Nekkar — Annual Report 2015

Apr 29, 2016

Annual account TTS Group Annual account TTS Group ASA 41 107

Auditor's Report Confirmation from the Board The TTS history 132 134 137

1. TTS was born and a small consultancy set up in London.

2. Oskar Munch, one of the founders.

TTS GROUP

The TTS Group is an international corporation that provides first-rate handling solutions and access systems for the marine and offshore industries. Headquartered in Norway, TTS has subsidiaries in 15 countries and serves a global client base from strategic points in Europe, Asia and America.

Based on decades of experience and technological innovations, we offer handling solutions for a wide variety of vessel types in different marine segments. We work closely with leading shipyards and ship-owners and take pride in contributing to safer, more efficient and more environmental-friendly operations – whether in shipyards, at sea or in harbour.

TTS – what sets us apart is our ability to make our clients' operations come together.

3

A remarkable five-decade journey

The beginning was humble, but the vision was great: To get the gears of the marine industries engaging more smoothly. When TTS was set up in 1966, the goal was not just to deliver first-rate handling equipment, but also to provide complete handling solutions for shipyards, ports and ship-owners.

The ensuing years, the company made a remarkable journey from a tiny start-up on the west coast of Norway to a multinational NOK billion corporation with operations worldwide.

Five decades might not be long in historical perspective, but during these years, the marine industries have undergone tremendous changes that have set new requirements for material and passenger handling. TTS has played an active role in providing the answers to these demands. Our solutions have enabled heavier lifts, faster turnaround in ports and safer and more efficient operations for anyone involved in running the intricate systems of seaborne trade, travel and industry.

For fifty years, TTS has been devoted to fulfilling our founders' vision. For the next fifty, we promise to keep pushing the boundaries of efficiency.

5

RoRo, Cruise, Navy

TTS is the world's leading provider of specialised handling solutions for car carriers and in the forefront of developing eco-friendly solutions for the next generation of cruise ships. Building on a long history of supplying equipment for navies worldwide, TTS is also strengthening its focus on the naval market. The business unit RoRo, Cruise, Navy provides complete cargo handling solutions for car carriers and other RoRo vessels, cruise ships, passenger ferries and various navy vesselst as well as innovative systems for terminal loading and access systems. TTS' portfolio includes ramps of all kinds, covers and doors, hydraulic and electric drive systems and hoistable decks as well as landbased logistic systems such as gangways and provision and luggage handling systems.

Multipurpose, General Cargo

In addition to providing a variety of handling equipment based on standardised building blocks, TTS has decades of experience of tailoring special solutions for particularly challenging project cargo. The business unit Multipurpose, General Cargo delivers handling systems for multipurpose vessels and cargo ships requiring special operating capabilities. The product portfolio ranges from heavy lift cranes and mooring winches to hatch covers and dedicated side-loading systems for various multipurpose vessels, cargo ships and heavy project cargo. The joint venture TTS-SCM Marine and Offshore Machinery, which provides heavy lift cranes for a steadily growing Chinese market, is part of this business unit.

Container, Bulk, Tank

During five decades in business, TTS has developed a range of innovative products for the global container fleet. TTS is the global number one supplier of hose handling cranes for tankers and has developed state-of-the-art loading systems for bulk carriers – including solutions for a variety of self-discharge cargoes. The business unit Container, Bulk, Tank supplies complete cargo handling solutions for container ships, tankers and bulk carriers, with a product range encompassing davits, hatch covers, cranes and winches. The Chinese joint ventures TTS Hua Hai Ships Equipment – by far the market leader for hatch covers in China – and TTS Bohai Machinery are part of the Container, Bulk, Tank unit.

TTS Organization

Shipyard Solutions

For decades, TTS has been an international leader in design, construction and installation of heavy material handling equipment and production equipment for shipyards, repair yards and ports. The product range of the Shipyard Solutions business unit includes various shiplifts, launching and retrieval systems, transfer systems, multiwheelers and translifters. TTS has developed an ingenious fluid-bed system for weight distribution designed to ease landside operations as well as innovative solutions contributing to greener and safer ship recycling.

Offshore

The Offshore business unit offers handling solutions to the traditional oil-related offshore market and its supporting services as well as to new segments targeted at exploiting renewable energy sources. TTS has developed advanced Active Heave Compensated (AHC) cranes enabling safer and more efficient subsea load handling in deep and rough waters. The product portfolio encompasses a range of cranes and winches as well as internal and external covers and doors. TTS supplies handling equipment for offshore construction and support vessels as well as for drill ships, rigs, accommodation and service units and heavy lift and utility ships.

Services

The business unit Services offers worldwide maintenance, repair services and aftersales for the full range of TTS' products, including spare parts, service interval arrangements and lifetime services. TTS provides a global network of 24/7 service operations centred on the busiest ports and offshore hubs. The last two years, TTS has supplemented its already strong presence in Europe and the Far East with new service stations in USA, Brazil, and the United Arab Emirates.

First decade

1966-1975

Emerging from a small family enterprise that produces cranes, Total Transportation Systems is established in 1966. The name is later shortened to TTS.

TTS becomes the first Norwegian company that acts on the improved relations between China and the West, and signs its first contract with China State Shipbuilding Corporation in 1974.

	2015 4)	2014	2013	2012 restated 3)	2012 1)	2011 1)
PROFIT AND LOSS ACCOUNT (NOK 1 000)
Operating revenue	3 051	2 453	2 693	2 370	2 929	3 546
Operating profit/loss before depresiation (EBITDA)	155	105	-130	157	159	198
Operating profit/loss (EBIT)	32	61	-164	110	96	139
Pre-tax profit/loss 2)	-15	63	-178	462	448	62
Net profit/loss 2)	-40	18	-204	455	450	23
BALANCE SHEET (NOK 1 000)
Total assets	3 026	2 411	2 225	2 350	2 350	3 529
Total equity	855	610	567	795	856	840
- Shareholders part of Equity	635	610	567	795	856	840
Working capital	-91	-30	-195	-126	-126	-169
Net interestbearing debt (NIBD)	108	262	92	-97	-97	548
NIBD/equity ratio	0,17	0,43	0,16	-0,12	-0,11	0,65
CAPEX - operational	5	46	36	22	22	39
Equity ratio (total equity/ total assets)	28,3 %	25,3 %	25,5 %	33,8 %	36,4 %	23,8 %
KEY PERFORMANCE RATIOS
EBITDA margin	5,1 %	4,3 %	-4,8 %	6,6 %	5,4 %	5,6 %
EBIT margin	1,0 %	2,6 %	-6,1 %	4,6 %	3,3 %	3,9 %
Profit margin (pre-tax) 2)	-0,5 %	2,6 %	-6,6 %	1,9 %	15,3 %	1,8 %
Profit margin (after-tax) 2)	-1,3 %	0,7 %	-7,6 %	1,5 %	15,4 %	0,6 %
Net change in Cashflow (MNOK)	266	-21	-127	-284	-284	162
Return on equity 2)	-2,4 %	2,9 %	-36,1 %	5,4 %	54,1 %	7,6 %
Return on total capital	-1,3 %	0,7 %	-7,2 %	1,5 %	3,3 %	4,0 %
KEY FIGURES SHARES Equity per share	7,32	7,05	6,52	9,14	9,84	11,10
Earnings per share (NOK)	-0,55	0,21	-2,63	0,39	5,42	0,30
Dividend/ capital distribution per share (NOK)	0,00	0,00	1,00	5,77	5,77	0,00
Number of shares, end of year (MILL)	87	87	87	87	87	76
Average number of shares (MILL)	87	87	87	83	83	75
Market price per share 31.12. (NOK)	2,79	4,75	6,21	9,40	9,40	9,47
OTHER KEY FIGURES
Orders received (MNOK) 4,5)	2 733	2 446	2 912	2 276	2 276	2 667
Order backlog (MNOK) 5)	4 015	3 627	2 971	2 783	2 783	3 168
Employees (31.12.)	1 093	1 053	1 100	970	970	1 162
Sick leave	2,6 %	2,6 %	3,0 %	2,5 %	2,5 %	2,5 %
LTIFR (Lost Time Insident Frequency Rate)	7,7	13,0	8,4	11,4	11,4	12,4

1) Figures include discontinued business

2) Figures includes profit from discontinued business

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

4) TTS Hua Hai consolidated as of 2Q/2015.

5) Including 50% of order reserve in JV-companies

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
LTIFR	Number of lost time incident / Total numbers worked x 1.000.000

MNOK	2015	2014
TTS GROUP
Turnover	3051	2 453
EBITDA	155	105
Order backlog per 31.12	4015	3 627
RORO/CRUISE/NAVY
Turnover	641	599
EBITDA	62	77
Order backlog per 31.12	941	854
CONTAINER/BULK/TANK
Turnover	973	422
EBITDA	141	-5
Order backlog per 31.12	2090	1 687
OFFSHORE
Turnover	359	572
EBITDA	-102	-50
Order backlog per 31.12	219	254
MULTIPURPOSE/GENERAL CARGO 3 051
Turnover	259	138
EBITDA Order backlog per 31.12	-13 2 693 2 453 573	-32 562
		2 369
SHIPYARD SOLUTIONS
Turnover	216	192
EBITDA	17	32
Order backlog per 31.12	204	271
2015 SERVICES	2014 2013	2012
Turnover	Consolidated 591	530
EBITDA	Operating revenue(MNOK) 76	96
	3 051

OPERATING REVENUE (MNOK)

Key figures

Second decade 1976 - 1985

The Gothenburg-based company that later becomes TTS Marine AB, makes its first delivery of cargo handling solutions to a car carrier in 1984. This marks the beginning of TTS' climb to a world-leading position as provider of access system for this highly special ised segment.

The contract with Norwegian Steelmill (Norsk Jernverk) which resulted further involving with the Scandinavian stee^l mill industry world in the following decades.

Third decade 1986-1995

After years of falling order intake due to a declining Norwegian shipbuilding industry, large contracts with Kværner Govan Shipyard in Scotland in 1988 marks a new turning point for TTS.

TTS is listed on Oslo Stock Exchange in 1995.

1. Tristan was built to carry 6200 cars.

2. King Harald V visited TTS at Nor-Shipping.

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
31.12.15		2,79	-	-0,55	7,32	0,38	86 606	242

Shareholder	Shares		% Country
SKEIE TECHNOLOGY AS	22 655 763	26,16	NOR
RASMUSSENGRUPPEN AS	11 512 506	13,29	NOR
SKEIE CAPITAL INVEST	4 203 361	4,85	NOR
HOLBERG NORGE	3 761 575	4,34	NOR
BARRUS CAPITAL AS	3 465 005	4	NOR
SKAGEN VEKST	3 035 946	3,51	NOR
PIMA AS	2 440 304	2,82	NOR
CIPI LAMP UCITS	2 232 886	2,58	IRL
MERTOUN CAPITAL AS	1 769 598	2,04	NOR
PHAROS SICAV SIF	1 696 936	1,96	LUX
ITLUTION AS	1 475 261	1,7	NOR
SKANDINAVISKA ENSKILDA	1 453 232	1,68	SWE
SKANDINAVISKA ENSKILDA	1 018 052	1,18	FIN
AVANT AS	1 000 000	1,15	NOR
AVANZA BANK AB	914 435	1,06	SWE
EUROCLEAR BANK S.A.	747 809	0,86	BEL
GLASTAD INVEST AS	668 000	0,77	NOR
TRAPESA AS	634 147	0,73	NOR
NORDEA AVKASTNING	590 739	0,68	NOR
SANDGRIND PER CHRISTIAN	545 000	0,63	NOR
Total, 20 largest shareholders		0,00 %
Other	86 605 660 100,00 %
Total	86 605 660 100,00 %

*) As of April 19, 2016

SHARE PRICE PERFORMANCE

MARKET CAPITAL DEVELOPMENT (NOK) 20 LARGEST SHAREHOLDERS *)

Shareholder information

FINANCIAL CALENDAR

Fourth decade 1996-2005

The purchase of Mongstad Engineering in 1996 is the starting point for a period of acquisition-driven growth for TTS. Target segments, product portfolio and operations are heavily expanded.

TTS acquires the crane companies Norlift and Aktro in 1997 and 2000 and the Dry Cargo Division of Hamworthy in 2001 – including 50 % of the Chinese deck equipment provider today known as TTS Hua Hai.

Takeover of LMG's crane division in 2004 strengthens TTS' position in the German shipbuilding market, while the purchase of Finnish Liftec expands the range of the Group's solutions for loading and unloading at ports.

In 2005, TTS and Dalian New Shipbuilding Heavy Industry establish the joint venture TTS Bohai Machinery in Dalian, China.

1. The first joint venture with China was established.

2005: The second joint venture established with DSIC, China.

Fifth decade 2006-2015

TTS acquires the drilling package provider Sense EMD in 2007 and sells it on to Cameron with a sound profit in 2012.

The acquisition of Neuenfelder Maschinenfabrik in Hamburg makes TTS the leading player in the heavy-lift market.

TTS establishes a services division in 2009 in order to capitalize on its huge base of installed equipment. A network of service hubs are set up around the world's busiest ports and offshore hubs to serve a global client base.

As the Far East grows increasingly important as both a market and a manufacturing base, TTS expands its operations in China and Korea and strengthens its strategic partnership with the Chinese shipbuilding industry. In 2015, TTS and China State Shipbuilding Corporation establishes the joint venture TTS-SMC in Guangzhou.

TRYM SKEIE CHAIRMAN OF THE BOARD

Skeie (b. 1968) is one of the main founders of Skagerak Venture Capital AS (SVC), where he currently is a partner. He holds the Chairman or Board of Directors position in several small compa nies. Skeie has been working as an Investment Manager with Kistefos Venture Capital and as structural design engineer in Hydralift ASA. Skeie holds a Master of Science (MSc) in Economics and Business Administration from the Norwegian School of Economics (NHH), and a MSc. in Civil Engineering from the Norwegian University of Science and Technology (NTH).

Skeie has been Chairman of the Board of TTS Group ASA since November 2009.

TORIL EIDESVIK DIRECTOR OF THE BOARD

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

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

GISLE RIKE DIRECTOR OF THE BOARD

Rike (b. 1953) holds an MSC from Norwegian University of Science & Technology (NTH). He is Director of Property in Rasmussengruppen AS. Rasmussengruppen AS is a major shareholder of the TTS Group ASA. Rike has various executive management experi ences from project management and business development from Rasmussengruppen AS and Maritime Tentech AS.

Rike has been Director of the Board of TTS Group ASA since 2015.

MARIANNE SANDAL DIRECTOR OF THE BOARD

Sandal (b. 1965) is COO in poLight AS. She holds a Bachelor degree in Mechanical Engineering from Bergen University College. She has further education in economics and management from BI Norwegian Business School. Sandal has various executive management experiences from business development, sales and project management from Nera ASA and Q-free ASA since 1998.

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

ANITA KRÅKENES DIRECTOR OF THE BOARD, EMPLOYEE ELECTED

Anita Kråkenes (b. 1971) is an Administrative Service Coordinator at TTS Marine AS. She joined TTS in 2011, and has previously also worked as a project controller and spare parts coordinator. Kråkenes has a Bachelor in International Marketing from BI and has further qualifications in Psychology and Service Management.

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

BJARNE SKEIE DIRECTOR OF THE BOARD

Skeie (b. 1945) is an engineer by education. He holds exten sive expertise in founding and building up companies. He started his career with the founding of Hydralift ASA, a Norwegian company constructing lift cranes for the offshore industry. With the experience from Hydralift ASA, Mr. Skeie built up a number of other companies, including Sinvest ASA, DDI, Ocean Rig ASA, Maritime Well Service and Maritime Hydraulics. He is currently Chairman of Skeie Group AS which is a privately owned management company serving the three companies; Skeie Technology AS, Skeie Capital Investment AS and Skeie Eiendom AS.

Skeie has been Director of the board of TTS Group ASA since 2008.

OLE HENRIK ASKVIK DIRECTOR OF THE BOARD, EMPLOYEE ELECTED

Askvik (b. 1971) is Senior Manager, Head of Spare Parts Department at TTS Marine AS in Kristiansand. He has worked for Hydralift and IUM Shipmanagement for the period of 1996 to 2002. Askvik holds a degree in Technical Exports from Agder University Collage.

Askvik has been an employee elected Director of the Board of TTS Group ASA since 2015. He held the same position in the period of 2012 to 2014.

The Board of Directors

Trym Skeie Toril Eidesvik

Ole Henrik Askvik

Marianne Sandal

Gisle Rike

Bjarne Skeie

Anita Kråkenes

Group EBITDA for the year amounted to MNOK 155, an improvement of MNOK 50 compared to 2014. The 2015 EBITDA was affected by a non-recurring gain of MNOK 104 from the consolidation of TTS Hua Hai (THH) from the 2nd quarter of 2015, and non-recurring costs in the Offshore segment of MNOK 37 from restructuring and inventory write-down. When comparing the 2015 EBITDA with 2014, the non-recurring positive effect in 2014 of MNOK 101 from changes in the group's pension plans must be considered. Adjusted for these non-recurring effects, the operational EBITDA for 2015 has improved by MNOK 84 compared to 2014.

Total group revenue was MNOK 3,051, up 24% compared to 2014. The increase primarily reflects the effect of the consolidation of TTS Hua Hai (THH) from the 2nd quarter of 2015, partly offset by the effects of a falling offshore market. In 2015, TTS experienced another year with successful progress in its service operations, as well as increased sales revenue based on a solid position in the markets for RoRo and Heavy lift.

The group reports a loss before tax of MNOK 15 in 2015, compared to a profit of MNOK 23 in 2014. The weakening of the result is explained by impairments of MNOK 65 of intangible and fixed assets related to BU Offshore and Liftec OY.

The order backlog at the end of 2015 amounted to MNOK 4,015, up from MNOK 3,627 at the end of 2014. The figure includes 50% of the order backlog of TTS' joint ventures in China. The increase of the order backlog is mainly due to the effect of consolidating THH.

In 2015, TTS continued its efforts to reduce both direct and indirect costs through improving work

processes, establishing cost-efficient value chains and utilizing synergies across the group. The offshore market has been even tougher than expected at the beginning of 2015, and cost-cutting, including significant workforce adjustments, has been made to adjust capacity to the order book.

Significant corporate efforts were also continued in 2015. A full Key Account Management (KAM) organization is in action to further develop TTS's good relationship with its customers, and support the continued drive to deliver solutions focusing on shiptype and lifecycle management. Further, TTS' strategic sourcing group (SSG) has been further reinforced to contribute to more cost-efficient purchases from sub-suppliers.

TTS strengthened its position in the important Chinese market in 2015. The new 50% owned subsidiary TTS SCM commenced operation in China in 2015, and has taken orders for deliveries of heavy lift cranes to Chinese customers. Furthermore, TTS has strengthened its lead on the 50% owned TTS Hua Hai, which is consolidated as a subsidiary into the TTS group accounts from the 2nd quarter of 2015. TTS has also increased its focus on the 50% owned joint-venture company TTS Bo Hai in 2015. This development of the activities in Asia is an important contributor to the execution of the TTS long-term strategy.

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 customer-oriented services, combined with an innovative approach towards utilizing new technology.

Since 2014, TTS has announced its long-term business target of building up a 6 billion NOK system as service provider within the global maritime and offshore industry by 2020. TTS pursues opportunities, particularly within the heavy lift work boat market, to compensate for the sharp fall in the Offshore market since 2014, in order to be able to meet the 6 billion target within 2020-2022. The group mainly pursues an organic growth strategy based on increased value of sales per contract and capture of market share, but also on broadening its product portfolio through partnerships, co-operations and acquisition of peripheral products in the ship value chain.

• Important objectives include: To always be considered a potential supplier in emerging and existing projects, and to achieve a market share above 30 % in all our targeted markets.
• To have product technology among the top three in all segments where TTS competes.
• To be a provider of complete, full life-cycle handling solutions and services for our targeted global 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: • Leverage the group's strong market and cost

• position in China, including further development of the strategic partnerships with the major stateowned shipbuilders and increased co-operation with Chinese partners within manufacturing
• Focus marketing on ship-type, including expanding the product portfolio per asset type and providing complete solutions and services for important vessel types within our targeted segments.

• Build a strong key account management structure around our key customers' needs and challenges.

• 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 momentum program, by execution of internal efficiency tasks and structural changes in sourcing, workflow and integrated value chains.

Operations and business units

The TTS Group runs a worldwide operation and has subsidiaries or branch offices in 15 countries: Belgium, Brazil, China, United Arab Emirates, Finland, Germany, Greece, Italy, Norway, Poland, Singapore, South Korea, Sweden, USA and Vietnam. In addition, TTS is represented by agents in several other locations.

TTS has organized its operations into six asset typeoriented 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 Solutions. The last unit, Services, offers worldwide services and after-sales for the complete range of TTS' products across all business units.

RORO/CRUISE/NAVY (BU RCN)

BU RCN 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.

CONTAINER/BULK/TANK (BU CBT)

BU CBT delivers complete cargo handling solutions for container ships, tankers and bulk carriers. The product range encompasses winches, davits, cranes and hatch covers. After changes to the governing documents for the 50% owned TTS Hua Hai Ships Equipment Co (THH), TTS controls THH, which is fully

Directors' Report 2015

The 2015 financial year is characterized by a stable marine market, and at the same time a sharp decline in the offshore market. The underlying profitability for the marine segments has improved in 2015, due to a combination of operational efficiency and cost reductions. The positive marine development and the efforts implemented in the offshore business unit gives the Board of Directors a reason to believe that the TTS Group will be able to regain profitable growth.

consolidated into the TTS group accounts as from the 2nd quarter of 2015.

Two of TTS' joint ventures in China are part of BU CBT. TTS owns 50% of TTS Bohai Machinery Co. Ltd. with partner Dalian Shipbuilding Industry Co. (DSIC). Through its control of the 50% owned subsidiary TTS Hua Hai Ships Equipment, TTS holds a 40 % stake in Jiangnan (Nantong) TTS Ships Equipment Co. Ltd.

OFFSHORE (BU OFF)

BU OFF supplies handling systems to the offshorebased energy industry and its supporting service industry. The unit addresses handling equipment for offshore construction and support vessels, as well as 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.

MULTIPURPOSE/GENERAL CARGO (BU MPG)

BU MPG 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 joint venture: TTS-SCM Marine and Offshore Machinery Co. Ltd. The new company provides heavy lift marine and offshore cranes for a growing Far East market.

SHIPYARD SOLUTIONS (BU SYS)

BU SYS 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.

SERVICES (BU SER)

BU SER 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.

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 1093 (1053) employees at the end of 2015, in addition to a temporary staff of 66 (116). Throughout 2015, staff has been reduced in BU OFF due to the challenging market. The number of employees has increased in other business units, partly due to the inclusion of THH on a 100% basis, and partly due to the expansion of service activities in other areas.

GEOGRAPHICAL BREAKDOWN OF EMPLOYEES

Review of the annual accounts ANNUAL RESULT FOR 2015

	Full Year
MNOK		2015 2014
Turnover		3 051 2 454
EBITDA*	155	105
Operating profit **	32	61
Net financial items	-47	-38
Profit/loss before tax	-15	23
Net result continued business	-40	-22
Total net result included divested business	-40	18

* The 2015 EBITDA includes a reduction of MNOK 38 related to restructuring and impairment costs in BU OFF. One-off effect from consolidating TTS Hua Hai (THH) included in 2015 of MNOK 104. A positive one-off effect, MNOK 101, from change in the pension plan of TTS Group included in the 2014 figures.

** In addition to EBITDA effects above, Operating profit includes one-off effects from impairment of fixed and intangible assets in BU OFF by MNOK 45, and impairment of intangible assets in BU SYS (Liftec), by MNOK 20

The total group turnover in 2015 was MNOK 3,051, representing a 24% increase compared to 2014. The increase in turnover comes mainly from TTS Hua Hai, which was consolidated into the TTS Group accounts from the 2nd quarter of 2015 (MNOK 667), supplemented by positive effects from increased activity in the market for heavy lift cranes and RoRo. This increase in turnover is partly offset by a falling demand for certain merchant vessels as well as significantly reduced activity within the offshore segment.

Operational costs and losses in projects were reduced compared to 2014. Group EBITDA for the year amounted to MNOK 155, an improvement of MNOK 50 compared to 2014. The 2015 EBITDA was affected by a non-recurring gain of MNOK 104 from the consolidation of TTS Hua Hai (THH) from the 2nd quarter of 2015, partly offset by costs in the Offshore segment of MNOK 38 from restructuring and writedowns. When comparing EBITDA for 2015 with 2014, the non-recurring positive effect in 2014 of MNOK 101 from changes in the group's pension plans must be considered. Adjusted for these non-recurring effects, the underlying EBITDA for 2015 is improved by MNOK 84 compared to 2014.

TTS' Services unit in particular contributes positively to the result. On the other hand the weak Offshore market, together with low utilization and price pressure in the Container/Bulk/Tank, Multipurpose/General Cargo units, as well as poor project performance in some large projects, contribute negatively to the overall performance.

The Group's net finance cost in 2015 was MNOK 47, an increase from MNOK 38 in 2014. The increase in finance cost is mainly explained by exchange rate effects combined with reduced interest income due to reduced bank deposits, and increased interest expenses due to higher utilization of the group's credit lines.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Total assets at the end of the 4th quarter of 2015 were MNOK 3,026, an increase of MNOK 615 since 2014. The increase is mainly due to the effect of the consolidation of THH. The net working capital is negative MNOK 84.

In 2015, net interest-bearing debt decreased by MNOK 154, from MNOK 262 to MNOK 108. Consolidation of the 50% owned subsidiaries THH and TTS SCM represents a reduction in the reported net interest-bearing debt of MNOK 336.

In December 2015, TTS agreed with Nordea and DNB on new credit and guarantee facility arrangements,

which in principle represent an extension of previous agreements. The extended agreements expire 31 December 2016.

At the end of the 4th quarter of 2015, the TTS Group has fully drawn its loan facility with DNB of MNOK 100. In addition, the group has drawn MNOK 218 from the MNOK 300 overdraft facility with Nordea.

Covenants for both equity ratio, NIBD/EBITDA (4Q2015 only) and EBITDA (2016) related to the debt facilities with Nordea and DNB have been renegotiated in connection with the extension in the 4th quarter of 2015. Please refer to the section Risk factors and risk management/Financial risks below.

There were no conversions in the subordinated convertible bond in 2015. In December 2015, the bondholders agreed to an extension of the subordinated convertible debt until April 18th 2017. The TTS Group ASA Extraordinary General Assembly approved the extension on January 5th 2016.

Financial fixed assets were MNOK 85 at the end of 2015, compared to MNOK 103 at the end of 2014. 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 8 at the end of 2015, consisting of gross deferred tax assets of MNOK 43 and gross deferred tax liability of MNOK 51.

The reporting currency of TTS is NOK (Norwegian krone). As substantial parts of both income and expenses are denominated in foreign currencies, fluctuating foreign exchange rates may affect the group's operating results. TTS therefore works on reducing 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 of Directors affirms that the accounts provide a true and fair view of the company's financial position as of December 31st 2015. The Board of Directors is not aware of any unreported events occurring subsequent to the balance sheet date of December 31st 2015 that may be of material significance to the TTS Group, or to the annual accounts of 2015. See Note 31; Subsequent events, for further information.

At the end of 2015, 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 own shares.

CASH FLOW

TTS Group reported a positive cash flow of MNOK 265 in 2015, compared to a negative cash flow of MNOK 21 in 2014. The consolidation of THH from 2nd quarter 2015 contributed with MNOK 220 to the positive cash flow.

Cash flow from operations was positive MNOK 0, a significant improvement from negative MNOK 162 in 2014, reflecting the improved operations through 2015.

Net cash flow from investment activities in 2015 was positive MNOK 196. The positive cash flow from the THH consolidation is partly offset by investments in subsidiaries of MNOK 24 and investments in fixed assets of MNOK 14, while dividends from Joint Ventures contributed positively with MNOK 9.

Net cash flow from financing activities was positive MNOK 69, mainly from increase of drawdown of bank overdrafts MNOK 126, partly offset by interest paid MNOK 60.

During 2015, the TTS Group has incurred an additional MNOK 95 of debt and paid interest on debt amounting to MNOK 35.

At the end of 2015, TTS has a nominal net interestbearing debt of MNOK 108 and unused available credit facilities of MNOK 82, in addition to a cash reserve of MNOK 414, of which MNOK 78 is in fully owned subsidiaries, and MNOK 336 is in 50% owned subsidiaries (THH and TTS SCM).

TTS paid no dividends to its shareholders in 2015.

RESEARCH AND DEVELOPMENT

Total capitalized investment in R&D in 2015 was MNOK 0 (2014 MNOK 0). In 2015, R&D related to the development of offshore cranes was impaired by MNOK 17. Cost of development activities within specific projects is charged to the P&L as project cost.

ORDER BACKLOG

The order backlog at the end of 2015 amounted to MNOK 4,015, up from MNOK 3,627 at the end of 2014. The figure includes 50% of the order backlog of TTS' joint ventures in China. The increase of the order backlog is mainly due to the effect of including 100% of THH in the reported backlog figures.

CONTINUED OPERATION

As of December 31st 2015, TTS' equity ratio was 28.2 %, compared to 25.3% the previous year. Net interestbearing debt amounted to MNOK 108, including the nominal value of the convertible bond.

The Group's financial objective is to have sufficient cash reserves or credit lines 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 guarantee and overdraft facilities with Nordea and DNB, which mature on December 31st 2016. The Group's bond loan expires April 18th 2017. The Group expects to renew the loan agreements or negotiate 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 (BURCN)

	Full Year
MNOK		2015 2014
Turnover	641	599
EBITDA	62	77
EBITDA margin (%)		9.7 12.9
Order backlog	941	854

The performance of BURCN reflects the TTS Group's strong position in the market for car carriers, where TTS has continued to leverage its strong and longstanding relationship with several major players in this specialized niche. Going forward, we see a slightly softer market for car carriers, being replaced by higher activity in the market for RoPax and RoRo.

Total revenue for the unit was MNOK 641 in 2015, up from MNOK 599 the previous year. BURCN recorded a 2015 EBITDA of MNOK 62. The order backlog points to continued high levels of activity in the unit's key markets, increasing from MNOK 854 at the end of 2014 to MNOK 941 in 2015. 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 2015, TTS also continued winning a number of contracts to equip cruise ships.

CONTAINER/BULK/TANK (BUCBT)

	Full Year
MNOK		2015 2014
Turnover	973	422
EBITDA	141	-5
EBITDA margin (%)	14.5	-1.1
Order backlog		2 090 1 687

* The 2015 EBITDA includes a one-off effect from consolidating TTS Hua Hai (THH) of MNOK 104.

The turnover of MNOK 206 from fully owned companies within the business unit in 2015 is lower than the comparable 2014 turnover of MNOK 422, reflecting demanding market conditions caused by continued low rates in certain freight segments, and generally less activity at South Korean shipyards.

Focus on overall efficiency and restructuring initiatives has compensated for the effect of price pressure and currency effects on costs, giving an EBITDA-margin on level with last year.

The profit share from JV companies in 2015 shows a positive contribution of MNOK 110, of which MNOK 104 is the non-recurring gain arising when changing to full consolidation of THH from the 2nd quarter of 2015.

The order backlog, including 50% of the order backlog from the Chinese joint ventures, grew from MNOK 1,687 in 2014 to MNOK 2,090 at the end of 2015. The increase is mainly from the effect of the consolidation of THH, which is included 100% from the 2nd quarter of 2015 (MNOK 583), partly offset by a reduced order backlog in the non-consolidated joint venture company TTS Bo Hai (TBH) (MNOK -197). THH and TBH hold solid market positions in China, with market shares exceeding 50 % for hatch covers and hose handling cranes, and a market position for winches and cargo cranes with potential for further improvement.

Increased activity in the winch-market in South Korea had a positive effect on order intake in the 4th quarter of 2015, and the order backlog in this segment is a solid platform for reaching the expected activity level in 2016.

Despite price pressure from Korean yards, the group's expectations are moderately positive. A weak handybulk market is balanced by increased activity within mega cape-size bulk and feeder containers.

OFFSHORE (BUOFF)

	Full Year
MNOK		2015 2014
Turnover	359	572
EBITDA	-102	-50
EBITDA margin (%)	-28.3	-8.7
Order backlog	219	254

* The 2015 EBITDA includes reduction of MNOK 38 related to restructuring and impairment cost in the Offshore Segment. A positive one off effect, MNOK 35, from change in the pension plan in TTS Group is included in the 2014 EBITDA figures. ** In addition to EBITDA effects above, Operating profit includes one off effects from impairment of fixed and intangible assets in Offshore by MNOK 45

The Offshore market is still slow with a low level of activity and visibility, and the pricing competition is fierce. As an effect of the weak offshore market, the reported turnover is reduced significantly compared to 2014.

The unit recorded a turnover of MNOK 359, a significant reduction from MNOK 608 the previous year, and an EBITDA loss of MNOK 102.

Non-recurring costs of MNOK 38 for the restructuring of the offshore activities in Shanghai and the writedown of inventories of MNOK 20 have been charged to the Offshore unit in 2015, of which MNOK 38 affects the EBITDA. In 2015, the book value of intangible assets in BUOFF was impaired by MNOK 26, and the book value of fixed assets was impaired by MNOK 19.

TTS has taken strong cost-reducing measures in order to adjust activities and capacity to the current offshore market. Several adjustments have been made in 2014 and 2015 in order to match capacity with the order backlog and market conditions. The number of full time employee equivalents has from the peak in the 3rd quarter of 2014 been reduced by almost 70%.

The Offshore market is expected to remain harsh in 2016 and 2017. The segment is consequently expected to show a low level of activity and low margins in the quarters to come. After the downsizing of the Business Unit during 2015, the cost base has come down, and the structure of the remaining business gives the possibility to further adjust costs and capacity to the prevailing market conditions.

MULTIPURPOSE/GENERAL CARGO (BUMPG)

	Full Year
MNOK		2015 2014
Turnover	259	138
EBITDA	-13	-32
EBITDA margin (%)		-5.0 -23.2
Order backlog	573	562

BUMPG shows an increased turnover compared to last year. The restructuring of the segment in 2014 and the start-up of the 50% owned TTS SCM in China in 2015 create a good position for TTS to take a fair share of a market that we expect will grow. Costs connected to the set up of TTS SCM has contributed negatively to the segment margin in 2015.

The solid order backlog and the improving market for heavy lift cranes give prospects of higher activity levels and improved profitability going forward. Alternative use of the unit's special leg-encircling cranes on workboats shows a growing interest where the Offshore unit's competence also will be required.

SHIPYARD SOLUTIONS (BUSYS)

	Full Year
MNOK		2015 2014
Turnover	216	192
EBITDA	17	32
EBITDA margin (%)		8.1 16.9
Order backlog	204	271

* A positive one-off effect, MNOK 18, from change in the pension plan in TTS Group included in the 2014 EBITDA figures.

The figures in 2015 reflect the unit's market position in a niche market for shiplift and transfer systems and other logistics solutions for the production industry. TTS has started the integration of the SyncroliftTM ship-lift product range, which was purchased from Rolls-Royce Marine in the 3rd quarter of 2015.

TTS Liftec, which is a substantial supplier within the European niche market for translifters, is adapting to a market with increased competition. In the 4th quarter, impairment of goodwill of MNOK 20 has been charged to the segment EBIT.

The order backlog represents a sound operational fundament for the quarters to come. From the volume of prospects identified, there is potential for further growth.

SERVICES (BUSER)

	Full Year
MNOK		2015 2014
Turnover	591	530
EBITDA	76	96
EBITDA margin (%)		12.7 18.2

* A positive one-off effect, MNOK 38, from change in the pension plan in TTS Group included in the 2014 EBITDA figures.

The Services unit further improved its strong performance in 2015, with an increased underlying EBITDA margin. The business unit revenue was MNOK 591, an increase of 12% compared to 2014. EBITDA for 2015 amounted to MNOK 76, up by MNOK 18 compared to the previous year's underlying earnings, adjusted for the positive one-time effect of MNOK 37 related to pension plan changes in 2014.

Market demand in the segment and historically installed base provide a platform for further increase in turnover at acceptable profit margins, although

the service market still remains influenced by low ship charter rates in some segments. The planned expansion of the services network continued in 2015 and 2016 to create a larger geographical basis for the TTS Services business.

Risk factors and risk management

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

The Board of Directors reviews operating reports from management on a monthly basis. In addition to the continuous risk mitigation, the Board of Directors 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 is 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 world trade, the number of vessels contracted, shipyard utilization indicators, charter development, investment trends as well as prices of oil and other raw materials.

The 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 the 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 2016, the TTS Group has secured a sound order backlog for most of its new building business within the marine sector. Scheduled deliveries for the majority of the current contract obligations normally 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. The Offshore unit has reduced its cost base significantly throughout 2015, in order to adjust to the weak market. 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.

FINANCIAL RISK

TTS is exposed to credit, liquidity and currencyrelated risks and has adopted an active approach to managing risks 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 evaluating the financial strength of its contract partners, restricting credit and utilizing mechanisms to secure payments, such as letters of credit. TTS works continuously to limit its exposure to credit risks.

At the end of 2015, the group meets both the covenants for the debt facilities with Nordea and DNB, equity >27,5%, and debt ratio NIBD/EBITDA <3.

The covenants for both equity ratio and EBITDA related to the debt facilities with Nordea and DNB were renegotiated when renewing the credit, bonding and currency facilities in December 2015. The 2016 covenants are:

(MNOK)	Q1-16 Q2-16 Q3-16 Q4-16
EBITDA Covenant	≥ 15 ≥ 35 ≥ 60 ≥ 100
accumulated

• Equity ratio min 25,0% (nominal value of remaining bond-debt is to be included in the basis of calculation)
• Minimum liquidity reserve (MNOK 50)

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 group. 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. On December 31st 2015, the TTS Group had utilized MNOK 218 of its total overdraft facility of MNOK 300.

The companies bank facilities is due 31.12.2016, and convertible bond debt is due 18.4.2017. In the latter part of 2016 TTS Group will initiate a process in order to replace, or renew, these funding facilities. TTS Group believes that the current business plan will enable the group to renew or replace these funding agreements prior to expiry.

Relating to currency risks, 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. Furthermore, TTS Group is exposed to the currency effects of the group's net investments in foreign subsidiaries and joint controlled entities.

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. Measures are implemented to ensure that all projects are being satisfactorily assessed both prior to signing the contracts and during the execution. Amongst these are strengthening 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.e. 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

TTS is part of an international industry where what is good for the globe and the people and what is good for business are more closely intertwined than ever. TTS is dedicated to conducting our activities in an ethical and responsible way; aiming at sustainable development for employees, customers, investors 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.

The Group has enterprises in 15 countries and operates in diverse cultural contexts. While committed to respecting local culture, TTS takes care always to employ the highest standards of ethical conduct and business behaviour. TTS stresses the importance of

legal compliance at local, national and international

levels. As a global corporation, TTS is committed to following OECD's Guidelines for Multinational Enterprises and contributing to the improvement of international business standards and practices, especially with regard to questions of corruption, labour relations and the global environment. TTS performs in a manner that respects the human rights as set out in the UN's Universal Declaration of Human Rights and the core conventions of the International Labour Organization.

In April 2016 the Board adopted a protocol relating to ethics and social responsibility where it determines that the ten principles on human rights, workers, the environment and anti-corruption in the UN Global Compact, should be the guideline for the company's operations.

TTS gives high priority to creating a working environment where employees thrive and develop as humans and professionals. We support our workers' opportunities to exercise their employee rights and to organize through trade and labour unions, and we facilitate 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 more than 15 years, the Group has built its reputation around the fundamentals embodied in the booklet "The Spirit of TTS", which encompasses company vision and strategy, corporate values and ethical and other guidelines for management and employees. In 2015, the Board of Directors initiated a revision of "The Spirit of TTS", still built around the core values integrity, openness and honesty, loyalty and initiative. The revised booklet has been distributed and presented to all employees throughout the Group. The company has additionally approved more spesific guidelines for Corporate Social Responsibility ("CSR") based on UN Global Compact's 10 principles for CSR related to human rights, employee rights, environment and anti-corruption.

The TTS Group has zero tolerance for corruption and encourages its employees to "blow the whistle" when suspecting infringements. Following a 2015 initiative, TTS established an internet based whistle-blower channel in 2016, lowering the threshold for reporting misconduct to a minimum.

Quality, health, safety and environment (QHSE)

The Board of Directors believes that a proactive QHSE policy is a precondition for the successful development of a long-term sustainable and profitable business for 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 zero-harm-and-fault policy.

TTS always operates with worker safety and environmental sensitivity at the forefront, 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 to the environment, to 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. The Board of Directors advocates a consistent HSE policy at corporate level, and common HSE reporting procedures are applied.

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, with a mandate to contribute to increased efficiency and quality in the HR & HSE processes, continued its work in 2015 with a special focus on competence development, knowledge transfer, and general safety training and safe job analysis. Other focus areas for 2015 have been improved air quality and measures to reduce oil spillage, risk of tripping and strain related to heavy lifts.

All employees are accountable for contributing to their own health, safety and wellbeing as well as 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.

TTS' Quality Management Group (QMG) at corporate level is responsible for establishing, implementing and enforcing common quality parameters throughout the group. In 2015, QMG developed a common corporate structure for categorising and reporting non-conformities. All business units have reported on their non-conformity costs since the first quarter of 2015, and by the end of 2016, every ISO 9001 certified TTS entity will report along the lines drawn up by QMG.

Other top priorities for QMG in 2015 have been ISO certification and supplier validation and development. Adherence to strict QHSE measures is an important criterion for TTS when selecting partners, subcontractors and suppliers. Together, QMG and the Strategic Sourcing Group (SSG) have established common corporate procedures for monitoring and following up suppliers. This is to make sure that preferred suppliers at all times match TTS' demands regarding QHSE and possess an urge towards joint continuous improvement.

China becomes increasingly important as a manufacturing base for TTS. The Group has therefore established a hub in Shanghai aimed at ensuring efficient utilization and quality control of Group resources in China. Important focus areas for the Shanghai hub in 2015 were process and quality control of steel suppliers in China and training an internal team of quality control engineers.

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 regularly has contributed as an 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

In order to strengthen the group management team and give the CEO further room to focus on heavy operative tasks in a demanding turnaround process, Bjørn Olafsson was appointed Deputy Managing Director of TTS Group ASA in October 2015.

In December 2015, Stefan Gleuel stepped down as Executive Vice President of the business unit Services, and CEO Björn Andersson took over as interim EVP of the unit. The different business units are currently led by the following EVPs:

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 Arve Tjønn Rinde Shipyards Solutions: Executive Vice President Björn Andersson Services: Interim Executive Vice President Björn Andersson

The TTS Group had 1,093 employees at the end of 2015, in addition to a staff of 66 hired on a temporary basis. In order to adjust the workforce to the current difficult market conditions in the oil-related offshore industry, temporary and permanent workforce reductions were implemented in two stages in the offshore business unit's entities in Norway and Poland. All downsizing was done in accordance with the jurisdiction applicable to the relevant site, and in cooperation with the employees' representatives.

The skilled and dedicated workers of TTS are the group's most important success factor, and the Board of Directors wishes to express their gratitude to all employees for their contribution to the company's turnaround in 2015.

TTS experienced 11 workplace incidents resulting in the need for medical treatment in 2015, down from 29 in 2014. This indicates that TTS' strong focus on risk awareness and mitigation pays off, and the Board of Directors urges the management to continue promoting a culture of workplace injury prevention. The Lost Time Incident Rate per million working hours (LTI rate) was 7.7 in 2015, also a significant decrease

from 13 in 2014. Reported absence due to illness was 2.6 % in 2015, in line with the previous year.

In October 2015, TTS conducted a Global Employee Survey encompassing all TTS entities in 15 countries. The purpose of the survey – which is carried out every second year – is to identify employee engagement and the underlying factors influencing the overall satisfaction with working for TTS. The 2015 survey was distributed in Chinese, English, German and Korean to all employees, who responded anonymously with a response rate of 76%. The scores were generally good regarding job content and requirements, teamwork and feeling of empowerment. Compared to 2013, however, we see a slight decline in overall workplace satisfaction and in management satisfaction. These results must clearly be seen in light of the past few years' restructuring and downsizing in certain business segments, but also point to important HSE and management priorities for the future.

The TTS Group continuously works towards ensuring a healthy and motivating working environment for its employees. As an international corporation that 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 that offers 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 their 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 21% of the workforce in 2015, as in 2014. Consequently, the Board of Directors consider it important for TTS to map out a recruitment policy with a special eye for measures to attract women.

Two of the corporate management team's eleven members are female. Three of the seven 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 impairments.

BOARD OF DIRECTORS

Trym Skeie is Chairman of the Board of Directors of the TTS Group ASA, which in addition had the following directors at the end of 2015: Bjarne Skeie, Marianne Sandal, Toril Eidesvik, Anita Kråkenes, Ole Henrik Askvik and Gisle Rike.

At the Annual General Meeting held in June 2015, Gisle Rike was appointed director, after Jan Magne Galåen stepped down as director in December 2014. Due to changes in employment status, Jan-Magnar Grøtte resigned as Director of the Board in September 2015 and was replaced by the first deputy Ole Henrik Askvik.

AUDITOR

KPMG was re-elected as the TTS Group ASA's auditor for 2015.

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. 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 the 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.

Most 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 2015 was MNOK 854, of which MNOK 634 was attributable to the majority and MNOK 220 was attributable to the non-controlling interests of partly owned subsidiaries.

The parent company, TTS Group ASA, reports a net profit of MNOK 67 and an operating loss of MNOK 37 for the year 2015. The main reason for the positive net result is dividends from subsidiaries of MNOK 259, partly offset by the write-down of shares in other subsidiaries. The equity in TTS Group ASA was MNOK 537 at the end of 2015, of which MNOK 159 was restricted capital and MNOK 378 other equity of MNOK 145.

Due to the poor financial performance of the group, the Board of Directors will propose no dividend payment for the year 2015. The net result from the year is proposed to be transferred to other equity.

Future prospects

The TTS Group is completing a major turnaround process in all of its business units, and has taken strong measures to reduce the cost base and risks for the business. The Group has made substantial progress in a number of areas in 2015, and has managed to reduce the operating losses and the exposure in BUOFF. The financial performance improved during the year, and the Board of Directors has reason to believe that the company is on the right track towards restoring profitability to industry standards.

The Board of Directors' expectations for 2016 are cautiously positive for the marine business. TTS Group expects further growth in line with the total market growth. The offshore market is expected to remain weak. TTS Group is well diversified, and hence its exposure to the sub-markets differs somewhat from segment to segment.

Within BURCN, the PCTC market seems to be somewhat softer, but we see higher activity levels within the Ropax and Trailer RoRo segments. The activity within the cruise market is expected to grow, with increased Chinese activity being an interesting factor.

BUMPG has shown positive development, which is expected to continue, particularly in China.

Going forward, the Board of Directors expects the overall Services market to be relatively stable with some underlying growth. Further penetration of the installed base together with cost-effective new sourcing provide a substantial platform for further profitability.

Market expectations for BUCBT in the Chinese market are generally positive, with increased activity in the overall Container market. The market for medium sized bulk vessels is expected to remain weak; however there is a clear tendency of increased demand for capsize-plus. Newbuilding activity within the tank sector is good, however there are some indications of less activity.

During 2014 and 2015, TTS Group has implemented measures to adapt the capacity to shifting demands. These measures continue into 2016. Through the Momentum program, TTS Group has run several cost improvement initiatives within process reengineering, sourcing and fabrication, as well as product standardization.

Market initiatives are taken to provide ship-type solutions to key customers. The effects of the actions taken are expected to contribute positively in the years to come. TTS Group works actively to grow its product portfolio and service offering. Sales of larger bundled equipment packages and solutions are expected to improve efficiency for both shipyards and ship owners. This is supported by the company's organization of its business units based on ship-type, with the aim to offer complete equipment packages for ship types to increase the order value per ship, and increase TTS' market position.

In order to position the TTS Group for further growth, the Board of Directors of TTS Group continues the strategic process initiated in February 2015 to explore structural opportunities.

Bergen, 19 April 2016 Board of Directors of TTS Group ASA

Trym Skeie

Chairman of the board

Bjarne Skeie Director

Toril Eidesvik

Director

Ole Henrik Askvik Director

Bj¨örn Andersson CEO & President

Gisle Rike Director

Anita Kråkenes Director

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", revised in 2015, is available on the company's website www.ttsgroup.com, and describes our 1) Vision and Strategy, 2) Corporate Culture and Core Values, 3) Management and 4) Ethical Guidelines. Additionally, the company has approved more specific guidelines for Corporate Social Responsibility ("CSR") based on the UN Global Compact's 10 principles about CSR related to human rights, employee rights, the environment and anti-corruption.

TTS Group ASA has approved and implemented a specific set of rules and procedures for the Board of Directors, with the purpose of laying down the rules for the work and administrative procedures of the Board of Directors.

As a global group with activities in 15 countries, it is important for the group to focus on core values and corporate social responsibility in order to ensure that the corporate culture complies with the applicable standards. The group's core values, defined as integrity, openness and honesty, loyalty and initiative shall characterize all employees and the group's activities.

Through clearly defined core values, TTS wishes to contribute to developing the societies 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 held seminars to enhance the understanding of cultural differences, and developed its 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."

The company's operations, goal and strategy is described in more detail in other parts of the group's annual report. As shown in these descriptions, the company's operations and strategy are within the limits of the mission statement of the Articles of Association.

3. Equity and dividends EQUITY

The total balance on December 31st 2015 was MNOK 3,026, with an equity of MNOK 855, giving an equity-to-assets ratio of 28.3 percent. The company's solidity 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 was converted to 10,464,876 shares. The remaining part of this loan was around year-end 2015/2016 replaced by a new subordinated convertible bond with maturity on April 18th 2017. Based on the applicable accounting rules, this new loan is treated as an extension of the previous loan.

SHAREHOLDER POLICY

TTS aims to give our shareholders a competitive long-term return that reflects the risk inherent in the company's operations. Based on TTS' capital balance and growth strategy, the shareholders' return should be realized first and foremost through an increase in the value of their shares, but a combination with dividend may also be relevant in the future if and when circumstances permit it. Growth by means of acquisitions will be implemented through balanced financing from 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 June 2nd that no dividends are paid out for the financial year 2015.

STRATEGY FOR FURTHER GROWTH

Since 1996, TTS has completed a number of successful acquisitions, establishing a leading position in the market segments for marine handling equipment. TTS has built a strong market position, based on a diversified product portfolio, in its core shipping markets. TTS has a strong focus on system development, and products and solutions that raise the efficiency for our end users. TTS believes "package sales" will be a key growth driver going forward. The organization is reformed, from having a product-type to a ship-type delivery-oriented 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 adapt to these requirements and to fill gaps in the product portfolio, and expand its services to clients in order to deliver more package sales. This is expected to position TTS for higher order values per ship, and thus enable TTS to increase its market position in markets like 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 its financial advisor in order to assist in the strategic process.

BOARD AUTHORIZATIONS

• On June 8th 2015, 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 authorization has been given in order to enable the Board to increase the company's share capital in order to, among others, be able to further develop the company and/or quickly and efficiently use good business connections with regards to the acquisition of other business activities or assets within the same or similar industry as the company. The authority is valid until the next Annual General Meeting, but June 30th 2015 at the latest. No shares have been issued on the basis of this authorization as of April 19th, 2016.

• On June 5th 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 executive management. This authorization is valid for two years until June 30th 2016, based on the two-year terms of the company's option programme. A total of 575,000 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 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 June 8th 2015, the Annual General Meeting adopted a resolution to authorize the Board to issue a maximum of 675,000 shares against cash redemption for the benefit of the company's leading employees. This authorization is valid for two years based on the two-year terms of the company's option programme. A total of 600,000 shares have been issued in the form of options, with a possible first-time exercise of options following the presentation of the first quarterly

Corporate Governance

TTS Group ASA (TTS) follows The Norwegian Code of Practice for Corporate Governance (NUES), dated October 30th 2014, as guidelines for its work. The following principles for corporate governance have been adopted by the Board of TTS Group ASA:

results for 2016, 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 2016 and the first quarter of 2017, in addition to options not previously exercised.

• On June 8th 2015, 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 authorization is valid until the Annual General meeting 2016, but latest until June 30th 2015. As of April 19th 2016 this autorization has not been utilized.
• On June 8th 2015, the Annual General Meeting adopted a resolution to authorize the Board of Directors to buy back a portion of the convert ible callable unsecured subordinated bond 2011/2016, up to a total of NOK 150,000,000. The authorization is valid to Annual General assembly 2015, but latest until June 30th, 2016. The loan matured on January 18th, 2016 and this autorization has not been utilized.
• On January 5th 2016, the Extraordinary General Meeting adopted a resolution to renew and extend the subordinated convertible bond, including the conversion rights on same terms as the previous subordinated convertible bond loan. Furthermore, the Board of Directors was, in accordance with the provisions set out in the loan agreement, authorized to issue shares upon conversion of the bond loan at a strike price of NOK 4,97 per share with applicable adjustments according to the loan agreement. The authoriza tion is, according to the loan agreement, appli cable both on demand from bondholders, and on certain conditions, from the company. As of April 19th 2016 the authorization has not been utilized.

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

On December 31st 2015 the share capital 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 TTS' 20 major shareholders is available on the company's website.

OWN SHARES

Own shares are purchased through ordinary trade on the Oslo Stock Exchange. On April 19th, 2015 the company's own shareholding was 112,882 shares.

THE BOARD OF DIRECTORS AND GROUP MANAGEMENT

TTS Group ASA's Board of Directors and group management are considered close associates of TTS. The Board of Directors has approved a specific set of "Rules and procedures" for the Board of Directors. According to this, transactions between associates shall comply with the Norwegian Code of Practice for Corporate Governance ("NUES").

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 rights issue. If such a situation occurs TTS will comply with this recommendation.

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.The company's shares are therefore freely traded.

6. Annual General Meeting

The Annual General Meeting is usually held at the end of May/beginning of June. The Annual General Meeting for 2016 will be held on June 2nd 2016 in accordance with the financial calendar for 2016.

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

The notice includes sufficiently detailed and compre hensive information in order to allow the 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 shareholders to provide sepa rate voting instructions for each matter that will be discussed at the meeting, including 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 all present at the Annual General Meeting, in addition to other board members when appropriate. The Annual General Meeting is opened by the Chairman of the Board ("COB") and the COB is normally elected to chair the 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 individu ally considered for each general assembly.

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The Annual General Meeting will be given the oppor tunity 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 June 8th 2015, a nomination committee was set up with the following members:

NAME	POSITION
Petter Sandtorv	Self-employed
Anders Nome Lepsø	EVP & CFO Westfal-Larsen Management AS
Bjørn Olafsson	Self-employed

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

Bjørn Olafsson was in October 2015 appointed Deputy Managing Director of TTS Group ASA and he therefore at the same time announced his resignation from the nomination committee.

In the Extraordinary General Meeting held on January 5th 2016, Kate Henriksen, COO of Miles AS, was elected new member of the nomination committee. The company was thereafter informed by the nomi nation committee that Petter Sandtorv was elected chairman of the committee.

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No one in the nomination committee is member of the Board of TTS Group ASA or part of the manage ment of TTS, and are all independent of the Board of Directors or members of corporate management. The nomination committee receives updates on TTS activities and challenges during their work, and they

have contact with the Board of Directors, manage ment and major shareholders, so that the interests of the shareholders are protected.

The nomination committee recommends candidates for the Board of Directors and recommends the remu neration of the members of the Board of Directors. The recommendations from the nomination committee are an integrated part of the Annual General Meeting notice to the shareholders.

According to the Norwegian Code of Practice for Corporate Governance, the chairman of the nomi nation committee should be elected at the Annual General Meeting, and furthermore the guidelines for their work should be set by the Annual General meeting. In the opinion of TTS, it is more appro priate that the Board of Directors sets the rules and procedures for the nomination committee, and that the nomination committee decides on the distribution of tasks, including the election of a chairman. The Annual General Meeting determines the nominating commit tee's remuneration.

Information about the members of the committee, the rules and procedures as well as information about the shareholders' right to submit proposals to the nomination committee is available on the company's website. Contact details to the election committee is also available on the 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 represent atives on the Board of Directors of TTS Group ASA.

In accordance with the Annual General Meeting on June 8th 2015, the shareholders elected the following members to the Board of Directors:

NAME	ELECTION PERIOD	POSITION
		Trym Skeie 2014 - 2016 Chairman, Skagerak Kapital
Marianne Sandal	2014 - 2016 Self-employed
	Toril Eidesvik 2015 - 2017 Lawyer
		Bjarne Skeie 2014 - 2016 Skeie Technology AS
Gisle Rike		2015 - 2017 Manager, Rasmussengruppen

In accordance with the ordinary election of two employee representatives to the Board of Directors of TTS Group ASA, the following were appointed to the Board in July 2014:

NAME	COMPANY	POSITION
Jan-Magnar Grøtte	TTS Offshore Solutions AS	Director
Anita Kråkenes	TTS Marine AS	Director

Jan Magnar Grøtte declared his resignation as an employee of the company in 2015. Consequently he resigned as member of the Board of Directors effec tively from September, and was replaced as employee representative to the Board of Directors by Ole Henrik Askvik - TTS Marine AS.

TTS' Directors of the Board are elected for a two-year period. Time of service and CV for each member of the Board of Directors is available in the Annual Report.

Trym Skeie and Bjarne Skeie are both directly and indirectly major shareholders in the company. Gisle Rike is employed by Rasmussengruppen AS, which is a major shareholder in the company. The other shareholder-elected Board members are independent of management, the company's major shareholders and the main business connections. Furthermore, the composition of the Board of Directors upholds share holder interests and the company's requirements for expertise, capacity and diversity in a well-functioning collegiate body. The complementary expertise of the Board of Directors ensures that the members of the Board of Directors have the ability to assess matters from different perspectives before reaching a final conclusion.

Trym Skeie, Chairman of the Board, directly and indirectly holds 573,140 shares and convertible bonds with a nominal value of MNOK 4, which can be converted to 804,828 shares in TTS Group ASA. The indirect owenership of shares and loan are held through Skeie Alpha Invest AS and Tamafe Holding AS , where he holds all of the voting shares.

Bjarne Skeie, Director of the Board, indirectly holds 27,159,124 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 AS, Skeie Consultants AS and Skeie Capital Investments AS, where he holds all of the voting shares.

In addition the following members of the Board of Directors holds shares: Toril Eidesvik, through Zahlahuset AS, 50,000 shares, Ole Henrik Askvik 3,268 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 holds options. A procedure for the Directors of the Board and management has been made regarding the 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 ("Rules and procedures for the Board of Directors") where its responsibilities and rules for the work and administrative procedures are laid down. The Board of Directors works according to an annual plan in order to ensure the coverage of all important issues and business areas, with particular emphasis on objectives, strategy and implementation.

The Board of Directors holds yearly, normally every autumn, two-day strategy meetings where the main subject is long-term planning.

The Board normally holds eight scheduled meetings annually, but due to the challenging situation within the Offshore business unit, both work sessions and extraordinary meetings with the Board of Directors have been held for the past few years. A total of 23 board meetings (e-mail, telephone and physical) were held in 2015. The attendence of the shareholder elected members of the Board of Directors were Trym Skeie 23 / 23, Bjarne Skeie 23 / 23, Toril Eidesvik 22 / 23, Gisle Rike 14 / 15 and Marianne Sandal 23 / 23.

The Board of Directors issues instructions for its own work as well as for the executive management. The Board of Directors has in 2015 focused on the challenges of the group's offshore activities, where restructuring, downsizing and completion of projects with especially high risks have had special attention. In the latter part of 2015, the Board of Directors worked especially with a refinancing program for the company's debt. In addition to quarterly meetings in order to review and approve financial results, 6 meetings - "business reviews" - between management and the Board of Directors were held in order to discuss operational issues and performance.

The Board of Directors in TTS Group ASA has appointed an audit committee with the following composition during 2015 :

AUDIT COMMITTEE

Toril Eidesvik (Chair) Marianne Sandal Gisle Rike (From June 8th, 2015) The audit committee is selected on the basis of qualification and independence of the company as described in NUES.

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

The Board of Directors evaluates its own performance and expertise on an annual basis. This evaluation is submitted to the nomination committee.

10. Risk management and internal control

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On an annual basis the The Board of Directors discusses and assesses the group's risk exposures, systems, routines and internal control in order to mitigate these risks. Following the last years' losses and weak performance, internal control procedures have been tightened through the implemetation of new procedures, limitation of authorities, organiza tional changes, strengthened manning and increased reporting. The effect of these measures will gradually emerge due to the structure of the business model with projects and deliveries over a relatively long period. The Board of Directors' work with internal control and applicable systems encompasses 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 result reports, which are submitted to and reviewed by the members of the Board of Directors. In addition, more comprehensive quarterly financial reports are prepared, and reviewed at quarterly meetings in the Board of Directors.

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 of Directors and executive 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 thor ough review of the company's financial status in the Directors' Report. This review also includes a further description of the main elements of our HSE efforts with a corresponding action plan if needed.

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.The nomi nation committee's recommendation of remuneration is normally based on the Board of Directors' respon sibilities, competence and time commitment, taking into consideration the company's size and complexity, but also referencing the level of board remuneration in comparable, Norwegian stock exchange listed companies. The remuneration is not linked to the company's performance. 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 of Directors. Still, should such tasks be assigned, this will be based on the approval of the Board of Directors. There were no such assign ments in 2015.

The nomination committee's proposal for remuneration of the Board of Directors will be presented in the call for the Annual General Meeting in 2016.

12. Remuneration of executive management

The Board of Directors has issued guidelines for sala ries and other remunerations for executive manage ment. The President and CEO's terms are decided by the Board of Directors. The guidelines are communi cated yearly to the Annual General Meeting, where the Board of Directors so far has asked for the endorse ment of all sections of the declaration of the determi nation of salaries and other remuneration of leading employees, except the option programme where they have asked for approval. Executive management remuneration consists of three main elements: salary, bonus and options.

The Board of Directors' view on management salaries is that these should be competitive and motivating, but not ahead of the market level. The bonuses are calculated according to concrete targets, hereunder result targets that are annually determined by the Board. Bonus schemes are limited to a portion of the salary, increasing with regards to the position category and maximized up to 50 % of ordinary annual salary. Guidelines are outlined in note 4.

As presented in note 4, in the period June 8th, 2015 - April 19th, 2016, 600,000 options were issued to executive management under the two authorizations to the Board of Directors mentioned under Item 3.

13. Information and communication

The company has established guidelines for handling information and communication. These guidelines also address the contact with shareholders 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 the Annual General Meeting.

Information for the shareholders of the company is posted on newsweb.no and the company's website. Notice for the Annual General Meeting is at the same time distributed to the shareholders per post.

14. Company takeover

The company's Articles of Association do not include mechanisms aimed towards preventing takeover, nor are other hindrances in effect in order to reduce the transfer of the company's shares. The shares are freely negotiable. Transparency and equal treatment of the shareholders are fundamental principles.

Further written principles have not been established for how TTS will act in case of any takeover bids, but the Board of Directors has discussed the matter and intends to act fully in accordance with applicable regulations as well as the general principles of the stock market if such a situation should occur. The recommendation of Corporate Governance and company management will in any such situation be a reference with normative function.

15. Auditor

The auditor conducts minimum 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 goes through the yearly audit plan with the auditor. Any identified weaknesses and suggestions for improvements of the company's internal control are reviewed with the audit committee, normally in the autumn when summarising the interim audit.

The auditor is present at meetings in the Board of Directors as required. The auditors are always present at the meetings in the Board of Directors when the annual accounts are approved. The Board of Directors has in this meeting a separate session with the audi tors without the management present.

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Remuneration payable to the auditor, specifying the division between auditing and other services, is outlined in Note 4. It has not been deemed necessary by the Board of Directors to implement additional guidelines regarding the management's access to making use of the auditor for services other than auditing.

In the Annual General Meeting, the Board of Directors annually presents the auditor's remuneration along with the distribution between auditing and other services.

DISTRIBUTION OF OPTIONS AND SHARES AT 19 APRIL 2016:

		Number of options exercisable until	Exercise	Number of options exercisable until	Exercise
Name	Position	6.6.2016	price	8.8.2017	price	Total
Björn Andersson	CEO & President	75 000	6,15	75 000		4,75 150 000
Henrik Solberg-Johansen CFO		12 500	6,15	50 000		4,75 62 500
Edgar Bethmann	EVP BUCBT	12 500	6,15	50 000		4,75 62 500
Per Croner	EVP BURCN	12 500	6,15	50 000		4,75 62 500
Arve Rinde	EVP BUOFF			50 000		4,75 50 000
Options granted to other managers		325 000	6,15	325 000		4,75 650 000
Total number of options granted to management	437 500		600 000		1 037 500

12

(AMOUNTS IN NOK 1000)

Continuing operations	Notes	IFRS 2015	IFRS 2014
OPERATING REVENUE
Project revenue	2, 21	3 051 243	2 453 658
Total revenue and income	1	3 051 243	2 453 658
OPERATING EXPENSES
Cost of sales	3, 21	1 939 679	1 419 801
Personnel costs	4, 5	699 224	597 395
Depreciation of fixed assets	6, 7	58 134	40 093
Other depreciations/amortisation	7, 8	64 843	3 673
Other operating expenses	4, 20	360 645	335 156
Losses on accounts receivable		12 600	10 417
Income from equity accounted investments (profit = -)	10, 28	-115 889	-14 325
Total operating expenses		3 019 236	2 392 209
Operating profit/loss		32 007	61 449
FINANCIAL INCOME AND EXPENSES Other interest income	24	6 250	11 756
Other financial income	24	31 924	4 699
Other interest expenses	24	-47 809	-42 304
Other financial expenses	24	-37 694	-12 339
Net financial items		-47 329	-38 188
Profit before tax from continuing operations	1	-15 322	23 261
Income tax expenses	18	-24 841	-45 079
Profit for the period from continuing operations		-40 163	-21 819
Discontinued operations
Profit / (loss) after tax for the period from discontinued operations	29	-	39 562
Profit for the period		-40 163	17 743
Attributable to equity holders of the company Attributable to non-controlling interests	28	-48 674 8 511	17 743 -
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
Items that may be reclassified subseqently to profit or loss
Foreign currency differences for foreign operations	25	102 983	55 289
Other comprehensice income for the period		102 983	24 589
Total comprehensive income for the period		62 820	42 332
Attributable to equity holders of the company		23 228	42 332
Attributable to non-controlling interests		39 592	-
Earnings per share - continuing operation (NOK per share)	17	-0,55	-0,25
Earnings per share - discontinued operation (NOK per share)	17	-	0,46
Diluted earnings per share - continuing operation (NOK per share)	17	-0,55	-0,25
Diluted earnings per share - discontinued operation (NOK per share)	17	-	0,46

FINANCIAL INCOME AND EXPENSES

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

TTS GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1 JANUARY - 31 DECEMBER

ASSETS

(AMOUNTS IN NOK 1000)

	Notes	IFRS 2015	IFRS 2014
Non-current assets
INTANGIBLE ASSETS
Deferred tax assets	18	43 221	31 152
Research and development	7	16 510	34 853
Licences and patents	7	3 122	3 720
Other intangible assets	7, 28	122 190	30 602
Goodwill	7, 28	701 807	563 208
Total intangible assets		886 850	663 535
NON-CURRENT ASSETS
Property	6, 13	22 197	20 232
Buildings	6, 13	13 202	13 482
Machinery and vehicles	6	50 178	53 618
Furniture, office-, and computer equipment	6, 13	48 944	73 565
Total non-current assets		134 521	160 897
FINANCIAL NON-CURRENT ASSETS
Equity accounted investment	10, 21	84 975	102 582
Assets available for sale	8	-	-
Total financial non-current assets		84 975	102 582
Total non-current assets		1 106 346	927 014
Current assets
Inventories	3, 13	414 157	189 264
Total inventories		414 157	189 264
CURRENT RECEIVABLES
Trade receivables	11,13, 21	361 307	326 747
Other receivables	11, 13	73 236	96 634
Accrued, non-invoiced production	2, 3, 13	560 762	609 475
Derivative financial instruments	22	16 075	38 340
Prepayments to suppliers	2,13	80 411	93 399
Total current receivables		1 091 790	1 164 597
Bank deposits, cash in hand, etc.	14	413 210	130 602
Total current assets		1 919 157	1 484 462
Total assets	1	3 025 503	2 411 477

EQUITY AND LIABILTIES (AMOUNTS IN NOK 1000)

Equity
EQUITY
Liabilities
PROVISIONS FOR LIABILITIES
OTHER NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Convertible Callable Unsecured Subordinated Bond	12, 14,

	Notes	IFRS 2015	IFRS 2014
Equity
EQUITY
Issued share capital	16	9 527	9 527
Treasury shares	16	-12	-12
Share premium reserve	16	149 378	149 378
Other equity	16	475 615	451 470
Shareholders equity		634 507	610 362
Equity allocated to non-controlling interests	28	220 059	-
Total equity		854 566	610 362
Liabilities
PROVISIONS FOR LIABILITIES
Deferred tax	18	51 581	31 336
Total provisions for liabilites		51 581	31 336
OTHER NON-CURRENT LIABILITIES Convertible Callable Unsecured Subordinated Bond	12, 14, 15, 31	-	88 143
Total other non-current liabilities		-	88 143
CURRENT LIABILITIES
Convertible Callable Unsecured Subordinated Bond	12, 14,	96 425	-
	15, 31
Debt to financial institutions	12, 13, 14	426 387	297 764
Payables to suppliers	21	285 861	258 469
Income tax payable	18	11 387	935
Other taxes payable		27 104	30 967
Prepayments from customers	2	633 979	233 520
Non-invoiced production costs, suppliers	2	40 643	81 284
Derivative financial instruments	22	199 141	237 319
Other current liabilities	19, 23	398 430	541 377
Total current liabilities		2 119 357	1 681 636
Total liabilities	1	2 170 938	1 801 115
Total equity and liabilities		3 025 503	2 411 477

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

Bergen, 19 April 2016 Board of Directors of TTS Group ASA

Trym Skeie Chairman of the board

Bjarne Skeie Director

Toril Eidesvik

Director

Ole Henrik Askvik Director

Bj¨örn Andersson CEO & President

Gisle Rike Director

Marianne Sandal Director

Anita Kråkenes Director

(AMOUNTS IN NOK 1000)

			Treasury	Share premium	Other	Shareholders	Non controlling	Total
		Note Share capital	shares	reserve	equity	equity	interests	equity
Equity as of 1.1.2014		9 526	-16		149 378 407 781	-		- 566 670
Profit /(loss) for the period		-	-		- 17 743	-		- 17 743
Other comprehensive income 5, 25		-	-		- 24 589	-		- 24 589
Total comprehensive income		-	-		- 42 332	-		- 42 332
Treasury shares (sale)	16	-	4	-	149	-	-	153
Share based payment	16	-	-	-	1 207	-	-	1 207
Equity as of 31.12.2014		9 526	-12		149 378 451 469	610 362		- 610 362
Equity as of 1.1.2015		9 526	-12		149 378 451 469	610 362		- 610 362
Profit /(loss) for the period		-	-		- -48 674	-48 674		8 511 -40 163
Other comprehensive income	25	-	-		- 71 902	71 902		31 081 102 983
Total comprehensive income	28	-	-		- 23 228	23 228		39 592 62 820
Equity transactions with	28	-	-	-	-		- 211 718 211 718
non-controlling interests
Treasury shares (sale)	16	-	-	-	-	-	-	-
Share based payment	16	-	-	-	915	915	-	915
Dividend paid		-	-	-	-	-		-31 250 -31 250
Equity as of 31.12.2015		9 526	-12		149 378 475 612		634 505 220 060 854 566

TTS GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

	Note	2015	2014
Cash flow from operating activities
Profit/loss before tax continuing operations		-15 322	23 261
Profit/loss before tax discontinuing operations		-	39 562
Profit before tax		-15 322	62 823
Adjustments to reconcile profit before tax to net cash flows
Gain related to change of control	27	-104 370	-
Depreciation of fixed assets		58 134	40 093
Depreciation/writedown on non-current assets/goodwill		64 843	-
Interest expense		47 809	42 304
Interest income		-6 250	-11 756
Profit/loss from equity accounted investments		-14 325	-14 325
Gain from sale of subsidiaries		-	-39 562
Share based payment		915	1 207
Difference between pension charges and payments to/from pension schemes		-	-74 684
Change in inventories, customers and suppliers		5 165	-200 906
Change in other receivables and other short term liabilities		-23 856	56 460
Income tax paid		-12 911	-23 414
Net cash flow from operating activities		-169	-161 760
Cash flow from investment activities
Acquisition of subsidiaries, net of cash acquired		-	-1 087
Proceeds from change of control in THH (ref note 27) 1)		220 112	-
Disbursements from acquisition of fixed assets		-24 131	-50 690
Disbursements on own developement		-	1 506
Dividend received from investments in equity accounted companies		-	14 326
Proceedes from sale of subsidiaries		180	39 562
Investment in shares sale/ (purchase)		-	23 300
Net cash flow from investment activities		196 162	26 917
Cash flow from financing activities
Proceeds from issuance of short-term/long-term debt		-	134 659
Disbursement on short-term/ long-term debt		-3 000	-
Net change in bank overdraft facility		125 931	-
Interest received		6 250	11 756
Interest paid		-59 815	-32 727
Sale / (purchase) treasury shares		-	153
Net cash flow from financing activities		69 366	102 085
Net change in cash and cash equivalents		265 358	-21 003
Cash and cash equivalents at the start of the period		130 602	155 571
Foreign currency gains/loss on cash and cash equivalents		17 250	(3 966)
Cash and cash equivalents at the end of the period		413 210	130 602
Net available cash:
Bank deposits etc.		413 210	130 602
Unused overdraft facility		82 000	176 800
Total available cash and cash equivalents at the end of the period		495 210	307 402

1) Change of control in TTS Hua Hai (ref note 27) have a positive cash effect of MNOK 220 in the consolidated accounts.

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

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 is a global enterprise that designs, develops and supplies equipment solutions and services for the marine and offshore industries. The group's activities primarily involve design, assembly and testing of equipment while, apart from manufacturing of certain key components, production is undertaken by a global network of subcontractors. The Group reported on six segments in 2015: BURCN (RoRo/ Cruise/ Navy), BUCBT (Container/ Bulk/Tank), BUMPG (Multi purpose/General Cargo), BUOFF(Offshore), BUSYS (Shipyard Solutions) and BUSER (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 2016 have not been applied in preparing these consolidated financial statements.

The consolidated financial statements of the Group for the year ended 31 December 2015 were approved by the Board of Directors on 19 April 2016.

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 2015. 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 2015. 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 2015

The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2015:

ANNUAL IMPROVEMENTS TO IFRSS 2011–2013 CYCLE In December 2013, the IASB issued "Annual Improvements to IFRSs 2011–2013 Cycle," which amended four standards. The improvements primarily aim to provide clarifications. The amendments were endorsed by the European Union in December 2014.

The amendments do not have any material impact on the presentation of TTS Groups' results from operations, financial position, or cash flows.

Accounting principles TTS GROUP

NEW STANDARDS, AMENDMENTS AND

INTERPRETATIONS NOT YET ADOPTED BY TTS GROUP: A number of new standards, interpretations and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2016, and have not been applied in preparing the consolidated financial statement. The Group has not opted for early adoption. None of these are expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

IFRS 9 Financial instruments

Summary of the requirements: IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and de-recognition of financial instruments from IAS 39.

IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

Possible impact on consolidated financial statements: The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 9.

IFRS 15 Revenue from contracts with customers

Summary of the requirements: : IFRS 15 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 2018. Early application is permitted.

Possible impact on consolidated financial statements: TTS 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.

IFRS 16 Leases

Summary of the requirements: IFRS 16 principally requires lessees to recognize assets and liabilities for all leases and to present the rights and obligations associated with these leases in the statement of financial position. Going forward, lessees will therefore no longer be required to make the distinction between finance and operating leases that was required in the past in accordance with IAS 17. For all leases, the lessee will recognize a lease liability in its statement of financial position for the obligation to make future lease payments. At the same time, the lessee will capitalize a right of use to the underlying asset which is generally equivalent to the present value of the future lease payments plus directly attributable expenditure. Similar to the guidance on finance leases in IAS 17, the lease liability will be adjusted over the lease term for any remeasurement, while the right-of-use asset will be depreciated, which normally leads to higher expenses at the inception date of a lease. For the lessor, on the other hand, the guidance in the new standard are similar to the existing guidance in IAS 17. IFRS 16 also includes updated guidance on the definition of a lease and its presentation, on disclosures in the notes, and on sale and leaseback transactions.

IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, with early adoption permitted.

Possible impact on consolidated financial statements: The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 16.

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

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

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above, ref note 8.

2.2 BASIS FOR CONSOLIDATION a) Subsidiaries

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2015.

The Group's consolidated financial statements comprise TTS Group ASA and subsidiaries. Subsidiaries are entities which TTS Group ASA has the ability to control. Ability to 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 50 % of the shares or less, 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.

In cases where TTS achieves control over an entity, 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 cost 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

Equity accounted investments are entities where the Group by agreement has joint control together with other parties, but not alone. Investments in these companies 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 companies. 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 arrangements 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 an adjustment of operating expenses, 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 2015. These are BURCN (RoRo/ Cruise/ Navy), BUCBT (Container/ Bulk/Tank), BUMPG (Multi purpose/General Cargo), BUOFF (Offshore), BUSYS (Shipyard Solutions) and BUSER (Services).

2.4 FOREIGN CURRENCIES a) Functional and presentation currencies

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

b) Transactions and balance sheet items

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

c) Group companies

On consolidation, the assets and liabilities of foreign operations are translated into NOK at the rate of exchange prevailing at the reporting date and their income statements are translated at 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, PLANT 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 portfolios 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 portfolios 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.

$25-50$ years
3-5 years
5-10 years
3-5 years

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 other 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 availablefor-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 are 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, is 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. As of 2015 TTS Group has only defined contribution 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.

Prior to 2015 companies within TTS also set up defined benefit plans. 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). 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.

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

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

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

b) Share based payments

The Annual General Meeting of the Group has granted senior executives options to purchase shares in the parent company. The fair value of options granted is measured on the grant date. The cost is recognized as part of salary cost over the period in which the performance and/or service conditions are fulfilled, with a corresponding increase in equity. Fair value of 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 and other criteria's.

2.19 PROVISIONS

The Group recognizes provisions for restructuring, legal requirements, etc., if • 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 (engineer-to-order), contracts for delivery of pre-designed products (configure-to-order), service contracts and after-sales.

Revenue from contracts for delivery of pre-designed products and revenue from sale of goods and services is recognized in the financial statements in accordance with IAS18, Revenue. Revenue is recognized at net fair value after the deduction of value added tax, returns, discounts and rebates. Revenue from the sale of pre-designed products and other 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 remaining 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 the sale of services is recognized at the time of delivery of the service.

Revenue from long-term production contracts (engineer-to-order) is recognized in the financial statements in accordance with IAS 11, Construction contracts, using the percentage of completion method.

The Group's products are frequently sold with a warranty period of two years. Ref. 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.

2.21 CONSTRUCTION CONTRACTS

Construction contract revenues and costs are measured using the percentage of completion method. Degree of completion is determined by a method that measures the progress of the contract in a controllable and reliable way. Depending on type of contract, different methods can be used by TTS Group to measure the percentage of completion. The general method used is to measure the contract costs incurred to date compared to latest 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, variation orders, disputed amounts and incentive bonuses to the extent that it is likely that the income will be realized and a reliable estimate is available. Contract costs include all costs attributable to the contract, both directly attributable to the specific contract and allocated costs attributable to general contract activity. Costs that cannot be attributed to a 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. If any, payments related to future activities are recognized as advance payments, other current assets or as inventories depending of origin of the cost base.

Incurred costs and revenue received relating to all construction contracts in progress, where the incurred costs and revenue 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, any loss is accounted as an expense. In assessing actual loss, the value of the inventory of which the Group takes ownership, and received prepayments are taken into account.

2.22 IMPAIRMENT OF 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 31.

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 of Directors 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 reviews 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 of Directors. 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, SEK, USD, EUR, RMB and KRW. Currency risk is to a large extent related to contracts for delivery that involve income and expenses in foreign currencies as well as currency risk related to the group's investments in subsidiaries. The Group endeavors to reduce the risk of exposure to exchange rate fluctuations for each functional currency by obtaining an optimal balance between incoming and outgoing payments in the same currency. Following contract signing, the guidelines are to sell and purchase foreign currencies with forward exchange contracts designated as hedges of firm commitments, to reduce the currency risk in cash flows. When necessary, forward exchange contracts are continued as they mature.

The high volatility in the currency markets from the last quarter of 2014 and through 2015 has led to significant net negative market value for the hedging instruments at the end of 2015, 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 may 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 monitored, and is adjusted 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.

		Spot rate		Average exchange rates
	31.12.2013	31.12.14	Q1	Q2	Q3	Q4	31.12.2015
SEK	0.9472	0.9597	0.9307	0.9211	0.9679	1.0039	1.0475
EUR	8.3825	9.0365	8,7302	8,5674	9,1240	9,3435	9.6190
USD	6.1332	7.4332	7.7514	7.7766	8.2026	8.5403	8.8090
RMB	1.0049	1.1977	1.2126	1.2535	1.3011	1.3363	1.3565
KRW	0.00576	0.00682	0.00704	0.00708	0.00702	0.00737	0.00749

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 2015	14 391	4 833
31 December 2014	4 935	- 3 304

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 2015	28 342	3 663
31 December 2014	38 831	7 902

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 interest bearing 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 of Directors.

Items exposed to interest rate risk are bank deposits, bank overdrafts and other interest bearing 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
2015	+/- 1%-points	4 580	4 580
2014	+/- 1%-points	1 752	1 752

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 a 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

SIGNIFICANT CURRENCIES THROUGHOUT THE YEAR: 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 counterparties for derivatives are investment grade rated banks (Nordea, DNB and Kookmin Bank), and the credit risk related to these is considered to be insignificant. The same applies to bank deposits.

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

3-6	> 6
	months

			0-3	3-6	> 6
MNOK		Total Not due	months	monts	months
31.12.2015	392	187	103	61	41
31.12.2014	347	143	114	58	32

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 risk management implies maintaining sufficient cash and committed credit facilities for the Group to meet obligations as they mature for payment. As of December 2015, the Group's credit facilities is divided between three bank facilities (Nordea, DNB and Kookmin Bank of totally MNOK 1050 + Korea of which MNOK 650 is allocated to guarantees, and a subordinated convertible bond with nominal value of MNOK 95 falling due in April 2017. The Bank facilities with Nordea and DNB is falling due 31.12.2016 (ref note 15 for additional information), and the facilities with Kookmin Bank is falling due at 31.12.2016.

As of 1 January 2016 the credit facility with Nordea and DNB has introduced a cash covenant. Minimum available cash/overdraft facility in fully owned subsidiaries should be minimum MNOK 50.

As of 31 December 2015, the Group has undrawn overdraft facilities of MNOK 85. Furthermore, the Group has available liquidity in the form of bank

deposits in the amount of MNOK 414, of which MNOK 336 in 50% owned subsidaries.

TTS Group is continuously working with efficient management of working capital in order to further optimize cash flow from operations.

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 funds.

The Group's liquidity development is continuously monitored based on liquidity forecasts from the Business units.

The Group's strategy is to have sufficient cash reserves or credit facilities available to be able to finance its operations and investments at all times. In the latter part of 2016, TTS Group will initiate an adequate process in order to replace or renew its funding facilities and believes that the current business plan will enable the Group to renew or replace its current funding agreements before expiry.

The companys' effort over the last part of 2015 and into 2016 to improve working capital, and not least to eliminate negative cash flow of unprofitable projects and BU Offshore is also expected to contribute positively.

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 continuously strives to improve operations and projects implementation. This further includes credit rating of major sub-suppliers in order to ensure implementation of the projects.

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

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

3.2 RISK RELATED TO INVESTMENT MANAGEMENT

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

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

	2015	2014
Interest bearing debt 1)	521 732	393 109
- Cash and cash equivalents 2)	413 210	130 602
Net interest bearing debt	108 522	262 507
Equity	854 566	610 362
Total	963 088	872 869
Geari	11,3 %	30,1 %

1) Includes nominal value of convertible debt.

2) Includes nominal value of cash in consolidated 50/50 owned companies, MNOK 335,7.

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

REMAINING PERIOD:

2015:				< 6 months 6-12 months 1-5 years More than 5 years	Total
Long-term financial obligations:
Interest-bearing non-current liabilities 1)	-	-	-	-	-
Current financial obligations:
First year's installment on non-current liabilities		426 387	95 345		521 732
Net derivatives	154 418	21 195	7 453		183 066
Accounts payable and other current liabilities	1 060 093	337 311			1 397 404
Total financial obligations	1 214 511		784 893 102 798		- 2 102 202

1) As per 31.12.2015 convertible bond debt of MNOK 95,345 is presented as a short term facility. Based on extension approved in the general assembly in TTS on the 5th January 2016, the bond debt is due for payment on April 18. 2017.

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	296 264	-		- 297 764
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		- 1 738 641

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

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

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.

At the end of 2015, TTS Group has secured a sound order backlog for most of its businesses within the marine sector. Scheduled deliveries for the main part of the current contract obligations are between three months and two years. For the offshore sector, the fall in oil price has led to a significant reduction in demand for new equipment, significantly reducing the order backlog for TTS' Offshore unit. BUOFF has adjusted capacity to the current market. For all TTS' business units, development in the global economy, the oil price and the credit market represent potential risks for cancellation or postponement of orders.

Within the BURCN, proven equipment solutions to customers within the car carrier market ensure a sound foundation for continued utilization of the unit's capacity the coming quarters. In 2014 and 2015, TTS has successfully entered into new contracts to equip cruise vessels. At yearend 2015 the overall PCTC market seems to be somewhat softer, but we see higher activity within the Ropax and RoRo segments. The activity in the cruise market is expected to grow, with increased Chinese activity being an important factor.

To meet the fierce competition and falling prices in the market for deck equipment TTS moved its unit headquarters from Bremen, Germany to Busan, South Korea in 2014 to serve the world market outside China. At the end of 2015, a weak market for handy bulk is balanced by increased activity within mega cape-size bulk and feeder container both in Korea and China. New build activity within the tank sector is good, however with some indication on lower activity

Within the Offshore segment TTS has implemented strong cost-reducing measures to adjust the unit's

capacity to the current slow market. Substantial restructuring was undertaken in 2014 and 2015 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' offshore cranes, the segment is still considered to have a positive long-term potential, however in the shorter timeframe, the Offshore market is expected to remain weak.

Within the MPG segment TTS initiated cost cut in 2013 and 2014, which is a 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 marked another important step in the strategic partnership between the TTS Group and CSSC to strengthen TTS' position in the Chinese market. At yearend 2015 BUMPG has shown a positive development, which is expected to continue, particularly in China

Within BUSYS the order backlog has decreased slightly in 2015, 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. From the volume of the prospects we have identified, we believe there is potential for further growth in the segment.

The Services segment has undertaken a 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 and in Rio de Janeiro. During 2015, a new office has been opened in Antwerp, together with increased focus on operations in Genoa, Italy, Singapore and Dubai. 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 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 fair value on shares

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

g) Deferred tax assets

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

h) Inventory

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

i) Accounts receivable

Valuation of accounts receivable is based on amounts invoiced to customers adjusted for potential financial loss in the ordinary course of business. Changes in the finance market may affect the value of accounts receivable. See section 2.8 and accounting values in Note 11.

j) Evaluation of ability to control in 50/50 owned companies

Based on the facts and circumstances, TTS Group has concluded that as of the date of the amendment to governing documents, TTS Group has the ability to control THH based on the criteria in IFRS10, because TTS controls significant parts of relevant activities. Prior to the contract amendment, it is unlikely that TTS had the ability to control. The amendments in principle increased TTS influence related to marketing and customer contracts, and critical component sourcing. TTS has also increased its' local presence in both sale and key employee involvement. Additional information is available in note 9, 10 and 27.

Note 1 - Operating segments (AMOUNTS IN NOK 1000)

Primary reporting format - business segments From 2014, TTS Group's focus has been based on shiptype.

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

BU RCN	RoRo/ Cruise/ Navy segment
BU CBT	Container/ Bulk/ Tank segment
BU MPGC	Multipurpose/ General Cargo segment
BU OFF	Offshore segment
BU SYS	Shipyard Solutions segment
BU SER	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 are designed to operate in the multipurpose or general cargo market, requiring specialized operating capabilities. Product range includes 2000 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.

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.

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.

NOTES FOR CONSOLIDATED ACCOUNTS TTS GROUP NOTES¹

YEAR ENDED 31.12.2014:

Notes 1

		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	48 297	98 173
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	-35 388	23 261

YEAR ENDED 31.12.2015:

	Key profit figures
	RCN	CBT		MPGC Offshore Shipyard		Solutions Services	Other	Total
External turnover	641 423	973 191	259 394	358 803	215 994	590 728		11 709 3 051 243
Internal turnover	62 977	227 967	58 313	206 846	511	133 140	37 436	727 190
Intergroup eliminations	-62 977	-227 967	-58 313	-206 846	-511	-133 140		-37 436 -727 190
Group Turnover	641 423	973 191	259 394	358 803	215 994	590 728		11 709 3 051 243
Income from associated companies	-	108	-	-	-	-	-	108
Earnings before depreciation, finance and tax (EBITDA)	62 277	140 846	-12 997	-101 668	17 466	75 560	-26 501	154 984
Depreciation/amortisation	5 610	18 170	11 403	16 347	1 285	4 704	616	58 134
Impairments	-	-	-	45 873	18 901	-	-	64 774
Operating profit/loss	56 667	122 676		-24 400 -163 888	-2 720	70 856	-27 117	32 076
Financial income	3 931	16 106	712	3 967	2 318	21 984	60 855	109 873
Financial cost	17 085	26 209	8 570	9 537	1 847	22 568	71 456	157 271
Segment profit/ loss before tax	43 514	112 573		-32 258 -169 458	-2 248	70 272	-37 717	-15 322

YEAR ENDED 31.12.2015:

	Key profit figures
	RCN	CBT			MPGC Offshore Shipyard	Solutions Services	Other	Total
Assets		610 824 1 422 335	270 787	353 422	161 639	181 038		-3 930 2 996 115
Joint ventures	-	29 389	-	-	-	-	-	29 389
Total segment assets		610 824 1 451 723	270 787	353 422	161 639	181 038		-3 930 3 025 503
Liabilities	320 346	915 123	168 175	465 160	83 703	138 630		79 802 2 170 938
This year's capital expenditures	3 121	3 506	926	19	218	325	-	8 113

Notes¹

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

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)

	2015	2014
Europe	932 519	1 018 863
Asia	1 832 575	1 296 333
USA/Canada	256 339	116 137
Rest of the world	29 810	22 325
Total sales revenue	3 051 243	2 453 658

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

TOTAL ASSETS

	2015	2014
Europe	1 558 545	1 893 708
Asia	1 437 299	486 675
USA/Canada	29 659	31 094
Rest of the world	-	-
Total assets	3 025 503	2 411 477

Assets are reported based on their location.

NON-CURRENT ASSETS *

	2015	2014
Europe	683 565	712 786
Asia	280 010	78 236
USA/Canada	2 663	2 258
Rest of the world	-	-
Total non-current assets *	966 238	793 280

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)

	2015	2014
Inventories, incl. non-current	224 678	225 947
Obsolescence	-25 358	-36 683
Total inventories	199 320	189 264
Book value of inventories pledged as security for liabilities	76 861	84 990

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 1 880 in 2015 (2014: MNOK 1 357).

Based on new information input from our sibsidiary TTS Hua Hai, a reclassification of short term assets have been made that afects inventory and vendor prepayments. The change has no effect on P&L, total balance or cash flow. Updated Group inventory figures are as follows:

Inventory	Presented balance figure	Updated balance figure
Q1 interim rapport	229 660	229 660
Q2 interim rapport	269 436	406 809
Q3 interim rapport	260 412	453 173
Q4 interim rapport	199 320	414 157

Note 3 - Inventories

(AMOUNTS IN NOK 1000)

	2015	2014
Revenue from construction contracts, continued operations	1 487 774	1 923 788
Sale of goods 1)	973 191
Revenue from service contracts, continued operations	590 278	529 870
Total revenue from projects, continued operations 2)	3 051 243	2 453 658
Revenue from construction contracts and service contracts, discontinued operations	-	-
Total revenue from projects continued operations and discontinued operations 2)	3 051 243	2 453 658
Balance sheet items related to construction contracts
Current Assets
Completed production	1 278 595	1 039 540
Invoiced production	717 833	430 065
Accrued, non-invoiced production	560 762	609 475
Prepayments to suppliers 3)	80 411	93 399
Total current assets	641 173	702 874
Current liabilities
Completed production	412 103	315 320
Invoiced production	1 046 082	548 840
Prepayments from customers	-633 979	-233 520
Non-invoiced production cost, suppliers	-40 643	-81 284
Total current liabilities	-674 622	-314 804

1) Sale of goods is based on contracts that are regognized at the time of delivery.

2) Revenue from projects includes revenues from long-term construction contracts and revenues from service contracts.

3) Ref note 3 for more information.

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.

(AMOUNTS IN NOK 1000)

Total navroll expenses continued operations
Other benefits
Defined contribution pension costs (note 5)
Defined benefit pension costs (note 5)
Employer's social security contribution
Odialico

Payroll expenses:	2015	2014
Salaries	512 425	631 879
Employer's social security contribution	81 402	60 638
Defined benefit pension costs (note 5)	0	-83 607
Defined contribution pension costs (note 5)	44 670	30 631
Other benefits	60 727	86 854
Total payroll expenses continued operations	699 224	597 395
Number of employees at the end of the year	1 093	1 053

A correction of the figures for 2014 for personnel cost has been made in order to compare to 2015 figures. The correction relates to cost for hired in personnel that has been reclassified from personnel cost to other operating expense and allocation of overhead cost also reclassified from personnel cost to other operating expenses. A total amount of MNOK 129 has been reclassified.

Note 4 - Payroll expenses and employee information

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. Base salaries is intended to be competitive and motivating, but in line with general market terms.

• The bonus for the President & CEO is up to NOK 200 000 based on target results, plus up 100% of annual base salary in the event

Notes 4

• Bonus for other executives is determined on the basis of target results and on individual targets. Bonus targets are revised annually. Bonus is up to 50 % of base salary for other executives. Bonus payment reported in 2015 is based on the evaluation of the relevant performance criteria for the fiscal year ending 31.12.2014. Bonus payments are based on individual employment

• of change of control.
• contracts.
• information regarding option program.

• A share option program has been active for the Group management of TTS since 1998, 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 16 Share capital and shareholder information for further

Board remunerations 1)		2015	2014
Trym Skeie	Board member since 06.2008. Re-elected for the period 06.2014 - 06.2016	400	525
Bjarne Skeie	Board member since 06.2008. Re-elected for the period 06.2014 - 06.2016	230	200
Gisle Rike 2)	Board member since 06.2015. Elected for the period 06.2015 - 06.2017	-	-
Toril Eidesvik	Board member since 06.2013. Re-elected for the period 06.2015 - 06.2017	320	280
Marianne Sandal	Board member since 06.2014. Elected for the period 06.2014 - 06.2016	280	-
Anne Breive	Board member until 06.2014	-	240
Jan Magne Galåen 2)	Board member until 11.2014	140	240
Anita Kråkenes	Board member since 07.2014, employee representative	105	-
Ole Henrik Askvik	Board member since 09.2015, employee representative	10	100
	Mona L. Tellnes Halvorsen Board member until 07.2014, employee representative.	10	100
Ingve Hjelmeseter	Board member until 07.2014, employee representative.	-	-
Jan Magnar Grøtte	Board member until 09.2015, employee representative.	105	-
Total		1 600	1 685

1) The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next. For the financial year 2015, the reported remuneration is based on the remuneration paid in 2015 based on the amounts determined by the Board at the Annual General Meeting for 2015. The same applies to the nomination committee. 2) Gisle Rike and 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 was comprised of the following members: Bjørn Olafsson (Chairman), Petter Sandtorv and Anders Nome Lepsø. In October 2015, Bjørn Olafsson took up position as Deputy Managing Director in TTS Group. At the same time he then resigned from the Nomination Committee. In January 2016 the nomination committee was complemented by Cate Henriksen, COO of Miles AS. Peter Sandtorv is now chairman. The nomination committee remuneration for 2015 was TNOK 60 for the chairman and TNOK 35 for each of the members, a total of TNOK 130. Peter Sandtorv and Bjørn Olafsson are both self-employed and receives remuneration by invoicing TTS.

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.

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.

Notes 4 5

TOTAL PENSION COST:

	2015			2014
		Insured Uninsured	Total		Insured Uninsured	Total
Defined benefit plans	-	-		- -83 607		- -83 607
+ Defined contribution plan	44 670	-	44 670	30 631	-	30 631
= Total pension cost	44 670	-		44 670 -52 977		- -52 977
- of which recognized as payroll cost	44 670			44 670 -55 559		-55 559
- of which recognized as finance cost				2 583		2 583

The employment contract with the President & CEO matures at 28 November 2016, with no further severance pay. The contract with the Deputy Managing Director matures at 28 May 2016, with an option to extend for one month, and with a one month extended pay in the event of change of control. For the other members in the Senior Executive Group, the period of notice is 6 months and a severance pay period of up to 12 months.

As of 30th December 2014, TTS Group ASA and its Norwegian subsidiaries changed its pension scheme from defined pension benefit plan into a contribution based pension plan. The change effected all employees hired in the Norwegian companies. For employees hired in other countries, the prevailing schemes in the respective companies apply.

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: 2015

(AMOUNTS IN NOK 1000)

Name	Position	Base salary	Other benefits	Bonus paid	Share options	Pension cost
Björn Andersson *)	President & CEO	2 961	8	-	120	-
Bjørn Olafsson (from October 2015) **)	Deputy Managing Director	-	-	-	-	-
Henrik Solberg-Johansen	CFO	1 719	13	100	25	174
Per Croner	EVP, Roro/ Cruise/ Navy	2 179	161	57	25	856
Edgar Bethman *)	EVP, Container/ Bulk/ Tank	2 366	150	192	25	-
Arve T. Rinde	EVP, Offshore	1 548	21	-	15	153
Ralf Ressel (til March 2015) *)	EVP, MultiPurpose/ General Cargo	414	29	517	11	-
Stefan Gleuel (til Nov 2015) *)	EVP, Services	2 439	150	1 125	81	-
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

*) not members of the TTS Group pension plan, nor any other pension arrangement paid by TTS.

**) Bjørn Olafsson is self-employed, and receives remuneration by invocing TTS Group. Invoiced amount in 2015 is NOK 510 000.

Remuneration of Auditor:	2015	2014
Statutory audit	5 359	4 750
Other attestation services	106	60
Tax advisory	424	664
Other non-audit service	449	306
Total	6 338	5 780

EFFECTS RECORDED IN OTHER COMPREHENSIVE INCOME

Notes 5

2015	2014
-	94 319
-	-62 831
-	-
-	-
-	-13 282
-	2 300
-	9 120
-	1 076
-	30 700

NET PENSION COSTS FROM BENEFIT PLANS ARE DETERMINED AS FOLLOWS:

	Service cost
$\ddot{}$	Interest cost

	2015			2014
			Total			Total
Service cost	-	-		12 631	-	12 631
	-	-		2 583	-	2 583
	-	-		339	-	339
	-	-		1 829	-	1 829
	-	-				- -100 989
	-	-		-83 607	-	-83 607
- of which recognized as payroll cost	-			-86 190		-86 190
- of which recognized as finance cost	-			2 583		2 583
	+ Interest cost + Administration cost + Payroll tax of net pension cost + Impact of curtailment/settlement incl. payroll tax = Net periodic pension cost		Insured Uninsured		- - - - - -100 989 - - -	Insured Uninsured

CHANGE IN RECOGNIZED FUNDS:

	2015	2014
Net liability as of 01.01	-	-74 704
- Cost recognized during the year (see above)	-	83 607
+/- Pension payments and payment of pension premiums	-	23 345
- Remeasurements recognized in OCI	-	-30 713
= Net assets/ (liability) as of 31.12.	-	1 535

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

	Expenses
	2015	2014
Discount rate		4,10 %
Return on pension funds		4,10 %
Annual wage growth		3,75 %
Annual adjustment of National pension index (G)		3,50 %
Annual adjustment of pensions in payment		3,50 %
Voluntary retirement		8,0-0,0%
Payroll tax		14,10 %
Mortality table 1)		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,
As of 1.1.2014	Property	Buildings	and vehicles	office equipment, etc.	Total
Acquisition cost 1.1.	17 215	22 198	70 220	109 579	219 211
Accumulated depreciation as of 1.1.	-1 162	-8 390	-23 014	-50 596	-83 162
Book value as of 1.1.2014	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	-	-	818	-	818
Additions	1 319	3 130	13 167	27 592	45 207
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
2015 Financial year
Book value as of 1.1.	20 232	13 482	53 618	73 565	160 897
Foreign currency differences	1 965	645	33 273	-21 866	14 017
Acquisitions	-	-	-	-	-
Additions	-	86	2 328	11 381	13 795
Disposals	-	-	-3 462	-3	-3 465
Depreciation	-	-1 011	-35 579	-14 133	-50 724
Book value as of 31.12.2015	22 197	13 202	50 178	48 944	134 521
	-
As of 31.12.2015
Acquisition cost 31.12.	23 359	24 216	168 413	143 113	359 101
Accumulated depreciation as of 31.12.	-1 162	-11 014	-118 235	-94 169	-224 580
Book value as of 31.12.2015	22 197	13 202	50 178	48 944	134 521

Notes ⁶ Notes⁷

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 2015	Cost 2016	Cost 2017-2020 Cost 2020+		Total future lease payments
Lease of premises	63 231	51 439	129 443	78 228	259 110
Lease of equipment and vehicles	4 378	3 569	6 479	-	10 048
Total	67 609	55 008	135 922	78 228	269 158

(AMOUNTS IN NOK 1000)

	Customer	Patents,
	portfolio	licences etc	R&D	Goodwill	Total
As of 1.1.2014
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 01.01.2014	30 602	3 720	34 853	563 208	632 384
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
2015 Financial year
Book value 1.1.	30 602	3 720	34 853	563 208	632 384
Foreign currency differences	-	-	-	-	-
Additions	-	-	5 680	-	5 680
Acquisitions 1)	95 149	471	-	170 499	266 119
Disposals	-	-	-	-	-
Depreciation	-3 561	-1 070	-7 398	-	-12 029
Amortisation	-	-	-16 625	-31 900	-48 525
Book value as of 31.12.2015	122 190	3 122	16 510	701 807	843 628
As of 31.12.2015
Acquisition cost 31.12.	131 572	7 399	59 885	733 707	932 562
Accumulated depreciation and	-9 382	-4 277	-43 375	-31 900	-88 934
amortization as of 31.12.
Book value as of 31.12.2015	122 190	3 122	16 510	701 807	843 629

Customer	Patents,			Total
36 423	6 928	54 205	563 208	660 763
-5 821	-3 207	-19 351	-	-28 379
30 602	3 720	34 853	563 208	632 384
26 368	4 579	46 746	538 119	615 811
7 105	531	-	25 089	32 726
-	-	-	-	-
-	-	-	-	-
-	-	-4 437	-	-4 437
-2 870	-1 389	-7 456	-	-11 715
-	-	-	-	-
30 602	3 720	34 853	563 208	632 384
				660 763
				-28 379
30 602	3 720	34 853	563 208	632 384
30 602	3 720	34 853	563 208	632 384
-	-	-	-	-
-	-	5 680	-	5 680
95 149	471	-	170 499	266 119
-	-	-	-	-
-3 561	-1 070	-7 398	-	-12 029
				-48 525
122 190	3 122	16 510	701 807	843 628
				932 562
-9 382	-4 277	-43 375	-31 900	-88 934
	portfolio 36 423 -5 821 - 131 572	licences etc 6 928 -3 207 - 7 399	R&D 54 205 -19 351 -16 625 59 885	Goodwill 563 208 - -31 900 733 707

1) Reference is made to note 27 which provide additional information on acquisitions in 2015.

BOOK VALUE R&D, PATENTS AND LICENCES PER 31.12.2015 CONSIST OF:

Development - Heave compensated VME 1)
Development - Offshore cranes
Other
Total

Development - Heave compensated VME 1)	13 000
Development - Offshore cranes	-
Other	3 510
Total	16 510

1) R&D related to Heave compensated VME have been impaired by MNOK 16,6 in 2015, reflecting the market outlook with the Offshore segment.

For proprietary products a continuous assessment is carried out to ensure the criteria for recognition of development costs Summary of the allocation of goodwill at segment level is as follows: have been met.

Note 7 - Intangible assets

SUMMARY OF THE ALLOCATION OF GOODWILL AT SEGMENT LEVEL IS AS FOLLOWS:

CGUs within segment	Goodwill 31.12.15 (MNOK)	Goodwill 31.12.14 (MNOK)
RoRo/Cruise/ Navy	222	206
Container/Bulk/Tank - fully owned	89	83
Container/Bulk/Tank - 50 % owned 1)	134	-
Shipyard Solutions 2)	23	40
Offshore 3)	-	13
MultiPurpose/ General Cargo	208	195
Services	26	26
Total	702	563

1) As an effect of changes to the company agreements in TTS Hua Hai, a fair value assessment and PPA evaluation give basis for allocation of GW in 2015. Reference is made to note 27.

2) GW allocated to TTS Liftec OY, a unit within the Shipyard Solutions division have been impaired in 2015 by MNOK 19.

3) GW allocated to CGU units within the offshore division have been impaired by MNOK 13 in 2015. No remaining goodwill is allocated to the CGU's.

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 2015, the share price value 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.

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

	EBITDA Margin
CGUs within segment 1)	Goodwill 31.12.15 (MNOK)	Revenue 2015 (MNOK) Actual 2015		Est. 2016 2)	>2017 2)	WACC 3)
RoRo/Cruise/ Navy	222	702	9,7 %	9,2 %	11,3 %	13,0 %
Container/Bulk/Tank - fully owned	89	436	4,0 %	6,1 %	10,6 %	13,9 %
Container/Bulk/Tank - 50 % owned 6)	134	667	6,3 %	4,1 %	6,0 %	13,0 %
Shipyard Solutions 5)	23	81	3,7 %	3,7 %	4,2 %	13,0 %
Offshore 4)	-	359	-28,3 %	NA	NA	13,0 %
MultiPurpose/ General Cargo	208	437	7,2 %	4,0 %	11,1 %	13,9 %
Services	26	218	-2,1 %	2,5 %	10,0 %	13,0 %
Total	702	2 900

	EBITDA Margin
	Goodwill
	31.12.14	Revenue
CGUs within segment 1)	(MNOK)		2014 (MNOK) Actual 2014	Est. 2015 2)	>2016 2)	WACC 3)
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

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

2) Expected margin used for terminal calculation.

3) Pre-tax weighted average cost of capital.

4) GW allocated to CGU units within BOUFF have been impaired by MNOK 13 in 2015. No remaining goodwill is allocated to the CGU's.

5) GW allocated to TTS Liftec OY, a unit within BUSYS have been impaired in 2015 by MNOK 19

6) As an effect of changes to the company agreements in TTS Hua Hai, a fair value assessment and PPA evaluation give basis for allocation of GW in 2015. Reference is made to note 27.

• assumptions from the Norwegian National Bank.
• of increased volumes and in part a result of increased margins.
• observed beta in other similar listed companies.
• has performed sensitivity analysis that show no need for write downs given the following assumptions:
• 10 % increase in the WACC • 10 % decrease in EBITDA margin

ADDITIONAL INPUT ON ASSUMPTIONS IN THE VALUE IN USE CALCULATION

CGU RELATED TO NMF ACTIVITIES

				Notes
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 calculated 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 2016 are based on board-approved budgets for 2016. For the years 2017-2018, estimates are based on the mid term strategy figures approved by the board. Terminal value after 2018 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 the Board of Directors report - section Market. • 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 IAS36, based on the business in it's current state (including started and committed changes). No revenue or corresponding cost elements from expansion of the business are included in the cash flows. The expected positive development in EBITDA margin is in part a result of increased volumes and in part a result of increased margins. • Weighted average cost of capital (WACC) is calculated on the basis of the Capital Asset Pricing Model. The WACC applied is a nominal pre-tax WACC. The WACC for all CGUs is based on a post tax WACC of 9,7%, which again is based on 1,6% risk free interest, a risk premium of 5,5%, a beta of 2,2 and an additional small cap premium of 2%. The Beta is calculated based on observed beta in other similar listed companies. • Based on the above assumptions, an impairment has been made to units within the BUOFF of totally MNOK13, and to a unit within BUSYS of MNOK19. Estimated value in use exceeds the carrying value for the other CGU's, indicating there is no requirement to impair in any of these CGUs. Please note, however, that there is a high degree of inherent estimation uncertainty related to several assumptions, and that changes to these assumptions could lead to future write downs. The Group has performed sensitivity analysis that show no need for write downs given the following assumptions: • 10 % increase in the WACC • 10 % decrease in EBITDA margin
			10% increase	10% decrease in
Change in recoverable amount:	Impairment 2015 Initial headroom		in WACC	EBITDA margin
RoRo/Cruise/ Navy	-	699 000	-145 000	-119 000
Container/Bulk/Tank - fully owned	-	368 000	-96 000	-87 000
Container/Bulk/Tank - 50 % owned	-	109 000	-66 000	-45 000
Shipyard Solutions	-18 900	-	-7 100	-6 200
Offshore	-13 000	-	-	-
Multipurpose/ General Cargo	-	231 000	-69 000	-64 000
Services	-	153 000	-27 000	-23 000
Total	-31 900	1 558 000	-410 100	-344 200
ADDITIONAL INPUT ON ASSUMPTIONS IN THE VALUE IN USE CALCULATION The estimates of recoverable amount are based on assumptions regarding future development of several factors. The inherent uncer tainty 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 31.12.2015. CGU RELATED TO NMF ACTIVITIES The CGU within BUMPG has it's origin in the structure, products and organisation coming from TTS NMF. The CGU is believed to have an inherent risk in the calculation of value in use related to market development. NMF was acquired in the 3rd quarter of 2012, and both volume and margins in 2013 and 2014 were weaker than expected. During 2015 the CGU's activity within Services has picked up both in volume and margin, however Newbuild activity is still slower than anticipated. The MPG newbuild unit revenue, decreasing sharply from MNOK 374 in 2013 to MNOK 190 in 2014 and coming in at MNOK 319 in 2015, reflects the market slow in the segment for the last couple of years. The EBITDA for 2015 , although still negative improved from - 32 in 2014 to - 13 in 2015. Cost cuts initiated in 2013, together with an ongoing TTS project to cut production lead-time and cost, has laid the foundation for a sound future operations in the unit.				-
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. TTS Group expects an improved future market for heavy lift cranes, and has reorganized the NMF business in 2014 and 2015, including expanding the market foothold by establishing a production and sales unit in China. Although slow, newbuild activity in the CGU related to traditional heavy lift sales in Europe have been stable. The CGU successfully delivered a heavy lift unit to an Offshore WindMill Installation platform in 2014. Increased focus on offshore windmill energy production creates a new market for highly specialized installation platforms, giving basis for complex newbuild or conversion projects. Newbuild turnover in the CGU for 2015 was MNOK 319, and a negative margin of 4%. Turnover in 2016 is expected to pick up to			MNOK 570, and a 1,1% margin, a slow in 2017 with a turnover around MNOK 450 with a margin of 8,3%, into a turnover in 2018 of

7

around MNOK 560 with a margin of 9,9 %. Around 80% of turnover 2016, and 15% of turnover 2017 is part of backlog at yearend 2015. Normal project delivery time is 12-30 months depending on capacity and complexity, starting 3-6 months after the project has been sold. Revenue recognition is based on percentage of completion.

Services turnover in the CGU is expected to grow from MNOK 118 in 2015 to MNOK 145 in 2018, and with an margin at around 15% in 2018. Services turnover is based on the NMF and LMG install base consisting of around 3000 units delivered over the past 15 years where more than 60% were delivered in the period 2008-2011. The overall outlook for the service market within the CGU remains stable, although low ship charter rates may still influence the market.

The CGU consumed a net new working capital at yearend 2015 of MNOK 136. As part of 2015 impairment it is expected that overall net working capital will be reduced by MNOK 66 in 2016, and MNOK 24 in 2017, whereafter the working capital is expected to stabilize at around 7% of turnover. A reduction in working capital of MNOK 60 in 2016 relates to a project which is expected to be completed within yearend 2016. Somewhat reduced activity in 2017, combined with increased turnaround on inventory, and focused strategies on payment terms towards customers and vendors is expected to contribute positively. Terminal value contributes with 70% of the calcu lated value in use.

CGU RELATED TO TTS LIFTEC ACTIVITIES

Turnover in the CGU has been variable. From a turnover in 2013 of MNOK 144, the turnover in 2014 dropped to MNOK 57, but regained momentum to around MNOK 80 in 2015, which is in line with the expected turnover going forward. Historical margins up to 15% have not been reached for the past few years, and after a minor loss in 2013, the margins in 2014 and 2015 ended at around 4,5 %. Margins going forward is expected at 4,2% which give basis for the impairment of MEUR 2 (~MNOK 19) allocated to 2015. Value in use is based on stable working capital requirement, and low CAPEX requirement. R&D development to maintain product port folio is in general allocated as part of project cost.

Terminal value contributes with 74% of the calculated value in use.

CGU RELATED TO OFFSHORE ACTIVITIES

Turnover in the CGU has been variable, and profit margins have not been acceptable. Based on a slow market combined with fierce price pressure on the key product lines TTS Group has impaired any GW allocated to the Offshore segment, in total MNOK 13 for 2015. Remaining GW allocated to Offshore is MNOK 0.

CGU RELATED TO ACTIVITIES WITHIN TTS MARINE

TTS Marine is defined as a separate CGU reporting as part of the Services segment. Turnover in the CGU continue its positive trend, although the margin in 2015 are still low.

The impairment test is based on the assumption that the CGU will continued its positive development in turnover, going from MNOK 217 in 2015 to MNOK 270 in 2018. The model includes a terminal assumption on 2,5% increase in revenue. EBITDA margins is expected to pick up from a low -2% in 2015 to 10% in 2018, and continues a 10% margin going forward. TTS believe this being a conservative esti mate on the long term margin potential for the CGU. The organizational setup within the CGU is based on expected increase in turnover, and a positive margin is expected to be materialized with minor increases in turnover. Terminal value contributes to 83% of the calculated value in use.

CGU RELATED TO ACTIVITIES WITHIN BURCN

The CGU unit within the RCN segment is based on more than one legal entity with highly integrated operational structures. Turnover in the CGU continue to show a positive trend, with EBITDA margins in line with projections. The impairment test is based on the assumption that the CGU will continue its positive development in turnover, going from MNOK 684 in 2015 to MNOK 750 in 2018. The model includes a terminal assumption on 2,5% increase in revenue. EBITDA margins is expected to pick up from 9,1% in 2015 to 11,6 % in 2018 which is expected going forward provided no material change in delivery mix. Terminal value contributes to 83% of the calculated value in use.

CGU RELATED TO ACTIVITIES WITHIN BUCBT - FULLY OWNED

The CGU unit within the CBT segment is based on more than one legal entity with highly integrated operational Newbuild and Services structures.

As an effect of reduced market activity in the CBT segment, turnover in the CGU have declined, although being able to deliver positive EBITDA margins. The impairment test is based on the assumption that the market activity effecting the CGU will improve, ref market expectations described in the Board of Directors report. A positive development in turnover, going from MNOK 436 in 2015 to MNOK 617 in 2018, combined with an improvement in EBITDA margins going from 4,0% in 2015 to 10,6% in 2018. Improvement in margins is anticipated based on implemented changes in the operational structure. The model includes a terminal assumption on 2,5% increase in revenue. Terminal value contributes to 85% of the calculated value in use.

CGU RELATED TO ACTIVITIES WITHIN BUCBT - 50% OWNED COMPANIES

The CGU unit THH is reported as part of the CBT segment, and is based on more than one legal entity with highly integrated operational Newbuild and Services structures. The CGU is consolidated into TTS Group as from Q1/2015.

The impairment test is based on the market assumption described in the Board of Directors report. A positive development in turnover, going from MNOK 667 in 2015 to MNOK 910 in 2018, combined with an EBITDA margin going from 7,0% in 2015 to 6,0% in 2018. The model includes a terminal assumption on 2,5% increase in revenue. Terminal value contributes to 65% of the calculated value in use.

7 Notes

Notes 89

Note 8 - Investments in other companies

(AMOUNTS IN NOK 1000)

	Ownership	Acquisition cost	Book value
			2015	2014
Fixed assets:
Sigma Drilling AS1)	16.1 %	28 673	-	-
Total investments in other companies		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 in 2014, after which TTS Group has impaired the remaining value of shares in Sigma Drilling by 5,3 MNOK. TTS is familiar with ongoing negotiations between Sigma Drilling and STX on final settlement related to the cancellation of the contract, which may give basis for a positive outcome for the owners of Sigma Drilling. At the end of Q4/2015 discussions are still ongoing. The outcome for TTS is not clear.

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.

(AMOUNTS IN NOK 1000)

The following subsidiaries are basis for the consolidated accounts:

TTS GROUP ASA:

		Acquisition		Voting	Local	Share capital
Subsidiary 1)	Registered office		year Ownership	share	currency	in local currency
TTS Syncrolift AS 2)	Drøbak, Norway	1994	100 %	100 %	NOK	950 000
Norlift AS	Bergen, Norway	1994	100 %	100 %	NOK	500 000
TTS Marine AB	Gothenburg, Sweden	2002	100 %	100 %	SEK	2 000 000
TTS Marine Shanghai Co Ltd	Shanghai, China	2002	100 %	100 %	CNY	8 185 303
Hydralift Marine AS	Kristiansand, Norway	2003	100 %	100 %	NOK	100 000
TTS Cranes Norway AS	Bergen, Norway	2007	100 %	100 %	NOK	500 000
TTS Marine AS	Bergen, Norway	2009	100 %	100 %	NOK	3 000 000
TTS Singapore Pte. Ltd.	Singapore	2009	100 %	100 %	SGD	1 141 813
TTS Greece Ltd.	Pireus, Greece	2009	100 %	100 %	EUR	200 000
TTS Offshore Solutions AS 3)	Bergen, Norway	2012	100 %	100 %	NOK	2 112 500
TTS Neuenfelder Maschinenfabrik GmbH	Hamburg, Germany	2012	100 %	100 %	EUR	3 000 000
TTS Polen SP.Z.O.O	Gdansk, Poland	2013	100 %	100 %	PLZ	250 000

1) TTS Marine Holding AB and TTS Port & Logistics Holding AB have been sold in 2015. 2)TTS Handling Systems AS has changed names to TTS Syncrolift AS. 3) TTS Ships Equipment AS has been merged into TTS Offshore Handling Equipment AS in 2015. TTS Offshore Handling Equipment AS has changed names to TTS Offshore Solutions AS.

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

Equity accounted investments are accounted for in accordance with the equity method, see note 10.

Note 9 - Subsidiaries

⁹Notes Notes¹⁰

TTS MARINE AB HAS THE FOLLOWING SUBSIDIARIES:

Subsidiary 4)	Registered office Acquisition	year	Ownership	Voting share	Local currency	Share capital in local cur rency
TTS Marine Inc.	Virginia, USA	1994	100 %	100 %	USD	190 000
TTS Marine GmbH	Bremen, Germany	1997	100 %	100 %	EUR	255 646
TTS Hua Hai AB	Gothenburg, Sweden	2002	100 %	100 %	SEK	120 000
TTS Liftec Oy	Tampere, Finland	2004	100 %	100 %	EUR	76 500
TTS Marine S.r.l 5)	Genova, Italy	2006	100 %	100 %	EUR	10 400
TTS Vietnam Co. Ltd	Haiphong, Vietnam	2014	100 %	100 %	VND	10 000
TTS Hua Hai Ships Equipment Co Ltd 6)	Shanghai, China	2002	50 %	100 %	CNY	11 000 000
Shanghai TTS Hua Hai International Trade Co., Ltd 6) 7)	Shanghai, China	2012	50 %	100 %	CNY	1 000 000
Jiangsu TTS Hua Hai Ships Equipment co. Ltd 6)	Jiangsu, China	2007	50 %	100 %	CNY	15 988 240

4) TTS Port Equipment AB has been merged into TTS Marine AB in 2015.

5) Ergon S.r.l has been aquistioned and merged into the company in 2015.

6) The governing documents of the companies were changed in April 2015, after which TTS Group has the ability to control the companies. Based on this, the company is considered as a subsidiary and fully consolidated into the TTS Group accounts as from 2nd

quarter 2015. 7) THH trade is owned 100% by THH.

Equity accounted investments	Registered office	Acquisition year	Ownership	Voting share
Jiangnan TTS Ships Equipment
manufaturing company LTD 7)	Jiangnan, China	2012	20 %	40 %

7) TTS Hua Hai Equipment co. Ltd owns 40%. TTS indirectly controls 40% of the votes and is indirectly entiteled to 20% of any dividend 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	Local currency	Share capital in local currency
TTS Marine Ostrava s.r.o 8)	Ostrava, Czech Republic	2005	100 %	100 %	CZK	9 000 000
TTS Marine GmbH Korea Co. Ltd	Korea	2007	100 %	100 %		KRW 1 513 390 000
TTS Marine Equipment Ltd.	Dalian, China	2008	100 %	100 %	RMB	15 728 611

8) To be winded up in 2016

TTS NEUENFELDER MASCHINENFABRIK GMBH HAS THE FOLLOWING SUBSIDIARIES:

Subsidiary	Registered office Acquisition	year	Ownership	Voting share	Local currency	Share capital in local currency
TTS SCM Marine and Offshore Machinery Co. Ltd 9)	Shenzhen, China	2014	50 %	100 %	RMB	32 000 000

9) Based on the governing documents of the company, TTS Group has the ability to control the company. Based on this, the company is considered as a subsidiary and fully consolidated into the TTS Group accounts.

TTS MARINE AS HAS THE FOLLOWING SUBSIDIARIES:

	year	Ownership	Voting share	Local currency	Share capital in local currency
Rio de Janeiro, Brazil	2014	99 %	100 %	BRL	400 000
		Registered office Acquisition

10) TTS Group ASA owns the remaining 1 %.

(AMOUNTS IN NOK 1000)

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

From FY2014, TTS Group has applied IFRS10 in the accounting for the investments. The change in IFRS as per 31.12.2013 applied per 1.1.2014 focus on TTS ""ability to control"" as opposed to the ""execution of control"" applied in the former accounting rules. Early in April 2015 an amendment related to the agreements governing the mandates of the functions controlling THH was agreed with the other 50% owner of THH ( TTS Hua Hai). Based on the amendments TTS has ""ability to control"" THH, and is exposed for variable return on its investment. As of 2Q 2015 THH is consolidated into the TTS Group accounts. Additional information is available in note 27.

As part of the change in control, the Chinese company JiangNan TTS Ships Equipment Manufacturing Co.Ltd (JiangNan), of which THH hold a 40% ownership is recognized using the equity method. JiangNan is mainly a subcontractor/supplier of steel structures for the two major shareholders; TTS Hua Hai and Jiangnan Heavy Industries, and is operated on a cost centre approach. The management expects annual earnings before tax to be in the range of MCNY 3 – 5 going forward, depending on the volume mix.

The agreements governing the mandates of the functions controlling TTS SCM Marine and Offshore Machinery Co.Ltd (TSG) has the same structure as the THH agreements, and TTS Group is exposed for variable return on its investment. As of 01.01.2015 THH is consolidated into the TTS Group accounts. TSG was formally established in December 2014, and has initiated its operation during 2015 in order to perform scheduled customer deliveries in the latter part of 2016. As of 01.01.2015 TSG is consolidated into the TTS Group accounts.

PER 31 DECEMBER THE GROUP HAS THE FOLLOWING INVESTMENTS IN EQUITY ACCOUNTED INVESTMENTS:

Company	Registered office Acquisition date		Ownership	Voting share
TTS Bohai Machinery Co., Ltd	Dalian, China	2005	50 %	50 %
TTS Bohai Trading Co., Ltd	Dalian, China	2005	50 %	50 %
JiangNan TTS Ships Equipment Manufacturing Co.Ltd	JiangNan, China	04.2015	40 %	40 %

Interests in equity accounted investments

Interests in equity accounted investments	TTS Bohai Machinery / Trading	TTS Hua Hai Ships Equipment, Shanghai and Jiangsu	TTS-SCM Marine and Offshore Machinery Co., Ltd	JiangNan TTS Ships Equipment Manufacturing Co.Ltd	Total
Opening balance 1.1.2014	15 986	88 016	-		- 104 002
Share of profit/loss (net of withholding tax)	1 942	12 384	-		- 14 326
Dividends (net of withholding tax)	-	-27 601			-27 601
Currency effect	1 822	10 033	-		- 11 855
Closing balance 31.12.2014	19 750	82 832	-		- 102 582
Opening balance 1.1.2015	19 750	82 832	-		- 102 582
Effect from change in control in (ref note 27)		-98 811			67 048 -31 763
Share of profit/loss (net of withholding tax)	2 671	7 912	NA	1 638	8 945
Dividends (net of withholding tax)	-	-	NA		-
Currency effect	6 968	8 067	NA	- 13 000	5 211
Closing balance 31.12.2015	29 389	-	NA		55 586 84 975

EQUITY ACCOUNTED INVESTMENTS TOTAL (100%) PROFIT/LOSS, ASSETS AND LIABILITIES PER 31.12.2015:

Long term	Current	Long term	Current	Profit/loss
				after tax
				5 454
				4 001
				9 455
	assets	assets 3 405 246 077 343 103 458 368 346 508 704 445	liabilities	liabilities Income - 190 702 411 993 - 623 418 438 588 - 814 120 850 581

Note 10 - Equity accounted investments

EQUITY ACCOUNTED INVESTMENTS 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
TTS-SCM Marine and Offshore Machinery Co., Ltd	-	-	-	-	-	-
Total		15 260 836 101		- 678 643 940 378		34 766

TTS HUA HAI SHIPS EQUIPMENT CO., LTD, SHANGHAI AND JIANGSU - CHANGE OF CONTROL - 2015

A preliminary fair value assessment of TTS Hua Hai (THH) based on the discounted cash flow approach is the basis for revaluation and reallocation of THH assets, implementing of non-controlling equity interests in the consolidated accounts, and profit recognition related to the attributable excess values of the 50% share TTS hold in THH.

PROFIT EFFECTS FROM CHANGE OF CONTROL:

	TTS Hua Hai Ships Equipment, Shanghai and Jiangsu
Opening balance 1.1.2015	82 832
Share of profit/loss (net of withholding tax)- Q1/2015	7 912
Currency effect Q1/2015	8 067
Value as Q1/2015	98 811
Fair value assessment (ref note 27)	202 478
Profit effect from change of control	103 667

Additional information on change in control assessment available in note 27.

¹¹ Notes¹²

Note 11 - Trade and other receivables

(AMOUNTS IN NOK 1000)

Trade receivables	2015	2014
Trade receivables	392 688	347 587
Loss provisions	-31 381	-20 840
Net trade receivables	361 307	326 747

For terms and conditions related to relating party receivables, ref. to Note 21. Trade receivebales are non-interest bearing and are generelly on 30-90 day terms.

Trade receivables (gross) per currency:	2015	2014
EUR	92 553	116 638
USD	106 972	106 575
NOK	180 287	108 379
Other currencies	12 876	15 995
Total	392 688	347 587

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:

	2015	2014
VAT	15 346	20 031
Prepayments	16 334	10 683
Other receivables	41 556	65 921
Other short-term receivables	73 236	96 634

Note 12 - Loans and non-current liabilities

(AMOUNTS IN NOK 1000)

	Repayment profile and maturity:
	Nominal value 31.12.2015	2016	2017	2018	2019	2019 and later
Convertible Subordinated Bond Loan 2011/2017 1)	95 345		- 95 345	-	-	-
Other loans		207 214 207 214		-	-	-
Total loans incl. first year instalment and short term loans		302 559 207 214 95 345		-	-	-
- short term loans and first year instalment of non-current debt	-207 214 -207 214		-	-	-	-
Total non-current liabilities 1)	95 345		- 95 345	-	-	-
Expected interest payments		19 617	3 432	-	-	-

1) Booked value of Subordinated Boan Loan is MNOK 96.425. Devitation from nomial value is due to use of effective interest method, ref

note 15.

SPECIFICATION OF LOANS:

10 Notes

	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	12,00 %	2017	balloon	95 345	95 345
Innovasjon Norge	Mortgage loan	NOK	5,75 %	2015	bi-annually	-	3 000
DNB	Mortgage loan		NOK Nibor + 3,75%	2016	balloon	100 000	100 000
TTS Marine Korea Ltd.
Kookmin Bank	Mortgage loan	KRW	2,95 %	2016	quarterly	26 653	16 200
Kookmin Bank	Mortgage loan	KRW	2,95 %	2016	Ballon	5 991	3 413
TTS Marine Shanghai Co Ltd
DNB Bank ASA Shanghai Branch	Mortgage loan	EUR	EURIBOR + 2,0 %	2016	balloon	3 925	4 732
DNB Bank ASA Shanghai Branch	Mortgage loan	RMB	PBOC base rate	2016	balloon	40 695	35 931
DNB Bank ASA Shanghai Branch	Mortgage loan		USD USDLIBOR + 1,5 %	2016	balloon	29 951	26 759
Total loans						302 559	285 380
Difference between nominal value and effective debt value related to convertible bond (ref. Note 15)						1 080	-7 202
Net book value of bond debt and other debt to financial institutions 1)						303 639	278 178
1) Debt exclusive of draw-down TNOK 218 000 in TTS Group cash pool, 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 31.12.2015 is TNOK 96 425.

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

FOLLOWS:

(NOK 1000)	2015	2014
NOK	195 345	198 345
EUR	3 925	4 732
USD	29 951	26 759
RMB	40 695	35 931
KRW	32 644	19 613
Total	302 559	285 380

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. 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.

Notes ^{12 13} Notes¹⁴

15

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:

	2015		2014
	Limit	Drawn	Limit	Drawn
Group cash pool overdraft facility	300 000	-218 000	300 000	-123 200
Drawdown facility, operations	100 000	100 000	100 000	100 000
Guarantee limit for Group	650 000	530 800	640 000	620 200

As per 31.12.2015 all Norwegian companies (ref Note 9), as well as TTS Marine 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 18.12.2015 TTS Group ASA entered into an agreement with Nordea and DNB on new financing agreements for credit and guarantee facilities, which represents an extension of the agreements the company had at the beginning of the prior fiscal year. The extended agreements expire at 31.12.2016, and are presented as short term debt.

The credit facility in the agreement is MNOK 1.125, and consists of;

• MNOK 175, term loan facility (DNB)
• MNOK 300, multi-currency overdraft facility (Nordea)
• MNOK 650, guarantee facility (Nordea MNOK 490, DNB MNOK 160)

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

The new agreements includes unchanged pledges of inventory, accounts receivables in the major Norwegian companies. In addition shares in TTS Marine AB have been pledge.

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

Assets pledged as collateral for secured debt:	2015	2014
Shares in TTS Marine AB	275 330	389 663
Account/Group receivables	333 023	272 552
Inventory/Work in progress, including non-invoiced production	76 861	84 990
Property	-	-
Assets pledged as collateral	685 214	747 205

OTHER ASSETS PLEDGED AS SECURITY AND GUARANTEES: TTS MARINE AB

As pr 31.12.2015, MSEK 306.0 (MNOK 292 .1) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 530.8 in the above table. In addition TTS Marine AB has a bank guarantee agreements with Danske Bank. As per 31.12.2015 total guarantees were MSEK 0.- (MNOK 0.-). The bank has received parent company guarantee (generell borgen) from TTS Group ASA.

TTS MARINE GMBH

As per 31.12.2015, MEUR 4.4 (MNOK 61.8) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 530.8 in the above table.

NEUENFELDER MASCHINENFABRIK GMBH (NMF)

As per 31.12.2014, MEUR 2.5 (MNOK 24.3) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/DnB of MNOK 530.8 in the above table.

TTS LIFTEC OY

As pr 31.12.2015, MEUR 0.5 (MNOK 5.2) was drawn in guarantees. This amount is included in the total guarantee drawn with Nordea/ DnB of MNOK 530.8 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 28.9) which was drawn with MEUR 3.0 (MNOK 28.9) as per 31.12.2015. A credit limit has also been established in RMB of MRMB 30.0 (MNOK 40.7) of which MRMB 30,0 (MNOK 40,7) was drawn as per 31.12.2015. A credit limit has also been established in USD of MUSD 1.0 (MNOK 8.8) of which MUSD 0.7 (MNOK 6.2) was drawn as per 31.12.2015. The bank has receieved two parent company guarantee from TTS Group ASA of MEUR 3.0 (MNOK 28.9) and one of 1 MUSD (MNOK 8.8)

TTS MARINE KOREA CO. LTD

TTS Marine Korea Co., Ltd has established a loan of MKRW 800 (MNOK 6.0) with Kookmin Bank in Korea. The company also has a credit limit of MKRW 4 000 (MNOK 30.0), of which 3 558 MKRW (MNOK 26.6) was drawn. The bank has security in the company's building and land. In addition, TTS Group ASA is co-debtor. The building is valued to MKRW 3 404 (MNOK 25.5).

Note 14 - Net interest-bearing debt

(AMOUNTS IN NOK 1000)

	2015	2014
Bank deposits, cash etc. as of 31.12. exclusive cash pool 1)	413 210	130 602
Convertible Bond loan 2)	-95 345	-95 345
Other non-current interest bearing debt	-	-
Cash pool agreement as of 31.12.	-218 000	-123 248
Other current interest bearing debt	-208 387	-174 516
Nominal net interest-bearing debt (-) / deposits (+)	-108 522	-262 507
Effective interest method	-1 080	7 202
Interest bearing debt	-109 602	-255 305

1) Including deposits from consolidated companies TTS Hua Hai Co. Ltd, and TTS SCM Co Ltd. MNOK 335,7 (0 in 2014) 2) 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.

COVENANTS

TTS Group has loans, draw down facilities and guarantee limits with Nordea and DNB. The Group have met the following financial covenant requirements from Nordea and DNB end of Q4-2015.

The Group's equity ratio shall at least be equal to 27,5 %. In addition a multiple of other standard default clauses related to the bond loan inclusive cross default clauses are apparent. Nordea and DnB has accepted that the nominal value of the Subordinated Convertible Bond loan is included as part of the equity calculation. Including the added back nominal value of the Subordinated Convertible Bond, the relevant covenant equity measure basis as per 31.12.2015 is MNOK 950, which represents an equity ratio of 31.4 %.

The Group's covenant related to rolling 12 months NIBD/EBITDA is max 3,0 calculated on 12 month rolling EBITDA. As per 31.12.2015 the NIBD/EBITDA ratio was 0,7.

TTS Group meets the financial covenant requirement as per 31.12.2015.

On the 18th of December 2015 TTS Group ASA entered into a new agreement with Nordea and DNB, which represents an extension of the agreements the company had at the beginning of the prior fiscal year. As of Q1-2016 the financial covenants requirements are;

• Equity ratio min 25,0 % (inclusive nominal value of remaining bond-debt).
• Minimum liquidity reserve of MNOK 50 in fully owned subsidiaries.
• EBITDA:

NOK mill	Q1-16	Q2-16	Q3-16	Q4-16
EBITDA Covenant accumulated	≥ 15	≥ 35	≥ 60	≥ 100

¹⁵Notes Notes¹⁵

(AMOUNTS IN NOK 1000)

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/ 2015.

There have been no Debt conversions or changes in the conversion price in 2014 or 2015. The conversion price at yearend 2015 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. 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. At yearend 2015 the call option is out of money. '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.

The 17th December 2015, the bondholders agreed to a renewal of the Subordinated Convertible Bond Debt, which represent an extension of the repayment of the debt facility until 18 April 2017. An extraordinary General Assembly in TTS approved the renewal at January 5th 2016. The new agreement represents a 15-month extension of the maturity date from 18th January 2016 to 18th April 2017, and a change of fixed coupon rate from 8% to 12%p.a. A new drag along conversion clause enables both the Bond holder, and TTS the right to require a conversion of all outstanding bonds to shares in the case of an acquisition event at a price above or equal to the conversion price. A new drag along call option clause, in the case of an acquisition event at a price below the conversion price, enables TTS the right to redeem all outstanding bonds at a rate of 105% of par value.

Terms and conditions in the renewed agreement have been evaluated according to IAS 39. Changes in overall terms represent a change of less than 5% change to the overall agreement, and will be handled as a prolonging of the prior bond debt agreement.

	2015	2014
Subordinated convertible bond loan - nominal value at drawdown	200 000	200 000
Converted debt to shares in 2011	-7 500	-7 500
Converted debt to shares in 2012 1)	-97 155	-97 155
Nominal debt value as per 31.12	95 345	95 345

Note 16 - Share capital and shareholder information

Date	Number of shares	Nominal value	Share capital
31.12.15	86 605 660	0.11	9 526 623
31.12.14	86 605 660	0.11	9 526 623
Changes to share capital 2015:

There were no changes to the nominal share capital in 2015

Changes to share capital 2014:

There were no changes to the nominal share capital in 2014

DIVIDENDS PAID AND PROPOSED:

(NOK 1000)	2015	2014
Declared and paid during the year:
Dividends on ordinary shares	-	-
Dividend for shareholders proposed for 2015, to be paid in 2016: NOK 0 per share.

Total dividend amount proposed: NOK 0.

	2015	2014
Draw down cost	-14 262	-14 262
Derived equity portion from inherent put option at drawdown	-36 981	-36 981
Equity derived from converted subordinated convertible bond during 2011	1 387	1 387
Equity derived from converted subordinated convertible bond during 2012	17 964	17 964
At the Extraordinary General Meeting on 10.1.2011 a subordinated convertible bond facility of MNOK 200 were approved. Effective interest cost less paid interest - 2011 Effective interest cost less paid interest - 2012 The bond holder has a consecutive right to convert their nominal bond value into shares in TTS Group ASA. Conversion price is fixed per Effective interest cost less paid interest - 2013 Effective interest cost less paid interest - 2014 Effective interest cost less paid interest - 2015 Effective debt value	9 977	9 977
	1 900	1 900
	5 851	5 851
	6 961	6 961
	8 282	-
	96 425	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, 2014 and 2015.

	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 31.12.2015:

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 %
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	3 727 364	3,52 %
Total	19 184 105	18,13 %

1) Bonds held by principal shareholder in TTS Group.

¹⁶Notes Notes¹⁶

PRINCIPAL SHAREHOLDERS OF TTS GROUP ASA AS OF 31.12.2015:

Shareholder	Number of shares	Ownership	Voting share 2)
SKEIE TECHNOLOGY AS 1)	22 655 763	26,16 %	26,19 %
RASMUSSENGRUPPEN AS	11 512 506	13,29 %	13,31 %
SKEIE CAPITAL INVESTMENT AS 1)	4 203 361	4,85 %	4,86 %
BARRUS CAPITAL AS	3 465 005	4,00 %	4,01 %
SKAGEN VEKST	3 035 946	3,51 %	3,51 %
PIMA AS	2 316 025	2,67 %	2,68 %
CIPI LAMP UCITS SWEDBANK SMB	2 232 886	2,58 %	2,58 %
HOLBERG NORGE	2 061 575	2,38 %	2,38 %
MERTOUN CAPITAL AS	1 769 598	2,04 %	2,05 %
HOLBERG NORDEN	1 700 000	1,96 %	1,97 %
ITLUTION AS	1 475 261	1,70 %	1,71 %
PHAROS SICAV SIF	1 180 905	1,36 %	1,37 %
ODIN ENERGI	1 071 732	1,24 %	1,24 %
SKANDINAVISKA ENSKILDA BANKEN AB NOMINEE	1 071 732	1,24 %	1,24 %
AVANT AS	1 000 000	1,15 %	1,16 %
AVANZA BANK AB	911 030	1,05 %	1,05 %
SKANDINAVISKA ENSKILDA BANKEN AB NOMINEE	806 737	0,93 %	0,93 %
EUROCLEAR BANK S.A./N.V. ('BA')	747 809	0,86 %	0,86 %
VPF NORDEA AVKASTNING	727 557	0,84 %	0,84 %
GLASTAD INVEST AS	668 000	0,77 %	0,77 %
Total, 20 largest shareholders	64 613 428	74,61 %	74,70 %
Own shares	112 082	0,13 %	0,00 %
Total other	21 880 150	25,26 %	25,30 %
Total	86 605 660	100,00 %	100,00 %

1) Boardmember of TTS, Mr. Bjarne Skeie controls an ownership of 27 159 124 shares through different companies.

Total voting share 31,40 %.

2) Voiting portion are calculated after eliminating shares held by TTS Group ASA

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

	Shares		Share options			Conversion rights from subordinated convertible loan
Board	19.05.16	31.12.15					31.12.14 19.04.16 31.12.15 31.12.14 19.04.16 31.12.15 31.12.14
Trym Skeie1) 3)	573 140		573 140 2 733 875	-	-		- 804 829 804 829 804 829
Bjarne Skeie 2) 3)		27 159 124 27 159 124 14 386 273		-	-		- 1 207 243 1 207 243 1 207 243
Toril Eidesvik 4)	50 000	50 000	50 000	-	-	-	-	-	-
Ole Henrik Askvik	3 268	3 268	3 268	-	-	-	-	-	-
Anita Kråkenes	2 000	2 000	2 000	-	-	-	-	-	-
Group Executives
Björn Andersson	75 000	75 000		75 000 150 000 150 000 145 000			-	-	-
Henrik Solberg-Johansen	50 000	50 000		50 000 62 500 62 500 12 500			-	-	-
Edgar Bethmann	20 000	20 000		20 000 62 500 62 500 12 500			-	-	-

	Shares		Share options			Conversion rights from subordinated convertible loan
Board	19.05.16	31.12.15					31.12.14 19.04.16 31.12.15 31.12.14 19.04.16 31.12.15 31.12.14
Trym Skeie1) 3)	573 140		573 140 2 733 875	-	-		- 804 829 804 829 804 829
Bjarne Skeie 2) 3)		27 159 124 27 159 124 14 386 273		-	-		- 1 207 243 1 207 243 1 207 243
Toril Eidesvik 4)	50 000	50 000	50 000	-	-	-	-	-	-
Ole Henrik Askvik	3 268	3 268	3 268	-	-	-	-	-	-
Anita Kråkenes	2 000	2 000	2 000	-	-	-	-	-	-
Group Executives
Björn Andersson	75 000	75 000		75 000 150 000 150 000 145 000			-	-	-
Henrik Solberg-Johansen	50 000	50 000		50 000 62 500 62 500 12 500			-	-	-
Edgar Bethmann	20 000	20 000		20 000 62 500 62 500 12 500			-	-	-

2) Bjarne Skeie holds 20 % of the shares and 100 % of the voting shares in Skeie Technology AS and Skeie Consultants AS. Skeie

1) Trym Skeie holds 100 % of the shares in Tamafe Holding AS and Skeie Alpha Invest AS. Technology AS owns shares in Skeie Capital Investment AS. unchanged from yearend 2015 and yearend 2014. 4) Toril Eidesvik own 100 % of the shares and voting shares in Zahlahuset II AS.

3) Per 19.04.2016 shares held and controlled by companies or members of the Skeie familiy is 27.732.264. Number of shares are

On the 8 June 2015, 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 until the the next Annual General Meeting or latest 30.06.2016. No shares have been issued on the basis of this authorisation as of 19 April 2016.

On the 8 June 2015, 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 until the the next Annual General Meeting or latest 30.06.2016.

On the 8 June 2015, the Annual General Meeting adopted a resolution to give the Board authority to buy a maximum number of 6 000 000 shares in TTS Group ASA within a price range from NOK 1 to NOK 25 for deletion. The authority is valid until the the next Annual General Meeting or latest 30.06.2016. No shares have been bought on the basis of this authorisation as of 19 April 2016.

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. As per 19.04.2016 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.

On the 8 June 2015, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 675 000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 30.6.2017. As per 19.04.2016 a total of 600 000 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 2016, 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 2016 and the first quarter of 2017, in addition to options not previously exercised. Option granted to people leaving TTS Group are terminated.

TREASURY SHARES:

	Number of shares	Share capital (NOK 1000)
Treasury shares as of 01.01.2014	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
Sale of treasury shares 2015	-	-
Treasury shares as of 31.12.2015	112 882	-12 417

On the 8. June 2015, 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 675 000 shares. As per 19.4.2016 the authoity have been used to awarding 600.000 share options to senior employees The authoritiy is valid to 30 June 2017.

On the 8. June 2015 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 2016. As per 19.4.2016 the authority is unused.

Notes¹⁶ 17

ALLOCATION OF OPTIONS:

Name	Position	Company	Number of options exercisable until 10.06.2016	Exercise price	Number of options exercisable until 05.06.2017	Exercise price	Total
Senior executives
Björn Andersson	CEO & President	TTS Group ASA	75 000	6,15	75 000	4,75	150 000
Henrik Solberg-Johansen CFO		TTS Group ASA	12 500	6,15	50 000	4,75	62 500
Per Croner	EVP BURCN	TTS Marine AB	12 500	6,15	50 000	4,75	62 500
Edgar Bethmann EVP BUCBT		TTS Marine GmbH	12 500	6,15	50 000	4,75	62 500
Arve T. Rinde	EVP BUOFF	TTS Offshore Solutions AS	0		50 000	4,75	50 000
Other executives	various	various	325 000	6,15	325 000	4,75	650 000
Total number of options to executives			437 500		600 000		1 037 500

During 2014 no share options have been exercised from Senior Management.

During 2015 no share options have been exercised from Senior Management.

In accordance with authorities granted by the Annual General Meeting in 2014 and 2015, 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 2014 and 2015 was 48% and 43% respecit vely. Risk-free interest rate applied for options issued in 2014 and 2015 was 1,53% and 1,16% resepectively. For 2015, option premium of MNOK 0,9 (2014 MNOK 1.2) has been charged as expenses classified as salary in the profit and loss statement. Payroll tax is charged when share options are realized.

SUBORDINATED CONVERTIBLE LOAN:

On 10.1.2011 the Extraordinary General Meeting approved the issuance of a convertible bond loan of MNOK 200. The loan has an 8 % coupon interest rate and reaches maturity 18.1.2016. On specific terms the Group has a call option that is exercisable from 8.2.2014. Bondholders have continuous conversion rights with an exercise price of NOK 4.97 per share.

The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011. In the Extraordinary General Meeting on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision at the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share. At the Extraordinary General Meeting on 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The 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. No changes applied in 2014 or 2015. The conversion price at yearend 2015 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%. There have been no changes to the outsatnding debt amount, or conversion prices in 2014 or 2015.

The 17. December 2015 TTS Group reached an agreed with it's bondholders to renew the subordinated convertible bond loan with a nominal value of MNOK 95,345. Formal renewal were approved in a extraordinary general meeting at 5th January 2016. Based on the renewed agreement the maturity date is set to 18.4.2017. Annual interest rate is set to 12%. Convertion strike price is unchanged from yearend 2015 at 4,97.

Please find additional information relating to the subordinated convertible loan in Note 15.

Note 17 - Earnings per share

(AMOUNTS IN NOK 1000)

Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

	2015	2014
Net profit attributable to ordinary equity holders of the parent from continuing operations	-48 674	-21 819
Net profit attributable to ordinary equity holders of the parent from discontinued operations	-	39 562
Weighted average of issued shares excluding own shares	86 493	86 443
Earnings per share - continuing operation (NOK per share)	-0,55	-0,25
Earnings per share - discontinued operation (NOK per share)	-	0,46

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, ref Note 15. The conversion price is fixed, and was NOK 4.97 per share as per 31.12.2015. 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 31.12.2015.

	2015	2014
Profit used to calculate diluted earnings per share - continuing operation	-48 674	-21 819
Profit used to calculate diluted earnings per share - discontinued operation	-	39 562
Average of ordinary issued shares excluding own shares	86 493	86 443
Adjustment for share options	-	-
Adjustment for average of coversion right in convertible bond	-	-
Average number of ordinary shares for calculation of diluted earnings per share	86 493	86 443
Diluted earnings per share - continuing operation (NOK per share)	-0,55	-0,25
Diluted earnings per share - discontinued operation (NOK per share)	-	0,46

SHARE STRUCTURE:

	2015	2014
Issued shares	86 605 660	86 605 660
Own shares	112 882	112 882
Unused share options that can be settled by issue	1 037 500	705 000
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 31.12.2015. An extention of the subor dinated convertible bond was established with the bond holders at the 17.December 2015, and approved in a Extraordinary General Meeting at the 5. January 2016. Please find additional information relating to the extension terms, and convertion rights in Note 15.

Note 18 - Tax

(AMOUNTS IN NOK 1000) SHARE STRUCTURE:

Income tax expenses:	2015	2014
Payable tax 1)	27 637	17 893
Not allocated tax losses 2)	-	34 830
Change in deferred tax	-2 796	-27 644
Impairment of tax assets	-	20 000
Tax cost in the profit and loss statement	24 841	45 079

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.

2) Additional deferred tax assets in Norwegian companies are de-recognized. Estimated value in 2015 is MNOK 23,8.

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

	2014	2013
Profit before tax (incl. discontinued operations)	-15 322	62 823
Expected income tax according to income tax rate in Norway (25 / 27%)	-3 831	16 962
Prior period adjustment deferred taxes	-	-
Not allocated deferred tax losses	34 613	4 451
Profit from joint ventures	-28 972	-3 868
Permanent differences	20 848	11 824
Tax rate outside Norway, different from 27%	2 183	-4 290
Impairment of tax assets	-	20 000
Tax cost in the profit and loss statement	24 841	45 079

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:	2015	2014
Gross deferred tax assets 1)	252 508	246 715
- Not allocated tax losses	-209 287	-215 563
- Offset deferred taxes
- Deferred tax assets to be recovered after 12 months	43 221	31 152
- Deferred tax assets to be recovered within 12 months
Total recognized deferred tax assets (gross)	43 221	31 152

1) Changes in tax rates in Norway from 27% to 25% have reduced the gross deferred tax assets per 01.01.2015 by MNOK 11,8. As deferred tax assets from Norwegian companies are not recognized, the change has no effect on the 2015 tax cost. 2) As part of the acquisition of TTS Hua Hai, tax assets of MNOK 12,4 is recognized in the balance sheet. Additional information in note 27.

Deferred tax liabilities:	2015	2014
Gross deferred tax	-51 581	-31 336
- Deferred tax to be recovered after 12 months	-51 581	-31 336
- Deferred tax to be settled within 12 months
Total recognized deferred tax liabilities (gross)	-51 581	-31 336
Net deferred taxes in Group (asset=+, liability=-)	-8 360	-184

Notes¹⁸

CHANGE IN RECOGNIZED DEFERRED TAXES:

	2015	2014
Recognized value 1.1.	-184	26 819
Deferred tax charged in the income statement	2 796	27 644
Not allocated tax losses charged in the income statement	-	-34 830
Impairment of tax assets	-	-20 000
Change in deferred taxes related to convertible bond	-	-
Sale shares in subsidiaries	-	-
Net deferred tax related to business combinations	-11 050	-
Prior period adjustment of deferred taxes including foreign currency differences	78	183
Recognized value 31.12.	-8 360	-184

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

TAX REGIME):

Deferred tax (asset = + / liability = -)

		1.1.2014 Changes 2014		31.12.2014 Changes 2015	31.12.15
Deferred tax (asset = + / liability = -)
Fixed assets	22 312	-12 792	9 520	4 295	13 815
Current assets	1 317	-7 349	-6 032	-803	-6 835
Other temporary differences / provisions	-18 534	3 710	-14 824	-7 017	-21 840
Impairment deferred tax assets	-	-20 000	-20 000	-	-20 000
Not allocated tax losses	-294 781	79 218	-215 563	-23 807	-239 370
Tax losses to carry forward	320 767	-74 052	246 715	35 876	282 591
Deferred taxes related to convertible bond	-4 262	4 262	-	-	-
Net deferred tax (asset = + / liability = -)	26 819	-27 003	-184	8 544	8 360

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, as well as tempo-

rary differences related to Chinese 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. Losses not recognized in 2015 is calculated to MNOK 23,8 related to activities in some Norwegian companies, and especially companies within the Offshore segment. Tax assets were impaired by MNOK 20 in 2014, of which MNOK 42 was impaired in Norwegian companies, and MNOK 20 re-recognized in the German companies.

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

	2015	2014
Tax payable, (including withholding taxes)	27 637	17 893
Prepaid tax	-16 250	-16 958
Total tax payable in balance sheet at year end	11 387	935

ORIGIN OF TAX EXPENSE PAYABLE:

	2015	2014
Norway	143	-
Sweden	10 537	14 871
Germany	891	1
China	15 115	-
Rest of Europe	1 156	2 442
Rest of Asia	-437	579
North / South America	233	-
Total	27 637	17 893

TAXES CARRIED FORWARD BY REGION 2015:

	Norway	Germany	Rest of Europe	China	Other	Total
Deferred tax carried forward	167 322	94 861	2 304	16 975	1 129	282 591
Deferred tax not recognised	-161 307	-78 063	0	-	-	-239 370
Deferred tax asset recognised	6 015	16 798	2 304	16 975	1 129	43 221
Deferred taxes liability	-	3 619	25 534	22 428	-	51 581
Deferred tax liability	-	3 619	25 534	22 428	-	51 581

TAXES CARRIED FORWARD BY REGION 2014:

				Total
148 964	94 601	-	3 150	246 715
-142 962	-72 601	-	-	-215 563
6 002	22 000	-	3 150	31 152
-	7 961	23 375	-	31 336
-	7 961	23 375	-	31 336
	Norway	Germany	Rest of Europe	China Other

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

	2015	2014
Pre-tax profit/ loss	-15 322	62 823
Permanent differences	83 392	43 793
Changes in temporary differences	-14 100	-60 855
Changes in tax losses carried forward	48 276	34 919
Tax basis for the year	103 470	80 679
Payable tax	27 637	17 893
Effective tax rate	27,0 %	22,2 %

Notes 19 20 21

Note 19 - Other current liabilities

(AMOUNTS IN NOK 1000)

	2015	2014
Provisions for completed projects (ref Note 23)	86 553	144 629
Guarantee provisions (ref Note 23)	41 597	42 185
Other liability provisions (ref Note 23)	112 118	112 835
Other current liabilities	158 163	241 728
Total Other current liabilities	398 430	541 377

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)

	2015	2014
Premises and office expenses	81 386	61 517
Computer expenses	49 997	25 996
Marketing and travel expenses	48 813	40 893
Consultancy and external services	98 483	107 766
Other expenses	81 966	98 983
Total other operating expenses, continued operations	360 645	335 156

A correction of the figures for 2014 for other operating expenses has been made in order to compare to 2015 figures. The correction relates to cost for hired in personnel that has been reclassified from personnel cost to other operating expense and allocation of overhead cost also reclassified from personnel cost to other operating expenses. A total amount of MNOK 129 has been reclassified.

Note 21 - Related parties

(AMOUNTS IN NOK 1000)

TTS Group ASA is the ultimate parent based and listed in Norway.

There were no transactions between the Group and the shareholders during the financial years 2015 and 2014.

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 (ref Note 4) 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 31.12.2015, the Group has not recorded any impairment of receivables relating to the amounts owed by related parties (2014: 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.

TRANSACTIONS WITH JOINT VENTURES:	2015	2014
Sales to joint ventures	9 561	30 652
Purchases of goods and services from joint ventures	5 234	29 601
BALANCE SHEET ITEMS RELATED TO PURCHASE AND SALE OF GOODS AND SERVICES:	2015	2014
Receivables from joint ventures	49 067	28 472
Liabilities to joint ventures	8 781	2 198

BALANCE SHEET ITEMS RELATED TO PURCHASE

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)

	2015		2014
Market value:	Assets	Liabilities	Assets	Liabilities
Forward currency contracts - effective hedging contracts	16 075	196 748	38 340	237 319
Forward currency contracts - ineffective hedging contracts	-	2 393	-	3 253
Currency option contracts not designated as hedging contracts	3 734	-	-	1 880
Forward currency contracts - total	19 809	199 141	38 340	242 452

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

Matures:	Net market value
Q1 2016	-59 610
Q2 2016	-91 075
Q3 2016	-14 564
Q4 2016	-6 631
2017	-7 848
2018 and later	396
Total	-179 332

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

	Sold	Bought
NOK	285 487	220 403
USD	182 123	38 875
EUR	27 736	11 969
SEK	-	-
KRW	-	-

FORWARD CURRENCY CONTRACTS:

The nominal value of the outstanding forward currency contracts on 31.12.2015 is MNOK 2 835 compared to MNOK 2 592 in 2014.

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, ref. note 26.

TTS Group enters into hedging contracts that qualifies as fair value hedges. In addition to these, 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 2 393 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)

Note 24 - Financial items and foreign currency gains/losses

	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
	Completed projects 1)	Guarantees	Other	Total
1.1.2015	144 629	42 185	112 835	299 649
Provisions for the year	124 334	18 044	142 789	285 167
Utilized provisions during the year	-187 190	-20 463	-148 656	-356 309
Currency exchange deviation	4 780	1 831	5 150	11 760
31.12.15	86 553	41 597	112 118	240 267
Classification in the balance:			2015	2014
Presented as other current liabilities, see note 19			240 267	299 649

1.1.2015
Provisions for the year
Jtilized provisions during the year
Currency exchange deviation
31.12.15

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.

(AMOUNTS IN NOK 1000)

	2015	2014
Other interest income	6 250	11 756
Net other financial income and expenses	-5 770	-7 640
Effective interest on convertible bond (ref Note 15)	-15 910	-14 589
Interest on debt to financial institutions	-19 268	-18 804
Other interest expenses	-12 630	-8 911
Total financial items and foreign currency gains/losses continued operations	-47 329	-38 188

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.

Notes²³ 24

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 1.1.2014	46 702
Equity currency differences 2014:
Group company	34 620
Joint ventures	20 668
Net changes 2014	71 398
Total equity currency effects per 31.12.2014	101 991
Equity currency differences 2015:
Group companies	78 170
Joint ventures	24 813
Net changes 2015	102 983
Total equity currency effects per 31.12.2015	204 974

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 2.17. 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:

			2015
	Financial derivative contracts not desig nated 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	-	-	361 307	-	361 307
Other current receivables	-	-	73 236	-	73 236
Acquired, non-invoiced production	-	-	560 762	-	560 762
Derivatives 1)	3 734	16 075	-	-	19 809
Prepayment to suppliers	-	-	80 411	-	80 411
Cash and cash equivalents	-	-	413 210	-	413 210
Total financial assets	3 734	16 075	1 488 926	-	1 508 735

1) Fair value of financial assets:

	2014
	Financial derivative contracts not desig nated 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:

The Group's derivatives consist of forward currency contracts. Fair value of forward currency contracts is determined by utilizing mark-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.

Notes²⁶

CLASSIFICATION OF FINANCIAL LIABILITIES:

		2015
	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	-	-	-	-
Current financial liabilites
First year installment of non-current debt	-	-	96 425	96 425
Interest-bearing current liabilities	-	-	426 387	426 387
Prepayments from customers	-	-	633 979	633 979
Cost related to facilities under construction			40 643	40 643
Derivatives 1)	2 396	196 748	-	199 144
Accounts payable and other financial debt			722 782	722 782
Total financial liabilities	2 396	196 748	1 920 216	2 119 360
1) Fair value 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 Total financial liabilities	1 880	235 439	831 748 1 532 459	831 748 1 769 778

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	2015	Level 1	Level 2	Level 3	2014	Level 1	Level 2	Level 3
Shares available for sale	-	-	-	-	-	-	-	-
Foreign exchange contracts - hedging	16 075	-	16 075	-	38 340	-	38 340	-
Foreign exchange contracts - non-hedging	3 734	-	3 734	-	-	-	-	-
Liabilities measured at fair value	2015	Level 1	Level 2	Level 3	2014	Level 1	Level 2	Level 3
Foreign exchange contracts - hedging	196 748	-	196 748	-	235 439	-	235 439	-
Foreign exchange contracts - non-hedging	2 396	-	2 396	-	1 880	-	1 880	-

Note 27 - Business combinations

(AMOUNTS IN NOK 1000)

ACQUISITION IN 2015

TTS Hua Hai Ships Equipment Co.Ltd - Ability to control

China is an increasingly important market for TTS, both as a market to sell TTS products/solutions and as a market to purchase vital parts, steel production and assembly capacity. Due to this, TTS has wanted to get closer involved in the management of it's 50% owned companies, and to integrate the business of the 50% owned companies closer into the 100% owned parts of the TTS structure

From FY2014, TTS Group has applied IFRS10 in the accounting for the investments. The change in IFRS as per 31.12.2013 applied per 1.1.2014 focus on TTS "ability to control" as opposed to the "execution of control" applied in the former accounting rules.

Early in April 2015 an amendment related to the agreements governing the mandates of the functions controlling THH was agreed with the other 50% owner of THH. Based on the amendments TTS has re- evaluated whether it controls THH, and is exposed for variable return on its investment.

Based on the facts and circumstances, TTS Group has concluded that as of the date of the adjustment to the governing documents, TTS Group has the ability to control THH based on the criteria in IFRS10, because TTS controls significant parts of relevant activities. Relevant activities, of which evaluation gives support to TTS control includes but are not limited to; approval of annual budgets, and strategy, sale and marketing of vital contracts, and sourcing of critical components. Chairman of the Board is to be elected by TTS. Chairman of the Board has a casting vote related to approval of long term strategies, annual budget. The Chairman of the Board is furthermore responsible for approval of any major capex investments and approval of major customer contracts. THH has also agreed to adhere to and be supportive in developing the TTS Global Sourcing Strategy. Consequently, TTS will apply the full consolidation method described in IFRS 10 as the basis for the accounting for THH in the group accounts as from March 2015.

THH was founded by TTS subsidiary TTS Marine AB and the Chinese shipbuilding company CSSC in 1997, to build a basis for utilizing TTS technology and CSSC market access in the Chinese market. CSSC is a large Chinese state owned industrial group, which is a major player in the ship-building cluster in China. The Chinese shipbuilding market is increasingly important for TTS, and is today one of the most important shipbuilding markets in the world. Although being a major customer to THH, overall revenue generated from CSSC controlled companies is expected to be less than 30% of total volume.

Assets acquired and liabilities assumed	TTS Hua Hai - Book value 31.03.2015 (KCNY)	Fair value adjustments	TTS Hua Hai - fair value recognition 31.03.2015 (KCNY)	TTS Hua Hai - fair value recognition 31.03.2015 (KNOK)
				currency rate 1,2923
Assets
Deferred tax assets	9 609	-	9 609	12 418
Intangible assets (customer portfolio, order backlog)	-	72 638	72 638	93 870
Other intangible assets	521	-	521	673
Goodwill	-	98 717	98 717	127 572
Fixed assets	2 395	-	2 395	3 095
Investment in associated companies	51 883	-	51 883	67 048
Inventories	241 030	-	241 030	311 483
Accounts receivable	115 223	-	115 223	148 903
Other current assets	291	-	291	376
Cash and cash equivalents	170 328	-	170 326	220 112
Total identifiable assets	591 280	171 355	762 633	985 551
Equity
Controlling interest	155 166	1 515	156 680	202 478
Non controlling interest		156 680	156 680	202 478
Total equity	155 166	158 195	313 360	404 955

Assets acquired and liabilities assumed	TTS Hua Hai - Book value 31.03.2015 (KCNY)	Fair value adjustments	TTS Hua Hai - fair value recognition 31.03.2015 (KCNY)	TTS Hua Hai - fair value recognition 31.03.2015 (knock)
Liabilities
Non current liabilities	25 231	-	25 231	32 606
Deferred tax liabilities	-	18 160	18 160	23 468
Debt to credit institutions	-		-	-
Payables to suppliers	58 929		58 929	76 154
Taxes payable	8 679		8 679	11 216
Prepayment from customers	310 659		310 659	401 465
Other current liabilities	32 616	-5 000	27 615	35 687
Total identifiable liabilities	436 114	13 160	449 273	580 595
Total equity and liabilities	591 280	171 355	762 633	985 551
Goodwill arising on acquisition			98 717	127 572
Fair value consideration of equity			313 360	404 955

A fair value assessment of THH have been performed based on the DCF approach. THH assets presented in the balance at the acquisition date is considered at fair value.

Fair value of inventories, money 241 is determined based on the estimated selling value in the ordinary course of business, less estimated cost of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories. Customer portfolio and order backlog of approximate 72,6mCNY have been recognized as intangible assets as these assets meet the criteria for recognition as intangible assets under IAS 38. Allocated deferred tax liabilities is expected to be deductible for income tax purposes.

Fair value of order backlog was estimated to MCNY 30.4, including a tax amortization benefit of MCNY 6.4. The fair value estimate of order backlog evaluation is calculated applying the MEEM approach starting with the estimated EBITDA from existing order backlog, charging for fixed assets, net working capital and assembled workforce. A contributory asset charge was applied. Order backlog as at 31 March 2015 is mainly to be delivered during 2015 and 2016, reflecting a 10% cancellation RISK. Sales and direct costs per project were available, while indirect costs were allocated on a pro-rata basis adjusted up by one percent to arrive at EBITDA per project. Due to the assumed lower riskiness of the future earnings from the order backlog a discount rate of 13 % have been applied (overall applied WACC 13.8 %). Tax amortization benefit was added to the calculated net present value of cash flows from order backlog to reflect that the acquired order backlog is to be amortized according to Chinese tax law.

Fair value of customer relationships was estimated to MCNY 42.2, including a tax amortization benefit of MCNY 5.7. The fair value estimate of customer relations is calculated applying the MEEM approach starting with the estimated sales from the base enterprise valuation and adjusting for sales from order backlog, assumed new customers and annual churn. 100 % of projected sales relates to existing customer relationships of TTS Hua Hai. Sales, direct costs and indirect costs related to order backlog were excluded from the EBITDA margin applied for 2015-2017. After 2017, we applied the same EBITDA margin as in the base enterprise valuation. The estimated future EBITDA contribution from the current customer base was charged 0,86% for the utilization of contributory assets. A discount rate for customer relationships which is 1.2 percentage points higher than the WACC to reflect assumed higher riskiness of the future earnings from the customer relationships compared to the order backlog. Tax amortization benefit was added to the calculated net present value of cash flows from customer relationships to reflect that the acquired customer relationships are to be amortized according to Chinese tax law.

Enterprise value not allocated to identifiable assets and liabilities is estimated at mCNY 103,7, and is classified as goodwill. Goodwill is mainly related to "know how" and expected synergies related to strengthening TTS' market position in China. None of the goodwill recognized is expected to be deductible for income tax purposes. Information on P&L effects from the ability to control consideration is presented in note 10. Information on proforma effects from full year consolidation is presented in note 28.

Expenses related to change of control are marginal. TTS Group has mainly used internal resources for which the expenses have been

charged to profit and loss on a running base.

From the date of acquisition, THH has contributed MNOK 667 (mCNY 521) to revenue and MNOK 33,9 (mCNY 27,1) to the profit before tax from continued operations of the group.

If the combination had taken place as from 01.01.2015, revenue from continued operations would have been MNOK 862 (mCNY 682), and profit before tax MNOK 48,5 (mCNY 38,4). In addition income from JV would be reduced by MNOK 7,9. In deterring these amounts management have assumed that the fair value adjustments, determined provisionally, that arose at the acquisition data would have been the same if the acquisition had occurred on 1.1.2015.

Notes²⁷

Note 30 - Contingent events / Material disputes

Note 31 - Subsequent events

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.

EVENTS REGARDING TTS GROUP ARE AS FOLLOWS:

The 17th December 2015, the bondholders agreed to an extension of the subordinated debt until 18 April 2017. The TTS General Assembly approved the extension at January 5th 2016. Additional information included in Board of Directors report, and Note 15.

NEW CONTRACTS IN THE PERIOD 01.01.2016 - 19.04.2016 At 4th February 2016, TTS Group announced the securement of contracts related to offshore cranes, cargo access equipment and other ships equipment deliveries with an order value of approx. MNOK 160.

At 10th February 2016, TTS Group announced the securement of contracts related to heavylift cranes and winches with an order value of approx. MNOK 65.

Note 29 - Discontinuing operations

(AMOUNTS IN NOK 1000)

DIVESTMENTS IN 2015

The Group sold two companies in 2015. TTS Marine Holding AB and TTS Port & Logistics Holding AB. Amount concidered immaterial.

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 2015.

In march 2015 TTS Group finalized the dicussions with Cameron related to final release of hold back amount from Cameron related to the sale of the Energy-division in 2012. The release has no material effects on 2015 figures.

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.

Note 28 - Non-controlling interest (NCI)

(AMOUNTS IN NOK 1000)

The following table summarizes the information relating to each of TTS Groups' subsidiaries that has material non controlling interest, before intra group eliminations.

	TTS Hua Hai Ships Equipment (THH)	TTS SCM Marine and Offshore machinery Co .Ltd (TSG)
NCI percentage	50 %	50 %
Non current assets	308 218	676
Current assets	386 211	6 071
Cash and cash equivalents	267 174	68 546
Non current liabilities	-22 428	-
Short term liabilities to financial institutions	-	-
Current liabilities	-538 445	-35 906
Net assets	400 730	39 387
Net assets attributable to NCI	200 365	19 694
Revenue	667 282	6
Profit after tax	20 949	-3 927
Other comprehensive income (OCI)	31 933	1 372
Total comprehensive income	52 882	-2 555
Profit allocated to NCI	16 191	-1 964
OCI allocated to NCI	24 679	686

TSG, established in Q4/2014 is owned on 50/50 share basis between TTS Group and SCM Group, a subsidiary of CSSC. Based on the shareholder agreement TTS Group has the "ability to control" TSG and consolidates the company on 100% basis. TSG have initiated its operational start in 2015. The company is reported as part of the BUMPG segment in TTS Group.

THH, established in 1997 is owned on 50/50 share basis between TTS Group and CSSC group. Based on an amendment to the shareholder agreement as from Q2/2015, TTS Group has the "ability to control" THH and consolidates the company structure on 100% basis. The company is reported as part of the BUCBT segment in TTS Group. Further information on the basis for consolidation is provided in note 27.

Other acquisitions

During 2015 TTS have acquired the assets from Rolls Royce Syncrolift R. into TTS Syncrolift AS, a TTS company allocated to BUSYS, and located in Norway. Total purchase consideration is calculated to MNOK 10,7 MNOK of which MNOK 10,1 has been allocated to other intangible assets. GW allocation is 0.

Furthermore, TTS has acquired the assets from Ergon Srl. into TTS Marine Srl, a TTS company allocated to BUSER, and located in Italy. Total purchase consideration is kEUR 280, of which kEUR 201 has been allocated to goodwill. Expenses related to acquisition are marginal and have been charged to profit and loss on a running base.

ACQUISITION IN 2014

THERE HAVE BEEN NO ACQUISITIONS IN 2014

In September 2014 TTS Group established a 100% subsidiary company TTS Brazil Servicos Ltda to strengthen the service concept in the Brazil region. In October 2014 TTS Group established 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 established a 50/50 joint venture 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.

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

(AMOUNTS IN NOK 1000)

	Notes	NGAAP 2015	NGAAP 2014
OPERATING INCOME
Intra-Group operating income		11 709	-
Other operating income		-	-
Group service fee from TTS subsidiaries	15	37 436	34 272
Total operating income		49 145	34 272
OPERATING COSTS
Personnel costs etc.	1, 2	34 057	23 346
Depreciation on tangible fixed assets	3	616	625
Other operating costs	1, 14	51 148	25 150
Total operating costs		85 821	49 121
Operating profit		-36 676	-14 849
FINANCIAL INCOME AND EXPENSES
Income from investments in subsidiaries	16	258 759	-
Income from investments in joint ventures	16	-	-
Interest received from group companies	16	15 637	11 623
Other interest income	16	1 463	1 570
Other financial income	16	59 461	44 150
Interest expenses to group companies	16	-3 007	-3 677
Other interest expenses	16	-29 574	-26 691
Other financial expenses	16	-199 114	-85 903
Net financial items		103 626	-58 928
Profit before tax		66 950	-73 777
Tax	11	143	33 035
Profit for the year		66 807	-106 812
Provision dividend	10	-	-
Transferred to other equity		-66 807	106 812

TTS GROUP ASA BALANCE SHEET 1 JANUARY - 31 DECEMBER

ASSETS

(AMOUNTS IN NOK 1000)
-----------------------	--	--

	Notes	NGAAP 2015	NGAAP 2014
Non-current assets
INTANGIBLE ASSETS
Deferred tax assets	11	-	-
Total intangible assets		-	-
FIXED ASSETS
Machinery and vehicles	3	109	170
Furniture, office and computer equipment	3	3 741	4 295
Total fixed assets		3 850	4 466
FINANCIAL FIXED ASSETS Shares in subsidiaries	5, 8	626 687	726 462
Investments in joint ventures	5	4 122	4 122
Loans to companies in the Group	6, 8	61 166	59 730
Investments in shares and other financial instruments	4	-	-
Total financial fixed assets		691 975	790 314
Total non-current assets		695 825	794 780
Current assets
CURRENT RECEIVABLES
Trade debtors		-	-
Intra-group accounts receivable	6, 8, 15	3 538	6 636
Other receivables to Joint Ventures	6, 15	25 055	-497
Other receivables	6	12 058	7 986
Other intra-group receivables	6, 8, 12, 15	50 597	-
Total current receivables		91 248	14 125
Bank deposits, cash in hand etc.	12	398	4 012
Total current assets		91 646	18 137
Total assets		787 471	812 917

EQUITY AND LIABILITIES (AMOUNTS IN NOK 1000)

Equity PAID UP EQUITY

Liabilities

CURRENT LIABILITIES

	Notes	NGAAP 2015	NGAAP 2014
Equity
PAID UP EQUITY
Share capital	10	9 527	9 527
Treasury shares	10	-12	-12
Premium account		149 378	149 378
Total paid up equity		158 893	158 893
RETAINED EARNINGS
Other equity		377 776	310 054
Total retained earnings		377 776	310 054
Total equity		536 668	468 947
Liabilities
OTHER NON-CURRENT LIABILITIES
Pension liabilities	2	-	-
Convertible subordinated bond loan	7, 9	-	88 143
Total other non-current liabilities		-	88 143
CURRENT LIABILITIES
Convertible subordinated bond loan	7, 9	96 425	-
Liabilities to financial institutions	7, 8	100 000	103 000
Bank overdraft	8, 12	-	115 670
Trade payables		1 023	3 215
Intra-group trade payables	15	22 842	9 327
Social security and employees` tax deduction		1 389	1 828
Payable coprporate tax	11	-	-
Provision for dividends	10	-	-
Other intra-group liabilities	12	1 607	1 446
Other current liabilities	13	27 516	21 341
Total current liabilities		250 803	255 827
Total liabilities		250 803	343 970
Total equity and liabilities		787 471	812 917

TTS GROUP ASA BALANCE SHEET 1 JANUARY - 31 DECEMBER

Bergen, 19 April 2016 Board of Directors of TTS Group ASA

Trym Skeie Chairman of the board

Bjarne Skeie Director

Toril Eidesvik

Director

Ole Henrik Askvik Director

Bj¨örn Andersson CEO & President

Gisle Rike Director

Marianne Sandal Director

Anita Kråkenes Director

(AMOUNTS IN NOK 1000)

			Share
	Share capital	Treasury shares	premium	reserve Other equity	Total
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
Equity as of 1.1.2015	9 527	-12	149 377	310 054	468 947
Option schemes				915	915
Provision for dividends				-	-
Net profit for the year				66 807	66 807
Equity as of 31.12.2015	9 527	-12	149 377	377 776	536 668

TTS GROUP ASA EQUITY STATEMENT 1 JANUARY - 31 DECEMBER

TTS GROUP ASA CASH FLOW STATEMENT 1 JANUARY - 31 DECEMBER

(AMOUNTS IN NOK 1000)

Cash flow from operating activities

Cashflow from investments

	2015	2014
Cash flow from operating activities
Net profit before tax	66 950	-73 777
Income from investments in subsidiaries	-258 759	-
Paid tax	-143	-
Depreciation	616	625
Option cost without cash effect	915	1 207
Writedowns on shares and receivables	144 602	83 516
Net interest costs	15 481	18 745
Difference between pension charges and payments to/from pension scheme	-	-10 869
Other receivables and other short term liabilities	-17 877	-3 764
Net cash flow from operating activities	-48 216	15 683
Cashflow from investments
Disbursements on acquisitions of shares and other financial instruments	-	23 300
Acquisition of subsidiaries	-	-
Additional equity into subsidiaries	-45 000	-
Proceedes from sale shares in subsidiaries	181	39 562
Dividend from subsidiaries	258 759	-
Disbursements on acquisitions of tangible fixed assets	-	-
Proceedes from and repayment intra-group loans	-1 436	-102 882
Net cashflow from investments	212 503	-39 790
Cashflow from financing
Repayment of convertible subordinated bond loan	-	-
Proceedes from liabilities to financial institutions	-	-
Repayment of liabilities to financial institutions	-3 000	-3 000
Net change overdraft facility	-157 703	41 800
Disbursements of dividends	-	-
Repayment of capital to shareholders	-	-
Sale treasury shares	-	154
Interest costs	-7 199	-11 639
Paid in equity capital	-	-
Net cashflow from financing	-167 902	27 315
Effects of exchange-rate fluctuations on cash and cash equivalents
Net change in cash and cash equivalents	-3 615	3 208
Cash and cash equivalents (opening balance)	4 012	803
Cash and cash equivalents (closing balance)	398	4 012
This consists of:
Bank and cash pool deposits	398	4 012
Available unused overdraft facility	82 000	176 800

Cashflow from financing

Effects of exchange-rate fluctuations on cash and cash equivalents

This consists of:

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 price.

OPERATING INCOME

Operating income includes income on delivered products and services granted over the year. The income is recognized once the delivery of services has taken place and most of the risk and return has been transferred.

CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS

Current assets and short term liabilities include items which fall due within one year, and items related to the operating cycle. Other balance sheet items are classified as fixed assets / long term liabilities.

Current assets are valued at the lower of cost and fair value. Short term liabilities are posted in the balance sheet at the nominal value at the time of initial 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

The companies in the Group have different pension plans. The pension plans are in general financed by payments to insurance companies or pension funds. As of 2015 TTS Group has only defined contribution 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.

Prior to 2015 companies within TTS also set up defined benefit plans. 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). 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.

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.

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.

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.

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 25 % 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	9.6190
SEK	1.0475
USD	8.8090
CNY	1.3565

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.

TTS GROUP ASA Notes¹

Note 1 - Personnel costs, number of employees, remunerations, loans to employees etc

(AMOUNTS IN NOK 1000) PAYROLL EXPENSES:

	2015	2014
Salaries	29 597	25 946
Employer's social security contribution	2 650	3 955
Pension costs	1 286	-6 834
Other benefits	524	279
Total payroll expenses	34 057	23 346
Number of employees at the end of the year	15	15

BOARD REMUNERATIONS 1)

		2015	2014
Trym Skeie	Board member since 06.2008. Re-elected for the period 06.2014 - 06.2016	400	525
Bjarne Skeie	Board member since 06.2008. Re-elected for the period 06.2014 - 06.2016	230	200
Gisle Rike 2)	Board member since 06.2015. Elected for the period 06.2015 - 06.2017	-	-
Toril Eidesvik	Board member since 06.2013. Re-elected for the period 06.2015 - 06.2017	320	280
Marianne Sandal	Board member since 06.2014. Elected for the period 06.2014 - 06.2016	280	-
Anne Breive	Board member until 06.2014	-	240
Jan Magne Galåen 2)	Board member until 11.2014	140	240
Anita Kråkenes	Board member since 07.2014, employee representative	105	-
Ole Henrik Askvik	Board member since 09.2015, employee representative	10	100
Mona L. Tellnes Halvorsen	Board member until 07.2014, employee representative.	10	100
Ingve Hjelmeseter	Board member until 07.2014, employee representative.	-	-
Jan Magnar Grøtte	Board member until 09.2015, employee representative.	105	-
Total		1 600	1 685

1) The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next. For the financial year 2015, the reported remuneration is based on the remuneration paid in 2015 based on the amounts determined by the Board at the Annual General Meeting for 2015. The same applies to the nomination committee. 2) Gisle Rike and 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 was comprised of the following members: Bjørn Olafsson (Chairman), Petter Sandtorv and Anders Nome Lepsø. In October 2015, Bjørn Olafsson took up position as Deputy Managing Director in TTS Group. At the same time he then resigned from the Nomination Committee.

In January 2016 the nomination committee was complemented by Cate Henriksen, COO of Miles AS. Peter Sandtorv is now chairman. The nomination committee remuneration for 2015 was TNOK 60 for the chairman and TNOK 35 for each of the members, a total of TNOK 130. Peter Sandtorv and Bjørn Olafsson are both self-employed and receives remuneration by invoicing TTS.

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.
• Base salaries is intended to be competitive and motivating, but in line with general market terms.
• of "change of control" in TTS Group ASA.

• The bonus for the President & CEO is up to NOK 200 000 based on target results, plus up 100% of annual base salary in the event

• Bonus for other executives is determined on the basis of target results and on individual targets. Bonus targets are revised annually. Bonus is up to 50 % of base salary for other executives. Bonus payment reported in 2015 is based on the evaluation of the relevant performance criteria for the fiscal year ending 31.12.2014. Bonus payments are based on individual employment contracts.
• A share option program has been active for the Group management of TTS since 1998, 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 16 Share capital and shareholder information for further information regarding option program.

The employment contract with the President & CEO matures at 28 November 2016, with no further severance pay. The contract with the Deputy Managing Director matures at 28 May 2016, with an option to extend for one month, and with a one month extended pay in the event of change of control. For the other members in the Senior Executive Group, the period of notice is 6 months and a severance pay period of up to 12 months.

As of 30th december 2014 TTS Group ASA and its Norwegian subsidiaries changed its pension scheme from defined pesion benefit plan into a contribution based pension plan. The change effected all employees hired in the Norwegian companies. For employees hired in other countries, the prevailing schemes in the respective companies apply.

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)

2015
Name	Position	Base salary	Other	benefits Bonus paid	Share options	Pension cost
Björn Andersson *)	President & CEO	2 961	8	-	120	-
Bjørn Olafsson (from October 2015) **) Deputy Managing	Director	-	-	-	-	-
Henrik Solberg-Johansen	CFO	1 719	13	100	25	174

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

*) not members of the TTS Group pension plan, nor any other pension arrangement paid by TTS.

**) Bjørn Olafsson is self-employed, and receives remuneration by invocing TTS Group. Invoiced amount in 2015 is NOK 510 000.

AUDITORS' FEES (EXCL. VAT)

	2015	2014
Statutory audit	1 836	1 351
Other attestation services	-	-
Other assistance including tax advice	155	94
Total	1 991	1 445

Notes²

Note 2 - 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.

NET PENSION COSTS FROM DEFINED CONTRIBUTION PLAN.

	2015	2014
Service cost	1 286	-
+ Payroll tax of net pension cost	181	-
= Net periodic pension cost	1 468	-

NET PENSION COSTS FROM DEFINED BENEFIT PLAN ARE DETERMINED AS FOLLOWS:

	2015	2014
	Insured	Insured
Service cost	-	3 124
+ Interest cost	-	100
+ Administration cost	-	93
+ Payroll tax of net pension cost	-	357
+ Impact of curtailment/settlement incl. payroll tax	-	-10 407
= Net periodic pension cost	-	-6 735
- of which recognized as payroll cost	-	-6 834
- of which recognized as finance cost	-	99

CHANGE IN RECOGNIZED FUNDS:

• Net liability as of 31.12 prior year Effect of transition to IAS 19R

	2015	2014
	Insured	Insured
Net liability as of 31.12 prior year
Effect of transition to IAS 19R
Net liability as of 01.01	-	-9 876
- Cost recognized during the year (see above)	-	6 834
+/- Pension payments and payment of pension premiums	-	2 618
+/- Remeasurements recognized in Equity	-	993
= Net asset/(liability) as of 31.12.	-	569

EFFECTS RECORDED IN OTHER COMPREHENSIVE INCOME:

	2015	2014
Remeasurements loss (gain) - change in discount rate	-	9 912
Remeasurements loss (gain) - change in other financial assumptions	-	-5 983
Remeasurements loss (gain) - change in mortality table	-	-
Remeasurements loss (gain) - change in other demographic assumptions	-	-
Remeasurements loss (gain) - experience DBO	-	-9 388
Remeasurements loss (gain) - change in other financial assumptions assets	-	441
Remeasurements loss (gain) - experience Assets	-	5 753
Investment management cost	-	257
Total remeasurement losses (gains) recognized in Equity	-	993

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

	Expenses
	2015	2014
Discount rate		4,10 %
Return on pension funds		4,10 %
Annual wage growth		3,75 %
Annual adjustment of National pension index (G)		3,50 %
Annual adjustment of pensions in payment		3,50 %
Voluntary retirement		8,0-0,0%
Payroll tax		14,10 %
Mortality table 1)		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.

Notes³ 4

Note 3 - Tangible fixed assets

(AMOUNTS IN NOK 1000)

2014 Fiscal year
As of 31.12.2014

		Machinery and vehicles Furniture and office equip.	Total
Book value as of 31.12.2013	571	4 089	4 660
2014 Fiscal year
Book value as of 1.1.	571	4 089	4 660
Additions	-	712	712
Disposals	-282	-	-282
Depreciation for the year	-119	-506	-625
Book value as of 31.12.2014	170	4 295	4 465
As of 31.12.2014
Acquisition cost 31.12.	500	5 732	6 232
Accumulated depreciation as of 31.12.	-329	-1 437	-1 766
Book value as of 31.12.2014	170	4 295	4 466
2015 Fiscal year
Book value as of 1.1.	170	4 295	4 466
Additions	-	-	-
Disposals	-	-	-
Depreciation for the year	-61	-554	-616
Book value as of 31.12.2015	109	3 741	3 850
As of 31.12.2015
Acquisition cost 31.12.	500	5 732	6 232
Accumulated depreciation as of 31.12.	-390	-1 991	-2 381
Book value as of 31.12.2015	109	3 741	3 850
Depreciation schedule	Linear	Linear
Depreciation period	5 years	3-10 years

2015 Fiscal year

Book value as of 1.1.
Additions
Disposals
Depreciation for the year
Book value as of 31.12.2015

As of 31.12.2015

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 in 2015 is MNOK 10,9. A part of the offices are subleased to different subsidiaries. Net received from subsidiaries is MNOK 9,5. 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
			2015	2014
Fixed assets:
Sigma Drilling AS 1)	16.1 %	28 673	-	-
Total investments in other companies		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 in 2014, after which TTS Group has impaired the remaining value of shares in Sigma Drilling by 5,3 MNOK. TTS is familiar with ongoing negotiations between Sigma Drilling and STX on final settlement related to the cancellation of the contract, which may give basis for a positive outcome for the owners of Sigma Drilling. At the end of Q4/2015 discussions are still ongoing. The outcome for TTS is not clear.

Note 5 - Subsidiaries and equity accounted investments

(AMOUNTS IN NOK 1000)

INVESTMENTS IN SUBSIDIARIES VALUED AT COST:

1) TTS Marine Holding AB and TTS Port & Logistics Holding AB have been sold in 2015. Total sales value of TNOK 181.

2) TTS Handling Systems AS has changed names to TTS Syncrolift AS.

3) As per 01.01.2015 TTS Ships Equipment AS merged into TTS Offshore Handling Equipment AS. TTS Offshore Handling Equipment AS changed name to TTS

Offshore Solutions AS.

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

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

Subsidiary 1)	Registered office	Acquisition date	Ownership	Voting share	Currency	Share capital	Number of shares	Equity 31.12.2015	Net Result 2015		Cost Net book value 2015 6) Net book value 2014 1)
TTS Syncrolift AS 2)	Drøbak, Norway	1994	100 %	100 %	NOK	950 000	95 000	27 856	8 940	33 296	33 296	33 296
Norlift AS	Bergen, Norway	1994	100 %	100 %	NOK	500 000	500	1 761	433	6 262	6 262	6 262
TTS Marine AB	Gothenburg, Sweden	2002	100 %	100 %	SEK	2 000 000	2 000	199 385	44 794	295 816	295 816	295 816
TTS Marine Shanghai Co Ltd 6)	Shanghai, China	2002	100 %	100 %	CNY	8 185 303	3 500	-53 874	-38 302	4 705	-	4 705
Hydralift Marine AS	Kristiansand, Norway	2003	100 %	100 %	NOK	100 000	1 000	-52	-	115	115	115
TTS Cranes Norway AS	Bergen, Norway	2007	100 %	100 %	NOK	500 000	1 000	1 659	1 047	516	516	516
TTS Marine AS 6)	Bergen, Norway	2009	100 %	100 %	NOK	3 000 000	1 000	89 483	-12 750	201 020	153 020	201 020
TTS Singapore Pte. Ltd.	Singapore	2009	100 %	100 %	SGD	1 141 813	1 141 813	11 535	3 820	5 064	5 064	5 064
TTS Greece Ltd.	Pireus, Greece	2009	100 %	100 %	EUR	200 000	2 000	3 595	1 415	1 812	1 812	1 812
TTS Offshore Solutions AS 3, 4, 6)	Bergen, Norway	1996	100 %	100 %	NOK	2 112 500	100	-41 644	-107 402	280 040	-	46 897
TTS NMF GmbH	Hamburg, Germany	2012	100 %	100 %	EUR	3 000 000	3 000	-138 720	20 063	130 340	130 340	130 340
TTS Polen SP.Z.O.O.	Gdansk, Polen	2013	100 %	100 %	PLZ	250 000	250	8 986	3 338	436	436	436
TTS Brazil Services 5)	Rio de Janeiro, Brazil	2014	100 %	100 %	BRL	400 000	400	-806	-1 782	12	12	12
Total								109 164	-76 387	959 434	626 687	726 463

6) In 2015 book value of shares in TTS Offshore Solutions AS have been impaired by TNOK 91.897, shares in TTS Marine Shanghai Co.Ltd have been impaired by

TNOK 4.705, and shares in TTS Marine AS have been impaired by TNOK 48.000, in total TNOK 144.602.

EQUITY ACCOUNTED INVESTMENTS, VALUED AT COST:

Notes⁵

Joint venture	Registered office	Acquisition date	Ownership	Voting share	Currency	Share capital	Number of shares	Equity 31.12.2015	Net Result 2015	Cost		Net book value 2015 Net book value 2014
TTS BoHai Machinery Co., Ltd	Dalian, China	2005	50 %	50 %	RMB	22 000 000	2 200	29 389	2 671	8 683	4 122	4 122
TTS Bohai Trading (Dalian) Co., Ltd	Dalian, China	2014	50 %	50 %	RMB	200 000	200	-	-	-	-	-

Note 6 - Trade and other receivables

Note 7 - Non-current liabilities

(AMOUNTS IN NOK 1000)

	2015	2014
Customer receivables	-	-
Customer receivables within group	3 538	6 636
Customer receivables to Joint Ventures	25 055	-497
Other receivables within group	8 563	-
VAT	471	660
Pension fund assets	-	-
Other receivables, including prepayments	11 587	7 326
Intragroup deposit on Cash pool arrangement	42 033	-
Short-term receivables	91 248	14 125
Receivables maturing at over one year:
Loans to companies in same group	61 166	59 730
Total	61 166	59 730

There are no credit risk concentrations within customer receivables. Steps have been taken to avoid delays in settling internal receivables.

(AMOUNTS IN NOK 1000)

	Repayment profile and maturity
	Nominal value 31.12.2015	2016	2017			2018 2019 2020 and later
Convertible Subordinated Bond Loan 2011/2017 1)	95 345		- 95 345	-	-	-
Non-current liabilities		100 000 100 000	-	-	-	-
Total non-current debt incl. first year instalment			195 345 100 000 95 345	-	-	-
- first year instalment of non-current debt		-100 000 -100 000	-	-	-	-
Total non-current debt	95 345		- 95 345	-	-	-
Expected interest payments		- 19 617	3 432	-	-	-

SPECIFICATION OF LOANS:

			Nominal		Installment	Nominal value	Nominal value
	Loan type Currency		interest rate Maturity		terms	2015	2014
Norsk Tillitsmann ASA 1)	Convertible bond	NOK	12,00 %	2017	balloon	95 345	95 345
Innovasjon Norge	Mortgage loan	NOK	5,75 %		2015 bi-annually	-	3 000
DNB	Mortgage loan		NOK Nibor + 3,75%	2016	balloon	100 000	100 000
Total 1)						195 345	198 345

1) Additional description of the Convertible Subordinated bond is available in Note 9. Book value of the debt as per 31.12.2015 is TNOK 96 425.

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 loans, draw down facilities and guarantee limits with Nordea and DNB. The Group have met the following financial covenant requirements from Nordea and DNB end of Q4-2015.

The Group's equity ratio shall at least be equal to 27,5 %. In addition a multiple of other standard default clauses related to the bond loan inclusive cross default clauses are apparent. Nordea and DNB has accepted that the nominal value of the Subordinated Convertible Bond loan is included as part of the equity calculation.

Notes⁷ 8

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:

	2015		2014
	Limit	Drawn	Limit	Drawn
Group cash pool overdraft facility	300 000	-218 000	300 000	-123 200
Drawdown facility, operations	100 000	100 000	100 000	100 000
Guarantee limit for Group	650 000	530 800	640 000	620 200

As per 31.12.2015 all Norwegian companies (ref Note 5), as well as TTS Marine 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 18.12.2015 TTS Group ASA entered into an agreement with Nordea and DNB on new financing agreements for credit and guarantee facilities, which represents an extension of the agreements the company had at the beginning of the prior fiscal year. The extended agreements expire at 31.12.2016, and are presented as short term debt.

The credit facility in the agreement is MNOK 1.125, and consists of;

• MNOK 175, term loan facility (DNB)
• MNOK 300, multi-currency overdraft facility (Nordea)

• MNOK 650, guarantee facility (Nordea MNOK 490, DNB MNOK 160)

The agreement includes covenant requirements related to equity ratio, EBITDA level and minimun liquidity reserve. The covnenants are

described in note 7.

The new agreements include unchanged 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:

	2015	2014
Shares in TTS Marine AB	295 816	295 816
Account/Group receivables	333 023	272 552
Inventory/Work in progress, including non-invoiced production	76 861	84 990
Property	-	-
Assets pledged as collateral	705 700	653 358

Including the added back nominal value of the Subordinated Convertible Bond, the relevant covenant equity measure basis as per 31.12.2015 is MNOK 950, which represents an equity ratio of 31.4 %.

The Group's covenant related to rolling 12 months NIBD/EBITDA is max 3,0 calculated on 12 month rolling EBITDA. As per 31.12.2015

the NIBD/EBITDA ratio was 0,7.

TTS Group meets the financial covenant requirement as per 31.12.2015. On the 18th of December 2015 TTS Group ASA entered into a new agreement with Nordea and DNB, which represents an extension of the agreements the company had at the beginning of the prior fiscal year. As of Q1-2016 the financial covenants requirements are; • Equity ratio min 25,0 % (inclusive nominal value of remaining bond-debt).

• Minimum liquidity reserve of MNOK 50 in fully owned subsidiaries. • EBITDA :

(MNOK)	Q1-16	Q2-16	Q3-16	Q4-16
EBITDA covenant accumulated	≥ 15	≥ 35	≥ 60	≥ 100

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 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/ 2015.

There have been no Debt conversions or changes in the conversion price in 2014 or 2015. The conversion price at yearend 2015 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. 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. At yearend 2015 the call option is out of money.

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.

The 17th December 2015, the bondholders agreed to a renewal of the Subordinated Convertible Bond Debt, which represent an extension of the repayment of the debt facility until 18 April 2017. An extraordinary General Assembly in TTS approved the renewal at January 5th 2016. The new agreement represents a 15-month extension of the maturity date from 18th January 2016 to 18th April 2017, and a change of fixed coupon rate from 8% to 12%p.a. A new drag along conversion clause enables both the Bond holder, and TTS the right to require a conversion of all outstanding bonds to shares in the case of an acquisition event at a price above or equal to the conversion price. A new drag along call option clause, in the case of an acquisition event at a price below the conversion price, enables TTS the right to redeem all outstanding bonds at a rate of 105% of par value.

Terms and conditions in the renewed agreement have been evaluated according to IAS 39. Changes in overall terms represent a change of less than 5% change to the overall agreement, and will be handled as a prolonging of the prior bond debt agreement.

	2015	2014
Subordinated convertible bond loan - nominal value at drawdown	200 000	200 000
Converted debt to shares in 2011	-7 500	-7 500
Converted debt to shares in 2012 1)	-97 155	-97 155
Nominal debt value as per 31.12	95 345	95 345

Notes⁹ 1O

Note 10 - Share capital and shareholder information

(AMOUNTS IN NOK 1000)

Date	Number of shares	Nominal value	Share capital
31.12.15	86 605 660	0.11	9 526 623
31.12.14	86 605 660	0.11	9 526 623

Changes to share capital 2015: There were no changes to the nominal share capital in 2015.

Changes to share capital 2014: There were no changes to the nominal share capital in 2014.

DIVIDENDS PAID AND PROPOSED:

Declared and paid during the year:

(NOK 1000)	2015	2014
Declared and paid during the year:
Dividends on ordinary shares	-	-

Dividend for shareholders proposed for 2015, to be paid in 2016: NOK 0 per share. Total dividend amount proposed: NOK 0.

	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 31.12.2015:

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 %
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	3 727 364	3,52 %
Total	19 184 105	18,13 %

1) Bonds held by principal shareholder in TTS.

	2015	2014
Draw down cost	-14 262	-14 262
Derived equity portion from inherent put option at drawdown	-36 981	-36 981
Equity derived from converted subordinated convertible bond during 2011	1 387	1 387
Equity derived from converted subordinated convertible bond during 2012	17 964	17 964
Effective interest cost less paid interest - 2011	9 977	9 977
Effective interest cost less paid interest - 2012	1 900	1 900
Effective interest cost less paid interest - 2013	5 851	5 851
Effective interest cost less paid interest - 2014	6 961	6 961
Effective interest cost less paid interest - 2015	8 282	-
Effective debt value	96 425	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, 2014 and 2015.

TREASURY SHARES

	Number of shares	Share capital
Treasury shares as of 01.01.2014	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
Sale of treasury shares 2015	-	-
Treasury shares as of 31.12.2015	112 882	-12 417

On the 8. June 2015, 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 675 000 shares. As per 19.4.2016 the authoity have been used to awarding 600.000 share options to senior employees The authoritiy is valid to 30 June 2017.

On the 8. June 2015 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 2016. As per 19.4.2016 the authority is unused.

PRINCIPAL SHAREHOLDERS OF TTS GROUP ASA AS OF 31.12.2015:

Shareholder	Number of shares	Ownership	Voting share 2)
SKEIE TECHNOLOGY AS 1)	22 655 763	26,16 %	26,19 %
RASMUSSENGRUPPEN AS	11 512 506	13,29 %	13,31 %
SKEIE CAPITAL INVESTMENT AS 1)	4 203 361	4,85 %	4,86 %
BARRUS CAPITAL AS	3 465 005	4,00 %	4,01 %
SKAGEN VEKST	3 035 946	3,51 %	3,51 %
PIMA AS	2 316 025	2,67 %	2,68 %
CIPI LAMP UCITS SWEDBANK SMB	2 232 886	2,58 %	2,58 %
HOLBERG NORGE	2 061 575	2,38 %	2,38 %
MERTOUN CAPITAL AS	1 769 598	2,04 %	2,05 %
HOLBERG NORDEN	1 700 000	1,96 %	1,97 %
ITLUTION AS	1 475 261	1,70 %	1,71 %
PHAROS SICAV SIF	1 180 905	1,36 %	1,37 %
ODIN ENERGI	1 071 732	1,24 %	1,24 %
SKANDINAVISKA ENSKILDA BANKEN AB NOMINEE	1 071 732	1,24 %	1,24 %
AVANT AS	1 000 000	1,15 %	1,16 %
AVANZA BANK AB	911 030	1,05 %	1,05 %
SKANDINAVISKA ENSKILDA BANKEN AB NOMINEE	806 737	0,93 %	0,93 %
EUROCLEAR BANK S.A./N.V. ('BA')	747 809	0,86 %	0,86 %
VPF NORDEA AVKASTNING	727 557	0,84 %	0,84 %
GLASTAD INVEST AS	668 000	0,77 %	0,77 %
Total, 20 largest shareholders	64 613 428	74,61 %	74,70 %
own shares	112 082	0,13 %	0,00 %
Total other	21 880 150	25,26 %	25,30 %
Total	86 605 660	100,00 %	100,00 %

1) Boardmember of TTS, Mr. Bjarne Skeie controls an ownership of 27 159 124 shares through different companies. Total voting share 31,40 %.

2) Voiting portion are calculated after eliminating shares held by TTS Group ASA

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

		Shares			Share options			Conversion rights from subor dinated convertible loan	-
Board	19.04.16	31.12.15					31.12.14 19.04.16 31.12.15 31.12.14 19.04.16 31.12.15 31.12.14
Trym Skeie 1)	573 140		573 140 2 733 875	-	-		- 804 829 804 829 804 829
Bjarne Skeie 2)		27 159 124 27 159 124 14 386 273		-	-	-	1 207 243	1 207 243	1 207 243
Toril Eidesvik 3)	50 000	50 000	50 000	-	-	-	-	-	-
Ole Henrik Askvik	3 268	3 268	3 268	-	-	-	-	-	-
Anita Kråkenes	2 000	2 000	2 000	-	-	-	-	-	-
Group Executives
Björn Andersson	75 000	75 000		75 000 150 000 150 000 145 000			-	-	-
Henrik Solberg-Johansen	50 000	50 000	50 000	62 500	62 500	12 500	-	-	-
Edgar Bethmann	20 000	20 000	20 000	62 500	62 500	12 500	-	-	-

Notes¹⁰

2) Bjarne Skeie holds 20 % of the shares and 100 % of the voting shares in Skeie Technology AS and Skeie Consultants AS. Skeie Technology AS

1) Trym Skeie holds 100 % of the shares in Tamafe Holding AS and Skeie Alpha Invest AS. owns shares in Skeie Capital Investment AS. yearend 2015 and yearend 2014. 4) Toril Eidesvik own 100 % of the shares and voting shares in Zahlahuset II AS.

3) Per 19.04.2016 shares held and controlled by companies or members of the Skeie familiy is 27.732.264. Number of shares are unchanged from

On the 8 June 2015, 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 until the the next Annual General Meeting or latest 30.06.2016. No shares have been issued on the basis of this authorisation as of 19 April 2016.

On the 8 June 2015, 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 until the the next Annual General Meeting or latest 30.06.2016

On the 8 June 2015, the Annual General Meeting adopted a resolution to give the Board authority to buy a maximum number of 6 000 000 shares in TTS Group ASA within a price range from NOK 1 to NOK 25 for deletion. The authority is valid until the the next Annual General Meeting or latest 30.06.2016. No shares have been bought on the basis of this authorisation as of 19 April 2016.

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. As per 19.04.2016 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.

On the 8 June 2015, the Annual General Meeting adopted a resolution to give the Board authority to issue a maximum of 675 000 shares against cash redemption for the benefit of the company's executive management. This authorisation is valid until 30.6.2017. As per 19.04.2016 a total of 600 000 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 2016, 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 2016 and the first quarter of 2017, in addition to options not previously exercised. Option granted to people leaving TTS Group are terminated.

ALLOCATION OF OPTIONS:

During 2014 no share options have been exercised from Senior Management. During 2015 no share options have been exercised from Senior Management.

In accordance with authorities granted by the Annual General Meeting in 2014 and 2015, 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 2014 and 2015 was 48% and 43% respecitvely. Risk-free interest rate applied for options issued in 2014 and 2015 was 1,53% and 1,16% resepectively. For 2015, option premium of MNOK 0,9 (2014 MNOK 1.2) has been charged as expenses classified as salary in the profit and loss statement. Payroll tax is charged when share options are realized.

Position	Company	Number of options exercisable until 05.06.2016	Exercise price	08.06.2017	Exercise price	Total
CEO &	TTS Group ASA	75 000	6,15	75 000		4,75 150 000
Solberg-Johansen CFO	TTS Group ASA	12 500	6,15	50 000	4,75	62 500
		12 500	6,15	50 000	4,75	62 500
		12 500	6,15	50 000	4,75	62 500
	Solutions AS	0		50 000	4,75	50 000
Other executives various	various	325 000	6,15	325 000		4,75 650 000
		437 500				1 037 500
	President	EVP BURCN TTS Marine AB Edgar Bethmann EVP BUCBT TTS Marine GmbH EVP BUOFF TTS Offshore Total number of options to executives				Number of options exercisable until 600 000

Subordinated convertible loan:

On 10.1.2011 the Extraordinary General Meeting approved the issuance of a convertible bond loan of MNOK 200. The loan has an 8 % coupon interest rate and reaches maturity 18.1.2016. On specific terms the Group has a call option that is exercisable from 8.2.2014. Bondholders have continuous conversion rights with an exercise price of NOK 4.97 per share. The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011. In the Extraordinary General Meeting on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision at the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share. At the Extraordinary General Meeting on 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The 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. No changes applied in 2014 or 2015. The conversion price at yearend 2015 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%. There have been no changes to the outsatnding debt amount, or conversion prices in 2014 or 2015.

The 17. December 2015 TTS Group reached an agreed with it's bondholders to renew the subordinated convertible bond loan with a nominal value of MNOK 95,345. Formal renewal were approved in a extraordinary general meeting at 5th January 2016. Based on the renewed agreement the maturity date is set to 18.4.2017. Annual interest rate is set to 12%. Convertion strike price is unchanged from yearend 2015 at 4,97. Please find additional information relating to the subordinated convertible loan in Note 15.

THE FOLLOWING COMPANIES ARE INCLUDED IN TTS GROUP CONSOLIDATED FINANCIAL STATEMENTS:

Company	Owner	Ownership		interest Control Currency	Share captial Number	of Shares
TTS Syncrolift AS 1)	TTS Group ASA	100 %	100 %	NOK	950 000	95 000
Norlift AS	TTS Group ASA	100 %	100 %	NOK	500 000	500
TTS Marine AB	TTS Group ASA	100 %	100 %	SEK	2 000 000	2 000
TTS Marine Shanghai Co Ltd	TTS Group ASA	100 %	100 %	CNY	8 185 303	3 500
Hydralift Marine AS	TTS Group ASA	100 %	100 %	NOK	100 000	1 000
TTS Cranes Norway AS	TTS Group ASA	100 %	100 %	NOK	500 000	1 000
TTS Marine AS	TTS Group ASA	100 %	100 %	NOK	3 000 000	1 000
TTS Singapore Pte. Ltd.	TTS Group ASA	100 %	100 %	SGD	1 141 813	1 141 813
TTS Greece Ltd.	TTS Group ASA	100 %	100 %	EUR	200 000	2 000
TTS Offshore Solution AS 2)	TTS Group ASA	100 %	100 %	NOK	2 112 500	100
TTS NMF GmbH	TTS Group ASA	100 %	100 %	EUR	3 000 000	3 000
TTS Polen SP.Z.O.O.	TTS Group ASA	100 %	100 %	PLZ	250 000	250
TTS Marine Inc.	TTS Marine AB	100 %	100 %	USD	190 000	1 900
TTS Marine GmbH	TTS Marine AB	100 %	100 %	EUR	255 646	5 000
TTS Hua Hai AB	TTS Marine AB	100 %	100 %	SEK	120 000	1 000
TTS Liftec Oy	TTS Marine AB	100 %	100 %	EUR	76 500	1 020
TTS Marine S.r.l	TTS Marine AB	100 %	100 %	EUR	10 400	1 000
TTS Vietnam Co. Ltd	TTS Marine AB	100 %	100 %	VND	10 000	1 000
TTS Brasil Services Ltda	TTS Marine AS	100 %	100 %	BRL	400 000	400
TTS Marine Ostrava s.r.o	TTS Marine GmbH	100 %	100 %	CZK	9 000 000	1 000
TTS Marine GmbH Korea Co. Ltd TTS Marine GmbH		100 %	100 %	KRW	1 513 390 000	1 000
TTS Marine Equipment Ltd.	TTS Marine GmbH	100 %	100 %	CNY	15 728 611	1 000
TTS SCM Marine and Offshore Machinery Co. Ltd 3)	TTS NMF GmbH	50 %	100 %	CNY	32 000 000
TTS Hua Hai Ships Equipment Co Ltd 4)	TTS Marine AB	50 %	100 %	CNY	11 000 000
Shanghai TTS Hua Hai International Trade Co., Ltd 4)	TTS Hua Hai Ships Eq Co Ltd.	50 %	100 %	CNY	1 000 000
Jiangsu TTS Hua Hai Ships Equipment Co. Ltd 4)	TTS Marine AB	50 %	100 %	CNY	15 988 240

1) TTS Handeling Systems AS has changed names to TTS Syncrolift AS.

2) TTS Ships Equipment AS has been merged into TTS Offshore Handeling Equipment AS in 2015. TTS Offshore Handeling Equipments AS has changed names to TTS Offshore Solutions AS.

Notes¹¹

Note 11 - Tax

(AMOUNTS IN NOK 1000)

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

TAX REGIME):

		1.1.2014 Changes	2014 31.12.2014 Changes		2015 31.12.2015
Deferred tax
Fixed assets	452	99	551	99	650
Pension fund / liabilities	-2 667	2 667	-	-	-
Credit deduction carried forward	-5 961	-4 869	-10 830	802	-10 028
Allowance carried forward	-1 215	1 215	-		-
Convertible debt	4 262	-4 262	-		-
Tax loss carry forward	-54 635	-8 940	-63 575	7 846	-55 729
Net deferred tax (assets = - / liabilities = +)		-59 763 -14 090	-73 853	8 747	-65 106
Unrecognized deferred tax assets related tax losses	21 669	41 906	63 575	-7 846	55 729
Unrecognized deferred tax assets related to other temporary differences	5 058	5 220	10 278	-901	9 377
Net deferred tax reported (assets = - / liabilities = +)		-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 subsid iaries, 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:

	2015	2014
Result before tax	66 950	-73 777
Permanent differences	52	7 377
Change to temporary profit/loss differences	-99	-13 225
Reversed share of profits/losses in subsidiaries and joint ventures	-119 866	43 808
Application of loss to be carried forward	-	-
Tax basis for year	-52 963	-36 009

BREAKDOWN OF TAX COSTS:

	2015	2014
Tax payable	-	-
Withholding tax from activities outside Norway	143	-
Not allocated deferred tax related to tax losses	13 241	9 722
Other changes to deferred tax	-13 241	23 313
Tax cost	143	33 035

EXPLANATION AS TO WHY THIS YEAR'S TAX COSTS ARE NOT 25% / 27 % OF PROFIT BEFORE TAX:

	2015	2014
25% / (27 %) of profit before tax	16 738	-19 920
Permanent differences	-29 954	1 992
Allocated profit from subsidiaries and joint ventures	-	-
Allocated reduction of deferred tax asset from group	13 216	50 963
Withholding taxes	143	-
Estimated tax cost	143	33 035

3) Based on the governing documents of the company, TTS Group has the ability to control the company. Based on this, the company is considered as a subsidiary and fully consolidated into the TTS Group accounts. 4) The governing documents of the companies were changed in April 2015, after which TTS Group has the ability to control the companies. Based on this, the company is considered as a subsidiary and fully consolidated into the TTS Group accounts as from 2nd quarter 2015.

Note 12 - Cash and cash equivalents

Note 15 - Related parties

Note 13 - Other current liabilities

Note 14 - Other operating costs

(AMOUNTS IN NOK 1000)

	2015	2014
Bank deposits, cash etc. as per 31.12.1)	398	4 013
Deposits (+)/withdrawals (-) from cash pool account system as at 31.12.	42 033	-115 670

1) Restricted bank deposits per 31.12.2015 were TNOK 208. Of these TNOK 208 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. TTS Group has been granted a group cash pool overdraft facility of MNOK 300. Net drawn at the Group cash pool system as per 31.12.2015 was MNOK 218,0, and MNOK 123,2 as per 31.12.2014. Net deposits from TTS Group ASA was MNOK 42,0. Amount classified as intercompany asset in 2015 is 42,0, and intercompany liability of MNOK 115,7 in 2014. Drawdown facilities, security and covenants are described in Note 7 and 8.

(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.

	2015	2014
Sales:
Subsidiaries	37 436	34 272
Joint ventures	11 709	-
Cost of sales:
Subsidiaries	-	-
Joint ventures	-	-

(AMOUNTS IN NOK 1000)

	2015	2014
Provision for holiday pay	1 384	1 567
Other provisions for costs	26 132	19 774
Total other current liabilities	27 516	21 341

(AMOUNTS IN NOK 1000)

	2015	2014
Building lease, cost of premises	2 305	1 621
IT costs	1 242	791
Marketing, travel	9 292	7 327
External services	36 419	14 923
Other	1 890	488
Total other operating costs	51 148	25 150

Notes 12 13 14 15

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

	2015	2014
Current receivables
Subsidiaries accounts receivables	3 538	6 636
Subsidiaries other short term receivables	8 563
Deposit in cash pool	42 034
Joint ventures	25 055	-497
Current liabilities
Subsidiaries	22 842	9 327
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.

TTS GROUP ASA - INTRA GROUP GUARANTEES AND WARRANTY

	Expire 1H/2016	Expire 2H/2016	Expire 1H/2017	Expire 2H/2017	Expire > 2017	Total
Advance payment guarantees	40 406	7 012	5 223	2 613		55 254
Warranty	1 687					1 687
Total	42 093	7 012	5 223	2 613	-	56 941

At yearend 2015 TTS Group ASA have provided a general continued operation guarantees to TTS Offshore Solutions AS, TTS NMF Gmbh, and TTS Liftec Oy. Additional information on company figures are available in note 5.

TTS Group are continuously focusing on it's subsidiaries ability to deliver products according to contract terms and relevant industry standards. Over the years TTS Group subsidiaries have settled disputes within the project, and TTS Group ASA has never received a claim related to provided guarantees or warranty. At yearend 2015 no consideration for contingent liabilities is accrued.

Notes 15 16 17

Note 16 - Financial items and exchange rate gains/losses

(AMOUNTS IN NOK 1000)

	2015	2014
Dividend from subsidiaries	258 759	-
Contribution from subsidiaries	-	8 161
Gain sale subsidiaries	-	39 562
Interest income from companies in same group	15 637	3 653
Other financial income	7 172	1 570
Interest paid to companies in same group	-3 007	-3 677
Interest paid to financial institutions	-29 557	-26 672
Write down shares in subsidiaries	-144 602	-78 143
Other financial costs	-5 530	-7 781
Net exchange rate gains (losses)	4 753	4 397
Total	103 626	-58 928

EXCHANGE RATE GAINS/LOSSES:

Currency differences booked to income and costs in the profit and loss account are as follows:

	2015	2014
Currency exchange income	53 752	46 726
Currency exchange costs	-48 999	-42 329
Total	4 753	4 397

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

Note 17 - Subsequent events

Events regarding the TTS Group are listed in the Group note 31.

KPMG AS, a Norwegian limited liability company and member firm of the KPMG network of independent	Oslo	Gurnstad	Molde
	Alta	Hamar	Narvil
	Arendal	Haugesund	Sandr
	Bergen	Knarvik	Staya
member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.	Bode	Kristiansand	Stord
1999년 10월 20일 - 1999년 10월 10월 10월 10월 10월 10월 10월 10월 10월 10월	Elyerum	Larvik	Strau
Statsautoriserte revisorer - medlemmer av Den norske Revisorforening	Finnsnes	Mo i Rana	Tram

STATEMENT ON COMPLIANCE

Today, the Board of Directors and the President &CEO 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 2015

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 2015 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 2015 have 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

Bergen, 19 April 2016 Board of Directors of TTS Group ASA

Trym Skeie

Chairman of the board

Bjarne Skeie Director

Toril Eidesvik Director

Ole Henrik Askvik

Director

Bj¨örn Andersson CEO & President

Gisle Rike

Director

Marianne Sandal Director

Anita Kråkenes

Director

TTS history through 50 years

1966

TTS Technology is established and headquartered in Bergen. TTS was originally an abbrevi ation for Total Transportation Systems.

1974

First Asian contract entered into with China Shipbuilding Corp. TTS already had inter national 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 impor tant 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 tech nology 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 compa it has 135 employees.

ny's turnover is MNOK 362 and

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 venture interest in TTS Hua Hai Ships Equipment in Shanghai

entails a 50 percent joint in partnership with CSSC.

Sold TTS Aktro, profit MNOK 22.5. Temporary exit from offshore cranes market.

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. 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. Profit MNOK 420.

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.

2015

Agreement with Rolls-Royce to acquire Syncrolift TM assets, broadening the offering for shiplifts and transfer system solutions. Services offering expanded trough purchasing the assets of Italian company Ergon s.r.l. New Services office in Antwerpen. Amendments to governing agreements in THH reflected via full consolidation of THH into TTS Group.

TTS Group ASA

PO Box 3577 Fyllingsdalen N-5845 Bergen Norway

Photos: Øystein Klakegg Shutterstock

Design: Knowit Experience