Scana — Interim / Quarterly Report 2014

Aug 13, 2014

Interim report, second quarter and first half year 2014

Scana Industrier 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 forms of energy and marine activities for the offshore area. Scana also provides servicing, maintenance and repairs for customers in the same markets.

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

Scana Industrier ASA has subsidiaries in Norway, Sweden, China, the USA, Poland, Singapore, Brazil and South Korea. The Group's head office is in Stavanger.

Improvements but challenges remain:

• Revenue was NOK 909 million in the first half of 2014 with EBITDA of NOK 14 million.
• Revenue of NOK 445 million in the second quarter of 2014, with EBITDA at NOK 6 million.
• Scana Energy and Scana Offshore are showing a positive trend for the first half of the year and are delivering positive EBITA of 6% and 10% respectively.
• The sale of Scana Offshore Technology, Scana Offshore Services and the workshop part of Scana Offshore Vestby was concluded in the second quarter.
• Large staffing reductions have been and are being implemented in the group.
• During the first half of the year, Scana paid off interest-bearing debt to a total of NOK 116 million.

Financial performance

First half of the year

The group's total revenue was NOK 909 million in the first half of 2014, compared with NOK 819 million for the same period in 2013, an increase of 11%. EBITDA was NOK 14 million, which is equivalent to an EBITDA margin of 2 per cent compared with -3 per cent for the corresponding period in 2013 (NOK -29 million).

Net order inflow in the first half of the year amounted to NOK 655 million. The order reserve at the end of the first half of 2014 was NOK 682 million.

Net financial items were NOK -7 million for the first half of 2014, compared with NOK - 21 million for the first half year of 2013. These consist mainly of agio items worth NOK 12 million, net interest expenses of NOK -14 million and other net financial expenses amounting to NOK -5 million. Scana hedges all major contracts in foreign currency. Temporary changes in value is entered directly into the statement of income in accordance with IFRS.

The estimated tax for the first half year is NOK 0 million. Scana's tax loss carry forward is used to reduce the tax payable.

Financial instruments are valued at fair value. Changes in value that satisfy the requirements for hedge accounting are recorded against the total profit. In the first half of the year, such instruments fell in value by NOK 6 million.

Earnings per share were NOK -0.11 for the first half of 2014.

Second quarter

The group's total revenue was NOK 445 million in the second quarter of 2014, compared with NOK 406 million for the same period in 2013. This is a rise of 10 per cent. EBITDA was NOK 6 million, which is equivalent to an EBITDA margin of 1 per cent compared with -3 per cent for the corresponding period in 2013 (NOK -13 million).

Net order inflow in the second quarter was NOK 245 million adjusted for cancellations.

Earnings per share were NOK 0.01 for the second quarter.

			Quarters				Year to date	Full Year
NOK million	Q2 14	Q2 13	Q1 14	Q4 13	Q3 13	2014	2013	2013
Operating revenue	445	406	464	455	388	909	819	1 662
EBITDA	6	-13	8	-29	-13	14	-29	-71
Operating profit EBIT	-10	-31	-7	-157	-31	-17	-64	-252
Operating margin %	-2 %	-8 %	-2 %	-35 %	-8 %	-2 %	-8 %	-15 %
Profit before tax	-11	-34	-13	-162	-45	-24	-85	-293
Order inflow	245	341	410	392	378	655	715	1 484
Order reserve	682	993	838	896	967	682	993	896

Performance of key figures:

Cash flow

Net cash flow from operating activities amounted to NOK -38 million in the first half of the year, of which NOK -77 million was tied up in increased working capital. Net cash flow from investing activities was NOK 138 million, of which the sale of its shares represents the main part when considering the half year as a whole. Net cash flow from financing activities was NOK -77 million. Financing activities include paying off interestbearing debt amounting to net NOK 58 million and interest and other financial expenses of NOK -19 million. Net cash flow in the first half of the year was therefore NOK 22 million.

The group's total cash and cash equivalents, viewed in context with the company's strategic initiatives, are considered to be limited, but sufficient.

Balance sheet and capital position

Total assets at the end of the first half of 2014 were NOK 1,388 million, compared with NOK 1,538 million at the end of 2013. The group's net interest-bearing debt was NOK 367 million.

A carrying amount for equity of NOK 403 million corresponds to NOK 5.36 per share and an equity ratio of 29 per cent.

The group has negotiated a waiver with the bank syndicate for the second quarter.

Share price trend

The closing price for shares in Scana was NOK 1.64 at the end of the second quarter. The closing price at the end of 2013 was NOK 1.91.

Scana holds 11,301 of its own shares. Scana has 75,118,301 shares in total. Scana has a Market Maker agreement to increase the liquidity of its shares and ensure listing on the Oslo Børs Match list.

BUSINESS AREAS

Scana Energy

This business area includes the companies Scana Steel Björneborg AB, Scana Subsea AB and Scana Machining AB.

First half of the year

Operating revenue amounted to NOK 304 million in the first half of 2014, compared with NOK 282 million in the corresponding period in 2013. EBITDA for the first half of the year was NOK 19 million, which is equivalent to a 6 per cent EBITDA margin, compared with 0 per cent for the corresponding period in 2013.

Second quarter

Operating revenue amounted to NOK 150 million in the second quarter of 2014, compared with NOK 136 million in the corresponding period in 2013. EBITDA for the second quarter was NOK 9 million, which is equivalent to a 6 per cent EBITDA margin, compared with 2 per cent for the corresponding period in 2013.

Orders and market

The business area's net order inflow was NOK 245 million in the first half of the year. The order reserve amounts to NOK 276 million compared with NOK 359 million at the same point in 2013. The business area's net order inflow was NOK 130 million in the second quarter.

There is still a weak market within important segments for the business area, something which together with the overcapacity in terms of the manufacturers creates price pressures and weak profitability.

Cost reductions implemented at Scana Steel Björneborg are beginning to have a positive effect on profits.

Cost reductions and colocation for Scana Machining is being implemented.

Establishment of a shared organisation for Scana Energy is implemented.

New customer relations have been established in Asia and on the American continent.

Scana Propulsion

Reporting for this area includes the production units of Scana Volda AS and Scana Mar-El AS as well as service and sales offices in Poland, Singapore, China, Brazil and the USA.

First half of the year

Operating revenue amounted to NOK 167 million in the first half of 2014, compared with NOK 193 million in the corresponding period in 2013. EBITDA for the first half of the year was NOK -8 million, which is equivalent to a -5 per cent EBITDA margin, compared with 4 per cent for the corresponding period in 2013.

Second quarter

Operating revenue amounted to NOK 80 million in the second quarter of 2014, compared with NOK 95 million in the corresponding period in 2013. EBITDA for the second quarter was NOK -1 million, which is equivalent to a -2 per cent EBITDA margin, compared with 5 per cent for the corresponding period in 2013.

Orders and market

Order inflow totalled NOK 144 million in the first half of the year. The order reserve amounts to NOK 135 million compared with NOK 131 million at the same point in 2013. The business area's net order inflow was NOK 51 million in the second quarter.

Staffing and cost reductions which will provide yearly savings of NOK 24 million are being implemented at Scana Volda.

Further cost reductions have been determined and will be implemented at Scana Zamech.

Scana Volda has delivered the first CRP system. Sea tests show good results linked to fuel economy and operationality.

Scana Offshore

Reporting for this area includes the companies Scana Offshore Vestby AS and Scania Skarpenord AS.

First half of the year

Operating revenue amounted to NOK 140 million in the first half of 2014, compared with NOK 76 million in the corresponding period in 2013. EBITDA for the first half of the year was NOK 14 million, which is equivalent to a 10 per cent EBITDA margin, compared with -15 per cent for the corresponding period in 2013.

Second quarter

Operating revenue for the business area amounted to NOK 76 million in the second quarter of 2013, compared with NOK 36 million in the corresponding period in 2013. EBITDA for the second quarter was NOK 10 million, which is equivalent to a 13 per cent EBITDA margin, compared with -19 per cent for the corresponding period in 2013.

Orders and market

Order inflow totalled NOK -13 million in the first half of the year. The order reserve amounts to NOK 177 million compared with NOK 324 million at the same point in 2013.

In January 2011 Scana Industrier ASA announced that its subsidiary Scan Offshore Vestby had entered a contract with Ecovix for the delivery of offloading stations for the Tupi and Guara field in Brazil.

The original contract value was approx. NOK 350 million and consisted of deliveries for hydraulic/mechanical unloading systems and hoses for eight FPSOs. Customers and operators have, after entering into contracts, changed the delivery schedule for the project. The changes make it natural to defer production of hoses, because the hoses have limited life time. Hoses for remaining parts of deliveries were therefore cancelled by the customer in the second quarter. The new total contract value is approx. NOK 270 million. The remaining deliveries associated with the contract are expected to be completed by the end of 2014.

Negotiations connected to the cancellation have also led to changes in the contractual relationship which generally improves Scana's project risk and project margin in the

contract. The accounting effect is incorporated into the accounts for the second quarter.

In the second quarter Scana Offshore Vestby signed a contract with Teekay for delivery of an unloading system to the Gina Krog project.

Scana Skarpenord has been delivering revenues close to the budget with a positive operating margin during the first half of the year. The company has shown a positive order inflow from markets in China and South-Korea in the second quarter.

Scana Property

First half of the year

Operating revenue amounted to NOK 21 million in the first half of 2014, compared with NOK 18 million in the corresponding period in 2013. EBITDA for the first half of the year was NOK 15 million, compared with NOK 13 million for the corresponding period in 2013.

Second quarter

Operating revenue amounted to NOK 4 million in the second quarter of 2014, compared with NOK 14 million in the corresponding period in 2013. EBITDA for the second quarter was NOK 1 million, compared with NOK 11 million for the corresponding period in 2013.

During the first half of the year, Scana Property has sold several smaller properties. The work on the "Fjordbris Concept" is going according to plan. Scana Propery continuously evaluating various properties for sale.

Other companies

Reporting for this area mainly covers the companies Scana Steel Stavanger AS, Scana Steel Söderfors AB and Scana Steel Booforge AB.

First half of the year

Operating revenue amounted to NOK 326 million in the first half of 2014, compared with NOK 316 million in the corresponding period in 2013. EBITDA for the first half of the year was NOK 0 million, which is equivalent to a 0 per cent EBITDA margin, compared with -6 per cent for the corresponding period in 2013 (NOK -18 million).

Second quarter

Operating revenue amounted to SEK 157 million in the second quarter of 2014, compared with SEK 157 million in the corresponding period in 2013. EBITDA for the second quarter was NOK 1 million, which is equivalent to a 1 per cent EBITDA margin, compared with -8 per cent for the corresponding period in 2013 (NOK -13 million).

Orders and market

Order inflow totalled NOK 278 million in the first half of the year. The order reserve totals NOK 94 million compared with NOK 181 million at the same point in 2013. The business area's net order inflow was NOK 122 million in the second quarter.

During the first half of the year, vigorous staffing reductions were implemented in Scana Steel Stavanger. A decision was made in the second quarter to close the cast line. Implementation of this measure will be carried out in the second half of the year.

Scana Steel Söderfors negotiated a contract with SSAB during the second quarter which is signed in the third quarter. The contract is important for increased capacity utilisation and improved profitability.

Scana Steel Booforge has been delivering revenue and margins above budget during the first half of the year.

Outlook

The main focus for Scana in 2014 is to re-generate profitability within its business areas. In addition, Scana will continue the projects for strategic development of the group and will continue working to achieve property values and assets that are not defined as core business.

The group will continue to practice a careful investment policy and expects improved cash flow from regular operations that will stabilise the liquidity situation and allow a stronger focus on value-creating activities.

The group is in discussions with a bank syndicate to negotiate adjusted conditions for covenants and payment structures.

Scana is continuing to work with a revised strategic platform for the remaining Offshore companies in 2014. The market within the production of propulsion systems for special vessels is expected to improve slightly. The market for forged products is expected to continue with pressure on prices. Scana is therefore looking at niche-oriented markets with high refinement ratios.

Switching production to more advanced and complete products and components for the market (including oil and gas) is well underway through new organisation platforms in Scana Energy and Scana Propulsion. It is expected that Scana's market position and earnings potential will be improved through initiatives within each of the business areas. Measures to further strengthen the company's market position is under implementation.

It is the opinion of the Board of Directors that the company's liquidity position will continue to be challenging, and that is why efforts are being made towards future, long-term financing. The company's Board of Directors and management are working determinedly with cost-reducing measures that will allow Scana to be in a position to deliver profitable operations.

Stavanger, 13 August 2014 The Board of Directors and the Group CEO Scana Industrier ASA

Profit and Loss Account - Group

	Quarters					Year to date	Full Year
NOK million	Q2 14	Q 2 13	Q1 14	Q4 13	Q313	2014	2013	2013
Total operating revenues	445	406	464	455	388	909	819	1662
Raw materials and consumables	148	124	153	82	119	301	259	460
Change in stocks and FG and WIP	$-6$	-6	$-10$	80	16	$-16$	$-19$	77
Wages and NI contributions	163	169	171	175	138	334	339	652
Other operating costs	133	132	143	147	128	276	268	543
Depreciation/amortization/writedowns	16	18	15	128	18	31	35	181
Total operating costs	455	437	472	613	419	926	883	1914
Operating profit / (loss) - EBIT	$-10$	$-31$	$-7$	$-157$	$-31$	$-17$	$-64$	$-252$
Interest income	$\mathbf{1}$	1	1	1	1	$\overline{2}$	$\mathbf{1}$	3.
Interest expense	$-7$	-9	$-8$	$-9$	$-8$	$-15$	$-15$	$-32$
Net currency gain / loss (-)	10	6	$\overline{2}$	8	-6	12	1	3
Other financial income / expense (-)	$-5$	$-1$	$-0$	$-6$	$-1$	$-5$	$-8$	$-15$
Net financial income / expense (-)	$-1$	$-3$	$-5$	$-5$	$-14$	$-7$	$-21$	$-40$
Profit / (loss) before taxes	$-11$	$-34$	$-13$	$-162$	$-45$	$-24$	$-85$	$-293$
Taxation	$-2$	$-2$	$\overline{2}$	19	-6	$-0$	$-7$	6.
Net profit / (loss) - continued operation	$-9$	$-31$	$-15$	$-181$	$-39$	$-24$	$-78$	$-298$
Net profit / (loss) - discontinued operation	10	$\mathbf{1}$	6	10	14	15	2	25
Net profit / (loss)	$\overline{1}$	$-30$	-9	$-171$	$-26$	$-8$	$-77$	$-274$
Attributable to:
Equity holders of the parent	$\mathbf{1}$	$-31$	$-9$	$-171$	$-26$	$-8$	$-79$	$-276$
Minority interests	$\overline{0}$	1	0	0	Ū.	$\overline{0}$	$\overline{2}$	2
Earnings per share - continued operation	0,01	$-0,55$	$-0,12$	$-2,28$	$-0,34$	$-0,11$	$-1,82$	$-4,65$
Diluted earnings per share - continued operation	0,01	$-0,55$	$-0,12$	$-2,28$	$-0,34$	$-0,11$	$-1,82$	$-4,65$
Other comprehensive income
Net movement in value of cash flow hegdes	3	$-1$	$-2$	-3	4	$\overline{1}$	2	3
Net gain /loss on hegde of net investment	$\overline{1}$	-0	5	5	$-12$	6	$-9$	$-15$
Exchange difference on translations of foreign operations	10	7	$-11$	3	$-18$	$-1$	24	9
Other comprehensive income	14	6	$-8$	5	$-26$	6	18	$-3$
Total comprehensive income	14	$-25$	$-17$	$-166$	$-52$	$-2$	$-59$	$-277$
Key Figures:
EBITDA	6	$-13$	8	$-29$	$-13$	14	$-29$	$-71$
EBITDA margin - %	1%	$-3%$	2%	$-6%$	$-3%$	2%	$-3%$	$-4%$
EBIT margin - %	$-2%$	$-8%$	$-2%$	$-35%$	$-8%$	$-2%$	$-8%$	$-15%$
Order intake - continued operation	245	341	410	392	378	655	715	1484
Order reserve - continued operation	682	993	838	896	967	682	993	896

1989 - Jan Barnett, fransk politiker

Balance Sheet - Group

NOK million	30.06.14	30.06.13	31.03.14	31.12.13	30.09.13	30.06.14	30.06.13	31.12.13
Intangible fixed assets	33	96	35	68	96	33	96	68
Deferred tax assets	0	18	0	0	17	$\theta$	18	0
Property, pland and equipment	501	650	512	575	663	501	650	575
Financial fixed assets	43	20	42	43	20	43	20	43
Total fixed assets	577	783	588	686	796	577	783	686
Inventory	256	347	250	265	329	256	347	265
Trade debtors	469	442	463	522	550	469	442	522
Derivates		$\overline{2}$			$\overline{2}$	1	2	1
Cash and cash equivalents	85	13	15	63	54	85	13	63
Assets held for sale	0	281	164	0	0.	$\mathbf 0$	281	0
Total current assets	811	1084	894	853	935	811	1084	853
Total assets	1388	1868	1482	1538	1732	1388	1868	1538
Paid-in capital	612	612	612	612	613	612	612	612
Other equity	$-210$	10	$-224$	$-207$	$-41$	$-210$	10	$-207$
Minority interests	0	22	0	0	0	$\mathbf 0$	22	0
Total shareholders' equity	403	645	389	405	571	403	645	405
Interest bearing loans and borrowings	$\overline{4}$	16	9	17	15	4	16	17
Derivates	10	8	9	9	7	10	8	9
Deferred tax	27	45	27	32	42	27	45	32
Other non-current liabilities	$\overline{2}$	5	$\overline{2}$	$\overline{2}$	5	$\overline{2}$	5	2
Total non-current liabilities	44	74	48	60	70	44	$\overline{74}$	60
Interest bearing loans and borrowings	449	459	474	517	557	449	459	517
Derivates	6	11	10	11	5	6	11	11
Liabilities held for sale	۵	89	73	0	n.	n	89	0
Other current liabilities	486	590	489	545	529	486	590	545
Total current liabilities	941	1 1 4 9	1046	1073	1090	941	1 1 4 9	1073
Total liabilities and shareholders' equity	1388	1868	1482	1538	1732	1388	1868	1538
Key Figures:
Equity ratio	29%	35%	26 %	26 %	33%	29%	35%	26%
Gross debt	453	475	483	534	572	453	475	534
Net debt	367	463	468	470	518	367	463	470
Gearing (gross debt divided by shareholders' equity)	1,1	0,7	1,2	1,3	1,0	1,1	0,7	1,3

Cash Flow Statement - Group

Cash Flow Statement - Group		Quarters		Year to date	Full Year
NOK million	02 14	Q 2 13	2014	2013	2013
Profit / (loss) before tax	$-11$	$-34$	$-24$	$-85$	$-293$
Profit / (loss) before tax - discontinued operation	11	2	19	2	30
Tax paid	$-2$	$-1$	$-3$	$-2$	$-1$
Gain / loss - discontinued operation	$-8$	-0	$-8$	-0	$-15$
Currency exchange differences and gain/loss on sale of fixed assets and non cash element	23	$-15$	$\overline{7}$	$-18$	-6
Depreciation/amortization/writedowns	17	21	34	41	190
Net interest expense	6	9	14	16	31
Change in net working capital	$-29$	$-8$	$-77$	$-44$	$-29$
Net cash flow from operating activities	7	$-26$	$-38$	$-91$	$-93$
Proceeds from sale of property, plant and equipment	4	12	25	12	12
Purchase of property, plant and equipment	$-10$	$-13$	$-12$	$-20$	$-51$
Proceeds from sale of shares	108	0	129	0	72
Cash disposed as a part of discontinued operations	$-4$	0	$-4$	$\Omega$	$-20$
Investments in business	٥		0	$-4$	$-4$
Net cash flow from investing activities	98	0	138	$-12$	9
Proceeds from long-term borrowings	0	0	0	0	0
Repayment of long-term borrowings	-5	-0	-5	$-1$	$-1$
Proceeds from short-term borrowings	$\overline{0}$	$\mathbf{0}$	0	60	135
Net increase/(decrease) in short-term borrowings	$-23$	$-88$	$-54$	$-57$	$-97$
Paid-in capital	0	131	0	131	131
Paid dividend	$\overline{0}$	$\mathbf{0}$	0	$\mathbf 0$	0
Paid other finance cost	$-1$	-0	$-4$	-6	$-11$
Net paid interest	-6	$-7$	$-15$	$-11$	$-25$
Net cash flow from financing activities	$-35$	35	$-77$	117	133
Net cash flow	70	9	22	14	49
Cash and cash equivalents at beginning of period	15	18	63	13	13
Net foreign exchange difference	٥		$-0$	$\overline{2}$	2
Cash and cash equivalents at end of period	85	28	85	28	63

Statement of change in shareholders equity - Group

					Currency		Reserves Total equity
	Issued		Own Other paid-	Retained	translation for change ex. minority			Minority
NOK million	Capital	shares	in capital	earnings	reserves	in value	interests		interest Total equity
Equity at 1 January 2013	360		119	71	18	$-18$	549	20	570
Total comprehensive income current period				-78	16		-61		-59
Share option programme							0		0.
Changes - paid in capital	$-285$		418				134		134
Equity at 30 June 2013	75	0	537		33	-16	623	22	645

Notes - Consolidated financial statements

Note 1 - Overall information

The consolidated financial statements for Scana Industrier ASA for the first half of 2014 were approved by the Board of Directors on 13 August 2014. The accounting numbers have not been audited. The report has been prepare

Note 2 - Segment information
			Quarters				Year to date	Full Year
NOK million	Q 2 14	Q 2 13	Q1 14	Q4 13	Q313	2014	2013	2013
Energy:
Turnover	150	136	154	169	134	304	282	585
EBITDA	9	$\overline{2}$	9	5	3	19	$-0$	7.
EBITDA margin	6%	2%	6%	3%	2%	6%	0 %	1%
Order intake	130	103	115	138	102	245	205	446
Order reserve	276	359	301	333	355	276	359	333
Propulsion:
Turnover	80	95	87	73	82	167	193	347
EBITDA	$-1$	4	$-7$	$-12$	$-2$	$-8$	8	$-6$
EBITDA margin	$-2%$	5%	-8%	$-17%$	$-2%$	$-5%$	4%	$-2%$
Order intake	51	63	93	79	99	144	113	291
Order reserve	135	131	163	155	147	135	131	155
Offshore:
Turnover	76	36	64	68	48	140	76	192
EBITDA	10	$-7$	4	$-15$	0	14	$-11$	$-26$
EBITDA margin	13%	$-19%$	7%	$-22%$	1%	10%	$-15%$	$-13%$
Order intake	$-59$	38	46	49	20	$-13$	123	192
Order reserve	177	324	261	278	296	177	324	278
Other Business:
Turnover	157	157	168	179	147	326	316	643
EBITDA	$\mathbf{1}$	$-13$	$-1$	0	$-8$	$\overline{0}$	$-18$	$-26$
EBITDA margin	1%	$-8%$	$-1%$	0 %	$-5%$	0%	$-6%$	$-4%$
Order intake	122	137	156	125	157	278	274	556
Order reserve	94	181	113	130	169	94	181	130
Property:
Turnover	4	14	17	5	4	21	18	27
EBITDA	$\mathbf{1}$	11	14	1	$\mathbf{1}$	15	13	15
Other / Elimination:
Turnover	$-22$	$-33$	$-27$	$-40$	$-27$	$-49$	-66	$-132$
EBITDA	$-14$	$-11$	$-12$	$-8$	$-7$	$-26$	$-20$	$-35$

Note 3 - Interest-bearing debt
Per 30.06.14	Current	Long-term
Total interest-bearing debt	448752	4150
Per 30.06.13	Current	Long-term
Total interest-bearing debt	458 995	16449

Interest bearing debt consists of a term loan with original value of SEK 348 million, a multicurrency overdraft facility of NOK 130 million and a bank
guarantee facility of NOK 150 million. The syndicate loan facility were the banksyndicate for the second quarter

Scana has during second quarter repaid SEK 27.5 million of the term loan. I addition Scana has repaid a loan at Handelsbanken by NOK 4.6 million.

Note 4 - Impairment test

Property, plant and equipment and intangible assets are 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
also uses a sensitivity analysis which tests the impairment tests operating margin, the discount rate and rate of growth for the period 2014-2018. This means that there will be uncertainty in the outcome of the calculations.

The group has not done any impairment in second quarter of 2014.

Note 5 - Sale of business

Sale of the subsidiaries Scana Offshore Technology AS, Scana Offshore Services Inc. and the workshop part of Scana Offshore Vestby AS were finalized in second quarter. The buyer is Aquamarine Subsea AS, which is owned by HitecVision fund VI

The company achieved revenues amounting to MNOK 212 in 2013 and has around 130 employees. The transfer of the shares has taken place in May 2014.
The sale has a postiv in the group accounts effect.

In 2008 Scana Offshore Services was bought by local entrepreneurs in Houston, USA. In the lastyear the company has experienced avery positive trend, and after relocating to larger production facilities and introducing its own products, it increased its market shared in the Gulf of Mexico. Scana Offshore Technology was established in December 2006 in Jarpeland, outside equipment for the oil and gas industry. Scana Offshore Vestby was formed following the acquisition of Brødrene Johnsen AS and AMT AS in 2006. The workshop part of Scana Offshore Vestby provides maintenance for risers, among other things.

The overview below shows the profit & loss related to the companies above.

Note 5 - Sale of business
			Quarters	Year to date	Full Year
NOK million	Q 2 14	Q 2 13	Q1 14	Q4 13	Q313	2014	2013	2013
Total operating revenues	46	-54	80	62	-51	126	99	212
Total operating costs	43	52	72	62	47	115	98	207
Operating profit / (loss) - EBIT	3					11
Pre-tax income								6
Тах
Net profit / (loss) - disontinued operation			6	0			0

Note 6 - Other comprehensive income

The table shows a change in value associated with cash flow hedging relating to hedging electricity prices in the business activities in Sweden and Scana
Steel Stavanger AS and cash flow hedging of the interest rate for pa Swedish business activities and translation differences are presented. All of these items may be reclassified in the profit and loss section in later periods.

Note 7 - Tax

Noto 8 Earning nor charge

Tax is calculated based on profit/loss before tax with associated tax rates in countries where the business activities are located. The group has tax loss carry forward in several countries. The tax loss carry forwards are included in deferred tax asset to the extent it is expected that sufficient revenue will be generated within the deadlines that apply in each individual country. Deferred tax assets are fully written down for the group.

MOTE A - FALLILLIA DEL SHALE
			Quarters			Year to date	Full Year
NOK	Q 2 14	Q213	Q1 14	Q4 13	Q3 13	2014	2013	2013
Earnings per share - continued operation	$-0,12$	$-0.55$	$-0,20$	$-2,41$	$-0,52$	$-0.31$	$-1,81$	$-5,03$
Diluted earnings per share - continued operation	$-0,12$	$-0,55$	$-0,20$	$-2,41$	$-0,52$	$-0,31$	$-1,81$	$-5,03$
Earnings per share - discontinued operation	0.13	$-0.00$	0,08	0,13	0.18	0,20	$-0.01$	0,39
Diluted earnings per share - discontinued operation	0,13	$-0,00$	0,08	0,13	0,18	0,20	$-0,01$	0,39
Earnings per share	0.01	$-0.55$	$-0.12$	$-2.28$	$-0.34$	$-0,11$	$-1,82$	$-4.65$
Diluted earnings per share	0,01	$-0,55$	$-0,12$	$-2,28$	$-0,34$	$-0,11$	$-1,82$	$-4,65$