I.M. Skaugen SE. IMS Innovative Maritime Solutions

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1 I.M. Skaugen SE IMS Innovative Maritime Solutions Annual General Meeting Oslo, March 18th

2 The IMS strategy The company has succeeded in identifying and leveraging g higher growth/higher margin market niches Being global Innovative Cost and Service leadership Target marine transport market niches Focus on higher growth markets Above average market returns of the more traditional shipping industry 2

3 Leveraging the growth markets The last 10 years we have focused on Position IMS as a global business, centered more towards growth from areas such as Asia and the Middle East Gas Activities Marine Transfer China Activities Norgas position itself as the low cost provider of exports from the low cost Middle East region to Asia and especially to China Forming strategic alliances to gain an improved market share in the Middle East region and achieve better utilization of the assets. The Marine Transfer division partnered with Teekay and expanded the high end service capacity of the company into the global markets from its presence in the US Gulf and also now with a new focus on LNG. Our pioneering efforts in China has produced significant results and has set up the company as the likely low cost logistics provider in this emerging market. 3

4 Our past achievements Over the last 10 years Skaugen shares (IMSK) have produced a solid return of 17% p.a including reinvested dividends 10 Year benchmark (total returns) 20 % 17 % 15 % 12 % 15 % 10 % 5 % 7 % 5 % 6 % 7 % 6 % 0 % 55 % 1 % 33 % Source: Ecowin & Bloomberg 4

5 What we expect from the next decade I.M. Skaugen is expected to produce returns above the returns of traditional shipping companies in the commodity markets being the global tanker, bulker, container and LNG markets 1. IMS An emerging market play Norgas Focusing on the Middle East / Asian trade SPT Expanding its services east of Suez China Continues development of our business 2. IMS Fuelling the future with LNG The growth and multi market nature of the Mini LNG (MLNG) markets are expected to generate higher growth/higher margins and less cyclicality yand volatility and thus also lower risk than traditional shipping companies. THE RISE OF THE EAST MINI LNG Gas for stranded customers 5

6 2009 acceptable operational performance in challenging hll times Positives: Higher contract coverage gained over many years lowers volatility in earnings Exposure to resilient emerging market demand (ethylene) trough our customers Relentless focus on lower cost and high service level improves performance IMS EBITDA & Pre tax results D Million US EBITDA Pre tax result * Earnings historical size adjusted 6

7 due to resilient ethylene production..on onthe back of strong growth in Chinese consumption (last 10 years 12% annual growth) Source: Nexant Chemsystems Source: Nexant Chemsystems 7

8 Issues related to CAPEX and debt financing Capex commitments: Total remaining gcapex commitments ts of USD 47 million for vessels financed trough sale and leaseback solutions and USD 31 million (adjusted for ownership in JV s) for vessels financed via traditional debt facilities at year end. Bond portfolio: Overall average interest rate at 5,6% given current USD interest rates The company has USD2.9 million of bonds falling due for repayment within next 12 months. At year end large part of the outstanding bond portfolio covered by cash holdings and net SLB payments (+ USD 105M) IMS Newbuilding projects Project Construction finance Post Delivery finance Wintergas 3 Sale & Leaseback with x (5 800/ 9 Through IMS bonds Teekay LNG Partners 600cbm) Multigas 2 x Included in Sale & Sale & Leaseback with ( Leaseback Teekay LNG Partners cbm) Multigas 4 x ( cbm) Construction loan facility Loan facility, 18 year repayment profile IMS - Bond maturity schedule (000' USD) March

9 Key figures good operational performance / large strategic investments/ heavy R&D expenses Strategic investments affecting our performance in the short term: Utilization of total USD million EBITDA EBIT Pre tax result (10.1) assets Liquid assets Liquid assets Balance Sheet capacity Equity at book value Net interest bearing debt ) Equity ratio 27.5% 30.8% 36% 40% 38% 59% Interest coverage ratio 2) ) Book equity divided by total assets 2) EBITDA divided by net interest expenses 9

10 Outlook Q and onwards Key developments: During the early part of 2010 we experienced high utilization of the gas carriers on contractual terms with less spot exposure. SPT will gain from an improved crude tanker market as well as our China activities show a better progress than last year. Norgas: 80% contract coverage with a leading position in the Middle East, now moving into LNG with our unique Multigas utgascarriers SMC: Delivering state of the art vessels on time and on budget SPT: Growing the global support services into new growth areas Shenghui: InitiatingIPOprocesson IPO on the backof strong revenue growth 10

11 Norgas Spot rates bottoming lower USD 's per mont th SR TCE 8000 ETH TCE 6500 SR TCE 3500 SR 1yr TC 100 INGE STEENSLAND AS

12 Norgas Positive long term outlook 2.1) Competitiveness of Middle East 2.2) Increased supply and export US Dollars per Ton Cost of ethylene production Q USGC (E) USGC (N) W. Canada M. East W. Europe Japan S. Korea Variable Cost Fixed Costs Source: Nex xant Chemsystems s Source: Ban nk of America Secu urities 2.3) Limited supply growth 2.4) Favorable shipping dynamics The existing fleet of 326 vessels in the S/R segment has an order book of 39 vessels or about 15% of capacity to be delivered before end of ships equal to 21% of capacity are above 25 years and thus eligible for recycling or alternative uses in the coming years. 12

13 SMC Delivery of Norgas Innovation The ship was delivered to the Owner at 1100 hrs, 13 Jan 2010 (LST), from Wuzhou Shipyard Cargo systems performance has been very good, and the cooling capacity puts it in the supercooler category * Norgas Innovation 1st Multigas vessel naming ceremony. The ship is an advanced LNG/ LPG/ Eth gas carrier cbm. In 2010 SMC will be very busy and deliver WG vessel number three, as well as Multigas vessels two and three. It will also commence the cargo system installation for the Multigas vessel number

14 SMC delivery schedule Vessels Type CBM DWT Tanks IMO LOA Temp Ex.Del Mei Wen Ti Fully pressurized LPG carrier Amb. 1Q 2007 Qin Shi Huang Fully pressurized LPG carrier Amb. 2Q 2007 Xi Shi Fully pressurized LPG carrier Amb. 3Q 2008 Norgas Pan Semi ref LEG/LPG and chemical carriers 5 800/ /11 3.0/ Norgas Cathinka Semi ref LEG/LPG and chemical carriers 5 800/ /11 3.0/ Norgas Camilla Semi ref LEG/LPG and chemical carriers 5 800/ /11 3.0/ Q 2010 Norgas Innovation Semi ref LNG/LEG/LPG/VCM carriers Norgas Creation Semi ref LNG/LEG/LPG/VCM carriers Q 2010 Norgas Invention Semi ref LNG/LEG/LPG/VCM carriers Q 2010 Norgas Conception Semi ref LNG/LEG/LPG/VCM carriers Q 2011 Norgas Unikum Semi ref LNG/LEG/LPG/VCM carriers Q 2011 Norgas Vision Semi ref LNG/LEG/LPG/VCM carriers Q 2011 To be confirmed Type CBM DWT Tanks IMO LOA Temp Ex.Del TBN Semi ref LNG/LEG/LPG/VCM carriers TBN Semi ref LNG/LEG/LPG/VCM carriers TBN Semi ref LNG/LEG/LPG/VCM carriers TBN Semi ref LNG/LEG/LPG/VCM carriers

15 China Shenghui Gas and Chemical Systems (SGCS) IMS bought into the company in 2006 as a necessary strategic supplier to our newbuilding program of gas carriers. In 2009 our orders accounted for about 30% of the revenues and this will decline going forward. In the up coming years we have agreed with our partners in the company that we will facilitate an IPO process to visualize the values created in this company. 600,00 Shenghui revenue development (MRMB) 400,00 200,

16 SPT Expanding its presence from the US Gulf to the entire world! Challenging aframax market offset by strong growth in global support services in 2009 There are numerous areas ready for expansion including Southeast Asia, the Persian Gulf and Brazil, SPT is going east Global support services business Morethan7 billion barrels have been managed by SPT Existing Proposed 16

17 Fuelling our future with LNG The long term future of fuel oils is questioned, both in terms of dependency on oil and especially with regards to emissions. Natural gas in contrast gives a far more environmental friendly combustion and there are greater known reserves than for oil. I.M. Skaugen will increase the availability of gas by creating flexible small scale LNG supply chains to provide gas in areas hereto not supplied with gas. We will boldly venture where no pipelines have gone! The future is gas! Environmental benefits 120 Diesel engine running on MDO, 1% Sulphur content Dual-fuel engine running on gas 100 Emission values [%] NOx SOx CO2 Particulate Source: Energy Information Administration (EIA) Source: Wärtsilä 17

18 The Mini LNG potential Capitalizing on our investment in innovation IMS is building 6 flexible Mini LNG vessels in China, with option of additionally 4 vessels A cbm Multigas utgasvessel can carry approximately 300 tons of LNG per year in regional distribution The Mini LNG market, gas for stranded customers: Marine fuel (potential of approximately 100 million tons per year) Heavy land transportation Stranded industrial customers The heart of the operation the sea borne transportation of small scale LNG is provided by our unique and innovative Multigas Carrier. 18

19 Proof of concept Nordic LNG A new energy supply chain for Scandinavia About USD 500 millionofof total investments About 50% of the plant capacity has been contracted to stranded customers The integrated and industrial nature of the mini LNG business should ensure less volatility and higher margins than regular commodity shipping The liquifaction plant under construction in Stavanger Our pioneering efforts make us the preferred partner for Receiver terminals to be built similarsolutions solutions globally Our innovative i Multigas vessel 19

20 IMS Summary Positioned for another decade of Steady as she goes 1) Continue capitalizing and develop our global business model with focus on growth areas 2) Develop and capitalize on the small scale LNG business 20