Nekkar — Annual Report 2013

Apr 30, 2014

OurVision

To be the preferred global supplier of handling systems for the maritime and offshore industry.

Values that drive us

n System and Technology competence n Reliability and Customer satisfaction

The Strategy

By building an integrated group with strong team processes and synergies, we aim to develop complete, vessel-type material handling solutions and services, adding true value to our clients' operations.

Content

Global Solutions. Worldwide opportunities.	2
CEO's letter to shareholders	5
Key Figures 2013	6
2013: The events behind the figures	8
Strategy and Initiatives	11
The Management	12
Catching the wave of car carrier demand	14
Reinventing the shortest route to the cargo deck	18
The Chinese connection	22
Shareholder information	26
The Board of Directors	28
Directors' Report 2013	30
Corporate Governance	40

Annual account TTS Group

Auditors Report

The TTS history

Annual account TTS Group ASA

Confirmation from the Board

Companies in the TTS Group

141

Global solutions. Worldwide opportunities.

TTS Group ASA is a global enterprise that designs, develops and supplies equipment solutions and services for the marine and offshore industries. TTS is one of the top three largest suppliers in its specialized market segments.

TTS offers solutions that increase profitability and competitiveness by improving productivity, quality and system capacities. We aim to work closely with our customers to devise intelligent and innovative solutions. The close, flexible working relationships within the group enable us to assemble complete project teams when expertise in a range of fields is required.

The group's activities primarily involve the design, assembly and testing of equipment. Apart from the manufacture of certain key components, production is undertaken by a global network of subcontractors.

TTS has a worldwide network of branch offices, service stations and agents. It

provides after sales services covering the major shipping regions of the world.

The Company, with headquarters in Bergen, Norway, is listed on the Oslo Stock Exchange.

1,100 Employees China

Norway 26% Germany 26% China 15% Sweden 14% Korea 7% Other countries 12%

13 Countries

Brazil, China, Finland, Germany, Greece, Italy, Korea, Norway, Poland, Singapore, Sweden, USA and Vietnam.

Based on 15 years of successful co-ownership with Chinese state-owned companies, TTS has consolidated its unique position in the Chinese shipbuilding market.

TTS Group was an early mover into the Chinese market, which today is a "home market". Our joint venture operations are based on 50/50 ownership with the leading state-owned corporations CSSC (China State Shipbuilding Corporation) and DSIC (Dalian Shipbuilding Industry Corporation). TTS contributes with a strong brand and state of the art technology, while the Chinese partners provide valuable market access.

Marine

TTS creates and delivers a wide range of solutions that enable vessels to operate at maximum capacity at all times.

The maritime industry has been at the core of TTS' activities since the business was founded. TTS operates within the areas of cargo access, deck equipment, shipyards and heavy handling in the marine market.

Main products include solutions for RoRo/cargo vessels, Pure Car and Truck Carriers (PCTC) and Cruise in addition to winches, hatch covers and side doors. For shipyard heavy handling, the product portfolio ranges from innovative linkspans to some of the world's most forwardthinking solutions for moving goods.

Offshore

TTS is at the forefront of design and supply of marine and offshore cranes. Over the years, TTS has developed better and safer solutions for subsea load handling in rough and deep waters.

The Offshore and Heavy Lift division delivers all types of cranes, and is primarily focused on heavy lift and offshore cranes, including active heave-compensated cranes.

Lifting requirements will always be specific to the vessel type. TTS' standardized building blocks are able to match the needs of the individual vessel.

Services

Experts in their field, TTS service engineers continue to contribute valued knowledge and experience to customers globally.

The Services division includes service and after sales for all departments within TTS. This enables TTS to offer service and after sales worldwide across the full product range.

TTS is investing heavily in a support network. With qualified, experienced engineers in key locations worldwide, TTS can give support wherever it is required and at short notice.

CEO's letter to shareholders

Dear Reader,

Seen in the rearview mirror, it springs to mind that "mixed blessings" might be a fair phrase to describe the TTS Group's proceedings in 2013. Our revenues increased, the order books grew, and activity was high in several of our target markets. Bulk contracting reached levels not seen since 2008, LNG tankers and car carriers were in strong demand, and the offshore market was vibrant.

Still, we weren't quite able to capitalize on these trends in the way we had hoped for. An EBITDA loss of MNOK 130 was way below expectations and not in line with our long-term aspirations. The poor figures were mainly due to cost overruns and low margins on a number of offshore projects, as well as the restructuring of heavy-lift operations in Germany and major losses on deck equipment for yachts.

External competition will continue to intensify, not only for revenues and market shares, but also for successful new products and technologies. To be able to continue developing material handling solutions and relations that really add value to our clients' operations, we have to make sure that our own operations are sustainable and competitive in the long run.

A comprehensive profitability program has been launched throughout the corporation to improve work processes, strengthen cost control and utilize synergies. We've downsized our heavy-lift operations in Germany, which experienced low activity last year, to a sounder level and the market now seems to be picking up also in this segment.

Searching for operational excellence, however, is like running a distance with no finishing line. In order to fulfill our potential, we'll have to constantly search for more efficient ways to conduct operations and for ever smarter solutions to offer to our clients.

Thankfully, we've got a strong foundation to build on. The TTS brand is solid; we've got a series of recognized product offerings and a reputation for delivering as expected. We've developed long-standing, strong relationships with major players in important markets – as the recent order intake for car carrier equipment underlines – and we've got the ability to attract new clients in new segments and in new geographical areas – as exemplified by the ground gained in the offshore sector and by our ship lift orders to Vietnam and Brazil.

Not least, we've got an experienced, skilled and dedicated workforce. To strengthen our ability to convert this expertise into profitable business, we're building an integrated group with strong corporate structures for sourcing, key customer management, transfer of knowledge, service operations and portfolio development. We will focus on leveraging our strong cost and manufacturing position in China and on the standardization of building blocks, so that we can offer unmistakable TTS quality whether we're talking of customized high-end solutions or high-volume products. We will also continue our development of so-called ship-concept solutions, offering yards and ship-owners complete packages for chosen vessel types.

The course is set, and I'm confident that everyone at TTS is bent on performing at the highest possible level – to the benefit of both customers and shareholders. Important progress has already been made, and it is my belief that we will see a recovery in TTS' results in 2014.

Björn Andersson,

CEO & President, TTS Group ASA

Key Figures 2013

		2012
KEY FIGURES	2013	restated***)	2012*)	2011*)	2010*)	2009*)
PROFIT AND LOSS ACCOUNT (NOK 1 000)
Operating income	2 693 167	2 369 906	2 928 623	3 545 959	3 240 809	4 196 482
Operating profit/loss before depresiation (EBITDA)	-130 284	157 331	158 933	198 284	3 712	-84 265
Operating profit/loss (EBIT)	-164 098	110 143	96 373	139 134	-48 267	-230 800
Pre-tax profit/loss**)	-177 936	44 471	448 387	62 207	-156 103	-311 942
Net profit/loss**)	-204 418	36 532	450 421	22 896	-196 656	-248 482
BALANCE SHEET (NOK 1 000)
Non-current assets	942 297	898 616	869 721	1 544 438	1 528 039	1 550 755
Current assets	1 282 329	1 451 728	1 480 624	1 984 396	1 923 959	2 138 720
Total assets	2 224 626	2 350 345	2 350 345	3 528 835	3 451 998	3 689 475
Equity	566 670	794 576	856 195	840 383	802 734	935 883
Non-current liabilities	289 794	175 658	114 038	188 084	545 691	452 876
Current liabilities	1 368 162	1 380 112	1 380 112	2 500 368	2 103 572	2 300 715
Total equity and liabilities	2 224 626	2 350 345	2 350 345	3 528 835	3 451 998	3 689 475
KEY RATIOS
FINANCIAL STRENGTH
Equity to assets ratio (as a percentage of total capital)	25,5 %	33,8 %	36,4 %	23,8 %	23,3 %	25,4 %
PROFITABILITY
EBITDA margin	-4,8 %	6,6 %	5,4 %	5,6 %	0,1 %	-2,2 %
EBIT margin	-6,1 %	4,6 %	3,3 %	3,9 %	-1,5 %	-6,0 %
Profit margin (pre-tax)	-6,6 %	1,9 %	15,3 %	1,8 %	-4,8 %	-8,2 %
Profit margin (after-tax)**)	-7,6 %	1,5 %	15,4 %	0,6 %	-6,1 %	-6,5 %
RATE OF RETURN
Return on equity **)	-26,1 %	5,4 %	54,1 %	7,6 %	-18,0 %	-33,3 %
Return on total capital	-7,2 %	1,5 %	3,3 %	4,0 %	-4,4 %	-6,3 %
SHARES
Equity per share	6,54	9,17	9,89	11,10	10,75	13,78
Earnings per share (NOK)	-2,63	0,39	5,42	0,30	-2,76	-5,72
Number of shares, end of year	86 606	86 606	86 606	75 690	74 631	67 908
Average number of shares	86 606	83 281	83 281	75 160	71 269	43 408
Nominal value, end of year	0,11	0,11	0,11	0,50	0,50	0,50

*) Figures include discontinued business

**) Figures includes 2013 profit from discontinued busines

***) Figures restated to IAS19 (Revised), ref Accounting principles 2.1.a)

Definitions

Earnings per share: Profit after taxes divided on total number of shares at the end of the fiscal year Return on equity Profit before tax as a percentage of average equity

Return on total capital: Operating profit as a percentage of average total capital

MNOK	2013	2012 restated	2011
GROUP
Operating income	2 693	2 369	2 593
EBITDA	-130	157	170
Order backlog per 31.12	2 971	2 783	3 168
MARINE
Operating income	1 030	1 197	2 126
EBITDA	7	134	172
Order backlog per 31.12	1 692	1 487	2 874
PORT& LOGISTICS
Operating income	234	105	191
EBITDA	-7	-11	15,5
Order backlog per 31.12	433	213	99
OFFSHORE
Operating income	982	686	275
EBITDA	-148	27	-0,5
Order backlog per 31.12	846	334	196
SERVICES
Operating income	446	382
EBITDA	43	24

2013: The events behind the figures

Board decision to invest in new facilities for winch production in Dalian, China, and in new testing facilities for offshore cranes in Hamburg. Q1 Q2

NOK 75 mill contract signed with Xiamen Shipbuilding Industry, China, concerning equipment for three Post-Panamax car carriers.

Norwegian shipyard Kleven orders an advanced AHC subsea crane for an offshore construction vessel. Contract value NOK 65 mill.

DP World chooses TTS as supplier of translifters and cassettes for the new London Gateway Terminal – the UK's 21st Century major deep-sea container port.

NOK 50 mill contract signed with the COSCO shipyard in China for delivery of two offshore cranes.

NOK 150 mill contracts with two Korean yards for delivery of technology and equipment for another six Post-Panamax car carriers.

NOK 103 mill contracts with the Vietnamese Navy and with a shipyard in Haiphong signify a Vietnamese breakthrough for TTS.

Mr. Stefan Gleuel is appointed Executive Vice President of the new Services Division and Mr. Geir Storaas as Executive Vice President of the Offshore & Heavy Lift Division.

Two contracts with a combined value of NOK 207 mill signed with Korean and Chinese yards for delivery of equipment for four Post-Panamax car carriers. Q3 Q4

Korean shipbuilder Daewoo orders four large offshore cranes and additional equipment in NOK 120 mill

Brazilian breakthrough with a NOK 130 mill shiplift contract with the Brazilian Navy.

NOK 80 mill contract concerning cargo access equipment for three Post-Panamax car carriers signed with Chinese yards.

Due to significant negative deviances, TTS issues a profit warning for 2013. Additional information on losses sent in April 2014.

NOK 100 mill contracts won for gangway system for the largest port in the Swedish capital of Stockholm and for Dibba Fishing Port in Oman.

Two new contracts for delivery of specialized offshore cranes with a total value of NOK 110 mill.

Johannes D. Neteland resigns as CEO of the TTS Group. Björn Andersson is appointed new CEO.

NOK 76 mill contracts for delivery of anchor and mooring

Strategy and Initiatives

The TTS Group's strategic focus is on growth through internal efficiency and the capture of market share. The group pursues a number of short- and longer-term strategic initiatives in order to consolidate its position as a profitable top-three player in all target markets.

Key strategic elements:

• Profitability in all operations through focus on cost control, price competitiveness, efficient work processes and uniform quality management systems.
• Corporate level sourcing and product innovation with a strong emphasis on developing standardized building blocks and complete material handling solutions for end-users.
• Building a solid corporate structure around our clients' needs with account management at a group level.
• Continuing to build on TTS' strong and longstanding relationships in China and the Far East.

MARINE DIVISION

Delivers a wide range of cargo access and deck equipment to the marine industries. Aims to be the preferred player within its product segments and geographic target areas.

Key strategic elements:

• Building customer value through supreme product capability and quality.
• Continued synergy development with an emphasis on strategic sourcing, product optimization and the establishment of the most effective working processes in the industry.
• Product and market development with winches and hatch covers as a strong priority.
• Leveraging our excellent cost and manufacturing position in China; in sourcing in defined areas.

OFFSHORE & HEAVY LIFT DIVISION

Focuses on all types of cranes for various offshore vessels as well as heavy lift equipment for other maritime clients. Aims to expand into the rig and drillship market and to be a top-three player in all its segments.

Key strategic elements:

• Strengthen supply chain, engineering capacity and capacity for assembly and testing.
• Offensive product development with special emphasis on packages for the Offshore Service Vessel (OSV) fleet and advanced solutions for specialized vessels operating subsea and in harsh climates; e.g. "ice class" rigs and drill ships.
• Stronger co-operation between production facilities in Shanghai and design and engineering forces in Europe.
• Penetrate rig and drillship market through TTS' strong connections with Chinese yards.

SERVICES DIVISION

Provides after sales and services for the full range of TTS' products. Aims to establish the group's service offerings as one of the main reasons for marine and offshore clients to choose TTS equipment.

Key strategic elements:

• Building a strong global footprint.
• Increasing TTS' market share on own installed base and providing competitively priced spare parts in the time zones.
• Utilizing a skilled and motivated workforce in a global, seamless service network with unified systems.
• A general turn from re-active support to pro-active service and maintenance programs for the benefit of TTS' customers.

blesses those who host its statue, and can boost the host's career, solve dangers, fend of demons, and bring prosperity.

The Legendary Qilin One of the most popular mythical creatures, the 麒麟 (qílín) is often referred to in the West as the "Chinese Unicorn". This creature ranks second among the 'Four Benevolent Animals' (四灵 sì líng) of ancient China, along with the Chinese dragon, the tortoise, and the phoenix. According to legends, the qilin likes to help good

The Management

BJÖRN ANDERSSON CEO

Andersson (b. 1946) was appointed CEO of TTS in March 2014, after holding the position of acting CEO since November 2013. Mr. Andersson has extensive operational experience from different positions within the industry, including TTS. He has also been Chairman of the Board at TTS' two joint ventures in China: TTS Bohai and TTS Hua Hai. Mr. Andersson studied Mechanical Engineering in Gothenburg, Sweden.

ARILD APELTHUN CHIEF FINANCIAL OFFICER

Apelthun (b. 1972) has been CFO of TTS Group ASA since 2010. He came from the position of CFO at Aker Process in the Netherlands. Apelthun has held various positions in subsidiaries of Aker Solutions in the USA and Europe over seven years. Prior to that, he worked for ABB, Aker Maritime and Ementor in Norway. Arild Apelthun has an MSc degree in Science in Business from Bodø Graduate School of Business.

IVAR K. HANSON EXECUTIVE VICE PRESIDENT, MARINE DIVISION

Hanson (b. 1964) started at TTS as a shipyard consultant in 1994 and was appointed managing director of TTS Automation AS in 1999. Mr. Hanson has held various positions within the TTS Group including Chief Operating Officer of TTS Group ASA and Executive Vice President of the Marine Division. Hanson has a Master's degree in Science in Business from the Norwegian School of Economics (NHH) and is a mechanical engineer.

GEIR STORAAS EXECUTIVE VICE PRESIDENT, OFFSHORE & HEAVY LIFT DIVISION

Storaas (b. 1951) has been Executive Vice President of the Offshore & Heavy Lift Division since August 2013. Mr. Storaas has held various senior roles in the industry. Prior to joining TTS he was General Manager at UPTIME Centre of Competence. He studied at the Norwegian School of Economics and Mechanical and Industrial Engineering at The University of Salford (Greater Manchester, England).

STEFAN GLEUEL

EXECUTIVE VICE PRESIDENT, SERVICES DIVISION

Gleuel (b. 1966) has been Executive Vice President of Services at TTS Group ASA since June 2013. Since 1994, Mr. Gleuel has accrued broad international management experience in the marine industry. Prior to joining TTS he was the Executive Vice President of Services in Cargotec Corporation, where he was also a Member of the Executive Board. He holds degrees in Naval Architecture, Business Marketing and General Management.

The Management of TTS Group (left to right): Geir Storaas, Björn Andersson, Ivar K. Hanson, Stefan Gleuel, Arild Apelthun.

Catching of car carrier demand

2014 marks the 100th anniversary of the opening of the Panama Canal for commercial operations. But at TTS Marine AB in Sweden there is little time for celebration. A new lane with a wider set of locks is currently being added to the canal, and when the first supersized car carriers sail through in 2015, the lion's share of them will be equipped with cargo access solutions developed and delivered by TTS.

The Panama Canal is a key conduit for international maritime trade. 100 years after the opening a new set of locks will further increase the capacity of this engineering masterpiece.

The Panama Canal, which connects the Atlantic and the Pacific Oceans via the Caribbean, is undoubtedly one of the most astonishing engineering achievements of the 20th Century. Not only is the sea level of the Caribbean several inches lower than the Pacific, the Isthmus of Panama itself rises 26 meters above sea level. In addition, the different tides of the two oceans must be accounted for. To solve these problems, a series of locks were constructed to lift ships up to Gatun Lake and then back down to sea level.

The opening of the Panama Canal meant a revolution to world seaborne trade 100 years ago; now a new set of locks will further increase the crossing's capacity. The expansion allows for larger vessels and the result is lower shipping costs, in particular for commodities exporters who are more concerned with cost than time.

In the race for contracts that began among shipbuilders and equipment suppliers when plans for the expansion were announced seven years ago, the TTS Group has emerged as one of the winners. In 2013, the group's subsidiary TTS Marine AB in Sweden won no less than six contracts for the delivery of cargo access equipment for a total of 16 so-called Post-Panamax Pure Car and Truck Carriers. The list of customers includes several of the world's major car carrier owners and operators: Eukor, Glovis, Höegh Autoliners, Ray Car Carriers, Wilh. Wilhelmsen and Wallenius Lines.

Based on decades of experience, TTS has developed industry-leading solutions for handling vehicle cargo. For car carrier operators, it is paramount to be able to stack as many cars as possible in the safest and most efficient manner. TTS's flexible solutions, including liftable car decks and mobile scissor lifts, allow for

optimal utilization of cargo space – even when the vehicles loaded differ in height.

Staying close to the customer

According to Per Croner, President of TTS Marine AB, nurturing long-standing relationships and close co-operation with yards and ship owners are key factors behind the order intake in 2013.

"Car carriers represent a very specialized segment with relatively few and large players compared to other parts of the shipping industry. Experience, expertise and proven ability to deliver industry-leading solutions are quintessential factors. Our customers expect continued technological development and improvement, so we do our best to stay at the forefront," he says.

Developing state of the art solutions for car carriers requires advanced design skills and tens of thousands of engineering hours. The largest vessels hold up to 8,500 cars - and developing efficient systems for loading, unloading and keeping the cargo safe during crossing is a skill in its own right.

"We are working flat out and, to be honest, I don't think we could have taken on as many assignments as we did last year without the drive of our experienced co-workers and the time-tested processes described in our quality management system," says Croner.

He describes delivery in time and in line with customer expectations as the main currency of the trade. The company therefore focuses on clear and close customer dialogue, continuously setting itself new goals to increase customer satisfaction.

Croner thinks that it's important to ensure that the company's truly customer-driven attitude is reflected in internal staff relations: "In order to enhance team co-operation, dynamic operations and internal value chain optimality, we focus on what we can call 'internal customer satisfaction'. When every link in the internal value chain considers the next one to be a customer in the true sense, the impact on our end-products is positive."

Global growth causes surge in car demand

At the same time as the Panama Canal's new lane has created a demand for new and wider types of vessel with higher load capacity, the increase in worldwide car sales has also contributed to a positive market outlook for the TTS Group. International sales of up to 100 mill cars are expected annually, and nations like China and India are growing as exporters. Historically speaking, some 15-20 percent of cars produced globally have been transported to their new owners by sea, and as demand rapidly increases in emerging markets, there is reason to believe that this percentage will increase.

As worldwide car sales continue to improve, analysts estimate that an international fleet of car carriers numbering between 600 and 700 vessels will be required. As average life expectancy for these vessels is between 20 and 30 years, a need for building some 30 to 40 vessels annually seems reasonable.

"If we continue to nurture long-term client relations and push ourselves to develop our technological solutions further, I believe that we have a fair chance of keeping a strong market position in this very specialized industry", says Croner.

But as anyone with experience from the shipping-related industries will know; as sure as there are waves on the ocean, there will be market fluctuations.

"Therefore," Croner says, "we will take measures to expand TTS Marine's product portfolio and look at new business opportunities within several interesting niches. Success in new areas, I think, to a large degree depends on whether you invest sufficient time on close customer dialogue. You have to really grasp the operational challenges and demands of that particular trade and that particular customer. If we can combine such an understanding with our decade-long experience of the maritime industry and a strong will to utilize new technology, I believe that we can add value to maritime customers' businesses in a range of areas."

Reinventing the shortest route to the cargo deck

A large part of the world's specialized fleet of reefer ships is reaching the end of its lifetime. TTS Ships Equipment stands ready to equip the next generation of reefer vessels with innovative, cost-efficient and highly competitive side-loading systems.

It takes intelligent handling systems to be able to cope with both exotic fruit and cars.

"As long as people eat fruit and meat and fish, our systems will be in demand," says Jan-Magnar Grøtte, President of TTS Ships Equipment in Bergen, Norway.

Some ten years ago, refrigerated containers were the hot topic among traders of seaborne transportation for perishable commodities such as fruit, meat, fish and vegetables. But Grøtte never lost faith in the specialized reefer ship as a market opportunity. Being President of the world's leading provider of side-loading equipment, he is obliged to talk positively of his own company's solutions, but his faith in adding innovations to proven technology goes deeper than that.

"According to simple logic, the fastest way to load or unload a ship must be the shortest one – which happens to go straight through the ship's side. Therefore we've kept building on decades of experience and in-depth technological knowledge to create new side-loading systems with higher capacity. Today, we can offer our customers solutions that guarantee substantially shorter turnaround time in harbor," he says.

Four star delivery

Following a deal in November 2012 with Star Reefers, the last year has been a busy one for Grøtte and his colleagues. In connection with the London-based ship owner's extension of four of its specialized reefer vessels, a total of 12 state of the art side-loading systems complete with side ports and lifts have been delivered by TTS.

Capacity per side port is 160 pallets per hour, and Grøtte estimates that due to shortened turnaround time, operators can reduce speed at sea by some 2-3 knots and still keep the route. One hardly needs a degree in maritime economics to grasp the fuel savings involved in that calculation.

"We've developed quite a portfolio of side-loading solutions for many vessel types; ranging from wellproven, off-the-shelf systems to top notch, customized solutions such as an automatic conveyor-belt system with a capacity of up to 725 pallets per hour. Our most advanced offers include loading-sequence tracking, cycle times, advanced safety devices and fault finding tools as well as count of pallets loaded," he explains.

Switching mangos for cars

Imagine a reefer ship docking in at Rotterdam loaded with mangos, star fruits and other exotic goodies. Unloading is handled efficiently without any damage to the fragile delights, and by the next day, the ship can start loading passenger cars destined for African customers.

For the modernized vessels of Star Reefers, this wishful scenario has become a reality. The innovative and versatile side-loading system delivered by TTS allows for careful unloading of fruit to be followed by safe loading of passenger cars.

"Working closely with professional customers for many years has taught us the true value of flexibility. By combining the will to listen with extensive know-how, I'm certain that we can customize first class solutions fit to solve even the most demanding cargo-related challenge," Grøtte says.

When Grøtte joined Mongstad Engineering – the predecessor of TTS Ships Equipment – as it sixth employee 22 years ago, annual turnover was around NOK 8-10 mill and the order backlog a scarce NOK 100,000. In 2013, revenue of the 50-strong company was NOK 243 mill. In addition to sideloading systems and other cargo access equipment, the company provides ROV-ports, hatch covers, moon pool covers and smaller offshore cranes for advanced offshore vessels.

He says: "All along, we've worked towards developing better and more efficient systems regardless of trends and consultants' hang-ups. We've worked particularly closely with the ship owners and are often consulted even before the yards get involved."

Transfer of knowledge

TTS Ships Equipment is part of TTS' Offshore & Heavy Lift division, which had to take substantial losses related to several offshore crane and heavy lift projects in 2013.

Grøtte notes: "They've experienced what many of us have gone through upon entering new market segments, but there's no reason to despair. Persistence pays off; it's all about striving for operational excellence and, not least, to be able to incorporate market feedback into everyday business. I'm confident that the group's offshore initiatives are viable."

In order to build a more integrated corporation and utilize expertise accumulated through nearly 50 years in business, the TTS Group has a clear focus on cross-corporation transfer of knowledge. Grøtte is one of TTS' core tradition-bearers, and soon intends to step down as President to embark upon new roles in business development and as an advisor. Transfer of technological know-how and project management insight from TTS Ships Equipment to other parts of the Offshore & Heavy Lift division will be one of his most important missions.

Return of the reefer ship market

According to a recent report from the international shipping consultancy Drewry, the average age of the fleet of 600 specialized reefer ships greater than 100,000 cubic feet has increased to 24 years. Even though some consolidation is expected, the average life span of 30 years for this vessel type implies a demand for newbuildings in the near future.

Fresh analysis also highlights that seaborne transportation of perishable commodities is steadily on the increase. This applies not least to exotic fruit – perhaps the most fragile of goods to be transported, and in high demand by European and North American consumers.

Grøtte is confidant that, equipped with new and ingenious solutions from TTS Ships Equipment, specialized reefer ships with side-loading systems are fully able to compete with container ships. After years of aggressive pricing of container-based solutions, it has also become apparent that market share is not all; in the long run, growth also has to be profitable.

"It turns out that side-loading – at least with our new improvements – is still a highly competitive alternative to container-based top-loading systems. We estimate that our modern deliveries can reduce turnaround-time in harbor with as much as 30 percent," Grøtte says.

"Our systems have several advantages over the top-hatch and crane-based container solutions," he adds. "Our side doors form rain shelters above the loading area. The damage rates are low, they operate independent of tidal variations and demand very modest on-port facilities. If we continue to spend those extra hours in search of the improvements that'll take our own and our customers' business to the next level, I believe in a bright future for our reefer ship equipment."

Jan Magnar Grøtte is president of TTS Ships Equipment AS in Bergen, Norway.

TheChinese connection

For 20 years, the TTS Group has worked on building close business relationships with major players in the Chinese shipbuilding industry. This has been a wise investment, according to economist professor Erik S. Reinert who believes that China is becoming a laboratory of diverse policies and economic experiments – not unlike Europe before the West seized world hegemony.

Beijing is the political and cultural centre of a China that is currently thriving on diversity.

In the Tang-Song period (618-1279), China was a melting pot of ideas and policies. The Chinese invented gunpowder, paper currency and moveable-type printing and, as late as the 15th Century, the country was reckoned to be a naval superpower. Admiral Zheng explored the coast of East Africa with a fleet of more than 200 vessels. But sometime around 1700, China was superseded by Europe in development. Why?

Reinert notes that: "Elimination of diversity under a centralized regime was a key element in China's relative decline. China turned inwards and became increasingly standardized and bureaucratic. Europe, on the other hand, experienced a virtual explosion of intellectual creativity and development, which eventually made the region forge ahead."

Reinert is professor at Tallinn University of Technology and author of How Rich Countries Got Rich … and Why Poor Countries Stay Poor, The book made it to the best-seller list of the Financial Times and has been translated into 18 languages. In cooperation with the historian Ting Xu he has recently published a paper on historic development in Europe and China.

"Europe now seems to make the same kind of mistakes – centralizing and killing diversity – which was a key element in China's decay. China, on the other hand, appears to be cultivating the same kind of creative diversity which once brought Europe to the forefront", says Reinert. He points to the standardization of currency, research policy and even the shape of cucumbers as telling examples of Europe's arduous homogenization.

A diversified China

Reinert argues that contrary to the common Western image of contemporary China as an extremely centralized state, the country is, in fact, a laboratory

for experiments with local reforms where a diversity of policies are compared and tested against each other:

"The Maoist system and the Cultural Revolution seem to have decentralized economic and administrative power to regional levels; a trend that has become much stronger in today's China."

Never in human history has a society developed as fast as modern China without wages skyrocketing. The last two to three years have nevertheless seen a substantial growth in Chinese labor cost, but Reinert believes that this will not necessarily represent a disadvantage to the Chinese competitiveness:

"Quite the contrary, actually. What really matters is the cost of labor compared to the cost of capital. If wages increase while capital stays cheap, enterprises get strong incentives to invest in new technology – which facilitates innovation and increased efficiency."

According to Reinert, successful policy-making consists not of standardizing policies, but rather adapting what have been successful policies elsewhere to one's own situation. He refers to the Italian economist Giovanni Botero, who, as early as the 16th Century understood the importance of the competition between what were literally hundreds of small European states. In this context, access to foreign knowledge was key to success – as it is in 21st century China.

World's largest shipbuilder

Another important aspect of development in today's China, argues Reinert, is a strong commitment to basic science and to grasping the essence of a range of technologies and industries. One of China's official target areas this millennium, is shipbuilding. After overtaking South Korea two years ago, China is firmly the world's largest shipbuilding nation with 45% of global orders.

Chen YingHua, recently appointed General Manager of TTS Hua Hai Ships Equipment, a joint venture between the TTS Group and the China State Shipbuilding Corporation (CSSC), is certain that China can keep its strong position:

"China will increasingly promote high-end products and turn from pure volume to more specialized newbuildings like gas carriers and offshore vessels. Some other Asian countries with lower labor costs, like Vietnam or India, or an African country, for that matter, is likely to overtake us sooner or later in terms of number of orders, but within advanced segments, I think we'll be a major player for a long time."

TTS Hua Hai was established in 1998, and has grown to be a billion NOK enterprise based on TTS' brand and technology and CSSC's invaluable network in the world's leading shipbuilding nation. The company offers a range of cargo access equipment and is by far the current market leader for hatch covers in China. Following a recent strategic initiative, the company is also gaining ground in the market for winches. Division of labor in the joint venture follows the conventional layout of the trade, with design and most of the engineering done in Germany, and manufacturing in China. But Chen believes that this will eventually change.

"In the long term, this division of labor might not be viable, and some of our competitors are already moving the entire value chain to China in order to get even closer to the market. If we could do the same, but still maintain the strong TTS brand, I think that would be positive for TTS Hua Hai," Chen argues.

Building lasting shareholder value

"In general, I think that the TTS Group should deepen its cooperation with the CSSC when it comes to technological innovation. It is also important to remember TTS is not a 'Norwegian' company. It is an

international corporation headquartered in Norway, and that's a big difference. If TTS continues to build operations in China, which will remain one of the world's most important shipbuilders for the foreseeable future, TTS is building lasting value for its shareholders."

Professor Reinert considers it important for TTS – and for any other European headquartered maritime company – to be present at the world's technological frontiers. That's where customers are the most demanding and the operational challenges and the needs for technological innovation the greatest.

"I would also advise TTS to protect its niches of core competence and to attempt to increase market share there. The more you accumulate volume, the more the unit cost drops. Think about how the Koreans conquered the electronics market. Initially, they sold at a loss, but they kept production growing to run down the learning curve in order to capture volume and market share. In the end, production costs dropped sufficiently to make business viable, and most Western producers were quite simply outcompeted. China looks to be pursuing a similar strategy in shipbuilding today – and will remain strong in this industry for a long time to come. To cultivate Chinese relations seems to be a good idea these days," Reinert concludes.

Chen Ying Hua is General Manager of TTS Hua Hai Ships Equipment Co Ltd in Shanghai, China.

Shareholder information

MARKET CAPITALIZATION DEVELOPMENT

SHARE PRICE PERFORMANCE

Date	Price (in NOK)
Subscription price at time of offering	23.00
1995-05-03 Opening price	26.50
1995-12-31	25.24
1996-12-31	29.26
1997-12-31	29.26
1998-12-31	10.97
1999-12-31	10.24
2000-12-31	17.92
2001-12-31	12.44
2002-12-31	5.67
2003-12-31	7.56
2004-12-31	14.13
2005-12-31	23.43
2006-12-31	52.90
2007-12-31	73.32
2008-12-31	12.47
2009-12-31	5.70
2010-12-31	7.60
2011-12-31	9.47
2012-12-31	9.40
2013-12-31	6.21

20 LARGEST SHAREHOLDERS*

	Shareholder	Shares	%	Country
1	RASMUSSENGRUPPEN AS	11 512 506	13,29 %	NOR
2	SKEIE TECHNOLOGY AS	8 929 879	10,31 %	NOR
3	LESK AS	5 306 058	6,13 %	NOR
4	STISK AS	5 306 058	6,13 %	NOR
5	SKANDINAVISKA ENSKILDA BANKEN AB	4 903 935	5,66 %	FIN
6	BARRUS CAPITAL AS	3 455 000	3,99 %	NOR
7	SKAGEN VEKST	3 222 553	3,72 %	NOR
8	SKEIE CAPITAL INVESTMENT AS	2 531 263	2,92 %	NOR
9	HOLBERG NORGE VERDIPAPIRFONDET	2 241 870	2,59 %	NOR
	10 TAMAFE HOLDING AS	2 160 735	2,49 %	NOR
	11 ODIN MARITIM	2 158 443	2,49 %	NOR
	12 HOLBERG NORDEN VERDIPAPIRFONDET	2 000 000	2,31 %	NOR
	13 MERTOUN CAPITAL AS	1 769 598	2,04 %	NOR
	14 UBS AG, LONDON BRANCH	1 741 489	2,01 %	GBR
	15 ITLUTION AS	1 475 261	1,70 %	NOR
	16 PIMA AS	1 450 084	1,67 %	NOR
	17 SKANDINAVISKA ENSKILDA BANKEN	1 228 294	1,42 %	SWE
	18 JP MORGAN CHASE BANK, NA	1 218 907	1,41 %	SWE
	19 VERDIPAPIRFONDET DNB SMB	1 137 164	1,31 %	NOR
	20 SKEIE CONSULTANTS AS	953 033	1,10 %	NOR
	Total, 20 largest shareholders	64 702 130	74,69 %
	Other	21 903 530	25,31 %
	Total	86 605 660	100 %

*) As of April 23, 2014

FINANCIAL CALENDAR

The Board of Directors

TRYM SKEIE CHAIRMAN OF THE BOARD

Skeie (b. 1968) is one of the main founders of Skagerak Venture Capital AS (SVC), where he currently is a partner and holds several chairman and board member positions in different portfolio companies. Skeie has been Investment Manager at Kistefos Venture Capital and worked as structural design engineer at Hydralift. Skeie holds the equivalent of a Master's degree from the Norwegian School of Economics and Business Administration (NHH), and an MSc from the Norwegian University of Science and Technology (NTH).

Skeie has been Chairman of the Board since November 2009.

BJARNE SKEIE DIRECTOR

Skeie (b. 1945) has an engineering background and is known as an entrepreneur, industrial developer and investor in the offshore, equipment and rig industries. His achievements include founding Maritime Hydraulics AS (1970), as well as acquiring and restructuring a number of companies that were merged and listed on the Oslo Stock Exchange as Skeie Group (1986/87).

Skeie was Chairman of the Board of TTS Group ASA (2002-2003) and has been a member of the board since 2008.

JAN MAGNE GALÅEN DIRECTOR

Galåen (b. 1972) is a portfolio manager for Rasmussengruppen. He holds an MSc from Norwegian University of Science & Technology (NTNU) and has further qualifications in economics from BI Norwegian Business School. He has worked for First Securities and as an analyst at Fearnley Fonds. Galåen has also worked for industrial companies like Aker Maritime and Hydro Aluminium Maritime. Galåen is employed by Rasmussengruppen AS, which is a major shareholder in TTS.

Galåen has been a member of the Board of TTS Group ASA since 2011.

ANNE BREIVE DIRECTOR

Breive (b. 1965) is CFO in Trelleborg Offshore AS. She has a Bachelor's degree in Commerce from BI Norwegian Business School and an MBA from Glasgow University. She held various managerial positions at Norske Skog Group and Statnett, before becoming CFO at Løvenskiold-Vækerø AS.

Breive has been a member of the Board of TTS Group ASA since 2005.

TORIL EIDESVIK DIRECTOR

Eidesvik (b. 1968) is CEO of EMS Seven Seas ASA. She holds a Master's in Law from the University of Oslo and has qualifications in Economics from BI Norwegian Business School. Eidesvik was CEO of Green Reefers ASA from 2008 to 2012 (Working Chairperson 2006-2008) and was CEO of Actinor Shipping ASA from 2003 to 2006. Ms. Eidesvik has held a number of positions as lawyer from 1994 to 2002. She has extensive board experience, including from Solstad Offshore ASA, where she has been a Director since 2005.

Eidesvik has been a member of the Board of TTS Group ASA since 2013.

MONA LUCILLE TELLNES HALVORSEN DIRECTOR, EMPLOYEE ELECTED

Halvorsen (b. 1970) is Sales Manager at TTS Offshore Handling Equipment AS in Bergen. She has held various positions in TTS companies such as Vice President of HR & HSE and Sales Manager of Production Systems. Halvorsen holds a degree in Industrial Engineering from the Bergen University College and has further qualifications in Quality Management and Project Management.

Halvorsen has been an employee elected member of the Board of TTS Group ASA since 2012.

OLE HENRIK ASKVIK DIRECTOR, EMPLOYEE ELECTED

Askvik (b. 1971) is Vice President of Spare Parts at TTS Marine AS in Kristiansand. He was former Vice President of Services and has worked for Hydralift and IUM Shipmanagement. Askvik holds a degree in Technical Exports from Agder University College.

Askvik has been an employee elected member of the Board of TTS Group ASA since 2012.

The Board of Directors of TTS Group (left to right): First row: Ole Henrik Askvik, Mona Halvrosen, Second row: Anne Breive, Trym Skeie, Toril Eidesvik, Third row: Bjarne Skeie, Jan Magne Galåen.

Directors' Report 2013

2013 was a challenging year for the TTS Group. Despite an upturn in demand in our most important markets and positive growth in group revenue, the operating results came out far worse than expected. EBITDA for the year amounted to a loss of MNOK 130, compared to a profit of MNOK 157 in 2012.

Group revenues were up 14% to MNOK 2,693 in 2013. The Offshore & Heavy Lift division saw an increase in turnover of MNOK 296; partly due to the acquisition of the German heavy lift crane company Neuenfelder Maschinenfabrik GmbH (the present TTS NMF) in August 2012. The Port & Logistics and the Services divisions also increased their revenues in 2013. Still, this growth was partly offset by approx. MNOK 200 lower turnover in the Marine division due to changes in the joint venture structure in China, which will be completed in 2014.

The weak operational figures are primarily due to cost overruns on deliveries of advanced cranes to offshore vessels, too low margin coverage on a number of other offshore projects as well as substantial losses on yacht deliveries in Deck Equipment. In addition, the restructuring of the heavy lift operations in Germany (the present TTS NMF) has proven to be more challenging than expected due to weak market conditions. Write downs of inventories also had a significant negative impact on group operating results. On the positive side, deliveries of cargo handling equipment to car carriers and other specialized vessels contributed positively to TTS' earnings.

The TTS Group's net result for 2013 was a loss of MNOK 204, down from a profit of MNOK 454 in 2012 – where the results were heavily influenced by the sale of the drilling equipment business to Cameron International Corp. The 2013 result includes a gain of MNOK 23 as part of an earn-out deal resulting from the sale to Cameron.

The General Meeting of 10 June 2013 approved the Board's proposal for dividends of NOK 1.00 per share, an aggregate total of MNOK 86.5. Net interest bearing debt amounted to MNOK 92 at the end of 2013, and the equity ratio was 25.5%, down from 36.3% the previous year.

In November 2013 the Board appointed Björn Andersson as the new acting CEO. Björn Andersson was permanently appointed as CEO in March 2014.

Following the change of CEO, strong measures have been taken in order to re-establish profitability and competitiveness within all divisions and business units of the TTS Group. A new strategy has been implemented focusing on customers and market shares. Furthermore operational excellence, expansion of product portfolios and broader service offerings are core elements going forward. The strategic turn is underpinned by organizational changes to enable cross-company key account ownership and streamlining of corporate product development and sourcing.

The Board is not satisfied with the TTS Group's operational performance in 2013, but is confident that the operational refocusing that has taken place will have a positive impact on profitability going forward. TTS is positioned to benefit from the upturn in several segments and, in particular, to capitalize on its strong presence and partnerships in China and Korea. This region is expected to dominate the marine, offshore and rig market for the coming years and TTS should be able to leverage on its strong manufacturing and cost platform.

Global trade and oil price development combined with new build prices within the industry are key drivers for the target markets of the TTS Group. After several sluggish years, the markets improved within most of the group's marine business segments in 2013. Contracting of bulkers, LNG tankers and specialized vessels such as car carriers has been, and is expected to remain high. The contracting of offshore vessels has also been high for some years. However a slowdown may be expected.

In the remainder of this report, all figures refer to continued business unless otherwise stated.

Target and strategy

The TTS Group's main objective is to design, develop and supply high-quality handling equipment solutions and services to the marine and offshore industries. Through a dedicated focus on product quality and execution, customer-oriented services and an innovative approach towards utilizing new technology, TTS aims to support its customers' productivity and value generation. In order to be considered a potential supplier to as many relevant projects as possible, it is essential for the group to be among the top three players. Hence, our ambition is to be on the maker's list in all of the group's target markets.

For the coming five-year period, organic growth is at the focus of the group strategy. Immediate priorities are to keep building customer confidence and deliver profitable performance through improved internal efficiency and the capture of further market share in prioritized areas.

In order to succeed, TTS focuses, in particular, on the following:

• Implementing of a business improvement program, named Momentum.
• Standardization of engineering principles and components, implementation of a group-wide sourcing structure and expansion of the product portfolio.
• Development of a stronger global service footprint.
• Capitalizing further on the group's strong market position through the Chinese JV's in China and other parts of Asia.

Operations and divisions

The TTS Group is an international corporation with subsidiaries in 13 countries: Brazil, China, Finland, Germany, Greece, Italy, Korea, Norway, Poland, Singapore, Sweden, USA and Vietnam.

TTS' operations were managed through four divisions in 2013: the Marine division, the Offshore & Heavy Lift division, the Port & Logistics division and the Services division. In February 2014 it was decided to merge Port & Logistics – the group's smallest division accounting for about 9% of total turnover – into the Marine division. Joining the forces of Port & Logistics with the cargo access expertise and customer reach of the Marine division enables a more holistic approach towards customers within cruise, ferry lines and port operations.

MARINE DIVISION

The Marine division delivers a wide range of cargo access and deck equipment solutions. Key products include cranes, winches, side-doors and hatch covers as well as customized RoRo- and other solutions for car carriers, cruise ships and specialized vessels. After the merger of Port & Logistics into Marine, the division also offers a wide range of solutions for cargo, material and passenger handling for ports and terminals, with a special focus on cruise, passenger gangways and link spans. Being able to customize complete solutions covering both on-shore and ship demands, gives TTS a competitive advantage.

The division operates globally from its main bases located in Norway, Sweden, Finland, Germany, China and South Korea. TTS' two joint ventures in China are organized as part of the Marine division. The TTS Group owns 50% of TTS Hua Hai Ships Equipment Co. Ltd. and TTS Bohai Machinery Co. Ltd. with partners China State Shipbuilding Corporation (CSSC) and Dalian Shipbuilding Industry Co. (DSIC) respectively. Furthermore, TTS Hua Hai Ships Equipment holds a 40% stake in Jiangnan TTS (Nantong) Ships Equipment Co. Ltd., which manufactures hatch covers.

OFFSHORE & HEAVY LIFT DIVISION

The Offshore & Heavy Lift division provides all types of cranes for offshore vessels, drill ships and rigs, with a particular emphasis on TTS-developed AHC cranes, as well as heavy lift cranes.

The division operates with main bases in Norway, Germany and China.

SERVICES DIVISION

The establishment of a separate Services division in 2013 represented an important move away from an entity-centric set up to a global service network with unified systems offering after sales and services for the full range of TTS' products.

This kind of cross-company apparatus provides a high-quality TTS-mark to all the group's service offerings. In 2014 further steps are planned, all the way from re-active, ad hoc support to pro-active solutions and lifecycle service programs.

The main bases for these operations are located in Norway, Germany, Korea and China and new offices are under establishment in USA and Brazil to underpin TTS' offensive in the offshore market.

The TTS Group

The parent company of the group, TTS Group ASA, is located in Bergen, Norway, and has been listed on the Oslo Stock Exchange since 1995.

The group operates on a worldwide basis and had 1,100 employees at the year-end 2013. An additional 165 employees were hired on a temporary basis.

TTS Group employees, geographical breakdown

Review of the annual accounts

The TTS Group ASA presents its annual accounts pursuant to the Norwegian Accounting Act's Section 3-9 Annual Accounts, in accordance with the International Financial Reporting Standards (IFRS) as adopted by EU.

TTS implemented a change in one of its accounting principles in 2013. From 1 January 2013, actuarial gains and losses are recognized in other comprehensive income as part of adoption of the revised IAS 19. Please refer to Note 5 for additional information relating to the change in principle.

Annual result for 2013

Full Year
MNOK	2013	2012
Turnover	2 693	2 370
EBITDA	-130	157
Operating profit	-164	110
Net financial items	-37	-66
Profit/loss before tax	-201	44
Net result continued business	-227	37
Total net result included divested business	-204	455

Total group turnover in 2013 was MNOK 2,693, representing a 14% increase on 2012. The revenue growth is primarily due to higher activity in the Services and Offshore & Heavy Lift divisions. This growth was partly offset by MNOK 200 lower turnover in the Marine division due to changes in the joint venture structure in China, which will be completed in 2014.

The increased volumes, however, were offset by increased operational costs and low utilization in parts of TTS' operations. EBITDA for 2013 amounted to a loss of MNOK 130; down from a profit of MNOK 157 the previous year. The decline in operating profit was mainly due to cost overruns and low margins on a number of offshore projects and weaker margins in parts of the Marine division.

Due to reduced debts, the TTS Group's financial costs were significantly reduced compared to 2012.

The sale of the drilling business completed in 2012 resulted in an additional earn-out of MNOK 23 in 2013. The Board notes that there is a potential for further gain from the drilling business sales in the form of earn-out and holdback amounts in 2014 and earn-out in 2015.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION Total assets at the end of 2013 were MNOK 2,225, down MNOK 126 from 2012. The reduction is

attributable to a reduction in the gross working capital. Still, the net working capital is somewhat high mainly due to the postponement of a number of heavy lift projects.

Payment of dividends and increased net working capital has resulted in an increase in net interest bearing debt of MNOK 189, to MNOK 92 in 2013.

At the end of the third quarter of 2013, the TTS Group was in breach with one of its debt covenants concerning 12 month rolling EBITDA. Debt reclassification requirements were nonetheless avoided in the annual accounts, as TTS obtained waivers from the banks for the 12-month rolling EBITDA covenant for the period Q3 2013 to and including Q2 2014.

In January 2014 TTS was informed that Sigma Drilling has terminated its contract with the STX Offshore and Shipbuilding Company Ltd. (STX) in Korea. TTS has an ownership interest in Sigma Drilling where total investments amount to MNOK 29. The majority of the initial investment relates to a down payment to the yard, which has been guaranteed by the refund guarantee and is therefore to a lesser extent exposed to the financial situation of STX.

Following this announcement, TTS has also terminated its contract regarding crane delivery with STX and have claimed STX for compensation for worked performed and other costs that TTS has in connection with execution of the contract. TTS has a material work in progress (stock) related to the crane package and the value depends on the commercial settlement with STX.

Financial fixed assets were MNOK 133 at the end of 2013, compared to MNOK 164 at the year-end 2012. The assets consist of the TTS Group's investments in Sigma Drilling AS and the joint ventures in China.

Total recognized tax losses carried forward was MNOK 58 at the end of 2013.

The reporting currency at TTS is NOK (Norwegian krone). As substantial parts of both income and expenses are denominated in foreign currencies, fluctuating foreign exchange rates can have a certain impact on the group's operating results. TTS therefore strives to reduce its exposure to currency fluctuations through the use of hedging instruments. For additional information, please consult the Accounting principles, section 3.1a.

The annual accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by EU. The Board affirms that the accounts provide a true and fair view of the company's financial position as of 31 December 2013. The Board is not aware of any unreported events occurring subsequent to the balance sheet date of 31 December 2013 that may be of material significance to the TTS Group or to the annual accounts of 2013. See Note 30; Subsequent events, for further information.

At the end of 2013, the TTS Group ASA had a share capital of NOK 9,526,623 divided into 86,605,660 shares at 0.11 each. The company holds 144,400 of its own shares.

CASH FLOW

The TTS Group had a negative net cash flow of MNOK 127 in 2013. Cash flow from operations was negative with MNOK 138; attributable mainly to offshore and heavy lift projects where delays have caused a build-up of working capital, which represents the main difference between the EBITDA of negative 130 and the negative cash flow from operations.

Net cash flow from investments in 2013 was positive with MNOK 14. The main factors influencing the cash flow from investments were dividends of MNOK 40 from the joint ventures and an additional earn-out of MNOK 23 originating from the sale of the drilling business in 2012. Investments in fixed assets in 2013 amounted to MNOK 49.

During 2013, the TTS Group has drawn an additional MNOK 115 of debt and paid net interests on debt amounting to MNOK 32.

At the end of 2013, TTS has a nominal net interest bearing debt of MNOK 92 and unused available credit facilities of MNOK 259 in addition to a cash reserve of MNOK 156.

TTS paid dividends of MNOK 86 to shareholders in 2013.

RESEARCH AND DEVELOPMENT

Total capitalized investment in R&D in 2013 was MNOK 2,7 which mainly relates to development of cranes to drillship.

ORDER BACKLOG

Order backlog at the end of 2013 amounted to MNOK 2,971, up from MNOK 2,783 at the end of 2012. The figure includes 50% of the order backlog in TTS' joint ventures in China.

Most of the increase in order intake is related to car carriers, offshore cranes and ship lift solutions, but

order intake in the joint ventures also increased during 2013.

CONTINUED OPERATION

As of 31 December 2013, TTS' equity ratio was 25.5%, down from 36.3% the previous year. Net interest bearing debt amounted to MNOK 92, using the nominal value of the convertible bond.

In accordance with Section 3-3 of the Norwegian Accounting Act, the Board of directors confirms that the financial statements have been prepared on the basis of the going concern assumption, and that the requirements for continued operations are fulfilled.

Business areas

The TTS Group reports on three separate business segments: the Marine Division, the Offshore & Heavy Lift Division and the Services Division. The former fourth division, the Port & Logistics Division, was merged into the Marine Division as of February 2014.

MARINE DIVISION

	Full Year
MNOK	2013	2012
Turnover	1 264	1 302
EBITDA	-0,2	122.3
EBITDA margin (%)	0,0	9,4
Order backlog*	2 125	1 700

The Marine division includes the former Port & Logistics division. *) Order backlog includes 50% of Joint venture and NMF from 20th of August 2012.

Total revenue for the Marine division was generally in line with 2012. Lower activity within deck equipment was largely offset by increased demand for TTS' solutions for ship lifts and car carriers. Still, this growth was partly offset by MNOK 200 lower turnover in the Marine division due to changes in the joint venture structure in China, which will be completed in 2014.

EBITDA was reduced compared to 2012, due mainly to lower earnings in the joint ventures and in the deck equipment business where losses related to yacht projects explains the weak results. On the positive side, the order backlog grew considerably during 2013.

The Marine division experienced positive market trends in 2013. Bulk sector contracting reached levels not seen since 2008 and the market for LNG tankers improved significantly. The market for specialized vessels was strong, with the increased demand for car and truck carriers (PCTCs) of particular importance to the TTS Group, which holds a strong position in the car carrier market. The market for the port and

terminal solutions offered by TTS' port and logistics business improved somewhat in 2013.

Most of the Marine division's target markets improved in 2013. The largest orders were related to car carriers, a segment where TTS has established strong and long-lasting relationships with several of the largest players, and to ship lifts, where the group won milestone contracts for its solutions both in Vietnam and Brazil.

OFFSHORE & HEAVY LIFT DIVISION

	Full Year
MNOK	2013	2012
Turnover	982	686
EBITDA	-148,4	26,6
EBITDA margin (%)	-15,1	3,9
Order backlog	846	1 083

Turnover increased significantly in the Offshore & Heavy Lift division in 2013, due partly to the acquisition of the heavy lift crane company TTS NMF in August 2012.

Poor margins and substantial delays on a number of projects, in addition to lower than expected activity within the heavy lift crane business, contributed to the substantial loss in 2013. EBITDA loss amounted to MNOK 148. However the division had an important breakthrough, in the rig and drillship segment, and the Board believes that as long as the ongoing business improvement programs are successfully carried out, the potential for the division is viewed to be ample. The Board's decision to establish TTS' first full scale production site for offshore cranes – at TTS Marine in Shanghai at close proximity to the important Far East market – underpins this belief.

Activities in the offshore market were generally high in 2013, although demand declined slightly at the end of the year. The market for offshore cranes is expected to be more mixed in 2014 than in 2013. The order backlog of the division was significantly reduced during 2013, due mainly to the slow-paced market for heavy lift cranes.

SERVICES DIVISION

	Full Year
MNOK	2013	2012
Turnover	46	382
EBITDA	43,0	24,3
EBITDA margin (%)	9,7	6,4

The Services division's revenue increase in 2013 by 16% is partly explained by the acquisition of TTS NMF in August 2012, but higher activity within the offshore

segments also contributed positively. The operating result grew by 76%.

In general the service market stayed quite flat during the year, influenced to some degree by the relatively low charter hire levels negative effects on spare parts sales.

Risk factors and risk management

The TTS Group is exposed to various types of risks. The risks have been categorized into three different types; a) market risks which relates to the possible changes in demand or price due to e.g. market fluctuations and macroeconomic factors, b) financial risks which relates to currency risks, credit risks, liquidity risks and similar risks, and c) operational risks which represents risks for unsatisfactory execution of projects both technically and commercially.

On a monthly basis, the Board reviews operating reports from the management. In addition to the continuous risk mitigation, the Board and management carry out specific risk analysis in connection with major investments and contract signing. Specific risk areas or projects are continuously monitored.

MARKET RISK

There are a number of risks related to the market development for TTS' products and services. TTS monitors these risks through its extensive sales network, through a number of enquiries, and by monitoring relevant available information on trends like the number of vessels contracted, ship yard utilization indicators, charter development, investment trends and oil prices.

Contracting of new vessels – both merchant vessels and specialized vessels – represents the most important market risk factor for the TTS Group. The level of contracting activity heavily influences both total business volume and margins for TTS' main products and solutions. Services and after sales are to a larger degree affected by the development in freight rates, legislative changes and the general development of demand and supply in the marine market.

At the beginning of 2014, the TTS Group has secured sound order backlogs for most of its businesses. Scheduled deliveries for the main part of the current contract obligations are between three months and two years. Still, uncertainties surrounding the global economy, oil price and the credit market indicate risks relating to the cancellation or postponement of orders.

FINANCIAL RISK

TTS is exposed to credit-, liquidity- and

currency-related risks and has adopted an active approach to managing risk in the financial market. The aim of the group's financial strategy is to be sufficiently robust to withstand prolonged adverse conditions.

Credit risks represent potential financial losses stemming from contractual partners' failure to fulfil their contractual obligations. Developments in the global economy in general and in the marine business specifically have so far resulted in only modest losses on accounts receivable. Yet, under the perception that there is a substantial credit risk, the TTS Group has taken measures to limit this risk through restricting credit and evaluating the financial bearing capacity of its contract partners. TTS works continuously to limit its exposure to credit risk.

TTS has covenants for both equity ratio and 12 months rolling EBITDA related to its loans with Nordea and DNB. In 3rd quarter TTS received a waiver for 12 months rolling EBITDA related to the period up to and including 2nd quarter 2014. The Equity ratio, including subordinated convertible bond was 29.1%. The covenant requirement is 27.5%.The financial development of the Group has increased the risk of breach of the loan covenants.

The liquidity risk is the risk that TTS may be unable to meet short-term financial demands and fulfil its obligations as they fall due. To reduce this risk, the TTS Group operates a cash pool arrangement involving the majority of the enterprises within the corporation. The purpose is to optimize group cash flow and the arrangement includes the group's overdraft facilities. In total, this pool set-up enables optimal cash flow control on group level.

On a monthly basis, the TTS Group prepares a 12-month cash forecast to predict liquidity requirements. At 31 December 2013, the TTS Group had utilized MNOK 74 of its total overdraft facility of MNOK 300.

Relating to currency risk, TTS' policy is to hedge all significant currency positions.

OPERATIONAL RISK

The TTS Group's deliveries are primarily conducted and organized in the form of projects. The operational risks in projects are largely related to unsatisfactory project management, faulty calculations or inadequate technical execution of projects.

During the tender phase, projects undergo thorough risk assessments in order to identify and mitigate any potential technical and commercial risk involved. calculate additional risk areas and level of contingency required. TTS experienced a number of projects in 2013 where the risk assessment has been inadequate and insufficient. Measures have been implemented to ensure that all projects are being satisfactory assessed both prior to signing of contracts and during execution of the project. Risks related to estimating project costs are assessed based on technical product specifications; such risks are therefore inherently more difficult to assess for new products.

Furthermore evaluations of the projects are done to

TTS will continue to focus on improving its risk monitoring and assessment tools as well as its project management tools. Measures are taken to ensure that all companies within the group review progress and risk mitigation regularly during project execution.

Corporate social responsibility

At TTS, we are dedicated to conducting business in an ethical and responsible way. Our corporate social responsibility encompasses QHSE, business ethics, human rights, employee rights and anti-corruption policies. We aim at sustainable development for all stakeholders: economically, socially and environmentally.

Corporate social responsibility at TTS is supported by a corporate culture whose core values are integrity, openness and honesty, loyalty, and initiative. TTS has enterprises in 13 countries and operates in very different cultural contexts. While committed to respecting local culture, we take care to employ the highest standards of ethical conduct and business behavior.

TTS puts emphasis on maintaining legal compliance at local, national and international levels and works in accordance with all the regulations that govern our business. We seek to ensure that no human rights are violated in connection with our activities and give our workers' every opportunity to exercise their employee rights.

Creating a working environment where employees can thrive and develop as humans and professionals is given high priority at TTS. We support our employees' opportunities to organize through trade and labour unions and facilitate annual global employee representatives' meetings. TTS is also a strong advocate for equal rights for all employees regardless of gender, sexual orientation, disability, ethnicity, religion or political orientation.

For nearly 15 years, we have been building our Group's reputation around the solid and lasting fundamentals embodied in The Spirit of TTS. The Spirit of TTS contains:

• TTS vision and strategy
• Company culture
• Management
• Ethical guidelines

The Spirit of TTS generates a set of core values in the TTS Group:

• Client-focused services
• Commitment to quality and professional excellence • Respect for others
• Taking positive and effective action at all times

These core values will enable us to continue to build relationships with all of our stakeholders.

The TTS Group has zero tolerance for corruption and encourages its employees to blow the whistle at the suspicion of infringements.

Quality, health, safety and environment (QHSE)

To conduct safe and reliable operations, which do no harm to people and the environment, is paramount to the TTS Group. We also strive to avoid damages or losses to property and to avoid faults and non-conformities that may influence the quality of our deliveries. We support a company culture characterized by strong day-to-day compliance with high QHSE standards, and it is our belief that such considerations are fundamental to achieving good results for customers, shareholders and employees.

Although all employees are accountable for contributing to their own as well as to their colleagues' health and safety, managers have a particular responsibility for monitoring and mitigating risk. We work systematically to improve our management systems and our QHSE performance. Adherence to strict QHSE measures is also an important criterion for TTS when selecting suppliers.

In 2013, a number of important initiatives were undertaken in order to strengthen TTS' QHSE work. An HR & HSE working group was established at a corporate level with a mandate to contribute to increased efficiency and quality in HR and HSE processes. New HSE reporting procedures were implemented at a corporate level in order to facilitate adherence to common HSE measures for the entire group.

We also conducted our first employee survey encompassing all TTS operations in 13 countries, reaching out to over 1,000 employees in five languages with a respondent rate of 79 percent.

The survey showed good results for TTS regarding employee engagement and loyalty and also provided useful input for further HSE initiatives. Management policies, business plans, and management and business measures are fully discussed at an annual employee representative and management meeting held by the CEO of TTS Group. An exchange of views between the CEO and the different employee representatives is also encouraged, so as to create a common basis for the group's future development.

THE ENVIRONMENT

TTS takes great care to ensure that the group's operations have a minimum negative impact on the physical environment. At our production facilities in Germany, South Korea and China, measures have been taken to ensure that activities are conducted in accordance with strict environmental standards.

The TTS Group's target markets are the marine and offshore industries. Shipping is generally recognized to be among the most environmental-friendly ways of transportation; nevertheless we have to acknowledge the fact that seaborne transportation is a major source of pollution. Therefore we put emphasis on developing material handling solutions targeted at improving efficiency thus saving fuel and reducing emissions.

It is also worth noting that TTS has regularly contributed as advisor to national and international programs and initiatives targeted at developing more environmental-friendly and efficient means of transportation and cargo handling.

People and organization

ORGANIZATION AND ENVIRONMENT

In November 2013, the Board and Johannes D. Neteland agreed to terminate his appointment as CEO of the TTS Group.

Björn Andersson was appointed acting CEO; an arrangement made permanent in March 2014. The Board has strong confidence in Andersson's ability to see important improvement programs through and to direct TTS towards fulfilling its potential as a leading, full-scale provider of equipment solutions and services to the maritime industries.

Two divisions also got new top executives in 2013. Stefan Gleuel was appointed Executive Vice President of the new Services division, while Geir Storaas became the new Executive Vice President of the Offshore & Heavy Lift division.

The TTS Group had 1,100 employees at the end of 2013. In addition, 165 employees were hired on a temporary basis. The skilled and dedicated workers of TTS are the Group's most important success factors, and the Board therefore wishes to thank all employees for their contributions to the company's operations in 2013.

TTS experienced 13 work place incidents resulting in need for medical treatment in 2013, but no fatalities, no cases resulting in total or partial permanent disabilities and no serious personnel injuries.

Reported absence due to illness was 3% in 2013, an increase of 0.5% from 2012. The Lost Time Incident rate per million working hours (LTI rate) was 8.4 in 2013; down from 11.4 and 12.4 in 2012 and 2011 respectively. This trend indicates that TTS' strong focus on risk awareness and mitigation has a positive effect, and it is the Board's hope that the LTI index will stabilize at even lower levels.

The TTS Group continuously strives to ensure a healthy and motivating working environment for its employees. As an international corporation with operations within very different cultural contexts, TTS has invested considerable resources in establishing cross-border connections between managers and employees. In all of the group's divisions and subsidiaries, efforts are made to nurture a joint corporate culture based on the core values of integrity, openness, loyalty and initiative.

TTS' activities are primarily related to design, engineering and sales – activities with very limited impact on the external environment. TTS also conducts service and support activities as well as assembly and testing of equipment based on a very limited use of chemicals that may be harmful to human health or to the environment.

The products delivered by TTS are mainly electrohydraulically powered; the use of which represents very limited risk of environmental pollution. The TTS Group's operations are not regulated by any licenses or regulatory orders.

EQUAL OPPORTUNITIES

TTS promotes a working environment offering equal rights, equal treatment and equal opportunities to all regardless of gender, religion and ethnic background. It is an important aim that all employees experience equal possibilities regarding professional and personal development.

Engineers make up the major part of TTS' workforce, and represent a profession where women are traditionally underrepresented. The challenge of attracting women to the field is reflected at TTS, where women constitute 21% of the workforce.

Of the corporate management team's eight members, two are female. Three of the TTS Group ASA's Board members are female; two elected by the shareholders and one by the employees.

Pursuant to the law prohibiting discrimination based on disability (the Norwegian Anti-Discrimination and Accessibility Act), TTS has made efforts to locate operations and implement office layout in a manner that enhances accessibility for all. It is also the company's policy to make reasonable workplace accommodations to meet the needs of employees with hearing or sight impairment.

BOARD OF DIRECTORS

Trym Skeie is Chairman of the Board of the TTS Group ASA. In addition to the chairman, the Board of Directors at the end of 2013 consisted of Bjarne Skeie, Jan Magne Galåen, Anne Breive, Toril Eidesvik, Mona Halvorsen and Ole Henrik Askvik.

The composition of the Board changed during 2013. At the Annual General Meeting held in June 2013, Kjerstin Fyllingen stepped down and was replaced by Toril Eidesvik. Jan Magne Galåen was re-elected for a two-year period.

AUDITOR

KPMG AS was re-elected as the TTS Group ASA's auditor for 2013.

Board statement on corporate governance

The TTS Group's Board of Directors adheres to good corporate governance standards and uses the Norwegian Code of Practice for Corporate Governance actively as a guideline. A more detailed account of the applicable principles for corporate governance is provided as a separate Corporate Governance section in the annual report. Relevant resolutions from the General Meeting can be found at the company's website, www.ttsgroup.com.

SHAREHOLDER STRUCTURE AND LIMITATION

The shares of the TTS Group ASA are publicly traded at the Oslo Stock Exchange, where the company trades under the ticker code TTS. All shares are identified by the owner's name. As reflected in the company's Articles of Association, there are no restrictions to voting or transfer of share ownership, nor are there any mechanisms aimed at preventing takeovers. The TTS Group ASA has one class of shares, and each share confers one vote at the General Meeting. There is no specific representation – neither individually nor jointly – for shares owned by employees of TTS.

Some of the agreements that the company has entered into with financial institutions are conditioned upon the TTS Group ASA being listed at Oslo Stock Exchange.

CAPITAL STRUCTURE AND PARENT COMPANY TTS GROUP ASA FINANCIAL POSITION

Total group equity at year-end 2013 was MNOK 567 of which MNOK 159 was restricted capital and MNOK 408 other equity.

The parent company, TTS Group ASA, reports a net profit for the year 2013 of MNOK 97 and an operating loss of MNOK 28. The main reason for the positive net result relates to dividends from subsidiaries, additional earn-out related to the sale of the drilling business partially offset by write-down of share value in subsidiaries.

The equity in TTS Group ASA was at the end of 2013 MNOK 573 of which MNOK 159 was restricted capital and MNOK 415 other equity. At the General Meeting in June 2013, the Board's proposal for dividends of NOK 1 per share was approved.

Due to the poor financial performance of the group, the Board will propose no dividend payment for the year 2013. The net result from the year is proposed to be transferred to other equity.

Future prospects

The year of 2013 came with clear signs that financing is easing across the shipbuilding industry. Seaborne trade grew and is expected to continue growing, which has a positive effect for the demand for merchant vessels and for the future business opportunities of TTS' Marine division.

Energy demand is growing and offshore exploration and production is expected to develop positively in the long run, even though the outlook for 2014 looks somewhat challenging. There are still uncertainties related to the general global economic development, nonetheless it's the Board's opinion that when the ongoing business reengineering programs at TTS are successfully conducted, the group is well positioned to capitalize on the current trends in market.

Through its strong position and long-standing partnerships in China, TTS has established a good basis on which to keep expanding its product offering in both China and South Korea, the two largest shipbuilding nations in the world.

Within the offshore and heavy lift markets the Board sees an untapped potential for TTS, in particular if it can succeed in its strategic initiative towards the rig and drillship market. The market outlook for TTS' broad portfolio of heavy lift equipment has been picking up towards end of 2013. In addition, the Board expects to see the positive effects of TTS' efforts to build a stronger service offering with a strong global footprint.

The global service market is expected to remain unchanged in 2014; yet the Board has reason to believe that the structural changes to TTS' services strategy will result in an increased activity for the group's service offerings in 2014.

Bergen, 23 April 2014 Board of Directors of TTS Group ASA

Trym Skeie

Chairman of the board

Bjarne Skeie Director

Ole Henrik Askvik Director

Toril Eidesvik

Director

Jan Magne Galåen Director

Mona Lucille Tellnes Halvorsen Director

Anne Breive Director

Björn Andersson CEO & president

Corporate Governance

TTS Group ASA (TTS) use The Norwegian Code of Practice for corporate governance (NUES), dated 23 October 2012 as guidelines for its work. The following principles for corporate governance have been adopted by the Board of TTS Group ASA:

1. Review of corporate governance

The intent of TTS' principles of corporate governance is to clarify the roles of the shareholders, the Board of Directors and management beyond what follows from legislation. These principles constitute part of the company's annual report.

"The Spirit of TTS" is available on the company's website, www.ttsgroup.com and describes 1) Vision and Strategy 2) Corporate Culture and Core Values 3) Management and 4) Ethical Guidelines.

As a global group with companies in 13 countries, there is a continuous focus on our core values and corporate culture. Through a process involving all companies and divisions, we have examined and established our core values; which are integrity, openness, loyalty and initiative. Our core values shall influence all TTS' activities, in order that that they contribute to cooperation and progress for each and everyone in the group.

Through clearly defined core values, TTS wishes to contribute to development of the societies in countries where it is present. TTS' operations are often based on trade across borders and culture. TTS takes social responsibility through developing increased understanding of cultural differences and in this way increased tolerance.

TTS has in cooperation with external expertise held seminars to enhance understanding of cultural differences, and developed our own "Cultural Handbook". TTS has also sponsored Chinese cultural activities in Norway, and Norwegian cultural activities in China.

2. Business

TTS Group ASA's Articles of Association are available on the company's website. Article 3 defines the company's purpose:

The company's purpose is to engage in industrial activities related to ship building, oil and gas production, and port activities, including any related activities, as well as participation in or acquisition of other enterprises.

3. Equity and dividends EQUITY

Total balance at 31 December 2013 was MNOK 2,225, with an equity of MNOK 567, giving an equity-to-assets ratio of 26 percent. The company's solidity requirement is continuously assessed on the basis of the company's goals, strategies and risk profile.

In 2011, TTS issued a subordinated convertible bond of MNOK 200. During 2011, 2012 and 2013 MNOK 105 has been converted to 10,464,876 shares. The strike price has been adjusted to reflect dividends and repayment of capital.

In 2012, TTS sold Energy AS, its drilling equipment business unit, for MUSD 270 with a gain of MNOK 420. Additional earn out for the sale in 2013 amounted to MNOK 23.

SHAREHOLDER POLICY

TTS aims to give our shareholders a competitive long-term return that reflects the risk inherent to the company's operations. Based on TTS' growth strategy, the shareholders' return should be realised through an increase in the value of their shares, together with dividends when circumstances so permit. Growth by means of acquisitions will be implemented through balanced financing of equity and debt.

The Annual General Meeting determines the annual dividend, based on the Board's proposal.

The Board of TTS Group ASA will propose to the Annual General Meeting on 5 June that no dividends are paid out for the financial year 2013.

STRATEGY FOR FURTHER GROWTH

TTS has, since 1996, completed a number of successful acquisitions, establishing a leading position in its segments of the market for offshore and marine handling equipment. TTS is positioned today to take a higher market share in the marine and offshore markets with a broad product range and solid reputation.

TTS is presently focusing on profitability with the aim to improve profitability in general and especially in the offshore segment. To this effect, a number of strategic initatives have been launched to ensure that the competitiveness of TTS products improves.

TTS aims to grow the business signifiantly during the next five years. However, TTS sees a potential for organic growth within all of its segments and aim to maintain or become one of the three largest manufactures within all segments where TTS is present.

AUTHORISATIONS TO THE BOARD

• On 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 8,600,000 shares against cash or non-monetary redemption including merger relating to acquistions of businesses or assets. The authority is valid to the Annual General Meeting on 5 June 2014. No shares have been issued on the basis of this authorisation as of 23 April 2014.
• On 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 600,000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 10 June 2015. A total of 530,000 shares have been issued in the form of options, with a possible first time exercise of options following the presentation of the first quarterly results for 2014, equivalent to a maximum of 50 percent of the allocated options. The number of shares for further exercise of options constitutes 12.5 percent following the presentation of the results for the second, third and fourth quarter

of 2014 and the first quarter of 2015, in addition to options not previously exercised.

• On the 31 May 2012, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 500,000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 31 May 2014. A total of 360,000 shares have been issued in the form of options, with a possible first time exercise of options following the presentation of the first quarterly results for 2013, equivalent to a maximum of 50 percent of the allocated options. The number of shares for further exercise of options constitutes 12.5 percent following the presentation of the results for the second, third and fourth quarter of 2013 and the first quarter of 2014, in addition to options not previously exercised.
• On 10 June 2013, the Annual General Meeting adopted a resolution to give the Board of Directors autorisation to buy own shares to the benefit of employees up to 800 000 shares. The authoritiy is valid to 30 June 2014. As of 23rd of April 2014 this autorisation has not been utilized.
• On 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to buy up to 6,000,000 shares with the purpose of deletion. The authorisation is valid to 30 June 2014. As of 23rd of April 2014 this autorisation has not been utilized.
• On 10 June 2013, the Annual General Meeting adopted a resolution to give the Board of directors authority to buy back a portion of the convertible callable unsecured subordinated bond 2011/2016 up to a total of NOK 150,000,000. The authoritiy is valid to 30 June 2014. As of 23rd of April 2014 this autorisation has not been utilized.

4. Equal treatment of shareholders and transactions with closely related parties SHARE CAPITAL AND SHAREHOLDERS

The share capital on 31 December 2013 was NOK 9,526,623 divided into 86,605,660 shares at a nominal value of NOK 0.11 each. The company has only one class of freely negotiable shares, which are listed on the Oslo Stock Exchange's Match List under the ticker symbol TTS. Each share is allocated one vote.

A list of the TTS' 20 major shareholders is available on the company's website.

OWN SHARES

Own shares are purchased on the Oslo Stock Exchange. On 23 April 2013, the company's own shareholding was 144,400.

THE BOARD OF DIRECTORS AND GROUP MANAGEMENT

TTS Group ASA's Board of Directors and group management are viewed as closely related parties of TTS, using the Oslo Stock Exchange for the transaction of TTS shares.

According to the Norwegian code of practice for corporate governance, a company is advised to implement guidelines assuring that closely related parties give notice of closely related transactions. Based on the current Board of Directors and group management, the company has not seen the need to implement such guidelines.

According to the Norwegian code of practice for corporate goverance, a company should list reasons for deviation from existing shareholders' preferential status when making a right issue. TTS aims to follow the Norwegian code if and when applicable.

RELATED COMPANIES

The joint venture companies in the TTS group are treated as joint ventures with transactions as shown in Note 10.

5. Freely negotiable shares

As transpires from the Articles of Association posted on the company's website, no form of transfer restriction has been effectuated.

6. Annual General Meeting

The Annual General Meeting is usually held at the end of May/beginning of June. The Annual General Meeting for 2013 will be held on 5 June 2014, in accordance with the financial calendar for 2014.

Notice, including the agenda for the Annual General Meeting and the nominating committee's recommendations, are distributed to the shareholders at least three weeks prior to the Annual General Meeting, and are available on the company's website at least three weeks prior to the meeting. The agenda

papers are detailed enough to permit the shareholders to make a decision on all items up for consideration. Shareholders unable to attend may vote by proxy. Proxy forms will be sent out for each shareholder to fill in and return to the administration. On the proxy form, the shareholder may vote on each individual item. The registration deadline is set to the day before the Annual General Meeting.

The Chairman of the Board, chairman of the nominating committee, auditor and CEO are present at the Annual General Meeting, in addition to other board members when appropriate. The Annual General Meeting elects its own chair; usually this is the Chairman of the Board.

Due to a low turnout for the general assemblies, TTS does not deem it necessary for all of the Directors of the Board to be present. We have, for the same reason, found it unnecessary to establish routines to secure independent chairing of the Annual General Meeting. Should there be particular items on the agenda requiring such measures, this will be individually considered for each individual general assembly.

The Annual General Meeting will be given the opportunity to vote for each of the candidates up for positions in the company's bodies.

7. Nominating committee

At TTS, a nominating committee is statutory according to the Articles of Association. In accordance with the Annual General Meeting on 10 June 2013, a nomination committee was set up with the following members appointed:

NAME	STATUS	POSITION
Petter Sandtorv	Elected	Trustee, Skagenfondene
Bjørn Sjaastad	Not for election	Consultant
Bjørn Olafsson	Re-elected	Consultant

The nominating committee appoints its own chairman of the committee. Bjørn Olafsson was elected to chair the committee.

No one in the nominating committee is a member of the Board of TTS Group ASA or part of the management of TTS, as such ensuring independence. The nominating committee has knowledge of TTS and its shareholders, so that the interests of the shareholders are protected.

The nominating committee recommends candidates to the Board and related remuneration, where the nominating committee's recommendation is substantiated.

According to the Norwegian Code of Practice for Corporate Governance, the chairman of the nominating committee should be elected at the Annual General Meeting and guidelines for its work should be established. In the opinion of TTS, it is more appropriate that the committee decides on the distribution of tasks, including the election of a chairperson. The Annual General Meeting determines the nominating committee's remuneration.

The members of the committee, including practical information such as deadlines for nominations and contact information, are listed on the company's website.

8. Corporate Assembly and Board of Directors, composition and independence

As TTS Group ASA has fewer than 200 employees, the management model does not include a corporate assembly. There are two employee elected representatives on the Board of TTS Group ASA.

In accordance with the Annual General Meeting on 10 June 2013, the shareholders elected the following members to the Board:

NAME	STATUS	POSITION
Trym Skeie	Not for election	Chairman, Skagerak Kapital
Anne Breive	Not for election	CFO Trelleborg Offshore AS
Toril Eidesvik	Elected	CEO, EMS Seven Seas ASA
Bjarne Skeie	Not for election	Skeie Technology AS
Jan Magne Galåen	Re-elected	Manager, Rasmussengruppen

In accordance with the ordinary election of two employee representatives to the Board of TTS Group ASA, the following were appointed to the Board in September of 2012:

NAME	STATUS	POSITION
Mona Halvorsen	TTS Offshore Handling Director
Ole Henrik Askvik TTS Marine		Director

TTS' Board members are elected for a two-year period. Each Board member's CV is available in the Annual Report.

Trym Skeie and Bjarne Skeie are both directly and indirectly major shareholders in the company. Jan Magne Galåen is employed by Rasmussengruppen AS which is a major shareholder in the company. The other shareholder-elected Board members are independent of management, the company's major shareholders and primary business connections. Furthermore, the composition of the Board upholds shareholder interests and the company's requirements for expertise, capacity and diversity in a fine collegiate body. The complementary expertise of the Board ensures the Board member's ability to assess matters from different perspectives before reaching a final conclusion.

Trym Skeie, Chairman of the Board, holds 2,160,735 shares in TTS Group ASA, through Tamafe Holding AS, where he holds all of the voting shares. In addition Trym Skeie holds 323,140 shares and convertible bonds with a nominal value of MNOK 4 which can be converted to 804 828 shares.

Bjarne Skeie, Director for the Board, holds 12,414,175 shares in TTS Group ASA, through Skeie Technology, Skeie Consultants and Skeie Capital investments. In addition Bjarne Skeie owns, through Skeie Consultants, convertible bond with a nominal value of MNOK 6 which can be converted to 1,207,243 shares.

Mona Halvorsen owns 1 774 shares and Ole Henrik Askvik owns 2,032 shares. The other Directors of the Board do not hold any shares in TTS Group ASA. None of the Directors of the Board hold options. The attendence at the Board meetings has been high.

A procedure for the Directors and leading employees has been made relating to trade in TTS shares.

According to the Norwegian Code of Practice for Corporate Governance, the Chairman of the Board should be elected by the Annual General Meeting. In TTS, the Board appoints the chairman.

9. The work of the Board

The Board of Directors conducts its work on the basis of established procedures outlining its responsibilities collectively and individually.

The Board has eight scheduled meetings annually, and an annual meeting plan is set up. Further meetings are held as required. A total of 16 board meetings were held in 2013.

In November the Board of Directors made a decision to replace Johannes Neteland with Björn Andersson as the CEO of the company.

The Board's work has been focused on strategy for the business and control and risk related to ongoing operations, in addition to quarterly meetings to review financial results. The Board complies with the rules

regarding disqualification pursuant to the Joint Stock Public Companies Act, Section 6-27. The group's use of a nominating committee has been made statutory in its Articles of Association. In addition, the Board of TTS Group ASA has appointed an audit committee:

AUDIT COMMITTEE

Toril Eidesvik (Chairman) Anne Breive Jan Magne Galåen

The audit committee is selected on the basis of qualification and independence of the company as described in NUES.

At present, the Board does not have a compensation committee. This is assessed on an annual basis. TTS previously had a compensation committee. There are no other committees in the Board. At present, TTS does not have a deputy chairman. This is assessed on an annual basis. TTS previously had a deputy chairman.

The Board conducts a self assessment annually.

10. Risk management and internal control

Following Björn Anderssons appointment as CEO of the company, TTS reorganized the management team where the position of COO was removed.

Following the losses in parts of TTS, the internal control has been strenghtened by expanding the monthly operational review. In addition the internal control has been strenghtend by adding staff to the controller functions in the group.

Procedures and systems upholding uniform reporting have been prepared. The management prepares monthly reports on results, which are submitted to and reviewed by the members of the Board. In addition, more comprehensive quarterly financial reports are prepared, which are reviewed at quarterly board meetings.

As part of an ongoing risk management effort, the Board and management undertake specific risk review of major investments and contract signing. Finally the Board together with the management discuss budget

and strategy as part of a annual process to identify opportunities and threats for the group. The Board of Directors undertakes a thorough review of the company's financial status in the Directors' Report. This review includes a further description of the main elements of HSE and risk aspects.

11. Remuneration of the Board of Directors

Based on the recommendation of the nominating committee, the Annual General Meeting determines the remuneration of the Board of Directors. Remuneration is not linked to the company's result. There is no share option programme for the Board of Directors.

Members of the Board of Directors, or companies with whom they are associated, are not usually given separate tasks by TTS in addition to their function as members of the Board. Still, should such tasks be assigned, this will be based on the approval of the Board of Directors. There were no such assignments in 2013.

The nominating committee's proposal for remuneration of the Board of Directors is presented in the call for the Annual General Meeting on 5 June 2014.

12. Remuneration of executive management

The Board has issued guidelines for stipulation of salaries and other remunerations to executive management. The President and CEO's terms are decided by the Board. The guidelines are presented at the annual general meeting.

The Board's attitude to management salaries is that these should be competitive and motivating, but not ahead of the market with regard to their level. Bonus is calculated on the basis of measured results.

Guidelines are presented in Note 4. According to the note, share options constitute part of the remuneration. Exercise of share options is dependent on the share price listed on the Oslo Stock Exchange. Currently there are 890,000 options issued to management under the two authorisations to the Board of Directors mentioned under Item 3.

12

DISTRIBUTION OF OPTIONS AND SHARES AT 23 APRIL 2014

Name	Position	Number of options exercisable until 31.05.2014	Exercise price	Number of options exercisable until 10.06.2015	Exercise price	Total
Björn Andersson	CEO	0	9,83	70 000	6,42	70 000
Ivar K Hanson	EVP, Marine	60 000	9,83	60 000	6,42	120 000
Arild Apelthun	CFO	60 000	9,83	60 000	6,42	120 000
Miao Reinlund	VP Comunnications	60 000	9,83	60 000	6,42	120 000
Stefan Gleuel	EVP, Services	0	9,83	50 000	6,42	50 000
Geir Storaas	EVP, Offshore and Heavy lift	0	9,83	50 000	6,42	50 000
Nina Seter	VP HR & HSE	0	9,83	60 000	6,42	60 000
	Total number of potions to senior executives	180 000		410 000		590 000

In addition there are 240,000 options issued to former CEO Johannes D. Neteland which expire at the end of May 2014 and 60,000 to Lennart Svensson, former EVP of Port and Logistics which expire in May 2014.

13. Information and communication

The company has established guidelines for the handling of information and communication. These guidelines also address contact with the owners separate from the general assembly. The reporting by TTS of financial and other information is based on transparency, respecting the principles of equal treatment of stock market participants.

A financial calendar is available on the company's website. Any dividend proposal is presented in the fourth quarterly report and in the call for an annual general meeting.

Information for the shareholders of the company is posted on the company's website at the same time as it is distributed to the shareholders (with the exception of the call for an annual general meeting, see Item 6).

14. Company takeover

The company's Articles of Association do not include mechanisms aimed at preventing takeover, nor are other hindrances in effect to reduce transfer of the company's shares.

No main principles have been established for TTS' response to a prospective takeover bid, other than that the Norwegian Code of Practice for Corporate Governance will have a normative function.

15. Auditor

The auditor conducts a minimum of two meetings a year with the audit committee, part of the meeting without management present. One of the meetings is conducted in connection with the review of the annual accounts, and one of the meetings deals with the company's internal control. The audit committee meets with the auditors to go through the audit plan for the year where any specific areas are being discussed.

The auditor is present at board meetings as required. The auditors are always present at the board meeting where the annual accounts are approved. The management is not present during the meeting between the auditors and the Board.

Remuneration payable to the auditor, specifying the division between auditing and other services, is outlined in Note 4. The extent of services other than audit services is addressed in the meeting between the auditor and the audit committee. It has not been deemed necessary by the Board to implement additional guidelines with regard to the management's access to making use of the auditor for services other than auditing.

Gdansk.

TTS Poland was established in 2013. The company, situated close to Gdansk airport, provides design for all types of equipment and disciplines.

TTS GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

			IFRS 2012
	Notes	IFRS 2013	restated
Continuing operations
OPERATING REVENUE
Project revenue	2, 21	2 693 167	2 346 478
Other income		-	23 428
Total revenue and income	1	2 693 167	2 369 906
OPERATING EXPENSES
Cost of sales	3, 21	1 911 696	1 542 167
Personnel costs	4, 5	683 424	512 597
Depreciation of fixed assets	6, 7	33 814	24 387
Other depreciations/amortisation	7, 8	-	22 801
Other operating expenses	4, 20	228 124	207 517
Losses on accounts receivable		12 171	10 210
Income from investments in joint ventures (profit = -)	10	-11 964	-59 916
Total operating expenses		2 857 265	2 259 763
Operating profit/loss		-164 098	110 144
FINANCIAL INCOME AND EXPENSES
Other interest income	24	7 903	10 223
Other financial income	24	6 202	19 788
Other interest expenses	24	-27 629	-42 588
Other financial expenses	24	-23 259	-53 095
Net financial items		-36 783	-65 672
Profit before tax from continuing operations	1	-200 881	44 472
Income tax expenses	18	-26 482	-7 939
Profit for the period from continuing operations		-227 363	36 533
Discontinued operations
Profit / (loss) after tax for the period from discontinued operations	28	22 945	418 162
Profit for the period		-204 418	454 695
STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 1 JANUARY TO 31 DECEMBER		2013	2012 restated
Items that are not reclassified subseqently to profit or loss
Remeasurement of defined benefit pension plans	5	-10 220	-16 948
Items that may be reclassified subseqently to profit or loss
Foreign currency differences for foreign operations	25	71 398	-21 294
Other comprehensice income for the period		61 178	-38 242
Total comprehensive income for the period		-143 240	416 453
Earnings per share - continuing operation (NOK per share)	17	-2,63	0,44
Earnings per share - discontinued operation (NOK per share)	17	0,27	5,03
Diluted earnings per share - continuing operation (NOK per share)	17	-2,63	0,36
Diluted earnings per share - discontinued operation (NOK per share)	17	0,27	4,09

Profit for the period and total comprehensive income have been allocated to the owners of the parent company.

TTS GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION 1 JANUARY - 31 DECEMBER

ASSETS (AMOUNTS IN NOK 1000)

	Notes	IFRS 2013	IFRS 2012 restated	IFRS 01.01.2012 restated
Non-current assets
INTANGIBLE ASSETS
Deferred tax assets	18	57 748	67 825	137 524
Research and development	7	46 746	49 711	274 843
Licences and patents	7	4 579	5 832	10 702
Other intangible assets	7	26 368	25 180	3 315
Goodwill	7	538 119	471 150	827 184
Total intangible assets		673 560	619 697	1 253 567
NON-CURRENT ASSETS
Property	6, 13	16 053	14 620	14 548
Buildings	6, 13	13 808	17 767	19 792
Machinery and vehicles	6	47 820	35 913	9 407
Furniture, office-, and computer equipment	6, 13	58 368	46 734	74 256
Total non-current assets		136 049	115 035	118 004
FINANCIAL NON-CURRENT ASSETS
Investments in joint ventures	1, 10, 21	104 002	134 988	169 723
Assets available for sale	5	28 686	28 895	222
Other receivables		-	-	145
Total financial non-current assets		132 688	163 883	170 092
Total non-current assets		942 297	898 616	1 541 663
Current assets
Inventories	3, 13	200 801	187 111	382 794
Total inventories		200 801	187 111	382 794
CURRENT RECEIVABLES
Trade receivables	11, 13	316 395	334 024	468 875
Other receivables	11, 13, 21	58 816	121 735	213 084
Acquired, non-invoiced production	2, 13	470 763	504 574	317 756
Derivative financial instruments	22	25 179	23 180	20 710
Prepayments to suppliers	2,13	54 804	53 437	146 426
Assets held for sale	8	-	-	-
Total current receivables		925 957	1 036 950	1 166 851
Bank deposits, cash in hand, etc.	14	155 571	227 666	434 750
Total current assets		1 282 329	1 451 728	1 984 396
Total assets	1	2 224 626	2 350 345	3 526 060

TTS GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1 JANUARY - 31 DECEMBER

EQUITY AND LIABILTIES

(AMOUNTS IN NOK 1000)

	Notes	IFRS 2013	IFRS 2012 restated	IFRS 01.01.2012 restated
Equity
EQUITY
Issued share capital	16	9 527	9 527	37 845
Treasury shares	16	-16	-32	-18
Share premium reserve	16	149 378	149 378	384 891
Other equity	16	407 781	635 703	368 719
Total equity		566 670	794 576	791 437
Liabilities
PROVISIONS FOR LIABILITIES
Pension liability	5	74 683	62 917	46 171
Deferred tax	18	30 929	31 411	26 464
Total provisions for liabilites		105 612	94 328	72 635
OTHER NON-CURRENT LIABILITIES
Convertible Callable Unsecured Subordinated Bond	12, 14, 15	81 182	75 330	152 620
Debt to financial institutions	12, 13, 14	103 000	6 000	35 363
Total other non-current liabilities		184 182	81 330	187 983
CURRENT LIABILITIES
Bond loan		-	-	400 000
Debt to financial institutions	12, 13, 14	49 257	29 587	355 385
Payables to suppliers	21	298 698	245 363	339 615
Income tax payable	18	6 272	2 141	11 142
Other taxes payable		31 186	24 900	46 062
Prepayments from customers	2	281 489	501 181	616 516
Non-invoiced production costs, suppliers	2	173 414	62 365	98 843
Derivative financial instruments	22	28 494	9 490	108 551
Other current liabilities	19, 23	499 352	505 085	497 892
Total current liabilities		1 368 162	1 380 112	2 474 006
Total liabilities	1	1 657 956	1 555 770	2 734 624
Total equity and liabilities		2 224 626	2 350 346	3 526 060

Trym Skeie

Chairman of the board

Bjarne Skeie

Director

Ole Henrik Askvik Director

Bergen, 23 April 2014 Board of Directors of TTS Group ASA

Toril Eidesvik

Director

Jan Magne Galåen Director

Mona Lucille Tellnes Halvorsen Director

Anne Breive

Director

Björn Andersson CEO & president

TTS GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

			Treasury	Share premium
	Note	Share capital	shares	reserve	Other equity	Total
Equity as of 31.12.2011		37 845	-18	384 891	417 665	840 383
Effect of change of accounting principles
Effect of IAS19(Revised) from actuarial gains and losses	5	-	-	-	-48 946	-48 946
Equity as of 1.1.2012		37 845	-18	384 891	368 719	791 437
Profit for the period		-	-	-	454 695	454 695
Other comprehensive income	5, 25	-	-	-	-38 242	-38 242
Total comprehensive income		-	-	-	416 453	416 453
Treasury shares (purchase of 259 190 shares)	16	-	-129	-	-4 348	-4 477
New issue (convertible debt)	16	5 232	-	91 923	-	97 155
New issue (stock option program)	16	225	-	2 913	-	3 138
New issues expenses	16	-	-	-349	-	-349
Equity derived from subordinated convert ible bond	15	-	-	-	-12 935	-12 935
Dividend paid (NOK 1.56 per share)	16	-	-	-	-134 646	-134 646
Share based payment	16	-	-	-	2 575	2 575
Repayment of capital to shareholders (NOK 4.21 per share)	16	-33 776	115	-330 000	-115	-363 776
Equity as of 31.12.2012		9 526	-32	149 378	635 703	794 575
Equity as of 1.1.2013		9 526	-32	149 378	635 703	794 575
Profit /(loss) for the period					-204 418	-204 418
Other comprehensive income	5, 25				61 178	61 178
Total comprehensive income		-	-	-	-143 240	-143 240
Treasury shares (sale)	16	-	17	-	483	500
Share based payment	16	-	-	-	1 296	1 296
Dividend paid (NOK 1 per share)	16	-	-	-	-86 461	-86 461
Equity as of 31.12.2013		9 526	-16	149 378	407 781	566 670

TTS GROUP CONSOLIDATED STATEMENT OF CASH FLOWS

1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

2013 2012 restated Cash flow from operating activities Profit/loss before tax continuing operations -200 881 44 472 Profit/loss before tax discontinuing operations 22 945 418 162 Profit before tax -177 936 462 634 Adjustments to reconcile profit before tax to net cash flows
Depreciation of fixed assets 33 814 24 387
Depreciation/writedown on non-current assets/goodwill - 22 801
Interest expense 27 629 42 588
Interest income -7 903 10 223
Profit/loss from joint ventures -11 964 -59 916
Gain from sale of subsidiaries -22 945 -418 162
Share based payment 1 296 1 422
Difference between pension charges and payments to/from pension schemes 1 583 167
Change in inventories, customers and suppliers -137 050 61 344
Change in other receivables and other short term liabilities 160 407 -151 807
Interest recieved 7 903 -10 223
Income tax paid -12 757 -19 154
Net cash flow from operating activities -137 922 -33 697
Cash flow from investment activities
Acquisition of subsidiaries, net of cash acquired -11 732 -144 300
Disbursements from acquisition of fixed assets -35 751 -22 743
Disbursements on own developement -2 050 -3 772
Dividend received from investments in Joint Ventures 40 856 47 712
Proceedes from sale of subsidiaries 22 945 1 216 422
Investment in shares - -28 673
Net cash flow from investment activities 14 267 1 064 647
Cash flow from financing activities
Proceeds from issuance of short-term/long-term debt 115 007 -
Disbursement on short-term/ long-term debt - -852 071
Dividends paid -86 461 -134 646
Interest paid -32 209 -40 685
Sale / (purchase) treasury shares 500 -4 478
Repayment of capital to shareholders - -363 776
Proceeds from issued new share capital - 99 944
Net cash flow from financing activities -3 164 -1 295 712
Net change in cash and cash equivalents -126 819 -264 762
Cash and cash equivalents at the start of the period 227 666 511 377
Foreign currency gains/loss on cash and cash equivalents 54 724 -18 950
Cash and cash equivalents at the end of the period - continued business 155 571 227 666
Net cash discontinued business - -
Cash and cash equivalents at the end of the period - continued and discontinued business 155 571 227 666
Net available cash:
Bank deposits etc. 155 571 227 666
Unused overdraft facility 258 830 167 100
Total available cash and cash equivalents at the end of the period 414 401 394 766

Accounting principles TTS GROUP

1. General information

1.1 REPORTING ENTITY

TTS Group ASA is a public company incorporated and domiciled in Norway. The company is listed on the Oslo Stock Exchange where the shares are publicly traded. The registered head office is located at Folke Bernadottes vei 38, Fyllingsdalen in Bergen. The Group has companies in Norway, Sweden, Germany, Finland, China, USA, Poland, Italy, Singapore, Korea and Greece, as well as a branch office in Vietnam.

TTS Group is a global company that creates and supplies handling equipment for ships, ports and offshore installations. The Group reported on four segments in 2013: Marine, Port & Logistics, Offshore & Heavy Lift and Services. In February 2014, the Group's board decided to change the structure of governance and reporting, which reduces the number of segments to three: Marine, Offshore & Heavy Lift and Services. The TTS Group is among the leading suppliers in its market segments. Further information of the principal activities of the Group is described in Note 1. Information on its ultimate parent is presented in Note 16 and Note 21.

1.2 BASIS OF PREPARATION

The consolidated financial statements for TTS Group ASA have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union. Standards and interpretations effective for annual periods beginning after 1 January 2013 have not been applied in preparing these consolidated financial statements.

The consolidated financial statements of the Group for the year ended 31 December 2013 were approved by the Board on 23 April 2014.

The consolidated financial statements have been prepared on the basis of historic cost, with the following modifications: Shares held available for sale and financial derivatives are measured at fair value.

Preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Future events may lead to these estimates being changed. Estimates and their underlying assumptions are reviewed on a regular basis. Changes in accounting estimates are recognized during the period when the changes take place. If the changes also apply to future periods, the effect is divided among the present and future periods. Areas that to a great extent involve such evaluations or high degree of complexity, or areas where assumptions and estimated are material to the

consolidated financial statements, are described in section 4.

These consolidated financial statements are presented in NOK, which is the groups reporting currency. All financial information is presented and rounded to the nearest thousand, except when otherwise indicated.

2. Summary of the most central accounting principles

The accounting principles set out below have been applied consistently to all periods presented in the consolidated financial statements, and have been applied consistently by Group entities.

2.1 BASIC PRINCIPLES a) New accounting standards

The accounting policies adopted are consistent with those of the previous year, except for the following amendments to IFRS which have been implemented by the Group effective as of January 2013. The adoption of the standards or interpretations, and the effects on the financial statements for the Group is described below:

The Group applied, for the first time, certain standards and amendments that require restatement of previous financial statements. These include IAS 19 Employee Benefits (Revised 2011), IFRS 13 Fair Value Measurement and amendments to IAS 1 Presentation of Financial Statements.

Several other amendments apply for the first time in 2013. However, they do not impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group. The nature and the impact of each new standards and amendments are summarized below:

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS. IFRS 13 defines fair value as an exit price. As a result of the guidance in IFRS 13, the Group re-assessed its policies for measuring fair values. Application of IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

IAS 1 Presentation of Items of Other

Comprehensive Income – Amendments to IAS 1 The amendments to IAS 1 introduce a grouping of items presented in OCI. Items that will be reclassified ('recycled') to profit or loss at a future point in time (e.g., net loss or gain on AFS financial assets) have to be presented separately from items that will not be reclassified (e.g., revaluation of land and buildings). The amendments affect presentation only and have no impact on the Group's financial position or performance.

IAS 19 Employee Benefits (Revised 2011)

The Group applied IAS 19 (Revised 2011) retrospectively in the current period in accordance with the transitional provisions set out in the revised standard. The opening statement of financial position of the earliest comparative period presented (1 January 2012) and the comparative figures have been accordingly restated. IAS 19 (Revised 2011) changes, amongst other things, the accounting for defined benefit plans. The key changes that impacted the Group include the following:

Actuarial gains and losses (remeasurements) are recognized in other comprehensive income. As a part of the adaption to the changes of IAS19, TTS Group has elected to classify the interest elements of the pension cost within the financial items in the P&L. Due to the change in recognition for actuarial gains and losses, comparative information is restated to reflect the change in recognition principle. The effects of the changes are summarized in the table below:

NEW STANDARDS AND INTERPRETATIONS APPROVED BY EU, BUT NOT YET EFFECTIVE:

Listed below are new/revised/additions to standards and interpretations issued at 31 December 2013, but

Consolidated statement of comprehensive income	Reported 2012	Adjustments	Restated 2012
EBITDA	153 059	4 274	157 332
Net result continued business	32 259	4 274	36 533
Net result divested business	418 162	-	418 162
Net result	450 421	4 274	454 695
Condensed Consolidated statement of financial position	Reported 2012	Adjustments	Restated 2012
Total equity	840 383	- 48 946	791 437
Provisions	- 2 771	48 946	46 175
Total equity and liabilities	3 526 060	-	3 526 060

not yet effective. The Group has listed all standards and interpretations that are not yet effective. The Group has not opted for early adoption. The implementation dates stated are the latest a company whose financial year is identical to the calendar year can apply the new/amended/ additions to standards and interpretations.

Approved IFRSs and IFRICs with future effective dates

Standards and interpretations that are issued up to the date of issuance of the consolidated financial statements, but not yet effective are disclosed below. The Group's intention is to adopt the relevant new and amended standards and interpretations when they become effective, subject to EU approval before the consolidated financial statements are issued.

IAS 19 Employee Benefits

The amendment introduces the option to recognize contributions from employees or third parties as a reduction in the service cost in the same period in which they are payable if, and only if, they are linked solely to the employee's service rendered in that period.

The amendment is not yet approved by the EU. The amendment is not considered to have a significant impact on the consolidated accounts.

IAS 27 Separate Financial Statements

As a consequence of the issuance of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, the IASB has amended IAS 27. IAS 27 now only deals with accounting in the separate financial statements. The title of the standard is amended accordingly. Within the EU/EEA area, the amendments are effective for annual periods beginning on or after 1 January 2014.

The amendment is considered to not have a significant impact on the consolidated accounts.

IAS 28 Investments in Associates and Joint Ventures

As a consequence of the new standards IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates has been renamed IAS 28 Investment in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. Within the EU/EEA area, the amendments are effective for annual periods beginning on or after 1 January 2014.

The amendment is considered to not have a significant impact on the consolidated accounts.

IAS 32 Financial Instruments: Presentation

IAS 32 Financial Instruments - Presentation is amended in order to clarify the meaning of "currently has a legally enforceable right to set-off" and the application of the IAS 32 Financial Instruments - Presentation offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments are effective for annual periods beginning on or after 1 January 2014.

The amendment is considered to not have a significant impact on the consolidated accounts.

IAS 36 Impairment of Assets

IAS 36 Impairment of Assets is amended to address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. These amendments are issued to align the disclosure requirements in IAS 36 Impairment of Assets with the IASB's original intention when consequential amendments to IAS 36 Impairment of Assets were made as a result of the issuance of IFRS 13 Fair Value Measurement. The amendments are effective for annual periods beginning on or after 1 January 2014.

The amendment is considered to not have a significant impact on the consolidated accounts.

IAS 39 Financial Instruments: Recognition and Measurement

IAS 39 Financial Instruments: Recognition and Measurement is amended to provide relief from discontinuing hedge accounting when a derivative designated as a hedging instrument is novated to provide clearing with a central counterparty as a result of law or other regulation, when certain criteria are met. These amendments are effective for annual periods beginning on or after 1 January 2014.

The amendment is considered to not have a significant impact on the consolidated accounts.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the two first phases of IASB's work on the replacement of IAS 39 Financial Instruments: Recognition and Measurement, which are classification and measurement of financial assets and financial liabilities and hedge accounting. Third and last phase of this project will address amortized cost measurement and impairment of financial assets. The mandatory effective date of IFRS 9 has been removed to allow sufficient time for entities to prepare to apply the new Standard. The IASB have decided that a new date should be decided upon when the entire IFRS 9 project is closer to completion.

The Group will evaluate potential effects of IFRS 9 as soon as the final standard, including all phases, is issued.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements and SIC-12 Consolidation – Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. In accordance with IFRS 10, an investor controls another entity when it is exposed, or has rights, to variable returns from its involvement with the other entity, and has the ability to affect those returns through its power over the entity. Within the EU/EEA area, IFRS 10 is effective for annual periods starting on or after 1 January 2014.

The group has not in full evaluated the effect of the amendment, but the preliminary assessment indicates that the amendment will not have a significant impact on the consolidated accounts.

IFRS 11 Joint Arrangements

This standard replaces IAS Interests in Joint Ventures and SIC-13 Jointly-controlled Entities – Non-monetary Contributions by Ventures. IFRS 11 Joint Arrangements removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. All entities meeting the definition of a joint venture must be accounted for using the equity method. Within the EU/EEA area, IFRS 11 Joint Arrangements is effective for annual periods beginning on or after 1 January 2014.

Since TTS Group is already using the equity method for the investments in Joint Ventures, the amendments is considered to not have a significant impact on the consolidated accounts.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 applies for enterprises with interests in subsidiaries, joint arrangements, associates and structured entities. IFRS 12 replaces the disclosure requirements that were previously included in IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. A number of new disclosures are also required. Within the EU/EEA area, IFRS 12 is effective for annual periods beginning on or after 1 January 2014.

Other than new disclosure requirements, the amendment is not considered to have a significant impact on the consolidated accounts.

b) Current versus non-current classification

The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is expected to be realized or intended to sold or consumed in normal operating cycle, held primarily for the purpose of trading, expected to be realized within twelve months after the reporting period, or cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when it is expected to be settled in normal operating cycle, it is held primarily for the purpose of trading, it is due to be settled within twelve months after the reporting period, or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

c) Fair value measurement

The Group measures financial instruments, such as, derivatives at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
• Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

2.2 BASIS OF CONSOLIDATION a) Subsidiaries

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2013.

The Group's consolidated financial statements comprise TTS Group ASA and subsidiaries. Subsidiaries are entities in which TTS Group ASA has a controlling interest. Control is achieved when the

Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. Control may also be achieved when the Group owns less than 50 % of the shares, through voting rights from contractual agreements or when the Group is able to exercise actual control over the entity. Non-controlling interests are included in the Group's equity. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Business combinations are accounted for using the acquisition method (see section 2.7). The acquired identifiable tangible and intangible assets, liabilities and contingent liabilities are measured at their fair values at the date of the acquisition. Goodwill is measured at the acquisition date as:

• the fair value of the consideration transferred,
• the recognized amount of any non-controlling interests in the acquire,
• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquire, less
• the net recognized amount of the identifiable assets acquired and liabilities assumed.

Goodwill is tested at least annually for impairment. Goodwill is allocated to those cash-generating units or groups of cash-generating units that are expected to get benefits from the business acquisition. See section 2.7.

If the excess value is negative, a bargain purchase (negative goodwill) is recognized immediately in profit or loss; see section 2.7.

In cases where changes in the ownership interest of a subsidiary lead to loss of control, the consideration is measured at fair value. Assets and liabilities of the subsidiary and non-controlling interest at their carrying amounts are derecognized at the date when the control is lost. Differences between the consideration and the carrying amount of the asset are recognized as a gain or loss in profit or loss. Investments retained, if any, are recognized at fair value. Surplus or deficits, if any, are recognized in profit and loss as a part of gain/ loss on subsidiary disposal. Amounts included in other comprehensive income are recognized in profit or loss

or is recognized directly in equity – depending on the character of the items.

All intra-group transactions, outstanding balances and unrealized internal gains between group companies are eliminated. Unrealized internal losses are eliminated, but considered an impairment indicator in relation to write-down of the asset transferred. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.

b) Joint ventures

Joint ventures are entities where the Group by agreement has joint control together with other parties, but not alone. Investments in joint ventures are recognized in the financial statements in accordance with the equity method. Investments in joint ventures are recognized in the financial statements at cost at the time of acquisition, and include goodwill (which is reduced by any subsequent write-downs) (ref. section 2.7).

The consolidated financial statements include the Group´s share of the profit and loss and other comprehensive income of the joint ventures. If the Group´s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

As the activities of the joint ventures are closely related to the operations of the Group, the Group's share of profit or loss of an associate and a joint venture is shown on the face of the statement of profit or loss as a part of operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the joint venture.

The Group's share of unrealized gains on transactions between the Group and the joint ventures are eliminated against the investment to the extent of the Groups interest in the investee. The same applies to unrealized losses unless the transaction indicates a write-down of the asset transferred.

The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

2.3 SEGMENT INFORMATION

For management purposes, the Group is organized into segments based on its products and services. The Board of directors monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. However, the Group's financing (including finance costs and finance income) is managed on a Group basis and are not allocated to operating segments.

The Group had four segments in 2013. These are Marine, Port & Logistics, Offshore & Heavy Lift and Services. In February 2014, the Group's board decided to change the structure of governance and reporting, which reduces the number of segments to three: Marine, Offshore & Heavy Lift and Services.

2.4 FOREIGN CURRENCIES

a) Functional and presentation currencies

The financial statements of the individual entities in the Group are measured in the currency primarily used in the economic area where the unit operates (functional currency). The consolidated financial statements are presented in Norwegian kroner (NOK), which is both the functional and presentation currency of the parent company, TTS Group ASA.

b) Transactions and balance sheet items

Transactions in foreign currencies are translated into the functional currency using the currency spot rates at the time of recognition. Foreign currency gains and losses that arise from the payment of such transactions, and the translation of monetary items (assets and liabilities) in foreign currencies at the currency spot rates at the balance sheet date, are recognized in profit and loss. Non-monetary items measured at historical cost in foreign currency are translated into functional currency using the exchange rates as at the dates of the initial transaction.

c) Group companies

On consolidation, the assets and liabilities of foreign operations are translated into NOK at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in profit or loss.

Goodwill associated with the acquisition of a foreign entity is allocated to the acquired entity, and translated at the rate in effect on the date of the balance sheet.

2.5 TANGIBLE FIXED ASSETS

Tangible fixed assets are recorded in the financial statements at cost less accumulated depreciation and accumulated write-downs. Cost includes the costs directly related to the acquisition of the fixed asset.

Subsequent expenses are capitalized when it is likely that the Group will receive future economic benefits from the expense, and the expense can be measured reliably. Other repair and maintenance costs are recognized in the profit and loss accounts in the period when the expenses are incurred.

Land is not depreciated. Other fixed assets are depreciated based on the straight-line method, so that the historical cost of the fixed asset is depreciated to the residual value over expected useful life, which is:

Buildings	25-50 years
Machinery and vehicles	3-5 years
Fixtures/office equipment	5-10 years
Computer equipment	3-5 years

The assessment of indicators related to possible impairment requirements is monitored continuously. When the carrying value of the fixed asset is higher than the estimated recoverable amount, the value is written down to the recoverable amount.

Gains and losses on disposals are recognized in the profit and loss accounts and represent the difference between the sales price and the carrying value.

Depreciation methods, useful lives and residual values are assessed at each balance sheet date and adjusted if necessary.

2.6 INTANGIBLE ASSETS

Intangible assets that have been acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired through an acquisition is their fair value at the date of acquisition. Capitalized intangible assets are recognized at cost less any amortization and impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized but are expensed as occurred.

The economic life is either finite or indefinite. Intangible assets with a finite economic life are amortized over their economic life and tested for impairment if there are any indications. The amortization method and period are assessed at least once a year. Changes to the amortization method and/or period are accounted for as a change in accounting estimate.

Intangible assets with an indefinite economic life are tested for impairment at least once a year, either individually or as a part of a cash-generating unit. Intangible assets with an indefinite economic life are not amortized. The economic life is assessed annually with regard to whether the assumption of an indefinite economic life can be justified. If it cannot, the change to a definite economic life is made prospectively.

Customer relationships and customer portfolio

Customer relationships and customer portfolio are established through contracts with customers. Customer relationships and customer portfolio acquired through a business combination is recognized as an asset based on the allocated acquisition cost. The customer relationship and customer portfolio have limited useful life, and are depreciated by the straight-line method over their expected useful life (10 to 15 years).

Patents and licenses

Patents and licenses have limited useful life, and are recorded at historical cost in the balance sheet less depreciation. Patents and technology are depreciated by the straight-line method over their expected useful life (2 to 15 years).

Research and development

Research costs are expensed as incurred. Development activities include design or planning of production of new or significantly improved products and processes. Development costs associated with development of new products are normally capitalized. Development costs are capitalized only to the extent that they can be reliably measured, the product or process is technically or commercially feasible, future financial benefits are likely, and the Group intends and has sufficient resources to complete the development, and to sell or use the asset. Capitalized development expenses include materials, direct labor, directly attributable overheads and capitalized borrowing costs. Development costs are depreciated over their expected useful life (2 to 15 years).

Cost related to market surveys, market developments are normally expensed as incurred. Project development related to sales contracts is charged as cost directly to the individual projects. Other development expenditure is recognized as an expense when incurred.

Capitalized development expenses are recognized at cost less accumulated amortization and accumulated impairment losses.

2.7 BUSINESS COMBINATIONS AND GOODWILL

Business combinations are accounted for using the acquisition method. Acquisition-related costs are expensed in the periods in which the costs are incurred and the services are received. Acquisition costs are classified as administrative expenses.

The consideration paid in a business combination is measured at fair value at the acquisition date and consist of cash, shares issued in TTS Group ASA and contingent consideration. The contingent consideration is classified as a liability in accordance with IAS 39. Subsequent changes in the fair value are recognized in profit or loss.

When acquiring a business financial assets and liabilities acquired are classified in accordance with contractual terms, economic circumstances and conditions at the acquisition date. The acquired assets and liabilities are recognized at fair value in the opening group balance.

The initial accounting for a business combination can be changed if new information about the fair value at the acquisition date is present. The allocation can be amended within 12 months of the acquisition date provided that the initial accounting at the acquisition date was determined provisionally. The non-controlling interest is set to the non-controlling interest's share of identifiable assets and liabilities. The measurement principle is applied for each business combination separately.

When the business combination is achieved in stages the previously held equity interest is re-measured at its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination,

irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

2.8 FINANCIAL INSTRUMENTS

Initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

For subsequent measurement, the Group classifies financial assets into the following categories: a) Loans and receivables

• b) Financial assets available for sale
• c) Financial assets at fair value through profit and loss

a) Loans and receivables

Loans and receivables are non-derivative financial assets with payments that are fixed or determinable and that are not quoted in an active market. They are classified as current assets, unless they are due more than 12 months after the date of the balance sheet. In this case they are classified as non-current assets.

Loans and receivables are initially recognized at fair value plus directly attributable transaction costs. After initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. The effective interest method amortization is included in finance income in the income statement. The losses arising from impairment are recognized in the income statement in finance costs for loans and in cost of sales or other operating expenses for receivables.

Loans and receivables consist of accounts receivable and other outstanding claims.

b) Assets available-for-sale (investments in shares)

Financial assets available-for-sale are non-derivative financial assets that are designated as being available-for- sale, and which are not classified in any of the other categories. Investments in shares are included in non-current assets unless management intends to sell the investment within 12 months from the date of the balance sheet.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value on the balance sheet date. Any changes in fair value are charged directly against comprehensive income and presented as revaluation reserve in the equity. However, this does not apply to impairment losses and exchange rate differences on equity instruments available-for-sale. When an investment is derecognized, the cumulative gain or loss from comprehensive income is transferred and recognized in other operating income.

c) Financial instruments at fair value through profit and loss

The Group's financial assets through profit and loss are the Group's hedging instruments, ref. section 2.9.

2.9 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

In accordance with adopted guidelines and the Group's strategy, the Group utilizes hedging of contractual income and cost in a foreign currency at the date of signature of the contract. The same applies to individual larger sub-contracts in foreign currencies.

Fair value hedging

The Group uses financial derivatives to hedge foreign currency risk. Derivatives are recognized initially at fair value, and are subsequently re-measured at fair value. Attributable transaction costs are recognized in the profit or loss as they incur. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

The Group only uses forward currency contracts for fair value hedging of the foreign currency risk in unrecognized firm commitments. At the inception of a hedge relationship, the group formally designates and documents the relationship between the hedging instrument and hedged item. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value of the respective hedged items attributable to the hedged risk.

Fair value of the derivatives used for hedging are set out in Note 22. Fair value of the derivatives is classified as current assets or short-term liabilities, as the hedges and derivatives generally fall due within12 months.

Changes to fair value of the hedging derivative are recognized in profit and loss along with the change in fair value associated with the corresponding hedged asset or liability. When an unrecognized firm commitment is designated as a hedged item, the

subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding gain or loss recognized in profit and loss. Profit or loss attributable to the hedged risk is recognized as project revenue if it is associated with hedging of contract revenue and under operational expenses if it is associated with hedging of contract costs.

In the event that the hedge no longer fulfils the criteria for hedge accounting, the derivative is carried at fair value through profit and loss. This applies to derivatives where the underlying delivery contract has been cancelled.

Derivatives at fair value through profit and loss

Derivatives that are not designated as hedging instruments at initial recognition or that do not any longer fulfill the criteria for hedge accounting are carried at fair value through profit or loss. Changes to the fair value of the derivatives are recognized in the profit and loss statement as financial expenses and financial income.

2.10 LEASES Finance leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, and whether fulfillment of the arrangement is dependent on the use of a specific asset or the arrangements conveys a right to use the assets, even if that right is not explicitly specified in the arrangement.

Leases of property, plant and equipment in terms of which the Group assumes substantially all of the risks and rewards of ownership of the leased item, are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of the fair value of the leased asset or the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the income statements.

The same depreciation period as for the company's other depreciable assets is used. If it is not reasonably certain that the company will assume ownership when the term of the lease expires, the asset is depreciated over the term of the lease or the asset's economic life, whichever is the shorter.

Operating leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are recognized as an operating expense on a straight-line basis over the lease term.

2.11 INVENTORIES

Inventories are valued at the lower of cost and net realizable value. The cost is calculated by means of the first-in, first-out principle (FIFO). For finished goods and work in progress, the cost consists of product design expenses, consumption of materials, direct labor costs, other direct costs, and indirect production costs (based on a normal capacity level). Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and estimated costs necessary to make the sale.

Inventories established as a result of a contracts being cancelled are recognized as inventory. The inventory related to cancelled projects, are valued at the lowest of production cost and fair value. Any payments received that the Group has a contractual right to retain at termination are included in the calculation of the acquisition cost.

2.12 ACCOUNTS RECEIVABLE

Accounts receivable are on initial recognition measured at fair value. For subsequent measurement, accounts receivable are measured at amortized cost determined using the effective interest method, and less provision for impairment. Provisions for impairment losses are recognized when there are objective indicators that the Group will not receive settlement in accordance with the original contract terms. Considerable financial difficulties on part of the customer, likelihood of bankruptcy on part of the customer and significant delays of payment, are all indicators of impairment for the accounts receivables. The losses arising from impairment are recognized in profit and loss as operating expenses. Receivables in foreign currencies are converted to reporting currency at the exchange rate on the balance sheet date.

2.13 CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and bank deposits. Bank deposits in foreign currencies are converted to the reporting currency at the exchange rate on the balance sheet date. Withdrawals from the bank overdraft constitute part of current liabilities. Deposits and overdrafts are presented net if the bank has a legal/contractual right to offset the deposits and liabilities.

2.14 SHARE CAPITAL AND PREMIUM

Ordinary shares are classified as equity.

Expenses that are directly attributable to the issuance of new shares or options less taxes are recognized in equity as a reduction in proceeds.

When the company's own shares are purchased, the consideration, including any transaction costs less tax, is entered as a reduction of the equity (attributable to the company's shareholders). If the company's own shares are subsequently sold or reissued, the proceeds are entered as an increase in the equity attributable to the company's shareholders.

2.15 FINANCIAL LIABILITIES

The Group classifies financial liabilities at initial recognition into the following: non-derivative financial liabilities: loans and borrowings, payables, financial liabilities at fair value through profit or loss and derivatives designated as hedging instruments.

Non-derivative financial liabilities are initially recognized at fair value plus directly attributable transaction costs. After initial recognition, liabilities are measured at amortized costs using the effective interest method.

Loans are classified as current liabilities unless there is an unconditional right to postpone payment of the debt by more than 12 months from the date of the balance sheet. The following year's payment is classified as short-term debt.

The Group initially recognizes the bond debt on the issue date. All other financial liabilities are initially recognized on the agreement date, when the Group becomes a party to the instrument's contractual provisions.

Convertible loans are divided into two components, a liability component and an equity component. The liability component is recognized initially at fair value of similar loans that does not have an equity conversion option. The equity component is recognized as the difference between the fair value of the liability component and the fair value of the convertible loan in its entirety. The equity component is recognized in profit or loss over the period of the borrowings on an effective interest basis.

The Group derecognizes a financial liability when the contractual obligations are satisfied or cancelled.

2.16 TAXES

Tax in the profit and loss accounts comprise both tax payable for the period and change in deferred tax. Tax payable for the period and deferred tax are recognized in profit and loss, with the exception of tax on items related to business combinations or taxes recognized directly in equity or comprehensive income.

Periodic tax is payable tax or tax receivable on taxable income or loss for the year, based on tax rates enacted or substantially enacted on the balance sheet date. Revision of the estimated periodic tax for previous years is included in the figures.

Deferred tax is calculated on all temporary differences between the tax and accounting values of assets and liabilities.

For the following temporary differences, no deferred tax is recognized:

• Initial recognition of assets or liabilities in a transaction that is not a business combination and that does not affect accounting or tax-based results upon inclusion,
• Differences related to investments in subsidiaries to the extent that it is likely that these differences will not be reversed in the foreseeable future, and
• Tax-increasing differences upon initial recognition of goodwill

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Deferred tax assets are recognized when it is probable that the company will have a sufficient profit for tax purposes in subsequent periods to utilize the tax asset. The Group recognizes previously unrecognized deferred tax assets to the extent it has become probable that the company can utilize the deferred tax asset. Similarly, the company will reduce a deferred tax asset to the extent that the Group no longer regards it as probable that it can utilize the deferred tax asset.

Deferred tax asset or liability is measured using tax rates and tax laws enacted or substantially enacted on the balance sheet date, and which presumably may be utilized when the deferred tax advantage is realized or when the deferred tax is settled.

Deferred tax and deferred tax assets are recognized at their nominal value and classified as non-current asset investments (long-term liabilities) in the balance sheet.

2.17 PENSION OBLIGATIONS, BONUS SCHEMES AND OTHER COMPENSATION SCHEMES FOR EMPLOYEES a) Pension obligations

The companies in the Group have different pension plans. The pension plans are in general financed by payments to insurance companies or pension funds. The Group has both defined contribution plans and defined benefit plans.

A defined contribution plan is a pension plan in which the Group pays fixed contributions to a separate legal entity. The Group has no legal or other obligation to pay further contributions if the insurance company does not have sufficient assets to pay all employee benefits relating to employee service in current and prior periods. Contributions are recorded as payroll expense in the financial statements.

A defined benefit plan is typically a pension plan defining the pension payments which employees will receive upon retirement. Pension payments are normally dependent on one or more factors such as age, years of service for the company and salary level.

Net liability for defined benefit pension plans is calculated for each plan by estimating the future benefits employees have earned for services rendered in the current or prior periods. The benefits are discounted to calculate present value, and the fair value of plan assets is deducted. The discount rate for Norwegian schemes is based on the interest rate on high quality corporate bond (OMF). See note 5 for further information. For foreign plans, the discount rate is based on the interest rate on a bond issued by a company with a high credit rating in the same currency as the benefits will be paid and with a maturity that is approximately equal to the maturity of the related pension liability. The pension obligation is calculated annually by independent actuaries using the projected unit credit method.

Re-measurements, comprising of actuarial gains and losses, and the return on plan assets, are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

The Group recognizes the service cost as a payroll expense and net interest expense or income as finance cost or income in the statement of profit and loss.

Gains and losses on the curtailment or settlement of a defined contribution plan are recognized at the time that the curtailment or settlement occurs. A curtailment occurs when the Group adopts a significant reduction in the number of employees covered by the plan or changes the terms of a defined contribution plan such that a significant proportion of current employees' future earnings will no longer qualify for benefits, or qualify only for reduced benefits.

b) Share based payments

The Annual General Meeting of the Group has granted senior executives options to purchase shares in the

parent company. The fair value of options granted is measured on the grant date. The cost is recognized as part of salary cost over the period in which the performance and/or service conditions are fulfilled, with a corresponding increase in equity. Fair value of granted options is estimated on the date of allotment using the Black & Sholes option pricing model. Ref. note 16. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. Ref. note 17

C) GROUP BONUSES

The Group records a liability and a cost for Group bonuses if the Group has a legal- or constructive obligation and the size of the bonus can be reliably estimated. Whether a bonus will be paid and the size of the bonus is dependent on the profit for the year. The bonus is paid in the following year.

2.18 PROVISIONS

The Group recognizes provisions for restructuring, legal requirements, etc., when the Group has a legal or constructive obligation as a result of past events, it is probable that the obligation will be settled by a transfer of economic resources, and the size of the obligation can be estimated reliably.

The Group recognizes provisions for expected guarantee liabilities based on experience and contract. Guarantee liabilities are recognized when the underlying products or services are sold. Additionally, the Group recognizes provisions for remaining work or claims from the customer regarding long-term construction contracts.

Provisions are measured at current value of expected payments in order to fulfill the obligation. A pretax discount rate is utilized, reflecting the present market situation and risk specific to the obligation. An increase in the obligation due to the passage of time is recognized as a financial cost.

2.19 REVENUE RECOGNITION

The Group's revenue relates to long-term construction contracts, service contracts and after-sales.

Income from the sale of goods and services is assessed at net fair value after the deduction of value added tax, returns, discounts and rebates. Revenue from the sale of goods is recognized when there is persuasive evidence, usually in the form of signed sales agreement, that the significant risks and benefits related to the goods are transferred to the buyer, it is likely that the payment will be received, related costs and possible return of goods can be estimated reliably, there is no involvement in the goods normally associated with owning, and the revenue can be

reliably measured. The date of transfer of risks and benefits varies depending on the conditions of the individual sales contract.

Revenue from delivery of services is recognized according to percentage of completion on the balance sheet date. Main principle to recognize degree of completion is to measure the contract costs incurred to date compared to estimated total contract costs.

Income from long-term production contracts is recognized in the balance sheet in accordance with guidelines in IAS 11, using the percentage of completion method, ref. section 2.20 for more detail. The Group's products are frequently sold with a warranty period of +/- two years. As for other matters, reference is made to information regarding guarantee liabilities in section 4 and Note 13.

Interest is recognized in profit and loss over time in accordance with the effective interest method. If receivables are written down, the book value of the receivables are reduced to the recoverable amount.

2.20 CONSTRUCTION CONTRACTS

Construction contract revenues and costs are measured using the percentage of completion method. Degree of completion is determined by the method that measures reliably the progress of the contract. Depending on type of contract different methods can be used by TTS Group to measure the percentage of completeness. The main method in use is to measure the contract costs incurred to date compared to estimated total contract costs. In some cases the costs incurred to date compared to estimated total contract costs gives a misleading view of the grade of completion. In these cases technical completion is considered to determine the progress of the contract more reliably than measure degree of completeness based on costs.

When the final outcome is uncertain and the outcome cannot be reliably measured, revenue is recognized only to the expected recoverable level of costs. Losses on contracts are fully recognized when identified. The recognized revenue in one period consists of the revenue attributable to the period`s progress and any effect of changes in estimated outcome to date.

Revenue from construction contracts includes original contract amount, as well as variation orders, disputed amounts and incentive bonuses to the extent that it is likely that the income is realized and reliable estimates are available. Contract costs include all costs attributable to the contract, and include both costs that relate directly to the specific contract and allocated costs that are attributable to contract activity. Costs that cannot be attributed to contract activity are expensed. Tender costs are expensed as incurred. When estimating accrued cost for construction contracts, purchases relating to future activities of a contract will not be taken into account. Such costs are recognized as inventories, advance payments or other current assets depending of type of costs.

Incurred costs and profits received relating to all construction contracts in progress, where the incurred costs and profit received (less recognized losses) exceed the payments on-account invoiced, will be recorded on the balance sheet as an asset. The asset is classified as accrued, non-invoiced production. If on-account billings exceed costs incurred and recognized profits (less losses), this is recorded as received advance payments from customers as presented as current liabilities. The assessment is made for each contract at company level. There will be no other net allocation at corporate level.

For terminated contracts, the loss is accounted as an expense. In assessing financial loss, the value of the inventory of which the Group takes ownership is taken into account.

2.21 IMPAIRMENT FINANCIAL ASSETS

On the reporting date, financial assets that are not measured at fair value through profit and loss are assessed with regard to whether there is objective evidence of impairment. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred 'loss event'), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Objective evidence that financial assets are impaired may be customer breach, change of outstanding claims on terms that the Group would otherwise not have accepted, and indications that a borrower or issuer will enter bankruptcy or closure of an active market for the security. For equity instruments, objective evidence of impairment would include significant or prolonged decline in the fair value below its cost.

Impairment losses relating to a financial asset measured at amortized cost is the difference between the carrying value and the present value of estimated future cash flows discounted with the original effective interest rate. An impairment loss is recognized in profit and loss and the asset's carrying value is reduced by the use of an allowance account.

Non-financial assets

At the reporting date, the Group assesses whether there are indications that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. For goodwill and intangible assets not yet available for use, or with an indeterminable useful life, the recoverable amount is estimated at the same time each year. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In the assessment of value in use, the estimated future cash flow is discounted to net present value, with a pretax market-based discount rate. The rate takes into consideration the time value of money and asset-specific risk. With the purpose of testing for impairment, assets that have not been tested individually are grouped in the smallest identifiable group of assets that generate incoming cash flow which in all material aspects is independent of incoming cash flows from other assets or group of assets (cash generating units or CGU). Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates.

Impairment losses relating to goodwill cannot be reversed in future periods. For other assets, an assessment is made on each reporting date whether there are indications that previously recognized impairment losses no longer exist or have decreased. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

2.22 CASH FLOW STATEMENT

The cash flow statement has been prepared based on the indirect method.

2.23 EARNINGS PER SHARE

The basic earnings per share and diluted earnings per share are presented for ordinary shares. The basic earnings per share is calculated by dividing the period's earnings attributable to owners of the ordinary shares, with a weighted average number of ordinary

shares in the period, adjusted for the number of own shares.

Diluted earnings per share are calculated by adjusting the earnings and the weighted average number of ordinary outstanding shares, adjusted for the number of own shares, for potential dilution effects. Dilution effects are a result of employee share options and the conversion rights related to a subordinated convertible bond facility issued by TTS Group ASA. The bondholders have a consecutive right to convert their nominal bond value into shares in TTS Group ASA. Pursuant to the agreement for the subordinated convertible bond facility the conversion price and how the conversion rights is adjusted.

2.24 FINANCIAL INCOME AND COST

Financial income consists of capital gains on financial investments and changes to fair value of financial assets to fair value in profit and loss. Interest income is recognized in profit and loss using the effective interest method.

Financial costs comprise interest costs on loans, the effect of interest in discounted accruals, changes to the fair value of financial assets to fair value in profit and loss, and impairment of financial assets. Borrowing costs not directly attributable to acquisition, processing or production of a qualifying asset, are included in profit and loss using the effective interest rate method.

Foreign currency gains and losses are reported net.

2.25 EQUITY

Convertible bonds and similar instruments which contain both a liability and equity element are divided into two components when issued, and these are recognized separately as a liability or equity.

When change in effective terms of the convertible bond, the equity instrument is measured at carrying value of the liability and no gain or loss is recognized on reclassification.

Transaction costs directly related to an equity transaction are recognized directly in equity after deducting tax expenses.

All other reserves are as stated in the consolidated statement of changes in equity.

2.26 CONTINGENT LIABILITIES AND ASSETS

Contingent liabilities are not recognized in the financial statements. Significant contingent liabilities are disclosed, with the exception of contingent liabilities that are unlikely to incur.

Contingent assets are not recognized in the annual accounts but are disclosed if there is a certain probability that a benefit will be added to the Group.

2.27 EVENTS AFTER THE REPORTING PERIOD

The effect of new information on the Group's financial position at the end of the reporting period which becomes known after the reporting period is recorded in the financial statements. Events after the reporting period that do not affect the Group's financial position at the end of the reporting period but which will affect the Group's financial position in the future are disclosed if significant, ref. Note 30.

2.28 DISCONTINUED OPERATIONS

A discontinued operation is a component of the Group´s business, the operations and cash flows of which can be clearly distinguished from rest of the Group and which:

• represents a separate major line of business or geographical area of operations
• is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or
• is a subsidiary acquired exclusively with a view to re-sale.

Classification as a discontinued operation occurs on disposal or when the operation meets the criteria to be classified as held-for-sale, if earlier.

When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.

3. Financial risk management

3.1 FINANCIAL RISK FACTORS

The Group's activities entail various types of financial risk; market risk (including currency risk and interest rate risk), credit risk, liquidity risk and operational risk.

The Board has the primary responsibility for establishing and supervising the Group's framework for risk management. The principles of risk management have been established in order to identify and analyze the risk to which the Group is exposed. Principles and systems for risk management are regularly reviewed to reflect any changes in activities and market conditions.

The audit committee follows up the management's monitoring of the Group's principles and procedures for risk management.

The Group's main risk management plan focuses on the unpredictability of the capital market, and attempts to minimize its potentially negative effects on the Group's financial results.

The Group engages in international operations and is especially exposed to currency risk. The Group makes use of hedging to reduce the risk of currency exposure.

The Group has a decentralized structure with operational supervision of the various business units, where the main management of financial risk is determined by the Board. This applies to areas such as currency risk, interest rate risk, credit risk and use of financial derivatives.

For the classification of financial assets and liabilities, reference is made to Note 26.

MARKET RISK

Market risk is the risk of changes to market prices, such as foreign exchange rates, interest and stockexchange values, affecting the income or value of financial instruments. Management of market risk intends to monitor that risk exposure lies within a set framework.

The Group is particularly vulnerable to fluctuations in the price of steel. The Group monitors the development of steel prices on a continuous basis.

The companies of the Group buy and sell financial derivatives, and incur financial obligations to control market risk. Transactions are carried out within the guidelines issued by the Group. To control volatility in the reported result, hedge accounting is used whenever possible.

Further description of the Group's market risk can be found in the Directors' report.

a) Currency risk

The Group operates internationally and is exposed to currency risk in a number of foreign currencies. The consolidated financial statements are to a great extent affected by the exchange rate of NOK against SEK, USD, EUR and RMB. The Group endeavors to reduce the risk of exposure to exchange rate fluctuations by obtaining an optimal balance between incoming and outgoing payments in the same currency, in addition to forward exchange transactions at an acceptable exchange rate. Currency risk is to a large extent related to contracts for delivery that involve income and expenses in foreign currencies. Following contract signing, the guidelines are to sell and purchase foreign currencies with forward exchange contracts, to reduce the currency risk in cash flows designated in foreign

currencies. With a production process based on the use of an international network of sub-suppliers, purchases may further be optimized with regard to currency.

In order to manage the currency risk of future trade transactions and assets and liabilities recognized in the balance sheet, the Group's units use forward exchange contracts. When necessary, forward exchange contracts are continued as they mature. These hedging activities meet the requirements of hedge accounting.

For other monetary assets and obligations in foreign currency, net exposure is kept at an acceptable level by purchasing and selling foreign currency at spot prices whenever necessary.

The Group has investments in foreign subsidiaries where net assets are exposed to currency risk at conversion of currency. A more detailed description of currency conversion differences is presented in Note 25.

Significant currencies throughout the year:

	Average exchange rates	Spot rate
	Q1	Q2	Q3	Q4	31.12.2013
SEK	0.8729	0.8891	0.9136	0.9307	0.9472
EUR	7.4236	7.6091	7.9302	8.2392	8.3825
USD	5.6174	5.5872	5.9933	6.0518	6.1332
RMB	0.9024	0.9468	0.9784	0.9934	1.0049

Sensitivity analysis

A 10 % strengthening of EUR against NOK at year-end would have increased equity and result with the figures given below. The analysis is subject to other variables being constant.

	Equity	Result after tax
31 December 2013	18 360	7 065
31 December 2012	22 520	202

A 10 % weakening of EUR against NOK would have the same effect as regards to amount, only with the opposite sign, subject to other variables being constant.

A 10 % strengthening of SEK against NOK at year-end would have increased equity and result with the figures given below. The analysis is subject to other variables being constant.

	Equity	Result after tax
31 December 2013	59 452	2 173
31 December 2012	39 996	2 561

A 10 % weakening of SEK against NOK would have the same effect as regards to amount, only with the opposite sign, subject to other variables being constant.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term liabilities with floating interest rates. This involves an interest rate risk for the Group's cash flow. The Group's surplus liquidity is in the form of bank deposits. Any divergence from the use of a floating rate of interest and placement of surplus liquidity shall be determined by the Board.

Items exposed to interest rate risk are bank deposits, bank overdrafts and long-term liabilities.

Sensitivity analysis of cash flow for instruments of variable interest

Calculations take into account all interest-bearing items, except debt with fixed interest rate. All effects will be carried to the profit and loss, as the Group has no hedging instruments related to interest that will be directly charged against equity.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the portion of loans and borrowings affected. With all other variables held constant, the Group's profit before tax is affected trough the impact on floating rate debts as follows:

	Fluctuations in interest rate	Effect on net result after tax	Effect on equity
2013	+/- 1%-points	617	617
2012	+/- 1%-points	688	688

Calculations are made on the basis of average net interest-bearing debt. A more detailed account of interest-bearing debt is presented in Note 12.

CREDIT RISK

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with bank and financial institutions, foreign exchange transactions and other financial instruments.

Credit risk is dealt with at a corporate level. The credit risk is reduced through distribution over several counterparties. Requirements to credit ratings have been established toward counterparties, and new customers are subject to credit rating. Furthermore, the Group makes a comprehensive use of Letters of

Credit toward its customers, in order to minimize the risk of losses.

The Group's customers are mainly located in Europe, including Scandinavia and Germany, as well as Asia, particularly China. The Group carries out assessment of credit risk to the political structure depending on the economic importance of the agreements based on assessments from the OECD and other equivalent factors.

Maximum risk exposure is represented by the extent of financial assets recognized in the balance sheet. Please find detailed information in Note 26.

The counterparty for pension funds is a Norwegian insurance company, and the risk related to this is considered to be insignificant.

The counterparties for derivatives are investment grade rated banks, and the credit risk related to these is considered to be insignificant. The same applies to bank deposits.

Volatility in the financial markets in 2008 and 2009, with continued significant European volatility from 2010 through 2013 has increased the credit risk. As a response, the Group implemented actions against increased risk through close follow-up of customers and suppliers. Customers with bad debt or delayed payments are particularly scrutinized. Historically, the Group has had low losses on accounts receivable, but in 2009 the Group recorded a loss that exceeded MNOK 100 relating to bankruptcies. For 2010 confirmed losses was MNOK 20.9 and in the period 2011 – 2013, annual losses on accounts receivable were between MNOK 10 and MNOK 13. Although losses are significantly reduced compared to 2009 and 2010, the Group maintains focus on customer monitoring.

As of 31.12, the Group had the following maturity distribution on its external customers (including receivable from the joint venture companies):

		0-3	3-6	> 6
	Total Not due	months	monts	months
31.12.2013	316 395 137 654 126 532		24 537	27 672
31.12.2012	334 024 195 519 109 162		13 123	16 220

For accounts receivable that are not yet due, the assessment is, based on previous experience, that there is no need to write down the value. These relate to independent customers who have no previous history of failing to fulfill their obligations to the Group. Invoicing is to a large extent carried out in accordance with milestone-based progress in each project. Due

to delays in delivery, a considerable gap between due date and payment date may arise.

Accounts receivable are discussed in further detail in Note 11.

LIQUIDITY RISK

Liquidity risk is the risk of the Group being unable to fulfill its financial obligations as they fall due. Liquidity management shall, to the extent possible, ensure that available liquidity is sufficient to meet obligations as they mature for payment, without this resulting in unacceptable loss or risk of damage to the Group's reputation. The availability of sufficient liquidity to meet expected operating costs, as well as resources to service financial obligations in the future, shall be secured.

During the autumn of 2009, the Group implemented actions to reduce working capital. These actions continued in the following years, and in 2012, among other things, the Group pursued a project that was initiated to optimize the Group's procedures and processes in order to reduce the need for working capital.

TTS Group ASA has established a joint cash pool arrangement that includes most of its subsidiaries. The joint cash pool arrangement improves accessibility and flexibility in the management of liquidity. Work is being done to include several of the foreign subsidiaries in the Group accounting system within national legal frameworks.

The Group's liquidity developments are monitored continuously based on regular liquidity forecasts from all the units in the Group.

Through the issuance of convertible subordinated loan, the Group improved its liquidity in January 2011. The facility of MNOK 200 was fully subscribed in December 2010 and paid to the Group in January 2011. Out of the loan, MNOK 105 was converted to shares in 2011 and 2012. The remaining nominal value of the convertible subordinated loan in 2013 is MNOK 95. In assessing equity-based loan terms with Nordea and bond owners, the subordinated convertible loan shall be considered part of the equity.

In December 2012 TTS Group ASA signed a new bank agreement with Nordea and DNB. The new arrangement replaces the existing credit- and bond facility from December 2011. The new facility is adjusted to the Group`s financial requirements after the sale of the Energy division. Total facility in the new arrangement is MNOK 900. See note 13 for further information.

As of 31 December 2013, the Group has undrawn overdraft facilities of MNOK 226. Furthermore, the Group has available liquidity in the form of bank deposits and drawdown facility amounting to MNOK 188.

The Group's strategy is to have sufficient cash reserves or credit options to be able to, at any time, finance operations and investments throughout the year, in accordance with the Group's strategy plan. The Group regards it as most likely that it will be able to renew loan agreements or negotiate alternative financing agreements upon expiry of the current agreements.

Surplus liquidity is placed as deposits in bank on market terms.

The table below gives an overview of the structure of maturity of the Group's financial obligations:

Remaining period: (See table below)

OPERATIONAL RISK

Operational risk is the risk of direct or indirect losses as a result of a whole range of causes related to the Group's processes, personnel, technology and infrastructure, as well as external factors besides credit risk, market risk and liquidity risk that follow from laws, rules and generally accepted principles for business

conduct. Operational risk arises in all of the Group's business areas.

The Group's deliveries are primarily organized in the form of projects. The Group is continuously striving to improve operations and projects implementation. This further includes credit rating of major sub-suppliers in order to ensure implementation of the projects.

The Group's aim is to deal with operational risk, so that a balance is reached between avoiding economic loss or damage to the Group's reputation, and general cost effectiveness, and to avoid control routines that limit initiative and creativity.

The main responsibility for development and implementation of controls designed to handle operational risk is allocated to the top management within each business area. This responsibility is supported by developing the overall Group standard for management of operational risk in various areas.

3.2 RISK RELATED TO INVESTMENT MANAGEMENT

The Group's aim with regard to investment management is to secure continued operations in order to ensure a return for the owners and other partners, and maintain an optimum capital structure, so as to reduce capital costs. To improve the capital structure, the Group may adjust the level of dividend

REMAINING PERIOD:

2013:				< 6 months 6-12 months 1-5 years More than 5 years	Total
Long-term financial obligations:
Interest-bearing non-current liabilities	-	-	198 345	-	198 345
Current financial obligations:
First year's installment on non-current liabilities	1 500	47 757	-	-	49 257
Net derivatives	689	2 775	-148	-	3 315
Accounts payable and other current liabilities	1 062 960	227 452	-		- 1 290 411
Total financial obligations	1 065 149	277 984	198 197		- 1 541 328
2012 Long-term financial obligations:				< 6 months 6-12 months 1-5 years More than 5 years	Total
Interest-bearing non-current liabilities	-	-	129 954	-	129 954
Current financial obligations:
First year's installment on non-current liabilities	1 500	27 109	-	-	28 609
Net derivatives	6 203	2 517	4 970	-	13 690
Accounts payable and other current liabilities	1 042 708	342 060	90 918		- 1 475 685

Liquidity risk

For further information on financial obligations, see Notes 12, 13, 14, 15, 19, 22, 24, 26 and 27.

payment to shareholders, issue new shares or sell assets to repay loans.

The company's gearing as of 31.12.2013 and 31.12.2012 is illustrated below:

		2013	2012
	Total interest bearing debt 1)	247 602	130 932
-	cash and cash equivalents	155 571	227 666
=	Net interest bearing debt	92 031	-96 734
+	Equity	566 670	794 576
=	Total	658 701	697 842
	Gearing	14,0 %	-13,9 %

1) Includes nominal value of convertible debt.

3.3 ESTIMATION OF FAIR VALUE

Fair value of financial instruments traded in an active market is based on the market value on the balance sheet date. Examples of this are forward contracts in foreign currencies where fair value is calculated by using a market rate on the balance sheet date.

Fair value of financial instruments not traded in an active market is estimated by the use of valuation techniques (primarily discounted future prospective cash flows) or other relevant information for giving a best estimate of fair value on the balance sheet date.

Accounts receivable and accounts payable are recognized at face value, less deductions for occurred or estimated losses on the balance sheet date, an amount presumed to be equal to the actual value of the entry.

Fair value of employee share options is measured using the Black & Sholes formula. The data forming the basis for measurement includes the share price at the time of measurement, the option's exercise price, expected volatility, weighted average expected economic life for the instruments, expected return, as well as risk free interest rate. Service terms and non-market based terms are not considered in the calculation of fair value.

Fair value of customer relations and order backlog acquired in a business combination is determined using the multi-period excess earnings method. The value of the intangible asset is equal to the present value of the incremental after-tax cash flows attributable only to the subject intangible asset after deducting contributory asset charges.

Fair value of drawings/technology acquired in a business combination is determined using the relief of royalty method. The valuation is based on the concept that if the company owns a technology, it does not have to rent, and is then relieved from paying a royalty. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

4. Risk related to key accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

a) Risk related to impairment of goodwill and other non-financial assets

The carrying value of goodwill and other intangible assets with indefinite life are tested for impairment annually in accordance with IAS 36. All non-financial assets are tested for impairment if indicators of impairment are present at the reporting date. Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget and plans for the next three years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset's performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in Note 7.

b) Risk related to revenue recognition of construction contracts

Recognition of income and appropriate contract costs from construction contracts is done in accordance with the percentage of completion method, ref. IAS 11. The assessment of project revenue and project cost is based on a number of estimates and assessments each with an inherent uncertainty. It

is more challenging to estimate the outcome of a project in the beginning of the project period and for more technically complex projects. The percentage of completion method requires that the Group prepares reliable estimates for future revenue and cost for each project as well as degree of completion on the balance sheet date. Revenue forecasts are based on contractual values where future revenue in foreign currencies is secured by forward contracts. Forward contracts and hedging accounting is discussed in section 2.10, and the accounting value of hedging instruments in Note 22. Estimated contract cost forecast is based on evaluation of calculated volume and evaluation of future price levels. The price of steel, in particular, could significantly influence project costs. In some market segments, there is risk related to delays and cancellations of firm contracts. The Group assesses the likelihood of cancellations and delays on a continuous basis. Delays and cancellation entail the risk of reduced revenue, increased costs, and change of previously recognized project margins.

c) Risk related to assessment of financial assets and obligations

The Group's financial assets and obligation are further discussed in sections 2.8, 2.9, 2.10, 2.12, 2.13, 2.15 and 2.16. Risk related to currency, interest, credit and liquidity, as well as asset management is discussed in section 3. Volatility in the financial markets could significantly affect the basis for valuation, estimated cash flow and liquidity in the course of the next accounting year. For further discussion of this, reference is made to section 3 and, for accounting values see Note 11, 12, 14, 15, 22, 24, and 26.

d) Risk related to guarantee liability

The Group customarily offers a warranty period of +/- two years on its delivered products. Management estimates accruals for future guarantee commitments based on information from historical guarantee claims, together with updated information of the quality of recent deliveries. Factors that may affect estimated obligations include the outcome of productivity and quality initiatives, as well as reference prices and labor costs. Guarantee costs are further discussed in section 2.18, and accruals in Note 23.

e) Risk related to pension obligations

Net pension obligations and pension cost is determined using actuarial valuations, which are based on assumptions which may change in the future. The assumptions include discount rate, future salary increases, future pension increases, expected return on pension assets, voluntary retirement, disability and mortality. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in

these assumptions. All assumptions are reviewed at each reporting date. The discount rate is based on Norwegian high grade corporate bonds (OMF). Mortality rate is based on publicly available mortality tables. Pension cost and other compensation payments to employees are further discussed in section 2.18, and accounting values in Note 5.

f) Risk related to fair value on shares

Fair value of shares not traded in an active market is estimated by the use of valuation techniques. The Group evaluates and chooses methods and assumptions that are based on market conditions on the balance sheet date. Changes to the market conditions may significantly affect the fair value of shares. The accounting value of shares is further discussed in Note 8.

g) Deferred tax assets

The Group has recognized deferred tax assets primarily related to the Norwegian companies. The following criteria have been used to estimate whether it is probable that future taxable profit will be available against which unused tax losses can be utilized:

• The Group probably has sufficient future taxable profit available to utilize the benefits
• The Group has sufficient temporary differences
• Tax losses as a result of specific identifiable causes

h) Inventory

Valuation of inventory is based on estimates on future selling prices in the ordinary course of business. Changes in market conditions may affect the value of inventory. See section 2.11 and accounting values in Note 3.

Reinventing the shortest route to the cargo deck page 18

NOTES FOR CONSOLIDATED ACCOUNTS TTS GROUP NOTES¹

Note 1 - Operating segments

(AMOUNTS IN NOK 1000)

Primary reporting format - business segments

For management purposes the Group is organised into business units based on its products and services and has five reportable segments, as follows:

Marine:	Marine Division
Port & Logistic:	Port and Logistics Division
Offshore & Heavy Lift:	Offshore and heavy lift division
Services:	Services division
Other:	Parent company and other

Marine Division:

The Marine Division, produces deck machinery, hatch covers, cargo cranes and yacht equipment, cargo access equipment, such as RoRo equipment, side loading systems and equipment for cruise ships.

Port and Logistic Division:

The Port and Logistic Division produces port equipment, such as heavy load handling, shipyard production lines and cargo handling systems.

Offshore and Heavy Lift Division

The Offshore and Heavy Lift Division produces offshore and heavy lift cranes, hangar and watertight doors.

Services division:

The Services Division provides spare parts, service and maintenance.

The segment structure was changed from 2012 to 2013, by moving some parts of the Marine division to the Offshore & Heavy Lift division, as well as separating the Group's Services activities to a separate reporting segment.

In February 2014, the Group's board decided to change the structure of governance and reporting by moving the activities within the Port & Logistics division into the Marine division. This reduces the number of segments to three: Marine, Offshore & Heavy Lift and Services.

Each segment is managed separately. Management monitors the operating results of its business separately for the purpose of making decisions about resource allocation and performance assessment. Information related to the divisions are shown below. Earnings are measured based on segment income before tax, as evidenced by internal management reports reviewed by the CEO and the Board of Directors.

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties. These are not recognized on a separate line, as the amounts are immaterial.

Inter-segment revenues are eliminated upon consolidation and reflected within the individual segments.

YEAR ENDED 31.12.2013:

	Key profit figures
	Marine	Port	Offshore	Services	Other	Total
External turnover	1 030 272	234 149	982 413	446 110	224	2 693 167
Internal turnover	291 990	15 707	122 286	105 887	-	535 870
Intergroup eliminations	-291 990	-15 707	-122 286	-105 887	-	-535 870
Group Turnover	1 030 272	234 149	982 413	446 110	224	2 693 167
Income from associated companies	11 964	-	-	-	-	11 964
Earnings before depreciation, finance and tax (EBITDA)	7 264	-7 434	-148 385	43 007	-24 736	-130 284
Depreciation/amortisation	6 987	3 214	19 452	3 506	655	33 814
Operating profit/loss	276	-10 647	-167 837	39 501	-25 392	-164 098
Financial income	12 424	628	172	154	727	14 105
Financial cost	7 061	184	11 271	7 473	24 899	50 888
Segment profit/ loss before tax	5 639	-10 203	-178 936	32 182	-49 564	-200 881

Banana leaves

Banana leaves have a wide range of applications because they are large, flexible, waterproof and decorative. They are used for cooking, wrapping and food serving in a wide range of cuisines of tropical and subtropical areas. Banana leafs are used for decorative and symbolic purposes in numerous Hindu and Buddhist ceremonies. In traditional home building in the tropical areas, roofs and fences are made of thatched dry banana leaves. Banana and palm leaves were historically the primary writing surface in many nations of South and Southeast Asia.

YEAR ENDED 31.12.2012 (RESTATED TO 2013 SEGMENT STRUCTURE)

	Key profit figures
	Marine	Port	Offshore	Services	Other	Total
External turnover	1 197 300	104 795	686 246	381 565		2 369 906
Internal turnover	259 793	3 076	141 999	86 672		491 540
Intergroup eliminations	-259 793	-3 076	-141 999	-86 672	-	-491 540
Group Turnover	1 197 300	104 795	686 246	381 565	-	2 369 906
Income from joint ventures	59 916					59 916
Earnings before depreciation, finance and tax (EBITDA)	132 966	-11 489	27 423	24 306	-15 874	157 332
Depreciation/amortisation	4 731	3 382	12 361	3 831	82	24 387
Impairments		22 801				22 801
Operating profit/loss	128 235	-37 672	14 898	20 475	-15 792	110 144
Financial income	24 418	1 065	615	37	3 876	30 011
Financial cost	26 554	2 512	21 313	9 482	35 822	95 683
Segment profit/loss before tax	126 099	-39 119	-5 800	11 030	-47 738	44 472

YEAR ENDED 31.12.2013:

	Segment assets, liabilities and capital expenditure
	Marine	Port	Offshore	Services	Other	Total
Assets	1 064 664	225 881	744 471	161 993	-76 385	2 120 624
Joint ventures	104 002	-	-	-	-	104 002
Total segment assets	1 168 666	225 881	744 471	161 993	-76 385	2 224 626
Liabilities	670 107	145 268	563 559	91 189	187 833	1 657 956
This year's capital expenditures	25 493	730	21 913	1 520	1 568	51 224

YEAR ENDED 31.12.2012 (RESTATED TO 2013 SEGMENT STRUCTURE)

		Segment assets, liabilities and capital expenditure
	Marine	Port	Offshore	Services	Other	Total
Assets	1 850 768	209 527	261 832	190 261	-297 031	2 215 357
Joint ventures	134 988	-	-	-	-	134 988
Total segment assets	1 985 756	209 527	261 832	190 261	-297 031	2 350 345
Liabilities	1 404 979	103 904	205 602	89 544	-309 879	1 494 150
This year's capital expenditures	11 430	2 709	9 679	801	2 392	27 011

INFORMATION ABOUT GEOGRAPHICAL AREAS

The Group's activities are primarily distributed in the following regions: Europe Asia USA/Canada Rest of the world

SALES REVENUE (EXTERNAL)

	2013	2012
Europe	1 152 248	814 859
Asia	1 312 215	1 378 747
USA/Canada	51 111	99 704
Rest of the world	177 593	76 596
Total sales revenue	2 693 167	2 369 906

Sales are allocated based on the customer's country of domicile.

TOTAL ASSETS

	2013	2012
Europe	1 746 038	2 143 314
Asia	424 199	357 392
USA/Canada	9 576	9 589
Rest of the world	0	0
Total assets	2 179 813	2 510 295

Assets are reported based on their location.

NON-CURRENT ASSETS 1)

	2013	2012
Europe	730 230	651 480
Asia	50 026	43 922
USA/Canada	290	401
Rest of the world	0	0
Total non-current assets 1)	780 546	695 803

1) Non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts

Note 2 - Construction contracts

(AMOUNTS IN NOK 1000)

	2013	2012
Revenue from construction contracts, continued operations	2 247 508	1 962 818
Revenue from service contracts, continued operations	445 659	383 660
Total revenue from projects, continued operations 1)	2 693 167	2 346 478
Revenue from construction contracts and service contracts, discontinued operations 2)	-	558 717
Total revenue from projects continued operations and discontinued operations 1)	2 693 167	2 905 195
Balance sheet items related to construction contracts
Current Assets
Completed production	812 319	774 420
Invoiced production	341 556	269 846
Accrued, non-invoiced production	470 763	504 574
Prepayments to suppliers	54 804	53 437
Total current assets	525 567	558 011
Current liabilities
Completed production	272 349	237 970
Invoiced production	553 838	739 151
Prepayments from customers	-281 489	-501 181
Non-invoiced production cost, suppliers	-173 414	-62 365
Total current liabilities	-454 903	-563 546

1) Revenue from projects includes revenues from long-term construction contracts and revenues from service contracts. 2) Revenue from discontinued operations for 2012 includes revenues from divested Energy division up to 6.6.2012.

Risks related to the estimation of the posted values are further discussed under accounting principles, in sections 2.21 and 4.

Note 3 - Inventories

(AMOUNTS IN NOK 1000)

	2013	2012
Inventories, incl. non-current	243 376	202 152
Obsolescence	-42 575	-15 041
Total inventories	200 801	187 111
Book value of inventories pledged as security for liabilities	106 962	158 977

Raw materials removed from storage for use in ongoing production is presented along with accrued, non-invoiced production. Consumption of raw materials, supplies, changes in finished goods and changes in work in progress are included under the item cost of sales, and amounts to MNOK 1 756 in 2013 (2012: MNOK 1 509).

Note 4 - Payroll expenses and employee information

(AMOUNTS IN NOK 1000)

Payroll expenses:	2013	2012
Salaries	535 754	405 964
Employer's social security contribution	56 791	50 560
Defined benefit pension costs (note 5)	20 605	16 722
Defined contribution pension costs (note 5)	13 868	16 111
Other benefits	56 407	23 240
Total payroll expenses	683 424	512 597
Number of employees at the end of the year	1 100	970

The number of employees in the Group increased with 130 from 2012 to 2013.

Board remunerations 1)	2013	2012
Trym Skeie	350	350
Bjarne Skeie	200	200
Anne Breive	240	280
Kjerstin Fyllingen	280	240
Jan Magne Galåen 2)	240	240
Karen Torine Mørkestøl	-	100
Ole Henrik Askvik	75	-
Mona L. Tellnes Halvorsen	75	-
Jarle Dyrdal	-	100
Ingve Hjelmeseter	19	-
Dag Rune Mjelde	19	-
Total	1 498	1 510

1) The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next.

For the financial year 2013, the reported remuneration is based on the remuneration paid in 2013 based on the amounts determined by the Board at the Annual General Meeting for 2013. The same applies to the nomination committee.

2) Jan Magne Galåen represents Rasmussengruppen and the board fee is paid to Rasmussengruppen.

The board has not received any remuneration beyond director`s fee. No loans or severance pay is given to the directors.

NOMINATION COMMITTEE REMUNERATION

The TTS nomination committee is comprised of the following members: Bjørn Olafsson (Chairman), Bjørn Sjaastad og Johan Aasen.

The nomination committee remuneration for 2013 was TNOK 50 for the chairman and TNOK 30 for each of the members, a total of TNOK 110

STATEMENT REGARDING THE STIPULATION OF REMUNERATION AND OTHER BENEFITS FOR THE PRESIDENT & CEO AND OTHER EXECUTIVES

Regarding Group management, TTS Group ASA's remuneration policy is based on offering competitive terms. Remunerations should reflect that TTS is a listed company with an international focus.

The annual remuneration is based on Group management`s part-taking in the results generated by the company and the added value for shareholders through increased company value. Remuneration consists of three main components; Base salary, bonus and a share option program.

Bonus is determined on the basis of target results. In certain circumstances where change and development are of decisive nature, the bonus is further based on specific developmental targets. Bonus targets are revised annually. The maximum bonus is one year's base salary for the President & CEO, and up to 50 % of base salary for other executives.

Since 1998, a share option program has been active for the Group management of TTS; the goal being that the Group management shall have the same incentive as the shareholders in respect of increasing company value over time. The Annual General Meeting has each year given the Board authority to establish share option program with a two year term. Redemption price equals market price on allotment. First exercise is 50 % after one year. Next 12.5 % per quarter, in addition to options not previously utilized. Each option program expires after 2 years. Please refer to note 17 Share capital and shareholder information for further information regarding option program.

The Group pension scheme in Norway is based on about 65 % of base salary at the age of 67, limited to 12G, with the exception of TTS Offshore Handling Equipment AS which has a defined contribution plan. For employees hired in other countries, the prevailing schemes in the respective companies apply.

The period of notice is 2 months, with no further severance pay for the President & CEO. For the other members in the Senior Executive Group, the period of notice is 6 months, with a severence pay of up to 12 months including the period of notice.

The share option program is contingent on the Annual General Meeting's approval, based on the Board being granted authority to make such allotments. The President & CEO's remuneration is determined by the Board of TTS Group ASA. Remuneration to other executives is determined by the President & CEO.

REMUNERATION AND OTHER BENEFITS FOR THE PRESIDENT & CEO AND OTHER SENIOR EXECUTIVES: 2013

(AMOUNTS IN NOK 1000)

Name	Position	Base salary	Other benefits	Bonus paid	Share options	Pension cost
Johannes D. Neteland (till December 2013) President & CEO		2 032	160	1 839	280	935
Björn Andersson (from December 2013)	President & CEO	128	-	-	-	-
Arild Apelthun	CFO	1 614	14	465	280	131
Ivar K. Hanson	EVP, Marine	1 434	16	543	140	58
Geir Storaas (from August 2013)	EVP, Offshore and Heavy Lift	583	7	-	-	29
Lennart Svensson	EVP, Port and Logistics	1 276	15	-	-	496
Stefan Gleuel (from August 2013)	EVP, Services	876	-	-	-	-
Remunerations	Taxable remuneration
Other benefits	Car, group life insurance,taxable pension schemes, phone, newspaper, etc.
Bonus paid	Bonus paid in current year
Share options	Calculated option cost recognized in the income statement

The President & CEO from December 2013 is not a member of the TTS Group pension plan, nor any other pension arrangement paid by TTS.

The former President & CEO receives ordinary salary in the period of notice until May 2014. For the same period, the former President & CEO remains member of the TTS Group pension plan. After the notice period, the former President & CEO will receive severance pay equivalent to 18 months ordinary salary in line with the employment contract.

Remuneration of Auditor:	2013	2012
Statutory audit	4 755	3 185
Other attestation services	0	597
Tax advisory	413	412
Other non-audit service	461	1 336
Total	5 629	5 530

Note 5 - Pensions

(AMOUNTS IN NOK 1000)

The Norwegian companies within TTS Group, except TTS Offshore Handling Equipment AS, have defined benefit pension plans that give employees the right to future pension benefits depending on length of service, salary levels, retirement age and the National Insurance benefits received. As of 31.12.13 the pension plan includes 243 persons, including 33 retirees. The Group's obligations are covered primarily by an insurance company.

Group companies outside Norway have pension plans in accordance with local practice and regulations. All pension plans in companies outside Norway are defined contribution plans, and the contribution paid during the year is expensed when incurred. Contribution paid and expensed in 2013 is MNOK 13,9, including expensed contribution for TTS Offshore Handling Equipment AS .

With effect from 1st of January 2013 actuarial gains and losses are recognized in other comprehensive income, ref. IAS 19 revised. As a part of the adaption to the changes of IAS19, TTS Group has elected to classify the interest elements of the pension cost within the financial items in the P&L. Due to the change in recognition for actuarial gains and losses, comparative figures for 2012 are restated to reflect the change in recognition principle.

THE NET PENSION OBLIGATION FOR COMPANIES WITH A DEFINED BENEFIT PLANS IS BASED ON THE ASSUMPTIONS AS OF 31.12.2013 AND ARE DETERMINED AS FOLLOWS:

		2013			2012
			Insured Uninsured 2)	Total		Insured Uninsured 2)	Total
	Fair value of assets at end of year	121 139	-	121 139	104 564	-	104 564
-	Defined benefit obligation at end of year	-186 216	-425	-186 640	-159 311	-395	-159 706
+	Unrecognized net actuarial loss (gain)	-	-	-	-	-	-
-	Accrued payroll tax 1)	-9 176	-6	-9 182	-7 719	-56	-7 775
=	Net pension asset (obligation) after payroll taxes	-74 253	-431	-74 683	-62 466	-451	-62 917

1) Accrued payroll tax is calculated based on net funded status at period end. Accrued payroll tax is recognized as pension liability. 2) The amount includes TNOK 431 liabilities related to unsecured liabilities. The unsecured liabilities is related to a closed pension scheme including three retirees in the age between 63 and 67 years. Payments in this pension scheme will stop when the retirees reaches the age of 67.

NET PENSION COSTS ARE DETERMINED AS FOLLOWS:

		2013			2012
			Insured Uninsured	Total		Insured Uninsured	Total
	Service cost	15 915	-	15 915	13 630	-	13 630
+	Interest cost	2 072	-	2 072	205	-	205
+	Administration cost	328	-	328	946	-	946
+	Payroll tax of net pension cost	2 290	-	2 290	1 941	-	1 941
=	Net periodic pension cost	20 605	-	20 605	16 722	-	16 722
	- of which recognized as payroll cost	18 533		18 533	16 517		16 517
	- of which recognized as finance cost	2 072		2 072	205		205

CHANGE IN RECOGNIZED FUNDS:

		2013	2012
	Net liability as of 31.12 prior year		2 775
	Effect of transition to IAS 19R		-48 946
	Net liability as of 01.01	-62 917	-46 171
-	Cost recognized during the year (see above)	-20 605	-16 722
	+/- Pension payments and payment of pension premiums	19 059	16 924
-	Remeasurements recognized in OCI	-10 220	-16 948
=	Net liability as of 31.12.	-74 684	-62 917

EFFECTS RECORDED IN OTHER COMPREHENSIVE INCOME

	2013
Remeasurements loss (gain) - change in discount rate	-7 334
Remeasurements loss (gain) - change in other financial assumptions	7 487
Remeasurements loss (gain) - change in mortality table	8 328
Remeasurements loss (gain) - change in other demographic assumptions	-
Remeasurements loss (gain) - experience DBO	-1 170
Remeasurements loss (gain) - experience Assets	1 825
Investment management cost	1 085
Total remeasurement losses (gains) recognized in other comprehensive income	10 220

BREAKDOWN OF PENSION ASSETS UNDER MANAGEMENT BY DNB LIVSFORSIKRING

	2013	2012
Equities	6,80 %	9,20 %
Alternative investments	3,50 %	0,00 %
Bonds	17,00 %	15,60 %
Money market	22,00 %	18,30 %
Hold to maturity bonds	35,20 %	36,70 %
Real estate	14,30 %	18,30 %
Other	1,10 %	1,90 %

THE FOLLOWING ECONOMIC ASSUMPTIONS HAVE BEEN MADE FOR CALCULATION OF THE PENSION OBLIGATIONS:

	Expenses		Commitments
	2013	2012	31.12.13	31.12.12
Discount rate	3,90 %	3,30 %	4,10 %	3,90 %
Return on pension funds	4,00 %	4,80 %	4,10 %	4,00 %
Annual wage growth	3,50 %	4,00 %	3,75 %	3,50 %
Annual adjustment of National pension index (G)	3,25 %	3,75 %	3,50 %	3,25 %
Annual adjustment of pensions in payment	3,25 %	3,75 %	3,50 %	3,25 %
Voluntary retirement	8,0-0,0 %	10,00 %	8,0-0,0 %	8,0-0,0 %
Withdrawal propensity for early retirement (AFP)	N/A	45,00 %	N/A	N/A
Payroll tax	14,10 %	14,10 %	14,10 %	14,10 %
Mortality table 1)	K2013	K2005	K2013	K2005

Economic actuarial assumptions used in the calculation are based on recommendations from The Norwegian Accounting Standards Board. The discount rate is based on high quality corporate bond (Norwegian Covered Bonds, OMF). Norwegian OMF is considered as high quality bond with low risk based on the strong macroeconomic position in Norway.

1) Mortality and disability tables are based on the best estimates prepared by Finance Norway. In 2013 the mortality table was changed from K2005 to K2013, reflecting and increased estimated logevity for Norwegian employees in the pension plan.

Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.18 and 4.

Note 6 - Fixed assets

(AMOUNTS IN NOK 1000)

			Machinery and	Furniture, office
	Property	Buildings	vehicles	equipment, etc.	Total
As of 1.1.2012
Acquisition cost 1.1.	15 710	25 008	68 186	196 695	305 598
Accumulated depreciation as of 1.1.	-1 162	-10 069	-55 245	-121 119	-187 594
Book value as of 1.1.2012	14 548	14 939	12 941	75 576	118 004
2012 Financial year
Book value as of 1.1.	14 548	14 939	12 941	75 576	118 004
Foreign currency differences	72	-458	256	-918	-1 048
Acquisitions	-	-	25 939	4 179	30 118
Additions	-	-	4 408	17 393	21 801
Disposals	-	-	-	-36 666	-36 666
Depreciation	-	-1 567	-4 097	-11 510	-17 174
Book value as of 31.12.2012	14 620	12 914	39 447	48 054	115 034
As of 31.12.2012
Acquisition cost 31.12.	15 782	20 729	61 694	100 342	198 546
Accumulated depreciation as of 31.12.	-1 162	-7 816	-22 247	-52 288	-83 512
Book value as of 31.12.2012	14 620	12 913	39 447	48 054	115 034
2013 Financial year
Book value as of 1.1.	14 620	12 913	39 447	48 054	115 034
Foreign currency differences	1 433	1 266	4 651	3 135	10 484
Acquisitions	-	-	-	-	-
Additions	-	326	13 718	22 382	36 425
Disposals	-	-	-474	-320	-794
Depreciation	-	-698	-9 521	-14 882	-25 101
Book value as of 31.12.2013	16 053	13 807	47 820	58 368	136 049
As of 31.12.2013
Acquisition cost 31.12.	17 215	22 198	70 835	108 964	219 211
Accumulated depreciation as of 31.12.	-1 162	-8 390	-23 014	-50 596	-83 162
Book value as of 31.12.2013	16 053	13 808	47 820	58 368	136 049

Property in the Norwegian companies has been pledged as security for long-term and short-term debt to credit institutions, see Note 13.

LEASING

TTS Group has no leases classified as financial lease.

TTS Group has entered into different operating leases for offices and other facilities as well as for equipment and vehicles. Most of the leases contain an option for extension.

THE OPERATING LEASE CONTRACTS COMPRISE:

	Leasing cost 2013	Cost 2014	Cost 2015-2018	Cost 2018+	Total future lease payments
Lease of premises	44 966	55 221	146 175	89 919	291 409
Lease of equipment and vehicles	13 170	13 048	16 338	7 834	37 220
Total	58 137	68 269	162 513	97 753	328 629

Note 7 - Intangible assets

(AMOUNTS IN NOK 1000)

	Customer portfolio	Patents, licences etc	R&D	Goodwill 1)	Total
As of 1.1.2012
Acquisition cost 31.12.	6 117	27 959	338 675	960 115	1 332 866
Accumulated depreciation as of 31.12.	-2 426	-18 098	-63 369	-132 931	-216 824
Book value as of 1.1.2012	3 691	9 861	275 306	827 184	1 116 042
2012 Financial year
Book value 1.1.	3 691	9 861	275 306	827 184	1 116 042
Foreign currency differences	147	-64	-822	-2 783	-3 522
Additions		592	4 618	-	5 210
Acquisitions	25 944	3 050	-	157 761	186 755
Disposals	-3 315	-7 534	-200 740	-511 012	-722 601
Depreciation	-911	-913	-5 387	-	-7 211
Amortisation	-	-	-22 801	-	-22 801
Book value as of 31.12.2012	25 556	4 992	50 174	471 150	551 872
As of 31.12.2012
Acquisition cost 31.12.	26 467	10 164	83 521	471 150	591 302
Accumulated depreciation as of 31.12.	-911	-5 173	-33 347	-	-39 431
Book value as of 31.12.2012	25 556	4 991	50 174	471 150	551 871
2013 Financial year
Book value 1.1.	25 556	4 991	50 174	471 150	551 871
Foreign currency differences	3 625	642	1 298	55 303	60 869
Additions	57	334	2 742	-	3 133
Acquisitions	-	-	-	11 666	11 666
Disposals	-	-	-	-	-
Depreciation	-2 870	-1 389	-7 469	-	-11 728
Book value as of 31.12.2013	26 367	4 578	46 746	538 119	615 811
As of 31.12.2013
Acquisition cost 31.12.	29 318	6 397	58 642	538 119	632 475
Accumulated depreciation as of 31.12.	-2 950	-1 818	-11 896	-	-16 664
Book value as of 31.12.2013	26 368	4 579	46 746	538 119	615 811

BOOK VALUE R&D, PATENTS AND LICENCES PER 31.12.2013 CONSIST OF:

32 798
5 415
13 112
51 325

For proprietary products a continuous assessment is carried out to ensure the criteria for recognition of development costs have been met.

1) Summary of the allocation of goodwill at segment level is as follows:

2013	Port	Marine	Offshore & Heavy Lift	Services	Total
Total	41 051	277 304	193 665	26 100	538 119
2012	Port	Marine	Offshore & Heavy Lift	Services	Total
Total	36 062	239 842	169 146	26 100	471 150

Note 7 - Intangible assets

(AMOUNTS IN NOK 1000) GOODWILL IMPAIRMENT ASSESSMENT

TTS Group tests the value of goodwill and other intangible assets annually or at the end of each reporting period if any indication that the assets may be impaired. At end of 4th quarter 2013 the share price values the group lower than book equity, indicating potential impairment of goodwill.

The TTS Group has defined cash generating units (CGU) at the lowest level that generates cash inflows that are largely independent of those from other assets or groups of asset.

A summary of the most important assumptions for the test is shown below, aggregated for the tested CGUs within each segment:

		EBITDA Margin
CGUs within segment 1)	Goodwill 31.12.13 (MNOK)	Revenue 2013 (MNOK)	Actual 2013	Est. 2014 2)	>2014 2)	WACC 3)
Marine	303	1 292	7,2 %	8,3 %	8,3 %	12,2 %
Port & Logistics	41	144	-5,1 %	3,8 %	6,2 %	12,3 %
Offshore & Heavy Lift	194	771	-0,8 %	4,0 %	7,6 %	12,3 %
Total	538	2 208

1) The table summarize information per reporting segment for the CGUs which have been tested for impairment. CGUs with no allocated goodwill or other intangible assets with indefinite life is not included in this table. Revenue includes service revenue 2) Weighted average.

3) Pre-tax weighted average cost of capital.

Impairment tests are performed by estimating value in use for each CGU, which is compared to the carrying value of the assets tested. Estimated value in use is calculatid on the basis of expected discounted future cash flows, based on the following assumptions:

• Expected cash flows are based on EBITDA adjusted for investments and changes in working capital. Estimates for 2014 are based on board-approved budgets for 2014. For the years 2015-2016, estimates are based on the mid term strategy figures approved by the board. Terminal value after 2016 is based on a growth rate of 2.5%, which is consistent with long term macroeconomic assumptions from the Norwegian National Bank.
• Estimated future revenues are based on market analysis and evaluations of the different markets in which the companies and divisions of the Group operate. Please find additional description in the Board of Directors report - section Market.
• Revenue, cost and net earnings are estimated based on the budgets and plans of each CGU. The budgeted figures are the management's best estimates, in which expected future earnings (EBITDA) are based on specific estimates for each CGU and observed margins from comparative companies. The cash flows in the model are, in accordance with IAS39, based on the business in it's current state (including started and committed changes). No revenue or corresponding cost elements from expansion of the business are included in the cash flows. The expected positive development in EBITDA margin is in part a result of increased volumes and in part a result of increased margins.
• Weighted average cost of capital (WACC) is calculated on the basis of the Capital Asset Pricing Model. The WACC applied is a nominal pre-tax WACC. The WACC for all CGUs is based on a post tax WACC of 9,5%, which again is based on 3% risk free interest, a risk premium of 5%, a beta of 2 and an additional small cap premium of 2%. The Beta is calculated based on observed beta in other similar listed companies.

Based on the above assumptions, the estimated value in use exceeds the carrying value for each CGU, indicating there is no requirement to impair in any of the CGUs. Please note, however, that there is a high degree of inherent estimation uncertainty related to several assumptions, and that changes to these assumptions could lead to future write downs. The Group has performed sensitivity analysis that show no need for write downs given the following assumptions:

• 10 % increase in the WACC.

• 10 % decrease in EBITDA margin.

CHANGE IN RECOVERABLE AMOUNT:

	10% increase in WACC	10% decrease in EBITDA margin
Marine	-93 818	-226 927
Port & Logistics	-10 456	-24 070
Offshore & Heavy Lift	-40 388	-93 656
Total	-144 662	-344 653

The estimates of recoverable amount are based on assumptions regarding future development of several factors. The inherent uncertainty in the assumptions including, but not limited to, future sales volumes, prices for products sold, future prices for input factors, investments, working capital, exchange rates and WACC leads to an uncertainty of the outcome of the estimates. A sensitivity analysis show that changes in assumptions within the range listed above would not have lead to impairment being recorded at 31.12.2013. Out of the tested CGUs, TTS NMF, a part of Offshore & Heavy Lift, has the lowest margin between the book value and the calculated value in use. NMF was acquired in the 3rd quarter of 2012, and the results in 2013 have been weaker than expected. TTS Group expects an improved future market for heavy lift cranes, and has reorganized the NMF business. The updated plans assume improved results, and TTS Group has estimated that the value in use of the goodwill is MNOK 47 higher than the book value of goodwill of MNOK 316.

Note 8 - Investments in other companies

(AMOUNTS IN NOK 1000)

	Ownership	Acquisition cost	Book value
			2013	2012
Fixed assets:
Shin Young Heavy Industry	13.4 %	222	-	222
Sigma Drilling AS 1)	16.1 %	28 673	28 673	28 673
Total investments in other companies		28 895	28 673	28 895

Other investments in shares are defined as available for sale.

1) TTS Group ASA acquired a 16.1 % share in Sigma Drilling AS in mid-November 2012. The investment was at fair value on the day of acquisition, and a best estimate for fair value at year-end 2012 is acquisition cost in mid-November 2012, see note 21 Related parties. In January 2014 Sigma Drilling AS has terminated a contract with STX. The final outcome for Sigma Drillng is uncertain, with a limited negative outcome. Ref. comment in note 29. As there are no observable market data available for the Sigma share (Level 3 according to IFRS13), the TTS Group's valuation of the shares in Sigma is performed using valuation techniques. The valuation is based on a scenario analysis where the fair value is calculated as a risk weighted average of the net present value of the potential outcomes. The valuation shows that the fair value of the shares of Sigma Drilling AS has not changed significantly during the year.

Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.8 and 4.

Note 9 - Subsidiaries

(AMOUNTS IN NOK 1000)

The following subsidiaries are basis for the consolidated accounts:

TTS GROUP ASA:

		Acquisition	Ownership/
Subsidiary	Registered office	year	voting share		Currency Share capital
TTS Handling Systems AS	Drøbak, Norway	1994	100 %	NOK	950 000
Norlift AS	Bergen, Norway	1994	100 %	NOK	500 000
TTS Ships Equipment AS	Bergen, Norway	1996	100 %	NOK	2 500 000
TTS Marine AB	Gothenburg, Sweden	2002	100 %	SEK	2 000 000
TTS Marine Shanghai Co Ltd	Shanghai, China	2002	100 %	RMB	200 000
Hydralift Marine AS	Kristiansand, Norway	2003	100 %	NOK	100 000
TTS Cranes Norway AS	Bergen, Norway	2007	100 %	NOK	500 000
TTS Marine AS	Bergen, Norway	2009	100 %	NOK	3 000 000
TTS Singapore Pte. Ltd.	Singapore	2009	100 %	SGD	1 141 813
TTS Greece Ltd.	Pireus, Greece	2009	100 %	EUR	200 000
TTS Marine Holding AB	Gothenburg, Sweden	2011	100 %	SEK	100 000
TTS Port & Logistics Holding AB	Gothenburg, Sweden	2011	100 %	SEK	100 000
TTS Offshore Handling Equipment AS Bergen, Norway		2012	100 %	NOK	2 000 000
TTS NMF GmbH	Hamburg, Germany	2012	100 %	EUR	3 000 000
TTS Polen SP.Z.O.O.	Gdansk, Poland	2013	100 %	PLZ	250 000

Joint venture	Registered office		Acquisition year Ownership/ voting share
TTS BoHai Machinery Co., Ltd	Dalian, China	2005	50 %

Joint ventures are accounted for in accordance with the equity method, ref. note 10.

TTS MARINE AB HAS THE FOLLOWING SUBSIUDIARIES:

Subsidiary	Registered office	Acquisition year	Ownership/ voting share Currency		Share capital
TTS Marine Inc.	Virginia, USA	1994	100 %	USD	190 000
TTS Marine GmbH	Bremen, Germany	1997	100 %	EUR	255 646
TTS Hua Hai AB	Gothenburg, Sweden	2002	100 %	SEK	100 000
TTS Liftec Oy	Tampere, Finland	2004	100 %	EUR	76 500
TTS Port Equipment AB	Gothenburg, Sweden	2005	100 %	SEK	100 000
TTS Marine S.r.l	Genova, Italy	2006	100 %	EUR	10 400

Joint venture	Registered office		Acquisition year Ownership/ voting share
TTS Hua Hai Ships Equipment Co Ltd	Shanghai, China	2002	50 %
Jiangsu TTS Hua Hai Ships Equipment co. Ltd	Jiangsu, China	2007	50 %

Joint ventures are accounted for in accordance with the equity method, ref. note 10.

TTS MARINE GMBH HAS THE FOLLOWING SUBSIDIARIES:

Subsidiary	Registered office	Acquisition year	Ownership/ voting share Currency		Share capital
TTS Marine Ostrava s.r.o	Ostrava, Czech Republic	2005	100 %	EUR	310 291
TTS Marine GmbH Korea Co. Ltd	Korea	2007	100 %	KRW	1 513 390 000
TTS Marine Equipment Ltd.	Dalian, China	2008	100 %	RMB	15 728 611

Note 10 - Investments in joint ventures

(AMOUNTS IN NOK 1000)

Joint ventures are accounted for in accordance with the equity method.

PER 31 DECEMBER THE GROUP HAS THE FOLLOWING INVESTMENTS IN JOINT VENTURES:

Company	Registered	office Acquisition date	Ownership	Voting share
TTS Hua Hai Ships Equipment Co., Ltd	Shanghai, China	2002	50 %	50 %
TTS Hua Hai Ships Equipment Co., Ltd	Jiangsu, China	2007	50 %	50 %
TTS Bohai Machinery Co., Ltd	Dalian, China	2005	50 %	50 %

Interests in joint ventures	TTS Bohai Machinery Co., Ltd	TTS Hua Hai Ships Equipment, Shanghai and Jiangsu	Sense Drillfab AS	Total
Opening balance 1.1.2012	15 282	150 527	3 914	169 723
Disposals/divestment	-	-	-3 914	-3 914
Reclassifications 1)	-	-34 910	-	-34 910
Share of profit/loss (net of witholding tax)	869	59 047	-	59 916
Dividends (net of witholding tax)	-	-47 502	-	-47 502
Currency effect	-994	-7 331	-	-8 325
Closing balance 31.12.2012	15 157	119 831	-	134 988
Opening balance 1.1.2013	15 157	119 831	-	134 988
Share of profit/loss (net of witholding tax)	1 053	10 911	-	11 964
Dividends (net of witholding tax)	-	-40 954		-40 954
Currency effect	-224	-1 772	-	-1 996
Closing balance 31.12.2013	15 986	88 016	-	104 002

Except a guarantee for external debt of total MUSD 7,5 there are no contingent liabilities or capital committments relating to the Group's interests in the joint ventures and no significant contingent liabilities of the joint ventures themselves.

1) During 2012 a reclassification from Other receivables to Investments in joint ventures was recorded related to prior years' dividends.

JV'S TOTAL (100%) PROFIT/LOSS, ASSETS AND LIABILITIES PER 31.12.2013:

	Long term assets	Current assets	Long term liabilities	Current liabilities	Income	Profit/loss after tax
TTS Bohai Machinery Co., Ltd	3 960	156 423	-	123 771	250 173	3 025
TTS Hua Hai Ships Equipment Co., Ltd, Shanghai and Jiangsu	60 511	520 140	-	312 152	483 206	36 338
Total	64 471	676 563	-	435 923	733 378	39 363

JV'S TOTAL (100%) PROFIT/LOSS, ASSETS AND LIABILITIES PER 31.12.2012:

	Long term assets	Current assets	Long term liabilities	Current liabilities	Income	Profit/loss after tax
TTS Bohai Machinery Co., Ltd	4 089	171 318	-	145 091	304 677	1 658
TTS Hua Hai Ships Equipment Co., Ltd, Shanghai and Jiangsu	50 792	460 635	-	271 766	951 540	118 173
Sense Drillfab	-	-	-	-	-	-
Total	54 881	631 952	-	416 857	1 256 217	119 831

Note 11 - Trade and other receivables

(AMOUNTS IN NOK 1000)

Trade receivables	2013	2012
Trade receivables	338 238	364 693
Loss provisions	-21 843	-30 669
Net trade receivables	316 395	334 024
Trade receivables (gross) per currency:	2013	2012
EUR	151 323	129 482
USD	70 967	100 393
NOK	105 794	121 514
Other currencies	10 154	13 304
Total	338 238	364 693

For additional information on accounts receivables and associated risks, see Accouning Principles and sections 2.12, 3.1 and 4 and Note 26.

OTHER RECEIVABLES UNDER SHORT-TERM RECEIVABLES:

	2013	2012
VAT	21 685	29 492
Prepayments	4 355	13 425
Hold back amount	-	34 682
Other receivables	32 776	44 138
Other short-term receivables	58 816	121 737

Note 12 - Loans and non-current liabilities

(AMOUNTS IN NOK 1000)

	Repayment profile and maturity:
	Nominal value 31.12.2013	2014	2015	2016	2017	2018 and later
Convertible Subordinated Bond Loan 2011/2016	95 345	-	-	95 345	-	-
Other loans	152 257	49 257	103 000	-	-	-
Total loans incl. first year instalment and short term loans	247 602	49 257	103 000	95 345	-	-
- short term loans and first year instalment of non-current debt	-49 257	-49 257	-	-	-	-
Total non-current liabilities	198 345	-	103 000	95 345	-	-
Expected interest payments		12 016	12 013	381	-	-

SPECIFICATION OF LOANS:

	Loan type Currency		Nominal interest rate	Maturity terms	Instalment terms	Nominal value 3013	Nominal value 2012
TTS Group ASA
Norsk Tillitsmann ASA 2)	Convertible bond	NOK	8,00 %	2016	balloon	95 345	95 345
Innovasjon Norge	Mortgage loan	NOK	5,75 %	2015	bi-annually	6 000	9 000
DNB	Mortgage loan		NOK Nibor + 2,35%	2015	balloon	100 000
TTS Marine Ostrava s.r.o.
Unicredit Bank	Mortgage loan	EUR	Euri bor+1,275%	2012	quarterly	-	367
TTS Marine Korea Ltd.
Kookmin Bank	Mortgage loan	KRW	3,88 %	2014	quarterly	2 881	2 904
TTS Marine Shanghai Co Ltd
DNB Bank ASA Shanghai Branch	Mortgage loan	EUR	China Bank basis + 1,5 %	2013	balloon	1 220	978
DNB Bank ASA Shanghai Branch	Mortgage loan	RMB	China Bank basis + 1,5 %	2013	balloon	22 360	18 192
DNB Bank ASA Shanghai Branch	Mortgage loan	USD	China Bank basis + 1,5 %	2013	balloon	19 796	4 146
Total loans						247 602	130 932
Difference between nominal value and effective debt value related to convertible bond (ref. Note 15)						-14 163	-20 015
Net book value of bond debt and other debt to financial institutions 1)	233 439	110 917

1) Debt exclusive of draw-down TNOK 73 870 in TTS Group cash pool, as total cash position with the bank is positive, ref. note 13 and 14.

2) Additional description of the Convertible Subordinated bond is available in Note 15. Book value of the debt as per 31.12.2013 is TNOK 81 182.

RECOGNIZED NOMINAL VALUE OF THE GROUP'S NON-CURRENT LIABILITIES IN VARIOUS CURRENCIES ARE AS FOLLOWS: (1000 NOK)

	2013	2012
NOK	201 345	104 345
EUR	1 220	1 345
USD	19 796	4 146
RMB	22 360	18 192
KRW	2 881	2 904
Total	247 602	130 932

See Note 13 related to assets pledged as security on non-current liabilities.

Reference is made to Note 15 related to Convertible Callable Unsecured Subordinated Bond established in 2011.

Reference is made to Note 16 related to debt refinancing in 2012/2013. Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.8, 2.15, 3 and 4.

COVENANTS

TTS Group has loans, draw down facilities and guarantee limits with Nordea and DNB (ref. note 12+13).

THE GROUP HAS TO MEET THE FOLLOWING FINANCIAL COVENANT REQUIREMENTS FROM NORDEA AND DNB:

The Group's equity ratio shall at least be equal to 27.5 %. In addition a multiple of other standard default clauses related to the bond loan inclusive cross default clauses are apparent. Nordea and DNB has accepted that the nominal value of the Subordinated Convertible Bond loan is included as part of the equity calculation.

Including the added back nominal value of the Subordinated Convertible Bond, the relevant covenant equity measure basis as per 31.12.2013 is MNOK 647 which represents an equity ratio of 29.1%. Thus, TTS Group meets the financial covenant requirement as per 31.12.2013.

The Group's covenant related to NIBD/EBITDA is max 3,0 calculated on 12 month rolling EBITDA. At the end of 3rd quarter 2013, TTS was in breach with the loan covenant with Nordea and DNB A13on 12 month rolling EBITDA. In the 4th quarter, TTS obtained waivers from the banks for the 12 month rolling EBITDA covenant from the period Q3 2013 to Q2 2014. According to the waiver TTS has to be within the original covenants at the end of Q3 2014 and has to obtain a EBITDA of MNOK 20 during Q2 2014 not to be in breach of the waiver.

Note 13 - Assets pledged as security and guarantees

(AMOUNTS IN NOK 1000)

The major bank credit facility of TTS Group ASA is established with Nordea Norge ASA (Nordea) and DNB ASA (DNB).

TTS GROUP HAS THE FOLLOWING CREDIT FACILITIES THROUGH ITS FACILITATORS:

	2013		2012
	Limit	Drawn	Limit	Drawn
Group cash pool overdraft facility1)	300 000	-73 870	200 000	-22 727
Drawdown facility, operations	100 000	100 000	100 000	-
Guarantee limit for Group	500 000	461 900	600 000	265 900

1) Cash balance in TTS Group cash pool arrangement; 31.12.2013; MNOK -73.9, 31.12.2012; MNOK -22,7.

As per 31.12.2013 all Norwegian companies (ref Note 9), as well as TTS Marine AB, TTS Port Equipment AB, TTS NMF GmbH and TTS Marine GmbH are part of the Group cash pool arrangement with Nordea.

All companies within TTS Group utilize the guarantee limit. The guarantee limit cover payment guarantee, performance bonds, advance payment bonds and tax guarantees.

On 6.12.2012 TTS Group ASA entered into an agreement related to financing of the Group with Nordea. In addition, TTS Group ASA established a bank agreement with DNB on 21.12.2012. The new agreement replaced the prior credit- and bond facility. The new facility was adjusted to the Group's new financial requirements after the sale of the Energy division in 2012, and further adjusted in 2013.

The credit facility in the agreement is MNOK 900, and consists of;

• MNOK 100, 3 year term loan facility, unchanged in 2013
• Original MNOK 200, 3 year multi-currency overdraft facility changed to MNOK 300 in 2013
• Original MNOK 600, 3 year guarantee facility changed to MNOK 500 in 2013

The agreement includes covenant requirements related to equity ratio and debt gearing. The covenants are described in note 12.

The existing securities and collateral which were established when TTS Group ASA entered into the agreement with the bank syndicate was cancelled. New pledges have been established related to TTS Group ASA's new bank agreements. The agreements include pledges of plant and machinery, inventory, accounts receivables in the major Norwegian companies. In addition shares in TTS Marine AB have been pledged.

FOR THE ABOVE MENTIONED FACILITIES THE FOLLOWING ASSETS HAVE BEEN PLEDGED AS COLLATERAL TO NORDEA AND DNB:

Assets pledged as collateral for secured debt:	2013	2012
Shares in TTS Marine AB	347 354	442 036
Account/Group receivables	224 767	286 051
Inventory/Work in progress, including non-invoiced production	106 962	158 977
Property	-	-
Assets pledged as collateral	679 083	887 064

OTHER ASSETS PLEDGED AS SECURITY AND GUARANTEES:

TTS GROUP ASA

TTS Group ASA has a loan to Innovasjon Norge for establishment of TTS Marine Equipment (Dalian, Kina) Co. Ltd. The loan of MNOK 6.0 has security in the shares of TTS Marine Equipment Co. Ltd.

TTS MARINE AB

As pr 31.12.2013, MSEK 145,1 (MNOK 154,4) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DNB of MNOK 461,9 in the above table. In addtion TTS Marine AB has a bank guarantee agreement with Den Danske Bank. As per 31.12.2013 total guarantees were MSEK 16.3 (MNOK 15.3). The bank has received parent company guarantee from TTS Group ASA of MNOK 150.

TTS MARINE GMBH

As per 31.12.2013, MEUR 5.4 (MNOK 45.2) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DNB of MNOK 461.9 in the above table.

NEUENFELDER MASCHINENFABRIK GMBH (NMF)

As per 31.12.2013, MEUR 1,7 (MNOK 14.1) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DNB of MNOK 461.9 in the above table.

TTS PORT EQUIPMENT AB

As pr 31.12.2013, MSEK 41.1 (MNOK 43.7) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DNB of MNOK 461,9 in the above table. In addtion TTS Port Equipment AB has a bank guarantee agreements with Den Danske Bank. As per 31.12.2013 total guarantees submitted were MSEK 0.5 (MNOK 0.5 ). The bank has received parent company guarantee from TTS Group ASA of MNOK 50.

TTS LIFTEC OY

As pr 31.12.2013, MEUR 0.15 (MNOK 1.2) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/ DNB of MNOK 461,9 in the above table.

TTS MARINE SHANGHAI CO. LTD.

TTS Marine Shanghai Co. Ltd. has established a credit facility with DNB Bank ASA, Shanghai Branch with a credit limit of MEUR 3.0 (MNOK 25.2) which was drawn with MEUR 1.9 (MNOK 16.2) as per 31.12.2013. A credit limit has also been established in RMB of MRMB 30.0 (MNOK 30.0) of which MRMB 22.4 (MNOK 22,4) was drawn as per 31.12.2013. A credit limit has also been established in USD of MUSD 1.0 (MNOK 6.1) of which MUSD 0.7 (MNOK 4.4) was drawn as per 31.12.2013. The bank has receieved two parent company guarantee from TTS Group ASA of MEUR 3.0 (MNOK 27.6) and one of 1 MUSD (MNOK 6.1).

TTS MARINE KOREA CO. LTD

TTS Marine Korea Co., Ltd has established a loan of MKRW 500 (MNOK 2.9) with Kookmin Bank in Korea. The company also has a credit limit of MKRW 2 500. (MNOK 14.4), as of 31.12.2013 the facility was unused. The bank has security in the company's building. In addition TTS Group ASA is co-debtor. The building is valued to MKRW 3 478 (MNOK 20.0).

Note 14 - Net interest-bearing debt

(AMOUNTS IN NOK 1000)

	2013	2012
Bank deposits, cash etc. as of 31.12. exclusive cash pool	229 441	250 393
Cash pool agreement as of 31.12.	-73 870	-22 727
Convertible Bond loan 1)	-95 345	-95 345
Other non-current interest bearing debt	-103 000	-6 000
Other current interest bearing debt	-49 257	-29 587
Net interest-bearing debt (-) / deposits (+)	-92 031	96 734

1) Convertible Bond loan included at nominal value as per 31.12. Please find additional information relating to the Convertible Bond loan in Note 15.

Drawing facilities, security and covenants are described in Note 13.

Note 15 - Convertible Bond loan

(AMOUNTS IN NOK 1000)

At the Extraordinary General Meeting on 10.1.2011 a subordinated convertible bond facility of MNOK 200 were approved. The bond has a fixed interest of 8 % p.a. and final maturity date is 18.1.2016.

The bond holder has a consecutive right to convert their nominal bond value into shares in TTS Group ASA. Conversion price is fixed per share.

Conversion price is to be adjusted in several occurrences of which the major is;

• i. consolidation or subdivisions of shares
• ii. distribution of profits or reserves to shareholders by issue of new shares
• iii. dividend payments to shareholders
• iv. issue or grant shareholders rights, options, warrants or other subscription rights

The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011.

Changes to conversion price 2012

In the Extraordinary General Meeting on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision in the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share.

In the Extraordinary General Meeting on the 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The creditor deadline under the Norwegian Public Limited Liability Act section 12-6 expired 17 October 2012, and TTS Group ASA received no objections to the capital reduction. The capital reduction was registered at the Register of Business Enterprises 25.10.2012 after opening time of Oslo Stock Exchange. The reduction amount, 365 MNOK, was disbursed to the shareholders at time of the registration. Disbursement per share was NOK 4.2147. Based on the announced repayment of capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price was NOK 5.71, effective on 26.10.2012 which was the first date the shares traded ex capital repayment. The conversion price is fixed at NOK 5.71 per share on 31.12.2012.

Changes to conversion price 2013

There have been no Debt conversions in 2013. On 10.06.2013 the Annual General Meeting decided on a dividend of NOK 1 per share. Based on the announced dividend, the conversion price was adjusted accordingly. The adjusted conversion price is NOK 4.97 per share.

TTS Group ASA has a call option to enforce a conversion of bond into shares. The call option will be effective as of 8.2.2014, given a weighted average share price that exceeds NOK 7.455 per share for more than 20 days within a 30 days period. TTS Group ASA also has a clean-up call option which is effective given a prior 90 per cent of bond holders having redeemed or converted their bonds into shares.

The convertible bond contains both a liability and an equity component, which is separated and classified as financial liability and equity according to IAS 32. Alternative interest has been calculated to 14.25 % p.a. plus fees. Effective interest is presented as part of finance cost.

	2013
Subordinated convertible bond loan - nominal value at drawdown	200 000
Converted debt to shares in 2011	-7 500
Converted debt to shares in 2012 1)	-97 155
Nominal debt value as per 31.12	95 345
Draw down cost	-14 262
Derived equity portion from inherent put option at drawdown	-36 981
Equity derived from converted subordinated convertible bond during 2011	1 387
Equity derived from converted subordinated convertible bond during 2012	17 964
Effective interest cost less paid interest - 2011	9 977
Effective interest cost less paid interest - 2012	1 900
Effective interest cost less paid interest - 2013	5 851
Effective debt value	81 182

1) MNOK 4.5 was converted in February and March 2012. MNOK 76.2 was converted in April, May and June 2012, while MNOK 16.5 were converted in July and August 2012. There was no conversions during 4th quarter 2012, and no conversions in 2013.

	Repayment profile and maturity:
	2012	2013	2014	2015	2016
Subordinated convertible bond loan - nominal value	-	-	-	-	95 345
Nominal interest cost	11 754	7 628	7 628	7 628	381
Calculated effective interest cost recognized in the accounts	13 654	13 479	14 589	15 910	827

PRINCIPAL BONDHOLDERS AS OF 31.12.2013:

Bondholders that may acquire, or currently hold or control more than 2.0 % of the shares in TTS Group if bond is converted to shares is stated below.

Bondholder:	Conversion rights	Share portion if fully converted
MP Pensjon PK	8 048 290	7,61 %
Akershus fylkeskommune - pensjonskasse	4 024 145	3,80 %
Odin Maritim	1 307 847	1,24 %
Holberg Norden	1 276 660	1,21 %
Mertoun Capital AS	804 829	0,76 %
Skandinaviska Enskilda Banken	945 674	0,89 %
Verdipairfondet Eika Kombinasjon	402 414	0,38 %
Bjørn Bakkevig	402 414	0,38 %
Erik Penser FondKommission AB	382 294	0,36 %
Pima AS	221 328	0,21 %
Other (14 bond holders)	1 368 209	1,29 %
Total	19 184 105	18,13 %

BONDS ACQUIRED BY PRINCIPAL SHAREHOLDERS SUBSEQUENT TO 31.12.2013:

In the period 01.01.2014-23.04.2014, principal shareholders of the Group has acquired bonds giving the following congversion rights:

Bondholder:	Conversion rights	Share portion if fully converted
Skeie Consultants AS	1 207 243	1,14 %
Tamafe Holding AS	804 828	0,76 %

Note 16 - Share capital and shareholder information

(AMOUNTS IN NOK 1000)

Date	Number of shares	Nominal value	Share capital
31.12.13	86 605 660	0.11	9 526 623
31.12.12	86 605 660	0.11	9 526 623

Changes to share capital 2012:

The Extraordinary General Meeting in TTS Group ASA held on 15.8.2012 resolved to pay a dividend of NOK 1.56 per share and to reduce company capital by MNOK 365 via repayment of capital to shareholders. The disbursement amount was NOK 4.2147 per share. The capital reduction was registered at the Register of Business Enterprises on 25.10.2012 after opening time of Oslo Stock Exchange. The final allocation of the reduction amount between share capital and share premium account, was NOK 33 776 207 and NOK 331 239 544, respectively. New nominal value per share is NOK 0.11, and the share was registered with this nominal value from 26.10.2012. The new share capital is NOK 9 526 622.

Changes to share capital 2013: There were no changes to the nominal share capital in 2013

DIVIDENDS PAID AND PROPOSED:

(NOK 1000)	2013	2012
Declared and paid during the year:
Dividends on ordinary shares	86 461	134 646

Dividend for shareholders proposed for 2013, to be paid in 2014: NOK 0 per share. Total dividend amount proposed: NOK 0.

TREASURY SHARES:

	Number of shares	Share capital (NOK 1000)
Treasury shares as of 01.01.2012	35 210	-17 605
Purchase of treasury shares June 2012	111 261	-55 631
Purchase of treasury shares July 2012	147 929	-73 965
Treasury shares as of 25.10.2012 (face value NOK 0.50 per share)	294 400	-147 200
Treasury shares as of 25.10.2012 (face value NOK 0.11 per share)	294 400	-32 384
Treasury shares as of 31.12.2012	294 400	-32 384
Sale of treasury shares May 2013	150 000	-16 500
Treasury shares as of 31.12.2013	144 400	-15 884

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board of Directors autorisation to buy own shares to the benefit of employees up to 800 000 shares. The authoritiy is valid to 30 June 2014.

On the 10 June 2013 the Annual General Meeting adopted a resolution to give the Board authority to buy up to 6 000 000 shares with the purpose of deletion. The authorisation is valid to 30 June 2014.

PRINCIPAL SHAREHOLDERS OF TTS GROUP ASA AS OF 31.12.2013:

Shareholder	Number of shares	Ownership	Voting share
Rasmussengruppen AS	11512506	13,29 %	13,29 %
Skeie Technology AS	8929879	10,31 %	10,31 %
Skandinaviska Enskilda Banken (nominee account)	5457111	6,30 %	6,30 %
Lesk AS	5306058	6,13 %	6,13 %
Stisk AS	5306058	6,13 %	6,13 %
Barrus Capital AS	3455000	3,99 %	3,99 %
Skagen Vekst Verdipapirfond	3222553	3,72 %	3,72 %
Skeie Capital Investment AS	2531263	2,92 %	2,92 %
JP Morgan Chase Bank (nominee account)	2486047	2,87 %	2,87 %
Holberg Norge Verdipapirfond	2241870	2,59 %	2,59 %
Tamafe Holding AS	2160735	2,49 %	2,49 %
Odin Maritim Verdipapirfond	2048906	2,37 %	2,37 %
Holberg Norden Verdipapirfond	2000000	2,31 %	2,31 %
Mertoun Capital AS	1750000	2,02 %	2,02 %
Itlution AS	1475261	1,70 %	1,70 %
Pima AS	1173712	1,36 %	1,36 %
Verdipapirfondet DNB SMB	1137164	1,31 %	1,31 %
Skeie Consultants AS	953033	1,10 %	1,10 %
Glastad Invest AS	700000	0,81 %	0,81 %
Euroclear Bank S.A./N.V. (nominee account)	692117	0,80 %	0,80 %
Total, 20 largest shareholders	64 539 273	74,52 %	74,52 %
Total other	22 066 387	25,48 %	25,48 %
Total	86 605 660	100,00 %	100,00 %

SHARES OWNED BY BOARD MEMBERS, GROUP EXECUTIVES AND THEIR RELATIVES:

Board	31.12.13	23.04.14	31.12.12
Trym Skeie 1)	2 483 875	2 483 875	2 483 875
Bjarne Skeie 2)	12 414 175	12 414 175	12 414 175
Ole Henrik Askvik	2 032	2 032	2 032
Mona Lucille Tellnes Halvorsen	1 774	1 774	1 774
Group Executives
Ivar K. Hanson	182 422	182 422	152 422
Arild Apelthun	120 000	120 000	60 000

1) Owns 100 % of the shares in Tamafe Holding AS. Tamafe Holding AS owns shares in Skeie Capital Investment AS. 2) Bjarne Skeie owns 20 % of the shares and 100 % of the voting shares in Skeie Technology AS and Skeie Consultants AS. Skeie Technology AS owns shares in Skeie Capital Invesment AS.

On the 31 May 2012, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 500 000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 30.6.2015. A total of 300 000 shares have been issued in the form of options, with a possible first time exercise of options following the presentation of the first quarterly results for 2013, equivalent to a maximum of 50 percent of the allocated options. The number of shares for further exercise of options constitutes 12.5 percent following the presentation of the results for the second, third and fourth quarter of 2013 and the first quarter of 2014, in addition to options not previously exercised.

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 600 000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 30.6.2015. A total of 530 000 shares have been issued in the form of options, with a possible first time exercise of options following the presentation of the first quarterly results for 2014, equivalent to a maximum of 50 percent of the allocated options. The number of shares for further exercise of options constitutes 12.5 percent following the presentation of the results for the second, third and fourth quarter of 2014 and the first quarter of 2015, in addition to options not previously exercised.

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 8 600 000 shares against cash or non-monetary redemption including merger relating to acquistions of business or assets. The authority is valid to the Annual General Meeting 5.06.2014. No shares have been issued on the basis of this authorisation as of 23 April 2014.

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board of directors authority to buy back a portion of the convertible callable unsecured subordinated bond 2011/2016 up to a total of NOK 150 000 000. The authoritiy is valid to 30 June 2014.

ALLOCATION OF OPTIONS:

			Number of options exercisable until	Exercise	Number of options exercisable until	Exercise
Name	Position	Company	31.5.2014	price	10.06.2015	price	Total
Björn Andersson	CEO	TTS Group ASA	-	9,83	70 000	6,42	70 000
Arild Apelthun	CFO	TTS Group ASA	60 000	9,83	60 000		6,42 120 000
Ivar K. Hanson	EVP Marine	TTS Group ASA	60 000	9,83	60 000		6,42 120 000
Geir Storaas	EVP Offshore & Heavy lift	TTS Group ASA	-	9,83	50 000	6,42	50 000
Stefan Gluel	EVP Service	TTS Marine GmbH	-	9,83	50 000	6,42	50 000
Miao Reinlund	VP Communication TTS Group ASA		60 000	9,83	60 000		6,42 120 000
Nina Seter	VP HR & HSE	TTS Group ASA	-	9,83	60000	6,42	60 000
Total number of options to senior executives			180 000		410 000		590 000

In addition there are 240 000 options issued to former CEO Johannes Neteland which expires at the end of May 2014 and 60 000 to Lennart Svensson, former EVP of Port and Logistics which expires in May 2014.

During 2012 300 000 share options with a strike price of NOK 5.91, allocated in 2010 were exercised from Senior Management. Further, in 2012 150 000 share options with strike price of NOK 9.10, allocated in 2011 were exercised from Senior Management.

During 2013 150 000 share options with a strike price of 3.33, alocated in 2011 were exercised from Senior Management.

In accordance with authorities granted by the Annual General Meeting in 2011 and 2012, TTS Group ASA has issued share option programes to Senior Executive Group.Through these programs, Senior Executive Group in the TTS Group has a future right to purchase a number of shares at an exercise price equal to the marked rate on the date that the share option program was initiated.

The option premium is estimated on the grant date using the Black & Scholes option pricing model (BS). The options have a maximum term of two years, with a possible first exercise after one year (50 percent), then 12.5 percent per quarter, giving a weighted average of 15 months maturity which is employed in BS. The option premium is distributed over the option's two-year term. Implied volatility is based on a combination of historic data and assumptions. Volatility used for options issued 2012 and 2013 was 48% and 52% respecitvely. Risk-free interest rate applied for options issued in 2012 and 2013 was 1,48% and 1,56% resepectively. For 2013, option premium of MNOK 1.3 (2012 MNOK 1.4) has been charged as expenses classified as salary in the profit and loss statement. Payroll tax is charged when share options are realized.

SUBORDINATED CONVERTIBLE LOAN:

On 10.1.2011 the Extraordinary General Meeting approved the issuance of a convertible bond loan of MNOK 200. The loan has an 8 % coupon interest rate and reaches maturity 18.1.2016. On specific terms the Group has a call option that is exercisable from 8.2.2014. Bondholders have continuous conversion rights with an exercise price of NOK 4.97 per share.

The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011. In the Extraordinary General Meeting on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision at the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share. At the Extraordinary General Meeting on 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The reduction amount, MNOK 365, was disbursed to the shareholders at time of the registration. Disbursement per share was NOK 4.2147 per share. Based on the announced repayment of capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price was NOK 5.71, effective on 26.10.2012. On 10.06.2013 the Annual General Meeting decided on a dividend of NOK 1 per share. Based on the announced dividend, the conversion price was adjusted accordingly. The adjusted conversion price is NOK 4.97 per share

The maximum number of shares to be issued at full conversion was 21 542 671, equivalent to a dilution effect of 29 %. During 2011 debt conversions of MNOK 7.5 took place, representing 807 849 new shares. During 2012 debt conversions of MNOK 97.2 have taken place, representing 10 464 876 new shares, and a dividend of MNOK 134.6 was declared. Remaining shares that may be converted at 31.12.2012 were 16 697 898, representing a dilution effect of 16 %. In 2013 a dividend of MNOK 86.5 was declared, increasing the number of shares that may be converted to 19 184 104 shares, representing a dilution effect of 18%. Please find additional information relating to the subordinated convertible loan in Note 15."

Note 17 - Earnings per share

(AMOUNTS IN NOK 1000)

Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

	2013	2012
Net profit attributable to ordinary equity holders of the parent from continuing operations	-227 363	36 533
Net profit attributable to ordinary equity holders of the parent from discontinued operations	22 945	418 162
Weighted average of issued shares excluding own shares	86 406	83 107
Earnings per share - continuing operation (NOK per share)	-2,63	0,44
Earnings per share - discontinued operation (NOK per share)	0,27	5,03

DILUTED EARNINGS PER SHARE:

When calculating the diluted result per share, the weighted average of the number of ordinary issued shares in circulation is adjusted for the conversion effect of all potential shares that can cause dilution.

For the company's share options, a calculation is made to determine the number of shares which could have been acquired at market rate based on the money value of the subscription rights of the outstanding share options. The number of shares calculated is compared to the number of shares that would have been issued if all share options were exercised. The difference is attributed to the denominator in the fraction that issued the shares without compensation.

The company has a convertible callable unsecured subordinated bond, see Note 15. The conversion price is fixed, and was NOK 4.97 per share as per 31.12.2013. The remaining nominal convertible bond debt is MNOK 95.345, corresponding to 19 184 104 conversion rights based upon the fixed conversion price as per 31.12.2013.

	2013	2012
Profit used to calculate diluted earnings per share - continuing operation	-227 363	36 533
Profit used to calculate diluted earnings per share - discontinued operation	22 945	418 162
Average of ordinary issued shares excluding own shares	86 406	83 107
Adjustment for share options	80	633
Adjustment for average of coversion right in convertible bond	-	18 523
Average number of ordinary shares for calculation of diluted earnings per share	86 486	102 262
Diluted earnings per share - continuing operation (NOK per share)	-2,63	0,36
Diluted earnings per share - discontinued operation (NOK per share)	0,27	4,09

SHARE STRUCTURE:

	2013	2012
Issued shares	86 605 660	86 605 660
Own shares	144 400	294 400
Unused share options that can be settled by issue	720 000	570 000
Conversion right related to convertible bond loan	19 184 105	16 697 898

SUBORDINATED CONVERTIBLE BOND ISSUE:

On 10.12.2011 the Extraordinary General Meeting approved the drawdown of a subordinated convertible bond loan of MNOK 200. The bondholders have a continuous conversion right at a call price of NOK 4.97 per share as per 31.12.2013. Please find additional information relating to the bond loan in Note 15.

Note 18 - Tax

(AMOUNTS IN NOK 1000) SHARE STRUCTURE:

Income tax expenses:	2013	2012
Payable tax 1)	22 076	17 196
Not allocated tax losses	255 918	8 903
Change in deferred tax	-251 512	-18 160
Tax cost in the profit and loss statement	26 482	7 939

1) Payable tax is relating to the foreign subsidiaries' taxable profit that cannot be offset against tax losses carryforward in Norway or other countries with tax losses.

A RECONCILIATION OF THE EFFECTIVE TAX RATE IN TTS GROUP ASA'S COUNTRY OF REGISTRATION:

Dividends paid and proposed:	2013	2012
Profit before tax	-177 936	40 198
Expected income tax according to income tax rate in Norway (28%)	-49 822	11 255
Prior period adjustment deferred taxes		373
Not allocated deferred tax losses	76 668	8 903
Profit from joint ventures	-3 350	-16 939
Effect of change in tax rate 1)	-	-3 647
Permanent differences	10 193	9 126
Tax rate outside Norway, different from 28%	-7 207	-1 132
Tax cost in the profit and loss statement	26 482	7 939

1) Tax rate in Sweden has with effect from 1.1.2013 changed from 26.3% to 22.0%. TTS has recognized the effect relating to the change in tax rate. Total effect is MNOK 3.6.

Deferred tax liabilities and deferred tax assets are netted if the Group has a legal right to offset deferred tax assets against deferred taxes in the balance sheet, and if the deferred taxes are owed to the same tax authorities

Deferred tax assets:	2013	2012
Gross deferred tax assets	352 529	112 493
- Not allocated tax losses	-294 781	-44 668
- Deferred tax assets to be recovered after 12 months	57 748	67 825
- Deferred tax assets to be recovered within 12 months	-	-
Total recognized deferred tax assets (gross)	57 748	67 825
	2013	2012
Deferred tax liabilities:
Gross deferred tax	30 929	31 411
- Deferred tax to be recovered after 12 months	30 929	31 411
- Deferred tax to be settled within 12 months	-	-
Total recognized deferred tax liabilities (gross)	30 929	31 411
Net deferred taxes in Group (asset=+, liability=-)	26 819	36 414

CHANGE IN RECOGNIZED DEFERRED TAXES:

	2013	2012
Recognized value 1.1.	36 414	111 060
Deferred tax charged in the income statement	251 512	18 160
Not allocated tax losses charged in the income statement	-255 918	-8 903
Change in deferred taxes related to convertible bond	1 775	5 030
Sale shares in subsidiaries		-79 509
Deferred tax related to business combinations		-8 607
Prior period adjustment of deferred taxes including foreign	-6 964	-817
currency differences
Net recognized value 31.12.	26 819	36 414

CHANGE IN DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (EXCLUDING NETTING WITHIN THE SAME TAX REGIME):

	1.1.2012	Changes 2012	31.12.2012	Changes 2013	31.12.13
Deferred tax (asset = + / liability = -)
Fixed assets	-23 316	21 637	-1 679	23 991	22 312
Current assets	25 691	-24 599	1 092	225	1 317
Other temporary differences / provisions	-19 331	-1 026	-20 357	1 823	-18 534
Impairment deferred tax assets	-88 500	88 500	-		-
Not allocated tax losses	-29 332	-9 531	-38 863	-255 918	-294 781
Tax losses to carry forward	257 459	-155 201	102 258	218 509	320 767
Deferred taxes related to convertible bond	-11 611	5 574	-6 037	1 775	-4 262
Net deferred tax (asset = + / liability = -)	111 060	-74 646	36 414	-9 595	26 819

Deferred tax asset relating to unused tax losses have been recognized as deferred tax asset to the extent that it is probable that future profits will be available. Unused tax losses are mainly related to losses in Norwegian and German companies.

The Group has received and is expecting orders to yield taxable profit in the years to come. Taxable income may be counterbalanced against the deficit carried forward, enabling utilization of the tax advantage. An assessment has been made based on IFRS' requirements regarding reversion of the tax losses taken into consideration the expected tax profit. Tax losses not expected to be utilized within 6 years are not recognized as deferred tax asset.

The following criteria have been applied to assess the likelihood of taxable income against which unused tax losses may be utilized:

• the Group has sufficient temporary differences
• the entities will have taxable profits before unused tax losses expire
• tax losses are induced by specific identifiable causes

TAX PAYABLE IN THE BALANCE SHEET

2013	2012
22 076	17 196
-15 804	-15 055
6 272	2 141

ORIGIN OF TAX PAYABLE:

	2013	2012
Norway	23	224
Rest of Europe	16 589	14 515
Outside Europe	5 465	2 457
Total	22 076	17 195

TAX LOSSES TO CARRY FORWARD BY REGION 2012:

			Norway Rest of Europe Outside Europe Outside Europe
Deferred tax on tax losses to carry forward	95 185	224 068	1 514	320 767
Deferred tax not recognised	-70 713	-224 068	0	-294 781
Deferred tax asset recognised	24 472	0	1 514	25 986

Specification of differences between the financial profit before tax and the tax basis for the year:

	2013	2012
Pre-tax profit/ loss	-177 936	40 198
Permanent differences	36 404	-27 931
Changes in temporary differences	99 336	-5 393
Chages in tax losses carried forward	138 552	58 265
Tax basis for the year	96 355	65 139
Payable tax	22 076	17 196
Effective tax rate	22,9 %	26,4 %

Note 19 - Other current liabilities

(AMOUNTS IN NOK 1000)

	2013	2012
Provisions for completed projects (ref Note 23)	205 940	233 484
Guarantee provisions (ref Note 23)	56 634	45 242
Other liability provisions (ref Note 23)	38 459	10 624
Other current liabilities	198 318	215 735
Total Other current liabilities	499 352	505 085

The best estimate for maturity date for completed projects is within 12 months from balance sheet date.

Note 20 - Other operating expenses

(AMOUNTS IN NOK 1000)

46 746
18 049
37 145
28 696
76 880
207 516

Note 21 - Related parties

(AMOUNTS IN NOK 1000)

TTS Group ASA is the ultimate parent based and listed in Norway.

There were no transactions other than dividends paid and repayment of capital, between the Group and the shareholders during the financial years 2013 and 2012.

The subsidiaries (ref Note 9), Investments in joint ventures (ref Note 10), members of the Board (ref Note 4) and members of the Senior Executive Group are considered as related parties. Transactions with subsidiaries have been eliminated in the consolidation process.

The Group has carried out various transactions with underlying companies and joint ventures. All the transactions have been carried out as part of the ordinary operations and at arm's length prices. For the year ended 31.12.2013, the Group has not recorded any impairment of receivables relating to the amounts owed by related parties (2012: MNOK 0). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Prior to the divestment of TTS Energy AS and the Drilling business, TTS Offshore Handling Equipment AS (OHE) was established. Assets and liabilities which were related to the nature of the OHE business were carried forward at book values within the Group. As such the divestment had no impact on the financial position and profit for the period.

TTS Group has a transaction company, TTS Hua Hai AB, where some of the turnover from Joint Venture companies to external customers has been recorded. In 2012, the transfer of this turnover from the transaction company to Joint Venture company was started. The process continued in 2013, until ongoing contracts in the transaction company are finished and delivered. The amount of transactions between TTS Group and related parties will after this change be at a lower level than previous years. The transfer of turnover affects the turnover reported in TTS Group. No other effects are expected in net profit or in balance sheet relating to the transfer of the turnover from TTS Hua Hai AB to the Joint Venture company.

TTS Group has invested MUSD 5 (MNOK 29) in Sigma Drilling AS (Sigma) as Sigma has contracted a drillship at STX Offshore and Shipbuilding Co. Ltd in Korea. The Skeie Group, owning approximately 30 % of the shares in TTS Group ASA, has invested separately in Sigma. TTS Group will produce and deliver offshore cranes to the drillship. In January 2014 both Sigma Drilling AS and TTS Group terminated the contract with STX. Ref comment in note 8 and 30.

PURCHASE AND SALE OF GOODS AND SERVICES WITH JOINT VENTURES:	2013	2012
Sales to joint ventures	15 114	8 853
Purchases of goods and services from joint ventures	46 560	116 966
BALANCE SHEET ITEMS RELATED TO PURCHASE AND SALE OF GOODS AND SERVICES:	2013	2012
Receivables from joint ventures	45 576	28 901
Liabilities to joint ventures	47 515	214

Information about the Board and Senior Executive Group's shares and options is stated in Note 16.

In addition to the above mentioned transactions and Note 16, there are no further agreements or commitments between the Group and the related parties.

Note 22 - Derviatives

(AMOUNTS IN NOK 1000)

	2013		2012
Market value:	Assets	Liabilities	Assets	Liabilities
Forward currency contracts - effective hedging contracts	23 711	23 023	22 130	9 490
Forward currency contracts - ineffective hedging contracts	-	5 471	-	-
Currency option contracts not designated as hedging contracts	1 468	-	1 050	-
Foreign currency contracts - total	25 179	28 494	23 180	9 490

Fair value of hedging instruments and derivatives are classified as current assets or current liabilities.

Net market value
-90
-599
-3 795
1 020
202
-54
-3 315

Nominal value currency contracts, original currency (Amounts in currency*1000)

	Sold	Bought
NOK	141 655	738 119
USD	211 532	20 756
EUR	31 589	58 528
SEK	101 806	643 634
KRW	-	1 058 300

FORWARD CURRENCY CONTRACTS:

The nominal value of the outstanding forward currency contracts on 31.12.2013 is MNOK 1 785 compared to MNOK 1 595 in 2012.

Derivatives are recognized at fair value on the contract date. The value is adjusted to fair value at the end of each balance sheet date. The value is set to observable market price. See note 26

TTS Group enters into hedging contracts that qualifies as fair value hedges. In addition to this, the Group may have hedging contracts that no longer meet the criteria for hedge accounting as the underlying delivery contract has been cancelled. These are recognized at fair value in the financial statement.

Changes to fair value that meet the criteria of an effective fair value hedge is recognized in the financial statement with the change in fair value of the assets or liabilities that are being hedged.

The ineffective portion of the recognized hedge relationships amounts to TNOK 1 857 and is recognized in P&L together with the changes in value of derivatives.

The asset or liability being hedged is contractual income or cost related to production cost. Hedged assets or liabilities are recognized in the balance sheet at actual value. The hedged asset or liability represents, among other things, the part of the contractual income or cost that has not been invoiced on the balance sheet date, or where invoices have not been received from the supplier. The asset or liability is included in Other current assets or Other current liabilities respectively. Additionally the hedged asset or liability for each contract is represented through bank, client or supplier.

For additional information on foreign currency and foreign currency risks, please refer to Accounting principles, section 2.9 and 3.1.

Note 23 - Provisions for liabilities

(AMOUNTS IN NOK 1000)

	Completed projects 1)	Guarantees	Other	Total
1.1.2012	186 816	83 145	15 483	285 444
Acquisition	19 488	4 380	-	23 868
Divestment	-1 173	-21 609	-10 071	-32 853
Provisions for the year	77 449	43 346	50 238	171 033
Utilized provisions during the year	-46 362	-62 589	-44 605	-153 556
Currency exchange deviation	-2 734	-1 431	-421	-4 586
31.12.12	233 484	45 242	10 624	289 350
	Completed projects 1)	Guarantees	Other	Total
1.1.2013	233 484	45 242	10 624	289 350
Provisions for the year	53 196	21 384	58 578	133 159
Utilized provisions during the year	-98 228	-15 120	-41 196	-154 545
Currency exchange deviation	17 488	5 128	10 453	33 069
31.12.13	205 940	56 634	38 459	301 034
Classification in the balance:			2013	2012

1)Liabilities related to supplementary work and other demands from clients

Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.18 and 4.

Note 24 - Financial items and foreign currency gains/losses

(AMOUNTS IN NOK 1000)

	2013	2012
Other interest income	7 903	10 223
Net other financial income and expenses	-17 057	-26 511
Interest on bond loan	-	-15 189
Effective interest on convertible bond (ref Note 15)	-13 479	-13 654
Interest on debt to financial institutions	-10 409	-13 745
Other interest expenses	-3 741	-6 796
Total financial items and foreign currency gains/losses	-36 783	-65 672

Net other financial income and expenses primarily consist of foreign currency gains and losses as well as transaction costs from banks and other financial institutions.

Note 25 - Currency effects on equity

(AMOUNTS IN NOK 1000)

Translation differences consist of all currency differences that arise from translations of the financial statements of the foreign entities.

Per 1.1.2012	(3 402)
Equity currency differences 2012:
Group companies	(10 586)
Joint ventures	(10 708)
Net changes 2012	(21 294)
Total equity currency effects per 31.12.2012	(24 696)
Equity currency differences 2013:
Group companies	74 532
Joint ventures	(3 134)
Net changes 2013	71 398
Total equity currency effects per 31.12.2013	46 702

A Panama hat (toquilla straw hat) is a traditional brimmed straw hat of Ecuadorian origin. Traditionally, hats were made from the plaited leaves of the Carludovica palmata plant, known locally as the toquilla palm or jipijapa palm, although it is a palm-like plant rather than a true palm. Panama hats are lightcolored, lightweight, and breathable, and often worn as accessories to summer-weight suits, such as those made of linen or silk. Beginning around the turn of the 20th century, panamas began to be associated with the seaside and tropical locales.

Catching the wave of car carrier demand page 14

Note 26 - Financial risk management

(AMOUNTS IN NOK 1000)

Financial assets and liabilities are described in Accounting Principles, under sections 2.8, 2.10, 2.12, 2.13, 2.14 and 2.16. Risks associated with the underlying estimates of the recognized values and financial risk management is described in Accounting Principles, ref section 3.

	2013
Dividends paid and proposed:	Financial derivative contracts not designated for hedgn ing	Financial derivative contracts designated for hedgning	Loans and receivables	Assets available for sale	Total
Non current financial assets:
Shares available for sale				28 686	28 686
Other receivables					-
Financial current assets:
Trade receivables			316 335		316 335
Other current receivables			60 284		60 284
Acquired, non-invoiced production			470 763		470 763
Derivatives 1)	1468	23 711			25 179
Prepayment to suppliers			54 804		54 804
Cash and cash equivalents			155 571		155 571
Total financial assets	1 468	23 711	1 057 757	28 686	1 111 622

CLASSIFICATION OF FINANCIAL LIABILITIES:

	2013
	Financial derivative contracts not designat ed for hedgning	Financial derivative contracts designated for hedgning	Other financial liabilities	Total
Non-current financial liabilities
Interest-bearing non-current debt			184 182	184 182
Principal shareholders of TTS Group ASA as of 31.12.2013:
First year installment of non-current debt			3 000	3 000
Interest-bearing current liabilities			46 257	46 257
Prepayments from customers			281 489	281 489
Cost related to facilities under construction			83 414	83 414
Derivatives 1)	5 470	23 023		28 493
Accounts payable and other financial debt			840 979	840 979
Total financial liabilities	5 470	23 023	1 439 321	1 467 814

1) Fair value of financial liabilities:

The Group's derivatives consist of forward currency contracts. Fair value of forward currency contracts is determined by utilizing market rate on the balance-sheet date as stated by the Group's bank. Fair value relating to non-current debt is considered approximately equal to carrying value, as loans are given at market terms and with a floating rate.

Assets measured at fair value	2013	Level 1	Level 2	Level 3
Shares available for sale	28 686	-	-	28 686
Foreign exchange contracts - hedging	23 711	-	23 711	-
Foreign exchange contracts - non-hedging	1 468	-	1 468	-
Liabilities measured at fair value	2013	Level 1	Level 2	Level 3
Foreign exchange contracts - hedging	23 023	-	23 023	-
Foreign exchange contracts - non-hedging	5 470	-	5 470	-

		2012
Financial derivative con tracts not designated for hedgning	Financial derivative contracts designated for hedgning	Loans and receivables	Assets available for sale	Total
	-	-	28 895	28 895
	-	-	-	-
	-	368 706	-	368 706
	-	87 055	-	87 055
	-	667 486	-	667 486
	23 180		-	23 180
	-	49 306	-	49 306
	-	227 666	-	227 666
	23 180	1 400 219	28 895	1 452 294

	2012
Financial derivative contracts not designated for hedgning	Financial derivative contracts designated for hedgning	Other financial liabilities	Total
	-	81 330	81 330
	-	3 000	3 000
	-	26 587	26 587
	-	454 589	454 589
	-	95 154	95 154
	9 490	-	9 490
	-	950 842	950 842
	9 490	1 611 502	1 620 992

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly .

Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

2012	Level 1	Level 2	Level 3
28 895	-	-	28 895
22 130	-	22 130	-
1 050	-	1 050	-
2012	Level 1	Level 2	Level 3
9 490	-	9 490	-
-	-	-	-

Note 27 - Business combinations

(AMOUNTS IN NOK 1000)

ACQUISITION IN 2013 ACQUISITION OF JMARINE

On 09.08.2013 TTS Group through it's subsidiary TTS Polen ZP.Z.O.O. acquired 100% of the business of JMarine, an unlisted company based in Gdansk, Poland. TTS Polen performs technical design and installation services, primarily as a service provider to other companies within the TTS Group.

ASSETS ACQUIRED AND LIABILITIES ASSUMED

THE FAIR VALUES OF THE IDENTIFIABLE ASSETS AND LIABILITIES ACQUIRED FROM JMARINE AS ON THE DATE OF ACQUISITION WERE:

	Fair value recognized on acquisition (09.08.2013)
Identifiable assets and liabilities:
Net working capital	80
Total net identifiable assets	80
Goodwill arising on acquisition (Note 7)	11 719
Purchase consideration transferred	11 799
Purchase consideration
Cash settlement	9 799
Contingent consideration liability	2 000
Total consideration	11 799

The expenses related to the purchase are marginal. TTS Group has mainly used internal resources for which the expenses have been charged to profit and loss on a running base.

ACQUISITION IN 2012

Acquisition of Neuenfelder Maschinenfabrik GmbH

On 20.8.2012 TTS Group ASA acquired 100 % of the voting shares of Neuenfelder Maschinenfabrik GmbH ("NMF"), an unlisted company based in Hamburg, Germany. NMF supplies all types of ships cranes for the segment of offshore, super heavy lift, heavy lift, multipurpose, container and bulk. NMF designs, develops and assembly cranes for the marine sector. The Group acquired NMF because the product range of NMF will complement and strengthen TTS' market position for marine and offshore cranes.

ASSETS ACQUIRED AND LIABILITIES ASSUMED

THE FAIR VALUES OF THE IDENTIFIABLE ASSETS AND LIABILITIES IN NMF AS ON THE DATE OF ACQUISITION WERE:

	Fair value recognized on acquisition (20.08.2012)
Assets:
Other intangible assets (Note 7)	28 991
Machinery and vehicles (Note 6)	25 939
Furniture, office-, and computer equipment (Note 6)	4 179
Inventories	242 204
Accounts receivables	58 174
Other current assets	25 785
Cash and cash equivalents	10 011
Total identifiable assets	395 283

	Fair value recognized on acquisition (20.08.2012)
Liabilities:
Deferred tax liability	8 607
Non-current liabilities to affiliated companies (Note 21)	69 454
Debt to credit institutions	26 457
Other provisions	120 925
Payables to suppliers	77 753
Prepayments from customers	183 363
Other current liabilities	8 084
Total identifiable liabilities	494 643
Total identifiable net assets at fair value	-99 360
Goodwill arising on acquisition (Note 7)	157 761
Purchase consideration transferred	58 401

The fair value of the trade receivables amounts to MNOK 58.2. The gross amount of trade receivables is approximate MNOK 58.2. However, none of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.

Prior to the acquisition, a provision of approximate MNOK 86.8 was recognized as provision for onerous contracts.

The enterprise value not allocated to identified assets and liabilities is estimated at MNOK 157.8 and is classified as goodwill. Goodwill is mainly related to "know how" and expected synergies related to complementing and strengthening TTS' market position arising from the acquisition. None of the goodwill recognized is expected to be deductible for income tax purposes.

Customer portfolio, order backlog and technology of approximate MNOK 28.6 have been recognized as intangible assets as these assets meet the criteria for recognition as intangible assets under IAS 38. Please see Note 7 for more details of the classification of intangible assets.

From the date of acquisition, NMF has contributed MNOK 254 (MEUR 34.5) of revenue and MNOK -7.1 (MEUR -1) to the profit before tax from continuing operations of the Group in 2012. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been MNOK 700 (MEUR 95.0) and the profit before tax from continuing operations for the Group would have been MNOK -22.0 (MEUR -3) in 2012. In determining these amounts, management have assumed that the fair value adjustments, determined provisionally, that arose on the acquisition date would have been the same if the acquisition had occurred on 1.1.2012

Purchase consideration	20.08.2012
Cash settlement	58 401
Contingent consideration liability	-
Total consideration	58 401
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from investment activities)	-1 018
Net cash acquired with the subsidiary (included in cash flows from investment activities)	10 011
"Net cash paid for shares including net interest bearing debt	-154 312
(included in cash flows from investment activities)"
Net cash flow on acquisition	-145 319

The purchase price expenses are marginal. Some external advisors have been involved. TTS Group has mainly used internal resources. External expenses are estimated at approximate MNOK 1 (see above) which have been charged to profit and loss. Internal expenses have been charged to profit and loss on a running base.

The acquisition of NMF was recognized in the Group accounts for the first time in 3rd quarter 2012. At that time the opening balance and the purchase price allocation was based on temporary calculation and based on unaudited internal valuations. Due to new information about issues existing at the date of acquisition the values have changed. The change is relating to estimated profit from ongoing construction contracts. The change increases the goodwill arising from the acquisition with MNOK 55.

Note 28 - Discontinuing operations

(AMOUNTS IN NOK 1000)

DIVESTMENTS IN 2013

The Group did not divest any of it's activities in 2013.

In 2013, the Group received a first installment of the earn-out from the sale of the Energy division in 2012. The amount of TNOK 22 945 was recognized as net result divested business in 2013.The outcome of the remaining two years of the earn-out is uncertain, and no income from the earn-out has been included in the net result from discontinued operations at year end 2013.

DIVESTMENTS IN 2012

On 6.6.2012 TTS Group ASA finalized the sale of its drilling equipment business, a part of TTS Energy division, and relevant subsidiaries, to Cameron International Corporation (NYSE: CAM) for MUSD 270, plus a turnover based earn-out model for a three-year period. Offshore Handling (cranes and winches), which was also a part of the TTS Energy division, was not included in the divestment.

The sale was announced on 18.4.2012 and on 4.6.2012 an information memorandum relating to the sale of the drilling equipment business to Cameron International Corp. was approved by the Board of Directors. The transaction before earn-out was at that point estimated to give the Group a profit of approximately MNOK 300 and was included in the result reported on 30.6.2012. On 27.9.2012 closing of the transaction was concluded with Cameron International Corp. The gain from the sale increased to MNOK 418 before earnout and the increase from 2nd quarter was included in 3rd quarter 2012. The closing had limited cash effect.

Due to the divestment of the Energy division the consolidated statement of comprehensive income and consolidated statement of cash flowsfor 2011 is re-presented as if the operaion had been discontinued from the start of the comparative year.

The transaction included 307 employees.

The Profit and Loss account related to the drilling equipment business are included in the Profit after tax for the period from discontinued operations with the following figures:

PROFIT AND LOSS ACCOUNTS DISCONTINUED BUSINESS:

(NOK 1000)	2012 (YTD 6.6.2012)
Project revenue (Note 2)	558 717
Cost of sales (Note 3)	353 602
Personnel costs (Note 4 and 5)	158 731
Other operating expenses (Note 4 and 21)	40 509
Adjustments related to Group fee	-6 134
Operating profit / loss before depreciation (EBITDA)	12 009
Depreciation / impairment (Note 6 and 7)	15 372
Operating profit / loss (EBIT)	-3 363
Net financial items (Note 25)	-9 035
Profit before income tax	-12 398
Income tax expenses (Note 19)	9 973
Profit after tax	-2 425
Gain sale of Energy division	420 587
Tax on sale of Energy division	-
Net gain after tax sale of Energy division	420 587
Net profit from discontinued operations	(2 425)
Net result from discontinued operations	418 162
Earnings per share - discontinued operation (NOK per share)	5,03
Diluted earnings per share - discontinued operation (NOK per share)	4,09

Note 29 - Contingent liabilities / Material disputes

Regular claims are made against the Group as a result of its ordinary operations. These claims are part of ordinary business and are generally covered by provisions for guarantee costs and provisions for completed contracts, ref. note 24. TTS Group is in the opinion that already recognized provisions will cover regular claims resulting from ordinary business.

TTS has terminated its contract regarding crane delivery with the STX and are currently in negotiations with STX for compensation for work performed and other costs that TTS has in connection with execution of the contract. TTS has a material work in progress (stock) related to the crane package and the value depends on the commercial settlement with STX. Sigma Drilling AS, where TTS has a 16% stake, has made a corresponding termination of it's contract with STX. Ref. note 8 and 30.

There are no other on-going cases that are expected to lead to significant commitments for the TTS Group.

Note 30 - Subsequent events

No significant events regarding TTS Group ASA. Events regarding TTS Group is as follows:

EVENTS REGARDING TTS GROUP ARE AS FOLLOWS:

In January 2014 TTS was informed that Sigma Drilling has terminated its contract with the STX Offshore and Shipbuilding Company Ltd. (STX) in Korea. TTS has an ownership interest in Sigma Drilling where total investments amount to MNOK 29. The majority of the initial investment relates to a down payment to the yard which has been guaranteed by the refund guarantee and is therefore not exposed to the financial situation of STX. The main remaining risk relates to additional costs in Sigma offset by potential additional payments from STX following STX breach of contract.

Following this announcement, TTS has also terminated its contract regarding crane delivery with the STX and are currently in negotiations with STX for compensation for work performed and other costs that TTS has in connection with execution of the contract. TTS has a material work in progress (stock) related to the crane package and the value depends on the commercial settlement with STX.

NEW CONTRACTS IN THE PERIOD 01.01.2014 - 23.04.2014

TTS Group ASA has, through its subsidiary TTS NMF GmbH in Hamburg, Germany, entered into an agreement for delivery of two 85 t lattice boom offshore cranes to Azerbaijan, with a total value of NOK 55 million.

TTS Group ASA has entered into a contract through its subsidiary TTS NMF GmbH in Hamburg, Germany. The contract includes three heavy lift cranes, with a total value of NOK 27 million.

TTS Group ASA has, through its subsidiary TTS NMF GmbH in Hamburg, Germany, secured a new contract with Keppel Singmarine Pte. Ltd. in Singapore for the delivery of one 200t Leg Encircling Crane and one 50t pedestal offshore crane to the yard Nakilat-Keppel Offshore & Marine in Qatar. The contract has a total value of approximately MNOK 50.

TTS Group ASA has, through its subsidiaries TTS Ships Equipment AS and TTS Marine GmbH, entered into four new contracts, one for delivery of side-loading systems and three for winches. The total values of the contracts are NOK 110 million.

TTS Group ASA has, through its subsidiary TTS Offshore Handling Equipment AS in Bergen signed a new contract for delivery of a subsea crane. Value of the contract is approximately NOK 35 million.

TTS Group ASA through its subsidiary TTS Marine AB in Sweden has received confirmation for delivery of four ship-sets of cargo access equipment to four post-Panamax car carriers, with a total value of MNOK 209.

TTS Group ASA has, through its subsidiary TTS Marine Inc signed a new contract for container handling equipment with Global Container Terminals in New Jersey, USA. The contract value is approximately NOK 65 million.

TTS GROUP ASA PROFIT AND LOSS STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

	Notes	NGAAP2013	NGAAP 2012
OPERATING INCOME
Group service fee from TTS subsidiaries	16	33 221	24 090
Total operating income		33 221	24 090
OPERATING COSTS
Personnel costs etc.	1, 2	32 130	24 250
Depreciation on tangible fixed assets	3	660	367
Other operating costs	1, 14	28 926	16 289
Total operating costs		61 716	40 906
Operating profit		-28 495	-16 817
FINANCIAL INCOME AND EXPENSES
Income from investments in subsidiaries	16	236 906	404 168
Income from investments in joint ventures	16	-	-
Interest received from group companies	16	19 161	28 607
Other interest income	16	644	4 780
Other financial income	16	9 572	-
Interest expenses to group companies	16	-7 453	-5 416
Other interest expenses	16	-19 352	-39 866
Other financial expenses	16	-114 040	-23 329
Net financial items		125 438	368 945
Profit before tax		96 943	352 128
Tax	11	23	61
Profit for the year		96 920	352 067
Provision dividend	10	-	-86 606
Transferred to other equity		-96 920	-265 462

TTS GROUP ASA BALANCE SHEET 1 JANUARY - 31 DECEMBER

ASSETS (AMOUNTS IN NOK 1000)

	Notes	NGAAP2013	NGAAP 2012
Non-current assets
INTANGIBLE ASSETS
Deferred tax asset	11	33 035	33 035
Total intangible assets		33 035	33 035
FIXED ASSETS
Machinery and vehicles	3	571	166
Furniture, office and computer equipment	3	4 089	3 599
Total fixed assets		4 660	3 765
FINANCIAL FIXED ASSETS
Shares in subsidiaries	5, 8	804 594	626 093
Investments in joint ventures	5	8 683	8 683
Loans to companies in the Group	6, 8	61 522	204 201
Investments in shares and other financial instruments	4	28 686	28 895
Total financial fixed assets		903 485	867 872
Total non-current assets		941 180	904 673
Current assets
CURRENT RECEIVABLES
Trade debtors		-	34 682
Intra-group accounts receivable	6, 8, 15	5 539	11 631
Other receivables to Joint Ventures	6, 15	-	4 167
Other receivables	6	3 363	11 635
Other intra-group receivables	6, 8	34 895	40 907
Total current receivables		43 797	103 022
Bank deposits, cash in hand etc.	12	-	3 147
Total current assets		43 797	106 168
Total assets		984 977	1 010 841

TTS GROUP ASA BALANCE SHEET 1 JANUARY - 31 DECEMBER

EQUITY AND LIABILITIES (AMOUNTS IN NOK 1000)

	Notes	NGAAP2013	NGAAP 2012
Equity
PAID UP EQUITY
Share capital	10	9 527	9 527
Treasury shares	10	-16	-32
Premium account		149 378	149 377
Total paid up equity		158 889	158 872
RETAINED EARNINGS
Other equity		414 519	320 590
Total retained earnings		414 519	320 590
Total equity		573 408	479 461
Liabilities
OTHER NON-CURRENT LIABILITIES
Pension liabilities	2	9 876	5 046
Convertible subordinated bond loan	7, 9	81 181	75 330
Liabilities to financial institutions	7, 8	103 000	6 000
Total other non-current liabilities		194 057	86 376
CURRENT LIABILITIES
Liabilities to financial institutions	7, 8	3 000	3 000
Bank overdraft	8, 12	73 870	22 727
Trade payables		4 679	3 098
Intra-group trade payables	15	10 146	4 845
Social security and employees` tax deduction		2 103	1 567
Provision for dividends	10	-	86 606
Other intra-group liabilities Other current liabilities	12	104 328 19 386	304 513 18 648
Total current liabilities	13	217 512	445 004
Total liabilities		411 569	531 380
Total equity and liabilities		984 977	1 010 841

Trym Skeie

Chairman of the board

Bjarne Skeie

Director

Ole Henrik Askvik Director

Bergen, 23 April 2014 Board of Directors of TTS Group ASA

Toril Eidesvik

Director

Jan Magne Galåen Director

Mona Lucille Tellnes Halvorsen Director

Anne Breive

Director

Björn Andersson CEO & president

TTS GROUP ASA CASHFLOW STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

	2013	2012
Cash flow from operating activities
Net profit before tax	96 943	352 128
Income from investments in subsidiaries	-236 906	-404 167
Paid tax	-23	-60
Depreciation	660	367
Option cost without cash effect	1 295	1 422
Writedowns on shares	110 000
Net interest costs	7 644	16 675
Difference between pension charges and payments to/from pension scheme	-81	1 231
Other receivables and other short term liabilities	-140 499	-1 850
Net cash flow from operating activities	-160 966	-34 255
Cashflow from investments
Disbursements on acquisitions of shares and other financial instruments	209	-28 673
Acquisition of subsidiaries	-	-130 318
Additional equity into subsidiaries	-280 000	-60 100
Proceedes from sale shares in subsidiaries	22 945	1 218 074
Net contribution received from subsidiaries	33 959	6 055
Dividend from subsidiaries	180 000	-
Disbursements on acquisitions of tangible fixed assets	-1 555	-2 391
Proceedes from and repayment long-term intra-group loans	-	-30 180
Net change cash pool facility	142 679	175 850
Net cashflow from investments	98 237	1 148 317
Cashflow from financing
Repayment of convertible subordinated bond loan	3 950	-97 155
Proceedes from liabilities to financial institutions	97 000	-
Repayment of liabilities to financial institutions	-	-603 000
Repayment debt related to Energy before sale	-	-130 000
Net change overdraft facility	51 143	22 727
Disbursements of dividends	-	-134 646
Repayment of capital to shareholders	-86 606	-363 776
Purchase treasury shares	499	-4 478
Costs related to changes in convertibel debt and repayment of capital	-	-349
Interest costs	-5 599	-14 774
Paid in equity capital	-	100 293
Net cashflow from financing	60 387	-1 225 158
Effects of exchange-rate fluctuations on cash and cash equivalents
Net change in cash and cash equivalents	-2 343	-111 096
Cash and cash equivalents (opening balance)	3 146	114 242
Cash and cash equivalents (closing balance)	803	3 146
This consists of:
Bank and cash pool deposits	803	3 147
Unused overdraft facility	226 130	177 273

TTS GROUP ASA EQUITY STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

			Share
	Share	Treasury	premium
	capital	shares		reserve Other equity	Total
Equity as of 31.12.2011	37 845	-18	384 891	208 598	631 316
Effect of change of accounting principles
Effect of IAS19(Revised) from actuarial gains and losses	-	-	-	-1 986	-1 986
Equity as of 1.1.2012	37 845	-18	384 891	206 612	629 330
Treasury shares	-	-130	-	-4 348	-4 478
New issues	5 457	-	94 836	-	100 293
New issues expenses	-	-	-349	-	-349
Option schemes	-	-	-	2 575	2 575
Equity derived from subordinated convertible bond	-	-	-	-12 933	-12 933
Dividend paid	-	-	-	-134 646	-134 646
Provision for dividends	-	-	-	-86 606	-86 606
Repayment of capital to shareholders	-33 775	116	-330 001	-116	-363 776
Remeasurements of pension obligation recognized in equity				-2 016	-2 016
Net profit for the year	-	-	-	352 067	352 067
Equity as of 31.12.2012	9 527	-32	149 377	320 589	479 461
Equity as of 1.1.2013	9 527	-32	149 377	320 589	479 461
Treasury shares		17		482	499
Option schemes				1 295	1 295
Dividend provided 2012, not paid on treasury shares				144	144
Provision for dividends				-	-
Remeasurements of pension obligation recognized in equity				-4 911	-4 911
Net profit for the year				96 920	96 920
Equity as of 31.12.2013	9 527	-15	149 377	414 519	573 408

Accounting principles TTS GROUP ASA

The financial statements have been prepared in accordance with The Norwegian Accounting Act and generally accepted accounting principles in Norway.

SUBSIDIARIES, ASSOCIATED COMPANIES

Subsidiaries and associates are valuated at cost, less any impairment losses. Dividends, contributions and other distributions from subsidiaries are recognized as financial income, unless distributions exceed withheld profit after the acquisition date. Any excess amount represents repayment of invested capital and is recognized as deduction of cost price.

OPERATING INCOME

Operating income includes income on delivered products and services granted over the year. The income is recognized once the delivery of services has taken place and most of the risk and return has been transferred.

CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS

Current assets and short term liabilities include items which fall due within one year, and items related to the operating cycle. Other balance sheet items are classified as fixed assets / long term liabilities.

Current assets are valued at the lower of cost and fair value. Short term liabilities are posted in the balance sheet at the nominal value at the time of initial recognition.

Fixed assets are valued at cost, less depreciation and impairment losses. Long term liabilities are posted in the balance sheet at the nominal value at the time of the initial recognition.

ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accounts receivable and other current receivables are recorded in the balance sheet at their nominal value less impairment provision for doubtful accounts. Provisions for doubtful accounts are made on the basis of an individual assessment of the different receivables. For the remaining receivables, a general provision is estimated based on expected loss.

SHORT TERM INVESTMENTS

Short term investments are valued at the lower of acquisition cost and fair value at the balance sheet date. Dividends and other distributions are recognized as other financial income.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is capitalized and depreciated linearly over the asset's estimated useful life. Costs for maintenance are expensed as incurred, whereas costs for improving and upgrading property, plant and equipment are added to the acquisition cost and depreciated with the related asset. If carrying value of non-current asset exceeds the estimated recoverable amount, the asset is written down to the recoverable amount. The recoverable amount is greater of the net value and value in use. In assessing value in use, the discounted estimated future cash flows from the asset are used.

PENSIONS

The company has a defined benefit pension plan. Defined benefit plans are valued at the present value of accrued future pension benefits at the balance sheet date. Pension plan assets are valued at their fair value.

Net liability for defined benefit pension plans is calculated for each plan by estimating the future benefits employees have earned for services rendered in the current or prior periods. The benefits are discounted to calculate present value, and the fair value of plan assets is deducted. The discount rate is based on the interest rate on high quality corporate bond (OMF). See note 5 for further information. The pension obligation is calculated annually by independent actuaries using the projected unit credit method.

Re-measurements, comprising of actuarial gains and losses, and the return on plan assets, are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

The Group recognizes the service cost as a payroll expense and net interest expense or income as finance cost or income in the statement of profit and loss.

TAXES

The tax expense in the profit and loss accounts consists of the current tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all differences between the book value and tax value of assets and liabilities. Deferred tax is calculated as 28 % of temporary differences and the tax effect of tax losses carried forward. Tax-increasing and tax-reducing temporary differences which are reversed, or could be reversed, during the same period are offset against each other and recorded net.Deferred tax assets are recorded in the balance sheet when it is more likely than not that tax assets will be utilized.

Taxes payable and deferred taxes are recognized directly in equity to the extent that they relate to equity transactions.

FOREIGN CURRENCY

Transactions in foreign currency are translated at the rate applicable on the transaction date. Monetary items in a foreign currency are translated into NOK using the exchange rate applicable on the balance sheet date.

Non-monetary items that are measured at their historical price expressed in foreign currency are translated into NOK using the exchange rate applicable on the transaction date. Non-monetary items that are measured at their fair value expressed in a foreign currency are translated at the exchange rate applicable on the balance sheet date.

Changes to exchange rates are recognized in the income statements as they occur during the accounting period.

Currency rates on year end which is basis for revaluation of balance sheet items are:

EUR	8.3825
SEK	0.9472
USD	6.0837
CNY	1.0049

CASH FLOW STATEMENT

The cash flow statement is presented using the indirect method. Cash and cash equivalents includes cash, bank deposits and other short term, highly liquid investments with maturities of three months or less.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and bank deposits. Bank deposits in foreign currencies are translated into NOK using the exchange rate on the balance sheet date. Withdrawals from the bank overdraft facility constitute part of current liabilities.

USE OF ESTIMATES

The management has used estimates and assumptions that have affected assets, liabilities, incomes, expenses and information on potential liabilities in accordance with generally accepted accounting principles in Norway.

Note 1 - Personnel costs, number of employees, remunerations, loans to employees etc

(AMOUNTS IN NOK 1000)

PAYROLL EXPENSES:

	2013	2012
Salaries	25 030	16 671
Employer's social security contribution	3 426	2 882
Pension costs	2 636	3 532
Other benefits	1 037	1 164
Total payroll expenses	32 130	24 249
Number of employees at the end of the year	16	12

BOARD REMUNERATIONS 1)

	2013	2012
Trym Skeie	350	350
Bjarne Skeie	200	200
Anne Breive	240	280
Kjerstin Fyllingen	280	240
Jan Magne Galåen2)	240	240
Karen Torine Mørkestøl	-	100
Ole Henrik Askvik	75	-
Mona L. Tellnes Halvorsen	75	-
Jarle Dyrdal	-	100
Ingve Hjelmeseter	19	-
Dag Rune Mjelde	19	-
Total	1 498	1 510

1) 1) The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next.

For the financial year 2013, the reported remuneration is based on the remuneration paid in 2013 based on the amounts determined by the Board at the Annual General Meeting for 2013. The same applies to the nomination committee.

2) Jan Magne Galåen represents Rasmussengruppen and the board fee is paid to Rasmussengruppen.

The board has not received any remuneration beyond director`s fee. No loans or severance pay is given to the directors.

NOMINATION COMMITTEE REMUNERATION

The TTS nomination committee is comprised of the following members: Bjørn Olafsson (Chairman), Bjørn Sjaastad og Johan Aasen. The nomination committee remuneration for 2013 was TNOK 50 for the chairman and TNOK 30 for each of the members, a total of TNOK 110.

STATEMENT REGARDING THE STIPULATION OF REMUNERATION AND OTHER BENEFITS FOR THE PRESIDENT & CEO AND OTHER EXECUTIVES

Regarding Group management, TTS Group ASA's remuneration policy is based on offering competitive terms. Remunerations should reflect that TTS is a listed company with an international focus.

The annual remuneration is based on Group managements part-taking in the results generated by the company and the added value for shareholders through increased company value.

Remuneration consists of three main components; Base salary, bonus and a share option program.

Bonus is determined on the basis of target results. In certain circumstances where change and development are of decisive nature, the bonus is further based on specific developmental targets. Bonus targets are revised annually. The maximum bonus is one year's base salary for the President & CEO, and up to 50 % of base salary for other executives.

Since 1998, a share option program has been active for the Group management of TTS; the goal being that the Group management shall have the same incentive as the shareholders in respect of increasing company value over time. The Annual General Meeting has each year given the Board authority to establish share option program with a two year term. Redemption price equals market price on allotment. First exercise is 50 % after one year. Next 12.5 % per quarter, in addition to options not previously utilized. Each option program expires after 2 years.

The Group pension scheme in Norway is based on about 65 % of base salary at the age of 67, limited to 12G, with the exception of TTS Offshore Handling Equipment AS which has employees partly within defined pension plan and partly within a defined contribution plan. For employees hired in other countries, the prevailing schemes in the respective companies apply.

The period of notice is 2 months, with no further severance pay for the President & CEO. For the other members in the Senior Executive Group, the period of notice is 6 months, with a severence pay of up to 12 months including the period of notice.

The share option program is contingent on the Annual General Meeting's approval, based on the Board being granted authority to make such allotments. The President & CEO's remuneration is determined by the Board of TTS Group ASA. Remuneration to other executives is determined by the President & CEO.

REMUNERATION AND OTHER BENEFITS FOR THE PRESIDENT & CEO AND OTHER SENIOR EXECUTIVES: (AMOUNTS IN NOK 1000)

2013
Name	Position	Base salary	Other benefits	Bonus paid	Share options	Pension cost
Johannes D. Neteland (till December 2013)	President & CEO	2 032	160	1 839	280	935
Bjørn Andersson (from December 2013)	President & CEO	128	-	-	-	-
Arild Apelthun	CFO	1 614	14	465	280	131
Ivar K. Hanson	EVP, Marine	1 434	16	543	140	58
Remunerations	Taxable remuneration
Other benefits	Car, group life insurance, taxable pension schemes, phone, newspaper, etc.

Other benefits	Car, group life insurance, taxable pension schemes, phone, newspaper, etc.
Bonus paid	Bonus paid in current year
Share options	Calculated option cost recognized in the income statement

The President & CEO from December 2013 is not a member of the TTS Group pension plan, nor any other pension arrangement paid by TTS.

The former President & CEO receives ordinary salary in the period of notice until May 2014. For the same period, the former President & CEO remains member of the TTS Group pension plan. After the notice period, the former President & CEO will receive severance pay equivalent to 18 months ordinary salary in line with the employment contract.

AUDITORS' FEES (EXCL. VAT)

	2013	2012
Statutory audit	1 312	915
Other attestation services	0	564
Other assistance including tax advice	59	930
Total	1 371	2 409

Note 2 - Pensions

(AMOUNTS IN NOK 1000)

TTS Group ASA has a defined benefit pension plan that give employees the right to future pension benefits depending on length of service, salary levels, retirement age and the National Insurance benefits received. As of 31.12.13 the pension plan includes 24 persons, including 12 retirees. The company's obligations are covered by an insurance company.

With effect from 1st of January 2013 actuarial gains and losses are recognized in other comprehensive income, ref. IAS 19 revised. As a part of the adaption to the changes of IAS19, TTS Group has elected to classify the interest elements of the pension cost within the financial items in the P&L. Due to the change in recognition for actuarial gains and losses, comparative figures for 2012 are restated to reflect the change in recognition principle.

THE NET PENSION OBLIGATION FOR COMPANIES WITH A DEFINED BENEFIT PLANS IS BASED ON THE ASSUMPTIONS AS OF 31.12.2013 AND ARE DETERMINED AS FOLLOWS:

		2013	2012
		Insured	Insured
	Fair value of assets at end of year	28 133	25 863
-	Defined benefit obligation at end of year	-36 796	-30 285
-	Accrued payroll tax 1)	-1 213	-624
=	Net pension asset (obligation) after payroll taxes	-9 876	-5 046

1) Accrued payroll tax is calculated based on net funded status at period end. Accrued payroll tax is recognized as pension liability.

NET PENSION COSTS ARE DETERMINED AS FOLLOWS:

		2013	2012
		Insured	Insured
	Service cost	2 232	2 869
+	Interest cost	143	28
+	Administration cost	78	225
+	Payroll tax of net pension cost	326	411
=	Net periodic pension cost	2 779	3 532
	- of which recognized as payroll cost	2 636	3 504
	- of which recognized as finance cost	143	28

CHANGE IN RECOGNIZED FUNDS:

		2013	2012
		Insured	Insured
	Net liability as of 31.12 prior year		186
	Effect of transition to IAS 19R		-1 986
	Net liability as of 01.01	-5 046	-1 800
-	Cost recognized during the year (see above)	-2 779	-3 532
+/-	Pension payments and payment of pension premiums	2 861	2 302
+/-	Remeasurements recognized in Equity	-4 911	-2 016
=	Net liability as of 31.12.	-9 876	-5 046

EFFECTS RECORDED IN OTHER COMPREHENSIVE INCOME

	2013
Remeasurements loss (gain) - change in discount rate	-1 274
Remeasurements loss (gain) - change in other financial assumptions	1 328
Remeasurements loss (gain) - change in mortality table	1 433
Remeasurements loss (gain) - change in other demographic assumptions	-
Remeasurements loss (gain) - experience DBO	2 840
Remeasurements loss (gain) - experience Assets	375
Investment management cost	210
Total remeasurement losses (gains) recognized in Equity	4 911

BREAKDOWN OF PENSION ASSETS UNDER MANAGEMENT BY DNB LIVSFORSIKRING

	2013	2012
Equities	6,80 %	9,20 %
Alternative investments	3,50 %	0,00 %
Bonds	17,00 %	15,60 %
Money market	22,00 %	18,30 %
Hold to maturity bonds	35,20 %	36,70 %
Real estate	14,30 %	18,30 %
Other	1,10 %	1,90 %

THE FOLLOWING ECONOMIC ASSUMPTIONS HAVE BEEN MADE FOR CALCULATION OF THE PENSION OBLIGATIONS:

	Expenses		Commitments
	2013	2012	31.12.13	31.12.12
Discount rate	3,90 %	3,30 %	4,10 %	3,90 %
Return on pension funds	4,00 %	4,80 %	4,10 %	4,00 %
Annual wage growth	3,50 %	4,00 %	3,75 %	3,50 %
Annual adjustment of National pension index (G)	3,25 %	3,75 %	3,50 %	3,25 %
Annual adjustment of pensions in payment	3,25 %	3,75 %	3,50 %	3,25 %
Voluntary retirement	8,0-0,0%	10,00 %	8,0-0,0%	8,0-0,0%
Withdrawal propensity for early retirement (AFP)	N/A	45,00 %	N/A	N/A
Payroll tax	14,10 %	14,10 %	14,10 %	14,10 %
Mortality table 1)	K2013	K2005	K2013	K2005

Economic actuarial assumptions used in the calculation are based on recommendations from The Norwegian Accounting Standards Board. The discount rate is based on high quality corporate bond (Norwegian Covered Bonds, OMF). Norwegian OMF is considered as high quality bond with low risk based on the strong macroeconomic position in Norway.

1) Mortality and disability tables are based on the best estimates prepared by Finance Norway. In 2013 the mortality table was changed from K2005 to K2013, reflecting and increased estimated logevity for Norwegian employees in the pension plan.

Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.18 and 4.

Note 3 - Tangible fixed assets

(AMOUNTS IN NOK 1000)

		Total
203	1 538	1 741
203	1 538	1 741
123	2 269	2 392
-	-	-
-160	-207	-367
166	3 599	3 765
1 071	4 040	5 111
-905	-440	-1 345
166	3 599	3 765
166	3 599	3 765
694	1 016	1 710
-155	-	-155
-134	-525	-660
571	4 089	4 660
1 610	5 055	6 665
-1 039	-966	-2 005
571	4 089	4 660
Linear	Linear
5 years	3-10 years
	Machinery and vehicles	Furniture and office equip.

The company has no leases classified as financial lease.

OPERATING LEASE AGREEMENTS:

TTS Group ASA has entered into a lease agreement for offices. The lease is classified as operational lease.

Annual payment is MNOK 13,1. A part of the offices are subleased to different subsidiaries. Net received from subsidiaries is MNOK 11.9. The lease agreement for offices expires in 2018. TTS Group ASA has an option to extend the lease agreement for 5+5 years at market price.

Note 4 - Investments in other companies

(AMOUNTS IN NOK 1000)

	Ownership	Acquisition cost	Book value
			2013	2012
Fixed assets:
Shin Young Heavy Industry	13.4 %	222	-	222
Sigma Drilling AS 1)	16.1 %	28 673	28 673	28 673
Total investments in other companies		28 895	28 673	28 895

1) TTS Group ASA acquired a 16.1 % share in Sigma Drilling AS in mid-November 2012. The investment was at fair value on the day of acquisition. The best estimate for fair value at year-end 2013 does not differ significantly from the book value.

Note 5 - Subsidiaries and joint ventures

(AMOUNTS IN NOK 1000)

INVESTMENTS IN SUBSIDIARIES VALUED AT COST:

Subsidiary	Registered office	Acquisition date	Ownership	Voting share	Currency
TTS Handling Systems AS	Drøbak, Norway	1994	100 %	100 %	NOK
Norlift AS	Bergen, Norway	1994	100 %	100 %	NOK
TTS Ships Equipment AS	Bergen, Norway	1996	100 %	100 %	NOK
TTS Marine AB	Gothenburg, Sweden	2002	100 %	100 %	SEK
TTS Marine Shanghai Co Ltd	Shanghai, China	2002	100 %	100 %	RMB
Hydralift Marine AS	Kristiansand, Norway	2003	100 %	100 %	NOK
TTS Cranes Norway AS	Bergen, Norway	2007	100 %	100 %	NOK
TTS Marine AS	Bergen, Norway	2009	100 %	100 %	NOK
TTS Singapore Pte. Ltd.	Singapore	2009	100 %	100 %	SGD
TTS Greece Ltd.	Pireus, Greece	2009	100 %	100 %	EUR
TTS Marine Holding AB	Gothenburg, Sweden	2011	100 %	100 %	SEK
TTS Port & Logistics Holding AB	Gothenburg, Sweden	2011	100 %	100 %	SEK
TTS Offshore Handling Equipment AS	Bergen, Norway	2012	100 %	100 %	NOK
TTS NMF GmbH	Hamburg, Germany	2012	100 %	100 %	EUR
TTS Polen SP.Z.O.O.	Gdansk, Polen	2013	100 %	100 %	PLZ
Total

INVESTMENTS IN JOINT VENTURES, VALUED AT COST:

	Joint venture	Registered office Acquisition date	Ownership	Voting share	Currency
2005	TTS BoHai Machinery Co., Ltd	Dalian, China	50 %	50 %	RMB

JV'S TOTAL (100%) PROFIT/LOSS, ASSETS AND LIABILITIES PER 31.12.2013

	Long term assets		Current assets Long term liabilities	Current liabilities	Income	Profit/loss
TTS Bohai Machinery Co., Ltd	3 960	156 423	-	123 771	250 173	3 025

JV'S TOTAL (100%) PROFIT/LOSS, ASSETS AND LIABILITIES PER 31.12.2012

	Long term assets		Current assets Long term liabilities	Current liabilities	Income	Profit/loss
TTS Bohai Machinery Co., Ltd	4 089	171 318	-	145 091	304 677	1 658

Except a guarantee for external debt of total MUSD 6, there are no contingent liabilities or capital committments relating to the Group's interests in the joint ventures and no significant contingent liabilities of the joint ventures themselves.

Share capital	Number of shares	Equity 31.12.2013	Net Result 2013		Cost Net book value 2013 Net book value 2012
950 000	95 000	19 320	11 239	33 296	33 296	33 296
500 000	500	1 206	382	6 262	6 262	6 262
2 500 000	2 500	36 924	9 204	46 897	46 897	36 897
2 000 000	2 000	298 066	62 469	295 816	295 816	295 816
200 000	3 500	26 623	-4 193	4 705	4 705	4 705
100 000	1 000	-52	-	115	115	115
500 000	1 000	-1 567	-1 362	516	516	516
3 000 000	1 000	108 076	-17 287	201 020	201 020	51 020
1 141 813	1 141 813	6 060	2 460	5 064	5 064	5 064
200 000	2 000	2 508	297	1 812	1 812	1 812
100 000	1 000	95	-	86	86	86
100 000	1 000	88	1	86	86	86
2 000 000	100	61 417	-112 998	188 143	78 143	60 100
3 000 000	3 000	-105 864	-38 204	130 340	130 340	130 318
250 000	250	131	-205	436	436	-
				914 594	804 594	626 093

Share capital	Number of shares	Equity 31.12.2013	Net Result 2013		Cost Net book value 2013 Net book value 2012
22 000 000	2 200	36 613	3 025	8 683	8 683	8 683

Note 6 - Trade and other receivables

(AMOUNTS IN NOK 1000)

	2013	2012
Customer receivables	-	34 682
Customer receivables within group	5 539	11 631
Customer receivables to Joint Ventures	-	4 167
Other receivables within group	34 895	40 907
VAT	783	1 789
Other receivables, including prepayments	2 580	9 845
Short-term receivables	43 797	103 022
Receivables maturing at over one year:
Loans to companies in same group	61 522	204 201
Total	61 522	204 201

There are no credit risk concentrations within customer receivables. Steps have been taken to avoid delays in settling internal receivables.

Note 7 - Non-current liabilities

(AMOUNTS IN NOK 1000)

	Repayment profile and maturity
	Nominal value 31.12.2013	2014	2015	2016	2017	2018 and later
Convertible Subordinated Bond Loan 2011/2016	95 345	-	-	95 345		-
Non-current liabilities	106 000	3 000	103 000		-	-
Total non-current debt incl. first year instalment	201 345	3 000	103 000	95 345	-	-
- first year instalment of non-current debt	-3 000	-3 000	-	-	-	-
Total non-current debt	198 345	-	103 000	95 345	-	-
Expected interest payments		12 016	12 013	381	-	-

SPECIFICATION OF LOANS:

	Loan type	Currency	Nominal interest rate	Maturity	Installment terms	Nominal value 2013	Nominal value 2012
Norsk Tillitsmann ASA 2)	Convertible bond	NOK	8,00 %	2016	balloon	95 345	95 345
Innovasjon Norge	Mortgage loan	NOK	5,75 %	2015	bi-annually	6 000	9 000
DnB	Mortgage loan	NOK	Nibor + 2,35%	2015	balloon	100 000
Total 2)						201 345	104 345

1) Debt exclusive of draw-down TNOK 73 870 in TTS Group cash pool, as total cash position with the bank is positive,

2) Additional description of the Convertible Subordinated bond is available in Note 9. Book value of the debt as per 31.12.2012 is TNOK 81 182.

COVENANTS

TTS Group has undertaken to meet the following financial covenant requirements from Nordea and DNB:

The Group's equity ratio shall at least be equal to 27.5 %. In addition a multiple of other standard default clauses related to the bond loan inclusive cross default clauses are apparent. Nordea and DNB has accepted that the nominal value of the Subordinated Convertible Bond loan is included as part of the equity calculation.

ref. note 13 and 14.

Including the added back nominal value of the Subordinated Convertible Bond, the relevant covenant equity measure basis as per 31.12.2013 is MNOK 647, which represents an equity ratio of 29.1%. Thus, TTS Group meets the financial covenant requirement as per 31.12.2013.

The Group's covenant related to NIBD/EBITDA is max 3,0 calculated on 12 month rolling EBITDA. At the end of 3rd quarter 2013, TTS was in breach with one of the loan covenants on 12 month rolling EBITDA. In the 4th quarter, TTS obtained waivers from the banks for the 12 month rolling EBITDA covenant from the period Q3 2013 to Q2 2014. According to the waiver TTS have to be within the original covenants in Q3 2014 and have to obtain a EBITDA of MNOK 20 during Q2 2014 to not be in breach of the waiver.

Note 8 - Assets pledged as security and guarantees

(AMOUNTS IN NOK 1000)

The major bank credit facility of TTS Group ASA is established with Nordea Norge ASA (Nordea) and DNB ASA (DNB).

TTS GROUP HAS THE FOLLOWING CREDIT FACILITIES THROUGH ITS FACILITATORS:

	2013		2012
	Limit	Drawn	Limit	Drawn
Group cash pool overdraft facility 1)	300 000	-73 870	200 000	-22 727
Drawdown facility, operations	100 000	100 000	100 000	-
Guarantee limit for Group	500 000	461 900	600 000	265 900

1) Cash balance in TTS Group cash pool arrangement; 31.12.2013; MNOK -73.9, 31.12.2012; MNOK -22,7.

As per 31.12.2013 all Norwegian companies (ref Note 9), as well as TTS Marine AB, TTS Port Equipment AB, TTS NMF GmbH and TTS Marine GmbH are part of the Group cash pool arrangement with Nordea.

All companies within TTS Group utilize the guarantee limit. The guarantee limit cover payment guarantee, performance bonds, advance payment bonds and tax guarantees.

On 6.12.2012 TTS Group ASA entered into an agreement related to financing of the Group with Nordea. In addition, TTS Group ASA established a bank agreement with DNB on 21.12.2012. The new agreement replaced the prior credit- and bond facility. The new facility was adjusted to the Group's new financial requirements after the sale of the Energy division in 2012, and further adjusted in 2013.

The credit facility in the agreement is MNOK 900, and consists of;

• MNOK 100, 3 year term loan facility, unchanged in 2013
• Original MNOK 200, 3 year multi-currency overdraft facility changed to MNOK 300 in 2013
• Original MNOK 600, 3 year guarantee facility changed to MNOK 500 in 2013

The agreement includes covenant requirements related to equity ratio and debt gearing. The covenants are described in note 7.

The existing securities and collateral which were established when TTS Group ASA entered into the agreement with the bank syndicate was cancelled. New pledges have been established related to TTS Group ASA's new bank agreements. The agreements include pledges of plant and machinery, inventory, accounts receivables in the major Norwegian companies. In addition shares in TTS Marine AB have been pledged.

FOR THE ABOVE MENTIONED FACILITIES THE FOLLOWING ASSETS HAVE BEEN PLEDGED AS COLLATERAL TO NORDEA AND DNB:

ASSETS PLEDGED AS COLLATERAL FOR SECURED DEBT:

	2013	2012
Shares in TTS Marine AB	295 816	295 816
Account/Group receivables	224 767	286 051
Inventory/Work in progress, including non-invoiced production	106 962	158 977
Assets pledged as collateral	627 545	740 844

TTS Group ASA has a loan to Innovasjon Norge for establishment of TTS Marine Equipment (Dalian, Kina) Co. Ltd. The loan of MNOK 6.0 has security in the shares of TTS Marine Equipment Co. Ltd.

Note 9 - Trade and other receivables

(AMOUNTS IN NOK 1000)

At the Extraordinary General Meeting on 10.1.2011 a subordinated convertible bond facility of MNOK 200 were approved. The bond has a fixed interest of 8 % p.a. and final maturity date is 18.1.2016.

The bond holder has a consecutive right to convert their nominal bond value into shares in TTS Group ASA. Conversion price is fixed per share.

Conversion price is to be adjusted in several occurrences of which the major is;

• i. consolidation or subdivisions of shares
• ii. distribution of profits or reserves to shareholders by issue of new shares
• iii. dividend payments to shareholders
• iv. issue or grant shareholders rights, options, warrants or other subscription rights

The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011.

Changes to conversion price 2012

In the Extraordinary General Meeting on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision in the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share. In the Extraordinary General Meeting on the 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The capital reduction was registered at the Register of Business Enterprises 25.10.2012. The reduction amount, 365 MNOK, was disbursed to the shareholders at time of the registration. Disbursement per share was NOK 4.2147. Based on the announced repayment of capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price was NOK 5.71, effective on 26.10.2012 which was the first date the shares traded ex capital repayment. The conversion price was fixed at NOK 5.71 per share on 31.12.2012.

Changes to conversion price 2013

There have been no Debt conversions in 2013. On 10.06.2013 the Annual General Meeting decided on a dividend of NOK 1 per share. Based on the announced dividend, the conversion price was adjusted accordingly. The adjusted conversion price is NOK 4.97 per share.

TTS Group ASA has a call option to enforce a conversion of bond into shares. The call option will be effective as of 8.2.2014, given a weighted average share price that exceeds NOK 7.455 per share for more than 20 days within a 30 days period. TTS Group ASA also has a clean-up call option which is effective given a prior 90 per cent of bond holders having redeemed or converted their bonds into shares.

The convertible bond contains both a liability and an equity component, which is separated and classified as financial liability and equity according to IAS 32. Alternative interest has been calculated to 14.25 % p.a. plus fees. Effective interest is presented as part of finance cost.

	2013
Subordinated convertible bond loan - nominal value at drawdown	200 000
Converted debt to shares in 2011	-7 500
Converted debt to shares in 2012 1)	-97 155
Nominal debt value as per 31.12	95 345
Draw down cost	-14 262
Derived equity portion from inherent put option at drawdown	-36 981
Equity derived from converted subordinated convertible bond during 2011	1 387
Equity derived from converted subordinated convertible bond during 2012	17 964
Effective interest cost less paid interest - 2011	9 977
Effective interest cost less paid interest - 2012	1 900
Effective interest cost less paid interest - 2013	5 851
Effective debt value	81 182

1) MNOK 4.5 was converted in February and March 2012. MNOK 76.2 was converted in April, May and June 2012, while MNOK 16.5 were converted in July and August 2012. There was no conversions during 4th quarter 2012, and no conversions in 2013.

Notes⁹ 1O

	Repayment profile and maturity:
	2012	2013	2014	2015	2016
Subordinated convertible bond loan - nominal value	-	-	-	-	95 345
Nominal interest cost	11 754	7 628	7 628	7 628	381
Calculated effective interest cost recognized in the accounts	13 654	13 479	14 589	15 910	827

PRINCIPLE BONDHOLDERS AS OF 31.12.2013

Bondholders that may acquire, or currently hold or control more than 2.0 % of the shares in TTS Group if bond is converted to shares is stated below.

Bondholder:	Conversion rights	Share portion if fully converted
MP Pensjon PK	8 048 290	7,61 %
Akershus fylkeskommune - pensjonskasse	4 024 145	3,80 %
Odin Maritim	1 307 847	1,24 %
Holberg Norden	1 276 660	1,21 %
Mertoun Capital AS	804 829	0,76 %
Skandinaviska Enskilda Banken	945 674	0,89 %
Verdipairfondet Eika Kombinasjon	402 414	0,38 %
Bjørn Bakkevig	402 414	0,38 %
Erik Penser FondKommission AB	382 294	0,36 %
Pima AS	221 328	0,21 %
Other (14 bond holders)	1 368 209	1,29 %
Total	19 184 105	18,13 %

BONDS ACQUIRED BY PRINCIPAL SHAREHOLDERS SUBSEQUENT TO 31.12.2013:

In the period 01.01.2014-23.04.2014, principal shareholders of the Group has acquired bonds giving the following congversion rights:

Bondholder:	Conversion rights	Share portion if fully converted
Skeie Consultants AS	1 207 243	1,14 %
Tamafe Holding AS	804 828	0,76 %

Note 10 - Share capital and shareholder information

(AMOUNTS IN NOK 1000)

Date	Number of shares	Nominal value	Share capital
31.12.13	86 605 660	0.11	9 526 623
31.12.12	86 605 660	0.11	9 526 623

CHANGES TO SHARE CAPITAL 2012:

The Extraordinary General Meeting in TTS Group ASA held on 15.8.2012 resolved to pay a dividend of NOK 1.56 per share and to reduce company capital by MNOK 365 via repayment of capital to shareholders. The disbursement amount was NOK 4.2147 per share. The capital reduction was registered at the Register of Business Enterprises on 25.10.2012. The final allocation of the reduction amount between share capital and share premium account, was NOK 33 776 207 and NOK 331 239 544, respectively. New nominal value per share is NOK 0.11, and the share was registered with this nominal value from 26.10.2012. The new share capital is NOK 9 526 622.

CHANGES TO SHARE CAPITAL 2013:

There were no changes to the nominal share capital in 2013.

(AMOUNTS IN NOK 1000)

DIVIDENDS PAID AND PROPOSED:

	2013	2012
Declared and paid during the year:
Dividends on ordinary shares	86 461	134 646
Dividend for shareholders proposed for 2013, to be paid in 2014: NOK 0 per share.
Total dividend amount proposed: NOK 0.

TREASURY SHARES:

	Number of shares	"Share capital
Treasury shares as of 01.01.2012	35 210	-17 605
Purchase of treasury shares June 2012	111 261	-55 631
Purchase of treasury shares July 2012	147 929	-73 965
Treasury shares as of 25.10.2012 (face value NOK 0.50 per share)	294 400	-147 200
Treasury shares as of 25.10.2012 (face value NOK 0.11 per share)	294 400	-32 384
Treasury shares as of 31.12.2012	294 400	-32 384
Sale of treasury shares May 2013	150 000	-16 500
Treasury shares as of 31.12.2013	144 400	-15 884

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board of Directors authorisation to buy own shares to the benefit of employees up to 800 000 shares. The authoritiy is valid to 30 June 2014.

On the 10 June 2013 the Annual General Meeting adopted a resolution to give the Board authority to buy up to 6 000 000 shares with the purpose of deletion. The authorisation is valid to 30 June 2014.

PRINCIPAL SHAREHOLDERS OF TTS GROUP ASA AS OF 31.12.2013:

Shareholder	Number of shares	Ownership	Voting share
Rasmussengruppen AS	11512506	13,29 %	13,29 %
Skeie Technology AS	8929879	10,31 %	10,31 %
Skandinaviska Enskilda Banken (nominee account)	5457111	6,30 %	6,30 %
Lesk AS	5306058	6,13 %	6,13 %
Stisk AS	5306058	6,13 %	6,13 %
Barrus Capital AS	3455000	3,99 %	3,99 %
Skagen Vekst Verdipapirfond	3222553	3,72 %	3,72 %
Skeie Capital Investment AS	2531263	2,92 %	2,92 %
JP Morgan Chase Bank (nominee account)	2486047	2,87 %	2,87 %
Holberg Norge Verdipapirfond	2241870	2,59 %	2,59 %
Tamafe Holding AS	2160735	2,49 %	2,49 %
Odin Maritim Verdipapirfond	2048906	2,37 %	2,37 %
Holberg Norden Verdipapirfond	2000000	2,31 %	2,31 %
Mertoun Capital AS	1750000	2,02 %	2,02 %
Itlution AS	1475261	1,70 %	1,70 %
Pima AS	1173712	1,36 %	1,36 %
Verdipapirfondet DNB SMB	1137164	1,31 %	1,31 %
Skeie Consultants AS	953033	1,10 %	1,10 %
Glastad Invest AS	700000	0,81 %	0,81 %
Euroclear Bank S.A./N.V. (nominee account)	692117	0,80 %	0,80 %
Total, 20 largest shareholders	64 539 273	74,52 %	74,52 %
Total other	22 066 387	25,48 %	25,48 %
Total	86 605 660	100,00 %	100,00 %

SHARES OWNED BY BOARD MEMBERS, GROUP EXECUTIVES AND THEIR RELATIVES:

Board	31.12.13	23.04.14	31.12.12
Trym Skeie 1)	2 483 875	2 483 875	2 483 875
Bjarne Skeie 2)	12 414 175	12 414 175	12 414 175
Ole Henrik Askvik	2 032	2 032	2 032
Mona Lucille Tellnes Halvorsen	1 774	1 774	1 774
Group Executives
Ivar K. Hanson	182 422	182 422	152 422
Arild Apelthun	120 000	120 000	60 000

1) Owns 100 % of the shares in Tamafe Holding AS. Tamafe Holding AS owns shares in Skeie Capital Investment AS.

2) Bjarne Skeie owns 20 % of the shares and 100 % of the voting shares in Skeie Technology AS and Skeie Consultants AS. Skeie Technology AS owns shares in Skeie Capital Invesment AS.

On the 31 May 2012, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 500 000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 30.6.2015. A total of 300 000 shares have been issued in the form of options, with a possible first time exercise of options following the presentation of the first quarterly results for 2013, equivalent to a maximum of 50 percent of the allocated options. The number of shares for further exercise of options constitutes 12.5 percent following the presentation of the results for the second, third and fourth quarter of 2013 and the first quarter of 2014, in addition to options not previously exercised.

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 600 000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 30.6.2015. A total of 530 000 shares have been issued in the form of options, with a possible first time exercise of options following the presentation of the first quarterly results for 2014, equivalent to a maximum of 50 percent of the allocated options. The number of shares for further exercise of options constitutes 12.5 percent following the presentation of the results for the second, third and fourth quarter of 2014 and the first quarter of 2015, in addition to options not previously exercised.

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 8 600 000 shares against cash or non-monetary redemption including merger relating to acquistions of business or assets. The authority is valid to the Annual General Meeting 5.06.2014. No shares have been issued on the basis of this authorisation as of 23 April 2014.

On the 10 June 2013, the Annual General Meeting adopted a resolution to give the Board of directors authority to buy back a portion of the convertible callable unsecured subordinated bond 2011/2016 up to a total of NOK 150 000 000. The authoritiy is valid to 30 June 2014.

ALLOCATION OF OPTIONS:

Name	Position	Company	Number of options exercisable until 31.5.2014	Exercise price	Number of options exer cisable until 10.06.2015	Exercise price	Total
Björn Andersson	CEO	TTS Group ASA	-	9,83	70 000	6,42	70 000
Arild Apelthun	CFO	TTS Group ASA	60 000	9,83	60 000	6,42	120 000
Ivar K. Hanson	EVP Marine	TTS Group ASA	60 000	9,83	60 000	6,42	120 000
Geir Storaas	EVP Offshore & Heavy lift	TTS Group ASA	-	9,83	50 000	6,42	50 000
Stefan Gluel	EVP Service	TTS Marine GmbH	-	9,83	50 000	6,42	50 000
Miao Reinlund	VP Communication	TTS Group ASA	60 000	9,83	60 000	6,42	120 000
Nina Seter	VP HR & HSE	TTS Group ASA	-	9,83	60 000	6,42	60 000
	Total number of options to senior executives		180 000		410 000		590 000

In addition there are 240 000 options issued to former CEO Johannes Neteland which expires at the end of May 2014 and 60 000 to Lennart Svensson, former EVP of Port and Logistics which expires in May 2014.

During 2012 300 000 share options with a strike price of NOK 5.91, allocated in 2010 were exercised from Senior Management. Further, in 2012 150 000 share options with strike price of NOK 9.10, allocated in 2011 were exercised from Senior Management.

During 2013 150 000 share options with a strike price of 3.33, alocated in 2011 were exercised from Senior Management.

In accordance with authorities granted by the Annual General Meeting in 2011 and 2012, TTS Group ASA has issued share option programes to Senior Executive Group.

Through these programs, Senior Executive Group in the TTS Group has a future right to purchase a number of shares at an exercise price equal to the marked rate on the date that the share option program was initiated.

The option premium is estimated on the grant date using the Black & Scholes option pricing model (BS). The options have a maximum term of two years, with a possible first exercise after one year (50 percent), then 12.5 percent per quarter, giving a weighted average of 15 months maturity which is employed in BS. The option premium is distributed over the option's two-year term. Implied volatility is based on a combination of historic data and assumptions. Volatility used for options issued 2012 and 2013 was 48% and 52% respecitvely. Risk-free interest rate applied for options issued in 2012 and 2013 was 1,48% and 1,56% resepectively. For 2013, option premium of MNOK 1.3 (2012 MNOK 1.4) has been charged as expenses classified as salary in the profit and loss statement. Payroll tax is charged when share options are realized.

Subordinated convertible loan:

On 10.1.2011 the Extraordinary General Meeting approved the issuance of a convertible bond loan of MNOK 200. The loan has an 8 % coupon interest rate and reaches maturity 18.1.2016. On specific terms the Group has a call option that is exercisable from 8.2.2014. Bondholders have continuous conversion rights with an exercise price of NOK 4.97 per share.

The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011. In the Extraordinary General Meeting on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision at the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share. At the Extraordinary General Meeting on 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The capital reduction was registered at the Register of Business Enterprises on 25.10.2012. The reduction amount, MNOK 365, was disbursed to the shareholders at time of the registration. Disbursement per share was NOK 4.2147 per share. Based on the announced repayment of capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price was NOK 5.71, effective on 26.10.2012. On 10.06.2013 the Annual General Meeting decided on a dividend of NOK 1 per share. Based on the announced dividend, the conversion price was adjusted accordingly. The adjusted conversion price is NOK 4.97 per share

The maximum number of shares to be issued at full conversion was 21 542 671, equivalent to a dilution effect of 29 %. During 2011 debt conversions of MNOK 7.5 took place, representing 807 849 new shares. During 2012 debt conversions of MNOK 97.2 have taken place, representing 10 464 876 new shares, and a dividend of MNOK 134.6 was declared. Remaining shares that may be converted at 31.12.2012 were 16 697 898, representing a dilution effect of 16 %. In 2013 a dividend of MNOK 86.5 was declared, increasing the number of shares that may be converted to 19 184 104 shares, representing a dilution effect of 18%. Please find additional information relating to the subordinated convertible loan in Note 9.

THE FOLLOWING COMPANIES ARE INCLUDED IN TTS GROUP CONSOLIDATED FINANCIAL STATEMENTS:

Company	Owner	Ownership interest	Currency		Share capital Number of shares
TTS Handling Systems AS	TTS Group ASA	100 %	NOK	950 000	95 000
Norlift AS	TTS Group ASA	100 %	NOK	500 000	500
TTS Ships Equipment AS	TTS Group ASA	100 %	NOK	2 500 000	2 500
TTS Marine AB	TTS Group ASA	100 %	SEK	2 000 000	2 000
TTS Marine Shanghai Co Ltd	TTS Group ASA	100 %	RMB	200 000	3 500
Hydralift Marine AS	TTS Group ASA	100 %	NOK	100 000	1 000
TTS Cranes Norway AS	TTS Group ASA	100 %	NOK	500 000	1 000
TTS Marine AS	TTS Group ASA	100 %	NOK	3 000 000	1 000
TTS Singapore Pte. Ltd.	TTS Group ASA	100 %	SGD	1 141 813	1 141 813
TTS Greece Ltd.	TTS Group ASA	100 %	EUR	200 000	2 000
TTS Marine Holding AB	TTS Group ASA	100 %	SEK	100 000	1 000
TTS Port & Logistics Holding AB	TTS Group ASA	100 %	SEK	100 000	1 000
TTS Offshore Handling Equipment AS	TTS Group ASA	100 %	NOK	2 000 000	100
TTS NMF GmbH	TTS Group ASA	100 %	EUR	3 000 000	3 000
TTS Poland SP.Z.O.O.	TTS Group ASA	100 %	PLZ	250 000	250
TTS Marine Inc.	TTS Marine AB	100 %	USD	190 000	1 900
TTS Marine GmbH	TTS Marine AB	100 %	EUR	255 646	5 000
TTS Hua Hai AB	TTS Marine AB	100 %	SEK	100 000	1 000
TTS Liftec Oy	TTS Marine AB	100 %	EUR	76 500	1 020
TTS Port Equipment AB	TTS Marine AB	100 %	SEK	100 000	1 000
TTS Marine S.r.l	TTS Marine AB	100 %	EUR	10 400	1 000
TTS Marine Ostrava s.r.o	TTS Marine GmbH	100 %	EUR	310 291	1 000
TTS Marine GmbH Korea Co. Ltd	TTS Marine GmbH	100 %	KRW	1 513 390 000	1 000
TTS Marine Equipment Ltd.	TTS Marine GmbH	100 %	RMB	15 728 611	1 000

Note 11 - Tax

(AMOUNTS IN NOK 1000)

CHANGE IN DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (EXCLUDING NETTING WITHIN THE SAME TAX REGIME):

	1.1.2012	Changes 2012	31.12.2012	Changes 2013	31.12.2013
Deferred tax
Fixed assets	705	-350	355	97	452
Pension fund / liabilities	186	-478	-292	-2 374	-2 667
Credit deduction carried forward	-6 182	-	-6 182	221	-5 961
Allowance carried forward	-1 260	-	-1 260	45	-1 215
Convertible debt	11 611	-5 574	6 037	-1 775	4 262
Tax loss carry forward	-56 523	-5 171	-61 695	7 060	54 635
Net deferred tax (assets = - / liabilities = +)	-51 463	-11 574	-63 037	3 275	59 763
Unrecognized deferred tax assets related tax losses	18 400	6 544	24 944	-3 275	21 669
Unrecognized deferred tax assets related to other temporary differences	5 058	-	5 058	-	5 058
Net deferred tax reported (assets = - / liabilities = +)	-28 005	-5 029	-33 035	-	-33 035

Deferred tax asset related to losses which can be carried forward for tax purposes is recognized if the management believes it is likely that the company can use these against future taxable income.

BREAKDOWN OF DIFFERENCES BETWEEN PROFIT BEFORE TAX AS PER THE ACCOUNTS AND TAX BASIS FOR YEAR:

	2013	2012
Result before tax	96 943	352 128
Permanent differences	102 597	4 408
Change to temporary profit/loss differences	14 196	669
Reversed share of profits/losses in subsidiaries and joint ventures	-202 945	-382 547
Application of loss to be carried forward	-10 791	25 343
Tax basis for year	0	0

BREAKDOWN OF TAX COSTS:

	2013	2012
Tax payable	-	-
Withholding tax from activities outside Norway	23	61
Not allocated deferred tax related to tax losses	3 584	7 283
Other changes to deferred tax	-3 584	-7 283
Tax cost	23	61

EXPLANATION AS TO WHY THIS YEAR'S TAX COSTS ARE NOT 28 % OF PROFIT BEFORE TAX:

	2013	2012
28 % of profit before tax	27 144	98 596
Permanent differences	28 727	1 234
Allocated profit from subsidiaries and joint ventures	-59 478	-107 113
Allocated reduction of deferred tax asset from group	3 607	7 283
Withholding taxes	23	61
Estimated tax costs	23	61

Note 12 - Cash and cash equivalents

(AMOUNTS IN NOK 1000)

	2013	2012
Bank deposits, cash etc. as per 31.12.1)	803	3 147
Deposits (+)/withdrawals (-) from cash pool account system as at 31.12.	-73 870	-22 727

1) Restricted bank deposits per 31.12.2013 were TNOK 207. Of thise TNOK 207 were deposits on tax withdrawal accounts. TTS Group ASA has a bank guarantee for employees 'tax withholdings of TNOK 750.

TTS Group ASA operates a cash pool account system. The group has been granted a group cash pool overdraft facility of MNOK 300. Net drawn at the Group cash pool system as per 31.12.2012 was MNOK 73.9. Net drawn from TTS Group ASA was MNOK 168,2. Drawn from TTS Group ASA which exceeds total drawn is presented as other intra-group liability. Amount classified as intercompany liability is MNOK 94,3. Drawing facilities, security and covenants are described in Note 7, 8, 9 and 10.

Note 13 - Other current liabilities

(AMOUNTS IN NOK 1000)

	2013	2012
Provision for holiday pay	1 624	1 308
Other provisions for costs	17 762	17 340
Total other current liabilities	19 386	18 648

Note 14 - Other operating costs

(AMOUNTS IN NOK 1000)

	2012	2012
Building lease, cost of premises	1 357	1 364
IT costs	1 206	921
Marketing, travel	6 426	4 241
External services	14 233	8 071
Other	5 703	1 692
Total other operating costs	28 926	16 289

Note 15 - Related parties

(AMOUNTS IN NOK 1000)

The subsidiaries (ref Note 5), Investments in joint ventures (ref Note 5), members of the Board (ref Note 1) and members of the Senior Executive Group are considered as related parties. The Group has engaged in many different transactions with subsidiaries and joint ventures.

All transactions were made in the normal course of business at arm's length prices.

	2013	2012
Sales to:
Subsidiaries	33 221	24 090
Joint ventures	-	-

BALANCE SHEET ITEMS RELATED TO PURCHASE AND SALE OF GOODS AND SERVICES:

Information on the Board and Senior Executive Group's shares and options are stated in Note 11.

	2013	2012
Receivables from:
Subsidiaries	5 539	11 631
Joint ventures	-	4 167
Liabilities to:
Subsidiaries	10 146	4 845
Joint ventures	-	-

Information on the Board and Senior Executive Group's shares and options are stated in Note 10.

In addition to the above mentioned transactions and Note 10, there are no further agreements or commitments between the Group and the related parties.

Note 16 - Financial items and exchange rate gains/losses

(AMOUNTS IN NOK 1000)

	2013	2012
Dividend from subsidiaries	180 000	30 000
Contribution from subsidiaries	33 959	21 620
Gain sale subsidiaries	22 945	352 547
Interest income from companies in same group	19 161	28 607
Other interest income	644	4 780
Interest paid to companies in same group	-7 453	-5 416
Interest paid to financial institutions	-19 340	-39 866
Write down shares in subsidiaries	-110 000	-
Other financial costs	-3 970	-19 148
Net exchange rate gains (losses)	9 491	-4 181
Total	125 438	368 943

EXCHANGE RATE GAINS/LOSSES:

Currency differences in the profit and loss account are as follows:

	2013	2012
Currency exchange income	12 819	20 191
Currency exchange costs	-3 329	-24 372
Total	9 491	-4 181

Note 17 - Subsequent events

No significant events regarding TTS Group ASA.

Events regarding the Group are listed in Group note 30.

KPMG AS Telephone +47 04063

Postboks 4 Kristianborg Fax +47 55 32 71 20 Kanalveien 11 Internet www.kpmg.no N-5822 Bergen Enterprise 935 174 627 MVA

To the Annual Shareholders' Meeting of TTS Group ASA

INDEPENDENT AUDITOR'S REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of TTS Group ASA, which comprise the financial statements of the parent company TTS Group ASA and the consolidated financial statements of TTS Group ASA and its subsidiaries. The parent company's financial statements comprise the balance sheet as at 31 December 2013, the profit and loss statement, the cash flow statement and the equity statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

The Board of Directors and the Managing Director's Responsibility for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the parent company financial statements in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway and for the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

	Offices in:
KPMG AS, a Norwegian member firm of the KPMG network of independent	Oslo Alta Arendal Bergen Bodø	Haugesund Knarvik Kristiansand Larvik Mo i Rana	Sandnessjøen Stavanger Stord Straume Tromsø
member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.	Elverum Finnsnes Grimstad	Molde Narvik Røros	Trondheim Tønsberg Ålesund
Statsautoriserte revisorer - medlemmer av Den norske Revisorforening.	Hamar	Sandefjord

Opinion on the separate financial statements

In our opinion, the parent company's financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of TTS Group ASA as at 31 December 2013, and of its profit and loss, its cash flows and changes in equity for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.

Opinion on the consolidated financial statements

In our opinion, the consolidated financial statements are prepared in accordance with the law and regulations and give a true and fair view of the consolidated financial position of TTS Group ASA and its subsidiaries as at 31 December 2013, and of its consolidated comprehensive income, its consolidated cash flows and consolidated changes in equity for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.

Report on Other Legal and Regulatory Requirements

Opinion on the Board of Directors' report and the statements on Corporate Governance and Corporate Social Responsibility

Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors' report and in the statements on Corporate Governance and Corporate Social Responsibility concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.

Opinion on Accounting Registration and Documentation

Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that the management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.

Bergen, 30 April 2014 KPMG AS

Knut Olav Karlsen State Authorised Public Accountant

[Translation has been made for information purposes only]

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CONFIRMATION FROM THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER

We confirm, to the best of our knowledge, that the consolidated annual accounts for the period 1 January to 31 December 2013 have been prepared in accordance with the current accounting standards/IFRS and that theinformation herein gives a true and fair view of the company's and the group's assets, liabilities, financial position and profit as a whole, and that the annual report gives a fair view of the development, results and position of thecompany and of the group, together with a description of the principal risks and uncertainties facing the enterprise.

Bergen, 23 April 2014 Board of Directors of TTS Group ASA

Toril Eidesvik Director

Jan Magne Galåen Director

Mona Lucille Tellnes Halvorsen Director

Anne Breive Director

Björn Andersson CEO & president

Trym Skeie Chairman of the board

Bjarne Skeie Director

Ole Henrik Askvik Director

Gothenburg.

TTS Marine AB, located in Gothenburg, Sweden is designated the RoRo equipment Centre of Excellence.

Companies in the TTS Group

CHINA

TTS Hua Hai Ships Equipment Co Ltd 18th floor, 3255 Zhou Jia Zui Road CN-200093 Shanghai Tel: +86 21 6539 8257 Fax: +86 21 6539 7400 info@tts-huahai.com

TTS Bohai Machinery

(Dalian) Co Ltd Beihai Industrial Park Sujia, Dalianwan Street Ganjingzi District CN-Dalian Tel: +86 411 8711 2670 Fax: +86 411 8711 2702 info@tts-bohai.com

TTS Marine (Shanghai) Co Ltd No.389 GaoDong No 2 Rd GaoDong Industrial Park Pudong CN-Shanghai 200137 Tel: +86 21 5848 5300 Fax: +86 21 5848 5311 office@tts-marine.cn

TTS Marine Equipment

(Dalian) Co Ltd Tuchengzi Cun Dalianwan Street Ganjingzi District CN-Dalian 116034 Tel: +86 411 8711 9663 Fax: +86 411 8711 9678 info@tts-me.cn

FINLAND

TTS Liftec Oy Sorkkalantie 394 33980 Pirkkala Tel: +358 3 3140 1400 Fax: +358 3 3140 1444 sales@tts-liftec.fi

GERMANY

TTS Marine GmbH

Wachtstrasse 17–24 DE-28195 Bremen P.O. Box 104080 DE-28040 Bremen Tel: +49 421 52008-0 Fax: +49 421 52008-20 info@tts-marine.de

TTS NMF GmbH

Neuenfelder Fährdeich 120 21129 Hamburg Tel: +49 40 55 43 61 500 Fax: +49 40 55 43 61 900 info@nmf-crane.de

GREECE

TTS Greece Ltd Akti Miaouli 81 18538 Piraeus Tel: +30 210 42 94 480 Fax: +30 210 42 93 933 info@ttsgreece.gr

ITALY

TTS Marine s.r.l. Ponte Colombo IT-16126 Genova Tel: +39 010 24 81 205 Fax: +39 010 25 43 191 info@tts-marine.it

KOREA

TTS Marine Korea Co., Ltd. #26, Noksansandan 407-ro Gangseo-gu Busan, Korea (618-819) Tel: +82 51 979 5622 Fax: +82 51 979 5610 mail@tts-marine.co.kr

NORWAY

TTS GROUP ASA

Folke Bernadottes vei 38 Postboks 3577 Fyllingsdalen NO-5845 Bergen Tel: +47 55 94 74 00 Fax: +47 55 94 74 01 info@tts-group.no

TTS Handling Systems AS

Holterkollveien 6 P.O. Box 49 NO-1441 Drøbak Tel: +47 64 90 79 10 Fax: +47 64 93 16 63 info@tts-hs.no

TTS Ships Equipment AS

Folke Bernadottesvei 38 P.O. Box 3517, Fyllingsdalen NO-5845 Bergen Tel: +47 55 11 30 50 Fax: +47 55 11 30 60 info@tts-se.no

TTS Marine AS

Barstølveien 26 Servicebox 602 NO-4606 Kristiansand Tel: +47 38 04 95 00 Fax: +47 38 04 93 41 service.krs@tts-marine.no

TTS Offshore Handling

Equipment AS Folke Bernadottesvei 38 Servicebox 3566, Fyllingsdalen 5845 Bergen Tel. +47 55 34 84 00 Fax. +47 55 34 84 01 sales@tts-ohe.com

POLAND

TTS Poland sp. z o.o. Azymutalna 9 , 80 - 298 Gdansk Poland Tel: +48 58 760 30 40 Mob: +48 608 433 846 dorota.morka@tts-group.pl

SINGAPORE

TTS Singapore Ltd 16 Enterprise Road Enterprise 10 Singapore 627699 Tel: +65 68 67 90 70 Fax: +65 62 64 47 30 service@tts-singapore.com

SWEDEN

TTS Marine AB Kämpegatan 3 SE-411 04 Göteborg Tel: +46 31 725 79 00 Fax: +46 31 725 78 00 info@tts-se.se

TTS Port Equipment AB

Kämpegatan 3 SE-411 04 Göteborg Tel: +46 31 725 79 00 Fax: +46 31 725 78 04 info@tts-port.se

USA

TTS Marine Inc 6555 North Powerline Road, Suite #410 Fort Lauderdale, FL 33309 Tel: +1 954 493 6405 Fax: +1 954 493 6409 info@tts-se.us

VIETNAM

TTS Vietnam 6th Floor, Harbour View Building No 4, Tran Phu Street Haiphong City, Vietnam Tel: +84 31 36 86 518 Fax: +84 31 36 86 516

The TTS History

1966

TTS Technology is established and headquartered in Bergen. TTS was originally an abbreviation for Total Transportation Systems.

1974

First Asian contract entered into with China Shipbuilding Corp. TTS already had international relations, and after Norwegian parliament elections in 1977 internationalization becomes part of main strategy.

1988

After several years of recession TTS is close to bankruptcy. The market finally turns around, and a contract with the Kværner Govan shipyard in Scotland becomes an important turning point. The annual accounts show a profit for all TTS companies.

1995

TTS Technology ASA is listed on the Oslo Stock Exchange on the list for smaller and medium sized companies.

1996

TTS acquires Mongstad Engineering in Bergen; a company focusing on technology and solutions for marine cargo handling.

1997

TTS acquires Norlift in Bergen and so takes an important step into the market for marine and offshore cranes.

1998

Johannes D. Neteland is appointed CEO. The company's turnover is MNOK 362 and it has 135 employees.

1999

The Board of Directors adopts a strategy for the «new» TTS, which states that the group should become one of the leading players in the global markets for marine cargo handling over the next five years.

TTS establishes operations in Japan. Two years later the operations are liquidated as a result of negative market developments.

2000

TTS acquires Aktro in Molde and by this enters the market for larger offshore cranes with high performance technology.

2001

TTS acquires Hamworthy KSE - Dry Cargo Division in Gothenburg. The acquisition entails a 50 percent joint venture interest in TTS Hua Hai Ships Equipment in Shanghai in partnership with CSSC.

2004

TTS acquires the crane division of LMG, a company established in 1846, in Lübeck. This complements TTS' crane portfolio and gives access to the German shipbuilding market.

2004

TTS acquires Liftec Products in Tampere, supplier of systems and products for loading and unloading at ports.

2005

TTS acquires Kocks in Bremen, making deck machinery; winches for tankers, container vessels and other cargo vessels, part of the company's product portfolio.

TTS acquires Navciv Engineering in Gothenburg. The company forms the basis of TTS' international initiative relating to linkspans and container terminals.

TTS enters into an agreement for 50 percent joint venture with DSIC, and TTS Bohai Machinery is established in Dalian focusing on the Chinese market for marine cranes.

TTS passes a milestone with MNOK 1,000 in turnover. At the end of the year the company has a workforce of 580 employees and operations in nine countries.

2006

The price of TTS' share increases by 133 percent during the year. Based on solid results a dividend of NOK 1 per share is paid to the shareholders.

2007

TTS acquires Sense EMD in Kristiansand and makes drilling equipment a separate business domain. The company gets two orders for drilling equipment packages total drilling equipment solutions.

TTS makes a «come back» in the offshore cranes market with great success, amongst others as result of acquiring ICD Projects in Ålesund.

2008

TTS reports a turnover of MNOK 4,196, the best in company's history. However, the financial crisis has a great impact on the pre-tax profit.

2009

TTS establishes own services division.

2010

TTS enters into an agreement with DSIC regarding strategic cooperation on deliveries to the offshore industry.

2011

TTS reports best ever result in the company's history.

2012

TTS Energy Division (minus the Bergen offshore department) sold to Cameron int. Corp. TTS acquires Neuenfelder Maschinenfabrik GmbH (NMF) in Hamburg, Germany.

2013

TTS Poland sp. zo.o in Gdansk established. Björn Andersson appointed new CEO.