Nekkar — Interim / Quarterly Report 2013

Feb 14, 2014

HIGHLIGHTS FOR THE 4 TH QUARTER 2013.

Main highlights for the quarter was as follows;

• EPS for the quarter was NOK -0,75.
• Turnover in the quarter was MNOK 638.
• EBITDA in the quarter was MNOK -20. The loss reflects restructuring, inventory write downs and project losses in the Offshore & Heavy Lift division and in the deck equipment part of the Marine Division.
• Order intake in the fourth quarter was MNOK 775, an increase of 22% from fourth quarter last year. The main order intake in the quarter relates to cranes, car carriers and passenger gangways.
• The Cargo Access part of the Marine Division has experienced a particularly strong market in 2013, whereas the expected improvement of the Heavy Lift market did not materialize in 2013.

	Q4		Full Year
MNOK	2013	2012	2013	2012
Turnover	638	810	2 693	2 370
EBITDA	-20,0	32,1	-40,3	157,3
EBITDA margin (%)	-3,1	4,0	-1,5	6,6
Orderintake	775	635	2 913	2 276
Order backlog*	2 971	2 783	2 971	2 7830
EPS (NOK) Total	-0,75	-0,05	-1,32	5,47
EPS (NOK) Continued	-0,75	-0,05	-1,59	0,44

KEY FIGURES

(*) Order backlog includes 50% of Joint venture backlog.

Turnover in the quarter was 21% lower than fourth quarter last year. The main reasons for the reduction are reduced turnover in Offshore & Heavy Lift (particularly NMF) and lower turnover in the Marine division due to change in the Joint Venture structure.

For the year 2013, the turnover increased with approximately 14% compared to 2012. The main reasons are turnover growth in the Offshore & Heavy Lift division (MNOK +296), as well as in the Port & Logistics division (MNOK +129) and the Services division (MNOK +64). The increased turnover in these divisions is partly offset by reduced reported turnover from the Marine division due to changes in the joint venture structure (MNOK -215).

The EBITDA for the 4 th quarter was MNOK -20. Several factors have been contributing to the negative earnings, including additional costs related to delivery of offshore projects combined with low margin on ongoing offshore projects. Increased losses in deck equipment on yacht projects and closing of the production unit in Czech Republic, as well as the effects of low activity

and restructuring in heavy lift in Germany and write down of inventory and other current assets contributed further to the negative earnings.

For the year 2013, TTS Group reports an EBITDA of MNOK -40 compared to MNOK 157 for the year 2012.

Offshore and heavy lift division reports an EBITDA of MNOK -106 which relates to cost overruns on offshore projects, low activity and restructuring in Germany and write down of inventories.

Marine division reports an EBITDA of MNOK 47, which has been reduced from MNOK 134 in 2012, mainly due to reduced earnings from the joint ventures and losses related to the deck equipment business.

The other two divisions report improved earnings compared to 2012. Port & Logistics division reported an EBITDA of MNOK 0,6 versus a loss of MNOK 11,5 in 2012. Services division reported an EBITDA of MNOK 43 versus MNOK 24 in 2012.

Order intake in 4 th quarter 2013 was MNOK 775 compared to MNOK 635 in the 4 th quarter 2012. Main orders were heavy lift cranes, passenger gangways and car carriers. Order intake in the Joint Ventures is not included in these figures, and has been good in the 4th quarter.

Total order intake in 2013 increased by approximately 28% compared to 2012. Order intake related to car carriers, offshore cranes and ship lift projects represents the majority of the increase, although there has been a general improvement in most segments.

Order backlog at the end of 2013 was MNOK 2971, an improvement of MNOK 188 from last year. In addition to the increased order intake in the consolidated group companies, the order intake in the Joint Ventures has been improving.

The board of directors has decided to postpone the decision regarding dividends to the approval of the 2013 annual accounts in April.

TOTAL ASSETS AND NET INTERSTBEARING DEBT

Total assets at the end of 2013 was MNOK 2 178, a reduction of MNOK 172 in 2013. The change is mainly due to reduced working capital, which has shown significant improvement related to marine projects and offshore cranes projects. The working capital is still somewhat high mainly due to postponement of several heavy lift projects.

Net interest bearing debt has increased with MNOK 189 in 2013, mainly due to payment of dividend and reduced financing from suppliers in 2013. During 4 th quarter, net interest bearing debt was reduced by MNOK 88, mainly due to improvement in working capital.

At the end of 3rd quarter 2013, TTS was in breach with one of the loan covenants on 12 month rolling EBITDA. In the 4th quarter, TTS obtained waivers from the banks for the 12 month rolling EBITDA covenant from the period Q3 2013 to Q2 2014.

There were no conversions in the subordinated convertible bond in the fourth quarter.

ACCOUNTING PRINCIPLES

The company has prepared the interim financial report in accordance with IAS 34. The company has adopted the changes in IAS 19 where gains and losses from actuarial liabilities have been reflected in the balance sheet. Please see note 5 for more information describing the changes.

SEGMENTS

TTS reports its operations in 4 divisions.

Marine division

	Q4		Full Year
MNOK	2013	2012	2013	2012
Turnover	303	320	1 030	1 197
EBITDA	9,1	29,1	47,3	133,8
EBITDA margin (%)	3,0	9,1	4,6	11,2
Order backlog*	1 692	1 487	1 692	1 487
(*) Order backlog includes 50% of Joint venture backlog.

Adjusted for changes in the Joint Venture structure, the turnover in the Marine division increased with almost 5 %. The increase is mainly related to equipment to car carriers. Deck equipment has incurred substantial losses related to yacht projects and restructuring in 2013. The earnings from the joint ventures increased in the 4th quarter compared to the 3rd quarter. For the 2nd half of 2013, the earnings from Joint Ventures were lower than the 1st half of 2013 and 2012.

Offshore & Heavy Lift division

	Q4		Full Year
MNOK	2013	2012	2013	2012
Turnover	151	358	982	686
EBITDA	-46,2	9,2	-106,4	26,6
EBITDA margin (%)	-30,5	2,6	-10,8	3,9
Order backlog	846	1 083	846	1 083

The Offshore & Heavy Lift division had reduced turnover in the 4th quarter, mainly due to low activity and restructuring within heavy lift. Activity within offshore cranes remains high. Low margins and significant cost overruns on projects combined with provisions and write down of assets has led to the loss in Q4 2013.

The order backlog is reduced, mainly due to lower activity in the market for heavy lift cranes.

Port & Logistics division

	Q4		Full Year
MNOK	2013	2012	2013	2012
Turnover	71	40	234	105
EBITDA	7,3	4,5	0,6	-11,5
EBITDA margin (%)	10,4	11,3	0,2	-11,0
Order backlog	433	213	433	213

The Port & Logistics division has a significant increase in activity compared to last year in all segments. The earnings have improved in the 4th quarter, mainly due to higher activity on ship lift projects. The order back log has increased significantly compared to the end of last year. Order intake in Q4 includes passenger gangway project.

Services division

	Q4		Full Year
MNOK	2013	2012	2013	2012
Turnover	113	92	446	382
EBITDA	17,6	-4,2	43,0	24,3
EBITDA margin (%)	15,6	-4,6	9,7	6,4

The Services division has higher turnover in 2013 compared to last year mainly within the offshore and heavy lift segment. Several markets are still affected by the low charters in segments of the shipping industry, which contributes to a lower sale of spare parts.

OUTLOOK

The market for TTS Group has improved over the last year. The contracting of most types of vessels has increased this year and the contracting levels are expected to continue in 2014 with some variation.

The offshore vessel market has been somewhat quieter, whereas the market for heavy lift has started to improve. Due to the lead times within this market segment, TTS expects the positive effects from the heavy lift market to be reflected through improved earnings from 2015, increasing into 2016.

The market for car carriers has been strong in 2013, and TTS expects this market segment to continue strong in 2014. The Bulk sector contracting has reached to levels not seen since 2008 and we also see increased activity within the heavy lift vessels segment. Both sectors favor China.

The market for service has been influenced by relative low sales of spare parts. It is not expected that this market will recover in the near term.

TTS Group ASA Q4 2013

Konsolidert oppstilling av totalresultat / Consolidated statement of comprehensive income

NOK 1 000	Urevidert/ Unaudited	Urevidert/ Unaudited	Urevidert/ Unaudited	Urevidert/ Unaudited*
RESULTAT / PROFIT AND LOSS ACCOUNT	YTD 31.12.2013	YTD 31.12.2012	4th quarter 2013	th quarter 2012 4
Driftsinntekter/ Income from projects	2 693 167	2 346 478	638 564	795 682
Andre driftsinntekter/ Other operating income	-	23 428	-	14 064
Sum driftsinntekter/ Total operating income	2 693 167	2 369 906	638 564	809 745
Varekostnad/ Raw materials and consumables used	1 781 093	1 537 893	366 772	573 631
Andre driftskostnader/ Other operating costs	964 321	734 597	293 739	211 856
Resultat fra JV ( - er inntekt)/ Result from JV ( - is income)	-11 964	-59 916	-1 953	-7 891
Driftsresultat før avskrivninger/ EBITDA	-40 284	157 332	-19 993	32 149
Avskrivninger/ Depreciation	33 814	24 387	9 967	7 220
Andre avskrivninger/nedskrivninger/ Other depreciation/write-downs	-	22 801	-	0
Driftsresultat/ Operating profit	-74 098	110 144	-29 960	24 930
Finansinntekter/ Financial income	31 296	36 975	17 471	6 793
Finanskostnader/ Financial expense	68 079	102 647	39 659	18 295
Netto finans/ Net finance	-36 783	-65 672	-22 188	-11 502
Resultat før skattekostnader/ Profit/loss before tax	-110 881	44 472	-52 147	13 428
Skattekostnad/ Tax	26 482	7 939	12 540	16 226
Periodens resultat videreført virksomhet/ Net result continued business	-137 363	36 533	-64 687	-2 798
Resultat fra avhendet virksomhet / Net result divested business	22 945	418 162	-	0
Netto resultat/ Net result	-114 417	454 695	-64 687	-2 798
Oppstilling av totalresultatet/ Net result for the year
Periodens resultat/ Net result for the period	-114 417	454 695	-64 687	-2 798
Estimatavvik pensjoner / Actuarial gain/loss on defined pension benefit plan	-10 220	-16 948	-10 220	-
Omregningsdifferanser/ Translation differences	71 398	-21 294	14 035	2 719
Totalresultat/ Comprehensive income	-53 240	416 452	-60 873	-79
Fortjeneste pr. aksje (NOK) videreført virksomhet / Earnings per share (NOK) continued business	-1,59	0,44	-0,75	-0,05
Utvannet fortjeneste pr. aksje (NOK) videreført virksomhet / Diluted earnings per share (NOK) continued business	-1,59	0,36	-0,75	-0,04
Fortjeneste pr. aksje (NOK) avhendet virksomhet / Earnings per share (NOK) divested business	0,27	5,03	-	-
Utvannet fortjeneste pr. aksje (NOK) avhendet virksomhet / Diluted earnings per share (NOK) divested business	0,27	4,09	-	-
Fortjeneste pr. aksje (NOK)/ Earnings per share (NOK)	-1,32	5,47	-0,75	-0,05
Utvannet fortjeneste pr. aksje (NOK) / Diluted earnings per share (NOK)	-1,32	4,45	-0,75	-0,04
Average number of shares used as calculation basis for diluted EPS (000)	86 486	102 262	86 541	102 262

*Året 2012 og 4. kvartal 2012 er omregnet for sammenligningsformål grunnet endringer i IAS 19, se note 5/ Full year 2012 and 4rth quarter 2012 is restated to reflect changes in IAS 19, see Note 5

	Urevidert/ Unaudited	Urevidert/ Unaudited*
Konsolidert oppstilling av finansiell posisjon / Condensed consolidated statement of
financial position	31.12.2013	31.12.2012
Immaterielle eiendeler/ Intangible assets	673 560	619 698
Varige driftsmidler/ Tangible assets	136 049	115 034
Finansielle anleggsmidler/ Financial assets	104 002	134 988
Sum anleggsmidler/ Total non-current assets	913 610	869 721
Varer/ Inventories	200 801	187 111
Kortsiktige fordringer/ Total receivables	879 680	1 036 952
Eiendeler tilgjengelig for salg/ Assets available for sale	28 686	28 895
Bankinnskudd/kontanter/ Bank deposits/cash	155 571	227 666
Sum omløpsmidler/ Total current assets	1 264 738	1 480 624
Sum eiendeler/ Total assets	2 178 348	2 350 345
Aksjekapital / Share capital	9 526	9 526
Annen egenkapital / Other equity	647 143	785 049
Sum egenkapital/ Total equity	656 670	794 575
Avsetning for forpliktelser/ Provisions	106 017	94 328
Langsiktig rentebærende gjeld/ Long term interest bearing debt	184 182	81 330
Langsiktig gjeld/ Long term liabilities	290 199	175 658
Kortsiktig rentebærende gjeld/ Current interest bearing debt	49 257	29 587
Kortsiktig gjeld/ Current liabilities	1 182 222	1 350 525
Sum gjeld/ Total liabilities	1 521 679	1 555 770
Sum egenkapital og gjeld/ Total equity and liabilities	2 178 348	2 350 345

*Finansiell stilling per 31.12.2012 er omregnet for å reflektere endringer i IAS 19, se note 5/ Financial Position per 31.12.2012 is restated to reflect changes in IAS 19, see Note 5

	Urevidert/ Unaudited	Urevidert/ Unaudited*
Kontantstrømoppstilling / Condenced consolidated statement of cash flows	YTD 31.12.2013	YTD 31.12.2012
Driftsresultat før avskrivninger/ EBITDA	-40 284	157 332
Endring i netto omløpsmidler/ Change in net current assets	-97 638	-209 979
Kontantstrøm fra operasjonelle aktiviteter/ Cash from operations	-137 922	-52 647
Kjøp av varige driftsmidler/ Aquisition of non-current assets	-49 534	-26 515
Netto salgssum avhendet virksomhet/ Proceeds discontinued business	22 945	1 217 440
Andre investeringsaktiviteter/ Other investing activities	40 855	-126 279
Kontantstrøm fra investeringsaktiviteter/ Cash from investments	14 267	1 064 647
Opptak og nedbetaling av lån/ New loans and repayment	115 007	-852 071
Innbetaling av egenkapital/ Paid-in equity	500	95 466
Utbetaling til aksjonærer/ Payments to shareholders	-86 461	-498 422
Netto betalte renter/ Net interest paid	-32 209	-40 685
Kontantstrøm fra finansieringsaktiviteter/ Cash from financing	-3 164	-1 295 712
Endring i kontantbeholdning/ Change in cash	-126 819	-283 712
Kontantbeholdning IB/ Cash position OB	227 666	511 378
Effekt av valutakursendring bank/ Effect of exchange rate changes on cash	54 724	-
Kontantbeholdning UB/ Cash position CB	155 570	227 666
Kontanter avhendet virksomhet/ Net cash discontinued operations	-	-
Kontantbeholdning videreført virksomhet/ Net cash continued business	155 570	227 666

*Kontantstrøm per 31.12.2012 er omregnet for å reflektere endringer i IAS 19, se note 5/ Cash flows per 31.12.2012 is restated to reflect changes in IAS 19, see Note 5.

Konsolidert oppstilling av endringer i egenkapital / Consolidated statement of changes in equity

EGENKAPITAL / EQUITY	Paid in capital	Own shares		Other reserves Retained earnings	Total
Egenkapital/ Equity as of 31.12.2012	9 526	-32	149 378	697 323	856 195
Endring innregning estimatavvik på ytelsespensjoner / Change in recognition in actuarial gain/loss on defined benefit pension plans	-	-	-	-61 620	-61 620
Egenkapital/ Equity as of 1.1.2013	9 526	-32	149 378	635 703	794 575
Totalresultat/ Comprehensive income	-	-	-	-53 240	-53 240
Salg egne aksjer / Sale treasury shares	-	17	-	483	500
Opsjonsplaner/Options cost	-	-	-	1 296	1 296
Effekt av endret skattesats/tax effect
Utbetaling utbytte/ Dividend distributed	-	-	-	-86 461	-86 461
Egenkapital UB/ Equity CB	9 526	-16	149 378	497 781	656 670

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENT 4 TH QUARTER 2013

Note 1 General information

Reporting entity

TTS Group ASA is registered and domiciled in Norway, and the head office is located in Bergen.

The consolidated financial statement covers TTS Group ASA with its subsidiaries and part of joint ventures.

The Board of Directors approved the consolidated financial statement for the year ended 31st of December 2012 on 17th of April 2013. The annual report 2012 for the TTS Group and for TTS Group ASA, including the consolidated financial statements for the TTS Group, the financial statements for TTS Group ASA and the auditor opinion from KPMG, are available at our website www.ttsgroup.com.

Basis of preparation

TTS Group's financial reports are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.

The unaudited consolidated financial statements for 4 th quarter 2013 have been prepared in accordance with IAS 34 for Interim Financial Statements. The interim accounts do not include all the information required for a full financial statement and should therefore be read in connection with the consolidated financial statements of 2012.

With effect from 1st of January 2013 actuarial gains and losses on defined benefit pension plans is recognized in the balance sheet as net pension asset or net pension liability through other comprehensive income or –loss. The consolidated statement of comprehensive income, the consolidated statement of financial position and the consolidated statement of cash flows for 4 th quarter 2012 and full year 2012 are restated to reflect the changes in principle. See Note 5 for details.

The accounting principles applied, with exception mentioned above, are the same as those described in the consolidated financial statements of 2012.

This condensed consolidated 4 th quarter results of 2013 were approved by the Board on 20th of February 2014.

Judgments, estimates and assumptions

The preparation of the interim accounts requires the use of valuations, estimates and assumptions that affect the application of accounting principles and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these consolidated interim financial statements, the key assessments made by the management in applying the Group's accounting principles and the key sources of estimation uncertainty were the same as

those that applied to the consolidated financial statements for the financial year ended 31st of December 2012.

Note 2 Segment information

Full Year
	Marine		Offshore & Heavy Lift		Port		Services		Corporate / Other		Total
	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012
Turnover	1 030	1 197	982	686	234	105	446	382	0	0	2 693	2 370
EBITDA	47,3	133,8	-106,4	26,6	0,6	-11,5	43,0	24,3	-24,7	-15,9	-40,3	157,3
Q4
	Marine		Offshore & Heavy Lift		Port		Services		Corporate / Other		Total
	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012
Turnover	303	320	151	358	71	40	113	92	0	0	638	810
EBITDA	9,1	29,1	-46,2	9,2	7,3	4,5	17,6	-4,2	-7,8	-6,5	-20,0	32,1

TTS Group have with effect from 1st quarter 2013 changed the segment reporting. The reporting, for management purposes is changed to the following segments:

• Marine
• Offshore and Heavy Lift
• Service
• Port & Logistics

Marine division delivers a wide range of products to the maritime industry. Main products include solutions for RORO, PCTC, and Cruise in addition to cranes, winches, hatch covers and side doors. The joint venture companies in TTS are part of the Marine division.

Offshore and Heavy Lift division, which consists of all types of cranes primarily focused on heavy lift and offshore cranes, including active heave compensated cranes.

Port & Logistics division remains unchanged.

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

Comparatives restated to reflect above change.

Note 3 Share capital and equity

As per 31st of December 2013 TTS Group ASA has issued 86 605 660 shares, each with a face value of NOK 0.11 giving a share capital of total NOK 9 526 622.60. As per 31 st of December 2013 the TTS Group ASA holds 144 400 own shares, compared to 294 400 shares at the end of 2012.

There have been no equity transactions in the 1st , 3 rd or 4th quarter of 2013.

During the 2nd quarter 2013 the senior management exercised 150 000 share options with an exercise price of NOK 3.33 per share.

During the 2nd quarter 2013 the senior management was awarded 360 000 new share options. Exercise price per share is NOK 6.42, corresponding to the closing price for the share on 10th of June 2013, adjusted for dividend, NOK 1.00 per share.

As per 4 th quarter 2013 the senior management had 720 000 outstanding share options.

The ordinary general meeting on 10th of June 2013 decided to pay a dividend of NOK 1.00 per share. The share was traded ex. dividend on 11th of June 2013 and the dividend, total NOK 86 461 260, where distributed to the shareholders on the 21st of June 2013. Due to dividend payment the conversion rate for the convertible bond loan is changed, see Note 11 for further details.

Note 4 Earnings per share

Earnings per share (EPS) are based upon on the weighted average numbers of shares outstanding during the period. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments.

		31.12.2013 31.12.2012
Net income available to shareholders, continued business	-137 363	36 533
Effect of dilution	-	-
Diluted net income available to shareholders, continued business	-137 363	36 533
Net income available to shareholders, divested business	22 945	418 162
Effect of dilution	-	-
Diluted net income available to shareholders, divested business	22 945	418 162
Net income available to shareholders Effect of dilution	-114 418 -	454 695 -

The components of the numerator for the basic and diluted EPS are as follows:

The components of the denominator for the calculation of basic and diluted EPS are as follows:

Diluted net income available to shareholders -114 418 454 695

		31.12.2013 31.12.2012 Q4 2013		Q4 2012
Weighted average number of shares outstanding	86 406	83 107	86 461	83 107
Effect of dilution	80	19 155	80	19 155
Diluted numbers of shares	86 486	102 262	86 541	102 262

Note 5 Change in accounting principle

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

	Reported full	Adjust	Restated full
Consolidated statement of comprehensive income	year 2012	ments	year 2012
EBITDA	153 059	4 274	157 332
Net result continued business	32 259	4 274	36 533
Net result divested business	418 162	-	418 162
Net result	450 421	4 274	454 695
	Reported full	Adjust	Restated full
Condensed consolidated statement of financial position	year 2012	ments	year 2012
Total equity	856 195	-61 620	794 575
Provisions	32 708	61 620	94 328
Total equity and liabilities	2 350 345	-	2 350 345

Note 6 Related parties

Note 22 and in accounting principles section 2.2 in the consolidated financial statement of 2012 describe the principles related to elimination of transactions between group subsidiaries. Eliminated transactions have no significance for the financial position and profit for the period.

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.

Balance sheet items to/from Joint Ventures	31.12.2013	31.12.2012
Current receivables	22 258	28 901
Current liabilities	-4 493	-214
Net receivables (+) / liabilities (-) to/from Joint Ventures	17 765	28 687

Note 7 Tax

TTS Group is taxable in more than one jurisdiction based on its operations. A loss in one jurisdiction may not be offset against taxable income in another jurisdiction. Thus, the Group may pay tax within some jurisdictions even though it might have an overall loss or have tax losses exceeding taxable profit at the consolidated level. Recognized tax in the income statement for the 4 th quarter 2013 is relating to taxes in foreign tax jurisdictions.

Deferred tax

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial purpose and such amounts recognized for tax purposes. The net deferred tax consists of the following:

	31.12.2013	31.12.2012
Gross deferred tax asset1)	57 748	67 825
Gross deferred tax liability1)	-30 929	-31 411
Net deferred tax asset (+) / liability (-)	26 819	36 414

1) Gross deferred tax asset is recognized as intangible assets and gross deferred tax liability is recognized as provisions

Recognized deferred tax asset is primarily relating to tax losses in the Norwegian companies. The criteria that have been utilized to estimate that future taxable profit can be utilized against deferred tax losses are;

• The Group will have taxable profits before unused tax losses expire
• The Group has sufficient temporary differences
• Tax losses result from particular identifiable causes

In general, the assessment of deferred tax assets in the Norwegian companies is unchanged in 2013 compared to 2012. See Note 19 in the consolidated financial statement of 2012 for further description.

Note 8 Goodwill and other intangible assets

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 4 th quarter 2013 the share price values the group lower than book equity.

For the subsidiary NMF, which was acquired in the 3 rd quarter of 2012, the results are weaker than expected. TTS Group expects improved results, and has concluded that the value in use is higher than book value. The future market development could have a material impact in the impairment test.

TTS Group considers that there are no events, changes in assumptions or other new information indicating a changed assessment of goodwill and other intangible assets from year-end 2012. At 31 st of December 2013 TTS Group has not impaired any goodwill or other intangible assets.

Overview of changes in goodwill and other intangible assets are as follows:

Goodwill		Other intangible assets
31.12.2013	31.12.2012	31.12.2013	31.12.2012
471 150	827 184	80 724	288 860
12 000	157 761	-	28 994
-	-511 012	-	-211 589
	-	1 782	5 210
-	-	-10 233	-7 211
	-	-	-22 801
54 969	-2 783	5 420	-739
538 119	471 150	77 693	80 724

Note 9 Non-current assets

	Non-current assets
	31.12.2013	31.12.2012
Net book value, beginning of period	115 034	118 003
Acquisition	-	30 118
Divestment	-	-36 666
Additions	35 751	21 801
Depreciations/Amortizations	-23 580	-17 175
Impairment	-	-
Foreign currency differences	8 844	-1 047
Net book value, end of period	136 049	115 034

Note 10 Investments in Joint Ventures

	31.12.2013	31.12.2012
Net book value, beginning of period	134 988	169 723
Divestment	-	-3 914
Reclassification	-	-34 910
Share of profit (+) / loss (-)	11 964	59 916
Share of dividend received	-40 954	-47 502
Foreign currency differences	-1 996	-8 325
Net book value, end of period	104 002	134 988

Note 11 Inventories

	31.12.2013	31.12.2012
Inventories, incl non current	243 376	202 152
Obsolescence	-42 575	-15 041
Total inventories	200 801	187 111

Note 12 Financial assets measured at fair value

The Group has one investment in financial assets measured at fair value in accordance with IFRS 13.

					31.12.2013		31.12.2012
Sigma Drilling AS					Ownership	Fair value	Ownership	Fair value
					16,1 %	28 673	16,1 %	28 673

The investment is classified within Level 3 of the IFRS 13 fair value hierarchy. The valuation principle applied is a risk weighed net present value of estimated future net cash flows. The information available indicates asymmetrical sensitivity of the fair value in the range of -22% to + 330% of the estimated fair value.

Note 13 Financial risk management

The Group's objectives and principles of financial risk management are consistent with what stated in the consolidated financial statements for the fiscal year 2012.

There has been no execution related to the subordinated bond facility during 2013, and the nominal amount related to the convertible bond loan is unchanged from 4th quarter 2012 and is MNOK 95.345.

Due to dividend payment approved at the ordinary general meeting on the 10th of June 2013, the conversion price on the convertible bond was changed from NOK 5.71 per share to NOK 4.97 per share. The nominal value at the time of resolution is MNOK 95.345, giving right to 19 184 104 shares upon conversion based on the new conversion rate.

During 2nd quarter 2013 TTS-group increased the overdraft facility from MNOK 200 to MNOK 300 in the bank agreement established in December 2012, ref Note 16 in Annual report. At the same time, the guarantee facility was decreased from MNOK 600 to MNOK 500.

At the end of 2013 TTS-group has drawn MNOK 100 of total MNOK 100 of the 3 year term loan facility in the bank agreement established in December 2012, ref. Note 16 in the Annual report. In addition the group has drawn 74 MNOK of the total 300 MNOK overdraft facility.

At the end of 3rd quarter 2013 TTS-group was in breach with it's loan covenant on rolling 3 month EBITDA. Due to this, the loans affected were classified as current in the 3rd quarter report. Before year end 2013, TTS received waivers from the banks on the 12 month rolling EBITDA covenant for the period Q3 2013 to Q2 2014. Based on these waivers, the loans affected have been classified as non-current in the 4th quarter report.

Additional information regarding financial risk management is available in the annual report 2012.

Note 14 Subsequent events

On the 2 nd of January 2014 TTS NMF GmbH in Hamburg, a subsidiary of TTS Group ASA, signed a new contract for delivery of two 85 tonne lattice boom offshore cranes to Azerbaijan, with a total value of NOK 55 million.

On the 9 th of January 2014 TTS NMF GmbH in Hamburg, a subsidiary of TTS Group ASA, signed a new contract for three heavy lift cranes to a new training vessel owned by Dalian Maritime University in China. The total value of the contract is NOK 27 Million.

On the 14th of January 2014 TTS Group ASA announced that the lifting equipment package from TTS Offshore Handling Equipment AS of MNOK 130 has been terminated by TTS. Sigma Drilling Ltd. has terminated the construction contract for a new, high-specification drillship with STX Offshore & Shipbuilding Co. Ltd. (STX) in Korea.

On the 13th of February 2014, the Board of TTS Group ASA decided to reorganize the division structure by including the Port & Logistics division as a part of the Marine division.