Annual Report 2012

3 THE SCANA GROUP 4 Objectives and means 5 Group Management and Board of Directors 6 Comments from the CEO 8 Historical highlights 10 Business areas

12 BUSINESS AREA SCANA ENERGy 14 Scana Steel Björneborg 15 Scana Steel Booforge 16 Scana Steel Söderfors 17 Scana Machining 18 Scana Subsea 19 Scana Steel AB

20 BUSINESS AREA SCANA PROPUlSION 22 Scana Propulsion 26 BUSINESS AREA SCANA OffSHORE 28 Scana Offshore Technology 29 Scana Steel Stavanger 30 Scana Offshore Vestby 31 Scana Offshore Services 33 Scana Skarpenord 35 Scana Korea Hydraulic

36 BUSINESS AREA SCANA OTHER BUSINESS 38 leshan Scana Machinery 39 Scana do Brasil Industrias ltda

40 BUSINESS AREA SCANA PROPERTy

42 ENVIRONMENTAl IMPACT

45 ANNUAl ACCOUNTS 2012 46 Directors’ report 52 Scana group statement of income 53 Scana group balance sheet 54 Scana group cash flow statement 55 Scana group statement of change in shareholders equity 56 Scana group notes 88 Parent company statement of income 89 Parent company balance sheet 90 Parent company cash flow statement 91 Parent company notes 97 Declaration by the Board of Directors and the CEO and group chief executive 98 Auditors´ report

100 SHARES AND SHAREHOlDERS 2012 102 Articles of association

104 KEy fIGURES

Cover: Upsetting operation in the Scana Steel Björneborg forge.

This includes oil and gas, other energy and marine operations related to the offshore market.

Scana also provides service and carries out repairs and maintenance for customers in the same markets.

Scana’s technology, unique materials knowledge and extensive production experiencee form the basis of our competitive power. Our aim is to be the preferred supplier to leading companies within our market

segments. The majority of our customers are located in Europe, the Americas and Southeast Asia.

Scana Industrier ASA has operative companies in Norway, Sweden, China, USA, Poland, Singapore, Brazil and South Korea. The head office is situated in Stavanger.

At the end of 2012, the group had 1765 employees.

Scana Industrier ASA is a Nordic industrial group whose main business is to supply products and systems to energy related enterprises.

THE SCANA GROUP

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Scana’s technology, unique materials know­ledge and extensive production experience form the basis of our competitive power.”

Business conceptThe objective of the company is to own and manage manufacturing industry, commercial activities and related activities. The objectives of the company also includee investing in other companies that can promote the company’s primary activities.

Scana shall be a market-driven industrial group with niche products for growing markets.

VisionScana creates progress.

Scana shall have a reputation for robust quality, delivery reliability, excellent customer respons and strong competition. The company shall be an attractive workplace were our employees are challenged. Scana’s finances shall be sufficient to develop the group industrially and commercially.

Direction of development•Scanasmainmarketsareenergyandoffshore•Scanamovestowardssupplyofmoreadvanced

products and components•Scanashallcooperatewithcorecustomersforacost

efficient value chain

•Scanashallhaveapresenceclosetocustomersinchosen areas

•Scanamovesfrommerelyinvestment-basedcustomers to more maintenace and service based customers

Main aim and strategyThe main aim of the group is to increase the share-holders’ values. On this basis, the following primary strategies have been determined:

1. Inceased focus on the structure and development of the business areas

2. Continued organic growth in all business areas3. Regain profitability and ensure proper financial

management4. Develop the repair and service concept within

Scana Propulsion and for Scana Offshore5. Strengthen the group’s strategic position through

cooperation/acquisitions6. Reduce the group’s exposure outside the groups

priority area7. Develop property value

In 2013, the board emphasises improved operation and strict financial management

OBjECTIvES AND mEANS

Scana creates progress”

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Rolf Roverud, Group CEORolf Roverud (born 1958) took up the appointment as Group Chief Executive in Scana Industrier on january 1, 2008. He has previously had a number of leading positions in Saga Petroleum and came from the position as vice Chief Executive in NSB AS. Roverud is an economics graduate and holds a master’s degree in strategy and management.

Kjetil Flesjå, Group Director / CFO Kjetil Flesjå (born 1967) has a master of Science in Finance and came to Scana from Fokus Bank. Flesjå has a thorough expertise in banking and a comprehensive experiencee with cor-porate finance processes including acquisitions and sales, financial risk analyses, balance and liability strategies, plus and extensive analysis experience.

Jan Henry Melhus, Group Director Oil & Gasjan Henry melhus (born 1963) is educated as production engineer with additional education within marine technology. He has more than 20 years of experiencee from Scana’s areas of commitment. melhus came to Scana from the position as director for GE Oil & Gas. Ha has previously held leading positions at vetco Gray, GmC group, NAT and ABB Group.

GROUP mANAGEmENT AND BOARD OF DIRECTORS

Scana has a decentralized organisation, and a large part of the group’s technical and commercial expertise shall be located in the companies. Scana’s group management team and finance and accounts functions are based at the head office in Stavanger, Norway.

Group management

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Bjørn Torkildsen, Chairman of the BoardBjørn Torkildsen (born 1962) has extensive experience in management and Strategy and 25 years experience in the petroleum industry. mr. Torkildsen worked as Skangass CEO from 2009-2013 and Lyse Infra CEO from 2005-2008. Torkildsen has an m.Sci from Norwegian University of Science and Technology, with additional education within finance and management.

Per RavnestadPer Ravnestad (born 1952) has more than 30 years experience from the oil and gas industry. Up until 2010, Ravne-stad was Scana’s group director for business development. He came to Scana from the position as managing Director in IOS Tubular management. Ravnestad is a major shareholder in Scana.

Elisabeth Saupstad Elisabeth Saupstad (born 1968) has extensive experi-ence in hospitality business and held a numerous of management positions within Nordic Choice Hotels and the last years as Director of Operations for Comfort Hotels in Norway. She also worked for Figgjo AS, as director of sales, both national and internationals. Saupstad is now in Add Energy Group, as managing Director in Add Consulting.

John Arild Ertvaagjohn Arild Ertvaag (born 1955) runs his own investment business through his company Camar AS. The invest-ments are primarily within oil and gas, indus-try and commerce. He holds a number of board positions in both listed and non-listed compa-nies. After an issue of shares Q1 2012, Camar AS is the largest investor in Scana Industrier ASA.

Knut Øgreid Knut Øgreid (born 1950) runs his own investment business through verket Finans. The investments include among other things real estate, industry, oil and gas and commerce. Øgreid holds a number of board positions in both listed and non-listed companies. After an issue of shares Q1 2012, verket Finans is the second largest investor in Scana Industrier ASA.

Martha Kold Bakkevigmartha Kold Bakkevig (born 1963) has and extensive experience in the topics of leadership, strategy and R&D within technology and business development. She holds a doctorate (dr. scient) from NTNU (1995) and a doctorate (dr. oecon) from Handelshøyskolen BI (2007). Bakkevig is CEO in the well service company DeepWell in Haugesund.

Board of Directors

COmmENTS FROm THE CEO

a great effort every single day. These are advantages that we will make the most out of!

Our companies are currently leaders within their niches and we support world-class customers. This is a good starting point for further work. Still, we cannot take our customer’s graces for granted. We must deliver every single time, something we sadly do not always manage. Through self-examination and an open and honest dialogue with our customers, we must rise to meet the challenges and see changes through to regain trust.

Scana is a well-respected supplier of high quality steel. During the recent years, we have gradually produced more complete products and systems. We do not compete with other steel works on the delivery of a rod of steel across the globe. Our competitive power lies in the drive to add value for the customer when we turn high quality steel into more complete products in a way that few others manage.

Scana is an environmental business and manufactures some of the purest and eco-friendly steel to be obtained, steel that is utilized in our own products and by our customers. Our starting point is scrap metal, which, through our processes is turned into high-quality products. It is our goal to have the smallest possible impact on our environment, irrespective of where in the world we do business.

We have a firm basis in our employees’ competences and attitude. When Scana succeeds with our change process, it is because everybody know that change is necessary, but not least because everyone wishes to keep the business running and the workplaces intact. This team spirit combined with a very low absence due to illness, are strengths to uphold. I wish to thank all our employees for their great efforts and positive attitude through a demanding 2012!

What about further development? We are going through demanding changes to strengthen our future competitive position. We are in a process towards delivering more advanced products, components and systems, cooperating closely with our core customers for a cost-efficient value chain. This is an arduous journey, but over time it will secure Scana’s foundation and increased competitive power. Throughout the recent year, we have taken over parts of the value chain from several of our key customers, something that has required large production and competence changes in our organization. In the long run this strengthens our

2012 did not turn out as expected for Scana. When the European debt crisis replaced the extensive, global financial crisis, we saw at the outset of 2012 signs of growth in the markets that we operate. However, this positive trend failed to continue, and on the contrary we experienced a very demanding conclusion of the year.

Even if we have reduced our exposure considerably towards the weak European market, we are still dependent on this market to obtain sufficient tonnage for our steel companies. It was this type of order that failed towards the end of 2012. Riskiness in the market growth at the outset of 2013, combined with a desire to lower stock at the turn of the year, reduced the demand for less refined products considerably.

Somewhat simplified, we could say that we need the simple products with a fair tonnage to cover our fixed costs and we need more advanced and processed components and products to see a good profit. At the outset of 2012 we asked for the more advanced orders – we have, however, received more of these towards the end of 2012, for delivery up to 2014, but the large quantity products disappeared temporarily during this period, as mentioned. This gave us liquidity challenges and a need for capital injection. Scana is fortunate to have shareholders that help contribute to cover our capital requirements.

It´s sure that the road back to positive results has been longer than we expected. We did not base our prognoses on the fact that the economic slope should be this long-term. A strong Norwegian and Swedish Krone compared to other important currencies, give us extra challenges compared to our competitors and hit us harder when the market prices are already under pressure. Every month we have to compensate for the more than NOK 10 million that the strong Krone affects our operating profit, compared to 2009. That is a considerable amount for a company of our size.

But we are still convinced that it is feasible to regain profit in Scana even under the current international climate, and we are certain that we are positioned to deliver substantial results when the market returns to normal. Our main focus for 2013 will of course be to regain profit!

To succeed, we need to focus clearly on our strengths: our materials knowledge, delivery precision and quality, and a close relationship to our customers. We are small and flexible, with employees that do their best and make

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position considerably and is also favourable for our customers.

Additionally, we are moving from an investment-based customer group, to more of a serviced-based customer group. Service and maintenance are less vulnerable to economic turnarounds than “new sales”. In the recent years, Scana Propulsion has had a sharp increase in service and maintenance. This makes it possible to create profit within this business area, even if “new sales” are low due to a historic slump in the global new build activity. We see the same trend in oil and gas, and in both areas we have a firm basis for growth in the coming years.

We will continue to maintain a point of contact close to our customers in selected areas. This must be done without increasing costs disproportionally. Important foundations are Europe/The North Sea, North America / The Gulf of mexico, Brazil, South East Asia including Singapore, China and South Korea. We have no plans of spreading out more. Still, we are glad to sell to customers operating in other areas, but without a specific presence in that area.

An important ongoing change is to turn the group even more towards energy/offshore. many of our companies are already strong within this segment and are positioned for success. Additionally, the world’s need for energy will be on the increase the coming decades. A stronger positioning towards energy related activities, is therefore interesting for us. This change is also a demanding one. It is far more challenging to supply customers in this segment, than in other markets. But in the long-term it is right – and that means that we have to make the move.

2013, like 2012, will not be a bed of roses for Scana, but we need to deliver on another level than we did in 2012. Our main task is to stabilize those of our companies that have taken the greatest losses, to re-obtain profit for the group as a whole. Exclusively cutting costs cannot ensure this. The most important thing is to win good orders and deliver these on time with expected quality.

Additionally we will look into alternative developments for each business area and for the companies within them. This entails cooperation with other companies to create a “win-win” situation for both parties. At the outset of 2013, this work has already started for Scana Energy and we see that we have a lot to gain for the other business areas or each subisidiary. Through

Yours sincerely,

Rolf RoverudCEO

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cooperation, we complement each other for new markets, products and competences and create new business opportunities.

In addition, we will work to expand our real estate values. This will also happen in cooperation with external partners.

Still, small events may have greater effect on our profit than earlier. An event, that during a period of economic growth not had been registered on the profit, will in these situations be noticeable. During 2012 we often experienced that the ball “hit the woodwork”. For 2013 we need to see more goals – and more victories, which is needed to regain profit. Our organization is excitedly working towards that goal!

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1652 Scana’s oldest company, Scana Booforge, is established in Karlskoga.

1656 Permission is granted to build a forge hammer at the vismes estuary. This forms the basis for Björneborg’s growth and development.

1911 Stavanger Electro-Stålverk is established. Today, Scana Steel Stavanger AS is Norway’s only special steel works and is located in Strand municipality.

1987 Scana Industrier is founded through a merger between ScanArmatur AS and ScanPaint AS.

1989 The actuator and valve control system manufacturer Scana Skarpenord AS is taken over by Scana Industrier.

1991 Scana Industrier acquires Stavanger Staal AS, now Scana Steel Stavanger AS.

1993 Scana Industrier buys Björneborgs järnverk AB, now Scana Steel Björneborg AB, one of the oldest ironworks in the world.

1994 Scana Industrier buys a company steeped in forging traditions: Booforge AB, now Scana Steel Booforge AB. Production was previously run by Alfred Nobel’s Bofors.

1995 Scana Industrier is listed on the Oslo Stock Exchange.

1996 Scana Steel Stavanger AS secures its own power supply through the licence allocation to jørpeland Kraft AS, a third of which is owned by Scana.

1997 Scana establishes a foothold China through the joint venture company Leshan Scana machinery Company Ltd.

1998 Scana buys volda mekaniske verksted AS, now Scana volda AS.

1999 Scana signs an agreement with Caterpillar, making Scana volda a preferred supplier of propellers, reduction gears and control systems for Caterpillar’s diesel engines.

2000 The first complete year of operation for Scana Korea Hydraulic Ltd. This company has increased Scana’s market share considerably in one of the world’s largest shipbuilding nations.

2001 Scana increases its capital, which gives the company NOK 106 million in new share capital.

2002 Smedvig sells his share majority in Scana to leading employees in Scana Industrier.

2004 Scana Korea Hydraulic becomes one of five subcontractors to be given the prestigious “Quality Gold mark” by Samsung Heavy Industries, one of the world’s largest shipyards.

2005 Scana establishes the offshore service company Scana Offshore Technology AS in collaboration with International Oilfield Services AS. The new company aims to further develop the group’s activities within service and maintenance.

2006 Scana acquires the companies “Brødrene johnsen AS” and “AmT AS”, now Scana Offshore vestby AS. These acquisitions confirm the company’s express objectives for growth in oil and gas.

2008 Scana’s turnover reaches almost NOK 2.9 billion after bustling activity in all of the group’s business areas. Scana Offshore Services is established after an acquisition of business in Houston. The new company strengthens Scana’s position in the USA and Singapore.

2009Scana buys ABB’s marine activities in Poland and establishes Scana Zamech Sp. zo. o. The acquisition complements Scana’s activities within the business area marine. Scana’s establishment of a business in Brazil will create big opportunities for growth in an exciting market.Scana also establishes Scana Subsea, supplying subsea and riser components to the oil and gas industry.

2011Scana buys the property of the liquidated Axels Components in Kristinehamn, Sverige, and establishes Scana machining AB.Scana sells its shares in jørpeland Kraft AS.Scana wins, through Scana Offshore vestby, a contract for NOK 350 million in Brazil. This is the largest contract for Scana in its entire history and represents a breakthrough in an exciting market.

2012Scana complete a private placement with a gross value of NOK 150 million against existing stockholders. Existing syndicate loan is refinanced with a multicurrency loan of SEK 348 million and a revolving credit facility of NOK 280 million. Existing loan facility at Leshan Scana machinery were refinanced with a new loan of USD 8,7 million.

HISTORICAL HIGHLIGHTS

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HISTORICAL HIGHLIGHTS

Scana is organized in business areas with a decentralized organization, in which the production units are separate legal entities.

BUSINESS AREAS

SCANA ENERGY

Scana Steel Björneborg AB, Sweden manufacture and sales of forged apecial components.

Scana Steel Booforge AB, Sweden manufacture and sales of arms for forklift trucks. Specialized forging and heat treatment.

Scana Steel Söderfors AB, Sweden manufacture and sales of rolled special profiles and rolled/forged rods and billetts, mainly in special steel.

Scana Machining AB, Sweden machining, assembly and testing of components and products.

Scana Subsea AB, Sweden Sales and project management for subsea and riser systems for the oil and gas industry.

Scana Steel AB, Swedenmanages Scana’s real estate in Karlskoga, Sweden.

SCANA PROPULSION

Scana Volda AS, Norway Design, engineering, manufacture and sales of girs, propellers and propulsion systems.

Scana Mar-El AS, Norway Design, manufacture and sales of electronic remote control systems for propulsion and navigation of vessels.

Scana Zamech sp. zo. o, PolandSales and service related to propulsion systems.

Scana Singapore Pte. Ltd.Sales and service related to propulsion systems.

Scana Shanghai Trading Co. Ltd.Sales and service office for propulsion systems.

Scana Propulsion US Inc.Salg og service knyttet til fremdriftssystemer.

SCANA OFFSHORE

Scana Offshore Technology AS, Norway Repair, maintenance and recertifi-cation of equipment to the oil and gas industry.

Scana Steel Stavanger AS, Norway manufacture and ales of hig-alloy castings and forgings, and wear-resistant steel.

Scana Offshore Vestby AS, Norway Engineering, design, manufacture and sales of special equipment for the oil and gas industry.

Scana Offshore Services Inc, USADesign, engineering, repair and maintenance of drilling equipment.

Scana Offshore Services, SingaporeDesign, engineering and marketing towards the market in South-East Asia.

Scana Skarpenord AS, Norway Design, manufacture and sales of hydraulic actuators and valve control systems.

Scana Korea Hydraulics Ltd, South Koreamanufacture and sales of hydraulic actuators and valve control systems. Sana owns 49%.

Scana Skarpenord Shanghai Service Station, China Service of hydraulic actuators and valve control systems.

SCANA OTHER BUSINESS

Leshan Scana Machinery Ltd, China manufacture and sales of castings and steel rolls. Scana owns 80%

Scana Do Brasil Industrias Ltda., Brazilmarketing and sales of Scana’s products in Brazil.

SCANA PROPERTY

Established Q4 2012 to manage and develop the value of Scanas properties

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production and in the development of new, customized products. Scana’s production capacity in terms of steel produced in-house is around 150,000 tonnes of melted material. To Scana, the kinds of advanced components and products we create from high quality steel, are more important than the number of tonnes we manufacture. However, tonnage and good capacity utilization is important for cost recovery and profitability.

Scana offers a broad range of products, weighing from 50 kg to 75 tonnes, in lengths up to 24 metres. Scana is a market leader in the upper weight and length range for cylindrical products. Scana has a large capacity within heat treatment. This renders possible specific material qualities and extended tensile strength, an important competitive advantage.

Markets and customersThe main market for the business area is energy, in which oil and gas are the most dominant. Our specialized products are delivered to world-leading customers. Scana offers optimum design and material alternatives, which, combined with a more refined product, provide a competitive total solution.

The global activity within oil and gas is high. Scana Energy delivers components to risers for developing projects offshore, demanding projects with considerable develop-ment work. Several of the projects are now nearing completion, and results both from the development work and the market in general give grounds for good profitability for future projects. Scana Energy has built up a record-breaking order reserve for oil and gas projects. The order reserve is to be delivered in 2013 and 2014.

Scana Energy also delivers shafts of up to 24 meters, which are part of propulsion systems for ships. The number of contracts for ships has been very low the recent years. When the market returns, Scana Energy will be duly positioned, and an increased activity within shipbuilding will have a prominent positive effect on Scana Energy’s profitability.

Special steel customers are primarily steel companies, major wholesalers and end users such as oil and gas, automotive and machinery industries. Scana has entered into several long-term collaboration agreements with a number of key customers. This provides us with a sound foundation for further development of our business concept.

The development moves towards a higher degree of finished products, delivered directly to the customers’ facilities. High quality and technical expertise, combined with precision deliveries have all contributed to Scana capturing a strong position in the market.

The companies in Scana Energy represent a several hundred year long tradition in the Swedish steel industry. Among them are Scana Steel Bjorneborg, Scana Steel Booforge, Scana Steel Söderfors, Scana Subsea, Scana machining and Scana Steel AB. The companies within Scana Energy have an independent and long history and specialize in different production areas.

Scana Energy focuses on oil and gas as the most important market area, in addition to other kinds of energy. Also, the companies supply specialized steel and components to marine, automobile, machining and tools industries. Production takes place at Scana’s own production facilities, which include melting plants, forges, rolling mills, heat treatment and machining units. The business area is characterized by a high metallurgical expertise. Production is of a high standard and complies with ISO-certified quality assurance systems.

Strategic positionScana maintains a high standard with regard to produc-tion as well as a broad product range. Getting a foot-hold in this industry is difficult due to the fact that both production facilities and infrastructure represent major investments, and because it also is extremely challenging to acquire sufficient levels of metallurgical and technical expertise.

Scana is one of the few players with integrated production facilities that include both melting/production of steel, heat treatment and preparation of components. Few of Scana’s competitors have their own steelworks, and they have to buy billets and semi-finished goods to be able to offer finished steel products. A greater control over the value chain gives Scana a competitive advantage.

From 2005-2012, almost NOK 400 million have been invested in Scana Energy. The investments increase our competitive power, coming from increased capacity and delivery precision, and reducing operational risk and production costs.

During the recent years, Scana Energy has increased its commitment towards the oil and gas market. Almost half of its profit comes from this interesting, but demanding, market. The companies have also gone further in the value chain the recent years and are taking more re-sponsi bility for complete machining, coating, testing and, to some extent, assembly. These positions differentiate Scana Energy from other corresponding businesses.

ProductsScana is a leading supplier of specialized steel products and customizes solutions for various uses. Key elements are close collaboration with our customers and high quality results. Scana’s technological expertise is pivotal to the

BUSINESS AREA SCANA ENERGy

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The image shows a “Tension Joint Assembly” in project “laggan-Toremore” for fMC Kongsberg. This photograph was taken on the final inspection at Scana Offshore Technology, before departure for the North Sea and installation off the Shetland Islands on a depth of 600 meters. End client is Total.

Scana Steel Björneborg was founded in 1656 and is one of the world’s oldest forges.

Increased productivity and quality2012 can be characterized as a year of good progress. Our Lean process implementation has really taken off during the year. We can clearly see that the combination of good order, continuous improvement and daily management have resulted in a better flow of both products and information. Lead time and delivery accuracy is significantly improved throughout 2012. One of the technical challenges came from the Oil & Gas industry concerning high demands for products with entirely new quality requirements. After considerable development work, this was resolved in a good way.

The costs for quality divergences will also diminish, as a direct result of the aforementioned work, and combined with the programme for cost reduction, this has contributed to increased competitive power. The programme continues through 2013. This is a continuation of earlier work to systematically shorten the lead-time.

Scana Steel Björneborg want to ensure that the company’s workers are highly skilled, which in turn leads to improved quality. The company identifies critical skills using a competence matrix, in addition to certification of specific skills through practical and written tests.

Markets and customersScana Steel Björneborg exports 70 % of its turnover, directly or through other companies in the group. The largest market is Europe, but export also goes to the USA, Asia and other parts of the world.

The entire forging industry has continued, also through 2012, to be faced with a low demand and increased competition due to overcapacity in both Europe and Asia. Scana Steel Björneborg has, adhering to our long-term strategy, continued our work on increasing the refinement of our products. For 2012, this has lead

to an increasing number of customers ordering finished products, especially in the marine business area, but also in the energy segment.

Also for 2013, Scana Steel Björneborg expect a challenging year and will work actively with both existing and new customers to enhance activity.

ProductsScana Steel Björneborg delivers customer designed products for four market segments: industrial, marine, machine and energy. The company’s main products are forged, rotation symmetrical, large and long steel components with a high technical content. Scana Steel Björneborg also supplies raw forged and semi-lathed details. The products are for instance axles, rotors, joints, risers, poles and sheet metal.

The products are often key components for our customers, and are delivered with different degrees of completion, depending on customer requirements. The company has an on-going cooperation with material institutes to further increase the quality of products and with suppliers within the group to finish the products to the degree the customers requires.

Managing director: Sören Andersson

Scana Steel Björneborg refines steel in an integrated chain that includes steelworks, heat treatment, a forge with a 4,500 tonne press and a well-equipped machining workshop.

SCANA STEEL BjÖRNEBORG

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Markets and customersThe company is mainly aimed at forklift truck and machine manufacturers, as well as other steelworks. The company also has customers in oil and gas. The customers are primarily located in the Nordic region, but the company also acts globally through developed distribution network. The company’s largest customers include Cargotec, Konecranes, Svetruck, Sandvik, Alfa Laval and moorlink.

The market for Scana Steel Booforge’s core products – forks, open die forging and heat treatment – has been stable during 2012.

ProductsScana Steel Booforge’s main products are:•Forgedarmsforforklifttrucks•Liftingequipmentforforklifttrucks

•Heattreatmentoflargergoods•Opendieforgedcomponents

The strengthening of Scana Steel Booforge as a brand in the forklift truck industry has increased demand and global sales. To further expand our global activities, we established new sales channels and dealer networks during 2012.

Our special research and development function now gives Booforge the opportunity to perform as an active customer partner in a value chain perspective, to develop supplemental products.

With a stronger market focus, our own technological development and increased production efficiency, will Scana Steel Booforge greet the future.

Scana Steel Booforge is a world leader in the manufacture of large forklift truck arms that can lift in excess of 10 tonnes. Scana’s expertise in open die forging renders the company able to manufacture large forks and other forged products according to any specification, with stringent demands for strength. Since 2009, Booforge also manufactures masts and lifting carriages, and thus complete lifting systems for forklift trucks in the heavy segment.

SCANA STEEL BOOFORGE

Managing director: Torsten BlombergSite Manager: Bjørn Konradsen

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The company has an extensive experience in forging, rolling, heat treatment and machining. Scana Steel Söderfors is located at Söderfors, north of Stockholm, Sweden, and is closely situated to other major steel producers. Since 1995, the company has been a part of the Scana group.

Markets and customersScana Steel Söderfors exports 50 % of its turnover. Europe is the largest market. China, japan and the US are also important markets. Scana Steel Söderfors works in three different market segments: energy, oil & gas and steel. The customers are world leading system suppliers, component suppliers, steel makers, machine builders and distributors. In 2012, a larger share of the company’s orders have included a greater degree of refinement.

Products Scana Steel Söderfors supplies niche products. main products are forged or rolled bars, sections, profiles and open die forged components with a high technical content. Typical open die forged components alongside bars are shafts, rotors, pole plates and connectors. Rolled products are manufactured in high alloy steel,

such as round and flat profiles, with bars as the most common product, in different stainless grades with emphasis on various grades of Duplex and Super Duplex. High-alloy tool steel and Pm steel in the form of bars, round and flat profiles are also important products. Scana Steel Söderfors continue to grow within the oil and gas business with focus on steel bars in low alloy and high alloy steel. Connectors of different kinds and materials are established products.

In the course of the year, the company has invested in additional capacity in processing equipment to meet the increasing demand for highly processed products. The investments are made to improve production efficiency to meet customer demands. Focus on lean production concepts improves customer service levels.

The organization continues our competence and skill development process. Increasing the share of proces-sed products and meeting the demands of strategic customers are prominent goals. Furthermore, a new system for process handling of internal logistics has been implemented to create opportunities and develop Scana Steel Söderfors into a just-in-time partner for the customers.

Managing director: Per Jarbelius

Scana Steel Söderfors is a manufacturer of high quality steel products specializing in high alloy and high purity steels for demanding applications. Hot forming and heat treatment of steel has a long tradition in Söderfors. Since 1676, skilled blacksmiths have made Söderfors renowned for its high quality products.

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Markets and customersScana machining’s most prominent markets are within oil and gas, energy and marine, as well as in paper, heavy industry and military defence products. Sales are made through our subsidiaries and larger international groups with affiliated industry in Sweden and Norway. The products the company manufacture are to a large extent exported to end clients.

Scana machining’s most important competitive advantages are short, internal decision processes from enquiry to delivery and our employees’ technical skills, knowledge and commitment to resolve our customers’ needs. In collaboration with Scana, quality control through the entire value chain is strengthened through future-oriented production facilities.

The businesses within oil and gas, marine and military

defence products will remain stable and growing markets for the company.

The company is actively working to grow into new customer groups with special focus on customers in the Norwegian oil and gas market.

Products and servicesThe company supplies subdeliveries within welding, machining, assembly and testing of systems for heavy components of steel, stainless and aluminium. We supply production technical services as well as manufacture of smaller structures.

Scana machining possesses an advanced calibration operation with regard to national and international standards. The company also sells calibration services to several external customers.

Managing director: Torsten Blomberg

Scana machining sells and performs services in assembly, machining, welding and testing of system deliveries for heavy components in an extensive range of low alloy to advanced stainless steels, as well as aluminium, and special alloys and other high-performance materials.

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The company works with sales, contract management and product development. All manufacture is done by the steel producing companies within the Scana group, completed by high quality workmanship from Scana machining. In addition, cooperation with partners outside the group is established. The company will utilize Scana’s strong market position within steel and forged production of long and heavy components.

Markets and customersScana Subsea exports 100 % of its sales. Customers range from oil companies to system/product suppliers internationally, with USA as the largest market. The North Sea, Brazil and Southeast Asia are also important commitment areas.

2012 was a good year for Scana Subsea, securing several large contracts for risers in the North Sea and the Gulf of mexico. Sales have shown a continually positive trend compared to earlier years. An important competitive advantage is Scana’s experience in handling long and heavy products. The company also has a strong sales network.

Risers will continue to be the company’s most important product. For 2013, an increase in demand for risers is

expected. But the company works hard to expand the product range.

Through Scana Subsea, Scana attains a more efficient project management, taking full responsibility for the entire manufacturing process. This renders increased efficiency and reduced costs for the customers. The effect of these improvements is now seen as a continous increase in orders. The order reserve for Scana Subsea at the beginning of 2013 is over NOK 300 million. This is a record for the company and for Scana’s commitment to the subsea segment.

Products and servicesThe company’s main products are forged, rotation symmetrical, long and thin components with a high technical content for the oil and gas industry, in riser and tendon applications. material technology and metal-lurgical skills are also a part of the product portfolio.

The company’s products are often key components for the customers. Scana Subsea delivers components at dif fe rent completion degrees, depending on the customers’ re quire- ments. The company puts emphasis on research and de-velopment to further strengthen the quality of its products.

Managing director: Peter Jansson

Scana Subsea delivers subsea and riser applications to the oil and gas industry. Having strong materials and production skills, the company takes an overall responsibility for manufacture, assembly and testing of complex products. The company adds value for customers through optimal solutions.

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The company owns 35,000 m2 floor space in total. This mainly consists of industrial premises, with additional office and service areas. The business is located on the old industrial site of Bofors, and the properties were acquired in 1997, when Scana bought the property of Bofors AB.

Following still ongoing structural changes in the defence industry, a need to see new activity in the halls has arisen; to replace the existing tenants’ lessened need for rented area. At Karlskoga an increasing amount of free halls are accumulating. Scana Steel, however, is still letting a large portion of its halls and has avoided reduced volumes throughout the year.

ServicesToday, five external companies rent areas for a total of

18,500 m2. The remaining areas are rented and utilized by Scana Steel Booforge and Scana machining. Scana machining repossessed premises previously rented by Axcel Components.

Logistics and geographyFrom a Swedish perspective, Karlskoga is located almost in the middle of a centre for logistics. With the improved road E18 towards Örebro and Karlskoga, Karlskoga today represents a strong, competitive alternative to other nearby places.

Business has been positive in 2012 for Scana Steel AB and its tenants. Especially the logistics companies have seen a positive development and are asking for larger areas.

Managing director: Sten Israelsson

Scana Steel AB is a cost-efficient real estate firm, managing Scana’s real estate in Karlskoga, north-east of väneren in Sweden.

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BUSINESS AREA SCANA PROPUlSION

ScanaPropulsion

Scana Propulsion was established to coordinate and increase the marketing efforts for Scana’s propulsion technology of propellers, gears, thrusters and remote control. Scana Propulsion is marketed as a complete equipment package in the global ship equipment market.

The Scana Propulsion group of companies was from january 1st 2012 structured as group in the group, comprising the companies supplying equipment and services for ship propulsion and maneuvering. The core market of the business area is in the shipping industry, and key customers are shipyards, shipping companies, ship designers and other suppliers of ship equipment.

Strategic positionThe business area is a market leader of complete and technically sophisticated solutions and is represented in the most central markets. The main segment of Scana Propulsion is offshore anchor handling vessels, seismic

vessels and other special vessels to include offshore and fisheries. Geographically, the main activity is located in Asia, Europe and the U.S., in addition to Brazil’s emergence as an interesting market.

Within the product area Scana Propulsion, Scana coordinates sales, marketing, purchases, product development and manufacturing of propellers, gears, thrusters and remote control systems. The steel companies have products that are included in the propulsion companies’ products, giving a substantial control with the value chain and added value within the Scana group.

Scana has recent years enabled a strong growth in the service market. This has partly compensated for lower activity in new sales. Scana’s growth within service and repairs is expected to continue in 2013.

Group Director/Managing Director: Kristian Sætre

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ScanaPropulsion

SCANA vOLDAManaging director: Kristian Sætre

The former volda mekaniske verksted, was established in 1913 in volda, Norway, and hence in 2013 celebrating 100 years anniversary. The company was taken over by the Scana group in 1998. volda mek. started as an engine factory and later developed into including shipbuilding and production of propellers and gears. At the end of the 1980s, the last hull was delivered. Since 1996, gears and propulsion systems have been the most important products. Scana volda has been a Consortial Partner to maK (Caterpillar) since 1996.

SCANA mAR-ELManaging director: Bjønn Tveito

The company is located in Dalen in Telemark, Norway, and has been a part of Scana since 1996. Scana mar-El is one of Europe’s leading manufacturers of maritime control systems for ship propulsion and maneuvering, in addition to control systems for special applications. Since the start in 1974, the company has delivered approx 3,000 control and navigational systems.

SCANA ZAmECHManaging director: Jacek Pabian

The history goes back to 1837 when Ferdinand Gotlob Schichau opened the machine workshop “Schichau Werke”. The workshop manufactured elements for steam engines, equipment for sugar factories, oil mills and lumber mills, as well as hydraulic presses and rollers. In 1855, the world’s first seagoing ship with a steel hull and a propeller was launched from “Schichau Werke”. Scana acquired the company in 2009. In the recent years, the most important products have been tunnel thrusters and large propellers. During 2012, all manufacture of new products was moved to Scana volda. Today, Scana Zamech is a sales and service company. In addition, the company provides certain engineering services for Scana volda.

SCANA SINGAPOREManaging director: Lars Alvsvåg

Established in 1996. The company is responsible for sales and service on Scana’s marine products in South-East Asia. Personnel local to the area perform product service and installation, in addition to service on related products for external companies.

SCANA SHANGHAI TRADINGManaging director: Stig Hjelvik

Established in 2011. Previously, the company was registered as a representation office for Propulsion. The company is now a self-contained company, responsible for its own revenue and profit. main business is new sales and service for the Chinese shipbuilding market.

SCANA PROPULSION US INC.Managing director: Dan Gaiennie

Established in 2009. A historically large volume of orders and a promising market made it feasible and necessary to establish a sales and service station in the proximity of the Gulf of mexico. The company is located in mandeville, close to New Orleans.

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Scana Propulsion is represented through offices, strategic partners and agents throughout Norway, Poland, Iceland, the Netherlands, Turkey, United Arabic Emirates (UAE), Singapore, India, China, Korea, USA, Brazil and Chile. By structuring our organization in this manner, Scana Propulsion can nurture closer relationships with customers regarding both sales and service preparedness for the marine fleet.

Scana Propulsion Service is a special profit centre in the group and performs the service and after market activities within the business area. Scana Propulsion Service has service personnel located in Norway, Poland, Singapore, China, USA and Brazil in addition to service agreements with independent companies in selected markets.

The companies constituting Scana Propulsion have gained a good international reputation and typically export 80 % of their products, in total.

Markets and customersScana Propulsion’s core segment is offshore, merchant vessels, speedboats, passenger ships and fishery. Geographically, the main activity is located in Asia, Europe and the US. European ship owners and design companies are very important for the markets where Scana Propulsion operates. In Brazil, there is a bustling activity in the offshore and merchant segment as a

result of Petrobras’ extensive development program. This is an important market for Scana Propulsion.

Scana Propulsion’s hallmark is technologically advanced solutions and a strong market position for ships for demanding operations, like anchor handling vessels and other special vessels.

Scana Propulsion promotes complete equipment packages in the global ship equipment market, but the products are also sold as independent units. Gear from Scana volda is an example of a strong brand in the market, and similarly, control systems from Scana mar-El.

In co-operation with engine manufacturers, Scana offers complete propulsion packages for ships, consisting of engine, gears, propellers, shafts, tunnel thrusters and propulsion control. Caterpillar is a consortial partner and holds an important role in this segment. Close co-operation with ship designers and leading electronic suppliers has created a clear focus on developing products that are a part of eco-friendly hybrid and diesel-electric propulsion systems.

Among our partners, there is a great interest in developing propulsion solutions in co-operation with Scana. A continued commitment to complete packages within hybrid and diesel-electric solutions is expected to

yield increased results. Scana Propulsion’s product line is included with several design companies, and they are marketing these products in different ship designs for their clients.

Scana Propulsion Service has a strong commitment to selling service to the global market. This commitment has yielded positive results. Synergies between the propulsion companies and a continued international commitment are expected to increase turnover and profit for the service organization. Sales and marketing of service is aimed mainly at Scana’s own products related to commissioning, maintenance, retrofit and breakdown. Diagnostic services and other consultancy services are also provided.

2012 was in general a challenging year in the business, mostly due to excess contracting in 2007 and 2008 and the resulting excess tonnage. The financial crisis with consequential limitations on investment desire and finances in shipping, amplified an already slow contracting. Scana Propulsion is also affected by this

situation. Nevertheless, due to a large share of contracts going to the offshore fleet, there has been a satisfactory order intake. In 2012, the company signed strategically important contracts within the offshore business in Singapore, USA and Norway

The weak market is expected to last also through 2013. Nevertheless, the demand for vessels within offshore and windmills is expected to increase. These markets are important for Scana Propulsion. Lower activity at the shipyards has resulted in shorter delivery times on the Propulsion products, from typically 2-3 years in heated periods to less than one year. An effect of this situation is that new contracts currently has a faster effect on results.

ProductsThe product line of Scana Propulsion:•Controllablepitchpropellersfrom520-1900mm.hub

diameter (8 m. max outer diameter)•Fixedpropellersindiesel-electricpropulsionsystems

with gears

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contra rotating propellers (CRP) in combination with permanent magnet electric motors. The project was carried out in cooperation with Salt Ship Design and Inpower. The product has generated massive attraction world-wide. The product is, in addition to other applications, suitable for pure platform supply vessels (PSv’s), a market segment to which Scana Propulsion with its former product portfolio had limited access.

Scana Propulsion has through the years been developing a new generation tunnel thrusters, having optimized strength and reduced noise. This thruster was completed in 2011 and was introduced internationally in 2012.

Important new orders of 2012The order intake in 2012 was mainly for the offshore segment, service vessels for windmills, fishing and other special vessels. Following important orders may be mentioned:

•STXfortheshipownerIceman.Asophisticatedandlarge double propulsion system for an AHTS, intended for use in arctic areas.

•BAEsystemsforGulfmarkOffshore.Deliveryoftwoships, with option for more.

•KlevenshipyardforUglandOffshore.Acontrarotatingpropulsion system with permanent magnet motors, resulting out of a co-operation with Salt Ship Design.

•SeveralimportantorderswithServogearforremotecontrol systems for windmill service ships.

•Thefishingvesselmarkethasbeenactiverecentyears, and Scana Propulsion signed several nice orders for this segment.

•Reductiongearsupto20,000kWengineoutput•Tunnelthrustersupto3,000mmdiameterand3,000

kW•Contrarotatingpropellers(CRP)incombinationwith

dieselelectric powering. max power acc. specs.•Permanentmagnetelectricalmotorsdirectlycon-

nected to controllable pitch propellers. max power acc. specs.

•Maritimecontrolsystemsforshippropulsionandmanoeuvring

•Ruddercontrol,controlmachines,thrusterscontrols•Joysticksystems•Agencyagreementsforpositioningsensors,joysticks

and instrumentation•Serviceandcustomersupport:

- Planned repairs and maintenance at dry docks- Service according to customer wishes and

demands- Rebuilding and modernization for increased safety

and better operations economy, plus eco-friendly solutions

- Spare parts- Training, consultation and surveillance

Product developmentIn the market for high-technological solutions, development is of paramount importance – especially development governed by specifications from the customer. Consequently, Scana Propulsion has continuous product development and upgrade as an integral part of the group’s work. Deliveries are adapted to each ship and are detailed in collaboration with ship owners and ship designers. The development team of Scana Propulsion develops, projects, manufactures and sells propulsion solutions for all ship types, in a scale of up to 20,000 kW engine output. The business area also has a department for development and manufacture of remote control systems.

Scana mar-El’s agency department sells very high quality components. These are utilized offshore, in telecommunication, energy, sea and land based defense installations and in other industry. This department represents large international players in advanced, high-tech components, and technological companies in Norway are in the customer portfolio.

Scana Propulsion has a strong market focus and frequently commercializes new products. Products adapted for hybrid and diesel-electric solutions have a clear focus. 2012 was the year of break-through for

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ProductsThe main products for Scana Offshore are design and manufacture of components and systems, in addition to maintenance and repair of oil and gas industry equipment.

Scana Offshore vestby AS offers established products and systems for anchoring, cargo loading and unloading. In 2011, the company has established projects for deliveries to FPSO construction programmes in Brazil. The programme will be in progress until 2014.

Scana Offshore Technology AS offers thermic treatment and maintenance services aimed at drilling devices and equipment. The company works closely with the offices in Houston and Singapore.

Scana Steel Stavanger delivers high-alloy forged products and complex, cast special components to customers globally.

Scana Skarpenord manufactures and delivers hydraulic systems for remote control of valves for production vessels, rigs and fixed installations constructed for the oil and gas industry. Remote control systems are also supplied for cargo handling, ballast, pump and coolant systems for gas tankers, chemical ships, oil tankers, product tankers and dry cargo ships. One of the key products is hydraulic actuators. The company is established in South Korea through the subisidary Scana Korea Hydraulic.

Markets and customersScana’s ambition is to establish a strong market position within the supply of special solutions to the oil and gas industry. The majority of Scana’s customers are global players in design, production and/or operators of production facilities, drilling and production equipment, as well as manufacturers of subsea facilities. The customers’ head offices and manufacture facilities are located in the US, Europe and Southeast Asia, and are served by Scana’s offices for sales, projects and service locally.

It is Scana’s goal to increase the activity towards these customers and establish long-term contractual relationships in order to decrease vulnerability and increase value through higher processing levels within the business area.

Scana Offshore consists of Scana Offshore vestby, Scana Offshore Technology, Scana Offshore Services (Houston and Singapore), Scana Steel Stavanger, Scana Skarpenord, Scana Korea Hydraulic, in addition to service station and representative offices in Shanghai and China. There is a wide scope of activities in the business area: from design, engineering and consulting services – to production, assembly and testing of equipment and steel components, in addition to manufacture of products and systems developed in-house. The business area also offers service and repairs on mechanical components for the oil and gas industry.

Strategic positionThe trend in recent years has been that customers want fewer suppliers, and that these are capable of taking an overall responsibility for a number of disciplines. The supplier should have clear a responsibility for quality and timely deliveries, all through one point of contact. This has led to consolidation and merging of players in the supplier industry.

Through our own companies, Scana Offshore has established an environment that is embedded in the entire value chain. This broad spectrum of expertise and overall focus on product life cycle – from design to operation and maintenance, strengthens Scana’s competitive position.

Scana Offshore vestby is about to take on an exciting position in design and manufacture of loading and unloading systems for floating production vessels, as well as design and manufacture of mooring systems for offshore installations. Scana Steel Stavanger has mainly turned its business towards deliveries of cast components for offshore projects, as well as deliveries of specialized steel for oil wells – and is one of a few companies within these niches.

In 2008, Scana established Scana Offshore Services through acquisitions in Houston. The company supplies engineering services, purchases and construction, in addition to project management of blowout preventer systems (BOP) and motion compensating lift frames, plus other lifting devices for well operations focusing on HES in operations. The company delivers systems to several of the world’s largest drilling contractors and is a niche-supplier with substantial development potential.

Scana Offshore Services has yielded Scana an operative pier head in the important oil market in Gulf of mexico. Scana Offshore Services also has established an office in Singapore to serve the huge new builds and maintenance market in Southeast Asia.

BUSINESS AREA SCANA OffSHORE

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Scana Offshore Technology was established December 2005. The company is co-localized with Scana Steel Stavanger at jørpeland, near Stavanger.

Markets and customersThe company’s customers are mainly oil companies, equipment manufacturers, drilling- and service companies in the petroleum industry. The company business philosophy is to work closely with original equipment manufacturers and, as a result of this strategy, establish close relationships with several original equipment manufactures as an approved repair and maintenance workshop for the North Sea market. The company has kept up with the increased demand by investing in additional machinery, welding and test equipment for use offshore. The company has employed personnel in sales, engineering, project management and welding, in addition to own offshore service department with experienced technicians.

Products and servicesScana Offshore Technology organizes its activities in five main areas: •Rigequipmentandsystems•Subseaequipmentandsystems•Processingequipment•Offshoreservice•Preventivemaintenance

The products and services delivered to these five main areas are based on the following disciplines:

•Disassembly,inspectionandsurveyreports•Engineeringandprojectmanagement•Materialinspection,testingandverification•Thermalspraying,claddingandweldingofadvanced

materials•Machining•Assembly,testandinstallation•Documentationandrecertifications

Scana has a strong market position within petroleum industry component manufacture. The company is dedicated to attain the same position within maintenance and repair work in close collaboration with equipment manufacturers. This is a market area with short delivery deadlines of critical equipment, and the company shall grow in line with its customers and increase the capacity of machinery and personnel accordingly. Our largest customers are experiencing an increasing workload and a major increase in sales, and consequently, this leads to a major increase in our planned upgrades and recertifications.

In the time to come, Scana Offshore Technology is investigating new product areas and services that fit our heavy drilling and process equipment portfolio. The company has strong focus on repairs and recertifications of critical drilling and production equipment such as BOP´s, risers, riser tension systems and general pressure control equipment, all of which require recertification processes.

Managing director: Helge Skjellevik

Scana Offshore Technology primarily carries out maintenance and repairs on critical equipment for the oil and gas industry. The company specializes in pressure control and lifting/handling equipment for production, drilling and subsea installations.

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Managing director: Jarle Fjetland

Scana Steel Stavanger’s customers are users of special steel and high alloy steel with stringent requirements for design and documentation. The main market for the company is the offshore market. In addition, Scana Steel Stavanger’s customers include energy, marine and mining industries.

SCANA STEEL STAvANGER

Scana Steel Stavanger was founded in 1910 and has manufactured steel since 1913. The company is located at jørpeland, near Stavanger, Norway, with a business concept based on the idea of remelting scrap steel from the local cannery industry and ship scrapping. Scana bought the company in 1991.

Markets and customersScana Steel Stavanger operates in a global market, but the majority of our customers are found in northern Europe. The company competes in the market of high alloy forged components and complex, cast, special components. Scana Steel Stavanger is, in addition to Scana Leshan in China, the only company in Scana with a foundry.

In 2012, Scana Steel Stavanger had an export share of 72 %. There is tough competition in the market. Scana’s competitive edge is that we are a relatively small player able to produce small series, where quality, documentation, flexibility and delivery times are vital. Our deliveries are often special products, custom made to meet the client’s specific needs. Project deliveries for the oil and gas sector are becoming prominent and have mostly replaced serial production for the marine sector. Project completion has been demanding, but the company is working to ensure its production processes.

For Scana Steel Stavanger in 2012, there has been a relatively high level of activity in Cast, but varying activity in Forged, becoming very low towards the end of the year. Project completion is expected to be good in 2013 and our earning power will improve. Order influx is expected to be high within the oil and gas sector, especially for cast products. However, the company depends on a good market for forged products to achieve satisfactory profitability.

Managing director: Leo E. Helland

Scana Offshore vestby is an innovative company within the oil & gas / offshore industry. For the oil and gas industry, as well as for the marine business, the company develops and delivers systems and components and carries out maintenance and upgrade assignments. The company has great development potential.

SCANA OFFSHORE vESTBY

The business areas cover:•Maritimesystems•Thermalcoating•Productswithinthedrillingandsubseasector•Engineering•Offshoreserviceandmodifications

Scana Offshore vestby traces its roots back to 1953. Scana Offshore vestby has developed strong competencies within design, engineering, purchase, manufacture and installation aimed at the oil and gas industry. The company also serves selected customers within the energy and industry market and cooperates smoothly with other Scana companies within oil & gas.

Markets and customersScana Offshore vestby delivers advanced products and systems to customers in the offshore market. In 2012, activity has been boosted as a result of the increasing global energy demand. One of the company’s primary product areas is within floating manufacture (FPSO/FSO). During 2012, the company has strengthened its sales and market initiatives. Furthermore, the company has increased its international activities towards new customer groups. Increased interest and activity throughout 2012 is expected to yield results in 2013.

Products and servicesThe company is particularly strong with regard to the manufacture of prototypes and heavy, complex

products and systems. Scana Offshore vestby assembles, tests and installs anchoring, loading and unloading systems for floating production units. The company undertakes orders within maintenance and upgrade of equipment to the offshore industry.

Based on our leading expertise in thermal coating, the company is positioned as a quality supplier of, among other things, modification and maintenance on risers and valve components. Further development of the engineering and manufacturing environments at vestby will help strengthen the product and service portfolio towards complete and advanced systems deliveries.

The company’s main products and services are:•Turretandbuoysolutions•Hosereelsforunloadingoilfromfloatingproduction

and storage units•Anchorwinchesforfloatingproductionandstorage

units•Multipathswivelsforon-,andoff-loadingofgasand

crude oil•Advancedthermalsprayingforcorrosionprotection

and wear-resistance•Riserrepairsandrefurbishments,plusupgradeof

components•Manufactureofsubseacomponentsfortheoil&gas

industry•Maintenanceonoffshoreequipmentfordrillingand

subsea operations

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Markets and customersScana Offshore Services provides our customers specialized design, engineering and manufacturing services for the offshore oil and gas market. Based on our extensive experience in the industry, Scana Offshore Services can offer complete product support from conceptual engineering design, to fabrication and installation of these services. Scana Offshore Services has the capability to perform rig surveys, installations, and technical assistance to our customers globally in order to cater a turnkey solution.

Presently, Scana Offshore Servicec supports more than 20 clients worldwide with a 100,000 sq. ft. operating facility and employing 30 professionals. The company´s goal by the end of 2013 is to be an API accredited business.

Although the company does not deal exclusively with major customers, the bulk of the business is with major, publicly traded US companies. Currently, the company has ongoing contracts with Noble Drilling, Ensco, Transocean, Atwood Oceanics, Parker Drilling and Diamond Offshore.

Scana Offshore Services has produced increases in revenue volumes and profitability in 2012 through continuous efforts with existing customers and developing relationships with new contacts among drilling contractors and oilfield equipment service providers. The company is preoccupied with offering effective project handling, as well as provide innovative solutions to the current needs and demands of the industry. What distinguishes Scana Offshore Services above the rest, is the company’s ability to use little resources while completing tasks in a short time.

Managing director: Tyler KiefOperations Manager: Al Robinson

Scana Offshore Services provides our clients with innovative, specifically engineered products and services with an emphasis on quality, cost, and time. Our focus is on new technology solutions, customer satisfaction, and to uphold the highest professional standards in the oil and gas industry. The company works out of Houston and Singapore.

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Products and servicesThe following products and services are offered at Scana Offshore Services along with the engineering capabilities supported by the engineering partner of the company´s business, Stingray Offshore Solutions:

•SubseaandSurfaceBOP-Stackframesystems,assembly and testing

•Coiltubingliftframesincludingstaticandmotioncompensating units

•WellCappingStackframesystems,assembly,andtesting

•EngineeringandManufacturingModificationstoexisting BOP Stack systems

•CarbonSteelChoke&Killflexloops•AssetManagement:Equipmentdataregistry,review,

finalization, and maintenance•TechnicalassistancewithupgradestoexistingBOP

and carrier systems•Technicalassistanceandinspectionsfornewand

existing BOP subsea systems

•Testflangerental’s•Workplatforms,guidefunnels,hangofftools,guide

posts•ERS(EmergencyRecoverySystems)•Customequipmentfordrillingoperations•OffshoreServiceSupport•FabricationServices

Engineering (Stingray Offshore Solutions)•OffshoreServiceSupport•MechanicalSystemDesign•HydraulicSystemDesign•PneumaticSystemDesign•Inspectionand3rdPartyServices•TechnicalSupport•FiniteElementalAnalysis•SolidModelingvia3DCAD•ProjectConsultation•ProductR&D

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Managing director: Ragnar Øhrn

Scana Skarpenord was originally established as a subsidiary of Norsk Hydro, Rjukan Fabrikker, in the late 60’s. The company has been on the market with its current product range since the middle of the 70’s, and is among the leading suppliers of hydraulic valve systems for the ship and oil & gas industry. Scana took control of the company in 1989.

SCANA SKARPENORD

In the recent years, the company has strengthened its competitive power through increasing efficiency and now holds a strong market position.

Products and servicesThe company develops, manufactures and supplies hydraulic systems for the remote control of valves in permanent oil and gas installations, and for production ships and rigs. Also, remote control systems are manufactured for cargo handling, ballast, boom and coolant systems on board gas tankers, chemical tankers, oil tankers, product tankers and dry cargo ships.

One of our key products is hydraulic actuators, mounted directly on valves. The actuators are one of our designs and manufactured at Rjukan. The control systems for the actuators include control panels, magnetic valve centrals, hydraulic oil generators and PC/PLS-based terminals for system operation and indication. There are no other concepts or new technologies today that can replace these systems.

The organization is well prepared to deliver tailor-made solutions for customer adapted applications and short delivery times. The recent years the company has increased the commitment to sales and service for the after market.

DevelopmentTo meet competition and demands for cost efficient solutions, the company follows a continuous programme for developing and improving products and production methods. The development is to some degree done in collaboration with external partners with a strong competence within the subject fields.

An increasing share of machining is done by fully automatic, unmanned machines. manual installation work is made more efficient by improved methods and effective resource utilization.

Efficiency and flexibility are strengthened throughout the entire value chain – from sales to manufacture, logistics and delivery of the finished product. The company has adopted and implemented systems and routines adhering to the “Lean Production” philosophy.

Markets and customersThe company’s traditional customers are shipyards building offshore vessels (rigs, drill ships and FPSOs and FSOs) and large tankers and dry cargo ships. The company has also delivered components and complete control systems for permanent installations in the North Sea.

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The main market is new constructions in Korea, China and Singapore, while Brazil is expected to become more important in the years to come. The company also supplies equipment to customers in Europe, Russia and North America. Rebuilds and upgrades of older ships make up an increasing share of the activity, and owners and operators become more and more important as customers.

The subsidiary Scana Korea Hydraulics serves the market in South Korea. Scana Skarpenord supplies system solutions and key components from Norway, while sales, engineering, assembly and testing is performed by the subsidiary in South Korea. In 2012, the company has secured significant deliveries to FPSOs to be built in South Korea.

Hydraulic actuators and parts for these kinds of systems are also supplied to valve producers and suppliers of gas handling systems for LPG and LNG ships. Other suppliers offering complete packages to the shipyards for rebuilds, upgrades and modifications of permanent offshore installations are also important customers.

Global networkIn addition to the factory in South Korea, Scana Skarpenord has a sales and service office in Shanghai and employees in Singapore. The company also actively utilizes the offices of the Scana group in Brazil and Houston regarding marketing, sales, spare parts and service, in addition to a network of agents giving global coverage.

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Scana Korea was established as a joint venture company in 1998. The company was at the time a minor supplier of valve remote control systems in Korea. At present, the market share in Korea has reached approximately 25 %. Consequently, the company is the 2nd largest local supplier in Korea. Scana’s ownership is 49 %.

The company has a solid order reserve for 2013. By the end of 2012, the company had approx. 56 employees and a turnover of NOK 115 million and a positive operating result.

Markets and customersScana Korea’s key customers are shipyards that build large types of ships, such as tankers, LNG tankers, LNG carriers, LPG carriers, bulk carriers and large offshore vessels, such as FPSOs (production ships), rigs etc. The customers are the shipyards Hyundai, Samsung, DSmE, STX,Hyundai-Mipo,Hyundai-Samho,SPPandothermedium and small sized shipyards in Korea.

Scana Korea completed large deliveries to Total’s CLOv project built at DSmE in 2012. The company will deliver their products to the world’s first LNG-FPSO being built for Shell at Samsung, and also the company are nomina -ted to supply their products to Ichthys FPSO at DSmE and CPF (Central Processing Facility) at Samsung in 2013.

Products and servicesNo other products or technologies can currently be substituted for the Scana Korea’s products. Great interest for our products is expected in the time to come.

The company includes tank level gauging systems in a package delivery with valve remote control systems, and as a result, the contract volume per project is increased.

Scana Korea has in 2012 established promotion and sales support services agreements with Scana Steel Stavanger, Scana Offshore vestby and Scana volda for the sales representation of their equipment in the Korean market.

Managing director: H. B. Noh

Scana Korea Hydraulic develops, manufactures and supplies systems for remote control of valves in cargo, ballast and other systems for ships, offshore vessels and permanent offshore installations.

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Scana Other Business includes the companies Leshan Scana machinery in China and Scana do Brasil Industrias in Brazil.

Leshan Scana machinery manufactures rolls and rings for the steel industry and cast components for, among other businesses, oil and gas and construction projects. Leshan Scana is a well-reputed supplier to the domestic Chinese market, and is among the leading Chinese manufacturers of rolls and rings for mainly Chinese roll works, but also recently for several inter-national ones. The company has an annual capacity of 20 000 tons cast products and has initiated work to strengthen its product range and geographical impact area.

Scana do Brasil Industrias is a wholly owned subsidiary of Scana. The company represents and markets all of Scana’s companies in Brazil. The company was established in 2009, with headquarters in Rio de janeiro.

BUSINESS AREA SCANA OTHER BUSINESS

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Leshan Scana is situated in the Sichuan Province (South Western China) with a site area of 240,000 m2. The company is a an important manufacturer for rolls and sleeves in the domestic Chinese market. Through several years of investment in product innovation and quality enhancements, Leshan Scana has become strategic partner with major global brands such as Bao Steel and WISCO (Wuhan Iron & Steel Group). The company is currently exporting products to India and Taiwan.

With a melting capability of up to 50,000 mT, Leshan Scana has an advantage in large casting for the steel, energy, oil and gas, construction and shipping industry. This is further complimented by a machining shop, where turnkey operation for machine-finished castings is the key objective. Leshan Scana is a well-respected supplier in the Chinese market. The total annual capacity for the roll and casting foundry is 20,000 mT.

Leshan Scana will continue to drive for product development, quality, sustainability and investments in human resources in order to maintain growth and market share.

Products and marketRolls and sleeves are the company’s core products, which are utilized in the industry, producing profile steel, hot semi-finished materials and plates. At present, China’s entire production of steel totals 715 million mT, or roughly 50 % of the world’s total production. The production is expected to increase to more than 1,000 million mT towards 2020. With a combination of a strong brand and customer base, Leshan Scana is well positioned.

Castings are mainly used in power generation, oil & gas, petroleum, cement production plants, construction and shipping industries. Leshan Scana is in compliance with DNv and ABS and we continue to work together with our customers to acquire the appropriate certification for their application requirements. During the recent years, Scana has been an important supplier to major projects inChina,suchasEXPO2010inShanghaiandtheBird’sNest Stadium in Beijing for the Olympic Games 2008. As the company continue to expand the expertise in the size of castings, material specifications and machining capabilities.

Continuous improvements, such as “Lean production”, will be strategic directions for Leshan Scana’s future production platform. A lean and efficient workshop and workforce will ultimately contribute to competitive edge. The Chinese steel market is characterized by overcapacity among manufacturers, with fierce competition and reduced prices being the result. The company will, supported by the Scana Group, shift investment focus to other products and components than those previously having our main focus. Deliveries to marine, oil and gas and mining industries will be given a lot of attention in 2013.

Managing director: Tony Chau

Leshan Scana machinery Co. was founded in 1998 and is a Norwegian-Chinese joint venture, where Scana Industrier ASA has an 80 % share. Local authorities in China own the remaining 20 %.

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Managing director: Johnar Olsen

Scana do Brasil industrias Ltda is a 100 % Scana subsidiary covering all group segments in the South America continent. The company was founded in December 2009 and is located in Rio De janeiro, Brazil.

SCANA DO BRASIL INDUSTRIAS LTDA

Role Scana do Brasil operations include services for existing Scana products operating in the region, as well as sales to new projects. Our presence in this region increases Scana Group’s opportunities for new ventures, business development and sales. The following example shows this fact with clarity: In 2011, Scana vestby signed a USD 60 million contract to supply 16 offloading units with Petrobras as the end user.

Market segmentsToday, around 44 support vessels with Scana propulsion systems are operating in Brazil, constituting approx. an 11 % market share. This after sales operation, which includes a partnership between the Brazilian company Offshore Reparos Navais (ORN) and Scana volda services engineers, has been well received by important customers.

Main initiativesThe main activities during 2012 in the offshore segment were the participation in several bids for new systems such as mooring, offloading, risers pull in and valves remote control systems. This resulted in a Scana Skarpenord contract for delivering valve Remote Control systemstotheBraziliansubsidiaryofSTXasthemainEPC contractor.

Scana is included in the Petrobras master vendor List, as well as in the main Petrobras registration system having the CRCC for Scana vestby, Scana Skarpenord and Scana Steel Stavanger.

Note: CRCC is the certificate of registration in the Petrobras system.

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existing homes. The company will also have external areas and building sites at its disposal at a total of 3,800,000 m2, making future project development possible.

The market value of the property portfolio at the turn of the year is estimated to around NOK 300-350 million, noting that some value estimation is somewhat old.Today, the company lets around 40,000 m2 to external tenants, while the rest is rented by Scana companies. For operation-independent properties, the tenant portfolio will consist of both private and public parties.

MarketThe real estate market is influenced by macro-economic development and the general demand for industrial estate either to rent or invest in. The demands for increased return by way of trade of real estate, and the property market rent level, directly influences real estate value.

Properties are let to a number of tenants from different businesses, generating approximately 70 % of the rental income.

Future prospectsIn Norway, growth is still relatively high, and most areas in the Norwegian economy have a favourable develop-ment. But due to the international situation, future prospects, even for the Norwegian economy, is uncertain.

For Scana Property, added value will be closely connected to structure and regulation. Securing access to tenants for vacant and liberated areas will be among our biggest challenges and will be of high priority when necessary structure and regulations are ready.

The company’s properties in Strand municipality, near Stavanger, is expected to yield interesting value through their own projects - and also as a consequence of the area being linked to Stavanger through a new tunnel in 2018.

Scana Property AS was established Q4 2012 and is planned as a holding company for the group’s real estate. Today, large properties are owned by the group, both in Norway and Sweden. These properties are planned to be unified under Scana Property AS.

Throughout 2013 and 2014, the company will be organized in such a way that other subsidiaries at most of our installations in Norway and Sweden will rent their facilities from Scana Property. Scana Property’s rental income will approximately be 70 % / 30 % from our own/external companies, respectively. Parts of our properties are currently let to a number of external tenants from different businesses.

Our goal, after this reorganization, is to offer a well-adjusted real estate portfolio with a balanced maturity structure on our rent contracts, to make for a better future service for Scana as a whole. At the same time we will be able to report value growth, rent income, free space etc.

Strategic positionScana Property will create added value through owning, development and administering the group’s real estate, both operation-independent and -dependent, to make visible and collect the potential value of our property portfolio.

For operation-independent properties, added value will chiefly be seen through re-regulation, project development and transfer of properties. For operation-dependent properties we wish to administer and develop our property portfolio optimally for Scana utilization. This combination is expected to contribute to a maximum value increase both in the short and long term.

Property portfolioAfter our structure is fully established, the company will administer an industrial indoor space of 150,000 m2, including some detached office buildings and a few

BUSINESS AREA SCANA PROPERTy

Managing director: Raymond Gabrielsen

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ENvIRONmENTAL ImPACT

Scana is an environmentally friendly enterprise and produces some of the cleanest steel there is. This steel is utilized in our products and by our customers. Our starting point is scrap metal that, through our processes, is turned into high quality products. It is our goal to have as small an impact on the environment as possible, irrespective of where in the world we do business.Scana manufactures and works with, among other things, steel and other alloys. We realize that as a player in this market, we contribute both considerably to recycling – and produce discharges to the outer environment. It is a fact that the world needs steel, and we see it as our task to supply as cleanly a processed product as possible, avoiding negative impact on the environment.

SCANA ENERGYScana’s steel manufacture is in essence a recycling industry, where a lot of scrap metal is recycled. On the other hand, energy is spent in recycling.

BjörneborgScana Steel Björneborg meets the goals of the Scana group, having the smallest possible impact on the environment. As a concrete measure, scrap steel is recycled, chiefly collected from local suppliers, at a distance of maximum 150 km. The company is ISO 9001 certified.Scana Steel Björneborg has a railroad track leading into the production area and can deliver products by rail. This means of transport reduces emissions to air.

SöderforsThe environmental impact from Söderfors is mainly through emissions to air and water, in addition to waste. Throughout the year, Söderfors has fulfilled all government demands and there has been no incidents or unwanted discharges. During 2012, Scana Steel Söderfors worked on updating our environmental handbook, targeted towards an ISO 14001 certification. Among other things, this entails strengthening our routines for handling chemicals and deciding which ones to utilize in the company.

BooforgeBooforge works determinedly towards modernising and reducing any negative impact on the environment. In the recent years, the company has made rather large environmental changes and also changed production routines. We are also changing to lessen energy consumption.

Booforge continually measures our oil consumption to incite reduced consumption and make production more effective.

Scana MachiningScana machining adheres to ISO 9001 and 14001, plus to military quality and environmental standards. In addition to safety for employees, the company works with energy optimization for manufacture, buildings and factory facilities. In 2011 the company got connected to the municipal remote heating system, in order to reduce use of oil for heating.For measurements and so-called non-destructive testing (NDT), the steel companies use chemicals in controlled environments to verify the surface of steel constructions. Chemicals are disposed as special waste. The companies are preoccupied with good control over chemical usage.

SCANA PROPULSIONScana’s marine business area consists mainly of high-technological manufacture, having little or no negative impact on the environment.

VoldaScana volda’s production yields products that are contributing to the protection and safeguard of the environment, crew and load. Among our products, we find emergency electromotors for chemical tankers and flexible solutions to make engines run more environ-mentally friendly. Optimisation of engine usage is a continuing ambition for the company.

ZamechThe company further develops with regard to future environ mental and market related requirements through our co-operation with Scana volda’s gear and propeller technology and remote controlled systems from Scana mar-El.

SCANA OFFSHOREStavangerThe company is ISO 9001 and ISO 14001 certified, and is named by FOSECO as the most environmental friendly foundry in Europe. This claim is built upon our choice of forming sand, binding agents and hardeners. The company continually employs new routines to reduce negative impact on the environment, be it waste manage -ment, filtering and reductions. measurements are done regularly according to international standards. In 2011, a new sea based depot for sand from the production process was opened to reduce discharges and transport.

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power for the production, but some diesel fuel is used for heating the production halls.

SCANA OTHER BUSINESSLeshanLeshan Scana is situated in the middle of a Chinese region of about four million people. The company was earlier an old state owned business, responsible for a great deal of pollution, mainly because everything was coal based. Around the turn of millennium the company converted to electrical and gas power, and by the end of 2007, a dust collection system was installed on the entire facility. The company runs entirely on hydropower generated from a nearby river. Scana’s environmental initiative in China follows stringent, global standards and could have been transferred anywhere in the world.

HEALTH, ENVIRONMENT AND SAFETY (HES)The group consists of companies that affect the outer environment through noise and discharges/emissions. The group is licenced for its activities and the impact on the environment is not regarded as exceeding the discharge permissions. The group works continually to reduce discharges/emissions, waste to deposits and other negative environmental impact. Residue from the production is waste managed and handled according to regulations, in addition to being recycled when applicable. The companies within the steel business area buy large quantities of scrap for remelting, and are thereby also prominent in the recycling industry.

Offshore TechnologyScana Offshore Technology repairs equipment and is ISO 9001 certified. Our activity has very little negative impact on the outer environment, but we continually monitor how our activity may have an impact on the environment.

Offshore VestbyThe company has today no negative discharges or emissions to the environment, neither water, nor air. With regard to thermal treatment, the company now builds new premises according to present regulations. Sana Offshore vestby is a competence and design company that has no negative impact on the outer environment.

Offshore Services (Houston)Scana Offshore Services performs service and repairs on drilling equipment. Work is to a large degree done by subvendors, while project administration and engineering is done by the company. The company has stringent demands for HES with our subvendors and follows up and inspects work according to current HES regulations.

SkarpenordThe production of hydraulic actuators and systems at Skarpenord yields no negative discharges. The waste from the production is scrap iron/metal and is sold as scrap metal. This is both environmentally friendly and provides income. The company mainly uses electrical

ANNUAL ACCOUNTS 2012

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SCANA GROUP

52 Statement of income 53 Balance sheet 54 Cash flow statement 55 Statement of change in shareholders equity 56 Notes 56 Note 1. Consolidated accounting principles 61 Note 2. Estimate uncertainty 61 Note 3. Segment information 65 Note 4. Investments in associated and other companies 66 Note 5. Specification of other comprehensive income 67 Note 6. Tax 68 Note 7. Earnings per share 68 Note 8. Intangible assets 70 Note 9. Property, plant and equipment 72 Note 10. Payroll costs 74 Note 11. Pensions and other long-term employee benefits 76 Note 12. Inventories 76 Note 13. Trade receivables 77 Note 14. Other current receivables 77 Note 15. Bank deposits 77 Note 16. Share capital and premiums 78 Note 17. Interest-bearing debt 78 Note 18. Other current liabilities 79 Note 19. Trade payables 79 Note 20. Leasing obligations 80 Note 21. Related-party transactions 80 Note 22. Financial risk 81 Note 23. Financial instruments 85 Note 24. Shares and shareholders 86 Note 25. Pledged assets and guarantees 86 Note 26. Own shares 87 Note 27. Events after the balance sheet date 87 Note 28. Going concern

PARENT COMPANY

88 Statement of income 89 Balance sheet 90 Cash flow statement 91 Notes 91 Note 1. Accounting principles 91 Note 2. Shares 93 Note 3. Property, plant and equipment 93 Note 4. Tax 94 Note 5. Equity 94 Note 6. Guarantees 94 Note 7. Related-party transactions 95 Note 8. Remuneration and fees 95 Note 9. Share capital 95 Note 10. Debts and liabilities to group companies 95 Note 11. Bank deposits 95 Note 12. Current interest-bearing liabilities 95 Note 13. Pledged assets 96 Note 14. Financial instruments 96 Note 15. Other non-current liability 96 Note 16. Events after the balance sheet date and going concern

97 Declaration by the Board of Directors and the CEO and group chief executive 98 Auditors´ report

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DIRECTORS’ REPORT 2012

an aggregate net proceeds of NOK 135 million are implemented. Of this amount, a private placement with gross proceeds of NOK 100 million has already been completed. The subscription period for the subsequent repair offering of up to NOK 67.9 million will begin in early may.

Based on the Group’s business plans, budgets and latest forecasts for 2013-2015, the Board confirms in accordance with the Accounting Act § 3-3a that the accounts have been prepared under the going concern assumption, and that this assumption is valid.

IFRSInternational Financial Reporting Standards (IFRS) are used as the prevailing accounting principles for the consolidated financial statements, as adopted by the EU.

Financial performance Revenue for 2012 was NOK 2,039 million – i.e. on the same level as 2011. The Group achieved a loss before depreciation (EBITDA) of NOK 34 million, representing an EBITDA margin of minus 2 per cent. Impairments in goodwill and deferred tax benefits have charged the financial statements with NOK 77 million. The latter does not limit future utilization of tax benefits in the tax context related to Norwegian businesses. The write downs have no cash flow effect.

The Group’s net interest expenses totalled NOK 28 million.

The loss before tax was NOK 196 million. The recognized tax cost for the year amounted to NOK -1 million. Tax payable is NOK 0.1 million.

The Group’s total net loss was NOK 195 million, of which NOK 8 million is attributable to minority interests. This amounts to earnings per share of NOK -0.68 compared with NOK -0.50 per share in 2011.

Balance sheet The balance sheet total as at 31 December 2012 was NOK 1,750 million, which is a reduction of NOK 156 million compared with 31 December 2011.

The Group’s net interest-bearing debt is NOK 439 million, taking into account bank deposits and liquid assets. Gross interest-bearing debt at the end of 2012 was recognized at NOK 452 million, which is a reduction of NOK 57 million from 31 December 2011. At the end of 2012, the Group was in breach of the original financial covenants and has been endorsed a waiver

ABOUT THE BUSINESS Scana lndustrier ASA is a Nordic industrial Group whose key business is supplying products and system solutions to energy-related businesses. This encompasses oil and gas, other energy and marine businesses related to the offshore market.

Scana also provides servicing, repairs and maintenance for customers in the same markets.

Scana’s technology, unique expertise in materials and extensive production experience form the basis of our competitiveness. Our objective is to be the preferred supplier for leading companies within our market segments. The majority of Scana’s customers are located in Europe, USA and South East Asia.

Scana lndustrier ASA has companies in Norway, Sweden, China, USA, Poland, Singapore, Brazil and South Korea. The Group’s head office is in Stavanger.

Global recession caused a reduction in revenue in 2009 and 2010. 2011 did show a slight increase in revenue and 2012 ended on the same level as 2011. Revenue amounted to NOK 2,039 million with an operating loss of NOK 152 million. A write downs of goodwill and postponed tax benefits have charged the accounts with NOK 77 million.

The order inflow of NOK 1,965 million is a decrease of 16 per cent compared with 2011. The order reserve at the end of the year was NOK 1,113 million.

FINANCIAL STATEMENTS Going concern The challenges for the Group as a result of the financial crisis and the subsequent European debt crisis have been greater than the Group expected. This is due to the scope and duration of the market decline, coupled with a very strong Norwegian and Swedish Krone. There is uncertainty as to whether the Group will be able to comply with the adjusted loan conditions related to EBITDA in 2013 and the market development. However, the Board assesses the Group to gradually regain profitability through a well diversified and niche oriented product portefolio , that are leading in their market segments, and through ongoing and completed strategic and operational initiatives. In this regard, the private placement, which was completed in February 2013, and the planned repair issue, combined with the adjusted loan conditions incl. a grace period in amortisations, are important (See Note 27). The newly negotiated loan terms require that share issues with

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As a consequence of the liquidity position of the Group, a share issue will be carried out in the first half of 2013 to inject new capital in the Group, see note 27.

Information on segmentationIn 2012, the Group has changed its segmentation. The following companies are now part of the following new Group segments:

•ScanaEnergy– The reports include Scana Steel Björneborg, Scana

Steel Söderfors, Scana Steel Booforge, Scana Subsea and Scana machining, and the real estate company Scana Steel AB. All localized to Sweden.

•ScanaPropulsion– The reports include these production units: Scana

volda, Scana mar-El, Scana Zamech, in addition to service and sales offices in Singapore, Shanghai and Louisiana.

•ScanaOffshore– The reports include Scana Offshore vestby, Scana

Steel Stavanger, Scana Offshore Technology, Scana Offshore Services in Houston and Singapore, and Scana Skarpenord.

•ScanaOtherBusiness– The reports include Leshan Scana machinery and

Scana do Brasil Industrias.•ScanaProperty

– Scana Property was established in Q4 2012 and is planned as a holding company for the Group’s entire real estate.

SCANA ENERGYThe companies within Scana Energy mainly target oil & gas, as well as other energy as the most important market areas. In addition, the companies deliver specialized steel and components for the marine, car, machining and tool industries. Production takes place at Scana’s own production facilities, which include melting plants, forges, rolling mills, heat treatment and machining workshops. Production is of a high standard and complies with ISO-certified quality assurance systems.

Turnover for 2012 amounted to NOK 851 million in 2012, up 1 per cent compared to 2011. EBITDA ended on NOK 34 million.

Order influx for 2012 was NOK 822 million, down 7 per cent compared to 2011. The main reason for lower order influx was a lower demand for “simpler” products (volume products) in Q4 2012. The order reserve at the end of 2012 was NOK 339 million, compared to NOK 439 million at the end of 2011.

for “leverage ratio” and equity ratio. As at 31.12.12, the Group satisfied the waiver demands for an equity ratio of 27.5 per cent. Furthermore, the bank syndicate waiver demands that the Group strengthens its equity through a share issue during the first half of 2013 (see note 27 Events after Balance Day), which is the main reason for the syndicate loan being classified as short-term as of 31.12.12.

The book value of equity was NOK 570 million at the 31.st December 2012, which is equivalent to NOK 1.98 per outstanding share and an equity ratio of 33 per cent. At the end of 2011, recognized equity was NOK 630 million and the equity ratio was 33 per cent. Equity per share was calculated on the basis of 287,871,250 shares, the registered number of shares in the company as at 31 December 2011.

Intangible assets as at 31 December 2012 were recognized at NOK 101 million, of which goodwill amounted to NOK 49 million.

Cash flow Net cash flow from operating activities is minus NOK 2 million. The discrepancy between the operating result and the cash flow from operational activities is mainly due to depreciations and write downs, in addition to changes in working capital.

Investments in fixed assets amounts to NOK 87 million. The largest part of these investments was replacements of critical production tools for Scana Steel Björneborg. The net cash flow from investing activities is minus NOK 80 million. The net cash flow from financing activities was NOK 82 million.

The net cash flow from financing activities is positive, with NOK 58 million. The net cash flow for the Group in 2012 was minus NOK 24 million. The Group’s cash and cash equivalents totalled NOK 13 million at the end of the year. In addition, the Group had available credit facilities, see Note 22.

Capital position As at 31 December 2012, Scana’s option programme consisted of up to 1,240,000 share options, which are targeted at senior employees. The options may be redeemed after the presentation of Q2 and Q4 2012, and the following three years. Last point of redemption is after the presentation of Q4 2014. 590,000 options can be redeemed at a rate of NOK 1.87, while the rest will be redeemed at a rate of NOK 2.25. See also note 10 in the financial statements.

technology through a contract for delivering a newly developed propulsion system for Kleven maritime for Ugland Offshore. The propulsion system is innovative and renders increased reliability and a major improvement for fuel economy. The new propulsion system has been met with particularly good feedback in the market. This concept may give Scana an expanded market.

SCANA OFFSHOREThe activity in the business area spans a wide scope of services and products, from design, engineering, to production, assembly and testing of equipment and steel components, plus production of products and systems developed in-house. In addition, the business area delivers service and repairs of mechanical components to the oil & gas industry.

Turnover for 2012 amounted to NOK 715 million in 2012, compared to NOK 674 million in 2011. EBITDA was minus NOK 24 million. A weak result is attributed to continuing low activity for the companies in the business area.

The order reserve at the end of 2012 amounted to NOK 483 million, while the he order inflow was NOK 672 million. At the end of 2011 the order reserve was NOK 534 million. The decrease in order reserve is partly due to progress in the Brazil contract, entered in Q1 2011.

Scana Steel Stavanger now has global oil & gas projects as their main market. The company has been successful in winning very interesting contracts in the international oil & gas market and has taken a quality position in the market. However, they are still struggling to create sufficient profitability in their projects. Scana Steel Stavanger was in Q4 strongly influenced by the reduced order inflow for simpler products. Additional measures are taken to increase profitability.

Scana Offshore vestby has strained the Group’s financial result, but now has increased the number of prospects within offloading and unloading systems, in addition to mooring systems for the FPSO market and deliveries to the maintenance market in The North Sea. Increased volumes of this kind of deliveries are crucial to ensure profitability for the company. “The Brazilian Project”, in which Scana Offshore vestby is to deliver “off-loading” systems to eight FPSOs is on budget. The schedule for the project, however, has been delayed for customer reasons. Scana expects Scana Offshore vestby to play an interesting global role within their market in the coming 2-3 years.

Scana’s sales and production of valve control systems have its basis in companies in Norway and Korea. The companies have increasing activities as a result of

Continuing overcapacity in the global forging industry, a low-priced, weak European market and a strong Swedish Krone, yields high pressure on margins and profitability within the business area.

The global activity in oil & gas is high. Among other things, Scana Energy delivers components for risers to field developments in deep waters. These are demanding projects with considerable development work. Several of these projects are now nearing completion and the results from the development work and the market in general, give grounds for improved profitability for future projects. There has been a high order influx of components for risers in Q4 2012. These orders are to be delivered in 2013 and 2014.

A cross-company project in the business area has been started to further strengthen sales.

The companies in the business area are developed to become world leaders in their niches. A strong position in oil & gas and other energy gives a favourable basis for profitability. Increased vessels contracting and continuing high activity in oil & gas are the key elements to reinforce profitability for the business area.

SCANA PROPULSIONThe companies within the business area Scana Propulsion develop and manufacture propulsion technology within propellers, gears, thrusters and remote controls, primary for specialized ships and offshore vessels, in addition to offering servicing and after-sales services. Customers are shipyards, shipping companies, engine suppliers and other system suppliers. The business area is well represented in South East Asia, USA, Brazil and Europe with its own offices for sales and service.

Turnover in 2012 amounted to NOK 358 million, which is up 2 per cent compared to 2011. EBITDA was NOK 6 million compared to NOK 16 million in 2011. A positive operating profit in a weak new sales market is attributed to recognized solutions, innovation, cost adjustments, in addition to a positive contribution from servicing and after-sales services.

Order influx for 2012 was NOK 351 million, up 9 per cent compared to 2011. At the end of 2012, the order reserve was NOK 211 million, compared to NOK 235 million at the end of 2011.

The market for new sales is expected to be continually challenging in the years to come. The positive trend in servicing and after-sales service is expected to continue for Scana Propulsion.

Scana Propulsion has commercialized pioneering

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is presumed to represent considerable future assets for the Group.

It is decided that Scana will consider future development for both operational independent and non operational-dependent real estate to make visible both existing and potential value – and realize it. This work will happen across the entire Group, under a common management.

The work to increase value in real estate will first be based on the Group’s considerable acreage in Strand municipality in Rogaland. The work will be done in close cooperation with local authorities. Whether it is useful to call in other partners will be evaluated.

RISKThe Group’s most significant risk area is closely tied to the real macro economy situation and developments in the global market. Scana has implemented a number of measures in order to address the change in activity following the financial crisis, encompassing increased market and sales effort, reductions in workforce as well as costs, and restructuring operations.

In addition to risk associated with project implementation, the Group is exposed to fluctuations in commodity prices, such as scrap metal and alloys, as well as electricity costs. The Group has chosen a market based and contractual hedging policy against fluctuations in parts of the risk areas.

The Group is also exposed to financial risk:

• Currency risk The Group hedges its net foreign currency exposure against NOK and SEK. For major contracts, the currency flows are secured separately at contract signing. Currency changes after this point is reflected in sales revenue. However, these changes are offset by corresponding effects in the financial items in the financial statements. The Group is mainly exposed to fluctuations between NOK and SEK through its holdings in Swedish subsidiaries. Parts of the long-term debt are held in SEK to neutralize the Group’s equity SEK exposure. The development in NOK and SEK in relation to EUR, USD and GBP will, however, over time greatly affect Scana’s competitiveness, margin outlook and operating profit.

• Liquidity risk The Group monitors the liquidity situation in the short and long term through active dialogue with its subsidiaries and follow-up through the Group’s cash management system. In addition, the Group has a programme to reduce working capital. The group has deposits of 13 million and available credit facilities.

increased deliveries to FPSO projects in Korea, while the market for other ship deliveries is weak. Several FPSO contracts have been entered for Q1 2013.

Activity in service and repairs has seen a positive trend through the last half of 2012.

SCANA OTHER BUSINESSThe business area mainly consists of the company’s activity in China, Leshan Scana machinery.

The turnover in 2012 amounted to NOK 135 million, compared to NOK 190 million in 2011. EBITDA was minus NOK 20 million.

The order influx for 2012 was NOK 121 million, compared to NOK 173 million in 2011. The order reserve at the end of 2012 was NOK 80 million.

The activity decrease for Leshan Scana machinery reflects a considerable decrease in the Chinese steel market, with a volume reduction of about 40 per cent in the markets where Scana operates. The stimulating measures that the Chinese government has determined could be important for Scana in China. In addition, Scana is using its Norwegian competencies in cast products to develop Leshan Scana for delivery of new products in domestic China and for export to other regions. The company expects gradually increased turnover and continually increasing revenue throughout 2013.

STRATEGIC INITIATIVES Scana Industrier ASA has engaged an advisor to evaluate different strategies for the growth and international development of the business area Scana Energy.

In recent years, Scana has invested heavily in Scana Energy to develop and offer advanced products of very high quality to the different growth sectors within global energy, especially in oil & gas. The products are well received and the markets are considerable and growing well.

Hiring an external advisor for Scana Energy is a follow-up on the strategy that was communicated through the reorganization of Scana’s business areas in 2012. This renders possible different development strategies for the Group’s business areas.

Our goal for the process is to evaluate different measures that could force and strengthen Scana Energy’s market positions and thus create a sound basis for value growth for the Group’s shareholders.

Scana Industrier also owns considerable real estate, most of them in Norway and Sweden. This real estate

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A more detailed description of corporate governance is included in the “Shares and shareholders 2012” chapter of the annual report.

ORGANISATION AND PERSONNEL At the end of 2012, the Group had 1,765 employees, including 511 at the steelworks in China. Throughout 2012 new reductions in the workforce and costs have been implemented to increase profitability. A good working relationship with trade unions has made it possible to quickly adjust to the changed activity level. The working environment at Scana is considered to be good.

Women have 40 per cent representation on Scana’s executive board. Women are also represented in management groups in the Group’s subsidiaries. Traditionally, however, Scana’s production units have had a high proportion of men in the businesses, although the number of women is increasing.

DISCRIMINATION The Group is working to promote the objectives of the Norwegian Gender Equality Act within our businesses. The activities encompass recruitment, salary and working conditions, promotions, development opportunities and protection against harassment.

The Group’s objective is to be a workplace free of disability-based discrimination.

HEALTH, SAFETY AND ENVIRONMENT (HSE) In 2012, there were 44 injuries resulting in absence at the company, compared with 54 in 2011. Actual hours worked in 2012 amounted to 3,112,361, compared with 3,304,892 in 2011. In 2012, there was one fatal accident at Scana machining AB in Sweden.

The Board is not satisfied with the results of HSE in 2012, and measures have been taken in the Group’s operations.

Absence due to illness, which amounted to 3.8 per cent for the Group in 2012, is a result the Group is satisfied with.

The Group has obtained concessions for its businesses and its impact on the external environment does not exceed the specified discharge permits granted. The Group works continuously to limit discharge, waste to landfill and other negative environmental effects. Waste from the production is sorted and handled according to regulations, as well as some parts being re-used. Companies in the steel business buy large quantities of scrap for remelting and are thus also significant recycling enterprises.

Further details relating to liquidity risk is disclosed in note 22. The Group was refinanced in 2012 by the establishment of a new credit facility, consisting of a term loan of SEK 348 million and credit/guarantee facilities totalling 280 million. In the first half of 2012, the Group conducted a share issue of NOK 150 million. As at the end of 2012, the Group has waivers on several conditions regarding the loan agreement, including no amortization in 2013. See also Note 17, Note 22, Note 27 and Note 28, which, among other things, state that the Group in january 2013 decided on completing a private placement of 100 million and has decided on a repair issue of up to 67.9 million.

• Credit risk The Group has guidelines in place to ensure that contracts are not entered into with customers who have had or can be expected to have payment problems and that outstanding amounts do not exceed defined credit limits. The Group has also taken out credit insurance with GIEK Kredittforsikring in order to reduce its exposure to credit risk for the business (does not apply to Leshan Scana). Beyond this, the Group believes it can withstand the greater credit risk that has occurred in the market in recent times by means of extra monitoring of customers’ financial situation and a more prudent approach to credit assessments. See note 22 of the consolidated financial statements for further information on financial risk.

SHAREHOLDERS Scana was listed on the Oslo Stock Exchange in 1995. Scana’s owners consist of institutions and private investors. The largest shareholders of the Group at the year end were Camar AS (11.6 per cent) and verket Finans AS (11.1 per cent). Camar AS is owned by Board member john Arild Ertvaag and verket Finans AS is owned by Board member Knut Øgreid.

At the end of the year, the 10 largest shareholders owned a combined 55.2 per cent of shares in the company. There were a total of 2,144 shareholders. 2.4 per cent of the combined share capital was under foreign ownership.

In 2012, the share experienced a weak price trend, with a closing price of NOK 1.23, compared with NOK 1.61 at the start of the year. 39 million shares were traded on the Oslo Stock Exchange, equal to a turnover of 13.6 per cent. Scana has a “market maker” agreement with the Oslo Stock Exchange in order to enhance the liquidity of its share and ensure listing on the Oslo Børs match list.

CORPORATE GOVERNANCE Corporate governance of the company is based on “the Norwegian Code of Practice for Corporate Governance”.

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& gas market. Scana is in a very strong position for components for risers, among other things. In addition, 2013 is expected to yield increased activity in the FPSO market, a market important to Scana’s overall profitability. The changes in production towards more advanced and complete products and components for the energy market (including oil & gas) are developing positively and are enhancing Scana’s market position and earning power.

Scana expects a continuingly slow marine market in 2013, with a gradual increase in global activity beyond. An improvement in the marine market, with yet more global contracts for ships, is important to Scana’s profitability.

Scana is now far less dependent on the European market, but still depends on covering some of the basic tonnage in the steel companies. The market for simpler products in the steel segment is expected to improve in Q1 2013 compared to Q4 2012, but will still be characterized by a weak, European market. Scana expects a gradually more positive development in the European market from Q4 2013.

The main focus for Scana in 2013 is to regain profitability within the business areas. In addition, Scana will continue the projects for further growth and international development of Scana Energy, plus further work for realizing real estate value.

Scana emphasises that there is considerable uncertainty linked to evaluation of future conditions.

TRANSACTIONS AND TRANSFERS The loss for the year attributed to owners in the parent company amounted to NOK 187 million, equivalent to a loss of NOK 0.65 per share. The parent company, Scana lndustrier, realized a loss for the year of NOK 116.6 million. The Board will propose to the General meeting that NOK -116.6 million be covered by other equity. Free equity after this will be NOK 60.5 million.

RESEARCH AND DEVELOPMENT The work on research and development is given high priority at Scana. Efforts have increased over recent years and are important in the further development of the market position of each of the businesses. A large proportion of the work is linked to product development, and the long-term strategy is to create added value for customers, boost productivity and reduce costs, as well as to reduce the impact of the business on the external environment.

OUTLOOK The main objective of the Group is to increase the values for shareholders. The following primary strategies have been determined on this basis:

1. Increased focus on the structure and development of the business areas

2. Continuing organic growth in all business areas3. Re-obtaining profitability and ensure effective financial

management4. Developing the repair and servicing concept within

propulsion and offshore5. Reinforcing the Group’s strategic position through

strategic collaborations/acquisitions6. Reducing exposure outside of the Group’s

commitment areas7. Development of property values

For 2013, the Board is prioritising good operations, including effective financial management.

MARKET TRENDS Scana’s key products are niche-oriented and are leading products within their market segments. A new, superior Group structure clarifies increased focus on the energy market, increases opportunities for synergies within the business areas and renders clearer management responsibility for each business area. In addition, the structure opens for further strategic adjustments.

Scana sees a positive order inflow linked to the oil

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Stavanger, 11th of April 2013

Bjørn TorkildsenChairman of the Board

john Arild ErtvaagBoard member

Knut ØgreidBoard member

Elisabeth SaupstadBoard member

martha Kold BakkevigBoard member

Per RavnestadBoard member

Rolf RoverudCEO

Period 1 January - 31 December (NOK 1000) Note 2012 2011

Operating Revenues:Sales revenues 3/13 2 016 527 2 022 658Other revenues 5 19 766 18 555Gain on disposal of fixed assets 9 2 209 775

Total operating revenues 2 038 502 2 041 988

Operating costs:Raw materials and consumables 12 729 653 870 961Change in stocks of FG and WIP 12 25 363 -11 750Wages and NI contributions 10/11 730 295 667 819Depreciation / amortisation / writedowns 8/9 117 409 80 951Other operating costs 5/13/20 587 376 518 608

Total operating costs 2 190 096 2 126 589

Operating profit / loss ( - ) -151 594 -84 601

Financial income and expenses 17/22Income from interests in associated companies 4 2 971 -3 838Interest income 2 164 2 446Interest expense 17 -30 438 -33 123Net currency gain / loss ( - ) -9 438 16 612Other financial income / expenses ( - ) 5 -9 788 -4 852

Net financial income / expenses ( - ) -44 529 -22 755

Profit / loss ( - ) before tax -196 123 -107 356

Taxation 6 -1 411 -24 609

Net profit / loss ( - ) -194 712 -82 747

The net profit / loss is distributed as follows:Equity holders of the parent 7 -186 744 -83 749minority interests -7 968 1 002

Net profit / loss ( - ) -194 712 -82 747

Earnings per share 7 -0,68 -0,50Diluted earnings per share 7 -0,68 -0,50

SCANA GROUP STATEmENT OF INCOmE

Net profit / loss ( - ) -194 712 -82 747

Other comprehensive incomeNet movement in value of cash flow hedges 6/23 -589 -27 139Net gain / loss on hedge of net investment 6 2 097 42Exchange difference on translations of foreign operations -12 459 6 606

Other comprehensive income -10 951 -20 491

Total comprehensive income -205 663 -103 238

The total comprehensive income is distributed as follows:Equity holders of the parent -197 695 -104 240minority interests -7 968 1 002

Total comprehensive income -205 663 -103 238

SCANA GROUP STATEmENT OF OTHER COmPREHENSIvE INCOmE

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SCANA GROUP BALANCE SHEET

(NOK 1000) Note 31.12.12 31.12.11

Fixed assets:Intangible assets 8 101 001 133 828Deferred tax assets 6 23 137 36 887Property, plant and equipment 9 757 900 777 125Shares in associated companies 4 13 453 11 043Other shares 4 634 486

Total fixed assets 896 125 959 369

Current assets:Inventory 12 351 615 378 360Trade debtors 13 441 637 475 285Derivatives 23 541 5 544Other current assets 14 47 578 49 630Cash and cash equivalents 15 12 805 37 727

Total current assets 854 176 946 546

Total assets 1 750 301 1 905 915

Shareholders' equity:Paid-in capital 16 478 403 333 482Other equity 71 062 268 757

Equity before minority interests 549 465 602 239minority interests 20 176 28 144

Total shareholders’ equity 569 641 630 383

Non-current liabilities:Interest-bearing loans and borrowings 17/20/22 14 954 18 209Pension obligations 11 4 667 6 425Deferred tax liability 6 47 301 64 447Derivatives 23 14 384 9 679Other non-current liabilities 0 145

Total non-current liabilities 81 306 98 905

Current liabilities:Interest-bearing loans and borrowings 17/20/22 436 753 490 291Trade payables 19 292 415 270 332Advances from customers 13 120 108 170 238Tax payable 6 140 40Derivatives 23 15 299 13 766Other current liabilities 18 234 639 231 960

Total current liabilities 1 099 354 1 176 627

Total liabilities and shareholders’ equity 1 750 301 1 905 915

Stavanger, 11th of April 2013

Bjørn TorkildsenChairman of the Board

john Arild ErtvaagBoard member

Knut ØgreidBoard member

Elisabeth SaupstadBoard member

martha Kold BakkevigBoard member

Per RavnestadBoard member

Rolf RoverudCEO

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SCANA GROUP CASH FLOW STATEmENT

(NOK 1000) Note 2012 2011

Cash flow from operating activities:Profit / loss ( - ) before tax -196 123 -107 356Tax paid 6 1 642 4 346Gain ( - ) / loss 4/8/9 -4 953 3 169Depreciation / Amortization / Writedowns 8/9 117 409 80 951

Employee share options 1 386 1 065

Unrealised foreign currency gain / loss and derivatives 20 776 4 852Interest income -2 165 -2 446Interest expense 30 438 33 123Differences between paid and expenced pension cost -1 781 -6 040Change in trade debtors / advances from customers 13 -23 272 5 883Change in inventory 12 21 911 -36 013Change in trade payables 19 25 049 34 239Change in other current liabilities and accruals 14/18 7 628 44 598

Net cash - operating activities -2 055 60 371

Cash flow from investing activitiesProceeds from sale of property, plant and equipment 8/9 6 247 3 174Purchase of property, plant and equipment 8/9 -86 853 -73 049Proceeds from sale of shares 4 0 77 789Investments in shares and paid in equity 4 0 -81 498Dividend associated companies 4 253 1 466

Net cash - investing activities -80 353 -72 118

Cash flow from financing activitiesProcees from LT borrowings 17 348 591 13 058Repayments of LT borrowings 17 -396 216 -49 735Net increase ( decrease ) in ST borrowings 17 9 916 30 944*Proceeds from issue of new share capital 16 141 021 1 154Paid other finance costs -17 055 -16 003*Interest received 2 164 2 445Interest paid -30 074 -33 016

Net cash - financing activities 58 347 -51 153

Net cash flows -24 061 -62 900

Cash and cash equiv. at beg. of period 37 727 101 249Exch diff in cash and cash equiv -861 -622Cash and cash equiv. at end of period 12 805 37 727

Change in cash and cash equivalents -24 061 -62 900

*Figures have been reclassified to be comparable with 2012.

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SCANA GROUP STATEmENT OF CHANGE IN SHAREHOLDERS EQUITY

ReserveOwn Other for Reserves Non con-

Chare share- Paid in Other translation for change trolling Total(NOK 1000) capital holdings capital equity differences in value Total interests equity

Equity as at 1 january 2011 209 617 -141 121 780 341 624 21 664 9 709 704 253 27 142 731 395Comprehensive income -83 749 6 648 -27 139 -104 240 1 002 -103 238Share option programme 1 072 1 072 1 072Paid-in capital 222 932 1 154 1 154

Equity as at 31 December 2011 209 839 -141 123 784 257 875 28 312 -17 430 602 239 28 144 630 383

ReserveOwn Other for Reserves Non con-

Chare share- Paid in Other translation for change trolling Total(NOK 1000) capital holdings capital equity differences in value Total interests equity

Equity as at 1 january 2012 209 839 -141 123 784 257 875 28 312 -17 430 602 239 28 144 630 383Comprehensive income -186 744 -10 362 -589 -197 695 -7 968 -205 663Share option programme 1 386 1 386 1 386Paid-in capital 150 000 -6 465 143 535 143 535

Equity as at 31 December 2012 359 839 -141 118 705 71 131 17 950 -18 019 549 465 20 176 569 641

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NOTES GROUP 2012

Note 1. Consolidated accounting principles 2012

General informationScana Industrier ASA is located at Strandkaien 2 in Stavanger, Norway. The company is a public limited company which is listed on the Oslo Stock Exchange. Its activities are described in note 3. The consolidated financial statements for Scana Industrier ASA for 2012 were approved by the Board of Directors on 11 April 2013.

Main principlesThe consolidated financial statements for Scana Industrier ASA have been prepared in accordance with IFRS and the interpretations specified by the International Accounting Standards Board, as approved by the EU.

The consolidated financial statements have been prepared on the basis of the going concern requirements. The annual accounts consist of the income statement, total comprehensive income, balance sheet, statement of cash flows, statement of changes in equity and notes to the accounts. The most important consolidation and accounting principles followed in the preparation of the annual accounts are as follows:

The consolidated financial statements are based on the principles of historical cost accounts, with the exception of the following items:• Buildingswhicharevaluedatrecordedvalue• Financialinstrumentsatfairvaluethroughprofitandloss,financial

instruments available for sale which are recognised at fair value, loans and receivables and other financial obligations that are recognised at amortised cost

The consolidated financial statements have been prepared in accordance with the standard accounting principles for similar transactions and events under otherwise similar circumstances.

Functional currency and presentation currencyThe consolidated financial statements are presented in Norwegian kroner (NOK), and all figures are rounded to the nearest thousand (’000) unless otherwise indicated. The functional currency for the parent company Scana Industrier ASA is NOK, while the functional currency for the subsidiaries is their local currency. Subsidiaries with a functional currency other than NOK are translated at the exchange rate on the balance sheet date for balance sheet items, while income statement items are translated at the transaction rate. The transaction rate is determined using monthly average exchange rates. Translation differences are recognised against total comprehensive income. On the disposal of investments in foreign subsidiaries, accumulated translation differences associated with the subsidiary are recognised in the income statement.

Consolidation principlesThe consolidated financial statements cover the parent company Scana Industrier ASA and the companies in which Scana Industrier ASA has a controlling interest, either directly or indirectly through ownership or through separate agreements. A controlling interest is defined as Scana Industrier ASA controlling over 50 per cent of the votes at the general meeting. The group’s subsidiaries are listed in note 2 to the annual accounts for the parent company. Non-controlling interests are included in the group’s equity.

Company mergers are recognised using the purchase method of accounting. The cost price is measured at the fair value of the assets acquired, the shares issued or the liabilities assumed at the acquisition date. Additional cost price in excess of the fair value of the net assets in the acquired business is recognised as goodwill. Companies that are bought or sold during the course of the year are included in the consolidated financial statements from the date at which control was acquired and until control ceases.

Inter-company transactions and inter-company balances, including internal revenues and unrealised gains and losses, are eliminated.

Unrealised gains relating to transactions with associates and jointly controlled companies are eliminated through the group’s share of the company/business. Similarly, unrealised losses are eliminated, but only to the extent that there are no indications of a loss of value of the assets sold internally.

The following standards and interpretations have been published but have not yet come into force and have therefore not been applied.

IAS 1 Presentation of Financial StatementsThe amendments to IAS 1 mean that items in the statement of other comprehensive income (OCI) are to be grouped into two categories. Items that could be reclassified to profit or loss at a future point in time (for example, net gains on the hedging of net investment, translation differences on the translation of foreign operations to the presentation currency, net change in cash flow hedging and net gains or losses on financial assets classified as available for sale) must be presented separately from items which will never be reclassified (for example, actuarial gains and losses on defined benefit plans). The amendments only affect presentation and have no impact on the group’s financial position or results. The amendments apply to financial years beginning on or after 1 july 2012 and will therefore be implemented in the group’s first set of financial statements after they have come into force.

IAS 12 Income TaxesThe amendment to IAS 12 means that deferred tax on investment assets measured at fair value under IAS 40 Investment Property must be calculated on the basis of whether the entity expects to recover the carrying amount of the asset through sale (and not use). This expectation can be disproved if two closely specified criteria are met. The amendment also includes the incorporation of SIC 21- Income Taxes – Recovery of Revalued Non-Depreciable Assets which stipulates that deferred tax on non-depreciable assets measured using the revaluation model in IAS 16 Property, Plant and Equipment must always be calculated on the basis of whether the entity expects to recover the carrying amount of the asset through sale (and not use). The amendments apply within the EU/EEA to financial years beginning on or after 1 january 2013.

IAS 19 Employee BenefitsIASB has approved a number of amendments to IAS 19. The amendments are in part of a fundamental nature, such as no longer allowing the corridor approach and making a conceptual change to the expected return on pension assets, and in part of a simpler nature, such as simple clarifications and rewording. The removal of the corridor approach means that actuarial gains and losses are to be recognised in other comprehensive income (OCI) in the period in which they arise. The amendment to IAS 19 will affect net pension expenses as a result of the expected return on pension assets being calculated using the same interest rate as that used for discounting pension obligations. The amendments apply to financial years beginning on or after 1 january 2013.

IAS 28 Investment in Associates and Joint Ventures As a consequence of the new standards IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 has changed its name to IAS 28 Investment in Associates and Joint Ventures, and now describes the application of the equity method to joint ventures as well as associates. The amendments apply within the EU/EEA to financial years beginning on or after 1 january 2014.

IAS 32 Financial Instruments: Presentation IAS 32 has been amended in order to clarify the meaning of “currently has a legally enforceable right to set-off” and also to clarify the application of IAS 32’s offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments apply to financial years beginning on or after 1 january 2014.

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IFRS 7 Financial instruments: Disclosures The amendments mean that companies are obliged to disclose information about offsetting rights and related agreements (such as the provision of securities). The disclosures will provide the users of the financial statements with useful information for evaluating the effect of offsetting agreements on the group’s financial position. The new notes are required for all recognised financial instruments that are netted in accordance with IAS 32 Financial Instruments: Presentation. The disclosure requirements also apply to recognised financial instruments that are subject to an “enforceable master netting arrangement” or similar agreement, irrespective of whether or not they are netted in accordance with IAS 32. The amendments will have no impact on the group’s financial position or results. The amendments apply to financial years beginning on or after 1 january 2013.

IFRS 9 Financial InstrumentsIFRS 9, in its current published form, reflects the first phase of IASB’s work to replace the current IAS 39, and applies to the classification and measurement of financial assets and liabilities as defined in IAS 39. The standard was initially intended to enter into force for financial years beginning on or after 1 january 2013, but amendments to IFRS 9 approved in December 2011 pushed the effective date back to 1 january 2015. Later phases of this project relate to hedge accounting and the impairment of financial assets. The group will evaluate the potential impact of IFRS 9 in accordance with the other phases as soon as the final standard, including all phases, is published.

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements IFRS 10 replaces the portions of IAS 27 Consolidated and Separate Financial Statements that address consolidated financial statements, and SIC-12 Consolidation – Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities, including special purpose entities (SPEs). The amendments introduced in IFRS 10 require the management to exercise a considerable degree of judgement to determine which entities are controlled by the parent company, where all entities which are controlled must be consolidated. As a result, the group has assessed which companies are to be consolidated in accordance with IFRS 10 and compared with the prevailing IAS 27. The meaning of the term ‘control’ is somewhat different to that in IAS 27. The factor that determines whether companies should be consolidated under IFRS 10 is whether there is control. Control exists when the investor has power over the investment object, is exposed to or has rights to variable returns from the investment object, and has the ability to use their power to direct the activities at the investment object with a significant impact on returns. IFRS 10 applies within the EU/EEA to financial years beginning on or after 1 january 2014.

Amendments to IFRS 10, IAS 27 and IFRS 12 relating to Investment EntitiesThe amendments to IFRS 10 mean that companies which fulfil the definition of an investment entity are no longer required to consolidate their subsidiaries. The exception is that subsidiaries which provide services that relate to the investment entity’s investment activities must be consolidated. Other investments in subsidiaries, joint ventures and associates must be consolidated at fair value with changes in value through profit and loss. Investment entities that are required to consolidate all their subsidiaries at fair value with changes in value through profit and loss in accordance with IFRS 10 present the separate financial statements as their only financial statements. The note disclosure requirements have been extended.The changes enter into force with effect from financial years beginning on or after 1 january 2014, but the amendments have not yet been approved by the EU.

IFRS 11 Joint ArrangementsThis standard supersedes IAS 31 Interests in Joint Ventures, as well as SIC-13 jointly Controlled Entities – Non-Monetary Contributions by Venturers. IFRS 11 removes the option of recognising joint ventures using the gross method. All entities that fulfil the definition of a joint venture must be recognised using the equity method.

IFRS 11 applies within the EU/EEA to financial years beginning on or after 1 january 2014.

IFRS 12 Disclosure of Interests in Other EntitiesIFRS 12 applies to entities with interests in subsidiaries, joint arrangements, associates or unconsolidated structured entities. IFRS 12 replaces the disclosure requirements previously covered by IAS 27 Consolidated and separate financial statements, IAS 28 Investments in Associates, and IAS 31 Interests in Joint Ventures. A number of new disclosure requirements have also been introduced. The amendments do not affect the group’s financial position or results. IFRS 12 applies within the EU/EEA to financial years beginning on or after 1 january 2014.

IFRS 13 Fair Value MeasurementThis standard specifies principles and guidelines for the measurement of fair value for assets and liabilities which other standards require or permit to be measured at fair value. IFRS 13 applies to financial years beginning on or after 1 january 2013.

IFRIC 20 Stripping Costs in the Production Phase of a Surface MineIFRIC 20 stipulates the accounting treatment of costs relating to the removal of waste (stripping costs) during the production phase of a surface mine. The amendments apply to financial years beginning on or after 1 january 2013. Annual improvement project 2009–2011

IAS 1 Presentation of Financial Statements The amendments to IAS 1 clarify the difference between voluntary comparative information and the minimum requirements. The presentation of the comparative information for the previous period will usually satisfy the minimum requirements. The amendments do not affect the group’s financial position or results. The amendments apply to financial years beginning on or after 1 january 2013, but the amendments have not yet been approved by the EU.

IAS 16 Property, plant and equipmentThe amendments include the stipulation that major spare parts and servicing equipment that fulfil the definition of property, plant and equipment do not constitute inventories. The amendments apply to financial years beginning on or after 1 january 2013, but the amendments have not yet been approved by the EU.

IAS 32 Financial instruments: PresentationThe amendment represents a clarification that income taxes resulting from dividends to the holders of financial instruments classified as equity must be recognised in accordance with IAS 12. The amendments apply to financial years beginning on or after 1 january 2013, but the amendments have not yet been approved by the EU.

The group does not expect the implementation of the proposed list above to have any impact on the consolidated financial statements at the time of implementation, but will perform further analyses on the various proposals prior to implementation.

CORE ACCOUNTING PRINCIPLES

Core accounting assessed evaluations and estimatesmanagement has applied estimates and assumptions that affect the recognition and valuation of assets, liabilities, revenues, expenses and information concerning contingent liabilities. This applies in particular to the recognition of revenues from long-term construction contracts, the assessment of depreciation and write-down of non-current assets, income taxes, evaluation of bad debts, evaluation of inventory obsolescence, reporting of development costs and the valuation of pension obligations. Future events may result in changes to these estimates. Estimates and the underlying assumptions are regularly assessed. Changes to accounting estimates are recognised in the period in which the changes occur. See also note 2.

RevenueRevenue is recognised when it is probable that the transactions will generate future economic benefits for the company and where

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the amount of these can be measured reliably. Sales revenue is presented net of value-added tax and discounts. Revenue from the sale of goods is recognised when delivery has taken place, i.e. the risk and potential gains associated with the goods have been transferred to the purchaser and the group has established a claim against the customer. Rental income is recognised on a straight-line basis over the period of the lease. Revenue related to long-term construction contracts (projects) is recognised in line with the progress of the project, where the outcome of the project can be measured reliably. The stage of completion is calculated using the most suitable method for the individual contract, which is normally the costs incurred as a percentage of the expected total cost. If the outcome of the project cannot be measured reliably, only revenue equivalent to the project costs incurred is recognised as revenue. Any loss on a contract is recognised in full in the period in which it is established that the project will result in a loss. Advances on construction contracts are classified on the balance sheet under current liabilities. Royalties are recognised in accordance with the conditions of the various royalty agreements. Dividends are recognised when the rights to receive a dividend are established. Interest income is recognised as it is accrued.

The tax cost in the income statement is the sum of the tax currently payable and the change in deferred tax.

Currency translationTransactions in foreign currency are recognised using the exchange rate on the transaction date. monetary items and liabilities in foreign currency are translated using the exchange rate on the balance sheet date. Any exchange differences are recognised as financial items.

Balance sheet items at foreign subsidiaries are translated to NOK using the exchange rate as at 31 December. All items in the income statement are translated to NOK using the weighted average exchange rate. Consolidation leads to currency translation differences, which are presented as other comprehensive income in the total comprehensive income. Exchange rate gains and losses relating to liabilities in foreign currency which for accounting purposes are considered to hedge investments in foreign subsidiaries and the currency effects of monetary items which represent a portion of the net investment in the foreign subsidiaries are recognised as other comprehensive income in total comprehensive income until the subsidiary is disposed of.

Intangible assetsIntangible assets with a limited life are depreciated over the anticipated useful life and are assessed for possible impairment when there are indications that the value of the intangible assets may have been reduced. The depreciation period and method for intangible assets with a limited life are evaluated at least at the end of each financial year. Changes to the anticipated useful life or anticipated pattern of use of the intangible assets are recognised by changing the depreciation period or method and are treated as changes to accounting estimates.

Internally generated intangible assets, excluding capitalised development costs, are not recognised on the balance sheet and expenses are recognised in the income statement in the period in which the expense is incurred. The useful life of intangible assets is considered to be either limited or indefinite.

GoodwillGoodwill arising on acquisition is valued at acquisition cost. This represents the portion of the total acquisition cost that exceeds the net fair value of identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is valued at the acquisition cost less any accumulated impairment. The group tests goodwill for

impairment annually or when there are indications of a loss of value. Impairment testing is carried out for the cash-generating units with recognised goodwill. Recognised goodwill is compared with the recoverable amount. The recoverable amount is the higher of the net realisable value and the utility value.

Research and development expenditureExpenditure on research is recognised on an ongoing basis. Development costs for an individual project are capitalised as intangible assets when the criteria are met. Intangible assets are recognised when: - the technical feasibility of completing the intangible asset so that it

will be available for use or sale can be documented- there is performance potential and its potential to use or sell the

asset - the asset will generate future economic benefits- the necessary resources to complete the development of the assets

are in place- the development costs can be measured reliably

Recognised development costs are reported on the balance sheet at acquisition cost less accumulated depreciation and write-downs. Recognised development costs are depreciated on a straight-line basis over the estimated useful life of the asset. All accrued expenses are depreciated during the period in which the current project is anticipated to be sold in the future.

The carrying amount of the development costs is evaluated annually, or more frequently where there are indications of a reduction in value.Gains and losses on the disposal of an intangible asset, calculated as the difference between the net realisable value and the carrying amount, are recognised in the income statement.

Property, plant and equipmentProperty, plant and equipment are measured at acquisition cost, less accumulated depreciation and write-downs. When assets are sold or disposed of, the carrying amount is derecognised and any gains or losses are recognised in the income statement.

The acquisition cost of property, plant and equipment is the purchase price, including fees/taxes and expenses directly linked to making the non-current asset ready for use. Expenses incurred once the non-current asset has been taken into use, such as ongoing maintenance, are recognised in the income statement, while other expenses, including larger-scale maintenance work that is expected to provide future economic benefit, are recognised on the balance sheet.

Depreciation is calculated using the straight-line method over the anticipated useful life of the non-current assets. The useful life, residual value and depreciation method for non-current assets are assessed once a year.

The carrying amount for the non-current assets is tested for impairment when events or changes in circumstances indicate that the carrying amount may be reduced.

The group capitalises larger-scale scheduled maintenance and depreciates it against income in relation to the maintenance interval.

Larger spare parts and spare equipment are considered to be part of non-current assets when the group expects them to be used in more than one accounting period. Similarly, where the spare parts and spare equipment can only be used in connection with the non-current assets, they are recognised as part of these.

Write-down of non-current assetsThe write-down of non-current assets is assessed when there are indications of a loss of value. Where the carrying amount of an asset is greater than its recoverable amount, the asset is written down in the income statement. The recoverable amount is the higher of the fair value less selling costs and the utility value (the discounted cash flow with continued use). The fair value less selling costs is the value that can be realised on sale to an independent third party less the selling costs. The recoverable amount is determined separately for all non-current assets, but where this is not possible, it is determined together with

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the cash-generating unit with which the non-current assets are associated.

Write-downs recognised in the income statement from previous periods are reversed when there is information that the write-down is no longer necessary. Reversals are made via the income statement. No reversals are made, however, where this would mean that the carrying amount exceeds what the carrying amount would have been if ordinary depreciation had been applied.

Deferred tax assetsDeferred tax assetDeferred tax assets are recognised on the balance sheet when it is probable that the group will have sufficient taxable surplus in future periods to make use of the tax assets. The companies recognise previously unrecognised deferred tax assets to the extent that it has become probable that the group will be able to make use of the deferred tax assets. Similarly, the group will reduce deferred tax assets to the extent that the group no longer considers it probable that it will be able to make use of the deferred tax assets.

Shares in associatesAn associate is an entity over which the group has significant influence, but not control over the financial and operational management (normally a share of ownership of between 20 and 50 per cent). The consolidated financial statements include the group’s share of profits at associates according to the equity method from the point at which significant influence is achieved and until such influence ceases.

Where the group’s share of losses exceeds the investment in an associate, the group’s carrying amount is reduced to zero and further losses are not recognised in the income statement unless the group has an obligation to cover such losses.

Other sharesOther shareholdings that are not in subsidiaries or associates are recognised on the balance sheet at fair value with changes in value recognised against income.

Investments and other financial instrumentsFinancial assets within the scope of IAS 39 are classified either as financial instruments with ongoing recognition of changes in fair value, loans or receivables. Financial assets are initially recognised on the balance sheet at fair value, plus (for investments other than where changes in value are recognised in the income statement on an ongoing basis) directly related transaction costs. The group determines the classification of its financial assets on initial recognition and, where permitted and appropriate, this classification is reassessed at the end of each financial year.

Loans and receivables are non-derivative financial assets with fixed or variable cash flows where market prices are not continuously applied. Such assets are recognised at amortised cost using the effective interest method. Gains or losses are recognised when the loans and receivables are disposed of or are considered to be lost, in addition to amortisation.

InventoriesInventories, which comprise purchased goods and in-house manufactured products, are valued at the lower of the purchase/manufacturing cost and the expected net realisable value. The net realisable value is the estimated selling price from ordinary operations, less the estimated costs of completion, marketing and distribution. The acquisition cost is allocated using the FIFO method and includes expenses incurred on the acquisition of the goods and costs of bringing the goods to their present condition and location. In-house manufactured goods include raw materials, energy, direct work and a portion of indirect costs, including maintenance and depreciation.

Trade receivablesTrade receivables are normally recognised at the original invoice amount. Loss provisions are made when there are objective grounds to believe that the group will not be able to collect a receivable. Earned revenue not yet received is classified on the balance sheet under trade receivables.

Financial instrumentsFinancial instruments that are not recognised at fair value are valued on the balance sheet date in order to identify any possible loss of value.

Cash and cash equivalentsCash and cash equivalents on the balance sheet comprise cash and bank balances with an original period of three months or less.

With regard to the group’s statement of cash flows, cash and cash equivalents comprise cash and cash equivalents as defined above. The statement of cash flows is prepared using the indirect method.

Assets held for saleBusiness or assets that are intended to be sold, and where the sale is very likely, are classified as held for sale on the balance sheet.

Equity

Options – share-based paymentSenior employees of the group are allocated options to purchase shares in the parent company. These options are valued on the basis of the fair value of the option at the time when the option scheme is approved. The options are valued using the Black-Scholes model. The cost of the option is allocated over the period during which the employees earn the right to receive the options.

Own shareholdingsHoldings of own shares are recognised against equity at cost price for the group.

Financial instruments and hedgingThe group uses financial instruments such as forward currency contracts, interest rate swaps and electricity derivatives to hedge the risks associated with interest rates, exchange rates and fluctuations in the price of electricity. Such financial instruments are initially recognised at fair value on the date on which the contract is entered into and are valued in subsequent periods at fair value. A derivative is classified as an asset when its fair value is positive and as a liability when its fair value is negative.

The group’s criteria for the classification of a derivative or other financial instrument as a hedging instrument are as follows: (1) the hedge is expected to be highly effective in offsetting changes in fair value or cash flows for a specific object – the effectiveness of the hedge must be expected to be within the range of 80–125 per cent, (2) the effectiveness of the hedge can be measured reliably, (3) adequate documentation has been established on entering into the hedge, (4) for cash flow hedging, the future transaction must be likely, and (5) the hedge must be continuously evaluated and have been shown to be effective.

On entering into a hedging contract, the group documents the assets, liabilities or future transactions to which it wishes to apply hedge accounting, with associated risk-management targets and strategy. This documentation includes the identification of the hedging instrument, the hedged item or transaction, the type of risk that is being hedged and how the entity will assess the effectiveness of the hedging instrument with regard to offsetting the exposure to changes in the fair value of the hedged item or cash flows associated with the hedged risk. Hedges are expected to be highly effective with regard to offsetting changes in fair value or cash flows and are continuously assessed in order to determined whether they have actually been effective throughout the intended accounting period.

The group uses hedge accounting for cash flow hedges associated with the hedging of the future price of electricity and hedging future interest payments associated with external loans through interest rate swaps. Hedge accounting is also used to hedge currency effects on net investments in Swedish subsidiaries. Exchange gains/losses on loans that are used as hedging instruments for hedging net investment are recognised against total comprehensive income.

The fair value of forward currency contracts is calculated in relation to the currency forward prices for contracts with similar terms. The fair value of interest rate swaps and electricity derivatives is determined with reference to market values for similar agreements.

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Changes in the value of financial instruments that qualify for cash flow hedging are recognised as other comprehensive income in total comprehensive income. Any ineffective elements of hedging are recognised in the income statement on an ongoing basis.

Gains and losses resulting from changes in the fair value of derivatives that do not qualify for hedge accounting are recognised in the income statement on an ongoing basis.

Interest-bearing loans and loan costsLoans are recognised at the amount originally received less directly related transaction costs. In subsequent periods, interest-bearing loans and the taking out of loans are valued at amortised cost using the effective interest method. Gains and losses are recognised in the income statement where liabilities are derecognised from the balance sheet as well as through ordinary amortisation.

LeasingThe group has entered into lease agreements as a lessee. Lease agreements are classified as finance or operating leases on the basis of a specific assessment of each lease.

For finance leases, an amount equivalent to the lower of the fair value and the present value of the minimum lease payment is reported on the balance sheet at beginning of the lease period. The same depreciation period is used as for the group’s other depreciable assets. Where there is no reasonable certainty that the group will take over the asset at the end of the lease period, the asset is depreciated over the shorter of the term of the lease and the asset’s economic life.

Operating leases are expensed on a straight-line basis over the period of the lease.

PensionsSome employee groups are covered by pension plans that are financed through insurers or directly by the company.

Pension obligations are valued at the present value of future pension rights accrued on the balance sheet date on the basis of the linear accrual method and estimated final salary. The pension plan assets are valued at estimated market value. Net pension obligations (pension obligations less pension plan assets) are classified on the balance sheet as non-current liabilities taking into account adjustments for net accumulated actuarial gains and losses. Recognised net obligations include employer’s contributions.

Net pension costs for the period (gross pension costs less estimated return on pension plan assets) are included in personnel costs. Gross pension costs comprise the present value of pension rights earned during the period, interest on pension obligations and the amortisation effects of plan changes and actuarial gains and losses in the pension plan.

Changes in the obligations and pension assets as a result of changes and deviations in the calculation assumptions (estimate changes) are spread over the estimated average remaining earning period where the deviations at the beginning of the year exceed 10 per cent of the larger of gross pension obligations and pension assets.

The introduction of a new defined-benefit plan or the improvement of the current defined-benefit plan would result in changes to the pension obligations. This will be expensed on a straight-line basis until the effect of the change has been obtained. The introduction of new plans or changes to existing plans with retroactive effect such that the employees have immediately earned a paid-up pension (or a change in a paid-up pension) is recognised directly in the income statement.

For pension plans where the agreed payments are made by the group and where the pension asset plans are administered separately (defined-contribution pension plans), the annual payments/contribution are included in personnel costs.

The pension plans for the group’s Norwegian and Swedish employees are considered to be defined-benefit plans, organised as multi-employer plans. These pension plans are treated as defined-contribution pension plans in the financial statements, as the information required to treat the plans as defined-benefit plans is not yet available from the life assurance company administering the pension plans. Once the required information is available and the pension plans are recognised as defined-benefit plans in accordance with IAS 19, this may have a significant impact on the consolidated financial statements.

Deferred taxDeferred tax/tax asset on the balance sheet is recognised at nominal value and is calculated on the basis of temporary differences between the tax value and the carrying amount of assets and liabilities on the balance sheet date, adjusted for tax loss carry-forward.

Tax payable and deferred tax are recognised directly against equity to the extent that the tax items relate to equity.

Tax payableReceivables and payables relating to tax payable for the current and previous periods are valued at the amount which is expected to be paid to or from the tax authorities. The tax rates and the tax regulations used to estimate this sum are those which are in force or are essentially in force on the balance sheet date. ProvisionsProvisions are recognised when the group has an obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle the obligation through economic benefits and a reliable estimate can be made of the amount of the obligation. Where the group expects that a provision will be refunded in whole or in part, for example in connection with an insurance contract, the refund will be recognised as an asset, but only when the refund is made. Changes in provisions are presented in the income statement net after any refunds. If the effect of the time value of money is significant, provisions are discounted using a discounting rate before tax that reflects the risks specific to the obligation in question. In the event of discounting, the increase in provisions is recognised in the income statement as a financial expense, since the assumed earning point has moved closer.

Guarantee provisions are recognised when the underlying products are sold. The provisions are based on historical information about guarantees and a weighting of possible outcomes against the likelihood of them occurring.

Derecognition of financial assets and liabilitiesA financial asset (or parts of a financial asset or parts of a group of similar financial assets) are derecognised from the balance sheet where:•therightstoreceivecashflowsfromtheassetexpire,•thegroupretainstherightstoreceivecashflowsfromtheasset,

but has undertaken to pay them in their entirety without significant delay to a third party through a ‘pass-through arrangement’, or

•thegrouphastransferreditsrightstoreceivecashflowsfromtheasset and has either (a) transferred substantially all the risks and rewards of ownership of the asset, or (b) neither transferred nor retained the majority of the risks and rewards of ownership of the asset, but has transferred control of the asset.

A financial liability is derecognised when the liability has been settled, cancelled or has expired. Where an existing financial liability is replaced by another from the same lender on significantly different terms, or where the terms of an existing liability are significantly amended, such a change or amendment will be treated as the original liability being derecognised from the balance sheet and a new liability being recognised on the balance sheet. The difference in the respective carrying amounts will be recognised in the income statement.

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Note 2. Estimate uncertainty

Estimates and judgements are evaluated on an ongoing basis and are based on historical experience and other factors, including forecasts of future events that are regarded as being probable under the present circumstances.

The group draws up estimates and makes assumptions/forecasts linked to the future. The accounting estimates that result from this will, by definition, rarely be completely in agreement with the final result. Estimates and assumptions/forecasts with a considerable risk of leading to material adjustments of recognised values are discussed below.

Impairment assessmentThe group carries out impairment tests annually on cash-generating units with goodwill items and units showing indications of a loss of value. This is done on the basis of future cash flows and discount rates. Changes in these assumptions and estimates can lead to a write-down being entered in the income statement. Where there are indications of a loss of value, the carrying amount is evaluated against the recoverable amount. (See note 1, 8 and 9.)

Development costsThe company capitalises development costs in accordance with the criteria for capitalisation in IAS 38. The present value of the expected cash flow is based on budgets and business plans. Other development costs in the group are expected to have a limited lifetime and the estimates are based on a 5-year horizon. Changes in these assumptions and estimates can lead to a write-down being entered in the income statement. Where there are indications of a loss of value, the carrying amount is evaluated against the recoverable amount.

Deferred tax assetThe deferred tax asset is recognised on the balance sheet when it is probable that there will be future taxable income and that the temporary tax-reducing differences or tax loss carry-forward can be deducted in this income. Estimates have been made of future cash flows in order to assess whether the deferred tax asset can be

recognised on the balance sheet. The estimates are based on the assumptions used in approved budgets and forecasts. Changes in assumptions and estimates may necessitate the reduction of the deferred tax asset.

Inventoriesvalued at the lower of the purchase/production cost and expected net realisable value. The net realisable value is the estimated selling price from future operations, less the estimated costs of completion, marketing and distribution. Changes in estimates related to the expected net realisable value can lead to changes in product costs.

Trade receivablesTrade receivables are assessed on an ongoing basis, and are written down if there are objective criteria for the occurrence of a loss-triggering event that can be measured reliably and will affect the payment of the receivable. Changes in the management’s basis for the assessment of the credit risk may affect the estimated loss provision. In the same way, changes in market conditions, internal conditions with our customers, etc. can mean a final result that deviates from the write-down of the trade receivables. (See note 13.)

Construction contractsWhen reporting construction contracts, assumptions are made regarding estimated costs and earnings, as well as the definition and measurement of degree of completion. Changes in these estimates may mean that the reporting of revenue and earnings deviates from the underlying value created, relative to the project’s overall revenue and earnings. Thus, earnings can be reported too early or too late in the project.

Guarantee provisionsThe management estimates the provisions for future guarantee obligations based on information on historical guarantee requirements, together with other information used to calculate future guarantee obligations. Factors that can affect estimated obligations include unknown faults in completed deliveries.

Note 3. Segment information

BUSINESS AREASScana is a Nordic industrial group operating in four business areas. In order to strengthen investment and value creation within the group, in 2012 Scana organised its companies into new business areas: Scana Energy, Scana Propulsion, Scana Offshore and Scana Other Assets. The main products for the Scana Energy business area are customised steel forgings and castings for the oil and gas, energy, marine, machine and tool industries. The Scana Propulsion business area designs and manufactures propellers, propeller housing, axles, gears, thrusters and control systems for the global shipbuilding market. Scana Propulsion is marketed as a complete equipment package in the global ship equipment market. Scana Offshore supplies products, components and servicing to the oil and gas industry. Scana Other Assets primarily relates to activities at Leshan Scana machinery China, which supplies steel forgings and castings to the Chinese market. The presentation coincides with the internal

reporting to the Board. Head Office is related to the parent company. As a result of the change in the business areas, the comparable figures have been revised in line with the new structure.

Revenues from sales to external customers and transactions with other segments are reported in each of the business areas. Internal deliveries are recognised at estimated market value. Sales between the business areas only occur to a limited extent. “Eliminations” primarily refer to eliminations between the business areas. “Other” mainly refers to revenues/costs relating to group management and its associated staff and administration. Assets and liabilities included in “Other” mainly apply to the parent company. Investments in associates are broken down into the different business areas. The effect on results during eliminations are primarily costs related to corporate management and its staff and administration not allocated to the business areas.

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2012 Scana Scana Scana Scana Head Other/(NOK million) Energy Propulsion Offshore Other Assets Office Eliminations Total

External operating revenue 836.0 355.3 714.9 132.3 0.0 0.0 2 038.5Internal operating revenue 15.1 2.2 0.5 2.4 40.2 -60.4 0.0

Total operating revenue 851.1 357.5 715.4 134.7 40.2 -60.4 2 038.5Operating expenses 817.0 351.5 739.3 154.7 44.0 -33.8 2 072.7

EBITDA 34.0 6.0 -23.9 -20.0 -3.8 -26.5 -34.2

Depreciation 41.6 10.1 21.4 8.9 0.5 -0.1 82.4Write-downs 0.0 1.6 33.4 0.0 0.0 0.0 35.0

Operating profit/loss (EBIT) -7.5 -5.7 -78.7 -28.9 -4.3 -26.5 -151.6

EBIT margin -1 % -2 % -11 % -21 % -7 %

Net financial items -44.5

Profit/loss before tax -196.1Tax -1.4

Profit/loss for the year -194.7

Balance sheet figures:

Assets 735.8 278.6 572.7 284.4 467.0 -588.2 1 750.3Non-current liabilities 41.9 18.6 14.5 0.3 7.6 -1.6 81.3Current liabilities 472.9 148.7 413.4 138.4 512.6 -586.6 1 099.4

Other segment information:

Intangible assets 12.7 36.3 41.8 10.2 0.0 0.0 101.0Deferred tax asset 0.0 2.0 12.4 6.0 4.3 -1.6 23.1Property, plant and equipment 384.1 76.9 181.4 111.5 4.0 0.0 757.9Inventories 136.0 48.9 137.8 28.9 0.0 0.0 351.6Trade receivables 170.2 49.1 155.4 72.8 13.7 -19.6 441.6

Cash flow:

Operating activities 33.5 20.9 -74.5 7.4 2.2 0.0 -2.1Investments in property, plant and equipment -60.2 -8.5 -15.1 -0.7 -2.3 0.0 -86.9

2011 Scana Scana Scana Scana Head Other/(NOK million) Energy Propulsion Offshore Other Assets Office elimineringer Total

External operating revenue 832.5 350.2 669.3 189.9 0.0 0.1 2 042.0Internal operating revenue 9.9 1.2 4.6 0.0 52.0 -67.7 0.0

Total operating revenue 842.4 351.4 673.9 189.9 52.0 -67.6 2 042.0Operating expenses 818.9 335.6 691.6 182.4 53.0 -32.9 2 045.6

EBITDA 23.5 15.8 -17.7 7.6 -1.0 -34.9 -3.7

Depreciation 41.6 9.2 23.1 6.5 0.5 0.1 81.0Write-downs 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Operating profit/loss (EBIT) -18.1 6.6 -40.8 1.0 -1.5 -34.8 -84.6

EBIT margin -2 % 2 % -6 % 1 % -4 %

Net financial items -22.8

Profit/loss before tax -107.4Tax -24.6

Profit/loss for the year -82.7

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GEOGRAPHIC AREAThe group companies are located in the following countries; Norway, Sweden, China, Poland, Brazil, USA and Singapore. Poland, USA, Brazil and Singapore are included in the “Other” column.

2011 Scana Scana Scana Scana Head Other/(NOK million) Energy Propulsion Offshore Other Assets Office elimineringer Total

Balance sheet figures:

Assets 770.2 273.7 708.2 326.7 459.4 -632.3 1 905.9Non-current liabilities 58.9 21.7 0.5 0.3 21.8 -4.3 98.9Current liabilities 493.1 123.1 482.8 140.6 565.1 -628.1 1 176.6

Other segment information:

Intangible assets 5.6 35.0 82.0 11.3 -0.1 0.0 133.8Deferred tax asset 0.0 4.4 10.5 3.9 22.4 -4.4 36.9Property, plant and equipment 383.2 80.5 183.5 127.7 2.2 0.0 777.1Inventories 161.6 43.1 134.1 39.5 0.0 0.0 378.4Trade receivables 174.4 54.4 157.3 90.3 22.4 -23.5 475.3

Cash flow:

Operating activities -17.5 -2.9 109.5 -2.6 -26.6 -0.5 60.4Investments in property, plant and equipment -41.0 -15.4 -8.1 -8.4 -0.2 0.0 -73.0

2012 (NOK million) Norway Sweden China Other Eliminations Total

External operating revenue 965.8 836.0 133.2 103.4 0.1 2 038.5Internal operating revenue 19.7 15.1 2.9 14.9 -52.6 0.0

Total driftsinntekter 985.5 851.1 136.1 118.3 -52.5 2 038.5Driftskostnader 1 021.9 817.0 157.4 128.9 -52.5 2 072.7

EBITDA -36.4 34.0 -21.3 -10.5 0.0 -34.2

Depreciation 28.1 41.6 8.9 3.8 0.0 82.4Write-downs 33.4 0.0 0.0 1.6 0.0 35.0

Operating profit/loss (EBIT) -97.9 -7.5 -30.2 -16.0 0.0 -151.6

EBIT margin -10 % -1 % -22 % -14 % -7 %

Net financial items -44.5

Profit/loss before tax -196.1Tax -1.4

Profit/loss for the year -194.7

Balance sheet figures:

Assets 1 012.1 735.8 239.9 94.4 -331.9 1 750.3Non-current liabilities 33.4 41.9 0.0 6.0 0.0 81.3Current liabilities 775.8 472.9 131.1 51.5 -331.9 1 099.4

Other segment information:

Intangible assets 32.7 12.7 10.2 45.3 0.1 101.0Deferred tax asset 17.2 0.0 5.9 0.0 0.0 23.1Property, plant and equipment 259.1 384.1 111.5 3.3 -0.1 757.9Inventories 181.3 136.0 28.9 5.5 -0.1 351.6Trade receivables 192.7 170.2 72.8 27.9 -22.0 441.6

Cash flow:

Operating activities -41.5 33.5 6.8 -8.2 7.3 -2.1Investments in property, plant and equipment -25.9 -60.2 -0.7 0.0 -0.1 -86.9

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OPERATING REVENUES BY COUNTRYThe breakdown of operating revenues is based on the location of the customer.

(NOK million) 2012 2011

Denmark 22.3 28.8 Finland 25.8 26.9 France 14.7 35.5 Germany 180.8 248.5 Italy 15.9 6.3 Poland 25.2 23.0 Spain 2.1 8.4 Sweden 362.6 362.7 Netherlands 28.6 28.6 UK 162.3 188.7 Other EU countries 23.1 31.8

Total EU 863.5 989.3

Norway 503.2 421.5Russia 3.1 2.2Other European countries 75.1 9.5

Total Rest of Europe: 581.4 432.9

2011 (NOK million) Norway Sweden China Other Eliminations Total

External operating revenue 908.6 832.5 190.3 110.4 0.1 2 041.9Internal operating revenue 11.7 9.9 0.4 12.4 -34.3 0.1

Total operating revenue 920.3 842.4 190.7 122.8 -34.2 2 042.0Operating expenses 960.2 818.9 182.4 118.3 -34.2 2 045.6

EBITDA -39.9 23.5 8.3 4.4 0.0 -3.7

Depreciation 28.9 41.6 6.5 3.9 0.1 81.0Write-downs 0.0 0.0 0.0 0.0 0.0 0.0

Operating profit/loss (EBIT) -68.8 -18.1 1.8 0.6 -0.1 -84.6

EBIT margin -7 % -2 % 1 % 3 % -4 %

Net financial items -22.8

Profit/loss before tax -107.4Tax -24.6

Profit/loss for the year -82.7

Balance sheet figures:

Assets 1 003.7 770.2 284.3 110.5 -262.8 1 905.9Non-current liabilities 33.1 58.9 0.0 6.9 0.0 98.9Current liabilities 766.0 493.1 136.0 44.5 -263.0 1 176.6

Other segment information:

Intangible assets 65.8 5.6 11.3 51.1 0.0 133.8Deferred tax asset 33.0 0.0 3.9 0.0 0.0 36.9Property, plant and equipment 261.6 383.2 127.7 4.7 -0.1 777.1Inventories 168.8 161.6 39.5 8.3 0.2 378.4Trade receivables 200.2 174.4 90.8 26.4 -16.5 475.3

Cash flow:

Operating activities 69.0 -1.9 5.8 -2.1 -10.4 60.4Investments in property, plant and equipment -21.6 -41.0 -8.4 -2.1 0.1 -73.0

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Scana Korea Hydraulic Ltd.The group has a 49 per cent shareholding in Scana Korea Ltd, which is involved in the sale and production of hydraulic valve control systems. The company is located in Busan in South Korea. Scana has 33.33 per cent of the voting rights.

Stingray Offshore SolutionsStingray Offshore Solutions was founded in 2009 and Scana Offshore Services has a 25 per cent holding in the company. The company assists Scana Offshore Services through sales and design

engineering for oilfield drilling contractors and is engaged in various projects such as flex loops and BOP stack modifications for their customers.

PetroParts JVScana Offshore Services has a 50 per cent holding in PetroParts jv. The company sells subsea hoses and fittings to South East Asia. Scana Offshore Services purchases equipment through this company. The company was closed down as of 1 january 2012.

Note 4. Investments in associates and other companies

Associates; financial information 2012 (group share): Scana Korea Ltd Stingray Offshore Solutions

Operating revenue 60 476 1 543

Profit/loss for the year 2 060 389

Non-current assets 24 567 44Current assets 17 832 199Non-current liabilities -14 159 0Current liabilities -15 941 0

Equity 13 210 242

Associates; financial information 2011 (group share): Scana Korea Ltd Other

Operating revenue 50 735 1 093

Profit/loss for the year 1 028 408

Non-current assets 8 158 37Current assets 29 995 644*Non-current liabilities -8 777 0Current liabilities -19 005 -9

Equity 10 371 672*

Canada 3.4 7.5 Other South America 31.7 4.2 Brazil 72.0 45.0 Other North America 216.0 181.6

Total America 323.1 238.3

China 131.2 212.6 japan 31.0 34.8 Singapore 7.4 53.3 South Korea 45.4 - Other Asian countries 29.5 56.6

Total Asia 244.6 357.2

Africa and Oceania 4.0 4.9

Total 2 016.5 2 022.7

Key customers:The group’s operating revenue from individual customers did not exceed 10 per cent of the group’s operating revenue in 2012.

Stingray Offshore Solutions and PetroParts jv are included under Other for 2011. PetroParts jv was closed down on 1 january 2012 and for that reason is not included for 2012.*353 of the current assets and 353 of the equity concern PetroParts jv.

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2012 2011

Other financial income/expenses (-):Compensation arising from a change in energy contract 0 7 301Financing costs -7 172 -11 403Gain on sale of shares 122 0Other -2 738 -750

Total -9 788 -4 852

Note 5. Specification of other comprehensive income

2012 2011

Other operating revenues:Rental income 13 395 15 087Service income 0 1 919Other revenues 6 371 1 549

Total 19 766 18 555

Other operating expenses:Operation and maintenance 166 785 162 602Contract services 198 730 164 500Rental costs 38 695 30 081Fees and consultancy services 46 323 46 538Travel and marketing costs 38 780 36 080Office and administration costs 27 665 33 174Bad debts 1 670 -4 473Grants and subsidies -1 795 -855Energy costs 9 816 9 393Losses on disposal of property, plant and equipment 349 106Restructuring costs 10 390 0Other operating expenses 49 968 41 462

Total 587 376 518 608

Auditor’s fees: *)Statutory audit Ernst & Young 3 901 3 022Equity transaction 82 60Other certification services 0 0Other non-audit services 1 142 2 018Tax consulting 267 121

Total 5 392 5 221

*) Figures are exclusive of vAT.

Carrying amount of associates: 2012 2011

As at 1 jan 11 043 24 029Additions and deposits 0 70 000Disposals 0 -77 789Dividends -253 -1 466Share of profit/loss for the year 2 971 -3 838Share of profit/loss not included in previous years/agio effects -307 107

Total carrying amount of shares in associates 13 453 11 043

Other shares: 2012 2011

Carrying amount of other shares 634 486

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Note 6. Tax2012 2011

The tax cost for the year has been calculated as follows:Tax payable 9 431Change in deferred tax on the balance sheet (excl. change in tax rate) 4 935 -33 773Change of tax rate in Sweden -8 331 0Tax recognised in other comprehensive income 998 8 224Translation differences, foreign tax 978 509

Tax cost for the year -1 411 -24 609

Of which outside Norway -18 826 -2 666Effective taxation rate 1 % 23 %

2012 2011

Reconciliation of taxes against ordinary profit/loss before tax:Profit/loss before tax -196 123 -107 35628% of profit/loss before tax -54 914 -30 060Tax cost for the year -1 411 -24 609

Difference; due to -53 503 -5 451

Permanent differences and other effects*) -12 735 -5 176Change in unrecognised deferred tax asset -44 000 0Effect of foreign activity as a result of different tax levels 4 931 -292Tax related to net investment and share issue -1 699 17

Total -53 503 -5 451

Consolidated balance

Breakdown of net deferred tax liabilities: 2012 2011

Non-current assets 88 452 92 978Current assets -5 200 -9 549Pension obligations -1 926 -1 763Liabilities -544 3 470Tax loss carry-forward -100 618 -57 576Unrecognised tax loss carry-forward 44 000 0

Net deferred tax liability 24 164 27 560

Deferred tax asset Norway 28% 55 188 33 032Of which unrecognised 38 000 0

Net deferred tax asset Norway 28% 17 188 33 032

Deferred tax asset China 25% 11 949 3 855Of which unrecognised 6 000 0

Deferred tax asset China 25% 5 949 3 855

Net deferred tax asset 23 137 36 887

Net deferred tax Sweden 22% 41 668 57 974Net deferred tax Poland 19% 1 022 1 787Net deferred tax USA 35% 4 611 4 686

Net deferred tax 47 301 64 447

Net deferred tax liability 24 164 27 560

Tax recognised in other comprehensive income: 2012 2011

Hedge accounting net investment 815 17Electricity derivatives 701 -8 241Share issue costs -2 514 0

Total tax recognised in other comprehensive income: -998 -8 224

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Note 7. Earnings per share

2012 2011

Profit/loss for the year -186 744 -83 749

Weighted average no. of shares*) 272 676 273 167 712 528 Effect of dilution:Options/subscription rights 0 0

Weighted average no. of shares adjusted for effect of dilution 272 676 273 167 712 528

Earnings per share -0,68 -0,50Earnings per diluted share -0,68 -0,50

Ordinary earnings per share are calculated as the ratio between the profit/loss for the year that falls to the shareholders and the weighted average of outstanding shares.

Earnings per diluted share is the profit/loss that falls to the shareholders and the number of weighted average outstanding shares is adjusted for all dilution effects related to share options. The “denominator” includes all share options that are “in-the-money” and can be exercised over the options’ validity period in the current year.

*) The weighted average number of shares takes into account the effect of the company’s weighted holding of own shares.

Note 8. Intangible assets

CustomerPatents and Development relations/

Intangible assets 31/12/12 licences Goodwill costs Order reserve Total

Acquisition costAccumulated 1 jan 18 600 110 758 60 808 31 321 221 487Additions during the year 130 0 16 350 0 16 480Translation differences -759 -1 574 67 -214 -2 480Disposals -340 0 -4 994 0 -5 334

Accumulated 31 Dec 17 631 109 184 72 231 31 107 230 153

Depreciation and write-downsAccumulated 1 jan 7 480 25 617 27 836 26 726 87 659Depreciation and write-downs for the year 1 183 35 055 8 409 2 039 46 686Translation differences -252 -4 -25 177 -104Disposals -95 0 -4 994 0 -5 089

Accumulated 31 Dec 8 316 60 668 31 226 28 942 129 152

Carrying amount 31 Dec 9 315 48 516 41 005 2 165 101 001

Depreciation period in no. of years 10 - 50 No depreciation 5* 5

* The straight-line method of depreciation has been used. See below for further information.

Deferred tax asset relates to the Norwegian and Chinese part of the group. Unrecognised deferred tax assets represent NOK 38 million and NOK 6 million respectively, and are related to the business areas Scana Offshore (NOK 38 million) and Scana Other Assets (NOK 6 million). The group has calculated future cash flows on the basis of contracts entered into and external information about the potential for new agreements as well as future expectations for the period 2013 to 2017 in countries where the group has recognised a tax loss on the balance sheet. The assumptions relating to cash flows are the same as those used in impairment testing. The cash flows are risk-adjusted such that they are more in line with historically achieved results. Future cash flows plan for the company’s business areas exiting the downturn they are currently experiencing. Based on the future cash flows at hand, the group considers it likely that the recognised deferred tax asset can be utilised.

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CustomerPatents and Development relations/

Intangible assets 31/12/11 licences Goodwill costs Order reserve Total

Acquisition costAccumulated 1 jan 17 736 112 210 54 787 32 012 216 745Additions during the year 32 0 6 401 0 6 433Translation differences 832 -1 452 -380 -691 -1 691Disposals 0 0 0 0 0

Accumulated 31 Dec 18 600 110 758 60 808 31 321 221 487

Depreciation and write-downsAccumulated 1 jan 6 122 25 617 21 453 26 006 79 198Depreciation and write-downs for the year 1 088 0 6 381 1 301 8 770Translation differences 270 0 2 -581 -309Disposals 0 0 0 0 0

Accumulated 31 Dec 7 480 25 617 27 836 26 726 87 659

Carrying amount 31 Dec 11 120 85 141 32 972 4 595 133 828

Depreciation period in no. of years 10 - 50 No depreciation 5* 5

* The straight-line method of depreciation has been used. See below for further information.

Patents and licences also include ownership rights/rights of use for an area of land in China. This right of use is amortised over the lease period of 50 years and has a carrying amount as at 31 December 2012 of NOK 7.7 million.

Customer relations and order reserves at the end of 2012 consist of valued customer relations with the acquisition of Scana Zamech and Scana Offshore Services. Customer relations are amortised over five years.

Recognised development costs relating primarily to the loading buoy produced by Scana Offshore vestby total NOK 10.6 million. Scana Steel Björneborg AB and Scana Steel Stavanger AS have recognised development costs of NOK 9.9 million and NOK 2.5 million respectively relating to development of steel properties. Scana volda AS has recognised development costs corresponding to NOK 13.9 million relating to product technology. Scana Subsea AS has recognised development costs of NOK 1.2 million relating to the telescopic joint. Scana Zamech has recognised development costs of NOK 2.8 million. Development costs are primarily amortised over the anticipated useful life of the product.

Goodwill by cash-generating unit: 2012 2011

Scana Steel Björneborg AB 1 565 1 565Leshan Scana Ltd 2 437 2 437Scana Zamech sp.zo.o 17 022 18 094Scana mar-El AS 1 076 1 076Scana Offshore Technology AS 3 053 3 053Scana Offshore vestby AS 0 33 431Scana Offshore Services Inc. 23 363 25 485

Total 48 516 85 141

Goodwill by business area:Energy 1 565 1 565Propulsion 18 098 19 170Offshore 26 416 61 969Other Assets 2 437 2 437

The group tests goodwill for impairment once a year or where there are any indications of loss of value. The impairment tests estimate the utility value based on discounting of expected future cash flows. The cash flows are based on the budget and business plans determined by the management for the period 2013–2017. The estimates are based on a budgeting approach for the various cash-generating units. For the subsequent period, the model assumes a terminal growth rate of 2–2.5%, which reflects the long-term inflation expectations. Revenues are based on contracts entered into and on the management assessment of external information about the potential for new agreements. The estimated operating margin

for the period is increased on the basis of positive market growth forecasts. The group recognises impairment loss in the income statement where the estimated recoverable amount is lower than the recognised assets for the cash-generating unit.

Goodwill items constituting NOK 33.4 million relating to Scana Offshore vestby AS were written down in 2012 due to a weaker development in revenue and profit than expected. As a result of this, the management has adjusted downward future expectations related to revenue and margins in order to reflect this.

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Leshan Scana Scana Offshore Scana Offshore ScanaMachinery co. Ltd Vestby AS Services Inc. Zamech sp. z o.o.

Operating margin 6.1 % 2.3 % 9.1 % 13.9 %Discount rate (nominal before tax) 12.4 % 13.4 % 13.7 % 14.4 %Rate of growth 2013–2017 12.3 % 18.5 % 5.1 % -2.8 %Annual rate of growth after 2017 (nominal) 2.5 % 2.0 % 2.0 % 2.5 %

Price trends: It is expected that changes in the price of purchased components in the forthcoming period will be reflected in the market price of goods sold and will therefore not affect the operating margin significantly.market share: The estimates for Leshan Scana machinery, Scana Offshore Services and Scana Zamech are based on the assumption that the market share will not change significantly. Scana Offshore vestby expects to see significant growth during the period.

Sensitivity analysisSensitivity analyses in relation to impairment testing test for reasonable changes in the key assumptions. The table below shows how much the key assumptions can be reduced without resulting in impairment. For example, a reduction in the operating margin (with other assumptions remaining unchanged) at Leshan Scana machinery Co. Ltd by more than 0.1 percentage points to a figure lower than 6.0 per cent will result in impairment. The calculations are made on the basis of the same assumptions as in the table above. Figures for Scana Offshore vestby have not been included because goodwill has been written down so that the carrying amount is equal to the recoverable amount. The table shows the variable’s reduction measured as a percentage.

Note 9. Property, plant and equipment

Machinery, Buildings andProperty, plant and equipment 31/12/12 equipment etc. property Land Total

Acquisition costAccumulated 1 jan 1 169 387 357 129 43 800 1 570 316Additions during the year 68 647 1 387 339 70 373Translation differences -20 026 -5 139 -389 -25 554Transfers 7 899 -7 899 0 0Disposals -13 663 -407 1 -14 069

Accumulated 31 Dec 1 212 244 345 071 43 751 1 601 066

DepreciationAccumulated 1 jan 645 425 145 080 2 686 793 191Depreciation and write-downs for the year 58 737 10 374 1 612 70 723Translation differences -8 833 -1 934 (55) -10 822Transfers 0 0 0 0Disposals -9 647 -279 0 -9 926

Accumulated 31 Dec 685 682 153 241 4 243 843 166

Carrying amount 31 Dec 526 562 191 830 39 508 757 900

Depreciation period in no. of years 5 - 40 40 - 50The straight-line method of depreciation has been used.

The table below shows the key assumptions for impairment testing relating to companies with an indication of possible impairment. The operating margin is an average for the period 2013 to 2017.The growth rate is the average annual growth in revenue for the period 2012 to 2017.

Leshan Scana Scana Offshore ScanaMachinery co. Ltd Services Inc. Zamech sp. z o.o.

Operating margin -0.1 % -2.5 % -3.4 %Discount rate (nominal before tax) 0.1 % 3.6 % 3.6 %Rate of growth 2013–2017 -0.2 % -6.2 % -4.5 %

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Machinery, Buildings andProperty, plant and equipment 31/12/11 equipment etc. property Land Total

Acquisition costAccumulated 1 jan 1 133 294 342 681 43 200 1 519 175Additions during the year 54 099 11 903 614 66 616Additions from acquisition of operations 16 151 0 0 16 151Translation differences 10 481 2 655 -13 13 123Transfers -144 144 0 0Disposals -44 494 -254 -1 -44 749

Accumulated 31 Dec 1 169 387 357 129 43 800 1 570 316

DepreciationAccumulated 1 jan 621 627 135 300 1 504 758 431Depreciation and write-downs for the year 61 513 9 497 1 171 72 181Translation differences 4 256 501 11 4 768Transfers 0 0 0 0Disposals -41 971 -218 0 -42 189

Accumulated 31 Dec 645 425 145 080 2 686 793 191

Carrying amount 31 Dec 523 962 212 049 41 114 777 125

Depreciation period in no. of years 5 - 40 40 - 50The straight-line method of depreciation has been used.

Depreciation period, machinery, equipment, etc.:5–10 years for office equipment, tools, vehicles and fork-lift trucks15–20 years for laboratory and test equipment, as well as small production equipment20–40 years for larger production machinery, electrical installations and transformers

Impairment tests have been carried out on property, plant and equipment in individual companies. The impairment tests show that the present value of future cash flows is higher than the recognised value of the assets.

Property, plant and equipment are pledged to the group’s main bankers whereby there are restrictions on disposal. This does not apply to the subsidiaries Scana Leshan machinery Co. Ltd, Scana Offshore Services Inc. and Scana Zamech sp.zo.o. The carrying amount of pledged assets is NOK 640.8 million as at 31 December 2012.

Financial leasing of machinery is included in property, plant and equipment in the amount of NOK 26.8 million as at 31 December 2012.

Recoverable amountProperty, plant and equipment is written down to the recoverable amount where the recoverable amount is lower than the recognised value of the asset. The utility value is the present value of future cash flows which are expected to arise from an asset or cash-generating unit. The group uses impairment testing if there are indications of a loss of value. See also note 8 for a description of the method for impairment testing.The impairment tests are performed for the cash-generating units with an indication of possible loss of value for recognised assets in property, plant and equipment. Scana Steel Söderfors AB and Scana Steel Stavanger AS have been tested for the recoverable amount. The book value of property, plant and equipment as at 31.12.12 is mNOK 102.1 for Scana Steel Södersfors and mNOK 128.0 for Scana Steel Stavanger AS.

The table below shows key assumptions used when impairment testing for a loss of value in property, plant and equipment. The operating margin is the average for the period 2013 to 2017. The growth rate is the average annual growth in revenue for the period 2012 to 2017.

Sensitivity analysisSensitivity analyses in relation to impairment testing test for reasonable changes in the key assumptions. The table below shows how much the key assumptions can be reduced without resulting in impairment. For example, a reduction in the operating margin (with other assumptions remaining unchanged) at Scana Steel Söderfors AB by more than 0.4 percentage points to a figure lower than 4.9 per cent will result in impairment. Changes in the key assumptions which are larger than shown in the table will result in impairment. The calculations are based on the same assumptions as in the table above.The table shows the variable’s reduction measured as a percentage.

Scana Steel Söderfors AB Scana Steel Stavanger AS

Operating margin 5.3 % 4.3 %Discount rate (nominal before tax) 11.2 % 11.7 %Rate of growth 2013–2017 5.7 % 6.7 %Annual rate of growth after 2017 (nominal) 2.5 % 2.5 %

Scana Steel Söderfors AB Scana Steel Stavanger AS

Operating margin -0.4 % -2.0 %Discount rate (nominal before tax) 1.6 % 0.1 %Rate of growth 2013–2017 -2.0 % -0.2 %

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Note 10. Payroll costs

Payroll costs: 2012 2011

Payroll costs 547 128 502 040 Employer’s contributions 126 316 115 005 Pension costs 35 422 27 141 Insurance 5 529 8 143 Share option programme 1 412 1 171 Other payroll and staff costs 14 488 14 319

Total payroll costs 730 295 667 819

Average no. of FTEsNorway 561 522 Sweden 593 542 China 618 665 Poland 49 59 Other 43 35

Total average no. of FTEs 1 865 1 824

PensionOther premium

natural deposits/Name Position Salary Bonus payments pension Fees Total

2012Frode Alhaug Former Chairman of the Board 885 885 Rolf Roverud Group CEO 3 521 186 60 3 767 jan Henry melhus Group director 1 999 164 60 2 223 Kjetil Flesjå Group director 1 190 168 60 1 418

Total remuneration to key personnel 6 710 0 518 180 885 8 293

2011Frode Alhaug Former Chairman of the Board 787 787 Rolf Roverud Group CEO 3 576 167 58 3 801 Per Ravnestad Group director 527 527 jan Henry melhus Group director 1 898 178 57 2 133 Kjetil Flesjå Group director 550 76 34 660 Christian Rugland Group director 468 2 22 492

Total remuneration to key personnel 6 492 0 423 171 1 314 8 400

REMUNERATION TO KEY PERSONNEL (GROUP MANAGEMENT):

Frode Alhaug has, in addition to his position as Chairman of the Board, carried out work on behalf of the Board. He was hired from his own company.

The pension scheme for senior employees is a defined-contribution plan. Rolf Roverud and jan Henry melhus also have pension disbursements.

The notice period for key personnel is 3–6 months. Severance pay agreements have been entered into with group management, which provide for a salary to be paid for 6–12 months after the notice period. Any salaries that are received from other work during the period in which severance payments are made shall be deducted from the severance pay.

A bonus scheme is in operation for the managing directors of the group’s subsidiaries and the group management. This is linked to profit and capital. A profit-sharing model was introduced in 2005 for all employees of operational units in Norway and Sweden.

Board fees:Fees totalling NOK 1,033 were paid to the Board of Scana Industrier ASA. Fees are paid annually in arrears. Fees are listed below.

Frode Alhaug Former Chairman of the Board 300mari Skjærstad Former Board member 200martha Kold Bakkevig Board member 200Bjørn Dahle Former Board member 133john Arild Ertvaag Board member 200

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STATEMENT ON THE DETERMINATION OF SALARIES AND OTHER REMUNERATION FOR THE CEO AND OTHER SENIOR EMPLOYEES

In accordance with Section 6–16a of the Norwegian Public Limited Companies Act, the Board is obligated to draw up a statement on the determination of salaries and other remuneration for the CEO and other senior employees. The statement must contain guidelines for the determination of salaries and other remuneration, and include the main principles of the company’s wage policy in relation to management.

Section 6–16a of the aforementioned Act also imposes a duty on the Board to provide a statement on the wage policy for management followed in the preceding financial year.

Scana Industrier ASA defines senior employees as the group chief executive and members of the group management team, as well as the managing directors of the group’s subsidiaries. The guidelines may also be applied to other key personnel in the group.

1. The main principles of the company’s wage policy for management for the financial year 2012

The main principle behind the company’s wage policy for management is that the basic salary shall promote added value in the company and contribute to the mutual interests of the owners and senior employees. The basic salary shall not be of such a nature or of such a scope that the company’s reputation will be harmed.

As a leading player in its field, Scana Industrier ASA is dependent on offering salaries that can attract the most competent managers. The policy of the Board is that in order to secure the best possible leadership, salaries must be offered at levels that the individual is satisfied with, and which are competitive in an international market.

2. Salaries and other benefits for the financial year 2012The main principle behind the company’s wage policy for management is that the basic salary shall promote added value in the company and contribute to the mutual interests of the owners and senior employees. The basic salary shall not be of such a nature or of such a scope that the company’s reputation will be harmed.

As a leading player in its field, Scana Industrier ASA is dependent on offering salaries that can attract the most competent managers. The policy of the Board is that in order to secure the best possible leadership, salaries must be offered at levels that the individual is satisfied with, and which are competitive in an international market.- Experience and expertise- The size of the company- Competitive situation

The variable salary is paid on the basis of results achieved and individual assessment:- Operating margin achieved- Order inflow- Working capital- Leadership

Other target figures may apply based on the primary duties of the individual company. The total value of the variable salary shall not normally exceed the value of the fixed salary.

The CEO’s remuneration is determined by the Board. Salary adjustments for other senior employees are determined by the CEO with subsequent reporting to the Board.

The determination of salaries for senior employees shall follow the same principles that apply to other employees with regard to annual ceilings for salary adjustments, adjustment dates and a total salary package consisting of a fixed and variable salary.

In addition to the basic salary, other remuneration may be paid to senior employees, including payments that relate to shares and share-based remuneration schemes.

When the existing share option programme expires, the Board has decided that it will not be replaced with a new share option programme, but that incentives will be provided through other schemes in accordance with the guidelines for the remuneration of the company’s senior employees.

Pension plans shall in principle be the same for managers as those generally determined for employees of the company.

Bonus schemes for the management team shall be partly linked to the company’s profits, and partly to an assessment of leadership ability.

Early retirement plans can be entered into with senior employees, with a mutual entitlement to demand retirement that triggers an early retirement pension on the employee’s 62nd birthday.

Severance pay arrangements that are established upon departure from the company will be viewed in conjunction with the mutual option to terminate the employment relationship and other restrictive clauses in the individual’s contract of employment. Severance pay arrangements shall in principle be subject to deductions for income earned elsewhere.

Options:Share option programme decided in 2010:The General meeting of Scana Industrier ASA decided on 28 April 2010 to allot options to group management and the managing directors. The options were allotted on the same day at a price of NOK 9.50, which was the share price on the date of allotment. In 2010, there were 635,000 share options allotted.

The second tranche of the share option programme was allotted to group management and the managing directors at the General meeting of 4 may 2011.

The options were allotted on the same day at a price of NOK 7.30, which was the share price on the date of allotment. 580,000 options were allotted.

At the extraordinary general meeting of 9 january 2012, options were allotted to senior employees and key personnel under the company’s share option programme in 2010 and 2011, repriced such that the exercise price/subscription price was set at the closing price on the Oslo Stock Exchange that day of NOK 2.25.

The third tranche of the share option programme was allotted to group management and the managing directors at the General meeting of 9 may 2012. 590,000 options were allotted on the same day at a price of NOK 1.87, which was the share price on the date of allotment.

The options can only be exercised after the presentation of Q2 and Q4 2012 and over the next three years. The final exercise date is following the presentation of Q4 2014.

Provisions of NOK 1.4 million were made in 2012 in relation to the share option programme in accordance with the earning period.

Valuation method:The share option programmes are valued in line with the Black-Scholes model. Risk-free interest corresponds to Norges Bank’s interest rate on the date of allotment. Risk-free interest is interpolated over the earning period. The volatility is based on the trading of the share over the past three years, and is 50 per cent. No account has been made for sharing.

It is a condition of the share option programme of 2007 that no one who is allotted options leaves during the earning period and that everyone exercises their options after Q3 2010. The same conditions apply to the share options programme adopted in 2010 (first, second and third portions), except that everyone must redeem their options after Q2 two years after allotment.

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No. of Remaining

optionsoptionsIB 2012 Options allotted 2012

Other disposal

No. of Date of No. of No. of No. of Name options allotment options options options

Rolf Roverud 150 000 09-05-12 70 000 -10 000 210 000Kjetil Flesjå 35 000 09-05-12 35 000 70 000jan Henry melhus 70 000 09-05-12 35 000 105 000

Ingvar Winbo 70 000 09-05-12 35 000 -105 000 0jan Øyvind jørgensen 70 000 09-05-12 35 000 105 000Håkan Schill 35 000 09-05-12 35 000 -70 000 0Per jarbelius 70 000 09-05-12 35 000 105 000johnny Sjöström 70 000 09-05-12 35 000 -105 000 0Sten Israelsson 40 000 09-05-12 20 000 60 000

Kristian Sætre 70 000 09-05-12 35 000 105 000Ragnar Øhrn 70 000 09-05-12 35 000 105 000Egil Kongsbakk 40 000 09-05-12 20 000 -60 000 0jacek Pabian 40 000 09-05-12 20 000 60 000

Per Allan Røsand 40 000 09-05-12 35 000 75 000Peter jansson 70 000 09-05-12 35 000 105 000Tyler Kief 20 000 09-05-12 20 000 40 000johnar Olsen 40 000 09-05-12 20 000 60 000Leo Helland 0 09-05-12 35 000 35 000

No. of options to employees 1 000 000 590 000 -350 000 1 240 000

Share options programmes valid in 2012

Note 11. Pensions and other long-term employee benefits

In accordance with Section 7–30a of the Norwegian Accounting Act, the companies in Norway are obliged to have a company pension plan in line with the Norwegian Act on Compulsory Occupational Pensions, and the companies have a pension plan that meets these requirements.

Defined-benefit planThe group’s Norwegian companies are covered by a contractual pension scheme. This scheme covers 574 individuals as at 31 December 2012. The obligation is calculated using a linear accrual method.

In 2010, the old contractual pension scheme was discontinued. The obligation linked to the old contractual pension scheme was

recognised under operating profit. At the end of 2010, it was decided that the shortfall in cover in relation to the old contractual pension scheme must be recognised as a liability. The shortfall in cover at 31 December 2012 has also been recognised as a liability.The new contractual pension scheme is classified as a defined-benefit multi-employer plan. Thus far, we have not received sufficient information to perform the necessary calculations. The scheme is recognised as a defined-contribution plan. On the date the necessary information is available, the scheme must be reported as a defined-benefit plan.

As at 31 December 2012, the unhedged schemes amounted to NOK 4.8 million of the pension obligation.

Economic and actuarial assumptions: 2012 2011

Discount rate 2.7 % 3.2 %Return on pension assets 4.3 % 4.7 %Salary increases 3.3 % 4.0 %Pension adjustments 1.6 % 2.1 %Inflation rate 1.8 % 2.0 %voluntary retirement 4.0 % 4.0 %Withdrawal disposition 40 % 40 %mortality table K2005 K2005

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Changes in gross obligation: 2012 2011

Obligation at 1 jan 10 369 17 272Present value of pension entitlement for the year 14 -672Interest costs 180 397Pension payments made -2 418 -3 010Actuarial loss/gain on obligation -3 314 -3 618

Gross pension obligation at 31 Dec 4 831 10 369

Pension costs for the year are calculated as follows: 2012 2011

Present value of pension entitlement for the year 14 -672Interest cost of accrued pension obligations 190 397Anticipated return on pension assets -132 -108Recognised actuarial gains/losses 1 108 -2 982Recognised effect of plan changes 0 0

Total 1 180 -3 365

Pension obligations and assets: 2012 2011

Present value of accrued hedged obligations 4 831 10 369Fair value of pension assets -106 -2 762Unrecognised actuarial gains/losses -59 -1 183

Net recognised pension obligation at 31 Dec 4 667 6 425

Changes in gross pension assets: 2012 2011

Pension assets at 1 jan 2 762 2 918Actual return 116 108Premium payments 0 42Payments made -383 -331Actuarial loss/gain on pension assets -2 389 25Final settlement 0 0

Gross pension assets at 31 Dec 106 2 762

Changes in net pension obligation: 2012 2011

Net recognised pension obligation at 1 jan 6 425 12 535Recognised pension costs 1 180 -3 365Premium payments -902 -42Pension payments made, unhedged schemes -2 035 -2 703

Net recognised pension obligation 31 Dec 4 667 6 425

Defined-contribution plan in NorwayCompanies in Norway have defined-contribution plans. The defined-contribution plans cover all employees over the age of 20 in morethan a 20% position. The contributions represent 4–5% of the annual salary between 1 and 6G and 8% between 6G and 12G. The pension assets are invested in funds, administered by an insurance company and managed by the employee.At 31 December 2012, the plans had 556 members.

Defined-contribution plan in ChinaIn China, the group’s employees have a pension plan that is regarded as a defined-contribution plan.The company pays directly to the authorities, who are subsequently responsible for the pension scheme.At 31 December 2012, the plan had 519 members.

Pension schemes in SwedenThe pension plans for the group’s Swedish employees are considered to be defined-benefit plans organised as multi-employer plans. These plans are recognised as defined-contribution plans because the necessary information for recognising the plans as defined-benefit plans has not yet been made available by the life assurer where the plans are financed. When the necessary information is available and the schemes are reported as defined-benefit plans in accordance with IAS 19, this could have a significant effect on the consolidated accounts. At 31 December 2012, the plans had 591 members.

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Provisions for potential bad debts are based on individual assessments of every single item. Of receivables > 90 days overdue, NOK 39.6 million relates to operations in China compared with NOK 31 million in 2011.

The table below shows accrued revenues and costs relating to construction contracts that are included in the income statement for the accounting period.

Note 13. Trade receivables

2012 2011

Nominal value of trade receivables 338 276 383 631Earned, non-invoiced revenues 104 626 95 798Trade receivables, associates 8 333 5 836Provisions for bad debts -9 598 -9 980

Total 441 637 475 285

Bad debt written off for the year 1 757 3 589Bad debt recognised, including change in provisions 1 670 -4 473

Age of receivables: 2012 2011

Non-overdue receivables 211 363 199 3090–30 days 58 387 88 92431–60 days 17 803 34 75861–90 days 9 134 18 618over 90 days 49 922 47 858Trade receivables 346 609 389 467

2012 2011

Revenues linked to construction contracts in the financial year 814 213 632 489Costs linked to construction contracts in the financial year 611 276 492 224Gross margin in NOK 202 937 140 265Gross margin as a percentage 25 22

2012 2011

Pension costs related to defined-benefit plans in Norway: 1 180 -3 365Pension costs related to defined-contribution plans in Norway: 13 066 11 155Pension costs related to defined-contribution plans in China: 5 985 5 517Pension costs related to multi-employer plans in Sweden: 15 191 13 834

Total pension costs 35 422 27 141

Note 12. Inventories

2012 2011

Raw materials 180 340 184 597 Semi-finished goods and work in progress 126 485 140 443 Finished goods 44 790 53 320

Total 351 615 378 360

Provision for obsolescence at 31 Dec 101 510 89 518Change in provision for obsolescence for the year 11 992 8 522

An ongoing evaluation is made of specific obsolescence.Inventories are provided as security for interest-bearing loans.Total pledged inventories 317 239 330 469

Changes in inventories of work in progress and finished goods in the balance sheet are different to changes in inventories shown in the income statement. This is because of currency translation.

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2012 2011

Advance revenues on construction contracts 493 696 760 698Advances from customers 120 108 170 238

The table below shows accrued revenues and costs relating to construction contracts that are not completed and delivered on the balance sheet date. A number of the contracts have a construction period of more than one year.

2012 2011

Revenues linked to construction contracts in progress 700 627 762 819Costs linked to construction contracts in progress 539 202 586 421Gross margin in NOK 161 426 176 398Gross margin as a percentage 23 23

Note 14. Other current receivables

2012 2011

Prepaid costs 12 690 12 212 Advances to suppliers 5 304 3 716 Tax paid on account 3 792 5 526 value-added tax 17 412 18 123 Other current receivables 8 380 10 053

Total 47 578 49 630

Note 15. Bank deposits

The cash and cash equivalents in China, Singapore, Brazil and Poland totalling NOK 9.6 million are not part of the group’s cash pool. Restricted funds relate to tax deductions.

2012 2011

Ordinary bank deposits 12 772 24 299Restricted funds 33 13 427

Total 12 805 37 727

Note 16. Share capital and premiums

No. of shares:

No. of outstanding ordinary shares as at 31 December 2011 167 871 250Capital increase 120 000 000

No. of outstanding ordinary shares as at 31 December 2012 287 871 250

The nominal value of the shares is NOK 1.25. There is one class of shares, with all shares carrying equal voting rights.All shares are fully paid.

Share premiumShare capital and premiums: Share capital account

As at 31 December 2012 359 839 0

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Syndicate loan SEKThe group was refinanced in 2012 with a new three-year syndicate loan for SEK 348 million and a rolling credit facility totalling NOK 280 million divided into an overdraft facility with a nominal value of NOK 130 million and a bank guarantee facility of NOK 150 million. The syndicate loan of SEK 348 million has a half-yearly instalment profile from january 2013. The loan is secured with a first priority pledge in the group’s assets.

At the end of 2012 the group was in breach of the original terms of the loan, but was granted a waiver for leverage ratio and equity ratio. As at 31 December the group met the waiver requirement for an equity ratio of 27.5 per cent. There is also a requirement in the waiver from the syndicate that the group must strengthen equity through a share issue during the first half of 2013 (see note 27 Events after the balance sheet date), which is the reason why the syndicate loan is classified as being short-term as at 31 December 2012. In approved waiver there is granted exemption regarding leverage ratio that are replaced with new loan condition related to minimum EBITDA in the first quart of 2013 by NOK -10 million and for first half NOK 0 million.

Bank loan, HandelsbankenThe majority of this loan relates to Scana Offshore vestby and is secured through the pledging of Scana Offshore vestby’s inventories and receivables. Instalments are paid four times a year in the amount of NOK 167,000 per instalment. A small part of this loan relates to Scana machining AB and is secured against Scana machining.

Syndicate loan USDA syndicate loan for USD 8,666,667 has been arranged to replace previous loans from DNB and Handelsbanken to Scana’s operations in China. The loan matures on 30 june 2013. There are no special loan terms for bullet loans; the same loan terms as for the syndicate loan in SEK are followed, see above.

FactoringThe group has no counter-claim rights on factoring since the criteria for exclusion have not been met. As a result of this, factoring is recorded on the balance sheet as a gross amount.

Note 18. Other current liabilities2012 2011

Guarantee provision 12 403 16 850 Salaries payable, holiday pay, vAT, etc. 130 492 117 257 Accrued non-invoiced expenses 53 555 68 913 Restructuring costs 1 747 225 Provisions made for commission costs 3 087 3 861 Liabilities to Nordic Development Fund - 3 483 Royalties 3 019 2 969 Other current liabilities 30 336 18 402

Total 234 639 231 960

2011: Nominal interest Short-term Long-term Maturity

Financial leasing obligations 3.53 % - 15.6 % 4 659 12 100 Bank overdraft NIBOR + 2.00 % 23 132 0 Factoring STIBOR + 1.25 % 57 049 0 Syndicate loan SEK STIBOR + 3.00% 287 219 0 24-10-12Syndicate loan NOK NIBOR + 3.00 % 58 038 0 24-10-12Bank loan, Handelsbanken NIBOR + 4.2 % 5 384 6 109 01-10-20Bank loan, DnBNor and Handelsbanken, China USD LIBOR + 3.00% 51 899 0 06-07-12Unpaid interest 2 911 0

Total 490 291 18 209

Note 17. Interest-bearing debt

2012: Nominal interest Short-term Long-term Maturity

Financial leasing obligations 3.53 % - 15.6 % 4 241 10 059 Bank overdraft NIBOR + 3.75 % / 7.94%* 35 148 0 Factoring STIBOR + 2.12 % 57 017 0 Syndicate loan SEK STIBOR + 3.75% 287 622 0 22-03-15Bank loan, Handelsbanken 7.91 % 1 200 4 895 01-10-20Syndicate loan USD USDLIBOR + 3.75% 48 242 0 30-06-13Unpaid interest 3 283 0

Total 436 753 14 954

*The overdraft facility at Scana Offshore vestby has a margin of 7.94%.

Liability caseScana volda AS was sued in France after a gearbox failed in 2010. The plaintiff is a shipowner insurer, which believes that Scana volda’s selection of components for the gearbox caused the gearbox to break down. Scana volda believes that the original delivery was made in accordance with the client’s specifications and that other conditions have caused the damage.

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Note 19. Trade payables

2012 2011

Trade payables 292 147 270 286 Trade payables, associates 268 46

Total 292 415 270 332

Age of receivables: 2012 2011

Non-overdue trade payables 134 324 160 470 0–30 days 94 844 74 623 31–60 days 30 283 11 534 61–90 days 8 242 6 403 over 90 days 24 722 17 302

Total trade payables 292 415 270 332

Operating leases:The group has entered into a number of lease contracts for machinery, offices and other facilities with a remaining lease period of 1–10 years. These lease contracts are classified as operating leases. The contracts do not contain restrictions on the company’s dividend policy or financing options. None of the assets that are leased are sublet. The reported leasing cost in 2012 was NOK 21 million.

The figures apply to future minimum leases.

Note 20. Lease obligations

Operating leases: 2012 2011

Within one year 22 437 20 128 more than one year and less than five years 48 532 47 921 more than five years 7 703 8 310

Total 78 672 76 359

The group as lessee – financial lease contracts:The group’s assets under financial lease contracts include machinery and equipment. In addition to the lease payments, the group has obliga-tions relating to the maintenance and insurance of the assets. The remaining lease periods range from one to six years. None of the assets that are leased under non-cancellable financial lease contracts are sublet. The contracts do not contain restrictions on the company’s dividend policy or financing options.

2012 2011

Carrying minimum Carrying minimumFinancial leases: amount payment* amount payment*

Within one year 4 241 4 705 4 659 5 226 After one year but not more than five years 9 282 10 147 10 563 11 635 more than five years 777 941 1 537 1 844

Carrying amount of leases 14 300 15 793 16 759 18 705

The carrying amount corresponds to the present value of the lease contract.The free purchase amount of the larger financial and operating lease contracts amounts to NOK 65.7 million.

*) minimum payment is instalment and interest in accordance with the respective lease contracts.Financial leases mainly relate to assets classified as machinery in note 9.

Of trade payables > 90 days overdue, NOK 22.0 million relates to operations in China in 2012 compared with NOK 16.4 million in 2011.

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Related-party transactions are executed at the estimated market price. Outstanding receivables and liabilities are unsecured short-term interest-free items. Settlements are made in cash. The group has not issued any guarantees to its related parties. No provisions have been made for unsecured receivables as at 31 December 2012.

*) Panda AS is owned by Per Ravnestad.**) Scana Industrier ASA rents office premises from Strandkaien 2 AS. This company is a sister company of verket Finans AS, which is a shareholder in Scana Industrier ASA. Both companies are controlled by Øgreid AS.

Associates: Sale Purchase Receivables Liabilities

Scana Korea Hydraulic Ltd 2012 36 446 231 8 333 1692011 31 457 397 5 836 0

Stingray Inc. 2012 0 336 0 992011 0 394 0 46

Companies with significant influence: Sale Purchase Receivables Liabilities

Frode Alhaug AS 2012 0 885 0 5312011 0 787 0 225

Panda AS *) 2012 0 0 0 02011 0 527 0 0

Strandkaien 2 AS **) 2012 0 1 211 0 02011 0 1 123 0 0

Note 21. Related-party transactions

Note 22. Financial risk

Centralised risk managementScana has a centralised finance function. The most important task is to secure the group’s room to manoeuvre in the short term and the long term. The hedging of currency, interest and electricity price exposure is carried out in accordance with the group’s policy and routines. This is done centrally by the Finance Department on the basis of the needs reported by the operational units.

Financial risk:The group’s activities are exposed to financial market risk, which mainly encompasses exchange rate risk, interest rate risk and fluctuations in the price of electricity. Furthermore, the group (primarily the steel area) is also exposed to trends in other raw material prices such as scrap steel and alloys. Scana aims to reduce the risk associated with currency, interest and electricity prices by means of derivatives. The group has chosen not to hedge against any fluctuations in other raw material prices, since Scana believes that any increases in these prices can mostly be offset by increased sale prices, albeit with a certain time lag.

Currency risk:The group is exposed to exchange rate fluctuations since large parts of production, purchasing and sales take place abroad and/or in foreign currency. The group’s internal banking function continuously monitors and reports the group’s currency positions. The currency risk is estimated for each foreign currency and takes account of assets, liabilities and probable purchases and sales in the relevant currency. The company tries to reduce the net currency risk by means of forward contracts, deposits and/or borrowings in the relevant currencies. The main risks associated with currency in the group are related to future sales payments and the group’s assets in foreign subsidiaries.

Interest rate risk:The group’s interest rate risk is mainly associated with the group’s debt portfolio. The risk is managed at group level. The group aims to offset major effects linked to changes in the market rate. Scana has therefore tied parts of the debt portfolio to fixed interest rates in order to curb short-term fluctuations in the market rate. The group’s strategy

is for at least 40 per cent of the company’s interest-bearing debt to be secured at fixed interest rates. Scana’s greatest exposure to interest rate fluctuations is related to the STIBOR.

Price risk of electricity:The group has major electricity costs in relation to the production of its goods, primarily in the steel segment. Scana protects itself from fluctuations in electricity prices by buying electricity derivatives for its Swedish subsidiaries and Scana Steel Stavanger AS. The group has an agreement with vattenfall Power management AB to administer Scana’s electricity derivatives with the aim of hedging the future electricity prices that need to be paid in Sweden and at Scana Steel Stavanger AS. The estimated electricity consumption is hedged by up to 100 per cent for the coming months, while the hedged share of estimated consumption is gradually lowered for periods further into the future.

Liquidity risk:Securing good financial room to manoeuvre is an important aim of the group. As a result of the international financial crisis, a number of measures have been implemented to reduce the financial risk, particularly through closer monitoring of liquidity projections and programmes to reduce the level of working capital.

The group monitors the liquidity situation in the short term and the long term through active dialogue with its subsidiaries. The group has also implemented strategic measures to strengthen the operational units in the group and reduce the level of working capital. The group has bank deposits of NOK 13 million. The group has utilised credit facilities in the amount of NOK 33 million from an overdraft facility of NOK 130 million. In total, the liquidity reserve for the group as at 31 December 2012 was NOK 110 million. The financial covenant of the syndicate loan linked to the liquidity reserve is set at a minimum of NOK 70 million.

At the end of 2012, the liquidity reserve combined with the share issue (described in note 27) is expected to provide the group with adequate liquidity reserves for the future.

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Credit risk:The group has guidelines for ensuring that orders are not entered into with customers who have had major payment problems and where outstanding amounts do not exceed defined credit limits. The maximum risk exposure is represented by the capitalised value of the financial assets, including derivatives, on the balance sheet. The counterparties in currency contracts are DnB and Nordea. The counterparty in electricity derivatives is vattenfall Power management AB, which is subject to the supervision of the Swedish Financial Supervisory Authority. The credit risk associated with derivatives is considered to be low. The group regards its greatest risk exposure to

be the recognised value of trade receivables (see note 13) and other receivables (see note 14).

The operational companies in Europe and the USA have credit insurance with GIEK Kredittforsikring in order to cover the exposure to credit risk. Within the marine area, the biggest deliveries are to financially sound shipyards in China and Korea with a large degree of state ownership. Within the Oil & Gas area, servicing and after sales services are provided for leading global players. No major reduction is expected in the level of activity in this market segment and the credit risk is considered to be limited. Increased activity is expected within new projects and expansions.

Sensitivity analysisIn accordance with IFRS 7, a sensitivity analysis must be carried out for all financial instruments held on the balance sheet date. In the illustration below, the sensitivity analysis shows material effects linked to financial instruments. Tax effects are not taken into consideration in the calculations.

Currency riskThe financial instruments that have currency effects are currency contracts, syndicate loans, accounts receivable, accounts payable and bank deposits. The table shows the effects of changes in the Norwegian krone (NOK) against foreign currency. If the NOK increases by five per cent against foreign currency, this has a positive effect on profit linked to net assets of NOK 11.0 million. Correspondingly, if the NOK weakens against foreign currency, the effect on profit is negative.

Effect on other Change in NOK Effect on profit before tax comprehensive income

2012 5 % 10 951 11 387-5 % -10 951 -11 387

2011 5 % 12 069 11 423-5 % -12 069 -11 423

Price risk of electricityThe table below shows the effects linked to changes in electricity prices based on the portfolio of electricity derivatives that the group has on the balance sheet date. An increase in electricity prices will mean a positive change in value for profit and equity.

Interest rate riskThe table below shows the effects associated with interest rate changes in the group on the balance sheet date. The table shows that increased interest rates have a negative effect on profit.

Note 23. Financial instruments

Hedging of net investmentThe group is subject to currency exposure in the form of net investment in its Swedish subsidiaries. This net investment is defined as Scana’s share of the subsidiaries’ equity. In order to protect against major currency fluctuations, Scana has taken out a loan in SEK. In accordance with the rules on the hedge accounting of net investments, currency gains/losses on this loan are recognised against other comprehensive income to the degree that the loan is offset by the net investment. Hedging of currency riskSince a significant part of the group’s sales are carried out in foreign currencies, Scana is exposed to exchange rate fluctuations during the period from the time the sales contract is entered into to final payment by the customer. There is also a risk associated with future payments in foreign currency. In order to secure the group’s net cash flow in the individual currencies, currency contracts are entered into that offset the estimated future incoming/outgoing payments.

Effect on other Change in electricity price Effect on profit before tax comprehensive income

2012 10 % 946 3 885-10 % -946 -3 885

2011 10 % 783 7 382-10 % -783 -7 382

Effect on other Change in interest rate Effect on profit before tax comprehensive income

2012 1 % 2 389 6 707-1 % -2 389 -6 707

2011 1 % -2 708 8 285-1 % 2 708 -8 285

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Classification of currency gains/losses in the income statementThe group classifies currency gains/losses as financial items. most subsidiaries have chosen to hedge the net currency exposure based on the balance positions and sales and purchase orders for each individual currency. Hedge accounting in accordance with IAS 39 is not applied to currency contracts.

UnrealisedCurrency Net Nominal value Maturity gain/loss (-)

EUR Sale 18 981 2012 116GBP Sale 8 460 2012 195SEK Sale 26 200 2012 -33USD Sale 8 823 2012 1 909EUR Purchase 1 902 2013 -284USD Purchase 5 873 2013 1 001EUR Purchase 1 985 2014 -364USD Purchase 6 087 2014 733

Total 3 273

Below is a summary of all open currency contracts at 31 December 2011:

Hedging of interest rate riskFloating interest-bearing liabilities are hedged against changes in the interest rate level by entering into interest rate swaps. As at 31 December 2012, 51% of the syndicate loan was hedged at a fixed interest rate. In 2010, the group entered into an interest rate swap with Nordea, where Scana receives variable rates of interest and pays fixed rates. Changes in the fair value of the agreement are recognised against total comprehensive income in accordance with the rules of IAS 39 on hedge accounting. The maturity period of the interest rate swap is five years, while the interest-bearing liability matures in 2015. Any inefficiencies are recognised in the income statement. For 2012, the hedge ratio is considered to be effective and the entire change in value resulting from the interest rate swaps is consequently recognised against other comprehensive income. As at 31 December 2012, the group has an interest rate swap totalling SEK 200 million, where the group pays a fixed interest rate and receives a variable rate. This agreement was extended in 2011 to October 2016 at a lower fixed interest rate.

Currency Amount Fixed interest rate Maturity Fair value

SEK 200 000 3.00 % 25.10.2016 -11 031

The variable interest rate is set each quarter and is based on the 3-month STIBOR. The interest rate swap entered into for cash flow hedging at 31 December 2012 is NOK -2.0 million, which is recognised in other comprehensive income.

Hedging of fluctuations in electricity pricesThe group has major electricity costs in relation to the production of its goods. Scana protects itself from fluctuations in electricity prices by buying electricity derivatives for its Swedish subsidiaries and Scana Steel Stavanger AS. The group has an agreement with vattenfall Power management AB to administer Scana’s electricity derivatives with the aim of hedging future electricity prices. The estimated electricity consumption is hedged by up to 100 per cent for the coming months, while the hedged share of estimated consumption is gradually lowered for periods further into the future. As at 31 December 2012, electricity hedging is carried out for up to three years in the future. The value of electricity derivatives is calculated on the basis of the difference between the agreed future electricity price and the market’s forward prices on the valuation date, multiplied by the hedged volume. The change in the fair value of electricity derivatives is recognised against total comprehensive income to the degree it satisfies the effectiveness requirements for hedge accounting in accordance with IAS 39. The ineffective portion of the changes in value is recognised in the income statement.

On the settlement of electricity derivatives, Scana receives a statement from vattenfall based on the difference between the agreed price in accordance with the electricity contracts and the price Scana has paid for its ongoing electricity consumption. This amount is recognised as other operating costs in such a way that the expensed electricity consumption is based on the hedged electricity prices at all times.

UnrealisedCurrency Net Nominal value Maturity gain/loss (-)

EUR Purchase 1 902 2013 -1 274SEK Sale 160 000 2013 -786USD Purchase 5 873 2013 -1 662EUR Purchase 1 985 2014 -1 374USD Purchase 6 087 2014 -1 979

Total -7 075

Below is a summary of all open currency contracts at 31 December 2012:

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The table below shows the effects on the income statement and the balance sheet. The figures are pre-tax.

Electricity derivatives: 2012 2011

Fair value as at 31 Dec -11 171 -12 886Recognised against other comprehensive income during the period 1 591 -10 779Hedging instruments removed from other comprehensive income during the period -6 168 -30 984

2013 2014 2015 2016 2017 2018As at 31 December 2012 Remaining years < 1 1 - 2 2 - 3 3 - 4 4 - 5 > 5 Total

Fixed interestInterest rate swaps -11 031 -11 031

FloatingBank deposits 12 805 12 805Bank overdraft -35 148 -35 148Financial leases -4 241 -3 717 -2 625 -1 835 -1 106 -776 -14 300Factoring -57 017 -57 017Syndicate loan SEK -287 622 -287 622Syndicate loan USD -48 242 -48 242Bank loan, Handelsbanken -1 200 -895 -667 -667 -667 -1 999 -6 095Forward currency contracts -3 722 -3 353 -7 075Interest -3 283 -3 283Electricity derivatives -7 549 -3 364 -258 -11 171

The table below shows an overview of the carrying amount associated with financial instruments distributed by maturity period:

Determining fair valueThe fair value of forward currency contracts is calculated according to the closing rate on the balance sheet date adjusted for an interest addition or deduction based on the interest rate difference between the respective currencies. For currency swaps and electricity derivatives, the basis is the present value of the cash flow. The fair value of cash, bank overdrafts and other interest-bearing debt is considered to be almost equal to the recognised value, since these have a short maturity period and thereby give floating interest rates that are adjusted in line with changes in the general interest rate level. Likewise, the fair value of trade receivables and payables is considered to be equal to the carrying amount, since both items have a short maturity period and were entered into under normal conditions.The fair value of interest rate swaps is calculated using the estimated discounted cash flow based on the market’s forward interest rates on the valuation date, with an addition to reflect the bank’s profit margins.

2012 2013 2014 2015 2016 2017As at 31 December 2011 Remaining years < 1 1 - 2 2 - 3 3 - 4 4 - 5 > 5 Total

Fixed interestInterest rate swaps -9 027 -9 027

FloatingBank deposits 37 727 37 727Bank overdraft -23 132 -23 132Financial leases -4 659 -3 904 -3 206 -2 104 -1 348 -1 538 -16 760Factoring -57 049 -57 049Syndicate loan SEK -345 257 -345 257Interest-bearing loans, Leshan Scana -51 899 -51 899Bank loan, Handelsbanken -5 384 -1 442 -667 -667 -667 -2 666 -11 493Forward currency contracts 2 188 717 369 3 273Interest -2 911 -2 911Electricity derivatives -8 341 -3 346 -1 199 -12 886

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Below is a table showing the carrying amount and fair value of the group’s financial instruments. The carrying amount and the fair value are the same.

Note 2012 2011

Financial assetsBank deposits 15 12 805 37 727Trade receivables 13 441 637 475 285

Other financial assets 47 578 49 630Embedded derivatives 194 780Electricity derivatives 347 172Interest rate swaps 0 0Forward currency contracts 0 4 592

Total 502 561 568 186

Financial liabilitiesTrade payables 19 292 415 270 332Advances from customers 13 120 108 170 238Bank overdraft 15/17 35 148 23 132Financial leases 17/20 14 300 16 760Interest-bearing loans 17/20 402 259 468 608Embedded derivatives 59 42Forward currency contracts 7 075 1 318Interest rate swaps 11 031 9 027Electricity derivatives 11 518 13 058

Total 893 913 972 515

At fair value through profit and lossLending and Available At amortised

Held for sale Hedge accounting receivables for sale cost Total

Financial assetsBank deposits 12 805 12 805Trade receivables 441 637 441 637

Other financial assets 47 578 47 578Embedded derivatives 194 194Electricity derivatives 347 347Interest rate swaps 0 0Forward currency contracts 0 0

Total 541 0 502 020 0 0 502 561

The table below shows how the different financial instruments are categorised, cf. IFRS 7 as at 31 December 2012.

Financial liabilitiesTrade payables 292 415 292 415Advances from customers 120 108 120 108Bank overdraft 35 148 35 148Financial leases 14 300 14 300Interest-bearing loans 402 259 402 259Embedded derivatives 59 59Forward currency contracts 7 075 7 075Interest rate swaps 11 031 11 031Electricity derivatives 2 479 9 039 11 518

Total 9 613 20 070 0 0 864 230 893 913

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As at 31 December 2012, Scana has the following financial instrumentsthat are recognised at fair value: 31.12.12 Level 1 Level 2 Level 3

Assets measured at fair value

Financial assets at fair value with a change in value through profit and lossElectricity derivatives 347 347Forward currency contracts 0 0

Total 347 0 347 0

Liabilities measured at fair value

Financial obligations at fair value with a change in value through profit and lossEmbedded derivatives 59 59Forward currency contracts 7 075 7 075Interest rate swaps 11 031 11 031Electricity derivatives 11 518 11 518

Total 29 683 0 29 624 59

Capital structure and equityThe main purpose of the group’s composition and management of liabilities and equity is to ensure commercial room to manoeuvre in relation to the work of the group in both the short term and the long term. The group also aims for the best possible credit rating, and thereby competitive loan terms from lenders for Scana’s activity. The group will support its commercial activity through effective asset management in relation to equity and liabilities, and thereby contribute to increasing the value for shareholders.

The group aims to have sufficient liquid funds and credit facilities to finance operational activities. This is achieved by maintaining high targets for continued operations and financial management. The group manages the capital structure and makes the necessary changes based on an ongoing assessment of the market and financial risk and the financial outlook for both the short term and the medium term. See note 17.

See also note 27, Events after the balance sheet date.

There were no transfers in 2012 between levels 1 and 2 in the assessment of fair value, and no transfers to or from level 3 in the assessment of fair value.

Note 24. Shares and shareholders

Scana Industrier ASA had 2,144 shareholders as at 31 December 2012. Foreign shareholders held shares totalling 2.4 per cent of the share capital.

No. of shares held by Board members and senior employees:Frode Alhaug * 17 785 966john Arild Ertvaag** 33 400 000Knut Øgreid*** 31 870 000Per Ravnestad**** 7 369 496martha Kold Bakkevig***** 37 000Rolf Roverud 758 263jan Henry melhus 180 108Kjetil Flesjå 150 000

* Through the company Fama Invest AS ** Through the company Camar AS. *** Through the company verket Finans AS **** Through the ownership of the companies International Oilfield Services AS and Panda AS ***** Through the company Kold Invest AS

In addition, the company holds 113,010 own shares.

Fair value – value hierarchy Scana applies the following hierarchy when assessing and presenting the fair value of the financial instruments. Level 1: Trading prices (unadjusted) in active markets for identical assets and liabilities.Level 2: Input other than traded prices from active markets that are included in level 1, which can be observed for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3: Input for the asset or liability that is not based on observable market data.

The table below shows how the different financial instruments are categorised, cf. IFRS 7 as at 31 December 2012.

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The 20 largest shareholders as at 31 December 2012:

CAmAR A/S 33 400 000vERKET FINANS AS 31 870 000FAmA INvEST AS 17 785 966ODIN NORGE 17 337 193PARETO AKSjE NORGE 16 514 341BEST INvEST AS 11 871 237mP PENSjON PK 10 192 304PARETO AKTIv 6 995 543INTERNATIONAL OILFIELD SERvICES AS 6 694 353SOCIETEGENERALEBANK&TRUSTLUX. 6 290 000SLETHEI AS 6 288 023STOLEN AS 5 048 258SPECTATIO AS 4 631 349PARETO vERDI 3 779 857HØILAND AS 2 882 470ODIN GLOBAL SmB 2 709 822jOHANNESEN 2 688 349OjN INvEST AS 2 067 353UBS AG, LONDON BRANCH 1 916 997STRAEN A/S 1 884 317Total holding for 20 largest shareholders 192 847 732

Total no. of shares 287 871 250

Note 25. Pledged assets and guarantees

2012 2011

Pledged assets:Of the group’s recognised liabilities, the following was secured through pledges 448 423 505 589

Total pledged assets 448 423 505 589

Carrying amount of pledged items:Trade receivables 254 777 271 438 Inventories 317 239 330 469 machinery, equipment 434 574 416 702 Buildings, land 207 881 225 723

Total 1 214 471 1 244 331

Guarantee obligations:Guarantees 68 174 102 120

The parent company guarantees which amount to NOK 5 million are mainly related to a guarantee obligation associated with a lease contract for one of our subsidiaries.

Of the bank guarantees, approx. 50% relate to advance payment guarantees. Non-delivery will entitle the customer to draw on the bank guarantee. The remaining 50% of the guarantees are “on demand” guarantees. In the event of non-payment the supplier can draw on the guarantee.

In accordance with Section 7–27 of the Norwegian Accounting Act, the purchase and disposal of own shares must be reported.The Annual General meeting held on 9 may 2012 granted the Board au-thorisation to acquire the company’s own shares up to a nominal value of NOK 35.983 million. This authorisation is valid until the next Annual General meeting in 2013.

Note 26. Own shareholdings

In 2012, the company did not trade own shares using the afore-mentioned authorisation or equivalent authorisation granted by the Annual General meetings of 2009, 2010 and 2011.

No. of shares Amount

Holding of own shares as at 31 December 2011 113 010 788

Holding of own shares as at 31 December 2012 113 010 788

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Note 27. Events after the balance sheet date

Share issueThe Board of Directors made a targeted share issue on 29 january 2013 of NOK 100 million through the issue of 333,333,333 new shares at a price of NOK 0.30 per share. The targeted share issue was made through a book building process and was supported and subscribed only by existing shareholders. The share issue was resolved by the extraordinary General meeting held on the 20th February 2013. Nominal value per share was written down from NOK 1.25 to NOK 0.10 per share, with a subsequent 2 month creditor period. Proceeds related to private placement is completed and the amount is on a blocked account at Pareto Securities AS. Proceeds will be available for Scana when registration takes place in the business register (‘Foretaksregisteret’) after the expiry of creditors and no later than 15 may 2013.

Repair issueThe extraordinary General meeting resolved to authorize the Board to conduct a subsequent issue (repair issue) to those of the group’s shareholders who were not allotted shares in the private placement. The repair issue will be up to 225,357,331 new shares at a price of NOK 0.30 per share, for a total gross proceeds of up to NOK 67.9 million. Assuming that the repair issue is completed, transferable subscription rights will be assigned and allocated to eligible shareholders pro rata based on their shareholdings in the company as at 28 january 2013. Shareholders who were allocated shares in the private placement will not receive subscription rights. Oversubscription will be permitted. Allocation and payment will be 15 may 2013.

Financing agreementThe Group had exemptions for the loan terms Q4, 2012. 31 january 2013, the group has received waivers for a number of loan terms until the loan is terminated. The exemptions are subject to the assumption that the share issue is carrying a aggregate net proceeds of at least NOK 135 million. At the same time, waivers for repayment in 2013 is agreed upon on syndicated loan SEK, totaling mSEK 55, wherein the next semi-annual repayments are due in january 2014. The Group has in the approved waiver from january 2013 got a new expiration date at 30 june 2014 for the syndicated loan USD. See note 17. In the waiver, the group has an exemption for loan terms relating to equity ratio, liquidity and leverage ratios Q1, 2013. In addition, a new loan condition relating to minimum EBITDA has been agreed upon.

Bridge financingAnticipating the availability of the private placement, the company has entered into an additional credit with the bank syndicate of mNOK 60, in which there was an assumption that shareholders who participated in the private placement guarantee for said amount. In the additional credit period, the company’s undrawn guarantee facility will be reduced by mNOK 60. The additional credit is due 15 may 2013. If the private placement should not be implemented, the additional credit will be converted into subordinated loans from the guarantors.

Share of ownership of Inpower ASThrough Scana Propulsion AS, Scana has acquired a shareholding of 24.9% in Inpower through a targeted share issue in january 2013. This acquisition is part of the efforts to secure access to and contribute to the further development of essential technology for the companies under the Scana Propulsion AS umbrella.

Note 28. Going concern

The challenges for the Group as a result of the financial crisis and the subsequent European debt crisis, have been greater than the Group expected. This is due to the scope and duration of the market decline, coupled with a very strong Norwegian and Swedish Krone. There is uncertainty as to whether the Group will be able to comply with the adjusted loan conditions related to EBITDA in 2013 and the market development. However, the Board assesses the group to gradually regain profitability through well diversified and niche key products that are leading in their market segments, and through ongoing and completed strategic and operational initiatives. In this regard, the private placement, which was completed in February 2013, and the planned repair issue, combined with the adjusted

loan conditions and repayment deferrals, are important (See Note 27). The newly negotiated loan terms require that share issues with an aggregate net proceeds of mNOK135 are implemented. Of this amount, a private placement with gross proceeds of mNOK 100 has already been completed. The subscription period for the subsequent repair offering of up to mNOK 67.9 will begin in early may.

Based on the Group’s business plans, budgets and latest forecasts for 2013-2015, the Board confirms in accordance with the Accounting Act § 3-3a that the accounts have been prepared under the going concern assumption, and that this assumption is valid.

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PARENT COmPANY STATEmENT OF INCOmE

Period 1 January - 31 December (NOK 1000) Note 2012 2011

Total revenue 7 40 232 51 981

Operating costs and expensesWages, social security and pension costs 8 13 470 14 270Depreciation 3 492 503Other operating expenses 7/8 30 573 38 717

Total operating costs and expenses 44 535 53 490

Operating income -4 303 -1 509

Financial income and expensesIncome from investments in subsidiaries 953 5 255Interest income 1 947 2 050Interest income intra-group 7 33 977 32 809Writedown of shares in subsidiaries 2 -117 444 -851Interest expense -26 648 -24 695Interest expense intra-group 7 -2 404 -2 687Other financial expenses -1 851 -16 803

Net finance -111 470 -4 922

Income before taxes -115 773 -6 431

Taxes 4 848 -5 102

Net income -116 621 -1 329

Allocations and transfersRetained earnings -116 621 -1 329

Total -116 621 -1 329

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PARENT COmPANY BALANCE SHEET

(NOK 1000) Note 31.12.12 31.12.11

Non currenct assets:Intangible assets:Deferred tax assets 4 9 897 9 046 Tangible assets:Property, plant and equipment 3 4 059 2 262 Financial assets:Shares in subsidiaries 2 472 641 521 709 Other shares 100 100 Intercompany long-term receivables 10 229 532 232 975

Total non current assets 716 229 766 092

Current assets:Debtors:

Intercompany short-term receivables 10 225 184 192 770 Prepaid expenses and other short-term receivables 942 5 907

Total debtors 226 126 198 677 Cash and cash equivalents 11 223 3 045

Total current assets 226 349 201 722

Total assets 942 578 967 814

Shareholders’ equity:Paid-in capital:Share capital 9 359 839 209 839 Own shares -141 -141 Share premium accont 0 2 822 Other paid-in capital 60 518 114 081

Total paid-in capital 420 216 326 601 Retained earnings:Retained earnings/uncovered losses 0 69 104

Total retained earnings 0 69 104

Total shareholder’s equity 5 420 216 395 705

Gjeld: Annen langsiktig gjeld:Annen langsiktig gjeld 3 353 653

Total annen langsiktig gjeld 3 353 653

Current liabilities:Interst bearing short-term debt 12/13 369 276 366 352 Accounts payable 3 668 2 634 Intercompany short-term debt 125 317 183 907 Other accrued expenses and liabilities 14/15 20 748 18 563

Total current liabilities 519 009 571 456

Total liabilities & shareholder’s equity 942 578 967 814

Stavanger, 11th of April 2013

Bjørn TorkildsenChairman of the Board

john Arild ErtvaagBoard member

Knut ØgreidBoard member

Elisabeth SaupstadBoard member

martha Kold BakkevigBoard member

Per RavnestadBoard member

Rolf RoverudCEO

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PARENT COmPANY CASH FLOW STATEmENT

(NOK 1000) 2012 2011

Operating activitiesIncome before taxes -115 773 -6 431 Income from investments in subsidiaries 116 491 -5 255 Gains (-)/losses on the sale of non-current assets - - Depreciation 492 503 Change in other current assets -31 751 55 586 Change in accounts payable 1 034 -1 485 Change in other current liabilities and accruals -55 293 -98 921

Net cash provided by (used in) operating activities -84 800 -56 003

Investing activitiesChange in long-term receivables -64 932 151 554 Investments in fixed assets -2 289 -163 Investments in business 0 -104 195

Net cash used in investing activities -67 221 47 196

Net cash before financing activities -152 022 -8 807

Financing activitiesProceeds from long-term borrowings 348 591 13 058 Repayment of long-term interest bearing debt -60 969 -51 941

Change in short-term interest-bearing debt -284 698 21 095

Received dividend 5 255 -25 227 Proceeds from issue of new share capital 141 021 1 154

Net cash provided by financing activities 149 200 -41 861

Net cash flows -2 822 -50 668

Cash and cash equivalents at beginning of year 3 045 53 713 Cash and cash equivalents at end of year 223 3 045

Change in cash and cash equivalents -2 822 -50 668

*) The syndicated loan was at the time of drawing classified as long-term, but at the balance sheet day classified as short-term.

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The company financial statements submitted have been prepared in compliance with the provisions of the Norwegian Accounting Act and good accounting practices. Continued operation forms the basis for the preparation of the financial statements and valuation of the company’s assets. The financial statements consist of an income statement, balance sheet, cash flow statement and notes. The financial statements constitute a whole. All figures in the financial statements are full NOK 1,000 unless otherwise stated.Some of the notes are given as notes to the consolidated financial statements.

Income and expenses Income is recognised as it is earned. Expenses are recognised in the same period as the related income. Direct transaction costs associated with taking out loans are allocated over the term of the loan using the amortised cost method.

Current receivables and current liabilitiesReceivables and liabilities are classed as current assets and current liabilities if they are due for payment within one year of the balance sheet date.

Assets and liabilities in foreign currencyTransactions in foreign currency are recognised at the exchange rate at the time of the transaction. The company’s cash and bank balances, receivables and liabilities in foreign currency are translated at the exchange rate on the balance sheet date.

Trade receivablesTrade receivables are recognised on the balance sheet after deduction for confirmed losses and provisions for covering anticipated losses.

Shares in subsidiariesInvestments in subsidiaries are valued using the cost method. Where the criteria for impairment are met, this will be recognised against profit/loss. Dividends from subsidiaries that represent income earned are recognised as income. Dividends for which payment is made on the purchase of shares represents a repayment of invested capital and is reported as a reduction in investment.

Property, plant and equipment and depreciationProperty, plant and equipment are recognised on the balance sheet at historic acquisition cost less depreciation and impairment. Depreciation is calculated using the straight-line method on acquisition cost. When assets are sold, gains are included as operating income and losses as operating expenses. Future discounted cash flows are used as a criterion for impairment.

LeasesLease contracts are classified as finance or operating leases on the basis of a specific assessment of each lease. The company only has operating assets that are defined as operating leases.

TaxThe tax cost in the income statement is the sum of the tax currently payable and the change in deferred tax linked to the accounting income for the year.Deferred tax on the balance sheet is tax calculated at 28% of the net tax-increasing temporary differences between the balance sheet values for accounting and tax purposes, after reconciliation of tax-reducing temporary differences and loss to carry forward. Full provisions are made according to the liability method without discounting.Deferred tax asset is recognised on the balance sheet, provided that the company can substantiate future earnings according to fiscal transactions that defend the recognised value.

Pensions and pension obligationsEmployees are assured via a pension scheme in which agreed payments are made by the employer (contribution-based scheme) and included in the item salary and social security costs.

Financial instrumentsThe company uses different financial instruments to manage the Group’s currency and interest-rate exposure. Accountancy treatment is based on the intentions behind entering into these contracts. Forward currency contracts are recognised on the balance sheet at fair value. Unrealised gains or losses linked to these contracts are recognised as they occur. The company uses hedge accounting for interest rate swaps that fulfil the criterion for hedge accounting.The hedging of net investments is treated as hedge accounting. Unrealised currency gains or losses on loans that are included as hedging instruments for hedging net investments in Swedish subsidiaries are initially recognised on the balance sheet as a part of investment in subsidiaries and will only be recognised in the income statement on the disposal of the investment.

Cash flow statementThe cash flow statement is prepared according to the indirect method. Cash and cash equivalents comprises means of payment (cash/bank deposits) and current investments in securities (not shares) with a term of less than three months calculated from the time of acquisition.

PARENT COmPANY NOTES

Share of Share of Carrying amountShares in subsidiaries: Acquired ownership votes No. of shares NOK as at 31.12.12

Scana Steel Björneborg AB, Björneborg, Sweden 1993 100 % 100 % 80 000 32 610Leshan Scana machinery Co. Ltd, Leshan, China 1997 80 % 80 % N/A 51 005Scana Trading AS, Stavanger, Norway 1987 100 % 100 % 115 000 29 993Scana Propulsion AS, volda, Norway 2011 100 % 100 % 1 000 106 001Scana Steel AB (subgroup), Karlskoga, Sweden 1995 100 % 100 % 69 305 94 698Scana Skarpenord AS, Rjukan, Norway 1989 100 % 100 % 7 000 11 363Scana Steel Stavanger AS, jørpeland, Norway 1990 100 % 100 % 10 000 77 000Scana Offshore Technology AS, jørpeland, Norway 2005 100 % 100 % 100 10 501Scana Offshore vestby AS, vestby, Norway 2006 100 % 100 % 2 100 0Scana Oil & Gas Inc., Houston, Texas, USA 2006 100 % 100 % 1 000 0Scana Offshore Services Inc, Houston, Texas, USA 2008 100 % 100 % 10 000 41 970Scana Subsea AB, Björneborg, Sweden 2009 100 % 100 % 1 000 13 210Elimination of agio on net investments in subsidiaries 4 290

Shares owned by subsidiaries: 472 641

Note 1. Accounting principles

Note 2. Shares

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Share ofAcquired ownership Share of votes No. of shares

Shares owned by subsidiaries:Scana Steel Booforge AB, Karlskoga, Sweden 1994 100 % 100 % 100 000Scana Steel Söderfors AB, Söderfors, Sweden 1995 100 % 100 % 259 000Scana machining AB, Kristinehamn, Sweden 2011 100 % 100 % 50 000Scana Shanghai Trading Ltd, Shanghai, China 2011 100 % 100 % N/AScana Singapore Pte Ltd, Singapore 1994 100 % 100 % 205 000Scana mTC AS, jørpeland, Norway 2007 100 % 100 % 100Scana Offshore Services Singapore Pte Ltd, Singapore 2008 98 % 98 % 474 879Scana do Brasil Ind Ltda, Rio de janeiro, Brazil 2009 100 % 100 % 10 000Scana volda AS, volda, Norway 1997 100 % 100 % 94 426Scana mar-El AS, Dalen, Norway 1996 100 % 100 % 150 000Scana Zamech sp.zo.o, Elblag, Poland 2009 100 % 100 % 28 100

Scana Steel Scana Offshore Scana Offshore Leshan ScanaScana Steel AB Stavanger AS Services Inc. Vestby AS Machinery Ltd

Operating margin 5.3 % 4.3 % 9.1 % 2.3 % 6.1 %Discount rate (nominal before tax) 11.6 % 11.7 % 13.7 % 13.4 % 12.4 %Rate of growth 2013-2017 3.4 % 6.7 % 5.1 % 18.5 % 12.3 %Annual rate of growth after 2017 (nominal) 2.5 % 2.5 % 2.0 % 2.0 % 2.5 %

Price trends: It is expected that changes in the price of purchased components in the forthcoming period will be reflected in the market price of goods sold and will therefore not affect the operating margin significantly.market share: The estimates are based on the assumption that the market share will not change significantly.

Sensitivity analysisSensitivity analyses in relation to impairment testing tested for reasonable changes in the key assumptions. Where the actual key assumptions are lower than shown in the table below, this may result in impairment. For example, a reduction in the operating margin (with other assumptions remaining unchanged) at Leshan Scana machinery Ltd. by more than 2.4 per cent to a figure lower than 3.7 per cent will result in impairment. The calculations are made on the basis of the same assumptions as in the table above.

The group tests goodwill for impairment once a year or when there are any indications of loss of value. The impairment tests estimate the utility value. The utility value is based on the budget and business plans determined by the management for the period 2013-2017. The estimates are based on a budgeting approach for the various cash-generating units. For the subsequent period, the model assumes a growth rate of 2 - 2.5 per cent, which is within the long-term expectations of the inflation target of Norway’s central bank, Norges Bank. Revenues are based on contracts entered into and on the management assessment of external information about the potential for new agreements. The estimated operating margin for the period is expected to increase as a result of positive market trends. The group recognises impairment loss in the income statement where the estimated recoverable amount is lower than the recognised assets or the cash-generating unit. Write-downs of shares related to Scana Steel Stavanger AS and Scana Offshore vestby AS in 2012 totals mNOK 117.4.

Scana Steel Scana Offshore Scana Offshore Leshan ScanaScana Steel AB Stavanger AS Services Inc. Vestby AS Machinery Ltd

Operating margin -0.2 % 0.0 % -0.8 % 0.0 % -2.4 %Discount rate (nominal before tax) 0.6 % 0.0 % 0.7 % 0.0 % 3.8 %Rate of growth 2013 - 2017 -0.7 % 0.0 % -1.7 % 0.0 % -4.6 %

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Note 4. Tax

2012 2011

Basis for current tax payable:Profit/loss before tax -115 773 -6 431Permanent/Other differences 112 730 -11 731Change in temporary differences -8 413 -2 760Loss carry-forward utilised, not previously recognised in the income statement 11 456 20 922

Basis for current tax payable 0 0

Tax cost for the year:Tax payable 0 0Change in deferred tax -851 -5 085Tax recognised against equity 1 699 -17

Tax cost for the year 848 -5 102

Reconciliation of taxes against ordinary profit/loss before tax:Tax cost for the year 848 -5 10228% of profit/loss before tax -32 416 -1 801

Difference due to: 33 265 -3 301

Permanent/Other differences 31 566 -3 284Profit/loss on investment in subsidiaries, taxe cognised directly against equity -815 -17Tax issue cost recognised directly against equity 2 514 0Changes not recognised on the balance sheet/reversed deferred tax asset 0 0

Note 3. Property, plant and equipment

Machinery, equipment etc.

Acquisition cost Accumulated acquisition cost as at 1 january 2012 4 526Additions during the year 2 289Disposals during the year 0

Accumulated acquisition cost as at 31 December 2012 6 815

DepreciationAccumulated depreciation as at 1 january 2012 2 264Depreciation for the year 492Disposals during the year 0

Accumulated depreciation as at 31 December 2012 2 756

Carrying amount 31 December 2012 4 059

Depreciation period in no. of years 3 - 5

Annual rent for office premises (not recognised on the balance sheet) in 2012 was NOK 1,211

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2012 2011

Specification of the basis for deferred tax:Non-current assets 747 671Receivables 0 0Derivatives -13 500 -11 929Profit and loss account -101 -126Other liabilities 9 883 0Tax loss/Refund to carry forward -32 377 -20 922

Total temporary differences -35 348 -32 306

28% deferred tax -9 897 -9 046

Tax deferred on the above basis is recognised as:Deferred tax asset 9 897 9 046Deferred tax asset recognised on the balance sheet is based on estimates of future earnings in Norway

The right to carry forward uncovered losses expires:No limits 0 0

Tax recognised directly against equity:Net investment -815 -17Share issue costs 2 514 0

Total 1 699 -17

Note 5. Equity

Note 6. Guarantees

Share OtherOwn premium paid-in Other

Share capital shareholdings account capital equity Equity

Equity as at 31 December 2011 209 839 -141 2 822 114 081 69 104 395 705Profit/loss for the year -50 336 -66 285 -116 621

Share option programme 416 416

Cash flow hedging -2 004 -2 004Net investment -815 -815Share issue (net after taxes) 150 000 -2 822 -3 643 143 535

Equity as at 31 December 2012 359 839 -141 0 60 518 0 420 216

2012 2011

Parent company guarantees 68 174 102 120

Note 7. Related-party transactions

NOK 40,174 of the operating revenue for the year constitutes charges made to subsidiaries including group support and royalties. Of the net financial items for the year, NOK 33,977 constitutes interest from group companies and NOK 2,404 interest to group companies. See note 22 of the consolidated accounts for details of related parties.

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Note 13. Pledged assets

2012 2011

Of the company’s interest-bearing liabilities, the following were secured through pledges 369 276 366 352Carrying amount of pledged items:Shares 472 641 521 709machinery, equipment 4 059 2 262

Total 476 700 523 971

See note 26 of the consolidated accounts for further details on pledged assets.

2012 2011

Salary expenses 10 720 11 432Employer’s contributions 1 675 1 773Pension costs 460 445Other payroll and staff costs 615 620

Total payroll costs 13 470 14 270

2012 2011

Bank overdraft 33 412 21 095Syndicate loan, instalments due for payment within 12 months 335 864 345 257

Total 369 276 366 352

Note 12. Current interest-bearing liabilities

Note 11. Bank deposits

Note 10. Debts and liabilities to group companies

Note 9. Share capital

Note 8. Remuneration and fees

As at 31 December 2012, Scana Industrier ASA’s share capital came to NOK 359,839,063, distributed across 287,871,250 shares at NOK 1.25. There is one class of shares, with all shares carrying equal voting rights. See note 25 of the consolidated accounts for details of shareholders.

The bank deposits and cash of mNOK 223 include tax deductions as restricted funds of NOK 0. Bank deposits are part of a group account arrangement. Through Nordea, the company has issued warranties related to taxes owed.

The company has loan agreements with subsidiaries. At year-end 2012 and 2011 no debts are due to group companies after one year.

Auditor’s fees: * 2012 2011

Statutory audit 400 300 Other non-audit services 842 1 438 Tax consulting 194 0

Total 1 436 1 738

*Figures are exclusive of vAT.

Scana Industrier had seven employees at the end of the year, including one woman. The average number of employees in 2012 was 6 people.The company’s pension scheme satisfies the requirements of the Norwegian Act on Compulsory Occupational Pensions.

The company is in breach of loan conditions per 31.12.12 for the syndicated loan, but has been exempted from the syndicate. The exemption is however conditional of a share issue (see consolidated financial statements note 27) and the syndicated loan is therefore classified as short-term.

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Note 14. Financial instruments

Currency Amount Fixed interest rate Maturity Fair value

SEK 200 000 3.00 % 25.10.2016 -11 031

UnrealisedCurrency Net Nominal value Maturity gain/loss (-)

EUR Purchase 1 287 2013 -30 GBP Purchase 170 2013 -59 jPY Purchase 66 400 2013 -304 USD Purchase 4 119 2013 -699 EUR Purchase 0 2014 -118 SEK Sale 161 700 2014 -801 USD Purchase 0 2014 -458

Total -2 469

Currency contracts Below is a summary of all open currency contracts as at 31 December 2012.

The forward contracts are included as part of the group’s management of the exchange rate risk. See note 22 of the consolidated accounts. Interest rate swapsThe group believes that holding parts of its liabilities at a fixed interest rate reduces the long-term risk. On this basis, interest rate swaps are used to swap variable interest for a fixed rate. When the fixed interest rate is lower than the variable rate, Scana receives and reports the difference in interest as income. When the fixed interest rate is higher than the variable rate, Scana pays and reports the difference in interest as a cost. Income/costs are accrued over the relevant interest period.

As at 31 December 2012, the company has an interest rate swap of SEK 200 million, where the company pays a fixed interest rate and receives a variable rate. The variable interest rate is set each quarter and is based on the 3-month STIBOR.

Note 15. Other non-current liability

Of the non-current liability, NOK 1,052 constitutes public charges payable.

Note 16. Events after the balance sheet date and going concern

Refers to the consolidated financial statements note 27 for events after balance sheet date and note 28 regarding going concern.

Stavanger, 11th of April 2013

Bjørn TorkildsenChairman of the Board

john Arild ErtvaagBoard member

Knut ØgreidBoard member

Elisabeth SaupstadBoard member

martha Kold BakkevigBoard member

Per RavnestadBoard member

Rolf RoverudCEO

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DECLARATION BY THE BOARD OF DIRECTORS AND THE CEO ANDGROUPCHIEFEXECUTIvE

The Board and the President & CEO have to day considered and approved the Scana Industrier ASA annual report and financial statements for the Scana Industrier group and its parent company for the 2012 calendar year end as of 31 December 2012.

The consolidated financial statements have been prepared and presented in accordance with the requirements of IFRS as adopted by the EU and associated interpretations, and with Norwegian disclosure requirements that were in force as of 31 December 2012. The annual report for the group and parent company meets the requirements of the Norwegian Accounting Act and Norwegian Accounting Standard 16 in force as of 31 December 2012.

To the best of our knowledge:•the2012financialstatementsforthegroupandparentcompany

have been prepared in accordance with applicable accounting standards

•theinformationprovidedinthefinancialstatementsgivesatrueandfair portrayal of the group and parent company’s assets, liabilities, financial position, and profit as a whole as of 31 December 2012.

•theannualreportprovidesatrueandfairoverviewof:- developments, profit, and the financial position of the group and

the parent company- the most significant risks and uncertainties facing the group and

the parent company

Stavanger, 11th of April 2013

Bjørn TorkildsenChairman of the Board

john Arild ErtvaagBoard member

Knut ØgreidBoard member

Elisabeth SaupstadBoard member

martha Kold BakkevigBoard member

Per RavnestadBoard member

Rolf RoverudCEO

AUDITORS’ REPORT 2012

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SHARES AND SHAREHOLDERS 2012

the year. The remainder shall ensure growth and a satisfactory level of equity.

Scana lndustrier ASA has one class of share, with each share carrying one vote. Each share has a nominal value of NOK 0.10. The company offered a private placement of shares to parts of the existing shareholders, and we will during 1st half of of 2013 carry out a repair issue towards shareholders not participating in the first private placement. The repair issue will be carried out with same conditions as the private placement offer. The company is given the authority to buy its own shares in connection with potential acquisitions up to 10 per cent of the company’s registered share capital at the General meeting in 2013.

Guidelines have been prepared to ensure that the Board members and senior employees obtain prior approval and report any trading of Scana shares. There are no revenue restrictions on the share.

The group’s supreme management body is the General meeting for Scana lndustrier. In accordance with the company’s Articles of Association, the General meeting shall be led by the Chairman of the Board. The General meeting elects the election committee, Board members for Scana lndustrier and the group’s external auditor, as well as approving fees for these posts. The General meeting also deals with issues pursuant to the Norwegian Limited Liability Companies Act, including the financial statements for the group and the parent company. All shareholders in the company are entitled to attend and vote at the General meeting. The notice of meeting and agenda shall be sent out no later than 21 days prior to the date of the General meeting. Case documents for the General meeting are made available on the corporate website. In 2006, the General meeting appointed an election committee consisting of three external members. The Articles of Association were changed in 2008 to reflect this. Scana does not currently have a corporate assembly.

In accordance with the company’s Articles of Association, the company’s Board of Directors shall consist of 3-7 members who are elected by the General meeting for a two-year term. The age limit for Board members is 68; Board members must step down at the first annual general meeting following their 68th birthday. The Board’s duties and responsibilities are

Group objectives and corporate governance Corporate governance at Scana shall ensure that the Company’s business management is in line with universal and recognised interpretations and standards, together with legislation and regulations. Scana aims to follow the principles set out in the Norwegian Code of Practice for Corporate Governance to the extent applicable. Information on the code of practice can be found at www.nues.no.

The principles for corporate governance are specified in different governing documents for Scana’s business. The principles aim to ensure good interaction between the company’s various stakeholders, such as customers, employees, governing bodies, management and society as a whole.

The main objective of the group is to increase the values for shareholders. The following primary strategies have been determined on this basis:

1. Increased focus on the structure and development of the business areas

2. Continuing organic growth in all business areas3. Re-obtaining profitability and ensure effective financial

management4. Developing the repair and servicing concept within

propulsion and offshore5. Reinforcing the Group’s strategic position through

strategic collaborations/acquisitions6. Reducing exposure outside of the Group’s

commitment areas7. Development of property values

For 2013, the Board is prioritising good operations, including effective financial management.

Scana’s shareholder policy is to give its shareholders a competitive return in the form of dividends and an increase in market value. Scana will pursue a conservative share issue policy in which the interests of existing shareholders are given precedence.

Satisfactory long-term growth and financial performance should provide shareholders with a good total value trend over time. The company’s dividend policy must consider the need to maintain adequate levels of capital and allow for added value through new investments. Based on this, the Board believes it is appropriate that the long-term dividend constitutes 1/3 of the profit for

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other representatives of the group management. In line with requirements for the independence of the auditor, Scana will only use the appointed external auditor for work other than the statutory financial audit to a limited extent. Scana does not have its own internal auditing department, but uses resources from an external audit firm if the need for such audits arises.

With regard to shares held by Board members and senior employees, please see note 24 of the consolidated financial statements.

Reporting calendar Scana lndustrier publishes interim reports, financial statements and a comprehensive annual report in Norwegian and English. In 2010, the General meeting decided that documents relating to cases which are dealt with at the General meeting for the company, such as the annual report, could be made available on the company’s website, cf. Article 9 C of the Articles of Association.

determined by Norwegian law, and include the overall management and control of the group. The Board of Scana lndustrier is conscious of its responsibility to protect the interests of all owners, and its work has prioritised balancing traditional control and supervisory duties with discussions on strategy and other relevant topics. The composition of the Board takes into account the requirement for independence from the group management. There are specific guidelines in place for the Board and its work. Accordingly, the Board is responsible for the management of the group’s activities and for ensuring that legislation and regulations are complied with. The Board’s main duties include strategy, organisation, control and special tasks. The 2010 Annual General meeting decided that the Articles of Association should state that the tasks and dutiesof the audit committee are to be carried out by the full Board. This was to include the broadest skillset possible in the audit committee. The Board normally meets seven times a year. No profit-related remuneration or share option schemes have been introduced for any members of the Board.

Frameworks for option schemes and schemes for allocating shares to employees shall be dealt with and approved by the General meeting. A new share option scheme for senior employees was approved by the General meeting on 28 April 2010.

Scana’s objective is for the stock market to have accurate information on the group’s operations and position at all times so as to promote the most accurate pricing possible. Communication with the financial market is to be achieved by publishing all new, crucial information via stock exchange announcements and in the group’s annual reports, financial statements and interim reports.

The General meeting appoints an independent external auditor and sets their fee. Scana’s policy is to use the same auditors in all group companies where it is practical to do so, and where Scana alone can decide this. The external auditor shall confirm to the General meeting that the group and parent company’s financial statements have been submitted in accordance with current legislation and regulations. The auditor also attends Board meetings that deal with the financial statements. meetings may be arranged between the Board and auditor without the presence of the CEO or

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ARTICLES OF ASSOCIATION - SCANA INDUSTRIER ASA

§ 1 The company’s name is Scana Industrier ASA. The company is a Norwegian public limited company.

§ 2 The company’s objects are the ownership and management of industrial and commercial activities and any related business, and the ownership and management of properties. The company’s objects also include investment in other companies to further the company’s operations.

§ 3 The company’s head office is to be in Stavanger.

§ 4 The company’s share capital is NOK 359,839,062.50 divided into 287,871,250 shares each with a par value of NOK 1.25.

§ 5 The company’s shares are to be registered with the Norwegian Central Securities Depository (vPS).

§ 6 The company’s board is to have between three and seven members elected by the general meeting for a term of two years at a time. The upper age limit for board members is 68 years. members are to step down at the first annual general meeting after reaching the age of 68.

§ 6 B The entire Board of Directors shall exercise the Audit Committee’s tasks and duties according to the requirements of the Public Limited Companies Act at any time.

§ 7 The chairman of the board or the general manager together with a member of the board may sign on behalf of the company.

§ 8 General meetings are to be chaired by the chairman of the board.

§ 9 The following topics are to be considered and resolved at the annual general meeting:

i. Adoption of the profit and loss account and balance sheet, including the distribution of the profit for the year or covering of the loss for the year and the distribution of dividends.

ii. Adoption of the group profit and loss account and group balance sheet.iii. Election of the members and chairman of the board on the expiry of their term of office.iv. Emoluments payable to the board.v. Election of an auditor where a proposal for such has been made.vi. Approval of the auditor’s fees.vii. Any other business required to be transacted at the meeting in accordance with the law or the

articles of association.

§ 9 B The company is to have an election committee consisting of at least 3 members elected by the general meeting. The election committee is to prepare the election of board members for the general meeting, propose candidates to board duties and recommend the size of emoluments payable to the board. The general meeting may give directives as to how the election committee should work.

§ 9 C Documentation related to items to be treated by the AGm, inclusive of documents that by law should be included in or attached to the notice of annual general meeting, can be made available on the company’s homepage on the internet. The requirement for physical distribution is then not applicable. Shareholders can still request documentation related to items to be treated by the AGm to be distributed.

§ 10 In all other respects, reference is made to applicable company law.

Last amended 9th january 2012

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Queen Mary 2 is one of the world’s finest cruise ships. 345 meter long, 72 meter tall and with about 150 000 gross register tonnes she moves forwards, backwards and sideways using four controllable pitch propellers developed and produced by Scana Steel Stavanger. During the summer she is frequently visiting Stavanger while sailing along the Norwegian coastline.

NOK in millions, Except per Share Data Def. 2012 2011 2010 2009 2008 2007

Operating resultsTurnover 2 039 2 042 1 748 2 267 2 896 2 469Gross operating income EBITDA -34 -4 -44 263 350 327Operating profit / (loss) -152 -85 -111 201 277 266Profit before taxes -196 -107 -156 325 75 239Net Income -195 -83 -121 244 60 197Operating margin 1 -7.4% -4.1% -6.4% 8.8% 9.6% 10.8%Return on Capital Employed 2 -14.0% -7.2% -8.7% 15.2% 23.0% 25.2%Return on Equity 3 -32% -12% -15% 31% 8% 29%

Financial Position

Total Assets 1 750 1 906 1 815 1 990 2 248 1 904Gross Debt 4 452 509 517 496 611 495Cash and Cash Equivalents 5 13 38 101 140 139 206Net Debt 6 439 471 416 357 472 290Shareholders' Equity 7 570 630 731 873 723 724Gearing 8 0.79 0.81 0.71 0.57 0.85 0.68Equity Ratio 33% 33% 40% 44% 32% 38%

Share DataEarnings per Share 9 -0.68 -0.50 -0.71 1.51 0.27 1.11Cash Earnings per Share 10 -0.26 -0.17 -0.40 2.28 0.46 1.54Dividends per Share 11 0.00 0.00 0.00 0.30 0.30 0.50Shareholders' Equity per Share 2.09 3.76 4.36 5.22 4.32 4.33Share Price at Year End 12 1.23 1.98 7.06 7.83 8.20 18.90market value at Year End (in thousands) 354 082 332 385 1 183 913 1 310 225 1 372 139 3 162 613Shares Outstanding at Year End (in thousands) 272 676 167 871 167 693 167 334 167 334 167 334Weighted Avg. Shares Outst. (in thousands) 13 272 676 167 713 167 570 166 117 166 532 167 062

KEY FIGURES

Definitions:

1. Operating income as a percentage of total revenue.

2. Operating income as a percentage of average net working capital (i.e. less interest bearing items) plus average non-current assets

3. Net income attributable equity holders of parent divided by average shareholders’ equity.

4. The sum of short- and long-term debt.

5. Including tax deductions.

6. Gross debt less cash and cash equivalents.

7. Including minority interest.

8. Gross debt divided by shareholders’ equity.

9. Net income attributable equity holders of parent divided by weighted average shares outstanding.

10. Net income attributable equity holders of parent plus depreciation and amortization and deferred taxes divided by weighted average shares outstanding.

11. Proposed dividend 2012.

12. Scana was listed on the Oslo Stock Exchange main List on 4 December 1995.

13. Issue of new shares weighted with respect to dates for equity changes, and the company´s holding of own shares.

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Design and production: Printers as

Pictures: Cover: Anders Eliasson. Page 3: Scana Subsea. Page 4: Roar Hidle Bjorkhaug. Page 5 (Knut Øgreid, Bjørn Torkildsen and Elisabeth Saupstad): Private. Page 5 (others): Kjetil Alsvik. Page 7: Kjetil Alsvik. Page 8: Scana Steel Björneborg. Page 9: Scana Subsea. Page 11: Scana Offshore Technology. Page 13: Scana Subsea. Page 14: Scana Steel Björneborg. Page 15: Scana Steel Booforge. Page 16: Scana Steel Söderfors. Page 17: Sten Andersson. Page 18: Scana Subsea. Page 19: Scana Steel AB. Page 20: Sanco/Harald m. valderhaug. Page 21: Per Eide. Page 23 and 24: Scana Propulsion. Page 25: Per Eide. Page 27 og 28: Scana Offshore Technology. Page 29: Scana Steel Stavanger. Page 30: Scana Offshore vestby. Page 31 og 32: Scana Offshore Services. Page 33 og 34: Kjetil Alsvik. Page 35: Scana Korea Hydraulic. Page 36: Leshan Scana machinery. Page 37: Kjetil Alsvik. Page 38: Leshan Scana machinery. Page 39: Scana Offshore vestby. Page 41: Scana Steel Björneborg. Page 43: istockphoto. Page 44: Kjetil Alsvik. Page 101: Scana Steel Björneborg. Page 103: Kjetil Alsvik.

Thanks to: Kjell Inge Torgersen.

In case of any deviations or interpretation differences between the Norwegian and the English version of the annual report, the Norwegian version applies.

Scana Industrier ASAStrandkaien 2, P.O. Box 878, N-4004 Stavanger, NorwayTelephone +47 51 86 94 00, fax +47 51 91 99 80industrier@scana.no • www.scana.no

Scana Industrier ASAStrandkaien 2. P.o.box 878N-4004 Stavanger, NorwayTel: +47 51 86 94 00

SCANA ENERGY

Scana Steel Björneborg ABKristinehamnsvägen 2SE-680 71 Björneborg, SwedenTel: +46 550 251 00

Scana Steel Booforge ABP.o.box 55SE-691 21 Karlskoga, SwedenTel: +46 586 820 00

Scana Steel Söderfors ABP.o.box 104SE-81 504 Söderfors, SwedenTel: +46 29 31 77 00

Scana Machining ABP.o.box 235SE-681 25 Kristinahamn, SwedenTel: +46 550 847 00

Scana Subsea ABKristinehamnsvägen 2SE-680 71 Björneborg, SwedenTel: +46 55 02 53 90

Scana Steel ABP.o.box 55SE-691 21 Karlskoga, SwedenTel: +46 586 815 81

SCANA OTHER BUSINESS

Leshan Scana Machinery Co. Ltd.Guan’e Street. Shawan DistrictLeshan City. Sichuan ProvinceChina 614900Tel: +86 833 3445725

Scana do Brasil Industrias Ltda.Rua Lanro muller 116, Suite 2403Botafogo, Rio De janeiro, Rj 22290-160, BrazilTel: +55 (21) 3544 0000

SCANA PROPULSION

Scana Propulsion ASHamnegaten 24. P.o.box 205N-6101 volda, NorwayTel: +47 70 05 90 00

Scana Volda ASHamnegaten 24. P.o.box 205N-6101 volda, NorwayTel: +47 70 05 90 00

Scana Mar-El ASStorvegen 48N-3880 Dalen, NorwayTel: +47 35 07 58 00

Scana Zamech sp. z o.o.ul. Stoczniowa 282-300 Elblag, PolandTel: +48 55 2364820

Scana Singapore Pte. Ltd.21 Bukit Batok Crescent#18-73, WCEGA TowerSingapore 658065 Tel: +65 6872 2702

Scana Shanghai Trading Co. LtdRoom 1302, No 300 Huaihai Zhong RoadHongkong New World Tower, Shanghai, ChinaTel: +86 21 6288 8881 Ext. 103

Scana Propulsion USA, Inc.823 Carroll Street, Suite Cmandeville, Louisiana 70448, USATel: (985) 778-0614 (Office)

SCANA PROPERTY

Scana Property ASStrandkaien 2. P.o.box 878N-4004 Stavanger, NorwayTel: +47 51 86 94 00

SCANA OFFSHORE

Scana Offshore Technology ASDir. Poulsens gate 1N-4100 jørpeland, NorwayTel: +47 51 74 35 00

Scana Steel Stavanger ASDir. Poulsens gate 1N-4100 jørpeland, NorwayTel: +47 51 74 34 00

Scana Offshore Vestby ASTverrveien 4. P.o.box 24N-1541 vestby, NorwayTel: +47 64 95 65 00

Scana Offshore Services8901 jameel, Suite 100Houston, Texas 77040, USATel: +1713 460 0295

Scana Skarpenord ASSåheimsveien 2N-3660 Rjukan, NorwayTel: +47 35 09 18 00

Scana Korea Hydraulic Ltd. 73, Goldenroot-ro 130 beon-gil, juchon-myeonGimhae, Gyeognam, KoreaTel: +82 55 343 9007

Scana Skarpenord Shanghai Service StationNo. 851, Zhongshan Nan Er Rd.Shanghai 200032, ChinaTel: +86 21 64 33 08 18