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part of Aker
The Premier Shipbuilder in the U.S.Aker Philadelphia Shipyard
Investor Day Presentation MaterialSeptember 9, 2008
part of Aker
Important information
This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Aker Philadelphia Shipyard ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as ”expects”, ”believes”, ”estimates” or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Aker Philadelphia Shipyard ASA’sbusinesses, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation.
Although Aker Philadelphia Shipyard ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Aker Philadelphia Shipyard ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Aker Philadelphia Shipyard ASA nor any of its directors, officers, employees or consultants assisting in this Presentation will have any liability to you or any other persons resulting from your use thereof.
Slide 2
part of Aker
Building the Future
Slide 3
1. Introduction
2. Company Presentation
3. Financial Overview
Table of contents
part of Aker
Section 1Introduction
part of Aker
Building the Future
Slide 5
Today’s PresentationAKPS will continue to return value to our shareholders
AKPS possesses:
-State of the art shipyard, processes and people-
-Unique position in a unique market-
-The ability to deliver predictable results-
VP Planning
27 yrsVP Production
16 yrsCFO
17 yrs
VP Bus Dev
12 yrs
VP Procurement
26 yrs
VP HR
14 yrs
part of Aker
Our Vision and Values
HSEmindset
We take personal responsibility for HSE
because we care
Deliveringresults
We deliver consistently and strive to beat our goals
Customerdrive
Building customer trustis key to our business
Peopleand teams
All our major achievementsare team efforts
Hands-on management
We know our business and get things done
Open anddirect dialogue
We encourage early andhonest communication
Mission:Premier provider of
merchant vessels in the U.S. Jones Act Market
Common Aker values define us as part of a larger organization
Slide 6
Building the Future
part of Aker
Section 2Company presentation
part of Aker
Building the Future
Slide 8
Transformation of the ShipyardAKPS is the most modern commercial shipyard in the U.S., with $650 million invested in facilities and equipment since 1997
The yard in 1997… The facility today…
part of Aker
Building the Future
Slide 9
Advanced Shipbuilding PracticesAKPS’s innovative production approach utilizes the most sophisticated shipbuilding technologies and processes in the U.S.
Modern, automated steel assembly line
Total processing capability of 25,000 tons annually
High lift capacity (660 tons) and efficient layout
Sophisticated Fabrication EquipmentConcept, design and detailed engineering
Advanced production methods and expertise
Procurement and logistics support
Co-Operation w/ Leading Shipbuilders
More efficient vertical build process
Greater flexibility and fewer space constraints
Faster production times and reduced manhours
Extensive ModularizationStrong subcontractor relationships reduce need for specialized labor and equipment
Advantageous agreements with suppliers
Efficient Procurement Practices
part of Aker
Building the Future
Slide 10
Strong Management and Highly Skilled, Flexible WorkforceAKPS possesses the most skilled shipbuilding workforce in the U.S.
~200
~500
~600
~1,300
Experienced senior management team with extensive international shipbuilding industry knowledge
Emphasis on employee training
Strong relationship with union workforce
AKPS’s unique partnership with its workforce allows for a flexible arrangement for the use of over 600 subcontractors
Salaried Employees
Employee Snapshot
Union Employees
Subcontractors
Total
part of Aker
Building the Future
Slide 11
Exclusive Rights to World-Class Hyundai DesignsAKPS’s strategic agreements and experience allow us to provide the vessels desired by leading companies
“User friendly” designs translate into more cost-effective shipbuilding
Highly efficient designs create significant competitive differentiators versus peer vessels
Established track record for quality
Product/Shuttle Tankers
Container Ships
part of Aker
Building the Future
Slide 12
Track Record of Efficiency Gains
AKPS has continued to experience operational improvements
Production time has declined dramatically and a further reduction in production time is expected
Vessel throughput has consistently improved year over year since 2005
Internal metrics show continued productivity improvements each of the last four quarters
Unmatched by U.S. competitors, AKPS is progressing towards improved levels of production efficiency
Manhours per Vessel
Through-put
-46%
Korean Shipyards
Other U.S. Shipyards
0.2 0.30.5
0.7
1.1
1.5
2.02.3
2.73.0
2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E
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1
33
0
10
20
30
40
2009 2011 2013 2017 2020 2023
Tank
ers
12
16
11
8
1
7
0
4
8
12
16
20
>35 30 - 35 25 - 30 15 - 25 5 - 15 <5
Cont
aine
r Shi
ps
Building the Future
Slide 13
New offshore oil exploration and aging ship fleets will drive significant demand for Jones Act tankers and container ships over the next twenty years
The Jones Act protects AKPS from foreign competition
Product tanker supply deficit due to old vessels and increase in trade
AKPS estimates the market for shuttle tankers to be up to $5-6 billion over the next 15 years
AKPS estimates that the long-term market for container ships is up to $4-6 billion
- Strong fundamentals for additional capacity on “short sea” routes
28% CAGR
Candidates for Replacement
Shuttle Tanker Demand – GoM
Age of Container Ship Fleet (Years)
Expanding Demand in the Protected Jones Act Market
10
3716
9
<20 years
>20 years
Tankers underconstruction
ATBs underconstruction
Product Tanker Fleet
part of Aker
Building the Future
Slide 14
Flexible Capacity and Continuous ImprovementAKPS has flexibility and potential to capitalize on both additional Jones Act opportunities and other opportunities
Shuttle Tankers– Developing demand as oil exploration moves into deeper waters off the coast of the Gulf of
Mexico– Management anticipates building several tankers as part of its current backlog– New builds are significantly more cost-effective than converting older vessels
Product Tankers– Supply deficit due to tougher vetting standards and increases in quantity of transported product
Container Vessels– Major operators Matson (13 ships) and Horizon (21 ships) are currently planning to replace
aging container vessel fleetsShort Sea Barges and Ro/Ro’s– Short sea shipping services are being evaluated by the U.S. Government to relieve overworked
rail and freightLNG Tankers– Natural gas exploration in Alaska will create demand for multipurpose vessels (MPVs) and LNG
Tankers with icebreaking capabilities– AKPS can access state-of-the-art icebreaker technologies due to strong industry relationships
Military Vessels– AKPS could also service an aging military product tanker fleet or potentially build other military
vesselsLarge Steel Structures– Fabrication shops well suited for non-marine steel structures
Jones Act Opportunities
Other Opportunities
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Building the Future
Slide 15
Leadership Position in the U.S. Jones Act Market
Direct Competitor
NASSCOSan Diego, CA Constructing Jones Act commercial tankers
Other Shipbuilders w/ Commercial Capabilities
Atlantic MarineMobile, AL
Building and assembling modules for AHL product tankers
Bender ShipyardMobile, AL
Constructs smaller commercial and governmental vessels
Bollinger ShipyardsLockport, LA
Constructs smaller commercial and governmental vessels
VT HalterPascagoula, MS
Constructs smaller commercial and governmental vessels
Limited U.S. Competition
As a result of several key points of differentiation, AKPS has become the clear market leader in the U.S.
Demonstrated track record of success with Hyundai’s industry-leading designs
Highly efficient production capabilities and lean manufacturing practices will continue to increase capacity
Ability to secure favorable material procurement agreements due to strong industry relationships
Focus on commercial market yields a reduction of specialized labor and greater flexibility
Available capacity to expand product offerings in 2011 and beyond
History of on-time deliveries
Key Differentiators
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Section 3Financial Overview
part of Aker
Building the Future
Slide 17
AKPS’s revenue streams into 2010 are secured by contracts; rising EBITDA margins and low capital expenditures will result in strong cash flow generations
Highly Predictable Revenues and Improving Profitability
Summary FinancialsRevenues for the years 2008 – 2010 are highly predictable - Secure contracts in place for eight additional
tankers
For the fiscal year 2008 AKPS expects record revenues and earnings
AKPS projects strong EBITDA growth and cash flow generation through 2010
Continued improvement in efficiency through entire cost base
Targeted revenues in excess of $300M in 2010
Targeted EBITDA Margin in excess of 7% in 2010
$ millions 2005 2006 2007 2008F
Revenue 88 247 264 274 Growth NA NA 7% 4%
EBITDA 7 10 13 15 Margin 8% 4% 5% 5%
part of Aker
Building the Future
Slide 18
Summary Balance Sheet
$ millions Dec06 Dec07 Jun08
Vessels under construction - receivables 243 93 110Cash and cash equivalents 0 58 32Other current assets 18 16 22Total current assets 262 168 163Total non-current assets 86 85 84Total assets 348 253 248
Construction and other short term loans 221 79 78Trades and payables 29 39 30Other current liabilities 4 7 2Total current liabilities 254 125 110
Total non-current liabilities 24 30 37
Total liabilities 278 155 147
Total equity 70 98 101
Total equity and liabilities 348 253 248
Strong balance sheet provides flexibility
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Key Financial Ratios
Working Capital $54 million as of June 30, 2008
Current ratio of 1.5 as of June 30, 2008
Debt to capital (excluding construction financing)• 30% as of June 30, 2008
Anticipated Dividend Policy ratios• Dividend Yield of 4-8%• Payout Ratio of 50-100%
Strong financial ratios confirm healthy position
Slide 19
Building the Future
part of Aker
Summary of Favorable Financing Arrangements
$20 million term debt for Capital expenditures spent in 2007/2008• Interest rate of 2.75%• Maturity-bullet payment of $20 million on March 27, 2012
$150 million construction financing facility• Interest rate of Libor plus 2.25(5.06% at August 21)• Facility matures approximately Q1 2011
Original funding as part of the Master Agreements with Governmental parties• Approximately $17.6 million outstanding at 12/31/07• Interest rate of 3.75%
• Maturities occur on July 1, 2015 and October 1, 2015
AKPS’s lending partners have confidence in us as reflected in our favorable cost of capital
Slide 20
Building the Future
part of Aker
Cash Position
Cash and cash equivalents at June 30, 2008 was $31.5 million
This cash gives us flexibility and can be used for the following:• Deposits on long lead items• Funding of new project engineering/specs• Short term working capital needs• Dividends
AKPS’s has sufficient cash to prepare for the future
Slide 21
Building the Future
part of Aker
Dividend Policy
The Company’s objective is to provide its shareholders with a competitive return over time based on its earnings. Any dividends will be considered in conjunction with the Company’s financial position, debt covenants, its capital requirements and potential strengthening of the Company’s financial structure. The Company aims to pay out between 50% and 100% of its net profits.
AKPS aims to pay out 50% to 100% of our net profits
Slide 22
Building the Future
part of Aker
2008 Interim Dividend
The Company’s goal is to pay out dividends on a consistent basis
Dividend of 2.50 NOK per Share approved by the EGM held on September 2, 2008
September 2 - Traded in-dividend date
September 3 - Traded ex-dividend date
September 12 - Dividend Payment
Interim dividend will not impact Company’s ability to pay out a dividend based on 2008 annual accounts
Following through on our promises
Slide 23
part of Aker
Building the Future
Slide 24
State-of-the-Art Shipyard
Exclusive Rights to World-Class Hyundai Designs
Leadership Position in the strong U.S. Jones Act Market
Strong Management and Highly Skilled, Flexible Workforce
Flexible Capacity and Continuous Improvement Opportunities
Highly Predictable Revenues and Improving Profitability
High Dividend Potential
Investment HighlightsUnique opportunity to be part of the most modern U.S. commercial shipyard with a prospects for continued success
part of Aker
Appendix
part of Aker
Building the Future
Slide 26
Company OverviewA U.S. shipyard that utilizes state-of-the-art shipbuilding practices to manufacture ocean-going commercial vessels for the Jones Act market
Company: AKPS is the most modern U.S. shipyard focused on building commercial vessels protected by the Jones Act
Products: AKPS currently builds mid-sized (30,000 –45,000 dwt), ocean-going tankers and container ships with double-hull designs; the yard has the capabilities and infrastructure to build significantly larger vessels (50,000 – 80,000 dwt)
Customers: AKPS’s products are sold or leased through an affiliated organization to leading oil producers and shipping lines
Facility: AKPS’s shipyard was completely rebuilt in 1998 and has been optimally designed to support commercial shipbuilding operations
Processes: The yard utilizes modular construction, automated fabrication systems and outsourcing to enhance productivity
Backlog: AKPS’s backlog of eight vessels plus 13 options, representing total potential revenues of $2.0 to $3.0 billion, is the largest in the U.S. commercial market
Product Tankers Container Ships
Commercial Vessels
$88
$242$264
0%
2%
4%
6%
8%
10%
0
50
100
150
200
250
300
2005 2006 2007
EBIT
DA M
argi
n
$Mill
ions
Financial Summary
Note: 2005 financials represent half year numbers, as the business was previously part of a combined entity
part of Aker
Philadelphia Naval Shipyard
1876First Ship Built
on League Island
1919350 t
Hammerhead Crane Installed
1942Battleship New
Jersey Built
1996PNSY Closes
Master Agreement
signed
1997
2000Construction of
New Yard Completed
Contract with Matson for 2
ships
2002
2003Delivery of First Containership
2006Delivery of
Fourth Containership
2007Delivery of
Three Product Tankers
Listing on Oslo Stock
Exchange
2005Aker Philadelphia Shipyard
1970Last New
Construction Ship Delivered
In Just 10 Years, New Facilities, 8 Ships Built, 8 on order and 1,300 Jobs
Timeline – Shipbuilding in Philadelphia
Building the Future
Slide 27
part of Aker
50%
29%
21%
Industrial Conglomerate Float Others Over 5%
05101520253035404550
45.00
50.00
55.00
60.00
17-D
ec27
-Dec
6-Ja
n16
-Jan
26-J
an5-
Feb
15-F
eb25
-Feb
6-M
ar16
-Mar
26-M
ar5-
Apr
15-A
pr25
-Apr
5-M
ay15
-May
25-M
ay4-
Jun
Volu
me
(000
's)
Pric
e (N
OK)
Building the Future
Slide 28
Current Trading Summary
Ownership SnapshotShare Price Evolution
Enterprise Value Calculation$ millions
Share Price 10.33$ Shares Outstanding 10.2Equity Value 105.4$
Interest-bearing Loans 32.6$ Excess Cash (37.3)$ Enterprise Value 100.7$
part of Aker
Length Over All 185 mBeam 32.2 mDepth, molded 18.8 mDraft, max 12.2 mSpeed 14.0 kntsDeadweight 46,000 t
Capacity 320,000 bbl
Bow loading System 8,000 m3/hr
Discharge (Framo System) 3,600 m3/hr
DP2 positioning capability with tunnel and azimuthing thrusters and redundant diesel generator room
EPA Tier II Compliant
DP2 specifics: 1 azimuth thruster forward 1 tunnel thruster forward2 tunnel thrusters aft1 Controllable pitch propeller
Generation II Shuttle Tanker for U.S. GoM
Building the Future
Slide 29
part of Aker
Key element of Aker’s Early Production System package
Lease FPSO
Subsea Systems
Risers,Flowlines
Aker Integrated Project
Team
Lease Shuttle Tanker Installation
A unique offering potential across Aker provides additional credibility
Field Architecture &
Flow AssuranceOilCo
Project Shuttle
Building the Future
Slide 30
part of Aker
Hull 001 - M.V. Manukai (CV2600)
Our Vessels
Container Vessels – 4 Delivered
Hull 004 - M.V. Maunalei (CV2500)
Hull 002 - M.V. Maunawili (CV2600)
Hull 003 - M.V. Manulani (CV2600)
Building the Future
Slide 31
part of Aker
Our VesselsVeteran MT46 Product Tankers (4 of 12 Delivered)
Hull 005 - Overseas Houston
Hull 007 - Overseas Los Angeles Hull 008 - Overseas New York
Hull 006 - Overseas Long Beach
Building the Future
Slide 32
part of Aker
Our Vessels
Four product tankers under constructionHull 009 – Outfitting Dock Hull 010 – Engine Lowering in Dry Dock
Hull 012 – Pre FabricationHull 011 – Grand Block Assembly
Building the Future
Slide 33