Aker Philadelphia Shipyard

Annual report 2009

In review

4 Highlights
5 Key figures
7 Goals and strategies
8 Vision and values
10 Letter from the President & CEO

The business

13 Our business areas
14 Aker Philadelphia Shipyard
18 Corporate responsibility
20 Health, safety, and environment
21 People and development

Performance 2009

24 Board of Directors' report
30 Consolidated accounts
51 Parent company accounts
58 Auditor's report
60 Shares and shareholder matters

Our organization and governance

64 Corporate governance
67 Presentation of the Board of Directors
68 Presentation of the Management Team
70 Company information

In review
Company overview

History

1997

Founded by the public-private partnership consisting of U.S. governmental agencies and the Kvaerner Shipbuilding Division

1998

Construction of the production facility and workforce training

2000

Began construction of the first two container vessels (CVs)

2002

Matson agreed to purchase the two CVs

2003

First CV delivered

2004

Second CV delivered

2005

Matson agreed to purchase two additional CVs
Third CV delivered
Aker American Shipping ASA (AKASA) formed and listed on Oslo Bors
Construction program of ten product tankers (PTs) initiated

2006

Fourth CV delivered

2007

First three PTs delivered
Order of additional two PTs for later conversion to shuttle tankers
Split of AKASA's shipbuilding and ship owning operations and listing of AKPS on Oslo Axess

2008

Fourth and fifth PTs delivered
Graduation of the first three apprentice classes
Celebrated the ten year anniversary of the shipyard
First dividend paid to shareholders

2009

Sixth, seventh and eighth PTs delivered
Finalized settlement agreement with American Shipping Company and Overseas Shipholding Group
Service Awards initiated for employees with five and ten years of service

This is Aker Philadelphia Shipyard

Aker Philadelphia Shipyard is a leading U.S. commercial shipyard constructing vessels for operation in the Jones Act market (trade between U.S. ports). It possesses a state-of-the-art shipbuilding facility and has earned a reputation as the preferred provider of ocean-going merchant vessels with a track record of delivering quality ships.

Aker Philadelphia Shipyard ASA is situated in Oslo, Norway with an operating subsidiary in Philadelphia, Pennsylvania, USA. The company constructs merchant vessels for operation in the U.S. Jones Act market. Its customers for the current series of vessels under construction are American Shipping Company ASA and Overseas Shipholding Group, Inc.

Aker Philadelphia Shipyard ASA was listed on Oslo Axess in December 2007. Converto Capital Fund AS, an investment fund controlled by Aker ASA, is the majority shareholder, holding 50.3% of the shares.

Elements contributing to success:

State-of-the-art shipyard with modern equipment
Access to global shipbuilding expertise through an agreement with Hyundai Mipo Dockyard
Order book with four tankers on order and options for four additional tankers
A solid track record demonstrated by the delivery of twelve quality vessels (four containerships, eight product tankers)
Construction period financing in place with a credit line of USD 150 million
Skilled workforce consisting of direct and contracted employees

Aker Philadelphia Shipyard annual report 2009

In review

Highlights

Highlights 2009

Financial calendar 2010

8 April
Annual General Meeting
29 April
1st quarter results 2010
6 August
2nd quarter results 2010
27 October
3rd quarter results 2010

Successful delivery of three additional product tankers

The Overseas Boston, Overseas Nikiski and Overseas Cascade were delivered in February, June and December, respectively.

Finalized settlement agreement with American Shipping Company and Overseas Shipholding Group

Agreement modified certain aspects of the parties' commercial arrangements and settled all outstanding commercial disputes amongst the companies, including the dismissal with prejudice of all claims in the arbitration with AMSC and OSG. The settlement resolved certain issues facing AKPS, including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program for AMSC and OSG, and terminated the exclusivity agreements among AKPS, AMSC and OSG, providing AKPS complete flexibility to build tankers for other parties.

Financial performance

Continued positive cash flows and EBITDA (earnings before interest, taxes, depreciation, and amortization) margin growth.

Reduced injury rates

Due to an increased focus on safety, AKPS reduced lost time injuries by 14% and eye injuries by 62%.

Aker Philadelphia Shipyard annual report 2009

In review
Key figures

Key figures 2009

Order Reserve and Income Statement Items		Actual 2009	Actual 2008
Order backlog as of 31 December	USD million	246.7	499.9
Operating revenues	USD million	226.7	285.0
EBITDA	USD million	13.4	16.2
EBITDA-margin	Percent	5.9%	5.7%
Loss for the year	USD million	(4.4)	(1.8)
Cash Flow
Cash flow from/(used in) operating activities	USD million	88.7	(73.1)
Cash and cash equivalents as of 31 December	USD million	36.2	23.6
Statement of Financial Position
Interest-bearing debt	USD million	81.3	153.9
Total assets	USD million	216.1	295.4
Equity ratio	Percent	40.4%	31.1%
The AKPS Share
Share price as of 31 December	Norwegian Kroner	6.9	54.0
Dividend paid per share	Norwegian Kroner	0.0	2.5
Employees
Number of employees as of 31 December	Employees	656	700
HSE
H-value (accidents per million work hours)	Accidents	6.2	7.1
Hours worked	Work hours	1 384 847	1 450 768

Aker Philadelphia Shipyard annual report 2009

MAX LOAD 2 MTON
IMG
HOST1 MAX LOAD 550 LBS
HOST2 MAX LOAD 550 LBS

In review
Goals and strategies

Goals and strategies

Be the premier provider of merchant vessels in the U.S. Jones Act market

Zero Incidents

We will embrace safety as our first core value
We will never compromise safety
We will communicate our safety goals and objectives
We will seek advice on best practices around us, within the Aker group and other parties who can help us improve workplace safety

Increased Productivity

We have established and foster a culture of continuous improvement
We will measure performance and improvements week to week for everything we do
We can always strive to be better and will never accept that things are good enough
We will create accountability at all levels of the organization for our performance

Optimize Through-put

We will optimize the use of our best-in-U.S. facility for production of ocean-going merchant vessels
We will continue to take advantage of the shipbuilding expertise of our partners
We will focus our resources where we have the best competitive advantage and create the most value
We will apply innovation and creativity to every step of the shipbuilding process

Market Leader

We will evaluate existing and new market segments
We will evaluate best in class designs from world class shipbuilders
We will target taking a leading position within attractive market segments by weighing short-term benefits versus long-term opportunities and value creation

Aker Philadelphia Shipyard annual report 2009

In review

Vision and values

Unity and commitment

Aker Philadelphia Shipyard's business activities build on our six corporate values.

Our corporate values support and guide day-to-day priorities and decision-making. Acting in accordance with our values promotes sound attitudes and performance every day. Aker Philadelphia Shipyard's corporate values commit the company and reinforce the bonds among company employees.

Our employees' dedication and know-how allow Aker Philadelphia Shipyard to deliver on its commitments to customers, employees, and the communities in which we work. An effective corporate culture must remain dynamic and responsive. Thus, it is with a combination of humility and pragmatism that Aker Philadelphia Shipyard works to strengthen and cultivate its values.

"Our corporate values support and guide day-to-day priorities and decision-making."

Our Values in Context

We maintain an unrelenting goal of "zero incidents" in HSE matters
We work safely in a manner that protects and promotes the health and well-being of our employees and the environment
We obey HSE guidelines and rules in recognition that they are for the health and benefit of employees, and are not intended as restrictive or counterproductive
Every employee works proactively to improve on his/her performance

HSE mindset

We take personal responsibility for HSE because we care

We build customer trust by delivering projects on time and on budget, and at the agreed levels of quality

We recognize that every employee at Aker Philadelphia Shipyard is in a customer-supplier relationship
We know our customer's business and we are a flexible, competent and reliable partner at every project phase

We deliver on time and within budget, to our customer's satisfaction
On all levels of a project, it is the final result that counts, and we strive to deliver more than our stakeholders expect and do it "right the first time"
We make optimal use of resources and adhere to proven, defined processes in order to produce a superior product
We are proactive and energetic, and we strive to generate a return on the assets entrusted to us by our shareholders

Aker Philadelphia Shipyard annual report 2009

In review
Vision and values

We recognize our roles and responsibilities, take ownership, and accept the consequences of our actions
We act with a sense of ownership in our workplace
We encourage an environment of risk taking within the context of accountability
We are professional and proactive, and discover problems early on

We are committed to honest and sincere communications among all employees, creating an environment in which ideas are fostered and shared
We speak our opinion and fight for our ideas, but once the relevant decisions are made, we work together and focus all our energies on execution
We convey information so that everyone in our company can better understand our business, our objectives and our performance
We deal with errors and improvements frankly and constructively

We believe a teamwork relationship among a diverse collection of employees is the way to productivity and continuous improvement
We work in an inclusive environment that embraces change, new ideas, respect for the individual and equal opportunity to succeed
We are team players, willing to share and utilize common knowledge
We empower people and provide opportunities for personal development in an energetic and challenging atmosphere

Aker Philadelphia Shipyard annual report 2009

In review

Letter from the President and CEO

What is your 50% of the solution?

Aker Philadelphia Shipyard annual report 2009

In review

Letter from the President and CEO

Living our values

For most companies, 2009 was a year of economic challenges and uncertainty, and Aker Philadelphia Shipyard was no different. We move forward by establishing new goals for 2010, with optimism for success, and a strong backbone to guide us – the APSI core values. Here in the shipyard, we are committed to living them everyday.

We entered 2009 with a strong focus on continuous improvement, and through various achievements and lessons learned, we transformed into a better, more cost effective shipbuilding operation. Every initiative set forth and resulting achievement was due in part to a strengthened focus on our core values. In February, NB 010, the Overseas Boston, was delivered; followed by NB 011, the Overseas Nikiski, in June; and NB 012, the Overseas Cascade, in December.

Contributing to these timely deliveries was a heightened awareness of our HSE mindset. Across the yard, it was evident that our employees were on board, and the results speak for themselves. In 2009, we set a goal of reducing lost workday injuries by 15%, and actually reduced that number by 35%. We also created a new initiative to reduce eye injuries by 40%, and through a strong focus and steady follow up, that rate dropped 62%.

In combination with the new safety campaign, all employees received a new type of safety training, called ZIP, short for Zero Incident Process. The program introduced employees to a new way of thinking about safety, and the messages have certainly made a positive impact.

Along with this effort, we made a commitment to improve open and direct dialogue within the shipyard last year. This included overhauling the suggestion program and increasing our newsletters and other written communications. I also held yard-wide meetings for all employees to keep messages strong and all of our employees and subcontractors on the same page. The new and improved suggestion program has been a useful tool in improving two-way communication. Over 300 suggestions were submitted by employees last year and over 70 improvements were implemented as a result.

Relative to customer drive and commercial awareness, Aker Philadelphia Shipyard employees embraced Project Intrepid; a project put into place last year to lower ship costs and help to stay competitive in the market. I'm happy to

announce that through these efforts, we were able to trim ship costs in 2009, keeping the shipyard attractive in a volatile market, all while maintaining the highest level of quality which our customers have recognized on many occasions.

We have taken hands-on management to a new level, and I'm pleased to say that, at the end of last year, we finalized commercial agreements with American Shipping Company, Overseas Shipholding Group, and Aker. The agreements modified certain aspects of their commercial arrangements, settled all of the outstanding commercial disputes between the companies, and secured the proper financing for our build program through NB 016. With this resolution in place, we are better able to concentrate on the future.

We have many goals for 2010, with our main challenge being to expand our backlog and maintain the continuity of our operations. We have made the required operational preparations to build NB 017 and 018 as product tankers and are working diligently to secure orders/financing for these vessels so we can proceed with construction. The longer term market is promising although the timing of new orders is not certain. Interest continues to build for the shipyard to construct containerships and other dry cargo vessels and there is interest in specialized vessels for tasks like offshore wind turbine installation. Aker Philadelphia Shipyard has proven that it can deliver an excellent product at a competitive price and that continues to make us the preferred partner if these projects come to fruition.

Internally, we continue on our efforts for continuous improvement. Project Intrepid yielded great results in its first year and I look forward to what the outcome will be in 2010 as we continue our efforts to lower ship costs and improve our operations. Although our safety culture has shown significant improvement we will work diligently to improve the HSE mindset until we reach our goal of zero incidents.

Also internally, we will continue to

develop actions and implement the top items cultivated from the valuable feedback of our employee survey. The survey was initially given in 2008, with actions implemented in 2009, and a whole new set of actions are currently in place for 2010, most of which coordinate with overall company goals. We will continue to measure our improvement every year and develop new actions to always understand the pulse of our employees and be at the forefront for change.

Our success depends largely on the people and teams of Aker Philadelphia Shipyard. Fortunately, we have some of the best talent around, with solid shipbuilding know-how and seamless teamwork. In 2009, we presented the first ever President's Award to the team that displayed HSE excellence. In conjunction, we awarded a series of HSE achievement awards, to recognize teams and individuals who have excelled in each category – health, safety and environment. We will hold these nominations again in 2010 to support a shipyard whose people work well in teams and look out for the safety of others, both at the shipyard and beyond our gates.

2010 brings some bold challenges for us and we will work tirelessly to meet the expectations of our stakeholders, customers, employees and the community.

There is a renewed energy in the yard full of employees who understand that the best way to be successful is to stay focused. I'm continuously inspired by how engaged everyone is, teams who support APSI's goals and live the core values. Together, we have what it takes to face the challenges head on.

James H. Miller
President and CEO
Aker Philadelphia Shipyard ASA

Aker Philadelphia Shipyard annual report 2009

The business

Our business areas

Building the future
Page 14

Demonstrating corporate responsibility
Page 18

Taking personal responsibility for HSE
Page 20

Driving performance
Page 21

Aker Philadelphia Shipyard annual report 2009 13

The business

Aker Philadelphia Shipyard

Building the future

Aker Philadelphia Shipyard, Inc. (APSI) is a leading U.S. commercial shipyard constructing vessels for operation in the Jones Act market. It possesses a state-of-the-art shipbuilding facility and has earned a reputation as the preferred provider of ocean-going merchant vessels with a track record of delivering quality ships. APSI has its headquarters in Philadelphia, PA USA. APSI's parent, Aker Philadelphia Shipyard ASA, is headquartered in Oslo, Norway.

Highlights 2009

Successful delivery of three additional product tankers
Finalized settlement agreement with American Shipping Company and Overseas Shipholding Group
Financial performance
Reduced injury rates

In 2009 the shipyard delivered three additional product tankers, the Overseas Boston, the Overseas Nikiski, and the Overseas Cascade. The shipyard has a firm order backlog of four product tankers, with options for an additional four.

On 11 December 2009, Aker Philadelphia Shipyard ASA and its subsidiaries (referred to herein as AKPS or the company) entered into a settlement agreement and certain other agreements with Overseas Shipholding Group, Inc. (together with its subsidiaries, referred to herein as OSG), American Shipping Company ASA (formerly named Aker American Shipping ASA) (together with its subsidiaries, referred to herein as AMSC), Aker ASA and various related parties to modify certain aspects of their commercial arrangements and settle all of the outstanding commercial disputes among them, including the dismissal with prejudice of all claims in the arbitration with AMSC and OSG. The settlement resolved certain issues facing AKPS, including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program originally announced in 2005, and terminated the exclusivity agreements among AKPS, AMSC and OSG, providing AKPS complete flexibility to build tankers for other parties.

A proven track record and deliveries on time and within budget uphold APSI's reputation as a leading commercial shipyard in the U.S. Jones Act industry. APSI had operating revenues of USD 226.7 million for the year ended 2009 and 656 employees at year end.

Competitive Advantages

A major competitive advantage of Aker Philadelphia Shipyard is its state-of-the-art facilities. Constructed new from the ground up about eleven years ago, the shipyard possesses modern and advanced equipment, and is continuously improving and updating machines and processes.

The exclusive partnership with Hyundai Mipo Dockyard (HMD) is a recognizable advantage as well, allowing the shipyard

(Illustrative map)

U.S. Jones Act

U.S. coastwise law, commonly referred to as the Jones Act, requires all commercial vessels transporting merchandise between ports in the United States to be built, owned, operated and manned by U.S. citizens and to be registered under the U.S. flag. Commonly referred to as the Jones Act market, it encompasses all water-borne transportation between U.S. ports, including between the mainland U.S. and non-contiguous areas of Alaska, Hawaii and Puerto Rico, as well as shuttle tankers in the Gulf of Mexico.

Aker Philadelphia Shipyard annual report 2009

Puerto Rico

The business

Aker Philadelphia Shipyard

to share ideas and know-how with the world's leading shipbuilder. HMD provides Aker Philadelphia Shipyard with exclusive rights to each vessel's technical package, which includes the basic design, production drawings, test procedures, and procurement. Aker Philadelphia Shipyard focuses on complete construction of the hull through the grand blocks, final outfitting, and testing and commissioning.

Another key advantage is APSI's workforce, including subcontractors and direct employees. With a workforce nearing 1,200, the yard has a vast array of talent. APSI is constantly refining recruiting strategies to shape the needs of the shipyard. APSI works diligently at recruiting, training and retaining employees that make a measurable difference, as well as modifying and updating procedures and policies to attract the best employees. In addition to recruiting the best workforce, APSI also focuses on developing the next generation of shipbuilders through its Apprentice Program. Since its inception five years ago, the program has grown to include over 100 apprentices, who are likely to be the future of shipbuilding.

APSI advanced its safety culture during 2009 through continued education and new initiatives. The shipyard operates on a strict safety code and a "zero incidents" mindset. To achieve these goals APSI takes a cooperative approach with both union management and the Department of Labor's Occupational Safety and Health Administration (OSHA). During 2009, APSI completed all first year requirements under its partnership agreement with OSHA and is on track to complete the requirements for the two year program. The shipyard experienced an improvement in both its number of accidents and the incident rate during 2009 but strives to continue to improve in this area.

Risks

APSI faces a number of challenges to sustaining the success it has achieved in the last few years. Among these challenges are increasing vessel throughput; achieving the anticipated learning curve gains; maintaining an adequate labor force; and managing its supply chain in challenging financial times.

A culture of continuous improvement exists at Aker Philadelphia Shipyard. The impressive learning curve that was achieved during the series of container ships from 2003-2006 has been extended to the product tankers. Over the first eight product tankers, productivity has

increased almost 35%. APSI remains vigilant for opportunities to improve our processes and performance.

APSI leverages the knowledge and purchasing power of Hyundai Mipo Dockyard to secure the equipment needed for its shipbuilding projects. APSI has also committed to developing positive relationships with the local supplier network to facilitate uninterrupted production. APSI procures material from domestic and international vendors and thus supply contracts are denominated in several currencies; primarily the Korean Won, Euro and Norwegian Kroner. In order to reduce its exposure to currency fluctuation, APSI has entered into currency securing contracts with maturities of 0-12 months, but APSI remains at some risk if the USD declines against other world currencies.

APSI is also dependent on the Jones Act to ensure demand for its products. APSI considers it unlikely for there to be unfavorable modifications to the Jones Act based on its broad political support and long history of stability.

If APSI does not continue to build vessels after the current 12-ship series then

the company will incur significant expenses and it would be very challenging for the company to continue operations after the delivery of the last ship. For a more complete discussion of risks, please refer to the Board of Directors' report and note 1 to the consolidated accounts.

Future Market Opportunities

The success of the product tanker and containership programs has earned APSI

Aker Philadelphia Shipyard annual report 2009

The business

Aker Philadelphia Shipyard

12 Quality Ships Delivered to Date

Aker Philadelphia Shipyard annual report 2009

The business

Aker Philadelphia Shipyard

the experience and reputation to seize future market opportunities. With a proven design and an established learning curve, APSI can leverage the MT-46 product tanker program into multiple segments. Replacement of additional product tankers, as the phase-out required by the Oil Pollution Act of 1990 (OPA 90) reaches its final stages, offers an opportunity for orderbook expansion. Shuttle tankers for the U.S. Gulf of Mexico also represent opportunity for expansion. Two of the current series of twelve tankers will be utilized as the first shuttle tankers to operate in the Jones Act market. APSI has developed a Generation II shuttle tanker design based on the MT-46 product tankers under construction. This design will offer oil companies drilling in the deep water Gulf of Mexico a flexible alternative to pipelines.

The fleet of more than 50 dry cargo vessels (containerships and roll-on/roll-off) in the Jones Act market have an average age of over 20 years. There are replacement plans for these vessels under development and APSI remains engaged with owners and operators. There are other possible opportunities for orderbook expansion especially in the domestic short-sea service or large barge market.

Due to the downturn in the U.S. economy, the immediate market for newbuilding contracts has become very challenging, as is the case for international shipbuilding. Aker Philadelphia Shipyard will continue to strategically evaluate each opportunity to expand its orderbook through 2011 and beyond.

2009 Operation

During 2009 three product tankers were delivered. At the end of 2009, four additional product tankers were in various phases of construction, with the next delivery scheduled to be completed in Spring 2010. The four vessels under construction represent the total backlog of vessels, with a total contract value of approximately USD 247 million. Delivery of the fourth vessel is planned for the first quarter of 2011. There is an option agreement in place with American Shipping Company for four additional vessels, which, if all four options are exercised, would utilize the yard's capacity until mid-2012.

APSI realized operating revenues of USD 226.7 million and EBITDA of USD 13.4 million in 2009, compared with USD 285.0 million and USD 16.2 million in 2008. Revenues are recognized according to the percentage of completion method.

Net loss for 2009 was USD 4.4 million. Cash flow from operations came to USD 88.7 million. No new equity was invested in AKPS in 2009.

Aker Philadelphia Shipyard made USD 3.4 million in capital expenditures to enhance its production facilities during 2009.

Goals for 2010

APSI will focus on expanding its order backlog. APSI will continue to improve productivity and safety while increasing throughput during 2010. Three additional product tankers are expected to be delivered during 2010. An increase in productivity of over 40% compared to the first product tanker is expected to be achieved before year end.

Outlook 2010

APSI will strive to continue to gain experience and cement its reputation as the preferred partner for Jones Act merchant vessels, having delivered more large merchant ships than all other active U.S. shipyards combined. Although current financial conditions are challenging, strong demand fundamentals exist in the Jones Act market across a variety of vessel types. For a more complete discussion of the outlook for 2010, please refer to the Board of Directors' report.

Total Injuries

Lost Time Incident Rate

Aker Philadelphia Shipyard annual report 2009

The business

Corporate responsibility

Demonstrating corporate responsibility

Aker Philadelphia Shipyard's overriding corporate responsibility is concern for the communities of which we are a part. We strive to provide products and services in an environmentally sound, ethical, and socially responsible manner.

The way in which we achieve growth and profitability is as important as the achievements themselves. Aker Philadelphia Shipyard intends to be recognized for promoting sustainability and responsible operations that are driven by both financial performance and social responsibility. We meet the needs of today's customers without harming future generations.

Our corporate values and ethical guidelines make responsibility an integral facet of our business. Constant awareness and responsive actions by Aker Philadelphia Shipyard instill confidence among employees, investors, customers, suppliers, cooperation partners, and the communities of which we are a part (see "Our Commitment" on right). Dedication, know-how, and performance make our company the preferred partner.

Aker Philadelphia Shipyard is committed to good corporate citizenship and operates according to fundamental standards for workplace safety, ethical conduct, and sound business practices.

We are inspired by internationally promulgated standards and guidelines such as the UN's Global Compact, the Global Reporting Initiative™ (GRI), and OECD guidelines. The following five key points summarize how Aker Philadelphia Shipyard daily implements its corporate social responsibility policy.

Expertise: On a daily basis, we share know-how and experience with our suppliers and employees. We continually hone our state-of-the-art expertise and find new, effective solutions in various operations and implement them in deliveries.
People: A competent, motivated workforce, working towards common goals, is key. Diversity with regard to race, gender, culture, religion, and ethnicity makes us stronger and more adaptive. We help each employee reach his or her full potential — and take personal responsibility for health, safety, and the environment. Cooperation, quality-consciousness, and mutual respect further Aker Philadelphia Shipyard's commitment to protect individual rights and the interests of the company's stakeholders, our local communities, and the environment.
Environment: We work systematically to reduce emissions and minimize environmental stress — at Aker Philadelphia Shipyard workplaces and in our products and services. The greatest long-term service we can perform for the environment is to develop and deliver technologies, products, and solutions that are consistent with sustainable development.
Integrity: Success at Aker Philadelphia Shipyard depends on a reliable, well-functioning business climate. Our six core values help ensure integrity and adherence to high ethical standards. Potential ethical dilemmas are discussed in regularly occurring forums, sharpening awareness of our guidelines and generating improvements. We never stop building a culture that values honesty, openness, and transparency. We are trustworthy and reliable.
Society: Through profitable investments, Aker Philadelphia Shipyard establishes good relations with the communities in which we operate. Safe workplaces at our projects and the desirable economic ripple effects they cause are important contributors to the development of local and regional businesses. Aker Philadelphia Shipyard wants to be a good neighbor.

Aker Philadelphia Shipyard annual report 2009

The business
Corporate responsibility

"The way in which we achieve growth and profitability is as important as the achievements themselves."

Our commitment

Aker Philadelphia Shipyard makes the following commitments to its customers, shareholders, employees, and the communities in which we operate.

Our customers can expect

Outstanding health, safety, and environmental performance
To be listened to and understood
Competitive, on-time quality deliveries
An open, long-term and mutually beneficial relationship
High ethical standards and integrity

Our shareholders can expect

To be part of an active and value-creating ownership, full of energy and determination
A decisive management that closely supervises business activities, strives to deliver solid profits and inspires confidence
Transparency — accurate, consistent, and timely presentation of financial and other relevant information
Sound corporate governance

Our employees can expect

A safe and inspiring working environment
Challenging work assignments and opportunities for growth
A working environment in which diversity is appreciated
Competitive compensation, relative to the markets in which they work
To be treated fairly and with respect

The communities in which we operate can expect

Local and regional value creation
Respect for its inhabitants, laws, and culture
Value-adding relationships with local partners, subcontractors, and suppliers
Socially responsible business conduct, integrity, and high ethical standards
Openness — an open agenda, transparency, and reliability

Aker Philadelphia Shipyard annual report 2009

The business

Health, safety, and environment

Taking personal responsibility for HSE

One dangerous incident is one too many. Aker Philadelphia Shipyard's guiding principle is that all accidents are preventable.

Taking personal responsibility for health, safety, and the environment (HSE) is a core value at Aker Philadelphia Shipyard that commits each and every employee to promote better HSE performance through his or her daily actions.

Attention to health, safety, and the environment — and profitability — are two sides of the same coin. Excellent HSE performance is fundamental for long-term value creation. Outstanding HSE conditions secure competitive advantages, desirable workplaces, and sustained profitability.

This focus on HSE factors powers continuous efforts to stop incidents that can injure people, damage property, harm the environment, or tarnish our reputation.

Ambitious goals

Aker Philadelphia Shipyard's HSE culture is driven by ambitious goals, decisive action, and individual commitment — taking personal responsibility for HSE and demonstrating concern for people, the environment, and the company's stakeholders.

Our overarching goal is zero undesirable incidents that can harm people, the environment, operating equipment, or other property. Although serious accidents regrettably do occur, we refuse to compromise on our HSE zero tolerance goals.

Risk increases considerably when employees' working procedures, safety equipment, or respect for HSE matters do not comply with the strictest standards. Accordingly, information about HSE factors is treated as a top priority in meetings, and backed up by managerial action.

Driving improvement

Aker Philadelphia Shipyard managers drive HSE improvements — and they are regularly assessed as to their demonstrated HSE leadership. Advances take hold via reporting HSE observations, regular follow-up of HSE issues, and the implementation of HSE improvement measures.

An open attitude about HSE performance, dangerous conditions, health hazards, accidents, and near-accidents increases our chances of reaching our HSE goals and helps foster constant improvement. Building an even stronger HSE culture at Aker Philadelphia Shipyard is a responsibility we all share.

Health, safety, and environment (HSE) is a core value at Aker Philadelphia Shipyard.

Excellent HSE performance is fundamental to long-term value creation.

Aker Philadelphia Shipyard annual report 2009

The business
People and development

Teamwork, know-how, and individual dedication spur new levels of performance.

Driving performance

Aker Philadelphia Shipyard's achievements and profitability are generated by our people, who are willing to take on challenges and deliver solutions.

Teamwork, know-how, and skills are the driving forces for enhanced performance and continual business development. Aker Philadelphia Shipyard's corporate values guide the development of our people and the company.

Leadership

Leadership means taking responsibility and showing the way. Aker Philadelphia Shipyard emphasizes clear expectations as to performance, individual responsibility, goal follow-up, and comprehensive feedback. Managers are rewarded for their achievements — and for adherence to the company's values in their work and interactions.

Systematic appraisals of each manager's performance provide snapshots of how the company is run. The performance appraisal process also provides a platform for comparison across organizational levels, industry benchmarks, and best practices. Moreover, performance reviews provide fine-tuned guidance that hones individuals' capabilities. This interactive process also ensures that Aker Philadelphia Shipyard assigns the right person to the right job. Recruitment of managerial talent ready to tackle new and more complex tasks is also a priority.

Our commitment

Aker Philadelphia Shipyard's commitment to our employees: we will maintain a working environment that is safe, tolerant, and fair. Employees are given challenging assignments and ample opportunities for development and growth.

Continuous employee development is vital to the competitiveness of Aker Philadelphia Shipyard. The power of the company's collective know-how reinforces customer confidence and enhances our ability to win new contracts and execute them profitably.

Aker Philadelphia Shipyard annual report 2009

LEGGERS MASH

Performance 2009

24 Board of Directors' report
30 Consolidated accounts:
30 Income statement
31 Statement of financial position
33 Cash flow statement
34 Accounting principles
34 Notes to the accounts

51 Parent company accounts:
51 Income statement
52 Statement of financial position
53 Cash flow statement
54 Accounting principles
54 Notes to the accounts

58 Auditor's report
60 Shares and shareholder matters

Aker Philadelphia Shipyard annual report 2009 23

Performance 2009
Board of Directors' report

Board of Directors' report 2009

Aker Philadelphia Shipyard ASA and its subsidiaries (referred to herein as AKPS or the company) is a leading shipbuilder in the U.S. Jones Act market. During 2009, the shipyard delivered three product tankers, which represented the tenth, eleventh and twelfth new builds to be released since the yard's inception. Additionally, on 11 December 2009, the company entered into a settlement agreement and certain other agreements with Overseas Shipholding Group, Inc. (together with its subsidiaries, referred to herein as OSG), American Shipping Company ASA (formerly named Aker American Shipping ASA) (together with its subsidiaries, referred to herein as AMSC), Aker ASA and various related parties to modify certain aspects of their commercial arrangements and settle all of the outstanding commercial disputes among them, including the dismissal with prejudice of all claims in the arbitration with AMSC and OSG. The settlement resolved certain issues facing AKPS, including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program originally announced in 2005, and terminated the exclusivity agreements among AKPS, AMSC and OSG, providing AKPS complete flexibility to build tankers for other parties.

For the year ended 31 December 2009, AKPS realized operating revenues of USD 226.7 million, a decrease of 20% from 2008 and operating income before interest, taxes, depreciation, and amortization (EBITDA) of USD 13.4 million, a decrease of 17% from the prior year results. The reduction in revenues and EBITDA is primarily driven by certain pricing concessions given to AMSC as part of the settlement and lower production under the tanker project in 2009 than in 2008.

Converto Capital Fund AS (formerly named Aker Capital Fund AS), an investment fund controlled by Aker ASA, is the majority shareholder in Aker Philadelphia Shipyard ASA owning 50.3% of its total outstanding shares as of 31 December 2009. These shares were transferred by Aker ASA to Converto Capital Fund AS as part of a reorganization of Aker ASA's investments consummated in 2009.

Activities

The main entities in the Aker Philadelphia Shipyard ASA Group are the Norwegian holding company, Aker Philadelphia Shipyard ASA, and the U.S. operating subsidiary Aker Philadelphia Shipyard, Inc. (APSI or the shipyard). Aker Philadelphia Shipyard ASA is located in Oslo, Norway, while APSI is located in Philadelphia, Pennsylvania, USA.

As of 31 December 2009, AKPS's workforce consisted of approximately 1,200 people, with an approximate breakdown of 656 direct employees and 544 subcontracted personnel.

AKPS's business strategy for APSI, a leading U.S. commercial shipyard, is to build merchant vessels for operation in the U.S. Jones Act market.

Three of the vessels currently being built by APSI will be sold to single purpose companies, wholly-owned by AMSC. The fourth vessel currently being built by APSI will be sold to OSG. The three vessels to be sold to AMSC's subsidiaries will be bareboat chartered to OSG.

Cost efficient and cost competitive construction of new vessels is critical for the success of AKPS's business model. There are several factors that position AKPS to capitalize on this market: a state-of-the-art shipyard with modern equipment; access to global shipbuilding expertise with Hyundai Mipo Dockyard and its affiliates; and a solid track record through the delivery of four container vessels to Matson Navigation Company and eight product tankers to AMSC and OSG.

The Jones Act market

The Master Agreement with PSDC

APSI currently operates its shipyard under a 99-year lease with the Philadelphia Shipyard Development Corporation (PSDC), a government-sponsored non-profit corporation. A master agreement governs APSI's relationship with PSDC and the various governmental parties that have contributed to the establishment of the shipyard.

Under the master agreement, the governmental parties have provided approximately USD 438 million for the renovation and modernization of the facility and training of the workforce. APSI was required to make certain qualified infrastructure investments totaling USD 135 million, which have been fully satisfied. APSI was also required to match government funding for certain training costs totaling USD 50 million, which has been fulfilled.

The master agreement also requires APSI to employ an average of at least 500 full time employees per year during the period from 1 January 2005 through 31 December 2014. Additionally, if the shipyard fails to employ an average of at least 200 full-time employees during any two consecutive calendar years, the lessor may terminate the shipyard lease. With the current business plan, the shipyard considers it unlikely that it will employ less than an average of 200 full-time employees during two consecutive calendar years as long as there is ongoing shipbuilding activity at the shipyard.

In 1997, Kvaerner ASA and its subsidiary, Kvaerner, Inc., issued parent company guarantees with respect to certain obligations, including the minimum employment guarantee obligation described above. The guarantee from Kvaerner, Inc. has been released. The guarantee from Kvaerner ASA remains in force with Aker Maritime Finance AS (as successor by merger to Kvaerner ASA).

Aker Philadelphia Shipyard annual report 2009

As part of the split of AMSC's shipbuilding and ship-owning operations in December 2007, AKPS has issued a USD 20 million counter guarantee for the benefit of Aker Maritime Finance AS and AMSC with regard to the above-described employment guarantee.

Strategy

AKPS will, through its unique partnerships and series of twelve contracted identical product tankers and options for four additional similar tankers, continue the development of APSI's position as the most efficient shipyard in the U.S. Jones Act market for production of merchant vessels. We expect this powerful resume will facilitate possibilities for profitable construction of vessels within existing and new market segments. AKPS will continue to monitor and evaluate how to derive the maximum benefit from its competitive advantage and market share.

Key events 2009

Three product tankers were delivered in February, June and December 2009, and formally named the Overseas Boston, the Overseas Nikiski and the Overseas Cascade, respectively. By 31 December 2009, construction on the product tanker project reached 74% completion. The four product tankers currently under construction are scheduled to be delivered in the first, second and fourth quarters of 2010 and the first quarter of 2011, respectively. AKPS has a firm commitment for construction financing on the four remaining product tankers under contract with AMSC and OSG, subject to customary terms and conditions.

On 11 December 2009, the company entered into a settlement agreement and certain other agreements with OSG, AMSC, Aker ASA and various related parties to modify certain aspects of their commercial arrangements and settle all of the outstanding commercial disputes among them, including the dismissal with prejudice of all claims in the arbitration with AMSC and OSG. The settlement resolved certain issues facing AKPS, including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program for AMSC originally announced in 2005. As part of the agreements, AMSC sold its rights to purchase two tankers in the twelve ship build program (AKPS NB 012 and 015) to OSG in order to resolve AMSC's previously disclosed challenges to finance these vessels, and AKPS further agreed to pay liquidated damages to OSG in the event of late delivery of these vessels on the terms and conditions defined in the agreements. The first of these two vessels was delivered in December 2009 and the second is expected to be delivered in the fourth quarter of 2010. Also as part of the agreements, exclusivity between AKPS and OSG and between AKPS and AMSC for tanker construction was eliminated, allowing the company to pursue opportunities with any interested parties. In addition, AKPS and AMSC agreed to cancel AMSC's options for tankers beyond AKPS NB 020 (i.e. AKPS NB 021 through 029). AMSC maintains four options with AKPS for product tankers (i.e. AKPS NB 017-020). As part of the settlement agreements, fixed pricing was negotiated on the remaining tankers and AMSC agreed to pay approximately USD 2.6 million for credit enhancements related to the construction financing (ultimately payable to Caterpillar Financial Services Corporation and Aker ASA) and to assign its rights in approximately USD 3.0 million of deposits for long-lead materials to AKPS. Due to the revised pricing, total revenues on the existing shipbuilding contracts with AMSC were reduced by USD 9.7 million.

Review of the annual accounts

AKPS prepares and presents its accounts according to International Financial Reporting Standards (IFRS) as adopted by the European Union.

Aker Philadelphia Shipyard ASA was formed on 16 October 2007 to be the holding company of APSI which owns the shipyard located in Philadelphia, Pennsylvania, USA.

In accordance with IFRS, AKPS is recognizing the last nine tankers of the twelve-tanker order as one single project. As such, revenue and expense are being recognized on a total project basis. As of 31 December 2009, AKPS is approximately 74% complete with the project.

Order backlog

APSI's order backlog was USD 246.7 million as of 31 December 2009. At the end of the year, the order backlog was comprised of remaining work to be performed on the four remaining product tankers in the 12-ship series. The net backlog decrease of USD 253.2 million over 2008 is due to the delivery of three additional vessels and by work completed on the remaining four vessels to be delivered, and the previously noted pricing concessions granted to AMSC as part of the settlement. Furthermore, APSI has an agreement with AMSC for their option to build an additional four product tankers with exercise dates ranging from 2010 to 2011. As previously noted, the number of options granted to AMSC was reduced from thirteen to four as part of the settlement.

Income statement

In 2009, AKPS had revenues of USD 226.7 million compared to USD 285.0 million in 2008. Revenues are recognized according to the percentage of completion method, based primarily on the scope of completed work compared to estimated overall project scope. The recognized revenues in 2009 and 2008 represent revenues related to the product tankers being built for AMSC and OSG.

AKPS's operating income before interest, taxes, depreciation, and amortization (EBITDA), were USD 13.4 million in 2009 compared to USD 16.2 million in 2008. These figures correspond to EBITDA margins of 5.9% and 5.7%, respectively.

Depreciation was USD 7.4 million in 2009 and USD 7.1 million in 2008. In 2009 goodwill was impaired amounting to USD 11.0 million, which the company incurred due to the uncertainty of future orders and cash flows. The Company performed similar procedures to determine if there was any impairment of property, plant and equipment but based on the analysis no impairment has occurred as of 31 December 2009 (see Note 1 of the consolidated financial statements). AKPS's operating loss (EBIT) was USD 5.0 million in 2009, compared to an operating income of USD 9.1 million in 2008.

Net financial items were USD 6.2 million of income in 2009, compared to USD 8.9 million expense in 2008. The positive net financial items in 2009 are primarily attributable to gains on foreign currency forward contracts to economically hedge foreign exchange risk related to the tanker build project and exchange rate gains on cash deposits which are held in Norwegian Kroner (NOK). Both reflected gains are due to the weakening of the U.S. dollar in 2009. These gains will not impact the overall profitability of the nine tanker build project, nor any guidance previously supplied surrounding profitability. Interest cost related to construction financing is capitalized as a cost of the project and will therefore not appear under financial items.

Income tax expense for 2009 was USD 5.6 million, compared to USD 1.9 million in 2008.

In 2009, AKPS's net loss was USD 4.4 million and its basic and diluted loss per

share was USD 0.43. The corresponding figures for 2008 were a net loss of USD 1.8 million and basic and diluted loss per share of USD 0.17. Excluding the goodwill impairment charge net income would have been USD 6.6 million (basic and diluted earnings of USD 0.65 per share).

AKPS's research and development is primarily related to two areas. The most important area is the development of the building methodology and working methods to ensure that APSI takes maximum benefit of the learning curve and produces each grand block and each vessel more efficiently than the previous. There is also work related to development of new vessels, but APSI will not develop its own designs for other vessel types, but rather identify and acquire existing best in class designs and cooperate with the owners of such designs.

Cash flow

The company's cash flow from operations is very dynamic, as it in part depends on payment for construction and delivery settlement for the vessels sold to external customers. Total net cash flow from operating activities in 2009 was USD 88.7 million compared to total net cash flow used in operating activities of USD 73.1 million in 2008. As noted previously, the significant changes year to year are caused by the timing of ship deliveries and the level of completion on vessels.

Net cash flow used in investment activities was USD 3.4 million in 2009 and USD 6.5 million in 2008. These expenditures were primarily for infrastructure improvements and replacements.

Net cash flow used in financing activities was USD 72.6 million in 2009 compared to net cash flow from financing activities of USD 44.8 million in 2008. The changes are caused by the timing of draw-downs on the construction financing and timing of vessel deliveries.

Statement of financial position and liquidity

As of 31 December 2009, AKPS had cash and cash equivalents of USD 36.2 million. The corresponding figure for 2008 was USD 23.6 million. The increase was primarily driven by the timing of financing draw-downs on vessels under construction and customer milestone payments and profit on the tanker project. At year-end 2009, AKPS's net working capital was USD 52.9 million, compared to USD 42.0 million at 31 December 2008.

Current assets as of 31 December 2009 are mainly comprised of vessels under construction-receivables of USD 94.6 million compared to USD 162.1 million at year end 2008, prepayments for future vessels of USD 10.7 million compared to USD 16.5 million as of 31 December 2008 and interest-bearing receivables related to the container vessels of USD 3.0 million compared to USD 4.8 million at 31 December 2008. The overall decrease in current assets is primarily driven by the decrease in vessels under construction-receivables caused by the December delivery of the eighth product tanker and a partial settlement on the container vessels receivable.

The remaining assets as of 31 December 2009 of USD 71.6 million are property, plant and equipment and miscellaneous other assets. As of 31 December 2008 remaining assets totaled USD 88.4 million and consisted of property, plant and equipment, goodwill and miscellaneous other assets. The significant decrease is due to the write-off of goodwill in 2009 of USD 11.0 million, and depreciation and amortization of USD 7.4 million.

Current liabilities of USD 93.0 million are mostly related to construction financing, trade payables, accrued liabilities and current provisions. The corresponding figure for 2008 was USD 168.0 million. The decrease is primarily driven by reduced construction loans outstanding at year-end 2009 due to the vessel delivery in December 2009.

Interest-bearing debt decreased to USD 81.3 million at 31 December 2009 compared to USD 153.9 million as of 31 December 2008. This decrease was attributable to the timing of draw-downs and repayments under the construction financing facility.

At year-end 2009, total equity was USD 87.3 million and the equity ratio was 40% of total assets. Corresponding figures for 2008 were USD 91.7 million and 31%, respectively. The decrease in equity was caused by the current year's loss.

The Board deems that the company, at the present time, is financially sound and has an appropriate financing structure.

AKPS's construction financing has certain cross-defaults to AMSC's take-out financing for AKPS NB 013, 014 and 016 and OSG's obligation to purchase AKPS NB 015. In addition, AKPS's construction financing and capital expenditure financing contain defaults triggered by an AMSC insolvency event. AKPS closely monitors these links to AMSC and OSG and their potential impact on operations, including through frequent updates with AMSC's management. If an event of default occurs under AMSC's take-out financing for AKPS NB 013, 014 and 016, OSG breaches its obligation to purchase AKPS NB 015, or an AMSC insolvency event occurs, then AKPS's construction and capital expenditure credit facilities would be in default, which would require the company to seek waivers from its lenders. As a condition to any such waiver, a lender might, among other things, require additional collateral or guarantees, increase the interest rate, and/or impose fees. There is no guarantee a lender would grant any such waiver, in which case the lender could demand immediate repayment of its loans, foreclose on its collateral and/or exercise its other rights and remedies.

Additionally, the ongoing global recession continues to put existing and future financing sources at risk. AKPS regularly monitors the financial health of its construction financing lender as well as the financial health of the financial institutions which it uses for cash management services and in which it makes deposits and other investments.

Risks

Market risks

The overall market risk is related to the Jones Act, but market experts believe that significant changes to the legislation are unlikely. AKPS is also exposed to market risk related to imbalance between supply and demand for vessels and the associated reduction in new projects. AKPS faces risks if it is unable to secure new orders and/or financing for vessels after the current 12-ship series. For further analysis of these risks, please refer to the Outlook discussion on page 28.

Operational risks

AKPS faces risks related to construction of vessels. The risks related to vessel construction are primarily the shipyard's ability to meet the anticipated learning curve and through-put, as well as availability of skilled workers, and the risk of maintaining stable supplier networks and subcontractors.

Financial risks

AKPS's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, liquidity risk and cash flow interest-rate risk. AKPS's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse

Performance 2009
Board of Directors' report

effects on AKPS's financial performance. AKPS uses derivative financial instruments to economically hedge certain risk exposures.

Risk management is carried out under policies approved by the Board of Directors. These policies provide principles for overall financial risk management as well as policies covering specific areas such as foreign exchange risk, interest-rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments and investing excess liquidity.

All significant foreign currency balance sheet items are hedged in accordance with AKPS's policy. Furthermore, the majority of firm contracts with future settlement in foreign currencies are hedged. There is limited exposure for future contracts related to the four tankers not yet completed. AKPS has secured over 95% of its currency exposure to complete the current firm order. No forward contracts have been secured for any option vessels. The company considers its net currency exposure to be minimal.

AKPS operates in business areas that are capital intensive. The company is dependent upon having access to construction financing facilities and other loans and debt facilities to the extent its own cash flow from operations and milestone payments from customers is insufficient to fund its operations and capital expenditures. In turn, AKPS must secure and maintain sufficient equity capital to support such borrowing facilities.

Through construction financing, the company is exposed to fluctuations in interest rates. The interest risk related to external capital needed for vessels under construction is deemed moderate.

The credit risk of ship owners and lessors is evaluated upon contract signing. Typically, ship owners have financing approvals in place before contracts are entered into. At the completion of a vessel, transfer of ownership takes place upon settlement. Should a ship owner fail to pay, the company may attempt to dispose of the vessel in the open-market to recover AKPS's construction costs. Credit risk associated with AKPS's receivables is regarded as limited. Credit risk associated with cash and bank deposits is regarded as minimal.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Board of Directors' report

Events after the balance sheet date

No significant events have occurred after the balance sheet date.

The going concern assumption

In view of AKPS's financial position, the Board confirms that the 2009 annual accounts have been prepared based on the assumption of a going concern. For further analysis, please refer to the Outlook discussion below.

Parent company accounts and allocation of income for the year

The income statement of Aker Philadelphia Shipyard ASA shows income for the year 2009 of USD 873 000. The Board of Directors proposes that the income for the year be allocated as shown below:

Dividend payments	USD 0
Other equity	USD 873 000
Total allocated	USD 873 000

Unrestricted equity amounts to USD 14 097 000.

Health, safety and environment

A healthy and safe workplace and being friendly to the environment is an important part of AKPS's strategy. AKPS develops policies to comply with or exceed all federal, state and local requirements. Compliance with environmental regulations is assured by establishing operating procedures for best management practices and is executed through management and supervision.

At AKPS, the Union-Management Safety and Environmental Board reviews the various HSE programs, and makes recommendations on policies and procedures. The HSE system includes safety training of employees and subcontractors, safety inspections, industrial health and wellness programs, drug testing, emergency response and environmental programs. The company expects to implement new initiatives to continuously improve its HSE mindset during 2010.

In 2009, the frequency of lost-time incidents (incidents resulting in absence from work per one million hours) was 6.2, compared with 7.1 in 2008. The accidents came from a total of 1,384,847 hours worked by AKPS employees in 2009, compared with 1,450,768 hours worked in 2008. AKPS continues to work proactively to further improve the safety and reduce the number of injuries at the shipyard. The company continues to believe that additional improvements will be made.

To reduce the number of accidents

and injuries, the shipyard will continue to improve its in-house systems and procedures for exchanging knowledge gained from past accidents and potentially hazardous events. Additionally the company has put renewed emphasis on leading versus lagging indicators. The company is also working with outside parties to obtain and implement best practices to develop a zero incident culture. To this end, AKPS entered into a cooperative agreement with the Department of Labor's Occupational Safety and Health Administration (OSHA) in 2008. The agreement is designed to assist the company in implementing a successful safety and health management system to protect its employees and to encourage the company to participate in OSHA's Voluntary Protection Program. The company has completed all of its first year requirements regarding this agreement.

AKPS takes its environmental responsibilities seriously. Environmental status reporting is an integral part of the company's reporting system, on par with reporting on financial matters and operations. AKPS aims to comply with applicable laws, rules, and regulations. This commitment extends to evaluating and adopting environmentally beneficial improvements in production processes, alternative materials, and services. AKPS promotes open communication on environmental issues with employees, neighbors, public authorities, and other interested parties. No material accidental environmental emissions were recorded in 2009 or 2008. APSI gathers and sorts waste to promote environmentally responsible handling, disposal, and recovery of any residual value.

Organization

On 31 December 2009, AKPS had approximately 656 direct employees. Employee turnover in 2009 was 9%, primarily related to the union workforce.

Equal-opportunity employer

AKPS seeks to be an attractive employer and maintains a human relations policy that is open and fair. AKPS is committed to providing equal employment opportunity to all employees and applicants for employment, regardless of race, color, ethnic background, gender, religion, age, marital status, sexual orientation, national origin, citizenship status, disability, veteran status, or any other legally protected status. Diversity strengthens AKPS's overall capacity and skills. In support of this diversity, APSI currently maintains an approximate 46% minority workforce.

The maritime industry has traditionally been male-dominated. The entire industry faces the challenge of increasing the proportion of female employees. The company has taken affirmative steps to address this challenge. For example, the company encourages female applicants and has seen increased interest among potential female employees to pursue a career with the company. To further this goal, the company has recruited at schools and training programs with more women. The company has also continued to train supervisors, managers and employees in our EEO Policy.

At year-end 2009, there were no women in AKPS senior management, but women held key positions as Finance Manager, Project Cost Controller, Testing and Commissioning Manager, and Production Supervisor. There were also three women in the Apprenticeship Program. In addition, two of the five members of the Board of Directors are women.

Corporate governance

AKPS's corporate governance policy exists to ensure an appropriate division of roles among the company's owners, Board of Directors and Executive Management. 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. AKPS's Board of Directors adopted its corporate governance guidelines in 2008. AKPS's corporate governance guidelines are presented in greater detail on page 63 of this annual report.

Outlook

Aker Philadelphia Shipyard has built a strong foundation for its future through both its reputation for delivering on its promises and the efficient and innovative organization that has been developed.

AKPS's current backlog of USD 246.7 million secures shipbuilding activities until the first quarter of 2011, when the twelfth product tanker is expected to be delivered. However, full utilization of the Company's facilities will require new projects. Based on the option agreements with AMSC, AKPS has secured long lead

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Board of Directors' report

materials for tankers with deliveries for the remainder of 2011 and into 2012.

The ongoing global recession has created uncertainties which have delayed the decision making process for new builds and has created difficulties regarding financing of new build projects. However, AKPS remains committed to providing the Jones Act market with the most cost efficient and environmentally friendly merchant vessels possible and believes that it will be the supplier of choice when these vessels are ordered.

The ongoing weak economic climate also causes strain on some of our key suppliers, financial partners and customers. We will continue to monitor conditions to mitigate any challenges. The current economic conditions, combined with procedures and policies implemented by AKPS in the previous years, including the apprenticeship program, have improved access to shipbuilding labor.

AKPS continues to pursue all markets which include shuttle tankers, container ships, short-sea shipping vessels, barges, and other large steel fabrications. As a result of recent government renewable energy initiatives, AKPS has been approached regarding the construction of wind turbine installation vessels. AKPS considers each opportunity for the value it would create for AKPS and its shareholders.

A key focus for 2010 continues to be securing new orders to expand the backlog. Start of production for the first unsecured/option vessel (Hull 017) is planned for Spring 2010, but this schedule is dependent upon securing a firm order and/or construction financing for this vessel. Although no firm orders or construction financing are in place, AKPS has made prior purchase commitments on long lead items for Hulls 017-020 as tankers and continues to make commitments on Hull 017 as required by the intended production schedule. If Hull 017 is not built, whether pursuant to a firm order or on speculation, it is estimated that the company would incur expenses in excess of USD 15 million. If the shipyard is unable to build additional vessels beyond the current 12-ship series without a significant interruption, then the company would incur significant additional expenses and it would be very challenging for the company to continue operations after delivery of the twelfth tanker. In addition, because multiple vessels are in production at any one time, lack of continued firm backlog will cause operational inefficiencies for completion of the remaining vessels in the current 12-ship series.

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 Aker Philadelphia Shipyard ASA, as of and for the year ending 31 December 2009 (annual report 2009).

The Aker Philadelphia 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 2009. The separate financial statements for Aker Philadelphia Shipyard ASA have been prepared in accordance with the Norwegian Accounting Act and Norwegian Accounting Standards as of 31 December 2009. The Board of Directors' report for AKPS 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 2009.

To the best of our knowledge:

The consolidated and separate annual financial statements for 2009 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 loss as a whole as of 31 December 2009 for AKPS and the parent company
The Board of Directors' report for AKPS and the parent company includes a true and fair review of:
The development and performance of the business and the position of AKPS and the parent company
The principal risks and uncertainties AKPS and the parent company face

Oslo, 1 March 2010
Board of Directors, Aker Philadelphia Shipyard ASA

Karl Erik Kjelstad
Board Chairman

Gary Mandel
Board Deputy Chairman

Mark Singel

Marianne Heien Blystad
Marianne Heien Blystad

Elin Kammell
Elin Kammell

James H. Miller
General Manager

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Aker Philadelphia Shipyard ASA

Consolidated Income Statement

Amounts in USD thousands	Note	2009	2008
Operating revenues		226 726	285 000
Cost of vessels		(205 748)	(258 731)
Wages and other personnel expenses, net	2	(1 905)	(2 204)
Other operating expenses	3	(5 643)	(7 875)
Operating income before depreciation and amortization		13 430	16 190
Depreciation	6	(7 415)	(7 117)
Impairment of goodwill	7	(11 011)	-
Operating income/(loss)		(4 996)	9 073
Financial income	4	7 478	1 529
Financial expenses	4	(1 239)	(10 462)
Income before tax		1 243	140
Tax expense	5	(5 642)	(1 894)
Net loss for the year (1)		(4 399)	(1 754)

Aker Philadelphia Shipyard ASA

Consolidated Statement of Comprehensive Income

Amounts in USD thousands (except shares and per share amounts)	2009	2008
Net loss for the year	(4 399)	(1 754)
Other comprehensive income, net of income tax	-	-
Total comprehensive income for the year(1)	(4 399)	(1 754)

(1) All attributed to the equity holders of AKPS.

Average number of shares 14 10 165 305 10 165 305

Basic loss per share (2) 14 (0.43) (0.17)

Diluted loss per share (3) 14 (0.43) (0.17)

(2) Loss attributable to the equity holders of the parent / average number of shares.

(3) There were no potentially dilutive securities outstanding as of 31 December 2009 and 2008.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Aker Philadelphia Shipyard ASA

Consolidated Statement of Financial Position as of 31 December

Amounts in USD thousands	Note	2009	2008
ASSETS
Property, plant and equipment	6	66 848	70 833
Intangible assets	7	-	11 011
Interest-bearing long-term receivables	8	171	220
Other non-current assets	9	3 203	3 356
Total non-current assets		70 222	85 420
Vessels under construction-receivables	10	94 614	162 145
Prepayments and other receivables	11	10 651	16 506
Income tax receivable	5	1 397	2 941
Interest-bearing short-term receivables, net	12	3 017	4 789
Cash and cash equivalents	13	36 225	23 551
Total current assets		145 904	209 932
Total assets		216 126	295 352
EQUITY AND LIABILITIES
---	---	---	---
Paid in capital	15	70 995	70 995
Other equity		16 335	20 734
Total equity attributable to equity holders of the parent		87 330	91 729
Total equity		87 330	91 729
Interest-bearing long-term debt	16	31 160	33 235
Deferred tax liabilities	5	4 622	2 429
Total non-current liabilities		35 782	35 664
Construction loan	16, 21	48 000	118 500
Interest-bearing short-term debt	16, 21	2 175	2 152
Trade and other payables	20	39 325	41 667
Income taxes payable	5	114	1 871
Current provisions	19	3 400	3 769
Total current liabilities		93 014	167 959
Total liabilities		128 796	203 623
Total equity and liabilities		216 126	295 352

Oslo, 1 March 2010
Board of Directors, Aker Philadelphia Shipyard ASA

Karl Erik Kjelstad
Board Chairman

Gary Mandel
Board Deputy Chairman

Mark Singel

Marianne Heien Blystad

Elin Kampel

James H. Miller
General Manager

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Aker Philadelphia Shipyard ASA

Consolidated Statement of Changes in Equity

Amounts in USD thousands	Share Capital	Share premium	Other equity	Total equity
Balance at 31 December 2007	18 709	72 402	6 861	97 972
Transfer of share premium to other equity	-	(20 000)	20 000	-
Dividend paid in 2008	-	-	(4 373)	(4 373)
Transaction costs paid in 2008 related to issuance of shares in 2007	-	(116)	-	(116)
Loss for the year 2008	-	-	(1 754)	(1 754)
Balance at 31 December 2008	18 709	52 286	20 734	91 729
Loss for the year 2009	-	-	(4 399)	(4 399)
Balance at 31 December 2009	18 709	52 286	16 335	87 330

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Aker Philadelphia Shipyard ASA

Consolidated Cash Flow Statement

Amounts in USD thousands	Note	2009	2008
Income before tax		1 243	140
Unrealized foreign exchange (gain)/loss		(6 415)	6 444
Depreciation	6	7 415	7 117
Impairment of goodwill	7	11 011	-
Write-down of assets-under-construction	6	-	1 463
Net financial expense/(income)	4	1 043	(339)
(Increase)/decrease in:
Vessels under construction-receivables	10	67 531	(68 942)
Other current assets	11,12	7 677	(2 702)
Other non-current assets	9	153	280
Increase/(decrease) in:
Accrued liabilities and other payables	20	4 391	(7 706)
Income taxes paid	5	(4 104)	(8 657)
Interest paid, net of capitalized interest	4	(1 819)	(1 768)
Interest received	4	530	1 606
Net cash flow from/(used in) operating activities		88 656	(73 064)
Investments in property, plant and equipment	6	(3 430)	(6 491)
Net cash flow used in investing activities		(3 430)	(6 491)
Proceeds from long-term interest-bearing debt	16	100	11 420
Repayment of long-term interest-bearing debt	16	(2 152)	(2 092)
Proceeds from construction loan	16	169 500	199 800
Repayment of construction loan	16	(240 000)	(160 000)
Dividend paid		-	(4 373)
Net cash flow from/(used in) financing activities		(72 552)	44 755
Net change in cash and cash equivalents		12 674	(34 800)
Cash and cash equivalents as of 1 January		23 551	58 351
Cash and cash equivalents as of 31 December	13	36 225	23 551

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Aker Philadelphia Shipyard ASA

Notes to the accounts

Note 1: Accounting principles

STATEMENT OF COMPLIANCE

The consolidated financial statements of Aker Philadelphia Shipyard ASA and its subsidiaries (AKPS) have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union in effect at each financial reporting period.

These accounts have been approved for issue by the Board of Directors on 1 March 2010.

BASIS FOR PREPARATION

Aker Philadelphia Shipyard ASA was formed on 16 October 2007 to be the holding company of Aker Philadelphia Shipyard, Inc. (APSI) which owns and operates a shipyard located in Philadelphia, Pennsylvania, USA.

On 3 December 2008, APSI formed a wholly-owned subsidiary, Aker Philadelphia Priming, Inc. (APPI), to own and operate APSI's prime-plating operations.

AKPS is domiciled in Norway. APSI and APPI are domiciled in the Commonwealth of Pennsylvania, USA. Related addresses follow:

Aker Philadelphia Shipyard ASA
Fjordalleen 16
PO Box 1423 Vika
NO-0115 Oslo, Norway

Aker Philadelphia Shipyard, Inc.
2100 Kitty Hawk Avenue
Philadelphia, PA 19112
USA

Aker Philadelphia Priming, Inc.
2001 Langley Avenue, Building 763
Philadelphia, PA 19112
USA

These consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value.

USE OF ESTIMATES

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts in the 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.

Critical accounting estimates and assumptions are as follows:

Revenue and Cost Recognition

AKPS uses the percentage of completion method for accounting for projects in process. The use of the percentage of completion method requires AKPS to estimate the stage of completion of contract activity at each balance sheet date and estimate the ultimate outcome of costs and profit on contracts. Revenue recognition and cost estimates depend upon variables such as steel prices, labor costs and availability, and other production inputs. AKPS must also evaluate and estimate the outcome of variation orders, contract claims and requests from customers to modify contractual terms which often involve complex negotiations with customers. Generally, estimates are subject to a greater level of uncertainty when a vessel design is new to AKPS than if a vessel is being constructed later in a series.

Estimates of the Fair Value of Cash Generating Units

AKPS must determine the fair value of its cash generating unit in order to perform its annual goodwill impairment test. Determining the fair value of the cash generating unit that includes AKPS's activities is subject to uncertainty and requires estimates of the recoverable amount which is the higher of the fair value less costs to sell and value in use. The estimated recoverable amount is determined based upon the present value of the future cash flows of the cash generating unit. Generally, there will be uncertainties regarding the timing and amount of cash flows for various reasons, including the costs of production and demand in the U.S. Jones Act shipping market. In addition, AKPS must determine an appropriate interest rate to discount expected future cash flows.

Deferred Income Taxes

Deferred income tax assets are recognized when it is probable that they will be realized. Determining probability requires AKPS to estimate the sources of future taxable income from operations and 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 backlog.

Accruals/Provisions

AKPS has various accruals/provisions which require management to make estimates. Management uses all available facts and circumstances when determining these estimates including historical experiences as well as input from outside advisors.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates 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.

AKPS ACCOUNTING AND CONSOLIDATION PRINCIPLES

Subsidiaries

The consolidated financial statements include the financial statements of the parent company, Aker Philadelphia Shipyard ASA, and its subsidiaries, Aker Philadelphia Shipyard, Inc. and Aker Philadelphia Priming, Inc. A subsidiary is an entity in which Aker Philadelphia Shipyard ASA either owns, directly or indirectly, over 50% of the voting rights, or otherwise has the power to govern the operating and financial policies.

All intercompany transactions, receivables, liabilities and unrealized profits, as well as intercompany profit distributions, are eliminated in consolidation.

Foreign currency translation and transactions

Functional Currency

Items included in the financial statements of each entity in AKPS are initially recorded in the entity's functional currency, i.e. the currency that best reflects the economic substance of the underlying events and circumstances relevant to that subsidiary.

The consolidated financial statements are presented in United States dollars (USD), which is the reporting currency for the consolidated accounts and the functional currencies for all the entities within AKPS.

Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Receivables and liabilities in foreign currencies are translated into the functional currency at the exchange rates in effect on the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated income statement. Foreign exchange differences arising in respect of operating items are included in operating profit in the consolidated income statement, and those arising in respect of financial assets and liabilities are recorded net as a financial item.

PROPERTY, PLANT AND EQUIPMENT

General

Property, plant and equipment acquired by AKPS companies is stated at cost at the date of acquisition. Depreciation is calculated on a straight-line basis and adjusted for impairment charges, if any. The carrying value of the property, plant and equipment on the balance sheet represents the cost net of government grants and subsidies received (if applicable) less accumulated depreciation and any impairment charges. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use.

Land is not depreciated, but other property, plant, and equipment in use are depreciated on a straight-line basis. Expected useful lives of long-lived assets are reviewed annually and, where they differ significantly from previous estimates, depreciation periods are changed accordingly.

Ordinary repairs and maintenance costs are charged to the consolidated income statement

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

during the financial period in which they are incurred. The cost of improvements is included in the asset's carrying amount when it is probable that AKPS will derive future economic benefits in excess of the originally assessed standard of performance of the existing asset. Improvements are depreciated over the useful lives of the related assets.

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in operating profit. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less selling costs.

Component Cost Accounting

The Company allocates the amount initially recognized in respect of an item of property, plant and equipment to its significant components and depreciates separately each such component part over its useful life.

INTANGIBLE ASSETS

Goodwill

Goodwill is initially measured as the excess of the cost of a business combination over the acquirer's fair value of the net assets acquired.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Initially, any goodwill acquired is allocated to cash-generating units expected to benefit from the combination's synergies. AKPS currently has only one cash generating unit. Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognized.

IMPAIRMENT OF LONG-LIVED ASSETS

Property, plant and equipment and other non-current assets are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable, mainly independent, cash flows. An impairment loss is the amount by which the carrying amount of the assets exceeds the recoverable amount. The recoverable amount is the higher of the asset's net selling price and its value in use. The value in use is determined by reference to discounted future net cash flows expected to be generated by the asset.

A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount, however not to an extent higher than the carrying amount that would have been determined had no impairment loss been recognized in prior years.

LEASES

Leases of property, plant and equipment where AKPS has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability. Finance charges are charged directly against income. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases net of any incentives received from the lessor is charged to the consolidated income statement on a straight-line basis over the period of the lease when annual instalments vary.

OTHER LONG-TERM RECEIVABLES

Other long-term receivables are measured at their net present value when the expected payments are due after 12 months and they are not interest bearing.

CONSTRUCTION CONTRACTS

AKPS's business activities mainly involve deliveries of vessels and services under contract to customers. Revenue related to construction contracts is recognized using the percentage of completion method, based primarily on the scope of completed work compared to estimated overall project scope at the balance sheet date. The stage of completion is assessed by reference to production hours incurred to total estimated production hours. As soon as the outcome of the construction contract can be estimated reliably, contract revenue and expenses are recognized in the consolidated income statement in proportion to the degree of completion of the contract.

If the final outcome of a contract cannot be estimated reliably, contract revenue is recognized only to the extent costs incurred are expected to be recovered. Any projected losses on future work done under existing contracts are expensed and classified as accrued costs/provisions in the balance sheet under short-term debt. Losses on contracts are recognized in full when identified. Recognized contract profit includes profit derived from change orders and disputed amounts when, in management's assessment, realization is probable and reasonable estimates can be made.

Project costs include costs directly related to the specific contract and indirect costs attributable to the contract. Interest expense is included in project costs to the extent there are qualifying assets, which normally occurs when customer payments lag behind construction progress.

Project revenue is classified as operating revenues in the consolidated income statement. Vessels under construction-receivable are classified as a current asset in the balance sheet. Advances from customers are deducted from the value of vessels under construction-receivable of the contract involved or, to the extent they exceed this value, recorded as customer advances. Customer advances that exceed contract offsets would be classified as current liabilities.

GOVERNMENT GRANTS

Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all conditions have been met. Grants related to capital expenditures are recognized as a reduction of the related asset cost which results in a lower depreciation charge over the useful life of the asset. Grants related to specific programs or projects are recognized as income over the period in which work that relates to the grant is performed. There were no government grants related to capital expenditures received in the periods presented.

INTEREST-BEARING

SHORT-TERM RECEIVABLES

Interest-bearing short-term receivables are carried at their anticipated net realizable value. These balances represent holdbacks related to previously delivered vessels. A valuation allowance is made when there is objective evidence that AKPS will not be able to collect all amounts due according to the original terms of the receivables.

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.

SHARE CAPITAL

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any subsidiary purchases AKPS's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, is deducted from equity.

INTEREST-BEARING LIABILITIES

All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recognized in the consolidated income statement over the period the interest bearing liabilities are outstanding. Amortized cost is calculated by taking into account any issuance costs, and any discount or premium.

Gains and losses are recognized in net income or loss when the liabilities are derecognized or impaired, as well as through the amortization process.

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 law as used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred Income taxes

Deferred income tax is provided, using the asset/liability method, on all temporary differences at the balance sheet 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 profit 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 balance sheet date and

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. The expected utilization of tax losses are 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 balance sheet date.

Income tax relating to items recognized directly in equity is recognized in equity.

PENSION OBLIGATIONS

AKPS has a defined contribution pension plan that covers its non-union employees whereby contributions are paid to a qualifying pension plan. The Company's union employees are participants in a union selected pension plan. Plan contributions are charged to the consolidated income statement in the period to which the contributions relate.

PROVISIONS

A provision is recognized when AKPS 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. Provisions are reviewed at each balance sheet date and adjusted to reflect the current estimate.

The amount of the provision is the present value of the risk adjusted expenditures expected to be required to settle the obligation, determined using the estimated risk free interest rate as the discount rate. Where discounting is used, the carrying amount of provision increases in each period and is recognized as interest expense.

FINANCIAL RISK MANAGEMENT

AKPS's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, and cash-flow interest-rate risk. AKPS's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on AKPS's financial performance. AKPS uses derivative financial instruments to hedge certain risk exposures.

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, interest-rate risk, credit risk, and use of derivative financial instruments and non-derivative financial instruments.

Credit Risk

Due to the nature of AKPS's operations, revenues and related receivables are typically concentrated amongst a few customers. As of 31 December 2009, AKPS had only two customers, AMSC and OSG. AKPS continually evaluates the credit risk associated with customers 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.

Interest Rate Risk

AKPS is exposed to fluctuations in interest rates for its variable interest rate debt related to construction financing.

Foreign Exchange Risk

AKPS is exposed to foreign currency 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 Korea, Norway and other countries in Europe.

Capital Management Risk

AKPS's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, while maintaining an optimal capital structure to minimize the cost of capital. To meet these capital structure objectives, AKPS will review annually with its Board any proposed dividends as well as any needs to raise additional equity for future business opportunities or to reduce debt.

Counter-Party Credit Risk

AKPS's construction financing has certain cross-defaults to AMSC's take-out financing for AKPS Hulls 012-014 and OSG's obligation to purchase AKPS Hull 015. In addition, AKPS's construction financing and capital expenditure financing contain defaults triggered by an AMSC insolvency event. AKPS closely monitors these links to AMSC and OSG and their potential impact on operations, including through frequent updates with AMSC's management. If an event of default occurs under AMSC's take-out financing for AKPS Hulls 012-014, OSG breaches its obligation to purchase AKPS Hull 015, or an AMSC insolvency event occurs, then AKPS's construction and capital expenditure credit facilities would be in default, which would require the Company to seek waivers from its lenders. As a condition to any such waiver, a lender might, among other things, require additional collateral or guarantees, increase the interest rate, and/or impose fees. There is no guarantee a lender would grant any such waiver, in which case the lender could demand immediate repayment of its loans, foreclose on its collateral and/or exercise its other rights and remedies.

Funding/Investment Risk

The ongoing global financial crisis has placed existing and future financing sources at risk. AKPS regularly monitors the health of its construction financing lender. Additionally, AKPS monitors the financial health of the financial institutions which it uses for cash management services and in which it makes deposits and other investments. AKPS responds to changes in conditions affecting its financing sources and deposit relationships as situations warrant.

Liquidity Risk

Liquidity risk is the risk that AKPS will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. AKPS's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to AKPS's reputation.

Accounting for Derivative Financial Instruments and Hedging Activities

Derivative financial instruments are recognized initially and in subsequent periods on the balance sheet at fair value. The method of recognizing the resulting gain or loss is dependent on the nature of the item being hedged. On the date a derivative contract is entered into, AKPS designates the derivatives as either a hedge of the fair value of a recognized asset or liability (fair value hedge), or a hedge of a forecasted transaction (cash flow hedge) or of a firm commitment (fair value hedge).

Changes in the fair value of derivatives that are designated and qualify as fair value hedges and that are highly effective both prospectively and retrospectively are recorded in the consolidated income statement, along with any changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective both prospectively and retrospectively are initially recognized in equity and subsequently reclassified to the consolidated income statement when hedged transactions are realized. AKPS currently has no derivative instruments that qualify for hedge accounting under IFRS.

Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IFRS are recognized immediately in the consolidated income statement.

In accordance with its treasury policy, AKPS does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Estimates of the fair value for foreign currency contracts are obtained from a third party. The fair value of derivative long-term financial liabilities is disclosed in Note 23 regarding financial instruments.

RELATED PARTY TRANSACTIONS

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

AKPS only had one business segment which is building vessels for the U.S. Jones Act market.

DIVIDENDS

Dividends are recorded in AKPS's financial statements in the period in which they are approved by AKPS's shareholders. AKPS did not pay dividends in 2009.

BASIC AND DILUTED EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders using the weighted average number of shares outstanding during the year after deduction of the average number of treasury shares held over the period. The calculation of diluted earnings per share is consistent with the calculation of basic earnings per share while giving effect to all dilutive potential ordinary shares that were outstanding during the period. AKPS currently has no potentially dilutive shares outstanding.

EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

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

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

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).

RECENTLY ISSUED ACCOUNTING STANDARDS AND PRONOUNCEMENTS

Effective 1 January 2009, AKPS has changed its accounting policy for the following accounting standards:

Amendments to IAS 1, Presentation of Financial Statements: A Revised Presentation is applicable to the Company effective 1 January 2009. This requires the Company to present a new statement on comprehensive income, which is shown as a separate statement, following the income statement. The Company presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Reclassification adjustments and income tax relating to each component of other comprehensive income

will be disclosed on the face of the statement of comprehensive income. Currently there are no such components applicable to the Company.

The Company also adopted International Financial Reporting Standard 8, Operating Segments on 1 January 2009 which did not impact the consolidated financial statements as the Company has only one operating segment.

No other accounting standards effective in 2009 impacted the Company's consolidated financial statements. In addition, no standards effective in 2010 are expected to significantly impact the Company.

Note 2: Wages and other personnel expenses

Wages and other personnel expenses consist of:

Amounts in USD thousands (except employee count)	2009	2008
Wages	40 094	42 056
Social security contributions	3 648	3 448
Pension costs (note 18)	923	861
Other expenses	10 123	9 862
Total gross expense	54 788	56 227
Expenses related to vessel construction	(52 883)	(54 023)
Wages and other personnel expenses, net	1 905	2 204
Average number of employees	672	711
Number of employees at year-end	656	700

Other expenses relate primarily to workers' compensation and employee benefits.

Note 3: Other operating expenses

Other operating expenses consist of:

Amounts in USD thousands	2009	2008
Rent and leasing expenses	1 559	2 103
Other operating expenses	4 084	5 772
Total other operating expenses	5 643	7 875

Other operating expenses primarily relate to selling, general and administrative expenses. Fees to auditors for AKPS were for ordinary audit services and are included in other operating expenses. Such fees totaled USD 328 for 2009 and USD 380 for 2008.

Note 4: Financial income and financial expenses

Amounts in USD thousands	2009	2008
Interest income	191	1 529
Gain on foreign currency forward contracts	6 414	-
Foreign exchange gain	873	-
Financial income	7 478	1 529
Interest expense	(3 945)	(5 802)
Interest capitalized on construction contracts	2 706	4 612
Loss on foreign currency forward contracts	-	(6 444)
Foreign exchange loss	-	(2 828)
Financial expenses	(1 239)	(10 462)
Net financial items	6 239	(8 933)

Details regarding the Company's debt facilities and interest rates are provided in note 16 and foreign exchange gain/loss details are provided in note 23. The foreign exchange gain in 2009 and loss in 2008 are attributable to mark-to-market of foreign exchange forward contracts in Korean Won, Norwegian Kroner and Euro and certain cash balances which are held in Norwegian Kroner and Korean Won.

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Note 5: Tax

INCOME TAX EXPENSE

Recognized in the income statement

Amounts in USD thousands	2009	2008
Current tax expense:
Current year - U.S.	3 449	4 751
Current year - Norway	-	627
Total current tax expense	3 449	5 378
Deferred tax expense:
Origination and reversal of temporary differences - U.S.	2 193	(3 846)
Origination of temporary differences - Norway	-	362
Total deferred tax expense/(benefit)	2 193	(3 484)
Total income tax expense in the income statement	5 642	1 894
Reconciliation of effective tax rate:
Amounts in USD thousands	2009	2008
Income before tax	1 243	140
Nominal Norwegian tax rate	28.0%	28.0%
Expected tax expense using nominal Norwegian tax rate	348	39
Effect of differences between nominal Norwegian tax rate and U.S. federal, state and city tax rate	64	419
Additional deductions for tax purposes	(138)	-
Tax losses for which no deferred income tax asset was recognized as a deferred tax asset	978	-
Impairment of goodwill	5 676	-
Expenses not deductible for tax purposes	124	55
Foreign exchange	(1 224)	1 524
Other differences	(186)	(143)
Total income tax expense in the income statement	5 642	1 894

The effective tax rate differs from the expected tax rate primarily due to the impairment of goodwill which is not deductible for taxes, expenses that were not deductible in the U.S., and for Norwegian taxes which are calculated in local currency which differs from the functional currency resulting in currency losses for taxation purposes on U.S. dollar balances that are not reflected in the consolidated financial statements.

Deferred tax assets and liabilities

Deferred income tax assets and liabilities 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 2009 for the Group was primarily the U.S., the Commonwealth of Pennsylvania and the City of Philadelphia.

The offset amounts for U.S. items are as follows:

Amounts in USD thousands	2009	2008
Deferred tax assets	7 710	10 537
Deferred tax liabilities	(12 332)	(12 966)
Net deferred tax liabilities	(4 622)	(2 429)

Deferred tax assets and liabilities shown in the statement of financial position are mainly attributable to the U.S. tax jurisdiction. At 31 December 2009 the company also had USD 3.5 million of deferred tax assets related to the Norwegian tax jurisdiction which are not recognized in the financial statements due to lack of expected future taxable income in Norway.

Deferred assets have not been recognized in respect of the following items:

Due to the change in control that occurred during 2005 (when the shipyard was acquired), only approximately USD 10.7 million of the Group's total U.S. federal and state net operating loss carryforwards created before the change of control of approximately USD 90.0 million were available to offset future taxable income. The remaining benefit has been fully used as of 31 December 2009.

The gross movement in the deferred income tax account for all tax jurisdictions is as follows:

Amounts in USD thousands	2009	2008
Beginning of the period	(2 429)	(5 913)
Deferred tax expense	(2 193)	3 484
End of the year	(4 622)	(2 429)

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Deferred tax assets:

Amounts in USD thousands	Provisions of assets	Tax losses	Total
31 December 2008	10 537	-	10 537
Credited to the income statement	(2 827)	-	(2 827)
31 December 2009	7 710	-	7 710

Deferred tax liabilities:

Amounts in USD thousands	Property, plant and equipment	Projects	Other	Total
31 December 2008	(11 645)	(1 093)	(228)	(12 966)
Charged/(credited) to the income statement	(153)	559	228	634
31 December 2009	(11 798)	(534)	-	(12 332)

Note 6: Property, plant and equipment

Movements in property, plant and equipment for 2009 are shown below:

Amounts in USD thousands	Machinery & vehicles	Buildings	Land improvements	Assets under construction	Total
Cost at 1 January 2009	25 336	50 765	18 172	1 132	95 405
Purchases	1 861	513	-	1 056	3 430
Transfers	1 592	60	-	(1 652)	-
Cost at 31 December 2009	28 789	51 338	18 172	536	98 835
Depreciation and impairment losses at 1 January 2009	11 771	10 570	2 231	-	24 572
Depreciation	4 012	2 621	782	-	7 415
Depreciation and impairment losses at 31 December 2009	15 783	13 191	3 013	-	31 987
Book value at 31 December 2009(1)	13 006	38 147	15 159	536	66 848
(1) Book value of assets under financial leasing agreements recorded in the statement of financial position:	17	-	-	-	17
Depreciation period	3-12 years	7-30 years	20 years
Depreciation method	Straight-line	Straight-line	Straight-line

Movements in property, plant and equipment for 2008 are shown below:

Amounts in USD thousands	Machinery & vehicles	Buildings	Land improvements	Assets under construction	Total
Cost at 1 January 2008	22 764	47 537	16 511	3 565	90 377
Purchases	2 062	2 752	-	1 677	6 491
Transfers	510	476	1 661	(2 647)	-
Write-down of assets-under-construction(1)	-	-	-	(1 463)	(1 463)
Cost at 31 December 2008	25 336	50 765	18 172	1 132	95 405
Depreciation and impairment losses at 1 January 2008	7 900	8 042	1 513	-	17 455
Depreciation	3 871	2 528	718	-	7 117
Depreciation and impairment losses at 31 December 2008	11 771	10 570	2 231	-	24 572
Book value at 31 December 2008(2)	13 565	40 195	15 941	1 132	70 833

(1) The Company wrote down certain assets-under-construction to their estimated realizable values which is included in other operating expenses. The write-down was net of amounts reimbursed by the contractor.
(2) Book value of assets under financial leasing agreements recorded in the statement of financial position:
186
- - - 186

Depreciation period
3-12 years
7-30 years
20 years

Depreciation method
Straight-line
Straight-line
Straight-line

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Leased plant and machinery

The Company leases production equipment under a number of finance lease agreements. At the end of each of the leases, the Company has the option to purchase the equipment at a beneficial price. The leased equipment secures lease obligations (see note 16).

Security granted on property, plant and equipment

At 31 December 2009, property, plant and equipment with a carrying amount of USD 66.8 million (2008: USD 70.8 million) are subject to mortgages to secure loans (see note 16).

Property, plant and equipment under construction

Assets-under-construction relate to upgrades in facilities and equipment.

Depreciation

Depreciation charges for equipment and property used in the construction of vessels are included in depreciation expense and capitalized in the value of vessels under construction-receivables.

Determination of recoverable amounts/fair value

Because of the impairment to goodwill in the current year the Company also looked at any potential impairment of property, plant and equipment. Based on its analysis, which included discounted cash flows and alternative uses under different scenarios, the Company concluded that no impairment of property, plant and equipment had occurred in the current year.

Note 7: Intangible assets

Movements in intangible assets for 2009 are shown below:

Amounts in USD thousands	Goodwill	Other Intangibles	Total
Cost at 1 January 2009	11 011	-	11 011
Cost at 31 December 2009	11 011	-	11 011
Impairment of goodwill	(11 011)	-	(11 011)
Book value at 31 December 2009	-	-	-

In the fourth quarter the Company prepared its annual goodwill impairment testing as noted below. Based on this analysis it was determined that an impairment had occurred. Therefore, the Company recorded an impairment charge of USD 11.0 million in the fourth quarter of 2009. As of 31 December 2009 the book value of goodwill has been reduced to USD 0.

Movements in intangible assets for 2008 are shown below:

Amounts in USD thousands	Goodwill	Other Intangibles	Total
Cost at 1 January 2008	11 011	-	11 011
Cost at 31 December 2008	11 011	-	11 011
Book value at 31 December 2008	11 011	-	11 011

Determination of recoverable amounts/fair value:

Recoverable amounts are based on value-in-use calculations. The calculations use cash flow projections based on future cash flow budgets and forecasts for the periods 2010-2013 and an annual growth rate of 0% for subsequent periods. A discount rate (WACC) of 10% before tax has been used for discounted cash flow projections.

Based on the Company's low market capitalization over a period of time, decreasing order backlog and this analysis, the recoverable amount was estimated to be below the carrying amount and the Company recorded an impairment charge as noted above.

Note 8: Interest-bearing long-term receivables

Financial interest-bearing long-term receivables consist of the following items:

Amounts in USD thousands	Interest rate per annum	31 Dec. 2009	Interest rate per annum	31 Dec. 2008
Interest-bearing long-term receivable	5.00%	171	5.00%	220
Total		171		220

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Note 9: Other non-current assets

Other non-current assets consist of the following items:

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Prepaid lease payments and deposits	3 203	3 356
Total	3 203	3 356

The lease payments and deposits are unsecured and have no collateral. The amount includes USD 2.7 million for deposits for Hulls 019 and 020.

Note 10: Construction contracts

The order backlog primarily represents an obligation to deliver vessels that have not yet been produced for AMSC and OSG. The order backlog is USD 246.7 million at 31 December 2009 and represents future sales.

Amounts in USD thousands	Order Backlog 31 Dec. 2009	Order Intake 2009	31 Dec. 2008	Order Intake 2008	Order Backlog 31 Dec. 2007
Product Tankers	246 693	-	499 855	-	784 848
Total	246 693	-	499 855	-	784 848

Order backlog represents the base contract price plus a fixed price for material escalation and is subject to adjustments based on change orders as defined in the agreement as well as vessel deliveries. The last vessel to deliver under the backlog is scheduled to be delivered in March 2011.

The recognized profits at 31 December 2009 and 2008 on contracts in process at year-end are as follows:

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Contract revenue recognized as revenue to date	690 850	464 930
Less contract expenses recognized to date	(644 793)	(434 844)
Recognized profit to date	46 057	30 086
Other construction contracts figures:
Contract costs incurred to date	(663 722)	(429 794)

As of 31 December 2009 and 2008, the costs incurred including recognized profit billable to customers upon delivery of the ships in excess of deposits received were USD 94.6 million and USD 162.1 million, respectively, using the percentage of completion method. Final amounts due will be billed upon delivery of each vessel which is expected to occur over the next fifteen months.

Advances from customers at 31 December 2009 and 31 December 2008 totaled USD 94.7 million and 87.7 million, respectively, and are included as reductions in the vessels under construction-receivables.

Retentions related to construction contracts are disclosed in note 12.

The Company currently has no orders for vessels beyond the orders for AMSC and OSG.

On 11 December 2009, the Company entered into a settlement agreement and certain other agreements with Overseas Shipholding Group, Inc. (together with its subsidiaries, referred to herein as OSG), American Shipping Company ASA (formerly named Aker American Shipping ASA) (together with its subsidiaries, referred to herein as AMSC), Aker ASA and various related parties to modify certain aspects of their commercial arrangements and settle all of the outstanding commercial disputes among them, including the dismissal with prejudice of all claims in the arbitration with AMSC and OSG.

The settlement resolved certain issues facing AKPS, including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program originally announced in 2005, and terminated the exclusivity agreements among AKPS, AMSC and OSG, providing AKPS complete flexibility to build tankers for other parties.

As part of the agreements, AMSC sold its rights to purchase two tankers in the twelve ship build program (AKPS Hulls 015 and 016) to OSG in order to resolve AMSC's previously disclosed challenges to finance these vessels, and AKPS further agreed to pay liquidated damages to OSG in the event of late delivery of these vessels on the terms and conditions defined in the agreements. The first of these two vessels was delivered in December 2009 and the second is expected to be delivered in the fourth quarter of 2010.

Also as part of the agreements, exclusivity between AKPS and OSG and between AKPS and AMSC for tanker construction was eliminated, allowing the Company to pursue opportunities with any interested parties.

In addition, AKPS and AMSC agreed to cancel AMSC's options for tankers beyond AKPS Hull 020 (i.e., AKPS Hulls 021 through 029). AMSC maintains four options with AKPS for product tankers (i.e., AKPS Hulls 017-020).

As part of the settlement agreements, fixed pricing was negotiated on the remaining tankers and AMSC agreed to pay approximately USD 2.6 million for credit enhancements related to the construction financing (ultimately payable to Caterpillar Financial Services Corporation and Aker ASA) and to assign its rights in approximately USD 3.0 million of deposits for long-lead materials to AKPS. Due to the revised pricing, total revenues on the existing shipbuilding contracts with AMSC were reduced by USD 9.7 million.

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Note 11: Prepayments and other receivables

Trade and other receivables consist of the following items:

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Advance payments to suppliers	10 209	14 817
Trade and other short-term interest-free receivables	442	1 689
Total	10 651	16 506

Advance payments to suppliers at 31 December 2009 includes USD 6.9 million prepayments related to Hulls 012-015 (NB 013-016) and USD 3.3 million prepayments related to Hulls 017-018. Total commitments on Hulls 017-018 which do not presently have firm contracts are approximately USD 31.5 million.

Note 12: Interest-bearing short-term receivables

Interest-bearing short-term receivables consist of the following items:

Amounts in USD thousands	Interest rate	31 Dec. 2009	Interest rate	31 Dec. 2008
Interest-bearing short-term receivables, net of allowances	0.3%	3 017	2.5%	4 789
Total		3 017		4 789

Short-term investments are made for varying periods of between one day and three months depending on the immediate cash requirements of AKPS, and earn interest at the respective short-term deposit rates.

Interest-bearing short-term receivables relate to contractual hold backs from the container vessel customer and are contingent upon final closeout of warranty work. The decrease in the balance was caused by a partial settlement of the amounts outstanding in 2009. The balance bears interest at a floating rate. The warranty period has expired and the hold backs will be repaid once warranty matters are resolved. At 31 December 2009, the allowance for interest-bearing short-term receivables was USD 1.2 million (USD 1.1 million at 31 December 2008).

Note 13: Cash and cash equivalents

Cash and cash equivalents consist of the following items:

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Cash and bank deposits	36 225	23 551
Cash and cash equivalents in the statement of cash flows	36 225	23 551

Cash and bank deposits are invested in overnight deposits. There are no restrictions on cash.

Note 14: Earnings per share

Basic and diluted:

Basic and diluted earnings/(loss) per share are calculated by dividing the income/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares.

Amounts in USD thousands (except shares and per share data)	2009	2008
Loss attributable to equity holders of the Company	(4 399)	(1 754)
Weighted average number of ordinary shares in issue	10 165 305	10 165 305
Basic and diluted loss per share (USD per share)	(0.43)	(0.17)

There were no potentially dilutive securities outstanding as of 31 December 2009 and 2008.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Note 15: Paid in capital

The current share capital is 10,165,305 shares issued and outstanding, each with a par value of NOK 10 (USD 1.85 at an exchange rate of NOK/USD 5.4:1), fully paid. There are currently no additional authorized shares.

Amounts in USD thousands	Capital	Premium	Paid-in-Capital
31 December 2007	18 709	72 402	91 111
Transfer of share premium to other equity	-	(20 000)	(20 000)
Transaction costs paid in 2008 related to issuance of shares	-	(116)	(116)
31 December 2008	18 709	52 286	70 995
31 December 2009	18 709	52 286	70 995

Note 16: Interest-bearing loans and liabilities

This note provides information about AKPS's contractual terms of interest-bearing loans and borrowings. For more information about AKPS's exposure to interest rate and foreign currency risk, see note 23.

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Non-current interest-bearing liabilities
Secured loans, net of unamortized financing costs of USD 224 in 2009 and USD 324 in 2008	31 150	33 198
Finance lease liabilities	10	37
Total non-current interest-bearing liabilities	31 160	33 235
Current interest-bearing liabilities
Secured loans	2 148	2 069
Finance lease liabilities	27	83
Construction loan	48 000	118 500
Total current interest-bearing liabilities	50 175	120 652
Secured Loans as of 31 December 2009	Maturity	Balance
---	---	---
Philadelphia Industrial Development Authority (PIDA)	Oct. 2015	9 132
Philadelphia Industrial Development Corporation (PIDC)	Oct. 2015	4 390
PIDC Regional Center, LP XV (Welcome Fund)	Mar. 2012	19 776
Total Secured Loans		33 298

The PIDA and PIDC loans are secured by a joint first mortgage against property, plant and equipment with a carrying amount of USD 66.8 million as of 31 December 2009 (see note 6) and have a fixed interest rate until maturity. Payments are fixed and are paid monthly through maturity.

The Welcome Fund loan is secured by a second mortgage against property, plant and equipment with a carrying value of USD 66.8 million as of 31 December 2009 (see note 6) and has a fixed interest rate until maturity. Interest is paid semi-annually and the principal is due March 2012.

Construction Loan as of 31 December 2009	Maturity	Balance	Interest Rate
Caterpillar Financial Services Corporation	< 12 months	48 000	2.50%
		3-month LIBOR + 2.50%

The margin of 2.50% is subject to an increase or decrease depending upon the lender's cost of funds as defined in the loan agreement. In no event will the margin be adjusted below 2.25%.

The construction loan outstanding at 31 December 2009 is for construction of Hull 012 and Hull 013 and is secured by vessels under construction-receivables, valued at USD 94.6 million as of 31 December 2009. The undrawn amount as of 31 December 2009 is USD 102.0 million.

The loan balance for each vessel is repayable at the delivery of such vessel.

The Caterpillar loan contains certain financial covenants related to a minimum tangible net worth, as defined, of USD 40.0 million (USD 87.3 million at 31 December 2009) and debt to tangible net worth of no more than 4.0 to 1.0 (0.9 at 31 December 2009). As of 31 December 2009, the Company was in compliance with the existing covenants and is expected to remain in compliance during 2010.

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Finance lease liabilities are payable as follows as of 31 December:

Amounts in USD thousands	Payments 2009	Interest payments 2009	Principal 2009	Payments 2008	Interest payments 2008	Principal 2008
Less than one year	29	2	27	88	5	83
Between one and five years	10	-	10	39	2	37
Total	39	2	37	127	7	120

The finance leases are for forklifts.

Undrawn credit facilities

As of 31 December 2009, the Company has USD 4.2 million of undrawn credit facilities with a bank, out of a total available balance of USD 6.0 million. The drawn amount is being used for letters of credit.

Note 17: Operating leases

Non-cancelable operating lease rentals are payable as follows as of 31 December:

Amounts in USD thousands	2009	2008
Less than one year	482	516
Between one and five years	566	903
Total	1 048	1 419

The operating leases are for priming and blasting equipment, vehicles, and printing and copying equipment.

The Company operates on land subleased from the Philadelphia Shipyard Development Corporation (PSDC) through April 2018. Lease payments include rent, taxes and operating expenses. The lease payments are subject to an annual revision based on PSDC's operating expenses. The Company has options to renew the lease for three consecutive periods of 20 years each and one final period of 19 years. The Company can acquire the land for USD 1 after the expiration of all renewal periods.

Note 18: Pensions

Pension expense recognized in the income statement:

Amounts in USD thousands	2009	2008
Contribution plans (employer’s contribution)	923	861
Total net pension expense	923	861

The Company has a defined contribution plan for its non-union employees which provides for a Company contribution based on a fixed percentage of certain employee contributions plus a discretionary percentage of salaries. The Company also contributes a fixed amount per hour worked to the union's multi-employer pension plan. If the Company were to terminate its relationship with the union's multi-employer pension plan, the Company could be statutorily liable for a termination liability calculated at the termination date. Currently the Company has no plans to terminate this relationship. Thus no termination liability has been recognized in the financial statements.

Note 19: Other provisions - warranties

Amounts in USD thousands	2009	2008
Current balance as of beginning of period	3 769	3 701
Provisions made during the period	999	706
Provisions used during the period	(1 368)	(638)
Current balance as of 31 December	3 400	3 769

The warranty provision relates to the warranty work for container vessels Hulls 001-004 (CV1-4) and product tankers Hulls 005-012 (PT1-8) delivered in 2003 through 2009.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Note 20: Trade and other payables

Trade and other payables comprise the following items:

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Trade accounts payable	5 953	2 089
Financial cost accruals	52	298
Ship material and subcontracting accruals	13 147	13 951
Derivative financial instruments	142	6 557
Employee-related cost accruals	11 749	10 773
Overhead cost accruals	8 072	7 200
Other short-term interest-free liabilities	210	799
Total	39 325	41 667

Net current operating assets (+)/liabilities (-) (working capital):

Amounts in USD thousands	31 Dec. 2009	31 Dec. 2008
Current operating assets	15 065	26 906
- Current operating liabilities	(45 014)	(49 459)
+ Project related cash	36 225	23 551
= Net working capital	6 276	998

Current operating assets and liabilities exclude the cost in excess of billings on construction contracts (i.e. vessels under construction-receivables) and the corresponding construction loan.

Note 21: Interest-bearing short-term debt

Interest-bearing short-term debt comprises the following items at 31 December:

Amounts in USD thousands	2009	2008
Construction loan	48 000	118 500
Current portion of interest-bearing long-term debt	2 175	2 152
Total	50 175	120 652

See note 16 for further details on interest-bearing debt.

Note 22: Interest-bearing debt

Net interest-bearing debt comprise the following items at 31 December:

Amounts in USD thousands	2009	2008
Long-term interest-bearing debt	31 160	33 235
+ Short-term interest-bearing debt (excluding construction loan)	2 175	2 152
Total interest-bearing liabilities	33 335	35 387
- Long-term interest-bearing receivable	(171)	(220)
- Short-term interest-bearing receivable	(3 017)	(4 789)
- Cash and bank deposits	(36 225)	(23 551)
Total interest-bearing assets	(39 413)	(28 560)
Net interest-bearing debt (+)/asset (-)	(6 078)	6 827

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Note 23: Financial instruments

Exposure to credit, liquidity, currency, and interest rate risks arise in the normal course of the Group's business. Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates for business purposes.

Credit risk

The carrying amount of financial assets represents the maximum credit exposure. At 31 December 2009, the maximum exposure to credit risk is as follows:

Amounts in USD thousands	2009	2008
Cash and cash equivalents	36 225	23 551
Total	36 225	23 551
Amounts in USD thousands	2009	2008
Interest-bearing long-term receivable	171	220
Security deposits	2 883	2 883
Interest-bearing short-term receivable, net of allowances	3 017	4 789
Vessels under construction-receivables	94 614	162 145
Total	100 685	170 037

The Company currently has two customers which are AMSC and OSG. The interest-bearing short-term receivable relates to monies in escrow related to the container vessels' customer.

Receivables are related to monies in escrow and certain security deposits for rents.

Liquidity risk

The following are the contractual maturities of financial liabilities including interest payments:

Amounts in USD thousands	31 December 2009						More than 5 years
	Book value	Contractual cash flow	6 mths and less	6-12 mths	1-2 years	2-5 years
Non-derivative financial liabilities:
Long-term portion of secured loans (gross)	31 374	(33 132)	-	-	(3 176)	(29 956)	-
Long-term portion of finance lease liabilities	10	(10)	-	-	(10)	-	-
Current portion of long-term interest-bearing external liabilities	2 175	(3 205)	(1 601)	(1 604)	-	-	-
Construction loan	48 000	(49 139)	31 441	(80 580)	-	-	-
Derivative financial liabilities:
Forward exchange contracts	142	(142)	(142)	-	-	-	-
Total	81 701	(85 628)	29 698	(82 184)	(3 186)	(29 956)	-
Amounts in USD thousands	31 December 2008						More than 5 years
---	---	---	---	---	---	---	---
	Book value	Contractual cash flow	6 mths and less	6-12 mths	1-2 years	2-5 years
Non-derivative financial liabilities:
Long-term portion of secured loans (gross)	33 522	(36 308)	-	-	(3 175)	(31 169)	(1 964)
Long-term portion of finance lease liabilities	37	(39)	-	-	(29)	(10)	-
Current portion of long-term interest-bearing external liabilities	2 152	(3 266)	(1 646)	(1 620)	-	-	-
Construction loan	118 500	(120 259)	(120 259)	-	-	-	-
Derivative financial liabilities:
Forward exchange contracts	6 557	(6 557)	(4 028)	(2 208)	(321)	-	-
Total	160 768	(166 429)	(125 933)	(3 828)	(3 525)	(31 179)	(1 964)

Book values included in the above tables are gross loan amounts. Balances included in the statement of financial position are shown net of unamortized financing costs of USD 224 in 2009 and USD 324 in 2008.

Currency risk

The Group incurs foreign currency risk on purchases and borrowings that are denominated in a currency other than USD. The currencies giving rise to this risk are primarily EUR (Euro), NOK (Norwegian Kroner) and KRW (Korean Won).

As of 31 December 2009 AKPS's portfolio of foreign exchange transaction exposures represented the following currencies and maturities. Amounts indicated represent the underlying notional amounts.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Amounts in USD thousands	Maturing in 2010	2011	2012	Later years	Total
Buy KRW	2 795	-	-	-	2 795
Buy total	2 795	-	-	-	2 795
Net position	2 795	-	-	-	2 795

Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognized in the income statement. Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the monetary items are recognized as part of "net financial items" (see note 4). The fair value of exchange contracts used as economic hedges of monetary assets and liabilities in foreign currencies at 31 December 2009 was USD 142 and 2008 was USD 6,557 recognized in current liabilities.

Exposure to currency risk

The Company's exposure to currency risk at 31 December 2009 was as follows based on the following notional amounts:

Amounts in USD thousands	2009			2008
	Euro	KRW	NOK	Euro	KRW	NOK
Gross balance sheet exposure
Trade payables (-)	(64)	(209)	-	(5)	-	(311)
Cash	-	-	5 337	-	-	5 214
Gross balance sheet exposure	(64)	(209)	5 337	(5)	-	4 903
Estimated forecast expenses (-)	(1 171)	(4 342)	(1 865)	(5 527)	(24 940)	(5 552)
Gross exposure	(1 171)	(4 342)	(1 865)	(5 527)	(24 940)	(5 552)
Forward exchange contracts	-	2 795	-	4 413	25 891	7 474
Net exposure	(1 235)	(1 756)	3 472	(1 119)	951	6 825

Sensitivity analysis

In managing interest rate and currency risks the Group aims to reduce the impact of short-term fluctuations on the Group's earnings. Over the longer term, however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.

At 31 December 2009 it is estimated that a 10% strengthening of the USD against other foreign currencies would decrease the Group's profit before tax by approximately USD 241.

Exposure to interest rate risk

It is estimated that a general increase of one percentage point in interest rates would decrease the Group's income before tax on an annual basis by approximately USD 274 for 2009 and USD 836 for 2008. The estimate for financial liabilities includes only the variable interest rate construction loan.

Fair values

The fair values of financial instruments together with the carrying amounts shown in the statement of financial position as of 31 December are as follows:

Amounts in USD thousands	Carrying amount 2009	Fair value 2009	Carrying amount 2008	Fair value 2008
Interest-bearing long-term receivables	171	171	220	220
Interest-bearing short-term receivables	3 017	3 017	4 789	4 789
Cash and cash equivalents	36 225	36 225	23 551	23 551
Forward exchange contracts	142	142	(6 557)	(6 557)
Secured loans (gross)	(33 522)	(28 672)	(35 591)	(30 532)
Construction loan	(48 000)	(48 000)	(118 500)	(116 622)
Finance lease liabilities	(37)	(35)	(122)	(117)

The fair value of fixed-interest long-term debt is calculated based on the present value of future principal and interest cash flows discounted at the market rate of 8.0% for 2009 and 7.0% for 2008.

Carrying amounts included in the above table are gross loan amounts. Balances included in the statement of financial position are shown net of unamortized financing costs of USD 224 in 2009 and USD 324 in 2008.

The Company has categorized its assets and liabilities that are recorded at fair value, based on the priority of the input to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The categories are described below:

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we have the ability to access.

Level 2. Assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Examples of Level 2 inputs include quoted prices for identical or similar assets or liabilities in non-active markets and pricing models whose inputs are observable for substantially the full term of the asset or liability.

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The only items recognized at fair value in the consolidated statement of financial position as of 31 December 2009 are foreign exchange contracts of USD 2.8 million, which are classified in the Level 2 category described above.

Note 24: Shares owned or controlled by the President and Chief Executive Officer, Board of Directors and Senior Management of AKPS

Shares owned in Aker Philadelphia Shipyard ASA as of 31 December 2009

Name	Position	AKPS Number of shares
Karl Erik Kjelstad	Board Chairman	2 000
Elin Karfjell	Board Member	1 200
Jim Miller	General Manager	20 000
Jeffrey Theisen	CFO	1 000
Scott Clapham	Senior Vice President	1 000

There is no share option agreement between Aker Philadelphia Shipyard ASA and Senior Management or Directors.

Remuneration to the Board of Directors for the year ended 31 December 2009 (USD)

Name	Position	Remuneration
Karl Erik Kjelstad	Board Chairman	52 065
Gary Mandel	Board Deputy Chairman	34 710
Marianne Heien Blystad	Board Member	34 710
Elin Karfjell	Board Member	34 710
Mark Singel	Board Member	34 710
Sum Directors' fee		190 905

The Company paid Mark Singel USD 44,000 under a consulting contract. No other board members received any other benefits other than Directors' fees.

Remuneration to the nomination committee

The nomination committee of Aker Philadelphia Shipyard ASA has the following members: Leif-Arne Langoy, Kjeld Rimberg and Gerhard Heiberg. Remuneration earned by the committee in 2009 was NOK 90,000 (USD 15,620).

Guidelines for remuneration to the President and CEO and members of the Executive Team

The basis of the remuneration of the President and CEO and members of the Executive Team has been developed in order to create a performance-based system. This system of reward is designed to contribute to the achievement of good financial results and increase shareholder value.

The CEO receives a base salary. In addition, a variable pay may be awarded. This variable pay program was implemented in 2007. This variable pay is based on the achievement of financial and personal performance targets, leadership performance in accordance with the Company's values and the development of the Company's share price.

The variable pay program represents a potential for an additional variable pay up to 100% of base salary depending on the achievement of defined short-term and long-term results such as financial targets (profit and working capital) and personal targets (project targets, development of commercial solutions, alignment with values and improvement of Health, Safety and Environment).

The variable pay is paid the following year. After a further two years, an additional one half of the earned variable amount is paid to encourage executives to maintain their employment in Aker Philadelphia Shipyard ASA.

Variable pay and other benefits of USD 0 and 284,000 were guaranteed to the CEO in 2009 and 2008, respectively.

Members of the Executive Team receive a base salary. In addition, a variable pay may be awarded. This variable pay program was implemented in 2007. This variable pay is based on the achievement of financial and personal performance targets, leadership performance in accordance with the Company's values and the development of the Company's share price.

The variable pay program represents a potential for an additional variable pay in the range of 20% to 50% of base salary depending on the achievement of defined short-term and long-term results such as financial targets (profit and working capital) and personal targets (project targets, development of commercial solutions, alignment with values and improvement of Health, Safety and Environment).

The President and CEO and members of the Executive Management Team are eligible for participation in the variable pay program.

The President and CEO and Executive Management Team participate in the standard pension and insurance schemes, 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 the members of the Executive Management Team.

The Company does not offer share option programs to Executive Managers.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Consolidated accounts

Remuneration to Senior Management during 2009

In 2009, Jim Miller, CEO and President, received a salary of USD 485,000, variable pay of USD 182,500, pension contributions of USD 9,700 and other benefits of USD 93,600. Jim Miller was appointed CEO and President on 1 July 2008. His paid compensation for the period of 1 July 2008 through 31 December 2008 was a salary of USD 243,000, pension contributions of USD 1,000 and other benefits of USD 55,000. Dave Meehan was CEO and President for the period of 1 January 2008 through 30 June 2008. During this period he received a salary of USD 210,000, variable pay of USD 67,000, pension contributions of USD 9,000 and other benefits of USD 874,000.

In 2009, Jeffrey Theisen, CFO, received a salary of USD 230,000, variable pay of USD 54,800, pension contributions of USD 8,700 and other benefits of USD 15,800. His paid compensation in 2008 was a salary of USD 233,000, variable pay of USD 54,000, pension contributions of USD 6,300 and other benefits of USD 15,000.

Note 25: Commitments and contingencies

Government grants

The Shipyard has been funded by various federal, state, and local government agency subsidies for periods including those prior to the purchase on 30 June 2005, totaling USD 438.6 million, as set forth in the Master Agreement between the Government Parties and the Shipyard, dated 16 December 1997, as amended 30 July 1999.

Funding under the Master Agreement was allocated as follows: USD 42.0 million for preliminary Shipyard development, USD 259.6 million for initial construction costs, and USD 137.0 million for employee training programs. In 2001, the Shipyard was granted a transfer of USD 50.0 million from the preliminary Shipyard development budget to the initial construction costs budget, but the overall amount of USD 438.6 million did not change. Funding was provided through loans to the Shipyard (see note 16) as well as grants.

The Shipyard has exhausted the funding under the Master Agreement and did not receive any funding in 2009 or 2008.

For the year ended 31 December 2009, the Shipyard received USD 235,700 reimbursement of employee training costs (USD 61,900 reimbursement in 2008).

Other commitments and contingencies

Under the terms of the Master Agreement, the Shipyard and Aker Maritime Finance AS (as the successor by merger to the former Kvaerner ASA) are subject to various operating covenants, restrictions, and obligations throughout an approximate 15-year period ending on 31 December 2014. The Shipyard anticipates that, so long as it continues its shipbuilding activities, it will continue to comply with the terms and requirements of the Master Agreement and that the Master Agreement will continue to remain in effect.

Under the Master Agreement, the Shipyard is required to maintain minimum employment levels. The Shipyard will be required to pay liquidated damages to the Government Parties in the event that the average number of full-time employees during a given year falls below the required minimum, subject to an aggregate cap of USD 20.0 million. This requirement is guaranteed by Aker Maritime Finance AS. American Shipping Company ASA (AMSC) issued a USD 20.0 million counter guarantee with respect to this requirement to Aker Maritime Finance AS in connection with the establishment of the AMSC group in 2005. As part of the sale by AMSC of Aker Philadelphia Shipyard, Inc. in 2007, the Company issued a USD 20.0 million counter guarantee with respect to this requirement to both Aker Maritime Finance AS and AMSC.

In addition, under the Master Agreement, the Shipyard is required to pay a common area maintenance charge each month to the PSDC of approximately USD 34,000 through the term of the agreement.

On 13 September 2002, the Shipyard finalized an agreement with the City of Philadelphia (and others), whereby the parties agreed to the Real Estate and Use and Occupancy Tax for the years 2001 through 2017. The Shipyard is committed to a fixed assessment of approximately USD 3.3 million to USD 3.6 million per year, commencing in 2003.

As of 31 December 2009, the Company has entered into commitments with various third-party suppliers for approximately USD 68.5 million of ship production and overhead related expenditures on Hulls 012 - 015 (NB 013-016). The Company has commitments for approximately USD 57.7 million for materials related to Hulls 017-020 (see note 11). If the Company does not build Hull 017, either pursuant to a firm order or on speculation, then it is estimated that the Company would incur expenses in excess of USD 15.0 million. If the Company does not build the three remaining option vessels (Hulls 018-020) then the Company will incur significant additional expense.

The Company has contractual commitments for capital expenditures of USD 278,000 at 31 December 2009.

The Company and AMSC are jointly and severally liable to Overseas Shipholding Group for breaches by them under the framework agreement and related transaction documents governing the construction and leasing of the initial ten Jones Act tankers of APSI's current 12-ship series. Among other liabilities, the Company and AMSC are obligated to pay liquidated damages to Overseas Shipholding Group in the event of late delivery of AKPS Hull 015 (NB 015) on the terms and conditions defined in such transaction documents. The Company and AMSC have entered into a cross-inaternity agreement to allocate these liabilities among themselves based on relative fault.

Legal matters

The Group is involved in various legal disputes in the ordinary course of business related primarily to personal injury matters, employment matters and commercial matters. Provisions have been made to cover the expected outcomes when it is probable that a liability has been incurred and the amount is reasonably estimable. Although the final outcome of these matters is subject to uncertainty, in the Group's opinion the ultimate resolution of such legal matters will not have a material adverse effect on the Group's financial position or results of operations.

Aker Philadelphia Shipyard, Inc. is currently under audit by the Internal Revenue Service for the year ended 31 December 2007. Although the final outcome of the audit is subject to uncertainty, in the Company's opinion the ultimate resolution of the audit will not have a material adverse effect on the Company's financial position or results of operations.

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Consolidated accounts

Note 26: Transactions, guarantees and agreements with related parties and concentration of business

Converto Capital Fund AS, an investment fund controlled by Aker ASA, is the majority shareholder in AKPS owning 50.3% of the total outstanding shares of AKPS as of 31 December 2009. These shares were transferred by Aker ASA to Converto Capital Fund AS as part of a reorganization of Aker ASA's investments consummated in 2009. APSI has business relations with several companies which are ultimately controlled by Aker ASA. Except as described elsewhere, AKPS believes that related party transactions are made on terms equivalent to those that prevail in arm's length transactions.

Transactions

The Group has service agreements with Aker ASA and its affiliates which provide certain specified consulting, accounting, financial and administrative services.

Related administrative costs and financial statement amounts were as follows:

Amounts in USD thousands	Expenses 2009	Expenses 2008	Payables 31 Dec. 2009	Payables 31 Dec. 2008
Aker ASA	256	441	23	329

In its shipbuilding activities AKPS subcontracts and hires services from several affiliated companies on behalf of APSI.

Related balances were as follows:

Amounts in USD thousands	Expenses 2009	Expenses 2008	Payables 31 Dec. 2009	Payables 31 Dec. 2008
STX Brevik Support AS	2 768	8 910	-	3
Resource Group International	65	38	-	-
Aker Solutions	30	46	-	-

Concentrations

Operating revenues were from sales to entities controlled by AMSC.

Amounts in USD thousands	Revenue 2009	Revenue 2008	Vessels under construction-receivables
			31 Dec. 2009	31 Dec. 2008
American Shipping Corporation (AMSC)	224 951	285 000	82 842	162 145

Agreements

A service agreement with Aker ASA exists for economic and accounting services, IT support and operation and administrative services.

APSI has a management service agreement with AMSC to provide legal services, HR, payroll, IT and information services as well as other administrative services. Total fees charged to AMSC in 2009 and 2008 were USD 124 and USD 408, respectively.

AKPS is a party to the counter guarantee to Aker Maritime Finance AS and AMSC disclosed in note 25.

As part of the settlement with OSG, AMSC, and Aker noted in note 10, Aker was required to provide a guarantee under the construction loan facility with Caterpillar for USD 150.0 million for the construction financing of NB015 and NB016. In the event that NB013 is not delivered by 15 May 2010, the guarantee of USD 150.0 million will be extended to cover NB013-NB016. In consideration for the guarantee, APSI agreed to pay a guarantee fee to Aker. As part of the settlement with AMSC, AMSC agreed to pay the guarantee fee on behalf of APSI.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Parent company accounts

Aker Philadelphia Shipyard ASA

Income Statement

Amounts in USD thousands	Note	2009	2008
Operating revenues		78	115
Operating expenses	2	(745)	(543)
Operating loss		(667)	(428)
Interest income from subsidiary		312	77
Other interest and financial income		1 234	1 334
Other interest and financial expenses		(6)	(2 892)
Income/(loss) before tax		873	(1 909)
Tax expense	4	-	(989)
Net income/(loss)		873	(2 898)
Allocation of net income/(loss):
Net income/(loss)		873	(2 898)
Other equity	6	(873)	2 898
Total		-	-

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Parent company accounts

Aker Philadelphia Shipyard ASA

Statement of Financial Position

as of 31 December

Amounts in USD thousands	Note	2009	2008
ASSETS
Shares in subsidiary	3	67 000	67 000
Long-term receivable from subsidiary		10 000	5 000
Total non-current assets		77 000	72 000
Other short-term receivables		243	31
Cash and cash equivalents	6	10 189	15 118
Total current assets		10 432	15 149
Total assets		87 432	87 149
EQUITY AND LIABILITIES
Share capital		18 709	18 709
Share premium reserve		52 286	52 286
Total paid in capital		70 995	70 995
Other equity		14 097	13 224
Total equity	5	85 092	84 219
Other short-term liabilities		2 340	2 930
Total current liabilities		2 340	2 930
Total equity and liabilities		87 432	87 149

Oslo, 1 March 2010

Board of Directors

Aker Philadelphia Shipyard ASA

Karl Erik Kjelstad

Board Chairman

Gary Mandel

Board Deputy Chairman

Mark Singel

Jame H. Miller

General Manager

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Parent company accounts

Aker Philadelphia Shipyard ASA

Cash Flow Statement

Amounts in USD thousands	2009	2008
Income/(loss) before tax	873	(1 909)
Change in short-term receivables	(212)	(17)
Change in short-term liabilities	(590)	(1 222)
Net cash flow from/(used in) operating activities	71	(3 148)
Change in long-term investments	(5 000)	(5 000)
Net cash flow used in investing activities	(5 000)	(5 000)
Dividends paid	-	(4 373)
Net cash flow used in financing activities	-	(4 373)
Net change in cash and cash equivalents	(4 929)	(12 521)
Cash and cash equivalents at beginning of period	15 118	27 639
Cash and cash equivalents as of 31 December	10 189	15 118

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Parent company accounts

Aker Philadelphia Shipyard ASA

Notes to the accounts

Note 1: Basis for preparation

The accounts of Aker Philadelphia Shipyard ASA are presented in conformity with Norwegian legislation and generally accepted accounting principles in Norway. The Company's functional and reporting currency is the U.S. dollar (USD).

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 temporary nature and is necessitated by accepted accounting principles. 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 the Company's statement of financial position.

Classification and valuation of statement of financial position items

Current assets and short-term 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 long-term assets/long-term debt.

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-current liabilities are valued at nominal historical values.

Tax

Tax 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 is calculated using a 28% 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.

To the extent a group contribution is not shown in the income statement, the tax effect is taken directly against the investment item in the statement of financial position.

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 generally accepted accounting principles 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.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Parent company accounts

Note 2: Other operating expenses

Fees to the auditors of USD 53,801 and USD 40,269 for ordinary audit have been expensed in 2009 and 2008, respectively. The company has no employees. The senior management is employed in the operating company. Fees to the Board of Directors of USD 190,905 and USD 140,352 were expensed in 2009 and 2008, respectively.

Note 3: Shares

This item comprises the following as of 31 December 2009:

Amounts in USD thousands	Ownership and voting rights (%)	Business address	Historical cost	Book value
Aker Philadelphia Shipyard, Inc.	100%	Philadelphia	67 000	67 000
Total shares			67 000	67 000

APSI's results after-tax in 2009 and equity at the end of 2009 are:

Results after-tax 2009 in USD thousands (5 272)

Equity at 31 December 2009 in USD thousands 69 238

Note 4: Taxes

The table below shows the difference between book and tax values by the end of 2009 and 2008, and the amounts of deferred taxes at these dates and the change in deferred taxes.

Amounts in USD thousands	2009	2008
Operating loss carried forward measured in NOK for taxation purposes	(3 491)	-
Total differences	(3 491)	-
Net deferred tax asset, 28%	(977)	-
Tax losses not recognized	977	-
Tax asset in the statement of financial position	-	-

Deferred tax asset is not recognized due to lack of expected future taxable income in Norway.

Estimated result for tax purposes:

Amounts in USD thousands	2009	2008
Income/(loss) before tax measured in NOK for taxation purposes	(3 491)	3 327
Transaction cost offset equity	-	(90)
Utilization of loss carried forward	-	(997)
Estimated income/(loss) for tax purposes	(3 491)	2 240
Payable current tax	-	627

Tax expenses in the income statement:

Amounts in USD thousands	2009	2008
Tax payable	-	627
Change in deferred tax in the statement of financial position	-	362
Tax expense	-	989

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Parent company accounts

Note 5: Total equity

Changes in equity are:

Amounts in USD thousands	Share capital	Share premium	Total paid-in capital	Other equity	Total equity
Equity as of 1 January 2009	18 709	52 286	70 995	13 224	84 219
Net income				873	873
Equity as of 31 December 2009	18 709	52 286	70 995	14 097	85 092

The share capital of NOK 101 653 050 consists of 10 165 305 shares with a par value of NOK 10.

The company is a part of the consolidated accounts of Aker ASA, Fjordalleen 16, 0115 Oslo.

Twenty largest shareholders
as of 15 February 2010

Name	Number of shares held	Ownership (in %)
CONVERTO CAPITAL FUND AS	5 112 750	50.30%
DEUTSCHE BANK AG LON PRIME BROKERAGE FULL	1 432 486	14.09%
GOLDMAN SACHS & CO - SECURITY CLIENT SEGR	1 424 967	14.02%
SKANDINAVISKA ENSKIL (PUBL) OSLOFILIALEN	480 000	4.72%
STATE STREET BANK AN A/C CLIENT OMNIBUS D	456 800	4.49%
COMMERZBANK AG LONDO A/C DBL ARB	446 343	4.39%
CREDIT SUISSE SECURI SPECIAL CUSTODY A/C	222 302	2.19%
SEB PRIVATE BANK S.A	135 783	1.34%
DEUTSCHE BANK AG LON	131 346	1.29%
CREDIT SUISSE SECURI (EUROPE) LTD./FIRMS	124 348	1.22%
SEB ENSKILDA ASA EGENHANDELSKONTO	30 080	0.30%
MEEHAN DAVID	27 500	0.27%
FIRST CLEARING A/C L C/O JPMORGAN CHASE B	21 000	0.21%
ELSJO AS V/ERLING SIGVART JOH	10 200	0.10%
KOVACI RAMADAN	10 000	0.10%
CAMELBACK HOLDING AS V/ TORE BJARK	9 800	0.10%
INTELLIGENT TRADING	8 600	0.08%
KOKKEN TOR INVEST AS	6 000	0.06%
LOLIGO AS	4 800	0.05%
GRANLUND HOLDING AS	3 200	0.03%
Total, 20 largest shareholders	10 098 305	99.34%
Other shareholders	67 000	0.66%
Total	10 165 305	100.00%

Note 6: Cash and cash equivalents

There is no restricted cash.

Note 7: Events after 31 December 2009

There have been no significant events after 31 December 2009.

Note 8: 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, see note 24 to the Consolidated Accounts.

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Parent company accounts

Note 9: Guarantee on behalf of subsidiary and affiliated Companies

The company has made the following guarantees:

Description	Beneficiary	Amount (USD thousands)	Borrower
Capital expenditure facility	PIDC Regional Center, LP XV	20 000	APSI
Construction loan facility	Caterpillar Financial Services Corp.	150 000	APSI
Working capital	TD Bank	6 000	APSI

The capital expenditure facility is for capital improvements at the yard.

The construction loan facility is for the construction of the product tankers.

The working capital facility supports the issuance of letters of credit.

Additionally, as part of the sale of Aker Philadelphia Shipyard, Inc. (APSI) in 2007, the Company issued a USD 20.0 million counter guarantee to both Aker Maritime Finance AS and American Shipping Company ASA (AMSC) related to APSI's obligation to maintain minimum employment levels through 2014. For additional information regarding this obligation, see note 25 to the Consolidated Accounts.

The Company has a service agreement with Aker ASA for financial, information technology, and administrative services. Total expenses incurred under this agreement in 2009 and 2008 were USD 256 thousand and USD 441 thousand respectively.

The Company entered into a loan agreement in the amount of USD 20.0 million with APSI. USD 10.0 million is outstanding at 31 December 2009. Interest is payable quarterly in arrears at three-month LIBOR plus 2.25%. The loan is payable upon demand.

The Company has agreed to indemnify Overseas Shipholding Group (OSG) for breaches by APSI under the framework agreement and related transaction documents governing the construction and leasing of the initial ten Jones Act tankers of APSI's current 12-ship series. The Company has also agreed to indemnify AMSC under a cross-indemnity agreement in the event that AMSC indemnifies OSG for breaches by APSI under those transaction documents.

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Auditor's report

KPMG

KPMG AS

P.O. Box 7000 Majorstuen

Sørkedalsveien 6

N-0306 Oslo

Telephone +47 04963

Fax +47 22 60 96 01

Internet www.kpmg.no

Enterprise 935 174 627MVA

To the Annual Shareholders’ Meeting of Aker Philadelphia Shipyard ASA

AUDITOR’S REPORT FOR 2009

Respective Responsibilities of Directors and Auditors

We have audited the annual financial statements of Aker Philadelphia Shipyard ASA as of 31 December 2009, showing a profit of USD 873,000 for the parent company and a total comprehensive income of USD -4,399,000 for the group. We have also audited the information in the Board of Directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The annual financial statements comprise the parent company’s financial statements and the group accounts. The parent company’s financial statements comprise the statement of financial position, the statements of income and cash flows, and the accompanying notes. The group accounts comprise the statement of financial position, the income statement and the statement of comprehensive income, the statement of cash flows, the statement of changes in equity and the accompanying notes. The rules of the Norwegian accounting act and good accounting practice in Norway have been applied to prepare the parent company’s financial statement. The rules of the Norwegian accounting act and International Financial Reporting Standards as adopted by the EU have been applied to prepare the group accounts. These financial statements and the Board of Directors’ report are the responsibility of the Company’s Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on the other information according to the requirements of the Norwegian Act on Auditing and Auditors.

Basis of Opinion

We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and good auditing practice in Norway, including standards on auditing adopted by Den norske Revisorforening (The Norwegian Institute of Public Accountants). These auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and good auditing practice an audit also comprises a review of the management of the Company’s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion,

the parent company’s financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the parent Company as of 31 December 2009, the results of its operations and its cash flows for the year then ended, in accordance with the rules of the Norwegian accounting act and good accounting practice in Norway

KPMG AS is a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

Søroautoriserte revisorer - medlemmer av Den norske Revisorforening

Offices in:

Oslo	Haugesund	Sandefjord
Biele	Kristiansand	Sandeloppen
Alle	Lars	Søvanger
Aversdal	Lillehammer	Stad
Bergen	Mo i flere	Tromsø
Dusnum	Molde	Trøndfærø
Fornøres	Nevik	Tøndberg
Hense	Røvik	Ålesund
Grimstad

Aker Philadelphia Shipyard annual report 2009

Performance 2009
Auditor's report

KPMG

the group accounts are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Group as of 31 December 2009, the total comprehensive income, its cash flows and the changes in equity for the year then ended, in accordance with the rules of the Norwegian accounting act and International Financial Reporting Standards as adopted by the EU
the company’s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of accounting information
the information in the Board of Directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and comply with the law and regulations.

Oslo, 5 March 2010
KPMG AS

State Authorised Public Accountant

Aker Philadelphia Shipyard annual report 2009 59

Performance 2009

Shares and shareholder matters

Good dialogue

Aker Philadelphia Shipyard is committed to maintaining an open and direct dialogue with its shareholders, potential investors, analysts, brokers, and the financial community in general.

The timely release of information to the market that could affect the company's share price helps ensure that Aker Philadelphia Shipyard ASA's share price reflects its underlying value.

Aker Philadelphia Shipyard's goal is that the company's shareholders will, over time, receive competitive returns on their investments through a combination of dividends and share price growth. On 25 February 2008, the company's Board of Directors adopted the following dividend policy:

"The Company's objective is to provide its shareholders with a competitive return over time based on its earnings. Any dividends will be considered in conjunction with the Company's financial position, debt covenants, its capital requirements and potential strengthening of the Company's financial structure. The Company aims to pay out between 50% and 100% of its net profits."

The Board of Directors will propose to Aker Philadelphia Shipyard's annual shareholders' meeting that no dividend be paid for the 2009 accounting year.

Year	Dividend (in NOK)
2006	0
2007	0
2008	2.50
2009 Proposed	0

Shares and share capital

Aker Philadelphia Shipyard ASA has 10 165 305 ordinary shares; each share has a par value of NOK 10 (see Note 5 to the parent company's 2009 accounts). As of 31 December 2009, the company had 91 shareholders, of whom 15.4% were non-Norwegian shareholders.

Aker Philadelphia Shipyard has a single share class. Each share is entitled to one vote. The company held 0 of its own (treasury) shares as of 31 December 2009. No share issues were carried out in 2009.

Stock-exchange listing

Aker Philadelphia Shipyard ASA was listed on Oslo Axess on 17 December 2007 (ticker: AKPS). Aker Philadelphia Shipyard's shares are registered in the Norwegian Central Securities Depository; the shares have the securities registration number ISIN NO 0010395577. DnB NOR Bank ASA is the company's registrar.

Majority shareholder

Aker Philadelphia Shipyard ASA's majority shareholder is Converto Capital Fund AS (formerly named Aker Capital Fund AS), an investment fund controlled by Aker ASA. Companies that are part of the Aker group are legally and financially independent units. Converto Capital Fund AS exercises active ownership as part of systematic efforts to create value for all Aker Philadelphia Shipyard shareholders.

From time to time, agreements are entered into between two 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 2009, Aker Philadelphia Shipyard ASA has no current Board authorizations to issue shares.

Stock option plans

As of 31 December 2009, Aker Philadelphia Shipyard ASA has no options program.

Investor relations

Aker Philadelphia Shipyard ASA seeks to maintain an open and direct dialogue with shareholders, financial analysts, and the financial market in general.

All Aker Philadelphia Shipyard press releases and investor relations (IR) publications, including archived material, are available at the company's website: www.akerphiladelphia.com. This online resource includes the company's quarterly and annual reports, prospectuses, corporate presentations, 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].

Electronic interim and annual reports

Aker Philadelphia Shipyard ASA encourages its shareholders to subscribe to the electronic version of the company's annual reports. Annual reports are published on the company's website at the

Share capital development over the past three years

Date	Change in share capital	Share capital (in NOK million)	Number of shares	Par value (in NOK)
1 January 2007
Change in 2007	101 653 050
31 December 2007		101 653 050	10 165 305	10.00
Change in 2008	-
31 December 2008		101 653 050	10 165 305	10.00
Change in 2009	-
31 December 2009		101 653 050	10 165 305	10.00

Aker Philadelphia Shipyard annual report 2009

Performance 2009

Shares and shareholder matters

same time as they are made available via website release by the Oslo Stock Exchange/Oslo Axess: www.newsweb.no (ticker: AKPS). Subscribers to this service receive annual reports in PDF format by email.

Quarterly reports, which are generally only distributed electronically, are available from the company's website and other sources. Shareholders who are unable to receive the electronic version of interim and annual reports, may subscribe to the printed version by contacting Aker Philadelphia Shipyard's investor relations staff.

Nomination committee

The company's nomination committee has the following members: Leif-Arne Langøy, Gerhard Heiberg, Kjeld Rimberg.

Shareholders who wish to contact Aker Philadelphia Shipyard's nomination committee may do so using the following address:

Nomination Committee of
Aker Philadelphia Shipyard ASA
P.O. Box 1423 Vika
NO-0115 Oslo, Norway

Annual shareholders' meeting

Aker Philadelphia Shipyard ASA's annual shareholders' meeting is normally held in

March or early April. Written notification is sent to all shareholders individually or to the shareholders' nominee. To vote at shareholders' meetings, shareholders (or their duly authorized representatives) must either be physically present or must vote by proxy.

2009 share data

The company's total market capitalization as of 31 December 2009 was NOK 69.6 million. During 2009, a total of 75 850 Aker Philadelphia Shipyard ASA shares traded. The shares traded on 17 trading days in 2009.

Twenty largest shareholders
as of 15 February 2010

Name	Number of shares held	Ownership
Converto Capital Fund AS	5 112 750	50.3%
Deutsche Bank AG Lon Prime Brokerage Full	1 432 486	14.1%
Goldman Sachs & Co - Security Client Segr	1 424 967	14.0%
Skandinaviska Enskil (Publ) Oslofilialen	480 000	4.7%
State Street Bank AN A/C Client Omnibus D	456 800	4.5%
Commerzbank AG Londo A/C Dbl Arb	446 343	4.4%
Credit Suisse Securi Special Custody A/C	222 302	2.2%
Seb Private Bank S.A	135 783	1.3%
Deutsche Bank AG Lon	131 346	1.3%
Credit Suisse Securi (Europe) Ltd./Firms	124 348	1.2%
Seb Enskilda Asa Egenhandelskonto	30 080	0.3%
Meehan David	27 500	0.3%
First Clearing A/C L C/O Jpmorgan Chase B	21 000	0.2%
Elsjo As V/Erling Sigvart Joh	10 200	0.1%
Kovaci Ramadan	10 000	0.1%
Camelback Holding AS V/ Tore Bjark	9 800	0.1%
Intelligent Trading	8 600	0.1%
Kokken Tor Invest AS	6 000	0.1%
Loligo AS	4 800	0.0%
Granlund Holding AS	3 200	0.0%
Total, 20 largest shareholders	10 098 305	99.3%
Other shareholders	67 000	0.7%
Total	10 165 305	100.0%

Ownership structure by number of shares held
as of 15 February 2010

Shares owned	Number of shareholders	Percent of share capital
1 – 100	2	< 0.01%
101 – 1 000	37	0.15%
1001 – 10 000	38	0.92%
10 001 – 100 000	4	0.87%
100 001 – 500 000	7	19.64%
Over 500 000	3	78.41%
Total	91	100%

Share price development in 2009
2009 share data

Highest traded	NOK	12.00
Lowest traded	NOK	3.80
Share price as of 31 Dec.	NOK	6.85
Shares issued as of 31 Dec.		10 165 305
Own (treasury) shares as of 31 Dec.		0
Shares issued and outstanding as of 31 Dec.		10 165 305
Market capitalization as of 31 Dec.	NOK million	69.6
Proposed share dividend	NOK per share	0.0

Geographic distribution of shareholders
As of 15 February 2010

Nationality	Number of shares held	Ownership
Non-Norwegian shareholders	4 426 875	43.5%
Norwegian shareholders	5 738 430	56.5%
Total	10 165 305	100.0%

Share price development

Aker Philadelphia Shipyard annual report 2009

MANAGEMENT

Our organization and governance

64 Corporate governance
67 Presentation of the Board of Directors
68 Presentation of the Management Team
70 Company information

Aker Philadelphia Shipyard annual report 2009 63

Our organization and governance
Corporate governance

Corporate governance

The Group's Corporate Governance policy was adopted by the Board of Aker Philadelphia Shipyard ASA in February 2008. The policy is based on the Norwegian Code of Practice for Corporate Governance, dated 4 December 2007.

In 2009, certain changes in the Norwegian company legislation were implemented and a new version of the Norwegian Code of Practice for Corporate Governance was published. The new rules and recommendations concern inter alia the calling and holding of shareholder meetings and introduce a duty to appoint an audit committee. AKPS is in the process of considering how it will respond to these changes in rules and recommendations and, as a consequence, may propose amendments to its articles of association and an updated corporate governance policy.

The following presents Aker Philadelphia Shipyard ASA's current practice regarding each of the recommendations contained in the Code of Practice and further addresses the changes that will be or are considered implemented. Any deviations from the recommendations are found under the item in question.

Purpose

Aker Philadelphia Shipyard ASA's Corporate Governance principles ensure an appropriate division of roles and responsibilities among the company's owners, its Board of Directors, 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 Aker ASA's corporate values and ethical guidelines, which are shared by Aker companies worldwide. Aker Philadelphia Shipyard ASA's corporate values are presented on page 8 of this annual report.

Business

Aker Philadelphia Shipyard ASA's business purpose clause in its 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. The Group's financial goals and main strategies are presented on page 7 of this report and in the Board of Directors' report.

Equity and dividends

Equity

The Group's equity as of 31 December 2009 amounted to USD 87.3 million, which corresponds to an equity ratio of 40.4%. Aker Philadelphia Shipyard ASA regards the company's current equity structure as appropriate and adapted to its objectives, strategy, and risk profile.

Dividends

Aker Philadelphia Shipyard ASA's dividend policy is included in the section "Shares and shareholder matters" (see page 60).

Board authorizations

It is the intention that the Board's proposals for future Board authorizations are to be limited to defined issues and to be valid only until the next annual shareholders' meeting.

The Board currently has no authorizations to issue shares.

Equal treatment of shareholders and transactions with close associates

The company has a single class of shares, and all shares carry the same rights in the company. Equal treatment of all shareholders is crucial. If existing shareholders' pre-emptive rights are proposed waived upon an increase in share capital, the Board must justify the waiver. Transactions in own (treasury) shares are executed on the Oslo Stock Exchange or by other means at the listed price.

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.

Aker Philadelphia Shipyard ASA has prepared guidelines designed to ensure that members of the Board of Directors and Executive Management notify the Board of any direct or indirect stake they may have in agreements entered into by the Group.

See additional information on transactions with related parties in Note 26 to the consolidated accounts. 50.3% of the shares in Aker Philadelphia Shipyard ASA are owned by an investment fund controlled by Aker ASA. For further details on the relationship between Aker Philadelphia Shipyard ASA and Aker ASA, see Note 26 to the consolidated accounts.

Freely negotiable shares

Aker Philadelphia Shipyard ASA's shares are freely negotiable. No restrictions on transferability are found in the company's articles of association/incorporation.

Annual shareholders' meetings

The company encourages shareholders to participate in shareholders' meetings. It is the company's priority to hold the annual shareholders' meeting as early as possible after the year-end. Notice of shareholders' meetings and comprehensive supporting information is made available for the shareholders on the company's home page and sent to the shareholders according to the deadlines stated in the Norwegian Public Company Act (allmen-naksjeloven) and the recommendations in the Norwegian Code of Practice when possible. The deadline for shareholders to register to the shareholders' meetings is set as close to the date of the meeting as possible. Shareholders who are unable to attend the meeting in person may vote by proxy, and normally the proxy may be given to the chairman of the meeting or any other person appointed by the chair

Aker Philadelphia Shipyard annual report 2009

Our organization and governance
Corporate governance

man. Both on the attendance and proxy form and the notice of meeting, all procedures for registration are thoroughly explained. 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.

Pursuant to Aker Philadelphia Shipyard ASA's articles of association, the Chairman of the Board, or any other person appointed by the Chairman, chairs the shareholders' meetings. It is the view of the Company that this procedure provides efficient and well prepared general meetings and is in the interests of the shareholders. To the extent possible, Board members, the nomination committee leader, and auditor attend annual shareholders' meetings.

In its work, the nomination committee emphasizes composing a board that works as a team, and that the Board members' experience and qualifications support each other. The shareholders' meeting is therefore invited to vote for a complete Board.

Minutes of shareholders' meetings are published as soon as practically possible on the Oslo Stock Exchange, www.newsweb.no (ticker: AKPS) and on the company's home page www.akerphiladelphia.com, under the heading "Investor".

Nomination committee

Aker Philadelphia Shipyard ASA has a nomination committee, as set forth in the company's articles of association. Pursuant to the articles of association, the nomination committee is to comprise no fewer than three members. Each member is normally elected for a two-year period. The composition of the nomination committee reflects the interests of the shareholders, and the nomination committee members' independence from Aker Philadelphia Shipyard ASA's Board and Executive Management. Nomination committee members and Chairman are elected by the company's annual shareholders' meeting, which also determines remuneration payable to committee members.

Pursuant to Aker Philadelphia Shipyard ASA's articles of association, the nomination committee recommends candidates for members of the Board of Directors. The nomination committee also makes recommendations as to remuneration of Board members. The nomination committee should justify its recommendation.

Aker Philadelphia Shipyard's nomination committee comprises the following members:

Leif Arne Langøy, Chairman (2009-2011)
Gerhard Heiberg (2009-2011)
Kjeld Rimberg (2009-2011).

Board composition and independence

The company does not have a corporate assembly.

Pursuant to the company's articles of association, the Board comprises between 3 and 7 members. Pursuant to the company's corporate governance policy, the Board is to comprise a total of 5 members. The company's shareholders elect the Chairman of the Board at the annual shareholders' meeting. The Board elects its own Deputy Chairman. Board members are elected for a period of two years.

All of the shareholder-elected Board members are independent of the company's Executive Management and its significant business associates. Further, no fewer than two of the shareholder-elected Board members are to be independent of the Company's main shareholder. Currently, two of the Board members, Karl Erik Kjelstad and Gary Mandel, are senior managers of Aker Solutions ASA, a portfolio company of Aker ASA. Aker Philadelphia Shipyard ASA does not have any Board committees at this time; however, it is in the process of preparing for the establishment of an audit committee in order to comply with recently enacted Norwegian company legislation.

The current composition of the Board is presented on page 67 of this annual report; the Board members' expertise, capabilities, and independence are also presented. Board members' shareholdings are presented in Note 24 to the consolidated accounts. The company encourages the Board members to invest in the company shares. The shareholder-elected Board members represent a combination of expertise, capabilities, and experience from various finance, business, industry, and non-governmental organizations.

None of the shareholder-elected Board members are up for election.

The work of the Board of Directors

The Board of Aker Philadelphia Shipyard ASA annually adopts a plan for its work, emphasizing goals, strategies, and implementation. Also, the Board has adopted board instructions that regulate areas of responsibility, tasks, and division of roles of the Board, Board Chairman, and President and CEO/General Manager. The Board instructions also feature rules governing Board schedules, rules for notice and chairing of Board meetings, decision-making rules, the President and CEO's/General Manager's duty and right to disclose information to the Board, professional secrecy, impartiality, and other issues.

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 appropriate risk management systems tailored to the company's business activities. The Board annually reviews the company's most important risk areas and internal control systems and procedures, and the main elements of these assessments are mentioned in the Board of Directors' report. The issue is further described in Notes 1 and 23 to the consolidated accounts.

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 Aker Philadelphia Shipyard ASA's financial performance. 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 2009 is presented in Note 24 to the consolidated accounts.

Remuneration of Executive Management

The Board has adopted guidelines for remuneration of Executive Management in accordance with the Norwegian Public Limited Company Act (Allmennaksjeloven § 6-16a). Salary and other remuneration of the President and CEO of Aker Philadelphia Shipyard ASA are determined in a Board of Directors' meeting.

Aker Philadelphia Shipyard ASA does not have stock option plans or other such share award programs for employees. Further information on remuneration for 2009 for members of Aker Philadelphia Shipyard ASA's Executive Management is presented in Note 24 to the consolidated accounts. The Group's guidelines for

Aker Philadelphia Shipyard annual report 2009

Our organization and governance
Corporate governance

remuneration to Executive Management are discussed on page 48 of this annual report and will be presented to the shareholders at the annual shareholders' meeting.

Information and communications

Aker Philadelphia Shipyard ASA'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 Aker Philadelphia Shipyard ASA's investor relations activities is to ensure the company'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 the company's share price; the company 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 the company's homepage www.akerphiladelphia.com; stock exchange notices are also available from www.newsweb.no. All information that is distributed to shareholders is simultaneously published on Aker Philadelphia Shipyard ASA's home page. The company endeavors to hold open presentations in connection with the

reporting of the results and the presentations are often transmitted directly on the internet.

The company's financial calendar is found on page 4 of this annual report.

Section 14 takeovers

The company 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, it will not take steps to prevent or obstruct a take-over bid for the company'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 shareholders' meeting after the take-over offer has become public knowledge.

Upon the issuance of an offer for the company's shares, the Board will make a statement to shareholders that provides an assessment of the bid, the Board's recommendations, and reasons for these recommendations. For each instance, an assessment will be made as to the necessity of bringing in independent expertise and if a third party valuation is to be obtained. If a third party valuation is obtained the Board will aim at recording such valuation in its statement.

Transactions that have the effect of sale of the company or a major component of it are to be decided on by shareholders at a shareholders' meeting.

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 meeting that deals with the annual accounts, and the auditor has reviewed the company's internal control with the Board. Once a year a meeting is held between the auditor and the Board, at which no representatives of Executive Management are present.

Guidelines have been established for Executive Management's use of auditors for services other than auditing. Auditors are to provide the Board with an annual overview of services other than auditing that have been supplied to the company.

Remuneration for auditors is presented in Note 3 to the consolidated accounts, detailed in auditing and other services. In addition, these details are presented at the annual general meeting.

Aker Philadelphia Shipyard annual report 2009

Our organization and governance
Presentation of the Board of Directors

Presentation of the Board of Directors

Karl Erik Kjelstad

Board Chairman

Karl Erik Kjelstad (b. 1966) is Executive Vice President of Aker Solutions ASA and has been with the Aker group since 1998. Mr. Kjelstad has been a board member of the Philadelphia shipyard since 2002 and served as Chairman since 2004. Mr. Kjelstad was, in the period June 2007 - July 2009, President, Maritime and Senior Partner in Aker ASA. From 2003 to 2007 Mr. Kjelstad was President & CEO of Aker Yards ASA. Prior to joining Aker, he held the position as Principal Consultant at PA Consulting Group. From 1992 to 1996 he held various positions in the TTS Group. Mr. Kjelstad holds a Master of Science (M.Sc) degree in Marine Engineering from the Norwegian University of Science and Technology (NTNU). Mr. Kjelstad is a Norwegian citizen. As of 1 February 2010, Mr. Kjelstad holds, through a privately owned company, 2000 shares in the company and has no stock options. He has been elected for the period of 2009-2011.

Gary Mandel

Board Deputy Chairman

Gary Mandel (b. 1960) is Board Deputy Chairman of Aker Philadelphia Shipyard ASA (AKPS) Board of Directors, having been nominated to the position in December 2007. Currently, Mr. Mandel is Executive Vice President of Aker Solutions Process and Construction business area. Additionally, Mr. Mandel served as Chairman of the American Shipping Company ASA (AMSC) Board of Directors from December 2007 through June 2008. Mr. Mandel continued to serve as an ordinary member of AMSC's board until he resigned in April 2009. He also served as Executive Vice President of Aker Kvaerner ASA's (AKVER) Oil, Gas, Process and Energy business area from 2002 to 2007. For more than 25 years Mr. Mandel has worked within the oil and gas industry. Mr. Mandel is a graduate from the University of Nuevo Leon, Mexico. Mr. Mandel is a U.S. citizen. As of 1 February 2010, Mr. Mandel holds zero shares in the company and has no stock options. He has been elected for the period 2009-2011.

Marianne Heien Blystad

Board Member

Marianne Heien Blystad (b. 1958) is an Attorney-at-Law with the law firm Ro Sommernes since December 2008. Previously she had the same position with the law firms Nordia DA and Bull & Co. Prior to this, Ms. Blystad held positions in Blystad Shipping and Trading Inc., the Norwegian export/import bank, Eksportfinans ASA and Citibank, Oslo. Ms. Blystad is serving on Board of Directors of both listed and unlisted Norwegian companies. She is currently on the Board of Directors of Eksportfinans ASA and member of the General Assembly of Orkla ASA. Ms. Blystad holds a Master of Business and Administration (MBA) from the Norwegian School of Management; BI, and a law degree from the University of Oslo; UIO. Ms. Blystad is a Norwegian citizen. As of 1 February 2010, Ms. Blystad holds zero shares in the company and has no stock options. She has been elected for the period of 2009-2011.

Elin Karfjell

Board Member

Elin Karfjell (b. 1965) is CEO of Fabi Group AS. Prior to that, she was Director of Finance and Administration of Ementor Norge AS. She is a former partner of Ernst & Young AS. Ms. Karfjell joined Ernst & Young AS in 2002. Prior to this, Ms. Karfjell held various positions including partner at Arthur Anderson. At Ernst & Young/Arthur Anderson, she held various leading positions, both within advisory and audit, and she has experience from a broad specter of industries. Ms. Karfjell is also a Board Member and leader of the audit committee for DNO International ASA and a Board Member of Aktiv Kapital ASA. Ms. Karfjell is a state authorized public accountant, and has a bachelor accountant's degree from Okonomisk College (Hoyskolen i Oslo). Ms. Karfjell is a Norwegian citizen. As of 1 February 2010, Ms. Karfjell holds 1200 shares in the company and has no stock options. She has been elected for the period 2009-2011.

Mark Singel

Board Member

Mark Singel (b. 1953) is President of The Winter Group and has been with the group since its founding in 2005. Prior to that, he served as Lieutenant Governor of Pennsylvania from 1987 through 1995 and, for a period of time, Acting Governor of the Commonwealth. Mr. Singel also served six years in the Pennsylvania State Senate and was chief of staff of two members of U.S. Congress. He ran for U.S. Senate in 1992 and 1994. Mr. Singel served as Chairman of the Democratic Party from 1995-1998 and was the President of Pennsylvania's Electoral College in January 1997. He was also an elected delegate to the 2008 Democratic Convention. Mr. Singel is a magna cum laude graduate of the Pennsylvania State University. He has served on the boards of Penn State and St. Francis Universities and holds several honorary doctorate degrees. Mr. Singel is a U.S. citizen. As of 1 February 2010, Mr. Singel holds zero shares in the company and has no stock options. He has been elected for the period of 2009-2011.

Aker Philadelphia Shipyard annual report 2009

Our organization and governance

Presentation of the Management Team

Jim Miller

President and CEO

Jim Miller (b. 1955) joined Aker Philadelphia Shipyard as President and CEO in June 2008. Before coming to the shipyard, Mr. Miller was President of Aker Solutions Process & Construction (P&C) Americas, where he was responsible for financial operations of seven business units which generated approximately 8-9 billion NOK in revenues per year. During his tenure, Aker Solutions P&C Americas became a leading provider of global engineering and construction solutions with 7,500 employees, including 4,500 construction trades personnel. Prior to joining Aker Solutions P&C Americas, Mr. Miller held the position of President Aker Solutions Songer. Mr. Miller graduated from the University of Edinboro in Pennsylvania with a BA. Mr. Miller lives in Philadelphia, PA USA. Mr. Miller is a U.S. citizen. As of 1 February 2010, Mr. Miller holds 20,000 shares in the company and has no stock options.

Jeffrey Theisen

Chief Financial Officer

Jeffrey Theisen (b. 1968) joined Aker Philadelphia Shipyard in May 2007. Mr. Theisen has over 19 years experience in financial and strategic planning, organizational leadership, budgeting and cost management, including seven years with Arthur Andersen. Prior to joining APSI, Mr. Theisen served as Chief Financial Officer for The Regulus Group, a market leader in transaction and information processing services to financial institutions and commercial end-users. Mr. Theisen holds a Bachelor of Science in Accounting from Villanova University and is a certified public accountant (inactive) in the state of Pennsylvania. Mr. Theisen lives in Lansdale, PA USA. Mr. Theisen is a U.S. citizen. As of 1 February 2010, Mr. Theisen holds 1,000 shares in the company and has no stock options.

Audun Stensvold

Vice President

Audun Stensvold (b. 1972) is Vice President of Aker Philadelphia Shipyard. In addition to this responsibility, Mr. Stensvold serves as Investment Director for Converto Capital Management. Mr. Stensvold joined Aker's M&A team in 2006. Prior to this, he worked as strategy and finance consultant for Selmer, and as a financial analyst for DnB NOR. Mr. Stensvold holds an MSc in Business and Economics from the Norwegian School of Economics and Business Administration (NHH). Mr. Stensvold is a Norwegian citizen. As of 1 February 2010, Mr. Stensvold holds zero shares in the company and has no stock options.

Scott Clapham

Senior Vice President Projects and Business Improvements

Scott Clapham (b. 1974) has been with Aker Philadelphia Shipyard since its inception in 1998. Mr. Clapham provided critical support to the CV2600 and CV2500 containership and MT-46 tanker projects from design through production. Since joining the management team in 2005, Mr. Clapham has been responsible for marketing efforts, advanced projects, and other business development issues at the shipyard. Mr. Clapham holds a degree in Naval Architecture and Marine Engineering from the University of Michigan. Mr. Clapham lives in Fort Washington, PA USA. Mr. Clapham is a U.S. citizen. As of 1 February 2010, Mr. Clapham holds 1,000 shares in the company and has no stock options.

Robert Fitzpatrick

Vice President Production

Robert Fitzpatrick (b. 1964) joined Aker Philadelphia Shipyard in April 2001 and had held numerous key positions including Prefabrication Manager and Senior Production Manager before being promoted to VP Production in January 2007. Prior to coming to APSI, Mr. Fitzpatrick amassed sixteen years experience in industrial manufacturing including 12 years as a production manager responsible for the fabrication of naval circuit breakers and switchgear. Mr. Fitzpatrick holds a Bachelor of Science in Mechanical Engineering from Spring Garden College in Philadelphia, PA, USA. Mr. Fitzpatrick lives in Burlington, NJ USA. Mr. Fitzpatrick is a U.S. citizen. As of 1 February 2010, Mr. Fitzpatrick holds zero shares in the company and has no stock options.

Aker Philadelphia Shipyard annual report 2009

Our organization and governance
Presentation of the Management Team

Michael Giantomaso

Vice President Human Resources

Michael Giantomaso (b. 1966) joined Aker Philadelphia Shipyard as Human Resources Manager in May 1998 and was APSI's first locally hired manager. Mr. Giantomaso was promoted to VP in August 2001. He has over 19 years of human resources experience in the manufacturing and health care fields. Mr. Giantomaso holds a Bachelor of Arts in Business Administration and Human Resources from Temple University. Mr. Giantomaso lives in Huntingdon Valley, PA USA. Mr. Giantomaso is a U.S. citizen. As of 1 February 2010, Mr. Giantomaso holds zero shares in the company and has no stock options.

Pertti Rinta-Panttila

Vice President Engineering, Planning and Quality Control

Pertti Rinta-Panttila (b. 1954) was appointed VP Planning & Quality Control in November 2007. Mr. Rinta-Panttila has previously worked at the Shipyard during the start-up period in 1998-2003 in several positions, including VP Production & VP Planning, and returned to APSI from Aker Yards Finland in November 2007. Mr. Rinta-Panttila started his shipbuilding career in Finland in 1980, and has in total 29 years wide experience of shipbuilding, including several management positions in different areas of shipbuilding, most recently as VP Planning at Aker Yards Finland (formerly Kvaerner Masa Yards). Mr. Rinta-Panttila has been personally involved in over 100 large new-building projects during his career. Mr. Rinta-Panttila lives in Philadelphia, PA USA. Mr. Rinta-Panttila is a Finnish citizen. As of 1 February 2010, Mr. Rinta-Panttila holds zero shares in the company and has no stock options.

Sanjay Deshmuk

Vice President Purchasing

Sanjay Deshmuk (b. 1952) joined Aker Philadelphia Shipyard in September 2000 and held several positions such as Design Manager, Project Manager and Procurement Manager before being promoted to VP Purchasing in April 2009. Mr. Deshmuk began his career in the maritime industry as a Hull Engineer and, in total, has amassed over 30 years of experience in Engineering, Project Management and Procurement. Mr. Deshmuk has a Master of Business Administration (MBA) from Drexel University and holds a Bachelor of Engineering in Naval Architecture and Marine Engineering from the Indian Institute of Technology in India. Mr. Deshmuk lives in Somerdale, NJ USA. Mr. Deshmuk is a U.S. citizen. As of 1 February 2010, Mr. Deshmuk holds zero shares in the company and has no stock options.

Dean Grabelle

General Counsel

Dean Grabelle (b. 1970) was appointed General Counsel at Aker Philadelphia Shipyard in May 2008. Prior to joining APSI, Mr. Grabelle was employed with the law firm Drinker Biddle & Reath LLP in Philadelphia, PA USA, where he established a legal career spanning 12 years. Past experience includes mergers and acquisitions, business counseling, lending, private equity and corporate finance. Mr. Grabelle graduated from Duke University with a Bachelor of Arts in Economics and Public Policy Studies. He also holds a Juris Doctor from the University of Pennsylvania Law School. Mr. Grabelle lives in Voorhees, NJ USA. Mr. Grabelle is a U.S. citizen. As of 1 February 2010, Mr. Grabelle holds zero shares in the company and has no stock options.

Aker Philadelphia Shipyard annual report 2009

Save the environment — read reports online

The annual reports of Aker Philadelphia Shipyard ASA are available via the Internet: www.akerphiladelphia.com. Alternatively, Aker Philadelphia Shipyard ASA encourages its shareholders to subscribe to the company's annual reports via the electronic delivery system of the Norwegian Central Securities Depository (VPS). Please note that VPS services (VPS Investor@jenester) are designed primarily for Norwegian shareholders. Subscribers to this service receive annual reports in PDF format by email. VPS distribution takes place at the same time as distribution of the printed version of Aker Philadelphia Shipyard's annual report to shareholders who have requested it.

Electronic distribution is the fastest channel for accessing company information; it is also cost-effective and environmentally friendly.

Layout design:
Haugvar Kommunikasjon & Design

Project management:
First House AS

Photo/illustrations:
All photos courtesy of
Aker Philadelphia Shipyard, Inc.

Translation:
Samtext AS

Layout/production:
Key Design AS

Print:
Zoom Grafisk AS

Aker Philadelphia Shipyard ASA

Annual report 2009

AI assistant

Philly Shipyard — Annual Report 2009

3713_rns_2010-03-23_bd4dd69d-7b9c-4c93-93a5-9838eebd689a.pdf

Annual report 2009

Contents

In review

The business

Performance 2009

Our organization and governance

History

1997

1998

2000

2002

2003

2004

2005

2006

2007

2008

2009

This is Aker Philadelphia Shipyard

Elements contributing to success:

Highlights 2009

Financial calendar 2010

Successful delivery of three additional product tankers

Finalized settlement agreement with American Shipping Company and Overseas Shipholding Group

Financial performance

Reduced injury rates

Key figures 2009

Goals and strategies

Be the premier provider of merchant vessels in the U.S. Jones Act market

Zero Incidents

Increased Productivity

Optimize Through-put

Market Leader

Unity and commitment

Our Values in Context

What is your 50% of the solution?

Living our values

Our business areas

Building the future

Highlights 2009

Competitive Advantages

U.S. Jones Act

Risks

Future Market Opportunities

12 Quality Ships Delivered to Date

2009 Operation

Goals for 2010

Outlook 2010

Demonstrating corporate responsibility

Our commitment

Our customers can expect

Our shareholders can expect

Our employees can expect

The communities in which we operate can expect

Taking personal responsibility for HSE

Ambitious goals

Driving improvement

Driving performance

Leadership

Our commitment

LEGGERS MASH

Performance 2009

Contents

Board of Directors' report 2009

Activities

The Jones Act market

The Master Agreement with PSDC

Strategy

Key events 2009

Review of the annual accounts

Order backlog

Income statement

Cash flow

Statement of financial position and liquidity

Risks

Market risks

Operational risks

Philly Shipyard Annual Report 2009