Nekkar — Interim / Quarterly Report 2015

Feb 18, 2016

HIGHLIGHTS FOR THE 4TH QUARTER 2015.

Financial highlights for the quarter were:

• Order backlog at the end of 2015 was MNOK 4 015 (3 627) $\bullet$
• Order intake in the quarter was MNOK 937 (498) $\bullet$
• Turnover in Q4 was MNOK 842 (734) $\bullet$
• Q4 EBITDA MNOK 29 (36)* $\bullet$
• Net profit in the quarter was MNOK -80 (89)
• Total EPS for the quarter was NOK -1,07 (1,03) $\bullet$

*One off effect, MNOK 106, from change in the pension plan in TTS Group excluded from the 4Q/14 EBITDA presented above.

KEY FIGURES

	Q 4		Full Year
MNOK	2015	2014	2015	2014
Turnover	842	734	3 0 5 1	2 4 5 4
EBITDA **	29	142	155	105
EBITDA margin (%)	3,4	19,3	5,1	4,3
Order intake	937	498	2733	2 4 4 6
Order backlog*	4 0 1 5	3627	4 0 1 5	3 6 27
EPS (NOK) Total	$-1,07$	1,03	$-0,55$	0,21
EPS (NOK) Continued	$-1,07$	1,03	$-0,55$	$-0,25$

(*) Order backlog includes 50% of backlog from JV companies in China

** During 2015 EBITDA have been reduced by MNOK 38 related to restructuring and impairment cost in the Offshore Segment, whereof MNOK 18 in the 4^th quarter. One off effect from consolidating TTS Hua Hai (THH) included in full year 2015 off MNOK 104

** One off effect, MNOK 106, from change in the pension plan in TTS Group included in the 4Q/14 EBITDA. Full year 2014 effect was MNOK 101.

The order intake for 4^th quarter 2015 was MNOK 937 (including MNOK 173 from THH), a significant increase compared to MNOK 498 in 4^th quarter 2014. Business units RoRo/Cruise/Navy and Container/Bulk/Tank reported strong order intake in 4^th quarter.

The order backlog* at the end of $4^th$ quarter reached NOK 4 billon (3.6 billion), of which NOK 2.7 billion is expected to be turned into revenue in 2016. *including 50% of the order backlog, 323 (417), from JV companies in China.

4^th quarter turnover was MNOK 842 including THH, compared to 734 in 4^th quarter last year when THH was not consolidated. Turnover reported from THH in 4^th quarter 2015 was MNOK 200. The increase in turnover coming from consolidation of THH is partly offset by the weak Offshore sector, which reports a reduction in turnover of MNOK 120 for Q4.

EBITDA in the $4^th$ quarter was positive by MNOK 47, before non-recurring provisions of MNOK 18 for restructuring of the Shanghai assembly plant of BU Offshore. The Marine segments, particularly BU Container/Bulk/Tank report improved results in 4^th quarter.

TOTAL ASSETS AND NET INTEREST BEARING DEBT

Total assets at the end of 4th quarter 2015 was MNOK 3 026, an increase of MNOK 615 since yearend 2014. The change is mainly an effect of the changed consolidation related to TTS Hua Hai Ships Equipment Co Ltd.

Net working capital at yearend is negative MNOK 84.

In the 4^th quarter of 2015 net interest bearing debt decreased by MNOK 22 from MNOK 130 to MNOK 108. Consolidation of THH and TTS SCM represents a reduction of the reported net interest bearing debt of MNOK 336.

In December 2015, TTS agreed with Nordea and DNB new credit and quarantee facilities agreements, which in principle represent an extension of previous agreements. The extended agreements expire 31 Dec. 2016.

In December 2015, the bondholders agreed to an extension of the subordinated convertible debt until 18 April 2017. The TTS Group ASA General Assembly approved the extension at the 5^th January 2016.

ACCOUNTING PRINCIPLES

The company has prepared the interim financial report in accordance with IAS 34. The accounting principles applied are explained in detail in the 2014 annual report. There are no changes to the accounting principles in 2015.

SEGMENTS

TTS reports its operations in 6 business segments.

RoRo/Cruise/Navy (RCN)

	Q 4		Full Year
MNOK	2015	2014	2015	2014
Turnover	176	157	641	599
EBITDA	13	21	62	77
Order backlog	941	854	941	854

The RCN segment continues to report positive quarterly figures, which reflect the TTS Group's strong position within the PCTC-market (PureCarTruckCarrier). However, quarterly margin is affected by increased cost in some projects.

The outlook for the segment is positive. The strong order intake from the PCTC and cruise markets in 4^th quarter creates a sound basis for satisfactory turnover and margins in the quarters to come.

Container/Bulk/Tank (CBT)

	Q4			Full Year
MNOK	2015	2014	2015	2014
Turnover	298	105	973	422
EBITDA **	24	$-1$	141	-5
Order backlog *)	2090	1 687	2.090	1 687

(*) Order backlog includes 50% of backlog from JV companies in China

** One off effect from consolidating TTS Hua Hai included in full year 2015 off MNOK 104.

Change of consolidation from equity method to full consolidation of the 50 % owned company THH from 2^nd quarter 2015, explains the major part of the reported increase in revenue and margin. Included in $4^th$ quarter EBITDA is a contribution from THH of MNOK 16.

Turnover from fully owned companies within the segment in the quarter of MNOK 98 is on level with 4^th quarter 2014 (MNOK 105). Focus on overall efficiency and restructuring initiatives has compensated for the effect of price pressure and currency effects on cost, giving an EBITDA-margin on level with last year.

Profit share from JV-companies in the $4^th$ quarter shows a positive contribution of MNOK 3.

Increased activity in the winch-market in South- Korea had a positive effect on order intake in 4^th quarter, and the order backlog in the segment gives basis for acceptable activity in 2016.

In despite of price pressure from Korean yards, the group's expectations are moderately positive. A weak handy-bulk market is balanced by increased activity within mega cape-size bulk and feeder container.

Offshore (OFF)

	Q 4		Full Year
MNOK	2015	2014	2015	2014
Turnover	90	210	359	572
EBITDA *	$-22$	-33	$-102$	-50
Order backlog	219	254	219	254

* During 2015 EBITDA have been reduced by MNOK 38 related to restructuring cost and inventory impairment in the business unit, hereof MNOK -18 in the 4^th quarter.

*One off effect, MNOK + 37, from change in the pension plan included in the 4Q/14 EBITDA. Full year 2014 effect was MNOK + 35.

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

Non-recurring cost of MNOK 38 for restructuring of the offshore activities in Shanghai has been charged to the Offshore unit in 4th quarter, of which MNOK 18 affects the EBITDA. Book value of R&D, patents and other intangible assets in the Offshore segment was impaired by MNOK 17 during 4^th quarter. In 3^rd quarter inventory was impaired by MNOK 20 (allocated to EBITDA). In 2^nd quarter, goodwill allocated to the segment was impaired by MNOK 9.

TTS has taken strong cost-reducing measures 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 order backlog and market conditions. The number of full time employee equivalents has from the peak in $3^rd$ quarter 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 low utilization 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 cost and capacity to prevailing market conditions.

Multipurpose/General Cargo (MPG)
	Q4		Full Year
MNOK	2015	2014	2015	2014
Turnover	50	47	259	138
EBITDA	-6	-1	$-13$	$-32$
Order backlog	573	562	573	562

Multinurnoso/Conoral Corao (MDC)

The Multipurpose/General Cargo segment shows an increased full year turnover compared to last year.

Restructuring of the segment in 2014 and start-up of the 50 % owned TTS SCM in China in 2015, creates a good position for TTS to take a fair share of a market which we expect will grow. Cost connected to the kick off of TTS SCM has contributed negatively to segment margin in 2015. The solid order backlog and the improving market for heavy lift cranes give prospects for higher activity and improved profitability going forward.

Shipyard Solutions (SYS)
	Q 4		Full Year
MNOK	2015	2014	2015	2014
Turnover	79	53	216	192
EBITDA *	12	27	17	32
Order backlog	204	271	204	271

*One off effect, MNOK +20, from change in the pension plan included in the 4Q/14 EBITDA. Full year 2014 effect was MNOK +18.

The figures in 2015 reflect the segment's market position in a niche market for shiplift and transfer systems and other logistics solutions for the production industry. In 4th quarter, TTS Group has started the integration of the Syncrolift™ ship-lift product range, which was purchased from Rolls-Royce Marine in 3^rd quarter.

TTS Liftec, which is a substantial supplier within the European niche market for translifters, is adapting to a market with increased competition. In 4^th quarter, impairment of goodwill of MNOK 20 (MEUR2) has been charged to the segment EBIT.

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

Services (SER)

	Q4
MNOK	2015	2014	2015	2014
Turnover	147	162	591	530
EBITDA *	21	64	76	96

*One off effect, MNOK +40, from change in the pension plan included in the 4Q/14 EBITDA. Full year 2014 effect was $MNOK + 38$

Total 2015 Services turnover has increased compared to 2014, whereas 4^th quarter is somewhat down compared to 4^th quarter 2014 where we saw some large conversion projects. The EBITDA margin in the 4^th quarter is in line with the underlying EBITDA in the same quarter in 2014.

Market demand in the segment and historical installed base provides 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.

OUTLOOK

The total shipbuilding market is expected to improve in line with increased demand for sea transport. TTS Group expects further growth in line with the total market growth.

Within the RoRo/Cruise/Navy segment, the PCTC market seems to be somewhat softer, but we see higher activity within the Ropax and Trailer RoRo segments. The activity in the cruise market is expected to grow, with increased Chinese activity being an important factor. The Multipurpose General Cargo segment has shown a positive development, which we expect will continue, particularly in China. Going forward we expect the overall Services market to be relatively stable with some underlying growth. Market expectations for the Container/Bulk/Tank segment 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 we see clear a tendency of increased demand for capesize-plus. New build activity within the tank sector is good, however some indication on lower activity. The Offshore market is expected to remain weak.

Going into 2016, the TTS Group has a total order backlog of more than NOK 4 billion, of which NOK 2,7 billion is expected to be turned into revenue in 2016.

During 2014 and 2015, TTS Group has implemented initiatives to adjust capacity to shifting demands. In addition, TTS Group has run several cost improvement programs 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 will 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, both in China and internationally.

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.

TTS Group ASA Q4.2015 / 31.12.2015

Consolidated statement of comprehensive income / Konsolidert oppstilling av totalresultat

NOK 1 000	Unaudited/ Urevidert	Audited/ Revidert	Unaudited/ Urevidert	Unaudited/ Urevidert*
PROFIT AND LOSS ACCOUNT/ RESULTAT	YTD 31.12.2015	YTD 31.12.2014	4 th quarter 2015	4 th quarter 2014
Income from projects/ Driftsinntekter	3 051 243	2 453 658	842 101	734 090
Other operating income/ Andre driftsinntekter
Total operating income/ Sum driftsinntekter	3 051 243	2 453 658	842 101	734 090
Raw materials and consumables used/ Varekostnad	1 969 973	1419801	521 740	431 547
Other operating costs/ Andre driftskostnader	1 042 175	942 968	294 489	164 443
Result from JV ( - is income)/ Resultat fra JV ( - er inntekt)	$-115889$	$-14325$	$-2670$	$-3625$
EBITDA Driftsresultat før avskrivninger	154 984	105 215	28 543	141 725
Depreciation/ Avskrivninger	58 134	43 766	27 503	14 076
Other depreciation/write-downs/ Andre avskrivninger/nedskrivninger	64 843		55 670
Operating profit/ Driftsresultat	32 007	61 449	$-54630$	127 649
Financial income/ Finansinntekter	38 442	98 173	2889	48 173
Financial expense/ Finanskostnader	85 771	136 361	42 029	54 707
Net finance/ Netto finans	-47 329	$-38$ 188	$-39$ 140	$-6534$
Profit/loss before tax/ Resultat før skattekostnader	$-15322$	23 26 1	$-93770$	121 115
Tax/ Skattekostnad	24 841	45 079	2 5 9 4	32 019
Net result continued business/ Periodens resultat videreført virksomhet	$-40$ 163	$-21819$	$-96364$	89 095
Net result divested business/ Resultat fra avhendet virksomhet	$\mathbf 0$	39 562	$-0$	0
Net result/ Netto resultat	$-40$ 163	17 743	$-96364$	89 095
Attributable to equity holders of the company / Majoritet	$-48674$	17 743	$-92946$	89 095
Attributable to non-controlling interests/ Minoritetsinteresser	8511		$-3419$
NET RESULT FOR THE YEAR/ Oppstilling av totalresultatet
Net result for the period/ Periodens resultat	$-40163$	17 743	$-96364$	89 095
Actuarial gain/loss on defined pension benefit plan/ Estimatavvik pensjoner		$-30700$
Translation differences/ Omregningsdifferanser	102 983	55 289	$-15884$	$-7347$
Total comprehensive income/ Totalresultat	62 820	42 332	$-112249$	81 747
Attributable to equity holders of the company / Majoritet	23 229	42 332	$-111887$	3 6 6 5
Attributable to non-controlling interests/ Minoritetsinteresser	39 592		$-362$
Earnings per share (NOK) continued business/
Fortjeneste pr. aksje (NOK) videreført virksomhet Diluted earnings per share (NOK) continued business/	$-0,55$	$-0,25$	$-1,07$	1.03
Utvannet fortjeneste pr. aksje (NOK) videreført virksomhet	$-0,55$	$-0,25$	$-1,07$	1,03
Earnings per share (NOK) divested business/ Fortjeneste pr. aksje (NOK) avhendet virksomhet		0,46
Diluted earnings per share (NOK) divested business/
Utvannet fortjeneste pr. aksje (NOK) avhendet virksomhet		0,46
Earnings per share (NOK)/ Fortjeneste pr. aksje (NOK)	$-0,55$	0,21	$-1,07$	1,03
Diluted earnings per share (NOK)/ Utvannet fortjeneste pr. aksje (NOK)	$-0,55$	0,21	$-1,07$	1,03
Average number of shares used as calculation basis for diluted EPS (000)/ Gjennomsnittlig antall utestående aksjer som basis for utvannet EPS (000)	86 493	86 443	86 493	86 430

Condensed consolidated statement of financial position /	Unaudited/	Audited/
Konsolidert oppstilling av finansiell stilling	Urevidert	Revidert
NOK 1 000	31.12.2015	31.12.2014
Intangible assets/ Immaterielle eiendeler	886 850	663 535
Tangible assets/ Varige driftsmidler	134 521	160 897
Financial assets/ Finansielle anleggsmidler	84 975	102 582
Assets available for sale/ Eiendeler tilgjengelig for salg	$-0$	$\mathbf 0$
Sum anleggsmidler/ Total non-current assets	1 106 346	927 014
Inventories/ Varer	199 320	189 264
Total receivables/ Kortsiktige fordringer	1 306 628	1 164 597
Bank deposits/cash/ Bankinnskudd/kontanter	414 186	130 602
Total current assets/ Sum omløpsmidler	1 920 133	1 484 463
Total assets/ Sum eiendeler	3 0 26 4 79	2 411 477
Share capital/ Aksjekapital	9526	9526
Other equity/ Annen egenkapital	624 981	600 836
Non-controlling interests / Minoritetseiere	220 059
Total equity/ Sum egenkapital	854 566	610 362
Provisions/ Avsetning for forpliktelser	52 692	31740
Long term interest bearing debt/ Langsiktig rentebærende gjeld	$\Omega$	88 143
Long term liabilities/ Langsiktig gjeld	52 692	119883
Current interest bearing debt/ Kortsiktig rentebærende gjeld	522 812	297 764
Current liabilities/ Kortsiktig gjeld	1596410	1 383 468
Total current liabilities / Sum kortsiktig gjeld	2 119 221	1681232
Total liabilities/ Sum gjeld	2 171 913	1801115
Total equity and liabilities/ Sum egenkapital og gjeld	3 0 26 4 79	2 411 477

Condenced consolidated statement of cash flows/ Kontantstrømoppstilling	Unaudited Urevidert	Audited/ Revidert
NOK 1000	YTD 31.12.2015	YTD 31.12.2014
EBITDA/ Driftsresultat før avskrivninger	154 984	105 215
Change in net current assets/ Endring i netto omløpsmidler	$-30974$	$-255220$
Cash from operations/ Kontantstrøm fra operasjonelle aktiviteter	124 010	$-150005$
Aquisition of non-current assets / Kiøp av varige driftsmidler	$-254070$	$-46096$
Proceeds discontinued business/ Netto salgssum avhendet virksomhet	$\Omega$	39 562
Other investing activities/ Andre investeringsaktiviteter	121 560	33 604
Cash from investments/ Kontantstrøm fra investeringsaktiviteter	$-132510$	27 070
New loans and repayment/ Opptak og nedbetaling av lån	122 931	134 659
Paid-in equity/ Innbetaling av egenkapital	211 718
Payments to shareholders/ Utbetaling til aksjonærer
Net interest paid/ Netto betalte renter	$-59815$	$-32727$
Cash from financing/ Kontantstrøm fra finansieringsaktiviteter	274 833	101 932
Change in cash/ Endring i kontantbeholdning	266 333	$-21003$
Cash position OB/ Kontantbeholdning IB	130 602	155 570
Effect of exchange rate changes on cash/ Effekt av valutakursendring bank	17 250	$-3966$
Cash position CB/ Kontantbeholdning UB	414 185	130 603

NOK 1 000	Share capital / Aksjekapital	Treasury shares/ Egne aksjer	Share premium reservel Overkursfond	Other equity/ Annen	Shareholders equity/ egenkapital Majoritetsandel	Non controlling interest / Minoritet	Total equity / Total egenkapital
Equity as of 1.1.2015/ Egenkapital 1.1.2015	9 5 2 6	$-12$	149 378	451 469	610 362		610 362
Comprehensive income/ Totalresultat				23 229	23 2 29	39 5 9 2	62 820
Sale treasury shares/ Salg egne aksjer		٠		۰.
Options cost/ Opsjonsplaner Equity transactions with non controlling interests/		$\sim$	$\sim$	915	915		915
Egenkapitaltransaksjoner med minoritetsinteresser						211 718	211 718
Dividend distributed/ Utbetaling utbytte						$-31250$	$-31250$
Equity CB/ Egenkapital UB	9 5 2 6	$-12$	149 378	475 613	634 506	220 060	854 566

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS 4TH QUARTER 2015

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 statements cover TTS Group ASA including its subsidiaries. As of 2^nd quarter 2015, changes in the joint venture agreement related to the jointly owned 50/50 % company TTS Hua Hai Co Ships Equipment Co Ltd. in China, require TTS to change its consolidation method from the equity method to full consolidation.

Operation in TTS SCM commenced as of $2^{nd}$ quarter 2015, and is fully consolidated into TTS accounts.

Jointly controlled companies are accounted for using the equity method.

The Board of Directors approved the consolidated financial statements for the year ended 31^st of December 2014 on 15^th of April 2015. The annual report 2014 including the consolidated financial statements for the TTS Group, the separate financial statements for TTS Group ASA and the auditors' 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 2015 have been prepared in accordance with IAS 34 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 2014.

The accounting principles applied are the same as those described in the consolidated financial statements of 2014.

This condensed consolidated 4^th quarter interim report of 2015 was approved by the Board on 17^th of February 2016.

Judgments, estimates and assumptions

The preparation of the interim report requires the use of judgments, estimates and assumptions that affect the application of accounting principles and the reported amounts of assets and liabilities, income and expenses. Actual future outcome 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 31^st of December 2014.

Note 2 Segment information

		Q4		Q 3		Q 2		Q 1		Full year / YTD
		Turnover	EBITDA	Turnover	EBITDA	Turnover	EBITDA	Turnover	EBITDA	Turnover	EBITDA
Roro, cruise, navy (RCN)	2015	176	12,8	146	18,2	159	16,2	160	15,1	641	62,3
	2014	157	25.3	154	21,4	154	19,4	135	11,1	599	77,3
Container, bulk, tank	2015	298	24,2	292	5,5	313	110,9	72	1,9	973	140,8
	2014	105	$-7,5$	92	$-0.9$	112	2,3	112	1,3	422	$-4,8$
Offshore	2015	90	$-21.8$	99	$-48.1$	92	$-8,1$	79	$-23,7$	359	$-101,7$
	2014	210	32,5	111	$-26,4$	130	$-30,0$	121	$-26.1$	572	$-50,0$
Multipurpose General Cargo	2015	50	$-6,2$	78	$-3,9$	38	0,7	94	$-3.7$	259	$-13,0$
	2014	47	$-1,1'$	28	$-6,1$	35	$-11,7$	28	$-13,0$	138	$-32,0$
Shipyard Solutions	2015	79	12,5	44	0,5	42	0,2	51	4,3	217	17,5
	2014	53	27,1	59	7,1	43	, 2	37	$-2,9$	192	32,5
Services	2015	147	21.2	146	21,3	162	19,7	136	13,4	591	75,6
	2014	162	64,0	105	13,1	142	12,8	120	6.5	530	96,4
Corporate / Other	2015		$-14,2$		$-5,5$		$-1,7$		$-6,7$		$-26,6$
	2014		.4		$-5,9$		$-4,4'$		$-5,3$		$-14,2$
Total	2015	842	28,6	805	$-12,0$	811	137,8	593	0,6	3 0 5 1	155,0
	2014	734	141,8	549	2,2	617	$-10,3$	554	$-28,4$	2 4 5 3	105,2
	2013	638	$-110,0$	565	$-82,2$	758	36,8	732	25,1	2 693	$-130,3$

Comparative figures of Q2/14, Q1/14 and 31.12.2013 have been restated to reflect the change in segment reporting introduced in 3rd quarter 2014

As of Q2/2015 TTS Hua Hai are consolidated on a 100% basis into TTS Group accounts. The activity is reported as part of the Container/Bulk Tank segment. One time effect of MNOK 103,7 is recognized in Q2/15 periodic EBITDA.

As of Q2/2015 TTS SCM are consolidated on a 100% basis into TTS Group accounts. The activity is reported as part of the Multipurpose General Cargo segment.

From 3^rd auarter 2014 TTS Group are reporting in the following segments.

• RoRo/cruise/navy (RCN)
• Container/bulk/tank (incl. JV-companies) (CBT) $\blacksquare$
• Offshore $\bullet$
• Multipurpose/General cargo (MPG) $\bullet$
• Shipyard Solutions $\bullet$
• Services

The RCN segment delivers complete cargo handling solutions to RoRo, PCTC, cruise and navy vessels, 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.

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.

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

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

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

This segment has earlier been reporting as part of the Marine Division.

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.

Note 3 Share capital and equity

As per 31^th of December 2015 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 9 526 623.

TTS Group ASA holds 112 882 own shares.

No options have been awarded in $4^th$ quarter. As per yearend 2015 leading employees holds 1.037.500 share options, whereof 600,000 shares options with an exercise price of NOK 4.75 were awarded in $2^{nd}$ quarter.

Note 4 Earnings per share

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

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

Earnings per share Resultat per aksie:	YID	YID
	31.12.2015	31.12.2014	Q4 2015	Q4 2014
Net income available to shareholders, continued business/ Resultat tilordnet selskapets aksjonærer, videreført
virksomhet	-48 674	$-21819$	$-92946$	89 0 95
Effect of dilution/ Utvanningseffekt
Diluted net income available to shareholders, continued business/ Utvannet resultat tilordnet selskapets aksionærer.
videreført virksomhet	$-48674$	$-21819$	$-92946$	89 0 95
Net income available to shareholders, divested business/ Resultat tilordnet selskapets aksionærer, avhendet
virksomhet		39 562
Effect of dilution/ Utvanningseffekt
Diluted net income available to shareholders, divested business/ Resultat tilordnet selskapets aksionærer, avhendet
virksomhet	$\overline{\phantom{a}}$	39 5 62
Net income available to shareholders/ Utvannet resultat tilordnet selskapets aksionærer	$-48674$	17743	$-92946$	89 0 95
Effect of dilution/ Utvanningseffekt
Diluted net income available to shareholders/ Utvannet resultat tilordnet selskapets aksjonærer	$-48674$	17743	$-92946$	89 0 95

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

		31.12.2015 31.12.2014	Q4 2015	Q4 2014
Weighted average number of shares outstanding/ Gjennom snittlig utestående aksjer	86493	86 443	86 493	86 430
Effect of dilution/ Utvanningseffekt
Diluted numbers of shares/ Utvannet gjennom snittlig utestående aksjer	86493	86 443	86 493	86 430

Accordingly, the basic and diluted EPS is as follows:

		31.12.2015 31.12.2014 Q4 2015 Q4 2014
Earnings per share (NOK)/ Fortjeneste pr. aksje (NOK)	$-0.55$	0.21	$-1.07$	1.03
Diluted earnings per share (NOK)/ Utvannet fortjeneste pr. aksje (NOK)	$-0.55$	0.21	$-1.07$	1.03

Note 5 Related parties

Note 21 and accounting principles section 2.2 in the consolidated financial statements of 2014 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 subsidiaries 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/ Balanseposter til/fra felleskontrollert virksomhet	31.12.2015	31.12.2014
Current receivables/ Kortsiktige fordringer	49 067	28 472
Current liabilities/ Kortsiktig gield	$-8,781$	$-2.198$
Net receivables $(+)$ / liabilities $(-)$ to/from Joint Ventures/ Netto fordringer $(+)$ / gield $(-)$	40 285	26 274

Note 6 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.

Deferred tax

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

	31.12.2015	31.12.2014
Gross deferred tax asset 1 Brutto utsatt skattefordel 1	43 221	31 152
Gross deferred tax liability1)/ Brutto utsatt skatteforpliktelse1)	$-51.581$	$-31.336$
Net deferred tax asset (+) / liability (-)/ Netto utsatt skattefordel (+) / -forpliktelse (-)	$-8,360$	-183

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

¹⁾ Brutto utsatt skattefordel er innregnet som immateriell eiendel og brutto utsatt skatteforpliktelse er innregnet som avsetning for forpliktelser

Recognized deferred tax asset primarily relates to tax losses in the Norwegian and German companies, as well as short term tax differences from the Chinese 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

Note 7 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.

TTS shares are freely traded at Oslo Stock Exchange. Closing price of last trading date in December 2015 was NOK 2,79 per share, indicating a nominal trade value of TTS of MNOK 241. Book value of the equity at 31.12.2015 was MNOK 651 excluding minority interest.

For the subsidiary TTS NMF Gmbh, which was acquired in the 3rd quarter of 2012, the inherent CGU relates to the total activity in the company. Although the results have been weaker than expected, improved utilization in the newbuild section, and a strong development in the cross-related service section, support that the value in use is higher than the book value. Future market development may have material impact on the impairment test.

During the past two years, the Offshore segment in TTS has experienced substantial losses on its activity, combined with a low order intake. Changes in the segment structure combined with market conditions which remain challenging, have given basis for impairment of goodwill allocated to the segment. An impairment of goodwill of MNOK 9.2 was allocated to $2^{nd}$ quarter 2015. In the $4^{th}$ quarter book value related to R&D, patents and other intangible assets in the Offshore segment have been impaired by MNOK 16,6. Remaining value at yearend is MNOK 13 with a planned straight line depreciation of close to 4 MNOK per year.

Governing agreements for the 50/50 owned company TTS Hua Hai (THH) has been changed during 2^nd quarter. The changes have required a renewed assessment of the control evaluation defined in IFRS 10. Based on the evaluation it has been concluded that TTS has the power to control relevant activities which directly

influences the risk and return from the operational activity in THH. Consequently THH is consolidated on 100% basis as of 2^nd quarter 2015. The effects of the change are presented as an acquisition in table below. Purchase price allocation is based on estimates and is subject to change according to IFRS structure.

TTS Liftec, which is a well-recognized supplier within the European niche market for translifters is experiencing increased market competition. Based on recent evaluation on market outlook and margins, an impairment of goodwill of MNOK 19 (2mEUR) has been allocated to the $4^th$ quarter. Based on calculation of value in use remaining goodwill allocated is MEUR 2.4. Future market development may still have material impact on the impairment test.

During 4^th quarter TTS Group, via the Service segment, has acquired a minor entity in Italy. Purchase price allocation is based on estimates and is subject to change according to IFRS structure.

TTS Group considers that there are no major events, changes in assumptions or other new information indicating a change in the valuation of goodwill or other intangible assets from year-end 2014 in the other business segments. Estimates related to future market expectations could have material impact on the impairment test.

Overview of goodwill and other intangible assets are as follows:

	Goodwill / Goodwill		Other intangible assets / Andre immaterielle eiendeler
	31.12.2015	31.12.2014	31.12.2015	31.12.2014
Net book value, beginning of period/ Bokført verdi, periodestart	564 464	538 119	67918	77 693
Acquisition/ Oppkjøp	140 692		98 497
Divestment/ Avhendelse
Additions/Tilgang i året			4 3 9 0	$-419$
Depreciations/Amortizations/ Avskrivninger			$-24557$	$-12$ 179
Impairment/ Nedskrivninger	$-28050$		$-16625$
Foreign currency differences/ Omregningsdifferanser	24 701	26 345	12 199	2 8 2 2
Net book value, end of period/ Bokført verdi, periodeslutt	701 807	564 464	141 821	67918

Note 8 Non-current assets

	Non-current assets/ anleggamidler
	31.12.2015	31.12.2014
Net book value, beginning of period/ Bokført verdi, periodestart	160 897	136 049
Acquisition/ Oppkjøp	2979
Divestment/ Avhendelse		$-500$
Additions/ Tilgang i året	9 6 3 4	47 015
Depreciations/Amortizations/ Avskrivninger	$-29318$	$-31782$
Impairment/ Nedskrivninger	$-20008$
Foreign currency differences/ Omregningsdifferanser	10 427	10 115
Net book value, end of period/ Bokført verdi, periodeslutt	134 521	160 897

Note 9 Investments in Joint Ventures

	31.12.2015	31.12.2014
Net book value, beginning of period/ Bokført verdi, periodestart	102 582	104 002
Acquisition/ Oppkjøp	66 006
Divestment/ Avhendelse
Reclassification/ Reklassifisering	$-81876$
Share of profit (+) / loss (-)/ Andel overskudd (+) / underskudd (-)	1 0 0 7	14 3 25
Share of dividend received/ Utbytte mottatt		$-5796$
Foreign currency differences/ Omregningsdifferanser	$-2744$	$-9949$
Net book value, end of period/ Bokført verdi, periodeslutt	84 975	102 582

As per 31.12.2015 investments in Joint Ventures include TTS Bo Hai Machinery Co Ltd. and Jiangnan TTS Ships Equipment Manufacturing Co Ltd. TTS Hua Hai holds a 40% share portion in Jiangnan.

Governing agreements for the 50/50 owned company, TTS Hua Hai Ships Equipment Co Ltd. was changed during 2^nd quarter. Changes have been evaluated with respect to definitions in IFRS 10, and TTS have concluded its ability to control the THH. As an effect THH is consolidated on 100% basis as of 2^nd quarter 2015.

Note 10 Inventories

	31.12.2015	31.12.2014
Inventories, incl non current/ Råvarer og ferdigvarer inkl. ukurans	228 420	225 947
Obsolescence/ Ukurans	$-29,100$	$-36663$
Total inventories/ Sum varelager	199 320	189 264

Note 11 Financial assets measured at fair value

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

	.12.2015		12.2014
	Ownership/	Fair value/	Ownership/	Fair value/
Sigma Drilling AS	Eierandel	Virk elia verdi	Eierandel	Virk elia verdi
	16.1 %		16.1

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 12 Net result divested operations

In March 2015 TTS Group finalized the discussions 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. Final earn-out discussion with Cameron was completed during $3^rd$ quarter. The completion has no effects on 2015 figures.

Note 13 Change of control in 50/50 owned companies

Governing agreements for the 50/50 owned company, TTS Hua Hai Ships Equipment Ltd Co. is changed during the quarter. The changes have required a renewed evaluation of the control assessment defined in IFRS 10. Based on the evaluation it's been concluded that TTS have the power to control relevant activities which directly influences the risk and return from operational activity in THH. Consequently the company is consolidated on 100% basis as of 2^nd quarter 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.

Preliminary allocation of fair value of assets, debt and goodwill related to TTS Hua Hai/ Foreløpig allokeing av virkelig verdi for aktiva, passiva og goodwill relatert til TTS Hua Hai

Amounts in MNOK / Beløp i MNOK	MNOK
Equity - Fair value assessment / Egenkapital-Virkelig verdi vurdering	404
Fair value of net identified assets/Virkelig verdi av aktiva	$-856$
Fair value of identified liabilities/ Virkelig verdi av passiva	642
Goodwill / Goodwill	190
Intangible assets / Immaterielle eiendeler	107
Tangible fixed assets / Varige driftsmidler	3
Financial fixed assets / Finansielle driftsmidler	67
Total fixed assets / Sum driftsmidler	177
Inventories, acc receivables / Varelager/ kunderfordringer o.l	193
Short term receivables/ Andre kortsiktige fordringer	267
Cash / Kontanter og bankekvivalenter	220
Total current assets / Sum omløpsmidler	680
Total assets / Sum eiendeler	1046
Equity / Egenkapital	404
Long term liabilities / Langsiktig gjeld	23
Short term liabilities / Kortsiktig gjeld	619
Total equity and liabilities/ Sum egenkapital og gjeld	1046

Note 14 Financial risk management

The Group's objectives and principles of financial risk management are consistent with what is stated in the consolidated financial statements for the fiscal year 2014.

There has been no execution related to the subordinated bond facility during the 4^th quarter of 2015. The nominal amount and conversion price of the convertible bond loan is unchanged from 4^th quarter 2014 and is MNOK 95.3, giving right to 19.184.104 shares upon conversion.

The initial maturity date requires the bond debt to be classified as short term debt as per 31 December.

The $17^th$ 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 5^th 2016.

The amendments mainly involves 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. Changes also include minor amendments to conversion and redemption provisions. Terms and conditions in the renewed agreement have been evaluated according to IAS 39. Based on the evaluation the renewed agreement is considered a prolonging of the prior bond debt agreement.

On the 18^th December 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 Dec. 2016, and are presented as short term debt.

The credit facility in the extended agreement is 1.125 MNOK, and consist of:

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

At yearend the agreement includes covenant requirement related to equity ratio (27,5%), and debt ratio (EBITDA/ NIBD <3).

As of Q1/2016 covenant requirements are ERITDA

NOK mill	$Q1 - 16$ $Q2 - 16$ $Q3 - 16$ $Q4 - 16$
EBITDA Covenant		25	40
EBITDA Covenant akkumulert		60

• 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)

At yearend TTS Group meet the set covenants.

TTS group has drawn MNOK 218 of the total MNOK 300 overdraft facility with Nordea. Consolidation of TTS Hua Hai and TTS SCM has significant effects on the cash flow and presented cash in the balance. Cash within the 50/50 companies is not available to other companies within TTS Group.

	31.12.2015	31.12.2014
Bank deposits in fully owned companies/ Bankinnskudd i heleide datterselskaper	78 466	130 602
Bank deposits in 50/50 owned companies/ Bankinnskudd i 50/50 eide selskaper	335 720
Bank deposits / Bankinnskudd	414 186	130 602

An overall description of debt facilities, and additional information regarding financial risk management will be available as part of the notes to the annual report 2015.

Note 15 Subsequent events

The 17^th 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 5^th 2016.

At 4^th 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 10^th February 2016, TTS Group announced the securement of contracts related to heavylift cranes and winches with an order value of approx. MNOK 65.

Additional information on subsequent events is available at www.newsweb.no - ticker TTS