FINANCIAL HIGHLIGHTS

For the year, I.M. Skaugen Group (IMS) reported a net result of USD10.6 million (USD20.5 million in 2005). The result on an EBITDA basis was USD34.6 million (USD46.3 million in 2005). The Group's gross revenues totaled USD206.6 million (USD185.2 million in 2005).

Total assets were USD334 million. Shareholders` equity amounted to USD105.2 million or USD3.87/NOK24.30 per share. Shareholders` equity represents about 33 per cent of the total assets. The net debt at the end of 2006 was USD78.7 million and the net interest-bearing debt totaled USD112.2 million. The ratio between current assets and current liabilities is 493 per cent.

Total liquidity as of the end of 2006 was USD81.2 million, which is regarded as sufficient for the company's ongoing business activities. The working capital requirements going forward will be higher than in the past due to the newbuilding requirements. Interest coverage ratio (EBITDA / Net interest cost) was 3.5 for the year 2006, as against 5.15 for 2005.

Financing
In June IMS placed a new three-year USD bond of USD100 million in the Norwegian market (ticker code IMSK03), of which we currently hold USD25 million. The bond carries a coupon of three months LIBOR + 1.80 per cent and matures on 19 th June, 2009. The proceeds have been used to refinance and strengthen the balance sheet and to obtain financial resources to move forward. At the same time, I.M. Skaugen ASA exercised its call option to repurchase the IMSK01 - NOK300 million bond. Of this bond NOK111.5 million were outstanding and these were called on June 2, 2006. In May 2006 the remaining of the convertible bond was converted into shares or amortized.

Thus IMS now has two bond programmes in USD outstanding.

Dividend
At the Annual General meeting on 1 March 2007, the Board will recommend a dividend payment of NOK1.75 per share (NOK2.50 in 2006 and NOK1.88 in 2005). This dividend represents approximately 4 per cent direct yield on the share price of NOK 44.00 at year-end.

Parent Company
The parent company, I.M. Skaugen ASA, showed a negative result of NOK42 million. The company has NOK68 million in free equity available for dividend payment.

The Board proposes the following allocations (NOK million):

- dividend distribution: NOK48 million

- transfer from other equity NOK90 million.

The total equity for the company after allocations is NOK475 million, of which NOK20 million is free equity.

The Board finds that the assumptions for future and continued operations have not been changed as the basis for approving the 2006 accounts and as a consequence these annual accounts are based on the going-concern assumptions in accordance with §3-3 of the Norwegian Accounting Act.