and cash  equivalents  from cash flows for the year of DKK 197
million  compared to net decreases of DKK 43 million in 2003 and DKK 305 million
in 2002.

     Despite this  relatively  modest  development,  our operations  generated a
historically  high cash flow of DKK 1,397 million in 2004 as compared to DKK 494
million in 2003 and DKK 261 million in 2002. The primary source of the cash flow
was profit from operating activities.  Our investment in NORDEN also contributed
with DKK 200 million in dividends received.

     Cash flow from  operating  activities was for the most part used to finance
the investing  activities  during the year as DKK 1,117 million net was invested
in tangible fixed assets,  primarily  comprising our extensive  expansion of the
fleet, compared to DKK 1,007 million in 2003 and DKK 934 million in 2002.

     Cash outflow from financing  activities was DKK 83 million compared to cash
inflow  of DKK 471  million  in 2003  and DKK 552  million  in  2002.  Borrowing
amounted to DKK 875 million for the  financing  of our  newbuilding  program and
purchase of second hand vessels, while scheduled repayments on mortgage debt and
finance lease  obligations  amounted to DKK 695 million.  Dividends  paid to our
shareholders  in the amount of DKK 209 million and  settlement  of share options
relating  to our  share  option  program  including  DKK 54  million  in  shares
transferred also negatively affected cash flow from financing activities.

     Of our  cash  and  cash  equivalents  as at  December  31,  2004 of DKK 676
million,  DKK 54  million  were held as  collateral  for a USD loan.  Thus,  our
unencumbered cash and cash equivalents were DKK 622 million at year-end compared
to DKK 427 million in 2003 and DKK 336 million in 2002. Please refer to note 17,
paragraph  i),  to  our  consolidated  financial  statements  for  a  summarized
statement of cash flow in accordance with U.S. GAAP.

     We have  significant cash  requirements  associated with our long term debt
and time charters.  These payments are influenced by changes in interest  rates.
In order to manage  interest rate risk, we enter into  financial  instruments to
swap the variable  interest rate on a portion of our  borrowings  for fixed rate
debt.

     To support our  strategy,  we increased our  financial  flexibility  in the
fourth quarter of 2004, as we agreed to a revolving facility with leading banks.
The facility has a total limit of USD 570 million,  of which USD 299 million was
drawn  as at  December  31,  2004.  Part of the  facility  is  dedicated  to the
financing  of new  tonnage,  whereas the  remaining  part will go to the ongoing
financing  of some of our  existing  vessels.  As at  December  31,  2004 we had
additional  loans  of  approximately  DKK  779  million  bringing  total  credit
agreements  to DKK  3,895  million  bearing  interest  at  LIBOR + .75% of which
slightly more than DKK 1.5 billion was unused.

     As of the end of April 2005,  TORM's  newbuilding  program  and  contracted
second-hand vessels comprised 17 vessels, of which one vessel is owned through a
50/50 joint venture with J. B. Ugland Shipping A/S. When acquiring vessels,  the
first  20%-30% of the  contract  price is  normally  financed  by TORM,  and the
remaining  70%-80% is  financed  by  mortgage  debt.  TORM has  entered  into an
agreement  for the  financing  of the  five LR2  product  tanker  vessels  to be
delivered  during  the  period  from  April  2006  to  January  2008.   Payments
corresponding  to 10% of the contract  price have been made on all five vessels.
The  remaining  10%  installments  are to be paid by TORM between March 2005 and
January 2007.  The financing for the remaining  vessels has not yet been agreed.
For all 17 vessels, the total amount of our self-financing is expected to be DKK
768  million,  of which  DKK 588  million  in 2005,  and the  total  outstanding
contractual commitment amounts to DKK 2,854 million.

     We  believe  that  based on our  available  cash and  planned  investments,
projected operating cash flows and financing  capacity,  we have sufficient cash
flow to meet  our  operating  requirements,  cash  flow  obligations  and  other
strategic initiatives.  We also believe that our current fleet structure,  based
on time charters and owned vessels, provides us with the flexibility to react to
change  in  market   conditions   reducing  the  exposure  to  negative   market
developments.

     For further disclosure and discussion of our contractual obligations please
refer to the table included in Item 5F and to Item 10C.

FOREIGN CURRENCY EFFECTS

     We are exposed to market risk from changes in foreign exchange rates, which
can affect  results from  operations  and financial  condition.  To minimize the
risk,  we manage our exposure to changes in foreign  currency  rates through our
regular operating and financing activities and, when deemed appropriate, through
the use of derivative financial instruments,  primarily cross currency contracts
and forward exchange contracts.

     Please refer to Item 11 for information regarding our hedging strategy.

EFFECTS OF INFLATION

     Inflation  generally  affects  us by  increasing  the  interest  expense of
floating  rate  indebtedness  and by increasing  the cost of labor,  dry-docking
costs and other operating expenses.  We do not believe inflation has had or will
have a material impact on our operations. Inflationary pressures on bunker costs
are not  expected  to have a material  effect on our future  operations  because
freight  rates for voyage  charters  are  generally  sensitive to the price of a
ship's  fuel.  A sharp  rise in  bunker  prices  tend to have  only a  temporary
negative effect on results since freights  generally  adjust after prices settle
at a higher level.

C.   Research and development, patents and licenses, etc.

     Not applicable.

D.   Trend information.

EXPECTATIONS FOR 2005

Tanker division

     In 2005, the tanker market will be affected by the  relatively  large order
book of vessels  for  delivery  in 2005 and an  expected  slightly  lower  world
economic  growth.  The revised IMO rules for  phase-out  of older  single-hulled
vessels came into force from April 2005.  There is,  however,  some  uncertainty
regarding  the impact of the revised  IMO rules on freight  rates for our Tanker
division.

     With an expected  growth in GDP of 3.5% for USA, 1.6% for Europe,  1.6% for
Japan,  and 9.3% for China,  the  International  Energy  Agency (IEA)  expects a
growth in world oil  demand  in 2005 of 1.5%,  corresponding  to a growth of 1.4
million  barrels  per  day.  This  will  lead  to an  additional  growth  in the
transportation  of oil. For the product  tanker  market  tonmiles is expected to
increase by 4.7% in 2005 and 3.5% in 2006.

     If these  growth  figures  are  compared  with the net  growth in  tonnage,
utilization of the active tanker fleet is expected to fall from 91.5% in 2004 to
86.5% in 2005 - corresponding  to the level in 2001, which was also considered a
high level.

     In total, we expect that for 2005 the Tanker division will experience lower
rates than in 2004.  Seasonal  patterns mean that the first and fourth  quarters
traditionally are the strongest due to the winter season in the western world.

     The risk  factors,  which  are  judged  to have the  largest  effect on the
product tanker market in 2005 are:

     o    Lower economic growth in the world and thereby  decreased  consumption
          of refined products,

     o    Lower imports of refined products, in particular to USA and China.

Bulk division

     We expect  that Bulk  markets  in 2005 will again be at  historically  high
levels but exhibit considerable volatility.

     The order book for bulk vessels is relatively modest, despite the very high
rate  levels,  and the  demand in the bulk  market is  highly  dependent  on the
development of a few markets, particularly China.

     We  have  therefore  - as was  the  case  in 2004 -  decided  to  secure  a
significant  part of our earnings for 2005 through time charters.  Consequently,
65% of the earning  days for 2005 for our Panamax  bulk  vessels were covered on
longer term contracts as at March 1, 2005,  thereby securing a historically high
income of 30,800 USD/day for these earning days.

     The risk  factors  which are judged to have the largest  effect on the bulk
markets in 2005 are:

     o    China's import of raw materials are lower than expected,

     o    Waiting days in ports are reduced,

     o    A generally lower global economic growth.

E.   Off-balance sheet arrangements.

     We do not have any off-balance sheet arrangements.

F.   Tabular disclosure of contractual obligations.

     We have various contractual  obligations and commercial commitments to make
future  payments  including  debt  agreements,  lease  obligations  and purchase
commitments.  The following table summarizes our future  obligations under these
contracts due by period as of December 31, 2004 (in DKK million):

<TABLE>
<CAPTION>
                                2005      2006      2007      2008      2009   There-      Total
                                                                                after
                             -------   -------   -------   -------   -------   -------   -------
<S>                          <C>         <C>       <C>       <C>       <C>     <C>       <C>
Long-Term Debt (1)             339.8     259.5     311.5     151.9     216.4     882.9   2,162.0

Chartered-in Vessels
(Operating leases)             245.8     192.8     170.6     168.2     137.6     196.3   1,111.3

Newbuilding installments
(Purchase Obligations) (2)     511.2     414.6     311.8     139.9        --        --   1,377.5

Other operating leases           6.0       6.0       5.1       4.5       4.8      25.3      51.7
                             -------   -------   -------   -------   -------   -------   -------
Total                        1,102.8     872.9     799.0     464.5     358.8   1,104.5   4,702.5
                             =======   =======   =======   =======   =======   =======   =======
</TABLE>

(1)  Debt payments could be accelerated  upon  violation of debt  covenants.  We
     believe the likelihood of a debt covenant violation is remote.

(2)  Debt   financing   will  provide  an  estimated  80%  of  the   newbuilding
     installments.

CRITICAL ACCOUNTING POLICIES

     The  preparation of  consolidated  financial  statements in conformity with
accounting  principles  generally  accepted in Denmark and in the United  States
requires  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 we  apply  our  accounting  policies.  An
accounting  estimate is considered critical if: the estimate requires management
to make  assumptions  about  matters that were highly  uncertain at the time the
estimate was made;  different  estimates  reasonably could have been used; or if
changes in the  estimate  that would  have a  material  impact on the  Company's
financial condition or results of operations are reasonably likely to occur from
period to period. Management believes that the accounting estimates employed are
appropriate and resulting balances are reasonable; however, actual results could
differ from the original estimates,  requiring  adjustments to these balances in
future periods.

     We believe these are our critical accounting policies:

     Carrying amounts and useful life of Vessels

     We  evaluate  the  carrying  amounts  and period over which the vessels are
depreciated   to  determine  if  events  have  occurred  that  would  require  a
modification of their carrying amounts or useful lives. The valuation of vessels
is reviewed  based on events and changes in  circumstances  that would  indicate
that the carrying amount of the assets might not be recovered.  In assessing the
recoverability  of the  vessels,  we  review  certain  indicators  of  potential
impairment, such as reported sale and purchase prices, market demand and general
market conditions. Market valuations from independent internationally recognized
ship broking companies are obtained on a semi-annual basis as part of our review
for  potential  impairment  indicatory.  Under U.S.  GAAP,  if an  indication of
impairment is  identified,  the  undiscounted  future cash flows are compared to
carrying  amount of the assets.  If these are less than the carrying  amount, an
impairment  loss is  recorded  based on the  difference  between  the fair value
(generally based on discounted future cash flows) and the carrying amount of the
vessels.  If, under Danish GAAP, an  indication of impairment is identified  the
need for  recognizing  an impairment  loss is assessed by comparing the carrying
amount of the vessels to the higher of the net selling price and the  discounted
future cash flows.

     The review for potential  impairment  indicators  and  projection of future
undiscounted  and  discounted  cash flows  related to the vessels is complex and
require us to make various  estimates  including future freight rates,  earnings
from the vessels and discount rates.  All of these items have been  historically
volatile.

     The  carrying  amounts of our vessels may not  represent  their fair market
value at any point in time since market prices of secondhand vessels to a degree
tend to fluctuate  with changes in charter  rates and the cost of  newbuildings.
However,  if the estimated future cash flow or related assumptions in the future
experience changes, an impairment of vessels may be required.

     Under Danish GAAP,  in 2002 we reversed a  previously  recorded  impairment
amount  resulting in an income of DKK 12 million.  There were no  impairments of
vessels recorded from 2002 to 2004.

     Tax

     We entered  the then newly  enacted  Danish  tonnage  taxation  scheme with
effect from January 1, 2001 and have filed tax returns for 2001,  2002 and 2003.
The  assessment  of the tax  returns  by the tax  authorities  has not yet  been
completed. The tax regulations are highly complex and while we aim to ensure the
estimates of tax assets and liabilities  that we record are accurate,  there may
be  instances  where the process of agreeing  our tax  liabilities  with the tax
authorities  could  require  adjustments  to be  made  to  estimates  previously
recorded.  It is our  assessment  that there is material  uncertainty  as to our
estimate of taxes  payable as of December 31, 2004 due to the lack of precedents
that have  interpreted  the tonnage  tax  regulation.  The  estimate is based on
scenario  analysis and discussions  with the tax  authorities,  tax advisors and
industry organizations, and the uncertainty primarily relates to the division of
the income and expense items of our activities  between income and expenses from
shipping  related  activities,  which are taxed under the tonnage tax scheme and
income and expenses from other activities, which are not taxed under the tonnage
tax scheme.  Please refer to Item 10 E for a description  of the Danish  tonnage
tax scheme.

     Since  entering  the Danish  tonnage  taxation  scheme the  Company has not
accrued  for  deferred  tax in the  balance  sheet in the  financial  statements
prepared in  conformity  with Danish GAAP as the  deferred  tax status only will
become payable if the Company's  participation  in the Danish  tonnage  taxation
scheme is  abandoned or if the  Company's  level of  investment  and activity is
significantly reduced. Tax liabilities relating to the vessels are considered as
contingent  liabilities.  Please  refer  to  Item  10e  and  note 8 for  further
information.

     Under U.S.  GAAP,  the  provision  for deferred tax is still carried in the
balance  sheet,  as the  recognition  of a provision  for  deferred tax does not
depend  on the  likelihood  of  the  provision  resulting  in  taxable  amounts.
Therefore,  under U.S. GAAP the uncertainty  applies to both the estimate of tax
payable and the provision for deferred tax.

     We  estimate  that the tax  returns  filed for 2001,  2002 and 2003 and the
Company's  activities  in 2004 will not trigger  taxes  payable in excess of the
amount,  which has been recognized as per December 31, 2004,  because  estimated
taxable  income to a large  extent is offset by  deductible  losses  from  prior
periods,  and that the  deferred  tax  liability  recorded  under  U.S.  GAAP is
adequate.

     Our investment in NORDEN is regarded as a strategic  investment.  At a sale
of this investment after three years of ownership, no tax liability is connected
to the gain on this  asset.  If this  shareholding  is sold  entirely or in part
before August 2005, any gain will be taxed at 30%. To determine our deferred tax
liability we are therefore required to estimate when this timing difference will
crystallize.  We currently have no intention to sell the  shareholding in NORDEN
and have  therefore  not  recognized  a deferred  tax  liability  related to the
cumulated  unrealized gain on the investment of DKK 1,721 million  recognized as
of  December  31,  2004.  If  this  intention  changes,  it  could  result  in a
significant tax liability.

CHANGE IN ACCOUNTING Policies

     The  accounting  policies are  unchanged  from last year except that Danish
accounting standard 21 "Leasing" and Danish accounting standard 22 "Income" have
become effective and have been applied in this financial year.

     The effect of  implementing  Danish  accounting  standard 21 is that a gain
relating to a sale and  leaseback  transaction  under certain  circumstances  is
recognized in the income statement  immediately.  Previously,  a gain was always
recognized  on the  balance  sheet and  amortized  over the life of the  charter
party. In connection with a sale and leaseback transaction in the financial year
2000 resulting in an operating  lease, we recognized a gain on the balance sheet
which has since been  amortized  in  proportion  to the gross rental on the time
charter over the life of the charter  party.  The fair value at the  transaction
date was  essentially  equal to the book  value,  and the  accounting  treatment
applied is consequently  considered to be in accordance  with Danish  accounting
standard 21.

     The effect of implementing Danish accounting standard 22 is that the stated
criteria for recognizing income have become more explicit in accordance with the
standard.  The methods applied by us to recognize  income are in accordance with
Danish accounting standard 22.

     The  adoption of these  accounting  standards  has thus not resulted in any
changes in the reported amounts.

ACCOUNTING PRINCIPLES NOT YET ADOPTED

     Danish GAAP

     The Danish  Financial  Statements Act was amended in February  2004.  Under
Danish  GAAP,  financial  statements  may now be  prepared  in  accordance  with
International Financial Reporting Standards, or IFRS, which is required pursuant
to EU regulation no.  1606/2002/EF  for all publicly listed  companies in the EU
for fiscal years beginning on or after January 1, 2005.

     Accordingly,  we will  produce  Annual  Reports for TORM and for our Parent
Company in accordance with IFRS beginning on January 1, 2005.

     Based  on the IFRS  standards  currently  applicable,  the  changes  to the
accounting  policies will result in the following  changes as at January 1, 2005
and in the comparative figures for 2004 for TORM and for our Parent Company:

     a)   Unrealized  gains or losses in  respect  of bonds and  shares in other
          companies  are  currently  recognized  in the income  statement  under
          financial items.  Shares are treated as financial assets available for
          sale. In accordance  with IAS 39 "Financial  Instruments:  Recognition
          and Measurement"  unrealized gains or losses in respect of shares will
          be  recognized  directly in  shareholders'  equity and released to the
          income  statement  when  the  assets  are   derecognized.   Bonds  are
          classified as financial  assets at fair value through  profit or loss.
          Therefore,  unrealized  gains or losses in  respect of bonds are still
          recognized in the income statement.

     b)   Our share option  scheme  provides our  employees  with the choices of
          cash settlement or receipt of TORM shares.  The difference on the date
          the  options are granted  between  the  exercise  price and the market
          price of the shares is currently  recognized as a compensation expense
          in  administrative  expenses  in the income  statement.  Receipts  and
          payments  relating to the exercise of the share options are recognized
          directly  in   shareholders'   equity.   In  accordance  with  IFRS  2
          "Share-based  Payment"  a  liability  relating  to share  options  not
          exercised will be recognized in the balance  sheet.  The change in the
          liability for the period and the value of the share options  exercised
          in the  period  will  be  recognized  in  the  income  statement.  The
          liability is measured using the Black-Scholes model.

     c)   We have chosen to apply the optional  exemption in IFRS 1  "First-time
          Adoption of International  Financial Reporting  Standards" relating to
          cumulative  translation  differences.  As  a  consequence,  cumulative
          translation  differences  are  deemed  to  be  zero  at  the  date  of
          transition  to IFRS and gain or loss on a  subsequent  disposal  of an
          operation  applying a  measurement  currency  different  from USD will
          exclude  translation   differences  that  arose  before  the  date  of
          transition to IFRS.

     We will  change the  reporting  currency  for the TORM Group as well as the
measurement currency in the administrative entity to USD beginning on January 1,
2005.

     The effects of these  changes as at January 1, 2005 and to the  comparative
figures for 2004 for TORM are  illustrated  below with  reference to the bullets
listed above.  The  statements are presented in USD since the Annual Report will
be presented in USD from now on.

<TABLE>
<CAPTION>
Shareholders' equity, USD million                    Reference   January 1,   January 1,
                                                                       2004         2005
<S>                                                          <C>      <C>          <C>
Shareholders' equity, current GAAP(1)                                 413.6        790.8

Exchange  rate  adjustment  regarding  change  of
measurement currency in the administrative entity
to USD from DKK                                                         0.0         (0.3)

Liability regarding outstanding share options                b         (6.9)        (1.8)

Shareholders' equity, IFRS                                            406.7        788.7
</TABLE>

<TABLE>
<CAPTION>
Income statement, USD million                              Reference        January 1 to
                                                                       December 31, 2004
<S>                                  <C>                           <C>             <C>
Net profit for the year, current GAAP(2)                                           415.8

Expense relating to the share option program                       b                (9.8)

Unrealized gains/losses on shares recognized in equity             a               (204.7)

Net profit, IFRS                                                                    201.3
</TABLE>

(1): Translated into USD using the exchange rate on the balance sheet date.

(2): After change of measurement  currency to USD from DKK in the administrative
     entity in accordance with the IFRS transition provisions.

     The annual report for 2005 must be based on the IFRS  standards  applicable
on December 31, 2005 and the presented  figures may change if IFRS standards are
revised during 2005.

     It is our view,  that the accounting  legislation  relating to income taxes
for publicly listed Danish companies is in accordance with IAS 12 "Income Taxes"
and the  transition  to IFRS is not  expected to give rise to any changes in the
accounting  treatment of income taxes.  We expect to  participate in the tonnage
tax scheme after the binding  period of 10 years and at a minimum to maintain an
investing and activity level  corresponding to the level at the time of entering
the tonnage tax scheme.  Accounting  for income  taxes is one of the areas being
discussed as part of the short-term convergence project being undertaken by IASB
and the FASB with a view to eliminating many of the differences  between US GAAP
and IFRS.  However, a new draft IFRS standard on income taxes is not expected to
be released until the second half of 2005 at which point we will  reconsider the
accounting treatment of income taxes.

     In addition, IFRS disclosure requirements are in a number of areas somewhat
in excess of those governing publicly listed Danish companies.  We will evaluate
the need for  adjustments  to the  current  notes and the  possible  addition of
further notes and disclosures.

     Beginning in the first quarter 2005 we will prepare the  quarterly  reports
to the Copenhagen Stock Exchange in accordance with the criteria for recognition
and  measurement  in  IAS/IFRS.  We will not  apply IAS 34,  "Interim  Financial
Reporting".

     U.S. GAAP

     In  December  2004,  the FASB  issued  Statement  of  Financial  Accounting
Standards ("SFAS") No. 123 (revised 2004),  "Share-Based Payments" or SFAS 123R.
This statement  eliminates the option to apply the intrinsic  value  measurement
provisions of Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to Employees" to stock compensation awards issued to employees.
Rather,  SFAS 123R requires  companies to measure the cost of employee  services
received in exchange for an award of equity  instruments based on the grant-date
fair value of the award.  That cost will be  recognized  over the period  during
which an employee is required to provide services in exchange for the award--the
requisite service period (usually the vesting period).  SFAS 123R applies to all
awards  granted  after  the  required  effective  date and to  awards  modified,
repurchased,  or cancelled  after that date. SFAS 123R will be effective for our
fiscal year ending  December 31, 2006. We have not yet  quantified the effect of
the future adoption of SFAS 123R on a going forward basis.

     In December 2004, the FASB SFAS No. 153, "Exchanges of Nonmonetary Assets -
an  amendment  of APB  Opinion No. 29" ("SFAS  153"),  which  amends  Accounting
Principles  Board Opinion No. 29,  "Accounting for Nonmonetary  Transactions" to
eliminate the exception for nonmonetary  exchanges of similar  productive assets
and replaces it with a general  exception  for exchanges of  nonmonetary  assets
that do not have  commercial  substance.  SFAS 153 is effective for  nonmonetary
assets exchanges  occurring in fiscal periods  beginning after June 15, 2005. We
do not  anticipate  that the  adoption  of this  statement  will have a material
effect on our financial position or results of operations.

     In November 2004, the EITF reached a consensus on EITF Issue No. 03-1, "The
Meaning  of  Other-Than-Temporary  Impairment  and its  Application  to  Certain
Investments"   ("EITF  03-1").   EITF  03-1  provides  guidance  on  determining
other-than-temporary  impairments and its  application to marketable  equity and
debt  securities  accounted  for under SFAS No.  115,  "Accounting  for  Certain
Investments in Debt and Equity Securities," as well as investments accounted for
under the cost method of  accounting.  In September  2004,  the FASB issued FASB
Staff  Position  ("FSP") EITF Issue 03-1-1 which delayed the effective  date for
the  measurement  and  recognition  guidance  contained  in  EITF  03-1  pending
finalization  of the draft FSP EITF Issue 03-1-a,  "Implementation  Guidance for
the  Application of Paragraph 16 of EITF 03-1." The disclosure  requirements  of
EITF 03-1 remain in effect.  The  adoption of the  recognition  and  measurement
provisions  of EITF 03-1 when  finalized  are not  expected  to have a  material
impact on our results of operations or financial position.

     In October  2004,  the FASB  issued  EITF  04-10,  "Determining  Whether to
Aggregate Operating Segments That Do Not Meet the Quantitative  Thresholds." The
consensus  addresses  the  issue  of  how  an  enterprise  should  evaluate  the
aggregation criteria in paragraph 17 of SFAS 131, "Disclosures about Segments of
an Enterprise  and Related  information,"  when  determining  whether  operating
segments that do not meet the  quantitative  thresholds may be  aggregated.  The
effective  date of this issue has been  delayed and is  anticipated  to occur in
2005 to coincide with the final issuance of the FSP (FASB Staff Position), which
will provide guidance in determining whether two or more operating segments have
similar economic  characteristics.  However,  earlier adoption is permitted. The
application  of this  guidance is not expected to have a material  effect on our
financial position or results of operations.

ACCOUNTING POLICIES ADOPTED DURING 2004

     FIN 46(R) "Consolidation of Variable Interest Entities"
     -------------------------------------------------------

     In January 2003, the FASB issued FASB Interpretation No. 46,  Consolidation
of Variable  Interest  Entities,  and revised it in December 2003 ("FIN 46(R)").
FIN 46(R)  clarifies the  application  of Accounting  Research  Bulletin No. 51,
Consolidated Financial Statements, to certain entities in which equity investors
do not have the  characteristics  of a controlling  financial interest or do not
have sufficient equity at risk for the entity to finance its activities  without
additional  subordinated  support.  An enterprise  shall  consolidate a variable
interest entity if that enterprise is the primary beneficiary.  An enterprise is
considered  the  primary  beneficiary  if it has a variable  interest  that will
absorb a majority of the  entity's  expected  losses,  receive a majority of the
entity's expected residual returns, or both.

     The  provisions of FIN 46(R) are required to be applied  immediately to all
variable  interest  entities  created  after  December  31,  2003.  For variable
interest  entities  that were created  prior to December 31, 2003,  FIN 46(R) is
required to be applied  beginning with the first annual period  beginning  after
December 15, 2004.  We have  assessed  the  potential  impact of the adoption of
FIN46(R),  and we concluded that it has no material impact on  consolidated  net
income or shareholders' equity.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   Directors and senior management.

     Set forth below are the names,  ages and  positions  of our  directors  and
     executive officers.

     Name                            Age            Position
     ----                            ---            --------

     Board of Directors:
     Niels Erik Nielsen              57             Chairman of the Board
     Christian Frigast               53             Deputy Chairman of the Board
     Lennart Arnold Johan Arrias     56             Director
     Ditlev Engel                    41             Director
     Rex Harrington                  71             Director
     Peder Mouridsen                 55             Director
     Gabriel Panayotides             50             Director

     Management:
     Klaus Kjaerulff                 53             Chief Executive Officer
     Klaus Nyborg                    41             Chief Financial Officer

     Biographical  information  with  respect  to  each  of  our  directors  and
executives is set forth below.

     Niels Erik  Nielsen  was Deputy  Chairman  of our Board of  Directors  from
September 26, 2000 and has been  Chairman of our Board of Directors  since April
25, 2002.  Mr.  Nielsen is also a partner  with the Danish law firm,  Bech-Bruun
Dragsted,  which  provides  certain legal  services to us. He is a member of the
board of  directors  of  several  Danish  companies,  including  the  following:
Amagerbanken  Aktieselskab,  Ambu A/S, Charles  Christensen A/S, Cimber Air A/S,
Danica-Elektronik  A/S, Danish Supply Corporation A/S, Gammelrand  Skaervefabrik
A/S, GPV Industri  A/S,  InterMail  A/S,  Kongskilde  Industries  A/S,  Mezzanin
Kapital A/S, Preben Olsen Automobiler A/S, Satair A/S,  SCF-Technologies A/S and
Weibel  Scientific  A/S. He holds a Masters of Law degree from the University of
Copenhagen.

     Christian  Frigast has been a director of the Company  since  September 26,
2000 and Deputy  Chairman  since April 25, 2002. He is the managing  director of
Axcel  A/S,  a Danish  investment  company,  and  holds an  M.Sc(Econ)  from the
University of  Copenhagen.  He also serves as a member of the Board for numerous
companies including Britannia Invest A/S, Holdingselskabet af 1. august 1997 A/S
and several companies related to Axcel A/S.

     Lennart  Arnold Johan Arrias has been a director of the Company since 2003.
Mr.  Arrias is employed by TORM as a Captain and has been with the Company since
1992. He is elected by the employees of TORM to the Board.

     Ditlev Engel has been a director of the Company  since April 25, 2002.  Mr.
Engel is Group  President  and CEO of Vestas Wind  Systems A/S and has a B(Comm)
degree from the Copenhagen Business School.

     Rex  Harrington,  a director of the Company since April 2003, is the former
Director  of  Shipping  at  The  Royal  Bank  of  Scotland  (RBS)  where  he had
responsibility for its extensive shipping  portfolio.  He has wide experience in
the shipping industry and in marine finance,  starting his career at the Bank of
England after graduating from Oxford University with a Masters degree. He is now
an independent  shipping advisor. Mr. Harrington is the Chairman of the Advisory
Board  of  the  Liberian   International  Ship  and  Corporate  Registry  and  a
non-executive  director of General Maritime  Corporation (NYSE listed),  and the
International Chamber of Commerce Commercial Crime Services,  which incorporates
the  International  Maritime Bureau.  In addition he is a Deputy Chairman of the
International   Maritime   Industries  Forum  and  a  member  of  the  following
organizations:  InterCargo  London Advisory  Panel,  Lloyds Register of Shipping
General Committee,  London Shipping Law Centre Steering Committee and The Baltic
Exchange. He was a Director of Clarksons  (international  shipbrokers) from 1995
to 1998 and Lloyds Register of Shipping from 1994 to 1999.

     Peder  Mouridsen  has  been a  director  of the  Company  since  2003.  Mr.
Mouridsen is employed by TORM as a Chief  Engineer and has been with the Company
since 1970. He is elected by the employees of TORM to the Board.

     Gabriel  Panayotides has been a director of the Company since September 26,
2000. He is Chairman (since 1998) of Excel Maritime Carriers Ltd., listed on the
American Stock Exchange since October 1997. Mr.  Panayotides has been engaged in
the ownership and operation of ships since 1978 and sits on the Greek  Committee
of the classification societies, Bureau Veritas and Lloyds Register of Shipping.
He has a Bachelors degree from the Pireaus University of Economics.

     Klaus Kjaerulff has been our Chief Executive  Officer and Managing Director
since September 2000. Mr. Kjaerulff has worked for TORM since 1976. From 1997 to
2000, he served as Executive Vice President  responsible for our tanker and bulk
divisions.  From 1981 to 1997,  Mr.  Kjaerulff was Vice  President of our tanker
division.  He is a member  of the board of  gram-agentur  A/S,  a Danish  listed
public limited company.

     Klaus Nyborg has been our Chief  Financial  Officer  since  February  2002.
Prior to working for us, Mr.  Nyborg was employed in various  capacities  at the
A.P. M0ller Group,  most recently as Chief Financial Officer (CFO) of the Maersk
Logistics division.  From 1998 to 2001, he served as Vice President and Regional
CFO at  Maersk  for the  Asia-Mid-East  Region.  From  1997 to 1998,  he was the
Regional CFO for the Europe-Africa  Region. From 1992 to 1997, Mr. Nyborg served
as General Manager and Corporate  Secretary in the A.P. M0ller Group. Mr. Nyborg
holds a  masters  degree  in Law and  Business  Economics  from  the  Copenhagen
Business School.

B.   Compensation.

     In  2004,  we  paid a total  of DKK 1.5  million  in cash to the  Board  of
Directors  and DKK 13.9 million in cash to our  executives  excluding  exercised
stock options. We have not set aside any amounts to provide pension,  retirement
or similar benefits to our directors and executive  officers.  For a description
of our stock option plan please refer to "Option Plan" below. As of December 31,
2004, members of our Board of Directors had exercised 60,980 options.

C.   Board Practices.

     The members of our Board of Directors are elected for four-year  terms.  At
the end of each term,  they are  eligible  for  re-election.  All current  Board
members were elected at the annual general  meeting in 2003 and will be eligible
for re-election in 2007.  There are no service  contracts  between us and any of
our directors providing for benefits upon termination of a director's election.

D.   Employees.

     The numbers of employees we employed,  on average,  for the previous  three
financial years, are as follows:

                                              2002           2003           2004
                                              ----           ----           ----
Land-based employees

     Denmark                                    90             92             93

     Other                                       1              3              7

     Total                                      91             95            100

Seafarers (officers)                           160            185            195
                                               ---            ---            ---

Total employees                                251            280            295

     In 2002, 2003 and 2004,  approximately 30 of our employees were employed in
administrative  positions.  The  majority  of the staff on vessels  owned by our
subsidiaries and associated companies are not employed by us.

E.   Share ownership.

     The following table sets forth information as of April 30, 2004,  regarding
the total  amount of capital  stock owned by our  officers  and  directors on an
individual basis:

                                                                    Shares
Name                          Position                              (Nom. Hold.)
----                          --------                              ------------
Niels Erik Nielsen            Chairman of the Board                 *
Christian Frigast             Deputy Chairman of the Board          *
Lennart Arnold Johan Arrias   Director                              *
Ditlev Engel                  Director                              *
Rex Harrington                Director                              *
Peder Mouridsen               Director                              *
Gabriel Panayotides           Director                              *
Klaus Kjaerulff               Chief Executive Officer               *
Klaus Nyborg                  Chief Financial Officer               *

*    The person beneficially owns less than one percent of our common shares.

Option plan

     In 2001, we created a share option based incentive  program for Management,
key  employees  and  the  Board  members.  The  program  currently  includes  23
participants  who from 2001-2003 have been granted options to purchase shares in
the Company,  where the option holder can buy the shares at a specified exercise
price  or  where  the  differential  between  the  share  price as of the day of
exercising the options and the option price may be settled in cash.

     In this respect we acquired  4.39% of our share  capital for DKK 47 million
to cover the risk of share price  movements in connection  with the share option
incentive program.  As of December 31, 2004 52,980 own shares were held to cover
this risk. The value of these shares was DKK 12 million as of December 31, 2004,
whereas  the value of the  exercised  options  was DKK 53.5  million,  which was
primarily  settled in cash.  As of December  31,  2004,  97% of the options were
exercised.

     Please refer to Note 3 to the consolidated Financial Statements for further
information.

Employee shares

     During  April  2001,  the  Board of  Directors  also  decided  to offer our
employees  200,000 common shares for the price of DKK 10.5 per share. In October
2001,  employees  exercised the right to purchase  194,235 of these shares.  The
market  price at the date of the grant  was DKK 54.3 per  share.  The  remaining
stock purchase rights expired.

Exemptions from Nasdaq corporate governance rules

     At the time TORM listed its ADRs with the Nasdaq National Market,  TORM was
granted an exemption  from Nasdaq's  requirement  for an audit  committee and an
audit  committee  charter.  Our full Board of Directors  currently  fulfills the
function of an audit committee. Our management is responsible for the proper and
timely preparation of the Company's annual reports. Once the annual reports have
been  completed  and  approved by  management  and our Board of  Directors,  the
reports  are  delivered  to two  independent  auditors,  one of  whom  must be a
state-authorized  public  accountant.   The  audited  annual  reports  are  then
presented for shareholder  approval at the general  meeting,  and once approved,
the reports are sent to Denmark's Commerce and Companies Agency. TORM will adopt
an audit  committee  and audit  committee  charter in  compliance  with Nasdaq's
corporate governance rules by July 31, 2005.

     The Company  complies  with the Nasdaq  corporate  governance  requirements
pertaining to the disclosure of a going concern audit opinion,  the distribution
of annual and interim reports;  shareholder  meetings,  quorum, peer review, and
direct  registration  program and the disclosure of a  notification  of material
non-compliance.

     The  Company  believes  that  its  corporate  governance  practices  are in
compliance  with, and are not  prohibited by, the laws of Denmark.  Accordingly,
the Company  expects to apply for an  exemption  from all of Nasdaq's  corporate
governance  practices other than the requirements  regarding the disclosure of a
going concern audit opinion, notification of material non-compliance with Nasdaq
corporate  governance  practices,  and the  establishment  and composition of an
audit  committee  that complies  with SEC Rule 10A-3 and a formal  written audit
committee charter.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

A.   Major shareholders.

     Our  capital  stock is  comprised  of common  shares,  par value DKK 10 per
share.  We  increased  the share  capital in May 2004 from  nominally  DKK 182.0
million to nominally DKK 364.0  million  through the issue of 18.2 million bonus
shares increasing the number of shares to 36.4 million shares.  The bonus shares
were allotted to our existing shareholders at the ratio 1:1. The following table
sets forth  information  regarding the owners of five (5) percent or more of our
common shares as of April 30, 2005.  None of the  shareholders  have any special
voting rights.

Name                                      Number of Shares   Percentage of Class
----                                      ----------------   -------------------
Beltest Shipping Company Ltd.                   11,698,050           32%
Menfield Navigation Company Limited              7,282,352           20%
A/S Dampskibsselskabet TORM's
Underst0ttelsesfond, Denmark                     2,278,440            6%

     Each of the shareholders  above holds 5% or more of the total number of our
outstanding shares, which requires that shareholder to file information with the
Copenhagen Stock Exchange.

     Beltest and its parent company,  Ryder Holdings Inc., have filed a Schedule
13D with the Securities and Exchange Commission, or the SEC. Menfield Navigation
Company Limited acquired  7,282,352 shares,  or 20.0% of our outstanding  shares
during 2003, 2004 and 2005. A/S Dampskibsselskabet TORM's  Underst0ttelsesfond's
shareholding in TORM is unchanged over the last three years.

     Beltest Shipping Company Ltd., Pacific  International  Investments Inc. and
Menfield Navigation Company Limited have given notices of their shareholdings to
the Copenhagen Stock Exchange.

B.   Related party transactions.

     Please refer to note 16 in the consolidated financial statements.

C.   Interests of experts and counsel.

     Not applicable.

ITEM 8. FINANCIAL INFORMATION.

A.   Consolidated Statements and Other Financial Information.

     See Item 17.

DIVIDEND DISTRIBUTION POLICY

     Under Danish law, we are permitted to distribute dividends from our surplus
capital.  Any decision to distribute  dividends will be at the discretion of the
Board of  Directors  and must be  approved  by the  shareholders  at our  annual
general meeting. Our shareholders approved a dividend of DKK 15 for every DKK 10
share at the annual general meeting in 2005.

     There are no  restrictions  in our existing  financing  arrangements on our
ability to pay dividends to our shareholders.

B.   Significant Changes.

     Not Applicable.

ITEM 9. THE OFFER AND LISTING.

A.   Listing Details.

     Our common shares  currently trade on the Copenhagen  Stock  Exchange.  The
tables  below sets forth,  for the periods  indicated,  the high and low closing
sale price in Danish Kroner and the average daily trading  volume for our shares
on the Copenhagen  Stock  Exchange.  Although we have provided the average daily
trading  volume of our shares for the periods  indicated,  the trading volume of
our shares on the  Copenhagen  Stock  Exchange is  extremely  volatile and daily
trading ranges from none to several thousand shares.

     The average  daily trading  volume may not be indicative of actual  trading
volumes  and  liquidity.  Please  also refer to "Risk  Factors - There may be no
active  public  market for you to resell our ADSs." For the  previous  five full
years:

<TABLE>
<CAPTION>
                         2000            2001            2002            2003              2004
                         (restated)(*)   (restated)(*)   (restated)(*)   (restated)(*)
<S>                    <C>             <C>             <C>             <C>               <C>
Low                     11.24           22.00           23.07           28.66             96.89

High                    30.14           31.25           30.21           91.44            249.11

Average Daily

Volume                 20,372          18,908          22,350          50,416            81,351
</TABLE>

(*): Adjusted for the issue of bonus shares in May 2004.

For the previous two full years and subsequent periods, by quarter:

<TABLE>
<CAPTION>
2003                      1st quarter          2nd quarter         3rd quarter        4th quarter
(restated)(*)
<S>                        <C>                  <C>                 <C>                <C>
Low                         28.66               32.97               42.60               64.33

High                        33.48               45.39               70.58               91.44

Average Daily
Volume                     42,804              85,686              40,460              35,512
<CAPTION>
2004                      1st quarter          2nd quarter         3rd quarter        4th quarter
                          -------              ------              ------             -------
<S>                       <C>                  <C>                 <C>                <C>
Low                         96.89              136.54              139.72              171.12

High                       198.99              175.74              172.76              249.11

Average Daily
Volume                    106,556              41,774              72,080             102,191
</TABLE>

(*): Adjusted for the issue of bonus shares in May 2004.

For the previous six months:

                November   December   January   February   March     April
                2004       2004       2005      2005       2005      2005
                -------    ------     ------    -------    -------   -------

Low              189.05    220.66     221.99     265.95     286.04    286.71

High             249.11    248.57     254.10     324.85     312.31    334.97

Average Daily
Volume          101,629    84,572     64,367    135,969    151,390   110,672

B.   Markets.

     Our common shares are currently  trading on the Copenhagen  Stock Exchange.
Our ADSs, each  representing one common share, are listed on the Nasdaq National
Market under the abbreviation "TRMD".

     In 2004,  the  average  daily  trading  volume  of our  ADSs on the  Nasdaq
National  Market was 14,839 ADSs  adjusted  for the issue of bonus shares in May
2004, and from January 1, 2005 through April 30, 2005, the average daily trading
volume was 30,034 ADSs.

ITEM 10. ADDITIONAL INFORMATION

     This section  summarizes  our share capital and the material  provisions of
our  Articles of  Association,  including  rights of holders of our shares.  The
description is only a summary and does not describe everything that our Articles
of Association contain. A copy of our Articles of Association was filed with the
Securities  and  Exchange  Commission  on June 28,  2002,  as Exhibit 1.1 to our
annual  report on Form 20-F for the year ended  December 31, 2001.  As a foreign
private  issuer,  we are not  subject to the proxy rules  applicable  to issuers
under  Section 14 of the Exchange  Act of 1934,  as amended,  and our  officers,
directors and principal  shareholders are not subject to the short-swing  profit
disclosure  and  recovery  provisions  of Section  16 of that act.  We intend to
provide  quarterly  reports for the first three  quarters of each fiscal year to
the  Securities  and  Exchange  Commission  on  Form  6-K  containing  unaudited
financial and other information that we file with the Copenhagen Stock Exchange.

A.   Share capital.

     Not Applicable.

B.   Memorandum and articles of association.

     Our Articles of Association provide that our principal objectives are:

o    to carry out  business  within  shipping,  chartering  and other  transport
     services;

o    to make investments, including in real estate; and

o    to carry on such other  business as determined by the Board of Directors to
     be consistent with such objectives.

     The Rules of  Procedure  that  govern  our Board of  Directors  prohibit  a
director  from   participating  in  the  consideration  of  business   regarding
agreements in which the director is a participant or in which the director has a
material interest.  Any agreements between us and a director or between us and a
third party in which a director has an interest must be approved by the Board of
Directors.  The Rules of Procedure  also provide that a director shall retire at
the first general meeting following the director's 70th birthday.

     Our Articles of Association also contain the following provisions:

o    our Board of Directors shall receive a fixed stipend, which shall be set by
     the Board of Directors and approved by the  shareholders  during the annual
     general meeting;

o    any dividend  payable to a shareholder  which remains  unclaimed after five
     years shall accrue to us;

o    each common share shall have the right to one vote;

o    directors are elected for four year terms, after which they are entitled to
     be re-elected;

o    there are no redemption rights; and

o    generally, proposals to amend our Articles of Association or to dissolve or
     merge with  another  company  require  the  approval of at least 2/3 of all
     votes cast at a meeting at which 3/5 of the  outstanding  share  capital is
     present,  unless the resolution was proposed by the Board of Directors,  in
     which  case a simple  majority  of the votes  cast at a meeting  at which a
     quorum consisting of 1/3 of the outstanding shares is present is required.

     With regard to general and special  meetings,  the Articles of  Association
provide that:

o    special meetings can be convened by the Board of Directors and the auditors
     at any time on at least  eight  days  notice  but  cannot be more than four
     weeks in advance;

o    holders of at least 10% of our share capital can request  special  meetings
     by submitting a written  request to the Board of Directors,  which then has
     14 days to convene a meeting;

o    shareholders  desiring  to  attend  the  general  meeting  must  obtain  an
     admission card from us at least four days prior to the meeting;

o    admission  cards  will be issued to  registered  holders,  and  holders  of
     unregistered  shares  who have  obtained  a deposit  receipt  issued by the
     depositary  bank (or Danish  Securities  Center) and a written  declaration
     that the shares will not be transferred until after the general meeting;

o    shares  acquired from another  shareholder  will not have any voting rights
     unless  the  shares  are  registered  or unless  the  holder  has filed and
     provided proof of ownership at least one day prior to the  announcement  of
     the general meeting; and

o    proposals  by  shareholders  must be  submitted  in writing to the Board of
     Directors  before  February  15th in order to be  considered  at the annual
     general meeting.

DANISH LAW CONSIDERATIONS

     Under  Danish law,  shareholders  are not  permitted  to approve  corporate
matters  by  written  consent  in lieu  of  general  or  special  meetings.  All
shareholders  have access to  corporate  records  filed by each company with the
Danish  Commerce and  Companies  Agency.  These  corporate  records  include the
articles  of  association  and the annual  accounts/financial  statements.  Each
company is also required to keep a share register,  but shareholders do not have
access to it.

     Danish law permits  companies to adopt  cumulative  voting  provisions  and
staggered  terms  for our  board  of  directors,  but we have not  adopted  such
provisions.  Danish law also  prohibits  companies  from adopting  "poison pill"
measures  that could  prevent a takeover  attempt  by  discriminating  against a
shareholder or a group of shareholders.

C.   Material contracts.

     The  following  is a summary of our  material  contracts.  This  summary is
qualified in its entirety by reference to the full text of the actual documents,
which govern the transactions we describe.

NEWBUILDING CONTRACTS

     We entered into five contracts with Dalian New Shipbuilding  Heavy Industry
Co.  Ltd.,  each for the  construction  of a 110,000 dwt product  tanker.  These
contracts were executed on June 20, 2003, October 22, 2003 and January 20, 2004,
respectively.  The contracts  provide for stage  payments of 10% upon signing of
the  contracts,  30% during  construction,  and 60% upon delivery of the vessel.
Delivery of the tankers is scheduled between April 2006 and January 2008.

LOAN AGREEMENTS AND CREDIT FACILITIES

     A/S D/S TORM entered into a USD 95 million loan  agreement with Nordea Bank
Danmark A/S on January 15, 2004 to assist in the financing of the 5 newbuildings
mentioned  above.  The  interest  rate is a variable  rate based upon LIBOR.  As
security  for our  obligations  under the debt  instrument,  we have  granted to
Nordea  Bank a first  priority  mortgage,  registered  over  and  against  the 5
vessels. The loan is due to be repaid in 2014.

     A/S D/S TORM also entered into a USD 570 million  revolving credit facility
with Danske Bank A/S and Danish Ship  Finance on December  10, 2004 to assist in
the  financing of 20 vessels in the TORM fleet.  The interest rate is a variable
rate  based  upon  LIBOR.  As  security  for  our  obligations  under  the  debt
instrument,  we have  granted  to Danske  Bank and Danish  Ship  Finance a first
priority mortgage,  registered over and against the 20 vessels.  The loan is due
to be repaid in 2014.

D.   Exchange controls.

     None.

E.   Taxation.

     The  following  discussion  is a summary  of the  material  Danish and U.S.
federal income tax considerations  relevant to an investment  decision by a U.S.
Holder and a Non-U.S.  Holder,  as defined  below,  in our  American  Depositary
Shares,  or ADSs, as evidenced by American  Depositary  Receipts,  or ADRs. This
discussion does not purport to deal with the tax  consequences of owning ADSs to
all  categories of investors,  some of which,  such as dealers in securities and
investors whose functional  currency is not the U.S.  dollar,  may be subject to
special rules.  You should consult your own tax advisors  concerning the overall
tax consequences  arising in your own particular  situation under U.S.  federal,
state, local or foreign law of the ownership of ADSs.

DANISH TAX CONSIDERATIONS

     Under Danish law, dividends paid in respect of shares are subject to Danish
withholding  tax at the rate of 28%,  without  regard  to the  residency  of the
shareholders.  Non-residents  of  Denmark do not have to pay  additional  Danish
income tax on the dividends,  unless their shares are held in connection  with a
trade or business conducted from a permanent establishment in Denmark.

     Non-resident  shareholders  may be  eligible  for a  refund  of part of the
withholding  tax where  the  shareholders  are  entitled  to,  and  comply  with
procedures  for  claiming  benefits  under an income  tax  convention.  Eligible
shareholders who comply with certain certification procedures may claim a refund
from the Danish tax authorities, which will reduce the effective withholding tax
rate,  normally to 15%. The claim for a refund must be certified by the holder's
local tax authorities on forms prepared by the Danish tax authorities, which are
then submitted to the Danish tax authorities.

     No withholding tax is levied on dividends paid to a corporation which holds
at least 20% of a company's  shares,  provided that the shareholder  company (i)
has held those  shares  for a minimum  of one year  during the time in which the
dividends were paid and (ii) is a resident in another  European Union country or
in a country  with  which  Denmark  has  entered  into a taxation  treaty  which
eliminates or reduces the withholding tax on dividends.

     Under the  current  income tax  convention  between  Denmark and the United
States, dividends on shares  beneficially-owned by U.S. holders who are eligible
for treaty  benefits are subject to an effective  Danish  withholding tax at the
rate of 15%. The withholding  tax rate is reduced to 5% if the beneficial  owner
of the  dividends is a U.S.  company,  which holds  directly at least 10% of the
share capital of the company paying the dividends.

     Denmark has entered into tax  conventions  reducing the  withholding tax to
the applicable  convention  rate for individual  residents of the United States,
Canada, Germany,  Belgium,  Luxembourg,  Norway, Sweden,  Ireland,  Switzerland,
Greece and the United  Kingdom.  The regime does not  entitle the  investor to a
lower  withholding  tax rate than the rate  applicable  according  to the double
taxation  treaty,  but reduces the  withholding tax rate from the normal rate of
28% to the  withholding  tax rate that applies  according to the relevant double
taxation treaty.

     In order to receive  benefits  under the regime  mentioned in the preceding
paragraph,  a U.S.  investor  must  deposit  his shares with a Danish  bank.  An
agreement  on the  deposit  of  shares  must be made  with  the  Danish  bank in
question.

     Further, the U.S. investor must obtain a certificate of residential address
and tax  liability  from the tax  authorities  in the U.S.  and file it with the
Danish account holding bank through which the U.S. investor holds his shares.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     In the opinion of Seward & Kissel LLP, our U.S. counsel,  the following are
the material U.S.  federal income tax consequences to us and to U.S. Holders and
Non-U.S. Holders, as defined below, regarding our ADSs. The following discussion
of U.S.  federal  income tax matters is based on the  Internal  Revenue  Code of
1986,  as  amended,  which  we  refer  to as  the  "Code",  judicial  decisions,
administrative  pronouncements,  and existing and proposed regulations issued by
the U.S.  Department of the  Treasury,  all as they exist on the date hereof and
all of which are  subject  to  change,  possibly  with  retroactive  effect.  In
addition,  the discussion is based,  in part, on the description of our business
as described above and assumes that we conduct our business as described in that
section.

     References in the following  discussion to "we",  "us" and "our" are to A/S
Dampskibsselskabet  Torm ("TORM") and its subsidiaries on a consolidated  basis.
For purposes of the discussion  below, the U.S. Holders and Non-U.S.  Holders of
ADSs  generally  will be  treated  as the  owners  of the  common  stock of TORM
represented by the ADSs. In the following discussion, the United States Internal
Revenue Service is referred to as the "IRS".

United States Taxation Of Our Company

     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 cargoes,
hire or lease income from voyage,  time or bareboat charters and the performance
of services  directly related thereto,  which we refer to as "shipping  income".
Unless exempt from U.S.  taxation under Section 883 of the Code or under Article
8 of the United  States-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 United States.

     Shipping income that is attributable to transportation that begins or ends,
but that does not both begin and end, in the United  States  will be  considered
for such tax purposes to be 50% derived from sources  within the United  States.
Shipping income  attributable to transportation that both begins and ends in the
United  States will be  considered  to be 100% derived  from sources  within the
United States. We do not engage in  transportation  that gives rise to 100% U.S.
source income.

     Shipping income attributable to transportation exclusively between non-U.S.
ports will be  considered  to be 100% derived  from  sources  outside the United
States.  Shipping income derived from sources outside the United States will not
be subject to any U.S. federal income tax.

Code Section 883 Exemption

     TORM and each  subsidiary  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:

o    TORM and each subsidiary is organized in a qualified  foreign country which
     is one  that  grants  an  equivalent  exemption  from  tax to  corporations
     organized in the United States 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

o    more  than 50% of the  value of the  stock of TORM and each  subsidiary  is
     treated  as  owned,   directly  or  indirectly,   by  individuals  who  are
     "residents"  of  qualified  foreign  countries,  which  we  refer to as the
     "ownership requirement".

     Since the U.S. Treasury Department has recognized  Denmark,  the country of
incorporation  of TORM,  and each of the  countries of  incorporation  of TORM's
subsidiaries  as a qualified  foreign  country in respect of the shipping income
for which exemption is being claimed under Section 883, TORM and each subsidiary
satisfy the country of organization requirement.

     In respect of the  ownership  requirement,  Section 883  provides a special
publicly-traded  rule applicable to both TORM and its subsidiaries.  In the case
of TORM, it will be exempted from having to satisfy the ownership requirement if
its stock is considered to be "primarily and regularly  traded on an established
securities market" located in its country of organization,  Denmark,  in another
qualified  foreign  country  or in the United  States,  which we refer to as the
"publicly-traded test". Furthermore, if TORM satisfies the publicly-traded test,
the  stock of  TORM's  subsidiaries  will be  deemed  to be owned by  individual
residents of Denmark and each of the  subsidiaries  will  satisfy the  ownership
requirement.

     Final  regulations  interpreting  Section 883 were  promulgated by the U.S.
Treasury  Department  in  August  of  2003,  which  we  refer  to as the  "final
regulations."

     Under the American Jobs Creation Act of 2004, the final  regulations  apply
to taxable years  beginning on or after  September  24, 2004. As a result,  such
regulations  will only be effective for calendar year  taxpayers  like ourselves
for the calendar year 2005.

     The final regulations  provide,  in pertinent part, that stock of a foreign
corporation  will be  considered  to be  "primarily  traded"  on an  established
securities  market if the number of shares  that are traded  during any  taxable
year on that market  exceeds the number of shares traded during that year on any
other established securities market.

     At present,  the sole class of TORM's stock that is issued and  outstanding
is its  common  stock,  which is listed on the  Copenhagen  Stock  Exchange,  an
established securities market in Denmark.  TORM's common stock as represented by
its ADSs (each  representing  one share of common  stock) is also  listed on the
NASDAQ National Market (NASDAQ),  which is an established  securities  market in
the United  States.  However,  since TORM's common stock as  represented by ADSs
began  trading  on the  NASDAQ on April  17,  2002,  the  trading  activity  has
represented  less than 10% of the common shares traded on the  Copenhagen  Stock
Exchange.  For the  foreseeable  future,  TORM has no reason to expect that more
common shares will not continue to be traded on the  Copenhagen  Stock  Exchange
than on the NASDAQ and  therefore,  the analysis  below  proceeds on the premise
that its common shares are "primarily traded" on the Copenhagen Stock Exchange.

     Under the final regulations, TORM's common stock further provide that stock
will be considered to be "regularly traded" on an established  securities market
if (i) more than 50% of the common  stock is listed on such market and is traded
on such market, other than in de minimis quantities,  on at least 60 days during
the taxable year and (ii) the aggregate number of shares of such stock traded on
such  market is at least  10% of the  average  number  of  shares of such  stock
outstanding during such year.

     For 2004,  TORM's common stock  satisfied these  "regularly-traded"  tests.
Furthermore, TORM has no reason to believe that this will not continue to be the
case notwithstanding the ADS listing on the NASDAQ.

     Notwithstanding the foregoing,  the final regulations provide, in pertinent
part, that TORM's common stock will not be considered to be regularly  traded on
an  established  securities  market for any taxable year in which 50% or more of
the  outstanding  shares of such  stock are  owned,  within  the  meaning of the
regulations,  on more than half the days during such taxable year by persons who
each own 5% or more of the value of the outstanding  shares of such stock, which
we refer to as the "5% override rule".

     In the event the 5% override rule is triggered based on its "more than half
the days" standard, the final regulations provide that the 5% override rule will
not apply for such year if we can establish that among the closely-held group of
5%  shareholders,  which we refer to as the "5% closely-held  group",  there are
sufficient 5% shareholders that are considered to be qualified  shareholders for
purposes of Section  883 to preclude  non-qualified  5%  shareholders  in the 5%
closely-held  group from  owning 50% or more of our stock for more than half the
number of days during such year, which we refer to as the "5% closely-held group
exception".

     Based on its  shareholdings  during  2004,  TORM would be subject to the 5%
override  rule of the final  regulations  and TORM's  ability to satisfy  the 5%
closely-held group exception could prove to be problematic.  If TORM were denied
the benefit of the special  publicly  traded rule,  we believe that TORM and its
subsidiaries may not be able to satisfy the ownership  requirement in accordance
with the final regulations.

     Since the final  regulations  were not  effective  until the calendar  year
2005,  however,  we  intend  to  take  the  position  that  TORM  satisfied  the
publicly-traded  test for taxable years prior to calendar year 2005 and as such,
we and our subsidiaries  were entitled to exemption from U.S. federal income tax
under Section 883 in respect of our U.S. source shipping income for such taxable
years. For the 2005 taxable year and taxable years thereafter, we do not believe
we are entitled to exemption  from U.S.  federal income tax under Section 883 in
respect of our U.S. source shipping income.

The United States-Denmark Income Tax Treaty Exemption

     Without  regard  to  Section  883,  we  believe  that  TORM and each of its
subsidiaries  would qualify for  exemption  from U.S.  federal  income tax under
Article 8 of the United  States-Denmark  Income Tax Treaty, which we refer to as
the "Treaty".

     Article 8 exempts from U.S. federal income tax the profits of TORM and each
of its Danish subsidiaries and each of its non-Danish subsidiaries, all of which
are  treated  as  "residents"  of  Denmark  within  the  meaning  of the  Treaty
(collectively,  "Danish  subsidiaries")  derived from the  operation of ships in
international traffic. As defined, profits from the "operation of ships" include
profits derived from (i) time or voyage  charters,  (ii) the inland transport of
property within the United States  undertaken as part of international  traffic,
(iii)  bareboat  charters  if the lessee  operates  the vessel in  international
traffic  and  (iv)  the  use,  maintenance  or  rental  of  containers  used  in
international  traffic.  All of the U.S.  source shipping income of TORM and its
Danish  subsidiaries falls within the scope of the exemption provided by Article
8.

     The Treaty  conditions the eligibility of TORM and its Danish  subsidiaries
to claim exemption under Article 8 upon, among other things, TORM satisfying the
publicly-traded   rule  of  the  "treaty  shopping"  provisions  of  Article  22
(Limitation Of Benefits) of the Treaty.

     The  publicly-traded  rule provides that a Danish corporation such as TORM,
as well as its Danish  subsidiaries,  will be  entitled  to the  benefits of the
Treaty if all of TORM's  shares in the class or  classes  of stock  representing
more than 50 percent  of the vote and value of its  stock,  which we refer to as
the "50% vote/value  test", are listed on a "recognized  stock exchange" and are
"substantially  and regularly traded" on one or more recognized stock exchanges,
which we refer to as the  "substantially  and regularly  traded test".  The term
"recognized  stock  exchange"  includes the  Copenhagen  Stock  Exchange and the
NASDAQ.  The shares in a class of stock are considered to be "substantially  and
regularly  traded"  if (i)  trades  in such  class are  effected  on one or more
recognized  stock  exchanges  other than in de minimis  quantities  during every
quarter, and (ii) the aggregate number of shares of that class traded during the
previous  taxable  year is at least six (6)  percent  of the  average  number of
shares outstanding in that class during that taxable year.

     TORM's  common stock is currently  listed on a  recognized  stock  exchange
within the  meaning of the Treaty (the  Copenhagen  Stock  Exchange).  Since the
common  stock  is  TORM's  sole  class  of  stock,  the 50%  vote/value  test is
satisfied.  Based  on their  recent  trading  history  on the  Copenhagen  Stock
Exchange  over the past two years,  the common  shares of TORM also  satisfy the
substantially  and  regularly  traded  test of the  Treaty  and  therefore  TORM
currently  satisfies  the  publicly  traded  rule of Article  22 of the  Treaty.
Although  we cannot  give any  assurances,  we have every  expectation  that the
trading  volume and trading  frequency of TORM's common shares on the Copenhagen
Stock  Exchange will continue to match or exceed the recent  trading  history of
TORM's common shares on the Copenhagen Stock Exchange.

Taxation in Absence of Internal Revenue Code Section 883 Exemption or Treaty
Exemption

     4% Gross Basis Tax Regime. To the extent the benefits of Section 883 or the
Treaty  are  unavailable,  the  U.S.  source  shipping  income  of TORM  and its
subsidiaries  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%
tax  imposed by Section  887 of the Code on a gross  basis,  without  benefit of
deductions.  Since 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 would never
exceed 2% under the 4% gross basis tax regime.

     Net Basis and Branch Tax Regime.  To the extent the benefits of the Section
883 exemption or the Treaty are  unavailable and the U.S. source shipping income
of TORM and its  subsidiaries 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 corporate income tax currently
imposed at graduated rates of up to 35%. In addition,  TORM and its subsidiaries
may be subject to the 30%  "branch-level"  taxes (or such lesser tax as provided
by an applicable income tax treaty) on earnings  effectively  connected with the
conduct of such trade or business,  as  determined  after  allowance for certain
adjustments,  and on certain  interest paid or deemed paid  attributable  to the
conduct of their U.S. trade or business.

     The  U.S.  source  shipping  income  of  TORM  or any  subsidiary  will  be
considered  "effectively connected" with the conduct of a U.S. trade or business
only if:

o    TORM or such  subsidiary  has, or is  considered  to have, a fixed place of
     business in the United States  involved in the earning of shipping  income;
     and

o    substantially  all of the  U.S.  source  shipping  income  of  TORM or such
     subsidiary 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 United States.

     We do not intend to have,  or permit  circumstances  that  would  result in
having,  substantially  all of the U.S.  source  shipping  income of TORM or its
subsidiaries  attributable to regularly scheduled  transportation.  Based on the
foregoing and on the expected mode of our shipping  operations,  we believe that
none of the  U.S.  source  shipping  income  of TORM or any  subsidiary  will be
"effectively connected" with the conduct of a U.S. trade or business.

     Gain on Sale of Vessels.  To the extent any of our vessels  makes more than
an occasional  voyage to U.S. ports,  TORM or its subsidiaries may be considered
for United States  federal income tax purposes to be engaged in the conduct of a
United States trade or business.  As a result,  except to the extent the gain on
the  sale of a  vessel  is  incidental  to the  Shipping  Income  of TORM or its
subsidiaries  that is exempt  under either  Section 883 or the Treaty,  any U.S.
source gain derived by TORM or its  subsidiaries  on the sale of a vessel may be
partly or wholly  subject to United States  federal  income tax as  "effectively
connected" income  (determined under rules different from those discussed above)
under the net basis and branch tax regime described above. However, we intend to
structure  sales of our vessels in such a manner,  including  effecting the sale
and  delivery of vessels  outside of the United  States,  as to not give rise to
U.S. source gain.

Taxation of U.S. Holders

     As used herein,  the term "U.S.  Holder" means a beneficial owner of an ADS
that (i) is a U.S.  citizen or resident,  a United States  corporation  or other
United States entity taxable as a corporation, an estate, the income of which is
subject to United States federal income taxation  regardless of its source, or a
trust  if a  court  within  the  United  States  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 and (ii)
owns the ADSs as a capital asset, generally, for investment purposes.

     If a  partnership  holds  our ADSs,  the 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 ADSs, you should
consult your own tax advisor on this issue.

     Distributions.  Any  distributions  made by the ADS  depositary  agent,  or
depositary,  with respect to our ADSs 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 ADSs to a  non-corporate  U.S. Holder (a
"U.S.  Individual  Holder") may be eligible for preferential U.S. federal income
tax  rates  (through  2008)  provided  that  (1)  we  are a  "qualified  foreign
corporation",  (2) the U.S.  Individual Holder has owned our stock for more than
60 days in the  121-day  period  beginning  60 days before the date on which our
stock  becomes  ex-dividend  and (3) we are  not a  passive  foreign  investment
company  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).  The
preferential  tax rates do not apply to U.S.  Holders that are not  individuals,
trusts or estates.

     We will be treated as a "qualified  foreign  corporation" if either (1) our
ADSs are readily  tradable  on an  established  securities  market in the United
States  or (2) we are  eligible  for  the  benefits  of a  satisfactory  (in the
judgment of the U.S. Treasury Secretary) comprehensive income tax treaty between
the  United  States  and  a  foreign  country  which  includes  an  exchange  of
information program.

     Our ADSs will  qualify as readily  tradable  or an  established  securities
market  because they are listed on the NASDAQ  national  market,  which has been
designated by the IRS as so qualifying.  Alternatively,  as discussed  above, we
are eligible for the benefits of the Treaty and the IRS has issued guidance that
the Treaty is  satisfactory  for this  purpose.  Therefore,  we believe that any
dividends paid by us on our ADSs should be eligible for these preferential rates
in the hands of a U.S. Individual Holder. However, certain limitations may apply
to any "extraordinary  dividends" paid by us. 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 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 his ADSs on a dollar-for-dollar basis and thereafter as capital gain. Because
we are not a U.S.  corporation,  U.S. Holders that are corporations  will not be
entitled  to  claim  a  dividend   received   deduction   with  respect  to  any
distributions  they  receive  from  us.  Dividends  paid  with  respect  to  the
underlying  common  stock of each ADS will  generally  be  treated  as  "passive
income" (or "passive category income" for taxable years beginning after December
31, 2006) or, in the case of certain types of U.S. Holders,  "financial services
income",  (which will be treated as "general  category income" for taxable years
beginning after December 31, 2006) for purposes of computing  allowable  foreign
tax credits for U.S. foreign tax credit purposes.

     Sale,  Exchange or other  Disposition of ADSs. A U.S. Holder generally will
recognize taxable gain or loss upon a sale, exchange or other disposition of our
ADSs 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 ADSs.  Such gain or loss will be treated as long-term
capital gain or loss if the U.S.  Holder's holding period in the ADSs 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.

U.S. Taxation of "Non-U.S. Holders"

     A  beneficial  owner of an ADS that is not a U.S.  Holder  is  referred  to
herein as a "Non-U.S. Holder."

     Distributions.  Non-U.S.  Holders  generally  will not be  subject  to U.S.
federal income tax or withholding tax on dividends received from us with respect
to our common stock,  unless the dividends are  effectively  connected  with the
Non-U.S. Holder's conduct of a trade or business in the United States or, if the
Non-U.S. Holder is entitled to the benefits of an 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 United States.

     Sale,  Exchange or Other  Disposition of ADSs.  Non-U.S.  Holders generally
will 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 ADSs unless:  (i)
the gain is effectively connected with the Non-U.S.  Holder's conduct of a trade
or business in the United  States or, if the Non-U.S.  Holder is entitled to the
benefits  of an 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 United States;  or (ii) the Non-U.S.  Holder is an individual who is present
in the United States 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 ADSs,  including  dividends on
the  underlying  common  stock  and the gain from the  sale,  exchange  or other
disposition of such stock that is effectively connected with the conduct of that
trade or business,  will generally be subject to regular U.S. federal income tax
in the same manner as discussed in the previous section relating to the taxation
of U.S.  Holders.  In addition,  if you are a corporate  Non-U.S.  Holder,  your
earnings and profits that are attributable to the effectively  connected income,
which are subject to certain adjustments, may be subject to an additional branch
profits  tax at a rate of 30%,  or at a lower rate  specified  by an  applicable
income tax treaty.

Backup Withholding and Information Reporting

     In general, dividend payments, or other taxable distributions,  made within
the United States to you will be subject to information  reporting  requirements
and "backup withholding" if you are a non-corporate U.S. Holder and you:

o    fail to provide an accurate taxpayer identification number;

o    are  notified  by the IRS that you have  failed to report all  interest  or
     dividends required to be shown on your federal income tax returns; or

o    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 IRS
Form W-8BEN, W-8ECI or W-8IMY, as applicable.

     If you sell your ADSs to or through a U.S. office or 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 ADSs through
a non-U.S.  office of a non-U.S.  broker and the sales  proceeds are paid to you
outside the United  States then  information  reporting  and backup  withholding
generally will 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 United States, if you sell
your ADSs  through a non-U.S.  office of a broker  that is a U.S.  person or has
some other contacts with the United States.

     Backup  withholding  is not an additional  tax.  Rather,  you generally may
obtain a refund of any amounts  withheld  under  backup  withholding  rules that
exceed your income tax liability by filing a refund claim with the IRS.

Danish Tonnage Taxation Scheme

     On  February  6, 2002,  the  Danish  Government  proposed a bill  regarding
Tonnage  Taxation,  which was enacted on April 18,  2002.  According  to the new
Tonnage  Taxation  Act,  taxable  income  will no  longer be  calculated  as the
difference  between  taxable income and deductible  expenses as under the normal
corporate taxation.  Instead, taxable income is calculated with reference to the
tonnage used by the Company during the year.  The  legislation  was  implemented
retroactively  from January 1, 2001 and in connection with the submission of tax
return for 2001 the Company  decided to enter the tonnage  taxation  scheme with
effect from January 1, 2001.

     The election is binding for a ten-year period and, accordingly,  we will be
covered by the tonnage tax system until 2010.

     Taxable income under the tonnage tax system is calculated using fixed rates
per 100 net  tons  per day for the  vessels.  When  calculating  taxable  income
according to the tonnage tax system,  no deductions or depreciation  charges are
allowed.

     It is as yet  uncertain  whether  activities  in relation to  management of
pools of  vessels  owned by other  shipping  companies  can or  cannot  be taxed
according to the tonnage tax system,  but will be taxed in  accordance  with the
ordinary Danish  corporate tax  legislation.  Special rules apply in relation to
the treatment of financial income/expenses.

     The taxable  income for a Company for a given period is  calculated  as the
sum of the taxable  income  under the tonnage tax system and the taxable  income
made up in accordance  with to the ordinary  Danish  corporate  tax system.  The
taxable income is taxed at the normal  corporate tax rate  (presently  30%). The
taxable income may be offset by tax losses carried forward  following the normal
Danish Tax rules.

     Capital gains in connection  with the sale of vessels - calculated for each
vessel as the difference  between the sales price and the acquisition price plus
expenses  incurred for  improvement of the vessel - are taxed in accordance with
the normal tax legislation.

     Generally,  recaptured  depreciation should be taken into income.  However,
such taxation may be deferred if new vessels are contracted  within certain time
limits.

     In this respect,  when  converting to the tonnage tax system,  the existing
vessels are  transferred to a transition  account at their tax value.  Any costs
relating to  improvements  of these vessels are added to this  account.  Vessels
acquired  after  transferring  (January  1, 2001) to the  tonnage tax system are
booked on a special  netting  account.  Costs  relating to  improvement of these
vessels  are added to the  netting  account.  If a vessel is sold,  the  smaller
amount of the sales price and the actual  acquisition  price plus  expenses  for
improvements  shall reduce the  transition  account (if the ships were  acquired
prior to entering the tonnage tax system) or netting  account (if the ships were
acquired after entering the tonnage tax system).

     The transition and netting  accounts are reduced annually by a depreciation
rate of 12%.  If the  transition  account is  negative  and at the same time the
netting  account  is  positive,  the  reduction  is made on the basis of the net
amount.

     If the shipping company's transition account becomes negative, the negative
amount shall be included in the taxable  income  unless the  negative  amount is
fully or partially  neutralized by a positive amount on the netting account plus
contracted newbuild tonnage which shall be delivered within maximum three years.

     In accordance with Danish accounting principles, the provision for deferred
tax that existed at the date of enactment, DKK 360 million, has been released to
income in 2002,  which is in  accordance  with  shipping  industry  practice  in
Denmark.  The Company has paid no tonnage tax in 2001,  2002 and 2003 due to tax
losses carried forward.

     The tonnage tax  legislation is new, and the guidance from the  authorities
is not detailed in every aspect. Accordingly, in connection with the preparation
of our tax returns for 2001, 2002 and 2003, we made  interpretations  of the new
tonnage  tax  legislation  some  of  which  have  been  challenged  by  the  tax
authorities.  We  agree  in  part to  some  of the  alternative  interpretations
presented  by the tax  authorities  whereas  we do not  agree  to  other  of the
alternative   interpretations   presented.  The  differences  in  interpretation
primarily  relate to whether  certain income and expense items are taxable under
the tonnage  taxation scheme or the ordinary Danish  corporate tax  legislation.
The  correspondence  with the tax  authorities  regarding  these issues is still
ongoing.

F.   Dividends and paying agents.

     Not Applicable.

G.   Statement by experts.

     Not Applicable.

H.   Documents on display.

     We are subject to the informational requirements of the Securities Exchange
Act of 1934,  as amended.  In  accordance  with these  requirements  we file and
submit  reports  and  other   information   with  the  Securities  and  Exchange
Commission.  These materials,  including this annual report and the accompanying
exhibits,  may be  inspected  and  copied  at the  public  reference  facilities
maintained by the Securities and Exchange Commission at 450 Fifth Street,  N.W.,
Room 1024,  Washington,  D.C. 20549. You may obtain information on the operation
of the public  reference  room by calling 1 (800)  SEC-0330,  and you may obtain
copies at prescribed rates from the Public  Reference  Section of the Securities
and Exchange  Commission at its principal office in Washington,  D.C. 20549. The
Securities and Exchange Commission maintains a website (http://www.sec.gov) that
contains reports, proxy and information statements and other information that we
and other registrants have filed electronically with the Securities and Exchange
Commission.  In  addition,  documents  referred to in this annual  report may be
inspected at our headquarters at 18 Tuborg Havnevej, DK-2900 Hellerup, Denmark.

I.   Subsidiary Information.

     Not Applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from foreign currency  fluctuations,  changes
in interest rates and changes in the prices of fuel oil. We enter into financial
instruments  to manage these risks,  but do not use  financial  instruments  for
trading or  speculative  purposes.  The  sensitivity  analyses  presented do not
consider  the  effects  that such  adverse  change may have on overall  economic
activity,  nor do  they  consider  additional  actions  management  may  take to
mitigate  its  exposure to such  changes.  Actual  results  may  differ.  For an
overview of the fair value of the derivative financial  instruments please refer
to note 15.

Foreign Exchange Rate Risk

     Our  operations  are  primarily  denominated  in  U.S.  dollars  while  our
reporting currency is the Danish Kroner.  Virtually all of our revenues and most
of our operating  costs are  denominated  in U.S.  dollars.  A  hypothetical  1%
weakening of the U.S.  dollar would have  resulted in a decrease in Gross Profit
(Net  earnings from  shipping  activities)  of DKK 15 million for the year ended
December 31, 2004 as compared to DKK 8 million as of December 31, 2003.  We have
DKK 2,333 million of  outstanding  indebtedness  as of December 31, 2004 that is
repayable  in U.S.  dollars as compared to DKK 2,346  million as of December 31,
2003. A hypothetical 1% uniform weakening of the U.S. dollar would have resulted
in a reporting currency  translation  adjustment of DKK 16 million recorded as a
reduction in  shareholders'  equity as compared to DKK 23 million as of December
31,  2003.  Such a change in  exchange  rates would not have  impacted  our cash
flows.  We maintain the necessary U.S.  dollar balances to repay our outstanding
U.S. dollar obligations and these borrowings are directly related to U.S. dollar
based assets.

     In order to manage  this  risk,  we enter  into  forward  contracts,  cross
currency contracts and currency options.

Cross currency contracts

     As of December 31, 2004, we had the following  cross  currency  contract in
place:

Nominal Value at the date of                Date of Maturity    Fair Value
entering into the Contract

USD            DKK

5 million      37.0 million                 January 2005        DKK 10.0 million

     As of December 31, 2003,  the fair value of our currency  contracts was DKK
34.9 million.

Forward Currency Contracts

     In 2004 we entered into forward  contracts  agreeing to sell a total of USD
38 million  against DKK at an average  exchange rate of DKK 6.02 for the purpose
of servicing  our Danish cash flow  requirements.  As of December 31, 2004,  the
fair value of our forward currency contracts was DKK 20.7 million as compared to
DKK 2.0 million as of December 31, 2003. The contracts  expire  between  January
and April of 2005 with the majority at the end of the period.

Currency Options

     We have  entered into an agreement to buy put options for USD 35 million in
April 2005. The counterparty must buy USD from us at exchange rates between 5.85
and 6.06 to the DKK. In case the USD/DKK  exchange rate exceeds  various  agreed
levels  between  6.10 and 6.50,  the  counterparty  can  purchase USD from us at
exchange  rates  between DKK 5.85 and 6.06 per USD.  The average  rate for these
transactions is DKK 6.03 for the put options.

     As of December  31, 2004,  the fair value of our  currency  options was DKK
19.8 million as compared to DKK -1.5 million as of December 31, 2003.

Interest Rate Risk

     As of December  31, 2004,  all of our debts have  variable  interest  rates
based on LIBOR plus a margin.

     In certain  cases,  we utilize  derivative  financial  instruments to avoid
interest rate  fluctuations  on earnings and cash resources.  Typically,  we use
interest rate swaps for periods up to 5 years. The  instrument's  profile always
matches the loan profile of the particular loan in question. The differential to
be paid or  received  under the swap  agreements  is accrued as  interest  rates
change and is recognized as an adjustment to interest expense.

     As of December 31,  2004,  we were  committed to a series of interest  rate
swap  agreements  whereby 27% of our total  floating  rate debt was swapped with
fixed rate obligations  having an average remaining term of 2.9 years,  expiring
between 2006 and 2008. These  arrangements  effectively change our interest rate
exposure on the hedged debt from a floating  LIBOR rate to an average fixed rate
of 3.3%. An additional 32% of our floating rate debt was swapped with fixed rate
obligations  using interest swaps containing an option element having an average
remaining term of 3.1 years and expiring between 2007 and 2009. An interest rate
swap containing an option element is an agreement where the seller has an option
to ask the buyer to pay actual  LIBOR rate if this is above a certain  threshold
on the fixing day. On three of our  interest  rate swaps with an option  element
this  threshold is 7%. Below this level,  the swaps act as normal  interest rate
swaps and thereby  change our interest  rate  exposure on the hedged debt from a
floating  LIBOR rate to an average fixed rate of 3.6%. If market  interest rates
were to decrease  approximately 1% the interest rate swap agreements in place at
the end of the year would  require us to pay DKK 12.6  million  of  interest  in
excess of market rates.  The fair value of these interest rate swaps at December
31, 2004 was DKK 1.3  million as  compared to (DKK 31.4  million) as of December
31, 2003.

     A 1% increase in interest  rates on the remaining  variable rate debt would
result in DKK 6.6  million of  additional  interest  expense  for the year ended
December  31, 2004 as compared to DKK 7.1 million as of December  31,  2003.  We
assess each debt instrument, the level of debt to fix and the timing of entering
into such agreements based on the market conditions.

     Additionally, as of December 31, 2004, we have investments in certain fixed
interest rate bonds with a carrying amount of DKK 317 million as compared to DKK
316 million as of December 31, 2003. The fair values of these  investments could
be negatively  impacted by increases in interest rates. If the average  interest
rate for 2005 is 1  percentage  point  greater  than the rate as of December 31,
2004, the fair values of these  investments would decrease by DKK 8.6 million as
compared to DKK 9.5 million as of December 31, 2003.

Bunker Price Risk

     Our results of operations could be negatively  impacted by increases in the
price of fuel  oil.  To cover  this  risk,  we  hedge  the  price of part of its
bunkers' requirements for up to 12 months forward at a fixed price. In 2004, the
Company hedged twenty two per cent of its bunker  requirements,  and at year end
it had hedged about fifteen per cent of the 2005  requirement.  The market value
of these  contracts  was DKK  (4.3)  million  at year end as  compared  to DKK 0
million in 2003. A  hypothetical  change of 1 percentage  point in the price per
ton of  bunker  oil  would  result  in a change in cost in 2005 of DKK 2 million
based on the  expected  consumption  of  bunkers,  where  the  Company,  not the
charterer, takes the risk.

     In light of the Company's pool structure, bunker hedging for tankers is not
done in respect of an individual vessel when it has been chartered out. Instead,
bunker hedging is planned in connection with the specific pool's total estimated
bunker  requirements.  Nonetheless,  where a contract of affreightment  covering
several  voyages  has  been  fixed,  the  pool  may  hedge  bunker  requirements
specifically for such a contract.

     For the  bulk  carriers,  bunkers  are  similarly  hedged  to  match  cargo
contractual  obligations but the  requirements  are generally less, given that a
larger part of earnings are derived from vessels  chartered out on time charter,
where the charterer is responsible for the payment of bunkers.

     All bunker  hedgings  and indeed any other form of hedging  are carried out
only  based on  specific  requirements  and not for the  purpose  of any form of
speculation.

Freight Rate Risk

     The  majority of our tanker  vessels are  operated on spot voyage  charters
through our pools. To hedge our exposure to fluctuations in the freight rates we
may place certain of the pool's  vessels on time charter or enter into Contracts
of Affreightment (COA) or freight derivatives (FFA,  synthetic T/C, profit split
etc.). Our bulk vessels are primarily placed on time charters.

     The COA's would meet the  definition of a derivative  financial  instrument
according  to SFAS 133,  but  since we in nearly  all  instances  take  physical
delivery,  our COA's qualify for the normal sales and purchase exemption and are
therefore not accounted for as  derivative  financial  instruments.  The freight
derivatives are purely paper deals that require no physical delivery of either a
vessel or a cargo and as such are treated as a derivative financial instrument.

     As of December 31, 2004,  the fair values of the freight  derivatives  were
DKK -24.2 million as compared to DKK 1.3 million as of December 31, 2003.

                                     Part II

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not Applicable.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Neither  we nor any of our  subsidiaries  have been  subject  to a material
default in the payment of principal,  interest,  a sinking fund or purchase fund
installment or any other material  default that was not cured within 30 days. In
addition,  the payment of our dividends are not, and have not been in arrears or
have not been  subject to a material  delinquency  that was not cured  within 30
days.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS.

     None.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

     On the date of this report,  the Company  carried out an evaluation,  under
the  supervision  and  with  the  participation  of  the  Company's  management,
including the Company's Chief Executive Officer and Chief Financial Officer,  of
the  effectiveness  of the  design and  operation  of the  Company's  disclosure
controls and procedures  pursuant to Rule 13a-14 of the Securities  Exchange Act
of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and
Chief Financial  Officer  concluded that the Company's  disclosure  controls and
procedures  are  effective  in  alerting  them  timely to  material  information
relating to the  Company  required  to be  included  in the  Company's  periodic
Securities and Exchange Commission filings.

Changes in internal controls.

     There have been no significant changes in our internal controls or in other
factors that could have significantly  affected those controls subsequent to the
date of the Company's most recent evaluation of internal controls, including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     The Company will be required to  establish  an audit  committee by July 31,
2005. At that time the Company will make the determination  whether to include a
financial expert on that committee.

ITEM 16B. CODE OF ETHICS

     The Company does not presently have a code of ethics.

ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES

     Deloitte Statsautoriseret Revisionsaktieselskab, Copenhagen, Denmark is the
independent  accounting firm that audits the financial statements of the Company
and its  subsidiaries  and is the  principal  accountant  for the  audit  of the
Company.

     The aggregate fee for audit and audit services  provided by Deloitte to the
Company in 2004 and 2003 were:

--------------------------------------------------------------------------------
(in DKK million)                                           2004          2003(1)

--------------------------------------------------------------------------------
Audit Fees                                                  2.3           5.4

--------------------------------------------------------------------------------
Audit-Related Fees                                          0.0           0.8

--------------------------------------------------------------------------------
Tax Fees                                                    0.3           0.4

--------------------------------------------------------------------------------
All Other Fees                                              0.5           0.0

--------------------------------------------------------------------------------
Total                                                       3.1           6.6

--------------------------------------------------------------------------------

(1)  We have restated the fees paid to Deloitte for 2003 in accordance  with SEC
     requirements.

     The Danish  Annual  Report is audited by  Deloitte  and Ernst & Young.  The
aggregate  fee for  audit and audit  services  provided  by Ernst & Young to the
Company in 2004 is disclosed in note 4 to the consolidated financial statements.

     Audit  Fees  consist  of fees for the  audit of our  financial  statements,
consents,  and review of documents in  connection  with filings with the SEC and
other statutory or regulatory filings. Audit-Related Fees consist of fees, other
than Audit Fees, for assurances and related services that are reasonably related
to the performance of the audit and review of our financial statements. Tax Fees
consist of fees for  services  rendered for tax  compliance,  tax advice and tax
planning.  All Other Fees  consist of fees for all  services  other than  audit,
audit related or tax related services.

     Our Board of Directors 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.

ITEM 16D. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES

     None.

                                    Part III

ITEM 17. FINANCIAL STATEMENTS

     We  specifically  incorporate  by  reference  in  response to this item the
report  of  the  independent   auditors,   the  consolidated  audited  financial
statements and the accompanying notes, appearing on pages F-1 through F-47.

Non-GAAP measures

     In this document we use the measures:  solvency ratio, net interest bearing
debt and invested capital. Although not GAAP measures they are all commonly used
financial measures.

Solvency ratio

     Solvency  ratio  measures  the  proportion  of the total  assets,  which is
financed by  shareholders'  equity.  We believe  that it is a relevant  measure,
which  management  uses to measure  the  overall  development  in our  financial
position. Solvency ratio is calculated as follows:

(in DKK million)                                           2003            2004

Shareholders' equity                                    2,464.3         4,323.7

Divided by Total assets                                 4,893.7         6,778.9

Equals Solvency ratio                                      50.4%           63.8%

Net interest bearing debt

     Net interest bearing debt measures the net capital  resources,  which cause
net interest  expenditure  and interest  rate risk and which  together  with the
shareholders'  equity are used to finance  our  investments.  As such we believe
that net interest bearing debt is a relevant  measure,  which management uses to
measure the overall development of our use of financing other than shareholders'
equity. Net interest bearing debt is calculated as follows:

(in DKK million)                                            2003           2004

Mortgage debt and bank loans                             1,996.0        2,162.0

Plus Capitalized lease obligations                         180.8            0.0

Less Cash at bank and in hand                             (163.2)        (358.3)

Less Bonds                                                (315.9)        (317.5)
                                                         -------        -------

Equals Net interest bearing debt                         1,697.7        1,486.2

Invested capital

     Invested  capital  measures the net investments  used to achieve our profit
before  financial  items. We believe that invested capital is a relevant measure
that  management  uses to  measure  the  overall  development  of the assets and
liabilities  generating  our net  profit.  Invested  capital  is  calculated  as
follows:

(in DKK million)                                           2003            2004

Tangible fixed assets                                   3,193.3         3,762.9

Plus Inventories                                           26.1            31.8

Plus accounts receivable                                  219.2           293.6

Less Trade accounts payable                               (96.1)          (85.7)

Less Corporate tax                                         (0.0)          (51.2)

Less Other liabilities                                   (101.8)         (116.0)

Less Accruals                                             (54.7)          (40.4)
                                                        -------         -------

Equals Invested capital                                 3,186.0         3,795.0

ITEM 18. FINANCIAL STATEMENTS

     Not Applicable.
<PAGE>

                              TORM AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Auditors ..............................................F-2
Consolidated Statements of Operations for the years ended
December 31, 2002, 2003 and 2004 ............................................F-3
Consolidated Balance Sheets as of December 31, 2003 and 2004 ................F-4
Consolidated Statements of Total Gains and Losses for the
years ended December 31, 2002, 2003 and 2004 ................................F-6
Consolidated Statements of Cash Flow for the years ended
December 31, 2002, 2003 and 2004 ............................................F-8
Notes to Consolidated Financial Statements ..................................F-9
<PAGE>

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF AKTIESELSKABET
DAMPSKIBSSELSKABET TORM

     We  have  audited  the   accompanying   consolidated   balance   sheets  of
Aktieselskabet  Dampskibsselskabet TORM and subsidiaries as of December 31, 2004
and 2003, and the related consolidated statements of operations, total gains and
losses,  statement of changes in shareholders' equity and cash flows for each of
the  three  years  in the  period  ended  December  31,  2004.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We  conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  The  Company is not
required  to have,  nor were we engaged  to  perform,  an audit of its  internal
control over financial  reporting.  An audit includes  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion,  such consolidated  financial statements present fairly, in
all   material    respects,    the   financial    position   of   Aktieselskabet
Dampskibsselskabet  TORM and  subsidiaries  as of December 31, 2004 and 2003 and
the results of their operations and their cash flows for each of the three years
in the  period  ended  December  31,  2004 in  conformity  with  the  accounting
provisions of Danish legislation applied on a consistent basis.

     Accounting  principles used by Aktieselskabet  Dampskibsselskabet  TORM and
subsidiaries  vary in certain  respects  from  accounting  principles  generally
accepted in the United States of America. Information relating to the nature and
effect of such differences is presented in Note 17 to the consolidated financial
statements.

Deloitte Statsautoriseret Revisionsaktieselskab
Copenhagen, Denmark

June 14, 2005
<PAGE>

<TABLE>
                              TORM AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004
                         (EXPRESSED IN THOUSANDS OF DKK)
<CAPTION>
                                                 Note   2002          2003          2004
<S>                                              <C>    <C>           <C>           <C>
Net revenue                                              1,538,618     1,927,996     2,596,410
Port expenses and bunkers                                 (555,700)     (621,087)     (497,258)
                                                        ----------    ----------    ----------
                                                           982,918     1,306,909     2,099,152

Charter hire                                              (463,510)     (404,960)     (357,069)
Technical running costs                                   (217,402)     (254,780)     (298,346)
                                                        ----------    ----------    ----------
Gross profit (Net earnings from shipping          2,3      302,006       647,169     1,443,737
activities)

Profit on sale of vessels and interests                     16,965          (464)            0
Administrative expenses                           3,4     (101,342)     (126,119)     (171,656)
Other operating income                                      55,227        51,368        78,732
                                                        ----------    ----------    ----------
Profit before depreciation                                 272,856       571,954     1,350,813

Depreciation                                        6     (158,400)     (176,872)     (210,746)
                                                        ----------    ----------    ----------
Profit before financial items                              114,456       395,082     1,140,067
Financial items                                     7        5,988       656,637     1,193,704
                                                        ----------    ----------    ----------
Profit before tax                                          120,444     1,051,719     2,333,771

Tax on profit on ordinary activities                8      360,190          (692)      (52,556)
                                                        ----------    ----------    ----------
Profit from continuing operations                          480,634     1,051,027     2,281,215
                                                        ----------    ----------    ----------
Profit before tax from discontinued operations              69,818             0             0
Tax on discontinued operations                                   0             0             0
                                                        ----------    ----------    ----------
Net profit for the year                                    550,452     1,051,027     2,281,215
                                                        ----------    ----------    ----------
Allocation of profit
The Board of Directors recommends that the
year's result of DKK 2,281 million be
allocated as follows:

Proposed dividend DKK 15 per share of DKK 10
(2003: DKK 6)                                                                          546,000
Retained profit                                                                      1,735,215
                                                                                    ----------
                                                                                     2,281,215
                                                                                    ----------
</TABLE>

  The accompanying notes are an integrated part of these financial statements.
<PAGE>

                              TORM AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2003 AND 2004
                         (EXPRESSED IN THOUSANDS OF DKK)

                                                    Note        2003        2004
                                                    ----        ----        ----
ASSETS
FIXED ASSETS
Tangible fixed assets
Leasehold improvements                                         2,233         153
Land and buildings                                             2,420       2,353
Vessels and capitalized dry-docking                   13   2,944,164   3,540,359
Prepayment on vessels under construction                     229,303     204,003
Other plant and operating equipment                           15,148      16,037
                                                           ---------   ---------
                                                       6   3,193,268   3,762,905
                                                           ---------   ---------
Financial fixed assets
Other investments                                      5     975,988   2,014,765
                                                           ---------   ---------
                                                             975,988   2,014,765
                                                           ---------   ---------
Total fixed assets                                         4,169,256   5,777,670
                                                           ---------   ---------
CURRENT ASSETS
Inventories
Inventory of bunkers                                          26,075      31,841
                                                           ---------   ---------
Accounts receivable
Freight receivables, etc.                                    147,277     196,979
Other receivables                                             50,295      69,795
Prepayments                                                   21,609      26,859
                                                           ---------   ---------
                                                             219,181     293,633
                                                           ---------   ---------
Securities
Bonds                                                 13     315,934     317,494
                                                           ---------   ---------
Cash at bank and in hand                              13     163,211     358,261
                                                           ---------   ---------
Total current assets                                         724,401   1,001,229
                                                           ---------   ---------
Total assets                                               4,893,657   6,778,899
                                                           ---------   ---------

  The accompanying notes are an integrated part of these financial statements.
<PAGE>

<TABLE>
                              TORM AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                        AS OF DECEMBER 31, 2003 AND 2004
                         (EXPRESSED IN THOUSANDS OF DKK)
<CAPTION>
                                                           Note         2003          2004
                                                           ----         ----          ----
<S>                                                       <C>     <C>           <C>
LIABILITIES
SHAREHOLDERS' EQUITY
Common shares                                                 9      182,000       364,000
Own shares                                                    9      (51,962)      (46,163)
Retained Profit                                                    2,115,868     3,459,845
Proposed dividend                                                    218,400       546,000
                                                                  ----------    ----------
Total shareholders' equity                                         2,464,306     4,323,682
                                                                  ----------    ----------
LIABILITIES
Long-term liabilities
Mortgage debt and bank loans                              11,13    1,700,704     1,822,264
                                                                  ----------    ----------
                                                                   1,700,704     1,822,264
                                                                  ----------    ----------
Current liabilities
Next year's repayments on mortgage
debt and bank loans                                       11,13      295,343       339,764
Capitalized lease obligations                                11      180,801             0
Trade accounts payable                                                96,094        85,666
Corporate tax                                                              0        51,161
Other liabilities                                            12      101,758       115,988
Accruals                                                     10       54,651        40,374
                                                                  ----------    ----------
                                                                     728,647       632,953
                                                                  ----------    ----------
Total liabilities                                                  2,429,351     2,455,217
                                                                  ----------    ----------
Total liabilities and shareholders' equity                         4,893,657     6,778,899
                                                                  ----------    ----------
Accounting policies                                           1
Collateral security                                          13
Guarantees, contingent and contractual liabilities           14
Fair value of derivative financial instruments               15
Related party transactions                                   16
Reconciliation to United States Generally
Accepted Accounting Principles (U.S. GAAP)                   17
</TABLE>

  The accompanying notes are an integrated part of these financial statements.
<PAGE>

                              TORM AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF TOTAL GAINS AND LOSSES
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004
                         (EXPRESSED IN THOUSANDS OF DKK)

                                           2002         2003          2004
                                           ----         ----          ----
Net profit for the year                     550,452     1,051,027     2,281,215
Change in fair value of derivatives         (43,078)       14,876        19,466
Foreign currency translation               (168,608)     (180,257)     (178,575)
                                         ----------    ----------    ----------
Total gains and losses                      338,766       885,646     2,122,106
                                         ----------    ----------    ----------

  The accompanying notes are an integrated part of these financial statements.

<TABLE>
                                      STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                         AS OF DECEMBER 31, 2002, 2003 AND 2004
                                             (EXPRESSED IN MILLIONS OF DKK)
<CAPTION>
                                               Common  Revaluation        Own    Retained    Proposed      Total
                                               shares     reserves     shares      profit    dividend
<S>                                           <C>          <C>        <C>         <C>         <C>        <C>
SHAREHOLDERS' EQUITY

Balance at 1 January 2002                       182.0         22.1      (51.5)    1,129.3        72.8    1,354.7

Exchange rate adjustment arose upon
translation from measurement currency to
presentation currency                                                              (168.6)                (168.6)
Fair value adjustment of derivative
financial instruments                                                               (43.1)                 (43.1)
Reversal of revaluation of shares                            (19.5)                  19.5                    0.0
Reversal of revaluation of bonds                              (2.6)                   2.6                    0.0
Purchase of own shares                                                   (7.6)                              (7.6)
Disposal of own shares                                                    7.1                                7.1
Proceeds from sale of own shares                                                     (0.3)                  (0.3)
Dividends paid                                                                                  (72.8)     (72.8)
Dividends paid on own shares                                                          3.5                    3.5
Profit for the year                                                                 550.5                  550.5
Dividend for the financial year                                                     (36.4)       36.4        0.0
                                              ------------------------------------------------------------------
Balance as of 31 December 2002                  182.0          0.0      (52.0)    1,457.0        36.4    1,623.4

Exchange rate adjustment arose upon
translation from measurement currency to
presentation currency                                                              (180.3)                (180.3)
Fair value adjustment of derivative
financial instruments                                                                14.9                   14.9
Exercised share options                                                             (10.1)                 (10.1)
Dividends paid                                                                                  (36.4)     (36.4)
Dividends paid on own shares                                                          1.8                    1.8
Profit for the year                                                               1,051.0                1,051.0
Dividend for the financial year                                                    (218.4)      218.4        0.0
                                              ------------------------------------------------------------------
Balance as of  31 December 2003                 182.0          0.0      (52.0)    2,115.9       218.4    2,464.3

Exchange rate adjustment arose upon
translation from measurement currency to
presentation currency                                                              (178.5)                (178.5)
Fair value adjustment of derivative
financial instruments                                                                19.4                   19.4
Bonus share issue                               182.0                              (182.0)                   0.0
Cost of bonus share issue                                                            (0.1)                  (0.1)
Exercised share options                                                  5.8        (59.3)                 (53.5)
Dividends paid                                                                                 (218.4)    (218.4)
Dividends paid on own shares                                                          9.3                    9.3
Profit for the year                                                               2,281.2                2,281.2
Dividend for the financial year                                                    (546.0)      546.0        0.0
                                              ------------------------------------------------------------------
Balance as of  31 December 2004                 364.0          0.0      (46.2)    3,459.9       546.0    4,323.7
                                              ==================================================================
</TABLE>

  The accompanying notes are an integrated part of these financial statements.
<PAGE>

<TABLE>
                              TORM AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004
                         (EXPRESSED IN THOUSANDS OF DKK)
<CAPTION>
                                                            2002          2003          2004
                                                            ----          ----          ----
<S>                                                   <C>           <C>           <C>
CASH FLOW FROM OPERATING ACTIVITIES
Profit before financial items                            114,456       395,082     1,140,067
Profit before financial items in discontinuing
operations                                                61,408             0             0
Interest income, exchange rate gains and
dividends received                                        69,747        27,246       237,774
Interest expenses                                        (76,540)      (73,692)      (93,652)
                                                      ----------    ----------    ----------
                                                         169,071       348,636     1,284,189
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and impairment losses                       158,400       176,872       210,746
Depreciation in discontinuing operations                   5,172             0             0
Gain from sale of discontinuing operations               (63,007)            0             0
Other non-cash movements                                 (47,750)        6,096       (57,360)
Taxes paid                                                   (29)            0        (1,395)
Change in inventories, accounts receivables
and payables                                              39,430       (37,844)      (39,533)
                                                      ----------    ----------    ----------

Net cash inflow from operating activities                261,287       493,760     1,396,647
                                                      ----------    ----------    ----------
CASH FLOW FROM INVESTING ACTIVITIES
Investment in tangible fixed assets                     (954,262)   (1,121,612)   (1,118,715)
Investment in equity interests and securities           (247,983)         (228)            0
Sale of fixed assets                                      20,549       113,928         1,308
     including profit on sale of vessels                       0           478             0
     (included in operating activities)

Sale of discontinuing operations                          63,007             0             0
                                                      ----------    ----------    ----------
Net cash inflow/(outflow) from investing activities   (1,118,689)   (1,007,434)   (1,117,407)
                                                      ----------    ----------    ----------
CASH FLOW FROM FINANCING ACTIVITIES
Borrowing, mortgage debt                                 842,472       777,922       875,246
Repayment/redemption, mortgage debt                     (156,709)     (224,005)     (514,466)
Repayment/redemption, lease liabilities                  (63,449)      (38,416)     (180,810)
Increase/(decrease) in bank debt                               0             0             0
Dividends paid                                           (69,309)      (34,637)     (209,071)
Purchase/disposal of own shares                             (807)           (0)            0
Net settlement share options                                   0       (10,094)      (53,529)
                                                      ----------    ----------    ----------
Cash inflow/(outflow) from financing activities          552,198       470,770       (82,630)
                                                      ----------    ----------    ----------
Net cash inflow/(outflow) from operating,
investing and financing activities                      (305,204)      (42,904)      196,610
Cash and cash equivalents including bonds,
   in companies acquired/divested                              0             0             0
                                                      ----------    ----------    ----------

Increase/(decrease) in cash and cash equivalents        (305,204)      (42,904)      196,610
                                                      ----------    ----------    ----------
Cash and cash equivalents,
   including bonds, at 1 January                         827,253       522,049       479,145
                                                      ----------    ----------    ----------
Cash and cash equivalents,
   including bonds, at 31 December                       522,049       479,145       675,755
Of which used as collateral                             (186,056)      (51,647)      (53,872)
                                                      ----------    ----------    ----------
                                                         335,993       427,498       621,883
                                                      ----------    ----------    ----------
</TABLE>

  The accompanying notes are an integrated part of these financial statements.
<PAGE>

                              TORM AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004

NOTE 1 - ACCOUNTING POLICIES

Accounting Policies

     The  Annual  Report  of TORM  has  been  prepared  in  accordance  with the
provisions  of  the  Danish  Financial  Statements  Act  applicable  for  listed
companies  in  Accounting   Class  D,  Danish   accounting   standards  and  the
requirements of the Copenhagen  Stock Exchange  relating to the  presentation of
financial statements by listed companies.

Change in accounting standards

     The  accounting  policies are  unchanged  from last year except that Danish
accounting standard 21 "Leasing" and Danish accounting standard 22 "Income" have
become effective and are applied as from this financial year.

     The effect of  implementing  Danish  accounting  standard 21 is that a gain
relating to a sale and  leaseback  transaction  under certain  circumstances  is
recognized in the income statement  immediately.  Previously,  a gain was always
recognized  in the  balance  sheet and  amortized  over the life of the  charter
party. In connection with a sale and leaseback transaction in the financial year
2000  resulting in an  operating  lease,  TORM  recognized a gain in the balance
sheet which has since been  amortized in  proportion  to the gross rental on the
time  charter  over  the  life of the  charter  party.  The  fair  value  at the
transaction  date  essentially  equalled  the  book  value,  and the  accounting
treatment  applied is  consequently  considered to be in accordance  with Danish
accounting standard 21.

     The effect of implementing Danish accounting standard 22 is that the stated
criteria for recognizing income have become more explicit in accordance with the
standard. The methods applied by TORM to recognize income are in accordance with
Danish accounting standard 22.

     The changes in accounting  standards  have thus not resulted in any changes
in the reported amounts.

General recognition and measurement criteria

     Income, including net revenue, is recognized in the income statement when:

o    the income creating activities have been carried out,
o    the income can be measured reliably,
o    it is probable that payment will occur,
o    costs relating to the transaction can be measured reliably, and
o    documentation of the income exists.

     Costs  incurred in order to achieve the earnings for the period,  including
depreciation  and  provisions,  are also  recognized  in the  income  statement.
Furthermore,  value  adjustments of financial assets and liabilities,  which are
measured at fair value or amortized  cost,  as well as the effects of changes to
accounting  estimates  made  in  prior  periods  are  recognized  in the  income
statement.

     Assets are  recognized  in the balance  sheet when it is probable  that the
future economic  benefits  attributable to the asset will flow to the Group, and
the value of the asset can be measured reliably.

     Liabilities  are recognized in the balance sheet,  when it is probable that
there will be an outflow of future  economic  benefits  from the Group,  and the
value of the liability can be measured reliably.

     Upon  initial  recognition,  assets and  liabilities  are measured at cost.
Subsequently,  assets and  liabilities  are measured as described in  accounting
policies related to the balance sheet.

     Certain  financial  assets and  liabilities are measured at amortized cost,
whereby a constant effective yield to maturity is recognized.  Amortized cost is
calculated as original cost less  repayment and with  addition/deduction  of the
accumulated  amortization  of the  difference  between  the cost and the nominal
amount.

     Recognition and measurement take into account all circumstances,  including
predictable  risks and losses  occurring  before the  preparation  of the Annual
Report, which confirm or disconfirm  circumstances existing at the balance sheet
date.

Consolidation principles

     The Annual Report comprises the Parent Company,  TORM and its subsidiaries,
i.e. the entities in which the Parent Company, directly or indirectly, holds the
majority of the votes or otherwise has a controlling interest.

     Entities  in which the  Group  holds  between  20% and 50% of the votes and
exercises  significant but not controlling  influence are regarded as associated
companies.

     Associated  companies  which are by agreement  managed  jointly with one or
more other companies (joint  ventures),  and therefore subject to joint control,
are consolidated on a pro rata basis,  whereby the individual items are included
in proportion to the ownership share.

     The  Consolidated  Financial  Statements  are  prepared on the basis of the
financial  statements  of the  Parent  Company,  its  subsidiaries  and pro rata
consolidated  companies by combining  items of a uniform nature and  eliminating
inter-company  transactions,  balances and shareholdings as well as realized and
unrealized gains and losses on transactions between the consolidated companies.

Foreign currencies

     The measurement  currency of the operating entities including  subsidiaries
and  associated  companies  is USD,  because  the  Group's  vessels  operate  in
international  shipping  markets,  in which revenues and expenses are settled in
USD and the Company's  most  significant  assets and  liabilities in the form of
vessels  and related  mortgage  debt are in USD.  The books for these  operating
entities are maintained in USD. The measurement  currency of the  administrative
entity is DKK.

     Transactions  in  currencies  other  than  the  measurement   currency  are
translated into the measurement currency at the date of the transactions.  Gains
or losses  arising  between the exchange  rate at the  transaction  date and the
exchange rate at the settlement date are recognized in the income statement.

     Cash,  accounts receivable and payable and other monetary items denominated
in  currencies  other than the  measurement  currency  are  translated  into the
measurement  currency at the exchange rate prevailing at the balance sheet date.
Differences  between the exchange rate at the transaction  date and the exchange
rate at the balance  sheet date are  recognized  in the income  statement  under
financial items.

     The  reporting  currency of the  Company is DKK.  Upon  recognition  of the
operating entities,  the financial  statements are translated from USD into DKK.
Items in the income  statement are translated  into DKK at the average  exchange
rates for the period, whereas balance sheet items are translated at the exchange
rates as at the balance sheet date.  Exchange  gains and losses arising upon the
translation of the income  statements  and balance sheets of operating  entities
are  recognized  directly in  shareholders'  equity.  Exchange  gains and losses
arising upon the  translation  of  shareholders'  equity at the beginning of the
year into DKK at the  exchange  rate at the  balance  sheet date are  recognized
directly to shareholders' equity.

     Foreign  exchange  rate  gains or  losses  of  intercompany  balances  with
subsidiaries,  which are considered a part of the investment in the entity,  are
recognized directly in shareholders' equity.

Derivative financial instruments

     Derivative financial instruments are entered into to hedge future committed
or anticipated transactions.

     Derivative  financial  instruments are initially  recognized in the balance
sheet at cost and are subsequently measured at their fair value. The instruments
are recognized as other receivables or other liabilities, respectively.

     Changes in fair value of derivative financial instruments which are used to
hedge  the  fair  value of a  recognized  asset or a  recognized  liability  are
recognized  in the  income  statement  under  the same  item as  changes  to the
carrying  amount of the hedged item,  except for currency  translation  gains or
losses arising from the hedging of exposures relating to long-term  intercompany
receivables in  subsidiaries.  Currency  translation  gains or losses related to
such exposure are recognized directly in shareholders' equity.

     Changes in fair value of derivative financial  instruments,  which are used
to  hedge  the  expected  future   transactions,   are  recognized  directly  in
shareholders' equity under retained profit. When the expected future transaction
results  in an income or a cost,  amounts  deferred  under  retained  profit are
transferred to the income  statement and included in the same line as the hedged
item.

     Changes  in fair  value of  derivative  financial  instruments  that do not
qualify for hedge  accounting are recognized in the income  statement at the end
of each period.

Segment information

     The  Group  consists  of two  business  segments:  Tanker  and  Bulk.  This
segmentation  is  based  on the  Company's  internal  management  and  reporting
structure in addition to evaluation of risk and earnings.  Transactions  between
segments are based on market-related prices and are eliminated at Group level.

     The Group only has one  geographical  segment,  because the Group considers
the global  market as a whole,  and the  individual  vessels  are not limited to
specific parts of the world.

     The segment  non-current  assets  consists of the  non-current  assets used
directly for segment operations.

     Current  assets are  allocated  to  segments  to the  extent  that they are
directly attributable to segment operations, including inventories,  outstanding
freight, other receivables and prepayments.

     Segment  liabilities  comprise   segment-operating   liabilities  including
mortgage debt attached to the vessels, trade payables and other liabilities.

     Not allocated  items  primarily  comprise assets and liabilities as well as
revenues and expenses relating to the Group's administrative functions, offshore
activities,  termination of Liner activity and investment activities,  including
cash and bank balances,  interest  bearing debt except mortgage debt attached to
the vessels, taxes, etc.

Participation in pools

     TORM  acts as pool  manager  for a  number  of  pools,  and  the  Group  is
participating  with a significant  number of vessels in these. The Group's share
of the income  statement and balance sheet in the respective  pools is accounted
for by entering a proportional  share,  based on  participation  in the pool, by
combining  items of uniform  nature.  The Group's  share of the  revenues in the
pools is primarily dependent on the number of days the Group's vessels have been
available for the pools during the period.

Accounting for pension plans

     The Company 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.

Stock based compensation

     The  Board of  directors,  the  Management  and a number  of key  employees
participate in a share option program. Option commitments under this program are
hedged  through  holdings  of own shares and are not  recognized  in the balance
sheet or the income statement.

     The  difference  between  the  exercise  price and the market  price of the
shares at the date the  options  are  granted is  recognized  as a  compensation
expense in administrative expenses in the income statement.

     At the time of exercise  the  payments  received for the sale of own shares
are recognized directly in shareholders' equity.

     If payment is made as net settlement,  the amount payable by the Company is
recognized  in  shareholders'  equity  under  retained  profit  at the  time  of
settlement.

Leases

     Agreements  to  charter  vessels  and to lease  other  property,  plant and
equipment  where TORM has  substantially  all the risks and rewards of ownership
are recognized in the balance sheet as finance leases. Lease assets are measured
at the lower of fair  value and the  present  value of future  leasing  payments
determined in the agreements including any purchase options.

     For the  purpose of  calculating  the  present  value,  the  interest  rate
implicit in the lease or an approximate  value is used as discount  factor.  The
lease assets are depreciated  and written down under the same accounting  policy
as the  vessels  owned by the Group or over the lease  period  depending  on the
lease terms.

     The  capitalized  lease  obligation  is  recognized  as a liability  in the
balance sheet,  and the interest  element of the lease payment is charged to the
income statement as incurred.

     Other charter agreements concerning vessels and other leases are classified
as operating leases, and lease payments are charged to the income statement on a
straight-line  basis over the lease term. The obligation for the remaining lease
period is disclosed in the notes to the financial statement.

Sale and leaseback transactions

     A gain or loss related to a sale and leaseback  transaction  resulting in a
finance lease is deferred and amortized in proportion to the gross rental on the
time charter over the life of the charter party.

     A  gain  related  to a  sale  and  leaseback  transaction  resulting  in an
operating lease is recognized in the income statement  immediately  provided the
transaction is agreed on market terms. If the sales price is lower than the fair
value and this is  reflected  in future  lease  payments  below fair value,  the
difference  between the fair value and the sales price is deferred and amortized
in  proportion to the lease  payments  over the life of the lease.  If the sales
price  exceeds the fair value,  the  difference  between the sales price and the
fair value is deferred and amortized in  proportion  to the lease  payments over
the life of the lease.

     A  loss  related  to a  sale  and  leaseback  transaction  resulting  in an
operating  lease  is  recognized  in  the  income   statement  at  the  date  of
transaction.

Swap agreements

     Gains or losses on swap of  ownership  in  vessels  are  recognized  in the
income statement at the date of the swap  transaction,  except when the acquired
vessels  are  similar to the  vessels  exchanged.  If the swap is an exchange of
similar  vessels,  the vessels are accounted for based on carryover value and no
gain is recognized.

Income statement

Net revenues

     Net revenues comprise freight and demurrage revenues from the vessels.  Net
revenues are recognized when they meet the general criteria  mentioned above and
the stage of  completion  can be  measured  reliably.  Accordingly,  freight and
demurrage  revenues are  recognized at selling price upon delivery of service in
accordance with the charter parties concluded.

Port expenses and bunkers

     Port  expenses and bunkers,  which  comprise  port expenses and bunker fuel
consumption,  are  recognized  upon delivery of service in  accordance  with the
charter parties concluded.

Charter hire

     Charter hire includes the expenses  related to the chartering in of vessels
incurred in order to achieve the net revenues for the period.

Technical running costs

     Technical  running  costs,   which  comprise  crew  expenses,   repair  and
maintenance expenses and tonnage duty, are expensed as incurred.

Profit on sale of vessels and interests

     Profit  or loss  from  sale of  vessels  and  interests  are  stated as the
difference  between the sales price less sales costs and the carrying  amount of
the  asset at the time of the  sale.  Furthermore,  any  gains  or  losses  upon
repayment of related loans are included in the gain or loss on disposal.

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 income

     Other operating  income  comprises  chartering  commissions and profits and
losses deriving from the disposal of other plant and operating equipment.

Equity income from investments in subsidiaries and associated companies

     Equity income from  investments in  subsidiaries  and associated  companies
include  the  Parent  Company's  proportional  share  of the net  income  of the
individual subsidiary less the proportional share of unrealized internal gains.

Depreciation and impairment losses

     Depreciation  and impairment  losses comprise  depreciation of fixed assets
for the period as well as the deduction in the value of vessels by the amount by
which the carrying  amount of the asset exceeds its recoverable  amount.  In the
event of indication of impairment of value,  the carrying amount is assessed and
the value of the asset is reduced 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 net selling price.

Financial items

     Financial items comprise  interest income and interest  expense,  financing
costs of finance leases,  realized and unrealized  exchange rate gains or losses
relating to  transactions  in currencies  other than the  measurement  currency,
realized and unrealized  gains or losses from other  investments and securities,
dividends  received on shares and other financial income and expenses  including
value adjustments of certain financial  instruments not accounted for as hedging
instruments.  Interest is  recognized  in  accordance  with the accrual basis of
accounting  taking into account the effective  interest  rate, and dividends 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.

Tax

     In  Denmark,  A/S  Dampskibsselskabet  TORM is jointly  taxed with  certain
wholly owned Danish and non-Danish subsidiaries. The Parent Company provides for
and pays the aggregate Danish tax of the taxable income of these companies.  The
expected  tax of the  taxable  income for the year and  adjustments  relating to
previous years are recognized in the income statement.  However, tax relating to
items posted in shareholders' equity is posted directly in shareholders' equity.

Balance sheet

Tangible fixed assets

     Land is measured at cost.

     Buildings  are  measured  at  cost  less   accumulated   depreciation   and
accumulated  impairment  losses.  Buildings are  depreciated on a  straight-line
basis over 50 years.

     Vessels are measured at cost less accumulated  depreciation and accumulated
impairment  losses.  All major  components  of vessels  less  salvage  value are
depreciated on a straight-line  basis based on an anticipated  useful life of 25
years. Costs incurred in replacing or renewing the separate assets  (dry-docking
costs)  are  capitalized  and  depreciated  on a  straight-line  basis  over the
estimated period until the next dry-docking.

     Prepayment on vessels under construction is measured at costs incurred.

     Operating  equipment  is  measured at cost less  accumulated  depreciation.
Computer equipment is depreciated on a straight-line basis over three years, and
other  operating  equipment is  depreciated on a  straight-line  basis over five
years.  Operating  equipment  with a cost price of less than DKK 25,000 is fully
depreciated in the year of acquisition.

     Leasehold  improvements are measured at cost less accumulated  amortization
and  impairment   losses,   and  leasehold   improvements  are  amortized  on  a
straight-line  basis over the shorter of the term of the lease and the estimated
useful life.

     Cost  comprises   acquisition  cost  and  costs  directly  related  to  the
acquisition  up until  the time  when the  asset is ready  for use.  The cost of
vessels and vessels under  construction also includes interest expenses incurred
during the period of construction.

Financial fixed assets

     Investment in  subsidiaries  and  associated  companies are  recognized and
measured  in the Annual  Report of the Parent  Company  according  to the equity
method,  which requires that a proportionate share of their annual net income or
loss is reflected  in the income  statement  of the Parent  Company.  Unrealized
intercompany  profits are eliminated when calculating the proportionate share of
income and equity.

     The share of the net income of the  subsidiaries  and associated  companies
that has not been  distributed as dividends to the Parent Company is transferred
to a  restricted  reserve  under  shareholders'  equity in the Parent  Company's
balance sheet.

     Other  investments  comprise shares in other  companies.  Listed shares are
measured at the market  value at the balance  sheet  date.  Unlisted  shares are
measured at estimated market value.

     Realized and unrealized  gains and losses resulting from valuation or sales
of shares are recognized as financial items in the income statement.

     Dividends  on shares in other  companies  are  recognized  as income in the
period in which they are declared.

Joint ventures

     Participation   in  joint  ventures  is  recorded  using  the  proportional
consolidation  method in the Group accounts.  The consolidated  income statement
includes  the  Group's  share of income  and  losses of joint  ventures  and the
consolidated  balance sheet includes the Groups' share of assets and liabilities
in joint ventures.

Inventories

     Inventories  consist of bunkers,  lubricants and spare parts and are stated
at the lower of cost and net  realizable  value.  The cost is  determined by the
FIFO-method.

Receivables

     Outstanding  freight  receivables  and  other  receivables  which  are of a
current nature  (expected to be realized within 12 months from the balance sheet
date) are measured at the lower of  amortized  cost and net  realizable  values,
which corresponds to nominal value less provisions for bad debts.

Prepayments

     Prepayments comprise expenses paid relating to subsequent periods.

Securities

     Bonds are measured at market value at the balance sheet date.

     Realized  and  unrealized  gains and losses  resulting  from  valuation  or
realization of bonds are recognized as financial items in the income statement.

Own shares

     Own shares are recognized directly as part of shareholders' equity at cost.
Upon subsequent  disposal of own shares,  any  consideration  is also recognized
directly in shareholders' equity.

Dividend

     Dividend is  recognized  as a liability at the time of  declaration  at the
Annual General  Meeting.  Dividend  proposed for the year is moved from retained
profit and presented as a separate item in shareholders' equity.

Financial liabilities

     Mortgage  debt and bank loans  relating  to the  financing  of vessels  are
initially  measured at nominal  amounts less premiums and costs  incurred in the
loan arrangement and subsequently at amortized cost with the difference  between
the loan proceeds and the nominal value being recognized in the income statement
over the term of the loan.

     Financial   liabilities  also  include  the  capitalised   remaining  lease
obligation on finance leases.

Other liabilities

     Other  liabilities  comprising  trade  payables and other  liabilities  are
measured at amortized cost corresponding substantially to nominal value.

Accruals

     Accruals comprise receipts relating to revenue in subsequent periods.

Statement of cash flows

     The  statement of cash flows shows the Group's cash flows and cash and cash
equivalents at the beginning and the end of the period.

     Cash flow from operating activities is presented indirectly and is based on
profit  before  financial  items for the year  adjusted for  non-cash  operating
items,  changes in working  capital,  income tax paid,  dividends  received  and
interest paid/received.

     Cash flow from  investing  activities  comprises  the  purchase and sale of
tangible fixed assets and financial  fixed assets except for profit/loss on sale
of vessels, which is included in the cash flows from operating activities.

     Cash flow from financing  activities  comprises  changes in long-term debt,
bank loans, purchases or sales of own shares and dividend paid to shareholders.

     Cash  and cash  equivalents  comprise  cash at bank and in hand and  highly
liquid bonds. Shares are not included.

Earnings per share

     Basic  earnings  per share is computed by dividing  consolidated  profit or
loss available to common  shareholders by the weighted  average number of common
shares  outstanding  during  the  period.  Own shares  are not  included  in the
calculation.  Purchases  and sales of own shares during the periods are weighted
based on the remaining period.

     Diluted earnings per share is computed by dividing  consolidated  profit or
loss available to common  shareholders by the sum of weighted  average number of
common shares  outstanding  and the weighted  average number of all  potentially
dilutive shares.  Such potentially  dilutive common shares are excluded when the
effect would be to increase earnings per share or reduce a loss per share.

United States generally accepted accounting principles

     As a consequence of the registration of American Depository Receipts (ADRS)
with the United States Securities and Exchange Commission (SEC), the Company has
prepared a summary of the effect on net income and shareholders'  equity had the
Financial Statements been prepared in accordance with the accounting  principles
generally accepted in the United States.
<PAGE>

NOTE 2 - NET EARNINGS FROM SHIPPING ACTIVITIES (in DKK million)

<TABLE>
<CAPTION>
                                                  For the year ended December 31, 2003
                                            Tank           Bulk          Not     Total
                                       (restated)    (restated)    allocated
                                                                  (restated)
                                       -----------------------------------------------
<S>                                       <C>           <C>         <C>        <C>
SEGMENT INFORMATION
INCOME STATEMENTS
Net revenue                               1,115.1         793.3        19.6    1,928.0
Port expenses and bunkers                  (319.0)       (308.0)        5.9     (621.1)
                                          -------       -------     -------    -------
Time Charter Equivalent Earnings            796.1         485.3        25.5    1,306.9

Charter hire                                (83.5)       (309.6)      (11.8)    (404.9)
Technical running costs                    (195.1)        (43.0)      (16.7)    (254.8)
                                          -------       -------     -------    -------
Gross profit (Net earnings from
shipping activities)                        517.5         132.7        (3.0)     647.2
Profit from sale of vessels and
interests                                    (0.5)          0.0         0.0       (0.5)
Administrative expenses                     (88.8)        (30.1)       (7.2)    (126.1)
Other operating income                       50.9           0.4         0.1       51.4
                                          -------       -------     -------    -------
Profit before depreciation                  479.1         103.0       (10.1)     572.0
Depreciation                               (154.6)        (21.7)       (0.6)    (176.9)
                                          -------       -------     -------    -------
Profit before financial items               324.5          81.3       (10.7)     395.1
Financial items                             (52.3)         (2.5)      711.4      656.6
                                          -------       -------     -------    -------
Profit before tax                           272.2          78.8       700.7    1,051.7
Tax on profit on ordinary activities          0.0           0.0        (0.7)      (0.7)
                                          -------       -------     -------    -------
Net profit for the year                     272.2          78.8       700.0    1,051.0

BALANCE                                                        As of December 31, 2003
Fixed assets                              2,774.0         400.1       995.2    4,169.3
Total assets                              2,894.9         467.3     1,531.5    4,893.7
Total liabilities                         1,982.6         382.6        64.1    2,429.3
</TABLE>

     With  reference  to the  Departmental  order about  exemption to the Danish
Financial  Statements Act section 5, no. 4, item 1, no segment  information  for
the Parent Company is provided.

     The gain on NORDEN shares,  received  dividend on shares,  interest income,
tax on profit on ordinary activities,  the Company's Offshore activities and the
termination of the Liner activity are included in 'Not allocated'.

     The comparative  figures on segment  information  have been changed as cash
and bank balances as well as interest income and dividends received are included
in 'Not allocated', whereas previously allocated to segments.

<TABLE>
<CAPTION>
                                                     For the year ended December 31, 2004
                                                 Tank       Bulk           Not      Total
                                                                     allocated
                                              -------    -------       -------    -------
<S>                                           <C>        <C>           <C>        <C>
SEGMENT INFORMATION
INCOME STATEMENTS
Net revenue                                   1,532.1    1,063.9           0.4    2,596.4
Port expenses and bunkers                      (407.4)     (90.2)          0.3     (497.3)
                                              -------    -------       -------    -------
Time Charter Equivalent Earnings              1,124.7      973.7           0.7    2,099.1
Charter hire                                    (80.9)    (276.2)          0.0     (357.1)
Technical running costs                        (236.7)     (69.7)          8.1     (298.3)
                                              -------    -------       -------    -------
Gross Profit (Net earnings from
shipping activities)                            807.1      627.8           8.8    1,443.7
Profit from sale of vessels and interest          0.0        0.0           0.0        0.0
Administrative expenses                        (126.6)     (42.1)         (2.9)    (171.6)
Other operating income                           76.8        1.9           0.0       78.7
                                              -------    -------       -------    -------
Profit before depreciation                      757.3      587.6           5.9    1,350.8
Depreciation                                   (171.4)     (39.1)         (0.2)    (210.7)
                                              -------    -------       -------    -------
Profit before financial items                   585.9      548.5           5.7    1,140.1
Financial items                                 (61.3)      (3.1)      1,258.1    1,193.7
                                              -------    -------       -------    -------
Profit before tax                               524.6      545.4       1,263.8    2,333.8
Tax on profit on ordinary activities              0.0        0.0         (52.6)     (52.6)
                                              -------    -------       -------    -------
Net profit for the year                         524.6      545.4       1,211.2    2,281.2

BALANCE                                                           As of December 31, 2004
Fixed assets                                  3,080.2      664.6       2,032.9    5,777.7
Total assets                                  3,298.6      710.7       2,769.6    6,778.9
Total liabilities                             1,893.8      472.8          88.6    2,455.2
</TABLE>

     With  reference  to the  Departmental  order about  exemption to the Danish
Financial  Statements Act section 5, no. 4, item 1, no segment  information  for
the Parent Company is provided.

     The gain on NORDEN shares,  received  dividend on shares,  interest income,
tax on profit on ordinary activities,  the termination of the Company's Offshore
and Liner activity are included in 'Not allocated'.
<PAGE>

NOTE 3 - STAFF COSTS (in DKK million)

                                                 For the years ended December 31
                                                 -------------------------------
                                                          2002     2003     2004
                                                         -----    -----    -----
Total staff costs
Staff costs included in technical                         33.2     52.8     61.5
running costs
Staff costs included in                                   67.4     71.6    105.6
administrative expenses and profit
before tax from discontinued
operations
                                                         -----    -----    -----
Total                                                    100.6    124.4    167.1
                                                         -----    -----    -----
Staff costs comprise the following
Wages and salaries                                        90.5    112.4    152.2
Pension costs                                              9.7     11.2     13.9
Other social security costs                                0.4      0.8      1.0
                                                         -----    -----    -----
Total                                                    100.6    124.4    167.1
                                                         -----    -----    -----
Hereof  remuneration  to the  Board
of  Directors  and  salaries to the
Management
Board of Directors                                         1.4      1.4      1.5
Management                                                 5.2     10.8     13.9
                                                         -----    -----    -----
Total                                                      6.6     12.2     15.4
                                                         -----    -----    -----

Number of employees

     The average number of staff in the Parent Company in the financial year was
288 (the Group 295). The equivalent figure for 2003 was 277 (the Group 280).

<TABLE>
<CAPTION>
                                  Total options         Option allocation per year
                                           2004         2001         2002         2003
                                           ----         ----         ----         ----
<S>                                    <C>          <C>          <C>          <C>
Share option program - 2001 to 2004*

Board of Directors
Allocated                               105,820       24,420       40,700       40,700
Exercised in 2003                       (24,420)      (8,140)     (16,280)           0
Exercised in 2004                       (36,560)     (16,280)      (4,000)     (16,280)
                                       --------     --------     --------     --------
Not exercised at 31 December 2004        44,840            0       20,420       24,420
                                       --------     --------     --------     --------
Management
Allocated                               463,420      106,940      178,240      178,240
Exercised in 2003                      (285,180)    (106,940)    (178,240)           0
Exercised in 2004                      (178,240)           0            0     (178,240)
                                       --------     --------     --------     --------
Not exercised at 31 December 2004             0            0            0            0
                                       --------     --------     --------     --------
Key Employees
Allocated                               634,640      206,120      214,260      214,260
Exercised in 2003                      (420,380)    (206,120)    (214,260)           0
Exercised in 2004                      (214,260)           0            0     (214,260)
                                       --------     --------     --------     --------
Not exercised at 31 December 2004             0            0            0            0
                                       --------     --------     --------     --------
Resigned persons
Allocated                               402,760      147,820      131,540      123,400
Exercised in 2003                      (232,240)    (138,840)     (93,400)           0
Exercised in 2004                      (162,380)      (8,980)     (30,000)    (123,400)
                                       --------     --------     --------     --------
Not exercised at 31 December 2004         8,140            0        8,140            0
                                       --------     --------     --------     --------
Total number of not exercised
options at 31 December 2004              52,980            0       28,560       24,420
                                       --------     --------     --------     --------

Not exercised in per cent of
common shares                              0.15%        0.00%        0.08%        0.07%
</TABLE>

     * The figures in the table above and the description  below are adjusted to
reflect the issue of bonus shares in May 2004.

     The  classification  has been  adjusted to reflect the persons  association
with TORM at December 31, 2004.

     In 2001, a share option  compensation  plan for 20 of TORM's Board members,
executives and key employees was introduced.  The plan grants 1,606,640 options,
which are priced at 3  different  dates,  485,300  in 2001,  564,740 in 2002 and
556,600 in 2003.  Option holders may exercise their options in specified periods
and choose to purchase  the  Company's  shares at the strike  price or receive a
cash payment equivalent to the difference between the strike price and the share
price.

     The  individual  must be employed at the grant date to receive  that year's
options.  In 2004, the interpretation of the share option  compensation plan has
been changed, increasing the number of options granted in 2002 by 8,140.

     The share  options  for 2001 were priced on February  20,  2001,  the share
options for 2002 were  priced on March 20,  2002 and the share  options for 2003
were priced on February 27, 2003.  The 2001 share options are  exercisable  at a
price of DKK 27 per share,  the 2002  share  options at a price of DKK 29.25 per
share and the 2003 share  options  at a price of DKK 31.3 per  share.  The share
options can be  exercised  at the  earliest 1 year and at the latest 3 years and
four weeks after the allocation, observing the rules concerning insider trading.

     In 2004,  591,440  options have been  exercised  (2003:  962,220),  and the
related  cost  amounting  to DKK 53.5  mill.  (2003:  DKK 10.1  mill.)  has been
recognized  directly in  shareholders'  equity.  The total number of unexercised
options at December 31, 2004 is 52,980 which equates 0.15% of the common shares.
The Company has acquired own shares to cover the share option program.  The cost
of the shares has been recognized directly in shareholders' equity.

     According to the Black-Scholes  model, the theoretical  market value of the
unexercised  part of the share  option  program is  estimated  at DKK 10.1 mill.
(2003: DKK 41.1 mill.) at the balance sheet date.

     The key assumptions of the Black-Scholes model are:

o    The average dividend equals 3.48% (2003:  3.75%) of the average share price
     for the period.

o    The volatility is estimated at 93.76% (2003: 112.89%).

o    The risk free  interest  rate based upon expiry of the  options  applies to
     between 2.37 % and 2.50% (2003: 2.24% and 2.99%).

o    The quoted share price as of December 31, 2004 is 225.77  DKK/share  (2003:
     90.25 DKK/share).

NOTE 4 - ADMINISTRATIVE EXPENSES (in DKK million)

                                        For the year ended December 31
                                        ------------------------------
                                                2002     2003     2004
                                               -----    -----    -----
Parent company                                  93.7    121.9    159.9
Subsidiaries and associated companies            7.6      4.2     11.8
                                               -----    -----    -----
                                               101.3    126.1    171.7
                                               -----    -----    -----

Remuneration to the auditors appointed
at the annual general meeting                  2002     2003     2004
                                               ----     ----     ----

Ernst & Young
Audit fees                                               0.6      0.8
Fees for other services                                  1.0      0.3
                                                ---      ---      ---
Total fees, Ernst & Young                       3.4      1.6      1.1
                                                ---      ---      ---

Deloitte
Audit fees                                               1.3      1.6
Fees for other services                                  3.7      1.5
                                                ---      ---      ---
Total fees, Deloitte                            6.1      5.0      3.1
                                                ---      ---      ---

NOTE 5 - FINANCIAL FIXED ASSETS (in DKK million)

                                                              2003         2004
                                                              ----         ----
Cost:
Balance as of January 1                                      271.3        268.6
Additions                                                      0.2          0.0
Disposals                                                     (2.9)         0.0
                                                           -------      -------
Cost as of December 31                                       268.6        268.6
                                                           -------      -------
Value adjustment:
Balance as of January 1                                       19.8        707.9
Other value adjustment                                       688.1      1,038.8
                                                           -------      -------
Balance as of December 31                                    707.9      1,746.7
                                                           -------      -------

Write downs:
Balance as of January 1                                       (1.0)        (0.5)
Write downs for the year                                       0.5          0.0
                                                           -------      -------
Write downs as of December 31                                 (0.5)        (0.5)
                                                           -------      -------

Book value as of December 31                                 976.0      2,014.8
                                                           -------      -------
<PAGE>

NOTE 6 - TANGIBLE FIXED ASSETS (in DKK million)

<TABLE>
<CAPTION>
                                                                                                Other
                                                                 Vessels and  Prepayment on    plant and
                                    Leasehold         Land and   capitalized  vessels under    operating
                                   improvements      buildings   dry-docking  construction     equipment    Total
                                   ------------------------------------------------------------------------------------
<S>                                     <C>           <C>          <C>           <C>           <C>           <C>
Cost:
Balance as of January 1, 2004               9.9           7.2      3,878.1         229.3          29.7       4,154.2
Exchange rate adjustment                   (0.2)          0.0       (319.0)        (18.9)          0.0        (338.1)
Additions                                   0.2           0.0      1,021.0         357.3           9.4       1,387.9
Disposals                                  (7.1)          0.0         (9.1)       (363.7)         (7.0)       (386.9)
                                        -------       -------      -------       -------       -------       -------
Cost as of December 31, 2004                2.8           7.2      4,571.0        (204.0)        (32.1)      (4,817.1)
                                        -------       -------      -------       -------       -------       -------
Depreciation and impairment losses:

Balance as of January 1, 2004               7.6           4.8        933.9           0.0          14.6         960.9
Exchange rate adjustment                   (0.3)          0.0        (94.4)          0.0           0.0         (94.7)
Additions                                   0.0           0.0          0.0           0.0           0.0           0.0
Disposals                                  (7.1)          0.0         (9.1)          0.0          (6.5)        (22.7)
Depreciation for the year                   2.4           0.1        200.2           0.0           8.0         210.7
                                        -------       -------      -------       -------       -------       -------

Balance as of December 31, 2004             2.6           4.9      1,030.6           0.0          16.1       1,054.2
                                        -------       -------      -------       -------       -------       -------
Book value as of December 31, 2004          0.2           2.3      3,540.4         204.0          16.0       3,762.9
                                        -------       -------      -------       -------       -------       -------
Hereof finance leases                       0.0           0.0          0.0           0.0           0.0           0.0
                                        -------       -------      -------       -------       -------       -------
Hereof interest included in cost            0.0           0.0          7.8           0.0           0.0           7.8

                                        -------       -------      -------       -------       -------       -------
Book value as of December 31, 2003          2.3           2.4      2,944.2         229.3          15.1       3,193.3
                                        -------       -------      -------       -------       -------       -------
</TABLE>

     As of October 1, 2003 the value of land and  buildings  assessed for Danish
tax  purposes  amounted  to DKK 3.0  million  (book  value DKK 2.3  million)  as
compared to DKK 2.9 million as of January 1, 2003.

     Included in the book value for vessels are capitalized dry-docking costs in
the amount of DKK 39.1  million as compared  to DKK 42.6  million in 2003 in the
Group.
<PAGE>

NOTE 7 - FINANCIAL ITEMS (in DKK million)

                                                 For the years ended December 31
                                                 -------------------------------
                                                        2002      2003      2004
                                                        ----      ----      ----
Financial income
Interest income                                         30.2      19.2      20.3
Gain on other investments and securities*               14.5     685.7   1,038.8
Dividends **                                             1.3       8.0     201.4
Fair value adjustment of derivative
financial instruments                                   42.9      23.3      30.4
                                                     -------   -------   -------
                                                        88.9     736.2   1,290.9
                                                     -------   -------   -------
Financial expenses
Interest expense on mortgage and bank debt              75.7      73.7      88.5
Loss on other investments and securities                 0.0       4.0       2.8
Exchange rate adjustments                                6.9       1.3       0.8
Fair value adjustment of derivative
financial instruments                                    0.0       0.0       0.0
Other interest expenses                                  0.3       0.6       5.1

                                                     -------   -------   -------
                                                        82.9      79.6      97.2
                                                     -------   -------   -------
Total financial items                                    6.0     656.6   1,193.7
                                                     -------   -------   -------

*    Includes unrealized gain on the NORDEN shares of DKK 1,034 million (DKK 681
     million in 2003 and DKK 8 million in 2002).

**   Includes  dividend  on the NORDEN  shares of DKK 200 million in 2004 (2003:
     DKK 7 million).

NOTE 8 - TAXES (in DKK million)

                                               For the years ended December 31
                                               -------------------------------
                                                      2002      2003      2004
                                                     -----     -----     -----
TAX ON PROFIT FOR THE YEAR AND DEFERRED TAX

Tax on profit for the year                             0.0      (0.7)    (52.6)
Adjustment of deferred tax                           360.1       0.0       0.0
                                                     -----     -----     -----

Tax on profit for the year                           360.1      (0.7)    (52.6)
                                                     -----     -----     -----

Changes in deferred tax
Balance as of 1 January                              360.1       0.0       0.0
                                                     -----     -----     -----

Tax on:
Profit for the year                                    0.0       0.0       0.0
Adjustment deferred tax due to tonnage tax           (360.1)     0.0       0.0
                                                     -----     -----     -----

Provision for the year                               (360.1)     0.0       0.0
                                                     -----     -----     -----

Balance as of December 31                              0.0       0.0       0.0
                                                     -----     -----     -----

Effective corporate tax rate                           0.0%      0.0%      2.3%

     The Parent Company paid no tax in 2003 and 2004.

     The   Company   participates   in  the   tonnage  tax  scheme  in  Denmark.
Participation in the tonnage tax scheme is binding until December 31, 2010.

     The  deferred  tax status as of December 31, 2004 related to the assets and
liabilities  as of the date for entering  the tonnage tax scheme  equals DKK 403
mill.  (2003:  DKK 318 mill.).  The Company has not accrued for the deferred tax
status as of December  31,  2004,  as the  deferred  tax status will only become
payable, if the Company's  participation in the tonnage tax scheme is abandoned,
or if the Company's level of investment and activity is significantly reduced.

     The Company  expects to  participate  in the  tonnage tax scheme  after the
binding  period and at a minimum to maintain an  investing  and  activity  level
corresponding to the level at the time of entering the tonnage tax scheme.

NOTE 9 - COMMON SHARES (in DKK million)

                                                 As of December 31
                                                 -----------------
                                  2003           2004        2003        2004
                                  ----           ----        ----        ----
                             Number of      Number of     Nominal     Nominal
                          shares mill.   shares mill.   value DKK   value DKK
                                                            mill.       mill.

Balance at January, 1             18.2           18.2       182.0       182.0
Issue of bonus shares              0.0           18.2         0.0       182.0

Balance at December, 31           18.2           36.4       182.0       364.0

     In May 2004 the Company  increased  the share  capital from  nominally  DKK
182.0 mill. to nominally DKK 364.0 mill.  through the issue of 18.2 mill.  bonus
shares of DKK 10 each. The bonus shares were allotted to the Company's  existing
shareholders at the ratio of 1:1.

OWN SHARES*

<TABLE>
<CAPTION>
                                       2003        2004          2003           2004      2003      2004
                                                              Nominal        Nominal      % of      % of
                                  Thousands   Thousands         value          value     share     share
                                  of shares   of shares   DKK million    DKK million   capital   capital
                                    -------     -------       -------        -------   -------   -------
<S>                                 <C>         <C>              <C>            <C>        <C>       <C>
OWN SHARES
Balance as of January, 1            1,762.7     1,762.7          17.6           17.6       4.8       4.8
Purchase                                0.0         0.0           0.0            0.0       0.0       0.0
Sale                                    0.0         0.0           0.0            0.0       0.0       0.0
Share options exercised                 0.0      (196.1)          0.0           (1.9)      0.0      (0.5)
                                    -------     -------       -------        -------   -------   -------
Balance as of December, 31          1,762.7     1,566.6          17.6           15.7       4.8       4.3
                                    -------     -------       -------        -------   -------   -------
</TABLE>

     *The figures in the table above and the  description  below are adjusted to
reflect the issue of bonus shares in May 2004.

     At  December  31,  2004 the  Company's  holding of own  shares  represented
1,566,612 shares (2003: 1,762,736 shares) at denomination DKK 10 per share, with
a total  nominal  value of DKK 15.7 mill.  (2003:  DKK 17.6  mill.) and a market
value of DKK 353.7 million (2003: DKK 159.1 mill.) The retained shares equate to
4.3% (2003: 4.8%) of the Company's common shares.

     Total  consideration  in  respect of the  purchase  of own shares was DKK 0
(2003: DKK 0) whereas for the sale of shares it was DKK 6.1 mill. (2003: DKK 0).
As the disposal of own shares is carried out in connection  with the exercise of
share options, the consideration is based on exercise prices in the share option
program. Of the holding of own shares,  52,980 shares (2003: 636,280 shares) are
held as a hedge of the Company's share option program. The remaining shares will
be used for further  development  of the capital  structure,  for  financing  or
execution of acquisitions, for sale or for other types of transfers.

NOTE 10 -  (in DKK million)

                                                               As of December 31
                                                               -----------------
ACCRUALS                                                           2003     2004
                                                                 ------   ------

Deferred gain related to sale and lease back transactions          52.9     40.4
Other                                                               1.8      0.0
                                                                 ------   ------
                                                                   54.7     40.4
                                                                 ------   ------

NOTE 11 - MORTGAGE DEBT,  BANK LOANS AND CAPITALIZED  LEASE  OBLIGATIONS
(in DKK million)

                                                               As of December 31
                                                               -----------------
To be repaid as follows:                                        2003        2004
                                                                ----        ----

Next year's repayments                                         476.1       339.8
Falling due within 5 years                                     846.9       939.3
Falling due after 5 years                                      853.8       882.9
                                                             -------     -------
                                                             2,176.8     2,162.0
                                                             -------     -------

<TABLE>
<CAPTION>
                                                Effective   Effective      Book      Book
                                       Fixed/    interest    interest     value     value
                          Maturity   floating        2003        2004      2003      2004
                          --------   --------        ----        ----      ----      ----
<S>                           <C>    <C>             <C>         <C>    <C>       <C>
LOAN
USD                           2004   Floating        3.1%          --     299.9       0.0
USD                           2005   Floating        2.2%        3.8%     132.2     143.1
USD                           2006   Floating        2.0%        3.9%      77.4      90.2
USD                           2007   Floating        4.3%        4.0%     252.2     205.8
USD                           2008   Floating        2.7%        3.3%      52.5      92.9
USD                           2009   Floating        2.9%        4.3%     200.4     171.1
USD                           2011   Floating           -        2.8%       0.0      62.3
USD                           2012   Floating        4.1%        3.8%     742.8     419.3
USD                           2013   Floating        2.4%        4.4%     419.4     534.4
USD                           2014   Floating                    3.9%       0.0     442.9

Weighted average
effective interest rate                              3.3%        3.9%
Book value                                                              2,176.8   2,162.0
                                                                        -------   -------
</TABLE>

<PAGE>

NOTE 12 - OTHER LIABILITIES (in DKK million)

                                                               As of December 31
                                                               -----------------
                                                                   2003     2004
                                                                   ----     ----
Partners and commercial managements                                12.4     20.6
Accrued interests                                                  12.3     17.3
Wages and social expenses                                          17.7     18.4
Derivative financial instruments                                   32.9     39.7
Miscellaneous, including items related to shipping activities      26.5     20.0
                                                                 ------   ------
                                                                  101.8    116.0
                                                                 ------   ------

NOTE 13 - COLLATERAL SECURITY (in DKK million)

Collateral security for mortgage debt, bank loans and bareboat charters:

                                                               As of December 31
                                                               -----------------
                                                                2003        2004
                                                             -------     -------
Vessels                                                      1,942.4     2,112.8
Bonds                                                           51.2        53.9
Cash and cash equivalents                                        0.4         0.2
                                                             -------     -------
                                                             1,994.0     2,166.9
                                                             -------     -------

NOTE 14 - GUARANTEE AND CONTINGENT LIABILITIES (in DKK million)

                                                               As of December 31
                                                               -----------------
                                                                     2003   2004
                                                                     ----   ----
Guarantee liabilities                                                 3.9    3.9
                                                                     ----   ----

     The guarantee  liabilities  relate to guarantees to the Danish Ship Finance
and Danish Shipowners' Association.

     The Company has  contracted  7 vessels  (2003:  6 vessels),  an  investment
totaling DKK 1,545 million as compared to DKK 1,310 million in 2003.

     The  Company  is  jointly  and  severally  liable  with its  jointly  taxed
subsidiaries for tax on income subject to consolidated taxation.

CONTRACTUAL LIABILITIES
Charterhire for vessels on time charter:
                                                                  2003      2004
                                                                  ----      ----
Next year's payments                                             323.1     245.9
Falling due within 5 years                                       772.9     669.3
Falling due after 5 years                                        208.2     196.1
                                                               -------   -------
                                                               1,304.2   1,111.3
                                                               -------   -------
Average period until redelivery (years)                            2.3       2.7
Newbuilding installments (purchse obligations):
Next year's payments                                             253.4     511.2
Falling due within 5 years                                       825.7     866.3
Falling due after 5 years                                          0.0       0.0
                                                               -------   -------
                                                               1,079.1   1,377.5

     In addition to the above-mentioned  contractual  liabilities for vessels on
time charter and  newbuilding  installments,  the Company has entered into lease
contracts  regarding  office space in Copenhagen and  Singapore.  The Copenhagen
office comprises approximately 2,283 square meters and is leased until July 2014
at a rate of DKK 3.8 million per year in 2005  increasing to  approximately  DKK
5.6 million per year in 2014. The Singapore office comprises  approximately  120
square  meters and is leased until May 31, 2005 at a rate of DKK 0.3 million per
year. Furthermore,  the Company has leased three apartments in Singapore. One is
leased  until  February 6, 2006 at a rate of DKK 0.1  million per year.  Two are
leased at a yearly  rate of DKK 0.2  million  each and expire on May 6, 2006 and
October 6, 2006 respectively.

     Furthermore the Company has entered into various IT-related  contracts at a
total yearly rate amounting DKK 1.8 million. The greater part of these contracts
typically expires after 0.5 - 2.5 years.

NOTE 15 - FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS (in DKK million)

<TABLE>
<CAPTION>
                                                  Fair value adjustments
                                                  ----------------------
                             Fair value      Income       Income   Shareholders'    Fair value
                                  as of   statement    statement          equity         as of
                             January 1,         Net    Financial        Retained      December
                                   2004     revenue        items          profit      31, 2004
                                   ----     -------        -----          ------      --------
<S>                               <C>         <C>          <C>              <C>          <C>
Cross currency swaps               34.9          --        (34.5)            --            0.4
Forward rate contracts              2.0          --         20.9            (2.3)         20.6
Interest rate swaps               (31.4)         --          6.7            26.0           1.3
Currency options                   (1.5)         --         21.3              --          19.8
Bunker hedge                        0.0          --           --            (4.3)         (4.3)
Forward Freight Agreement           1.3       (25.5)          --              --         (24.2)
                                   ----       ----          ----            ----          ----
                                    5.3       (25.5)        14.4            19.4          13.6
                                   ----       ----          ----            ----          ----
</TABLE>
<PAGE>

NOTE 16 - RELATED PARTY TRANSACTIONS

     The members of the Company's Board of Directors and Senior Management, near
relatives to these  persons,  and companies  where these persons have control or
exercise   significant   influence  are  considered  as  related   parties  with
significant influence.

     Mr. Niels Erik Nielsen, Chairman of the Board of Directors, is a partner in
the law  firm  Bech-Bruun  Dragsted.  Bech-Bruun  Dragsted  has  rendered  legal
assistance during the financial year. The firm's fee of DKK 1.6 mill. (2003: DKK
0.4 mill.) is based upon the amount of time spent by the firm.

     Mr. Ditlev Engel, a member of the Board of Directors, was Managing Director
of Hempel A/S until  December 31, 2004. In the financial year the Company bought
products on market terms from Hempel  amounting to DKK 3.4 mill.  (2003: DKK 2.4
mill.).

     Mr.  Rex  Harrington,  a member of the  Board of  Directors,  has  provided
consulting  services to the Board of Directors amounting to DKK 0.6 mill. (2003:
DKK 0.0 mill.).

     There were no further  transactions  in the financial  year with members of
the Board of Directors and the senior Management.

     Management remuneration is disclosed in note 3.

     It is considered that no single person has control over the Company.
<PAGE>

NOTE  17  -  RECONCILIATION  TO  UNITED  STATES  GENERALLY  ACCEPTED  ACCOUNTING
PRINCIPLES (U.S. GAAP)

     The Company's Annual Report has been prepared in accordance with accounting
principles generally accepted in Denmark (Danish GAAP), which differs in certain
respects from U.S. GAAP.

     The following is a summary of the  adjustments  to net income for the years
ended  December 31,  2002,  2003 and 2004 and  shareholders'  equity as of those
dates,  necessary  to  reconcile  those to net income and  shareholders'  equity
determined in accordance with U.S. GAAP.

Reconciliation  of Net  income  for the  year to U.S.  GAAP Net  income  (in DKK
million)

                                          Notes      2002       2003       2004
                                          -----      ----       ----       ----

Net income as reported under Danish GAAP            550.5    1,051.0    2,281.2

Dry-docking costs                           a)      (21.9)      (0.4)      (9.3)
Write-down on vessels                       b)      (12.3)       1.0        0.9
Marketable securities                       c)       (4.4)    (685.5)   (1038.4)
Sale/leaseback transactions                 d)        1.2        0.0        0.0
Derivative financial instruments            e)      (32.4)      15.1       10.8
Stock options                               f)        0.0      (43.6)     (67.0)
Tonnage Taxation (deferred tax)             g)     (395.1)      12.1      (44.4)

                                                   ------    -------    -------
Net income in accordance with U.S. GAAP              85.6      349.7    1,133.8
                                                   ======    =======    =======

Reconciliation of Shareholders' equity to U.S. GAAP Shareholders' Equity (in DKK
million)

<TABLE>
<CAPTION>
                                                   Notes      2002       2003       2004
                                                   -----      ----       ----       ----
<S>                                                  <C>   <C>        <C>        <C>
Shareholders' equity as reported under Danish GAAP         1,623.4    2,464.3    4,323.7

Dry-docking costs                                    a)      (47.4)     (40.2)     (45.4)
Write-down on vessels                                b)      (12.3)     (11.3)     (10.4)
Marketable securities                                c)        0.0        0.0        0.0
Sale/leaseback transactions                          d)        0.0        0.0        0.0
Derivative financial instruments                     e)        0.0        0.0        0.0
Stock options                                        f)        0.0      (33.5)     (10.4)
Tonnage Taxation (deferred tax)                      g)     (367.3)    (355.3)    (399.6)

                                                           -------    -------    -------
Shareholders' equity in accordance with U.S. GAAP          1,196.4    2,024.0    3,857.9
                                                           =======    =======    =======
</TABLE>

     The Group's accounting policies under Danish GAAP are described below where
these differ from U.S. GAAP:

     a) Dry-docking costs

     Under Danish GAAP,  when a vessel is delivered major  components  which are
usually  replaced or renewed in connection with a docking are  depreciated  over
the estimated period to the first docking. The Company subsequently  capitalizes
dry-docking  costs as they are  incurred and  depreciates  these over the period
until the next docking.

     Under U.S. GAAP, the Company  accounts for the docking costs (provision for
repairs)  by  accruing  for the  estimated  dry dock costs  involved in the next
docking over the period to the next docking. Subsequent payments for dry-docking
are charged against the accrued liability. The following represents the movement
in the provision for repairs during the year ended  December 31, 2002,  2003 and
2004:

(in thousands  of DKK)
                                               2002          2003          2004
                                               ----          ----          ----
Beginning Balance                            41,294        31,663        23,135

Charged to expenses                          29,889        23,807        32,133
Utilization                                 (33,357)      (27,677)      (13,692)
Exchange rate conversion                     (6,163)       (4,658)       (3,516)
                                            -------       -------       -------

Ending Balance                               31,663        23,135        38,060
                                            =======       =======       =======

     b) Write-down on vessels

     In 1998 the Company  recognized an impairment  charge of DKK 80 million for
certain vessels on capital leases as the carrying value at the time exceeded the
fair value of these vessels.  Under Danish GAAP,  impairment losses are reversed
in  subsequent  periods if the fair value  increases.  During 2002,  the Company
recorded a reversal of the impairment  loss of DKK 12.3 million for the increase
in fair value of these assets.

     Under U.S. GAAP,  impairment  losses cannot be reversed.  This results in a
difference in depreciation expense between U.S. GAAP and Danish GAAP.

     c) Marketable securities

     Under Danish GAAP,  the Company's  marketable  securities are classified as
available-for-sale,  which  under  Danish GAAP means that  unrealized  gains and
losses on these are recorded in the income statement.

     Under U.S.  GAAP,  the Company must classify its  investments in marketable
securities  as  either  trading,  available-for-sale  or  held to  maturity,  as
required by Statement of Financial  Accounting Standards No. 115 "Accounting for
Certain  Investments  in Debt  and  Equity  Securities."  In 2002,  the  Company
classified its investments in equity  securities as  available-for-sale  and its
investments  in bonds as  trading.  From  January  1, 2003 the  bonds  have been
classified as  available-for-sale  due to a decrease in the trading  activities.
Unrealized gains and losses on available-for-sale  investments are recorded as a
component  of  shareholder's  equity  unless  there is an  other-than  temporary
impairment of the securities.  There were no other-than temporary impairments in
any period presented.

     d) Sale/leaseback transactions

     During the year ended  December  31,  2000,  the  Company  sold five of its
vessels and chartered (leased) them back under time charter agreements.

     Under Danish GAAP,  the Company has calculated a gain of DKK 147.1 million,
which has been  deferred and  amortized in proportion to the gross rental on the
time charters over the life of the related agreements.

     Under U.S. GAAP, the gain has been deferred and amortized in a similar way,
but the gain on disposal is different  under U.S.  GAAP due to the  treatment of
dry-docking  costs as  described  under item a) above.  The  initial  difference
between the gain under  Danish GAAP and U.S.  GAAP was DKK 14.8  million,  which
through amortization in 2000, 2001 and 2002 has been reduced to DKK 0 at the end
of 2002.

     e) Derivative Financial Instruments

     The U.S. GAAP reconciling  items regarding  derivatives for the years 2002,
2003 and 2004 have been summarized below.

<TABLE>
<CAPTION>
(in thousands of DKK)                  2002                    2003                    2004

                                             Share-                  Share-                  Share-
                                 Income    holders'      Income    holders'      Income    holders'
                              statement      equity   statement      equity   statement      equity
<S>                              <C>              <C>    <C>              <C>    <C>              <C>
Foreign currency contracts       (3,951)          0           0           0           0           0
Interest rate swaps             (31,526)          0      16,209           0      15,067           0
Fuel price agreements             3,056           0      (1,121)          0      (4,319)          0
                              ---------------------------------------------------------------------

Total U.S. GAAP adjustment      (32,421)          0      15,088           0      10,748           0
                              ---------------------------------------------------------------------
</TABLE>

     Under Danish GAAP,  derivative financial  instruments are recognized in the
balance  sheet at fair value.  For fair value hedges the change in fair value is
set-off  against  the  change in fair  value of the  hedged  balance  item.  For
cash-flow  hedges the  change in fair value on the  contract  is  recorded  as a
component of  shareholders'  equity and then transferred to the income statement
when the hedged item is realized.  The change in fair value on contracts that do
not qualify for hedge  accounting is recorded in the income statement at the end
of each period.

     Under  U.S.  GAAP,  the  Company  accounts  for  its  derivative  financial
instruments at fair value with changes  reflected in the income statement except
where the Company  designates  derivative  financial  instruments as hedges. For
derivatives  treated as hedges under US GAAP,  the treatment is consistent  with
that under Danish GAAP.

         Foreign currency contracts

     The  Company  entered  into a variety of  contracts  to manage its  foreign
currency exposure.  During the year ended December 31, 1999, the Company settled
an open currency contract  associated with a purchase option included in a lease
agreement.  Under Danish GAAP, the gain of DKK 19.4 million on this  transaction
was deferred and  amortized  into income over the life of the  associated  lease
agreement.  An amount of DKK 3.9 million of gain was recognized  during the year
ended December 31, 2002.

     Under U.S. GAAP, the gain on this  transaction was recorded at the time the
contract was settled.

     Interest rate swaps

     The Company has entered into interest rate swaps to hedge the interest rate
risk on the long-term loans obtained to finance vessel purchases.

     Under Danish GAAP,  the interest rate swaps qualify as cash flow hedges and
are  recorded  at  fair  value  in  the  balance  sheet  and as a  component  of
shareholders'   equity.  The  fair  values  of  the  hedges  are  released  from
shareholders' equity when interest is paid on the loans.

     Under U.S.  GAAP,  the  Company  adopted  the  provisions  for SFAS No. 133
`Accounting for Derivative  Instruments and Hedging Activities' with effect from
January 1, 2001. This resulted in the Company recording a transition  adjustment
for  the  fair  value  of all  material  derivatives  of DKK  6.9  million  as a
derivative asset and as a component of other  comprehensive  income of which DKK
6.4 million  was  charged to US GAAP net income in 2001,  and DKK 0.5 million in
2002.

     Under US GAAP,  subsequent to the adoption of SFAS No. 133, the Company has
accounted for changes in fair value of the interest rate swaps as a component of
income. However, beginning on October 1, 2003 the Company elected to apply hedge
accounting to some interest  rate swaps  designated as cash flow hedges.  During
the year ended December 31, 2002,  the Company  recorded a loss on interest rate
swaps of DKK 32.1 million.  During the year ended  December 31, 2003 the Company
recorded  a gain on  interest  rate  swaps of DKK  16.2  million  in the  income
statement  and a loss on interest  rate swaps  designated as cash flow hedges of
DKK 2.4 million was recorded as a component of shareholders'  equity. During the
year ended December 31, 2004 the Company  recorded a gain on interest rate swaps
of DKK 15.1 million in the income  statement  and a loss on interest  rate swaps
designated as cash flow hedges of DKK 2.3 million was recorded as a component of
shareholders' equity.

     Fuel price agreements

     The Company has entered  into fuel price  agreements  to hedge the price of
fuel bunkers for the Company's vessels.

     Under Danish GAAP,  the fuel price  agreements  qualify as cash flow hedges
and are  recorded  at fair  value in the  balance  sheet and as a  component  of
shareholders'   equity.  The  fair  values  of  the  hedges  are  released  from
shareholders' equity when the fuel bunkers are purchased.

     Under U.S. GAAP, the Company accounts for changes in fair value of the fuel
price  agreements as a component of income.  During the year ended  December 31,
2002, the Company  recorded a gain on fuel price  agreements of DKK 3.1 million,
during the year ended  December  31,  2003 the  Company  recorded a loss on fuel
price agreements of DKK 1.1 million, and during the year ended December 31, 2004
the Company recorded a loss on fuel price agreements of DKK 4.3 million.

     f) Stock options

     In  accordance  with  the  Company's  Danish  accounting  principles,   the
difference  between the exercise price and the market price of the shares at the
date the options  are granted is  recognized  as a  compensation  expense in the
income statement. At the time of exercise, the amounts paid to the employees for
options that are cash settled are recognized directly in shareholders' equity.

     Under U.S. GAAP,  stock-based  compensation  is accounted for in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."   and  related   interpretations   in  accounting  for  stock  based
compensation.  Under APB No. 25, the Company recognizes compensation expense for
the difference  between the exercise  price and market price at the  measurement
date. This compensation is amortized over the vesting period. The Company grants
options with cash settlement  terms for which the  measurement  date is the date
that these options are  exercised.  Under APB 25,  compensatory  plans with cash
settlement  terms qualify as variable plans, for which total  compensation  cost
must be  recalculated  each period based on the current  share price,  until the
options are exercised.

     g) Tonnage taxation

     On  February  6, 2002,  the  Danish  government  proposed a bill  regarding
tonnage  taxation,  which was enacted on April 17,  2002.  According  to the new
Danish  Tonnage  Taxation Act, tax payments in the future will not be based on a
taxable  income,  but rather a  calculated  income  based on the  tonnage of the
Company and taxable income from activities  outside the tonnage tax scheme.  The
legislation has been implemented with retroactive date effective from January 1,
2001 and the  Company  has  chosen to enter the  tonnage  taxation  scheme for a
10-year  period with effect from  January 1, 2001.  Income  taxation of reversed
depreciation  will only occur if the total  fleet of the  Company at the time of
entering the tonnage taxation scheme is reduced in size.

     Under Danish GAAP,  the provision for deferred tax that existed at the date
of enactment has been released to income.

     Under U.S.  GAAP,  the  provision  for deferred tax is still carried in the
balance  sheet,  as the  recognition  of a provision  for  deferred tax does not
depend on the likelihood of the provision  resulting in taxable amounts.  At the
end of each period,  the provision  for deferred tax is calculated  based on the
carrying  values and tax values of the shipping  related assets and  liabilities
that were owned by the company at the date for  entering  the  tonnage  taxation
scheme.  This  adjustment  includes the tax  consequences  of certain U.S.  GAAP
adjustments under the Danish Tonnage Taxation Act.

     h) Joint Venture Agreements

     The Company has investments in entities that are jointly owned and operated
together  with third  parties,  and in which the  parties  have  joint  dominant
influence.  Under Danish GAAP, the Company accounts for these  investments under
the proportional consolidation method.

     Under U.S.  GAAP,  these  entities  would be accounted for using the equity
method,  which will not result in a difference in net income between Danish GAAP
and U.S. GAAP.

     The following  represents the results reflected in the consolidated  income
statement for the year ended December 31, 2002, 2003 and 2004 in accordance with
Danish GAAP associated with these joint ventures:

(in thousands of DKK)                            2002         2003         2004
                                                 ----         ----         ----

Net turnover                                  393,052      260,067       74,966
Operating costs                               327,098      235,521       38,195
                                             --------     --------     --------
Net earning from shipping activities           65,954       24,546       36,771
Gain on sale of vessels/interests                  --           --           --
Administrative expenses                         7,483        7,017        6,648
Other operating income                          6,889        8,464       11,901
Depreciation                                   39,728       19,823       17,203
                                             --------     --------     --------
Profit before financial items                  25,632        6,170       24,821
Financial items                                68,281        8,373       (6,191)
                                             --------     --------     --------
Profit before tax                             (42,649)      (2,203)      18,630
Tax                                                --           --       (2,234)
                                             --------     --------     --------
Net profit                                    (42,649)      (2,203)      16,396
                                             ========     ========     ========

     The following represents summarized balance sheet data that is reflected in
the  consolidated  balance  sheet  associated  with these  joint  ventures as of
December 31, 2003 and 2004 in accordance with Danish GAAP:

(in thousands of DKK)                           2003              2004
                                                ----              ----

Fixed assets                                 194,736               597
Current assets                                31,799            18,353

Provisions                                        --                --
Long term liabilities                        122,012                --
Current liabilities                           85,437             7,633

     i) Statement of cash flows

     The cash flow  statement  prepared in accordance  with Danish GAAP presents
substantially the same information as required under U.S. GAAP. Under U.S. GAAP,
however,  there are certain  differences  with regard to the  classification  of
items within the cash flow  statement and with regard to the  definition of cash
and cash equivalents.

     Under Danish GAAP,  the Company's  cash is comprised of cash at bank and in
hand and bonds. For U.S. GAAP purposes, the Company classified only cash at bank
and  in  hand,  as  cash  and  cash  equivalents.  Therefore  under  U.S.  GAAP,
investments  in and sales of bonds,  treated as  available  for sale  securities
(2002:  trading securities) under SFAS 115, would be classified in the statement
of cash  flows as  operating  activities  and  investments  and  sales of equity
securities  classified  as available  for sale would be  classified as investing
activities.  Additionally,  the  unrealized  gain and loss on the bonds would be
reflected as a component of operating activities.

     Under Danish GAAP, the profit on the sale of fixed assets is reflected as a
component  of  investing  activities,  whereas  under U.S.  GAAP this  amount is
reflected as a component of operating activities.

     The  presentation of cash flows provided by (used in) operating,  investing
and financing activities, classified in accordance with U.S. GAAP, utilizing the
amounts  shown in the Company's  Danish GAAP cash flow  statement are as follows
for the years ended December 31, 2002, 2003 and 2004 (in thousands of DKK):

<TABLE>
<CAPTION>
                                                             2002          2003          2004
                                                             ----          ----          ----
<S>                                                    <C>           <C>           <C>
Net cash provided by operating activities                 478,303       531,593     1,395,087
Net cash provided by (used in) investment activities   (1,118,689)   (1,007,434)   (1,117,407)
Net cash provided by (used in) financing activities       552,198       470,770       (82,630)

Net increase in cash and cash equivalents                 (88,188)       (5,071)      195,050
Cash as defined under U.S. GAAP, beginning of year        256,470       168,282       163,211

                                                       --------------------------------------
Cash as defined under U.S. GAAP, end of year              168,282       163,211       358,261
                                                       --------------------------------------
</TABLE>

     j) Earnings Per Share

     Earnings per share is computed consistent with Danish GAAP.

     The following  table sets forth the  computation  of basic and diluted U.S.
GAAP net income per share (in thousands except share and per share data):

                                                    2002        2003        2004

Numerator for basic and diluted Earnings
Per Share (in thousands of DKK)
Profit from continuing operations                 15,754     349,711   1,133,817
                                               ---------------------------------
Profit from discontinuing operations              69,818           0           0
                                               ---------------------------------
Profit for the year                               85,572     349,711   1,133,817
                                               ---------------------------------

                                            No. of       No. of       No. of
                                            shares       shares       shares
                                            ----------   ----------   ----------

Weighted average number of shares:
Basic                                       34,635,818   34,637,264   34,784,357
Effect of dilutive shares and
share options
                                                20,898      434,220      260,613
                                            ----------   ----------   ----------
Diluted                                     34,656,716   35,071,484   35,044,970
                                            ----------   ----------   ----------

Basic earnings per share
Profit from continuing operations                  0.5         10.1         32.6
Profit from discontinued operations                2.0          0.0          0.0
                                            ----------   ----------   ----------
Profit for the year                                2.5         10.1         32.6
                                            ----------   ----------   ----------

Diluted earnings per share
Profit from continuing operations                  0.5         10.0         32.4
Profit from discontinued operations                2.0          0.0          0.0
                                            ----------   ----------   ----------
Profit for the year                                2.5         10.0         32.4
                                            ----------   ----------   ----------

     The weighted  average number of shares excludes the shares  reacquired from
the date of  repurchase.  The  comparative  figures  for  number of  shares  and
earnings  per share are  restated  to reflect  the issue of bonus  shares in May
2004.

     l) New accounting requirements not yet adopted

     In  December  2004,  the FASB  issued  Statement  of  Financial  Accounting
Standards ("SFAS") No. 123 (revised 2004),  "Share-Based Payments" or SFAS 123R.
This statement  eliminates the option to apply the intrinsic  value  measurement
provisions of Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to Employees" to stock compensation awards issued to employees.
Rather,  SFAS 123R requires  companies to measure the cost of employee  services
received in exchange for an award of equity  instruments based on the grant-date
fair value of the award.  That cost will be  recognized  over the period  during
which an employee is required to provide services in exchange for the award--the
requisite service period (usually the vesting period).  SFAS 123R applies to all
awards  granted  after  the  required  effective  date and to  awards  modified,
repurchased,  or cancelled  after that date. SFAS 123R will be effective for our
fiscal year ending  December 31, 2006. We have not yet  quantified the effect of
the future adoption of SFAS 123R on a going forward basis.

     In December 2004, the FASB SFAS No. 153, "Exchanges of Nonmonetary Assets -
an  amendment  of APB  Opinion No. 29" ("SFAS  153"),  which  amends  Accounting
Principles  Board Opinion No. 29,  "Accounting for Nonmonetary  Transactions" to
eliminate the exception for nonmonetary  exchanges of similar  productive assets
and replaces it with a general  exception  for exchanges of  nonmonetary  assets
that do not have  commercial  substance.  SFAS 153 is effective for  nonmonetary
assets exchanges  occurring in fiscal periods  beginning after June 15, 2005. We
do not  anticipate  that the  adoption  of this  statement  will have a material
effect on our financial position or results of operations.

     In November 2004, the EITF reached a consensus on EITF Issue No. 03-1, "The
Meaning  of  Other-Than-Temporary  Impairment  and its  Application  to  Certain
Investments"   ("EITF  03-1").   EITF  03-1  provides  guidance  on  determining
other-than-temporary  impairments and its  application to marketable  equity and
debt  securities  accounted  for under SFAS No.  115,  "Accounting  for  Certain
Investments in Debt and Equity Securities," as well as investments accounted for
under the cost method of  accounting.  In September  2004,  the FASB issued FASB
Staff  Position  ("FSP") EITF Issue 03-1-1 which delayed the effective  date for
the  measurement  and  recognition  guidance  contained  in  EITF  03-1  pending
finalization  of the draft FSP EITF Issue 03-1-a,  "Implementation  Guidance for
the  Application of Paragraph 16 of EITF 03-1." The disclosure  requirements  of
EITF 03-1 remain in effect.  The  adoption of the  recognition  and  measurement
provisions  of EITF 03-1 when  finalized  are not  expected  to have a  material
impact on the Company's results of operations, financial position or cash flows.

     In October  2004,  the FASB  issued  EITF  04-10,  "Determining  Whether to
Aggregate Operating Segments That Do Not Meet the Quantitative  Thresholds." The
consensus  addresses  the  issue  of  how  an  enterprise  should  evaluate  the
aggregation criteria in paragraph 17 of SFAS 131, "Disclosures about Segments of
an Enterprise  and Related  information,"  when  determining  whether  operating
segments that do not meet the  quantitative  thresholds may be  aggregated.  The
effective  date of this issue has been  delayed and is  anticipated  to occur in
2005 to coincide with the final issuance of the FSP (FASB Staff Position), which
will provide guidance in determining whether two or more operating segments have
similar economic  characteristics.  However,  earlier adoption is permitted. The
application  of this  guidance is not expected to have a material  effect on our
financial position or results of operations.
<PAGE>

ITEM 19. EXHIBITS.

     Number                            Description of Exhibits
     ------                            -----------------------

     1.1          ____  Articles of Association for A/S Dampskibsselskabet  TORM
                        and English Translation (the "Company") (1)

     1.2          ____  Rules of  Procedure  for the Board of  Directors  of the
                        Company and English Translation (1)

     2.2          ____  Form of Depositary  Agreement  between Deutsche Bank and
                        the Company (1)

     4.1          ____  The Company's Employee Stock Purchase Plan (1)

     4.2          ____  Office lease  between PFA Pension II and the Company and
                        English Translation (1)

     4.3          ____  Engagement  letter of  Bech-Bruun  Dragsted  and English
                        Translation (1)

     4.4          ____  DKK 42 million  revolving  credit  facility  letter from
                        Danske Bank to the Company  dated  December 11, 1998 and
                        English translation (1)

     4.5          ____  Debt  Instrument  from Agnete  Shipping  Corporation  to
                        Danske Bank Aktieselskab, Singapore Branch, dated August
                        9, 1995 (1)

     4.6          ____  Debt Instrument  from Eastern Light Shipping  Limited to
                        Danske  Bank  Aktieselskab,   Hong  Kong  Branch,  dated
                        November 17, 1995 (1)

     4.7          ____  Debt Instrument from Southern Light Shipping  Limited to
                        Danske Bank Aktieselskab, Hong Kong Branch (1)

     4.8          ____  Debt  Instrument  from Hermia  Shipping  Corporation  to
                        Danske Bank Aktieselskab,  Singapore Branch, dated June,
                        14,  1996 and to Danske  Bank A/S dated  August 29, 2001
                        (1)

     4.9          ____  Debt Instrument from Hilde Shipping Corp. to Danske Bank
                        Aktieselskab, dated July 3, 2000 (1)

     4.10         ____  Debt Instrument from Skagerak  Tankers Limited to Danske
                        Bank Aktieselskab,  Singapore Branch,  dated May 9, 1996
                        (1)

     4.11         ____  Debt Instrument from Anne Product Carriers (PTE) Ltd. To
                        Danske Bank Aktieselskab,  Singapore Branch,  August 28,
                        1998 (1)

     4.12         ____  Debt  Instrument  from Gunhild  Shipping  Corporation to
                        Danske  Bank  Aktieselskab,   Singapore  Branch,   dated
                        November 6, 1998 (1)

     4.13         ____  Debt  Instrument  from Tekla  Shipping Co. Ltd to Danske
                        Bank, Singapore Branch, dated March 23, 1992 (1)

     4.14         ____  Debt Instrument from Alice Product Tanker Corporation to
                        Danske  Bank  Aktieselskab,   Singapore  Branch,   dated
                        November 8, 1994 (1)

     4.15         ____  Debt  Instrument  from Bothnia  Shipping  Corporation to
                        Danske Bank,  Singapore Branch, dated September 20, 1989
                        (1)

     4.16         ____  Debt Instrument from Olga Shipping Corporation to Danske
                        Bank Aktieselskab,  Singapore Branch,  dated October 27,
                        1995 (1)

     4.17         ____  Secured Loan Agreement, between Caseros Shipping Limited
                        and Nordea Bank, dated June 15, 1994 (1)

     4.18         ____  Loan Agreement  between Estrid Shipping  Corporation and
                        Danmarks Skibskreditfond, dated November 6, 2001 (1)

     4.19         ____  Loan Agreement between Ragnhild Shipping Corporation and
                        Danmarks Skibskreditfond, dated November 6, 2001 (1)

     4.20         ____  Shipbuilding  Contract for the  Construction of Hull No.
                        S161,  between the  Company  and Samho Heavy  Industries
                        Co., Ltd. and Hyundai Heavy  Industries Co., Ltd., dated
                        November 24, 2000 (1)

     4.21         ____  Shipbuilding  Contract for the  Construction of Hull No.
                        S162,  between the  Company  and Samho Heavy  Industries
                        Co., Ltd. and Hyundai Heavy  Industries Co., Ltd., dated
                        November 24, 2000 (1)

     4.22         ____  Contract for  Construction  and Sale of Hull No. S-1089,
                        between   Thyra   Shipping   Corporation   and   Daedong
                        Shipbuilding Co., Ltd., dated March 2, 2001 (1)

     4.23         ____  Contract for  Construction  and Sale of Hull No. S-1090,
                        between   Freya   Shipping   Corporation   and   Daedong
                        Shipbuilding Co., Ltd., dated March 2, 2001 (1)

     4.24         ____  Contract for  Construction  and Sale of Hull No. S-1086,
                        between   Gertrud   Shipping   Corporation  and  Daedong
                        Shipbuilding Co., Ltd., dated November 3, 2000 (1)

     4.25         ____  Contract for  Construction  and Sale of Hull No. S-1087,
                        between   Gerd   Shipping    Corporation   and   Daedong
                        Shipbuilding Co., Ltd., dated November 3, 2000 (1)

     4.26         ____  Contract for  Construction  and Sale of Hull No. S-1079,
                        between the Company and Daedong  Shipbuilding Co., Ltd.,
                        dated August 25, 2000 (1)

     4.27         ____  Contract for  Construction  and Sale of Hull No. S-1080,
                        between the Company and Daedong  Shipbuilding Co., Ltd.,
                        dated August 25, 2000 (1)

     8.1          ____  List of the Company's subsidiaries (1)

     31.1         ____  Rule 13a-14(a)/15d-14(a)  Certification of the Company's
                        Chief Executive Officer.

     31.2         ____  Rule 13a-14(a)/15d-14(a)  Certification of the Company's
                        Chief Financial Officer.

     32.1         ____  Certification  of the Company's Chief Executive  Officer
                        pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
                        to Section 906 of the Sarbanes-Oxley Act of 2002.

     32.2         ____  Certification  of the Company's Chief Financial  Officer
                        pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
                        to Section 906 of the Sarbanes-Oxley Act of 2002.

----------
(1)  Incorporated  by  reference  from  exhibit of same  number to  Registration
     Statement on Form 20-F, filed February 27, 2002 (File No. 000-49650)
<PAGE>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this registration statement on its behalf.

                                          Aktieselskabet Dampskibsselskabet Torm


                                          By: /s/ Klaus Kjaerulff
                                              ----------------------------------
                                              Name:  Klaus Kjaerulff
                                              Title: Chief Executive Officer
Date: June 15, 2005

23116.0001 #578380v2