Vow ASA — Investor Presentation 2014

Nov 18, 2014

Presentation of Q3 2014

18 November 2014

1. Q3 overview

• 1. Financials Q3-2014
• 1. Scanship at a glance

Consolidated in TNOK	Q3 2014	Q3 2013	YTD 2014	YTD 2013	FY 2013
Total Revenue	35 736	45 824	102 443	120 401	169 974
Gross margin %	30 %	29 %	33 %	28 %	31 %
EBITDA bef. Non-rec.	707	5 655	3 662	11 462	20 982
Operating Profit (EBIT)	517	5 347	682	10 600	19 890
Profit before Tax	2 969	2 533	1 512	1 456	7 188
Total Assets	140 472	88 544	140 472	88 544	101 401
Order Backlog	101 000		101 000

• Total revenue for the group lower in Q3 2014 and YTD 2014 compared to the same period in 2013, mainly due to a retrofit market on hold
• The newbuild segment per YTD 2014 has increased revenue compared to YTD 2013
• The company delivers higher Profit before Tax compared to last year
• Positive future outlook within newbuild, retrofit and aftersales
• New orders in Q3 2014 maintains Order Backlog at above TNOK 100 000

Revenue development

• Q1 2013 through Q3 2014 shows typical seasonal newbuild revenue with higher revenues in second half of the year
• Shipyards will place orders on several AWP and Waste Management Systems for scheduled newbuilds
• Scanship expects to maintain its share in a growing newbuild market
• Neither the company, nor its competitors have been awarded AWP retrofit contracts during Q3
• The company is working on several leads for possible retrofit contract awards
• Continued focus on commercial activities is expected to improve revenue in the Aftersales segment

Retrofit market on hold, but changes expected with new IMO standard

• Scanship AWP certified to comply with the new MEPC 227(64) for special area Baltic Sea with nutrient removal
• Scanship is the only supplier today that holds such approval suitable for larger cruise vessels
• IMO MEPC67 meeting in October 2014 did confirm the new standard for the Baltic Sea, with the date of enforcement to be decided during next IMO MEPC meeting in May 2015
• A slow retrofit market with absence of orders in the latest months may have been influenced by shipowners awaiting the outcome of the IMO MEPC Meeting
• The new standard is expected to be a driver for the AWP retrofit market, in same way as it has been for the cruise newbuilding market since 2010 where almost 60% of new constructions are, or will be prepared for the new standard

AWP retrofit market estimated to 2.3 BNOK, several vessels yet to adopt technology

New contracts in Q3 – Meyer Turku

• Contract awarded by Meyer Turku (former STX Finland) for delivery of AWP for two vessels being build for TUI Cruises, Mein Schiff 5 and Mein Schiff 6
• The main delivery of equipment will take place in the second Quarter of 2015 for Mein Schiff 5 and 2016 for Mein Schiff 6
• The contract includes options for equipment deliveries in 2017 for Mein Schiff 7 and in 2018 for Mein Schiff 8
• Scanship AWP is in compliant operation on Mein Schiff 3, the first vessel in this series of ship built in Finland launched earlier this year

Main Q3 activities – high newbuild momentum

• Completes commissioning of the advanced wastewater purification system on RCCL's Quantum of the Seas
• Major equipment deliveries has been made to the newbuild constructions Viking Sea, Carnival Vista, Norwegian Escape and Oasis of The Seas III
• Viking Ocean Cruises Viking Sea and Carnival Cruise Lines Carnival Vista are both being built at the Italian ship yard Fincantieri for ship delivery in 2016
• Norwegian Escape, for owner Norwegian Cruise Line, are being built at the German ship yard Meyer Werft for delivery in 2015
• Oasis of the Seas III, under construction at STX France for owner Royal Caribbean International will be delivered in 2016

Higher industry newbuild momentum creates more revenue opportunities – status Q3 2014

9

1. Q3 Overview

2. Financials – Q3-2014

1. Scanship at a glance

Consolidated Income Statement

		Unaudited	Unaudited	Unaudited	Unaudited	Audited
(NOK 1000)		Q3 2014	Q3 2013	YTD 2014	YTD 2013	2013
	Note	Jul - Sept	Jul - Sept	Jan - Sept	Jan - Sept	Jan-Dec
Revenue	2	35 736	45 824	102 443	120 401	169 974
Total operating revenue		35 736	45 824	102 443	120 401	169 974
Cost of goods sold		-24 923	-32 351	-68 935	-86 296	-116 979
Gross Margin		10 813	13 473	33 508	34 105	52 995
Gross Margin		30 %	29 %	33 %	28 %	31 %
Employee expenses		-6 441	-3 696	-16 048	-11 168	-16 278
Other operating expenses		-3 664	-4 122	-13 798	-11 475	-15 735
EBITDA before non-recurring items		707	5 655	3 662	11 462	20 982
Non-recurring items	3	-	-	-2 361	-	-
EBITDA		707	5 655	1 300	11 462	20 982
Depriciation and amortisation		-190	-308	-619	-862	-1 092
Operating profit (EBIT)		517	5 347	682	10 600	19 890
Finance income	4	4 682	278	7 573	1 969	3 042
Finance costs	4	-2 230	-3 092	-6 743	-11 113	-15 744
Profit before tax		2 969	2 533	1 512	1 456	7 188
Income tax revenue (+) /expense (-)		-1 067	-720	-393	-414	-2 043
Profit for the period		1 902	1 813	1 119	1 042	5 146

Consolidated Statement of Financial Position

		Unaudited	Unaudited	Audited
(NOK 1000)	Note	30.09.2014	30.09.2013	31.12.2013
ASSETS:
Non-current assets:
Property, plany and equipment		1 892	1 785	1 574
Intangible assets	5	17 195	11 118	12 503
Total non-current assets		19 087	12 903	14 077
Current assets:
Inventories		6 004	4 560	5 109
Trade receivables		36 557	21 986	23 809
Contracts in progress	2	60 564	42 813	52 195
Other Receivables		4 165	4 998	5 035
Cash and cash equivalents		14 096	1 284	1 177
Total current assets		121 385	75 641	87 325
Total assets		140 472	88 544	101 401

A number of equipment deliveries during the last part of the Quarter has led to higher trade receivables compared to 2013

Long term borrowing is reclassified to current borrowings due to maturity in less than 12 months. The company intends to increase it's bank overdraft facility to repay loan in Q4

		Unaudited	Unaudited	Audited
(NOK 1000)	Note	30.09.2014	30.09.2013	31.12.2013
EQUITY AND LIABILITIES
Equity:
Share capital	3	9 551	202	202
Share premium	3	77 450	-	-
Translation difference		-310	-	-434
Retained earnings		-31 618	-25 231	-21 127
Total equity		55 073	-25 029	-21 360
Liabilities
Deferred tax liabilities		5 457	6 740	6 817
Long term borrowings	6	-	29 900	19 967
Total non-current liabilities		5 457	36 640	26 783
Current liabilities
Current borrowings	6	19 900	-	10 000
Trade creditors	7	15 357	19 997	30 931
Contract accruals	2	31 192	24 233	22 058
Financial instruments	4	668	4 923	7 114
Income tax payable		-	833	823
Bank overdraft		9 181	18 828	14 290
Other Current liabilities		3 644	8 119	10 762
Total Current Liabilities		79 942	76 933	95 978
Total liabilities		85 400	113 573	122 761
Total equity and liabilities		140 472	88 544	101 401

(NOK 1000)	Q3 2014	Q3 2013	2013
	Unaudited	Unaudited	Audited
Profit before income tax	2 969	2 533	7 188
Adjustments:
Net cash flow from operating activities	-11 316	-3 016	4 371
Net cash flow from investing activities	-2 081	-951	-3 715
Net cash flow from financing activities	-10 100	-	-
Net change in cash and cash equivalents	-23 496	-3 967	656
Cash and cash equivalents ingoing balance	28 412	-13 577	-13 769
Cash and cash equivalents at end of period	4 915	-17 544	-13 113

Comments to Q3 2014:

• Total available cash and cash equivalents including overdraft facility amounts to 14 015
• Negative cash flow from operating activities mainly due several equipment deliveries late in the quarter and subsequent increased trade receivables
• Cash flow from investing activities mainly used for product development (TNOK 1 925)

• Cash flow from financing activities all relates to payment of instalment on loan

• 1. Q3 Overview
• 1. Financials Q3-2014
• 3. Scanship at a glance

Preferred supplier to the cruise industry for solutions preserving water and air resources

• Envirotech company solution provider for water purification and waste processing
• World leading cruise industry supplier
• Unique track record since 1993 with supplies to 49 newbuilds and 30 turnkey retrofits
• 16 large cruise vessels with firm deliveries until 2018 will be equipped with Scanship systems
• R&D driven with new game changing technologies under development
• One stop shop strategically located around the cruise liner and yard clusters

Business model scope of services

R&D	Sales & marketing	Engineering & Design	Procurement	Manufacturin g & assembly (outsourced)	Installation	Commissionin g	Aftermarket: Service, spares & chemicals
-----	----------------------	-------------------------	-------------	----------------------------------------------	--------------	-------------------	------------------------------------------------

Total clean ship solution – market leading technology

AWP (Advanced Wastewater Purification) system

Layout illustration of the Scanship AWP on the ship classes NCL Getaway and RCCL Quantum built at Meyer Werft in Papenburg, Germany

• treats all wastewater streams from onboard operations including galley water, reject water from foodwaste management systems and bio-residue treatment
• meets all IMO Marpol- and local port sate regulations such as Alaska and Baltic Sea (Helcom). System type approved according to IMO Marpol MEPC 227(64)
• compact, efficient and easy to operate, low cost with an attractive LCC and ROI
• 44 systems in operation, whereas 19 systems supplied to newbuilds and 25 systems as retrofits. 16 systems to be equipped on cruise newbuilds under construction until 2018

Waste Management system Food waste Incinerator Waste recycling Bio-sludge

Layout illustration for the Scanship Waste Management system on the Viking Star project at Fincantieri

• processes all garbage, foodwaste and bio residues from shipboard operations
• vacuum foodwaste conveying system to eliminate overboard discharge and risk of contamination
• incinerator system meets and exceeds the IMO Marpol Annex V standard
• recycled waste obtain savings and income from landing
• 49 systems in operation whereas 45 systems supplied to newbuilds and 4 systems supplied as retrofits. 5 systems being equipped on cruise newbuilds under construction until 2018

Summary of scanship's growth initiatives

Disclaimer (1/2)

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Scanship Holding ASA

Lysaker Torg 12 P.O. Box 465 1327 Lysaker Norway

Phone: +47 67 200 300 E-mail: mail@scanship.no

www.scanship.no