Annual Report 2024
TORM PLC
4TH FLOOR, 120 CANNON STREET
LONDON, EC4N 6AS, UNITED KINGDOM
COMPANY: 09818726
Contents
Strategic Report
2024 Highlights
Key Figures
3
ESG Figures
4
Letter from the Chairman and the CEO
7
Business Model and Strategic Choices
The Value Chain in Oil Transportation
8
The Reference Company
10
Vessel Flexibility
12
Greener Future With Zero Emissions
13
Guided by Our Core Values
14
Superior Operating Platform
15
Review and Outlook
Risk Management
17
Market Review
23
Financial Review 2024
25
Market Drivers and Outlook
34
Coverage 2025-2027
37
TORM Fleet Development
38
Sustainability Statement
General
41
Environment
60
Social
103
Governance
131
Governance
Governance Introduction
Governance at TORM
155
Chairman’s Introduction
156
Governance Structure
TORM’s Governance Structure
159
Board of Directors
160
Board and Committee Meeting Attendance
161
Board Activities 2024
162
Committee Reports
Audit Committee Report
164
Risk Committee Report
169
Nomination Committee Report
171
Remuneration Committee Report
174
Other
Investor Information
185
Engagement and Decision-Making
188
Directors’ Report
191
Statement of Directors’ Responsibilities
194
Financial Statements
Consolidated Financial Statements
Consolidated Income Statement
198
Consolidated Statement of Comprehensive Income
198
Consolidated Balance Sheet
199
Consolidated Statement of Changes in Equity
200
Consolidated Cash Flow Statement
202
Notes to the Consolidated Financial Statements
203
Parent Company Financial Statements
Management Review for TORM plc
251
Parent Company Income Statement
252
Parent Company Statement of Comprehensive Income
252
Parent Company Balance Sheet
253
Parent Company Statement of Changes in Equity
254
Parent Company Cash Flow Statement
255
Notes to Parent Company Financial Statements
256
Other
Independent Auditor’s Report
265
TORM Fleet Overview
273
Glossary
276
TORM ANNUAL REPORT 2024
2
TORM
Strategy
Sustainability
Statement
Corporate
Governance
Financial
Statements
9
40
154 197
Key Figures
TCE Earnings (USD/Day)
EBITDA (USDm)
Adjusted ROIC (%)
Dividend/Share (USD)
2024
2023
2022
2021
2020
2024
2023
2022
2021
2020
Income statement (USDm)
Key financial figures ¹⁾
Revenue
1,559
1,520
1,443
620
747
Gross margins:
Time charter equivalent earnings (TCE) ¹⁾ ⁵⁾
1,135
1,084
982
379
520
Gross profit
57.4 %
57.5 %
54.2 %
30.4 %
45.6 %
Gross profit ¹⁾
896
874
782
188
341
EBITDA
54.6 %
55.8 %
51.5 %
22.1 %
36.4 %
EBITDA ¹⁾
851
848
743
137
272
Adjusted EBITDA
54.1 %
55.7 %
51.5 %
22.1 %
36.0 %
Adjusted EBITDA ¹⁾
844
846
744
137
269
Operating profit (EBIT)
42.3 %
45.9 %
41.7 %
0.2 %
18.6 %
Operating profit (EBIT)
659
699
602
1
139
Return on Equity (ROE)
32.7 %
40.9 %
44.0 %
-4.1 %
8.7 %
Financial items
-49
-47
-45
-42
-49
Return on Invested Capital (ROIC)
24.3 %
30.4 %
29.2 %
0.01 %
7.8 %
Net profit/(loss) for the year
612
648
563
-42
88
Adjusted ROIC
22.2 %
27.6 %
28.1 %
0.2 %
9.3 %
Net profit/(loss) ex. non-recurrent items¹⁾
561
596
548
-36
122
Equity ratio
59.8 %
58.0 %
57.5 %
45.1 %
50.9 %
TCE per day (USD) ⁵⁾
36,061
37,124
34,154
13,703
19,800
OPEX per day (USD) ⁵⁾
7,477
7,069
6,825
6,633
6,398
Balance sheet and cash flow (USDm)
Loan-to-value (LTV) ratio ⁵⁾
26.8 %
27.6 %
24.8 %
51.2 %
50.8 %
Non-current assets
2,854
2,179
1,875
1,968
1,755
Total assets
3,470
2,870
2,614
2,331
1,999
Share-related key figures ¹⁾
Equity
2,075
1,666
1,504
1,052
1,017
Basic earnings/(loss) per share (USD)
6.54
7.75
6.92
-0.54
1.19
Total liabilities
1,395
1,204
1,111
1,279
981
Diluted earnings/(loss) per share (USD)
6.36
7.48
6.80
-0.54
1.19
Invested capital ¹⁾
3,005
2,426
2,142
2,011
1,720
Dividend per share (USD) 6)
5.10
5.78
4.63
—
0.85
Net interest-bearing debt ¹⁾
948
773
650
972
713
Net Asset Value per share (NAV/share) ²⁾
29.3
33.4
28.5
13.0
12.1
Net Asset Value (NAV) excl. NCI ²⁾
2,854
2,858
2,330
1,047
902
Share price in DKK ³⁾
138.4
204.2
198.4
51.7
45.0
Cash and cash equivalents, incl. restricted cash
291
296
324
172
136
Share price in USD ³⁾
19.5
30.4
29.1
8.0
7.1
Investment in tangible fixed assets
911
608
121
371
173
Number of shares (m) ³⁾ ⁴⁾
97.3
85.7
81.8
80.7
74.4
Free cash flow
385
434
513
-243
116
Number of shares, weighted average (m) ⁴⁾
93.6
83.6
81.3
78.1
74.3
¹⁾ For a definition of the calculated key figures (the APMs), please refer to the glossary on pages 276 - 282.
⁴⁾ Excluding treasury shares.
²⁾ Based on broker valuations as of 31 December 2024, excluding charter commitments.
⁵⁾ For Tanker segment.
³⁾ End of period.
6) Dividend per share includes declared and proposed dividends.
STRATEGIC REPORT > 2024 IN REVIEW > KEY FIGURES
TORM ANNUAL REPORT 2024
3
36,061
37,124
34,154
13,703
19,800
2024
2023
2022
2021
2020
0
10,000
20,000
30,000
40,000
50,000
851
848
743
137
272
2024
2023
2022
2021
2020
0
200
400
600
800
1,000
22.2
27.6
28.1
0.2
9.3
2024
2023
2022
2021
2020
0
10
20
30
40
5.10
5.78
4.63
0.00
0.85
2024
2023
2022
2021
2020
0
2
4
6
8
ESG Figures
2030 Carbon Reduction (AER)
2050 Carbon Reduction Target
2030 Safety Target
Gender Diversity in Leadership
Unit
2024
2030
target
2050
target
Environmental
Absolute Scope 1 GHG emissions
Metric tons
CO2-e
1,594,793
≤1,500,000
Net-zero
Absolute Scope 2 GHG emissions
Metric tons
CO2-e
832
≤600
Net-zero
Absolute Scope 3 GHG emissions
Metric tons
CO2-e
1,849,266
≤1,200,000
Net-zero
SOx emissions reduction
Percentage
N/A1
8 % Net-zero
NOx emissions reduction
Percentage
N/A1
8 % Net-zero
PM10 emissions reduction
Percentage
N/A1
8 % Net-zero
PM2.5 emissions reduction
Percentage
N/A1
8 % Net-zero
Oil Spills (ITOPF definition)
Number
0
0
0
1 As 2024 is the baseline year, reporting on the reduction in 2024 is not applicable.
Read more about our ESG targets in the respective E, S, and G sections of the
Sustainability Statement
The methodology for the AER reduction target and progress has been updated to adjust for
vessels that have not been in the fleet for 12 months. For 2024, this change results in an
AER reduction of 40.0%, which would have been an AER reduction of 40.1% if the entire
fleet was included.
Unit
2024
2030
target
2050
target
Social
Port State Control (PSC)
Deficiencies per inspection
Ratio
0.65
≤0.75
TBD
Employee Engagement
TBD
Employee engagement participation rate
Percentage
93 %
≥90%
TBD
Employee engagement score
Number
8.7
≥8.2
TBD
Working Conditions
Monitoring Lost time accident frequency
(LTAF)
Per million
exposure
hours
0.42
≤0.3
TBD
Underrepresented gender in Board of
Directors
Percentage
20 %
40 %
TBD
Working conditions in dry docks used by
TORM
Number
N/A2
2 main dry
docks used
TBD
Underrepresented gender in leadership
positions
Percentage
19 %
35 %
TBD
Governance
Anti-corruption and bribery
Identified cases reported to MACN
Percentage
N/A2
100 %
TBD
Screening and engaging our supply chain on
ESG criteria
ESG screening of tier 1 and 2 suppliers
Percentage
N/A2
100 %
TBD
2 TORM is not reporting this number in 2024. Reporting will start in 2025.
STRATEGIC REPORT > 2024 IN REVIEW > ESG FIGURES
TORM ANNUAL REPORT 2024
4
39.5%
40.0%
45.0%
2023
2024
2030 target
—%
10%
20%
30%
40%
50%
0.32
0.42
0.30
2023
2024
2030 target
0.00
0.10
0.20
0.30
0.40
0.50
20.0%
19.0%
35.0%
2023
2024
2030 target
—%
10%
20%
30%
40%
50%
21
At TORM, we recognize the vital role we play in driving
sustainability within the shipping industry. We are
pursuing innovation and continue to modernize our fleet
and optimize operations to further reduce our carbon
footprint. Through our One TORM platform, we are
dedicated to delivering long-term value while contributing
to a more sustainable future.
10
63
TORM ANNUAL REPORT 2024
5
As of 31 December 2024.
10
OFFICES
~4,000
EMPLOYEES
As we navigate an increasingly volatile
market, our strategic focus on safety,
operational excellence and energy
efficiency has not only strengthened
our market position in the product
tanker industry but also reinforced our
commitment to long-term value
creation,” says Christopher H.
Boehringer
TORM ANNUAL REPORT 2024
6
Christopher
H. Boehringer
CHAIRMAN OF THE BOARD
Jacob
Meldgaard
CEO / EXECUTIVE DIRECTOR
Letter from the Chairman and the CEO
TORM achieved strong earnings and returned substantial cash dividends to
shareholders in a year marked by geopolitical tensions.
Navigating a Volatile Environment
The product tanker market demonstrated both resilience
and increasing complexity throughout 2024. While strong
for most of the year, freight rates weakened in the second
half of the year as market dynamics evolved, including a
temporary influx of crude carriers entering the clean
product tanker trade. These dynamics underscore the ever-
changing nature of the shipping industry, presenting both
increased risk and opportunities. Geopolitical
developments, shifting global oil demand, and evolving
trade patterns create a dynamic landscape that allows us to
leverage our agility and strategic focus to capitalize on
emerging opportunities and drive growth. As we look ahead,
we must be equipped with agility and strategic foresight in
order to face increasing uncertainty. To adapt, we have
intensified our monitoring and analysis of geopolitical
developments to support our navigation of future
uncertainties.
One TORM Platform
Amid this unpredictability, our One TORM platform remains
a cornerstone of our success. This integrated approach,
combining commercial and technical management under
one roof, continues to provide a competitive advantage. By
deploying a globally available fleet with high operational
standards and leveraging proprietary AI tools, we have
consistently quarter by quarter positioned our vessels in the
most advantageous markets. This capability has allowed us
to seize opportunities across regions, delivering high
returns on invested capital even in challenging conditions.
The One TORM platform integrates commercial and
technical management in-house, and thereby empowers
our organization to adapt, optimize, and execute, which in
turn supports us to remain among the best-performing
peers in the product tanker industry.
Ongoing Fleet Optimization
In an industry where market dynamics evolve rapidly, fleet
management is a key task. Since early 2024, we have
grown and modernized our fleet by taking delivery of 19
vessels and divesting seven older vessels, bringing the total
fleet to 94 vessels. We focus on eco-friendly, fuel-efficient
vessels that align with shifting trade patterns and offer
promising returns in coming years.
Maintaining Financial Strength
TORM delivered strong financial performance in 2024. High
freight rates enabled us to generate a satisfactory net profit
of USD 611.5m. Based on our distribution policy, we met our
goal to return all the free cash flow from our operations to
our shareholders. Through the use of our partly share-based
structure for vessel acquisitions, we maintain a strong
balance sheet while investing in the fleet and safeguarding
our ability to weather economic or market uncertainties as
well as being able to invest further if possibilities arise.
Advancing Sustainability in Shipping
As a leading product tanker company, we are acutely aware
of our responsibility to the environment and the challenges
we face in our decarbonization journey. In 2024, we
achieved the IMO 2030 target of a 40% reduction in
carbon intensity compared to 2008, putting us well ahead
of industry goals, as well as achieving our own ambitious
goal more than one year ahead of time.
But our ambition does not stop there. In our strategic
approach to sustainability, we prioritize the key challenges
that impact our business and stakeholders as detailed in our
Sustainability Statement section in this annual report. By
determining where we can exert meaningful influence, we
have developed targeted initiatives to address these
challenges effectively and responsibly in the years to come.
Looking Ahead
The geopolitical landscape continues to dominate market
dynamics. Looking ahead to 2025, we expect tanker
earnings to be robust, underpinned by steady capacity
utilization and balanced market fundamentals. While
product tanker rates may moderate, the overall outlook
suggests continued opportunities to deliver value to our
shareholders in a dynamic and evolving environment subject
to continuous geopolitical tensions and changes.
Thank you for your continued trust and confidence in TORM.
Christopher H. Boehringer, Jacob Meldgaard
Chairman of the Board
CEO / Executive Director
STRATEGIC REPORT > 2024 IN REVIEW > LETTER FROM THE CHAIRMAN AND THE CEO
TORM ANNUAL REPORT 2024
7
The Value Chain in Oil Transportation
The global oil industry covers a range of activities and processes that contribute to the
transformation of primary petroleum resources into usable end products for industrial
and private customers.
The global oil industry value chain starts with identifying
and exploring productive petroleum fields. Unrefined crude
oil is then transported to refineries via crude oil tankers,
pipelines, roads, or rail.
TORM focuses primarily on transporting refined oil products
from refineries to onshore distributors, who then deliver
them to end users. These refined products—also known as
clean petroleum products—are mainly used in road
transportation (gasoline, diesel), aviation (jet fuel), and as
feedstock for the petrochemical industry (naphtha).
TORM also transports non-fossil liquids such as vegetable
oil, ethanol, palm oil, and biofuel.
In addition to these clean products, some of TORM’s
vessels transport residual fuels from refineries or crude oil
directly from production fields to refineries. These cargoes,
known as dirty petroleum products, require extensive tank
cleaning before vessels can switch back to transporting
clean products.
Transportation patterns for both refined and unrefined
products are constantly evolving. For instance, refinery
shutdowns in oil-importing regions reduce the need to
transport crude oil but increase demand for moving refined
products.
Short- and long-term changes in the industry significantly
affect the oil value chain. Vessel operators, including
TORM, must remain agile and ready to adapt to these shifts
to stay ahead in this dynamic market.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > THE VALUE CHAIN IN OIL TRANSPORTATION
TORM ANNUAL REPORT 2024
8
Value Chain in Oil Transportation
Strategic Framework
OUR
VISION
OUR STRATEGIC
CHOICES
OUR WAY OF
WORKING
The Reference Company in the
Transportation Industry
At TORM, we strive to be the reference company in
the transportation industry. We aim to achieve this
by utilizing our integrated business model to serve
our customers with attention to safety, reliability,
and our responsibility to the environment.
Leading Product Tanker Owner
•
Financial flexibility and fleet optimization
•
Active management and optionality
•
Integrated operations
Green Future with Zero Emissions
•
Ambitious and ongoing energy optimization
•
Net-zero CO2 emissions by 2050
Superior Operating Platform
•
Commercial management
•
Optimal vessel positioning
•
Safe technical management
•
An integrated digital foundation leveraging
operational performance
•
Integrated decarbonization efforts
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > STRATEGIC FRAMEWORK
TORM ANNUAL REPORT 2024
9
The Reference Company in the
Transportation Industry
It is our vision at TORM to be the reference company in the
transportation industry. We use a disciplined approach to
develop and execute on our strategic direction and to help
achieve our visionary goal.
We have made our key strategic decisions based on our
position as the leading product tanker owner in the industry
while striving towards a green future with zero emissions.
Optionality
We recognize the challenges of operating in an ever-
changing world. For this reason, TORM has built in a level of
optionality in our strategic choices. By combining our
structured approach with strategic optionality, we ensure
that we have the flexibility to engage in interesting new
opportunities when they arise. One example of how TORM
has utilized this optionality is our engagement in methanol
trades with our MR product tanker vessels.
Another important aspect of having an optimal fleet is
about maximizing tradability and flexibility to deploy
vessels. Optionality ensures that TORM can capitalize on
attractive business opportunities and move swiftly between
the most attractive basins in a constantly changing market.
One of the main drivers for optionality is our One TORM
platform, which has proven to be key to our strong
operational performance and competitive advantage. Our
high operational standards allow us the optionality to keep
vessels older than 15 years in the fleet and continue to
trade them to the same customer base as vessels that are
younger if this is deemed more attractive than selling the
vessels. This means that a larger share of the product
tanker market is accessible for our older vessels compared
to similarly aged vessels in the industry.
One TORM
Our unique integrated One TORM platform is at the core of
how we work together and how we do business, and this
platform supports us in reaching our long-term goals. The
One TORM platform has consistently performed well in the
market and ensured that we generate value to our
customers and shareholders.
An example of our One TORM platform performance is our
vessel positioning model that enables us to continuously
outperform the industry by ensuring that our vessels are
optimally positioned around the world.
Our One TORM platform has also enabled us to deliver
tangible and innovative energy efficiency initiatives across
our fleet to reduce CO2 emissions where we have set an
ambitious target above the industry standard. We aim to
reduce emissions to a level where we can reach our
ambitious 2030 CO2 intensity reduction target through a
range of technological solutions with documented effect,
as well as a constant renewal of our fleet with eco vessels.
Share-Based Transactions
In recent years, TORM has made several share-based
transactions to further grow and renew our fleet. In 2021,
we made the first share-based transaction for eight vessels
which worked as a pilot for this type of transaction. Through
the subsequent transactions, the model has been refined
and improved, and we now have a standardized model for
shipowners to buy into the One TORM platform. This type of
transaction is attractive to TORM as it allows us to expand
our fleet with modern tonnage while supporting our share
liquidity and maintaining our solid capital structure.
Strong Cash Flow to Shareholders
In 2024, TORM has continued to distribute a meaningful
amount of excess liquidity above a threshold level to our
shareholders as cash dividends. Including the proposed
dividend related to the fourth quarter, the total dividend
declared for 2024 will be USD 485m.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > THE REFERENCE COMPANY IN THE TRANSPORTATION INDUSTRY
TORM ANNUAL REPORT 2024
10
Active Management of Market Exposure
We primarily employ our fleet in the spot market. However,
when freight rates are attractive, we use a combination of
medium- and long-term contracts to lock in rates:
•
Time Charter (TC) contracts are contracts where a
specific vessel is chartered out to a customer for an
extended period of time.
•
Contracts of Affreightment (CoA) are contracts
involving several consecutive cargos with a customer at
agreed freight rates.
•
Forward Freight Agreements (FFA) are financial
instruments hedging the forward price for freight for a
defined period.
The benefit of FFAs compared to TC contracts is that it is
easier to adjust the length and volume of FFAs, and there is
flexibility to end the contract early. On the other hand, TC
contracts potentially have longer maturity and better
pricing. Each element is only initiated when levels are
assessed to be attractive, and timing is key when choosing
which option to pursue.
Through a combination of the coverage options and active
fleet management, TORM aims to capitalize from
movements in freight rates, to have higher market exposure
when freight rates are high, and to have lower market
exposure when freight rates are low.
Read more on the operational leverage of TORM’s
spot market exposure in the Financial Outlook on
page 36
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > THE REFERENCE COMPANY IN THE TRANSPORTATION INDUSTRY
TORM ANNUAL REPORT 2024
11
Typical Contract Lengths
Vessel Flexibility
TORM is present in all large vessel classes in the product tanker market, which
provides synergies for an enhanced offering to our customers. We continue to focus
on vessel flexibility to increase the attractiveness of our fleet.
At TORM, we aim to improve the trading flexibility of our
fleet through enhanced cargo optionality. In recent years,
we have expanded our chemical capabilities, and we are
investigating opportunities to further diversify the cargo
transported by our fleet.
TORM’s MR fleet is presently capable of carrying both
petroleum products and chemicals. In our fleet of 63 MR
vessels capable of carrying these cargoes, we currently
have six parcel tanker types fully capable of methanol
carriage, and 14 regular MR vessels capable for methanol
carriage. More vessels are being reviewed for suitability for
additional higher chemical cargo carriage. This positions
TORM to utilize increased demand for chemical
transportation in the future.
Our LR2 vessels have the flexibility to enter into the Afra/
crude markets when we see attractive opportunities in
these markets. With a large presence in the LR2 vessel
class, we have the optionality to switch between product
and crude trades without losing scale within each market.
Our LR1 vessels have the possibility to shift between
trades and can enter both the LR2 and MR trades. The LR1
vessels will for example enter MR trades for export out of
the US Gulf and LR2 trades such as Arabian Gulf to Japan.
Our MR vessels can carry various cargoes, and TORM is
exploring opportunities to expand its business by
increasing the transportation of chemicals using its MR
tanker fleet.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > VESSEL FLEXIBILITY
TORM ANNUAL REPORT 2024
12
Greener Future With Zero
Emissions
We strive to utilize our market position to lead the product tanker industry into a more
environmentally friendly future and to develop new solutions for generations to come.
It is a priority for TORM to combat accelerating global
climate change and to minimize pollution of the seas and
the atmosphere. To contribute to these efforts, we focus
on reducing CO2 emissions. We do this with a structured
approach and a commitment to optimizing performance in
the short, medium, and long terms.
We believe that both decarbonization and general ESG
agendas will be decisive factors for the future of the
product tanker business. We also acknowledge that oil and
refined oil products are essential resources for societies,
and therefore, we want to distribute refined oil products as
efficiently as possible with accessible means.
2030 and 2050 Targets
In 2024 and one year ahead of our declared goal, TORM
achieved its 2025 CO2 intensity reduction target of 40%
compared to 2008 using IMO’s defined methodology. This
marks an important milestone for TORM’s decarbonization
journey. In comparison, IMO has set an industry-wide target
of 40% CO2 intensity reduction by 2030.
At TORM, our next CO2 target is to reach a 45% CO2
intensity reduction by 2030. For the long term, we have a
target for net-zero CO2 emissions by 2050. To support
these goals, TORM’s Management and organization have
specific performance measures.
2030 and 2050 Energy Transition
To ensure that we will reach our ambitious 2030 and 2050
CO2 intensity reduction targets, we have developed an
energy transition plan assessing of how we reach them. The
transition plan is integrated into the annual cycle and our
budget process to ensure that the Senior Management
Team and the Board of Directors focus on our progress and
improving at the needed pace to reach our targets. The
energy transition plan ahead of 2030 is based on concrete
initiatives and known technologies. The path post-2030
towards 2050 is to a greater extent based on assumptions
that must be in place to successfully reach our 2050
target, such as the introduction of zero emission vessels.
Read more on TORM’s ESG target on page 4
Read more on TORM’s Energy Transition Plan on
page 63
Decarbonizing Shipping
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > GREENER FUTURE WITH ZERO EMISSIONS
TORM ANNUAL REPORT 2024
13
Guided by Our Core Values
In 2024, TORM developed a new set of Core Values across the organization,
introducing one set of shared values for all employees across the company.
We launched this update to create a new common set of
values that resonates clearly with TORM employees. The
Core Values are designed to be easily linked with the daily
tasks and routines of employees.
The new Core Values were developed in a cross-
organizational process over the course of several months.
This process involved the Senior Management Team as well
as the Board of Directors.
We chose these three values for TORM because they
embody how we work together and do business, and they
represent what we believe is needed to maintain and
develop a high performing organization.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > GUIDED BY OUR CORE VALUES
TORM ANNUAL REPORT 2024
14
Superior Operating Platform
TORM’s fleet is effectively managed on the in-house integrated operating platform
known as One TORM. Operations are conducted jointly for the entire fleet to reap
synergies across vessel classes.
One main purpose of our One TORM platform is to ensure
that our fleet has the highest possible tradability. We
believe that we do this best with integrated commercial and
technical management, where people, vessels, and systems
work together to benefit from all possible synergies.
In short, on the One TORM platform, the commercial,
technical, sale and purchase, and support divisions all work
towards common goals in a network-based organization
with easy access to stakeholders supporting efficient
decision-making. The One TORM platform will continue to
optimize and improve while striving for best-in-class return
on invested capital for the benefit of our shareholders.
This integration relies on a sophisticated data platform that
prioritizes collaboration and transparency, focusing on data
quality and consistency in our processes and deliverables.
Our operating model also ensures our customers a clear and
consistent understanding of what to expect from us. We
believe the integrated One TORM platform enables better
decision-making, leading to improved results for our
shareholders and other key stakeholders, as decisions are
always made with TORM’s best interest in mind.
The integrated nature of TORM’s operating platform
provides transparency and clear alignment of Management
and shareholder interests.
We also believe that our integrated business model creates
a unique customer offering as it provides our customers
with accountability and insights into safety and vessel
performance. By across-the-fleet monitoring and
information sharing, we constantly look to reduce the
resources we spend, for the benefit of the environment and
to lower costs. If a vessel does not operate optimally, we
will know almost instantly.
In line with our strategic focus on safety, the One TORM
platform features the One TORM Safety Culture program.
The purpose of this program is to continuously strengthen
TORM’s safety culture beyond mere compliance, and it
reflects the belief that profitability and safety need to go
hand in hand.
One TORM Exemplified: Purchasing Second-hand
Vessels
Our approach to acquiring second-hand vessels embodies
the efficiency of the One TORM platform. When we
integrate newly purchased second-hand vessels into our
existing fleet, we have a holistic approach for screening
vessel candidates and quickly boosting the vessel standard
up to the same level as our current vessels.
At TORM, it is an ongoing process to assess the need and
attractiveness of renewing and expanding our fleet. We
perform a vessel screening to determine potential vessel
candidates, and later in the process, we conduct thorough
inspections of the vessels to determine their quality and
standard. This process is a collaborative effort with input
from our commercial, technical, and financial employees,
and we focus on serving the interests of our customers,
shareholders, and other key stakeholders.
When we take delivery of our new second-hand vessels into
our fleet, we have a structured program to quickly bring the
vessels up to the same standard as our existing fleet. This
program includes installing relevant technical equipment to
improve energy efficiency, and improving their cosmetic
appearance for better safety and vetting results, as well as
implementing TORM’s standard operational processes.
This program is a cross-functional task performed across
multiple departments to assess which new technical
equipment is needed on the vessels and when it would be
optimal to install the equipment in upcoming dry-docking
operations. This collaboration enables us to always have
uniform vessel quality standards across our fleet, thus
allowing us a competitive edge in the market and the ability
to best serve our customers.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > SUPERIOR OPERATING PLATFORM
TORM ANNUAL REPORT 2024
15
As a global company, we will adapt to the rapid
changing environment, mitigate risks, and seize
opportunities.
TORM ANNUAL REPORT 2024
16
Risk Management
As a global company, we will adapt to a changing environment, mitigate risks, and
seize opportunities. Systematically managing risk is key to creating and protecting
value over the short, medium, and long terms to maintain a competitive advantage.
Risk Management Framework
We acknowledge that TORM faces a range of risks in doing
business and that our success depends on identifying and
balancing these risks, as well as deciding how to best
manage and mitigate them. We believe that a strong risk
management framework is vital to protect TORM.
On an annual basis, TORM conducts an Enterprise Risk
Management (ERM) process, during which the critical risks
facing TORM are identified, assessed, and discussed by the
Senior Management Team at TORM and subsequently
approved by the Risk Committee.
The objective for TORM and our shareholders is to be
adequately rewarded for any desired risk tolerance level,
and that the governance structure tailored to oversee the
risk management activities is in place, so that risks are
mitigated to the extent desired.
Governance
TORM’s risk management approach emphasizes the
accountability and oversight of management. The identified
risk responsibility is assigned to the Senior Management
Team member most suited to manage the risk. This person
is required to continually monitor the risk, implement and
maintain mitigating actions, evaluate, and report.
If the consequence of a risk exceeds the agreed risk
tolerance, the Senior Management Team is required to
assess if implementation of additional mitigating controls is
possible and necessary until the desired risk level is
achieved.
TORM’s risk management framework acknowledges that
unforeseen or “black swan events” occur in the maritime
industry. Therefore, TORM accepts this type of risk and will
have a plan or will diligently develop a plan in case such
events materialize. The ability to react to and navigate an
unpredictable future is managed in close collaboration
between the Senior Management Team and the Risk
Committee via agreed predefined accepted risk tolerance
levels, which are reported on at regular meetings or, if
needed, extraordinarily.
Risk Assessment Process
TORM’s risk identification process stipulates that the risk
department conducts risk interviews with heads of
departments and Senior Management on an annual basis to
identify principal and emerging risks. Identified risks are
prioritized, challenged, and approved by the Senior
Management Team as risk owners. This also includes the
assessment of availability and effectiveness of mitigating
actions taken to avoid or reduce the impact or occurrence
of the underlying risks.
The risks are reassessed with the Risk Committee at least
on a quarterly basis, and if specific events occur, they may
require a reassessment. The identified risks in TORM are
divided into top risks and watch list risks.
TORM’s Risk Tolerance and Main Risk Exposure
The Senior Management Team and the Risk Committee
discuss and decide on TORM’s risk tolerance to principal
and emerging risk exposures. TORM’s risk tolerance and
inherited exposure risks are divided into five main
categories and emerging risks:
•
Industry and market risks
•
Operational risks
•
Compliance and IT risks
•
Financial risks
•
Emerging risks
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > RISK MANAGEMENT
TORM ANNUAL REPORT 2024
17
TORM’s General Risk Tolerance Per Group of Risk
Categories:
Industry and Market Risks
TORM accepts taking calculated risks, where the expected
return outweighs the evaluated risk exposure.
Operational, Compliance, and IT Risks
TORM is risk adverse regarding operational, compliance,
and IT risks. In essence, TORM will seek to mitigate any
such risks to a meaningful minimum level.
Financial Risks
TORM is risk adverse regarding financial risks. In essence,
TORM will seek to mitigate any such risks to a meaningful
minimum level.
TORM’s top risks measured on likelihood and consequence
are listed below and displayed on the heat map.
Emerging Risks and Climate Related Risks
TORM’s long terms risks are viewed as directly related to
climate change.
Emerging risks and climate related risks are
described in detail in our Sustainability Statement
in the E1 climate change section on page 62
Development Compared to Last Year
The Risk Committee and the Senior Management Team
have carried out a robust assessment, under the Corporate
Governance Code, of the principal and emerging risks which
TORM faces, including those that would threaten our
business model, future performance, solvency or liquidity,
and reputation.
A detailed description of each of the top risks is
available on pages 20-21
Below, we focus on the development of these risks.
Industry and Market Risks
TORM’s market risk exposure remains high, and we are
exposed to potentially adverse market conditions on
freight, bunkers, and vessel values. The residual risk level,
post mitigations, is considered manageable due to a strong
capital structure and our liquidity readiness while
continually assessing the market fundamentals and
mitigating factors.
The risks are deemed to have increased compared to last
year due to the increased volatility in the freight market due
to geopolitical events influencing tanker utilization rates.
This is expected to continue at a high level in 2025. The
average freight rate level is expected to be strong.
Operational Risks
Oil major approval risk is considered to be at a low level due
to continuous focus and efficient controls.
In the event that TORM becomes involved in an
environmental disaster, this would severely damage our
business and reputation. It is considered highly unlikely that
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > RISK MANAGEMENT
TORM ANNUAL REPORT 2024
18
a vessel accident with severe oil pollution would occur. In
the unlikely event, we would most likely be covered by
insurance.
Events such as piracy and terrorism could result in
kidnapping or injury to seafarers or vessel damage. Attacks
by Houthi rebels on vessels in the Bab-el-Mandeb Strait, a
narrow passage connecting the Red Sea to the Arabian
Sea, have caused significant disruptions to shipping traffic.
The Red Sea is a crucial trade route for global commerce,
connecting Asia and Africa with Europe. TORM decided to
temporarily put a halt to transit of the strait of Bab-el-
Mandeb in Red Sea. We deem that the risk of maritime
safety threats remains unchanged relative to last year. The
risk has reduced in other regions and the East African
region has been removed as an “area of unrest” by the
Baltic International Maritime Council (BIMCO), OCIMF, and
other shipping bodies.
Compliance and Cyber Risks
Due to the Russian invasion of Ukraine, sanctions have
increased. The likelihood of violating sanctions is deemed
minor and manageable due to TORM not trading Russian
customers along with mitigating activities, which involve
training of personnel as well as digital and automized
sanction screening systems.
Cyber risks include the risk of system unavailability and data
loss due to cyber attacks. Oil and gas and associated
infrastructure industries are expected to be targeted by
actors including Russia. TORM assesses that the risk of
cyber activism has increased from “possible” to “likely”,
which is in line with the Danish Centre for Cyber Security’s
assessment of the risk level. The likelihood of Russian cyber
attacks is increasing as the Ukraine conflict evolves into an
extended war of attrition. Critical government and private
sector networks as well as infrastructure across the globe
are vulnerable to hacking and spying.
Financial Risks
TORM’s financial gearing, liquidity buffer, and break-even
levels have maintained the liquidity risk at an acceptable
level. Considering the high value generation and current
mitigation activities, the breach of covenants is considered
unlikely.
Read more about mandates and sensitivity analysis
of the various risks in Note 25 on page 239
TORM’s Risk Tolerance
The Senior Management Team and the Risk Committee
decide TORM’s risk tolerance to principal risk exposures.
Risk Tolerance Conclusion
In TORM’s 2024 risk assessment, it was concluded that
there is an appropriate level between risk tolerance and net
severity for TORM’s top risks. Severe vessel accidents,
such as an oil spill or damage to our vessels, are deemed
outside the risk tolerance; however, this is the same
methodology used in previous years’ enterprise risk
management evaluation. TORM accepts that some risks
cannot be fully mitigated due to the nature of these risks.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > RISK MANAGEMENT
TORM ANNUAL REPORT 2024
19
Description of Top Risks
Industry and Market Risks
Operational Risks
Tanker
Freight Rates
Bunker Price
Asset Management
Oil Major Approval
Severe
Vessel Accident
Maritime
Safety Threats
Risk
Sustained low tanker
freight rates or inability to
predict and respond
timely and accurately to
freight rate
developments.
Unexpected bunker price
increases not covered by
corresponding freight rate
increases.
Unexpected value
depreciation of vessels.
The most exposed vessels
are older vessels due to
new legislation driven by
the climate change
agenda.
A sudden and unexpected
breach in quality
requirements of a single
vessel or continuous
decrease in quality across
the fleet.
A severe vessel accident
such as an environmental
disaster or material
damage or personal injury.
A maritime venture has
inherent hazards. Events
such as piracy and
terrorism are considered
main security risks.
Potential
Impact
TORM’s profitability
would be negatively
impacted in case of a
distressed product tanker
market.
Vulnerability to a
sustained increase in the
bunker price and pass-
through to charterers may
not have an immediate
effect, meaning that
TORM may temporarily
bear the full effect of
price increases.
A decline in TORM’s net
asset value, which could
lead to a requirement
from banks to provide
additional security. TORM
would also be exposed to
cyclical asset prices and
assets contracted at too
high prices.
The risk of a partial ban of
the TORM tanker fleet by
one or more oil majors.
TORM’s involvement in an
environmental disaster
would damage TORM’s
reputation and impair its
tradability with oil majors.
Events such as piracy and
terrorism could result in
kidnapping of or injury to
seafarers or vessel
damage.
Mitigating
Activities
TORM’s spot-oriented
strategy limits possible
mitigation. Unleveraging
is considered when terms
and pricing are deemed
attractive hereunder with
time charter-outs and
FFA coverage.
In general, TORM does
not hedge future bunker
expenses. In the case
that freight income is
fixed, TORM does hedge
future bunker exposures.
With a conservative
capital structure, focus
on conservative loan-to-
value and a close view of
the market, TORM
maintains flexibility and
an ability to act in the
asset market.
TORM’s integrated
platform with in-house
safety and technical and
operational staff secures
continued focus on
quality and high vetting
standards.
Disaster recovery plans
for emergency situations
are in place as well as an
ongoing safety resilience
program to enhance
safety culture, including
officers being trained as
“safety ambassadors”.
TORM’s internal Trading
Restrictions Committee
has oversight of security
threats and decides how
best to avoid and mitigate
the risk. TORM follows all
industry best practices
and has procedures in
place in case of an
incident.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > RISK MANAGEMENT
TORM ANNUAL REPORT 2024
20
A
B
C
D
E
F
Description of Top Risks
Compliance and IT Security Risks
Financial Risks
Legal Compliance
Cyber Security
Liquidity Risk
Risk
Legal or policy non-compliance or ethical misconduct.
The risk consists of competition law, corruption,
fraud, and sanctions.
System unavailability and data loss due to cyber
attacks caused by increasing interconnectivity and
severe external threat of cyber crime are driving
higher frequency and severity of incidents.
Liquidity risk is driven by financial gearing, liquidity
reserve, distribution policy, maintenance
requirements, fleet employment strategy, and
required vessel investments.
Potential
Impact
TORM’s inability to comply with rules and regulations
could lead to penalties, reputational damage, or the
inability to operate in key markets.
Business interruption and disruption to trading
resulting in loss of business or theft of money.
Sustained low freight rates or another unforeseen
adverse development could jeopardize liquidity, lead
to covenant breaches, and hence inflict costs and
lack of operational maneuverability.
Mitigating
Activities
Compliance and awareness training is mandatory for
all employees. In connection with sanctions, a know-
your-customer screening system has been
implemented.
Business continuity plans have been implemented
covering the entire group. The plans include
assessment and contingency of critical systems in
case of business interruption. Implementation of
group-wide IT security policy and IT risk management
policy. The policy ensures continuous focus on
capacity to detect and react to cyber attacks.
Conservative financial leverage guided by short and
long-term cash flow forecasting with stress-testing of
critical assumptions. Constantly maintaining
sufficient cash buffers and a tangible catalog of
available liquidity-enhancing initiatives in alignment
with our Distribution Policy.
STRATEGIC REPORT > BUSINESS MODEL AND STRATEGIC CHOICES > RISK MANAGEMENT
TORM ANNUAL REPORT 2024
21
G
H
I
TORM ANNUAL REPORT 2024
22
Market Review
Geopolitical tensions kept product tanker freight rates elevated in the first half of 2024,
while crude cannibalization negatively affected rates in the second half of the year.
Geopolitical Disruptions
During 2024, the product tanker market was strongly
affected by the geopolitical conflict in the Middle East and
the subsequent Houthi attacks against commercial vessels
at the Bab al-Mandeb Strait. This led to a widespread
rerouting of vessels away from the Red Sea to go around
the Cape of Good Hope, increasing trade distances on top
of the already longer trade routes as a result of sanctions
against Russia, officially introduced in 2023.
Prior to disruption, around 12% of global clean petroleum
product volumes transited the Suez Canal. By the end of
the first quarter 2024, the number of product tankers
transiting the Red Sea had fallen by 60%. Given the fact
that around 45% of clean petroleum product volume carried
on LR2s normally travels through the Suez Canal, the
impact on trade rerouting was strongest on the LR2
segment. Elevated fleet utilization led to higher and volatile
freight rates. Benchmark LR2 freight rates briefly touched
above USD 100,000/day in late January/early February, a
level not seen since the early days of the COVID-19
pandemic. Elevated LR2 earnings triggered a number of
crude tankers to clean up and enter clean product
transportation, which resulted in product tanker rates
dropping from record high to more normalized levels in the
second half of the year.
Global Oil Demand and Refinery Landscape
While geopolitical issues and market disruptions were the
main drivers of the product tanker market in 2024, overall
trade volumes also grew in 2024. This masked significant
regional differences. The ramp-up of new refining capacity
in the Middle East lifted the region’s exports of clean
petroleum products by 6% in 2024. Longer sailing
distances for diesel flows from the East to West
attracted barrels from the US. Combined with elevated
refinery runs, this led to a 10% year-on-year increase in US
Gulf clean petroleum product exports. This stood in stark
contrast to exports from Russia, OECD Europe, and Far
East, which all saw declines. While Russian refinery runs
were negatively affected by Ukrainian drone attacks,
Europe and Far East experienced refinery run cuts amid
weak refinery margins.
STRATEGIC REPORT > REVIEW AND RISK > MARKET REVIEW
TORM ANNUAL REPORT 2024
23
LR2 Ras Tanura - Chiba
LR1 Ras Tanura - Chiba
MR Average
Jan
Feb
Mar
Apr May
Jun
Jul
Aug Sep
Oct
Nov
Dec
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Via Suez Canal
Via Cape of Good
Hope
Other Routes
(2,000)
(1,500)
(1,000)
(500)
—
500
1,000
1,500
2,000
CPP Trade by Routes in 2024 vs. 2023
SOURCE: KPLER
Tanker Freight Rates in 2024
SOURCE: CLARKSONS
KB/D
AVERAGE TCE IN USD/DAY
Crude Tanker Clean-Ups
As a reaction to two significant factors, a growing number
of VLCC and Suezmax vessels cleaned their tanks to carry
diesel from the East to the West Suez. These two factors
include the aforementioned trade rerouting, which elevated
clean tanker freight rates, and unusually weak earnings for
very large crude carriers. As a result, the trend effectively
offset the additional ton-miles generated by rerouting
around the Cape of Good Hope during the third quarter of
2024.
While crude cannibalization declined in the fourth quarter,
clean petroleum product trade from East to West
decreased by over 40% from earlier levels. Partly, this was
due to maintenance at the Saudi Arabian refineries at the
Red Sea, but also reflected higher diesel volumes carried on
large crude tankers during the third quarter. Lower trade
volumes in the East of Suez market kept average product
tanker freight rates lower for the rest of the year, despite
strong activity in the US Gulf.
Overall, ton-miles related to clean petroleum product trade
increased by 9% in 2024, but due to crude cannibalization,
product tanker ton-miles increased less, by 6%.
STRATEGIC REPORT > REVIEW AND RISK > MARKET REVIEW
TORM ANNUAL REPORT 2024
24
4.4
4.3
4.9
5.0
5.2
5.6
2019
2020
2021
2022
2023
2024
—
1.0
2.0
3.0
4.0
5.0
6.0
Product Tankers
Crude Tankers
Total CPP Ton-Miles
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
(10)
(5)
—
5
10
15
20
CPP Ton-Miles in 2024 by Vessel Segment
SOURCE: KPLER
Middle East/India CPP Exports
SOURCE: KPLER
MB/D
% VS. 2023 AVG.
Financial Review 2024
Financial review for the year ended 31 December 2024.
Highlights
TORM navigated a challenging economic landscape in
2024 shaped by geopolitical tensions and evolving market
dynamics. Despite these uncertainties, our adaptability and
strategic focus allowed us to maintain operational
excellence and capitalize on market opportunities. By
leveraging our platform and disciplined approach, we
delivered strong results and reinforced our position as a
reliable and resilient leader in the product tanker industry.
Thus in 2024, TORM delivered time charter equivalent
(TCE) earnings for the Tanker segment of USD 1,134.8m
and Group EBITDA of USD 850.8m, meeting our most
recent guidance provided to the financial market. The year
was characterized by volatile freight rates, with fleet-wide
rates ranging from USD/day 43,152 in the first quarter of
the year to USD/day 25,775 in the last quarter of the year.
As a result, our quarterly financial results closely reflect the
fluctuations in freight rates.
In this dynamic market environment, we achieved TCE rates
slightly lower relative to the prior year while increasing our
number of earning days. This combination drove record-
high earnings and enabled us to provide significant dividend
distributions to our shareholders, underscoring our
commitment to creating long-term value.
Additionally, we made further strides in strengthening our
balance sheet. By issuing TORM’s first bond and obtaining
facilities for financing of vessels whilst maintaining
disciplined financial management, reducing leverage, and
optimizing our capital structure, we ensured TORM is well-
positioned to navigate future market volatility.
Distribution
TORM’s Board of Directors has on the date of this report
approved an interim dividend for the fourth quarter of USD
0.60 per share to be paid to the shareholders
corresponding to an expected total dividend payment of
USD 58.4m. The distribution for the quarter is equivalent to
75% of net profit and reflects the Distribution Policy. The
payment date is 02 April 2025 to all shareholders on record
as of 20 March 2025, and the ex-dividend date is 19 March
2025 for the shares listed on Nasdaq OMX Copenhagen
and 20 March 2025 for the shares listed on Nasdaq New
York.
The dividend payment will not be recognized as a liability
and there are no tax consequences.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
25
Key developments for the Tanker segment
USDm
2024
2023
Change
Income statement
Revenue
1,544.0
1,491.4
52.6
Port expenses, bunkers, and commissions
-409.2
-407.6
-1.6
Time charter equivalent (TCE)
1,134.8
1,083.8
51.0
Operating expenses
-245.6
-216.4
-29.2
Administrative expenses
-87.9
-76.5
-11.4
Net profit/(loss) for the year
614.1
648.9
-34.8
Balance sheet
Vessels, capitalized dry-docking and prepayments on vessels
2,843.9
2,167.7
676.2
Total assets
3,456.0
2,853.4
602.6
Borrowings, current and non-current
1,224.3
1,053.7
170.6
Total liabilities
1,383.1
1,192.1
191.0
Key figures
TCE per day (USD)
36,061
37,124
-1,063
OPEX per day (USD)
7,477
7,069
408
Income Statement
TCE
In 2024, we saw a decrease in the average TCE rate/day
for the Tanker segment of 2.9% from USD 37,124 in 2023
to USD 36,061 in 2024. This decrease was a result of
several factors including the crude cannibalization and
maintenance at Saudi Arabian refineries at the Red Sea,
mainly during the second half of the year.
Revenue for the Tanker segment for the year 2024
increased by USD 52.6m to USD 1,544.0m compared to
2023, corresponding to a 3.5% increase. The increase in
revenue was primarily a result of a net addition of 12 vessels
to the fleet, increasing earning days in 2024 with 2,135
days equivalent to 7.3% compared to 2023. This impact
more than offsets the adverse impacts that the factors
earlier described had on the TCE rate/day. Consequently, in
2024, we recorded the highest revenue in TORM’s history.
Port expenses, bunkers, and commissions for the Tanker
segment were USD 409.2m in 2024, an increase of
USD 1.6m compared to USD 407.6m in 2023. The increase
can primarily be attributed to a decrease in realized gains of
USD 21.2m partly offset by an increase in unrealized gains
of USD 5.2m on derivative financial instruments regarding
freight and bunkers. The fair value of the contracts was
positive with USD 8.1m as of 31 December 2024.
Additionally, bunker costs and the introduction of EU
emission allowances in 2024 contribute a total of USD
10.7m in increased expenses compared to 2023. The net
increase of the aforementioned items is mainly offset by
reduced port expenses of USD 23.9m.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
26
Change in Time Charter Equivalent Earnings in the Tanker Fleet
USDm
MR
LR1
LR2
Total
Time charter equivalent earnings 2023
708.4
161.2
214.2
1,083.8
Change in number of earning days
18.9
-29.0
113.0
102.9
Change in freight rates
-35.9
-1.2
-19.9
-57.0
Other
-2.2
-0.9
8.2
5.1
Time charter equivalent earnings 2024
689.2
130.1
315.5
1,134.8
Earnings Data
2024
USDm
2023
Full year
Q1
Q2
Q3
Q4
Full year
% change
Full year
LR2 vessels
Available earning days ¹⁾
4,490
1,475
1,809
1,764
1,811
6,859
53 %
Spot rates ²⁾
47,860
59,792
55,264
40,906
28,915
45,752
-4 %
TCE per earning day ³⁾
47,718
54,443
51,907
41,064
34,444
45,053
-6 %
LR1 vessels
Available earning days ¹⁾
4,307
891
909
892
839
3,531
-18 %
Spot rates ²⁾
33,553
47,985
46,019
32,139
23,039
37,557
12 %
TCE per earning day ³⁾
37,326
48,583
42,338
33,749
22,421
37,014
-1 %
MR vessels
Available earning days ¹⁾
20,355
5,331
5,031
5,132
5,403
20,897
3 %
Spot rates ²⁾
34,583
39,972
39,500
31,275
22,585
33,563
-3 %
TCE per earning day ³⁾
34,745
39,121
38,465
31,193
23,389
32,948
-5 %
Total
Available earning days ¹⁾
29,152
7,697
7,749
7,788
8,053
31,287
7 %
Spot rates ²⁾
36,430
44,274
43,456
32,966
23,895
36,303
-0 %
TCE per earning day ³⁾
37,124
43,152
42,057
33,722
25,775
36,061
-3 %
1) Total available earning days = Total calendar days less off-hire days.
2) Spot rates = Time Charter Equivalent Earnings for all charters with less than six months' duration.
3) TCE = Time Charter Equivalent Earnings. Please refer to the glossary on pages 276 to 282.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
27
Operation of Vessels
The development in operating expenses (OPEX) for the
Tanker segment is summarized in the table on this page.
The table also summarizes the operating days and the
reconciliation to available earning days for TORM’s fleet
(including both owned vessels and vessels financed via
bareboat charters in sale and leaseback arrangements).
OPEX for the Tanker segment increased by USD 29.2m to
USD 245.6m in 2024 compared to USD 216.4m in 2023.
This was due to 2,250 additional operating days compared
to 2023 and increased operating expenses per day of 5.8%
stemming from general price increases combined with
costs related to recently acquired secondhand vessels.
The total fleet of owned vessels had 1,568 off-hire and dry-
docking days, corresponding to 4.8% of operating days in
2024. This compares to 1,453 off-hire and dry-docking
days in 2023 or 4.7% of operating days. The relative share
of operating days is on par with the share in 2023, however,
generally higher than in years prior to 2023. This is driven
by newly acquired vessels entering dry docking shortly after
takeover.
Administrative Expenses
In 2024, administrative expenses for the Tanker segment
increased by USD 11.4m to USD 87.9m compared to 2023.
The primary factor was the full year impact in 2024 of the
additional extraordinary retention program granted to the
Executive Director and certain employees as announced on
29 March 2023. Increase in share based payment expense
was USD 7.3m compared to 2023.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
28
Change in Operating Expenses
USDm
MR
LR1
LR2
Total
Operating expenses 2023
150.0
32.0
34.4
216.4
Change in operating days
4.0
-6.1
18.7
16.6
Change in operating expenses per day
9.1
1.0
2.5
12.6
Operating expenses 2024
163.1
26.9
55.6
245.6
Change in Operating Days
Days
MR
LR1
LR2
Total
Operating days in 2023
21,347
4,551
4,707
30,605
Change in operating days
567
-874
2,557
2,250
Operating days in 2024
21,914
3,677
7,264
32,855
Offhire
-431
-105
-126
-662
Dry-docking
-586
-41
-279
-906
Available earning days 2024
20,897
3,531
6,859
31,287
Change in Operating Expenses Per Day
USD/day
MR
LR1
LR2
Total
Operating expenses per operating day in 2023
7,028
7,021
7,298
7,069
Operating expenses per operating day in 2024
7,445
7,310
7,659
7,477
Change in the operating expenses per operating day in %
6 %
4 %
5 %
6 %
Balance Sheet
Assets
TORM’s total assets for the Group increased by
USD 599.5m to USD 3,469.6m as of 31 December 2024,
mainly driven by an increase of the total assets for the
Tanker segment from USD 602.6m to USD 3,456.0m. The
growth in the Tanker segment was primarily driven by an
increase in vessels and capitalized dry-docking, including
prepayments on vessels, of USD 676.2m as a result of
increased vessel acquisition activities during 2024. The
development is mainly offset by a decrease in assets held
for sale of USD 47.2m and trade receivables of USD 27.1m.
As of 31 December 2024, the carrying amount of vessels,
capitalized dry-docking, and prepayments on vessels in the
Tanker segment amounted to USD 2,843.9m compared to
USD 2,167.7m at end 2023. This increase was due to the
delivery of 19 vessels including capitalized dry-docking of
USD 910.0m. The increase was offset by the divestment
including delivery to new owners of 7 older vessels of
USD 47.0m and depreciation of USD 186.7m.
Based on the average broker valuations from two
internationally recognized shipbrokers, TORM’s fleet on
water had a market value of USD 3,582.9m as of 31
December 2024, 26.0% above carrying value.
Assessment of Impairment of Assets
For impairment purposes for the Group, the Management
performed reviews of impairment indicators at every
quarter-end during 2024. Indicators of impairment for the
Main Fleet CGU include, but are not limited to, broker
vessel values, time charter rates, weighted average cost of
capital, any other adverse impacts from current economic,
environmental, and geopolitical uncertainty, as well as the
carrying amount of the net assets against the market
capitalization. The Audit Committee evaluated each
impairment indicator assessment and prepared a
recommendation to the Board of Directors on whether to
conduct an impairment test of the carrying value of the
Main Fleet CGU. During 2024, no recommendation to
conduct an impairment test was made. As mentioned
earlier, at year-end 2024, vessel values from brokers were
significantly above the carrying value of the vessels in the
Main Fleet CGU, supporting the conclusion by the
Management to not determine the recoverable amount.
For the Marine Engineering CGU, the year-end impairment
test did not identify any impairments. Please refer to Note
12 for additional details of the impairment assessments.
Equity
In 2024, total equity for the Group increased by
USD 408.8m to USD 2,074.8m. The increase was primarily
driven by a capital increase of USD 331.7m due to the
issuance of new shares in connection with several partly
share-based financed vessel acquisitions during 2024.
Additionally, the increase was positively impacted by the
net profit for the year of USD 611.5m offset by dividends
paid of USD 553.3m.
Liabilities
TORM's total liabilities for the Group increased by
USD 190.7m to USD 1,394.8m as of 31 December 2024,
mainly driven by an increase of the total liabilities for the
Tanker segment of USD 191.0m to USD 1,383.1m. The
development is primarily due to an increase in current and
non-current borrowings of USD 170.6m to USD 1,224.3m,
which stem from increased net vessel acquisitions during
2024.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
29
Liquidity and Cash Flow
The TORM Group liquidity position by the end of 2024 was
USD 614.8m (2023: USD 638.1m) including restricted cash
of USD 19.3m (2023: USD 30.1m) and undrawn credit
facilities of USD 323.6m (2023: USD 342.5m).
In January 2024, TORM announced the pricing of USD
200m, five-year senior unsecured bonds. The net proceeds
from the bonds issue was partly used to finance some of
the acquired vessels in 2023, delivered in 2024. The bonds
were successfully listed on the Oslo Stock Exchange in June
2024.
As of 31 December 2024, the TORM Group had CAPEX
commitments of USD 23.0m primarily related to scrubber
installations and Flettner rotors also known as rotor sails.
Net cash flow from operating activities was USD 826.8m
(2023: USD 805.0m). The increase was primarily driven by
an increase in TCE compared to 2023.
Net cash flow from investing activities was USD -442.1m
(2023: USD -370.6m). The development was primarily a
result of the delivery of 19 vessels during 2024 (compared
to 12 vessel deliveries in 2023) with an impact of USD
-72.7m. Further, the development was supported by
decreased proceeds from vessel sales in 2024 compared to
2023 of USD -35.8m, offset by a USD 37.5m higher net
cash flow from restricted cash compared to 2023.
Net cash flow from financing activities was USD -378.3m
(2023: USD -489.4m). The change in cash flow is mainly a
result of lower repayments on borrowings and lower
dividend payments of USD 329.1m and USD 33.1m,
respectively. The development is offset by reduced
proceeds from borrowings of USD -257.0m compared to
2023.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
30
Cash Flow for the Group
USDm
2024
2023
Change
Net cash flow from operating activities
826.8
805.0
21.8
Net cash flow from investing activities
-442.1
-370.6
-71.5
Net cash flow from financing activities
-378.3
-489.4
111.1
Net cash flow from operating, investing and financing activities
6.4
-55.0
61.4
Primary Factors Affecting the Results of
Operations
TORM generates revenue by charging customers for the
transportation of refined oil products and crude oil, using
TORM’s tanker vessels. Our focus is on maintaining a high-
quality fleet and high tradability, and we actively manage
the deployment of the fleet between spot market voyage
charters, which generally last from several days to several
weeks, and time charters.
TORM believes that the important measures for analyzing
trends in the results of our tanker operations comprise the
following elements.
Time Charter Equivalent (TCE) Earnings
Per Available Earning Day
TCE earnings per available earning day are defined as
revenue less voyage expenses divided by the number of
available earning days. Voyage expenses primarily consist
of port and bunker expenses, which are unique to a
particular voyage, and which would otherwise be paid by a
charterer under a time charter, as well as commissions,
freight, and bunker derivatives.
TORM believes that presenting revenue net of voyage
expenses neutralizes the variability created by unique costs
associated with particular voyages or the deployment of
vessels on the spot market and facilitates comparisons
between periods on a consistent basis. Under time charter
contracts, the charterer pays the voyage expenses, while
the shipowner pays these expenses under voyage charter
contracts. A charterer has the choice of entering a time
charter (which may be a one-trip time charter) or a voyage
charter. TORM is neutral as to the charterer’s choice
because TORM primarily bases its financial decisions on
expected TCE rates rather than expected revenue. The
analysis of revenue is therefore primarily based on
developments in TCE earnings.
Spot Charter Rates
A spot market voyage charter is generally a contract to
carry a specific cargo from a load port to a discharge port
for an agreed freight rate per ton of cargo or a specified
total amount. Under spot market voyage charters, TORM
pays voyage expenses such as port, canal, and bunker
costs.
Spot charter rates are volatile and fluctuate on a seasonal
and a year-to-year basis. Fluctuations derive from
imbalances in the availability of cargo for shipment and the
number of vessels available at any given time to transport
these cargos. Vessels operating in the spot market
generate revenue which is less predictable but can
potentially enable TORM to capture increased profit
margins during periods of improvements in tanker freight
rates.
Time Charter Rates
A time charter is generally a contract to charter a vessel for
a fixed period at a set daily or monthly rate. Under time
charters, the charterer pays voyage expenses such as port,
canal, and bunker costs. Vessels operating on time charters
provide more predictable cash flows but can yield lower
profit margins than vessels operating in the spot market
during periods characterized by favorable market
conditions.
Available Earning Days
Available earning days are the total number of days in a
period when a vessel is ready and available to perform a
voyage, meaning that the vessel is not off-hire or in dry-
dock. For the owned vessels, this is calculated by taking
operating days and subtracting off-hire days and days in
dry-dock. For the chartered-in vessels, no such calculation
is required because charter hire is only paid on earning days
and not for off-hire days or days in dry-dock.
Operating Days
Operating days are the total number of available days in a
period with respect to the owned and leased vessels, before
deducting unavailable days due to off-hire days and days in
dry-dock. Operating days is a measurement which is only
applicable to owned vessels, not to the time chartered-in
vessels.
Operating Expenses Per Operating Day
Operating expenses per operating day are defined as crew
wages and related costs, the costs of spares and
consumable stores, expenses relating to repairs and
maintenance (excluding capitalized dry-docking), the cost
of insurance, and other expenses on a per-operating-day
basis. Operating expenses are only paid for owned vessels.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
31
Going Concern
As of 31 December 2024, TORM’s available liquidity
including undrawn and committed facilities was USD 615m,
including a total cash position of USD 291m (including cash
held for dividend payment and restricted cash of USD 19m).
TORM’s net interest-bearing debt was USD 948m, and the
net debt loan-to-value ratio was 26.8% (Tanker segment
only and before dividend payment related to Q4 2024).
Further information on TORM’s objectives and policies for
managing our capital, our financial risk management
objectives, and our exposure to credit and liquidity risk can
be found in Note 24 to the financial statements.
TORM monitors our funding position throughout the year to
ensure that we have access to sufficient funds to meet the
forecasted cash requirements and loan commitments, and
to monitor compliance with the financial covenants in our
loan facilities, details of which are available in Note 2 to the
financial statements.
A key element for TORM’s financial performance in the
going concern period relates to the increased geopolitical
risk following Russia’s invasion of Ukraine in February
2022, while the conflicts in the Middle East are expected to
have a lessor impact on the product tanker market. While
the changed geopolitical landscape initially supported
market dynamics, crude cannibalization significantly
reduced the net positive effect in the second half of 2024.
TORM’s base case assumes that these dynamics will
persist, albeit with a lower estimated impact on the product
tanker market and consequently with freight rates and
vessel values materializing below 2024 levels. TORM
monitors the general development in the geopolitical
situation and potential effects on the product tanker
market. In the base case, TORM has sufficient liquidity and
headroom for all the covenant limits.
The principal risks and uncertainties facing TORM
are set out on pages 17 to 21
In addition to the base case, TORM has developed a reverse
stress case. The reverse stress case covers the lowest TCE
rate that only just meet the minimum liquidity covenant and
the lowest vessel values that do not breach any of the
facilities’ minimum security values in the period. In the
reverse stress case, with TCE rates are slightly below the
lowest rolling four-quarter average since 2000 on a per
vessel class basis and a related decline in vessel values,
TORM maintains sufficient headroom on liquidity and
covenants throughout the going concern period.
The Board of Directors has considered TORM’s cash flow
forecasts and the expected compliance with TORM’s
financial covenants for the period until 31 March 2026.
Based on this review, the Board of Directors has a
reasonable expectation that taking reasonably possible
changes in trading performance and vessel valuations into
account, TORM will be able to continue in operation and
comply with our financial covenants for the period until 31
March 2026. Accordingly, TORM continues to adopt the
going concern basis in preparing our financial statements.
Long-Term Viability Statement
In accordance with provision 31 of the UK Corporate
Governance Code, the Board of Directors confirms that
they have a reasonable expectation that TORM will
continue in operation and meet its liabilities as they fall due
for the three-year period ending 31 December 2027. This
period has been selected for the following reasons:
•
The general volatility and uncertainty in the product
tanker market leads to a significant increase in the
degree of judgement and uncertainty beyond a three-
year period
•
Three years are generally in line with the forecast
horizon for external equity analysts covering the
shipping sector
The assessment of the Board of Directors has been made
with reference to TORM’s current financial position and
prospects. The assessment of financial performance and
cash flows is primarily dependent on the expectations for:
•
Demand-supply picture in the product tanker sector
including the expected vessel values and freight rates
achieved by TORM, which in addition also covers the
outlook related to the geopolitical situations and
climate change developments
•
Development of the fleet
•
Operating and administrative expenses
•
Capital expenditures covering vessel purchases and
maintenance of the existing fleet including installation
of scrubbers and fuel efficiency equipment
•
Changes in interest rates
The expected financial performance and cash flows are
based on the same underlying assumptions as used in
TORM’s general financial planning. The operating and
administrative cost levels are on similar levels as TORM’s
historical performance, and freight rates are assumed to
remain at strong and profitable levels, however, with a
decreasing trend compared to 2024 levels. Vessel values
used in forecasting comply with financial covenants and are
based on the latest market valuations from two
independent, recognized shipbrokers. The expected outlook
has then been subject to a reverse stress case over the
three-year period, to assess the long-term viability. The
reverse stress case covers the lowest TCE rate that only
just meet the minimum liquidity covenant and the lowest
vessel values that do not breach any of the facilities’
minimum security values in the period. In the reverse stress
case, with TCE rates slightly below the lowest rolling four-
quarter average since 2000 on a per vessel class basis and
a related decline in vessel values, TORM maintains
sufficient headroom on liquidity and covenants throughout
the viability period.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
32
TORM’s freight rate assumptions as per the going concern
assessment continue throughout the viability period and
have further sensitized the vessel values downward over
the period to reflect a continued downturn. Should the
product tanker market (in terms of either freight rates or
vessel values) materialize significantly below TORM’s
expectations for a prolonged period, there is a risk of a
covenant breach after the going concern period, which
would require mitigating actions, including cost savings,
sale of vessels, or increased leverage which are considered
within Management’s control and achievable. In such a
scenario, Management would also consider obtaining
appropriate waivers and although they would be confident
of obtaining them, these are not within Management’s
control.
The Board of Directors monitors if TORM is moving towards
a covenant breach in order to incorporate any mitigating
actions in due course on an ongoing basis. Based on the
sensitivity analysis, the Board of Directors does not
currently expect that TORM will breach its financial
covenants or experience a liquidity shortfall over the three-
year forecast period.
The Board of Directors has also considered the long-term
prospects of TORM beyond the three-year forecast viability
horizon. In doing so, the Board of Directors has taken the
long-term risks and opportunities for TORM discussed
elsewhere in the strategic report and the potential impact
of economic volatility, climate change agenda, new
regulations, technological disruption, current geopolitical
situation and general changes in the utilization of energy
sources into consideration. Based on this assessment and
taking the current capital structure and TORM’s operational
platform into account, the Board of Directors believes that
TORM is well positioned both to respond to these risks and
to take advantage of any positive market developments for
a period beyond the three-year forecast horizon.
On behalf of TORM plc
Kim Balle
Chief Financial Officer
TORM A/S
06 March 2025
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL REVIEW
TORM ANNUAL REPORT 2024
33
Market Drivers and Outlook
The product tanker market continues to benefit from longer trade distances amid
geopolitical disruptions, although uncertainty increases. At the same time,
newbuilding deliveries increase.
Tonnage Demand
Ton-mile growth in the next couple of years will be driven by
trends in oil demand, changes in the refinery landscape, and
more importantly, by the developments in the geopolitical
situation in the Middle East and Europe.
Geopolitics continue to drive the product tanker market in
2025, although some changes in the current geopolitical
conflicts can potentially occur with the new Trump
administration in the US, increasing efforts to bring the
parties to the negotiation table. Nevertheless, any changes
to the current shipping disruptions will likely be gradual and
conditional. As such, the market continues to be influenced
by geopolitics, while the recent changes in trade flows
towards longer distances would at least partly remain.
There can be no certainty that these geopolitical conditions
will continue or if they might expand or change in other
unanticipated ways.
Changes in the Refinery Landscape
After a wave of new export-oriented refining capacity
additions in the Middle East over recent years, much of the
refining capacity being added in 2025 will occur in the
Atlantic basin and will potentially be import-reducing. While
the Dangote refinery in Nigeria is in the process of ramping
up runs and gasoline production units, a number of older
refineries in the country, which have been closed for years,
are reopening in order to reduce dependence on imported
fuels. Similarly, Doc Bocas refinery in Mexico is ramping up,
potentially leading to lower gasoline import needs in
Mexico.
At the same time, a number of refineries will close down
during 2025 in Europe and on the US West Coast, which is
likely to lead to higher import needs, given the position of
these regions as fuel net importers. Three refineries will be
closed down in Germany and the UK in 2025, accounting
for a combined 4.5% of North West Europe and 2.5% of
total Europe’s current refinery capacity. On the US West
Coast, refining capacity will decline by 6%.
Closure of the Lyondell Basell refinery in the US Gulf, which
accounts for almost 3% of the region’s refining capacity, is
likely to lead to less exports from the region. On the other
hand, this might reinforce higher flows from the Middle East
on trade routes affected by the Red Sea disruption (to
Europe), hence boosting ton-miles.
Crude Tanker Cannibalization
While crude cannibalization remains a downside risk factor
for the product tanker market, some positive spill-over
effects from the crude tanker market can be expected. One
of them is a potential tightening of sanctions against Iran,
as a result of a tougher stance on Iran by the Trump
administration. This will potentially lead to higher demand
for non-sanctioned crude tonnage, tightening crude tanker
fleet utilization. This comes on top of the latest tightening
of US sanctions against Russia, which resulted in a large
number of especially crude tankers being sanctioned in
early 2025. Further to this, a higher crude production
growth in the Atlantic basin is expected in 2025, which is
likely to positively contribute to the ton-mile demand for
crude tankers. At the same time, crude tanker deliveries
remain stable at low levels throughout 2025.
STRATEGIC REPORT > REVIEW AND RISK > MARKET DRIVERS AND OUTLOOK
TORM ANNUAL REPORT 2024
34
Tonnage Supply
Following yearly fleet growth of 2% in the past three years,
product tanker fleet net capacity is expected to grow at
twice the pace during 2025-2027, before lower
newbuilding deliveries and higher scrapping activity taper
fleet growth for the remainder of the decade.
In 2024, 69 newbuilt product tankers entered the fleet,
comprising 4.4m dwt. This was the lowest level of
newbuilding deliveries for more than two decades.
The high freight rate environment discouraged recycling
activity, with only four vessels leaving the market for
scrapyards. Meanwhile, newbuilding ordering activity
gained momentum, reaching the highest level since 2006
(375 vessels or 23.5m dwt to be delivered in 2026-2028).
While the majority of newbuilding interest in the previous
year was concentrated in the LR2 and MR vessel classes, all
vessel sizes saw active ordering activity in 2024.
The order book for the total product tanker segment in
terms of capacity stood at 23% at the end of 2024
(covering 2025-2028 deliveries). This masked a large
difference per size class. While the order book in the LR2
vessel class comprised 39% of the existing fleet, the figure
was lower at 17% for LR1s and for MRs.
However, the average age of the product tanker fleet is
currently the highest in two decades, with 15% of the
current fleet capacity being older than 20 years. As such,
these vessels are natural candidates for scrapping over the
next five years.
The large LR2 order book must also be viewed in
combination with the uncoated Aframax order book, which
stood at only 6%, resulting in a 20% order book for the
combined LR2/Aframax vessel classes. At the same time,
uncoated Aframaxes have a large recycling potential with
25% of the fleet above 20 years of age. This results in a
combined LR2/Aframax fleet above 20 years of 18%, only
slightly below the combined order book of 20%.
Given already high order book and shipyards’ preference for
other vessel segments, TORM expects the newbuilding
ordering activity to come down from current levels and
remain relatively limited in the next couple of years. This will
translate into significantly lower fleet growth from 2028
onward. Together with a higher share of the fleet reaching
natural scrapping age, this could lead to negative net fleet
growth towards the end of the decade.
Increasing but still manageable tonnage supply growth is
combined with the continuation of key positive demand side
drivers, although some of the drivers may turn less
supportive. Even though downside risks on the product
tanker market have increased, TORM believes that freight
rate levels remain strong in the historical context. However,
market volatility is expected to remain not least due to the
continued unpredictable geopolitical instability.
STRATEGIC REPORT > REVIEW AND RISK > MARKET DRIVERS AND OUTLOOK
TORM ANNUAL REPORT 2024
35
Global product tanker fleet and order book
Vessel classes
Fleet
31.12.2023
Delivered in
2024
Scrapped in
2024
Fleet
31.12.2024
Order book for
2025-2028
2025-2028
Order book
as % of end
2024 fleet
LR2
436
20
0
456
180
39 %
LR1
376
0
0
376
64
17 %
MR
1,895
35
1
1,929
333
17 %
Handysize
790
14
3
801
121
15 %
Total
3,497
69
4
3,562
698
20 %
Financial Outlook 2025
Financial Outlook
At TORM, we develop our annual guidance by closely
monitoring and reporting key metrics such as TCE, covered
days, and EBITDA sensitivity to freight rate fluctuations.
Freight rates in the product tanker market, which can be
highly volatile, are the primary driver of our financial results.
We anticipate maintaining relatively stable OPEX on a per-
vessel-day basis, with administrative costs expected to
remain consistent with 2024 levels. In 2024, our EBITDA
break-even TCE rate was approximately USD 10,600 per
day excluding profits from vessel sales.
Our financial outlook is primarily based on the assumptions
described on the preceding pages. The most important
macroeconomic factors affecting our TCE earnings are
expected to be:
•
Geopolitical conflicts including the war between Russia
and Ukraine and the conflicts in the Middle East region
•
Global economic growth or recession, consumption of
refined oil products, and inflationary pressure
•
Location of closing and opening refineries and
temporary shutdowns due to maintenance
•
Oil price development
•
Oil trading activity and developments in ton-mile
•
Bunker price developments
•
Global fleet growth and newbuilding ordering activity
•
Potential difficulties of major business partners
•
One-off market-shaping events such as strikes,
conflicts, embargoes, political instability, weather
conditions, etc.
We have limited visibility on TCE rates that are not yet fixed
with our customers. Hence, these rates may be significantly
lower or significantly higher than our current expectations.
For the full-year 2025, TCE earnings are expected to be in
the range of USD 650 - 950m (2024: USD 1,135m), and
EBITDA is expected to be in the range of USD 350 – 650m
(2024: USD 851m) based on the current fleet size. Please
refer to page 282 for a definition of TCE earnings.
As of 03 March 2025, TORM had covered 27% of the 2025
full-year earning days at USD/day 28,916. Hence, 73% of
the 2025 full-year earning days are subject to change.
Thus as 24,189 earning days in 2025 are unfixed as of 03
March 2025, a change in freight rates of USD/day 1,000
will – all other things being equal – impact the EBITDA by
USD 24m.
Also as of 03 March 2025, 84% of the Q1 2025 earning
days were covered at USD/day 26,612. For the individual
vessel classes, the Q1 2025 coverage was 92% at USD/day
32,397 for LR2, 81% at USD/day 23,540 for LR1 and 81%
at USD/day 24,870 for MR.
STRATEGIC REPORT > REVIEW AND RISK > FINANCIAL OUTLOOK 2025
TORM ANNUAL REPORT 2024
36
Disclaimer on Financial Outlook
The purpose of this Financial Outlook for 2025 is to
comply with reporting requirements for companies listed
in Denmark. Actual results may vary, and this information
may not be accurate or appropriate for other purposes.
Information about our financial outlook for 2025,
including the various assumptions underlying it, is
forward-looking and should be read in conjunction with
the Safe Harbor Statements on page 196, and the related
disclosure and information about various economic,
competitive, and regulatory assumptions, factors, and
risks that may cause our actual future financial and
operating results to differ materially from what we
currently expect.
The information included in this Financial Outlook for
2025 is preliminary, unaudited and based on estimates
and information available to us at this time. TORM has not
finalized its financial statements for the periods
presented. During the course of the financial statement
closing process, TORM may identify items that would
require us to make adjustments, which may be material to
the information provided in this section. As mentioned
above, the provided information constitutes forward-
looking statements and is subject to risks and
uncertainties, including possible material adjustments to
the financial outlook for 2025.
Coverage 2025-2027
Total earning days and covered days in TORM as of 03 March 2025.
The coverage tables below include both the physical fleet and FFA contracts.
Actual number of days can vary from projected number of days primarily due to vessel sales
and delays of vessel deliveries.Total earning days are defined as total calendar days less off-
hire days.
Coverage
2025
2026
2027
Total earning days
LR2
7,505
7,521
7,419
LR1
3,577
3,626
3,565
MR
22,005
22,659
22,610
Total
33,087
33,806
33,594
Covered days
LR2
3,155
365
146
LR1
732
—
—
MR
5,011
463
151
Total
8,898
828
297
2025
2026
2027
Covered, %
LR2
42 %
5 %
2 %
LR1
20 %
— %
— %
MR
23 %
2 %
1 %
Total
27 %
2 %
1 %
Coverage rates, USD/day
LR2
35,550
41,961
41,961
LR1
23,537
—
—
MR
25,526
30,432
29,832
Total
28,916
35,515
35,796
STRATEGIC REPORT > REVIEW AND RISK > COVERAGE 2025-2027
TORM ANNUAL REPORT 2024
37
TORM Fleet Development
Development in the fleet of owned and leased vessels.
By the end of December 2024, TORM had 94 owned and
leased vessels in the LR2, LR1, and MR vessel classes.
The table shows recent developments in TORM’s operating
fleet. In addition to 70 owned product tankers, as of 31
December 2024, TORM had 24 vessels under sale-and-
leaseback agreements with options to buy back the vessels.
To ensure the continued optimization and efficiency of our
fleet, TORM will periodically purchase younger secondhand
vessels while divesting older ones. This approach allows
TORM to maintain a high-performing and environmentally
friendly fleet that aligns with market demands and
operational goals.
Thus, during the year, TORM has taken delivery of a total of
nine 2010-12 built LR2 vessels and ten second-hand
2014-2015 built MR vessels.
In late December 2023, TORM sold two LR1 vessels (TORM
Sofia and TORM Signe) as well as one MR vessel (TORM
Loke) that were all delivered to new owners in the beginning
of January 2024. Further, during 2024 TORM has divested
an additional four older MR vessels (2005-built TORM
Platte, TORM Helvig and TORM Republican and 2006-built
TORM Eric), all of which were delivered to the new owners
before the end of the year.
Fleet Development
STRATEGIC REPORT > REVIEW AND RISK > TORM FLEET DEVELOPMENT
TORM ANNUAL REPORT 2024
38
Q4 2023 Changes
Q1 2024
Changes
Q2 2024 Changes
Q3 2024
Changes
Q4 2024
Owned vessels
LR2
6
7
13
2
15
—
15
—
15
LR1
5
-2
3
—
3
—
3
—
3
MR
47
1
48
-1
47
2
49
3
52
Total
58
6
64
1
65
2
67
3
70
Leaseback vessels
LR2
6
—
6
—
6
—
6
—
6
LR1
7
—
7
—
7
—
7
—
7
MR
11
—
11
—
11
—
11
—
11
Total
24
—
24
—
24
—
24
—
24
Total fleet
82
6
88
1
89
2
91
3
94
TORM ANNUAL REPORT 2024
39
Sustainability Statement
4
60
General Disclosures
PAGE 42
Non-Financial and
Sustainability Information
Statement
PAGE 57
SASB Tables
PAGE 58
ESG
Targets
Environment
Climate Change
PAGE 62
63
103
EU Taxonomy Tables
PAGE 84
Pollution
PAGE 88
Transition Plan
Social
Biodiversity
PAGE 92
55
131
Own Workforce
PAGE 105
Workers in the Value Chain
PAGE 123
Double
Materiality Matrix
Governance
Governance
PAGE 132
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > CONTENTS
TORM ANNUAL REPORT 2024
40
General
Advancing Sustainability Reporting with CSRD.
Starting in 2024, we are advancing our sustainability
reporting, where transparency takes center stage and helps
stakeholders understand our sustainability priorities.
Adhering to the Corporate Sustainability Reporting
Directive (CSRD), we are reshaping how we share our vision
for corporate responsibility. The CSRD provides a robust
framework for reporting material impacts, risks, and
opportunities related to environmental sustainability, social
responsibility, and governance (ESG).
To address what matters most to our stakeholders, we
began with a thorough assessment of material
sustainability topics, identifying key areas where we impact
our surroundings and where those impacts could affect us
financially. The outcome, illustrated in our Double
Materiality Matrix, served as the foundation for our strategy
and reporting.
Recognizing the importance of moving beyond compliance,
we went further, identifying where we can make a real
difference and committing to action. In 2024, we
introduced new ESG targets, building on our long-standing
commitments to reducing CO2 emissions, ensuring staff
safety, and promoting gender equality in leadership.
Our new targets include specific emission reductions for
absolute Scope 1, 2, and 3 GHG metrics, as well as tracking
additional pollutants like SOx and NOx. We have also
formalized our commitment to avoiding all oil spills,
strengthening our environmental stewardship.
In social sustainability, we are now publishing new metrics
to measure Port State Control performance and employee
engagement, ensuring accountability for progress in these
critical areas.
We are extending our safety monitoring setup to include dry
dock workers, aiming to gain a deeper understanding of
safety issues across the entire value chain and reinforcing
our commitment to safety at every level.
On governance, we have set clear targets to reinforce zero
tolerance for bribery and corruption while embedding ESG
criteria into supply chain engagement. These actions
demonstrate our aim to be industry leaders in responsible
governance and ethical business practices.
Our focus remains on delivering safe, sustainable, and
socially responsible operations. By setting ambitious goals,
measuring progress consistently, and leveraging the
economic benefits of sustainability, we are taking informed
steps to toward a better, more sustainable future for all.
This Sustainability Statement marks a significant step
forward, reflecting both the evolving regulatory landscape
and our dedication to creating positive change.
Jacob Meldgaard, CEO / Executive Director
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > GENERAL
TORM ANNUAL REPORT 2024
41
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
General Disclosures
BP-1
General Basis for Preparation of
the Sustainability Statement
Basis for TORM’s Sustainability Statement
TORM’s Sustainability Statement for the period 01 January
2024 to 31 December 2024 is adhering to the
requirements in the EU’s Corporate Sustainability Reporting
Directive (CSRD) and the European Sustainability Reporting
Standards (ESRS) issued by the European Financial
Reporting Advisory Group (EFRAG).
Scope of Consolidation
The consolidation of our data is guided by the same
principles as our financial statements. This means that the
consolidated, quantitative sustainability data covers the
parent company TORM Plc and subsidiaries controlled by
TORM Plc. Refer to Note 30 under the financial statements
for an overview of entities included.
The Marine Engineering segment consists of the legal
entities under the subsidiary Marine Exhaust Technology
A/S. We also use MET to refer to Marine Exhaust
Technology A/S and its legal entities.
Consolidation of all quantitative sustainability data follows
the principles above, unless otherwise specified in the
accounting policy.
Key Accounting Estimates and Judgements
We rely on assessments and estimates to report certain
data points, such as Scope 3 emissions and our transition
plan. These estimates and judgments are periodically
reviewed based on our experience, advancements in
sustainability reporting, and other factors. Any changes in
estimates are reflected in the period in which they are
updated.
Threshold for Restatements
For adjustments to sustainability data, we make a
judgement as to whether we should restate numbers. We
clearly indicate where we have restated data.
Scope Within Upstream and Downstream
Value Chain
Our Double Materiality Assessment (DMA) and reporting
cover TORM’s upstream and downstream value chains as
well as our material impacts, risks, and opportunities (IROs).
Omitted Information
The OPEX and CAPEX amounts required for the
implementation of the energy transition plan described in
E1-1 have not been disclosed (E1-3). This information is
deemed sensitive because it could potentially negatively
impact TORM’s bargaining power and negotiating position
related to purchasing and selling vessels.
No other information corresponding to intellectual property,
know-how, or the results of innovation have been omitted
from the Sustainability Statement.
TORM ANNUAL REPORT 2024
42
General
Disclosures
In this section, we provide general
information that sets the scene for the
disclosures of our Sustainability
Statement. We describe our preparations
and governance as well as the impacts,
risks, and opportunities found in our
materiality assessment. We have
included in this section our Non-Financial
and Sustainability Statement required by
the Companies Act 2006 as well as our
SASB disclosures.
ESRS 2
TORM has opted to make use of the phase-in allowance in
applicable situations.
BP-2
Disclosures in Relation to
Specific Circumstances
We have structured our sustainability disclosure differently
in the 2024 reporting period in order to be compliant with
the CSRD and ESRS reporting requirements introduced in
2023.
What we previously called our Responsibility Report has
been replaced by this Sustainability Statement, embedded
into our general sustainability information in our annual
reporting. Our Sustainability Statement includes our
material impacts, risks, and opportunities, as well as the
policies, actions, metrics, and targets established to
manage them.
Previously, TORM disclosed information for the TCFD
disclosure requirement. From 2024, the TCFD is not a UK
requirement. The TCFD content is still reported but as part
of the format of CSRD E1 Climate Change which also
includes CFD. For 2024, the segment Marine Engineering is
included where material.
The methodology for the AER reduction target and progress
has been updated to adjust for vessels that have not been
in the fleet for 12 months. For 2024, this change results in
an AER reduction of 40.0%, which would have been an AER
reduction of 40.1% if the entire fleet was included.
Reporting for Other Frameworks than the
ESRS
Our Sustainability Statement also includes information that
has been prepared in compliance with the following
frameworks and legislation:
•
§99a, §99c, §99d, §107a of the Danish Financial
Statements Act for Environmental Section, Social
Section, and Governance Section
•
CFD (Climate-related Financial Disclosure) page 67-74
•
SASB Marine Transportation page 58
•
EU Taxonomy page 83
•
Non-Financial and Sustainability Information Statement
page 57
Updating Disclosures About Events After the End of the
Reporting Period
Where relevant, some key information or material events
occurring on or after 01 January 2025, and up until the
publication date have been included in the Sustainability
Statement.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
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Governance
GOV-1
The Role of Administrative,
Management, and Supervisory
Bodies
Please see section ‘TORM’s Governance Structure’ on page
159-162 for an overview of the composition and diversity of
the Board of Directors and administrative management and
representation of employees and other workers.
TORM’s Board of Directors holds the responsibility for
sustainability matters, and they have delegated the
authority to the Executive Director and the Audit
Committee with regard to sustainability strategy and
performance. The Risk Committee oversees disruption
indicators related to clean petroleum products, including
climate-related risks. The Board of Directors receives
regular updates on sustainability from the Senior
Management Team.
TORM’s administrative, management, and supervisory
bodies, particularly the Board of Directors, bring a breadth
of governance experience from various industries through
their roles on other boards, previous job experience, and
sector knowledge. This experience provides valuable
insights into best practices, including oversight and
approval of ESG-related reporting. As this is TORM’s first
year of reporting on sustainability matters according to
CSRD, the Board of Directors has further built on their
expertise and their existing sufficient competences and will
continue to seek out more learnings in this area.
To support this transition, an external consulting firm has
been engaged to onboard the Board of Directors with
focused guidance on sustainability-related issues and
reporting requirements. This partnership ensures that
Board members have access to specialized knowledge and
resources, allowing TORM to effectively address
sustainability impacts, risks, and opportunities in alignment
with its strategic goals.
For more details about TORM's Governance
structure, see page 160
GOV-2
Information Provided to and
Sustainability Matters
Addressed by Our
Administrative, Management,
and Supervisory Bodies
Board of Directors
TORM’s Board of Directors oversees sustainability at
TORM. The Board of Directors considers the company’s
sustainability approach, our performance, and our material
impacts, risks and opportunities each year. This is done
through review and approval of the annual Sustainability
Statement as part of the annual report.
Senior Management Team
The Senior Management Team is responsible for
determining TORM’s objectives, including how we monitor
their progress. The Senior Management Team also oversees
the governing policies that address our material impacts,
risks, and opportunities. The entire Senior Management
Team is updated on the progress of CSRD reporting. Closer
involvement has been delegated to the Chief Financial
Officer (CFO) and Head of Technical Division who are
involved in the Governance Groups for all ESRS working
groups in order to support close management oversight.
The Executive Director reports to the Board of Directors on
sustainability matters central to TORM’s overall strategy
and business model.
The Senior Management Team executes the sustainability
strategy and also monitors material sustainability impacts,
risks, and opportunities (IRO). This includes setting targets
in relation to IROs, monitoring progress against these
targets, and overseeing policies and actions to address or
mitigate risks and negative or positive impacts. Examples of
targets, policies and actions can be found on the next page.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
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Examples of Targets, Policies, and Actions
TORM's 2030 Carbon Reduction Target (Absolute and
Intensity Reduction)
The Senior Management Team also approved our transition
plan to achieve our 2030 target and our net-zero target by
2050. In addition, The Senior Management Team has
reviewed and approved TORM's carbon intensity reduction
target to be 45% by 2030.
LTAF Target
At TORM, we use LTAF to measure safety performance. For
information on the LTAF measurement, please see the
Accounting Policy for Social.
The Senior Management Team has reviewed and approved
TORM’s LTAF target to be ≤0.3 by 2030.
TORM prioritizes health and safety of our employees and
contractors. As such, TORM works continuously to
minimize our LTAF, which is also embedded in our One
TORM KPIs, which form part of remuneration for all office-
based permanent employees.
Target for SOx, NOx, and PM
The Senior Management Team has approved TORM's target
to reduce SOx, NOx, PM2.5 and PM10 emissions by 8% by
2030 from all of TORM’s operations, using 2024 as a
baseline.
Anti-Bribery and Anti-Corruption Policy and Target Approval
Our policy is to keep all directors, officers, and employees,
vessel-based, office-based, and production workers, fully
informed of the contents of applicable bribery and
corruption law to assist them in complying. The compliance
system is intended to enable TORM to act in all relevant
markets, without being exposed to business interruption or
losses due to legal investigations or litigation which could
affect us negatively.
TORM’s Management has reviewed and approved TORM’s
updated anti-bribery and anti-corruption policy. In 2024,
TORM’s Management also approved a new target to have
100% of identified cases of corruption and/or bribery,
including attempts, reported to the MACN.
See more details about our anti-bribery and anti-
corruption policy in the G1 section under G1-3
The Board of Directors also has committees with
responsibilities for sustainability:
Risk Committee
The Risk Committee is responsible for the oversight of
TORM’s climate related risks. See more in the Risk
Committee Report Section.
Audit Committee
The Audit Committee is responsible for oversight of the
reporting process for the Sustainability Statement,
controls, and data quality. Additionally, the Audit
Committee is charged with risk assessment and
management related to reporting, monitoring internal
controls, and reviewing the double materiality assessment.
GOV-3
Integration of Sustainability-
Related Performance in
Incentive Schemes
TORM incorporates climate-related considerations and
health and safety considerations into the remuneration of
office-based employees, including administrative
management. All permanent office-based employees have
a CO2 reduction KPI weighted at 12%.
For further details refer to E1 incentive scheme on
page 62
GOV-4
Statement on Due Diligence
The following table provides a mapping of how TORM
applies the core elements of due diligence for people and
the environment and where they are presented in this
Sustainability Statement.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
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GOV-5
Risk Management and Internal
Controls over Sustainability
Reporting
At TORM, we have established internal controls over
sustainability reporting and adopted a systematic approach
to risk management to mitigate potential risks due to
human error or incomplete data. As 2024 is the first year of
CSRD reporting at TORM, the control environment for
sustainability data is not yet at the maturity level of our
financial reporting.
Our risk management process follows a structured risk
prioritization methodology, aimed at minimizing reporting
errors. A centralized database oversees data collection
from all business units, supporting consistency and
accuracy in the reporting process. This database enables
TORM’s ESG Controlling team to verify data inputs and
identify and address any inconsistencies or errors.
Accounting principles based on ESRS requirements have
been adopted for sustainability data presented in the
Sustainability Statement. TORM’s external auditor provides
an independent auditor’s report with limited assurance on
the CSRD reporting. Please see the Independent auditor’s
report for more information on page 265.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
46
Core elements of due diligence
Related Legislation
Does the disclosure relate to people and/or the
environment
a) Embedding due diligence in governance,
strategy and business model
ESRS 2 GOV-1
Roles of Administrative, Management and
Supervisory Bodies
ESRS 2 GOV-2
Information Provided to Administrative,
Management and Supervisory Bodies
ESRS 2 GOV-3
Integration of Sustainability Related Performance
in Incentive Schemes
ESRS 2 SBM-1
Strategy, Business Model and Value Chain
ESRS 2 SBM-3
Material Impacts, Risks and Opportunities and
Their Interaction with Strategy and Business
Model
b) Engaging with affected stakeholders
ESRS 2 SBM-2
Interests and Views of Stakeholders
ESRS 2 IRO-1
Double Materiality Assessment Process
ESRS 2 IRO-2
Materiality Matrix
E1-2, E2-1, E4-2,
S1-1, S2-1, G1-1
Policies for Climate Change, Pollution,
Biodiversity, Own Workforce, Workers in Value
Chain, Governance
S1-2, S1-3, S2-2,
S2-3
Engagement Process with Own Workforce and
Workers in Value Chain
c) Identifying and assessing adverse impacts
ESRS 2 SBM-3
Material Impacts, Risks and Opportunities and
Their Interaction with Strategy and Business
Model
d) Taking actions to address adverse impacts
E1-1
Transition Plan
E1-3, E2-2, E4-3,
S1-4, S2-4, G1-2,
G1-3
Actions for Climate Change, Pollution,
Biodiversity, Own Workforce, Workers in Value
Chain, Governance
e) Tracking effectiveness of due diligence efforts and
communicating
E1-4, E2-3, E4-4,
S1-5, S2-5, G1
Targets Related to Climate Change, Pollution,
Biodiversity, Own Workforce, Workers in Value
Chain, Governance
E1, E2-4, E4,
S1-6,S1-9,S1-14,S1-1
6, S1-17, S2-, G1-4,
G1-6
Metrics Related to Climate Change, Pollution,
Biodiversity, Own Workforce, Workers in Value
Chain, Governance
SASB
SASB Tables
EU Taxonomy
EU Taxonomy Tables
Strategy
SBM-1
Strategy, Business Model, and
Value Chain
Parts of the TORM Strategy that Relate to
Sustainability, the Business Model, and the
Value Chain
We are a leading, global carrier in the product tanker
market, specializing in the transportation of refined oil
products, including but not limited to gasoline, diesel, and
jet fuel.
TORM primarily serves the global refined oil products
market, focusing on regions with high demand for the
transportation of clean petroleum products. Key customer
groups include oil majors and commodity trading firms.
We have employees spread across different locations, and
the distribution can be seen in the table.
Number of employees by geographical area
Headcount
Office-based employees
Denmark
179
India
196
Philippines
43
Singapore
13
United Arab Emirates
2
United Kingdom
12
United States of America
12
China
22
Total office-based employees
479
Production workers
China
24
Denmark
17
Total production workers
41
Seafarers
Americas
4
Europe
370
India Subcontinent
1,518
Southeast Asia
1,783
Other
2
Total Seafarers
3,677
Total
4,197
Revenue Breakdown
The following table provides a breakdown of TORM’s
revenue by ESRS sector. This information has been
reconciled with the segment reporting as required by IFRS 8
Operating Segments. Refer to Note 3 on page 211.
ESRS sector - NACE code
Total revenue
in USDm
H.50.2 Sea and Coastal freight water transport
1,544.0
C. 28 Manufacturing and production
29.6
Inter-segment eliminations
-14.4
Consolidated revenue including eliminations
1,559.2
Refer to Note 3 - Segment income statement for revenue used for the
calculation.
TORM focuses primarily on transporting refined oil products
from refineries to onshore distributors. In addition, some of
TORM’s vessels transport crude oil and chemical.
TORM does not engage in exploration, extraction, refining,
or production of fossil fuels but specializes in the
transportation and distribution across global markets.
At TORM, we engage in ongoing dialog with key
stakeholders on concrete actions to improve sustainability
and increase transparency in reporting. TORM has concrete
2030 and 2050 GHG reduction targets, of which we
continuously monitor progress to support our focus on a
greener future.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
47
For further details of our strategy and challenges ahead,
refer to the Strategy Section on page 63 and E1 transition
plan and climate related risks on page 67.
Sustainability Strategy and Integration
At TORM, sustainability is an important aspect of our
strategy, aligning our organization with international
regulations such as EU frameworks and the IMO’s
decarbonization targets. Reducing CO2 emissions is not
only a sustainability priority but also a key part of managing
fuel costs. By focusing on lowering emissions through fuel
efficiency, route optimization, and digital tools within the
One TORM platform, we aim to balance environmental
responsibility with operational cost-effectiveness. This
approach helps us remain compliant with regulations while
contributing to a more sustainable shipping industry.
Business Model, One TORM Platform, and Marine
Engineering
Our vision at TORM is to be the reference company in the
transportation industry. This is elaborated in the Strategy
Section on page 10. This vision guides our key strategic
decisions in combination with our target of net-zero GHG
emissions in 2050.
Through the One TORM platform, we ensure that
sustainability objectives for a greener future and strong
safety culture are consistently met across our fleet
operations.
For details about the One TORM platform, refer to
this Annual Report's Strategy Section on pages 10
and 15
This integrated approach allows our teams to work
collaboratively toward the same goals, promoting both
environmental responsibility and operational excellence.
As part of TORM’s commitment to sustainability and
innovation, we invested in subsidiary Marine Exhaust
Technology (MET) in 2022, which is our Marine Engineering
segment. With MET, we drive development of advanced
technologies to enhance our environmental performance,
including gas cleaning solutions, waste heat recovery
systems, and other carbon emission-reducing innovations.
MET is a part of TORM’s value chain.
Value Chain Inputs
We continuously track the availability of required inputs
including fuel, raw materials such as steel, and electricity
which are used in various processes. We utilize financial
capital for short and long-term financing of operations.
Value Chain Outputs and Stakeholder Outcomes
TORM’s services enable safe, reliable transport of refined
products, benefiting customers, investors, and
communities. For investors, TORM’s operational efficiency
and sustainability initiatives support consistent returns and
improved energy efficiency.
MET’s services create products which either lower
customers' SOx emissions to the air or lower CO2 emissions
of a vessel using the heat pumps produced.
Value Chain Illustration
On the following page, you can see more details about the
value chains for TORM. Here, we show our inputs,
operations, and outputs, and when these involve which
stakeholders, as well as where the impacts described in this
Sustainability Statement belong.
For information about the oil transportation value
chain from exploration to end users, see page 8
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
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TORM’s Value Chain
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
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SBM-2 Interests and Views of
Stakeholders
How Stakeholder Views Inform our Strategy
and Business Model
Working in close collaboration with our customers and
stakeholders is a focus for TORM and is key to delivering on
our ambitious climate targets. Throughout the year,
specialists across TORM interact with our stakeholders to
ensure an open dialog.
We have defined our key stakeholders as customers and
business partners, employees, banks and other lenders,
investors, value chain workers, suppliers and industry
association and regulators.
Ongoing engagement with our key stakeholders mainly
takes place as part of daily activities and communication.
The following table discloses how we engage with our key
stakeholders, the purpose of those engagements, and their
outcome. The views of stakeholders inform our due
diligence process and the materiality assessment, which is
described in more detail in IRO-1.
TORM’s Response to Stakeholder Interests and Strategic
Alignment
Through TORM’s double materiality assessment and
ongoing stakeholder engagement, CO₂ reduction has been
identified as a key focus from our stakeholders.This priority
directly aligns with TORM’s already established strategy to
focus on a greener future, with an emphasis on CO₂
reduction to achieve cost efficiency and operational
sustainability.
The key conclusions from our ongoing stakeholder
conversations are regularly shared and discussed with our
Board of Directors. We plan to continuously develop our
stakeholder engagement.
Stakeholder
Engagement
Engagement and Purpose
Outcome
Shareholders and
lenders
Ongoing dialog as well as requirements for specific loan
agreements and investments in TORM
•
Reducing CO2 emissions
•
Strong governance and compliance
•
Safe operations
Employees
Engagement surveys, training, performance reviews, leadership
communication, whistleblower setup, and employee
representatives
•
Health and safety performance and safe
operations
•
Diversity to attract talents
Customers and
business partners
Open dialog and various channels such as tenders, projects,
industry associations, and initiatives
•
Reducing CO2 emissions
•
Strong Governance and compliance
•
Safe operations
Suppliers
On a daily operational basis and via contracts
•
Adherence to TORM's Business Principles
•
Strong governance and compliance
Environment and
industry
association and
regulators
TORM is a member of several industry trade organizations, and
we actively engage with regulators on ESG-related matters
that include decarbonizing and awareness of impacts among
others1
•
Reducing CO2 emissions
•
Pollution of air (SOx, NOx, and PM)
•
Biodiversity (noise pollution and
introduction of alien species)
•
Safe operations for the workers in the
value chain
1) For further details refer to the Engagement and Decision-Making section under Governance
SBM-3 Material Impacts, Risks, and
Opportunities and Their
Interaction with Strategy and
Business Model
The material impacts, risks, and opportunities identified
during the double materiality assessment are described and
presented below alongside the topical standards E1 Climate
Change, E2 Pollution, E4 Biodiversity, S1 Own workforce,
S2 Workers in the Value Chain, and G1 Business Conduct in
this Sustainability Statement.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
TORM ANNUAL REPORT 2024
50
Impacts, Risks, and Opportunities
Location in value chain
Time horizon
E1 Climate Change
Impact, Risk or
Opportunity
Own
Operations
Value
chain
Short term
Medium
term
Long term
Climate Change Adaption
Pollution from GHG to the environment could cause damages to assets due to potential extreme weather
events. Worst case could result in oil leaks due to damages.
Potential negative impact
●
●
Climate Change Mitigation
TORM’s GHG emissions and value chain activities contribute to climate change.
Actual negative impact
●
●
●
●
●
Energy Consumption
Consumption of fuels in the fleet generates GHG emissions which impact the environment.
Actual negative impact
●
●
Location in value chain
Time horizon
E2 Pollution
Impact, Risk or
Opportunity
Own
Operations
Value
chain
Short term
Medium
term
Long term
Pollution to Air
Air emissions incl. pollutants that have negative impacts on air quality and ecosystems, incl. human and animal
health. Release of SOx, NOx, and PM (PM 2.5 and PM10) contribute to global warming, air pollution, affecting
human health and the environment when combusting fossil fuels while operating a vessel.
Actual negative impact
●
●
Pollution to Water
Spills to the water could pollute the water and harm marine life.
Potential negative impact
●
●
●
●
Location in value chain
Time horizon
E4 Biodiversity
Impact, Risk or
Opportunity
Own
Operations
Value
chain
Short term
Medium
term
Long term
Impact on Stage of Species – Ballast Water
Invasive species introduction: Ballast water discharge from ships can transport invasive species to new
environments, where they can outcompete native species, disrupt food webs, and alter ecosystem dynamics.
Invasive species introductions can have profound ecological and economic impacts, leading to the decline of
native species, changes in species distributions, and increased vulnerability to other threats such as disease and
habitat degradation.
Potential negative impact
●
●
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S1 Own Workforce
Location in value
chain
Time horizon
Category of employees
Impact, Risk,
or Opportunity
Own
Operations
Value
chain
Short
term
Medium
term
Long term
Office-
based
Production
workers
Seafarers
Adequate Wages
In the case that TORM employees do not receive adequate wages, this could have an
impact on the employee affected as well as general levels of engagement and motivation
across the company.
Potential
negative
impact
●
●
●
Health and Safety
Operating vessels entails an inherent risk to health and safety. In the case that proper
training and safety procedures are not in place for operating a vessel or handling cargo,
there is a risk to health and safety of employees.
Actual
negative
impact
●
●
●
●
Diversity
The maritime industry has historically been a male-dominated industry. In the case that
TORM does not address the topics of diversity, equity, inclusion, and belonging, this could
have a negative impact on our employer branding and ability to attract new talent.
Actual
negative
impact
●
●
●
●
●
Harassment
In the maritime industry, employees live together on board vessels for up to months at a
time. In the case that TORM does not have measures against harassment, we would risk a
hostile work environment with a potential impact on employee well-being and company
reputation.
Actual
negative
impact
●
●
●
●
●
Equal Treatment
Diversity in the workforce is believed to help provide a balance of voices and thought that
inspires innovation and creativity. In terms of equal treatment, TORM focuses on equal pay
in the Annual Report. In the case that TORM fails to provide equal treatment and equal pay
to employees, we risk a negative impact on employer branding and company reputation.
Actual
negative
impact
●
●
●
Location in value
chain
Time horizon
S2 Workers in the Value Chain
Impact, Risk,
or Opportunity
Own
Operations
Value
chain
Short
term
Medium
term
Long term
Health and Safety
There is an inherent risk when maintaining a vessel (eg. in dry dock) where working
conditions can be dangerous and lead to accidents if proper training and safety procedures
are not in place.
Potential
negative
impact
●
●
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Location in value chain
Time horizon
G1 Business Conduct
Impact, Risk or
Opportunity
Own
Operation
s
Value
chain
Short
term
Medium
term
Long term
Corporate Culture
A company’s senior leadership influences corporate culture and guides the rest of the workforce in relation to the
organization’s core values, operating procedures, and practices. If the corporate culture fails to promote compliance and
governance, this could have a negative impact.
Potential
negative impact
●
●
Protection of Whistleblowers
In the case that whistleblowers are not protected in a proper setup, this could have a negative impact on TORM’s
reputation.
Potential
negative impact
●
●
Corruption and Bribery
The global maritime industry is vulnerable to corruption and bribery. Without proper measures against corruption and
bribery, there is a risk of negative impact to reputation.
Potential
negative impact
●
●
●
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Impact, Risk, and
Opportunity Management
IRO-1
Description of the Process to
Identify and Assess Material
Impacts, Risks, and
Opportunities
TORM regularly conducts materiality assessments to
review our sustainability issues with the greatest
significance and ensure that our sustainability strategy
remains relevant.
This assessment is typically informed by interactions with
internal and external stakeholders via workshops,
interviews, and questionnaires to fully capture material
sustainability impacts, risks, and opportunities. For each
identified topic, a governance group has been established in
order to perform a deep dive of the assessment. In each
governance group, the CFO and Head of Technical Division
are present for oversight of the progress and outcome. The
materiality assessment is validated by TORM's Senior
Management Team, the Audit Committee, and the Board of
Directors.
During 2023, TORM initiated activities to align with the EU
Corporate Sustainability Reporting Directive (CSRD) to be
able to publish a compliant Sustainability Statement in our
2024 Annual Report. The European Sustainability
Reporting Standards (ESRS), which are part of CSRD
regulations, mandate that a Double Materiality Assessment
(DMA) must be carried out to identify sustainability topics
on which to report. TORM has performed such an
assessment of sustainability impacts as well as financial
risks and opportunities as required by ESRS, and this largely
confirms that the focus areas of the current sustainability
strategy are material topics. In addition, new material
topics have been identified and will be analyzed in more
detail.
We have chosen to separate vessel-based employees,
production workers, and office-based employees in our
description of impacts, risks, and opportunities (IROs). This
is due to the fundamentally different circumstances under
which our employees work. Vessel-based employees and
production workers face more risks and danger associated
with maritime and production operations, which
necessitates distinct reporting to accurately reflect their
unique challenges. This differentiation allows for a more
focused approach to address the specific safety, well-
being, and operational needs of vessel-based employees
compared to those working in an office environment.
The DMA is reviewed annually. We anticipate to update the
DMA as we gain more data and knowledge regarding certain
IROs. In this process, we consider changes in the factors
and inputs that we evaluated during the previous year.
Scoring System and Thresholds
For the impact assessment, we used the scoring system to
evaluate the scale, scope, and irremediable character
(collectively referred to as severity), as well as the likelihood
of all sustainability matters. In terms of financial
materiality, the scoring system assessed both the likelihood
and potential magnitude of financial effects arising from a
sustainability matter. In our DMA, we considered the topics
outlined in regulation ESRS 1 and other relevant subjects
when assessing IROs.
Thresholds were established for both financial assessments
and impact assessments. The financial thresholds were
applied during the DMA process to evaluate financial risks
and opportunities. This ensured alignment with how risks
are typically assessed regarding financial performance in
our ERM process. For the impact assessment, we applied
internally developed thresholds, drawing inspiration from
advisors. For severe human rights impacts, a lower
threshold was used. These thresholds were instrumental in
evaluating and identifying impacts to meet the needs of our
stakeholders, including the readers of our Sustainability
Statement.
IRO-2
Disclosure Requirements in
ESRS Covered by the
Undertaking’s Sustainability
Statement
Compliance with the Disclosure Requirements
in Our Sustainability Statement
Disclosures related to ESRS 2 IRO-2 can be found in the
illustration. See TORM’s materiality matrix on next page.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ESRS 2 GENERAL DISCLOSURES
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Materiality Matrix
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55
ESRS 2 IRO-1 Description of the
Processes to Identify and
Assess Material Water and
Marine Resources Related
Impacts, Risks, and
Opportunities
At TORM, we have determined that water and marine
resources-related impacts, risks, and opportunities are
deemed out of scope based on our materiality assessment.
This determination is based on the following considerations:
Screening has been conducted as part of the compliance
process for ISO 14001. Internal workshops with Vice
Presidents (VPs) and Heads of Departments were held to
discuss potential impacts, risks, and opportunities in this
area. Additionally, peer discussions and network sessions
within the shipping industry confirmed that water and
marine resources-related considerations are generally not
deemed material for similar organizations. An external
consultancy firm was engaged to review and verify the
outcome of this assessment, further validating the
conclusion that this topic is not material to the company’s
operations or value chain. Furthermore, no external
stakeholders have identified or verified this topic as
material for the company. As a result, no methodologies,
assumptions, or tools were employed for water and marine-
related screenings.
No dedicated consultations with affected communities
were conducted specifically for water and marine
resources-related impacts. This approach is consistent with
the findings from internal workshops, peer discussions, and
verification by the external consultancy, all of which
concluded that this topic is not material.
TORM remains committed to transparency and continuous
evaluation. We will continue monitoring regulatory and
industry developments and, if new evidence or stakeholder
feedback indicates the material relevance of water and
marine resources-related impacts, risks, or opportunities,
we will revisit our assessment and processes.
ESRS 2 IRO-1 Description of the
Processes to Identify and
Assess Material Resource Use
and Circular Economy-Related
Impacts, Risks, and
Opportunities
At TORM, we have assessed our potential impacts, risks,
and opportunities related to resource use and circular
economy, and we have determined that this topic is not
material to our operations. The shipping industry operates
under a heavily regulated framework, including strict
international and regional standards governing resource
use, waste management, and environmental protection. As
such, the company’s operations already comply with these
regulations, minimizing significant risks or impacts in this
area.
Ship recycling is an important aspect of our governance and
business conduct. For more details, please see TORM’s
policies under G1-1. TORM has not scrapped any vessels
and maintains stringent policies in accordance with the
Hong Kong Convention when it comes to selling a vessel.
Although this topic is not considered material in relation to
the E5 circular economy, as we have not engaged in vessel
scrapping, it is managed under our G1 Business Conduct
framework.
A screening was conducted as part of the compliance
process for our ISO 14001 certification. The below is an
overview of this screening.
Methodology: Identification and evaluation of
environmental aspects related to resource inflows
(generally fuel and materials), outflows (generally emissions
and waste), and waste management practices. The scope
of the screening covered the company’s own operations.
Tools and assumptions: Standard ISO 14001 methodologies
and compliance tools were used, aligned with the
requirements of international shipping regulations, such as
the International Maritime Organization (IMO) conventions.
No specific consultations with affected communities or
external stakeholders were conducted on this topic, as the
screening did not indicate material impacts, risks, or
opportunities requiring further engagement.
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56
Non-Financial and Sustainability
Information Statement
The following table constitutes our Non-Financial and Sustainability Information Statement in
compliance with sections 414CA and 414CB of the Companies Act 2006. The information listed is
incorporated by cross-reference. Additional Non-Financial Information is also available on our website.
Reporting
Requirement
Policies
Further Information
Page
Environmental
Matters
TORM's Business Principles
Climate Change Strategy
63, 67,75,
77, 82
Green Ship Recycling Policy
Climate Risks and Opportunities analysis and
Resilience analysis of business model
67-74
Environmental Protection Policy
EU Taxonomy
84
SASB Tables
58
Metrics and Targets Related to Climate Change
77 - 79
Pollution
88
Biodiversity
92
Employees
TORM's Business Principles
Material Impact Assessments for Own
Workforce
106
Whistleblower Charter
Human Rights
108,136
Anti-bribery and Anti-Corruption
Policy
Accident Prevention
109,112,
136
Health, Safety, and Security
Policy
Discrimination and Inclusion
109-112,
136
Diversity, Equity, Inclusion and
Belonging
Engagement Process with Own Workforce
110
Employee handbook
114
Anti-Discrimination and
Harassment Policy
Workers in Value Chain
123
Anti-Fraud Policy
Business Conduct Policies and Corporate
Culture
135
Modern Slavery Statement
Anti Bribery
142
Whistleblower
141
Respect for Human
Rights
TORM's Business Principles
Policies and Actions Related to Own Workforce
108 - 113
Whistleblower Charter
Policies and Actions Related to Workers in
Value Chain
124-126
Responsible Procurement Policy
Targets for Workers in Value Chain
127
Modern Slavery Statement
Engagement with Suppliers
142
Reporting
Requirement
Policies
Further Information
Page
Social Matters
TORM's Business Principles
Material Impact Assessments for Own
Workforce
106
Whistleblower Charter
Material Impact Assessments for Workers in
Value Chain
123
Anti-Discrimination and
Harassment Policy
Policies and Actions Related to Human Right
108,136
Anti-Fraud Policy
Engagement with Suppliers
142
Modern Slavery Statement
Targets for Workers in Value Chain
127
Responsible Procurement Policy
Anti-Corruption and
Anti-Bribery
TORM's Business Principles
Business Conduct Policies and Corporate
Culture
135
TORM's Policy on Anti-Corruption
and Anti-Bribery
Prevention and Detection of Corruption and
Bribery
142
Responsible Procurement Policy
Engagement with Suppliers
142
Whistleblower Charter
Anti-Corruption and Bribery Training
144
Description of
Principal Risks and
Impact of Business
Activity
Business Model to Material Impacts
47 - 53
Description of the
Business Model
Business Model
47
Non-Financial Key
Performance
Indicators
ESG Targets
4
SASB Tables
47
Metrics and Targets for Climate Change
77
Metrics and Targets for Pollution
90
Metrics and Targets for Biodiversity
92
Metrics and Targets for Own Workforce
114
Metrics and Targets for Workers in Value Chain
127
Metrics and Targets for Governance
144
Climate-Related
Financial Disclosures
Resilience Analysis
67
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SASB Marine Transportation
Industry Standard
Topic
Accounting metric
Unit
2024
2023
2022
Code
Greenhouse
Gas¹
Gross global Scope 1 emissions²
Metric tons (t) CO₂e
1,594,793
1,558,254
1,363,076
TR-MT-110a.1
Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions,
emissions reduction targets, and an analysis of performance against those targets
See pages
17-19, 24-25,
28-29, 32-37
See pages
15-17, 19,
22-27, 30-33
in AR 22
See pages
22-27, 34, 40
in AR 21
TR-MT-110a.2
1) Total energy consumed
Terajoules (TJ)³
22,390
20,791
19,265
TR-MT-110a.3
2) Percentage heavy fuel oil
Percentage (%)
60
60
53
TR-MT-110a.3
3) Percentage renewable
Percentage (%)
0
0
0
TR-MT-110a.3
Average Energy Efficiency Design Index (EEDI) for new vessels⁴
Grams of CO₂ per ton-
nautical mile
4.3
4.3
3.0
TR-MT-110a.4
Air quality⁵
Air emissions of the following pollutants:
1) NOₓ (excluding N₂O)
Metric tons (t)
35,782
N/A⁶
N/A⁶
TR-MT-120a.1
2) SOₓ
Metric tons (t)
1,830
1,322
1,785
TR-MT-120a.1
3) Particulate matter (PM10)
Metric tons (t)
3,429
N/A⁶
N/A⁶
TR-MT-120a.1
Ecological
impacts
Shipping duration in marine protected areas or areas of protected conservation status ⁷ ⁸
Number of travel days
570
654
N/A⁶
TR-MT-160a.1
Percentage of fleet implementing ballast water: 1) exchange⁷
Percentage (%)
— %
— %
12 %
TR-MT-160a.2
Percentage of fleet implementing ballast water: 2) treatment⁷
Percentage (%)
100 %
100 %
88 %
TR-MT-160a.2
Number of spills and releases to the environment ⁵ ⁹
Number
0
0
0
TR-MT-160a.3
Aggregate volume of spills and releases to the environment ⁵ ⁹
Cubic meters (M3)
0
0
0
TR-MT-160a.3
¹ Refer to Accounting Policy Section for E1.
2 Refer to Scope 1 Greenhouse Gas emission in Accounting Policy for E1.
³ The unit was updated from gigajoules to terajoules.
⁴ TORM reports EEXI number corresponding to EEDI for new vessels as TORM has vessels that are built prior to 2013.
⁵ Refer to Accounting Policy Section for E2.
⁶ TORM does not report this number.
⁷ Refer to Accounting Policy Section for E4.
⁸ Definition of shipping duration in marine protected areas or areas of protected conservation status has been changed during 2024 to be consistent with the SASB definition. Refer to Accounting Policy Section for E4.
⁹ Spills include both oil and chemical spills.
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TORM ANNUAL REPORT 2024
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Topic
Accounting metric
Unit
2024
2023
2022
Code
Employee
Health &
Safety¹
Lost Time Incident Rate (LTIR)
Per million exposure
hours
0.42
0.32
0.42
TR-MT-320a.1
Business
ethics²
Number of calls at ports in countries that have the 20 lowest rankings in Transparency
International's Corruption Perception Index
Number
9
15
18
TR-MT-510a.1
Total amount of monetary losses as a result of legal proceedings associated with bribery
or corruption³
USD
0
0
0
TR-MT-510a.2
Accident &
Safety
Management¹
Number of marine casualties
Number
0
1
1
TR-MT-540a.1
Percentage classified as very serious
Percentage (%)
0
0
0
TR-MT-540a.1
Number of Conditions of Class or Recommendations
Number
8
9
3
TR-MT-540a.2
Number of port state control: 1) deficiencies
Ratio
0.65
0.63
0.71
TR-MT-540a.3
Number of port state control: 2) detentions
Ratio
0.00
0.00
0.01
TR-MT-540a.3
Activity
metrics
Number of shipboard employees
Headcount
3,677
3,271
3,218
TR-MT-000.A
Total distance travelled by vessels
Nautical miles (nm)
5,306,958
4,971,501
4,568,294
TR-MT-000.B
Operating days
Days
32,855
30,605
29,610
TR-MT-000.C
Deadweight tonnage
Thousand deadweight
tons
6,284
5,212
5,034
TR-MT-000.D
Number of vessels in total shipping fleet (as of 31 December)
Number
94
82
78
TR-MT-000.E
Number of vessel port calls
Number
2,664
2,464
2,428
TR-MT-000.F
Twenty-foot equivalent unit (TEU) capacity
TEU
N/A⁴
N/A⁴
N/A⁴
TR-MT-000.G
¹ Refer to Accounting Policy for S1. TORM reports LTAF/LTIF instead of LTIR.
² Refer to Accounting Policy for G1.
³ Refer to Accounting Policy for G1. TORM reports Amount of Fines for Violation of Anti-Corruption and Anti-Bribery Laws.
4 TORM does not report this number due to we do not transport containers.
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TORM ANNUAL REPORT 2024
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Environment
Introduction
61
E1 Climate Change
62
EU Taxonomy Reporting
83
E2 Pollution
88
E4 Biodiversity & Ecosystems
92
Accounting Policies
98
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E
Introduction
Decarbonization Journey
TORM is committed to people, including our employees and
their communities, which makes it essential that we
commit to the environment for future generations.
With a fast forward approach, TORM has already achieved
our 2025 carbon intensity reduction target of 40%, one
year ahead of our own goal and six years ahead of the 2030
goal put forth by the International Maritime Organization
(IMO). By 2030, TORM expects to reach a 45% reduction
compared to the IMO’s 2008 baseline.
TORM prioritizes making reductions in our carbon footprint
today, and not only in the long term. We want to ensure
that we are making strides in our progress to continuously
reduce emissions, while at the same time, we pursue
innovation by developing and testing new technologies.
Reducing greenhouse gas emissions today provides TORM
with commercial benefits and synergies.
Our ability to achieve our targets depends on many factors,
not all of which are under our control. But we maintain our
commitment to leverage technological innovation, industry
collaboration, and our One TORM platform to make the
greatest impact within our power. We set a target to have
net-zero GHG emissions by 2050.
Our People Lead the Way
Technical projects and innovation can only provide energy
efficiencies if the people operating the vessels on board and
managing operations from offices can perform their jobs in
the optimal manner.
For this reason, we focus heavily on the operational
behavior of our teams in-office and at sea to achieve the
most impact possible in our energy efficiency initiatives.
At TORM, we ensure our people are up to date on training,
and we strive for all teams to know about new and
upcoming technologies along with the company’s
strategies for their utilization. We acknowledge that
technology is part of our strategy to pursue innovation, but
ultimately, our people lead the way.
Industry Collaborations
To harness momentum and synergies, TORM continues to
be an active contributor in several industry collaborations.
This involves active participation in Danish Shipping
through which TORM aims to impact the decision-making in
IMO in relation to ongoing discussions on the
implementation of CO2-related regulations.
Again in 2024, TORM supported and engaged in the Mærsk
McKinney Møller Center for Zero Carbon Shipping as a
Mission Ambassador to research ways to grow in a more
operationally, commercially, and sustainably viable way.
TORM also continues work with the innovation partnership
ShippingLab, (a non-profit platform for maritime research),
for development and innovation with 30 partners from
across the maritime industry.
We reconfirm our participation in the Getting to Zero
Coalition, a collaboration between the Global Maritime
Forum and the World Economic Forum.
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STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E1
Governance
GOV-3
Integration of Sustainability-
Related Performance in
Incentives Schemes
Factoring Climate-Related Considerations Into
TORM's Remuneration
TORM incorporates climate-related considerations into the
remuneration of office-based employees, including
administrative management. All permanent office-based
employees have a CO2 reduction KPI weighted at 12%.
This KPI, based on the AER (Annual Efficiency Ratio)
methodology, uses an intensity target rather than an
absolute target and is applied to TORM's office-based
employees, excluding subsidiaries. The Non-Executive
Directors of the Board receive a fixed fee that is not tied to
CO2 performance.
TORM ANNUAL REPORT 2024
62
Climate
Change
In the E1 Climate Change section, the
focus of the disclosure revolves around
our transition plan for climate change
mitigation. Here, we lay out all details
related to impacts, risks, and
opportunities in a set of bespoke
scenarios for the future. The section also
touches on climate change governance
as well as our metrics and targets, which
have been expanded in 2024 for
increased transparency and
accountability. We have included our EU
Taxonomy Reporting in this section.
E1
Strategy
E1-1
Transition Plan for Climate
Change Mitigation
Transition Plan for Climate Change Mitigation
TORM supports the transition towards net-zero carbon
emissions by 2050. Our commitment towards net-zero is
aligned with the IMO strategy and the goals of the Paris
Agreement. As part of our carbon reduction efforts at
TORM to have net-zero GHG emissions by 2050, we have
developed an energy transition plan.
Our transition plan is based on IMO targets and what is
deemed most relevant for TORM’s business and the
industry in which we operate. This means that the transition
plan is centered around our CO2 intensity target instead of
our absolute GHG emission targets and primarily for this
reason the current transition plan is not yet fully aligned
with CSRD requirements. TORM is committed to enhancing
our approach to ensure compliance and transparency
before 2028.
This plan helps our organization to continuously assess the
required effort and likelihood of reaching our ambitious
2030 and 2050 CO2 intensity reduction targets and
absolute GHG targets for Scope 1, Scope 2, and Scope 3.
Read more about our targets in E1-4
At TORM, we have used the following key assumptions to
develop our Energy Transition Plan:
•
The starting point in the transition plan is based on our
current fleet.
•
Throughout the period towards 2050, we assume a
constant fleet size based on our fleet today.
•
Vessels are assumed to be divested at similar vessel
ages as done historically.
•
New second-hand vessels are assumed to be the same
size as divested vessels in terms of DWT.
•
All second-hand vessels are assumed to have energy
efficiency technologies installed.
•
From 2035, all replacement vessels in the fleet are
assumed to be zero emission vessels.
•
Vessel speed and trading pattern is assumed to be
similar to 2022-2023.
Short-term and medium-term towards 2030, the energy
transition plan is dependent on known technologies and
TORM reaping the continued benefits of the energy
efficiency projects, which are rolled out across our fleet.
TORM has already identified a list of potential projects to
help us reach our 2030 CO2 target. The energy transition
plan towards 2050 is dependent on the development and
inclusion of zero emission vessels from 2035 and onwards
in order to reach our zero emissions target by 2050. TORM
is monitoring the technological developments and will
update the plan if the assumptions do not materialize as
expected.
It is important for TORM to not just set an ambitious target
for the future, but to help lower global carbon emissions
now and improve the sustainability of the TORM fleet today.
In our energy transition plan, we have only included known
technologies in the assessment of reaching our 2030 CO2
intensity reduction target. This means that there is a
potential upside if new technologies continue to be
developed and show commercial viability.
As carbon reduction is not a static process, additional
energy efficiency initiatives are also evaluated on a
continuous basis throughout the year. All approved energy
efficiency initiatives have had a positive business case both
in terms of expected financial performance and a further
reducing in our global carbon footprint is expected. TORM
remains confident that we will reach our 2030 CO2
intensity reduction target based on our current progress
and the upcoming funded initiatives that we have identified.
As stated above, all identified initiatives are technologies
known to us, meaning that implementation risk is
significantly reduced.
TORM has set an ambitious GHG reduction target for 2050
with net-zero GHG emissions. It will be challenging to
achieve but we will work towards this with a structured
approach, dedication, ingenuity, and industry-wide
collaboration. Our energy transition plan towards 2050 is
an important tool in this approach.
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One main challenge in the tanker industry for reaching net-
zero emissions is establishing the required global
infrastructure to ensure sufficient global availability of
green fuels. This is a more prominent challenge in the
tanker segment as transport of cargoes is not done through
established trading routes and solely major ports. Our ability
to reach net-zero carbon emissions will be contingent on
required infrastructure and global availability of green fuels
in smaller ports.
Global industry collaboration is needed in order to deliver on
the infrastructure and availability for green fuels as well as
to overcome technological challenges. TORM actively
participates in several coalitions and industry groups to
push for sustainable solutions in the tanker industry to curb
these challenges. Once sustainable industry-wide solutions
have been developed, we are committed to pursuing net-
zero emission carbon vessels to take TORM to net-zero
emissions by 2050.
The graph shows TORM’s energy transition reaching net-
zero emissions in 2050 with the help of zero emission
vessels. We have assumed that we will have the same
number of vessels in our fleet in 2050 as we currently have.
We assume that the phase-in of zero emission vessels will
take place as part of the ongoing fleet renewal from 2035,
meaning that each conventionally fueled vessel will
eventually be replaced by a zero emission vessel.
To ensure full anchoring of the energy transition plan in the
TORM organization, the yearly update of the energy
transition plan is carried out in connection with the yearly
budget and business planning process. If deemed relevant,
TORM also conducts a strategy process simultaneously to
ensure the right strategic focus areas and options are still in
place to ensure the long-term viability of TORM.
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2022
2023
2024
2025
2026
2027
2028
2029
2030
35
40
45
50
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
25
50
75
100
Transition Plan towards 2050
% reduction in AER compared to the IMO’s 2008 base year
using the CII reference line measured in CO2 g/dwt x nm.
Transition Plan towards 2030
% reduction in AER compared to the IMO’s 2008 base year
using the CII reference line measured in CO2 g/dwt x nm.
The Transition Plan and the targets are fully aligned and
shared across the organization. This approach ensures
adequate knowledge of the funding needed for all relevant
initiatives. The Transition Plan is ultimately approved by our
Board of Directors to ensure full alignment between the
Board of Directors, our shareholders, and the TORM
organization.
TORM's Emission Reduction Targets in
Relation to a Global Warming Limit of 1.5°C as
Well as Our Planned Actions and Levers
At TORM, we work with a combination of levers to reach our
absolute GHG reduction target for 2030. The three main
decarbonization levers are as follows:
•
Energy efficiency initiatives
Below, we elaborate on the energy efficiency initiatives.
•
Fleet renewal
Fleet renewal is built into the TORM strategy for general
business purposes.
•
Bio fuels usage
The usage of bio fuels is assumed only to have a minor
impact.
About Our Energy Efficiency Initiatives
TORM’s integrated operational One TORM platform builds
on the idea that we must all work towards the same goals in
a transparent and collaborative way, on all layers of the
organization. By working together cohesively as one unit,
we are able to harness synergies allowing us to optimize
energy and fuel performance on board vessels. Read below
about the initiatives launched and implemented across
TORM, ranging from NEXUS to behavior optimization
projects.
NEXUS
One of TORM's main IT components in our fuel efficiency
program is an internally developed bespoke platform called
NEXUS. NEXUS covers all processes influencing fuel
efficiency, not only vessel machinery performance, but also
voyage planning, hull performance, and much more. We aim
for this to be a central tool providing transparency through
live data to the operational teams and to improve overall
value creation.
By gathering all relevant data in a single system, NEXUS
can relieve simple administrative burdens. The data in
NEXUS can be viewed by all relevant TORM teams in real-
time, eliminating the need to communicate back and forth
across geographies and time zones, thereby also reducing
risks of delay.
The Connected Machinery project is the onboard aspect of
NEXUS, which pulls data from all major components on the
vessel and automatically guides the vessel crews when
there are apparent improvements to be made to optimize
fuel efficiency and other operating expenses. NEXUS
empowers crews on vessels to use the data themselves and
take action immediately, thereby minimizing resource
leakage. NEXUS serves as a fundamental infrastructure for
TORM to evaluate energy utilization on board. By the end of
2024, the majority of our vessels had been added to the
digital platform.
Voyage Optimization
In our voyage optimization efforts, we utilize data pulled
from NEXUS. This data is used in combination with TORM’s
proprietary voyage optimization algorithm to ensure the
safest and most efficient journey, thus keeping emissions
as low as possible and the ocean passage as safe as
possible considering weather.
Our voyage optimization algorithm is used to optimize each
vessel's journey. Every journey has different routes,
distances, weather, and vessel size.
At TORM, we implement multiple energy efficiency
initiatives simultaneously, including devices and features
for direct savings as well as technology to optimize
operational behavior. For this reason, it is not possible to
accurately isolate the CO2 emission savings of each
individual contribution. Overall, we are registering savings.
Fuel Efficiency Technologies
In addition to operational and collaborative strategies, we
maintain our efforts in the optimization and efficiency of
TORM's fleet by applying a broad set of technical
improvements. These efforts include smaller investments
with short payback time and also larger investments with an
expected longer payback period. At TORM, we make sure to
continuously test and evaluate these technologies to make
sure that the solutions are optimized after installation. This
covers proven technologies and pilot projects.
Proven Technologies
Proven Technologies are successfully tested projects that
we plan to roll out to all vessels. Our proven technologies
relate either to propulsion of the vessel or machinery on
board.
The objective of propulsion-related projects is primarily to
reduce water resistance while sailing. Applying silicone-
based paint on the hulls of our vessels is one main
technology in this category. Silicone-based coating
provides a smooth and low-friction surface with higher
resilience towards fouling organisms sticking to the hull. By
the end of 2024, 72 of TORM’s vessels have silicone paint
applied. This helps TORM achieve an estimated emissions
reduction of 1,430 metric tons of CO2 per vessel per year.
Another proven propulsion technology is propeller
ultrasound. Algae growth on a propeller, also known as
biofouling, makes it harder for a vessel to move efficiently.
An ultrasound system can produce a pattern of increasing
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and decreasing vibrations on the surface of the propeller.
This process can prevent surface algae and can ensure
smoother, more energy-efficient sailing. TORM has used
ultrasound on propellers since 2017. With a potential to
save around 140 metric tons of CO2 per vessel every single
year, it is standard equipment on TORM vessels. The
Propeller Ultrasound program is completed across our fleet
except recently purchased vessels where installation is in
process.
The objective of machinery projects is primarily to reduce
unnecessary energy consumption. One example is Variable
Frequency Drives (VFDs) on cooling systems. All systems
onboard a vessel are designed for maximum loads and
temperatures. A vessel’s main engine develops excess heat
when sailing in extreme conditions, at half load, or in colder
temperatures. Cooling pumps remove this heat with cooling
water. When the conditions are not extreme, the cooling
need is less, and the power used for the cooling water
system can be reduced. VFDs control the cooling systems’
capacity according to the situation and thus run the
systems more efficiently by maintaining the right
temperature and ensuring that the cooling pump does not
over-cool and use unnecessary energy.
As of 2024, the VFD program is completed across our fleet
except recently purchased vessels where installation is in
process. We estimate VFDs can provide TORM a savings of
approximately 400 metric tons of CO2 per vessel per year,
which is considered to be 2% of TORM’s greenhouse gas
emissions for 2024.
Pilot Projects
Pilot projects are still under evaluation and currently being
tested on select vessels.We cannot accurately estimate
CO2 emissions reductions for these projects.
One example of a pilot project being tested at TORM is
Flettner rotors, also known as rotor sails. Rotor sails utilize
wind to help thrust the vessel forward. Rotor sails have the
potential to work well in various conditions, and we
estimate that they can work well without dependence on
many variables once installed.
Another prototype pilot project is the Waste Heat Recovery
project using a 300kW heat pump to re-use excess heat
from engines and other equipment onboard for domestic
heating. The heat pump lifts the heating potential of waste
heat to eliminate the use of the oil-fired boiler during a
vessel’s idle periods. The technology is currently installed
on six vessels, where we are monitoring development to
document experiences.
As described in previous annual reports, TORM has also
been investigating and testing air lubrication technology.
Air lubrication is a system which blows out microscopic air
bubbles at the bottom of the vessel, creating a layer of air
between the vessel and the water. This layer of air is
intended to reduce the vessel friction in water. The project
is still in the testing phase.
Behavior Optimization Projects
TORM has a technical decarbonization team to exclusively
deal with understanding and training seafarers on
optimizing energy consumption and usage on board. The
office-based teams observe data from NEXUS on energy
consumption onboard vessels and note any outlier activity.
When the activity has been analyzed, and the team has a
suggestion for how to alter operations, this is
communicated to the crew initiating a collaboration. The
crews are the ones who must make the decisions on how to
operate. At TORM, we have worked on optimizing the
feedback from office-based teams, so the onboard crews
receive information quickly, clearly, and know how to follow
up. We are working to further enhance this process with the
implementation of NEXUS.
In addition, new behavioral recommendations are rolled out
in the form of officer seminars, online training, and reading
material to ensure all seafarers on all TORM vessels are
aware of new recommendations for behavioral changes.
Our Investments and Funding Supporting the
Implementation of Our Transition Plan
We are committed to achieving net-zero GHG emissions
through our investment strategy. These investments are
currently not specifically targeted to be EU Taxonomy
aligned. This is because investments in vessels, which are
capable for carrying clean petroleum products, are not
considered aligned. TORM is continuously investing in fleet
renewal and energy efficiency projects as part of our
ongoing business.
Potential Locked-In GHG Emissions from Our
Key Assets and Products
Our vessels’ dual-fuel capability allows them to operate on
both biofuel and fossil fuel. This capability provides
opportunities for emissions management. However, TORM
is currently mostly locked-in to fossil fuels. As we renew our
fleet, we will reduce our locked-in position.
We are committed to monitoring fuel usage and exploring
options that reduce our overall greenhouse gas emissions
over time. Our strategy focuses on maintaining operational
flexibility while aligning with evolving sustainability
standards.
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Aligning Our Economic Activities with Criteria
Established in Commission Delegated
Regulation 2021/213936
Currently, our activities are not aligned with the EU
Taxonomy. To align our economic activities with the criteria
established in Commission Delegated Regulation
2021/2139, we are developing plans for capital
expenditures (CAPEX) focused on transitioning to
renewable energy sources and enhancing the energy
efficiency of our fleet.
Refer to EU Taxonomy tables listed on page 83
Significant CAPEX Amounts Invested During
Reporting Period Related to Coal, Oil, and
Gas-Related Economic Activities
Transport of refined oil products is related to oil and gas
economic activities. The CAPEX invested is reflected in the
financial disclosures Notes 8, 9, 10, and 20, which are our
vessels and capitalized dry-docking under tangible fixed
assets.
Exclusion from EU Paris-Aligned Benchmarks
TORM is not excluded from EU Paris-aligned benchmarks.
Embedding Our Transition Plan in TORM's
Overall Business Strategy and Financial
Planning and Approval
The yearly update of the energy transition plan is carried out
in connection with the yearly budget and business planning
process.
Back in 2022, to deliver on our ambitious climate targets,
TORM enhanced its organizational structure by creating
dedicated teams for both the technical and the commercial
decarbonization work, ensuring focus and ability to take
action.
In addition, TORM has established a separate department
focused on execution of our ESG reporting, working in close
cooperation with our commercial and technical
decarbonization teams. Finally, the Corporate Finance and
Strategy team monitor and track the overall progress on the
energy transition plan. All of these different tasks and
workstreams are ultimately approved and aligned with the
Senior Management Team and the Board of Directors.
The energy transition plan is first approved by the Senior
Management Team, and subsequently approved by the
Board of Directors. As the energy transition plan is
interlinked with the budget and business plan process, the
annual update of the energy transition plan takes place in
the fall each year.
Emerging technologies and regulatory changes as well as
market developments are continuously monitored and
tracked across TORM, and work as valuable input to the
overall TORM corporate strategy. TORM’s corporate
strategy will be developed in connection with the energy
transition plan, and these will influence each other.
ESRS 2 SBM-3 Material Impacts, Risks
and Opportunities, and the
Strategy and Business Model
Climate-Related Physical Risks and Climate-
Related Transition Risks
The scenario analysis identified four financially material
climate-related risks. All of the risks identified are transition
risks by nature. Below is a short summary of the risks.
Risk 1: Declining demand for oil and gas
Risk 2: Higher cost of capital and reduced access to capital
Risk 3: Carbon price regulations
Risk 4: Decarbonization of vessels
Scope of TORM’s Climate Strategy and
Business Model Resilience
TORM’s primary objective is the transportation of clean
petroleum products, which includes chartering vessels for
the safe and efficient movement of refined oil products.
This focus allows for a concentrated assessment of the
unique climate-related risks and opportunities associated
with these operations. TORM performs an annual update of
climate resilience analysis.
The scope incorporates our current and planned strategies
for adapting our operations to minimize the impact of
extreme weather, as well as mitigation activities such as
investments in more fuel-efficient vessels or using
alternative energy sources.
Locations
TORM’s own workforce was assessed in the analysis,
including vessel-based employees and office-based
employees.
At TORM, we have assessed that there is no material risk of
damages to office buildings associated with extreme
weather or rising sea levels, as all of our office locations are
rented.
Our vessels operate globally with the risk of impact from
extreme weather and rising sea levels.
Current Fleet Assessment
Our climate resilience analysis is based on the assumption
that our existing fleet operates without significant
alterations in vessel design or technology over the analysis
period. This presents an opportunity to evaluate the
resilience of our current operations in the face of climate
risks while considering the implications of maintaining our
current fleet.
Types of Climate Risks considered are described below.
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Physical Risks
•
Acute Risk: Assessment of extreme weather events
that could affect shipping routes, such as hurricanes,
storms, and flooding, which may disrupt operations or
damage assets.
•
Chronic Risks: Long-term climate changes such as
rising sea levels and increasing temperatures that may
influence port accessibility, vessel performance, and
safety.
•
Transition risks: Evaluation of risks associated with the
transition to a low-carbon economy, including
regulatory changes (e.g., stricter emissions controls),
shifts in market demand for clean petroleum products,
and technological advancements in cleaner shipping
practices.
Our Risk assessment is based on broad identified key data
points such as Oil demand, oil price and CO2 emission.
We have not included MET as part of climate resilience
analysis as impact is deemed limited.
Value Chain
At TORM, our climate resilience analysis identifies and
evaluates risks across the entire value chain, with as
assessment of stakeholders from both upstream extraction
to downstream consumer demands. This involves assessing
both physical and transitional risks and how these can
affect TORM’s operations and reputation.
We have also considered exploration of the production and
demand for renewable energy fuels and technologies.
Conducting the Resilience Analysis
The process of undertaking the scenario analysis in 2024
included a workshop with senior TORM representatives
from departments including Finance, Investor Relations,
Risk, Strategy, Market Research, Operations, and the
Technical Division to consider the three scenarios and
identify climate-related risks and opportunities.
The risks and opportunities were then assessed for financial
materiality and their potential impact on TORM’s business
model and strategy. This process is designed to improve the
resilience of TORM’s corporate strategy.
Enterprise Risk Management
The climate-related risks identified through the scenario
analysis exercise have been incorporated into TORM’s
annual Enterprise Risk Management (ERM) procedure
during which, the critical risks for TORM were identified,
assessed, and discussed by TORM’s Senior Management
Team and included in the ERM Report provided to the Risk
Committee.
Reference to G1 on Board of Directors committees
Chronic Risks
For climate-related risks and opportunities, we define the
types of risks by using the ESRS guidance for transition and
physical risk categories.
This report is also the basis for risk management in TORM
and guides how risk management supports TORM’s
strategy. The ERM Report includes TORM’s definitions of
risk and risk management, the risk management objectives,
the risk approach and philosophy, as well as the various
responsibilities under risk management within TORM.
Governance
In TORM's Board of Directors, the various committees play
varying roles in relation to climate-related matters. See
more about the Board of Directors and committee in the G1
section under ESRS 2 GOV-1.
The Senior Management Team has overall management
responsibility for climate-related risks and opportunities at
TORM. The Senior Management Team is responsible for the
development of TORM’s ESG strategy and reporting.
The Head of Group Finance monitors new ESG-related
regulatory requirements and develops initiatives to ensure
that TORM complies with stakeholder expectations.
Strategies to explore and develop business opportunities
both related to customers, brokers, and industry
stakeholders, as well as further energy efficiency
technologies to increase decarbonization on commercially
viable terms are led by the Head of Commercial
Decarbonization and the Head of Technical
Decarbonization.
Risks related to climate change are incorporated into
TORM’s Enterprise Risk Management process and the
annual Enterprise Risk Management Report.
TORM has conducted a climate-resilience scenario analysis
in order to identify material impacts, risks, and
opportunities that TORM faces in relation to climate
change, and how various elements affect our overall
strategy and business model.
To complete our climate-resilience analysis, we developed
three bespoke climate scenarios. The scenarios were based
on publicly available scenarios published in 2023 and 2024
by the International Energy Agency, the Network for
Greening the Financial System, and the IPCC Sixth
Assessment Report.
The scenarios were supplemented by data and insights
relevant to the transport of refined oil products. The
scenarios are:
•
1.5C Net-Zero 2050
•
2.0C Delayed Transition
•
3-4C Hot House World
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Each scenario explores a different set of assumptions for
how climate policy, emissions, temperatures and physical
risk impacts evolve.
Time Horizons
TORM’s three climate scenarios used to analyze potential
climate impact were combined with short, medium, and
long terms designated as 2025, 2030, and 2050,
respectively.
Results from TORM’s Resilience Analysis
The Net-Zero 2050 and Delayed Transition scenarios will
create challenging conditions for the tanker market due to
the increasing costs of decarbonizing vessels and the
reduction of product demand. The tanker market will see
increased demand in the Hot House World scenario.
The global refining industry is under pressure across all
scenarios, from changes to product demand, risk of
stranded assets, or from cyclones, storm surges, and water
stress. In all scenarios, refineries in Europe will close as
demand shifts to Asia Pacific.
An increase in the frequency and intensity of extreme
weather such as tropical cyclones and storm surges may
lead to more frequent disruptions to refinery production and
higher market volatility.
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Climate-Related Risk Scenarios
1.5°C Net-Zero 2050
2.0°C Delayed Transition
3-4°C Hot House World
Orderly Transition
Disorderly Transition
Worst Case Scenario
Assumptions
An ambitious scenario that limits
global warming to 1.5°C through
stringent climate policies and
innovation, reaching net-zero CO₂
emissions around 2050
The world continues with “business as
usual”, and emissions rise until 2030
This scenario relies only on
government policies that have already
been introduced or announced, such
as the EU’s Fit for 55
Assumes that ambitious climate
policies are introduced immediately
with low policy variation between
regions and strong international
cooperation to achieve net-zero CO₂
emissions worldwide
By 2030, governments and societies
finally take action to avoid catastrophic
global warming. But at this point,
aggressive climate action is required to
limit global warming to around 2.0°C
Emissions grow until 2080, leading to
about 3°C of warming and severe
physical risks
Net-zero means a major decline in the
use of oil and other fossil fuels. Oil
demand peaks in 2023 and falls from
around 99 million barrels per day (mb/
d) in 2023 to 23 mb/d in 2050.
Demand for oil and other fossil fuels
grows to 2030 and then falls rapidly. Oil
demand peaks at 102 mb/d in 2030 and
falls rapidly to 23 mb/d in 2050.
This includes irreversible changes such
as higher sea level rise and extreme
temperatures.
Oil demand peaks at around 102 mb/d
in 2030, and declines very slightly
thereafter
Governments work to ensure an
orderly transition across the energy
sector
This results in a disorderly transition in
which the transition to a low-carbon
economy occurs in an unexpected and
chaotic way
Conflict and humanitarian crises are
exacerbated, and some areas of the
world become uninhabitable zones
Conclusion
High and immediate transition risk
Delayed and very high transition
risk
Low transition risk
Relatively low physical risk
Medium physical risk
High physical risk
Source: NGFS The Network of the Greening the Financial System (NGFS) phase V report - November 2024, IEA World Energy Outlook - October 2024, IPCC sixth
Assessment Report - September 2023.
Key Scenario Impact on TORM's Business
Impact on TORM
Policy actions drive outcomes
The policy actions taken by governments are the key variable and the main reason for the differences in outcomes across the
scenarios.
Advanced economies decarbonize in all scenarios
In all scenarios, the EU and other advanced economies decarbonize faster than developing nations.
Electrification reduces oil demand in all scenarios
The electrification of road transport reduces oil demand in all three scenarios to a varying extent (in Hot House World, the lower
demand is offset by an increase in aviation and shipping among other industries).
Refining industry under increasing pressure
The global refining industry is under pressure across all scenarios, whether from changes to product demand, risk of stranded assets,
or from extreme weather condition. In all scenarios, refineries in Europe close as demand shifts to Asia Pacific.
Tanker market is challenged in Net-Zero 2050 and Delayed
Transition
The Net-Zero 2050 and Delayed Transition scenarios create challenging conditions for the tanker market through decarbonization
costs and destruction in product demand. The tanker market grows in Hot House World and benefits from volatility.
The West-East trade is dominant across all scenarios
Import dependency on fossil fuels in developing economies in Asia remains high in all scenarios, leading to further concentration of
trade flows between the Middle East and Asia.
Global GDP costs in Hot House World vastly outweigh transition
costs
Global GDP growth is lower under all scenarios compared with a world without climate change. The global economic costs of physical
risk in a Hot House World vastly outweigh the costs of a transition to a low-carbon economy in other scenarios.
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CO2 Emission Pathways
CO2 emission pathways are significantly divergent in
reduction and speed to 2050. The “business as usual”
pathway in Delayed Transition follows the Hot House World
until 2030 and then falls rapidly as aggressive climate
policies are introduced. The temperature rise is a
consequence of the CO2 emission pathway.
Oil Demand Forecast
Peak oil is reached in 2023 in Net-Zero 2050, 2030 in
Delayed Transition and 2030 in Hot House World.
Uncertainties in the Analysis
The resilience analysis identified several areas of
uncertainty that could impact our shipping operations and
strategic decisions.
Regulatory Uncertainty: The marine shipping industry is
subject to evolving environmental regulations on emissions
and fuel standards. Uncertainties regarding the timing,
stringency, and enforcement of these regulations can
significantly affect operational compliance and investment
requirements.
Market Dynamics: Changes in global oil demand and
consumer preferences towards more sustainable products
present uncertainties. The speed at which customers
transition to alternative fuels or shipping options can
impact revenue and market share.
Technological Advancement: The effectiveness and
availability of new technologies for cleaner shipping, such
as alternative fuels and energy-efficient shipping routes,
are uncertain. Delays in the commercialization of these
technologies could hinder our transition to a low-carbon
operation.
Climate Change Prediction: The inherent variability of
climate change impacts, including extreme weather events
and sea-level rise, introduces uncertainty in the risk
assessment of disruptions to shipping routes, port access,
and fleet operations.
Consideration in Strategy, Decisions, and Actions
At TORM, climate-related risks and opportunities are fully
embedded in the corporate strategy and financial planning
process. TORM’s corporate strategy consists of three key
elements of which one is to achieve a greener future with a
zero-emission ambition.
We believe that decarbonization will have a significant
impact on the future of the product tanker business, but at
the same time we acknowledge that refined oil products will
continue to play an essential role in the global economy
across all scenarios.
We set the goal at TORM to accelerate our climate target
and deliver at least a 40% GHG emission reduction in
intensity by 2025 – instead of in 2030 – compared to a
2008 baseline using IMO’s defined methodology. We
reached that goal one year ahead of schedule in 2024. We
also have a target to reach a 45% reduction by 2030. In the
long term, TORM has an target to achieve net-zero GHG
emissions in 2050.
To support these goals, the entire TORM organization has
specific KPIs on achieving this trajectory, and the impact on
the trajectory is included as a decision-making criterion
when assessing fleet renewal options.
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Hot House World
Delayed Transition
Net Zero
2023
2025
2030
2035
2040
2045
2050
0
10,000
20,000
30,000
40,000
Hot House World
Delayed Transition
Net Zero
2023
2025
2030
2035
2040
2045
2050
0
25
50
75
100
125
CO2 Emission Pathways
SOURCE: IEA Energy Outlook 2024
Million tons of CO2 per year
Oil Demand Forecast
SOURCE: IEA Energy Outlook 2024
Million barrels per day
The outlook for oil demand and traditional, refined
products, such as gasoline and diesel, varies significantly
across scenarios. Therefore, TORM monitors a number of
“disruption indicators” which function as warning signs as
to whether TORM’s corporate strategy needs to be
reconsidered, including our investment strategy in
newbuildings. This risk and the disruption indicators are a
reoccurring agenda item at every meeting of the Risk
Committee.
Refer to G1 on Board of Directors committees
We are maintaining focus on the optimization and
improvement of our existing fleet. This is namely about
enhancing efficiency of our fleet by applying a broad set of
operational and technical improvements. TORM has
allocated more than USD 26m in capital expenditure for
2024 for this purpose.
In our efforts to obtain commercially viable and
environmentally friendly results, we established a new
position as Head of Commercial Decarbonization in 2022, a
role that together with our Head of Technical
Decarbonization will be pivotal in exploring and developing
business opportunities with our customers, brokers, and
industry stakeholders so that we can utilize the power of
our integrated platform to reinforce our position as a
leading product tanker owner.
Lastly, TORM supports broad industry cooperation to
accelerate the decarbonization of shipping by joining
industry groups such as the Mærsk McKinney Møller
Institute for Zero-Carbon Shipping as a Mission
Ambassador. TORM monitors the development of new fuels
and associated technologies, and TORM aims to be part of
shaping their development and deployment whenever this is
commercially and operationally viable.
ESRS 2 IRO-1 Description of the
Processes to Identify and
Assess Material Climate-
Related Impacts, Risks, and
Opportunities
Identifying and Assessing Climate-Related
Impacts, Risks, and Opportunities
See ESRS2 SBM-3 for a complete description of the
process at TORM for conducting our climate resilience
analysis, including the screening for actual and potential
future greenhouse gas (GHG) emissions.
Climate-Related Physical Risks, in Particular
Climate-Related Hazards and Our Exposure to
These Hazards
See ESRS2 SBM-3 for a complete description of the
process at TORM for the scope of TORM’s climate strategy
and business model resilience.
See ESRS2 SBM-3 a complete description of the climate
scenarios used by TORM to conduct our climate resilience
analysis.
Climate-Related Transition Risks and
Opportunities, in Particular TORM’s Exposure
TORM has conducted a climate-resilience scenario analysis
with three bespoke climate scenarios. The scenario analysis
identified four financially material climate-related risks and
three financially material climate-related opportunities, all
of which are described in the tables on the following pages.
Risks and Opportunities
Our three bespoke climate scenarios were combined with
short,medium, and long terms designated as 2025, 2030,
and 2050, respectively.
In the scenarios, we took TORM’s full value chain into
consideration, including upstream oil and gas production,
refining, and downstream customer demand. MET is
currently not included in our scenario analysis.
We also examined production and demand for renewable
energy fuels and technologies, including biofuels, hydrogen,
ammonia, and carbon capture utilization and storage.
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Climate-Related Risks
All potential financially material climate-related risks are transition risks, none are physical risks.
Risk Severity in Scenarios
#
Type
Climate-Related Risks
Main Impact(s)
1.5 °C
1.8 °C
3-4 °C
Strategic Actions to Mitigate Risks
Risk 1
Market Risk
Declining Demand for Oil and Gas
Demand for oil products would decline significantly in the
Net-Zero 2050 scenario and rapidly after 2030 in the
Delayed Transition scenario, mainly due to the
electrification of transport.
Decreased demand/revenue
Decreased
asset value
High
High
(delayed)
Lower
•
Revenue diversification into transport of renewable fuel types (see opportunity 1)
(specific metrics added)
•
Seafarer competencies improved to handle chemical transportation to meet the
chemical distribution requirements
•
Monitoring of a number of “disruption indicators”
•
Strong opportunity for higher asset utilization due to vessel supply shortage (see
opportunity 3)
•
Apply modest financial gearing and operate in a lease structure to remove asset
value risk
Risk 2
Reputation
Higher Cost of Capital and Reduced Access to Capital
Withdrawal of banks from the sector and a more limited pool
of investors over time, resulting in more expensive debt/
equity financing.
TORM’s banks are signatories to Poseidon Principles, thus
obliged to reduce emissions.
Reduced access to and
higher cost of capital
Inability to grow the
business or maintain the
current average fleet age
High
High
(delayed)
Lower
•
Revenue diversification into transport of renewable fuel types (see opportunity 1)
•
Maintaining a conservative capital structure profile and have access to multiple
funding sources
•
Decarbonizing fleet faster than required by IMO by 2030 to remain investable as
transition company
Risk 3
Emerging
Regulation
Carbon Price Regulations
IMO has announced that a global carbon regulation is
expected to be agreed in 2025 with implementation from
2028. Tax level is currently unknown.
Increased operating cost
(bunker and carbon tax)
Decreased asset value (if
not decarbonized)
High
High
(delayed)
Lower
•
Decarbonizing fleet faster than required by IMO by 2030 to ensure
competitiveness in a declining market
•
Carbon tax will be incorporated into the market rate and thus exposure only if
emissions from TORM vessels are higher than the “average vessel” of competitors
Risk 4
Technology
Decarbonization of Vessels
In the Net-Zero 2050 and the Delayed Transition scenarios,
decarbonization of TORM’s fleet would be required to meet
customer and regulatory requirements.
The diversity of alternative fuels and technologies increases
the risk of selecting the wrong technology.
Increased CAPEX to
decarbonize the fleet
Stranded assets due to
selecting the wrong
technology
Increased operating cost
(alternative fuels)
High
High
(delayed)
Lower
•
Decarbonizing fleet faster than required by IMO by 2030 to ensure
competitiveness in a declining market
•
Focus on using known solutions to decarbonize fleet and delaying investments until
fuel technologies are de-risked and adopted at industry level
•
Participating in industry decarbonization groups, such as the MMM Center for Zero
Carbon Shipping
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Climate-Related Opportunities
Opportunity in Scenarios
#
Type
Main Impact(s)
Main Impact(s)
1.5 °C
1.8 °C
3-4 °C
Strategic Actions to Mitigate Risks
1
Market
Diversification into Transport of Low-Carbon Fuels
Demand for transport of low-carbon fuels would increase
under the Net-Zero 2050 and the Delayed Transition
scenarios. This includes biofuels, green methanol, liquid
hydrogen, and hydrogen-based fuels such as ammonia
There are significant similarities between the business
model, customer segments, and vessel operations for
transporting these new products and TORM’s existing
business
Opportunity to diversify
revenue into these new and
growing markets
In particular, 67% of
TORM’s fleet is already able
to carry biofuels and 9% of
TORM’s fleet carry is able
to carry methanol
ü
ü
(ü)
•
Pursuing opportunities within the biofuel market to build a market position with the
existing assets and capabilities
•
Upgrading a number of the current vessels to carry methanol, which will make us a
large player in the segment
•
Investigating the opportunity to enter into the hydrogen and ammonia segments
(this would require new and different types of assets)
•
Monitoring of a number of “disruption indicators"
2
Market
Market Volatility Due to Extreme Weather
Across all three scenarios, the frequency and intensity of
extreme weather such as tropical cyclones and storm
surges will increase as compared to a world without climate
change
This will lead to more frequent disruption to refinery
production, resulting in a higher frequency of market
volatility
Opportunity to improve
TORM’s forecasting of
these events and position
our vessels to take
advantage of the supply and
demand imbalances that
occur during periods of
market volatility
ü
ü
ü
•
Investing in vessel positioning tools, voyage optimization, and BI setup
•
Predictive analytics and AI to better forecast these extreme events and have our
vessels positioned to take advantage of this
3
Market
Higher Utilization Due to Supply Shortage
Across all three scenarios, it is expected that investments
in newbuildings will be limited due to reduced access to
capital, uncertainty relating to the transition of shipping to
new fuel types, and uncertainty relating to future demand
for oil products
Except for the 1.5C Net-Zero 2050 scenario, it is, however,
expected that the demand for oil products will remain high
in the medium term
Opportunity for higher asset
utilization of the existing
fleet due to supply/demand
imbalance in the short to
medium term
(ü)
ü
ü
•
Monitoring of a number of “disruption indicators” to assess the likelihood of the
opportunity materializing
•
Remaining exposed to the oil and liquids segment in the medium term to capture
the opportunity whilst diversifying revenue in the longer term
ü Opportunities exist
(ü) Limited opportunities
E1-2
Policies Related to Climate
Change Mitigation and
Adaptation
Policies to Manage Material Impacts, Risks,
and Opportunities Related to Climate Change
Mitigations
TORM is committed to contributing to reducing climate
change to align with the Paris Agreement. TORM is
committed to achieving our target to have net-zero GHG
emissions from operating our fleet in 2050. During 2024,
TORM also added an additional target for absolute Scope 1,
2, and 3 GHG reduction.
TORM's environmental policies include commitment
approaches to combating climate change. Our policy is also
a part of our Business Principles. All employees are required
to confirm in writing that they have read and understood
the Business Principles. In addition, all of TORM's owned
vessels are ISO-14001 certified which emphasizes TORM's
management commitment to environmental impact
management from climate change mitigation to waste
management.
As our policy has a target commitment based on the IMO
strategy which has the Paris Agreement as one of its
guiding principles. Our ambitious target helps to manage
three identified risks including higher cost of capital, carbon
price regulations, and decarbonization of vessels.
For the risk of declining oil and gas demand, TORM has no
policies to address this. However, we respond to the risk
with our business strategy.
How Our Policies Address Climate Change
Mitigation and Adaptation, Energy Efficiency,
and Renewable Deployment
TORM's policy addresses climate change mitigation with
our ambitious target that is aligned with the IMO guideline.
TORM plans to reach our targets with energy efficiency
projects as well as fleet renewal including the usage of zero
emission vessels.
TORM does not have an adaptation policy. TORM does not
have a renewable deployment policy. Please see our
Environmental Protection Policy in the G1-section for more
information.
E1-3
Actions and Resources in
Relation to Climate Change
Policies
Actions and Resources Related to Climate
Change Mitigation
TORM intends to mitigate climate change by utilizing our
transition plan. Our transition plan towards 2030 entails
three main categories:
•
Fleet renewal
•
Biofuels
•
Energy efficiency initiatives
For resources allocated to our decarbonization levers and
our transition plan, refer to E1-1 for additional details.
In addition, TORM has emphasized the importance of
climate change mitigation by making CO2 reduction a KPI
for all of our employees.
Climate Change Mitigation Actions Presented
by Decarbonization Lever
TORM's current decarbonization levers are presented in
E1-1. TORM's future decarbonization plan follows TORM's
transition plan as mentioned under E1-1.
Achieved and Expected GHG Emission
Reductions
Unit
2024
2021
AER
Ratio
4.69
5.05
Number of vessels in
total shipping fleet
Number
94
84
Unit
2024
2021
Scope 1 GHG
Metric tons
1,594,793
1,081,027
Scope 2 GHG
Metric tons
832
486
Scope 3 GHG
Metric tons
1,849,266
1,238,479
Total
Metric tons 3,444,892
2,319,991
1 Gross market-based Scope 2.
For full overview of the reductions please refer to the table
on page 80.
In 2024, TORM achieved an AER of 4.69, corresponding to
a 40% reduction of the IMO's 2008 baseline for carbon
intensity. The reduction is not reflected in our absolute
emissions due to the increase in TORM’s fleet size. The
Annual Efficiency Ratio (AER) is a metric used in the
maritime industry to measure the carbon efficiency of a
vessel. It quantifies the amount of CO2 emissions produced
per unit of cargo-carrying capacity (deadweight tonnage, or
DWT) over a distance traveled (nautical miles). This metric
is expressed in grams of CO2 per deadweight ton-mile
(gCO2/dwt*nm).
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Monetary Amounts of CAPEX and OPEX
Required to Implement Actions Taken or
Planned
TORM includes our decarbonization lever investments as
part of our Tangible Fixed Assets and Operating expenses in
Note 3 - Segment in our Annual Report.
USDm
Booked OPEX related to decarbonization
initiatives
1
Booked CAPEX related to decarbonization
initiatives
26
The listed values reflect what is booked for 2024. The
expected CAPEX to reach our 2030 reduction target will
depend on the future acquisition price of second-hand
vessels towards 2030.
Key Performance Indicators and CAPEX Plan Required by
Commission Delegated Regulation (EU) 2021/2178
TORM has identified taxonomy-eligible economic activities
within its operations but has determined that no activities
currently meet the technical screening criteria to be
considered taxonomy-aligned. Therefore, the proportion of
taxonomy-aligned turnover, CAPEX, and OPEX is 0% for
the reporting period. Refer to page 84 for EU Taxonomy
tables.
TORM has identified the activities in the Marine Engineering
segment as non-eligible for the Turnover, OPEX, and
CAPEX indicators.
Ability to Implement Actions Based on Resources
The estimation of financial investments required for
retrofitting ships, adopting new technologies, and training
staff is conducted as part of the yearly budget and business
plan process in the fall of every year.
In recent years, a significant FTE increase has taken place
in the Technical Division to accommodate the additional
workload with further improving our energy efficiency
across the fleet and ensure adequate resource allocation on
the projects that were approved as part of the business plan
and budget.
Funding for achieving our energy transition plan will be a
combination of our cash flow from operations and standard
bank financing. In the long term, there could potentially be a
need to increase the ratio of bank financing to cash flow
from operations.
With regards to the EU Taxonomy, TORM’s investments are
not targeted and not expected to meet the EU Taxonomy
requirements the next upcoming years.
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Metrics and Targets
E1-4
Targets Related to Climate
Change Mitigation and
Adaptation
How We Have Set GHG Emission Reduction
Targets to Manage Material Impacts, Risks,
and Opportunities
TORM has set a 2030 CO2 intensity reduction target of
45% compared to IMO’s original Tank-to-Wake 2008
baseline, which is 5%-points more ambitious than the
industry-wide target set out by IMO. In addition, we also
have a 2050 target of net-zero emissions. TORM is
currently evaluating if we should amend our target
methodology to Well-to-Wake to be in line with the recent
IMO methodology change.
We have deliberately chosen not to split our targets
between fuel efficiency improvements and incorporating
low carbon technologies at TORM. We have opted for this
approach because we consider that it is irrelevant as well as
technically challenging to separate our emission reductions
into these categories. We focus on capturing the combined
result for carbon emissions in the reduction of fuel
consumption.
The fuel reduction initiatives are tracked via the reporting of
fuel consumption for the reporting period.
Further, TORM has set absolute targets for Scope 1 of
≤1,500,000 metric tons GHG emissions, Scope 2 of ≤600
metric tons GHG emissions, and Scope 3 of ≤1,200,000
metric tons GHG emissions for 2030. For 2050, TORM has
set absolute targets of net-zero GHG emissions. As part of
the target setting process, TORM has been in dialog with
selected stakeholders.
The targets reflects the overall objective set in the policy of
environmental protection. The targets are applicable for
TORM.
Target
Unit
2030
Target
2050
Target
Carbon intensity
reduction target
Percentage
45 %
100 %
Absolute Scope 1
GHG emissions
Metric tons
CO2e
≤1,500,000
Net-zero
emissions
Absolute Scope 2
GHG emissions1
Metric tons
CO2e
≤600
Net-zero
emissions
Absolute Scope 3
GHG emissions
Metric tons
CO2e
≤1,200,000
Net-zero
emissions
1 Market-based CO2 emissions used for the Scope 2 target.
The data will be collected internally on a quarterly basis and
reviewed by the Senior Management Team in order to track
the ongoing progress.
GHG Emission Reduction Targets Presented
for Scope 1, 2, and 3
Ensuring Relevance of Baseline Value Against Which
Progress Is Measured
At TORM, we use a 2021 baseline year for our absolute
Scope 1, Scope 2 and Scope 3 GHG emissions.
For our CO2 intensity reduction target, we use the year
2008 as the base year, which is the international shipping
standard adopted by the IMO Strategy on Reduction of
GHG emissions from ships.
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Takeaways for Development in Scope 1, 2, and
3
In 2022, the value chain was mapped and a screening of all
15 categories was performed based on five criteria,
according to which we considered the number of emissions,
the degree of influence we have, associated risks,
importance to our stakeholders, and if the activity is
performed in-house or not.
A screening of the categories is conducted yearly, so far
with the result of the same categories in scope based on a
minimum threshold. Refer to page 81 for categories scoped
for reporting.
Change in Share of Primary/Hybrid Data
TORM focuses on improving our data quality by pursuing
primary data. The proportion of primary data versus hybrid
data increased from 92% in 2023 data to 95% in 2024.
The methodology used in this category for investment in
new vessels is the lightweight method for calculating the
GHG footprint. During 2024, TORM invested in fleet
renewal and increased our fleet size by 12 vessels. This
significantly impacted the overall Scope 3 calculation
where Category 2 increased by 79% compared to 2023.
Takeaways on Scope 1
TORM's Scope 1 absolute GHG emissions for 2024 have
increased compared to 2023 due to an increase in fleet size
from 82 vessels to 94 vessels, and operating days
increased from 30,605 to 32,855. In 2024, we increased
our time charter out employment, which caused a shift of
emissions from Scope 1 to Scope 3.
Takeaways on Scope 2
The Scope 2 absolute emissions mainly consist of
electricity. From 2024, MET has been included hence the
increase in emissions.
Takeaways on Scope 3
The majority increase of TORM’s scope 3 absolute
emissions is mainly due to TORM’s fleet expansion in 2024.
Total Greenhouse Gas (GHG) Emissions
The total Greenhouse Gas (GHG) emissions for 2024
increased due to vessel investments, and fuel consumption
from these new second-hand vessels. However, at the
same time, we achieved a continuous reduction in the
carbon intensity of our activities.
TORM's AER (Annual Efficiency Ratio) decreased from 4.93
in 2023 to 4.69 in 2024, which reflects that the fleet
operated more efficiently in terms of lowering the CO2
footprint of cargo transported per sailed nautical mile. By
working together cohesively as one unit, we are able to
harness synergies allowing us to optimize energy and fuel
performance on board vessels.
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Application of Science-Based Targets and
Compatibility with Limiting Global Warming to
1.5°C
TORM’s current target is science-based and developed
using international and well established methodologies
such as IPCC. TORM does not have an SBTi target because
SBTi does not allow participation by companies where the
main revenue is derived from the distribution of oil
products. TORM's current target aligns with the Paris
Agreement, but is not verified by an external party. Refer to
the transition plan described under E1-1.
Expected Decarbonization Levers and Their
Overall Quantitative Contributions to Targets
Broken Down by Scope (1, 2, and 3)
For quantitative contribution to Scope 1, please refer to
E1-1. No specific quantitative contributions have been
accomplished yet.
Our Plan to Adopt New Technologies to Reach Targets
New technologies are continuously evaluated as part of our
energy efficiency efforts to ensure that we reach our GHG
reduction target. If the pilot projects that we conduct are
deemed beneficial enough for improving our fleet wide
energy efficiency, the projects will be implemented on a
full-scale basis across our fleet. TORM is also following the
future development of zero emissions vessels.
E1-5
Energy Consumption and Mix
The High Climate Impact Sectors Used to
Determine Our Energy Intensity
The revenue from TORM and Marine Engineering is
generated from high climate impact sectors.TORM is in
section H - Transportation and storage. Marine Engineering
is in section C - Manufacturing.
Reconciliation to Relevant Line Item or Notes
in Financial Statements from Activities to
High Climate Impact Sectors
The reconciliation of the net revenue used to calculate GHG
intensity
USDm
Net revenue used to calculate GHG intensity
1,559
Net revenue (other)
0
Total net revenue¹
1,559
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Energy consumption
Unit
2024
Coal and coal products
Crude Oil and Petroleum products
Heavy Fuel
MWh
3,668
Low-sulfur heavy fuel
MWh
1,405
Marine Gas Oil
MWh
1,146
Petrol
MWh
13
Natural gas
MWh
0
Other fossil sources
MWh
0
Purchased or acquired electricity, heat, steam or cooling from fossil sources
MWh
2,064
Total energy consumption from fossil sources
MWh
8,296
Total energy consumption from nuclear sources
MWh
0
Renewable sources, including biomass, biofuels, biogas, hydrogen from
renewable sources etc.
MWh
0
Purchased or acquired electricity, heat, steam and cooling from renewable
sources
MWh
50
Self-generated non-fuel renewable energy
MWh
0
Total energy consumption from renewable sources
MWh
50
Total energy consumption
MWh
8,346
Renewable sources share of total energy consumption (%)
Percentage
(%)
0.6 %
Percentage of fossil sources in total energy consumption
Percentage
(%)
99.4 %
Energy Intensity per net revenue
Unit
2024
2023¹
Percentage
Energy intensity (total energy consumption per net revenue)²
MWh per million USD
5.35
4.60
16.30 %
¹ In 2023 the GHG emissions was not reported for MET hence not included for 2023. For 2024 TORM’s standalone energy intensity would be 4.84.
² Refer to Note 3 - Segment income statement for revenue used for the calculation.
E1-6
Gross Scopes 1, 2, 3, and Total
GHG Emissions
GHG Emissions, milestones and targets
Retrospective
Milestones and target years
2021
2023²
2024
Percentage
2025
2030
2050
Annual
% target
/ Base year
Scope 1 GHG emissions
Gross Scope 1 GHG emissions (tCO2eq)
1,081,027
1,558,254
1,594,793
2 %
N/A ≤1,500,000
0
(4) %
Percentage of Scope 1 GHG emissions from regulated emission trading schemes (%)
0
4 %
Scope 2 GHG emissions
Gross location-based Scope 2 GHG emissions (tCO2eq)
N/A
N/A
502
N/A
N/A
N/A
0
Gross market-based Scope 2 GHG emissions (tCO2eq)
486
506
832
64 %
N/A
≤600
0
(3) %
Significant scope 3 GHG emissions
Total Gross indirect (Scope 3) GHG emissions (tCO2eq)
1,238,479
923,784
1,849,266
100 %
N/A ≤1,200,000
0
— %
1 Purchased goods and services
132,146
73,442
93,572
27 %
2 Capital goods
702,107
648,901
1,162,462
79 %
3 Fuel and energy-related Activities (not included in Scope 1 or Scope 2)
117,856
163,950
341,959
109 %
4 Upstream transportation and distribution
0
0
5 Waste generated in operations
0
0
6 Business traveling
14,090
7,885
10,524
33 %
7 Employee commuting
0
0
8 Upstream leased assets
0
0
9 Downstream transportation
0
0
10 Processing of sold product
0
0
11 Use of sold products
0
89,768
12 End-of-life treatment of sold products
0
0
13 Downstream leased assets
272,280
29,606
150,981
410 %
14 Franchises
0
0
15 Investments
0
0
Total GHG Emissions¹
Total GHG emissions (location-based) (tCO2eq)
N/A
N/A
3,444,561
N/A
N/A
N/A
0
Total GHG emissions (market-based) (tCO2eq)
2,319,991
2,482,544
3,444,892
39 %
N/A ≤2,700,600
0
(2.0) %
¹ Aligned with ESRS 1 §62-§67, including the GHG emissions in accordance with the extent of our operational control.
² In 2023 the GHG emissions was not reported for MET hence not included for 2023. For 2024 TORM’s standalone tCO2e for Scope 1 is 1,594,790, Scope 2 is 560 and Scope 3 is 1,747,235.
In TORM, we do not have any biogenic emissions.
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Category
Included or excluded Segment included as material
Category 1 Purchased goods and services
>1% - Included TORM and Marine Engineering
Category 2 Capital goods
>1% - Included TORM
Category 3 Fuel-and energy related activities
>1% - Included TORM
Category 4 upstream transport
<1% - Excluded Below threshold
Category 5 Waste generated in operations
<1% - Excluded Below threshold
Category 6 Business Travel
>1% - Included Always included for TORM
Category 7 Employee commuting
<1% - Excluded Below threshold
Category 8 Upstream leased assets
<1% - Excluded
Assessed annually but no relevant
activities for the financial year
Category 9 Downstream leased assets
<1% - Excluded Not applicable. No sold products
Category 10 Processing of sold products
<1% - Excluded
Not applicable. No processing of sold
products
Category 11 Use of sold products
>1% - Included Marine Engineering
Category 12 EoL of sold products
<1% - Excluded Not applicable. No EoL of sold products
Category 13 Downstream leased assets
>1% - Included TORM
Category 14 Franchises
<1% - Excluded Not applicable. No franchises
Category 15 Investments
<1% - Excluded
Assessed annually but no relevant
activities for the financial year
Greenhouse gas (GHG) emissions - Fleet
Unit
2024
2023
2022
CO2 emissions, AER total fleet
gCO2e/dwtxnm
4.69
4.93
5.15
CO2 emissions, AER LR2
gCO2e/dwtxnm
3.42
3.37
3.68
CO2 emissions, AER LR1
gCO2e/dwtxnm
4.36
4.40
4.73
CO2 emissions, AER MR
gCO2e/dwtxnm
6.00
6.14
6.09
CO2 emissions, AER Handy
gCO2e/dwtxnm
N/A
N/A
8.37
CO2 emissions, EEOI total fleet
gCO2e/dwtxnm
10.21
10.80
10.88
CO2 emissions, EEOI LR2
gCO2e/dwtxnm
7.71
7.94
8.13
CO2 emissions, EEOI LR1
gCO2e/dwtxnm
9.66
10.39
9.38
CO2 emissions, EEOI MR
gCO2e/dwtxnm
12.54
12.56
12.69
CO2 emissions, EEOI Handy
gCO2e/dwtxnm
N/A
N/A
21.29
Percentage of Scope 1 GHG Emissions from
Regulated Emission Trading Schemes
As of 01 January 2024, TORM is subject to the European
Union Emissions Trading System (EU ETS). For applicable
every metric ton of CO2 emitted, the reporting company has
to surrender one EU ETS allowance (EUA). As the EU ETS is
being gradually phased in and only relates to voyages with
one or both legs in the EU, this does not cover 100% of
TORM’s emissions. 4.20% of TORM’s 2024 Scope 1 GHG
emissions have been covered by the purchase of EUAs.
Reconciliation of Net Revenue Amounts (Used
in Calculating GHG Emission Intensity) to the
Financial Statements
E1-8
Internal Carbon Pricing
Internal Carbon Pricing Schemes
In 2024, TORM set up two internal carbon prices schemes.
One used in connection with purchases and sales of
vessels, and one in connection with investments in energy
efficiency projects.
For purchases and sales of vessels, TORM uses a
comparable internal carbon price where the fuel
consumption of the vessel subject is compared with the
existing fleet of the relevant tanker segment (i.e., LR2, LR1
or MR), and where an internal carbon price is applied to the
difference in consumption.
In addition, TORM uses a shadow carbon price for all our
energy efficiency investment cases being applied on our
vessels.
Both of the internal carbon pricing schemes have been
implemented with the purpose to further accelerate
TORM’s green energy transformation.
Scope of the Internal Carbon Pricing Schemes
The scope of the activity includes all vessel purchases and
sales as well as energy efficiency projects on a global scale
for TORM plc.
Carbon Prices Applied According to the Type
of Scheme
For the vessels purchases and sales investment decisions,
an internal carbon price of USD/t carbon 100 is applied to
fuel consumption difference between the vessel subject
and the average fuel consumption of TORM’s existing
vessels in that segment.
TORM also uses a shadow carbon price of USD/t carbon
100 for energy efficiency projects. This price is equivalent
to the carbon cost for vessels trading intra Europe in the
period 2026-2029 (EU ETS and Fuel EU Maritime). At the
moment, TORM considers this price level relevant as these
are the concrete elements that potentially can impact
TORM in the near future. TORM is continuously monitoring
if changes to this price level are needed.
TORM’s internal carbon pricing scheme includes gross
Scope 1 greenhouse gas emissions but not Scope 2 and 3.
E1-9
Anticipated Financial Effects
from Material Physical and
Transition Risks and Potential
Climate-Related Opportunities
TORM has chosen to utilize the phase-in allowance to
exclude the anticipated financial effects from potential
climate impacts, risks, and opportunities as required in
E1-9.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E1
TORM ANNUAL REPORT 2024
82
GHG intensity per net revenue
Unit
2024
2023¹
Percentage
GHG emissions intensity, location-based (total GHG emissions per
net revenue)
tCO2e per million USD
2,209
N/A²
N/A²
GHG emissions intensity, market-based (total GHG emissions per
net revenue)
tCO2e per million USD
2,209
1,665
33 %
1 In 2023 the GHG emissions was not reported for MET hence not included for 2023. For 2024 TORM’s stand-alone GHG intensity for location-based is
tCO2eq per million USD 2,165 and market-based 2,165.
2 Scope 2 was not reported for location-based in 2023.
Refer to Note 3 - Segment income statement for revenue used for the calculation.
EU Taxonomy Reporting in 2024
EU Taxonomy
The EU Taxonomy is a classification scheme established by
the European Union to provide transparency into a
company’s activities. It defines what constitutes an
environmentally sustainable economic activity, according
to EU defined criteria. The purpose is to assess whether a
business activity substantially contributes to one of the
EU’s six environmental objectives. An activity is considered
eligible if the activity has the potential to contribute.
The six environmental objectives outlined in the EU
Taxonomy are climate change mitigation (Regulation EU
2020/852 Annex 1), climate change adaption (Regulation
EU 2020/852 Annex 2), sustainable use of water and
marine sources, circular economy, pollution prevention, and
a healthy ecosystem (Commission Delegated Regulation EU
2023/2486).
Technical Screening Criteria for EU Taxonomy
TORM's activities that relate to chartering, maintaining,
and operating vessels, including costs related to repairs and
maintenance, are covered by the EU Taxonomy category
'6.10 Sea and Coastal Freight Water Transport, Vessels for
Port Operations, and Auxiliary Activities'. We therefore
assess TORM's activities to be eligible. The activities for the
Marine Engineering segment are not considered eligible.
An activity is considered aligned when it contributes
substantially to one or more of the EU's environmental
objectives, does not significantly harm any of those
objectives, and is carried out in compliance with minimum
social safeguards.
In screening the eligible activities for EU Taxonomy
alignment, we have concluded a non-alignment. TORM’s
assets are currently dedicated to the transportation of
fossil fuels, which is explicitly deemed non-aligned by the
environmental objective Climate change mitigation.
TORM is not in a locked-in position and is able to transport
chemicals or biofuels, although this trade is considered
immaterial. TORM’s vessels cannot be considered as having
a share of activities that are aligned according to the EEDI
criteria and therefore, we have assessed that our
operations are not considered aligned.
An assessment for DNSH (Do No Significant Harm) criteria
and Minimum Safeguards was performed. Disclosure has
not been provided, as TORM’s activities are considered
non-aligned with the EU Taxonomy.
In 2024, TORM is reporting on the EU Taxonomy for the
three KPIs: Turnover (referred to as revenue), capital
expenditure (CAPEX), and operating expenditure (OPEX).
See TORM's EU Taxonomy Accounting Policy on
page 100
EU Taxonomy Overview
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > EU TAXONOMY
TORM ANNUAL REPORT 2024
83
EU Taxonomy Tables
TORM's key performance indicators are listed in the tables below. TORM's activities are considered eligible but
not aligned. The non-eligible activity consists of Marine Engineering. Proportion of TURNOVER from products or
services associated with Taxonomy-aligned economic activities.
Financial year 2024
Substantial contribution criteria
DNSH criteria
('Do No Significant Harm')
Economic activities (1)
Code(s) (2)
Turnover (3) (USD m)
Proportion of Turnover
(4)
Climate change
mitigation (5)
Climate change
adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity and
ecosystems (10)
Climate change
mitigation (11)
Climate change
adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity and
ecosystems (16)
Minimum safeguards
(17)
Proportion of
Taxonomy-aligned (A.1.)
or -eligible (A.2.)
turnover, year N-1 (18)
Category enabling
activity (19)
Category transitional
activity (20)
USD
%
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Turnover of environmentally sustainable activities (Taxonomy-
aligned) (A.1)
0
—%
%
%
%
%
%
%
%
Of which enabling
0
—%
%
%
%
%
%
%
%
E
Of which transitional
0
—%
%
%
T
A.2 Taxonomy-Eligible but not environmentally sustainable activities (Not Taxonomy-aligned activities) (g)
Sea and Coastal Freight Water Transport, Vessels for Port
Operations, and Auxiliary Activities
CCM 6.10
1,544¹
99%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
1,491¹
Turnover of Taxonomy-eligible but not environmentally sustainable
1,544
99%
1,491
A. Turnover of Taxonomy-eligible activities (A.1+A.2)
1,544
99%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities
15
1%
TOTAL (A + B)
1,559
100 %
1See the Financial Review Section on page 26 for a detailed description of the development.
Turnover can be reconciled to Note 3 in the consolidated financial statements.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > EU TAXONOMY
TORM ANNUAL REPORT 2024
84
Proportion of CAPEX from products or services associated with Taxonomy-aligned economic activities.
Financial year 2024
Substantial contribution criteria
DNSH criteria
('Do No Significant Harm')
Economic activities (1)
Code(s) (2)
CAPEX (3)
Proportion of CAPEX (4)
Climate change
mitigation (5)
Climate change
adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity and
ecosystems (10)
Climate change
mitigation (11)
Climate change
adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity and
ecosystems (16)
Minimum safeguards
(17)
Proportion of
Taxonomy-aligned (A.1.)
or -eligible (A.2.)
CAPEX, year N-1 (18)
Category enabling
activity (19)
Category transitional
activity (20)
USD
%
EL;
N/EL
(f)
EL;
N/EL
(f)
EL;
N/EL
(f)
EL;
N/EL
(f)
EL;
N/EL
(f)
EL;
N/EL
(f)
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
CAPEX of environmentally sustainable activities (Taxonomy-
aligned) (A.1)
0
—%
%
%
%
%
%
%
%
Of which enabling
0
—%
%
%
%
%
%
%
%
E
Of which transitional
0
—%
%
%
T
A.2 Taxonomy-Eligible but not environmentally sustainable activities (Not Taxonomy-aligned activities) (g)
Sea and Coastal Freight Water Transport, Vessels for Port
Operations, and Auxiliary Activities
CCM 6.10
904
99%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
602
CAPEX of Taxonomy-eligible but not environmentally sustainable
904
99%
602
A. CAPEX of Taxonomy-eligible activities (A.1+A.2)
904
99%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CAPEX of Taxonomy-non-eligible activities
9
1%
TOTAL (A + B)
913
100 %
CAPEX can be reconciled to Note 3 in the consolidated financial statements.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > EU TAXONOMY
TORM ANNUAL REPORT 2024
85
Proportion of OPEX from products or services associated with Taxonomy-aligned economic activities.
Financial year 2024
Substantial contribution criteria
DNSH criteria
('Do No Significant Harm')
Economic activities (1)
Code(s) (2)
OPEX (3)
Proportion of OPEX (4)
Climate change
mitigation (5)
Climate change
adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity and
ecosystems (10)
Climate change
mitigation (11)
Climate change
adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity and
ecosystems (16)
Minimum safeguards
(17)
Proportion of
Taxonomy-aligned (A.1.)
or -eligible (A.2.) OPEX,
year N-1 (18)
Category enabling
activity (19)
Category transitional
activity (20)
USD
%
Y;N;
N/EL
(b,c)
Y;N;
N/EL
(b,c)
Y;N;
N/EL
(b,c)
Y;N;
N/EL
(b,c)
Y;N;
N/EL
(b,c)
Y;N;
N/EL
(b,c)
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
OPEX of environmentally sustainable activities (Taxonomy-
aligned) (A.1)
0
—%
%
%
%
%
%
%
%
Of which enabling
0
—%
%
%
%
%
%
%
%
E
Of which transitional
0
—%
%
%
T
A.2 Taxonomy-Eligible but not environmentally sustainable activities (Not Taxonomy-aligned activities) (g)
Sea and Coastal Freight Water Transport, Vessels for Port
Operations, and Auxiliary Activities
CCM 6.10
76
31 %
EL
N/EL
N/EL
N/EL
N/EL
N/EL
64
OPEX of Taxonomy-eligible but not environmentally sustainable
76
31 %
64
A. OPEX of Taxonomy-eligible activities (A.1+A.2)
76
31 %
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OPEX of Taxonomy-non-eligible activities
169
69 %
TOTAL (A + B)
245
100 %
OPEX can be reconciled to Note 3 in the consolidated financial statements.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > EU TAXONOMY
TORM ANNUAL REPORT 2024
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Nuclear and fossil gas-related activities for revenue, CAPEX, and OPEX.
Nuclear energy-related activities
Yes/No
The undertaking carries out, funds or has
exposures to research, development,
demonstration and deployment of innovative
electricity generation facilities that produce
energy from nuclear processes with minimal
waste from the fuel cycle.
No
The undertaking carries out, funds or has
exposures to construction and safe operation of
new nuclear installations to produce electricity or
process heat, including for the purposes of
district heating or industrial processes such as
hydrogen production, as well as their safety
upgrades, using best available technologies.
No
The undertaking carries out, funds or has
exposures to safe operation of existing nuclear
installations that produce electricity or process
heat, including for the purposes of district heating
or industrial processes such as hydrogen
production from nuclear energy, as well as their
safety upgrades.
No
Fossil gas-related activities
Yes/No
The undertaking carries out, funds or has
exposures to construction or operation of
electricity generation facilities that produce
electricity using fossil gaseous fuels.
No
The undertaking carries out, funds or has
exposures to construction, refurbishment and
operation of combined heat/cool and power
generation facilities using fossil gaseous fuels.
No
The undertaking carries out, funds or has
exposures to construction, refurbishment and
operation of heat generation facilities that
produce heat/cool using fossil gaseous fuels.
No
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > EU TAXONOMY
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STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E2
Impact, Risk, and
Opportunity Management
ESRS 2 IRO-1
We have identified the following material impacts and risks
related to pollution in the double materiality assessment
described in IRO-1 in the ESRS 2 disclosure.
Pollution of Air
Fossil fuel combustion from TORM's vessel operations
emits nitrogen oxides (NOx), sulfur oxides (SOx), and
particulate matter (PM2.5 and PM10) into the atmosphere.
These pollutants negatively affect the environment and
human health. This adverse impact is inherent in our
operations, systemic to the maritime sector, and occurs
over the short, medium, and long terms.
Pollution of Water
TORM’s operations may result in the pollution of water
through oil or chemical spills. This can cause harm to the
marine environment and to people. This negative impact
occurs in TORM's own operations, is considered systemic
to the maritime sector, and could potentially occur over the
short, medium, and long term. Pollution of water through an
oil or chemical spill may also result in a financial risk for
TORM due to the cost of clean-up, fines, sanctions and/or
lawsuits, reputational damage, and increased insurance
premiums in the short and medium terms.
E2-1
Policies Related to Pollution
Policies to Manage Impacts, Risks, and
Opportunities, and How the Policies Address
the Mitigation of Negative Impacts Related to
Pollution of Air, Water, and Soil
In TORM’s Environmental Protection Policy, we commit to
reducing our pollution to air and water with our reduction
targets for SOx, NOx, and PM, along with a target for zero oil
spills. Further information on the scope of the
Environmental Protection Policy and how it is implemented
is described in policies related to climate change in E1.
E2-2
Actions and Resources Related
to Pollution
Pollution-Related Actions and the Resources
Allocated to Their Implementation
TORM’s operations are governed by national and
international regulations including MARPOL, Annex VI for
prevention of air pollution, Annex I for prevention of
pollution by oil, and Annex II for control of pollution by
noxious liquids.
Environmental Management System
All TORM’s operations, vessels and technical organization
are ISO-14001: 2015 certified, which is a standard for
environmental management systems. The certification
ensures three elements including Management’s
commitment to the environment, employees’ recruitment
and training, environmental policies and control procedures,
TORM ANNUAL REPORT 2024
88
Pollution
In the E2 section, we dive into TORM’s
impacts, risks, and opportunities related
to pollution. This covers both pollution to
air and pollution to water. In 2024,
TORM introduced new targets related to
our emissions as well as a target to
maintain a record of zero oil spills. These
are elaborated under metrics and targets.
E2
and environmental impact that should be annually audited
by the Recognized Organization (RO). The implementation
includes elements such as Management’s commitment to
the environment, employees’ recruitment and training,
environmental policies, and control procedures.
TORM is subject to annual internal and external audits in
accordance with relevant regulations (ISM Code and
ISO-14001:2015). The scope of audits includes assessment
of environmental impacts, such as pollution to air and
water, and mitigation measures to manage the risks.
Actions and Resources in Relation to Material
Sustainability Matters
Our actions to reduce pollution to air are linked to actions
performed to reduce CO2 emissions. Refer to E1-2 for
further details.
Our procedure for managing oil spill is documented in our
Safety Management System (SMS), which can be accessed
by all seafarers.
If an oil spill occurs, this will be handled according to our
emergency procedures. As a minimum, this includes an
announcement on the vessel to muster all crew members
and the initiation to contain the spill. Mitigating actions to
prevent oil from going overboard include draining spilled oil
into an empty tank or slack tank. This event is reported by
the captain to the company and the authorities as per local
regulations.
To prevent oil spills, TORM makes sure that all crew
members are trained and familiar with cargo and bunker
handling procedures. In addition, we require that all
equipment is tested and ready prior to sailing.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E2
TORM ANNUAL REPORT 2024
89
Metrics and Targets
E2-3
Targets Related to Pollution
Pollution-Related Targets, Including
Information Requirements Defined in ESRS 2
MDR-T
Pollution to Air
TORM has set the target to reduce SOx, NOx, PM10, and
PM2.5 emissions by 8% by 2030 from all of TORM's
operations, using 2024 as a baseline to track our progress.
Pollution to Water
TORM has set the target of zero oil spills to water according
to the ITOPF definition, from 2024 ongoing.
How Targets Relate to the Prevention and
Control of Air Pollutants
Refer to E1-4 for information on how our targets relate to
the prevention and control of air pollutants.
Specification of Which Targets are Mandatory
or Voluntary
The targets are voluntary, however, there is a mandatory
target set by IMO for CO2 emissions, which is linked to the
emission of SOx, NOx, PM2.5, and PM10.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E2
TORM ANNUAL REPORT 2024
90
Topic
Unit
2030 Target
2050 target
SOx
Metric tons
Reduce SOx, NOx, and PM2.5 and PM10
emissions from all TORM’s operations by 8% by
2030
Net-zero emissions
NOx
Metric tons
Net-zero emissions
PM10
Metric tons
Net-zero emissions
PM2.5
Metric tons
Net-zero emissions
Zero oil spills Number
Zero oil spills according to the ITOPF definition
Zero Oil Spills According to the ITOPF definition
E2-4
Pollution of Air, Water, and Soil
Pollutants Emitted Through Our Own
Operations and Microplastics Used or
Generated
Data Collection Processes for Pollution-
Related Accounting and Reporting
Pollution to Air
SOx calculation is based on the amount of bunkered fuel
used multiplied with the percentage of a one-year historic
weighted average of sulfur amount. The sulfur amount is
adjusted if the vessel has a scrubber installed and the date
when scrubber was installed. The bunker amount is
collected where sulfur content is stated in the Bunker
Delivery Note. The calculation is prepared annually at year
end, and the calculation is performed for all vessels.
NOx calculation is based on the summation of main engine
and auxiliary engines’ power output using an energy-based
emission factor. Emission factor is calculated using the
Fourth Greenhouse Gas study methodology from IMO
according to engine tier and engine speed.
Both engine tier and engine speed data are stored. An
engine’s power output data is based on power meters
installed on vessels, which is reported in our internal cube.
The calculation is performed for every engine on every
vessel in the fleet annually.
PM10 calculation is based on summation of the main and
auxiliary engines’ output using energy-based emission
factor. The emission factor is based on fuel type and fuel
consumption from the Bunker Delivery Note recorded. An
engine’s power output is based on power meters installed
on vessels and reported. PM2.5 calculation derived from
calculation of PM10.
Pollution to Water
Oil and chemical spills are recorded immediately on vessels
and via e-mail to the HSE manager. Information recorded
includes the number of spills, volume of spills, how spills
occur, corrective measures, and preventive measures.
E2-6
Anticipated Financial Effects
from Pollution-Related Impacts,
Risks, and Opportunities
Anticipated Financial Effects of Risks and
Opportunities Related to Pollution
TORM has chosen to utilize the phase-in allowance to
exclude the anticipated financial effects from pollution-
related impacts, risks, and opportunities.
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E2
TORM ANNUAL REPORT 2024
91
Pollution to Air and Water
Unit
2024
2023
2022
Pollution to air (Non-GHG Emissions)
SOx emissions (Sulfur emissions)
Metric tons
1,830
1,322
1,785
NOx
Metric tons
35,782
N/A
N/A
PM10
Metric tons
3,429
N/A
N/A
PM2.5
Metric tons
3,155
N/A
N/A
Pollution to water
Number of uncontained oil and chemical spills (ITOPF definition)
Number
0
0
0
Aggregate volume of oil and chemical spills and releases to the
environment
Cubic meters (M3)
0
0
0
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > ENVIRONMENT > E4
Strategy
E4-1
Transition Plan and
Consideration of Biodiversity
and Ecosystems in Strategy and
Business Model
TORM’s Strategy and Business Model
Resilience in Relation to Biodiversity Risks
There is a potential regulatory risk posed by deterioration of
biodiversity, which could translate into increased operating
costs for TORM.
TORM’s customers are:
•
Crude oil producing companies
•
Trading companies
•
Refining companies
TORM’s main suppliers are:
•
Bunker producers
•
Dry-dock operators (Dry-dock operators are excluded
from our resilience analysis.)
Transition Risks
At TORM, we have identified our main transition risk in this
area to constitute regulatory risk established due to
deteriorating marine biodiversity. Increasing regulatory risks
will potentially result in increased operating costs for
TORM, including costs related to longer sailing distances
around marine protected areas, speed reduction around
marine protected areas, and increasing capital expenditure
investments in equipment such as Ballast Water Treatment
Systems (BWTS).
One example of regulations resulting from deteriorating
biodiversity is a new project being designed by the IMO
(International Maritime Organization) called GloNoise
Partnership Project, which aims to address the issue of
underwater noise from shipping industry. Once finalized,
TORM expects financial impact to comply with such new
regulations.
Currently, TORM follows regulations and local
requirements. Our regulatory requirements include
compliance with international regulations from
organizations including but not limited to IMO (SOLAS,
MARPOL, IHM), national regulations such as USA EPA
(VGP), European EMSA (European Maritime Safety
Agency), and local regulations such as CARB (California Air
Resource Board) at berth regulation, and mandatory speed
reduction measures such as the North Atlantic Right Whale
Seasonal Management Areas (SMA).
We expect in the long term, operating costs may also
increase for both customers and suppliers.
Based on our investigations of our top five customers in
2024, none of our customers are setting requirements for
their suppliers with strong biodiversity solutions. On the
supplier side, we identify our main suppliers as being bunker
operators. We expect that increasing regulatory
requirements for our suppliers and banks will increase costs
for TORM.
TORM ANNUAL REPORT 2024
92
Biodiversity &
Ecosystems
In the E4 section of this Sustainability
Statement, we cover biodiversity and
ecosystems in relation to TORM’s
strategy, impacts, risks, and
opportunities. We describe our metrics
and targets in this area, where it is
relevant to include again our goal to
maintain a record of zero oil spills. TORM
has the oil spill target for both E2 and E4
as we identify that oil spills are considered
to be pollution to water (E2) and
contamination to water (E4).
E4
Systematic Risks
At TORM, we expect that increasing requirements from
regulatory bodies such as IMO as well as local requirements
for shipping operators, customers, suppliers, and banks will
be the main risks. Increasing requirements will most likely
mean increasing operational costs and investment costs.
TORM is currently collaborating with Danish Shipping and
the Baltic International Maritime Council (BIMCO) to
investigate shipping industry impacts on marine biodiversity
and mitigation measures.
The Scope of Our Resilience Analysis Across
the Value Chain
TORM’s resilience analysis covers our own operations,
consisting of transportation of refined oil products. Our
subsidiary MET is not included, based on the results of our
materiality assessment.
Key Assumptions and Time Horizon
In our resilience analysis, we assume that TORM continues
to operate in the business of transporting refined oil
products, and that we do not materially change our
suppliers, customers, fleet size, fleet composition, or sailing
routes.
As there are constant changes in our regulatory frameworks
regarding the environment, we deem it is most appropriate
to do a medium-term analysis for our resilience analysis,
and we have based our analysis on a three-year
perspective.
Results of our Resilience Analysis and
Involvement of Stakeholders
We assess that the loss of biodiversity and ecosystems has
no direct impact on TORM’s operations, our suppliers, or
our customers. However, there is a risk of indirect impact
from increased regulations to preserve biodiversity.
Regulatory pressure is expected to have an impact on
TORM, our customers, and our suppliers. The pressure will
increase operating costs and investment costs for TORM.
At TORM, we acknowledge that our operations have an
impact on marine biodiversity. We comply with existing
regulations from regulatory bodies such as the IMO. These
regulations support the mitigation of contamination of
water from oil and chemical spills and the carriage of alien
species.
We also acknowledge that we have impacts on marine
biodiversity from noise pollution and mammal collisions.
Based on our current research, the severity of these
impacts and effective mitigation measures are still
unknown. We meet the requirements for speed reduction
measures such as the North Atlantic Right Whale Seasonal
Management Areas (SMA). Investigating these impacts is a
relatively new area for the shipping industry.
We are currently collaborating with Danish Shipping in order
to further investigate in this area. TORM’s Head of the
Technical Division engages in the Technical Committee at
Danish Shipping with regular meetings for knowledge
sharing of the latest research for assessing the impacts and
potential solutions of shipping industry on biodiversity.
ESRS 2 SBM-3
TORM’s Material Sites in our Own Operations
Related to Biodiversity Risks
Our onshore business covers ten office locations around
the world. None of our offices are located in Protected
Areas.
TORM’s shipping business consists of global marine
transportation operations. We report our operations in
Particularly Sensitive Sea Areas (PSSAs), as shown in the
table below.
During 2024, TORM’s shipping duration in marine
protected areas decreased from 654 days to 570 days. This
is driven by less exposure in the Mediterranean Sea due to
the re-routing away from the Red Sea. TORM complies with
the approved PSSA specific measures.
Our impacts from our general operations are
discussed in detail in E4-1
Impact on Marine Protected Areas
Days
2024
2023
Shipping duration in marine
protected areas or areas of
protected conservation status¹
570
654
¹Definition of shipping duration in marine protected areas or areas of
protected conservation status has been changed during 2024 to be
consistent with the SASB definition. Refer to Accounting Policy Section
for E4.
Effects from Our Operations on Threatened
Species
TORM operates globally, and we acknowledge that we have
potential impacts on threatened species from our marine
operations. The severity of the impacts is currently
unknown.TORM is investigating further on this topic.
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ESRS 2 IRO-1
Description of Processes to
Identify and Assess Material
Biodiversity and Ecosystem-
Related Impacts, Risks,
Dependencies, and
Opportunities
Identifying Material Impacts, Risks,
Dependencies, and Opportunities Related to
Biodiversity and Ecosystems
TORM’s locations are described in ESRS 2 SBM-3. Criteria
used for assessing our impacts include only TORM’s
internal operations, specifically our marine transportation
operations. We do not include biodiversity impacts from our
customers and suppliers for our 2024 Sustainability
Statement.
We have assessed our impacts on marine biodiversity using
two methods:
•
Literature reviews from sources including the IUCN
World Conservation Congress
•
Stakeholder consultations
In addition, we work closely with our Head of Voyage
Optimization and our Business Intelligence team to
determine appropriate definitions of Marine Protected
Areas and conduct geofencing accordingly for automation
of data collection. This allows us to identify our shipping
duration in the Marine Protected Areas. Actual impacts
from entering these areas cannot be assessed as it highly
depends on our actions and conditions during sailing.
TORM's operations have the following impacts on
biodiversity:
1.
Contamination to water from potential oil and chemical
spills (please refer to our disclosure in E2-Pollution)
2. Carriage of alien species
3. Noise pollution to mammals
4. Collisions with marine mammals
5. Contamination of water from anti-fouling paint
Dependencies on Biodiversity and Ecosystems
at Site Locations and Assessment Criteria
At TORM, we assess our impacts from our onshore
operations by mapping our office locations and Protected
Areas to evaluate if our offices are located in the Protected
Areas.
Transition, Physical, and Systemic Risks and
Opportunities Related to Biodiversity and
Assessment Criteria
At TORM, we identify physical risks, transition risks, and
systemic risks by reviewing relevant literature and mapping
risks within TORM’s value chain. We review the websites
and annual reports of our top five customers and suppliers
to assess if they prioritize their biodiversity guidelines for
upcoming years. We investigate relevant criteria from ESG
rating agencies. In addition, we review our current
regulatory requirements and assess the impacts on TORM.
We conclude that regulatory requirements have impacts on
both our operational and investment costs. We extrapolate
this into our transition and systemic risks.
Affected Communities
Based on our double materiality assessment, we have
concluded that TORM has no affected communities,
vessels, offices, or businesses related to this topic.
Sites Located in or Near Biodiversity-Sensitive
Areas
See information about sites and sensitive areas in shipping
duration in the marine protected areas table.
The Necessity of Biodiversity Mitigation
Measures
At TORM, we acknowledge that our operations have an
impact on marine biodiversity. We are continuously
evaluating the best way to mitigate our impacts.
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Impact, Risk, and
Opportunity Management
E4-2
Policies Related to Biodiversity
and Ecosystems
Policies Related to Biodiversity and Ecosystem
Impacts, Risks, Opportunities, and
Dependencies
At TORM, we have our Environmental Protection Policy and
Compliance Program in addition to our Business Principles,
further described in G1-1. The policies are enforced by our
Senior Management Team. Our policy is also a part of our
Business Principles. All employees are required to confirm
in writing that they have read and understood the Business
Principles.
With these policies, we aim to prevent environmental issues
including CO2 emissions and prevention of oil and chemical
spills. The essence of our Environmental Protection Policy
and Compliance Program is to exercise constant care in our
operations and continually improve our environmental
performance beyond compliance and legislation. Employees
who fail to comply with our Environmental Protection Policy
and Compliance Program are subject to disciplinary actions.
All of our seafarers are subject to various training programs
at different intervals.
Our Environmental Protection Policy and Compliance
Program has four parts including general guidelines for
employees to exercise caution towards the environment in
all daily activities, a training program for all employees, an
annual assessment for performance appraisal, and
investigation guidelines.
With this policy in place, TORM’s employees are trained to
be aware of their actions towards the environment, observe
all procedures and instructions in our Safety Management
System (SMS), where TORM has environment related
policies and procedures, report all deviations from
procedures and instructions, and identify opportunities to
improve environmental performance.
Our Environmental Protection Policy and Compliance
Program currently covers our impacts on water including oil
and chemical spills and carriage of alien species. Please
refer to our disclosure in E2 for information about oil spills.
As described resilience analysis, we are investigating our
impacts on marine mammals. As such, our current policy
does not directly cover these impacts.
TORM complies with local requirements for speed reduction
measures such as the North Atlantic Right Whale Seasonal
Management Areas (SMA).
We acknowledge that biodiversity deterioration poses the
risk of significant impact on our society. At TORM, we are
establishing a governing body to assess our risks, potential
mitigation measures, and monitor progress.
How our Policies Relate to Our Material
Impacts, Risks, Dependencies, and
Opportunities
TORM’s operations are not impacted by deteriorating
marine biodiversity. Our physical and transition risks are
described in detail in E4-1.
How Our Policies Support Traceability of
Products and Materials, Production in
Material Areas, and Social Consequences in
Relation to Biodiversity
See more information about our policies in relation to
biodiversity and ecosystems.
Our Adoption of Policies to Protect
Biodiversity and Ecosystems Covering All
Operational Sites
TORM’s Environmental Protection Policy covers all of our
operations including our ten offices and our entire fleet of
vessels. TORM has currently not adopted sustainable
oceans policies. The area is still nascent to us, and we are
investigating further actions.
Our vessels are governed by regulatory and local
requirements to mitigate our impacts on marine
biodiversity. Regulatory requirements and local
requirements are described in detail in E4-1.
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E4-3
Actions and Resources Related
to Biodiversity and Ecosystems
Key Actions and Resources
TORM’s environmental protection actions are governed by
four layers, consisting of two external layers and two
internal layers. External layers include regulatory
requirements, from bodies such as the IMO, and our
voluntary ISO-14001 certification, which subjects TORM to
audit procedures. All TORM’s vessels are ISO-14001
certified.
Our internal layers are TORM’s Environmental Protection
Policy and Compliance Program and TORM’s Business
Principles. See E4-2 for more information about our policies
in relation to biodiversity and ecosystems.
TORM implements the following actions to mitigate our
impacts on marine biodiversity:
All TORM’s vessels are designed according to regulatory
requirements. Classification societies monitor vessel
constructions to be in line with the IMO guidelines.
ISO-14001 certification and training ensure that our
seafarers are trained to be compliant with and vigilant of
procedures to minimize contamination of water including
oil, chemical, and sewage discharges. In addition,
contamination of water is regulated by MARPOL Annex I,
Annex II, Annex IV, Annex V.
TORM has an internal Safety Management System (SMS)
where specific procedures are provided to seafarers to
follow to mitigate contamination of water from our
operations. TORM records and reports oil and chemical
spills in our database.
Ballast Water Treatment Systems (BWTS) are installed on
100% of our vessels to minimize carriage of alien species.
This is required by the IMO.
TORM’s vessels complies with the approved Particularly
Sensitive Sea Area (PSSA) specific measures, if required to
sail via the PSSAs. Approved PSSA entails specific
measures including:
•
Routing requirements
•
Strict applications of MARPOL discharge
•
Specific equipment for tankers and installation of
Vessel Traffic Services (VTS)
•
TORM follows PSSA requirements strictly when our
vessels need to sail through the PSSA
TORM engages with peers and attends network sessions to
obtain more knowledge on impacts and solutions.
We have one Senior Management Team member who
attends networking sessions related to impact on marine
biodiversity with Danish Shipping.
Mitigation Actions
TORM uses two approaches to minimize our impacts on
biodiversity. These are avoidance and minimization.
Avoidance
TORM’s ten offices are not located in Protected Areas.
During 2024, TORM expanded by opening a new office in
Pune, India and moving to a new location in London, UK. At
TORM, we evaluated whether our new office locations
would be located in Protected Areas prior to signing our
contracts.
In addition, we strive to avoid sailing through the PSSA
when determining our sailing routes, as stated in the
TORM's Environmental Protection Policy. However, TORM
complies with specific measures when transiting through
the PSSA area. See further details in E4-3.
Other impacts that TORM has on biodiversity cannot be
avoided, but only mitigated via our internal procedures,
local guidance, and regulations.
Mitigation
Our mitigation actions are described in E4-3.
Biodiversity Offsets
TORM currently does not implement biodiversity offsets in
our action plan as we need to investigate further into our
impacts on marine biodiversity.
Incorporating Local and Indigenous Knowledge
and Nature-Based Solutions
TORM’s Environmental Protection Policy does not
incorporate local and indigenous knowledge and nature-
based solutions in relation to biodiversity, as biodiversity is
still relatively nascent for the industry. We are investigating
further into this area.
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Percentage of fleet implementing ballast water exchange and treatment system
2024
2023
2022
Percentage of fleet implementing ballast water: (1) exchange
— %
— %
12 %
Percentage of fleet implementing ballast water: (2) treatment
100 %
100 %
88 %
Metrics and Targets
E4-4
Targets Related to Biodiversity
and Ecosystems
Biodiversity and Ecosystem-Related Targets
TORM acknowledges that our operations have impacts on
marine biodiversity. We have set targets to mitigate our
impact on marine biodiversity for oil spills. We are working
with Danish Shipping to investigate the extent of our
impacts and mitigation measures for the remaining issues.
Oil and Chemical Spills
We target to have zero oil spills at any time globally (See
more about the progress towards reaching our target in our
SASB table and our E2 Pollution section).
At TORM, we have identified that one of our main potential
impacts on marine biodiversity is contamination to water
from oil spills. Of all the potential impacts that we have
investigated, we have most insight into the actual impact of
oil spills. For this reason, we selected this as our target.
Ecological Thresholds and Allocations Applied
When Setting Our Targets
At TORM, we have set our targets based on the following:
•
Literature reviews of impacts
•
Engagement with operational stakeholders
•
Feedback from the Senior Management Team and
approval from the Board of Directors
•
Current operational performance
•
Financially viable solutions
Ecological thresholds are not incorporated into our process
for settings targets. We have determined that this is not
applicable for TORM based on our global operations.
How Our Targets Are Informed
Our target for having zero oil spills to seawater is aligned
with Target 7 for 2030 in the Kunming-Montreal Global
Biodiversity Framework, which was adopted during the
fifteenth meeting of the Conference of the Parties (COP15).
How Our Targets Relate to the Biodiversity
and Ecosystem Impacts Identified by TORM
Across Our Value Chain
TORM’s targets have no direct impacts on TORM’s
operations. However, our targets help minimize impacts
from our operations, meaning they provide less exposure to
financial, reputational, and regulatory risks.
Biodiversity Offsets in Setting Our Targets
TORM currently does not implement biodiversity offsets in
setting our targets.
Mitigation Actions in Relation to Targets
TORM’s targets of having zero oil spills has a purpose to
minimize oil spills into the sea water from TORM’s
operations.
E4-5
Impact Metrics Related to
Biodiversity and Ecosystems
Change
Our Impact Metrics
At TORM, we acknowledge that our operations have
impacts on the marine ecosystems of our sailing routes.
We have identified two main impact metrics. These are
contamination to water from oil spills (See the SASB table
and our E2 Pollution section) and the number of days sailed
in Marine Protected Areas (See the SASB table and table in
ESRS 2 SBM-3).
E4-6
Anticipated Financial Effects
from Biodiversity and Ecosystem
Related Risks and Opportunities
Anticipated Financial Impacts
At TORM, we have chosen to utilize the phase-in allowance
to exclude the anticipated financial effects from
biodiversity and ecosystems-related impacts, risks, and
opportunities.
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Accounting Policy
ESRS
E1 Climate Change
Financial Resources allocated to action plan
(OPEX and CAPEX)
Operating expenses (OPEX), which comprise crew
expenses, repair and maintenance expenses, and tonnage
duty, are expensed as incurred (refer to Note 1 under
financial statements).
The capital expenditure (CAPEX) incurred relates to
upgrading facilities, purchasing new technology, and other
investments intended to enhance operational efficiency
and support the transition objectives.
The OPEX and CAPEX related to the transition plan are
approved annually as part of the overall budget by the
Senior Management Team and Board of Directors as part of
the budget.
Total Energy Consumption Related to Own
Operations
All fuel used on board our vessels has been converted into
energy based on fuel oil analysis results.
Total Energy Consumption for Vessels and in Production
Total energy consumption for vessels is calculated
following TR-MT-110a.3 as a multiplication of consumption
for each of the different fuel types by the lower calorific
value as reported in the BDN, summarized, and converted
to the unit of MWh. For records where bunkered fuel
amount has been submitted without an associated lower
calorific value, a weighted average of lower calorific value
for that fuel type for the year is used.
Total Energy Consumption from Fossil Sources
Same definition as for the metric Total energy consumption
relate to own operations.
Heavy Fuel
All heavy fuel oil (HFO) burned on board the vessels.
Low-Sulfur Heavy Fuel
All low-sulfur heavy fuel burned on board the vessels.
Source: TPRS and sounding (linked to scope 1 reporting).
Marine Gas Oil
All Marine gas oil burned on board the vessels.
Petrol
Petrol is used by company cars for business travel.
Consumption of Purchased or Acquired Electricity, Heat,
Steam, and Cooling from Fossil Sources
Electricity consumed indirectly in operating activities at the
offices excludes London, Dubai, Delhi, Pune, and Houston
offices. An allocation key based on either FTE or sqm
occupancy is used when direct data for shared common
areas is unavailable. The collection of data is based on the
actual usage of each office, converted to MWh for
reporting purposes.
Consumption of Purchased or Acquired Electricity, Heat,
Steam and Cooling from Renewable Sources
Electricity consumed indirectly in the operating activities at
the TORM Denmark offices is sourced from renewable
sources. This information is based on the general
declaration provided by the electricity supplier.
Fleet Size
The fleet size consists of owned and leased vessels as of
December 31 2024.
AER
AER is a measure of efficiency using the total fuel
consumption, distance travelled, and deadweight. The
measure is defined as grams CO2 emissions emitted by the
vessels per deadweight-ton-nautical mile. AER includes
emissions from both Scope 1 and Scope 3 Category 13.
Deadweight is defined in accordance with the highest
deadweight value available in the maximum load line
certificate cross-referenced with the deadweight of a ship
in water of relative density of 1,025 kg/m3 at summer load
draught. Distance is defined as GPS distance recorded by
the vessel. AER is affected by vessel size, speed, duration
of waiting time, and port stays. AER for the fleet is
calculated by summarizing the fuel emissions for the fleet
and dividing them by the sum of the products of deadweight
and distance sailed, multiplied by 1,000,000 to convert to
g/dwtxnm unit.
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Carbon reduction (AER)
CO2 reduction percentage is based on AER calculated for
the fleet which is adjusted for acquired second-hand
vessels for a period of 12 months following take-over. The
value of the AER is compared against the baseline. Baseline
reference for carbon emissions reductions is calculated
every year to adjust for the latest fleet composition, with
the same exclusion applied. Deadweight for the year for
which the AER reduction is determined is weighted by days
in operation for every vessel used. The baseline is
calculated by first determining the required AER for 2030
to achieve a reduction of 40%, by using the formula for the
supply-based measurement of 2030 target and applying a
reduction factor following the formula of required annual
operational CII (MEPC 76/15/Add.2 Annex 12). Required
AER is calculated following the CII reference line formula
applying the 2019 Tanker specific reference line factors
(MEPC 76/15/Add.2 Annex 11).
EEOI
EEOI is a measure of efficiency using the total fuel
consumption, distance travelled, and cargo intake. The
measure is defined as grams of CO2 emissions per cargo-
ton-nautical mile. EEOI is affected by vessel size, speed,
cargo availability, duration of ballast voyages, waiting time,
and port stays.
Deadweight Tonnage (Based on SOLAS II- 1A Reg 2-20)
Deadweight Tonnage is calculated as a sum of the vessels’
deadweight present in the fleet at the time of reporting. A
vessel’s deadweight is defined in accordance with the
highest deadweight value available in the maximum load line
certificate cross-referenced with the deadweight of a ship
in water of relative density of 1,025 kg/m3 at summer load
draught.
Scope 1 Greenhouse Gas Emissions
This metric is the same as Gross Scope 1 Greenhouse Gas
Emission from SASB table. CO2 emissions have been
calculated based on the consumption of heavy fuel oil and
marine gas oil according to IMO’s conversion factor for
emission per metric ton which includes fugitive emissions
from CH4 and N2O on TtW basis using a 100 year GWP
(global warming potential) as per IPCC’s AR5. Emissions are
calculated for each single vessel and then consolidated.
Numbers under the Scope 1 data sheet have been collected
on board our vessels or at our offices. The collection is
based on actual usage. The vast majority of TORM’s Scope
1 emissions are linked to vessel operations from our fleet.
Due to the very limited share in our total emissions,
emissions from company cars have not been included.
TC in (voyages time chartered in < 90 days) are considered
within our operational control and are included in Scope 1.
The TC out (voyages time chartered out > 90 days) are
considered outside our operational control.
The TC out on-hire days are excluded from the population
and added under Scope 3 category 13.
Gross Location-Based Scope 2 Greenhouse Gas Emissions
CO2 emissions have been calculated based on the
consumption of acquired electricity and heating following
the emission factors from various sources. For TORM we
used the AIB, European Residual Mixes 2023 - Production
mix (CO2 only). For Singapore, we used the EMA, 2022 Grid
average emission factor (OM). For TORM Cebu, Manila, and
Mumbai, we used IEA 2023 data for electricity.
Additionally, for TORM heating in Denmark, we referenced
the IEA 2023 Miljødeklaration for the conversion factor for
emission per metric ton for district heating. Emissions are
calculated for each office and then consolidated.
Gross Market-Based Scope 2 Greenhouse Gas Emissions
CO2 emissions have been calculated based on the
consumption of acquired electricity and heating following
the emission factors from relevant sources. For TORM we
used the AIB, European Residual Mixes 2023 - Residual mix
(CO2 only). For TORM Singapore, Cebu, Manila, Mumbai
and MET China, the same emission factors as location-
based are used due to the absence of a Residual mix.
Similarly, for TORM heating in Denmark, location-based
emission factor is also applied. Emissions are calculated for
each office and then consolidated.
Gross Scope 3 Greenhouse Gas Emissions
CO2 emissions generated from activities not owned or
controlled by TORM, that we indirectly affect in our value
chain. Scope 3 emissions are calculated using a mixed
approach where spend-based data as well as supplier-
specific and/or activity-based data is used, and where the
relevant emission factors are applied. We use a variety of
data sources for these emission factors where the key
sources are DEFRA, GLEC, Thrust Carbon Methodology,
IMO, and Exiobase.
From 2024, all entities are included in the Scope 3
reporting including Marine Engineering. The data reported in
2024 for Marine Engineering is for 2023. ESG metrics
follow the below boundaries unless otherwise specified:
•
Owned and leased vessels (incl. third-party technically
managed vessels)
•
Employees in offices
•
Crew onboard vessels
•
All TORM offices around the world
•
Spend-based emission factors are in EUR
Greenhouse Gas Emissions
Scope 3: Indirect upstream and downstream emissions
from third-party activities and operational management
services. Based on our materiality threshold of 1% following
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the GHG recommendations, TORM includes the following
Scope 3 GHG categories in our reporting framework:
Purchased Goods and Services (GHG #1)
This category includes operating expenses, administration,
port costs, and investments related to dry docking and
vessel projects. Data has been categorized as either
“Primary/Hybrid” or “Spend-based”. The primary/Hybrid
approach is where we know the actual quantities consumed
combined with industry specific emission factors converted
into emissions. “The "spend-based” approach is used
where no primary data was available. For Marine
Engineering this category mainly includes costs related to
electrical machinery and equipment, iron and steel. For
Marine Engineering 2023 is reported for 2024.
Capital Goods (CHG #2): CAPEX investments relating to the
purchase of vessels or modifications on vessels. Vessel
lightweight methodology is used to extract emissions data
for purchase of vessels, and spend-based approach is used
for vessel modification. Industry-specific emission factors
are used to calculate emissions.
Fuel and Energy-Related Activities (GHG #3): This category
includes upstream emissions associated with production
and distribution of bunker fuel for our vessels. Specific
quantity data is used for consumption of fuel oil and gas oil
from own operations (metric tons) multiplied with industry
specific average emission factor to calculate emission.
Electricity and heating consumption for own operation are
included with location based emission factors.
Business Travel (GHG #6): This category includes emissions
from the transportation of employees in vehicles owned by
third parties (such as airfreight, taxi) and hotel stay. Primary
methodology has been used where detailed air travel data
has been received by TORM’s travel partners with average
emission factors. Spend-based approach has been used for
hotel expenses with industry-specific emission factors used
to calculate emissions.
Use of sold products (GHG #11): This category includes the
sold scrubbers in 2023 by Marine Engineering. The
estimated lifetime of scrubbers is 25 years. Based on this,
the calculations of the sold scrubbers have been
extrapolated.
The emission factors used come from GLEC v3.0 (2023)
for heavy fuel oil (HFO) (sulfur 2.5%).
Downstream Leased Assets (GHG #13): This category
includes emissions that occur during the operation of time-
charters without operational control (TC out > three
months/ TC in < three months). Specific quantity data is
used for fuel oil and gas oil. The IMO Tank-to-Wheel (TTW)
emission factors have been used to calculate emissions
occurring during the operation of time-charters without
operational control.
CO2 emissions have been calculated based on the
consumption of heavy fuel oil and marine gas oil according
to IMO’s conversion factor for emission per metric ton.
Emissions are calculated for each single vessel and then
consolidated. Emissions that fall under the Scope 3
category 13 are emitted by vessels that are on TC-out
voyages for longer than 90 days, excluding the off-hire
days.
EU Taxonomy Accounting Policy
Turnover
Turnover refers to the activities that generate revenue.
Revenue associated with economic activities deemed
eligible under the EU Taxonomy is classified as our turnover
in the tanker segment.
CAPEX
CAPEX associated to economic activities defined in the EU
Taxonomy consist of the following under tangible assets
under the tanker segment ‘vessels and capitalized dry-
docking’ and ‘prepayment on vessels’ after additions and
disposals and before depreciation or any remeasurements.
See Note 10 in the Consolidated Financial Statements.
OPEX
OPEX associated with economic activities deemed eligible
under the EU Taxonomy is classified under the tanker
segment and constitutes of our OPEX under the tanker
segment, which comprise crew expenses, repair and
maintenance expenses, and tonnage duty, are expensed as
incurred. Refer to Note 1 in the financial statements for
further details.
For operating expenses, TORM uses an allocation key of
10% for seafarers wages related to repair and maintenance.
The allocation key is based on interviews with key, senior
personnel.
Energy Intensity per Net Revenue
Energy intensity per net revenue is calculated by dividing
total energy consumption (Scope 1 and Scope 2 energy
consumption in MWh) by total net revenue. The net revenue
is derived from the company’s audited financial statements,
specifically Note 4 - Revenue from Contracts with
Customers. For the year 2023, only TORM numbers are
included. Consequently, only the revenue from the tanker
segment is used to calculate energy intensity.
Reconciliation of the Net Revenue Used to
Calculate GHG Intensity
Consolidated net revenue used as the denominator in
calculating GHG intensity metrics.
For the year 2023, only TORM numbers are included.
Consequently, only the revenue from the tanker segment is
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used to calculate GHG intensity metrics. Revenue related
to MET is classified under Net Revenue (Other) to ensure
that the total revenue reconciles with Note 4 - Revenue
from Contracts with Customers in the financial statements.
For 2024, the consolidated revenue for TORM and MET is
reported. Accordingly, the total consolidated revenue is
used to calculate GHG and energy intensity metrics. As a
result, Net Revenue (Other) is zero and the total net
revenue will align directly with the figure reported in Note 4.
GHG Intensity per Net Revenue
GHG intensity per net revenue is calculated by dividing total
GHG emissions (Scope 1, Scope 2, and Scope 3 GHG
emissions in metric tons of CO2e) by total net revenue. The
net revenue is derived from the company’s audited financial
statements, specifically Note 4 - Revenue from Contracts
with Customers. For the year 2023, only TORM numbers
are included.
SASB
SASB Metrics
EEDI
EEDI value is the product of power installed, specific fuel
consumption, and carbon conversion, divided by the
product of available capacity and vessel speed at design
load. The unit reported is grams of carbon dioxide per ton-
nautical mile. EEDI is a measure for new vessels built from
2013 onwards. TORM reports an equivalent EEXI value as
TORM has vessels built prior to 2013.
Number of Vessel Port Calls
Reported as the number of vessel port calls includes all
Spot charter port calls and Time charter port calls,
excluding canal transits in the reporting period. This data is
based on port call registrations on the commercial platform
VIP, utilizing its reporting feature.
Total Distance Travelled by Vessels
Reported as the sum of nautical miles travelled on owned or
operated voyages during the reporting period.
ESRS
E2 Pollution
Pollution to Air
Sulfur Oxide (SOx)
Sulfur oxide emissions are calculated as a multiplication of
consumption for each of the different fuel types by the
weighted average sulfur oxide content, summarized and
converted to metric tons using the conversion factor of
1.955 (According to Fourth IMO GHG Study). For vessels
that have a scrubber installed, the sulfur oxide content of
High Fuel Oil (HFO) is set to a fixed value of 0.025%. For
records where bunkered fuel amount has been submitted
without an associated sulfur oxide content percentage, a
weighted average of sulfur oxide percentage for that fuel
type for the year is used. Sulfur oxide is reported in metric
tons.
Nitrogen Oxide (NOx)
Nitrogen Oxide emissions are calculated following TR-
MT-120a.1. using the main and auxiliary engines’ power
output using an energy-based emission factor (Efe) in g
pollutant/kWh. The emission factor is calculated using the
4th GHG study methodology, according to the engine tiers:
Tier 1 NOx limit (17 g/kWh) or Tier 2 NOx limit (14.4 g/kWh),
and rated speed of the engines, the data for which is
available in class verified Supplement to the International
Air Pollution Prevention Certificate (available for every
vessel). The calculation is performed for each of the
engines available on board, for every vessel in the fleet, and
summarized for the final NOx emissions value. Nitrogen
oxide is reported in metric tons.
To calculate the NOx emissions for the vessels where shaft
power meters are not installed, and therefore no power
output is recorded, an average power output of the vessels
with power meters for the vessel type will be applied, and
emissions will be calculated basis those figures.
Particulate Matter (PM10)
Following the TR-MT-120a and IMO 4th GHG study,
particulate matter is calculated using an emission factor
(Efe) in g pollutant/kWh and fuel consumption per fuel type
and machinery. The emission factor is calculated based on
the fuel type, its sulfur oxide content, and the main and
auxiliary engines’ SFOC, using the methodology provided in
the Fourth GHG study. PM 10 is reported in metric tons.
Particulate Matter (PM2.5)
Following ESRS E2-4 and IMO 4th GHG study, Particulate
Matter 2.5 (PM 2.5) is calculated as 92% of PM10. PM2.5
is reported in metric tons.
Pollution to Water
Aggregate Amount of Oil and Chemical Spills
Oil spills are reported when there are leakages of oil to
water greater than 9.46 cubic meters. Based on ITOPF spill
categorization of > 7 metric tons, we use a standard factor
of 0.740 (based on products we usually carry) to convert
metric tons into cubic meters. We report the total volume
of spills as the estimated aggregate volume of all spills.We
do not net the amount of such material that was
subsequently recovered, evaporated, or otherwise lost. The
amount of oil spilled is based on discrepancies between the
expected amount of oil and the actual amount of oil.
Aggregate amount of spills is reported in cubic meters (M3).
Number of Oil and Chemical Spills
Number of oil spills is reported based on leakages of oil to
water greater than 9.46 cubic meters which is aligned with
the ITOPF definition.
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ESRS
E4 Biodiversity
Shipping Duration in Marine Protected Areas
Marine Protected Areas include Particularly Sensitive Sea
Areas (PSSA) designated by the IMO. Vessels in the PSSA
for at least 24 hours are considered as present one day.
Shipping duration in Marine Protected Areas is reported in
numbers of days. During 2024, we changed TORM’s
internal definition of Marine Protected Areas to be
consistent with the SASB standard. This resulted in a
reduction of number of days sailed in the Marine Protected
Areas from 835 days reported in 2023 to 654 days.
Percentage of Fleet Implemented Ballast Water Treatment
Systems
Ballast Water Treatment Systems (BWTS) are based on
vessels that have a certificate from DNV, American Bureau
of Shipping, or Lloyd’s Register certifying that the vessels
has BWTS installed in accordance with regulation D2.
BWTS are reported in percentage of BWTS installed on
vessels.
Percentage of fleet implemented ballast water treatment
system is calculated based on numbers of vessels with
BWTS over total fleet size.
Percentage of Fleet Implemented Ballast Water Exchange
Systems
Ballast Water Exchange System are based on vessels that
implemented D1 standard.
Percentage of fleet implemented ballast water exchange
system is calculated based on numbers of vessels with
ballast water exchange system over total fleet size.
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Social
Introduction
104
S1 Own Workforce
105
S2 Workers in the Value Chain
123
Accounting Policies
128
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S
Introduction
TORM's Core Values and Culture
At the heart of TORM's Core Values is our commitment to
people and their safety. Our commitment to people extends
beyond our employees, but also to their families,
communities, and the environment.
The One TORM platform is a key element in our people-
centric way of working. With collaboration as a pillar of our
success, we continue to focus on psychological safety for
both office employees and our seafarers.
Our crew surveys show the importance of well-being and
work-life balance initiatives. This year, we prioritized
upgrades of our onboard accommodations and
entertainment systems.
Engagement surveys for office employees confirm that our
staff enjoy a strong sense of belonging.
TORM reiterates and reinforces our zero-tolerance towards
harassment, and we continue to work with preventive
measures to avoid stress at work.
Health, Safety, and Inclusion
The majority of our workforce consists of seafarers. Health
and safety on board our vessels are therefore our primary
focus. We are continuing our successful safety leadership
program and our ‘One TORM Safety Culture – driving
resilience’ program.
Joining forces with a strong network in the United Nations
Global Compact, TORM participated in the 2024 Target
Accelerator program focused on gender equality.
We aim to incorporate learnings from the program into our
overall journey of celebrating a culture of diversity and
inclusion at TORM. In 2024, we engaged our office-based
leaders in unconscious bias training.
For our employees on vessels, we continue to participate in
Danish Shipping’s taskforce for more women at sea. We
have incorporated ten recommendations into processes
and procedures as best practice.
Supporting Our Communities
Taking action on our commitment to communities where we
operate, TORM supports educational programs in the
countries where we have many employees.
In the Philippines, the TORM Philippines Education
Foundation (TPEF) carries out a range of projects from
educational and career programs targeted at the maritime
sector, to helping fulfill basic needs for equipment and
facilities in rural schools.
In India, TORM partners with a selection of NGOs to
improve school buildings and equipment and to help
students attend school by paying for tuition, school
supplies, and certain living expenses.
Inspired by colleagues in the Philippines and India, the
TORM operational headquarters in Denmark launched a
Responsibility Committee in 2024, enabling employees to
organize community support projects. The first initiatives
were launched in November 2024.
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STRATEGIC REPORT > SUSTAINABILITY STATEMENT > SOCIAL > S1
Strategy
ESRS 2 SBM-3 Material Impacts, Risks
and Opportunities, and the
Strategy and Business Model
Scope of Our Reporting on S1 and Types of
Employees Subject to Material Impact
At TORM, we generally designate our own workforce as
vessel-based employees, office-based employees, and
production workers. The vessel-based employees are also
mentioned as seafarers, offshore employees, employees at
sea, etc. The office-based employees are also mentioned as
shore-based employees.
In this Sustainability Statement, we write generally about
all employees except where the process or circumstances
differ between the groups of employees. In these cases, we
specify that the information disclosed pertains to office-
based employees, vessel-based employees, production
workers, or specifically staff employed at subsidiary Marine
Engineering (MET), mentioned as MET employees.
Vessel-Based Employees
We have two categories of vessel-based employees in
scope. See below.
1.
Full-time employees, also known as permanent
employees. This refers to active seafarers that are on
permanent contract as of the end of the calendar year.
This refers to all seafarers, who are receiving pay, even
if not onboard vessels.
2. Non-guaranteed hours employees. This refers to
contract-based seafarers or contractors, which are all
active seafarers per year-end that are not permanently
employed. Some seafarers are employed through
agencies.
Vessel-based employees are part of a pool, from which they
can be scheduled to work on board our vessels. The
seafarers on contract will automatically stay part of the
pool after a voyage ends, until they resign, or until they are
removed from the pool.
Office-Based Employees
We distinguish between five types of office-based
employees. Four categories are in scope for the S1 section
of our Sustainability Statement. See below.
1.
Full-time employees (FTE). Employees on a full-time
contract with TORM equal to a 1.0 FTE position.
2. Part-time employees. Employees on contract with
TORM on a less-than-1.0 FTE. For example, a 30-hour
per week position equaling a 0.8 FTE position. This
concept is used only in Denmark.
3. Temporary employees. Employees on time-limited
contracts.
4. Non-guaranteed hours employees. Student assistants/
interns and employees paid by the hour.
5. Non-employees or consultants hired on external
contract. TORM employs very few of this type of
employee. In India, TORM refers to this concept as
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Own
Workforce
The S1 section is where we elaborate on
our own workforce. We begin with an
introduction to our strategy and a full
description of our impacts, risks, and
opportunities, where we clearly
distinguish between the different types
of workers at TORM. From there, the
disclosure covers our metrics and
targets. We have unique targets for our
office employees and our employees at
sea.
S1
“External Contract Employees”. TORM has chosen to
use the phase-in allowance to exclude this category in
our reporting.
TORM´s office locations are divided into Denmark, India
(Mumbai, Delhi, and Pune), the Philippines (Manila and
Cebu), Singapore, United Arab Emirates, US, and UK.
MET Employees
At subsidiary Marine Engineering (MET), we employ office-
based employees and production workers. Offices and
production sites are located in Denmark and China (Jiaxing,
Suzhou, Hong Kong).
We distinguish between three types of employees at MET.
The definition of the categories is equivalent to TORM´s
categories: Full-time employees, part-time employees, and
non-guaranteed hours employees.These categories cover
both office-based employees and production workers.
Material Negative Impacts in Scope for Our
Employees
The material impacts, risks, and opportunities for the entire
workforce at TORM relate to diversity (specifically female
employees in leadership positions) and harassment,
including measures taken against harassment. Both
diversity and harassment can affect individuals in specific
cases.
Vessel-Based Employees and Production Workers
The material risks and opportunities for our vessel-based
employees relate to health and safety.
Health and safety can be considered widespread, as they
concern most of the workforce (more than 3,500
employees at sea).
The salaries of vessel-based employees and production
workers are regulated via CBAs and union regulations. As
such, we assessed that adequate wages are not material
for TORM, because we do not have full control over these
salaries.
Office-Based Employees
The material risks and opportunities for our office-based
employees relate to adequate wages and equal treatment,
including equal pay. Both can affect individuals in specific
cases.
Material Risks and Opportunities Arising from
Impacts on Our Workforce
The material risks from impacts on TORM’s workforce
relate to our ability to attract and retain employees and
meet the expectations of key stakeholders and legal
requirements.
S1 Own Workforce
Description
Impact, Risk or
Opportunity
Adequate Wages
In the case that TORM employees do not
receive adequate wages, this could have
an impact on the employee affected as
well as general levels of engagement and
motivation across the company.
Potential negative
impact
Health and Safety
Operating vessels entails an inherent risk
to health and safety. In the case that
proper training and safety procedures
are not in place for operating a vessel or
handling cargo, there is a risk to health
and safety of employees.
Actual negative
impact
Diversity
The maritime industry has historically
been a male-dominated industry. In the
case that TORM does not address the
topics of diversity, inclusion, equity, and
belonging, this would have a negative
impact on our employer branding and
ability to attract new talent.
Actual negative
impact
Harassment
In the maritime industry, employees live
together on board vessels for up to
months at a time. In the case that TORM
does not have measures against
harassment, we would risk a hostile work
environment with a potential impact on
employee well-being and company
reputation.
Actual negative
impact
Equal Treatment
Diversity in the workforce is believed to
help provide a balance of voices and
thought that inspires innovation and
creativity. In terms of equal treatment,
TORM focuses on equal pay in the
Annual Report. In the case that TORM
fails to provide equal treatment and
equal pay to employees, we risk a
negative impact on employer branding
and company reputation.
Actual negative
impact
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Material Impacts on Our Workforce from
Transition Plans Related to the Environment
TORM’s workforce is not at risk of adverse impact from
transition plans related to the environment. Over the
coming years, we plan to focus on developing internal
competencies to attract new employees and retain existing
employees. Refer to E1 Climate Change for further details
about our own transition plan.
Characteristics of Employees at Greater Risk
of Harm
TORM is a global company, where people of many different
nationalities work together. The maritime and
manufacturing industries have historically been male
dominated with female seafarers and workers
underrepresented in the workforce.
This is also evident at TORM; however, we do not assess
that the female employees are at greater risk of harm.
TORM has internal procedures and policies that protect all
employees, regardless of gender, and we have a zero
tolerance policy on harassment. It is a priority at TORM to
build and maintain a company culture characterized by
physical and psychological safety.
Specific Groups More at Risk of Material
Negative Impact
Please refer to S1-1, where we describe the
material negative impacts in scope for our
employees, including which groups are at risk of
which impacts
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Impacts, Risks, and
Opportunities
S1-1
Policies Related to Own
Workforce
Policies to Manage Material Impacts on Our
Workforce
At TORM, we have several policies addressing material
impacts on and risks to our own workforce.
For details about our policies, please refer to
section G1
All company policies are available internally. At TORM, we
designate safety and quality as particularly important.
Employees are encouraged to prioritize the safety and well-
being of themselves and colleagues. Management
participates by establishing proactive safety and quality
campaigns to support safe operations in offices and
onboard vessels.
TORM’s Health, Safety, and Security Policy is implemented
through the processes described in TORM’s Safety
Management System (SMS) and Quality Management
System (QMS). This policy applies to all of TORM’s
employees whose work relates to vessel operations.
TORM’s Health, Safety, and Security policy and
management are centralized at TORM’s Head of HSSE who
is responsible for daily operations, practices and trainings.
Human Rights Policy Commitments
At TORM, we operate in the maritime industry, which is
highly regulated. TORM is compliant with regulations
including the UK Modern Slavery Act and the IMO
regulations. TORM’s flag states Denmark and Singapore
have rectified the Maritime Labour Convention (MLC) and
have thereby incorporated the MLC’s principles into their
respective legislation. As such, TORM lives up to those
principles, and this is also part of our DoC (Document of
Compliance).
TORM is committed to people, and we are active members
of the UN Global Compact. We believe that human rights
are the foundation for good business. Our membership
entails a pledge to respect international human rights and
labor rights as described in the UN Global Compact’s ten
guiding principles.
See more details in G1-1
The status of our staff in relation to human rights is vetted
every year and per vessel. TORM has an extensive Safety
Management System (SMS) describing the required
procedures, globally, valid for every location. The SMS
procedures are reviewed and updated regularly. TORM
controls the process of hiring our own workforce.
Engagement with our Own Workforce
All employees are encouraged to contact their direct
managers or Marine HR/People Department with any
comments or concerns.
Both TORM and MET have a whistleblower setup,
further described in section G1-1
Vessel-Based Employees
TORM’s Marine HR (MHR) department conducts a survey
among a vessel's crews at the end of a voyage. Additionally,
we conduct annual crew surveys to measure and gauge
satisfaction among all of our seafarers. On each vessel,
there is a dedicated crew member acting as employee
representative. Our vessel-based employees based in
Denmark have additional workers’ representatives.
At TORM, we have continued our focus on gathering
seafarers physically at seminars for junior and senior
officers, and ratings. We do this to enhance the
collaboration between our teams and support a successful
onboarding process. We have found that information
sharing works well online, while fostering relationships for
certain types of learning and development is best achieved
in person. We have implemented the two methods in
conjunction.
TORM also had special focus in 2024 on leadership courses
to prepare junior officers for future senior positions. Safety
leadership is the main topic of this training, which also
includes harassment training and objection management.
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This helps us equip our next generation of leaders with the
necessary tools and skills to move from technical tasks to
generalist and leadership responsibilities.
Office-Based Employees
TORM hosts bi-annual or annual engagement surveys and
quarterly town hall meetings for office-based employees
where Management shares updates about company
financials, strategy, specific project development, specific
project introductions, and to receive feedback and
comments from the employees.
MET Employees
Where possible, MET does have workers’ representatives
and unions in place. Workers’ representatives hold quarterly
meetings. Additionally, there are town hall meetings for all
employees. The frequency of these meetings depends on
the location.
Measures to Remedy Human Rights Impacts
The outcome of the engagement surveys, whistleblower
cases, and other cases all include processes enabling us to
take action. TORM’s Safety Management System (SMS)
covers procedures in case of impacts.
Policy Alignment with Recognized Instruments
such as the UN Guiding Principles
It is an integral part of TORM’s Business Principles to
comply with the UN Guiding Principles and other human
rights conventions. TORM furthermore complies with the
Maritime Labour Convention (MLC), the UK Modern Slavery
Act, and IMO regulations. All policies are approved at the
highest executive management level, and the policies are
accessible across the TORM organization. TORM’s
Business Principles and our Modern Slavery Statement are
publicly available.
Workplace Accident Prevention Policy or
Management System
TORM Employees, Not Including MET
All of TORM’s operations, vessels, and technical
organization are certified by the International Safety
Management (ISM) Code, which is audited annually. The
ISM code provides proactive risk management procedures
and marine operational guidelines for TORM’s Health and
Safety Management System and ensures that TORM’s
employees and contractors have safe working conditions.
TORM’s Health and Safety Management System, which is
compliant with the ISM code, shares the same objective as
the ISO-45001 standard for managing occupational health
and safety risks for an organization. The number of
accidents is a KPI at TORM, and as such, has been
measured and reported for multiple years.
In addition to annual audits of the ISM code, TORM’s
vessels are also subject to the Ship Inspection Report
Programme (SIRE), which is governed by the OCIMF (Oil
Companies Internation Marine Forum) and are used by
charterers to ascertain safety standards of our vessels.
MET Employees
MET has quarterly safety meetings and accident
prevention, and a management system to register
accidents and a Safety Board to oversee the system and
the circumstances. Annual meetings are in place.
Policies on Discrimination and Inclusion
TORM continues to reiterate and reinforce our zero
tolerance towards harassment. Harassment is inconsistent
with our policies and values, and we put extra focus on
preventive measures. We also ensure that our employees
have the right tools to handle such situations, along with
the knowledge that it is not accepted by the company. All
seafarers and office-based colleagues have participated in
interactive training courses to understand different types of
harassment, what to do if it occurs, and what tools are
available to support them.
At TORM, it is our policy to work towards a diverse
workforce irrespective of gender, religion, sexuality,
nationality, ethnicity, or disabilities. A diverse workforce
provides a balance of voices and thought that inspires
innovation and creativity. TORM implemented a Diversity,
Equity, Inclusion, and Belonging (DEIB) policy in the first
half of 2024.
Reference table of policies under G1 Business
Conduct - TORM´s Policies
Our anti-harassment policy and the DEIB policy cover our
commitments related to inclusion and positive actions for
groups at particular risk of vulnerability in our workforce.
There are detailed requirements from the employees in the
DEIB policy as follows:
TORM expects from all employees that they:
•
Contribute actively to maintaining a good working
atmosphere by showing respect to colleagues.
•
Commit to providing a safe and secure work
environment.
TORM expects from all officers and managers that they:
•
Encourage and support professional development for all
our employees.
•
Ensure that every employee is treated equally and
evaluated according to qualifications.
•
Identify and offer equal opportunities for our
employees.
•
Do not emphasize a person’s gender, age, nationality,
ethnicity, religion, disability, etc. in recruitment, salary
adjustment, performance evaluation, career
development, training, and dismissal.
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Procedures for Policies on Preventing,
Mitigating, and Acting on Incidents of
Discrimination
The DEIB policy, anti-harassment policy, Whistleblower
Charter, employee handbook, and Business Principles are
communicated to the whole corporation. Every recruit
receives the employee handbook and Business Principles
during induction (onboarding training). Some policies need
to be reviewed and signed annually by employees.
Vessel-Based Employees
We have a system for our seafarers, which dictates that
employees at the captain level are re-trained on a set of our
policies annually. This is tracked in our training system, and
the captains commit to disseminating this knowledge to the
crews.
S1-2
Processes for Engaging with
Own Workers and Workers'
Representatives About Impacts
How We Engage with Our Own Workforce
At TORM, we engage with our employees through team
meetings, town hall meetings, surveys, our intranet, the
One TORM mobile app, workers’ representatives, trainings,
and direct contact with supervisors, Management, Marine
HR, or the People and HR Departments.
Throughout these touchpoints, TORM’s Management
conducts ongoing assessments of the impacts on
employees, including in relation to human rights.
It varies from country to country and depending on local
legislation, whether or not employees are represented by a
local organization such as a workers’ council or workers’
representatives.
How Decisions Are Influenced by Employee
Perspectives, including Timing and Frequency
of Engagement
Vessel-Based Employees
When Management makes decisions at TORM, the
employee perspective is always considered. Workers’
representatives help provide the perspective of seafarers to
the rest of the organization. All seafarers can contact the
head of Marine HR (MHR), local MHR leaders, vessel
managers, crewing managers, and onboard representatives
at any time. The frequency of this engagement varies, as it
depends on the individual employee.
Office-Based Employees
Management incorporates the perspective of office-based
employees via input given to managers, direct supervisors,
and the People Department. Engagement occurs with
varying frequency and direct engagement is always
possible.
Function with Operational Responsibility for
Engagement and Results
Vessel-Based Employees
The MHR department is an extensive department with
many sub-departments responsible for different tasks
related to seafarers. The Head of MHR has operational
responsibility for the seafarers, as well as for ensuring that
engagement between seafarers and office-based
employees takes place to an adequate extent.
Office-Based Employees
The People Department at TORM is an extensive
department covering multiple locations, responsible for all
office-based employees. The Head of People has the
operational responsibility for ensuring that adequate
engagement takes place, and that the results inform
TORM’s approach.
MET Employees
At MET, the Management Team is responsible for
engagement with the workforce, both for office-based
employees and production workers, and they take
responsibility for monitoring the results of this engagement.
Our Framework Agreements with Workers'
Representatives related to Human Rights
Vessel-Based Employees
TORM operates in a governed marine industry. Vessels
operated by TORM's crew fly Danish or Singaporean flag.
Depending on nationality and flag-state of the vessel,
seafarers are covered by collective bargaining agreements
(CBA) or the seaman law. For all nationalities, it is possible
to join a union. All changes in wages are communicated in
writing.
Office-Based Employees
TORM is committed to human rights and refers to a variety
of frameworks, as described in "Human rights policy
commitments" and G1-1. All TORM employees are free to
join workers’ unions. All changes in wages are
communicated in writing.
MET Employees
Where possible, MET does have workers’ representatives
and unions in place. MET is a Danish headquartered
company under Danish leadership and functions under
Danish regulations. All changes in wages are communicated
in writing.
Effectiveness of Our Engagement with
Employees
We use engagement surveys to assess engagement with
employees. Based on the answer ratio, engagement is
measured and compared to previous years. Based on
scoring and answers/comments received from employees,
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TORM’s Management can measure the effectiveness of the
engagement.
In locations where there are workers’ representatives who
hold meetings, the outcome of these meetings and the
topics discussed provide input for the measurement of the
effectiveness of the engagement.
Our Insights into Employee Perspectives
Among Particularly Vulnerable Groups
As described in "Characteristics of employees at greater
risk", TORM’s workforce is affected by the same impacts
and risks and no group of people are particularly vulnerable.
At TORM, we retrieve useful insights from bi-annual or
annual surveys for office employees, and the annual
engagement surveys as well as voyage surveys for the
vessel-based employees. We also get insights from the
yearly results of the whistleblower setup.
Vessel-Based Employees and Production Workers
While we do not categorize female seafarers or production
workers as particularly vulnerable, TORM takes extra steps
to accommodate female employees by carefully delegating
them to vessels in pairs, as a specific extension of the
TORM buddy program.
TORM employs many nationalities at sea, but it is not
possible with the risk level of the seafarers’ work to employ
people with disabilities.
Office-Based Employees
In our offices, there is no risk in hiring employees with
disabilities and TORM does not disqualify candidates based
on any disabilities.
S1-3
Processes to Remediate
Negative Impacts and Channels
for Own Workers to Raise
Concerns
Channels for raising concerns
To learn more about how employees are
encouraged to raise concerns, please refer to G1-1
Approach to Remediation in Case of Material
Negative Impact and Assessment of
Effectiveness
The effectiveness of remediation initiatives is assessed in
the engagement surveys and when required with direct
communication. This is done on a case-by-case basis. After
an engagement survey is conducted and completed, the
Management and the HR Departments (People Department
or Marine HR Department) assess the need for action. If
needed, they create an action plan with tasks and
implement solutions based on the survey outcome.
Where there are workers’ representatives and they hold
meetings, it is during these meetings, that the next steps of
remediation are assessed on a case-by-case basis.
Specific Channels for Raising Concerns and
Mechanism for Complaints
At TORM, we utilize the surveys, which are used to create
an action plan. Read more about the surveys in
"Engagement with our own workforce". TORM have a
whistleblower setup, which is further described in G1-1
under “Raising Concerns” and in the following section
below.
Effectiveness of the Channels for Concerns
The whistleblower reporting enables employees and
external stakeholders to report existing or potential
violations of laws or regulations. It is handled by a third-
party service provider, a law firm. The documentation
ensures that relevant perspectives of the employees can be
effectively included in addressing and managing impacts.
Additionally, we track issues internally, when raised in the
engagement surveys, town hall meetings, and workers’
representatives’ meetings. Action plans are established
where needed.
Assessment of Employee Trust in the Process
for Raising Concerns
At TORM, the corporate culture is characterized by trust
and safety, with particular importance given to physical and
psychological safety. This is communicated on every
platform and assessed in the engagement surveys.
The whistleblower setup is advertised on TORM and
MET´s respective websites (www.torm.com and https://
meproduction.com/), on the TORM mobile app for internal
use, and on the intranet. There are also boards onboard
vessels advertising the program to seafarers. Marine
management assesses continuously whether TORM is
doing enough to keep seafarers informed of their options
for raising concerns.
S1-4
Taking Action on Material
Impacts on Own workforce and
Risks and Pursuing Material
Opportunities Related to Own
Workforce
Our Action to Address Material Impacts,
Manage Material Risks, and Pursue Material
Opportunities
At TORM, we continuously develop measures and initiatives
to prevent, mitigate, and remediate adverse impacts, and to
create positive impacts. This work is a collaboration
between relevant employees and departments in TORM,
including Marine HR and People, employee representatives,
managers, and executives across the organization.
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We prioritize continuous information sharing with all
employees via the intranet and the One TORM mobile
application to raise awareness of ongoing projects and
nurture the sense of belonging among employees.
Safety and LTAF Target-Related Actions
In 2024, TORM continued our safety program, known as
the "One TORM Safety Culture: Driving Resilience"
program, defines standards and expectations for excellent
performance in safety. An ongoing aspect of this program is
the continuous implementation of the Five Safety I’s, which
are behavioral principles that guide the work of all TORM
employees, in offices and on vessels.
In 2024, TORM launched a new set of core values:
•
Committed to people
•
Pursuing innovation
•
Always delivering
Safety is implicitly prioritized in the commitment to people,
as committing to people includes their safety. Safety is
explicitly mentioned in the supporting line of the third value,
where it is stated that we are always delivering, without
comprising on safety.
TORM also continued the “Safety Delta” tool in 2024. This
tool consists of cycles where crews on TORM vessels can
anonymously evaluate all aspects of the safety culture on
board. The evaluation results are processed by office staff
and used to create a report that the vessel then receives to
review potential areas for improvement.
We conduct a variety of trainings throughout the year (both
in person and online) for all types of employees to enhance
safety awareness. For office employees and production
workers, trainings are organized by HR and People
Departments.
For seafarers, TORM has a dedicated training department.
With the right trainings, TORM can ensure that both
physical and psychological safety are ensured and that all
employees meet company requirements. We believe that
continuous safety training on board vessels and at
production sites can enhance and raise safety awareness,
in order to mitigate the inherent dangers of working on
board a vessel or at a production site.
We perform reviews of employee and crew surveys and take
actions where needed, to ensure that no problems are
overlooked, and we position our leadership and training
teams to properly engage with our own workforce.
Town hall meetings take place quarterly where we highlight
the importance of safety and share progress and important
ongoing projects with all employees. This helps enhance
engagement with our own workforce, and strengthen
engagement between Management and employees as well
as between different departments.
Safety at TORM is measured as Lost Time Accident
Frequency (LTAF). Read more about this measurement
under our Accounting Policy in the Social section. The listed
actions do not cover the full list of actions TORM has
implemented. The scope for LTAF reporting is only for the
seafarers based on the assessed risk and the Double
Material Assessment (DMA), however, safety trainings are
also implemented for production workers and office
employees. The action points are executed continuously.
Employee surveys are conducted on an annual basis, but
voyage surveys are conducted at the time of the end of a
voyage.
MET Employees
MET has a Safety Board in place, which oversees the safety
agenda at the company. Additionally, there are quarterly
safety meetings with the employees.
Gender Equality Actions
At TORM, we aim to ensure genuine opportunities for
career advancement and to foster diversity within our
leadership by identifying internal candidates for leadership
positions. We focus on recruiting women for leadership
positions if they are the most qualified for the position or we
assess that a diversity focus will benefit the specific team.
In 2024, we introduced our Diversity, Equity, Inclusion,
Belonging (DEIB) policy and incorporated the DEIB
framework to our recruitment strategies in order to
increase the representation of underrepresented groups.
We have implemented an initiative to make our job postings
more inclusive.
In 2024, we continued to participate in Danish Shipping’s
taskforce for more women at sea. We have incorporated 10
recommendations into processes and procedures as best
practice. The recommendations include setting gender
diversity targets, supporting women through family-friendly
policies, and rethinking the recruitment process. Also in
2024, we continued to review and optimize the initiatives
embedded in our daily operations, originally developed as
outputs from a project where Danish female seafarers were
supported in enhancing their network and participated in
mentoring for the unique lifestyle at sea.
We are updating the hiring process to ensure that we
maintain a diverse and welcoming environment, helping us
achieve high levels of equality and inclusion and to work
towards our target of female employees in leadership.
In 2024, we began a new global onboarding process, which
is streamlined across departments and locations to ensure
a cohesive understanding of employee rights and
responsibilities.
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At TORM, we are monitoring the gender pay gap during the
salary review process to ensure that we are working
towards equal pay for equal work. The salary review process
takes place annually in March.
In 2024, TORM joined the UN Global Compact Target
Accelerator program Target Gender Equality. In this nine-
month program, we are working to set and revise ambitious
corporate targets for women’s representation, equal pay,
and leadership in business. This is an opportunity to learn
and share experiences with other companies across
industries. One example of an action as a result of this
program was that we have used a “Gender Decoder” to
analyze our job ad templates and determine if the language
is appealing for female candidates.
We started the implementation process of the new DEIB
policy in the One TORM engagement survey.
MET Employees
MET has not yet set actions related to gender diversity or
female employees in leadership.
Diversity in Management
TORM’s DEIB policy addresses diversity for other criteria
than gender. The global structure of our organization and
the shipping industry already ensure an inherent level of
diversity for criteria such as nationality and educational
background. We continuously monitor how diversity
initiatives can benefit our organization.
For more details about the policies, please refer to
section G1-1
Tracking Effect of Actions and Allocating Resources to the
Action Points
At TORM, the effectiveness of actions to address impacts
is measured via direct dialog with our own workforce and via
engagement surveys. Additionally, TORM has multiple
targets, which we use to track the effect of our actions.
For more details about our targets and actions,
please refer to section S1-5
Based on the input, discussions, and outcomes from the
engagement surveys (both for office-based employees and
vessel-based employees), the People Department and the
Marine HR Department evaluate and decide on a case-by-
case basis, which action is appropriate or needed in a
particular case.
TORM’s Management allocates resources to the cases,
where we decide to take action. The resources depend on
the nature of the case, and multiple departments can
potentially be involved.
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Metrics and Targets
S1-5
Targets Related to Managing
Material Negative Impacts,
Advancing Positive Impacts, and
Managing Material Risks and
Opportunities
Time-Bound and Outcome-Oriented Targets
Reducing Negative Impacts
At TORM, we set health and safety targets to minimize
negative impacts identified in our workforce. Our target
is to continually improve our safety performance and strive
to avoid all accidents and harm to our people.
In addition to our safety target, we have set targets for
equality and diversity. We recognize these areas as
important for the well-being of our employees. Read more
about this in policy overview in the governance section
(G1-1). Additionally, from 2025 going forward, we have set
targets on the engagement survey participation rate and
the engagement score.
Lost Time Accident Frequency (LTAF)
Safety is measured as Lost Time Accident Frequency
(LTAF). We only measure LTAF for vessel-based employees
(including both contractors (contract-based or non-
guaranteed hours seafarers) and permanently (full-time)
employed seafarers). This is a gauge of serious work-related
personal injuries which result in more than one day off work,
measured per million hours of work. In 2024, TORM
conducted physical visits on board vessels and additional
activities such as physical seminars, virtual town halls, and
information-sharing sessions, and we also deployed
thorough review and analysis of data such as “near-miss”
for better insight. A high number of near-miss reports
indicate that the organization proactively monitors and
responds to risks.
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Topic
Unit
2024
actuals
2023
actuals 2030 Target
LTAF
Per million exposure
hours
0.42
0.32 TORM’s safety performance target for 2030 is ≤0.3.
Port State Control
Ratio
0.65
0.63
Achieve a score of less than 0.75 deficiencies/PSC
inspection every year towards 2030.
Underrepresented gender in
Board of Directors
Percentage
20 %
20 %
40% Of Underrepresented Gender In Board of
Directors.
Underrepresented gender in
leadership positions
Percentage
19 %
20 %
35% of leadership positions should be held by the
underrepresented gender.
Participation rate
Percentage
93 %
96 %
TORM´s employee engagement participation rate is
over 90%.
Engagement score
Number
8.7
8.6
TORM´s employee engagement score is over 8.2 (or
the equivalent) (on a scale of 1 to 10).
TORM’s Management has reviewed and approved TORM’s
LTAF target to reach or remain at 0.3 by 2030. TORM
continuously works to minimize our LTAF. The LTAF
measurement is also embedded in our company's KPIs,
which form part of the basis for remuneration for all office-
based permanent employees.
TORM’s Board of Directors and Senior Management Team
monitor TORM’s LTAF progress in TORM’s Monthly
Reports. The LTAF metric is also part of TORM’s incentive
scheme for all of TORM’s office-based employees.
Port State Control
TORM commits to providing a well-functioning workplace
for our seafarers and counterparts. To formalize this
commitment, we have set a target to achieve a score of
“Less than 0.75 Deficiencies” per port state control
inspection every year towards 2030. The target was set in
2024. The metric measures performance in relation to Port
State Control (PSC) inspection results.
Underrepresented Gender in Board of Directors
At the end of 2024, the Board of Directors consisted of
four male members and one female member elected at the
Annual General Meeting. TORM has fulfilled the current
target of 20% female Board members (1 out of 5).
The next target for the Board of Directors is for 2030,
stating that 40% of the members must be of the
underrepresented gender. TORM has implemented the
DEIB policy to support reaching the target. The Board of
Directors Nomination Committee supervises and reviews
both the target and the process to achieve it on an annual
basis. Discussions about the composition of the Board of
Directors occur with the Nomination Committee, and any
changes to the Board of Directors composition may require
time.
Underrepresented Gender in Leadership Positions
We actively monitor gender representation in senior
leadership, other levels of management, and the workforce.
Historically, women have always been the
underrepresented gender at TORM, and in the shipping
industry in general. At the end of 2024, the proportion of
female full-time employees in the office-based workforce
was 30%, while women in leadership positions constituted
19%. TORM has a target for 2030 stating that 35%
leadership positions should be held by the
underrepresented gender.
In 2022, TORM took over Marine Engineering (MET) as a
subsidiary. Including this segment and our permanent
seafarers, we have a total of 187 managers with one or
more direct reports who are not members of the Board. The
underrepresented gender, women, constitutes 12% of this
group of managers, and we have a target of 20% women in
2030.
Engagement Survey Participation ratio and Engagement
score
In 2024, TORM decided to set two new targets for the
office-based employees’ engagement survey, applicable
from 2025 going forward. These targets are for the
participation rate and the engagement score of the survey.
The set target for the participation rate is a minimum of
90% and for the engagement score, the target is a
minimum of 8.2 (on a scale of 1 to 10, where 10 is the
highest). The targets are annual targets, with the target
year of 2030. TORM will report on this from 2025 and
onwards.
Advancing Positive Impacts
At TORM, we prioritize seeking out and implementing
initiatives intended to have positive impacts on our
workforce. We have not set general targets for advancing
the positive impacts. However, after every survey
conducted, the results are reviewed and assessed. If
needed, an action plan is made to review the outcome, set
new targets, and initiate tasks.
Managing Material Risks and Opportunities
No material financial risk or opportunities have been
identified.
Process for Setting Targets, Including How
We Engaged the Workforce
TORM’s process for setting new ESG targets is part of the
yearly strategy, business plan, and budget process. ESG
targets are approved by the Senior Management Team and
the Board of Directors.
All ESG targets are assessed on an ongoing basis by a wide
range of employees and reviewed annually by the Senior
Management Team and Board of Directors. Where possible,
targets are measured quarterly and shared and discussed
internally in the organization. If applicable, mitigation
efforts are initiated.
Refer to ESRS 2 for further details of the process
How We Track Performance and Actions
For LTAF measures, a quarterly assessment of the metric is
performed by our Head of Quality, Head of Technical, and
the Designated Person Ashore. The metrics are automated
and visible on an internal dashboard.
The People Department actively monitors the
representation of the underrepresented gender in senior
leadership, other levels of management, and the workforce.
The figures are reported annually.
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See specific targets in "Targets" section as well as
more information about our actions to achieve
these targets under Diversity metrics.
For the engagement survey related targets, the People
Department tracks the progress and results via the annual
or bi-annual engagement survey.
Lessons Learned from Tracking Performance
For LTAF development information please refer to
section S1-14
Port State Control Deficiencies
We are monitoring the development of the Port State
Control numbers. Currently, the numbers reflect the
expected development from taking delivery of numerous
new vessels since 2023.
Employee Engagement Survey
Our engagement survey is a key parameter to track
progress at TORM, as this provides an indication of what is
important to our colleagues across all our locations. When
analyzing the results of the survey, we determine the areas
to focus on. In the further investigation, we find points to
prioritize, and we also look at what we can do to prevent
future issues in an effort to be proactive instead of reactive.
Underrepresented Gender on the Board
At TORM, we have set a target to have 40% women on the
board in 2030, as women are currently the
underrepresented gender. Ongoing discussions about the
progress take place in the Board of Directors’ Nomination
Committee.
Underrepresented Gender in Leadership Positions
Based on the progress towards our target for the
underrepresented gender in leadership positions, we are
working to restructure TORM’s recruitment process, both
in job advertising and in the recruitment steps for potential
candidates. We have tested a method of blind recruitment,
which means screening applications without being able to
see name, location, and gender, but we could not find a
recruitment system that could handle this function for all of
our office locations. Metrics and development are
presented regularly to Board of Directors.
At TORM, we have engaged in discussions with the Head of
People Department and the Head of Marine HR Department
to understand developments and lessons learned
throughout the year. We deemed this engagement to have
provided adequate and comprehensive insight. For that
reason, we have not engaged directly with workers
representatives.
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S1-6
Characteristics of Our
Employees
Number of employees by location and gender
(Headcount)
Women
Men
Total
Office-based employees
Denmark
46
133
179
India
50
146
196
Philippines
27
16
43
Singapore
4
9
13
United Arab Emirates
0
2
2
United Kingdom
3
9
12
United States of America
2
10
12
China
11
11
22
Total office-based employees
143
336
479
Production workers
China
0
24
24
Denmark
3
14
17
Total production workers
3
38
41
Seafarers
Americas
2
2
4
Europe
15
355
370
India Subcontinent
12
1,506
1,518
Southeast Asia
13
1,770
1,783
Other
0
2
2
Total Seafarers
42
3,635
3,677
Total
188
4,009
4,197
Number of employees by contract type and gender
(Headcount)
Women
Men
Total
Total number of employees
Office-based employees
143
336
479
Seafarers
42
3,635
3,677
Production workers
3
38
41
Total
188
4,009
4,197
Number of permanent/full time employees
Office-based employees
139
323
462
Seafarers
6
79
85
Production workers
3
36
39
Total
148
438
586
Number of part-time employees
Office-based employees
2
0
2
Seafarers
0
0
0
Production workers
0
2
2
Total
2
2
4
Number of temporary employees
Office-based employees
0
5
5
Seafarers
0
0
0
Production workers
0
0
0
Total
0
5
5
Number of non-guaranteed hours employees
Office-based employees
2
8
10
Seafarers
36
3,556
3,592
Production workers
0
0
0
Total
38
3,564
3,602
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Number of employees by contract type and region
Headcount
Office-based employees
Number of permanent/full-time employees
Denmark
168
India
191
Philippines
43
Singapore
13
UK
12
US
11
United Arab Emirates
2
China
22
Number of part-time employees
Denmark
1
India
0
Philippines
0
Singapore
0
UK
0
US
1
United Arab Emirates
0
China
0
Number of temporary employees
Denmark
0
India
5
Philippines
0
Singapore
0
UK
0
US
0
United Arab Emirates
0
China
0
Number of non-guaranteed hours employees
Denmark
10
India
0
Philippines
0
Singapore
0
UK
0
US
0
United Arab Emirates
0
China
0
Number of employees by contract type and region
Headcount
Seafarers
Number of permanent/full-time employees
Americas
0
Europe
85
India Subcontinent
0
Southeast Asia
0
Other
0
Number of non-guaranteed hours employees
Americas
4
Europe
285
India Subcontinent
1,518
Southeast Asia
1,783
Other
2
Number of employees by contract type and region
Headcount
Production workers
Number of permanent/full-time employees
China
22
Denmark
17
Number of part-time employees
China
2
Denmark
0
Number of non-guaranteed hours employees
China
0
Denmark
0
Employee turnover (Headcount and Percentage)
Employees
left
Turnover
ratio
Office-based employees
48
11%
Seafarers
291
8%
Production workers
24
51%
Total
363
9%
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Key Characteristics of Our Workforce
At TORM, we generally designate our own workforce as
vessel-based employees, office-based employees, or
production workers.
Learn more about these definitions in section
"Scope of our reporting on S1 data"
Vessel-Based Employees
TORM employs more than 3,500 vessel-based employees.
A small number of these employees are permanently
employed while most are employed on a contract basis.
TORM employs seafarers of varying nationalities.
Office-Based Employees at TORM
TORM has approximately 400 office-based employees in
ten locations in seven countries on three continents.
MET Employees
MET has approximately 100 employees in four locations in
two countries, Denmark, and China. Approximately 60% of
the employees work in offices and 40% of the employees
work in production.
S1-9
Diversity Metric
Gender Distribution of Management and Age
Distribution of Employees
As described in S1-5 section, diversity is a priority for TORM
because we believe a diverse workforce provides a balance
of voices and thoughts that inspire innovation and
creativity, contributing to TORM’s success. A cornerstone
of the One TORM platform is the concept that all
employees are of equal value.
Diversity Metrics in Management
In 2024, women in leadership positions at TORM
constituted 12%. We have a total of 187 managers with one
or more direct reports, who are not members of the Board
of Directors.
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Gender Diversity in Management
2024
2023
Non-executive Directors of the Company and
Executive Directors of the Company (Board of
Directors)¹⁾
Total number of members
5
5
Percentage of the underrepresented gender
20 %
20 %
Target figures in percentage
40 %
40 %
Year of achievement of target figures
2030
2030
Shore-based managers in TORM not listed above
(managers with one or more direct reports)
Total number of members without Senior Executives
84
80
Number of members of Senior Executives without
the Executive Director
3
3
Percentage of the underrepresented gender for
managers
19 %
20 %
Percentage of the underrepresented gender for
Senior Executives
0 %
0 %
Target figures in percentage for underrepresented
gender for managers
35 %
35 %
Year of achievement of target figures for
underrepresented gender for managers
2030
2030
Managers - Marine Engineering segment
(managers with one or more direct reports)
Total number of members
18
14
Percentage of the underrepresented gender
6 %
0 %
Target figures in percentage
15 %
15 %
Year of achievement of target figures
2030
2030
Managers - Permanent seafarers (managers with
one or more direct reports)
Total number of members
85
90
Percentage of the underrepresented gender
7 %
6 %
Target figures in percentage
10 %
10 %
Year of achievement of target figures
2030
2030
Total number of managers excluding Board of
Directors
Total number of members
187
184
Percentage of the underrepresented gender
12 %
11 %
Target figures in percentage
20 %
20 %
Year of achievement of target figures
2030
2030
¹⁾ The Company includes both TORM and MET.
S1-10
Adequate Wages
TORM assesses the level of wages and payment packages
on an annual basis.
This reporting requirement only concerns office-based
employees, as the wages of our vessel-based employees
and production workers are regulated via collective
bargaining agreements or other industry or local regulations
and are not entirely under TORM’s control. However, the
salary level is also monitored for vessel-based employees
and production workers.
Office-based employees receive appropriate wages in line
with applicable benchmarks, reviewed annually and
regulated locally. Non-guaranteed hours employees (mainly
interns and student assistants) receive wages that are
regulated locally. Based on our internal evaluation, we
assess that all office employees across TORM receive
adequate wages.
S1-11
Social Protection
Social Protection for Employees Against Loss
of Income
Vessel-Based Employees
TORM’s seafarers are covered by the Maritime Labour
Convention (MLC) and local collective bargaining
agreements, which establish a baseline for seafarer rights
at work. All seafarers and their family members are insured
by TORM while they are active at sea with TORM and when
they are part of our pool of seafarers.
Office-Based Employees and MET Employees
All office-based employees and production workers at
TORM are covered by social protection against loss of
income due to sickness, unemployment, employment injury,
parental leave, and retirement, according to the local
regulations where they are employed. The details of these
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Diversity of Permanent Employees
Male
Female
Non-Executive Directors of the Company
3
1
Executive Directors of the Company
1
0
Senior Executives
3
0
Managers not listed above (managers with one or more direct reports)
164
23
Other permanent employees of the Group
285
129
Employee age distribution
Headcount
Percentage
Office-based employees
Below 30
69
14 %
Between 30 and 50
325
68 %
Above 50
85
18 %
Seafarers
Below 30
985
27 %
Between 30 and 50
2,194
60 %
Above 50
498
13 %
Production workers
Below 30
11
27 %
Between 30 and 50
20
49 %
Above 50
10
24 %
Total number of employees
Below 30
1,065
25 %
Between 30 and 50
2,539
61 %
Above 50
593
14 %
terms can be found in the Employee Handbooks per
location and in the personal contracts for each employee,
according to their location’s standards.
S1-14
Health and Safety Metrics
This reporting requirement only concerns vessel-based
employees and production workers, as there is an inherent
safety risk when operating a vessel or working at a
manufacturing site.
TORM uses an SMS (Safety Management System) and has
procedures in place that cover every employee and most
major service providers onboard the vessels. The number of
incidents and fatalities is reported to everybody working
onboard.
Lost Time Accident Frequency (LTAF)
Lost Time Accident Frequency (LTAF) is a measure of
serious work-related personal injuries which result in more
than one day off work. LTAF is measured as the number of
injuries per million hours of work. TORM’s LTAF measure in
2024 was 0.42 and in 2023 it was 0.32. Many factors
influenced our LTAF performance in 2024, including the
addition of new vessels to the fleet, new crew members,
and new technologies, which have all entailed startup
phases with steep learnings curves. We are leveraging
these experiences as data and learning for our safety
procedures going forward.
TORM’s LTAF metric includes all seafarers, including
contractors (contract-based or non-guaranteed hours
seafarers) and permanently (full-time) employed seafarers
as well.
Production Workers
AT MET production sites, accidents are monitored, and
formal training is provided to everybody working on site.
There is no similar industry measurement to LTAF in
manufacturing.
Health and Safety Measures
Number of Fatalities
TORM
0
MET
0
Total
0
Number of Injuries/Accidents
TORM
7
MET
4
Total
11
Lost time accident frequency
0.42
S1-16
Remuneration Metrics (Pay Gap
and Total Remuneration)
Pay Gap Between Female and Male Employees
The calculation includes office-based employees,
production workers and seafarers.
In 2024, the gender pay gap at TORM was calculated to be
6%. The calculation is based on the total average salary
(including base salary, other incomes, pension, bonus, and
other short-term and long-term incentives) of full-time and
part-time male and female office-based employees,
production workers, and seafarers, across all TORM
locations and levels. This means that the number reflects
an aggregated calculation of the entire workforce,
irrespective of different locations, roles, qualifications, and
experience levels.
As such, this calculation cannot be used to measure equal
pay for equal work. Instead, the gender pay gap provides an
overview of gender pay disparities across the broader
employee population.
In 2025, we will continue working on obtaining more
granular information on the variable pay components.
Difference Between the Highest Paid
Employee and Median
The calculation includes office-based employees,
production workers, and seafarers. The calculated total
annual remuneration ratio in 2024 is 234.
The following formula was used for the calculation:
Annual total remuneration for the company´s highest paid individual
Median employee annual total remuneration (excluding the highest
paid individual)
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S1-17
Incidents, Complaints, and
Severe Human Rights Impacts
Work-Related Incidents and Complaints
In 2024, 4 cases were created based on reports to TORM’s
and MET´s whistleblower setups.
For details please refer to the table.
TORM did not pay any fines, penalties, or compensation for
damages due to the incidents and complaints disclosed
above and in the below table.
The whistleblower setup is advertised on TORM and MET´s
websites; www.torm.com and https://meproduction.com.
Read more about TORM’s whistleblower setup in
G1-1
Based on the categorization and information provided by
the third-party law firm, TORM can categorize the cases
into the above points mentioned categories.
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Incidents and Complaints
2024
2023
Total number of complaints filed through channels for own workforce
4
1
Number of complaints filed to National Contact Points for OECD Multinational Enterprises
0
0
Total number of incidents of discrimination or harassment
0
0
Total amount of fines, penalties and compensation paid as a result of Incidents of discrimination
0
0
Number of severe human rights incidents
0
0
Number of severe human rights issues and incidents connected to own workforce that are cases of
non respect of UN Guiding Principles and OECD Guidelines for Multinational Enterprises
0
0
Total amount of fines, penalties and compensation paid as a result of severe human rights incidents
0
0
Incidents and Complaints
2024
2023
Number of whistle-blower cases reviewed
4
1
Number of cases requiring actions and subsequent addressed actions
3
1
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > SOCIAL > S2
Introduction
ESRS 2 SBM-3 Material Impacts, Risks,
and Opportunities and their
Interaction with Strategy and
Business Model
Business Strategy and Value Chain Workers
Who Can Be Materially Impacted by TORM
Safety is a central part of TORM’s business strategy. We
prioritize meeting compliance and safety requirements, and
maintaining a high-quality work standard. In order to
maintain our vessels, TORM is in contact with dry docks and
the workers at the dry docks.
Based on our Double Materiality Assessment (DMA), we
have identified that the workers in TORM’s upstream value
chain, specifically dry-dock workers, can be materially
impacted by TORM’s activities.
Working in a dry dock with the maintenance of vessels is
hard manual labor involving heavy machinery and
chemicals. We determine that TORM has a responsibility for
ensuring that workers employed at the dry docks in our use
have a safe working environment with proper equipment,
working conditions, safety measures, and safety training.
This is also important because working conditions at
shipyards affect our own workforce.
Locations with Significant Risk of Child Labor,
Forced Labor, or Compulsory Labor in Our
Value Chain
TORM has policies and procedures about the safety and
other conditions in the shipyards we use, and part of our
procedure is to have multiple TORM employees and
representatives present before and during dry-docking
operations. These TORM representatives oversee the
process, they assess and report to TORM if they believe
that there are any human rights violations such as child
labor or forced labor. As part of supervising the process,
TORM´s representatives also evaluate the process and the
dry docks themselves. The evaluation is documented in
checklists, which are shared with the crew members and
Technical Division, including Management. For
documentation, TORM uses a yard evaluation from, where
it is documented how the dry docks handle the
maintenance process from health, safety, environmental,
and other perspectives.
Material Negative Impacts
At TORM, we have a limited impact on general working
conditions and safety measures, which impact the dry-dock
workers.
In cases where TORM is the main or one of the main
customers of a shipyard, we work to influence the
shipyard’s safety and working conditions despite our limited
impact. Our efforts are further elaborated throughout the
S2 section, including below in the next section. In the event
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Workers in
Value Chain
Section S2 is about workers in our value
chain. TORM has found our material
group in this area to be dry-dock
workers, and this disclosure covers the
impacts, risks, and opportunities related
to the workers involved in our dry-dock
operations. In this area, we have also
introduced a new target, expanding our
safety measurement from just our own
workforce to our most used dry docks.
S2
that TORM experiences a substandard HSE level in dry-
dock worker conditions or the dry dock’s practices, TORM
can evaluate the option to discontinue the usage of the dry
dock.
S2 Workers in the Value Chain
Description
Impact, Risk or
Opportunity
Health and safety
There is an inherent risk when maintaining a
vessel (etc. in dry dock) where working
conditions can be dangerous and lead to
accidents if proper training and safety
procedures are not in place
Potential
negative
impact
Material Positive Impact
As described in the previous section, we focus on and try to
influence health, safety, and working conditions at
shipyards, where we are a significant customer. We aim to
influence processes and implement safety improvements in
these yards.
At TORM, we designate a safety manager to visit the
shipyards during the dry-docking period as well as outside
of the dry-docking period.
We expect shipyards to follow TORM policies regarding
safety and the dry-docking process before and during the
process. To assist with improvements, we schedule
monthly safety meetings with our most-used shipyards,
where participants discuss important safety issues and
action plans, as well as potential follow-up actions for
improvement.
Material Risks and Opportunities from
Dependencies on Value Chain Workers
For TORM, there are no material risks or opportunities
arising from dependencies on value chain workers. We
operate independently, and we do not rely on workers within
the value chain to maintain business continuity as we could
easily solicit services from a different dry dock.
Value Chain Workers at Greater Risk of Harm
At TORM, we have not identified any specific group of dry-
dock workers that face a greater risk of harm compared to
others. All workers in shipyards and dry docks are exposed
to inherent risks due to the nature of the work. As described
in "Business strategy and value chain workers" section, this
work entails heavy machinery and chemicals. Safety
protocols are in place to mitigate these risks for all workers
equally.
Material Risks and Opportunities Related to
Specific Groups of Value Chain Workers
The material risks do not arise from a specific group of value
chain workers, but constitute generic risks about the
health, safety, and working conditions of the dry-dock
workers in the used shipyards.
S2-1
Policies Related to Value Chain
Workers
Policies Relating to Value Chain Workers
At TORM, we have internal policies and procedures for our
workforce. Multiple TORM employees and TORM
representatives must be present at the shipyard before and
during every dry-docking period. After dry docking, we must
prepare an evaluation. The following policies extend to the
shipyards and their workers:
Dry Docking 01N.10.09.01
The policy contains our requirements for dock planning and
execution, and it is related to the health and safety of
seafarers and TORM employees present at the dry dock, as
well as the health and safety of the workers at the shipyard.
Safety in Dry Dock 01N.10.09.02
The policy contains our safety requirements while the
vessel is in the dry dock and it is related to the health and
safety of seafarers and TORM employees present at the dry
dock, as well as the health and safety of the workers at the
shipyard.
Both of the above policies are part of our Safety
Management System (SMS) and are overseen by the
captain and chief engineer present for the dry docking, as
well as by the dry-docking manager, the vessel manager,
and the management of the specific shipyard. They are
shared and discussed with all shipyards used by TORM.
The policies include descriptions of the tasks, which the
shipyard is required to perform, and these tasks are
supervised and evaluated by TORM employees.
For more details, please refer to the G1-1
Human Rights Policy Commitments Relevant
to Value Chain Workers
When we enter into new contracts with a service provider
for TORM, we always negotiate the terms and include our
Business Principles in the contracting process. This
includes clauses on human rights and safety.
TORM has a Modern Slavery Statement and our TORM
Business Principles, which both extend to the workers in
the value chain. TORM is also committed to the UN Global
Compact and it's principles on human rights. Additionally,
we thoroughly evaluate, before, during, and after each dry-
docking operation to ensure compliance with safety and
labor standards by TORM’s own workforce, the dry-dock
manager, and the safety manager. At TORM, we do not
currently have a formal policy about human rights for value
chain workers.
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Engagement with Value Chain Workers
TORM employees, including the dry-dock manager and the
safety manager, are in regular contact with the yard
managers before and during dry-docking operations.
Measures to Provide Remedy for Human
Rights Impacts
Our whistleblower setup is available to dry-dock workers.
See more details about our whistleblower setup in section
G1-1. Additionally, TORM employees present in the dry
docks, particularly the dry-dock manager and safety
manager, oversee the procedures. They are also tasked
with ensuring that proper working conditions are
maintained, and that human rights matters are actively
addressed throughout the process.
How Our Policies Address Human Trafficking,
Forced Labor, and Child Labor, and How They
Align with Internationally Recognized
Instruments
At TORM, we do not currently have a formal policy about
human rights for value chain workers, however, we do have
procedures in place to ensure compliance with human
rights standards, as described in "Human rights policy
commitments" section.
No violations involving value chain workers and the UN
Guiding Principles on Business and Human Rights, the ILO
Declaration on Fundamental Principles and Rights at Work,
or the OECD Guidelines for Multinational Enterprises were
reported.
We do not have a specific supplier code of conduct.
However, TORM´s Business Principles are included in the
contracts signed by our suppliers. We determine that this
completes the purpose of a supplier code of conduct, and
we find that our Business Principles are enforced.
S2-2
Processes for Engaging with
Value Chain Workers About
Impacts
How the Perspectives of Value Chain Workers
Inform Decisions
Workers at shipyards have access to TORM employees and
representatives before and during the dry-docking period.
They are in contact with the dry-dock manager, the safety
manager from TORM, and the vessel manager for the
relevant vessel and vessel crew.
TORM does not have direct general contact with the
shipyard workers, but instead, we are in direct contact with
the shipyard management.
The Stage Where Our Engagement With Value
Chain Workers Occurs
Engagement with value chain workers is easiest during the
dry-docking operations but also possible before or after dry
docking, in locations where we have a safety manager, such
as at the Chinese shipyards.
TORM’s Most Senior Role with Operational
Responsibility for Ensuring the Engagement
Takes Place
The Head of Technical Projects is responsible for
engagement with shipyards. This role is a direct report to
the Head of the Technical Division.
Agreements with Unions
TORM does not have influence or decision-making rights on
what framework agreements are created by the shipyards
or if unions are involved with them.
How We Assess Effectiveness of Engagement
with Value Chain Workers
At TORM, we do engage regularly with value chain workers,
as they have access to TORM employees and
representatives throughout the dry-docking period. See
more information on this engagement in S2-2.
However, there is no formal assessment of the engagement
with the value chain workers directly, but there is an
assessment of the relationship with the given dry dock and
the work done by the dry dock and workers in the dry dock.
Steps We Take to Gain Insight into the
Perspectives of Particularly Vulnerable
Workers
Based on our assessment, there is no particularly vulnerable
group of shipyard workers. All workers in the shipyard are
affected by the same working conditions. TORM gains
insight into the perspective of the workers as described in
S2-2.
S2-3
Processes to Remediate
Negative Impacts and Channels
for Value Chain Workers to
Raise Concerns
Process for Providing Remedy and Specific
Channels for Value Chain Workers to Raise
Concerns
TORM’s whistleblower setup is available for all and is
accessible from TORM´s website.
Value Chain Workers’ Awareness of and Trust
in Our Channels for Raising Concerns
We do not have a process in place to assess whether value
chain workers are aware of or trust these structures to
report concerns.
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S2-4
Taking Action on Material
Impacts on Value Chain
Workers, and Approaches to
Managing Material Risks and
Pursuing Material Opportunities
Related to Value Chain Workers,
and Effectiveness of Those
Actions
Actions to Prevent Negative Impacts on Value
Chain Workers
TORM employees, specifically the safety manager, conduct
shipyard visits and evaluations to ensure decent working
conditions. We follow up on recommendations and discuss
actions during dedicated monthly meetings, as well as plans
for the next steps.
Actions Taken to Provide Remedy
No action was taken to provide remedy.
Additional Actions in Place to Deliver Positive
Impacts for Value Chain Workers
At TORM, we request continuous improvements at our
most-used Chinese shipyards in relation to weaknesses
observed at shipyard visits and during dry-docking
operations. We have follow-up meetings in place and
conduct continuous evaluations due to our large volume of
dry-docking operations at our main shipyards.
How We Track and Assess the Effectiveness
of our Actions
Please see the following section for a description of our
process to identify and assess our actions.
Our Process to Identify Needed Actions to
Address Potential Negative Impacts
We review and complete an evaluation form after every
shipyard visit. During the dry-docking process, there are
daily morning meetings, where requirements and
recommendations are discussed. During monthly meetings,
we review and discuss multiple points.
Our Approach to Acting on and Providing
Remedy for Specific Material Negative
impacts
No actions in place.
Actions to Mitigate Material Risks Related to
our Dependencies on Value Chain Workers
At TORM, we are not dependent on shipyard workers or
shipyards in general. We can select freely among shipyards,
and we continuously assess our possibilities.
Actions to Pursue Material Opportunities
Related to Value Chain Workers
Currently, we focus on maintaining strong working
relationships and ensuring the well-being of shipyard
workers, as well as mitigating identified material risks,
rather than pursuing opportunities.
We remain committed to supporting safe and fair working
conditions within and in connection with our operations,
and we will continue to prioritize the health and safety of all
workers in our value chain.
Actions to Avoid Causing or Contributing to
Negative Impacts on Value Chain Workers
During dry-docking operations, we always have a full crew
on board and present. Vessel managers and dry-dock
managers are present as well.
At TORM, we have strict internal policies and procedures
relating to safety during dry docking. All crew and other
relevant personnel are trained in these policies and
procedures, which are also extended to the shipyards that
we use.
We conduct shipyard visits and evaluations to ensure that
health and safety procedures are established, and
personnel abide by them, and we evaluate the quality of
work.
At the shipyards most used by TORM, we have a safety
manager as a representative who oversees general working
conditions and conducts monthly safety meetings, where
they discuss previous recommendations, and plan actions if
deemed necessary.
Incidents Reported Related to Value Chain
Workers
At TORM, we are not aware of any reported or unreported
severe human rights issues or incidents connected to the
shipyards that we use.
Tracking Effectiveness of Policies and Actions
At TORM, we track the effectiveness of policies and actions
for value chain workers via our set targets.
For more information about the targets, please see
section S2-5
Resources Allocated to Management of
Material Impacts with Information that
Enables Users to Understand How These
Impacts Are Managed
At our most-used shipyards, we have a safety manager
present before, during, and sometimes after the dry-
docking process. We also have a dry-dock manager present
at every dry-docking operation. These resources are
allocated to oversee the process, the working conditions,
and the treatment of the workers in the dry docks.
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Metrics and Targets
S2-5
Targets Related to Managing
Material Negative Impacts,
Advancing Positive Impacts, and
Managing Material Risks and
Opportunities
Targets to Manage Our Material Impacts,
Risks, and Opportunities Related to Value
Chain Workers
Topic
2030 Target
Working conditions in
dry docks used by TORM
Monitoring the LTAF data of
the main 2 dry docks used by TORM
to improve our internal assessment
process
At TORM, we are currently focused on improving the quality
of our data related to Lost Time Accident Frequency (LTAF)
and fatalities. This effort is vital to enable ourselves to set
informed and effective targets going forward.
In 2024, TORM decided to set a target from 2025 and
onwards. The target is to monitor LTAF data of the main
two dry docks used by TORM. This will improve our internal
dry-dock assessment process. The target is the monitoring
of the data itself. We are not setting a target for the actual
LTAF numbers of the measured dry docks. Once we have a
reliable baseline of data, we will be better positioned to
establish meaningful targets to manage material impacts,
risks, and opportunities related to value chain workers.
The Technical Projects Department will inquire, follow up
on, and monitor the data on an annual basis. The target
year is 2030.
Our Process for Setting Targets Related to
Value Chain Workers, Tracking Our
Performance, and Identifying Lessons
TORM’s process for setting new ESG targets is part of the
yearly strategy, business plan, and budget process. ESG
targets are approved by the Senior Management Team and
the Board of Directors.
All ESG targets are assessed on an ongoing basis by a wide
range of employees and reviewed annually by the Senior
Management Team and the Board of Directors. If
applicable, mitigation efforts are initiated.
Refer to ESRS 2 for further details of the process
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Accounting Policy
ESRS
S1 - Own Workforce
Total Number of Employees
Employee data is retrieved from records in HR systems and
reported on a headcount basis, including full-time, part-
time, temporary, and non-guaranteed hours employees
across all geographical locations. Gender is reported based
on the data in the HR systems. Data reflects the status as
of 31 December 2024.
Employee Characteristics Based on Contract
Type
•
Full-time employees. Employees with a full-time
contract with TORM equivalent to a 1.0 FTE position.
Full-time employees are also known as permanent
employees. The category is used for seafarers, office-
based employees, and production workers.
•
Part-time employees. Employees on contract with
TORM on a less than 1.0 FTE. For example, a 30-hour
per week position equaling a 0.8 FTE position. This
concept is used only in Denmark. The category is used
for office-based employees and production workers.
•
Permanent employees. This classification is not utilized
at TORM.
•
Temporary employees. Employees on time-limited
contracts. In Denmark, we refer to this group as time-
limited contract employees. In India, we refer to them
as contract employees. Applicable only for office-based
employees.
•
Non-guaranteed hours employees. Employees paid by
the hour in the office, such as student assistants/
interns, and contract-based seafarers. All active
seafarers per year-end that are not on permanent
employment.
•
Non-employees or consultants/hired on external
contract. TORM employs very few of this type of
employee, approximately a few people per year. In India,
TORM refers to this concept as “External Contract
Employees”. TORM has chosen to use utilize the phase-
in allowance to exclude this category in our reporting.
Office-based employees and production workers are
categorized by actual office locations and country. The
locations in use are: Denmark, India, Philippines, Singapore,
United Arab Emirates (UAE), United Kingdom (UK), United
States of America (US) and China. Note, that production
workers are only located in Denmark and in China.
Vessel-based employees are categorized based on
nationality and per continent. The locations in use are:
Americas, Europe, Indian Subcontinent, Southeast Asia,
Other.
Number and Rate of Employee Turnover
The employee turnover rate is calculated as the number of
employees who left during the reporting year divided by the
average number of employees during the year (the average
of employees is calculated based on the beginning number
and ending number of employees of the reporting period).
All figures are reported on a headcount basis.
This formula was used to calculate the turnover rate:
Total number of employees leaving
* 100
(Employees at the beginning + Employees at the end) / 2
Gender Distribution in Management and
Diversity of Permanent Employees Tables
•
Non-executive Directors of the Company: Board of
Directors excluding the Executive Director
•
Executive Directors of the Company: CEO
•
Senior Executives: the Senior Management Team
excluding the Executive Director
•
Managers not listed above: Employees not listed above
with at least direct report, including permanently
employed seafarers, in officer ranks
•
Other permanent employees: all remaining permanently
employed staff, including permanently employed
seafarers, who are not categorized as officers/
managers
TORM defines top management as the Executive Director
and the Senior Executives of the company.
Officer ranks of permanent seafarers:
•
Master/Captain
•
Chief Officer
•
Second Officer
•
Third Officer
•
Fourth Officer
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•
Chief Engineer
•
Second Engineer
•
Third Engineer
•
Fourth Engineer
•
Electrician
•
Electro-Technical Officer
•
Junior Officer
•
Junior Engineer
Underrepresented Gender in Management in
Percentage
Proportion (number and percentage) of individuals in
TORM’s office/shore-based management, who are women.
Only TORM office-based employees are included. Managers
are defined as an individual with at least one direct report.
Age Distribution of All Employees
Calculations include all employees (full-time, part-time,
temporary, and non-hour guaranteed employees, across all
locations and levels, including management), and data is
given on a headcount basis as of 31 December 2024. The
reported data is divided into three categories: 1. Employees
under 30 years old, 2. Employees between 30 and 50 years
old, including both 30 and 50 years olds and 3. Employees
above 50 years old.
Lost Time Accident Frequency (LTIF or LTAF)
Lost Time Accident Frequency (LTAF) is a measure of
registered serious work-related personal injuries per unit
exposure hours for the operating fleet. Unit in respect of
LTAF is one million man hours. Lost time accidents are the
sum of fatalities, permanent total disabilities, permanent
partial disabilities, and lost workday cases as based on
OCIMF Marine Injury Reporting Guidelines Section 3.
This metric is applicable to all seafarers at TORM, including
contractors (contract-based or non-guaranteed hours
seafarers) and (full-time) permanently employed seafarers
as well.
Injuries and Accidents
At TORM, we define injuries and accidents with the same
calculation method as used for LTIF or LTAF, which relate to
serious work-related personal injuries.
Please refer to our health and safety management
and metrics section
Gender Pay Gap
Gender pay gap is calculated as the difference of average
annual total remuneration between female and male
employees, reported as a percentage of the average annual
total remuneration of male employees. The calculation
includes the full-time and part-time employees’ (including
office-based employees, seafarers, and production
workers) base salary, other monthly incomes such as
“fritvalg”, where applicable, St. Bededagstillæg, where
applicable, monthly allowances (such as car allowance,
housing allowance, where applicable), pension, bonus, and
other short-term or long-term incentives. The amounts are
converted to USD with the effective foreign exchange rates
of the last day of the year.
Gross pay level per employee is calculated as the Annual
Gross Salary per FTE. The part time employees´ salary has
been converted to full-time equivalents to compare.
Excluded from the calculation are temporary employees,
interns, and students. The calculation does not take
educational background, seniority, or position into account.
The used formula for the calculation is the following:
(Average gross pay level of male employees - Average gross
pay level of female employees) * 100
Average gross pay level of male employees
Total Remuneration Ratio
The ratio is calculated based on the following formula:
Annual total remuneration for the company´s highest paid individual
Median employee annual total remuneration (excluding the highest
paid individual)
The calculation based on the average annual gross pay level
of all full-time and part-time office-based women
employees and all full-time and part-time office-based male
employees. The calculation includes the base salary, other
monthly incomes, like “fritvalg”, where applicable, St.
Bededagstillæg, where applicable, monthly allowances (like
car allowance, housing allowance, where applicable) and
pension. The amounts are converted to USD with the
effective foreign exchange rates of the last day of the year.
Gross pay level per employee is calculated as the Annual
Gross Salary per FTE. The part time employees´ salary has
been converted to full-time equivalents to compare.
Severe Human Rights Incidents and Other
Discrimination/Harassment and Complaints
Cases
The number of discrimination-related complaints filed
through our complaints mechanism /whistleblower setup.
These are incidents or complaints of ill-treatment on the
grounds of gender, racial or ethnic origin, nationality,
religion or belief, disability, age, or other relevant forms of
discrimination involving internal and/or external
stakeholders across operations in the reporting period.
Severe human rights incidents can also be reported via
formal complaints through the whistleblowing systems.
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SASB
SASB metrics
LTAF or LTIF or LTIR (Based on OCIMF Marine
Injury Reporting Guidelines Section 4)
Please refer to Lost time accident frequency
definition
Marine Casualty (Based on IMO Casualty
Investigation Code Ch 2 -2.9))
A marine casualty means an event, or a sequence of events,
that has resulted in any of the following and that has
occurred directly in connection with the operation of a
vessel:
•
The death of, or serious injury to, a person
•
The loss of a person from a ship
•
The loss, presumed loss, or abandonment of a ship
•
Material damage to a ship (Read more about the
definition of material damage to a ship in the definition
below)
•
The stranding or disabling of a ship or the involvement
•
of a ship in a collision
•
Material damage to marine infrastructure external to a
ship that could seriously endanger the safety of the
ship, another ship, or an individual
•
Severe damage to the environment or the potential for
severe damage to the environment, brought about by
the damage of a ship or ships
However, a marine casualty does not include a deliberate
act or omission with the intention to cause harm to the
safety of a ship, an individual, or the environment.
Material Damage to a Ship (Based on IMO
Casualty Investigation Code Ch 2 -2.16)
A material damage in relation to a marine casualty means:
•
Damage that significantly affects the structural
integrity, performance or operational characteristics of
marine infrastructure, or a ship.
•
Damage that requires major repair or replacement of a
major component or components.
•
Destruction of the marine infrastructure or ship.
Very Serious Marine Casualty (based on IMO
Casualty Investigation Code Ch 2 -2.22)
A very serious marine casualty means a marine casualty
involving the total loss of the ship, a death, or severe
damage to the environment.
Port State Control
We report the number of port state control deficiencies and
detentions as a ratio instead of a number. It is the industry
norm to report port state control performance as a ratio as
it provides important context to the metrics. The ratio is
calculated as the number of deficiencies (or detentions)
divided by the total number of PSC inspections. A ship is
detained when it is unfit to proceed to sea or the
deficiencies pose an unreasonable risk to the ship, its crew
or the environment. In case, if there are deficiencies found,
the ship can proceed with its voyage, however, the found
deficiencies need to be corrected.
Numbers of Conditions of Class or
Recommendations
Following TR-MT-540a.2 by the SASB standard. The
number reported is based on total numbers of Conditions of
Class or Recommendations received from a flag
administration or a recognized organization. All Conditions
of Class are reported regardless of whether they resulted in
withdrawal, suspension, or invalidation of a vessel’s class
certificate.
Engagement Score
Engagement score achieved on the annual TORM´s
engagement survey, reported as number. Only office-
based, TORM employees are participating in the given
engagement survey, MET and seafarers are not in scope for
the reported number.
Engagement Survey Participation Ratio
TORM´s employee engagement participation rate in the
annual engagement survey in percentage. MET and the
seafarers are not included in the reported number, only
TORM´s office-based employees are in scope for the
reported number.
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Governance
Introduction
132
G1 Business Conduct
133
Accounting Policies
146
Incorporation by Reference
148
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G
Introduction
Business and Human Rights
TORM's Core Values begin with a strong commitment to
people, communities, and the environment. This
commitment is also reflected in TORM’s Business
Principles.
One example is that we have a zero-tolerance approach to
bribery and corruption, and we co-founded the Maritime
Anti-Corruption Network (MACN) in 2011 to unite the
industry against corruption and bribery. At TORM, we are all
committed to acting professionally, fairly, and with integrity
in all business dealings and relationships, wherever we
operate.
TORM was the first Danish Shipping Company to become a
member of the UN Global Compact in 2009, demonstrating
a will to lead the way when it comes to human rights and
sustainability.
In the highly regulated shipping industry, TORM adheres to
all relevant legislation. We value ethics, safety, and security
in our approach to compliance. All of TORM's vessels are
flagged in Denmark or Singapore. This sets further strict
requirements for our organization, which we are proud to
meet.
Data Ethics and Cyber Security
TORM’s business model, the One TORM platform, uses
advanced analytics and digital solutions in which large
amounts of data are processed. TORM’s Data Ethics Policy
confirms TORM’s commitment to our defined data ethics
principles, and it defines how we collect, store, and process
data.
At TORM, we actively follow information security best
practices, and we continuously monitor risks,
vulnerabilities, and industry threats. In 2024, work has
continued to strengthen TORM’s cyber security maturity.
We have established a dedicated IT risk and security team
to ensure a continuous focus on IT risk management and
information security.
Responsible Procurement
Responsible behavior is central to our business,
management practices, and culture, as well as how we work
with procurement at TORM. Our supply chain is important
to achieve our goals, and we must ensure that our quality
standards and responsibility efforts are extended and
improved throughout it.
We expect our suppliers to comply with recognized
international standards and work to improve human rights,
labor conditions, impact on the environment, safety,
corruption, and quality.
We ensure that we apply our Business Principles when
dealing with subcontractors and suppliers. TORM's
Business Principles emphasize our commitment to
promoting responsible business principles in our supply
chain. Therefore, TORM is compliant with the UK Modern
Slavery Act.
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STRATEGIC REPORT > SUSTAINABILITY STATEMENT > GOVERNANCE > G1
Governance
ESRS 2 GOV-1 The Role of the
Administrative, Supervisory, and
Management Bodies
Information about the Administrative,
Management, and Supervisory Bodies
Transparency and accountability are key to TORM’s way of
doing business, and these values play a central role in our
corporate social responsibility approach.
Our approach to responsible behavior is rooted in our TORM
Business Principles. These are explained further under G1-1.
TORM’s Management is responsible for providing the
organization with the company’s “Business Principles.”
The Business Principles apply to all companies within the
TORM Group, from the Board of Directors to every TORM
employee, whether employed on our vessels, in production,
or in offices, and across all geographies. All employees are
responsible for understanding and adhering to the principles
in practice.
By adhering to the Business Principles, we ensure an
aligned standard for how we conduct business within
TORM. The principles also ensure that we comply with the
latest legislation and live up to our commitment to
responsible business practices. TORM employees are
provided with the necessary resources to know,
understand, and stay compliant with the relevant legal and
regulatory frameworks.
Management's Expertise on Business Conduct
Matters
Our Board of Directors oversees the ESG (Environmental,
Social, and Governance) governance via the Audit
Committee and the Risk Committee. The Board of Directors
is responsible for setting the strategy, policies, and
performance indicators.
The Board of Directors has delegated the day-to-day
management of the business to Executive Director, Jacob
Meldgaard. This includes TORM’s operational development
and the responsibility for implementing the strategies and
overall decisions approved by the Board of Directors. The
Executive Director also serves as CEO in the Group’s
largest subsidiary, TORM A/S. In addition, Kim Balle,
TORM's CFO, assist in the implementation of the strategy
and overall decisions.
The Executive Director is assisted by the Senior
Management Team in the day-to-day management of the
business. The Senior Management Team consists of the
following employees in TORM A/S (in addition to the
Executive Director): Kim Balle (Chief Financial Officer), Lars
Christensen (Senior Vice President and Head of Projects)
and Jesper s. Jensen (Senior Vice President and Head of
Technical Division).
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G1
Business
Conduct
The Sustainability Statement’s G1
section covers governance at TORM. The
disclosure begins with an introduction to
our governance and moves into the
impacts, risks, and opportunities. Then,
we present a full overview of our relevant
policies. This section also contains newly
introduced metrics and targets related to
governance.
As a company, we rely on the One TORM platform to turn
ambitious goals into reliable results through a focused
strategy, clear policies, and time-tested principles. The
Senior Management Team holds weekly meetings and plays
a crucial role in formalizing the strategy and policies that
support the One TORM platform. Performance is measured
against performance indicators and reported to the Board
of Directors. The Board of Directors approves TORM’s
quarterly financial results and annual sustainability report.
TORM's Board of Directors has established four
committees for which formal Terms of Reference have been
approved by the Board of Directors and can be found on
TORM’s website. See more about the committees here:
•
The Audit Committee is composed solely of
independent Non-Executive Directors, meets five times
a year at a minimum, and is a permanent committee
reporting to the Board of Directors.
The Audit Committee assists the Board of Directors in
supervising and enhancing financial reporting, oversight
of sustainability reporting, internal controls, external
auditing processes, and risk management. This
committee also oversees non-financial reporting,
including the annual sustainability report.
•
The Risk Committee is composed solely of independent
Non-Executive Directors, meets five times a year at a
minimum, and is a permanent committee reporting to
the Board of Directors. The Risk Committee is
responsible for supervisory oversight and monitors
responsibilities regarding internal controls and
enterprise risk management, including climate-related
risks and opportunities as well as the resilience
assessment.
•
The Remuneration Committee helps the Board of
Directors review Management’s performance and
remuneration and TORM’s general remuneration
policies.
•
The Nomination Committee is responsible for reviewing
the structure, size, and composition (including skills,
knowledge, experience, and diversity) of the Board of
Directors and makes recommendations to the Board
regarding any changes. Additionally, considers
succession planning for directors, the CEO, and others.
For further details refer to the Governance section
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Impacts, Risks, and
Opportunities
G1-1
Business Conduct Policies and
Corporate Culture
Policies on Business Conduct and How We
Foster Corporate Culture
In this Sustainability Statement, we write generally about
all employees except where the process or circumstances
differ between the groups of employees. In these cases, we
specify that the information disclosed pertains to office-
based employees, vessel-based employees, production
workers, or specifically staff employed at subsidiary Marine
Engineering (MET), mentioned as MET employees.
At TORM, our approach to responsible business conduct is
detailed in TORM’s Business Principles, which have the
following five objectives:
•
Maintaining a good and safe workplace
•
Reducing environmental impact
•
Respecting people
•
Doing business responsibly
•
Ensuring transparency
The Business Principles cover all aspects of our business, at
all levels within TORM, and cover four key themes,
philosophy, principles, policies, and people. The Business
Principles form part of our commitment to the UN Global
Compact (www.unglobalcompact.org).
With TORM’s Business Principles, our core values, and the
commitment to the UN Global Compact, TORM is publicly
dedicated to respecting human rights as outlined in the
United Nations Guiding Principles on Business and Human
Rights.
TORM is an active member of the UN Global Compact. This,
together with the UN Sustainable Development Goals
(SDGs), is another way we commit to an internationally
recognized set of principles on health, safety, labor rights,
environment, and anti-corruption.
TORM recognizes that implementing the necessary policies
and respective processes to be in line with the requirements
of the UN Global Principles is just part of an ongoing effort
to evolve. Going forward, we will continue to promote
human rights-related policies and processes.
How We Establish, Develop, Promote, and
Evaluate Corporate Culture
Employees of TORM are informed that social responsibility
means different things in different contexts. Initiatives may
be different depending on location. The established
corporate culture at TORM promotes ethical behavior and
compliance with all relevant legislation and regulations.
TORM’s Management maintains an ongoing dialog with
relevant authorities and organizations to stay up-to-date on
upcoming legislation and recommended standards, thus
enabling us to be proactive. Annually, all TORM employees
are asked to confirm via the internal compliance system
that they have both read and will comply with the Business
Principles and all associated policies. A process is currently
being established for subsidiary Marine Engineering (MET),
in which the Managing Director distributes all relevant
policies to MET employees and subsequently confirms on
behalf of all MET employees that they have received and
understood them.
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TORM's Policies
Environmental Protection Policy
CSRD/ESRS
E1, E2, E4
Affected stakeholders
Environment
IROs
Climate change, Pollution to
air and water Biodiversity
Value chain
TORM's own operations
Summary
Priorities in combating global climate change and
minimizing pollution. Long-term ambitions and designated
actions, including constant care in our operations and
compliance with applicable legislation.
Statement of commitment to improve our environmental
performance beyond compliance with legislation.
Third-Party Standards
International conventions, flag state regulations, local
port state requirements, and other regulations including
Marpol, EU legislation, local, and national legislation where
the vessel is visiting. TORM is ISO 14001 certified.
Scope
All TORM's operations.
Monitoring
Regulations on operations, waste handling, and more.
Procedures and policies, including our safety management
system (SMS).
Senior Management is accountable for the policy.
Business Principles/Code of Conduct
CSRD/ESRS
G1, S1, S2
Affected stakeholders
Employees, business
partners, suppliers, local
communities, workers in
the value chain,
contractors
IROs
Climate change, pollution to air
and water (environmental
performance), health and
safety, equal treatment,
employee well-being,
responsible procurement,
Corporate culture, Compliance
Value chain
Upstream, downstream
and TORM´s own
operation
Summary
Priorities in environmental awareness, respect for
employees, responsible business practices, transparency,
and equality. Statement of commitment to improve
responsible business practices beyond compliance with
legislation and adherence to international standards
mentioned below.
Third-Party Standards
ISO 14001, UN Global Compact, SOX Compliance
Scope
All employees across all locations where we operate.
Monitoring
Continuous dialog with stakeholders, reporting on
financial, social, environmental, and governance
performance, and adherence to applicable legislation.
Senior Management is accountable for the policy.
Anti-Bribery and Anti-Corruption Policy
CSRD/ESRS
G1, S1, S2
Affected stakeholders
Employees, business
partners, suppliers,
contractors
IROs
Zero tolerance of anti-bribery
and anti-corruption
Value chain
Upstream, downstream
and TORM´s own operation
Summary
TORM’s zero-tolerance approach to bribery and
corruption, requiring all employees to comply with
applicable anti-bribery and anti-corruption regulations.
Enables the company to operate in relevant markets
without legal issues or reputational damage.
Third-Party Standards
Member and co-founder of the Maritime Anti-Corruption
Network (MACN), which provides training and support for
the policy implementation, SOX Compliance
Scope
All directors, officers, and employees across the
company’s operations and all suppliers.
Monitoring
The policy requires employees to report any questions or
issues related to anti-bribery and corruption law to
management or the compliance officer.
Senior Management is accountable for the policy.
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Green Ship Recycling Policy
CSRD/ESRS
Affected stakeholders
Environment, crew,
recycling facilities,
authorities, communities
IROs
Value chain
Downstream
Summary
Commitment to recycling all TORM-owned vessels in a
safe and environmentally sustainable manner.
Ensure compliance with applicable legislation, regulations,
and conventions mentioned below.
Third-Party Standards
Hong Kong International Convention for the Safe and
Environmentally Sound Recycling of Ships.
Best practices in the global shipping industry.
Scope
All vessels under TORM’s ownership.
Monitoring
Legislation and regulations, audits of recycling facilities,
proper procedures for hazardous material management
and safety, and undertakings from vessel buyers for future
recycling.
Designated person ashore (DPA) is accountable for the
policy
Whistleblower Charter
CSRD/ESRS
G1, S1, S2
Affected stakeholders
Employees, business
partners, suppliers,
workers in the value chain,
contractors
IROs
Protection of whistleblowers,
Corporate culture
Value chain
Upstream, downstream
and TORM´s own operation
Summary
Procedure for handling whistleblower complaints
regarding substantial non-compliance or breach of rules in
relation to accounting, internal accounting controls,
auditing matters, and other company policies and
guidelines. Ensure proper handling of complaints and
maintain transparency and fairness in business
operations. All reports to the whistleblower service
provider are anonymous. TORM ensures that all
whistleblowers are protected from retaliation.
Third-Party Standards
N/A
Scope
All employees across all of TORM’s operations and all
affiliated companies and subsidiaries.
Monitoring
An independent third-party Whistleblower Service
Provider (WSP) investigates and pursues any suspected
irregularities, ensures the proper handling of complaints,
and reports to management and the Board of Directors as
necessary.
Senior Management is accountable for the policy.
Anti-Discrimination and Harassment Policy
CSRD/ESRS
G1, S1
Affected stakeholders
Employees
IROs
Zero tolerance against
harassment
Value chain
Upstream and downstream
in value chain, TORM´s
own operations
Summary
Prohibits discrimination and harassment based on gender,
ethnicity, religion, disability, age or any other basis.
Guidelines for maintaining a respectful workplace. Define
discrimination and harassment, and procedures for
handling complaints. Ensure a work environment free of
discrimination and harassment, to allow all employees
respect and equal opportunities.
Third-Party Standards
N/A
Scope
All employees and business partners across all locations
where we operate.
Monitoring
Investigation of complaints by the People Department
and/or the Whistleblower Service Provider. Annual SOX
compliance where employees must confirm their
compliance with the policy.
Senior Management and Head of People are accountable
for the policy.
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Anti-Fraud Policy
CSRD/ESRS
G1
Affected stakeholders
Employees, vendors,
service providers,
contractors
IROs
Corporate culture
Value chain
Upstream and downstream
in value chain, TORM’s
own operations
Summary
Guidelines for preventing, detecting, and addressing fraud
within the organization. Covers the control environment,
risk assessments, control activities, information and
communication, and monitoring.
To conduct business honestly and ethically, prevent and
counter fraud, ensure integrity and transparency in
business dealings, and protect against financial loss and
reputational damage.
Third-Party Standards
Aligned with the COSO framework.
Scope
All employees and stakeholders (vendors, service
providers, etc.) across all locations where we operate.
Monitoring
Regular risk assessments, transaction level controls,
annual Anti-Fraud E-Learning Courses for employees, and
the use of a whistleblower setup for reporting concerns.
Monitoring involves visits and workshops with key
employees and stakeholders.
Senior Management and Compliance Officer for Anti-
Fraud are accountable for the policy.
Responsible Procurement Policy
CSRD/ESRS
G1
Affected stakeholders
Employees, vendors,
service providers,
contractors
IROs
Corporate Culture,
Corruption and Bribery
Value chain
Upstream, downstream
and TORM´s own operation
Summary
Priorities in respect for employees, responsible business
practices, transparency, and equality. Statement of
commitment to improve responsible business practices
beyond compliance with legislation and adherence to
international standards mentioned below.
Third-Party Standards
ISO 14001, UN Global Compact, SOX Compliance
Scope
All employees across all locations where we operate.
Monitoring
Continuous dialog with stakeholders, reporting on
financial, social, environmental, and governance
performance, and adherence to applicable legislation.
Senior Management is accountable for the policy.
Modern Slavery Statement
CSRD/ESRS
G1, S1, S2
Affected stakeholders
Employees, suppliers,
contractors, communities
IROs
Human rights, labor
conditions, responsible
business practices,
community support, equal
treatments
Value chain
Upstream and downstream
in value chain and TORM´s
own operations
Summary
Commitment to standards listed below including
internationally recognized principles on human rights.
Third-Party Standards
UN Global Compact, UN Sustainable Development Goals
(SDGs). The International Labor Organization's Maritime
Labor Convention. UN Guiding Principles on Business and
Human Rights.
Scope
All TORM's operations but does not include subsidiary
MET.
Monitoring
Risk assessments and due diligence on high-risk suppliers.
Training for new employees on TORM Business Principles.
See Whistleblower Charter for more about how to raise
concerns.
Annual reporting to the UN Global Compact.
TORM’s Executive Director is accountable for the policy
with certain areas under the Audit Committee of the
Board of Directors.
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Diversity, Equity, Inclusion, and Belonging
(DEIB) Policy
CSRD/ESRS
S1
Affected stakeholders
Employees
IROs
Diversity, equal treatment,
zero tolerance of harassment
Value chain
TORM's own operations
Summary
Commitment to and framework for fostering a culture of
Diversity, Equity, Inclusion, and Belonging (DEIB) that
celebrates the unique perspectives, backgrounds, and
talents of all individuals. Our commitment to DEIB reflects
our broader dedication to corporate social responsibility
by promoting social equity, inclusion, and human rights
within our organization and the communities we serve.
Third-Party Standards
N/A
Scope
All TORM's operations.
Monitoring
Targets set for female employees in leadership positions.
Senior Management and Head of People are accountable
for the policy.
Employee Handbooks
CSRD/ESRS
S1
Affected stakeholders
Employees, their families
IROs
Employee understanding of
policies, procedures
Value chain
TORM's own operations
Summary
Guidelines and general rules, rights, responsibilities, and
opportunities in the workplace. Separate Employee
Handbooks for each TORM location.
Third-Party Standards
N/A
Scope
All employees across all locations where we operate.
Monitoring
Continuous dialog with stakeholders and engagement
surveys. Updates also based on local regulations and
legislation.
Head of People is accountable for the policy.
Health, Safety, and Security Policy
CSRD/ESRS
S1
Affected stakeholders
Employees, contractors
IROs
Health and safety
Value chain
TORM's own operations
Summary
Commitment to providing a safe and secure work
environment. Statement of compliance with all relevant
health and safety rules and regulations, and statement of
commitment to raise safety levels on board our vessels by
promoting a culture of safety.
Third-Party Standards
Based on the SMS (Safety Management System)
standards, which is based on the ISM (International Safety
Management) code.
Scope
All TORM's operations.
Monitoring
Tracking of progress on safety target measured in LTAF.
Head of HSSE or in her/his absence Head of Security and
Environmental Compliance is accountable for the policy.
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Safety Management System (SMS) incl. Dry
docking and safety in dry docking policies
CSRD/ESRS
S1, S2
Affected stakeholders
Employees on vessels,
workers in the value chain
IROs
Health and Safety, Pollution
to air and water
Value chain
TORM's own operations,
some value chain,
environment
Summary
The International Safety Management (ISM) code provides
an international standard for the safe management and
operation of ships and for pollution prevention. The ISM
requires a safety management system (SMS) to be
established by the shipowner, which has assumed
responsibility for operating the ship. The highlighted Dry
docking and Safety in dry dock policies are extended to
the workers in dry docks. The policies contain our
requirements for dock planning and execution, including
the health and safety requirements during the process
Third-Party Standards
Based on ISM (International Safety Management) code.
Scope
Vessel-based employees and office-based employees with
contact with vessel-based employees, workers in dry
docks.
Monitoring
Electronic control system SERTICA, websites by FLAG,
classification societies, and local authorities including US
Coast Guard (USCG),and others.
All proposals for new/revised procedures pass SMS, and
the author is responsible for compliance.
Senior Management, management, and captains onboard
vessels are accountable for the policy. Sections relevant
to dry dock workers are discussed with management at
the specific dry docks. The TORM employees present at
the dry dock along with dry dock management are
responsible for monitoring.
Policies
Availability
Internal
External
Environmental Protection Policy
●
●
Business Principles / Code of
Conduct
●
●
Anti-Bribery and Anti-Corruption
Policy
●
●
Green Ship Recycling Policy
●
●
Whistleblower Charter
●
●
Anti-Discrimination and Harassment
Policy
●
Anti-Fraud Policy
●
●
Responsible Procurement Policy
●
Modern Slavery Statement
●
●
Diversity, Equity, Inclusion, and
Belonging (DEIB) Policy
●
Employee Handbooks
●
Health, Safety, and Security Policy
●
Safety Management System (SMS)
incl. Dry docking and safety in dry
docking policies
●
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Policies on Business Conduct and Raising
Concerns
We expect all employees to help protect the interests of
TORM by raising concerns about known or suspected
breaches of the Business Principles and policies.
Concerns should be raised with an employee’s superior
officer(s). Vessel violations, including safety of seafarers
and cargo, can be reported to the designated person on
board or the designated Corporate Social Responsibility
(CSR) Team or TORM's Senior Management Team.
However, instances may occur where an employee
assesses that a concern cannot be raised with their
superior officer(s) or that a concern is not satisfactorily
addressed by their superior officer(s). In such cases, the
employee is encouraged to raise the concern using the
TORM whistleblower setup, which is an external
independent lawyer's office that has been solicited by the
Board of Directors since 2006, to receive and process
concerns and claims relating to TORM raised by TORM
employees, business partners, or anyone else.
MET Employees
For employees of subsidiary Marine Engineering (MET),
there is a separate whistleblower setup, available to office-
based employees and production workers in Denmark.
Anyone can anonymously report any types of complaint,
and this option is clearly stated on the external website of
MET. A third-party service provider, law firm Hjulmand
Kaptain (different from the one used by TORM), processes
the data provided. They provide an overview, with
protection of anonymity, to a dedicated employee at TORM.
In China, there is currently a process underway to establish
a whistleblower setup for local employees. In the meantime,
the TORM whistleblower setup is open and available to all.
How We Protect Whistleblowers
On an on-going basis, the Whistleblower Service Provider
(WSP), must review and assess the adequacy of the TORM
Whistleblower Charter for whistleblowing and make
recommendations to the Board of Directors for changes to
improve TORM’s Whistleblower Charter and related
procedures.
In accordance with Directive (EU) 2019/1937 of the
European Parliament and of the Council, the whistleblower
service provided by TORM through “Holst, Advokater,” and
by MET through "Hjulmand Kaptajn," will protect the
identity of people raising concerns with them, as detailed in
the Whistleblower Charter (TORM - Investor - Governance -
Whistleblower). However, if the employee prefers to remain
anonymous, they may file a report by telephone or by letter
or by sending an encrypted mail. The sections identified in
the TORM Whistleblower Charter, available to all employees
and external parties, make this clear.
Procedures to Investigate Incidents, Beyond
Protecting Whistleblowers
The WSP must first report to the Chairman of the AC and
the Board of Directors, and the case can be escalates to
the Senior Management Team unless the allegation is made
against the Senior Management Team, in which case the
Board or the AC will handle it. If the Board of Directors is
implicated, the WSP will report to the full Board.
Policy for Internal Business Conduct Training
TORM’s Management has established compulsory e-
learning courses, which provide a better understanding of
anti-bribery and anti-corruption and key concepts within
international anti-corruption laws. These courses also
provide typical scenarios that employees might encounter
during their day-to-day employment.
Through this training, TORM provides the tools to address
challenging situations and to come closer to achieving a
maritime industry free of corruption. The course's aim is
also to encourage employees to work together and improve
their communication lines when tackling maritime
corruption.
Annually, as part of TORM’s essential internal online
training sessions, each TORM employee must take and pass
the “TORM Anti-Bribery and Corruption” course. This
course is mandatory for all office-based staff and all
officers on board TORM vessels. All employees with supplier
contact must familiarize themselves with TORM’s
commitment to responsible business practices in the supply
chain. In addition, each TORM employee must take and
pass the “TORM How to avoid harassment in the
workplace” course. As part of this course, there is advice
on seeking help if an employee themselves or a colleague is
subjected to harassment in the workplace, and it is not
possible to speak out against the offender.
The importance of maintaining high ethical conduct and
control standards is communicated as part of the
orientation processes for new hires, which educates on
TORM’s commitment to our legal obligations and integrity
within the workplace, and in addition, the role of the
employee in helping the organization live out that
commitment.
TORM’s Business Principles must be studied, agreed to,
and confirmed in writing by all employees when signing their
employment contracts.
MET Employees
In case of MET, as described in G1-1, a process is being
established, in which the Managing Director of MET
confirms on behalf of all MET employees that they have
received and understood the relevant policies.
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Functions Most at Risk in Respect of
Corruption and Bribery
It is TORM’s policy to conduct all business in an honest and
ethical manner. TORM has a “zero tolerance” approach to
corruption and bribery, and TORM is committed to acting
professionally, fairly, and with integrity in all business
dealings and relationships, wherever TORM operates.
TORM commits to uphold all laws relevant to countering
bribery and corruption in all the jurisdictions in which TORM
operates.
At TORM, we acknowledge that seafarers, more than
office-based employees and production workers, are at risk
of exposure to corrupt demands, such as unlawful requests
for payments to allow vessels to enter and depart a port or
disproportionate penalties applied for minor errors. This can
lead to interruptions in normal operations, delaying vessels,
and creating a risk to navigation and seafarer safety.
However, at TORM, we ensure that all employees, vessel-
based or office-based, are subject to compulsory training
programs in respect to corruption and bribery.
G1-2
Management of Relationships
with Suppliers
Information about Managing Relationships
with Suppliers
Responsible behavior is central to our business,
management practices, and culture, as well as how we work
with procurement at TORM. Our supply chain is important
for achieving our goals, and we must ensure that our quality
standards and responsibility efforts are extended and
improved throughout it.
We expect our suppliers to comply with recognized
international standards and work to improve human rights,
labor conditions, impact on the environment, safety,
corruption, and quality.
TORM’s Business Principles ensure alignment between our
values, and the policies that ensure appropriate behavior,
which cannot be deviated from. This relationship applies to
policies within all operations, including those related to
sustainability. TORM also applies its Business Principles
when dealing with subcontractors and suppliers. TORM's
Business Principles emphasize our commitment to
promoting responsible business practices in our supply
chain.
We have no formal policy pertaining solely to the prevention
of late payments for SMEs.
At TORM, we have a four-tier evaluation structure for
suppliers relating to purchases in our Technical Division.
The focus in our evaluation is on suppliers based in the
regions categorized as high risk by CP2021. Our approach
thoroughly screens for human rights and environmental
matters. A robust check list is in place for onsite audits.
We are currently in the process of rolling out this evaluation
structure for the remaining divisions of TORM. We are also
investigating how to measure environmental performance
among all of our suppliers and build a system for evaluation.
G1-3
Prevention and Detection of
Corruption and Bribery
Information and Procedures Related to
Prevention, Detection, and Mitigation of
Corruption and Bribery Incidents
Corruption and bribery impede global trade and can restrict
non-corrupt companies’ access to markets. In this way,
corruption and bribery have a negative impact on economic
and social development. For TORM, the risk of corruption
does not mean increased costs alone. Corruption also
exposes our seafarers to safety and security risks and
poses a potential risk to TORM’s legal standing and
reputation.
Our policy is to keep all directors, officers, and employees,
vessel-based and office-based, fully informed of the
contents of applicable bribery and corruption law to assist
them in complying. The compliance system is intended to
enable TORM to act in all relevant markets, without being
exposed to business interruption or losses due to legal
investigations or litigation which could affect us negatively.
At TORM, we believe that long term business success
requires transparent business conduct. TORM gives
preference to suppliers who share our commitment to
lawful and ethical behavior. In the event of an investigation
by any authorities in relation to bribery and corruption,
assuming their credentials and authority have been duly
established, the general instruction to all employees is to
offer TORM’s full support and cooperation.
Since 2011, when TORM co-founded the Maritime Anti-
Corruption Network (MACN), TORM has taken a joint stand
with the industry against the requests for facilitation
payments, which exist in many parts of the world where
TORM conducts business. Best practice is shared between
members of the network, and members align their approach
to minimizing facilitation payments. MACN seeks support
from government bodies and international organizations to
eliminate the root causes of corruption. TORM is
committed to addressing corrupt business practices by
supporting this cross-sector approach.
At TORM, we encourage our employees to speak up in
relation to all incidents relevant to countering bribery and
corruption in all the jurisdictions in which TORM operates.
TORM leverages the three elements below to continue a
high level of transparency and accountability of our anti-
corruption and anti-bribery policy:
•
Strict employee guidelines and processes to prevent
and manage anti-corruption and anti-bribery
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•
Specific reporting processes
•
Compulsory e-learning courses
Separation of Investigators from
Management, and the Reporting Process
Within TORM, all incidents of attempted bribery or
corruption are handled through TORM’s internal legal
department, which is separate from the commercial and
operational chain of management. TORM’s legal
department then reports any such breach to TORM’s Senior
Management Team and the Maritime Anti-Corruption
Network (MACN). All reporting to MACN is anonymous.
TORM’s Senior Management Team then decides whether or
not to discuss/share the information with the full Board of
Directors or relevant Board of Directors Committee, if
deemed applicable.
Information about Communicating Policies to
Relevant Audiences
TORM’s Anti-Bribery and Corruption Law Compliance Policy
and Program forms an integral part of every employee’s
employment contract with TORM and must be studied,
agreed to, and confirmed in writing by all employees when
signing their employment contracts.
Anti-Bribery and Corruption is also part of our e-learning
courses given to new and current employees. More
information about TORM’s annual compulsory e-learning
courses can be found under the G1 Accounting policy.
Should TORM update or make any changes to the Anti-
Bribery and Corruption Compliance Policy or Program,
TORM will inform all employees by e-mail, and additional
briefings and training will be supplied. Any such information
material is made available immediately via the TORM
Intranet Website.
MET Employees
MET`s management signs off on the forementioned policies
and communicates them to the rest of the MET employees.
No specific training is provided because of the nature of the
business and a low risk of exposure to bribes, compared to
vessel-based employees.
Nature, Scope, and Depth of Anti-Corruption
and Anti-Bribery Training
Every employee must remain constantly aware of the
Compliance Policy and Program, including any updates and
changes.
TORM also utilizes an internal online training course
provided by the Maritime Anti-Corruption Network (MACN)
that each TORM employee must take and pass. This course
is mandatory for all office-based staff and all officers on
board TORM’s vessel. The course provides employees with
a better understanding of corruption risks and key concepts
outlined in international anti-corruption laws.
The course highlights some typical scenarios that might be
encountered within the employee’s role and provides
guidance on how to act, in essence, by providing tips on
how to counter demands, increase bargaining power, and
how to stand their ground. In addition, the course touches
upon matters related to mitigating and preventing
situations leading to corrupt demands, situations of duress,
and case study scenarios of typical engagement with port
officials and other stakeholders.
The aim of the course is to give TORM’s employees tools to
better address challenging situations and to come closer to
achieving a maritime industry free of corruption.
TORM complies with Sarbanes Oxley (SOX) regulations.
TORM has an annual internal audit procedure where all
TORM vessel-based, office-based employees, and
contractors must complete the training and confirm
adherence to TORM's anti-bribery and anti-corruption
guidelines, ensuring compliance. The process is supervised
and controlled by TORM's Legal Department.
This training was enhanced most recently in 2022 by
MACN to ensure its relevance.
Percentage of Functions-at-Risk Covered by
Training, and Training Given to Management
Seafarers are more at risk of exposure to corrupt demands
than office-employees. However, all functions at TORM are
subject to compulsory training programs. As described
previously, MET employees face a lower risk of bribes and
therefore do not have the same compulsory training.
See more about training at TORM in the G1-1
Accounting policy
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Metrics and Targets
Anti Corruption and Bribery Training
In the below table, we disclose the coverage of TORM’s
anti-corruption and anti-bribery training for at-risk
functions during the financial year 2024. For office-based
employees, a scheduling change was made, which moved
the November 2024 training to January 2025. Thus, no
training was conducted in 2024.
G1-4
Confirmed Incidents of
Corruption or Bribery
Information on Incidents of Corruption or
Bribery During the Reporting Period
Anti-corruption and Bribery
Number of convictions for violation of anti-
corruption and anti- bribery laws
0
Amount of fines for violation of anti-corruption
and anti- bribery laws
0
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Anti Corruption and Bribery training
Training coverage
Unit
At-risk functions
- Seafarers
At-risk functions
- Office-based
employees
Senior
Management
Team
Training coverage
Percentage
81 %
— %
— %
Total number of functions-at-risk covered by training
Number
367
409
4
Total receiving training
Number
299
0
0
Delivery method and duration
Classroom training
Minutes
N/A
N/A
N/A
Computer-based training
Minutes
71
20
20
Voluntarily Computer based training
Minutes
N/A
N/A
N/A
Frequency
How often training is required
Frequency
Annual
Annual
Annual
Topics covered
Definition of corruption
Y/N
Yes
Yes
Yes
Policy
Y/N
No
Yes
Yes
Procedures on suspicion/detention
Y/N
No
Yes
Yes
Key concepts within international anti-corruption laws
Y/N
Yes
Yes
Yes
G1-6
Payment Practices
Payment Practices and Average Time Taken to
Pay an Invoice
The average time that TORM takes to pay an invoice from
the date when the contractual term of payment starts to be
calculated is 39.37 days.
Payment practices
Average number of days to pay invoice from date
when contractual or statutory term of payment
starts to be calculated
39.37
Percentage of payments aligned with standard
payment terms
81 %
Number of outstanding legal proceedings for late
payments
0
Time Taken to Pay an Invoice in Number of
Days by Main Category of Suppliers
For TORM’s main category of suppliers, invoices are paid on
an average term of 45 days from the date of invoice. This is
a standard payment term for TORM vendors, except if the
vendor type is Bunker, Vetting, Commission, Shipping,
Admin, or if it is presented in writing why alternate payment
terms should be used, signed by a vice-president or a higher
level of profession.
Payment is made as per the agreed terms with the vendor.
The payment term is defined on the vendor card when the
vendor is created within TORM's financial system. The due
date is then calculated automatically from the invoice date
and payment is made automatically upon reaching the due
date.
Targets
Topic
2030 Target
Anti-corruption and bribery
100% of identified cases of
corruption and/or bribery,
including attempts, are
reported to the MACN
Screening and engaging our
supply chain on ESG criteria
ESG screening 100% of tier 1
and 2 suppliers
Target on Reporting 100% of the Identified Cases and
Corruption and Bribery to MACN
TORM furthermore has decided to implement a target on
ensuring that 100% of the identified cases of corruption
and/or bribery, including attempts will be reported to the
Maritime Anti-Corruption Network (MACN). The target is
applicable from 2025 onwards, and the target year is
2030. This target was set to ensure that our reporting to
MACN is transparent and complete. The target will be
measured on an annual basis by the Management.
Target on Screening and Engagement with our Supply Chain
on ESG Criteria
TORM has decided to implement a target from 2025 going
forward on screening our suppliers. The target is to screen
100% of our Tier 1 and Tier 2 suppliers for ESG criteria. The
target year is 2030. To start the process, in 2025, the
focus will be on screening for:
•
Working conditions
•
Quality of products/manufacturing processes
•
Employees human rights
The detailed framework of the screening methodology is in
the process of being finalized.
The target has been created to prepare for the upcoming
CSDDD requirements, to be able to compare our suppliers
and to ensure that safety comes first amongst our
suppliers. The target will be measured on an annual basis by
the Management.
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Accounting Policy
ESRS
G1-Governance
Number of Convictions for Violation of Anti-
Corruption and Anti-Bribery Laws
Seafarers report all incidents via TORM's reporting tool.
TORM has a strict anti-bribery policy which prohibits any
form of bribery and facilitation payments. All requests for
such illicit payments will be reported via the reporting tool
and dealt with by the dedicated department to ensure
compliance. TORM reports these incidents to the Maritime
Anti-Corruption Network (MACN) on a voluntary basis.
Amount of Fines for Violation of Anti-
Corruption and Anti-Bribery Laws
National authorities are the relevant parties able to issue
fines for violations of anti-bribery rules and regulations. The
amount of fines will be derived from letters received by the
legal department from authorities. TORM has never been
investigated for any violations.
Percentage of Functions-at-Risk Training
Coverage
Vessel-Based Employees
The proportion of TORM’s seafarers, identified as
functions-at-risk, who have successfully completed the
company's anti-corruption and anti-bribery training
programs within a specified reporting period. Seafarers,
identified as functions-at-risk are the four senior officer
ranks (Master/Captain, First/Chief Officer, Chief Engineer,
Second Engineer).
Office-Based Employees
The proportion of TORM’s office-based employees,
identified as functions-at-risk, who have successfully
completed the company's anti-corruption and anti-bribery
training programs within a specified reporting period. As per
TORM´s assessment, all office-based employees are
identified as functions-at-risk. Managers are defined as
employees, who has at least one direct report.
MET Employees
At MET, the functions-at-risk employees are identified as
the Managing Director of MET, only. The Managing Director
is signing off on the Anti-bribery and corruption policy
(together with other policies) on an annual basis, going
forward, which is considered to fulfil the functions-at-risk
training program.
Note: In the above displayed “Anti-corruption and bribery
training” table, MET Employees are not included.
Anti-Corruption and Bribery Training Table
Vessel-Based Employees
All new employees receive training as part of their
onboarding. All relevant employees (as described for
seafarers, functions-at-risk are the four Senior Officer
ranks) receive yearly training/recertification. Participation
in the e-learning program is mandatory. Non-passer cases
are followed up while onboard, and when re-joining
onboard, the training is triggered again for completion.
Data reported in the table is based on active and onboard
seafarers of the four Senior Officer ranks, as of 02 January
2025. Ocean Learning Platform (OLP) is the system used to
register training data for seafarers.
Office-Based Employees
All new employees receive training as part of their
onboarding. All current employees receive yearly training/
recertification. Participation in the e-learning program is
mandatory. Non-passer cases are followed up individually
and also escalated to the Senior Management Team for
further follow up. Training coverage is calculated as of end
of 2024. We have no data to report for office-based
employees, as there were no training conducted within the
2024 financial year. This is due to scheduling change,
resulting in the November 2024 training being moved to
January 2025.
Average Number of Days to Pay Invoice from
Date When Contractual or Statutory Term of
Payment Starts to be Calculated
Average number of days is calculated on the basis of
invoice date to the actual date of payment made. This data
source of BI Report from Navision.
Percentage of Payments Aligned with
Standard Payment Terms
Calculated as actual payment date minus the invoice due
date. This data source of BI Report from Navision.
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Number of Outstanding Legal Proceedings for
Late Payments
Number of Outstanding Legal Proceedings for Late
Payments refers to the amount of legal cases or actions
that have been initiated or are pending in relation to
payments that have not been made on time. It includes
lawsuits, arbitration, or other formal legal actions initiated
by creditors against TORM as debtor, due to overdue
payments.
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ESRS data points that derive from other EU legislation
ESRS
Disclosure
Requirement
Datapoint
Information
SFDR
Pillar 3
Benchmark
Regulation
EU Climate
Law
Material/
Non-Material
Page
ESRS 2
GOV-1
21d
Gender diversity in the Board of Directors
●
●
Material
115
ESRS 2
GOV-1
21e
Percentage of independent board members
●
Material
160
ESRS 2
GOV-4
30
Disclosure of mapping of information provided in Sustainability Statement
about due diligence process
●
Material
45
ESRS 2
SBM-1
40 d i
Involvement in activities related to fossil fuel activities
●
●
●
Material
47
ESRS 2
SBM-1
40 d ii
Involvement in activities related to chemical production
●
●
N/A
ESRS 2
SBM-1
40 d iii
Involvement in activities related to controversial weapons
●
●
N/A
ESRS 2
SBM-1
40 d iv
Involvement in activities related to cultivation and production of tobacco
●
N/A
ESRS E1
E1-1
14
Transition plan to reach climate neutrality by 2050
●
Material
63 - 67
ESRS E1
E1-1
16 (g)
Undertakings excluded from Paris-Aligned Benchmarks
●
●
Material
67
ESRS E1
E1-4
34
GHG emission reduction targets
●
●
●
Material
77
ESRS E1
E1-5
38
Energy consumption from fossil fuel sources disaggregated by sources (only
high climate impact sectors)
●
Material
79
ESRS E1
E1-5
37
Energy consumption and mix
●
Material
79
ESRS E1
E1-5
40-43
Energy intensity associated with activities in high climate impact sectors
●
Material
79
ESRS E1
E1-6
44
Gross Scope 1, 2, 3, and total GHG emissions
●
●
●
Material
80
ESRS E1
E1-6
53-55
Gross GHG emissions intensity
●
●
●
Material
82
ESRS E1
E1-7
56
GHG removals and carbon credits
●
N/A
ESRS E1
E1-9
66
Exposure of the benchmark portfolio to climate-related physical risks
●
Phase-in
ESRS E1
E1-9
66 (a); 66
(c)
Disaggregation of monetary amounts by acute and chronic physical risk;
Location of significant assets at material physical risk
●
Phase-in
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ESRS
Disclosure
Requirement
Datapoint
Information
SFDR
Pillar 3
Benchmark
Regulation
EU Climate
Law
Material/
Non-Material
Page
ESRS E1
E1-9
67 (c)
Breakdown of the carrying value of its real estate assets by energy-
efficiency classes
●
Phase-in
ESRS E1
E1-9
69
Degree of exposure of the portfolio to climate-related opportunities
●
Phase-in
ESRS E1
E2-4
28
Amount of each pollutant listed in Annex II of the E-PRTR Regulation
emitted to air, water, and soil
●
Material
91
ESRS E1
E3-1
9
Water and marine resources
●
Non-Material
ESRS E1
E3-1
13
Dedicated policy
●
Non-Material
ESRS E2
E3-1
14
Sustainable oceans and seas
●
Non-Material
ESRS E3
E3-4
28 (c)
Total water recycled and reused
●
Non-Material
ESRS E3
E3-4
29
Total water consumption in m³ per net revenue on own operations
●
Non-Material
ESRS E4
ESRS 2- IRO 1 - E4
16 (a) i
●
Material
93
ESRS E4
ESRS 2- IRO 1 - E4
16 (b)
●
Material
93
ESRS E4
ESRS 2- IRO 1 - E4
16 (c)
●
Material
93
ESRS E4
E4-2
24 (b)
Sustainable land / agriculture practices or policies
●
N/A
ESRS E4
E4-2
24 (c)
Sustainable oceans / seas practices or policies
●
Material
95
ESRS E4
E4-2
24 (d)
Policies to address deforestation
●
N/A
ESRS E5
E5-5
37 (d)
Non-recycled waste
●
Non-Material
ESRS E5
E5-5
39
Hazardous waste and radioactive waste
●
Non-Material
ESRS S1
ESRS 2- SBM3 - S1
14 (f)
Risk of incidents of forced labor
●
Non-Material
ESRS S1
ESRS 2- SBM3 - S1
14 (g)
Risk of incidents of child labor
●
Non-Material
ESRS S1
S1-1
20
Human rights policy commitments
●
Material
108
ESRS S1
S1-1
21
Due diligence policies on issues addressed by the fundamental International
Labor Organisation Conventions 1 to 8
●
Material
136-140
ESRS S1
S1-1
22
Processes and measures for preventing trafficking of human beings
●
Non-Material
ESRS S1
S1-1
23
Workplace accident prevention policy or management system
●
Material
139-140
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ESRS
Disclosure
Requirement
Datapoint
Information
SFDR
Pillar 3
Benchmark
Regulation
EU Climate
Law
Material/
Non-Material
Page
ESRS S1
S1-3
32 (c)
Grievance/complaints handling mechanisms
●
Material
137
ESRS S1
S1-14
88 (b) and
(c)
Number of fatalities and number and rate of work-related accidents
●
●
Material
121
ESRS S1
S1-14
88 (e)
Number of days lost to injuries, accidents, fatalities, or illness
●
Material
121
ESRS S1
S1-16
97 (a)
Unadjusted gender pay gap
●
●
Material
121
ESRS S1
S1-16
97 (b)
Excessive CEO pay ratio
●
Material
121
ESRS S1
S1-17
103 (a)
Incidents of discrimination
●
Material
122
ESRS S1
S1-17
104 (a)
Non-respect of UNGPs on Business and Human Rights and OECD
●
●
Material
122
ESRS 2
SBM3 - S2
11 (b)
Significant risk of child labor in the value chain
●
Non-Material
ESRS S2
S1-1
17
Human rights policy commitments
●
Material
108
ESRS S2
S2-1
18
Policies related to value chain workers
●
Material
124
ESRS S2
S2-1
19
Non respect of UNGPs on Business and Human Rights principles and OECD
guidelines
●
●
Material
136
ESRS S2
S2-1
19
Due diligence policies on issues addressed by the fundamental International
Labor Organization Conventions 1 to 8
●
Material
124
ESRS S2
S2-4
36
Human rights issues and incidents connected to its upstream and
downstream value chain
●
Material
126
ESRS S3
S3-1
16
Human rights policy commitments
●
Non-Material
ESRS S3
S3-1
17
Non-respect of UNGPs on Business and Human Rights, ILO principles, or
and OECD guidelines
●
●
Non-Material
ESRS S3
S3-4
36
Human rights issues and incidents
●
Non-Material
ESRS S4
S4-1
16
Policies related to consumers and end-users
●
Non-Material
ESRS S4
S4-1
17
Non-respect of UNGPs on Business and Human Rights and OECD
guidelines
●
●
Non-Material
ESRS S4
S4-4
35
Human rights issues and incidents
●
Non-Material
ESRS G1
G1-1
10b
United Nations Convention against Corruption
●
Material
142
ESRS G1
G1-1
10d
Protection of whistleblowers
●
Material
141
ESRS G1
G1-4
24a
Fines for violation of anti-corruption and anti-bribery laws
●
●
Material
144
ESRS G1
G1-4
24b
Standards of anti-corruption and anti-bribery
●
Material
142
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Disclosure requirements in incorporation by reference
Disclosure requirements and incorporation by reference
Page
BP-1
General basis for preparation of the sustainability
statement
General Disclosures
42
BP-2
Disclosures in relation to specific circumstances
General Disclosures
43
GOV-1
The role of the administrative, management and
supervisory bodies
Governance
44
GOV-2
Information provided to and sustainability matters
addressed by the undertaking’s administrative,
management and supervisory bodies
Governance
44
GOV-3
Integration of sustainability-related performance
in incentive schemes
Governance
45
GOV-4
Statement on due diligence
Governance
45-46
GOV-5
Risk management and internal controls over
sustainability reporting
Governance
46
SBM-1
Strategy, business model and value chain
Strategy
47
SBM-2
Interests and views of stakeholders
Strategy
50
SBM-3
Material impacts, risks and opportunities and their
interaction with strategy and business model
Strategy
50
IRO-1
Description of the process to identify and assess
material impacts, risks and opportunities
Impacts, risks and
opportunities
54
IRO-2
Disclosure requirements in ESRS covered by the
undertaking’s sustainability statement
Impacts, risks and
opportunities
54
IRO-1
Description of the Processes to Identify and
Assess Material Water and Marine Resources
Related Impacts, Risks, and Opportunities
Impacts, risks and
opportunities
56
IRO-1
Description of the Processes to Identify and
Assess Material Resource Use and Circular
Economy-Related Impacts, Risks, and
Opportunities
Impacts, risks and
opportunities
56
E1 GOV-3
Integration of sustainability-related performance
in incentive schemes
Climate change
62
E1-1
Transition plan for climate change mitigation
Climate change
63
Disclosure requirements and incorporation by reference
Page
E1 SBM-3
Material impacts, risks and opportunities and their
interaction with strategy and business model
Strategy and IRO's
47
Double materiality
assessment
54
Climate change
67
E1 IRO-1
Description of the processes to identify and assess
material climate-related impacts, risks and
opportunities
Stakeholder
engagement
50
Double materiality
assessment
54-55
Climate change
72
E1-2
Policies related to climate change mitigation and
adaptation
Climate change
75
E1-3
Actions and resources in relation to climate
change policies
Climate change
75
E1-4
Targets related to climate change mitigation and
adaptation
Climate change
77
E1-5
Energy consumption and mix
Climate change
79
E1-6
Gross scopes 1, 2, 3 and Total GHG emissions
Climate change
80
E1-8
Internal carbon pricing
Climate change
82
E1-9
Anticipated financial effects from material
physical and transition risks and potential climate-
related opportunities
Climate change
82
E2 IRO-1
Description of the processes to identify and assess
material pollution-related impacts, risks and
opportunities
Stakeholder
engagement
50
Double materiality
assessment
54-55
Pollution
88
E2-1
Policies related to pollution
Pollution
88
E2-2
Actions and resources related to pollution
Pollution
88
E2-3
Targets related to pollution
Pollution
90
E2-4
Pollution of air, water and soil
Pollution
91
E2-6
Anticipated financial effects from pollution-related
impacts, risks and opportunities
Pollution
91
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Disclosure requirements and incorporation by reference
Page
E4-1
Transition plan and consideration of biodiversity
and ecosystems in strategy and business model
Biodiversity and
ecosystems
92
E4 SBM-3
Material impacts, risks and opportunities and their
interaction with strategy and business model
Strategy and IRO's
47-50
Double materiality
assessment
54-55
Biodiversity and
ecosystems
93
E4 IRO-1
Description of processes to identify and assess
material biodiversity and ecosystem-related
impacts, risks and opportunities
Biodiversity and
ecosystems
94
E4-2
Policies related to biodiversity and ecosystems
Biodiversity and
ecosystems
95
E4-3
Actions and resources related to biodiversity and
ecosystems
Biodiversity and
ecosystems
96
E4-4
Targets related to biodiversity and ecosystems
Biodiversity and
ecosystems
97
E4-5
Impact metrics related to biodiversity and
ecosystems change chang
Biodiversity and
ecosystems
97
E4-6
Anticipated Financial Effects from Biodiversity and
Ecosystem Related Risks and Opportunities
Biodiversity and
ecosystems
97
S1 SBM-2
Interests and views of stakeholders
Strategy
50
S1 SBM-3
Material impacts, risks and opportunities and their
interaction with strategy and business model
Strategy and IRO's
47-53
Double materiality
assessment
54-55
Own workforce
105
S1-1
Policies related to own workforce
Own workforce
108
S1-2
Processes for engaging with own workforce and
workers’ representatives about impacts
Own workforce
110
S1-3
Processes to remediate negative impacts and
channels for own workforce to raise concerns
Own workforce
111
S1-4
Taking action on material impacts on own
workforce, and approaches to managing material
risks and pursuing material opportunities related
to own workforce and effectiveness of those
actions
Own workforce
111
Disclosure requirements and incorporation by reference
Page
S1-5
Targets related to managing material negative
impacts, advancing positive impacts and
managing material risks and opportunities
Own workforce
114
S1-6
Characteristics of the undertaking’s employees
Own workforce
117
S1-9
Diversity metrics
Own workforce
119
S1-10
Adequate wages
Own workforce
120
S1-11
Social Protection
Own workforce
120
S1-14
Health and safety metrics
Own workforce
121
S1-16
Remuneration metrics (pay gap and total
remuneration)
Own workforce
121
S1-17
Incidents, complaints and severe human rights
impacts
Own workforce
122
S2 SBM-2
Interests and views of stakeholders
Strategy
50
S2 SBM-3
Material impacts, risks and opportunities and their
interaction with strategy and business model
Strategy and IRO's
47-53
Double materiality
assessment
54-55
Workers in the value
chain
123
S2-1
Policies related to value chain workers
Workers in the value
chain
124
S2-2
Processes for engaging with value chain workers
about impacts
Workers in the value
chain
125
S2-3
Processes to remediate negative impacts and
channels for value chain workers to raise concerns
Workers in the value
chain
125
S2-4
Taking action on material impacts on value chain
workers, and approaches to managing material
risks and pursuing material opportunities related
to value chain workers, and effectiveness of those
actions
Workers in the value
chain
126
S2-5
Targets related to managing material negative
impacts, advancing positive impacts and
managing material risks and opportunities
Workers in the value
chain
127
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TORM ANNUAL REPORT 2024
152
Disclosure requirements and incorporation by reference
Page
G1 GOV-1
The role of the administrative, supervisory and
management bodies
ESG Governance
44
Business conduct
133
G1 IRO-1
Description of the process to identify and assess
material impacts, risks and opportunities
Impacts, risks, and
opportunities
54
G1-1
Business conduct policies and corporate culture
Business conduct
135
G1-2
Management of relationships with suppliers
Business conduct
142
G1-3
Prevention and detection of corruption and
bribery
Business conduct
142
G1-4
Confirmed Incidents of corruption or bribery
Business conduct
144
G1-6
Payment practices
Business conduct
145
STRATEGIC REPORT > SUSTAINABILITY STATEMENT > GOVERNANCE > INCORPORATION BY REFERENCE
TORM ANNUAL REPORT 2024
153
Governance
Governavnce Introduction
Governance at TORM
155
Chairman’s Introduction
156
Governance Structure
TORM’s Governance Structure
159
Board of Directors
160
Board and Committee Meeting Attendance
161
Board Activities 2024
162
Committee Reports
Audit Committee Report
164
Risk Committee Report
169
Nomination Committee Report
171
Remuneration Committee Report
174
Other
Investor Information
185
Engagement and Decision-Making
188
Directors’ Report
191
Statement of Directors’ Responsibilities
194
Safe Harbor Statement as to the Future
196
TORM ANNUAL REPORT 2024
154
Governance at TORM
With respect to the year ended 31 December 2024, TORM plc was subject to the 2018
UK Corporate Governance Code (available at www.frc.org.uk).
This section of the Annual Report details our corporate
governance practices. Our governance framework is
integral to developing and executing our strategy. It
ensures the Board receives timely, detailed, and relevant
information to effectively oversee progress and challenge
management. Furthermore, this framework empowers our
dedicated Committees to conduct in-depth reviews of
specific areas.
During 2024, we reviewed and updated TORM's
compliance with the revised UK Corporate Governance
Code published in January 2024. TORM has considered the
individual provisions and is in compliance or partial
compliance with 38 out of 41 provisions. The non-
compliance with provisions 18, 19, and 32 are a result of
business decisions made after careful consideration by the
Board of Directors. The plan is not to attain compliance
with these recommendations.
TORM's updated compliance with the revised UK
Corporate Governance Code can be found on
www.torm.com/investor/governance/
governance-documents-and-policies/
The Chairman of the Board of Directors has been in post for
nine years. The Board’s Nomination Committee has
considered the performance and role of the Chairman and
the unique position that the Chairman plays in the
relationship with TORM’s largest shareholder. The
Nomination Committee determined that the benefits
brought by retaining the current Chairman outweigh the
negative effects of the Chairman serving for longer than
nine years. The Chairman was not independent on
appointment and the corporate governance of TORM’s
Board of Directors has always been based on a non-
independent Chairman in collaboration with a strong Senior
Independent Director (SID) and Independent Non-Executive
Directors.
Our Board of Directors is aware that two of our Non-
Executive Directors, David Weinstein and Göran Trapp,
were appointed in 2015. Both have served for longer than
nine years from the date of their first appointment.
However, after a thorough review of the composition, size
and structure of the Board of Directors and its Committees
by the Company Secretary which was presented to the
Nomination Committee during November, the Board of
Directors has determined that they continue to
demonstrate independence in their roles as directors.
The Board of Directors understands the need to consider
the balance between the need for continuity against the
benefit of having fresh perspectives and consequently
could begin the search for new or additional Board members
during the beginning of 2025.
Details on compliance can be found on pages 171
and 174
This section constitutes the UK statutory reporting on
corporate governance.
TORM’s Diversity, Equity, Inclusion and Belonging (DEIB)
Policy constitutes compliance with the requirements
stipulated by section 107d of the Danish Financial
Statements Act and the Danish Recommendations on
Corporate Governance.
Details on our DEIB policy can be found in our
Sustainability Statement section S1-1 §24
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Chairman’s Introduction
Chairman’s Statement
On behalf of the Board of Directors, I am pleased to
introduce the corporate governance report for 2024. This
continues to be the Board’s principal method of reporting to
shareholders in relation to corporate governance.
Strong governance is essential for
the effective delivery of our
strategy
Good corporate governance creates value for our
stakeholders as well as for the ongoing development and
sustainability of our business.
Throughout the year, the Board of Directors met in person
and online, and was able to deliver on strategic
commitments. The Board of Directors met 16 times this
year with seven ad hoc meetings in addition to the Board’s
nine scheduled meetings.
Read more about TORM’s Board and Committees
on page 161
Board Evaluation
As with previous years, this year’s evaluation was
undertaken internally. It involved a review of the Board of
Directors and its principal committees, covering a wide
range of topics. The evaluation is a well-established
process and an important opportunity to test that the Board
of Directors is well suited to provide constructive inquiries
to TORM’s Management. As a result of this review, the
Board of Directors requested further information on it’s role
in a potential cyber attack and the formalization of a
process plan.
Changes to the Board
In 2024, there were no changes to the Board of Directors.
The membership of the Board of Directors is drawn from a
diverse mix of nationalities, gender, and backgrounds,
ensuring the relevant skills and knowledge to provide a
positive contribution to the Board. During 2024, Board
Observer Christian Gorrissen decided to step down as
employee representative. and has been replaced by Liv
Kjær.
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TORM ANNUAL REPORT 2024
156
Key Deliverables
Fleet Growth
TORM grew the fleet by acquiring 19 vessels since the
beginning of 2024. TORM divested seven older vessels
supporting modernization of the fleet.
Board Deep Dives Requested in 2024
As a result of the 2024 Board evaluation, the Board of
Directors requested to further increase their knowledge of
cyber security and the Board’s role in a potential cyber
attack.
Geopolitical Risk
The Board of Directors continued to focus on geopolitical
risks in 2024. Developments in the geopolitical landscape
make it crucial to study and monitor geopolitical transitions
with external expert advisors.
Employee Engagement Survey
This year, TORM office employees participated in one
engagement survey, which showed over a 93% response
rate, resulting in an engagement score of 8.7 out of 10.
Further details can be found within the S1 section.
Board Leadership
As a Board of Directors, we are aware of the responsibility
that TORM has to the environment and the communities
that we work in. The strength and health of our corporate
culture, both in the Boardroom and across the business,
play a pivotal role in our success. Our values and actions as
leaders help ensure that the TORM culture is embedded
throughout the organization. The Board of Directors,
through its Remuneration Committee, is responsible for
ensuring appropriate arrangements are in place for
rewarding and incentivizing with specific performance
targets linking our culture and purpose to the delivery of our
strategy.
The Board of Directors continues to focus on our key
priorities and make important decisions necessary to deliver
progress, while our shareholders and other stakeholders
hold us accountable for our development. Strategic deep
dives into all areas of the business continued throughout
the year, providing insight and elaboration on the
challenges faced.
In addition, there has been focus on succession planning at
both Board of Directors and Senior Management Team level
to ensure that we have robust plans in place, with credible
succession plans for all key roles. More details on our
succession planning is set out in the Nomination
Committee report.
Shareholders
In continuation of the quarterly Distribution Policy first
introduced during 2022, TORM expects to pay out
quarterly dividends to our shareholders totaling USD
484.9m related to 2024.
Employees
TORM has reiterated and reinforced our zero-tolerance
towards harassment, which is inconsistent with our policies
and values, and we put extra focus on preventive measures.
We also ensure that our employees have the right tools to
handle such situations, along with the knowledge that it is
not accepted by the company. All seafarers and office-
based colleagues have participated in interactive training
courses to understand different types of harassment, what
to do if it occurs, and what tools are available to support
them.
Read more about TORM's people within the
Sustainability Statement S1 section
Customers
Working in close collaboration with our customers and
stakeholders is an immense focus for TORM and is key to
delivering on our ambitious climate targets. Throughout the
year, specialists across TORM interact with our
stakeholders to ensure an open dialog.
Suppliers
Our supply chain is important to achieve our goals, and we
must ensure that our quality standards and responsibility
efforts are extended and improved throughout it. We
expect our suppliers to comply with recognized
international standards and work to improve human rights,
labor conditions, impact on the environment, safety,
corruption, and quality.
Community
TORM has a long history of supporting education in India
and the Philippines, making the Sustainable Development
Goal 4 Quality Education an integrated part of our
organization and values.
Read more about TORM's connection to the
surrounding communities on page 104
Environment
TORM is committed to people, including our employees and
their communities, which makes it essential that we
commit to the environment for future generations. We work
relentlessly towards ambitious climate goals to reduce our
carbon footprint. TORM surpassed its 2025 CO2 intensity
reduction target, achieving a 40% decrease compared to
2008 (using the IMO's methodology) a year ahead of
schedule. This is a significant step in TORM's
decarbonization efforts, especially as the IMO's industry-
wide target is a 40% reduction by 2030. Looking forward,
TORM aims for a 45% reduction in CO2 intensity by 2030
and net-zero CO2 emissions by 2050. These targets are
supported by specific performance measures for TORM's
Management and organization.
Sustainability is a key theme in Board and committee
discussions as the Board of Directors leads the Group's
efforts to achieve net zero. The Board of Directors commits
to addressing the impact of climate change and the
contribution we can make as a business to mitigate our own
impact and that of our supply chain. Our sustainability
ambitions are shared across the Group.We welcome
collaboration with our colleagues, suppliers, and customers
in achieving our targets related to sustainability.
Read more about TORM's sustainability efforts on
page 13
ESG Reporting
TORM has established a separate department focused on
execution of our Sustainability Statement, working in close
cooperation with our commercial and technical
decarbonization teams.The Head of Group Finance
monitors new ESG-related regulatory requirements and
develops initiatives to ensure that TORM complies with
stakeholder expectations. Our experienced Board of
Directors oversees the ESG governance via the Audit
Committee.
Read more about TORM's sustainability reporting
on page 39
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TORM ANNUAL REPORT 2024
157
The Year Ahead
The evolving geopolitical landscape continues to influence
market dynamics. As we look forward to 2025, we
anticipate robust tanker earnings, supported by consistent
capacity utilization and balanced market fundamentals.
Although product tanker rates might see some moderation,
the overall outlook remains positive, presenting ongoing
opportunities to deliver value to our shareholders in a
dynamic and ever-changing environment. We appreciate
your continued trust and confidence in TORM.
Geopolitical factors will continue to shape the product
tanker market in 2025. Administrations in the US, Middle
East, Europe, and China may introduce new efforts to
mediate current geopolitical conflicts, while Europe, China,
and other key players could also implement policies
affecting global trade and energy flows. Potential
sanctions, diplomatic negotiations, or shifts in energy
strategies may lead to gradual and conditional changes in
shipping disruptions. Despite this, the market remains
heavily influenced by geopolitics, and recent shifts in trade
flows towards longer distances are expected to persist.
The One TORM platform has consistently delivered strong
shareholder returns by enhancing the tradability of our fleet
for customers and optimizing vessel positioning through
advanced data models and skilled personnel. The Board of
Directors remains committed to being best in class by
focusing on value creation, safety, and the green transition,
ensuring we remain relevant and attractive to both
customers and investors. To achieve this, TORM will
continue with its established key performance indicators
(KPIs) for Return on Invested Capital, safety, and CO2
emission intensity reduction, among others.
At TORM, we diligently adhere to information security best
practices and continuously monitor risks, vulnerabilities,
and industry threats. Throughout 2025, we will continue to
enhance TORM’s cyber security maturity.
2024 marks TORM's first year of reporting on sustainability
matters in accordance with CSRD. The Board of Directors is
still developing its expertise in this area and will continue its
education on this topic to facilitate this transition. This
commitment ensures that Board members have access to
specialized knowledge and resources, enabling TORM to
effectively address sustainability impacts, risks, and
opportunities in alignment with our strategic goals.
Read more about TORM's forward focus on page 13
We look forward to connecting with you at our Annual
General Meeting in April 2025 and updating you at that
time on our progress. Thank you for your continued support.
Christopher H. Boehringer
Chairman of the Board
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TORM ANNUAL REPORT 2024
158
TORM’s Governance Structure
The Board of Directors
Chaired by Christopher H. Boehringer
The Board of Directors holds nine prescheduled meetings on an annual basis in addition to several ad hoc meetings. The duties of the Board of Directors include establishing policies for strategy, accounting,
organization, finance, and the appointment of executive officers. The Board of Directors governs TORM in accordance with the limits prescribed by the Articles of Association or by any special resolution of the
shareholders.
Chairman
Leads the Board of Directors, sets the
agenda, and promotes a culture of
open debate between Executive and
Non-Executive Directors.
Meets regularly with the Chief
Executive Officer (CEO), other
Executive Directors, and other senior
management executives to stay
informed.
Senior Independent Director
Ensures that the views of each Non-
Executive Director are given due
consideration.
Available to both Non-Executive
Directors and shareholders if they have
concerns.
Meets with each Non-Executive
Director on an annual basis to appraise
the performance of the Chairman.
Non-Executive Directors
Committed to contributing
constructively to challenge and help
develop proposals on strategy.
Executive Director
Responsible for the day-to-day
management of TORM and for TORM’s
operational development, results, and
internal development.
Implements the strategies and overall
decisions approved by the Board of
Directors.
Board Observers
Employee-elected observers, providing
a communication platform between
the employees and the Board of
Directors. All observers are entitled to
attend and speak at Board meetings.
Audit Committee
Chaired by Göran Trapp.
Meets a minimum of four times a year.
Assists the Board of Directors in fulfilling its
responsibilities relating to the oversight of the
quality and integrity of the accounting, auditing,
and financial and ESG reporting of TORM.
Risk Committee
Chaired by Göran Trapp.
Meets a minimum of three times a year.
Responsible for supervisory oversight and
monitors responsibilities with respect to internal
controls and risk management.
Nomination Committee
Chaired by Christopher H. Boehringer.
Meets a minimum of twice a year.
Reviews the structure, size, and composition
(including skills, knowledge, experience, and
diversity) of the Board of Directors and makes
recommendations to the Board regarding any
changes.
Considers succession planning for directors, the
CEO, and others.
Remuneration Committee
Chaired by Christopher H. Boehringer.
Meets a minimum of twice a year.
Assists the Board of Directors in reviewing the
Management’s performance and remuneration as
well as TORM’s general remuneration policies.
Read more about the role and activities of
the Audit Committee on page 164
Read more about the role and activities
of the Risk Committee on page 170
Read more about the role and activities of
the Nomination Committee on page 171
Read more about the role and activities of
the Remuneration Committee on page 174
Senior Management Team
Consists of the following employees of TORM A/S (in addition to the Executive Director, Jacob Meldgaard): Kim Balle (Chief Financial Officer – CFO), Lars Christensen (Senior Vice President and Head of Projects),
and Jesper S. Jensen (Senior Vice President and Head of Technical Division). The Senior Management Team holds weekly meetings and assists the Executive Director in the day-to-day management of the business.
GOVERNANCE > GOVERNANCE STRUCTURE > TORM'S GOVERNANCE STRUCTURE
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159
Board of Directors
Christopher H. Boehringer
Non-Executive Director and Chairman of
TORM’s Board of Directors
David N. Weinstein
Senior Independent Director and Deputy
Chairman of TORM’s Board of Directors
Göran Trapp
Independent Non-Executive Director
Annette Malm Justad
Independent Non-Executive Director
Jacob Meldgaard
Executive Director and
Chief Executive Officer
Nationality: Canadian
Nationality: American
Nationality: Swedish
Nationality: Norwegian
Nationality: Danish
First elected: 2015
Appointed: 2015, continues until
removed by the B-shareholder
First elected: 2015
First elected: 2020
First elected: 2015
Employment: Managing Director and
Head of Europe, Oaktree Capital
Management (International) Limited
Employment: Senior Investment Banking,
Governance, and Reorganization
Specialist
Employment: Board member
Employment: Board member
Employment: Chief Executive Officer of
TORM since 01 April 2010
Skills and Experience: Shipping, strategy,
capital investment, M&A. Goldman
Sachs, FI Travel Corporation, Warburg
Dillon Read/SG Warburg, and LTU GmbH
& Co
Skills and Experience: Strategy, capital
markets and finance, risk management
and oversight, extensive public company
and corporate governance experience,
global business, US Listings (i.e. Seadrill
Limited, Stone Energy Corp, and Deep
Ocean Group) and as Managing Director
of Calyon Securities Inc, BNP Paribas,
Bank of Boston and Chase Securities Inc.
Skills and Experience: Shipping, strategy,
customers, capital, finance. Morgan
Stanley crude oil trader, Head of Oil
Products Trading Europe & Asia, Global
Head of Oil Trading and Head of
Commodities EMEA. Business
development and oil trading at Equinor.
Founding director of energy advisory
boutique Energex
Skills and Experience: Shipping, strategy,
customers, capital, finance. More than
25 years of executive experience from
shipping and industry including CEO of
Oslo-listed Eitzen Maritime Services ASA
from 2006-2010. The last 10 years as
independent consultant and Non-
Executive Board member
Skills and Experience: Shipping,
customers, strategy, capital, M&A, US
listing. Previously served as Executive
Vice President of Dampskibsselskabet
NORDEN A/S and held a number of
management positions in J. Lauritzen A/S
and A.P. Moller - Maersk
External Appointments: Utmost Group,
Marco Capital Holdings Limited and
Oaktree Capital Management
(International) Limited, and Draslovka a.s.
External Appointments: N/A
External Appointments: Chairman of
Energex Partners Ltd
External Appointments: Partner at Recore
Norway AS. Chair of the Board of
Directors of Store Norske Spitsbergen
Kulkompani AS, ANSC ASA, Småkraft AS
and Ocean Distillery AS. Board member
of Awilco LNG ASA and PowerCell
Sweden AB
External Appointments: Board member of
Danish Shipping, International Chamber
of Shipping, Danish Ship Finance,
SYFOGLOMAD Ltd, and the TORM
Foundation
Committees:
Committees:
Committees:
Committees:
Committees: None
Audit:
Risk:
Nomination:
Remuneration:
Chairman:
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Board and Committee Meeting Attendance
Board
Audit
Committee
Risk
Committee
Nomination
Committee
Remuneration
Committee
Meetings Held in 2024
16
5
4
2
3
Chairman of the Board
Christopher H. Boehringer
15
2
3
Senior Independent Non-Executive Director
David N. Weinstein
16
5
4
2
3
Executive Director
Jacob Meldgaard
16
2
3
Non-Executive Independent Directors
Annette Malm Justad
16
5
4
2
3
Göran Trapp
16
5
4
Board Observers
Christian Gorrissen
4
Rasmus J. Skaun Hoffmann
14
Liv Kjær
11
Board of Directors:
Audit:
Risk:
Nomination:
Remuneration:
Chairman:
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Board Activities 2024
Board Evaluation
According to the recommendations of the UK
Corporate Governance Code 2018, the Board of Directors is
to review and assess its performance annually
While the Nomination committee keeps the composition of
the Board of Directors under regular review, the annual
review of Board effectiveness provides an opportunity for
reflection on how we can continue to enhance the profile of
the Board.
As TORM is not listed in the UK, we are not required to have
an external evaluation under the 2018 UK Corporate
Governance Code. Instead, TORM has undertaken an
internal evaluation involving a detailed and thorough review
of the Board of Directors and its principal committees,
covering a wide range of topics. Following the evaluation
this year, the Board of Directors requested to further
increase their knowledge of cyber security and the Board’s
role within a potential cyber attack.
Board Activities
Generating long-term sustainable success will remain the
Board of Directors’ primary objective. The governance
structure is set for this and is continuously developed to
remain up to date. Below are some of the most important
strategic areas that were on the Board of Directors’ agenda
during 2024. It is important for the Board of Directors to
follow developments and make sure the competences
within the Board of Directors are in place as risks and
opportunities develop.
TORM’s governance structure is described on page
159
Learn more about the activities of the Committees
on pages 164 to 181
Strategy Update
By focusing on lowering emissions through fuel efficiency,
route optimization and digital tools within the One TORM
platform, we aim to balance environmental responsibility
with operational cost-effectiveness. This approach helps us
remain compliant with regulations while contributing to a
more sustainable shipping industry.
Geopolitical Updates
The geopolitical landscape continues to shape market
dynamics. Looking ahead to 2025, we expect tanker
earnings to be robust, underpinned by steady capacity
utilization and balanced market fundamentals. While
product tanker rates may moderate, the overall outlook
suggests continued opportunities to deliver value to our
shareholders in a dynamic and evolving environment.
TORM Internationalization
To create a more diversified approach to factors such as
geographical risks, sourcing of employees, tax regimes, and
flag states, throughout 2024, TORM has worked towards
increased internationalization with a more diversified
geographical income generation and asset ownership.
TORM Core Values
It was encouraging to see the enthusiasm and engagement
throughout the organization to TORM's updated Core
Values. These updated values are meant to be an
expression to provide our employees with a common
vocabulary for the successful and compassionate way that
we already work at TORM.
•
Committed to People - we are committed to people,
communities and the environment
•
Pursuing Innovation - we are pursuing innovation to
improve and excel
•
Always Delivering - we are always delivering results
without compromising on safety and reliability
Fleet Expansion and Optimization
Since early 2024, we have grown and modernized our fleet
by taking delivery of 19 vessels and divesting seven older
vessels, bringing the total fleet to 94 vessels on a fully
delivered basis. We focus on eco-friendly, fuel-efficient
vessels that align with shifting trade patterns and offer
promising returns in coming years.
Our Responsibility
In 2024, TORM surpassed its 2025 CO2 intensity reduction
target, achieving a 40% decrease compared to 2008 (using
the IMO's methodology) a year ahead of schedule. This is a
significant step in TORM's decarbonization efforts,
especially as the IMO's industry-wide target is a 40%
reduction by 2030. Looking forward, TORM aims for a 45%
reduction in CO2 intensity by 2030 and net-zero CO2
GOVERNANCE > GOVERNANCE STRUCTURE > BOARD ACTIVITIES 2024
TORM ANNUAL REPORT 2024
162
emissions by 2050. To further strengthen our ambition, we
have directly integrated the CO2 targets into TORM’s
incentive scheme where 12% is directly linked to our carbon
intensity reduction performance. However, our ambition
does not stop there. In our strategic approach to
sustainability, we prioritize the key challenges that impact
our business and stakeholders as detailed in our
Sustainability Statement section in this annual report. By
determining where we can exert meaningful influence, we
have developed targeted initiatives to address these
challenges effectively and responsibly in the years to come.
AI and Machine Learning
In competitive markets, real-time insights and predictions
are essential for rapid, informed decisions. Automating
routine tasks further enhances efficiency by allowing
employees to dedicate their time to strategic and creative
work. Further deep dives on the use of AI and machine
learning will assist us on our journey towards a 45% CO2
intensity reduction by 2030. In addition, we prioritize safe
operations and see a strong case for using AI to assist in
achieving this. AI will also be instrumental in optimizing our
processes and enhancing our competitive edge.
Cyber Security
Via our Risk Committee, the Board of Directors’ focal point
has been on the implementation of our IT and security
strategy. Our aim is to increase our proficiency to identify
potential threats and vulnerabilities.
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163
Audit Committee Report
Chairman’s Statement
This report provides an overview of how the Audit
Committee operates, an insight into the Audit Committee’s
activities, its role in monitoring and reviewing the integrity
and quality of TORM’s financial statements, the
effectiveness of internal controls, and related processes.
The Role of the Audit Committee
Read more about the Audit Committee’s area of
responsibility on page 159
Terms of Reference for the Audit Committee are
available at www.torm.com/investor/governance/
governance-documents-and-policies/
Audit Committee Members
The Board of Directors is satisfied that the Audit
Committee meets the independence requirements and any
applicable laws, regulations, and listing requirements,
including the UK Corporate Governance Code. In the
introduction to this Governance section on page 155, we
describe our compliance with recommendations for tenure.
The Audit Committee has deep knowledge of and
significant business experience in financial reporting, risk
management, internal control, and strategic management.
This combined knowledge and experience enables the Audit
Committee to perform its duties properly. In addition, the
Board of Directors has determined that the members of the
Audit Committee have the relevant shipping sector
knowledge. In the opinion of the Board of Directors, the
Chairman of the Audit Committee, Göran Trapp, meets the
requirement of bringing recent financial experience to the
Audit Committee.
The Audit Committee also has access to the financial
expertise in TORM and its independent auditors and can
seek further professional advice at TORM’s expense, if
required.
Meetings
The Audit Committee meets at least four times a year. The
Chief Financial Officer of TORM A/S, the Head of External
Reporting, the Head of Group Internal Control, and senior
representatives of TORM’s independent auditors are invited
to attend all or some of the meetings by invitation as
appropriate.
Updates Related to Financial Reporting and
Sustainability Statement
•
Quarterly discussions of the product tanker market
conditions and their impact on the quarterly results
•
Impact of the financing vessel investments through
share issuance
•
Accounting judgement review and update
•
Implementation of the CSRD and IFRS S2, including
first time reporting in 2024
•
Adoption of the updated 2024 UK Corporate
Governance Code
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At a Glance
Chairman
Göran Trapp
Members
Annette Malm Justad
David N. Weinstein
Composition
The Audit Committee is composed solely of Independent
Non-Executive Directors.
Meetings
The Audit Committee held five scheduled meetings in
2024. The members’ attendance at the committee
meetings can be seen on page 161.
2024 Highlights
•
Quarterly assessment of the impairment indicator test
of the vessels in the fleet
•
Going concern assessment and viability statement
•
Implementation of the CSRD and IFRS S2
Principal Activities in Focus
Financial Reporting and Sustainability Statement
•
Key elements in TORM’s Quarterly Reports, Annual
Report, and the estimates and judgements included in
TORM’s financial statements and disclosures
•
The appropriateness of the Management’s analysis and
conclusions on judgmental accounting matters
•
An assessment of whether the Annual Report, taken as
a whole, is fair, balanced, and understandable, and
whether our US annual report on Form 20-F complies
with relevant US regulations with focus on clarity of
disclosures, compliance with relevant legal and financial
reporting standards, and application of appropriate
accounting policies and judgements
•
The going concern assessment and adoption of the
going concern basis in preparing the Annual Report and
financial statements
•
The external auditor’s reports on its audit of the
financial statements
•
Reports from the Management and the external auditor
on the effectiveness of our system of internal controls
and our internal control over financial reporting
•
Compliance with applicable provisions of the Sarbanes-
Oxley Act (SOX)
•
A quarterly assessment of the impairment indicator test
of the vessels in the fleet
•
Approving the process performed for the double
materiality assessment and the outcome in terms of
impacts, risks, and opportunities
•
Reviewing the Management’s assumptions applied in
the determination of eligible and aligned activities under
the EU Taxonomy, hereunder the ‘do no significant
harm’ and ‘minimum safeguard’ criteria and how it is
reported
•
Oversee the reporting process of current applicable
legislation and process for setting ESG targets
Risk and Compliance
•
Reports from the Group Legal Department on the status
of significant litigation, claims, and investigations from
tax authorities
•
Compliance review of the 2024 UK Corporate
Governance Code recommendations
•
The appropriateness of the Enterprise Risk
Management (ERM) Report representing critical risk
factors, ownership and governance, and alignment with
the Risk Committee
•
Concerns raised through the whistleblower setup
process and their remediation
External Audit
•
Monitoring the effectiveness and quality of the external
audit process through examination and review of the
coverage provided by the external auditor’s audit plan
•
Reviewing reports from the external auditor on key audit
and accounting matters, business processes, internal
controls, and IT systems
•
Agreeing the audit and non-audit fees of the external
auditor during the year, including the objectivity and
independence of the external auditor
Significant Reporting Issues
In the financial statements, there are several areas
requiring the exercise of judgement by Management. The
Audit Committee’s role is to assess whether the
judgements made by Management are reasonable and
appropriate. To assist in this evaluation, the CFO presents
an accounting paper to the Audit Committee once a year,
setting out the key financial reporting judgements. The
main areas of judgement considered by the Audit
Committee in the preparation of the financial statements
are as follows:
Going Concern
The Audit Committee reviewed the Management’s
assessment for preparing TORM’s financial statements on a
going concern basis. This included reviewing and
challenging the Management’s forecast and the underlying
base and reverse stress case calculations along with its
assumptions. The Audit Committee also considered
TORM’s available liquidity, including undrawn and
committed facilities along with any liquidity-enhancing
projects and projections for the financial covenants within
TORM’s borrowing facilities.
Based on this, the Audit Committee confirmed that the
application of the going concern basis for the preparation of
the quarterly reports and year-end financial statements
continued to be appropriate, with no material uncertainties.
Please refer to Note 1 to the financial statements.
The going concern statement is set out in the
Financial Review page 32
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Impairment of Vessels
The impairment of TORM’s vessels is a key recurring risk
due to its significance in the context of TORM’s net asset
value. If Management determines that there are indicators
of impairment, the recoverable amount will be determined
based on the higher of the i) fair value less cost of disposal
for the cash-generating unit (CGU) and ii) the value in use
of the CGU. The Audit Committee regularly reviews
Management's assessment of the potential indicators of
impairment related to TORM’s vessels in the fleet within the
CGU comprised of the main fleet of LR2, LR1, and MR
vessels. Management's indicator assessment includes, but
is not limited to, broker vessel values, time charter rates,
weighted average cost of capital, any other adverse
impacts from current economic, environmental, and
geopolitical uncertainty, as well as the carrying amount of
the net assets against the market capitalization. As the
indicators involve complex and subjective judgements, the
Audit Committee thoroughly reviews and challenges the
judgements included in the assessment. The Audit Commit-
tee agreed to Management's conclusion that there were no
indicators of impairment as at 31 December 2024, and thus
the recoverable amount was not determined. Refer to Note
12 to the financial statements for further information.
Revenue Recognition
Revenue is recognized upon delivery of services in
accordance with the terms and conditions of the charter
parties and is made based on “load to discharge”, and
demurrage was until this year recognized with up to 95%
until actual realization. However, the Revenue Recognition
Policy was analyzed in 2024 and re-evaluated based on a
proposal from the Management to increase the demurrage
recognition from 95% to 97% due to underlying collection
rates. The supporting analysis and historic evidence was
discussed, including any assumptions applied, before the
Audit Committee agreed and approved the increase in
demurrage recognition to 97%.
Expected Credit Loss
Allowances for expected credit losses are based on “the
simplified approach” according to IFRS 9, which permits
the use of the lifetime expected loss provision for all trade
receivables. In 2024, Management presented the Audit
Committee with an analysis to support a proposal to amend
the expected credit loss allowance matrix. The Audit
Committee challenged the assumptions applied by the
Management in the amended allowance matrix, and
following further discussions that also included the impact
of current economic and geopolitical uncertainty, it was
agreed to reduce the expected credit loss for freight and
demurrage revenue for selected aging groups in the matrix.
The impact of the change was a reversal of USD 5.9m.
Depreciation Policy and Residual Value of Vessels
The Management maintains an analysis of the potential
impact of climate change and how different drivers might
have implications on the useful life of vessels. Among the
drivers were TORM’s short and long-term climate targets,
the IMO’s revised Green House Gas Strategy, and other
new regulations and policies with increased focus on carbon
reduction in the short and long terms. Together with
Management, the Audit Committee discussed the different
drivers and their impact on the current useful life of vessels,
but concluded, that the current accounting policy of
depreciating vessels over 25 years is still appropriate and
still in line with TORM’s peers. The Audit Committee will
continue to monitor the development closely.
The residual value of vessels is calculated based on two
elements: Scrap values reviewed on a yearly basis and cost
of voyage to the scrapping location. In 2021, the Audit
Committee agreed to the recommendation from the
Management to gradually phase in the green recycling
prices in the calculation of residual values by applying an
equal weighted average of green recycling and conventional
recycling prices, while still using a three-year average to
limit volatility in the residual values. In 2024, the Audit
Committee discussed with Management the potential
increase to 100% weight on green recycling prices from
2025. As the market for green recycling had matured and
now accounts for a significant portion of recycled vessels, it
was agreed to increase the weight of green recycling prices
from 70% to 100% from 2025.
Effectiveness of the Audit Committee
In 2024, the Audit Committee carried out a detailed self-
assessment using a questionnaire and discussions
facilitated by the Head of External Reporting. Based on the
self-assessment, no material concerns arose.
Internal Audit
The Audit Committee assesses the need for an internal
audit function on an annual basis and makes a
recommendation to the Board of Directors. The Audit
Committee was satisfied that based on TORM’s current
size, complexity, and internal control environment, TORM
can continue to defer the establishment of an internal audit
function. The decision must be revisited annually, next time
in 2025.
In the absence of an internal audit function, internal
assurance is achieved through the work of the Group
Internal Control function and PwC’s testing of the entire
Internal Control over Financial Reporting framework (ICFR).
The Audit Committee is satisfied that the internal audit
arrangements continue to provide effective assurance of
TORM’s risk and controls environment. Throughout the
year, the Audit Committee monitored the effectiveness of
TORM’s risk management and internal control systems,
including material financial, operational, and compliance
controls.
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Internal Controls and Risk Management
The Audit Committee has primary responsibility for the
oversight of TORM’s internal control system, including the
risk management framework, the compliance framework,
and the work of the Group Internal Control function. The
Audit Committee regularly discusses the principles for risk
assessment and risk management related to financial
reporting, and the committee reviews TORM’s significant
risks, including fraud, and their impact on financial
reporting, including stress testing when relevant.
Read more about principal risks and uncertainties
on pages 17 to 21
The Board of Directors fulfills its responsibility regarding the
effectiveness of the risk management and the ICFR through
the Audit Committee. Since the US listing on Nasdaq in
New York in 2017, TORM has been required to comply with
the Sarbanes-Oxley Act (SOX) resulting in increased
regulatory requirements.
The ICFR to support TORM’s SOX compliance is based on
the Internal Control – Integrated Framework 2013 issued by
the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), which enables best
practices and a strong control environment.
To ensure TORM meets its target of SOX compliance, the
Audit Committee continuously monitors the status of the
ICFR. This oversight by the Audit Committee includes
recurring reporting, including management oversight, the
outcome of management testing, and the status of auditor
testing. The Audit Committee makes sure that the
Management sufficiently addresses deficiencies when they
emerge.
2024 was the third year that TORM was required to have
controls audited by its external auditor to comply with
Section 404(b) of SOX.
Having monitored TORM’s ICFR, the Audit Committee has
not identified any material weaknesses in TORM’s ICFR
through either management testing or external audit.
Sustainability
The Audit Committee is responsible for overseeing the
internal reporting process of the Sustainability Statement
at TORM, as carried out by the Senior Management Team.
This oversight encompasses the entire reporting process,
including the approval of the double materiality assessment
and discussions about the principles of risk assessment and
risk management concerning the Sustainability Statement.
In 2024, sustainability reporting became an integrated part
of the Audit Committee annual wheel and is now a recurring
part of all regular Audit Committee meetings throughout
the year. This decision was a result of the applied
governance structure and responsibility assigned to the
Audit Committee by the Board of Directors.
TORM prepared for, and reported on, the CSRD and IFRS
S2 for the first time in 2024, as TORM is both a listed
company and exceeds the 500 employee threshold. The
double materiality assessment conducted during 2024 was
thoroughly reviewed and ultimately approved by Audit
Committee. Any changes to the outcomes of the double
materiality assessment, prompted by new insights or
additional knowledge, were duly presented to the Audit
Committee. The rationale and supporting documentation
for the changes were shared and discussed with the Audit
Committee before approval.
The Audit Committee received regular updates on progress
of the data collection, including the status of activities and
the measures taken to ensure the accuracy and reliability of
the data to be reported.
The Audit Committee has been actively engaged in
overseeing the process for establishing targets to ensure
that they align with TORM's strategic priorities and
regulatory obligations. The Audit Committee has reviewed
and formally approved both the methodology employed in
the target-setting process as well as the actual targets.
External Auditor
The Audit Committee has primary responsibility for
overseeing the relationship with the external auditor, Ernst
& Young LLP (‘EY’).
This includes making the recommendation on the
appointment, reappointment, or removal of the external
auditor, assessing their independence on an ongoing basis,
approving the statutory audit fee, the scope of the
statutory audit, and the appointment of the lead audit
engagement partner. As Lloyd Brown retired during 2024,
Mark Woodward was chosen as the new lead audit
engagement partner. The appointment of Mark Woodward
was a result of a thorough selection process between EY
and the Audit Committee, supported by the Management.
Handover was initiated during 2023 ensuring a smooth
transition to the 2024 audit.
During the year, EY reported to the Audit Committee on
their independence from TORM. The Audit Committee and
the Board of Directors are satisfied that EY has adequate
policies and safeguards in place to ensure that auditor
objectivity and independence are maintained. The Audit
Committee has recommended to the Board of Directors the
reappointment of the external auditors for the 2025
financial year, and the Board will be proposing the
reappointment of EY at the upcoming AGM.
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Effectiveness of the External Audit Process
The Audit Committee reviewed the quality of the external
audit throughout the year and considered the performance
of EY by undertaking an annual review of the performance
of the independent auditor in a combination of discussions
with the Management, reviewing the quality of written
deliverables to the Audit Committee, and reviewing the
quality of dialog and insights provided during Audit
Committee meetings. The findings were considered by the
Audit Committee, and it was agreed that the audit process,
independence, and quality of the external audit were
satisfactory.
Based on these reviews, the Audit Committee concluded
that there had been appropriate focus and challenge by EY
on the primary areas of the audit, and that EY had applied
robust challenge and skepticism throughout the audit.
Auditor Independence and Objectivity
In its assessment of the independence of the auditor, and in
accordance with the standard on independence, the Audit
Committee received details of all relationships between
TORM and EY, which may have a bearing on their
independence, and received confirmation from EY that it is
independent of TORM in accordance with applicable laws
and regulations.
The Audit Committee maintains a policy and has
procedures in place for the pre-approval of all audit
services, audit-related services, and other services
undertaken by the external auditor. The principal purpose of
this policy is to ensure that the independence and the
objectivity of the external auditor are not impaired. The
policies include restrictions on the types of services which
the independent auditor can provide, in line with the Ethical
Standard published by the UK Financial Reporting Council
(FRC). Details of the services which the independent
auditors cannot be engaged to perform were provided to
the Audit Committee at the November 2024 Audit
Committee meeting. A copy of the policy can be made
available on request.
Audit and Non-Audit Fees
Full disclosure of the audit and non-audit fees paid during
2024 can be found in Note 6 to the financial statements.
Audit fees:
USD 1.3m
Non-audit fees:
USD 1.0m
The independent auditor may be contracted to perform
certain non-audit activities. The Audit Committee believes
that this can be performed without compromising the
auditor’s independence and objectivity. The Audit
Committee will allocate the non-audit work after
considering TORM’s policy on the provision of non-audit
services by TORM’s auditors. A copy of the pre-approval
procedures can be made available on request.
The EU Green Paper (“Audit Policy: Lessons from the
Crisis”) requires that audit firms cap their non-audit
services at 70% of average audit fees over a three-year
period (non-audit services required by the EU or national
law or regulation do not count against the cap). Fees
relating to non-audit services by EY amounted to USD 1.0m
in 2024, of which USD 0.5m are not required by EU or
national law. The average audit fees in the past three years
from 2021 to 2023 were USD 1.1m. As such, non-audit
services by EY corresponded to 45% of the total audit fees.
The Audit Committee considered that the services provided
were most efficiently provided by the external auditor. To
maintain the external auditor’s independence and
objectivity, the external auditor did not make any decisions
on behalf of the Management.
Whistleblower
TORM’s Whistleblower Charter, which supports the group-
wide Business Principles, is monitored by the Audit
Committee.
Read more about TORM’s Whistleblower Charter
here: www.torm.com/investor/governance/
whistleblower/
The Audit Committee received reports providing details of
matters reported through TORM’s international,
confidential telephone reporting lines and secure e-mail
reporting facility, which is operated by an independent third
party, Holst Advokater. All matters reported are
investigated by Holst Advokater and reported to the Board
of Directors as well as to the Audit Committee together
with details of any corrective actions taken. The Audit
Committee also received reports at each Audit Committee
meeting providing details of any fraud losses during the
quarter.
Approval
On behalf of the Audit Committee
Göran Trapp
Chairman of the Audit Committee
06 March 2025
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Risk Committee Report
Chairman’s Statement
This report provides an overview of how the Risk Committee
operates, the activities of the Risk Committee, and the
committee’s role in monitoring and reviewing the integrity
and quality of TORM’s company-wide risk management.
The Role of the Risk Committee
Read more about the Risk Committee’s area of
responsibility on page 159
Terms of Reference for the Risk Committee are
available at www.torm.com/investors/governance
Risk Committee Members
The Risk Committee must at all times consist of at least
two independent members of the Board of Directors, each
meeting the independence requirements and having
sufficient qualifications within risk management and capital
market knowledge to independently assess the
appropriateness of TORM’s risk management and control
environment as well as the planning and execution of the
risk management policies and funding activities.
Meetings
The Risk Committee meets at least three times a year.
Activities During the Year
At each meeting, the Risk Committee follows up on key risk
indicators to ensure alignment of risk tolerance and actual
risk level. These measures include the principal risks
described in the Risk Management section from page 17
and monitoring of the compliance with internal risk
mandates, such as foreign exchange, FFA, and bunker
hedge level, refinance risk, interest rate hedge level, credit
risk, and time charter position. A liquidity forecast is
presented at each Risk Committee meeting.
Cyber Security
Cyber security is a recurring agenda item at each meeting,
and the Risk Committee reviews TORM’s cyber security
risks and maturity status During 2024, the Risk Committee
approved TORM's IT security policy and IT risk management
policy. Focus this year has been on implementation of the IT
and security strategy aimed at reducing the attack surface,
increasing capabilities to identify threats, and mitigating
vulnerabilities. We have continued our work on regulatory
compliance including requirements for NIS2.
Customer Credit Risk
During 2024, the Risk Committee approved an updated
Customer Credit Risk Policy reflecting a higher degree of
automation in the credit assessment process by using
external credit rating providers as primary source of
customer credit. TORM has a well-functioning customer
credit approval process, where all customers are reviewed
prior to commercial charters.
Capital Structure Risks
The Risk Committee reviewed risk considerations related to
TORM’s capital structure, including liquidity position,
financial leverage, TORM’s Distribution Policy, off-balance
sheet liabilities, terms and sources of funding vessel
investments, and fleet employment strategy.
At a Glance
Chairman
Göran Trapp
Members
Annette Malm Justad
David N. Weinstein
Composition
The Risk Committee is composed solely of Independent
Non-Executive Directors.
Meetings
The Risk Committee held four scheduled meetings in 2024. The
members’ attendance at the committee meetings is described
on page 161.
2024 Highlights
•
Risk management review of TORM’s policies on insurance,
IT, financial instruments, and our Financial Policy
•
Maintained focus on IT security risk
•
Reviewed peak oil demand forecasts
•
Review of geopolitical risks associated with TORM’s
business
•
Review and approval of the Enterprise Risk Management
(ERM) report
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Peak Oil
The Risk Committee reviewed development of peak oil
forecasts from IEA for the period of 2019 to 2023. In the
recent IEA’s Stated Policies Scenario (STEPS), peak oil is
assumed by the end of this decade, followed by a gradual
decline hereafter. The IEA STEPS projects the global energy
landscape based on the potential (but not full)
implementation of current and announced policies,
focusing on gradual transitions in energy demand,
investment, and technology advancement without
transformative changes. The development in forecasts over
the last few years shows a slightly faster decline in global oil
demand after the peak is reached, although oil demand in
2050 is expected to remain only slightly below pre-COVID
levels within STEPS forecast. Nevertheless, there is a large
regional difference in the timing of the peak oil, with total oil
demand in most of the advanced economies already having
peaked while demand in emerging economies and
developing countries as a group is expected to continue to
grow. Similarly, there’s a difference in the timing of peak
demand by oil products, with naphtha and jet fuel demand
not expected to peak before 2050 in the STEPS scenario.
The Net Zero Emission scenario outlines more aggressive oil
demand decline.
The Risk Committee acknowledges TORM’s vulnerability to
declines in oil demand. Oil demand, while critical, is
insufficient to fully understand TORM’s business, as the
ton-miles driven by regional imbalances, which play a
critical role in assessing logistical efficiency and market
dynamics, also depend on changes in the refinery landscape
(such as closures and capacity additions
Liquidity Governance
The Risk Committee oversaw TORM’s liquidity risk. TORM
works with e.g. break-even levels to ensure sufficient
liquidity is available. At TORM, we ensure that financial
gearing related to loan agreements can manage periods of
low profitability and declining vessel values.TORM identifies
the required liquidity- and financial leverage cushions to be
available by severely stressing our tanker freight rates and
vessel values with low points values seen since 2000.
Forward Freight Agreements (FFAs) and Liquidity Risk
During 2024, the Risk Committee approved an updated
FFA and Bunker Policy. The FFA and Bunker Policy clearly
outlines acceptable liquidity thresholds and hedging
exposure enabling TORM to hedge freight.
Funding and Funding Sources
The Risk Committee has reviewed funding structure and
terms prior to purchase second-hand vessels.Moreover, the
Risk Committee reviews geopolitical downside risks
associated with current and future funding sources herein
assessment of effective mitigations. TORM liaises with
external advisors to maintain an updated understanding
related to geopolitical risks.
EU ETS
The Risk Committee approved a newly established EU ETS
Trading Policy enabling TORM to manage ETS exposure.
Maritime Safety Threats
The Risk Committee reviewed the measures taken by TORM
to assess, manage, and mitigate future safety threats.
Review Policies
The Risk Committee reviewed TORM’s IT Policy, Financial
Policy, FFA and Bunker Policy, Insurance Policy, Credit Risk
Policy, and EU ETS Policy. These policies outline core
activities and risks, and the measures which TORM has
taken to mitigate these risks.
Sustainability Reporting
In the past two years, TORM has used the Task Force on
Climate-related Financial Disclosures (TCFD) guidelines to
assess transition and physical risks and opportunities and
how they might impact the resilience of TORM’s strategy.
From 2024, the TCFD is not a UK requirement. The TCFD
content is still reported but as part of the format of CSRD
E1 Climate Change. The findings from the scenario analysis
were presented and discussed with the Risk Committee.
The climate-related risks identified through the scenario
analysis exercise have been incorporated into TORM’s
annual Enterprise Risk Management process and is part of
the recurring items discussed at the Risk Committee
meetings.
Enterprise Risk Management
The Risk Committee reviewed the key risks faced by TORM
and the underlying drivers of these exposures. The
alignment of actual risk and desired risk was discussed, and
the Risk Committee approved TORM’s risk profile based on
these discussions. Further, the Risk Committee reviewed
the assigned management accountability, which highlights
current and planned risk-mitigating activities.
TORM’s annual Enterprise Risk Management Report was
approved at the Board of Directors meeting in February
2025.
Read more about TORM's annual risk assessment
on page 16
Approval
On behalf of the Risk Committee
Göran Trapp
Chairman of the Risk Committee
06 March 2025
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Nomination Committee
Report
Chairman’s Statement
In 2024, no changes were made to the Nomination
Committee. The key focus areas of the Nomination
Committee were governance, succession planning, and
employee engagement.
The Role of the Nomination Committee
Read more about the Nomination Committee’s
area of responsibility on page 159
Terms of Reference for the Nomination Committee
at www.torm.com/investors/governance
Compliance with the Code
The Nomination Committee complies with the updated
2024 UK Corporate Governance Code except for provision
18. This provision states that all directors should be subject
to annual re-election, however, TORM’s B-Director is not
appointed for a specified term and will continue until
removed by the B-shareholder. TORM believes that
continuity in the B-Director role is important as this
Director serves as a representative of the minority
shareholders. The B-shareholder, who represents the
minority shareholders, can replace the B-Director at any
time. In addition, provision 19 states that the Chairman of
the Board of Directors should not remain in place beyond
nine years from the date of their appointment to the Board
of Directors. However, after a thorough review of the
composition, size and structure of the Board of Directors
and its Committees by the Company Secretary which was
presented to the Nomination Committee during November,
the Board’s Nomination Committee has considered the
performance and role of the Chairman and the unique
position that the Chairman plays as an employee of TORM’s
largest shareholder. The Nomination Committee
determined that the benefits brought by retaining the
current Chairman outweigh the negative effects of the
Chairman serving for longer than nine years. This is
particularly true given that the Chairman was not
independent on appointment and the corporate governance
of TORM’s Board of Directors has always been based on a
non-independent Chairman, but supported by a strong
Senior Independent Director (SID) and Independent Non-
Executive Directors.
The Nomination Committee reviewed the independence of
all Non-Executive Directors pursuant to the UK Corporate
Governance Code. Except for the Chairman, the
Nomination Committee is composed solely of Independent
Non-Executive Directors, who in the opinion of the Board of
Directors, continue to constructively offer strategic
guidance, specialist advice and, challenge TORM’s
Management.
In line with TORM’s Articles of Association on the annual
re-election of the remaining directors, all TORM’s Non-
Executive Directors will submit themselves for re-election
at the 2025 Annual General meeting.
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171
At a Glance
Chairman
Christopher H. Boehringer
Members
Annette Malm Justad
David N. Weinstein
Composition
Except for the chairman, the Nomination Committee is
composed solely of Independent Non-Executive Directors.
Meetings
The Nomination Committee had two scheduled meetings in
2024.The members’ attendance at committee meetings can
be seen can be seen on page 161.
13%
13%
61%
13%
Succession planning
Employee population
Governance
Diversity
Focus Area
The Executive Directors’ service contracts and the Non-
Executive Directors’ terms and conditions of appointment
are available for inspection at our registered office and will
be available on display at the 2025 Annual General
Meeting.
Effectiveness
During the year, the Nomination Committee reviewed the
independence, time commitment, and potential conflicts of
interest of the Non-Executive Directors and concluded that
they each continued to demonstrate independent
judgement and to devote sufficient time to discharging
their duties.
Board Evaluation
In accordance with the UK Corporate Governance Code,
TORM conducts an annual internal evaluation of the Board
of Directors. Following the evaluation this year, the Board
of Directors requested to further increase their knowledge
of cyber security and the Board’s role within a potential
cyber attack..
Read more about the Board's activities this year
from page 162
Employee Engagement
Throughout the year, the Nomination Committee received
updates on key elements of the people strategy, which
provides insight into a variety of areas, including culture,
diversity and inclusion, succession planning, future
capabilities, and colleague engagement.
Read about TORM’s people from page 105
Diversity
The Nomination Committee continued to review TORM’s
progress against its gender diversity targets for both female
Board of Directors members and women in leadership
positions in the office-based workforce. At the end of
2024, women in leadership positions constituted 20%.
TORM has a target for 2030 of 35% women in leadership
positions.
Read about TORM’s diversity targets in
Management from page 105
Since 2020, the Board of Directors has fulfilled its target of
20% female Board members. A new target has been set for
the Board of Directors of 40% women by the end of 2035.
Board diversity matrix
Country of principle Executive Offices
United Kingdom
Foreign private issuer
Yes
Disclosure prohibited under home law
No
Total number of Directors
5
Succession Planning
Succession planning continues to be a priority for the
Nomination Committee. Throughout the year, the
Nomination Committee focused on the succession pipeline
for TORM’s Senior Management Team, which is essential to
ensure a continuous level of quality in Management. It
further aids TORM in avoiding instability by mitigating the
risks which may be associated with unforeseen events,
such as the departure of key individuals, as well as
promoting diversity and inclusion.
Retention Rate
At the end of 2024, the retention rate for all office-based
employees was 94%, which is still at a satisfactory level. In
2023 and 2022, the retention rate was 91% and 90%,
respectively.
Read more about our employee health and
well-being from page 105
Approval
On behalf of the Nomination Committee
Christopher H. Boehringer
Chairman of the Nomination Committee
06 March 2025
GOVERNANCE > COMMITTEE REPORTS > NOMINATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
172
Total Remuneration 2024 of
the CEO
Annual Performance Bonus KPI outcomes
For 2024, the Remuneration Committee established a KPI bonus scorecard across six
areas. These areas were: ROIC, TCE, CO2 reduction, Safety and Quality, OPEX, and
Administrative Cost to a maximum bonus potential of 70% against which 63.0% was
attained.
Annual Performance Bonus Discretionary
The Remuneration Committee reviews the CEO incentive award prior to
payment using judgement to ensure that the final assessment of performance
is fair and appropriate. If circumstances warrant it, the Remuneration
Committee may adjust the final payment.
The performance metrics of discretionary bonus are specified at the start of
the performance period and are commercially sensitive.
2024 Annual Bonus
63%
45%
108%
Formulaic outcome
percentage of maximum 70%
Committee
discretion maximum 50%
Final outcome percentage of
maximum 120%
Total Remuneration 2024
Long-Term Incentive Plan
Awarded in 2024
Restricted Share Units
255,200.00
Exercise price per share
DKK 258.40
Vesting over three years
2025 - 2027
Grant value
USD 1.91m
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
173
Base Salary, 49%
Annual performance
bonus, 50%
Benefits, 1%
90%
90%
One TORM KPIs (70%)
Committee discretion (50%)
Remuneration Committee
Report
Chairman's Statement
The Remuneration Committee report describes the
activities of the Remuneration Committee for the period 01
January 2024 to 31 December 2024. It sets out
remuneration details for the Executive and Non-Executive
Directors in TORM. It has been prepared in accordance with
Schedule 8 of the Large and Medium-Sized Companies and
Groups (Accounts and Reports) Regulations 2008 as
amended (the "Regulations").
The report is split into two main areas:
•
Chairman’s Statement
•
Annual Report on Remuneration
The Remuneration Policy, approved by the shareholders at
the Annual General Meeting (AGM) on 11 April 2024, took
effect from the date of that meeting. As of the date of this
Annual Report, TORM plc is in compliance with the
requirements of this Remuneration Policy. During 2024,
the Committee undertook a further review of the
Remuneration Policy.
Find TORM’s Remuneration Policy at
www.torm.com/investors/governance
The annual report on remuneration provides details on
remuneration in the period and additional information
required by regulations. The UK Companies Act 2006
requires that the auditors report to shareholders on certain
parts of the Directors' Remuneration Report and state
whether, in their opinion, those parts of the report have
been properly prepared in accordance with the regulations.
The parts of the annual report on remuneration subject to
audit are indicated in the report. The statement
by the Chairman of the Remuneration Committee is not
subject to audit.
The Role of the Remuneration Committee
Read more about the Remuneration Committee’s
area of responsibility on page 159
Find the Terms of Reference for the Remuneration
Committee at www.torm.com/investors/
governance
Compliance with the Code
The Remuneration Committee is in full compliance with the
2018 UK Corporate Governance Code except for provision
32. This provision states that the Board of Directors must
establish a Remuneration Committee of Independent Non-
Executive Directors, with a minimum membership of three.
In addition, the Chairman of the Board of Directors can only
be a member if he is independent on appointment, and he
cannot chair the Remuneration Committee. TORM's
Chairman of the Board of Directors, Christopher H.
Boehringer, has been appointed as Chairman of TORM’s
Remuneration Committee. However, given his association
with the controlling shareholder and the alignment of
interest regarding remuneration, the Board of Directors
considers it appropriate for Christopher H. Boehringer to
chair the Remuneration Committee.
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TORM ANNUAL REPORT 2024
174
68%
20%
5%
5%2%
One TORM KPIs
LTIP
Employee remuneration
Governance
Board remuneration
At a Glance
Chairman
Christopher H. Boehringer
Members
Annette Malm Justad
David N. Weinstein
Composition
Except for the chairman, the Remuneration Committee is
composed solely of Independent Non-Executive Directors.
Meetings
The Remuneration Committee had two scheduled meetings in
2024. The members’ attendance at committee meetings can
be seen on page 161.
Focus Area
Meetings
The Chairman and the Executive Director attend the
meetings of the Remuneration Committee except for
matters relating to their own remuneration. The Head of
People attended some meetings, and other members of
TORM’s Management attend when necessary.
Activities During 2024
KPIs
In accordance with the UK Corporate Governance Code,
the Remuneration Committee throughout the year
consistently reviewed the agreed 2024 KPI status providing
valuable feedback. In addition, the Remuneration
Committee reviewed and agreed the KPIs for 2025.
In order to further strengthen the One TORM platform
focus across the organization, the Remuneration
Committee agreed that again for 2025, all employees will
be measured against the same KPIs.
Gender-Based Initiatives
The Remuneration Committee engaged in discussions
surrounding the broader workforce remuneration. There is
interest in doing more to develop and foster a diverse and
inclusive workplace for all our employees. This includes
addressing any underlying reasons surrounding gender-
based remuneration gaps. At TORM we are monitoring the
gender pay gap during the salary review process to ensure
that we work towards equal pay.
Annual Remuneration Policy Review
The Remuneration Committee reviewed the Remuneration
policy. Following the review, they concluded that no
changes were warranted.
At this point, there is no intention to revise the
Remuneration Policy more often than every third year,
unless required due to changes to regulations or legislation.
Approval
On behalf of the Remuneration Committee
Christopher H. Boehringer
Chairman of the Remuneration Committee
06 March 2025
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
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175
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
176
Remuneration at a Glance
Executive Director and Chief Executive Officer’s Remuneration
Fixed Pay
Base Salary
Effective 01 January 2024
Chief Executive DKK 7.91m
Effective 01 January 2025
Chief Executive DKK 8.15m
Executive Director Salary
EUR 70,000
EUR 70,000
Benefits
DKK 276,000, covering the running and maintenance expenses associated with a
private vehicle
DKK 276,000, covering the running and maintenance expenses associated with a
private vehicle
Pension
Not entitled to any pension
Not entitled to any pension
Annual Bonus
Short-Term Incentive
Opportunity (% of salary):
Maximum: 120% of the base salary in the financial year 2024
Opportunity (% of salary):
Maximum: 120% of the base salary in the financial year 2025
Long-Term Incentive
Long-Term Incentive
Granted a total of 255,200 RSUs vesting over a three-year period, with one third of
the grant amount vesting at each anniversary during the three-year period starting
on 01 January 2025. The exercise price for each RSU is DKK 258.4. Also granted
5,563 RSUs following exercise of RSUs granted in 2021 and 2022 to reflect the
payment of dividends since the grant date. The exercise price for each RSU is USD
0.01.
Not known at time of publication
Statement of Voting at the AGM
Shareholder voting on the resolutions to approve the annual Remuneration Report put to the 2024 AGM and the Directors’ Remuneration Policy put to the 2021 AGM were as follows:
Votes for
%
Votes against
%
Abstentions
%
Total Votes
Annual remuneration report
54,276,518
89.1
6,575,454
10.8
70,633
0.1
60,851,972
Directors' remuneration policy
53,635,713
88.0
7,094,933
11.7
191,989
0.3
60,730,646
Executive Director and Chief Executive
Officer’s Remuneration
Single Total Figure of Remuneration
The table to the right sets out the 2023-24 remuneration
for Jacob Meldgaard in his roles as Executive Director of
TORM plc and Chief Executive Officer (CEO) of TORM A/S,
a subsidiary of TORM plc.
Base Salary
The base salary is discussed and agreed with the Chairman
of the Board of Directors and the Remuneration Committee
once a year. Base salary as of 01 January 2024: DKK 7.91m
(USD 1,141m). In addition, the CEO receives EUR 70,000
(USD 76,000) for his role as Executive Director. The CEO’s
base salary was reviewed on 23 January 2025 to determine
the appropriate salary for 2025. The base salary as of 01
January 2025 was determined at DKK 8.152m, and the
adjustment of the salary will take effect as of 01 January
2025.
Taxable Benefits
TORM can place a car costing no more than DKK 1m at the
CEO’s disposal. However, the CEO has instead accepted an
amount of DKK 23,000 per month, covering the running
and maintenance expenses associated with a private
vehicle. For 2024, the amount of DKK 276,000 (USD
39,798 ) was included in the single figure amount.
Other benefits provided directly include two trade
periodicals, a mobile phone, which may be used for both
business and private purposes, a PC at the CEO’s disposal
at his home address, which may be used for both business
and private purposes, including internet access and call
charges. No changes in allowances and benefits are
expected for 2025.
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
177
Total Remuneration for the Financial Year 2024
2024
2023
Fixed pay
(USD'000)
Fixed pay
(USD'000)
Base Salary
1,217.2
1,195.4
Taxable Benefits
39.8
40.0
Pension
—
—
Total Fixed Remuneration
1,257.0
1,217.2
Variable Pay (USD'000)
Annual Performance Bonus
1,232.6
1,277.4
Total Variable Pay
1,232.6
1,277.4
Single Total Figure of Remuneration (USD'000)
2,489.6
2,512.8
Change in Remuneration of Colleagues and Directors
% change from 2023 to 2024
Salary
Benefits
Bonus
Employee Entire Group
4.2 %
0.0 %
94.1 %
Chief Executive Officer
1.8 %
0.0 %
-3.5 %
Performance Bonus 2024
The Remuneration Committee has provided the CEO with a
performance cash bonus for the financial year 2024 in the
following range and based on the following parameters:
•
The fulfillment of specific performance metrics set by
TORM (up to 70% of the CEO’s base salary). These
include but are not limited to ROIC, cost structure,
highest safety standards, and environmental footprint
•
Up to 50% of the CEO’s base salary based on the sole
discretion of TORM’s Board of Directors
The table below shows the achievement against each of the
performance metrics in our annual bonus and the resulting
total annual bonus payout for the year ended 31 December
2024.
Key One TORM KPIs
Payout at
Maximum
Perfor-
mance %
Actual
Payout %
of Salary
Actual
Payout %
of Overall
Bonus
Parameter 1
Highest Safety and quality
standard
70.0
63.0
58.3
CO2 reduction towards 2025
target
Outperform peers on RoIC
Outperform peers on TCE
Maintain effective OPEX cost base
Maintain effective Admin cost base
Parameter 2
Commercially sensitive
50.0
45.0
41.7
Total
120.0
108.0
100.0
In aggregate, the maximum achievable cash bonus for the
financial year 2024 for the CEO is equal to 120% of the
CEO’s base salary in the financial year 2024. The specific
metrics and calculation methodology for each of the
parameters have been determined by the Board of
Directors. Based on the aforesaid methodology, the CEO’s
performance cash bonus for 2024 was determined to be a
total of 108.0% (63.0% on parameter 1 and 45.0% on
parameter 2) of the 2024 fixed annual salary of DKK 7.91m,
resulting in an amount of DKK 8,547m (USD 1,233m).
Long-Term Incentive Program, Restricted Share Units
Granted to the CEO
In accordance with TORM’s Remuneration Policy, the Board
of Directors has as part of the Long-Term Incentive
Program (LTIP) granted Restricted Share Units (RSUs) in
the form of restricted stock options to certain employees.
The RSUs aim at retaining and incentivizing the employees
to seek to improve the performance of TORM and thereby
the TORM share price for the mutual benefit of themselves
and TORM’s shareholders. Each RSU granted under the
LTIP entitles its holder to acquire one Class A common
share, subject to vesting.
The single figure remuneration table for the CEO does not
include any amounts in relation to the RSU awards since
2016, and there are no performance conditions associated
with the grant of RSUs.
As detailed in announcement no. 09 issued on 23 March
2022, the CEO was granted a total of 255,200 RSUs which
will vest in equal amounts over the next three years. The
first amount could be exercised from 01 January 2023. The
exercise price for each RSU was DKK 58, corresponding to
the average price of TORM shares in the 90 calendar days
preceding the publication of TORM plc’s Q4 2021 release
plus a 15% premium. Vested RSUs may be exercised for a
period of 360 days from each vesting date.
As detailed in announcement no. 09 issued on 29 March
2023, the CEO was granted a total of 255,200 RSUs which
will vest in equal amounts over the next three years. The
first amount could be exercised from 01 January 2024. The
exercise price for each RSU was DKK 220.6, corresponding
to the average of 90 calendar days preceding the
publication of TORM plc’s 2022 Annual Report plus a 15%
premium and adjusted for the dividend payment related to
TORM’s the fourth quarter 2022 results.
In addition, Executive Director Jacob Meldgaard will be
granted a total of 300,000 RSUs on similar terms as
outlined above, with the exceptions that the strike price for
these RSUs is set to one US cent and that all the RSUs will
vest on 01 March 2026.Vested RSUs may be exercised for
a period of 360 days from each vesting date.
As detailed in announcement no. 08 issued on 07 March
2024, the CEO was granted a total of 255,200 RSUs which
will vest in equal amounts over the next three years. The
first amount could be exercised from 01 January 2025. The
exercise price for each RSU was DKK 258.4, corresponding
to the average of 90 calendar days preceding the
publication of TORM plc’s 2023 Annual Report plus a 15%
premium .
In addition, Executive Director Jacob Meldgaard was
granted a total of 5,563 RSUs following exercise of RSUs
granted in 2021 and 2022 to reflect the payment of
dividends since the grant date. The exercise price for each
RSU was USD 0.01.
LTIP Element of Jacob Meldgaard’s Remuneration Package
2024
Award
2024
2024
Awarded on
07 March 2024
15 May 2024
Vesting period
three years
one year
1st vesting date
01 January 2025
Issue window
Original exercise price
DKK 258.4
USD 0.01
Grant value assuming
100% vesting
USD 1.91m
Covered under
value of original
grant
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178
Long-Term Incentive Program – Restricted Share Units Granted
Year
2023 Ret. Add
2024
2022 Additional
2021 Additional
2023 Retention
2023
2022
2021
Grant of RSUs excluding the Executive Director
3,120
1,214,988
11,146
16,430
1,333,224
1,248,155
1,137,770
1,099,921
Grant of RSUs to the Executive Director
255,200
1,972
3,591
300,000
255,200
255,200
255,200
Vesting period in years
1
3
1
1
1
3
3
3
Vesting period in years to the Executive
Director
3
1
1
1
Beginning
Vest upon grant
01-Jan-25
Vest upon grant
Vest upon grant
01-Mar-26
01-Jan-24
01-Jan-23
01-Jan-22
Exercise period from vesting
Within the issuing
period
Three Years after
each vesting date
Within the issuing
period
Within the issuing
period
Three Years after
each vesting date
360 days after
each vesting date
360 days after
each vesting date
360 days after
each vesting date
Black-Scholes model, theoretical market value
*
USD 10.9m
*
*
USD 58.02m
USD 14.5m
USD 2.7m
USD 3.0m
Exercise Price (DKK)
-
258.4
0.08
0.08
-
220.60
58.00
53.50
Exercise Price (USD)
0.01
-
-
-
0.01
-
-
-
Reduced due to dividend payment (DKK)
218.0
-
-
-
149.8
0.08
0.08
Total RSU's expired un-exercised
-
-
-
-
35,445
68,977
92,155
124,057
RSUs exercised within 2019
RSUs exercised within 2020
RSUs exercised within 2021
RSUs exercised within 2022
433,979
RSUs exercised within 2023
435,952
398,539
RSUs exercised within 2024
3,120
-
13,118
20,021
7,089
467,577
435,967
398,546
Total RSU's exercised by grant year
3,120
-
13,118
20,021
7,089
467,577
871,919
1,231,064
RSUs outstanding as of 31 December 2024
—
1,470,188
—
—
1,590,690
966,801
428,896
—
•
The adjustment RSUs were covered by the value of the original RSU grant
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TORM ANNUAL REPORT 2024
179
End of Service Gratuity
TORM can terminate the CEO’s Service Agreement giving
12 months’ notice to expire on the last day of a month. The
CEO can terminate the Service Agreement giving six
months’ written notice to expire on the last day of a month.
Post-Service Salary
If the CEO dies during his employment, TORM will pay to the
widow or any of his children below the age of 18 the fixed
salary including non-salary benefits for the current month
and a post-service salary for three months equal to the
fixed salary. However, such post-service salary will only be
paid until the date on which the employment would have
terminated because of termination of the Service
Agreement.
Claw Back Policy
TORM’s policy regarding the recovery of erroneously
awarded compensation (“Clawback Policy”) is made in
accordance with the applicable rules of the Danish
Companies Act, The Nasdaq Stock Market and Section 10D
and Rule 10D-1 of the Securities Exchange Act of 1934, as
amended. In the event TORM is required to prepare an
accounting restatement due to material noncompliance
with any financial reporting requirements under U.S.
securities laws or otherwise has published erroneous data
or if TORM determines there has been a significant
misconduct that causes material financial, operational or
reputational harm, TORM shall be entitled to recover a
portion or all of any incentive-based compensation provided
to certain executives who, during a limited time period
preceding the date on which an accounting restatement is
required, received incentive compensation, through the
LTIP or STIP, based on the erroneous financial data that
exceeds the amount of incentive-based compensation the
executive would have received based on the restatement.
Total Pension Entitlements
The Directors of TORM plc are not entitled to any pension
contributions from TORM. In addition, Denmark-based
Executive Director Jacob Meldgaard, in his role as CEO of
TORM A/S, is not entitled to any pension contribution.
Taxable Benefits
In general, members of the Board of Directors of TORM plc
do not receive any additional benefits.
Payments for Loss of Office
No payments for loss of office have been made in 2024.
The Company does not consider making payments for loss
of office to Non-Executive Directors. For Executive
Directors, a termination notice cannot exceed 24 months.
Termination by the Executive Director must be subject to a
minimum of six months’ written notice. Any severance pay
cannot exceed an amount corresponding to the
remuneration paid for the preceding two years. The
Remuneration Committee will maintain a discretionary
approach to the treatment of leavers given that the facts
and circumstances of each case are unique. In an exit
situation, the Remuneration Committee will consider the
individual circumstances, any mitigating factors that may
be relevant, the appropriate statutory and contractual
position, and the requirements of the business for speed of
change.
Outside Appointments
The Executive Director is entitled to retain the fees earned
from non-executive appointments outside TORM. Jacob
Meldgaard was appointed Non-Executive Director of Danish
Ship Finance A/S for which he received DKK 350,000 and
Non-Executive Director of SYFOGLOMAD Limited for which
he received EUR 5,000 for his services.
Annual Bonuses and LTIPs
TORM’s Remuneration Policy stipulates that the Non-
Executive Directors’ remuneration cannot include
participation in share or warrant programs. The Non-
Executive Directors of TORM plc do not receive any part of
their remuneration from TORM in shares or warrants. The
remuneration for the Non-Executive Directors is
determined by the Board of Directors subject to limits in
TORM’s Articles of Association. During 2024, none of the
Non-Executive Directors received any part of their
remuneration in shares or warrants.
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180
The Executive Director’s Interests in the
Shares of TORM
The table to the right summarizes the total interests of the
Executive Director in shares of TORM plc as of 31
December 2024. During the period 01 January to 31
December 2024, the Executive Director sold 260,763 A-
shares in TORM plc for a total value of approximately DKK
58.1m. The following changes took place between 31
December 2024 and 06 March 2025. Of the 810,401
unvested portion of the Executive Director’s interests
255,200 Restricted Share Options vested on 01 January
2025.
The Board Directors’ Interest in the Shares of
TORM
The table to the right summarizes the total interests of the
members of the Board of Directors in shares of TORM plc as
of 31 December 2024. During the period 01 January to 31
December 2024, Non-Executive Director Göran Trapp sold
12,820 A-shares in TORM plc for a total value of
approximately DKK 2.9m. No changes took place in the
Directors’ interests between 31 December 2024 and 06
March 2025.
Remuneration for Non-Executive Directors
The table to the right summarizes the remuneration paid to
the Non-Executive Directors of TORM in 2024. The fees
payable can be found in the Remuneration Policy and are
paid in EUR. The decrease in fees in USD is in relation to
exchange rates. The fees in EUR remain unchanged year on
year. The fees shown include any additional fees paid in
respect of chairmanships of committees or other roles such
as Senior Independent Director (SID). Board Observer fees
are no longer payable.
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181
Executive Director’s Interests in the Shares of the Company (Audited)
Jacob Meldgaard's Restricted Share Units
Awarded
Vested Not
Exercised
Agreed not to
Exercise
Exercised
Unvested
At 31/12/23
3,108,360
1,021,380
766,035
510,544
810,401
Granted – 07/03/24
255,200
—
—
—
1,065,601
Granted – 15/05/24
5,563
—
—
—
1,071,164
Exercised within 2024
—
—
—
260,763
810,401
At 31/12/24
3,369,123
1,021,380
766,035
771,307
810,401
2024 Statement of Directors' Shareholding and Share Interests
Director
Ordinary
shares as of 01
Jan 2024
Ordinary
shares as of 31
Dec 2024
Changes from
31 Dec 2024
to 06 Mar
2025
Ordinary
shares as of 06
Mar 2025
Christopher H. Boehringer
21,204
21,204
—
21,204
David N. Weinstein
5,000
5,000
—
5,000
Göran Trapp
12,820
—
—
—
Annette Malm Justad
2,700
2,700
—
2,700
Jacob Meldgaard
—
—
—
—
The above table shows the total number of share interests of each Director.
2024 Remuneration Table Non-Executive Directors
USD '000
Base Fee
Committee Fee
Total
Director
2024
2023
2022
2024
2023
2022
2024
2023
2022
Christopher H. Boehringer
159
161
157
53
54
52
212
214
210
David N. Weinstein
108
109
104
108
109
104
217
219
207
Göran Trapp
54
55
52
108
109
104
163
164
155
Annette Malm Justad
54
55
52
108
109
104
163
164
155
Information provided in the following part of the Annual Report on remuneration is not subject to audit.
Assessing Pay and Performance
In the table to the right, we summarize the Chief Executive
Officer’s single figure remuneration over the past six years,
and how our variable pay plans have paid out in relation to
the maximum opportunity. This can be compared to
TORM’s performance since the listing of TORM plc,
measured by total shareholder return, compared to the
average of a selection of TORM’s main peers in the industry
and with the performance of the Danish stock index OMX.
The OMX index is a market cap weighted index of all stocks
listed on Nasdaq in Copenhagen. The total shareholder
return is calculated in USD.
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
182
67%
60%
45%
117%
100%
100%
57%
114%
108%
1,473
1,626
1,531
2,208
2,307
2,449
1,744
2,513
2,490
Annual bonus (% earned of base salary)
Total remuneration USD '000
2016
2017
2018
2019
2020
2021
2022
2023
2024
0
500
1,000
1,500
2,000
2,500
3,000
0%
20%
40%
60%
80%
100%
120%
140%
8-Year Historical Performance. TORM plc vs Peers and the OMX Index
Financial year remuneration for the Chief Executive Officer
72
71
51
62
56
58
129
218
251
96
106
108
112
134
177
176
199
241
Peer average
TORM
OMX
2016
2017
2018
2019
2020
2021
2022
2023
2024
0
100
200
300
Annual Percentage Change in Directors’
Remuneration
The table to the right shows the percentage change over
the year ended 31 December 2023 to the year ended 31
December 2024 with respect to the Directors’
remuneration and average employee remuneration. As
required by legislation, the Directors’ remuneration is
compared to the employees of TORM plc on a full-time
equivalent basis.
Relative Importance of Spend on Pay
The table to the right shows the actual expenditure of
TORM on employee pay and distributions to shareholders
compared to the retained earnings of TORM.
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
183
Change in Remuneration of Colleagues and Directors
Salary or Fees % Change
Benefits % Change
Bonus % Change
2023 to
2024
2022 to
2023
2021 to
2022
2023 to
2024
2022 to
2023
2021 to
2022
2023 to
2024
2022 to
2023
2021 to
2022
Chief Executive Officer
1.8 %
7.5 %
-10.6 %
0.0 %
2.9 %
-11.8 %
-3.5 %
115.5 %
-49.0 %
Christopher H. Boehringer
1.1 %
2.2 %
-10.9 %
N/A
N/A
N/A
N/A
N/A
N/A
David N. Weinstein
4.8 %
5.8 %
-11.4 %
N/A
N/A
N/A
N/A
N/A
N/A
Göran Trapp
4.8 %
5.8 %
-11.7 %
N/A
N/A
N/A
N/A
N/A
N/A
Annette Malm Justad
4.8 %
5.8 %
-11.7 %
N/A
N/A
N/A
N/A
N/A
N/A
Colleagues entire group
4.2 %
5.7 %
4.6 %
0.0 %
0.0 %
0.0 %
94.1 %
-15.2 %
1.9 %
The comparative figures used to determine the % change take into consideration the CEO's salary and benefits.
Other benefits provided relate directly to company car benefit.
% change in DKK for salary and Executive Director’s fees is 2.5%, taxable benefits is 0% and annual bonus is -3.0%.
% change in Euro for Non-Executive Director fees is 0%. Fees have remained unchanged.
Relative Importance of Spend on Pay
Expenditure USDm
2024
2023
2022
2021
2020
Dividends paid
553.3
586.4
166.7
—
70.6
Purchase of outstanding treasury shares in TORM A/S
—
—
—
—
—
Purchase/disposals of treasury shares
—
—
—
—
1.3
Executive Director’s remuneration
2.5
2.5
1.7
2.4
2.3
Total
555.8
588.9
168.4
2.4
74.2
Staff costs
87.0
77.9
49.7
52.1
50.7
Retained earnings
1,791.5
1,382.2
1,290.4
899.5
939.2
Remuneration Policy
The TORM plc Remuneration Policy approved at the 11 April
2024 Annual General Meeting (AGM) remained unchanged
during 2024. In accordance with the UK Corporate
Governance Code, TORM’s Remuneration Policy and
practices are designed to support the business strategy and
promote TORM’s long-term sustainable success. The
Remuneration Committee will continue to consider the
appropriateness of the Remuneration Policy annually to
ensure that it continues to align with the business strategy.
At this point, there is no intention to revise the
Remuneration Policy more often than every third year,
unless required due to changes to regulations or legislation.
Find TORM’s Remuneration Policy at
www.torm.com/investors/governance/
2025 Remuneration Policy
The Remuneration Policy approved at the 11 April 2024
AGM took effect from the date of that meeting. As of the
date of this Annual Report, TORM plc is in compliance with
the requirements of this Remuneration Policy.
Read TORM's revised Remuneration policy under
Documents and Policies on www.torm.com/
investor/governance
Adaptation and Publication
The Board of Directors must review the Remuneration
Policy at least once a year. Any changes to the
Remuneration Policy must be adopted by the Board of
Directors and approved by the shareholders at an AGM.
TORM’s Remuneration report will be included in TORM’s
Annual Reports for all financial years and will contain
information on remuneration paid to the Board of Directors
and Executive Management.
Approval
On behalf of the Remuneration Committee
Christopher H. Boehringer
Chairman of the Remuneration Committee
06 March 2025
GOVERNANCE > COMMITTEE REPORTS > REMUNERATION COMMITTEE REPORT
TORM ANNUAL REPORT 2024
184
Investor Information
Dual Listing in Copenhagen and New York
TORM’s A-shares are listed on Nasdaq Copenhagen under
the ticker TRMD-A and on Nasdaq New York under the
ticker TRMD. TORM’s A-shares can move freely between
the two Nasdaq exchanges.TORM’s Transfer Agent is
Computershare Inc, P.O. Box 43006, Providence RI,
02940-3078, USA.
Shareholders
As of 31 December 2024, TORM had approximately
28,499 registered shareholders representing
approximately 66% of the share capital.
TORM is subject to the EU’s Prospectus Regulation and
Transparency Directive which implies that shareholders
have an ownership notification requirement if the
ownership reaches, exceeds or falls below the thresholds 5,
10, 15, 20, 25, 50, or 90 percent, or 1/3, or 2/3.
Based on notifications received during 2024 and 2025 to
date, OCM Njord Holdings S.à r.l. (Oaktree) is the only
shareholder with more than 5% of the share capital, holding
41% of the share capital at the end of 2024.
Share Information
Exchanges
Nasdaq CPH and NY
ISIN (CPH)
GB00BZ3CNK81
CUSIP (NY)
G89479102
Tickers
TRMD A and TRMD
Number of A-shares (end 2024)
97,814,051
Number of treasury shares
493,371
As of 31 December 2024, TORM’s treasury shares
represented approximately 0.5% of the total share capital.
The C-share is held by Oaktree, and the B-share is held by
the Minority Trustee, SFM Trustees Limited, on behalf of
TORM’s non-Oaktree shareholders. The B-share and the C-
share have certain voting rights.
At the end of 2024, the members of the Board of Directors
held a total of 28,904 shares, equivalent to a total market
capitalization of DKK 4.0m or USD 0.55m. The Board of
Directors and certain employees are limited to trading
shares during a 45-day period after the publication of
financial reports.
Share Price Performance
In 2024, TORM had an average of 94,099,269 A-shares
outstanding. The average daily trading volume on Nasdaq in
Copenhagen has been approximately 270,000 shares and
approximately 836,000 shares on Nasdaq in New York.
During 2024, the share price decreased from DKK 206.20
to DKK 138.40 on Nasdaq in Copenhagen and from USD
31.4 to USD 19.45 on Nasdaq in New York.
The 2024 share price development is available at
www.torm.com/investors/share
Financial Calendar 2025
16 April 2025
Annual General Meeting
08 May 2025
First quarter 2025 results
14 August 2025
First six months 2025 results
06 November 2025
First nine months 2025 results
Investor Relations
TORM pursues a transparent and consistent dialog with
investors to ensure efficient and fair pricing of our shares.
The TORM share is currently covered by ten analysts,
predominantly from shipping-oriented investment banks.
TORM observes a three-week silent period prior to the
publication of financial reports.
Financial reports, investor presentations,
and announcements, are available at
www.torm.com/investor
Share Capital
As of 31 December 2024, TORM’s share capital amounted
to USD 978,140.53 divided into 97,814,051 A-shares of
USD 0.01 each, one B-share of USD 0.01 and one C-share
of USD 0.01. A total of 97,814,051 votes are attached to
the A-shares. Only the A-shares are admitted to trading
and official listing on Nasdaq in Copenhagen and Nasdaq in
New York. As of 31 December 2024, TORM holds 493,371
as treasury shares.
GOVERNANCE > OTHER > INVESTOR INFORMATION
TORM ANNUAL REPORT 2024
185
During 2024, TORM increased our share capital by
11,588,367 A-shares as a result of the issuance of
10,242,929 new shares in connection with the delivery of
acquired vessels and the exercise of 1,345,438 Restricted
Share Units.
Share Pre-Emption Grant
Pursuant to TORM’s Articles of Association and authorities
granted at TORM plc’s AGM on 15 March 2016 (2016 AGM)
and updated authorities granted at TORM plc’s AGM on 14
April 2020 and 11 April 2024, the Board of Directors was
granted authority to allot shares or rights relating to shares
for cash free from pre-emption up to an aggregate nominal
amount of USD 4,941,465, of which the following
authorizations are still active:
•
Up to an aggregate nominal amount of USD 1,372,283
which can be offered in connection with any proposed
initial public offering of equity securities on certain US
stock exchanges, of which none were issued from 01
January 2020 to 31 December 2024, leaving a current
authority to issue up to 137,228,300 A-shares.
Share Pre-Emption Grant
Directors, officers, and employees
Dates
Values
Granted
April 11, 2024
USD 707,025
Utilized
Shares issued since 2024
AGM authority
USD 5,422
Utilized
Grant of remaining options
USD 44,566
Remaining
USD 657,037
•
Up to an aggregate nominal amount of USD 2,345,198
in general equity issues including warrants, convertible
debt, and general equity with the issue being at fair
value as determined by the Board of Directors, of which
USD 38,571 was issued from 11 April 2024 to 31
December 2024, leaving a current authority to issue up
to 230,662,640 A-shares.
•
Up to an aggregate nominal amount of USD 707,025 to
Directors, officers, or employees of TORM or any of its
subsidiaries of which USD 5,422 was issued from 11
April 2024 to 31 December 2024, and the Company has
granted share options over a further 44,566, leaving a
current authority to issue up to 65,703,749 A-shares.
Share Pre-Emption Grant
Details of TORM’s CEO’s share scheme and any rights
attached to the shares under this scheme is set out in the
Directors’ Remuneration Report.
Share Pre-Emption Grant
General equity issues - acquisition of vessels
Dates
Values
Granted
April 11, 2024
2,345,198
Utilized
2024
38,571
Remaining
2,338,368
The U.K. Takeover Code, issued and administered by the
U.K. Takeover Panel, applies to TORM.
Restricted Share Units
As of 31 December 2024, 4,456,575, Restricted Share
Units (RSUs) were outstanding with 1,345,438 being
exercised during 2024.
In accordance with TORM’s Remuneration Policy, the Board
of Directors has as part of the Long-Term Incentive
Program (LTIP) granted certain employees RSUs in the form
of restricted stock options. The RSUs aim at retaining and
incentivizing the employees to seek to improve the
performance of TORM and thereby the TORM share price
for the mutual benefit of themselves and TORM’s
shareholders. Each RSU granted under the LTIP entitles its
holder to acquire one Class A common share, subject to
vesting.
The specific terms for the Remuneration are
described within the Remuneration Report
Share Repurchase Grant
Authority
Date
Value
Granted
April 11, 2024
18,145,867
Repurchase
Accumulated
0
Remaining
Approx. 8% of TORM's
share capital excluding
treasury shares
18,145,867
The Directors regard the ability to repurchase issued A-
shares in suitable circumstances as an important part of
the financial management of the Company and therefore
consider it to be desirable to have the authority to make
purchases by way of off-market purchases. The company
intend to table a resolution at the 2025 AGM to allow the
Company to buy back a maximum aggregate number of A-
shares, being 10% of the Company’s issued share capital.
The authorities, if granted, will be effective until the end of
the Company’s next annual general meeting to be held in
2026.
Distribution Policy
On 07 March 2024, TORM amended the distribution policy
with effect from the first quarter of 2024. With this, TORM
intends to distribute on a quarterly basis excess liquidity
above a threshold liquidity level. The threshold liquidity level
will be determined as the sum of i) the product of liquidity
requirement per vessel and the number of owned and
leased vessels in TORM’s fleet as at the balance sheet day
and ii) a discretionary element determined by the Board of
Directors taking into consideration TORM’s capital
structure, strategic opportunities, future obligations and
market trends.
GOVERNANCE > OTHER > INVESTOR INFORMATION
TORM ANNUAL REPORT 2024
186
In line with the previous distribution policy applicable for
2024, the Board of Directors has decided to recommend
for the Annual General Meeting to approve a distribution of
USD 58.4m for the fourth quarter of 2024. The total
declared and proposed distribution related to 2024
amounted to USD 484.9m. TORM's distribution policy for
2024 can be found on TORM's website and in the 2023
Annual Report.
Voting Rights
Each A-share carries one vote on all resolutions proposed at
the General Meetings of TORM except for the election or
removal of the B-Director. Until the Threshold Date (the
first time at which OCM Njord Holdings S.à r.l. (“Oaktree”)
and its affiliates cease to beneficially own at least one third
of the issued shares), the sole B-share has one vote at the
General Meetings and special administrative rights,
including the right to appoint the Deputy Chairman of the
Board of Directors. After the Threshold Date, all Directors
can be appointed or removed by passing an ordinary
resolution. The B-shareholder has the right to appoint one
Board Observer. Pursuant to the Articles of Association, no
more than one B-share can be issued by TORM.
TORM can only take certain material actions relating to
supermajority matters and Reserved Matters (as specified
in its Articles of Association) if either (i) the majority of the
Directors (who must include the Chairman and the B-
Director) approve the relevant action or (ii) (a) in case of a
supermajority action, if the B-Director did not approve such
action or attend the relevant Board meeting, such action is
approved by a shareholder resolution approved by at least
86% of the votes capable of being cast on such
supermajority action or (ii) (b) in case of a Reserved Matter
action, if the B-Director did not approve such action or
attend the relevant Board meeting, such action is approved
by a shareholder resolution approved by at least 70% of the
votes capable of being cast on such Reserved Matter
action.
Until the Threshold Date, the sole TORM C-share has
350,000,000 votes at the General Meetings in respect of
certain Specified Matters only, including the election of
members to the Board of Directors of TORM (including the
Chairman, but excluding the B-Director) and certain
amendments to the Articles of Association. The sole C-
shareholder, Oaktree, must continue to hold the C-share as
long as it or its affiliates beneficially own at least one third
of the issued shares (“Threshold Date”). Accordingly,
Oaktree may continue to operate as the Company’s
controlling shareholder, even if Oaktree does not own a
majority of the A-shares. Pursuant to the Articles of
Association, no more than one C-share can be issued by
TORM. A number of the A-shares are issued subject to
restrictions on transfer (“Restricted Shares”) imposed by
US securities laws. These Restricted Shares may only be
transferred pursuant to an effective registration statement
filed with the U.S. Securities and Exchange Commission
(SEC) or an exemption from the registration requirements
of the United States Securities Act of 1933 as amended.
There are no specific restrictions on the size of a holding of
the A-shares nor the transfer of the A-shares (except for
the Restricted Shares as detailed above), which are both
governed by the general provisions of the Articles of
Association and prevailing legislation.
The B-share can only be transferred to (i) another trustee (it
is currently held by SFM Trustee Limited on behalf of the
minority shareholders), or (ii) TORM if the B-share is
redeemed or (iii) any person who has acquired 100% of the
issued A-shares. The B-share cannot be encumbered.
The C-share is held by Oaktree and can only be transferred
(i) to one of Oaktree’s affiliates or (ii) to TORM if the C-
share is redeemed or (iii) any person who has acquired 100%
of the issued A-shares. The C-share cannot be
encumbered.
The B-share and the C-share do not have any rights to
receive dividends or other distributions which TORM
decides to pay. TORM must redeem the B-share and the C-
share at the same time as soon as possible after the
Threshold Date for USD 0.01 each. Once redeemed, the B-
share and the C-share must be cancelled, and no further B-
shares or C-shares can be issued by TORM.
GOVERNANCE > OTHER > INVESTOR INFORMATION
TORM ANNUAL REPORT 2024
187
Engagement and Decision-Making
The following information forms our section 172 statement, setting out how, in performing their duties over the course of the year,
Directors regarded the matters set out in section 172(1) (a-f) of the UK Companies Act 2006.
We have integrated our reporting on how our stakeholders have been considered in terms of our business model and governance
throughout this report. TORM's Board of Directors considers, both individually and together, that they have acted in good faith and in
the way they consider would be most likely to promote the success of TORM for the benefit of its members as a whole during the year
ended 31 December 2024.
Why?
Why is it important to engage?
How?
How did Management and Directors engage?
Outcomes and Actions
What was the impact of the engagement?
Shareholders
Transparent and open shareholder
communication is expected to support the
markets’ valuation of TORM shares and future
access to capital in the equity markets.
To ensure consistent communication to all investors, quarterly and annual
financial statements and other stock exchange announcements are the
main vehicles of communication. TORM maintains regular capital market
contact through analyst and industry presentations, investor meetings,
and conference calls.
TORM’s Management and Directors have continuous focus on leveraging
the integrated One TORM platform, TORM’s capital structure, TORM’s
ESG agenda, and the product tanker market fundamentals in support for
short-term and long-term ROIC generation with the aim of maximizing the
long-term value for TORM’s shareholders.
TORM maintained active engagement with the investor community in 2024,
issuing 46 regular regulatory stock exchange announcements and hosting open
virtual presentations in connection with our quarterly earnings releases. Our
Management and Investor Relations Team participated in a range of virtual and
physical meetings and presentations for investors and analysts across key
financial hubs. Additionally, we prioritize designated Investor Relations
communication tailored specifically to retail investors, further reinforcing our
commitment to broad and inclusive engagement.
Employees
TORM’s employees are fundamental to enable us
to do business, and their continued engagement
is an integral part of the decision-making across
the organization. The Board of Directors
supports an open dialog between the Board and
the workforce.
TORM regards responsible behavior as a central
part of the company, our business, and the
mindset of our people.
The Board of Directors oversees the mechanisms we have in place to help
ensure that employees can raise any matters of concern, how such
matters are considered and, when necessary, how they are investigated
through the whistleblower setup.
Two employee-elected representatives attended all Board meetings as
Observers. The current Observers include one office-based employee and
one vessel-based employee. Observers are permitted to participate but are
not permitted to formally vote on matters submitted to a vote.
The Board of Directors receives and follows up on the Employee
Engagement Survey performed twice a year.
Since 2006, TORM’s Board of Directors has provided a whistleblower
setup with an independent lawyer as part of the internal control system.
Read more on page 141
The Observers on TORM’s Board of Directors allow TORM’s employees to
have a direct line of questioning to and receive feedback from the Board.
Full details of attendance can be found on page 161
In 2024, we continued our biannual real-time data engagement survey,
which we introduced in 2020. More than 96% of all office-based
employees responded to this survey. Read about TORM’s engagement
survey within the S1 Report
GOVERNANCE > OTHER > ENGAGEMENT AND DECISION-MAKING
TORM ANNUAL REPORT 2024
188
Why?
Why is it important to engage?
How?
How did Management and Directors engage?
Outcomes and Actions
What was the impact of the engagement?
Suppliers and Customers
Managing the relationship with suppliers and
customers is an integral part of the way TORM
conducts business.
Beyond national and international regulation, TORM’s largest customers
have their own compliance criteria with which TORM and other product
tanker operators must comply.
Ensuring quality in everything TORM does is part of the One TORM KPI
Framework. Within this framework, the Board of Directors includes a
Tradability KPI ensuring that TORM vessels can meet our customers’
demands.
TORM encourages feedback from its customers and suppliers.
TORM has a high degree of approval by oil majors and regularly receives feedback
from our customers. TORM utilizes this feedback in solving future logistical
demands, understanding our customers’ difficulties and requirements, and to help
resolve issues each time they are encountered.
Read more about how TORM meets customer's requirements on page 15
In 2024, TORM made a supplier assessment to establish a baseline and understand
the status of our suppliers to facilitate a dialog with them about how we together
can extend and improve the quality of sustainability efforts.
Lenders
Strong relationships with our banks, financial
institutions, and investors support TORM’s ability
to be financially flexible.
TORM maintains an ongoing dialog with several funding providers. TORM is
engaged with lenders and potential lenders to be able to fund vessel
acquisitions.
TORM is also in dialog with leasing providers for operational lease funding of
vessel acquisitions and for sale and leaseback transactions with buy-back
options and no obligations to mitigate stranded asset risk.
TORM is engaged with funding providers to understand ESG risks related to
financing in order to be an attractive and transparent borrower.
During 2024, TORM completed acquisition financing in Norwegian Bond market
and via new Syndicate and bi-lateral bank financing agreements. Majority of bank
financing was completed as Revolving Credit Facilities. TORM has a stable
repayment profile over the coming years with debt maturities extended to 2029.
TORM maintains a strong partnership within our bank group, which consists of
bilateral facilities by specialized shipping banks, leasing facilities and nine banks
participated in a syndicated facility agreement.
GOVERNANCE > OTHER > ENGAGEMENT AND DECISION-MAKING
TORM ANNUAL REPORT 2024
189
Why?
Why is it important to engage?
How?
How did Management and Directors engage?
Outcomes and Actions
What was the impact of the engagement?
Regulators
As a company incorporated in the UK and listed on
Nasdaq in both Copenhagen and New York, TORM
must ensure that the high standards required by
local regulatory bodies are met.
Through close dialogue with the Management and the Committees, and
through compliance systems, the Board of Directors ensures that TORM
remains up to date with the latest regulatory changes. Examples of matters
discussed this year by the Board of Directors or the Committees include:
•
IMO regulations on CO2 emissions
•
Danish Shipping and the Charter for More Women in Shipping
•
Mærsk McKinney Møller Center for Zero Carbon Shipping as a Mission
Ambassador
•
ESG reporting requirements
•
Sanctions compliance
TORM’s Business Principles ensure that TORM is always in compliance
with legislation and lives up to the commitment to responsible business
practices. See page 133
TORM’s Corporate Governance statement is available at www.torm.com/
about
TORM’s Modern Slavery Statement is available at www.torm.com/
responsibility
Read more about TORM’s participation in Danish Shipping and the Center
for Zero Carbon Shipping on page 13
Community and Environment
TORM remains committed to taking an active role in
caring for communities and our environment. It is
not just our shared duty, but our shared
responsibility. Therefore, TORM continues the work
to combat carbon, sulfur, and other emissions and
remains committed to enabling quality education,
as this is a matter of concern for TORM and its
employees. We believe that by having all involved
stakeholders work together on this, great results
can be achieved.
TORM is engaged in several local and global initiatives supporting the
different communities in which TORM operates. We also support efforts to
combat the overarching climate issues faced by the world. Initiatives include
our education foundation, our commitment to the UN SDGs 4 and 13, and our
climate engagement supporting initiatives.
TORM is improving our ESG reporting to gain more insight into our
environmental impact and to enable enhancement opportunities in the
future.
For information on how the TORM Philippines and TORM India’s Education
Foundations have been uplifting and supporting the educational
development actions in the community, see page 104
To see how TORM is actively involved in various industry collaborations
supporting our ambitious journey to achieve our 2050 environmental
target of zero CO2 emissions from our operating fleet, see page 61
To support TORM’s ambitious CO2 target, TORM’s Management will be
measured on achieving it. You can read more about TORM’s ESG journey
on pages 61
GOVERNANCE > OTHER > ENGAGEMENT AND DECISION-MAKING
TORM ANNUAL REPORT 2024
190
Directors’ Report
The Board of Directors is pleased to present the Annual
Report on the affairs of the TORM Group for 2024,
including financial statements and the auditor’s report.
Other disclosure requirements, which form part of the
Directors’ Report, are included in other sections of this
Annual Report. Details on information incorporated by
reference are generally set out under the relevant topics in
the Directors’ Report.
TORM’s section 172 statement can be found on
page 188
Statement of Directors’ Responsibility
A Statement of Directors’ Responsibility made by the Board
of Directors regarding the preparation of the financial
statements is required under UK-adopted International
Accounting Standards.
TORM’s Statement of Directors’ Responsibility can
be found on page 194
Going Concern
TORM’s going concern statement can be found on
page 32
Corporate Governance Statement
The corporate governance statement sets out how TORM
complies with the UK Corporate Governance Code 2018
and includes a description of the main features of our
internal control and risk management arrangements in
relation to the financial reporting process.
Find TORM’s corporate governance statement at
www.torm.com/investors/governance
A description of the composition and operation of
the Board of Directors and its committees can be
found on page 160
Other Information Included in the Strategic
Report
The Strategic Report starting on page 5 provides a review
of TORM’s operations in 2024 and the potential future
developments of those operations. Details on greenhouse
gas emissions are included in the strategic report from page
13, and details on TORM’s general policy relating to
recruitment, training, career development, and disabled
employees are included within TORM’s policies.
Information on the Directors’ regard for the need
to foster TORM’s business relationship with
suppliers, customers, and other stakeholders is set
out on pages 188
Directors and Their Interests
Information on the Directors of the Company who
served during the financial year 2024 and up to the
date of signing the financial statements can be
found on page 160
The rules relating to the appointment and the
replacement of Directors and the Directors’
powers can be found in TORM’s Articles of
Association at www.torm.com/investors/
governance
Details of Directors’ interests in the Company are
set out in the Remuneration Committee report
starting on page 173
Indemnification of Directors and Insurance
TORM has not granted any indemnity for the benefit of the
Directors but has a general Directors’ and Officers’ Liability
Insurance and a Public Offering of Securities Insurance
covering the Prospectus and the Exchange Offer
documentation related to the Corporate Reorganization.
Requirements of the Listing Rules
TORM plc is listed on Nasdaq in Copenhagen and Nasdaq in
New York. The only listing rule requirement regarding the
content of the Annual Report is that TORM’s Annual Report
must comply with the provisions of the UK Companies Act,
including provisions for EEA-listed companies.
GOVERNANCE > OTHER > STATEMENT OF DIRECTORS' RESPONSIBILITIES
TORM ANNUAL REPORT 2024
191
With effect from 01 January 2021, TORM plc elected
Denmark as its Home State under the Transparency
Directive rules due to the implications of Brexit.
Accordingly, TORM plc has complied with the guidelines laid
down in the Public Statement from The European Securities
and Markets Authority (ESMA32-61-1156) concerning the
application of transparency requirements by UK issuers
with securities admitted to trading on regulated markets in
the EU under Article 4 of the Transparency Directive, to
ensure compliance and transparency in this Annual Report.
Share Capital
More information on TORM’s share capital can be
found on page 185
Dividends
In line with the TORM’s Distribution Policy,
Sustainability
Information about TORM’s approach to sustainability risks
and opportunities is set out in the Sustainability Statement
starting on page 40. Also included on these pages are
details on our greenhouse gas emissions.
Financial Risk Management
TORM uses financial instruments to manage risks related to
freight rates, bunker fuels, interest rates, and foreign
exchange. For further information on the use of financial
instruments, please refer to Note 24 to the financial
statements. Details on financial risks are provided in the
Risk Management section on pages 16-17.
Annual General Meeting
TORM’s next Annual General Meeting (AGM) will be held on
16 April 2025. The notice of the AGM, including the
complete proposals, will be available on TORM’s website,
www.torm.com, prior to the meeting and will be available
for inspection from the Company Secretary, Elemental
CoSec.
Articles of Association
As per section 21 of the Companies Act 2006, TORM may
only amend its Articles of Association by special resolution.
TORM's Articles of Association are available at
https://www.torm.com/investors/governance
Retirement, Reappointment, and Appointment
of Directors
In line with TORM’s Articles of Association on file at
Companies House, each Director, apart from the B-
Director, must retire from office at the first annual general
meeting after their appointment. TORM’s Directors were
re-elected at the 2024 Annual General Meeting and will
therefore be due to retire in 2025. The terms and
conditions of the appointment of Non-Executive Directors
are set out in TORM's Memorandum of Terms and
Conditions which, in accordance with the UK Companies
Act 2006, Chapter 5, Section 228, is available for
inspection from the Company Secretary, Elemental CoSec.
Payment for Loss of Office
TORM’s policy in regard to payments for loss of office can
be found in the Remuneration Policy.
TORM’s Remuneration Policy is available at
https://www.torm.com/investors/governance
Research and Development
TORM continues to focus on optimization of assets but
does not allocate specific costs to research and
development.
Group Policy Compliance
TORM has implemented a comprehensive compliance
program to ensure that we remain in compliance with rules
and regulations related to our business activities worldwide.
As part of this compliance program, all employees are
required to document that they are aware of and have
received all training required in relation to each compliance
area.
Company Branches
The TORM Group has offices in Denmark, India, the
Philippines, Singapore, the UK, the UAE, and the US.
Further details on TORM's global presence are set out on
page 245.
Political Donations
No political donations were made during 2024.
Significant Shareholdings
Details on significant shareholdings are set out in the
Investor Information on page 185.
Controlling Shareholder
TORM’s controlling shareholder, Oaktree, owns TORM plc’s
sole C-share, which carries 350,000,000 votes at the
General Meetings in respect of Specified Matters, including
election of members to the Board of Directors of TORM plc
(including the Chairman, but excluding the Deputy
Chairman) and certain amendments to the Articles of
Association.
GOVERNANCE > OTHER > STATEMENT OF DIRECTORS' RESPONSIBILITIES
TORM ANNUAL REPORT 2024
192
Recent Developments and Post-Balance Sheet Events
Details of important events affecting TORM which have
occurred since the end of the financial year are disclosed in
Note 2 to the financial statements.
Independent Auditor
Each person who is a Director at the date of approval of the
Annual Report confirms that:
•
As far as the Director is aware, there is no relevant audit
information of which TORM’s independent auditor is
unaware.
•
The Director has taken all reasonable steps that he or
she ought to have taken as a Director in order to make
him or herself aware of any relevant audit information
and to establish that TORM’s independent auditor is
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the UK
Companies Act 2006.
Statement by the Directors in Performance
of their Statutory Duties in Accordance
with Section 172(1) of the UK Companies
Act 2006
TORM’s engagement and decision-making can be
found from page 188
Approval
On behalf of the Board of Directors
Christopher H. Boehringer
Chairman of the Board of Directors
06 March 2025
GOVERNANCE > OTHER > STATEMENT OF DIRECTORS' RESPONSIBILITIES
TORM ANNUAL REPORT 2024
193
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable United Kingdom laws and regulations as well as
additional requirements for listed companies in accordance
with the Danish Financial Statements Act.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the
Directors are required to prepare the group financial
statements in accordance with UK-adopted International
Accounting Standards (UK-adopted IAS) as well as IFRS
Accounting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and
IFRS as adopted by the EU, as applied to financial periods
beginning on or after 01 January 2024 and have elected to
prepare the parent company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards and applicable law), including Financial Reporting
Standard 101 “Reduced Disclosure Framework” (FRS 101).
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
TORM and of the profit or loss of the Group and the
Company for that period.
Due to the Company having shares listed on a regulated
market in Denmark, the Annual Report and financial
statements are furthermore prepared in accordance with
the additional requirements of the Danish Financial
Statements Act applicable to listed companies (reporting
class D).
In preparing these financial statements, the Directors are
required to:
•
Select suitable accounting policies in accordance with
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently.
•
Make judgements and accounting estimates that are
reasonable and prudent.
•
Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable,
and understandable information.
•
Provide additional disclosures when compliance with
the specific requirements in UK-adopted IAS as well as
IFRS Accounting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and
IFRS as adopted by the EU, as applied to financial
periods beginning on or after 01 January 2024
(or in respect of the parent company financial
statements, FRS 101) is insufficient to enable users to
understand the impact of particular transactions, other
events and conditions on the entity's financial position
and financial performance.
•
In respect of the group financial statements, state
whether UK-adopted IAS as well as IFRS Accounting
Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) and IFRS as
adopted by the EU, as applied to financial periods
beginning on or after 01 January 2024 have been
followed, subject to any material departures disclosed
and explained in the financial statements.
•
In respect of the parent company financial statements
state whether applicable UK Accounting Standards,
including FRS 101, have been followed, subject to any
material departures disclosed and explained in the
financial statements.
•
Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
GOVERNANCE > OTHER > STATEMENT OF DIRECTORS' RESPONSIBILITIES
TORM ANNUAL REPORT 2024
194
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s and the Group’s transactions and disclose
with reasonable accuracy at any time the financial position
of the Company and the Group and enable them to ensure
that the Company and the Group financial statements
comply with the Companies Act 2006 as well as additional
disclosure requirements for listed companies in accordance
with the Danish Financial Statements Act. They are also
responsible for safeguarding the assets of the Group and
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable laws and regulations, the Directors are
also responsible for preparing a strategic report, Directors’
report, Directors’ remuneration report, and corporate
governance statement that comply with that law and those
regulations including additional disclosure requirements for
listed companies in accordance with the Danish Financial
Statements Act. The Directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation
in the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ Responsibility Statement
We confirm that to the best of our knowledge:
•
The consolidated financial statements, prepared in
accordance with the Companies Act 2006 and UK-
adopted International Accounting Standards as well as
IFRS Accounting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and
IFRS as adopted by the EU, as applied to financial
periods beginning on or after 01 January 2024, and the
parent company financial statements, prepared in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards and applicable law), give a true and fair view
of the assets, liabilities, financial position, and profit or
loss of the Company and the undertakings included in
the consolidation taken as a whole.
•
The Annual Report, including the Strategic report,
includes a fair review of the development and
performance of the business and the position of the
Company and the undertakings included in the
consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face.
•
The Annual Report, taken as a whole, is fair, balanced,
and understandable and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model, and
strategy.
•
The Sustainability Statement is prepared in accordance
with the European Sustainability Reporting Standards
ESRS as required by the Danish Financial Statements
Act section 99a as well as article 8 in the EU Taxonomy
regulation.
In addition, the Board of Directors confirms that it has
monitored the risk management and internal control
framework throughout the year. The Risk- and Audit
Committee reports provides details to the review and
monitoring of the framework. The Board of Directors is
satisfied that, at the time of conducting the year-end
review, any significant failings or weaknesses related to
material controls identified as part of the monitoring had
been adequately remediated. The year-end review provided
the Board of Directors with sufficient appropriate evidence
and reasonable confidence to determine that material
controls were effective as at the balance sheet date.
The Annual Report for the financial year 01 January - 31
December 2024 with the file
213800VL1H1ABVM1ZF63-2024-12-31-0.zip is prepared,
in all material respects, in compliance with the ESEF
Regulation (the European Single Electronic Format
Regulation).
This responsibility statement was approved by the Board of
Directors on 06 March 2025 and is signed on its behalf by:
Jacob Meldgaard
Executive Director
GOVERNANCE > OTHER > STATEMENT OF DIRECTORS' RESPONSIBILITIES
TORM ANNUAL REPORT 2024
195
Safe Harbor Statement as to the Future
Matters discussed in this release 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 reflect our current
views with respect to future events and financial
performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance,
and underlying assumptions and other statements, which
are statements other than statements of historical facts.
The Company 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. Words such as,
but not limited to, “expects,” “anticipates,” “intends,”
“plans,” “believes,” “estimates,” “targets,” “projects,”
“forecasts,” “potential,” “continue,” “possible,” “likely,”
“may,” “could,” “should” and similar expressions or phrases
may identify forward-looking statements. The forward-
looking statements in this annual report are based upon
various assumptions, many of which are, in turn, based
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 the Company believes that these
assumptions were reasonable when made, because these
assumptions are inherently subject to significant
uncertainties and contingencies that are difficult or
impossible to predict and are beyond our control, the
Company cannot guarantee that it will achieve or
accomplish these expectations, beliefs, or projections.
Important factors that, in our view, could cause actual
results to differ materially from those discussed in the
forward-looking statements include, but are not limited to,
our future operating or financial results; changes in
governmental rules and regulations or actions taken by
regulatory authorities; inflationary pressure and central
bank policies intended to combat overall inflation and rising
interest rates and foreign exchange rates; general domestic
and international political conditions or events, including
“trade wars” and the war between Russia and Ukraine, the
developments in the Middle East, including the war in Israel
and the Gaza Strip, and the conflict regarding the Houthis’
attacks in the Red Sea; international sanctions against
Russian oil and oil products; changes in economic and
competitive conditions affecting our business, including
market fluctuations in charter rates and charterers’ abilities
to perform under existing time charters; changes in the
supply and demand for vessels comparable to ours and the
number of newbuildings under construction; the highly
cyclical nature of the industry that we operate in; the loss
of a large customer or significant business relationship;
changes in worldwide oil production and consumption and
storage; risks associated with any future vessel
construction; our expectations regarding the availability of
vessel acquisitions and our ability to complete acquisition
transactions planned; availability of skilled crew members
other employees and the related labor costs; work
stoppages or other labor disruptions by our employees or
the employees of other companies in related industries;
effects of new products and new technology in our industry;
new environmental regulations and restrictions; the impact
of an interruption in or failure of our information technology
and communications systems, including the impact of
cyber-attacks, upon our ability to operate; potential
conflicts of interest involving members of our Board of
Directors and Senior Management; the failure of
counterparties to fully perform their contracts with us;
changes in credit risk with respect to our counterparties on
contracts; adequacy of insurance coverage; our ability to
obtain indemnities from customers; changes in laws,
treaties or regulations; our incorporation under the laws of
England and Wales and the different rights to relief that
may be available compared to other countries, including the
United States; government requisition of our vessels during
a period of war or emergency; the arrest of our vessels by
maritime claimants; any further changes in U.S. trade policy
that could trigger retaliatory actions by the affected
countries; the impact of the U.S. presidential and
congressional election results affecting the economy,
future government laws and regulations and trade policy
matters, such as the imposition of tariffs and other import
restrictions; potential disruption of shipping routes due to
accidents, climate-related incidents, adverse weather and
natural disasters, environmental factors, political events,
public health threats, acts by terrorists or acts of piracy on
ocean-going vessels; damage to storage and receiving
facilities; potential liability from future litigation and
potential costs due to environmental damage and vessel
collisions; and the length and number of off-hire periods
and dependence on third-party managers. In the light of
these risks and uncertainties, undue reliance should not be
placed on forward-looking statements contained in this
release because they are statements about events that are
not certain to occur as described or at all. These forward-
looking statements are not guarantees of our future
performance, and actual results and future developments
may vary materially from those projected in the forward-
looking statements. Except to the extent required by
applicable law or regulation, the Company undertakes no
obligation to release publicly any revisions or updates to
these forward-looking statements to reflect events or
circumstances after the date of this release or to reflect
the occurrence of unanticipated events. Please see
TORM’s filings with the U.S. Securities and Exchange
Commission for a more complete discussion of certain of
these and other risks and uncertainties. The information set
forth herein speaks only as of the date hereof, and the
Company disclaims any intention or obligation to update
any forward-looking statements as a result of
developments occurring after the date of this
communication.
GOVERNANCE > OTHER > SAFE HARBOR STATEMENT
TORM ANNUAL REPORT 2024
196
Financial
Statements
Consolidated Financial Statements
Consolidated Income Statement
198
Consolidated Statement of Comprehensive Income
198
Consolidated Balance Sheet
199
Consolidated Statement of Changes in Equity
200
Consolidated Cash Flow Statement
202
Notes to the Consolidated Financial Statements
203
Parent Company Financial Statements
Management Review for TORM plc
251
Parent Company Income Statement
252
Parent Company Statement of Comprehensive Income
252
Parent Company Balance Sheet
253
Parent Company Statement of Changes in Equity
254
Parent Company Cash Flow Statement
255
Notes to Parent Company Financial Statements
256
Other
Independent Auditor’s Report
265
Independent Auditor's Limited Assurance Report on the
Sustainability Statement
271
TORM Fleet Overview
273
Glossary
276
Alternative Performance Measures
278
TORM ANNUAL REPORT 2024
197
Consolidated Income Statement
01 January-31 December 2024
USDm
Note
2024
2023
2022
Revenue
3,4
1,559.2
1,520.4
1,443.4
Port expenses, bunkers, commissions, and
other cost of goods and services sold
-418.5
-430.3
-459.5
Operating expenses
5
-245.1
-216.0
-202.1
Profit from sale of vessels
28
51.3
50.4
10.2
Administrative expenses
5,6
-95.6
-82.9
-55.0
Other operating income and expenses
-0.5
6.3
5.9
Share of profit/(loss) from joint ventures
—
—
0.2
Impairment losses on tangible assets
10,12,28
—
—
-2.6
Depreciation and amortization
9,10,11
-192.0
-149.3
-139.0
Operating profit (EBIT)
658.8
698.6
601.5
Financial income
7
24.8
14.3
4.0
Financial expenses
7
-74.1
-60.9
-48.8
Profit/(loss) before tax
609.5
652.0
556.7
Tax
8
2.0
-4.0
5.9
Net profit/(loss) for the year
611.5
648.0
562.6
Net profit/(loss) for the year attributable
to:
TORM plc shareholders
612.5
648.3
562.8
Non-controlling interest
-1.0
-0.3
-0.2
Net profit/(loss) for the year
611.5
648.0
562.6
Earnings per share for TORM plc
shareholders
Basic earnings/(loss) per share (USD)
32
6.54
7.75
6.92
Diluted earnings/(loss) per share (USD)
32
6.36
7.48
6.80
Consolidated Statement of
Comprehensive Income
01 January-31 December 2024
USDm
2024
2023
2022
Net profit/(loss) for the year
611.5
648.0
562.6
Other comprehensive income/(loss):
Items that may be reclassified to profit or loss:
Exchange rate adjustment arising from translation of
entities using a functional currency different from USD
-0.6
—
-0.5
Reclassification of exchange rate adjustments on
disposal of joint venture
—
—
0.1
Fair value adjustment on hedging instruments
7.1
3.1
54.9
Fair value adjustment on hedging instruments
transferred to income statement
-19.7
-22.0
1.7
Tax on other comprehensive income
2.6
4.6
-13.2
Items that may not be reclassified to profit or loss:
Remeasurements of net pension and other post-
retirement benefit liability or asset
-0.1
—
—
Other comprehensive income/(loss) after tax
-10.7
-14.3
43.0
Total comprehensive income/(loss) for the year
600.8
633.7
605.6
Total comprehensive income/(loss) for the year
attributable to:
TORM plc shareholders
601.9
634.1
605.7
Non-controlling interest
-1.1
-0.4
-0.1
Total comprehensive income/(loss) for the year
600.8
633.7
605.6
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
198
Consolidated Balance Sheet
As of 31 December 2024
USDm
Note
2024
2023
2022
ASSETS
Intangible assets
Goodwill
9,12,34
1.7
1.8
1.8
Other intangible assets
9
2.0
1.8
1.9
Total intangible assets
3.7
3.6
3.7
Tangible fixed assets
Land and buildings
10,11
8.1
5.5
3.8
Vessels and capitalized dry-docking
10,11,12,21
2,826.7
2,070.2
1,855.9
Prepayments on vessels
10
—
86.0
—
Other non-current assets under construction
4.6
4.2
—
Other plant and operating equipment
10
3.3
4.4
5.6
Total tangible fixed assets
2,842.7
2,170.3
1,865.3
Financial assets
Investments in joint ventures
0.1
0.1
0.1
Loan receivables
13
4.5
4.5
4.6
Deferred tax asset
8
3.1
0.4
0.6
Other investments
0.2
—
0.2
Total financial assets
7.9
5.0
5.5
Total non-current assets
3
2,854.3
2,178.9
1,874.5
Inventories
14
68.4
61.7
72.0
Trade receivables
15
183.9
211.0
259.5
Other receivables
16
59.6
60.5
74.0
Prepayments
17
12.2
15.2
10.4
Cash and cash equivalents incl. restricted cash
33
291.2
295.6
323.8
Current assets excluding assets held for sale
615.3
644.0
739.7
Assets held for sale
28
—
47.2
—
Total current assets
615.3
691.2
739.7
TOTAL ASSETS
3,469.6
2,870.1
2,614.2
USDm
Note
2024
2023
2022
EQUITY AND LIABILITIES
Equity
Common shares
18
1.0
0.9
0.8
Share premium
271.0
260.0
167.6
Treasury shares
18
-4.2
-4.2
-4.2
Hedging reserves
15.5
25.6
39.9
Translation reserves
-0.8
-0.4
-0.5
Other reserves
320.0
—
—
Retained profit
1,471.5
1,382.2
1,297.8
Equity attributable to TORM plc
shareholders
2,074.0
1,664.1
1,501.4
Non-controlling interest
34
0.8
1.9
2.3
Total equity
2,074.8
1,666.0
1,503.7
Liabilities
Non-current tax liability related to held-
over gains
8
45.2
45.2
45.2
Deferred tax liability
8
0.3
3.6
6.1
Borrowings
11,20,21,23
1,061.0
886.9
849.8
Other non-current liabilities
19
2.9
3.0
3.0
Total non-current liabilities
1,109.4
938.7
904.1
Borrowings
11,20,21,23
165.3
172.7
117.1
Trade payables
23
50.0
43.1
48.5
Current tax liabilities
0.7
0.6
2.0
Other liabilities
19,23
61.3
45.2
31.1
Provisions
31
0.6
0.5
6.8
Prepayments from customers
7.5
3.3
0.9
Total current liabilities
285.4
265.4
206.4
Total liabilities
1,394.8
1,204.1
1,110.5
TOTAL EQUITY AND LIABILITIES
3,469.6
2,870.1
2,614.2
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
199
Consolidated Statement of Changes in Equity
01 January-31 December 2024
USDm
Common
shares
Share
premium
Treasury
shares ¹⁾
Hedging
reserves
Translation
reserves
Other
reserves
Retained
profit
Equity
attributable
to
shareholders
of TORM plc
Non-
controlling
interest
Total
Equity as of 01 January 2022
0.8
159.6
-4.2
-3.6
0.1
—
899.5
1,052.2
—
1,052.2
Comprehensive income/loss for the year:
Net profit/(loss) for the year
—
—
—
—
—
—
562.8
562.8
-0.2
562.6
Other comprehensive income/(loss) for the year²⁾
—
—
—
56.7
-0.6
—
—
56.1
0.1
56.2
Tax on other comprehensive income
—
—
—
-13.2
—
—
—
-13.2
—
-13.2
Total comprehensive income/(loss) for the year
—
—
—
43.5
-0.6
—
562.8
605.7
-0.1
605.6
Capital increases ³⁾
—
8.0
—
—
—
—
—
8.0
—
8.0
Share-based compensation
—
—
—
—
—
—
2.2
2.2
—
2.2
Dividends paid
—
—
—
—
—
—
-166.7
-166.7
—
-166.7
Total changes in equity 2022
—
8.0
—
43.5
-0.6
—
398.3
449.2
-0.1
449.1
Non-controlling interest arising on acquisition
—
—
—
—
—
—
—
—
2.4
2.4
Equity as of 31 December 2022
0.8
167.6
-4.2
39.9
-0.5
—
1,297.8
1,501.4
2.3
1,503.7
Comprehensive income/loss for the year:
Net profit/(loss) for the year
—
—
—
—
—
—
648.3
648.3
-0.3
648.0
Other comprehensive income/(loss) for the year ²⁾
—
—
—
-18.9
0.1
—
—
-18.8
-0.1
-18.9
Tax on other comprehensive income
—
—
—
4.6
—
—
—
4.6
—
4.6
Total comprehensive income/(loss) for the year
—
—
—
-14.3
0.1
—
648.3
634.1
-0.4
633.7
Capital increase ³⁾
0.1
92.6
—
—
—
—
—
92.7
—
92.7
Transaction costs of capital increase
—
-0.2
—
—
—
—
—
-0.2
—
-0.2
Share-based compensation
—
—
—
—
—
—
22.5
22.5
—
22.5
Dividends paid
—
—
—
—
—
—
-586.4
-586.4
—
-586.4
Total changes in equity 2023
0.1
92.4
—
-14.3
0.1
—
84.4
162.7
-0.4
162.3
Non-controlling interest arising on acquisition
—
—
—
—
—
—
—
—
—
—
Equity as of 31 December 2023
0.9
260.0
-4.2
25.6
-0.4
—
1,382.2
1,664.1
1.9
1,666.0
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
200
Consolidated Statement of Changes in Equity
01 January-31 December 2024
USDm
Common
shares
Share
premium
Treasury
shares ¹⁾
Hedging
reserves
Translation
reserves
Other
reserves
Retained
profit
Equity
attributable
to
shareholders
of TORM plc
Non-
controlling
interest
Total
Equity as of 01 January 2024
0.9
260.0
-4.2
25.6
-0.4
—
1,382.2
1,664.1
1.9
1,666.0
Comprehensive income/(loss) for the year:
Net profit/(loss) for the year
—
—
—
—
—
—
612.5
612.5
-1.0
611.5
Other comprehensive income/(loss) for the year ²⁾
—
—
—
-12.7
-0.4
—
-0.1
-13.2
-0.1
-13.3
Tax on other comprehensive income
—
—
—
2.6
—
—
—
2.6
—
2.6
Total comprehensive income/(loss) for the year
—
—
—
-10.1
-0.4
—
612.4
601.9
-1.1
600.8
Capital increases ³⁾
0.1
331.6
—
—
—
—
—
331.7
—
331.7
Capital reduction ⁴⁾
—
-320.0
—
—
—
320.0
—
—
—
—
Transaction costs of capital increase
—
-0.6
—
—
—
—
—
-0.6
—
-0.6
Share-based compensation
—
—
—
—
—
—
30.2
30.2
—
30.2
Dividends paid
—
—
—
—
—
—
-553.3
-553.3
—
-553.3
Total changes in equity 2024
0.1
11.0
—
-10.1
-0.4
320.0
89.3
409.9
-1.1
408.8
Equity as of 31 December 2024
1.0
271.0
-4.2
15.5
-0.8
320.0
1,471.5
2,074.0
0.8
2,074.8
¹⁾ Please refer to Note 18 for further information on treasury shares.
²⁾ Please refer to "Consolidated Statement of Comprehensive Income".
³⁾ Please refer to Note 18 for further information on capital increases during the year.
⁴⁾ The Share premium reserve was reduced by USD 320.0m, as decided at the Annual General Meeting on 11 April 2024 and subsequently approved by the court, in order to create further distributable reserves to support: (i) the
future payment by the Company of dividends to its shareholders; and (ii) share buy-backs should circumstances dictate it desirable.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
201
Consolidated Cash Flow Statement
01 January-31 December
USDm
Note
2024
2023
2022
Cash flow from operating activities
Net profit/(loss) for the year
611.5
648.0
562.6
Adjustments:
Profit from sale of vessels
-51.3
-50.4
-10.2
Depreciation and amortization
9,10
192.0
149.3
139.0
Impairment losses on tangible assets
9,10,28
—
—
2.6
Share of profit/(loss) from joint ventures
—
—
-0.2
Financial income
7
-24.8
-14.3
-4.0
Financial expenses
7
74.1
60.9
48.8
Tax expenses/(income)
8
-2.0
4.0
-5.9
Other non-cash movements
29
22.9
14.5
-3.6
Interest received and realized exchange
gains
24.8
14.3
4.0
Interest paid and realized exchange losses
-66.9
-66.0
-49.5
Income taxes paid
-1.3
-3.1
-0.7
Change in inventories, receivables and
payables, etc.
29
47.8
47.8
-180.9
Net cash flow from operating activities
826.8
805.0
502.0
USDm
Note
2024
2023
2022
Cash flow from investing activities
Investment in tangible fixed assets ¹⁾
-582.4
-509.7
-119.3
Investment in intangible fixed assets
-1.1
-0.6
-0.6
Acquisition of subsidiaries, net of cash
acquired
34
—
—
1.1
Sale of tangible fixed assets
28
130.6
166.4
106.6
Change in restricted cash
10.8
-26.7
23.5
Net cash flow from investing activities
-442.1
-370.6
11.3
Cash flow from financing activities
Proceeds, borrowings
13,20
419.4
676.4
96.3
Repayment, borrowings
20
-256.3
-585.4
-275.2
Dividends paid
-553.3
-586.4
-166.7
Capital increase ¹⁾
18
12.5
6.2
8.0
Transaction costs share issue
-0.6
-0.2
—
Net cash flow from financing activities
-378.3
-489.4
-337.6
Net cash flow from operating, investing,
and financing activities
6.4
-55.0
175.7
Cash and cash equivalents as of 01
January
265.5
320.5
144.8
Cash and cash equivalents as of 31
December
271.9
265.5
320.5
Restricted cash as of 31 December
33
19.3
30.1
3.3
Cash and cash equivalents, including
restricted cash as of 31 December
291.2
295.6
323.8
¹⁾ In 2024, the share capital was increased by USD 331.7m (2023: USD 92.7m, 2022: USD 8.0m) including a
USD 319.2 m (2023: USD 86.5 m, 2022:USD 0.0m) non-cash share issues in relation to the acquisition of
19 (2023: five, 2022:zero) vessels. Please refer to Note 18 for further reference.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
202
Notes to the Consolidated Financial
Statements
NOTE 1 – ACCOUNTING POLICIES, CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS
204
NOTE 2 – LIQUIDITY, CAPITAL RESOURCES AND SUBSEQUENT EVENTS
209
NOTE 3 – SEGMENT
211
NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS
214
NOTE 5 – STAFF COSTS
215
NOTE 6 – REMUNERATION TO AUDITORS APPOINTED AT THE PARENT COMPANY’S
ANNUAL GENERAL MEETING
218
NOTE 7 – FINANCIAL ITEMS
218
NOTE 8 – TAX
219
NOTE 9 – INTANGIBLE ASSETS
220
NOTE 10 – TANGIBLE FIXED ASSETS
221
NOTE 11 – LEASING
224
NOTE 12 – IMPAIRMENT TESTING
226
NOTE 13 – LOAN RECEIVABLES
228
NOTE 14 – INVENTORIES
229
NOTE 15 – TRADE RECEIVABLES
229
NOTE 16 – OTHER RECEIVABLES
230
NOTE 17 – PREPAYMENTS
230
NOTE 18 – COMMON SHARES AND TREASURY SHARES
230
NOTE 19 – OTHER LIABILITIES
231
NOTE 20 – EFFECTIVE INTEREST RATE, OUTSTANDING BORROWINGS
232
NOTE 21 – COLLATERAL SECURITY FOR BORROWINGS
233
NOTE 22 – GUARANTEE COMMITMENTS AND CONTINGENT LIABILITIES
233
NOTE 23 – CONTRACTUAL RIGHTS AND OBLIGATIONS
234
NOTE 24 – DERIVATIVE FINANCIAL INSTRUMENTS
236
NOTE 25 – RISKS ASSOCIATED WITH TORM’S ACTIVITIES
239
NOTE 26 – FINANCIAL INSTRUMENTS
243
NOTE 27 – RELATED PARTY TRANSACTIONS
244
NOTE 28 – ASSETS HELD FOR SALE AND NON-CURRENT ASSETS SOLD DURING THE
YEAR
245
NOTE 29 – CASH FLOWS
245
NOTE 30 – ENTITIES IN THE GROUP
245
NOTE 31 – PROVISIONS
246
NOTE 32 – EARNINGS PER SHARE AND DIVIDEND PER SHARE
247
NOTE 33 – CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED CASH
247
NOTE 34 – BUSINESS COMBINATIONS
248
TORM ANNUAL REPORT 2024
203
NOTE 1 – ACCOUNTING POLICIES, CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Overview of Business
TORM plc is a shipping company that primarily owns and operates a fleet of product tankers and is
engaged in the marine engineering industry. TORM plc is a public company limited by shares and is
incorporated in England and Wales. Its registered number is 09818726, and its registered address
is 4th Floor, 120 Cannon Street, London, EC4N 6AS, United Kingdom. Unless otherwise indicated,
the terms “TORM plc” and “Parent Company” refers solely to TORM plc and the terms “we”, “us”,
“our”, the ”Company”, and the “Group” refer to TORM plc and its consolidated subsidiaries, which
include TORM A/S.
TORM plc is listed on Nasdaq in Copenhagen, Denmark, on Nasdaq in New York, the United States
as well as having bonds listed on Oslo Stock Exchange, Norway.
Basis of Preparation
The consolidated financial statements of the Group have been prepared in accordance with UK-
adopted International Accounting Standards (“UK-adopted IAS”). The consolidated financial
statements are also prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”) and IFRS as adopted by the European
Union (“EU”), as applied to financial periods beginning on or after 01 January 2024 and additional
disclosure requirements for listed companies in accordance with the Danish Financial Statements
Act.
The consolidated financial statements have been prepared on a going concern basis and under the
historical cost convention, except where fair value accounting is specifically required by IFRS.
The functional currency of the Company is USD, and the Company applies USD as the presentation
currency in the preparation of the consolidated financial statements.
Going Concern
As of 31 December 2024, TORM’s available liquidity including undrawn and committed facilities
was USD 615m, including a total cash position of USD 291m (including cash held for dividend
payment). TORM’s net interest-bearing debt was USD 948m, and the net debt loan-to-value ratio
was 26.8% (Tanker segment only and before dividend payment related to Q4 2024). Further
information on TORM’s objectives and policies for managing our capital, our financial risk
management objectives, and our exposure to credit and liquidity risk can be found in note 25 to the
financial statements. The principal risks and uncertainties facing TORM are set out on pages 17-21.
TORM monitors our funding position throughout the year to ensure that we have access to
sufficient funds to meet the forecasted cash requirements and loan commitments, and to monitor
compliance with the financial covenants in our loan facilities, details of which are available in Note
2 to the financial statements.
NOTE 1 - continued
A key element for TORM’s financial performance in the going concern period relates to the
increased geopolitical risk following Russia’s invasion of Ukraine in February 2022, while the
conflicts in the Middle East are expected to have a lessor impact on the product tanker market.
While the changed geopolitical landscape initially supported market dynamics, crude
cannibalization significantly reduced the net positive effect in the second half of 2024. TORM’s
base case assumes that these dynamics will persist, albeit with a lower estimated impact on the
product tanker market and resultingly with freight rates and vessel values materializing below 2024
levels. TORM monitors the general development in the geopolitical situation and potential effects
on the product tanker market. In the base case, TORM has sufficient liquidity and headroom for all
the covenant limits.
In addition to the base case, TORM has developed a reverse stress case. The reverse stress case
covers the lowest TCE rate that only just meet the minimum liquidity covenant and the lowest
vessel values that do not breach any of the facilities’ minimum security values in the period. In the
reverse stress case, with TCE rates slightly below the lowest rolling four-quarter average since
2000 on a per vessel class basis and a related decline in vessel values, TORM maintains sufficient
headroom on liquidity and covenants throughout the going concern period.
The Board of Directors has considered TORM’s cash flow forecasts and the expected compliance
with TORM’s financial covenants for the period until 31 March 2026. Based on this review, the
Board of Directors has a reasonable expectation that taking reasonably possible changes in trading
performance and vessel valuations into account, TORM will be able to continue in operation and
comply with our financial covenants for the period until 31 March 2026. Accordingly, TORM
continues to adopt the going concern basis in preparing our financial statements.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
204
NOTE 1 - continued
Adoption of New or Amended IFRS Standards
IASB has issued a number of new or amended accounting standards (IFRS) and interpretations
(IFRIC). TORM has implemented the following standards and amendments issued by the IASB and
adopted by the UK in the consolidated financial statements for 2024:
•
Amendments to IAS 1 Presentation of Financial Statements
•
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback
•
Amendments to IAS 7 and IFRS 7 Supplier Finance Agreements
For the new standards and amendments, it is assessed that application of these effective on 01
January 2024 has not had any material accounting impact, but only limited impact on disclosures
on the consolidated financial statements in 2024.
The below have been issued by the IASB and adopted by the UK but have not yet come into effect
for consolidated financial statements of 2024:
•
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability (January 2025)
•
Annual Improvements to IFRS Accounting Standards—Volume 11 (January 2026)
The below have been issued by the IASB and not yet adopted by the UK and not yet come into
effect:
•
Amendments to IFRS 9 and IFRS 7: Amendments to the Classification and Measurement of
Financial Instruments (January 2026)
•
Amendments to IFRS 9 and IFRS 7: Contracts Referencing Nature dependent Electricity
(January 2026)
•
IFRS 18 Presentation and Disclosure in Financial Statements (January 2027)
•
IFRS 19 Subsidiaries without Public Accountability: Disclosures (January 2027)
•
IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture issued in September 2014 (deferred indefinitely).
TORM has assessed the accounting standards and interpretations above except IFRS 18, and
TORM does not expect the new standards to have any material impact on neither TORM’s figures
nor the disclosures. The impact of IFRS 18 on the consolidated financial statements has not yet
been determined on a sufficiently reliable basis.
Accounting Policies
The Group’s material accounting policy information is provided below in combination with the
accounting policies described in each of the individual notes to the consolidated financial
statements as outlined in the following notes:
NOTE 1 - continued
•
Segment reporting
•
Revenue from contracts with customers
•
Staff costs
•
Intangible assets
•
Tangible fixed assets
•
Leasing
•
Impairment
•
Loan receivables
•
Inventories
•
Financial items
•
Trade receivables
•
Tax
•
Other liabilities
•
Borrowings
•
Derivative financial instruments
•
Provisions
•
Earnings per share
•
Business combinations
Consolidation Principles
The consolidated financial statements comprise the financial statements of the parent company,
TORM plc and entities controlled by the Company and its subsidiaries. Control is achieved when the
Company has all the following:
•
Power over the investee
•
Exposure, or rights, to variable returns from its involvement with the investee
•
The ability to use its power over the investee to affect the amounts of the investor’s returns
TORM reassesses whether it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over
the investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities unilaterally. The Company considers all facts and circumstances in assessing whether or
not the Company’s voting rights in an investee are sufficient to give it power, including:
•
The size of the Company’s holding of voting rights relative to the size and dispersion of holdings
of the other vote holders
•
Potential voting rights held by the Company, other vote holders, or other parties
•
Rights arising from other contractual arrangements
•
Any additional facts and circumstances which indicate that the Company has, or does not
have, the current ability to direct the relevant activities at the time when decisions need to be
made, including voting pattern at previous shareholders’ meetings
Entities in which the Group exercises significant but not controlling influence are regarded as
associated companies and are accounted for using the equity method.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
205
NOTE 1 - continued
Companies which are managed jointly by agreement with one or more companies and therefore are
subject to joint control (joint ventures) are accounted for using the equity method.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and
ends when the Company loses control over the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated income
statement and other comprehensive income from the date on which the Company obtains control
until the date when the Company loses control over the subsidiary.
The consolidated financial statements are prepared using consistent accounting policies and
eliminating intercompany transactions, balances, and shareholdings as well as gains and losses on
transactions between the consolidated entities.
Foreign Currencies
The functional currency of all significant entities, including subsidiaries and associated companies,
is United States Dollars (USD) because the Company’s vessels operate in international shipping
markets, in which income and expenses are settled in USD, and because the Company’s most
significant assets and liabilities in the form of vessels and related liabilities are denominated in USD.
Transactions in currencies other than the functional currency are translated into the functional
currency at the transaction date. Cash, receivables and payables and other monetary items
denominated in currencies other than the functional currency are translated into the functional
currency at the exchange rate at the balance sheet date. Gains or losses due to differences
between the exchange rate at the transaction date and the exchange rate at the settlement date or
the balance sheet date are recognized in the income statement under “Financial income” and
“Financial expenses”.
The reporting currency of the Company is USD. Upon recognition of entities with functional
currencies other than USD, the financial statements are translated into USD. Income statement
items are translated into USD at the exchange rate for each transaction, whereas balance sheet
items are translated at the exchange rate as of the balance sheet date. Exchange differences
arising from the translation of financial statements into USD are recognized as a separate
component in “Other comprehensive income”. On the disposal of an entity, the cumulative amount
of the exchange differences recognized in the separate component of equity relating to that entity
is transferred to the income statement as part of the gain or loss on disposal.
NOTE 1 - continued
Income Statement
Port expenses, bunkers, and commissions and other costs of goods and services sold
Port expenses, bunker fuel consumption, commissions, and other costs of goods sold are
recognized as incurred. To the extent that the costs are recoverable, costs directly attributable to
relocate the vessel to the load port are capitalized and amortized over the course of the
transportation period.
Gains and losses on forward bunker contracts, forward freight agreements (FFA) as well as write-
down for losses on trade receivables are included in this line.
Operating expenses
Operating expenses, which comprise crew expenses, repair and maintenance expenses, and
tonnage duty, are expensed as incurred.
Profit from sale of vessels
Profit from sale of vessels is recognized at the time of delivery to the buyer, representing the
difference between the sales price less costs to sell and the carrying value of the vessel.
Administrative expenses
Administrative expenses, which comprise administrative staff costs, management costs, office
expenses, and other expenses relating to administration, are expensed as incurred.
Other operating expenses and income
Other operating expenses primarily comprise management fees paid to commercial and technical
managers for managing the fleet, profits and losses deriving from the disposal of fixed assets other
than vessels as well as claims and disputes provisions.
Depreciation and impairment losses and reversals of impairment losses
Depreciation and impairment losses comprise depreciation of tangible fixed assets for the year as
well as the write-down of the value of assets by the amount by which the carrying amount of the
asset exceeds its recoverable amount. In the event of indication of impairment, the carrying
amount is assessed, and the value of the asset is written down to its recoverable amount equal to
the higher of value in use based on net present value of future earnings from the assets and its fair
value less costs to sell.
Subsequent reversal of impairment losses is recognized if the recoverable amount exceeds the
carrying amount to the extent that the carrying amount does not exceed the carrying amount
without any historical impairment losses.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
206
NOTE 1 - continued
Balance Sheet
Financial assets
Financial assets are initially recognized on the settlement date at fair value plus transaction costs,
except for financial assets at fair value through profit or loss, which are recognized at fair value.
Financial assets are derecognized when the rights to receive cash flows from the assets have
expired or have been transferred.
Investments in joint ventures
Investments in joint ventures comprise investments in companies which by agreement are
managed jointly with one or more companies and therefore are subject to joint control and in which
the parties have rights to the net assets of the joint venture. Joint ventures are accounted for using
the equity method. Under the equity method, the investment in joint ventures is initially recognized
at cost and thereafter adjusted to recognize TORM’s share of the profit or loss in the joint venture.
When TORM’s share of losses in a joint venture exceeds the investment in the joint venture, TORM
discontinues recognizing its share of further losses. Additional losses are recognized only to the
extent that TORM has incurred legal or constructive obligations or made payments on behalf of the
joint venture.
Treasury shares
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
Interim dividends are recognized when paid. Any year-end dividend is recognized as a liability at the
date of approval at the AGM.
Other non-current liabilities
Other non-current liabilities consist of long-term employee-related liabilities related to the frozen
Danish holiday funds in connection with the transition to the new Danish Holiday Act. TORM has
elected to keep the holiday funds until the employees, covered at the transition date, reach the age
of retirement. The liability is remeasured annually based on an index rate published by the Holiday
Allowance fund.
Trade payables
Trade payables are recognized at the fair value of the item purchased and are subsequently
measured at amortized cost.
Deferred income
Deferred income relates to amounts received from customers in advance of the related
performance obligations being satisfied.
NOTE 1 - continued
Cash flow statement
The cash flow statement shows how income and changes in the balance sheet items affect cash
and cash equivalent, i.e. how cash is generated or used in the period. The cash flow statement is
presented in accordance with the indirect method commencing with “Net profit/(loss) for the
year”.
Cash flow from operating activities converts income statement items from the accrual basis of
accounting to cash basis. Starting with “Net profit/(loss) for the year”, non-cash items are
reversed, and actual payments are included. Further, the change in working capital is taken into
account.
Cash flow from investing activities comprises the cash used or received in the purchase and sale of
tangible fixed assets and financial assets as well as cash from business combinations.
Cash flow from financing activities comprises changes in the cash used or received in borrowings
(amount of new borrowings and repayments), purchases or sales of treasury shares, dividends paid
to shareholders.
Cash and cash equivalents including restricted cash comprise cash and short-term bank deposits
with an original maturity of three months or less. The carrying amount of these assets is
approximately equal to their fair value. Cash and cash equivalents including restricted cash at the
end of the reporting period are shown in the consolidated cash flow statement and can be
reconciled to the related items in the consolidated balance sheet.
The restricted cash balance relates to cash provided as security for initial margin calls and negative
market values on derivatives as well as a sale and leaseback transaction prepayment to be released
upon delivery of the vessel.
Critical Accounting Estimates and Judgements
The preparation of financial statements in accordance with IFRS requires the Management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period. These estimates and
assumptions are affected by the way TORM applies its accounting policies. An accounting estimate
is considered critical if the estimate requires the Management to make assumptions about matters
subject to significant uncertainty, if different estimates could reasonably have been used, or if
changes in the estimate that would have a material impact on the Company’s financial position or
results of operations are reasonably likely to occur from period to period. The Management believes
that the accounting estimates applied are appropriate and the resulting balances are reasonable.
However, actual results could differ from the original estimates requiring adjustments to these
balances in future periods.
The Management also makes various accounting judgements in the preparation of the consolidated
financial statements which can affect the amounts recognized.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
207
NOTE 1 - continued
Judgements
The Management has assessed that TORM has two cash-generating units (CGUs), being the Main
Fleet and the Marine Engineering (previously referred to as Marine Exhaust) cash-generating units.
The Main Fleet is comprised of TORM’s LR1, LR2 and MR vessels, which are largely
interchangeable, and the cash flows generated by them are interdependent. These vessels are
operated via the One TORM platform collectively as a combined internal pool, employed principally
in the spot market, and actively managed to meet the needs of our customers in that market,
particularly regarding the location of vessels meeting required specifications and the price of
transport rather than vessel class. Given the technical specifications and capacity of vessels, the
Main Fleet is relatively homogenous with a very high degree of interoperability. All vessels in the
Main Fleet can handle multiple sizes of cargo and sail all seas and oceans, over both shorter and
long distances. The Main Fleet is monitored and managed on an aggregated level as one pool, i.e.
each vessel or vessel class does not generate cash inflows which are largely independent of those
from other vessels or vessel classes. The MR vessels acquired in prior years with chemical trading
capability are operated as all other product tanker vessels and thus included in the Main Fleet CGU.
In addition, the activities within the Marine Engineering segment represent a single CGU because
cash inflows are generated independent of the cash inflows from the Main Fleet from serving the
existing external customer base of the Marine Engineering segment.
Estimates
Carrying amounts of vessels
The Company evaluates the carrying amounts of the vessels (including newbuildings) to determine
if events have occurred which would require a modification of their carrying amounts. The
recoverable amount of vessels is reviewed based on events or changes in circumstances which
would indicate that the carrying amount of its vessels might not be recoverable.
In assessing the recoverability of the vessels, the Company reviews certain indicators of potential
impairment or indication of any past impairment losses that should be reversed. If an indication of
impairment or reversal of past impairment is identified, the need for recognizing an impairment loss
or a recognition of a reversal of a past impairment loss is assessed by comparing the carrying
amount of the vessels to the higher of the fair value less costs of disposal and the value in use.
NOTE 1 - continued
The Management assesses indicators of impairment that include, but are not limited to, broker
vessel values, time charter rates, weighted average cost of capital, and any other adverse impacts
from current economic, environmental, and geopolitical uncertainty, as well as the carrying amount
of the net assets against the market capitalization.
The fair value less cost of disposal of the vessels is based on the market approach which considers
the valuations from two internationally acknowledged shipbrokers with appropriate qualifications
and recent experience in the valuation of vessels. The shipbrokers’ primary input is deadweight
tonnage, yard, and age of the vessel. The fair value assumes that the vessels are in good and
seaworthy condition and with prompt, charter-free delivery.
The assessment of the value in use is based on projection of future discounted cash flows related
to the vessels which is complex and requires the Company to make various estimates including
future freight rates, utilization, earnings from the vessels, future operating expenses and capital
expenditure including dry-docking costs and discount rates.
All these factors have been historically volatile, especially the freight rates. The carrying amounts
of TORM’s vessels may not represent their fair market value at any point in time, as market prices
of second-hand vessels to a certain degree tend to fluctuate with changes in freight rates and the
cost of newbuildings. However, if the estimated future cash flow or related assumptions in the
future change, an impairment write-down or reversal of impairment may be required.
For more information refer to Note 12.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
208
NOTE 2 – LIQUIDITY, CAPITAL RESOURCES AND SUBSEQUENT EVENTS
Liquidity and Capital Resources
As of 31 December 2024, TORM’s cash and cash equivalents including restricted cash totaled
USD 291m (2023: USD 296m, 2022: USD 324m), and undrawn and committed credit facilities as
listed below amounted to USD 324m (2023: USD 343m, 2022: USD 93m).
TORM has the following debt facilities as of 31 December 2024.
Debt Facility
Maturity
Outstanding
amount
2024
(USDm)
Outstanding
amount
2023
(USDm)
Outstanding
amount
2022
(USDm)
Senior Unsecured Bonds
2029
200.0
—
—
Syndicated Facilities 2023
2029
160.0
224.0
—
Syndicated Facilities 2020
Repaid
—
—
143.8
Danish Ship Finance Facility 2020
2031
245.6
192.6
201.8
ING Facility 2023
2029
51.4
57.9
—
HCOB Facility 2023
Repaid
—
31.2
—
HCOB Facilities 2020-2021
Repaid
—
—
63.5
HCOB Facility 2024
2031
87.5
—
—
KfW Facility 2019
2032
31.8
34.8
37.9
CEXIM 2016
Repaid
—
—
41.1
Other credit facilities
2026
1.9
4.8
4.9
Total
778.2
545.3
493.0
In 2024, TORM refinanced a number of debt facilities involving repayment of debt in relation to sale
of vessels, as well as financing additional second-hand vessel purchases. TORM repaid debt on
seven vessels previously funded by HCOB. In total, the company had 19 vessels delivered
throughout the year with 14 vessels financed by mortgage debt and revolving credit facilities and
the remaining five being unencumbered. TORM obtained funding from HCOB to partly finance a
purchase of five second-hand vessels. Moreover, TORM completed consolidation of the HCOB
facilities by amending the facility with maturity prolonged to 2031. TORM also refinanced the
Danish Shipping Facility to partly fund the acquisition of three MR vessels. As of 31 December
2024, the scheduled minimum payments on mortgage debt and bank loans in 2025 amount to USD
113.7m.
NOTE 2 - continued
TORM has the following undrawn facilities as of 31 December 2024.
Undrawn Facility
Maturity
Undrawn
amount
2024
(USDm)
Undrawn
amount
2023
(USDm)
Undrawn
amount
2022
(USDm)
Syndicated Facilities 2023 - RCF
2029
100.0
100.0
—
Syndicated Facilities 2020 - RCF
Cancelled
—
—
92.6
Syndicated Facilities 2024 - RCF
2031
149.5
—
—
HCOB Facility 2023 - RCF
Cancelled
—
24.9
—
DSF Additional Facility
Cancelled
—
52.6
—
Syndicated Bridge to Bond Facility
Cancelled
—
165.0
—
HCOB Facility 2024 - RCF
2031
74.1
—
—
Total
323.6
342.5
92.6
TORM announced a USD 150m revolving syndicate credit facility with eight banks to partly finance
the purchase of six second-hand vessels. Furthermore, the HCOB revolving credit facility increased
to USD 74m and the maturity prolonged to 2031. Also, the maturity of TORM’s USD 100m
Syndicated Facilities was extended by one year to 2029. As of 31 December 2024, all three credit
facilities remain undrawn.
TORM has the following lease facilities as of 31 December 2024.
Lease Facility
Maturity
Outstanding
amount
2024
(USDm)
Outstanding
amount
2023
(USDm)
Outstanding
amount
2022
(USDm)
Bocomm Leasing Facilities 2019-2021
2032
135.6
148.9
162.2
Bocomm Leasing Facilities 2019
Repaid
—
—
49.4
Springliner Leases
2026
25.0
27.9
30.7
China Development Bank Financial Leasing
2032
136.5
149.0
160.8
China Merchant Bank Financial Leasing
2033
159.5
195.8
37.3
Showa Leasing
Repaid
—
—
18.7
Eifuku Leasing
Repaid
—
—
20.9
Total
456.6
521.6
480.0
TORM did not engage in any new lease facilities in 2024. As of 31 December 2024, the scheduled
minimum payments on lease agreements in 2024 amounts to USD 51m.
TORM manages its capital structure for the Group as a whole in order to support our spot-based
vessel employment profile. This is done through a conservative leverage, a strong liquidity position
and limited off-balance sheet commitments. TORM ongoingly stress tests the capital structure and
liquidity position as well as prepares cash flow forecasts to make sure the capital structure remains
robust to potential risks. Besides the liquidity position, the main considerations are loan-to-value
ratio, distribution policy, CAPEX commitments, off-balance sheet liabilities, terms and sources of
funding vessel investments, hedging of financial market risks and fleet employment strategy,
hereunder entering into FFA contracts.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
209
NOTE 2 - continued
On March 2024, TORM amended the distribution policy with effect from the first quarter of 2024.
With this TORM intends to distribute on a quarterly basis excess liquidity above a threshold liquidity
level. The threshold liquidity level will be determined as the sum of i) the product of liquidity
requirement per vessel and the number of owned and leased vessels in TORM’s fleet as at the
balance sheet day and ii) a discretionary element determined by the Board taking into consideration
TORM’s capital structure, strategic opportunities, future obligations and market trends.
TORM’s debt facilities include financial covenants related to:
•
Minimum liquidity (cash and cash equivalents minimum amount requirement at all times)
•
Minimum security value (loan-to-value for individual borrowings)
•
Equity ratio (minimum level)
Financial covenants should be complied with on a daily basis, and is reported to counterparties on a
quarterly basis. During 2024, 2023 and 2022, TORM did not have any covenant breaches, and the
Management has assessed that a covenant breach in the near future is remote. Please refer to
Note 20 for further information on facilities with financial covenants.
Subsequent Events
After the end of 2024, TORM sold the MR vessels TORM Ragnhild, TORM Resilience and TORM
Thames to new owners with expected delivery during the remaining part of Q1 2025.
TORM’s Board of Directors has on the date of this report approved an interim dividend for the
fourth quarter of USD 0.60 per share to be paid to the shareholders corresponding to an expected
total dividend payment of USD 58.4m. The distribution for the quarter is equivalent to 75% of net
profit and reflects the Distribution Policy. The payment date is 02 April 2025 to all shareholders on
record as of 20 March 2025, and the ex-dividend date is 19 March 2025 for the shares listed on
Nasdaq OMX Copenhagen and 20 March 2025 for the shares listed on Nasdaq New York. The
dividend payment will not be recognized as a liability and there are no tax consequences.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
210
NOTE 3 – SEGMENT
Segment Reporting - Consolidated Income Statement
USDm
2024
2023
2022
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Revenue
1,544.0
29.6
-14.4
1,559.2
1,491.4
48.0
-19.0
1,520.4
1,440.4
5.9
-2.9
1,443.4
Port expenses, bunkers, and commissions
-409.2
—
—
-409.2
-407.6
—
—
-407.6
-458.9
—
—
-458.9
Other cost of goods and services sold
—
-18.5
9.2
-9.3
—
-36.6
13.9
-22.7
—
-3.0
2.4
-0.6
Operating expenses
-245.6
—
0.5
-245.1
-216.4
—
0.4
-216.0
-202.1
—
—
-202.1
Profit from sale of vessels
51.3
—
—
51.3
50.4
—
—
50.4
10.2
—
—
10.2
Administrative expenses
-87.9
-7.7
—
-95.6
-76.5
-6.4
—
-82.9
-52.4
-2.6
—
-55.0
Other operating income and expenses
-0.6
0.1
—
-0.5
6.0
0.3
—
6.3
5.9
—
—
5.9
Share of profit/(loss) from joint ventures
—
—
—
—
—
—
—
—
0.2
—
—
0.2
Impairment losses and reversal of impairment on
tangible assets
—
—
—
—
—
—
—
—
-2.6
—
—
-2.6
Depreciation and amortization
-191.2
-0.8
—
-192.0
-148.2
-1.1
—
-149.3
-138.7
-0.3
—
-139.0
Operating profit (EBIT)
660.8
2.7
-4.7
658.8
699.1
4.2
-4.7
698.6
602.0
—
-0.5
601.5
Financial income
24.7
0.1
—
24.8
14.3
—
—
14.3
3.9
0.1
—
4.0
Financial expenses
-73.9
-0.2
—
-74.1
-60.5
-0.4
—
-60.9
-48.7
-0.1
—
-48.8
Profit before tax
611.6
2.6
-4.7
609.5
652.9
3.8
-4.7
652.0
557.2
—
-0.5
556.7
Tax
2.5
-0.5
—
2.0
-4.0
—
—
-4.0
5.9
—
—
5.9
Net profit for the year
614.1
2.1
-4.7
611.5
648.9
3.8
-4.7
648.0
563.1
—
-0.5
562.6
The eliminations above represent revenue and other costs of goods and services sold from the
installation of scrubbers performed by the Marine Engineering entities on tanker vessels within the
Tanker segment. All revenue from the Tanker segment is derived from external customers.
In all material aspects, TORM’s customers are domiciled outside the UK and are spread all over the
world with only a few countries contributing significantly to TORM’s revenue. Below is presented
the countries contributing with more than 10% of TORM's revenue.
Countries contributing more
than 10% of TORM's revenue
2024
2023
2022
USDm
% of total
USDm
% of total
USDm
% of total
Switzerland
264.3
17.0 %
242.5
16.0 %
220.9
15.3 %
United States
243.1
15.6 %
182.7
12.0 %
—
— %
United Arab Emirates
160.5
10.3 %
—
— %
—
— %
Mexico
—
— %
—
— %
178.2
12.8 %
Revenue is allocated to countries based on the customer’s ultimate parent domicile.
A major part of TORM's revenues stems from a small group of customers. Below is presented the
number of customers exceeding 10% of TORM's consolidated revenue and the customers' share of
TORM's consolidated revenue.
Customers contributing more than 10% of TORM's
revenue
2024
2023
2022
Number of customers
0
0
1
Share of consolidated revenue
— %
— %
12 %
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
211
NOTE 3 – continued
Segment Reporting - Consolidated Balance Sheet
USDm
2024
2023
2022
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
ASSETS
Intangible assets
Goodwill
—
1.7
—
1.7
—
1.8
—
1.8
—
1.8
—
1.8
Other intangible assets
1.1
0.9
—
2.0
0.9
0.9
—
1.8
0.7
1.3
—
2.0
Total intangible assets
1.1
2.6
—
3.7
0.9
2.7
—
3.6
0.7
3.1
—
3.8
Tangible fixed assets
Land and buildings
8.1
—
—
8.1
4.9
0.6
—
5.5
2.8
1.0
—
3.8
Vessels and capitalized dry-docking
2,843.9
—
-17.2
2,826.7
2,081.7
—
-11.5
2,070.2
1,863.4
—
-7.5
1,855.9
Prepayments on vessels
—
—
—
—
86.0
—
—
86.0
—
—
—
—
Other non-current assets under construction
—
4.8
-0.2
4.6
—
4.5
-0.3
4.2
—
—
—
—
Other plant and operating equipment
2.1
1.2
—
3.3
3.3
1.1
—
4.4
4.1
1.5
—
5.6
Total tangible fixed assets
2,854.1
6.0
-17.4
2,842.7
2,175.9
6.2
-11.8
2,170.3
1,870.3
2.5
-7.5
1,865.3
Financial assets
Investments in joint ventures
0.1
—
—
0.1
0.1
—
—
0.1
0.1
—
—
0.1
Loan receivables
4.5
—
—
4.5
4.5
—
—
4.5
4.6
—
—
4.6
Deferred tax asset
3.1
—
—
3.1
0.4
—
—
0.4
0.5
—
—
0.5
Other investments
0.2
—
—
0.2
—
—
—
—
0.2
—
—
0.2
Total financial assets
7.9
—
—
7.9
5.0
—
—
5.0
5.4
—
—
5.4
Total non-current assets
2,863.1
8.6
-17.4
2,854.3
2,181.8
8.9
-11.8
2,178.9
1,876.4
5.6
-7.5
1,874.5
Inventories
62.6
5.8
—
68.4
58.0
3.7
—
61.7
61.1
11.0
-0.1
72.0
Trade receivables
179.1
4.8
—
183.9
206.2
5.0
-0.2
211.0
255.7
4.2
-0.4
259.5
Other receivables
54.7
4.9
—
59.6
58.8
1.7
—
60.5
72.7
1.3
—
74.0
Prepayments
11.6
0.6
—
12.2
10.7
4.5
—
15.2
9.7
0.7
—
10.4
Cash and cash equivalents incl. restricted cash
284.9
6.3
—
291.2
290.7
4.9
—
295.6
321.4
2.4
—
323.8
Current assets excluding assets held for sale
592.9
22.4
—
615.3
624.4
19.8
-0.2
644.0
720.6
19.6
-0.5
739.7
Assets held for sale
—
—
—
—
47.2
—
—
47.2
—
—
—
—
Total current assets
592.9
22.4
—
615.3
671.6
19.8
-0.2
691.2
720.6
19.6
-0.5
739.7
TOTAL ASSETS
3,456.0
31.0
-17.4
3,469.6
2,853.4
28.7
-12.0
2,870.1
2,597.0
25.2
-8.0
2,614.2
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
212
NOTE 3 – continued
Segment Reporting - Consolidated Balance Sheet
USDm
2024
2023
2022
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
Tanker
segment
Marine
Engineering
segment
Inter-
segment
elimination
Total
EQUITY AND LIABILITIES
Total equity
2,072.9
11.7
-9.8
2,074.8
1,661.3
9.9
-5.2
1,666.0
1,498.0
6.2
-0.5
1,503.7
Liabilities
Non-current tax liability related to held-over gains
45.2
—
—
45.2
45.2
—
—
45.2
45.2
—
—
45.2
Deferred tax liability
—
0.3
—
0.3
3.3
0.3
—
3.6
5.8
0.3
—
6.1
Borrowings
1,060.8
0.2
—
1,061.0
884.0
2.9
—
886.9
844.6
5.2
—
849.8
Other non-current liabilities
2.3
0.6
—
2.9
2.2
0.8
—
3.0
2.2
0.8
—
3.0
Total non-current liabilities
1,108.3
1.1
—
1,109.4
934.7
4.0
—
938.7
897.8
6.3
—
904.1
Borrowings
163.5
1.8
—
165.3
169.7
3.0
—
172.7
115.7
1.4
—
117.1
Trade payables
46.2
3.8
—
50.0
39.6
3.4
—
43.0
46.4
3.5
-1.4
48.5
Current tax liabilities
0.4
0.3
—
0.7
0.6
—
—
0.6
1.6
0.4
—
2.0
Other liabilities
60.7
0.6
—
61.3
44.8
0.5
-0.1
45.2
31.0
0.3
-0.2
31.1
Provisions
—
0.6
—
0.6
—
0.6
—
0.6
6.5
0.3
—
6.8
Prepayments from customers
4.0
11.1
-7.6
7.5
2.7
7.3
-6.7
3.3
—
6.8
-5.9
0.9
Total current liabilities
274.8
18.2
-7.6
285.4
257.4
14.8
-6.8
265.4
201.2
12.7
-7.5
206.4
Total liabilities
1,383.1
19.3
-7.6
1,394.8
1,192.1
18.8
-6.8
1,204.1
1,099.0
19.0
-7.5
1,110.5
TOTAL EQUITY AND LIABILITIES
3,456.0
31.0
-17.4
3,469.6
2,853.4
28.7
-12.0
2,870.1
2,597.0
25.2
-8.0
2,614.2
Non-current asset additions during the year:
Goodwill
—
—
—
—
—
—
—
—
—
1.8
—
1.8
Other intangible assets
0.5
0.5
—
1.0
0.6
—
—
0.6
0.6
1.2
—
1.8
Land and buildings
5.6
—
—
5.6
4.4
—
—
4.4
0.3
1.1
—
1.4
Vessels and capitalized dry-docking
798.5
—
-5.8
792.7
520.4
—
-4.0
516.4
84.7
—
-7.5
77.2
Prepayments on vessels
111.5
—
—
111.5
86.0
—
—
86.0
43.1
—
—
43.1
Other non-current assets under construction
—
0.4
-0.2
0.2
—
4.5
-0.3
4.2
—
—
—
—
Other plant and operating equipment
0.7
0.6
—
1.3
1.1
0.2
—
1.3
0.8
1.6
—
2.4
Total non-current asset additions
916.8
1.5
-6.0
912.3
612.5
4.7
-4.3
612.9
129.5
5.7
-7.5
127.7
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
213
NOTE 3 - continued
The Company’s non-current assets are based on domicile of the legal entity ownership in the
following countries:
USDm
2024
2023
2022
UK
357.2
0.2
0.1
Denmark
1,604.2
1,746.6
1,607.7
Singapore
799.7
336.7
257.1
USA
76.0
79.8
—
Other countries
9.7
10.6
4.5
Non-current assets
2,846.8
2,173.9
1,869.4
Accounting Policies
The segmentation is based on the Group’s internal management and reporting structure. The
Group has two operating segments, the Tanker segment, for which the services provided primarily
comprise transportation of refined oil products such as gasoline, jet fuel, and naphtha, and the
Marine Engineering segment for which the services provided primarily comprise developing and
producing advanced and green marine equipment.
Transactions between the segments are based on market-related prices and are eliminated at
Group level.
TORM considers the global product tanker market as a whole, and as the individual vessels are not
limited to specific parts of the world, the Group has only one geographical segment for the Tanker
segment. Further, the internal management reporting does not provide geographical information
for either the Tanker segment or the Marine Engineering segment. Consequently, geographical
segment information on revenue from external customers or non-current segment assets for the
Tanker segment or the Marine Engineering segment are not provided.
NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS
USDm
2024
2023
2022
Disaggregation of revenue
Transportation of oil products and chemicals
1,544.0
1,491.4
1,440.4
Scrubbers and related services
9.1
21.7
1.2
Welding and mounting
4.9
5.3
1.1
Others
1.2
2.0
0.7
Total revenue
1,559.2
1,520.4
1,443.4
Tanker segment
1,544.0
1,491.4
1,440.4
Marine Engineering segment
29.6
48.0
5.9
Intersegment elimination
-14.4
-19.0
-2.9
Total revenue
1,559.2
1,520.4
1,443.4
USDm
2024
2023
2022
Customer contract balances
Trade receivables
183.9
211.0
259.5
Customer contract assets¹⁾
2.4
2.5
3.0
Customer contract liabilities²⁾
-7.5
-3.4
-0.9
Total
178.8
210.1
261.6
¹⁾ Recognized in prepayments.
²⁾ Recognized in prepayments from customers.
Refer to Note 15 for further information on trade receivables. Customer contract assets primarily
relate to prepaid voyage expenses until the cargo load date. During the year, USD 2.5m was
recognized relating to customer contracts entered in 2023 (2023: USD 3.0m relating to 2022,
2022: USD 2.0m relating to 2021). Customer contract liabilities primarily relate to prepaid charter
hire and prepayments received by customers in connection with scrubber installations. The change
in customer contract liabilities during the year is primarily caused by change in prepayments
received by customers in connection with scrubber installations of USD 2.8m.
Accounting policies
Revenue
Income is recognized in the income statement when:
•
The income generating activities have been carried out on the basis of a binding agreement
•
The income can be measured reliably
•
It is probable that the economic benefits associated with the transaction will flow to the
Company
Revenue comprises freight, charter hire, and demurrage revenue from the vessels as well as
Marine Engineering revenue. Revenue is recognized when or as performance obligations are
satisfied by transferring services to the customer, i.e. over time, provided that the stage of
completion can be measured reliably. Revenue is measured as the consideration that the Group
expects to be entitled to. Freight revenue including charter hire and demurrage (and related
voyage costs) are recognized in the income statement according to the entered charter parties
from the date of load to the date of delivery of the cargo (discharge).
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
214
NOTE 4 - continued
The completion is determined using the load-to-discharge method based on the percentage of the
estimated duration of the voyage completed at the reporting date because the customer receives
the benefit during the voyage as it is provided.
Cross-over voyages
For cross-over voyages (voyages in progress at the end of a reporting period), the uncertainty and
the dependence on estimates are greater than for finalized voyages. The Company recognizes a
percentage of the estimated revenue for the voyage equal to the percentage of the estimated
duration of the voyage completed at the balance sheet date. The estimate of revenue is based on
the expected duration and destination of the voyage.
When recognizing revenue, there is a risk that the actual number of days it takes to complete the
voyage will differ from the estimate. The contract for a single voyage may state several alternative
destination ports. The destination port may change during the voyage, and the rate may vary
depending on the destination port. Changes to the estimated duration of the voyage as well as
changing destinations and weather conditions will affect the voyage expenses.
Demurrage revenue
Freight contracts contain conditions regarding the amount of time available for loading and
discharging of the vessel. If these conditions are breached, TORM is compensated for the
additional time incurred in the form of demurrage revenue. Demurrage revenue is recognized in
accordance with the terms and conditions of the charter parties. Upon completion of the voyage,
the Company assesses the time spent in port, and a demurrage claim based on the relevant
contractual conditions is submitted to the charterers. The claim will often be met by counterclaims
due to differences in the interpretation of the agreement compared to the actual circumstances of
the additional time used. Based on previous experience, 97% of the demurrage claim submitted is
recognized as demurrage revenue upon initial recognition. For cross-over voyages, an estimate of
incurred demurrage is recognized at the balance sheet date.
The Company receives the demurrage payment upon reaching final agreement on the amount,
which could be up to approximately 100 days after the original demurrage claim was submitted.
Any adjustments to the final agreement are recognized as demurrage revenue.
Marine Engineering revenue
Some of the Group’s contracts with customers relate to the sale of marine engineering equipment
with installation services. Customers obtain control of the marine engineering equipment with
installation services when the goods are delivered to the customer, they have completed
commissioning and delivery has been accepted by the customers. When without installation
services, customers obtain control of the marine engineering equipment when the goods are
delivered to and have been accepted by the customers.
Revenue is thus recognized upon the customers obtaining control. There is generally only one
performance obligation related hereto.
A warranty provision is recognized for expected repair costs related to warranty claims for sold
marine engineering equipment within the standard warranty period of one year. These provisions
are recognized when the equipment is sold and are based on historical experience. The warranty
provision estimates are updated annually.
NOTE 5 – STAFF COSTS
Employee Information
Staff costs included in operating expenses relate to the 109 seafarers employed under Danish
contracts (2023: 105, 2022:100).
The average number of employees is calculated as a full-time equivalent (FTE).
The Executive Director is, in the event of termination by the Company, entitled to a severance
payment of up to 12 months' salary.
USDm
2024
2023
2022
Total staff costs
Staff costs included in operating expenses
9.6
8.6
7.7
Staff costs included in administrative
expenses
77.3
69.3
42.0
Total
86.9
77.9
49.7
Staff costs comprise the following
Wages and salaries
47.3
46.9
38.8
Share-based compensation
30.3
23.0
2.9
Pension costs
4.2
3.8
3.3
Other social security costs
0.4
1.4
1.5
Other staff costs
4.7
2.8
3.2
Total
86.9
77.9
49.7
Average number of permanent employees
Seafarers
109
105
100
Land-based
498
468
386
Total
607
573
486
At the end of 2024 TORM has a pool of 3,677 (2023: 3,271, 2022: 3,218) seafarers.
The majority of seafarers on vessels are on short-term contracts. The average number of seafarers
on board vessels on short-term contracts in 2024 was 1,721 (2023: 1,625, 2022: 1,565).
Total seafarers’ costs in 2024 were USD 141.4m (2023: USD 127.1m, 2022: USD 124.9m), which
is included in “Operating expenses” of which USD 131.8m (2023: USD 118.5m, 2022: USD 117.2m)
pertains to cost for seafarers on board vessels on short term contracts and USD 9.6m (2023:
USD 8.6m, 2022: USD 7.7m) pertains to cost for seafarers employed under the Danish contract
as indicated in the staff costs table above.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
215
NOTE 5 - continued
USD '000
2024
2023
2022
Non-Executive Board and Committee remuneration, short
term
Christopher H. Boehringer
212
214
210
David N. Weinstein
217
219
207
Göran Trapp
163
164
155
Annette Malm Justad
163
164
155
Total
755
761
727
Executive Management
USD '000
Salary
Taxable
benefits
Annual
performance
bonus
Share-based
payment
Total
Executive Management
remuneration
Jacob Meldgaard
2022, TORM A/S¹⁾
1,040
39
593
—
1,672
2022, TORM plc¹⁾
72
—
—
439
511
2023, TORM A/S¹⁾
1,119
40
1,277
—
2,436
2023, TORM plc¹⁾
77
—
—
4,383
4,460
2024, TORM A/S¹⁾
1,141
40
1,233
—
2,414
2024, TORM plc¹⁾
76
—
—
5,530
5,606
¹⁾ Paid by legal entity as noted.
Senior Management Team
The aggregated compensation expensed by the Group to the three (2023: three, 2022: three)
other members of the Senior Management Team in 2024 (excluding CEO Jacob Meldgaard) was
USD 9.5m (2023: USD 7.5m, 2022: USD 2.8m), which includes an aggregate of USD 0.1m
(2023: USD 0.1m, 2022: USD 0.1m) allocated for pensions (defined contribution plans) and share-
based payment of USD 7.5 m (2023: 6.0m, 2022: 0.7m) for these individuals.
NOTE 5 - continued
LTIP element of CEO Jacob Meldgaard's remuneration package 2024:
Ordinary
Ordinary
Retention
Ordinary
Grant Date
23-Mar-22
29-Mar-23 29-Mar-23
07-Mar-24
RSU LTIP grant¹⁾
255,200
255,200
300,000
255,200
Exercise price per share
DKK 58.00
DKK 220.60
USD 0.01
DKK 258.40
RSU grant value assuming 100% vesting
USD 0.5m
USD 2.5m USD 10.7m
USD 1.9m
¹⁾ LTIP award is fixed by the Board of Directors and was communicated via company announcement no. 9 dated
23 March 2022 , announcement no.9 dated 29 March 2023 and announcement no.9 dated 7 March 2024 ,
therefore there is no minimum or maximum for 2022, 2023 and 2024.
TORM operates an equity-settled, share-based compensation plan. The fair value of the employee
services received in exchange for the grant of shares is recognized as an expense and allocated
over the vesting period. Employment in TORM throughout the period is in most cases a
prerequisite for upholding the full vesting rights in the RSU program. For voluntary leavers subject
to the Danish Stock Options Act, the RSUs will vest in accordance with the vesting schedule, but
for all other leavers, all unvested RSUs shall be immediately forfeited for no consideration. Options
are granted under the plan for no consideration and carry no dividend or voting rights.
In accordance with its Remuneration Policy, TORM has granted the CEO a number of Restricted
Share Units (RSUs). There are no performance conditions associated with this grant of RSUs.
Refer to Long-Term Incentive Program – restricted share units granted to the executive director
on page 178 for further information. The original RSUs granted to the CEO in 2016 vested in equal
installments over a five years period. Subsequent awards vest in equal installments over three
years.
Vested RSUs may be exercised for a period of 360 days from each vesting date. Details of the
CEO’s awards and interests in Restricted Share Units are set out on page 116.
The single figure remuneration table for the CEO does not include any amounts in relation to the
RSU awards as there are no performance conditions associated with this grant of RSUs.
As detailed in announcement no. 9 issued on 23 March 2022, the CEO was granted a total of
255,200 RSUs which will vest in equal amounts over the next three years. The first amount could
be exercised from 1 January 2023. The exercise price for each RSU is DKK 58.0, corresponding to
the average price of TORM shares in the 90 calendar days preceding the publication of TORM plc’s
2021 Annual Report plus a 15% premium. Vested RSUs may be exercised for a period of 360 days
from each vesting date.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
216
NOTE 5 – continued
As detailed in announcement no. 9 issued on 29 March 2023, the CEO was granted a total of
255,200 RSUs which will vest in equal amounts over the next three years. The first amount could
be exercised from 01 January 2024. The exercise price for each RSU is DKK 220.6, corresponding
to the average price of TORM shares in the 90 calendar days preceding the publication of TORM
plc’s 2022 Annual Report plus a 15% premium adjusted for the dividend payment related to
TORM’s fourth quarter 2022 results. Vested RSUs may be exercised for a period of 360 days
from each vesting date. In addition to the RSUs granted above, the CEO is granted a total of
300,000 RSUs in the Additional Retention Program on similar terms as outlined above, with the
exception that the strike price for these RSUs is set to one US cent and that all RSUs will vest on
01 March 2026.
As detailed in announcement no. 9 issued on 07 March 2024, the CEO was granted a total of
255,200 RSUs which will vest in equal amounts over the next three years. The first amount could
be exercised from 01 January 2025. The exercise price for each RSU is DKK 258.4 corresponding
to the average price of TORM shares in the 90 calendar days preceding the publication of TORM
plc’s 2023 Annual Report plus a 15% premium. Vested RSUs may be exercised for a period of 360
days from each vesting date.
Long-term employee benefit obligations
The obligation comprises an obligation under the incentive programs to deliver Restricted Share
Units in TORM plc at a determinable price to the entity's key personnel, including the CEO. The
RSUs granted entitle the holder to acquire one TORM A-share.
The program comprises the following number of shares in TORM plc:
Number of shares (1,000)
2024
2023
2022
Outstanding as of 01 January
4,417.7
2,424.0
2,372.9
Granted during the period¹⁾
1,506.4
3,136.6
1,393.0
Exercised during the period
-1,345.4
-1,137.6
-1,078.0
Expired/forfeited during the period
-122.1
-5.3
-263.9
Outstanding as of 31 December
4,456.6
4,417.7
2,424.0
Exercisable as of 31 December
—
—
—
¹⁾ Includes additional 36,259 RSUs granted in 2024 to adjust for the impact of dividends on the
share price in accordance with the original terms of the grant. No modifications to the terms of
the grant in the RSU program have occurred.
In 2022, the Board of Directors agreed to grant a total of 1,137,770 RSUs to other management.
The vesting period of the program is three years for key employees. The exercise price is set at
DKK 58.0 The exercise period is 360 days from each vesting date. The fair value of the options
granted in 2022 was determined using the Black-Scholes model and is not material. The average
remaining contractual life for the restricted shares as of 31 December 2022 was 1.5 years, and as
of 31 December 2024 was 0.0 years.
NOTE 5 – continued
In 2023, the Board of Directors agreed to grant a total of 1,248,153 RSUs to other management.
The vesting period of the program is three years for key employees. The exercise price is set at
DKK 220.6. The exercise period is 360 days from each vesting date. The fair value of the options
granted in 2023 was determined using the Black-Scholes model and amounts to USD 10.8m. The
average remaining contractual life for the restricted shares as of 31 December 2023 was 1.5
years, and as of 31 December 2024 was one year. In addition to the RSUs granted above, the
other management is granted a total of 1,333,222 RSUs in the Additional Retention Program on
similar terms as outlined above, with the exception that the strike price for these RSUs is set to
one US cent and that all RSUs will vest on 01 March 2026. The fair value of the options in the
Additional Retention Program granted in 2023 was determined using the Black-Scholes model and
amounts to USD 40.4m.
In 2024, the Board of Directors agreed to grant a total of 1,214,986 RSUs to other management.
The vesting period of the program is three years for key employees. The exercise price is set at
DKK 258.4. The exercise period is 360 days from each vesting date. The fair value of the options
granted in 2024 was determined using the Black-Scholes model and amounts to USD 8.1m. The
average remaining contractual life for the restricted shares as of 31 December 2024 is 1.5 years.
Accounting Policies
Employee benefits
Wages, salaries, social security contributions, holiday and sick leave, bonuses, and other monetary
and non-monetary benefits are recognized in the year in which the employees render the
associated services. Please also refer to the accounting policy for share-based payment.
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 payments
The Group makes equity-settled share-based payments to certain employees, which are measured
at fair value at the date of grant and expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of shares which will eventually vest. The fair value of the share
schemes is calculated using the Black-Scholes model at the grant date.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
217
NOTE 6 – REMUNERATION TO AUDITORS APPOINTED AT THE PARENT COMPANY’S ANNUAL
GENERAL MEETING
The remuneration of the auditor is required to be presented as follows:
USDm
2024
2023
2022
Audit fees
Fees payable to the Company's auditor for the audit of
the Company's annual accounts
1.2
1.2
0.9
Audit of the Company's subsidiaries pursuant to
legislation
0.1
0.1
0.1
Total audit fees
1.3
1.3
1.0
Non-audit fees
Audit-related services
0.5
0.1
0.2
Others
0.5
0.1
0.2
Total non-audit fees
1.0
0.2
0.4
Total
2.3
1.5
1.4
Under SEC regulations, the remuneration of the auditor of USD 2.3m (2023: USD 1.5m, 2022:
USD 1.4m) is required to be presented as follows: Audit fees USD 1.8m (2023: USD 1.4m, 2022:
USD 1.2m), audit-related fees USD 0.5m (2023: USD 0.1m, 2022: USD 0.2m), tax fees USD
0.0m (2023: USD 0.0m, 2022: USD 0.0m), and all other fees USD 0.0m (2023: USD 0.0m,
2022: USD 0.0m.).
TORM's Audit Committee pre-approves all audit, audit-related and non-audit services not
prohibited by law to be performed by our independent auditors and associated fees prior to the
engagement of the independent auditor with respect to such services.
NOTE 7 – FINANCIAL ITEMS
USDm
2024
2023
2022
Financial income
Interest income from cash and cash equivalents,
including restricted cash ¹⁾
24.5
14.2
4.0
Other financial income
0.3
0.1
—
Total
24.8
14.3
4.0
Financial expenses
Interest expenses on borrowings ¹⁾
69.7
55.6
48.5
Financial expenses arising from lease liabilities regarding
right-of-use assets
0.6
0.5
0.2
Exchange rate adjustments, including loss from forward
exchange rate contracts
0.7
0.4
0.5
Commitment fee
1.9
1.3
0.6
Amortization of interest rate swaps
1.7
2.2
2.4
Ineffectiveness on interest rate swaps
-1.5
-2.4
-3.6
Other financial expenses
1.0
3.3
0.2
Total
74.1
60.9
48.8
Total financial items
-49.3
-46.6
-44.8
¹⁾ Interest for financial assets and liabilities not at fair value through profit and loss.
Accounting Policies
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 equity
investments and securities, unrealized gains from securities, dividends received, and other
financial income. Interest is recognized in accordance with the accrual basis of accounting
considering the effective interest rate. Dividends from other investments are recognized when the
right to receive payment has been decided, which is typically when the dividend has been declared
and can be received without conditions.
Financial expenses
Financial expenses comprise interest expenses, financing costs of leases liabilities, realized and
unrealized exchange rate losses relating to transactions in currencies other than the functional
currency, realized losses from other equity investments and securities, unrealized losses from
securities, and other financial expenses including payments under interest rate hedge
instruments. Interest is recognized in accordance with the accrual basis of accounting considering
the effective interest rate.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
218
NOTE 8 – TAX
USDm
2024
2023
2022
Tax on profit for the year
Current tax for the year
1.0
0.6
0.5
Adjustments related to previous years
-1.0
—
-0.1
Adjustment of deferred tax
-3.3
2.2
-7.3
Income tax charge for the year
-3.3
2.8
-6.9
Tonnage tax charge for the year
1.3
1.2
1.0
Total
-2.0
4.0
-5.9
Adjustment of deferred tax of USD -3.3 m for the year ended 31 December 2024 primarily
consists of the recognition of deferred tax assets for unused tax credits for charges subject to the
corporate interest restriction and for carried forward losses.
The majority of the Group's taxable income is located in Denmark, and therefore the majority of
the tax base is subject to Danish tax legislation. As such, the Group has elected to participate in
the Danish tonnage tax scheme; the participation is binding until 31 December 2034. The Group
expects to participate in the tonnage tax scheme after the binding period and, as a minimum, to
maintain an investment and activity level equivalent to that at the time of entering the tonnage tax
scheme.
Under the different tonnage tax schemes that TORM is subject to, income and expenses from
shipping activities are not subject to direct taxation, and accordingly, an effective rate
reconciliation has not been provided, as it would not provide any meaningful information. Instead,
the taxable income is calculated from:
•
The net tonnage of the vessels used to generate the income from shipping activities
•
A rate applicable to the specific net tonnage of the vessels based on a sliding scale
Corporate income tax is primarily levied on the Group’s non-vessel-related activities. The effective
tax rate of the Group is 0.3% (2023: 1.0%, 2022 -1.0%). Net deferred tax liability in relation to
activities outside the tonnage tax regime amounts to USD 6.2m.
NOTE 8 – continued
USDm
2024
2023
2022
Deferred tax assets
Deferred tax assets related to Corporate Interest
Restriction
1.7
0.5
3.4
Deferred tax assets related to trading losses
6.9
5.1
4.6
Other temporary differences
0.4
—
—
Deferred tax assets before offset
9.0
5.6
8.0
Offset against deferred tax liabilities from Corporate
Interest Restriction
—
-0.5
-3.4
Offset against deferred tax liabilities from trading losses
—
-4.7
-4.0
Offset from tax liabilities
-5.9
—
—
Deferred tax assets, net as of 31 December
3.1
0.4
0.6
Deferred tax liabilities
Deferred tax liabilities arising from changes in equity
5.9
8.5
13.2
Other temporary differences
0.3
0.3
0.3
Deferred tax liabilities before offset
6.2
8.8
13.5
Offset against tax liabilities arising from changes in
equity
-5.9
—
—
Offset from tax assets
—
-5.2
-7.4
Deferred tax liabilities in the balance sheet
0.3
3.6
6.1
Deferred tax assets and liabilities are offset and reported net where appropriate within territories.
Deferred tax at the balance sheet date have been measured using the appropriate enacted tax
rates and are reflected in these financial statements and all deferred tax movements arise from
the origination and reversal of temporary differences.
Deferred tax assets are recognized to the extent that the realization of the relaxed tax benefit
through future taxable profits is probable.
As per 31 December 2024, there are unused tax credits of USD 2.2m (2023: USD 2.2m, 2022
2.2m) relating to prior year losses, as the utilization of these losses may not be used to offset
taxable profit due to a high degree of uncertainty of future taxable profits.
The deferred tax liability is derived from temporary differences between the accounting and tax
values of derivative financial instruments of USD 5.9m (2023: USD 8.5m, 2022: USD 13.2m) and
intangible assets of USD 0.0m (2023: USD 0.0m, 2022: 0.3m).
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
219
NOTE 8 – continued
USDm
2024
2023
2022
Non-current tax liability related to held-over gains
Balance as of 31 December
-45.2
-45.2
-45.2
The non-current tax liability related to held-over gains is the undiscounted income tax payable
calculated on the realized gain on sale of vessels which came from corporate income taxation into
the Danish tonnage tax scheme upon initial application in 2001 (the held-over gain reflected in the
transition account under the Danish tonnage tax scheme). This tax liability will become payable, in
part or in full, if the Danish owned fleet of vessels is significantly or fully disposed of, or if operated
to end of useful life and sold for scrap.
If TORM discontinues its participation in the Danish tonnage tax scheme, a deferred tax liability
would arise in relation to the vessels held by the Group and taken out of the tonnage tax scheme.
The Management considers this to be a remote scenario.
The Group operates in a wide variety of jurisdictions, in some of which the tax law is subject to
varying interpretations and potentially inconsistent enforcement. As a result, there can be
practical uncertainties in applying tax legislation to the Group's activities. Whilst the Group
considers that it operates in accordance with applicable tax law, there are potential tax exposures
in respect of its operations, the impact of which cannot be reliably estimated but could be
material.
Accounting Policies
Pillar Two Tax Effects
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which
the Group operates. Under the legislation, the parent company will be required to pay, in UK, top-
up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15%. The
main jurisdictions in which exposures to this tax may exist include Denmark, Singapore and the US.
As the majority of these companies’ revenue consist of international shipping income, it is
assessed that this income will be excluded from the GloBE income with reference to the shipping
carveout described in Article 3.3.
TORM has applied the exception in IAS 12 'Income Taxes' to recognizing and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes.
Based on our fiscal year for 2024, the Group has prepared a preliminary Transitional Country-by-
Country Reporting (CbCR) Safe Harbour assessment concluding that we expect to be eligible for
the Transitional CbCR Safe Harbour in a majority of jurisdictions in which we are present. As of
December 31, 2024, the calculated top-up tax does not have a material impact on our financial
result.
NOTE 8 – continued
Tax
Tax expenses comprise the expected income tax charge for the year in accordance with IAS 12 as
well as tonnage tax related to the Group’s vessels for the year. The income tax charge for the year
includes adjustments relating to previous years and the change in deferred tax for the year.
However, income tax relating to items in other comprehensive income is recognized directly in the
statement of other comprehensive income.
Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes. Deferred tax is calculated at the income tax rates which are expected to apply in the
period when the liability is settled or the asset is realized, based on the laws which have been
enacted or substantially enacted at the balance sheet date. The deferred tax is charged through
the income statement except when it relates to other comprehensive income items. No deferred
tax is recognized related to assets and liabilities, including vessels which are subject to tonnage
tax.
Income tax balances
The expected income tax payable on the taxable profits for the year is classified as current tax in
the balance sheet. Income taxes expected to fall due after more than one year are classified as
non-current liabilities or assets in the balance sheet. Income tax is measured using tax rates
enacted or substantially enacted at the balance sheet date and includes any adjustment to tax
payable in respect of previous years. Current and non-current income tax balances are not
discounted.
NOTE 9 – INTANGIBLE ASSETS
USDm
2024
2023
2022
GOODWILL
Cost:
Balance as of 01 January
13.2
13.2
11.4
Exchange rate adjustments
-0.1
—
—
Additions from business combinations
—
—
1.8
Balance as of 31 December
13.1
13.2
13.2
Impairment:
Balance as of 01 January
11.4
11.4
11.4
Balance as of 31 December
11.4
11.4
11.4
Carrying amount
1.7
1.8
1.8
The opening balance in 2022 on goodwill cost and impairment relates to the reverse acquisition of TORM A/S in
2015, which was impaired in 2016. The goodwill addition in 2022 of USD 1.8m relates to the acquisition of
Marine Exhaust Technology A/S, which is allocated to the Marine Engineering cash-generating unit. Please refer
to note 34 for further reference on acquisition and note 12 for further reference on impairment testing.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
220
NOTE 9 - continued
USDm
2024
2023
2022
OTHER INTANGIBLE ASSETS
Cost:
Balance as of 01 January
2.8
2.3
—
Exchange rate adjustments
—
—
0.2
Additions
1.1
0.5
0.6
Additions from business combinations
—
—
1.2
Transfer from other items
—
—
0.3
Balance as of 31 December
3.9
2.8
2.3
Amortization:
Balance as of 01 January
1.0
0.4
—
Amortization for the year
0.9
0.6
0.3
Transfer from other items
—
—
0.1
Balance as of 31 December
1.9
1.0
0.4
Carrying amount
2.0
1.8
1.9
Accounting Policies
Goodwill
Goodwill is measured as the excess of the cost of the business combination over the fair value of
the acquired assets, liabilities, and contingent liabilities and is recognized as an asset under
intangible assets. For each business combination, TORM elects whether to measure the non-
controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related costs are expensed as incurred and included in
administrative expenses. Goodwill is not amortized as it is considered to have an indefinite useful
life, but the recoverable amount of goodwill is assessed annually. For impairment testing purposes,
goodwill is on initial recognition allocated to the cash generating unit expected to benefit from the
synergies of the combination. If the recoverable amount of the cash generating unit is less than
the carrying amount of the unit, the impairment loss is first allocated to reduce the carrying
amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on
the basis of the carrying amount of each asset in the unit. An impairment loss for goodwill is not
reversed in a subsequent period.
Other Intangible Assets
Other intangible assets consist of software as well as scrubber test facility development costs and
customer list acquired in connection with the Marine Exhaust Technology A/S acquisition. Other
intangible assets are measured at cost less accumulated amortization and impairment losses.
Other intangible assets are considered as having finite useful lives and are amortized on a straight-
line basis over:
•
Software: 3 years
•
Scrubber test facility: 2 years
•
Customer list: 7 years
NOTE 10 – TANGIBLE FIXED ASSETS
USDm
2024
2023
2022
LAND AND BUILDINGS
Cost:
Balance as of 01 January
14.6
12.0
10.9
Exchange rate adjustment
-0.2
-0.2
-0.3
Additions
5.6
4.4
0.3
Additions from business combinations
—
—
1.1
Disposals
-2.4
-1.6
—
Balance as of 31 December
17.6
14.6
12.0
Depreciation:
Balance as of 01 January
9.1
8.2
6.1
Exchange rate adjustment
0.2
—
-0.2
Disposals
-2.3
-1.6
—
Depreciation for the year
2.5
2.5
2.3
Balance as of 31 December
9.5
9.1
8.2
Carrying amount as of 31 December
8.1
5.5
3.8
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
221
NOTE 10 - continued
USDm
2024
2023
2022
VESSELS AND CAPITALIZED DRY-DOCKING
Cost:
Balance as of 01 January
2,622.1
2,421.2
2,443.3
Additions
792.7
476.0
77.2
Disposals
-20.7
-31.9
-14.2
Transferred from prepayments
197.5
40.6
55.1
Transferred to assets held for sale
-90.7
-283.8
-140.2
Balance as of 31 December
3,500.9
2,622.1
2,421.2
Depreciation:
Balance as of 01 January
536.3
543.8
475.0
Disposals
-20.7
-31.9
-14.2
Depreciation for the year
186.7
143.7
133.7
Transferred to assets held for sale
-41.7
-119.3
-50.7
Balance as of 31 December
660.6
536.3
543.8
Impairment:
Balance as of 01 January
15.6
21.5
30.5
Impairment losses on tangible fixed assets¹⁾
—
—
2.7
Transferred to assets held for sale
-2.0
-5.9
-11.7
Balance as of 31 December
13.6
15.6
21.5
Carrying amount as of 31 December
2,826.7
2,070.2
1,855.9
¹⁾ For additional information regarding impairment considerations, please refer to Note 12
Included in the carrying amount for “Vessels and capitalized dry-docking” are capitalized dry-
docking costs in the amount of USD 108.2m (2023: USD 75.1m, 2022: USD 50.1m).
Included in the carrying amount for “Vessels and capitalized dry-docking” are vessels on time
charter leases (as lessor) in the amount of USD 395.5m (2023: 169.8m, 2022: 13.7m). Please
refer to Note 23 for expected redelivery of the vessels.
In 2024 TORM took delivery of 19 (2023: 5, 2022: 0) vessels in connection with partly share-
based transactions for a total purchase price of USD 864.5m (2023: USD 173.0m, 2022: 0.0m),
of which USD 86.0m was paid in 2023. The fair value of the vessels is based on the market
approach which considers the valuations from two internationally acknowledged shipbrokers with
appropriate qualifications and recent experience in the valuation of vessels. The shipbrokers’
primary input is deadweight tonnage, yard, and age of the vessel. The fair value assumes that the
vessels are in good and seaworthy condition and with prompt, charter-free delivery.
NOTE 10 - continued
USDm
2024
2023
2022
PREPAYMENTS ON VESSELS
Cost:
Balance as of 01 January
86.0
—
12.0
Additions
111.5
126.6
43.1
Transferred to vessels
-197.5
-40.6
-55.1
Balance as of 31 December
—
86.0
—
Carrying amount as of 31 December
—
86.0
—
USDm
2024
2023
2022
OTHER PLANT AND OPERATING EQUIPMENT
Cost:
Balance as of 01 January
11.2
10.5
9.3
Exchange rate adjustment
-0.1
—
-0.2
Additions
1.3
1.3
0.8
Additions from business combinations
—
—
1.6
Disposals
-6.5
-0.6
-0.7
Transfers
—
—
-0.3
Balance as of 31 December
5.9
11.2
10.5
Depreciation:
Balance as of 01 January
6.8
4.9
3.0
Exchange rate adjustment
-0.1
—
-0.2
Disposals
-5.9
-0.6
-0.6
Depreciation for the year
1.8
2.5
2.8
Transfers
—
—
-0.1
Balance as of 31 December
2.6
6.8
4.9
Carrying amount as of 31 December
3.3
4.4
5.6
For information on assets provided as collateral security, please refer to Note 21. Please refer to
Note 12 for information on impairment testing.
The depreciation expense related to “Other plant and operating equipment” of USD 1.8m relates
to “Administrative expense” (2023: USD 2.5m, 2022: USD 2.8m). Depreciation and impairment
losses on tangible fixed assets on “Vessels and capitalized dry-docking” relate to operating
expenses.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
222
NOTE 10 - continued
Accounting Policies
Vessels
Vessels consist of owned vessels and vessels financed via sale and leaseback transactions.
Vessels are measured at cost less accumulated depreciation and accumulated impairment losses.
Costs comprise acquisition costs and costs directly related to the acquisition up until the time
when the asset is ready for use, including interest expenses incurred during the period of
construction. In partly share-based acquisitions, vessels are measured at fair value at the delivery
date, where the purchase price is compared to valuations from two internationally acknowledged
shipbrokers with appropriate qualifications and recent experience in the valuation of vessels and
adjusted if a material difference is identified. All major components of vessels (scrubbers, etc.)
except for dry-docking costs are depreciated on a straight-line basis to the estimated residual
value over their estimated useful life. Different drivers such as TORM’s short and long-term
climate targets, the revised IMO’s Green House Gas Strategy, and other new regulation and
policies with increased focus on carbon reduction on both short and long-term impact the
determination of the estimated useful life. Considering the different drivers, TORM estimates the
useful life to be 25 years for newbuildings - in line with previous years and with what is used by
other shipowners with comparable tonnage. Depreciation is based on costs less the estimated
residual value. Residual value is estimated as the lightweight tonnage of each vessel multiplied by
the recycling prices per ton. TORM has completed phasing in green recycling prices in the
calculation of residual values by applying a weighted average of green recycling and conventional
recycling prices, while using a 3-year average to limit volatility. The useful life and the residual
value of the vessels are reviewed at least at each financial year-end based on market conditions,
regulatory requirements, and TORM’s business plans.
TORM also evaluates the carrying amounts to determine if events have occurred which indicate
impairment and would require a modification of the carrying amounts at the reporting date.
Prepayment on vessels is measured at costs incurred.
Dry-docking
Approximately every 24 and 60 months, depending on the nature of work and external
requirements, the vessels are required to undergo planned dry-dockings for replacement of certain
components, major repairs, and major maintenance of other components, which cannot be carried
out while the vessels are operating. These dry-docking costs are capitalized and depreciated on a
straight-line basis over the estimated period until the next dry-docking. The residual value of such
components is estimated at nil. The useful life of the dry-docking costs is reviewed at least at each
financial year-end based on market conditions, regulatory requirements, and TORM’s business
plans. A portion of the cost of acquiring a new vessel is allocated to the components expected to
be replaced or refurbished at the next dry-docking. Depreciation thereof is carried over the period
until the next dry-docking. For newbuildings, the initial dry-docking asset is estimated based on
the expected costs related to the first-coming dry-docking, which again is based on experience
and history of similar vessels. For second-hand vessels, a dry-docking asset is also segregated and
capitalized separately, taking into account the normal docking intervals of the vessels.
At subsequent dry-dockings, the costs comprise the actual costs incurred at the dry-docking yard.
Dry-docking costs may include the cost of hiring crews to carry out replacements and repairs, the
cost of parts and materials used, the cost of travel, lodging and supervision of Company personnel
as well as the cost of hiring third-party personnel to oversee a dry-docking. Dry-docking activities
include, but are not limited to, the inspection, service on turbocharger, replacement of shaft seals,
service on boiler, replacement of hull anodes, applying of anti-fouling and hull paint, steel repairs
as well as refurbishment and replacement of other parts of the vessel.
NOTE 10 - continued
Prepayments on vessels
Prepayments consist of prepayments related to the purchase of second-hand vessels not yet
delivered and to newbuilding contracts for vessels not yet delivered which also include the share of
borrowing costs directly attributable to the acquisition of the underlying vessel. When a vessel is
delivered, the prepaid amount is reallocated to the financial statement line “Vessels and
capitalized dry-docking”.
Land and buildings and other plant and operating equipment
Land and buildings and other plant and operating equipment consist of leaseholds regarding office
buildings, leasehold improvements, company cars, IT equipment, and software and is measured at
historical cost less accumulated depreciation and any impairment loss. Any subsequent cost is
included in the asset’s carrying amount or recognized as a separate asset only when it is probable
that future economic benefits are associated with the item and the cost of the item can be
measured reliably. Depreciation is based on the straight-line method over the estimated useful life
of the assets. The current estimates are:
•
Land and buildings
•
Office buildings: Over the shorter of the remaining leasing term and the estimated useful life
•
Leasehold improvements: Over the shorter of the remaining leasing term and the estimated
useful life
•
Other plant and operating equipment
•
Company cars: Over the lease term, typically 3 years
•
IT equipment: 3–5 years
•
Software: 3–5 years
•
Other equipment 3–15 years
The depreciation commences when the asset is available for use, i.e. when it is in the location and
condition necessary for it to be capable of operating in the manner intended by the Management.
For a right-of-use asset, depreciation commences at the commencement date of the lease.
Assets held for sale
Assets are classified as held-for-sale if the carrying amount will be recovered principally through a
sales transaction rather than through continuing use. This condition is regarded as met only when
the asset is available for immediate sale in its present condition subject to terms which are usual
and customary for sales of such assets, and when its sale is highly probable. The Management
must be committed to the sale, which should be expected to qualify for recognition as a completed
sale within one year from the date of classification.
Assets held for sale mainly refer to vessels being sold and are measured at the lower of their
previous carrying amount and fair value less costs to sell. Gains are recognized on delivery to the
new owners in the income statement in the item “Profit from sale of vessels”. Anticipated losses
are recognized at the time when the asset is classified as held-for-sale in the item “Impairment
losses on tangible and intangible assets”.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
223
NOTE 11 – LEASING
TORM leases office buildings, some vehicles, and other administrative equipment. Except for
short-term leases and leases of low-value assets, each lease is reflected on the balance sheet as a
right-of-use asset with a corresponding lease liability. The right-of-use assets are included in the
financial statement line item in which the corresponding underlying assets would be presented if
they were owned. Please refer to Note 10.
As of 31 December 2024, TORM had recognized the following right-of-use assets:
USDm
Land and
buildings
Other plant
and
operating
equipment
Cost:
Balance as of 01 January 2024
14.6
1.5
Exchange rate adjustments
-0.2
—
Additions
5.6
—
Disposals
-2.4
-0.3
Balance as of 31 December 2024
17.6
1.2
Depreciation:
Balance as of 01 January 2024
9.1
0.7
Exchange rate adjustment
0.2
—
Disposals
-2.3
-0.3
Depreciation for the year
2.5
0.3
Balance as of 31 December 2024
9.5
0.7
Carrying amount as of 31 December 2024
8.1
0.5
NOTE 11 - continued
USDm
Land and
buildings
Other plant
and
operating
equipment
Cost:
Balance as of 01 January 2023
12.0
1.3
Exchange rate adjustments
-0.2
0.1
Additions
4.4
0.1
Disposals
-1.6
—
Balance as of 31 December 2023
14.6
1.5
Depreciation:
Balance as of 01 January 2023
8.2
0.4
Exchange rate adjustments
—
-0.1
Disposals
-1.6
—
Depreciation for the year
2.5
0.4
Balance as of 31 December 2023
9.1
0.7
Carrying amount as of 31 December 2023
5.5
0.8
USDm
Land and
buildings
Other plant
and
operating
equipment
Cost:
Balance as of 01 January 2022
10.9
0.7
Exchange rate adjustments
-0.3
—
Additions
0.3
0.1
Additions from business combinations
1.1
0.9
Disposals
—
-0.4
Balance as of 31 December 2022
12.0
1.3
Depreciation:
Balance as of 01 January 2022
6.1
0.5
Exchange rate adjustments
-0.2
—
Disposals
—
-0.3
Depreciation for the year
2.3
0.2
Balance as of 31 December 2022
8.2
0.4
Carrying amount as of 31 December 2022
3.8
0.9
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
224
NOTE 11 - continued
The table below describes the nature of the Group’s leasing activities by type of right-of-use
assets recognized on the balance sheet as of 31 December 2024:
Land and
buildings
Other plant
and
operating
equipment
No. of right-of-use assets leased
16
6
Range of remaining term
0 - 5 years
0 - 2 years
Average remaining lease term
2.7 years
2.1 years
No. of leases with extension options
12
6
No. of leases with options to purchase
0
1
No. of leases with termination options
12
8
Lease liabilities regarding right-of-use assets are included on the balance sheet under
“Borrowings”.
USDm
2024
2023
2022
Maturity analysis - contractual undiscounted cash flow
Less than one year
3.1
2.9
2.7
One to five years
7.2
4.7
2.6
Total undiscounted lease liabilities as of 31 December
10.3
7.6
5.3
Lease liabilities included under “Borrowings” as of 31
December
8.6
6.6
5.0
Non-current
6.4
4.1
2.5
Current
2.2
2.5
2.5
Extension and termination options are included in several leases in order to optimize operational
flexibility in terms of managing contracts. The lease term determined by TORM is the non-
cancellable period of a lease, together with any extension/termination options if these are/are not
reasonably certain to be exercised.
NOTE 11 – continued
Lease payments not recognized as a liability
TORM has elected not to recognize a lease liability for short-term leases (leases of an expected
term of 12 months or less) or for leases of low-value assets. Payments made under such leases are
expensed on a straight-line basis. The expenses relating to payments not recognized as a lease
liability are insignificant.
Cash outflow for leases
The total cash outflow for leases amounts to USD 3.6m (2023: USD 3.2m, 2022: USD 2.7m).
Accounting policies
TORM assesses whether a contract is or contains a lease at inception of the contract and
recognizes right-of-use assets and corresponding lease liabilities at the lease commencement
date, except for short-term leases and leases of low value. For these leases, TORM recognizes the
lease payments as an operating expense on a straight-line basis over the term of the lease.
Agreements to charter in vessels and to lease land and buildings and other plant and operating
equipment for which TORM substantially has the control are recognized on the balance sheet as
right-of-use assets and initially measured at cost, which comprises the initial amount of the lease
liabilities adjusted for any lease payments made at or before the commencement date.
Subsequently the right-of-use assets are measured at cost less accumulated depreciation and
impairment losses. The right-of-use assets are depreciated and written down under the same
accounting policy as the assets owned by the Company or over the lease period depending on the
lease terms.
The corresponding lease obligation is recognized as a liability in the balance sheet under
“Borrowings” and initially measured at the present value of the lease payments that are not paid at
the commencement date. The Company uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable.
Subsequently lease liabilities are measured at amortized cost using the effective interest method,
where the lease liabilities are remeasured when there is a change in future lease payments.
Leases to charter out vessels are classified as operating leases as the leases are short-term in
nature and usually less than one year. Chartered-out vessels are presented as part of Vessels and
capitalized dry-docking. Please refer to Note 6. The lease income is recognized in the income
statement on a straight-line basis over the lease term.
Following a sale transaction, for agreements to immediately charter in the related vessels (sale and
leaseback) but for which TORM maintains substantially all the risks and rewards incidental to
economic ownership including repurchase options at lower value that the initial sales price, the
proceeds received are presented as a financial liability in “Borrowings”. No gain or loss is recorded,
and the asset remains recognized on the balance sheet under Vessels and capitalized dry-docking.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
225
NOTE 12 – IMPAIRMENT TESTING
The Management of TORM has assessed that TORM has two CGUs being the Main Fleet and the
Marine Engineering cash-generating unit, following the acquisition of Marine Exhaust Technology
A/S in 2022 and the disposal of the two remaining Handysize vessel in 2022.
The Main Fleet is comprised of TORM’s LR1, LR2 and MR vessels, which are operated collectively
as a combined internal pool, employed principally in the spot market and actively managed to meet
the needs of our customers in that market, particularly regarding the location of vessels meeting
required specifications. All vessels in the Main Fleet can handle multiple sizes of refined oil cargos
and sail all seas and oceans, over both short and long distances. Given the technical specifications
and capacity of the vessels, the Main Fleet is relatively homogenous with a very high degree of
interoperability. The Main Fleet includes the 2021 acquired MR vessels with chemical trading
capability, which are operated as all other product tanker vessels.
The Marine Engineering segment represent a single CGU because cash inflows are generated
independent of the cash inflows from the Main Fleet from serving the existing external customer
base of the Marine Engineering segment.
As of 31 December 2024, the Management tested the carrying amount of Marine Engineering
investment for impairment as further set out below.
Tanker Segment
As of 31 December 2024, the Management has assessed indicators of impairment that include,
but are not limited to, broker vessel values, time charter rates, weighted average cost of capital,
any other adverse impacts from current economic, environmental, and geopolitical uncertainty, as
well as the carrying amount of the net assets against the market capitalization. Vessel values from
two internationally recognized shipbrokers were on average 26.0% above the carrying value of the
vessels in the Main Fleet CGU, supporting the carrying amount. Consequently, the Management
did not determine the recoverable amount of the CGU as no indicators were identified.
As of 31 December 2023 and 31 December 2022, the assessment of the recoverable amount of
the Main Fleet was based on the fair value less cost of disposal.
Recoverable amount
Excess values (recoverable
amount less carrying amount) ¹⁾
2024
2023
2022
2024
2023
2022
CGU
USDm
USDm
USDm
USDm
USDm
USDm
Main Fleet ²⁾
N/A 3,495.0
2,647.0
N/A
952.1
784.0
Total
N/A 3,495.0
2,647.0
N/A
952.1
784.0
¹⁾ Included in the excess value is the outstanding installments for purchased not delivered vessels.
²⁾ No impairment losses and reversals was incurred in 2024, 2023 and 2022.
NOTE 12 - continued
31 December 2024
As noted above, the recoverable amount of the Main Fleet CGU was not determined as no
indicators of impairment were identified. Additionally, no impairment was recognized during 2024
in connection with disposal of individual vessels as set out in Note 10.
31 December 2023
As of 31 December 2023, the assessment of the recoverable amount of the Main Fleet is based on
the fair value less cost of disposal of the vessels. The recoverable amount of the Main Fleet as of
31 December 2023 amounts to USD 3,495m, and is based on the market approach which
considers the valuations from two internationally acknowledged shipbrokers with appropriate
qualifications and recent experience in the valuation of vessels. The shipbrokers’ primary input is
deadweight tonnage, yard, and age of the vessel. The fair value assumes that the vessels are in
good and seaworthy condition and with prompt, charter-free delivery. The fair value less costs of
disposal of the vessels is determined to be within Level 3 of the fair value hierarchy.
We have assessed the impact from climate changes and the potential adverse impact on vessel
values, however, no specific adjustments in this respect have been reflected in the impairment
testing of the Main Fleet given the recoverable amount has been based on the fair value less costs
of disposal. Further discussion can be found in the Audit Committee Report, page 102 and TCFD
pages 87-89 in the Annual Report for 2023. We continue to monitor the development closely, and
we continuously work on more specific plans for our ambition to have zero CO2 emissions from
operating our fleet by 2050, which may impact our impairment testing in the future.
Based on this review, the Management concluded that as of 31 December 2023 assets within the
Main Fleet were not impaired as fair value less costs of disposal exceeded the carrying amount by
USD 952m.
No impairment was recognized during 2023 in connection with disposal of individual vessels as set
out in Note 8 in the Annual Report 2023.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
226
NOTE 12 - continued
31 December 2022
As of 31 December 2022, the assessment of the recoverable amount of the Main Fleet is based on
the fair value less cost of disposal of the vessels. The recoverable amount of the Main Fleet as of
31 December 2022 amounts to USD 2,647m, and is based on the market approach which
considers the valuations from two internationally acknowledged shipbrokers with appropriate
qualifications and recent experience in the valuation of vessels. The shipbrokers’ primary input is
deadweight tonnage, yard, and age of the vessel. The fair value assumes that the vessels are in
good and seaworthy condition and with prompt, charter-free delivery. The fair value less costs of
disposal of the vessels is determined to be within Level 3 of the fair value hierarchy.
We have assessed the impact from climate changes and the potential adverse impact on vessel
values, however, no specific adjustments in this respect have been reflected in the impairment
testing of the Main Fleet given the recoverable amount has been based on the fair value less costs
of disposal. Further discussion can be found in the Audit Committee Report, page 91 and TCFD
pages 75-77 in the Annual Report for 2022. We continue to monitor the development closely, and
we continuously work on more specific plans for our ambition to have zero CO2 emissions from
operating our fleet by 2050, which may impact our impairment testing in the future.
Based on this review, the Management concluded that as of 31 December 2022 assets within the
Main Fleet were not impaired as fair value less costs of disposal exceeded the carrying amount by
USD 784m.
Impairments recognized during 2022 of USD 2.7m (2021: USD 4.6m) as set out in Note 8 of the
2022 Annual Report relate to the disposal of individual vessels during the year. The recoverable
amount of the vessels was based on fair value less costs of disposal, which amounted to USD
31.8m. The fair value was based on sales price less transaction costs (fair value hierarchy Level 2).
NOTE 12 - continued
Marine Engineering Segment
Marine Exhaust Technology A/S was acquired in 2022 which was also the first year the
impairment testing was performed.
31 December 2024
As of 31 December 2024, the assessment of the recoverable amount of the Marine Engineering
cash-generating unit is based on value in use. The result of the impairment test showed an excess
value of USD 28.6m compared to the carrying amount. No impairment of goodwill was recognized
as of 31 December 2024.
Key assumptions used in the determination of value in use
The value in use is calculated based on future cash flows using a five-year budget period from
2025-2029. The future cash flows are based on the budget for 2025, assuming no growth in
sales. Cost of goods sold is calculated using the gross margins from the 2025 budget. The gross
margins are assumed to be constant in the budget period. Operating costs are based on the 2025
budget and are being inflated in the forecast period with the assumed inflation rates of 2% - 3%
p.a. Cash levels are assumed constant in the forecast period, investments in non-current assets
are USD 0.2m in 2025 and zero afterwards, and lastly, leasing liabilities are assumed constant.
The terminal value extending beyond 2029 are based on a continuation of before mentioned
parameters.
The discount rate used in the value in use calculation was based on a Weighted Average Cost of
Capital (WACC) of 7.4% as of 31 December 2024. The WACC was calculated by using a standard
WACC model in which cost of equity, cost of debt and capital structure were the key parameters.
The impairment test was sensitive to reasonably possible changes in the key assumptions, which
may result in future impairments. These were related to the future development in sales across all
revenue segments. All other things being equal, the sensitivities to the value in use have been
assessed as follows:
•
An increase/decrease in the total sales of 10.0% from 2025 and onwards would result in an
increase/decrease in the value in use of USD 13.3m.
31 December 2023
As of 31 December 2023, the assessment of the recoverable amount of the Marine Engineering
cash-generating unit is based on value in use. The result of the impairment test showed an excess
value of USD 9.8m compared to the carrying amount. No impairment of goodwill was recognized
as of 31 December 2023.
Key assumptions used in the determination of value in use
The value in use is calculated based on future cash flows using a five-year budget period from
2024-2028. The future cash flows are based on the budget for 2024, assuming no growth in
sales. Cost of goods sold is calculated using the gross margins from the 2024 budget. The gross
margins are assumed to be constant in the budget period. Operating costs are based on the 2024
budget and are being inflated in the forecast period with the assumed inflation rates of 2% - 3%
p.a. Cash levels are assumed constant in the forecast period, investments in non-current assets
are USD 0.1m in 2024 and zero afterwards, and lastly, leasing liabilities are assumed constant.
The terminal value extending beyond 2028 are based on a continuation of before mentioned
parameters.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
227
NOTE 12 - continued
The discount rate used in the value in use calculation was based on a Weighted Average Cost of
Capital (WACC) of 8.8% as of 31 December 2023. The WACC was calculated by using a standard
WACC model in which cost of equity, cost of debt and capital structure were the key parameters.
The impairment test was sensitive to reasonably possible changes in the key assumptions, which
may result in future impairments. These were related to the future development in sales across all
revenue segments. All other things being equal, the sensitivities to the value in use have been
assessed as follows:
•
An increase/decrease in the total sales of 10.0% from 2024 and onwards would result in an
increase/decrease in the value in use of USD 12.1m.
31 December 2022
As of 31 December 2022, the assessment of the recoverable amount of the Marine Engineering
cash-generating unit is based on value in use. The result of the impairment test showed an excess
value of USD 3.2m compared to the carrying amount. No impairment of goodwill was recognized
as of 31 December 2022.
Key assumptions used in the determination of value in use
The value in use is calculated based on future cash flows using a five-year budget period from
2023-2027. The future cash flows are based on the budget for 2023, assuming zero growth in
sales. Cost of goods sold is calculated using the gross margins from the 2023 budget. The gross
margins are assumed to be constant in the budget period. Operating costs are based on the 2023
budget and are being inflated in the forecast period with the assumed inflation rates of 2% - 3%
p.a. Cash levels are assumed constant in the forecast period, investments in non-current assets
are USD 0.3m in 2023 and zero afterwards, and lastly, leasing liabilities are assumed constant.
The terminal value extending beyond 2027 are based on a continuation of before mentioned
parameters.
The discount rate used in the value in use calculation was based on a Weighted Average Cost of
Capital (WACC) of 10.8% as of 31 December 2022. The WACC was calculated by using a standard
WACC model in which cost of equity, cost of debt and capital structure were the key parameters.
The impairment test was sensitive to reasonably possible changes in the key assumptions, which
may result in future impairments. These were related to the future development in sales across all
revenue segments. All other things being equal, the sensitivities to the value in use have been
assessed as follows:
•
An increase/decrease in the total sales of 10.0% from 2023 and onwards would result in an
increase/decrease in the value in use of USD 3.8m.
Accounting Policies
Impairment of assets
Non-current assets are reviewed at the reporting date to determine any indication of impairment
including a significant decline in either the assets’ market value, increase in market rates of return,
or in the cash flows expected to be generated by the fleet. At least annually, or if impairment
indicator(s) exists, an impairment test on a CGU level will be performed. A CGU is determined as
the smallest group of assets that generates independent cash inflows. An asset/CGU is impaired if
the recoverable amount is below the carrying amount.
NOTE 12 - continued
The recoverable amount of the CGU is estimated as the higher of fair value less costs of disposal
and value in use. The value in use is the present value of the future cash flows expected to be
derived from a CGU, utilizing a pre-tax discount rate that reflects current market estimates of the
time value of money and the risks specific to the unit for which the estimates of future cash flows
have not been adjusted. If the recoverable amount is less than the carrying amount of the cash
generating unit, the carrying amount is reduced to the recoverable amount.
The impairment loss is recognized immediately in the income statement. Where an impairment loss
subsequently reverses, the carrying amount of the CGU is increased to the revised estimate of the
recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined, had no impairment loss been recognized in prior years.
For the purpose of assessing impairment, assets, time charter and bareboat contracts are grouped
at the lowest levels at which impairment is monitored for internal management purposes.
NOTE 13 – LOAN RECEIVABLES
USDm
2024
2023
2022
Loan receivables
Cost:
Balance as of 01 January
4.7
4.7
4.7
Balance as of 31 December
4.7
4.7
4.7
Expected credit loss:
Balance as of 01 January
0.2
0.1
0.1
Additions during the year
—
0.1
—
Balance as of 31 December
0.2
0.2
0.1
Carrying amount as of 31 December
4.5
4.5
4.6
The loans were issued as part of sale and lease back transactions in 2019 for two MR vessels. The
loans will mature in 2026 and have an interest rate applicable fixed at 1% per annum.
Expected credit loss is recognized based on the 12-month expected credit losses.
Accounting Policies
Loan receivables
Loan receivables are initially recognized on the balance sheet as fair value less transaction costs.
After initial recognition, loan receivables are measured at amortized cost. Amortized cost is
defined as the amount initially recognized reduced by principal repayments and allowances for the
expected credit loss (ECL).
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
228
NOTE 14 – INVENTORIES
USDm
2024
2023
2022
Bunkers
46.1
49.3
52.8
Lubeoil
10.9
8.5
8.3
EU Emission Allowances
5.6
0.2
—
Other
5.8
3.7
10.9
Balance as of 31 December
68.4
61.7
72.0
During 2024, bunker inventories of USD 278.2m (2023:USD 272.4m, 2022: USD 295.5m) were
recognized as an expense in Port expenses, bunkers, commissions, and other cost of goods and
services sold.
During 2024, lubeoil inventories of USD 8.1m (2023: USD 7.5m, 2022: USD 6.4m) were
recognized as an expense in Operating expenses.
During 2024, EU Emission Allowances inventories of USD 5.0m (2023: USD 0.0m, 2022: USD
0.0m) were recognized as an expense in Port expenses, bunkers, commissions, and other cost of
goods and services sold.
During 2024, other inventories of USD 9.3m (2023: USD 22.7m, 2022: USD 0.6m) were
recognized as an expense in Port expenses, bunkers, commissions, and other cost of goods and
services sold.
Accounting Policies
Inventories consist of bunkers, lubeoil, EU Emission Allowances and other inventories.
Bunkers, lubeoil and other inventories are stated at the lower of cost in accordance with the FIFO-
principle and net realizable value. Cost of bunkers and lubeoil includes expenditure incurred in
acquiring bunkers and lubeoil including delivery costs less discounts. The cost of other inventories
consists of raw materials and components based on direct costs, direct payroll costs and a
proportionate share of indirect production costs. Indirect production costs include the
proportionate share of capacity costs directly relating hereto, which are allocated on the basis of
the normal capacity of the production facility .
At 01 January 2024, the EU Emission Trading System was extended to maritime transport
emissions, where shipping companies must surrender allowances to cover emissions related to EU
port calls. EU Emission Allowances are purchased in connection with TORM's cargo transportation
only, similar to a tax on purchase of bunkers. TORM has no intention of selling or trading the
allowances.
In the absence of any specific IFRS standards or IFRIC interpretations on accounting for emission
rights of carbon dioxide generated as part of the EU Emission Trading scheme (EU ETS), and
considering the above, EU Emission Allowances are treated similar to bunker inventories. The
following policies are applied for EU Emission Allowances:
•
The emission rights are considered as a part of the bunker consumption for the delivery of
transportation services and thus recognized as inventories at their acquisition cost.
•
As these allowances are utilized during the voyage, the carrying amount of these allowances
are recognized as an expense against a liability in the period in which the associated revenue is
recognized.
NOTE 15 – TRADE RECEIVABLES
USDm
2024
2023
2022
Analysis as of 31 December of trade receivables:
Gross trade receivables:
Not due
73.0
97.5
122.3
Due < 30 days
32.0
42.6
52.1
Due between 30 and 180 days
82.6
62.4
76.8
Due > 180 days
6.3
19.2
18.9
Total gross
193.9
221.7
270.1
Allowance for expected credit loss
10.0
10.7
10.6
Total net
183.9
211.0
259.5
The Management makes allowances for expected credit losses based on “the simplified approach”
according to IFRS 9 to provide for expected credit losses, which permits the use of the lifetime
expected loss provision for all trade receivables.
As a result of improved collection efforts and decreased losses on trade receivables, the
Management reassessed the accounting estimates included in the expected credit loss allowance
matrix during 2024. The outcome of the reassessment resulted in an updated allowance matrix,
reversing allowances of USD 5.9m in 2024.
Expected credit loss for receivables overdue 180 days or less is 0%-3%, depending on the
category of the receivable. Expected credit loss for receivables overdue more than 180 days is
10%-100%, depending on the category of the receivable. Expected credit loss for receivables
overdue more than one year is 50%-100%, also depending on the category of the receivable. For
all “legal” cases, allowances of 100% are made.
Movements in provisions for impairment of trade receivables during the year are as follows:
USDm
2024
2023
2022
Allowance for expected credit loss
Balance as of 01 January
10.7
10.6
4.7
Provisions for the year
5.8
3.3
6.5
Provisions reversed during the year
-6.5
-3.2
-0.6
Balance as of 31 December
10.0
10.7
10.6
Allowance for expected credit loss of trade receivables has been recognized in the income
statement under “Port expenses, bunkers, commissions, and other costs of goods sold”.
Allowance for expected credit loss of trade receivables is calculated using an aging factor as well
as specific customer knowledge and is based on a provision matrix on days past due.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
229
NOTE 15 - continued
Accounting Policies
Receivables
Outstanding trade receivables and other receivables which are expected to be realized within 12
months from the balance sheet date are classified as “Trade receivables” or “Other receivables”
and presented as current assets.
Receivables are, at initial recognition, measured at their transaction price less allowance for
expected credit losses over the lifetime of the receivable and are subsequently measured at
amortized cost adjusted for changes in expected credit losses. Derivative financial instruments
included in other receivables are measured at fair value.
Expected credit losses
Expected credit losses are, at initial recognition, determined using an ageing factor as well as a
specific customer knowledge such as customers’ ability to pay, considering historical information
about payment patterns, credit risks, customer concentrations, customer creditworthiness as well
as prevailing economic conditions. The estimates are updated subsequently, and if the debtor’s
ability to pay is becoming doubtful, expected credit losses are calculated on an individual basis.
When there are no reasonable expectations of recovering the carrying amount, the receivable is
written off in part or entirely.
NOTE 16 – OTHER RECEIVABLES
USDm
2024
2023
2022
Derivative financial instruments
33.0
37.6
55.3
Escrow accounts
1.4
14.9
14.9
Vessel sale
18.9
—
—
Other
6.3
8.0
3.8
Balance as of 31 December
59.6
60.5
74.0
No significant other receivables are past due or credit impaired.
The carrying amount is a reasonable approximation of fair value due to the short-term nature of
the receivables. Please refer to Note 26 for further information on fair value hierarchies.
NOTE 17 – PREPAYMENTS
USDm
2024
2023
2022
Prepaid operating expenses
1.7
1.2
—
Prepaid bareboat hire
2.8
0.8
3.0
Prepaid customer contract assets
2.4
2.5
3.0
Other prepayments
5.3
10.7
4.4
Balance as of 31 December
12.2
15.2
10.4
NOTE 18 – COMMON SHARES AND TREASURY SHARES
Common shares
2024
2023
2022
Nominal value
per share
(USD)
Number of
shares
Number of
shares
Number of
shares
A-shares
0.01
97,814,051
86,225,684
82,311,299
B-shares
0.01
1
1
1
C-shares
0.01
1
1
1
Total
97,814,053
86,225,686
82,311,301
During the year, the share capital was increased by 11,588,367 A-shares with a nominal value of
USD 115,883.67. The total amount including share premium amounted to USD 331.7m. USD
319.2m was non-cash increases in conjunction with the acquisition of the 19 vessels, and USD
12.5m was contributed in cash in connection with exercises of Restricted Share Units.
During 2023, the share capital was increased by 3,914,385 A-shares with a nominal value of USD
39,143.90.The total amount including share premium amounted to USD 92.7m. USD 86.5m was
a non-cash increase in conjunction with the acquisition of the five vessels, and USD 6.2m was
contributed in cash in connection with exercises of Restricted Share Units.
During 2022, the share capital was increased by 1,078,030 A-shares with a nominal value of USD
10,780.30 in connection with exercise of Restricted Share Units leading to a total cash
contribution of USD 8.0m.
The A-shares are listed on Nasdaq in Copenhagen and Nasdaq in New York and are publicly
available for trading. Each A-share carries one vote at the General Meetings and gives the
shareholders the right to dividends, liquidation proceeds, or other distributions. The A-shares carry
no other rights or obligations. The B-share has one vote at the General Meetings, has no pre-
emption rights in relation to any issue of new shares of other classes, and carries no right to
receive dividends, liquidation proceeds, or other distributions from TORM.
The holder of the B-share has the right to elect one member to the Board of Directors (being the
Deputy Chairman), up to three alternates as well as one Board Observer. The B-share cannot be
transferred or pledged, except for a transfer to a replacement trustee.
The C-share represents 350,000,000 votes at the General Meetings in respect of certain
Specified Matters, including election of members to the Board of Directors (including the
Chairman, but excluding the Deputy Chairman) and certain amendments to the Articles of
Association proposed by the Board of Directors. The C-share has no pre-emption rights in relation
to any issue of new shares of other classes and carries no right to receive dividends, liquidation
proceeds, or other distributions from TORM. The C-share cannot be transferred or pledged, except
to an affiliate of Njord Luxco.
The B-share and the C-share are redeemable by TORM in the event that (i) TORM has received
written notification from Njord Luxco (or its affiliates) that Njord Luxco and its affiliates (as defined
in the Articles of Association) hold less than 1/3 in aggregate of TORM’s issued and outstanding
shares, (ii) 5 business days have elapsed from the Board of Directors’ receipt of such written
notice either without any Board member disputing such notice or with at least 2/3 of the Board
members confirming such notice, and (iii) both of the B-share and the C-share are redeemed at
the same time.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
230
NOTE 18 – continued
Treasury shares
2024
2023
2022
Number of shares ('000)
Balance as of 01 January
493.4
493.4
493.4
Balance as of 31 December
493.4
493.4
493.4
2024
2023
2022
Nominal value USD '000
Balance as of 01 January
4.9
4.9
4.9
Balance as of 31 December
4.9
4.9
4.9
2024
2023
2022
Percentage of share capital
Balance as of 01 January
0.6 %
0.6 %
0.6 %
Dilution due to capital increases
-0.1 %
— %
— %
Balance as of 31 December
0.5 %
0.6 %
0.6 %
As of 31 December 2024, the Company's holding of treasury shares represented 493,371 shares
(2023: 493,371 shares, 2022: 493,371 shares) of USD 0.01 each at a total nominal value of USD
0.0m (2023: USD 0.0m, 2022: USD 0.0m) and a market value of USD 9.6m (2023: USD 14.9m,
2022: USD 14.0m).
We plan to solicit the approval of our shareholders and apply for a court order from the Companies
Court in England and Wales to effect the cancellation of 493,371 treasury shares that we
purchased in share buybacks on Nasdaq Copenhagen A/S in 2016 and 2020. The cancellation of
these treasury shares is intended to rectify the fact that these repurchases were not made in
accordance with the UK Companies Act, which distinguishes between buybacks effected through
“market purchases” and “off-market purchases.” We effected these buybacks under “market
purchase” resolutions; however, for purposes of the UK Companies Act, Nasdaq Copenhagen A/S
is an overseas exchange, making it ineligible for buybacks conducted under the “market purchase”
provisions. The cancellation of the affected treasury shares will not affect the rights attached to,
or result in any other change to, any of our other shares (or their nominal value).
Restricted Share Units
Key management participates in an LTIP program, which gives the right to buy TORM shares at a
predefined share price. Please refer to note 5.
NOTE 19 – OTHER LIABILITIES
USDm
2024
2023
2022
Accrued operating expenses
22.7
17.8
10.5
Accrued interest
11.3
2.1
3.6
Wages and social expenses
19.0
22.4
15.1
Accrued administration expenses
2.6
1.9
1.5
Derivative financial instruments
2.5
2.8
1.9
EU Emission Allowances
5.2
—
—
Other
0.9
1.2
1.5
Balance as of 31 December
64.2
48.2
34.1
Hereof non-current
2.9
3.0
3.0
Hereof current
61.3
45.2
31.1
The carrying amount is a reasonable approximation of fair value due to the short-term nature of
the payable. Please refer to note 26 for further information on fair value hierarchies.
Accounting Policies
Other liabilities are generally measured at amortized cost. Derivative financial instruments
included in other liabilities are measured at fair value.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
231
NOTE 20 – EFFECTIVE INTEREST RATE, OUTSTANDING BORROWINGS
2024
2023
2022
USDm
Fixed/
floating
Maturity
Effective
interest¹⁾
Carrying
value²⁾
Maturity
Effective
interest¹⁾
Carrying
value²⁾
Maturity
Effective
interest¹⁾
Carrying
value²⁾
Borrowings
Syndicate Facility⁵⁾
Floating
2029
7.2 %
160.0
2028
6.6 %
224.0
2026
7.6 %
143.8
Bond Facility⁵⁾
Fixed
2029
9.9 %
200.0
—
—
—
—
—
—
DSF Facility⁵⁾
Floating
2029
6.4 %
123.8
2029
5.9 %
140.1
2027
6.7 %
201.8
DSF Facility 2⁵⁾
Floating
2029
6.2 %
92.0
2029
5.8 %
52.5
—
—
—
DSF Facility 3⁵⁾
Floating
2031
6.2 %
29.8
—
—
—
—
—
—
HCOB Facility⁵⁾
Floating
2031
7.4 %
87.5
2029
7.8 %
31.2
2025
9.9 %
42.4
ING⁵⁾
Floating
2029
6.4 %
51.4
2029
5.9 %
57.9
—
—
—
KFW Facility⁵⁾
Floating
2032
7.1 %
31.8
2032
6.4 %
34.8
2032
7.1 %
37.9
BoComm 2 (USD)³⁾
Floating
2032
7.6 %
62.1
2032
7.0 %
66.7
2031
7.4 %
71.3
BoComm 3 (USD)³⁾
Floating
2029
7.9 %
73.5
2029
7.3 %
82.2
2029
7.8 %
90.9
CDBL³⁾
Fixed
2032
6.1 %
136.5
2032
5.7 %
149.0
2029
5.8 %
160.8
Springliner (USD)³⁾
Fixed
2026
4.8 %
25.0
2026
4.8 %
27.9
2026
4.8 %
30.7
CMBFL³⁾
Fixed
2033
5.8 %
159.5
2033
5.7 %
195.8
2033
4.9 %
37.3
Other credit facilities
Floating
2026
4.3 %
1.8
2026
4.7 %
4.8
2026
3.1 %
4.9
CEXIM (USD)⁵⁾
Floating
—
—
—
—
— %
—
2030
7.0 %
41.1
HCOB Facility 2⁵⁾
Floating
—
—
—
—
— %
—
2026
8.3 %
21.1
BoComm 1 (USD)³⁾
Floating
—
—
—
—
— %
—
2025
8.7 %
49.4
Eifuku (USD)³⁾
Floating
—
—
—
—
— %
—
2026
7.9 %
20.9
Showa (USD)³⁾
Floating
—
—
—
—
— %
—
2024
8.6 %
18.7
Weighted average effective interest rate⁴⁾
7.1 %
6.2 %
7.1 %
Total borrowings
1,234.7
1,066.9
973.0
Borrowing costs
-17.0
-13.9
-11.1
Right-of-use lease liabilities
8.6
6.6
5.0
Total
1,226.3
1,059.6
966.9
Hereof non-current
1,061.0
886.9
849.8
Hereof current
165.3
172.7
117.1
¹⁾ Effective interest rate includes deferred borrowing costs.
²⁾ Because of the floating interest rate, the carrying value of the Group's borrowings is approximately equal to the fair value except for fixed rate borrowings, where the fair value amounts to USD 544.8m (2023: USD 402.8m,
2022: USD 223.5m (compared to a total carrying value as of 31 December 2024 of USD 521.0m, 2023: USD 372.7m, 2022: USD 233.7m).
³⁾ Lease debt recognized under sale and leaseback arrangement with repurchase options (accounted for as finance transactions).
⁴⁾ Please refer to Note 24 for average interest rate including hedges.
⁵⁾ Facility with financial covenant. Total carrying value amounts to USD 776.3m as of 31 December 2024 (2023: USD 540.5m, 2022: USD 488.1m).
In addition to the facilities above, TORM had undrawn credit facilities of USD 323.6m as of 31 December 2024. Please refer to Note 2 for further information on the Company’s liquidity and capital
resources and Notes 24 and 25 for further information on interest rate swaps and financial risks.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
232
NOTE 20 - continued
The following table summarizes the reconciliation of liabilities arising from financing activities:
Cash movements
Non-cash movements
USDm
Opening
balance
as of
01 January
2024
Borrowings Repayments
Business
combin-
ations
Other
changes
End balance
as of 31
December
2024
Borrowings
1,059.6
419.4
-256.3
—
3.6
1,226.3
Total
1,059.6
419.4
-256.3
—
3.6
1,226.3
Cash movements
Non-cash movements
USDm
Opening
balance
as of
01 January
2023
Borrowings Repayments
Business
combin-
ations
Other
changes
End balance
as of 31
December
2023
Borrowings
966.9
676.4
-585.4
—
1.7
1,059.6
Total
966.9
676.4
-585.4
—
1.7
1,059.6
Cash movements
Non-cash movements
USDm
Opening
balance
as of
01 January
2022
Borrowings Repayments
Business
combin-
ations
Other
changes
End balance
as of 31
December
2022
Borrowings
1,135.4
96.3
-275.2
7.9
2.5
966.9
Total
1,135.4
96.3
-275.2
7.9
2.5
966.9
Accounting Policies
Borrowings consist of mortgage debt, bank loans, bonds and lease liabilities.
Borrowings are initially measured at fair value less transaction costs. Mortgage debt and bank
loans are subsequently measured at amortized cost. This means that the difference between the
net proceeds at the time of borrowing and the nominal amount of the loan is recognized in the
income statement as a financial expense over the term of the loan applying the effective interest
method.
When terms of existing financial liabilities are renegotiated, or other changes regarding the
effective interest rate occur, TORM performs a test to evaluate whether the new terms are
substantially different from the original terms. If the new terms are substantially different from the
original terms, TORM accounts for the change as an extinguishment of the original financial
liability and the recognition of a new financial liability.
NOTE 21 – COLLATERAL SECURITY FOR BORROWINGS
The total carrying amount of vessels which have been provided as security for borrowings amounts
to USD 2,827m as of 31 December 2024 (2023: USD 2,070m, 2022: USD 1,856m), including
transferred ownership under sale and leaseback arrangements accounted for as financing
transactions, where the vessels are not derecognized and where vessels are provided as security
for lease debt.
USD 0.7m (2023: USD 0.7m, 2022: USD 0.7m) in floating charge in Marine Exhaust Technology
A/S have been provided as security for loans to other lenders.
USD 0.3m (2023: USD 0.4m, 2022: USD 0.4m) in floating charge in Marine Exhaust Technology
A/S have been provided as security for loans to banks.
In 2024 0 shares (2023: 10,500 shares, 2022: 10,500 shares) in ME Production A/S with a book
value of zero (2023: USD 2.1m, 2022: USD 2.1m) have been provided as security for loans to the
lenders of Marine Exhaust Technology A/S.
USD 6.2m (2023: USD 6.6m, 2022: USD 6.4m) in floating charge in ME Production A/S with a
book value of 7.4m (2023: USD 10.5m, 2022: USD 10.2m) have been provided as security for
loans to banks.
Please refer to Note 1 for further information.
NOTE 22 – GUARANTEE COMMITMENTS AND CONTINGENT LIABILITIES
The guarantee commitments of the Group are less than USD 0.1m (2023: USD 0.1m, 2022: USD
0.1m) and relate to guarantee commitments to Danish Shipping.
The Group is involved in certain other legal proceedings and disputes (refer to Note 31). It is the
Management's opinion that the outcome of these proceedings and disputes will not have any
material impact on the Group's financial position, results of operations, and cash flows.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
233
NOTE 23 – CONTRACTUAL RIGHTS AND OBLIGATIONS
The following table summarizes the Group's contractual obligations as of 31 December 2024.
USDm
2025
2026
2027
2028
2029
Thereafter
Total
Borrowings ¹⁾
167.9
166.2
132.8
118.1
488.2
170.1
1,243.3
Interest payments related to scheduled interest fixing
51.1
46.5
43.7
39.8
26.0
5.3
212.4
Estimated variable interest payments ²⁾
9.9
8.8
8.4
8.5
5.7
4.7
46.0
Committed scrubber installations ³⁾
11.9
1.1
7.9
2.1
—
—
23.0
Trade payables and other obligations
92.0
—
—
—
—
2.7
94.7
Total
332.8
222.6
192.8
168.5
519.9
182.8
1,619.4
The following table summarizes the Group's contractual obligations as of 31 December 2023.
USDm
2024
2025
2026
2027
2028
Thereafter
Total
Borrowings ¹⁾
174.9
148.0
148.4
112.0
120.0
370.2
1,073.5
Interest payments related to scheduled interest fixing
41.0
32.5
26.7
24.5
19.5
18.4
162.6
Estimated variable interest payments ²⁾
6.3
5.3
6.1
6.2
7.5
8.9
40.3
Secondhand vessel commitments
190.4
—
—
—
—
—
190.4
Committed scrubber installations ³⁾
23.6
—
2.0
8.1
2.0
—
35.7
Trade payables and other obligations
85.0
—
—
—
—
2.7
87.7
Total
521.2
185.8
183.2
150.8
149.0
400.2
1,590.2
The following table summarizes the Group's contractual obligations as of 31 December 2022.
USDm
2023
2024
2025
2026
2027
Thereafter
Total
Borrowings ¹⁾
119.8
130.0
127.2
185.9
161.7
253.4
978.0
Interest payments related to scheduled interest fixing
34.8
30.6
24.7
18.0
14.1
22.1
144.3
Estimated variable interest payments ²⁾
3.3
1.6
2.5
2.2
5.5
11.1
26.2
Committed scrubber installations ³⁾
17.3
1.1
—
—
—
—
18.4
Trade payables and other obligations
81.6
—
—
—
—
2.5
84.1
Total
256.8
163.3
154.4
206.1
181.3
289.1
1,251.0
¹⁾ The presented amounts to be repaid do not include directly related borrowing costs arising from the issuing of the loans of USD 17.0m (2023: USD 13.9m. 2022: USD 11.1m), which are amortized over the term of the loans.
Borrowing costs capitalized during the year amount to USD 7.3m (2023: USD 9.0m, 2022: USD 0.7m).
²⁾ Variable interest payments are estimated based on the forward rates for each interest period including hedging instruments.
³⁾ Commitments for pollution reduction installations
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
234
NOTE 23 - continued
TORM has contractual rights to receive future payments as lessor of vessels on time charter and bareboat charter to customers.
The following table summarizes the Group's contractual rights as of 31 December 2024.
USDm
2025
2026
2027
2028
2029
Thereafter
Total
Contractual rights - as lessor:
Charter hire income for vessels ⁵⁾
67.8
26.2
11.9
—
—
—
105.9
Total
67.8
26.2
11.9
—
—
—
105.9
The following table summarizes the Group's contractual rights as of 31 December 2023
USDm
2024
2025
2026
2027
2028
Thereafter
Total
Contractual rights - as lessor:
Charter hire income for vessels ⁵⁾
37.8
24.1
—
—
—
—
61.9
Total
37.8
24.1
—
—
—
—
61.9
The following table summarizes the Group's contractual rights as of 31 December 2022
USDm
2023
2024
2025
2026
2027
Thereafter
Total
Contractual rights - as lessor:
Charter hire income for vessels ⁵⁾
2.1
—
—
—
—
—
2.1
Total
2.1
—
—
—
—
—
2.1
⁵⁾ Charter hire income for vessels on time charter is recognized under "Revenue". During the years revenue from time charter amounted to 145.6m (2023: 43.8m, 2022: 64.7m).
The average period until redelivery of the vessels for the period ended 31 December 2024 was 1.8 years (2023: 1.6 years, 2022: 0.4 years).
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
235
NOTE 24 – DERIVATIVE FINANCIAL INSTRUMENTS
Please refer to Note 26 for further information on fair value hierarchies.
USDm
2024
2023
2022
Fair value of derivatives:
Derivative financial instruments regarding freight and
bunkers:
Forward freight agreements — fair value through profit
and loss
7.8
1.7
—
Bunker swaps — fair value through profit and loss
0.3
-0.2
—
Bunker swaps — hedge accounting
0.1
-0.5
—
Derivative financial instruments regarding interest and
currency exchange rate:
Forward exchange contracts — hedge accounting
-2.3
0.5
0.4
Interest rate swaps — hedge accounting
24.7
35.3
53.7
Fair value of derivatives as of 31 December
30.6
36.8
54.1
Derivative financial instruments are presented as below on the balance sheet:
USDm
Financial
assets
Financial
liabilities
2024
Offsetting financial assets and financial liabilities:
Gross amount
32.9
-2.3
Offsetting amount
—
—
Net amount presented in the balance sheet
32.9
-2.3
USDm
Financial
assets
Financial
liabilities
2023
Offsetting financial assets and financial liabilities:
Gross amount
37.7
-0.9
Offsetting amount
-0.1
0.1
Net amount presented in the balance sheet
37.6
-0.8
USDm
Financial
assets
Financial
liabilities
2022
Offsetting financial assets and financial liabilities:
Gross amount
54.5
-0.4
Offsetting amount
—
—
Net amount presented in the balance sheet
54.5
-0.4
NOTE 24 – continued
Derivative financial instruments assets are offset against derivative financial instruments liabilities
where the counterparty is identical, where TORM has legal right to offset and intends to settle on a
net basis..
Hedging of risks with derivative financial instruments is made with a ratio of 1:1 and where hedge
items can be a portion of exposure. Sources of ineffectiveness are mainly derived from differences
in timing and interest base rate. Any ineffective portions of the cash flow hedges are recognized in
the income statement as financial items. Value adjustments of the effective part of cash flow
hedges are recognized directly to other comprehensive income. Gains and losses on cash flow
hedges are transferred upon realization from the hedging reserve into the income statement.
FFAs are used to mitigate fluctuations in the freight rates of vessels with a duration of 0-24
months. The FFAs are not designated for hedge accounting.
Forward exchange contracts with a fair value of USD -2.3m (net loss) are designated as hedge
accounting relationships to hedge a part of TORM payments in 2025 regarding administrative and
operating expenses denominated in DKK with a notional value of DKK 348.9m (2023: DKK,
325.5m 2022: DKK 280.3m).
Interest rate swaps with a fair value of USD 24.7m (net gain) applying the USD Secured Overnight
Financing Rate ("SOFR") compounded in arrears are designated as hedge accounting relationships
to fix a part of TORM's interest payments during the period 2025-2032 with a notional value of
USD 498.7m (2023: USD 923.0m, 2022: USD 687.2m).
Bunker swaps with a fair value USD 0.1m (net gain) are designated as hedge accounting
relationships and are used to reduce the exposure to fluctuations in bunker prices for fixed
voyages denominated in MT with a notional value of MT 9,000 (2023: MT 9,600, 2022 MT 0).
At year-end 2024, 2023, and 2022, TORM held the following derivative financial instruments
designated as hedge accounting:
Expected maturity
2024
Notional
value
Unit
2025
2026
After
2026
Forward exchange contracts
(USD/DKK) ¹⁾
348.9
DKKm
348.9
Interest rate swaps ²⁾
498.7
USDm
134.5
95.2
268.9
Bunker swaps ³⁾
9,000.0
MT
9,000.0
—
—
¹⁾ The average hedge of USD/DKK currency was 6.8
²⁾ The average interest rate was 1.29% p.a. plus margin.
³⁾ The average price of the hedging instruments was USD 391.0
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
236
NOTE 24 – continued
Hedge accounting
Expected maturity
2023
Notional
value
Unit
2024
2025
After
2025
Forward exchange contracts
(USD/DKK) ¹⁾
325.5
DKKm
325.5
—
Interest rate swaps ²⁾
923.0
USDm
103.3
172.0
647.7
Bunker swaps ³⁾
9,600.0
MT
9,600.0
—
—
¹⁾ The average hedge of USD/DKK currency was 6.8
²⁾ The average interest rate was 1.45 p.a. plus margin.
³⁾ The average price of the hedging instruments was USD 539.2
Hedge accounting
Expected maturity
2022
Notional
value
Unit
2023
2024
After
2024
Forward exchange contracts
(USD/DKK) ¹⁾
280.3
DKKm
280.3
—
—
Interest rate swaps ²⁾
687.2
USDm
136.9
51.6
498.7
Bunker swaps ³⁾
—
MT
—
—
—
¹⁾ The average hedge of USD/DKK currency was 6.9
²⁾ The average interest rate was 1.37 p.a. plus margin.
TORM only enters into interest derivatives under established ISDA agreements supported with or
without credit support annexes with predefined credit thresholds.
Cash collateral of USD 11.3m (2023: USD 27.9m, 2022: USD 1.4m) has been provided as security
for the agreements relating to derivative financial instruments, which does not meet the offsetting
criteria in IAS 32, but which can be offset against the net amount of the derivative asset and
derivative liability in case of default, and insolvency, or bankruptcy in accordance with associated
collateral arrangements.
TORM did not enter into any enforceable netting arrangements.
Further details on derivative financial instruments are provided in Notes 25 and 26.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
237
NOTE 24 - continued
The table below shows realized amounts as well as fair value adjustments regarding derivative financial instruments recognized in the income statements and equity in 2024, 2023 and 2022.
Income statement
Other comprehensive income
Equity
USDm
Port
expenses,
bunkers, and
commissions
Financial
items
Operating
expenses
Admini-
strative
expenses
Transfer to
income
statement
Fair value
adjustment
Hedging
reserves as of
31 December
2024
Forward freight agreements
8.2
—
—
—
—
—
—
Bunker swaps
-0.1
—
—
—
0.1
0.5
0.1
Forward exchange contracts
—
—
-0.6
-0.5
1.1
-4.0
-2.3
Interest rate swaps
—
22.5
—
—
-20.9
10.5
23.7
Total
8.1
22.5
-0.6
-0.5
-19.7
7.0
21.5
2023
Forward freight agreements
23.0
—
—
—
—
—
—
Bunker swaps
1.0
—
—
—
0.3
-0.8
-0.5
Forward exchange contracts
—
—
—
-0.1
0.1
0.1
0.5
Interest rate swaps
—
24.7
—
—
-22.3
3.7
34.1
Total
24.0
24.7
—
-0.1
-21.9
3.0
34.1
2022
Forward freight agreements
-33.3
—
—
—
—
—
—
Bunker swaps
13.8
—
—
—
-3.3
3.3
—
Forward exchange contracts
—
—
-2.4
-2.3
4.6
-2.7
0.4
Interest rate swaps
—
3.2
—
—
0.4
54.3
52.6
Total
-19.5
3.2
-2.4
-2.3
1.7
54.9
53.0
The hedging reserves as of 31 December relates to derivatives used for cash flow hedge for open hedging instruments, only. Certain interest rate swaps fair value change are considered ineffective and is
recognized in "Financial expenses" in the income statement. Please refer to page 236 for a full overview of the fair value of hedge instruments.
Please refer to Note 25 for further information on commercial and financial risks.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
238
NOTE 24 - continued
Accounting Policies
Derivative financial instruments and hedge accounting
Derivative financial instruments, primarily forward currency exchange contracts, forward freight
agreements, interest rate hedges, and forward contracts regarding bunker purchases are entered
into to mitigate risks relating to future fluctuations in prices and interest rates, etc. on future
committed or anticipated transactions. TORM applies hedge accounting under the specific rules
on cash flow hedges, when appropriate, as described below for each type of derivative.
Changes in the fair value of derivative financial instruments designated as cash flow hedges and
deemed to be effective are recognized directly in “Other comprehensive income”. When the
hedged transaction is recognized in the income statement, the cumulative value adjustment
recognized in “Other comprehensive income” is transferred to the income statement and included
in the same line as the hedged transaction. Portion of the changes in fair value deemed to be
ineffective is recognized immediately in the income statement.
Changes in the fair value of derivative financial instruments not designated as hedges are
recognized in the income statement. While effectively reducing cash flow risk in accordance with
the Company’s risk management policy, certain forward freight agreements and forward contracts
regarding bunker purchases do not qualify for hedge accounting. Changes in fair value of these
derivative financial instruments are therefore recognized in the income statement under “Financial
income” or “Financial expenses” for interest rate swaps and under “Port expenses, bunkers and
commissions” for forward freight agreements and forward bunker contracts.
NOTE 25 – RISKS ASSOCIATED WITH TORM’S ACTIVITIES
TORM’s overall risk tolerance and inherited exposure to risks is divided into five main categories:
•
Emerging risks
•
Industry and market risks
•
Operational risks
•
Compliance and IT risks
•
Financial risks
The risks described below under each of the five categories are considered to be among the most
significant and quantifiable risks for TORM.
Emerging Risks
Industry-changing risks, such as the substitution of oil for other energy sources and radical
changes in transportation patterns, are considered to have a relatively high potential impact but
are long-term risks. The Management continues to monitor long-term strategic risks to ensure the
earliest possible mitigation of potential risks and develop the necessary capabilities to exploit
opportunities created by the same risks.
Please refer to the Risk Management section in our Sustainability Statement under E1 Climate
Change section on page 64 for a detailed description of emerging risks.
Industry and Market Risks
Industry and market-related risk factors relate to changes in the markets and in the political,
economic, and physical environment which the Management cannot control, such as freight rates
and vessel and bunker prices.
Freight rate fluctuations
TORM’s income is primarily generated from voyages carried out using the Company’s fleet of
vessels. As such, TORM is exposed to the considerable volatility which characterizes freight rates
for such voyages.
It is TORM’s strategy to seek a certain exposure to this risk, as volatility also represents an
opportunity because earnings have historically been higher in the day-to-day market compared to
time charters. The fluctuations in freight rates for different routes may vary substantially.
However, TORM aims to reduce the sensitivity to the volatility of such specific freight rates by
actively seeking the optimal geographical positioning of the fleet and by optimizing the services
offered to customers. Please refer to Note 12 for details on impairment testing.
Tanker freight income is to a certain extent covered against general fluctuations through the use
of physical contracts such as cargo contracts and time charter agreements with durations of 6-36
months . In addition, TORM uses derivative financial instruments such as forward freight
agreements (FFAs) with coverage of typically 0-24 months ahead, based on market expectations
and in accordance with TORM’s risk management policies.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
239
NOTE 25 - continued
During 2024, 8.5% (2023: 12.6%, 2022: 12.8%) of the 31,287 earning days deriving from
operating the Company’s product tankers were covered in this way. Physical time charter
contracts accounted for 65.6% (2023: 8.5%, 2022: 46.1%) of overall coverage. In 2024, the
Company sold FFAs with a notional contract value of USD 82.6m (2023: USD 213.9m, 2022:
USD 58.3m) and bought FFAs with a notional contract value of USD 11.7m (2023: USD 0m, 2022:
USD 92.3m). The total notional contract volume sold in 2024 was 2,430,000 metric tons (2023:
5,400,000 metric tons; 2022: 2,310,000 metric tons), and the total notional volume bought was
250,000 metric tons (2023: 0 metric tons, 2022: 2,592,000 metric tons). At the end of 2024,
the coverage of available earning days for 2025 was 12.8% through time charters, current spot
voyages and cargo contracts (2023: 11.3%, 2022: 3.7%).
FFA trade and other freight-related derivatives are subject to specific policies and guidelines
approved by the Risk Committee, including trading limits, stop-loss policies, segregation of duties,
and other internal control procedures.
All things being equal and to the extent the Company’s vessels have not already been chartered
out at fixed rates, a freight rate change of USD/day 1,000 would lead to the following changes in
profit before tax based on the expected number of earning days for the coming financial year:
Sensitivity to changes in freight rates
USDm
2025
2024
2023
Decrease in freight rates of USD/day 1,000:
Changes in profit/loss before tax for the following year
-28.9
-27.8
-26.5
Changes in equity for the following year
-28.9
-27.8
-26.5
Sales and purchase price fluctuations
As an owner of vessels, TORM is exposed to risks associated with changes in the value of the
vessels, which can vary considerably during their useful lives. As of 31 December 2024, the
carrying value of the fleet was USD 2,826.7m (2023: USD 2,070.2m, 2022: USD 1,855.9m).
Based on broker valuations, TORM’s fleet had a market value of USD 3,582.9m as of 31 December
2024 (2023: USD 3,080.9m, 2022: USD 2,650.3m).
NOTE 25 - continued
Bunker price fluctuations
The cost of fuel oil consumed by the vessels, known in the industry as bunkers, accounted for
69.0% (2023: 66.6% 2022: 61.3%) of the total voyage costs in 2024 and is by far the biggest
single cost related to a voyage.
TORM is exposed to fluctuations in bunker prices which are not reflected in the freight rates
achieved by TORM. To reduce this exposure, TORM hedges the bunker exposure with oil product
instruments to the extent bunker element in the freight rates achieved is considered fixed.
Bunker trade is subject to specific risk policies and guidelines approved by the Risk Committee
including trading limits, stop-loss, stop-gain and stop-at-zero policies, segregation of duties and
other internal control procedures.
TORM only hedges bunker exposure whenever the freight is fixed beyond one month. In 2024,
6.0% (2023: 17.7%, 2022: 15.2%) of TORM’s total bunker purchase was hedged through bunker
hedging contracts. At the end of 2024, TORM had covered 7% (2023: 5%, 2022: 0%) of its
bunker requirements for 2025. The total bunker exposure is estimated to be approximately
432,316 metric tons.
All things being equal, a price change of 10% per ton of bunker oil (without subsequent changes in
freight rates) would lead to the following changes in expenditure based on the expected bunker
consumption in the spot market:
Sensitivity to changes in the bunker price
USDm
2025
2024
2023
Increase in the bunker prices of 10% per ton:
Changes in profit/loss before tax for the following year
-22.5
-25.9
-22.1
Changes in equity for the following year
-22.5
-25.9
-22.1
Operational Risks
Operational risks are risks associated with the ongoing operations of the business and include risks
such as the safe operation of vessels, the availability of experienced seafarers and staff, terrorism,
piracy as well as insurance and counterparty risk.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
240
NOTE 25 - continued
Insurance Coverage
During the fleet’s operation, various casualties, accidents, and other incidents may occur which
may result in financial losses for TORM. For example national and international rules, regulations,
and conventions could mean that TORM may incur substantial liabilities if a vessel is involved in an
oil spill or emission of other environmentally hazardous agents.
To reduce the exposure to these risks, the fleet is insured against such risks to the extent possible.
The total insurance program comprises a broad cover of risks in relation to the operation of vessels
and transportation of cargo, including personal injury, environmental damage and pollution, cargo
damage, third-party casualty and liability, hull and machinery damage, total loss, and war. All
TORM’s owned vessels are insured for an amount corresponding to their market value plus a
margin to cover any fluctuations. Liability risks are covered in line with international standards. It is
TORM’s policy to cooperate with financially sound international insurance companies with a credit
rating of BBB or better, presently some 14-16 companies along with two P&I clubs, to diversify
risk. The P&I clubs are members of the internationally recognized collaboration, International
Group of P&I clubs, and TORM’s vessels are each insured for the maximum amount available in the
P&I system. At the end of 2024, the aggregate insured value of hull and machinery and interest
for TORM’s owned vessels amounted to USD 4.32bn (2023: USD 2.34bn, 2022: USD 2.8bn).
Counterparty Risk
Counterparty risk is an ever-present challenge demanding close monitoring to manage and decide
on actions to minimize possible losses. The maximum counterparty risk associated is equal to the
values recognized in the balance sheet. A consequential effect of the counterparty risk is loss of
income in future periods, e.g. counterparties not being able to fulfill their responsibilities under a
time charter, a contract of affreightment, or an option. The main risk is the difference between the
fixed rates under a time charter or a contract of affreightment and the market rates prevailing
upon default. This characterizes the method for identifying the market value of a derivative
instrument.
TORM has a close focus on its risk policies and procedures to ensure that risks managed in the
day-to-day business are kept at agreed levels, and that changes in the risk situation are brought to
the Management’s attention.
TORM’s counterparty risks are primarily associated with:
•
Receivables, cash and cash equivalents, including restricted cash
•
Contracts of affreightment with a positive fair value
•
Derivative financial instruments and commodity instruments with a positive fair value
NOTE 25 - continued
Receivables, cash, and cash equivalents, including restricted cash
The majority of TORM’s customers are companies operating in the oil industry. It has been
assessed that these companies are, to a great extent, subject to the same risk factors as those
identified for TORM.
A major part of TORM’s freight revenues stem from a small group of customers. In 2024, one
customer accounted for 8% of TORM’s freight revenues (2023: one accounted for 8%, 2022: one
accounted for 12%). The concentration of earnings on a few customers requires extra attention to
credit risk. TORM has a credit policy under which continued credit evaluations of new and existing
customers take place. For long-standing customers, payment of freight normally takes place after
a vessel’s cargo has been discharged. For new and smaller customers, TORM’s credit risk is limited
as freight is usually paid prior to the cargo’s discharge, or, alternatively, a suitable bank guarantee
is placed in lieu thereof.
Because of the payment patterns mentioned above, TORM’s receivables primarily consist of
receivables from voyages in progress at year-end and outstanding demurrage. For the past five
years, TORM has not experienced any significant losses in respect of charter payments or any
other freight agreements. With regard to the collection of original demurrage claims, TORM’s
average stands at 98.4% (2023: 98.6%, 2022: 98.6%), which is considered to be satisfactory
given the differences in interpretation of events. In 2024, demurrage represented 13% (2023:
16.0%, 2022: 14.0%) of the total freight revenues. Please refer to Note 1 for more details on
recognition of demurrage claims into revenue.
Excess liquidity is placed on deposit accounts with major banks with strong and acceptable credit
ratings or invested in secure papers such as American or Danish government bonds, or triple AAA-
rated money market funds. Cash is invested with the aim of getting the highest possible yield,
while maintaining a low counterparty risk, and having adequate liquidity reserves for possible
investment opportunities or to withstand a sudden drop in freight rates.
Derivative Financial Instruments and Commodity Instruments
In 2024, 100% (2023: 100%, 2022: 100%) of TORM’s forward freight agreements (FFAs) were
traded via clearing houses or over-the-counter (OTC). Trade via clearing houses effectively
reduces counterparty credit risk by daily clearing of balance and OTC trades are only done with
investment grade counterparties. Over-the-counter fuel swaps have restrictively been entered
into with major oil companies, banks, or highly reputed partners with a satisfactory credit rating.
TORM also trades FX and interest derivatives. All such derivatives were entered into with
investment grade counterparties.
Financial risks
Financial risks relate to TORM’s financial position, financing, and cash flows generated by the
business, including foreign exchange risk and interest rate risk. TORM’s liquidity and capital
resources are described in Note 2.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
241
NOTE 25 - continued
Foreign Exchange Risk
TORM uses USD as its functional currency because most of the Company’s transactions are
denominated in USD. The foreign exchange risk is thereby limited to cash flows not denominated
in USD. The primary risk relates to transactions denominated in DKK, EUR, and SGD and relates to
administrative and operating expenses.
The part of TORM’s expenses denominated in currencies other than USD accounts for
approximately 57.8% (2023: 60.2%, 2022: 81.4%) for administrative expenses and approximately
19.9% (2023: 21.6%, 2022: 19.8%) for operating expenses. TORM’s expected administrative and
operating expenses in DKK and EUR for 2025 are approximately DKK 494.0m, whereof 69.1%
(2023: 68.3%, 2022: 68.9%) are hedged through FX forward contracts. All FX forward contracts
have maturity within 2025, and TORM’s average hedge USD/DKK currency rate is 6.8. FX
exposure is hedged in its entirety for all risks.
TORM assumes identical currency risks arising from exposures in DKK and EUR.
Sensitivity to Changes in the USD/DKK and USD/EUR Exchange Rate
All things being equal, a change in the USD/DKK and the USD/EUR exchange rates of 10% would
result in a change in profit/loss before tax and equity as follows:
USDm
2025
2024
2023
Effect of a 10% increase of DKK and EUR:
Changes in profit/loss before tax for the following year
-2.1
-2.2
-1.8
Changes in equity for the following year
-2.1
-2.2
-1.8
NOTE 25 - continued
Interest rate risk
TORM’s interest rate risk generally relates to interest-bearing borrowings. All TORM’s loans for
financing vessels are denominated in USD. Please refer to Note 20 for additional information on
borrowings. At the end of 2024, TORM had fixed 82.7% (2023: 86.9%, 2022: 94.6%) of the debt
then outstanding with interest rate swaps, fixed rate leasing debt and senior unsecured bond
corresponding to an amount of USD 1,019.7m. USD 498.7m of this amount is hedged at an
interest rate of 1.29% plus margin with interest rate swaps with maturity in the period
2025-2030.
Sensitivity to Changes in Interest Rates
All things being equal, a change in the interest rate level of 1%-point would result in a change in the
interest rate expenses as follows:
USDm
2025
2024
2023
Effect of a 1%-point increase in interest rates:
Changes in profit/loss before tax for the following year
-3.0
-2.7
-0.7
Changes in equity for the following year
8.7
10.4
16.3
Liquidity risk
TORM’s strategy is to ensure continuous access to funding sources by maintaining a robust
capital structure and a close relationship with several financial partners. As of 31 December 2024,
TORM’s loan portfolio was spread across 13 different banks.
As of 31 December 2024, TORM maintains a liquidity reserve of USD 291.2m in cash and cash
equivalents, including restricted cash, combined with USD 323.6m in undrawn and committed
credit facilities. Cash is only placed in banks with an investment grade rating. For further
information on contractual obligations, including a maturity analysis, please refer to Note 23.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
242
NOTE 26 – FINANCIAL INSTRUMENTS
Categories of financial assets and liabilities (USDm):
Observable input
(Level 2)
Financial instruments
measured at fair value
Financial instruments
measured at amortized cost
Total carrying value
2024
Financial assets
Loan receivables¹⁾
—
—
4.5
4.5
Trade receivables¹⁾
—
—
183.9
183.9
Other receivables
33.0
33.0
26.6
59.6
Cash and cash equivalents, including restricted cash¹⁾
—
—
291.2
291.2
Total
33.0
33.0
506.2
539.2
Financial liabilities
Borrowings¹⁾²⁾
—
—
1,226.3
1,226.3
Other non-current liabilities
—
—
2.9
2.9
Trade payables¹⁾
—
—
50.0
50.0
Other liabilities¹⁾
2.5
2.5
58.8
61.3
Total
2.5
2.5
1,338.0
1,340.5
2023
Financial assets
Loan receivables¹⁾
—
—
4.5
4.5
Trade receivables¹⁾
—
—
211.0
211.0
Other receivables
37.6
37.6
22.9
60.5
Cash and cash equivalents, including restricted cash¹⁾
—
—
295.6
295.6
Total
37.6
37.6
534.0
571.6
Financial liabilities
Borrowings¹⁾²⁾
—
—
1,059.6
1,059.6
Other non-current liabilities
—
—
3.0
3.0
Trade payables¹⁾
—
—
43.1
43.1
Other liabilities¹⁾
2.8
2.8
42.4
45.2
Total
2.8
2.8
1,148.1
1,150.9
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
243
NOTE 26 - continued
Categories of financial assets and liabilities (USDm):
Observable
input (Level 2)
Financial instruments
measured at fair value
Financial instruments
measured at amortized cost
Total carrying value
2022
Financial assets
Loan receivables¹⁾
—
—
4.6
4.6
Trade receivables¹⁾
—
—
259.5
259.5
Other receivables
55.3
55.3
18.7
74.0
Cash and cash equivalents, including restricted cash¹⁾
—
—
323.8
323.8
Total
55.3
55.3
606.6
661.9
Financial liabilities
Borrowings¹⁾²⁾
—
—
966.9
966.9
Other non-current liabilities
—
—
3.0
3.0
Trade payables¹⁾
—
—
48.5
48.5
Other liabilities¹⁾
1.9
1.9
29.2
31.1
Total
1.9
1.9
1,047.6
1,049.5
¹⁾ Due to the short maturity, the carrying value is considered to be an appropriate expression of the fair value.
²⁾ See Note 21.
³⁾ Derivative financial instruments are presented in the balance sheet line "Other receivables" and "Other liabilities".
NOTE 26 - continued
Fair value hierarchy for financial instruments measured at fair value in the balance sheet
Below, please find the fair value hierarchy for financial instruments measured at fair value in the
balance sheet. The financial instruments in question are grouped into levels 1 to 3 based on the
degree to which the fair value is observable.
•
Level 2 fair value measurements are those derived from input other than quoted prices
included in Level 1 which are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices)
Methods and assumptions in determining fair value of financial instruments
Derivative part of other receivables and other liabilities
The fair value of derivatives in other receivables and other liabilities is measured using accepted
valuation methods with input variables such as yield curves, forward curves, spreads, etc. and
compared to financial counterparties to ensure acceptable valuations. The valuation methods
discount the future fixed and estimated cash flows and valuation of any option elements.
NOTE 27 – RELATED PARTY TRANSACTIONS
TORM’s ultimate controlling party is Brookfield Oaktree Holdings, LLC, a limited liability company
incorporated in the USA. The immediate controlling shareholder is OCM Njord Holdings S.á.r.l.
(Njord Luxco).
Shareholders' contribution and dividends paid are disclosed in the consolidated statement of
changes in equity. Dividends to related parties are paid out based on the related parties’ ownership
of shares.
The remuneration of key management personnel, which consists of the Board of Directors,
Executive Director and the Senior Management Team, is disclosed in Note 5.
On 01 September 2022, TORM purchased 75% of the shares in Marine Exhaust Technology A/S,
thereby obtaining a controlling interest in its joint venture entity Marine Exhaust Technology (Hong
Kong) Ltd. Until 01 September 2022, TORM’s transactions with its joint venture entity producing
scrubbers for the TORM fleet covered CAPEX of USD 5.6m in total.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
244
NOTE 28 – ASSETS HELD FOR SALE AND NON-CURRENT ASSETS SOLD DURING THE YEAR
During 2024, TORM delivered three vessels sold in 2023 for a total consideration of USD 66.5m.
The vessels had a carrying value of USD 47.2m. After deducting related bunker costs, the sales
resulted in a profit of USD 17.2m, which is recognized in the income statement for 2024.
During 2024, TORM sold and delivered four vessels for a total consideration of USD 83.0m. The
vessels had a carrying value of USD 47.0m. After deducting related bunker costs, the sales
resulted in a profit of USD 34.1m, which is recognized in the income statement for 2024. The sales
consideration for one vessel of USD 18.9m has not yet been received as per 31 December 2024.
During 2023, TORM sold and delivered eight vessels for a total consideration of USD 166.4m. The
vessels sold and delivered to new owners during 2023 had a carrying value of USD 111.4m. After
deducting related bunker cost, the sales resulted in a profit of USD 50.4m which are recognized in
the income statement for 2023. Additionally, TORM sold three vessels with a carrying value of
USD 47.2m classified as assets held for sale at the end of 2023 as the vessels were not yet
delivered to new owners.
During 2022, TORM sold seven vessels. All the vessels sold in 2022 and one vessel sold in 2021
were delivered to the new owners to a total consideration of USD 106.6m. The vessels sold and
delivered to the new owners during 2022 had a carrying value of USD 93.8m. The sales resulted in
an impairment loss of USD 2.6m and a profit of USD 10.2m which are recognized in the income
statement for 2022.
NOTE 29 – CASH FLOWS
USDm
2024
2023
2022
Reversal of other non-cash movements:
Exchange rate adjustments
-0.6
0.1
-0.3
Share-based payments
30.2
22.5
2.2
Fair value adjustments on derivative financial instruments
-6.6
-1.5
0.6
Reversal of provisions adjustments
—
-6.5
-6.3
Other adjustments
-0.1
-0.1
0.2
Total
22.9
14.5
-3.6
USDm
2024
2023
2022
Change in inventories, receivables, and payables:
Change in inventories
-10.2
1.2
-21.8
Change in receivables
41.7
45.2
-158.1
Change in prepayments
8.4
-1.8
-5.7
Change in trade payables and other liabilities
7.9
3.2
4.7
Total
47.8
47.8
-180.9
NOTE 30 – ENTITIES IN THE GROUP
Entity
Country
TORM plc
United Kingdom
Investments in subsidiaries ⁵⁾:
Entity
Country
Ownership ⁴⁾
TORM A/S
Denmark
100 %
OCM Singapore Njord Holdings Almena, Pte. Ltd ¹⁾
Singapore
100 %
OCM Singapore Njord Holdings Hardrada, Pte. Ltd
Singapore
100 %
OCM Singapore Njord Holdings St.Michaelis Pte. Ltd ¹⁾
Singapore
100 %
OCM Singapore Njord Holdings St. Gabriel Pte. Ltd ¹⁾
Singapore
100 %
OCM Singapore Njord Holdings Agnete, Pte. Ltd ¹⁾
Singapore
100 %
OMI Holding Ltd.¹⁾
Mauritius
100 %
TORM Crewing Service Ltd.¹⁾
Bermuda
100 %
TORM Middle East DMCC
United Arab Emirates
100 %
TORM Shipping India Private Limited ³⁾
India
100 %
TORM Singapore Pte. Ltd.
Singapore
100 %
TORM Tanker Corporation ⁶⁾
USA
100 %
TORM USA LLC ⁶⁾
USA
100 %
TORM VesselCo UK Limited
United Kingdom
100 %
VesselCo 8 Pte. Ltd. ¹⁾
Singapore
100 %
VesselCo 9 Pte. Ltd.
Singapore
100 %
VesselCo 10 Pte. Ltd. ²⁾
Singapore
100 %
VesselCo 11 Pte. Ltd. ¹⁾
Singapore
100 %
VesselCo 12 Pte. Ltd.
Singapore
100 %
TORM SHIPPING (PHILS.), INC. ⁴⁾
Philippines
25 %
Marine Exhaust Technology A/S
Denmark
75 %
ME Production A/S
Denmark
75 %
Marine Exhaust Technology (Hong Kong) Ltd.
China
59 %
ME Production (Zhejiang) Co, Ltd.
China
75 %
Suzhou ME Production Technology Co, Ltd.⁶⁾
China
59 %
¹⁾ Entities dissolved in the financial year ended 31 December 2022.
²⁾ Entities dissolved in the financial year ended 31 December 2023.
³⁾ Entities with different reporting periods: TORM Shipping India has a financial reporting period that runs from
01 April to 31 March as required by the Indian government's laws and legislations.
⁴⁾For all subsidiaries, ownership and voting rights are the same except for TORM SHIPPING (PHILS.), INC
where voting rights are 100%.
⁵⁾ All subsidiaries are consolidated in full.
⁶⁾ Entities not audited
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
245
NOTE 30 - continued
Interest in legal entities included as joint ventures:
There has been no activity in the Danish joint venture, Long Range 2 A/S for which TORM controls
50%.
TORM obtained control over Marine Exhaust Technology (Hong Kong) Ltd. on 01 September 2022
following the acquisition of Marine Exhaust Technology A/S, where it affected the profit and loss
from continuing operations in 2022 with -0.1m. Before the acquisition, TORM controlled 28% of
Marine Exhaust Technology A/S.
The table below shows the registered addresses for the companies mentioned above:
Denmark
India
Philippines
Tuborg Havnevej 18
2nd Floor
7th Floor
DK-2900 Hellerup
Leela Business Park
Salcedo Towers, 169
Denmark
Andheri-Kurla Road
HV dela Costa Street
Andheri (E)
Salcedo Village,
Mumbai 400059
Makati City
India
Philippines 1227
Singapore
United Kingdom
USA
6 Battery Road #27-02
4th Floor
Suite 1625
Six Battery Road
120 Cannon Street
2500 City West
Singapore 049909
London, EC4N 6AS
Boulevard
Singapore
United Kingdom
77042, Houston , Texas
USA
Denmark
China
Hong Kong
Sandholm 7
208 Longward Road
Room 12, 10/F
9900 Frederikshavn
Zhapu Town Ping Hu
Kwai Cheong Centre
Denmark
Jiaxing City
No. 50 Kwai Cheong Road
Zhejiang Provice
Kwai Chung, New Territories
China
Hong Kong
United Arab Emirates
DMCC Business Centre
AU Tower 15-G
JLT Cluster I
Dubai, UAE
United Arab Emirates
NOTE 31 – PROVISIONS
USDm
2024
2023
2022
Cargo claim provisions
—
—
6.5
Warranty provisions
0.6
0.6
0.3
Balance as of 31 December
0.6
0.6
6.8
In 2020, TORM was involved in cargo claims relating to a customer having granted indemnities for
discharge of cargoes, and not being able to honor those obligations. The cases involved irregular
activities by the customer. Legal action was initiated by TORM in the UK and in India against the
customer and related individuals. During 2022, TORM settled one claim and reassessed its
provisions for the remaining part of the case complex, which led to the reversal of provisions
amounting to USD 6.3m.
As expected at the end of 2023, the remaining part of the case complex was resolved in
arbitration during the first quarter of 2024 with an award in favor of TORM.
Warranty provisions relate to sold marine engineering equipment.
Accounting Policies
Provisions are recognized when the Group has a legal or constructive obligation as a result of past
events, and when it is probable that this will lead to an outflow of resources which can be reliably
estimated. Provisions are measured at the estimated liability expected to arise, considering the
time value of money.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
246
NOTE 32 – EARNINGS PER SHARE AND DIVIDEND PER SHARE
2024
2023
2022
Earnings per share
Net profit/(loss) for the year attributable to TORM plc
shareholders (USDm)
612.5
648.3
562.8
Million shares
Weighted average number of shares
94.1
84.1
81.8
Weighted average number of treasury shares
-0.5
-0.5
-0.5
Weighted average number of shares outstanding
93.6
83.6
81.3
Dilutive effect of outstanding share options
2.7
3.1
1.5
Weighted average number of shares outstanding incl.
dilutive effect of share options
96.3
86.7
82.8
Basic earnings/(loss) per share (USD)
6.54
7.75
6.92
Diluted earnings/(loss) per share (USD)
6.36
7.48
6.80
2024
2023
2022
Dividend per share
Declared dividend per share (USD)
5.10
4.42
4.63
Declared dividend for the year (USDm)
485.3
370.9
378.7
Proposed dividend per share for approval at Annual
General Meeting (USD)
—
1.36
—
Proposed dividend for approval at Annual General
Meeting (USDm)
—
126.3
—
Dividends paid per share (USD)
5.86
7.01
2.04
Dividends paid during the year (USDm)
553.3
586.4
166.7
Number of shares
Number of shares, end of period (million)
97.8
86.2
82.3
Number of treasury shares, end of period (million)
-0.5
-0.5
-0.5
Number of shares outstanding, end of period (million)
97.3
85.7
81.8
NOTE 32 - continued
Accounting Policies
Basic earnings per share are calculated by dividing the consolidated net profit/(loss) for the year
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 of
treasury shares during the period are weighted based on the remaining period.
Diluted earnings per share are calculated by adjusting the consolidated profit or loss available to
common shareholders and the weighted average number of common shares outstanding for the
effects of all potentially dilutive shares. Such potentially dilutive common shares are excluded
when the effect of including them would be to increase earnings per share or reduce a loss per
share.
NOTE 33 – CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED CASH
USDm
2024
2023
2022
Cash at banks and on hand
271.9
265.5
320.5
Cash and cash equivalents
271.9
265.5
320.5
Cash provided as security for initial margin calls and
negative market values on derivatives, etc.¹⁾
19.3
30.1
3.3
Restricted cash
19.3
30.1
3.3
Cash and cash equivalents, including restricted cash
291.2
295.6
323.8
¹⁾ The counterparties have an obligation to return any excess cash provided as security to the Group upon
settlement or early termination of the contracts.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
247
NOTE 34 – BUSINESS COMBINATIONS
There were no business combinations in 2023 or 2024.
On 01 September 2022, TORM acquired an ownership stake of 75% of Marine Exhaust Technology
A/S (MET), a Danish industrial company specialized in developing and producing advanced and
green marine equipment for a cash consideration of USD 2.0m. TORM acquired MET because the
entity has gained strong expertise in developing and producing components for the maritime
industry, including scrubbers for the shipping industry. As part of the transaction, TORM also
obtained control over the joint venture entity Marine Exhaust Technology (Hong Kong) Ltd in which
TORM previously held a 27.5% interest.
TORM has elected to measure the non-controlling interest in the acquiree at fair value.
The fair value of the non-controlling interest in MET has been assessed based on the EBITDA
multiples method using estimated 2023 financials based on expected scrubber orders. The value
includes an adjustment based on development costs to account for potential future income from
the sales of Flettner rotors. Based on the enterprise value estimate, the equity value is calculated
through a standard adjustment for net interest-bearing debt.
The previously held interest in Marine Exhaust Technology (Hong Kong) Ltd was remeasured at fair
value as part of the transaction leading to a gain of USD 0.3m recognized in the share of profit/
loss from joint ventures in the consolidated income statement.
The acquired assets include contractual receivables of USD 5.7m of which USD 0.3m were
considered to be uncollectible at the day of the acquisition.
Transaction costs in connection with the acquisition amounted to less than USD 0.1m and are
recognized as administration expenses.
The goodwill of USD 1.8m represents the value of expected synergies arising from the acquisition
and is allocated entirely to the Marine Engineering segment. The goodwill recognized is not
expected to be deductible for tax purposes.
Revenue and profit for the period generated by the acquired entity amounted to USD 5.9m and
0.0m, respectively, and have been recognized in the consolidated income statement since the
acquisition. Had the acquisition taken place on 01 January 2022, the revenue and profit for the
Group for 2022 would have been USD 1,455.9m and USD 561.9m, respectively.
NOTE 34 - continued
The following table summarizes the fair values of the assets acquired and the liabilities assumed on
01 September 2022:
01 September
USDm
2022
Intangible assets
1.2
Tangible fixed assets
2.5
Inventories
6.4
Trade receivables
1.6
Other receivables
3.8
Prepayments
1.5
Cash and cash equivalents
3.0
Borrowings
-7.9
Deferred tax liabilities
-0.3
Provisions
-0.4
Other non-current liabilities
-0.8
Trade payables
-1.5
Other liabilities
-0.3
Deferred income
-4.3
Current tax liabilities
-0.3
Net identifiable assets acquired
4.2
Goodwill
1.8
Total net assets acquired
6.0
Of which fair value of non-controlling interest
-2.4
Total purchase consideration
3.6
Cash consideration
2.0
Fair value of previously held interests
1.6
Total purchase consideration
3.6
Cash acquired
3.0
Cash consideration
-2.0
Acquisition of subsidiaries, net of cash acquired
1.0
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
248
NOTE 34 - continued
Accounting Policies
Newly acquired or formed entities are recognized in the consolidated financial statements from the
date of acquisition or formation. The date of acquisition is the date on which control over the
entity is effectively transferred.
Business combinations are accounted for by applying the purchase method, whereby the acquired
entities’ identifiable assets, liabilities, and contingent liabilities are measured at fair value at the
acquisition date. The tax effect of the revaluation activities is also considered.
When a business combination agreement provides for an adjustment to the cost of the
combination contingent on future events, the amount of that adjustment is included in the cost of
the combination if the event is probable and the adjustment can be measured reliably. Costs of
issuing debt or equity instruments in connection with a business combination are accounted for
together with the debt or equity issuance. All other costs associated with the acquisition are
expensed in the income statement.
The excess of the cost of the business combination over the fair value of the acquired assets,
liabilities, and contingent liabilities is recognized as goodwill under intangible assets and is tested
for impairment at least once a year. Upon acquisition, goodwill is allocated to the cash generating
units that subsequently form the basis for the impairment test. If the fair value of the acquired
assets, liabilities, and contingent liabilities exceeds the cost of the business combination, the
identification of assets and liabilities and the processes of measuring the fair value of the assets
and liabilities and the cost of the business combination are reassessed. If the fair value of the
business combination continues to exceed the cost, the resulting gain is recognized in the income
statement.
FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
249
Parent Company 2024
Parent Company FInancial Statements
Management Review for TORM plc
251
Parent Company Income Statement
252
Parent Company Statement of Comprehensive Income
252
Parent Company Balance Sheet
253
Parent Company Statement of Changes in Equity
254
Parent Company Cash Flow Statement
255
Notes to Parent Company Financial Statements
256
TORM ANNUAL REPORT 2024
250
Management Review for TORM plc
In 2024, the TORM Group simplified the corporate structure due to commercial and risk
management reasons. A result of the restructuring included that the Parent company now actively
manages the deployment of tanker vessels between spot market voyage charters and time
charters on similar terms as other entities in the TORM Group. The parent company activities still
include holding company activities for the TORM Group, treasury activities, as well as bareboat
chartering activities.
Income Statement
In 2024, revenue amounted to USD 73.8m compared to USD 47.9m in 2023. The development
was primarily driven by the introduction of the transportation of refined oil products on spot
market voyage charters and time charters of USD 33.6m, offset by a decrease in bareboat charter
hire rates of USD 7.7m. Costs associated with the transportation (port expenses, bunkers, and
commissions) amounted to USD 12.9m in 2024 compared to none in 2023. As the Parent
company in 2024 chartered additional vessels from subsidiaries compared to 2023, the cost of
charter hire increased by USD 14.7m to USD 62.0m.
Financial income for 2024 increased by USD 1,221.7m to USD 1,365.7m. Financial expenses were
USD 37.9m, an increase of USD 24.2m compared to 2023. The increase in net financial income of
USD 1,197.5m was primarily a result of increased dividends received from subsidiaries of
USD 1,216.1m as a result of the restructuring of the TORM Group. As part of the restructuring, the
parent company received dividends from TORM A/S of USD 795.7m related to the parent
company’s acquisition of TORM Singapore Pte Ltd from TORM A/S and USD 479.2m related to
the sale of vessels from TORM A/S to the newly established TORM VesselCo UK Limited. The
development is partly offset by increased interest expenses on borrowings of USD 23.2m
stemming from increased borrowings.
Net profit amounted to USD 1,307.2m compared to USD 120.9m in 2023.
Balance Sheet
Assets
Total assets increased by USD 1,373.1m to USD 2,735.5m as of 31 December 2024, mainly
impacted by increases in investment in subsidiaries of USD 1,432.8m, cash and cash equivalents
of USD 89.5m, and freight receivables of USD 23.9m. The development is offset by a decrease in
loans to subsidiaries of USD 178.2m.
Investment in subsidiaries increased to USD 2,441.9m as of 31 December 2024 primarily due to
the purchase of TORM Singapore Pte Ltd from TORM A/S for a total consideration of USD 795.7m
and the setup of the new TORM VesselCo UK Limited for a total investment of USD 618.9m
equivalent to the fair value of 15 MR and LR1 vessels.
As tanker vessels are now actively deployed in the market, the parent company had a freight
receivable balance of USD 23.9m as of 31 December 2024 corresponding to the increase since
end of 2023.
As of 31 December 2024, the parent company had unsecured loans to subsidiaries with a total
outstanding balance of USD 134.0m. Besides normal repayments, the main driver behind the
decrease of USD 178.2m since the end of 2023 was the additional repayment of USD 139.7m on
an existing unsecured loan from TORM A/S in addition to ordinary repayments.
Equity
Total equity increased by USD 1,107.3m to USD 1,945.1m as of 31 December 2024, primarily
driven by net profit for the year of USD 1,307.2m and secondly by capital increases of USD 331.7m
due to the issuance of new shares in connection with several partly share-based financed vessel
acquisitions during 2024. The increases were partly offset by dividend payments of USD 553.3m.
Liabilities
During 2024, total borrowings increased by USD 234.5m to USD 733.6m mainly impacted by the
issuance of USD 200m five-year senior unsecured bonds in January 2024, subsequently listed on
the Oslo Stock Exchange in June 2024. In addition, the purchase of new secondhand vessels in
the TORM Group financed through the parent company contributed to the increase.
Cash Flow
Net cash flow from operating activities was USD 20.9m (2023: USD -1.3m). The increase was
primarily driven by the TCE effects of tanker vessels being actively deployed in the market which
they were not in 2023.
Net cash flow from investing activities was USD 372.8m (2023: USD 485.4m). The decrease was
mainly impacted by lower repayments received related to loans to subsidiaries compared to 2023.
Net cash flow from financing activities was USD -304.3m (2023: USD -485.1m). The
development was predominantly impacted by lower repayments of mortgage debt compared to
2023, slightly offset by reduced cash flow from new borrowings.
Key developments in 2024
USDm
2024
2023
Change
Income statement
Revenue
73.8
47.9
25.9
Port expenses, bunkers and commissions
-12.9
—
-12.9
Charter hire
-62.0
-47.3
-14.7
Financial income
1,365.7
144.0
1,221.7
Financial expenses
-37.9
-13.7
-24.2
Net profit for the year
1,307.2
120.9
1,186.3
Balance sheet
Investments in subsidiaries
2,441.9
1,009.1
1,432.8
Freight Receivables
23.9
—
23.9
Loans to subsidiaries, current and non-
current
134.0
312.2
-178.2
Total assets
2,735.5
1,362.4
1,373.1
Total equity
1,945.1
837.8
1,107.3
Borrowings, current and non-current
733.6
499.0
234.6
Total liabilities
790.4
524.6
265.8
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > MANAGEMENT REVIEW FOR TORM PLC
TORM ANNUAL REPORT 2024
251
Parent Company Income Statement
01 January-31 December
USD '000
Note
2024
2023
Revenue
2
73,801
47,895
Port expenses, bunkers and commissions
-12,938
–
Charter hire
-62,043
-47,304
Operating expenses
3
-6,541
–
Administrative expenses
3
-14,785
-10,429
Other operating income and expenses
-1,340
49
Expected credit loss
-47
2,517
Depreciation and amortization
-201
-24
Operating profit/(loss) (EBIT)
-24,094
-7,296
Financial income
4
1,365,734
144,004
Financial expenses
4
-37,893
-13,664
Profit before tax
1,303,747
123,044
Tax
5
3,406
-2,174
Net profit for the year
1,307,153
120,870
Parent Company Statement of
Comprehensive Income
01 January-31 December
USD '000
2024
2023
Net profit for the year
1,307,153
120,870
Other comprehensive income:
Items that may be reclassified to profit or loss:
Fair value adjustment on hedging instruments
10,497
3,749
Fair value adjustment on hedging instruments transferred to income
statement
-20,930
-22,307
Tax on other comprehensive income
2,608
4,640
Other comprehensive income after tax
-7,825
-13,918
Total comprehensive income for the year
1,299,328
106,952
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > BALANCE SHEET
TORM ANNUAL REPORT 2024
252
Parent Company Balance Sheet
As of 31 December
USD '000
Note
2024
2023
ASSETS
Intangible assets
Other intangible assets
78
86
Total Intangible assets
78
86
Tangible fixed assets
Capitalized dry-docking
5,362
—
Land and buildings
—
81
Other plant and operating equipment
176
—
Total tangible fixed assets
5,538
81
Financial assets
Investments in subsidiaries
6, 13
2,441,892
1,009,071
Loan receivables
7
4,476
4,523
Loans to subsidiaries
16
65,522
71,475
Deferred tax assets
5
2,715
—
Total financial assets
2,514,605
1,085,069
Total non-current assets
2,520,221
1,085,236
Inventories
8
7,115
—
Freight Receivables
9
23,870
—
Loans to subsidiaries
16
68,464
240,713
Other receivables
10
24,927
35,322
Prepayments
721
438
Cash and cash equivalents
90,175
685
Total current assets
215,272
277,158
TOTAL ASSETS
2,735,493
1,362,394
The financial statements of TORM plc, company number 9818726, have been approved by the
Board of Directors and signed on their behalf by:
Jacob Meldgaard
Executive Director
06 March 2025
USD '000
Note
2024
2023
EQUITY AND LIABILITIES
Equity
Common shares
978
862
Treasury shares
-4,235
-4,235
Hedging reserves
17,742
25,567
Share premium
181,232
170,262
Other reserves
320,000
—
Retained profit
1,429,360
645,332
Total equity
1,945,077
837,788
Liabilities
Deferred tax liability
5
—
3,324
Borrowings
11
625,345
398,427
Total non-current liabilities
625,345
401,751
Borrowings
11
108,227
100,611
Trade payables
4,746
278
Payables to subsidiaries
16
39,378
19,814
Current tax liabilities
24
—
Other liabilities
12
12,696
2,152
Total current liabilities
165,071
122,855
Total liabilities
790,416
524,606
TOTAL EQUITY AND LIABILITIES
2,735,493
1,362,394
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > CHANGES IN EQUITY
TORM ANNUAL REPORT 2024
253
Parent Company Statement of Changes in Equity
01 January-31 December
USD '000
Common
shares ¹⁾
Treasury
shares ¹⁾
Hedging
reserves
Share
premium
Other
reserves
Retained
profit
Total
EQUITY
Equity as of 01 January 2023
823
-4,235
39,485
77,794
—
1,088,297
1,202,164
Comprehensive income for the year:
Net profit for the year
—
—
—
—
—
120,870
120,870
Other comprehensive income for the year
—
—
-18,558
—
—
—
-18,558
Tax on other comprehensive income
—
—
4,640
—
—
—
4,640
Total comprehensive income for the year
—
—
-13,918
—
—
120,870
106,952
Capital increases
39
—
—
92,635
—
—
92,674
Transaction costs capital increase
—
—
—
-167
—
—
-167
Share-based compensation
—
—
—
—
—
22,549
22,549
Dividends paid
—
—
—
—
—
-586,384
-586,384
Total changes in equity 2023
39
—
—
92,468
—
-563,835
-471,328
Equity as of 31 December 2023
862
-4,235
25,567
170,262
—
645,332
837,788
Comprehensive income for the year:
Net profit for the year
—
—
—
—
—
1,307,153
1,307,153
Other comprehensive income for the year
—
—
-10,433
—
—
—
-10,433
Tax on other comprehensive income
—
—
2,608
—
—
—
2,608
Total comprehensive income for the year
—
—
-7,825
—
—
1,307,153
1,299,328
Capital increases
116
—
—
331,601
—
—
331,717
Transaction costs capital increase
—
—
—
-631
—
—
-631
Capital reduction ²⁾
—
—
—
-320,000
320,000
—
—
Share-based compensation
—
—
—
—
—
30,162
30,162
Dividends paid
—
—
—
—
—
-553,287
-553,287
Total changes in equity 2024
116
—
—
10,970
320,000
-523,125
-192,039
Equity as of 31 December 2024
978
-4,235
17,742
181,232
320,000
1,429,360
1,945,077
¹⁾ Please refer to Note 18 to the Group consolidated financial statements for further information on treasury shares.
²⁾ The Share premium reserve was reduced by USD 320.0m, as decided at the Annual General Meeting on 11 April 2024 and subsequently approved by the court, in order to create further distributable reserves to support: (i) the
future payment by the Company of dividends to its shareholders; and (ii) share buy-backs should circumstances dictate it desirable.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > CHANGES IN EQUITY
TORM ANNUAL REPORT 2024
254
Parent Company Cash Flow Statement
01 January-31 December
USD '000
Note
2024
2023
Cash flow from operating activities
Net profit for the year
1,307,153
120,870
Reversals:
Reversal of depreciation and impairment losses
201
24
Reversal of other non-cash movements
17
64,346
51,536
Financial income
4
-1,365,734
-144,004
Financial expenses
4
37,893
13,664
Tax
5
-3,406
2,174
Interest received
31,811
14,293
Interest paid
-31,196
-16,160
Net exchange rate gains and losses
-318
107
Repayments of intercompany trading balances
-129
-43,653
Change in inventories, receivables, and payables, etc.
17
-19,674
-194
Net cash flow from operating activities
20,947
-1,343
USD '000
Note
2024
2023
Cash flow from investing activities
Investment in tangible fixed assets
-181
—
Investment in intangible fixed assets
-34
-89
Repayments of loans to subsidiaries ¹⁾
313,053
485,461
Dividends from subsidiaries
60,000
—
Net cash flow from investing activities
372,838
485,372
Cash flow from financing activities
Borrowing, mortgage debt
11
419,380
489,974
Repayment/redemption, mortgage debt
11
-182,262
-394,641
Repayment/redemption, leases
11
-12
-19
Capital increase ¹⁾
12,517
6,187
Transaction costs capital increase
-631
-167
Dividends paid
-553,287
-586,384
Net cash flow from financing activities
-304,295
-485,050
Net cash flow from operating, investing, and financing
activities
89,490
-1,021
Cash and cash equivalents as of 01 January
685
1,706
Cash and cash equivalents as of 31 December
90,175
685
¹⁾ During 2024, the share capital was increased by USD 331.7m (2023: USD 92.7m), including a USD 319.2m
(2023: USD 86.5m) non-cash share issue in relation to subsidiaries’ acquisition of 19 (2023: 5) vessels with a
corresponding increase in loans to subsidiaries. Please also refer to Note 6 for non-cash transactions on
investments in subsidiaries in 2024 and 2023 and to Note 16 for vessel sales to subsidiaries in 2023.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > CASH FLOW STATEMENT
TORM ANNUAL REPORT 2024
255
Notes to Parent Company Financial
Statements
NOTE 1 – ACCOUNTING POLICIES - SUPPLEMENTARY FOR THE PARENT COMPANY
257
NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS
258
NOTE 3 – STAFF COSTS
258
NOTE 4 – FINANCIAL ITEMS
258
NOTE 5 – TAX
259
NOTE 6 – FINANCIAL ASSETS
260
NOTE 7 – LOAN RECEIVABLES
261
NOTE 8 – INVENTORIES
261
NOTE 9 – FREIGHT RECEIVABLES
261
NOTE 10 – OTHER RECEIVABLES
262
NOTE 11 – BORROWINGS
262
NOTE 12 – OTHER LIABILITIES
262
NOTE 13 – IMPAIRMENT TESTING
262
NOTE 14 – COLLATERAL SECURITY FOR MORTGAGE DEBT AND BANK LOANS
262
NOTE 15 – GUARANTEE COMMITMENTS AND CONTINGENT LIABILITIES
262
NOTE 16 – RELATED PARTY TRANSACTIONS
263
NOTE 17 – CASH FLOWS
263
TORM ANNUAL REPORT 2024
256
NOTE 1 – ACCOUNTING POLICIES - SUPPLEMENTARY FOR THE PARENT COMPANY
Basis of Preparation
TORM plc is a public company limited by shares and incorporated in England and Wales. Its
registered number is 09818726, and its registered address is 4th Floor, 120 Cannon Street,
London, EC4N 6AS. The Parent Company meets the definition of a qualifying entity under
Financial Reporting Standard 100 (“FRS 100”) issued by the Financial Reporting Council.
Therefore, these financial statements were prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law),
including Financial Reporting Standard 101 Reduced Disclosure Framework and additional
disclosure requirements for listed companies in accordance with the Danish Financial Statements
Act.
As permitted by FRS 101, the Parent Company has taken advantage of the disclosure exemptions
available under that standard in relation to accounting standards issued but not yet effective or
implemented, share-based payment information, financial instruments, capital management,
presentation of comparative information in respect of certain assets and certain related party
transactions.
The following exemptions available under FRS 101 have been applied:
•
Paragraphs 45(b) and 46 to 52 of IFRS 2, “Shared-based payment” (details of the number and
weighted-average exercise prices of share options, and how the fair value of goods or services
received was determined)
•
IFRS 7 “Financial Instruments: Disclosures”
•
Paragraph 91 to 99 of IFRS 13, “Fair value measurement” (disclosure of valuation techniques
and inputs used for fair value measurement of assets and liabilities)
•
The following paragraphs of IAS 1 “Presentation of financial statements”
•
16 (statement of compliance with all IFRS)
•
134-136 (capital management disclosures)
•
Paragraph 30 and 31 of IAS 8 “Accounting policies, changes in accounting estimates and
errors” (requirement for the disclosure of information when an entity has not applied a new
IFRS that has been issued but is not yet effective)
•
Paragraph 17 and 18A of IAS 24 “Related Party Disclosures” (Key management personnel
compensation)
•
The requirements in IAS 36 “Impairment of Assets” (disclosure of valuation technique and
assumptions used in determining recoverable amount)
The financial statements have been prepared on a going concern basis. Further information
relating to the going concern assumption is provided in Note 1 to the Group consolidated financial
statements.
Where required, the equivalent disclosures are given in the Group's consolidated financial
statements. Key sources of estimating uncertainty disclosure are provided in the accounting
policies and in relevant notes to the Group consolidated financial statements as applicable.
Details of the Parent Company's share-based payment schemes are provided in Note 5 to the
Group consolidated financial statements.
NOTE 1 - continued
Accounting Policies
In supplement to the accounting policies provided in Note 1 to the Group consolidated financial
statements, the following material accounting policy information provided below were applied to
the Parent Company’s financial statements.
Investment in Subsidiaries and Joint Ventures
Investment in subsidiaries, associated companies, and joint ventures are recognized and measured
in the financial statements of the Parent Company at cost less provision for impairment and
classified as “non-current assets”. Dividends are recognized under “Financial income”.
The carrying amount of investment in subsidiaries and joint ventures is increased to its recoverable
amount if there have been changes in the estimates used to determine the recoverable amount
since the last impairment loss was recognized.
Reversal of impairment losses on investment in subsidiaries and joint ventures is recognized in
“Impairment reversal on investment in subsidiaries”.
Critical Accounting Estimates and Judgements
In supplement to the critical accounting estimates and judgements provided in Note 1 to the Group
consolidated financial statements, the following is considered a significant accounting estimate
used in the preparation of the Parent Company’s financial statements.
Carrying Amounts of Investments in Subsidiaries
The Management has assessed that all subsidiaries of the Parent Company are considered as one
single cash-generating unit (CGU).
The Parent Company evaluates the carrying amount of the CGU to determine if events have
occurred which would require a modification of the carrying amount. The recoverable amount of
the CGU is reviewed based on events or changes in circumstances which would indicate that the
carrying amount of the CGU might not be recoverable.
In assessing the recoverability of the CGU, the Parent Company reviews certain indicators of
potential impairment or indication of any past impairment losses that should be reversed. If an
indication of impairment or reversal of past impairment is identified, the need for recognizing an
impairment loss or a recognition of a reversal of a past impairment loss is assessed by comparing
the carrying amount of the CGU to the higher of the fair value less costs of disposal and the value
in use.
The Management assesses indicators of impairment that include, but are not limited to, broker
vessel values, weighted average cost of capital, and any other adverse impacts from current
economic, environmental, and geopolitical uncertainty.
For further information regarding the underlying impairment testing of the vessels in the Group,
please refer to Note 12 to the Group consolidated financial statements.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
257
NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS
USD'000
2024
2023
Disaggregation of revenue
Transportation of oil products and chemicals
33,576
—
Bareboat hire from subsidiaries
40,225
47,895
Total revenue
73,801
47,895
NOTE 3 – STAFF COSTS
The average number of employees is calculated as a full-time equivalent (FTE).
USD'000
2024
2023
Total staff costs
Staff costs included in administrative expenses
9,454
6,986
Total
9,454
6,986
Staff costs comprise the following
Wages and salaries
754
191
Share-based compensation
8,329
6,740
Pension costs
57
15
Other social security costs
75
20
Other staff costs
239
20
Total
9,454
6,986
Average number of permanent employees
Land-based
4
1
Total
4
1
Total seafarers’ costs in 2024 were USD 4.1m (2023: USD 0.0m), which is included in “Operating
expenses”. The cost is recharged to TORM PLC from another group undertaking as they are not
employed by TORM PLC.
Please refer to Note 5 to the Group consolidated financial statements for further information on
Executive Management and Non-Executive Board remuneration.
NOTE 4 – FINANCIAL ITEMS
USD '000
2024
2023
Financial income
Interest income from subsidiaries
30,616
24,916
Interest income from cash and cash equivalents, including
restricted cash
106
35
Dividends from subsidiaries
1,334,964
118,906
Other financial income
48
48
Exchange rate adjustments, including loss from forward
exchange rate contracts
—
99
Total
1,365,734
144,004
Financial expenses
Interest expenses on borrowings
-35,124
-11,960
Interest expense from right-of-use assets
-2
-4
Commitment fees
-1,912
-1,298
Amortization of interest rate swaps
-1,726
-2,215
Ineffectiveness on interest rate swaps
1,521
2,388
Exchange rate adjustments, including loss from forward
exchange rate contracts
-349
—
Other financial expenses
-301
-575
Total
-37,893
-13,664
Dividends from subsidiaries in 2024 of USD USD 1,335.0m primarily related to non-cash
distribution of USD 1,275.0m from its subsidiary TORM A/S. This included USD 795.7m related to
the transfer of share ownership of TORM Singapore Pte Ltd with transfer price based on the
market value of vessels owned by TORM Singapore Pte Ltd. The market value was determined
using an average of valuations from two internationally acknowledged shipbrokers with appropriate
qualifications and recent experience in vessel. Another non-cash distribution of USD 479.2m was
in relation to a settlement of intercompany loan note payable to TORM A/S. This loan note was
originated from transfer 15 vessels from TORM A/S to TORM VesselCo UK Limited, with the loan
principle amount also based on an average of valuations from two the two qualified shipbrokers.
TORM Plc increased its capital contribution in TORM VesselCo UK Limited (refer to note 6) by
settling the loan note at full with TORM A/S. TORM Plc further received cash dividends of USD
USD 60.0m from TORM Singapore Pte Lte in 2024.
Dividends from subsidiaries in 2023 of USD 118.9m primarily related to three vessels distributed
from its subsidiary TORM A/S based on a market value of the vessels of USD 117.1m derived from
an average of valuations from two internationally acknowledged shipbrokers with appropriate
qualifications and recent experience in the valuation of vessels.
Please refer to Note 6 to the Parent Company financial statements for further information in
respect of the acquisitions.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
258
NOTE 5 – TAX
The major components of income tax for the years ended 31 December 2024 and 2023 are:
USD '000
2024
2023
Tax for the year
Tonnage tax charge for the year
24
—
Origination and reversal of temporary differences
-3,430
2,174
Total
-3,406
2,174
The net movement in deferred tax of USD 3.4m for the year ended 31 December 2024 consists of
the utilization of deferred tax assets for unused tax credits for charges subject to the corporate
interest restriction of USD 1.2m (2023: USD -2.8m) and the recognition of deferred tax assets for
additional carried forward loss of USD 2.2m (2023: USD 0.6m).
In 2024 TORM plc established a new UK vessel-owning company. The UK-owned vessels are
chartered on bare boat contracts to TORM plc, which charters out the vessels externally. TORM
plc has elected and applied to enter into the UK tonnage tax regime in October 2024, which has
resulted in a tonnage tax charge for the year of USD 24k.
Tax effects directly recognized in equity or other comprehensive income for the years ended 31
December 2024 and 2023 are:
USD '000
2024
2023
Deferred tax charged in the statement of Other Comprehensive
Income
Deferred tax related to items recognized in OCI during the year
-2,608
-4,640
Total
-2,608
-4,640
Tax recognized in equity or other comprehensive income relates to the unrealized fair value
adjustment on hedging instruments recognized directly in equity or other comprehensive income.
NOTE 5 – continued
Reconciliation of tax charge
USD '000
2024
2023
Accounting profit before income tax
1,303,747
123,044
Adjustment of income
Dividend distribution
-1,334,964
-118,906
Legal and professional fees
1,472
262
Non-chargable shipping activities
7,721
—
Other non-deductible expenses for tax purposes
8,712
6,740
Other non-taxable income
—
-2,163
Corporate interest restriction
4,623
-11,339
Capital allowances
-232
-283
Adjusted taxable loss
-8,921
-2,645
At effective UK income tax rate of 25% (2023: 25%)
—
—
Recognition of deferred tax asset
3,430
-2,174
Income tax reported in the Income Statement
3,430
-2,174
Deferred taxes
USD '000
2024
2023
Deferred tax assets
Deferred tax asset related to Corporate Interest Restriction
1,683
529
Deferred tax asset related to trading losses
6,947
4,669
Deferred tax assets before offset
8,630
5,198
Offset against deferred tax liabilities
-5,914
-5,198
Deferred tax assets in the balance sheet
2,716
—
USD '000
2024
2023
Deferred tax liabilities
Deferred tax liabilities arising from changes in equity
5,914
8,522
Deferred tax liabilities before offset
5,914
8,522
Offset against deferred tax assets
-5,914
-5,198
Deferred tax liabilities in the balance sheet
—
3,324
Deferred tax assets and liabilities are offset and reported net where appropriate within territories.
Deferred tax assets are recognized to the extent that the realization of the relaxed tax benefit
through future taxable profits is probable.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
259
NOTE 5 – continued
All deferred tax movements arise from the origination and reversal of temporary differences.
As per 31 December 2024 there are unused tax credits of USD 2.2m (2023: USD 2.2m) relating
to prior year losses, as the utilization of these losses may not be used to offset taxable profit due
to a high degree of uncertainty of future taxable profits.
Deferred tax at the balance sheet date have been measured using the appropriate enacted tax
rates and are reflected in these financial statements.
Pillar Two Tax Effects
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which
the Group operates. Under the legislation, the parent company will be required to pay, in UK, top-
up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15%. The
main jurisdictions in which exposures to this tax may exist include Denmark, Singapore and the US.
As the majority of these companies’ revenue consist of international shipping income, it is
assessed that this income will be excluded from the GloBE income with reference to the shipping
carveout described in Article 3.3.
TORM has applied the exception in IAS 12 'Income Taxes' to recognizing and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes.
Based on our fiscal year for 2024, the Group has prepared a preliminary Transitional Country-by-
Country Reporting (CbCR) Safe Harbour assessment concluding that we expect to be eligible for
the Transitional CbCR Safe Harbour in a majority of jurisdictions in which we are present. As of
December 31, 2024, the calculated top-up tax does not have a material impact on our financial
result.
NOTE 6 – FINANCIAL ASSETS
USD'000
2024
2023
Investments in subsidiaries
Cost:
Balance as of 01 January
1,009,071
940,291
Additions
1,453,444
62,912
Capital decreases in subsidiaries
-42,434
-9,941
Capital increases related to share-based payments
21,811
15,809
Balance as of 31 December
2,441,892
1,009,071
Carrying amount as of 31 December
2,441,892
1,009,071
Additions during 2024 of USD 1,453.4m primarily relate to two transactions.
In June 2024 TORM plc acquired the investment in TORM Singapore Pte. Ltd from its subsidiary
TORM A/S for a total consideration of USD 795.7m against a loan note towards TORM A/S. The
value of the company is based on the average of the valuations from the two internationally
acknowledged shipbrokers adjusted for the value of bareboat contracts and working capital. TORM
A/S has subsequently distributed the loan note as dividend in kind. In connection to this
transaction, intercompany loans between TORM plc and TORM A/S of USD 38.8m were
converted into shares in TORM A/S.
In October 2024 the subsidiary TORM A/S sold fifteen MR and LR1 vessels to the subsidiary TORM
VesselCo UK Limited at fair market value of USD 618.9m based on the average of the valuations
from the two internationally acknowledged shipbrokers. The vessels are sold against a loan note
receivable of USD 618.9m. TORM A/S has subsequently distributed the loan note receivable to
TORM plc via dividends of USD 479.2m and repayment of the existing intercompany loan of USD
139.7m. TORM Plc contributed in kind hereafter the note receivable as share capital in TORM
VesselCo UK Limited.
Additions during 2023 of USD 62.9m primarily relate to one vessel contributed in kind to the
newly incorporated subsidiary, TORM Tanker Corporation. The historical cost of this investment in
subsidiary amounts to USD 37.8m and is based on a market value of the vessel derived from an
average of valuations from two internationally acknowledged shipbrokers with appropriate
qualifications and recent experience in the valuation of vessels.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
260
NOTE 7 – LOAN RECEIVABLES
USD '000
2024
2023
Loan receivables
Cost:
Balance as of 01 January
4,711
4,711
Balance as of 31 December
4,711
4,711
Expected credit loss:
Balance as of 01 January
188
141
Additions during the year
47
47
Balance as of 31 December
235
188
Carrying amount as of 31 December
4,476
4,523
NOTE 8 – INVENTORIES
USD '000
2024
2023
Bunkers
5,654
—
Lubeoil
1,445
—
EU Emission Allowances
16
—
Balance as of 31 December
7,115
—
During 2024 bunker inventories of USD 7.7m (2023:USD 0.0m) were recognized as an expense in
Port expenses, bunkers and commissions.
During 2024 lubeoil inventories of USD 0.2m (2023: USD 0.0m) were recognized as an expense
in Operating expenses.
During 2024 EU Emission Allowance inventories of USD 0.1m (2023: USD 0.0m) were recognized
as an expense in Port expenses, bunkers and commissions.
NOTE 9 – FREIGHT RECEIVABLES
USD '000
2024
2023
Analysis as of 31 December of freight receivables
Gross freight receivables
Not due
15,037
—
Due < 30 days
6,274
—
Due between 30 - 180 days
2,559
—
Total gross
23,870
—
Allowance for expected credit loss
—
—
Total net
23,870
—
The Management makes allowance for expected credit loss based on “the simplified approach”
according to IFRS 9 to provide for expected credit losses, which permits the use of the lifetime
expected loss provision for all freight receivables. Expected credit loss for receivables overdue
more than 180 days is 25%-100%, depending on the category of the receivable. Expected credit
loss for receivables overdue more than one year is 100%.
Allowance for expected credit loss of trade receivables has been recognized in the income
statement under “Port expenses, bunkers and commissions”.
Allowance for expected credit loss of freight receivables is calculated using an aging factor as well
as specific customer knowledge and is based on a provision matrix on days past due.
All allowance for expected credit loss relates to receivables due > 180 days.
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
261
NOTE 10 – OTHER RECEIVABLES
USD '000
2024
2023
Derivative financial instruments
24,663
35,301
Other
264
21
Balance as of 31 December
24,927
35,322
NOTE 11 – BORROWINGS
As of 31 December 2024, the Parent Company had borrowed USD 744.5.m (2023: USD 505.7m).
The loan proceeds were USD 10.9m lower (2023: USD 6.7m) due to borrowing fees. The fees are
amortized over the loan periods.
In January 2024 the Parent Company issued a senior unsecured bond of USD 200m, which was
successfully listed on the Oslo Stock Exchange in June 2024.
As of 31 December 2024, the Parent Company had lease liabilities of USD 0.0m (2023: USD
0.1m).
The following table summarizes the reconciliation of liabilities arising from financing activities:
Cash movements
Non-cash
movements
USD '000
Opening
balance
as of
01 January
2024
Borrowings
Repayments
Other changes
End balance
as of 31
December
2024
Borrowings
499,038
419,380
-182,275
-2,571
733,572
Total
499,038
419,380
-182,275
-2,571
733,572
Cash movements
Non-cash
movements
USD '000
Opening
balance
as of
01 January
2023
Borrowings
Repayments
Other changes
End balance
as of 31
December
2023
Borrowings
405,484
489,974
-394,661
-1,759
499,038
Total
405,484
489,974
-394,661
-1,759
499,038
NOTE 12 – OTHER LIABILITIES
USD '000
2024
2023
Accrued operating expenses
1,113
—
Accrued interest
10,750
1,474
Accrued administration expenses
704
678
EU Emission Allowance
129
—
Balance as of 31 December
12,696
2,152
NOTE 13 – IMPAIRMENT TESTING
As of 31 December 2024, the Management has assessed that all subsidiaries of TORM plc are
considered as one single CGU.
As of 31 December 2024, the Management has assessed indicators of impairment for the CGU
that include, but are not limited to, broker vessel values, weighted average cost of capital, any
other adverse impacts from current economic, environmental, and geopolitical uncertainty.
Based on this assessment, the Management did not determine the recoverable amount of the CGU
as no indicators were identified.
NOTE 14 – COLLATERAL SECURITY FOR MORTGAGE DEBT AND BANK LOANS
The vessels owned by subsidiaries of the Parent Company which have been provided as security
for TORM’s debt amounted to USD 544.5m as of 31 December 2024 (2023: USD 505.7m).
NOTE 15 – GUARANTEE COMMITMENTS AND CONTINGENT LIABILITIES
The Parent Company is guarantor for a loan amounting to USD 32m (2023: USD 35m)
established in the subsidiary TORM A/S.
As part of sale and leaseback transactions made by a subsidiary, the Parent Company issued a
guarantee to the third party in relation to future lease payments to be made by the subsidiary,
which are expected to total approximately USD 457m (2023: USD 522m).
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
262
NOTE 16 – RELATED PARTY TRANSACTIONS
TORM’s ultimate controlling party is Brookfield Oaktree Holdings, LLC, a limited liability company
incorporated in the USA. The immediate controlling shareholder is OCM Njord Holdings S.à.r.l.
(Njord Luxco).
During the year the following transactions with related parties have occurred:
USD '000
2024
2023
Transactions with subsidiaries
Time charter hire income
796
—
Bareboat hire income
39,429
47,895
Bareboat hire expense
62,044
47,304
Management fee income
447
—
Management fee expense
1,787
—
The Parent Company has issued two unsecured loans to two subsidiaries with a total outstanding
balance of USD 134.0m as per 31 December 2024 (2023: 312.2) maturing in 2026 and 2028
respectively. The loans carry interest rate in accordance with SOFR compounded in arrears plus a
margin of 1.75% (2023: 1.75%) and 1.85% (2023: 1.85%) respectively.
The Parent Company bought in 2024 TORM Singapore Pte Ltd from TORM A/S. Please refer to
Note 6 to the Parent Company financial statements for further information in respect of the
acquisitions.
The Parent Company sold in 2023 two vessels to its subsidiary TORM Tanker Corporation
amounting to USD 79.4m against a loan note and contributed one vessel in kind amounting to USD
37.8m.
Please also refer to note 4 for interest income from subsidiaries and received dividends from
subsidiaries.
NOTE 16 – continued
As part of the business model in TORM, the Parent Company has bareboat agreements (short term
leases) with subsidiaries, which are nullified on a continuing basis through dividends, capital
reductions, etc. Consequently, the intercompany liability of USD 39.4m at 31 December 2024
(2023: USD 19.8m) towards subsidiaries is expected to be settled during 2025.
There have been no or limited transactions with related parties during the financial year other than
the transactions disclosed above.
Please refer to Note 27 in the Group consolidated financial statements for further information
about transactions with controlling shareholder and to Note 5 in the Group consolidated financial
statements for further information about the remuneration to the Executive Director.
NOTE 17 – CASH FLOWS
USD '000
2024
2023
Reversal of other non-cash movements:
Share-based payments
8,352
6,740
Bareboat hire expense
62,044
47,304
Bareboat and charter hire income
-13,939
—
Operating expenses
6,503
—
Management fees
1,369
—
Other adjustments
17
-2,508
Total
64,346
51,536
USD '000
2024
2023
Change in inventories, receivables and payables
Change in inventories
-559
—
Change in receivables
-24,112
-5
Change in prepayments
-283
-68
Change in trade payables and other liabilities
5,280
-121
Total
-19,674
-194
FINANCIAL STATEMENTS > PARENT COMPANY FINANCIAL STATEMENTS > NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
TORM ANNUAL REPORT 2024
263
Other
Independent Auditor’s Report
265
Independent Auditor's Limited Assurance Report on the
Sustainability Statement
271
TORM Fleet Overview
273
Glossary
276
Alternative Performance Measures
278
TORM ANNUAL REPORT 2024
264
Independent Auditor’s Report to the Members of TORM plc
Report on the Audit of the Financial Statements
Opinion
In our opinion:
•
TORM plc’s group financial statements and parent
company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of
the parent company’s affairs as at 31 December 2024 and
of the group’s profit for the year then ended;
•
the group financial statements have been properly prepared
in accordance with UK adopted international accounting
standards;
•
the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice and additional
disclosure requirements for listed companies in accordance
with the Danish Financial Statements Act;
•
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006; and
•
the group financial statements are also prepared in
accordance with IFRS Accounting Standards (“IFRS”) as
issued by the International Accounting Standards Board
(“IASB”) and IFRS as adopted by the EU, as applied to
financial periods beginning on or after 1 January 2024 and
additional disclosure requirements for listed companies in
accordance with the Danish Financial Statements Act.
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law
and UK adopted international accounting standards. The
consolidated group financial statements are also prepared in
accordance with IFRS Accounting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”) and
IFRS as adopted by the EU, as applied to financial periods
beginning on or after 1 January 2024 and additional disclosure
requirements for listed companies in accordance with the
Danish Financial Statements Act. The financial reporting
framework that has been applied in the preparation of the
parent company financial statements is applicable law and
United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice) and additional disclosure
requirements for listed companies in accordance with the
Danish Financial Statements Act.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the
group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions Relating to Going Concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the group and parent
company’s ability to continue to adopt the going concern basis
of accounting included carrying out the following procedures:
FINANCIAL STATEMENTS > OTHER > INDEPENDENT AUDITOR'S REPORT
TORM ANNUAL REPORT 2024
265
We have audited the financial statements of TORM plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31
December 2024 which comprise:
Group
Parent company
Consolidated Income Statement for the year then ended
Income Statement for the year then ended
Consolidated Statement of Comprehensive Income for the year
then ended
Statement of Comprehensive Income for the year then ended
Consolidated Balance Sheet as at 31 December 2024
Balance Sheet as at 31 December 2024
Consolidated Statement of Changes in Equity for the year then
ended
Statement of Changes in Equity for the year then ended
Consolidated Statement of Cash Flows for the year then ended
Statement of Cash Flows for the year then ended
Related notes 1 to 34 to the financial statements, including
material accounting policy information.
Related notes 1 to 17 to the financial statements, including
material accounting policy information
•
We confirmed our understanding of management’s going
concern assessment process and assessed the design,
implementation and operating effectiveness of related
controls and also engaged with management early to
ensure key factors were considered in their assessment.
•
We obtained management’s board approved forecast cash
flows and covenant calculation covering the period of
assessment from the day of signing to 31 March 2026. As
part of this assessment, the group has modelled a base
case and stress test case scenario in their cash forecasts
and covenant calculations in order to incorporate
unexpected changes to the forecasted liquidity and
covenant compliance of the group.
•
We assessed the reasonableness of the cashflow forecast
by analyzing management’s historical forecasting accuracy.
•
We evaluated the key assumptions and sensitivities
identified underpinning the group’s assessment by
challenging how these compared with external benchmarks,
historical performance adjusted for inflation, the lowest
rolling 4-quarter average since 2000, as well as
performance in the period post year end.
•
We have evaluated the key assumptions underpinning the
group’s base case and stress test case scenario by
challenging the appropriateness of the base case and stress
test case scenarios modelled and how these compared with
the principal risks and uncertainties of the group.
•
We have evaluated the stress test case scenario and
considered whether the combination of factors (notably
significantly reduced freight rates and vessel values) is a
plausible outcome or remote based upon the historical
performance, external benchmarks, and performance and
conditions in the period post year end.
•
We tested the clerical accuracy and logical integrity of the
model used to prepare the group’s going concern
assessment.
•
We considered whether the group’s forecasts in the going
concern assessment were consistent with other forecasts
used by the group in its accounting estimates.
•
Our analysis also considered the mitigating actions such as
sale of older vessels, increase leverage through additional
sale and leaseback structures that management could
undertake in an extreme downside scenario and whether
these were achievable and in control of management
considering timing and quantum.
•
We also confirmed the continued availability of debt
facilities through the going concern period, and reviewed
their underlying terms, including covenants, by examination
of executed documentation.
•
We have considered factors in the period immediately after
the going concern period, such as forecast freight rates by
comparing them to the market forward freight rates and
forecast vessel values against estimated fair value at the
current year end.
•
We considered whether management’s disclosures in the
financial statements sufficiently and appropriately reflect
the going concern assessment and outcomes.
The group is forecast to be profitable and generate positive
operating cash flows throughout the going concern period in
base case scenario. The group is forecast to be loss making but
still to have a positive EBITDA and generate positive operating
cash flow throughout the going concern period in the stress
test case scenario modelled. In each scenario TORM has
sufficient liquidity and continues to meet its covenants. The
combination of factors to achieve a stress test position is
considered to be remote.
We considered subsequent events, including committed capital
expenditure and pipeline vessels disposals in 2025 and
obtained management’s assessment over the impact of these
events. Management has assessed that the subsequent events
do not change the conclusion of their assessment.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group and parent company’s ability to continue as a going
concern for a period to 31 March 2026.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee
as to the group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
We performed an audit of the complete
financial information of the group.
Key audit matter
Vessel impairment indicator assessment.
Materiality
Overall group materiality of $22m which
represents 2.6% of the group’s EBITDA.
An Overview of the Scope of the Parent and Group Audits
Tailoring the Scope
In the current year, our audit scoping has been updated to
reflect the new requirements of ISA (UK) 600 (Revised). We
have followed a risk-based approach when developing our audit
approach to obtain sufficient appropriate audit evidence on
which to base our audit opinion. We performed risk assessment
procedures to identify and assess risks of material
misstatement of the group financial statements and identified
significant accounts and disclosures. Our assessment of audit
risk, our evaluation of materiality and our allocation of
performance materiality determine our audit scope for each
company within the group. Taken together, this enables us to
form an opinion on the consolidated financial statements.
In assessing the risk of material misstatement to the group
financial statements, we considered that all significant
elements of the group’s finance and accounting function are
situated and managed centrally in Copenhagen, Denmark, and
operate under one common internal control environment; and
all operations of the group are also managed from this location
together with the UK headquarters. All audit work performed for
the purposes of the audit was undertaken by the group audit
team, as an integrated audit engagement team, consisting of
team members located in Denmark and the UK. As an
integrated team all audit work was performed in a shared
electronic workspace. The audit plan was developed jointly and
both teams were involved in the execution of the plan and in the
consideration of areas of significant judgement and estimation.
During the course of the audit, the UK senior members,
including the Senior Statutory Auditor, supervised the members
of the audit team who are based in Copenhagen, Denmark. We
held regular meetings with management and the Denmark
based audit team via video calls to direct and supervise the
audit and the UK team continued to access client
documentation and document our work in the shared electronic
work file. UK team members were also present in Copenhagen
during the interim and year end phase of the audit.
FINANCIAL STATEMENTS > OTHER > INDEPENDENT AUDITOR'S REPORT
TORM ANNUAL REPORT 2024
266
Climate Change
Stakeholders are increasingly interested in how climate change
will impact group. The group has determined that the most
significant future impacts from climate change on its
operations will be from declining demand for oil and gas,
reduced access to capital and higher cost of capital, increased
operating costs and increased capital expenditure to
decarbonize the fleet. These are explained on pages 73-74 in
Climate-Related Risks and on page 61-82 in Corporate
Sustainability Reporting Directive (CSRD) E1 Climate Change
Section. They have also explained their climate commitments
on pages 4, 13, 61, 63-64, 77 to 79. All of these disclosures
form part of the “Other information”, rather than the audited
financial statements. Our procedures on these unaudited
disclosures therefore consisted solely of considering whether
they are materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated, in line with our
responsibilities on “Other information”.
In planning and performing our audit we assessed the potential
impacts of climate change on the group’s business and any
consequential material impact on its financial statements.
The group has explained in notes 10 and 12 to the group’s
financial statement how climate change has been reflected in
vessels value, and its climate targets on the estimated useful
life and residual value of vessels, including how this aligns with
their commitment to the aspirations of the Paris Agreement to
achieve net zero emissions by 2050. Significant judgements
and estimates relating to climate change are included in notes
10 and 12. These disclosures also explain where governmental
and societal responses to climate change risks are still
developing, and where the degree of certainty of these changes
means that they cannot be taken into account when
determining asset and liability valuations under the
requirements of under the requirements of UK adopted
international accounting Standards.
In note 10 to the financial statements the impact of green
recycling prices on vessels’ residual values has been provided.
Our audit effort in considering the impact of climate change on
the financial statements was focused on evaluating
management’s assessment of the impact of climate risk,
physical and transition, their climate commitments, the effects
of material climate risks disclosed on pages 73-74 and the
significant judgements and estimates disclosed in notes 10 and
12. As part of this evaluation, we performed our own risk
assessment and considered whether these have been
appropriately reflected in the carrying value of vessels and
where the fair value of vessels may be negatively impacted by
climate change and climate change agenda. Details of our
procedures and findings on carrying value of vessels are
included in our key audit matter below.
We also challenged the Directors’ considerations of climate
change risks in their assessment of going concern and viability
and associated disclosures.
Based on our work we have not identified the impact of climate
change on the financial statements to be a key audit matter or
to impact a key audit matter.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or
not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do
not provide a separate opinion on these matters.
FINANCIAL STATEMENTS > OTHER > INDEPENDENT AUDITOR'S REPORT
TORM ANNUAL REPORT 2024
267
Risk
Our Response to the Risk
Key Observations Communicated
to the Audit Committee
Vessel impairment indicator assessment.
Carrying value of group’s vessels as at 31 December 2024
totaled $2,827m (2023: $2,070m).
The Company assesses impairment indicators at each
reporting date or whenever events or changes in
circumstances would indicate that the carrying amounts of its
vessels might not be recoverable in accordance with IAS 36
impairment of Assets. The Company prepares an impairment
indicator assessment at the cash generating unit (CGU) level,
which has been determined as LR1, LR2 and MR vessels (the
Main Fleet) as they are operated collectively, are largely
interchangeable and the cash flow generated by them are
interdependent from other vessels. In assessing vessel
impairment indicators, the Company monitors the fair value of
the vessels, which was calculated as the average of two
valuations prepared by independent shipbrokers. Based on the
assessment, the Company concluded that the no vessel
impairment indicators required the Company to prepare an
impairment test as of 31 December 2024.
Auditing the Company’s vessel impairment indicator
assessment was complex due to the significant judgment
required by Management in determining the CGU and
determining whether impairment indicators required the
Company to prepare an impairment test. The vessel
impairment indicator with significant judgment was
Management’s assessment of the fair value of the vessels
using independent shipbroker valuations, which use a
combination of vessel specific inputs such as size, yard and
age of the vessels and assumptions based on market data,
including recent comparable vessel transactions.
We obtained an understanding, evaluated the design, and
tested the operating effectiveness of the controls over the
Company’s impairment assessment process, including
controls over the identification of CGUs and review of the
vessels’ fair value.
We performed audit procedures on the impairment indicator
assessment that included, among others, assessing of
management’s CGU determination by evaluating their analysis
in respect of the smallest group of assets that generate largely
independent cash flows. We inspected evidence used in
Management’s determination of the collective operation and
homogenous nature of the Main Fleet. We evaluated the
determination of the fair value of the vessels by comparing
them to the average of two valuations prepared by
independent shipbrokers. We performed inquiries with the
independent shipbrokers regarding the valuation methodology
applied and input data used and evaluated their competence,
capabilities and objectivity. We tested the input data used for
the valuation of the vessels in the Main Fleet by comparing
vessel specific inputs with vessel records and supporting
documentation as well as evidence obtained in other areas of
the audit. We further performed a retrospective comparison of
historical sales prices of vessels with the independent broker
valuations near the time of disposal and compared the
valuations to recent market data for comparable vessels.
We assessed the adequacy of disclosures in notes 1 and 12,
including the impact from climate changes to the consolidated
financial statements in accordance with IAS 36 - Impairment
of Assets.
Based on our audit procedures performed, we concur with
Management’s conclusion that there are no vessel impairment
indicators at 31 December 2024 as presented to the Audit
Committee, including:
•
Determination of CGUs (being Main Fleet MR/LR1/LR2
and MET group) is judgmental but is supported by
Management’s assessment.
•
The shipbroker valuations assumed and applied have been
benchmarked to external sources and assessed as
reasonable.
•
The independent shipbrokers have been assessed as
competent, capable and objective.
•
We consider the disclosures in the financial statements to
be sufficient and appropriate and in compliance with
accounting standards.
In the prior year, our auditor’s report included a key audit matter in relation to carrying value of vessels. In the current year, we focused on assessing the impairment indicators for vessels, given the
complexity and significant subjectivity involved in this process. A failure in identifying an impairment indicator and/or inappropriate assessment could result a potential misstatement of the carrying
value of the vessels.
FINANCIAL STATEMENTS > OTHER > INDEPENDENT AUDITOR'S REPORT
TORM ANNUAL REPORT 2024
268
Our Application of Materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial
statements. Materiality provides a basis for determining the
nature and extent of our audit procedures.
We determined materiality for the group to be $22 million
(2023: $17 million), which is 2.6% (2023: 2%) of the group’s
EBITDA. We believe that key users of the group’s financial
statements are focused on the group’s earning-based KPIs,
primarily EBITDA.
We determined materiality for the Parent Company to be $13
million (2023: $6.3 million), which is 0.5% (2023: 0.5%) of
total assets, as the parent company principally holds
investments in subsidiaries and has relatively low trading
activities externally.
Performance Materiality
The application of materiality at the individual account or
balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our
assessment of the group’s overall control environment, our
judgement was that performance materiality was 50% (2023:
50%) of our planning materiality, namely $11m (2023: $8.5m).
Our objective ion adopting this approach is to confirm the total
detected and undetected audit differences due to not exceed
our materiality for the financial statements as a whole.
Reporting Threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of $1.1m
(2023: $0.85m), which is set at 5% of planning materiality, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our
opinion.
Other Information
The other information comprises the information included in the
annual report, including the Strategic Report and Governance
section, set out on pages 3 - 193, other than the financial
statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
•
The information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
•
The strategic report and directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the
group and the parent company and its environment obtained in
the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
•
Adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
•
the parent company financial statements and the part of
the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by
law are not made; or
•
we have not received all the information and explanations
we require for our audit
FINANCIAL STATEMENTS > OTHER > INDEPENDENT AUDITOR'S REPORT
TORM ANNUAL REPORT 2024
269
Responsibilities of Directors
As explained more fully in the directors’ responsibilities
statement set out on page 194-195, the directors are
responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group and parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities,
including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below. However, the primary responsibility for
the prevention and detection of fraud rests with both those
charged with governance of the company and management.
•
We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and determined
that the most significant are UK adopted international
accounting standards, IFRS as issued by the IASB and
adopted by the EU as applied to financial periods beginning
on or after 1 January 2023, FRS 101, the Companies Act
2006 and Corporate Governance Code, the Danish
Financial Statement Act, the Danish and UK tax legislation,
IMO 2020 Sulfur Regulation, IMO 2023 GHG Strategy, EU
Taxonomy and Corporate Sustainability Reporting
Directive.
•
We understood how TORM plc is complying with those
frameworks by making inquiries of management and
identifying the policies and procedures regarding
compliance with law and regulations. We also identified
those members of management who have the primary
responsibilities for ensuring compliance with law and
regulations, and for reporting any known instance of non-
compliance to those charged with governance. We
corroborated our inquiries through our review of board
minutes, discussion with the Audit Committee and any
correspondence received from regulatory bodies.
•
We assessed the susceptibility of the group’s financial
statements to material misstatement, including how fraud
might occur by meeting with management and those
charged with governance to understand where they
considered there was susceptibility to fraud, reviewing the
group’s risk register, through inquiry with management and
the Audit Committee during the planning and execution
phases of our audit. We considered the programs and
controls that the group has established to address risks
identified, or that otherwise prevent, deter and detect fraud
and material errors; and how management monitors those
programs and controls. We also considered performance
targets and their influence on efforts made by management
to manage earnings. Where this risk was considered to be
higher, we performed audit procedures to address each
identified fraud risk. These procedures included testing
journal entries and were designed to provide reasonable
assurance that the financial statements were free from
material misstatements arising from fraud.
•
Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations. Our procedures involved as follows:
•
Inquiries of management and external legal counsels
regarding their knowledge of any non-compliance or
potential non-compliance with laws and regulations
that could affect the financial statements;
•
Review of minutes of meeting of those charged with
governance;
•
Evaluating the appropriateness of management’s
assessment of non-compliance instances including
financial impact and remediation actions and their
status;.
•
Obtaining and reading correspondence from legal and
regulatory bodies;
•
Obtaining confirmations from the group’s banking
provider to verifying the existence of cash balances and
completeness of loans and borrowings;
•
Journal entry testing, with a focus on manual journals
and journals indicating large or unusual transactions
based on our understanding of the business.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of Our Report
This report is made solely to the company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Mark Woodward (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London - 06 March 2025
FINANCIAL STATEMENTS > OTHER > INDEPENDENT AUDITOR'S REPORT
TORM ANNUAL REPORT 2024
270
Independent Auditor's Limited Assurance Report on the
Sustainability Statement
To the shareholders of TORM plc
Limited assurance conclusion
We have conducted a limited assurance engagement on the
Sustainability Statement of TORM plc (the group) included in
the Strategic Report of the Annual Report, page 40 - 153 (the
sustainability statement), for the financial year 1 January – 31
December 2024.
Based on the procedures we have performed and the evidence
we have obtained, nothing has come to our attention that
causes us to believe that the Sustainability Statement is not
prepared, in all material respects, in accordance with the
Danish Financial Statements Act section 99 a, including:
•
Compliance with the European Sustainability Reporting
Standards (ESRS), including that the process carried out by
the management to identify the information reported in the
Sustainability Statement (the process) is in accordance
with the description set out in the chapter Impact, Risk, and
Opportunity Management, within the General section,
pages 54 and 56 of the Sustainability Statement; and
•
Compliance of the disclosures in chapter EU Taxonomy
Reporting in 2024 within the Environmental section, pages
83 – 87 and 100 of the Sustainability Statement with
Article 8 of EU Regulation 2020/852 (the Taxonomy
Regulation).
Basis for conclusion
We conducted our limited assurance engagement in
accordance with International Standard on Assurance
Engagements (ISAE) 3000 (Revised), Assurance engagements
other than audits or reviews of historical financial information
(ISAE 3000 (Revised)) and the additional requirements
applicable in Denmark.
The procedures in a limited assurance engagement vary in
nature and timing from, and are less in extent than for, a
reasonable assurance engagement. Consequently, the level of
assurance obtained in a limited assurance engagement is
substantially lower than the assurance that would have been
obtained had a reasonable assurance engagement been
performed.
We believe that the evidence we have obtained is sufficient and
appropriate to provide a basis for our conclusion. Our
responsibilities under this standard are further described in the
Auditor's responsibilities for the assurance engagement section
of our report.
Our independence and quality management
We are independent of the group in accordance with the
International Ethics Standards Board for Accountants'
International Code of Ethics for Professional Accountants
(IESBA Code) and the additional ethical requirements applicable
in Denmark. We have also fulfilled our other ethical
responsibilities in accordance with these requirements and the
IESBA Code.
EY Godkendt Revisionspartnerselskab applies International
Standard on Quality Management 1, which requires the firm to
design, implement and operate a system of quality
management including policies or procedures regarding
compliance with ethical requirements, professional standards
and applicable legal and regulatory requirements.
Other matter
The comparative information included in the Sustainability
Statement of the group for the financial year 1 January – 31
December 2023 was not subject to an assurance engagement.
Our conclusion is not modified in respect of this matter.
Inherent limitations in preparing the Sustainability
Statement
In reporting forward-looking information in accordance with
ESRS, management is required to prepare the forward-looking
information on the basis of disclosed assumptions about events
that may occur in the future and possible future actions by the
group. Actual outcomes are likely to be different since
anticipated events frequently do not occur as expected.
Management's responsibilities for the Sustainability
Statement
Management is responsible for designing and implementing a
process to identify the information reported in the sustainability
statement in accordance with the ESRS and for disclosing this
Process in the chapter Impact, Risk, and Opportunity
Management-, within the General section, pages 54 and 56 of
the Sustainability Statement. This responsibility includes:
•
Understanding the context in which the group's activities
and business relationships take place and developing an
understanding of its affected stakeholders;
•
The identification of the actual and potential impacts (both
negative and positive) related to sustainability matters, as
well as risks and opportunities that affect, or could
reasonably be expected to affect, the group's financial
position, financial performance, cash flows, access to
finance or cost of capital over the short-, medium-, or long-
term;
•
The assessment of the materiality of the identified impacts,
risks and opportunities related to sustainability matters by
selecting and applying appropriate thresholds; and
•
Making assumptions that are reasonable in the
circumstances.
Management is further responsible for the preparation of the
Sustainability Statement, in accordance with the Danish
Financial Statements Act section 99a, including:
•
Compliance with the ESRS;
•
Preparing the disclosures in chapter EU Taxonomy
Reporting in 2024 within the Environmental section, pages
83 – 87 and 100 of the Sustainability Statement, in
compliance with Article 8 of the Taxonomy Regulation;
•
Designing, implementing and maintaining such internal
control that management determines is necessary to
enable the preparation of the Sustainability Statement that
is free from material misstatement, whether due to fraud or
error; and
•
The selection and application of appropriate sustainability
reporting methods and making assumptions and estimates
that are reasonable in the circumstances.
Auditor's responsibilities for the assurance
engagement
Our objectives are to plan and perform the assurance
engagement to obtain limited assurance about whether the
Sustainability Statement is free from material misstatement,
whether due to fraud or error, and to issue a limited assurance
report that includes our conclusion. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to
influence decisions of users taken on the basis of the
Sustainability Statement as a whole.
As part of a limited assurance engagement in accordance with
ISAE 3000 (Revised) we exercise professional judgement and
maintain professional skepticism throughout the engagement.
Our responsibilities in respect of the process include:
•
Obtaining an understanding of the process but not for the
purpose of providing a conclusion on the effectiveness of
the process, including the outcome of the process;
•
Considering whether the information identified addresses
the applicable disclosure requirements of the ESRS, and
FINANCIAL STATEMENTS > OTHER > ESG AUDIT REPORT
TORM ANNUAL REPORT 2024
271
•
Designing and performing procedures to evaluate whether
the process is consistent with the group's description of its
process, as disclosed in the chapter Impact, Risk, and
Opportunity Management, within the General section,
pages 54 and 56.
Our other responsibilities in respect of the Sustainability
Statement include:
•
Identifying disclosures where material misstatements are
likely to arise, whether due to fraud or error; and
•
Designing and performing procedures responsive to
disclosures in the Sustainability Statement where material
misstatements are likely to arise. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
Summary of the work performed
A limited assurance engagement involves performing
procedures to obtain evidence about the Sustainability
Statement.
The nature, timing and extent of procedures selected depend
on professional judgement, including the identification of
disclosures where material misstatements are likely to arise,
whether due to fraud or error, in the Sustainability Statement.
In conducting our limited assurance engagement, with respect
to the process, we:
•
Obtained an understanding of the process by performing
inquiries to understand the sources of the information used
by management; and reviewing the group's internal
documentation of its process; and
•
Evaluated whether the evidence obtained from our
procedures about the Process implemented by the group's
was consistent with the description of the Process set out
in the chapter Impact, Risk, and Opportunity Management,
within the General section, pages 54 and 56 of the
Sustainability Statement.
In conducting our limited assurance engagement, with respect
to the Sustainability Statement, we:
•
Obtained an understanding of the group's reporting
processes relevant to the preparation of its Sustainability
Statement including the consolidation processes by
obtaining an understanding of the group's control
environment, processes and information systems relevant
to the preparation of the Sustainability Statement but not
evaluating the design of particular control activities,
obtaining evidence about their implementation or testing
their operating effectiveness;
•
Evaluated whether material information identified by the
process is included in the Sustainability Statement;
•
Evaluated whether the structure and the presentation of
the Sustainability Statement are in accordance with the
ESRS;
•
Performed inquiries of relevant personnel and analytical
procedures on selected information in the Sustainability
Statement;
•
Performed substantive assurance procedures on selected
information in the Sustainability Statement;
•
Evaluated methods, assumptions and data for developing
material estimates and forward-looking information and
how these methods were applied;
•
Obtained an understanding of the process to identify the EU
Taxonomy economic activities for turnover, CAPEX and
OPEX and the corresponding disclosures in the
Sustainability Statements;
•
Evaluated the presentation and use of EU Taxonomy
templates in accordance with relevant requirements;
•
Reconciled and ensured consistency between the reported
EU Taxonomy economic activities and the items reported in
the primary financial statements including the disclosures
provided in related notes.
Copenhagen, 06 March 2025
EY Godkendt Revisionspartnerselskab
CVR no. 30 70 02 28
Jens Thordahl Nøhr
Lars Fermann
State Authorised
State Authorised
Public Accountant
Public Accountant
mne32212
mne45879
FINANCIAL STATEMENTS > OTHER > ESG AUDIT REPORT
TORM ANNUAL REPORT 2024
272
TORM Fleet Overview
As of 31 December 2024
Vessel type Vessel class
Vessel
DWT
Built
Ownership
Carrying value (USDm)
Tanker
LR2
TORM GABRIELLA
119,456
2010
100 %
46¹⁾
Tanker
LR2
TORM GANGA
119,456
2010
100 %
50¹⁾
Tanker
LR2
TORM GEMMA
119,456
2012
100 %
53¹⁾
Tanker
LR2
TORM GENESIS
119,456
2011
100 %
47¹⁾
Tanker
LR2
TORM GITTE
119,456
2010
100 %
50¹⁾
Tanker
LR2
TORM GLORIA
119,456
2011
100 %
49¹⁾
Tanker
LR2
TORM GRACE
119,456
2012
100 %
50¹⁾
Tanker
LR2
TORM GWENDOLYN
119,456
2010
100 %
50¹⁾
Tanker
LR2
TORM GWYNETH
119,456
2010
100 %
49¹⁾
Tanker
LR2
TORM HANNAH
109,999
2016
100 %
39
Tanker
LR2
TORM HELLERUP
114,000
2018
100 %
43
Tanker
LR2
TORM HELENE
114,000
2021
100 %
46
Tanker
LR2
TORM HERMIA
114,000
2018
100 %
43
Tanker
LR2
TORM HERDIS
114,000
2018
100 %
41
Tanker
LR2
TORM HILDE
114,000
2018
100 %
44
Tanker
LR2
TORM HOUSTON
114,000
2022
100 %
46
Tanker
LR2
TORM KIARA
114,445
2015
100 %
37
Tanker
LR2
TORM KIRSTEN
114,445
2015
100 %
36
Tanker
LR2
TORM KRISTINA
114,323
2015
100 %
37
Tanker
LR2
TORM MAREN
109,672
2008
100 %
27
Tanker
LR2
TORM MATHILDE
109,672
2008
100 %
27
Tanker
LR1
TORM VENTURE
73,700
2007
100 %
18
Tanker
LR1
TORM ELISE
75,000
2020
100 %
34
Tanker
LR1
TORM ELIZABETH
75,000
2020
100 %
35
Tanker
LR1
TORM EVELYN
74,606
2011
100 %
32
Tanker
LR1
TORM EVOLVE
74,554
2011
100 %
31
Tanker
LR1
TORM EVA
74,552
2011
100 %
32
Tanker
LR1
TORM EMMA
75,000
2012
100 %
32
Tanker
LR1
TORM EMILIE
75,013
2013
100 %
33
Tanker
LR1
TORM INTEGRITY
73,800
2013
100 %
36
Tanker
LR1
TORM INNOVATION
73,847
2013
100 %
35
FINANCIAL STATEMENTS > OTHER > FLEET OVERVIEW
TORM ANNUAL REPORT 2024
273
As of 31 December 2024
Vessel type Vessel class
Vessel
DWT
Built
Ownership
Carrying value (USDm)
Tanker
MR
TORM ADVENTURER
46,042
2007
100 %
13
Tanker
MR
TORM AGNES
49,999
2011
100 %
17
Tanker
MR
TORM AGNETE
49,999
2010
100 %
20
Tanker
MR
TORM ALEXANDRA
49,999
2010
100 %
22
Tanker
MR
TORM ALICE
49,999
2010
100 %
17
Tanker
MR
TORM ALLEGRO
46,184
2012
100 %
21
Tanker
MR
TORM ALMENA
49,999
2010
100 %
17
Tanker
MR
TORM AMALIE
49,999
2011
100 %
18
Tanker
MR
TORM AMORINA
46,184
2012
100 %
20
Tanker
MR
TORM ANABEL
49,999
2012
100 %
20
Tanker
MR
TORM ARAWA
49,999
2012
100 %
20
Tanker
MR
TORM ASLAUG
49,999
2010
100 %
20
Tanker
MR
TORM ASTRID
49,999
2012
100 %
21
Tanker
MR
TORM ATLANTIC
49,999
2010
100 %
21
Tanker
MR
TORM AUSTRALIA
51,737
2011
100 %
18
Tanker
MR
TORM CAVATINA
46,200
2010
100 %
19
Tanker
MR
TORM CORRIDO
46,156
2011
100 %
19
Tanker
MR
TORM DISCOVERER
45,012
2008
100 %
16
Tanker
MR
TORM DIWATA
49,746
2014
100 %
45¹⁾
Tanker
MR
TORM INDIA
49,999
2010
100 %
19
Tanker
MR
TORM LAURA
49,999
2008
100 %
17
Tanker
MR
TORM LEADER
46,070
2009
100 %
18
Tanker
MR
TORM LENE
49,999
2008
100 %
18
Tanker
MR
TORM LILLY
49,999
2009
100 %
19
Tanker
MR
TORM LOTTE
49,999
2009
100 %
19
Tanker
MR
TORM LOUISE
49,999
2009
100 %
19
Tanker
MR
TORM MALAYSIA
51,737
2011
100 %
18
Tanker
MR
TORM NEW ZEALAND
51,737
2011
100 %
18
Tanker
MR
TORM BIRGITTE
49,995
2013
100 %
34
Tanker
MR
TORM BELIS
49,995
2013
100 %
34
Tanker
MR
TORM BEATRICE
49,995
2013
100 %
34
Tanker
MR
TORM PHILIPPINES
49,999
2010
100 %
15
Tanker
MR
TORM RAGNHILD
46,187
2005
100 %
12
Tanker
MR
TORM RESILIENCE
49,999
2005
100 %
12
Tanker
MR
TORM SINGAPORE
51,737
2011
100 %
18
FINANCIAL STATEMENTS > OTHER > FLEET OVERVIEW
TORM ANNUAL REPORT 2024
274
As of 31 December 2024
Vessel type Vessel class
Vessel
DWT
Built
Ownership
Carrying value (USDm)
Tanker
MR
TORM SOLUTION
49,999
2019
100 %
29
Tanker
MR
TORM SOVEREIGN
49,999
2017
100 %
26
Tanker
MR
TORM SPLENDID
49,999
2020
100 %
29
Tanker
MR
TORM STELLAR
49,999
2020
100 %
28
Tanker
MR
TORM STRENGTH
49,999
2019
100 %
29
Tanker
MR
TORM STRONG
49,999
2019
100 %
30
Tanker
MR
TORM SUBLIME
49,999
2019
100 %
28
Tanker
MR
TORM SUCCESS
49,999
2019
100 %
29
Tanker
MR
TORM SUPREME
49,999
2017
100 %
24
Tanker
MR
TORM THAMES
47,036
2005
100 %
12
Tanker
MR
TORM THOR
49,842
2015
100 %
25
Tanker
MR
TORM THUNDER
49,842
2015
100 %
25
Tanker
MR
TORM TIMOTHY
49,842
2015
100 %
25
Tanker
MR
TORM TITAN
49,842
2016
100 %
26
Tanker
MR
TORM TORINO
49,842
2016
100 %
26
Tanker
MR
TORM TROILUS
49,842
2016
100 %
26
Tanker
MR
TORM VOYAGER
45,916
2008
100 %
16
Tanker
MR
TORM DANICA
49,999
2015
100 %
40¹⁾
Tanker
MR
TORM DENISE
49,999
2015
100 %
37
Tanker
MR
TORM DAGMAR
49,999
2015
100 %
37
Tanker
MR
TORM DIANA
49,999
2016
100 %
38
Tanker
MR
TORM DURGA
49,680
2014
100 %
43¹⁾
Tanker
MR
TORM DAMINI
49,746
2014
100 %
45¹⁾
Tanker
MR
TORM DORIS
49,680
2015
100 %
44¹⁾
Tanker
MR
TORM DAGNY
49,635
2015
100 %
43¹⁾
Tanker
MR
TORM DEBORAH
49,680
2015
100 %
44¹⁾
Tanker
MR
TORM DAPHNE
49,746
2015
100 %
43¹⁾
Tanker
MR
TORM DULCE
49,680
2014
100 %
45¹⁾
¹⁾ Indicates vessels for which TORM believes that, as of 31 December 2024, the basic charter-free market value is lower than the vessel's carrying amount.
FINANCIAL STATEMENTS > OTHER > FLEET OVERVIEW
TORM ANNUAL REPORT 2024
275
Glossary
Available earning days: A measure of unfixed operating days
available for generating earnings.
BB: Bareboat: A form of charter arrangement where the
charterer is responsible for all costs and risks in connection with
the operation of the vessel.
Backwardation: A situation in which the spot price of a
commodity is higher than the forward price. The opposite is
known as contango.
Bunker hedge: A forward agreement used to reduce a company’s
exposure to fluctuating bunker costs.
Bunkers: Fuel with which to run a vessel’s engines.
CAPEX: Capital expenditure.
Charter-in and leaseback days: A measure of operating days
available for generating earnings from vessels that are not
owned by the Company.
Charter party: A lease or freight agreement between a shipowner
and a charterer for a longer period of time or for a single voyage.
Classification society: Independent organization that ensures
through verification of design, construction, building process,
and operation of vessels that the vessels at all times meet a long
list of requirements to seaworthiness, etc. If the vessels do not
meet these requirements, insuring and mortgaging the vessel will
typically not be possible.
COA: Contract of Affreightment. A contract that involves a
number of consecutive cargos at previously agreed freight rates.
Coating: The internal coatings applied to the tanks of a product
tanker enabling the vessel to load refined oil products.
Commercial management: An agreement to manage a vessel’s
commercial operations for the account and risk of the
shipowner.
Coverage: A measure of Covered days divided by Earning days.
Covered days: A measure of fixed operating days.
Demurrage: A charge against the charterer of a vessel for
delaying the vessel beyond the allowed free time. The demurrage
rate will typically be at a level equal to the earnings in USD/day
for the voyage.
DKK: Danish kroner.
Dwt: Deadweight ton. The cargo carrying capacity of a vessel.
EBIT/Operating profit: Earnings Before Interest
and Tax.
Earning days: A measure of operating days available for
generating earnings.
ESG: Environment, Social, and Governance.
FFA: Forward freight agreement. A financial derivative
instrument enabling freight to be hedged forward at a fixed price.
Handysize: A specific class of product tankers with a cargo
carrying capacity of 20,000–40,000 dwt.
IAS: International Accounting Standards.
IFRS: IFRS Accounting Standards issued by the International
Accounting Standards Board.
IMO: International Maritime Organization.
KPI: Key Performance Indicator. A measure of performance used
to define and evaluate how the Company is making progress
towards its long-term organizational goals.
Loan-to-value (LTV): A measure of notional debt divided by
broker values of the encumbered vessels.
LR1: Long Range 1. A specific class of product tankers with a
cargo carrying capacity of 60,000–80,000 dwt.
LR2: Long Range 2. A specific class of product tankers with a
cargo carrying capacity of 80,000–110,000 dwt.
LTAF: Lost Time Accident Frequency. Work-related personal
injuries that result in more than one day off work per million
hours of work.
MR: Medium Range. A specific class of product tankers with a
cargo carrying capacity of 40,000–60,000 dwt.
MT: Metric ton.
Oaktree: Oaktree Capital Management, L.P.
Oil major: One of the world’s largest publicly owned oil and gas
companies. Examples of oil majors are BP, Chevron, ExxonMobil,
Shell and Total.
OPEC: Organization of the Petroleum Exporting Countries.
Owned days: A measure of operating days available for
generating earnings from vessels that are owned by the
Company.
P&I club: Protection & Indemnity club.
Product tanker: A vessel suitable for carrying clean petroleum
products such as gasoline, jet fuel, and naphtha.
Spot market: Market in which vessels are contracted for a single
voyage for near-term delivery.
TC: Time charter: An agreement covering the chartering out of a
vessel to an end user for a defined period of time where the
owner is responsible for crewing the vessel, but the charterer
must pay port costs and bunkers.
Technical management: An agreement to manage a vessel’s
technical operations and crew for the account and risk of the
shipowner.
Ton-mile: A unit of freight transportation equivalent to a ton of
freight moved one mile.
UN Global Compact: The United Nation’s social charter for
enterprises, etc.
Vetting: An audit of the safety and performance status of a
tanker vessel made by oil majors.
FINANCIAL STATEMENTS > OTHER > GLOSSARY
TORM ANNUAL REPORT 2024
276
Glossary
Key Financial Figures
TCE per day
=
TCE excluding unrealized gains/losses on derivatives
Available earning days
Gross profit %
=
Gross profit
Revenue
EBITDA %
=
EBITDA
Revenue
Operating profit %
=
Operating profit (EBIT)
Revenue
Return on Equity (RoE) %
=
Net profit/(loss) for the year
Average equity
Return on Invested Capital
(ROiC) %
=
Operating profit less tax
Average invested capital
Equity ratio
=
Equity
Total assets
Earnings per share, EPS
=
Net profit/(loss) for the year
Average number of shares
Diluted earnings/(loss) per share, EPS
=
Net profit/(loss) for the year
Average number of shares less average number of treasury shares
FINANCIAL STATEMENTS > OTHER > GLOSSARY
TORM ANNUAL REPORT 2024
277
Glossary
Alternative Performance Measures
Group
Throughout the annual report, several alternative performance measures (APMs) are used. The
following APMs relate to the Group.
Net profit/(loss) for the year excluding non-recurrent items: Net profit excluding impairment is net
profit less impairment and reversals of impairment generated from impairment testing during the
year (please refer to Note 12). TORM reports net profit excluding impairment because we believe
it provides additional meaningful information to investors regarding the operational performance
excluding fluctuations in the valuation of fixed assets. The APM replaces “Net profit/(loss) for the
year” excluding impairment as it is more relevant and provides more useful information.
USDm
2024
2023
2022
Reconciliation to net profit for the year
Net profit/(loss) for the year
611.5
648.0
562.6
Profit from sale of vessels
-51.3
-50.4
-10.2
Impairment losses on tangible assets
—
—
2.6
Provisions
—
-6.5
-6.3
Expense of capitalized bank fees at refinancing
0.5
3.5
—
Termination of finance leases
—
1.3
—
Step-up gain related to acquisition
—
—
-0.3
Net profit for the year ex. non-recurrent items
560.7
595.9
548.4
Gross profit: TORM defines Gross profit, a performance measure, as revenue less port expenses,
bunkers and commissions, and other cost of goods sold, charter hire and operating expenses.
TORM reports Gross profit because we believe it provides additional meaningful information to
investors, as Gross profit measures the net earnings from core activities. Gross profit is
calculated as follows:
USDm
2024
2023
2022
Computation of gross profit
Revenue
1,559.2
1,520.4
1,443.4
Port expenses, bunkers, commissions, and other cost of
goods and services sold
-418.5
-430.3
-459.5
Operating expenses
-245.1
-216.0
-202.1
Gross profit
895.6
874.1
781.8
Return on Invested Capital (ROIC): TORM defines ROIC as earnings before interest and tax (EBIT)
less tax, divided by the average invested capital for the period. Invested capital is defined below.
ROIC expresses the returns generated on capital invested in TORM. The progression of ROIC is
used by TORM to measure progress against our long-term value creation goals outlined to
investors. ROIC is calculated as follows:
USDm
2024
2023
2022
Reconciliation to operating profit (EBIT)
Operating profit (EBIT)
658.8
698.6
601.5
Tax
2.0
-4.0
5.9
EBIT less tax
660.8
694.6
607.4
Invested capital, opening balance
2,425.5
2,142.3
2,011.3
Invested capital, ending balance
3,005.4
2,425.5
2,142.3
Average invested capital for the year
2,715.5
2,283.9
2,076.8
Return on Invested Capital (ROIC)
24.3 %
30.4 %
29.2 %
FINANCIAL STATEMENTS > OTHER > ALTERNATIVE PERFORMANCE MEASURES | GROUP
TORM ANNUAL REPORT 2024
278
Glossary
Alternative Performance Measures
Group
Adjusted Return on Invested Capital (Adjusted RoIC): TORM defines Adjusted RoIC as earnings
before interest and tax (EBIT) less tax and impairment losses and reversals, divided by the
average invested capital less average impairment for the period. Invested capital is defined
below.
The Adjusted RoIC expresses the returns generated on capital invested in TORM adjusted for
impacts related to the impairment of the fleet. The progression of RoIC is used by TORM to
measure progress against our long-term value creation goals outlined to investors. Adjusted
RoIC is calculated as follows:
USDm
2024
2023
2022
Reconciliation to operating profit (EBIT)
Operating profit (EBIT)
658.8
698.6
601.5
Tax
2.0
-4.0
5.9
EBIT less tax
660.8
694.6
607.4
Profit from sale of vessels
-51.3
-50.4
-10.2
Impairment losses on tangible assets
—
—
2.6
Provisions
—
-6.5
-6.3
Step-up gain related to acquisition
—
—
-0.3
EBIT less tax adjusted
609.5
637.7
593.2
Average invested capital¹⁾
2,715.5
2,283.9
2,076.8
Average impairment ²⁾
26.0
29.9
37.4
Average invested capital adjusted for impairment
2,741.5
2,313.8
2,114.2
Adjusted RoIC
22.2 %
27.6 %
28.1 %
¹⁾ Average invested capital is calculated as the average of the opening and closing balance of invested capital.
²⁾ Average impairment is calculated as the average of the opening and closing balances of impairment charges
on vessels and goodwill in the balance sheet.
Invested Capital: Invested capital as defined by TORM measures the net investment used to
achieve TORM’s operating profit. TORM believes that invested capital is a relevant measure that
the Management uses to measure the overall development of the assets and liabilities generating
the net profit. Such measure may not be comparable to similarly titled measures of other
companies. Invested capital is calculated as follows:
USDm
2024
2023
2022
Tangible and intangible fixed assets
2,846.4
2,173.9
1,869.0
Investments in joint ventures
0.1
0.1
0.1
Deferred tax asset
3.1
0.4
0.6
Other investments
0.2
—
0.2
Inventories
68.4
61.7
72.0
Trade receivables ¹⁾
255.7
286.7
343.9
Assets held for sale
—
47.2
—
Non-current tax liability related to held-over gains
-45.2
-45.2
-45.2
Deferred tax liability
-0.3
-3.6
-6.1
Trade payables ²⁾
-114.2
-91.3
-82.5
Current tax liabilities
-0.7
-0.6
-2.0
Provisions
-0.6
-0.5
-6.8
Prepayments from customers
-7.5
-3.3
-0.9
Invested capital
3,005.4
2,425.5
2,142.3
¹⁾ Trade receivables also include Other receivables and Prepayments.
²⁾ Trade payables includes Trade payables and Other liabilities.
FINANCIAL STATEMENTS > OTHER > ALTERNATIVE PERFORMANCE MEASURES | GROUP
TORM ANNUAL REPORT 2024
279
Glossary
Alternative Performance Measures
Group
EBITDA and Adjusted EBITDA: TORM defines EBITDA as earnings before financial income and
expenses, depreciation, impairment, amortization and taxes.
EBITDA is used as a supplemental financial measure by the Management and external users of
financial statements, such as lenders, to assess TORM operating performance as well as
compliance with the financial covenants and restrictions contained in TORM’s financing
agreements. TORM believes that EBITDA assists the Management and investors in evaluating
TORM’s operations by increasing comparability of TORM’s performance from period to period. This
increased comparability is achieved by excluding the potentially disparate effects of interest,
depreciation, impairment, amortization, and taxes. These are items which could be affected by
various changing financing methods and capital structures, and which may significantly affect
profit/(loss) between periods. Including EBITDA as an alternative performance measure, benefits
investor in selection between investment alternatives.
EBITDA excludes some, but not all, items that affect profit/ (loss), and these items may vary
among other companies and may therefore not be directly comparable. The following table
reconciles EBITDA to net profit/ (loss), the most directly comparable IFRS financial measure, for
the periods presented.
Due to temporary fluctuations of the fair value of freight and bunker derivatives, Management
believes that an adjustment for unrealized gains/losses on freight and bunker derivatives help to
increase comparability in EBITDA developments. The adjusted EBITDA is calculated as follows:
USDm
2024
2023
2022
Reconciliation to net profit
Net profit for the year
611.5
648.0
562.6
Tax
-2.0
4.0
-5.9
Financial expenses
74.1
60.9
48.8
Financial income
-24.8
-14.3
-4.0
Depreciations and amortization
192.0
149.3
139.0
Impairment losses on tangible assets
—
—
2.6
EBITDA
850.8
847.9
743.1
Reconciliation to EBITDA
EBITDA
850.8
847.9
743.1
Fair value adjustments on freight and bunker derivatives
-6.6
-1.5
0.6
Adjusted EBITDA
844.2
846.4
743.7
Net interest-bearing debt: Net interest-bearing debt is defined as borrowings (current and non-
current) less loans receivables and cash and cash equivalents, including restricted cash. Net
interest-bearing debt depicts the net capital resources which cause net interest expenditure and
interest rate risk and which, together with equity, are used to finance TORM’s investments. As
such, TORM believes that net interest-bearing debt is a relevant measure which the Management
uses to measure the overall development of the use of financing, other than equity. Such measure
may not be comparable to similarly titled measures of other companies.Net interest-bearing debt
is calculated as follows:
USDm
2024
2023
2022
Borrowings ¹⁾
1,243.3
1,073.5
978.0
Loan receivables
-4.5
-4.5
-4.6
Cash and cash equivalents incl. restricted cash
-291.2
-295.6
-323.8
Net interest-bearing debt
947.6
773.4
649.6
¹⁾ Borrowings include long-term and short-term borrowings, excluding capitalized loan costs for the year of
USD 17.0m (2023 USD 13.9m, 2022: USD 11.1m)
FINANCIAL STATEMENTS > OTHER > ALTERNATIVE PERFORMANCE MEASURES | GROUP
TORM ANNUAL REPORT 2024
280
Glossary
Alternative Performance Measures
Group
Net Asset Value per share (NAV/share): TORM believes that the NAV/share is a relevant measure
which the Management uses to measure the overall development of the assets and liabilities per
share. Such measure may not be comparable to similarly titled measures of other companies.
NAV/share is calculated using broker values of vessels and excluding charter commitments.
NAV/share is calculated as follows:
USDm
2024
2023
2022
Net Asset Value per share
Total vessel values including newbuildings (broker values)
3,582.9
3,080.9
2,650.3
Vessel values of purchased secondhand vessels not
delivered (broker values)
—
479.9
—
Committed investment capital expenditure
23.0
35.7
18.4
Committed liability capital expenditure
-23.0
-226.1
-18.4
Goodwill
1.7
1.8
1.8
Other intangible assets
2.0
1.8
1.9
Land and buildings
8.1
5.5
3.8
Other plant and operating equipment
3.3
4.4
5.6
Investments in joint ventures
0.1
0.1
0.1
Loan receivables
4.5
4.5
4.6
Deferred tax asset
3.1
0.4
0.6
Other investments
0.2
—
0.2
Inventories
68.4
61.7
72.0
Accounts receivables ¹⁾
255.7
286.7
343.9
Cash and cash equivalents incl. restricted cash
291.2
295.6
323.8
Deferred tax liability
-0.3
-3.6
-6.1
Borrowings ²⁾
-1,243.3
-1,073.5
-978.0
Trade payables ³⁾
-114.2
-91.3
-82.6
Current tax liabilities
-0.7
-0.6
-2.0
Provisions
-0.6
-0.5
-6.8
Prepayments from customers
-7.5
-3.3
-0.9
Total Net Asset Value (NAV)
2,854.6
2,860.1
2,332.2
Non-controlling interest
0.8
1.9
2.3
Total Net Asset Value (NAV) excl. non-controlling interest
2,853.8
2,858.2
2,329.9
Total number of shares end of period excl. treasury
shares (million)
97.3
85.7
81.8
Total Net Asset Value per share (NAV/share) (USD)
29.3
33.4
28.5
¹⁾ Trade receivables includes Trade receivables, Other receivables and Prepayments.
²⁾ Borrowings include long-term and short-term borrowings, excluding capitalized loan costs of USD 17.0m.
³⁾ Trade payables includes, Trade payables, Other non-current liabilities and Other liabilities.
Liquidity: TORM defines liquidity as available cash, comprising cash and cash equivalents, including
restricted cash as well as undrawn and committed credit facilities.
TORM finds the APM important as the liquidity expresses TORM’s financial position, ability to
meet current liabilities, and cash buffer. Further, it expresses TORM’s ability to act and invest
when possibilities occur.
USDm
2024
2023
2022
Cash and cash equivalents incl. restricted cash
291.2
295.6
323.8
Undrawn credit facilities and committed facilities incl.
sale & leaseback financing transactions
323.6
342.5
92.6
Liquidity
614.8
638.1
416.4
Free cash flow: TORM defines free cash flow as net cash flow from operating activities less the net
cash flow from investing activities. TORM finds free cash flow important as free cash flow reflects
our ability to generate cash, repay liabilities and pay dividends.
USDm
2024
2023
2022
Net cash flow from operating activities
826.8
805.0
502.0
Net cash flow from investing activities
-442.1
-370.6
11.3
Free cash flow
384.7
434.4
513.3
FINANCIAL STATEMENTS > OTHER > ALTERNATIVE PERFORMANCE MEASURES | GROUP
TORM ANNUAL REPORT 2024
281
Glossary
Alternative Performance Measures
Tanker segment
Net Loan-to-value (LTV): TORM defines Loan-to-value (LTV) ratio as vessel values divided by net
borrowings on the vessels.
LTV describes the net debt ratio on the vessel and is used by TORM to describe the financial
situation, the liquidity risk as well as to express the future possibilities to raise new capital by new
loan facilities.
USDm
2024
2023
2022
Vessel values, including newbuildings (broker values)
3,582.9
3,080.9
2,650.3
Vessel values of purchased secondhand vessels not
delivered (broker values)
—
479.9
—
Other committed investment capital expenditure
23.0
35.7
18.4
Total vessel values
3,605.9
3,596.5
2,668.7
Borrowings
1,241.3
1,067.6
971.4
- Debt on Land and buildings and Other plant and
operating equipment
-8.4
-5.4
-3.2
Committed liability capital expenditure
23.0
226.1
18.4
Loan receivables
-4.5
-4.5
-4.6
Cash and cash equivalents incl. restricted cash
-284.9
-290.7
-321.4
Total (loan)
966.5
993.1
660.6
Loan-to-value (LTV) ratio
26.8 %
27.6 %
24.8 %
Time Charter Equivalent (TCE) earnings: TORM defines TCE earnings, a performance measure, as
revenue after port expenses, bunkers and commissions incl. freight and bunker derivatives. The
Company reports TCE earnings because we believe it provides additional meaningful information to
investors in relation to revenue, the most directly comparable IFRS measure. TCE earnings is a
standard shipping industry performance measure used primarily to compare period-to-period
changes in a shipping company’s performance irrespective of changes in the mix of charter types
(i.e., spot charters, time charters, and bareboat charters) under which the vessels may be
employed between the periods. For this reason, we apply TCE earnings in our financial outlook on
page 36. Below is presented a reconciliation from revenue to TCE earnings:
USDm
2024
2023
2022
Reconciliation to revenue
Revenue
1,544.0
1,491.4
1,440.4
Port expenses, bunkers and commissions
-409.2
-407.6
-458.9
TCE earnings
1,134.8
1,083.8
981.5
Fair value adjustments on freight and bunker derivatives
-6.6
-1.5
0.6
Adjusted TCE earnings
1,128.2
1,082.3
982.1
Available earning days
31,287
29,152
28,756
TCE per earning day (USD)
36,061
37,124
34,154
FINANCIAL STATEMENTS > OTHER > ALTERNATIVE PERFORMANCE MEASURES | GROUP
TORM ANNUAL REPORT 2024
282