4	Full circle - one company
6	CEO's letter to shareholders
8	Key Figures 2014
10	Around the year in two pages
12	The Management

14	RoRo, Cruise, Navy
16	Container, Bulk, Tank
18	Multipurpose, General Cargo
20	Offshore
22	Shipyard Solutions
24	Services
26	Through the 30-year circuit
28	Keeping customers in business
30	Towards greener ship recycling

32	Shareholder information
34	The Board of Directors
36	Directors' Report
48	Corporate Governance

55	Annual account TTS Group
119	Annual account TTS Group ASA

Auditor's Report Confirmation from the Board Companies in the TTS Group The TTS history 144 146 148 149

The TTS Group is an acknowledged provider of cargo handling solutions and access systems to the international marine and offshore industries.

Having cooperated with leading shipyards and ship-owners for decades, we have acquired unique experience in the field of cargo and passenger handling – as well as a thorough understanding of our clients' challenges and requirements.

Based on close customer dialogue, top-notch technology and a strong will to innovate, we offer complete ship-type handling solutions and services, adding true value to our customers' operations.

TTS – supporting ship-owners' efficiency for half a century.

To be the preferred supplier in our clients' next newbuilding program.

We bring positive circles into play. Engaging our gears with those of our customers.

Around the clock. Across the globe.

Through the full lifecycle of the vessel.

Spanning a quarter of a century for every ship - from design to green scrapping.

Full circle - One company

The TTS lifetime focus comes naturally. It derives from understanding ships. From catching the fact that a ship is not just a ship – it is a highly specialized tool, constructed to perform a particular task for a specific ship-owner. Through the different cycles of the trade, throughout the entire lifespan of the vessel.

Shipping has always been key to the world's technological development. During the last 50 years, remarkable improvements have been made in the efficiency of sea traffic. Container ships, LNG carriers and car carriers have revolutionized seaborne transport. The complexity of a large cruise vessel or a Post Panamax carrier compares easily to that of a modern airliner.

TTS is determined to play an important role as this development continues.

We are moulding together the unique competence present in our subsidiaries. Constantly seeking new and improved handling solutions, so that all the different components that make up the marine transport system can interact as efficiently as possible.

Enabling us to always meet the demands of even the most challenging newbuilding programme.

Halfway around

This industry is about trust, and trust is what we build. To us a sale is not the completion, but the continuation of an ongoing process. This is why we have chosen "full circle" as the common theme of this annual report.

Circles and cycles are descriptive of our business in so many ways. What we do is most of all about getting the gears of our expertise and technology to engage perfectly with those of our customers. Then you have our will to provide services throughout the full life cycle of a vessel, from the design phase to recycling. When you also consider the movement of the maritime market segments in cycles with peaks and troughs, and our clients' ships constantly circling the waters of the world, the theme came rather naturally.

After heavy losses in 2013, our performance improved in every quarter of 2014. We still have a job to do, but sticking to the core concept of this report, I would say that we are halfway around our major turnaround process. We have entered the upward half of the circle and are on the right track towards profitability.

We achieved a number of important things in 2014. We have cut costs, improved work processes and put into place a new system for corporate sourcing. A new market strategy is also in place,

focusing on complete handling solutions and access systems for key ship types. In South Korea and China, we have further strengthened our market position and manufacturing capability.

In 2015, we focus on three issues. One: The profitability improvement programme continues at full strength. There are still potential cost reductions and value chain improvements to be executed.

Two: Full steam ahead with product innovation and expanding the product portfolio. To exemplify, we already deliver cranes, winches and hatch covers for container ships. There is no reason why we should not also deliver cargo control systems, lashing bridges and lashing gears. Another example is expanding the size range of our trademark AHC cranes. Fitting AHC onto smaller cranes allows for more subsea operations in rougher sea conditions.

Three: Keep moulding TTS together and building a unified corporate culture. Our different subsidiaries possess unique expertise developed through decades, as well as technology considered top-notch in several segments. As global competition gets tougher and size really matters, we have to leverage these assets at the group level. That means utilizing common strengths, building value chains

across the group and – not least – facing the market as a unified whole. Success requires determination for shared ambitions, and I want all of TTS to have the same high-quality stamp. No matter what part of the group a ship-owner's superintendent contacts, we have to show that we thoroughly understand his ship type.

A few words in the end about the most important circle of them all. Our business is indeed part of the greater circuit – our common physical environment. I want that awareness to permeate our organization, making us focus on innovations that will not only benefit our own profitability, but also contribute to greener shipping. Would it not be nice to be able to look back in thirty years' time, knowing that our efforts mattered?

Björn Andersson,

CEO & President, TTS Group ASA

	2014	2013	2012 restated***)	2012*)	2011*)	2010*)

PROFIT AND LOSS ACCOUNT (NOK 1 000)
Operating income	2 453 658	2 693 167	2 369 906	2 928 623	3 545 959	3 240 809
Operating profit/loss before depresiation (EBITDA)	105 215	-130 284	157 331	158 933	198 284	3 712
Operating profit/loss (EBIT)	61 449	-164 098	110 143	96 373	139 134	-48 267
Pre-tax profit/loss**)	62 823	-177 936	462 633	448 387	62 207	-156 103
Net profit/loss**)	17 743	-204 418	454 695	450 421	22 896	-196 656

BALANCE SHEET (NOK 1 000)
Non-current assets	927 014	942 297	898 616	869 721	1 544 438	1 528 039
Current assets	1 484 462	1 282 329	1 451 728	1 480 624	1 984 396	1 923 959
Total assets	2 411 477	2 224 626	2 350 345	2 350 345	3 528 835	3 451 998
Equity	610 362	566 670	794 576	856 195	840 383	802 734
Non-current liabilities	119 479	289 794	175 658	114 038	188 084	545 691
Current liabilities	1 681 636	1 368 162	1 380 112	1 380 112	2 500 368	2 103 572
Total equity and liabilities	2 411 477	2 224 626	2 350 345	2 350 345	3 528 835	3 451 998
KEY RATIOS
FINANCIAL STRENGTH
Equity to assets ratio (as a percentage of total capital)	25,3 %	25,5 %	33,8 %	36,4 %	23,8 %	23,3 %

PROFITABILITY
EBITDA margin	4,3 %	-4,8 %	6,6 %	5,4 %	5,6 %	0,1 %
EBIT margin	2,6 %	-6,1 %	4,6 %	3,3 %	3,9 %	-1,5 %
Profit margin (pre-tax)**)	2,6 %	-6,6 %	1,9 %	15,3 %	1,8 %	-4,8 %
Profit margin (after-tax)**)	0,7 %	-7,6 %	1,5 %	15,4 %	0,6 %	-6,1 %

RATE OF RETURN
Return on equity **)	2,9 %	-36,10 %	5,4 %	54,1 %	7,6 %	-18,0 %
Return on total capital	0,7 %	-7,20 %	1,5 %	3,3 %	4,0 %	-4,4 %
SHARES
Equity per share	7,05	6,54	9,17	9,89	11,10	10,75
Earnings per share (NOK)	0,21	-2,63	0,39	5,42	0,30	-2,76
Number of shares, end of year	86 606	86 606	86 606	86 606	75 690	74 631
Average number of shares	86 606	86 606	83 281	83 281	75 160	71 269
Nominal value, end of year	0,11	0,11	0,11	0,11	0,50	0,50

*) Figures include discontinued business

**) Figures includes profit from discontinued business

***) 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

ORDER BACKLOG (MNOK)

854

Container/Bulk/Tank

Total 3627

Multipurpose/General Cargo

1687

Offshore

254

MNOK	2014	2013
TTS GROUP Turnover	2 453	2 693
EBITDA	105	-130
Order backlog per 31.12	3 627	2 971


RORO/CRUISE/NAVY
Turnover	599	562
EBITDA	77	53
Order backlog per 31.12	854	762


CONTAINER/BULK/TANK
Turnover	422	535
EBITDA	-5	-71
Order backlog per 31.12	1 687	1 056

OFFSHORE
Turnover	572	608
EBITDA	-50	-114
Order backlog per 31.12	254	539
		3 545

MULTIPURPOSE/GENERAL CARGO
Turnover 2 454	2 693 138	374
EBITDA	2 370 -32	-35
Order backlog per 31.12	562	307


SHIPYARD SOLUTIONS
Turnover	192	168
EBITDA	32	18
Order backlog per 31.12	271	308
2014	2013 2012	2011
	Consolidated
SERVICES	Operating income (MNOK)
Turnover	530	446
EBITDA	2 454 96	43

Around the year in two pages

Looking back at 2014

Major turnaround process

Björn Andersson appointed permanent CEO

New contracts, and strong standing in the market.

Operations transferred to Busan, South Korea, Far East market.

New contracts worth MNOK 330 New contracts

worth MNOK 350 in total.

and strengths across TTS

• Following a short period as acting CEO,

• Major turnaround process to improve profitability and competitiveness, focusing on cutting costs, improving work processes, global customer care and group integration in order to utilize synergies

Björn Andersson is appointed permanent CEO of TTS. • A number of new contracts – including one for the delivery of TTS' trademark leg-encircling crane to a yard in Qatar – testify the group's strong standing in the market for marine and offshore heavy lift cranes.

January February March April May June July

Main base for deck equipment operations transferred to Busan, South Korea in order to further strengthen TTS' presence and manufacturing capabilities in the important Far East market.
New contracts worth MNOK 330 regarding equipment deliveries to pure car and truck carriers underline TTS' strong standing in the still vibrant car carrier market.
Strong order intake in other segments as well, with new contracts worth MNOK 350 in total. These include deliveries to a major container terminal in New Jersey, U.S., a state-of-the-art AHC crane to the Norwegian shipyard Kleven, and side-loading systems to the Norwegian fleet operator Sea-Cargo.
Two new Vice Presidents Corporate for Strategic Accounts have been appointed, and a new key account management structure has been built up in order to provide first-rate customer care across TTS.

10 ANNUAL REPORT 2014 TTS GROUP ASA

Q3

The signing of a MNOK 100 contract with leading state-owned shipbuilder SIMA represents a Peruvian breakthrough for TTS and emphasizes the group's position as a world leader in the ship lift and transfer system market.
A large number of orders for multipurpose cranes from Chinese players and contracts for equipping another six car carriers amount to MNOK 370.
New service hubs opened in Houston, Lafayette, USA and Rio de Janeiro, Brazil in order to further strengthen TTS' global service footprint.

Q4

New organizational structure implemented in order to underpin a strategic market approach offering key customers complete ship-type handling solutions and services in a lifetime perspective.
The establishment of a new 50/50 company in China – TTS-SCM Marine and Offshore Machinery Co. Ltd. – marks another important step in the development of the strategic partnership between TTS and China State Shipbuilding Corporation.
TTS signs contracts worth MNOK 250 for heavy lift cranes and equipment for cruise vessels and LNG carriers, including deliveries to Star Cruises' new luxury cruise ship, which will be the first large cruise vessel with all-electric shell doors and drive systems.

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.

HENRIK SOLBERG-JOHANSEN CHIEF FINANCIAL OFFICER

Solberg-Johansen (b. 1966) was appointed CFO in TTS in June 2014, after holding the position of VP Accounting and Control since August 2013. Prior to joining TTS, Mr. Solberg-Johansen has more than 20 years of experience from auditing and consulting. Mr. Solberg-Johansen has a master degree from the Norwegian School of Economics (NHH) and is a State Authorized Public Accountant.

PER CRONER EXECUTIVE VICE PRESIDENT, BUSINESS UNIT RORO, CRUISE AND NAVY

Croner (b. 1960) has been Executive Vice President of Business Unit RoRo, Cruise and Navy, since November 2014. Croner has close to 30 years' experience from the international maritime and shipping industry. Prior to joining TTS in 2010, Croner was President of Stockholm-based ship-owner Wallenius Marine. Croner's experience from the maritime and offshore industry also includes Rolls Royce (ex. Kamewa), GVA and Volvo Penta. Croner holds a Master degree in Naval Architecture from Stockholm.

ARVE TJØNN RINDE

EXECUTIVE VICE PRESIDENT, BUSINESS UNITS OFFSHORE AND MULTIPURPOSE AND GENERAL CARGO

Rinde (b. 1970) was appointed Executive Vice President of Business Unit Offshore in December 2014. As from April 2015 he also holds the same position for BU Multipurpose and General Cargo. Mr. Rinde has extensive operational experience from different positions within the industry, including Aker Solutions, Reinertsen, Aibel & Kværner. Mr. Rinde has an educational background from NTNU, MIT Sloan School of Management and NHH, The Administrative Research Institute (AFF).

STEFAN GLEUEL

EXECUTIVE VICE PRESIDENT, BUSINESS UNIT SERVICES

Gleuel (b. 1966) has been Executive Vice President of Business Unit Services since June 2013. Since 1994, Mr. Gleuel has built 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.

EDGAR BETHMANN

EXECUTIVE VICE PRESIDENT, BUSINESS UNIT CONTAINER, BULK AND TANK

Bethmann (b. 1957) has been Executive Vice President of Business Unit Container, Bulk and Tank since November 2014. Mr. Bethmann has extensive operational experience in the maritime business working for shipyards and its supply industry. Mr. Bethmann has been in various positions in TTS, including President of several TTS companies, EVP of former BU Deck Equipment and Chairman of TTS Bohai and TTS Hua Hai. Mr. Bethmann holds a master degree in mechanical engineering.

Arve Tjonn Rinde

RORO, CRUISE AND NAVY

The business unit "RoRo, Cruise and Navy" provides complete cargo handling solutions for car carriers, RoRo's, Ro Pax, cruise vessels and navy vessels, as well as terminal loading and passenger systems.

RORO

TTS supplies both ship-based and land-based solutions designed to ensure smooth cargo handling. The ship-based equipment includes stern ramps for access to a vessel's main lower and upper decks, as well as ramp covers that provide access to the lower hold and the internal areas of the vessels. TTS also provides large-quarter ramps, internal ramps for distribution of cargo between decks, liftable/hoistable car decks, and watertight ramp covers and bulkhead doors that ensure the required compartmental division for water- and gas-tight integrity.

CRUISE SHIPS

TTS has developed reliable, fast and environmentally friendly doors and platforms optimized for the cruise ship industry, available with either hydraulic or electric operation. TTS also provides land-based logistic systems, such as gangways and provision and luggage handling systems.

NAVAL VESSELS

TTS has a long history of designing and supplying equipment for navies worldwide. Vessel types such as logistics support ships, all types of docking and landing ships and pre-positioning ships are fully covered by the TTS portfolio.

TTS equipment installed on these vessels are ramps of all types, side-loading systems, cranes, deck machinery, hatch covers and internal doors and lifts.

A VIBRANT MARKET

The performance of the RoRo, Cruise and Navy unit reflects the TTS Group's strong position in the vibrant car carrier market. The increase in demand over the last two-three years is due to a number of vessels nearing the end of their expected lifetime, and to the new opportunities provided by the new and wider Panama Canal. TTS has continued to leverage its strong and long-standing relationship with several major players in this specialized niche.

Key figures

Proven solutions and repeat orders from demanding customers within the car carrier market ensure a sound foundation for continued high utilization of unit capacity in the coming quarters. In 2014, TTS also won a number of contracts to equip cruise ships, including one to supply shell doors and electric drive systems for the first large cruise ship to carry all-electric shell doors. The order backlog points to continued high levels of activity in the unit's key markets. 599 562 Turnover NOK Million 599 599 2014 562 2013

2014

17 Percentage of %TTS' turnover

Key figures

Total unit revenue reflects demanding market conditions caused by continued low rates in certain freight segments, and generally lower level of activity at South Korean shipyards. The increase in the order backlog is mainly caused by a strong order intake in the Chinese joint ventures, which hold solid market positions in China with market shares exceeding 50 % for hatch covers and hose handling cranes. Turnover NOK Million 422 2014 535 2013 422 535

2014 2014 2013 1 056

The business unit "Container, Bulk and Tank" offers complete cargo handling solutions for container vessels, tankers and bulkers, including winches, cranes and hatch covers.

CONTAINERSHIPS

TTS supplies a wide range of functional products for the world's container fleet. TTS was early involved in the creation of lift on/ lift off hatch cover systems. Using advanced stress-calculation systems and computer-aided design technology for the steel structure enables these hatch cover panels to accommodate heavier container loads, while keeping panel weights within the permitted maximum for shore crane handling.

BULKERS

Our high-performance solution is a loading/unloading system that provides a range of tools, including options for handling a variety of self-discharge cargoes, thereby streamlining bulk operations considerably. This system is designed to help short-sea shippers load and unload more cargo faster, thus increasing the ships' revenue.

TANKERS

As the world's leading supplier of hose handling cranes for tankers, we know that standardized design and

production cost efficiency are key elements in this market segment. All our cranes are designed in accordance with the Oil Companies International Marine Forum (OCIMF) requirements.

JOINT VENTURES

Two of TTS' joint ventures in China with China State Shipbuilding Corporation (CSSC) and with Dalian Shipbuilding Industry Co. (DSIC) are part of the Container/Bulk/Tank unit. The joint ownership also includes a 20 % stake of Jiangnan (Nantong) TTS Ships Equipment Co. Ltd in China.

CLOSER TO THE KOREAN MARKET

TTS started reorganizing its deck equipment business in 2014. Major operational processes have been moved from Bremen, Germany to Busan, South Korea, getting closer to the Korean customer.

By triangulating its Korean operations with TTS' internal production in Asia and the Centre of Excellence, including research and development, in Germany, TTS meets the market with new strength and a more efficient value chain.

MULTIPURPOSE AND GENERAL CARGO

Key figures

A strong order intake in 2014 indicates that the market for heavy lift cranes is recovering. However, the unit revenue reflects the slow market within the segment for the last 17 years. The EBITDA for 2014 also reflects restructuring costs in Germany and a low degree of utilization within the unit. 374

components, ensuring minimal downtime and full availability of spare parts when needed. While the use of standard building blocks still allows for the flexibility of customization that enables rapid creation of effective solutions.

NEW 50/50 COMPANY IN CHINA

In 2014, a new 50/50 company was established for the development, design, assembly and production of heavy lift marine and offshore cranes.

TTS-SCM Marine and Offshore Machinery Co. Ltd., is jointly owned by TTS NMF GmbH and South China Marine Machinery Co. Ltd., owned by China State Shipbuilding Corporation (CSSC).

2014

Modular construction enables TTS to design and build equipment for diverse applications from standard

The business unit "Multipurpose and General Cargo" supplies heavy lift cranes, mooring winches, hatch covers and sideloading systems for multipurpose vessels and cargo ships.

TTS designs and installs customized solutions alongside a wide range of cargo handling systems, all designed to equip a variety of vessels, from short-sea traders to reefers and specialized combination carriers.

TTS delivers equipment such as hatch covers, cranes designed for various types of cargo loads, and dedicated side-loading systems and

external doors.

The unit's order backlog reflects difficult market conditions in the offshore sector, where uncertainty related to the oil price implies a very cautious approach to new investments. 572 608

OFFSHORE

The business unit "Offshore" supplies all types of cranes for offshore vessels and offshore installations – focusing on offshore cranes and AHC cranes – in addition to hatch covers, moon pool hatches and similar equipment.

TTS is at the forefront of the 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.

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

TTS has developed advanced and reliable system technologies. A comprehensive portfolio of cranes and winches – including advanced active heave compensated (AHC) solutions – puts us in the position to provide tools for a wide range of offshore operations.

DRILLSHIPS AND RIGS

TTS offers a range of cranes for drillships, semi-submersible production units, flotels and jack-ups.

HEAVY LIFT AND OFFSHORE INSTALLATION

As the undisputed leader in the market for heavy lift marine cranes, TTS brings uncompromising reliability and performance to its product designs using premium components and advanced manufacturing and testing procedures.

SUCCESSFUL DESIGN

The successful new leg-encircling crane designed by TTS NMF gained another foothold in the offshore market.

TTS NMF offers the widest range of offshore lattice boom cranes in the market, from SWL 50t to SWL 1500t. The electro-hydraulic leg-encircling crane does not occupy valuable deck area, and features high speeds for hoisting, luffing and slewing in each load step.

The 2014 figures reflect the Shipyard Solutions unit's strong position in a moderately sized market for ship lifts and transfer systems. Future demand for the unit depends largely on the shipyards' need to implement more efficient production lines, and there are currently no signs that the yard industry's focus on restructuring and increased productivity will diminish. Turnover 192 2014 168 2013 192 168

The business unit "Shipyard Solutions" provides ship handling systems and cargo handling systems to shipyards, ports and industry.

TTS ship handling systems are used to move ships from sea-to-land and into repair berths within Newbuilding yards, Repair yards, Navy yards and Re-cycling yards. TTS provides solutions whether it is a ship-lift, floating dock or slipway.

Our Port and Industry cargo handling solutions are designed for efficient handling and safety. The self-loading Translifters & Cassettes handle cargoes from 50 – 200 tons.

For half a century, TTS has been an international leader in the design, construction and installation of material-handling equipment. Our product range for shipyards includes various types of transfer systems, as well as launching and retrieval systems.

When combined with a transfer system, multiple work berths provide efficient and environmentally safe work areas well away from the water, bringing efficiency and improved return on investments to ship repair and building new shipyards around the globe.

TTS are currently developing new solutions which will further improve our customers and TTS competitiveness for the future.

ENTERING NEW MARKETS

An innovative ship-lift, has opened new markets to TTS.

For the past few years, TTS has strengthened its position as a world leader in the market for ship-lifts. After signed a ship-lift contract with the Korean Navy in 2012, TTS in addition has won the six latest contracts up for bids in the open market. Among others with the Vietnamese navy and customers in Brazil and Peru.

The Services unit performed quite strongly in 2014 with an EBITDA margin closing in on the TTS Group's long-term goal for service operations. The unit recorded an all-time high in terms of both revenue and EBITDA.

2014 EBITDA margin (%)

The business unit "Services" offers a complete range of service and maintenance solutions, including spare parts, service interval agreements and lifetime services.

With a worldwide network of strategically located offices and service stations, TTS has a global as well as a local presence.

To support the entire range of TTS' products, we have built a global service and aftersales network of highly qualified maintenance professionals, operating around the clock. Our services are based on a deep understanding of the critical aspects of our customers' business operations. As a result, we supply a powerful combination of service options to our customers, set to handle anything from emergency repairs to comprehensive refurbishments and upgrades during class dockings.

By providing impeccable aftercare, we help our customers get the best possible return on their investment in TTS equipment.

TTS also offers conversion programs that are designed to benefit shipyards and ship-owners in preparing their existing equipment for a viable and competitive future. This includes the adaptation of equipment for use in new ways and for compliance with new rules and regulations.

THREE NEW HUBS

TTS is strengthening its global service footprint by establishing new hubs near key container, shipping and offshore hot spots. In 2014, new service stations were opened in Houston and Lafayette, U.S. and in Rio de Janeiro, Brazil.

In the coming years, TTS will be rolling out three to four new service stations annually to provide a worldwide safety net for our customers.

Of particular importance to TTS' customers in the car carrier segment is our contribution in the early phases of a newbuilding programme.

Through the 30-year circuit

In 1984, TTS made its very first delivery of specialized cargo handling solutions for car carriers. The recipient vessel was Wallenius Lines' M/V Tristan. Thirty years later, we are reckoned a world-leading player in the field. In 2014, TTS won contracts to provide complete handling solutions for no less than twelve new pure car and truck carriers.

Behind this success story lie not only tens of thousands of engineering hours and years of close cooperation with leading shipyards and owners of car carrier fleets. Of equal importance is our strong will to grasp the unique characteristics of various ship types, and the professional challenges and demands of different shipping segments.

Tristan was designed to carry 5,300 cars, and had both side and stern ramps and three hoistable decks. Since she was launched, car carries have become generally larger with wider beams, higher car decks and increased load capacity of both decks and ramps. Electrical operation of moveable equipment has become more common; the vessels are likely to have more moveable decks as well as digitalised and more sophisticated control systems. The giant pure car and truck carriers of the Post-Panamax type hold up to 8,500 cars.

The key theme of the trade is nevertheless the same. The ultimate goal when constructing a car carrier is to strike the optimal balance between the number of vehicles stacked on board and the most efficient loading and unloading. The higher the load capacity, the better the long-term profitability prospects. On the other hand, faster loading allows for shorter port stays and the ability to cross for the next destination at a lower speed, saving fuel and reducing emissions.

Of particular importance to TTS' customers in the car carrier segment is our contribution in the early phases of a newbuilding programme. In the beginning of any car carrier's voyage is a sketch on a drawing board or computer screen, and we know that even small adjustments of ramps and pillars may unlock effects on the profitability margins. Our trademark tools for 3D simulations aid our customers in optimizing the efficiency of complex loading operations even before a steel plate is cut or a single nail hammered.

For Tristan, the voyage is about to end. She has come full circle and is bound for dismantling and recycling. Yet, every end marks a new beginning. TTS is still working closely with Wallenius and other major players in the car carrier segment to develop more efficient and environmental-friendly cargo access solutions. We believe that if you understand ships and are willing to go that extra mile, there is always another newbuilding project waiting around the corner.

THINKING 30 YEARS AHEAD

TTS supports the International Maritime Organization's "Green Passport" initiative. A green passport is a document containing an inventory of all materials potentially hazardous to human health or the environment. The passport is meant to accompany the ship throughout its working life – normally 25-30 years – so that any hazardous materials are properly dealt with during dismantling and recycling. It makes us all think 30 years ahead.

To TTS, services are not mainly about fixing what is broken. It is about minimizing the risk of costly, unscheduled stoppages.

Keeping customers in business

In order to be able to offer our clients the very best lifetime services, we have spent the last two years well. Based on analysis of historical data on the port calls of ships carrying TTS equipment, we are extending our service apparatus to ensure that skilled technicians and spare parts are available wherever and whenever they are needed.

The reason for our efforts is of course that our clients operate in a business where time equals money. The days are long gone when a sailor had a girl in every port. Today's port calls are all about efficiency, about unloading and loading as quickly and safely as possible and then cast off for the next destination in the merrygo-round that is international seaborne transportation.

Yet, as we all know, no matter the quality of the cargo handling equipment, the wear and tear of time, wind, water and heavy lifts will eventually take its toll. The best insurance against unscheduled and costly stoppages is therefore to cooperate with an original equipment manufacturer that also offers seamless customer care throughout the lifecycle of the vessel.

The best remedy when something on board actually is broken, is a partner providing an extensive global network of 24/7 service operations with spare parts available in every time zone. TTS combines these valuable assets.

By combining historical data on port calls with other pieces of information, we get the full picture needed to truly build our services around our customers' demands. We know the likely routes of their ships, what equipment they carry, the age of the ship and the handling equipment, what spare parts they require, when they are due for dry dockings and what kind of engineers and technicians we need in order to

answer in detail to their future service and maintenance demands.

Based on this information, we are extending our global service footprint heavily. Among the world's busiest ports and offshore hubs, we have singled out the ones with the highest port call rate of TTS-equipped vessels. Now we are rolling out new service stations accordingly, at a pace of three to four per year.

To supplement our already strong presence in Europe and the Far East, we opened new service hubs in Rio de Janeiro, Brazil and Houston and Lafayette, U.S. in 2014. Next in line is Antwerp, Belgium and Dubai, United Arab Emirates, which is the largest harbour of the Middle East.

Through these hubs, we offer first-rate services ranging from routine maintenance and emergency repairs to comprehensive refurbishments and full-circle service agreements.

Our customers own or operate the naval workhorses of the world. They keep the merchandise and the goods of the globe flowing. We make sure that they all stay in business. Around the clock. Across the globe. Throughout the full lifecycle of their vessels.

TTS' SERVICE STATIONS

In order to offer first-rate services to all customers anywhere at any time, we are strengthening our global service footprint. Today, TTS has service stations at the following maritime junctions: Gothenburg (Sweden), Busan (South Korea), Bremen (Germany), Bremerhaven (Germany), Shanghai (China), Bergen (Norway), Hamburg (Germany), Drøbak (Norway), Athens (Greece), Singapore, Kristiansand (Norway), Genoa (Italy), Houston (USA), Lafayette (USA), Rio de Janeiro (Brazil). Next in line: Antwerp (Belgium) and Dubai (United Arab Emirates).

Towards greener ship recycling

Careless scrapping of end-of-life ships on the beaches of developing countries claims lives on a weekly basis, and represents numerous environmental hazards. As the support grows for international regulation of shipbreaking, TTS is developing ship lift and transfer systems that will contribute to safer and greener ship recycling.

Being a ship-breaker on the beaches of Bangladesh or its neighbouring countries is considered one of the most dangerous jobs on the entire planet, associated with severe pollution and unsafe working conditions. Huge tankers and container ships are beached during high tides, and scrapped on the shorefronts with few safety precautions by workers who literally tear the vessels apart with hand tools only. Lives are lost on a weekly basis, and daily accidents cause severe damages.

After oils and other liquids are siphoned out and the machinery and fittings stripped down to the copper wirings, acetylene torches are used to slice the carcass into pieces. Fires, explosions and falls from great heights occur regularly; workers get crushed under falling steel plates and suffocate in pockets of poisonous fumes.

As the ships may also contain toxic waste such as PCBs, heavy oil, asbestos and oil residues, poison soaks into the land and pollutes the water. Storing and removing hazardous materials is simply impossible on beaches where the tide constantly washes in.

Of the 1026 large ocean-going vessels taken out of service in 2014, 641 were scrapped at beaching facilities in Bangladesh, India and Pakistan. The figures are according to the Brussel-based NGO Shipbreaking Platform, a global coalition of non-governmental organisations working for safer and cleaner shipbreaking.

TTS is aware that there is no quick fix to this ominous situation. It is too closely intertwined with poor economic conditions in part of South Asia and with players from major shipping nations changing the flag of their vessels shortly before scrapping, making them objects of speculation for international brokers dealing in outdated ships.

Still, a situation being challenging cannot possibly be an argument for doing nothing.

Based on our world-leading expertise in ship lift and transfer systems, we offer means that will contribute to safe and sound ship recycling. With our solutions, the ship is placed on a steel supported platform while still in the water, lifted onto dry land where the tides cannot reach it and placed on a rail-based or wheel-going transfer system that can take it to an approved yard for recycling.

There is still a long way to go before the majority of the world's leading shipping nations has ratified and acted on the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships from 2009. Nevertheless, we believe that the combined forces of public attention, legislative initiatives and the conscience of ship-owners worldwide will make an impact. It all comes down to the fact that every human being is irreplaceable and that every industry is part of a larger circuit – our common physical environment.

NORWEGIAN SHIP-OWNERS INCREASINGLY AVOID BEACHING

According to NGO Bellona, one of the founding members of the Shipbreaking Platform, the work towards stopping Norwegian ship-owners from choosing careless scrapping on the beaches of South Asia is fruitful. In 2014, six Norwegian vessels were beach-scrapped, compared to twenty-one in 2013. Norwegian ship-owners are more frequently using recycling yards in China, Turkey and Denmark as end-destination for their vessels.

Based on our world-leading expertise in ship lift and transfer systems, we offer means that will contribute to safe and sound ship recycling.

Shareholder information

MARKET CAPITAL DEVELOPMENT (NOK)

SHARE PRICE PERFORMANCE

Date	Change in shares	Market price (NOK)	Dividend pr. share (NOK)	Earnings per share	Equity per share	P/B	Number of shares ('000)	Market capitalization value (MNOK)
	Subscription public offering	46,00	-				1 911	88
03.05.95	Introduced at Oslo Stock Exchange	53,00	-				1 911	101
31.12.95	Share split 1:2	25,24	-	0,05	14,68	1,72	3 822	96
31.12.96	Private placement	29,26	-	-2,64	12,50	2,34	4 292	126
31.12.97	Private placement	29,26	-	4,46	11,90	2,46	5 146	151
31.12.98	Private placement	10,97	-	0,02	11,98	0,92	5 361	59
31.12.99	Private placement	10,24	-	0,97	13,81	0,74	5 861	60
31.12.00	Private placement	17,92	-	-0,27	15,31	1,17	6 873	123
31.12.01	Private placement	12,44	-	0,60	15,05	0,83	6 988	87
31.12.02	Private placement,	5,67	-	0,83	15,64	0,36	14 846	84
31.12.03	Private placement	7,56	-	0,04	15,07	0,50	14 846	112
31.12.04	Private placement	14,13	-	0,70	17,05	0,83	16 315	231
31.12.05	Private placement	23,43	-	2,19	19,63	1,19	20 116	471
31.12.06	Private placement	52,90	-	2,92	26,58	1,99	22 493	1 190
31.12.07	Private placement	73,32	1,00	3,07	36,27	2,02	25 738	1 887
31.12.08	Private placement	12,47	1,25	1,41	38,18	0,33	25 908	323
31.12.09	Public placement, NOK 6.00 per share	5,70	-	-5,72	13,78	0,41	67 908	387
31.12.10	Private placement, NOK 6,00 per share	7,60	-	-2,76	10,76	0,71	74 631	567
31.12.11	Converted bond debt NOK 9,28 per share	9,47	-	0,30	11,10	0,85	75 691	717
31.12.12	Converted bond debt NOK 9,28 per share	9,40	5,77	5,47	9,89	0,95	86 606	814
31.12.13		6,21	1,00	-2,36	6,54	0,95	86 606	538
31.12.14		4,75	-	0,21	7,05	0,67	86 606	411

20 LARGEST SHAREHOLDERS *) TRADE IN TTS SHARES

Shareholder	Shares	%	Country
RASMUSSENGRUPPEN AS	11 512 506	13,29 %	NOR
SKEIE TECHNOLOGY AS	8 929 879	10,31 %	NOR
LESK AS	5 306 058	6,13 %	NOR
STISK AS	5 306 058	6,13 %	NOR
SKEIE CAPITAL INVESTMENT AS	4 203 361	4,85 %	NOR
BARRUS CAPITAL AS	3 465 005	4,00 %	NOR
SKANDINAVISKA ENSKILDA BANKEN AB	3 204 552	3,70 %	FIN
SKAGEN VEKST	3 055 946	3,53 %	NOR
HOLBERG NORGE	2 166 816	2,50 %	NOR
TAMAFE HOLDING AS	2 160 735	2,49 %	NOR
ODIN MARITIM	2 158 443	2,49 %	NOR
HOLBERG NORDEN	1 980 000	2,25 %	NOR
PIMA AS	1 942 566	2,24 %	NOR
MERTOUN CAPITAL AS	1 769 598	2,04 %	NOR
UBS AG, LONDON BRANCH	1 741 489	2,01 %	GBR
ITLUTION AS	1 475 261	1,70 %	NOR
SKANDINAVISKA ENSKILDA BANKEN	1 422 766	1,64 %	SWE
SKEIE CONSULTANTS AS	1 253 033	1,45 %	NOR
VERDIPAPIRFONDET DNB SMB	834 180	0,96 %	NOR
EUROCLEAR BANK S.A./N.V. ('BA*)	747 854	0,86 %	BEL
Total, 20 largest shareholders	64 606 106	74,57 %
Other	21 999 554	25,43 %
Total	86 605 660 100,00 %

*) As of April 15, 2015

Number of shares (1000)

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 is currently 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 in Hydralift. Skeie holds the equivalent of a Master's degree from the Norwegian School of Economics (NHH), and a MSc. from the Norwegian University of Science and Technology (NTNU).

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 achivements 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 has been member of the board of TTS Group ASA since 2008.

MARIANNE SANDAL DIRECTOR

Sandal (b. 1965) is Vice President Road User Charging in Q-Free ASA. She holds a Bachelor as Mechanical Engineer from Bergen University College and has further education in economics and management from BI Norwegian Business School. From 1988- 2006 Sandal was employed at Nera ASA and Nera Networks AS in several positions with focus on business development, sales and project management, including heading Nera Networks worldwide Operations activities.

Sandal has been member of the Board of TTS Group ASA since 2014.

TORIL EIDESVIK DIRECTOR

Eidesvik is an independent board member and consultant. She holds a Master's in Law from the University of Oslo and has qualifications in Management from BI Norwegian Business School. Eidesvik has long and various executive management experience from the shipping industry. Eidesvik is a licensed lawyer, and practised as such from 1994 to 2002. Eidesvik has extensive board experience, i.a. from Solstad Offshore ASA.

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

JAN-MAGNAR GRØTTE DIRECTOR

Jan-Magnar Grøtte (b. 1953) is head of R & D Business Development at Business Unit Offshore. He came from the position as General Manager of TTS Ships Equipment AS, and has held various management positions within TTS since 1992. Grøtte holds a degree in Engineering from Bergen Ingeniørhøyskole (Bergen University College), and has further qualifications within economy, sales and leadership.

Grøtte has been employee elected member of the Board of TTS Group ASA since 2014.

ANITA KRÅKENES DIRECTOR

Anita Kråkenes (b. 1971) is project controller at TTS Marine AS. She joined TTS in 2011, and has previously also worked as spare parts coordinator. Kråkenes is educated within marketing and has further qualifications in Psychology and Service Management.

Kråkenes has been employee elected member of the Board of TTS Group ASA since 2014.

The Board of Directors of TTS Group (top left clock wise): Jan-Magnar Grøtte, Toril Eidesvik, Bjarne Skeie, Anita Kråkenes, Trym Skeie and Marianne Sandal Photo: Øystein Klakegg

Directors' Report 2014

2014 was above all a result of the major turnaround process over the last years in TTS Group ASA. After a sharp decline in profitability and poor results in 2013, the performance improved considerably in the latter part of 2014. The operating results are still far from satisfactory, but improved figures for four consecutive quarters give the Board reason to believe that TTS Group is on the right track towards a solid foundation for future profitable growth.

Group EBITDA for the year amounted to MNOK 105, an improvement of MNOK 235 compared to 2013. Adjusted for a one-time effect of MNOK 101 related to pension plan changes in the group's Norwegian companies, EBITDA still improved by MNOK 134 compared to the previous year.

Total group revenue was MNOK 2.454, down 9 % compared to 2013. The decrease primarily reflects reduced levels of activity within the merchant vessel segment at South Korean yards and a non-anticipated delay in the market for marine heavy lift cranes, as well as higher levels of activity in the JVs, whose revenue is not consolidated.

A sharp decline in oil prices has also led to a significant reduction in order intake and activity levels for the offshore business.

On the other hand, TTS experienced an all-time high when it comes to turnover for its service operations, as well as increased sales revenue and enhanced market share in the car carriers market.

Group profit before tax was MNOK 23 in 2014, an improvement of MNOK 224 compared to 2013. The order backlog, including 50 % of the joint ventures, grew considerably from MNOK 2.971 at the end of 2013 to MNOK 3.627 in 2014, mainly caused by a strong order intake in TTS' joint ventures in China.

TTS made strong efforts in 2014 to reduce both direct and indirect costs through improving work processes, establishing cost-efficient value chains and utilizing synergies across the group. Tough and challenging decisions were required, especially regarding workforce adjustments needed to align ourselves with the market downturn in the offshore industry.

Significant corporate actions were also initiated in 2014. One central decision was to transfer the main office for deck equipment operations from Germany to South Korea, in order to be closer to the end market. Furthermore, TTS enhanced our strong base in China by creating a 50/50 company – TTS-SCM Marine and Offshore Machinery Co. Ltd. in Southern China. This marks another important step in the development of strategic partnerships between TTS and China State Shipbuilding Corporation. The new company is expected to strengthen TTS' position in the Chinese market for marine heavy lift cranes.

Further utilization of the advantages of combining European first-rate design and engineering with a strong Asian cost and manufacturing base will also be our highest priority in the upcoming period.

The TTS Group made important progress in implementing a new market approach with a clear potential to increase TTS' market share and increase the value per contract. Across the Group the focus is turned from single-product sales to promoting complete ship-type equipment packages and system solutions for key customers. A global structure of key account managers has been established in order to nurture long-term relationships with the most important players within the maritime and offshore industries.

While the Board acknowledges that the TTS Group is still in the midst of a comprehensive turnaround, it is at the same time confident that the efforts made in 2014 will strengthen the company's competitive position in the Far East market, where most of the marine and offshore construction building will take place.

Target and strategy

The TTS Group's main objective is to design, develop and supply high-quality handling systems and services for the global maritime and offshore industries. TTS aims to create value and increase efficiency for our customers through a dedicated focus on product quality, efficient project execution and customeroriented services, combined with an innovative approach towards utilizing new technology.

TTS has a long-term business target of building up a NOK 6 billion system within the global maritime and offshore industry by 2020, and to be recognised by the market for customer-oriented service. The group mainly pursues an organic growth strategy based on increased value of sales per contract and capture of market share.

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

To always be considered a potential supplier in emerging and existing projects, and achieve a market share above 30 % in all our targeted markets.
To have a product technology among the top three in all segments where TTS compete.
To be a provider of complete, full life-cycle handling solutions and services for our targeted markets.
To establish a profitability level in line with the industry average.

In order to achieve these objectives, the TTS Group focuses on the following main strategic lines:

Leveraging the group's strong market and cost position in China further, including further development of the strategic partnerships with the major state-owned shipbuilders and increased co-operation with Chinese partners within manufacturing.
Switching from product focus to ship-type focus, including expanding the product portfolio per asset type and providing complete solutions and services for important vessel types within our targeted segments.
Enhanced services through rolling out strategic service hubs around major clusters of customer bases. Laying the foundation for long-term customer relationships through service interval and lifetime services agreements.
Continued focus on cost reduction through the execution of internal efficiency tasks and structural changes in sourcing, workflow and integrated value chains.

Operations and divisions

The TTS Group runs a worldwide operation and has subsidiaries in 13 countries: Brazil, China, Finland, Germany, Greece, Italy, Norway, Poland, Singapore, South Korea, Sweden, USA and Vietnam.

TTS implemented a new business structure in November 2014, and organized its operations into six asset type-oriented business units. The first three units, RoRo/Cruise/Navy, Container/Bulk/Tank and Multipurpose/General Cargo, address the main shipping segments, while the Offshore unit addresses the offshore vessel and rig market. The ship lift and transfer systems for shipyards are addressed by the business unit Shipyard Solution. The last unit, Services, offers worldwide services and after-sales for the complete range of TTS' products across all business units.

RORO/CRUISE/NAVY

The RoRo/Cruise/Navy unit provides complete cargo handling solutions for RoRo vessels, car carriers, cruise ships, passenger ferries and navy vessels, as well as systems for terminal loading and passenger access. The product portfolio includes external and internal ramps, covers and doors, hydraulic and electric drive systems, hoistable decks, passenger gangways and linkspan systems as well as systems for auto mooring.

The unit previously reported as part of the former Marine division.

CONTAINER/BULK/TANK

The Container/Bulk/Tank unit delivers complete cargo handling solutions for container ships, tankers and bulk carriers. The product range encompasses winches, davits, cranes and hatch covers.

Two of TTS' joint ventures in China are part of the Container/Bulk/Tank unit. TTS owns 50 % of TTS Hua Hai Ships Equipment Co. Ltd. with partner China State Shipbuilding Corporation (CSSC), and 50 % of TTS Bohai Machinery Co. Ltd. with partner Dalian Shipbuilding Industry Co. (DSIC). Furthermore, TTS Hua Hai Ships Equipment also holds a 40 % stake in Jiangnan (Nantong) TTS Ships Equipment Co. Ltd. The unit was earlier reporting as part of the former Marine division.

OFFSHORE

The Offshore unit supplies handling systems to the offshore-based energy industry and its supporting service industry. The unit addresses handling equipment for offshore construction and support vessels, as well as for drilling, accommodation and service units and heavy lift and utility ships. The product range includes offshore cranes, AHC cranes, mooring winches, internal and external covers and doors.

The unit previously reported as part of the former Offshore and Heavy Lift division.

MULTIPURPOSE/GENERAL CARGO

The Multipurpose/General Cargo unit delivers handling systems for multipurpose vessels and cargo ships requiring special operating capabilities. The products include heavy lift cranes, side-loading systems, hatch covers and mooring winches.

In December 2014, TTS NMF GmbH, a subsidiary of the TTS Group, and South China Marine Machinery Co. Ltd., owned by China State Shipbuilding Corporation (CSSC), established a new 50/50 company: TTS-SCM Marine and Offshore Machinery Co. Ltd. The new company will provide heavy lift marine and offshore cranes for a growing Far East market, and the establishment marks another important strategic step in the development of the strategic partnership between TTS and CSSC.

The unit earlier reported as part of the former Offshore and Heavy Lift division.

SHIPYARD SOLUTIONS

The Shipyard Solutions unit provides ship lift and transfer systems, as well as complete production lines for shipyards and other industries. The product range also includes translifters and multiwheelers. The unit previously reported as part of the former Marine division.

SERVICES

The Services unit offers worldwide maintenance and repair services for the full range of TTS' products across all business units, including spare parts, service interval arrangements and lifetime services. TTS is strengthening its global service footprint by establishing new hubs near main container, shipping and offshore areas, and opened new service stations in Houston and Lafayette, USA, and Rio de Janeiro, Brazil, in 2014.

The unit previously constituted the former Services division and reported as such.

The TTS Group

The parent company of the group, TTS Group ASA, is located in Bergen, Norway, and is listed on the Oslo Stock Exchange with the ticker code TTS.

The group operates on a worldwide basis and had 1053 employees at the end of 2014, in addition to a temporary staff of 116. 2014 was a year when the staff was reduced in the European high-cost countries and operations were built up in China and South Korea, in line with TTS' strategy to strengthen activities in the all-important Far East market.

GEOGRAPHICAL BREAKDOWN OF EMPLOYEES

Review of the annual accounts

	Full Year
MNOK	2014	2013
Turnover	2 454	2 693
EBITDA*	105	-130
Operating profit	61	-164
Net financial items	-38	-37
Profit/loss before tax	23	-201
Net result continued business	-22	-227
Total net result included divested business	18	-204

* The 2014 figures include a one-time effect of changes in the pension plan for the group's Norwegian companies. The effect amounts to MNOK 101.

Total group turnover in 2014 was MNOK 2,454, representing a 9 % decrease compared to 2013. The main causes for the decrease of revenue are less activity at South Korean yards due to falling demand for certain merchant vessels, a slow market for heavy lift cranes, less activity within the offshore segment, as well as the effect of more activity being performed in the joint venture companies, out of which only the net profit from the joint ventures is included in the group accounts.

The decreased volumes, however, were offset by reduced operational costs and reduced losses on projects compared to 2013. EBITDA for 2014 amounted to MNOK 105; up from a loss of MNOK 130 the previous year. Pension plan changes in the Norwegian companies had a positive one-time EBITDA effect of MNOK 101, while improved margins in all business units explain the remaining MNOK 134 of the increase in operating profit.

TTS' Services unit in particular contributes positively to the result, while low utilization in the Container/Bulk/ Tank, Multipurpose/General Cargo and Offshore units – as well as poor project performance in some large projects – still causes a drag in overall profit.

Due to increased interest bearing debt, as well as waiver fees paid to the banks, the TTS Group's interest costs increased compared to 2013. This was largely offset, however, by exchange rate effects, giving a net finance cost on par with 2013.

The sale of the drilling business that was completed in 2012 resulted in an additional earn-out of MNOK 23 in 2013. No earn-out was paid for 2014. Based on information available, the investment in Sigma Drilling AS is valued at NOK 1 per 31 December 2014. The Board means that there is a considerable upside related to ongoing negotiations between Sigma Drilling and STX regarding the cancelled contract.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Total assets at the end of the 4th quarter of 2014 was MNOK 2,304, an increase of MNOK 79 since 2013. The change is mainly due to increased receivables and works in progress. Net working capital has increased by approximately MNOK 165 during 2014. The net working capital is negative with MNOK 35.

Increased net working capital has resulted in an increase in net interest bearing debt by MNOK 170, to MNOK 262 in 2014. At the end of the 4th quarter of 2014, the TTS Group has drawn MNOK 100 of in total MNOK 100 of the 3-year term loan facility in the bank agreement established in December 2012. In addition, the group has drawn MNOK 123 from the MNOK 300 overdraft facility.

Covenants for both equity ratio and 12 months' rolling EBITDA related to the debt facilities with Nordea and DNB have been renegotiated in the 4th quarter of 2014. Please refer to the section Risk factors and risk management/Financial risks below.

There were no conversions in the subordinated convertible bond in 2014.

Financial fixed assets were MNOK 103 at the end of 2014, compared to MNOK 133 at the end of 2013. The assets consist of the TTS Group's investments in Sigma Drilling AS and the joint ventures in China.

The Group's net deferred tax liability was MNOK 0 at the end of 2014, consisting of gross deferred tax assets of MNOK 31 and gross deferred tax liability of MNOK 31.

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 may impact the group's operating results. TTS therefore strives to reduce its exposure to currency fluctuations by using hedging instruments. For additional information, please refer to the Accounting principles, section 3.1a.

The annual accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. The Board affirms that the accounts provide a true and fair view of the company's financial position as of 31 December 2014. The Board is not aware of any unreported events occurring subsequent to the balance sheet

date of 31 December 2014 that may be of material significance to the TTS Group or to the annual accounts of 2014. See Note 30; Subsequent events, for further information.

At the end of 2014, 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 112,882 of its own shares.

CASH FLOW

The TTS Group had a negative net cash flow of MNOK 21 in 2014. Cash flow from operations was negative with MNOK 150, attributable mainly to losses within offshore projects and building up working capital within Roro/Cruice Navy. This represents the main difference between the negative cash flow from operations and the EBITDA of positive 105 minus the change of pension plan, which does not influence the cash flow.

Net cash flow from investments in 2014 was positive with MNOK 27. The main factors influencing the cash flow from investments were dividends of MNOK 4 from the joint ventures, dividends of MNOK 23 from Sigma Drilling and an additional MNOK 40 originating from the sale of the drilling business in 2012. Investments in fixed assets in 2014 amounted to MNOK 46.

During 2014, the TTS Group has incurred an additional MNOK 115 of debt and paid net interests on debt amounting to MNOK 33.

At the end of 2014, TTS has a nominal net interest bearing debt of MNOK 255 and unused available credit facilities of MNOK 177, in addition to a cash reserve of MNOK 131.

TTS paid no dividends to its shareholders in 2014.

RESEARCH AND DEVELOPMENT

Total capitalized investment in R&D in 2014 was MNOK 0 (In 2013 MNOK 2.7, which mainly relates to the development of offshore cranes). The group has significant development activities through projects, which is charged as a project expense.

ORDER BACKLOG

The order backlog at the end of 2014 amounted to MNOK 3,627, up from MNOK 2,971 at the end of 2013. The figure includes 50 % of the order backlog of TTS' joint ventures in China.

CONTINUED OPERATION

As of 31 December 2014, TTS' equity ratio was 25.3 %, compared to 25.5 % the previous year. Net interest bearing debt amounted to MNOK 263, using the nominal value of the convertible bond. The Group strive to have sufficient cash reserves or credit options so as to be able to, at any time, finance operations and investments throughout the year, in accordance with the Group's strategy plan. The Group has bonding and overdraft facilities with Nordea and DNB which mature in the 4th quarter of 2015. TTS Group has initiated a process to prepare for the renewal of the facilities. The Group's bond loan expires in the 1st quarter of 2016. The Group does not expect any problems in renewing the loan agreements or negotiating alternative financing agreements upon expiry of the current agreements.

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

Business areas

The TTS Group reports its operations in six separate business segments: RoRo/Cruise/Navy, Container/ Bulk/Tank, Offshore, Multipurpose/General Cargo, Shipyard Solutions and Services.

RORO/CRUISE/NAVY (RCN)

	Full Year
MNOK	2014	2013
Turnover	599	562
EBITDA	77	53
EBITDA margin (%)	12.9	9.4
Order backlog	854	762

The performance of the RCN unit reflects the TTS Group's strong position in a vibrant market for car carriers. The increase in demand for the last two-three years is due to a need for fleet renewal, as a number of vessels are near the end of their expected lifetimes, as well as the new opportunities provided by the new and wider Panama Canal. TTS has continued to leverage its strong and longstanding relationship with several major players in this specialized niche.

Total revenue for the unit was MNOK 599 in 2014, up from MNOK 562 the previous year. The RCN unit recorded a sound profit in 2014, with an EBITDA of MNOK 77. The order backlog points to continued high levels of activity in the unit's key markets, increasing from MNOK 762 at the end of 2013 to MNOK 854 in 2014.

CONTAINER/BULK/TANK (CBT)

	Full Year
MNOK	2014	2013
Turnover	422	535
EBITDA	-5	-71
EBITDA margin (%)	-1.1	-13.2
Order backlog	1 687	1 056

Although the CBT unit shows strong improvement compared to 2013, the financial performance is still below expectations. Total unit revenue decreased from MNOK 535 in 2013 to 422 in 2014, reflecting demanding market conditions caused by continued low rates in certain freight segments, and generally lower activity at South Korean shipyards.

The CBT unit recorded an EBITDA loss of MNOK 5 in 2014, yet a substantial improvement compared to a loss of MNOK 71 the previous year. TTS' joint ventures in China contribute to the unit's EBITDA with a profit of MNOK 14. TTS has initiated measures to improve the results in TTS Bohai.

Fierce competition and falling prices in the market for deck equipment constitute a challenge for the unit's long-term profitability, and in order to face this challenge head on, TTS has decided to move unit headquarters from Bremen, Germany to Busan, South Korea in order to serve the world market outside China. The transfer process, which entailed downsizing in Germany, will be completed by the end of 2015. Restructuring costs related to the transfer had a MNOK 13 negative impact on unit results in 2014, but TTS expects the reorganization to contribute to a more sustainable and competitive business in the longer term.

The order backlog, including 50 % of the order backlog from the Chinese joint ventures, grew from MNOK 1,056 in 2013 to MNOK 1,687 at the end of 2014. The increase is mainly driven by strong order intake in TTS' Chinese joint ventures, which serve the Chinese market. The joint ventures hold solid market positions in China with market shares exceeding 50 % for hatch covers and hose handling cranes. The market shares for winches and cargo cranes grew as well, and it is worth noting that total revenue for the Chinese joint ventures was around MNOK 1,000

OFFSHORE

	Full Year
MNOK	2014	2013
Turnover	572	608
EBITDA	-50	-114
EBITDA margin (%)	-8.7	-18.7
Order backlog	254	539

Although the results improved compared to 2013, the Offshore unit's performance in 2014 is unfortunately still influenced by significant cost overruns on a number of projects.

The unit recorded a turnover of MNOK 572, slightly down from the previous year, and an EBITDA loss of MNOK 50, significantly up from a loss of MNOK 114 in 2013. Pension plan changes in TTS' Norwegian entities have a positive one-time EBITDA effect of MNOK 37.

The unit's order backlog fell sharply from MNOK 539 in 2013 to MNOK 254 in 2014, reflecting difficult market conditions in the offshore sector, where uncertainty related to the oil price implies a very cautious approach to investments in new ships or rigs.

TTS has implemented strong cost-reducing measures in order to adjust the unit's capacity to the current market slow. A substantial restructuring was undertaken in 2014. New adjustments are done in 2015 in order to match capacity with the order backlog and the market conditions, including merging the two Norwegian entities TTS Offshore Handling Equipment AS and TTS Ships Equipment AS. Based on market feedback on TTS' performance and on the reliability of TTS' advanced offshore cranes, the segment is still considered to have a positive longterm potential.

MULTIPURPOSE/GENERAL CARGO (MPGC)

		Full Year
MNOK	2014	2013
Turnover	138	374
EBITDA	-32	-35
EBITDA margin (%)	-23.2	-9.2
Order backlog	562	307

The MPGC unit revenue, decreasing sharply from MNOK 374 in 2013 to MNOK 138 in 2014, reflects the segment's market slow for the last couple of years. The EBITDA for 2014 is still influenced by restructuring costs in Germany and by low utilization within the unit.

On the positive side, the strong order intake in 2014 indicates that the market for heavy lift cranes is recovering. The unit's order backlog grew from MNOK 307 at the end of 2013 to MNOK 562 in 2014.

The cost cuts initiated in 2013 have laid the foundation for sound future operations in the unit, which has a strong market reputation and is in position to benefit from the expected market growth. In December 2014, TTS NMF GmbH and South China Marine Machinery Co. Ltd., controlled by the leading state-owned corporation China State Shipbuilding Company (CSSC), established a new Chinese 50/50 company

within the heavy-lift segment. The establishment marks another important step in the strategic partnership between the TTS Group and CSSC, and will strengthen TTS' position in the Chinese market.

SHIPYARD SOLUTIONS

	Full Year
MNOK	2014	2013
Turnover	192	168
EBITDA	32	18
EBITDA margin (%)	16.9	10.5
Order backlog	271	308

The 2014 figures reflect the Shipyard Solutions unit's strong position in a moderately sized market for ship lifts and transfer systems. The turnover was MNOK 192, an increase of MNOK 24 compared to 2013. The EBITDA, increasing from MNOK 18 to MNOK 32, was affected positively by pension plan changes in TTS' Norwegian companies. Adjusted for this one-time item, the profitability of the underlying operations was in line with 2013.

The order backlog decreased slightly compared to 2013, but still represents a sound operational foundation for the coming quarters. Future demands for the unit depend largely on the shipyards' need to implement more efficient production lines, and currently there are no signs that the yard industry's focus on restructuring and increased productivity will diminish.

SERVICES

	Full Year
MNOK	2014	2013
Turnover	530	446
EBITDA	96	43
EBITDA margin (%)	18.2	9.7

The Services unit performed strongly in 2014, with an EBITDA margin closing in on the TTS Group's longterm goal for service operations. The unit recorded an all-time high in terms of both revenue and EBITDA. Unit revenue was MNOK 530, an increase of 19 % compared to 2013. EBITDA for 2014 amounted to MNOK 96, up by MNOK 53 compared to the previous year. Adjusted for the positive one-time effect of MNOK 37 related to pension plan changes, the unit still reports an improvement in profitability of 37 % compared to 2013.

The unit has made thorough analyses of the world's major ports and offshore hubs in order to single out the ones with the highest port call frequency of TTS-equipped vessels, and establish new operations accordingly. In 2014, new service stations opened in Houston and Lafayette, USA and in Rio de Janeiro, Brazil.

The acitvity in the Services segment provides a basis for continued growth with regards to turnover and increased profitability for the TTS Group. However, parts of the service market remain influenced by low ship charter rates in some segments.

Risk factors and risk management

The TTS Group is exposed to various market, financial and operational risks.

The Board reviews operating reports from the management on a monthly basis. In addition to the continuous risk mitigation, the Board and the management carry out specific risk analyses in connection with major investments and contracts. 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, a number of enquiries, and by monitoring relevant available information on trends such as the number of vessels contracted, shipyard utilization indicators, charter development, investment trends and oil prices.

Contracting 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 supply and demand in the marine market, rather than the contracting activity.

At the beginning of 2015, the TTS Group has secured sound order backlogs for most of its businesses within the marine sector. Scheduled deliveries for the main part of the current contract obligations range from three months to two years. For the offshore sector, the fall in oil prices has led to significantly less demand for new equipment, reducing the order backlog for TTS' Offshore unit considerably. Although the Offshore unit has acted to adjust capacity to the current market picture, the market risk has increased significantly during the latter part of 2014. For all TTS' business units, uncertainties related to the global economy, the oil price and the credit market indicate risks relating to cancellation or postponement of orders.

FINANCIAL RISK

TTS is exposed to credit-, liquidity- and currencyrelated 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 are substantial credit risks, the TTS Group has taken measures to limit these risks through restricting credit and evaluating the financial sustainability of its contract partners. TTS works continuously to limit its exposure to credit risks.

Covenants for both equity ratio and 12 months rolling EBITDA related to the debt facilities with Nordea and DNB have been renegotiated in the 4th quarter of 2014. The new equity covenant requires an equity portion of 20.0 % at all times. Nominal value of remaining bond debt is to be included in the basis for the calculation.

The rolling 12-month NIBD/EBITDA covenant has been waived until Q4 2015. In the period Q4 2014 until Q3 2015 a new EBITDA covenant is applied.

(MNOK)	Q4-14		Q1-15 Q2-15 Q3-15
EBITDA margin (%)	≥ 31	≥ 31	≥ 53	≥ 80

The debt and bonding facilities with Nordea and DNB mature in the 4th quarter of 2015. The Group's bank loans of MNOK 100 have consequently been classified as short-term debt in the reported balance per 31 December. TTS has initiated a process to prepare for the renewal of the debt and bonding facilities which mature in the 4th quarter of 2015 and the maturity of the bond loan in the 1st quarter of 2016.

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 2014, the TTS Group had utilized MNOK 123 of its total overdraft facility of MNOK 300.

Relating to currency risk, TTS' policy is to hedge all significant currency contracts. The currency hedging is performed on firm contracts for sale or purchase in currencies other than the functional currency of the

TTS unit entering into the contract. These hedging contracts qualify as hedging of firm commitments in accordance with IAS39. Further, TTS Group is exposed to the currency effects of the group's net investments in foreign subsidiaries and joint controlled entities. The unusually high volatility in the currency markets from the last quarter of 2014 has led to significant negative market value for the hedging instruments at the end of 2014. Increased currency volatility is expected to affect the total exposure accepted by the banks for overdraft, bonding and currency exposure.

OPERATIONAL RISKS

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

During the tender phase, projects undergo thorough risk assessment in order to identify and mitigate any potential technical and commercial risk involved. Furthermore, projects are evaluated in order to calculate additional risk areas and the level of contingency required. TTS experienced a number of projects in 2013, of which several continued into 2014, where the risk assessment was inadequate and insufficient. Measures have been implemented to ensure that all projects are being satisfactorily assessed both prior to signing the contracts and during execution. Amongst these are strengthening of the project manager competence, and the bid review process, where all major risks are evaluated before a binding offer is sent to potential customers. The bid review process includes i.a. review by TTS Group management of bids above MNOK 25 and Board review of bids above MNOK 100.

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

For TTS, the way the Group delivers is equally important to what it delivers. TTS is dedicated to conducting business in an ethical and responsible way, and aims at sustainable development for both investors, customers, employees and the communities in which the Group operates. Our policies for corporate social responsibility encompass QHSE, business ethics, support for human and employee rights and anti-corruption measures.

A corporate culture which embodies the core values integrity, openness and honesty, and loyalty and initiative, supports corporate social responsibility at TTS. The Group has enterprises in 13 countries and operates in diverse cultural contexts. While committed to respecting local culture, TTS takes care to always employ the highest standards of ethical conduct and business behaviour.

TTS stresses the importance of legal compliance at local, national and international levels, and works in accordance with all regulations that govern the business. TTS has also committed itself to taking positive measures beyond mandatory compliance, and wishes to contribute to the improvement of international business standards and practices. TTS seeks to ensure that no human rights are violated in connection with the Group's activities and gives all workers every opportunity to exercise their employee rights.

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

For 15 years, the Group has built its reputation around the fundamentals embodied in the booklet "The Spirit of TTS", which contains our company vision and strategy, core values underpinning TTS' way of doing business, and ethical and other guidelines for management and employees.

The TTS Group has zero tolerance for corruption, and encourages its employees to blow the whistle if suspecting infringements.

Quality, health, safety and environment (QHSE)

The Board believes that a proactive QHSE policy is a precondition for the successful development of a longterm sustainable and profitable business to the benefit of customers, employees and shareholders. The TTS Group therefore never compromises on issues of quality and safety, and has committed itself to a zeroharm-and-fault policy.

TTS always operates with worker safety and environmental sensitivity at top of mind, and supports a company culture characterized by strong day-to-day compliance with high QHSE standards. Our QHSE ambition is to cause no harm to people or the

environment, prevent accidents and damages to property and to avoid faults and non-conformities that may influence the quality of our deliveries.

The Group comprises a range of companies that differ in size, operate in different business segments and face different legislative systems. Over time, this has to some extent led to differing HSE standards within the group, a development that the Board finds it important to counter through a consistent HSE policy at corporate level. New HSE reporting procedures were established in 2013 to facilitate the adherence to common HSE measures for the entire group, and the HR department has attached great emphasis to following up this issue in 2014.

The Group also welcomes a general, global tendency towards more stringent HSE requirements from a growing number of customers, contributing to fairer competition based on quality, experience, efficiency and technology and not on compromising on safety.

The HR & HSE working group that was established in 2013, with a mandate to contribute to increased efficiency and quality in the HR & HSE processes, continued its work in 2014 with a special focus on basic personnel administration, recruitment and competence and employee development. Other particular focus areas for 2014 have been falling objects, working in heights and "safe job analysis".

All employees are accountable for contributing to their own health, safety and wellbeing as well as to that of their colleagues. Managers at all levels, however, have a special responsibility to monitor and mitigate any safety risks and to contribute to the improvement of management systems and TTS' QHSE performance.

Adherence to strict QHSE measures is also an important criterion for TTS when selecting partners, subcontractors and suppliers. In 2014, on-site follow-up of steel suppliers and quality control of suppliers to TTS' joint ventures in China had a high priority.

In April 2014, TTS established a Quality Management Group (QMG) at corporate level, responsible for establishing, implementing and enforcing common quality parameters throughout the group. QMG's objective is to ensure that all business units manage their operations and execute their deliveries in accordance with the customers' expectations, the ISO 9001 standards and the high quality level defined by the TTS Group.

To create a common basis for the Group's future development, TTS encourages the exchange of views between CEO, management and employee representatives. The CEO holds an annual meeting for employee representatives and management where management policies, business plans and more detailed measures are openly discussed.

THE ENVIRONMENT

The TTS Group takes great care to avoid any negative impact of its operations on the physical environment. Our activities related to design, engineering and sales have very limited impact on the external environment. TTS also conducts service and support activities as well as the assembly and testing of equipment based on a very limited use of chemicals that may be harmful to human health or to the environment. At our main manufacturing facilities in Germany, South Korea and China, continuous measures are taken to ensure that operations are conducted in accordance with all applicable environmental standards.

The products delivered by TTS are mainly electrohydraulically powered, and their use represents very limited risks of environmental pollution. The TTS Group's operations are not regulated by any licenses or regulatory orders.

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 emphasize developing material handling and passenger access solutions targeted towards improving energy efficiency, saving fuel and reducing emissions. All-electric shell door and drive systems for cruise ships and new technology for environmentally safe scrapping are among our contributions to a greener shipping industry.

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

People and organization

After serving as acting CEO since November 2013, Björn Andersson's appointment as CEO of the TTS Group ASA was made permanent in March 2014. The Board wishes to express its confidence in Andersson's ability to see TTS' improvement programs and new market approach through in a way that will create sustainable value for the company's shareholders. In June 2014, Henrik Solberg-Johansen took over as CFO after Arild Apelthun, who chose to pursue another possibility outside the TTS Group. Resulting from the reorganization of the group's business

structure in 2014, several business units also got new top executives.

RoRo/Cruise/Navy: Executive Vice President Per Croner. Container/Bulk/Tank: Executive Vice President Edgar Bethmann. Offshore: Executive Vice President Arve Tjønn Rinde. Multipurpose/General Cargo: Executive Vice President Ralf Ressel, from 1 April 2015 replaced by Arve Tjønn Rinde. Shipyards Solutions: Executive Vice President Björn Andersson. Services: Executive Vice President Stefan Gleuel.

The TTS Group had 1,053 employees at the end of 2014, in addition to a staff of 116 hired on a temporary basis. In order to adjust the workforce to the current market conditions, workforce adjustments in certain segments was necessary in 2014. All downsizing was done in accordance with the jurisdiction applicable to the relevant site and in cooperation with the employees' representatives. TTS offered counselling intended to assist in securing another job after termination.

The skilled and dedicated workers of TTS are the group's most important success factor, and the Board wishes to express its gratitude to all employees for their contribution to the company's turnaround in 2014.

TTS experienced 29 workplace incidents resulting in the need for medical treatment in 2014, up from 13 in 2013. The Board is concerned about this increase and has requested the management to look into the matter and take any precautions necessary to ensure that the incident rate drops in 2015.

Reported absence due to illness was 2.6 % in 2014, compared to 3.0 % the year before. The Lost Time Incident Rate per million working hours (LTI rate) was 13 in 2014, up from 8.4 in 2013, 11.4 in 2012 and 12.4 in 2011. This trend indicates that TTS' strong focus on risk awareness and mitigation pays off, and the Board assumes 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 which operates 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 units and subsidiaries, efforts are made to nurture a joint corporate culture based on the core values described above.

EQUAL OPPORTUNITIES

TTS promotes a working environment offering equal rights, equal treatment and equal opportunities to everyone 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 majority of TTS' workforce, and represent a profession where women are traditionally underrepresented. The challenge of attracting women to the field is reflected by the fact that women constituted 20 % of the workforce in 2014, compared to 21 % the previous year. To better facilitate women's careers at TTS, efforts have been made to increase female participation at management courses. The share of female participants attending such courses rose from 15 % in 2013 to 30 % in 2014.

Two of the extended corporate management team's nine members are female. Three of the six members of the Board of Directors of the Group ASA are female; two elected by the shareholders and one by the employees.

Pursuant to the law prohibiting discrimination based on disabilities (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 everybody. It is also the company's policy to make reasonable workplace accommodations in order 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, which in addition had the following directors at the end of 2014: Bjarne Skeie, Marianne Sandal, Toril Eidesvik, Anita Kråkenes and Jan-Magnar Grøtte.

At the Annual General Meeting held in June 2014 Marianne Sandal replaced Anne Breive. In July 2014, Anita Kråkenes and Jan-Magnar Grøtte replaced Mona L. Tellnes and Ole Henrik Askvik as employee elected board members. In December 2014, Jan Magne Galåen stepped down as director after accepting a position at Carnegie Investment Banking preventing him from holding directorships in listed companies. Galåen will not be replaced before the ordinary Annual General Meeting in June 2015.

AUDITOR

KPMG was re-elected as the TTS Group ASA's auditor for 2014.

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 in effect 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'S FINANCIAL POSITION

Total group equity at the end of 2014 was MNOK 610, of which MNOK 159 was restricted capital and MNOK 451 other equity.

The parent company, TTS Group ASA, reports a net loss of MNOK 106 and an operating loss of MNOK 15 for the year 2014. The main reason for the negative net result relates to the write-down of shares in subsidiaries.

The equity in TTS Group ASA was MNOK 469 at the end of 2014, of which MNOK 159 was restricted capital and MNOK 310 other equity.

Due to the poor financial performance of the group, the Board will propose no dividend payment for the year 2014. The net result from the year is proposed to be transferred to other equity.

Future prospects

The TTS Group is still in the midst of a major turnaround process, but made substantial progress in a number of areas in 2014. The financial performance improved during the year, and the board shares the view of the administration that the ongoing turnaround process will restore profitability to industry average. Most important are of course the strategic actions taken in 2014 in order to lay the foundations for a viable solid and long-term business performance.

The Board's expectations for 2015 are cautiously positive due to the size of the backlog within the marine business. However, the current business cycle in the offshore market is challenging, and seems hard to predict. Going forward, the offshore operations will be exposed to a weaker market sentiment and will have a different risk profile from the rest of the group's activities. Hence, looking forward and excluding Offshore, a modest increase in revenue and margins is expected for TTS in 2015, with margins approaching industry average in 2016.

The general marine market outlook is positive and improving in line with increased global growth of seaborne transport. Yet the TTS Group is exposed to a number of submarkets where the prospects differ somewhat from segment to segment.

The market for pure car and truck carriers is expected to continue on the strong side, while the cruise vessel market is expected to pick up further due to a rapidly growing passenger base in Asia in particular. Global naval expenditure is also currently on the rise.

Overcapacity and low freight rates continue to affect the demand for certain types of merchant vessels, such as dry bulk, but the market expectations are positive for the Chinese market for container ships and tankers. On the positive side, it is worth noting that the global market for LNG carriers looks very promising at the moment. In the other major shipbuilding nation in

the segment, South Korea, the market outlook is more challenging.

The market for heavy lift cranes for multipurpose and general cargo ships has been picking up in 2014, and the Board finds it reasonable to assume that this positive development will continue. The overall outlook for the service market remains stable, although low ship charter rates still influence the market. The Board believes that the current strategy that TTS pursues for its service operations, rolling out new service hubs in global hot spots, will result in the capture of an increasing market share, not least in connection to the group's own installed base. The offshore market is expected to remain challenging, but necessary cost measures will be taken.

The TTS Group has launched a new market strategy based on offering complete asset-type handling solutions for key customers in target segments. The strategy implies expanding the product portfolio and the services, as well as sales of larger bundled equipment packages. This approach has a potential for increasing sales revenue and decreasing sales costs for TTS, while improving efficiency for shipowners and shipyards. The Board also believes that TTS is in a good position to capitalize further on its strong market and manufacturing position in China.

In order to ensure the best possible framework for future growth for the TTS Group ASA and to capitalise further on the current business setup, the Board of Directors has decided to run a strategic process to explore, on a broad basis, the opportunities for potential acquisitions or partnerships, to supplement the products and market position of TTS.

Trym Skeie Chairman of the board Bjarne Skeie Director

Bergen, 15 April 2015 Board of Directors of TTS Group ASA

Toril Eidesvik

Director Jan-Magnar Grøtte Director

Bj¨örn Andersson CEO & President

Marianne Sandal Director Anita Kråkenes Director

Corporate Governance

TTS Group ASA (TTS) follows The Norwegian Code of Practice for Corporate Governance (NUES), dated 30 October 2014, 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 the management beyond what follows from the 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 of TTS' activities, in order to contribute to cooperation and progress for each and everyone in the group.

Through clearly defined core values, TTS wishes to contribute to developing the society of the countries where we are present. TTS' operations are often based on trade across borders and cultures. TTS assumes social responsibility through increasing the understanding of cultural differences, leading to 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 2014 was MNOK 2,411, with an equity capital of MNOK 610, giving an equity-to-assets ratio of 25.3 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, 2013 and 2014 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, our drilling equipment business unit, for MUSD 270 with a gain of MNOK 420. Additional profit recognition/earn out for the sale amounted to MNOK 39 in 2014.

SHAREHOLDER POLICY

TTS aims to give our shareholders a competitive longterm 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 permit it. 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 8 June that no dividends are paid out for the financial year 2014.

STRATEGY FOR FURTHER GROWTH

TTS has since 1996 completed a number of successful acquisitions, establishing a leading position in its market segments for offshore and marine handling equipment.

TTS has built a strong product portfolio and market position in core shipping markets, and improving efficiency for our customers is our highest priority. TTS has a strong focus on system development and product solutions that raise the efficiency for our end users. TTS believes "package sale" will be a key growth driver going forward. Our organization has been reformed from a product-type to a ship-type structure. Increased integration and automation of control systems on ships in order to reduce on/off loading times is a focus area for ship owners. TTS Group's strategy is to fill the gaps in the product portfolio, and to expand its services to clients in order to deliver more package sales. This will position TTS for higher order values per ship, and enable TTS to increase its market position in our core markets, i.e. China and Korea.

TTS aims to expand the business significantly during the next five years. In order to position the TTS Group for such growth, the Board of Directors of TTS Group has decided to run a strategic process to look for one or more partners in order to achieve our longterm goals. The Board of Directors of TTS Group has retained Pareto Securities AS as our financial advisor in order to assist in the strategic process.

BOARD AUTHORIZATIONS

On 5 June 2014, the Annual General Meeting adopted a resolution to authorize the Board to issue a maximum of 8,600,000 shares against cash or non-monetary redemption, including mergers relating to acquistions of businesses or assets. The authority is valid until the Annual General Meeting on 30 June 2015. No shares have been issued on the basis of this authorisation as of 15 April 2015.
On 10 June 2013, the Annual General Meeting adopted a resolution to authorize the Board 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 firsttime 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 5 June 2014, the Annual General Meeting adopted a resolution to authorize the Board to issue a maximum of 600,000 shares against cash redemption for the benefit of the company's leading employees. This authorisation is valid until 30 June 2016. A total of 575,000 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 2015, 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 2015 and the first quarter of 2016, in addition to options not previously exercised.
On 5 June 2014, the Annual General Meeting adopted a resolution to authorize the Board of Directors to buy own shares for the benefit of employees up to 800,000 shares. The authoritiy is valid until 30 June 2015. As of 15 April 2015 this autorisation has not been utilized.
On 5 June 2014, the Annual General Meeting adopted a resolution to authorize the Board to buy up to 6,000,000 shares with the purpose of deletion. The authorisation is valid until 30 June 2015. As of 15 April 2015 this autorisation has not been utilized.
On 5 June 2014, the Annual General Meeting adopted a resolution to authorize the Board of Directors to buy back a portion of the convertible callable unsecured subordinated bond 2011/2016, up to a total of NOK 150,000,000. The authority is valid until 30 June 2015. As of 15 April 2015 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 2014 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 15 April 2015, the company's own shareholding was 112,882.

THE BOARD OF DIRECTORS AND GROUP MANAGEMENT

TTS Group ASA's Board of Directors and group management are considered close associates 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 close associates give notice if they have any material direct or indirect interest in any transaction entered into by the company. 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 deviating from the existing shareholders' preferential status when making a right issue.

RELATED COMPANIES

The joint venture companies in the TTS group are handled as close associates.Transactions are shown in Note 10.

5. Freely negotiable shares

As it 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 2014 will be held on 8 June 2015, in accordance with the financial calendar for 2015.

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

The notice includes sufficiently detailed and comprehensive information in order to allow shareholders to form a view on all matters that will be discussed at the meeting.

Shareholders unable to attend may vote by proxy. Proxy forms are issued to each shareholder. The proxy form allows the shareholder to provide separate voting instructions for each matter that will be discussed at the meeting, and for each of the candidates nominated for election. Registration of proxies is set to the day before the Annual General Meeting.

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

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. For the same reason, TTS has found it unnecessary to establish routines for securing 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 general assembly.

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

7. Nominating committee

At TTS, a nomination committee is statutory according to the Articles of Association. In accordance with the Annual General Meeting on 5 June 2014, a nomination committee was set up with the following members:

NAME	STATUS	POSITION
Petter Sandtorv	Not for election	Managing director Flu AS
Anders Nome Lepsø Elected		CFO Westfal-Larsen Management AS
Bjørn Olafsson	Not for election	Consultant

The nomination committee appoints its own chairman. Bjørn Olafsson was chosen to chair the committee.

No one in the nomination committee is member of the Board of TTS Group ASA or part of the management of TTS, which ensures their independence. The nomination committee has knowledge of TTS and its shareholders, so that the interests of the shareholders are protected.

The nomination committee recommends candidates for the Board and recommends remuneration of the Board, which will be decided by the General Meeting. According to the Norwegian Code of Practice for Corporate Governance, the chairman of the nomination committee should be elected at the Annual General Meeting, and guidelines for their 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.

Information about the members of the committee, as well as information about the shareholders' right to submit proposals to the nomination committee, is available 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 5 June 2014, the shareholders elected the following members to the Board:

NAME	STATUS	POSITION
Trym Skeie	Re-elected	Chairman, Skagerak Kapital
Marianne Sandal	Elected	VP Road User Charging Q Free ASA
		Toril Eidesvik Not up for election CEO, EMS Seven Seas ASA
Bjarne Skeie Re-elected		Skeie Technology AS
Jan Magne Galåen		Not up for election Manager, Rasmussengruppen

Director Jan Magne Galåen resigned as director of TTS Group ASA, after accepting a position at Carnegie Investment Banking (Corporate Finance) from January 2015. In his new position Galåen is not permitted to hold directorships in listed companies.

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 July 2014:

NAME	STATUS	POSITION
Jan-Magnar Grøtte	TTS Ships Equipment AS Director
Anita Kråkenes	TTS Marine AS	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 was 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 main 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 members' ability to assess matters from different perspectives before reaching a final conclusion.

Trym Skeie, Chairman of the Board, holds 2,733,875 shares and convertible bonds with a nominal value of MNOK 4, which can be converted to 804,828 shares in TTS Group ASA. The shares and loan are held through Tamafe Holding AS and Skeie Alpha Invest AS, where he holds all of the voting shares.

Bjarne Skeie, Director of the Board, holds 14,386,273 shares and convertible bonds with a nominal value of MNOK 6, which can be converted to 1,207,243 shares in TTS Group ASA. The shares and loan are held through Skeie Technology, Skeie Consultants and Skeie Capital investments.

Toril Eidesvik holds 50,000 shares, Jan-Magnar Grøtte 10,080 shares and Anita Kråkenes 2000 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.

A procedure for the Directors and leading employees has been made related 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 its 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 of Directors produce an annual plan for its work, with particular emphasis on objectives, strategy and implementation. The Board has eight scheduled meetings annually. Further meetings are held as required. A total of 20 board meetings were held in 2014. The attendence at the Board meetings has been above 90%.

Mr. Björn Andersson was appointed interim CEO for TTS Group in November 2013. In March 2014, the Board of Directors appointed him the CEO of the company.

The Board of Directors issues instructions for its own work as well as for the executive management, with particular emphasis on clear internal allocation of responsibilities and duties.The Board's work in 2014/2015 has focused on the strategy for the business as well as control and risk related to ongoing operations. In addition to quarterly meetings to review financial results, monthly operational updates are carried out.

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 nomination committee has been made statutory in its Articles of Association.

The Board of Directors in TTS Group ASA has appointed an audit committee:

AUDIT COMMITTEE

Toril Eidesvik (Chair) Anne Breive (Until 5 June 2014) Marianne Sandal (From 5 June 2014) Jan Magne Galåen (Until 11 December 2014)

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

The Board of Directors evaluates its performance and expertise on an annual basis.

10. Risk management and internal control

The Board of Directors focuses on internal control and systems for risk management within the group. Following the losses in parts of TTS in the last two quarters of 2013 and the first quarter of 2014, the internal control has been strenghtened by expanding the monthly operational review. In addition, the internal control has been strenghtened by adding staff to the controller functions in the group. Established systems are appropriate in relation to the extent and nature of the company's activities. Internal control and the systems also encompass the company's corporate values, ethical guidelines and guidelines for corporate social responsibility.

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

As part of an ongoing risk management effort, the Board and management undertake specific risk reviews of major investments and contracts.

As part of the annual budget and strategy process, the Board and senior management conduct an annual review to discuss and identify external and internal opportunities and threats for the group.

In addition, the Board of Directors undertakes a thorough review of the company's financial status in the Directors' Report. This review also includes a further description of the main elements of HSE and the risk aspects.

11. Remuneration of the Board of Directors

Based on the recommendation of the nomination committee, the Annual General Meeting determines the remuneration of the Board of Directors. Remuneration is not linked to the company's result.

12

DISTRIBUTION OF OPTIONS AND SHARES AT 15 APRIL 2015

Name	Position	Number of options exercisable until 10.06.2015	Exercise price	Number of options exercisable until 10.06.2015	Exercise price	Total
Björn Andersson	CEO & President	70 000	6.42	75 000	6.15	145 000
Henrik Solberg-Johansen CFO		0	6.42	12 500	6.15	12 500
Stefan Gleuel	EVP, Services	50 000	6.42	50 000	6.15	100 000
Edgar Bethmann	EVP CBT	0	6.42	12 500	6.15	12 500
Per Croner	EVP RCN	0	6.42	12 500	6.15	12 500
Ralf Ressel	EVP MPGC	0	6.42	12 500	6.15	12 500
Total number of potions to senior executives		120 000		175 000		295 000

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 2014.

The nomination committee's proposal for remuneration of the Board of Directors is presented in the call for the Annual General Meeting on 4 June 2015.

12. Remuneration of executive management

The Board has issued guidelines for the stipulation of salaries and other remunerations to executive management. The President and the CEO's terms are decided by the Board. The guidelines are communicated to the Annual General Meeting.

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

Senior payment guidelines are presented in Note 4. Share options constitute part of the remuneration. Exercise of share options depends on the share price listed on the Oslo Stock Exchange. Currently there are 295,000 options issued to executive management under the two authorisations to the Board of Directors mentioned under Item 3.

13. Information and communication

The company has established guidelines for the handling of information and communication. These guidelines also address contact with the owners apart from the general assembly. TTS' reporting 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 proposals are 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 towards preventing takeover, nor are other hindrances in effect to reduce the transfer of the company's shares.

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

15. Auditor

The auditor conducts a minimum of two meetings a year with the audit committee, where part of the meeting is held 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 discussed.

The auditor is present at Board meetings as required. The auditors are always present at the Board meeting when the annual accounts are approved. The Board has a session with the auditors without the management present in at least one Board meeting during the year.

Remuneration payable to the auditor, specifying the division between auditing and other services, is outlined in Note 4. The extent of services other than auditing 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 regarding the management's access to making use of the auditor for services other than auditing.

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

(AMOUNTS IN NOK 1000)

	Notes	IFRS 2014	IFRS 2013
Continuing operations

OPERATING REVENUE
Project revenue	2, 21	2 453 658	2 693 167
Total revenue and income	1	2 453 658	2 693 167

OPERATING EXPENSES
Cost of sales	3, 21	1 419 801	1 911 696
Personnel costs	4, 5	726 395	683 424
Depreciation of fixed assets	6, 7	40 093	33 814
Other depreciations/amortisation	7	3 673	-
Other operating expenses	4, 20	206 156	228 124
Losses on accounts receivable		10 417	12 171
Income from investments in joint ventures (profit = -) Total operating expenses	10	-14 325 2 392 209	-11 964 2 857 265

Operating profit/loss		61 449	-164 098

FINANCIAL INCOME AND EXPENSES
Other interest income	24	11 756	7 903
Other financial income	24	4 699	6 202
Other interest expenses	24	-42 304	-27 629
Other financial expenses	24	-12 339	-23 259
Net financial items		-38 188	-36 783
Profit before tax from continuing operations	1	23 261	-200 881
Income tax expenses	18	-45 079	-26 482
Profit for the period from continuing operations		-21 819	-227 363

Discontinued operations
Profit / (loss) after tax for the period from discontinued operations	28	39 562	22 945

Profit for the period		17 743	-204 418
STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 1 JANUARY TO 31 DECEMBER
Items that are not reclassified subseqently to profit or loss
Remeasurement of defined benefit pension plans	5	-30 700	-10 220
Items that may be reclassified subseqently to profit or loss
Foreign currency differences for foreign operations	25	55 289	71 398
Other comprehensice income for the period		24 589	61 178

Total comprehensive income for the period		42 332	-143 240

Earnings per share - continuing operation (NOK per share)	17	-0,25	-2,63
Earnings per share - discontinued operation (NOK per share)	17	0,46	0,27
Diluted earnings per share - continuing operation (NOK per share)	17	-0,25	-2,63
Diluted earnings per share - discontinued operation (NOK per share)	17	0,46	0,27

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

	Notes	IFRS 2014	IFRS 2013
Non-current assets

INTANGIBLE ASSETS
Deferred tax assets	18	31 152	57 748
Research and development	7	34 853	46 746
Licences and patents	7	3 720	4 579
Other intangible assets	7	30 602	26 368
Goodwill	7	563 208	538 119
Total intangible assets		663 535	673 559

NON-CURRENT ASSETS
Property	6, 13	20 232	16 053
Buildings	6, 13	13 482	13 808
Machinery and vehicles	6	53 618	47 206
Furniture, office-, and computer equipment	6, 13	73 565	58 984
Total non-current assets		160 897	136 050

FINANCIAL NON-CURRENT ASSETS
Investments in joint ventures	1, 10, 21	102 582	104 002
Assets available for sale	8	-	28 686
Total financial non-current assets		102 582	132 688

Total non-current assets		927 014	942 297

Current assets

Inventories	3, 13	189 264	200 801
Total inventories		189 264	200 801

CURRENT RECEIVABLES
Trade receivables	11, 13, 21	326 747	316 395
Other receivables	11, 13	96 634	58 814
Accured, non-invoiced production	2, 13	609 475	470 763
Derivative financial instruments	22	38 340	25 179
Prepayments to suppliers	2, 13	93 399	54 804
Total current receivables		1 164 597	925 955

Bank deposits, cash in hand, etc.	14	130 602	155 571
Total current assets		1 484 462	1 282 328

Total assets	1	2 411 477	2 224 626

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

EQUITY AND LIABILTIES

	(AMOUNTS IN NOK 1000)

	Notes	IFRS 2014	IFRS 2013
Equity

EQUITY
Issued share capital	16	9 527	9 527
Treasury shares	16	-12	-16
Share premium reserve		149 378	149 378
Other equity		451 470	407 781
Total equity		610 362	566 670
Liabilities
PROVISIONS FOR LIABILITIES
Pension liability	5	-	74 683
Deferred tax	18	31 336	30 929
Total provisions for liabilites		31 336	105 612

OTHER NON-CURRENT LIABILITIES
Convertible Callable Unsecured Subordinated Bond	12, 14, 15	88 143	81 182
Debt to financial institutions	12, 13, 14	-	103 000
Total other non-current liabilities		88 143	184 182
CURRENT LIABILITIES
Debt to financial institutions	12, 13, 14	297 764	49 257
Payables to suppliers	21	258 469	298 698
Income tax payable	18	935	6 272
Other taxes payable		30 967	31 186
Prepayments from customers	2	233 520	281 489
Non-invoiced production costs, suppliers	2	81 284	173 414
Derivative financial instruments	22	237 319	28 494
Other current liabilities	19, 23	541 377	499 352
Total current liabilities		1 681 636	1 368 162

Total liabilities	1	1 801 115	1 657 956
Total equity and liabilities		2 411 477	2 224 626

Trym Skeie

Chairman of the board

Bjarne Skeie Director

Bergen, 15 April 2015 Board of Directors of TTS Group ASA

Toril Eidesvik Director

Jan-Magnar Grøtte Director

Bj¨örn Andersson

CEO & President

Marianne Sandal Director

Anita Kråkenes Director

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
	9 526	-32	149 378	635 703	794 575
				-204 418	-204 418
5, 25				61 178	61 178
	-	-	-	-143 240	-143 240
16	-	17	-	483	500
16	-	-	-	1 296	1 296
16	-	-	-	-86 461	-86 461
	9 526	-16	149 378	407 781	566 670

	9 526	-16	149 378	407 781	566 670
				17 743	17 743
5, 25				24 589	24 589
	-	-	-	42 332	42 332
16	-	4	-	149	153
16	-	-	-	1 207	1 207
	9 526	-12	149 378	451 469	610 362

TTS GROUP CONSOLIDATED STATEMENT OF CASH FLOWS 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

	2014	2013
Cash flow from operating activities
Profit/loss before tax continuing operations	23 261	-200 881
Profit/loss before tax discontinuing operations	39 562	22 945
Profit before tax	62 823	-177 936
Adjustments to reconcile profit before tax to net cash flows
Depreciation of fixed assets	40 093	33 814
Interest expense	42 304	27 629
Interest income	-11 756	-7 903
Profit/loss from joint ventures	-14 325	-11 964
Gain from sale of subsidiaries	-39 562	-22 945
Share based payment	1 207	1 296
Difference between pension charges and payments to/from pension schemes	-74 684	1 583
Change in inventories, customers and suppliers	-200 906	-137 050
Change in other receivables and other short term liabilities	56 460	160 407
Interest recieved	11 756	7 903
Income tax paid	-23 414	-12 757
Net cash flow from operating activities	-150 005	-137 923

Cash flow from investment activities
Acquisition of subsidiaries, net of cash acquired	-1 087	-11 732
Disbursements from acquisition of fixed assets	-50 690	-35 751
Disbursements on own developement	1 506	-2 050
Dividend received from investments in Joint Ventures	14 326	40 856
Proceedes from sale of subsidiaries	39 562	22 945
Changes net investment in discontinued business	-	-
Investment in shares sale/ (purchase)	23 300	-
Net cash flow from investment activities	26 917	14 267

Cash flow from financing activities
Proceeds from issuance of short-term/long-term debt	134 659	115 007
Net change in bank overdraft facility	-	-
Dividends paid	-	-86 461
Interest paid	-32 727	-32 209
Sale / (purchase) treasury shares	153	500
Net cash flow from financing activities	102 085	-3 164
Net change in cash and cash equivalents	-21 003	-126 819
Cash and cash equivalents at the start of the period	155 571	227 666
Foreign currency gains/loss on cash and cash equivalents	(3 966)	54 724
Cash and cash equivalents at the end of the period - continued business	130 602	155 571
Net cash discontinued business	-	-

Cash and cash equivalents at the end of the period - continued and discontinued business	130 602	155 571

Net available cash:
Bank deposits etc.	130 602	155 571
Unused overdraft facility	176 800	258 830
Total available cash and cash equivalents at the end of the period	307 402	414 401

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 Berandottes vei 38, Fyllingsdalen in Bergen. The Group has subsidiaries in Norway, Sweden, Germany, Finland, China, USA, the Czech Republic, Italy, Singapore, Korea, Greece, Brazil and Vietnam.

TTS Group ASA is a global enterprise that designs, develops and supplies equipment solutions and services for the marine and offshore industries ships, ports and offshore installations. The group's activities primarily involve design, assembly and testing of equipment while, apart from manufacture of certain key components, production is undertaken by a global network of subcontractors. As of 4th quarter 2014 the Group's board decided to change the structure of governance and reporting to reflect the change of market focus from product-supply to shiptypesolutions. The Group reported on six segments in 2014: RCN (RoRo/ Cruise/ Navy), CBT (Container/ Bulk/Tank), MPGC (Multi purpose/General Cargo), Offshore, Shipyard Solutions and Services. TTS Group is among the leading suppliers in the product market segments. Further information of the principal activities of the Group is described in Note 1. Information on 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 2015 have not been applied in preparing these consolidated financial statements.

The consolidated financial statements of the Group for the year ended 31 December 2014 were approved by the Board of Directors on 15 April 2015.

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 thousands, 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 2014. The adoption of the standards or interpretations, and the effects on the financial statements for the Group is described below:

Several other amendments apply for the first time in 2014. 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:

NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED BY THE GROUP FROM 2014

The following standards have been adopted by the group for the first time for the financial year beginning on or after 1 January 2014:

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. IFRS 10 is effective for annual periods starting on or after 1 January 2014. The new standard did not have any effect on the group financial statements or consolidation structure.

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.

As TTS Group used the equity method for the investments in Joint Ventures prior to the change in IFRS 11, the amendments have had no 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. IFRS 12 is effective for annual periods beginning on or after 1 January 2014.

Other than new disclosure requirements, the amendment does not have any 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 have amended IAS 27. IAS 27 now only deals with accounting in the separate financial statements. The title of the standard is amended accordingly.

IAS 28 Investment 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.

IAS 32, Financial instruments:

Presentation on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms.

The amendment has no any effect on the group financial statements.

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. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.

The amendment has no impact on the consolidated accounts.

IAS 39 Financial Instruments: Recognition and Measurement

Amendment to IAS 39, 'Financial instruments: Recognition and measurement' on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to 'over-the-counter' derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria.

TTS group has applied the amendment and there has been no significant impact on the group financial statements as a result.

IFRIC 21

IFRIC 21, 'Levies', sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognized. The Group is not currently subjected to significant levies so the impact on the Group is not material.

Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the group.

New standards, amendments and interpretations not yet adopted by TTS Group:

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015, and have not been applied in preparing the consolidated financial statement. 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. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

IFRS 9, Financial instruments

IFRS 9, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The group is yet to assess IFRS 9's full impact.

IFRS 15, 'Revenue from contracts with customers'

IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue

is recognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017. Early application is permitted.

The group is assessing the impact of IFRS 15 both related to revenue recognition, and contractual impact. The alteration in the control definition in IFRS 15 is expected to postpone the revenue recognition on repeat projects where product standardization has been effectively incorporated in the delivery structure. The control definition in IFRS 15 is also expected to postpone the revenue recognition on projects where contractual terms establish boundaries on cancellation fee/profit compensation clauses.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material 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 be 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, maximising the use of relevant observable inputs and minimising 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- ref note 8.

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 2014.

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. Acquisition costs is expensed. 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 arrangements (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 six segments in 2014. These are RCN (RoRo/ Cruise/ Navy), CBT (Container/Bulk/ Tank), MPGC (Multi purpose/General Cargo), Offshore (Offshore), Shipyard Solutions and Services. Comparative numbers from prior year is changed to reflect the change in segment structure – ref note 1.

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 average exchange rates. 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 PROPERTY, PLAN AND EQUIPMENT

Property, plant and equipment 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 other 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 statements 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 within 12 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), and attributable borrowing cost. 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 losses 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 BORROWING COST

General and specific borrowing costs directly attributable to an acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

2.17 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 the profit and loss accounts, 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 receivables 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

2.18 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 as 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 allotted 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.

2.19 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.

2.20 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 are 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 the profit and loss account 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.

2.21 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.

2.22 IMPAIRMENT OF 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 the profit and loss accounts 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.

2.23 CASH FLOW STATEMENT

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

2.24 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.

2.25 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.

2.26 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.

2.27 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.

2.28 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.

2.29 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 RMB and KRW. 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. The unusually high volatility in the currency markets from the last quarter of 2014 has led to significant net negative market value for the hedging instruments at the end of 2014, as described in note 22. The current bank facilities with Nordea and DNB described in section "Liquidity risk" below do not explicitly define a maximum currency derivative exposure accepted by the banks. Increased currency volatility is expected to affect the total exposure accepted by the banks for overdraft, bonding and currency exposure.

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:

	Spot		Average exchange rates
	rate 31.12.13	Q1	Q2	Q3		rate Q4 31.12.14
SEK	0.9472	0.9426	0.9073	0.8995	0.9260	0.9597
EUR	8.3825	8.3471	8.2105	8.2818	8.5879	9.0365
USD	6.1332	6.0945	5.9852	6.2393	6.8772	7.4332
RMB	1.0049	0.9991	0.9606	1.0117	1.1185	1.1977
KRW		0.00576 0.00566 0.00580 0.00608 0.00632				0.00682

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 2014	4 935	- 3 304
31 December 2013	18 360	7 065

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 2014	38 831	7 902
31 December 2013	59 452	2 173

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 longterm 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
2014	+/- 1%-points	1 752	1 752
2013	+/- 1%-points	617	617

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 2014 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 21 and in the period 2011 – 2014, 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
31.12.2014	347 587 143 365 114 310		57 846	32 064
31.12.2013	316 395 137 654 126 532		24 537	27 672

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.

For the past 5 years TTS Group has successfully implemented different actions to keep the working capital at an acceptable level. Procedures and processes are currently being scrutinized in order to further optimize the cash flow structure in ongoing and coming projects.

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. Continuous work is ongoing to include foreign subsidiaries in the Group cash pool arrangement within the legal framework where the legal companies operate.

The Group's liquidity developments are monitored continuously based on regular liquidity forecasts from 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 2014 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. See note 15 for further information.

In December 2012 TTS Group ASA signed a new bank agreement with Nordea and DNB. During 2014 the total facility in the arrangement is increased to MNOK 1040. See note 13 for further information.

As of 31 December 2014, the Group has undrawn overdraft facilities of MNOK 177. Furthermore, the Group has available liquidity in the form of bank deposits amounting to MNOK 130.

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 debt and bonding facilities with Nordea and DNB mature in the 4th quarter 2015. TTS Group has initiated a process to prepare for the renewal of the debt and bonding facilities which mature in 4th quarter 2015 and the maturity of the bond loan in 1st quarter 2016. 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 top right gives an overview of the structure of maturity of the Group's financial obligations:

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 of 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.

REMAINING PERIOD:
2014:				< 6 months 6-12 months 1-5 years More than 5 years	Total
Long-term financial obligations:
Interest-bearing non-current liabilities	-	-	95 345	-	95 345

Current financial obligations:
First year's installment on non-current liabilities	1 500	185 122	-	-	186 622
Net derivatives	90 234	81 496	27 249	-	198 979
Accounts payable and other current liabilities	989 151	157 402	-		- 1 146 533
Total financial obligations	1 080 885	424 020	122 594		- 1 627 499


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	1 017 960	185 452	-		- 1 200 411

Liquidity risk

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

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

The company's gearing as of 31.12 is illustrated below:

		2014	2013
	Total interest bearing debt 1)	393 109	247 602
-	cash and cash equivalents	130 602	155 571
=	Net interest bearing debt	262 507	92 031
+	Equity	610 362	566 670
=	Total	872 869	658 701
	Gearing	30,1%	14,0 %

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 fair value of the item.

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) Market risks

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, shipyard 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, rather than the contracting activity.

the order backlog for TTS' Offshore unit. Although the Offshore unit has acted to adjust capacity to the current market picture, the market risk has increased significantly during the latter part of 2014. For all TTS' business units, uncertainties related to the global economy, the oil price and the credit market indicate risks relating to the cancellation or postponement of orders.

Within the RCN segment proven solutions and repeat orders from demanding customers within the car carrier market ensure a sound foundation for continued high utilization of unit capacity the coming quarters. In 2014, TTS also won a number of contracts to equip cruise ships, including one to supply shell doors and electric drive systems for the first large cruise ship to carry all-electric shell doors.

Within the CBT segment fierce competition and falling prices in the market for deck equipment constitutes a challenge for the unit's long-term profitability, and in order to face this challenge head on, TTS has decided to move unit headquarters from Bremen, Germany to Busan, South Korea to serve the world market outside China.

Within the Offshore segment TTS has implemented strong cost-reducing measures to adjust the unit's capacity to the current market slow. A substantial restructuring was undertaken in 2014. New adjustments are done in 2015 in order to match capacity with the order backlog and the market conditions, including merging the two Norwegian entities TTS Offshore Handling Equipment AS and TTS Ships Equipment AS. Based on market feedback on TTS' performance and on the reliability of TTS' advanced offshore cranes, the segment is still considered to have a positive long-term potential

Within the MPGC segment TTS initiated cost cut in 2013, and this has laid the foundation for sound future operations in the unit. TTS NMF has a strong market reputation and is in a position to benefit from the expected market growth. In December 2014, TTS NMF GmbH and South China Marine Machinery Co. Ltd., controlled by the leading state-owned corporation China State Shipbuilding Company (CSSC), established a new Chinese company within the heavy-lift segment. The establishing marks another important step in the strategic partnership between the TTS Group and CSSC and will strengthen TTS' position in the Chinese market.

Within the Shipyard Solutions segment the order backlog has decreased slightly in 2014, but still represents a sound operational foundation for the coming quarters. Future demand for the unit depends largely on the shipyards' need to implement more

efficient production lines, and currently there are no signs that the yard industry's focus on restructuring and increased productivity will diminish.

The Services segment has undertaken thorough analysis of the world's major ports and offshore hubs to single out the ones with the highest port call frequency of TTS equipped vessels, and establishes new operations accordingly. In 2014, new service stations opened in Houston, U.S. and in Rio de Janeiro, Brazil.

The structural capacity of the Services segment provides a basis for continued growth in turnover and increased profitability for the TTS Group in general and especially the Services segment. However, parts of the service market remains influenced by low ship charter rates in some areas.

b) 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.

c) 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 revenues and project costs is based on a number of estimates and assessments each which carries 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 costs 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.

d) 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 2.17. Risk related to currency, interest, credit and liquidity, as well as asset management is discussed in section 3. These days' unrest in the financial market 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.

e) Risk related to guarantee liability

The Group customarily offers a warranty period of one-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 2.19, and accruals in Note 23.

f) 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 high grade corporate bonds. Mortality rate is based on publicly available mortality tables. As the defined

benefit plans were closed at the end of 2014, these assumptions affect the reported pension cost for 2014 and 2013 and the net pension obligation at the end of 2013. Pension cost and other compensation payments to employees are further discussed in section 2.19, and accounting values in Note 5.

g) 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.

h) Deferred tax assets

The Group has recognized deferred tax assets primarily related to the Norwegian and German 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

i) 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.

NOTES FOR CONSOLIDATED ACCOUNTS TTS GROUP NOTES¹

Note 1 - Operating segments (AMOUNTS IN NOK 1000)

Primary reporting format - business segments

During 2014 TTS Group has changed the market strategy going from a product focus into a shiptype based focus. From Q3 2014 the segment reporting has changed.

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

RCN	RoRo/ Cruise/ Navy segment
CBT	Container/ Bulk/ Tank segment
MPGC	Multipurpose/ General Cargo segment
Offshore	Offshore segment
Shipyard Solutions	Shipyard Solutions segment
Services	Services segment
Other:	Parent company and other

RoRo/ Cruise/ Navy segment:

The RCN segment delivers complete cargo handling solutions to RoRo, PCTC, cruise and navy vessel, including terminal loading and passenger systems. Product range includes external and internal ramps, covers and doors, liftable decks, passenger gangways and linkspan systems. The segment has earlier been reporting as part of the Marine Division.

Container/ Bulk/ Tank segment:

The CBT segment delivers complete cargo handling solutions to the container, tanker and bulk vessels. Product range includes 10-40 t winches, 15-50 t cranes and specialized hatch covers designs. The segment has earlier been reporting as part of the Marine Division.

Multipurpose/ General Cargo segment:

The MPGC segment delivers supporting solutions to the vessels which is designed to operate in the multipurpose or general cargo market, requiring specialized operating capabilities. Product range includes 40-900 t heavy lift cranes, side loading systems, hatch covers and mooring winches. The segment has earlier been reporting as part of the Offshore and Heavy Lift division.

Offshore segment:

The Offshore segment delivers support solutions to the offshore based oil industry and the supporting service industry. Product range includes 15-50 t offshore cranes, 40-400 t heave compensated cranes, mooring winches, internal and external covers and doors. The segment has earlier been reporting as part of the Offshore and Heavy Lift division.

Shipyard Solutions segment:

The Shipyard Solutions segment includes shiplift and transfer systems, as well as complete production lines to the yard industry. Products range includes shiplift system, ship transfer systems, multiwheelers and translifters.

This segment has earlier been reporting as part of the Port & Logistics Division.

Services segment:

The Services segment includes service and after sales for all segments within TTS. This enables TTS to offer service and after sale worldwide for the full range of its products.

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.

2014:

	Key profit figures
	RCN	CBT	MPGC	Offshore	Shipyard Solutions	Services	Other	Total
External turnover	598 529	422 201	137 935	572 454	192 493	530 047	-	2 453 658
Internal turnover	58 270	284 921	50 852	123 123	13 804	102 546	34 272	667 787
Intergroup eliminations	-58 270	-284 921	-50 852	-123 123	-13 804	-102 546	-34 272	-667 787
Group Turnover	598 529	422 201	137 935	572 454	192 493	530 047	-	2 453 658

Income from associated companies	-	14 325	-	-	-	-	-	14 325
Earnings before depreciation, finance and tax (EBITDA)	77 281	-4 784	-31 950	-49 983	32 490	96 387	-14 225	105 215
Depreciation/amortisation	5 161	9 664	10 185	12 373	1 774	3 985	625	43 766
Impairments	-	-	-	-	-	-	-	-
Operating profit/loss	72 120	-14 449	-42 135	-62 356	30 716	92 401	-14 850	61 448
Financial income	13 706	4 630	89	9 446	2 233	19 772	87 858	137 734
Financial cost	9 705	14 992	5 896	13 421	1 736	21 776	68 835	136 361
Segment profit/ loss before tax	76 121	-24 812	-47 941	-66 331	31 214	90 396	4 173	62 822

YEAR ENDED 31.12.2013 (RESTATED TO 2014 SEGMENT STRUCTURE):

		Key profit figures
	RCN	CBT	MPGC	Offshore	Shipyard Solutions	Services	Other	Total
External turnover	561 728	534 645	374 218	608 195	168 047	446 110	224	2 693 167
Internal turnover	26 203	277 334	8 175	114 111	13 696	109 205	43 575	592 298
Intergroup eliminations	-26 203	-277 334	-8 175	-114 111	-13 696	-109 205	-43 575	-592 298
Group Turnover	561 728	534 645	374 218	608 195	168 047	446 110	224	2 693 167

Income from associated companies	-	11 964	-	-	-	-	-	11 964
Earnings before depreciation, finance and tax (EBITDA)	52 730	-70 597	-34 533	-113 863	17 705	43 007	-24 736	-130 286
Depreciation/amortisation	2 856	4 912	9 135	10 333	2 418	3 506	655	33 814
Impairments	-	-	-	-	-	-	-	-
Operating profit/loss	49 874	-75 509	-43 668	-124 196	15 288	39 501	-25 392	-164 098
Financial income	7 386	4 792	119	-246	1 174	154	727	14 105
Financial cost	209	7 101	4 266	5 842	1 099	7 473	24 899	50 888
Segment profit/ loss before tax	57 052	-77 818	-47 814	-130 284	15 362	32 182	-49 564	-200 881

YEAR ENDED 31.12.2014:

		Key profit figures
	RCN	CBT	MPGC	Offshore	Shipyard Solutions	Services	Other	Total
Assets	765 530	525 267	179 422	474 171	188 139	200 312	-23 946	2 308 895
Joint ventures	-	102 582	-	-	-	-	-	102 582
Total segment assets	765 530	627 849	179 422	474 171	188 139	200 312	-23 946	2 411 477
Liabilities	370 449	429 255	115 759	460 157	95 569	132 291	197 634	1 801 115
This year's capital expenditures	3 589	4 907	1 605	254	-	3 320	-	13 676

2013 (RESTATED TO 2014 SEGMENT STRUCTURE):

		Key profit figures
	RCN	CBT	MPGC	Offshore	Shipyard Solutions	Services	Other	Total
Assets	673 562	497 948	249 718	472 278	141 510	161 993	-76 385	2 120 624
Joint ventures	-	104 002	-	-	-	-	-	104 002
Total segment assets	673 562	601 949	249 718	472 278	141 510	161 993	-76 385	2 224 626
Liabilities	386 941	398 633	156 847	368 202	68 311	91 189	187 833	1 657 956
This year's capital expenditures	7 648	17 845	8 765	13 148	730	1 520	1 568	51 224

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)

	2014	2013
Europe	1 018 863	1 152 248
Asia	1 296 333	1 312 215
USA/Canada	116 137	51 111
Rest of the world	22 325	177 593
Total sales revenue	2 453 658	2 693 167

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

TOTAL ASSETS

	2014	2013
Europe	1 893 708	1 746 038
Asia	486 675	424 199
USA/Canada	31 094	9 576
Rest of the world	-	-
Total assets	2 411 477	2 179 813

Assets are reported based on their location.

NON-CURRENT ASSETS 1)

	2014	2013
Europe	712 786	730 230
Asia	78 236	50 026
USA/Canada	2 258	290
Rest of the world	-	-
Total non-current assets 1)	793 280	780 546

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)

	2014	2013
Revenue from construction contracts, continued operations	1 923 788	2 247 508
Revenue from service contracts, continued operations	529 870	445 659
Total revenue from projects, continued operations1)	2 453 658	2 693 167
Revenue from construction contracts and service contracts, discontinued operations	-	-
Total revenue from projects continued operations and discontinued operations1)	2 453 658	2 693 167

Balance sheet items related to construction contracts
Current Assets
Completed production	1 039 540	812 319
Invoiced production	430 065	341 556
Accrued, non-invoiced production	609 475	470 763

Prepayments to suppliers	93 399	54 804
Total current assets	702 874	525 567

Current liabilities
Completed production	315 320	272 349
Invoiced production	548 840	553 838
Prepayments from customers	-233 520	-281 489

Non-invoiced production cost, suppliers	-81 284	-173 414
Total current liabilities	-314 804	-454 903

1) Revenue from projects includes revenues from long-term construction contracts and revenues from service contracts. Provisions for losses on contracts is recognized in the income statement when identified, see section 2.22 in Accounting principles. Risks related to the estimation of the posted values are further discussed under accounting principles, in sections 2.22 and 4.

Note 3 - Inventories

(AMOUNTS IN NOK 1000)

	2014	2013
Inventories, incl. non-current	225 947	243 376
Obsolescence	-36 683	-42 575
Total inventories	189 264	200 801

Book value of inventories pledged as security for liabilities	84 990	106 962

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 1 357 in 2014 (2013: MNOK 1 756).

Note 4 - Payroll expenses and employee information

(AMOUNTS IN NOK 1000)

Payroll expenses:	2014	2013
Salaries	631 879	535 754
Employer's social security contribution	60 638	56 791
Defined benefit pension costs (note 5)	-83 607	20 605
Defined contribution pension costs (note 5)	30 631	13 868
Other benefits	86 854	56 407
Total payroll expenses continued operations	726 395	683 425

Number of employees at the end of the year	1 073	1 100

The number of employees in the Group decreased with 27 from 2013 to 2014.

Board remunerations 1)	2014	2013
Trym Skeie	525	350
Toril Eidesvik	280	-
Bjarne Skeie	200	200
Anne Breive	240	240
Kjerstin Fyllingen	-	280
Jan Magne Galåen2)	240	240
Ole Henrik Askvik	100	75
Mona L. Tellnes Halvorsen	100	75
Ingve Hjelmeseter	-	19
Dag Rune Mjelde	-	19
Total	1 685	1 498

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

For the financial year 2014, the reported remuneration is based on the remuneration paid in 2014 based on the amounts determined by the Board at the Annual General Meeting for 2014. 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 Petter Sandtorv. The nomination committee remuneration for 2014 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. Bonus payment reported in 2014 is based on the evaluation of the relevant performance creiteria for the fiscal year endring 31.12.2013. Bonus payments are in line with the individual employment contracts.

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. As of 30th december 2014 TTS Group ASA and its Norwegian subsidiaries have changed its pension plan from defined pesion benefit plan into a contribution based pension plan. The change effects pension plan for all employees hired in the Norwegian companies. 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 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: 2014

(AMOUNTS IN NOK 1000)

Name	Position	Base salary	Other benefits	Bonus paid	Share options	Pension cost
Björn Andersson	President & CEO	2 961	10	-	32	-
Henrik Solberg-Johansen (from July 2014)	CFO	1 327	22	-	5	207
Per Croner	EVP, Roro/ Cruise/ Navy	1 984	133	375	5	813
Edgar Bettman	EVP, Container/ Bulk/ Tank	1 869	-	221	5	-
Ralf Ressel	EVP, MultiPurpose/ General Cargo	1 551	-	368	5	-
Stefan Gleuel	EVP, Services	2 100	-	196	21	-
Arve T. Rinde (from December 2014)	EVP, Offshore	142	1	-	-	9
Arild Apelthun ( till June 2014)	CFO	1 471	14	-	205	151
Ivar K. Hanson (till august 2014)	EVP, Marine	2 123	26	-	205	82
Geir Storaas (till December 2014)	EVP, Offshore	1 379	18	150	21	69

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, Björn Andersson, is not a member of the TTS Group pension plan, nor any other pension arrangement paid by TTS.

The former President & CEO, Johannes Neteland, received 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.

Remuneration of Auditor:	2014	2013
Statutory audit	4 750	4 755
Other attestation services	60	-
Tax advisory	664	413
Other non-audit service	306	461
Total	5 780	5 629

Note 5 - Pensions

(AMOUNTS IN NOK 1000)

The Norwegian companies within TTS Group has changed its pension plans as of 30.12.2014. In general the change is decribed as going from defined benefit pension plans to defined contribution plans. The change in pension plan affects all employees and retirees in total 251 persons, including 35 retirees.

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.

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 elected to classify the interest elements of the pension cost within the financial items in the P&L.

TOTAL PENSION COST:

		2014			2013
	Insured	Uninsured	Total	Insured	Uninsured	Total

Defined benefit plans	-83 607	-	-83 607	20 605	-	20 605
Defined contribution plan	30 631	-	30 631	13 900	-	13 900
Total pension cost	-52 977	-	-52 977	34 505	-	34 505
- of which recognized as payroll cost	-55 559		-55 559	32 433		32 433
- of which recognized as finance cost	2 583		2 583	2 072		2 072

THE NET PENSION OBLIGATION FOR COMPANIES WITH A DEFINED BENEFIT PLANS IS BASED ON THE ASSUMPTIONS AS OF 31.12.2014 AND ARE DETERMINED AS FOLLOWS:

			2014			2013
		Insured	Uninsured	Total		Insured Uninsured 2)	Total

	Fair value of assets at end of year	-	-	-	121 139	-	121 139
-	Defined benefit obligation at end of year	-	-	-	-186 216	-425	-186 640
+	Unrecognized net actuarial loss (gain)	-	-	-	-	-	-
-	Accrued payroll tax1)	-	-	-	-9 176	-6	-9 182
=	Net pension asset (obligation) after payroll taxes	-	-	-	-74 253	-431	-74 683

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 reach the age of 67.

NET PENSION COSTS FROM BENEFIT PLANS ARE DETERMINED AS FOLLOWS:

			2014			2013
			Insured Uninsured	Total		Insured Uninsured	Total

	Service cost	12 631	-	12 631	15 915	-	15 915
+	Interest cost	2 583	-	2 583	2 072	-	2 072
+	Administration cost	339	-	339	328	-	328
+	Payroll tax of net pension cost	1 829	-	1 829	2 290	-	2 290
+	Impact of curtailment/settlement incl. payroll tax	-100 989	-	-100 989	-	-	-
=	Net periodic pension cost	-83 607	-	-83 607	20 605	-	20 605
	- of which recognized as payroll cost	-86 190		-86 190	18 533		18 533
	- of which recognized as finance cost	2 583		2 583	2 072		2 072

CHANGE IN RECOGNIZED FUNDS:

		2014	2013
	Net liability as of 01.01	-74 704	-62 917
-	Cost recognized during the year (see above)	83 607	-20 605
	+/- Pension payments and payment of pension premiums	23 345	19 059
-	Remeasurements recognized in OCI	-30 713	-10 220
=	Net assets/ (liability) as of 31.12.	1 535	-74 684

EFFECTS RECORDED IN OTHER COMPREHENSIVE INCOME

	2014	2013
Remeasurements loss (gain) - change in discount rate	94 319	-7 334
Remeasurements loss (gain) - change in other financial assumptions DBO	-62 831	7 487
Remeasurements loss (gain) - change in mortality table	-	8 328
Remeasurements loss (gain) - change in other demographic assumptions DBO	-	-
Remeasurements loss (gain) - experience DBO	-13 282	-1 170
Remeasurements loss (gain) - change in other financial assumptions assets	2 300	-
Remeasurements loss (gain) - experience Assets	9 120	1 825
Investment management cost	1 076	1 085
Total remeasurement losses (gains) recognized in other comprehensive income	30 700	10 220

BREAKDOWN OF PENSION ASSETS UNDER MANAGEMENT BY DNB LIVSFORSIKRING

	2014	2013
Equities	N/A	6,80 %
Alternative investments	N/A	3,50 %
Bonds	N/A	17,00 %
Money market	N/A	22,00 %
Hold to maturity bonds	N/A	35,20 %
Real estate	N/A	14,30 %
Other	N/A	1,10 %

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

	Expenses		Commitments
	2014	2013	31.12.14	31.12.13
Discount rate	4,10 %	3,90 %	N/A	4,10 %
Return on pension funds	4,10 %	4,00 %	N/A	4,10 %
Annual wage growth	3,75 %	3,50 %	N/A	3,75 %
Annual adjustment of National pension index (G)	3,50 %	3,25 %	N/A	3,50 %
Annual adjustment of pensions in payment	3,50 %	3,25 %	N/A	3,50 %
Voluntary retirement	8,0-0,0%	8,0-0,0%	N/A	8,0-0,0%
Payroll tax	14,10 %	14,10 %	N/A	14,10 %
Mortality table 1)	K2013	K2013	N/A	K2013

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	Furniture, office
	Property	Buildings	and vehicles	equipment, etc.	Total
As of 1.1.2013
Acquisition cost 1.1.	15 782	20 729	61 694	100 342	198 547
Accumulated depreciation as of 1.1.	-1 162	-7 816	-22 247	-52 288	-83 513
Book value as of 1.1.2013	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	4 036	3 750	10 485
Acquisitions	-	-	-	-	-
Additions	-	326	13 718	22 382	36 426
Disposals	-	-	-474	-320	-794
Depreciation	-	-698	-9 521	-14 882	-25 101
Book value as of 31.12.2013	16 053	13 807	47 206	58 984	136 049

	Property	Buildings	Machinery and vehicles	Furniture, office equipment, etc.	Total
As of 31.12.2013
Acquisition cost 31.12.	17 215	22 198	70 220	109 579	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	47 206	58 983	136 049

2014 Financial year
Book value as of 1.1.	16 053	13 808	47 206	58 983	136 049
Foreign currency differences	2 860	1 303	3 734	3 385	11 282
Acquisitions	-	-	0	-	0
Additions	1 319	3 130	13 985	27 592	46 025
Disposals	-	-	-80	-329	-409
Depreciation	-	-4 759	-11 227	-16 066	-32 051
Book value as of 31.12.2014	20 232	13 482	53 618	73 565	160 897

As of 31.12.2014
Acquisition cost 31.12.	21 394	26 962	80 723	127 778	256 858
Accumulated depreciation as of 31.12.	-1 162	-13 481	-27 105	-54 213	-95 960
Book value as of 31.12.2014	20 232	13 482	53 618	73 565	160 897

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 2014	Cost 2015	Cost 2016-2019	Cost 2019+	Total future lease payments
Lease of premises	54 544	51 273	132 924	81 162	265 360
Lease of equipment and vehicles	10 414	11 513	20 693	8 511	40 717
Total	64 958	62 786	153 617	89 673	306 077

Note 7 - Intangible assets

(AMOUNTS IN NOK 1000)

	Customer portfolio	Patents, licences etc	R&D	Goodwill 1)	Total
As of 1.1.2013
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 01.01.2013	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
Amortisation	-	-	-	-	-
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

2014 Financial year
Book value 1.1.	26 368	4 579	46 746	538 119	615 811
Foreign currency differences	7 105	531	-	25 089	32 726
Additions	-	-	-	-	-
Acquisitions	-	-	-	-	-
Disposals	-	-	-4 437	-	-4 437
Depreciation	-2 870	-1 389	-7 456	-	-11 715
Amortisation	-	-	-	-	-
Book value as of 31.12.2014	30 602	3 720	34 853	563 208	632 384

As of 31.12.2014
Acquisition cost 31.12.	36 423	6 928	54 205	563 208	660 763
Accumulated depreciation as of 31.12.	-5 821	-3 207	-19 351	-	-28 379
Book value as of 31.12.2014	30 602	3 720	34 853	563 208	632 384

BOOK VALUE R&D, PATENTS AND LICENCES PER 31.12.2014 CONSIST OF:

Development - Heave compensated VME	29 575
Development - Offshore cranes	4 882
Other	4 117
Total	38 574

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:

Goodwill 31.12.13 (MNOK)
205
76
37
13
181
26
538

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 2014 the share price values of the group was 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. The annual

impairment assessment is carried out inhouse based on available information per December. 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 segment1)	Goodwill 31.12.14 (MNOK) Revenue 2014 (MNOK)		Actual	2014 Est. 20152)	>20162)	WACC3)
RoRo/Cruise/ Navy	206	632	12,9 %	12,9 %	12,9 %	13,1 %
Container/Bulk/Tank	83	537	-1,0 %	3,8 %	5,0 %	13,1 %
Shipyard Solutions	40	57	7,7 %	6,1 %	8,0 %	13,1 %
Offshore 4)	13	196	-15,3 %	6,2 %	8,0 %	13,1 %
MultiPurpose/ General Cargo	195	299	-7,8 %	4,8 %	6,7 %	13,1 %
Services	26	187	11,1 %	10,1 %	15,0 %	13,1 %
Total	563	1 908

			EBITDA Margin
CGUs within segment1)	Goodwill 31.12.13 (MNOK) Revenue 2013 (MNOK)		Actual	2013 Est. 20142)	>20152)	WACC3)
RoRo/Cruise/ Navy	189	469	17,3 %	13,1 %	12,9 %	12,2 %
Container/Bulk/Tank	78	665	-0,7 %	4,8 %	4,8 %	12,3 %
Shipyard Solutions	41	144	-5,1 %	3,8 %	6,1 %	12,3 %
Offshore	13	241	9,0 %	7,8 %	8,0 %	12,3 %
MultiPurpose/ General Cargo	181	530	-5,2 %	2,0 %	8,0 %	12,3 %
Services	36	159	-1,2 %	7,8 %	8,6 %	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 is not included in this table.

2) Weighted average

3) Pre-tax weighted average cost of capital

4) GW allocated to the offshore division is related to TTS Ships Equipment AS. Pre tax profit 2014 in the company is MNOK 14. A process has been initiated to merge the company with TTS Offshore Handling Equipment AS in 2015. The merger process may affect the future CGU calculation.

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 2015 are based on board-approved budgets for 2015. For the years 2016-2017, estimates are based on the mid term strategy figures approved by the board. Terminal value after 2017 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 business units of the Group operate. Please find additional description in in the principle notes section 4a.
Turn over, 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 IAS, 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 nominl pre-tax WACC. The WACC for all CGUs is based on a post tax WACC of 9,5%, which again is based on 2,4% risk free interest, a risk premium of 5%, a beta of 1,9 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:

CHANGE IN RECOVERABLE AMOUNT:

	Initial headroom	10% increase in WACC	10% decrease in EBITDA margin
RoRo/Cruise/ Navy	610 000	-78 000	-94 000
Container/Bulk/Tank	360 000	-70 000	-80 000
Shipyard Solutions	80 000	-17 000	-20 000
Offshore	240 000	-30 000	-35 000
Multipurpose/ General Cargo	82 000	-53 000	-45 000
Services	219 000	-46 000	-37 000
Total	1 591 000	-294 000	-311 000

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 31.12.2014.

Out of the tested CGUs, TTS NMF, a part of MultiPurpose/General cargo segment, 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 and 2014 have been weaker than expected. TTS Group expects an improved future market for heavy lift cranes, and has reorganized the NMF business, including expanding of the market foothold by establishing a new production and sales unit in China. Newbuild activity in the CGU related to sales in Europe have picked up, and is expected to remain stable. Capacity adjustments in the CGU are expected to give basis for improved margins. Turnover in 2017 for the European business is expected to be MNOK 320, and deliver a margin of 4,0%. The new production and sales unit locaed in China is established to improve market foothold in China. As the new unit is based upon taking advantage of already established know how, and end customers often being unchanged, the unit is considered to be part of the already defined CGU. The new unit is expected to give basis for a turnover of approx. MNOK 340 in 2017, and deliver a margin of 5,7%. The CGU also contains the services activity that is directly interlinked to the product delivered from newbuild activity. Services turnover is expected to grow from MNOK 91 in 2014 to MNOK 136 in 2017, and a change in margin going from 12,6% to 15,8%. Based on the assumption TTS Group has estimated that the value in use of the goodwill is MNOK 82 higher than the book value of the company of MNOK 361. Goodwill allocated to NMF is MNOK 195.

The MPGC newbuild unit revenue, decreasing sharply from MNOK 374 in 2013 to MNOK 138 in 2014 (exclusive service revenue), reflects the market slow in the segment for the last couple of years. The EBITDA for 2014 was in line with the previous year, and points both to restructuring costs in Germany and to low utilization in the unit. The cost cuts initiated in 2013 has laid the foundation for sound future operations in the unit, which has a strong market reputation and is in a position to benefit from the expected market growth. In December 2014, TTS NMF GmbH and South China Marine Machinery Co. Ltd., controlled by the leading state-owned corporation China State Shipbuilding Company (CSSC), established a new Chinese company within the heavy-lift segment. The establishing marks another important step in the strategic partnership between the TTS Group and CSSC and will strengthen TTS' position in the Chinese market. On the positive side, the strong order intake in 2014 indicates that the market for heavy lift cranes is recovering. The unit's order backlog grew from MNOK 307 at the year-end 2013 to MNOK 562 in 2014. The TTS Group is still in midst of a major turnaround process, but made substantial progress in a number of areas in 2014. The financial performance improved during the year, and the Board has reason to believe that the company is on the right track towards restoring industry profitability. Most important are of course the strategic actions taken in 2013 and 2014 in order to lay the foundations for a viable long-term and solid business performance. The market for heavy lift cranes for multipurpose and general cargo ships has been picking up in 2014 and we find it reasonable to assume that this positive development will continue. The overall outlook for the service market within the CGU remains stable, although low ship charter rates still influence the market.

If several assumptions changes in parallel the impairment conclusion may change. A drop in EBITDA by 10% and a paralell increase of WACC to 14,6% will reduce the impaiment excess value from MNOK 82 to MNOK 4. A reduction of EBITDA with 20%, and no changes in WACC will give basis for an impairment of MNOK 22. As structural cost in the CGU is a significant short and mid term cost factor, drop in estimated revenue will have substantial impact to the profit margin.

Note 8 - Investments in other companies

(AMOUNTS IN NOK 1000)

	Ownership	Acquisition cost	Book value
			2014	2013
Fixed assets:
Sigma Drilling AS1)	16.1 %	28 673	-	28 673
Other		2	-	-
Total investments in other companies		28 675	-	28 673

Other investments in shares are wholly defined as available for sale.

1) Following the cancellation of a new build contract from STX, Sigma Drilling has made a distribution of cash in the amount of MNOK 23,3 during 3rd quarter. Sigma Drilling is currently evaluating their future strategy. TTS Group has impaired the value of shares in Sigma Drilling by 5,3 MNOK in the 3rd quarter. Remaning value after impariment is NOK 1.

TTS is familiar with ongoing negotiations between Sigma Drilling an STX on final settlement related to the cancellation of the contract, which can give a positive outcome for the owners of Sigma Drilling.

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 1)	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 1)	Bergen, Norway	2012	100 %	NOK	2 000 000
TTS Neuenfelder Maschinenfabrik GmbH Hamburg, Germany		2012	100 %	EUR	3 000 000
TTS Polen SP.Z.O.O	Polen	2013	100 %	PLZ	250 000

1) Companies to be merged in 2015.

Joint venture	Registered office		Acquisition year Ownership/ voting share
TTS BoHai Machinery Co., Ltd	Dalian, China	2005	50 %
TTS Bohai Trading (Dalian) Co., Ltd	Dalian, China	2014	50 %

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

TTS MARINE AB HAS THE FOLLOWING SUBSIDIARIES:

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 2)	Gothenburg, Sweden	2005	100 %	SEK	100 000
TTS Marine S.r.l	Genova, Italy	2006	100 %	EUR	10 400
TTS Vietnam Co. Ltd	Haiphong, Vietnam	2014	100 %	VND	10 000

2) Company merged into TTS Marine AB in 2015.

Joint venture	Registered office		Acquisition year Ownership/ voting share
TTS Hua Hai Ships Equipment Co Ltd	Shanghai, China	2002	50 %
Shanghai TTS Hua Hai International Trade Co., Ltd	Shanghai, China	2012	50 %
Jiangsu TTS Hua Hai Ships Equipment co. Ltd 3)	Jiangsu, China	2007	20 %

3) TTS Hua Hai Ships Equipment co. Ltd owns 40 %. TTS indirectly controls 20 % of the votes. Joint ventures are accounted for in accordance with the equity method, see 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 4)	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

4) To be winded up in 2015.

TTS NEUENFELDER MASCHINENFABRIK GMBH HAS THE FOLLOWING SUBSIDIARIES:

Subsidiary	Registered office	Acquisition year	Ownership/ voting share Currency		Share capital
TTS SCM Marine and Offshore Machinery Co. Ltd 5)	Shenzhen, China	2014	50 %	RMB	32 000 000

5) Based on shareholder agreement the company is concidered as a subsidiary.

TTS MARINE AS HAS THE FOLLOWING SUBSIDIARIES:

Subsidiary	Registered office	Acquisition year	Ownership/ voting share Currency		Share capital
TTS Brazil Services 6)	Rio de Janeiro, Brazil	2014	99 %	BRL	400 000

6) TTS Group ASA owns the remaining 1 %.

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	Total

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

Opening balance 1.1.2014	15 986	88 016	104 002
Share of profit/loss (net of witholding tax)	1 942	12 384	14 326
Dividends (net of witholding tax)	-	-27 601	-27 601
Currency effect	1 822	10 033	11 855
Closing balance 31.12.2014	19 750	82 832	102 582

JV'S TOTAL (100%) PROFIT/LOSS, ASSETS AND LIABILITIES PER 31.12.2014:

	Long term assets	Current assets	Long term liabilities	Current liabilities	Income	Profit/loss after tax
TTS Bohai Machinery Co., Ltd	3 760	229 709	-	184 916	356 575	5 016
TTS Hua Hai Ships Equipment Co., Ltd, Shanghai and Jiangsu	11 500	606 392	-	493 727	583 803	29 750
Total	15 260	836 101	-	678 643	940 378	34 766

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	733 379	39 363

OTHER RECEIVABLES INCLUDED IN SHORT-TERM RECEIVABLES:

	2014	2013
VAT	20 031	21 685
Prepayments	10 683	4 355
Other receivables	65 921	32 776
Other short-term receivables	96 634	58 816

Note 11 - Trade and other receivables

(AMOUNTS IN NOK 1000)

Trade receivables	2014	2013
Trade receivables	347 587	338 238
Loss provisions	-20 840	-21 843
Net trade receivables	326 747	316 395

Trade receivables (gross) per currency:	2014	2013
EUR	116 638	151 323
USD	106 575	70 967
NOK	108 379	105 794
Other currencies	15 995	10 154
Total	347 587	338 238

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

OTHER RECEIVABLES INCLUDED IN SHORT-TERM RECEIVABLES:

	2014	2013
VAT	20 031	21 685
Prepayments	10 683	4 355
Other receivables	65 921	32 776
Other short-term receivables	96 634	58 816

Note 12 - Loans and non-current liabilities

(AMOUNTS IN NOK 1000)

	Repayment profile and maturity:
	Nominal value 31.12.2014	2015	2016	2017	2018	2019 and later
Convertible Subordinated Bond Loan 2011/2016	95 345	-	95 345	-	-	-
Other loans	190 035	190 035	-	-	-	-
Total loans incl. first year instalment and short term loans	285 380	190 035	95 345	-	-	-
- short term loans and first year instalment of non-current debt	190 035	-190 035	-	-	-	-
Total non-current liabilities	95 360	15	95 345	-	-	-
Expected interest payments		13 387	381	-	-	-

SPECIFICATION OF LOANS:

	Loan type Currency		Nominal interest rate	Maturity terms	Instalment terms	Nominal value 2014	Nominal value 2013
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	3 000	6 000
DNB	Mortgage loan		NOK Nibor + 2,85%	2015	balloon	100 000	100 000

TTS Marine Korea Ltd.
Kookmin Bank	Mortgage loan	KRW	3,82 %	2015	quarterly	16 200	0
Kookmin Bank	Mortgage loan	KRW	3,82 %	2015	quarterly	3 413	2 881

TTS Marine Shanghai Co Ltd
DNB Bank ASA Shanghai Branch	Mortgage loan	EUR	EURIBOR + 2,0 %	2015	balloon	4 732	1 220
DNB Bank ASA Shanghai Branch	Mortgage loan	RMB	PBOC base rate	2015	balloon	35 931	22 360
DNB Bank ASA Shanghai Branch	Mortgage loan	USD	USDLIBOR + 1,5 %	2015	balloon	26 759	19 796

Total loans						285 380	247 602
Difference between nominal value and effective debt value related to convertible bond (ref. Note 15)						-7 202	-14 163
Net book value of bond debt and other debt to financial institutions 1)						278 178	233 439

1) Debt exclusive of draw-down TNOK 123 200 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 31.12.2014 is TNOK 88 143.

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

(NOK 1000)	2014	2013
NOK	198 345	201 345
EUR	4 732	1 220
USD	26 759	19 796
RMB	35 931	22 360
KRW	19 613	2 881
Total	285 380	247 602

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 and13). Covenants for both equity ratio and 12 months rolling EBITDA related to the debt facilities with Nordea and DNB have been renegotiated in December 2014, and have been waived until 4Q 2015. The Group has to meet the following financial covenant requirements from Nordea and DNB in the period Q4-2014 and until Q3-2015:

The Group's equity ratio shall at least be equal to 20.0 %. 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 31.12.2014 is MNOK 698, which represents an equity ratio of 30.3 %. Thus, TTS Group meets the financial covenant requirement as per 31.12.2014.

The Group's covenant related to rolling 12 months NIBD/EBITDA has been waived until Q4 2015. In the period Q4-2014 until Q3-2015 a new EBITDA level covenant is applied.

(MNOK)	Q4-14	Q1-15	Q2-15	Q3-15
EBITDA covenant acumulated	≥ 31	≥ 31	≥ 53	≥ 80

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:

	2014		2013
	Limit	Drawn	Limit	Drawn
Group cash pool overdraft facility1)	300 000	-123 248	300 000	-73 870
Drawdown facility, operations	100 000	-100 000	100 000	100 000
Guarantee limit for Group	640 000	620 200	500 000	461 900

1) Cash balance in TTS Group cash pool arrangement; 31.12.2014; MNOK -123,2, 31.12.2013; MNOK -73,9.

As per 31.12.2014 all Norwegian companies (ref Note 9), as well as TTS Marine AB, TTS Port Equipment AB, TTS Liftec OY, 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 1.040, and consists of;

MNOK 100, 3 year term loan facility, unchanged in 2014
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 640 in 2014

The agreement includes covenant requirements related to equity ratio and EBITDA level. The covnenants are described in note 12.

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:	2014	2013
Shares in TTS Marine AB	389 663	347 354
Account/Group receivables	272 552	224 767
Inventory/Work in progress, including non-invoiced production	84 990	106 962
Property	-	-
Assets pledged as collateral	747 205	679 083

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 3.0 has security in the shares of TTS Marine Equipment Co. Ltd.

TTS MARINE AB

As pr 31.12.2014, MSEK 235.6 (MNOK 226.2) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 620.2 in the above table. In addition TTS Marine AB has a bank guarantee agreements with Danske Bank. As per 31.12.2014 total guarantees were MSEK 2.4 (MNOK 2.5). The bank has received parent company guarantee (generell borgen) from TTS Group ASA.

TTS MARINE GMBH

As per 31.12.2014, MEUR 5.4 (MNOK 48.9) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 620.2 in the above table.

NEUENFELDER MASCHINENFABRIK GMBH (NMF)

As per 31.12.2014, MEUR 4.7 (MNOK 42.6) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 620.2 in the above table.

TTS PORT EQUIPMENT AB

As pr 31.12.2014, MSEK 34.0 (MNOK 32.7) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 620.2 in the above table. In addtion TTS Port Equipment AB has a bank guarantee agreements with Danske Bank. As per 31.12.2014 total guarantees submitted were MSEK 0.5 (MNOK 0.5 ). The bank has received parent company guarantee (generell borgen) from TTS Group ASA.

TTS LIFTEC OY

As pr 31.12.2014, MEUR 0.12 (MNOK 1.0) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/ DnB of MNOK 620.2 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 27.0) which was drawn with MEUR 3.1 (MNOK 27.9) as per 31.12.2014. A credit limit has also been established in RMB of MRMB 30.0 (MNOK 35.9) of which MRMB 30,0 (MNOK 35,9) was drawn as per 31.12.2014. A credit limit has also been established in USD of MUSD 1.0 (MNOK 7.4) of which MUSD 0.7 (MNOK 5.4) was drawn as per 31.12.2014. The bank has receieved two parent company guarantee from TTS Group ASA of MEUR 3.0 (MNOK 27.0) and one of 1 MUSD (MNOK 7.4)

TTS MARINE KOREA CO. LTD

TTS Marine Korea Co., Ltd has established a loan of MKRW 500 (MNOK 3.4) with Kookmin Bank in Korea. The company also has a credit limit of MKRW 2 500 (MNOK 17.1), of wich 2 375 MKRW (MNOK 16.2) was drawn . The bank has security in the company's building. In addition TTS Group ASA is co-debtor. The building is valued to MKRW 3 441 (MNOK 23.5).

Note 14 - Net interest-bearing debt

(AMOUNTS IN NOK 1000)

	2014	2013
Bank deposits, cash etc. as of 31.12. exclusive cash pool	130 602	229 441
Cash pool agreement as of 31.12.	-123 248	-73 870
Convertible Bond loan 1)	-95 345	-95 345
Other non-current interest bearing debt	-	-103 000
Other current interest bearing debt	-297 764	-49 257
Net interest-bearing debt (-) / deposits (+)	-262 507	-92 031

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 was 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.

Changes to conversion price 2014.

There have been no Debt conversions or changes in the conversion price in 2014. The conversion price is NOK 4.97 per share.

TTS Group ASA has a call option to enforce a conversion of bond into shares. The option require a weighted average share price that exceeds NOK 7.455 per share for more than 20 days within a 30 days period. The call option is effective as of 8.2.2014. 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.

2014
200 000
-7 500
-97 155
95 345

-14 262
-36 981
1 387
17 964
9 977
1 900
5 851
6 961
88 143

1) MNOK 4.5 was converted in February and March 2012. MNOK 76.155 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. There was no conversions in 2013 and 2014

	Repayment profile and maturity:
	2012	2013	2014	2015	2016
Subordinated convertible bond loan - nominal value	95 345	-	-	-	-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 31.12.2014:

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	6 036 217	5,71 %
HOME CAPITAL AS	2 434 608	2,30 %
ODIN MARITIM	1 307 847	1,24 %
HOLBERG NORDEN	1 276 660	1,21 %
BL CAPITAL I AS	1 207 243	1,14 %
SKEIE CONSULTANTS AS 1)	1 207 243	1,14 %
AKERSHUS FYLKESKOMM. PENSJONSKASSE	804 829	0,76 %
TAMAFE HOLDING AS 1)	804 829	0,76 %
MERTOUN CAPITAL AS	804 829	0,76 %
Erik Penser Bankaktiebolag AB	779 678	0,74 %
Other	2 520 121	2,38 %
Total	19 184 105	18,13 %

1) Bonds held by principal shareholder in TTS Group.

Note 16 - Share capital and shareholder information

Date	Number of shares	Nominal value	Share capital
31.12.14	86 605 660	0.11	9 526 623
31.12.13	86 605 660	0.11	9 526 623

Changes to share capital 2014:

There were no changes to the nominal share capital in 2014

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

DIVIDENDS PAID AND PROPOSED:

(NOK 1000)	2014	2013
Declared and paid during the year:
Dividends on ordinary shares	-	86 461

Dividend for shareholders proposed for 2014, to be paid in 2015: NOK 0 per share. Total dividend amount proposed: NOK 0.

TREASURY SHARES:

	Number of shares	Share capital (NOK 1000)
Treasury shares as of 01.01.2013	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

Sale of treasury shares May 2014	31 518	-3 467
Treasury shares as of 31.12.2014	112 882	-12 417

On the 5. June 2014, 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 2015.

On the 5 June 2014 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 2015.

PRINCIPAL SHAREHOLDERS OF TTS GROUP ASA AS OF 31.12.2014:

Shareholder	Number of shares	Ownership	Voting share
RASMUSSENGRUPPEN AS	11 512 506	13,29 %	13,29 %
SKEIE TECHNOLOGY AS	8 929 879	10,31 %	10,31 %
LESK AS	5 306 058	6,13 %	6,13 %
STISK AS	5 306 058	6,13 %	6,13 %
SKEIE CAPITAL INVESTMENT AS	4 203 361	4,85 %	4,85 %
BARRUS CAPITAL AS	3 465 005	4,00 %	4,00 %
SKANDINAVISKA ENSKILDA BANKEN AB	3 207 052	3,70 %	3,70 %
SKAGEN VEKST	3 055 946	3,53 %	3,53 %
HOLBERG NORGE	2 166 816	2,50 %	2,50 %
TAMAFE HOLDING AS	2 160 735	2,49 %	2,49 %
ODIN MARITIM	2 158 443	2,49 %	2,49 %
HOLBERG NORDEN	2 000 000	2,31 %	2,31 %
PIMA AS	1 816 078	2,10 %	2,10 %
MERTOUN CAPITAL AS	1 769 598	2,04 %	2,04 %
UBS AG, LONDON BRANCH	1 741 489	2,01 %	2,01 %
ITLUTION AS	1 475 261	1,70 %	1,70 %
SKANDINAVISKA ENSKILDA BANKEN	1 473 111	1,70 %	1,70 %
SKEIE CONSULTANTS AS	1 253 033	1,45 %	1,45 %
VERDIPAPIRFONDET DNB SMB	1 050 000	1,21 %	1,21 %
EUROCLEAR BANK S.A./N.V. ('BA')	747 404	0,86 %	0,86 %
Total, 20 largest shareholders	64 797 833	74,82 %	74,82 %
Total other	21 807 827	25,18 %	25,18 %
Total	86 605 660	100,00 %	100,00 %

SHARES AND SHARE OPTIONS OWNED BY BOARD MEMBERS, GROUP EXECUTIVES AND THEIR RELATIVES:

	Shares
Board	31.12.14	15.04.15	31.12.13	31.12.14	15.04.15	31.12.13
Trym Skeie 1)	2 733 875	2 733 875	2 483 875	-	-	-
Bjarne Skeie 2)	14 386 273	14 386 273	12 414 175	-	-	-
Toril Eidesvik 3)	50 000	50 000	0	-	-	-
Jan-Magnar Grøtte	10 080	10 080	10 080	12 500	12 500	-
Anita Kråkenes	2 000	2 000	0	-	-	-

Group Executives
Björn Andersson	75 000	75 000	0	145 000	145 000	-
Henrik Solberg-Johansen	50 000	50 000	0	12 500	12 500	-
Edgar Bethmann	20 000	20 000	20 000	12 500	12 500	-

1) Trym Skeie owns 100 % of the shares in Tamafe Holding AS and Skeie Alpha Invest 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 Investment AS.

3) Toril Eidesvik own 100 % of the shares and voting shares in Zahlahuset II AS.

On the 5 June 2014, 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 5.06.2015. No shares have been issued on the basis of this authorisation as of 15 April 2015.

On the 5 June 2014, 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 the Annual General Meeting 5.06.2015.

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 5 June 2014, 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 30.6.2016. A total of 575 000 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 2015, 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 2015 and the first quarter of 2016, in addition to options not previously exercised. Option granted to people leaving TTS Group are terminated.

ALLOCATION OF OPTIONS:

			Number of options exercisable until	Exercise	Number of options exercisable until	Exercise
Name	Position	Company	10.06.2015	price	05.06.2016	price	Total
Senior executives
Björn Andersson	CEO & President	TTS Group ASA	70 000	6,42	75 000	6,15	145 000
Henrik Solberg-Johansen	CFO	TTS Group ASA	-	6,42	12 500	6,15	12 500
Miao Reinlund	EVP	Communication TTS Group ASA	60 000	6,42	25 000	6,15	85 000
Geir Storaas	EVP Joint ventures	TTS Group ASA	50 000	6,42	50 000	6,15	100 000
Stefan Gluel	EVP Services	TTS Marine GmbH	50 000	6,42	50 000	6,15	100 000
Ralph Ressel	EVP MPGC	TTS NMF GmbH	-	6,42	12 500	6,15	12 500
Per Croner	EVP RCN	TTS Marine AB	-	6,42	12 500	6,15	12 500
Edgar Bettmann	EVP CBT	TTS Marine GmbH	-	6,42	12 500	6,15	12 500

Other executives	Various	Various	-	6,42	225 000	6,15	225 000

Total number of options to executives			230 000		475 000		705 000

During 2013 150 000 share options with a strike price of 3.33, alocated in 2011 were exercised from Senior Management. During 2014 no share options have been exercised from Senior Management.

In accordance with authorities granted by the Annual General Meeting in 2013 and 2014, 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 2013 and 2014 was 52% and 48% respecitvely. Risk-free interest rate applied for options issued in 2013 and 2014 was 1,56% and 1,53% resepectively. For 2014, option premium of MNOK 1.2 (2013 MNOK 1.3) 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.

Group ASA received no objections to the capital reduction. The capital reduction was registered at the Register of Business Enterprises on 25.10.2012 after opening time of Oslo Stock Exchange. 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 28.87 %. 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. There have been no changes to the outsatnding debt amount, or conversion prices in 2014.

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.

	2014	2013
Net profit attributable to ordinary equity holders of the parent from continuing operations	-21 819	-227 363
Net profit attributable to ordinary equity holders of the parent from discontinued operations	39 562	22 945

Weighted average of issued shares excluding own shares	86 443	86 406

Earnings per share - continuing operation (NOK per share)	-0,25	-2,63
Earnings per share - discontinued operation (NOK per share)	0,46	0,27

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 31.12.2014. The remaining nominal convertible bond debt is MNOK 95.345, corresponding to 19 184 105 conversion rights based upon the fixed conversion price as per 31.12.2014.

	2014	2013
Profit used to calculate diluted earnings per share - continuing operation	-21 819	-227 363
Profit used to calculate diluted earnings per share - discontinued operation	39 562	22 945

Average of ordinary issued shares excluding own shares	86 443	86 406
Adjustment for share options	-	80
Adjustment for average of coversion right in convertible bond	-	-
Average number of ordinary shares for calculation of diluted earnings per share	86 443	86 486

Diluted earnings per share - continuing operation (NOK per share)	-0,25	-2,63
Diluted earnings per share - discontinued operation (NOK per share)	0,46	0,27

SHARE STRUCTURE:

	2014	2013
Issued shares	86 605 660	86 605 660
Own shares	112 882	144 400
Unused share options that can be settled by issue	705 000	720 000
Conversion right related to convertible bond loan	19 184 105	19 184 105

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 31.12.2014. Please find additional information relating to the bond loan in Note 15.

Note 18 - Tax

(AMOUNTS IN NOK 1000) SHARE STRUCTURE:

Income tax expenses:	2014	2013
Payable tax 1)	17 893	22 076
Not allocated tax losses	34 830	255 918
Change in deferred tax	-27 644	-251 512
Impairment of tax assets	20 000	-

1) Payable tax is relating to the foreign subsidiaries' taxable profit that cannot be offset against tax losses carried forward in Norway or other countries with tax losses.

Tax cost in the profit and loss statement 45 079 26 482

A RECONCILIATION OF THE EFFECTIVE TAX RATE IN TTS GROUP ASA'S COUNTRY OF REGISTRATION:

	2014	2013
Profit before tax	62 823	-177 936

Expected income tax according to income tax rate in Norway (27%)	16 962	-49 822
Prior period adjustment deferred taxes	-	-
Not allocated deferred tax losses	4 451	76 668
Profit from joint ventures	-3 868	-3 350
Permanent differences	11 824	10 193
Tax rate outside Norway, different from 27%	-4 290	-7 207
Impaiment of tax assets	20 000	-
Tax cost in the profit and loss statement	45 079	26 482

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 in 2013 was 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:	2014	2013

Gross deferred tax assets	246 715	352 529
- Not allocated tax losses	-215 563	-294 781
- Offset deferred taxes		-
- Deferred tax assets to be recovered after 12 months	31 152	57 748
- Deferred tax assets to be recovered within 12 months
Total recognized deferred tax assets (gross)	31 152	57 748

Deferred tax liabilities:	2014	2013

Gross deferred tax	-31 336	-30 929
- Deferred tax to be recovered after 12 months	-31 336	-30 929
- Deferred tax to be settled within 12 months
Total recognized deferred tax liabilities (gross)	-31 336	-30 929

Net deferred taxes in Group (asset=+, liability=-)	-184	26 819

CHANGE IN RECOGNIZED DEFERRED TAXES:

	2014	2013
Recognized value 1.1.	26 819	36 414
Deferred tax charged in the income statement	27 644	251 512
Not allocated tax losses charged in the income statement	-34 830	-255 918
Impaiment of tax assets	-20 000	-
Change in deferred taxes related to convertible bond	-	1 775
Sale shares in subsidiaries	-	-
Deferred tax related to business combinations	-	-
Prior period adjustment of deferred taxes including
foreign currency differences	183	-6 964
Recognized value 31.12.	-184	26 819

CHANGE IN DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (EXCLUDING NETTING WITHIN THE SAME TAX REGIME):

	1.1.2013	Changes 2013	31.12.2013	Changes 2014	31.12.14
Deferred tax (asset = + / liability = -)
Fixed assets	-1 679	23 991	22 312	-12 792	9 520
Current assets	1 092	225	1 317	-7 349	-6 032
Other temporary differences / provisions	-20 357	1 823	-18 534	3 710	-14 824
Impairment deferred tax assets	-	-	-	-20 000	-20 000
Not allocated tax losses	-38 863	-255 918	-294 781	79 218	-215 563
Tax losses to carry forward	102 258	218 509	320 767	-74 052	246 715
Deferred taxes related to convertible bond	-6 037	1 775	-4 262	4 262	-
Net deferred tax (asset = + / liability = -)	36 414	-9 595	26 819	-27 003	-184

Deferred tax asset relating to tax losses carried forward have been recognized as deferred tax asset to the extent that it is probable that future profits will be available. Tax losses carried forward are 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. Based on the assessment tax assets has been totally impaired by MNOK 20 in 2014. In the norwegian companies tax assets has been impaired by MNOK 42. In the German companies the assessment have given basis for a rerecognition of tax assets of MNOK 22.

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

	2014	2013
Tax payable	17 893	22 076
Prepaid tax	-16 958	-15 804
Total tax payable in balance sheet at year end	935	6 272

ORIGIN OF TAX PAYABLE:

	2014	2013
Norway	0	23
Rest of Europe	962	16 589
Outside Europe	-27	5 465
Total	935	22 076

TAXES CARRIED FORWARD BY REGION 2014:

	Norway		Germany Rest of Europe Outside Europe		Total
Deferred tax on tax losses carried forward	148 964	94 601	-	3 150	246 715
Deferred tax not recognised	-142 962	-72 601	-	-	-215 563
Deferred tax asset recognised	6 002	22 000	-	3 150	31 152

Deferred taxes liability	-	7 961	23 375	-	31 336
Deferred tax liability	-	7 961	23 375	-	31 336

SPECIFICATION OF DIFFERENCES BETWEEN THE FINANCIAL PROFIT BEFORE TAX AND THE TAX BASIS FOR THE YEAR:

2014	2013
62 823	-177 936
43 793	36 404
-60 855	99 336
34 919	138 552
80 679	96 355

17 893	22 076
22,2 %	22,9 %

Note 19 - Other current liabilities

(AMOUNTS IN NOK 1000)

	2014	2013
Provisions for completed projects (ref Note 23)	144 629	205 940
Guarantee provisions (ref Note 23)	42 185	56 634
Other liability provisions (ref Note 23)	112 835	38 459
Other current liabilities	241 728	198 319
Total Other current liabilities	541 377	499 352

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)

	2014	2013
Premises and office expenses	61 517	59 197
Computer expenses	25 996	27 477
Marketing and travel expenses	40 893	45 740
Consultancy and external services	41 766	38 435
Other expenses	35 983	57 275
Total other operating expenses, continued operations	206 156	228 124

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 2014 and 2013.

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 31.12.2014, the Group has not recorded any impairment of receivables relating to the amounts owed by related parties (2013: 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.

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.

TRANSACTIONS WITH JOINT VENTURES:	2014	2013
Sales to joint ventures	30 652	15 114

Purchases of goods and services from joint ventures	29 601	47 487

BALANCE SHEET ITEMS RELATED TO PURCHASE AND SALE OF GOODS AND SERVICES:	2014	2013
Receivables from joint ventures	28 472	45 576

Liabilities to joint ventures	2 198	47 515

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 17, there are no further agreements or commitments between the Group and the related parties.

Note 22 - Derviatives

(AMOUNTS IN NOK 1000)

	2014		2013
Market value:	Assets	Liabilities	Assets	Liabilities
Forward currency contracts - effective hedging contracts	38 340	237 319	23 711	23 023
Forward currency contracts - ineffective hedging contracts	-	3 253	-	5 471
Currency option contracts not designated as hedging contracts	-	1 880	1 468	-
Forward currency contracts - total	38 340	242 452	25 179	28 494

Fair value of hedging instruments and derivatives are classified as current assets or current liabilities.

Matures:	Net market value
Q1 2015	-40 605
Q2 2015	-49 629
Q3 2015	-52 362
Q4 2015	-29 134
2016	-25 769
2017 and later	-1 480
Total	-198 979

Nominal value currency contracts, original currency (Amounts in currency*1000)

	Sold	Bought
NOK	383 364	551 415
USD	244 284	38 361
EUR	33 425	69 852
SEK	94 869	960 438
KRW		55 700

FORWARD CURRENCY CONTRACTS:

The nominal value of the outstanding forward currency contracts on 31.12.2014 is MNOK 2 592 compared to MNOK 1 785 in 2013.

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 3 253 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 appurtenant risks, please refer to Accounting principles, and see section 2.10 and 3.1.

Note 23 - Provisions for liabilities

(AMOUNTS IN NOK 1000)

	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

	Completed projects 1)	Guarantees	Other	Total
1.1.2014	205 940	56 634	38 459	301 034
Provisions for the year	135 849	14 550	222 467	372 866
Utilized provisions during the year	-200 971	-30 620	-154 130	-385 721
Currency exchange deviation	3 811	1 620	6 039	11 470
31.12.14	144 629	42 185	112 835	299 649

Classification in the balance:		2014	2013
Presented as other current liabilities, see note 19			299 649	301 034

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)

	2014	2013
Other interest income	11 756	7 903
Net other financial income and expenses	-7 640	-17 057
Effective interest on convertible bond (ref Note 15)	-14 589	-13 479
Interest on debt to financial institutions	-18 804	-10 409
Other interest expenses	-8 911	-3 741
Total financial items and foreign currency gains/losses continued operations	-38 188	-36 783

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 that are not an integrated part of the operation of the company.

Per 1.1.2013	(24 696)

Equity currency differences 2013:
Group company	74 532
Joint ventures	(3 134)
Net changes 2013	71 398

Total equity currency effects per 31.12.2013	46 702

Equity currency differences 2014:
Group company	34 620
Joint ventures	20 668
Net changes 2014	55 289

Total equity currency effects per 31.12.2014	101 991

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.

CLASSIFICATION OF FINANCIAL ASSETS:

			2014
	Financial derivative contracts not designated for hedgning	Financial derivative contracts designated	for hedgning Loans and receivables	Assets available for sale	Total
Non current financial assets:
Shares available for sale	-	-	-	-	-
Other receivables	-	-	-	-	-
Financial current assets:
Trade receivables	-	-	326 747	-	326 747
Other current receivables	-	-	96 634	-	96 634
Acquired, non-invoiced production	-	-	609 475	-	609 475
Derivatives 1)	-	38 340	-	-	38 340
Prepayment to suppliers	-	-	93 399	-	93 399
Cash and cash equivalents	-	-	130 602	-	130 602
Total financial assets	-	38 340	1 256 857	-	1 295 197

1) Fair value of financial assets:

			2013
	Financial derivative contracts not designated for hedgning	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

1) Fair value of financial assets:

CLASSIFICATION OF FINANCIAL LIABILITIES:

	2014
	Financial derivative contracts not designated for hedgning	Financial derivative contracts designated for hedgning	Other financial liabilities	Total
Non-current financial liabilities
Interest-bearing non-current debt	-	-	88 143	88 143
				-
Current financial liabilites
First year installment of non-current debt	-	-	-	-
Interest-bearing current liabilities	-	-	297 764	297 764
Prepayments from customers	-	-	233 520	233 520
Cost related to facilities under construction	-	-	81 284	81 284
Derivatives 1)	1 880	235 439	-	237 319
Accounts payable and other financial debt	-	-	831 748	831 748
Total financial liabilities	1 880	235 439	1 532 459	1 769 778

1) Fair value of financial liabilities:

	2013
	Financial derivative contracts not designated 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
				-
Current financial liabilites
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-to-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. 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.

Assets measured at fair value	2014	Level 1	Level 2	Level 3	2013	Level 1	Level 2	Level 3
Shares available for sale	-	-	-	-	28 686	-	-	28 686
Foreign exchange contracts - hedging	38 340	-	38 340	-	23 711	-	23 711	-
Foreign exchange contracts - non-hedging	-	-	-	-	1 468	-	1 468	-

Liabilities measured at fair value	2014	Level 1	Level 2	Level 3	2013	Level 1	Level 2	Level 3
Foreign exchange contracts - hedging	235 439	-	235 439	-	23 023	-	23 023	-
Foreign exchange contracts - non-hedging	1 880	-	1 880	-	5 470	-	5 470	-

Note 27 - Business combinations

(AMOUNTS IN NOK 1000)

ACQUISITION IN 2014

There have been no acquisitions in 2014

In September 2014 TTS Group established a 100% subsidiary company TTS Brasil Servicos Ltda to strenghten the service concept in the Brasil region. In October 2014 TTS Group establihsed a 100% subsidiary company TTS Vietnam Ltd. The company is set up to support technical design as a service provider to other group companies. In December 2014 TTS Group establised a 50/50 company in China TTS-SCM Marine and Offshore Machinery Co.Ltd. The company is established as part of the group strategy to improve its competitiveness within the MultiPurposeGeneralCargo segment.

ACQUISITION IN 2013

ACQUISITION OF JMARINE

On 09.08.2013 TTS Group through its subsidiary TTS Poland ZP.Z.O.O. acquired 100% of the business of JMarine, an unlisted company based in Gdansk.TTS Poland performs technical design and installation services, primarily as a sub-supplier 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	09.08.2013
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.

Note 28 - Discontinuing operations

(AMOUNTS IN NOK 1000)

DIVESTMENTS IN 2014

The Group did not divest any of it's activities in 2014.

Earn-out from the sale of the Energy division in 2012 have been evaluated. Based on the earn-out criteria no additional earn-out was recognized in net result from divested business in 2014.The outcome of the remaining year of the earn-out period (07.2014 - 06.2015) is uncertain, and no income from the earn-out has been included in the net result from discontinued operations at year end 2014.

TTS Group received a release of hold-back of MUSD 7,0 in Q3/2014, which has been recognized as net result from divested business in 2014.

A hold-back amount of MUSD 1,2 remain unsettled by year end 2014. The amount is not included in the net result from discontinued operations in 2012, 2013 or 2014. The hold-back amount is a part of the consideration of MUSD 270 for the 2012 sale of Energy division.

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.

A hold-back amount of MUSD 7,5 is not settled by year end 2013, which is not included in the net result from discontinued operations in 2012 or 2013. The hold-back amount is a part of the consideration of MUSD 270 for the 2012 sale of Energy division.

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.

There are no other on-going cases that are expected to lead to significant commitments for the TTS Group.

Note 30 - Subsequent events

EVENTS REGARDING TTS GROUP ARE AS FOLLOWS:

TTS Group has a strategy to grow its product portfolio and service offering. Sales of larger bundled equipment packages and solutions will improve efficiency for both shipyards and ship owners. The company has therefore reorganized its business units from a product focus to a ship-type focus. The aim is to increase the order value per ship and increase TTS' market position, both in China and internationally.

In order to position the TTS Group for this growth the Board of Directors of TTS Group has decided to run a strategic process to explore opportunities for both acquisitions and partnerships.

Pareto Securities AS is engaged as financial advisor.

NEW CONTRACTS IN THE PERIOD 01.01.2015 - 15.04.2015:

TTS Group ASA has, through its subsidiary TTS Handling Systems AS in Drobak, Norway secured a new contract for the delivery of a 9000 tonne ship transfer system. The total contract value is 23 MNOK. The contract is a repeat order from Baku Shipyard in Azerbaijan operated by Keppel Fels/Socar. Delivery will take place in November 2015.

TTS Group ASA has, through its subsidiary TTS Marine AB in Gothenburg, Sweden, entered into a contract for delivery of cargo access equipment to in total three car carriers. The total order value for TTS is approx. 25 MNOK. The three Pure Car/Truck Carriers (PCTC) are under construction at a European shipyard. The TTS deliveries will be completed during 2016 and 2017.

TTS Group ASA has, through its new 50/50 company TTS-SCM Marine and Offshore Machinery Co., Ltd. in China, entered into a strategically important contract for delivery of marine equipment packages, consisting of heavy lift cranes, hatch covers and winches to six new multipurpose heavy lift vessels. The package equipment approach brings the total order value up to approx. 270 MNOK for the six vessels. The contract is signed with Shanghai Shipyard Co., Ltd., and is related to their order for six 28.000 DWT multipurpose heavy lift vessels that is going to be built as part of the ongoing fleet extension program of China Ocean Shipping Group Company (COSCO). The delivery of the first ship will be in May 2016

TTS Group ASA has, through its Business Unit Offshore, entered into three new agreements for delivery of offshore and deck cranes with a total order value of approx. 105 MNOK.

The main contract is with Triyards Marine Services Pte Ltd. in Singapore for delivery of two active heavy compensated (AHC) subsea cranes for two vessels contracted by an Indian owner. The deliveries will take place 2(nd) and 3(rd) quarter 2016. The two other contracts are for shipyards respectively in Argentina and Norway.The Argentinian yard has ordered three deck cranes for a product carrier. Delivery will be in approx. 10 months. For the Norwegian shipyard Kleven Verft, TTS will deliver deck cranes for six offshore vessels to be built for Maersk. The delivery time will be 12-16 months. TTS has reinforced its position within the midsize crane segments.

TTS GROUP ASA PROFIT AND LOSS STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

	Notes	NGAAP 2014	NGAAP 2013
OPERATING INCOME
Group service fee from TTS subsidiaries	16	34 272	33 221
Total operating income		34 272	33 221

OPERATING COSTS
Personnel costs etc.	1, 2	23 346	32 130
Depreciation on tangible fixed assets	3	625	660
Other operating costs	1, 14	25 150	28 926
Total operating costs		49 121	61 716

Operating profit		-14 849	-28 495

FINANCIAL INCOME AND EXPENSES
Income from investments in subsidiaries	16	-	236 906
Income from investments in joint ventures	16	-	-
Interest received from group companies	16	11 623	19 161
Other interest income	16	1 570	644
Other financial income	16	44 150	9 572
Interest expenses to group companies	16	-3 677	-7 453
Other interest expenses	16	-26 691	-19 352
Other financial expenses	16	-85 903	-114 040
Net financial items		-58 928	125 438
Profit before tax		-73 777	96 943
Tax	11	33 035	23
Profit for the year		-106 812	96 920
Transferred to other equity		106 812	-96 920

TTS GROUP ASA BALANCE SHEET 1 JANUARY - 31 DECEMBER

ASSETS (AMOUNTS IN NOK 1000)

	Notes	NGAAP 2014	NGAAP 2013
Non-current assets

INTANGIBLE ASSETS
Deferred tax assets	11	-	33 035
Total intangible assets		-	33 035

FIXED ASSETS
Machinery and vehicles	3	170	571
Furniture, office and computer equipment	3	4 295	4 089
Total fixed assets		4 466	4 660

FINANCIAL FIXED ASSETS
Shares in subsidiaries	5, 8	726 462	804 594
Investments in joint ventures	5	4 122	8 683
Loans to companies in the Group	6, 8	59 730	61 522
Investments in shares and other financial instruments	4	-	28 686
Total financial fixed assets		790 314	903 485
Total non-current assets		794 780	941 180

Current assets

CURRENT RECEIVABLES
Trade debtors		-	-
Intra-group accounts receivable	6, 8, 15	6 636	5 539
Other receivables to Joint Ventures	6, 15	-497	-
Other receivables	2, 6	7 986	3 363
Other intra-group receivables	6, 8	-	34 895
Total current receivables		14 125	43 797

Bank deposits, cash in hand etc.	12	4 012	-

Total current assets		18 137	43 797

Total assets		812 917	984 977

EQUITY AND LIABILITIES (AMOUNTS IN NOK 1000)

	Notes	NGAAP 2014	NGAAP 2013
Equity

PAID UP EQUITY

Share capital	10	9 527	9 527
Treasury shares	10	-12	-16
Premium account		149 378	149 378
Total paid up equity		158 893	158 889

RETAINED EARNINGS
Other equity		310 054	414 519
Total retained earnings		310 054	414 519

Total equity		468 947	573 408

Liabilities

OTHER NON-CURRENT LIABILITIES

Pension liabilities	2	-	9 876
Convertible subordinated bond loan	7, 9	88 143	81 181
Liabilities to financial institutions	7, 8	-	103 000
Total other non-current liabilities		88 143	194 057
CURRENT LIABILITIES
Liabilities to financial institutions	7, 8	103 000	3 000
Bank overdraft	8, 12	115 670	73 870
Trade payables		3 215	4 679
Intra-group trade payables	15	9 327	10 146
Social security and employees` tax deduction		1 828	2 103
Other intra-group liabilities	12	1 446	104 328
Other current liabilities	13	21 341	19 386
Total current liabilities		255 827	217 512

Total liabilities		343 970	411 569
Total equity and liabilities		812 917	984 977

Trym Skeie

Chairman of the board

Bjarne Skeie Director

Bergen, 15 April 2015 Board of Directors of TTS Group ASA

Toril Eidesvik

Director

Jan-Magnar Grøtte Director

Bj¨örn Andersson CEO & President

Marianne Sandal Director

Anita Kråkenes Director

TTS GROUP ASA EQUITY STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

			Share
	Share capital	Treasury shares	premium	reserve Other equity	Total
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	498
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	-16	149 377	414 519	573 408

Equity as of 1.1.2014	9 527	-16	149 377	414 519	573 408
Treasury shares	-	4	-	149	153
Option schemes	-	-	-	1 207	1 207
Provision for dividends	-	-	-	-	-
Remeasurements of pension obligation recognized in equity	-	-	-	993	993
Net profit for the year	-	-	-	-106 814	-106 814
Equity as of 31.12.2014	9 527	-12	149 377	310 054	468 947

TTS GROUP ASA CASHFLOW STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

	2014	2013
Cash flow from operating activities
Net profit before tax	-73 777	96 943
Income from investments in subsidiaries	-	-236 906
Paid tax	0	-23
Depreciation	625	660
Option cost without cash effect	1 207	1 295
Writedowns on shares and receivables	83 516	110 000
Net interest costs	18 745	7 644
Difference between pension charges and payments to/from pension scheme	-10 869	-81
Other receivables and other short term liabilities	-3 764	-140 499
Net cash flow from operating activities	15 683	-160 966

Cashflow from investments
Disbursements on acquisitions of shares and other financial instruments	23 300	209
Acquisition of subsidiaries	-	-
Additional equity into subsidiaries	-	-280 000
Proceedes from sale shares in subsidiaries	39 562	22 945
Net contribution received from subsidiaries	-	33 959
Dividend from subsidiaries	-	180 000
Disbursements on acquisitions of tangible fixed assets	-	-1 555
Proceedes from and repayment intra-group loans	-102 882	-0
Net change cash pool facility	-	142 679
Net cashflow from investments	-39 790	98 237

Cashflow from financing
Repayment of convertible subordinated bond loan	-	3 950
Proceedes from liabilities to financial institutions	-	97 000
Repayment of liabilities to financial institutions	-3 000	-
Net change overdraft facility	41 800	51 143
Disbursements of dividends	-	-
Repayment of capital to shareholders	-	-86 606
Sale treasury shares	154	499
Costs related to changes in convertibel debt and repayment of capital	-	-
Interest costs	-11 639	-5 599
Paid in equity capital	-	-
Net cashflow from financing	27 315	60 387

Effects of exchange-rate fluctuations on cash and cash equivalents
Net change in cash and cash equivalents	3 208	-2 343
Cash and cash equivalents (opening balance)	803	3 146
Cash and cash equivalents (closing balance)	4 012	803
This consists of:
Bank and cash pool deposits	4 012	803
Unused overdraft facility	176 800	226 130

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. Impairment losses are reversed if the reason for the impairment loss disappears in a later period. 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.

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 establishment.

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 establishment.

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

At the end of 2014 TTS Group ASA changed its pension plan going from a defined benefit pension plan to a defined contribution plan. Contribution paid during the year is expensed when incurred.

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 for Norwegian schemes 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.

Change of pension plan is handled in a two-step model as follows;

Net liability for defined benefit pension plans is calculated, as if no changes, for the defined benefit 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. This calculation is the basis for the 2014 OCI adjustment.
The fair value of plan assets are transferred to individual pension accounts for each employee. The correspondent net defined benefit liability is zeroed out. The difference between the net plan assets and the net defined benefit liability are presented as cost reduction.

The Group recognizes the 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 27 % 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 as a net sum. Temporary changes are only assessed for the Norwegian companies. 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	9.0365
SEK	0.9597
USD	7.4332
CNY	1.1977

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:

	2014	2013
Salaries	25 947	25 030
Employer's social security contribution	3 955	3 426
Pension costs	-6 834	2 636
Other benefits	279	1 037
Total payroll expenses	23 346	32 130

Number of employees at the end of the year	15	16

BOARD REMUNERATIONS 1)

	2014	2013
Trym Skeie	525	350
Toril Eidesvik	280	-
Bjarne Skeie	200	200
Anne Breive	240	240
Kjerstin Fyllingen	-	280
Jan Magne Galåen2)	240	240
Ole Henrik Askvik	100	75
Mona L. Tellnes Halvorsen	100	75
Ingve Hjelmeseter	-	19
Dag Rune Mjelde	-	19
Total	1 685	1 498

1) The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next. For the financial year 2014, the same remuneration was stipulated as was determined by the Board at the Annual General Meeting for 2014. 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 2014 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.

As of 30th december2014 TTS Group ASA and its Norwegian subsidiaries have changed its pension plan from defined pesion benefit plan into a contribution based pension plan. The change effects pension plan for all employees hired in the Norwegian companies.

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 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)

2014
Name	Position	Base salary	Other benefits	Bonus paid	Share options	Pension cost
Bjørn Andersson	President & CEO	2 961	10	-	32	-
Henrik Solberg-Johansen (from July 2014)	CFO	1 327	22	-	5	207
Arild Apelthun (till June 2014)	CFO	1 471	14	-	205	151
Ivar K. Hanson (till Sept 2014)	EVP, Marine	2 123	26	-	205	82

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

AUDITORS' FEES (EXCL. VAT)

	2014	2013
Statutory audit	1 351	1 312
Other attestation services	-	-
Other assistance including tax advice	94	59
Total	1 445	1 371

Note 2 - Pensions

(AMOUNTS IN NOK 1000)

TTS Group ASA has changed its pension plans as of 30.12.2014. In general the change is decribed as going from defined benefit pension plans to defined contribution plans. The change in pension plan affects all employees and retirees in total 25 persons, including 12 retirees.

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

		2014	2013
		Insured	Insured
	Fair value of assets at end of year	-	28 133
-	Defined benefit obligation at end of year	-	-36 796
-	Accrued payroll tax 1)	-	-1 213
=	Net pension asset (obligation) after payroll taxes	-	-9 876

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:

Insured Insured Service cost 3 124 2 232 + Interest cost 100 143 + Administration cost 93 78 + Payroll tax of net pension cost 357 326 + Impact of curtailment/settlement incl. payroll tax -10 407 - = Net periodic pension cost -6 735 2 779







- of which recognized as payroll cost -6 834 2 636
- of which recognized as finance cost 99 143

CHANGE IN RECOGNIZED FUNDS:

		2014	2013
		Insured	Insured
	Net liability as of 01.01	-9 876	-5 046
-	Cost recognized during the year (see above)	6 834	-2 779
+/-	Pension payments and payment of pension premiums	2 618	2 861
+/-	Remeasurements recognized in Equity	993	-4 911
=	Net asset/(liability) as of 31.12.	569	-9 876

EFFECTS RECORDED IN OTHER COMPREHENSIVE INCOME

	2014	2013
Remeasurements loss (gain) - change in discount rate	9 912	-1 274
Remeasurements loss (gain) - change in other financial assumptions	-5 983	1 328
Remeasurements loss (gain) - change in mortality table	-	1 433
Remeasurements loss (gain) - change in other demographic assumptions	-	-
Remeasurements loss (gain) - experience DBO	-9 388	2 840
Remeasurements loss (gain) - change in other financial assumptions assets	441	-
Remeasurements loss (gain) - experience Assets	5 753	375
Investment management cost	257	210
Total remeasurement losses (gains) recognized in Equity	993	4 911

BREAKDOWN OF PENSION ASSETS UNDER MANAGEMENT BY DNB LIVSFORSIKRING

	2014	2013
Equities	N/A	6,80 %
Alternative investments	N/A	3,50 %
Bonds	N/A	17,00 %
Money market	N/A	22,00 %
Hold to maturity bonds	N/A	35,20 %
Real estate	N/A	14,30 %
Other	N/A	1,10 %

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

	Expenses		Commitments
	2014	2013	31.12.14	31.12.13
Discount rate	4,10 %	3,90 %	N/A	4,10 %
Return on pension funds	4,10 %	4,00 %	N/A	4,10 %
Annual wage growth	3,75 %	3,50 %	N/A	3,75 %
Annual adjustment of National pension index (G)	3,50 %	3,25 %	N/A	3,50 %
Annual adjustment of pensions in payment	3,50 %	3,25 %	N/A	3,50 %
Voluntary retirement	8,0-0,0%	8,0-0,0%	N/A	8,0-0,0%
Payroll tax	14,10 %	14,10 %	N/A	14,10 %
Mortality table 1)	K2013	K2013	N/A	K2013

Risk related to the estimates that form the basis for the book values are further described in Accounting principles.

Note 3 - Tangible fixed assets

(AMOUNTS IN NOK 1000)

		Total
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

		6 665
		-2 005
		4 660


		4 660
-	712	712
-282	-	-282
-119	-506	-625
170	4 295	4 465

		6 232

		-1 766
		4 465

5 years	3-10 years
	Machinery and vehicles 1 610 -1 039 571 571 500 -329 170 Linear	Furniture and office equip. 5 055 -966 4 089 4 089 5 732 -1 437 4 295 Linear

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
			2014	2013
Fixed assets:
Shin Young Heavy Industry	13.4 %	222	-	-
Sigma Drilling AS 1)	16.1 %	28 673	-	28 673
Total investments in other companies		28 895	-	28 673

1) Following the cancellation of a new build contract from STX, Sigma Drilling has made a distribution of cash in the amount of MNOK 23,3 during 3rd quarter 2014. Sigma Drilling is currently evaluating their future strategy. TTS Group has impaired the value of shares in Sigma Drilling by 5,3 MNOK in the 3rd quarter 2014. Remaining value after impairment is NOK1.

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 3)	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 1,2,3)	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
TTS Brazil Services 4)	Rio de Janeiro, Brazil	2014	100 %	100 %	BRL
Total

1) Book value impaired by TNOK 78 143 in 2014.

2) Equity increased by MNOK 20 in January 2015, and MNOK 25 in February 2015.

3) Merger of TTS Ships Equipment AS and TTS Offshore Handling Equipment AS are ongoing. The merged company will be named TTS Offshore Solutions AS.

Merger prosess to be completed within June 2015.

4) TTS Marine AS own 99%, TTS Group ASA own 1%.

INVESTMENTS IN JOINT VENTURES, VALUED AT COST:

Joint venture	Registered office	Acquisition date	Ownership	Voting share	Currency
TTS BoHai Machinery Co., Ltd	Dalian, China	2005	50 %	50 %	RMB
TTS Bohai Trading (Dalian) Co., Ltd	Dalian, China	2014	50 %	50 %	RMB

Share capital	Number of shares	Equity 31.12.2014	Net Result 2014	Cost	Net book value 2014	Net book value 2013
950 000	95 000	22 156	23 473	33 296	33 296	33 296
500 000	500	1 560	394	6 262	6 262	6 262
2 500 000	2 500	52 370	13 806	46 897	46 897	46 897
2 000 000	2 000	366 786	120 093	295 816	295 816	295 816
200 000	3 500	-14 307	-39 186	4 705	4 705	4 705
100 000	1 000	-52	-	115	115	115
500 000	1 000	612	2 179	516	516	516
3 000 000	1 000	117 947	23 065	201 020	201 020	201 020
1 141 813	1 141 813	10 375	2 967	5 064	5 064	5 064
200 000	2 000	3 488	715	1 812	1 812	1 812
100 000	1 000	96	-	86	86	86
100 000	1 000	90	-	86	86	86
2 000 000	100	-21 283	-40 230	188 143	-	78 143
3 000 000	3 000	-150 202	-32 642	130 340	130 340	130 340
250 000	250	6 582	5 928	436	436	436
400 000	400	1 024	-96	12	12	0
		397 242	80 466	914 606	726 463	804 594

Share capital	Number of shares	Equity 31.12.2014	Net Result 2014	Cost	Net book value 2014	Net book value 2013
22 000 000	2 200	48 553	5 058	8 683	4 122	8 683
200 000	200			-	-	-

Note 6 - Trade and other receivables

(AMOUNTS IN NOK 1000)

	2014	2013
Customer receivables	-	-
Customer receivables within group	6 636	5 539
Customer receivables to Joint Ventures	-497	-
Other receivables within group	-	34 895
VAT	660	783
Pension fund assets	569	-
Other receivables, including prepayments	6 758	2 580
Short-term receivables	14 125	43 797

Receivables maturing at over one year:
Loans to companies in same group	59 730	61 522
Total	59 730	61 522

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 31.12.2014	2015	2016	2017	2018	2019 and later
Convertible Subordinated Bond Loan 2011/2016 1)	95 345	-	95 345			-
Non-current liabilities	186 622	186 622			-	-
Total non-current debt incl. first year instalment	281 967	186 622	95 345	-	-	-
- first year instalment of non-current debt		-186 607 -186 607	-	-	-	-
Total non-current debt	95 360	15	95 345	-	-	-
Expected interest payments		13 387	381	-	-	-

SPECIFICATION OF LOANS:

						Nominal value
Loan type	Currency			terms	2014	2013
Convertible bond	NOK	8,00 %	2016	balloon	95 345	95 345
Mortgage loan	NOK	5,75 %	2015	bi-annually	3 000	6 000
Mortgage loan	NOK	Nibor + 2,85%	2015	balloon	100 000	100 000
					198 345	201 345
			Nominal	interest rate Maturity	Installment	Nominal value

1) Additional description of the Convertible Subordinated bond is available in Note 9. Book value of the debt as per 31.12.2014 is TNOK 88 143.

With exception of the convertible bond, fair value is estimated to approximately equal to carrying value as the loans are based on market terms and no fixed-rate terms exists. See Note 8 for security on long-term debt.

COVENANTS

TTS Group has undertaken to meet the following financial covenant requirements from Nordea and DnB:

TTS Group has loans, draw down facilities and guarantee limits with Nordea and DNB. Covenants for both equity ratio and 12 months rolling EBITDA related to the debt facilities with Nordea and DNB have been renegotiated in December 2014, and have been waived until 4Q 2015. The Group has to meet the following financial covenant requirements from Nordea and DNB in the period Q4-2014 and until Q3-2015:

The Group's covenant related to rolling 12 months NIBD/EBITDA has been waived until Q4 2015. In the period Q4-2014 until Q3-2015 a new EBITDA level covenant is applied.

(MNOK)	Q4-14	Q1-15	Q2-15	Q3-15
EBITDA covenant
acumulated	≥ 31	≥ 31	≥ 53	≥ 80

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:

	2014		2013
	Limit	Drawn	Limit	Drawn
Group cash pool overdraft facility 1)	300 000	-123 200	300 000	-73 870
Drawdown facility, operations	100 000	100 000	100 000	100 000
Guarantee limit for Group	640 000	620 200	500 000	461 900

1) Cash balance in TTS Group cash pool arrangement; 31.12.2014; MNOK -123,2, 31.12.2013; MNOK -73,9.

As per 31.12.2014 all Norwegian companies (ref Note 5), as well as TTS Marine AB, TTS Port Equipment AB, TTS Liftec OY, 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.

The credit facility in the agreement is MNOK 1.040, and consists of;

MNOK 100, 3 year term loan facility, unchanged in 2014
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 640 in 2014

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:

2014	2013
295 816	295 816
272 552	224 767
84 990	106 962
-	-
653 358	627 545

TTS Group ASA has a loan to Innovasjon Norge for establishment of TTS Marine Equipment (Dalian, Kina) Co. Ltd. The loan of MNOK 3 has security in the shares of TTS Marine Equipment Co. Ltd.

Note 9 - 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 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.

Changes to conversion price 2014.

There have been no Debt conversions or changes in the conversion price in 2014. The conversion price is NOK 4.97 per share.

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.

	2014
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 interest cost less paid interest - 2014	6 961
Effective debt value	88 143

Notes⁹ 1O

	Repayment profile and maturity:
	2012	2013	2014	2015	2016
Subordinated convertible bond loan - nominal value	95 345	-	-	-	-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 31.12.2014:

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.

Conversion rights Share portion if fully converted 6 036 217 5,71 % 2 434 608 2,30 % 1 307 847 1,24 % 1 276 660 1,21 % 1 207 243 1,14 % 1 207 243 1,14 % 804 829 0,76 % 804 829 0,76 % 804 829 0,76 % 779 678 0,74 % 2 520 121 2,38 % 19 184 105 18,13 %
	Bondholder:
	MP PENSJON PK
	HOME CAPITAL AS
	ODIN MARITIM
	HOLBERG NORDEN
	BL CAPITAL I AS
	SKEIE CONSULTANTS AS 1)
	AKERSHUS FYLKESKOMM. PENSJONSKASSE
	TAMAFE HOLDING AS 1)
	MERTOUN CAPITAL AS
	Erik Penser Bankaktiebolag AB
	Other
	Total

1) Bonds held by principal shareholder in TTS

Note 10 - Share capital and shareholder information

(AMOUNTS IN NOK 1000)

Date	Number of shares	Nominal value	Share capital
31.12.14	86 605 660	0.11	9 526 623
31.12.13	86 605 660	0.11	9 526 623

Changes to share capital 2014:

There were no changes to the nominal share capital in 2014

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

DIVIDENDS PAID AND PROPOSED:

(NOK 1000)	2014	2013
Declared and paid during the year:
Dividends on ordinary shares	-	86 461

Dividend for shareholders proposed for 2014, to be paid in 2015: NOK 0 per share. Total dividend amount proposed: NOK 0.

TREASURY SHARES

	Number of shares	Share capital
Treasury shares as of 01.01.2013	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

Sale of treasury shares May 2014	31 518	-3 467
Treasury shares as of 31.12.2014	112 882	-12 417

On the 5 June 2014 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 2015.

PRINCIPAL SHAREHOLDERS OF TTS GROUP ASA AS OF 31.12.2014:

Shareholder	Number of shares	Ownership	Voting share
RASMUSSENGRUPPEN AS	11 512 506	13,29 %	13,29 %
SKEIE TECHNOLOGY AS	8 929 879	10,31 %	10,31 %
LESK AS	5 306 058	6,13 %	6,13 %
STISK AS	5 306 058	6,13 %	6,13 %
SKEIE CAPITAL INVESTMENT AS	4 203 361	4,85 %	4,85 %
BARRUS CAPITAL AS	3 465 005	4,00 %	4,00 %
SKANDINAVISKA ENSKILDA BANKEN AB	3 207 052	3,70 %	3,70 %
SKAGEN VEKST	3 055 946	3,53 %	3,53 %
HOLBERG NORGE	2 166 816	2,50 %	2,50 %
TAMAFE HOLDING AS	2 160 735	2,49 %	2,49 %
ODIN MARITIM	2 158 443	2,49 %	2,49 %
HOLBERG NORDEN	2 000 000	2,31 %	2,31 %
PIMA AS	1 816 078	2,10 %	2,10 %
MERTOUN CAPITAL AS	1 769 598	2,04 %	2,04 %
UBS AG, LONDON BRANCH	1 741 489	2,01 %	2,01 %
ITLUTION AS	1 475 261	1,70 %	1,70 %
SKANDINAVISKA ENSKILDA BANKEN	1 473 111	1,70 %	1,70 %
SKEIE CONSULTANTS AS	1 253 033	1,45 %	1,45 %
VERDIPAPIRFONDET DNB SMB	1 050 000	1,21 %	1,21 %
EUROCLEAR BANK S.A./N.V. ('BA')	747 404	0,86 %	0,86 %
Total, 20 largest shareholders	64 797 833	74,82 %	74,82 %
Total other	21 807 827	25,18 %	25,18 %
Total	86 605 660	100,00 %	100,00 %

SHARES AND SHARE OPTIONS OWNED BY BOARD MEMBERS, GROUP EXECUTIVES AND THEIR RELATIVES:

	Shares				Share options
Board	31.12.14	15.04.15	31.12.13	31.12.14	15.04.15	31.12.13
Trym Skeie 1)	2 733 875	2 733 875	2 483 875	-	-	-
Bjarne Skeie 2)	14 386 273	14 386 273	12 414 175	-	-	-
Toril Eidesvik 3)	50 000	50 000	0	-	-	-
Jan-Magnar Grøtte	10 080	10 080	10 080	12 500	12 500	-
Anita Kråkenes	2 000	2 000	0	-	-	-

Group Executives
Björn Andersson	75 000	75 000	0	145 000	145 000	-
Henrik Solberg-Johansen	50 000	50 000	0	12 500	12 500	-
Edgar Bethmann	20 000	20 000	20 000	12 500	12 500	-

1) Trym Skeie owns 100 % of the shares in Tamafe Holding AS and Skeie Alpha Invest 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 Investment AS.

3) Toril Eidesvik own 100 % of the shares and voting shares in Zahlahuset II AS.

			Number of options exercisable until	Exercise	Number of options exercisable until	Exercise
Name	Position	Company	10.06.2015	price	05.06.2016	price	Total
Senior executives
Björn Andersson	CEO & President	TTS Group ASA	70 000	6,42	75 000	6,15	145 000
Henrik Solberg-Johansen	CFO	TTS Group ASA	-	6,42	12 500	6,15	12 500
Miao Reinlund	EVP	Communication TTS Group ASA	60 000	6,42	25 000	6,15	85 000
Geir Storaas	EVP Joint ventures	TTS Group ASA	50 000	6,42	50 000	6,15	100 000
Stefan Gluel	EVP Services	TTS Marine GmbH	50 000	6,42	50 000	6,15	100 000
Ralph Ressel	EVP MPGC	TTS NMF GmbH	-	6,42	12 500	6,15	12 500
Per Croner	EVP RCN	TTS Marine AB	-	6,42	12 500	6,15	12 500
Edgar Bettmann	EVP CBT	TTS Marine GmbH	-	6,42	12 500	6,15	12 500

Other executives	various	Various	-	6,42	225 000	6,15	225 000
Total number of options to executives			230 000		475 000		705 000

ALLOCATION OF OPTIONS:

During 2013 150 000 share options with a strike price of 3.33, alocated in 2011 were exercised from Senior Management. During 2014 no share options have been exercised from Senior Management.

In accordance with authorities granted by the Annual General Meeting in 2013 and 2014, 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.

of MNOK 1.2 (2013 MNOK 1.3) 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:

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 creditor deadline under the Norwegian Public Limited Liability Act section 12-6 expired on 17.10.2012, and TTS Group ASA received no objections to the capital reduction. The capital reduction was registered at the Register of Business Enterprises on 25.10.2012 after opening time of Oslo Stock Exchange. 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 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 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 Polen SP.Z.O.O.	TTS Marine AB	100 %	PLZ	250 000	250
TTS Vietnam Co. Ltd	TTS Marine AB	100 %	VND	10 000	1000
TTS Brasil Services Ltda	TTS Marine AS	100 %	BRL	400 000	400
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):

	1.1.2013	Changes 2013	31.12.2013	Changes 2014	31.12.2014
Deferred tax
Fixed assets	355	97	452	99	551
Pension fund / liabilities	-292	-2 374	-2 667	2 667	0
Credit deduction carried forward	-6 182	221	-5 961	-4 869	-10 830
Allowance carried forward	-1 260	45	-1 215	1 215	-
Convertible debt	6 037	-1 775	4 262	-4 262	0
Tax loss carry forward	-61 695	7 060	-54 635	-8 940	-63 575
Net deferred tax (assets = - / liabilities = +)	-63 037	3 275	-59 763	-14 090	-73 853

Unrecognized deferred tax assets related tax losses	24 944	-3 275	21 669	41 906	63 575
Unrecognized deferred tax assets related to other temporary differences	5 058	-	5 058	5 220	10 278
Net deferred tax reported (assets = - / liabilities = +)	-33 035	-0	-33 035	-33 035	-

Deferred tax assets related to losses which can be carried forward for tax purposes are reported if the management believes it is likely that the company can use these against future taxable income. Due to the tax exemption method related to share dividends from subsidiaries, and tax exemption method on profit from shares sale, tax assets has been impaired as of 31.12.2014, giving basis for a tax cost of MNOK 33 in 2014.

BREAKDOWN OF DIFFERENCES BETWEEN PROFIT BEFORE TAX AS PER THE ACCOUNTS AND TAX BASIS FOR YEAR:

	2014	2013
Result before tax	-73 777	96 943
Permanent differences	7 377	102 597
Change to temporary profit/loss differences	-13 225	14 196
Reversed share of profits/losses in subsidiaries and joint ventures	43 808	-202 945
Application of loss to be carried forward	-	-10 791
Tax basis for year	-36 009	-

BREAKDOWN OF TAX COSTS: 2014 2013 Tax payable - - Withholding tax from activities outside Norway - 23 Not allocated deferred tax related to tax losses 9 722 3 584 Other changes to deferred tax 23 313 -3 584

EXPLANATION AS TO WHY THIS YEAR'S TAX COSTS ARE NOT 27 % OF PROFIT BEFORE TAX:

2014	2013
-19 920	27 144
1 992	28 727
-	-59 478
50 963	3 607
-	23
33 035	23

Tax cost 33 035 23

Note 12 - Cash and cash equivalents

(AMOUNTS IN NOK 1000)

	2014	2013
Bank deposits, cash etc. as per 31.12.1)	4 013	803
Deposits (+)/withdrawals (-) from cash pool account system as at 31.12.	-115 670	-73 870

1) Restricted bank deposits per 31.12.2014 were TNOK 207. Of these 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 31.12.2014 was MNOK 123,2. Net drawn from TTS Group ASA was MNOK 115,7. Drawn from TTS Group ASA which exceeds total drawn is presented as other intra-group liability. Amount classified as intercompany liability is MNOK 115,7. Drawing facilities, security and covenants are described in Note 7 and 8.

Note 13 - Other current liabilities

(AMOUNTS IN NOK 1000)

	2014	2013
Provision for holiday pay	1 567	1 624
Other provisions for costs	19 774	17 762
Total other current liabilities	21 341	19 386

Note 14 - Other operating costs

(AMOUNTS IN NOK 1000)

	2014	2013
Building lease, cost of premises	1 621	1 357
IT costs	791	1 206
Marketing, travel	7 327	6 426
External services	14 923	14 233
Other	488	5 703
Total other operating costs	25 150	28 926

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.

	2014	2013
Sales:
Subsidiaries	34 272	33 221
Joint ventures	-	-

Cost of sales:
Subsidiaries	-	-
Joint ventures	-	-

BALANCE SHEET ITEMS RELATED TO PURCHASE AND SALE OF GOODS AND SERVICES:

	2014	2013
Receivables
Subsidiaries	6 636	5 539
Joint ventures	-497	-

Liabilities
Subsidiaries	9 327	10 146
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)

	2014	2013
Dividend from subsidiaries	-	180 000
Contribution from subsidiaries	8 161	33 959
Gain sale subsidiaries	39 562	22 945
Interest income from companies in same group	3 653	19 161
Other interest income	1 570	644
Interest paid to companies in same group	-3 677	-7 453
Interest paid to financial institutions	-26 672	-19 340
Write down shares in subsidiaries	-78 143	-110 000
Other financial costs	-7 781	-3 970
Net exchange rate gains (losses)	4 397	9 491
Total	-58 928	125 438

EXCHANGE RATE GAINS/LOSSES:

Currency differences in the profit and loss account are as follows:

	2014	2013
Currency exchange income	46 726	12 819
Currency exchange costs	-42 329	-3 329
Total	4 397	9 491

Currency income and costs are net and shown as other financial costs.

Note 17 - Subsequent events

In order to position the TTS Group for this growth the Board of Directors of TTS Group has decided to run a strategic process to explore opportunities for both acquisitions and partnerships.

Pareto Securities AS is engaged as financial advisor.

Events regarding the TTS Group are listed in the 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 2014, the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The consolidated financial statements comprise the statement of financial position as at 31 December 2014, and the income statement and the statement of other comprehensive income, statement of changes in equity and cash flow statement 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:
	Oslo	Haugesund
	Alta	Knarvik
	Arendal	Kristiansand
	Bergen	Larvik
KPMG AS, a Norwegian member firm of the KPMG network of independent	Bodø	Mo i Rana
member firms affiliated with KPMG International Cooperative ("KPMG	Elverum	Molde
International"), a Swiss entity.	Finnsnes	Narvik
	Grimstad	Sandefjord
Statsautoriserte revisorer - medlemmer av Den norske Revisorforening.	Hamar	Sandnessjøen

144 ANNUAL REPORT 2014 TTS GROUP ASA

Stavanger Stord Straume Tromsø Trondheim Tynset Tønsberg Ålesund

Independent auditor's report 2014 TTS Group ASA

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 2014, and of its financial performance and its cash flows 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 financial position of TTS Group ASA and its subsidiaries as at 31 December 2014, and of its financial performance and its cash flows 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 and the going concern assumption 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, 28 April 2015 KPMG AS

Knut Olav Karlsen State Authorised Public Accountant

[Translation has been made for information purposes only]

STATEMENT ON COMPLIANCE

Today, the Board of Directors, the President & CEO and the CFO has reviewed and approved the Board of Directors report and the consolidated and separate financial statements related to TTS Group ASA as of 31. December 2014

This statement is based on reports, information and statements from the group's CEO, CFO and other administration, on the results of the group's relevant activities, and on other information which is essential to assess the position of the group and parent company.

To the best of our knowledge we confirm that;

the Board of Directors report for the group and the parent company is in accordance with the Norwegian Accounting Act and relevant Norwegian Accounting Standards.
the Board of Directors report gives a true and fair view of the development, performance, financial position, principle risks and uncertainties of the company and the group.
the consolidated annual financial statements for 2014 have been prepared in accordance with IFRSs and IFRICs as adopted by the European Union, IFRSs as issued by IASB, and additional Norwegian disclosure requirements in the Norwegian Accounting Act.
the separate financial statement for TTS Group ASA for 2014have been prepared in accordance with the Norwegian Accounting Act and Norwegian Accounting Standards.
the information presented in the financial statements gives a true and fair view of the company's and the group's assets, liabilities, financial position and results for the period viewed in their entirety.

Trym Skeie Chairman of the board

Bjarne Skeie Director

Bergen, 15 April 2015 Board of Directors of TTS Group ASA

Toril Eidesvik Director

Jan-Magnar Grøtte Director

Bj¨örn Andersson CEO & President

Marianne Sandal Director

Anita Kråkenes Director

Companies in the TTS Group

BRAZIL

TTS Service Brasil Ltda. Avenida Rio Branco 31 Salas 1408 – 1411 Centro Rio de Janeiro, RJ Tel: + 55 21 99121-1986 [email protected]

FINLAND

TTS Liftec Oy Sorkkalantie 394 33980 Pirkkala Tel: +358 3 3140 1400 Fax: +358 3 3140 1444 [email protected]

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

[email protected] 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

TTS Marine

[email protected]

(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 [email protected]

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 [email protected]

TTS-SCM Marine and Offshore Machinery Co., Ltd SCM factory, Long Xue Ave, Nan Sha District Guang Zhou, China Tel: +86 2039 08 0616 Fax:- +86 2039 08 0689

GERMANY

TTS Marine GmbH

An der Reeperbahn 6 DE-28217 Bremen. P.O. Box 10 40 80 DE-28040 Bremen, Germany Tel + 49 421 52008-0 Fax: + 49 421 52008-20 [email protected]

TTS NMF GmbH

Neuenfelder Fährdeich 120 DE-21129 Hamburg Tel: +49 40 55 43 61 500 Fax: +49 40 55 43 61 900 [email protected]

ITALY

TTS Marine s.r.l. Ponte Colombo IT-16126 Genova Tel: +39 010 24 81 205 Fax: +39 010 25 43 191 [email protected]

GREECE

TTS Greece Ltd Akti Miaouli 81 18538 Piraeus Tel: +30 210 42 94 480 Fax: +30 210 42 93 933 [email protected]

KOREA

TTS Marine Korea Co., Ltd. #1664-10 Songjeong-Dong Gangseo-Gu, Busan 618-819 Korea Tel: +82 51 831 8401 Fax: +82 51 979 5610 [email protected]

Business Unit CBT Team:

1405, U-dong, Haeundae-gu, Busan, Korea(612-741) Tel: +82 51 979 5644

Service department:

RM 1514, Marine Park, Marine City 2-ro 2, Haeundae-gu, Busan, Korea(612-824) Tel: +82 51 979 5631 [email protected]

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 [email protected]

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 [email protected]

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 [email protected]

TTS Marine AS

Barstølveien 26 Servicebox 602 NO-4606 Kristiansand Tel: +47 38 04 95 00 Fax: +47 38 04 93 41 [email protected]

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 [email protected]

POLAND

TTS Poland sp. z o.o. Azymutalna 9 , 80 - 298 Gdansk Poland Tel: +48 58 760 30 40 Mob: +48 608 433 846 [email protected]

SINGAPORE

TTS Singapore Ltd 16 Enterprise Road Enterprise 10 Singapore 627699 Tel: +65 68 67 90 70 Fax: +65 62 64 47 30 [email protected]

SWEDEN

TTS Marine AB Kämpegatan 3 SE-411 04 Göteborg Tel: +46 31 725 79 00 Fax: +46 31 725 78 00 [email protected]

USA

TTS Marine Inc 14730 Vickery Drive, Houston, TX 77032, USA Tel: +1 (281) 227 5999 Fax. +1 (281) 227 5998 [email protected]

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.

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.

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.

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.

2014

New service hubs opened in Houston and Lafayette, USA and Rio de Janeiro, Brazil. New 50/50 company in China established. More operations transferred to Busan, Korea.

TTS Group ASA PO Box 3577 Fyllingsdalen N-5845 Bergen Norway

Photos: Øystein Klakegg Shutterstock

Design: Neolab by Knowit

Printed by: Bodoni AS Bergen Norway

AI assistant

Nekkar — Annual Report 2014

3669_rns_2015-04-29_24a95273-040a-4e54-bf11-9d48d1f747a2.pdf

Full circle - One company

Halfway around

DEFINITIONS

ORDER BACKLOG (MNOK)

Around the year in two pages

Q3

Q4

The Management

BJÖRN ANDERSSON CEO

HENRIK SOLBERG-JOHANSEN CHIEF FINANCIAL OFFICER

PER CRONER EXECUTIVE VICE PRESIDENT, BUSINESS UNIT RORO, CRUISE AND NAVY

ARVE TJØNN RINDE

EXECUTIVE VICE PRESIDENT, BUSINESS UNITS OFFSHORE AND MULTIPURPOSE AND GENERAL CARGO

STEFAN GLEUEL

EXECUTIVE VICE PRESIDENT, BUSINESS UNIT SERVICES

EDGAR BETHMANN

EXECUTIVE VICE PRESIDENT, BUSINESS UNIT CONTAINER, BULK AND TANK

RORO, CRUISE AND NAVY

RORO

CRUISE SHIPS

NAVAL VESSELS

A VIBRANT MARKET

Key figures

Key figures

CONTAINERSHIPS

BULKERS

TANKERS

JOINT VENTURES

CLOSER TO THE KOREAN MARKET

MULTIPURPOSE AND GENERAL CARGO

Key figures

NEW 50/50 COMPANY IN CHINA

DRILLSHIPS AND RIGS

HEAVY LIFT AND OFFSHORE INSTALLATION

SUCCESSFUL DESIGN

The business unit "Shipyard Solutions" provides ship handling systems and cargo handling systems to shipyards, ports and industry.

ENTERING NEW MARKETS

THREE NEW HUBS

Through the 30-year circuit

THINKING 30 YEARS AHEAD

Keeping customers in business

TTS' SERVICE STATIONS

Towards greener ship recycling

NORWEGIAN SHIP-OWNERS INCREASINGLY AVOID BEACHING

Shareholder information

MARKET CAPITAL DEVELOPMENT (NOK)

SHARE PRICE PERFORMANCE

20 LARGEST SHAREHOLDERS *) TRADE IN TTS SHARES

The Board of Directors

TRYM SKEIE CHAIRMAN OF THE BOARD

BJARNE SKEIE DIRECTOR

MARIANNE SANDAL DIRECTOR

TORIL EIDESVIK DIRECTOR

JAN-MAGNAR GRØTTE DIRECTOR

ANITA KRÅKENES DIRECTOR

Directors' Report 2014

Target and strategy

Operations and divisions

RORO/CRUISE/NAVY

CONTAINER/BULK/TANK

OFFSHORE

MULTIPURPOSE/GENERAL CARGO

SHIPYARD SOLUTIONS

SERVICES

The TTS Group

GEOGRAPHICAL BREAKDOWN OF EMPLOYEES

Review of the annual accounts

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CASH FLOW

RESEARCH AND DEVELOPMENT

ORDER BACKLOG

CONTINUED OPERATION

Business areas

RORO/CRUISE/NAVY (RCN)

CONTAINER/BULK/TANK (CBT)

OFFSHORE

MULTIPURPOSE/GENERAL CARGO (MPGC)

Nekkar Annual Report 2014