AI assistant
Philly Shipyard — Annual Report (ESEF) 2024
Apr 2, 2025
Preview isn't available for this file type.
Download source filePhilly Shipyard Annual Report 2024
Contents
Content 2
Company Overview 3
Our History 4
Key Events 6
Norwegian Transparency Act 7
Sustainability and ESG Program 7
Board of Directors’ Report 9
Directors’ Responsibility Statement 12
Consolidated Accounts 15
Parent Company Accounts 42
Auditor’s Report 50
Shares and Shareholder Matters 56
Corporate Governance 59
The Board of Directors 64
The Management Team 66
Company Information 67
CONTENT
FINANCIAL CALENDAR 2025
| Date | Event |
|---|---|
| 2 April | Annual general meeting |
| 29 April |
Dates are subject to change.
COMPANY OVERVIEW
This is Philly Shipyard
Philly Shipyard ASA is listed on the Euronext Expand Oslo (formerly known as Oslo Axess) with the ticker symbol “PHLY”. Aker Capital AS, a wholly-owned subsidiary of Aker ASA, is the majority shareholder, holding 57.6% of the shares as of 31 December 2024. PHLY sold its only operating asset Philly Shipyard, Inc. to Hanwha on 19 December 2024. An Extraordinary General Meeting (EGM) was held on 19 February 2025 at which dissolution of PHLY was approved.
OUR HISTORY
Philly Shipyard: Our History 1997 - 2024
| Time Period | Key Developments # REVIEW OF THE ANNUAL ACCOUNTS
Philly Shipyard prepares and presents its consolidated accounts according to International Financial Reporting Standards (IFRS) as adopted by the European Union. PHLY was formed on 16 October 2007 to be the holding company of PSI which operated.
Income/(loss) from discontinued operations was USD 90.8 million in 2024 and negative USD 67.2 million in 2023. Income in 2024 was comprised of the net loss from discontinued operations of USD 142.2 million offset by the gain-on-sale of discontinued operations of USD 233.0 million. The loss from discontinued operations in 2023 was USD 67.2 million.
In 2024, Philly Shipyard’s net income was USD 90.6 million and its basic and diluted income per share was USD 7.49. The corresponding figures for 2023 were net loss of USD 67.9 million and a basic and diluted loss per share of negative USD 5.61.
Cash flows
Net cash flow used in operating activities in 2024 and 2023 were USD 59.2 million and USD 50.8 million, respectively. There were no significant changes year-to-year caused by the level of completion of vessels and customer and vendor contract payment schedules.
Net cash flow from investing activities in 2024 was USD 68.8 million and net cash used in investing activities in 2023 was USD 6.6 million. Cash generated from investment activities in 2024 was mostly due to proceeds from sale of PSI partially offset by capital expenditures up through 19 December 2024 whereas in 2023 investment activities were due to capital improvements and enhancements to support the NSMV and SRIV programs.
Net cash flow used in financing activities in 2024 and 2023 were USD 1.1 million and USD 0.7 million, respectively. In both 2024 and 2023, financing activities were for lease liabilities.
Board of Directors’ Report 2024
Philly Shipyard ASA is a holding company that currently has no operating investments. Aker Capital AS, a wholly-owned subsidiary of Aker ASA, is the majority shareholder in Philly Shipyard ASA.
BOARD OF DIRECTORS’ REPORT
KEY EVENTS AND HIGHLIGHTS
- Successfully sold its wholly-owned subsidiary, Philly Shipyard, Inc., to Hanwha on 19 December 2024
- 2024 net income of USD 90.6 million compared to 2023 net loss of USD 67.9 million
- Total cash and cash equivalents of USD 88.0 million at 31 December 2024, excluding USD 10.0 million of escrow cash
PHILLY SHIPYARD - ANNUAL REPORT 2024
10
Statement of financial position and liquidity
As of 31 December 2024, Philly Shipyard has cash and cash equivalents (excluding escrow cash) of USD 88.0 million. The corresponding figure for 2023 is USD 79.5 million. The increase of USD 8.5 million in 2024 (compared to decrease of USD 58.1 million in 2023) was primarily due to the sale of PSI, offset by cash used in discontinued operations.
Philly Shipyard’s net working capital (current assets less current liabilities) is USD 86.4 million at 31 December 2024 compared to negative USD 106.7 million at 31 December 2023.
As of 31 December 2024, Philly Shipyard had an escrow of USD 10.0 million (classified as long-term). The USD 10.0 million was obligated to be maintained in an escrow account related to certain potential liabilities of the Company under the SPA for a period of up to four years following the closing of the Transaction on 19 December 2024.
Total assets were USD 98.1 million at 31 December 2024 compared to USD 294.5 million at 31 December 2023, with the decrease in total assets mainly resulting from the sale of PSI.
Current assets as of 31 December 2024 of USD 88.1 million consists of prepayments and cash and cash equivalents. The corresponding figure for 31 December 2023 was USD 173.9 million and consisted of prepayments and other receivables, restricted cash (short-term), income tax receivable (short-term) and cash and cash equivalents. The decrease of USD 85.8 million in current assets is primarily due to the sale of PSI.
Non-current assets of USD 10.0 million as of 31 December 2024 consists of the escrow cash. The corresponding figures for 31 December 2023 was USD 120.6 million and consisted of property, plant and equipment, right-of-use assets, restricted cash (long-term), deferred tax asset, income tax receivable (long-term), and other non-current assets. The decrease of USD 110.6 million in non-current assets is primarily due to the sale of PSI.
Current liabilities as of 31 December 2024 of USD 1.7 million consists of trade payables and accrued liabilities. The corresponding figure for 31 December 2023 was USD 280.6 million and consisted of trade payables and accrued liabilities, warranties, customer advances (net), other contract liabilities and lease liability (short-term). The decrease of USD 278.9 million in current liabilities is primarily due to the sale of PSI.
Non-current liabilities of USD 0 as of 31 December 2024 and USD 8.0 million as of 31 December 2023 consists of income tax payable (long-term) and lease liability (long-term). The decrease of USD 8.0 million in non-current liabilities is primarily due to the sale of PSI.
Total equity at 31 December 2024 amounts to USD 96.4 million and the equity ratio (total equity divided by total assets) was 98%. Corresponding figures for 31 December 2023 are USD 5.8 million and 2%, respectively. The USD 90.6 million increase in equity is the result of the current year’s net income.
The Board deems that the Company as of 31 December 2024 is financially viable.
An EGM on 19 February 2025 approved the dissolution of PHLY. It is anticipated to be completed within the first half of 2025.
RISKS
Historically, the risks facing PHLY have typically been related to the operational and financial performance of its only asset, PSI. As noted, as part of the closing, PHLY is obligate to maintain an escrow account related to certain potential liabilities of the Company under the SPA for a period of up to four years following the closing of the Transaction. If the Company was to collect less than the full escrow, the amount not collected would impact future liquidity and distributions as well as the gain recorded as of 31 December 2024.
SUBSEQUENT EVENTS AFTER 31 DECEMBER 2024
On 29 January 2025, the Board proposed a dividend payment of USD 6.08 per share to shareholders of record as of 21 February 2025 as well as the commencement of dissolution proceedings of PHLY. An extraordinary general meeting (EGM) was held on 19 February 2025 during which the proposed dividend and dissolution of PHLY were approved.
THE GOING CONCERN ASSUMPTION
Following the closing of the sale of PSI in December 2024, PHLY has ceased trading, and the going concern assumption is therefore not applied in these financial statements. PHLY has continued to account for PSI as discontinued operations in its financial statements up until closing. At the date of issuance of this report, the liquidation of the Company has been approved by the Board and the EGM that occurred on 19 February 2025. Management has concluded that the IFRS accounting standards (consolidated financial statements) and Norwegian GAAP accounting standards (Parent company financial statements) still provide relevant and reliable information, and has therefore prepared these financial statements using the same accounting policies as previously disclosed.
PARENT COMPANY ACCOUNTS AND ALLOCATION OF INCOME FOR THE YEAR
The income/(loss) account of PHLY for the year 2024 shows income of USD 59.0 million. The Board of Directors proposes that the income for the year be allocated as shown below:
| Extraordinary dividend | (73.6) million |
| Share premium reserve | 12.5 million |
| Other equity | 2.1 million |
| Total allocated | 59.0 million |
Philly Shipyard presents its Parent company financial statements using GAAP (Generally Accepted Accounting Principles) of Norway that require extraordinary dividend to be presented
BOARD OF DIRECTORS’ REPORT
PHILLY SHIPYARD - ANNUAL REPORT 2024
11
as a liability and as part of the allocation of the income for 2024 regardless of the fact that the dividend was declared in February 2025 and not in 2024. For the financial statements presented using IFRS (International Financial Reporting Standards), dividend declared after year end 2024 may not be recorded as a liability. The equity of the Company is therefore not the same in the two statements of financial position as at 31 December 2024.
Philly Shipyard’s goal now that it has sold its only operating asset, PSI, is to return a significant portion of the sale proceeds to its shareholders while ensuring PHLY’s obligations under the SPA are fully accounted for. The Parent company’s only significant asset is cash. Prior to closing of the Transaction it was the investment in subsidiary, PSI.
ENVIRONMENTAL, SOCIAL, & GOVERNANCE (ESG)
Philly Shipyard is committed to operating sustainably and responsibly. As an enhancement to the Company’s governance framework, the Audit Committee of the Board of Directors established oversight of the sustainability/ESG program and reviews it regularly at meetings.
In compliance with the Norwegian Transparency Act, Philly Shipyard filed the second required statement on the sustainability page of its website on 30 June 2024. This statement describes the decent working conditions within the Shipyard’s operations, its policies and practices, its supplier risk assessment process and findings, and its engagement with its supply chain regarding human rights and modern slavery.
Philly Shipyard’s sustainability/ESG strategy continues to be focused on those material topics that were identified through its stakeholder analysis and materiality assessment, which are reviewed annually. The Company published its first Sustainability Report on 16 September 2024 and the report can be found at www.phillyshipyardasa.com/sustainability.The Company has zero tolerance for corruption and has adopted an Anti-Corruption Policy that is in line with the anti-corruption policies at other Aker ASA-related companies. The Company was required to report according to the Corporate Sustainability Reporting Directive (CSRD) in 2024. The CSRD is an EU regulation that mandates companies to disclose detailed information about their environmental, social and governance (ESG) impacts, aiming to enhance transparency and accountability in corporate sustainability practices. Due to the fact that the Company is under liquidation and will be dissolved in 2025, the Company has not prepared the report.
ORGANIZATION
On 31 December 2024, Philly Shipyard’s workforce consisted of 0 employees.
CORPORATE GOVERNANCE
Philly Shipyard’s corporate governance policy exists to ensure an appropriate division of roles among the Company’s owners, Board of Directors and Management Team. Such a separation of roles ensures that goals and strategies are prepared, that adopted corporate strategies are implemented, and that the results achieved are subject to verification and follow-up. Applying these principles also contributes to satisfactory group-wide monitoring and verification of activities. An appropriate division of responsibilities and satisfactory controls will contribute to the greatest possible value creation over time, to the benefit of shareholders and other interest groups. Philly Shipyard’s corporate governance guidelines are presented in greater detail on pages 59-63 of this annual report.
The directors and officers of Philly Shipyard are covered under an Aker group Directors and Officers liability insurance policy (D&O). The insurance covers personal legal liabilities including defense and legal costs. The officers and directors of the Parent company and all subsidiaries globally (owned more than 50%) are covered by the insurance. The cover also includes employees in managerial positions or employees who become named in a claim or investigation.
OUTLOOK
PHLY has gone through a transformational 2024 with the sale of its sole operating asset, PSI. The Board proposed an initial dividend of USD 6.08 per share totaling approximately USD 73.6 million and to begin the dissolution process. The proposed dividend and dissolution process were approved at an EGM held on 19 February 2025. PHLY hopes to complete the dissolution within the first half of 2025 and distribute the remaining cash to its shareholders. The escrow account of USD 10.0 million is obligated to be maintained for a period of up to four years following the closing for certain potential liabilities of the Company under the SPA. It is anticipated that the remaining amount will be paid as a liquidation dividend to shareholders.
BOARD OF DIRECTORS’ REPORT
Kristian Røkke
Board Chairman
Elin Karfjell
Board Member
Steinar Nerbøvik
President and CEO
Oslo, Norway - 28 March 2025
Board of Directors
Philly Shipyard ASA
Jan Petter Hagen
Board Member
Susan Hayman
Board Member
PHILLY SHIPYARD - ANNUAL REPORT 2024
12
DIRECTORS’ RESPONSIBILITY STATEMENT
Today, the Board of Directors and the Chief Executive Officer reviewed and approved the Board of Directors’ report and the consolidated and separate annual financial statements for Philly Shipyard ASA, as of and for the year ending 31 December 2024 (annual report 2024). The Philly Shipyard ASA consolidated financial statements have been prepared in accordance with IFRS, as adopted by the European Union, and additional disclosure requirements in the Norwegian Accounting Act, and that should be used as of 31 December 2024. The separate financial statements for Philly Shipyard ASA have been prepared in accordance with the Norwegian Accounting Act and Norwegian Accounting Standards as of 31 December 2024. The Board of Directors’ report for the group and the Parent company is in accordance with the requirements in the Norwegian Accounting Act and Norwegian accounting standard no. 16, as of 31 December 2024.
To the best of our knowledge:
- The consolidated and separate annual financial statements for 2024 have been prepared in accordance with applicable accounting standards
- The consolidated and separate annual financial statements give a true and fair view of the assets, liabilities, financial position and income/(loss) as a whole as of 31 December 2024 for the Group and the Parent company
- The Board of Directors’ report for the Group and the Parent company includes a true and fair review of:
- The development and performance of the business and the position of the Group and the Parent company
- The principal risks and uncertainties the Group and the Parent company face
Directors’ Responsibility Statement
Kristian Røkke
Board Chairman
Elin Karfjell
Board Member
Steinar Nerbøvik
President and CEO
Oslo, Norway - 28 March 2025
Board of Directors
Philly Shipyard ASA
Jan Petter Hagen
Board Member
Susan Hayman
Board Member
PHILLY SHIPYARD - ANNUAL REPORT 2024
13
PHILLY SHIPYARD - ANNUAL REPORT 2024
14
PHILLY SHIPYARD - ANNUAL REPORT 2024
15
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Amounts in USD thousands (except share amounts and earnings per share)
| Note | 2024 | 2023 |
|---|---|---|
| Operating revenues | 2 | - |
| Operating revenues | - | |
| Operating expenses | 3 | (556) |
| Operating loss before depreciation (EBITDA) | (556) | |
| Depreciation | 6 | - |
| Operating loss (EBIT) from continuing operations | (556) | |
| Financial income | 4 | 241 |
| Financial expense | 4 | (24) |
| Loss before income tax from continuing operations | (339) | |
| Income tax expense | 5 | - |
| Loss after income tax from continuing operations | (339) | |
| Income/(loss) from discontinued operations, net after income tax | 19 | 90 855 |
| Income/(loss) after income tax | 90 516 | |
| Weighted average number of ordinary shares in issue | 10 | 12 107 901 |
| Basic and diluted loss per share from continuing ops (USD) | 10 | (0.02) |
| Basic and diluted income/(loss) per share from discontinued ops (USD) | 10 | 7.51 |
| Basic and diluted income/(loss) per share (USD) | 10 | 7.49 |
Philly Shipyard ASA - under liquidation
Amounts in USD thousands
| 2024 | 2023 | |
|---|---|---|
| Income/(loss) after income tax | 90 516 | (67 937) |
| Other comprehensive income, net of income tax | - | - |
| Total comprehensive income/(loss) for the period * | 90 516 | (67 937) |
| * All attributable to equity holders of the parent company. |
CONSOLIDATED ACCOUNTS
PHILLY SHIPYARD - ANNUAL REPORT 2024
16
Consolidated Statement of Financial Position as of 31 December
Amounts in USD thousands
| Note | 2024 | 2023 |
|---|---|---|
| ASSETS | ||
| Property, plant and equipment | 6 | - |
| Right-of-use assets | 6 | - |
| Restricted cash long-term | 9 | - |
| Escrow cash long-term | 9 | 10 000 |
| Deferred tax asset | 5 | - |
| Income tax receivable long-term | 5 | - |
| Other non-current assets | - | |
| Total non-current assets | 10 000 | |
| Prepayments and other receivables | 7 | 79 |
| Restricted cash short-term | 9 | - |
| Income tax receivable short-term | 5 | - |
| Cash and cash equivalents | 8 | 88 039 |
| Total current assets | 88 118 | |
| TOTAL ASSETS | 98 118 | |
| EQUITY AND LIABILITIES | ||
| Paid in capital | 11 | 35 206 |
| Other equity | 61 145 | |
| Total equity attributable to equity holders of the parent company | 96 351 | |
| Total equity | 96 351 | |
| Income tax payable long-term | 5 | - |
| Lease liability long-term | 12 | - |
| Total non-current liabilities | - | |
| Trade payables and accrued liabilities | 14 | 1 767 |
| Other provisions - warranties | 13 | - |
| Customer advances (net) | 2 | - |
| Other contract liabilities | 2 | - |
| Lease liability short-term | 12 | - |
| Total current liabilities | 1 767 | |
| Total liabilities | 1 767 | |
| TOTAL EQUITY AND LIABILITIES | 98 118 |
CONSOLIDATED ACCOUNTS
Kristian Røkke
Board Chairman
Elin Karfjell
Board Member
Steinar Nerbøvik
President and CEO
Oslo, Norway - 28 March 2025
Board of Directors
Philly Shipyard ASA
Jan Petter Hagen
Board Member
Susan Hayman
Board Member
Philly Shipyard ASA - under liquidation
PHILLY SHIPYARD - ANNUAL REPORT 2024
17
Consolidated Statement of Changes in Equity
| Share capital | Share premium | Treasury shares | Other equity | Total equity | |
|---|---|---|---|---|---|
| Amounts in USD thousands | |||||
| Balance at 31 December 2022 | 22 664 | 22 511 | (9 969) | 38 566 | 73 772 |
| Total comprehensive loss for the year 2023 | - | - | - | (67 937) | (67 937) |
| Balance at 31 December 2023 | 22 664 | 22 511 | (9 969) | (29 371) | 5 835 |
| Total comprehensive income for the year 2024 | - | - | - | 90 516 | 90 516 |
| Balance at 31 December 2024 | 22 664 | 22 511 | (9 969) | 61 145 | 96 351 |
CONSOLIDATED ACCOUNTS
Philly Shipyard ASA - under liquidation
PHILLY SHIPYARD - ANNUAL REPORT 2024
18
Consolidated Cash Flow Statement
| Amounts in USD thousands | Note | 2024 | 2023 |
|---|---|---|---|
| Income/(loss) before tax | 116 027 | (64 856) | |
| Depreciation | 6 | 4 237 | 7 720 |
| Gain on sale of subsidiary | 19 | (233 077) | - |
| Right-of-use assets reassessment | - | 7 | |
| Net financial income | 4 | (217) | (14) |
| (Increase)/decrease in: | |||
| Vessels-under-construction receivable | 2 | - | 4 925 |
| Restricted cash | 9 | 3 344 | 11 251 |
| Prepayments materials deposits | 7 | 8 706 | (8 435) |
| Prepayments other and other receivables | 7 | (646) | (7 597) |
| Other non-current assets | - | (4) | |
| Increase/(decrease) in: | |||
| Trade payables and accrued liabilities | 13,14 | 27 283 | 25 188 |
| Customer advances (net) | 2 | 11 230 | (18 362) |
| Other contract liabilities | 2 | 179 | (127) |
| Income taxes received/(paid) | 5 | 3 502 | (459) |
| Interest paid | 4 | (24) | (45) |
| Interest received | 4 | 241 | 59 |
| Net cash flow used in operating activities | (59 215) | (50 749) | |
| Investment in property, plant & equipment | 6 | (5 683) | (6 635) |
| Net proceeds from sale of subsidiary | 19 | 74 531 | - |
| Net cash flow from/(used in) investing activities | 68 848 | (6 635) | |
| Repayment of lease liability | 12 | (1 652) | (1 068) |
| Interest expense on lease liability | 12 | 595 | 329 |
| Net cash flow used in financing activities | (1 057) | (739) | |
| Net change in cash and cash equivalents | 8 576 | (58 123) | |
| Cash and cash equivalents as of 1 January | 79 463 | 137 586 | |
| Cash and cash equivalents as of 31 December | 8 | 88 039 | 79 463 |
Note: The cash flow is primarily related to discontinued operations, with the exception of# CONSOLIDATED ACCOUNTS
Philly Shipyard ASA - under liquidation
PHILLY SHIPYARD - ANNUAL REPORT 2024
19
STATEMENT OF COMPLIANCE
The consolidated financial statements of Philly Shipyard ASA under liquidation and its subsidiaries (referred to herein as a group as Philly Shipyard, the Group or the Company) have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU in effect at each financial reporting period. These accounts have been approved for issue by the Board of Directors on 28 March 2025. The annual accounts will be submitted to Philly Shipyard’s annual general meeting on 29 April 2025 for final approval.
BACKGROUND AND BASIS FOR PREPARATION
Philly Shipyard ASA (referred to herein as PHLY) was formed on 16 October 2007 to be the holding company of Philly Shipyard, Inc. (referred to herein as PSI or the Shipyard) which operated a shipyard located in Phila- delphia, Pennsylvania, USA. PHLY sold PSI to Hanwha on 19 December 2024 and has no other operating subsidiaries. PHLY is domiciled in Oslo, Norway. PSI is domi- ciled in the Commonwealth of Pennsylvania, USA.
These consolidated financial statements have been prepared on a historical cost basis. The consolidated financial statements are presented in USD (thousands), except when indicated otherwise.
The financial position and performance of Philly Shipyard was particularly affected by the sale of its sole subsidiary, Philly Shipyard, Inc. (PSI), on 19 December 2024. Following the closing of the sale of PSI in December 2024, the Company has ceased trading, and the going concern assumption has not been applied in these financial state- ments. At the date of issuance of this report, the EGM on 19 February approved the Board of Directors’ proposed decision to start liq- uidation proceedings of the Company.
Management has concluded that the IFRS accounting standards still provide relevant and reliable information, and has therefore prepared these financial statements using the same accounting policies as previously disclosed.
ESTIMATES, ASSUMPTIONS AND SIGNIFICANT JUDGMENTS
The preparation of the consolidated financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts in the consoli- dated financial statements. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. In addition, the preparation of consolidated financial statements in conformity with IFRS requires management to make judgments that affect the application of accounting poli- cies and the reported amounts of assets and liabilities, income and expense. Estimates, underlying assumptions and sig- nificant judgments are reviewed on an ongo- ing basis. Revisions to accounting estimates are recognized in the period in which the esti- mates are revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods.
Critical accounting estimates, assumptions and significant judgments are as follows:
Revenue Recognition
Philly Shipyard recognizes revenue over time in accordance with IFRS 15 Revenue from Con- tracts with Customers (IFRS 15). This approach requires Philly Shipyard to measure the progress of contract activity at each state- ment of financial position date and estimate the ultimate outcome of costs and profit on contracts. Progress towards satisfying per- formance obligations is measured based on project costs incurred compared to the total forecasted project costs. In case of a loss-making project, a loss provision will be made when total contract cost will exceed total contract revenue (onerous contract). Revenue and cost estimates from shipbuild- ing activities depend, amongst others, on variables such as steel prices, supplier and subcontractor costs, labor costs and avail- ability, and other production inputs. Philly Shipyard must also evaluate and estimate the outcome of variation orders, liquidated damages, contract claims and requests from customers to modify contractual terms which can involve complex negotiations with cus- tomers. Generally, estimates are subject to a greater level of uncertainty when a vessel design is new to the Shipyard than if a vessel is being constructed later in a series (see note 2 for further discussion).
Philly Shipyard has three separate awards under one shipbuilding contract in place for the NSMV program. NSMVs 1-2 were awarded at contract signing in April 2020 (NSMVs 1-2 delivered as of 31 December 2024); NSMVs 3-4 were awarded upon the exercise of an option in January 2021, and NSMV 5 was awarded upon the exercise of an option in April 2022. Therefore, the three awards are treated as three separate perfor- mance obligations that are reported as three separate projects for revenue recognition. Each of these projects is being accounted for using the percentage-of-completion method per IFRS 15. The principle of a series of dis- tinct goods has been applied where NSMVs 1-2, NSMVs 3-4 and NSMV 5 are each treated separate of one another.
Cost Forecast of Shipbuilding Contracts
The cost forecast of shipbuilding contracts can be judgmental and sensitive to changes. The cost estimates can significantly impact revenue recognition for contracts using cost
Notes to the Consolidated Accounts
NOTE 1: ACCOUNTING PRINCIPLES
CONSOLIDATED ACCOUNTS
PHILLY SHIPYARD - ANNUAL REPORT 2024
20
progress, particularly in lump sum construc- tion contracts. Forecasting the total con- tract cost depends on the ability to properly execute the engineering and design phase, availability of skilled resources, manufactur- ing capacity, productivity and quality factors, steel prices and performance of subcon- tractors. Experience, systematic use of the project execution model and focus on core competencies reduce, but do not eliminate, the risk that cost estimates may change sig- nificantly.
Tax Uncertainty
Tax positions subject to uncertainty are iden- tified and assessed either individually or in groups based on an estimate of the probabil- ity that the tax authorities will accept or reject a certain treatment. Where it is assessed that it is not probable the tax authorities will accept an uncertain tax treatment, the effect of the uncertainty is reflected in the calcula- tion of the taxable profit, tax bases, unused tax losses or credits, or tax rates. The effect of the uncertainty is calculated by applying the most appropriate method (most likely amount or expected value). Changes in cir- cumstances are assessed and reflected at each reporting date.
Deferred Income Taxes
Deferred income tax assets are recognized when it is probable that they will be realized. Determining probability requires Philly Ship- yard to estimate the sources of future taxable income from operations, including reversing taxable temporary differences. Determining these amounts is subject to uncertainty and is based primarily upon historical earnings, reversals of taxable temporary differences and expected earnings due to contracts in progress and contract order backlog. The recognition of deferred tax assets is primarily applicable to U.S. taxes where Philly Shipyard has a net deferred tax asset position (see note 5 for further discussion).
R&D Tax Credit
Since 2015, PSI has qualified for the research and development (R&D) tax credit for both federal and Pennsylvania state tax purposes. The Shipyard qualified for the credit because of the research it undertook to discover information that is technological in nature and intended to be useful in the development of a new or improved busi- ness component. The Company recognizes the R&D tax credit estimate as part of the income tax benefit based on a calculation of qualifying research expenses using avail- able guidance and the applicable rules and regulations.
Climate Risk - Consideration of Climate Change
In preparing these financial statements the Board of Directors has considered the potential impact of climate change and has concluded that there is limited impact from climate change on financial reporting judgements and estimates. Therefore, the Company is of the opinion that there is no immediate or medium-term impact expected as the Company is expected to be liquidated during 2025.
PHILLY SHIPYARD ACCOUNTING AND CONSOLIDATION PRINCIPLES
Subsidiaries
The consolidated financial statements include the financial statements of the par- ent company, Philly Shipyard ASA, and its subsidiary Philly Shipyard Inc. up until it was sold on 19 December 2024. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the abil- ity to affect those returns through its power over the entity.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Functional Currency
The consolidated financial statements are presented in United States dollars (USD), rounded to the nearest thousand, which is the reporting currency for the consolidated accounts and the functional currencies for all the entities within Philly Shipyard.
INCOME STATEMENT PRESENTATION
Operating related expenses in the consol- idated income statement are presented as a combination of function and nature in conformity with industry practice. Depreci- ation is presented on a separate line based on its nature, while cost of vessel construc- tion, wages and other personnel expenses (SG&A) and non-payroll expenses (SG&A) are presented on a functional basis. Significant expenses such as salaries, pensions, etc. are presented by their nature in the notes to the consolidated financial statements.
PROPERTY, PLANT AND EQUIPMENT
General Property, plant and equipment and right- of-use assets acquired by the Shipyard are stated at cost at the date of acquisition.# CONSOLIDATED ACCOUNTS
PHILLY SHIPYARD - ANNUAL REPORT 2024
REVENUE FROM CONTRACTS WITH CUSTOMERS
Philly Shipyard principally generates revenues from activities relating to long-term shipbuilding construction contracts, and also generated revenue from the performance of industry studies for the U.S. Navy and U.S. Coast Guard. A detailed review of customer contracts occurred for contracts which were open from 1 January 2024 to 19 December 2024 (see note 2 for further discussion).
Construction Contracts
The vessel construction contracts were assessed according to IFRS 15 to evaluate whether the revenue from such contracts shall be recognized over time or at a point in time. As a result of the assessment, the Company concluded that the principle of revenue recognition over time method was appropriate for these contracts based on the fact that the vessels under construction do not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment from the customer for the work completed to date.
Performance Obligations
Philly Shipyard has three separate awards under one shipbuilding contract in place for the NSMV program (NSMVs 1-2, NSMVs 3-4 and NSMV 5), one separate shipbuilding contract in place for the SRIV program (SRIV) and one separate shipbuilding contract in place for the CV program (CVs 1-3). Per IFRS 15, the NSMV projects are being treated as three separate performance obligations that are reported as three separate projects for revenue recognition. Each of these projects is being accounted for using the percentage-of-completion method based on project costs incurred compared to the total project costs. This is considered to be a faithful depiction of the transfer of goods as it accurately reflects the underlying transactions and progress. Philly Shipyard’s accounting policy is to not recognize profits on projects until the cost to complete can be measured with reasonable certainty.
Constraint of Variable Consideration
Variable considerations are included in estimated contract revenue to the extent that it is highly probable that a significant reversal of revenue in a subsequent period will not occur when the uncertainties are resolved.
Onerous Contracts
Onerous revenue contracts are accounted for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. A provision is recognized when the unavoidable shipbuilding costs of meeting the obligations under a contract exceed the economic benefits to be received. As of 19 December 2024, both the NSMV contract and the SRIV contract were loss-making contracts. Therefore, in accordance with IFRS, the full estimated loss liability has been recorded to date for both onerous contracts. Project revenue is classified as operating revenues in the consolidated income statement. Vessels-under-construction are presented net of advances from customers as vessels-under-construction receivable or customer advances (net) on a contract by contract basis. Other operating revenues such as design studies are classified as contract assets and/or other contract liabilities and are classified as current or non-current based on the expected timing of recognition of revenue.
GOVERNMENT GRANTS AND SUPPORT
Government grants and support are recognized at their fair value where there is reasonable assurance that amounts will be received and conditions have been met. In some cases, recognition occurs over a period of time as restrictions lapse or as conditions are met. Grants and support related to capital expenditures or construction of assets for the Shipyard’s account are recognized as a reduction of the related asset cost. For assets held for use, this results in a lower depreciation charge over the useful life of the asset. Grants related to specific programs or projects are recognized as reductions in expense over the period in which work that relates to the grant or support is performed.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less.
INCOME TAXES
Current Income Taxes
Income taxes receivable and payable for the current period are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and tax laws as used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date.
Deferred Income Taxes
Deferred income taxes are recognized using the asset/liability method on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except upon initial recognition of an asset or a liability that does not impact income. Deferred income tax assets are recognized for all deductible temporary differences, and carry-forward of unused tax losses and credits, to the extent that it is probable that taxable income will be available against which the deductible temporary differences, and the carry-forward of unused tax losses and credits can be utilized. The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is not probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. The expected utilization of tax losses is not discounted when calculating the deferred tax asset. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.
DISCONTINUED OPERATIONS
Property, plant and equipment are not depreciated once classified as held for sale. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the income statement. All consolidation procedures as presented above are still applicable, and only external revenues and expenses are shown as discontinued operations. Comparative information in the income statement and disclosures are represented.
PROVISIONS
A warranty provision is recognized when Philly Shipyard has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Warranty provisions are reviewed at each statement of financial position date and adjusted to reflect the current estimate.
LEASES AND RIGHT-OF-USE ASSETS
At the lease commencement date, the Group recognizes a lease liability and corresponding right-of-use asset for all lease agreements in which it is the lessee, except for short-term leases (defined as twelve months or less) and low-value assets, for which the Group recognizes the lease payments as other operating expenses in the consolidated income statement when they are incurred. The Group measures the lease liability at the present value of the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date, by using the Group’s incremental borrowing rate. The lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the Group is reasonably certain to exercise this option. The lease payments included in the measurement comprise: Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; The exercise price of a purchase option, if the Group is reasonably certain to exercise that option; Payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease. The Group does not include variable lease payments in the lease liability. Instead, the Group recognizes these variable lease expenses in the consolidated income statement when they are incurred.The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments due to an adjustment in an index or rate. The Group presents its lease liabilities as separate line items in the consolidated statement of financial position. The Group measures the right-of-use asset at cost, less any accumulated depreciation and impairment losses, adjusted for any remeasurement of lease liabilities. The cost of the right-of-use asset comprises the amount of the initial measurement of the lease liability recognized, any lease payments made at or before the commencement date, less any incentives received, and any initial direct costs incurred by the Group. The Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment in depreciating the right-of-use asset, except that the right-of-use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right-of-use asset. The Group assesses at the lease commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. As part of the 2011 Authorization Agreement, PSI’s landlord, Philadelphia Shipyard Development Corporation (PSDC), purchased certain shipyard assets from PSI for a purchase price of USD 42.0 million with funds provided by the Commonwealth of Pennsylvania. PSI leases back those same assets from PSDC subject to the terms of its Shipyard Lease and the Authorization Agreement. For accounting purposes, the transaction was accounted for as a sale/leaseback, and no adjustments were made to the accounting value of the assets at closing.
RELATED PARTY TRANSACTIONS
The Company’s policy is that all transactions, agreements and business activities with related parties are conducted on an arm’s length basis according to ordinary business terms and conditions.
SEGMENT INFORMATION
Philly Shipyard had one business segment which was building vessels for both the U.S. Jones Act market and the U.S. Government up until the sale of PSI on 19 December 2024.
BASIC AND DILUTED INCOME/(LOSS) PER SHARE
The calculation of basic income/(loss) per share is based on the income or loss attributable to ordinary shareholders using the weighted average number of shares outstanding during the year (not including the treasury shares). The calculation of diluted income/(loss) per share is consistent with the calculation of basic income/(loss) per share while giving effect to all potential dilutive ordinary shares that were outstanding during the period. Philly Shipyard currently has no potentially dilutive shares outstanding.
SUBSEQUENT EVENTS AFTER 31 DECEMBER 2024
A distinction is made between events both favorable and unfavorable that provide evidence of conditions that existed at the statement of financial position date (adjusting events) and those that are indicative of conditions that arose after the statement of financial position date (non-adjusting events). Financial statements will only be adjusted to reflect adjusting events and not non-adjusting events (although there are disclosure requirements for such events).
NEW STANDARDS AND INTERPRETATIONS ADOPTED
Except for the OECD Pillar Two amendments, there were no changes to the financial reporting requirements this year. The Company has not identified any significant exposure to Pillar Two income taxes that require disclosure in these financial statements. While the IASB has made a few amendments to standards that apply from 1 January 2024, these are largely clarifications IASB has made some amendments to IFRS accounting standards that became applicable from 1 January 2024. IAS 1: Amendment regarding classification of liabilities as current or non-current and non-current liabilities with covenants; IFRS 16: Amendment regarding lease liability in a sale and leaseback; and IAS 7/IFRS 7: Amendments regarding supplier finance arrangements. None of these changes required a change in Philly Shipyard ASA’s accounting policies. The amendments listed above did not have any material impact on amounts in prior periods There has not been any recent IFRS Interpretation Committee (IC) agenda decisions that have required changes to any of the Group’s accounting policies for 2024.
EARLY ADOPTION OF STANDARDS
Philly Shipyard ASA generally only adopts standards early if they clarify existing practice, but do not introduce substantive changes. The Company has not early adopted new or amended standards in preparing these consolidated financial statements as of 31 December 2024. None of the new standards not yet effective are expected to have a material impact on the financial statements.
CONSOLIDATED ACCOUNTS
PHILLY SHIPYARD - ANNUAL REPORT 2024
23
NOTE 2: CONSTRUCTION CONTRACTS - DISCONTINUED OPERATIONS
| Accumulated recognized performance obligation | Remaining principle | Estimated revenue | recognition year of completion | |
|---|---|---|---|---|
| Amounts in USD thousands | 19 Dec. 2024 | 19 Dec. 2024 | 2024 | |
| NSMVs 1-2 | 644 | 571 | - | Over time |
| NSMVs 3-4 | 482 | 378 | 124 | 388 |
| NSMV 5 | 119 | 474 | 187 | 680 |
| SRIV | 118 | 883 | 76 | 959 |
| CVs 1-3 | 38 077 | 963 | 543 | Over time |
| Total | 1 403 383 | 1 352 570 |
During 2024 and up until the close of the sale of the subsidiary PSI on 19 December 2024, Philly Shipyard operated three separate awards under one shipbuilding contract in place for the NSMV program. NSMVs 1-2 were awarded at contract signing in April 2020, NSMVs 3-4 were awarded upon the exercise of an option in January 2021, and NSMV 5 was awarded upon the exercise of an option in April 2022. Therefore, the three awards under the NSMV contract are treated as three separate performance obligations that are reported as three separate projects for revenue recognition. Each of these projects is being accounted for using the percentage-of-completion method per IFRS 15 Revenue from Contracts with Customers (IFRS 15). PSI is building three NSMVs (NSMVs 3-5) for TOTE Services, with NSMVs 3 and 4 scheduled for delivery in 2025 and 2026, and the final vessel (NSMV 5) scheduled for delivery in 2027. As of 19 December 2024 (closing of the transaction), the NSMV projects for NSMVs 3-4 and NSMV 5 are 81.3% and 38.9% complete, respectively. Progress towards completing the NSMV, SRIV and CV contract performance obligations are measured based on project costs incurred compared to the total forecasted project costs. Construction contract revenue recognized through 19 December 2024 includes revenue for NSMVs 1-2, NSMVs 3-4, NSMV 5, the SRIV and CVs 1-3 since the contract for these vessels was accounted for using the principle-over-time revenue recognition method according to IFRS 15. Philly Shipyard’s accounting policy is to not recognize profit on projects until the cost to complete can be measured with reasonable certainty. As the NSMV and SRIV contracts are loss-making contracts, the full loss obligation was recorded in 2024.
Operating revenues and other income are detailed below:
| Amounts in USD thousands | 19 Dec. 2024 | 31 Dec. 2023 |
|---|---|---|
| Shipbuilding | 351 806 | 441 603 |
| Government design studies | 1 154 | 242 |
| Total operating revenue | 352 960 | 441 845 |
CONSOLIDATED ACCOUNTS
PHILLY SHIPYARD - ANNUAL REPORT 2024
25
The recognized accumulated combined loss on long-term construction contracts in process (NSMVs 1-5, the SRIV and CVs 1-3) as of 19 December 2024 is as follows:
| Amounts in USD thousands | 19 Dec 2024 |
|---|---|
| Construction contracts revenue recognized to date | 1 403 383 |
| Construction contracts expenses recognized to date | (1 585 878) |
| Construction contracts loss recognized to date | (182 495) |
The recognized accumulated combined loss on long-term construction contracts in process (NSMVs 1-5, the SRIV and CVs 1-3) as of 31 December 2023 is as follows:
| Amounts in USD thousands | 31 Dec 2023 |
|---|---|
| Construction contract revenue recognized to date | 1 051 577 |
| Construction contract expenses recognized to date | (1 121 755) |
| Construction contracts loss recognized to date | (70 178) |
Typical variable consideration elements identified in the Company’s construction contracts with customers include liquidated damages, performance guarantees and warranties. Customer milestone payments as of 19 December 2024 and 31 December 2023 totaled USD 0 and USD 1,263.8 million, respectively. Customer milestone payments received from TOTE Services for NSMVs 1-5, from Great Lakes for the SRIV and from Matson for CVs 1-3 were made at intervals that were intended to be cash neutral and to not require any external financing. Vessels-under-construction receivable Vessels-under-construction receivable as of 31 December 2024 and 31 December 2023 both totaled USD 0. Vessels-under-construction receivable represents the difference between (i) cash advances received from customers for vessels under construction and (ii) revenue recognized for those vessels. Customer advances (net) and other contract liabilities Customer advances (net) as of 31 December 2024 and 31 December 2023 totaled USD 0 and USD 212.2 million, respectively. Customer advances (net) represents the difference between (i) cash advances received from customers for vessels under construction and (ii) revenue recognized for those vessels. Other contract liabilities as of 31 December 2024 and 31 December 2023 totaled USD 0 and USD 221 thousand, respectively. Other contract liabilities represents the difference between (i) cash advances received from customers for government design studies and (ii) cost incurred on those studies.# CONSOLIDATED ACCOUNTS PHILLY SHIPYARD - ANNUAL REPORT 2024
NOTE 3: OPERATING EXPENSES
Operating expenses consist of:
| 2024 | 2023 | |
|---|---|---|
| Non-payroll expenses (SG&A) | 556 | 680 |
| Total operating expenses | 556 | 680 |
Non-payroll expenses (SG&A) primarily relate to non-payroll selling, general and administrative expenses.
| 2024 | 2023 | |
|---|---|---|
| Audit fees - parent company | 67 | 30 |
| Other audit and attestation fees - parent company | 62 | 20 |
| Audit fees - discontinued operations | 144 | 118 |
| Other audit and attestation fees - discontinued operations | - | 3 |
| Total | 273 | 171 |
NOTE 4: FINANCIAL INCOME AND FINANCIAL EXPENSE
| 2024 | 2023 | |
|---|---|---|
| Interest income - parent company | 241 | 59 |
| Interest income - discontinued operations | 7,091 | 930 |
| Foreign exchange gain - discontinued operations | - | 20 |
| Financial income | 7,170 | 7,170 |
| Interest expense - parent company | (24) | (45) |
| Interest expense - discontinued operations | (848) | (371) |
| Financial expense | (416) | (416) |
| Net financial items - parent company | 217 | 14 |
| Net financial items - discontinued operations | 6,740 | 4,082 |
| Net financial items | 6,754 | 4,299 |
CONSOLIDATED ACCOUNTS PHILLY SHIPYARD - ANNUAL REPORT 2024 27
CONSOLIDATED ACCOUNTS
NOTE 5: TAXES
Income tax expense/(benefit) Recognized in the consolidated income statement
| 2024 | 2023 | |
|---|---|---|
| Current income tax expense/(benefit): | ||
| Current year - U.S. | (1,598) | 2,206 |
| Current year - Norway | - | - |
| Total current income tax expense/(benefit) | (1,598) | 2,206 |
| Deferred tax (benefit)/expense: | ||
| Origination and reversal of temporary differences - U.S. | 109,875 | 27 |
| Origination and reversal of temporary differences - Norway | - | - |
| Total deferred tax expense/(benefit) | 109,875 | 27 |
| Total income tax expense/(benefit) in the income statement | 3,081 | 25,511 |
Income tax is attributable to:
- Continuing operations
- Discontinued operations
Reconciliation of effective tax rate:
| 2024 | 2023 | |
|---|---|---|
| Income/(loss) from continuing operations | (339) | - |
| Income/(loss) from discontinued operations | 116,366 | (64,856) |
| Income/(loss) before tax | 116,027 | (64,856) |
| Nominal Norwegian tax rate | 22.0% | 22.0% |
| Expected tax (benefit)/expense using nominal Norwegian tax rate | (25,526) | (14,268) |
| Effect of differences between nominal Norwegian tax rate and U.S. federal, state and city tax rate | (9,040) | (6,933) |
| Expenses not deductible for tax purposes | 23,161 | - |
| Gain on sale of subsidiary | (233,077) | - |
| Gain on sale of subsidiary not subject to Norwegian taxation | 233,077 | - |
| R&D tax credits | 1,508 | (3,731) |
| Other differences | (1,440) | (1,908) |
| Valuation allowance | 59,986 | 29,760 |
| Total income tax expense/(benefit) in the consolidated income statement | 25,511 | 3,081 |
Tax expense/(benefit) related to continuing operations - -
Tax expense/(benefit) related to discontinuing operations 25,511 -
The effective tax rate differs from the expected tax rate primarily due to the difference between the nominal Norwegian tax rate and U.S. federal, state and city tax rates, and income that was not taxable in Norway.
PHILLY SHIPYARD - ANNUAL REPORT 2024 28
CONSOLIDATED ACCOUNTS
Income tax receivable
| 2024 | 2023 | |
|---|---|---|
| Beginning of the period | 16,060 | 17,807 |
| Taxes (payable)/receivable | (3,186) | (1,747) |
| Taxes paid/(refunded) | - | - |
| Sale of subsidiary | (12,874) | - |
| End of the period | - | 16,060 |
Income tax payable
| 2024 | 2023 | |
|---|---|---|
| Beginning of the period | (1,200) | (1,200) |
| Taxes payable | 1,200 | - |
| Taxes paid/(refunded) | - | - |
| End of the period | - | (1,200) |
Income tax receivable and income tax payable are offset when there is a legally enforceable right to offset the taxes; however, when the taxes relate to different tax authorities, they cannot be offset.
Deferred tax asset/deferred tax liability
Deferred tax asset and deferred tax liability are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income taxes relate to the same fiscal authority, which through 31 December 2024 for the Company was in Norway. The offset amounts for U.S. items are as follows:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Deferred tax assets - U.S. tax jurisdictions | - | 33,490 |
| Deferred tax liabilities - U.S. tax jurisdictions | (1,777) | (8,157) |
| Sale of subsidiary | 1,777 | - |
| Net deferred tax asset/(liability) | - | 25,333 |
The gross movement in the deferred income tax account for U.S. tax jurisdictions is as follows:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Beginning of the period | 25,333 | 26,208 |
| Deferred tax benefit | (25,333) | (875) |
| Net deferred tax asset/(liability) | - | 25,333 |
CONSOLIDATED ACCOUNTS PHILLY SHIPYARD - ANNUAL REPORT 2024 29
CONSOLIDATED ACCOUNTS
The balance comprises temporary differences attributable to:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Deferred tax assets | ||
| Research & experimentation expenses | - | 20,175 |
| Work-in-process | - | 444 |
| Under-recovered overhead costs | - | 884 |
| State and city depreciation | - | 2,798 |
| Federal R&D tax credits | - | 11,258 |
| State R&D tax credits | - | 1,168 |
| Federal net operating losses | - | 3,622 |
| Norwegian net operating losses | 14 | - |
| State and city net operating losses | - | 10,363 |
| Valuation allowances | (14) | (20,266) |
| Other items | - | 3,044 |
| Total deferred tax assets | - | 33,490 |
| Deferred tax liabilities: | ||
| Property, plant & equipment | - | 8,157 |
| Work-in-process | - | - |
| Operating lease right-of-use assets | - | - |
| Total deferred tax liabilities | - | 8,157 |
| Total net deferred tax asset | - | 25,333 |
The Norwegian deferred tax assets of USD 3.2 million have not been recorded because the Company does not believe that they will be able to use them.
PHILLY SHIPYARD - ANNUAL REPORT 2024 30
CONSOLIDATED ACCOUNTS
NOTE 6: PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
Movements in property, plant and equipment and right-of-use assets for 2024 are shown below:
| Machinery and vehicles | Land | Buildings | Assets and land improvements | Under construction | Total | |
|---|---|---|---|---|---|---|
| Cost balance at 1 January 2024 | 81,320 | 78,852 | 27,084 | 483 | 187,739 | 187,739 |
| Additions - Property, plant & equipment thru 19 December 2024 | - | - | - | 5,683 | 5,683 | 5,683 |
| Additions - Right-of-use assets thru 19 December 2024 | - | - | - | - | - | - |
| Transfers | 3,630 | - | 15 | (3,645) | - | - |
| Assets sold | (84,950) | (78,852) | (27,099) | (2,521) | (193,422) | (193,422) |
| Cost balance at 31 December 2024 | - | - | - | - | - | - |
| Depreciation and impairment losses at 1 January 2024 | 71,446 | 41,055 | 14,750 | - | 127,251 | 127,251 |
| Depreciation - Property, plant & equipment thru 20 June 2024 | 2,485 | 493 | 361 | - | 3,339 | 3,339 |
| Depreciation - Right-of-use assets thru 20 June 2024 | 38,829 | 31 | - | 898 | 898 | 898 |
| Assets sold | (73,969) | (42,377) | (15,142) | - | (131,488) | (131,488) |
| Depreciation and impairment losses at 31 December 2024 | - | - | - | - | - | - |
| Net book value at 31 December 2024 | (1) | (1) | (1) | (1) | (1) | (1) |
(1) On 20 June 2024 (date of signing SPA with Hanwha), PP&E and ROU assets were classified as assets held for sale in accordance with IFRS 5 and depreciation ceased from this date forward. See note 19 for more information showing depreciation and impairment as discontinued operations for 2024 and 2023.
| Depreciation period | Depreciation method | |
|---|---|---|
| Machinery | 3-12 years | Straight-line |
| Land | 7-30 years | Straight-line |
| Buildings | 20 years | Straight-line |
| Assets and land improvements | ||
| Under construction |
Movements in property, plant and equipment and right-of-use assets for 2023 are shown below:
| Machinery and vehicles | Land | Buildings | Assets and land improvements | Under construction | Total | |
|---|---|---|---|---|---|---|
| Cost balance at 1 January 2023 | 73,678 | 72,771 | 26,502 | 2,216 | 175,167 | 175,167 |
| Additions - Property, plant & equipment | - | - | - | 6,635 | 6,635 | 6,635 |
| Additions - Right-of-use assets (includes lease reassessment) | - | 5,937 | - | - | 5,937 | 5,937 |
| Transfers | 7,642 | 144 | 582 | (8,368) | - | - |
| Cost balance at 31 December 2023 | 81,320 | 78,852 | 27,084 | 483 | 187,739 | 187,739 |
| Depreciation and impairment losses at 1 January 2023 | 66,395 | 39,501 | 13,635 | - | 119,531 | 119,531 |
| Depreciation - Property, plant & equipment | 4,901 | 383 | 834 | - | 6,118 | 6,118 |
| Depreciation - Right-of-use assets | 150 | 1,171 | 281 | - | 1,602 | 1,602 |
| Depreciation and impairment losses at 31 December 2023 | 71,446 | 41,055 | 14,750 | - | 127,251 | 127,251 |
| Net book value at 31 December 2023 | 9,874 | 37,797 | 12,334 | 483 | 60,488 | 60,488 |
(1) Net book value of right-of-use assets under lease agreements recorded in the statement of financial position at 31 December 2023 (see note 12):
| 253 | 11,732 | 5,850 | - | 17,835 |
| Depreciation period | Depreciation method | |
|---|---|---|
| Machinery | 3-12 years | Straight-line |
| Land | 7-30 years | Straight-line |
| Buildings | 20 years | Straight-line |
| Assets and land improvements | ||
| Under construction |
PHILLY SHIPYARD - ANNUAL REPORT 2024 31
CONSOLIDATED ACCOUNTS
NOTE 9: RESTRICTED CASH/ESCROW CASH
Restricted cash consists of the following items:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Restricted cash long-term | - | 34,158 |
| Restricted cash short-term | - | 10,022 |
| Escrow cash long-term | 10,000 | - |
| Current balance as of 31 December | 10,000 | 44,180 |
Total escrow cash as of 31 December 2024 amounted to USD 10.0 million, which is obligated to be maintained in an escrow account related to certain potential liabilities of the Company under the SPA for a period of up to four years following closing of the Transaction.
NOTE 7: PREPAYMENTS AND OTHER RECEIVABLES
Prepayments and other receivables consist of the following items:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Prepayments other | 79 | 1,032 |
| Prepaid ship materials deposits | - | 58,861 |
| Inventory | - | 1,327 |
| Trade receivables and other receivables | - | 7,169 |
| Current balance as of 31 December | 79 | 68,389 |
NOTE 8: CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following items:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Cash and bank deposits | 88,039 | 79,463 |
| Cash and cash equivalents in the statement of cash flows | 88,039 | 79,463 |
Cash and bank deposits are invested in overnight deposits.
PHILLY SHIPYARD - ANNUAL REPORT 2024 32
NOTE 10: INCOME/(LOSS) PER SHARE
Basic and diluted
Basic and diluted income/(loss) per share is calculated by dividing the total comprehensive income/(loss) attributable to equity holders of PHLY by the weighted average number of ordinary shares issued.Amounts in USD thousands (except share amounts and earnings per share)
| 2024 | 2023 | |
|---|---|---|
| Total comprehensive income/(loss) attributable to equity holders of PHLY | 90 | (67,937) |
| Weighted average number of ordinary shares | 12,107,901 | 12,107,901 |
| Basic and diluted income/(loss) per share (USD) | 7.49 | (5.61) |
At 31 December 2024 and 31 December 2023, PHLY had 12,107,901 ordinary shares (excluding 466,865 treasury shares) at a par value of NOK 10 per share. There were no share issuances or repurchases in 2024 or 2023. There were no potentially dilutive securities outstanding as of 31 December 2024 and 31 December 2023.
CONSOLIDATED ACCOUNTS
NOTE 12: LEASES
Lease liabilities are payable as follows as of 31 December:
| Amounts in USD thousands | Payments | Interest | Principal | Payments | Interest | Principal |
|---|---|---|---|---|---|---|
| Less than one year | - | - | - | 1,652 | 595 | 1,057 |
| More than one year | - | - | - | 9,145 | 2,357 | 6,788 |
| Total | - | - | - | 10,797 | 2,952 | 7,845 |
| Amounts in USD thousands | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|
| Current balance as of 1 January | 7,845 | 2,640 |
| New leases | - | 5,911 |
| Repayment of lease liability | (1,652) | (1,068) |
| Interest expense on lease liability | 595 | 329 |
| Remeasurement of leases | - | 33 |
| Liabilities sold | (6,788) | - |
| Current balance as of 31 December | - | 7,845 |
NOTE 11: PAID IN CAPITAL
The current share capital (excluding 466,865 treasury shares) is 12,107,901 shares issued and outstanding as of 31 December 2024, each with a par value of NOK 10, fully paid. As of 31 December 2024, there are no additional authorized shares.
PHILLY SHIPYARD - ANNUAL REPORT 2024 33
CONSOLIDATED ACCOUNTS
NOTE 13: OTHER PROVISIONS - WARRANTIES
| Amounts in USD thousands | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|
| Current balance as of 1 January | 2,131 | 250 |
| Provisions made during the period | 1,000 | 2,000 |
| Provisions used during the period | (829) | (119) |
| Liabilities sold | (2,302) | - |
| Current balance as of 31 December | - | 2,131 |
NOTE 14: TRADE PAYABLES AND ACCRUED LIABILITIES
Trade payables and accrued liabilities comprise the following items:
| Amounts in USD thousands | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|
| Trade payables | 1,691 | 25,314 |
| Ship material and subcontracting accruals | - | 33,275 |
| Employee-related cost accruals | - | 4,288 |
| Overhead and capital projects accruals | 76 | 2,160 |
| Current balance as of 31 December | 1,767 | 65,037 |
PHILLY SHIPYARD - ANNUAL REPORT 2024 34
CONSOLIDATED ACCOUNTS
NOTE 15: FINANCIAL INSTRUMENTS
Philly Shipyard’s activities are exposed to foreign exchange risk. PSI’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on Philly Shipyard’s financial performance. The Company may use derivative financial instruments to hedge certain risk exposures. As of 31 December 2024, there were no foreign exchange contracts in place. Risk management is carried out under policies approved by the Board of Directors. The Board of Directors provides principles for overall financial risk management as well as policies covering specific areas such as foreign exchange risk and use of derivative financial instruments and non-derivative financial instruments.
Credit and investment risk
Due to the nature of the Shipyard’s operations, revenues and related receivables are typically concentrated amongst a few customers. The Company continually evaluates the credit risk associated with customers and their assignees and manages this risk by requiring payment for substantially the entire contractual amount prior to delivering a vessel, including milestone payments upon completion of specified milestones. Additionally, PSI monitors the financial condition of the financial institutions which it uses for cash management services and in which it makes deposits and other investments. Philly Shipyard responds to changes in conditions affecting its deposit relationships as situations warrant. The carrying amount of financial assets represents the maximum credit exposure. At 31 December 2024 and 31 December 2023, the maximum exposure to credit risk is as follows:
| Amounts in USD thousands | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|
| Cash and cash equivalents | 88,039 | 79,463 |
| Restricted cash | - | 44,180 |
| Escrow cash | 10,000 | - |
| Trade receivables | - | 7,169 |
| Total | 98,039 | 130,812 |
Liquidity risk
Liquidity risk is the risk that Philly Shipyard will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. Philly Shipyard attempted to mitigate this risk through project financing and working capital facilities, progress payments from its customers, and material supplied and paid directly by its customers. The following are the contractual maturities of financial liabilities including interest payments:
31 December 2024
| Amounts in USD thousands | Book value | Contractual cash flow | Less than 6 months | 6-12 months | 1-2 years | 2-5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Non-derivative financial liabilities: | |||||||
| Lease liability | - | - | - | - | - | - | - |
| Trade payables | 1,691 | (1,691) | (1,691) | - | - | - | - |
| Total | 1,691 | (1,691) | (1,691) | - | - | - | - |
PHILLY SHIPYARD - ANNUAL REPORT 2024 35
CONSOLIDATED ACCOUNTS
31 December 2023
| Amounts in USD thousands | Book value | Contractual cash flow | Less than 6 months | 6-12 months | 1-2 years | 2-5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Non-derivative financial liabilities: | |||||||
| Lease liability | 7,845 | 10,797 | (826) | (826) | (1,698) | (1,302) | (6,145) |
| Trade payables | 25,314 | (25,314) | (25,314) | - | - | - | - |
| Total | 33,159 | (14,517) | (26,140) | (826) | (1,698) | (1,302) | (6,145) |
Book values included in the above tables are gross loan amounts.
Foreign exchange risk
Philly Shipyard is exposed to foreign exchange risk for purchases made in currencies other than the U.S. dollar which primarily relates to materials, supplies and costs related to the services of expatriate workers purchased from Norway and other countries in Europe. Philly Shipyard attempts to mitigate this risk through its foreign exchange hedging program or passing this risk onto its end customers by having them purchase certain materials directly in foreign currency or agree to exchange rate adjustment clauses for purchases made in foreign currency. The Company had no forward contracts as of 31 December 2024 and 31 December 2023.
Exposure to foreign exchange risk
The Company’s exposure to foreign exchange risk at 31 December 2024 and 31 December 2023 was as follows based on the following notional amounts:
| Amounts in USD thousands | 2024 | 2023 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR | NOK | KRW | SEK | EUR | NOK | KRW | SEK | ||
| Balance sheet exposure: | |||||||||
| Trade payables (-) | - | - | - | - | (170) | - | - | - | |
| Cash | - | 9 | - | - | 18 | - | - | - | |
| Gross balance sheet exposure | - | 9 | - | - | (170) | 18 | - | - | |
| Estimated forecast expenses (-) | - | - | - | - | (16,989) | - | (9,510) | (5,343) | |
| Net balance sheet exposure | - | 9 | - | - | (17,159) | 18 | (9,510) | (5,343) |
Sensitivity analysis
In managing currency risks, the Company aims to reduce the impact of short-term fluctuations on its earnings. Over the longer term, however, permanent changes in foreign exchange rates would have an impact on consolidated earnings. It is estimated that a 10% strengthening of the USD against other foreign currencies would not have significantly impacted the Company’s income before tax for 2024.
Fair values
Carrying amount of the Group’s financial assets and financial liabilities is a reasonable approximation of their fair value. There were no financial instruments measured at fair value as of 31 December 2024 or 31 December 2023.
PHILLY SHIPYARD - ANNUAL REPORT 2024 36
CONSOLIDATED ACCOUNTS
NOTE 16: SHARES OWNED OR CONTROLLED BY AND REMUNERATION TO THE PRESIDENT AND CHIEF EXECUTIVE OFFICER, BOARD OF DIRECTORS AND SENIOR MANAGEMENT OF PHILLY SHIPYARD
Shares owned in Philly Shipyard ASA as of 31 December 2024 and 31 December 2023
| Name | Position | 2024 number of shares held | 2023 number of shares held |
|---|---|---|---|
| Elin Karfjell | Board Member | 1,200 | 1,200 |
| Steinar Nerbøvik | President and CEO | 1,000 | 1,000 |
There is no share option agreement between Philly Shipyard ASA and Senior Management or Directors.
Remuneration to the Board of Directors for the years ended 31 December 2024 and 31 December 2023
| Name | Position | 2024 remuneration (NOK) | 2024 remuneration (USD) | 2023 remuneration (NOK) | 2023 remuneration (USD) |
|---|---|---|---|---|---|
| Kristian Røkke | Board Chairman | 522,000 | 45,977 | 497,000 | 48,874 |
| Elin Karfjell | Board Member | 412,000 | 36,289 | 392,000 | 38,549 |
| Jan Petter Hagen | Board Member | 412,000 | 36,289 | 392,000 | 38,549 |
| Susan Hayman | Board Member | 412,000 | 36,289 | 392,000 | 38,549 |
| Sum Directors’ fees | 1,758,000 | 154,843 | 1,673,000 | 164,520 |
Except for remuneration to the audit committee described below, no Board members received any remuneration other than Directors’ fees.
Remuneration to the audit committee
The audit committee of PHLY is comprised of Elin Karfjell (Chairperson) and Jan Petter Hagen. Remuneration for the Chairperson is NOK 61,000 (USD 5,373) and for each member is NOK 49,000 (USD 4,316). This is in addition to the amounts shown in the Board of Directors’ table above.
Remuneration to the nomination committee
The nomination committee of Philly Shipyard ASA has the following members: Ingebret G. Hisdal (Chairperson) and Charlotte Håkonsen. Hilde K. Ramsdal serves as deputy member to the committee. Remuneration for the Chairperson is NOK 55,000 (USD 4,844) and for the member is NOK 44,000 (USD 3,875).
Guidelines for remuneration to the President and CEO and other members of the Management Team
The President and CEO and other members of PSI’s Management Team that report directly to the President and CEO receive a base salary. In addition, a variable pay as further described below may be awarded. The President and CEO and other members of the Management Team participate in the insurance schemes, applicable to all employees. The President and CEO receives monthly pension contributions. The other members of the Management Team participate in the standard Company 401K plan (employer-sponsored retirement account), applicable to all employees. The Company practices standard employment contracts and standard terms and conditions regarding notice period and severance pay for the President and CEO and other members of the Management Team.# PHILLY SHIPYARD - ANNUAL REPORT 2024
Annual variable pay program
The Company has an annual variable pay (AVP) program, which was developed in order to create a performance-based system. The system of reward is designed to contribute to the achievement of good financial results and increase shareholder value. The AVP program is based on the achievement of defined annual results such as financial targets (profit and working capital), order intake, project targets, development of commercial solutions, alignment with Company’s values and improvement of HSE results. The AVP program includes two payments, i.e., a base award and a deferred payment. The base award represents a potential for an additional variable pay up to 70% of base salary for the President and CEO and 60% for other members of the Management Team. The deferred payment, which is designed to incentivize and retain key personnel, is equal to 50% of the base award and is payable between 12-21 months after the base award. The Company cannot demand repayment of the variable remuneration that has been awarded, but the Company is not required to pay the variable remuneration if the recipient has given notice of the recipient’s intention to resign prior to the distribution/payment date.
Remuneration to Senior Management for 2024
| Base salary | Variable pay (2) | Pension contribution | Other remuneration | Severance pay | Total |
|---|---|---|---|---|---|
| President and CEO | |||||
| Steinar Nerbøvik 1 Jan - 31 Dec | 449 080 | 105 948 | 32 000 | 69 000 | 656 028 |
| CFO | |||||
| Jeffrey Theisen 12 months 1 Jan - 31 Dec | 307 837 | 66 410 | 24 130 | 17 406 | 415 783 |
(1) PHLY has no employees. The Senior Management employees were employed in the operating company until it was sold on 19 December 2024.
(2) Mr. Nerbøvik’s variable pay in 2024 consisted of an award under the 2024 AVP program, as well as a deferred award under the 2023 AVP program earned in 2024 (USD 86,448 and USD 19,500, respectively). Mr. Theisen’s variable pay in 2024 consisted of an award under the 2024 AVP program, as well as a deferred award under the 2023 AVP program earned in 2024 (USD 55,410 and USD 11,000, respectively). Mr. Nerbøvik and Mr. Theisen will earn deferred awards under the 2024 AVP program of USD 43,224 and USD 27,705, respectively.
Remuneration to Senior Management for 2023
| Base salary | Variable pay (2) | Pension contribution | Other remuneration | Severance pay | Total |
|---|---|---|---|---|---|
| President and CEO | |||||
| Steinar Nerbøvik 1 Jan - 31 Dec | 451 952 | 106 094 | 32 000 | 70 772 | 660 818 |
| CFO | |||||
| Jeffrey Theisen 12 months 1 Jan - 31 Dec | 298 869 | 58 314 | 21 590 | 18 636 | 397 409 |
(1) PHLY has no employees. The Senior Management employees are employed in the operating company.
(2) Mr. Nerbøvik’s variable pay in 2023 consisted of an award under the 2023 AVP program, as well as a deferred award under the 2022 AVP program earned in 2023 (USD 39,294 and USD 66,800, respectively). Mr. Theisen’s variable pay in 2023 consisted of an award under the 2023 AVP program, as well as a deferred award under the 2022 AVP program earned in 2023 (USD 22,200 and USD 36,114, respectively). Mr. Nerbøvik and Mr. Theisen earned deferred awards under the 2023 AVP program of USD 19,500 and USD 11,000 respectively, if they remain employed with PSI during 2024.
CONSOLIDATED ACCOUNTS
NOTE 17: COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS
None.
NOTE 18: TRANSACTIONS AND AGREEMENTS WITH RELATED PARTIES
Aker Capital AS, a wholly-owned subsidiary of Aker ASA, is the majority shareholder in PHLY, owning 57.6% of its total outstanding shares as of 31 December 2024. Kristian Røkke, the Chairman of the Board of Directors of PHLY, is a board member of TRG Holding AS, which owns 68.2% of the total outstanding shares of Aker ASA as of 31 December 2024. TRG Holding AS is controlled by Kjell Inge Røkke through The Resource Group TRG AS. Philly Shipyard has service agreements with Aker ASA and certain of its affiliates which provide specified consulting, tax, financial, insurance and administrative services. All payables (including service fees and insurance premiums) under these agreements are paid within the normal course of business. Philly Shipyard believes that related party transactions are made on terms equivalent to those that prevail in arm’s length transactions. Related administrative costs and financial statement amounts are as follows:
| Expenses 2024 (thousands USD) | Expenses 2023 (thousands USD) | |
|---|---|---|
| Aker U.S. Services LLC - parent company | - | - |
| Aker U.S. Services LLC - discontinued operations | 132 | 132 |
| Aker ASA - parent company | 24 | 23 |
| Aker ASA - discontinued operations | - | - |
| Aker Insurances AS - parent company | 88 | 96 |
| Aker Insurances AS - discontinued operations | 197 | 387 |
NOTE 19: ASSETS & LIABILITIES / DISCONTINUED OPERATIONS
As announced on 20 June 2024, PHLY entered into a share purchase agreement (the “SPA”) with both Hanwha Systems and Hanwha Ocean (together “Hanwha”), for the purchase of PSI, the sole operating subsidiary of PHLY (the “Transaction”). The Transaction has resulted in PHLY selling all of its business against receiving a cash consideration of USD 100.0 million. The Transaction closed on 19 December 2024 and the agreed purchase price USD 100.0 million was not subject to any reduction or adjustments. In connection with the closing of the Transaction, PSI redeemed and repurchased shares of its stock in exchange for PSI’s cancellation of the total outstanding balance due from PHLY under an intercompany loan as of the closing date (including all unpaid principal and accrued interest). As part of the closing, PHLY is obligated to maintain an escrow account related to certain potential liabilities of the Company under the SPA for a period of up to four years following the closing of the Transaction.
PHLY (Consolidated) recognized the following gain:
| Amounts in USD thousands | |
|---|---|
| Gross proceeds | 100 000 |
| Less: transaction costs | (3 995) |
| Net proceeds at closing | 96 005 |
| Plus: total net deficit of PSI Group | 137 072 |
| After-tax gain on sale of subsidiary | 233 077 |
Major class of assets and liabilities of PSI as of 19 December 2024 are as follows:
| 19 Dec 2024 (thousands USD) | |
|---|---|
| Assets: | |
| Cash and cash equivalents | 11 469 |
| Restricted cash | 40 836 |
| Property, plant and equipment | 45 890 |
| Right-of-use assets | 16 045 |
| Prepayments and other receivables | 47 811 |
| Income tax receivable | 12 957 |
| Trade receivable | 7 736 |
| Other current assets | 4 971 |
| Other non-current assets | 551 |
| Total assets sold | 188 266 |
| Liabilities: | |
| Customer advances (net) | 223 691 |
| Trade payables and accrued liabilities | 92 682 |
| Other current liabilities | 1 586 |
| Other non-current liabilities | 7 379 |
| Total liabilities associated with assets sold | 325 338 |
NOTE 20: SUBSEQUENT EVENTS AFTER 31 DECEMBER 2024
On 29 January 2025, the Board proposed a dividend payment of USD 6.08 per share to the shareholders of record as of 21 February 2025 as well as dissolution proceedings of PHLY. An extraordinary general meeting (EGM) was held on 19 February 2025 during which the proposed dividend and dissolution of PHLY were approved.
Discontinued operations income statement
The income/(loss) statements presented as discontinued operations are as follows:
| 19 Dec 2024 (thousands USD) | 31 Dec 2023 (thousands USD) | |
|---|---|---|
| Operating revenues | 352 960 | 441 845 |
| Operating loss before depreciation (EBITDA) | (116 555) | (63 890) |
| Operating loss (EBIT) | (120 792) | (71 610) |
| Loss before income tax and gain-on-sale of discontinued operations | (116 711) | (64 190) |
| Gain-on-sale of discontinued operations | 233 077 | - |
| Income tax expense | (25 511) | (3 081) |
| Income/(loss) from discontinued operations, net after income tax | 90 855 | (67 271) |
Discontinued operations cash flow statement
The net cash amounts generated from discontinued operations are as follows:
| 19 Dec 2024 (thousands USD) | 31 Dec 2023 (thousands USD) | |
|---|---|---|
| Net cash used in discontinued ops - operating activities | (59 215) | (50 749) |
| Net cash from/(used in) discontinued ops - investing activities | 68 848 | (6 635) |
| Net cash used in discontinued ops - financing activities | (1 057) | (739) |
| Net change in cash and cash equivalents | 8 576 | (58 123) |
| Cash and cash equivalents at beginning of period | 79 463 | 137 586 |
| Cash and cash equivalents at end of period | 88 039 | 79 463 |
Net cash flow from the sale of PSI at 19 December 2024 is as follows:
| 19 Dec 2024 (thousands USD) | 31 Dec 2023 (thousands USD) | |
|---|---|---|
| Gross proceeds | 100 000 | - |
| Less: transaction costs | (3 995) | - |
| Less: escrow (restricted cash) | (10 000) | - |
| Net proceeds at closing | 86 005 | - |
| Cash in PSI at time of sale | (11 474) | - |
| Net proceeds from sale of subsidiary | 74 531 | - |
PARENT COMPANY ACCOUNTS
Philly Shipyard ASA - under liquidation
Income Statement
| Note | 2024 (thousands USD) | 2023 (thousands USD) | |
|---|---|---|---|
| Operating revenues | - | - | - |
| Operating expenses | 2 | (556) | (680) |
| Operating loss | (556) | (680) | |
| Interest expense payable to subsidiaries | (1 200) | (1 160) | |
| Gain on disposal of subsidiary | 8 | 588 | - |
| Other interest income and financial income | 241 | 59 | |
| Other interest expense and financial expense | (24) | (45) | |
| Income/(loss) before tax | 59 049 | (1 826) | |
| Income tax expense | 3 | - | - |
| Net income/(loss) after tax | 59 049 | (1 826) |
Allocation of net income/(loss):
| 2024 (thousands USD) | 2023 (thousands USD) | |
|---|---|---|
| Net income/(loss) after tax | 59 049 | (1 826) |
| Extraordinary dividend for 2024 | (73 616) | - |
| Other equity | 2 096 | 1 826 |
| Share premium reserve | 12 471 | - |
Statement of Financial Position as of 31 December
| Note | 2024 (thousands USD) | 2023 (thousands USD) | |
|---|---|---|---|
| ASSETS | |||
| Shares in subsidiary | - | 67 000 | |
| Escrow cash long-term | 5 | 10 000 | - |
| Total non-current assets | 10 000 | 67 000 | |
| Prepayments and other |
Kristian Røkke Board Chairman
Elin Karfjell Board Member
Steinar Nerbøvik President and CEO
Oslo, Norway - 28 March 2025 - Board of Directors
Philly Shipyard ASA
Jan Petter Hagen Board Member
Susan Hayman Board Member
Philly Shipyard ASA - under liquidation
PHILLY SHIPYARD - ANNUAL REPORT 2024
44 Cash Flow Statement
Amounts in USD thousands
| Note | 2024 | 2023 | |
|---|---|---|---|
| Income/(loss) before tax | 59 049 | (1 826) | |
| Gain on disposal of subsidiary | 8 | (60 588) | - |
| Payment-in-kind interest expense payable to subsidiary | 1 200 | 1 160 | |
| Change in prepayments and other receivables | 12 | 17 | |
| Change in trade payables and accrued liabilities | 1 508 | 48 | |
| Net cash flow from/(used in) operating activities | 1 181 | (601) | |
| Proceeds from sale of subsidiary | 8 | 86 005 | - |
| Net cash flow from investing activities | 86 005 | - | |
| Loan proceeds from subsidiary | 775 | 600 | |
| Net cash flow from financing activities | 775 | 600 | |
| Net change in cash and cash equivalents | 87 961 | (1) | |
| Cash and cash equivalents as of 1 January | 78 | 79 | |
| Cash and cash equivalents as of 31 December | 88 039 | 78 |
Philly Shipyard ASA - under liquidation
PHILLY SHIPYARD - ANNUAL REPORT 2024
45
The accounts of Philly Shipyard ASA - under liquidation (referred to herein as PHLY) are presented in conformity with Norwegian legislation and Generally Accepted Accounting Principles (GAAP) in Norway. PHLY’s functional and reporting currency is the U.S. dollar (USD). Following the closing of the sale of Philly Shipyard, Inc. (PSI) in December 2024, the Company has ceased trading, and the going concern assump- tion is not applied in these financial statements. At the date of issuance of this report, the Board has approved to begin liquidation proceedings of the Company and the EGM on 19 February 2025 approved the Board’s proposal to start liquidation proceedings. Management has concluded that GAAP applied in Norway still provide relevant and reliable information, and has therefore prepared these financial statements using the same accounting policies as previously disclosed.
Subsidiaries
Subsidiaries are presented on a historical cost basis in the parent company accounts. The investment is valued at historical cost for the shares unless impairment write-downs have been deemed necessary. The shares are written down to fair value if the impairment is not of a temporary nature and is necessitated by GAAP. Write-downs are reversed when the basis for the write-down no longer exists. Dividends and other payments are taken to income in the year they are accrued in the subsidiary. If dividends exceed retained earnings after the purchase, the excess represents repayment of invested capital and the payments are deducted from the invested value in PHLY’s statement of financial position.
Classification and valuation of statement of financial position items
Current assets and current liabilities include items that have less than one year to maturity, and other items that are deemed operational working capital. Other items are classified as non-current assets/non-current liabilities. Current assets are valued at the lower of historical cost and fair value. Current liabilities are valued at their nominal historical value at the time the liability arises. Non-current assets are valued at historical cost, but are written down to fair value if impairment is deemed to be of a permanent nature. Non-cur- rent liabilities are valued at nominal historical values.
Tax
Tax benefit/(expense) in the income statement comprises both current payable taxes and the change in deferred tax. Payable tax is calculated on the basis of the profit for the period in Norwegian Kroner (NOK). Deferred tax at 31 December 2024 is calculated using a 22% income tax rate utilizing the difference that exists between book values and tax values and the net operating losses that can be carried forward at the statement of financial position date. Tax-increasing and tax-reducing temporary differences that are reversing or can reverse in the same period are offset against each other. Net tax assets are shown in the statement of financial position to the extent it is probable that these assets can be utilized.
Cash flow statement
The cash flow statement is shown using the indirect method. Cash and cash equivalents comprises cash, bank deposits and other short-term liquid placements.
Use of estimates
Preparation of financial statements in conformity with GAAP in Norway requires management to make estimates and assumptions that affect the income statement, the reported amounts of assets and liabilities and also the disclosure of contingent assets and liabilities on the statement of financial position date. Contingent losses that are probable and quantifiable are expensed when they are identified.
PARENT COMPANY ACCOUNTS
NOTE 1: BASIS FOR PREPARATION
PHILLY SHIPYARD - ANNUAL REPORT 2024
46
NOTE 2: OPERATING EXPENSES
| Amounts in USD thousands | 2024 | 2023 |
|---|---|---|
| Audit fees | 67 | 30 |
| Other audit and attestation fees | 62 | 20 |
| Total | 129 | 50 |
Fees to the auditors for ordinary audit and other audit and attestation fees have been expensed.
PHLY has no employees. Senior Management was employed in the operating company. Fees to the Board of Directors of NOK 1,758 thousand (USD 154 thousand) and NOK 1,673 thousand (USD 164 thousand) were expensed in 2024 and 2023, respectively.
NOTE 3: TAXES
The table below shows the difference between book and tax values by the end of 2024 and 2023 and the amounts of deferred taxes at these dates and the change in deferred taxes.
Amounts in USD thousands
| 2024 | 2023 | |
|---|---|---|
| Losses carried forward | 13 600 | 8 636 |
| Other temporary differences | 35 | 26 |
| Total differences | 13 635 | 8 662 |
| Net deferred tax asset/(liability), 22%/22% | - | - |
| Foreign currency impact | - | - |
| Deferred tax asset/(liability) in the statement of financial position | - | - |
Estimated result for income tax purposes:
Amounts in USD thousands
| 2024 | 2023 | |
|---|---|---|
| Income/(loss) before tax measured in NOK for taxation purposes | 59 049 | (1 826) |
| Non-taxable gain on disposal of shares in subsidiaries | (60 588) | (23) |
| Change in other temporary differences | 9 | - |
| Foreign currency impact | (3 914) | (721) |
| Estimated income/(loss) for tax purposes | (5 444) | (2 570) |
| Income tax payable, 22%/22% | - | - |
Income tax benefit/(expense) in the income statement:
Amounts in USD thousands
| 2024 | 2023 | |
|---|---|---|
| Income tax payable | - | - |
| Change in deferred tax liability | - | - |
| Foreign currency impact | - | - |
| Excessive accrued income tax payable from prior year | - | - |
| Income tax benefit | - | - |
The Norwegian deferred tax assets of USD 3.2 million have not been recorded because the Company does not believe that they will be able to use them.
PARENT COMPANY ACCOUNTS
PHILLY SHIPYARD - ANNUAL REPORT 2024
47
PARENT COMPANY ACCOUNTS
NOTE 4: TOTAL EQUITY
Changes in equity are:
| Amounts in USD thousands | Share capital | Share premium | Treasury shares | Total paid in capital | Other equity | Total equity |
|---|---|---|---|---|---|---|
| Equity as of 1 January 2024 | 22 664 | 22 511 | (9 969) | 35 206 | 2 096 | 37 302 |
| Net income for the year 2024 | - | - | - | - | 59 049 | 59 049 |
| Extraordinary dividend | - | (12 471) | - | (12 471) | (61 145) | (73 616) |
| Equity as of 31 December 2024 | 22 664 | 10 040 | (9 969) | 22 735 | - | 22 735 |
Philly Shipyard presents its Parent company financial statements using GAAP (Generally Accepted Accounting Principles) of Norway that require the extraordinary dividend to be presented as a liability and as part of the allocation of the income for 2024 regardless of the fact that the div- idend was declared in February 2025 and not in 2024. For the consolidated financial statements presented using IFRS (International Financial Reporting Standards), dividend declared after year-end 2024 are not recorded as a liability.
The share capital of NOK 125,747,660 consists of 12,574,766 shares (including 466,865 treasury shares) with a par value of NOK 10 as of 31 December 2024. PHLY is a part of the consolidated accounts of Aker ASA, Oksenoyveien 10, NO-1366 Lysaker, Norway.
Twenty largest shareholders (as of 31 December 2024)
| Shareholders | Number of shares held | Ownership (%) |
|---|---|---|
| Aker Capital AS | 7 237 631 | 57.6% |
| J.P. Morgan Securities LLC | 1 211 486 | 9.6% |
| Philly Shipyard ASA | 466 865 | 3.7% |
| Nordnet Livsforsikring AS | 177 112 | 1.4% |
| Sivert Hultgren Berg | 169 679 | 1.3% |
| Tor-Fredrik Naevdal | 139 165 | 1.1% |
| Interactive Brokers LLC | 132 987 | 1.1% |
| Maxwell Montes AS | 96 082 | 0.8% |
| Citibank | 76 222 | 0.6% |
| Peter Myhre | 71 000 | 0.6% |
| Nordnet Bank AB | 67 436 | 0.5% |
| Filip Kristiansen | 61 436 | 0.5% |
| Jan Roar Ronning | 60 000 | 0.5% |
| Kristian Falnes AS | 60 000 | 0.5% |
| Trading Partner AS | 59 234 | 0.5% |
| Kim Skailand | 55 000 | 0.4% |
| Steinar Gronland | 45 805 | 0.4% |
| ITSOS AS | 45 000 | 0.4% |
| Thomas Fuglestad | 43 680 | 0.3% |
| Dag Arve Midttun | 40 000 | 0.3% |
| Total, 20 largest shareholders | 10 315 820 | 82.1% |
| Other shareholders | 2 258 946 | 17.9% |
| Total shareholders | 12 574 766 | 100.0% |
PHILLY SHIPYARD - ANNUAL REPORT 2024
48
PARENT COMPANY ACCOUNTS
NOTE 5: CASH AND CASH EQUIVALENTS AND ESCROW CASH
Total escrow cash as of 31 December 2024 amounted to USD 10.0 million, which is obligated to be maintained in an escrow account related to certain potential liabilities of the Company under the SPA for a period of up to four years following closing of the Transaction.
NOTE 6: SHARES OWNED BY THE BOARD OF DIRECTORS AND THE SENIOR MANAGEMENT
For information regarding shares owned by the members of the Board of Directors and the Senior Management, please see note 16 to the consolidated accounts.# NOTE 7: RELATED PARTY TRANSACTIONS AND GUARANTEES
PHLY has service agreements with Aker ASA and certain of its affiliates which provide consulting, tax, financial, insurance and administrative services. All payables (including service fees and insurance premiums) under these agreements are paid within the normal course of business. Philly Shipyard believes that related party transactions are made on terms equivalent to those that prevail in arm’s length transactions. Total expenses incurred under these agreements in 2024 and 2023 were USD 120 thousand and USD 176 thousand, respectively.
PHILLY SHIPYARD - ANNUAL REPORT 2024 49
PARENT COMPANY ACCOUNTS
NOTE 9: SUBSEQUENT EVENTS AFTER 31 DECEMBER 2024
On 29 January 2025, the Board proposed a dividend payment of USD 6.08 per share to the shareholders of record as of 21 February 2025 as well as dissolution proceedings of PHLY. An extraordinary general meeting (EGM) was held on 19 February 2025 during which the proposed dividend and dissolution of PHLY were approved.
NOTE 8: DISPOSAL OF SUBSIDIARY
As announced on 20 June 2024, PHLY entered into a share purchase agreement (the “SPA”) with both Hanwha Systems and Hanwha Ocean (together “Hanwha”), for the purchase of PSI, the sole operating subsidiary of PHLY (the “Transaction”). The Transaction has resulted in PHLY selling all of its business against receiving a cash consideration of USD 100.0 million. The Transaction closed on 19 December 2024 and the agreed purchase price USD 100.0 million was not subject to any reduction or adjustments. In connection with the closing of the Transaction, PSI redeemed and repurchased shares of its stock in exchange for PSI’s cancellation of the total outstanding balance due from PHLY under an intercompany loan as of the closing date (including all unpaid principal and accrued interest). As part of the closing, PHLY is obligated to maintain an escrow account of USD 10.0 million related to certain potential liabilities of the Company under the SPA for a period of up to four years following the closing of the Transaction.
PHLY recognized the following gain:
| Amounts in USD thousands | 19 Dec 2024 |
|---|---|
| Gross proceeds | 100,000 |
| Less: transaction costs | (3,995) |
| Net proceeds at closing | 96,005 |
| Cancellation of intercompany loan | 31,583 |
| Less: book investment in PSI | (67,000) |
| After-tax gain on sale | 60,588 |
Net cash flow from the sale of PSI at 19 December 2024 is as follows:
| Amounts in USD thousands | 19 Dec 2024 |
|---|---|
| Gross proceeds | 100,000 |
| Less transaction costs | (3,995) |
| Less escrow (restricted cash) | (10,000) |
| Net proceeds at closing | 86,005 |
PHILLY SHIPYARD - ANNUAL REPORT 2024 50
AUDITOR’S REPORT
Auditor’s Report
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of Philly Shipyard ASA – under liquidation
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Philly Shipyard ASA – under liquidation, which comprise:
- the financial statements of the parent company Philly Shipyard ASA – under liquidation (the Company), which comprise the Statement of Financial Position as at 31 December 2024, the Income Statement and Cash Flow Statement for the year then ended, and notes to the financial statements, including material accounting policy information, and
- the consolidated financial statements of Philly Shipyard ASA – under liquidation and its subsidiaries (the Group), which comprise the Statement of Financial Position as at 31 December 2024, the Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion:
- the financial statements comply with applicable statutory requirements,
- the financial statements give a true and fair view of the financial position of the Company as at 31 December 2024, and its financial performance for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and
- the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2024, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). 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 Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), 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.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of Philly Shipyard ASA for 3 years from the election by the general meeting of the shareholders on 20 April 2022 for the accounting year 2022.
PHILLY SHIPYARD - ANNUAL REPORT 2024 51
Emphasis of Matter
We draw attention to Note 1 to these financial statements and the Board of Director’s report, which refers to the decision to liquidate the Company subsequent to the statement of financial position date. The going concern assumption is therefore not applicable for the financial statements. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
As the Company has sold all its business during the financial year, the prior year key area of focus, Revenue Recognition from Construction Contracts, has been replaced by Accounting for profit for Discontinued Operations.
| Key Audit Matters | How our audit addressed the Key Audit Matter # AUDITOR'S REPORT
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Philly Shipyard ASA, which comprise the statement of financial position as at 31 December 2024, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements of the Company give a true and fair view of the financial position of Philly Shipyard ASA as at 31 December 2024, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
In our opinion, the accompanying consolidated financial statements of the Group give a true and fair view of the financial position of the Group as at 31 December 2024, and of the financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). 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 Company and the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements in Norway that are relevant to the audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the ethical requirements in Norway. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. The required statutory Sustainability Statement is omitted from the other information accompanying the financial statements. The Company is subject to the reporting requirements in the Norwegian Accounting Act §§ 2-3 – 2-7 and should have included a Sustainability Statement in their Board of Directors’ report. As the Company has sold all its business during the financial year, and aim to distribute the proceeds as dividend, and then dissolve the Company during the first half of 2025, Management has decided not to include a Sustainability Statement. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report ● is consistent with the financial statements and ● contains the information required by applicable statutory requirements. Our opinion on the Board of Director’s report applies correspondingly to the statement on Corporate Governance. Our opinion on whether the Board of Directors’ report contains the information required by applicable statutory requirements, does not cover the Sustainability Statement.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements of the Company that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation of the consolidated financial statements of the Group that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU. Management is responsible for such internal control as management determines 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, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Management has decided to liquidate the Company.
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 PHILLY SHIPYARD - ANNUAL REPORT 2024 53 AUDITOR’S REPORT 4 / 5 our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
- identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. 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.
- obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and the Group's internal control.
- evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- conclude on the appropriateness of management’s use of the going concern basis of accounting. Management has decided to liquidate the Company. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company and the Group to continue as a going concern.
- evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.
- obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing act of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
PHILLY SHIPYARD - ANNUAL REPORT 202454 AUDITOR’S REPORT 5 / 5
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Philly Shipyard ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name PHLY_ASA_31122024-EN.zip have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary.
Auditor’s Responsibilities
For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 28 March 2025
PricewaterhouseCoopers AS
Anne Kristin Huuse
State Authorised Public Accountant
(This document is signed electronically)
PHILLY SHIPYARD - ANNUAL REPORT 2024 55
PHILLY SHIPYARD - ANNUAL REPORT 202456
The timely release of information to the market that could affect PHLY’s share price helps ensure that Philly Shipyard ASA’s share price reflects its underlying value. On 12 March 2024, the PHLY Board revised the Company’s dividend policy as follows: “The Company’s objective is to provide its shareholders with a competitive return on its shares over time based on the Company’s earnings. The Company’s focus is on long-term profitability, and its current priority is to strengthen its balance sheet. Accordingly, no dividends are contemplated until further notice.”
In 2024, PHLY did not pay any dividends. However, on 29 January 2025 the Board authorized a dividend payment of USD 6.08 per share to shareholders on record as of 21 February 2025, totalling approximately USD 73.6 million. The dividend and the Board’s proposal to start dissolution proceedings were approved at an EGM held on 19 February 2025. Based on certain liquidation accounts to be prepared by the Company and audited by its auditor, PHLY expects to distribute the remaining unrestricted cash in the Company during the first half of 2025. Any remaining cash in the Company later available for distribution as a result of release of cash from the escrow arrangement with Hanwha, will be distributed once unrestricted to the Company’s shareholders eligible to receive the initial liquidation dividend.# SHARES AND SHAREHOLDER MATTERS
Philly Shipyard ASA (PHLY) is committed to maintaining an open and direct dialogue with its shareholders, potential investors, analysts, brokers and the financial community in general.
SHARE CAPITAL DEVELOPMENT OVER THE PAST THREE YEARS
| Change in share capital (in NOK) | Number of shares | Par value (in NOK) | Share capital (in NOK) |
|---|---|---|---|
| Change in 2022 | - | - | - |
| 31 December 2022 | 12,574,766 | 10.00 | 125,747,660 |
| Change in 2023 | - | - | - |
| 31 December 2023 | 12,574,766 | 10.00 | 125,747,660 |
| Change in 2024 | - | - | - |
| 31 December 2024 | 12,574,766 | 10.00 | 125,747,660 |
PHILLY SHIPYARD - ANNUAL REPORT 2024 57
STOCK EXCHANGE LISTING
Philly Shipyard ASA was listed on the Euronext Expand Oslo (formerly known as Oslo Axess) on 17 December 2007 (ticker: PHLY). PHLY’s shares are registered in the Norwegian Central Securities Depository; the shares have the securities registration number ISIN NO 0010395577. DNB Bank ASA is PHLY’s registrar.
MAJORITY SHAREHOLDER
Philly Shipyard ASA’s majority shareholder is Aker Capital AS, a wholly-owned subsidiary of Aker ASA. Companies that are part of Aker are legally and financially independent units. Aker Capital AS exercises active ownership as part of systematic efforts to create value for all PHLY shareholders. From time to time, agreements are entered into between the Company and one or more Aker companies. The Boards of Directors and other parties involved in the decision-making processes related to such agreements are all critically aware of the need to handle such matters in the best interests of the involved companies, in accordance with good corporate governance practice. If needed, external, independent opinions are sought.
CURRENT BOARD AUTHORIZATIONS
As of 31 December 2024, the Board of Directors of Philly Shipyard ASA has an authorization to pay dividends, an authorization to increase the share capital and two separate authorizations to acquire own shares. All of these current Board authorizations are valid up until the next annual general meeting in 2025. For more details, please see “Board authorizations” on page 60.
STOCK OPTION PLANS
As of 31 December 2024, Philly Shipyard ASA has no stock option program.
INVESTOR RELATIONS
Philly Shipyard ASA seeks to maintain an open and direct dialogue with shareholders, financial analysts and the financial market in general. All Philly Shipyard press releases and investor relations publications, including archived material, are available at the Company’s web site: www.phillyshipyardasa.com. This online resource includes PHLY’s quarterly and annual reports, prospectuses, articles of association, financial calendar and its Investor Relations and Corporate Governance policies, along with other information. Shareholders can contact the Company at [email protected].
QUARTERLY AND ANNUAL REPORTS
Philly Shipyard’s quarterly and annual reports are published electronically on the Company’s website at the same time as they are released via the Oslo Stock Exchange distribution service, www.newsweb.no (ticker: PHLY).
TWENTY LARGEST SHAREHOLDERS (as of 31 December 2024)
| Shareholders | Number of shares held | Ownership (% ) |
|---|---|---|
| Aker Capital AS | 7,237,631 | 57.6% |
| J.P. Morgan Securities LLC | 1,211,486 | 9.6% |
| Philly Shipyard ASA | 466,865 | 3.7% |
| Nordnet Livsforsikring AS | 177,112 | 1.4% |
| Sivert Hultgren Berg | 169,679 | 1.3% |
| Tor-Fredrik Naevdal | 139,165 | 1.1% |
| Interactive Brokers LLC | 132,987 | 1.1% |
| Maxwell Montes AS | 96,082 | 0.8% |
| Citibank | 76,222 | 0.6% |
| Peter Myhre | 71,000 | 0.6% |
| Nordnet Bank AB | 67,436 | 0.5% |
| Filip Kristiansen | 61,436 | 0.5% |
| Jan Roar Ronning | 60,000 | 0.5% |
| Kristian Falnes AS | 60,000 | 0.5% |
| Trading Partner AS | 59,234 | 0.5% |
| Kim Skailand | 55,000 | 0.4% |
| Steinar Gronland | 45,805 | 0.4% |
| ITSOS AS | 45,000 | 0.4% |
| Thomas Fuglestad | 43,680 | 0.3% |
| Dag Arve Midttun | 40,000 | 0.3% |
| Total, 20 largest shareholders | 10,315,820 | 82.1% |
| Other shareholders | 2,258,946 | 17.9% |
| Total shareholders | 12,574,766 | 100.0% |
OWNERSHIP STRUCTURE BY NUMBER OF SHARES HELD (as of 31 December 2024)
| Shares owned | Number of shareholders | % of share capital |
|---|---|---|
| 1 - 100 | 401 | 0.1% |
| 101 - 1,000 | 392 | 1.3% |
| 1,001 - 10,000 | 242 | 6.6% |
| 10,001 - 100,000 | 71 | 16.2% |
| 100,001 - 500,000 | 5 | 8.6% |
| Over 500,000 | 2 | 67.2% |
| Total | 1,113 | 100.0% |
PHILLY SHIPYARD - ANNUAL REPORT 2024 58
NOMINATION COMMITTEE
PHLY’s nomination committee has the following members: Ingebret G. Hisdal (Chairperson) and Charlotte Håkonsen. Hilde K. Ramsdal serves as deputy member to the committee. Shareholders who wish to contact PHLY’s nomination committee may do so using the following address:
Nomination Committee of Philly Shipyard ASA
Vika Atrium
Munkedamsveien 45
NO-0250 Oslo, Norway
ANNUAL GENERAL MEETING
Philly Shipyard ASA’s annual general meeting is normally held in March or April. Written notification is sent to all shareholders individually or to shareholders’ nominees. To vote at general meetings, shareholders (or their duly authorized representatives) must either be present or vote by proxy. Annual general meeting notices and attendance registration forms are sent to shareholders by the deadlines laid down in the Norwegian Public Limited Liability Companies Act and made available on the company’s website and through the Oslo Stock Exchange distribution service. The annual report and other enclosures to the meeting notice are made available solely via the company’s website and the Oslo Stock Exchange distribution service. Shareholders who wish to receive the enclosures by post must contact the company.
2024 SHARE DATA
PHLY’s total market capitalization as of 31 December 2024 was NOK 951 million. During 2024, a total of 2,963,210 Philly Shipyard ASA shares traded, corresponding to 0.236 times PHLY’s freely tradable stock. The shares traded on 248 trading days in 2024.
GEOGRAPHIC DISTRIBUTION OF SHAREHOLDERS (as of 31 December 2024)
| Number of Shareholders | Ownership (% ) | |
|---|---|---|
| Norwegian shareholders | 10,846,426 | 86.3% |
| Non-Norwegian shareholders | 1,728,340 | 13.7% |
| Total | 12,574,766 | 100.0% |
SHARE PRICE DEVELOPMENT IN 2024
| Value | |
|---|---|
| Highest traded (in NOK) | 76.8 |
| Lowest traded (in NOK) | 33.6 |
| Share price as of 31 December (in NOK) | 75.6 |
| Shares issued as of 31 December | 12,574,766 |
| Own (treasury) shares as of 31 December | (466,865) |
| Shares issued and outstanding as of 31 December | 12,107,901 |
| Market capitalization as of 31 December (in NOK millions) | 951 |
| Proposed share dividend (NOK per share) | - |
SHARE PRICE DEVELOPMENT (2022 - 2024)
NOK / share
100
80
60
40
20
0
20
30
40
50
60
70
80
1 Jan 2022
31 Dec 2024
PHILLY SHIPYARD - ANNUAL REPORT 2024 59
The Board of Directors (the “Board”) of PHLY has reviewed and updated PHLY’s principles for corporate governance. The principles are based on the Norwegian Code of Practice for Corporate Governance, dated 14 October 2021 (the “Code of Practice”), the principles set out in the continuing obligations of companies listed on the Oslo Stock Exchange, and the relevant Norwegian background law such as the Norwegian Accounting Act and the Norwegian Public Limited Liability Companies Act. The Code of Practice is available at www.nues.no and the continuing obligations of stock exchange listed companies may be found at www.euronext.com/en/markets/oslo. The principles also apply to PHLY’s subsidiaries when relevant. The following presents the current practice of PHLY regarding each of the recommendations contained in the Code of Practice. Any deviations from the recommendations are explained under the item in question. In addition to the Code of Practice, the Norwegian Accounting Act section 2-9 stipulates that companies must provide a report on their policies and practices for corporate governance either in the annual report or in a document referred to in the annual report. This report is integrated in this corporate governance statement. This statement should be read in conjunction with the Company’s ongoing liquidation process. The liquidation process is expected to be completed during Q2 2025. PHLY will remain listed on Euronext Expand until the liquidation process is completed.
Purpose
PHLY’s Corporate Governance principles ensure an appropriate division of roles and responsibilities among PHLY’s owners, its Board, and its executive management, and that business activities are subject to satisfactory control. The appropriate division of roles and satisfactory control contribute to the greatest possible value creation over time, to the benefit of owners and other stakeholders.
Values and ethical guidelines
The Board has adopted corporate values and ethical guidelines. PHLY has a code of conduct which is approved by the Board, and it constitutes a framework for managing compliance and integrity risks. It describes PHLY’s ethical commitments, requirements and expectations for personal conduct and business practice.# CORPORATE GOVERNANCE
Philly Shipyard ASA (PHLY) aims to create maximum value for its shareholders over time. Good corporate governance will help to reduce risk and ensure sustainable value creation.
CORPORATE GOVERNANCE
PHILLY SHIPYARD - ANNUAL REPORT 202460
PHLY’s code of conduct outlines clear principles and rules in key compliance and integrity areas such as anti-corruption and anti-bribery; facilitation payments; conflicts of interest; gifts and hospitality; human and labor rights; fair competition; anti-money laundering; and trade compliance. PHLY’s code of conduct is available on PHLY’s home page www.phillyshipyardasa.com, under the heading “Corporate Governance.”
PHLY has not adopted specific guidelines on equality and diversity due to its lack of employees. The Company is focused however on carrying on its business in line with the principles of equality and diversity with respect to the composition of its management and Board, and its Board currently comprise of four members where two are male and two are female.
Business
PHLY’s business purpose clause in the articles of association is as follows: “The Company’s business is to own and manage industry and other related business related to building of ships, capital management and other operations for the group, including participating in or acquiring other business.” The function of the business purpose clause is to ensure that shareholders have control of the business and its risk profile, without limiting the Board or management’s ability to carry out strategic and financially viable decisions within the defined purpose.
EQUITY AND DIVIDENDS
Equity
The PHLY group’s equity as of 31 December 2024 amounted to USD 96.4 million, which corresponds to an equity ratio (total equity divided by total assets) of approximately 98%. PHLY regards its current equity structure as appropriate and adapted to its objectives, strategy and risk profile.
On 19 February 2025, the extraordinary general meeting of the Company resolved to approve a proposed dividend of approximately USD 73.6 million, which was paid out by 28 February 2025.
Dividends
PHLY’s dividend policy is included in the Shares and Shareholder Matters section on page 56. Philly Shipyard’s goal now that is has sold its only operating asset, PSI, is to return a significant portion of the sale proceeds to its shareholders while ensuring PHLY’s obligations under the SPA are fully accounted for.
PHLY did not pay out any dividends in 2024. Given the sale of PSI to Hanwha in December 2024 whereby the Company received approximately USD 100.0 million in cash proceeds, the Board proposed a dividend of USD 6.08 per share, totaling approximately USD 73.6 million, in February 2025. This proposal was approved by an extraordinary general meeting held in the Company on 19 February 2025 and paid out by 28 February 2025.
The extraordinary general meeting also resolved to liquidate PHLY, a process which is expected to be completed in Q2 2025. As a result, PHLY does not foresee payment of any further shareholder distributions, including dividends and share buybacks, until the Company has been finally liquidated. Provided that the general meeting resolves to finally liquidate and dissolve the Company based on certain audited liquidation accounts, PHLY expects to distribute the remaining unrestricted cash in the Company at such time as a liquidation distribution to its shareholders as soon as permissible under Norwegian law.
Board Authorizations
The Board’s current authorizations to issue shares and to undertake share buybacks are to be limited to defined purposes and to be valid only until the next annual general meeting. The Board has the following authorizations valid up to the annual general meeting in 2025:
- to facilitate the potential payment of dividends in accordance with PHLY’s dividend policy, an authorization to pay dividends based on PHLY’s annual accounts for 2023;
- an authorization to increase the share capital by up to NOK 12,574,766, which can only be used to raise equity capital for new shipbuilding projects or other future investments within the Company’s scope of operations;
- an authorization to acquire own shares with a total nominal value of NOK 12,574,766, which can only be used for the purpose of utilizing PHLY’s shares as transaction currency in acquisitions, mergers, de-mergers or other transactions; and
- an authorization to acquire own shares with a total nominal value of NOK 12,574,766, which can only be used for the purpose of investment or subsequent sale or deletion of such shares.
The Board does not intend to propose to renew any of these authorizations due to the ongoing liquidation process. The Board currently has no other authorizations to issue shares or undertake share buybacks.
Equal Treatment of Shareholders
PHLY has a single class of shares, and all shares carry the same rights in PHLY. Equal treatment of all shareholders is crucial. If existing shareholders’ pre-emptive rights are proposed waived upon an increase in share capital, the Board will justify the waiver. The Board will also publicly disclose such justification in a stock exchange announcement issued in connection with such increase in share capital. Transactions in own (treasury) shares are executed on the Oslo Stock Exchange or by other means at the listed price.
Shares and Negotiability
There are no limitations on any party’s ability to own, trade or vote for shares in PHLY. No restrictions on transferability are found in PHLY’s articles of association.
General Meetings
The Board encourages shareholders to participate in general meetings. It is PHLY’s priority to hold the annual general meeting as early as possible after the year-end. Notices of general meetings are sent physically by post to shareholders who have not accepted digital communication and comprehensive supporting information, including the recommendations of the nomination committee, are made available for the shareholders on PHLY’s website www.phillyshipyardasa.com, in each case not later than 21 days prior to the annual general meeting.
The Board seeks to ensure that the resolutions and supporting information are sufficiently detailed and comprehensive to enable the shareholders to form a view on all matters to be considered at the meeting. The notice materials include a thorough explanation of all procedures for registration, voting and attendance. In addition, information on how to propose a resolution to the items on the agenda at the annual general meeting will be included in the notice.
If a general meeting is held as a physical meeting, the shareholders will also be given the opportunity to participate virtually. The proxy form includes instructions for representation at the meeting through a proxy or by virtual participation and allows shareholders to nominate a person who will be available to vote on behalf of the shareholders. In addition, to the extent possible, the proxy form includes separate voting instructions to be given for each matter to be considered by the meeting. The shareholders may also vote electronically in advance of the general meeting.
Pursuant to PHLY’s articles of association, the Chairman of the Board (the “Chairman”), or any other person appointed by the Chairman, chairs the general meetings. Although the Code of Practice recommends an independent chair for annual general meetings, it is the view of PHLY that the procedure followed by PHLY provides efficient and well prepared annual general meetings and is in the interests of the shareholders. Recent years, the general meetings have however been chaired by an independent chairperson appointed by the Chairman of the Board.
The shareholders are invited to make a joint voting on the composition of the Board as proposed by the nomination committee and not on each Board member separately. Hence, PHLY deviates from the Code of Practice in this regard as the nomination committee emphasizes that the Board’s composition shall reflect a variety of experience, knowledge and qualifications.
To the extent possible, the CEO/general manager, the chairperson of the nomination committee and the auditor attend annual general meetings. Minutes of general meetings are published as soon as practically possible on the Oslo Stock Exchange, www.newsweb.no (ticker: PHLY) and on PHLY’s website www.phillyshipyardasa.com.
NOMINATION COMMITTEE
PHLY has a nomination committee, as set forth in section 7 of PHLY’s articles of association. Pursuant to the articles of association, the nomination committee is to comprise no fewer than two members. Each member is normally elected for a two-year period. The composition of the nomination committee reflects the interests of the shareholders, and its members are independent from the Board and executive management. The members and chairperson of the nomination committee are elected by PHLY’s annual general meeting, which also approves the remuneration payable to committee members. The general meeting may also decide on guidelines for the nomination committee.
Pursuant to PHLY’s articles of association, the nomination committee recommends candidates for members of the Board. The nomination committee also makes recommendations as to remuneration of the members of the Board and the nomination committee. The nomination committee will justify its recommendation and such justification will address the criteria specified in section 8 of the Code of Practice on the composition of the Board.
The nomination committee comprises the following members:
- Ingebret G. Hisdal, Chairperson
- Charlotte Håkonsen, member
Neither of the members of the nomination committee is a member of the Board. Neither the CEO/general manager nor any other senior executive is a member of the nomination committee.
Hilde K.# BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE
Pursuant to section 4 of PHLY’s articles of association, the Board comprises between three and seven members. The Board is currently comprised of a total of four members. PHLY’s shareholders elect the Chairman at the annual general meeting. The Board may elect its own Deputy Board Chairman. Board members are elected for a period of two years.
The composition of the Board is designed to ensure that it can operate independently of any special interests and function effectively as a collegiate body. A majority of the shareholder-elected Board members are independent of PHLY’s executive management and its significant business associates. The Board does not include any executive personnel. Further, two of the four shareholder-elected Board members, Elin Karfjell and Susan Hayman, are independent of PHLY’s main shareholder, Aker ASA. Kristian Røkke, the Chairman, is chairman of Aker Horizons ASA. Jan Petter Hagen, Board member, is Managing Partner of Converto AS.
The current composition of the Board, as well as the Board members’ status on independence and expertise, capabilities, and experience, are presented on pages 64-65 of this annual report. The shareholder-elected Board members represent a combination of expertise, capabilities, and experience from various businesses and industries. The Board members’ shareholdings are presented in note 16 to the consolidated accounts. Two of the four shareholder-elected Board members are up for election in 2025.
THE WORK OF THE BOARD OF DIRECTORS
The Board of PHLY annually adopts a plan for its work, emphasizing the goals, strategies, and risk profile of the Company’s business activities. The plan also recognizes the Company’s corporate social responsibility, and how the Board shall handle agreements with related parties. If there are material transactions between the Company and a shareholder, Board member, member of executive management, or a party closely related to any of the aforementioned, the Board shall ensure that independent valuations are available. See additional information on transactions and agreements with related parties in note 18 to the consolidated accounts.
As of 31 December 2024, 57.6% of the shares in PHLY are owned by Aker Capital AS, a wholly-owned subsidiary of Aker ASA. For further details on the relationship between Philly Shipyard and Aker ASA, please see note 18 to the consolidated accounts.
Also, the Board has adopted instructions that regulate areas of responsibility, tasks, and division of roles of the Board, the Chairman, and the CEO/general manager. These instructions feature rules governing Board schedules, rules for notice and chairing of Board meetings, decision-making rules, the CEO’s/general manager’s duty and right to disclose information to the Board, professional secrecy, impartiality, and other issues. In order to ensure a more independent consideration of matters of a material character in which the Chairman is, or has been, personally involved, the Board’s consideration of such matters are chaired by the Deputy Board Chairman, if there is one serving at the time, or some other member of the Board in the absence of a Deputy Board Chairman.
PHLY has an audit committee consisting of two members elected by and among the Board’s members, Elin Karfjell (Chairperson) and Jan Petter Hagen. Both members are independent from operations of the Company. One member, Jan Petter Hagen, is linked to PHLY’s main shareholder, Aker ASA.
CORPORATE GOVERNANCE
PHILLY SHIPYARD - ANNUAL REPORT 2024 62
CORPORATE GOVERNANCE
PHLY does not have any other active Board committees at this time. In particular, PHLY does not have a remuneration committee because all members of the Board are independent of PHLY’s executive personnel.
PHLY has prepared guidelines designed to ensure that members of the Board and executive management notify the Board of any direct or indirect stake they may have in agreements entered into by the Company. The Board evaluates its own performance and expertise once a year.
Risk management and internal control
The Board is to ensure that the Company maintains solid in-house control practices and protocols and appropriate risk management systems tailored to the Company’s business activities. These practices and systems encompass the Company’s guidelines for how it integrates considerations related to stakeholders into its creation of value. PHLY’s policy regarding sustainability and environmental, social, and governance (ESG) is set forth on page 11 of this annual report.
The Board annually reviews the Company’s most important risk areas and internal control systems and procedures, and these risk areas are mentioned in the Board’s report. Through the use of a risk matrix and log, the Board also monitors the key risks related to the Company’s business goals and assesses those risks, taking into account mitigating actions, on a quarterly basis. The issue is further described in notes 1 and 15 to the consolidated accounts.
Audit committee
The audit committee has reviewed the Company’s financial reporting systems, systems for internal control and risk management and had dialogue with PHLY’s auditor. The audit committee has also considered the auditor’s independence. PHLY’s financial policies ensure follow-up of financial risk. Key targets are identified by the Board and management to ensure timely follow-up of currency exposure, interest rate exposure and compliance with covenants. PHLY has prepared an authorization matrix and approval procedures for costs included in PHLY’s governing documents.
FINANCIAL STATEMENT CLOSE PROCESS
PHLY has implemented Aker ASA’s accounting and reporting guidelines which contains requirements and procedures for the preparation of both quarterly and annual reporting. The reporting is done quarterly through PHLY’s reporting and consolidation system. Consolidation and control over the financial statement close process is the CFO’s responsibility. Financial results and cash development are analyzed and compared to the budget by the CEO/general manager and CFO and reported to the Board monthly.
REMUNERATION OF THE BOARD OF DIRECTORS
Board remuneration reflects the Board’s responsibility, expertise, time spent, and the complexity of the business. Remuneration does not depend on PHLY’s financial performance and PHLY does not grant share options to members of its Board. Board members and companies with whom they are associated are not to take on special tasks for the Company beyond their Board appointments unless such assignments are disclosed to the full Board and the remuneration for such additional duties is approved by the Board. Additional information on remuneration paid to Board members for 2024 is presented in note 16 to the consolidated accounts.
REMUNERATION OF EXECUTIVE MANAGEMENT
The Board has adopted guidelines for remuneration of executive management in accordance with section 6-16a of the Norwegian Public Limited Company Act which was originally presented to the annual general meeting in 2021 and approved by the shareholders for a period of four years. The guidelines currently approved by the shareholders are available on the Company’s website.
Salary and other remuneration of the CEO/general manager of PHLY are determined in a Board meeting. The basis of remuneration of executive management has been developed in order to create a system based on performance and retention. The system of reward is designed to contribute to the achievement of good financial results and increase shareholder value. PHLY does not have stock option plans. Further information on remuneration for 2024 for members of the Company’s executive management is presented in note 16 to the consolidated accounts. PHLY’s guidelines for remuneration to executive management are discussed starting on page 36 of this annual report.
The maximum size of any payment under the existing performance-related remuneration program to any executive is linked to the size of the executive’s base salary. The Board prepares and presents a report on remuneration of executive management every year as part of the annual general meeting, in accordance with the Norwegian Public Limited Company Act section 6-16b. This report is subject to the shareholders’ advisory vote only.
INFORMATION AND COMMUNICATIONS
PHLY’s reporting of financial and other information is based on openness and on equal treatment of shareholders, the financial community, and other interested parties. The long-term purpose of PHLY’s investor relations activities has been to ensure PHLY’s access to capital at competitive terms and to ensure shareholders’ correct pricing of shares. These goals are to be accomplished through correct and timely distribution of information that can affect PHLY’s share price. PHLY is also to comply with current rules and market practices, including the requirement of equal treatment.
All stock exchange notifications and press releases are made available on PHLY’s website www.phillyshipyardasa.com; stock PHILLY SHIPYARD - ANNUAL REPORT 2024 63
exchange notices are also available from www.newsweb.oslobors.no. All information that is distributed to shareholders is simultaneously published on PHLY’s website. PHLY’s financial calendar is found on the inside front cover of this annual report and its home page www.phillyshipyardasa.com.# PHLY’s investor relations staff is responsible for maintaining regular contact with PHLY’s shareholders, potential investors, analysts and other financial market stakeholders. The Board is regularly informed about PHLY’s investor relations activities. For more infor- mation regarding PHLY’s guidelines for reporting of financial and other information, see pages 56-58.
TAKEOVERS
PHLY has not produced special principles for how it will act in the event of a takeover bid. However, if a takeover bid occurred the Board would follow the overriding principle of equal treatment for all shareholders. Unless the Board has particular reasons for so doing, the Board will not take steps to prevent or obstruct a takeover bid for PHLY’s business or shares, nor use share issue authorizations or other measures to hinder the progress of the bid, without such actions being approved by a general meeting after the takeover offer has become public knowledge.
AUDITOR
The auditor makes an annual presentation to the Board of a plan for the auditing work for the year. Further, the auditor has provided the Board with a written confirmation that the requirement of independence is met. The auditor participates in the Board meet- ing that deals with the annual accounts, and the auditor has reviewed PHLY’s internal control with the Board. At these meetings, the auditor reviews any material changes to PHLY’s accounting principles, comments on any material estimated accounting figures and reports all matters on which there have been disagreement between the auditor and PHLY’s executive personnel. Once a year a meeting is held between the auditor and the Board, at which no representatives of execu- tive management are present. In addition to the presentations to the full Board, the audi- tor is present at all quarterly audit committee meetings which occur throughout the year and presents both its preliminary and final audit findings to the committee during such meetings.
CORPORATE GOVERNANCE
PHILLY SHIPYARD - ANNUAL REPORT 2024
64
KRISTIAN RØKKE
Board Chairman
Kristian Røkke (b. 1983) is Chief Executive Officer of Aker Horizons AS, an investment company dedicated to creating value and reducing emissions from renewable energy and decarbonization technologies. Mr. Røkke has previously been Chief Investment Officer of Aker ASA and has extensive experience from operations and M&A. Mr. Røkke is Chair of the board of Mainstream Renewable Power and Aker Carbon Capture AS, and a Director of TRG Holding AS. Mr. Røkke has an MBA from The Wharton School, University of Pennsylvania. Mr. Røkke holds both Nor- wegian and American citizenships. Mr. Røkke owns no shares in the company and has no stock options. Mr. Røkke has been elected for the period 2022-2024.
JAN PETTER HAGEN
Board Member
Jan Petter Hagen (b. 1965) is Managing Part- ner in the advisory firm Converto AS. Before joining Converto in 2017, Mr. Hagen held the position as Director of Business Transforma- tion in Rolls-Royce Marine. Mr. Hagen also served as CFO in Stokke, a high-end, global, well-recognized brand in the children prod- uct segment from 2009-2014. Mr. Hagen has previously held a variety of executive positions in Aker Yards, Offshore & Special- ized Vessels, including Senior Vice President Finance and Senior Vice President Shipbuild- ing. Mr. Hagen also has experience from the oil and gas industry. Mr. Hagen’s current board positions include inter alia Brattvaag Electro and Peil. Mr. Hagen holds a MSc in Energy Economics and Management and a Bachelor of Science in Business Administra- tion from Norwegian Business School BI in Oslo. Mr. Hagen owns no shares in the com- pany and has no stock options. Mr. Hagen has been elected for the period 2022-2024.
ELIN KARFJELL
Board Member
Elin Karfjell (b. 1965) has experience as EVP Property Management and Development of Statsbygg, a Norwegian government agency that manages central parts of the real estate portfolio of the government of Norway, where she previously held the position of CFO. Prior to that, Ms. Karfjell was CEO of Atelika AS and Fabi Group and Director of Finance and Administra- tion of Atea AS. Ms. Karfjell is a former partner at Ernst & Young AS. Ms. Karfjell joined Ernst & Young AS in 2002. Prior to this, Ms. Karfjell held various positions including partner at Arthur Andersen. At Ernst & Young/Arthur Andersen, Ms. Karfjell held various leading positions, both within advisory and audit, and Ms. Karfjell has experience from a broad specter of industries. Ms. Karfjell is also a Board member of North Energy ASA, DNO ASA and Contesto AS. Pre- viously, Ms. Karfjell was a Board member of Hent AS, Sevan Drilling Ltd., Norse Energy Corporation ASA, Aktiv Kapital ASA and Aker Floating Production ASA. Ms. Karfjell is a state authorized public accountant. Ms. Karfjell has a Bachelor of Science in Accounting from Okon- omisk College (Oslo Met) and a higher degree in accounting and auditing from the Norwegian School of Economics and Business Administra- tion (NHH). Ms. Karfjell is a Norwegian citizen. Ms. Karfjell holds 1,200 shares in the company and has no stock options. Ms. Karfjell has been elected for the period 2023-2025. Ms. Karfjell serves as an independent director.
Presentation of the Board of Directors
THE BOARD OF DIRECTORS
PHILLY SHIPYARD - ANNUAL REPORT 2024
65
SUSAN HAYMAN
Board Member
Susan Hayman (b. 1958) has held senior positions in both domestic and international maritime transportation companies includ- ing Foss Maritime Company, APL Ltd. and Matson Navigation. Ms. Hayman is a grad- uate of the United States Merchant Marine Academy and received an MBA from Harvard Business School. Ms. Hayman has served on several boards and committees, including: American Petroleum Institute (API) Marine Committee, Ship Operations Cooperative Program (SOCP), Chamber of Shipping of America (CSA), American Waterways Opera- tors (AWO), Maritime Transportation System Advisory Committee (MTSNAC), and the U.S. Merchant Marine Academy Board of Visitors. Ms. Hayman is a U.S. citizen. Ms. Hayman owns no shares in the company and has no stock options. Ms. Hayman has been elected for the period 2023-2025. Ms. Hayman serves as an independent director.
THE BOARD OF DIRECTORS
PHILLY SHIPYARD - ANNUAL REPORT 2024
66
THE MANAGEMENT TEAM
KRISTINE DAMLI
Vice President
Kristine Damli (b. 1990) is Vice President of Philly Shipyard ASA. In addition to this responsibility, Ms. Damli serves as Senior Controller for Aker ASA. Prior to joining Aker ASA in 2022, Ms. Damli worked for six years in PricewaterhouseCoopers. Ms. Damli holds an MSc in Economics and Business Adminis- tration and an MSc in Accounting and Audit- ing from The Norwegian School of Economics (NHH). Ms. Damli lives in Oslo, Norway. Ms. Damli is a Norwegian citizen. As of 1 Febru- ary 2025, Ms. Damli holds zero shares in the company and has no stock options.
STEINAR NERBØVIK
President and CEO
Steinar Nerbøvik (b. 1961) was appointed President and Chief Executive Officer of Philly Shipyard ASA and Philly Shipyard, Inc. in November 2014 after serving as Manag- ing Director since April 2014. Previously, Mr. Nerbøvik served as SVP Operations from October 2013. Prior to that, Mr. Nerbøvik served as SVP Yard Director for Norwegian Shipyard Vard Langsten (former Aker Yards and STX OSV Langsten), a leading provider of sophisticated offshore support vessels. Mr. Nerbøvik first joined Philly Shipyard in 2003 as Vice President Projects. Mr. Nerbøvik has held other management positions as com- bined Design Manager and Project Manager at Aker Langsten from 1991-2003. Mr. Ner- bøvik holds a Master of Science in Ship Naval Engineering from the Norwegian Institute of Technology (NTNU) in Trondheim, Norway. Mr. Nerbøvik lives in Wilmington, DE, USA. Mr. Nerbøvik is a U.S. and Norwegian citizen. As of 1 February 2025, Mr. Nerbøvik holds 1,000 shares in the company and has no stock options.
JEFFREY THEISEN
Chief Financial Officer
Jeffrey Theisen (b. 1968) rejoined Philly Ship- yard ASA as Chief Financial Officer in Sep- tember 2020. Mr. Theisen previously served as CFO from 2007-2015. Mr. Theisen has over 30 years of experience in financial and strategic planning, organizational leader- ship, growth and expansion strategies, debt and equity financing, investor and banking relations, and budgeting and cost account- ing. Mr. Theisen has held finance roles with Arthur Andersen, The Regulus Group, Philly Shipyard and most recently, People 2.0. Mr. Theisen holds a Bachelor of Science in Accounting from Villanova University and is a certified public accountant in the state of Pennsylvania. Mr. Theisen lives in Blue Bell, PA, USA. Mr. Theisen is a U.S. citizen. As of 1 February 2025, Mr. Theisen holds zero shares in the company and has no stock options.
Presentation of the Management Team
PHILLY SHIPYARD - ANNUAL REPORT 2024
67
DISCLAIMER
This annual report includes and is based, inter alia, on forward-looking information and state- ments that are subject to risks and uncertain- ties that could cause actual results to differ. Such forward-looking information and state- ments are based on current expectations, esti- mates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Philly Shipyard ASA and its subsidiaries and affiliates (the “Philly Shipyard Group”) lines of business. These expectations, estimates, and projections are generally identifiable by state- ments containing words such as “expects,” “believes,” “estimates,” “anticipates,” “intends,” or similar expressions. Although Philly Ship- yard ASA believes that its expectations and the information in this annual report were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this annual report.Neither Philly Shipyard ASA nor any other company within the Philly Shipyard Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the annual report, and neither Philly Shipyard ASA, any other company within the Philly Shipyard Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the annual report. Philly Shipyard ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the annual report, other than what is required by law. The Philly Shipyard Group consists of various legally independent entities, constituting their own separate identities. Philly Shipyard is used as the common brand or trademark for most of these entities. In this annual report we may sometimes use the “Company,” “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. This report does not constitute an offer of any securities for sale.
Philly Shipyard ASA
Vika Atrium, Munkedamsveien 45, NO-0250 Oslo, Norway
Tel: +47 23 11 91 00; Fax: +47 23 11 91 01
website: www.phillyshipyardasa.com
email: [email protected]
Photos/illustrations: All photos courtesy of: Hanwha Philly Shipyard, Inc.
Design/production: www.report.no
COMPANY INFORMATION
Philly Shipyard ASA
Annual Report 2024 © 2025 Philly Shipyard All rights reserved. www.phillyshipyardasa.com
| 2024-01-01 | 2024-12-31 | 2023-01-01 | 2023-12-31 | 2022-12-31 | 2023-12-31 | 2024-12-31 | |
|---|---|---|---|---|---|---|---|
| ifrs-full:IssuedCapitalMember | |||||||
| ifrs-full:SharePremiumMember | |||||||
| ifrs-full:TreasurySharesMember | |||||||
| ifrs-full:OtherReservesMember | |||||||
| 2022-12-31 | 549300HMTSHZZD4YR890 | ||||||
| 2023-12-31 | 549300HMTSHZZD4YR890 | ||||||
| 2024-12-31 | 549300HMTSHZZD4YR890 | ||||||
| ifrs-full:IssuedCapitalMember | 549300HMTSHZZD4YR890 | 549300HMTSHZZD4YR890 | |||||
| ifrs-full:SharePremiumMember | 549300HMTSHZZD4YR890 | 549300HMTSHZZD4YR890 | |||||
| ifrs-full:TreasurySharesMember | 549300HMTSHZZD4YR890 | 549300HMTSHZZD4YR890 | |||||
| ifrs-full:OtherReservesMember | 549300HMTSHZZD4YR890 | 549300HMTSHZZD4YR890 | 549300HMTSHZZD4YR890 | ||||
| iso4217:USD | |||||||
| xbrli:shares |