Philly Shipyard — AGM Information 2016

Apr 13, 2016

Annual General Meeting

Philly Shipyard ASA Oslo, 13 April 2016

Agenda

• 1. Opening of the annual general meeting, including approval of the notice and agenda.
• 2. Election of a person to co-sign meeting minutes along with meeting chair.
• 3. Presentation of business activities (non-voting).
• 4. Approval of the 2015 annual accounts of Philly Shipyard ASA, group consolidated accounts and the Board of Directors' report.
• 5. Consideration of the Board of Directors' declaration regarding stipulation of salary and other remuneration to the executive management of the Company.
• 6. Consideration of the statement of corporate governance (non-voting).

• 7. Stipulation of remuneration to the members of the Board of Directors and the Audit Committee.

• 8. Stipulation of remuneration to the members of the Nomination Committee.

• 9. Approval of remuneration to the auditor for 2015.
• 10. Election of members to the Board of Directors.
• 11. Authorization to the Board of Directors for payment of dividends.
• 12. Authorization to the Board of Directors to purchase own shares in connection with acquisitions, mergers, de-mergers or other transactions.
• 13. Authorization to the Board of Directors to purchase own shares for the purpose of investment or subsequent sale or deletion of such shares.
• 14. Authorization to the Board of Directors to increase the share capital for new shipbuilding projects or other future investments within the Company's scope of operations.

Presentation of Business Activities

Philly Shipyard ASA

Company Overview

A U.S. shipyard that utilizes state-of-the-art shipbuilding practices to manufacture ocean-going commercial vessels for the Jones Act market and opportunistically maintains ownership interests in the vessels it constructs

• Company: PHLY is the most modern U.S. shipyard focused on building commercial vessels protected by the Jones Act
• Products: PHLY builds ocean-going tankers ranging in size from 46,000-115,000 dwt and containerships. The yard has the capabilities and infrastructure to build a variety of vessels
• Facility: PHLY's shipyard was completely rebuilt in 1998 and has been optimally designed to support commercial shipbuilding operations; over USD 650M invested through a public private partnership
• Processes: The yard utilizes modular construction, automated fabrication systems and outsourcing to enhance productivity
• Partners: Relationships with Hyundai Mipo Dockyards, KOMAC, and Samsung Heavy Industries
• Order book: Eight vessels currently in the production phase, consisting of six product tankers and two containerships with last delivery in early 2019
• Ownership: Aker Capital II AS owns 57.6% of the company which is listed on the Oslo Stock Exchange Tankers Container Ships

Modern Shipyard

Commercial Vessels

Summary of 2015 Main Events

• New four-year collective bargaining agreement
• Second aframax tanker delivered to SeaRiver
• Philly Tankers declared its option and agreed to sell its product tanker contracts to Kinder Morgan
• Sold joint venture interests to Marathon
• Delivered Hull 021 to Crowley
• Began construction on Matson CV project
• Name change to Philly Shipyard
• Delivered Hull 022 to Crowley

Hull 023 ready for delivery in April 2016

Presentation of Financial Statements

Philly Shipyard ASA

Consolidated Income Statement

Amounts in USD thousands (except per share amounts)	2015	2014
Operating revenues	286,330	240,231
Other income	20,699	32,437
Operating revenues and other income	307,029	272,668
Cost of vessels	(258,918)	(233,793)
Wages and other personnel expenses, net	(2,519)	(2,155)
Other operating expenses	(2,858)	(4,574)
Operating income before depr. and amort. (EBITDA)	42,734	32,146
Depreciation	(6,471)	(7,457)
Operating income (EBIT)	36,263	24,689
Financial income	606	835
Financial expenses	(4,102)	(6,637)
Income before tax	32,767	18,887
Income tax expense	(15,388)	(5,274)
Net income for the year	17,379	13,613
Basic earnings per share (USD)	1.44	1.12

Consolidated Statement of Financial Position Assets

Amounts in USD thousands	2015	2014
ASSETS
Property, plant and equipment	49,659	52,894
Restricted cash	13,100	7,002
Deferred tax assets	6,683	308
Equity-accounted investees	56,645	55,960
Other non-current assets	229	208
Total non-current assets	126,316	116,372
Vessels-under-construction receivable	111,736	87,945
Work-in-process	41,460	-
Restricted cash	7,000	13,000
Prepayments and other receivables	5,939	10,590
Cash and cash equivalents	69,945	40,477
Total current assets	236,080	152,012
Total assets	362,396	268,384

Consolidated Statement of Financial Position Equity & Liabilities

Amounts in USD thousands	2015	2014
EQUITY AND LIABILITIES
Paid in capital	69,492	81,619
Other equity	73,942	56,563
Total equity attributable to equity holders of the parent	143,434	138,182
Total equity	143,434	138,182
Interest-bearing long-term debt	59,343	11,479
Other long-term liabilities	7,402	7,210
Deferred tax liabilities	1,231	-
Total non-current liabilities	67,976	18,689
Construction loans	29,000	-
Interest-bearing short-term debt	13,987	45,764
Trade payables and accrued liabilities	47,433	31,929
Income taxes payable	5,096	6,259
Customer advances, net	53,969	26,054
Other provisions - warranties	1,501	1,507
Total current liabilities	150,986	111,513
Total liabilities	218,962	130,202
Total equity and liabilities	362,396	268,384

Philly Shipyard ASA Income Statement

Amounts in USD thousands	2015	2014
Operating revenues	4 0	8 6
Operating expenses	(495)	(1,272)
Gain-on-sale of profit sharing asset	-	22,834
Operating (loss)/income	(455)	21,648
Interest income from subsidiary	869	196
Interest expense to subsidiary	-	(87)
Other interest and financial income	7 4	464
Other interest and financial expenses	(78)	(3,205)
Income before tax	410	19,016
Income tax expense	(1,325)	(7,046)
Net (loss)/income for the year	(915)	11,970
Allocation of net (loss)/income:
Net (loss)/income for the year	(915)	11,970
Other equity	915	(11,970)
Total	-	-

Philly Shipyard ASA Statement of Financial Position

Amounts in USD thousands	2015	2014	Amounts in USD thousands	2015	2014
ASSETS:			EQUITY AND LIABILITIES:
			Share capital	22,664	22,664
			Share premium reserve	46,828	58,955
			Total paid in capital	69,492	81,619
			Other equity	27,166	28,081
			Total equity	96,658	109,700
Shares in subsidiary	67,000	67,000
Loan to subsidiary	31,000	35,000	Deferred tax liability	1,231	-
Total non-current assets	98,000	102,000	Total non-current liabilities	1,231	-
Other current receivables	227	2 7	Other current liabilities	230	202
Cash and cash equivalents	293	13,916	Tax payable	401	6,041
Total current assets	520	13,943	Total current liabilities	631	6,243
Total assets	98,520	115,943	Total equity and liabilities	98,520	115,943

Auditor's Report 2015

KPMG AS Tom Myhre, State Authorized Public Accountant

Consideration of the Board of Directors' declaration regarding stipulation of salary and other remuneration to executive management of the Company

The General Meeting supports the Board of Directors' statement regarding establishment of salary and other benefits for the executive management pursuant to the Public Limited Liability Companies Act section 6-16a.

Corporate Governance Report 2015

Philly Shipyard ASA's corporate governance report is presented on pages 52-55 of the 2015 annual report.

Proposal from the Nomination Committee of remuneration to the members of the Board of Directors, the Audit Committee and the Nomination Committee

Board of Directors

>	Board chairman		NOK 320 000
>	Board members		NOK 215 000
>	Audit committee chairman	NOK	45 000
>	Audit committee members	NOK	35 000

Nomination Committee

Chairman and members NOK 33 000

Approval of remuneration to the auditor for 2015

The remuneration to the auditor of USD 31,000 ex.-VAT for the audit of the Company's 2015 annual accounts is approved. In addition, the Group has paid fees to KPMG of USD 11,000 ex.-VAT for services other than audit.

Board composition

Jim Miller (chairman)

Audun Stensvold (deputy chairman)

Amy E. Humphreys

Elin Karfjell

Board authorizations

• Authorization to the Board of Directors for payment of dividends.

• Authorization to the Board of Directors to purchase own shares in connection with acquisitions, mergers, de-mergers or other transactions.

• Authorization to the Board of Directors to purchase own shares for the purpose of investment or subsequent sale or deletion of such shares.

• Authorization to the Board of Directors to increase the share capital for new shipbuilding projects or other future investments within the Company's scope of operations.

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Philly Shipyard ASA and Philly Shipyard ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Philly Shipyard's businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although Philly Shipyard ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Philly Shipyard ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Philly Shipyard ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

The Philly Shipyard group consists of many legally independent entities, constituting their own separate identities. Philly Shipyard is used as the common brand or trade mark for most of this entities. In this presentation we may sometimes use "Philly Shipyard", "Group, "we" or "us" when we refer to Philly Shipyard companies in general or where no useful purpose is served by identifying any particular Philly Shipyard company.