Scana — Interim / Quarterly Report 2010

Apr 28, 2010

Increased order inflow for Scana

The board of Directors of Scana Industrier ASA has today approved the accounts

for 1Q 2010 (attached).

A presentation of the business and accounts was done April 28'th in Stavanger

and will be given April 29'th at 07:30 hrs at Hotel Continental in Oslo.

A web-cast of the presentation (Norwegian) and the presentation material

(Norwegian / English) can be accessed at www.scana.no by the end of Friday.

For further information, please contact:

CEO Rolf Roverud, tel. +47 911 67 581, or

CFO Christian Rugland, tel. +47 952 952 55.

____________________________________________________________

Increased order inflow for Scana

·         Increased order inflow and increased  tendering activity in all market

segments.

·         Positive operating profit despite reduced turnover.

·         Strong profitability within the Marine business area.

·         Increased activity but strong price pressure within the Steel business

area.

·         Important contracts and major potential in the Oil & Gas business

area.

·         Improved order inflow and gradually better prices are expected to

increase activity and profitability from the fourth quarter of 2010.

Operating revenue totalled NOK 430 million in the first quarter, compared with

NOK 702 for the same period last year. The operating profit was NOK 1 million.

The operating revenue and result are characterised by lower activity and

considerable price pressure. Implemented cost measures contributed to a

profitable operation. The first quarter shows a break in the trend related to

tendering activity and order inflow, which will affect the result in 2010 and

Within the Steel business area there is still a limited demand within the energy

and marine segments. The demand is increasing within the steel- and machinery

segment. This has increased activity though at pressured prices. The downward

trend has turned and two of the companies within the Steel business area are

increasing from two to three shifts. The operating revenue and result in the Oil

& Gas business area reflect the fact that Scana does not have any major projects

and that activities related to sales, tendering and negotiations have reduced

the operating profit. The Marine business area continues to have a number of

ongoing new sales projects and a good level of activity within service and after

sales.

Net financial items were NOK 6 million in the first quarter as a result of a

positive change in value of forward contracts.

The net order inflow was NOK 434 million in the first quarter, which is

considerably higher than the last three quarters. The tendering activity has

increased in all of Scana's market segments.

The closing price for shares in Scana was NOK 8.00 at the end of the first

quarter, up from NOK 7.83 at the end of the fourth quarter. This gives a market

value for the group of NOK 1.34 billion. In the first quarter, 4.5 million

shares out of a total of 167 million outstanding shares were traded. Scana's

holding of own shares is 113 010. Scana has a Market Maker agreement in order to

increase the liquidity of its shares and ensure listing on the Oslo Børs Match

list.

Steel

Operating revenue totalled NOK 275 million in the first quarter. The operating

profit was NOK 6 million, which corresponds to an operating margin of 2%. The

result is characterised by reduced activity and considerable price pressure. A

high level of tendering activity, improved order inflow and activity growth

towards the end of the quarter nevertheless indicates a gradually stronger

market. Key customers have renewed their framework agreements with Scana for

The steel companies' cost-saving measures and ongoing work to streamline

processes are contributing to ensuring a profitable operation and positioning

Scana for growth.

The business area's net order inflow was NOK 278 million for the first quarter,

up from NOK 155 million in the fourth quarter of 2009. The order reserve was NOK

444 million.

The scrap steel prices increased somewhat throughout the first quarter. Alloy

prices are also increasing. In order to safeguard our operating margins, the

steel companies have, to a large extent, used contractual hedging to neutralize

the effect of raw material price fluctuations.

Marine

Operating revenue totalled NOK 132 million in the first quarter. The operating

profit was NOK 12 million, which corresponds to an operating margin of 9%. The

reduction in operating revenue from 2009 is due to the completion of projects

and reduced new sales. Scana is increasing the activity within service and after

sales services.

The order inflow was NOK 80 million in the first quarter, and the order reserve

is NOK 319 million. The order inflow contributes to maintaining a satisfactory

level of activity in 2010.

Oil & Gas

The operating revenue was NOK 31 million in the first quarter. The operating

result is NOK -11 million following low activity within service and maintenance,

and the fact that Scana had no major development projects in the quarter. In

addition, Scana has carried costs relating to development-, sales- and tendering

activities in the P&L.

The order inflow was NOK 99 million for the business area in the first quarter,

while the order reserve is NOK 97 million. Scana entered into a contract with

FMC for deliveries of risers to the Snorre platform in the North Sea. The group

is well positioned for other similar deliveries on a global basis.

Scana has strengthened its expertise in the basic organization and foreign

offices. This has lead to proximity to the customers and a considerable increase

in the level of tendering activity for oil & gas projects.

Accounts

This interim report has been prepared in accordance with the standard for

interim financial reporting, IAS 34, and IFRS. The same accounting principles

are applied in the quarterly report as in the annual accounts.

Financial performance

The group's total turnover was NOK 430 million in the first quarter. The

reduction from the same period in 2009 is attributed to  lower demand and

considerable price pressure in the group's market segments. The operating profit

was NOK 1 million. Net financial items totaled NOK 6 million, compared with NOK

70 million in the first quarter of 2009. Temporary changes in value linked to

currency contracts represent a gain of NOK 5 million in 2010. Scana hedges all

major contracts in foreign currency. The change in value must be entered

directly in the profit and loss account against finance in accordance with IFRS,

but cannot be realized and has no effect on liquidity.

The estimated tax for the first quarter is NOK 1 million, which is 19% of the

result before tax. The group's result before tax is, to a large extent, related

to the activity in China. Scana has used a tax loss carry forward in Norway to

reduce the tax payable.

Financial instruments are valued at fair value. Changes in value that satisfy

requirements for hedge accounting are recorded against the total comprehensive

income. In the first quarter, such instruments had a fall in value of NOK 5

million. Translation differences from foreign subsidiaries and the elimination

of agio related to the hedging of net investments have changed the total

comprehensive income by NOK -6 million and NOK 12 million respectively.

The earnings per share was NOK 0.02 for the first quarter 2010.

Cash flow

The operating profit was NOK 1 million after depreciation totaling NOK 17

million. Net cash flow from operational activities was NOK 68 million in the

first quarter, of which the reduction in working capital totaled NOK 49 million.

Activated costs and investments in fixed assets totaled NOK 11 million, net

after proceeds from  sale of fixed assets. Net cash flow from financing

activities is negative, at NOK 59 million, of which NOK 13 million is

installments on long-term loans and NOK 41 million is reduced utilization of

long-term credit facilities. Current liabilities were reduced by NOK 3 million.

The net cash flow was accordingly NOK -2 million. The group's cash and cash

equivalents totaled NOK 140 million at the end of the first quarter. In

addition, the group has a satisfactory level of unused credit facilities.

Balance sheet and capital position

Scana has a healthy financial position, with a low level of debt. The total

balance sheet at the end of the first quarter 2010 was NOK 1 925 million; a

reduction of NOK 201 million from the same period in 2009. The group's net

interest-bearing debt was NOK 311 million. Book equity of NOK 880 million

corresponds to NOK 5.27 per share and an equity ratio of 46%.

Outlook

Scana's main products are niche oriented, and they are leading products within

their market segments. After several years of turnover growth and higher

margins, this trend was reversed in 2009 due to a significantly weaker

international economy. Scana anticipates a continued weak market in the Marine

business area and a volatile, but gradually stronger, market for traditional

industry. Scana's measures within the Oil & Gas business area are expected to

result in a significant increase in the order inflow from the first half of

2010 and gradually increase the level of activity throughout the year. In the

longer term perspective, a strong and modernized production capacity, combined

with activity growth and somewhat better prices, will result in significantly

increased turnover and earnings for Scana.

The products Scana supply within the Steel business area has a very high steel

grade. Deliveries to customers within steel and machinery have increased

considerably and are expected to maintain at a satisfactorily level. Scana

enters into short-term contracts when the prices are low, since the prices are

gradually expected to increase. Scana expects gradually increased activity

within the energy segment. Within the marine segment demand is expected to be

low until 2011.

The economic downturn and continued low number of new contracts will result in a

reduction in activity in Scana's marine companies in 2010. Scana has

strengthened the sales and marketing work, and is strengthening its positions in

emerging markets. The focus on service and after sales increase turnover and has

a positive effect on the result.

The group has developed several advanced products and systems in the Oil & Gas

area in recent years that have created interest. Multi-disciplinary training,

extensive expertise within materials technology and the capability for in-house

production of special components mean substantial future potential both for

existing niche products and for products under development. The order inflow is

expected to increase considerably in 2010 as a result of the group's structural

measures and increased focus on the world's most active oil and gas markets. The

founding of Scana Subsea will simplify the customers' business process linked to

specialized equipment, and provide Scana with considerable business

opportunities on a global basis. In addition, new business in Brazil will mean

major growth potential for the company in a growing market. Profitability within

Oil and Gas is dependent on Scana being awarded major projects to achieve a

satisfactory result.

Scana's  implemented measures to adapt its capacity and consumption of resources

to a lower demand and the effect of increased price pressure, has an annual

effect of NOK 200 million. Scana has released working capital and introduced a

strict prioritization of its investment resources. This enables the group to

ensure a satisfactory level of liquidity and a strong balance sheet.

Board of directors in Scana Industrier ASA

28 April 2010

This information is subject of the disclosure requirements acc. to §5-12 vphl

(Norwegian Securities Trading Act)

[HUG#1409439]