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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the six months ended June 30, 2015

Commission file number 001-36028

ARDMORE SHIPPING CORPORATION

(Exact name of Registrant as specified in its charter)

Hamilton House

10 Queen Street, Suite 102

Hamilton, HM11 Bermuda

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F T           Form 40- F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes ☐           No T

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes ☐           No T

 

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INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached to this Report on Form 6-K are (1) Management’s Discussion and Analysis of Financial Condition and Results of Operations and (2) the unaudited condensed interim consolidated financial statements and related notes of Ardmore Shipping Corporation (the “Company”), in each case as at and for the six months ended June 30, 2015 and 2014.

This Report is hereby incorporated by reference into the following registration statements of the Company:

·

Registration Statement on Form F-3 (Registration No. 333-198371) filed with the U.S. Securities and Exchange Commission on August 26, 2014; and

·

Registration Statement on Form F-3 (Registration No. 333-203205) filed with the U.S. Securities and Exchange Commission on April 2, 2015.

 

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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. 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. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions are among those that identify forward-looking statements.

The forward-looking statements in this report are based upon various assumptions, including, among others, the Company’s examination of historical operating trends, data contained in the Company’s 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 which are difficult or impossible to predict and are beyond the Company’s control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include: the failure of counterparties to fully perform their contracts with the Company; the strength of world economies and currencies; general market conditions, including fluctuations in charter rates and vessel values; changes in demand for tanker vessel capacity; changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs; the market for the Company’s vessels; competition in the tanker industry; availability of financing and refinancing; charter counterparty performance; ability to obtain financing and comply with covenants in such financing arrangements; changes in governmental rules and regulations or actions taken by regulatory authorities; general domestic and international political conditions; potential disruption of shipping routes due to accidents, piracy or political events; vessels breakdowns and instances of off-hires; and other factors. Please see the Company’s filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The Company cautions readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward-looking statements. 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.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and accompanying notes contained in this Report on Form 6-K and with our audited consolidated financial statements contained in “Item 1. Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2014. The unaudited condensed interim consolidated financial statements as at and for the three and six months ended June 30, 2015 and 2014 have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The condensed interim consolidated financial statements are presented in U.S. dollars unless otherwise indicated. Unless the context otherwise requires, the terms “Ardmore,” “we,” “our” and “us” refer to Ardmore Shipping Corporation and its consolidated subsidiaries.

GENERAL

Ardmore Shipping owns and operates a fleet of mid-size product and chemical tankers ranging from 17,500 to 50,300 deadweight tonnes (“Dwt”). Ardmore provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with its modern, fuel-efficient fleet of tankers.

Ardmore’s core strategy is to develop a modern, high-quality fleet of product and chemical tankers, build key long-term commercial relationships, and maintain a cost advantage in assets, operations and overhead, while creating synergies and economies of scale as the company grows. Ardmore provides its services to customers through voyage charters, commercial pools and time charters and enjoys close working relationships with key commercial and technical management partners. Ardmore views the continued development of these relationships as crucial to its long-term success.

We are commercially independent, as we have no blanket employment arrangements with third-party or related-party commercial managers. We market our services directly to our customers, including a range of pooling service providers. As of August 1, 2015, our fleet consisted of 24 vessels, including 21 vessels in operation and three vessels under construction, which are reflected in the following table:

 

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SIGNIFICANT DEVELOPMENTS

Fleet Deliveries

Since January 1, 2015, we have taken delivery of the following seven newbuilding eco-design product and chemical tankers:

Financing

Since December 31, 2014, we have drawn down debt of $133.0 million. Of this total amount, $108.0 million was drawn down from previously committed debt, in line with vessel deliveries noted in the table above, and $25.0 million was drawn down in May 2015 for vessels in operation, under two separate credit facilities.

Dividends

On each of February 18 and May 15, 2015, we paid a cash dividend of $0.10 per share of our common stock for the quarters ended December 31, 2014 and March 31, 2015, respectively.

On July 15, 2015, our board of directors announced a cash dividend of $0.10 per share for the quarter ended June 30, 2015. The dividend is payable on August 14, 2015 to all shareholders of record on July 31, 2015.

On April 2, 2015, we introduced our dividend reinvestment plan (“DRIP”). The DRIP allows existing shareholders to purchase additional common shares by automatically reinvesting all or any portion of the cash dividends paid on common shares held by the DRIP participant.

RESULTS OF OPERATIONS

Factors You Should Consider When Evaluating Our Results

There are a number of factors that should be considered when evaluating our historical financial performance and assessing our future prospects and we use a variety of financial and operational terms and concepts when analysing our results of operations. Please read “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2014 for additional information.

In accordance with U.S. GAAP, we report gross revenues in our income statement and include voyage expenses among our operating expenses. Shipowners base economic decisions regarding the deployment of their vessels upon actual and anticipated time charter equivalent (“TCE”) rates, and industry analysts typically measure rates in terms of TCE rates. TCE revenue, a non-GAAP measure, is vessel revenue less commissions and voyage related costs (including bunkers and port charges). TCE revenue is used primarily to compare performance of a fleet irrespective of changes in the mix of employment (i.e. direct spot charters, pool employment or time charters). This is because under time charters and pooling arrangements the customer typically pays the voyage expenses, while under voyage charters, also known as spot market charters, the shipowner usually pays the voyage expenses. For vessels employed on voyage charters, TCE is the net rate after deducting voyage expenses.  TCE daily rate is the TCE revenue per revenue day. Revenue days are the total number of calendar days the vessels are in our possession less off-hire days generally associated with drydocking or repairs.

 

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Statement of Operations for the Three Months ended June 30, 2015 and June 30, 2014

 

The following tables present our operating results for the three months ended June 30, 2015 and 2014.

 

Revenue. Revenue for the three months ended June 30, 2015 was $39.3 million, an increase of $25.5 million from $13.8 million for the three months ended June 30, 2014. The increase is due to an increase in the average number of owned vessels to 18.4 for the three months ended June 30, 2015, from 11.1 for the three months ended June 30, 2014, and an increase in earnings per day generated by vessels employed in the spot market. The Company had eight vessels employed under direct spot chartering arrangements as at June 30, 2015 and had one vessel employed under direct spot chartering arrangements as at June 30, 2014. Under direct spot chartering arrangements, revenue is recognized on a gross freight basis, while under time chartering arrangements and pools, the charterer typically pays voyage expenses and revenue is recognized on a net basis.

Commissions and voyage related costs. Commissions and voyage related costs were $8.5 million for the three months ended June 30, 2015, an increase of $8.2 million from $0.3 million for the three months ended June 30, 2014. This increase is primarily due to 681 additional revenue days in the second quarter of 2015 as compared to the second quarter of 2014, in line with the additional vessel deliveries noted above. Furthermore, the increase in spot employed vessels significantly increases commissions and voyage related expenses, as under a spot chartering arrangement, all voyage expenses are borne by Ardmore, as opposed to the charterer, while under time chartering arrangements and pools, the charterer typically pays voyage expenses.

TCE rate. TCE per day amounted to $18,675 per day for the three months ended June 30, 2015, increasing by $4,506 per day from $14,169 per day for the three months ended June 30, 2014.

 

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Vessel operating expenses. Vessel operating expenses were $11.3 million for the three months ended June 30, 2015, an increase of $4.7 million from $6.6 million for the three months ended June 30, 2014. This increase is primarily due to an increase in the number of vessels in operation for the three months ended June 30, 2015. Due to the nature of this expenditure, vessel operating expenses are prone to fluctuations between periods. Fleet operating costs per day, including technical management fees, were $6,457 for the three months ended June 30, 2015, as compared to $6,470 for the three months ended June 30, 2014.

Depreciation. Depreciation expense for the three months ended June 30, 2015 was $5.7 million, an increase of $2.3 million from $3.4 million for the three months ended June 30, 2014. The increase is due to an increase in the average number of owned vessels to 18.4 for the three months ended June 30, 2015, from 11.1 for the three months ended June 30, 2014.

Amortization of deferred dry dock expenditure. Amortization of deferred dry dock expenditure for the three months ended June 30, 2015 was $0.6 million, as compared to $0.5 million for the three months ended June 30, 2014. This increase is due to the timing of scheduled drydockings occurring across the fleet. The capitalized costs of drydockings for a given vessel are depreciated on a straight line basis to the next scheduled drydocking of the vessel.

General and administrative expenses. General and administrative expenses for the three months ended June 30, 2015 were $2.7 million, as compared to $1.9 million for the three months ended June 30, 2014. The increase is in relation to additional costs associated operating a growing fleet, along with general and administrative expenses being prone to fluctuations between periods.

Interest expense and finance costs. Interest expense and finance costs (which include loan interest, capital lease interest and amortization of deferred financing fees) for the three months ended June 30, 2015 were $2.5 million, as compared to $1.0 million for the three months ended June 30, 2014. Cash interest expense increased by $1.4 million from $1.6 million for the three months ended June 30, 2014 to $3.0 million for the three months ended June 30, 2015. This is as a result of an increase in the average debt balance following the delivery of vessels since June 30, 2014. Capitalized interest, which relates to vessels under construction, amounted to $0.9 million for the three months ended June 30, 2015, as compared to $0.9 million for the three months ended June 30, 2014. Amortization of deferred financing charges for the three months ended June 30, 2015 was $0.4 million, as compared to $0.2 million for the three months ended June 30, 2014.

 

The following tables present our operating results for the six months ended June 30, 2015 and 2014.

 

 

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Revenue. Revenue for the six months ended June 30, 2015 was $68.9 million, an increase of $42.7 million from $26.2 million for the six months ended June 30, 2014. The increase is due to an increase in the average number of owned vessels to 17.2 for the six months ended June 30, 2015, from 10.5 for the six months ended June 30, 2014, and an increase in earnings per day generated by vessels employed in the spot market. We had eight vessels employed under direct spot chartering arrangements as at June 30, 2015 and had one vessel employed under direct spot chartering arrangements as at June 30, 2014. As discussed above, under direct spot chartering arrangements, revenue is recognized on a gross charter basis, while under time chartering and pooling arrangements, the charterer typically pays voyage expenses and revenue is recognized on a net basis.

Commissions and voyage related costs. Commissions and voyage related costs were $14.7 million for the six months ended June 30, 2015, as compared to $0.5 million for the six months ended June 30, 2014. This increase is primarily due to 1,214 additional revenue days in the first half of 2015 as compared to the first half of 2014, in line with the additional vessel deliveries throughout the period. As discussed above, under a direct spot chartering arrangement, all voyage expenses are borne by us, as opposed to the charterer, while under time chartering and pooling arrangements, the charterer typically pays voyage expenses.

TCE rate. The TCE rate for our fleet was $17,992 per day for the six months ended June 30, 2015, an increase of $3,761 per day from $14,231 per day for the six months ended June 30, 2014.

Vessel operating expenses. Vessel operating expenses were $20.5 million for the six months ended June 30, 2015, an increase of $8.0 million from $12.5 million for the six months ended June 30, 2014. This increase is primarily due to an increase in the number of vessels in operation for the six months ended June 30, 2015. Due to the nature of this expenditure, vessel operating expenses are prone to fluctuations between periods. Fleet operating costs per day, including technical management fees, were $6,352 for the six months ended June 30, 2015, as compared to $6,494 for the six months ended June 30, 2014.

Depreciation. Depreciation expense for the six months ended June 30, 2015 was $10.6 million, an increase of $4.2 million from $6.4 million for the six months ended June 30, 2014. The increase is due to an increase in the average number of owned vessels to 17.2 for the six months ended June 30, 2015, from 10.5 for the six months ended June 30, 2014.

Amortization of deferred dry dock expenditure. Amortization of deferred dry dock expenditure for the six months ended June 30, 2015 was $1.2 million, as compared to $1.0 million for the six months ended June 30, 2014. This increase is due to the timing of scheduled drydockings occurring across the fleet. The capitalized costs of drydockings for a given vessel are depreciated on a straight line basis to the next scheduled drydocking of the vessel.

General and administrative expenses. General and administrative expenses for the six months ended June 30, 2015 were $4.8 million, as compared to $4.2 million for the six months ended June 30, 2014. The increase is in relation to additional costs associated with operating a growing fleet, along with general and administrative expenses being prone to fluctuations between periods.

Interest expense and finance costs. Interest expense and finance costs (which include loan interest, capital lease interest and amortization of deferred financing fees) for the six months ended June 30, 2015 were $4.1 million, as compared to $1.9 million for the six months ended June 30, 2014. Cash interest expense increased by $2.2 million to $5.4 million for the six months ended June 30, 2015 from $3.2 million for the six months ended June 30, 2014. This was the result of an increase in the average debt balance following the delivery of vessels since June 30, 2014. Capitalized interest, which relates to vessels under construction, amounted to $1.9 million for the six months ended June 30, 2015, as compared to $1.7 million for the six months ended June 30, 2014. Amortization of deferred financing charges for the six months ended June 30, 2015 was $0.7 million, compared to $0.4 million for the six months ended June 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash and cash equivalents, cash flows provided by our operations, our undrawn credit facilities and capital raised through financing transactions. As at June 30, 2015, our total cash and cash equivalents was $41.9 million, a decrease of $18.0 million from December 31, 2014. We believe that our working capital, together with expected cash flows from operations and availability under credit facilities, will be sufficient for our present requirements.

Our short-term liquidity requirements include the payment of operating expenses, drydocking expenditures, debt servicing costs, dividends on our shares of common stock, scheduled repayments of long-term debt, as well as funding our other working capital requirements. Our short-term and spot charters, including participating in spot charter pooling arrangements, contribute to the volatility of our net operating cash flow, and thus our ability to generate sufficient cash flows to meet our short-term liquidity needs. Historically, the tanker industry has been cyclical, experiencing volatility in profitability and asset values resulting from changes in the supply of, and demand for, vessel capacity. In addition, tanker spot markets historically have exhibited seasonal variations in charter rates. Tanker spot markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere and unpredictable weather patterns that tend to disrupt vessel scheduling. Time charters provide contracted revenue that reduces the volatility (as rates can fluctuate within months) and seasonality from revenue generated by vessels that operate in the spot market. Commercial pools reduce revenue volatility because they aggregate the revenues and expenses of all pool participants and distribute net earnings to the participants based on an agreed upon formula. Spot charters preserve flexibility to take advantage of increasing rate environments, but also expose the ship-owner to decreasing rate environments.

 

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Our long-term capital needs are primarily for capital expenditures and debt repayment. Generally, we expect that our long-term sources of funds will be cash balances, long-term bank borrowings and other debt or equity financings. We expect that we will rely upon external financing sources, including bank borrowings and the issuance of debt and equity securities, to fund acquisitions and expansion capital expenditures.

Our credit facilities and capital leases are described in Notes 2 (“Debt”) and 3 (“Capital leases”) to our condensed interim consolidated financial statements included in this Form 6-K. Our financing facilities contain covenants and other restrictions we believe are typical of debt financing collateralized by vessels, including those that restrict the relevant subsidiaries from incurring or guaranteeing additional indebtedness, granting certain liens, and selling, transferring, assigning or conveying assets. Our financing facilities do not impose a restriction on dividends, distributions, or returns of capital unless an event of default has occurred, is continuing or will result from such payment. Our financing facilities require us to maintain various financial covenants. Should we not meet these financial covenants or other covenants, the lenders may declare our obligations under the agreements immediately due and payable, and terminate any further loan commitments, which would significantly affect our short-term liquidity requirements. As at June 30, 2015, we were in compliance with all covenants relating to our financing facilities.

CASH FLOW DATA

Cash Flow Data for the Three and Six Months Ended June 30, 2015 and June 30, 2014

Cash provided by operating activities

For the three months ended June 30, 2015, cash flow provided by operating activities was $12.4 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $15.0 million. Changes in operating assets and liabilities resulted in an outflow of $2.5 million and drydock payments were $0.1 million. For the three months ended June 30, 2014, cash flow provided by operating activities was an outflow of $1.6 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $4.6 million. Changes in operating assets and liabilities resulted in an outflow of $5.0 million and drydock payments were $1.2 million.

For the six months ended June 30, 2015, cash flow provided by operating activities was $13.6 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $26.2 million. Changes in operating assets and liabilities resulted in an outflow of $11.6 million and drydock payments were $1.0 million. For the six months ended June 30, 2014, cash flow provided by operating activities was $7.0 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $8.1 million. Changes in operating assets and liabilities resulted in an inflow of $1.4 million and drydock payments were $2.5 million.

Cash used by investing activities

For the three months ended June 30, 2015, net cash used in investing activities was $52.9 million. Payments for the completion of vessels under construction, along with vessel equipment, was $49.6 million for the three months then ended. Payments in the quarter for vessels still under construction at June 30, 2015 were $3.3 million. For the three months ended June 30, 2014, net cash used in investing activities was $53.5 million. Investment in secondhand vessels and vessel equipment was $45.8 million. Payments in the quarter for vessels under construction at June 30, 2014 were $7.7 million.

 

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For the six months ended June 30, 2015, net cash used in investing activities was $147.3 million. Payments for the completion of vessels under construction, along with vessel equipment, was $128.1 million for the six months then ended. Payments for vessels still under construction at June 30, 2015 were $19.2 million. For the six months ended June 30, 2014, net cash used in investing activities was $131.7 million. Investment in secondhand vessels, the completion of vessels under construction and vessel equipment was $114.3 million. Payments for vessels under construction at June 30, 2014 were $17.4 million.

Cash provided by financing activities

For the three months ended June 30, 2015, the net cash provided by financing activities was $60.3 million. Drawdowns of long-term debt amounted to $69.2 million and repayments of debt amounted to $5.9 million. We made no debt prepayments during such period. Total principal repayments of the capital lease arrangement were $0.4 million. We also incurred $0.7 million of deferred finance charges for loan facilities, and for commitment fees payable in respect of other financing committed for vessels under construction. Quarterly cash dividends paid were $1.8 million for the period. For the three months ended June 30, 2014, the net cash used in financing activities was $7.0 million. Repayments of senior debt amounted to $3.0 million. We made no debt prepayments during such period. Total principal repayments of the capital lease arrangement were $0.4 million. We incurred $1.1 million of deferred finance charges for loan facilities, and for commitment fees payable in respect of other financing committed for vessels under construction. Quarterly cash dividends paid were $2.6 million for the period.

For the six months ended June 30, 2015, the net cash provided by financing activities was $115.7 million. Drawdowns of long-term debt amounted to $133.0 million and repayments of debt amounted to $10.8 million. We made no debt prepayments during such period. Total principal repayments of the capital lease arrangement were $0.8 million. We also incurred $1.3 million of deferred finance charges for loan facilities, and for commitment fees payable in respect of other financing committed for vessels under construction. Quarterly cash dividends paid were $4.4 million for the period. For the six months ended June 30, 2014, the net cash provided by financing activities was $133.8 million. Drawdowns of senior long-term debt amounted to $45.0 million and repayments of senior debt amounted to $5.3 million. We made no debt prepayments during such period. Total principal repayments of the capital lease arrangement were $0.8 million. We incurred $3.4 million of deferred finance charges for loan facilities, and for commitment fees payable in respect of other financing committed for vessels under construction. Net proceeds from an equity offering amounted to $102.7 million and quarterly cash dividends paid were $4.4 million for the period.

CAPITAL EXPENDITURES

Drydock

The drydocking schedule for our vessels that were in operation as of June 30, 2015 is as follows:

We endeavour to manage the timing of future dockings across the fleet. As our fleet matures and expands, our drydock expenses are likely to increase.

Newbuildings

As of June 30, 2015, we had four vessels on order. One of these vessels was delivered on July 17, 2015 and the remaining deliveries are scheduled for delivery during the remainder of 2015. We currently have committed financing in place for all of these newbuildings, subject to certain conditions.

Dividends

On each of February 18 and May 15, 2015, we paid a cash dividend of $0.10 per share of our common stock for the quarters ended December 31, 2014 and March 31, 2015, respectively.

On July 15, 2015, our board of directors announced a cash dividend of $0.10 per share for the quarter ended June 30, 2015. The dividend is payable on August 14, 2015 to all shareholders of record on July 31, 2015.

On April 2, 2015, we introduced our dividend reinvestment plan (“DRIP”). The DRIP allows existing shareholders to purchase additional common shares by automatically reinvesting all or any portion of the cash dividends paid on common shares held by the DRIP participant.

 

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CONTRACTUAL OBLIGATIONS

The following table sets forth our total obligations on vessel finance, newbuilding commitments and certain other obligations as at June 30, 2015.

(1)

The interest expense on our loans is variable and based on LIBOR. The amounts reflected in the table were calculated using an estimated interest rate of 0.3% plus a margin of 3.17%, which is the weighted average margin on our senior loan facilities. Interest on capital leases is based on a margin of 7.3%.

(2)	Loan commitment fees are based on management’s estimate of future drawdown dates as of June 30, 2015.

CRITICAL ACCOUNTING ESTIMATES

We prepare our financial statements in accordance with U.S. GAAP, which requires us to make estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from our assumptions and estimates. Accounting estimates and assumptions that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties are discussed in “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2014. There have been no significant changes to these estimates and assumptions in the six months ended June 30, 2015.

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2015, we had no off-balance sheet arrangements.

DISCLOSURES ABOUT MARKET RISK

In addition to the risks set forth below, you should carefully consider the risk factors discussed in “Item 3. Key Information – Risk Factors” in our Annual Report on Form 20-F for the year end December 31, 2014, which risks could materially affect our business, financial condition and results of operations.

Foreign Exchange Risk

The majority of our transactions, assets and liabilities are denominated in U.S. dollars, our functional currency. We incur certain general and operating expenses in other currencies (primarily Euro, Singapore Dollar, Pounds Sterling and Hong Kong Dollar) and, as a result, there is risk to us that currency fluctuations may have a negative effect on the value of our cash flows. Such risk may have an adverse effect on our financial condition and results of operations. We believe these adverse effects to be immaterial and have not entered into any derivative contracts to manage foreign exchange risk during the six months ended June 30, 2015.

Interest Rate Risk

We are exposed to the impact of interest rate changes primarily through borrowings that require us to make interest payments based on LIBOR. Significant increases in interest rates could adversely affect our results of operations and our ability to repay debt. We regularly monitor interest rate exposure and may enter into swap arrangements to hedge exposure where it is considered economically advantageous to do so.

 

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Liquidity Risk

Our principal objective in relation to liquidity is to ensure that we have access at minimum cost to sufficient liquidity to enable us to meet our obligations as they come due and to provide adequately for contingencies. Our policy is to manage our liquidity by forecasting of cash flows arising from time charter revenue, pool revenue, vessel operating expenses, general and administrative overhead and servicing of debt.

Credit Risk

There is a concentration of credit risk with respect to cash and cash equivalents as substantially all of these items are held across one bank - Nordea Bank. While we believe this risk of loss is low, we will keep this matter under review and revise our policy for managing cash and cash equivalents if considered advantageous and prudent to do so.

We limit our credit risk with trade accounts receivable by performing ongoing credit evaluations of our customers’ financial condition. We generally do not require collateral for our trade accounts receivable.

 

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Ardmore Shipping Corporation

INDEX TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

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The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

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Ardmore Shipping Corporation

Unaudited Condensed Interim Consolidated Statements of Comprehensive Income

For the three and six months ended June 30, 2015 and June 30, 2014

(Expressed in U.S. Dollars, unless otherwise stated)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

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Ardmore Shipping Corporation

Unaudited Condensed Interim Consolidated Statements of Changes in Equity

For the six months ended June 30, 2015 and year ended December 31, 2014

(Expressed in U.S. Dollars, unless otherwise stated)

The accompanying notes are an integral part of these condensed interim consolidated financial statements

 

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Ardmore Shipping Corporation

Unaudited Condensed Interim Consolidated Statements of Cash flows

For the six months ended June 30, 2015 and June 30, 2014

(Expressed in U.S. Dollars, unless otherwise stated)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

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Ardmore Shipping Corporation

		As at
		Jun 30, 2015
Facility I (“First ABN AMRO Facility”)			6,000,000
Facility II (“Second ABN AMRO Facility”)			51,910,000
Facility III (“DVB Facility”)			83,780,000
Facility IV (“Joint Bank Facility”)			134,781,970
Facility V (“NIBC Bank Facility”)			12,435,000
Facility VI (“CACIB Bank Facility”)			38,025,000
Total debt			326,931,970
Current portion of long-term debt			(26,592,598	)
Non-current portion of long-term debt			300,339,372

		As at
		Jun 30, 2015
2015			13,296,295
2016			32,342,595
2017			45,842,595
2018			56,022,595
2019			31,422,595
2020			17,492,595
2021			119,787,700
2022			10,725,000
			326,931,970

		As at
		Jun 30, 2015
Current portion of capital lease obligations			1,779,526
Non-current portion of capital lease obligations			26,201,233
Total capital lease obligations			27,980,759

		As at
		Jun 30, 2015
2015			1,933,104
2016			3,845,196
2017			3,834,690
2018			23,705,540
Total minimum lease payments			33,318,530
Less amount representing interest			(5,337,771	)
Net minimum lease payments			27,980,759

		Total
Vessels and equipment			44,525,446
Accumulated depreciation			(6,827,643	)
			37,697,803

		Six Months Ended
		Jun 30, 2015				Jun 30, 2014
Interest incurred			5,386,885				3,211,597
Capitalized interest			(1,945,451	)			(1,734,422	)
Amortization of deferred financing charges			697,794				412,847
			4,139,228				1,890,022

		2015				2016+				TOTAL
Vessels under construction			78,690,000				-				78,690,000
Loan commitment fees			213,981				-				213,981
Office space			43,463				28,818				72,281
			78,947,444				28,818				78,976,262

				Monte Carlo Simulation Inputs
Date	SARs Awarded	Exercise Price	Vesting Period	Grant Price	Dividend Yield	Risk-free rate of Return	Expected Volatility	Weighted Average Fair Value	Average Expected Exercise Life
01-Aug-13	1,078,125	$14.00	5 yrs	$14.00	2.87%	2.15%	54.89%	$4.28	4.9 - 6.0 yrs
12-Mar-14	22,118	$13.66	3 yrs	$13.66	2.93%	2.06%	56.31%	$4.17	4.6 - 5.0 yrs
01-Jun-14	5,595	$13.91	3 yrs	$13.91	2.88%	2.20%	53.60%	$4.20	4.5 - 5.0 yrs
06-Mar-15	37,797	$10.25	3 yrs	$10.25	3.90%	1.90%	61.38%	$2.98	4.2 - 5.0 yrs

Period		Total
2015			724,062
2016			1,027,447
2017			333,670
2018			106,198
			2,191,377

 

 

F-11

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