CEO's comments

2009 turned out to be a special year for Scana, as it was
for many businesses world-wide. After several years of
increasingly higher turnover and improved operating results
for Scana, the financial crisis and economic downturn came
upon us during the fall of 2008. Our customers’ inventories
were too big and had to be reduced. Planned projects were
postponed or cancelled. The consequences were fewer
requests from customers in need of our products. We saw it
evolving and acted immediately. That is why Scana has been
able to deliver a satisfying result even in 2009.

Our order intake at the outset of 2009 was robust. A good
order reserve plus forceful measures have made sure that
margins have been kept at a satisfying level, even though the
general activity was reduced and the pressure on prices has
been high.

We do not control the global market, but we control our own costs. Accordingly, we quickly reduced our workforce
by 300 employees through temporary and permanent measures. Several other cost cutting measures were also
taken. This was performed in very good cooperation with the trade unions – and the solutions were to some extent
pioneering. Beyond direct downsizing, employees in some of our Swedish companies agreed to a 20 % reduction in
working hours and a correspondingly lower pay. These workers do not have the same economic compensation
arrangements that one can find in a number of other countries. This was a novel solution in Sweden. In our
Norwegian steel company, employees voluntarily agreed to a 10 % pay cut for a period, without any reduction in working
time. And even more examples could be mentioned. I am proud to have employees that, when faced with challenges,
take a stand in this way. This kind of team spirit paired with a continuing low absence due to illness, make us a competitive
force and yield results. I wish to thank all our employees for their great contribution in 2009 and for the way they meet challenges!

It is our task to reorient our business when traditional markets recede. We have therefore gone through with
several structural measures to counteract the economic downturn we are experiencing and to position ourselves
for recovery. Our offices in Houston, Shanghai, Singapore, Houston and Rio de Janeiro bring us closer to the customers
in the most important markets, both for our Oil & Gas and Marine products. Through the establishment of a dedicated
subsea company, we render possible larger, more complete deliveries from Scana to a market where we know we have
a big competitive advantage. We have strengthened our portfolio of marine products through acquisition and have
invested to increase capacity, reduce costs per unit and increase the robustness of our steel companies. Strong focus
on efficiency, throughput times and unit costs combined with a commitment for the future, has lead us through difficult
times and makes for a strong basis for good results.

Many know Scana as a respected supplier of high quality steel. The recent years we have gradually developed more
complete products and systems. We do not compete in delivering a bar of steel in competition with a host of steel
works all over the globe. Our competitive edge is in the added value we can give our customers when we take high
quality steel and refine it into more processed products in a way very few others can. We think this strategic change
makes us unique on a global scale and something that we will profit from in the future. Our basis is a very strong
competence within material technology.

We utilise our competence in developing even higher qualities of steel. In Stavanger we are now able to deliver
corrosion resistant steel of the highest quality. In Björneborg we have developed a higher tensile in the steel that can result
in interesting weight reductions for customers. In China we will be able to deliver qualities that few other in that country
can. This will provide opportunities!

2010 will be a demanding year, too. Weak trade outlooks and weak order intakes throughout 2009 will affect results
in the first half of 2010 as well. But the order intake is on the rise and this will lead to improved results.
Signs of economic recovery are seen within areas that first were marked by the recess in 2008, in general industry and the consumer
market. The global oil and gas activity also show a positive development within areas where we compete. Signs
of recovery are also seen within renewable energy. The marine market, which is very important to Scana,
is expected is expected to maintain weak towards 2011. Our task is to exploit the possibilities that nevertheless exist.

In everything we do, we must be preoccupied with delivery precision and quality. The customers shall see Scana as a very
reliable supplier. This is something we shall continue working on in all our companies, so that we keep and strengthen our
reputation and our competitive position. This entails leaders being close to their businesses, becoming involved in the
production and in meetings with the customers to understand their needs and contribute to solving their challenges.
We want leaders who cultivate cooperation and business opportunities both with customers and internally in the Scana
group. We are well on our way to achieving this.

Scana is an environment friendly business and manufactures steel that is among the cleanest and purest in the world,
utilised in our own products and also by our customers. The starting point is scrap metal that through our
processes is turned into high quality products. It is a goal to cause as little environmental load as possible
in the manufacturing process, regardless of the nationality of the production process.

It is my opinion that Scana is well qualified to meet the challenges and, of course, the
opportunities that lie ahead of us. Competent and ready for change, good leadership in
the companies and short decision routes guarantee that Scana will keep creating
results for owners, customers and employees. We anticipate a volatile market in 2010, but
expect that the measures we have taken, in addition to a gradually normalising market, will
bring us back on the growth track. We have positioned ourselves for a very exciting future!

Rolf Roverud
CEO