Philly Shipyard — Annual Report 2014

Mar 25, 2015

Contents

In review

• 1 Company overview
• 2 History
• 4 Key events
• 5 Investment highlights
• 6 Our values
• 7 Our safety
• 8 Letter from the President and CEO

Performance 2014

• 10 Board of Directors' report
• 18 Directors' responsibility statement
• 20 Consolidated accounts
• 41 Parent company accounts
• 48 Auditor's report
• 50 Shares and shareholder matters

Our organization and governance

• 52 Corporate governance
• 56 Presentation of the Board of Directors
• 58 Presentation of the Management Team
• 60 Company information

Financial calendar 2015

Annual general meeting	15 April
Interim report Q1 2015	7 May
Interim report Q2 2015	16 July
Interim report Q3 2015	5 November

Dates are subject to change.

This is Aker Philadelphia Shipyard

Aker Philadelphia Shipyard 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 a preferred provider of ocean-going merchant vessels with a track record of delivering quality ships, having delivered over 50% of all large ocean-going Jones Act commercial ships since 2000.

Aker Philadelphia Shipyard ASA is headquartered in Oslo, Norway with an operating subsidiary in Philadelphia, PA, USA.

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 57.56% of the shares as of 31 December 2014.

Elements contributing to success:

• State-of-the-art shipyard with modern equipment
• Strong order backlog exceeding USD 1 billion with delivery dates through 2018
• Access to global shipbuilding and design expertise through agreements with Hyundai Mipo Dockyard, Samsung Heavy Industries and KOMAC
• A solid track record demonstrated by the delivery of 19 quality vessels (4 containerships, 14 product tankers, 1 aframax tanker) through 2014
• Skilled workforce consisting of direct and contracted employees with a strong HSE mindset and culture of improvement

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 in the United States, owned, operated and manned by U.S. citizens and 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.

1997

1997	2000	2002	2003	2004	2005	2006	2007
Founded by the public-private partnership consisting of U.S. govern mental agen cies and the Kvaerner Ship building Division	Began con struction of the first two con tainer vessels (CVs)	Matson agreed to purchase the two CVs	First CV delivered	Second CV delivered	Matson agrees to purchase two additional CVs Aker American Shipping ASA (AKASA) formed and listed on Oslo Bors Third CV delivered Construction program of ten product tankers (PTs) initiated	Fourth CV delivered	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

Now

2008	2009	2010	2011	2012	2013	2014
Fourth and fifth PTs delivered	Sixth, seventh and eighth PTs	Ninth, tenth and eleventh PTs	Secured financing for construction	Sold thirteenth and fourteenth	Delivered fourteenth PT	Delivered first aframax tanker
Graduation of the first three apprentice classes	delivered	delivered New union agreement extended into	of two PTs Twelfth PT deliv ered, marking successful com	PTs to Crowley Delivered thirteenth PT Began	Signed joint venture agreement with Crowley for	to SeaRiver Raised USD 65 million in equity via private
Celebrated ten year anniversary of the yard		2015	pletion of tanker series announced in 2005					SeaRiver vessels, Hulls	construction of	four PTs Signed agreement with	placement Signed contract with Philly
First dividend paid to							Signed contract with SeaRiver for two aframax			019 and 020	Matson for two 3,600 teu containerships	Tankers for two PTs, plus two options
shareholders		tankers				Celebrated the 15-year anniversary of	Began construction of first four PTs for

AKPS-Crowley JV

the shipyard

2014 key events and highlights

Successful equity raise

AKPS raised approximately USD 65 million in equity via a successful private placement and subsequent retail offering of its shares, resulting in 2,409,461 new shares in the company.

Closed USD 120 million construction loan

APSI entered into a loan agreement with Caterpillar Financial Services Corporation (Cat Financial) for a USD 120 million loan facility for construction financing on the four product tankers under construction with Crowley (Hulls 021- 024).

Secured contracts for Hulls 025 and 026

New CEO: Steinar Nerbovik

AKPS entered into an agreement with Philly Tankers for two 50,000 dwt product tankers with deliveries in Q4 2016 and Q1 2017 (Hulls 025 and 026) and has an option for two additional 50,000 dwt tankers with deliveries in 2017 (Hulls 027 and 028).

The Board of Directors appointed Steinar Nerbovik as President and CEO of Aker Philadelphia Shipyard ASA on 5 November 2014, after serving as Managing Director since 19 March 2014. Former President and CEO Kristian Rokke was appointed Board Chairman.

Sold profit sharing interests to Crowley

AKPS sold its profit sharing interests in Hulls 017 and 018 to Crowley for total cash proceeds of USD 40 million. This sale includes the profit sharing on the two product tankers delivered to Crowley in August 2012 (the Pennsylvania) and January 2013 (the Florida).

Commenced construction of all four product tankers for the AKPS-Crowley joint venture

The new 50,000 dwt product tankers are based on a proven Hyundai Mipo Dockyards (HMD) design which incorporates numerous fuel efficiency features, flexible cargo capability, and the latest regulatory requirements.

Delivered Hull 019

Hull 019, Liberty Bay, was delivered to SeaRiver on 11 June. The 820-foot long, 115,000 deadweight ton tanker has an 800,000 barrel (33.6 million gallon) carrying capacity and is being used to transport Alaskan North Slope

crude oil from Prince William Sound, Alaska to U.S. West Coast destinations. The vessel is equipped with double hull protection, the latest navigation and communications equipment, and an energy efficient engine.

Investment highlights

1 Leading Jones Act commercial shipyard 2 High visibility

• Š State-of-the-art facility with more than USD 650 million invested since founding
• Š Built over 50% of all large ocean-going Jones Act commercial ships since 2000
• Š Highly skilled workforce with integrated, fully flexible subcontracting

• Š Culture of high efficiency with proven ability to improve productivity

• Š Over USD 1 billion in backlog with last delivery in 2018

• Š APSI expects to secure available slots 027-028 as PTs in 2015
• Š Series production with familiar ships offers operational benefits
• Š Four product tankers already under construction

out 2018 3 Exposure to positive market trends 4 Strong earnings

• Š Healthy Jones Act shipping market fundamentals
• Š Consolidation in multiple Jones Act market sectors
• Š Six vessels with exposure to time charter rates with the opportunity to add additional exposure
• Š Significant replacement needs remain for aging Jones Act fleet

potential

• Š Expected earnings growth over coming years with backlog sold at attractive margins
• Š Shipping assets to contribute to earnings growth as vessels are delivered
• Š Strong balance sheet with available debt capacity
• Š Paying quarterly dividends since Q2 2014

AKPS order backlog

Customer	Vessel	Delivery	2015	2016	2017	2018
SeaRiver	020 Aframax	Q1 2015
	021 PT	Q3 2015
	022 PT	Q4 2015
Crowley	023 PT	Q2 2016
	024 PT	Q3 2016
	025 PT	Q4 2016
Philly	026 PT	Q1 2017
Tankers	027 PT (option)	Q3 2017
	028 PT (option)	Q4 2017
	029 Containership	Q3 2018
Matson	030 Containership	Q4 2018

Vision: To be - and be recognized as - America's leading commercial shipyard that delivers on its commitments, every time.

Our CORE values

Aker Philadelphia Shipyard's CORE values were designed as a reflection of who we are, and who we aspire to be, as a shipyard, as an organization, and as individuals.

They capture the pride, passion and commitment behind each action we take and decision we make. They are not words on a page, but our stand – a united commitment to conquer all challenges and build long lasting relationships. For years to come we will be united by these values, that give us the platform to deliver on our commitments, every time.

We are a shipbuilding family, a unique group comprised of many backgrounds and ethnicities, teams and departments; but at the end of the day, we have a healthy respect and a natural need to protect each other.

Customers are all around. From ship owner to process owner, we are all powerfully united to deliver. That means decisions are made in the best interest of the company, rather than oneself, or one team. We are strongest when we act together.

If you're responsible for it, you own it, so treat it like it's yours. This means taking the utmost care for tools and equipment, making decisions based on the impact to your bottom dollar, and simply doing the right thing. Success is in our hands.

A healthy dissatisfaction for the status quo lives within us. It fuels the need to challenge ourselves, and each other, to find a better way. Being efficient keeps our costs down, while driving our competitive edge up.

Caring in action

At Aker Philadelphia Shipyard, the way in which we achieve growth and profitability is as important as the achievements themselves. Our overriding corporate responsibility is concern for the communities that we are a part of. We strive to provide products and services in a safe, environmentally sound, ethical, and socially responsible manner.

More information regarding the Company's corporate social responsibility efforts can be found on pages 15-16 of the Board of Directors' report.

Journey toward world class safety

One of seven new banners installed throughout the shipyard in 2013

At APSI, safety is personal. Our guiding principle is that all incidents are preventable and extensive measures are taken to ensure the safety of everyone.

The credo is clear: We fundamentally believe that all injures are preventable and safety is everyone's responsibility; and we promise to be relentless in our pursuit of an injury-free workforce by creating and maintaining safe working conditions and never compromising safety for anyone, anywhere, at any time.

In 2014, for the first time in its history, APSI worked one million man-hours without a lost time incident.

APSI continued its "Invest another minute" campaign with diligent focus on pre-task planning and very personal reminders of why we work safely (reference large banner above). Additionally, employees were encouraged to submit observations and near-misses into the HSEnet, an intranet based system designed to capture observations submitted by employees.

Through that effort, employee observations increased over 35% in 2014 from 2013. APSI then took it one step further. After growing the "see something, say something" mindset, the company initiated a new category of observations called significant observations to urge employees to offer a corrective action in addition to logging the observation.

As part of the shipyard's extensive reward and recognition program that acknowledges employees who provide unwavering support, APSI included a new award for significant observations. Over 200 significant observations were recognized in 2014.

Together, we are building a safer future. At APSI, it doesn't matter what position you have—we are all united on the journey toward world class safety.

All incident frequency

Lost time frequency

Honoring our commitments

Hello again! I'm excited to be back in Philadelphia and leading our hardworking shipbuilders. Philly has been a second home from my earlier days as VP Projects, and it feels good to be back, harsh winter weather and all. As a matter of fact, it has been colder in Philadelphia than Norway this winter. Who would have thought?

Nevertheless, 2014 was a transformative year for Aker Philadelphia Shipyard (AKPS), with changes in leadership, new strategic investments and multiple projects underway. I would be remiss in not providing a thoughtful summary of our milestones, as well as opportunities and challenges for the year ahead.

Review of 2014 Plan to Win

Picking up from where Kristian left off last year, below are some of the results stemming from our 2014 Plan to Win.

1. Deliver on customer commitments

We began 2014 with the strongest order book in the history of the shipyard, with firm contracts with SeaRiver, Crowley and Matson, totaling over USD 1 billion. First and foremost was our commitment to deliver to SeaRiver. Ship 019, the Liberty Bay, was delivered on June 11 and was the largest ship ever built in Philadelphia, creating a legacy we are all proud of. The Liberty Bay is in service transporting crude oil from the Prince William Sound in Alaska to the U.S. West Coast and feedback to date is that she is performing very well. We are proud shipbuilders. The second vessel, Eagle Bay, is nearing delivery as I write this, and we are confident she will also serve our customer well. SeaRiver is a professional owner that has helped improve our operations over the last few years and will be a good reference and partner for years to come.

In 2014, we commenced construction on all four product tankers for Crowley. Delivery of the first vessel will be in Q3 2015 and employees are eager and focused on our "sweet spot" – midsize series built tankers that allow us to improve efficiencies by focusing on core competencies.

With construction of two containerships for Matson expected to begin in Q4 2015, the support departments have been focused on design, procurement and planning activities, leveraging the extended time between contract and delivery to maximize preproduction and ensure we get off to the best start possible.

2. Secure open slots as PT

In June 2014, AKPS and other financial sponsors created Philly Tankers, a pure-play Jones Act shipping company. The shipyard has a firm contract with Philly Tankers for two 50,000 dwt product tankers (Hulls 025 and 026) with deliveries in Q4 2016 and Q1 2017, and options for two additional tankers. Interest in product tankers and other vessels is strong as evidenced by the recent charters secured for the first two Philly Tanker tankers (Hulls 025 and 026). Investing in a Jones Act shipping company allows us to retain a portion of the shipping exposure creating even greater value to our shareholders, while still doing what we do best – build ships. Due to the strong interest, we are confident the two options (Hulls 027 and 028) will become firm contracts in 2015. Until then, we are forging ahead with the production preparations and equipment orders for both options with production start in Q3 2015 and deliveries in Q3 and Q4 2017.

In March 2014, AKPS sold its profit sharing interests in Hulls 017 and 018 to Crowley for USD 40 million. As demonstrated by this sale we plan to manage the company's shipping assets with an opportunistic ownership strategy to maximize their value over time. The joint venture with Crowley for Hulls 021- 024 is another example of that strategy, as AKPS will receive returns on ownership, chartering and operation of the vessels, in addition to returns on traditional shipbuilding activities. We have six vessels with an ownership interest and all have charters, which provides significant long-term value for AKPS and our shareholders as well.

Opportunities ahead

Honoring our commitments is core to our being as a shipyard and that includes commitments to our employees and their families, customers, and of course, shareholders.

In order to honor our commitments, we must always strive to be the best shipyard in the U.S., and being the best requires a concentrated focus on four key areas – safety, quality, cost and schedule. Anyone can be good in one of those four areas, but it's the integration of all four that enables us to win.

Our commitment to our employees and their families is best seen in our health, safety and environment (HSE) efforts, yet we know there is always room for improvement. Over the summer, and for the first time in its history, APSI completed one million work hours without sustaining a lost time incident. This is significant. Although I'm a born optimist, I am also aware of how fragile these records are. Having world class safety requires diligent job planning, following established processes, inputting observations, implementing lessons learned, and always using common sense. We have made good strides on our journey to zero incidents and we acknowledge that this is a journey with no end. We vow to never be "good enough" when it comes to safety.

Our commitment to our customers is fulfilled when we deliver a quality ship on time. To improve quality throughout the yard, we spent a good portion of last year deepening our relationships with Korean partners and suppliers. Korean shipyards are at the top of the shipbuilding game and it is a strategic imperative for us to learn from them so we can be the best in the U.S. We work especially closely with our Korean partners for specific improvement areas in quality and accuracy. Through internal audits conducted by Korean counterparts, we've since adopted many quality and accuracy improvements into the shipyard that are helping us drive efficiencies throughout the build process.

In addition to building relationships with Korean partners, we make it a priority to work closely with all shipyard partners — subcontractors, turnkey contractors, owners inspectors, and ABS and USCG inspectors. Being customer focused with all partners creates trust at every level in our organization and helps to fulfill our commitment of working as "one shipyard."

We look at our commitments to shareholders as providing maximum value for your investment. Shipbuilding and shipowning are capital intensive businesses, therefore we are constantly

challenging ourselves to find creative and innovative financing and transaction structures that allow us to do the most with the least cost.

This mantra of doing the most with the least cost is also true in our approach to ship building and our efforts to keep costs down. When it comes to efficiency, it is often assumed that improvement just happens over time. That is false. Improvement only happens with specific intent and that is why we've deliberately set a goal to be 30% better in three years (a program we call E-330). The E-330 program has looked at every area of shipyard operations for efficiency opportunities and cost savings, no matter how big or small. For example, through meaningful action we have become wiser in areas such as tool usage and consumables, with an overall 40% decrease in some areas. It won't stop there. We are always searching for ways to be more efficient, in all aspects of our company, and have challenged our employees to come up with ideas as well.

As I look ahead, we will continue to work hard to achieve the full potential of our business, while preparing for the future, and continue exploring ways to improve shareholder value. Our next vessel, Ship 021, is progressing, will launch soon, and is on track to deliver ahead of the contract date. Beyond that, we are pleased with our current backlog out 2018, but are not resting. We continue to build on our experiences and partnerships to pursue opportunities for 2019 and beyond.

A good player demonstrates a real passion to win, even when the times are tough. At APSI, we are full of good players. 2014 presented us with some unexpected challenges, but we stayed the course, and have become both wiser and stronger. 2015 will undoubtedly bring a new set of challenges, but we are poised and prepared to make the most of every opportunity and ensure that, no matter what, we are true to our word, honoring our commitments - every time.

Steinar Nerbovik President and CEO

Philadelphia, March 11, 2015

Board of Directors' report 2014

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. Converto Capital Fund AS (referred to herein as "Converto"), an investment fund controlled by Aker ASA, is the majority shareholder in Aker Philadelphia Shipyard ASA.

Highlights

In January 2014, AKPS raised approximately USD 65 million in equity via a successful private placement and subsequent retail offering of its shares and closed a USD 120 million construction loan facility with Caterpillar Financial Services Corporation.

In March 2014, AKPS sold its profit sharing interests in Hulls 017 (the Pennsylvania) and 018 (the Florida) to Crowley for total cash proceeds of USD 40 million.

In June 2014, AKPS successfully delivered Hull 019, the first of two aframax tankers ordered by SeaRiver.

In July 2014, AKPS completed a private placement for Philly Tankers with a subsequent listing on the Norwegian OTC. In conjunction with this transaction, the Company finalized contracts for two firm orders (Hulls 025 and 026) and two options (Hulls 027 and 028) for 50,000 dwt product tankers. The Company owns approximately 54% of the shares of Philly Tankers.

AKPS paid dividends for 2014 totaling USD 43.0 million in the aggregate and NOK 20.65 per share.

As of 31 December 2014, AKPS had an order backlog of USD 1,013 million with the last delivery in December 2018.

For the year ended 31 December 2014, AKPS realized operating revenues and other income of USD 272.7 million, a decrease of USD 6.3 million from 2013, and earnings before interest, taxes, depreciation, and amortization (EBITDA) of USD 32.1 million, compared to EBITDA of USD 30.1 million in 2013.

Activities

The main entities in the Aker Philadelphia Shipyard ASA Group are the Norwegian holding company, AKPS, and its U.S. operating subsidiary, Aker Philadelphia Shipyard, Inc. (referred to herein as "APSI" or the "Shipyard"), a leading U.S. commercial shipyard. AKPS is located in Oslo, Norway, while APSI is located in Philadelphia, Pennsylvania, USA.

As of 31 December 2014, APSI's workforce consisted of 1,146 people, with a breakdown of 570 direct employees and 576 subcontracted personnel.

AKPS's business strategy for APSI is to build merchant vessels for operation in the U.S. Jones Act market and to opportunistically participate in the economics of those vessels in operation. APSI expects to deliver Hull 020, the second of two aframax tankers ordered by SeaRiver Maritime, Inc. (SeaRiver), in March 2015. In addition, APSI is currently building four product tankers (Hulls 021-024) for a joint venture with Crowley Holdings, Inc. and certain of its subsidiaries (Crowley). Construction started on all four of these product tankers in 2014.

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; strong order backlog exceeding USD 1 billion with delivery dates through 2018; access to global shipbuilding and design expertise with Hyundai Mipo Dockyard, Samsung Heavy Industries and KOMAC; and a solid track record as evidenced by the delivery of four container vessels to Matson Navigation Company, Inc. (Matson), twelve product tankers to American Shipping Company ASA (AMSC) and Overseas Shipholding Group, Inc. (OSG), two product tankers to Crowley, and one aframax tanker to SeaRiver.

The Jones Act market

The U.S. Jones Act generally restricts the marine transportation of cargo and passengers between points in the United States to vessels built in the United States, registered under the U.S. flag, manned by predominately U.S. crews, and 75% owned and controlled by U.S. citizens. The ability of the Company to win contracts is in part dependent on its unique ability to construct vessels that are eligible for U.S. Jones Act trades, and the Jones Act requirement for construction of the vessels in the United

States limits competition for future contracts. Since the Company is not a U.S. citizen for purposes of the Jones Act, the Company's ability to maintain an economic interest in the vessels it constructs depends on its compliance with certain Jones Act rules and interpretations.

The Master Agreement, Shipyard Lease and Authorization Agreement with PSDC

APSI currently operates its shipyard under a 99-year lease with PSDC, a governmentsponsored non-profit corporation. A Master Agreement, a Shipyard Lease and an Authorization Agreement govern 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.

Under the Shipyard Lease, PSDC has the right to recapture the Shipyard if APSI fails to maintain an average of at least 200 full-time employees at the Shipyard for 90 consecutive days, subject to the right of APSI to complete work-in-process projects and a one-time, limited cure right which allows APSI to restore the lease to a 5-year term under certain circumstances. With the current business plan, the Company considers it unlikely that this termination event will be triggered as long as there is ongoing shipbuilding activity at the Shipyard.

Strategy

AKPS will, through its unique partnerships and experience obtained during construction of tankers and containerships, strive to be the most efficient shipyard in the U.S. Jones Act market for production of merchant vessels. AKPS intends to leverage its significant backlog and visibility into 2018 to drive improvement in all aspects of its business. AKPS will continue to monitor and evaluate how to derive the maximum benefit from its competitive advantage and market share and invest in the vessels it constructs when it creates additional value. If production capacity is available, APSI will also pursue fabrication opportunities outside of traditional shipbuilding where its core competencies in steel fabrication, heavy lifting, and project management are advantageous.

AKPS's current portfolio of shipping assets consists of exposure toward six product tankers through its future interests in the four-ship AKPS-Crowley joint venture and its investment in Philly Tankers. All of the AKPS-Crowley joint venture vessels (Hulls 021-024) and the two firm Philly Tankers vessels (Hulls 025 and 026) have commitments for long-term charters. These assets provide a mechanism for AKPS to achieve returns on the ownership, chartering and operation of the vessels it builds, in addition to traditional shipbuilding activities. The Company continues to evaluate strategic initiatives and potential transactions with regards to its shipping assets to maximize shareholder value

Key events 2014

On 17 January 2014, the Company obtained commitments in a private placement of equity totaling USD 60.9 million, or 2.25 million shares at an issue price of NOK 165 per share. The private placement was approved at an extraordinary general meeting on 7 February 2014 and trading of the new shares commenced on 10 February 2014. The Company carried out a subsequent offering that resulted in exercised subscription rights for 159,461 new shares in the Company, with trading of the new shares commencing on 27 March 2014.

Total proceeds from the subsequent offering were USD 4.3 million.

During Q1 2014, APSI signed definitive documentation with Caterpillar Financial Services for a loan facility of USD 120 million. This facility is to be used as needed for construction financing on the four AKPS-Crowley product tankers (Hulls 021- 024) and will accrue interest at three-month Libor plus 3.0% when funds are borrowed under the loan agreement. Funding is subject to satisfaction of customary conditions precedent for this type of facility, including securing commitments for post-delivery financing of the vessels.

On 31 March 2014, AKPS sold its profit sharing interest in Hulls 017 and 018 (the Pennsylvania and Florida, respectively) to Crowley for total cash proceeds of USD 40 million. APSI had delivered these vessels to Crowley in August 2012 and January 2013, respectively. The full payment was received in Q2 2014.

In April 2014, Kristian Rokke became Executive Chairman of AKPS and Steinar Nerbovik became Managing Director of AKPS. Subsequently in November 2014, Mr. Nerbovik became President and CEO of AKPS. Mr. Rokke continues as Chairman of AKPS, but in a non-executive capacity.

In June 2014, AKPS delivered the first aframax vessel to SeaRiver, ExxonMobil Corporation's U.S. marine affiliate. The vessel is currently successfully serving SeaRiver's transportation needs in the Alaska trade.

On 10 July 2014, Philly Tankers completed a private placement of shares. As a result, AKPS owns approximately 54% of the new company in exchange for an investment of USD 58.5 million. Substantially all of these funds will be paid over time as Hulls 025 and 026 are constructed. Philly Tankers' financial sponsors have invested USD 59.0 million for the remaining 46% of the new company. All of these funds were paid at closing.

In connection with the Philly Tankers transaction, AKPS and Philly Tankers, through their subsidiaries, entered into firm contracts for two product tankers with deliveries in Q4 2016 and Q1 2017 (Hulls 025 and 026) and an option agreement for two additional product tankers with deliveries in Q3 2017 and Q4 2017 (Hulls 027 and 028).

As of 31 December 2014, the project to construct two aframax tankers (Hulls 019 and 020) for SeaRiver was approximately 99% complete. These tankers are intended to be used to transport Alaskan North Slope crude oil from Prince William Sound, Alaska to the U.S. West Coast.

As of 31 December 2014, the project to construct four 50,000 dwt product tankers

(Hulls 021-024) for the joint venture with Crowley was approximately 32% complete. Construction of all four vessels commenced in 2014 and two vessels are currently in the Building Dock. After the vessels are delivered, Crowley and AKPS will share in the economics of the operation and chartering of the vessels throughout their useful lives. AKPS expects to hold an investment of approximately USD 110 million in the AKPS-Crowley joint venture after delivery of the fourth vessel.

Engineering and procurement activities are underway for the Matson project (Hulls 029 and 030). AKPS is leveraging the extended time between contract and delivery on these vessels to maximize preproduction activities and facilitate a smooth construction process.

AKPS paid dividends for 2014 totaling USD 43.0 million. Substantially all of the net after-tax proceeds from the sale of the profit sharing interests in Hulls 017 and 018 to Crowley were included in the Q1 2014 dividend.

In July 2014, the Company initiated a share buyback program to repurchase up to 10% of its share capital in accordance with the authorization granted to the Board of Directors at the Annual General Meeting held on 9 April 2014. The decision reflects the Company's focus on maximizing shareholder returns over time, its strong financial position, its confidence in its ability to deliver on its operational commitments, and a reflection of the opportunities it sees to further develop its shipping investments. To date, the Company has repurchased a total of 466,865 own shares, constituting approximately 3.71% of the shares outstanding.

Review of the annual accounts

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

AKPS 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 two aframax tanker order for SeaRiver and the four MT-50 tanker order with Crowley as single projects. As such, revenue and expense for these tankers have been recognized on a total project basis. As of 31 December 2014, the SeaRiver project was approximately 99% complete and the Crowley project was approximately 32% complete.

Order backlog

As of 31 December 2014, APSI's order backlog was USD 1,012.9 million. At the end of the year, the order backlog was comprised of remaining work to be performed on the one aframax tanker being built for SeaRiver, four product tankers for delivery to the AKPS-Crowley joint venture, two product tankers for delivery to Philly Tankers and two container vessels for delivery to Matson. The net backlog decrease of USD 4.8 million from 2013 is due to continued progress made on the SeaRiver and Crowley projects which was partially offset by the firm contracts entered into with Philly Tankers.

Profit and loss accounts

In 2014 AKPS had operating revenues of USD 240.2 million from continued progress on the SeaRiver and AKPS-Crowley joint venture which both recognize revenues based on the percentage of completion method when firm contracts are in place, based primarily on the scope of completed work compared to estimated overall project scope. 2013 operating revenues of USD 275.8 million represented revenues from the sale of Hull 018 to Crowley which had previously been built for AKPS's own account and progress on the aframax tankers being built for SeaRiver. 2014 other income of USD 32.4 million was comprised of the gain-on-sale of the profit sharing interests on Hulls 017 and 018 to Crowley and profit in equity-accounted investees (Philly Tankers). Other income of USD 3.2 million in 2013 was comprised of Hull 018 profit sharing income which was recognized upon delivery of Hull 018.

AKPS's operating profit before interest, taxes, depreciation, and amortization (EBITDA) was USD 32.1 million in 2014 compared to USD 30.1 million in 2013. These figures correspond to EBITDA margins of 11.8% and 10.8%, respectively.

Depreciation and amortization expense was USD 7.4 million in 2014 and USD 6.9 million in 2013. AKPS's operating profit before interest and taxes (EBIT) was USD 24.7 million in 2014, compared to EBIT of USD 23.2 million in 2013.

Net financial items were negative USD 5.8 million in 2014, compared to positive USD 0.2 million in 2013. Net financial items in 2014 were primarily driven by higher unrealized currency losses on foreign exchange forward contracts and certain cash balances held in Norwegian Kroner.

Income tax expense for 2014 was USD 5.3 million, compared to income tax expense of USD 7.8 million in 2013.

In 2014, AKPS's net income was USD 13.6 million and its basic and diluted earnings per share was USD 1.12. The corresponding figures for 2013 were net income of USD 15.6 million and basic and diluted earnings per share of USD 1.53.

The increase in EBITDA year over year was driven by the sale of the profit sharing interests in Hulls 017 and 018 to Crowley in 2014.

AKPS's research and development activities are primarily related to two areas. The most important area is the development of APSI's 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 one. There is also work related to the development of new vessels, but APSI will not develop its own designs for other vessel types, but rather identify and license existing best in class designs and cooperate with the owners of such designs to make such modifications as are necessary for APSI's customers.

Cash flow

The Company's cash flow from operations depends on payment terms for construction and delivery settlement for the vessels sold to external customers. Total net cash flow used in operating activities in 2014 was USD 67.9 million compared to total net cash flow from operating activities of USD 49.2 million in 2013. As noted previously, the significant changes year-to-year are caused by the timing of ship deliveries and the level of completion of vessels.

Net cash flow from investment activities was USD 33.7 million in 2014 and USD 4.9 million was used in 2013. These expenditures were primarily for infrastructure improvements and equipment replacements. 2014 investment activities of the Company also include its investment in Philly Tankers and proceeds from its sale of the profit share assets.

Net cash flow from financing activities was USD 5.9 million in 2014 and net cash flow used in financing activities in 2013 was USD 33.8 million in 2013. Net inflows in 2014 were primarily from the equity issuance proceeds and the note payable issued for the Philly Tankers investment which were reduced by dividends paid and share buybacks. 2013 outflows consisted of repayment of the USD 30.0 million Aker ASA loan in full and continued debt payments on a USD 20.0 million loan by the Pennsylvania Industrial Development Authority (PIDA) and a USD 10.0 million loan from the PIDC Local Development Corporation (PIDC).

Statement of financial position and liquidity

As of 31 December 2014, AKPS had cash and cash equivalents of USD 40.5 million. The corresponding figure for 2013 was USD 68.8 million. The decrease was primarily driven by investments in the AKPS-Crowley joint venture, dividends paid, and share repurchases and offset by the equity raise and milestone payments made by customers. At year-end 2014, AKPS's net working capital was USD 40.5 million, compared to USD 48.6 million at 31 December 2013.

Current assets as of 31 December 2014 are mainly comprised of cash and cash equivalents of USD 40.5 million, vessels-under-construction receivable of USD 87.9 million, restricted cash of USD 13.0 million and prepayments and other receivables of USD 10.6 million, while current assets as of 31 December 2013 were mainly comprised of cash and cash equivalents of USD 68.8 million and prepayments and other receivables of USD 35.3 million. The increase in current assets is primarily due to the increase in vesselsunder-construction receivables which was partially offset by the decrease in prepayments and other receivables. Non-current assets as of 31 December 2014 of USD 116.4 million consist of property, plant and equipment, restricted cash, equityaccounted investees and other non-current assets. As of 31 December 2013, noncurrent assets totaled USD 83.2 million and consisted of property, plant and equipment, restricted cash, deferred tax assets and other non-current assets.

Current liabilities as of 31 December 2014 of USD 111.5 million are mostly related to trade payables and accrued liabilities, income taxes payable, customer advances, net and the current portion of the note payable to Philly Tankers. The corresponding figure for 2013 was USD 55.5 million. The increase is primarily driven by the current portion of the note payable to Philly Tankers and an increase in income taxes payable and trade payables and accrued liabilities. Interest-bearing debt increased to USD 57.2 million at 31 December 2014 compared to USD 5.6 million as of 31 December 2013. This increase was attributable to the note payable to Philly Tankers which was partially offset by the prepayment of the remaining balance of USD 4.0 million under the PIDA and PIDC loans on 24 February 2014.

At year-end 2014, total equity was USD 138.2 million and the equity ratio was 52% of total assets. Corresponding figures for 2013 were USD 113.9 million and 61%, respectively. The increase in equity was the result of the current year's profit and the equity raise and partially offset by the dividends paid and treasury shares purchased.

The Board deems that the Company as of 31 December 2014 is financially sound and has an appropriate financing structure.

Risks Market risks

The overall market risk is related to the Jones Act. Interest groups have lobbied the U.S. Congress in the past to repeal or modify the Jones Act, and legislation to remove the U.S-build requirement of the Jones Act has been proposed, but market experts believe that repeal of or significant changes to the Jones Act are unlikely. Repeal of or significant changes to the Jones Act could, among other things, increase competition from foreign (non-U.S.) shipbuilders with lower costs or require increased use of higher priced domestic content, and as a result reduce the demand for U.S.-built vessels. In order to address this risk, the Company has continuous engagement with local, state and federal government officials.

AKPS is also exposed to market risk related to imbalance between supply and demand for vessels in the Jones Act market, which may result in a reduction of vessel prices and/or delay in new projects. AKPS faces risks, including early termination of its facility lease, if it is unable to secure new orders for Hulls 027-028, which are planned to be built as product tankers, or projects beyond the Matson project (i.e., Hulls 029 and 030).

AKPS faces market risks related to its investment in Philly Tankers, including the risk of failure to secure time charters and take-out financing for the underlying vessels on market terms. AKPS also faces market risks related to the options for Hulls 027 and 028, including the risk that those options are not declared and the underlying vessels are ultimately sold for less favorable terms.

Operational risks

AKPS faces risks related to construction of vessels. The Shipyard's ability to meet budgets and schedules may be adversely affected by many factors, including changes in productivity, shortages of materials, equipment and labor and changes in the availability and pricing of key vendors for design and procurement. The Shipyard's operations also depend on stable supplier networks. In addition, the Company faces challenges attracting and retaining skilled workers at forecasted rates.

The Company furthermore faces challenges related to the construction of new classes of vessels, as well as managing multiple projects at the same time. These challenges sometimes tend to impact quality, timely delivery and cost efficiencies. In order to address these risks, the Company has entered into contracts with design and procurement partners for all of the newbuilds in its existing backlog.

The Company depends on unionized labor for construction of vessels. Work stoppages or other labor disturbances could have a material adverse effect on the Company's business, results of operations and financial condition. In order to mitigate this risk, the Company and Unions have signed a collective bargaining agreement. The collective bargaining agreement includes a no-strike clause.

The Company further depends upon a 99-year lease agreement for the shipyard facility and the future operations of the yard will accordingly be dependent upon the Company fulfilling its obligations under this lease agreement. For more details regarding this lease, see "The Master Agreement,

Shipyard Lease and Authorization Agreement with PSDC" on pages 10-11.

The Company's operations are subject to the usual hazards inherent in shipbuilding, such as the risk of equipment failure and work accidents. These hazards can cause personal injury and loss of life, business interruption, construction delays, property and equipment damage, pollution and environmental damage. The Company continues to implement its Health, Safety and Environment (HSE) management system and provide training to its workforce to mitigate these risks. The Company's policy of covering these risks through contractual limitations of liability and indemnities and through insurance may not always be effective, and customers and subcontractors may not have adequate financial resources to meet their indemnity obligations to the Company.

The Company's operations are subject to numerous national, international, state and local environmental, health and safety laws, regulations, treaties and conventions, including, inter alia, those controlling the permitted and unpermitted discharge of materials into the environment, requiring removal and cleanup of environmental contamination, establishing certification, licensing, health and safety, labor and training standards, or otherwise relating to the protection of human health and the environment. Sanctions for failure to company with these requirements, which may be applied retroactively, may include: administrative, civil and criminal liabilities, revocation of permits to conduct business and corrective action orders, including orders to investigate and clean up contamination.

After Hulls 021-026 are delivered and in service, the Company will be exposed to additional risks due to its continued ownership interests in the companies that will own, charter and operate the vessels under the AKPS-Crowley joint venture and Philly Tankers investment. These risks include, but are not limited to, fluctuations in the market value of the vessels, damage or loss of the vessels, inadequacy of insurance to cover such damages and losses, reductions in charter revenue, noncompliance with environmental laws and regulations, unexpected drydock costs, increases in operating costs and capital expenses as the vessels age, and repeal or significant changes to the Jones Act. By partnering with Crowley, a first class operator, on Hulls 021-024, AKPS has sought to mitigate these risks.

Financial risks

AKPS's activities expose it to a variety of financial risks: market risk (including commodity pricing risk, currency 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 and protocols 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 nonderivative financial instruments.

The Company is exposed to changes in prices of steel and other materials. The Company attempts to mitigate its exposure with respect to steel and other material price escalation. APSI and Crowley share the risk of steel price escalation on Hulls 021-024 through the joint venture structure. APSI bears the risk of steel price escalation on Hull 025 and 026. If Philly Tankers exercises its option for Hull 027 and 028, then Philly Tankers will bear the risk of steel price escalation on those vessels. Matson bears the risk of steel price escalation on Hulls 029 and 030.

The Company is subject to exchange rate risk. In order to mitigate exposure to exchange rate risk for other vessels, the Company has begun securing foreign exchange forward contracts for Hulls 021- 028 and the Company will continue to follow its foreign exchange policy with respect to Hulls 029-030.

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 are insufficient to fund its operations and capital expenditures. In turn, AKPS must secure and maintain sufficient equity capital to support construction financing facilities.

AKPS regularly monitors the financial health of its construction financing lenders 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.

Through construction financing, the Company is exposed to fluctuations in interest rates. There is no construction financing for the SeaRiver project (i.e., Hulls 019 and 020) or the Matson project (i.e., Hulls 029 and 030), as these contracts will be fully funded by customer milestone payments.

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.

The Company accrues an estimate for future warranty claims on its outstanding projects. Thus far the claims have been in line with the reserve amounts. In order to mitigate the risk of warranty claims exceeding warranty provisions, the Company has secured back-to-back warranties for most major components on the vessels.

The Company is exposed to risks related to the take-out financing upon delivery of Hulls 021-024. The actual amount of APSI's investment in the joint venture with Crowley will depend in part on the net amount of this take-out financing. In addition, APSI cannot draw under its construction loan facility for Hulls 021-024 until this take-out financing is obtained. As part of the joint venture efforts, APSI and Crowley are currently working together to secure this financing on favorable terms.

Events after 31 December 2014

On 3 February 2015, a new four-year collective bargaining agreement was ratified by the Philadelphia Metal Trades Council, which represents the ten unions at the shipyard. This new labor contract will extend until 31 January 2019.

On 26 February 2015, Philly Tankers announced it entered into binding longterm charter contracts with a domestic end-user for its two 50,000 dwt product tankers under contract with AKPS (Hulls 025-026).

The going concern assumption

In view of AKPS's current financial position and backlog, the Board confirms the going concern assumption and that the 2014 annual accounts have been prepared based on the assumption of a going concern.

Parent company accounts and allocation of income for the year

The income/(loss) account of Aker Philadelphia Shipyard ASA shows income for the year 2014 of USD 12.0 million. The Board of Directors proposes that the

income for the year be allocated as shown below:

Dividend payments	USD 0
Other equity	USD 12.0 million
Total allocated	USD 12.0 million

As of 31 December 2014, the parent company has approximately USD 87 million of equity which could be distributed to shareholders by the Board in accordance with the Company's dividend policy. Based on the equity level of the parent company, the Board intends to continue paying quarterly dividends during 2015.

The parent company's only assets are cash and the investment in subsidiary (APSI). See note 7 of the parent company accounts for details regarding the profit sharing interests in Hulls 017 and 018, which were sold to Crowley in Q1 2014.

Corporate social responsibility

Maintaining 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. All of the Company's employees are located in Philadelphia, Pennsylvania in the United States of America. Compliance with environmental regulations is assured by establishing operating procedures for best management practices and is executed through management and supervision. The Company believes that being a good corporate citizen is good business. The Company organizes a toy collection drive and a food donation event each year in addition to targeted contributions to various charitable organizations.

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 approximately 40% 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 some 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 participates in available government programs that encourage women in manufacturing and has recruited at schools and training programs with more women. The Company has also continued to train supervisors, managers and employees in our Equal Employment Opportunity (EEO) Policy.

At year-end 2014, 4% of the workforce was women. While there were no women in AKPS senior management, women held key positions such as Project Cost Controller, Payroll/Benefits Supervisor and PR/ Communications Specialist. In addition, two of the four members of the Board of Directors are women.

The Company is committed to maintaining a work environment that is free of discrimination, harassment and hostilities. In keeping with this commitment, AKPS maintains a strict Harassment Free Environment Policy and does not tolerate unlawful harassment of employees by anyone.

AKPS believes all people share the same fundamental human rights. The Company follows legal and responsible sourcing practices and expects its suppliers to uphold the same standards. In 2014, the Company did not have a formal policy regarding human rights as its sole operating company is located in the United States, which has extensive human rights laws in place. The Company monitors its supply chain for potential human rights issues through periodic site visits.

At the operating subsidiary in Philadelphia, worker's rights are protected by federal, state, and local laws. In addition, approximately three quarters of the company's employees are members of the Philadelphia Metal Trades Council (PMTC) union and are covered under the collective bargaining agreement between the PMTC and the Company. This agreement is effective until 31 January 2019.

Under this collective bargaining agreement, union employees are granted vacation and personal time, and the shipyard is shut down during the week of Fourth of July holiday and in between Christmas and New Year's holidays. In addition, union employees may take up to 6 unpaid days within a 12-month period. Traditional sick days are not part of the collective bargaining agreement. Non-union employees accrue sick time on a monthly basis and may maintain a balance of up to 200 hours. During 2014, approximately 160 non-union employees used 6,170 hours of sick time, representing 1.6% of total non-union work hours. Comparably, in 2013, 170 non-union employees used 4,085 hours of sick time, representing approximately 1.0% of the total non-union work hours.

At AKPS, HSE responsibility is not just a priority but is a core value and influences all decisions and actions. 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 2015.

In 2014, the frequency of lost-time incidents (incidents resulting in absence from work per one million hours) was 5.4, compared with 4.7 in 2013 (1.08 and 0.94, respectively, using OSHA frequency rates). The incidents came from a total of 2,589,274 hours worked by AKPS employees and subcontractors in 2014, compared with 2,343,632 hours worked by AKPS employees and subcontractors in 2013. AKPS had 14 lost time incidents in 2014. During 2014, AKPS for the first time worked more than one million consecutive hours without a lost time incident. The most serious incident to occur during 2014 involved electrical burns. The most common injuries were bruises and contusions followed by sprains and strains and eye injuries. AKPS continues to work proactively to further improve safety and reduce the number of incidents at the Shipyard. For example, in 2014 APSI introduced expanded environmental waste disposal training and provided vision examinations for all production personnel. With these initiatives and additional training opportunities, the Company continues to believe that improvements will be made.

In 2015, the Shipyard will continue to improve its in-house systems and procedures for exchanging knowledge gained from past accidents and potentially hazardous events. The Company is also working with outside parties to obtain and implement best practices to develop a zero-incident culture.

AKPS takes its environmental responsibilities seriously beginning with the vessel design. The Company uses the latest International Maritime Organization (IMO) requirements as guidance for environmental protection and efficiency during the design and production process. The industrial nature of the Company's activities requires the use of significant amounts of energy, both electrical and gas, as well as the release of particulate and VOC emissions. During 2014 the Company used approximately 29.7 MW of electricity and approximately 635,530 ccf of natural gas.

Its VOC emissions were 76.4 tons for the reporting period ending in 2014. The Company had no reported discharges into the surrounding waterways. AKPS aims to comply with or exceed applicable environmental laws, rules, and regulations. Environmental status reporting is an integral part of the Company's reporting system, on par with reporting on financial matters and operations. 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 and has implemented a system through which employees can make observations and suggestions about AKPS's environmental performance.

In 2014, APSI generated approximately 2,549 tons of waste and recycled approximately 2,024 tons of steel. APSI has continued its program to gather and sort waste to promote environmentally responsible handling, disposal, and recovery of any residual value.

A basic principle of ethical business conduct requires that each employee of the Company support positively, both on and off the job, the Company's business activities. One important way we satisfy this responsibility is to ensure that our business dealings are never influenced by – or even appear to be influenced by – our own personal interests. The Company has zero tolerance for corruption and has adopted an Anti-Corruption Policy that is in line with the anti-corruption policies at other Aker ASA-related companies. The Company also maintains a strict Conflict of Interests policy, which is reflected in its employee handbook, as well as its Terms and Conditions to outside suppliers.

In support of the above initiatives and policies, AKPS maintains a formal policy for the disclosure of wrongful conduct and protection from retaliation (the Company's "Whistleblower Policy"). This policy is available to all employees and is administered by the Vice President of Human Resources. During 2014, a simplified process to make anonymous reports of violations through a third party administrator was implemented. In 2014, there were two cases reported using this process.

Organization

On 31 December 2014, AKPS had 570 direct employees and 576 subcontractors. The Company experiences higher turnover amongst its union and production subcontractor employees compared to other employees.

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 pages 52-55 of this annual report.

Outlook

Shipbuilding

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. The Company's large backlog provides an excellent platform for operational improvement and APSI's formal improvement program, E-330, is an important element in achieving the goals that have been established.

The contracts with SeaRiver for Hull 020, Crowley for Hulls 021-024 and Philly Tankers for Hulls 025-026 secure AKPS's backlog through Q4 2016. The containerships under contract with Matson (Hulls 029 and 030) are scheduled for delivery in 2018. The Company's order backlog for these projects exceeds USD 1 billion at 31 December 2014.

Key focus areas for 2015 will be continued progress on the product tankers being built for the AKPS-Crowley joint venture and the product tankers being built for Philly Tankers. The Company expects to build Hulls 027-028 as product tankers with deliveries in 2017.

While AKPS is mainly focused on product tankers and large containerships, AKPS continues to pursue prospects for new construction projects in other areas of the Jones Act market, including shuttle tankers, short-sea shipping vessels, offshore service vessels, barges, wind turbine installation vessels, and other large steel fabrication projects. LNG propulsion continues to be a consideration for potential owners and AKPS is well-positioned to leverage its experience from the Matson containership design. 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 vessels are ordered.

Shipping

The Company's shipping assets, consisting of the future economic interests in the AKPS-Crowley joint venture for Hulls 021-024 and its investment in Philly Tankers, provide a mechanism for AKPS to receive returns on the ownership, chartering and operation of the vessels it builds, in addition to returns on traditional shipbuilding activities. These shipping assets will be managed with an opportunistic ownership strategy to maximize their value. The fundamental outlook for Jones Act shipping remains firm in light of increased domestic crude production and strong demand for clean petroleum products and coastwise chemical movements; however, market uncertainty has increased in the second half of 2014. Available tonnage in the market continues to be limited compared to demand in the short and medium term. The Company continues to believe that new tonnage planned to come online in 2016 and 2017 will be effectively absorbed in the market. The Jones Act tanker market has seen a number of relevant transactions recently. These include the purchases of three existing product tankers by master limited partnerships (MLPs), consisting of one by Genesis Energy and two by Kinder Morgan Energy Partners. Further, since the decline in crude oil prices, the market has seen a number of charters, including two long-term charters for Philly Tankers as well as a multi-year charter for a newbuild MR product tanker as reported in an industry trade publication.

Oslo, Norway 6 March 2015 Board of Directors Aker Philadelphia Shipyard ASA

Kristian M. Rokke Amy Humphreys Elin Karfjell Board Chairman Board Member Board Member

Audun Stensvold Steinar Nerbovik Deputy Board Chairman President and CEO

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 2014 (annual report 2014).

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 2014. 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 2014. 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 2014.

To the best of our knowledge:

• • The consolidated and separate annual financial statements for 2014 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 profit as a whole as of 31 December 2014 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, Norway 6 March 2015 Board of Directors Aker Philadelphia Shipyard ASA

Kristian M. Rokke Amy Humphreys Elin Karfjell Board Chairman Board Member Board Member

Audun Stensvold Steinar Nerbovik Deputy Board Chairman President and CEO

Annual accounts

• 20 Consolidated accounts
• 41 Parent company accounts

Aker Philadelphia Shipyard ASA Consolidated Income Statement

Amounts in USD thousands (except share amounts and per share data)	Note	2014	2013
Operating revenues	9	240 231	275 838
Other income	9	32 437	3 187
Operating revenues and other income		272 668	279 025
Cost of vessels		(233 793)	(240 962)
Wages and other personnel expenses, net	2	(2 155)	(2 288)
Other operating expenses	3	(4 574)	(5 660)
Operating income before depreciation		32 146	30 115
Depreciation	6	(7 457)	(6 919)
Operating income		24 689	23 196
Financial income	4	835	1 084
Financial expenses	4	(6 637)	(871)
Income before tax		18 887	23 409
Income tax expense	5	(5 274)	(7 814)
Net income for the year *		13 613	15 595
Weighted average number of shares	13	12 170 960	10 165 305
Basic earnings per share (USD)	13	1.12	1.53
Diluted earnings per share (USD)	13	1.12	1.53

Aker Philadelphia Shipyard ASA

Consolidated Statement of Comprehensive Income

Amounts in USD thousands	2014	2013
Net income for the year	13 613 -	15 595 -
Other comprehensive income, net of income tax Total comprehensive income for the year *	13 613	15 595

* All attributable to equity holders of the parent company.

Consolidated Statement of Financial Position as of 31 December

Amounts in USD thousands	Note	2014	2013
ASSETS
Property, plant and equipment	6	52 894	54 824
Restricted cash	12	7 002	20 003
Deferred tax assets	5	308	2 976
Equity-accounted investees	24	55 960	-
Other non-current assets	7	208	5 380
Total non-current assets		116 372	83 183
Vessels-under-construction receivable	8	87 945	-
Restricted cash	12	13 000	-
Prepayments and other receivables	10	10 590	32 051
Income tax receivable		-	3 287
Cash and cash equivalents	11	40 477	68 775
Total current assets		152 012	104 113
Total assets		268 384	187 296

EQUITY AND LIABILITIES

Paid in capital	14	81 619	70 995
Other equity		56 563	42 950
Total equity attributable to equity holders of the parent company		138 182	113 945
Total equity		138 182	113 945
Interest-bearing long-term debt	15,17	726	2 870
Non-current portion of note payable	15	10 753	-
Other long-term liabilities	16	7 210	7 030
Deferred tax liabilities	5	-	7 896
Total non-current liabilities		18 689	17 796
Interest-bearing short-term debt	15,17	212	2 695
Trade payables and accrued liabilities	20	31 929	18 293
Note payable	15	45 552	-
Income taxes payable	5	6 259	-
Customer advances, net	8	26 054	33 821
Other provisions—warranties	19	1 507	746
Total current liabilities		111 513	55 555
Total liabilities		130 202	73 351
Total equity and liabilities		268 384	187 296

Oslo, Norway 6 March 2015 Board of Directors Aker Philadelphia Shipyard ASA

Board Chairman Board Member Board Member

Audun Stensvold Steinar Nerbovik Deputy Board Chairman President and CEO

Kristian Rokke Amy Humphreys Elin Karfjell

Aker Philadelphia Shipyard ASA Consolidated Statement of Changes in Equity

Amounts in USD thousands	Share capital	Share premium	Treasury shares	Other equity	Total equity
Balance at 31 December 2012	18 709	52 286	-	27 355	98 350
Net income for the year 2013	-	-	-	15 595	15 595
Balance at 31 December 2013	18 709	52 286	-	42 950	113 945
Issuance of shares, net of transaction costs	3 955	59 697	-	-	63 652
Dividends	-	(43 059)	-	-	(43 059)
Purchase of treasury shares	-	-	(9 969)	-	(9 969)
Net income for the year 2014	-	-	-	13 613	13 613
Balance at 31 December 2014	22 664	68 924	(9 969)	56 563	138 182

Consolidated Cash Flow Statement

Amounts in USD thousands	Note	2014	2013
Income before tax		18 887	23 409
Unrealized foreign exchange loss/(gain)	4	1 979	(57)
Depreciation	6	7 457	6 919
Gain-on-sale of profit shares	9	(32 337)	-
Accreted interest income		(180)	(657)
Accreted interest expense		945	-
Profit in equity-accounted investees	9	(100)	-
Net financial expense/(income)	4	619	(303)
(Increase)/decrease in:
Vessels-under-construction receivable	8	(87 945)	-
Work-in-process	8	-	67 718
Other current assets	10,12	5 855	(11 847)
Other non-current assets	7,12	13 566	(2 082)
Increase/(decrease) in:
Trade payables and accrued liabilities	19,20	12 418	(6 607)
Customer advances, net	8	(7 767)	(26 236)
Other long-term liabilities	16	180	1 050
Income taxes paid	5	(957)	(2 376)
Interest paid, net of capitalized interest	4	(1 678)	(724)
Interest received	4	1 059	1 027
Net cash flow (used in)/from operating activities		(67 999)	49 234
Investments in property, plant and equipment	6	(5 527)	(4 953)
Investment in equity-accounted investees		(6 025)	-
Distribution received from equity-accounted investees		5 525	-
Sale of profit sharing, net of transaction costs	9	39 731	-
Net cash flow from/(used in) investing activities		33 704	(4 953)
Repayment of interest-bearing long-term debt	15	(2 144)	(2 695)
Repayment of interest-bearing short-term debt	15	(2 483)	(31 144)
Proceeds from shares issued, net of transaction costs		63 652	-
Dividends		(43 059)	-
Purchase of treasury shares		(9 969)	-
Net cash flow from/(used in) financing activities		5 997	(33 839)
Net change in cash and cash equivalents		(28 298)	10 442
Cash and cash equivalents as of 1 January		68 775	58 333
Cash and cash equivalents as of 31 December	11	40 477	68 775

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 or the Company) 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 6 March 2015.

BACKGROUND AND BASIS FOR PREPARATION

Aker Philadelphia Shipyard ASA was formed on 16 October 2007 to be the holding company of Aker Philadelphia Shipyard, Inc. (APSI or the Shipyard) which owns and operates a shipyard located in Philadelphia, Pennsylvania, USA. APSI owns certain subsidiaries in connection with its investments in the joint venture with Crowley and in Philly Tankers AS.

AKPS is domiciled in Oslo, Norway. APSI is domiciled in the Commonwealth of Pennsylvania, USA. The subsidiaries of APSI are domiciled in the State of Delaware, 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.

The consolidated financial statements are presented in USD (thousands), except when indicated otherwise.

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 construction contracts. The use of the percentage of completion method requires AKPS to estimate the stage of completion of contract activity at each statement of financial position 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 can 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 its Cash Generating Unit

AKPS has concluded that it has only one primary cash generating unit and must determine the fair value of its cash generating unit in order to perform impairment tests of its long-lived assets. AKPS evaluates its investments in the joint venture with Crowley and its investment in Philly Tankers LLC (see note 24) separately from its primary cash generating unit. 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, including profit sharing agreements 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. The recognition of deferred tax assets is primarily applicable to Norway where AKPS has a net deferred tax asset position.

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. A subsidiary is an entity in which Aker Philadelphia Shipyard ASA has the power to control and govern the operating and financial policies.

Interests in equity-accounted investees

AKPS's interest in equity-accounted investees comprise interest in an associate and a joint venture.

Associates are those entities in which AKPS has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which AKPS has joint control, whereby AKPS has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

Interest in associates and joint ventures are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include AKPS's share of the profit or loss and other comprehensive income of equity–accounted investees, until the date on which significant influence or joint control ceases.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equityaccounted investees are eliminated against the investment to the extent AKPS's interest in the investees. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

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), rounded to the nearest thousand, 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. Monetary assets and liabilities in foreign currencies are translated into the functional currency at the exchange rates in effect on the statement of financial position 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 statement of financial position represents the cost net of government grants and subsidies received (if applicable) less accumulated depreciation and any impairment charges. Cost includes expenditures that are directly attributable to the asset. The cost of selfconstructed assets includes the costs of material and direct labor, and any other costs directly attributable to bringing the asset to working condition for its intended use. 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 longlived 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 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.

IMPAIRMENT OF LONG-LIVED ASSETS

Property, plant and equipment and other noncurrent 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 discounted cash flows and fair market value is based on recent third party appraisals.

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 to interest expense. 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 installments vary.

When a sale and leaseback results in a finance lease, any gain on the sale is deferred and recognized as income over the lease term. If the leaseback is classified as an operating lease, then any gain is recognized immediately if the sale and leaseback are at fair value.

CONSTRUCTION CONTRACTS

AKPS's business activities mainly involve deliveries of vessels under contract to customers. Revenue related to construction contracts for customers is recognized using the percentage of completion method, based primarily on the scope of completed work compared to estimated overall project scope at the statement of financial position 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 statement of financial position under accrued liabilities. 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.

To the extent AKPS's procurement activities result in it acting as an agent for its customer, the related costs and revenues are presented net within revenue. This situation typically occurs when certain materials are paid for and supplied by the customer directly.

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

Variable or contingent revenues are also classified as operating revenues in the consolidated income statement and are recognized under applicable standards when estimable.

VESSEL CONSTRUCTION FOR UNSPECIFIED CUSTOMERS

Vessels which do not have a contractual buyer at the start of construction and are being built with the expectation of identifying a customer during the construction phase are capitalized into workin-process. When the vessel is completed and sold both revenue and cost are recognized. If conditions indicate that the ultimate sales price will be below the estimated cost of the vessel, AKPS determines the estimated sales price and records an impairment charge as appropriate. The accumulated costs for vessels-underconstruction receivables for unspecified customers are included in work-in-process.

GOVERNMENT GRANTS AND SUPPORT

Government grants and support are recognized at their fair value where there is reasonable assurance that amounts will be received and conditions have been met. In some cases, recognition occurs over a period of time as restrictions lapse or as conditions are met. Grants and support related to capital expenditures or construction of assets for AKPS's account are recognized as a reduction of the related asset cost. For assets held for use, this results in a lower depreciation charge over the useful life of the asset. Grants related to specific programs or projects are recognized as reductions in expense over the period in which work that relates to the grant or support is performed.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less.

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 profit 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 laws as used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date.

Deferred Income Taxes

Deferred income tax is provided, using the asset/ liability method, on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except upon initial recognition of an asset or a liability that does not impact income.

Deferred income tax assets are recognized for all deductible temporary differences, and carry-forward of unused tax losses and credits, to the extent that it is probable that taxable 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 statement of financial position date and 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 statement of financial position date.

PENSION OBLIGATIONS

AKPS has a pension plan that covers its nonunion employees whereby contributions are paid to a qualifying pension plan. The Company's union employees are participants in a union selected pension plan. Although the Union Plan is a defined benefit pension plan, because the union does not provide information on the Company's employees and their share of the pension assets and obligations, the plan is accounted for in accordance with the requirements of a defined contribution plan. Under defined contribution pension plans, 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 statement of financial position 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 commodity pricing risk, currency 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 nonderivative 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 2014, AKPS has four customers: SeaRiver Maritime, Inc. (SeaRiver), Crowley Tankers, LLC (Crowley), Philly Tankers LLC (Philly Tankers) and Matson Navigation Company, Inc. (Matson). 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. AKPS attempts to mitigate this risk through its foreign exchange hedging program or passing this risk onto its end customers by having them purchase certain materials directly in foreign currency.

Commodity Price Risk

AKPS is exposed to commodity price risk on the steel that it procures in the shipbuilding process. AKPS seeks to mitigate this risk by attempting to pass this risk on to its end customers by having them purchase materials directly or by including steel escalation clauses in the shipbuilding contracts. AKPS also seeks to mitigate this risk by attempting to pass the risk on to its suppliers by capping the increase in pricing to be paid by AKPS.

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 reviews on a quarterly basis with its Board any proposed dividends as well as any needs to raise additional equity for future business opportunities or to reduce debt.

Funding/Investment Risk

AKPS regularly monitors the financial condition of its construction financing lenders as well as potential sources of permanent take-out financing related to its investments in the Crowley joint ventures and Philly Tankers. Additionally, AKPS monitors the financial condition 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 other financial assets. AKPS's approach to managing liquidity is to ensure, to the extent 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. AKPS attempts to mitigate this risk through project financing, progress payments from its customers, and material supplied and paid directly by its customers.

Accounting for Derivative Financial Instruments and Hedging Activities

Derivative financial instruments are recognized initially and in subsequent periods on the statement of financial position at fair value with the resulting gains and losses included 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 22 regarding financial instruments.

RELATED PARTY TRANSACTIONS

The Company's policy is that all transactions, agreements and business activities with related parties are conducted on an arm's length basis according to ordinary business terms and conditions.

SEGMENT INFORMATION

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

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. The calculation of diluted earnings per share is consistent with the calculation of basic earnings per share while giving effect to all potential dilutive ordinary shares that were outstanding during the period. AKPS currently has no potentially dilutive shares outstanding.

EVENTS AFTER 31 DECEMBER 2014

A distinction is made between events both favorable and unfavorable that provide evidence of conditions that existed at the statement of financial position date (adjusting events) and those that are indicative of conditions that arose after the statement of financial position date (nonadjusting events). Financial statements will only be adjusted to reflect adjusting events and not non-adjusting events (although there are disclosure requirements for such events).

NEW STANDARDS AND INTERPRETATIONS ADOPTED

IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities and the amendments to ISA 27 Separate Financial Statements and IAS 28 Investments in Associated were adopted effective 1 January 2014. The adoption of these standards did not have a material impact on the consolidated financial statements as the adoption date.

Standards issued but not yet adopted

A number of new standards and amendments to standards are effective for annual periods beginning 1 January 2014; however, AKPS has not applied the following new or amended standards in preparing these consolidated financial statements.

IFRS 9 Financial Instruments. IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. AKPS is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 9.

IFRS 15 Revenue from Contracts with Customers. IFRS 15 established a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2017, with early adoption permitted. AKPS is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 15.

Note 2: Wages and other personnel expenses

Wages and other personnel expenses consist of:

Amounts in USD thousands (except number of employees)	2014	2013
Wages	40 656	40 571
Social security contributions	3 737	3 908
Pension costs (note 18)	1 435	1 339
Other expenses	7 850	7 921
Total gross expense	53 678	53 739
Expenses related to vessel construction	(51 523)	(51 451)
Wages and other personnel expenses, net	2 155	2 288
Average number of employees	573	580
Number of employees at year-end	570	581

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

Note 3: Other operating expenses

Other operating expenses consist of:

Amounts in USD thousands	2014	2013
Other operating expenses	4 574	5 660
Other operating expenses	4 574	5 660

Other operating expenses primarily relate to selling, general and administrative expenses. Fees to auditors for AKPS are as follows:

Amounts in USD thousands	2014	2013
Audit fees	202	213
Other audit and attestation fees	71	20
Tax non-attest fees	3	-
Total	276	233

Note 4: Financial income and financial expenses

Amounts in USD thousands	2014	2013
Interest income	835	1 027
Gain on foreign currency forward contracts	-	57
Financial income	835	1 084
Interest expense	(1 454)	(774)
Interest capitalized on construction contracts	-	50
Loss on foreign currency forward contracts	(1 979)	-
Foreign exchange loss, net	(3 204)	(147)
Financial expenses	(6 637)	(871)
Net financial items	(5 802)	213

Details regarding the Company's debt facilities and interest rates are provided in note 15 and foreign exchange gain/(loss) details are provided in note 22. In 2014, the loss on foreign currency forward contracts is attributable to mark-to-market of foreign currency forward contracts in Korean Won and the foreign exchange loss, net is attributable to certain cash balances which were held in Norwegian Kroner. In 2013, the gain on foreign currency forward contracts is attributable to mark-to-market of foreign currency forward contracts in Korean Won and the foreign exchange loss, net is attributable to certain cash balances which were held in Norwegian Kroner.

Note 5: Taxes

Income tax expense/(benefit)

Recognized in the income statement

Amounts in USD thousands	2014	2013
Current tax expense:
Current year - U.S.	3 867	242
Current year - Norway	6 636	-
Total current tax expense	10 503	242
Deferred tax expense/(benefit): Origination and reversal of temporary differences - U.S.	(8 204)	6 995
Origination and reversal of temporary differences - Norway	2 975	577
Total deferred tax (benefit)/expense	(5 229)	7 572
Total income tax expense in the income statement	5 274	7 814

Reconciliation of effective tax rate:

Amounts in USD thousands	2014	2013
Income before tax	18 887	23 409
Nominal Norwegian tax rate	27.0%	28.0%
Expected tax expense using nominal Norwegian tax rate	5 099	6 555
Effect of differences between nominal Norwegian tax rate and U.S. federal, state and city tax rate	(1 735)	2 023
Expenses deductible for tax purposes	(938)	-
Expenses not deductible for tax purposes	419	55
Income subject to tax	2 210	-
Income not subject to tax	-	(756)
Other differences	219	(63)
Total income tax expense in the income statement	5 274	7 814

The effective tax rate differs from the expected tax rate primarily due to the difference between the nominal Norwegian tax rate and U.S. federal, state and city tax rate, and income that was not taxable in Norway.

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 2014 for AKPS was primarily the United States, the State of Delaware, the Commonwealth of Pennsylvania and the City of Philadelphia.

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

Amounts in USD thousands	2014	2013
Deferred tax assets U.S. tax jurisdiction	7 321	3 629
Deferred tax liabilities U.S. tax jurisdiction	(7 013)	(11 525)
Net deferred tax assets/(liabilities)	308	(7 896)

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

Amounts in USD thousands	2014	2013
Beginning of the period	(4 921)	2 651
Deferred tax benefit/(expense)	5 229	(7 572)
End of the year deferred tax assets/(liabilities), net	308	(4 921)

The movement in deferred tax assets and liabilities during the year for the U.S. tax jurisdiction is as follows:

Deferred tax assets:

Amounts in USD thousands	Other assets	Tax losses	Total
31 December 2013	3 629	-	3 629
(Charged)/credited to the income statement	3 692	-	3 692
31 December 2014	7 321	-	7 321

Deferred tax liabilities:

31 December 2014	(8 203)	2 180	(990)	(7 013)
(Charged)/credited to the income statement	334	5 168	(990)	4 512
31 December 2013	(8 537)	(2 988)	-	(11 525)
Amounts in USD thousands	Property, plant and equipment	Projects	Other	Total

The movement in deferred tax assets and liabilities during the year for the Norwegian tax jurisdiction is as follows:

Deferred tax assets:

Amounts in USD thousands	Other assets	Tax losses	Total
31 December 2013	2 738	238	2 976
(Charged)/credited to the income statement	(2 738)	(238)	(2 976)
31 December 2014	-	-	-

The Norwegian tax assets were utilized to offset taxable income in Norway resulting from the sale of the profit sharing agreements.

Note 6: Property, plant and equipment

Movements in property, plant and equipment for 2014 are shown below:

Amounts in USD thousands	Machinery and vehicles	Buildings	Land improvements	Assets-under construction	Total
Cost at 1 January 2014	39 338	55 292	18 172	751	113 553
Purchases	-	-	-	5 527	5 527
Transfers	1 609	4 161	-	(5 770)	-
Write-off of assets	-	(336)	-	-	(336)
Cost at 31 December 2014	40 947	59 117	18 172	508	118 744
Depreciation and impairment losses at 1 January 2014	31 150	21 523	6 056	-	58 729
Depreciation	4 137	2 559	761	-	7 457
Write-off of assets	-	(336)	-	-	(336)
Depreciation and impairment losses at 31 December 2014	35 287	23 746	6 817	-	65 850
Book value at 31 December 2014 (1)	5 660	35 371	11 355	508	52 894
(1) Book value of assets under financial leasing agreements
recorded in the statement of financial position (see note 17):	2 795	11 075	9 407	-	23 277
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 2013 are shown below:

Amounts in USD thousands	Machinery and vehicles	Buildings	Land improvements	Assets-under construction	Total
Cost at 1 January 2013	35 211	52 858	18 172	2 756	108 997
Purchases	-	-	-	4 953	4 953
Transfers	4 268	2 690	-	(6 958)	-
Write-off of assets	(141)	(256)	-	-	(397)
Cost at 31 December 2013	39 338	55 292	18 172	751	113 553
Depreciation and impairment losses at 1 January 2013	27 354	19 362	5 295	-	52 011
Depreciation	3 937	2 417	761	-	7 115
Write-off of assets	(141)	(256)	-	-	(397)
Depreciation and impairment losses at 31 December 2013	31 150	21 523	6 056	-	58 729
Book value at 31 December 2013 (1)	8 188	33 769	12 116	751	54 824
(1) Book value of assets under financial leasing agreements recorded in the statement of financial position (see note 17):	3 483	12 664	9 997	-	26 144
Depreciation period	3-12 years	7-30 years	20 years
Depreciation method	Straight-line	Straight-line	Straight-line

Leased plant and machinery

The Company leases production equipment and land improvements 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 17).

Property, plant and equipment under construction

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

Depreciation

AKPS's normal practice is to present its annual depreciation expense on a separate line item in its consolidated income statement when it is building vessels-under-construction contracts.

Determination of recoverable amounts/fair value

Due to the market and company specific developments including operating results and backlog, no impairment indicators were identified in 2014 for property, plant and equipment.

Sale leaseback

The assets sold and leased back from PSDC are being accounted for as a finance lease and as such the gain is being deferred and recognized over the assets' useful lives.

Note 7: Other non-current assets

Other non-current assets consist of the following items:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Long-term portion of profit sharing receivable	-	4 607
Prepaid lease payments and deposits	208	210
Interest-bearing receivable	-	10
Other non-current assets	-	553
Total	208	5 380

The prepaid lease payments and deposits are unsecured and have no collateral.

Note 8: Construction contracts/vessels built for own account

The order backlog is USD 1.013 billion at 31 December 2014 and represents an obligation to deliver vessels that have not yet been produced for our customers: SeaRiver, Crowley, Philly Tankers and Matson. The order backlog consists of future revenues and is subject to adjustments based on change orders as defined in the construction contracts.

The order backlog on long-term contracts is as follows:

Amounts in USD thousands	Order backlog	Order intake	Order backlog	Order intake	Order backlog
	31 Dec. 2014	2014	31 Dec. 2013	2013	31 Dec. 2012
Total	1 012 918	256 016	1 017 694	909 060	338 717

The recognized profits on long-term contracts in process at year-end are as follows:

Amounts in USD thousands	31 Dec. 2014
Contract revenue recognized as revenue to date	473 527
Less contract expenses recognized to date	(459 000)
Recognized profit to date	14 527

Other construction contracts figures: Contract costs incurred to date 473 954

Customer milestone payments as of 31 December 2014 and 31 December 2013 totaled USD 257.9 million and USD 263.1 million, respectively.

Customer advances, net as of 31 December 2014 and 2013 totaled USD 26.1 million and 33.8 million, respectively, and represents customer milestone payments net of work-in-process and earned profit.

As of 31 December 2014, APSI has non-cancellable purchase commitments for materials and equipment of approximately USD 115.7 million for the construction of Hulls 020-030.

Note 9: Operating revenues and other income

Operating revenues and other income consist of the following items:

Amounts in USD thousands	2014	2013
Operating revenues	240 231	275 838
Gain-on-sale of profit shares Profit in equity-accounted investees	32 337 100	- -
Hull 018 profit share	-	3 187
Other income	32 437	3 187
Total	272 668	279 025

On 31 March 2014, the Company sold its profit sharing interests in Hulls 017 and 018 to Crowley for USD 40 million. The company has recorded the gain as part of other income in the income statement.

Note 10: Prepayments and other receivables

Prepayments and other receivables consist of the following items:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Trade receivables	518	21 091
Claims receivable	7 871	-
Prepayments to suppliers/other	1 435	8 354
Prepayments to Crowley joint venture	766	-
Short-term portion of profit sharing receivable	-	2 606
Total	10 590	32 051

Claims receivable represents amounts the company anticipates recovering from vendors.

Prepayments to Crowley joint venture represent certain costs the parties have agreed to pay proportionately. Upon delivery of each vessel the amounts paid by APSI will be factored into the final investment by ship in the joint venture.

Note 11: Cash and cash equivalents

Cash and cash equivalents consist of the following items:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Cash and bank deposits	40 477	68 775
Cash and cash equivalents in the statement of cash flows	40 477	68 775

Cash and bank deposits are invested in overnight deposits.

Note 12: Restricted cash

Restricted cash consists of the following items:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Restricted cash - non-current	7 002	20 003
Restricted cash - current	13 000	-
Total	20 002	20 003

Restricted cash represents an escrow account established in conjunction with the SeaRiver contract. The monies held in the escrow account will be released in stages after delivery of the second vessel (Hull 020) as defined in the escrow agreement.

Note 13: Earnings per share

Basic and diluted

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

Amounts in USD thousands (except share amounts and per share data)	2014	2013
Income attributable to equity holders of the Company	13 613	15 595
Weighted average number of ordinary shares in issue	12 170 960	10 165 305
Basic and diluted earnings per share (USD)	1.12	1.53

At 31 December 2014, AKPS had 12,107,901 ordinary shares at a par value of NOK 10 per share which reflected the share issuances of 2,250,000 on 10 February 2014 and 159,461 on 27 March 2014 less 466,865 shares repurchased between 1 July 2014 and 31 December 2014. Based on these issuances, a weighted average of 12,170,960 ordinary shares was used in the calculation of earnings per share for the year ended 31 December 2014. For the year ended 31 December 2013, 10,165,305 ordinary shares was used for purposes of calculation of earnings per share.

There were no potentially dilutive securities outstanding as of 31 December 2014 and 2013.

Note 14: Paid in capital

The current share capital is 12,107,901 shares issued and outstanding as of 31 December 2014, each with a par value of NOK 10, fully paid. As of 31 December 2014, there are no additional authorized shares.

Amounts in USD thousands	Share capital	Share premium	Paid in capital
31 December 2013	18 709	52 286	70 995
Issuance of shares, net of transaction costs	3 955	59 697	63 652
Dividends	-	(43 059)	(43 059)
31 December 2014	22 664	68 924	91 588

Summary of purchases of treasury shares:

Treasury shares at 31 December 2014	466 865	(9 969)
Purchases	466 865	(9 969)
Treasury shares at 1 January 2014	-	-
Amounts in USD thousands (except share amounts)	Number of shares	Consideration

Note 15: Interest-bearing debt

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 22.

Amounts in USD thousands		31 Dec. 2014	31 Dec. 2013
Interest-bearing long-term debt:
PIDA/PIDC loans		-	1 932
Finance lease liability		726	938
Note payable		10 753	-
Total interest-bearing long-term debt		11 479	2 870
Interest-bearing short-term debt:
PIDA/PIDC loans		-	2 495
Finance lease liability		212	200
Note payable		45 552	-
Total interest-bearing short-term debt		45 764	2 695
Unsecured loans as of 31 December 2014	Maturity	Balance	Interest rate
Note payable	Feb. 2016	56 305	3.56%
Total unsecured loans		56 305

On 24 February 2014, APSI prepaid in full the remaining balance of USD 2.8 million under a USD 20 million loan by the Pennsylvania Industrial Development Authority (PIDA) and the remaining balance of USD 1.2 million under a USD 10 million loan from PIDC Local Development Corporation (PIDC), without premium or penalty, and the mortgages and all other liens securing such loans were released

On 6 March 2014, the Company entered into a loan agreement with Caterpillar Financial Services Corporation (Cat Financial) for a USD 120 million loan facility for construction financing on the four product tankers under contract with Crowley Maritime Corporation. The loan is subject to a maximum borrowing amount of USD 58-60 million per vessel and will be secured by a first lien on Hulls 021-024. The loan will accrue interest at three-month LIBOR plus 3.0% as defined in the loan agreement. Funding is subject to satisfaction of customary conditions precedent for this type of facility, including securing commitments for post-delivery financing of the vessels. No funds have been drawn under this facility as of 31 December 2014.

On 6 November 2013, APSI executed a commitment letter with PIDC Regional Center, LP XXXI, a partnership between CanAm Enterprises and PIDC, for a secured term loan of up to USD 60 million. The commitment letter provides that the loan will have a five-year term and will be initially secured by a second lien on Hulls 021-024 during construction. After the vessels are delivered, the lender will have a lien on the economic interests in the vessels under the joint venture with Crowley. The commitment letter provides further that the loan will have a fixed interest rate of 2.75% through maturity. This facility will be used to fund the Company's investment in the AKPS-Crowley joint venture product tankers. Closing is subject to satisfaction of customary conditions precedent for this type of loan, including obtaining certain government approvals. AKPS expects to sign definitive documentation for the Welcome Fund loan described above and draw down the funds as soon as governmental approval of such loan has been obtained. This loan will be made through the Welcome Fund loan program, a source of low-cost capital generally available to commercial, retail, industrial or non-profit firms that create significant job growth and are located in or planning to locate to the City of Philadelphia. No funds have been drawn under this facility as of 31 December 2014.

In return for shares in Philly Tankers, the Company contributed a promissory note with a face value of USD 58 million to the equity capital of Philly Tankers. This note will be reduced dollar-for-dollar as the shipyard spends its own funds on the construction of Hulls 025 and 026. As this note was issued as an interest-free instrument, the Company has discounted its value and is imputing interest expense on the discounted amount at a rate of 3.56% per annum. The full amount is due and payable on the earlier of the date of delivery of Hull 026 or 30 November 2018.

Undrawn credit facilities

As of 31 December 2014, APSI has USD 3.1 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 16: Other long-term liabilities

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Deferred real estate tax liability	7 210	7 030
Total	7 210	7 030

In connection with the PSDC agreement, the City of Philadelphia agreed to temporarily defer USD 8.0 million in real estate tax payments due from APSI over three years (2011-2013). The full deferred amount is due in 2017. The Company has discounted the deferred payments and is imputing interest expense over the deferral period.

Note 17: Operating and finance lease liabilities

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

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Less than one year	238	251
Between one and five years	275	522
Total	513	773

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

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

Amounts in USD thousands	Payments	Interest	Principal	Payments	Interest	Principal
	2014	2014	2014	2013	2013	2013
Less than one year	256	44	212	255	55	200
Between one and five years	788	62	726	1 044	106	938
Total	1 044	106	938	1 299	161	1 138

The Company has a finance lease for priming equipment.

The Company operates on land leased from 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. Lease payments for rent due under the finance lease are USD 1 per year.

PSDC has the right to terminate the lease if APSI fails to maintain an average of at least 200 full-time employees at the shipyard for 90 consecutive days, subject to the right of APSI to complete work-in-process projects and a one-time, limited cure right which allows APSI to restore the lease to a 5-year term under certain circumstances. Based on its current construction schedule and backlog, AKPS expects that it will have at least 200 full-time employees on staff for the foreseeable future.

Note 18: Pension costs

Pension costs recognized in the income statement:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Contribution plans (employer's contribution)	1 435	1 339
Total net pension costs	1 435	1 339

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. In addition, the Company's union employees are participants in a multi-employer union selected pension plan (Union Plan). The Company contributes a fixed amount per hour worked to the Union Plan. If the Company were to terminate its relationship with the Union Plan, the Company could be statutorily liable for a termination liability calculated at the termination date. The termination liability at 31 December 2014 was USD 3.1 million. Currently, the Company has no plans to terminate this relationship. Thus, no termination liability has been recognized in the financial statements. The Company estimates that it will contribute approximately USD 1.0 million to the Union Plan in 2015. The Company's contributions over the last five years represented 0.2% of total contributions to the Union Plan for the same five-year period.

Note 19: Other provisions – warranties

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Current balance as of 1 January	746	2 837
Provisions made during the period	1 000	300
Provisions released during the period	-	(1 440)
Provisions used during the period	(239)	(951)
Current balance as of 31 December	1 507	746

The warranty provision relates to the warranty work for vessels (Hulls 016-019) which were delivered through 31 December 2014.

Note 20: Trade payables and accrued liabilities

Trade payables and accrued liabilities comprise the following items:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Trade payables	8 471	5 878
Ship material and subcontracting accruals	16 411	5 457
Employee-related cost accruals	4 658	4 466
Overhead and capital projects accruals	2 389	2 492
Total	31 929	18 293

Note 21: Net interest-bearing debt

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

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Interest-bearing long-term debt (see note 15)	11 479	2 870
+ Interest-bearing short-term debt (see note 15)	45 764	2 695
Total interest-bearing debt	57 243	5 565
- Interest-bearing receivable (see note 7)	-	(10)
- Profit sharing receivable (see notes 7 and 10)	-	(7 213)
- Cash and cash equivalents (see note 11)	(40 477)	(68 775)
- Restricted cash (see note 12)	(20 002)	(20 003)
Total interest-bearing assets	(60 479)	(96 001)
Net interest-bearing debt (+)/assets (-)	(3 236)	(90 436)

Net interest-bearing debt is defined by the Company to be total interest-bearing debt less interest-bearing receivables, cash and cash equivalents, and restricted cash.

Note 22: Financial instruments

Exposure to credit, liquidity, currency and interest rate risks arise in the normal course of AKPS'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 2014 and 2013, respectively, the maximum exposure to credit risk is as follows:

Amounts in USD thousands	31 Dec. 2014	31 Dec. 2013
Equity-accounted investees	55 960	-
Cash and cash equivalents	40 477	68 775
Restricted cash	20 002	20 003
Trade receivable	518	21 091
Profit sharing receivable	-	7 213
Interest-bearing receivable	-	10
Total	116 957	117 092

Liquidity risk

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

	31 December 2014
Amounts in USD thousands	Book value	Contractual cash flow	Less than 6 months	6-12 months	1-2 years	2-5 years	More than 5 years
Non-derivative financial liabilities
Note payable	56 305	(58 000)	(6 062)	(39 490)	(12 448)	-	-
Finance lease	938	(1 044)	(128)	(128)	(256)	(532)	-
Deferred real estate tax liability	7 210	(8 000)	-	-	-	(8 000)	-
Trade payables	8 471	(8 471)	(8 471)	-	-	-	-
Total	72 924	(75 515)	(14 661)	(39 618)	(12 704)	(8 532)	-

31 December 2013
Amounts in USD thousands	Book value	Contractual cash flow	Less than 6 months	6-12 months	1-2 years	2-5 years	More than 5 years
Non-derivative financial liabilities
Long-term portion of secured loans (gross)	1 932	(1 961)	-	-	(1 961)	-	-
Short-term portion of interest-bearing long-term external debt	2 495	(2 618)	(1 309)	(1 309)	-	-	-
Finance lease	1 138	(1 299)	(128)	(128)	(256)	(787)	-
Deferred real estate tax liability	7 030	(8 000)	-	-	-	(8 000)	-
Trade payables	5 878	(5 878)	(5 878)	-	-	-	-
Total	18 473	(19 756)	(7 315)	(1 437)	(2 217)	(8 787)	-

Book values included in the above tables are gross loan amounts.

Currency risk

AKPS incurs foreign currency risk on purchases 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).

Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in foreign currencies and for which hedge accounting is not 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 2014 was USD 1.9 million recognized in current liabilities.

Exposure to currency risk:

The Company's exposure to currency risk at 31 December 2014 and 2013 was as follows based on the following notional amounts:

		2014		2013
Amounts in USD thousands	Euro	KRW	NOK	Euro	KRW	NOK
Gross balance sheet exposure
Trade payables (-)	(46)	(2 693)	(21)	(311)	-	-
Cash	-	-	10 344	-	-	1 272
Gross balance sheet exposure	(46)	(2 693)	10 323	(311)	-	1 272
Estimated forecast expenses (-)	(2 267)	(19 521)	-	(4 969)	(36 868)	-
Gross exposure	(2 267)	(19 521)	-	(4 969)	(36 868)	-
Forward exchange contracts	2 108	54 426	19	5 183	18 361	-
Net exposure	(205)	32 212	10 342	(97)	(18 507)	1 272

Sensitivity analysis

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

At 31 December 2014 it is estimated that a 10% strengthening of the USD against other foreign currencies would have increased AKPS's income before tax by USD 67 thousand. At 31 December 2013 it is estimated that a 10% strengthening of the USD against other foreign currencies would have increased AKPS's income before tax by USD 16 thousand.

Exposure to interest rate risk

It is estimated that a general increase of one percentage point in interest rates would not impact AKPS's income before tax for 2014 and would not have impacted AKPS's income before tax for 2013. None of AKPS's financial assets and liabilities are measured at fair value.

Fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Amounts in USD thousands	Carrying amount 2014	Fair value 2014	Fair value hierarchy level 2014	Carrying amount 2013	Fair value 2013	Fair value hierarchy level 2013
Profit sharing receivable	-	-	-	7 213	7 213	3
Interest-bearing receivable	-	-	-	10	10	2
Secured loans (gross)	-	-	-	(4 427)	(4 129)	2
Note payable	(56 305)	(56 305)	2	-	-	-
Finance lease liabilities	(938)	(826)	2	(1 138)	(978)	2
Forward exchange contracts	(1 922)	(1 922)	2	57	57	2

The fair value of fixed-interest long-term debt (i.e. finance lease liabilities) is calculated based on the present value of future principal and interest cash flows discounted at a market rate of 5.0% for 2014 and 5.0% for 2013.

The fair value of the interest-free note payable is calculated based on the present value of future principal and accreted interest cash flows discounted at a market rate of 3.56% for 2014.

Financial instruments measured at fair value:

The following table shows the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used:

Type	Valuation technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value measurement
Forward exchange contracts	Market comparison technique: The fair values are based on banker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments.	Not applicable.	Not applicable.

Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values:

Amounts in USD thousands	2014	2013
Profit sharing receivable at beginning of year:	7 213	3 401
Addition from sale of Hull 018, included in operating revenues	-	3 187
Accreted interest, included in financial income	180	657
Cash payment received	-	(32)
Sale of profit sharing receivable	(7 393)	-
Profit sharing receivable at end of year	-	7 213

There were no transfers from Level 3 in 2014.

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.

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.

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.

Note 23: 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 2014

Name	Position	Number of shares held
Elin Karfjell	Board Member	1 200
Steinar Nerbovik	President and CEO	1 000
Scott Clapham	Senior Vice President	1 000
Sanjay Deshmuk	Vice President	1 000
Jeffrey Theisen	Chief Financial Officer	500

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 2014

			Remuneration
Name	Position	(NOK)	(USD)
Kristian Rokke	Executive Chairman	1 686 822	284 079
Elin Karfjell	Board Member	215 000	34 082
Amy Humphreys	Board Member	215 000	34 082
Audun Stensvold	Deputy Board Chairman	215 000	34 082
Sum Directors' fees		2 331 822	386 325

No Board members received any remuneration other than Directors' fees. The Board remuneration for Kristian Rokke includes the fee for his role as executive chairman from 9 April 2014. The Board remuneration for Audun Stensvold is paid to Aker ASA.

Remuneration to the audit committee

The audit committee of AKPS is comprised of Elin Karfjell (Chairperson) and Audun Stensvold. Remuneration for the Chairperson is NOK 45,000 (USD 7,133) and for each member is NOK 35,000 (USD 5,548). The audit committee remuneration for Audun Stensvold is paid to Aker ASA.

Remuneration to the nomination committee

The nomination committee of Aker Philadelphia Shipyard ASA has the following members: Leif-Arne Langoy, Kjetil Kristiansen and Gerhard Heiberg. Remuneration earned by each member of the committee in 2014 was NOK 33,000 (USD 5,231).

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

The variable pay program for the President and CEO represents a potential for an additional variable pay up to 70% 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 HSE).

The variable pay program for other members of the Executive Team represents a potential for an additional variable pay in the range of 20% to 60% of base salary depending on the achievement of the same factors described for the President and CEO.

The President and CEO and Executive 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 members of the Executive Team.

The Company does not offer share option programs to the Executive Team.

Remuneration paid to Executive Management for 2014

Amounts in USD			Base salary	Variable pay	Pension contribution	Other benefits	Total remuneration	Severance pay
	Steinar Nerbovik President and CEO	9 Apr. - Dec.	421 486	-	1 231	97 424	520 141	12 months
Kristian Rokke	President and CEO	Jan. - 8 Apr.	81 912	116 269	7 000	17 105	222 286	6 months
Jeffrey Theisen	CFO	Jan. - Dec.	268 149	74 622	12 600	16 035	371 406	12 months

Remuneration paid to Executive Management for 2013

Amounts in USD			Base salary	Variable pay	Pension contribution	Other benefits	Total remuneration	Severance pay
Kristian Rokke	President and CEO	Jan. - Dec.	228 827	80 114	7 000	53 587	369 528	6 months
Jeffrey Theisen	CFO	Jan. - Dec.	263 991	73 555	13 755	15 961	367 262	9 months

Note 24: Joint venture/equity-accounted investees

Joint venture with Crowley

On 6 November 2013, AKPS executed definitive agreements for a joint venture with Crowley Maritime Corporation and certain of its affiliates (Crowley) related to the ownership, operation and chartering of four product tankers. The vessels will be delivered in 2015 and 2016 and Crowley will maintain control over the ownership, technical operation, and commercial management of the vessels. AKPS and Crowley will share approximately 49.9% and 50.1%, respectively, in the economic benefits from the vessels. It is anticipated that AKPS will have an investment in the joint venture of approximately USD 110 million once all four vessels are delivered which will be accounted for under the equity method. No investment has taken place as of 31 December 2014 and there has been no joint venture results of operation. The actual amount of the investment will depend upon the total capital cost of the vessels to the joint venture and the net amount of take out financing upon delivery of the vessels. The vessels owned by the joint venture will be subject to mortgage debt residing at the joint venture. Due to the nature of the transaction, approximately 49.9% of the gross margin on each vessel being constructed by AKPS for the joint venture will be deferred and recognized ratably over the life of such vessel once it is delivered. As of 31 December 2014, the Company had deferred USD 9.0 million in profit which is recorded as a reduction in revenues and included in vessels-under-construction receivable on the statement of financial position. All four vessels have multi-year charters in place at 31 December 2014.

Equity-accounted investees

Philly Tankers

In July 2014, AKPS completed a USD 65.025 million private placement for Philly Tankers with a subsequent listing on the Norwegian OTC.

Prior to the Philly Tankers private placement, in return for 62,475 shares in Philly Tankers, the Company contributed a promissory note with a face value of USD 58 million to the equity capital of Philly Tankers. This note will be reduced dollar-for-dollar as the shipyard spends its own funds on the construction of Hulls 025 and 026. As this note was issued as an interest-free instrument, the Company has discounted its value and is imputing interest expense on the discounted amount at a rate of 3.56% per annum. The full amount is due and payable on the earlier of the date of delivery of Hull 026 or 30 November 2018.

In addition, as part of the Philly Tankers private placement, the Company invested USD 6.025 million in cash in exchange for an additional 6,025 shares in Philly Tankers. As the initial shareholder of Philly Tankers, the Company was paid a cash distribution of USD 5.525 million out of the proceeds of the Philly Tankers private placement.

As of 31 December 2014, the Company owns 53.7% of the outstanding shares of Philly Tankers. The Company has performed an analysis of its ownership interests and voting rights in the articles of association in Philly Tankers and concluded that it does not control the relevant activities of Philly Tankers. Therefore, the Company accounts for the investment using the equity method and does not consolidate Philly Tankers.

Amounts in USD thousands	2014	2013
Percentage ownership interest	53.7%	-
Non-current assets	30 753	-
Current assets	82 213	-
Non-current liabilities	-	-
Current liabilities	(75)	-
Net assets (100%)	112 891	-
Group's share of net assets (53.7%)	60 651	-
Adjustments to carrying value of investment:
APSI share of transaction costs	1 157	-
Deferred shipbuilding profit	(5 848)	-
Carrying amount of equity-accounted investees	55 960	-
Revenue	-	-
Income from operations (100%)	185	-
Other comprehensive income (100%)	-	-
Total comprehensive income (100%)	185	-
Group's share of income and total comprehensive income (53.7%)	100	-

Note 25: AKPS companies

	Incorporation	Ownership
Company name	City/State	Country	%
Aker Philadelphia Shipyard, Inc.	Pennsylvania	USA	100.0%
APSI Shipholding 017, Inc.	Delaware	USA	100.0%
APSI Shipholding 018, Inc.	Delaware	USA	100.0%
APSI Tanker Holdings, Inc.	Delaware	USA	100.0%
APSI Member 021, Inc.	Delaware	USA	100.0%
APSI Member 022, Inc.	Delaware	USA	100.0%
APSI Member 023, Inc.	Delaware	USA	100.0%
APSI Member 024, Inc.	Delaware	USA	100.0%
APSI Tanker Holdings II, LLC	Delaware	USA	100.0%

Note 26: Government grants, commitments and contingencies

Government grants

For the year ended 31 December 2014, the Shipyard received USD 44 thousand reimbursement of employee training costs from various governmental agencies (USD 726 thousand reimbursement in 2013). For the year ended 31 December 2014, the Shipyard did not receive any grant funds for capital and infrastructure improvements under the Small Shipyard Grant Program (USD 195 thousand of grant funds in 2013). All grants were recognized as a reduction in expenses or asset cost.

Other commitments and contingencies

APSI is required to pay a common area maintenance charge each month of approximately USD 72 thousand, subject to escalation, through the term of its shipyard lease.

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. In connection with the closing of certain other transactions with PSDC in March 2011, the City of Philadelphia agreed to temporarily defer USD 8.0 million in tax payments due from APSI over three years (2011-2013). The full deferred amount is due in 2017 (see note 16).

Legal matters

AKPS 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 AKPS's opinion the ultimate resolution of such legal matters will not have a material adverse effect on AKPS's financial position or results of operations.

Note 27: 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 57.6% of the total outstanding shares of AKPS as of 31 December 2014. In addition, Kristian Rokke, the Chairman of the Board of AKPS, is a Board member of TRG Holding AS, which owns 66.7% of the total outstanding shares of Aker ASA as of 31 December 2014. AKPS believes that related party transactions are made on terms equivalent to those that prevail in arm's length transactions.

Transactions

AKPS has service agreements with Aker ASA and its affiliates which provide certain specified consulting, accounting, tax, financial and administrative services. AKPS also has a secondment agreement with Aker ASA which establishes a framework for the mutual secondment of personnel between their respective organizations. All payables under these agreements are paid within the normal course of business. Related administrative costs and financial statement amounts were as follows:

Amounts in USD thousands	Expenses	Expenses	Payables
	2014	2013	31 Dec. 2014
Aker ASA	589	338	-
Aker US Services LLC	70	60	-

APSI has entered into an administrative services agreement with Philly Tankers LLC (PTLLC) whereby APSI will supply certain administrative and commercial services to PTLLC. Total payments since inception are USD 60 thousand.

Concentrations

Operating revenues are detailed below:

Amounts in USD thousands	Revenue 2014	Revenue 2013
Crowley	147 172	93 267
SeaRiver	92 996	185 742

Agreements

APSI has agreed to reimburse Aker ASA for certain support and assistance provided by Aker ASA to APSI in connection with the SeaRiver project. Related expenses for the twelve-month period ending 31 December 2014 were USD 82 thousand (USD 80 thousand in 2013).

Note 28: Use and reconciliation of non-GAAP financial measures

Use and reconciliation of non-GAAP financial measures consist of
Amounts in USD thousands	2014	2013
EBITDA plus: deferred shipbuilding profits for Hulls 021-024	32 146 8 999	30 115 -
Adjusted EBITDA 41 145 30 115

For AKPS, non-GAAP financial measures are defined as numerical measures that either exclude or include amounts that are not excluded or included in the comparable measures calculated and presented in accordance with GAAP (i.e. IFRS).

The following financial measure may be considered a non-GAAP financial measure:

Adjusted EBITDA which is defined as EBITDA plus deferred shipbuilding profits.

AKPS believes presenting Adjusted EBITDA is useful to investors as it provides another measure of AKPS's profitability from its shipbuilding operations, as if AKPS had no economic interest in the AKPS-Crowley joint venture vessels, and more closely represents earnings from its shipbuilding activities.

Note 29: Events after 31 December 2014

On 3 February 2015, a new four-year collective bargaining agreement was ratified by the Philadelphia Metal Trades Council (PMTC). The PMTC is the exclusive bargaining representative for production and maintenance employees at APSI. This new labor contract will extend until 31 January 2019.

On 26 February 2015, Philly Tankers announced it entered into binding long-term charter contracts with a domestic end-user for its two 50,000 dwt product tankers under contract with AKPS (Hulls 025-026).

Income Statement

Amounts in USD thousands	Note	2014	2013
Revenues		86	85
Gain-on-sale of profit sharing asset		22 834	-
Operating expenses	2	(1 272)	(611)
Reversal of guarantee provisions	2	-	2 000
Operating income		21 648	1 474
Interest income from subsidiary		196	-
Interest expense to subsidiaries		(87)	(407)
Other interest and financial income		464	699
Other interest and financial expenses		(3 205)	(136)
Income before tax		19 016	1 630
Tax (expense)/benefit	4	(7 046)	410
Net income for the year		11 970	2 040
Allocation of net income:
Net income for the year		11 970	2 040
Other equity	5	(11 970)	(2 040)
Total		-	-

Statement of Financial Position as of 31 December

Amounts in USD thousands	Note	2014	2013
ASSETS
Shares in subsidiary	3	67 000	67 000
Deferred tax asset	4	-	410
Loan to subsidiary	9	35 000	-
Non-current portion of profit sharing assets	7	-	14 110
Total non-current assets		102 000	81 520
Current portion of profit sharing assets	7	-	2 606
Other current assets		27	36
Cash and cash equivalents	6	13 916	17 527
Total current assets		13 943	20 169
Total assets		115 943	101 689
EQUITY AND LIABILITIES
Share capital		22 664	18 709
Share premium reserve		58 955	52 286
Total paid in capital		81 619	70 995
Other equity		28 081	16 111
Total equity	5	109 700	87 106
Long-term notes payable to subsidiaries	9	-	13 980
Total non-current liabilities		-	13 980
Other short-term liabilities		202 6 041	603
Tax payable			-
Total current liabilities		6 243	603
Total liabilities		6 243	14 583
Total equity and liabilities		115 943	101 689

Oslo, Norway 6 March 2015 Board of Directors Aker Philadelphia Shipyard ASA

Board Chairman Board Member Board Member

Audun Stensvold Steinar Nerbovik Deputy Board Chairman President and CEO

Kristian Rokke Amy Humphreys Elin Karfjell

Cash Flow Statement

Amounts in USD thousands	2014	2013
Income before tax	19 016	1 630
Change in profit sharing assets	16 716	(625)
Change in other current assets	9	(2)
Change in short-term liabilities	(401)	(1 585)
Income taxes paid	(595)	-
Net cash flow from/(used in) operating activities	34 745	(582)
Repayment of long-term notes payable to subsidiaries	(13 980)	-
Proceeds from long-term notes payable to subsidiaries	-	7 928
Proceeds from shares issued	63 652	-
Dividends	(43 059)	-
Purchase of treasury shares	(9 969)	-
Note receivable from subsidiary	(35 000)	-
Net cash flow (used in)/from financing activities	(38 356)	7 928
Net change in cash and cash equivalents	(3 611)	7 346
Cash and cash equivalents at beginning of period	17 527	10 181
Cash and cash equivalents as of 31 December	13 916	17 527

Aker Philadelphia Shipyard ASA Notes to the accounts

Note 1: Basis for preparation

The accounts of Aker Philadelphia Shipyard ASA (AKPS or the Company) 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), except when indicated otherwise.

Subsidiaries

Subsidiaries are presented on a historical cost basis in the parent company accounts. The investment is valued at historical cost for the shares unless impairment write-downs have been deemed necessary. The shares are written down to fair value if the impairment is not of a temporary nature and is necessitated by generally accepted accounting principles. Writedowns are reversed when the basis for the writedown 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 current liabilities include items that have less than one year to maturity, and other items that are deemed operational working capital. Other items are classified as non-current assets/non-current liabilities.

Current assets are valued at the lower of historical cost and fair value. Current liabilities are valued at their nominal historical value at the time the liability arises.

Non-current assets are valued at historical cost, but are written down to fair value if impairment is deemed to be of a permanent nature. Non-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 at 31 December 2014 is calculated using a 27% 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 taxreducing 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 shortterm 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.

Note 2: Other operating expenses

Fees to the auditors for ordinary audit and other audit and attestation fees have been expensed in 2014 and 2013. Fees to the auditors are as follows:

Amounts in USD thousands	2014	2013
Audit fees	58	45
Other audit and attestation fees	71	15
Tax non-attest fees	3	-
Total	132	60

The Company has no employees. The senior management is employed in the operating company. Fees to the Board of Directors of USD 386,325 and USD 171,200 were expensed in 2014 and 2013, respectively.

Accrued guarantee provisions of USD 2.0 million related to the government support on Hulls 017 and 018 were reversed in 2013 when the contingent obligation was discharged.

Note 3: Shares in subsidiary

This item comprises the following as of 31 December 2014:

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

APSI's results after-tax in 2014 and equity at the end of 2014 are:

Results after-tax 2014	(5 295)
Equity at 31 December 2014	95 482

Based on the net asset position of APSI (the investment in subsidiary) as well as the cash on hand at APSI, AKPS has concluded that no impairment has occurred to the investment in subsidiary at 31 December 2014.

Note 4: Taxes

The table below shows the difference between book and tax values by the end of 2014 and 2013 and the amounts of deferred taxes at these dates and the change in deferred taxes.

Amounts in USD thousands	2014	2013
Losses carried forward	-	883
Other temporary differences	-	635
Total differences	-	1 518
Net deferred tax asset, 27%	-	410
Tax (gains)/losses not recognized	-	-
Tax asset in the statement of financial position	-	410
Estimated result for tax purposes:
Amounts in USD thousands	2014	2013
Income before tax measured in NOK for taxation purposes	24 649	2 614
Permanent differences	253	(2 699)
Change in temporary differences	-	991
Utilization of loss carried forward	(2 528)	(906)
Estimated income for tax purposes	22 374	-
Payable current tax	6 041	-
Tax (expense)/benefit in the income statement:
Amounts in USD thousands	2014	2013
Tax payable	(6 041)	-
Deferred tax expense related to deductible costs related to the sale of
share capital	(595)	-
Change in deferred tax in the statement of financial position	(410)	410
Tax (expense)/benefit	(7 046)	410

Note 5: Total equity

Changes in equity are:

Amounts in USD thousands	Share capital	Share premium	Treasury shares	Total paid in capital	Other equity	Total equity
Equity as of 1 January 2014	18 709	52 286	-	70 995	16 111	87 106
Issuance of shares, net of transaction costs	3 955	59 697	-	63 652	-	63 652
Dividends	-	(43 059)	-	(43 059)	-	(43 059)
Purchase of treasury shares	-	-	(9 969)	(9 969)	-	(9 969)
Net income for the year 2014	-	-	-	-	11 970	11 970
Equity as of 31 December 2014	22 664	68 924	(9 969)	81 619	28 081	109 700

The share capital of NOK 125,747,660 consists of 12,574,766 shares with a par value of NOK 10 as of 31 December 2014.

The Company is a part of the consolidated accounts of Aker ASA, Fjordalleen 16, NO-0115 Oslo, Norway.

Twenty largest shareholders

(as of 31 December 2014)

Shareholders	Number of shares held	Ownership (in %)
Converto Capital Fund AS	7 237 631	57.6%
Goldman Sachs & Co. Equity Segragat	2 199 367	17.5%
DBSI - 090-9011 3-1-4	566 317	4.5%
Aker Philadelphia Shipyard ASA	466 865	3.7%
Pershing LLC	371 527	3.0%
Merrill Lynch Prof. Clearing Corp.	169 376	1.3%
Euroclear Bank S.A./N.V. ('BA')	168 969	1.3%
J.P. Morgan Clearing Corp.	117 831	0.9%
SEB Private Bank S.A. (Extended)	84 100	0.7%
Jefferies LLC	80 100	0.6%
Citibank, N.A.	79 764	0.6%
JP Morgan Clearing Corp.	70 416	0.6%
Merrill Lynch, Pierce, Fenner & S. Inc.	59 052	0.5%
Nordnet Pensjonsforsikring	54 660	0.4%
UBS Securities LLC	49 814	0.4%
Kovaci Ramadan	45 412	0.4%
Morgan Stanley & Co. LLC	45 000	0.4%
Jefferies & Co., Inc.	40 100	0.3%
Ro Lars	40 000	0.3%
Wilson Ole Johnny	28 318	0.2%
Total, 20 largest shareholders	11 974 619	95.2%
Other shareholders	600 147	4.8%
Total shareholders	12 574 766	100.0%

Note 6: Cash and cash equivalents

There is no restricted cash.

Note 7: Profit sharing assets

On 31 March 2014, the Company sold its profit sharing interests in Hulls 017 and 018 to Crowley for USD 40 million. The company has recorded the gain as part of operating revenues and other income in the income statement.

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 23 to the Consolidated Accounts.

Note 9: Related party transactions/guarantees

The Company has made the following guarantees:

Description	Beneficiary	Amount (USD thousands)	Borrower
Working capital	TD Bank, N.A.	6 000	APSI
Caterpillar loan	Caterpillar Financial Services Corp.	120 000	APSI

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

The Company has supplied a parent guarantee for the obligations of APSI under the four construction contracts with Crowley Maritime Corporation (Hulls 021-024), the two construction contracts with Philly Tankers (Hulls 025-026) and the two construction contracts with Matson Navigation Company (Hulls 029-030).

AKPS has service agreements with Aker ASA and its affiliates which provide certain specified consulting, accounting, tax, financial and administrative services. AKPS also has a secondment agreement with Aker ASA which establishes a framework for the mutual secondment of personnel between their respective organizations. All payables under these agreements are paid within the normal course of business. Total expenses incurred under this agreement in 2014 and 2013 were USD 589 thousand and USD 338 thousand, respectively.

On 29 April 2008, APSI, as borrower, entered into a loan agreement with AKPS, as lender. The loan agreement was amended on 16 June 2009, 3 May 2011 and 26 November 2014. The facility is for up to USD 50 million and interest is at a floating rate of 3-month LIBOR plus 2.25% per annum. As of 31 December 2014, USD 35 million is outstanding under the facility.

	Cifficas in
KPMG AS, a Norwegian member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.	Oslo Ahs ANTINE	Knarvik Kristiansand Lanuli Mo i Rana Adolds	Stord Christmas
States/Annants revisorer - mediammer av Dan norska Revisor	Harris

Good dialogue

Aker Philadelphia Shipyard ASA (referenced to herein as "AKPS" or the "Company") 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 26 February 2014, the Company's Board of Directors adopted the following dividend policy:

"The Company's objective is to provide its shareholders with a competitive return on its shares over time based on the Company's earnings. The Company aims to pay a quarterly dividend of USD 0.25 per share, beginning with the second quarter of 2014, with intentions of increasing the amount over time. Any payment of dividends will be considered in conjunction with the Company's financial position, debt covenants, capital requirements, market prospects and potential strengthening of the Company's financial structure."

The Company paid dividends totaling NOK 259.6 million (USD 43.0 million) in 2014.

The Norwegian Public Limited Liability Companies Act allows for the Board of Directors to pay dividends on the basis of an authorization from the general meeting. The Board of Directors will therefore propose to the annual general meeting in 2015 that the Board of Directors is granted an authorization to pay dividends based on the Company's annual accounts for 2014, valid up to the Company's annual general meeting in 2016. Such authorization will facilitate payments of dividends by the Board of Directors on a quarterly basis, in accordance with the Company's dividend policy.

Shares and share capital

As of 31 December 2014, Aker Philadelphia Shipyard ASA has 12,574,766 ordinary shares; each share has a par value of NOK 10 (see note 5 to the parent company's 2014 accounts). As of 31 December 2014, the Company had 602 shareholders, of whom 33.6% were non-Norwegian shareholders.

Aker Philadelphia Shipyard has a single share class. Each share is entitled to one vote.

On 17 January 2014, the Company obtained commitments in a private placement of equity totaling USD 60.9 million, or 2.25 million shares at an issue price of NOK 165 per share. The private placement was approved at an extraordinary general meeting on 7 February 2014 and trading of the new shares commenced on 10 February 2014. The Company carried out a subsequent offering that resulted in exercised subscription rights for 159,461 new shares in the Company, with trading of the new shares commencing on 27 March 2014. Total proceeds from the subsequent offering were USD 4.3 million. No other share issues were carried out in 2014.

In July 2014, the Company initiated a share buyback program to repurchase up to 10% of its share capital in accordance with the authorization granted to the Board of Directors at the Annual General Meeting held on 9 April 2014. The Company held 466,865 of its own (treasury) shares, constituting approximately 3.71% of the shares outstanding, as of 31 December 2014.

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 Bank ASA is the Company's registrar.

Majority shareholder

Aker Philadelphia Shipyard ASA's majority shareholder is Converto Capital Fund AS, an investment fund controlled by Aker ASA. Companies that are part of Aker 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 2014, Aker Philadelphia Shipyard ASA has an authorization to increase the share capital by up to NOK 12,415,300 and an authorization to purchase own shares with a total nominal value of NOK 12,415,300. Both of these current Board authorizations are valid up until the next Annual General Meeting in 2015. For more details, please see "Board authorizations" on page 52.

Stock option plans

As of 31 December 2014, 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 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, articles of association, financial calendar, and its Investor Relations and Corporate Governance policies, along with other information.

Shareholders can contact the Company at ir@akerphiladelphia.com.

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 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.

Share capital development over the past three years

Date	Change in share capital (in NOK)	Share capital (in NOK)	Number of shares	Par value (in NOK)
Change in 2012 31 December 2012	-	101 653 050	10 165 305	10.00
Change in 2013 31 December 2013	-	101 653 050	10 165 305	10.00
Change in 2014 31 December 2014	24 094 610	125 747 660	12 574 766	10.00

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 Langoy, Gerhard Heiberg and Kjetil Kristiansen.

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 Postboks 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 shareholders' nominees. To vote at shareholders' meetings, shareholders (or their duly authorized representatives) must either be physically present or must vote by proxy.

2014 share data

The Company's total market capitalization as of 31 December 2014 was NOK 1 235 million. During 2014, a total of 8,001,609 Aker Philadelphia Shipyard ASA shares traded, corresponding to 0.64 times the Company's freely tradable stock. The shares traded on 250 trading days in 2014.

Twenty largest shareholders

(as of 31 December 2014)

Shareholders	Number of shares held	Ownership (in %)
Converto Capital Fund AS	7 237 631	57.6%
Goldman Sachs & Co Equity Segragat	2 199 367	17.5%
DBSI-090-9011 3-1-4	566 317	4.5%
Aker Philadelphia Shipyard ASA	466 865	3.7%
Pershing LLC	371 527	3.0%
Merrill Lynch Prof. Clearing Corp.	169 376	1.3%
Euroclear Bank S.A./N.V.	168 969	1.3%
JP Morgan Clearing Corp.	117 831	0.9%
SEB Private Bank S.A.	84 100	0.7%
Jefferies LLC	80 100	0.6%
Citibank, N.A.	79 764	0.6%
JP Morgan Clearing Corp.	70 416	0.6%
Merrill Lynch, Pierce, Fenners & S. Inc.	59 052	0.5%
Nordnet Pensjonsforsikring	54 660	0.4%
UBS Securities LLC	49 814	0.4%
Kovaci Ramadan	45 412	0.4%
Morgan Stanley & Co. LLC	45 000	0.4%
Jefferies & Co., Inc.	40 100	0.3%
Ro Lars	40 000	0.3%
Wilson Ole Johnny	28 318	0.2%
Total, 20 largest shareholders	11 974 619	95.2%
Other shareholders	600 147	4.8%
Total	12 574 766	100.0%

Geographic distribution of shareholders

(as of 31 December 2014)

Nationality	Number of shares held	Ownership (in %)
Non-Norwegian shareholders	4 227 950	33.6%
Norwegian shareholders	8 346 816	66.4%
Total	12 574 766	100.0%

Ownership structure by number of shares held (as of 31 December 2014)

Shares owned	Number of shareholders	Percent of share capital
1 – 100	200	0.06%
101 – 1 000	262	0.89%
1 001 – 10 000	108	2.41%
10 001 – 100 000	24	6.79%
100 001 – 500 000	5	10.29%
Over 500 000	3	79.56%
Total	602	100.00%

Share price development in 2014

2014 share data

Highest traded	NOK	215.00
Lowest traded	NOK	77.00
Share price as of 31 Dec.	NOK	98.25
Shares issued as of 31 Dec.		12 574 766
Own (treasury) shares as of 31 Dec.		466 865
Shares issued and outstanding as of 31 Dec.		12 574 766
Market capitalization as of 31 Dec.	NOK million	1 235
Proposed share dividend	NOK per share	-

Share price development

Corporate governance

Aker Philadelphia Shipyard ASA (the "Company" or "AKPS") aims to create maximum value for its shareholders over time. Good corporate governance will help to reduce risk and ensure sustainable value creation.

The Board has reviewed and updated the Company's principles for corporate governance. The principles are based on the Norwegian Code of Practice for Corporate Governance, dated 30 October 2014 (the "Code of Practice"), the principles set out in the Continuing Obligations of stock exchange listed companies from the Oslo Stock Exchange, and the relevant Norwegian background law such as the Norwegian Accounting Act and the Norwegian Public Limited Liability Companies Act. The Code of Practice is available at www.nues.no and the Continuing Obligations of stock exchange listed companies may be found at www.oslobors.no. The principles also apply to the Company's subsidiaries when relevant. The Board's statement of corporate governance is included in the annual report. The following presents the current practice of AKPS regarding each of the recommendations contained in the Code of Practice. Any deviations from the recommendations are explained under the item in question.

Purpose

The Company'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 corporate values and ethical guidelines. The Company's corporate values are presented on page 6 of this annual report. These values consist of the following four "CORE" principles: Caring, One shipyard, Responsible and Efficient. AKPS has zero tolerance for corruption and, in 2015, the Board approved a new Anti-Corruption Policy that is in-line with the anti-corruption policies in place at

other Aker ASA-related companies. AKPS works to promote a sustainable and responsible company that is driven by good results and the demands for social responsibility.

Business

The Company's business purpose clause in the articles of association is as follows:

"The Company's business is to own and manage industry and other related business related to building of ships, capital management and other operations for the group, including participating in or acquiring other business."

The function of the business purpose clause is to ensure that shareholders have control of the business and its risk profile, without limiting the Board or management's ability to carry out strategic and financially viable decisions within the defined purpose. AKPS's goals and main strategies are presented in the Board of Directors' report. The Company's vision is "to be – and be recognized as – America's leading commercial shipyard that delivers on its commitments, every time," and its supporting strategies for 2015 continue to be delivering on customer commitments, securing open slots as product tankers and maximizing value of its shipping assets.

Equity and dividends Equity

AKPS's equity as of 31 December 2014 amounted to USD 138.2 million, which corresponds to an equity ratio of 51.5% of total assets. AKPS regards the Company's current equity structure as appropriate and adapted to its objectives, strategy, and risk profile.

Dividends

The Company's dividend policy is included in the section "Shares and shareholder matters" (see page 50). As stated in that policy:

"The Company's objective is to provide its shareholders with a competitive return on its shares over time based on the Company's earnings. The Company aims to pay a quarterly dividend of USD 0.25 per share, beginning with the second quarter of 2014, with intentions of increasing the amount over time. Any payment of dividends will be considered in conjunction with the Company's financial position, debt covenants, capital requirements, market prospects and potential strengthening of the Company's financial structure."

Board authorizations

It is the intention that the Board's proposals for future Board authorizations to issue shares and to undertake share buybacks are to be limited to defined purposes and to be valid only until the next annual shareholders' meeting.

To facilitate for payment of dividends on an on-going basis in accordance with the Company's dividend policy, the Board of Directors has an authorization to pay dividends based on the Company's annual accounts for 2013.

The Board of Directors has an authorization to increase the share capital by up to NOK 12,415,300, which can only be used to raise equity capital for new shipbuilding projects or other future investments within the Company's scope of operations.

The Board of Directors has an authorization to purchase own shares with a total nominal value of NOK 12,415,300 which can only be used in connection with buyback programs for the Company's shares or for future investments within the Company's scope of operations.

All of these Board authorizations are valid up to the annual shareholders' meeting in 2015.

The Board currently has no other authorizations to issue shares or undertake share buybacks. The Board will propose to the annual shareholders' meeting in 2015 that the Board is granted an authorization for payment of dividends, an authorization to increase the share capital and an authorization to purchase own 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 will justify the waiver. The Board will also publicly disclose such justification in a stock exchange announcement issued in connection with such increase in share capital. Transactions in own (treasury) shares are executed on the Oslo Stock Exchange or by other means at the listed price.

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.

The Company 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 AKPS.

See additional information on transactions with related parties in note 27 to the consolidated accounts. As of 31 December 2014, 57.6% of the shares in AKPS are owned by Converto Capital Fund AS, an investment fund controlled by Aker ASA. For further details on the relationship between AKPS and Aker ASA, see note 27 to the consolidated accounts.

Freely negotiable shares

The Company's shares are freely negotiable. No restrictions on transferability are found in the Company's articles of association.

Annual shareholders' meetings

The Board of Directors 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. Notices of shareholders' meetings are sent physically by post and comprehensive supporting information, including the recommendations of the nomination committee, are made available for the shareholders on the Company's home page, in each case not later than 21 days prior to the annual shareholders' meeting. The

Board seeks to ensure that the resolutions and supporting information are sufficiently detailed and comprehensive to enable the shareholders to form a view on all matters to be considered at the meeting. The deadline for shareholders to register to the shareholders' meetings is set as close to the date of the meeting as possible and the deadline for registration may not expire earlier than five days prior to the date of the shareholders' meeting. 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 chairman. 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 shareholders' meeting will be included in the notice.

Pursuant to the Company's articles of association, the Chairman of the Board, or any other person appointed by the Chairman, chairs the shareholders' meetings. Although the Code of Practice recommends an independent chair for annual general meetings, it is the view of the Company that the procedure followed by the Company provides efficient and well prepared general meetings and is in the interests of the shareholders. The shareholders are invited to make a joint voting on the composition of the Board of Directors as proposed by the nomination committee and not on each board member separately. Hence, the Company deviates from the Code of Practice in this regard as the nomination committee emphasizes that the Board's composition shall reflect a variety of experience, knowledge and qualifications.

To the extent possible, the CEO/ General Manager, nomination committee leader and auditor attend annual shareholders' meetings.

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 "Media Center".

Nomination committee

AKPS has a nomination committee, as set forth in Section 7 of 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 twoyear period. The composition of the nomination committee reflects the interests of the shareholders, and its members are independent from the Board and Executive Management. The members and Chairman of the nomination committee are elected by the Company's annual shareholders' meeting, which also approves the remuneration payable to committee members.

Pursuant to the Company'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 the members of the Board and the nomination committee. The nomination committee will justify its recommendation and such justification will address the criteria specified in Section 8 of the Code of Practice on the composition of the Board of Directors.

The nomination committee comprises the following members:

• Leif Arne Langoy, Chairman (2013-2015)
• Gerhard Heiberg (2013-2015)
• Kjetil Kristiansen (2013-2015)

None of the members of the nomination committee is a member of the Board of Directors. Neither the CEO/General Manager nor any other senior executive is a member of the nomination committee.

The shareholders' meeting has stipulated guidelines for the duties of the nomination committee.

The Company provides the shareholders with information on how to submit proposals to the nomination committee for candidates for election to the Board of Directors on the Company's website.

Board composition and independence

The Company does not have a corporate assembly because AKPS, excluding its subsidiaries, has fewer than 200 employees.

Pursuant to Section 4 of the Company's articles of association, the Board comprises between three and seven members. The Board is currently comprised of a total of four members. The Company's shareholders elect the Chairman of the Board at the annual shareholders' meeting. The Board may elect its own Deputy Board Chairman. Board members are elected for a period of two years.

The composition of the Board of Directors is designed to ensure that it can operate independently of any special interests and function effectively as a collegiate body. A majority of the shareholder-elected Board members are independent of the Company's Executive Management and its significant business associates. The Board of Directors does not include any executive personnel. Further, two of the four shareholder-elected Board members are independent of the Company's main shareholder, Aker ASA. Currently, two of the Board members are not independent of Aker ASA. Kristian Rokke, the Chairman of the Board of Directors of AKPS, is related to Aker ASA's Chairman and (indirectly) largest shareholder. Audun Stensvold, the Deputy Chairman of the Board of Directors of AKPS, is Financial Investment Director of Aker ASA.

The current composition of the Board, as well as the Board members' expertise, capabilities, and experience, are presented on pages 56-57 of this annual report. The shareholder-elected Board members represent a combination of expertise, capabilities, and experience from various businesses and industries in both the private and public sectors.

The Board members' shareholdings are presented in note 23 to the consolidated accounts. The Company encourages the Board members to invest in the Company shares.

One of the shareholder-elected Board members is up for election. AKPS will provide the relevant information regarding such Board member in accordance with the Code of Practice guidelines in advance of the annual general meeting.

The work of the Board of Directors

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

In order to ensure a more independent consideration of matters of a material character in which the Board Chairman is, or has been, personally involved, the Board's consideration of such matters are chaired by the Deputy Board Chairman, if there is one serving at the time, or some other member of the Board in the absence of a Deputy Board Chairman.

The Board of AKPS established an audit committee in 2010. The audit committee consists of two members, Elin Karfjell (Chairperson) and Audun Stensvold. Both members are independent from operations of the Company. As discussed above, Mr. Stensvold is linked to the Company's main shareholder.

The Board of AKPS established a tendering committee in 2012 to review tenders for new business. The tendering committee consists of two members, Kristian Rokke (Chairman) and Amy Humphreys. Both members are independent from operations of the Company. As discussed above, Mr. Rokke is linked to the Company's main shareholder.

AKPS does not have any other active Board committees at this time. In particular, the Company does not have a remuneration committee because all members of the Board are independent of the Company's executive personnel.

The Board evaluates its own performance and expertise once a year.

Risk management and internal control

The Board is to ensure that the Company maintains solid in-house control practices and protocols and appropriate risk management systems tailored to the Company's business activities. These practices and systems encompass the Company's corporate values, ethical guidelines and guidelines for corporate social responsibility. The Company's policy regarding corporate social responsibility is set forth on pages 15-16 of this annual report. The Board annually reviews the Company's most important risk areas and internal control systems and procedures, and these risk areas are mentioned in the Board of Directors' report. Through the use of a risk matrix and log, the Board also monitors the key risks related to the Company's business goals and assesses those risks, taking into account mitigating actions, on a quarterly basis. The issue is further described in notes 1 and 22 to the consolidated accounts.

Audit committee

The audit committee has reviewed the Company's internal reporting systems, internal control and risk management and had dialogue with the Company's auditor. The audit committee has also considered the auditor's independence.

AKPS's financial policies ensure follow-up of financial risk. Key targets are identified by the Board and management to ensure timely follow-up of currency exposure, interest rate exposure and compliance with covenants.

The Company has prepared an authorization matrix and approval procedures for costs included in the Company's governing documents.

Financial statement close process

The Company has implemented Aker ASA's accounting and reporting guidelines which contains requirements and procedures for the preparation of both the quarterly and annual reporting. The reporting is done quarterly through AKPS's reporting and consolidation system. Consolidation and control over the financial statement close process is the CFO's responsibility. Financial results and cash development are analyzed and compared to the budget by the CEO/General Manager and CFO and reported to the Board monthly.

Remuneration of the Board of Directors

Board remuneration reflects the Board's responsibility, expertise, time spent, and the complexity of the business. Remuneration does not depend on AKPS' financial performance and the Company does not grant share options to members of its Board. Board members and companies with whom they are associated are not to take on special tasks for the Company beyond their Board appointments unless such assignments are disclosed to the full Board and the remuneration for such additional duties is approved by the Board.

Additional information on remuneration paid to Board members for 2014 is presented in note 23 to the consolidated accounts.

Remuneration of Executive Management The Board has adopted guidelines for remuneration of Executive Management in accordance with Section 6-16a of the Norwegian Public Limited Company Act. Salary and other remuneration of the CEO/ General Manager of AKPS are determined in a Board of Directors' meeting. The basis of remuneration of Executive Management

has been developed in order to create a performance-based system. The system of reward is designed to contribute to the achievement of good financial results and increase in shareholder value.

AKPS does not have stock option plans or other such share award programs for employees. Further information on remuneration for 2014 for members of the Company's Executive Management is presented in note 23 to the consolidated accounts. AKPS's guidelines for remuneration to Executive Management are discussed on page 38 of this annual report and will be presented to the shareholders at the annual shareholders' meeting. The maximum size of any payment under the existing performance-related remuneration program to any executive is linked to the size of the executive's base salary.

The Board's guidelines for remuneration of executive management will be made available as a separate appendix to the agenda for the annual shareholders' meeting. The statement will include information on which aspects of the guidelines are advisory, and which, if any, are binding. The Company currently does not grant remuneration to Executive Management being subject to binding guidelines.

Information and communications

The Company'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 AKPS'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 home page www.akerphiladelphia.com; stock exchange notices are also available from www.newsweb.no. All information that is distributed to shareholders is simultaneously published on AKPS's home page.

The Company's financial calendar is found on the inside front cover of this annual report.

The Company's investor relations staff is responsible for maintaining regular contact with the Company's shareholders, potential investors, analysts and other financial market stakeholders. The Board is regularly informed about the Company's investor relations activities. For more information regarding the Company's guidelines for reporting of financial and other information, see pages 50-51.

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, the Board will not take steps to prevent or obstruct a takeover 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.

The Company will not enter into any agreement with a bidder that acts to limit the Company's ability to arrange other bids for the Company's business or shares unless it is self-evident that such an agreement is in the common interest of the Company and its shareholders. This provision shall also apply to any agreement on the payment of financial compensation to the bidder if the bid does not proceed. Any financial compensation will be limited to the costs the bidder has incurred in making the bid.

Agreements entered into between the Company and a bidder that are material to the market's evaluation of the bid will be announced to the public no later than at the same time as the disclosure that the bid has been made is published.

Upon the issuance of an offer for the Company's shares, the Board will make a statement to the shareholders that provides an assessment of the bid, the Board's recommendations, and reasons for these recommendations. If the Board cannot recommend to the shareholders whether they should or should not accept the bid, the Board will explain the reasons for this. The Board's statement on the offer will make it clear whether the views expressed are unanimous, and if this is not the case it will explain the basis on which specific members of the Board have excluded themselves from the Board's statement.

For each instance, an assessment will be made as to the necessity of bringing in independent expertise and obtaining a third party valuation. If a third party valuation is obtained, such valuation will include an explanation, and the Board will aim at recording such valuation in its statement. It may be necessary to obtain a valuation from an independent expert where a competing bid is made and the bidder either is the main shareholder or has a connection to the Board members or executive personnel.

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 companies' internal control with the Board. At these meetings, the auditor reviews any material changes to the Company's accounting principles, comments on any material estimated accounting figures and reports all matters on which there have been disagreement between the auditor and the Company's executive personnel. Once a year a meeting is held between the auditor and the Board, at which no representatives of Executive Management are present. In addition to the presentations to the full Board, the auditor is present at all audit committee meetings which occur throughout the year and presents both its preliminary and final audit findings to the committee during such meetings.

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 and note 2 to the parent company accounts, detailed in auditing and other services. In addition, these details are presented at the annual general meeting.

Presentation of the Board of Directors

Kristian Røkke Chairman

Mr. Rokke (b. 1983) joined Aker Philadelphia Shipyard in 2007. Mr. Rokke has held various roles at AKPS, including President and CEO, SVP Operations and Senior Shop Manager. Mr. Rokke has experience from offshore service and shipbuilding from several companies in the Aker group. Mr. Rokke is a Board Member of Philly Tankers AS, American Shipping Company, and TRG Holding AS, which owns 66.7% of Aker ASA. Mr. Rokke holds an MBA from The Wharton School, University of Pennsylvania. Mr. Rokke is a Norwegian and a U.S. citizen. As of 1 February 2015, Mr. Rokke holds zero shares in the company and has no stock options. He has been elected for the period 2014-2016.

Amy Humphreys Board Member

Amy Humphreys (b.1966) is President and CEO of Icicle Seafoods, Inc. Icicle's core business is the processing and marketing of seafood including salmon, pollock, crab, halibut, cod and herring in fisheries throughout Alaska, with both on-shore and floating processing facilities. Icicle also owns the largest United States salmon farming company located in the Pacific Northwest. Prior to joining Icicle Seafoods, Ms. Humphreys served as CFO of North Star Petroleum Group, the Petroleum Division of Saltchuk Resources including five fuel distribution operating companies. Prior to her current role, Ms. Humphreys was President of Delta Western, Inc., a leading petroleum marketing and distribution company in Alaska and a subsidiary of Saltchuk Resources. From 1996 to 2006, Ms. Humphreys held various leading positions in her 10 year tenure with American Seafoods Group, including VP Corporate Development and Treasurer. For the past 15 years, Ms. Humphreys has worked within companies operating under the Jones Act and, for the past several years, has managed companies in the oil industry within an environment subject to OPA 90 regulation. Ms. Humphreys holds a Master of Business Administration (MBA), with honors, from University of Washington, is a Certified Public Accountant (CPA) and holds a Bachelor of Arts (BA) in Accounting and Finance, magna cum laude, from University of Puget Sound. Ms. Humphreys is a U.S. citizen. As of 1 February 2015, Ms. Humphreys holds zero shares in the company and has no stock options. She has been elected for the period 2014-2016.

Elin Karfjell Board Member

Elin Karfjell (b. 1965) is Managing Partner of Atelika AS. Prior to that, she was CEO of Fabi Group and Director of Finance and Administration of Atea AS. She is 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 Andersen. At Ernst & Young/Arthur Andersen, 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 of North Energy ASA and Contesto AS. Previously she has been a Board member of Norse Energy Corporation ASA, Aktiv Kapital ASA, Aker Floating Production ASA and DNO International ASA. Ms. Karfjell is a state authorized public accountant. She has a bachelor accountant's degree from Okonomisk College (Hoyskolen i Oslo) and a master of accounting and auditing from the Norwegian School of Economics and Business Administration. Ms. Karfjell is a Norwegian citizen. As of 1 February 2015, Ms. Karfjell holds 1,200 shares in the company and has no stock options. She has been elected for the period 2013-2015.

Audun Stensvold Deputy Board Chairman

Audun Stensvold (b. 1972) holds the position of Investment Director for Aker ASA. Previously, he was CFO and Investment Director for Converto Capital Management, which is the investment advisor for Aker Philadelphia Shipyard's largest shareholder, Converto Capital Fund. Prior to joining Converto Capital Management in 2009, Mr. Stensvold worked for Aker ASA as Vice President of the M&A and Business Development team, and was i.a. involved in the initial stock exchange listing of Aker Philadelphia Shipyard (then named Aker American Shipping ASA) and later follow-up of Aker's ownership in the yard. Before joining Aker, Mr. Stensvold worked as a 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 2015, Mr. Stensvold holds zero shares in the company and has no stock options. He has been elected for the period 2014-2016.

Presentation of the Management Team

Steinar Nerbøvik President and CEO

Steinar Nerbøvik (b. 1961) was appointed CEO in November 2014 after serving as Managing Director since April 2014. Previously, Mr. Nerbovik served as SVP Operations from October 2013. Prior to that, Mr. Nerbøvik served as SVP Yard Director for Norwegian Shipyard VARD Langsten (former Aker Yards and STX OSV Langsten), a leading provider of sophisticated offshore support vessels. Mr. Nerbøvik first joined Aker Philadelphia Shipyard in 2003 as Vice President Projects. Mr. Nerbøvik has held other management positions as combined Design Manager and Project Manager at Aker Langsten from 1991 – 2003. Mr. Nerbøvik holds a Master of Science in Ship Naval Engineering from the Norwegian Institute of Technology (NTNU) in Trondheim. Mr. Nerbøvik lives in Philadelphia, PA, USA. Mr. Nerbøvik is a Norwegian citizen. As of 1 February 2015, Mr. Nerbøvik holds 1,000 shares in the company and has no stock options.

Jeffrey Theisen Chief Financial Officer

Jeffrey Theisen (b. 1968) joined APSI in May 2007. Mr. Theisen has over 20 years of 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 endusers. 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 2015, Mr. Theisen holds 500 shares in the company and has no stock options.

Morten Hofstad

Vice President

Morten Hofstad (b. 1978) is Vice President of Aker Philadelphia Shipyard. In addition to this responsibility, Mr. Hofstad serves as Investment Director and part of the Converto founding team since 2009 and also has previous oil service industry experience from Bourbon Offshore as well as substantial experience from corporate and investment banking. Mr. Hofstad holds a MSc in Business and Economics from the Norwegian School of Economics and Business Administration (NHH) and ITAM, Mexico City, and has completed officer training in the Norwegian Coastal Ranger Command. Mr. Hofstad lives in Oslo, Norway. Mr. Hofstad is a Norwegian citizen. As of 1 February 2015, Mr. Hofstad 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 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 2015, 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 the shipyard, Mr. Fitzpatrick amassed 20 years of 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 2015, Mr. Fitzpatrick holds zero shares in the company and has no stock options.

Michael Giantomaso Vice President Human Resources

Michael Giantomaso (b. 1966) joined Aker Philadelphia Shipyard as Human Resources Manager in May 1998 and was the shipyard's first locally hired manager. Mr. Giantomaso was promoted to VP in August 2001. He has over 20 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 2015, Mr. Giantomaso holds zero shares in the company and has no stock options.

Jeffrey Greenwell Vice President Purchasing

Jeffrey V. Greenwell (b. 1966) joined Aker Philadelphia Shipyard in 2015 as Vice President Procurement. From 2008 – 2014, Mr. Greenwell served as Vice President, Operations at GEA Heat Exchangers in Lakewood, CO and from 2007 – 2008 served as Director of Engineering. Mr. Greenwell began his career with U.S. Steel at Gary Works, amassing 16 years of experience, with roles ranging from Project Engineer/Manager and Area Manager Gary Works, Chief Engineer Granite City Works and Vice President – Technology Kosice, Slovakia. Mr. Greenwell holds a Bachelor of Science in Mechanical Engineering Technology from Purdue University. Mr. Greenwell lives in Mickleton, NJ, USA. Mr. Greenwell is a U.S. citizen. As of 1 February 2015, Mr. Greenwell 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 the shipyard, 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 2015, Mr. Grabelle holds zero shares in the company and has no stock options.

Disclaimer

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

Aker Philadelphia Shipyard ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the annual report, other than what is required by law.

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

Aker Philadelphia Shipyard ASA

Fjordalleen 16, Postboks 1423 Vika, NO-0115 Oslo, Norway Tel: + 47 24 13 00 00, Fax: + 47 24 13 01 01

Aker Philadelphia Shipyard, Inc.

2100 Kitty Hawk Avenue Philadelphia, PA 19112 USA Tel: +1 (215) 875 2600, Fax: +1 (215) 875 2700

website: www.akerphiladelphia.com email: info@akerphiladelphia.com

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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 lnvestortjenester) 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.

Photos/illustrations: All photos courtesy of Aker Philadelphia Shipyard, Inc. and Charles Cerrone Photography

Layout/production: RR Donnelley

Annual report 2014

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