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, 2006

                                       OR

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

      For the transition period from _________________ to

                                       OR

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

      Date of event requiring this shell company report

Commission file number 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
--------------------------------------------------------------------------------
<PAGE>

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

Common Shares, par value 5 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.

72,800,000 common shares, par value 5 Danish Kroner per share.

Indicate by check mark if the registrant is well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                       Yes   [X]            No  [_]

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                       Yes   [_]            No  [X]

Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                       Yes [X]              No [_]

Indicate by check mark whether the registrant is a large accelerated filer, and
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

 Large accelerated filer [X]  Accelerated filer  [_]   Non-accelerated filer [_]

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

                       [X]   Item 17        [_]   Item 18

If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

                       Yes  [_]             No  [X]

 (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
                          THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                       Yes  [_]             No [_]

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 ADVISORS................................................1

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

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

ITEM 4.    INFORMATION ON THE COMPANY.................................14

ITEM 4A.   UNRESOLVED STAFF COMMENTS..................................33

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS...............33

ITEM 6.    DIRECTORS, SENIOR MANAGEMENTAND EMPLOYEES..................54

ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY
           TRANSACTIONS...............................................58

ITEM 8.    FINANCIAL INFORMATION......................................59

ITEM 9.    THE OFFER AND THE LISTING..................................59

ITEM 10.   ADDITIONAL INFORMAITON.....................................62

ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES
           ABOUT MARKET RISK..........................................72

ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN
           EQUITY SECURITIES..........................................74

ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES............74

ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF
           SECURITY HOLDERS AND USE OF PROCEEDS.......................74

ITEM 15.   CONTROLS AND PROCEDURES....................................74

ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT...........................74

ITEM 16B.  CODE OF ETHICS.............................................74

ITEM 16C.  PRINCIPAL ACCOUNTING FEES AND SERVICES.....................74

ITEM 16D.  EXEMPTIONS FROM LISTING STANDARDS FOR
           AUDIT COMMITTEES...........................................75

ITME 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER
           AND AFFILIATED PURCHASES...................................75

ITEM 17.   FINANCIAL STATEMENTS.......................................75

ITEM 18.   FINANCIAL STATEMENTS.......................................76

ITEM 19.   EXHIBITS.....................................................
<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," "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 the SEC.
<PAGE>

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

      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 1,000 kilograms, refers to the maximum weight of cargo and
supplies that a vessel can carry. Unless otherwise indicated, all references to
"dollars," "USD" and "$" in this report are to, and amounts are presented in,
U.S. dollars.

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.

      Effective January 1, 2005, we adopted International Financial Reporting
Standards or IFRS and changed our reporting currency from DKK to USD. We had
previously presented our financial statements under Danish GAAP. In accordance
with the Securities and Exchange Commission, or the SEC, reporting requirements
for first-time application of IFRS, in this report we present the comparative
financial information under IFRS only for the fiscal years ended December 31,
2004 and 2005. IFRS differs in certain respects from United States generally
accepted accounting principles, or U.S. GAAP. The differences between IFRS and
U.S. GAAP as applicable to the historical financial statements are summarized in
Note 28 to the consolidated financial statements included herein.

      The selected consolidated financial data under U.S. GAAP includes the
Liner activities, which were sold to A.P. Moller-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.
<PAGE>

<TABLE>
                                                              For the year ended December 31
<CAPTION>
                                            2002           2003           2004            2005           2006
                                            ----           ----           ----            ----           ----
                                             (1)            (1)            (1)
                                                  (in thousands of USD except for per share information)
IFRS financial data
---------------------------------------
<S>                                                                   <C>             <C>            <C>
Statement of Operations Data:
Revenue (2)                                                           442,600          585,611        603,717
Port expenses, bunkers and commissions                                (83,769)        (124,968)      (148,943)
(2)
Freight and bunkers derivatives                                        (9,280)           3,194            620
                                                                       -------           -----            ---

Time charter equivalent earnings                                      349,551          463,837        455,394
                                                                      -------          -------        -------
Charter hire                                                          (59,592)         (82,139)      (106,329)
Operating expenses                                                    (49,791)         (66,744)       (77,624)
                                                                      --------         --------       --------
Gross profit (Net earnings from                                       240,168          314,954        271,441
shipping activities)
Profit from sale of vessels                                                 0           54,731         54,362

Administrative expenses                                               (38,637)         (31,176)       (34,594)
Other operating income                                                 13,139           12,570          9,839
Depreciation and impairment losses                                    (35,181)         (47,894)       (58,915)
                                                                      --------         --------       --------
Operating profit                                                      179,489          303,185        242,133
Financial income                                                       42,788           26,004         39,473
Financial expenses                                                    (16,949)         (29,822)       (40,520)
                                                                      --------         --------       --------

Profit before tax                                                     205,328          299,367        241,086
Tax expenses                                                          (18,715)              (4)        (6,574)
                                                                      --------              ---        -------

Net profit for the year                                               186,613          299,363        234,512

Balance sheet data (as of end of
period):
Total assets (5)                                                     1,239,562       1,810,138      2,089,019
Non-current liabilities                                               406,545          783,648        701,852
Equity/net assets                                                     715,407          904,651      1,280,846
Common shares                                                          61,098           61,098         61,098
No. of shares outstanding (4) (6) (11)                             72,800,000       72,800,000     72,800,000

Other financial data (4)
Dividends declared per share DKK                                        7.50              11.5            5.8
Dividends declared per share USD (7)                                     1.4               1.8            1.0
Earnings per share - basic                                               2.7               4.3            3.4
Earnings per share - diluted                                             2.6               4.3            3.4
U.S. GAAP financial data (8)
Revenue                                  194,173        307,873       442,600          585,611        603,717
Profit from continuing operations          6,417         51,365       205,337          283,441        245,835
before income taxes and discontinued
operations
Tax benefit (expense) on profit           (4,420)         1,725       (17,683)           4,289         (7,765)
                                          -------         -----       --------           -----         -------
Profit from continuing operations          1,997         53,090       187,654          287,730        238,070
Profit from discontinued operations (9)    8,849              0             0                0              0
                                           -----              -             -                -              -

Net profit before change in accounting    10,846         53,090       187,654          287,730        238,070
principles (3)
Cumulative effect of change in                                                           8,707
accounting principles as at January 1,
2005 (3)
Net profit after change in accounting                                                  296,437
principles (3)
Earnings per share - basic:
Profit from continuing operations            0.1            0.8           2.7              4.2            3.4
(4)(6)
Profit from discontinuing operations         0.1            0.0           0.0              0.0            0.0
(4)
Net profit before change in accounting       0.2            0.8           2.7              4.2            3.4
principles (3)(4)
Cumulative effect of change in                                                             0.1
accounting principles as at January 1,
2005 (3)(4)
Net profit after change in accounting                                                      4.3
principles (3)(4)
Earnings per share - diluted:
Profit from continued operations             0.1            0.8           2.7              4.2            3.4
(4)(11)
Profit from discontinued operations          0.1            0.0           0.0              0.0            0.0
(4)(11)
Net profit before change in accounting       0.2            0.8           2.7              4.2            3.4
principles (3)(4)(11)
Cumulative effect of change in                                                             0.1
accounting principles as at January 1,
2005 (3)(4)(11)
Net profit after change in accounting                                                     4.3
principles (3)(4)(11)
Total assets (5)                         562,756        816,646     1,236,317        1,809,639      2,089,019
Non-current liabilities (including       245,046        285,468       406,373          778,786        698,181
capital lease obligations)
Net assets                               168,927        339,738       705,323          891,642      1,271,406
No. of shares outstanding (4)(6)(11)  72.800,000     72.800,000    72.800,000       72.800,000     72.800,000
</TABLE>

1.    Effective January 1, 2005, we have changed the accounting policies used in
      preparing our financial statements from Danish GAAP to IFRS and changed
      our reporting currency from DKK to USD. In accordance with the SEC
      reporting requirements for first-time application of IFRS, we present the
      comparative financial information only for the fiscal year ended December
      31, 2004 and December 31, 2005. Comparative financial information prepared
      in accordance with IFRS data is not provided for the years ended December
      31, 2002 and 2003.

2.    As described in the accounting policies a new line has been added in the
      income statement. Consequently, the comparative figures for the revenue
      and port expenses, bunkers and commissions have been restated.

3.    We changed our method of accounting for vessel dry-docking costs under
      U.S. GAAP as of January 1, 2005. Please refer to Note 28 in our
      consolidated financial statements included herein and the table presented
      in footnote 10 below for further information.

4.    We increased the share capital in May 2004 from nominal DKK 182.0 million
      (USD 30.5 million) to nominal DKK 364.0 million (USD 61.1 million) through
      the issue of 36.4 million bonus shares of DKK 5 (USD 1.7) each.
      Comparative figures have been restated in accordance with the share split.
      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.

5.    Total assets for each period includes bonds that serve as collateral for
      certain of our borrowings. This amount was USD 0 million as of December
      31, 2006, USD 0 million as of December 31, 2005, USD 10 million as of
      December 31, 2004 for both IFRS and U.S. GAAP, and USD 9 million as of
      December 31, 2003 and USD 26 million as of December 31, 2002 for U.S.
      GAAP.

6.    Shares outstanding as of December 31, 2006 includes 3,556,364 shares that
      we purchased and hold as own shares, reflected in shareholders' equity. As
      of December 31, 2005 we held 3,116,944 own shares, as of December 31, 2004
      we held 3,133,224 own shares and as of December 31, 2003 and December 31,
      2002 we held 3,525,472 own shares. Comparative figures have been restated
      in accordance with the share split.

7.    Dividends are converted to U.S. dollars based on the historical exchange
      rate for the year in question.

8.    As a consequence of the change in reporting currency from DKK to USD
      effective as of January 1, 2005, comparative U.S. GAAP financial data for
      2002 and 2003 is translated from DKK into USD for income related data
      using the average USD/DKK exchange rate for period and for balance sheet
      related data using the USD/DKK exchange rate at the end of such period.

9.    Profit from discontinued operations for 2002 includes the gain of USD 7.6
      million on disposal of the Company's Liner activities.

10.   The table below presents U.S. GAAP net income adjusted for the proforma
      effect of the change in method of accounting for dry dock costs from the
      accrual method to the deferral method as if the adopted method of
      accounting had been applied during all periods affected.

      Proforma                                       2002      2003      2004

                                                  (in millions of USD, except
                                                          for per share data)

         Net income as reported                    10,846    53,090   187,654
         Effect of accounting change                1,942        46     1,089
                                                    -----        --     -----
         Net income                                12,788    53,136   188,743
                                                   ======    ======   =======
      Per share (basic)
          As reported                                 0.1       0.8       2.7
          Effect of accounting change                 0.1       0.0       0.0
                                                      ---       ---       ---
          Proforma profit                             0.2       0.8       2.7
                                                      ===       ===       ===
      Per share (diluted)
         As reported                                  0.1       0.8       2.7
         Effect of accounting change                  0.1       0.0       0.0
                                                      ---       ---       ---
         Proforma profit                              0.2       0.8       2.7
                                                      ===       ===       ===

11.   In accordance with the share split of May 23, 2007 all share related key
      figures have been restated retrospectively. Information about the share
      split is presented in note 29 in the financial statements.

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.

<TABLE>
<CAPTION>
                                                             DKK per U.S. dollar
                                     -------------------------------------------------------------------
                                         High            Low           Average (1)         Period End
                                     -------------   -------------   -----------------   ---------------
      Year ended December 31,
<C>                                     <C>             <C>               <C>                <C>
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
2005      ....................          6.3891          5.5161            5.9953             6.2985
2006      ....................          6.2888          5.5948            5.9422             5.6479
</TABLE>

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

(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 30, 2006        ....................     5.8681              5.6214
December 31, 2006        ....................     5.6999              5.5948
January 31, 2007         ....................     5.7756              5.6119
February 28, 2007        ....................     5.7633              5.6262
March 31, 2007           ....................     5.6874              5.5709
April 30, 2007           ....................     5.5772              5.4553

On April 30, 2007, the exchange rate between the Danish Kroner and the U.S.
dollar was 5.4553.

B.    Capitalization and Indebtedness

      Not Applicable.

C.    Reasons 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 product  tanker and dry bulk carrier  sectors are cyclical and
volatile,  and this may lead to reductions and volatility in our charter
rates when we  re-charter  our  vessels,  vessel  values and  results of
operations

      The dry bulk carrier and product tanker sectors are cyclical with
attendant volatility in charter hire rates and industry profitability. The
degree of charter hire rate volatility among different types of dry bulk
carriers and product tankers has varied widely. The charter rates for dry bulk
carriers and especially for product tankers remain near historically high
levels. If we enter into a charter when charter hire rates are low, our revenues
and earnings will be adversely affected. In addition, a decline in charter hire
rates likely will cause the value of our vessels to decline. We cannot assure
you that we will be able to successfully charter our vessels in the future or
renew our existing charters at rates sufficient to allow us to operate our
business profitably, meet our obligations or to pay dividends to our
shareholders. The factors affecting the supply and demand for dry bulk carriers
and product tankers are outside of our control and are unpredictable. The
nature, timing, direction and degree of changes in industry conditions are also
unpredictable.

      Factors that influence demand for seaborne transportation of cargo
include:

      o     demand for and production of dry bulk products, crude oil and
            refined petroleum products;

      o     the distance cargo is to be moved by sea;

      o     changes in oil production and refining capacity;

      o     global and regional economic and political conditions;

      o     environmental and other regulatory developments; and

      o     changes in seaborne and other transportation patterns, including
            changes in the distances over which cargo is transported due to
            geographic changes in where commodities are produced, oil is refined
            and cargoes are used.

      The factors that influence the supply of vessel capacity include:

      o     the number of newbuilding deliveries;

      o     the scrapping rate of older vessels;

      o     vessel casualties;

      o     price of steel;

      o     number of vessels that are out of service;

      o     changes in environmental and other regulations that may limit the
            useful life of vessels; and

      o     port or canal congestion.

      We anticipate that the future demand for our vessels will be dependent
upon continued economic growth in the world's economies, including China and
India, seasonal and regional changes in demand, changes in the capacity of the
world's dry bulk carrier and product tanker fleets and the sources and supply of
cargo to be transported by sea. If the global vessel capacity increases in the
shipping sectors in which we operate, but the demand for vessel capacity in
these sectors does not increase or increases at a slower rate, the charter rates
paid for our vessels could materially decline. Adverse economic, political,
social or other developments could have a material adverse effect on our
business, financial condition, results of operations and ability to pay
dividends.

      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 any of our tankers or dry bulk carriers at a time when vessel
prices have fallen, 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.

      The  international  tanker industry has  experienced  historically
high  charter  rates and vessel  values in the recent past and there can
be no assurance  that these  historically  high charter rates and vessel
values will be sustained

      Charter rates in the tanker industry recently have been near historically
high levels. We anticipate that future demand for our vessels, and in turn our
future charter rates, will be dependent upon continued economic growth in the
world's economy as well as seasonal and regional changes in demand and changes
in the capacity of the world's fleet. We believe that these charter rates are
the result of continued economic growth in the world economy that exceeds growth
in global vessel capacity. There can be no assurance that economic growth will
not stagnate or decline leading to a decrease in vessel values and charter
rates. A decline in charter rates could have a material adverse effect on our
business, financial condition, results of operation and ability to pay
dividends.

      Our operating results from our fleet are subject to seasonal fluctuations,
which may adversely affect our operating results

      Our fleet consists of dry bulk carriers and product tankers. We operate
our vessels in markets that have historically exhibited seasonal variations in
demand and, as a result, in charter rates. This seasonality may result in
quarter-to-quarter volatility in our operating results. The dry bulk sector is
typically stronger in the fall and winter months in anticipation of increased
consumption of coal and other raw materials in the northern hemisphere during
the winter months. As a result, we expect our dry bulk revenues to be weaker
during the fiscal quarters ended June 30 and September 30, and, conversely, we
expect our revenues to be stronger in fiscal quarters ended December 31 and
March 31. The tanker sector is typically stronger in the fall and winter months
in anticipation of increased consumption of oil and petroleum products in the
northern hemisphere during the winter months. As a result, our revenues from our
tankers may be weaker during the fiscal quarters ended June 30 and September 30,
and, conversely, revenues may be stronger in fiscal quarters ended December 31
and March 31. This seasonality could materially affect our operating results and
cash available for dividends in the future.

      World events could adversely affect our results of operations and
financial condition

      Terrorist attacks such as the attacks on the United States on September
11, 2001, the bombings in Spain on March 11, 2004 and in London on July 7, 2005
and the continuing response of the United States to these attacks, as well as
the threat of future terrorist attacks in the United States or elsewhere,
continue to cause uncertainty in the world financial markets and may affect our
business, operating results and financial condition. The continuing 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. These uncertainties could also adversely affect our ability
to obtain any additional financing or, if we are able to obtain additional
financing, to do so on terms favorable to us. In the past, political conflicts
have also resulted in attacks on vessels, mining of waterways and other efforts
to disrupt international shipping, particularly in the Arabian Gulf region. Acts
of terrorism and piracy have also affected vessels trading in regions such as
the South China Sea. Any of these occurrences could have a material adverse
impact on our business, financial condition, results of operations and ability
to pay dividends.

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

      The shipping industry in general, our business and the operation of our
tankers in particular, are affected by a variety of governmental regulations in
the form of numerous international conventions, national, state and local laws
and national and international regulations in force in the jurisdictions in
which such tankers operate, as well as in the country or countries in which such
tankers are registered. These regulations include:

      o     the United States Oil Pollution Act of 1990, or OPA, which imposes
            strict liability for the discharge of oil into the 200-mile United
            States exclusive economic zone, the obligation to obtain
            certificates of financial responsibility for vessels trading in
            United States waters and the requirement that newly constructed
            tankers that trade in United States waters be constructed with
            double-hulls;

      o     the International Convention on Civil Liability for Oil Pollution
            Damage of 1969 entered into by many countries (other than the United
            States) relating to strict liability for pollution damage caused by
            the discharge of oil;

      o     the International Maritime Organization, or IMO, International
            Convention for the Prevention of Pollution from Ships with respect
            to strict technical and operational requirements for tankers;

      o     the IMO International Convention for the Safety of Life at Sea of
            1974, or SOLAS, with respect to crew and passenger safety;

      o     the International Convention on Load Lines of 1966 with respect to
            the safeguarding of life and property through limitations on load
            capability for vessels on international voyages; and

      o     the United States Marine Transportation Security Act of 2002.

      More stringent maritime safety rules are being imposed worldwide as a
result of the oil spill in November 2002 relating to the loss of the m.t.
Prestige, a 26-year old single-hull tanker owned by a company not affiliated
with us. 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 adverse effect on our operations. In addition, we are
required by various governmental and quasi-governmental agencies to obtain
certain permits, licenses and certificates with respect to our operations. In
the event of war or national emergency, our tankers may be subject to
requisition by the government of the flag flown by the tanker without any
guarantee of compensation for lost profits. We believe our tankers are
maintained in good condition in compliance with present regulatory requirements,
are operated in compliance with applicable safety/environmental laws and
regulations and are insured against usual risks for such amounts as our
management deems appropriate. The tankers' operating certificates and licenses
are renewed periodically during each tanker's required annual survey. However,
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 expenditures on our ships to keep them in compliance.

      Compliance with safety and other vessel requirements imposed by
classification societies may be very costly and may adversely affect our
business

      The hull and machinery of every commercial vessel must be classed by a
classification society authorized by its country of registry. The classification
society certifies that a vessel is safe and seaworthy in accordance with the
applicable rules and regulations of the country of registry of the vessel and
the Safety of Life at Sea Convention. Our vessels are currently enrolled with
the American Bureau of Shipping, Lloyd's Register of Shipping or Det Norske
Veritas, each of which is a member of the International Association of
Classification Societies.

      A vessel must undergo annual surveys, intermediate surveys and special
surveys. In lieu of a special survey, a vessel's machinery may be placed on a
continuous survey cycle, under which the machinery would be surveyed
periodically over a five-year period. Our vessels are on special survey cycles
for hull inspection and continuous survey cycles for machinery inspection. Every
vessel is also required to be dry docked every two to three years for inspection
of the underwater parts of such vessel.

      If any vessel does not maintain its class and/or fails any annual survey,
intermediate survey or special survey, the vessel will be unable to trade
between ports and will be unemployable, which would negatively impact our
revenues.

      Increased inspection procedures and tighter import and export controls
could increase costs and disrupt our business

      International shipping is subject to various security and customs
inspections and related procedures in countries of origin and destination.
Inspection procedures can result in the seizure of contents of our vessels,
delays in the loading, offloading or delivery and the levying of customs,
duties, fines and other penalties against us.

      It is possible that changes to inspection procedures could impose
additional financial and legal obligations on us. Furthermore, changes to
inspection procedures could also impose additional costs and obligations on our
customers and may, in certain cases, render the shipment of certain types of
cargo impractical. Any such changes or developments may have a material adverse
effect on our business, financial condition, results of operations and our
ability to pay dividends.

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 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     engage in mergers or acquisitions;

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

      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, 2006, our fleet of owned
vessels included two tankers 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.

      Rising fuel prices may adversely affect our profits

      Fuel is a significant, if not the largest, operating expense for many of
our shipping operations when our vessels are not under period charter. The price
and supply of fuel is unpredictable and fluctuates based on events outside our
control, including geopolitical developments, supply and demand for oil and gas,
actions by OPEC and other oil and gas producers, war and unrest in oil producing
countries and regions, regional production patterns and environmental concerns.
As a result, an increase in the price of fuel may adversely affect our
profitability. Further, fuel may become much more expensive in future, which may
reduce the profitability and competitiveness of our business versus other forms
of transportation, such as truck or rail.

      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.

      An  economic  slowdown  in the Asia  Pacific  region  could have a
material adverse effect on our business,  financial position and results
of operations

      A significant number of the port calls made by our vessels involves, or
will involve, the loading or discharging of raw materials in ports in the Asia
Pacific region. As a result, a negative change in economic conditions in any
Asia Pacific country, but particularly in China, may have an adverse effect on
our business, financial position and results of operations, as well as our
future prospects. In recent years, China has been one of the world's fastest
growing economies in terms of gross domestic product, which has had a
significant impact on shipping demand. We cannot assure you that such growth
will be sustained or that the Chinese economy will not experience negative
growth in the future. Moreover, any slowdown in the economies of the United
States, the European Union or certain Asian countries may adversely affect
economic growth in China and elsewhere. Our business, financial position,
results of operations, ability to pay dividends as well as our future prospects,
will likely be materially and adversely affected by an economic downturn in any
of these countries.

      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 2006, we generated nearly all of our revenues in U.S. dollars but
incurred approximately 85% of our expenses in U.S dollars and approximately 13%
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, 2006, 91% 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, 2006, we had entered into interest swap
agreements expiring between 2007 and 2010 for approximately 60% 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
and cash flow.

      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 annual report 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. 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.

      We may have to pay tax on United States source income, which
would reduce our earnings

      Under the United States Internal Revenue Code of 1986, or the Code, 50% of
the gross shipping income of a vessel owning or chartering corporation, such as
ourselves and our subsidiaries, that is attributable to transportation that
begins or ends, but that does not begin and end, in the United States is
characterized as United States source shipping income and such income is subject
to a 4% United States federal income tax without allowance for deduction, unless
that corporation qualifies for exemption from tax under Section 883 of the Code
or under the terms of a tax-treaty with the United States.

      We expect that our Danish subsidiaries will qualify for tax exemption
under the tax treaty between the United States and Denmark. However, our
non-Danish subsidiaries may not qualify for exemption under Section 883 for the
2006 taxable year unless we are able to obtain certain certifications from our
shareholders. As of the date of this filing, we have not been able to obtain
these certifications, although we intend to continue to our efforts. If we are
unable to obtain these certifications, our non-Danish subsidiaries would be
subject to United States federal income tax on our United States source income
derived during our 2006 taxable year. We can give no assurances on our
tax-exempt status or that of any of our subsidiaries.

      If we or our subsidiaries are not entitled to this exemption under Section
883 for any taxable year, we or our subsidiaries would be subject for those
years to a 4% United States federal income tax on our U.S. source shipping
income. The imposition of this taxation could have a negative effect on our
business.

      U.S. tax authorities could treat us as a "passive foreign
investment company," which could have adverse U.S. federal income tax
consequences to U.S. holders

      A foreign corporation will be treated as a "passive foreign investment
company," or PFIC, for U.S. federal income tax purposes if either (1) at least
75% of its gross income for any taxable year consists of certain types of
"passive income" or (2) at least 50% of the average value of the corporation's
assets produce or are held for the production of those types of "passive
income." For purposes of these tests, "passive income" includes dividends,
interest, and gains from the sale or exchange of investment property and rents
and royalties other than rents and royalties which are received from unrelated
parties in connection with the active conduct of a trade or business. For
purposes of these tests, income derived from the performance of services does
not constitute "passive income." U.S. shareholders of a PFIC are subject to a
disadvantageous U.S. federal income tax regime with respect to the income
derived by the PFIC, the distributions they receive from the PFIC and the gain,
if any, they derive from the sale or other disposition of their shares in the
PFIC.

      Based on our proposed method of operation, we do not believe that we will
be a PFIC with respect to any taxable year. In this regard, we intend to treat
the gross income we derive or are deemed to derive from our time chartering
activities as services income, rather than rental income. Accordingly, we
believe that our income from our time chartering activities does not constitute
"passive income," and the assets that we own and operate in connection with the
production of that income do not constitute passive assets.

      There is, however, no direct legal authority under the PFIC rules
addressing our proposed method of operation. Accordingly, no assurance can be
given that the U.S. Internal Revenue Service, or IRS, or a court of law will
accept our position, and there is a risk that the IRS or a court of law could
determine that we are a PFIC. Moreover, no assurance can be given that we would
not constitute a PFIC for any future taxable year if there were to be changes in
the nature and extent of our operations.

      If the IRS were to find that we are or have been a PFIC for any taxable
year, our U.S. shareholders will face adverse U.S. tax consequences. Under the
PFIC rules, unless those shareholders make an election available under the Code
(which election could itself have adverse consequences for such shareholders, as
discussed below under "Tax Considerations--U.S. Federal Income Taxation of U.S.
Holders"), such shareholders would be liable to pay U.S. federal income tax at
the then prevailing income tax rates on ordinary income plus interest upon
excess distributions and upon any gain from the disposition of our common stock,
as if the excess distribution or gain had been recognized ratably over the
shareholder's holding period of our common stock. See "Tax Considerations--U.S.
Federal Income Taxation of U.S. Holders" for a more comprehensive discussion of
the U.S. federal income tax consequences to U.S. shareholders if we are treated
as a PFIC.

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 liner and offshore marine service vessels, but ceased these
services in September 2002 and December 2003, respectively. 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 IFRS.

      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
period 2004 to 2006, we have entered into contracts to purchase 35 additional
vessels under construction, or newbuildings, and secondhand vessels, for a total
cost of approximately USD 1.4 billion and have sold 10.5 vessels for aggregate
proceeds of approximately USD 274 million. As of April 30, 2007, we have taken
delivery of 19.5 vessels under this investment program and expect to take
delivery of the remaining 15.5 vessels, between 2007 and 2010, representing a
total outstanding investment of approximately USD 538 million.

B.    Business Overview

The Fleet

      As of December 31, 2006, our fleet of owned vessels consisted of 31
product tankers and five dry bulk carriers. The total tonnage of those vessels
is approximately 2,348,145 dwt. In addition, we chartered nine product tankers
and nine drybulk carriers and commercially managed approximately 46 vessels for
third party owners and charterers.

      For an overview of our fleet please refer to Item 4D and for details of
our investment activities please refer to Item 5A.

      Our product tanker division is primaryly 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 and secondarily a small part of the
tanker division is engaged in the transportation of crude oil. 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.

      Our dry bulk vessels transport products such as grain, coal and iron ore.
We operate dry bulk vessels of the Panamax size only. 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.

      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                             2004             2005             2006
--------                            -----            -----            -----
Product Tankers                       56%              67%              84%
Dry Bulk Vessels                      44%              33%              16%

      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 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. Please refer to
Note 1 to our consolidated financial statements contained herein for further
details relating to the treatment of income from pools.

The LR2 Pool

      As of December 31, 2006, the LR2 Pool was comprised of 24 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
Long Range 2 A/S, is the general partner of the partnership. We own 50% of all
issued and outstanding voting stock of Long 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, Reederei "Nord" Klaus E. Oldendorff Ltd. and Rederi AB
Gotland. Eight of our owned and chartered vessels participated in this pool. We
have also contracted to add our 5 newbuildings and another newbuilding in which
we have a 50% interest to the pool between 2007 and 2009 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 February 2008. 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 any partner from January 1, 2006 to April 30, 2007.

The LR1 Pool

      As of December 31, 2006, the LR1 Pool consisted of 36 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., Great Basic Limited, Great Global
(Asia) Limited, Prime Marine Corporation Inc. and Rederiaktiebolaget Gotland. As
of December 31, 2006, fourteen of our owned and chartered vessels participated
in this pool, and we had contracted to add one newbuilding vessel and another
newbuilding in which we have a 50% interest to the pool in 2007 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 any partner
from January 1, 2006 to April 30, 2007.

The MR Pool

      The MR Pool is a pooling arrangement we have entered into with Prisco
Singapore Pte Ltd., Sanmar Shipping and Rederiaktiebolaget Gotland for the
pooling of 22 Handymax product tankers as of December 31, 2006. We serve as the
sole manager of the MR Pool. As of December 31, 2006, 16 of our vessels
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 any partner from
January 1, 2006 to April 30, 2007.

Dry Bulk Vessel operation

      We operate Panamaxsize vessels in our Bulk Division. We operate our
Panamax vessels ourselves while our Handysize vessels were operated through our
participation in the IHC Pool. Similar to the pooling arrangement for our
product tankers, the earnings from the Handysize vessels were 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. The IHC Pool was comprised of
approximately 50 vessels as at December 31, 2005. Pacific Basin serves as
commercial manager for the pool. In April 2006 we sold our two remaining vessels
in the pool and will no longer participate in the IHC Pool.

Our investment in Dampskibsselskabet Norden A/S ("NORDEN")

      In the summer of 2002, TORM acquired a share holding in NORDEN and
subsequently 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. In 2005 and 2006 we
acquired a small portion of additional shares. As of December 31, 2006, we were
NORDEN's single largest shareholder with 34.7% 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, 2006, NORDEN operated approximately 153 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, 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.

Torm has disposed the shareholding in NORDEN at 31 March 2007. The shares were
sold through a book-building offer at a total price of DKK 3,940 million (USD
704 million). TORM's gain on the investment in Norden was DKK 3,599 million (USD
643 million), while the total return of the investment incl. dividends has been
DKK 4,079 million (USD 725 million). The appreciation in the value of the
investment since December 31, 2006 is DKK 354 million (USD 71 million).

The Industry - Tankers

      The international product tanker industry provides seaborne transportation
of refined petroleum products for the oil market. According to industry sources
(Marsoft), tankers transported refined oil products corresponding to
approximately 711 million tons annually in the fourth quarter of 2006 showing a
2.8 decrease as compared to fourth quarter 2005. For 2006 as a whole, industry
sources estimate that products trade decreased by 3%. Ton-miles, which
illustrates the total demand for capacity, is expected to increase by 4.6% in
2007 vs. 5.0% in 2006 (source: Fearnleys). However, it should be noted that the
calculation of this figure is subject to considerable uncertainty. 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 (Clarkson), the world tanker fleet above
10,000 dwt consists of approximately 4,278 vessels totaling 364 million dwt or
6.9% higher as of January 1, 2007 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 charter hire 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 Panamax dry bulk vessels only. 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 period 2003 to 2006 the dry bulk market
reached historically high levels and the charter rates, although volatile, have
remained relatively high compared to the historical averages due, among other,
to a strong demand from China for iron ore, coupled with a relatively low level
of newbuilding deliveries and a relatively 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 relatively 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 bunker costs.

      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 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 at 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, Tokyo and have recently
started an office in Kristiansand in Norway, 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.

Customers

      We have derived, and believe that we will continue to derive, a
significant portion of our revenues from a limited number of customers. The
majority of our customers are companies that operate in the oil industry. One
customer accounted for approximately 16% of our consolidated revenue during 2006
and approximately 12% in 2005. No other customer accounted for more than 10% of
our consolidated revenue during 2006 and 2005. The loss of any significant
customer or a substantial decline in the amount of services requested by a
significant customer could have a material adverse effect on our business,
financial condition and results of operations.

Environmental and Other Regulation

      Government regulation significantly affects the ownership and operation of
our vessels. They are subject to international conventions, national, state and
local laws and regulations in force in the countries in which our vessels may
operate or 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.

      We believe that the heightened level of environmental and quality concerns
among insurance underwriters, regulators and charterers is 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 vessels that conform to the stricter
environmental standards. We maintain operating standards for all of our vessels
that emphasize operational safety, quality maintenance, continuous training of
our officers and crews and compliance with U.S. and international regulations.
We believe that the operation of our vessels are in substantial compliance with
applicable environmental laws and regulations; however, because such laws and
regulations are frequently changed and may impose increasingly stricter
requirements, we cannot predict the ultimate cost of complying with these
requirements, or the impact of these requirements on the resale value or useful
lives of our vessels.

      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 (U.S. Coast
Guard, harbor master or equivalent), classification societies, flag state
administration (country of registry) and charterers, particularly terminal
operators and oil companies. 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.

INTERNATIONAL MARITIME ORGANIZATION

      The International Maritime Organization, or IMO (the United Nations agency
for maritime safety), has adopted the International Convention for the
Prevention of Marine Pollution from Ships, 1973, as modified by the Protocol of
1978 relating thereto, which has been updated through various amendments, or the
MARPOL Convention. The MARPOL Convention relates to environmental standards
including oil leakage or spilling, garbage management, as well as the handling
and disposal of noxious liquids, harmful substances in packaged forms, sewage
and air emissions. These regulations, which have been implemented in many
jurisdictions in which our vessels operate, provide, in part, that:

      o     25-year old tankers 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     30-year old tankers 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  laid on or
            after January 6, 1994; or

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

      Our vessels are also subject to regulatory requirements, including the
phase-out of single-hull tankers, imposed by the IMO. Effective September 2002,
the IMO accelerated its existing timetable for the phase-out of single-hull oil
tankers. At that time, these regulations required 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.

      Under the regulations, the flag state may allow for some newer single hull
ships registered in its country that conform to certain technical specifications
to continue operating until the 25th anniversary of their delivery. Any port
state, however, may deny entry of those single hull tankers that are allowed to
operate until their 25th anniversary to ports or offshore terminals. These
regulations have been adopted by over 150 nations, including many of the
jurisdictions in which our tankers operate.

      As a result of the oil spill in November 2002 relating to the loss of the
MT Prestige, which was owned by a company not affiliated with us, in December
2003, the Marine Environmental Protection Committee of the IMO, or MEPC, adopted
an amendment to the MARPOL Convention, which became effective in April 2005. The
amendment revised an existing regulation 13G accelerating the phase-out of
single hull oil tankers and adopted a new regulation 13H on the prevention of
oil pollution from oil tankers when carrying heavy grade oil. Under the revised
regulation, single hull oil tankers must be phased out no later than April 5,
2005 or the anniversary of the date of delivery of the ship on the date or in
the year specified in the following table:

Category of Oil Tankers
-----------------------

Category 1 oil tankers of 20,000 dwt and above carrying crude oil, fuel oil,
heavy diesel oil or lubricating oil as cargo, and of 30,000 dwt and above
carrying other oils, which do not comply with the requirements for protectively
located segregated ballast tanks

Category 2 - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil,
heavy diesel oil or lubricating oil as cargo, and of 30,000 dwt and above
carrying other oils, which do comply with the protectively located segregated
ballast tank requirements

and

Category 3 - oil tankers of 5,000 dwt and above but less than the tonnage
specified for Category 1 and 2 tankers.

Date or Year
------------

April 5, 2005 for ships delivered on April 5, 1982 or earlier; or 2005 for ships
delivered after April 5, 1982

April 5, 2005 for ships delivered on April 5, 1977 or earlier
2005 for ships delivered after April 5, 1977 but before January 1, 1978
2006 for ships delivered in 1978 and 1979
2007 for ships delivered in 1980 and 1981
2008 for ships delivered in 1982
2009 for ships delivered in 1983
2010 for ships delivered in 1984 or later

      Under the revised regulations, the flag state may allow for some newer
single hull oil tankers registered in its country that conform to certain
technical specifications to continue operating until the earlier of the
anniversary of the date of delivery of the vessel in 2015 or the 25th
anniversary of their delivery. Any port state, however, may deny entry of those
single hull oil tankers that are allowed to operate until the earlier of their
anniversary date of delivery in 2015 or the year in which the ship reaches 25
years of age after the date of its delivery, whichever is earlier.

      The MEPC, in October 2004, adopted a unified interpretation to regulation
13G that clarified the date of delivery for tankers that have been converted.
Under the interpretation, where an oil tanker has undergone a major conversion
that has resulted in the replacement of the fore-body, including the entire
cargo carrying section, the major conversion completion date of the oil tanker
shall be deemed to be the date of delivery of the ship, provided that:

      o  the oil tanker conversion was completed before July 6, 1996;

      o  the conversion included the replacement of the entire cargo section and
         fore-body and the tanker complies with all the relevant provisions of
         MARPOL Convention applicable at the date of completion of the major
         conversion; and

      o  the original delivery date of the oil tanker will apply when
         considering the 15 years of age threshold relating to the first
         technical specifications survey to be completed in accordance with
         MARPOL Convention.

      In December 2003, the MEPC adopted a new regulation 13H on the prevention
of oil pollution from oil tankers when carrying heavy grade oil, or HGO, which
includes most of the grades of marine fuel. The new regulation bans the carriage
of HGO in single hull oil tankers of 5,000 dwt and above after April 5, 2005,
and in single hull oil tankers of 600 dwt and above but less than 5,000 dwt, no
later than the anniversary of their delivery in 2008.

      Under regulation 13H, HGO means any of the following:

      o crude oils having a density at 15(0)C higher than 900 kg/m(3);

      o  fuel oils having either a density at 15(0)C higher than 900 kg/m(3) or
         a kinematic viscosity at 50(0)C higher than 180 mm(2)/s; or

      o  bitumen, tar and their emulsions.

      Under the regulation 13H, the flag state may allow continued operation of
oil tankers of 5,000 dwt and above, carrying crude oil with a density at 15(0)C
higher than 900 kg/m(3) but lower than 945 kg/m(3), that conform to certain
technical specifications and, in the opinion of the such flag state, the ship is
fit to continue such operation, having regard to the size, age, operational area
and structural conditions of the ship and provided that the continued operation
shall not go beyond the date on which the ship reaches 25 years after the date
of its delivery. The flag state may also allow continued operation of a single
hull oil tanker of 600 dwt and above but less than 5,000 dwt, carrying HGO as
cargo, if, in the opinion of the such flag state, the ship is fit to continue
such operation, having regard to the size, age, operational area and structural
conditions of the ship, provided that the operation shall not go beyond the date
on which the ship reaches 25 years after the date of its delivery.

      The flag state may also exempt an oil tanker of 600 dwt and above carrying
HGO as cargo if the ship is either engaged in voyages exclusively within an area
under its jurisdiction, or is engaged in voyages exclusively within an area
under the jurisdiction of another party, provided the party within whose
jurisdiction the ship will be operating agrees. The same applies to vessels
operating as floating storage units of HGO.

      Any port state, however, can deny entry of single hull tankers carrying
HGO which have been allowed to continue operation under the exemptions mentioned
above, into the ports or offshore terminals under its jurisdiction, or deny
ship-to-ship transfer of HGO in areas under its jurisdiction except when this is
necessary for the purpose of securing the safety of a ship or saving life at
sea.

      Revised Annex I to the MARPOL Convention entered into force in January
2007. Revised Annex I incorporates various amendments adopted since the MARPOL
Convention entered into force in 1983, including the amendments to regulation
13G (regulation 20 in the revised Annex) and Regulation 13H (regulation 21 in
the revised Annex). Revised Annex I also imposes construction requirements for
oil tankers delivered on or after January 1, 2010. A further amendment to
revised Annex I includes an amendment to the definition of "heavy grade oil"
that will broaden the scope of regulation 21.

      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 May 19,
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. We believe that all our vessels are
currently compliant in all material respects with these regulations. Additional
or new conventions, laws and regulations may be adopted that could adversely
affect our business, cash flows, results of operations and financial condition.

      The IMO has also adopted the International Convention for the Safety of
Life at Sea, or SOLAS Convention, which imposes a variety of standards to
regulate design and operational features of ships. SOLAS Convention standards
are revised periodically. We believe that all our vessels are in substantial
compliance with SOLAS Convention standards.

      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 intend to rely upon the safety management system
that we and our third party technical managers have developed.

      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, under the ISM Code. We have
obtained documents of compliance for our offices and safety management
certificates for all of our vessels for which the certificates are required by
the IMO. We are required to renew these documents of compliance and safety
management certificates annually.

      Noncompliance with the ISM Code and other IMO regulations may subject the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available insurance coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. The U.S. Coast Guard and European
Union authorities have indicated that vessels not in compliance with the ISM
Code by the applicable deadlines 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.

      Although the United States is not a party to these conventions, many
countries have ratified and follow the liability plan adopted by the IMO and set
out in the International Convention on Civil Liability for Oil Pollution Damage
of 1969. Under this convention and depending on whether the country in which the
damage results is a party to the 1992 Protocol to the International Convention
on Civil Liability for Oil Pollution Damage, a vessel's registered owner is
strictly liable for pollution damage caused in the territorial waters of a
contracting state by discharge of persistent oil, subject to certain complete
defenses. Under an amendment to the 1992 Protocol that became effective on
November 1, 2003, for vessels of 5,000 to 140,000 gross tons (a unit of
measurement for the total enclosed spaces within a vessel), liability will be
limited to approximately $6.75 million plus $944.7 for each additional gross ton
over 5,000. For vessels of over 140,000 gross tons, liability will be limited to
approximately $134.4 million. As the convention calculates liability in terms of
a basket of currencies, these figures are based on currency exchange rates on
January 23, 2007. The right to limit liability is forfeited under the
International Convention on Civil Liability for Oil Pollution Damage 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 that are parties to these conventions must provide evidence of
insurance covering the liability of the owner. In jurisdictions where the
International Convention on Civil Liability for Oil Pollution Damage 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 that convention.
We believe that our P&I insurance will cover the liability under the plan
adopted by the IMO.

U.S. Oil Pollution Act of 1990,  Comprehensive  Environmental  Response,
Compensation and Liability Act of the Clean Water Act,

      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 United States or its territories or
possessions, or whose vessels operate in the waters of the United States, which
include the U.S. territorial sea and the 200 nautical mile exclusive economic
zone around the United States. 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 charterers are
"responsible parties" who are jointly, severally and strictly liable (unless the
spill results solely from the act or omission of a third party, an act of God or
an act of war) for all containment and clean-up costs and other damages arising
from oil spills from their vessels. These other damages 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 loss of subsistence
         use of natural resources.

      OPA previously limited the liability of responsible parties to the greater
of $1,200 per gross ton or $10 million per tanker that is over 3,000 gross tons
(subject to possible adjustment for inflation). Amendments to OPA signed into
law in July 2006 increased these limits on the liability of responsible parties
to the greater of $1,900 per gross ton or $16 million per double hull tanker
that is over 3,000 gross tons. The act 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 which have enacted this type of 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
$300 per gross ton or $5 million.

      These limits of liability do not apply, however, where the incident is
caused by violation of applicable U.S. federal safety, construction or operating
regulations, or by the responsible party's gross negligence or willful
misconduct. These limits do not apply if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the
substance removal activities. 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 vessels 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 the act. The U.S. Coast
Guard has enacted regulations requiring evidence of financial responsibility in
the amount of $1,500 per gross ton for tankers, coupling the OPA limitation on
liability of $1,200 per gross ton with the CERCLA liability limit of $300 per
gross ton. The U.S. Coast Guard has indicated that it expects to adopt
regulations requiring evidence of financial responsibility in amounts that
reflect the higher limits of liability imposed by the July amendments to OPA, as
described above. 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 is 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 strict liability under OPA and CERCLA. We have
provided such evidence 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 $1.0 billion. 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
vessels operating in U.S. waters must be built with double-hulls, and existing
vessels that do not comply with the double-hull requirement will be prohibited
from trading in U.S. waters over a 20-year period (1995-2015) based on size, age
and place of discharge, unless retrofitted with double-hulls. Notwithstanding
the prohibition to trade schedule, the act currently permits existing
single-hull and double-sided tankers to operate until the year 2015 if their
operations within U.S. waters are limited to discharging at the Louisiana
Offshore Oil Port or off-loading by lightering within authorized lightering
zones more than 60 miles off-shore. Lightering is the process by which vessels
at sea off-load their cargo to smaller vessels for ultimate delivery to the
discharge port.

      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 United
States 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
            removal actions.

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

      In addition, the United States Clean Water Act prohibits the discharge of
oil or hazardous substances in United States navigable waters and imposes strict
liability in the form of penalties for unauthorized discharges. The Clean Water
Act also imposes substantial liability for the costs of removal, remediation and
damages and complements the remedies available under OPA and CERCLA, discussed
above. The United States Environmental Protection Agency, or EPA, has exempted
the discharge of ballast water and other substances incidental to the normal
operation of vessels in U.S. ports from Clean Water Act permitting requirements.
However, on March 31, 2005, a U.S. District Court ruled that the EPA exceeded
its authority in creating an exemption for ballast water. On September 18, 2006,
the court issued an order invalidating the exemption in EPA's regulations for
all discharges incidental to the normal operation of a vessel as of September
30, 2008, and directing the EPA to develop a system for regulating all
discharges from vessels by that date. Although the EPA has indicated that it
will appeal this decision, if the exemption is repealed, we may be subject to
Clean Water Act permit requirements that could include ballast water treatment
obligations that could increase the cost of operating in the United States. For
example, this could require the installation of equipment on our vessels to
treat ballast water before it is discharged or the implementation of other port
facility disposal arrangements or procedures at potentially substantial cost,
and/or otherwise restrict our vessels from entering U.S. waters.

      The National Invasive Species Act, or NISA, was enacted in 1996 in
response to growing reports of harmful organisms being released into U.S. ports
through ballast water taken on by ships in foreign ports. NISA established a
ballast water management program for ships entering U.S. waters. Under NISA,
mid-ocean ballast water exchange is voluntary, except for ships heading to the
Great Lakes, Hudson Bay, or vessels engaged in the foreign export of Alaskan
North Slope crude oil. However, NISA's exporting and record-keeping requirements
are mandatory for vessels bound for any port in the United States. Although
ballast water exchange is the primary means of compliance with the act's
guidelines, compliance can also be achieved through the retention of ballast
water onboard the ship, or the use of environmentally sound alternative ballast
water management methods approved by the U.S. Coast Guard. If the mid-ocean
ballast exchange is made mandatory throughout the United States, or if water
treatment requirements or options are instituted, the costs of compliance could
increase for ocean carriers.

      Our operations occasionally generate and require the transportation,
treatment and disposal of both hazardous and non-hazardous wastes that are
subject to the requirements of the U.S. Resource Conservation and Recovery Act,
or RCRA, or comparable state, local or foreign requirements. In addition, from
time to time we arrange for the disposal of hazardous waste or hazardous
substances at offsite disposal facilities. If such materials are improperly
disposed of by third parties, we might still be liable for clean up costs under
applicable laws.

      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 and other U.S.
environmental requirements and that they would also qualify for trade if
chartered to serve U.S. ports.

      European Union Tanker Restrictions

      In July 2003, in response to the m.t. Prestige oil spill in November 2002,
the European Union adopted regulation that accelerates the IMO single hull
tanker phase-out timetable. Under the regulation no oil tanker is allowed to
operate under the flag of a EU member state, nor shall any oil tanker,
irrespective of its flag, be allowed to enter into ports or offshore terminals
under the jurisdiction of a EU member state after the anniversary of the date of
delivery of the ship in the year specified in the following table, unless such
tanker is a double hull oil tanker:

Category of Oil Tankers

Category 1 - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil,
heavy diesel oil or lubricating oil as cargo, and of 30,000 dwt and above
carrying other oils, which do not comply with the requirements for protectively
located segregated ballast tanks

Category 2 - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil,
heavy diesel oil or lubricating oil as cargo, and of 30,000 dwt and above
carrying other oils, which do comply with the protectively located segregated
ballast tank requirements

and

Category 3 - oil tankers of 5,000 dwt and above but less than the tonnage
specified for Category 1 and 2 tankers.

Date or Year

2003 for ships delivered in 1980 or earlier
2004 for ships delivered in 1981
2005 for ships delivered in 1982 or later

2003 for ships delivered in 1975 or earlier
2004 for ships delivered in 1976
2005 for ships delivered in 1977
2006 for ships delivered in 1978 and 1979
2007 for ships delivered in 1980 and 1981
2008 for ships delivered in 1982
2009 for ships delivered in 1983
2010 for ships delivered in 1984 or later

      Furthermore, under the regulation, all oil tankers of 5,000 dwt or less
must comply with the double hull requirements no later than the anniversary date
of delivery of the ship in the year 2008. The regulation, however, provides that
oil tankers operated exclusively in ports and inland navigation may be exempted
from the double hull requirement provided that they are duly certified under
inland water legislation.

      The European Union, following the lead of certain European Union nations
such as Italy and Spain, as of October 2003, has also banned all single hull
tankers of 600 dwt and above carrying HGO, regardless of flag, from entering or
leaving its ports or offshore terminals or anchoring in areas under its
jurisdiction. Commencing in 2005, certain single hull tankers above 15 years of
age will also be restricted from entering or leaving European Union ports or
offshore terminals and anchoring in areas under European Union jurisdiction.

      The European Union is also considering legislation that would: (1) ban
manifestly sub-standard vessels (defined as those over 15 years old that have
been detained by port authorities at least twice in a six-month period) from
European waters and create an obligation of port states to inspect vessels
posing a high risk to maritime safety or the marine environment and (2) provide
the European Union with greater authority and control over classification
societies, including the ability to seek to suspend or revoke the authority of
negligent societies. It is impossible to predict what legislation or additional
regulations, if any, may be promulgated by the European Union or any other
country or authority.

Vessel Security Regulations

      Since the terrorist attacks of September 11, 2001, there have been a
variety of initiatives intended to enhance vessel security. On November 25,
2002, the U.S. Maritime Transportation Security Act of 2002, or MTSA, came into
effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast
Guard issued regulations requiring the implementation of certain security
requirements aboard vessels operating in waters subject to the jurisdiction of
the United States. Similarly, in December 2002, amendments to SOLAS created a
new chapter of the convention dealing specifically with maritime security. The
new chapter became effective in July 2004 and imposes various detailed security
obligations on vessels and port authorities, most of which are contained in the
International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS
Code is designed to protect ports and international shipping against terrorism.
After July 1, 2004, to trade internationally, a vessel must attain an
International Ship Security Certificate from a recognized security organization
approved by the vessel's flag state. Among the various requirements are:

      o  on-board installation of automatic identification systems to provide a
         means for the automatic transmission of safety-related information from
         among similarly equipped ships and shore stations, including
         information on a ship's identity, position, course, speed and
         navigational status;

      o  on-board installation of ship security alert systems, which do not
         sound on the vessel but only alerts the authorities on shore;

      o  the development of vessel security plans;

      o  ship  identification  number  to  be  permanently  marked  on a
         vessel's hull;

      o  a continuous synopsis record kept onboard showing a vessel's history
         including, name of the ship and of the state whose flag the ship is
         entitled to fly, the date on which the ship was registered with that
         state, the ship's identification number, the port at which the ship is
         registered and the name of the registered owner(s) and their registered
         address; and

      o compliance with flag state security certification requirements.

      The U.S. Coast Guard regulations, intended to align with international
maritime security standards, exempt from MTSA vessel security measures non-U.S.
vessels that have on board, as of July 1, 2004, a valid ISSC attesting to the
vessel's compliance with SOLAS security requirements and the ISPS Code. We have
implemented the various security measures addressed by MTSA, SOLAS and the ISPS
Code, and our fleet is in compliance with applicable security requirements.

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, structural damage to the vessel, 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 regular circumstances, salvage
and towing expenses are covered in connection with casualties. We also arranged
increased value and freight interests coverage for each vessel. Under this
coverage, in the event of total loss or total constructive loss of a vessel, we
will be able to recover for amounts not recoverable under the hull and machinery
policy.

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 expenses
and claims in connection with 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, wreck removal and related costs.
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 thirteen P&I Associations that
comprise the International Group insure more than 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 two P&I Associations, which are
members 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,
2006.

Entity                           Activities

A/S Dampskibsselskabet TORM      This is the parent company. The company
                                 owned 26 product tankers and one
                                 bulk carrier. 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 owned
                                 five product tankers and four bulk
                                 carriers. The company also provides
                                 some commercial and technical management.

LR2 Management K/S               50% owned limited
                                 partnership. Maersk Tankers owns
                                 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.

TT Shipowning K/S                50% owned limited
                                 partnership. Torghatten
                                 Trafikkselskap ASA owns the other
                                 50%. The partnership has entered
                                 into a newbuilding contract
                                 regarding a LR2 vessel under
                                 construction.

      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.

D.    Property, Plant and Equipment

Real Property

      We do not own any real property other than one small residential property.
We lease office space in Copenhagen and Singapore on contracts expiring in 2014
and 2008, respectively, and we have leased eight apartments in Singapore on
contracts expiring up until December 2007. Furthermore, we have entered into
various IT-related, office equipment and car rental contracts. The greater part
of these contracts typically expires after 0.5-2.5 years. We also have
contractual obligations relating to vessels chartered in. Please refer to item
5F for further disclosures relating to our contractual obligations.

Fleet

      The following table lists our entire fleet of owned vessels as of December
31, 2006:

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

TORM Ingeborg           2003        99,999    D/S TORM              NIS
TORM Valborg            2003        99,999    D/S TORM              NIS
TORM Helene             1997        99,999    D/S TORM              DIS
TORM Signe              2005        72,718    Torm Singapore        Singapore
TORM Sofia              2005        72,718    Torm Singapore        Singapore
TORM Estrid             2004        74,999    D/S TORM              DIS
TORM Ismini             2004        74,999    D/S TORM              DIS
TORM Emilie             2004        74,999    D/S TORM              NIS
TORM Sara               2003        72,718    Torm Singapore        Singapore
TORM Helvig             2005        44,990    D/S TORM              DIS
TORM Ragnhild           2005        44,990    D/S TORM              DIS
TORM Freya              2003        45,990    D/S TORM              DIS
TORM Thyra              2003        45,990    D/S TORM              DIS
TORM Camilla            2003        44,990    D/S TORM              DIS
TORM Carina             2003        44,990    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 Caroline           2002        44,946    D/S TORM              DIS
TORM Cecilie            2001        44,946    D/S TORM              NIS
TORM Clara              2000        45,999    D/S TORM              DIS
TORM Agnete             1999        47,165    Torm Singapore        Mexican
TORM Gunhild            1999        44,999    D/S TORM              DIS
TORM Anne               1999        44,990    Torm Singapore        Singapore
TORM Gotland            1995        44,999    D/S TORM              NIS
TORM Alice              1995        44,999    D/S TORM              Mexican
TORM Margrethe          2006        109,672   D/S TORM              DIS
TORM Marie              2006        109,672   D/S TORM              DIS
TORM Gudrun             2000        101,122   D/S TORM              NIS
TORM Kristina           1999        105,001   D/S TORM              NIS

Bulk Carriers        Year Built       Dwt     Ownership             Flag (1)
-------------        ----------       ---     ---------              --------

TORM Rotna              2001        75,971    Torm Singapore        Singapore
TORM Tina               2001        75,966    Torm Singapore        Singapore
TORM Marta              1997        69,638    D/S TORM              NIS
TORM Baltic             1997        69,614    Torm Singapore        Singapore
TORM Marlene            1997        69,548    Torm Singapore        Singapore

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

Other

      We have entered into various IT-related, office equipment and car rental
contracts that typically expire after 0.5-2.5 years. We also have contractual
obligations relating to vessels chartered in. Please refer to item 5F for
further disclosures relating to our contractual obligations.

      Please refer to Item 5A and Notes 17 and 19 to our consolidated financial
statements for information relating to our contractual obligations and planned
investments.

ITEM 4A. UNRESOLVED STAFF COMMENTS

      None

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.    Operating Results

      The financial information included in the discussion below is derived from
our consolidated financial statements. Effective January 1, 2005, we adopted
International Financial Reporting Standards or IFRS and changed our reporting
currency from DKK to USD. We had previously presented our financial statements
under Danish GAAP. In accordance with the Securities and Exchange Commission, or
the SEC, reporting requirements for first-time application of IFRS, in this
report we present the comparative financial information under IFRS only for the
fiscal years ended December 31, 2004, 2005 and 2006. IFRS differs in certain
respects from United States generally accepted accounting principles, or U.S.
GAAP. For a discussion of the primary differences between IFRS and U.S. GAAP and
a reconciliation of profit and stockholders' equity to U.S. GAAP, please see
Note 28 to our consolidated financial statements.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              For The Years Ended December 31, 2004, 2005 and 2006
                              (IN THOUSANDS OF USD)

                                              2004          2005          2006
                                              ----          ----          ----

Revenue                                     442,600       585,611       603,717
Port expenses, bunkers and commissions      (83,769)     (124,968)     (148,943)
Freight and bunkers derivatives              (9,280)        3,194            620
                                           ------------  ------------  ---------
Time charter equivalent earnings            349,551       463,837       455,394

Charter hire                                (59,592)      (82,139)     (106,329)
Operating expenses                          (49,791)      (66,744)      (77,624)
                                           ------------  ------------  ---------
Gross profit (Net earnings from shipping    240,168       314,954       271,414
activities)

Profit from sale of vessels                       0        54,731        54,362
Administrative expenses                     (38,637)      (31,176)      (34,594)
Other operating income                       13,139        12,570         9,839
Depreciation and impairment losses          (35,181)      (47,894)      (58,915)
                                           ------------  ------------  ---------
Operating profit                            179,489       303,185       242,133
Financial income                             42,788        26,004        39,473
Financial expenses                          (16,949)      (29,822)      (40,520)
                                           -----------  ------------  ----------
Profit before tax                           205,328       299,367       241,086

Tax expenses                                (18,715)           (4)       (6,574)
                                           ------------  ------------  ---------
Net profit for the year                     186,613       299,363       234,512
                                           ------------  ------------  ---------

COMPARISON  OF THE YEAR  ENDED  DECEMBER  31,  2006  AND THE YEAR  ENDED
DECEMBER 31, 2005

      Net profit for the year decreased by 22% to USD 235 million in 2006 from
USD 299 million in 2005 resulting in earnings per share (EPS) of USD 3.4 in 2006
against USD 4.3 in 2005. Excluding profit on sale of vessels of USD 54 million
and the increase in dividend from Dampskibsselskabet Norden A/S of USD 13
million compared to the previous year, the profit before tax for the year was
USD 174 million, which is slightly better than expected as reported at the
beginning of the financial year.

      The lower profit compared to 2005 is primarily due to lower freight rates
in the tanker and dry bulk segments and increased expenses and depreciation due
to the expansion and renewal of the fleet of owned and chartered vessels.

      TORM's total assets increased by USD 279 million in 2006 to USD 2,089
million from USD 1,810 million in 2005. The most significant developments behind
this increase are a net increase in the carrying amount of vessels, capitalized
dry-docking and prepayments on vessels, including vessels held for sale, of USD
113 million mainly due to fleet renewal, an increase in the carrying amount of
the shares in Norden of USD 281 million, and a decrease in cash and cash
equivalents of USD 124 million.

      The equity increased by USD 376 million in 2006 to USD 1,281 million from
USD 905 million in 2005. The equity ratio, as defined in Item 17, increased by
11 percentage points to 61% in 2006 from 50% in 2005. The significant increase
in equity is mainly due to the profit for the year and value adjustment of the
Company's investment in Norden less dividend paid out. TORM's total liabilities
decreased by USD 97 million in 2006 to USD 808 million from USD 905 million in
2005 primarily due to repayment of mortgage debt and bank loans.

Net earnings from shipping activities

      The table below presents net earnings from shipping activities on segment
level for the years ended December 31, 2005 and 2006:
<TABLE>
USD million
<CAPTION>
                                Tankers   Bulk      Not   Total      Tanker  Bulk        Not    Total
                                              Allocated   2005                     Allocated    2006
---------------------------------------------------------------     ----------------------------------
<S>                               <C>     <C>      <C>     <C>      <C>      <C>       <C>     <C>
Revenue                           418.0   167.6    0.0     585.6    494.0    109.7     0.0     603.7
Port expenses, bunkers and
commissions                     (113.3)  (11.7)    0.0   (125.0)   (143.8)    (5.1)    0.0    (148.9)
Freight and bunkers derivatives     3.2     0.0    0.0      3.2       0.6      0.0     0.0       0.6
                               --------------------------------     -----------------------------------
Time charter equivalent           307.9   155.9    0.0     463.8     350.8    104.6    0.0     455.4
earnings
Charter hire                     (44.3)  (37.9)    0.0    (82.2)    (58.5)    (47.8)   0.0    (106.3)
Operating expenses               (51.4)  (15.3)    0.0    (66.7)    (64.6)    (13.1)   0.0     (77.7)
                               --------------------------------     -----------------------------------
Gross profit/(loss)
(Net earnings from shipping
activities)                       212.2   102.7    0.0    314.9      227.7     43.7    0.0     271.4
</TABLE>

      TORM's total revenue in 2006 was USD 604 million as compared to USD 586
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 (including freight and bunkers derivatives) divided by the
number of available earning days (days available for service) are used to
compare freight rates. Under time charter contracts the charterer pays for the
voyage expenses, whereas the shipowner pays for the voyage expenses under voyage
charter contracts. A charterer basically has the choice of entering into either
a time charter (which may be a one-trip time charter) or a voyage charter, and
TORM is neutral to the charterer's choice, because the Company will base its
economic decisions primarily upon the expected TCE rates rather than on expected
revenues. The analysis of revenue is therefore primarily based on the
development in time charter equivalent earnings. TORM's time charter equivalent
earnings in 2006 were USD 455 million compared to USD 464 million in 2005. This
modest decrease in the TCE was due to lower freight rates in both segments, the
effect of which was almost fully offset by the increase in earning days in the
Tanker Division.

Tanker Division

      Revenue in the Tanker Division increased by 18% to USD 494 million from
USD 418 million in 2005, whereas the time charter equivalent earnings increased
by USD 43 million or 14% to USD 351 million in 2006 from USD 308 million in the
previous year.

      The tanker market started out strongly at the beginning of 2006 with high
earnings in January and February in all three business units: LR2, LR1 and MR.
An active winter market at the turn of the year combined with increased price
hedging ensured a highly satisfactory first quarter performance.

      Extraordinary seasonal maintenance of refineries and petrochemical plants
meant that rates dropped sharply at the beginning of the second quarter. But by
the end of the quarter and the beginning of the third quarter, the fear of
seeing a repeat of the previous year's hurricanes in the US resulted in highly
satisfactory product tanker earnings. One of the reasons for this was
substantial US imports intended to build inventories to be able to withstand any
closure of production units and refineries resulting from hurricane damage.

      A significant addition of new tonnage was seen during the year, and this
had a negative impact on rates. Unlike in 2005, no serious hurricane damage
occurred in 2006, and at the end of the third quarter inventories of both
refined products and crude oil in the US consequently reached a five-year peak.
The large inventories combined with unseasonably high temperatures in the major
consumer areas during the fourth quarter meant that the freight market did not
reach the levels usually seen during this period. Although the US economy has
slowed down slightly, demand for refined oil products was unchanged. This fact,
coupled with the continued strong demand in China and general stockpiling in the
OECD countries, produced satisfactory earnings from the vessels in 2006. The
capitalization on short-term differences between prices on oil products
occurring in two areas (arbitrage) also helped boost the demand for transport,
thus improving earnings.

      Japanese naphthalene imports fell by almost 2%, and inventories were
reduced by 3% in 2006. Production rose only marginally, by 1%. These figures
illustrate that the development of the Japanese naphthalene market is stable,
although substantial monthly fluctuations are possible.

      A positive factor for the development of rates in 2006 was the increasing
consumption of gasoline - particularly in the US, where demand was up by 1% on
the previous year. Also, US gasoline imports were up by 12%. During the year,
the US introduced new regulations governing the quality of gasoline, which meant
that numerous different qualities were introduced, contributing to increasing
the inventories.

      In 2006, freight rates once again fluctuated greatly from one period to
the next, and this volatility is expected to persist. The main geopolitical
reasons for this in 2006 were Iran's nuclear program, the war between Lebanon
and Israel, the temporary halt to production in Nigeria following sabotage and
Venezuela's plans to increase exports to China at the detriment of the US. To
top this off, BP was forced to temporarily shut down half of its largest oil
field in the US, Prudhoe Bay in Alaska, due to corroded pipelines.

      In 2006, the delivery of two newbuildings in the LR2 business area was the
primary reason for the increase in the number of available earning days by 412
days or 21% resulting in an increase in earnings of USD 14 million. TORM also
took delivery of two vessels, which had previously been chartered in and, thus,
did not affect the number of earning days. Freight rates that were on average
16% lower than in the previous year decreased earnings by USD 13 million.

      In the LR1 business area, the Company added five vessels to the chartered
fleet, and the vessels delivered to the owned fleet during 2005 had full effect
in 2006. These were the most important factors behind the increase in the number
of available earning days by 1,608 days or 58% from the previous year, resulting
in an increase in earnings of USD 52 million. The decrease in average freight
rates of 14% reduced earnings by USD 20 million from the previous year.

      In the MR business area, the net delivery of five vessels to the fleet
during 2005 had full effect in 2006 causing the number of available earning days
to increase by 918 days or 16%, which increased earnings by USD 24 million. The
average freight rates were 6% lower than in the previous year, which affected
earnings negatively by USD 10 million.

The net increase in the time charter equivalent earnings in the Tanker Division
can be summarized as illustrated in the table below.

<TABLE>
<CAPTION>
Earnings for the Tanker division
---------------------------------------------------------------------------------------------
                                                                              Un-
USD million                                   MR         LR1       LR2   allocated      Total
<S>                                          <C>          <C>       <C>         <C>      <C>
Time charter equivalent earnings 2005        146          88        68          6        308
Change in number of earning days              24          52        14          -         90
Change in freight rates                     (10)        (20)      (13)          -       (43)
Other                                          -           -         -        (4)        (4)
                                             ----       ----      ----        ----       ----
Time charter equivalent earnings 2006        160         120        69          2        351
---------------------------------------------------------------------------------------------
</TABLE>

      Unallocated earnings comprise fair value adjustment of freight and bunkers
derivatives, which are not designated as hedges, and gains and losses on freight
and bunkers derivatives, which are not entered for hedge purposes.

      The table below summarizes the earnings data per quarter for the Tanker
Division.
<TABLE>
<CAPTION>
Earnings data for the Tanker division

USD/Day                               2005                   2006                         2006    % Change
                                          -------------------------------------------
                                 Full year        Q1          Q2        Q3        Q4 Full year   2005-2006
LR2/Aframax vessels
-----------------------------------------------------------------------------------------------------------
<S>                                  <C>         <C>         <C>       <C>       <C>     <C>           <C>
Available earning days for: *)
- Owned vessels                      1,090       440         437       550       611     2,038         86%
- Time chartered vessels               899        89          90        92        92       363       (60%)
TCE per earning days **)            34,019    40,814      21,507    27,282    25,940    28,641       (16%)
OPEX per earning days   ***)        (5,612)   (5,464)     (6,695)   (7,141)   (5,614)   (6,032)          7%
-----------------------------------------------------------------------------------------------------------

LR1/Panamax vessels
-----------------------------------------------------------------------------------------------------------
Available earning days for: *)
- Owned vessels                      1,826       593         576       552       552     2,273         24%
- Time chartered vessels               925       319         484       642       641     2,086        126%
TCE per earning days **)            32,099    32,845      23,530    28,843    25,588    27,497       (14%)
OPEX per earning days  ***)         (5,903)   (5,730)     (5,254)   (6,450)   (5,109)   (5,631)        (5%)
-----------------------------------------------------------------------------------------------------------

MR vessels
-----------------------------------------------------------------------------------------------------------
Available earning days for: *)
- Owned vessels                      5,581     1,599       1,632     1,642     1,627     6,499         16%
- Time chartered vessels                 0         0           0         0         0         0          0%
TCE per earning days **)            26,115    26,614      24,755    25,306    21,861    24,627        (6%)
OPEX per earning days   ***)        (6,708)   (7,199)     (7,320)   (6,660)   (6,197)   (6,834)          2%
-----------------------------------------------------------------------------------------------------------
</TABLE>

*) Earning days are the total number of days in the period, where the vessels 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 port expenses,
bunkers and commissions (including freight and bunkers derivatives).
***) OPEX = Operating expenses for our owned vessels.

      Bulk Division

      In the Bulk Division, revenue decreased by 35% to USD 110 million from USD
168 million in the previous year, whereas the time charter equivalent earnings
decreased by USD 51 million or 33% to USD 105 million from USD 156 million in
2005. In 2006, the freight rates for bulk carriers were once again highly
volatile. Poor weather conditions and logistical problems at the beginning of
2006 caused difficulties in loading iron ore in Australia. This factor
contributed to the relatively poor market toward the end of 2005 extending into
the first quarter of 2006.

      Freight rates rose from mid-2006 - primarily due to increased demand for
iron ore. The growth in demand for coal by the Chinese steel industry and
European and Japanese power plants coupled with increasing grain imports to
China and India also underpinned freight rates.

      There was a relatively large addition of new tonnage to the bulk market in
2006, but the market was able to absorb the additional tonnage.

      However, TORM continued to pursue a strategy of high coverage in the bulk
segment, primarily through 1-year time charter agreements, and the market
development in freight rates during 2006 is therefore not directly reflected in
the Company's earnings for 2006.

      Freight rates in the Panamax business area were on average 31% lower than
in 2005, reducing earnings by USD 44 million. In this business area, the Company
sold three vessels but increased the number of earning days by chartering in
vessels, so that the net increase in the number of available earning days was 1%
or 73 days from the previous year. As a result the time charter equivalent
earnings increased by USD 2 million.

      In the Handysize business area, the two owned vessels were sold during the
second quarter of 2006 and the activities in this business area were
discontinued. The timecharter equivalent earnings decreased by USD 9 million to
USD 4 million in 2006.

      The change in the time charter equivalent earnings in the Bulk Division
can be summarized as illustrated in the table below.

Earnings for the Bulk division

--------------------------------------------------------------------------------
USD million                               Handysize       Panamax         Total
Time charter equivalent earnings 2005            13           143           156
Change in number of earning days                (8)             2           (6)
Change in freight rates                         (1)          (44)          (45)
                                                ---          ----          ----
Time charter equivalent earnings 2006             4           101           105
--------------------------------------------------------------------------------

      The table below summarizes the earnings data per quarter for the Bulk
Division.
<TABLE>
<CAPTION>
Earnings data for the Bulk division
USD/Day                                 2005                2006                      2006    % Change
                                            -------------------------------------
                                   Full year       Q1       Q2       Q3       Q4 Full year   2005-2006
Panamax vessels
-------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>      <C>      <C>      <C>     <C>          <C>
Available earning days for: *)
- Owned vessels                        2,698      716      727      557      499     2,499        (7%)
- Time chartered vessels               2,425      630      655      677      735     2,697         11%
TCE per earning days **)              27,897   20,324   18,343   18,402   20,272    19,325       (31%)
OPEX per earning days   ***)          (4,676)  (4,572)  (4,576)  (5,662)  (4,020)   (4,859)          4%
-------------------------------------------------------------------------------------------------------

Handysize vessels
-------------------------------------------------------------------------------------------------------
Available earning days for: *)
- Owned vessels                          712      179      124        0        0       303         N/A
- Time chartered vessels                 104                                                       N/A
TCE per earning days **)              16,011   12,479   11,899        -        -    12,249         N/A
OPEX per earning days   ***)          (3,919)  (4,583)  (4,583)        -        -   (4,583)         N/A
-------------------------------------------------------------------------------------------------------
</TABLE>

*) Earning days are the total number of days in the period, where the vessels 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 port expenses,
bunkers and commissions (including freight and bunkers derivatives).
***) OPEX = Operating expenses for own vessels.

Operation of vessels

      Vessels chartered in on time charters do not give rise to operating
expenses for TORM but only to charter hire payments. As compared to 2005,
charter hire in the Tanker Division increased by USD 15 million to USD 59
million in 2006, whereas charter hire paid in the Bulk Division increased by USD
10 million to USD 48 million. The increase in the Tanker Division was primarily
caused by a significant increase in the number of vessels chartered in, whereas
the development in the Bulk Division was caused by a combination of an increase
in the available earning days and higher time charter rates compared to 2005.

      The operating expenses for the owned vessels increased by USD 11 million
or 16% to USD 78 million in 2006. The most significant factor behind this
development was the increase in the number of operating days of 1,364 days or
12%, primarily due to the addition of owned vessels in the LR2 business area.
The main reason for the operating expenses not increasing proportionately to the
increase in the number of operating days is a decrease in the number of
dry-dockings to 100 days during 2006 compared to 277 days in 2005. Days in
dry-dock are not included in the number of operating days, whereas the vessels
incur operating expenses at similar levels as during operation. The total fleet
of owned vessels incurred 43 off-hire days in 2006 corresponding to three per
thousand of the number of operating days compared to 31 off-hire days in 2005
corresponding to three per thousand of the number of operating days. The Company
considers this a very satisfactory level.

      Operating expenses are mainly incurred in USD and DKK. The average DKK/USD
exchange rate in 2006 was more or less unchanged from 2005 and did not affect
the development in operating expenses significantly.

Administrative expenses and other operating income

      The increase in total administrative expenses from 2005 to 2006 by USD 4
million to USD 35 million was mainly due to increased salary expenses due to the
addition of new staff and a general increase in salary levels.

      Administrative expenses are primarily incurred in DKK. The average DKK/USD
exchange rate in 2006 was more or less unchanged from 2005 and did not affect
the development in administrative expenses significantly.

      Other operating income primarily comprises chartering commissions received
by TORM in connection with the management of the three tanker pools. Other
operating income amounted to USD 10 million in 2006 compared to USD 13 million
in 2005. The decrease was primarily related to commissions from the tanker
pools. The commissions are based on revenues in the pools, and the change is a
direct result of a higher decrease in freight rates than the increase in the
number of vessels in the pools compared to the previous year.

Financial income and expenses

      Net financial items in 2006 were USD -1 million compared to USD -4 million
in 2005. The most significant reason for the change is the higher dividend from
Norden of USD 25 million compared to USD 12 million in 2005 and an increase in
net interest expenses of USD 10 million to USD 36 million in 2006 due in part to
the increase in net interest bearing debt of USD 30 million during the year to
USD 662 million from USD 632 million in 2005 but more importantly due to the
significant increase in net interest bearing debt of USD 360 million in 2005
having full effect in 2006.

      Please refer to Note 8 to our consolidated financial statements for a
breakdown of financial items in the income statement and to Note 13 for an
overview of mortgage debt and bank loans.

Tax

      Tax expenses for the year amounted to USD 7 million compared to USD 0
million in 2005. The tax expenses for 2006 comprise current tax for the year of
USD 5 million compared to USD 9 million in the previous year, an increase in
deferred tax of USD 8 million compared to a decrease of USD 9 million in 2005
and an income of USD 6 million due to an adjustment to the estimated current tax
liabilities for the previous years. The deferred tax liability as at December
31, 2006 was USD 63 million compared to USD 55 million in the previous year.

      All significant Danish entities in the TORM group entered into the tonnage
taxation scheme with effect from 2001 and have filed tax returns for 2001
through to 2005. The Company has filed a complaint regarding the assessments by
the tax authorities of the tax returns for the years 2001 to 2004 and the
assessment for 2005 has not been completed. The recognized current tax
liabilities are therefore to a great extent based on Management's judgement
regarding the probable outcome of the complaint and the assessment. TORM paid
USD 3 million in corporation tax on account in 2006 regarding these entities.

      Please refer to Item 10E and Notes 2 and 10 to our consolidated financial
statements for further information.

Vessels and dry-docking

      The increase in tangible fixed assets of USD 157 million to USD 1,324
million in 2006 is attributable to the change in vessels and capitalized
dry-docking and in prepayments on vessels. The carrying value of vessels and
capitalized dry-docking increased by USD 70 million to USD 1,136 million. The
increase relating to vessels amounted to USD 73 million. The addition of new
tonnage amounted to a total acquisition cost of USD 168 million resulting from
two LR2 tanker newbuildings, two LR2 tankers built in 1999 and 2000 and one LR1
tanker newbuilding. One LR1 tanker built in 2006, three Panamax bulk carriers
built in 1990, 1992 and 1993, and two Handysize bulk carriers built in 1997 at a
total carrying amount of USD 43 million were sold during the year and
depreciation on the vessels amounted to USD 52 million. Prepayments on vessels
increased by USD 86 million to USD 183 million due to additional costs relating
to vessels under construction of USD 166 million less the above-mentioned
newbuilding deliveries of USD 80 million.

      Total depreciation amounted to USD 59 million in 2006 as compared to USD
48 million in 2005, an increase of USD 11 million. The increase is due to the
expansion and renewal of the fleet during 2005 and 2006.

      As at December 31, 2006, TORM's newbuilding programme comprised 17 tanker
vessels to be delivered during 2007 to 2011, and the contractual obligations
under the program amounted to USD 776 million. In addition, the Company called
an option in 2006 to acquire one Panamax bulk carrier on time charter built in
2004, which will be delivered in the second quarter of 2007. The contractual
liability relating to this vessel amounted to USD 19 million as at December 31,
2006.

      The market value of the fleet and investment program (5.5 LR2 tanker
newbuildings, 1.5 LR1 tanker newbuildings, 10 MR tanker newbuildings and one
second-hand Panamax bulk carrier) exceeded the carrying value of the fleet
including newbuilding contracts by USD 1,016 million at year-end. This valuation
is based on the average of three internationally acknowledged shipbrokers'
valuations.

Other investments (Norden)

      Other investments mainly comprise the investment in approximately 33% of
the shares in Norden - excluding Nordens treasury shares - with a carrying value
of USD 633 million as at December 31, 2006 compared to USD 352 million in the
previous year.

      TORM does not consider Norden as an associated company, as the Company
does not have influence on decisions and is not represented on Norden's Board of
Directors. The investment in Norden is valued on the basis of the closing price
on the Copenhagen Stock Exchange on December 31, 2006 of DKK 4,765.82 per share.
To the positive effect from the increase in the share price from DKK 2,958.63 as
at December 31, 2005 was added the effect of the change in the DKK/USD exchange
rate of USD 66 million.

      The Company holds investments in other entities with an aggregate carrying
amount of USD 11 million as at December 31, 2006, of which USD 3 million
concerns unlisted entities, compared to USD 9 million as at December 31, 2005.
The carrying amount of the unlisted shares constitutes the estimated fair value
based on available information.

      The shareholding in Norden is disposed at March 31, 2007. For further
information refer to item 4B.

COMPARISON  OF THE YEAR  ENDED  DECEMBER  31,  2005  AND THE YEAR  ENDED
DECEMBER 31, 2004

      Net profit for the year increased by 60% to USD 299.0 million in 2005 from
USD 187.0 million in 2004 resulting in earnings per share of USD 4.3 in 2005 and
USD 2.7 in 2004. The net profit for 2005, which includes a gain on sale of
vessels of USD 55.0 million and dividend from Dampskibsselskabet Norden A/S of
USD 12.0 million, is considerably higher than expected as reported at the
beginning of the year.

      The considerably higher profit is primarily due to the net addition of 9.5
vessels to our fleet of owned and long-term chartered vessels. Freight rates in
the tanker segment, which during part of 2005 were significantly higher than
expected, further contributed to the reported profit.

      Our total assets increased by USD 570.0 million in 2005 to USD 1,810
million from USD 1,240 million in 2004. The increase resulted in an increase of
USD 517.0 million in the carrying amount of our vessels and vessels under
construction, mainly due to fleet expansion, a decrease in the carrying amount
of marketable securities of USD 58.0 million and an increase in cash and cash
equivalents of USD 91.0 million.

      The shareholders' equity increased by USD 190.0 million in 2005 to USD
905.0 million compared to USD 715.0 million in 2004. The solvency ratio, as
defined in Item 17, decreased by 8 percentage points to 50% in 2005 from 58% in
2004. The significant increase in shareholders' equity is mainly due to the
profit in 2005 less dividend paid out and value adjustment of the Company's
investment in Norden. Our total liabilities increased by USD 381.0 million to
USD 905.0 million in 2005 as compared to USD 524.0 million in 2004 primarily due
to increases in mortgage debt and bank loans used to finance a part of the
expansion of the fleet.

Net earnings from shipping activities

      The table below presents net earnings from shipping activities on segment
level for the years ended December 31, 2004 and 2005:
<TABLE>
<CAPTION>
USD million
                                                      Not     Total                           Not    Total
                                 Tanker    Bulk allocated      2004     Tanker   Bulk  allocated     2005
-------------------------------------------------------------------     ------------------------------------
<S>                               <C>     <C>         <C>     <C>         <C>     <C>         <C>     <C>
Revenue                           265,0   177.5       0.1     442.6       419.3   167.6       0.0     586.9
Port expenses, bunkers and
commissions                      (68.8)  (15.0)       0.0    (83.8)     (111.4)  (11.7)       0.0   (123.1)
Freight and bunkers derivatives   (9.3)     0.0       0.0     (9.3)         3.2     0.0       0.0       3.2
                               ------------------------------------     ------------------------------------
Time charter equivalent           186.9   162.5       0.1     349.5       307.9   155.9       0.0     463.8
earnings
Charter hire                     (13.5)  (46.1)       0.0    (59.6)      (44.3)  (37.9)       0.0    (82.2)
Operating expenses               (39.5)  (11.6)       1.3    (49.8)      (51.4)  (15.3)       0.0    (66.7)
                               ------------------------------------     ------------------------------------
Gross profit/(loss)
(Net earnings from shipping
activities)                       133.9   104.8       1.4     240.1       212.2   102.7       0.0     314.9
</TABLE>

      Our total revenue in 2005 was USD 587.0 million as compared to USD 433.0
million in the previous year. Our 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 shipowner pays for the
voyage expenses under voyage charter contracts. As a consequence, we base our
economic decisions primarily upon the expected TCE rates rather than on expected
net revenues. The analysis of revenue is therefore based on the development in
time charter equivalent earnings. Our time charter equivalent earnings in 2005
were USD 464.0 million as compared to USD 350.0 million in 2004. The addition of
tonnage, especially in the LR1 and MR tanker business areas, as well as higher
rates in the tanker segment during part of the year were the primary reasons for
the increase in the TCE.

Tanker Division

      Net revenues in the Tanker Division in 2005 increased by 64% to USD 419.0
million from USD 256.0 million in 2004, whereas the TCE earnings increased by
USD 121.0 million, or 65%, to USD 308 million in 2005 from USD 187.0 million in
the previous year.

      The market for the Company's product tankers reached a historical peak in
2005, characterized by high but volatile freight rates with strong earnings
primarily during the first and fourth quarters. Because of an unusually high
growth in oil consumption towards the end of 2004, the product tanker market had
a strong beginning in 2005. During the second quarter of 2005, the product
tanker market experienced a normal seasonal decrease. However, the ongoing
growth in demand in the U.S. for the import of gasoline and other oil products,
especially up to the summer holiday season, resulted in a steady product tanker
market during mid-year.

      Hurricanes Katrina and Rita, which struck the southern U.S. during the
third quarter of 2005, had a major and boosting effect on the product tanker
market in 2005. 95% of the oil production in the Mexican Gulf was interrupted,
and 20% of the local refining capacity was temporarily shut down. The refining
capacity in the U.S. was restored to normal output levels during the fourth
quarter 2005. Demand for transportation capacity increased further as a result
of low inventory levels of refined products in the Western Hemisphere, resulting
from high oil prices and limited refining capacity. We believe that these low
inventories, combined with lack of refinery capacity often resulted in increased
demand for product tankers.

      Charter rates were increased towards the end of 2005, reaching
historically high levels despite a large number of product tanker newbuildings.
According to Fearnleys, 17% of the total product tanker fleet entered the market
in 2005 as compared 20% in 2004. Concurrently, according to the Energy
Information Administration, oil demand grew by 1.5% in 2005 compared to 3.3% in
2004, and, according to Clarksons, on average freight rates during 2005 were
5.0% higher than in 2004.

      In 2005, we achieved freight rates in the LR2 business area that were on
average 6% higher than in the previous year. This increased our earnings by USD
4.0 million. The number of available earning days increased by 165 days, or 9%
resulting in an increase in earnings of USD 6.0 million.

      In the LR1 business area, we took delivery of four vessels and sold 2.5
vessels during 2005. Two of the sold vessels were leased back on five-year time
charters. These transactions were the primary reason for the increase in the
number of available earning days of 1,326 days in 2005 representing a 93%
increase from the previous year and resulting in an increase in our earnings of
USD 33.0 million. The 30% increase in average freight rates in 2005 resulted in
a USD 21.0 million increase in our earnings.

      In the MR business area, the Company took delivery of seven vessels and
sold two vessels during 2005. The addition of new tonnage was the main reason
for the increase in the number of available earning days of 1,235 days, or 28%,
which increased our earnings by USD 26.0 million. The average freight rates were
24% higher in 2005 than in the previous year, which affected earnings positively
by USD 30.0 million.

      The table below shows the TCE earnings in the Tanker Division.
<TABLE>
<CAPTION>
Earnings for the Tanker division
--------------------------------------------------------------------------------------------------------------
USD million                                          MR           LR1           LR2        Un-          Total
                                                                                      allocated
<S>                              <C>                 <C>           <C>           <C>         <C>          <C>
Time charter equivalent earnings 2004                93            35            60          (1)          187
Change in number of earning days                     26            33             6            -           65
Change in freight rates                              30            21             4            -           55
Other                                                 -             -             -            1            1
                                                    ----         ----          ----         ----         ----
Time charter equivalent earnings 2005               149            89            70            0          308
--------------------------------------------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
Earnings data for the Tanker division
USD/Day                               2004                   2005                         2005    % Change
                                          -------------------------------------------
                                 Full year        Q1          Q2        Q3        Q4 Full year   2004-2005
LR2/Aframax vessels
-----------------------------------------------------------------------------------------------------------
<S>                                  <C>         <C>         <C>       <C>       <C>     <C>          <C>
Available earning days for: *)
- Owned vessels                      1,098       270         271       274       276     1,091        (1%)
- Time chartered vessels               726       180         171       274       274       899         24%
TCE per earning days **)            33,116    35,715      30,281    28,185    45,917    35,253          6%
OPEX per earning days   ***)       (4,754)   (5,526)     (4,849)   (5,899)   (6,157)   (5,612)         18%
-----------------------------------------------------------------------------------------------------------

LR1/Panamax vessels
-----------------------------------------------------------------------------------------------------------
Available earning days for: *)
- Owned vessels                      1,425       372         404       499       551     1,826         28%
- Time chartered vessels                 0       126         248       276       276       925         N/A
TCE per earning days **)            24,912    32,704      26,906    26,509    41,726    32,300         30%
OPEX per earning days  ***)        (6,153)   (4,991)     (6,836)   (6,074)   (5,680)   (5,903)        (4%)
-----------------------------------------------------------------------------------------------------------

MR vessels
-----------------------------------------------------------------------------------------------------------
Available earning days for: *)
- Owned vessels                      4,346     1,125       1,270     1,547     1,638     5,581         28%
- Time chartered vessels                 0         0           0         0         0         0          0%
TCE per earning days **)            21,381    27,465      26,079    23,499    29,373    26,613         24%
OPEX per earning days   ***)       (5,936)   (6,223)     (6,594)   (6,274)   (6,505)   (6,708)         13%
-----------------------------------------------------------------------------------------------------------
</TABLE>
*) Earning days are the total number of days in the period, where the vessels 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 port expenses,
bunkers and commissions (including freight and bunkers derivatives).
***) OPEX = Operating expenses for our owned vessels.

Bulk Division

      In the Bulk Division revenue decreased by 6% to USD 168.0 million in 2005
from USD 178.0 million in the previous year, whereas the time charter equivalent
earnings decreased by USD 7.0 million or 4% to USD 156.0 million in 2005 as
compared to USD 163.0 million in 2004.

      In 2005, freight rates prevailing in the dry bulk segment did were less
than freight rates in 2004. The dry bulk market began the year strongly but has
been extremely volatile throughout 2005.

      At the outset of 2005, a large part of the world bulk fleet was idle in
ports, especially in Australia and China, awaiting loading or discharge due to
lack of port capacity. This contributed to maintaining high rates in early 2005.
From mid 2005, however, port congestion was reduced to more normal levels in
most ports.

      A lower rate of growth in the import of coal and iron ore primarily by
China during the third quarter of 2005, coupled with an increase in newbuilding
deliveries and limited scrapping, resulted in a decrease in freight rates as the
year progressed. Notwithstanding these trends, however, according to Clarkson,
the charter rates ended the year considerably above the historical mean for the
period 1990-2005 of 12,644 USD/day.

      Given the rise in freight levels in 2003 and 2004 to historically high, we
elected to take advantage of these circumstances by chartering out a substantial
part of the dry bulk fleet on longer term time charter, often for periods of
about one year. These longer period charters have tended to reduce the risk
inherent in a market of such volatility. We have continued to pursue this
strategy successfully in 2005, and the Bulk Division's income has not been
significantly affected by the market's volatility.

      Freight rates in the Panamax business area in 2005 were on average 9%
higher than in 2004, increasing our earnings by USD 12.0 million. In this
business area, one vessel, which had previously been chartered in, was added to
our fleet of owned vessels during 2005. The decrease in the number of available
earning days by 506 days from the previous year was due to the net redelivery of
tonnage chartered in, and resulted in the decrease of USD 13.0 million in theTCE
earnings in this business area.

      In the Handysize business area earnings decreased by USD 5.0 million as a
consequence of a reduction in available earning days of 23% and a 5% decrease in
the average freight rates.

      The table below shows the change in the TCE earnings in the Bulk Division.
<TABLE>
<CAPTION>
Earnings for the Bulk division
-------------------------------------------------------------------------------------------------
USD million                                   Handysize       Panamax         Un-          Total
                                                                         allocated
<S>                                                 <C>          <C>        <C>             <C>
Time charter equivalent earnings 2004                18           144           1            163
Change in number of earning days                    (4)          (13)           -           (17)
Change in freight rates                             (1)            12           -            11
Other                                                 -             -          (1)           (1)
                                                   ----          ----        ----           ----
Time charter equivalent earnings 2005                13           143            0           156
-------------------------------------------------------------------------------------------------
</TABLE>

      The table below summarizes the earnings data per quarter for the Bulk
Division.
<TABLE>
<CAPTION>
Earnings data for the Bulk division
USD/Day                                 2004                2005                      2005    % Change
                                            -------------------------------------
                                   Full year       Q1       Q2       Q3       Q4 Full year   2004-2005
Panamax vessels
-------------------------------------------------------------------------------------------------------
Available earning days for: *)
<S>                                    <C>        <C>      <C>      <C>      <C>     <C>           <C>
- Owned vessels                        1,853      559      685      736      719     2,698         46%
- Time chartered vessels               3,776      765      518      504      637     2,425       (36%)
TCE per earning days **)              25,534   30,641   30,962   27,523   22,585    27,897          9%
OPEX per earning days   ***)         (5,022)  (4,794)  (4,607)  (4,294)  (5,017)   (4,676)        (7%)
-------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Handysize vessels
-------------------------------------------------------------------------------------------------------
Available earning days for: *)
<S>                                      <C>      <C>      <C>      <C>      <C>       <C>        <C>
- Owned vessels                          732      169      176      184      184       712        (3%)
- Time chartered vessels                 324       30       30       31       13       104       (68%)
TCE per earning days **)              16,829   18,952   17,645   14,514   13,067    16,011        (5%)
OPEX per earning days   ***)         (3,173)  (2,916)  (3,908)  (3,690)  (5,049)   (3,919)         24%
-------------------------------------------------------------------------------------------------------
</TABLE>

*) Earning days are the total number of days in the period, where the vessels 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 port expenses,
bunkers and commissions (including freight and bunkers derivatives).
***) OPEX = Operating expenses for own vessels.

Operation of vessels

      Vessels chartered in on time charters do not give rise to operating
expenses for TORM but only to charter hire payments. As compared to 2004,
charter hire in the Tanker Division increased by USD 31.0 million to USD 44.0
million in 2005, whereas charter hire paid in the Bulk Division decreased by USD
8.0 million to USD 38.0 million. The increase in the Tanker Division was
primarily caused by the sale and lease back on time charters of two vessels in
the LR1 business area in the beginning of 2005.

      The operating expenses for the owned vessels increased by USD 17.0 million
to USD 67.0 million in 2005. The most significant factor behind this development
was the increase in the number of operating days by 1,987 days, or 21%,
primarily due to the addition of owned vessels in the LR1, MR and Panamax
business areas. The main reasons for the operating expenses not increasing
proportionately to the increase in the number of operating days are one-time
expenses relating to the preparation of two vessels for sale and a high number
of dry-dockings during 2005 totaling 277 days in 2005 as compared to 30 days in
2004. Days in dry-dock are not included in the number of operating days, whereas
the vessels incur operating expenses at similar levels as during operation. In
addition, the operating expenses for some of the vessels added this year are
higher than the average for the fleet as of the beginning of the year. The total
fleet of owned vessels incurred 31 off-hire days in 2005 corresponding to three
per thousand of the number of operating days compared to 15 off-hire days in
2004 corresponding to two per thousand of the number of operating days. The
Company regards this as a very satisfactory level.

      Operating expenses are mainly incurred in USD and DKK. The average DKK/USD
exchange rate in 2005 was more or less unchanged from 2004 and did not affect
the development in operating expenses significantly.

Administrative expenses and other operating income

      Our total administrative expenses decreased from 2004 to 2005 by USD 8.0
million to USD 31.0 million mainly due to lower administrative costs relating to
the share options plan, which was partially offset by increased salary expenses
due to the addition of new staff and a general increase in salary levels.

      Administrative expenses are primarily incurred in DKK. The average DKK/USD
exchange rate in 2005 was more or less unchanged from 2004 and did not affect
the development in administrative expenses significantly.

      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 amounted to USD 13 million in 2005 as in
2004 despite an increase in commissions from the tanker pools, primarily due to
one-time income of USD 2.0 million in 2004. These commissions are based on net
revenues in the pools, and the change is a direct result of the change in
freight rates and the number of vessels in the pools compared to the previous
year.

Vessels and dry-docking

      The increase in tangible fixed assets of USD 479.0 million to USD 1,167.0
million in 2005 is mainly attributable to the change in vessels and capitalized
dry-docking. The carrying value of vessels and capitalized dry-docking increased
by USD 419.0 million to USD 1,066.0 million in 2005. The increase relating to
vessels amounted to USD 414.0 million. The addition of new tonnage amounted to a
total acquisition cost of USD 517.0 million resulting from two LR1 tanker
newbuildings and two LR1 tankers built in 2003 and 2004, two MR tanker
newbuildings and five MR tankers built in 2000 to 2003 as well as one Panamax
bulk vessel built in 2001. Furthermore, in 2005, we have sold two MR tankers
built in 1992 and 1994 and 2.5 LR1 tankers built in 1988 and 1990 at a total
carrying amount of USD 63.0 million and depreciation on the vessels in our fleet
amounted to USD 40.0 million. Prepayment on vessels under construction increased
in 2005 by USD 60.0 million to USD 97.0 million due to additional costs relating
to vessels under construction of USD 295.0 million less the above-mentioned
newbuilding deliveries of USD 191.0 million and the transfer of a vessel under
construction to non- current assets held for sale at a carrying amount of USD
44.0 million.

      Depreciation amounted to USD 48.0 million in 2005 as compared to USD 35
million in 2004, an increase of USD 13.0 million. The increase is due to the
expansion of the fleet during 2005.

      As at December 31, 2005, our newbuilding program comprised of 12 tanker
vessels to be delivered during 2006 to 2009, and the contractual liabilities
under the program amounted to USD 540.0 million. In addition the Company called
options in 2005 to acquire two LR2 tankers on time charter built in 1999 and
2000, which were delivered in January 2006. The contractual liability relating
to these vessels amounted to USD 94.0 million as of December 31, 2005. In 2005,
we also contracted to sell one of our LR1 vessels under construction subsequent
to delivery in 2006 bringing the total net investment program to 13 vessels.

      The market value of the fleet and investment program (7.5 LR2 tanker
newbuildings, 1.5 LR1 tanker newbuildings, two MR tanker newbuildings and two
second-hand LR2 tankers) exceeded the carrying value of the fleet including
newbuilding contracts by USD 768.0 million as of December 31, 2005. This
valuation is based on the average of three internationally acknowledged
shipbrokers' valuations.

Other investments (Norden)

      Other investments mainly comprise of our investment in approximately 33%
of the shares of Norden with a carrying value of USD 352.0 million as of
December 31, 2005 compared to USD 363.0 million as of December 31, 2004.

      TORM does not consider Norden as an associated company, as the Company
does not have influence on decisions and is not represented on Norden's Board of
directors. The investment in Norden is valued on the basis of the closing price
on the Copenhagen Stock Exchange on December 31, 2005 of DKK 2,958.63 per share.
The positive effect from the increase in the share price from DKK 2,725.52 as of
December 31, 2004 was offset by the adverse effect of the change in the DKK/USD
exchange rate of USD 49.0 million.

      We hold investments in other entities with an aggregate carrying amount of
USD 9.0 million as of December 31, 2005, of which USD 2.0 million concerns
unlisted entities, compared to USD 5.0 million as of December 31, 2004. The
carrying amount of the unlisted shares constitutes the estimated fair value
based on available information.

Financing

      Net financial items in 2005 were negative by USD 4.0 million as compared
to a net income of USD 26.0 million in 2004. The most significant reason for the
change is the lower dividend from Norden of USD 12.0 million in 2005 as compared
to USD 34.0 million in 2004 and an increase in interest expenses of USD 10.0
million to USD 26 million in 2005 primarily due to the increase in net interest
bearing debt, as defined in Item 17 below, of USD 360.0 million during the year
to USD 632.0 million in 2005 from USD 272.0 million in 2004.

      The invested capital, as defined in Item 17, increased by USD 558.0
million to USD 1,176.0 million as of December 31, 2005 from USD 618.0 million in
2004. The increase can primarily be explained by the addition of tonnage and
prepayments on newbuildings during 2005. Taking into account the development in
net interest bearing debt during 2005, a significant part of the expansion of
our Company is financed by cash flow from operations and from sale of vessels.

      Shareholders' equity increased by USD 190.0 million to USD 905.0 million
in 2005. The considerable growth in shareholders' equity is mainly due to the
net profit in 2005 of USD 299.0 million less USD 90 million dividends paid out
during the year and value adjustment of the Company's investment in shares in
other companies, including Norden, of USD 23.0 million.

Tax

      The tax expense for 2005 comprises current tax for the year of USD 9.0
million, which is unchanged compared to the previous year, less a USD 9.0
million reduction of deferred tax as compared to an increase in deferred tax of
USD 8.0 million in 2004. Net tax for 2005 was USD 0.0 million as compared to an
expense of USD 19.0 million in 2004. Of the reduction in deferred tax in 2005,
USD 4.0 million was a result of a change in the Danish corporation tax rate from
30% to 28%. The deferred tax liability as at December 31, 2005 of USD 55.0
million as compared to USD 73.0 million in the previous year was furthermore
affected by a currency exchange gain of USD 10.0 million which is recognized in
the income statement under financial items.

      All significant Danish entities in our group entered into the tonnage
taxation scheme effective from 2001 and have filed tax returns for 2001 through
2004. The assessment of the tax returns by the tax authorities has not yet been
completed, and the recognized current tax liabilities are therefore to a great
extent based on Management's judgment regarding the outcome of the assessment.
TORM paid USD 7.0 million in corporation tax on account in 2005 regarding these
entities.

B.    Liquidity and capital resources

      The invested capital increased by USD 123 million to USD 1,299 million as
at December 31, 2006, from USD 1,176 million as at December 31, 2005 and USD 618
million as at December 31, 2004. The increase can primarily be explained by the
addition of tonnage and prepayments on newbuildings during the year.

      The primary objective of the Company's capital management is to ensure
that it maintains a strong credit rating and healthy capital ratios in order to
support its business and maximize shareholder value. To manage its capital
structure and make adjustments to it, in light of changes in economic
conditions, the Company may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares. No changes were made to the capital
management objectives, policies or processes during the years ended December 31,
2004, December 31, 2005 and December 31, 2006.

      For maintenance of the capital structure the Board of Directors has
announced to undertake prior to the end of the current financial year a share
buy-back programme of up to 15% of the Company's nominal share capital.

      The Company monitors the capital using gearing ratios, primarily the
equity ratio, which is equity divided by total assets. The Company's policy is
to maintain the equity ratio above 30% both when executing short-term business
activities and when considering strategic initiatives and planning long-term
investments. As at December 31, 2006, the equity ratio was 61% compared to 50%
as at December 31, 2005 and 58% as at December 31, 2004.

      Equity increased by USD 376 million in 2006 to USD 1,281 million as at
December 31, 2006. The considerable growth in equity is mainly due to the net
profit for the year of USD 235 million and value adjustment of the Company's
investment in shares in other companies, including Norden, of USD 283 million
less dividends paid out during the year of USD 134 million.

      The payment of the Company's obligations under loan agreements, along with
the payment of charter hire for chartered-in vessels and all other commitments
that TORM has entered into, are paid out of the cash generated by the Company.
Total cash and cash equivalents amounted to USD 33 million at the end of 2006
vs. USD 157 million at the end of 2005 and USD 66 million at the end of 2004,
resulting in a net decrease in cash and cash equivalents for the year of USD 124
million compared to a net increase of USD 91 million in 2005 and a net increase
of USD 38 million in 2004. The primary sources of the cash flow were profit from
operating activities, additional borrowing and proceeds from the sale of
vessels.

      The cash flows were primarily used to finance the renewal of the fleet, to
repay mortgage debt and bank loans and to pay dividend to shareholders during
the year.

      The Company's operations generated a cash inflow of USD 233 million in
2006 compared to an inflow of USD 261 million in 2005, which was historically
high, and an inflow of USD 228 million in 2004. The Company invested USD 262
million in tangible fixed assets during the 2006, primarily comprising the
extension of the fleet, compared to USD 636 million in 2005 and USD 187 million
in 2004. The total cash inflow from the sale of vessels was USD 145 million in
2006 compared to USD 178 million in 2005. The Company did not generate any cash
flows from the sale of non-current assets in 2004.

      The total cash outflow from financing activities amounted to USD 239
million compared to a cash inflow of USD 303 million in 2005 and a cash outflow
of USD 3 million in 2004. Additional borrowing generated inflow of USD 162
million for the financing of the newbuilding program and purchase of second-hand
vessels, while repayments on mortgage debt and bank loans amounted to USD 256
million. Dividend payments to TORM's shareholders, which in 2006 amounted to USD
134 million, also affected cash flow from financing activities.

      As at December 31, 2006, TORM had entered into credit agreements with
leading banks with a total commitment of USD 1,514 million, of which USD 698
million was drawn. Of the total borrowings of USD 698 million, USD 634 million
was bearing variable interest. The credit agreements are dedicated to the
financing of new tonnage and to the ongoing financing of some of the existing
vessels.

      For all 17 vessels in the newbuilding programme payments corresponding to
approximately 23% of the aggregate contract price have been made, and TORM has
entered into an agreement for the remaining financing of three of the LR2
product tankers in the newbuilding programme to be delivered during the period
from April 2007 to June 2008. The remaining financing for the other vessels has
not yet been agreed but will be in place in due time to meet all payment
obligations. The total outstanding contractual commitment under the newbuilding
programme amounted to USD 594 million as at December 31, 2006, which is covered
by the existing commitments from our banks.

      TORM believes that based on available cash and planned investments,
projected operating cash flows and financing capacity the Company has sufficient
cash flow to meet the operating requirements, cash flow obligations and other
strategic initiatives set by the Company's Board of Directors. TORM also
believes that the current fleet structure, based on time charters and owned
vessels, provides the Company with the flexibility to react to changes in market
conditions reducing the exposure to negative market developments.

      For further disclosure and discussion of our contractual obligations
please refer to Item 10C and Notes 13 and 17 to the consolidated financial
statements.

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 tends 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 2007

      TORM's financial results primarily depend on developments in freight rate
levels and the number of earning days. At April, 30 2007 41% of the remaining
earning days in 2007 for product tankers had been covered vs. 25% at the same
time in 2006. In the Bulk Division, 94% of the remaining earning days in 2007
had been covered as at April 30, 2007 vs. 61% at the same time in 2006. In 2007,
the financial statements will be significantly affected by our acquisition of
50% in OMI. The financial result will also be greatly influenced by our sale of
the shares in Norden in March 2007 generating an income before tax of USD 643
million.

      The profit before tax forecast for 2007 as at April 30, 2007 is in the
region of USD 780-800 million. This forecast is subject to a degree of
uncertainty in as much as a number of factors could significantly impact freight
rates and consequently the earnings of both the product tankers and the bulk
carriers. Furthermore, it is difficult to predict the impact of additional
tonnage not yet delivered. TORM does not hold the view that there will be
greater uncertainty or other exceptional circumstances in 2007 than found
previously.

      For 2007, it is estimated that the following factors would have the
greatest influence on earnings:

            o     Worldwide economic growth.

            o     Consumption of refined oil products, particularly during the
                  winter months.

            o     Chinese imports of commodities, particularly iron ore, coal
                  and grain.

            o     Additions and scrapping of vessels.

            o     One-off events such as strikes, political instability in the
                  oil-exporting countries, weather conditions, shut- down of
                  refineries, etc.

            o     Additional costs due to restructuring as a result of the
                  acquisition of 50% of OMI.

Tanker Division

      In 2007, the tanker market is expected to be positively affected by an
increase in the global oil demand and negatively affected by a relatively
substantial number of product tanker deliveries.

      Energy Information Administration (EIA) expects global oil consumption to
increase by approximately 1.8% in 2007, vs. 1.0% in 2006, with China and the US
as the largest consumers. The longer transport distances of refined oil products
- attributable to the fact that additional refinery capacity is located far from
the main consuming countries - will, when combined with growth in consumption,
continue to underpin the product tanker market.

      Ton-miles, which illustrates the total demand for capacity, is expected to
increase by 4.6% in 2007 vs. 5.0% in 2006 (source: Fearnleys). However, it
should be noted that the calculation of this figure is subject to considerable
uncertainty.

      The global product tanker fleet will be affected by a historically large
order book of newbuildings due for delivery in 2007. In 2007, the net fleet
increase in the three business units operated by TORM is expected to be
approximately 16% (source: Fearnleys). The net growth is expected to slow down
in the succeeding years and then gradually normalize - not least in light of
what is expected to be a relatively substantial phasing out of single-hulled
product tankers in the run-up to 2010.

       For 2007, it is estimated that the following risk factors will have the
greatest influence on the product tanker market:

            o     The winter market and thereby stockpiling.

            o     The global economic growth and thereby the consumption of
                  refined oil products.

      Due to seasonal fluctuations, the first and the fourth quarters are
traditionally the strongest as a result of the winter season. With the slack
winter market prevailing at the beginning of 2007 and the large net addition of
product tankers, TORM expects 2007 to be characterized by a little lower rates
overall than in 2006.

      The drop in freight rates will to some extent be offset by the expansion
of TORM's fleet, which will result in 28% more earning days in 2007 compared to
2006.

      As of April 30, 2007, TORM had covered approximately 41% of the remaining
earning days in 2007 at an average rate of USD 24,966/day, which ensures
reasonable earnings for the Tanker Division in 2007.

Bulk Division

      The Bulk market has in recent years experienced very firm, but also highly
volatile freight rates. TORM expects this to be the case in 2007 as well.

      The most important factor in the demand for bulk carriers, and thus for
freight rates in 2007, is the development of the global economy, including in
particular developments in China. As a result of the expected considerable
volatility, TORM continues its practice of hedging a significant part of its
exposure by chartering out vessels on one-year contracts.

      For 2007, it is estimated that the following risk factors will have the
greatest influence on the bulk market:

            o     Chinese imports of commodities.

            o     The number of waiting days in ports.

            o     Reduced global economic growth.

      As of April 30, 2007, TORM had covered approximately 94% of the remaining
earning days for its Panamax vessels at an average rate of USD 25.150/day, which
ensures that the division will achieve satisfactory earnings for 2007.

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, 2006 (in USD million):

<TABLE>
<CAPTION>
USD million                       2007      2008      2009      2010      2011 There-after     Total
<S>            <C>                <C>       <C>       <C>       <C>       <C>       <C>         <C>
Long-Term Debt (1)                55.9      55.9      68.5      53.5      53.5      407.6       694.9
Interest  payments  fixed by      15.9       9.3       2.4       2.2       1.5        0.0       31.3
interest rate swaps (3)
Estimated  variable interest      18.2      24.2      30.6      27.2      24.2       55.3      179.7
payments (4)
Chartered-in  Vessels (incl.     129.4     128.0     115.4     103.6      99.4      306.1      881.9
vessels   not   delivered  )
(Operating leases)
Newbuilding installments         191.3     161.3     179.7      62.9      18.0        0.0      613.2
(Purchase Obligations) (2)
Other operating leases             2.1       1.9       1.7       1.7       1.8        3.7       12.9
                                   ---       ---       ---       ---       ---        ---       ----
Total                            412.8     380.6     398.3     251.1     198.4      772.7    2,413.9
                                 =====     =====     =====     =====     =====      =====    =======
</TABLE>

(1)       Debt payments could be accelerated upon violation of debt
          covenants. We are in compliance at December 31, 2006 and we believe
          the likelihood of a debt covenant violation is remote.
(2)       Debt financing will provide an estimated 70%-80% of the newbuilding
          installments.
(3)       Actual fixed rates according to interest rate swaps are used for the
          covered interest payments. Please refer to Item 11 for further
          information.
(4)       Variable interest payments are estimated based on a 6% floating
          interest rate, which was our estimate of 6 months LIBOR + a margin as
          of April 30, 2007.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

      The preparation of consolidated financial statements in conformity with
IFRS and accounting principles generally accepted 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 TORM applies its 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 Group'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
the resulting balances are reasonable. However, actual results could differ from
the original estimates requiring adjustments to these balances in future
periods.

      Management believes that the following are the significant accounting
estimates and judgments used in the preparation of the consolidated financial
statements and the reconciliation to US GAAP.

Carrying amounts of vessels

      The Group evaluates the carrying amounts of the vessels to determine if
events have occurred that would require a modification of their carrying
amounts. 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, the Group
reviews certain indicators of potential impairment such as reported sale and
purchase prices, market demand and general market conditions. Market valuations
from leading, independent and internationally acknowledged shipbroking companies
are obtained on a semi-annual basis as part of the review for potential
impairment indicatory. Under US 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
IFRS, 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
requires the Group 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 TORM's vessels may not represent their fair market
value at any point in time as market prices of second-hand 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 change, an impairment of vessels may be required.

      There were no indicators of impairment noted or impairments of vessels
recorded in 2004, 2005 or 2006.

Tax

      All significant Danish entities within the Group entered the Danish
tonnage taxation scheme which went into effect on January 1, 2001 and have filed
tax returns for 2001 to 2005. The assessment of the tax returns by the tax
authorities has not yet been completed for 2003, 2004 and 2005, and we have
filed a complaint regarding the assessments for 2001 and 2002. The tax
regulations are highly complex, and while the Group aims to ensure the estimates
of tax assets and liabilities that it records are accurate, there may be
instances where the process of agreeing the tax liabilities with the tax
authorities could require adjustments to be made to estimates previously
recorded.

      It is the Group's assessment that there is material uncertainty as to the
estimate of taxes payable as of December 31, 2006 due to the lack of precedents
that have interpreted the tonnage tax regulation. The estimate is based on
scenario analyses and discussions with the tax authorities, tax advisors and
industry organizations, and the uncertainty primarily relates to the division of
the 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.

CHANGES IN ACCOUNTING POLICIES

      IFRS

      TORM has implemented the following standards and changes to standards in
the annual report for 2006:

      IFRS 7 "Financial Instruments: Disclosures". The standard adds certain new
disclosures about financial instruments to those currently required by IAS 32,
replaces the disclosures now required by IAS 30 and compiles all of those
financial instruments disclosures together in a new standard.

      Amendment to IAS 1 "Presentation of Financial Statements". The amendment
introduces disclosure requirements about the level of capital and how the
capital is managed.

      In addition, TORM has implemented IFRIC 8 "Scope of IFRS 2 Share- based
Payment" and IFRIC 9 "Reassessment of Embedded Derivatives".

      The implementation of the above standards, changes to standards and
interpretations has not affected TORM's financial statements. However,
disclosures have been added due to the implementation.

      A new line "Freight and bunkers derivatives" has been added in the income
statement. The income statement effect of forward freight agreements, forward
bunker contracts and other shipping related derivates for which hedge accounting
is not applied is included in this line. Previously, the effect was included in
"Revenue" and "Port expenses, bunkers and commissions" respectively. The volume
of trade with freight forward agreements and forward bunker contracts is
increasing and in periods of high volatility in freight rates and oil prices the
change in the value of the contracts for which hedge accounting is not applied
may affect the income statement materially Although all freight and bunker
derivatives are regarded as part of the time charter equivalent earnings, it is
TORM's view that presenting these contracts separately provides a more relevant
presentation of "Revenue" and "Port expenses, bunkers and commissions" for the
period. The comparative figures have been reclassified accordingly. Revenue in
2005 is reduced by USD 1.4 million, and port expenses, bunkers and commissions
are increased by USD 1.8 million as a result of the change. Revenue in 2004 is
increased by USD by 9.3 million and port expenses, bunkers and commissions are
increased by less than 0.1 million.

      Note 17 to the consolidated financial statements includes lease
liabilities relating to vessels not yet delivered. Previously, the lease
liabilities presented only represented delivered vessels. While there may be
uncertainty relating to the delivery of vessels, it is TORM's view that
including these liabilities in the note provides a more relevant presentation of
the contractual liabilities. The comparative figures have been adjusted
accordingly. The lease liabilities in 2005 are increased by USD 228 million as a
result of the change. The change has no effect on any financial statement line
items and earnings per share in 2005.

      U.S. GAAP

      As of January 1, 2006, TORM has implemented the following standards and
interpretations:

      Statement of Financial Accounting Standards, or SFAS, No. 123 (revised
2004) "Share-based Payment", which is a revision of SFAS 123, "Accounting for
Stock-Based Compensation". SFAS 123R supersedes APB opinion No. 25, "Accounting
for Stock issued to Employees" and its interpretations, and revises SFAS 123
"Accounting for Stock-Based Compensation". SFAS 123R eliminates the alternative
to use APB Opinion 25's intrinsic value method of accounting that was provided
in SFAS 123 as originally issued. SFAS 123R requires entities to recognize the
cost of employee services received in exchange for awards of equity instruments
based on the grant-date fair value of those awards.

      SFAS 154 "Accounting Changes and Error Corrections -- a replacement of APB
Opinion No. 20 and FASB Statement No. 3". SFAS 154 replaces APB 20, "Accounting
Changes", and SFAS 3, "Reporting Accounting Changes in Interim Financial
Statements", and amends the requirements for the accounting for and reporting of
a change in accounting principle. SFAS 154 establishes retrospective
application, unless impracticable, as the required method for reporting a change
in accounting principle in the absence of explicit transition requirements
specific to the newly adopted accounting principle. SFAS 154 also provides
guidance for determining whether retrospective application of a change in
accounting principle is impracticable and for reporting a change when
retrospective application is impracticable. Under SFAS 154, the correction of an
error in previously issued financial statements is not an accounting change, but
involves adjustments to previously issued financial statements. In many, but not
all aspects, under SFAS 154 the accounting for changes and error corrections are
converged with IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors".

      Staff Position No. FAS 115-1 and FAS 124-1, the Meaning of Other
-Than-Temporary Impairment and Its Application to Certain Investments, ("FSP No.
115-1"). FSP No. 115-1 provides accounting guidance for identifying and
recognizing other-than-temporary impairments of debt and equity securities, as
well as cost method investments in addition to disclosure requirements.

      The adoption these standards and interpretations has not affected the
Company's financial position, cash flows or results of operations.

Accounting Policies Note

      IFRS

      IASB has issued IFRS 8 "Operating Segments" in November 2006. The standard
replaces IAS 14 and aligns segment reporting with the requirements of SFAS 131
under USGAAP. TORM expects to implement this standard with effect from the
financial year 2007.

      IASB also issued IFRIC 10 "Interim Financial Reporting and Impairment" in
July 2006 and IFRIC 11 "IFRS 2: Group and Treasury Shares Transactions" in
November 2006. TORM expects to implement these interpretations when they become
effective.

      TORM expects that the implementation of the standard and the
interpretations will not have a material effect on the annual report and the
interim reporting.

      U.S. GAAP

      In July 2006, the FASB issued Interpretation No. 48 (FIN 48) "Accounting
for Uncertainty in Income Taxes", an Interpretation of FASB Statement No. 109
"Accounting for Income Taxes" to address financial statement recognition and
measurement by an enterprise of a tax position taken or expected to be taken in
a tax return. The interpretation creates a single model to address uncertainty
in tax positions and prescribes the minimum recognition threshold a tax position
is required to meet before being recognized in the financial statements. The
interpretation also requires several new disclosures in annual financial
statements. It is effective for financial statements issued for fiscal years
beginning after December 15, 2006, and will therefore be adopted by the Company
from January 1, 2007. The Company has assessed that the interpretation will not
materially affect the financial statements.

      In September 2006, the FASB issued SFAS No. 157 "Fair Value Measurements"
("SFAS No. 157"). This standard defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. The standard does not require any new
fair value measurements. It is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and will therefore be adopted by
the Company from January 1, 2008. The Company is currently assessing SFAS No.
157 and has not yet determined the impact that the adoption of this standard
will have on its financial statement disclosures.

RECENT DEVELOPMENTS

Acquisition of OMI

      On April 17, 2007, the Company along with Teekay Shipping Corporation
("Teekay") entered into a definitive agreement to acquire OMI Corporation. Under
the agreement, OMI shareholders would receive USD 29.25 in cash for each share
of OMI common stock they held. Teekay and TORM agreed to divide the assets of
OMI equally and to equally split the total cost of the transaction of
approximately $2.2 billion, including assumed net debt and other transaction
costs.

      Under the agreement, Teekay and TORM were required to commence a tender
offer to the OMI shareholders on or before April 27, 2007. The tender offer was
subject to acceptance from OMI shareholders representing over 50 percent of
OMI's outstanding shares, as well as receipt of standard regulatory approvals.
At the expiration of the offer period, a total of 49,762,507 shares had been
validly tendered by the shareholders of OMI providing Omaha, Inc, a subsidiary
which is jointly held by TORM and Teekay, with control over OMI and allowing for
TORM and TEEKAY to gain 100% ownership of OMI and allowing for a subsequent
merger between Omaha, Inc. and OMI.

      The merger of OMI with and into Omaha, Inc., the final step in the
acquisition of OMI, occurred on June 8, 2007 and as a consequence of the merger
Omaha, Inc. changed its name to OMI Corporation. The acquisition of OMI by TORM
and TEEKAY was consequently completed on June 8, 2007 at the price of USD 29.25
per share, whereby OMI became a jointly owned subsidiary of TORM and TEEKAY.

      TORM entered into a one-year USD 700 million bridge loan agreement with
Danske Bank and HSH Nordbank on April 17, 2007, to assist in the financing of
the acquisition of TORM's share of OMI.

Share Split

     At the Company's annual general meeting, which took place on April 17,
2007, a proposal was adopted for a 2:1 stock split of the Company's ordinary
shares, nominal value DKK 10 into ordinary shares of nominal value DKK 5. The
share split was carried out on the Copenhagen Stock Exchange on May 23, 2007,
and the last day of trading in shares of par value DKK 10 was on May 22, 2007.
The first day of trading in shares of par value 5 was May 23, 2007. The share
split was carried out on NASDAQ on May 23, 2007 in relation to the Company's
American Depository Shares with a record date of May 23, 2007 and a distribution
date of May 31, 2007.

     After the share split the Company's common shares consist of 72,800,000
shares in denomination of DKK 5 per share.

G.    Safe harbor

      Forward-looking information discussed in this Item 5 includes assumptions,
expectations, projections, intentions and beliefs about future events. These
statements are intended as "forward-looking statements." We caution that
assumptions, expectations, projections, intentions and beliefs about future
events may and often do vary from actual results and the differences can be
material. Please see "Cautionary Statement Regarding Forward-Looking Statements"
in this Report.

ITEM 6.     DIRECTORS, SENIOR MANAGEMENTAND EMPLOYEES

A.    Directors and senior management [COMPANY TO CONFIRM STILL ACCURATE]

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

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

      Board of Directors:
      Niels Erik Nielsen                 59   Chairman of the Board
      Christian Frigast                  55   Deputy Chairman of the Board
      Lennart Arnold Johan Arrias        58   Director
      Margrethe Bligaard                 38   Director, joined in April 2007
      Ditlev Engel                       43   Director
      Peder Mouridsen                    57   Director, resigned in April 2007
      Niels Peter Abildgaard Nielsen     41   Director, joined in April 2007
      Gabriel Panayotides                52   Director
      Stefanos-Niko Zouvelos             51   Director

      Management:
      Klaus Kjaerulff                    55   Chief Executive Officer and acting
                                              Chief Financial Officer since June
                                                    2006
      Mikael Skov                        43   Chief Operating Officer, appointed
                                              in April 2007
      Klaus Nyborg                       43   Chief Financial Officer, resigned
                                              in June 2006

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

      Niels Erik Nielsen has been Chairman of our Board of Directors since April
25, 2002. Prior to that Mr. Nielsen was the Deputy Chairman of our Board of
Directors from September 26, 2000.. Mr. Nielsen is also a partner with the
Danish law firm, Bech-Bruun, which provides certain legal services to us. He is
a member of TORM's remuneration committee and a member of the board of directors
of several Danish companies, including Amagerbanken Aktieselskab, Ambu A/S,
Charles Christensen A/S, Cimber Air Holding A/S, Danica-Elektronik A/S,
Gammelrand Skaervefabrik A/S, GPV Industri A/S, InterMail A/S, Mezzanin Kapital
A/S, Pele Holding A/S, Preben Olsen Automobiler A/S, Satair A/S,
SCF-Technologies A/S and Weibel Scientific A/S. Mr. Nielsen 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 a member of TORM's audit
committee and remuneration committee. Mr. Frigast is the managing director of
Axcel A/S, a Danish investment company. He also serves as a member of the Board
of Directors of numerous companies including Holdingselskabet af 1. august 1997
A/S and several companies related to Axcel A/S. Mr. Frigast holds a Masters of
Science degree in Economy from the University of Copenhagen.

      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 has been elected by the employees of TORM to our Board of Directors.

      Margrethe Bligaard has been a director of the Company since April 2007.
Ms. Bligaard is employeed by TORM as General Manager in the Tanker Division with
responsibility for performance development and has been with TORM 1989. She has
been elected by the employees of TORM to our Board of Directors.

      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. He serves as a
member of the board of directors for several companies related to Vestas Wind
Systems A/S. Prior to that, Mr. Engel was the CEO of Hempel A/S from 2000 to
2005. Mr. Engel holds a Bachelor of Science degree and a Diploma in Economy from
the Copenhagen Business School.

      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 has been elected by the employees of TORM to our Board of
Directors. Mr. Mouridsen retired as a director of the Company at the annual
gereral meeting held in April 2007.

      Niels Peter Abildgaard Nielsen has been a director of the Company since
April 2007. Mr. Abildgaard is employed by TORM as General Manager for Quality
and Vetting and has been with TORM since 1987. He has been elected by the
employees of TORM to our Board of Directors.

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

      Stefanos-Niko Zouvelos has been a director of TORM since April 2006. Mr.
Zouvelos is General Manager of Beltest Shipping Company Ltd., in Cyprus, an
investment holding company specializing in the shipping sector and the largest
shareholder of TORM. Prior to that, Mr. Zouvelos served as a Financial Manager
of Good Faith Shipping Co. from 2000 to 2004. He holds a Master of Science
degree in Quantative Economics from the University of Stirling, Scotland,and has
been engaged in the shipping business since 1984.

      Klaus Kjaerulff has been our Chief Executive Officer and Managing Director
since September 2000 and TORM's acting Chief Financial Officer since June 2006.
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
deputy chairman of the board of the Danish Shipowners' Association and also
serves as a member of the board of directors for ICC Denmark,
Assuranceforeningen SKULD, Norske Veritas Rad and The Trade Council of Denmark.

      Mikael Skov has been appointed our Chief Operating Officer as of April 1,
2007. Mr. Skov has worked for TORM since 1984. From 2000 to 2007 he served as
Executive Vice President for TORM's Tanker Division.

      Klaus Nyborg has been our Chief Financial Officer since February 2002 and
resigned from TORM in June 2006. Prior to working for us, Mr. Nyborg was
employed in various capacities at the A.P. Moller 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. Moller Group. He holds a Masters degree in Law and Business
Economics and a Diploma in Economics from the Copenhagen Business School.

B.    Compensation

      In 2006, we paid a total of USD 0.5 million to the Board of Directors and
USD 3.6 million to our executives including 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, 2006, members of our
Board of Directors had exercised 105,820 options.

      The members of Management are, in the event of termination by the Company,
entitled to a severance payment of up to 24 months' salary. The pension age for
members of Management is 62.

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 April 2007, except for Mr.
Zouvelos who was elected at the annual general meeting in April 2006. All our
Board members will be eligible for re-election in 2011, except for Mr. Zouvelos
who will be eligible for re-election in 2010. There are no service contracts
between us and any of our directors providing for benefits upon termination of a
director's election.

Committees of the Board of Directors

      On July 31, 2005, we established an audit committee, which adopted an
audit committee charter in compliance with Nasdaq's corporate governance rules.
Our audit committee is comprised of two independent members of our board of
directors who will be responsible for reviewing our accounting controls and
recommending to the board of directors the engagement of our outside auditors.
The members of the audit committee are Messrs. Christian Frigast and Gabriel
Panayotides. In addition, we have established a remuneration committee that is
comprised of two independent members of our board of directors which are
responsible for establishing executive officers' compensation and benefits. The
members of our compensation committee are Messrs. Niels Erik Nielsen and
Christian Frigast.

Exemptions from Nasdaq corporate governance rules

      We have certified to Nasdaq that our corporate governance practices are in
compliance with, and are not prohibited by, the laws of the Kingdom of Denmark.
Therefore, we are exempt from many 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 of an audit committee and a formal
written audit committee charter. The practices that we follow in lieu of
Nasdaq's corporate governance rules are described below.

            o     In lieu of a nomination committee comprised of independent
                  directors, our board of directors will be responsible for
                  identifying and recommending potential candidates to become
                  board members and recommending directors for appointment to
                  board committees. Shareholders may also identify and recommend
                  potential candidates to become board members in writing. Also,
                  under Danish law, two of our seven directors are elected by
                  our employees. No formal written charter has been prepared or
                  adopted because this process is outlined in our Articles of
                  Association and in the laws of the Kingdom of Denmark.

            o     In accordance with Danish law, we will not be required to
                  obtain an independent review of related party transactions for
                  potential conflicts of interests. Our board of directors,
                  however, is contemplating adopting a policy that would require
                  any director who has a potential conflict of interest to
                  identify and declare the nature of the conflict to our board
                  of directors at the next meeting of the board of directors.
                  Such policy would additionally require that related party
                  transactions must be approved by disinterested directors.

            o     As a foreign private issuer, we are not required to solicit
                  proxies or provide proxy statements to Nasdaq pursuant to
                  Nasdaq corporate governance rules or Danish law. Consistent
                  with laws of the Kingdom of Denmark and as provided in our
                  Articles of Association, we will notify our shareholders of
                  meetings between 14 days and four weeks before the general
                  meeting, which is to be held every year before end of April.
                  This notification will contain, among other things,
                  information regarding business to be transacted at the
                  meeting. In addition, our Articles of Association provide that
                  shareholders must give us advance notice to properly introduce
                  any business at a general meeting of the shareholders no later
                  than February 15 before such general meeting. Our Articles of
                  Association also provide that shareholders may designate a
                  proxy to act on their behalf.

      Other than as noted above, we are in full compliance with all other
applicable Nasdaq corporate governance standards.

D.    Employees

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

                                    2004               2005               2006
                                    ----               ----               ----
Land-based employees
       Denmark                        93                103                112
       Other                           7                 20                 26
                                       -                 --                 --
       Total                         100                123                138
Seafarers (officers)                 195                216                215
                                     ---                ---                ---
Total employees                      295                339                353

      In 2004, 2005 and 2006, approximately 33 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, 2007, 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                          *
Margrethe Bligaard                Director                          *
Ditlev Engel                      Director                          *
Stefanos-Niko Zouvelos            Director                          *
Niels Peter Abildgaard Nielsen    Director                          *
Gabriel Panayotides               Director                          *
Klaus Kjaerulff                   Chief Executive Officer           *
Mikael Skov                       Chief Operating 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 included 20 participants who
from 2001 to 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 USD 7.9 million
to cover the economic risk of share price movements in connection with the share
option incentive program. As of December 31, 2006 nil treasury shares were held
to cover this risk as all the options were exercised.

      Please refer to Note 4 to the consolidated Financial Statements for
further information.

Employee shares

      During April 2001, the Board of Directors also decided to offer our
employees 400,000 common shares for the price of DKK 5,25 per share. In October
2001, our employees exercised the right to purchase 388,470 of these shares. The
market price at the date of the grant was DKK 27.15 per share. The remaining
stock purchase rights have expired. Comparative figures have been restated in
accordance with the share split.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

A. Major shareholders.

      Our capital stock is comprised of common shares, par value DKK 5 per
share. Shareholders holding 5% or more of the total number of our outstanding
shares are required to file information with the Copenhagen Stock Exchange.The
following table sets forth information regarding the owners of 5% or more of our
common shares as of April 30, 2007 according to announcements made to the
Copenhagen Stock Exchange in accordance with section 29 of the Danish Securities
Trading Act. None of the shareholders have any special voting rights.

Name                                  Number of Shares      Percentage of Class
----                                  ----------------      -------------------

Beltest Shipping Company Ltd.              23,409,100               32.2%
Menfield Navigation Company Limited        14,564,704               20.0%
A/S Dampskibsselskabet TORM's               4,556,880               6.3%
Underst0ttelsesfond, Denmark

      Beltest and its parent company, Ryder Holdings Inc., have filed a Schedule
13D with the SEC. Menfield Navigation Company Limited acquired 14,564,704
shares, or 20.0% of our outstanding shares during 2003, 2004 and 2005. A/S
Dampskibsselskabet TORM's Underst0ttelsesfond's has filed a Schedule 13G with
the SEC and its shareholding in TORM have not changed over the last four years.
The number of shares has been restated in accordance with the share split of May
23, 2007.

      Beltest Shipping Company Ltd., A/S Dampskibsselskabet TORM's
Underst0ttelsesfond and Menfield Navigation Company Limited have given notices
of their shareholdings to the Copenhagen Stock Exchange.

B.    Related party transactions.

      The members of the Company's Board of Directors and Management, close
members of the family to these persons and companies where these persons have
control or exercise significant influence are considered as related parties with
significant influence.

      TORM has during the financial year paid USD 8.5 million to an entity owned
by Beltest Shipping Company Limited under a time charter agreement. Furthermore,
TORM has during the financial year paid USD 0.3 million for legal assistance to
the law firm Bech-Bruun in which Mr. Niels Erik Nielsen, Chairman of the Board
of Directors, is a practicing partner.

      Management remuneration is disclosed in Note 4 to our 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 5,8 corresponding
to USD 1.0 for every DKK 5 share at the annual general meeting in 2007.

      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 THE LISTING

A.    Offer and 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>

 DKK                          2002            2003            2004         2005         2006
 ---                          ----            ----            ----         ----         ----
                               (*)             (*)
<S>                          <C>             <C>             <C>         <C>          <C>
Low                          11.54           14.33           48.44       110.99       116.50
High                         15.11           45.72          124.55       180.77       201.75
Average Daily
Volume                      44,700         100,832         162,702      302,890      327,508
</TABLE>

      The offer and listing details are adjusted in accordance with the share
      split as of May 23, 2007.

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

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

<TABLE>
2005                              1st quarter       2nd quarter       3rd quarter       4th quarter
----                              -----------       -----------       -----------       -----------
<S>                                   <C>               <C>               <C>               <C>
Low                                    110.99            143.35            153.33            145.74
High                                   162.43            169.61            180.77            176.26
Average Daily Volume                  232,750           279,544           322,926           371,458

2006                              1st quarter       2nd quarter       3rd quarter       4th quarter
Low                                    139.50            116.50            130.00            149.00
High                                   155.75            150.00            156.00            201.75
Average Daily Volume                  285,992           334,038           222,128           473,030
</TABLE>

            For the previous six months:
<TABLE>

                                November   December      January     February       March        April
                                    2006       2006         2007         2007        2007         2007
                                    ----       ----         ----         ----        ----         ----
<S>                              <C>        <C>          <C>          <C>         <C>          <C>
Low                               149.00     173.00       183.50       184.00      176.50       191.25
High                              172.50     201.75       188.25       195.75      193.25        201.5
Average Daily Volume             444,198    660,020      229,954      226.292     273,000      421.888
</TABLE>

B.    Plan of Distribution

      Not Applicable.

C.    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." The tables below sets forth, for the
periods indicated, the high and low closing sale price in U.S. Dollars and the
average daily trading volume for our shares on the Nasdaq National Market.
Trading on the Nasdaq National Market commenced on April 16, 2002. Although we
have provided the average daily trading volume of our shares for the periods
indicated, the trading volume of our shares on the Nasdaq National Market is
extremely volatile and daily trading ranges from none to several thousand
shares.

<TABLE>
 USD                          2002            2003            2004         2005         2006
 ---                          ----            ----            ----         ----         ----
                               (*)             (*)
<S>                            <C>          <C>             <C>          <C>           <C>
Low                           1.58            1.58            8.56        19.34        19.34
High                          2.13            7.87           22.45        29.79        36.20
Average Daily                  908          10,166          29,678       28,426        6,274
Volume
</TABLE>

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

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

2005                              1st quarter       2nd quarter       3rd quarter       4th quarter
----                              -----------       -----------       -----------       -----------
<S>                                    <C>               <C>               <C>               <C>
Low                                     19.34             24.50             25.14             22.81
High                                    28.79             28.70             29.79             28.07
Average Daily Volume                   67,328            22,158            14,880            10.892

2006                              1st quarter       2nd quarter       3rd quarter       4th quarter
Low                                     22.76             19.34             21.82             25.06
High                                    25.44             25.08             26.89             36.20
Average Daily Volume                    6,310             7,012             3,698             8,080
</TABLE>

      For each of the previous six months:
<TABLE>

                                November   December      January     February       March        April
                                    2006       2006         2007         2007        2007         2007
                                    ----       ----         ----         ----        ----         ----
<S>                                <C>       <C>          <C>           <C>         <C>          <C>
Low                                25.45      31.15        31.44        31.70       30.98        34.64
High                               30.25      36.20        32.97        34.75       34.72        36.71
Average Daily Volume               7,006     12,350       12,252        8,280       3,914        2,412
</TABLE>

D.    Selling Shareholders

      Not Applicable.

E.    Dilution

      Not Applicable.

F.    Expenses of the Issue

      Not Applicable.

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 have entered into eight contracts with Guangzhou Shipyard Int. Co.
Ltd., each for the construction of a MR product tanker. Of these contracts four
were executed on January 18, 2006, each for the construction of a 51,800 dwt Ice
Class 1A product tanker. The contracts provide for stage payments of 10% and 20%
upon signing of the contracts, 40% and 50% during construction and 40% upon
delivery of the vessels. In addition four contracts were executed on November
17, 2006, each for construction of a 50,500 dwt type 2 product tanker. The
contracts provide for stage payments of 15% upon signing of the contracts, 45%
during construction and 40% upon delivery of the vessels. Delivery of the
tankers is scheduled between March 2009 and August 2010.

LOAN AGREEMENTS AND CREDIT FACILITIES

      On January 15, 2004, the Company has entered into a USD 95.0 million loan
agreement with Nordea Bank Danmark A/S to assist in the financing of five
vessels in our fleet. 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 five
vessels. The loan is due to be repaid in 2014.

      On December 10, 2004, the Company has entered into a USD 570.0 million
revolving credit facility with Danske Bank A/S and Danish Ship Finance 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.

      On March 1, 2005, the Company has entered into a USD 161.0 million
revolving credit facility with Import Export Bank of China to assist in the
financing of five of the abovementioned newbuildings. The interest rate is fixed
based upon LIBOR. As security for our obligations under the debt instrument, we
have granted to Nordea Bank Denmark, who acts as guarantors towards Import
Export Bank of China for us, a first priority mortgage, registered over and
against the five vessels. The loan is due to be repaid in 2013.

      On December 23, 2005, TORM Singapore Pte. Ltd., a company wholly-owned by
TORM, has entered into a USD 237.0 million loan agreement with The Hongkong And
Shanghai Banking Corporation Limited to assist in the financing of seven 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 The
Hongkong And Shanghai Banking Corporation Limited a first priority mortgage,
registered over and against the seven vessels. The loan is due to be repaid in
2015.

      On April 20, 2006, the Company has entered into a USD 99.2 million
revolving credit facility with Danske Bank A/S to assist in the financing of 2
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 a first priority mortgage, registered over and against
the 2 vessels. The loan is due to be repaid in 2009.

      On December 22, 2006, the Company has entered into a USD 500.0 million
revolving credit facility with Nordea Bank Danmark A/S to assist in the
financing of future vessels. The interest rate is a variable rate based upon
LIBOR. As security for our obligations under the debt instrument, Nordea Bank
Danmark A/S will be granted a first priority mortgage, registered over and
against the relevant vessels. The loan is to be terminated in 2016.

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 are encouraged to 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 15% 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 (the one year period could be met retrospectively) 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

      Under Code Section 883 and the final regulations promulgated thereunder
that came into effect and applies to us beginning with the calendar year 2005,
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, as defined, is a foreign country 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.

      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 2006, 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 final
regulations, on more than half the days during such taxable year by persons who
each own 5% or more 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 2006, TORM was subject to the 5%
override rule of the final regulations. However, TORM intends to obtain from one
of its 5% shareholders, and from each entity in the chain of ownership between
such shareholder and TORM, ownership statements required by the final
regulations to support such shareholder's status as a qualified shareholder for
more than half the days of the calendar year 2006. If this ownership statement
is obtained, TORM will be able to establish that the percentage ownership of
TORM common shares owned by such 5% qualified shareholder for such period is
such that the common share percentage owned by the remaining shareholders in the
5% closely-held group for such period falls below the 50% ownership threshold.
As a result, TORM would therefore qualify for the 5% closely-held exception.
However, as of the date of this filing, TORM has not obtained this ownership
statement and there is no certainty that TORM will be able to do so.

      If the above ownership statement is obtained, both TORM and each
subsidiary will be eligible to claim exemption from tax under Section 883 on
their U.S. source shipping income earned during 2006. However, if TORM is unable
to obtain ownership statements from its 5% shareholders to establish that TORM
and each subsidiary are not subject to the 5% override rule for 2006, then TORM
and certain of its subsidiaries would not qualify for exemption under Section
883 and would be subject to United States federal income tax on their U.S.
source shipping income unless they qualify for the benefits of the Treaty as
described in more detail below.

The United States-Denmark Income Tax Treaty Exemption

      Without regard to Section 883, we believe that TORM and each Danish
subsidiary 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." TORM's non-Danish subsidiaries that earn U.S. source shipping
income do not qualify for the benefits of the Treaty.

      Under Article 8 of the Treaty, TORM and each of its Danish subsidiaries
and each of its non-Danish subsidiaries that is treated as a "resident" of
Denmark within the meaning of the Treaty (collectively, "Danish subsidiaries")
is exempt from U.S. federal income tax on the profits 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% 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 6% 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 are
encouraged to 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 2010) 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 apply only to U.S. Holders that are 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
category income" (or "passive income" for taxable years beginning prior to
January 1, 2007) or, in the case of certain types of U.S. Holders, "general
category income," (or "financial services income" for taxable years prior to
January 1, 2007) 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.
In addition, such payments will be subject to "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. Effective from January 1, 2007, fees
received for management are eligible for tonnage taxation subject to EU approval
of a change in the Danish tonnage tax law. 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 28 %, for
2007: 25%). 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. Subject to final EU approval of a change in the
Danish tonnage tax law, for vessels acquired on or after January 1, 2007, the
gain is tax exempt.

      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 enactmentwas released to income in
2002, which was in accordance with shipping industry practice in Denmark.
However, TORM changed its accounting policies in 2005 to comply with IFRS and in
order to align the accounting under IFRS and under U.S. GAAP deferred tax assets
and liabilities are recorded in the balance sheet. As at December 31, 2006, the
Company carried a deferred tax liability of USD 62.8 million in the balance
sheet. In 2006, the Company paid income taxes, including tonnage tax, of USD 3.2
million. The Company paid no income taxes in 2001, 2002 and 2003 due to tax
losses carried forward.

      The tonnage tax legislation is relatively 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, 2003,2004 and 2005, 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 tax authorities have concluded their assessment of the tax
returns for 2001 to 2004 and the assessment for 2005 has not been completed.
However, we have filed a complaint regarding the assessments for 2001 to 2004.

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 100 F Street, N.E., Room
1580, Washington, D.C. 20549. Copies of these materials can also be obtained
upon written request from the Public Reference Section of the SEC at its
principal office in Washington, D.C. 20549, at prescribed rates or from the
SEC's website on the Internet at http://www.sec.gov, free of charge. Please call
the SEC at 1-800-SEC-0330 for further information on public reference rooms. 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. The Company sets up all
bunker hedging, and indeed any other form of hedging, entirely on the basis of
the specific market hedging requirements. In general, hedge accounting is
applied systematically and is based upon policies.

      On a limited scale and within the boundaries set out by the Board of
Directors, the Company from time to time enters into FFA and bunker contracts as
a supplement to the physical position in vessels.

      The sensitivity analyses presented in Note 21 in our consolidated
financial statements 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 20.

Foreign Exchange Rate Risk

      As TORM uses USD as measurement currency and most of the Company's
transactions are denominated in USD, TORM only has limited transaction risk,
which primarily relates to costs in DKK.

      Exchange rate risks are assessed in relation to the USD, and the Company's
policy is to minimize the impact of exchange rate fluctuations on the financial
statements and on the financial position of the Company, typically by entering
into forward contracts.

      The expected cash flow in relation to the payment of technical expenses in
non-USD related currencies, salaries, wages and other administrative expenses
and dividends are typically hedged for a period of up to twelve months ahead.

      In order to manage this risk, we enter into forward contracts and currency
options. Please refer to Note 21 in our consolidated financial statements for
information relating to contracts entered into.

Interest Rate Risk

      TORM's interest rate risk generally relates to its interest bearing
mortgage debt. All the Company's loans for financing vessels are denominated in
USD, and most carry variable interest.

      In certain cases, the Company utilizes financial instruments to manage the
effects of interest rate changes on earnings and cash resources. The Company
typically uses interest rate swaps, which are entered into for periods of up to
five years, although typically for two to three years when acceptable interest
rate levels can be obtained. For shorter interest rate hedging, the Company from
time to time uses FRAs.

      The profile of the instruments always matches the profile of the
particular loan in question. When assessing interest rate risk hedging for its
loan portfolio, TORM takes into consideration expected interest rate
developments and future changes to the composition of the fleet in order to meet
ongoing and future market expectations and requirements.

      Please refer to Note 21 in our consolidated financial statements for
information relating to contracts entered into.

Bunker Price Risk

      The Company's operating result is affected by movement in the price of
fuel oil consumed by the vessels - known in the industry as bunkers. To cover
this risk, the Company hedges the price of part of its bunker requirements for a
period of up to 12 months forward. TORM has during 2006 started to apply hedge
accounting to certain bunker hedges.

      In light of the Company's pool arrangements, bunker requirements of
tankers are not hedged individually in respect of cargo contracts or other forms
of bunker hedging. Instead, bunker hedging is planned taking into account 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 bulk carriers, the bunker requirements are similarly hedged to match
cargo contract commitments, but the requirements are generally less, given that
a larger part of earnings derive from vessels chartered out on time charter,
where the charterer is responsible for the payment of bunkers.

      Please refer to Note 21 in our consolidated financial statements for
information relating to contracts entered into.

Freight Rate Risk

      The majority of our tanker vessels are operated on spot voyage charters
through our pools. To manage 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.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

      Not Applicable.

<PAGE>

                                     Part II

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

a) Disclosure of controls and procedures.

      As of December 31, 2006, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
the Chairman and Chief Executive Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the company in the report it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time period
specified in the SEC rules and forms, and to ensure that information required to
be disclosed by the company in the report it files or submits under the Exchange
Act is accumulated and communicated to the company's management including its
principal executive and principal financial officers, as appropriate, to allow
timely decisions regarding required disclosure.

      In designing and evaluating the disclosure controls and procedures,
Management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives.

b) Report of TORM Management on Internal Control Over Financial Reporting

      TORM's Management is responsible for establishing and maintaining adequate
internal control over financial reporting. The TORM Group's internal control
system was designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation and fair presentation of its published
consolidated financial statements.

      All internal control systems no matter how well designed have inherent
limitations. Therefore, even those systems determined to be effective may not
prevent or detect misstatements and can provide only reasonable assurance with
respect to financial statement preparation and presentation. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

      TORM's Management assessed the effectiveness of the Group's internal
control over financial reporting as of December 31, 2006. In making this
assessment, they used the criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this assessment and criteria, Management has
concluded that, as of December 31, 2006, TORM Group's internal control over
financial reporting is effective based on those criteria.

      Management's assessment of the effectiveness of internal control over
financial reporting as of December 31, 2006 has been audited by Deloitte,
Statsautoriseret Revisionsaktieselskab, Denmark, an independent registered
public accounting firm, as stated in their report which is included in exhibit
F2.

c) Changes in internal control over financial reporting.

      There have been no significant changes in our internal controls or in
other factors that could have significantly affected those controls in the
current period, including any corrective actions with regard to significant
deficiencies and material weaknesses.

d) Report of the independent registered public accounting firm

To the shareholders of A/S Dampskibsselskabet Torm

      We have audited the report of Torm management on Internal Control Over
Financial Reporting appearing under Item 15 of this Form 20-F, that
Aktieselskabet Dampskibsselskabet Torm and subsidiaries (the "Company")
maintained effective internal control over financial reporting as of December
31, 2006, based on criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit.

      We conducted our audit 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
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

      A company's internal control over financial reporting is a process
designed by, or under the supervision of, the company's principal executive and
principal financial officers, or persons performing similar functions, and
effected by the company's board of directors, management, and other personnel to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

      Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

      In our opinion, management's assessment that the Company maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2006, based on the criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

      We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), consolidated balance sheet
and the related consolidated statement of operations, changes in shareholders'
equity, and cash flow for the year ended December 31, 2006 of the Company and
our report dated June 26, 2007 expressed an unqualified opinion on those
financial statements and includes an explanatory paragraph relating to
differences between International Financial Reporting Standards as adopted by
the European Union and accounting principles generally accepted in the United
States of America.

Copenhagen, Denmark

June 26, 2007

Deloitte Statsautoriseret Revisionsaktieselskab

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

      We have established an audit committee of the board of directors comprised
of two independent members. Our audit committee does not include a financial
expert because it is not consistent with Danish practice.

ITEM 16B.   CODE OF ETHICS

      During 2006 TORM established a Code of Ethics and Conduct, which is an
extension of TORM's core values and reflects out continued commitment to ethical
business practices and regulatory compliance.

      The purpose of the code is to set standards of behavior in TORM and in the
way of doing business with TORM and to specify what is the encouraged and the
accepted behaviors and the mandatory consequences for not complying with these
standards.

      The Code of Ethics and Conduct will be revised and updated as needed,
reflecting changes in personnel policies, business and regulations.

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 2006 and 2005 were:

(in USD million)                                      2006            2005
--------------------------------------------------------------------------
Audit Fees                                             0.8             0.5
---------------------------------------------------------------------------
Audit-Related Fees                                     0.0             0.0
---------------------------------------------------------------------------
Tax Fees                                               0.1             0.1
---------------------------------------------------------------------------
All Other Fees                                         0.0             0.0
---------------------------------------------------------------------------
Total                                                  0.9             0.6
---------------------------------------------------------------------------

      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 Audit Committee pre-approves all audit, audit-related and non-audit
services not prohibited by law to be performed by our independent auditors and
associated fees prior to the engagement of the independent auditor with respect
to such services.

ITEM 16D.   EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES

      None.

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

      None.

<PAGE>

                                    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-51.

Non-GAAP measures

      In this document we use the measures: equity ratio, net interest bearing
debt and invested capital. Although not GAAP measures they are all commonly used
financial measures according to the Danish Society of Financial Analysts.

Equity ratio

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

(in USD million)                           2004            2005         2006
                                           ----            ----         ----
Equity                                    715,4           904.7      1,280.8
Divided by Total assets                 1,239,6         1,810.1      2,089,0
Equals Equity ratio                       57.7%           50.0%        61.3%

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
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 equity. Net interest bearing debt
is calculated as follows:

(in USD million)                           2004          2005          2006
                                           ----          ----          ----
Mortgage debt and bank loans              395.4         789.0         694.9
Less Cash and cash equivalents           (65.5)       (156.7)        (33.0)
Less Bonds                               (58.1)         (0.2)         (0.0)
                                         ------         -----         -----
Equals Net interest bearing debt          271.8         632.1         661.9

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 USD million)                         2004            2005            2006
                                         ----            ----            ----
Tangible fixed assets                   688.0         1,167.1         1,323.7
Plus Inventories                          5.8            10.9            12.1
Plus accounts receivable                 53.7            70.9            75.8
Plus Non-current assets held for          0.0            43.4             0.0
sale
Less Deferred tax                      (73.2)          (54.6)          (62.8)
Less Trade accounts payable            (15.7)          (22.9)          (18.7)
Less Current tax liabilities            (9.4)           (9.4)           (4.6)
Less Other liabilities                 (23.1)          (23.6)          (26.0)
Less Deferred income                    (7.4)           (6.0)           (1.1)
                                        -----           -----           -----
Equals Invested capital                 618.7         1,175.8         1,298.4

ITEM 18. FINANCIAL STATEMENTS

      Not Applicable.

<PAGE>

                              TORM AND SUBSIDIARIES
               INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm.................F-2
Consolidated Statements of Operations for the years
  ended December 31, 2004 and 2005......................................F-3
Consolidated Balance Sheets as of December 31, 2004 and 2005............F-4
Consolidated Statements of Total Gains and Losses for the
  years ended December 31, 2004 and 2005................................F-6
Consolidated Statements of Cash Flow for the years ended
  December 31, 2004 and 2005............................................F-8
Notes to Consolidated Financial Statements..............................F-9

<PAGE>

REPORT  OF  INDEPENDENT   REGISTERED   PUBLIC  ACCOUNTING  FIRM  TO  THE
SHAREHOLDERS OF AKTIESELSKABET DAMPSKIBSSELSKABET TORM

      We have audited the accompanying consolidated balance sheets of
Aktieselskabet Dampskibsselskabet Torm and subsidiaries (the "Company") as of
December 31, 2006 and 2005, and the related consolidated statements of
operations, changes in shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 2006. 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. An audit 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, 2006 and 2005, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2006, in conformity with International
Financial Reporting Standards as adopted by the European Union.

      International Financial Reporting Standards as adopted by the European
Union vary in certain significant 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 28 to the consolidated financial
statements.

      We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness of the
Company's internal control over financial reporting as of December 31, 2006,
based on the criteria established in Internal Control--Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated June 26, 2007 expressed an unqualified opinion on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting.

June 26, 2007

Deloitte Statsautoriseret Revisionsaktieselskab
Copenhagen, Denmark

<PAGE>

<TABLE>

TORM AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended December 31, 2004, 2005 and 2006
(EXPRESSED IN THOUSANDS OF USD)
<CAPTION>

                                                   Note     2004          2005          2006
                                                   ----     ----          ----          ----

<S>                                                <C>    <C>           <C>           <C>
Revenue                                                   442,600       585,611       603,717
Port expenses, bunkers and commissions                    (83,769)     (124,968)     (148,943)
Freight and bunkers derivatives                            (9,280)        3,194           620
                                                         ------------  ------------  ------------
Time charter equivalent earnings                          349,551       463,837       455,394

Charter hire                                              (59,592)      (82,139)     (106,329)
Operating expenses                                    4   (49,791)      (66,744)      (77,624)
                                                         ------------  ------------  ------------
Gross profit (Net earnings from shipping              3   240,168       314,954       271,441
activities)

Profit from sale of vessels                                     0        54,731        54,362
Administrative expenses                            4, 5   (38,637)      (31,176)      (34,594)
Other operating income                                     13,139        12,570         9,839
Depreciation and impairment losses                    7   (35,181)      (47,894)      (58,915)
                                                         ------------  ------------  ------------
Operating profit                                          179,489       303,185       242,133

Financial income                                      8    42,788        26,004        39,473
Financial expenses                                    8   (16,949)      (29,822)      (40,520)
                                                         ------------  ------------  ------------
Profit before tax                                         205,328       299,367       241,086

Tax expenses                                         10   (18,715)           (4)       (6,574)
                                                         ------------  ------------  ------------
Net profit for the year                                   186,613       299,363       234,512
                                                         ------------  ------------  ------------

                                                   Note                   2005          2006
                                                   ----                   ----          ----

      Earnings per share (USD)                       25                     4.3           3.4
      Earnings per share (DKK) *)                                          25.8          20.2
      Diluted earnings per share (USD)               25                     4.3           3.4
      Diluted earnings per share (DKK) *)                                  25.7          20.2

*)    Calculated from USD to DKK at the average USD/DKK exchange rate for the
      relevant period. The comparative figures has been restated in accordance
      with the share split of May 23, 2007.

The accompanying notes are an integrated part of these financial statements

</TABLE>

<PAGE>

TORM AND SUBSIDIARIES
CONSOLIDATED balance sheets
As of December 31, 2005 and 2006
(Expressed in thousands of USD)

                                          Note          2005             2006
                                          ----          ----             ----

ASSETS
NON-CURRENT ASSETS
Tangible fixed assets
Land and buildings                                       883              374
Vessels and capitalized dry-docking         15     1,066,474        1,136,408
Prepayments on vessels                                97,397          183,348
Other plant and operating equipment                    2,319            3,575
                                                 -----------     ------------
                                             7     1,167,073        1,323,705
                                                 -----------     ------------
Financial fixed assets
Other investments                            6       360,993          644,409
                                                 -----------     ------------
                                                     360,993          644,409
                                                 -----------     ------------
Total non-current assets                           1,528,066        1,968,114
                                                 -----------     ------------
CURRENT ASSETS
Inventories of bunkers                                10,869           12,134
Freight receivables, etc.                    9        53,890           49,690
Other receivables                                     14,133           21,500
Prepayments                                            2,853            4,546
Marketable securities                                    241                0
Cash and cash equivalent                             156,728           33,035
                                                 -----------     ------------
                                                     238,714          120,905
Non-current assets held for sale            24        43,358                0
                                                 -----------     ------------
Total current assets                                 282,072          120,905
                                                 -----------     ------------
TOTAL ASSETS                                       1,810,138        2,089,019

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

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

<PAGE>

<TABLE>

TORM AND SUBSIDIARIES
CONSOLIDATED balance sheets (continued)
As of December 31, 2005 and 2006
(EXPRESSED IN THOUSANDS OF USD)
<CAPTION>

                                                                      Note             2005              2006
                                                                      ----             ----              ----
<S>                                                                     <C>          <C>               <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Common shares                                                           11           61,098            61,098
Treasury shares                                                         11          (7,708)          (18,118)
Revaluation reserves                                                                296,448           579,852
Retained profit                                                                     415,306           574,493
Proposed dividend                                                                   132,382            73,939
Hedging reserves                                                                      3,258             5,589
Translation reserves                                                                  3,867             3,993
                                                                               ------------      ------------
Total shareholders' equity                                                          904,651         1,280,846
                                                                               ------------      ------------
LIABILITIES
Non-current liabilities
Deferred tax liability                                                  10           54,560            62,787
Mortgage debt and bank loans                                         13,15          729,088           639,065
                                                                               ------------      ------------
Total non-current liabilities                                                       783,648           701,852
                                                                               ------------      ------------
Current liabilities
Mortgage debt and bank loans                                         13,15           59,926            55,902
Trade payables                                                                       22,918            18,760
Current tax liabilities                                                               9,381             4,575
Other liabilities                                                       14           23,592            26,004
Deferred income                                                         12            6,022             1,080
                                                                               ------------      ------------
Total current liabilities                                                           121,839           106,321
                                                                               ------------      ------------
Total liabilities                                                                   905,487           808,173
                                                                               ------------      ------------
Total shareholders' equity and liabilities                                        1,810,138         2,089,019
                                                                               ------------      ------------
Accounting policies                                                    1-2
Collateral security                                                     15
Guarantee and contingent liabilities                                    16
Contractual liabilities                                                 17
Time charter contracts                                                  18
Purchase options on vessels                                             19
Fair value of derivative financial instruments                          20
Financial and commercial risks                                          21
Financial instruments                                                   22
Related party transactions                                              23
Non-current assets held for sale                                        24
Earnings per share                                                      25
Appropriation on net profit for the year incl. proposed
dividend                                                                26
Cash flows                                                              27
Reconciliation to United States Generally Accepted
Accounting Principles (U.S. GAAP)                                       28

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

</TABLE>

<PAGE>

<TABLE>
TORM AND SUBSIDIARIES
Consolidated statement of changes in shareholders' equity
As of December 31, 2004, 2005 and 2006
(Expressed in millions of USD)
<CAPTION>
                                                                                                      Gains/losses
                                                                                            recognized directly in equity
                                                                                           -----------------------------------------
                                           Common    Treasury   Retained    Proposed    Revaluation   Hedging   Translation
                                           shares     Shares     profit    dividends      reserve     reserves     reserves    Total
                                           ------     ------     ------    ---------      -------     --------     --------    -----
<S>                                          <C>        <C>        <C>        <C>         <C>          <C>        <C>         <C>
SHAREHOLDERS' EQUITY

Balance at January 1, 2004                   30.5     (8.7)      174.3       36.7         118.7      (3.6)        0.0         347.9

Changes in shareholders' equity 2004:
Exchange rate adjustment arising on
translation of entities using a
measurement currency different from USD                                                                           4.0           4.0
Reversal of deferred gain/loss on cash
flow hedges at the beginning of the year                                                               3.6                      3.6
Deferred gain/loss on cash flow hedges at
year-end                                                                                               0.4                      0.4
Reversal of fair value adjustment on
available for sale investments at the
beginning of the year                                                                   (118.7)                             (118.7)
Fair value adjustment on available for
sale investments at year-end                                                              319.3                               319.3
                                            ---------------------------------------------------------------------------------------
Net gains/losses recognized directly in      0.0        0.0        0.0        0.0         200.6        4.0        4.0         208.6
the equity
Profit for the year                                              186.6                                                        186.6
                                            ---------------------------------------------------------------------------------------
Total income/(expenses) for the year          0.0       0.0      186.6        0.0         200.6        4.0        4.0         395.2
Disposal of treasury shares, cost                       1.0                                                                     1.0
Gain on disposal of treasury shares                                0.1                                                          0.1
Dividends paid                                                             (35.4)                                            (35.4)
Dividends paid on treasury shares                                  1.5                                                          1.5
Exchange rate adjustment on dividends paid                         1.3      (1.3)                                               0.0
Proposed dividend for the financial year                        (99.9)       99.9                                               0.0
Exercise of share options                                          5.1                                                          5.1
Bonus share issue                            30.6               (30.6)                                                          0.0
Cost of bonus share issue                                          0.0                                                          0.0
                                            ---------------------------------------------------------------------------------------
Total changes in equity 2004                 30.6       1.0       64.1       63.2         200.6        4.0        4.0         367.5
                                            ---------------------------------------------------------------------------------------
Equity at December 31, 2004                 61.1      (7.7)      238.4       99.9         319.3        0.4        4.0         715.4

Changes in equity 2005:
Exchange rate adjustment arising on
translation of entities using a
measurement currency different from USD                                                                         (0.1)         (0.1)
Reversal of deferred gain/loss on  hedge
instruments at the beginning of the year                                                             (0.4)                    (0.4)
Deferred gain/loss on hedge instruments
at year-end                                                                                            3.3                      3.3
Reversal of fair value adjustment on
available for sale investments at the
beginning of the year                                                                   (319.3)                             (319.3)
Fair value adjustment on available for
sale investments at year-end                                                              296.4                               296.4
                                            ---------------------------------------------------------------------------------------
Net gains/losses recognized directly in      0.0        0.0        0.0        0.0        (22.9)        2.9      (0.1)        (20.1)
the equity
Profit for the year                                              299.4                                                        299.4
                                            ---------------------------------------------------------------------------------------
Total recognized income/(expenses) for        0.0       0.0      299.4        0.0        (22.9)        2.9      (0.1)         279.3
the year
Disposal of treasury shares, cost                       0.0                                                                     0.0
Dividends paid                                                             (94.5)                                            (94.5)
Dividends paid on own shares                                       4.1                                                          4.1
Exchange rate adjustment on dividends paid                         5.4      (5.4)                                               0.0
Exercise of share options                                          0.4                                                          0.4
Proposed dividend for the financial year                       (132.4)      132.4                                               0.0
                                            ---------------------------------------------------------------------------------------
Total changes in equity 2005                  0.0       0.0      176.9       32.5        (22.9)        2.9      (0.1)         189.3
                                            ---------------------------------------------------------------------------------------
Equity at December 31, 2005                  61.1     (7.7)      415.3      132.4         296.4        3.3        3.9         904.7

Changes in equity 2006:
Exchange rate adjustment arising on
translation of entities using a
measurement currency different from USD                                                                           0.1           0.1
Reversal of deferred gain/loss on  hedge
instruments at the beginning of the year                                                             (3.3)                    (3.3)
Deferred gain/loss on hedge instruments
at year-end                                                                                            5.6                      5.6
Reversal of fair value adjustment on
available for sale investments at the
beginning of the year                                                                   (296.4)                             (296.4)
Fair value adjustment on available for
sale investments at year-end                                                              579.8                               579.4
Net gains/losses recognized directly in
the equity                                   0.0        0.0        0.0        0.0         283.4        2.3        0.1         285.8
Profit for the year                                              234.5                                                        234.5
                                            ---------------------------------------------------------------------------------------
Total recognized income/(expenses) for        0.0       0.0      234.5        0.0         283.4        2.3        0.1         520.3
the year
Purchase of treasury shares, cost                    (10.4)                                                                  (10.4)
Disposal of treasury shares, cost                       0.0                                                                     0.0
Dividends paid                                                            (140.1)                                           (140.1)
Dividends paid on own shares                                       5.9                                                          5.9
Exchange rate adjustment on dividends paid                       (7.7)        7.7                                               0.0
Exercise of share options                                          0.4                                                          0.4
Proposed dividend for the financial year                        (73.9)       73.9                                               0.0
                                            ---------------------------------------------------------------------------------------
Total changes in equity 2006                  0.0    (10.4)      159.2     (58.5)         283.4        2.3        0.1         376.1
                                            ---------------------------------------------------------------------------------------
Equity at December 31, 2006                  61.1    (18.1)      574.5       73.9         579.8        5.6        4.0       1,280.8
                                            ---------------------------------------------------------------------------------------
</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, 2004, 2005 AND 2006
(Expressed in thousands of USD)
<CAPTION>
                                                            Note        2004         2005        2006
                                                            ----        ----         ----        ----
<S>                                                           <C>      <C>        <C>           <C>
CASH FLOW FROM OPERATING ACTIVITIES
Operating profit                                                     179,489      303,185     242,133

Adjustments:
Reversal of profit from sale of vessels                                    0     (54,731)    (54,362)
Reversal of depreciation and impairment losses                        35,181       47,894      58,915
Reversal of other non-cash movements                          27       4,112      (6,523)       6,020
Dividends received                                                    34,157       12,825      26,401
Interest income and exchange rate gains                                3,395        7,809      10,096
Interest expenses                                                   (15,659)     (26,045)    (40,734)
Income taxes paid                                                      (471)      (7,505)     (3,153)
Change in inventories, accounts receivables and
payables                                                            (12,178)     (15,797)    (12,813)
                                                                 -----------  ----------- -----------

Net cash inflow/(outflow) from operating activities                  228,026      261,112     232,503
                                                                 -----------  ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Investment in tangible fixed assets                                (187,133)    (635,877)   (262,376)
Sale of/investment in equity interests and
securities                                                                 0     (15,415)         227
Sale of non-current assets                                                 0      178,157     144,550
                                                                 -----------  ----------- -----------
Net cash inflow/(outflow) from investing activities                (187,133)    (473,135)   (117,599)
                                                                 -----------  ----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Borrowing, mortgage debt and other financial
liabilities                                                          146,072      645,493     162,096
Repayment/redemption, mortgage debt                                 (85,688)    (251,905)   (256,143)
Repayment/redemption, lease liabilities                             (30,348)            0           0
Dividends paid                                                      (33,824)     (90,401)   (134,140)
Purchase/disposal of treasury shares                                   1,023           40    (10,410)
                                                                 -----------  ----------- -----------
Cash inflow/(outflow) from financing activities                      (2,765)      303,227   (238,597)
                                                                 -----------  ----------- -----------
Net cash inflow/(outflow) from operating,
investing and financing activities                                    38,128       91,204   (123,693)

Cash and cash equivalents, at January 1                               27,396       65,524     156,728
                                                                 -----------  ----------- -----------
Cash and cash equivalents, at December 31                             65,524      156,728      33,035
Of which used as collateral                                                0            0           0
                                                                 -----------  ----------- -----------
                                                                      65,524      156,728      33,035

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

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

<PAGE>

TORM AND SUBSIDIARIES - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEARS ENDED DECEMBER 31, 2005 AND 2006

NOTE 1

ACCOUNTING POLICIES

      The annual report has been prepared in accordance with the International
Financial Reporting Standards as adopted by the EU and the disclosure
requirements for Danish listed companies' financial reporting.

      The annual report also complies with the International Financial Reporting
Standards ("IFRS") issued by the International Accounting Standards Board
(IASB).

      The financial statements are prepared in accordance with the historical
cost convention except where fair value accounting is specifically required by
IFRS.

      The functional currency in all major entities is USD, and the Group
applies USD as presentation currency in the preparation of financial statements.

CHANGES IN ACCOUNTING POLICIES AND PRESENTATION

      TORM has implemented the following standards and changes to standards in
the annual report for 2006:

      IFRS 7 "Financial Instruments: Disclosures". The standard adds certain new
disclosures about financial instruments to those currently required by IAS 32,
replaces the disclosures now required by IAS 30 and compiles all of those
financial instruments disclosures together in a new standard.

      Amendment to IAS 1 "Presentation of Financial Statements". The amendment
introduces disclosure requirements about the level of capital and how the
capital is managed.

      In addition, TORM has implemented IFRIC 8 "Scope of IFRS 2 Share- based
Payment" and IFRIC 9 "Reassessment of Embedded Derivatives".

      The implementation of the above standards, changes to standards and
interpretations has not affected TORM's financial statements. However,
disclosures have been added due to the implementation.

      A new line "Freight and bunkers derivatives" has been added in the income
statement. The income statement effect of forward freight agreements, forward
bunker contracts and other shipping related derivatives for which hedge
accounting is not applied is included in this line. Previously, the effect was
included in "Revenue" and "Port expenses, bunkers and commissions" respectively.
The volume of trade with freight forward agreements and forward bunker contracts
is increasing and in periods of high volatility in freight rates and oil prices
the change in the value of the contracts for which hedge accounting is not
applied may affect the income statement materially. Although all freight and
bunker derivatives are regarded as part of the time charter equivalent earnings,
it is TORM's view that presenting these contracts separately provides a more
relevant presentation of "Revenue" and "Port expenses, bunkers and commissions"
for the period. The comparative figures have been reclassified accordingly.
Revenue in 2005 is reduced by USD 1.4 million, and port expenses, bunkers and
commisions are increased by USD 1.8 million as a result of the change. Revenue
in 2004 is increased by USD by 9.3 million and port expenses, bunkers and
commissions are increased by less than 0.1 million.

      Note 17 includes lease liabilities relating to vessels not yet delivered.
Previously, the lease liabilities presented only represented delivered vessels.
While there may be uncertainty relating to the delivery of vessels, it is TORM's
view that including these liabilities in the note provides a more relevant
presentation of the contractual liabilities. The comparative figures have been
adjusted accordingly. The lease liabilities in 2005 are increased by USD 228
million as a result of the change. The change has no effect on any financial
statement line items and earnings per share in 2005.

ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

      IASB has issued IFRS 8 "Operating Segments" in November 2006. The standard
replaces IAS 14 and aligns segment reporting with the requirements of SFAS 131
under USGAAP. TORM expects to implement this standard with effect from the
financial year 2007 if adopted by the EU.

      IASB also issued IFRIC 10 "Interim Financial Reporting and Impairment" in
July 2006 and IFRIC 11 "IFRS 2: Group and Treasury Shares Transactions" in
November 2006. TORM expects to implement these interpretations when they become
effective and adopted by the EU in 2007 and 2008 respectively.

      TORM expects that implementation of the standard and interpretations do
not have material effect on the annual report and interim reporting.

KEY ACCOUNTING POLICIES

      The Management considers the following to be the most important accounting
policies for the TORM Group.

Participation in pools

      TORM generates its revenue from shipping activities, which to a large
extent are conducted through pools. Total pool revenue is generated from each
vessel participating in the pools in which the Group participates and is based
on either voyage or time charter parties. The pool measures net revenues based
on the contractual rates and the duration of each voyage, and net revenue is
recognized upon delivery of service in accordance with the terms and conditions
of the charter parties.

      The pools are regarded as jointly controlled operations, and the Group's
share of the income statement and balance sheet in the respective pools is
accounted for by recognizing a proportional share, based on participation in the
pool, 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 in relation to the total available pool earning
days during the period.

      TORM acts as pool manager for three pools in which the Group is
participating with a significant number of vessels. As pool manager, TORM
receives a chartering commission income to cover the expenses associated with
this role. The chartering commission income is calculated as a fixed percentage
of the freight income from each charter agreement. If the pool does not earn any
freight income, TORM will not receive any commission income. The commission
income is recognized in the income statement under "Other operating income"
simultaneously with the recognition of the underlying freight income in the
pool.

Cross over voyages

Revenue and the related expenses are recognized upon delivery of service in
accordance with the terms and conditions of the charter parties. For cross over
voyages (voyages in progress at the end of a reporting period) the uncertainty
and the dependence on estimates are greater than for concluded voyages. The
Group recognizes a percentage of the estimated revenue for the voyage equal to
the percentage of the estimated duration of the voyage completed on the balance
sheet date. The estimate of revenue is based on the expected duration and
destination of the voyage. Voyage expenses are recognized as incurred.

      When recognizing net revenue, there is a risk that the actual number of
days it takes to complete the voyage will differ from the estimate, and for time
charter parties a lower day rate may have been agreed for additional days. The
contract for a single voyage may state several alternative destination ports.
The destination port may change during the voyage, and the rate may vary
depending on the destination port. Changes to the estimated duration of the
voyage as well as changing destinations and weather conditions will affect the
voyage expenses.

Demurrage revenues

      Freight contracts contain conditions regarding the amount of time
available for loading and discharging of the vessel. If these conditions are
breached, TORM is compensated for the additional time incurred in the form of a
demurrage revenue. Demurrage revenues are recognized upon delivery of service in
accordance with the terms and conditions of the charter parties.

      Upon completion of the voyage, the Group assesses the time spent in port,
and a demurrage claim based on the relevant contractual conditions is submitted
to the charterers. The claim will often be met by counter claims due to
differences in the interpretation of the agreement compared to the actual
circumstances of the additional time used. Based on previous experience, 95% of
the demurrage claim submitted is recognized as demurrage revenue. The Group
receives the demurrage payment upon reaching final agreement of the amount,
which on average is approximately 100 days after the original demurrage claim
was submitted. If the Group accepts a reduction of more than 5% of the original
claim, or if the charterer is not able to pay, demurrage revenue will be
affected.

Vessels

      Vessels are measured at cost less accumulated depreciation and accumulated
impairment losses. Cost comprises acquisition cost and costs directly related to
the acquisition up until the time when the asset is ready for use including
interest expenses incurred during the period of construction based on the loans
obtained for the vessels.

      All major components of vessels, except for dry-docking costs, are
depreciated on a straight-line basis to the estimated residual value over their
estimated useful lives, which TORM estimates to be 25 years. The Group considers
that a 25-year depreciable life is consistent with that used by other shipowners
with comparable tonnage. Depreciation is based on cost less the estimated
residual value. Residual value is estimated as the lightweight tonnage of each
vessel multiplied by scrap value per ton. The useful life and the residual value
of the vessels are reviewed at least at each financial year-end based on market
conditions, regulatory requirements and the Group's business plans. The Group
also evaluates the carrying amounts to determine if events have occurred that
indicate impairment and would require a modification of their carrying amounts.

      Prepayment on vessels is measured at costs incurred.

Dry-docking costs

      The vessels are required to undergo planned dry-dockings for replacement
of certain components, major repairs and maintenance of other components, which
cannot be carried out while the vessels are operating, approximately every 30
and 60 months depending on the nature of work and external requirements. These
dry-docking costs are capitalized and depreciated on a straight-line basis over
the estimated period until the next dry-docking. The residual value of such
components is estimated at nil. The useful life of the dry-docking costs are
reviewed at least at each financial year-end based on market conditions,
regulatory requirements and TORM's business plans.

      A portion of the cost of acquiring a new vessel is allocated to the
components expected to be replaced or refurbished at the next dry-docking. The
two elements are recognized and depreciated separately. For newbuildings, the
initial dry-docking asset is segregated and capitalized separately. The cost of
such asset is estimated based on the expected costs related to the first-coming
dry-docking, which is again based on experience and past history of similar
vessels. For second-hand vessels, a dry-docking asset is also segregated and
capitalized separately, however, taking into account the normal docking
intervals in TORM.

      At subsequent dry-dockings, the costs comprise the actual costs incurred
at the dry-docking yard. Dry docking costs may include the cost of hiring crews
to effect replacements and repairs and the cost of parts and materials used,
cost of travel, lodging and supervision of TORM personnel and the cost of hiring
third party personnel to oversee a dry-docking. Dry-docking activities include,
but are not limited to, the inspection, service on turbocharger, replacement of
shaft seals, service on boiler, replacement of hull anodes, applying of
antifouling and hull paint, steel repairs and refurbishment and replacement of
other parts of the vessel.

Deferred tax

      All significant Danish entities within the Group entered the Danish
tonnage taxation scheme for a binding 10-year period with effect from 1 January,
2001 and have filed tax returns for the fiscal years 2001 to 2005. Under the
Danish tonnage taxation scheme, taxable income is not calculated on the basis of
income and expenses as under the normal corporate taxation. Instead, taxable
income is calculated with reference to the tonnage used during the year. The
taxable income for a company for a given period is calculated as the sum of the
taxable income under the tonnage taxation scheme and the taxable income from the
activities that are not covered by the tonnage taxation scheme made up in
accordance with the ordinary Danish corporate tax system.

      If the entities' participation in the Danish tonnage taxation scheme is
abandoned or if the entities' level of investment and activity is significantly
reduced, a deferred tax liability will become payable. A deferred tax liability
is recognized in the balance sheet at each period end and is accounted for using
the balance sheet liability method. The deferred tax liability relating to the
vessels is measured on the basis of the difference between the tax value of the
vessels at the date of entry into the tonnage taxation scheme and the lower of
the cost and the realized or realizable sales value of the vessels.

OTHER ACCOUNTING POLICIES

Consolidation principles

      The consolidated financial statements comprise the financial statements of
the Parent Company, A/S Dampskibsselskabet 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, and therefore subject to joint control (jointly controlled
entities), are accounted for using proportionate consolidation, whereby the
individual items in their financial statements 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 proportionately
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 transaction between the consolidated companies.
The financial statements used for consolidation purposes are prepared in
accordance with the Group's accounting policies. Entities are included in the
consolidated financial statements from the date of acquisition or founding until
the date of disposal or wounding up.

Foreign currencies

      The functional currency of all significant 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 Group's most significant assets and liabilities in the form of
vessels and related financial liabilities are in USD. Transactions in currencies
other than the functional currency are translated into the functional currency
at the date of the transactions.

      Cash, accounts receivable and payable and other monetary items denominated
in currencies other than the functional currency are translated into the
functional currency at the exchange rate prevailing at the balance sheet date.
Gains or losses due to differences between the exchange rate at the transaction
date and the exchange rate at the settlement date or the balance sheet date are
recognized in the income statement under "Financial items".

      An exchange rate gain or loss relating to a non-monetary item carried at
fair value is recognized in the same line as the fair value adjustment.

      The reporting currency of the Group is USD. Upon recognition of entities
with functional currencies other than USD, the financial statements are
translated into USD. Items in the income statement are translated into USD 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
differences arising from the translation of financial statements into USD are
recognized as a separate component of equity. On the disposal of an entity, the
cumulative amount of the exchange differences deferred in the separate component
of equity relating to that entity shall be transferred to the income statement
as part of the gain or loss on disposal.

Derivative financial instruments

      Derivative financial instruments, primarily interest rate swaps, forward
currency exchange contracts, forward freight agreements and forward contracts
regarding bunker purchases are entered to hedge future committed or anticipated
transactions. TORM applies hedge account- ing under the specific rules for cash
flow hedges when allowed and appropriate. In addition, TORM takes limited
positions in forward freight agreements as a supplement to the Group's physical
positions in vessels, which are not entered for hedge purposes.

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

      Changes in fair value of derivative financial instruments, which are
designated as cash flow hedges and deemed to be effective, are recognized
directly in equity under "Hedging reserves". When the hedged transaction is
recognized in the income statement, the cumulative value adjustment recognized
in equity is transferred to the income statement and included in the same line
as the hedged transaction. Changes in fair value of a portion of a hedge deemed
to be ineffective are recognized in the income statement.

      Changes in fair value of derivative financial instruments that are not
designated as hedges are recognized in the income statement. While effectively
reducing cash flow risk in accordance with the risk management policy of the
Group, interest rate swaps with cap features, and certain forward freight
agreements and forward contracts regarding bunker purchases do not qualify for
hedge accounting. Changes in fair value of these derivative financial
instruments are therefore recognized in the income statement under "Financial
expenses" for interest rate swaps with cap features and under "Freight and
bunkers derivatives" for forward freight agreements and forward bunker
contracts. Changes in fair value of forward freight agreements, which are not
entered for hedge purposes, are also recognized under "Freight and bunkers
derivatives".

      All fair values are based on market-to-market prices or standard pricing
models.

Segment information

      TORM consists of two business segments: Tanker and Bulk. This segmentation
is based on the Group'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 as the individual vessels are not limited to
specific parts of the world.

      The segment income statement comprises revenues directly attributable to
the segment and expenses, which are directly or indirectly attributable to the
segment. Indirect allocation of expenses is based on distribution keys
reflecting the segment's use of shared resources.

      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, out-
standing freight, other receivables and prepayments.

      Segment liabilities comprise segment operating liabilities including 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 and
investment activities, including cash and bank balances, interest bearing debt,
income tax, deferred tax, etc.

Employee benefits

      Wages, salaries, social security contributions, paid holiday and sick
leave, bonuses and other monetary and non-monetary benefits are accrued in the
year in which the employees render the associated services.

Pension plans

      The Group has entered into defined contribution plans only. Pension costs
related to defined contribution plans are recorded in the income statement in
the year to which they relate.

Share based compensation

      The Board of Directors, the Management and a number of key employees
participate in a share option scheme. The scheme provides these persons with the
choices of cash settlement or receipt of TORM shares. At the balance sheet date
a liability for the current fair value of the share options not exercised is
recognized in the balance sheet under other liabilities. The change in the
liability for the period is recognized in the income statement. The liability is
measured using the Black-Scholes model.

Leases

      Agreements to charter in 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 minimum lease payments
determined in the agreements.

      For the purpose of calculating the present value, the interest rate
implicit in the lease or an incremental borrowing rate 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 corresponding 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.

      Agreements to charter out vessels, where substantially all the risks and
rewards of ownership are transferred to the lessee, are classified as finance
leases, and an amount equal to the net investment in the lease is recognized and
presented in the balance sheet as a receivable. The carrying amount of the
vessel is derecognized and any gain or loss on disposal is recognized in the
income statement.

      Other agreements to charter out vessels are classified as operating leases
and lease income is recognized in the income statement on a straight-line basis
over the lease term.

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 lease term.

      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 or the sales price is lower than the fair
value. 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
except if the loss is compensated by future lease payments below fair value, it
is deferred and amortized in proportion to the lease payments over the life of
the lease.

INCOME STATEMENT

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

      o     the income creating activities have been carried out on the basis of
            a binding agreement,

      o     the income can be measured reliably,

      o     it is probable that the economic  benefits  associated  with
            the transaction will flow to the Group, and

      o     costs relating to the transaction can be measured reliably.

      Revenue comprises freight, charter hire and demurrage revenues from the
vessels and gains and losses from forward freight agreements designated as
hedges. Revenue is recognized when it meets the general criteria mentioned above
and the stage of completion can be measured reliably. Accordingly, freight,
charter hire and demurrage revenue is recognized at selling price upon delivery
of service in accordance with the charter parties concluded.

Port expenses, bunkers and commissions

      Port expenses, bunker fuel consumption and commissions are recognized as
incurred. Gains and losses from forward bunker contracts designated as hedges
are included in this line.

Freight and bunkers derivatives

      Freight and bunkers derivatives includes fair value adjustments and gains
and losses on forward freight agreements, forward bunker contracts and other
derivate financial instruments directly relating to shipping activities which
are not designated as hedges.

Charter hire

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

Operating expenses

      Operating expenses, which comprise crew expenses, repair and maintenance
expenses and tonnage duty, are expensed as incurred.

 Profit from sale of vessels

      Profit or loss from sale of vessels is recognized when the significant
risks and rewards of ownership have been transferred to the buyer, and it is
measured as the difference between the sales price less sales costs and the
carrying amount of the asset.

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 primarily comprises chartering commissions,
management fees and profits and losses deriving from the disposal of other plant
and operating equipment.

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 income

      Financial income comprises interest income, realized and unrealized
exchange rate gains relating to transactions in currencies other than the
functional currency, realized gains from other investments and securities,
unrealized gains from securities, dividends received and other financial income
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. Dividends
from other investments are recognized when the right to receive payment has been
decided, which is typically when the dividend has been declared and can be
received without conditions.

Financial expenses

      Financial expenses comprise interest expense, financing costs of finance
leases, realized and unrealized exchange rate losses relating to transactions in
currencies other than the functional currency, realized losses from other
investments and securities, unrealized losses from securities and other
financial 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.

Tax

      In Denmark, A/S Dampskibsselskabet TORM is jointly taxed with its Danish
subsidiaries. The Parent Company provides for and pays the aggregate Danish tax
of the taxable income of these companies but recovers the relevant portion of
the taxes paid from the subsidiaries based on each entity's portion of the
aggregate taxable income. Tax expenses include the expected tax including
tonnage tax of the taxable income for the year for the Group, adjustments
relating to previous years and the change in deferred tax for the year. However,
tax relating to items posted in equity is posted directly in equity.

BALANCE SHEET

Other plant and operating equipment

      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.

      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.

      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.

Financial assets

      Financial assets are initially recognized on settlement date at fair value
plus transaction costs, except for financial assets at fair value through profit
or loss, which are recognized at fair value. Financial assets are derecognized
when the rights to receive cash flows from the assets have expired or have been
transferred.

      Financial assets are classified as:

      o     Financial assets at fair value through profit or loss

      o     Held-to-maturity investments

      o     Loans and receivables or

      o     Available-for-sale financial assets.

Other investments

      Other investments comprise shares in other companies and are classified as
available-for-sale. Listed shares are measured at the market value at the
balance sheet date, and unlisted shares are measured at estimated fair value.
Unrealized gains and losses resulting from changes in fair value of shares are
recognized in equity under "Revaluation reserves". Realized gains and losses
resulting from sales of shares are recognized as financial items in the income
statement. The cumulative value adjustment recognized in equity is transferred
to the income statement when the shares are sold.

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

      Other investments are presented as non-current unless Management intends
to dispose of the investments within 12 months of the balance sheet date.

Receivables

      Outstanding freight receivables and other receivables that are of a cur-
rent nature, expected to be realized within 12 months from the balance sheet
date, are classified as loans and receivables and presented as current assets.
Receivables are measured at the lower of amortized cost and net realizable
values, which corresponds to nominal value less provision for bad debts.

      Derivative financial instruments included in other receivables are
measured at fair value.

Securities

      Bonds are classified as financial assets at fair value through profit or
loss and 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. Bonds are traded
frequently and therefore presented as current assets.

Impairment of assets

      Non-current assets are reviewed to determine any indication of impairment.
In the case of such indication, the recoverable amount of the asset is estimated
as the higher of the asset's net selling price and its value in use. If this
amount is less than the carrying amount of the asset, the carrying amount is
reduced to the recoverable amount. The impairment loss is recognized immediately
in the income statement.

      For the purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). For vessels, the cash-generating unit is the total fleet of the Group.

Inventories

      Inventories consist of bunkers and lubricants and are stated at the lower
of cost and net realizable value. The cost is determined by the FIFO- method and
includes expenditures incurred in acquiring the inventories and delivery cost
less discounts.

Non-current assets held for sale

      Non-current assets held for sale are presented in a separate line below
current assets in the balance sheet and measured at the lower of carrying amount
and fair value less costs to sell. Depreciation of an asset ceases when it is
classified as held for sale.

Treasury shares

      Treasury shares are recognized as a separate component of equity at cost.
Upon subsequent disposal of treasury shares, any consideration is also
recognized directly in equity.

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 component of equity.

Provisions

      Provisions are recognized when the Group has a legal or constructive
obligation as a result of past events and it is probable that it will lead to an
outflow of resources that can be reliably estimated. Provisions are measured at
the estimated ultimate liability that is expected to arise taking into account
the time value of money.

Liabilities

      Liabilities are generally measured at amortized cost.

      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.

      Derivative financial instruments included in other liabilities are
measured at fair value.

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 profit from sale of
vessels, non-cash operating items, changes in working capital, income tax paid,
dividends received and interest paid/received.

      Cash flow from investing activities comprises dividends received and the
purchase and sale of tangible fixed assets and financial fixed assets.

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

      Cash and cash equivalents comprise cash at bank and in hand and highly
liquid bonds with a term to maturity not exceeding three months. Other bonds and
other investments are classified as investment activities.

EARNINGS PER SHARE

      Basic earnings per share are calculated by dividing the consolidated
profit or loss available to common shareholders by the weighted average number
of common shares outstanding during the period. Treasury shares are not included
in the calculation. Purchases and sales of treasury shares during the period are
weighted based on the remaining period.

      Diluted earnings per share is calculated by adjusting the consolidated
profit or loss available to common shareholders and the weighted average number
of common shares outstanding for the effects of all potentially dilutive shares.
Such potentially dilutive common shares are excluded when the effect would be to
increase earnings per share or reduce a loss per share.

UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP)

      As a consequence of the registration of American Depository Receipts
(ADRs) with the United States Securities and Exchange Commission (SEC), the
Group has prepared a summary of the effect on net income and equity, had the
financial statements been prepared in accordance with the accounting principles
generally accepted in the US.

NOTE 2

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

      The preparation of consolidated financial statements in conformity with
IFRS and accounting principles generally accepted 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 TORM applies its 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 Group'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
the resulting balances are reasonable. However, actual results could differ from
the original estimates requiring adjustments to these balances in future
periods.

      Management believes that the following are the significant accounting
estimates and judgments used in the preparation of the consolidated financial
statements and the reconciliation to US GAAP.

Carrying amounts of vessels

      The Group evaluates the carrying amounts of the vessels to determine if
events have occurred that would require a modification of their carrying
amounts. 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, the Group
reviews certain indicators of potential impairment such as reported sale and
purchase prices, market demand and general market conditions. Market valuations
from leading, independent and internationally acknowledged shipbroking companies
are obtained on a semi-annual basis as part of the review for potential
impairment indicatory. Under US 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
IFRS, 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
requires the Group 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 TORM's vessels may not represent their fair market
value at any point in time as market prices of second-hand 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 change, an impairment of vessels may be required.

      There were no indicators of impairment noted or impairments of vessels
recorded in 2005 or 2006.

Tax

      All significant Danish entities within the Group entered the Danish
tonnage taxation scheme with effect from 1 January 2001 and have filed tax
returns for 2001 to 2005. The assessment of the tax returns by the tax
authorities has not yet been completed for 2003, 2004 and 2005, and we have
filed a complaint regarding the assessments for 2001 and 2002. The tax
regulations are highly complex, and while the Group aims to ensure the esti-
mates of tax assets and liabilities that it records are accurate, there may be
instances where the process of agreeing the tax liabilities with the tax
authorities could require adjustments to be made to estimates previously
recorded.

      It is the Group's assessment that there is material uncertainty as to the
estimate of taxes payable as of December 31, 2006 due to the lack of precedents
that have interpreted the tonnage tax regulation. The estimate is based on
scenario analyses and discussions with the tax authorities, tax advisors and
industry organizations, and the uncertainty primarily relates to the division of
the 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.

NOTE 3  - NET EARNINGS FROM SHIPPING ACTIVITIES (in USD million)
<TABLE>

                                                   For the year ended December 31, 2004
                                              Tanker     Bulk         Not allocated     Total
                                              ------     ----        -------------     -----
<S>                                           <C>          <C>        <C>               <C>
CONSOLIDATED SEGMENT INFORMATION
INCOME STATEMENT

Revenue                                        255.7        177.5            0.1     433.3
Port expenses, bunkers and commissions        (68.8)       (15.0)            0.0    (83.8)
                                           ---------    ---------         ------ ---------
Time Charter Equivalent Earnings               186.9        162.5            0.1     349.5

Charter hire                                  (13.5)       (46.1)            0.0    (59.6)
Operating expenses                            (39.5)       (11.6)            1.3    (49.8)
                                           ---------     --------       -------- ---------
Gross profit/(loss) (Net earnings from
shipping activities)                           133.9        104.8            1.4     240.1
Profit/(loss) from sale of vessels               0.0          0.0            0.0       0.0
Administrative expenses                       (28.5)        (9.5)          (0.6)    (38.6)
Other operating income                          12.9          0.3            0.0      13.2
Depreciation and impairment losses            (28.6)        (6.5)          (0.1)    (35.2)
                                            --------     --------       --------  --------
Operating profit                                89.7         89.1            0.7     179.5
Financial items                                                             25.8      25.8
                                                                        --------  --------
Profit/(loss) before tax                                                    26.5     205.3
Tax expenses                                                              (18.7)    (18.7)
                                                                          ------ ---------
Net profit/(loss) for the year                                               7.8     186.6

BALANCE                                                    As of December 31, 2004

Total non-current assets                       565.6        122.3          368.5   1,056.4
Total assets                                   605.5        130.8          503.3   1,239.6
Total liabilities                               29.5          8.0          486.7     524.2

OTHER INFORMATION
Additions to tangible fixed assets             126.4         60.9            0.0     187.3
Impairment losses recognized in the
income statement                                 0.0          0.0            0.0       0.0
</TABLE>

      During the year there have been no transactions between the Tanker and the
Bulk segments, and therefore all the revenue derives from external customers
<TABLE>

                                                      For the year ended December 31, 2005

                                            Tanker      Bulk       Not allocated   Total
                                            ------      ----       -------------   -----
<S>                                          <C>           <C>            <C>      <C>
CONSOLIDATED SEGMENT INFORMATION
INCOME STATEMENT
Revenue                                        418.0        167.6         0.0        585.6
Port expenses, bunkers and commissions       (113.3)       (11.7)         0.0      (125.0)
Freight and bunkers derivatives                  3.2          0.0         0.0          3.2
                                           ---------    ---------      ------    ---------
Time Charter Equivalent Earnings               307.9        155.9         0.0        463.8

Charter hire                                  (44.3)       (37.9)         0.0       (82.2)
Operating expenses                            (51.4)       (15.3)         0.0       (66.7)
                                           ---------     --------    --------    ---------
Gross profit/(loss) (Net earnings from
shipping activities)                           212.2        102.7         0.0        314.9
Profit/(loss) from sale of vessels              54.7          0.0         0.0         54.7
Administrative expenses                       (25.4)        (5.8)         0.0       (31.2)
Other operating income                          12.4          0.2         0.0         12.6
Depreciation and impairment losses            (37.0)       (10.8)         0.0       (47.8)
                                            --------     --------    --------     --------
Operating profit                               216.9         86.3         0.0        303.2
Financial items                                                         (3.8)        (3.8)
                                                                     --------     --------
Profit/(loss) before tax                                                (3.8)        299.4
Tax expenses                                                              0.0          0.0
                                                                       ------    ---------
Net profit/(loss) for the year                                          (3.8)        299.4

                                                           As of December 31, 2005

Total non-current assets                     1,025.8        141.3       361.0      1,528.1
Total assets                                 1,139.2        145.5       525.4      1,810.1
Total liabilities                               39.4          5.7       860.4        905.5

Additions to tangible fixed assets             607.2         28.7         0.0        635.9
Impairment losses recognized in the
income statement                                 0.0          0.0         0.0          0.0
Reversal of impairment losses
recognized in the income statement               0.4          0.1         0.0          0.5
</TABLE>

      During the year there have been no transactions between the Tanker and the
Bulk segments, and therefore all the revenue derives from external customers.
<TABLE>

                                                      For the year ended December 31, 2006

                                              Tanker        Bulk    Not allocated    Total
                                              ------        ----    -------------    -----
<S>                                          <C>            <C>      <C>            <C>

CONSOLIDATED SEGMENT INFORMATION
INCOME STATEMENT
Revenue                                        494.0        109.7         0.0        603.7
Port expenses, bunkers and commissions       (143.8)        (5.1)         0.0      (148.9)
Freight and bunkers derivatives                  0.6          0.0         0.0          0.6
                                           ---------    ---------      ------    ---------
Time Charter Equivalent Earnings               350.8        104.6         0.0        455.4

Charter hire                                  (58.5)       (47.8)         0.0      (106.3)
Operating expenses                            (64.6)       (13.1)         0.0       (77.7)
                                           ---------     --------    --------    ---------
Gross profit/(loss) (Net earnings from
shipping activities)                           227.7         43.7         0.0        271.4
Profit/(loss) from sale of vessels               3.1         51.3         0.0         54.4
Administrative expenses                       (29.1)        (5.5)         0.0       (34.6)
Other operating income                           9.7          0.1         0.0          9.8
Depreciation and impairment losses            (50.8)        (8.1)         0.0       (58.9)
                                            --------     --------    --------     --------
Operating profit                               160.6         81.5         0.0        242.1

Financial items                                                         (1.0)        (1.0)
                                                                     --------     --------
Profit/(loss) before tax                                                (1.0)        241.1

Tax expenses                                                            (6.6)        (6.6)
                                                                       ------    ---------
Net profit/(loss) for the year                                          (7.6)        234.5

BALANCE                                                    As of December 31, 2006

Total non-current assets                     1,234.9         88.8       644.4      1,968.1
Total assets                                 1,308.2         91.8       689.0      2,089.0
Total liabilities                               36.8          2.3       769.1        808.2

OTHER INFORMATION
Additions to tangible fixed assets             206.4          1.9         0.0        262.3
Impairment losses recognized in the
income statement                                 0.0          0.0         0.0          0.0
Reversal of impairment losses
recognized in the income statement               0.0          0.0         0.0          0.0
</TABLE>

      During the year there have been no transactions between the Tanker and the
Bulk segments, and therefore all the revenue derives from external customers.
<PAGE>

NOTE 4  - STAFF COSTS (in USD million)

                                     For the years ended December 31
                                        2004            2005            2006
                                        ----            ----            ----
Total staff costs
Staff costs included in                 10.7            12.9            13.6
operating
expenses
Staff costs included in                 27.4            21.1            22.7
administrative expenses
                                   ---------       ---------       ---------
Total                                   38.1            34.0            36.3
                                   ---------       ---------       ---------
Staff costs comprise the
following
Wages and salaries                      25.8            30.3            33.2
Share-based compensation                 9.8             0.5             0.0
Pension costs                            2.3             2.7             2.9
Other social security costs              0.2             0.5             0.2
                                   ---------       ---------       ---------
Total                                   38.1            34.0            36.3
                                   ---------       ---------       ---------
Hereof remuneration to the
Board of Directors and salaries
to the Management
Wages and salaries                       2.5             3.7             4.0
Share-based compensation                 3.7             0.5             0.0
Pension and social security              0.1             0.1             0.1
costs
                                   ---------       ---------       ---------
Total                                    6.3             4.3             4.1
                                   ---------       ---------       ---------

Hereof remuneration to the               1.4             0.9             0.5
Board of directors
Hereof salaries to the                   4.9             3.4             3.6
Management
                                   ---------       ---------       ---------
Total                                    6.3             4.3             4.1
                                   ---------       ---------       ---------

Employee information

      The average number of staff in the group in the financial year
was 353 (2005: 339). The majority of the staff on vessels are not
employed by TORM.

      The members of Management are, in the event of termination by the Company,
entitled to a severance payment of up to 24 months' salary. The pension age for
members of Management is 62.

      In 2001, a share option compensation plan for 20 of the Board members,
executives and key employees was introduced. The plan grants 3,213,280 options,
which are priced at 3 different dates, 970,600 in 2001, 1,129,480 in 2002 and
1,113,200 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.

      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 13.50 (USD 2,27) per share, the 2002 share options at a price of
DKK 14.63 (USD 2.46) per share and the 2003 share options at a price of DKK 15.7
(USD 2.63). The share options can be exercised at the earliest one year and at
the latest 3 years and four weeks after the pricing, observing the rules
concerning insider trading.

      At 1 January 2006, 48,840 options were outstanding (2005: 105,960 options)
with an exercise price of DKK 15.7 (USD 2.63). No options have been forfeited,
granted or expired during 2005 and 2006.

      In 2006, 48,840 options have been exercised (2005: 57,120). The weighted
average share price at the date of exercise is DKK 141.64 (USD 23,82) per share
for shares exercised in 2006 (2005: DKK 140,52 (USD 23,43)). The total number of
not exercised options at December 31, 2006 is 0 (2005: 48,840 options with an
exercise price of DKK 15.7 (USD 2.63) and a remaining life of three months)
which equates 0.00% (2005: 0.07%) of the common shares.

      In 2005 the fair value of the not exercised part of the share option
program was according to the Black-Scholes model estimated at USD 1.0 mill. at
the balance sheet date. The amount was recognized in the balance sheet. The
amount is equal to intrinsic value.

      The key assumptions of the Black-Scholes model as of December 31, 2005
were:

      o     The average dividend was estimated at 5.81% of the average share
            price for the period.

      o     The volatility was estimated at 27.7%.

      o     The risk free interest rate based upon expiry of the options applied
            to 2.75 %.

      o     The quoted share price as of December 31, 2005 was 152,56 DKK/share
            (24,13 USD/share).

The share options programme figures are adjusted in accordance with the share
split of May 23, 2007.

NOTE 5 - ADMINISTRATIVE EXPENSES (in USD million)

                                                For the year ended December 31

Remuneration to the auditors appointed at           2004       2005       2006
the Annual General Meeting                          ----       ----       ----

Deloitte
Audit fees                                           0.3        0.5        0.8
Audit-related fees                                   0.0        0.0        0.0
Tax fees                                             0.1        0.1        0.1
Fees other services                                  0.1        0.0        0.0
                                               ---------  ---------  ---------
Total fees                                           0.5        0.6        0.9
                                               ---------  ---------  ---------

Ernst & Young
Audit fees                                           0.2        0.1          -
Audit-related fees                                   0.0        0.0          -
Tax fees                                             0.0        0.0          -
Fees other services                                  0.0        0.0          -
                                               ---------  ---------  ---------
Total fees                                           0.2        0.1          -
                                               ---------  ---------  ---------

NOTE 6 - FINANCIAL FIXED ASSETS (in USD million)

Other investments                                   2005       2006
                                                    ----       ----
Cost:
Balance at January 1                                49.1       64.5
Additions                                           15.4        0.0
Disposals                                            0.0        0.0
                                               ---------  ---------
Balance at December 31                              64.5       64.5
                                               ---------  ---------
Value adjustment:
Balance at January 1                               319.4      296.5
Exchange rate adjustment                          (50.5)       42.2
Value adjustment for the year                       27.6      241.2
Disposal                                             0.0        0.0
                                               ---------  ---------
Balance as of December 31                          296.5      579.9
                                               ---------  ---------

Carrying amount at December 31:                    361.0      644.4
                                               ---------  ---------
Hereof listed                                      358.5      641.7
Hereof unlisted                                      2.5        2.7

NOTE 6

<TABLE>
Parent company:
A/S Dampskibsselskabet TORM                  Denmark

Investments in subsidiaries*)                              Investments in jointly controlled entities*):
-----------------------------                              ---------------------------------------------
<S>                                     <C>  <C>            <C>
Torm Singapore (Pte) Ltd.               100% Singapore     Long Range 2 A/S              50%     Denmark
Torm Asia Bulkers Limited               100% Hong Kong     LR2 management K/S            50%     Denmark
Eastern Light Shipping Limited          100% Liberia       TT Shipowning K/S             50%     Denmark
Southern Light Shipping Limited         100% Liberia       Torghatten & Torm             50%     Denmark
                                                           Shipowning Aps
Torm Shipping (Germany) G.m.b.H.        100% Germany       UT Shipowning K/S             50%     Denmark
Long Range 1 A/S                        100% Denmark       Ugland & Torm Shipowning ApS  50%     Denmark
Medium Range A/S                        100% Denmark       TORM SHIPPING (PHILS.), INC.  25%     Philippines
LR1 Management K/S                      100% Denmark
MR Management K/S                       100% Denmark       Furthermore, TORM is participating in a
                                                           number of joint ventures, primarily
                                                           the MR Pool, the LR1 Pool and the LR2
                                                           Pool, which are not legal entities.

                                                           The investments in these joint ventures
                                                           are included as investments in
                                                           jointly controlled operations.

</TABLE>

      The following represents the results reflected in the consolidated income
statement and the summarized balance sheet data that is reflected in the
consolidated balance sheet for the year ended December 31, 2005 and 2006 in
accordance with IFRS associated with jointly controlled entities:

<TABLE>
                                                                        2004           2005            2006
                                                                        ----           ----            ----
<S>                                                                    <C>             <C>            <C>
Revenue                                                                 12.5            0.0            13.4
Port expenses, bunkers and commissions                                 (5.5)            0.0           (5.3)
                                                                      ------         ------          ------
Time Charter Equivalent Earnings                                         7.0            0.0             8.1
Charter hire and operating expenses                                    (0.9)            0.0           (4.7)
                                                                    --------       --------        --------
Gross profit (Net earnings from shipping activities)                     6.1            0.0             3.4
Administrative expenses                                                (1.1)          (1.5)           (1.7)
Other operating income                                                   2.0            2.7             2.8
Depreciation and impairment losses                                     (2.9)            0.0             0.0
                                                                    --------       --------        --------
Operating profit                                                         4.1            1.2             4.5
Financial income                                                         0.0            0.1             0.2
Financial expenses                                                     (1.0)          (0.2)             0.0
                                                                    --------       --------        --------
Profit before tax                                                        3.1            1.1             4.7
Tax expenses                                                           (0.4)            0.0           (0.1)
                                                                      ------         ------          ------
Net profit for the year                                                  2.7            1.1             4.6

Non current assets                                                       0.1            0.0            17.0
Current assets                                                           3.4            2.1             3.9

Non-current liabilities                                                  0.0            0.0            15.8
Current liabilities                                                      1.4            1.0             0.2
</TABLE>

      Other investments:

      Dampskibsselskabet "Norden" A/S 33% **)Denmark

      The Norden shareholding is currently treated in TORM's accounts as "Other
investments" given that TORM is deemed not to have significant influence on
Norden in the form of board seats or similar.

      *) Companies with activity in the financial year.

      **) Including Norden's treasury shares.
<PAGE>

<TABLE>
NOTE 7 - TANGIBLE FIXED ASSETS (in USD million)
<CAPTION>

                                                                                                            Other
                                                                                                            plant
                                                                         Vessels and                        and
                                                                         capitalized        Prepayment      operating
                                                   Land and buildings    dry-docking        on vessels      equipment      Total
                                                   ------------------    -----------        ----------      ---------      -----
<S>                                                     <C>                   <C>                  <C>          <C>            <C>
Cost:
Balance at January 1, 2005                              1.3                 836.0                 37.3          5.9          880.5
Exchange rate adjustment                                0.0                   0.0                  0.0          0.0            0.0
Additions                                               0.0                 340.1                294.7          1.1          635.9
Disposals                                               0.0               (137.3)                  0.0        (0.9)        (138.2)
Transferred to/from other items                         0.0                 191.2              (191.2)          0.0            0.0
Transferred to non-current assets held for sale         0.0                   0.0               (43.4)          0.0         (43.4)
                                                   --------              --------             --------     --------       --------
Balance at December 31, 2005                            1.3               1,230.0                 97.4          6.1        1,334.8
                                                   --------              --------             --------     --------       --------
Depreciation and impairment losses:

Balance at January 1, 2005                              0.9                 188.5                  0.0          3.2          192.6
Exchange rate adjustment                                0.0                   0.0                  0.0          0.0            0.0
Additions                                               0.0                   0.0                  0.0          0.0            0.0
Disposals                                               0.0                (71.9)                  0.0        (0.8)         (72.7)
Reversal of impairment losses                         (0.5)                   0.0                  0.0          0.0          (0.5)
Depreciation for the year                               0.0                  47.0                  0.0          1.4           48.4
                                                   --------              --------             --------     --------       --------
Balance at December 31, 2005                            0.4                 163.6                  0.0          3.8          167.8
                                                   --------              --------             --------     --------       --------
Carrying amount at December 31, 2005                    0.9               1,066.4                 97.4          2.3        1,167.0
                                                   --------              --------             --------     --------       --------
Hereof finance leases                                   0.0                   0.0                  0.0          0.0            0.0
                                                   --------              --------             --------     --------       --------
Hereof financial expenses included in cost              0.0                   1.3                  0.2          0.0            1.5

Cost:
Balance at January 1, 2006                              1.3               1,230.0                 97.4          6.1        1,334.8
Exchange rate adjustment                                0.0                   0.0                  0.0          0.0            0.0
Additions                                               0.0                  93.3                166.3          2.7          262.3
Disposals                                             (0.8)               (119.6)                  0.0        (0.5)        (120.9)
Transferred to/from other items                         0.0                  80.4               (80.4)          0.0            0.0
Transferred to non-current assets held for sale         0.0                   0.0                  0.0          0.0            0.0
                                                   --------              --------             --------     --------       --------
Balance at December 31, 2006                            0.5               1,284.1                183.3          8.3        1,476.2
                                                   --------              --------             --------     --------       --------

Depreciation and impairment losses:

Balance at January 1, 2006                              0.4                 163.6                  0.0          3.8          167.8
Exchange rate adjustment                                0.0                   0.0                  0.0          0.0            0.0
Additions                                               0.0                   0.0                  0.0          0.0            0.0
Disposals                                             (0.3)                (73.6)                  0.0        (0.3)         (74.2)
Reversal of impairment losses                           0.0                   0.0                  0.0          0.0            0.0
Depreciation for the year                               0.0                  57.7                  0.0          1.2           58.9
                                                   --------              --------             --------     --------       --------
Balance at December 31, 2006                            0.1                 147.7                  0.0          4.7          152.5
                                                   --------              --------             --------     --------       --------
Carrying amount at December 31, 2006                    0.4               1,136.4                183.3          3.6        1,323.7
                                                   --------              --------             --------     --------       --------
Hereof finance leases                                   0.0                   0.0                  0.0          0.0            0.0
                                                   --------              --------             --------     --------       --------
Hereof financial expenses included in cost              0.0                   1.2                  0.8          0.0            2.0
</TABLE>

      At October 1, 2005 the value of land and buildings assessed for Danish tax
purposes amounted to USD 0.6 million (carrying amount at December 31, 2006 USD
0.4 mill.) compared with USD 0.5 million at October 1, 2004.

      Included in the carrying amount for vessels and capitalized dry-docking
are capitalized dry-docking costs in the amount of USD 9.4 million (2005: USD
12.6 mill.).

      Please refer to Note 15 for information with relation to assets used for
collateral security.

      In all material aspects the depreciations under Other plant and operating
equipment of USD 1.2 mill. relate to administration.

NOTE 8 - FINANCIAL ITEMS (in USD million)

                                               For the years ended December 31
                                                   2004        2005       2006
                                                   ----        ----       ----
Financial income
Interest income from cash and cash equivalents      3.4         2.2        4.1
Interest income from marketable securities at                   1.1        0.0
fair value through profit and loss
Gain on other investments                           0.0         0.1        0.0
Dividends *)                                       34.1        12.8       26.4
Gain on derivative financial instruments            5.2         0.2        7.6
Exchange rate adjustment                            0.0         9.6        1.4
                                                -------    --------   --------
                                                   42.7        26.0       39.5
                                                -------    --------   --------
Financial expenses
Interest expense on mortgage and bank debt         14.8        25.6       40.2
Net losses on marketable securities at fair         0.4         3.9        0.0
value through profit and loss
Exchange rate adjustments                           0.8         0.0        0.0
Other interest expenses                             0.9         0.5        1.1
Hereof included in the cost of tangible fixed       0.0       (0.2)      (0.8)
assets
                                                -------    --------   --------
                                                   16.9        29.8       40.5
                                                -------    --------   --------
Total financial items                              25.8       (3.8)      (1.0)
                                                -------    --------   --------

*) Includes dividend on the Norden shares of USD 25.5 million in 2006 (2005: USD
12.6 mill, 2004: USD 34.0 million).

NOTE 9 - FREIGHT RECEIVABLES, ETC. (in USD million)

Analysis as at December, 31 of freight receivables, etc.

                                                For the years ended December 31
                                                      2005        2006
                                                      ----        ----
Freight receivables, etc.
Neither past due nor impaired                         29.1        22.7
Due < 180 days                                        17.9        24.3
Due > 180 days                                         6.9         2.7
                                                  --------    --------
Total freight receivables, etc.                       53.9        49.7
                                                  --------    --------

      As at December 31, 2006, freight receivables etc. includes
receivables at a value of USD 1.5 mill. (2005: USD 1.4 mill.), that is
individually determined to be impaired to a value of USD 0.6 mill.
(2005: USD 0.6 mill.).

      Movements in the provision for impairment of freight receivables
etc. during the year are as follows:

                                                For the years ended December 31
                                                       2005        2006
                                                       ----        ----
Provisions for impairment of freight
receivables, etc.
Balance at January, 1                                   0.2         0.8
Provisions for the year                                 0.6         0.2
Provisions reversed during the year                     0.0         0.0
Provisions utilized during the year                     0.0       (0.1)
                                                   --------    --------
Balance at December, 31                                 0.8         0.9
                                                   --------    --------

      Provisions for impairment of freight receivables, etc. has been recognized
in the income statement under administrative expenses. The provision is based on
an individual assessment of each individual receivable.

NOTE 10 - TAXES (in USD million)

                                               For the years ended December 31
                                                       2004    2005     2006
                                                       ----    ----     ----
 TAX ON PROFIT FOR THE YEAR AND DEFERRED TAX

 Current tax for the year                             (9.6)   (8.8)    (4.7)
 Adjustment related to previous years                   0.0     0.0      6.3
 Adjustment of deferred tax                           (9.1)     8.8    (8.2)

                                                    -------------------------
 Tax expenses                                        (18.7)     0.0    (6.6)

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

 RECONCILIATION OF THE EFFECTIVE CORPORATION TAX RATE FOR THE YEAR

 Corporation tax rate in Denmark                     30.0%   28.0%    28.0%
 Differences in tax rates, foreign subsidiaries     (2.9%)  (4.5%)   (3.0%)
 Adjustment of tax related to previous years          0.0%    0.0%   (2.6%)
 Effect due to the tonnage tax scheme              (18.0%) (23.5%)  (19.7%)

                                                   -------------------------
 Effective corporate tax rate                         9.1%    0.0%     2.7%

      The Company participates in the tonnage tax scheme in Denmark.
Participation in the tonnage tax scheme is binding until December 31, 2010. The
Company expects to participate in the tonnage tax scheme after the binding
period and at a minimum to maintain its current investing and activity level.
Payment of dividends to the shareholders of A/S Dampskibsselskabet TORM has no
tax consequences for A/S Dampskibsselskabet TORM.

                                                For the years ended December 31
                                                          2005       2006
                                                          ----       ----

Deferred tax liability
Balance at January 1                                         73.3     54.6
Exchange rate adjustment                                    (9.9)      0.0
Reduction of Danish corporation tax from 30% to 28%         (4.2)        -
Deferred tax for the year                                   (4.6)      8.2

                                                          -----------------
 Balance at December 31                                      54.6     62.8

      Essentially all deferred tax relates to vessels included in the
transition account under the tonnage tax scheme.

NOTE 11 - COMMON SHARES

<TABLE>
                                                               As of December 31
                                               2005                   2006                   2005                  2006
                                         Number of shares,      Number of shares,     Nominal value, DKK        Nominal value,
                                               mill.                  mill.                  mill.                DKK mill.
                                               -----                  -----                  -----                ---------
<S>                                           <C>                    <C>                   <C>                   <C>
Balance at January, 1                          72,8                   72,8                  364.0                 364.0

Balance at December, 31                        72,8                   72,8                  364.0                 364.0
</TABLE>

      The common  shares  consist of 72,8 mill.  shares at  denomination
DKK 5 per share. No shares carry special  rights.  All issued shares are
fully paid.

      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 36,4 mill. bonus
shares of DKK 5 each. The bonus shares were allotted to the Company's existing
shareholders at the ratio of 1:1. Beyond this no changes have been made to the
share capital within the last 5 years.

TREASURY SHARES

<TABLE>
                                 2005         2006         2005        2006             2005         2006
                                                        Nominal     Nominal
                              Thousands    Thousands     value       value          % of share      % of share
                             of shares    of shares   DKK million   DKK million        capital        capital
                             ----------   ----------  -----------   -----------        -------        -------
<S>                             <C>          <C>            <C>           <C>              <C>            <C>
Balance at January, 1           3,133.2      3,117.0         15.7          15.6            4.3            4.3
Purchase                            0.0        455.6          0.0           2.3            0.0            0.6
Sale                                0.0          0.0          0.0           0.0            0.0            0.0
Share options exercised          (16,2)       (16.2)        (0.1)         (0.1)            0.0            0.0
                            -----------  -----------  -----------   -----------    -----------    -----------
Balance at December, 31         3,117.0      3,556.4         15.6          17.8            4.3            4.9
                            -----------  -----------  -----------   -----------    -----------    -----------
</TABLE>

      At  December  31,  2006,   TORM's   holding  of  treasury   shares
represented  3,556,364 shares (2005:  3,116,944  shares) at denomination
DKK 5 per share,  with a total nominal value of USD 3.1 mill. (2005: USD
2.5  mill.)  and a market  value of USD 116.8  million  (2005:  USD 75.2
mill.) The retained shares equate to 4.9% (2005:  4.3%) of the Company's
common shares.

      Total consideration in respect of the purchase of treasury shares was USD
10.4 mill. (2005: USD 0.0 mill.), whereas for the sale of shares it was USD 0.0
mill. (2005: USD 0.0 mill.). As the disposal of treasury shares is carried out
in connection with the exercise of share options, the consideration is based on
exercise prices in the share option program. The 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.

The common shares and treasury shares are adjusted in accordance with the share
split of May 23, 2007.
<PAGE>

NOTE 12 -  (in USD million)

                                                          As of December 31
DEFERRED INCOME                                            2005        2006
                                                           ----        ----

Deferred gain related to sale and lease back transactions   5.9         0.0
Other                                                       0.1         1.1
                                                         ------      ------
                                                            6.0         1.1
                                                         ------      ------

NOTE 13 - MORTGAGE DEBT,  BANK LOANS AND CAPITALIZED  LEASE  OBLIGATIONS
(in USD million)

                                                     As of December 31
To be repaid as follows:                          2005              2006
                                                  ----              ----

Falling due within one year                       59.9              55.9
Falling due between one and two years             59.9              55.9
Falling due between two and three years           90.0              68.5
Falling due between three and four years          57.5              53.5
Falling due between four and five years           57.5              53.5
Falling due after five years                     464.2             407.6
                                              --------          --------
                                                 789.0             694.9
                                              --------          --------

      The presented amounts to be repaid are adjusted by directly
related costs arose from the issuing of the loans by USD 2.9 mill.
(2005: USD 1.7 mill.), which are amortized over the term of the loans.

<TABLE>
                                                                Effective  Effective   Carrying   Carrying
                                                        Fixed/   interest   interest     amount     amount
                                           Maturity   floating       2005       2006       2005       2006
                                           --------   --------       ----       ----       ----       ----
<S>                                            <C>    <C>            <C>        <C>        <C>         <C>
LOAN
USD                                            2008   Floating       5.4%       6.2%       37.6        5.1
USD                                            2009   Floating          -       5.8%        0.0       15.0
USD                                            2011   Floating       5.4%       6.2%       22.0        8.1
USD                                            2011      Fixed          -       4.4%        0.0       63.6
USD                                            2013   Floating       5.4%          -       14.2        0.0
USD                                            2014   Floating       4.9%       5.2%      490.7      399.2
USD                                            2015   Floating       5.2%       5.9%      226.2      206.8

Weighted average effective interest rate                             5.0%       5.4%
Fair value                                                      ---------  ---------      790.7      697.8
                                                                                      ---------  ---------
</TABLE>

      The Group has an early settlement option to repay the loans by paying a
breakage costs.

      Part of the loans with floating interest rate have been swapped to fixed
interest rate. Please refer to Note 20 for further information on interest rate
swaps.

      Certain of TORM's loan agreements contain minimum requirements to the
liquidity and solvency of TORM and restrictive covenants, which may limit TORM's
ability to:

      o     engage in mergers or acquisitions;

      o     change the management of TORM's vessels

      As of December 31, 2006, TORM complies with these minimum requirements and
restrictive covenants. Based on TORM's expected future cash flow, investment
programmes, etc. TORM expects to comply with the requirements and covenant until
the maturity of the loan agreements.

      Please refer to the section "Managing risk and exposure" and note 21 for
further information on financial risks.

NOTE 14 - OTHER LIABILITIES (in USD million)

                                                              As of December 31
                                                               2005       2006
                                                               ----       ----
Partners and commercial managements                             1.9        1.8
Accrued operating expenses                                      4.1        6.3
Accrued dry-docking costs                                       1.9        0.0
Accrued interests                                               3.2        3.8
Wages and social expenses                                       6.5        5.2
Derivative financial instruments                                2.9        6.2
Miscellaneous, including items related to shipping activities   3.1        2.7
                                                             ------     ------
                                                               23.6       26.0
                                                             ------     ------

NOTE 15 - COLLATERAL SECURITY (in USD million)

Collateral security for mortgage debt and bank loans:
                                                              As of December 31
                                                               2005        2006
                                                               ----        ----
Vessels                                                       760.7       682.9
                                                             ------     -------
                                                              760.7       682.9
                                                             ------     -------

      The total  carrying  amount for vessels that have been provided as
security  amounts to USD 744 mill. as at December 31, 2006.  (2005:  767
mill.).

NOTE 16 - GUARANTEE AND CONTINGENT LIABILITIES (in USD million)

                                                  As of December 31
                                                  2005         2006
                                                  ----         ----
Guarantee liabilities                              0.0          0.0
                                                  ----         ----

      The guarantee liability for the Group is less than USD 0.1 million and
relates to guarantee liabilities to the Danish Shipowners' Association.

NOTE 17

USD million
CONTRACTUAL LIABILITIES - AS LESSEE (operating leases)
Charter hire for vessels on time charter (incl. vessels not delivered):

                                                      2005         2006
                                                      ----         ----
Falling due within one year                           80.9        129.4
Falling due between one and two years                 66.4        128.0
Falling due between two and three years               80.9        115.4
Falling due between three and four years              81.0        103.6
Falling due between four and five years               66.4         99.4
Falling due after five years                         105.7        306.1
                                                  --------    ---------
                                                     481.3        881.9
                                                  --------    ---------
Average period until redelivery (years)                3.9          4.9

Leases have been entered into with a mutually interminable lease period of up to
eight years. Certain leases include an option to renew for one or two additional
years at a time for up to three years and/or a purchase option. Exercise of the
purchase option on the individual vessels is based on an individual assessment.
Certain leases include a profit sharing element implying that the actual charter
hire may be higher.

Newbuilding installments and exercised purchase options (purchase obligations):

Falling due within one year                         225.3        191.3
Falling due between one and two years               146.7        161.3
Falling due between two and three years              95.5        179.7
Falling due between three and four years             28.0         62.9
Falling due between four and five years               0.0         18.0
Falling due after five years                          0.0          0.0
                                                 --------    ---------
                                                    495.5        613.2

Other operating leases:
Falling due within one year                           2.2          2.1
Falling due between one and two years                 2.2          1.9
Falling due between two and three years               1.9          1.7
Falling due between three and four years              1.7          1.7
Falling due between four and five years               1.8          1.8
Falling due after five years                          5.8          3.7
                                                 --------    ---------
                                                     15.6         12.9

      Other operating leases primarily consist of contracts regarding office
spaces and apartments as well as IT-related contracts.

      During the year, charter hire expenses have been recognized in the income
statement by USD 106.3 mill. (2005: USD 82.1 mill.) of which USD 7.1 mill.
(2005: USD 7.5 mill.) relate to profit sharing elements. Other operating lease
expenses have been recognized in the income statement by USD 2.5 mill. (2005:
USD 1.5 mill.).

USD million
CONTRACTUAL LIABILITIES - AS LESSOR (operating leases)
Charter hire income for vessels on time charter and bareboat charter (incl.
vessels not delivered):
                                                             2005         2006
                                                             ----         ----

Falling due within one year                                 102.7        145.0
Falling due between one and two years                        26.8         41.0
Falling due between two and three years                      13.8         23.6
Falling due between three and four years                     13.7          6.1
Falling due between four and five years                       6.0          0.0
Falling due after five years                                  0.0          0.0
                                                         --------    ---------
                                                            163.0        215.7
                                                         --------    ---------
Average period until redelivery (year)                        0.9          1.1

      Charter hire income for vessels on time charter and bareboat charter is
recognized under net revenue.

NEW BUILDING CONTRACTS

      As at December 31, 2006, TORM had contracted 17 newbuildings (2005: 12
newbuildings) to be delivered during 2007 to 2011. For all 17 vessels the total
outstanding contractual commitment amounted to USD 594 mill. as at December 31,
2006. In addition, TORM called an option in 2006 to acquire one Panamax bulk
carrier on time charter built in 2004, which will be delivered in the second
quarter of 2007. The contractual liability relating to this vessel amounted to
USD 19 mill. as at December 31, 2006.

NOTE 18 - TIME CHARTER CONTRACTS

      As at December 31, 2006, TORM had entered into the following time charter
contracts as lessee:
<TABLE>

                 Number of Average daily                                         Number of  Average daily
        Year/    operating freight rates                                  Year/  operating  freight rates
  Vessel type         days           USD                            Vessel type       days            USD
-----------------------------------------                         ----------------------------------------
<S>                    <C>        <C>                               <C>                <C>         <C>
2007:                                                             2012:
LR2                    454        25,224                          LR1                  765         20,044
LR1                  3,195        20,668                          MR                 2,160         15,908
Panamax              2,940        17,658                          Panamax            2,070         14,419
2008:                                                             2013:
LR2                    368        24,574                          LR1                  210         20,536
LR1                  3,300        20,680                          MR                 2,160         15,908
Panamax              2,880        17,597                          Panamax            1,800         14,583
2009:                                                             2014:
LR2                    360        24,500                          MR                 1,980         15,832
LR1                  3,030        19,953                          Panamax            1,800         14,583
MR                   1,440        15,831                          2015:
Panamax              1,560        14,970                          MR                 1,800         15,740
2010:                                                             Panamax            1,620         14,719
LR2                    360        24,500                          2016:
LR1                  1,830        19,939                          MR                   540         15,833
MR                   2,160        15,908                          Panamax            1,170         15,191
Panamax              1,710        13,986                          2017:
2011:                                                             MR                   360         15,900
LR2                    360        24,500                          Panamax            1,080         14,518
LR1                  1,425        20,720                          2018:
MR                   2,160        15,908                          Panamax              270         15,475
Panamax              1,890        14,096
</TABLE>

      The above-mentioned time charter contracts are included in the contractual
liabilities in Note 17.

NOTE 19 - PURCHASE OPTIONS ON VESSELS

      As at December 31, 2006, TORM had the following purchase options on
vessels:

<TABLE>
                                                                      Average option
              Exercise year/                        Average age of    exercise price as at
                 Vessel type    Number of vessels   vessels, years    31 Dec. 2006 USD mill.
                 -----------    -----------------   --------------    ----------------------
<S>             <C>               <C>                <C>                  <C>
2007:
Panamax                           2.0                3.0                  21.3
2008:
Panamax                           1.0                3.0                  21.3
2009:
LR1*)                             0.5                3.0                  15.1
Panamax                           1.0                3.0                  21.7
2011:
LR1*)                             0.5                5.0                  13.8
Panamax                           1.0                3.0                  27.1
2012:
MR**)                             1.0                3.0                  38.4
Panamax                           1.0                3.0                  25.0
2013:
Panamax                           3.0                4.3                  31.3
2014:
MR                                1.0                5.0                  30.2
2015:
Panamax                           1.0                5.0                  33.3
2016:
Panamax                           1.0                5.0                  37.5
</TABLE>

As at December 31, 2005, TORM had purchase options on 11 vessels.

      *) TORM holds 50% of the purchase option on the vessel. Consequently, the
stated option price is for 50% of the vessel.

      **) The stated option price is the minimum options price for the vessel.

NOTE 20 - FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS (in USD
million)

<TABLE>
                                                            Fair value adjustments
                                                               Income statement

                                                                              Freight                             Equity
                               Fair value at              Port expenses,      and bunkers   Financial  Hedging    Fair value at
                              January 1, 2005   Revenue   bunkers and comm.   derivatives   items      reserves   December 31, 2005
                              ---------------   -------   -----------------   -----------   -----      --------   -----------------
<S>                                 <C>          <C>            <C>               <C>        <C>           <C>         <C>
Hedge accounting cash flow:
Interest rate swaps                 0.4            -              -                 -            -         2.9         3.3
Non hedge accounting:
Cross currency swaps                0.1            -              -                 -        (0.1)           -         0.0
Forward rate contracts              3.8            -              -                 -        (3.9)           -       (0.1)
Interest rate swaps               (0.2)            -              -                 -          3.5           -         3.3
Currency options                    3.6            -              -                 -        (3.6)           -         0.0
Bunker hedge                      (0.8)            -              -               0.8            -           -         0.0
Forward Freight Agreement         (4.4)            -              -               2.5            -           -       (1.9)
                                 ------         ----         ------            ------       ------      ------      ------
                                    2.5          0.0            0.0               3.3        (4.1)         2.9         4.6
                                 ------         ----         ------            ------       ------      ------      ------

</TABLE>

<TABLE>

                                                            Fair value adjustments
                                                               Income statement

                                                                              Freight                             Equity
                               Fair value at              Port expenses,      and bunkers   Financial  Hedging    Fair value at
                              January 1, 2006   Revenue   bunkers and comm.   derivatives   items      reserves   December 31, 2006
                              ---------------   -------   -----------------   -----------   -----      --------   -----------------
<S>                                 <C>          <C>            <C>               <C>        <C>           <C>         <C>
Hedge accounting cash
flow:
Interest rate swaps                  3.3            -            -                  -            -         (0.3)          3.0
Bunker hedge                         0.0            -            -                  -                      (3.3)        (3.3)
Forward Freight Agreements           0.0            -            -                  -                        5.9          5.9
Non hedge accounting:
Forward rate contracts             (0.1)            -            -                  -          1.1             -          1.0
Interest rate swaps                  3.3            -            -                  -          0.2             -          3.5
Currency options                     0.0            -            -                  -          0.4             -          0.4
Bunker hedge                         0.0            -            -              (1.5)            -             -        (1.5)
Forward Freight Agreement          (1.9)            -            -              (0.4)            -             -        (2.3)
                                  ------       ------       ------             ------       ------        ------       ------
                                     4.6          0.0          0.0              (1.9)          1.7           2.3          6.7
                                  ------       ------       ------             ------       ------        ------       ------
</TABLE>

      Please refer to the section "Managing risk and exposure" and note 21 for
further information on commercial and financial risks.

      The interest rate swaps with a fair value of USD 3.0 mill. (2005: USD 3.3
mill.) are designated to hedge a part of TORM's interest payments during the
period 2007 to 2008. The bunkerhedge contracts with a fair value of USD (3.3)
mill. (2005: USD 0.0 mill.) are designated to hedge a part of TORM's bunker
expenses during the period 2007 to 2009. The Forward Freight Agreements with a
fair value of USD 5.9 mill. (2005: USD 0.0 mill.) are designated to hedge a part
of TORM's revenue during the period 2007 to 2009. The gains or losses on these
contracts will be recognized in the income statement together with the hedged
items.

NOTE 21 - FINANCIAL AND COMMERCIAL RISKS - (in USD million)

EXCHANGE RATE RISK

      All things being equal, a change in the USD exchange rate of 1% in
relation to DKK would result in a change in profit before tax and equity as
follows:

Sensitivity to changes in the USD/DKK exchange rate        2005            2006
---------------------------------------------------        ----            ----

Changes at increase in the USD exchange rate
 of 1% in relation to DKK:
Changes in profit before tax                                0.8             0.7
Changes in equity                                           4.0             6.4

      At year-end 2005, TORM had forward hedging contracts of USD 8 mill.
against DKK in respect of operating costs for 2006. In 2006, TORM entered into
exchange rate contracts for the sale of USD 154 mill. against DKK and sold USD
24 mill. spot in order to cover the DKK cash requirements for operating costs in
2006. As such, in 2006 spot and term exchange contracts for a total of USD 186
mill. were unwound at an average exchange rate of 6.18 as against the average
exchange rate for the year of USD against DKK of 5.95. Furthermore, TORM sold
USD 12 mill. with value in 2007 at an exchange rate of 6.12 against DKK.

      In 2006, with value in 2007, TORM had entered into an agreement to
purchase a put-option in the amount of USD 21 mill. against DKK including a
"knock-in" element for the counterparty. With regard to the put-option, TORM can
sell USD to the counterpart at an exchange rate of 5.80 to the DKK. In case the
USD/DKK exchange rate exceeds 6.12, the counterpart can purchase USD from TORM
at an exchange rate of 5.80 per USD.

      In 2006, with value in 2007, TORM had entered into an agreement to
purchase a put-option in the amount JPY 2.6 bill. against USD including a
"knock-in" element for the counterparty to cover a vessel purchase. With regard
to the put-option, TORM can buy JPY from the counterpart at an exchange rate of
115.50 to the USD. In case the USD/JPY exchange rate exceeds 122.20, the
counterpart can sell JPY to TORM at an exchange rate of 115.50 per USD. None of
the options were called neither by TORM nor by the counterpart during 2006.

INTEREST RATE RISK

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

      All things being equal, a change in the interest rate level of 1% point on
the unhedged variable interest debt will result in a change in the interest rate
expenses as follows:

SENSITIVITY TO CHANGES IN INTEREST RATES        2005                  2006
----------------------------------------        ----                  ----

Changes at increase in the interest
  rate level of 1% point:
Increase in interest rate expenses               2.0                   1.8

      TORM's interest bearing USD debt decreased from year-end 2005 to year-end
2006 by USD 91 mill. to USD 698 mill. Of TORM's mortgage debt in USD with
variable interest rates USD 52 mill. will be due within a 12 months period and
USD 216 mill. after 1 - 5 years. The average effective interest rate is between
4.0% and 6.2%.

      The portion of the interest swaps hedging the USD mortgage debt with
maturity within 1 year was USD 30 mill. and USD 121 mill. after 1 - 5 years. The
average effective interest rates were between 3.2% and 4.5%. The market value of
TORM's interest rate swaps was USD 6.5 mill. at year-end 2006 (2005: USD 6.6
mill.).

      At year-end, TORM had covered 77% of its total 2007 interest costs at an
average rate of 4.9% including margin. For the period 2008-2009, the coverage is
36%. The fixed interest debt has an average period of 2.4 years remaining,
expiring between 2007 and 2013.

      Please refer to Note 13 for further information on interest bearing debt.

MOVEMENT IN BUNKER PRICES

      In 2006, TORM covered 44% of its bunker requirements using hedging
instruments. As at December 31, 2006, TORM had hedged the price for 12% of its
bunker requirements for 2007, and the market value of these contracts as at
year-end was USD (4.8) mill (2005: 0.0 mill.).

      All things being equal, a price change of 1% per ton of bunker oil would
lead to the following change in expenditure based on the expected bunker
consumption:

SENSITIVITY TO CHANGES IN BUNKER PRICES                     2005         2006
---------------------------------------                     ----         ----

Changes at increase in the bunker prices of 1% per ton:
Changes in bunker expenses                                   1.2          1.0

NOTE 22 - FINANCIAL INSTRUMENTS - in USD million

CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES AS DEFINED IN
IAS 39:                                                        2005       2006

Financial assets at fair value through profit and loss
Marketable securities (held for trading)                        0.2        0.0
                                                              -----      -----
Total financial assets at fair value through profit or loss     0.2        0.0
                                                              -----      -----
Loans and receivables
Freight receivables, etc.                                      53.9       49.7
Other receivables                                               6.7        8.5
Cash and cash equivalents                                     156.7       33.0
                                                              -----      -----
Total loans and receivables                                   217.3       91.2
                                                              -----      -----
Available-for-sale financial assets
Other investments                                             361.0      644.4
                                                              -----      -----
Total available-for-sale financial assets                     361.0      644.4
                                                              -----      -----
Derivative financial instruments (assets)
Other receivables (held for trading)                            3.7        3.1
Other receivables (hedge accounting)                            3.3        9.4
                                                              -----      -----
Total derivative financial instruments (assets)                 7.0       12.5
                                                              -----      -----
Financial liabilities measured at amortised cost
Mortgage debt and bank loans                                  789.0      695.0
Trade payables                                                 22.9       18.8
Other liabilities                                              14.7       15.0
                                                              -----      -----
Total financial liabilities measured at amortised cost        826.6      728.8
                                                              -----      -----
Derivative financial instruments (liabilities)
Other liabilities (held for trading)                            2.4        2.0
Other liabilities (hedge accounting)                            0.0        3.8
                                                              -----      -----
Total derivative financial instruments (liabilities)            2.4        5.8
                                                              -----      -----

      The fair value of the financial assets and liabilities above equals the
carrying amount except for mortgage debt and bank loans for which the fair value
can be found in Note 13.

NOTE 23 - RELATED PARTY TRANSACTIONS

      The members of the Parent 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
practicing partner in the law firm Bech-Bruun. Bech-Bruun has rendered legal
assistance during the financial year as one of a number of law firms. The firm's
fee of USD 0.3 mill. (2005: USD 0.0 mill.) is based upon the amount of time
spent by the firm.

      Mr. Stefanos-Niko Zouvelos, member of the Board of Directors, is General
Manager of Beltest Shipping Company Limited. TORM has during the year paid USD
8.5 mill. (2005: USD 7.2 mill.) to an entity owned by Beltest Shipping Company
Limited under a time charter agreement involving one product tanker vessel.

       There have not been any other transactions with such parties during the
financial year.

      Management remuneration is disclosed in note 4.

      It is considered that no single person has control over the Group or the
Parent Company

NOTE 24 - NON-CURRENT ASSETS HELD FOR SALE

      In 2005, TORM entered into a contract concerning sale of a vessels under
construction for delivery in 2006. The vessel was delivered to the buyer in May
2006 and the result from the sale of the vessel has been recognized in the
income statement in 2006 under the item profit from sale of vessels by USD 3.1
mill. As at December 31, 2005, the vessel was classified as held for sale and
presented separately in the balance sheet and was included under Tanker in the
segment information.

NOTE 25 - EARNINGS PER SHARE

                                                   2004       2005      2006
                                                   ----       ----      ----

Net profit for the year (USD mill.)               186.6      299.4     234.5
                                               --------    -------  --------
Mill. Shares
Average number of shares                           72,8       72,8      72,8
Average number of treasury shares                 (3.1)      (3.1)     (3.3)
                                               --------    -------  --------
Average number of shares outstanding               69.7       69.7      69.5
Dilutive effect of outstanding share options        0.4        0.2       0.0
                                               --------    -------  --------
Average number of shares outstanding incl.
dilutive effect of share options                   70.1       69.9      69.5

                                               --------    -------  --------
Earnings per share (USD)                            2.7        4.3       3.4
                                               --------    -------  --------
Diluted earnings per share (USD)                    2.6        4.3       3.4
                                               --------    -------  --------

NOTE 26

USD million                                          2004     2005       2006
                                                     ----     ----       ----
APPROPRIATION OF NET PROFIT FOR THE YEAR INCL.
PROPOSED DIVIDEND
Proposed appropriation of net profit for the
year in the Parent Company, A/S
Dampskibsselskabet TORM:
Proposed dividend                                    99.9    132.4       73.9
Retained profit                                     105.9    103.3      114.5
                                                  -------   ------   --------
Net profit for the year                             205.8    235.7      188.4
                                                  -------   ------   --------

Total equity in the Parent Company,
A/S Dampskibsselskabet TORM:
Common shares                                        61.1     61.1       61.1
Treasury shares                                     (7.7)    (7.7)     (18.1)
Revaluation reserves                                319.3    296.4      579.8
Retained profit                                     286.8    400.0      513.1
Proposed dividend                                    99.9    132.4       73.9
Hedging  reserves                                     0.4      3.2        5.6
Translation reserves                                  6.0      6.0        6.0
                                                  -------   ------   --------
Total equity                                        765.8    891.4    1,221.4
                                                  -------   ------   --------
Proposed dividend per share (USD)                     1.4      1.8        1.0
Dividend per share paid (USD)                         1.3      1.4        1.9
                                                  -------   ------   --------

      The difference between proposed dividend per share in USD in 2005 and
dividend per share paid in USD in 2006 relates to the change in the USD/DKK
exchange rate as the dividend is paid in DKK.

NOTE 27 - CASH FLOWS

                                                  2004        2005     2006
                                                  ----        ----     ----
REVERSAL OF OTHER NON-CASH MOVEMENTS:
Adjustment on derivative financial instruments     9.6       (1.3)      3.9
Exchange rate adjustments                          3.5       (5.7)      1.7
Other adjustments                                 -9.0         0.4      0.4
                                                ------     -------   ------
Total reversal of other non-cash movements         4.1       (6.6)      6.0
                                                ------     -------   ------

<PAGE>

NOTE 28 - RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED  ACCOUNTING
PRINCIPLES (U.S. GAAP)

      The TORM Group's Annual Report has been prepared in accordance with the
International Financial Reporting Standards (IFRS), 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, 2004, 2005 and 2006 and shareholders' equity as of those
dates, necessary to reconcile those to net income and shareholders' equity
determined in accordance with U.S. GAAP.

<TABLE>
Reconciliation of Net income for the year to U.S. GAAP Net income (in USD million)
<CAPTION>
                                                           Notes            2004          2005          2006
                                                           -----            ----          ----          ----
<S>                                                        <C>             <C>            <C>           <C>
Net income as reported under IFRS                                         186.6          299.4         234.5

Dry-docking costs                                           a)            (1.5)            0.0           0.0
Write-down on assets                                        b)              0.2            1.4           0.5
Derivative financial instruments                            c)              2.6            0.0           0.0
Share options                                               d)            (1.2)            0.0           0.0
Deferred gain on sale and lease back of vessels             e)              0.0         (17.3)           4.2
Deferred taxation                                           f)              1.0            4.3         (1.1)

Net income in accordance with U.S. GAAP before change
in accounting principles                                                  187.7         287.8         238.1
                                                                   ------------------------------------------
Cumulative effect of change in accounting principles as     a)              0.0            8.7           0.0
at January 1, 2005
Net income in accordance with U.S. GAAP after change in
accounting principles                                                     187.7         296.5         238.1
                                                                   ==========================================
</TABLE>

Reconciliation  of  Shareholders'  equity  to  U.S.  GAAP  Shareholders'
Equity (in USD million)

<TABLE>
                                                           Notes            2004          2005       2006
                                                           -----            ----          ----       ----
<S>                                                        <C>             <C>            <C>           <C>
Shareholders' equity as reported under IFRS                                715.4        904.7       1,280.8

Dry-docking costs                                           a)            (8.3)            0.0           0.0
Write-down on assets                                        b)            (1.9)          (0.5)           0.0
Derivative financial instruments                            c)              0.0            0.0           0.0
Share options                                               d)            (0.1)            0.0           0.0
Deferred gain on sale and lease back of vessels             e)              0.0         (17.3)        (13.1)
Deferred taxation                                           f)              0.2            4.8           3.7

Shareholders' equity in accordance with U.S. GAAP
before change in accounting principles                                    705.3         891.7       1,271.4
                                                                   ------------------------------------------
Cumulative effect of change in accounting principles as                     0.0            0.0           0.0
at January 1, 2005
Shareholders' equity in accordance with U.S. GAAP after
change in accounting principles
                                                                          705.3         891.7       1,271.4
                                                                   ==========================================
</TABLE>

      The Group's accounting policies under IFRS are described below
where these differ from the accounting treatment under U.S. GAAP:

      a) Dry-docking costs

      As of January 1, 2005, TORM changed its method of accounting for vessel
dry-docking costs under U.S. GAAP from the accrual method to the deferral
method. Under the accrual method, dry-docking costs had been accrued as a
liability and an expense on an estimated basis in advance of the next scheduled
dry-docking. Subsequent payments for dry-docking were charged against the
accrued liability. Under the deferral method, costs incurred in replacing or
renewing the separate assets that constitute the dry-docking costs are
capitalized and depreciated on a straight-line basis over the estimated period
until the next dry-docking. Dry-docking activities include, but are not limited
to, inspection, service on turbocharger, replacement of shaft seals, service on
boiler, replacement of hull anodes, applying of antifouling and hull paint,
steel repairs and refurbishment and replacement of other parts of the vessel.
This change was made to conform to prevailing shipping industry accounting
practices and the Group's accounting under IFRS. On January 1, 2005, TORM
recorded the effect of the change in accounting principle on periods prior to
2005 as a cumulative effect of accounting change of USD 8.7 million (net of
income tax of USD 0.4 (income)) or USD 0.3 per basic share. The effect of this
change in accounting method on the U.S. GAAP shareholders' equity was an
increase of USD 8.7 million.

      The proforma effect of this change, as if it had been made for 2004, would
be to increase net income as follows:

                                                      2004
Proforma (USD million)
     Net income as reported                          187.7
     Effect of accounting change                       1.1
                                                 ----------
     Net income                                      188.8
                                                 ==========

Per share (diluted)
     As reported                                       2.7
     Effect of accounting change                       0.0
                                                 ----------
     Total                                             2.7
                                                 ==========

      b) Write-down on assets

      In 1998, TORM recognized an impairment charge for certain vessels on
capital leases as the carrying value at the time exceeded the fair value of
these vessels. In 2000, TORM recognized an impairment charge for certain
properties for the same reason. Under IFRS, impairment losses are reversed in
subsequent periods if the fair value increases. The Company recorded a reversal
of the impairment loss of USD 1.7 million for the increase in fair value of
these vessels during 2002 and a reversal of the impairment loss of USD 0.5
million for the increase in fair value of the properties during 2005.

      Under U.S. GAAP, impairment losses cannot be reversed. This results in a
difference in depreciation expense between US GAAP and IFRS. In February 2005,
the vessels were sold and the remaining impairment loss was added to the profit
on sale of vessels recognized under IFRS. In May 2006, the properties were sold
and the remaining impairment loss was added to the profit on sale of properties
recognized under IFRS.

      c) Derivative financial instruments

      Both under IFRS and US 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 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
does not qualify for hedge accounting is recorded in the income statement at the
end of each period.

      TORM has entered into interest rate swaps to hedge the interest rate risk
on the long-term loans obtained to finance vessel purchases.

      As part of the transition to IFRS the fair value of interest rate swaps
classified as cash flow hedges under previous GAAP has been recognized as a
separate component of shareholders' equity on January 1, 2004. The majority
of these interest rate swaps have either expired in 2004 or the forecast
transaction was no longer expected to occur because the long-term loans have
been repaid. Consequently, the fair value of these interest rate swaps has been
transferred to the income statement in 2004.

      Under US GAAP, TORM elected to apply hedge accounting to interest rate
swaps designated as cash flow hedges beginning on October 1, 2003. For interest
rate swaps entered prior to October 1, 2003 TORM accounted for changes in fair
value as a component of income. As from January 1, 2005, TORM elected also to
apply hedge accounting under US GAAP for the remaining interest rate swaps
entered prior to October 1, 2003 in order to align the accounting under US GAAP
and IFRS.

      d) Share options

      Under IFRS, TORM's share option scheme is treated as cash-settled
share-based payment transactions. A liability relating to share options not
exercised is recognized in the balance sheet. The change in the liability for
the period is recognized in the income statement. The liability is measured at
fair value using the Black-Scholes model.

      Under US GAAP, TORM implemented SFAS 123(R) as per 1 January 2006 using
the prospective method. TORM's share option scheme qualifies as a liability
under SFAS 123(R), which means that a liability for the fair value of the plan
is recognized in the balance sheet and that the change in the liability for the
period is recognized in the income statement. Previously, stock-based
compensation was 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 recognized compensation expense for the difference between the
exercise price and market price at the measurement date. This compensation was
amortized over the vesting period. TORM 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 qualified
as variable plans, for which total compensation cost must be recalculated each
period based on the current share price, until the options are exercised. The
implementation of SFAS 123(R) had an effect of USD 0.0 million on the
shareholders' equity under US GAAP as of 1 January 2006.

      e) Deferred gain on sale and lease back of vessels

      During 2005, TORM sold and leased back 2 vessels for 5 years. The leases
are regarded as operating leases under both IFRS and US GAAP.

      Under IFRS, the profit on the sale of the vessels is recognized in the
income statement immediately in accordance with IAS 17.

      Under US GAAP the profit on the sale shall be deferred and amortized in
proportion to the related gross rental charged to expense over the lease term in
accordance with FAS 28 as the criteria to deviate from this treatment (cf. FAS
28 a, b and c) were not met. The profit on the sale and lease back transaction
is deferred and amortized on a straight-line basis from February 1, 2005 to
February 1, 2010.

      f) Deferred taxation

      TORM applies the same treatment of deferred tax under IFRS and US GAAP.
The reconciliation item relates to the tax effect of the differences in
accounting treatment expressed by the items a) to e) above. The difference in
deferred tax liability as at December 31, 2006 only relates to the deferral
under US GAAP of the gain on sale of vessels in item e) above.

      g) Investment in bonds

      Under IFRS, bonds are classified as financial assets at fair value through
profit or loss and 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. Bonds are
traded frequently and therefore presented as current assets.

      Under US GAAP, investments in bonds are classified as an
available-for-sale, cf. Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities". Unrealized
gains and losses are recorded as a component of shareholders' equity unless
there is an other than temporary impairment of the securities. The bonds were
divested in 2005 and there were no other than temporary impairments in 2004 and
2005.

      The effect of this difference on net income and shareholders' equity in
2004 and 2005 was USD 0.0 million.

      h) Joint ventures

      The Group has investments in entities that are jointly owned and operated
together with third parties, and in which the parties have joint dominant
influence. Under IFRS, TORM 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 IFRS and
U.S. GAAP.

      The results reflected in the consolidated income statement for the years
ended December 31, 2004, 2005 and 2006 in accordance with IFRS associated with
these joint ventures are represented in Note 6 to the consolidated financial
statements.

      i) Statement of cash flows

      The cash flow statement prepared in accordance with IFRS 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.

      Under IFRS, dry-docking costs are 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 IFRS cash flow statement are as follows for the
years ended December 31, 2004, 2005 and 2006 (in thousands of USD):

<TABLE>

                                                               2004            2005           2006
                                                               ----            ----           ----
<S>                                                           <C>             <C>           <C>
Net cash provided by operating activities                    222,619         246,793         226,761
Net cash provided by (used in) investment activities       (181,726)       (458,816)       (111,857)
Net cash provided by (used in) financing activities          (2,765)        303,227        (238,597)

Net increase in cash and cash equivalents                    38,128          91,204        (123,693)
Cash, beginning of year                                      27,396          65,524         156,728
                                                     -----------------------------------------------------
Cash, end of year                                            65,524         156,728          33,035
                                                     -----------------------------------------------------
</TABLE>

      j) Earnings Per Share

      Earnings per share is computed consistent with IFRS.

      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):

<TABLE>

                                                             2004             2005             2006
                                                         --------------   --------------   --------------
<S>                                                            <C>              <C>              <C>
Numerator for basic and diluted Earnings Per Share
(in thousands of USD)
Profit from continuing operations                              187,654          296,437          238,082
                                                         --------------   --------------   --------------
Profit from discontinuing operations                                 0                0                0
                                                         --------------   --------------   --------------
Profit for the year                                            187,654          296,437          238,082
                                                         --------------   --------------   --------------

                                                         No. of shares      No. of shares    No. of shares
                                                         --------------   --------------   --------------
Weighted average number of shares:
Basic                                                       69,568,714       69,678,986       69,429,442
Effect of dilutive shares and share options
                                                               521,226           57,450           10,924
                                                         --------------   --------------   --------------
Diluted                                                     70,089,940       69,736,436       69,440,366
                                                         --------------   --------------   --------------

Basic earnings per share
Profit from continuing operations                              2.7              4.2              3.4
Profit from discontinued operations                            0.0              0.0              0.0
                                                         --------------   --------------   --------------
Profit for the year before change in accounting                2.7              4.2              3.4
principles
Cumulative effect of change in accounting                      0.0              0.1              0.0
principles as at January 1, 2005
                                                         --------------   --------------   --------------
Profit after change in accounting principles                   2.7              4.3              3.4
                                                         --------------   --------------   --------------

Diluted earnings per share
Profit from continuing operations                              2.7              4.2              3.4
Profit from discontinued operations                            0.0              0.0              0.0
                                                         --------------   --------------   --------------
Profit for the year before change in accounting                2.7              4.2              3.4
principles
Cumulative effect of change in accounting                      0.0              0.1              0.0
principles as at January 1, 2005
                                                         --------------   --------------   --------------
Profit after change in accounting principles                   2.7              4.3              3.4
                                                         --------------   --------------   --------------
</TABLE>

      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
and share split of May 23, 2007.

      k) Presentation of income statement

      Under IFRS, TORM shall to present additional line items, headings and
subtotals on the face of the income statement when such presentation is relevant
to an understanding of the Company's financial performance. The Company presents
the subtotals "Time charter equivalent earnings" and "Gross profit" as these
subtotal are considered to be relevant to an understanding of TORM's financial
performance.

      Under U.S. GAAP these subtotals are not appropriate on the face of the
income statement. The table below presents revenues and expenses in the
Company's income statement prepared in accordance with IFRS as they would appear
under the presentation requirements in U.S. GAAP for the years ended December
31, 2004, 2005 and 2006.

                                           2004          2005          2006
                                           ----          ----          ----

Gross Revenue                            442,600       585,611       603,717
Port expenses, bunkers and commissions   (83,739)     (124,968)     (148,943)
Freight and bunkers derivatives           (9,310)        3,194           620
Charter hire                             (59,592)      (82,139)     (106,329)
Operating expenses                       (49,792)      (66,744)      (77,624)
Profit from sale of vessels                    0        54,731        54,362
Administrative expenses                  (38,637)      (31,176)      (34,594)
Other operating income                    13,139        12,570         9,839
Depreciation and impairment losses       (35,181)      (47,894)      (58,915)
                                        ------------  ------------  ------------
Operating profit                         179,488       303,185       242,133

Financial income                          42,789        26,004        39,473
Financial expenses                       (16,949)      (29,822)      (40,520)
                                        ------------  ------------  ------------
Profit before tax                        205,328       299,367       241,086

Tax expenses                             (18,715)           (4)       (6,574)
                                        ------------  ------------  ------------
Net profit for the year                  186,613       299,363       234,512
                                        ------------  ------------  ------------

      l) Segment reporting

      One customer accounted for USD 96.5 million (16%) of our consolidated
revenue in 2006 compared to USD 70.7 million (12%) in 2005.In 2004 no customers
accounted for more than 10% of the consolidated revenue. The revenue was
generated from both the Tanker and the Bulk division.

      m) New accounting requirements not yet adopted

      In July 2006, the FASB issued Interpretation No. 48 (FIN 48) "Accounting
for Uncertainty in Income Taxes", an Interpretation of FASB Statement No. 109
"Accounting for Income Taxes" to address financial statement recognition and
measurement by an enterprise of a tax position taken or expected to be taken in
a tax return. The interpretation creates a single model to address uncertainty
in tax positions and prescribes the minimum recognition threshold a tax position
is required to meet before being recognized in the financial statements. The
interpretation also requires several new disclosures in annual financial
statements. It is effective for financial statements issued for fiscal years
beginning after December 15, 2006, and will therefore be adopted by the Company
from January 1, 2007. The Company has assessed that the interpretation will not
materially affect the financial statements.

      In September 2006, the FASB issued SFAS No. 157 "Fair Value Measurements"
("SFAS No. 157"). This standard defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. The standard does not require any new
fair value measurements. It is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and will therefore be adopted by
the Company from January 1, 2008. The Company is currently assessing SFAS No.
157 and has not yet determined the impact that the adoption of this standard
will have on its financial statement disclosures.

NOTE 29 - MATERIAL EVENTS OCCURRED AFTER THE BALANCE SHEET DATE

Acquisition of OMI

      On April 17, 2007, the Company along with Teekay Shipping Corporation
("Teekay") entered into a definitive agreement to acquire OMI Corporation. Under
the agreement, OMI shareholders would receive USD 29.25 in cash for each share
of OMI common stock they held. Teekay and TORM agreed to divide the assets of
OMI equally and to equally split the total cost of the transaction of
approximately $2.2 billion, including assumed net debt and other transaction
costs.

      Under the agreement, Teekay and TORM were required to commence a tender
offer to the OMI shareholders on or before April 27, 2007. The tender offer was
subject to acceptance from OMI shareholders representing over 50 percent of
OMI's outstanding shares, as well as receipt of standard regulatory approvals.
At the expiration of the offer period, a total of 49,762,507 shares had been
validly tendered by the shareholders of OMI providing Omaha, Inc, a subsidiary
which is jointly held by TORM and Teekay, with control over OMI and allowing for
TORM and TEEKAY to gain 100% ownership of OMI and allowing for a subsequent
merger between Omaha, Inc. and OMI.

      The merger of OMI with and into Omaha, Inc., the final step in the
acquisition of OMI, occurred on June 8, 2007 and as a consequence of the merger
Omaha, Inc. changed its name to OMI Corporation. The acquisition of OMI by TORM
and TEEKAY was consequently completed on June 8, 2007 at the price of USD 29.25
per share, whereby OMI became a jointly owned subsidiary of TORM and TEEKAY.

      TORM entered into a one-year USD 700 million bridge loan agreement with
Danske Bank and HSH Nordbank on April 17, 2007, to assist in the financing of
the acquisition of TORM's share of OMI.

Share Split

     At the Company's annual general meeting, which took place on April 17,
2007, a proposal was adopted for a 2:1 stock split of the Company's ordinary
shares, nominal value DKK 10 into ordinary shares of nominal value DKK 5. The
share split was carried out on the Copenhagen Stock Exchange on May 23, 2007,
and the last day of trading in shares of par value DKK 10 was on May 22, 2007.
The first day of trading in shares of par value 5 was May 23, 2007. The share
split was carried out on NASDAQ on May 23, 2007 in relation to the Company's
American Depository Shares with a record date of May 23, 2007 and a distribution
date of May 31, 2007.

     After the share split the Company's common shares consist of 72,800,000
shares in denomination of DKK 5 per share.

Share buy back

      For maintenance of the capital structure the Board of Directors has
announced to undertake prior to the end of the current financial year a share
buy-back programme of up to 15% of the Company's nominal share capital.

Disposal of Norden shares

      Torm has disposed the shareholding in NORDEN at 31 March 2007. The shares
were sold through a book-building offer at a total price of DKK 3,940 million
(USD 704 million). TORM's gain on the investment in Norden was DKK 3,599 million
(USD 643 million), while the total return of the investment incl. dividends has
been DKK 4,079 million (USD 725 million). The appreciation in the value of the
investment since December 31, 2006 is DKK 354 million (USD 71 million).

<PAGE>

ITEM 19. EXHIBITS

     Number                           Description of Exhibits

       1.1        ____  Amended and Restated Articles of Association for A/S
                        Dampskibsselskabet TORM (the "Company") and English
                        Translation(1)

       1.2        ____  Rules of Procedure for the Board of Directors of the
                        Company and English Translation (2)

       2.2        ____  Form of Depositary Agreement between Deutsche Bank and
                        the Company (2)

       4.1        ____  The Company's Employee Stock Purchase Plan (2)

       4.2        ____  Office lease between PFA Pension II and the Company and
                        English Translation (2)

       4.3        ____  Engagement letter of Bech-Bruun Dragsted and English
                        Translation (2)

       4.4        ____  DKK 42 million revolving credit facility letter from
                        Danske Bank to the Company dated December 11, 1998 and
                        English translation (2)

       4.5        ____  Debt Instrument from Agnete Shipping Corporation to
                        Danske Bank Aktieselskab, Singapore Branch, dated August
                        9, 1995 (2)

       4.6        ____  Debt Instrument from Eastern Light Shipping Limited to
                        Danske Bank Aktieselskab, Hong Kong Branch, dated
                        November 17, 1995 (2)

       4.7        ____  Debt Instrument from Southern Light Shipping Limited to
                        Danske Bank Aktieselskab, Hong Kong Branch (2)

       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
                        (2)

       4.9        ____  Debt Instrument from Hilde Shipping Corp. to Danske Bank
                        Aktieselskab, dated July 3, 2000 (2)

      4.10        ____  Debt Instrument from Skagerak Tankers Limited to Danske
                        Bank Aktieselskab, Singapore Branch, dated May 9, 1996
                        (2)

      4.11        ____  Debt Instrument from Anne Product Carriers (PTE) Ltd. To
                        Danske Bank Aktieselskab, Singapore Branch, August 28,
                        1998 (2)

      4.12        ____  Debt Instrument from Gunhild Shipping Corporation to
                        Danske Bank Aktieselskab, Singapore Branch, dated
                        November 6, 1998 (2)

      4.13        ____  Debt Instrument from Tekla Shipping Co. Ltd to Danske
                        Bank, Singapore Branch, dated March 23, 1992 (2)

      4.14        ____  Debt Instrument from Alice Product Tanker Corporation to
                        Danske Bank Aktieselskab, Singapore Branch, dated
                        November 8, 1994 (2)

      4.15        ____  Debt Instrument from Bothnia Shipping Corporation to
                        Danske Bank, Singapore Branch, dated September 20, 1989
                        (2)

      4.16        ____  Debt Instrument from Olga Shipping Corporation to Danske
                        Bank Aktieselskab, Singapore Branch, dated October 27,
                        1995 (2)

      4.17        ____  Secured Loan Agreement, between Caseros Shipping Limited
                        and Nordea Bank, dated June 15, 1994 (2)

      4.18        ____  Loan Agreement between Estrid Shipping Corporation and
                        Danmarks Skibskreditfond, dated November 6, 2001 (2)

      4.19        ____  Loan Agreement between Ragnhild Shipping Corporation and
                        Danmarks Skibskreditfond, dated November 6, 2001 (2)

      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 (2)

      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 (2)

      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 (2)

      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 (2)

      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 (2)

      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 (2)

      4.26        ____  Contract for Construction and Sale of Hull No. S-1079,
                        between the Company and Daedong Shipbuilding Co., Ltd.,
                        dated August 25, 2000 (2)

      4.27        ____  Contract for Construction and Sale of Hull No. S-1080,
                        between the Company and Daedong Shipbuilding Co., Ltd.,
                        dated August 25, 2000 (2)

       5.1        ____  Transaction Agreement, dated April 17, 2007, among
                        Teekay Corporation, TORM, Omaha, Inc. and OMI
                        Corporation (incorporated by reference to the Form 8-K
                        filed by OMI Corporation on April 20, 2007) (3)

       5.2        ____  Credit Agreement, dated April 17, 2007, among HSH
                        Nordbank AG, Danske Bank A/S and TORM (incorporated by
                        reference to the Schedule TO Amendment No. 2 filed by
                        Teekay Corporation, TORM, Teekay Acquisition Holdings
                        LLC and Omaha, Inc. on May 18, 2007) (3)

       5.3        ____  Joint Venture Agreement, dated as of April 17, 2007,
                        among Teekay, Teekay Acquisition Holdings LLC and TORM
                        (incorporated by reference to the Schedule TO filed by
                        Teekay Corporation, TORM, Teekay Acquisition Holdings
                        LLC and Omaha, Inc. on April 27, 2007) (3)

       8.1        ____  List of the Company's subsidiaries (2)

      12.1        ____  Rule 13a-14(a)/15d-14(a) Certification of the Company's
                        Chief Executive Officer and Acting Chief Financial
                        Officer

      12.1        ____  Certification of the Company's Chief Executive Officer
                        and Acting 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 6-K filed on May 1, 2007.

(2)   Incorporated by reference from exhibit of same number to Registration
      Statement on Form 20-F, filed February 27, 2002 (File No. 000-49650).

(3)   This agreement has been included to provide you with information regarding
      its terms. It is not intended to provide any other factual information
      about the filing persons. Such information can be found elsewhere in
      public filings these entities make, including such filings made with the
      Securities and Exchange Commission which are available without charge at
      www.sec.gov. This agreement may contain representations and warranties by
      the filing persons and the other parties to the agreement. The
      representations and warranties reflect negotiations between the parties to
      the agreement and, in certain cases, merely represent allocation decisions
      among the parties and may not be statements of fact. As such, the
      representations and warranties are solely for the benefit of the parties
      to the agreement and may be limited or modified by a variety of factors,
      including: subsequent events; information included in public filings;
      disclosures made during negotiations; correspondence between the parties;
      and disclosure schedules to the agreement. Accordingly, the
      representations and warranties may not describe the actual state of
      affairs at the date they were made or at any other time and you should not
      rely on them as statements of fact.

<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 25, 2007

SK 03810 0001 778862 v4