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Board Of Directors' Report At TORM A/S' Annual General Meeting On 11 April 2013

In the first quarter of 2012, freight rates were under pressure due to a large number of seasonal newbuilding deliveries - a total of 69 Capesize, 111 Panamax and 85 Handymax vessels. Furthermore, the market was negatively influenced by slower growth in the Chinese commodity demand and a delay in the South American grain season.

The second quarter of 2012, started with a positive sentiment as a result of South American grain coming into season. However, general macroeconomic uncertainty and events like the Indonesian export ban led to an overall negative development. Especially the larger segments suffered.

In the third quarter of 2012, the Pacific market was impacted by the monsoon season, and in the Atlantic freight rates were adversely affected by drought, leading to the lowest North American grain yield in six years, as well as a logistical disruption caused by the tropical storm Isaac.

The fourth quarter of 2012, was negatively affected by the seasonal decline in dry bulk freight rates for both the Atlantic and the Pacific markets. This occurred despite the fact that the demand for iron ore continued to be firm.

TORM experienced an increasing number of waiting days and ballasting days due to adverse effects of the Company's financial situation. Despite this, TORM achieved average earnings of USD/day 10,248 in the Panamax segment, which was 33% higher than the average benchmark level. In the Handymax segment, TORM's average daily earnings were USD/day 10,481, which is 11% higher than the average benchmark level.

The Bulk Division posted an operating loss (EBIT) for 2012 of USD 27 million excluding restructuring effects, against an operating loss of USD 68 million in 2011. This is highly unsatisfactory and is primarily due to the low bulk spot market level.

During 2012, TORM focused on strengthening its customer relations, and the coverage for 2013 is thus entirely based on contracts of affreightment (COAs) with key customers.

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