It is now midday, and as we have a quorum, I now declare the meeting open. A video conference call has been set up for this meeting. As set out in the notice of meeting, shareholders cannot legally attend the meeting or vote on the business of the meeting virtually. However, it's been agreed that those persons on the conference call can attend the meeting informally. Present today from the Board of Directors, we have myself, Simon Mackenzie Smith, Chairman of the Board. In addition, our CEO and Executive Director, Jacob Meldgaard, is joining us remotely via video link. We are also joined by Nick Lindsay from Elemental, our Company Secretary, and Christopher Everard, our General Manager. The Board of Directors has jointly agreed that only one director will attend the meeting in person on behalf of the Board.
Let me turn to the review of the year. I want to take this opportunity to briefly reflect on my first few months at TORM, a period that has exceeded my expectations about the expertise and professio nalism across the business. The period has also exemplified the ongoing complexities of the market in which we operate, whilst also providing an opportunity for TORM to demonstrate the flexibility, consistency and resilience that has been systematically built into the business. Events in the Middle East are a reminder that geopolitics is a major influence on both the products we carry and the shipping lanes in which we operate. What never changes is TORM's ability to execute whatever the complexities that lie before us.
I now have a deeper understanding of how TORM successfully navigates these market conditions in a way that delivers for our shareholders, and I am certain that we can continue to do this in a manner that exceeds the capabilities of our rivals. What really sets us apart is the strong culture that runs through the business, which provides us with a true clarity of purpose, and so creates a distinct competitive advantage. Geopolitically, 2025 was, in many respects, a continuation of the tensions and shifting trade patterns that have influenced our industry in one way or another since 2022. Disruption in the Red Sea continued to affect our product tanker routes, while low diesel inventories and refinery closures across Europe supported stronger clean product flows.
At the same time, reduced cannibalization from crude carriers strengthened demand for clean product tankers, driven primarily by longer haul crude trades and re-routings that kept Aframax and Suezmax vessels fully employed in their core markets, limiting their availability to switch into clean cargos. Recent developments, including Ukrainian drone attacks on Russian refineries, further influenced trade dynamics. Despite a high number of new build deliveries in the LR2 and Aframax segment during the year, overall clean product tanker capacity ended slightly below the previous year. This was partly due to sanctions on vessels transporting Russian oil, which removed ships from the clean petroleum product fleet and tightened effective supply. In this context, TORM once again demonstrated the strength of our One TORM integrated business model.
We are the benchmark for our industry, and we owe this to the refinement of our model, the expertise and discipline of our people, and the consistency and agility of our management team under our Chief Executive, Jacob Meldgaard. The evidence for this is in the numbers. Financially, 2025 was another robust year for TORM. We delivered a net profit of $286 million on TCE earnings of $910 million. While earnings moderated compared with the exceptionally strong markets of 2023 and 2024, they remained well above historical levels and clearly demonstrated both the strength of the product tanker market and TORM's ability to perform across changing market conditions.
Operationally, across our fleet, we achieved average TC rates of $28,783 per day, which is a strong performance across all vessel classes and a reflection of the value of our integrated commercial platform and global trading presence that enables us to achieve market-leading rates. We also upheld strict cost discipline with operating costs averaging $7,638 per day, supporting an EBITDA of $571 million and an operating profit of $356 million. Cash generation remained very healthy. Free cash flow reached $346 million, enabling us to maintain our commitment to shareholder returns while further strengthening TORM's financial position. During the year, we returned $2.12 per share, a total of $212 million, to our shareholders in the form of dividends. Throughout 2025, we continued to pursue a disciplined approach to fleet optimization. Through carefully considered vessel transactions, we focused on maintaining a competitive fleet capable of capturing opportunities across global markets.
We also took important steps to further strengthen our balance sheet. During the year, we secured new financing commitments on highly attractive terms, enabling us to refinance two existing syndicated loans and lease agreements covering 22 vessels. This refinancing simplifies our capital structure, enhances our operational flexibility, and supports our long-term ambition to generate sustainable value for our shareholders. Our net loan to value ratio ended the year at 29.4%, underscoring our continued commitment to maintaining a conservative leverage profile. Taken together, these results confirm that TORM continues to combine strong earnings, robust cash generation, and prudent financial management, allowing us to invest in our fleet, reinforce our balance sheet, and consistently return value to shareholders. As we enter 2026, geopolitical pressures not only persisted, but intensified.
The escalating conflict in the Middle East and the recent disruption to traffic through the Strait of Hormuz have contributed to one of the most volatile and unpredictable market environments in recent years. Geopolitical tensions, supply disruptions, and rapidly shifting trade flows are reshaping tanker movements almost daily. While this brings uncertainty, it also creates meaningful commercial opportunities for TORM. Today's disruptions, longer voyage distances, large-scale rerouting of cargoes, and sudden regional supply gaps mean the entire product tanker industry is operating in a highly dislocated market. In such conditions, operators with strong operational capabilities, commercial reach, and fleet flexibility will be best placed to benefit. For some, this environment will translate into very strong earnings. For TORM, our scale, chartering platform, and trading agility position us exceptionally well to capture emerging opportunities.
Despite the unpredictability, the combination of longer sailing distances, shifting cargo patterns, and widespread market inefficiencies creates a landscape where TORM is well-positioned to continue performing strongly. Before closing, I should also make reference to an important development in our ownership structure. Last year, Oaktree reduced part of its long-held shareholding in TORM through a transaction with Hafnia. We appreciate Oaktree's many years of support and the role they have played in TORM's transformation into the company we are today. This change in ownership reinforces rather than alters our strategic direction. It's a reminder that the best way for TORM to maximize value for every shareholder, long-standing or new, is to continue doing what we do best, running a highly efficient, agile, and commercially disciplined product tanker platform.
Our job now is to keep demonstrating through performance, good governance, and capital allocation that TORM creates more value as a strong, focused, standalone company. You should expect us to continue sharpening our competitiveness, deepening our commercial capabilities, and strengthening our financial profile, all with the clear ambition of ensuring that the market fully recognizes the value that TORM can create on its own. Thank you for your continued trust and support. With that, I would now like to start the formal proceedings of this Annual General Meeting. The Notice of the Annual General Meeting, together with the Explanatory Notes, was issued on the 5th of March 2026. Accordingly, the requisite notice of meeting has been given. I therefore propose that the notice of meeting be taken as read. Thank you.
To reflect the views of TORM shareholders more accurately, voting today will be done by way of a poll on each of the resolutions put to the meeting. I'm appointing Nick Lindsay, the Company Secretary, to act as scrutineer. I hereby confirm that as Chair of the AGM, I will vote all proxies received as per the proxy's instructions, and that in addition, I will vote in favor of all resolutions where the proxies will have discretion to do so. I would also like to ask Chris Everard, General Manager of TORM, to confirm that as Corporate Representative of OCM Njord Holdings, he will be voting in favor of all the resolutions to the extent that he is permitted to do so.
I confirm.
Thank you. There are three options for each resolution. To vote for the proposed resolution, to vote against the proposed resolution, or to withhold a vote. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against a resolution. The slides that will appear on the screen set out the votes representing all of the proxies received and the vote of OCM Njord Holdings, also known as Oaktree. We will now proceed to vote on the resolutions which I will formally propose to the meeting. The full text of each of the resolutions is set out in the Notice of Meeting, a copy of which you will have received.
Resolutions one to 12 are proposed as Ordinary Resolutions. For each of these resolutions to be passed, more than half of the votes cast, excluding in relation to Resolutions 11 and 12, the number of shares which are subject of the relevant Buyback Contract, must be in favor of the resolution. Resolution 13 is proposed as a Special Resolution. For that resolution to be passed, at least three-quarters of the votes cast must be in favor of the resolution. I will introduce each resolution briefly before proposing it. The first resolution is to receive and adopt the Annual Report and Accounts for the year ended 31st December 2025. I now propose that the Annual Report and Accounts for the year ended 31st December 2025 be received and adopted. I confirm that as set out in the summary, this resolution has been passed.
The next resolution is to seek approval of the Directors' Remuneration Report. I now propose that the Directors' Remuneration Report, as set out in the Annual Report and Accounts for the financial year ended 31st December 2025, be approved. I confirm that as set out in the Summary, this resolution has been passed. The next resolution is to seek approval of the Directors' Remuneration Policy. I now propose that the Directors' Remuneration Policy, as set out in the Annual Report and Accounts for the year ended 31st December 2025, be approved. I confirm that as set out in the Summary, this resolution has been passed. Resolution four, the Board of Directors recommends that Ernst & Young LLP be reappointed as the Auditor of the Company until the conclusion of TORM's next Annual General Meeting, and that the Directors be authorized to fix their remuneration.
Resolution four deals with their appointment, and Resolution five deals with their remuneration. I now propose that Ernst & Young be reappointed as auditors. I confirm that as set out in the summary, this resolution has been passed. Resolution five, I propose that the Directors be authorized to fix the auditors' remuneration. I confirm that as set out in the summary, this resolution has been passed. Resolutions six to 10 concern the re-election of the Directors, myself, Simon Mackenzie Smith, Christopher Boehringer, Pär Göran Trapp, Annette Malm Justad, and Jacob Meldgaard. In accordance with our Articles, each Director retires at this Annual General Meeting and, being eligible, submits themselves for re-election. The Board of Directors recommends that each of the Directors be re-elected as a Director of the Company. As this next resolution relates to my re-election, I will now hand over the chair to Christopher Everard.
I now propose that Simon Mackenzie Smith be re-elected as a Director and Chairman, and I confirm that as set out in the summary, this resolution has been passed. I will now hand the Chair back to Simon.
Thank you. I now propose that Christopher Boehringer be re-elected as a Director. I confirm that as set out in the summary, this resolution has been passed. I now propose that Pär Göran Trapp be re-elected as a Director. I confirm that as set out in the summary, this resolution has been passed. I now propose that Annette Malm Justad be re-elected as a Director. I confirm that as set out in the summary, this resolution has been passed. I now propose that Jacob Meldgaard be re-elected as a Director. I confirm that as set out in the summary, this resolution has been passed. Resolutions 11 and 12 relate to the company's authority to buy back its own A-shares through off-market share buyback contracts. These resolutions ask shareholders to approve two separate types of buyback arrangements, Buyback Contracts A and Buyback Contracts B.
Together, they provide the company with flexibility to repurchase shares within defined limits and pricing parameters, helping support our capital allocation strategy. I will now introduce each resolution in turn. Resolution 11 seeks shareholder approval for the company to enter into a series of off-market buyback contracts, referred to as Buyback Contracts A. This authority would allow the company to repurchase up to 10 million A shares within the defined pricing limits linked to trading on Nasdaq Copenhagen and Nasdaq New York, less any A shares purchased or committed to be purchased pursuant to Buyback Contracts B. The authority will run until the conclusion of the 2027 AGM. We have received some questions on Resolutions 11 and 12, and those questions and our answers to them are as follows. Question one refers to the intended scale of Buyback Contract B purchases from Oaktree.
A, has the Board received any indication from Oaktree as to the number of A-shares it intends to sell pursuant to Buyback Contract B, and if so, what is the anticipated range? B, what governance controls or internal limits, if any, has the Board established to ensure that purchases under Contract B do not disproportionately facilitate an exit by a single shareholder at the expense of remaining shareholders? C, will the Board commit to provide timely disclosure to all shareholders of the quantum and pricing of any purchases made under Contract B as they occur? Our responses are as follows. As stated in the AGM notice, the Directors regard the ability to repurchase shares in suitable circumstances to be an important part of the financial management of the company.
In common with other listed companies, the purpose of the proposed share buyback resolutions is therefore to provide appropriate flexibility for potential future share buybacks in a manner which reflects the company's share structure. As clearly stated in the AGM notice, this would only be where the Directors consider it would be in the best interests of the company and its shareholders as a whole to do so. There have therefore been no discussions on the details of any actual purchases under Buyback Contracts A or B. However, as stated in the AGM notice, the price for any buybacks under Buyback Contract B will be set by the price achieved in the same trading period and therefore always dependent on buybacks being made in that trading period under Buyback Contract A.
If any such purchases were to be made, the Company confirms that disclosure will be made in accordance with all applicable legislation. Question two refers to the share price and NAV thresholds for value-accretive buybacks as follows. At what discount to the Board's assessment of net asset value per share does the Board consider buybacks to be clearly value-accretive? Has the Board established any formal price discipline guidelines or threshold to govern execution? Next, how does the Board intend to balance buyback activity against alternative uses of capital, including vessel acquisitions, debt reduction, and direct cash distributions to shareholders, in the event that the Company's distributable reserves are constrained? Will the Board provide shareholders with the key assumptions and NAV reference points that underpin its view that proposed buybacks are in the best interest of the Company? Our response is as follows.
As already noted, the purpose of the share buyback resolutions is to provide flexibility for potential future buybacks, where the directors consider at that time it will be in the best interest of the company and its shareholders as a whole to do so. The matters reflected in these questions will be considered by the board as appropriate if and when the board is considering whether to launch a share buyback program pursuant to these resolutions. You should also see the response to question three below. The question three refers to the capital return framework, buybacks versus pro rata dividend distributions. What is the board's framework for determining whether available distributable reserves are deployed via buybacks or via dividend distributions? And what criteria must be met for each mechanism to be preferred?
Next, given that Buyback Contract B facilitates the exit of a specific identifiable shareholder, Oaktree, rather than a pro-rata reduction in share capital benefiting all shareholders equally, how does the Board satisfy itself that the use of corporate funds in this manner is consistent with its fiduciary duties to all shareholders? Finally, has the Board considered the possibility that a larger regular dividend might be a more equitable and transparent mechanism for returning capital at this point in the market cycle? Our response is, as set out in the Annual Report 2025, the Board's capital return framework is based on a quarterly assessment of earnings, cash generation, capital commitments, balance sheet strength, and liquidity, with cash dividends remaining the primary and default mechanism for returning capital to shareholders.
As already noted, share buybacks would only be implemented where the Directors consider it would be in the best interest of the company and its shareholders as a whole. On 25th of March, TORM distributed a Q4 interim dividend, representing an accelerated return of capital that might otherwise have been proposed following the AGM in line with the company's normal practice. The Board reiterates that dividends remain a core element of TORM's capital return policy and will continue to be considered on a quarterly basis in light of market conditions and financial performance. The use of separate Buyback Contracts A and B simply reflects the company's listings and registered shareholding structure with any potential buybacks under Buyback Contract B being at the price achieved in the same trading period, and therefore always dependent on buybacks being made in that trading period under Buyback Contract A.
I propose the authority to make limited market purchases of the company's A shares pursuant to Buyback Contracts A be approved. I confirm that, set out in the summary, this resolution has been passed. Resolution 12 asks shareholders to approve a second form of off-market buyback arrangement, known as Buyback Contracts B. This authority covers up to $7.5 million A shares, again, subject to minimum and maximum pricing limits that mirror those under Contract A, less any A shares exceeding $2.5 million A shares purchased or committed to be purchased pursuant to Buyback Contracts A. This authority will also run until the conclusion of the 2027 AGM. As already noted in respect of Resolution 11, we have had some questions on Resolutions 11 and 12, and those questions and our answers to them was already provided for Resolution 11.
I propose that the authority to make limited market purchases of the company's A-shares pursuant to Buyback Contracts B be approved. I confirm that as set out in the summary, this resolution has been passed. We now move to the special resolution, which is number 13. It proposes that with effect from the conclusion of this meeting, the draft Articles of Association presented to shareholders be adopted as the company's new Articles of Association in substitution for and to the exclusion of the existing Articles. I now propose that the updated Articles of Association be approved. I confirm that as set out in the summary, this resolution has been passed. That concludes the formal business of this meeting. Final results of the meeting will be announced to the market through our regulatory information service and posted on our website as soon as practical.
Thank you.
Thank you.