Annual Report 2005

the Aker group 2 ANNUAL REPORT 2005 62 98 3.3 51 2.3 THE AKER GROUP 60

2004 2005 2004 2005 2004 2005 This is Aker Order backlog Operating revenues EBITDA NOK billion NOK billion NOK billion With more than 46,000 employees and assosiates annual revenues exceeding NOK 62 billion, Aker is a significant Key figures Pro forma industrial participant in many communi- Profit and loss account (NOK million) 2004 2005 ties. Operating revenues 51 641 62 450 Aker’s core businesses are leaders in EBITDA 2 229 3 322 their respective industries. The Aker Aker Kværner 1 362 2 145 Group delivers technology-based pro- Aker Yards 768 1 029 ducts and services and advanced, inte- Aker American Shipping* 80 131 grated solutions and projects to custo- Aker Seafoods** 157 187 mers in oil, gas, energy, and process Aker Material Handling 11 35 industries. The Aker Group is also a Other activities and eliminations -210 -199 major shipbuilder and a significant fishe- Depreciation and amortization -815 -848 ries industry participant. Operating profit (EBIT) 1 254 2 404 Share of earnings in associated companies -80 28 Aker builds businesses that are world Net financial items, incl. exceptional financial items -777 179 leaders, creating value through proactive Profit before tax 397 2 611 industrial ownership. Aker bases its Tax -466 -21 value-adding competence on in-depth Net profit -69 2 590 knowledge of industries and technolo- gies, access to financial resources, and Balance Sheet (NOK million) 31 Des 04 31 Des 05 innovation. Assets Total intangible and tangible fixed assets 14 971 17 542 Aker — founded in 1841 — continues a Total financial fixed assets 1 679 2 777 proud industrial tradition. Many of the Current operating assets 14 528 23 749 businesses that are now part of the Cash and bank deposits 8 239 13 211 Group grew out of the industrialization of the Nordic countries in the 1700s and Total shareholders’ equity and liabilities 1800s. Today, the “home markets” of Total shareholders’ equity 6 120 8 105 most Aker businesses are located around Minority interest 3 123 6 841 the world. Subordinated debt 2 726 3 167 Interest-bearing long-term debt 7 117 8 186 The largest Group companies are Aker Other long-term debt, incl. deferred tax 2 633 2 765 Kværner, Aker Yards, Aker American Current operating liabilities 16 252 23 742 Shipping, Aker Seafoods, Aker Material Interest-bearing short-term debt 1 446 4 473 Handling, and Aker Capital, which inclu- Total assets 39 417 57 279 des Aker Drilling. The activities of these companies are presented in greater Key figures (NOK million) 31Des 04 31Des 05 detail on the following pages. Earnings per share (NOK) (majority interest) -3.95 21.07 Equity ratio 23 % 26 % Net interest-bearing debt (-)/receivable (+) 450 1 572 Of which construction loans 594 4 036

Comments * Aker acquired its majority shareholding in Aker American Shipping in June 2005. The company’s profit for the period 1 January through 31 December is presented in the above table; however, figures for 1 January through 30 June are reversed in the Eliminations item, so that column totals in the Aker Group’s consolidated profit and loss account remain unchanged. Financial * * Before non-recurring items calender 2006 Annual Shareholders’ Meeting: 30 March 1Q 2006: 2 May 2Q 2006: 11 August 3Q 2006: 3 November ANNUAL REPORT 2005 3

The photo on the cover of this year’s annual report was taken in May 2005 during the filming of Aker’s TV commercial Breaking the Mold since 1841. The choreographed, music video, which runs just over three minutes, shows how the tech- nology and capabilities of today’s Aker stems from solid industrial values and long traditions. Screened nationwide in Norway, the TV commer- cial generated broad debate on topics such as industry’s value-creating role in society. Breaking the Mold received several Norwegian and inter- national advertising awards; it can be viewed on www.notteknekker.no. Front page photo: Yann Aker.

Operating revenues 2005: EBITDA 2005: Employees 2005: NOK 62 billion NOK 3.3 billion 37,000

Aker Material Handling Aker Material Handling Norway EU (excl. Nordic countries Aker Seafoods Aker Seafoods and UK)

Aker American Shipping Aker American Shipping Nordic countries

Aker Yards Aker Yards North Amercia

Aker Kværner Aker Kværner UK

South America

Rest of the world 4 ANNUAL REPORT 2005

THE AKER GROUP

Aker’s ownership.....50.01 % Aker’s ownership...... 55.6 % Aker’s ownership...... 30.8 % No. of shares No. of shares No. of shares owned by Aker owned by Aker ....27 520 930 owned by Aker .....11 452 111 Capital ...... 28 637 815 Designs, builds, modifies and Designs and builds advanced Constructs and operates operates industrial facilities for cruise vessels and ferries, advanced 6th generation Aker oil, gas, energy, and process offshore service vessels, mer- H-6e semi-submersible rigs. industries. See page 14. chant vessels, and other spe- See page 18. cialized vessels. See page 16.

Inge K. Hansen Karl Erik Kjelstad Martinus Brandal President & CEO President & CEO President & CEO (acting)

Board members elected by Board members elected by Board members shareholders employees shareholders employees L-A Langøy (C) L-A Langøy (C) E Myhre L-A Langøy (C) W Andersen M Brandal B Flatgård (DC) B Kilnes S Sivertsen (DC) A O Rogne O Melberg M Brandal Å Knutsen M Brandal K J Breivik V B Sandland S Fürst A Teigland R Glasser T Widvey V H Madsen Y Hågensen H Midttun O Melberg Key figures (amounts in NOK million)

Aker Kværner Aker Yards 2004 2005 2004 2005 Operating rev. 35 553 41 463 Operating rev. 12 490 16 607 EBITDA 1 362 2 145 EBITDA 768 1 029 Order intake 41 582 57 748 Order intake 17 283 32 084 Order backlog 35 920 53 341 Order backlog 23 366 38 897 Employees 20 667 20 403 Employees 13 069 13 442

NOK Share-price development NOK Share-price development NOK Share-price development 50 500 203% 400 160% 40 400 300 1% 300 30 200 200 20 100 100 Share-price Share-price 10 Share-price Index** Index** Index** 0 0 0 03 Jan 05* 21 Feb 06 03 Jan 05* 21 Feb 06 21 Des 05* 21 Feb 06 ANNUAL REPORT 2005 5

Aker Capital

Aker’s ownership...... 53.2 % Aker’s ownership...... 65.0 % Aker’s ownership...... 100 % Aker’s ownership...... 100% No. of shares No. of shares Smaller-sized industrial activi- Manufactures storage and owned by Aker ....14 675 950 owned by Aker ....31 619 910 ties, financial activities, and archiving systems for use in Constructs merchant ships Harvesting, processing, marke- investments owned directly or industrial and office environ- and owns vessels for bareboat ting, and sales of high-quality indirectly. Ownership interests ments. See page 26. charter and operation between seafoods products in the listed companies Bjørge ports in the Unites States. See page 22.. and Odim, the Norwegian See page 20. supply base and logistics company NorSea Group, and Dave Meehan Yngve Myhre the industrial and business Hallvard Muri President & CEO President & CEO center Midsund Bruk are key President & CEO Aker Capital assets. Aker’s Board members Board members elected by investment in Aker Drilling is Board members elected by L-A Langøy (C) shareholders employees also owned through Aker shareholders employees K E Kjelstad L-A Langøy (C) B Kristiansen Capital. See page 19. L-A Langøy (C) J S Granheim Ø Svanevik B Borgersen (DC) H E Nilsen M Brandal N A Hagen M H Blystad L Berg-Hansen A Steffensen Nils Are Karstad Lysø S A Lindland E Karfjell M Brandal General Manager I Hafseth L Grønnevet

Key figures (amounts in NOK million)

Aker American Shipping Aker Seafoods Aker Material Handling Pro forma: 2004 2005 2004 2005 2004 2005 Operating revenues 1 638 Operating rev. 2 410 2 340 Operating rev. 1 231 1 346 EBITDA 80 131 EBITDA* 157 187 EBITDA 11 35 Order backlog 5 830 Employees 1 357 1 214 Order intake 1 297 1 391 Employees 639 * Before non-recurring items. Order backlog 265 303 Employees 710 757

NOK Share-price development NOK Share-price development 150 50 73% 40% 120 40

90 30

60 20 Share-price Share-price 10 30 Index**

0 0 * First day of listing (C) Chairman 02 Jul 05* 21 Feb 06 13 May 05* 21 Feb 06 ** Oslo Børs Benchmark index (DC) Deputy Chairman 6 ANNUAL REPORT 2005

THE AKER GROUP

Dear fellow shareholders, Leif-Arne Langøy Chairman and CEO customers, and employees

• 2005 was a good year for Aker. rose by 21 percent, to NOK 62 billion. my colleagues for their efforts, to our • We completed the integration of Operating profit before depreciation customers and business associates for Kværner and established sound, exceeded NOK 3.3 billion; up 49 per- their confidence in us and the orders simplified financial and operational cent compared with 2004. The value of they have placed, and to our creditors structures. our listed assets rose from NOK 8 bil- and shareholders, who let us manage • Improved operations, increased lion as of 31 December 2004 to NOK their assets. competitiveness and greater custo- 19 billion at the close of trade on the mer confidence have paid off in last trading day of 2005. In early Active industrial ownership the form of record-high order back- March 2006, the value of our listed The Aker Group stands out in several logs, rising margins, and greater assets had risen further, to NOK 24 bil- ways. We are an industrial group that profit predictability. lion. operates based on a thorough under- • The parent company has created Naturally, favorable markets standing of our markets, customers’ significant value through projects account for some of the Aker Group’s needs, technology, and risk factors. • Three new companies were stock- excellent performance. Financial mar- Moreover, we are a creative and dyna- exchange listed. kets developed positively in 2005, and mic environment with considerable • Shareholders have been able to our subsidiaries experienced strong financial expertise and capacity. This enjoy significant share-price deve- market demand for their products and combination of industrial and financial lopment, and for the first time in services. However, our growth has out- strengths constitutes the foundation for several years, dividends were paid. paced the market. What we are seeing what we call active industrial owner- are the results of business develop- ship. In summing up 2005, the number of ment, Groupwide improvement measu- Active industrial ownership perme- Aker Group records we achieved is res, and systematic and meticulous ates Aker. The parent company of the impressive: The order backlog stood at work with customers. Group, Aker ASA, is marked by its NOK 98 billion at year-end. Revenues I extend my heartfelt thanks to all main shareholder Kjell Inge Røkke and

An industrial vision — merging Aker and Kværner — was finally realized in 2005. Aker as a company was established in 1841, although some Group companies have a history that dates back to the 1700s. Aker has been a leading force through several industrial eras, as a result of its activities in Norway, the Nordic countries, and Europe.

Recap 2000-2006 From industrial vision to reality

Before 2000 2001/02 Spring 2004 Summer 2004 2006 Aker and Kværner Kværner Yard merger and Restructuring separate groups rescue operation three-way split of Aker

ARGI ARGI ARGI Aker Yards

Aker Aker Aker Aker Kværner Other Other KVI Aker Yards Mar Yards Other Aker Seafoods

Other Aker Am Shipping KVI KVI KVI Aker Drilling Aker Yards Aker Capital Aker Kværner Ship- O&G Ship- O&G Aker Aker Other Other Aker Matr handling Yards E&C Yards E&C Yards Kv Other Aker Seafoods Other Listed ANNUAL REPORT 2005 7

his energy, creativity, and business teams — in the parent company and in and discussed in detail throughout the insight. Similarly, the parent company Aker Group subsidiaries. But we also Aker Group in 2006. We expect our leaves its mark on the development of rely on cooperation across organizatio- 2006 focus on core values to result in each Group subsidiary. nal borders. To spur better coopera- an increased awareness of who we Our active industrial ownership provi- tion, we have established so-called are, how we work, and what makes us des the Aker Group with a dynamism functional teams, whose members are succeed. and decisiveness found in few other drawn from several Group companies major corporate structures. It is this to work on specific, joint improvement Management, recruitment, and industrial ownership that has provided projects. Inside the Group, we foster training — and continues to generate — lively discussions and exchanges of Leadership of a large corporate group added value for our customers, share- opinion, for optimal, well founded deci- such as Aker requires effective and holders, and employees in the form of sion-making. Outwardly, we are unified coordinated management. Thus, our excellent deliveries, profitability, and and strong. focus on selection and development of future-oriented workplaces. In 2005, following a comprehensive leaders is important. Effective as of in-house process, we identified the 2006, we have introduced standard Focused energy chief corporate values and attitudes at employment agreements for top exe- In our Group companies, we focus each company, and then discussed cutives and a variable salary program, individuals’ energy and inventiveness which values were key to success in both of which have been implemented via a disciplined and sound organizati- the various industries in which we ope- in all subsidiaries. In the spring of onal structure. During the last few rate. A surprising observation was the 2006, we will conduct a comprehen- years, we have worked to build a good similarity of values among the various sive survey and assessment of nearly organizational culture for the entire Group companies. 100 top executives, and evaluate the Aker Group and establish an efficient Our six core values that came out information we gather in light of our corporate management model. of the process and which are key to business objectives. We depend on strong, independent achieving our vision of being the pre- Recruitment and development of boards of directors and management ferred partner, will be communicated most Aker employees, other than cer-

In 2005, Aker reduced its shared core values to writing for the first time. The values capture attitudes that have played a formative role in each Group company’s success, and that will continue to be decisive for Aker’s development. Our values

HSE Delivering mindset results We take personal responsibility We deliver consistently and strive to beat for HSE because we care our goals

Open and Customer direct dialogue Vision drive To be the preferred partner We encourage early and Building customer trust through: honest communication is key to our business

Hands-on People management and teams We know our business All our major achievements and get things done are team efforts 8 ANNUAL REPORT 2005

THE AKER GROUP

By year-end 2007, the first Aker employees will move into the Group’s new Aker House (Aker Hus) headquarters, located at Fornebu, just outside Oslo. More than 2,000 employees will have their offi- ces in the building, including Aker’s management and managers of core Aker Group companies.

tain top personnel, is decentralized, Building premier companies activities in Norway and internationally. handled individually by each Group The parent company Aker ASA’s cor- Most Group companies had already company. Every year, thousands of porate mission is to create value for all developed sound structures and ope- employees complete competence- stakeholders by building premier com- rations some two years ago; for these enhancing courses and recertification panies in industrial sectors with which entities, Group managers were able to training. we are highly familiar and in which we concentrate largely on operations and Group headquarters organized two have strong execution capabilities. patient adaptation of organization and management training and general The corporate mission statement sets capacity. Aker Kværner and Aker recruitment projects in 2005. We esta- a course and guides our priorities. We Yards are examples of the latter. blished the Aker International Trainee don’t stop implementing improvements New companies joined the Aker Program to assist our core Group until our companies rank among the Group in 2005, among them are the companies, and we broadcast a cor- very best; and we leverage our in- listed companies Aker Drilling, Aker porate profile TV commercial called house skills in value creation. Seafoods, Aker American Shipping, Breaking the Mold. The TV commer- Businesses develop over time and and Aker Floating Production. The last cial, which created pride and motiva- pass through identifiable phases. We mentioned will be listed this year, per- tion among employees and was used advance our companies through cont- haps by the summer of 2006. We also as a recruiting tool by Group subsidia- inuous operational improvements and acquired companies, such as the fis- ries, raised appreciation for the work organic growth. We create new busi- heries company West Fish-Aarsæther, of industrial companies in modern, nesses through spin-offs, acquisitions, which is now part of Aker Seafoods; high-cost countries such as Norway. or mergers, and we exit activities we are in the process of acquiring the Breaking the Mold won awards in when we recognize that their potential large French shipyard Chantiers de Norway and abroad. can be more fully developed by other l’Atlantique. The first “entering class” of our owners. Although we develop our business international trainee program will be Some of Aker’s businesses have units as if they were to be owned by enrolled this spring. Starting in the fall required a great deal of Group mana- us forever, that approach does not of 2006, the first twelve trainees will gement expertise and ongoing assis- prevent us from selling. We regularly be assigned challenging manage- tance over the past couple of years. find ourselves in situations where we ment-level tasks at various Group Among these are the Philadelphia shi- at Aker have added what we can to a companies, interspersed with centrally pyard established by the former Kvær- business. In such a case, it is best for held courses for all participants. ner organization, the storage and Aker — and for the company involved archiving systems producer Aker — that new owners take over in order Material Handling, and our fisheries to advance the company further.

Recruitment and development of key per- sonnel for projects and business units in the Group’s anticipated growth regions is the objective of our just-launched Aker Internati- onal Trainee Program. We’re admitting the first 12 trainees — all newly employed peo- ple — in 2006. Applications to the newly established trainee program were solicited through advertisements in Russia, China, Malaysia, and Brazil. ANNUAL REPORT 2005 9

Aker develops its companies over time, and sees them through progressive phases. We advance existing Group companies through operational improvements and organic growth. New businesses are added via spin-offs, acquisitions, or mergers — and companies are sold when their potential can be better realized by others.

Building premier companies

Create business opportunities Improve existing business Divest and rebalance portfolio

• Aker Drilling • Capture synergies • Reduced holding in Aker Kværner and

• Aker Hus • Reconstruction of Aker Material Handling Aker Yards

• Alstom Marine acquisition • Aker Seafoods reorganization • Divestments

• Westfish acquisition • Aker Yards shipyard restructuring - Aker Kværner Pulp & Power

• Aker American Shipping • Improve projects execution models - Atlas Stord

• Aker Floating Production • Margin improvement and risk-to-profit - Aker Kværner Industrielt Vedlikehold - Aker Kværner Process Autom Systems

In 2005 and thus far in 2006, we have Aker Group, with a parent company new projects generated by the parent sold or concluded agreements for the that’s solid and predictable and subsi- company. Because the parent com- sale of Atlas-Stord, Aker Kværner diaries that already are — or are pany represents added value, Aker is Industrielt Vedlikehold (industrial main- becoming — among the very best in more than the sum of its component tenance), Aker Kværner Process Auto- their industries. parts. mation Systems, and Aker Kværner’s Aker is to be the preferred partner While it is gratifying to see how far activities in pulping and power gene- for customers, employees, sharehol- we have come, we are going even fur- ration from solid fuels. ders, and society at large. With a ther! In early March 2006, we announ- Viewed over time, the influx of new strong balance sheet as a foundation, ced changes in the composition of the activities, development of existing busi- the parent company Aker ASA will be Group’s Board of Directors and mana- nesses, and disposals have resulted in an effective, long-term owner of its gement. At this year’s annual share- a marked shift in the Aker Group’s subsidiaries — and a good investment holders’ meetings of Group compa- overall activities. Our oil- and gas- for its shareholders. nies, many new members will be industry related activities have grown For investors, the Aker Group elected to the companies’ boards of from generating 34 percent of Group represents a multitude of opportuni- directors. revenues in 2002 to generating 45 ties. They may choose to invest in the With key players in new positions, percent in 2005. Shipbuilding activities parent company, or in one or more we will release fresh energy and rose from 32 to 34 percent of Group Aker Group subsidiaries. Either way, enthusiasm that will propel Aker to revenues in the same period, while our investors take part in the energetic, ever-greater heights! land-based contracting activities have active industrial ownership that perme- decreased their proportion of Group ates Aker and generates value crea- Sincerely, revenues from 24 to 18 percent. tion. A mission of the Group’s parent More than the sum of individual parts company, Aker ASA, is to create value In 2005, we reestablished a strong by improving each subsidiary and via Leif-Arne Langøy Board Chairman and CEO — and fellow Aker ASA shareholder Through organic adaptations and corpo- Growing in oil, gas and shipbuilding rate acquisitions and divestitures, Aker has shifted its business in the direction of gre- Aker revenues by industry ater oil, gas, and shipbuilding revenues. Other 23% 18% * Eng & Constr 24% In 2005, Aker visualized significant growth in shareholder values. The value of the company’s * Shipbuilding * 29% 34% listed shares rose from NOK 8.2 billion at year-end 2004 to NOK 22.8 billion in mid-February Oil & Gas 32% 2006. In addition, shareholders received NOK 1 billion in dividends in December 2005. * * * Demonstrating shareholder value 34% 45% 45% Change after 1.1.2006 3,7 Dividend 1,0 2002 2005 2005 adj Market value, new listed shares AKS, AKASA, AKD, BJORGE 3,9 Sales of Pulp& Power reduces * Growth over and above index 3,5 E&C revenues by NOK 4,5 bn Market growth OSEBX (index) 3,3 * Acquisition of Alstom Marine adds * NOK 4.8 bn revenues to shipbuil- ding Market value, listed assets 1 Jan 2005 8,2 23,8 * Organic growth adds revenues * * to Oil & Gas Market value, listed assets 15 Feb 2006 and 2005 dividend combined 10 ANNUAL REPORT 2005

BOARD OF DIRECTORS AND MANAGEMENT

The Aker Group Boards and management Management in the Aker Group model and governing bodies The Aker Group comprises a number of wholly and partly owned companies, several of them stock- exchange listed. Each company has its own board of directors and management (see page 4-5), which exercise good corporate governance in accordance with current rules and recommendations. Nevertheless, Aker Group companies also cooperate closely.

Value-creating initiatives that cross company borders have been identified. The coordination of these initiatives will take place partly through Aker’s exercise of active ownership in The boards of directors and management of core Aker Group companies meet at an annual individual companies, and partly in board seminar. The photo was taken at their August 2005 meeting, in which the company’s various cooperative fora. main shareholder, Kjell Inge Røkke, and his wife Anne Grete Eidsvig participated. Once a year, board members of all 1 Elin Karfjell 14 Marianne Heien Blystad 27 Yngve Hågensen core Aker Group companies get 2Harald Magne Bjørnsen 15 Kjeld Rimberg 28 John Steinar Granheim together for a joint seminar. The Aker 3Lone Fønss Schrøder 16 Sissel Anne Lindland 29 Stein Aamdal CEO Forum is yet another cooperative 4 Kjell Inge Røkke 17 Arne Otto Rogne 30 Helge Midttun body; its monthly meetings bring 5Anne Grete Eidsvig 18 Åsmund Knutsen 31 Martinus Brandal together the chief executives of Aker 6 Leif-Arne Langøy 19 Siri Fürst 32 Yngve Myhre Group companies and Aker ASA 7Inge K. Hansen 20 Bjarne Borgersen 33 Atle Teigland management. Similar Groupwide, 8 Geir Arne Drangeid 21 Ivar Hafsett 34 Atle Tranøy executive-level fora are held for 9Jon Fredrik Baksaas 22 Bjørn Flatgård 35 Ole Melberg finance, organizational development, 10 Bernt Harald Kilnes 23 Leiv Grønnevet 36 Kjell Storeide and communications purposes. 11 Karl Erik Kjelstad 24 Vibeke Hammer Madsen 37 André Steffensen 12 Lisbeth Berg-Hansen 25 Eva von Hirsch 38 Hallvard Muri Purchasing and business 13 Svein Sivertsen 26 Wilhelm Andersen 39 Ørjan Svanevik development, management and employee development, trainee 33 39 37 39 programs, recruitment, contact and 26 27 28 29 35 36 31 38 liaison with public authorities, and 32 corporate image and profiling are all 17 18 19 2030 21 22 23 24 25 areas in which Groupwide coordination regularly takes place with good results. 8 910111213141516

1 23 4 5 6 7 ANNUAL REPORT 2005 11

The Aker Group Aker ASA Aker ASA Freedom to Share capital Ownership choose Aker ASA is a listed public limited lia- structure bility company registered in Oslo, The Aker industrial Group comprises a Norway. The legal entity Aker ASA was Aker ASA’s Class A stock was listed on number of operating companies. In a formally established on 13 February the Oslo Stock Exchange on 8 Septem- legal and financial sense each of these 2004. The company, though, is rooted ber 2004. As of 19 February 2006, Aker companies is an independent unit. Yet in more than a century-and-a half of had a total of 17 765 shareholders Aker companies have many commona- industrial traditions. (19 880 as of 1 March 2005) lities and their membership in the Aker Group provides a unifying influence. Until the merger with Kværner, the 20 largest shareholders as of 19 share capital of Aker ASA was NOK 2 February 2006: The Aker Group offers investors several 422 897 876, consisting of 44 131 354 1. TRG Holding AS 67.80% choices to meet different needs and Class A shares and 42 400 713 Class 2. Morgan Stanley* 3.68% strategies. They may invest in the Aker B shares. As part of the merger, 28 3. Bank of New York* 1.91% Group as a whole by buying shares in 243 374 new Class A shares were 4. Skandinaviska Enskilda (PUBL) Oslo 1.39% the parent company, Aker ASA. Alterna- issued as compensation to Kværner 5. Nordea Bank, Sweden* 1.02% tively, industry-specific investments can shareholders. Following the transac- 6. JP Morgan Chase Bank, Luxemb.* 1.00% be made by buying shares in Aker’s tion, the company has 72 374 728 7. Tore Aksel Voldberg 0.78% exchange-listed companies, which Aker Class A shares. Both Class A 8. Carnegie Investment** 0.66% together represent the bulk of the Aker and Class B shares have a par value 9. State Street Bank* 0.63% Group’s business activities. Investing in of NOK 28 per share. 10. JP Morgan Chase Bank* 0.60% Aker or in the Group’s listed companies 10. Goldman Sachs* 0.60% enables investors to participate in the All Class A shares carry voting rights; 12. Nordea Bank, Denmark* 0.48% financial and industrial expertise, creati- Class B shares have no voting rights. 13. Nordea Bank, Finland* 0.46% vity, and capabilities that characterize With regard to all other aspects, all 14. ABG Sundal Collier 0.37% the Aker Group as a whole. Aker ASA shares carry the same 15. Bear Stearns Securities* 0.35% rights. Aker has not issued any equity 16. CTCL-Britannic 0.33% The Aker Group is characterized by capital instruments beyond the shares 17. DnB NOR Markets 0.31% active ownership. Aker’s long-term described above. 17. Svenska Handelsbanken* 0.31% industrial approach, its shareholder 19. Hurricane Invest 0.27% structure, and its management model The 27 July 2004 extraordinary share- 20. Gambak VPF 0.25% imbue Aker companies with drive and holders’ meeting of Aker ASA authori- Total 20 largest shareholders 83.20% decisiveness. Just as the parent com- zed the Board of Directors to pur- * Nominee * * Settlement account pany of the Aker Group, Aker ASA, chase company shares, up to a total carries the imprint of its main share- par value of NOK 240 million. The aut- Aker ASA’s majority shareholder, TRG holder Kjell Inge Røkke (via his privat- horization expired on 27 January Holding, holds 67.8 percent of Aker ASA ely held company TRG Holding), Aker 2006; the Board had not exercised the shares with voting rights, and as such, puts its mark on the development of authorization. controls the company. TRG Holding has each Group company. stated that as an industrial investor, the Through the exercise of proactive company will contribute to the continuous ownership, Aker seeks to create value operations improvement and strategic that benefits all Group investors. positioning of the Aker Group. The chart below illustrates the approximate distribu- From time to time, agreements are tion of Aker’s Class A share ownership: entered into between two or more Aker Group companies. The boards of directors and other parties involved in TRG 67,8 % the decision-making processes lea- ding up to such agreements are all Other Norwegian 16 % critically aware of the need to act at Other 16 % arm’s length. If needed, external, independent opinions are sought. 12 ANNUAL REPORT 2005

SHAREHOLDER MATTERS

Aker ASA The Aker Group Aker ASA Shareholder Dividends and A transparent representation dividend policy structure

Pursuant to a proposal by the Aker strives to create value for its sha- As a consequence of the Aker Group’s nomination committee, shareholders of reholders in the form of dividend pay- structure, investors have access to each Group company elect ments and share-price growth over more information than is common for representatives to the respective time. In February 2006, Aker’s Board industrial groups of Aker’s size. boards of directors at shareholders’ of Directors adopted the following meetings. The nomination committees of all main Aker Group companies dividend policy: Most of the Group’s businesses are have comprised the following organized into the five listed compa- members: Rune Bjerke, Gerhard Aker ASA’s dividend policy supports nies Aker Kværner, Aker Yards, Aker Heiberg, and Kjell Inge Røkke. Mr. the company’s ambition to mainten Drilling, Aker American Shipping, and Røkke is Aker’s main shareholder. a solid balance sheet and liquidity Aker Seafoods. Each of these compa- Most shareholder-elected board reserves adequate to handle future nies is subject to the Oslo Stock members are independent of the obligations. The company’s objec- Exchange’s regulations governing fair company’s main shareholder. The tive is to pay dividends annually disclosure of market information. composition of each individual that, amount to 2-4 percent of the Access to detailed information about company’s board is shown on pages company’s net asset value. the operations and performance of 4 and 5 of this report. core Aker Group companies provides As shown in the table, Aker’s Presi- The determination of net asset extensive insight into the Aker Group’s dent and CEO Leif-Arne Langøy is the value is based on the share price of development. Board Chairman of the underlying Aker’s listed investments. For the Group companies. Aker’s Group Exe- 2005 and 2006 accounting years, Aker ASA cutive Vice President Martinus Brandal dividend payments will most likely is a board member for each underlying be in the lower end of the stipulated Additional company (with the exception of Aker interval. American Shipping). Through such information representation, Aker exercises its pro- In December 2005, following the mer- active ownership in Group subsidiaries. ger with Kværner and the issuing of Aker ASA publishes pertinent investor shares as compensation, Aker ASA relations material (in Norwegian and paid a per-share dividend of NOK 14. English) on the company’s website: Employees on www.akerasa.com. Significant events The Board of Directors of Aker ASA and information are also communica- the board will propose to the company’s annual ted in notices to the Oslo Stock Aker has a long-standing tradition of shareholders’ meeting that a per-share Exchange. close and constructive cooperation dividend of NOK 6.50 be paid for the with its employees, both through uni- 2005 accounting year. As a listed company, Aker ASA publis- ons and through the election of board hes quarterly and annual reports, and representatives, by and among Aker ASA schedules regular presentations on employees, for individual companies. accounting figures and operations. Generally, employees elect their Articles of Such presentations generally take board representatives every second place in Oslo each quarter. The com- year. The main employee representa- association pany occasionally participates in con- tive of each company typically serves ferences where the company’s perfor- on the board of that company. The company’s articles of association mance may be discussed. Aker American Shipping has its were last modified at the company’s activities in the USA; there are no 30 August 2004 extraordinary share- The company can be contacted via employees in its Norwegian parent holders’ meeting. The articles of asso- email at: [email protected]. company. However, employees at the ciation are available at the company’s Philadelphia shipyard elect represen- website www.akerasa.com. tatives to the shipyard’s board of directors. ANNUAL REPORT 2005 13

Corporate governance

The Norwegian Code of Practice for Corporate Governance was published on 7 December 2004. The recommendations set forth in the code are designed to strengthen confidence in stock-exchange listed companies and thus contribute to optimal value creation over time, to the benefit of shareholders, employees, and other interested parties.

Adherence to the code is based on the “comply or explain” principle, whereby companies will be expected either to comply with the Code of Practice or explain why they have chosen an alternative approach.

The Code of Practice sets forth 14 main recommendations; Aker’s activities are largely in accord with them. The full text of the recommendations is available from the Oslo Stock Exchange website at: www.ose.no. Company practices regarding each of the 14 recommendations are presented briefly below.

An updated version of the recommendations was published on 8 December 2005. Share-price Aker will begin using the updated version as of the 2006 business year. development 1. Implementation and reporting on 8. Corporate assembly and board of Aker’s Class A shares were listed on corporate governance directors: composition and the Oslo Stock Exchange on 8 Aker follows this recommendation independence September 2004; closing at NOK 63.00 through regular Board meetings, Recommendations are largely follo- per share on the first day of trading. At ordinary operational follow-up, and wed, with the qualification that Nor- the close of trade on 21 February via annual reports and other public way’s Corporate Democracy Com- 2006, the per-share price was NOK presentations. mittee has approved Aker’s lack of 260.00, a 312 percent increase in a corporate assembly. Further, Leif- share price in that period. 2. Business Arne Langøy served both as board Recommendations are complied member and general manager of The lowest per-share price for Aker’s with through the company’s articles Aker ASA as of 30 September 2005 Class A shares since listing was NOK of association and annual report. until 2 February 2006 when Bengt 45.50; the highest price was NOK Further, a corporate presentation is A. Rem took over as general 288.50. available on the company’s website. manager.

NOK 3. Equity and dividends 9. The work of the board of directors 260 Recommendations are followed. Recommendations are followed. Share price 274% The company has adopted a divi- The Board performed an evaluation dend policy, and proposals on divi- of its performance and expertise in 210 Index dend disbursements have been February 2006. presented in greater detail and 160 commented on as part of the com- 10. Remuneration of the board of pany’s shareholders’ meetings. directors 110 Recommendations are followed as 4. Equal treatment of shareholders set forth in this annual report. 0 and transactions with close 3 Jan 05 21 Feb 06 associates 11. Remuneration of executive Recommendations are followed, management The price of the AKE16 bond loan has with the exception of the recom- Recommendations are followed; risen in step with Aker’s positive mendation to have only one class of note, however, that the company development. The chart below shows shares. Aker ASA has two share has no option plans. the developments: classes; however only the Class A share is listed and negotiable. All 12. Information and communications AKE16 Bond Class B shares are held by a wholly Recommendations are followed. 102.0 Share price development 101% owned Group subsidiary. 13. Take-overs 5. Freely negotiable shares Recommendations are followed; 96.5 Recommendations are followed. however, the issues specified herein have not applied to Aker. 91.0 6. General meetings Recommendations are followed; 14. Auditor 85.5 however, meeting chairs are usually Recommendations are followed, appointed prior to meetings and with the exception that no specific 80.0 announced in the notice of share- guidelines have been prepared 20 Aug 04 27 Feb 06 holders’ meetings. regarding executive management’s ability to hire the company’s auditor 7. Nomination committee for services other than auditing. Recommendations are followed, with the qualification that the com- pany’s main shareholder chairs its nomination committee. 14 ANNUAL REPORT 2005

Key Figures

Aker Kværner ASA Profit and loss Pro forma Amounts in NOK million 2004 2005 Operating revenues 35 553 41 463 EBITDA 1 362 2 145 Depreciation, amortization (319) (356) Operating profit 1 043 1 789 Net financial items (396) (771) Profit before tax 647 1 018 Income tax expense (129) 227 Profit for the year 518 1 245 Minority interest 9 16 Equity holders of the parent 509 1 229

Balance sheet Property, plant and equipment and Intangible assets 6 477 6 981 Interest-bearing long-term receivables 103 141 Other non-current assets 159 142 Cash and interest-bearing short-term receivables 3 703 7 134 Other current assets 9 828 11 897 Total assets 20 270 26 295 Equity attributable to equity holders of the parent 1 671 4 262 Minority interest 48 65 Subordinated debt 3 826 3 167 Interest-bearing debt 2 436 2 112 Interest-free debt 12 289 16 689 Total equity and liabilities 20 270 26 295 Net interest-bearing debt(-)/receivables(+) 1 370 5 163 Equity ratio (%) 8.5 16.5 ANNUAL REPORT 2005 15

Aker Kværner Inge K. Hansen President and CEO

Aker Kværner has more than 20 400 petrochemicals, chemicals, pharmaceu- leum resources may be located in Arctic employees working in more than 30 ticals, power generation, wood pulping regions, much of it in offshore reser- countries. The engineering and con- products, metals, and mining. voirs. Because Aker Kværner has delive- struction company delivers to several In February 2006, Aker Kværner sig- red a number of production, transport, industrial sectors, primarily in the oil, ned a letter of intent for the sale of its and processing installations for fields energy, and process industries. At year- pulping and solid fuels power busines- with similar arctic characteristics, it con- end 2005, Aker owned 50.01 percent of ses. Plans are for the sale to be com- siders the Barents Sea and the Arctic Aker Kværner ASA shares; the company pleted in the second or third quarter of Ocean as part of its home market. is listed on the Oslo Stock Exchange. the year. Following this divestiture, deli- Product and technology develop- Aker Kværner is a significant world- veries to the oil and gas industry will ment, along with thorough management wide supplier to the oil and gas industry generate approximately 76 percent of of projects and risk management, are of specialized facilities, installations, and Aker Kværner’s revenues. key to ensuring satisfied customers and associated services. Deliveries by Aker Continuing high oil prices and the increasingly better project performance Kværner’s Oil & Gas business area challenge of gradually declining proven and profitability. include design, engineering, purcha- reserves are spurring oil companies to In 2005, Aker Kværner invested sing, product deliveries, construction, intensify exploration for new reserves. approximately NOK 190 million in select assembly, completion, operation, and Increased exploration activities are pro- technology development projects. Aker maintenance of facilities for oil and gas jected to result in increased investments Kværner received almost NOK 80 million exploration and production, largely for in new oil and gas production facilities, in additional technology development offshore field exploration and develop- and thus a continuing strong market for funding from customers and public aut- ment. Aker Kværner. horities in 2005; the NOK 80 million For land-based facilities, the Engine- In recent years, Arctic regions have figure does not include the significant, ering & Construction business area of emerged as some of the world’s most ongoing project-specific development Aker Kværner offers a comparably promising petroleum-producing regions. work done in close cooperation with broad range of products and services Surveys show that as much as 25 per- customers. for industrial niches, such as refining, cent of worldwide undiscovered petro-

Acclaimed, technologically advanced products

Products with a high content of new voirs pose tough, new requirements wells. One customer states that it or specialized technologies for the for drilling equipment. Aker Kværner has saved several hundred million oil and gas industry are comprising is the world’s second largest supp- NOK annually by using Aker Kvær- an increasing proportion of Aker lier of offshore oil drilling equipment; ner’s technologically advanced well Kværner’s overall activities. The the company has developed advan- tractor. Furthermore, use of the well Subsea, Products & Technology ced solutions for such demanding tractor results in an increase in well business generated about 25 per- conditions. Aker Kværner’s unique revenues and earnings, because cent of Aker Kværner’s 2005 reve- RamRig drilling system is well suited maintenance shutdowns are shorter nues. Some of Aker Kværner's pro- to drilling operations at great water than with alternative downhole soluti- ducts are described in greater detail depths. Dual RamRig drilling packa- ons. below. ges have recently been contracted by Aker Drilling and Eastern Drilling. Processing equipment Subsea solutions Complete drilling systems have also Aker Kværner delivers advanced Increasingly, offshore oil and gas been ordered for installation on new- solutions and technology for separa- fields are developed using cost- buildings for Maersk, SeaDrill, Petro- ting well-stream water, sand, and effective subsea solutions. Aker Mena, and other offshore drilling gas — efficiently and in an environ- Kværner is a significant worldwide companies. mentally friendly manner. The com- supplier of subsea production sys- pany has a significant share of the tems; deliveries include the subsea Well maintenance market for technology to process systems for the Dalia field off the Production wells require skilled seawater for injection into the reser- coast of Angola, the world’s largest maintenance to ensure free flow of voir to enhance production. Aker subsea-developed field. oil and gas — and increased reco- Kværner’s MEG (MonoEthylene very rates. Aker Kværner offers the Glycol) technology plays a key role Drilling equipment most cost-effective method for well in preventing gas pipeline plugging Great water depths and deep reser- intervention in horizontal oil and gas and production interruptions. 16 ANNUAL REPORT 2005

Key Figures

Aker Yards ASA Profit and loss Pro forma Amounts in NOK million 2004 2005 Operating revenues 12 490 16 607 EBITDA 768 1 029 Depreciation, amortization (290) (349) Non-recurring items (173) Operating profit 305 680 Net financial items (22) 24 Profit before tax 283 704 Income tax expense (74) 73 Profit for the year 209 777 Minority interest 5 5 Equity holders of the parent 204 772

Balance sheet Property, plant and equipment and Intangible assets 3 873 3 998 Interest-bearing long-term receivables 42 168 Other non-current assets 140 190 Cash and interest-bearing short-term receivables 3 897 4 297 Other current assets 3 691 9 668 Total assets 11 643 18 321 Equity attributable to equity holders of the parent 4 385 5 037 Minority interest 26 46 Interest-bearing debt 1) 2 402 5 957 Interest-free debt 4 830 7 281 Total equity and liabilities 11 643 18 321 Net iInterest-bearing debt(-)/receivables(+) 1 537 (1 492) Equity ratio (%) 37.9 27.7

1) Of which construction loans 594 3577 ANNUAL REPORT 2005 17

Aker Yards Karl Erik Kjelstad President and CEO

Aker Yards is one of the world’s foremost tive solutions, great capacity, and short Yards from competitors is its thorough shipbuilders. In 2005, the company’s 13 production times are among Aker Yards’ comprehension of customers’ markets. shipyards in five countries delivered a major competitive advantages in this mar- Group shipyards are adept at customi- total of 38 vessels in the market seg- ket segment. zing features so that each vessel will per- ments cruise ships and ferries, merchant Vessels with extensive customer-spe- form optimally in its market. Technological marine vessels, and offshore and specia- cific features, as well as production of expertise — continuing some 250 years lized vessels. standardized vessels, are hallmarks of of shipbuilding traditions — along with Aker Yards is one of the world’s four Aker Yards’ range of offshore and speci- operational flexibility and the ample largest producers of cruise ships and alized vessels. The Group is among the capacity of Aker Yards’ market-driven ferries. Innovation and specialized know- world’s leaders in this market. Innovation, value chain, bring sea-change innovation how — from concept development adaptability, and extensive, scalable yard to one of the world’s largest shipbuilding through construction — result in custom- capacity characterize Aker Yards’ Offs- enterprises. designed vessels that meet market hore & Specialized Vessels business Aker Yards’ order backlog increased demand. More than 20 percent of the area. by 66 percent in 2005. With highly satis- cruise ship tonnage delivered worldwide Aker Yards is recognized by custo- factory capacity utilization, the company in the past ten years was built at Aker mers worldwide for its ability to design focuses on maintaining its high quality, Yards shipyards. The company is among and build innovative, future-oriented ves- keeping to project schedules, and deri- Europe’s largest ferry builders. sels. The Group’s reputation for vessel ving optimal profitability with each vessel. Containerships, chemical tankers, newbuildings that are delivered on time Aker Yards’ future looks exciting: With product tankers, and small tankers are and on budget ensures customer suc- world trade continuing at record levels, part of the broad range of merchant ves- cess — and repeat orders. seaborne transportation needs are gro- sels produced by Aker Yards. Cost-effec- One characteristic that distinguishes Aker wing — spurring demand for new vessels.

A steadily growing cruise market

Demand for new cruise ships is driven accommodations. by travel industry growth. As leisure time The current genera- increases for more and more people, tion features skating vacation travel spending grows. The cru- rinks, climbing walls, golf 2009 ise industry has succeeded in attracting driving ranges, and even an ever-increasing number of vacatio- surfboarding. For the large ners by introducing more sophisticated community on board, ships, packed with activities and ameni- numerous pastimes are avai- ties. lable, such as movies, stage 2006 Economic growth in the United entertainment, fitness facilities, States and Europe is an important force spas, and casinos. driving demand for cruise ship newbuil- Increasing the current pro- dings; good financial performance by duction volume of post-panamax- 1999 cruise operators is also important. Regu- class vessels is a goal of Aker Yards’ latory frameworks that impose more Cruise & Ferries business area. The stringent technical requirements on cru- preliminary agreement with France’s ise ships, such as enhanced safety and Alstom on the acquisition of its shipyards is part 1995 pollution abatement, also contribute to of this strategy. The acquisition is scheduled to be increased newbuilding demand. completed toward the end of the first quarter of 2006. Several trends are shaping the mar- For several years, Aker Yards has been a leader in the 1982 ket for new cruise ships. The industry’s development of large cruise ships. In April 2006, the com- leading cruise operators attract the pany will deliver the world’s largest cruise ship, the 158 000 public by offering larger vessels. Post- GRT Freedom of the Seas, to Royal Caribbean International. 1970 panamax cruise ships — vessels too In February 2006, Royal Caribbean and Aker Yards surprised large to sail through the Panama Canal the market by announcing the contract to build a new generation of — are projected to become a major cruise ships — 40 percent larger than its Freedom class predecessor. competitive advantage. Today’s largest The first Genesis cruise ship will be delivered in 2009. The ship’s dimensi- cruise ships have an abundance of on- ons are 360 meters in length, 47 meters wide, and a height of 65 meters board attractions; they can be thought of above water line; Genesis is designed to carry 5 400 passengers. as floating amusement parks with luxury 18 ANNUAL REPORT 2005

Key Figures

Aker Drilling ASA Profit and loss Amounts in NOK million 2005 Operating revenues - EBITDA (4) Operating profit (4) Profit before tax (4) Income tax expense 1 Profit for the year (3) Equity holders of the parent (3)

Balance sheet Property, plant and equipment and Intangible assets 960 Cash and interest- bearing short-term receivables 242 Other current assets 2 921 Total assets 4 123 Equity attributable to equity holders of the parent 3 346 Interest-bearing debt 768 Interest-free debt 9 Total equity and liabilities 4 123 Net interest-bearing debt(-)/receivables(+) (526) Equity ratio (%) 81.2 ANNUAL REPORT 2005 19

Aker Drilling Martinus Brandal President and CEO (acting)

Aker Drilling has two advanced, sixth-gene- place mainly onshore and in areas featuring Drilling’s advanced drilling platforms are ration Aker H-6e drilling rigs under construc- relatively shallow waters and mild climatic particularly well suited to drilling operations tion. The two rigs are being built by Aker conditions. A mere five percent of world- in such waters. Kværner, to be delivered in February and wide oil production takes place at great October 2008. Aker Drilling also holds con- water depths, and seven percent in areas Aker Drilling was established by Aker in the tract options entitling the company to have with rough weather conditions. But the pic- fall of 2005. Additional investors were two similar rigs built at Aker Kværner, for ture is changing as the more easily acces- brought into the company through an Octo- completion in 2009 and early 2010. sible reservoirs are already in production. ber 2005 share issue, and in December 2005, Aker Drilling was listed on the Oslo The market for drilling rigs is strong due to New fields are found at great water depths, Stock Exchange. greater demand for oil and gas. Increased such as offshore Brazil and southwest exploration for new reservoirs, and new oil Africa, or in areas exposed to severe weat- Aker owns 30.8 percent of Aker Drilling fields entering production, generate demand her conditions, such as eastern Canada and stock. Aker Drilling is not consolidated in the for drilling rigs to drill exploration wells and Greenland, the North Sea, the Norwegian accounts of the Aker Group; Aker’s invest- the lengthy series of field production wells. Sea, northern regions of the Atlantic Ocean, ment in Aker Drilling is recorded in the the Barents Sea, and waters northeast of balance sheet of Aker Capital, which is a Oil and gas production continues to take Australia and in Russia’s far east. Aker wholly owned unit of the Aker Group.

Environmentally friendly drilling

In designing and building Aker H-6e drilling mud will be recycled and reused. For dril- disposal. Other runoff water that may con- rigs, a great deal of emphasis is placed on ling top sections, water-based drilling mud tain traces of oil, and water from on-board environmental concerns. The thinking behind is used, so that cuttings from such sections sanitary installations, are cleaned before the drilling rigs is clear: Absolutely no emissi- do not contain environmentally harmful being released into the sea. The only untrea- ons of environmentally harmful materials to materials. The material can, therefore, be ted releases to the sea are runoff from areas the sea. deposited safely on the seabed. not contaminated by oil or chemicals, such as rain water that has fallen on unpolluted All Aker H-6e systems have been designed The use of chemicals has been eliminated areas. and will be built with double barriers to pre- or reduced insofar as possible. Environmen- vent undesirable emissions. With the excep- tally benign “green chemicals” featured on 1) The Plonor list describes materials that are tion of crushed rock cuttings from drilling the Plonor list1 are used wherever possible. deemed to represent little or no risk to the the top section of wells, all cuttings will be Energy consumption is optimized to reduce environment (List of substances/preparati- gathered and transported for additional on- emissions to the air. ons used and discharged offshore which shore processing. are considered to Pose Little Or NO Risk Drainage from any area where an oil spill to the environment.) The list has been pre- The rigs can be equipped with a blending could occur is directed into drainage hol- pared as part of “The Convention for the unit that allows potentially polluted cuttings ding tanks. Drainage from drilling areas is Protection of the Marine Environment of to be reinjected into a waste well. Drilling carried to shore for further processing and the North-East Atlantic” (OSPAR).

Aker Capital

Aker Capital, established in 2005, comprises vari- Management, which manages the Aker Group’s Aker Invest sold assets of NOK 360 million (inclu- ous smaller-sized industrial activities, financial Norwegian pension funds, among other services. ding the January 2006 sale of Atlas-Stord); the activities, and investments of the Group. The com- sales resulted in gains totaling NOK 105 million. pany is not a separate Group reporting segment, The company Aker Invest was established in the but is included in the Other Activities segment. summer of 2005 to develop assets transferred to it Along with the investment in the offshore techno- by Aker and Aker Yards. Compensation for the assets logy company Odim, shares in the supply base The most significant items in Aker Capital’s transferred to the new company was in the form of and logistics company NorSea Group constitutes balance sheet are the shareholdings in the listed shares and loans. The total value of Aker Invest’s the most significant of Aker Invest’s investments. companies Aker Drilling (see main article above) assets at establishment was NOK 880 million. NorSea is directly or indirectly involved in seven and the oil service company Bjørge ASA, as well supply, service, and logistics bases located along as 60 percent of Aker Invest shares. Other Aker In 2005, Aker Invest invested NOK 237 million in the Norwegian coast; NorSea supplies large parts Capital assets are Aker Insurance Services, which new assets, of which shares in the listed oil ser- of Norway’s offshore industry activities. provides insurance management, and Aker Asset vice company Odim amounted to NOK 33 million. 20 ANNUAL REPORT 2005

Key Figures

Aker American Shipping ASA Profit and loss Pro forma Amounts in NOK million 2004 2005 Operating revenues - 1 638 EBITDA 80 131 Depreciation, amortization (45) (44) Operating profit 35 86 Net financial items 6 (3) Profit before tax 41 84 Income tax expense - (5) Profit for the year 41 79

Balance sheet Property, plant and equipment and Intangible assets 524 914 Interest-bearing long-term receivables - 69 Other non-current assets 26 40 Cash and interest-bearing short-term receivables 472 197 Other current assets 797 870 Total assets 1 819 2 090 Equity attributable to equity holders of the parent 1 036 1 223 Interest-bearing debt 1) 594 605 Interest-free debt 189 262 Total equity and liabilities 1 819 2 090 Net interest-bearing debt(-)/receivables(+) (122) (339) Equity ratio (%) 57.0 58.5

1) Of which construction loans 452 459 ANNUAL REPORT 2005 21

Aker American Shipping Dave Meehan President and CEO

Aker American Shipping builds world- Philadelphia into one of the most compe- objective — and efficiency has impro- class merchant marine vessels at its titive shipyards in the United States. ved significantly. The estimated num- modern Philadelphia shipyard — and ber of man-hours required for the owns ships that are chartered to In the spring of 2005, a contract was fourth containership newbuilding at the United States shipowners for transpor- entered into for construction of ten Philadelphia shipyard is about one- tation of goods between US ports. product tankers at the shipyard. The fourth the number of hours used to vessels will be delivered to Aker build the yard’s very first boxship. The Aker Philadelphia Shipyard is loca- American Shipping Corporation, ted at the former site of one of the US which, like the Philadelphia yard, is Aker Philadelphia Shipyard has few Navy’s largest shipyards. When the wholly owned by Aker American competitors. The most recent product Navy yard was closed in 1995, con- Shipping. The US shipowning com- tanker to be built in the United States struction of a new commercial shipyard pany Overseas Shipholding Group has was delivered in 1999, and only four began. The new shipyard, which featu- signed an agreement covering vessel US shipyards have built tankers in the res advanced production systems operations and rechartering to end- past 15 years. The Philadelphia used at successful European yards, users in the US Jones Act market. shipyard has already demonstrated its received significant funding and other competitiveness in this segment, and assistance from government agencies Long-term charter agreements have further productivity enhancement will at the federal, state, and local level. already been concluded with two oil result in even lower vessel costs. companies to put the first four of the Aker Philadelphia Shipyard has delivered product tankers into service. Construc- A management agreement between three containerships to Matson Naviga- tion on the two first tankers began in Aker American Shipping and Aker tion Company. A fourth vessel is under 2005; the first vessel in the series of Yards maintains a comprehensive coo- construction for delivery to the same cus- ten will be completed in the fourth peration between the two companies’ tomer in 2006. The ships are performing quarter of 2006. shipyards, and facilitates ongoing well and serve as references for the shi- technical support and knowledge pyard and its more than 600 qualified After the start-up of the new shipyard, transfer. shipbuilders, who are turning Aker improving productivity became a key

A tightly regulated and promising market

A number of US laws lay down the onally, the vessels must be US-regis- The upcoming fleet replacement legal foundations for Aker American tered and manned by US crews. mandated by law will give rise to sig- Shipping’s business. The idea is to OPA 90 was enacted as a response nificant demand for new, double-hul- provide efficient, state-of-the-art mer- to the notorious grounding of the led vessels. In 1990, there was chant vessels built in the United Exxon Valdez oil tanker and the excess capacity in the product tan- States in accord with various US resultant massive oil spill affecting ker market. From 2008 on, there will laws. Collectively called the coast- Alaska’s coastline. The act stipulates be too few vessels that meet statut- wise laws, these federal laws are that all new tankers for transport in ory requirements. The market conse- often popularly referred to as the US waters must have double hulls. quences are already clear; charter Jones Act, which introduced swee- All single-hulled tankers are to be day rates for product tankers have ping reforms on its enactment in taken out of service by 2015. risen in recent years. 1920. The Oil Pollution Act of 1990 (OPA 90) mandates fleet conversion The so-called Jones Act fleet cur- The series of ten product tankers con- to vessels of the type Aker American rently comprises 126 vessels excee- tracted for construction at Aker Shipping is building at its Aker ding 1 000 gross tons. Of these, 18 Philadelphia Shipyard represents a American Shipyard in Philadelphia. are raw oil tankers and 43 are pro- total of 460 000 deadweight tons. duct tankers and product tanker bar- This figure is expected to cover per- The Jones Act laws state that all ges, so-called Integrated Tank Bar- haps one-third of the projected commercial vessels carrying goods ges. In addition, there are several demand for double-hulled tonnage in between United States ports must be chemical tankers and hundreds of 2016. built in US shipyards, and owned smaller-sized barges used for coas- and operated by US citizens. Additi- tal freight operations. 22 ANNUAL REPORT 2005

Key Figures

Aker Seafoods Profit and loss Pro forma Pro forma Amounts in NOK million 2004 2005 Operating revenues 2 410 2 340 EBITDA 162 181 Depreciation, amortization (97) (83) Non recurring items 56 Operating profit 121 98 Net financial items (63) (57) Profit before tax 58 41 Income tax expense (6) (4) Profit for the year 52 37 Minority interest (2) 6 Equity holders of the parent 54 31

Balance sheet Property, plant and equipment and Intangible assets 1 787 1 785 Interest-bearing long-term receivables 184 205 Other non-current assets 18 16 Cash and interest-bearing short-term receivables 113 240 Other current assets 487 504 Total assets 2 589 2 750 Equity attributable to equity holders of the parent 783 886 Minority interest 47 20 Interest-bearing debt 1 301 1 337 Interest-free debt 458 507 Total equity and liabilities 2 589 2 750 Net interest-bearing debt(-)/receivables(+) (1 004) (892) Equity ratio (%) 32.1 32.9 ANNUAL REPORT 2005 23

Aker Seafoods Yngve Myhre President and CEO

Aker Seafoods harvests, processes, mar- seafood products and processed A key element of Aker Seafoods’ busi- kets and sells seafood products, largely seafood items to supermarket chains ness strategy is targeting fresh seafood in north-western Europe. Aker Seafoods and wholesale distributors in Europe. products. As for the market for frozen is one of the largest employers in northern Although Aker Seafoods sells products seafood products, in recent years the Norway. Some 900 of Aker Seafoods in Denmark under its own Thorfisk brand European fisheries industry has met with 1 267 employees work and live in the name, most of Aker Seafoods’ products fierce competition from China-based counties of Finnmark, Troms, or are sold under customers’ brand names. processing plants. Nordland. An additional 50 employees live along the central west coast of the Aker Seafoods only participates in well As a supplier of fresh seafood products, country. The Aker Seafoods Group also regulated and sustainable fisheries. The Aker Seafoods has several important has significant business activities in Den- company has a total of 29 licenses at its competitive advantages: access to first- mark, which employ nearly 300 people. disposal, entitling it largely to harvest class raw materials from the Norwegian cod, saithe, haddock, and shrimp in Sea, short transport time to continental Aker Seafoods’ 15 trawlers harvested Norwegian waters. European customers and markets, and about 51 000 metric tons of seafood in proximity to quality-conscious consu- 2005 in the waters off the coast of nor- In April 2005, Aker Seafoods acquired mers with high disposable incomes. thern Norway. Substantial purchases are two large Norwegian fisheries-industry also made from catches of local fisher- companies, West Fish-Aarsæther and The shift toward the fresh seafood mar- men in Norway and Denmark; approxi- Nordic Sea Holding. Prior to the acquisi- ket, which has continued for several mately 45 000 tons was purchased tion, Aker Seafoods was a wholly owned years, gained further momentum follo- locally in 2005. A relatively minor ton- Aker Group subsidiary. Following the wing the 2005 acquisition. In 2006, Aker nage of the fresh catch is sold round acquisition, Aker owned 88.5 percent of Seafoods will optimize production by (unprocessed except for gutting and the shares of the newly established Aker reducing the number of trawlers to 14, removal of the head). The company’s Seafoods ASA. Stock-exchange listing and distributing harvests more evenly Norwegian factories processed 58 000 on 13 May 2005 was preceded by a throughout the year. These steps will tons in 2005, and Aker Seafoods’ facili- share issue and sale of shares that fur- allow for more predictable deliveries to ties in Denmark, 25 000 tons. ther reduced Aker’s ownership interest. customers, more stable operations of Aker currently holds 65.0 percent of the company’s processing facilities, and The company sells fresh and frozen Aker Seafoods ASA shares. greater profitability.

Fresh seafood conquers new markets Consumers’ eating habits and lifes- New processing and packaging 3500 Export of fresh cod from tyles continue to change. Health technology, however, is reshaping Norway to EU countries and fitness are more important than the competitive position of fresh (in metric tons) 3000 ever, and there is a steadily growing fish. Controlled atmosphere packa- awareness of the relationship bet- ging of ready-to-serve pieces is ween good health and eating fresh, now making first-class seafood pro- 2500 nutritious foods. Another trend ducts more readily available to affecting fisheries companies such supermarket shoppers. These fresh 2000 as Aker Seafoods is the demand for fish products are ready to compete attractive and varied meals that with lamb chops and chicken bre- 1500 don’t require hours of kitchen pre- asts. paration. Food must be of high All this is good news for fishe- quality, but easy to prepare. ries companies. Processed fresh 1000 The health benefits of seafood fish products fetch prices twice as are well established, and, in fact, high as frozen seafood items — 500 numerous seafood products are and demand is rising. From 2003 to increasing in popularity in many 2004, exports of fresh cod from western countries. Until recently, Norway to European Union coun- 0 however, it has been difficult for tries increased by 57 percent, and 20002001 2002 2003 2004 fresh fish to compete successfully growth continued in 2005. One of in supermarkets with fresh meat Aker Seafoods’ goals is to increase and poultry products when it came its fresh cod export by 30 percent to quality and ease of preparation. in 2006. 24 ANNUAL REPORT 2005

Deep Sea fleet

Factory trawlers Status as of March 2006 Centurion Argentina, surimi production Atlantic Navigator Faeroe Islands, surimi production Næraberg Norway, idle Saga Sea Antarctic, krill harvesting as of March 2006 Heather Sea Canada, idle

Long-line vessels Antarctic I Argentina, idle Antarctic II Argentina, operating partially Antarctic III Argentina, operating partially ANNUAL REPORT 2005 25

Aker Seafoods Deep Sea Division Trond Williksen General Manager

Important fisheries activities conducted Aker Seafoods Corp. conducts long-line continuing to develop its Deep Sea Divi- by the Aker Group take place in operati- fishing for Chilean sea bass, and produ- sion fisheries activities. Market demand ons that are not part of the exchange- ces surimi based on southern blue whi- for surimi has developed favorably in listed Aker Group company, Aker ting and hoki. Aker Seafoods Antarctic recent years and prices have climbed. Seafoods ASA. Organized under the AS has a factory trawler that produces Aker has specialized in producing high- Aker Seafoods Deep Sea Division, these meal and oil from krill. At the Faeroe quality surimi from raw materials such as fisheries activities comprise five factory Islands, pf Næraberg operates a factory northern blue whiting, southern blue whi- trawlers and three long-line vessels trawler that produces surimi from nor- ting, and hoki. deployed in fisheries in Argentina, the thern blue whiting. Aker’s modern deepwater harvesting Faeroe Islands, and Antarctic regions of Securing even fleet utilization has uses advanced technology and speci- the South Atlantic Ocean. been a key challenge in recent years. ally-developed industrial processes. The business activities of the Aker Long-line fishing off Argentina has been These distinctions are particularly Seafoods Deep Sea Division are organi- limited by small quotas, and in 2005 only notable, for example, in the factory traw- zed in three main companies: Aker two out of three long-line vessels were in ler fleet. The factory deck on board the Seafoods Corp. in the United States, the operation. The factory trawler Centurion Atlantic Navigator has sixteen production Norwegian company Aker Seafoods del Atlantico in Argentina had solid pro- lines. Each line guts, cleans, and rinses Antarctic AS, and pf Næraberg in the duction when in operation, but has been 240 fish per minute. In the course of a Faeroe Islands. The Deep Sea Division affected by labor strikes. Two of the fac- regular work day, three million northern has an operations management agree- tory trawlers, Saga Sea and Atlantic blue whiting are turned into 90 metric ment with Aker Seafoods ASA. Navigator, underwent rebuilding for krill tons of surimi, 35 tons of fish meal, and Aker only participates in well-regula- and blue whiting harvesting, respectively, seven tons of oil. Not a gram of fish is ted fisheries. Through its wholly owned and these vessels were out of operation. wasted. Rendered oil is used as biofuel Argentinean subsidiary EstreMar S.A., Aker sees significant potential in for the vessel’s main engines.

Harvesting technology Surimi, fish meal, and fish oil are pro- advantages offered by continuous size. The technology is favorable from duced by a great many market partici- trawling. With continuous trawling, the an environmental as well as resource pants. However, production based on trawl gear can be towed for weeks at a management perspective, and facilita- either blue whiting or krill is not simple; time before being winched up. Also, a tes extremely efficient on-board pro- advanced solutions for both harvesting cleverly designed separator allows krill cessing. and automated raw materials proces- to pass into the trawl bag while bloc- On-board processing is most effi- sing are required. Aker conducts king the entry of unwanted, by-cat- cient when fish are of the same size; extensive, advanced harvesting and ches. processing-line machines can be processing technology development. The adaptation of continuous har- adjusted with great precision and the Aker has worked systematically vesting systems to all sorts of fisheries volume of waste is reduced. As a over the past two years to develop offers significant potential. Fish can be result, a greater proportion of high- new, continuous-trawl harvesting met- sorted during the trawl to avoid by-cat- value products are produced, such as hods. Work on continuous trawling ches and to gather fish of a specific filets or surimi. began as part of the Deep Sea Divisi- on’s krill harvesting project in the South Atlantic. Now, however, Aker sees sig- nificant potential in further develop- ment of this technology, which may be able to revolutionize fishing for com- mon edible fish species such as cod, saithe, and haddock. Krill is a sensitive raw material. The initial impetus to developing continu- ous trawling is the rapidity with which krill spoils once it dies. With continuous Continuous trawling trawling, Aker has developed a met- Developed for krill, but could revolutionize hod that brings krill on board the fac- edible fish harvesting. Uninterrupted tory trawler alive and sound. trawling for weeks at a time; a separator Greater trawling efficiency and releases unwanted by-catches blocking of by-catches are other 26 ANNUAL REPORT 2005

Deconstruction and reconstruction Subsequent to major expansion Oslo, Norway. The number of Aker company is focused on further through pre-1999 mergers and Material Handling employees has growth and margin improvement. acquisitions lead by Aker, the Con- been cut, from more than three thou- Such efforts are currently marked by structor Group was established as an sand to 757. Annual revenues are product and concept development Aker subsidiary in 1999. Also in one-third of their prior level. Downsi- and marketing activities to ensure 1999, Constructor Group merged zing was done so as to concentrate competitive products, as well as with UK-based Dexion Group Ltd, a solely on core activities. In 2003 and good distribution and wider market company owned by Apax Partners 2004, activities in the UK, Belgium, availability for the company’s product (UK). Apax Partners/Dexion Group France, Australia, Asia, the United portfolio. In addition, an in-house Ltd retained control of the merged States, and Finland were divested in developed dimensioning and calcula- company and initiated an extremely order to reduce the level of debt and tion tool facilitates the preparation of comprehensive restructuring pro- Aker’s guarantee obligations. bids and specifications by staff, dis- gram. tributors, and agents. Factories that were retained in the With the benefit of hindsight, some restructured Aker Material Handling Sales and marketing activities were decisions concerning the restructu- were streamlined and tailored to their recently strengthened through the ring program were, to a certain regional markets. In the Netherlands, establishment of sales offices in Bul- extent, mistaken. Implementation of for example, more than NOK 50 mil- garia and Romania, and the acquisi- the program became more challeng- lion was invested in a fully-automated tion of the sales and distribution ing than projected, in terms of both production line for shelving and racks company Dexion Comino in the UK. operations and capital outlays. Weak for the archive and office segment. In markets and sales shortfalls, along Germany and Norway, factories focu- Deconstruct to reconstruct with the above-mentioned factors, sed more narrowly on industrial-seg- 4000 (Revenues in NOK mill) resulted in significantly poorer profit ment products and on markets in performance and major capital Central Europe and the Nordic coun- 3500 needs at Constructor Dexion. tries, respectively. During the period, production equipment from the clo- 3000 Developments were such that it sed plant in Sweden was transferred 2500 became necessary for Aker to take to the Norwegian factory located at

control of Constructor Dexion and Hønefoss, and investments were ced sales

2000 u institute measures to prevent further made in new machinery for produc-

deterioration. The reconstruction that tion of industrial shelves and pallet 1500 Red followed demanded major effort; racks. These measures have made it Aker injected considerable funds and possible to retain about 100 industrial 1000 managerial expertise. In 2004, the workplaces at the Norwegian factory. Units divested company was renamed Aker Material 500 in 2000-2003 Handling. Aker Material Handling is now profi- 0 table. In 2004 and 2005, Aker Mate- The approach in the initial restructu- rial Handling had an operating profit 2000 ring phase after Aker gained full con- before depreciation of NOK 11 mil- 2003 2005 trol of the company was “fix, close, or lion and NOK 35 million, respectively. 6 Profit improvement sell.” During its expansion, the enter- The fourth-quarter 2005 EBITDA mar- 4 Rolling 12-month EBITDA in EUR million prise had grown into a global busi- gin exceeded five percent. In 2003, 2 ness, but harvested synergies were EBITDA for the same business activi- insufficient to sustain the costs of its ties was NOK 34 million. The retai- 0 diverse product lines and geographic ned activities have shown significant -2 6/04 6/03 6/05 12/02 12/03 12/04 12/05 spread. growth; from 2003 to 2005, order -4 intake rose from NOK 1 151 million to Five years later, Aker Material Hand- NOK 1 391 million (an increase of 21 -6 ling has changed dramatically. The percent). -8 number of factories has decreased -10 from fifteen to four. Corporate head- Now, it is fair to say that Aker Material quarters has been scaled down, from Handling’s financial situation is stabi- -12 25 employees to six, and relocated to lized. Continued development of the -14 Mill. Euro ANNUAL REPORT 2005 27

Aker Material Handling Halvard Muri President and CEO

Aker Material Handling is a leading Aker Material Handling has a compre- products and solutions, expanded mar- European manufacturer and supplier of hensive network of factories, sales offi- ket presence in Eastern Europe, and high-quality, indoor logistics systems for ces, and sales representatives in UK market growth. The Group’s various storage and archiving. These efficient Europe. Production takes place at Aker business units will pursue local impro- and practical solutions are used in fac- Material Handling’s four factories: two vement measures and, at the same tories, storage facilities, distribution and are in Germany, one is in Norway, and time, benefit from joint purchasing, pro- logistics centers, archives, offices, one is in the Netherlands. The company duct development, production, and museums, libraries, medical institutions, has its own sales offices in Norway, management synergies. and other settings. At year-end 2005, Sweden, Denmark, the Netherlands, The outlook for Aker Material Aker Material Handling had 757 Belgium, France, Switzerland, Germany, Handling’s main markets, such as employees. Italy, Poland, the Czech Republic, Slo- Scandinavia and the UK, is favorable, Aker Material Handling has a strong vakia, Hungary, Bulgaria, Romania, and while the important German market is market presence in most European Austria. The Aker Material Handling showing clear indications of improve- countries, and markets its products Group is headquartered in Norway. ment. Major installations in Germany under well-known brand names such as Aker Material Handling has institu- were completed in 2005 at new Volks- Constructor, Bruynzeel, Compactus, and ted a detailed development and impro- wagen original spare parts warehouses Dexion. These brand names are firmly vement program. Key program ele- and Michelin Kronprinz tire storage established in their market segments. ments are: further development of facilities.

Key Figures

Aker Material Handling Profit and loss Pro forma Amounts in NOK million 2004 2005 Operating revenues 1 231 1 347 EBITDA 11 35 Depreciation, amortization (26) (26) Non recurring items (8) (2) Operating profit (23) 7 Net financial items (17) (20) Profit before tax (40) (13) Income tax expense 4 - Profit for the year (36) (13) Equity holders of the parent (36) (13)

Balance sheet Property, plant and equipment and Intangible assets 361 406 Interest-bearing long-term receivables 6 15 Cash and interest-bearing short-term receivables 86 74 Other current assets 336 392 Total assets 789 887 Equity attributable to equity holders of the parent 119 108 Interest-bearing debt 307 387 Interest-free debt 363 392 Total equity and liabilities 789 887 Net interest-bearing debt(-)/receivables(+) (215) (298) Equity ratio (%) 15,1 12,2 28 ANNUAL REPORT 2005

Board of Directors

Kjell Inge Røkke Board Chairman (until 2 March 06) Kjell Inge Røkke is, through his wholly owned company TRG Holding AS, the company’s principal shareholder. He has been the main owner and a driving force in the development of Aker since the 1990s. Mr. Røkke owns 49 069 690 Aker Class A shares as per 19 Feb 06.

Lone Fønss Schrøder Bjørn Flatgård Kjeld Rimberg Deputy Chairman Board member Board member Lone Fønss Schrøder is President of Bjørn Flatgård is President & CEO of Kjeld Rimberg is an independent consul- Wallenius Lines and board member of Elopak AS. He is a board member of tant and a board member. He has previ- several other Nordic companies, inclu- several Elopak subsidiaries, Aker Kvær- ous work experience within research and ding Yara International ASA and Vatten- ner ASA, SalMar A/S and TRG Holding administration as a board member at fall AB. Ms. Fønss Schrøder was AS. Mr. Flatgård has an engineering Kongsberggruppen, Statoil, Nationalthe- employed by A.P.Møller-Maersk for 21 degree from the University of Trond- atret, Aschehoug, Falkengruppen, and years. She holds a law degree from the heim and a business degree from the as a former President & CEO of the Nor- University of Copenhagen. Norwegian School of Management. wegian State Railway (NSB). Mr. Rim- berg was educated at the Norwegian Institute of Technology (NTNU). Rimberg owns 6 300 Aker Class A shares as per 19 Feb 06.

Jon Fredrik Baksaas, Leif Arne Langøy Board member Board member Jon Fredrik Baksaas holds a Master of (Chairman from 2 March 06) Science in Business Administration from Leif-Arne Langøy has been President & the Norwegian School of Economics and CEO of Aker ASA, former Aker RGI, Kjell A. Storeide Business Administration in Bergen and since 2003. He has previously, served Board member has additional qualifications from IMD in as President & CEO of the Aker Yards Kjell A. Storeide is self-employed and Lausanne, Switzerland. He has been Group, and as a Managing Director for Chairman of the Board of several Nor- President and CEO of Telenor since Aker Brattvaag for 13 years. He is wegian industrial companies and mem- June 2002. He joined Telenor in 1989 chairman of the board of Aker Kvær- ber of the board of Innovasjon Norge. and was made Deputy CEO in 1997. ner, Aker Yards, Aker Seafoods, Aker From 1990 to 2004, Mr. Storeide was Baksaas has held positions as Finance American Shipping, Aker Drilling, and CEO and part owner of Stokke Grup- Director, Executive Vice President and Aker Material Handling, and deputy pen AS. He has a degree in Business CEO of TBK AS. Before joining Telenor, chairman of TRG Holding. Langøy Economics from the Norwegian School Baksaas held finance-related positions holds an MBA degree from the Norwe- of Management in Bergen. in Aker AS, Stolt-Nielsen Seaway and gian School of Economics. Langøy is a Det norske Veritas. He is a board mem- Norwegian citizen. He owns 31 000 ber of Svenska Handelsbaken AB. Aker Class A-shares as per 19 Feb 06. ANNUAL REPORT 2005 29

Konsernledelse

Leif-Arne Langøy President & CEO Leif-Arne Langøy has been President & CEO of Aker ASA, former Aker RGI, since 2003. He has previously, ser- ved as President & CEO of the Aker Yards Group, and as a Mana- ging Director for Aker Brattvaag for 13 years. He is chairman of the board of Aker Kværner, Aker Yards, Aker Seafoods, Aker American Shipping, Aker Drilling, and Aker Material Handling, and deputy chairman of TRG Hol- ding. Langøy holds an MBA degree from the Norwegian School of Economics. Langøy is a Norwegian citizen. He owns 31 000 Aker Class A-shares as per 19 Feb 06.

Martinus Brandal EVP Martinus Brandal, EVP, is in charge of operati- ons, strategy and busi- ness development for Aker. Mr. Brandal joined Aker RGI Holding as EVP on 1 July 2004. In the period from 1985 to 2004, Mr. Brandal held various management Atle Tranøy Bjarne Kristiansen positions in the ABB Group, inter alia as Group Board member Board member Senior Vice President at the headquarter in Atle Tranøy is chief union representa- Bjarne Kristiansen is group union Zurich and Head of Business Area Process tive, elected to Aker ASA’s Board of representative at Aker Seafoods. He Automation. Mr. Brandal holds a Bachelor of Directors by Group employees. Tranøy was elected to the Aker ASA Board of Science in Electrical Engineering from Oslo has worked full-time as a union repre- directors as an employee representa- University College. sentative since 1987, initially at Aker tive. Kristiansen has worked in the fis- Stord. Mr. Tranøy also heads the Euro- hing industry since 1973. He has been Bengt A. Rem pean Works Council at Aker. the chief union representative at Nor- CFO way Seafoods since 1990, and has ser- Bengt A. Rem joined ved as group union representative the Aker RGI Group in since 1996. 1995 where he was CFO and Chief of Staff. Before joining the Aker Group, Mr. Rem worked at Arthur Andersen & Co. and Oslo Børs. He is a state-authorized accountant and has a Master of Business and Economics degree from the Norwegian School of Management.

Geir Arne Drangeid EVP Geir Arne Drangeid is Harald Magne Bjørnsen Stein Aamdal responsible for commu- Board member Board member nications, investor relati- Harald Magne Bjørnsen is group union Stein Aamdal is the chief union repre- ons and human resour- representative, elected to Aker ASA’s sentative at Aker Verdal. He was elec- ces in Aker ASA and Board of Directors by Group employees. ted to the Aker ASA Board of directors has a background from An employee of Aker Elektro since 1978, as an employee representative. Aamdal journalism. He joined Bjørnsen became an Electrical & Instru- began working at Aker Verdal in 1974 the company on 1 Sep- mentation project leader in 1986. Bjørn- as a section builder-fitter. In 1990, he tember 2004. Mr. Drangeid has held various sen is a certified ships engineer and was elected local union leader at Aker communications related positions since 1990, electrical installer. Harald Magne Bjørn- Verdal. when he joined Norwegian Contractors, then a sen owns 700 Aker Class A shares as subsidiary of Aker. In 1996 he became head of per 19 Feb 06. group communications in Aker Maritime, and since 2002 he was group SVP Communications and Investor Relations in Aker Kværner. 30 ANNUAL REPORT 2005

BOARD OF DIRECTORS REPORT

A good year

2005 was one of Aker’s best years ever. Revenues exceeded NOK 62.4 billion in 2005 and operating profit before depreciation and amortization amounted to NOK 3.3 billion. The Group strengthened its financial position throughout the year, and the order backlog stood at NOK 98.4 billion at year-end 2005. This solid performance gives Aker a good foundation for continued growth and improved profitability

The Board of Directors will propose to the annual shareholders’ meeting the payment of an ordinary dividend of NOK 6.50 per share for the 2005 accounting year.

In 2005, the vision of creating a globally reason for the balance sheet growth is business activities. Aker American leading industrial group by combining increased activity levels, which resul- Shipping and Aker Yards deliver ves- Aker and Kværner was finally realized. ted in an increase in the Group’s wor- sels for seaborne transportation, and Kværner’s industrial activities were king capital. Cash and cash equiva- Aker Yards is a preferred supplier of transferred to Aker and other owners, lents also grew as a result of the cruise ships for the travel industry. For and the remaining Kværner activities Group’s generally good operations. Aker Seafoods, the increased demand were merged with a wholly owned Aker Cash and cash equivalents amounted for fresh seafood products in the Euro- subsidiary in December 2005. to NOK 12.4 billion at year-end 2005, pean market is an important factor. The contours of the new Aker up more than 50 percent, compared Aker is well prepared to take emerged during 2005. The Group’s with 31 December 2004. Net interest- advantage of these fundamentally insightfulness into industrial develop- bearing receivables increased by positive conditions and envisions cont- ment and its technological knowledge more than NOK 1 billion to NOK 1.6 inued growth and improving margins in select industries, combined with billion during the year. in all main companies. access to financial resources, created The positive development of Group opportunities for growth. The esta- subsidiaries resulted in share price Dividend and dividend policy blishment of the new exchange-listed growth for the parent company Aker The Board of Directors of Aker ASA companies Aker Seafoods, Aker Ame- ASA. The value of Aker’s listed assets will propose to the company’s annual rican Shipping, and Aker Drilling are rose, from NOK 8.2 billion at year-end shareholders’ meeting that a per-share examples of this value creation. 2004 to NOK 19.0 billion as of 31 dividend of NOK 6.50 be paid for the Operations in all Aker Group core December 2005. The equity ratio of 2005 accounting year. In December companies developed well in 2005. Aker ASA and other wholly owned 2005, the company paid an extraordi- Revenues and profits of Aker Kværner, companies that are part of the holding nary dividend of NOK 14 per share. Aker Yards, Aker American Shipping, company structure was 73 percent Aker ASA and the holding compa- Aker Seafoods, and Aker Material after dividend allocations, as of year- nies that are part of the parent com- Handling rose in 2005. end 2005; net interest-bearing recei- pany structure are to maintain a solid The Group’s 2005 order intake vables amounted to NOK 1.1 billion. balance sheet and liquidity reserves amounted to NOK 91.2 billion, up adequate to handle future obligations. more than 50 percent compared with Markets and outlook The purpose is to secure a robust 2004. The order backlog at year-end A significant part of the Group’s activi- financial status that is suitably buffe- 2005 corresponds to 1.6 times annual ties are directly or indirectly depen- red against the effects of short-term revenues. The corresponding multiple dent on developments in the world’s earnings fluctuations at Group compa- at year-end 2004 was 1.2. Greater energy markets, global commerce, nies and a foundation for a predictable order intake is attributable to Group and the travel industry. The underlying dividend policy. Aker’s objective is to companies’ strengthened competiti- trends in these segments are positive. pay dividends annually that amount, veness, as well as stronger markets. Aker Kværner, Aker Drilling, and on average and over time, to 2-4 per- Contract margins were generally hig- some Aker Yards activities, make sub- cent of the company’s value-adjusted her in 2005 than in prior periods. stantial deliveries to the oil and gas equity. The Group’s consolidated balance industry. Anticipated demand growth The determination of value-adju- sheet grew, from NOK 39.4 billion at as well as diminishing production from sted equity is based on the share year-end 2004 to NOK 57.3 billion as existing oil and gas fields are funda- price of Aker’s listed investments. For of 31 December 2005. One significant mental driving forces affecting these the 2005 and 2006 accounting years, ANNUAL REPORT 2005 31

dividend payments will most likely be in Aker Kværner is an important supplier Pennsylvania and the product tanker the lower end of the stipulated interval. to the international oil and gas indus- shipowning company American Ship- try, constructing diverse facilities and ping Corporation. The latter has ten Presentation of the Group installations, and providing associated product tankers on order with Aker Aker ASA is the parent company of services. These include design, engin- Philadelphia Shipyard. Long-term the Aker industrial group. The Group eering, purchasing, product deliveries, agreements covering marketing and encompasses several dozen operating construction, assembly, completion, chartering of the vessels have been companies, and a number of industrial operation, and maintenance of facili- entered into with US shipowner Over- and financial holdings. The most ties for oil and gas exploration and seas Shipholding Group. important Aker Group companies are production, largely for offshore field Aker American Shipping has ente- Aker Kværner, Aker Yards, Aker Ameri- exploration and development. red into a management agreement can Shipping, Aker Seafoods, Aker For land-based facilities, the Eng- with Aker Yards on operational follow- Material Handling, and Aker Capital, ineering & Construction business area up of the Aker Philadelphia Shipyard. which includes Aker Drilling. of Aker Kværner offers a comparably Aker Seafoods is a leading sea- Aker’s ownership interests provide broad range of products and services food company and the largest white significant industrial influence over for industrial niches, such as refining, fish harvesting company in Europe. Group companies. As a proactive petrochemicals, chemicals, pharma- Aker Seafoods ASA was listed on the owner and the Group’s parent com- ceuticals, power generation, wood Oslo Stock Exchange in May 2005 fol- pany, Aker ASA contributes to further pulping products, metals, and mining. lowing the merger of Norway Seafo- developing the various Group compa- Aker Yards is a international ship- ods AS, West Fish-Aarsæther AS, and nies, in accord with good corporate building group, focused on building a Nordic Sea Holding AS. Aker owns governance. Aker is closely involved in range of technologically advanced 66.7 percent of Aker Seafoods shares. the strategic and operational develop- ships. The Aker Yards Group is Euro- Aker Seafoods has an integrated ment, organizational structure, and pe’s largest and one of the world’s value chain, featuring strong ties bet- financing of the Group’s businesses. five largest shipbuilders, with a total of ween harvesting and processing acti- Technology, know-how, and experi- 13 shipyards and 13 442 employees in vities. This integration enables the ence are key pillars of Aker’s industrial Norway, Finland, Germany, Romania, company to deliver fresh seafood pro- activities. The development and appli- and Brazil. Aker Yards also has a ducts to the market year round. The cation of new technologies and wor- management agreement covering the company’s main markets are located king methods provide the Group with Aker Philadelphia Shipyard in the Uni- in northern Europe. Aker Seafoods’ an important competitive edge. A sig- ted States. At the close of 2005, Aker harvesting division comprises 14 ves- nificant proportion of the Group’s owned 55.6 percent of Aker Yards sels in active service. Together, these research, development, and innovation ASA shares, which are listed on the vessels fish for cod, saithe, and had- takes place as part of the execution of Oslo Stock Exchange. dock in Norwegian waters north of contracted projects, in close coopera- Aker Yards enjoys a strong market 620 north latitude. Aker Seafoods’ pro- tion with customers, such as shipow- position. The Aker Yards Group is cessing division comprises eleven ners and oil companies. Technology widely recognized for its innovative wholly-owned processing facilities, of development to advance Group ope- approach, product portfolio, technolo- which six are located in Norway and rations is also common. New methods gies, flexible capacity, and experience. five in Denmark, in addition to several of harvesting and processing fish and The shipyards that comprise the Aker reception facilities. krill are such examples. Yards Group build cruise ships and Aker Material Handling is a lea- Aker Kværner — with more than ferries, merchant marine vessels, offs- ding supplier of storage and archiving 20,00 employees in subsidiaries in hore service vessels, and other highly systems used in industrial and office more than 30 countries — specializes specialized vessels. environments. Aker owns 100 percent in technology, engineering, construc- Aker American Shipping builds, of Aker Material Handling, which is tion, and service deliveries to oil, owns, and charters vessels for use in among the largest participants in its energy, and process industries. Aker the US domestic market for seaborne industry in Europe. Its products are holds 50.01 percent of Aker Kværner transportation of petroleum products. sold under well recognized brand ASA shares, which are listed on the Through US subsidiaries, the company names such as Constructor, Bruyn- Oslo Stock Exchange. owns Aker Philadelphia Shipyard in zeel, Compactus, and Dexion. 32 ANNUAL REPORT 2005

BOARD OF DIRECTORS REPORT

The Aker Material Handling Group has Risk Aker Seafoods’ activities in Norway four factories located in Germany, the Aker ASA and individual Group subsi- and Denmark expanded sharply in the Netherlands, and Norway, and it has diaries are exposed to various forms first quarter of 2005 with the acquisi- an extensive network of sales offices of risk and uncertainty, such as market tion of the companies West Fish-Aar- and distributors in Europe. The most risk, risk relating to operations, coun- sæther and Nordic Sea Holding. The important products for the industrial- terparty risk, and other financial-mar- former owners of West Fish-Aarsæther market segment are pallet shelving, ket risks. and Nordic Sea Holding received sett- storage shelving, space-saving and Good risk management is a core lement in the form of 11.5 percent of productivity-enhancing systems for competence of Aker Group compa- the shares of the newly established inventory storage and retrieval, and nies. They make systematic efforts to company Aker Seafoods ASA. In May material handling systems. The com- manage risk in order to protect their 2005, Aker Seafoods ASA was listed pany’s office, commercial, and archi- operations and ensure that projects on the Oslo Stock Exchange. ving product lines include stationary, are delivered in accord with contract Prior to listing, the company car- mobile, and tiered systems. specifications and frameworks. In ried out a NOK 100 million share Aker Capital was established in addition to implementing sound sys- issue, and Aker and the other share- 2005 as a wholly owned Aker Group tems and procedures, a corporate cul- holders reduced their ownership in the company. Aker Capital owns the capi- ture that fosters openness and good company through a disbursement tal management company Aker Asset communications is stressed by Group sale. In these transactions, the market Management and Aker Insurance Ser- companies. It is important that any priced the new company at NOK 1.4 vices, a company that provides insu- deviations from plans, specifications, billion, or NOK 29 per share. Aker sold rance advisory services to other or expected performance are identi- Aker Seafoods shares for a total of Group companies. Aker Capital also fied quickly, so that corrective measu- NOK 243 million, and now owns 66.7 owns 60 percent of Aker Invest, 39.9 res can be taken at an early stage, percent of the company. percent of the listed oil services com- thus limiting the consequences of Aker American Shipping was pany Bjørge ASA, and 30.8 percent of such deviations. established by Kværner in the second the rig company Aker Drilling. (Aker Group companies adhere to rigid quarter of 2005. In June, Aker Ameri- Drilling is discussed under Strategic risk guidelines and frameworks to can Shipping carried out a private pla- milestones, below.) minimize exposure to financial-market cement of shares to select investors Aker Invest assets include 33.5 risk, such as foreign exchange, inte- that priced the company at approxi- percent of the company Norsea rest, and counterparty risk. A further mately NOK 1.8 billion or NOK 65 per Group, the leading supplier of base discussion of risk is presented in Note share. Following the share issue, Aker and supply services, logistics, and 36 to the consolidated accounts and acquired all Aker American Shipping services to Norwegian land-based in Note 14 of the parent company shares held by Kværner at the same activities and the offshore industry, accounts. price paid by other investors in the pri- and 18.9 percent of the listed offshore vate placement of shares; the total technology company Odim. At year- Strategic milestones share purchase price amounted to end 2005, Aker Invest owned 100 per- In 2005, the Aker Group completed a NOK 982 million. Following the share cent of Midsund Bruk business and number of financial and industrial acquisition, Aker owned 54.7 percent industrial park, and the industrial transactions that contributed to actua- of Aker American Shipping stock. equipment manufacturer Atlas-Stord. lizing significant shareholder values. In July 2005, Aker carried out a The latter company was sold in Janu- The most important transactions are smaller-sized secondary offering in ary 2006. Aker Yards is Aker Invest’s presented in greater detail below. which existing Aker and Kværner sha- minority shareholder, holding 40 per- In January 2005, Aker sold Aker reholders and leading Group com- cent of Aker Invest shares. Kværner and Aker Yards shares for a pany personnel were given prefe- Aker Capital does not constitute an total of NOK 1.5 billion. The sale rence. A total of 424 050 shares were independently reported business seg- strengthened the parent company’s sold at a per-share price of NOK 65. ment of the Aker Group. Aker Capital’s balance sheet, without relinquishing Following the share sale, Aker owns profit and loss account and balance influence over the underlying compa- 53.2 percent of Aker American Ship- sheet are reported under Other Activi- nies. The parent company accounting ping stock. Aker American Shipping ties. gain on the sales is not recognized in was listed on the Oslo Stock Other Activities primarily include the consolidated accounts. Exchange on 11 July 2005. Aker Seafoods Corp and Molde Fot- The freed-up assets were used to Aker Drilling was established in ballklubb. Aker Seafoods Corp har- pay off all external bank debt, a total the fall of 2005, initially as a wholly vests and processes fish and other of NOK 1.44 billion. At the same time, owned subsidiary of Aker Capital. Fol- seafood in Argentina, the Faeroe Aker decided to take out two new lowing a successful capitalization of Islands, and Antarctic waters. Its fleet, NOK 500 million bond loans, with the company, which included a NOK which comprises five advanced fac- maturity in five and seven years. With 2.5 billion private placement of sha- tory trawlers and three long-line ves- these transactions, Aker established a res, Aker reduced its ownership of sels, are recognized as one of the long-term financial structure that gives Aker Drilling to 30.8 percent. Based world’s most advanced fleets. the Group a great deal of flexibility. on the NOK 36.85 per-share issue ANNUAL REPORT 2005 33

price, the value of Aker’s investment in In January 2006, Aker Yards entered accounts have been prepared based Aker Drilling was approximately NOK into an acquisition agreement with the on the assumption of a going concern. 926 million. Aker Drilling was listed on Marine division of the French com- the Oslo Stock Exchange in December pany, Alstom, which includes the large Main Group companies 2005. shipyard Chantiers de l’Atlantique, Aker Kværner’s operating revenues Aker Drilling has two advanced located on France’s Atlantic coast. rose by 17 percent to NOK 41 463 mil- drilling platforms under construction, Alstom Marine’s shipbuilding activities lion in 2005. The Group’s operations for delivery in February and October have annual revenues in excess of developed favorably, and EBITDA for 2008, and the company holds an NOK 4 billion and 3 200 employees. 2005 was NOK 2 145 million, up 57 option for an additional two such plat- The acquisition was motivated by the percent compared with 2004. The forms, for delivery in 2009 and early expected growth in demand for large improvement from 2004 to 2005 also 2010. The rigs are to be built by Aker cruise ships. It is expected that the let- manifested itself in the form of an Kværner. ter of intent between Aker Yards and increase in the EBITDA margin, from Aker House (Aker Hus) is the Alstom will be finalized in the first 3.8 percent in 2004 to 5.2 percent in name of the new Oslo-region head- quarter of 2006. 2005. quarters of the Aker Group, now Aker Kværner’s letter of intent with Demand for products and services under construction. Aker bought the the Finnish company Metso for the delivered by Aker Kværner has risen, real estate parcel, including approved sale of Aker Kværner’s Pulp & Power and key contracts were signed in architectural drawings for the office activities was announced in February 2005. The company had a 2005 order building, in the summer of 2005. 2006. These activities have developed intake of NOK 57 748 million; the In the fourth quarter of 2005, Aker positively in recent years, although order backlog as of 31 December sold the real estate company that customers are increasingly deman- 2005 was a solid NOK 53 341 million. owns the land and the construction ding more integrated solutions. Thus, it Aker Kværner’s board of directors project to the listed investment com- made sense, industrially, to seek to will propose that a per-share dividend pany Acta ASA for NOK 1.4 billion. integrate the activities with those of of NOK 5 be paid for 2005. Aker’s The real estate transaction generated another industry participant. A final share of this dividend disbursement a gain for Aker ASA of approximately sales agreement is expected to be would amount to NOK 138 million. NOK 400 million. Additionally, Aker concluded in the first half of 2006. Aker Yards’ operating revenues estimates that the Group’s Oslo-area The Pulp & Power companies to be increased by 33 percent and EBITDA office rental expenses will be cut by divested had 2005 revenues of NOK increased by 38 percent in 2005, about 15 percent from the current 4.5 billion and 2 200 employees. compared with 2004’s figures. Opera- level. ting revenues amounted to NOK 16 The merger between Aker Mari- Consolidated profit and loss 607 million in 2005; EBITDA amounted time Finance and Kværner was account and balance sheet to NOK 1 029 million. agreed to between the boards of The 2005 consolidated accounts of In 2005, Aker Yards reinforced its directors of Aker and Kværner in the Aker Group show operating reve- position as a leading international August 2005. At subsequent extraordi- nues of NOK 62 450 million. The shipbuilding group. During the year, nary shareholders’ meetings of the Group’s operating profit before depre- the order backlog grew to NOK 38 two companies held in late September, ciation and amortization (EBITDA) 897 million; up 66.4 percent compa- the merger was approved and the amounted to NOK 3 322 million in red with 2004. The order backlog at transaction was completed in late 2005. Operating profit after deprecia- year-end 2005 comprised 112 vessels; November/early December. Through tion and amortization (EBIT) amounted their contract value represents more the merger, Aker achieved a significant to NOK 2 404 million. than 2.3 times Aker Yards’ 2005 ope- simplification of its shareholder and Pre-tax profit for 2005 amounted to rating revenues. corporate structures, and eliminated NOK 2 611 million, after net financial Aker Yards’ board of directors has the company’s debt to Kværner follo- items and share of profit from associa- proposed payment of a NOK 15.50 wing the acquisition of Aker American ted companies of NOK -834 million per-share dividend for 2005. Aker’s Shipping shares. and NOK 1 041 million in other income income from the dividend would As part of the merger, Aker share- (NOK 400 million gain on the sale of amount to NOK 178 million. holders decided to pay an extraordi- the Aker House project plus NOK 641 Aker American Shipping had nary dividend totaling NOK 14 per million related to the establishment of 2005 revenues of NOK 1 638 million share. The dividend was paid following Aker Drilling). and an EBITDA of NOK 131 million. the merger, just before Christmas 2005. Tax expenses amounted to NOK 21 Productivity at the company’s shipyard After year-end 2005, Aker Yards million. After-tax profit for 2005 was in Philadelphia is largely developing and Aker Kværner announced signifi- NOK 2 590 million, of which the according to expectations. Demand cant transactions that, if completed, minority’s share was NOK 976 mil- for the company’s product tankers is will result in the Aker Group increasing lion. good; four of the ten contracted ships its shipbuilding activities and reducing Pursuant to section 3-3a of the have already been chartered to end deliveries to land-based processing Norwegian accounting act, the Board users. industries. confirms that the 2005 annual 34 ANNUAL REPORT 2005

BOARD OF DIRECTORS REPORT

Aker Philadelphia Shipyard, a subsidi- parent company amounted to NOK Health, safety, the environment, and ary of Aker American Shipping, is cur- 104 million. community relations rently building a containership for an Aker’s goal is to be recognized as the external customer, and the first in a Parent company and holding preferred partner for its employees series of ten product tankers contrac- companies balance sheet and business associates, and a ted by American Shipping Corpora- The balance sheet for the parent com- respected corporate citizen. Over tion, a part of Aker American Ship- pany Aker ASA and holding compa- time, profitability is vital to achieving ping. Revenues associated with the nies that are part of the parent com- this goal. product tankers are eliminated in Aker pany structure (parent and holding Aker will be recognized for what American Shipping’s accounts, the companies) expresses the parent Group companies and their employ- accounts will thus approach zero company structure’s total liquidity, ees deliver in terms of services, pro- when the containership is delivered in receivables, and liabilities against the ducts, and profits. However, the man- mid-2006. listed companies and other operatio- ner in which our companies deliver No dividend payment from Aker nal companies of the Group. what is asked of them is equally American Shipping has been propo- Parent and holding companies’ important. Long-term and mutually sed for 2005. cash and short-term interest-bearing beneficial relationships with society at Aker Seafoods had revenues of receivables amounted to NOK 1 331 large generate lasting value. NOK 2 340 million in 2005, somewhat million at year-end 2005, compared The companies that comprise the below the 2004 figure. The decline is with NOK 474 million a year earlier. Aker Group had a total of 37 000 attributable to the decisions taken in Gross debt decreased from NOK 2 employees at year-end 2005, of whom 2005 to discontinue marginal activities 790 million to NOK 2 173 million approximately 20 400 worked in Nor- at the company’s Norwegian proces- during the year, of which intra-group way, 16 300 in other European coun- sing facilities. EBITDA before non- debt to subsidiaries amounted to NOK tries, and 5 500 in North America, pri- recurring items rose by 19 percent to 254 million at the close of 2005. marily in the United States. In addition, NOK 187 million in 2005. The net interest-bearing receivables are nearly 9 000 employees of associ- The main markets for Aker Seafo- as of 31 December 2005 amounted to ated companies and contract employ- ods’ products are Scandinavia and the NOK 1 092 million, a reversal of the ees working on projects. rest of Europe. Market demand for net-debtor position at year-end 2004, A common feature of most Group fresh seafood has risen sharply in when the company’s net interest-bea- activities in recent years is that delive- recent years, and Aker Seafoods is ring debt was NOK 1 080 million. The ries demand significantly higher levels adapting its production and product equity ratio rose from 68 percent at of expertise. Also, the participation of mix accordingly. Fresh seafood pro- year-end 2004 to 73 percent as of 31 partners and subcontractors is increa- ducts fetch higher prices and yield December 2005. singly important to project execution, higher margins than frozen goods. The most important changes in the which often takes place at facilities Aker Seafoods’ board of directors parent and holding companies’ that are geographically distant from has proposed that a per-share divi- balance sheet are presented under the Group’s own production sites. dend of NOK 0.75 be paid for 2005. the heading Strategic milestones, Consequently, it is important that Aker’s share of the dividend disburse- above. Aker Group companies attract and ment would amount to NOK 24 million. retain employees with sound attitudes, Aker Material Handling continued Allocation of profit for the year and enrich their know-how via chal- its positive development throughout The 2005 profit and loss account of lenging work assignments and syste- 2005. EBITDA for the year was NOK the parent company Aker ASA shows matic development. In 2005, Aker 35 million, up from NOK 11 million in an ordinary net profit of NOK 2 027 gave priority to establishing systems to 2004. Revenues rose 9 percent from million. The company’s unrestricted develop and follow up on leaders 2004 to NOK 1 347 million in 2005. equity that may be applied to dividend across the Group, and corporate pro- No dividend payment from Aker payments amounted to NOK 7 802 file measures were implemented to Material Handling has been proposed million as of 31 December 2005. strengthen Aker companies’ perceived in 2005. The Board will propose to the com- potential as employers. The Group is Aker ASA and other activities pany’s 30 March 2006 shareholders’ also implementing a global trainee include the parent company and some meeting that an ordinary dividend dis- program. 20 wholly owned holding companies bursement of NOK 746 million for the Further, Group companies are that are part of the parent company 2005 accounting year be paid. The implementing competence building structure, as well as the operational, figure corresponds to a per-share divi- measures and more general employee wholly owned companies Aker Capital, dend of NOK 6.50. Of the total divi- development initiatives. Aker Kværner, Aker Seafoods Corp, Molde Fotball- dend disbursement, Aker Maritime the Group company with the greatest klubb, and Group eliminations. Opera- Finance would receive NOK 276 mil- number of employees, conducted its ting revenues in 2005 amounted to lion. Aker Maritime Finance is a wholly employee satisfaction survey among NOK 349 million, due to Group elimi- owned Aker Group subsidiary, which all employees in 2005 as it has in pre- nations; 2005 EBITDA was NOK -103 owns all Aker Class B shares. vious years; the survey’s findings were million. Operating expenses of the favorable. ANNUAL REPORT 2005 35

Aker considers diversity a positive lion working hours) was 6.5 in 2005, to such proactive ownership is contribution to any organization. compared with 5.1 in 2004. There deemed important to value creation by Accordingly, the Group wishes to be were 6 work-related accidents with the Aker Group and fully accords with an attractive workplace for both fatalities in 2005. good corporate governance. women and men, regardless of ethnic The parent company’s activities do not The company’s nomination com- origin, cultural background, religion, have any detrimental environmental mittee, board chairman, and sharehol- political persuasion, or age. effects. Regular operations of indivi- der-elected directors are elected by In Norway, gender equality is a key dual Aker Group companies do not the company’s annual shareholders’ issue. As the majority shareholder in emit significant harmful substances meeting. Members of the Board of its listed Group companies, Aker has into the environment. No accidental Directors and Group management are communicated to those companies’ emissions to the environment were presented on the company’s webpa- nomination committees that considera- reported in 2005. ges and on page 28-29 of this annual tion should be given to meeting public report. authorities’ goals for female represen- Corporate governance At the company’s annual sharehol- tation in stock-exchange listed compa- Good corporate governance, that is, ders’ meeting in March 2005, Jon Fre- nies. proper board conduct and company drik Baksaas was elected new board One of seven shareholder-elected management, are key to Aker’s efforts member. Mr. Baksaas replaced Eva Aker board members is female. Under to build and sustain trust. The Aker von Hirsch. At a September 2005 Norwegian law, the number of female Group is committed to maintaining an extraordinary shareholders’ meeting, board members must be increased to appropriate division of responsibilities President and CEO Leif-Arne Langøy no fewer than three within two years, between the company’s governing was elected new shareholder-elected provided the total number of board bodies, its Board of Directors, and board member. Beyond the changes members remains unchanged. The management. described above, there were no four board members elected by and Aker has compared the new Nor- changes in the composition of the among employees are men. There are wegian recommendations on corpo- Board in 2005. no women in Aker’s Group manage- rate governance for listed companies In elections, Aker employees ment. with the Group’s own corporate gover- appoint four representatives to Aker Employee health and the working nance procedures and practice. The ASA’s Board of Directors. Three of environment are major areas of con- findings show that, by and large, the these representatives have their day- cern and the object of significant two sets of guidelines are in agree- to-day work at Aker Kværner and one attention throughout the Group. In ment. There are some differences, works for Aker Seafoods. some industries excellent health, which are presented on page 13 of Internal control at Aker ASA takes safety, and environmental performance this report. The Board regards these place via detailed budget follow-up; constitutes a key competitive advan- differences as minor. regular, thorough cost control; and tage. The sick leave rate among Aker Through his companies, Kjell Inge procedures for certifying payments. Group employees in 2005 was 3.8 Røkke owns 67.8 percent of Aker KPMG is the company’s indepen- percent, an increase from 3.5 percent Class A voting-rights shares. Mr. dent auditor. Fees for regular audit ser- in 2004. The frequency of lost-time Røkke is Board Chairman of Aker vices and other audit services are injuries (the number of injuries that ASA. He contributes actively to the detailed in the notes to the parent resulted in lost working time per mil- development of the Group. Proximity company accounts.

Oslo, 15 February 2006 Board of Directors Aker ASA

Kjell Inge Røkke (Sign) Lone Fønss Schrøder (Sign) Bjørn Flatgård (Sign) Jon Fredrik Baksaas (Sign) (Board Chairman) (Deputy Chairman) (Director) (Director)

Kjeld Rimberg (Sign) Kjell A. Storeide (Sign) Atle Tranøy (Sign) Harald Magne Bjørnsen (Sign) (Director) (Director) (Director) (Director)

Bjarne Kristiansen (Sign) Stein Aamdal (Sign) Leif-Arne Langøy (Sign) (Director) (Director) (President, CEO and Director) 36 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Aker ASA Group, Profit and Loss Account

Accounts Accounts Proforma 1) 2004 Amounts in NOK million Note 2005 2004 42 965 Operating revenues 4 62 110 51 353 288 Other income 340 288 -25 293 Cost of goods and changes in inventory -37 591 -29 648 -11 076 Wages and other personnel expenses 5 -14 790 -13 911 -4 989 Other operating expenses 6 -6 747 -5 853 1 895 Operating profit before depreciation and amortization 3 322 2 229 -700 Depreciation and amortization 11,12 -848 -815 680 Impairment changes and non recurring items 7,11,12 -70 -160 1 875 Operating profit 4 2 404 1 254 -836 Net financial items 8 -862 -777 -88 Share of profit of associated companies 13 28 -80 - Other items 9 1 041 - 951 Profit before tax 4 2 611 397

-403 Income tax expense 10 -21 -466 548 Profit for the year 2 590 -69

Attributable to: 380 Equity holders of the parent 1 614 -304 168 Minority interest 25 976 235

76 971 875 Average number of shares 2) 23 76 588 167 76 971 875

4.94 Earnings per share 3) 23 21.07 -3.95 4.94 Diluted earnings per share 4) 23 21.07 -3.95

1) 2004 are pro forma, as the Aker ASA group was formed 1 April 2004.

2) For comparison purposes the earnings per share for the proforma period is calculated by using average number of sha- res for the period April to December 2004.

3) Profit attributable to the equity holders of the parent / average number of shares

4) There was no potentially dilutive securities outstanding as of 31 December 2004 and 31 December 2005 ANNUAL REPORT 2005 37

Aker ASA Group, Balance Sheet of 31 December

Amounts in NOK million Note 2005 2004 ASSETS Property, plant and equipment 11 6 523 5 615 Intangible assets 12 8 798 7 668 Deferred tax assets 10 2 221 1 688 Investments in associated companies 13 1 191 631 Other shares 15 235 81 Interest-bearing long-term receivables 16 1 020 774 Pension assets 30 17 130 Other non-current assets 17 314 63 Total non-current assets 20 319 16 650

Inventories 18 2 256 1 237 Projects under construction 19 11 191 5 120 Other trade and other interest-free receivables 20 10 302 8 171 Interest-bearing short-term receivables 21 832 153 Cash and cash equivalents 22 12 379 8 086 Total current assets 36 960 22 767 Total assets 57 279 39 417 EQUITY AND LIABILITIES Paid in capital 24 8 521 7 807 Translation and other reserve -551 -505 Retained earnings 135 -1 182 Total equity attributable to equity holders of the parent 8 105 6 120 Minority interest 25 6 841 3 123 Total equity 14 946 9 243 Interest-bearing loans 27,36 8 186 7 117 Subordinated debt 29 3 167 2 726 Deferred tax liabilites 10 643 515 Pension liability 30 1 360 1 377 Other interest-free long-term liabilities 31 457 393 Non-current provisions 33 305 348 Total non-current liabilities 14 118 12 476 Interest-bearing short-term debt 27,36 4 473 1 446 Trade and other payables 35 22 000 15 699 Income tax payable 10 662 139 Current provisions 32,33 1 080 414 Total current liabilities 28 215 17 698 Total liabilites 42 333 30 174 Total equity and liabilities 57 279 39 417

Oslo, 15 February 2006 Board of Directors Aker ASA

Kjell Inge Røkke (Sign) Lone Fønss Schrøder (Sign) Bjørn Flatgård (Sign) Jon Fredrik Baksaas (Sign) (Board Chairman) (Deputy Chairman) (Director) (Director)

Kjeld Rimberg (Sign) Kjell A. Storeide (Sign) Atle Tranøy (Sign) Stein Aamdal (Sign) (Director) (Director) ( Director) (Director)

Bjarne Kristiansen (Sign) Harald Magne Bjørnsen (Sign) Leif-Arne Langøy (Sign) (Director) (Director) (Director/ President and CEO) 38 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Aker ASA Group, Consolidated statement of changes in equity

Total paid Translation Fair value Retained Minority Total Amounts in NOK million Note in capital reserve reserve earnings Total interest equity Balance at 1 January 2004 NGAAP 2 205 - - 3 823 6 028 256 6 284 Transition to IFRS 25 25 - 25 Balance at 1 January 2004 IFRS 2 205 - - 3 848 6 053 256 6 309 Capital increases, merger and dividend to shareholders 5 602 -5 410 192 2 794 2 986 Currency translation differences - -505 - - -505 -95 -600 Net income recognised directly in equity 5 602 -505 - -5 410 -313 2 699 2 386 Profit for the year 380 380 168 548 Total recognised income and expense 5 602 -505 - -5 030 67 2 867 2 934

Balance at 31 December 2004 7 807 -505 - -1 182 6 120 3 123 9 243

Implementing of IAS 39 - 100 100 77 177 Balance at 1 January 2005 24,25 7 807 -505 - -1 082 6 220 3 200 9 420 Change in fair value of available-for-sale financial assets 23 - 23 2 25 Dividend to shareholders - - - -1 013 -1 013 -53 -1 066 New minority - - - - - 2 674 2 674 Business combination 2 714 616 1 330 1 330 Currency translation differences - -69 - - -69 42 -27 Net income recognised directly in equity 714 -69 23 -397 271 2 665 2 936 Profit for the year 1 614 1 614 976 2 590 Total recognised income and expense 714 -69 23 1 217 1 885 3 641 5 526

Balance at 31 December 2005 24,25 8 521 -574 23 135 8 105 6 841 14 946

PROFORMA Total paid Translation Other Retained Minority Total Amounts in NOK million Note in capital reserve reserve earnings Total interest equity Balance at 1 January 2004 7 807 - - -1 075 6 732 2 515 9 247 Transition to IFRS 213 213 476 689 Balance at 1 January 2004 IFRS 7 807 - - -862 6 945 2 991 9 936 Currency translation differences - -521 - - -521 -103 -624 Net income recognised directly in equity - -521 - - -521 -103 -624 Profit for the year -304 -304 235 -69 Total recognised income and expense - -521 - -304 -825 132 -693

Balance at 31 December 2004 24,25 7 807 -521 - -1 166 6 120 3 123 9 243

Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations as well as from translation of liabilities that hedge the Company's net investment in a foreign subsidiary.

Fair value reserve The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments until the investment is derecognised. ANNUAL REPORT 2005 39

Aker ASA Group, Cash Flow Statement

Accounts Accounts Proforma 2004 Amounts in NOK million Note 2005 2004 951 Profit before tax 2 611 397 709 Net interest expenses (+) 626 649 -615 Interest paid -506 -677 64 Interest received 107 67 -749 Sales losses/gains (-) and write-downs -1 255 259 -503 Unrealized foreign exchange gain/loss and other non-cash items -17 -658 700 Depreciation and amortization 11,12 848 815 88 Share of earnings in associated companies 13 -28 80 - Dividend received from associated companies 13 67 - -169 Taxes paid 10 -335 -222 4 099 Changes in other net operating assets and liabilites 1 514 4 211 4 575 Net cash flow from operating activities 3 632 4 921

277 Proceeds from sales of property, plant and equipment 11 541 319 177 Proceeds from sale of shares and other equity investments 13 129 177 - Disposals of subsidiary, net of cash disposed 2 337 - - Acquisition of subsidiary, net of cash acquired -1 594 -424 -670 Acquisition of property, plant and equipment 11 -1 594 -777 -378 Acquisition of shares and equity investments in other companies 13 -474 - 7 142 Effect of combining of businesses/merger 1 245 -145 Net cash flow from other investments 621 -287 6 403 Net cash flow from investing activities 1 211 -992

3 467 Proceeds from issuance of long-term interest-bearing debt 3 786 3 572 - Proceeds from issuance of short-term interest-bearing debt 205 -2 780 Repayment of long-term interest-bearing debt -4 122 -3 565 -4 161 Repayment of short-term interest-bearing debt -238 -3 589 - New equity 853 -30 Dividends paid -1 142 -343 Changes in other financial liabilities 64 -3 504 Net cash flow from financing activities -594 -3 925

7 474 Net change in cash and cash equivalents 4 249 4 -359 Effects of changes in exchange rates on cash 44 -302 971 Cash and cash equivalents as of 1 January 8 086 8 384 8 086 Cash and cash equivalents as of 31 December 22 12 379 8 086 40 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

issued or liabilities undertaken, plus costs directly attribu- Statement of compliance and basis table to the acquisition. The excess of the cost of acquisition of preparation over the fair value of the net assets of the subsidiary acqui- Aker is a Norwegian company and presents its group red, measured at the date of change of control, is recorded accounts in accordance with International Financial Repor- as goodwill. (See “Intangible Assets” for the accounting ting Standards (IFRS). This is the group’s first IFRS consoli- policy on goodwill.) dated financial statements, and IFRS 1 has been applied. Subsidiaries acquired during the year are included in the The principles and policies shown below have been con- consolidated financial statements from the date on which sistently applied for all periods presented in the group control is transferred to the Group, and subsidiaries sold are accounts and they are also used to prepare the IFRS ope- included up to the date that control is relinquished. ning balance per 1 January 2004. The accounting principles Where necessary, the accounting policies of subsidiaries have been consistently used by all companies in the group. have been adjusted to ensure consistency with the policies An explanation of how the transition to IFRS has affected adopted by the Group. the reported financial position, financial performance, and cash flows of the Group, is provided in Note 44. Investments in associates Consolidated financial statements are presented in NOK The Group’s investment in an associate (associated com- million. Norwegian kroner (NOK) is the functional currency of pany) is accounted for under the equity method of accoun- the parent company. Preparation is based on historical cost, ting. An associate is an entity in which the Group generally except that the following assets and liabilities are stated at holds between 20% and 50% of the voting rights and over their fair value: derivative financial instruments, financial which the Group has significant influence but not overall instruments held for trading, financial instruments classified control. Share options, convertibles, and other equity instru- as available for sale, and investment property. ments are considered when assessing whether an entity is Non-current assets and disposal groups classified as under significant influence. held for sale are stated at the lower of fair value minus sel- Investments in associates are carried in the balance ling costs, or carrying amount. sheet at cost plus post-acquisition changes in the Group’s Preparation of financial statements in conformity with share of net assets of the associate, less any impairment in IFRS requires management to make judgments, estimates, value. As a general rule, the profit and loss account reflects and assumptions that affect the application of principles, as the share of the results of operations of the associate as well as the reported amounts of assets and liabilities, financial income/expense. Where there has been a directly income and expenses. The estimates and associated recognized change in the associate’s equity, the Group assumptions are based on historical experience and various recognizes its share of any changes and discloses this, other factors considered to be reasonable under the circum- when applicable, in the statement of changes in equity. stances. Actual results may differ from these assumptions. Equity accounting is discontinued when the carrying amount Estimates and underlying assumptions are reviewed on of the investment in an associated company reaches zero, an ongoing basis. Revisions to accounting estimates are unless the Group has incurred or guaranteed obligations in recognized in the period in which the estimates are revised if respect of the associated company. the revision affects that period, or in the period of revision and future periods if the revision affects both current and Minority interests future periods. Minority interests have been disclosed separately from the The principal accounting principles applied in the prepa- consolidated shareholders’ equity and liabilities, and are ration of the financial statements are set out below. recorded as a separate item in the consolidated profit and These consolidated financial statements for the 2005 loss account. accounting year were approved for release by the Board of Directors on 15 February 2006. Foreign currency translation and transactions Functional currency Group accounting and consolidation principles Items included in the financial statements of each subsidiary Subsidiaries in the Group are initially recorded in functional currency, i.e., The consolidated financial statements of Aker include the the currency that best reflects the economic substance of financial statements of the parent company, Aker ASA, and the underlying events and circumstances relevant to that its subsidiaries. Subsidiaries are entities of which Aker owns, subsidiary. either directly or indirectly, over fifty percent of the voting The consolidated financial statements are presented in rights, or as to which Aker has the power, in some other way, Norwegian kroner (NOK), which is the functional currency of to control the entity’s operating and financial policies. Share the parent company. options, convertibles, and other equity instruments are consi- dered when assessing whether an entity is controlled. Transactions and balances Acquisitions of subsidiaries are accounted for using the pur- Foreign currency transactions are translated into NOK using chase method of accounting. The cost of an acquisition is the exchange rates prevailing at the date of each transac- the acquisition-date fair value of the assets acquired, shares tion. Receivables and liabilities in foreign currencies are ANNUAL REPORT 2005 41

translated into NOK at the exchange rates on the balance paring the disposal proceeds with the carrying amount; sheet date. Foreign currency exchange gains and losses such gains and losses are included in operating profit. resulting from the settlement of such transactions and from Assets to be disposed of are reported at the lower of the the translation of monetary assets and liabilities denomina- carrying amount or the fair value less selling costs. ted in foreign currencies are recognized in the income state- ment. Foreign currency exchange differences arising with respect to operating business items are included in opera- Component cost accounting ting profit in the appropriate profit and loss account, and In component cost accounting, allocation is made of the those arising with respect to financial assets and liabilities amount initially recognized in respect of an item of property, are recorded net as a financial item. plant or equipment to its significant parts, and each such part is depreciated separately over its respective useful life. Group companies Profit and loss accounts and cash flow statements of subsi- diaries whose functional currency is not NOK are translated Intangible assets into NOK at weighted average exchange rates for the period. Goodwill Their balance sheets are translated at the mid-exchange All business combinations are accounted for by applying the rates on the balance sheet date. Exchange differences ari- purchase method. Goodwill represents amounts arising on sing from the translation of the net investment in foreign ope- acquisitions of subsidiaries, associates and joint ventures. In rations, and of related hedges are taken to translation respect of business acquisitions that have occurred since 1 reserve. They are released into the income statement upon January 2004, goodwill represents the difference between disposal. In respect of all foreign operations, any differences the cost of the acquisitions and the fair value of the net that have arisen before 1 January 2004, the date of transition identifiable assets acquired to IFRS, are presented as Translation reserve in Equity. In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP (NGAAP). The Transactions eliminated on consolidation classification and accounting treatment of business combi- Intragroup balances and any unrealized gains and losses or nations that occurred prior to 1 January 2004 has not been income and expenses arising from intragroup transactions, reconsidered in preparing the Group’s opening IFRS are eliminated in preparing the consolidated financial state- balance at 1 January 2004. ments. Unrealised gains arising from transactions with asso- Goodwill is stated at cost less any accumulated impair- ciates and jointly controlled entities are eliminated to the ment losses. Goodwill is allocated to cash generating units extent of the Group’s interest in the entity. Unrealised losses and is no longer amortized but is tested annually for impair- are eliminated in the same way as unrealized gains, but only ment. In respect of associates, the carrying amount of to the extent that there is no evidence of impairment. goodwill is included in the carrying amount of the investment in the associate. Negative goodwill arising on an acquisition is recognized directly in profit and loss. Property, plant and equipment Property, plant and equipment acquired by Group compa- Research and development nies are stated at historical cost, except that assets of acqui- Expenditure on research activities, undertaken with the pro- red subsidiaries are stated at acquisition-date fair values. spect of gaining new scientific or technical knowledge and Depreciation is calculated on a straight-line basis and adju- understanding, is recognized in the income statement as an sted for impairment losses, if any. The carrying value of the expense as incurred. property, plant and equipment in the balance sheet repre- Expenditure on development activities, whereby research sents the cost less accumulated depreciation and any findings are applied to a plan or design for the production of impairment losses. Interest costs on funds borrowed to new or substantially improved products and process, is capi- finance the construction of property, plant and equipment talized if the product or process is technically and commer- are capitalized during the period required to complete and cially feasible and the Group has sufficient resources to prepare the asset for its intended use. Other borrowing complete development. The expenditure capitalized includes costs are expensed. the cost of materials, direct labour, and an appropriate pro- Land is not depreciated, but other fixed assets in use are portion of overheads. Other development expenditure is depreciated on a straight-line basis. Expected useful lives of recognized in the income statement as an expense as incur- long-lived assets are reviewed annually and, where they dif- red. Capitalized development expenditure is stated at cost fer significantly from previous estimates, depreciation peri- less accumulated amortization and impairment losses. ods are changed accordingly. Ordinary repairs and maintenance costs are charged to Other intangible assets the profit and loss account during the financial period in Other intangible assets (patents, trademarks, fishing license- which they are incurred. The cost of major renovations is sand other rights) that are acquired by the group are stated at included in the asset’s carrying amount when it is probable cost less accumulated amortization and impairment losses. that the Group will derive future economic benefits in excess Expenditure on internally generated goodwill and brands of the originally assessed standard of performance of the is recognized in the income statement as an expense as existing asset. Major renovations are depreciated over the incurred. useful lives of the related assets. Gains and losses on disposals are determined by com- 42 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Financial investments cost is calculated as the present value of estimated future Financial instruments held for trading are classified as cur- cash flows, discounted at the original effective interest rent assets and are stated at fair value, with any resultant rate(i.e., the effective interest rate computed at initial recog- gain or loss recognized in the income statement. nition of these financial assets). Receivables with a short Where the group has the positive intent and ability to duration are not discounted. hold bonds to maturity, they are stated at amortised cost less The recoverable amount of other assets is the greater of impairment losses. their net selling price and value in use. In assessing value in Other financial instruments held by the group are classi- use, the estimated future cash flows are discounted to their fied as being available-for-sale and are stated at fair value, present value using a pre-tax discount rate that reflects cur- with any resultant gain or loss being recognized directly in rent market assessments of the time value of money an the equity, except for impairment losses and, in the case of risks specific to the assets. For an asset that does not gene- monetary items such as debt securities, foreign exchange rate largely independent cash flows, the recoverable amount gains and losses. When these investments are derecogni- is determined for the cash-generating unit to which the asset zed, the cumulative gain or loss previously recognized belongs. directly in equity is recognized in profit and loss. Where these investments are interest-bearing, interest calculated Reversal of impairment using the effective interest method is recognized in profit An impairment loss in respect of a held-to-maturity security and loss. or receivable carried at amortised cost is reversed if the The fair value of financial instruments classified as held subsequent increase in recoverable amount can be related for trading and available-for-sale is their quoted bid price at objectively to an event occurring after the impairment loss the balance sheet date. was recognized. Financial instruments classified as held for trading or avai- An impairment loss in respect of an investment in an lable-for-sale investments are recognized / derecognized by equity instrument classified as available-for-sale is not rever- the group on the date it commits to purchase / sell the invest- sed through profit and loss. If the fair value of a debt instru- ments. Securities held-to-maturity are recognized / derecogni- ment classified as available-for-sale increases and the incre- zed on the day they are transferred to / by the group. ase can be objectively related to an event after the impairment loss was recognized in profit and loss, the impairment loss shall be reversed, with the amount of the Impairment reversal recognized in profit and loss. An impairment loss in The carrying amounts of the group’s assets, other than respect of goodwill is not reversed. deferred tax assets (see Taxes), are reviewed at each In respect of other assets, an impairment loss is rever- balance sheet date to determine whether there is any indica- sed if there has been a change in the estimates used to tion of impairment. If any such indication exists, the asset’s determine the recoverable amount. An impairment loss is recoverable amount is estimated. reversed only to the extent that the asset’s carrying amount For goodwill, assets that have an indefinite useful life and does not exceed the carrying amount that would have been intangible assets that are not yet available for use, the reco- determined, net of depreciation or amortization, if no impair- verable amount is estimated at each balance sheet date. ment loss had been recognized. An impairment loss is recognized whenever the carrying amount of an assets or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in Leases the income statement. Leases of property, plant and equipment in which the Group Impairment losses recognized in respect of cash-gene- has substantially all the risks and rewards of ownership are rating units are allocated first to reduce the carrying amount classified as finance leases. Finance leases are capitalized of any goodwill allocated to cash-generating units and then, at the inception of the lease at the lower of the fair value of to reduce the carrying amount of the other assets in the unit the leased property or the present value of the minimum on a pro rata basis. lease payments. Lease payments are apportioned between Goodwill and indefinite-lived intangible assets were tested finance charges and reduction in the lease liability. Finance for impairment at 1 January 2004, the date of transition to charges are charged directly against income. IFRSs, even through no indication of impairment existed. Property, plant and equipment acquired under finance When a decline in the fair value of an available-for-sale leases are depreciated over the shorter of the useful life of financial asset has been recognized directly in equity and the asset or the lease term. there is objective evidence that the asset is impaired, the Leases in which a significant portion of the risks and cumulative loss that had been recognized directly in equity rewards of ownership are retained by the lessor are classi- is recognized in profit and loss even though the financial fied as operating leases. Payments made under operating asset has not been derecognized. The amount of the cumu- leases, net of any incentives received from the lessor, are lative loss that is recognized in profit and loss is the diffe- charged to the profit and loss account on a straight-line rence between the acquisition cost and fair value less any basis over the period of the lease. impairment loss on that financial asset previously recognized in profit and loss. Other long-term receivables Calculation of recoverable amount Other long-term receivables are measured at net present The recoverable amount of the group’s investments in held- value if the expected payments are long-term and not inte- to-maturity securities and receivables carried at amortised rest-bearing. ANNUAL REPORT 2005 43

Inventories Where any Group company purchases the Company’s equity Inventories are stated at the lower of cost or net realizable share capital (treasury shares), the consideration paid, inclu- value. Cost is determined by the first-in, first-out (FIFO) met- ding any directly attributable incremental costs, is deducted hod. The cost of finished goods and work in progress com- from equity. prises raw materials, direct labor and other direct costs, and The translation reserve comprises all foreign exchange related production overheads (based on normal operating differences arising from translation of the financial state- capacity), but excludes borrowing costs. Net realizable value ments of foreign operations, as well as from the translation of is the estimated selling price in the ordinary course of busi- liabilities that hedge Aker’s net investments in foreign subsi- ness, less the costs of completion and selling expenses. diaries. The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments until Construction contracts the investment is derecognized. The Group’s business activities mainly involve deliveries of products and services under contract to customers. Reve- nue related to construction contracts is recognized using the Interest-bearing liabilities percentage of completion method, based primarily on con- All loans and borrowings are initially recognized at cost, tract costs incurred to date, compared to estimated overall which is the fair value of the consideration received net of contract costs. issue costs associated with the borrowing. If the final outcome of a contract cannot be estimated After initial recognition, interest-bearing loans and borro- reliably, contract revenue is recognized only to the extent wings are measured at amortized cost using the effective costs incurred are expected to be recovered. Any projected interest method; any difference between proceeds (net of losses on future work done under existing contracts are transaction costs) and the redemption value is recognized in expensed and classified as accrued costs/provisions in the the profit and loss account over the period of the interest- balance sheet under short-term debt. Losses on contracts bearing liabilities. Amortized cost is calculated by taking into are recognized in full when identified. Recognized contract account any issue costs, and any discount or premium on profit includes profit derived from change orders and dispu- settlement. ted amounts when, in management’s assessment, realization Gains and losses are recognized in net profit or loss is probable and reasonable estimates can be made. when the liabilities are derecognized or impaired. Project costs include costs directly related to the specific contract and indirect costs attributable to the contract. Project revenue is classified as operating revenue in the Income taxes profit and loss account. Work in progress is classified as Income tax on the profit and loss for the year comprises cur- short-term receivables in the balance sheet. Advances from rent and deferred tax. customers are deducted from the value of work in progress Current tax is the anticipated tax payable on the taxable for the specific contract or, to the extent advances exceed income for the year, using tax rates enacted or substantially this value, recorded as customer advances. Customer enacted at the balance sheet date, and any adjustment to advances that exceed said contract offsets are classified as tax payable as to previous years. short-term debt. Deferred income tax is stated, using the liability method, on all temporary differences at the balance sheet date bet- ween the tax bases of assets and liabilities and their carry- Trade receivables ing amounts for financial reporting purposes. Trade receivables are carried at their anticipated realizable Deferred income tax assets are recognized for all deduc- value, which is the original invoice amount less an estimated tible temporary differences, carry-forward of unused tax valuation allowance for impairment of these receivables. A assets and unused tax losses, to the extent it is probable valuation allowance for impairment of trade receivables is that taxable profit will be available against which the deduc- made when there is objective evidence that the Group will tible temporary differences and the carry-forward of unused not be able to collect all amounts due according to the origi- tax assets and unused tax losses can be utilized. The carry- nal terms of the receivables. ing amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be avai- Cash and cash equivalents lable to allow all or part of the deferred income tax asset to Cash and cash equivalents comprise cash on hand, depo- be utilized. Deferred tax is measured on an undiscounted sits on call with banks, other short-term highly liquid invest- basis. ments with original maturities of three months or less, and Deferred income tax assets and liabilities are measured bank overdrafts. Bank overdrafts are included in borrowings at the tax rates expected to apply to the year in which the under current liabilities on the balance sheet. asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enac- ted at the balance sheet date. Share capital Tax consequences relating to items recognized directly Ordinary shares are classified as equity. in equity are recognized in equity and not in the profit and Incremental costs directly attributable to the issue of new loss account. shares or options are shown in equity as a deduction, net of Deferred tax assets and deferred tax liabilities are offset, tax, from the proceeds. if a legally enforceable right exists to set off current tax 44 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

assets against current tax liabilities, and the deferred tax Accounting for derivative financial instruments and relates to the same taxable entity and the same taxation aut- hedging activities hority. The group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In Pension obligations accordance with its treasury policy, the group does not hold The Group has both defined benefit and contribution plans. or issue derivative financial instruments for trading purposes. For defined benefit plans, the liability recognized is the pre- However, derivatives that do not qualify for hedge accounting sent value of the defined benefit obligation at the balance are accounted for as trading instruments. sheet date minus the fair value of plan assets, together with Derivative financial instruments are recognized initially at adjustments for actuarial gains/losses and past service cost. cost. Subsequent to initial recognition, derivative financial The defined benefit obligation is calculated by independent instruments are stated at fair value. The gain or loss on actuaries and is measured as the present value of estimated remeasurement to fair value is recognized immediately in future cash outflows. The cost of providing pensions is char- profit and loss. However, where derivatives qualify for hedge ged to the profit and loss account so as to spread the regu- accounting recognition of any resultant gain or loss depends lar cost over the service lives of employees. Actuarial gains on the nature of the item being hedged. and losses arising from experience adjustments, changes in The fair value of interest rate swaps is the estimated amount actuarial assumptions, and amendments to pension plans that the group would receive or pay to terminate the swap at are recognized over the average remaining service lives of the balance sheet date, taking into account current interest the employees concerned. rates and the current creditworthiness of the swap counter- For defined contribution plans, contributions are paid to parties. The fair value of forward exchange contracts is their pension insurance plans. Once the contributions have been quoted market price at the balance sheet date, being the paid, there are no further payment obligations. Contributions present value of the quoted forward price. to defined contribution plans are charged to the profit and loss account in the period to which the contributions relate. Hedging Cash flow hedges Provisions Where a derivative financial instrument is designated as a A provision is recognized when the Group has a present hedge of the variability in cash flows of a recognized asset or obligation (legal or constructive) as a result of a past event, liability, or a highly probable forecasted transaction, the effec- and it is probable (i.e., more likely than not) that an outflow tive part of any gain or loss on the derivative financial instru- of resources embodying economic benefits will be required ment is recognized directly in equity. When the forecasted to settle the obligation, and a reliable estimate can be made transaction subsequently results in the recognition of a non- of the amount of the obligation. Provisions are reviewed at financial asset or non-financial liability, or the forecasted trans- each balance sheet date and adjusted to reflect the current action for a non-financial asset or non-financial liability the best estimate. associated cumulative gain or loss is removed from equity and The amount of the provision is the present value of the risk- included in the initial cost or other carrying amount of the non- adjusted expenditures expected to be required to settle the financial asset or liability. If a hedge of a forecasted transacti- obligation, determined using the estimated risk-free interest rate ons subsequently results in the recognition of a financial asset as a discount rate. Where discounting is used, the carrying or financial liability, the associated gains or losses that were amount of a provision increases in each period to reflect the recognized in directly equity are reclassified into profit and diminishing effect of the discount with the passage of time. loss in the same period or periods during which the asset This increase is recognized as interest expense. acquired or liability assumed affects profit and loss (i.e., when interest income or expense is recognized). For cash flow hed- ges, other than those covered by the preceding two policy sta- Financial risk management tements, the associated cumulative gain or loss is removed The Group’s activities expose it to a variety of financial risks: from equity and recognized in the income statement in the market risk (including currency risk, fair value interest risk, same period or periods during the hedged forecast transac- and price risk), credit risk, liquidity risk, and cash-flow inte- tion affects profit or loss. The ineffective part of any gain or rest-rate risk. The Group’s overall risk management program loss is recognized immediately in the income statement. focuses on the unpredictability of financial markets and When a hedging instrument expires or is sold, terminated seeks to minimize potential adverse effects on the Group’s or exercised, or the unit revokes designation of the hedge financial performance. The Group uses derivative financial relationship but the hedged forecast transaction is still instruments to hedge certain risk exposures. expected to occur, the cumulative gain or loss at that point Risk management is carried out under policies approved remains in equity and is recognized in accordance with the by the Board of Directors. The Board provides guidelines for policy above when the transaction occurs. If the hedged overall financial risk management, as well as policies cove- transaction is no longer expected to take place, the cumula- ring specific areas such as foreign exchange risk, interest- tive unrealized gain or loss recognized in equity is recogni- rate risk, credit risk, use of derivative financial instruments zed immediately in the income statement. and non-derivative financial instruments, and investing excess liquidity. Hedge of monetary assets and liabilities Where a derivative financial instrument is used to hedge economically the foreign exchange exposure of a recogni- ANNUAL REPORT 2005 45

zed monetary asset or liability, no hedge accounting is Finance lease payments applied and any gain or loss on hedging instrument is Minimum lease payments are apportioned between the recognized in the income statement. finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the Hedge of net investments in foreign operation lease term so as to produce a constant periodic rate of inte- The portion of the gain or loss on an instrument used to hedge rest on the remaining balance of the liability. a net investment in a foreign operation that is determined to be an effective hedge is recognized directly in equity. The ineffec- tive portion is recognized immediately in profit and loss. Net financing costs Net financing costs compromise interest payable on borro- wings calculated using the effective interest rate method, inte- Related party transactions rest receivable on funds invested, dividend income, foreign All transactions, agreements, and business activities with exchange gains and losses, and gains and losses on hedging related parties are conducted according to ordinary busi- instruments that are recognized in the income statement. ness terms and conditions. Interest income is recognized in the income statement as it accrues, using the effective interest rate method. Dividend income is recognized in the income statement on the date the Revenue recognition entity’s right to receive payments is established which in the case Revenue is recognized only if it is probable that future eco- of quoted securities is usually the ex-dividend date. The interest nomic benefits will flow to Aker, and these benefits can be expense component of finance lease payments is recognized in measured reliably. Revenue includes the gross inflows of the income statement using the effective interest rate method. economic benefits received by Aker on its own account Revenue from the sale of goods is recognized when Aker has transferred the significant risks and rewards of owners- Segment reporting hip to the buyer and it no longer retains control or manage- Segmentation is based on the dominant source and nature rial involvement in the goods. Revenue from the rendering of of the risks and returns of the Group, as well as the Group’s services is recognized in the profit and loss account in pro- internal reporting structure. portion to the degree of completion of the transaction at the The Aker Group has designated business segments as balance sheet date. The stage of completion is assessed by its primary reporting segments, and geographical segments reference to reviews of work performed. as its secondary reporting segments. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are The Group comprises the following business segments: recognized in the profit and loss account in proportion to the - Aker Kværner Group (Oil & Gas, Engineering & Construction) degree of completion of the contract. The degree of com- - Aker Yards (design and construction of vessels) pletion is assessed by reference to estimates of work perfor- - Aker Seafoods (harvesting, processing, and sale of sea- med. An expected loss on a contract is recognized directly food products) in the profit and loss account. - Aker American Shipping (Construction and lease out of vessels) Government grants - Aker Material Handling (storage and archiving systems) An unconditional government grant is recognized in the - Other businesses (activities that do not qualify as sepa- income statement as other operating income when the grant rate segments due to the size of their operations) becomes receivable. Any other government grant is recogni- - Aker ASA including other Holding Companies zed in the balance sheet initially as deferred income when there is reasonable assurance that it will be received and The Aker Group has the following geographical segments: that the group will comply with the conditions attaching to it. - European Union Grants that compensate the group for expenses incurred are - North America recognized as revenue in the income statement on a syste- - Norway matic basis in the same periods in which the expenses are - Other areas incurred. Grants that compensate the group for cost of an - Asia asset are recognized in the income statement as other ope- Comparative data is generally restated for changes in repor- rating income on a systematic basis over the useful life of table segments. the asset. Dividends Expenses Dividends are recorded in the Group’s financial statements Operating lease payments in the period in which they are approved by the Group’s sha- Payments made under operating leases are recognized in the reholders. income statement on a straight-line basis over the term of the lease. Lease incentives received are recognized in the income statement as an integral part of the total lease expense. Earnings per share The calculation of basic earnings per share is based on the profit attributable to ordinary shares using the weighted ave- 46 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

rage number of shares outstanding during the year, after before, there will be no effect on the financial statements deduction of the average number of treasury shares held upon implementation. over the period. The calculation of diluted earnings per Amendment to IAS 21: The Effects of Changes in Foreign share is consistent with the calculation of basic earnings per Exchange rates, issued in December 2005, is effective for share, and gives effect to all dilutive potential ordinary sha- annual periods beginning on or after 1 January 2006. The res that were outstanding during the period, that is: Group implement it at its effective date. • The net profit for the period attributable to ordinary sha- IFRIC 4: Determining Whether an Arrangement Contains res is increased by the after-tax amount of dividends a Lease and interest recognized in the period in respect of the The interpretation is effective from 1 January 2006. The dilutive potential ordinary shares, and adjusted for any Group implement it at its effective date. other changes in income or expense that would result IFRIC 7: Applying the Restatement Approach under IAS from the conversion of the dilutive potential ordinary 29: Financial Reporting in Hyperinflationary Economies shares. The interpretation is required to be applied for annual peri- • The weighted average number of additional ordinary ods beginning on or after 1 March 2006, but is not expected shares that would have been outstanding, assuming to be relevant for the Group. the conversion of all dilutive potential ordinary shares, increases the weighted average number of ordinary shares outstanding. Accounting estimates and assumption (a) Revenue recognition The group uses the percentage-of-completion method in Comparatives accounting for its construction contracts. Use of the percen- When necessary, comparative figures have been adjusted to tage-of-completion method requires the group to estimate conform to changes in presentation in the current year. the construction performed to date as a proportion of the total construction to be performed. Another main uncertainty is the estimated final outcome. Convertible bonds Convertible bonds that can be converted to share capital at (b) Warranties the option of the holder, and for which the number of shares Based on past experience, the group has provided NOK 817 issued does not vary with changes in fair value, are accoun- million in warranty reserves on completed contacts. The war- ted for as compound financial instruments. Transaction costs ranty period is normally two years. The provisions (note 33) that relate to the issue of a compound financial instrument are recognized on an individual contract basis and normally are allocated to the liability and equity components in propor- approximates one percent of the contract value. Factors that tion to the allocation of proceeds. The equity component of could impact the estimated claim information include the convertible notes is calculated as the excess of the issue group’s quality initiatives and project execution model. proceeds over the present value of future interest and princi- pal payments, discounted at the market rate of interest appli- (c) Estimated impairment of goodwill cable to similar liabilities without a conversion option. The In accordance with the accounting policy the group tests interest expense recognized in the profit and loss account is annually whether goodwill has suffered any impairment. The calculated using the effective interest rate method. recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calcu- lations require the use of estimates and are consistent with Recently issued accounting standards and the market valuation of the group. pronounments Early adoption (d) Income taxes The additional disclosure requirements resulting from The group is subject to income taxes in numerous jurisdicti- amendment to IAS 19: Employee Benefits – Actuarial Gains ons. Significant judgement is required in determining the and Losses, Group Plans and Disclosures, have been inclu- worldwide provision for income taxes. There are many trans- ded in the financial statements. actions and calculations for which the ultimate tax determi- IFRS’s and IFRIC Interpretations not yet effective nation is uncertain during the ordinary course of business. The Group has not applied the following IFRS’s and IFRIC The group recognises liabilities for anticipated tax audit Interpretations that have been issued but are not yet effec- issues based on estimates of whether additional taxes will tive: be due. Where the final tax outcome of these matters is dif- IFRS 6: Exploration for and Evaluation of Mineral Resour- ferent from the amounts that were initially recorded, such dif- ces. This standard does not apply to the activities of the Group. ferences will impact the income tax and deferred tax provisi- IFRS 7: Financial Instruments: Disclosures ons in the period in which such determination is made. This standard is effective for annual periods beginning on or after 1 January 2007. This standard introduces new require- (e) Pension benefits ments to improve financial instrument disclosure. Implemen- The present value of the pension obligations depends on a tation is planned by the Group on the effective date. number of factors that are determined on an actuarial basis The amendment to the fair value option in IAS 39: Finan- using a number of assumptions. The assumptions used in cial Instruments: Recognition and Measurement, is effective determining the net cost (income) for pensions include the as of 1 January 2006. discount rate. Any changes in these assumptions will impact Since the Group has not applied the fair value option the calculated pension obligations. ANNUAL REPORT 2005 47

The group determines the appropriate discount rate at main assumptions for the pro forma financial statements pre- the end of each year. This is the interest rate that should be sented are stated below. The Aker Kværner pro forma finan- used to determine the present value of estimated future cial statements has considered the re-capitalizations (con- cash outflows expected to be required to settle the pension sisting of debt and equity) of the group completed at 1 April obligations. In determining the appropriate discount rate, the 2004. Issuance of new shares amounts to approximately group considers the interest rates of high-quality corporate NOK 2 billion. The Aker Yards pro forma financial statements bonds that are denominated in the currency in which the consider the combining of Kværner and Aker RGI Holding benefits will be paid, and that have terms to maturity appro- shipbuilding activities as per 31 March 2004. Further, an ximating the terms of the related pension liability. Other key extraordinary dividend paid to Aker RGI AS of NOK 3.5 bil- assumptions for pension obligations are based in part on lion from Aker RGI Holding AS prior to the merger and current market conditions. exchange of Kværner shares to Aker Yards and Aker Kvær- ner shares in April/May 2004 are reflected in the pro forma figures for all reporting periods The July 2004 refinancing of Changes in the composition of the Aker ASA Group and Aker ASA is reflected in the pro forma profit and loss pro forma information accounts as of 1 January 2004. Thus, interest expenses The official audited 2004 accounts present the profit and have been reduced by NOK 146 million in the pro forma loss account beginning with the 1 April 2004 establishment accounts, the tax effect is considered. Aker ASA’s purchase dates for new units, and beginning with 1 January for com- price beyond book value is allocated to goodwill and shares. panies formerly owned directly or indirectly by Aker RGI Hol- The pro forma figures apply a 20-year amortization period ding AS. To present comparable financial information, pro for goodwill. Accordingly, goodwill amortization of NOK 39 forma accounts for 2003 and 2004 have been prepared as if million was charged to the 2003 pro forma profit and loss the establishment took place for accounting purposes as of account. For the first three months of 2004, pro forma good- 1 January 2003 (pro forma profit and loss account, balance will amortization amounted to NOK 10 million. The amortiza- sheet, and notes to the accounts). These pro forma financial tion period of 20 years is based on an expectation of a statements are provided for informational purposes only and financial lifetime of at least 20 years for the goodwill acqui- are not necessarily indicative of actual results that would red by the Group. have been achieved had the transactions and assumptions described taken place during the periods presented. The

NOTE 2: BUSINESS COMBINATION

West Fish Aarsæther and Nordic Sea Holding In May 2005 Aker Seafoods ASA acquired 100% of the shares in West Fish-Aarsæther AS (WFAa) and 18.11% of the shares in Nordic Sea Holding (NSH). WFAa's shareholding in NSH was initially 46.97%, after the Aker Seafoods acquisition the ownership increased to 65.08% of NSH. The remuneration consisted of shares in Aker Seafoods ASA. At the same time Aker Seafoods purchased the remaining 34.92% of NSH. Remuneration was done in cash. During the 8-months period from acquisition to 31. December 2005 the subsidiary contributed a loss of NOK 4 million to the consolidated annual result. If the acquisiton had been made at 1. January 2005 the Group's operating revenue would have been NOK 2 316 million and the profit NOK 37 million. The subsidiary contributed with a profit of NOK 25 million for the total year.

Aker American Shipping ASA Aker American Shipping ASA issued on 30. June 2005 a private placement towards a selected group of investors. The proceeds from the private placement amounted to USD 125 million and including this the market valued Aker American Shipping at approximately NOK 1.8 billion. In addition Aker ASA acquired Kværner ASA shares for NOK 982 million and subsequently owned 54.7 % in the company. Later on Aker American Shipping was listed on Oslo Stock Exchange, first quoted on 11. July 2005. In connection with the listing, Aker offered a secondary sale. After the seconday sale Aker owns 53.2% in the company with a booked value of NOK 954 million. If the take over had been done on 1. January 2005, the Groups operating revenue would have increased by NOK 1 293 million and profit after tax by NOK 32 million. 48 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Merger between Kværner ASA and Aker Maritime Finance, a subsidiary of Aker ASA On 29 September 2005 the merger between Kværner ASA and Aker Maritime Finance AS was approved by shareholders. Following expiry of the creditor notice period on 30 November 2005, the merger was implemented effective from 1 December 2005. As merger consideration the shareholders in Kværner received 1.0935 Aker A-shares per Kværner share. The value of the consideration was approximately NOK 6.3 billion. If the merger had been executed from 1. january 2005, the Groups operating revenue would have increased by NOK 0 million and the profit after tax reduced by NOK 77 million.

Other acquisition In addition to acquisition above some minor acquisition in some subsidiaries of Aker with a total yearly turnover of NOK 140 mill. These acquistition have only small effects on Aker Group assets and liabilities.

If all of the acquisitions had been executed from 1. Janauary 2005, the Group operating revenue would have increased by NOK 3.7 billion and profit before tax reduced by approx. NOK 30 million.

Effect of acquisition on the Groups Assets and Liabilities

West Fish Aarsæther AS and Nordic Sea Holding AS Details on net acquired assets:

Acquisition cost: - Payment in Cash 4 - Cost related to the merger 1 - Fair value of consideration in shares *) 151 Total acquisition cost 156 Fair value of asset acquired 156 Goodwill 0

Effect of acquisition on the Groups Assets and Liabilities: Net asset in the acquired company at time of acquisition Recognised Fair value Booked Amount in NOK million values adjustments value Property, plant and equipment 202 202 Shares and interest in other companies 15 15 Intangible assets 377 141 236 Inventories 88 88 Trade and other receivables 97 97 Cash and Cash equivalents 16 16 Interest-bearing loans and credits and deferred tax -553 -38 -515 Accounts payable and other short term liabilities -83 -83 Net identifiable assets and liabilities 159 103 55 Contribution in cash 4 Value of contribution in shares *) 155

Cash acquired 16 Net cash flow 12

*) fair value of the payment shares was based on the share price.

The capital gain of the acquisition is allocated in its entirety to the fishing licences acquired. In december 2005, shares were also purchased in Lofoten trålrederi As, the ownership interest in Lofoten trålerrederi As after the purchase is 93.25 %. The remuneration was Nok 42.8 million and the capital gain of Nok 17.7 million was allocated in its entirety to fishing licences. Nok 5 million of the capital gain has been set aside for deferred tax. ANNUAL REPORT 2005 49

Aker American Shipping

Details on net acquired assets and goodwill:

Acquisition cost: - Payment in Cash 954 Total acquisition cost 954 Fair value of net asset acquired 954 Goodwill 0

No goodwill arise from the acquision of Aker American Shipping, as differences relates to future earnings on Product tanker contracts. We have ten contracts with options on further ships. Depreciation over the projects estimated lifetime, 25 years from December 2005, 35% tax is taken into consideration.

Net asset in the acquired company at time of acquisition

Recognised Fair value Booked value Amount in NOK million values adjustments in company acquired Property, plant and equipment 448 - 448 Goodwill 106 - 106 Other intangible assets 681 681 Interest-bearing receivables 101 - 101 Other non-current assets 22 - 22 Projects/work in process 450 - 450 Trade and other receivables 878 - 878 Cash and Cash equivalents 14 - 14 Total assets 2 699 681 2 018 Interest-bearing loans and credits -335 - -335 Deferred tax liability -281 -238 -42 Accounts payable and other short term liabilities -228 - -228 Construction loan -272 - -272 Elimination of 21.8% of value added at acquisition from an associated company 1) 123 123 Net assets 1 705 565 1 140 Minorities (46.8%) -751 -218 -533 Net assets acquired 954 348 606

1) Aker ASA acquired Aker American Shipping from Kværner ASA, in which Aker ASA had an ownership of 21.7%. Aker ASA has decided, in line with IFRS, to write down 21.7% of value added against other intangibles rather than against the shares in Kværner

Acquisition paid in cash 954 Cash and Cash equivalents in acquired company -14 Net cash flow 940 50 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Merger Kværner ASA and Aker Maritime Finance

Details on net acquired assets:

Merger cost: - Payment in Cash - - Fair vaue of assets and liabilites 8 282 - Deduction of own shares -6 557 Total merger cost 1 725 Fair value of net assets less value of own shares 1 725 Goodwill 0

Kværner ASA assets consisted of among other 42.4 mill Aker ASA.shares

In addition Kværner ASA had a receivable on Aker ASA of NOK 986 million related to Aker ASA's acquisition of Aker American Shipping from Kværner ASA as per 30.06.2005 (see above).

Assets and liabilites at the time of merger

Recognised Fair value Booked value Amount in NOK million values adjustments in company acquired Shares in Aker ASA (42.4 mill shares) 6 557 2 023 4 534 Receivables on Aker ASA 986 - 986 Other receivables 533 - 533 Cash and Cash equivalents 270 - 270 Total assets 8 346 2 023 6 323 Interest bearing loans and credits - - - Deferred tax liability - - - Accounts payable and other short-term liabilites -64 - -64 Net assets 8 282 2 023 6 259 Minorities - - - Net asset acquired 8 282 2 023 6 259

Acquisition cost paid in cash 0 Cash and cash equivalents in acquired company 270 Net cash flow 270

The equity effect of merger amount to NOK 1 330 million and consist of net of assets and liabilites received less value of own shares of NOK 1 725 million, deducted value of Akers 21.7% share in Kværner of NOK 395 million (see note 13) ANNUAL REPORT 2005 51

NOTE 3: SALE OF AND REDUCTION OF INVESTMENTS IN SUBSIDIARIES

Aker Drilling Aker Drilling, a subsidiary of Aker Capital, placed on 31.October 2005 a fixed price order for two semi-submersible drilling rigs. Two identical rigs will be designed and built by Aker Kværner.

Aker Drilling decided on 13.October to issue 67.8 million new shares at a price of 36.85 per share. The indicative price inter- val was set from NOK 32.00 to NOK 36.85. Aker Drilling has 93 million shares after the stock issue. The implied market value is NOK 3.4 billon. The value of Aker Capital's 25.3 million shares amount to NOK 926 millon. In addition Aker Capital subscri- bed for 3.4 millon share in the stock issue, in total the booked value of Aker Capitals 30.8% share in Aker Drilling at year end is NOK 1 056 millon. The gain of NOK 926 millon in Aker Capital is in the Aker Group reduced by NOK 285 millon to NOK 641 millon. The reduc- tion represent 30.8 % of the total gain.

Aker House On 3.November 2005 Aker signed an agreement to sell all shares in the Real estate company, who owned the land and buil- ding project for there Groups new head office at Fornebu outside Oslo, to Næringsbygg Holding 2 AS. The real estate transaction contributed a profit to Aker of NOK 400 million.

Sale of shares in Aker Yards and Aker Kværner Aker ASA sold on 24. January 2005, 4 385 830 Aker Kværner ASA shares at a price of NOK 178 per share and 4 000 000 Aker Yards ASA shares at NOK 174 per share.

Following the share sales, Aker ASA owns 27 520 930 Aker Kværner ASA shares and 11 452 111 Aker Yards ASA shares. These shareholdings correspond to ownership interests and voting rights of 50.01 percent and 55.6 percent, respectively. Beyond its shareholdings Aker ASA has no further rights to shares in any of the two companies.

The total value of the transactions is NOK 1.5 billion. The transactions have no effects on profit in the consolidated Aker Group accounts. 52 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 4: BUSINESS AND GEOGRAPHICAL SEGMENTS Segment information is presented in respect of the Group's business and geographical segments.The primary format, busi- ness segments, is based on the Group's management and internal reporting structure. The operating companies in the Group which represent the different business segments provide different products and services and they are subject to diffe- rent risk and returns. See the Board of directors' report for a description of the operating companies.

Operating revenue in geographical segments are based on the geographical location of customers whereas Segment assets and Capital expenditure are based on geographical location of the companies.

Inter-segment pricing are set on an arm's length basis in a manner similar to transactions with third parties.

Aker Aker 2005 - Business segments Aker Aker American Aker Material Other Amounts in NOK million Kværner Yards Shipping 4) Seafoods Handling investments Consolidated External operating revenues 41 463 16 560 345 2 339 1 347 396 62 450 Inter-segment revenues 0 47 0 0 0 -47 0 Operating revenues 41 463 16 607 345 2 339 1 347 349 62 450 EBITDA 2 145 1 029 35 181 35 -103 3 322 Depreciation and amortization -356 -284 -22 -83 -26 -77 -848 Impairment changes and non recurring items 0 -65 0 0 -2 -3 -70 Operating profit 1 789 680 13 98 7 -183 2 404 Share of earnings in associated companies 25 25 0 -5 0 -17 28 Net financial items and other items -796 -1 52 -52 -20 996 179 Profit before tax 1 018 704 65 41 -13 796 2 611 Tax expense 227 73 -21 -4 0 -296 -21 Profit for the year 1 245 777 44 37 -13 500 2 590

Order intake 5) 57 748 32 084 0 0 1 391 0 91 223 Order backlog 5) 53 341 38 897 5 830 0 303 0 98 371

Property, plant and equipment 1 549 2 352 798 803 182 839 6 523 Intangible assets 4 581 1 399 118 877 214 1 609 8 798 Investment in associates 113 132 0 7 0 939 1 191 Inventories, projects under constr. and interest-free receivables 11 897 9 668 839 503 392 450 23 749 Other assets 1) 8 155 4 770 337 560 99 3 097 17 018 Total assets 26 295 18 321 2 092 2 750 887 6 934 57 279

Trade and other payables 14 421 6 556 165 189 298 371 22 000 Current Provisions 769 280 13 86 18 -86 1 080 Other liabilities 2) 6 778 6 402 691 1 569 463 3 350 19 253 Total liabilities 21 968 13 238 869 1 844 779 3 635 42 333

Capital expenditure 3) 481 408 339 73 35 258 1 594 ANNUAL REPORT 2005 53

Aker Aker Proforma 2004 - Business segments Aker Aker American Aker Material Other Amounts in NOK million Kværner Yards 6) Shipping 4) Seafoods Handling investments Consolidated External operating revenues 35 553 12 489 0 2 467 1 231 -99 51 641 Inter-segment revenues 0 1 0 0 0 -1 0 Operating revenues 35 553 12 490 0 2 467 1 231 -100 51 641 EBITDA 1 362 768 0 162 11 -74 2 229 Depreciation and amortization -308 -290 0 -97 -26 -94 -815 Impairment changes and non recurring items -11 -149 0 56 -8 -48 -160 Operating profit 1 043 305 0 121 -23 -192 1 254 Share of earnings in associated companies -6 0 0 -54 0 -20 -80 Net financial itmes -390 -22 0 -9 -17 -339 -777 Profit before tax 647 283 0 58 -40 -551 397 Tax expense -129 -74 -6 4 -261 -466 Profit for the year 518 209 0 52 -36 -812 -69

Order intake 5) 41 582 17 283 0 0 1 297 0 60 162 Order backlog 5) 35 920 23 366 0 0 265 0 59 551

Aker Aker 2004 - Business segments Aker Aker American Aker Material Other Amounts in NOK million Kværner Yards Shipping 4) Seafoods Handling investments Consolidated External operating revenues 27 838 11 816 0 971 1 347 1 281 43 253 Inter-segment revenues 0 1 0 0 0 -1 0 Operating revenues 27 838 11 817 0 971 1 347 1 280 43 253 EBITDA 1 048 727 0 54 35 31 1 895 Depreciation and amortization -223 -260 0 -55 -26 -136 -700 Impairment changes and non recurring items -11 -149 0 18 -2 824 680 Operating profit 814 318 0 17 7 719 1 875 Share of earnings in associated companies -14 0 0 0 0 -74 -88 Net financial itmes -312 -34 0 -20 -20 -450 -836 Profit before tax 488 284 0 -3 -13 195 951 Tax expense -106 -75 6 0 -228 -403 Profit for the year 382 209 0 3 -13 -33 548 Property, plant and equipment 1 403 2 353 0 827 182 850 5 615 Intangible assets 4 507 1 480 0 855 179 647 7 668 Investment in associates 74 23 0 0 0 534 631 Inventories, projects under constr. and interest-free receivables 9 828 3 744 0 487 336 133 14 528 Other assets 1) 4 458 4 106 0 420 92 1 899 10 975 Total assets 20 270 11 706 0 2 589 789 4 063 39 417 Trade and other payables 10 281 4 029 0 183 297 909 15 699 Current Provisions 631 374 0 38 15 -644 414 Other liabilities 2) 7 639 2 892 0 1 538 358 1 634 14 061 Total liabilities 18 551 7 295 0 1 759 670 1 899 30 174

Capital expenditure 3) 418 269 0 38 15 37 777 54 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Operating revenues Total assets Capital expenditure Geographical segments by customer location by company location by company location 3) Accounts Proforma Accounts Amounts in NOK million 2005 2004 2004 2005 2004 2005 2004 Norway 19 468 16 906 13 971 22 346 15 785 547 337 EU 18 640 14 649 12 697 20 597 13 549 443 303 America/Canada 12 691 7 851 6 546 10 873 6 961 410 46 Asia 3 445 4 365 3 669 661 649 7 5 Other areas 7 866 7 582 6 082 2 802 2 473 187 87 Total 62 110 51 353 42 965 57 279 39 417 1 594 777

1) Other assets include deferred tax assets, interest-bearing receivables, cash and cash equivalentes and other financial assets. 2) Other liabilites include Non-current liabilities, Interest-bearing short-term debt, Income tax payable and Dividend payable. 3) Capital expenditure comprises additions to property, plant and equipment and Intangible assets. 4) The Profit and loss for Aker American Shipping in this note includes the Profit and loss from the time of Aker's aquisition 30 june 2005. 5) Unaudited 6) Profit and loss figures from 1 January to 31 March as in Aker RGI Holding GROUP and Profit and loss figures from 1 April 2004 as in Aker Yards group.

Analysis of operating revenues by category Accounts Proforma Accounts Amounts in NOK million 2005 2004 2004 Construction contract revenue 38 644 33 041 27 297 Sales of goods 11 240 8 973 7 657 Revenue from services 11 652 9 105 7 552 Royalty income 12 4 4 Other 562 230 456 Total 62 110 51 353 42 965 ANNUAL REPORT 2005 55

See below for information regarding Aker Kværner business segments:

Maintenance, Subsea Field Modifications Products & Pulping 2005 - Aker Kværner business segments Development and Operations Technologies Process & Power Other Total Amounts in NOK million (FD) (MMO) (SPT) (PRO) (P&P) External operating revenue: Construction contract revenue 9 715 2 571 3 776 6 743 3 231 -15 26 021 Revenue from services 606 4 489 2 535 2 634 593 478 11 335 Products 0 0 2 954 0 691 0 3 645 Other 122 1 57 217 3 62 462 Total revenue from external customers 10 443 7 061 9 322 9 594 4 518 525 41 463 Inter-segment revenue 177 391 532 31 5 -1 136 0 Operating revenue 10 620 7 452 9 854 9 625 4 523 -611 41 463 EBITDA 632 290 654 224 329 16 2 145 Depreciation and amortization -57 -13 -151 -20 -50 -65 -356 Operating profit (+) / loss (-) 575 277 503 204 279 -49 1 789 Share of earnings in associated companies 18 12 -5 0 0 0 25

Non-cash effect items in EBITDA 0 0 0 0 0 0 0 Capital expenditures 46 13 213 12 92 105 481

Net short-term operating assets excl. tax and dividend -3 930 7 1 454 -19 -477 -362 -3 327 Net long-term operating assets excl. tax and dividend 1 207 1 096 1 185 891 392 -35 4 736 Net operating assets excl. tax and dividend -2 723 1 103 2 639 872 -85 -397 1 409 Tax 787 Net operating assets incl. tax 2 196

Investment in associates 113 Investments excl associates 22 Subordinated loan -3 167 Net borrowings 5 163 Total equity inc. minority interests 4 327

Order intake 19 060 9 875 15 445 10 453 5 811 -2 896 57 748 Order backlog 20 265 12 061 11 269 8 174 4 819 -3 247 53 341

Employees 4 039 4 705 3 586 4 965 2 079 1 029 20 403

Goodwill 1 099 1 469 722 875 264 152 4 581

Total operating assets excl. tax and dividend 4 300 2 969 5 732 3 031 1 829 139 18 000 Total operating liabilities excl. tax and dividend -7 023 -1 866 -3 093 -2 159 -1 914 -536 -16 591 56 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Maintenance, Subsea Proforma 2004 Field Modifications Products & Pulping Aker Kværner business segments Development and Operations Technologies Process & Power Other Total Amounts in NOK million (FD) (MMO) (SPT) (PRO) (P&P)

External operating revenue: Construction contract revenue 8 146 3 054 3 121 5 534 3 018 0 22 873 Revenue from services 1 151 2 856 1 805 2 442 719 28 9 001 Sale of goods 0 0 2 372 0 1 077 0 3 449 Other 75 6 31 115 1 2 230 Total revenue from external customers 9 372 5 916 7 329 8 091 4 815 30 35 553 Inter-segment revenue 274 411 301 32 0 -1 018 0 Operating revenue 9 646 6 327 7 630 8 123 4 815 -988 35 553 EBITDA 409 229 490 110 264 -140 1 362 Depreciation and amortization -63 -7 -121 -24 -45 -59 -319 Operating profit (+) / loss (-) 346 222 369 86 219 -199 1 043 Share of earnings in associated companies 22 -3 -19 0 0 -6 -6

Non-cash effect items in EBITDA 0 0 0 0 0 0 0 Capital expenditures 31 12 162 27 61 125 418

Net short-term operating assets excl. tax and dividend -697 -86 653 -125 -623 -206 -1 084 Net long-term operating assets excl. tax and dividend 1 221 1 093 1 092 841 343 204 4 794 Net operating assets excl. tax 524 1 007 1 745 716 -280 -2 3 710 Tax 370 Net operating assets incl. tax 4 080

Investment in associates 74 Investments excl associates 21 Subordinated loan -3 826 Net borrowings 1 370 Total equity inc. minority interests 1 719

Order intake 13 955 7 859 8 332 8 465 4 198 -1 227 41 582 Order backlog 11 565 9 765 5 462 6 667 3 442 -981 35 920

Employees 4 566 4 867 3 411 4 896 2 005 922 20 667

Goodwill 1 098 1 477 716 826 251 139 4 507

Total operating assets excl. tax and dividend 3 349 2 777 4 101 3 204 1 863 508 15 802 Total operating liabilities excl. tax and dividend -2 827 -1 769 -2 353 -2 484 -2 143 -516 -12 092 ANNUAL REPORT 2005 57

NOTE 5: WAGES AND OTHER PERSONNEL EXPENSES Wages and other personnel expenses consist of: Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004 8 861 Wages 11 963 11 041 1 370 Social security contributions 1 658 1 692 438 Pension costs 658 533 407 Other expenses 511 645 11 076 Total 14 790 13 911 35 816 Average number of employees 36 377 35 708

NOTE 6: OTHER OPERATING EXPENSES Other operating expenses consist of: Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004 103 Research and development 197 178 635 Rent and leasing expenses 611 607 - Impairment loss on trade receivables 3 3 4 251 Other operating expenses 5 936 5 065 4 989 Total other operating expenses 6 747 5 853

Most of the research and development work in Aker is related to ongoing contracts and the costs are expensed as contract costs. Research and development costs of NOK 197 million have been expensed during the year (2004: NOK 178 million) because it is not possible to identify and quantify the future revenues that are directly linked to these costs.

Payments/fees to auditors for the Aker ASA Group are included in Other operating expenses. The figures for 2005, 2004 (proforma) and 2004 accounts are shown below. Accounts Ordinary Consulting Accounts Proforma 2004 Amounts in NOK million auditing services 2005 2004 5 Aker ASA 1 2 3 5 48 Subsidiary companies 35 15 50 54 53 Total 36 17 53 59

Consulting services of NOK 17 million consists of NOK 4 million in other assurance services, NOK 7 million in tax advisory services and NOK 6 million in non-audit services. 58 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 7: IMPAIRMENT CHANGES AND NON RECURRING ITEMS

Impairment changes and non recurring items include impairment losses on goodwill, impairment loss and impairment reversal on property, plant and equipment, major losses on the sale of operating assets, restructuring costs and other material matters not expected to be of a recurring nature.

The items are as follows: Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004 Non-recurring cost in connection with the combining of -30 shipbuilding activites in Aker Yards - -30 -91 Impairment loss on intangible assets (note 12) -70 -91 840 Recognition of badwill - - -17 Impariment loss property, plant and equipment (note 11) -11 -17 Reversal of impairment loss property, plant and equipment (note 11) 1 - -12 Other sales loss and gains 10 -12 -10 Other restructuring costs - -10 680 Total -70 -160

2005 When carrying out the analyzes of the business combination that established Aker Yards, deferred tax assets related to accumulated loss carried forward in Aker Ostsee on the date of business combination where not fully accounted for due to uncertainties about future utilization. In 2004 and 2005 have Aker Ostsee generated a substantial backlog, and are fully booked out 2007. As a consequence of the improved order situation in Aker Ostsee, future utilization of loss carried forward is made plausible. In the fourth quarter 2005 a deferred tax asset is taken to income related to accumulated losses before the business combination with NOK 68 million. According to IFRS 3 (65) is booked value of goodwill adjusted accordingly. The reduction in goodwill is expensed as impairment of goodwill.

2004 Material items regarding impairment loss on intangible assets are goodwill related to Aker Material Handling of NOK 54 million and NOK 11 million in Aker Kværner (Subsea og Products & Technologies).

Impariment loss on property, plant and equipment includes write-down of buildings in Laubach Germany of NOK 15 million.

In the 2004 accounts NOK 840 million in badwill is recognised. This is related to the combining of the shipbuilding activites in Aker RGI and Aker Kværner. ANNUAL REPORT 2005 59

NOTE 8: FINANCIAL INCOME AND FINANCIAL EXPENSES

Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004 110 Interest income 168 129 8 Dividend income 6 8 103 Other financial income 218 95 221 Financial income 392 232 -756 Interest expense -567 -694 -63 Non payable interest expense Subordinated loan -227 -84 -18 Net foreign exchange loss 20 -27 - Foreign exchange on disqualified hedge instruments 1) -396 - -220 Other financial expenses -84 -204 -1 057 Financial expenses -1 254 -1 009 -836 NET FINANCIAL ITEMS -862 -777

1) Since the hedgning instruments in Aker Kværner do not qualify for hedge accounting under IAS39, the fair value changes on foreign exchange forward contracts have been recorded in the income statement as a financial item. Hedging is explained in more details in note 36.

NOTE 9: OTHER ITEMS

2005 Other Income consist of NOK 641 million in gain from sale of Aker Drilling and NOK 400 million from sale of Aker Hus.

Aker Drilling Aker Drillling, a subsidiary of Aker Capital, placed on 31.October 2005 a fixed price order for two semi-submersible drilling rigs. Thw two identical rigs will be designed and built by Aker Kværner.

Aker Drilling decided on 13.October to issue 67.8 million new shares at a price of 36.85 per share. The indicative price inter- val was set from NOK 32.00 to NOK 36.85. Aker Drilling has 93 million shares after the stock issue. The implied market value is NOK 3.4 billion. The value of Aker Capital's 25.3 million shares amount to NOK 926 million. In addition Aker Capital subscribed for 3.4 million share in the stock issue, in total the booked value of Aker Capitals 30.8% share in Aker Drilling at year end is NOK 1 056 millon. The gain of NOK 926 million in Aker Capital is in the Aker Group reduced by NOK 285 millon to NOK 641 million. The reduction represent 30.8 % of the total gain.

Aker House On 3.November 2005 Aker signed an agreement to sell all shares in the Real estate company, who owned the land and building project for ther Groups new head office at Fornebu outside Oslo, to Næringsbygg Holding 2 AS. The real estate transaction contributed a profit to Aker of NOK 400 million. 60 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 10: TAX

INCOME TAX EXPENSE Recognised in the income statement

Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004 Current tax expense: -269 Current year -599 -288 29 Adjustments for prior years -31 33 -240 Total current tax expense -630 -255

Deferred tax expense: 89 Origination and reversal of temporary differences -229 37 227 Benefit of tax losses recognised 838 231 -479 Effect of changes in tax rules in Norway - -479 -163 Total deferred tax expense 609 -211 -403 Total income tax expense in income statement -21 -466

Reconciliation of effective tax rate Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004

951 Profit before tax 2 611 397 -266 Nominal tax rate Norway 28% -731 -111 -479 Effect of changes in tax rules in Norway - -479 -120 Tax differential in Norway and abroad -91 -136 276 Income not subject to tax 311 40 277 Benefit of tax losses recognised 838 231 0 Tax expense related to not approved tax statement in USA -312 -41 Other differences -36 -11 -403 Total income tax expense in income statement -21 -466

DEFERRED TAX ASSETS AND LIABILITIES Deferred assets have not been recognised in respect of the following items Accounts Accounts Amounts in NOK million 2005 2004 Dedecutible temporary difference 13 1 Tax losses 947 1 621

The deductible tempory difference do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom. ANNUAL REPORT 2005 61

The gross movement in the deferred income tax account (assets and liabilities) is as follows: Accounts Proforma Amounts in NOK million 2005 2004 Beginning of the year 1 173 1 493 Exchange differences 116 -87 Acquisition and sale of subsidiaries -262 -22 Income statement charge 609 -211 Tax charged to equity -58 0 End of the year 1 578 1 173 Deferred tax assets 2 221 1 688 Deferred tax liabilities (-) -643 -515 End of the year 1 578 1 173

Movements in det erred assets and liabilities in 2004 and 2005 are as follows:

Deterred tax assets: Provisions Impairment Tax losses Other Total Amounts in NOK million of assets losses 1 January 2004 15 0 1 337 279 1 631 (Charged)/credited to the income statement 0 0 -93 128 35 Charged to equity 0 0 0 0 0 Acquisition and sale of subsidiaries 0 0 0 0 0 Exchange differences 0 0 22 0 22 31 December 2004 15 0 1 266 407 1 688

(Charged)/credited to the income statement 36 0 383 0 419 Charged to equity 0 0 1 0 1 Acquisition and sale of subsidiaries 5 0 52 3 60 Exchange differences 0 0 2 51 53 31 December 2005 56 0 1 704 461 2 221

Deterred tax liabilities: Accelereated Projects Fair value Convertible Other Total tax gains bond Amounts in NOK million depreciation 1 January 2004 -157 -231 0 -7 257 -138 (Charged)/credited to the income statement -76 -420 0 0 250 -246 Charged to equity 0 0 0 0 0 0 Acquisition and sale of subsidiaries 3 0 0 0 -25 -22 Exchange differences -29 -14 0 0 -66 -109 31 December 2004 -259 -665 0 -7 416 -515

(Charged)/credited to the income statement 74 -85 0 0 201 190 Charged to equity 0 0 0 0 -58 -58 Acquisition and sale of subsidiaries -112 2 0 0 -213 -323 Exchange differences 24 33 0 0 6 63 31 December 2005 -273 -715 0 -7 352 -643 62 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Deferred tax recognised directely in equity Amounts in NOK million 2005 2004 Relating to available-for-sale financial assets -7 - Relating to financial instruments -51 - Total -58 -

Income tax payable Income tax payable at year end 2005 of NOK 662 million consist among other itmes of NOK 312 million in accrued tax liabi- lity due to tax audit in one of Aker's wholly-owned subsidiaries in USA. The US Inland revenue authorities did not approve tax deductions related to transactions in year 2000.

NOTE 11: PROPERTY, PLANT AND EQUIPMENT

Movements in property plant and equipment for 2005 are shown below: Ships, Machinery Buildings Under Other Amounts in NOK million airplanes, etc Vehicles Housing Land contruction assets Total Cost balance at 1 January 2005 1 842 2 432 2 939 -261 109 264 7 847 Acquisitions through business combinations 0 200 187 49 180 7 623 Other acquisitions 138 697 89 7 517 17 1 465 Disposals -638 -474 -13 -10 0 0 -1 135 Effect of movements in foreign exchange 368 81 60 0 -7 -7 495 Cost balance at 31 December 2005 1 710 2 936 3 262 307 799 281 9 295

Depreciation and impairment losses at 1 January 2005 -499 -737 -908 0 -32 -56 -2 232 Depreciation charge for the year -123 -505 -176 0 -3 -14 -821 Impairment losses recognised in profit or loss -1 -10 0 0 0 0 -11 Impairment losses reversed in profit og loss -2 2 1 0 0 0 1 Transfer to investment property 0 0 0 0 0 0 0 Transfer to non-current assets held for sale 0 0 0 0 0 0 0 Disposals 138 345 -56 0 0 0 427 Effect of movements in foreign exchange -53 -57 -25 0 0 -1 -136 Depreciation and impairment losses at 31 December 2005 -540 -962 -1 164 0 -35 -71 -2 772

Carrying amount at 31 December 2005 1) 1 170 1 974 2 098 307 764 210 6 523

1) Book value leasing agreements recorded in the balance sheet: 0 71 2 0 0 0 73 ANNUAL REPORT 2005 63

Movements in property plant and equipment for 2004 are shown below: Ships, Machinery Buildings Under Other Amounts in NOK million airplanes, etc Vehicles Housing Land contruction assets Total Cost balance at 1 January 2004 1 584 1 897 1 354 151 186 197 5 369 Acquisitions through business combinations 360 115 44 0 1 0 520 Other acquisitions 127 480 245 2 -82 0 772 Addition, establishment of Aker ASA group 0 531 1 468 143 0 79 2 221 Disposals -85 -463 -10 -31 -1 -13 -703 Effect of movements in foreign exchange -144 -128 -62 -4 -5 -1 -332 Cost balance at 31 December 2004 1 842 2 432 2 939 761 109 264 7 847

Depreciation and impairment losses at 1 January 2004 -491 -517 -756 0 -21 -53 -1 838 Depreciation charge for the year -109 -464 -199 0 -2 -12 -786 Impairment losses recognised in profit or loss 0 -2 -15 0 0 0 -17 Impairment losses reversed in profit og loss 0 0 0 0 0 0 0 Transfer to investment property 0 0 0 0 0 0 0 Transfer to non-current assets held for sale 0 0 0 0 0 0 0 Disposals 52 152 26 0 -1 12 241 Effect of movements in foreign exchange 49 94 36 0 -8 -3 168 Depreciation and impairment losses at 31 December 2004 -499 -737 -908 0 -32 -56 -2 232

Carrying amount at 31 December 2004 1) 1 343 1 695 2 031 261 77 208 5 615

1) Carrying amount leasing agreements recorded in the balance sheet: 0 94 7 0 0 0 101

Depreciation period 2-30 years 3-20 years 20-50 years Depreciation method Straight-line Straight-line Straight-line

NOTE 12: INTANGIBLE ASSETS

Movements in intangible assets for 2005 are shown below: Other Amounts in NOK million Goodwill intangibles Total Cost balance at 1 January 2005 8 098 490 8 588 Acquisitions through business combinations 22 1 014 1 036 Other acquisitions 101 43 144 Disposals -5 - -5 Effect of movements in foreign exchange 46 10 56 Cost balance at 31 December 2005 8 262 1 557 9 819

Amortisation and impairment losses at 1 January 2005 -787 -133 -920 Amortisation for the year - -27 -27 Impairment losses recognised in profit or loss -68 -2 -70 Impairment losses reversed in profit og loss - 1 1 Disposals - - - Effect of movements in foreign exchange -6 1 -5 Depreciation and impairment losses at 31 December 2005 -861 -160 -1 021

Carrying amount at 31 December 2005 7 401 1 397 8 798 64 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

The carrying amount of other intangibles of NOK 1 397 million at the end of 2005 consist of among other items of fishing licenses in Aker Seafoods of NOK 516 million and future earnings on contracts for product tankers in Aker American Shipping of NOK 681 million. Fishing licences is not amortization, while product tankers contracts are amortization over 25 years, starting from December 2006.

Fishery licences At the end of 2005, the Aker Seafoods Group owns 27.7 cod licences, 6 shrimp licences and 2 greater silver smelt licences. In 2005 a cod licence entitled the holder to harvest 716 tons of cod, 287 tons of haddock and 652 tons of saithe north of the 62nd parallel. The shrimp licences and greater silver smelt licences are not limited by quantity. Obligations to deliver are linked to the regi- ons in which the licences belong, i.e. Finnmark and Nordland. The existing delivery obligations is taken into consideration in the valuation of the licences.

In spring 2005, the Ministry of Fisheries and Coastal affairs introduced a structural quota scheme for the sea fishery fleet. This had also been possible earlier by means of the single quota scheme, but this scheme encumbered the structured quota with a limited duration (18 years). The new structural quota scheme made it possible to combine quotas by gathering more than one quota in one vessel without limiting the quota in time. As current fishing quotas are far lower than the harvesting capacity of a modern trawler, it is possible to substantially improve efficiency by gathering more than one quota in a single vessel. This has also increased the demand for cod licences from fishing companies with surplus harvesting capacity. The prices for cod, saithe and haddock have also risen in the last two years, which also increases the earnings per licence. The shrimp situation has differed, however, by low prices the last two years. The Aker Seafoods Group has only harvested shrimp to a limited extent in 2005, as vessels have been deployed on other, more profitable operations.

In connection with the presentation of the 2005 financial statements, an external valuation of the licences was performed. The cod licences were valued between NOK 39–43 million per licence, the shrimp licences at NOK 3–5 million per licence and the greater silver smelt licences at NOK 4 million per licence. The value assessments are based on the market value of this type of licences.

Contracts for Product tankers In connection with Akers acquisition of Aker American Shipping (see note 2) the excess value was allocated to the contracts for building product tankers. Aker American Shipping has contracts to build 10 product tankers and options for additional contracts. Aker American Ship- ping has entered into bareboat charter for 10 product tankers with a subsidiary of Overseas Shipholding Group. The first ship will be delivered at the end of 2006 the 10th ship will be delivered during 2010.

Aker Yards When carrying out the analyzes of the business combination that established Aker Yards, deferred tax assets related to accu- mulated loss carried forward in Aker Ostsee on the date of business combination where not fully accounted for due to uncer- tainties about future utilization. In 2004 and 2005 have Aker Ostsee generated a substantial backlog, and is fully booked out 2007. As a consequence of the improved order situation in Aker Ostsee, future utilization of loss carried forward is made plausible. In the fourth quarter 2005 a deferred tax asset is taken to income related to accumulated losses before the busi- ness combination with NOK 68 million. According to IFRS 3 (65) is booked value of goodwill adjusted accordingly. The reduc- tion in goodwill is expensed as impairment of goodwill ANNUAL REPORT 2005 65

Movements in intangible assets for 2004 are shown below: Other Amounts in NOK million Goodwill intangibles Total Cost balance at 1 January 2004 7 550 213 7 763 Acquisitions through business combinations 59 0 59 Other acquisitions 658 304 962 Disposals -144 -25 -169 Effect of movements in foreign exchange -25 -2 -27 Cost balance at 31 December 2004 8 098 490 8 588

Amortisation and impairment losses at 1 January 2004 -728 -130 -858 Amortisation for the year 0 -29 -29 Impairment losses recognised in profit or loss -89 -2 -91 Impairment losses reversed in profit og loss 0 0 0 Disposals 52 26 78 Effect of movements in foreign exchange -22 2 -20 Depreciation and impairment losses at 31 December 2004 -787 -133 -920

Carrying amount at 31 December 2004 7 311 357 7 668

Research and development at Aker mostly relates to ongoing projects, and is expensed.See note 6.

The amortisation and impairment charge is recognised in the following lines in the income statement: Accounts Proforma Amounts in NOK million 2005 2004 Depreciation and amortization -27 -29 Impairment changes and non recurring items -70 -91 Total -97 -120

Allocation of goodwill

Amounts in NOK million 2005 2004 Aker Kværner: Field Development (FD) 1 539 1 538 Maintenance, Modifications and Operations (MMO) 1 664 1 673 Subsea, Products & Technologies (SPT) 869 864 Process (PRO) 1 095 1 046 Pulping & Power (P&P) 949 935 Other activitiest in Aker Kværner 374 360 Aker Yards 496 543 Other 415 352 Total 7 401 7 311

The amount of goodwill related to Aker Kværner originate from a number of historic transactions, mainly the acquisitions of Trafalgar House in 1996 and Aker Maritime in 2002, and the establishment of Aker in 2004, but also from a number of other acquisitions. Subsequent the group has been reorganised many times, including mergers and de-mergers of individual busi- nesses, following which it is no longer possible to identify individual businesses from past acquisitions to enable allocation of goodwill from individual acquisitions to individual businesses. Consequently, we have identified Business Areas as the lowest identifiable cash generating units for this purpose. 66 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Goodwill in Aker Yards is related to the yards of Aker Finnyards with NOK 155 million, Aker Ostsee with NOK 110 million, Aker Brattvaag with NOK 111 million and Aker Brevik with NOK 120 million. It has been performed impairment testing for each cash generating unit by 31.12.2005 and the analysis indicates that no write down for impairment will be necessary. Other goodwill is mainly related to Aker Seafoods (NOK 160 million) and companies in the Aker Material Handling group.

Determination of recoverable amounts: The recoverable amounts is based on value in use calculation. The calculations use cash flow projections based on budgets for 2006 -2008. Cash flows for a further 7-year period are extrapolated using a three per cent growth rate and are appropriate because our industry is a long-term business. An enterprise value is calculated by discounting the projected cash flows by a pre-tax discount rate of nine per cent to 10 percent, depending on risk.

For all businesses the conclusion is the same, the calculated enterprise values are significantly higher than the book values under review and consequently, the analysis indicates that no write down for impairment will be necessary. As the calculated enterprise values exceed the book values by very large margin, we did not find it necessary to prepare sensitivity analyses with changes in the assumptions such as the discount rate or annual growth. A very large change would not have changed our conclusion.

NOTE 13: INVESTMENTS IN ASSOCIATED COMPANIES

Amounts in NOK million 2005 2004 Beginning of the year 631 718 Acquisitions / Disposals 585 -7 Share of loss/profit 28 -80 Exchange differences 4-2 Other equity movements -57 2 End of the year 1 191 631

The movements of investments in associated companies are allocated on companies as follows:

Other 2005 Balance beginning Acquisitions Share of loss/ Exchange equity Balance end Amounts in NOK million of the year and disposals profit differences movements of the year Kværner Powergas India 56 -25 18 4 53 Kværner ASA 417 -395 -22 0 Bjørge ASA 203 2 205 Aker Drilling ASA 771 -1 770 NorSea AS 94 33 -67 60 Supply Invest KS 37 37 Siva Verdal Eiendom 13 13 RR Offshore Oy 0 32 32 Other companies 14 -1 -2 4 6 21 Total 631 585 28 4 -57 1 191

Other equity movements of NOK 67 million in Norsea AS consist of NOK 67 million of dividend received in 2005. ANNUAL REPORT 2005 67

Investment in associated at 31 December 2005 include excess value of NOK 126 million that is allocated to other intangible assets.

Other 2004 Balance beginning Acquisitions Share of loss/ Exchange equity Balance end Amounts in NOK million of the year and disposals profit differences movements of the year Kværner Powergas India 44 -10 22 0 56 Kværner ASA 516 -99 0 417 NorSea AS 60 34 94 Supply Invest KS 37 0 37 P/f Næraberg -16 -10 26 0 Siva Verdal Eiendom 13 13 Other companies 64 3 -27 -2 -24 14 Total 718 -7 -80 -2 2 631

Investment in associated at 31 December 2004 include goodwill of NOK 0.

Summary financial information on associates and the group's interest in its principal associates is shown below. The companies are unlisted except for Bjørge ASA and Aker Drilling ASA.

Below is shown the quoted prices at Oslo Stock Exchange and Aker's market value of the investments in Bjørge ASA and Aker Drilling ASA.

Number of shares Share price (NOK) Carrying value Market value Amounts in NOK million in million 15 Feb 2006 31 Dec 2005 15 Feb 2006 Bjørge ASA 17.5 14.00 205 245 Aker Drilling ASA 28.6 37.90 770 1 085

2005 Profit for Amounts in NOK million Country Assets Liabilities Revenues the year % interest held Kværner Powergas India India 196 86 170 -16 49.0 Aker Drilling ASA Norway 4 123 777 0 -3 30.8 Bjørge ASA Norway 557 371 891 31 39.9 NorSea AS Norway 1 480 1 293 1 091 110 33.5 Supply Invest KS Norway 167 9 69 -1 22.7 P/f Næraberg the Faroe Islands 601 656 115 15 33,3 RR Offshore Oy Finland 111 82 284 4 26,0 Siva Verdal Eiendom Norway 40 8 7 3 46.0

2004 Profit for Amounts in NOK million Country Assets Liabilities Revenues the year % interest held Kværner Powergas India India 175 58 153 31 49.0 Kværner ASA Norway 9 197 3 986 20 197 -393 21.7 NorSea AS Norway 823 671 125 132 33.5 Supply Invest KS Norway 468 309 69 -2 22.7 P/f Næraberg the Faroe Islands 254 295 57 -1 33.3 Siva Verdal Eiendom Norway 37 8 6 0 46.0 68 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 14 INVESTMENT IN JOINT VENTURES The group has interests in several joint venture activities, whose principal activities are construction contracts. Included in the consolidated financial statements are the following items that represents the group's interests in the assets and liabilities, revenues and expenses of the joint ventures operating agreements and joint ventures operating entities. The main activities are 50% share in Aker Reinertssen AS and Aker Kvaerner & Soapro Engenharia Ltda.

Amounts in NOK million 2005 Current assets 44 Current liabilities -44 Net assets / (liabilities 0

Income 12 Expenses 0 Total 12

In addtition Aker have several Joint Venture operating agreements.

NOTE 15: SHARE INVESTMENTS Other share investments comprises the following items:

Amounts in NOK million 2005 2004 Odim ASA 43 - Northzone III AS 44 - AAM Absolute fund 45 - Island Offshore K/S 14 - Olympic Nor K/S 12 - Shares in other companies 77 81 Total 235 81

Shares in other companies is classified as available for sale and are valued to fair value.

NOTE 16: INTEREST-BEARING LONG-TERM RECEIVABLES Financial interest-bearing long-term receivables consist of the following items:

Amounts in NOK million 2005 2004 Restricted deposits 124 15 Loans to employees 1) 17 20 Other interest-bearing long-term receivables 879 739 Total 1 020 774

The maturity of interest-bearing long-term receivables is described in note 36.

1) Average interest rate for loans to employees is 3.55 percent in 2005 and 3.50 percent in 2004. ANNUAL REPORT 2005 69

NOTE 17: OTHER NON-CURRENT ASSETS Other non-current assets consist of the following items:

Amounts in NOK million 2005 2004 Receivable on Sea Launch 1) 198 - Other interest-free long-term receivables 116 63 Total 314 63

1) The receivable is measured to amortized cost. Aker has also issued guarantees totalling USD 149.8 million relating to loans to Sea Launch from third parties and advance payments from clients relating to ongoing contracts.

NOTE 18: INVENTORIES Inventory comprises the following items: Amounts in NOK million 2005 2004 Raw materials 862 724 Work in progress 945 275 Finished goods 449 238 Total 2 256 1 237

Write-down of inventories recognised as an expense during the period 12 Reversals of any write-down that is recognised as a reduction in expense in the period 8

Of the total value of the Aker ASA Group's inventories as of 31 Dec 2005, NOK 1 080 million is valued at fair value less cost to sell.

NOTE 19: CONSTRUCTION CONTRACTS Activities in Aker Yards, Aker Kværner, Aker American Shipping and other areas are largely based on deliveries under contracts with customers. The order backlog represents an obligation to deliver goods not yet produced, and gives Aker contractual rights for future deliveries. If projected costs are higher than projected income, the total projected loss on the contract is recorded to costs.

The operations in Aker Material Handling is also to a certain extent based on deliveries under contracts with customers, but the contracts are of short duration compared to construction contracts in the other companies.

Summary financial information on projects are presented below.

Unaudited Orderbacklog Orderintake Orderbacklog Orderintake Amounts in NOK million 31 Dec. 2005 2005 31 Dec. 2004 2004 Aker Kværner 53 341 57 748 35 920 41 582 Aker Yards 38 897 32 084 23 366 17 283 Aker American Shipping 5 830 - - - Aker Material Handling 303 1 391 265 1 297 Total 98 371 91 223 59 551 60 162 70 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Construction contracts in Aker Kværner

Amounts in NOK million 2005 2004 Value all contracts 95 657 74 708 Value of work performed: Accumulated contract cost 38 513 35 162 Accumulated gross contract margin 3 803 3 626 Value of work performed 42 316 38 788 Order reserve 53 341 35 920

Value of work performed 42 316 38 788 Advances received 33 945 31 604 Recoverable on contracts 8 371 7 184

Receivables where payment is withheld by customers based on non-fulfilled contract obligations 22 9 Revenue from construction contracts and services 37 356 31 874 1)

1) Proforma

Order intake (Unaudited)

Amounts in NOK million 2005 2004 Field Development (FD) 19 060 13 955 Maintenance, Modifications and Operations (MMO) 9 875 7 859 Subsea, Products & Technologies (SPT) 15 445 8 332 Process (PRO) 10 453 8 465 Pulping & Power (P&P) 5 811 4 198 Other / Elim -2 896 -1 227 Total 57 748 41 582

Order reserve (Unaudited)

Amounts in NOK million 2005 2004 Field Development (FD) 20 265 11 565 Maintenance, Modifications and Operations (MMO) 12 061 9 765 Subsea, Products & Technologies (SPT) 11 269 5 462 Process (PRO) 8 174 6 667 Pulping & Power (P&P) 4 819 3 442 Other / Elim -3 247 - 981 Total 53 341 35 920

Order reserve In the ordinary course of business, the group enters into delivery commitments prior to commencement of production. NOK 606 million related to certain major contracts which were not expected to yield any profit, while expected losses on such con- tracts have been charged to operations in 2005 based on best estimates at the time losses were identified. ANNUAL REPORT 2005 71

Largest projects in progress (Unaudited)

Project Customer Estimated Delivery Oil & Gas H6e Drilling rigs Aker Drilling 2008 Ormen Lange MIC Norsk Hydro 2007 Kashagan EPF Agip 2007 Frigg Decommissioning Total E&P Norge 2008 Adriatic LNG Project Terminale GNL Adriatico s.r.l 2008 Snøhvit Statoil ASA 2007 Statfjord Late Life Statoil ASA 2009 Tampen M&M Statoil ASA 2007 Dalia EPC Total E&P Angola 2007 Sempra Sempra Energy 2008

E&C Yanbu SABIC 2008 Hualian Sunshine PTA Phase II Zhejiang Hualian Sunshine 2006 Suzano Mucuri Boiler Suzano Bahia Sul Papel e Cellulose SA 2007 Hitachi Hitachi Americal Limited 2007

Construction contracts in Aker Yards

Unaudited Order backlog Order intake Order backlog Order intake Amounts in NOK million 31 Dec. 2005 2005 31 Dec. 2004 2004 Cruise & Ferries 17 559 13 279 10 229 6 689 Merchant Vessels 12 583 9 891 7 449 3 596 Offshore and Specialized Vessels 8 595 8 587 5 441 6 520 Other 160 327 247 479 Total 38 897 32 084 23 366 17 284

The recognized profit less losses in 2005 and 2004 are recorded as follows :

Amounts in NOK million 2005 Proforma 2004 Contract revenue recognized as revenue in the period 15 672 11 041 less contract expenses -14 797 -10 267 less expected losses recognized -66 -90 Recognised profit less losses 809 684 72 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

The recognised profit less losses and other key construction contracts figures divided by segments are as follows: 2005 Offshore & Cruise & Merchant Specialized Amounts in NOK million Ferries Vessels Vessels Other Total Contract revenue recognised as revenue in the period 5 687 4 401 5 542 42 15 672 less contract expenses -5 278 -4 326 -5 153 -40 -14 797 less expected losses recognised -22 - -44 - -66 Recognised profit less losses 387 75 345 2 809

Other construction contracts figures: Contract costs incurred in the period for projects under construction as of 31.12 6 152 2 397 3 414 53 12 016 Contract costs incurred and recognized profits to date for projects under construction as of 31.12 6 556 2 334 3 566 54 12 510 Advances received 2 650 2 414 2 514 11 7 589 Gross amount due from customers for contract work 4 659 1 442 1 402 45 7 548 Gross amount due to customers for contract work 753 1 523 350 1 2 627 Provisions for loss contracts -22 - -44 - -66

Construction contracts in Aker American Shipping The recognised profit less losses in 2005 is recorded as follows :

Amounts in NOK million 2005 Contract revenue recognised as revenue in the period 345 less contract expenses -302 less expected losses recognised - Recognised profit less losses 43

The recognised profit less losses and other key construction contracts figures divided by segments are as follows:

2005

Container Product Amounts in NOK million Vessels Tankers Other Total Contract revenue recognised as revenue in the period 345 - - 345 less contract expenses -302 - - -302 less expected losses recognised - - - - Recognised profit less losses 43 - - 43 ANNUAL REPORT 2005 73

NOTE 20: TRADE AND OTHER INTEREST-FREE RECEIVABLES Trade and other interest-free receivables consist of the following items: Amounts in NOK million 2005 2004 Trade receivable 6 012 5 078 Other short-term interest-free receivables 4 290 3 093 Total 10 302 8 171

In 2005 the group has recognised a loss of NOK 3 million (2004: NOK 2 million) for the impairment of its trade receivables. The loss has been included in other operating expenses in the profit and loss. Other short-term interest-free receivables consist mainly of advance payment to suppliers and withheld payments from customers where the payment will take place at the end of the warranty period.

NOTE 21: INTEREST-BEARING SHORT-TERM RECEIVABLES Interest-bearing short-term receivables consist of the following items: Amounts in NOK million 2005 2004 Interest-bearing short-term receivables with interest rate adjustment period exceeding one year - - Other Interest-bearing short-term receivables 832 153 Total 832 153

Other Interest-bearing short-term receivables is measured to fair value. The change in fair value is recongnised through the profit and loss statement.

Other Interest-bearing short-term receivables consist mainly of bonds NOK 388 million and other receivables NOK 444 million. The bonds have an interest rate of 3.06 %, whereas the main part of other receivables has an interest of 1.8%

NOTE 22: CASH AND CASH EQUIVALENTES Cash and cash equivalents comprise the following items: Amounts in NOK million 2005 2004 Cash and bank deposits 12 328 8 086 Short-term investments with terms less than 3 months 51 - Cash and cash equivalentes 12 379 8 086

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

Cash and cash equivalentes are allocated as follows: Amounts in NOK million 2005 2004 Aker Kværner 6 746 3 703 Aker Yards 3 914 3 765 Aker American Shipping 173 - Aker Seafoods 226 105 Aker Material Handling 74 86 Other companies 144 83 Aker ASA and holding companies 1 102 344 Total 12 379 8 086

There are restrictions on the cash transfer between Aker ASA and Holding companies and the listed subsidaries Aker Kværner, Aker Yards, Aker American Shipping and Aker Seafoods . The cash and cash equivalentes includes restricted deposites of NOK 506 million in Aker Kværner, NOK 785 million in Aker Yards and NOK 35 million in Aker ASA and holding companies. Restricted deposits are mainly related to projects and cash in joint ventures. 74 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 23: EARNINGS PER SHARE AND DIVIDEND PER SHARE

EARNINGS PER SHARE

Basic earnings per share The basic earnings per share at 31 december 2005 are based on the profit attributable to ordinary shares of NOK 1 614 million (2004: NOK -304 million), and the weighted average number of ordinary shares outstanding in 2005 of 76.6 million (2004: 77.0 million) calculated as follows:

Accounts Accounts Pro forma 2004 Amounts in NOK million 2005 2004 380 Profit for the period 1 614 -304 380 Profit attributable to ordinary shares 1 614 -304

86 532 067 Issued ordinary shares at 1 January 2005/30 April 2004 A 86 532 067 86 532 067 -9 560 192 Effect of own shares held B -9 560 192 -9 560 192 Effect of merger between Aker and Kværner 30 November 2005 -4 604 501 76 971 875 Total 72 367 374 76 971 875

Allocation: Issued ordinary shares at 31 December 2005 114 775 441 Effect of own shares held, B-shares -42 400 713 Effect of own shares held, A-shares -7 354 Total 72 367 374 -

76 971 875 Weighted average number of ordinary shares at 31 December 76 588 167 76 971 875

To be comparable the earings per share in the proforma period in 2004 was calculated by using the weighted average number of shares in the period April to December 2004.

Diluted earnings per share There was no potentially dilutive securities outstanding as of 31 December 2004 and 31 December 2005.

DIVIDEND PER SHARE Paid dividend in 2005 and 2004 war respectively NOK 1 013 million (NOK 14 per share) and NOK 0 million (NOK 0 per share). A dividend of NOK 6.50 per share will be proposed at the Annual General Meeting on 30 March 2006. ANNUAL REPORT 2005 75

NOTE 24: PAID IN CAPITAL As of 31 Dec 2005 Aker ASA's share capital consists of the following share classes:

Number Total par value (in NOK million) own Shares Par value Shares Shares Shares issued shares outstanding (in NOK) issued outstanding A-shares 72 374 728 7 354 72 367 374 28 2 026 2 026 B-shares 42 400 713 - 42 400 713 28 1 187 1 187 Total share capital 114 775 441 7 354 114 768 087 3 214 3 214

Share premium fund 2 071 Other paid-in capital 3 236 Total paid-in capital 8 521

All shares are entitled to dividend. The A-shares has equal voting power except that Aker ASA has no voting power for their A-shares owned. The B-shares are owned 100% by Aker Maritime Finance AS. The B-shares does not have any voting power.

Overview of the 20 largest shareholders as 3 February 2006 (A-shares) is shown in the Aker ASA accounts note 8.

The reserve for the company's own shares comprises the cost of the company's shares held by the Group.

Dividend After the balance sheet date the following dividends were proposed by the directors. The dividends have not not been provided for and there are no income tax related consequences.

Amounts in NOK million 2005 Proposed dividend of 6.50 per share 746 Expected payment of dividend to the subsidiary Aker Maritime Finance of NOK 6.50 per B-share 276 Expected paid dividend in 2006 for the group (from Aker ASA). 470 76 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 25: GROUP ENTITIES

The largest subsidiaries in the Aker Group accounts are presented in the table below. Company shareholdings owned directly by Aker ASA are emphasized.

Group's ownership Group's share Business address (in %) of votes (in %) City/Location Country Aker Kværner ASA 50.01 50.01 Lysaker Norway Aker Kværner Business Partner Ltd 50.01 50.01 London UK Aker Kværner E&C Group AS 50.01 50.01 Bærum Norway Aker Kvaerner O&G Group AS 50.01 50.01 Bærum Norway Aker Kvaerner Shared Services AS 50.01 50.01 Bærum Norway Aker Yards ASA 55.59 55.59 Oslo Norway Aker Langsten AS 55.59 55.59 Tomrefjord Norway Aker Brattvaag AS 55.59 55.59 Brattvåg Norway Aker MTW GmbH 55.59 55.59 Wismar Germany Aker Warnow 55.59 55.59 Rostock Germany Aker Finnyards Oy 55.59 55.59 Rauma Finland Aker Brevik AS 55.59 55.59 Brevik Norway Aker Aukra AS 55.59 55.59 Aukra Norway Norway Seafoods Holding AS 100.00 100.00 Oslo Norway Aker Seafoods Holding AS 100.00 100.00 Oslo Norway Aker Seafoods ASA 66.67 66.67 Oslo Norway Aker Seafoods Finmark AS 66.67 66.67 Hammerfest Norway Aker Seafoods Melbu AS 66.67 66.67 Melbu Norway Aker Seafoods JM Johansen AS 66.67 66.67 Stamsund Norway Aker Westfish AS 66.67 66.67 Oslo Norway Thorfisk AS 66.67 66.67 Grenå Denmark Norway Seafoods UK Ltd 66.67 66.67 Grimsby UK Atlas Stord AS 100.00 100.00 Bergen Norway Aker American Shipping Holding AS 100.00 100.00 Oslo Norway Aker American Shipping ASA 53.20 53.20 Oslo Norway Aker Philadelphia Shipyard Inc 53.20 53.20 Philadelphia USA Aker American Shipping Inc 53.20 53.20 Philadelphia USA Aker American Shipping Corp 53.20 53.20 Philadelphia USA Recondo AS 100.00 100.00 Oslo Norway Aker Material Handling Ltd 100.00 100.00 Oslo Norway Aker Material Handling AS 100.00 100.00 Oslo Norway RGI (Europe) BV 100.00 100.00 Rotterdam Netherlands RGI Aps 100.00 100.00 Copenhagen Denmark RGI Inc. 100.00 100.00 Seattle USA RGI Holdings, Inc 100.00 100.00 Seattle USA Legend Properties, Inc 100.00 100.00 Vero Beach USA Molde Fotball AS 99.97 99.97 Molde Norway

The Aker group contains several subsidiaries where Aker ASA and holding companies owns less than 100 %. Main companies with minority shareholders per 31 December 2005 are Aker Kværner with 49.9%, Aker Yards with 44.4%, Aker Seafoods with 33.3% og Aker American Shipping with 46.8%.

See note 4 Business segments for key financial figures for these companies. ANNUAL REPORT 2005 77

NOTE 26: FOREIGN CURRENCY EXCHANGE RATES

In the consolidated accounts of Aker, the following exchange rates have been used in translating the accounts of foreign sub- sidiaries and associated companies:

Average Rate at Average Rate at Country Currency rate 2005 31 Dec. 2005 rate 2004 31 Dec. 2004 Great Britain GBP 1 11.72 11.65 12.34 11.62 USA USD 1 6.44 6.75 6.74 6.03 Denmark DKK 100 107.45 107.16 112.53 110.47 Sweden SEK 100 86.33 84.70 91.74 90.97 The European Union EUR 1 8.01 8.01 8.37 8.23 In translating profit and loss account and balance sheet items, the average rate and rate at 31 December, respectively, have been used.

NOTE 27: INTEREST-BEARING LOANS AND LIABILITIES This note provides information about the Group's interest-bearing loans and borrowings.

Amounts in NOK million 2005 2004

Non-current liabilities Secured bank loans 2 688 3 157 Unsecured bond issues 33 - Secured bond issues 2 158 415 Convertible bonds 273 - Finance lease liabilities 77 71 Loan from associate - 140 Other 2 957 3 334 Total non-current interest-bearing liabilities 8 186 7 117

Current liabilities Current portion of secured bank loans 110 262 Current portion of finance lease liabilities 14 23 Unsecured bank facility 233 61 Construction loans 4 036 594 Other 80 506 Total current interest-bearing liabilities 4 473 1 446 Total interest-bearing liabilities 12 659 8 563

Interest-bearing liabilities specified per company: Amounts in NOK million 2005 2004 Aker Kværner 2 112 2 436 Aker Yards including construction loan 5 957 2 412 Aker American Shipping including construction loan 605 - Aker Seafoods 1 337 1 301 Aker Material Handling 387 307 Aker ASA and holding companies 2 173 2 790 Other and eliminations 88 -683 Total 12 659 8 563 78 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NET INTEREST-BEARING DEBT

Net interest-bearing debt comprise the following items:

Amounts in NOK million 2005 2004 Cash and bank deposits 12 379 8 086 Financial interest-bearing fixed assets 1 020 774 Interest-bearing short-term receivables 832 153 Total interest-bearing assets 14 231 9 013 Interest-bearing long-term debt 1) -8 186 -7 117 Interest-bearing short-term debt incl. Construction loans -4 473 -1 446 Total interest-bearing debt -12 659 -8 563 Net interest-bearing debt(-)/asset(+) 1 572 450

1) Not including subordinated debt

See note 36 Financial instruments for terms and conditions for interest bearing loans and liabilities.

Information regarding Convertible loan in Aker Yards:

Amounts in NOK million 2005 2004 Proceeds from issue of convertible bonds 236 236 Transaction costs - - Net proceeds 236 236 Amount classified as equity -24 - Accrued interest capitalized 4 - Carrying amount of liability at 31 December 216 236

The convertible bond was issued in July 2004 and have a value of NOK 236 million, booked value in the balance sheet is NOK 216 million after adjusting according to IFRS at 01.01.2005. According to IFRS this is a combined financial instrument with both liability and equity element.

An agreement has been reached with the current owner of the convertible, HBK Master Fund L.P.,to convert the loan to shares, (given the acceptance of the AGM in Aker Yards). The strike price will be NOK 111.36, a result of the current strike price being NOK 126.25, plus an extra 250.000 shares to be issued, as a compensation for converting early. The number of shares from converting the loan, will then be 2 119 253. The new shares will have right to dividend for 2005. Assuming the acceptance of the AGM, the total number of shares in Aker Yards ASA after converting will be 22 721 474. ANNUAL REPORT 2005 79

Finance lease liabilities Finance lease liabilities are payable as follows:

Minimum Minimum lease lease Amounts in NOK million payments Interest Principal payments Interest Principal Less than one year 21 3 18 52 4 48 Between one and five year 67 7 60 77 6 71 More than five years 12 1 11 0 - - Total 100 11 89 129 10 119

The main financial lease agreements comprises of two agreements for the financing of manufacturing equipment in Aker Material Handling . 60 % of these lease amounts has a maturity in fourth quarter 2010 and the remaining amount has a matu- rity at January 2013. During 2005 these agreements have had an interest rate of NIBOR / EURIBOR +1.65 % respectively. In January 2006, 40% of these lease amount has been refinanced, and interest rate has been fixed at 5 % for 7 years.

NOTE 28: OPERATING LEASES

Non-cancellable operating lease rentals (leases as a lessee) are payable as follows:

Amounts in NOK million 2005 2004 Less than one year 109 86 Between one and five year 792 323 More than five years 725 198 Total 1 626 607

The major part of the operating lease costs and commitments relate to rent of office facilities. Aker Kværner Business Partner AS and Aker Kvaerner Business Partner Ltd lease offices on behalf of the group and rent out to the other companies in Aker Kvaerner. As the agreements in Bærum are nearing maturation, a new agreement has been signed for rent of "Aker Hus", which is currently being built. The new offices will be completed by the end of 2007. For other locations the leases last for another 7-17 years. On these leases we do not have options to buy the buildings, but we have options for renewals by either 5 or 10 years after expiry date. None of the leases include significant contingent rent.

Other lease costs include leasing of IT equipment. The group has three years agreements with Hewlett Packard International Bank PLC. There are no options for purchase of the equipment and it can not be sublet. The equipment is insured by the company against loss or damage. None of the leases include significant contingent rent.

Aker Finnyards have a lease agreement with Helsinki City regarding rent of land related to the Helsinki Yard. The agreement is based on a price per square. Use of the ground is restricted to yard business and the ground can not be sub leased. The agreement expires 31.12.2010 and can be renewed based on new negotiations.

Aker Material Handling leases cars, offices, warehouses and other buildings.

The rent agreement for Aker Hus is 12-years from 1 November 2007 with an option to renew the contract.

The total of future minimum sublease payments expected to be received under non-cancellable subleases as at 31 December 2005 amounts to NOK 24 million. 80 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

NOTE 29: SUBORDINATED LOAN (Aker Kværner ASA)

Loan description Original Carrying Interest Maturity Interest Amounts in NOK million currency value amount coupon date terms

Aker Kværner ASA Non-interest-bearing until Subordinated debt 30.10.06 and fixed 5.00 . ISIN NO 0010128838 NOK 1 119 million 956 0.00% 30.10.11 % p.a. thereafter with ISIN NO 0010128846 USD 349 million 2 018 0.00% 30.10.11 back end fee of up to ISIN NO 0010128853 EUR 13 million 89 0.00% 30.10.11 4.44 % of the principal US Notes Issue USD 18 million 104 0.00% 30.10.11 payable at maturity. Total subordinated debt 3 167

Description of subordinated debt The terms and conditions of the subordinated debt contain certain restrictions and covenants of the group, including but not limited to (a) a restriction on carrying out a demerger (within the meaning of chapter 14 of the Norwegian Public Limited Companies Act), (b) a restriction on certain mergers, disposals of operations or assets and changes to the nature of the business and (c) a restriction on borrowings.

In addition the company shall not (a) within a calendar year, make a dividend payment to the shareholders that constitutes more than 50 per cent of accumulated net profits (after taxes) available for distribution (excluding any profits to the extent ari- sing from (i) disposals of assets other than in the ordinary course of business or (ii) the repurchase of subordinated debt) and (b) reduce its share capital or equity through a payment to its shareholders, other than under (a).

The debt, excluding the US Note issue, is listed on the Oslo Stock Exchange. During 2005 a conversion of USD 11 millions from the US Notes Issue to the USD tranche of the listed debt took place.

NOTE 30: PENSION EXPENSES AND PENSION LIABILITIES

The Aker Group's norwegian companies mainly cover their pensions through group pension plans in life insurance companies. Under IAS 19 Employee Benefits, the plans have been treated for accounting purposes as defined benefit plans. The Group's companies outside Norway have pension plans based on local practice and regulations. Certain companies have pension plans for which the employer provides an agreed-upon contribution that is managed in separate pension savings plan, (defined contribution plans) or makes contributions that are included in joint plans with other employers (multi- employer plans). The contributions are recorded as pension expenses for the period. The Group also has uninsured pension liabilities for which provisions have been made. Actuarial calculations have been made to determine pension liabilities and pension expenses in connection with the Group's defined benefit plans. The following assumptions have been made when calculating liabilities and expenses in Norway:

2005 2004 Expected return 5.5 % 6.0 % Discount rate at 31 December 4.5 % 5.0 % Wage growth 3.0 % 3.0 % Pension adjustment 2.5 % 2.0 % ANNUAL REPORT 2005 81

Pension expense recognised in the income statement: Accounts Accounts Proforma 2004 Amounts in NOK million 2005 2004 -147 Current service cost -264 -190 -136 Interest cost -237 -176 107 Expected return on pension funds 199 140 -4 Amortization of actuarial gains and losses -67 -5 - Amortization of past service cost - - - Curtailment / Settlement - - -180 Pension expenses recognised from defined benefit plans -369 -231 -258 Contribution plans (employer's contribution) -289 -302 -438 Total pension expense recognised in the income statement -658 -533

Net pension funds and liabilities: Accounts Proforma Amounts in NOK million 2005 2004 Defined Benefit obligation funded plans -3 348 -3 906 Defined Benefit obligation unfunded plans -873 -796 Fair value of plan assets 2 538 3 272 Calculated present value of net pension funds(+)/pension liabilities (-) -1 683 -1 430 Unrecognised net acturial gains and losses 340 183 Unrecognised Past service costs - - Net liability recognised in the balance sheet -1 343 -1 247

Changes in net liability recognised in the balance sheet are as follows: Accounts Proforma Amounts in NOK million 2005 2004 Net liability at the beginning of the year -1 247 -542 IFRS changes -689 Net expense recognised from defined benefit plans -369 -231 Pension contribution 270 210 Effect change pension plans 7 - Acquisition and sale -1 4 Benefits paid -2 1 Translation difference -1 - Net liability at the end of the year -1 343 -1 247 Pension funds 17 130 Pension liabilities -1 360 -1 377 Net liability at the end of the year -1 343 -1 247

Actual return on plan assets in 2005 and 2004 was respectively NOK 181 million and NOK 172 million.

The major categories of plan assets as a percentage of total plan assets are as follows: Percentage 2005 2004 Debt instruments 36.1 % 24.6 % Equity securities 7.1 % 5.1 % Money market instruments 54.2 % 69.8 % Other 2.6 % 0.5 % Total 100.0 % 100.0 %

The Group expects to contribute approximately NOK 187 million to the pension funds in 2006. 82 ANNUAL REPORT 2005

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NOTE 31: OTHER INTEREST-FREE LONG-TERM LIABILITIES

Other interest-free long-term liabilities comprise the following itmes:

Amounts in NOK million 2005 2004 Security reserve 195 180 Other interest-free long-term liabilities 262 213 Total 457 393

NOTE 32: PROVISIONS FOR LOSS CONTRACTS

Amounts in NOK million 2005 Carrying amount at 1 January 193 Additional provisions 48 Amounts used -24 Unused amounts reversed during the period -94 Exchange adjustment 7 Effect of the discounted amounts - Carrying amount at 31 December 130

Contract losses Any foreseeable losses on signed construction contracts are expensed. Amounts recoverable on work in progress are written down before a provision for contract losses is recognised. The cash effect of any provisions will flow over the projects' life time.

NOTE 33: OTHER PROVISIONS

Amounts in NOK million Warranties Restructuring Legal claims Other Total Balance as of 1 January 2005 722 145 50 265 1 182 Acquition and sale of subsidiaries 5 0 1 32 38 Provisions made during the year 419 1 -9 157 568 Provisions used during the year -162 -73 0 -87 -322 Provisions reversed during the year -196 -6 0 -49 -251 Exchange adjustment 18 -2 1 12 29 Discount rate adjustment / Unwind of discount 11 0 0 0 11 Balance as of 31 December 2005 817 65 43 330 1 255

Non-current 3 61 40 201 305 Current exclusive provisious for loss contracts 814 4 3 129 950 Balance as of 31 December 2005 817 65 43 330 1 255

Warranties The provision for warranties relates mainly to the possibility that Aker based on contractual agreements, needs to do guarantee work related to products and services delivered to customers. The provision is based on estimates about occurence and cost of work that needs to be done. The warranty period is normally two years and any cash effects will come in this period. ANNUAL REPORT 2005 83

Restructuring Provision for restructuring are mainly related to the restructuring process in Aker Yards (Aker Finnyards) in 2004. The yards in Turku Rauma and Helsinki were merged. This resulted in provision for restructuring related to work force reduction.

Legal claims Legal claims is mainly related to Aker Yards. The subsidiary Aker Braila in Romania has been held liable by a Dutch owner for canceling 8 contracts signed in 1995. A decision on this case is made by a court, but this is appealed by Aker Yards. Our actual part of the loss according to the verdict is calculated to be NOK 40 million. The amount is recognized in the balance sheet.

NOTE 34: GUARANTEE OBLIGATIONS

At year-end 2005 Aker had guarantee obligations of NOK 221 million that were not recorded in the balance sheet. As part of its ordinary operations, completion guarantees and guaranteed advance payments form customers are written. Such guarantees typically involve a financial institution that writes the guarantee vis-à-vis the customer.

Collateral has been posted for interest-bearing long-term debt of NOK 2.5 billion.The book value of assets used as collateral is NOK 2.4 billion.

In addtion the loans in Aker ASA and some of the subsidiaries of NOK 3.3 billion are secured by the respective companies shares in subsidiaries.

NOTE 35: TRADE AND OTHER PAYABLES

Trade and other payables comprise the following itmes:

Amounts in NOK million 2005 2004 Advances from customers 8 413 4 023 Trade accounts payable 5 325 4 023 Accrual of operating- and financial costs 5 804 4 394 Other short-term interest free liabilites 2 458 3 259 Total 22 000 15 699

NET CURRENT OPERATING ASSETS / LIABILITIES (-)

Specification of net curent operating assets (see also note 4):

Amounts in NOK million 2005 2004 Inventories, Projects under constr., Other trade and other interest-free receivables 23 749 14 528 Trade and other payables, Current provisions -23 080 -16 113 Total 669 -1 585 84 ANNUAL REPORT 2005

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NOTE 36: FINANCIAL INSTRUMENTS The Aker Group consists of various operations and companies that are exposed to different kinds of financial risk including credit-, interest- and currency risk. Due to this the main companies in the Group have developed their own policies and guidelines on how the financial risk should be handled based on the individual companies exposure to the different kinds of financial risk.

Below is a description of the financial risk and use of financial instruments per main company in Aker.

Aker Kværner: Exposure to credit, interest rate and currency risks arises in the normal course of the group’s business. Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates and interest rates.

Credit risk The group's prinicipal financial assets are bank balances and cash, trade and other receivables, finance lease receivables and investments, which represent the group's maximum exposure to credit risk in relation to financial assets. The group's credit risk is primarily attributable to its trade and finance lease receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the group's management based on prior experience and their asessment of the current eceonomic environment.

The exposure to credit risk is monitored on an ongoing basis within the groups guidelines. Credit evaluations are performed on all customers requiring credit over a certain amount.

Investments are allowed only in liquid securities / bank equivalents and only with counterparties that have a satisfactory credit rating. Transactions involving derivative financial instruments are with counterparties with whom the Group has a signed netting agreement as well as sound credit ratings. Given their high credit ratings, management does not expect any counterparty to fail to meet its obligations.

At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the balance sheet.

Interest rate risk Hedging The group's exposure to interest risk is evaluated on an ongoing basis. Interest swap agreements are used to achieve a disired mix of fixed and floating interests. The second priority lien notes is 2/3 swapped from fixed to floating interest until the middle of 2007.

The group will receive 3.20-3.40 percent fixed interest and pay floating interest. ANNUAL REPORT 2005 85

Effective interest rates and repricing analysis In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effec- tive interest rates at the balance sheet date and the periods in which they reprice.

2005 2004 Effective 6 mths More Effective 6 mths More interest and 6-12 1-2 2-5 than 5 interest - and 6-12 1-2 2-5 than Amounts in NOK million rate Total less mths years years years rate Total less mths years years 5 years Bonds 3.06 % 388 388 ------Cash & Cash equivalents 2.76 % 6 746 6 746 - - - - 2.44 % 3 702 3 702 - - - - Interest-bearing long term receivables 3.61 % 141 1 45 8 39 48 2.14 % 103 - - 1 6 96 Mortgage loan -- - - EUR 1) 260 million 8.55 % -2 103 - - - - -2 103 8.55 % -2 141 - - - - -2 141 EUR 33 million ------3.95 % - 242 - - - - - 242 USD 1) 8 million ------8.00 % - 48 - - - - - 48 NOK Unsecured bond issues NOK 1) 1 119 million 7.98 % - 956 - - - - - 956 2.94 % -1 243 - - - - -1 243 USD 1) 349 million 7.98 % -2 018 - - - - -2 018 2.94 % -2 266 - - - - -2 266 EUR 1) 13 million 7.98 % - 89 - - - - - 89 2.94 % - 119 - - - - - 119 USD 1) 18 million 7.98 % - 104 - - - - - 104 2.94 % - 198 - - - - - 198 Other long term liabilities USD 8.00 % - 9 - - - 4 - 3 - 2 8.00 % - 4 - - - - 4 - Total 1 996 7 135 45 4 36 -5 224 -2 456 3 702 - 1 2 -6 161

1) These assets / liabilities bear interest at a fixed rate before interest swap.

Foreign currency exposure Aker Kvaerner will regularely have contracts denominated in foreign currencies with both customers and vendors. The most typical examples are that operating units in a number of countries have sales contracts denominated in US-dollars with international oil companies and have purchase orders in EURO to buy materials from EU countries. The operating units are hedging any such exposure immediately on award of the contract that causes the exposure by entering into forward contracts to buy of sell the currency amount in question from/to the central Group Treasury units. This is a well established procedure that has been in force for a number of years.. The number of such transactions can be approximately 8 – 10 000 during a year and the central treasury department has implemented a special treasury-system to monitor any currency exposure at all times.

The type of accumulation of exchange exposures per currency that follows from the organisation of the central treasury functions does not enable the effectiveness testing on an individual hedging instrument basis that is required to qualify for hedge accounting under IFRS. Consequently, the effect of hedge accounting for 2005 in the subsidiaries, have had to be reversed on consolidation. The necessary adjustment to the opening balance as of 1 January 2005 has been to recognise accrued financial revenue of NOK 181 million. The adjustment to the balance sheet as at 31 December 2005 is an accrued financial loss of NOK 231 million. In total this has resulted in an expense of NOK 412 million to be charged to the income statement of 2005, of which NOK 16 million has reduced EBIT while NOK 396 million is charged as an FX-loss under financial items.

Even if these transactions do not qualify for hedge accounting under IFRS, the company believes it has an economic hedge so that the NOK 231 million that is expensed in the closing balance will be recognised over the periods customer contracts are completed so that it should be in the same economic position upon completion of contracts as if hedge accounting had been applied. 86 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

The foreign currency forward contracts described above, included the following purchase or sale as of 31 December 2005

Currency Amounts in NOK million Amount bought Amount Sold Net purchase/sale AUD 26 - 7 19 BRL 1 - 1 CAD 42 - 15 27 CHF 9 - 11 - 2 EUR 630 - 149 481 GBP 49 - 33 15 JPY 990 - 280 710 NOK 6 552 - 983 5 569 SEK 690 - 690 SGD - - 8 - 8 USD 73 -1 682 -1 609

Most of the forward exchange contracts have maturities of less than one year after the balance sheet date.

Aker Kvaerner will therefore with effect from 1 February 2006 change the treasury operation to use back-to-back external hed- ging instruments for the main projects and thereby qualify for hedge accounting for 2006 onwards.

Fair Value The fair values together with the carrying amounts shown in the balance sheet are as follows:

Carrying Fair Carrying Fair amount value amount value Amounts in NOK million 2005 2005 2004 2004 Other non-current operating assets 7 7 64 64 Interest-bearing long-term receivables 1) 141 141 103 103 Other non-current investements 22 22 21 21 Trade and other receivables 11 257 11 257 9 362 9 362 Income tax receivable 34 34 - - Interst-bearing short-term receivables 388 388 - - Cash an cash equivalents 6 746 6 746 3 703 3 703 Subordinated debt 2) -3 167 -3 340 -3 826 -2 720 Interst-bearing non-current debt 2) -2 112 -2 331 -2 435 -2 423 Other non-current operating liabilities - 309 - 309 - 34 - 34 Income tax payable - 52 - 52 - 66 - 66 Provisions - 769 - 769 - 631 - 631 Trade and other payables -14 421 -14 421 -10 281 -10 281 Total -2 236 -2 626 -4 020 -2 902

1) The carrying amount is used as fair value due to that the difference between fair value and carrying amount is immaterial. 2) Fair value are quoted prices on the Oslo Stock exchange.

For other items the fair values indicated are carrying values as there are no quoted prices available and because the underlying items mainly are short-term items for which significant differences between fair values and carrying values as unlikely. ANNUAL REPORT 2005 87

Aker Yards: The Group's industrial nature with long-term contracts and international presence give exposure to financial risks, that inclu- des but are not limited to, currency risks, interest risks and credit risks. The Group uses different financial instruments to active operate its financial exposure. Management of financial risks is done based on internal regulations.

Credit risk Credit risk that comes from commercial contracts, are managed by the different business units. A credit rating is done of the ship-owner at contract signing. Normally the ship-owner has the financial pledge in place within signing. The Group's financial assets are in all material aspects placed in cash deposits. Investments are allowed only to be placed in liquid securities and only with counterparties that have a credit rating equal to or better than the Group's credit rating.

Interest rate risk The Group's interest bearing liabilities at 31. December 2005 was in all major extend related to floating interest rate (Libor, Euribor, Nibor). The expose of interest rate in the Group is mainly related to interest bearing loan in different currencies. This is mainly neutralized by relatively large cash deposits. In order to reduce interest risks, interest rate swaps are used.

Effective interest rates and repricing analysis In respect of material income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice.

2005 2004 Effective 6 mths More Effective 6 mths More interest and 6-12 1-2 2-5 than 5 interest - and 6-12 1-2 2-5 than Amounts in NOK million rate Total less mths years years years rate Total less mths years years 5 years Cash and cash equivalents 3 914 3 914 - - - - - 3 765 3 765 - - - Long-term interest bearing receivables 4.8 % 168 - - - 168 - 2.0 % 42 - - - 42 - Short-term interest bearing receivables 1.8 % 360 360 ------Island Offshore ------2.0 % 70 70 - - - - Uksøy Petrel ------10.0 % 55 55 - - - -

Secured bank loan / Syndicate loan: NOK 300 million borrowing limit 1) 4.1 % ------5.3 % - 250 - 250 - - - - NOK 500 million borrowing limit (NOK part) 3.7 % - 100 - - - - 100 ------NOK 500 million borrowing limit (EUR part) 3.4 % - 196 - - - - 196 ------Statens Nærings og utviklingsfond (total) 5.0 % - 177 - 9 - 9 - 36 - 54 - 69 5.0 % - 96 - 4 - 7 - 18 - 27 - 40 Secured obligation bonds: Obligation bond NOK 250 million 6.4 % - 250 - - - 250 - - 5.3 % - 250 - - - - 250 - Obligation bond NOK 350 million 2) 9.0 % - 350 - - - - 350 - 7.1 % - 350 - - - - 350 - Effect on interest rate of interest swap 6.3 % - 4 - - - - 4 - 5.7 % ------Convertible bond 7.0 % - 236 - - - - 236 - 0.0 % - 236 - - - - 236 - Varma EUR 50 million 2) 4.2 % - 400 - - - - 400 ------Varma EUR 50 million 2) 4.3 % - 400 - - - - 400 ------Ilmarinen 3.3 % - 78 - - - - 78 - 3.5 % - 35 - - - - 35 - Kredittbanken (bank overdraft) 4.5 % - 51 - 51 - - - - 0.0 % - 50 -50 - - - - Clavis Maris 3) ------132 - - -132 - - Total 2 200 4 214 - 9 - 286 -1 650 - 69 2 533 3 586 - 7 - 150 - 856 - 40

1) Refinanced 2005 2) These assets / liabilities bear interest at a fixed rate. 3) No interest payments, fair value calculated according to IFRS. The loan is repurchased by Aker Yards AS in 2005 and is eliminated within Aker Yards group. 88 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Foreign currency risk The Group have a rigid policy of hedging of currency risks. When contract price is normally entered into in local currencies, and the costs of the project is in large extend in local currency, the currency exposure of the projects is relatively small. Any possible net exposure in singel currencies are hedged when a contract is entered into.

As of December 31, 2005 the Aker Yards Group's portofolio of other foreign exchange derivatives represented the following currencies and maturities. Amounts indicated include underlying principal.

After Amounts in NOK million 2006 2007 2008 2008 Total Sell EUR 675 132 12 - 819 Sell USD 88 - - - 88 Sell total 763 132 12 - 907

Buy EUR 516 32 - - 548 Buy USD 423 44 10 - 477 Buy total 939 76 10 - 1 025

Hedging of construction contracts When hedging the value of a construction contract or cost related to a contract in foreign currency, the part of hedging rela- ted to the percentage of completion in the contract adjust the value of work in progress. The value related to unrecognized contractual commitment (firm commitment) is accounted for as short term interest bearing receivables or liabilities. Net value of firm commitment recognized in the balance sheet at 31.12.2005 is NOK 62 million.

The construction contracts or hedged related costs are recognized to hedged currency rate under assumptions that it is a perfect hedge relationship. This are treated as fair value hedging.

Fair values The fair values together with the carrying amounts shown in the balance sheet are as follows:

Carrying Fair amount value Amounts in NOK million 2005 2005 Equity securities available-for-sale 36 36 Interest-bearing receivables, maturity 1-3 years 168 168 Non-interest-bearing receivables, maturity 1-3 years 14 14 Interest rate swaps: Assets 4 4 Liabilities 0 0 Forward exchange contracts: Assets 67 67 Liabilities -11 -11 Short-term interest bearing loan -2241 -2241 Long-term interest bearing loan -3716 -3716 Total -5 679 -5 679

The nominal values less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair value and are herefore not shown in the table. ANNUAL REPORT 2005 89

Aker American Shipping: Exposure to credit, interest rate and currency risk arises in the normal course of the Group's business. Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates and interest rates.

Effective interest rates and repricing analysis In respect of material income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice.

2005 Effective More Interest- 6 mths 6-12 1-2 2-5 than Amounts in NOK million rate Total and less mths years years 5 years Cash and cash equivalents 3.00 % 204 204 - - - - Short-term interest bearing receivables 3.50 % 23 12 12 - - - Long-term interest bearing receivables 4.25 % 69 - - 69 - - Secured bank loan USD 21.3 million 3.75 % - 144 - 6 - 6 - 15 - 44 - 72 Construction loans USD 68 million 7.47 % - 459 - - 459 - - - Financial lease USD 7.38 % - 2 - 0 - 0 - 1 - 1 - Total - 309 209 - 454 54 - 45 - 72

Foreign currency risk The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than USD. The currencies giving rise to this risk are primarily EURO, NOK and KRW.

As of December 31, 2005 the Aker American Shipping Group's portofolio of other foreign exchange transaction exposures represented the following currencies and maturities. Amounts indicated include underlying principal.

After Amounts in NOK million 2006 2007 2008 2008 Total Buy EUR 40 - - - 40 Buy NOK 3 - - - 3 Buy KRW 84 - - - 84 Buy total 127 - - - 127 Net position 127 - - - 127 90 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Fair values The fair values together with the carrying amounts shown in the balance sheet are as follows:

Carrying Fair amount value Amounts in NOK million 2005 2005 Interest-bearing long-term receivables 69 69 Other non-current assets 40 40 Trade and other receivables 124 124 Interst-bearing short-term receivables 23 23 Cash an cash equivalents 204 204 Interst-bearing long-term debt -133 -133 Interst-bearing short-term debt -13 -13 Constructon loans -459 -459 Income tax payable -13 -13 Provisions -13 -13 Trade and other payables -170 -170 Total -340 -340

The company has entered into 10 interest swap arrangements. The swap contracts exchange variable interest for fixed inte- rest on USD 660 million of an estimated USD 700 million borrowing need for the 10 product tankers the group will build and operate. The company has as of December 31, 2005 an undrawn borrowing facility of USD 350 million with DnB Nor. The purpose of the facility is the financing of the first five product tankers. The variable interest rate under this arrangement is Libor plus 0.7 percent.

Aker Seafood: Ordinary activities generate exposure to credit risks, interest-rate risks and foreign exchange risk. Financial derivatives are used for hedging against exchange-rate fluctuations.

Credit Risk The executive management has set guidelines for credit facilities and the exposure to credit risk is followed up continually. Credit insurance contracts is entered for all customers requesting credit greater than NOK 100.000. Loss on receivables com- pared to consolidated operating revenuewere approximately 0.18% and 0.05% in 2005 and 2004 respectively. Security is not required for financial assets.

No significant concentration of credit risk existed at the balance sheet date. The maximum credit risk exposure is reflected in the carrying amount of each financial asset, including financial derivatives.

Interest Risk Hedging The Group does not hedge against exposure to fluctuations in interest rates on deposits. The interest rate on interest-bearing financial assets is floating accordingly. The Group is exposed to interest rate fluctuations on its net interest-bearing debt which amounted to NOK 892 million at 31 December 2005.

Effective interest rates and repricing analysis The following table shows the redemption yield rates on the balance sheet date for interest-bearing financial assets and inte- rest-bearing financial liabilities. Repricing of all interest bearing financial assets and liabilities occur every three and six months as this is the intervals used for setting interest rates on margins. All interest-bearing financial assets and liabilities have floating interest rates. ANNUAL REPORT 2005 91

2005 2004 Effective Effective interest rate interest rate Cash and Cash equivalents 1.7 % 1.8 % Short-term interest bearing receivables 4.1 % 3.9 % Long-term interest bearing receivables 4.1 % 3.9 % Interest-bearing long-term loans and credits 4.5 % 6.0 % Unsecured bond issues 5.4 % - Operating facility 4.2 % 4.5 %

Effective interest rates and repricing analysis In respect of material income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice.

2005 2004 Effective 6 mths More Effective 6 mths More interest and 6-12 1-2 2-5 than 5 interest - and 6-12 1-2 2-5 than Amounts in NOK million rate Total less mths years years years rate Total less mths years years 5 years Cash and cash equivalents 1.7 % 226 226 - - - - 1.8 % 105 105 - - - - Short-term interest bearing receivables internal 1) 4.1 % 14 - 14 - - - 3.9 % 8 - 8 - - - Long-term interest bearing receivables 4.1 % 27 - 1 1 15 10 3.9 % 6 - - - 6 - Long-term interest bearing receivables internal 1) 4.1 % 178 - - - - 178 3.9 % 178 - - - - 178

Secured bank loan 4.5 % - 801 - 14 - 15 - 52 - 156 - 564 6.0 % -1 044 - - 422 - 422 - 200 - Other interst-bearing long-term debt 6.0 % - 175 - - 13 - 13 - 39 - 110 Unsecured bond issues 5.4 % - 394 - - - - 394 - Other short term liabilites 6.4 % - 6 - 6 - - - - Bank overdrafts 4.2 % - 136 - 136 - - - - 4.5 % - 82 - 82 - - - - Total - 892 70 - - 51 - 535 - 376 -1 004 23 - 427 - 435 - 233 68 1) Receivable on Aker Seafoods Holding

Foreign exchange risk The Group is exposed to foreign-exchange risks in sales in other currencies than NOK. The Group is primarily exposed to foreign-exchange risks involving EUR, GBP and USD. Roughly 50% of all receivables in EUR and GBP are hedged. Roughly 50% of the foreign-exchange risk associated with antici- pated sales in the subsequent six months are also hedged at all times. Forward foreign exchange contracts are used for hed- ging the foreign exchange risk. All foreign exchange contracts expire less than one year after the balance sheet date. The Group ensures that the net exposure linked to other monetary assets and liabilities in foreign currency is kept at an acceptable level by buying and selling foreign currency at the current rate of exhange when it is necessary to manage a short-term imbalance. Aker Seafoods portfolio of currency derivatives at 31 December 2005 for hedging of future sales, consists of the following currencies and maturity. The amounts indicate the underlying principal.

After Amounts in NOK million 2006 2006 Total Sell EUR 178 - 178 Sell GBP 35 - 35 Sell total 212 - 212 Buy EUR --- Buy GBP --- Buy total --- Net position 212 - 212 92 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Anticipated transactions. Forward foreign exchange contracts used for hedging of anticipated transactions are classified as cash-flow hedges. The contracts are valued at fair value. The fair value of forward foreign exchange contracts per 1 January 2005 is adjusted against the hedge reserve in the balance at the same date. The net fair value of forward foreign exchange contracts used in hedging of anticipated transactions was NOK 0 million at 31 December 2005.

Recognised Assets and Lliabilities Changes in the fair value of forward foreign exchange contracts used as financial hedging of monetary assets and liabilities in foreign currency, but which are not booked as hedging transactions, are recognised in the income statement. Changes in the fair value of forward foreign exchange contracts and foreign exchange gains and losses on assets and liabilities are recognised in "Net financial expenses". The fair value of forward foreign exchange contracts - used as financial hedging of monetary assets and liabilities in foreign currency at 31.December 2005 and recognised as short-term non-interest bearing receivables - was NOK 0 million.

Fair values The fair values together with the carrying amounts shown in the balance sheet are as follows: Carrying Fair Carrying Fair amount value amount value Amounts in NOK million 2005 2005 2004 2004 Other share investments 5 5 3 3 Interest-bearing receivables external 205 205 184 184 Trade receivable 253 253 248 248 Cash and Cash equivalents 226 226 105 105 Long-term Interest-bearing debt -1 166 -1 166 - 784 - 784 Short-term Interest-bearing debt - 171 - 171 - 517 - 517 Trade creditors - 273 - 273 - 222 - 222 Total - 921 - 921 - 983 - 983

Aker Material Handling: The Aker Material Handling Group has established a Treasury Policy, covering its various financial exposure. The policy is moni- tored and coordinated, centrally. Accrued project revenues and accounts receivable are exposed to credit risk. Credit evaluati- ons are performed by the local companies in the group. Credit risk are monitored centrally. Bad debt expenses during the year was limited. The Aker Material Handling Groups operations are exposed to foreign currency risk. The main currencies involved is EURO, NOK and SEK. Significant foreign currency risk exposure deriving in the tender to contract period or after contract award, is within the Treasury policy in general, required to be hedged by selling or buying the relevant currency at a future date. At the end of 2005 the outstanding amount of such obligations were limited to the purchase of EUR million 1.4. The Aker Material Handling Groups long term loans consist in majority of two financial leases and a mortgage, at the Groups three manufacturing sites. These are denominated in EUR and NOK, which are the base currencies of these operations. In addition the Group carry two long term loans in EUR and NOK with its parent and holding companies. The interest rates on all these loans were in 2005 floating, and the Group is consequently exposed to changes in market interest rates. In January 2006 a part of the EUR financial leases (MEUR 4.2) has been refinanced, with fixed interest rate.

Effective interest rates and maturity In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effec- tive interest rates at the balance sheet date and the maturity periods. ANNUAL REPORT 2005 93

2005 Effective More Interest- 6 mths 6-12 1-2 2-5 than Beløp i mill kroner rate Total and less mths years years 5 years Cash and cash equivalents 1.6 % 74 74 - - - - Interest-bearing receivables related parties 3.4 % 13 - - - - 13 Interest-bearing receivables external parties 2.5 % 2- - - 1 1 - Subordinated loan from Aker Material Handling Ltd 5.1 % - 174 - - - - - 174 Interest bearing loan from related parties 4.2 % - 73 - - - - 67 - 6 Interest bearing loans from external parties 8.0 % - 39 - 5 - 3 - 9 - 17 - 5 Finance lease liabilities 4.0 % - 83 - 7 - 7 - 16 - 38 - 15 Bank overdrafts 4.5 % - 18 - - 18 - - - Total - 298 62 - 28 - 24 - 121 - 187 There are no material difference between carrying amounts and fair values.

Aker ASA and Holding Companies: Effective interest rates and maturity In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effec- tive interest rates at the balance sheet date and the maturity periods.

2005 2004 Effective 6 mths More Effective 6 mths More interest and 6-12 1-2 2-5 than 5 interest - and 6-12 1-2 2-5 than Amounts in NOK million rate Total less mths years years years rate Total less mths years years 5 years Cash and cash equivalents 2.5 % 1 145 1 145 - - - - 2.5 % 294 294 - - - - Interest-bearing receivables related parties 5.7 % 283 - - - - 283 6.7 % 133 - - - - 133 Interest-bearing receivables external parties 3.67 % 81 50 - - - 31 5.8 % 67 - 50 - - 17

Loan Islandsbanken 4.3 % - 277 - - - 277 - - 5.3 % - 300 - 300 - - - - Loan NPA 2.6 % - 14 - - - - 14 2.6 % - 12 - - - - - 12 Loan SEB 3.9 % -1 440 -1 440 - - - - Bond loans convertible NT 1) 3.75 % - 290 - - - - 290 - Bond loans FRN Aker 01/07 4.1 % - 357 - 357 - - - - 4.6 % - 359 - - - 359 - - Bond loans 2010 floating interest 6.1 % - 500 - - - - 500 - Bond loans 2012 fixed interest 8.0 % - 500 - - - - - 500 Total - 429 838 - - 277 - 790 - 200 -1 617 -1 446 50 - 359 - 138

1) 3.75% Aker Seafoods Holding AS Exchangeable Bond Issue 2005/2008. Bonds owners may at any time during the period from and including 20 September 2005 until and including 20 June 2008 exchange 1 bond (par value 100) to 12 500 ordi- nary shares in Aker Seafoods ASA. Total Exchange Asset is 7 250 000 shares (par value 5.-)

Fair values The fair values together with the carrying amounts shown in the balance sheet are as follows: Carrying Fair Carrying Fair amount value amount value Amounts in NOK million 2005 2005 2004 2004 Assets 1509 1509 494 494 Liabilities 1) -1623 -1661 -1811 -1811 Total - 114 - 152 -1 317 -1 317

1) Carrying amount reduced with borrowing costs and equity part of conversion right in 2005. 94 ANNUAL REPORT 2005

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Other investments: Effective interest rates and maturity In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effec- tive interest rates at the balance sheet date and the maturity periods.

2005 2004 Effective 6 mths More Effective 6 mths More interest and 6-12 1-2 2-5 than 5 interest - and 6-12 1-2 2-5 than Amounts in NOK million rate Total less mths years years years rate Total less mths years years 5 years Cash and cash equivalents 2.5 % 113 113 - - - - 2.5 % 105 105 - - - - Interest-bearing receivables related parties 3.8 % 22 22 ------Interest-bearing receivables external parties 3.9 % 96 75 7 14 - - 15 - - 15 - - Secured bank loan ------3.4 % - 191 - 5 - 5 - 11 - 170 - Bank loan 3.0 % - 30 - - - - 30 - 3.0 % - 28 - - - - - 28 Bond loan 2010 NT 8.0 % - 200 - - - - 200 ------Other long-term Interest-bearing debt 6.4 % - 283 - 2 - 3 - 41 - 57 - 180 5.2 % - 305 - 21 - 26 - 45 - 65 - 148 Short-term Interest-bearing debt 7.5 % - 16 - 8 - 8 ------Bank overdrafts - 57 - 57 - - - - - 54 - 54 - - - - Total - 355 143 - 4 - 27 - 287 - 180 - 458 25 - 31 - 41 - 235 - 176

There are no material difference between carrying amounts and fair values.

Estimation of fair values The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.

Scurities Fair value is based on quoted market prices at the balance sheet date without any deduction for transaction costs.

Derivatives Forward exchange contracts are either marked to market using listed market prices or by discounting the contractual forward price and deducting the current spot rate. For interest rate swaps broker quotes are used. Those quotes are back tested using pricing models or discounted cash flow techniques. Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate is a market related rate for a similar instrument at the balance sheet date. Where other pricing models are used, inputs are based on market related data at the balance sheet date.

Interest-bearing loans and borrowings Fair value is calculated based on stock exchange values or best estimated fair value.

Convertible notes The fair value is based on quoted market prices, if available.

Finance lease liabilities The fair value is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous lease agreements. The estimated fair values reflect change in interest rates.

Trade and other receivables / payables For receivables / payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other receivables / payables are discounted to determine the fair value.

Interest rates used for determining fair value The entity uses the government yield curve as of 31 December 2005 plus an adequate constant credit spread to discount financial instruments. ANNUAL REPORT 2005 95

NOTE 37: CONTINGENCIES AND LEGAL CLAIMS

Project risks and uncertainties The group’s operations are to a large extentsubject to long term contracts, someof which are fixed-price, turnkey contracts that are awarded on a competitive bidding basis. Failure to meet schedule or performance guarantees or increases in con- tract costs can result in non-recoverable costs, which could exceed revenues realised from the applicable project. Where a project is identified as loss making, forward loss provisions are made. The accounting treatment is based on the information and advice available. Inevitably, such circumstances and information may be subject to change in subsequent periods and thus the eventual outcome may be better or worse than the assessments made in preparing up periodical financial reports.

Legal proceedings With its extensive worldwide operations, companies included in the group are in the course of their activities involved in legal disputes. Provisions have been made to cover the expected outcome of the disputes to the extent negative outcomes are likely and reliable estimates can be made. However, the final outcome of these cases will always be subject to uncertainties and resulting liabilities may exceed booked provisions.

Holborn In 2000, Aker Kvaerner Netherlands B.V. and Holborn Europa Raffinererie GmbH entered into contracts for delivery of a steam reformer and a unit for removal of sulphur and conversion of aromatics in refinery streams in order to produce ultra low sulphur and low aromatics diesel in accordance with the EU Fuel Directives. Aker Kvaerner Netherlands B.V has launched legal proceedings against Holborn Europa Raffinererie GmbH claiming pay- ment of outstanding invoices in the amount of approximately EUR 9.2 million and reimbursement of amounts drawn on bank guarantees in the amount of approximately EUR 7 million. Holborn Europa Raffinererie GmbH has rejected the claim and rai- sed counter claims of approximately EUR 35 million based on alleged defects, delays and acts of gross negligence and/or wilful misconduct in the execution of the project. Aker Kvaerner Netherlands B.V has rejected the counter claims from Hol- born Europa Raffinererie GmbH. The 2004 court order that gave Holborn Europa Raffinererie GmbH legal seizure in cash deposits and accounts receivable in the Netherlands up to a total amount of EUR 10 million have been lifted in 2005. The courts have encouraged the parties to try to reach a commercial settlement betwen EUR 3.5 - 8.8 million. However, no such settlement has been reached. Although there can be no assurance regarding the outcome, the expectation is that this will have not a material negative impact on the financial position or results of operation.

Valhall Aker Kværner entered into a contract with BP for the procurement and construction of the jacket for a water injection platform on the Valhall field in the North Sea. The installation was delayed due to pile refusal, and rectification work was necessary to complete the installation. The jacket was successfully installed in August 2003. BP has reserved the right to claim back the additional costs related to rectification work if it is determined that the pile refusal was caused by circumstances falling under the group's scope of liability. In addition, BP has reserved the right to claim penalty payments as a result of delayed delivery.

Aker Kvaerner and BP have not yet reached a financial conclusion. The limitation period in the contract with respect to claims has come to an end. With reference to this formal deadline, Aker Kvaerner and BP have exchanged writs to an arbitration tri- bunal. In parallel, the parties continue their direct dialogue aiming at reaching an agreement.Aker Kvaerner upholds the alre- ady made claims on approximately NOK 650 million for compensation of extra work to BP under the contract, while BP is clai- ming approximately NOK 550 million as compensation for costs incurred as a result of the pile refusal and liquidated damages for the delay. Aker Kvaerner`s assessment is that the dispute will have no financial effect on the accounts. Although the parties have exchanged writs to the arbitration tribunal as the agreed next step in a formal process, the parties will cont- inue the negotiations to find an amicable solution.

Warnow In 2000 the European Commission opened formal proceedings to examine whether Kvaerner Warnow Werft, now renamed Aker Warnow Werft, a subsidiary within the Aker Group, received approximately EURO 61 million (plus interest) in excess sub- sidies from German authorities in connection with the privatizations of the shipyard in 1992 and, if so, to what extent could be required to repay any such subsidies. On 20.10.2004 the Commission declared that approximately EURO 26.5 mil- lion (including interest as of May 2005) of the state aid given to the yard was incompatible with the Common Market and 96 ANNUAL REPORT 2005

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instructed Germany to institute all measures to reclaim this amount. Kværner is of the opinion that all subsidies granted were utilized in accordance with provisions duly notified to and approved by the European Commission and thus that no repayment obligation can be justified. Aker Warnow Werft and have filed an application with the European Court of First Instance to over- turn the Commissions repayment decision. In May 2005 German authorities made a claim for Aker Warnow immediate repay- ment of the state aid declared illegal by the Commission. In June 2005 Aker Warnow Werft filed a request for an injunction with the Administrative Court of Berlin to suspend any payment obligation until the European Courts have finally ruled on the validity of the Commissions repayment decision. In August 2005 the injunction was awarded. The German authorities may appeal the temporary injunction to the Administrative Court of Appeal Berlin-Brandenburg. No provision is held against the outcome of this potential exposure. Following the merger of Warnow and Aker MTW in connection with the establishment of the Aker Ostsee Group, it has been agreed that the outcome of this EU case will be Kværner’s (Aker Maritime Finance after the merger at the end of 2005) sole financial responsibility.

TAX Aker ASA and its subsidiaries have some issues that are under consideration by local tax authorities in certain countries in which the Group has operations. In accordance with generally accepted accounting practices, Aker has treated issues pen- ding final determination in accordance with the information available at the end of the accounting period.

IPSCO A previous subsidiary of Kværner has claimed USD 14 million for cost savings and bonus payments in a project management agreement for the design and construction of a plate steel facility. IPSCO claims that such previous subsidiary is responsible for project cost overruns and penalties of up to USD 66 million which are denied by the previous Kværner subsidiary. Kvær- ner (now Aker Maritime Finance) has issued a parent company guarantee for this project, with a counter-indemnification from Kvaerner (UK) Limited.

NOTE 38: TRANSACTIONS AND AGREEMENTS WITH RELATED PARTIES Aker ASA's main shareholder is TRG Holding AS which is controlled by Kjell Inge Røkke through The Resource Group (TRG) AS. All companies controlled by Kjell Inge Røkke is considered as related parties for the Aker Group. Aker does not have any material outstanding accounts neither has there been any transactions during 2005 with Kjell Inge Røkke except director's fee and other emoluments as described in note 39.

Aker Seafoods Holding AS, a subsidaries of Aker ASA has NOK 283 million (2004 NOK 133 million) in interest-bearing recei- vable against the associated company p/f Næraberg. The increase in receivable in 2005 is mainly due to Nærabergs pur- chase of the ship Atlantic Navigator from Aker.

NOTE 39: REMUNERATION PAID TO THE PRESIDENT & CEO AND GROUP MANAGEMENT All employees including the Group President & CEO and the group management have a pension plan included in their employment contracts. Some of the executives have a benfit plan (bonus) that depends among other things on the develop- ment of the value of some of the subsidiaries in Aker. The Group President and CEO and group management are guaranteed six months’ salary (over and above the six-month notice period) upon termination of employment. The board of directors has received NOK 3 491 666 in remuneration from the company in 2005. The board President has received NOK 0 in salary and NOK 39 141 in other benefits, in addition to the board remuneration.

Group President & CEO Leif-Arne Langøy: The Group President & CEO has received NOK 3 939 886 in salary and NOK 242 405 i other benefits in 2005. The company has paid NOK 96 182 to the Group President & CEO pension plan during 2005. In addition to the Group President & CEO the group management consist of three executives, that has totally received the fol- lowing salary and other benefits in 2005:

Amount in NOK Ordinary salary 6 018 868 Bonus and other benefits 5 464 174 Paid pension contribution 253 352 ANNUAL REPORT 2005 97

NOTE 40: SHARES OWNED BY THE PRESIDENT & CEO, BOARD OF DIRECTORS AND GROUP MANAGEMENT IN AKER ASA

Shares Kjell Inge Røkke 1) 49 069 690 Harald Magne Bjørnsen 700 Lapas with Leif-Arne Langøy 2) 31 000

1) Owns 99.65% directely and indirectely in TRG Holding AS, TGR Holding AS owns 49 069 690 shares in Aker ASA (67.8%) 2) Owns 133 333 b-shares (0.26%) in TRG Holding AS

In connection with the merger with Aker RGI Management AS, Aker ASA acquired all of the outstanding shares in Aker RGI Management AS in 2004, and accordingly, this company was a fully owned company before the merger. The purchase agreement includes a contingent fee of NOK 37 mill, linked to the value of Aker ASA, which where fullfiled in 2005. At the end of 2005 NOK 54 million are outstanding against the former shareholder of Aker RGI Management.

NOTE 41: EVENTS AFTER THE BALANCE SHEET DATE

Aker Sale of Aker Kvaerner Power & Automation Systems AS (AKPAS) February 3, 2006 Aker Kvaerner sold the Stord based subsidiary Aker Kvaerner Power and Automation Systems to the Finnish corporation Wãrtsilä for NOK 110 million. This includes approximately NOK 15 million in net cash holdings. The transaction represents a gain in the order of NOK 90 million compared to Aker Kvaerner's book value. AKPAS supplies power and auto- mation systems to the marine market, the oil and gas market and segments of the industrial market. The two year old com- pany has 135 employees.

Sale of Pulping and Power businesses to Metso After many years of determined and focused efforts to build a strong pulping and power business, Aker Kvaerner has signed a letter of intent to sell these businesses to Metso. The transaction will allow the Pulping and Power businesses to continue to grow under a new ownership, and Aker Kvaerner will free up financial and human resources to concentrate efforts on other core areas. The transaction value is estimated to be approximately NOK 3 billion, subject to closing adjustments. The acquisi- tion is subject to completion of the due diligence process by Metso, signing of the final sale and purchase agreement, and obtaining the relevant regulatory approvals. The parties aim to sign the final agreement by mid April 2006.

For Aker Kvaerner, the deal will have a positive net cash effect of approximately NOK 2.6 billion. Net gain for Aker Kvaerner compared to book value of the businesses is estimated to be a total of NOK 2.4 billion. Aker Kvaerner will continue to operate Pulping and Power until the transaction has been finally concluded. The parties have agreed to an adjustment mechanism for the transaction price where Aker Kvaerner will retain changes in the equity from October 2005 until the final closing of the deal.

Of Aker Kvaerner's 22 000 employees serving the international oil, gas and process industries, the Pulping and Power busi- nesses have approximately 2 000 employees with main operations in Sweden, Finland, USA, Canada, Japan and Brazil. In 2005, the Pulping and Power business had operating revenues of NOK 4 523 million, an EBITDA of NOK 329 million and an EBIT of NOK 279 million. The order backlog at 31 December 2005 was NOK 4 819 million.

Acquisition of 15 per cent in Aker Kvaerner Powergas Pvt Ltd Aker Kvaerner became a shareholder in the engineering consultancy company Aker Kvaerner Powergas in Mumbai, India, in 1976. Since then, Aker Kvaerner has gradually increased its position up to 48.9 per cent of the shares, and will now increase this further to 64 per cent ownership. In addition to Aker Kvaerner, the other major shareholders are the four employee benefit trusts. Aker Kvaerner Powergas is involved in both oil and gas projects as well as projects for the onshore based process industries and will be consolidated into the Field Development segment.

Aker Kvaerner Powergas is of strategic importance and Aker Kvaerner will increase the use of nearly 1000 highly trained eng- ineers in Powergas in projects around the world. Aker Kvaerner Powergas has for many years delivered solid profit, and access to skilled engineers is strategically important in an international job market straining for technical specialist. Access to skilled engineers with relevant experience is key in the competition for and execution of new projects. 98 ANNUAL REPORT 2005

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Aker Yards plan to buy yard from Alstom Aker Yards and ALSTOM announced on 4 January 2006 their intention to join forces in the shipyards in Saint-Nazaire and Lorient. The parties plan to establish a new company where Aker Yards would own 75 % of this new company, and ALSTOM would commit itself to keep the remaining 25 % until 2010. Aker Yards would pay EUR 50 million for the 75 % stake of the new company. Depending on the financial performance, the remaining 25 % would be sold to Aker Yards for up to EUR 125 million in 2010. The new company will be capitalized with EUR 100 million in working capital at the date of transition. The pro- posed transaction would be subject to a number of conditions, including finalization of the agreement between the parties, the effective setting-up of the new company, the requisite financing for the new company's activities, the authorization of the European authorities, the information / consultation of the work councils, confirmatory due diligence and other relevant condi- tions. It is expected to be concluded by the end of March 2006. The transaction would be carried out as a "Sale of Assets" from Chantiers de l'Atlantique to Aker Yards. The LNG tankers under construction at Saint-Nazaire are not a part of the trans- action. The LNG vessels would be completed by the new company as a subcontractor to Alstom. Apart from the LNG vessels, the current order book, mainly consisting of four cruise vessels would be included in the transaction. Additional information according to IFRS are not in place and can not be given.

NOTE 42: GOVERNMENT GRANTS Aker Yards In 2005, the Aker Yards Group received funds from public institutions related to research and development of NOK 21 million, Yards subsidies of NOK 173 million and other funds of NOK 12 million.

Aker American Shipping Aker Philadelphia Shipyard has been funded by various federal, state, and local government agency subsidies totaling USD 438.6 million as set forth in the Master Agreement between the Government Parties and the Company, dated December 16, 1997, as amended July 30, 1999. Funding under the Master Agreement was allocated as follows: USD 42 million for preliminary Shipyard development, USD 259.6 million for initial construction costs, and USD 137 million for employee training programs. The company was in 2001 granted a transfer of USD 50 million from the preliminary Shipyard development budget to the initial construction costs budget, but the overall amount of USD 438.6 million will not change. Funding is being provided through loans to the company as well as grants. The company has exhausted the funding under the preliminary Shipyard development costs and the initial constructions costs, and therefore did not receive any related reimbursements in 2005. For the years ended December 31, 2005, the company received USD 8.6 million of reimbursed employee training costs. Cumulative, through December 31, 2005, the company has received USD 132 million of the amounts available for training costs incurred through December 31, 2005.

Other commitments and contingencies In addition to the construction costs that were funded by the financing under the Master Agreement, the company was obligated to make USD135 million of additional capital investments through December 2014. The company has received confirmation from PSDC that as of December 31, 2004, approximately USD 126.6 million of this USD 135 million obligation has been met. As of December 31, 2005, the company estimates that approximately USD 132 million of this obligation has been met based on investments made during the year. It is expected that the entire obligation will be met during first half of 2006. Under the terms of the Master Agreement, the company, and former Kvaerner ASA are subject to various operating covenants, restrictions, and obligations throughout and approximately 15-years period. The company anticipates that it will continue to com- ply with the terms and requirements of the Master Agreement and that the Master Agreement will continue to remain in effect. During 2001, the company received USD 50 million from the PSDC for construction costs, which was originally stipulated as funding for training costs. As a result, the company agreed to match government funding for training costs commencing on April 1, 2002, until all of the remaining training funding was utilized. The utilization of the remaining training funding is expec- ted to occur through 2006. As of December 31, 2005, the company has fulfilled approximately USD 48.3 million of the mat- ching funding obligation. It is expected that the entire obligation will be met during first quarter of 2006. In addition, under the Master agreement, the company is required to pay a common area maintenance charge each month to the PSDC of approximately $28.000 through the term of the agreement. On September 13, 2002, the company finalized an agreement with the City of Philadelphia (and others), whereby the Real Estate and Use and Occupancy Tax for the years 2001 through 2017 were agreed to. The company is committed to a fixed assessment of approximately USD 3.3 million to USD 3.6 million per year, commencing in 2003. ANNUAL REPORT 2005 99

NOTE 43 PROFIT AND LOSS ACCOUNT AND NOTES 2003 Profit and loss accounts and notes for the year 2003 for Aker RGI Holding AS need to be presented according to Oslo Stock Exchange security regulations. The accounts are prepared according to Norwegian GAAP and due to this are not compa- rable with other parts of the year end accounts that are prepared in accordance with IFRS.

Amounts in NOK million Note 2003

Operating revenues a 13 809

Cost of goods and changes in inventory -8 610 Wages and other personnel expenses b -3 135 Other operating expenses -1 261 Operating profit before depreciation and amortization 803 Depreciation -376 Amortization -117 Exceptional operating items -32 Operating profit a 278

Share of earnings in associated companies c -448 Net financial items d -956 Exceptional financial items e 122 Profit before tax a -1 004

Tax f 75 Net profit -929

Minority interest -8 Majority interest -921 a) Segment information based on the 2004 group organisation is as follows:

Operating Operating Amounts in NOK million revenues profit Aker Kværner - - Aker Yards 9 713 606 Aker Seafoods 1 523 -49 Aker Material Handling 1 981 -110 Other investments 593 -104 Aker RGI Holding AS, Holding companies and eliminations -1 -65 Aker RGI Holding AS Group 13 809 278 100 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Operating revenues based on customer location are shown below : Amounts in NOK million Norway 2 774 EU 8 095 Asia 831 America/Canada 1 127 Other areas 982 Total 13 809 b) Wages and other personnel expenses consist of: Amounts in NOK million Wages 2 519 Social security contributions 421 Pension costs 50 Other expenses 145 Total 3 135 Average number of employees 11 862

c) Share of earnings in associated companies includes profits from the following companies Amounts in NOK million Avantor ASA -2 Kværner ASA -434 Other -12 Total -448

d) Net financial items consist of: Amounts in NOK million Interest income 350 Interest expense 1) -872 Net interest income -522 Net exchange loss/gain 52 Net other financial income/expenses -486 Net financial items -956 e) The NOK 122 million gain in 2003 on sale of shares is attributable to divestiture of Aker RGI's 39.9% shareholding in Avantor ASA. The stake in Avantor was sold in late 2003 for NOK 462 million. f) The Group 's taxes are made up as follows: Amounts in NOK million TAXES PAYABLE: Norway - Abroad -102 Total taxes payable -102 CHANGE IN DEFERRED TAX: Norway 130 Abroad 47 Total change in deferred tax 177 Total 75 ANNUAL REPORT 2005 101

NOTE 44 EXPLANATION OF TRANSITION TO IFRSs

These are the group’s first consolidated financial statements prepared in accordance with IFRSs.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 December 2005, the comparative information presented in these financial statements for the year ended 31 December 2004 and in the preparation of an opening IFRS balance sheet at 1 April 2004 (the date of the formation of the group and the date of transition) and at 1 January 2004 for pro forma purposes.

In preparing its opening IFRS balance sheet, the group has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (Norwegian GAAP). An explanation of how the transition from previous GAAP to IFRSs has affected the group’s financial position, financial performance and cash flows is set out in the following tables and notes:

Note 1) Pension All cumulative actuarial gains and losses on defined benefit plans existing on the transition date to IFRS have been recognised according to IFRS 1 (voluntary exemption) in the opening balance sheet at the date of transition. In addition some pension plans in Finland are redefined under IAS19, and the discount rate is reduced from 6.5% used for the NGAAP computations to 5.5% under IFRS increasing the pension liability in the accounts at 1. January 2004 by an additional NOK 53 million and in Proforma at 1. January 2004 by NOK 689 million The corresponding increase in pension expenses has been calculated to be NOK 14 million in the accounts for 2004 nd NOK 24 million for the full year (pro forma).

Note 2) Goodwill Amortisation of goodwill is no longer required under IFRS but the carrying amount of goodwill must be tested for impairment at least annually. NOK 371 million of goodwill amortisation in the accounts for 2004 and NOK 468 million has been reversed under IFRS and goodwill and equity increased accordingly.

In addition badwill are not allowed according to IFRS. Therefore NOK 840 million badwill in connection with the merger between Aker and Kværner shippingactivities are recognised in the profit and loss accounts for 2004. In the proforma accounts for 2004 are taken into accounts at 1. January 2004.

Note 3) Loans and borrowings measured at amortised cost At the time of the refinancing of the Kvaerner Group in 2001/2002, some of the borrowings were converted into a loan with modified terms. Under NGAAP it was concluded to continue to carry the loan at nominal value in the books.

According to IAS 39 it is assumed that the value of the loan should have been reduced to fair value at the time of the transaction and that the subsequent increase back up to nominal value should be recorded as interest expense over the loan period to 2011.

This adjustment leads to a reduction in the book value of the loan by NOK 1 099 million in the proforma pening balance for 2004 and NOK 1 063 million at the time of establishment 31. March 2004. The interest expense in proforma 2004 have increased by NOK 84 million and in actual 2004 NOK 63 million. The valuations are based on a funding cost level of 8% per annum.

Note 4) Tax Changes in income tax expense and deferred tax liabilities are due to changes described in note 1.

Note 5) Associated companies Aker 21.7% share in Kværner was according to NGAAP classified as shares on temporary ownership and recorded at cost. According to IFRS Kværner shares shall be classified as associated companies and valued at equitymethod. Accordingly the profit for 2004 and balance at end of 2004 are adjusted with -NOK 99 million. 102 ANNUAL REPORT 2005

ACCOUNTS AND BOARD OF DIRECTOR‘S REPORT

Note 6) IFRS features stricter rules than Norwegian accounting practices as to allocation of excess/under value at business combinations. Restructuring provision booked under NGAAP are expensed out in the 2004 accounts with NOK 62 million and NOK 71 million in the proforma 2004. In addition NOK 143 million in restructuring provision in connection with the merger betwwen Aker og Kværner shipping activities, have in 2004 reduced the amount expensed out in Aker Yards accounts.

Note 7) Property, plant and equipment Aker Kvaerner did not change the book value on property, plant and equipment at the date of transition. Impairment tests are to be done when there are indications of impairment. Aker is using fair value on some of the assets as new cost price. The judgment is based on external valuation. The effects are increased cost price with NOK 23 million and reduced depreciation in 2004 with NOK 6 million.

Note 8) Translation differences relating to foreign subsidiaries The translation difference from before 1. January 2004 is classified as other equity.

IAS 39 at 01.01.2005 Note 9) Financial instruments Financial instruments that represent hedges of future revenues and expenses were not reconised in the accounts under earlier GAAP.These instruments are now recognosed in the accounts (over P&L) as the hedges are deemed to not qualify as hedging instruments under IFRS (ref. note 36). The effect of these instruments are NOK 181 million, while - NOK 11 million is attributable to changed methods for fair value assessments.

Note 10) Shares hold for sale Fair value adjustment directly to equity in 2005 amounts to NOK 25 million.

CHANGES IN CONNECTION TRANSITION TO IFRS - ACTUAL

Balance Profit and loss Other Balance Note 1. January 2004 31.December Amounts in NOK million 2004 2004 Equity according to NGAAP 6 284 -594 2 512 8 202 Merger, translation differences, dividend and other -115 -115 Pension 1 -53 -14 - -67 Goodwill 2 - 371 - 371 Badwill 2 840 840 Deferred tax 4 31 37 - 68 Subordinated loan 3 - -63 - -63 Financial instrument - - - Dividend 11 - -11 - Restructuring 6 13 80 93 Revearsal previously write downs 7 23 -6 17 Share of earnings in Kværner 5 -99 -99 Classification - -4 -4 Total adjustments 25 1 142 -127 1 041 Eequity according to IFRS 6 309 550 2 385 9 243

Total adjustment allocated as follows: Majority interest 6 053 380 -313 6 120 Minority interest 256 168 2 698 3 123 ANNUAL REPORT 2005 103

CHANGES IN CONNECTION TRANSITION TO IFRS - PROFORMA

Balance Profit and loss Other Balance Note 1. January 2004 31. December Amounts in NOK million 2004 2004 Egenkapital i henhold til tidligere prinsipp (NGAAP) 9 247 -430 -615 8 202 Pension 1 -689 -24 - -713 Goodwill 2 158 468 626 Deferred tax 4 2 40 - 42 Subordinated loan 3 1 184 -84 1 100 Financial instruments - - - Dividend 11 - -11 - Restructuring 6 - 72 - 72 Revearsal previously write downs 7 23 -6 17 Classification - -4 -4 Share of earnings in Kværner 5 - -99 - -99 Total adjustments 689 363 -11 1 041 Eequity according to IFRS 9 936 -69 -626 9 243

Total adjustment allocated as follows: Majority interest 6 945 -304 -523 6 120 Minority interest 2 991 235 -103 3 123 104 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

Profit and Loss Account

Aker Aker Aker RGI ASA ASA Holding AS Amounts in NOK million Note 2005 13.02-31.12.04 2003

Total revenues - - -

Wages and other personnel expenses 1 -61 -39 -10 Depreciations 4 -7 -5 -13 Other expenses 2 -28 -51 -71 Sales gain/loss fixed assets 3 2 - 1 Operating profit -94 -95 -93

Dividends from subsidiaries 14 66 - Dividends other companies 4 - - Received Group contribution - 380 958 Interest income from Group companies 101 23 343 Gain on sale of shares 2 343 - - Other interest and financial income 73 95 603 Interest expenses to Group companies -225 -134 -302 Writedowns shares and receivables 15 -4 -29 -1 195 Other interest and financial expenses 14 -230 -152 -686 Profit after financial items 1 982 154 -372

Tax on ordinary profit 9 45 -93 86 Tax regarding limited deferred tax benfit in the balance sheet 9 - -509 - Profit/loss for the year 2 027 -448 -286

ALLOCATION OF PROFIT/LOSS FOR THE YEAR

Profit/loss for the year 2 027 -448 -286 Dividends -746 Transferred from/allocated to (-) retained earnings -1 281 964 286 Total 8 - - -

Received group contribution from subsidiaries against investments before tax 2 092 Group contribution without tax effects to subsidiaries -519 Group contribution after tax to subsidiaries - - -264 ANNUAL REPORT 2005 105

Balance Sheet as of 31.December Aker Aker Aker RGI ASA ASA Holding AS Amounts in NOK million Note 2005 2004 2003 ASSETS Goodwill 4 95 58 - Deferred tax benefit 9 - 494 494 Total intangible assets 95 552 494 Art, inventory and vehicles 42 44 41 Property 3 3 3 Total tangible fixed assets 4 45 47 44 Shares in subsidiaries 5,15 12 363 13 316 7 504 Shares in associated companies 5 - - 2 Other long-term investments in shares etc. 5 10 363 38 Long- term receivables from Group companies 6,15 7 720 605 3 240 Other long-term investments 6,10 16 121 209 Total financial fixed assets 20 109 14 405 10 993 Total fixed assets 20 249 15 004 11 531 Short-term receivables on Group companies 38 236 73 Group contributions 2 092 586 1 156 Other short-term receivables 14 15 62 53 Other short-term investments 7 50 - 16 Bank deposits, cash in hand, etc 17 928 185 156 Total current assets 3 123 1 069 1 454 Total assets 23 372 16 073 12 985 EQUITY AND LIABILITIES Share capital 3 214 2 423 1 605 Purchased shares - -185 -30 Share premium reserves 2 071 2 334 630 Other paid in equity 3 236 3 235 - Total paid in equity 8 521 7 807 2 205 Other equity 4 661 - 4 208 Total retained earnings 4 661 - 4 208 Total equity 8,19 13 182 7 807 6 413 Pension liability 10 105 127 124 Total provisions 105 127 124 Long-term debt to Group companies 11,16 1 708 1 160 3 892 Long- term subordinatet debt to Group companies 11,16 4 848 4 694 Other long-term debt 11 1 453 1 891 1 048 Total other long-term debt 8 009 7 745 4 940 Short-term debt to Group companies 16,11 1 525 357 1 229 Other short-term debt 11 551 37 279 Total short-term debt 2 076 394 1 508 Total equity and liabilities 23 372 16 073 12 985 Oslo, 15 February 2006 Board of Directors Aker ASA

Kjell Inge Røkke (Sign.) Lone Fønss Schrøder (Sign.) Bjørn Flatgård (Sign.) Jon Fredrik Baksaas (Sign.) (Board Chairman) (Deputy Chairman) (Director) (Director)

Kjeld Rimberg (Sign.) Kjell A. Storeide (Sign.) Atle Tranøy (Sign.) Stein Aamdal (Sign.) (Director) (Director) (Director) (Director)

Bjarne Kristiansen (Sign.) Harald Magne Bjørnsen (Sign.) Leif-Arne Langøy (Sign.) (Director) (Director) (President and CEO) 106 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

Cash Flow Statement

Aker Aker Aker RGI ASA ASA Holding AS Amounts in NOK million Note 2005 13.02-31.12.04 2003

Profit after financial items 1 982 154 -372 Gain/(loss) of sales fixed assets and write downs -2 285 29 976 Unrealized foreign exchange loss/gain (-) 43 23 -76 Ordinary depreciation 7 5 13 Change in short-term items etc 1 613 -167 -237 Cash flow from operating activities 1 360 44 304

Investments in tangible fixed assets 4 - -10 - Payments for acquisitions of shares and other equity investments 5 -152 -2 738 -339 Proceeds from sales of tangible fixed assets 4 2 - 2 Proceeds from sales of shares and other equity investments 5 1 499 - 158 Other investments/disposals etc 6 -289 - 157 Cash flow from investments activities 1 060 -2 748 -22

Paid in cash - 2 737 - New long-term interest-bearing debt 11 1 533 2 751 2 252 Repayment of long-term interest-bearing debt 11 -1 580 -491 -1 132 Change in short-term interest-bearing debt -89 -2 095 -921 Dividend and Group contributions paid/received 8 -1 541 -13 -485 Cash flow from financing activities -1 677 2 889 -286

Cash flow for the year 743 185 -4 Bank deposits, cash in hands etc in the beginning of the period 185 - 160 Bank deposits, cash at hands etc in the end of the period 928 185 156 ANNUAL REPORT 2005 107

Accounting Principles

The annual report is prepared according to the Norwegian Accounting Act 1998 and generally accepted accounting principles in Norway.

Subsidiaries and investment in associate Subsidiaries and investments in associate are valued by the cost method in the company accounts. The investment is valued as cost of acquiring shares in the subsidiary, providing that write down is not required. Write down to fair value will be carried out if the reduction in value is caused by circumstances which may not be regarded as incidental, and deemed necessary by generally accepted accounting principles. Write downs are reversed when the cause of the initial write down are no longer present.

Dividends and other distributions are recognized in the same year as appropriated in the subsidiary accounts. If dividends exceed withheld profits after acquisition, the exceeding amount represents reimbursement of invested capital, and the distribution will be subtracted from the value of the acquisition in the balance sheet.

Balance sheet classification Net current assets comprise creditors due within one year, and entries related to goods circulation. Other entries are classified as fixed assets and/or long term creditors.

Current assets are valued at the lower of acquisition cost and fair value. Short term creditors are recognized at nominal value.

Fixed assets are valued by the cost of acquisition, in the case of non incidental reduction in value the asset will be written down to the fair value amount. Long term creditors are recognized at nominal value.

The bond loans with fixed interest are recorded according to amortized cost.

Trade and other receivables Trade receivables and other current receivables are recorded in the balance sheet at nominal value less provisions for doubtful debts.

Foreign currency translation Foreign currency transactions are translated using the year end exchange rates.

Short term investments Short term investments (stocks, short-term bonds, liquid placements and shares are valued as current assets) are valued at the lower of acquisition cost and fair value at the balance sheet date. Dividends and other distributions are recognized as other investment income.

Property, plant and equipment Property, plant and equipment is capitalized and depreciated over the estimated useful economic life. Direct maintenance costs are expensed as incurred, whereas improvements and upgrading are assigned to the acquisition cost and depreciated along with the asset. If carrying value of a non current asset exceeds the estimated recoverable amount, the asset is written down to the recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the esimated future cash flows are discounted to their present value.

Pensions Pension costs and pension liabilities are estimated on the basis of linear earnings and future salary. The calculation is based on assumptions of discount rate, future wage adjustments, pension and other payments from the national insurance fund, future return on pension funds and actuarial assumptions for deaths, voluntary resignation etc. Pension funds are valued at fair value and deducted from net pension liabilities in the balance sheet. Changes in the pension obligations due to changes in pension plans are recognized over the estimated average remaining service period. When the accumulated effect of changes in estimates, changes in assumptions and deviations from actuarial assumptions exceed 10 percent of the higher of pension obligations and pension plan assets, the excess amount is recognized over the estimated average remaining service period. 108 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

Income tax Tax expenses in the profit and loss account comprise both tax payable for the accounting period and changes in deferred tax. Deferred tax is calculated at 28 percent on the basis of existing temporary differences between accounting profit and taxable profit together with tax deductible deficits at year end. Temporary differences, both positive and negative, are balanced out within the same period. Deferred tax assets are recorded in the balance sheet to the extent it is more likely than not that the tax assets will be utilized.

Cash flow statement The cash flow statement is presented using the indirect method. Cash and cash equivalents includes cash, bank deposits and other short term higly liquid placement with original maturities of three months or less.

Use of estimates The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts in the profit and loss statement,the measurement of assets and liabilites and the disclosre of contigent assest and liablilities on the balanse sheet date. Actual results can differ from these estimates. Contingent losses that are probable and quantifiable is expenced as occured.

Major events and effects Kværner Holding AS where established as of 13. February 2004. During 2004 the company has been transformed from a Limited Liability Company to a Public Limited Company and changed name of the company to Aker ASA. As of 27. May 2004 the company merged with Aker RGI Holding AS. Juridical Kværner Holding where the transferee company. However, by this point of view Kværner Holding AS where a subsidiary of Aker RGI Holding AS and for a accounting purposes. Aker ASA has merged with the 100% owned subsidiary Wyndmore NV during the year (parent-subsidiary merger). AS of 01 December 2005 Aker Maritime Finance AS merged with Kværner ASA. The merger consideration to shareholders in Kværner ASA consists of "A" shares in Aker ASA. As consideration for the merger consideration, Aker will get a receivable against Aker Maritime Finance AS, which is equivalent to the equity accruing to Aker Maritime Finance AS, which amounts to NOK 6 275 391 956,-. In 2005 the company has had major sales gain mainly related to sale of shares in Kværner ASA NOK 1 007 mill, Aker Kværner Yards ASA NOK 210 mill and paid-in asset in Contract Co Alfa AS and Contract Co Beta AS in the subsidiary Aker Capital AS to market value NOK 926 mill. The 2003 numbers from Aker RGI Holding AS is presented due to information considerations.

NOTE 1: WAGES AND OTHER PERSONNEL EXPENSES Wages and other personnel expenses consist of the following:

Amounts in NOK million 2005 2004 2003 Wages and salaries 35 23 - Social security 8 5 - Pension cost 6 -6 8 Other benefits 12 17 2 Total 61 39 10 Average number of employees 35 26 -

The Group President has received NOK 3 939 886 in salary and NOK 242 405 i other benefits in 2005. The company has paid-in NOK 96 182 in the Group Presiden's pension plan during 2005. The board of directors has received NOK 3 491 666 in remuneration from the company. The board President has received NOK 0 in salary and NOK 39 141 in other benefits, in addition to the remunderation to the board of directors. In 2003 Aker bought management services from Aker RGI Management AS and had no employees in this period. All emplyees including the Group President and the leadership have a pension plan included in their employment contracts. Some of the executives have a benfit plan that depends among other things on the development of the value of some of the subsidaries of Aker. See also note 39 and 40 in the Aker Group accounts. ANNUAL REPORT 2005 109

NOTE 2: AUDITOR'S FEE Auditor's fee is included in other expenses and consists of the following:

Orinary Other Law Total Total Total Amounts in NOK million auditing Attestation services services 2005 2004 2003 Aker ASA 1 0 1 1 3 5 3

NOTE 3: SALES GAIN/(PROFIT) OF TANGIBLE FIXED ASSETS

Amounts in NOK million 2005 2004 2003 Sale property 2 - 1 Total 2 - 1

NOTE 4: FIXED ASSETS The change in fixed assets consists of the following:

Machines/ cars/ Buildings/ Amounts in NOK million Art Inventory etc Total Goodwill Cost as of 1 Jan. 23 76 8 107 59 Purchase 5 5 Sold - Cost as of 31 Dec. 23 81 8 112 59 Accumulated depreciations -62 -5 -67 Book value as of 31 Dec. 23 19 3 45 59 Ordinary depreciations for the year -7 -7

Life time 4-8 years 20 years Plan of depreciations Linear Linear

Goodwill arised from the merger with Aker RGI Management AS. Purchase of a company are among other items based on strategic adaptation and expected future economic profit. The increase in 2005 relates to Aker RGI Management AS purchase according to note 19. 110 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

NOTE 5: SHARES Shares in subsidiaries consist of the following as of 31 Dec:

Equity as Profit after Amounts in NOK million Ownership in % 1) Head quarters of 31 Dec financial items Book value Aker AS 100.00 Oslo - - 3) 0 Recondo AS 100.00 Oslo 41 - 3) 139 Norway Seafoods Holding AS 100.00 Oslo 624 -9 3) 762 Aker Yards ASA 75.00 Oslo 5 029 773 2),5) 2 009 Atlas-Stord AS 100.00 Bergen 84 16 2) 84 RGI (Europe) BV 100.00 Rotterdam 690 83 3) 1 809 Norcrest Finance Corp 100.00 Liberia -15 -5 3) 1 CS Krabbe AS 100.00 Oslo 6 - 3) 48 Aker Reassurance AS 100.00 Copenhagen 7 - 3) 5 Resource Group International AS 100.00 Oslo 29 -1 3) 33 Dianor Invest AS 100.00 Oslo 71 6 3) 65 Intellectual Property Holdings AS 100.00 Oslo - - 3) - Prosessholding AS 100.00 Oslo 307 8 3) 236 Aker Maritime Finance AS 100.00 Oslo 1 231 49 3) 1 787 Aker Geo Seismic AS 100.00 Oslo 308 10 3) 316 Aker Finans AS 85.00 Oslo 1 - 3) 8 Aker Kværner ASA 57.98 Oslo 4 262 1 018 2),5) 3 523 Aker Capital AS 100.00 Oslo 1 459 5 3) 1 452 RGI Inc 1.25 Seattle 1 010 -96 3), 4) 25 Shipyard Exchange AS 4.60 Oslo 55 -10 3), 4) - Aker Mekaniske Verksted AS 35.00 Oslo -1 -4 3), 4) - Molde Fotball AS 100.00 Molde 23 -21 3) 57 Aker Contracting PF AS 100.00 Oslo - - 3) - Aker Barents Base AS 90.00 Oslo - - 3) 2 K3 Komplementar Tomt AS 100.00 Oslo - - 3) - Aker American Shipping Holding AS 100.00 Oslo 182 1 3) - Total 12 363

Shares in associated companies consist of the following:

Equity as Profit after Amounts in NOK million Ownership in % 1) Head quarters of 31 Dec financial items Book value APS DA 50.00 Oslo - - 3) - Total -

1) Aker ASA's ownership and voting power are the same for all companies. 2) 100% of the group equity as of 31 Dec and 2005 profit after financial items 3) 100% of the company's equity and 2005 profit after financial items 4) Subsidiary company in the group ANNUAL REPORT 2005 111

Other long-term shares: The company own 9.99% in Aker Insurance AS. The historical cost price is nok 10 mill.

5) Spesification of investment in public listed companies as of 31.12.2005

Number of Market value Market value Amounts in NOK million shares owned pr share Total Aker Kværner ASA 27 520 930 414.50 11 407 Aker Yards ASA 11 452 010 324.00 3 710 Total 15 118

The shares are considered as long-term strategic investment by Aker ASA. Short-term fluctations in the marked is therefore not taken into consideration for accounting purposes. The shares are recorded by historical cost

NOTE 6: OTHER LONG-TERM FINANCIAL ASSETS Other long-term financial assets consist of the following:

Amounts in NOK million 2005 2004 2003 Other long-term receivables 15 51 43 Pension funds 1 36 39 Activated costs relating to new debt - 34 13 Option from Norwegian companies - - 114 Total other long-term financial assets 16 121 209 Long-term receivables on Group companies (1) 7 720 605 3 240 Total 7 736 726 3 449

All receivables are due after 1 year. Interest conditions are according to marked conditions.

(1) the amounts consist of interest- bearing receivable of NOK 7 712 million and an interest- free of NOK 8 million and consist of the following:

Amounts in NOK million 2005 Aker American Shipping Holding AS 970 Aker Maritime Finance AS 5 368 Aker Material Handling Ltd 593 Aker Seafoods Holding AS 296 Other 493 Total 7 720

NOTE 7: OTHER SHORT-TERM INVESTMENTS Other short-term investments consist of the following:

Historical Market Change in Book cost value value in the year value Telenor ASA 50 50 0 50 Total 50 The assessment of market value is based on the stock value. 112 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

NOTE 8: SHAREHOLDERS EQUITY As of 31 Dec 2005 Aker ASA's share capital consists of the following share classes:

Total par value (NOK million) Number of shares Shares Shares Shares Shares issued Own shares outstanding Par value issued outstanding A-shares 72 374 728 7 354 72 367 374 28 2 026 2 026 B-shares 42 400 713 - 42 400 713 28 1 187 1 187 Total share capital 114 775 441 7 354 114 768 087 3 214 3 214 Own shares - Share premium reserve 2 071 Other paid-in capital 3 236 Total paid in capital 8 521

All the A-shares have voting power and can receive dividends. Aker ASA has no voting power for their A-shares owned. The B-shares are owned 100% by Aker Maritime Finance AS. The B-shares do not have any voting power, but can receive dividends.

The 20 largest shareholders as of 03.02.06 (A-shares):

Company Number shares Percent TRG Holding AS 49 069 690 67,8 Bank of New York, BR S/A Equity Tri-Party 2 056 583 2,8 Bank of New York, BR BNY GCM Client Accounts 1 388 050 1,9 Skandinaviska Enskilda (Publ) Oslofilialen 1 106 555 1,5 Nordea Bank Sweden A C17 691 187 1,0 Carnegie Investment Market-Making 582 850 0,8 Voldberg Tore Aksel 560 002 0,8 Morgan Stanley & Co. Client Equity Accounts 512 953 0,7 Morgan Stanley and C Client Equity Accounts 499 837 0,7 JPMorgan Chase Bank S/A Luxembourg Offshore 474 386 0,7 Goldman Sachs intern equity nontreaty customer accounts 469 066 0,7 State street bank & client omnibus 458 943 0,6 JPMorgan Chase bank S/A Escrow Accounts 320 265 0,4 State street bank & client omnibus 318 983 0,4 DnB Nor Markets, AKS Market-making derivatives 313 854 0,4 Nordea bank Denmark S/A Nordea (DK) 295 407 0,4 Nordea Bank PLC Finland 286 573 0,4 ABG Sundal Collier 272 500 0,4 Barclays Bank PLC Re BCSL SBL/PB 225 422 0,3 Svenska Handelsbanken c/o Handelsbanken AS 225 360 0,3 Total the 20 largest 60 128 466 83,10 % ANNUAL REPORT 2005 113

Changes in shareholders equity in 2005 are shown below:

Share premium Own Other paid-in Total paid-in Other Retained Total Amount in NOK million Share capital reserve shares equity (1) capital equity earnings equity Equity as of 01.01.05 2 423 2 334 -185 3 236 7 808 - 7 808 Paid in capital merger Kværner ASA/AM Finance AS 791 4 737 185 5 713 - 5 713 Extraordinary dividends - -1 607 -1 607 -1 607 Implementation IFRS pension -13 -13 -13 Reclassification equity -5 000 -5 000 5 000 5 000 - Ordinary dividends -746 -746 -746 Loss - 2 027 2 027 2 027 Equity as of 31 Dec 3 214 2 071 - 3 236 8 521 4 661 4 661 13 182

(1) Other paid-in equity is included in the basis for calculate free equity, regarding calculation of dividend capacity.

The changes in equity 2003 to 2005 are shown below:

Amounts in NOK million 2005 2004 2003 Opening balance 7 807 - 6 447 Net profit for the year 2 027 -448 -286 Continuity difference merger - -595 185 Paid in capital 5 713 9 253 68 Dividends -2 353 -403 - Others -13 - - Balance as of 31 Dec 13 182 7 807 6 413 114 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

NOTE 9: DEFERRED TAX The table below shows the difference between book and tax value at the end of 2005, and deferred tax liability at the end of 2005 and change in deferred tax:

Amounts in NOK million 2005 2004 2003 Differences in accruals 204 - 15 Differences of receivables -217 -359 -1 643 Differences short-term shares - - -76 Total short-term differences -13 -359 -1 704 Fixed assets differences -21 -20 -12 Long-term shares differences - - -309 Partnership companies differences - - - Differerence interest - - 199 Dividends from subsidiaries this year - - - Net pension liability -104 -91 -86 Capital gains and losses reserve 37 46 56 Total Long-term differences -88 -65 -152 Total differences -101 -424 -1 856 Tax losses carried forward -1 671 -3 158 - Total basis, deferred tax before corrections -1 772 -3 582 -1 856 Corrections for differences shares - - 90 Total basis, deferred tax after corrections -1 772 -3 582 -1 766 Net deferred tax 28% -496 -1 003 -494 Deferred tax receivable not in the balance sheet 496 509 - Deferred tax receivable - 494 494 Deferred tax liability - - -

Due to the new tax amendment in Norway, differences in shares are reversed in 2004.

ESTIMATED TAXABLE PROFIT

Amounts in NOK million 2005 2004 2003 Profit before tax 1 982 154 -372 Received group contribution against investments in subsidiaries 2 092 - - Profit and Loss regarding merger - -312 - Profit after finance for tax purposes 4 074 -158 -372 Net not deductible items -2 174 -1 155 -68 Dividends entitled to tax credit - -435 Change in differences -117 - 1 241 Taxable profit/loss NOKUS companies - - Estimated taxable income before Group contributions 1 783 -1 313 366 Tax payable (28%) in the Profit and loss accounts - - - Tax of Group contribution - - -366 Tax receivable correction earlier years - 13 - Tax payable (28%) in the balance sheet - 13 - ANNUAL REPORT 2005 115

Tax expense: 2005 2004 2003 Tax payable in the Profit and Loss account - - 102 Change in deferred tax 541 92 -189 Correction change in deffered tax earlier years - -59 - Tax receivable not in the balance sheet (1) - 509 - Tax on received group contribution against investments in subsidiaries -586 - - Total tax expense/(income) -45 542 -86 Tax expense/(income) on ordinary profit and loss -45 542 -86 Tax expense/(income) on extraordinary profit and loss - - - Total tax expense/(income) -45 542 -86 Tax expence due to merger 60 Tax expence in the Profit and Loss accounts (+) -45 602 -86

(1) Tax receivable not in the balance sheet due to the new norwegian tax emendment in 2004. There will be no tax on gain/loss sale of shares.

The tax expence divide from the tax expence in the Profit and Loss accounts due to the difference between tax and accoun- ting period described above.

The 2005 figures are based on estimates of different non deductable taxable income, non deductable items and differences between accounting and taxable items. The final items will be calculated in the income-tax return, and may differ from the estimates above.

Explanation why the tax income differ from 28% of profit before tax:

28 % tax of profit before tax 555 Tax against equity -586 Permanent differences -2 Other differences -12 Calculated tax income -45

Effective tax percent (tax income compared with profit/loss before tax) -2 %

NOTE 10: PENSION LIABILITIES/ASSETS Aker ASA covers its pensions mainly through a group pension plan in a life insurance company. The plan has been treated for accounting purposes as a defined benefit plan. Aker ASA also has uninsured pensions liabilities.

Actuarial calculations have been made based on the following assumptions:

Expected return 5.5 % Discount rate 4.5 % Wage increases 3.0 % Social security base adjustment/inflation 2.5 % Pension adjustment 2.0 % 116 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

PENSION EXPENSES

Over-funded Under-funded Amounts in Nok million plans 1) plans 1) Total 2005 Total 2004 Total 2003 Present value of the year's pension earnings -2 - -2 -2 -1 Interest cost on accrued pension liabilities -3 -6 -9 -9 -7 Expected return on pension funds 3 - 3 3 3 Allocated effect of change in estimates and pension plans - - - - -1 Change in social security - 2 2 2 -2 Net pension expenses -2 -4 -6 -6 -8

NET PENSION LIABILITIES/ASSETS AS OF 31 DEC:

Over-funded Under-funded Amounts in Nok million plans 1) plans 1) Total 2005 Total 2004 Total 2003 Present value of accrued pension liabilities -49 -110 -159 -156 -129 Value of future wage increases -5 -3 -8 -4 -3 Calculated pension liabilities -54 -113 -167 -160 -132 Value of pension funds 46 7 53 56 46 Calculated net pension funds/(liabilities) -8 -106 -114 -104 -86 Amortization 2) 9 6 15 20 8 Social security -5 -5 -7 -7 Net pension funds/(liabilities) 3) 1 -105 -104 -91 -85 Number of persons 135 21

1) Under-funded plans: The value of the pension liability exceeds the value of the pension funds. Over-funded plans: The value of the pension funds exceeds the value of the pension liability. 2) Amortization: The effect of changes in estimates and pension plans not recorded in the profit and loss account. 3) A provision is made for employment tax on contracts with net pension liabilities.

Aker ASA's net liabilities are presented in the balance sheet as an interest-free long-term liability. Net pension funds are recorded in the balance sheet as interest-free long-term receivables. Pension funds are invested in accordance with the general guidelines for life insurance companies. Recorded pension liablilities are calculated on the basis of estimated pension liabilities and accrued in accordance with generally accepted accounting principles. The pension liability recorded in the accounts is not the same as the pension rights legally earned as of 31 December. ANNUAL REPORT 2005 117

NOTE 11: DEBT Long-term debt to group companies has maturity date longer than 5 years. Also see note 16 regarding subordinated debt. Interest conditions are according to marked conditions.

Interest bearing long-term debt external is distributed as shown below:

Debt to Total Amounts in NOK million Convertible loan Bond loans credit institutions Other loans 2005 Year 2006 - 2007 357 357 2008 - 2009 - 2010 500 500 After 2010 500 14 514 Total 2005 - 1 357 - 14 1 371 2003 - 754 294 - 1 048 2004 - 359 1 440 12 1 811

Long-term interest free external debt is nok 101 mill. Average yearly interest rate on the interest- bearing loans is 6.1%. Book value of the bond which will be paid in 2007 is reduced by own bonds with nominal value of 448 mill. Bond loans are reduced by loan expences of 20 mill and will be expenced over the life time for det debt. Covenants is described in note 14. Bond loans are in NOK. Other loans are in USD

NOTE 12: LEGAL DISPUTES Aker ASA has made a guarantee for Norway Seafoods Holding AS related to the forced redemption of Norway Seafoods AS shares under the Norwegian public limited liabilities act. Remaining amounts is nok 7 mill.

NOTE 13: GUARANTEE OBLIGATIONS

Amounts in NOK million Loan guarantee 1 169 Performance guarantee 221 Total 2005 1 390

In 2004 997

Aker ASA has pledged a NOK 186.7 mill Aker Seafoods Holding AS receivable. 118 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA

NOTE 14: FINANCIAL MARKET RISK Foreign currency balance sheet items are naturally hedged, to the extent that borrowing and lending in the same currency coincide.

Aker has loan and guarantee commitments that contain covernants as to equity ratio and other issues. At the end of the 2005 accounting year, Aker met all loan and guarantee covernants.

Some Group subsidiaries are exposed to risk associated with the value of their investments in subsidiaries, due to changes in market prices for raw materials and semi-processed goods, to the extent that such fluctuations result in changes to these companies’ competitiveness and earnings potential over time.

Exposure to risk arising from foreign currency exchange rate fluctuations is identified and reduced through continuous moni- toring and adjustment of the Group’s collective portfolio of loans and financial instruments. Exchange risk related to invest- ments in foreign currencies is hedged by modifications to the loan portfolio and/or via other financial instruments.

Some Group subsidiaries enter into ongoing hedging transactions related to individual subsidiaries’ sales in foreign curren- cies. Such hedging is done to reduce the exchange rate risk affecting sales contracts.

The company has no not realized gain/loss on other derivative contracts included in the balance sheet as of 31.12.

NOTE 15: WRITE-DOWNS SHARES AND RECEIVABLES

Writedowns shares and receivables as shown below:

Amounts in NOK million 2005 1) Write-downs receivables 5 Write-downs shares -1 Total 4

NOTE 16: SUBORDINATED DEBT GROUP COMPANIES Subordinated debt as shown below:

Amounts in NOK million 2005 Aker Geo Seismic AS 521 Prosessholding AS 197 RGI (Europe) BV 1 840 RGI Inc 1 187 Aker Maritime Finance AS 1 103 Total subordinated debt 4 848

The loans are sub-ordinatet to all Aker ASA other liabilities, and is due after external debt is paid. The interest conditions is 12 mnd NIBOR + 1% margin. ANNUAL REPORT 2005 119

NOTE 17: RESTRICTED CASH The bank deposit of NOK 928 mill includes restricted cash of NOK 10 million. The bank deposit includes money placements of NOK 142 mill according to market value.

Note 18: EVENTS AFTER THE BALANCE SHEET DATE No major events has occured.

NOTE 19: SHARES OWNED BY THE PRESIDENT/ BOARD OF DIRECTORS Aker ASA shares owned as of 21.02.06:

Number of shares Kjell Inge Røkke (1) 49 069 690 Harald Magne Bjørnsen 700 Lapas v/Leif-Arne Langøy (2) 31 000

(1) Also owns 99.65% directly and indirectly of TRG Holding AS. TRG Holding own 49 069 690 shares in Aker ASA (67.8%). (2) Also owns 133 333 b-shares (0.26%) in TRG Holding AS.

In connection with the merger with Aker RGI Management AS, Aker ASA acquired all of the outstanding shares in Aker RGI Management AS in 2004, and accordingly, this company was a fully owned company before the merger. The consideration inclueds a contingent fee of NOK 37 mill, linked to the value of Aker ASA, which where fullfiled in 2005.The contigent fee has increased the Goodwill in 2005 (note 4). 120 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA Aker ASA and Holding companies

the Aker group 122 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA AND HOLDING

Profit and loss Statements Aker ASA and Holding companies

Amounts in NOK million Note 2005

Operating revenue 1 1 613

Operating expenses -104 Depreciation and amortization -9 Exceptional operating items - Operating profit 1 500

Received dividend 18 Other financial items 2 -10 Exceptional financial items - Profit before tax 1 508 Tax 3 -317 Profit after tax 1 191 ANNUAL REPORT 2005 123

Balance, Aker ASA and Holdingcompanies at 31.12.2005 The accounts of the Holding Company shows the value at which each investment has been recorded and how much debt Aker has assumed to finance the investments. In Akers view the Holding Company balance sheet is presented in a format that provides relevant information to investors and analysts and makes it easier to calculate the NAV of Aker ASA. The traditional parent company balance sheet has been expanded to contain all the wholly owned underlying administrative service compa- nies and holding companies that carry only investments, cash, and debt in the balance sheet. The balance sheet therefore shows net debt relating to the holding companies’ investments, i.e. the investments in Aker Kværner, Aker Yards, Aker Seafo- ods, Aker Material Handling. The balance sheet shows all holding companies consolidated, whereas the operating holding companies like Aker Kværner ASA, Aker Yards ASA and Aker Seafoods are included at original cost price. Original acquisition cost means the cost price paid by the Holding Company. For further comments on the applied accounting principles, see “Accounting Principles parent Company Aker ASA”. Please note that Aker has elected to present this balance sheet for Aker ASA and Holding companies in accordance with the cost method of accounting. Thus, shares in associated companies and subsidiaries are not valued according to the equity capital method in the balance sheet. The most significant holding compa- nies which are consolidated are: Aker ASA, Aker Maritime Finance, Resource Group International as, RGI (Europe) BV, RGI Inc, RGI Holdings, Inc, RGI(Denmark) Aps, Dianor Invest, Prosessholding, Aker Geo Seismic, Norway Seafoods Holding, Aker Seafoods Holding AS og Kværner Invest AS.

Amounts in NOK million Note ASSETS Intangible assets 5 879 Tangible fixed assets 5 41 Total intangible and tangible assets 920 Financial interest-bearing long-term assets 6 1 934 Financial interest-free long-term assets 5 241 Long term equity investments and interests 4 8 612 Total financial fixed assets 10 787 Total fixed assets 11 707 Short-term interest-free receivables 26 Short-term interest-bearing receivables 6 229 Liquid assets 7 1 102 Total current assets 1 357 Total assets 13 064 SHAREHOLDERS` EQUITY AND LIABILITIES Paid-in capital 8 521 Retained earnings 1 062 Total shareholders’ equity 8 9 583 Provisions and other interest-free long-term liabilities 9 252 Long-term interest-bearingliabilities 10 2 163 Total long-term liabilities 2 415 Short-term interest-free liabilities 9 1 056 Short-term interest-bearing liabilities 10 10 Total short-term liabilities 1 066 Total shareholders’equity and liabilities 13 064

Oslo, 15 February 2006 Board of Directors Aker ASA

Kjell Inge Røkke (Sign.) Lone Fønss Schrøder (Sign.) Bjørn Flatgård (Sign.) Jon Fredrik Baksaas (Sign.) (Board Chairman) (Deputy Chairman) (Director) (Director)

Kjeld Rimberg (Sign.) Kjell A. Storeide (Sign.) Atle Tranøy (Sign.) Stein Aamdal (Sign.) (Director) (Director) (Director) (Director)

Bjarne Kristiansen (Sign.) Harald Magne Bjørnsen (Sign.) Leif-Arne Langøy (Sign.) (Director) (Director) (President and CEO) 124 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA AND HOLDING

NOTE 1: OPERATING INCOME

Operating income is allocted as follows:

Amounts in NOK million 2005 Gain by establishing Aker Drilling 926 Gain of sale of Aker Hus 400 Sale of shares in Aker Kværner and Aker Yards 201 Gain by establishing Aker Invest II KS 86 Total 1 613

NOTE 2: OTHER FINANCIAL ITEMS

Other financial items consists of the following:

Amounts in NOK million 2005 Net Interest income company with in the same Group 72 Other interest expenses -74 Other financial items -8 Total other financial items -10

NOTE 3: TAX

Amounts in NOK million 2005 TAX PAYABLE: Norway 0 Abroad -312 Total tax payable -312

CHANGE IN DEFERRED TAX:

Norway -66 Abroad 61 Total change in deferred tax -5 Total -317 ANNUAL REPORT 2005 125

NOTE 4: LONG TERM EQUITY INVESTMENTS AND INTERESTS

Market price Market value Ownership Number Book value 15.02.2006 15.02.2006 At 31.12.2005 in % of shares (NOK mill) (kr) (NOK mill)

Aker Kværner ASA 50.01 27 520 930 3 523 508.50 13 994 Aker Yards ASA 55.59 11 452 010 2 009 387.00 4 432 Aker Seafoods ASA 66.67 32 474 910 534 40.70 1 322 Aker American Shipping ASA 53.17 14 675 950 954 114.50 1 680 Bjørge ASA 39.89 17 518 861 203 14.00 245 Aker Drilling ASA 30.84 28 537 815 1 057 37.90 1 085 Total listed shares 8 280 22 758 Aker Invest II KS 60.00 180 Aker Material Handling AS 100.00 0 Atlas Stord 100.00 70 Other 82 Total 8 612

NOTE 5: INTEREST-FREE LONG-TERM RECEIVABLES AND OTHER ASSETS

Interest-free long-term receivables and other assets are distributed as shown below:

Amounts in NOK million Receivable Other assets Total Deferred tax assets 772 772 Pension funds 8 8 Sea Launch 198 198 Receivables from companies in the same group - - Other 35 148 183 Total 1 013 148 1 161

NOTE 6: OTHER INTEREST-BEARING CURRENT ASSETS AND LONG-TERM RECEIVABLES

Other interest-bearing current assets and long-term receivables from companies within the same group, associated companies, and external companies are as shown below:

Short-term Long-term Amounts in NOK million assets receivables Total Receivable, companies within the same group 219 1 308 1 527 Receivable, external 10 626 636 Total 229 1 934 2 163

NOTE 7: LIQUID ASSETS Liquid assets amounts to NOK 1 102 million, where of NOK 35 million are restricted. 126 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA AND HOLDING

NOTE 8: SHAREHOLDERS' EQUITY

As of 31 Dec 2005 Aker ASA's share capital consists of the following share classes:

Number Total par value (NOK million) of shares Shares Shares Shares Shares issued Own shares outstanding Par value issued outstanding A-shares 72 374 728 7 354 72 367 374 28 2 026 2 026 B-shares 42 400 713 - 42 400 713 28 1 187 1 187 Total share capital 114 775 441 7 354 114 768 087 3 214 3 214 Share premium reserve 2 071 Other paid-in capital 3 236 Total paid in capital 8 521

All the A-shares has voting power and can receive dividends. Aker ASA has no voting power for their A-shares owned. The B-shares are owned 100% by Aker Maritime Finance AS. The B-shares do not have any voting power, but can receive dividends.

Dividend of NOK 6.50 per share proposed by the Board of Director are included in the accounts.

Amounts in NOK million 2005 Dividend NOK 6.50 pr share 746 NOK 6.50 per B-shares to 100% subsidiaries Aker Maritime Finance 276 Excepted payment of dividend from Aker in 2006 470

NOTE 9: INTEREST-FREE LIABILITIES Interest-free liabilities are presented below:

Amounts in NOK million Short-term Long-term Total Tax liabilities 323 2 325 Pension liabilities - 150 150 Dividend 470 470 Liabilities to companies in the same group 148 148 Other 115 100 215 Total 1 056 252 1 308 ANNUAL REPORT 2005 127

NOTE 10: INTEREST-BEARING DEBT Interest-bearing debt is distributed among companies in the same group and external creditors as shown below:

Amounts in NOK million Short-term Long-term Total Debt to companies in the same group - 254 254 Debt to external creditors 10 1 909 1 919 Total 10 2 163 2 173

Interest-bearing debt to external creditors is shown below:

Amounts in NOK million Bond loans 1 618 Debt to credit institution 277 Debt to former minority shareholders in Norway Seafoods ASA 8 Other debt 6 Total 1 909 128 ANNUAL REPORT 2005

ACCOUNTS, AKER ASA AND HOLDING rnlto:Flom-Jacobsen & Fish Translation: aotadpit apnGas S ieso 241 625 Kampen Grafisk AS Lisensno: Layout and print:

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Aker ASA, Fjordalléen 16, P.O.Box 1423 Vika, 0115 Oslo, Norway Tel. +47 24 13 00 00, Fax +47 24 13 01 01. Enterprise reg.no.: 886 581 432 VAT www.akerasa.com