Information Memorandum - TTS Group Information Memorandum - 4 June... · Memorandum. The...

Information Memorandum

TTS Group ASA

(a public limited liability company organized under the laws of the Kingdom of Norway)

Business Registration number 932 142 104

Information memorandum has been prepared in connection with the sale of

the Drilling Equipment Business to Cameron Holding Norge AS

This Information Memorandum does not constitute an offer to buy, subscribe or sell the securities

described herein.

Manager

4 June 2012

[1]

Important Notice

This information memorandum (“Information Memorandum”) has been prepared in order to provide information

about TTS Group ASA (“TTS” or the “Company”), and, together with its consolidated subsidiaries (excluding TTS

Energy AS and its subsidiaries following the completion of the Transaction, the “Group” or “TTS Group”) and its

business in connection with the divestment of its drilling equipment business, the TTS Energy division, excluding

the offshore handling (cranes and winches), which is also part of the TTS Energy division, to Cameron Holding

Norge AS, a subsidiary of Cameron International Corporation (NYSE: CAM). The contemplated divestment shall be

carried out by way of sale of all the shares in TTS Energy AS (“TTS Energy”), being a wholly owned subsidiary of

TTS and owning the group of and/or entities carrying out the business as discussed in Section 5 (Information

regarding the drilling equipment business) (the “Drilling Equipment Business”), pursuant to which TTS Group

ASA (as seller) on 17 April 2012 entered into a share purchase agreement with Cameron Norge Holding AS

(“Cameron”) (as purchaser) and Cameron International Corporation (as guarantor for the purchaser's obligations)

(the “Agreement”), with regards to the contemplated sale of all the shares in TTS Energy (the “Transaction”).

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Capitalized terms used in this Section and not defined herein shall have the meaning ascribed to them in the Section

headed “Definitions”.

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This Information Memorandum serves as information document as required under Section 3.5 of Oslo Børs'

“Continuing Obligations for Listed Companies”, and has been submitted to Oslo Børs for inspection and review

before it was published. This Information Memorandum is not a prospectus and has neither been inspected nor

approved by the Financial Supervisory Authority of Norway (Nw: Finanstilsynet) in accordance with the rules that

apply to prospectuses. This Information Memorandum has been prepared in an English version only.

_____________________

This Information Memorandum does not constitute an offer or solicitation to buy, subscribe or sell the

securities described herein, and no securities are being offered or sold pursuant to this Information

Memorandum.

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Investing in the shares issued by the Company (the “Shares”) involves risk. In reviewing this Information

Memorandum, you should carefully consider the matters described in Section 1 (Risk Factors) beginning on

page 5.

_____________________

This Information Memorandum is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising

in respect of this Information Memorandum is subject to the exclusive jurisdiction of the Norwegian courts, with

Bergen District Court as legal venue.

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IMPORTANT INFORMATION

The Company has furnished the information in this Information Memorandum. See Section 2 (Responsibility

Statement) for the board of the Company's responsibility statement in relation to the information contained herein.

The information contained herein is current as of the date hereof and subject to change, completion and amendment

without notice. There may have been changes affecting TTS subsequent to the date of this Information

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Memorandum. The publication and distribution of this Information Memorandum shall not under any circumstances

create any implication that there has been no change in the affairs of TTS or that the information herein is correct as

of any date subsequent to the date of this Information Memorandum.

All inquiries relating to this Information Memorandum should be directed to the Company. No other person has been

authorized to give any information about, or to make any representation on behalf of, the Company in connection

with the Transaction. If any such information is given or representation made, it must not be relied upon as having

been authorized by the Company.

The contents of this Information Memorandum are not to be construed as legal, business or tax advice. Each reader

of this Information Memorandum should consult with its own legal, business or tax adviser as to legal, business or

tax advice.

The distribution of this Information Memorandum in certain jurisdictions may be restricted by law. The Company

requires persons in possession of this Information Memorandum to inform themselves about, and to observe, any

such restrictions. No action has been taken or will be taken in any jurisdiction by the company that would permit

publication or distribution, directly or indirectly, or any documents relating to the Transaction or any amendment or

supplement thereto, including, but not limited to, this Information Memorandum, in any country or jurisdiction

where specific action for that purpose is required. The Company has not registered, and does not intend to register,

any of the shares issued by the Company (the “Shares”) under the Unites States Securities Act of 1933, as amended

(the “U.S. Securities Act”).

INFORMATION INCORPORATED BY REFERENCE

Oslo Børs' “Continuing Obligations for Listed Companies” allow TTS to incorporate by reference information in

this Information Memorandum that has been previously filed with Oslo Børs or the Financial Supervisory Authority

of Norway in other documents. The audited historical financial statements for TTS Group as of and for the years

ended 31 December 2011, 2010 and 2009 (the “Annual Financial Statements”), prepared in accordance with

International Financial Reporting Standards as adopted by the European Union (“IFRS”), and the director's reports

and auditor's reports in respect of the Annual Financial Statements, have been incorporated as a part of his

Information Memorandum; see Sections 10.3 Incorporated by reference. The same applies to TTS' accounting

principles, the financial statements of Q1 2012 and the appurtenant director's report. Accordingly, this Information

Memorandum is to be read in conjunction with these documents.

The Information Memorandum also includes unaudited pro forma condensed consolidated financial information

giving effect to the Transaction, as if the Transaction had taken place on 1 January 2011 for the purpose of the

consolidated income statement for 2011 and of Q1 2012, and for the purpose of the unaudited consolidated balance

sheet as per 31 March 2012. . The unaudited pro forma condensed consolidated financial information has been

prepared on a basis consistent with IFRS and has been based on the audited consolidated financial statements for the

ended 31 December 2011for the Group, the unaudited income statement of Q1 2012 and the unaudited consolidated

balance sheet as per 31 March 2012. See Section 9 for further details.

INFORMATION SOURCED FROM THIRD PARTIES

The information in this Information Memorandum that has been sourced from third parties has been accurately

reproduced and, as far as TTS is aware and able to ascertain from information published by that third party, no facts

have been omitted that would render the reproduced information inaccurate or misleading.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Information Memorandum contains forward-looking statements. These statements involve known and unknown

risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to

be materially different from any future results, performances or achievements expressed or implied by the forward-

looking statements.

In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “could”,

“should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the

negative of such terms or other comparable terminology. These statements are only predictions. Actual events or

results may differ materially. In evaluating these statements, prospective investors should specifically consider

various factors, including the risks outlined in the Risk Factors Section above. These factors may cause our actual

results to differ materially from any forward-looking statement. Although the Company believes that the

expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of

activity, performance or achievement.

Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statements

for any reason after the date of this Information Memorandum to conform these statements to actual results or to

changes in our expectations or publicly release the result of any revisions to these forward-looking statements which

the Company may make to reflect events or circumstances after the date of this Information Memorandum or to

reflect the occurrence of unanticipated events. Investors are advised, however, to consult any further public

disclosures made by the Company, such as filings made with Oslo Børs or press releases.

[4]

Table of contents

1. Risk Factors .................................................................................................... 5

2. Responsibility Statement .............................................................................. 11

3. Description of The Transaction ................................................................... 12

4. Presentation of TTS Group ASA ................................................................. 14

5. Information regarding the Drilling Equipment Business ........................... 23

6. Market overview ........................................................................................... 28

7. Presentation of TTS Group ASA after the transaction .............................. 32

8. Historical Financial Information ................................................................. 35

9. Pro Forma Financial Information ............................................................... 44

10. Additional Information ................................................................................ 50

11. Definitions ..................................................................................................... 52

Appendices

Appendix 1: Auditor’s Independent Assurance Report on pro forma financial information..................... A1

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1. RISK FACTORS

In addition to the other information set out in this Information Memorandum, the following risk factors should be

carefully considered when analyzing TTS Group and/or the Transaction. Any of the risks described below could

have a material adverse impact on TTS Group, financial condition and results of operations and could therefore

have a negative effect on the trading price of the shares in the TTS Group and affect a prospective investor's

investment. The information below does not purport to be exhaustive. Additional risks and uncertainties not

presently known to TTS Group currently deems immaterial may also have a material adverse effect on TTS Group,

following the Transaction, the Group's business, financial condition and operating results.

1.1 Risk factors related to the Company and the industry

As with any other development business, time itself may be characterised as a risk factor. In the following sub-

chapters, time and delays are inherent parts of many of the risk factors. Most challenges may be solved with time,

but there is a risk for delays and that a delay itself may cause a product to fail or that the delay and incurred cost may

become a challenge to the Company.

1.1.1 Dependency on the shipbuilding, offshore and Port and Terminals industries

• The demand for TTS's products and services is largely dependent upon developments in the shipbuilding

industry. Historically number of vessels contracted world-wide varies from year to year. A reduction in

contracting of vessels could negatively affect demand for TTS's products and services, which again could

have an adverse effect on its business, financial condition and result of operations. TTS can provide no

assurance with respect to future contracting in the shipbuilding industry.

• TTS through its offshore activities is dependent on demand for offshore services in connection with

exploration, development and production in the oil and gas sector. Historically, demand for exploration,

development and production has been volatile and closely linked to the price of hydrocarbons. Low oil

prices typically lead to a reduction in the demand for offshore services and thereby also the demand for

offshore and onshore handling equipment as well as other related equipment and services in demand within

the offshore industry. Decreased demand in the offshore industry could have an adverse impact on the

financial position of the Company.

• Until 2007 the Port and Terminals industry for some years had an annual growth of approximately 10%.

Following the difficulties in the financial markets in 2008 and later the financial turmoil in the Eurozone,

there has been a weakening of the economic performance in the "big three" container markets (China, North

Europe and the US) which has slowed down the growth, and this could possibly have an adverse impact on

the financial position of the Company in the years ahead.

1.1.2 Success in the market and the competitive situation in the industry

The global market is highly competitive and competition might limit TTS's ability to maintain or increase its market

share. TTS's current and future competitors may have considerably greater financial and other resources, and may be

better positioned to withstand and adjust to changing market conditions. If TTS is not able to maintain its

competitive position in the market it could have an adverse effect on its business, financial condition and result of

operations.

1.1.3 Manufacturing risks

TTS relies, and will continue to rely, upon subcontractors when producing their products. TTS cannot be certain that

they will be able to enter into satisfactory agreements with subcontractors. TTS’s failure to enter into agreements

with such subcontractors on reasonable terms, if at all, could have a material and adverse effect on the business,

financial condition and results of operations. TTS also needs to ensure that the manufacturing process complies with

applicable regulations and manufacturing practises as well as TTS's own high standards. Poor manufacturing

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performance by third party manufactures could have a significant adverse effect on the Company's business,

financial condition or result of operations.

1.1.4 Technology and new products

The markets TTS operates in are characterized by tough competition. Commitment to technologies/suppliers that

does not obtain market acceptance or lacks the ability to adapt to different market segments, may have a severe

effect on the Company's prospects for the future. Even though the Company believes it can offer a solid product

spectre within its areas of concentration, the industry and the customer demands can change. TTS cannot assure that

the company makes the right decisions regarding product development and marketing, or that future focus areas will

accommodate the customers altering requirements. TTS may also be exposed to severe risks with regard to possible

disruptive technologies, i.e. unforeseen technologies that may change the marketplace significantly.

1.1.5 Fluctuation in revenues

TTS's future revenues may fluctuate significantly from period to period and from year to year as a result of various

factors. Such fluctuations may have a material adverse impact on TTS's results of operational and financial

condition.

1.1.6 Obtaining acceptable prices and cost levels

TTS's financial position and future development depend to a considerable extent on the price it is able to obtain for

its products. The demand for the company's products is affected by a large number of different factors, over which

the Company has little control. A relative change in demand could lead to lower sales prices, which would have a

negative impact on TTS's operating revenues and profits. Certain cost factors such as steel prices may also affect

TTS's future operational result if the Company is unable to shift any increases in prices on to their customers.

Additionally, there will always be a risk that the costs of product development exceeds the original estimated costs,

that development takes longer than expected or that product fails to meet the demands from the potential customers.

1.1.7 Possibility of operating losses

TTS has a long performance record, operating history and historical financial statements upon which its financial

performance, services, products, processes or its ability to implement and achieve its business strategy can be

evaluated. TTS cannot assure that it, in the future, will be successful in implementing its business strategy or

developing internal processes to manage its growth and business prospects or continue to make profits.

1.1.8 Ability to raise additional capital

TTS may in the future seek to raise capital through equity and debt financings or from other sources. However, the

Company may prove unable to raise such additional capital in a timely manner and on commercially acceptable

terms, if at all. If TTS is unable to generate adequate funds from operations or from additional sources, then the

business, results of operations and financial condition may be materially and adversely affected.

1.1.9 Counter party risks

TTS's operations are mainly within the shipping and offshore industry, and many parts of the shipping and offshore

industry was affected by the global financial crisis and recession from 2009 and onwards. Such events are outside

the control of TTS and have increased TTS’s counter party risk. While the global market has been facing a slow

recovery, the shipping and offshore industry is still somewhat vulnerable.

1.1.10 Liability claims

Any claims against TTS, regardless of their merit, could materially and adversely affect its financial condition,

because litigation related to these claims would strain the financial resources in addition to consuming the time and

attention of the management. This also relates to product liability claims as TTS, as a producer and provider of

technology products, is exposed to product liability claims that may adversely affect TTS' profitability. TTS will not

necessarily be able to recover losses incurred due to such liability from its suppliers, nor will TTS' insurance

schemes necessarily cover such liabilities.

[7]

1.1.11 Reliance upon key personnel

TTS is highly dependent upon the senior management and engineering team, the loss of whose services might

impede the achievement of the company's objectives. Competition for key personnel with the experience that is

required is tough and is expected to continue to increase. There is no assurance that the Company will be able to

retain key personnel, nor can assurances be given that the Company will be able to recruit new key personnel in the

future.

1.1.12 Exchange rate risks

The value of non-Norwegian currency denominated revenues and costs will be affected by changes in currency

exchange rates or exchange control regulations. The majority of the Company’s future revenues in addition to NOK,

are expected to be in USD and EUR. TTS does engage in foreign exchange hedging transactions, but there can be no

assurance that these actions will adequately protect its operating results from the effects of exchange rate

fluctuations.

1.1.13 Labour interruptions

At the end of the first quarter of 2012, TTS had 1 474 employees (excl. Joint Ventures) (of which 268 were hired),

whereas the corresponding number after completion of the Transaction is budgeted to be approx. 990 (of which

approx. 180 will be hired personnel). Certain of TTS's employees are members of labour unions and future

employees may also be members of unions. Any labour unrest could prevent or hinder TTS's services from being

carried out normally and, if not resolved in a timely and cost-effective manner, could have a material adverse effect

on its business, results of operations, cash flows and financial condition.

1.1.14 Risks affecting international operations

TTS's business and results of operations are subject to a range of risks inherent in international operations. These

risks include:

Instable foreign governments and volatile foreign economies

New laws or regulations with obligations for TTS that will restrict its functionality or increase the cost of

operation

Risk of war or terrorist activities

Renegotiations or nullification of existing contracts and agreements

Foreign exchange restrictions or other regulations and policies affecting trade and investment

Interferences of production or services due to labour or political disturbance

1.1.15 Environmental risks

TTS works systematically to increase the level of quality on all deliveries. The TTS Group’s activities are primarily

related to design, engineering, assembly and testing of equipment. Assembly and testing of TTS products is based on

a very limited use of chemicals harmful to human health or to the environment. The products supplied by TTS are

primarily electro-hydraulically powered, and there is little risk of environmental pollution. The TTS Group’s

operations are not regulated by licenses or regulatory.

1.1.16 Taxation risks

The Company is exposed to a risk regarding the correct application of the tax regulations in the jurisdictions in

which it operates as well as possible future changes in the tax legislation of those relevant jurisdictions. New and

changed regulations could have an impact on TTS' profitability.

1.2 Risk factors relating to the Transaction

1.2.1 No completion of the Transaction

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The completion of the Transaction is expected to take place primo June. The Transaction may not be completed or

may not be completed as described in this Information Memorandum, if certain conditions to such completion are

not satisfied or waived. Should the Transaction be significantly delayed or not be completed, this could have a

material adverse effect on the financial conditions of TTS.

1.2.2 Unaudited pro forma financial information

This Information Memorandum contains unaudited pro forma financial information, which gives effect to the

Transaction. The unaudited pro forma financial information is based on preliminary estimates and assumptions

which TTS believes to be reasonable and is being furnished solely for illustrative purposes and is not necessarily

indicative of what TTS and TTS Energy's separate results of operations and financial conditions would have been

had the Transaction occurred on the dates assumed, see further information in Section 9 (Pro forma financial

information). The readers should not place undue reliance on TTS' unaudited pro forma financial information

presented in this Information Memorandum.

1.2.3 Less diversified company

By completion of the Transaction, TTS will depart from the drilling equipment industry, both offshore and onshore.

Following completion of the Transaction, TTS will thus become a less diversified company. TTS will, however,

retain and continue to develop and grow offshore handling (cranes and winches), which is not included in the

Transaction.

1.2.4 Risks relating to claims for breaches of the Agreement

After completion of the Transaction, TTS may be exposed to claims related to the extensive set of representation and

warranties and other undertakings included in the Agreement; see Section 3 (Description of the Transaction) for

further information. If TTS is in breach of such representation and warranties and other undertakings, TTS may be

subject to claims from Cameron Holding Norge AS. Resolving such a claim can be costly and time consuming, and a

successful claim under the Agreement against TTS could subject TTS for significant damages which may have a

material adverse effect on the results and financial position of TTS.

1.3 Risk factors relating to the Shares

1.3.1 Volatility of share price

The market price of the Shares can fluctuate widely in response to a number of factors, including the following:

actual or anticipated variations in operating results;

changes in financial estimates or recommendations by stock market analysts regarding the Company or its

competitors;

announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint

ventures, capital commitments or significant contracts;

matters announced in respect of major customers;

sales or purchases of substantial blocks of stock;

additions or departures of key personnel;

future equity or debt offerings by the Company and its announcements of these offerings;

changes to the regulatory environment in which the Company operates; and

general market and economic conditions.

Moreover, in recent years, the stock market in general has experienced large price fluctuations. These broad market

fluctuations may adversely affect the Company's stock price, regardless of its operating results.

1.3.2 Possibility of waiver of pre-emptive subscription right

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In order to raise equity on short notice in the investor market, TTS may undertake private placements with a

minimum subscription amount, and the general meeting may in that connection decide to waive the shareholders'

pre-emptive subscription rights.

1.3.3 Shareholders not participating in future offerings may be diluted

Unless otherwise resolved or authorised by the general meeting, shareholders in Norwegian public companies such

as the Company have pre-emptive rights proportionate to the aggregate amount of the shares they hold with respect

to new shares issued by the company. For reasons relating to US securities laws (and the laws in certain other

jurisdictions) or other factors, US investors (and investors in such other jurisdictions) may not be able to participate

in a new issuance of shares or other securities and may face dilution as a result.

1.3.4 Exception from the right to vote

Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other

third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the

Norwegian Central Securities Depository (the “VPS”) prior to the Company's general meetings. The Company

cannot guarantee that beneficial owners of the Shares will receive the notice of a general meeting in time to instruct

their nominees to either affect a re-registration of their Shares or otherwise vote for their Shares in the manner

desired by such beneficial owners.

1.3.5 Future sales of Shares

Sales of substantial amounts of the Shares by certain principal shareholders, directors and key management members

or the perception that such sales could occur, could have an adverse effect on the market value of the Shares and the

Company’s ability to raise capital through future capital increases.

1.3.6 Transfer restrictions under the securities law of the United States and other jurisdictions

The Shares are not registered under the U.S. Securities Act of 1933, as amended, or the securities laws of other

jurisdictions other than the Kingdom of Norway, and the Company does not expect to do so in the future. The Shares

may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the U.S.

Securities Act) nor may they be offered or sold in any other jurisdiction in which the registration of the Shares is

required but has not taken place, unless an exemption from the applicable registration requirement is available or the

offer or sale of the Shares occurs in connection with a transaction that is not subject to these provisions. In addition,

there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in

future capital increases or rights offerings.

1.3.7 Ability to pay dividends

Norwegian corporate legislation provides that any proposal of distribution of dividends must be adopted by TTS'

general meeting of shareholders. Dividends may only be distributed to the extent that TTS has distributable funds

and TTS' board of directors find such distribution to be prudent in consideration of the size, nature, scope and risks

associated with TTS' operations and its liquidity and financial position.

As a principal rule, the Company's general meeting of shareholders may not resolve to distribute higher dividends

than the Company's board of directors has proposed or approved. If, for any reason the general meeting does not

declare dividends in accordance with the above, a shareholder will generally have no claim in respect of such non-

distribution, and TTS will, as a general rule, have no obligation to pay any dividend in respect of the relevant period.

1.3.8 Enforceability of civil liabilities

TTS is a public limited liability company organised and existing under the laws of Norway. The majority of the

members of the board of directors or the Company's executive management reside in Norway. As a result, it may not

be possible for investors to effect services of process in other jurisdictions upon such persons or the Company, to

enforce against such persons or the Company judgements obtained in non-Norwegian courts, or to enforce

judgements on such persons or the Company in other jurisdictions.

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1.3.9 Shareholders' limited ability to take legal proceedings against the Company

The rights of the Company's shareholders are governed by Norwegian law and by the articles of association of the

Company. These rights may differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law

limits the circumstances under which shareholders of Norwegian companies may bring derivative actions. For

instance, under Norwegian law, any action brought by a company in respect of wrongful acts committed against the

Company will be prioritised over actions brought by shareholders claiming compensation in respect of such acts. In

addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated

upon, securities laws in other jurisdictions.

1.3.10 Exchange rate risk for foreign shareholders

The Shares are priced in Norwegian kroner (NOK), the lawful currency of Norway, and any future payments of

dividends on the Shares will be denominated in NOK. Accordingly, any investor outside Norway is subject to

adverse movements in the NOK against their local currency, as the foreign currency equivalent of any dividends

paid on the Shares or price received in connection with any sale of the Shares could be materially adversely affected.

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2. RESPONSIBILITY STATEMENT

Statement from the Board of Directors of TTS Group ASA

This Information Memorandum has been prepared by TTS Group ASA to provide information regarding the

contemplated Transaction.

The Board of Directors of the Company confirms that, having taken all reasonable care to ensure that such is the

case, the information contained in the Information Memorandum is, to the best of our knowledge, in accordance with

the facts and contains no omission likely to affect its import.

Bergen, 4 June 2012

The Board of Directors of TTS Group ASA

Trym Skeie

Chairman of the Board

Kjerstin Fyllingen

Board member

Anne Breive

Board member

Bjarne Skeie

Board member

Jan Magne Galåen

Board member

Jarle Dyrdal

Employee Representative

Karen Mørkestøl

Employee Representative

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3. DESCRIPTION OF THE TRANSACTION

3.1 Overview of the Transaction

On April 17, 2012 TTS Group ASA entered into an agreement to sell its drilling equipment business, a part of TTS

Energy division, and relevant subsidiaries, to Cameron Norge Holding AS for USD 270 million (less target net

debt), plus a turnover based earn-out model for a three-year period. The divestment shall be carried out by way of

sale of 100 per cent of the shares in TTS Energy AS, a wholly-owned subsidiary of TTS Group ASA and owning the

group of and/or entities carrying out the drilling equipment business; se Section 3.2 below for more information. The

transaction strengthens TTS Group financially and enables it to focus upon further growing and developing the

group.

The divestment is an active step by TTS to participate in the on-going further developments of the drilling

equipment industry, and is industrially right for both the Group as whole and for its drilling equipment business unit.

With the divestment, TTS Group will depart the drilling equipment industry, both offshore and onshore.

Offshore Handling (cranes and winces), which is also a part of the TTS Energy division, is not included in the

divestment, and TTS Group will thus continue to develop and grow Offshore Handling. After the transaction, TTS

Group will consist of TTS Marine, TTS P&L (Port & Logistics) and Offshore Handling.

3.2 TTS drilling equipment business

TTS drilling equipment business delivers high performance drilling equipment, multifunctional rigs and world class

control systems to the international energy industry. It provides unique solutions and advanced technologies based

on a highly skilled workforce and many years of experience. The designs offer efficient and cost competitive

solutions for rigs and vessels.

TTS delivers on- and offshore drilling equipment for platform rigs, jack ups and semi submersibles. The company

delivers integrated drilling packages to international drilling contractors. TTS also delivers offshore modular rigs

based on the internationally patented rack & pinion hoisting principle, tailored to meet the specific requirements of a

field development, whether the rig is for workover, drilling, P&A or a combination of well services. TTS also

delivers land rigs based on the same technology.

Additionally, TTS delivers a wide range of modern, innovative and cost-effective mud systems and equipment for

both on- and offshore applications.

Automated drilling equipment allows the entire operation to be remote controlled making the products safer, more

reliable and easier to use.

3.3 Consideration

Total consideration is USD 270 million less target net date (as further specified in the Agreement), plus a turnover

based earn-out model for a three-year period starting from the closing of the transaction. The consideration shall be

settled by way of cash payment. The value of the earn-out is highly uncertain and is contingent on the Drilling

Equipment Business achieving certain revenue growth targets in the next 3 years. The earn-out model is based on the

revenue exceeding a hurdle amount in each of the 3 years. TTS would be entitled to a per cent of the amount

exceeding the hurdle amount in each year.

The transaction before earn out will give TTS Group a profit of approximately NOK 300 million. Due to the

uncertainty of the earn-out, no income from the earn-out has been assumed in the estimated profit calculation.

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3.4 Completion & Conditions

The transaction is expected to close in the second quarter of 2012.

The transaction is subject to customary closing conditions, including inter alia the following conditions:

the Norwegian Competition Authority (Nw.: Konkurransetilsynet) has cleared the Transaction;

neither the Seller nor the Purchaser is in material breach of its obligations under the Agreement;

there exists no material breach of the Seller's warranties which is not remedied, as further specified in the

Agreement;

TTS Group ASA and TTS Energy AS have entered into and completed a saleback agreement relating to the

offshore handling business;

certain named material agreements have been terminated with no further obligation or liability to TTS

Energy AS or any of its subsidiaries;

TTS Energy AS has obtained in writing all necessary approvals from third parties as further specified in the

Agreement;

the parties agree on certain project estimates as of 31 March 2012 to be binding for purposes of generating a

completion balance sheet;

TTS Group ASA and TTS Energy AS agree, execute and deliver certain named side agreements; and

no material adverse change shall have occurred prior to completion.

3.5 Expenses relating to the Transaction

Expenses relating to the transaction mainly relate to a success fee for Pareto Securities and cost relating to legal

advisory services. Total expenses relating to the transaction is estimated to NOK 28 million.

3.6 Interest of certain persons in the Transaction

No agreements have currently been entered into providing benefits for certain persons as a result of the Transaction.

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4. PRESENTATION OF TTS GROUP ASA

4.1 Incorporation, registered office and registration number

The Company’s legal and commercial name is TTS Group ASA. The Company is a Norwegian Public Limited

Company organised under Norwegian law, and the Company and its business activities are governed by the

provisions of the Norwegian Public Limited Companies Act (Norwegian: allmennaksjeloven). The Company’s

registered organization number is 932 142 104. The Company was incorporated in 1974 under the name TTS

Technology ASA.

The Company’s registered office is at Folke Bernadottes vei 38, Postboks 3577 Fyllingsdalen, NO 5845 Bergen

Norway. The Company’s telephone number is +47 55 94 74 00.

4.2 History

The list below outlines the key historical events for TTS Group ASA.

Year Historical event Year Historical event

1966 Company established 2006 Established TTS Marine s.r.l., Genova, Italy

1995 Listed on Oslo Stock Exchange 2006 Established TTS Vietnam, Hai Phong

1996 Acquired Mongstad Engineering AS 2007 Acquired ICD Projects AS, Ålesund, Norway

1997 Acquired Norlift AS 2007 Acquired Sense EDM AS, Norway

2000 Acquired Aktro AS 2007 Acquired 100% Sense MUD AS, Kristiansand, Norway

2001 Established Joint Venture in Shanghai, China 2007 Established Sense DrillFab AS, Norway

2001 Sold TTS Construction AS 2007 Established Sense EDM pte LTd, Singapore

2001 Acquired HamworthyKSE AB, Dry Cargo 2007 Established TTS Keyon Marine, China

2001 Acquired Hydralift Marine and sold TTS Aktro 2008 Acquired Wellquip Holding AS, Norway

2002 Established office in Pusan, Korea 2008 Established Jiangnan -TTS, China

2004 Acquired 100% of JV in Shanghai, China 2008 Established TTS Marine Equipment (Dalian), China

2004 Acquired LMG Cranes in Lubeck, Germany 2009 Established TTS Singapore Pte.Ltd, Singapore

2004 Acquired Liftec Oy in Tampere, Finland 2009 Established TTS Greece Ltd, Greece

2005 Established TTS BoHai Machinery in Dalian, China 2009 Established TTS Mexico, Mexico

2005 Etablished TTS Inc. in Miami, USA 2009 Established TTS Brazil, Brazil

2005 Acquired NavCiv Engineering AB, Sweden 2011 Established TTS Poland

2005 Acquired Kocks GmbH in Bremen, Germany

[15]

4.3 Legal structure

4.4 Share capital and historical development of share capital

Conversion rights related to convertible subordinated bond is 20,734,821 as per 31.12.2011.

4.5 Business overview

4.5.1 Introduction

Bergen-headquartered TTS is a global enterprise that designs, develops and supplies equipment for marine industry

and the oil & gas industry. The operations are split into three separate divisions: Marine, Energy and Port and

Logistics. TTS is one of the top three largest suppliers in its market segments. TTS is listed on the Oslo Stock

Exchange and the group’s annual turnover is in the region of NOK 4,200 million. With a worldwide workforce of

around 1,400 (prior to closing of the Transaction), TTS has over 40 years of experience in the marine industry. The

group has, prior to the closing of the Transaction, subsidiaries in Norway, Sweden, Germany, USA, China, Finland,

Korea, Czech Republic, Vietnam, Canada, Singapore, Italy, Greece and Brazil.

Colour Codes

TTS Sense Drillfab AS

Kristiansand, Norway

Drill Finance AS

Holding/dormant

Marine

Energy

Port & Logistics

TTS Mexico S.A. de C.V

Mexico

Servicios TTS Sense Tihuantlan S.A.

Mexico

Brazil

TTS Sense Mud BV

TTS Energy Canada Ltd

de CV


Netherlands

Drillrig AS


TTS Port Equipment AB

Dalian, China

TTS Marine Equipment Ltd

TTS Marine GmbH

Bremen, Germany

TTS EDM Inc

USA

Maskinering og Sveiseservice AS

Bryne, Norway

TTS Energy (China) Company Ltd

Shanghai, China

TTS Sense -Ind C S P Ltda

Shanghai, China TTS Port Equipment Holding AB

Gotenburg, Sweden

Dalian, China

TTS Liftec Oy

Tampere, Finland TTS Greece Ltd

Piraesus, Greece

Norlift AS

Bergen, Norway

TTS Marine Inc

Virginia, USA TTS Bohai Machinery, Co. Ltd

Alberto, Canada

Gotenburg, Sweden

Gotenburg, Sweden TTS Singapore Ltd

Singapore

TTS Hua Hai AB

Gotenburg, Sweden TTS Marine AS


TTS Hua Hai Ships Equipment Co. Ltd

Shanghai, China TTS Marine Holding AB

TTS JV Jiangsu

Shanghai, China

TTS Marine Co. Ltd

Busan, Korea TTS Handling System

Drøbak Norway

TTS Cranes Norway AS

Bergen, Norway

TTS Kocks Ostrava s.r.o

Ostrava, Czech Republic TTS Shanghai Co. Ltd

Bergen, Norway

TTS Group ASA

Bergen, Norway

TTS Energy AS TTS Marine AB

Kristiansand, Norway Gotenburg, Sweden

Hydralift Marine AS


TTS Marine S.r.l

Genova, Italy TTS Ships Equipment ASSingapore

TTS Energy Pte Ltd

Date Type of transaction Share capital # of shares Nominal in NOK Subscription price

01.01.2009 Opening balance 12 954 140 25 908 279 0,50

30.07.2009 Public offering 33 954 140 67 908 279 0,50 6,0000

13.07.2010 Private placement 37 315 600 74 631 199 0,50 6,3000


02.07.2011 Debt conversion 37 674 883 75 349 765 0,50 9,2839


31.10.2011 Debt conversion 37 845 392 75 690 784 0,50 9,2839

[16]

4.5.2 Marine

The Marine Division delivers products to the marine industry. This has been at the core of TTS Group’s activities

since the business was founded. The division has an unmatched range of shipboard equipment enabling operators to

carry out tasks quickly, efficiently and safely, both at sea and in port. Focus is on creating and delivering solutions

that allow vessels to operate to their full capacity at all times.

TTS Marine division comprises the three former divisions Dry Cargo handling, Deck Machinery and Marine Cranes.

The division is headquartered in Bergen and employs approximately 740 people. Operations are split into three

business units, Cargo Access, Deck Equipment and Services. Cargo Access is responsible for RoRo equipment, side

doors, cruise and mega yacht equipment and marine cranes. Deck Equipment is responsible for deck machinery,

hatch covers and cargo cranes. Services are the Marine division’s global service network and comprises services

department in the Norwegian, Swedish and German companies.

TTS’ joint venture companies: TTS Hua Hai Ships Equipment and TTS Bohai Machinery are also part of the Marine

Division. The joint venture companies are located in China.

The division is headed by Ivar K Hanson.

4.5.3 Port & Logistics

The Port and Logistics Division, employing approximately 85 people, operates through the companies TTS

Handling System, TTS Liftec Oy and TTS Port Equipment AB. The division, headquartered in Gothenburg, Sweden

is responsible for linkspans, mooring systems, RoRo and container terminal systems, and shipyard systems.

The division is headed by Lennart Svensson.

TTS Group ASA

Port & Logistics (Gøteborg)Marine (Bergen) Energy (Kristiansand)

Design and development of cargo and

materials handling equipment:

• Block and heavy load handling

• Cargo Handling

• Consulting

• Container terminal

• Port equipment

• Shiplift and transfer systems

• Shipyard production lines

Design and development of shipboard

equipment such as:

• Cruise vessel equipment

• Electric winches

• Hatch covers

• Hydraulic winches

• Marine cranes

• Mega yacht equipment

• RoRo equipment

• Sideloading systems

Design and development of onshore

adn offshore drilling equipment:

• Drilling packages

• Land rigs

• Mud systems

• Offshore cranes

• Offshore ships equipment

• Offshore winches

• Roll compensation systems

TTS Marine

Cargo Access Deck Equipment Services Joint Ventures

• RoRo equipment

• Side Doors

• Cruise and Mega

Yachts equipment

• Custom Marine

Cranes

• Deck Machinery

• Hatch Covers

• Cargo Cranes

• Spare parts

• Inspection & survey

• In voyage repairs

• Modernisation &

conversions

• Service agreements

• Remote access

surveillance

• Hatch Covers

• Cranes

[17]

4.5.4 Energy

The TTS Energy Division focuses on development and delivery of advanced drilling and handling solutions for oil

and gas industry globally. The division delivers high performance products including; drilling equipment,

multifunctional rigs, offshore cranes, offshore winches and world class control systems. The division focuses on

providing unique solutions based on advanced technologies. TTS Energy provides efficient and cost competitive

solutions for your rigs and vessels based on a combination of innovative technology, experienced engineers and use

of best practice.

TTS Energy has been an active partner in developing equipment capable of withstanding the extremes of harsh

environment, from the inception of the offshore industry in the North Sea.

TTS Energy is headquartered in Kristiansand, Norway employing approximately 550 people. Operations are split

into two business areas, Drilling and Offshore Handling. Drilling comprises drilling packages, drilling equipment,

land rigs and mud systems. Offshore handing comprises cranes and winches for rigs and offshore vessels.

The division is headed by Inge Gabrielsen.

4.6 Patents and licenses

TTS Energy holds a number of patents related to the development of products relating to drilling equipment. TTS

Group does hold a number of patents although these are not viewed as material to the current business.

4.7 Trend information

The Group has not experienced any changes or trends outside the ordinary course of business that are significant to

the Group between 31 December 2011 and the date of this Information Memorandum, other than those described

elsewhere in this Information Memorandum. Please see Section 4 “Presentation of TTS Group ASA” and Section 6

“Market Overview” for more information about significant recent trends in the Group’s business and relevant

markets.

TTS Port & Logistics

Production Equipment Heavy Load Equipment Port Equipment

TTS Energy

Drilling Packages

and systems

Drilling

equipment

Rack & Pinion

rigs

Offshore Handling

& Winches

Offshore cranes

and Davits

[18]

4.8 Board of Directors and Management

The Company’s registered business address, Folke Bernadottes vei 38, Postboks 3577 Fyllingsdalen, NO 5845,

Bergen, Norway, serves as c/o address for the members of the Company’s directors and management.

4.8.1 Board of directors

Chairman Trym Skeie – Skeie (43) is one of the main founders of Skagerak Venture Capital AS (SVC), where he

currently is a partner and holds the Chairman seat. Skeie has been Investment Manager in Kistefos Venture Capital,

Vice President at Silicon Capital Ltd., Manager of Accenture and structural design engineer in Hydralift ASA. He

has also had Board seats in several offshore industry companies. Skeie holds the equivalent of a Masters degree from

the Norwegian School of Economics and Business Administration (NHH), and a MSc. from the Norwegian

University of Science and Technology (NTH). Skeie has been chairman of the board since November 2009. Skeie is

a Norwegian citizen.

Director Kjerstin Fyllingen – Fyllingen (54) is corporate director of Tryg, Private & Commercial Norway. She

holds a Diploma in Economics and an MSc in Leadership,both from the Norwegian School of Management BI.

Fyllingen previously worked for Vital Forsikring, where she held various managerial positions in charge of the

business segments Public Sector, as well as Customer Service Private & Commercial. Fyllingen has furthermore

held various managerial positions in DnB within the areas of IT and Economics. She has been head of Infodoc

International and held various positions within Economics in DnV. Fyllingen has been a member of the board since

2008. Fyllingen is a Norwegian citizen.

Director Anne Breive – Breive (46) is an independent consultant. She has a Bachelor of Commerce degree from the

Norwegian School of Management (BI) and an MBA degree from Glasgow University. During the period 1994-

2005, she held various managerial positions in the Norske Skog Group, including that of Vice President Corporate

Funding and Vice President Corporate Controlling. From 2005 – 2008 Breive was CFO at Statnett, thereafter CFO at

Løvenskiold-Vækerø AS. Breive has been a member of the TTS Group ASA board since 2005. Breive is a

Norwegian citizen.

Director Bjarne Skeie – Skeie (66) has an engineering background and is known as an entrepreneur, industrial

developer and investor in the rig, offshore and equipment industries. This includes the founding of Maritime

Hydraulics AS (1970), as well as acquisitions and restructuring of a number of companies that were merged and

listed on the Oslo Stock Exchange as Skeie Group (1986/87). Skeie was Chairman of the Board of TTS Group ASA

in the period 2002-2003 and has been a member of the board since 2008. Skeie is a Norwegian citizen.

Director Jan Magne Galåen – Galøen (40) is a Portfolio Manager in Rasmussen Gruppen. He holds an MSc from

Norwegian University of Science & Technology (NTH) and has further formal education in economics from BI.

Prior to joining Rasmussengruppen he was head of the Oil Service Research team in First Securities and has

previously worked as analysis at Fearnley Fonds. Galåen has also experience from industrial companies like Aker

Maritime and Hydro Aluminium Maritime. He currently holds a position as director of the board of Metallkraft AS.

Galåen is employed by Rasmussengruppen AS which is a major shareholder in the company. Galåen is a Norwegian

citizen.

Director Karen T. Mørkestøl – Mørkestøl (59) has completed upper secondary school with emphasis on English

language and music, and has further completed a one-year course at a college of commerce. Mørkstøl worked for

ship chandler Oskar Pedersen AS from 1972 to 1980 and was later employed by Maritime Hydraulics/Aker Solution.

Mørkestøl has held a position with Sense Technology/TTS Energy since 2000. Her responsibilities have included

accounting, wages, secretarial duties, administration and human resources. In 2006, Mørkestøl was appointed

Manager HR & Administration. She was appointed employee representative of the Board of TTS Group ASA in

2010. Mørkestøl is a Norwegian citizen.

Director Jarle Dyrdal – Dyrdal (40) holds a Bachelor’s degree in Industrial Electronics from the University of

Agder. He has worked with design and development of drilling equipment for Sense Technology, now TTS, since

2001. He currently holds the position of Vice President Products & Technology in the TTS Energy division in

[19]

Kristiansand. From 1996 to 2001, he worked for Aker Solution MH in Kristiansand. Dyrdal was a member of the

Board of Directors of TTS Offshore Handling Equipment from 2008 to 2010, and was appointed employee

representative on the Board of TTS Group ASA in 2010. Dyrdal is a Norwegian citizen.

4.8.2 Management

Johannes D. Neteland – President & CEO – Neteland (54) is President & CEO of TTS Group ASA. He has a

Master of Science in Business degree from the Norwegian School of Economics (NHH). Neteland worked for Statoil

from 1981 to 1988. He was the deputy managing director of Block Watne Boliger from 1988 to 1989 and the

marketing director of the Ekornes Group from 1989 to 1991. He was the division director of Vital Forsikring from

1991 to 1998 until he assumed his current position.

Ivar K. Hanson – Executive VP – Hanson (47) is Executive Vice President of the TTS Marine division and

President of TTS Marine AS. He holds a Master of Science in Business degree from the Norwegian School of

Economics and Business Administration (NHH) and is a mechanical engineer. He started at TTS as a shipyard

consultant in 1994 and was appointed managing director of TTS Automation AS in 1999 and TTS Handling Systems

AS in 2000. From 2003 to 2004, Hanson was director of Prosafe Drilling Services AS for Technology and Projects

in the engineering division.

Lennart Svensson – Executive VP – Svensson (55) is Executive Vice Presiden of the TTS Port and Logistics

division. Svensson is a Naval Architect and Mechanical Engineer. He has eight years of experience from various

enterprises that are currently part of the MacGregor Group and two years as Marketing Director at Daros Piston

Rings AB. Svensson has worked for TTS since 1996 and as President in TTS Port Equipment AB since the company

was established in 2005.

Inge Gabrielsen – Executive VP – Gabrielsen (59) is Executive Vice President of the TTS Energy division and

President of TTS Energy AS. Gabrielsen holds a degree as M.Sc. Naval Architect and Marine Engineering from the

Norwegian Institute of Technology (NTH) in Trondheim. Gabrielsen started in TTS Sense in 2007. Before that, he

was Vice President for Vessel Mangement and Equipment Group in Subsea 7 ASA. He has also worked for different

companies in Aker Maritime for ten years.

Arild Apelthun – CFO – Apelthun (40) is CFO of TTS Group ASA. Apelthun comes from the position as CFO of

Aker Process, based in the Netherlands. Apelthun has held various positions in subsidiaries of Aker Solutions in the

USA and Europe over the last seven years. Prior to that, he worked for ABB, Aker Maritime and Ementor in

Norway. Arild Apelthun has a Master of Science in Business degree from Bodø Graduate School of Business.

Miao Reinlund – Vice President, Communications – Reinlund (38) is Vice President, Communications of TTS

Group ASA. She holds a Bachelor of Art degree in Journalism, in addition to Psychology and Economics. Ms.

Reinlund has worked for seven years as a business executive at several international corporations, and as a journalist,

executive producer and director of various international media networks for a further seven years. Reinlund is on the

Board of Directors of Den Nationale Scene theatre in Bergen, and is Personal Deputy for the Chairman of the Board

of Bergen International Festival, Norway.

4.8.3 Shareholdings, stock options, service contracts with the Group and benefits upon termination of

employment

The following table sets forth, as of the date of this Information Memorandum, the number of shares owned directly

or indirectly by each of TTS’s directors and management, and the number of options held by such persons:

Name Position No. of Shares No. of Options

Trym Skeie 1)

Chairman 2,483,875 0

Bjarne Skeie 2)

Boardmember 23,026,291 0

[20]

Karen T. Mørkestøl Boardmember 3,949 0

Jarle Dyrdal Boardmember 30,227 0

Johannes Neteland CEO 200,000 240,000

Related daughter Anna S. Neteland 100 0

Arild Apelthun CFO 0 120,000

Ivar K. Hanson Executive VP 92,422 120,000

Lennart Svensson Executive VP 200 120,000

Inge Gabrielsen Executive VP 450 120,000

1) Owns 100% of the shares in Tamafe Holding

2) Bjarne Skeie owns 20% of the shares and 100% of the voting shares in Skeie Technology AS, Skeie Consultants AS and Skeie Capital

Investment AS. Lesk AS is owned by related daughter Lena Skeie. Stisk AS is owned by related daughter Stina Skeie.

Johannes D. Neteland’s employment agreement specifies 24 months in termination benefits in the case of

involuntary termination. Members of the group management are entitled to 12 month termination benefit.

Except for the above, no members of the administrative management or supervisory bodies have entered into any

service contracts with the Company or any of its subsidiaries providing for benefits upon termination of their

employment.

No members of the Board of Directors are entitled to severance payments.

4.9 Employees

At the date of the Information Memorandum, the Group had 1,379 employees in 14 countries.

The table below reflects a breakdown of the geographical location of the Group’s employees as of the date of this

Information Memorandum.

Location Number of employees Percentage of total employees

Norway……………………………………… 645 46.7%

China………………………………………... 205 14.9%

Germany……………………………………. 169 12.3%

Sweden……………………………………… 145 10.5%

Korea……………………………………….. 62 4.5%

Czech Republic……………………………... 34 2.5%

Canada……………………………………… 30 2.2%

Finland……………………………………… 28 2.0%

Singapore…………………………………… 25 1.8%

USA………………………………………… 14 1.0%

Vietnam……………………………………. 10 0.7%

Greece……………………………………… 6 0.4%

Italy………………………………………… 5 0.4%

Brazil……………………………………….. 1 0.1%

[21]

Total 1,379 100.0%

4.10 Corporate governance

The Norwegian Code of Practise for Corporate Governance (the “Corporate Governance Code”) applies to the

Company. The Company provides the market with an annual statement concerning compliance and non-compliance

with the various recommendation of the Corporate Governance Code. It is the opinion of the Company that it

maintains high standards of corporate governance and is committed to ensure that all shareholders of the Company

are treated equally. TTS Group’s principles of corporate governance have been adopted by the Board of TTS Group

ASA in compliance with the recommendations set out in the Corporate Governance Code. For further information

regarding the corporate governance of the Company, reference is made to the annual report 2011 of the Company.

TTS Group ASA applies the Norwegian code of practice for corporate governance, dated 21 October 2010, as

amended 20 October 2011. Principally, TTS Group ASA acts in accordance with this code of practise and, with the

following few exceptions:

In accordance with the Norwegian Public Limited Companies Act and the Company’s articles of

association, the Chairman of the Board is elected by the Board unless already elected by the Annual

General Meeting.

The Company’s shareholders have on a general meeting held 3 June 2010 granted the Board of Directors

authorizations to increase the Company’s share capital by issuing discounted shares to employees with a

maximum of NOK 250,000. The authorizations are granted for a period of two years, due to the share

options programs for executive management of the Company being of terms of two years.

The Company's shareholders have on a general meeting held 19 May 2011 granted the Board of Directors:

o authorizations to increase the Company’s share capital by up to NOK 3,500,000 by issuance of

shares through one or more directed share issues, such authorization to remain effective until the

next annual general meeting and latest 30 June 2012;

o authorization to increase the company's share capital by up to NOK 220,000 by issuance of shares

to leading employees – for allocation in 2011, such authorizations remaining effective for two

years;

o similar authorizations as mentioned in item (ii) above – for allocation in 2010, however such that

any such authorizations will remain effective until the next annual general meeting; and

o authorization to increase the company's share capital by a maximum of NOK 250,000 through the

issuance of discounted shares to employees, such authorization to remain effective until the next

annual general meeting.

TTS Group ASA’s Articles of Association are available on the company’s website. The same applies to ethical

guidelines.

4.11 Major shareholders

An overview of the Company’s 20 largest shareholder as of 11 May 2012 is set out in the table below:

Name of shareholder Number of Shares

Ownership (%)

1 Rasmussengruppen AS 11,512,506 13.7

2 Skeie Technology AS 8,929,879 10.7

3 Lesk AS 5,306,058 6.3

4 Stisk AS 5,306,058 6.3

5 Skandinavia Enskilda Banken (nominee acc) 5,152,752 6.2

6 Barrus Capital AS (II) 3,455,000 4.1

7 Skagen Vekst 3,222,553 3.8

[22]

8 Skeie Capital Investment AS 2,531,263 3.0

9 Shb Stockholm (nominee acc) 2,484,641 3.0

10 Tamafe Holding AS 2,160,735 2.6

11 Odin Maritim 2,000,000 2.4

12 Mertoun Capital AS 1,534,847 1.8

13 Itlution AS 1,475,261 1.8

14 Holberg Norge 1,462,581 1.7

15 DNB NOR SMB 1,169,114 1.4

16 Skeie Consultants AS 953,033 1.1

17 Holberg Norden 876,329 1.0

18 Sal oppenheim Jr & Cie (nominee acc) 821,162 1.0

19 State Street bank and trust Co. 700,000 0.8

20 Euroclear Bank S.A. (nominee acc) 624,132 0.7

Total 20 largest shareholders 61,677,904 73.7

Others 22,054,211 26.3

Total 83,732,115 100.0

Pursuant to the Norwegian Securities Trading Act, a person, entity or group acting in concert that acquires shares,

options for shares or other rights to shares resulting in its beneficial ownership, directly or indirectly, in the

aggregate meeting or exceeding the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 and 90% of

the share capital and/or the voting rights in the Company has an obligation under Norwegian law to notify Oslo Børs

and the Company immediately. The same applies to disposals of shares) resulting in a beneficial ownership, directly

or indirectly, in the aggregate meeting or falling below said thresholds. A change in ownership level due to other

circumstances may also trigger the notification obligations when said thresholds are passed, e.g changes in the

Company’s share capital.

The Company is not aware of any shareholders or consolidated groups of shareholders owning a number of Shares

sufficient to control the Company.

4.12 Legal and arbitration proceedings

The Company is currently not involved in any governmental, legal or arbitration proceedings (including any such

proceedings which are pending or threatened of which the Company is aware), and has not been involved in any

such proceedings during the previous twelve months, which may have, or have had in the recent past, significant

effects on the Company financial position or profitability.

4.13 Material contracts

In relation to the completion of the Transaction, the Company has entered into an agreement for the sale and

purchase of the Offshore Handling Business and Interwell Contract with TTS Energy AS dated 22 May 2012, as a

consequence of the Offshore Handling Business (cranes and winches) not being included in the Transaction. The

said agreement is deemed to be a material contract.

Except for the agreement above, the Company has not entered into any material agreements outside its ordinary

course of business the last two years prior to the date of this Information Memorandum.

[23]

5. INFORMATION REGARDING THE DRILLING EQUIPMENT

BUSINESS

5.1 Corporate information

The Drilling Equipment Business is a part of TTS Energy division. TTS Energy AS (“TTS Energy”) is a Norwegian

Private Limited Company organised under Norwegian law and governed by the provisions of the Norwegian Private

Limited Companies Act (Norwegian: aksjeloven). The Company’s registered organization number is 981 919 971.

The Company was incorporated in 2000 under the name Sense Technology AS.

The Company’s registered office is at Andøyfaret 3, NO 4623 Kristiansand S, Norway. The Company’s telephone

number is +47 38 00 05 70.

Offshore Handling (cranes and winches), which is also a part of TTS Energy division, is not included in the

divestment.

5.2 History

The Drilling Equipment Division was created through the acquisition of TTS Sense AS (former Sense EDM AS) in

May 2007.

EDM Engineering & Drilling Machinery AS was established in 1997 and has designed and patented a

multifunctional rig based Rak & Pinion technology. The multifunctional rig includes state of the art technology for

efficient work over, well intervention and under balanced drilling. The company has also established a series od

advanced tubular racking systems for both onshore and offshore drilling operations.

Sense Technology was established in 2000, and has been recognised as a leading supplier of advanced drilling

control systems worldwide. Sense Technology’s drilling systems enables the drilling rigs to achieve high efficiency

and quality in their drilling operations through innovative technology combining advanced control systems and

mechanical design.

In December 2005, Sense Technology and EDM Engineering & Drilling Machinery AS merged to form Sense EDM

AS. The company changed name to TTS Sense AS in May 2008.

[24]

5.3 Legal structure


5.4.1 Introduction

The Drilling Equipment Business delivers high performance drilling equipment, multifunctional rigs and world class

control systems to the international energy industry. It provides efficient and cost competitive solutions for onshore

and offshore rigs based on a combination of innovative technology, experienced engineers and use of best practice.

The Drilling Equipment Business is headquartered in Kristiansand, Norway employing approximately 550 people.

Inge Gabrielsen is the head of the Drilling Equipment Business.

The Business delivers high performance drilling equipment together with controls and utilities in one package, ready

for integration into any type of drilling operation. The drilling product portfolio includes:

49%

34%

Servicios TTS Sense Tihuantlan S.A.

de CV

Mexico

TTS Mexico S.A. de C.V

Mexico

TTS Energy Canada Ltd

Alberto, Canada

Drill Finance AS


Drillrig AS


TTS Sense Mud BV

Netherlands

TTS Sense -Ind C S P Ltda

Brazil

TTS Energy (China) Company Ltd

Shanghai, China

Maskinering og Sveiseservice AS

Bryne, Norway

TTS EDM Inc

USA

TTS Sense Drillfab AS


TTS Energy Pte Ltd

Singapore

TTS Energy AS


[25]

5.4.2 Offshore Drilling Packages

The Drilling Equipment Business offers high-end and complete drilling packages both for drillships,

semisubmersible rigs and jack-up rigs. The illustration below illustrates their offshore offering.

Source: TTS

National Oilwell Varco (NOV) is the biggest provider today, controlling ~60% of the market. Aker Solutions is the

second largest provider, while TTS Drilling Equipment is currently ranked as number three. The table below

illustrates their offshore product line compared to NOV and Aker Solutions.

Source: TTS. Table compares high-end equipment only.

1) TTS has not delivered Motion Compensation equipment, but has the technology to deliver such equipment

2) Only TTS and NOV has active heave compensated drawworks

3) Only TTS and NOV has column racker, catwalk machine with tail-in arm and other preferred pipehandling machines

Drilling Product Portfolio

Integrated Drilling Packages Drilling Equipment

Drilling Package for

Semi Submersibles and DrillshipsHMI & Control Systems

Hoisting & Rotation EquipmentDrilling Package for

JU / Fixed Platforms Tubular Handling

Drill Floor Tools150-400T R&P Modular Rigs

Motion Compensation250-400T Land Rigs

BOP Handling

100-150T R&P Workover Rigs LP & HP Mud Systems

Services

Drilling equipment

& packages for

Semis & Drill ships1.

Drilling equipment

& packages for

Jack Ups & Fixed

platforms

2.

Drilling equipment

for offshore

modular rigs3.

Product line AKER MH NOV TTS

Derrick Structures Yes Yes Yes

Hoisting & Rotation Yes Yes Yes(2)

Tubular Handling Yes Yes Yes(3)

Drill Floor Tools Yes Yes Yes

Motion Compensation Yes Yes Yes(1)

BOP Handling Yes Yes Yes

HMI & Controls Yes Yes Yes

Mud Systems Yes Yes Yes

[26]

5.5 Board of Directors and management

5.5.1 Board of Directors

The board of directors consists of:

Johannes D. Neteland (Chairman)

Bjarne Skeie

Arild Apelthun

Erling Oftedal (Employee representative)

Alv Repstad, (Employee representative)

5.5.2 Management

The management the Drilling Equipment Business consists of:

Inge Gabrielsen – President

Dag Stenevik – SVP Finance

Arne Lindekleiv – SVP Sales & Marketing

Tor O. Askildsen – SVP Drilling Operation

Thomas Myrvold – SVP MUD Operation

Frank H. Hansen – SVP Global Sourcing

Pål Larsen – SVP Service

5.6 Employees

At the date of the Information Memorandum, TTS Energy had 546 employees in 4 countries.

The table below reflects a breakdown of the geographical location of TTS Energy’s employees as of the date of this


Location Number of employees Percentage of total employees

Norway……………………………………... 500 91.6%

Canada……………………………………... 30 5.5%

Singapore...…………………………………. 15 2.7%

Brazil...……………………………………… 1 0.2%

Total 546 100.0%

5.7 Selected financial information

Key financial information

The Drilling Equipment business unit has not been reported as a separate business area. The table below show the

Drilling Equipment business unit as included in the consolidated financial statements.

Amounts in NOK thousands

2011 2010

[27]

Revenue 965 397 439 069

Operating result -11 765 -108 427

Net financial result -3 333 -28 154

Profit before tax -15 089 -140 221

Tax -4 370 40 671

Profit of the year -19 459 -180 892

Total assets 1 273 369 1 288 468

Total equity 528 123 477 245

Total liabilities 745 246 811 223

[28]

6. MARKET OVERVIEW

6.1 Shipbuilding industry

One of the most important factors for the development of TTS’ markets is the shipbuilding industry. Accordingly, in

the following a short overview of the ship building market is given.

World contracting measured in number of vessels, reached a top level in 2007-2008 with more than 5,000 new

vessel orders in a single year. There was a large drop in activity following the financial turmoil and collapse in the

major shipping markets in 2008. However, the market has regained some momentum in 2010 and 2011 driven by

scrapping, slow steaming, delays and cancellations.

More than 2,000 vessels expected to be contracted during 2012 and between 2,000-2,500 vessels annually the next 8

years.

Number of new ship orders

Source: IHS Fairplay Global Fleet Statistics per February 2012

World fleet outlook

Source: IHS Fairplay Global Fleet Statistics per February 2012

6.2 Offshore market

The level of activity in the offshore market, in which the oil price is a fundamental factor, is also important for the

development of TTS. Following is a short overview of the offshore market going forward.

[29]

The US Energy Information Administration (“EIA”) expects that global oil and gas production will grow by an

average of 1% per annum over the next 20 years. Of the nearly 140 million barrels of oil equivalents (figures include

approximately 55 mmboe gas) of current global petroleum production, approximately 45 mmboe (32%) comes from

offshore (source: BP Statistical Review 2011, EIA International Energy Outlook 2011). By 2020, offshore

production is expected to increase to 75 mmboe, an increase of approximately 67%. In order to achieve this, global

exploration and production (“E&P”) spending is expected to increase further.

As shown in the chart below, E&P spending is closely related to the oil price. The financial crisis and the sharp drop

in the oil price in 2008 had a significant impact on 2009 E&P spending which showed a year on year double-digit

decline. Following the improved economic outlook and increasing oil prices, 2011 E&P spending is expected to

have shown a double digit year on year growth, bouncing back from the retreat in 2009. Going forward it is expected

that the current strong oil prices combined with a continued strengthening of the global economic outlook, will

provide support for further increase in E&P spending. This is among others driven by oil companies planning prices

are well below the current oil price and the breakeven oil price for new investments.

Oil price vs. E&P capex (left); E&P spending growth estimates (right)

Source: Schlumberger and Citigroup (various years), GlobalData (2011), ParetoResearch E&P Survey 2011

Oil planning prices (left); Breakeven of new investments (right)

Source: Pareto Research E&P Survey 2011

The increase in E&P spending is has fuelled the demand both for offshore and land rigs. This can be seen from the

graphs below.

There has been an increase in the mobile offshore drilling unit fleet of approximately 20% over the last five years to

approximately 730 units at year-end 2011. There are currently approximately 150 units under construction for

delivery from 2012 onwards, including 49 drillships and 17 semis.

0

100

200

300

400

500

600

0

10

20

30

40

50

60

70

80

90

100

1970 1975 1980 1985 1990 1995 2000 2005 2010

USD

billions

USD

/barrel

Oil Price USD/barrel (l.a)

E&P Expenditures USD billion (r.a)

0

20

40

60

80

100

120

-30%

-20%

-10%

0%

10%

20%

30%

40%1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011e

2012e

USD/bbl

Upside Nominal spending growth (lhs) Average Brent (rhs)

Y/Y change

38

7055

7080 80

0

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012

Oil planning price (USD/bbl)

55 58

0

20

40

60

80

100

120

140

2010 2011

Breaveven on new investments (USD/bbl)

[30]

The onshore drilling market experienced a severe downturn following the financial crisis, reaching a bottom mid-

2009. Since then the total land rigs in operation in North America has more than doubled to approximately 2,000

units.

Newbuild rig activity (left); Total land rigs in operation in North America (right)

Source: ODS Petrodata per March 2012, Baker Hughes Rig Count per January 2012

Jack up flee age (left); Semi fleet age (right)

Source: ODS Petrodata per March 2012

North Sea AHTS Fixture Rates (BHP>15,000) (left); North Sea PSV Fixture Rates (DWT>3,999) (right)

Source: ODS-Petrodata per May 2012, Pareto Research May 2012

6.3 Port and terminals industry

The third large factor impacting TTS’s development is the Port and Terminals market. Global shipping volumes

drive the demand for port equipment, which has shown continuous growth the last decades, below represented by the

0

5

10

15

20

25

30

35

40

2003 2004 2005 2006 2008 2009 2010 2011

# o

f ri

gs

Jackup Semisubmersible Drillship

0

500

1,000

1,500

2,000

2,500

Jan-0

0

Jan-0

1

Jan-0

2

Jan

-03

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

0

10

20

30

40

50

60

70

80

90

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

# o

f ri

gs

0

5

10

15

20

25

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

# o

f ri

gs

[31]

container fleet capacity. The container terminals have lately had a global growth of approximately 10% per year. The

increasing port utilization around the world has driven the demand for more effective handling systems. With lower

global activity, the demand for equipment is expected to be somewhat reduced.

Global container fleet capacity

Source: Clarksons vessel database per May 2012

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

'000 TEU

[32]

7. PRESENTATION OF TTS GROUP ASA AFTER THE

TRANSACTION

7.1 Legal structure


7.2.1 Introduction

After the divestment TTS will have three business units: Marine, Port and Logistics and Offshore Handling. The

group will have a worldwide workforce of 955 and 2011 proforma turnover was NOK 2,594 million. The Marine

Division will be the largest division with a turnover of NOK 2,127 in 2011 and 740 employees, accounting for ~82%

of the total turnover. Port & Logistics and Offshore Handling will account for 7.4% and 10.6% of 2011 turnover

respectively. The illustration below outlines the key products per division.

Colour Codes

Holding/dormant

Marine

Offshore Handling Equipment AS

Port & Logistics

TTS Marine Holding AB

Gotenburg, Sweden

TTS Marine AS

Gotenburg, Sweden

Shanghai, China

TTS JV Jiangsu

Shanghai, China

TTS Hua Hai Ships Equipment Co. Ltd

TTS Port Equipment Holding AB


TTS Hua Hai AB

Gotenburg, Sweden

TTS Marine Co. Ltd

Busan, Korea

TTS Singapore Ltd

Singapore

Gotenburg, Sweden

TTS Port Equipment AB

TTS Marine Equipment Ltd

Dalian, China

TTS Bohai Machinery, Co. Ltd

Dalian, China

TTS Marine Inc

TTS Greece Ltd

Piraesus, Greece

Shanghai, China

Norlift AS

Bergen, Norway

TTS Handling System

Drøbak Norway

TTS Group ASA

Bergen, Norway

Virginia, USA

TTS Kocks Ostrava s.r.o

TTS Marine GmbH

Bremen, Germany

Ostrava, Czech Republic

Hydralift Marine AS


TTS Marine AB

Gotenburg, Sweden

TTS Shanghai Co. Ltd

Genova, Italy TTS Ships Equipment AS

Bergen, Norway

TTS Cranes Norway AS

Bergen, Norway

TTS Offshore Handling Equipment AS

Bergen, Norway

TTS Marine S.r.l

TTS Liftec Oy

Tampere, Finland

[33]

7.2.2 Marine

The Marine Division delivers products to the marine industry. This has been at the core of TTS Group’s activities

since the business was founded. The division has an unmatched range of shipboard equipment enabling operators to

carry out tasks quickly, efficiently and safely, both at sea and in port. Focusing is on creating and delivering

solutions that allow vessels to operate to their full capacity at all times.

TTS Marine division comprises the three former divisions Dry Cargo Handling, Deck Machinery and Marine

Cranes. The division is headquartered in Bergen and employs approximately 740 people. Operations are split into

three business units, Cargo Access, Deck Equipment and Services. Cargo Access is responsible for RoRo equipment,

side doors, cruise and mega yacht equipment and marine cranes. Deck Equipment is responsible for deck machinery,

hatch covers and cargo cranes. Services are the Marine division’s global service network and comprises services

department in the Norwegian, Swedish and German companies.

TTS’ joint venture companies: TTS Hua Hai Ships Equipment and TTS Bohai Machinery Equipment are also part of

the Marine Division. The joint venture companies are located in China.

The division is headed by Ivar K Hanson.

7.2.3 Port & Logistics

The Port and Logistics Division, employing approximately 85 people, operates through the companies TTS

Handling System, TTS Liftec Oy and TTS Port Equipment AB. The division, headquartered in Gothenburg, Sweden

is responsible for linkspans, mooring systems, RoRo and container terminal systems, and shipyard systems.

The division is headed by Lennart Svensson.

7.2.4 Offshore Handling

The Offshore Handling division, employing approximately 125 people, operates through TTS Offshore Handling

Equipment AS.. The division, headquartered in Bergen, Norway is responsible for offshore cranes, offshore ships

equipment and offshore winches.

The division is headed by Frank Heen.

7.3 The transaction’s significance for the earnings, assets and liabilities of TTS

The transaction will influence the group’s financial position substantially where net interest bearing debt of MNOK

511 at the end of 1st quarter 2012 to a net interest bearing asset exceeding MNOK 600 for the group. The proforma

equity ratio after the transaction is 44%.

As a result of the transaction the group will repay its debt to bank and bondholders (exception being convertible

bond where TTS has not the option to repay before maturity). The Board of Directors will later decide on strategic

TTS Group ASA

Port & Logistics (Gøteborg)Marine (Bergen) Offshore Handling (Bergen)

Design and development of cargo and

materials handling equipment:

• Block and heavy load handling

• Cargo Handling

• Consulting

• Container terminal

• Port equipment

• Shiplift and transfer systems

• Shipyard production lines

Design and development of shipboard

equipment such as:

• Cruise vessel equipment

• Electric winches

• Hatch covers

• Hydraulic winches

• Marine cranes

• Mega yacht equipment

• RoRo equipment

• Sideloading systems

Design and development offshore

equipment:

• Offshore cranes

• Offshore ships equipment

• Offshore winches

[34]

matters including the future capital structure of the group and decisions relating to extraordinary dividends in 2012,

if any.

The transaction represents a significant portion of the group’s activity. Turnover for the Drilling business was NOK

952m which represents approx. 26.8% of the total turnover for the group. In 1st quarter the turnover was NOK 313m

or approx. 36.4 % of the group’s turnover. In 2011 the Drilling business reported an EBITDA of NOK 20.9m, which

represents approximately 10.6% of total EBITDA for the group. In 1st quarter 2012 the EBITDA was NOK 10.3m

which represents approx. 15.7% of the group’s total EBITDA.

With the sale of the drilling division a substantial part of the intangible assets for the group has been sold. In addition

to goodwill, research and development reflecting the last 2 years investments in drilling products and the deferred

tax assets has been reduced significantly.

Working capital was influenced by the 3 land rigs that have been in stock for the last 3 years. These are included in

the sale of the drilling unit and will cause the working capital to be reduced. This is offset by a positive cash flow

from the large drilling projects.

[35]

8. HISTORICAL FINANCIAL INFORMATION

8.1 Summary of significant accounting policies

The consolidated financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) as adopted by the EU. The IFRS principles have been applied consistently for 2011, 2010 and

2009.

Please see Section 10.3 “Incorporated by Reference” in this Information Memorandum for link to the Company’s

significant accounting policies.

8.2 Historical financial accounts

The selected historical consolidated financial information for TTS Group ASA set forth in this section has been

derived from the Company’s audited group financial statements for the financial years 2011, 2010 and 2009, and the

unaudited quarterly reports for Q1 2012 and Q1 2011. The tables should be read in conjunction with the financial

statements as incorporated by reference in this Information Memorandum (see section 10.3 “Incorporated by

reference”).

These financial statements have been prepared in accordance with IFRS and the Company`s accounting principles

may be found in the related Annual Reports.

8.2.1 Consolidated income statement

Amounts in NOK thousands Year Year Year

31 Dec 31 Dec 31 Dec

2011 2010 2009

Audited Audited Audited

Project revenue .................................................... 3 524 372 3 225 819 3 784 087

Other income ....................................................... 21 586 14 990 41 232

Total revenues and income ............................... 3 545 959 3 240 809 3 825 319

Cost o f goods sold .............................................. 2 388 330 2 396 428 2 900 892

Employee benefits expense ................................. 725 142 617 148 663 467

Depreciation and impairment charges ................. 59 151 51 979 47 306

Other depreciation/amortisation .......................... 0 0 99 229

Other operating expenses .................................... 268 185 233 609 277 917

Losses on accounts receivables ........................... 12 953 20 848 88 949

Income from investments in joint ventures ........ -46 936 -30 936 -21 641

Operating profit ................................................. 139 134 -48 267 4 056 118

Other interest income .......................................... 3 662 17 994 24 459

Other financial income ........................................ 60 729 26 898 37 581

Other interest costs .............................................. -99 698 -146 426 -97 337

Other financial expenses ...................................... -41 620 -6 302 -45 844

Profit before income tax ................................... 62 207 -156 103 -81 142

Income tax expense ......................................... -39 311 -40 553 -63 460

Profit/(loss) for the year .................................... 22 896 -196 656 -248 482

Comprehensive Income

Net profit (loss).................................................... 22 896 -196 656 -248 482

Foreign currency difference................................. -16 246 21 998 -41 337

Total comprehensive income ............................ 6 650 -174 658 -289 819

Earnings per share (NOK per share).................... 0,30 -2,76 -5,72

Diluted earnings per share (NOK per share) ....... 0,27 -2,74 -5,63

Consolidated statement of comprehensive income Q1 2012 and Q1 2011

Amounts in NOK thousands Period Period

[36]

31 March 2012 31 March 2011

Unaudited Unaudited

Income from projects 854 761 932 250

Other operating income 4 138 4 010

Total operating income 858 899 936 261

Raw materials and consumables used 537 097 693 478

Other operating costs 269 496 224 694

Result from JV ( - is income) -13 187 -11 512

EBITDA 65 494 29 601

Depreciation 13 609 13 622

Operating profit 51 885 15 979

Financial income 16 924 10 875

Financial expense 41 768 28 013

Profit/loss before tax 27 041 -1 159

Tax 6 419 11 886

Net profit/loss for the period 20 622 -13 045

Comprehensive income

Net profit/loss for the period 20 622 -13 045

Currency differences -7 564 1 309

Comprehensive income 13 057 -11 736

Earnings per share (NOK) 0,26 -0,18

Diluted earnings per share (NOK) 0,20 -0,16

[37]

8.2.2 Consolidated balance sheet



2011 2010 2009


Assets

Non-current assets

Intangible assets

Deferred tax assets ................................................................. 137 524 162 460 187 630

Research and development .................................................... 274 793 270 659 279 818

Licences and patents .............................................................. 10 752 14 568 10 708

Other intangible assets ........................................................... 3 315 3 706 3 575

Goodwill ................................................................................ 827 184 827 184 828 083

Total intangible assets ......................................................... 1 253 567 1 278 577 1 309 814

Fixed assets

Property ................................................................................. 14 548 14 569 13 489

Buildings................................................................................ 19 792 20 584 27 040

Machinery and vehicles ......................................................... 9 407 14 490 24 111

Furniture, office-, and computer equipment .......................... 74 256 71 059 65 143

Total fixed assets .................................................................. 118 004 120 702 129 783

Financial fixed assets

Investment in joint ventures .................................................. 169 723 120 730 93 960

Investment in shares .............................................................. 222 222 1 945

Other receivables ................................................................... 145 0 5 584

Pensions ................................................................................. 7 802 7 758 9 668

Total financial fixed assets .................................................. 172 867 128 760 111 157

Current assets

Inventories ............................................................................. 382 794 422 587 462 693

Trade receivable .................................................................... 486 875 488 799 565 141

Other receivable ..................................................................... 213 084 192 717 192 348

Acquired, non-invoiced production ......................................... 317 756 368 057 456 185

Derivative financial instruments ............................................ 20 710 48 777 53 210

Prepayments to suppliers ....................................................... 146 426 130 690 217 741

Cash and cash equivalents ..................................................... 435 750 272 331 191 907

Total current assets ............................................................ 1 984 396 1 923 959 2 138 720

Total assets ........................................................................... 3 528 835 3 451 998 3 689 474

Equity

Capital and reserves attributable to equity holders of the Company

Issued share capital ................................................................ 37 845 37 316 33 954

Treasury shares ...................................................................... -18 -18 -18

Share premium reserve .......................................................... 384 891 376 057 337 911

Other equity ........................................................................... 417 665 389 308 564 036

Total equity .......................................................................... 840 383 802 734 935 883

Liabilities

Provision for liabilities

Deferred tax ................................................... 26 464 25 559 22 339

Total provision for liabilities ...................... 26 464 25 559 22 339

Liabilities

Non-current liabilities

Convertible Callable Unsecured Subordinated Bond ............ 152 620 0 0

Bond loan............................................................................... 0 400 000 400 000

Debt to financial institutions ................................................. 35 363 45 132 30 537

Other long-term liabilities ..................................................... 0 75 000 0

Total non-current liabilities ............................................... 187 984 520 132 430 537

Liabilities

Current liabilities

Bond loan............................................................................... 400 000 0 0

Debt to credit institutions ...................................................... 355 385 550 758 600 005

Payables to suppliers ............................................................. 339 615 332 513 339 466

Income taxes payable ............................................................ 11 142 5 680 19 308

Other taxes payable ............................................................... 46 062 33 667 37 706

Prepayments from costumers ................................................ 616 516 447 214 639 938

Non-invoiced production costs, suppliers ............................. 98 843 336 732 149 791

Derivative financial instruments ............................................ 108 551 69 666 91 876

Other current liabilities .......................................................... 497 892 327 342 422 624

Total current liabilities ....................................................... 2 474 006 2 103 572 2 300 715

[38]

Total liabilities ..................................................................... 2 688 452 2 649 264 2 753 591

Total equity and liabilities .................................................. 3 528 835 3 451 998 3 689 474

Consolidated statement of financial position Q1 2012 and Q1 2011


31 March 2012 31 March 2011

Unaudited Unaudited

Intangible assets 1 254 199 1 255 430

Tangible assets 119 862 111 488

Financial assets 188 706 141 633

Total fixed assets 1 562 768 1 508 550

Inventories 374 780 399 585

Total receivables 1 027 393 1 132 222

Bank deposits/cash 567 150 460 355

Total current assets 1 969 323 1 992 162

Total assets 3 532 091 3 500 713

Share capital 38 080 37 298

Other equity 819 860 776 333

Total equity 857 940 813 631

Provisions 26 144 26 889

Other long-term liabilities 462 666 633 977

Long term liabilities 488 810 660 866

Current liabilities 2 185 341 2 026 216

Total liabilities 2 674 151 2 687 081

Total equity and liabilities 3 532 091 3 500 713

[39]

8.2.3 Consolidated cash flow statement



2011 2010 2009


Profit before income tax .................................... 62 207 -156 103 -311 942

Adjusted for:

Income taxes paid .............................................. -25 007 -19 308 -13 903

Amortisation ...................................................... 59 151 51 979 47 305

Depreciation shares ........................................... 0 2 800 0

Depreciation fixed assets/goodwill .................... 99 229

Interest paid cost ................................................ 99 698 107 836 77 737

Profit/loss from JV ............................................ -46 936 -30 936 -21 641

Difference between pension changes and payments

to/from pension schemes ................................... 5 033 1 860

1 694

Inventories, customers and suppliers ................. 66 819 108 990 -371 704

Other receivables and short term liabilities ....... 187 812 65 169 134 396

Net cash generated from operating activities 408 777 132 287 -358 829

Cash flows from investing activities

Proceeds from sale of fixed assets ..................... 9 346 6 000 4 531

Disbursements from acquisition of fixed assets -39 924 -20 404 -44 674

Disbursements of own development ................. -25 874 -12 904 -68 218

Payments on other claims (loans) ...................... -2 185

Foreign currency gains/loss related to investments 604

Net cash used in investing activities ............... -56 452 -27 308 -109 942

Cash flows from financing activities

Proceeds from issuance of short- term/long-term debt 186 000 75 000 0

Disbursements on short- term/long –term debt . -204 242 -114 710 -98 092

Net change in bank overdraft facility ................ -81 330 81 482 351 703

Interest paid ....................................................... -99 698 -107 836 -77 737

Proceeds from issued new share capital ............ 9 635 41 509 231 208

Net cash used in financing activities .............. -189 905 -24 555 407 082

Net (decrease)/ increase in cash, cash equivalents and

bank overdrafts ................................................ 162 419 80 424 -61 689

Cash, cash equivalents and bank overdrafts at beginning

of year 01.01 ...................................................... 272 331 191 907 253 596

Cash, cash equivalents and bank overdrafts at end of

year 31.12.......................................................... 434 750 272 331 191 907

Consolidated cash flow statement Q1 2012 and Q1 2011


31 March 2012 31 March 2011

Unaudited Unaudited

EBITDA 65 494 29 601

Change in net current assets 1 029 117 325

Cash from operations 66 523 146 926

Acquisition of tangible fixed assets -11 118 -4 670

Other investing activities - -

Cash from investments -11 118 -4 670

New loans and repayment 95 500 65 263

Paid-in equity 4 500 -

Net interest paid -23 004 -19 495

Cash from financing 76 996 45 768

Change in cash 132 400 188 024

Cash position OB 434 750 272 331

Cash position CB 567 150 460 355

[40]

8.2.4 Consolidated statement of changes in equity

Amounts in NOK thousands Year Year Year Q1 Q1

31 Dec 31 Dec 31 Dec 31 March 31 March

2011 2010 2009 2012 2011

Audited Audited Audited Unaudited Unaudited

Paid in equity

Share capital ................................................. 37 845 37 316 33 954 38 087 37 316

Treasury shares ............................................ -18 -18 -18 -18 -18

Share premium reserve ................................ 384 891 376 058 337 912 389 149 376 057

Total paid in equity ...................................... 422 718 413 356 371 848 427 218 413 356

Retained earnings

Retained earnings and minority 1 Jan. ......... 389 379 564 035 853 277 417 665 389 379

Acquisition/disposal of own shares ............. 0 0 576 0 0

Dividends ..................................................... 0 0 0 0 0

Foreign currency differences ....................... -16 246 21 998 -41 337 -7 564 -1 309

Other items ................................................... 21 634 0 0 0 22 633

Profit/loss for the year .................................. 6 650 -196 656 -248 481 20 622 -11 736

Retained earnings 31 Des. ........................ 417 665 389 379 564 035 430 722 400 276

Equity in total .............................................. 840 383 802 734 935 883 857 940 813 631

8.2.5 Net interest bearing debt

Amounts in NOK thousands 31 Dec 2011 31 Dec 2010 31 Dec 2009 1Q 2012 1Q 2011

Interest bearing debt* ........................... 983

248

1 070

890

1 030

537

1 077

957

1 154

814 - Net cash ...................................... 434

750

272

331

191

907

567

150

460

355

Net interest bearing debt ................... 548

498

798

559

838

630

510

807

694

459

* Convertible subordinate bond loan has been presented at nominal value.

In February 2012 TTS entered into a financing agreement with a bank syndicate consisting of Nordea, SEB and

Sparebanken Vest which included a NOK 100m 1-year term loan, a NOK 500m 3 year multi-currency credit facility

and a NOK 1.3 billion bonding facility. The financing agreement replaces the previous 1 year revolving funding

arrangement with Nordea and Sparebanken Vest. In addition the agreement includes a 12 month NOK 400m

“bridge to bond” facility to improve flexibility relating to the refinancing of the NOK 400m senior unsecured bond

loan that is due in May 2012. In May TTS utilized the facility and repaid the bond loan. TTS aims to repay all

outstanding debt under the agreement in connection with the completion of the Transaction.

There are certain covenants related to the finance agreement relating to a minimum equity ratio, minimum amount of

equity and leverage ratio. TTS is not in breach nor does it expect to be in breach of these covenants.

8.2.6 Significant changes to TTS’s financial or trading positions since 31 March 2012

Since 31 March 2012, there has been no significant change in TTS’s financial or trading positions.

8.2.7 Key ratios

The table below sets forth some consolidated key ratios for TTS for the financial years 2011, 2010 and 2009, and 1Q

2012 and 2011.

Key ratios 31 Dec 2011 31 Dec 2010 31 Dec 2009 1Q 2012 1Q 2011

[41]

Booked Equity ratio .............................. 23,8% 23,3% 25,4% 24,3% 23,3% Equity ratio adjusted for convertible

subordinated bond .................................

28,7% N/A N/A 29,0% 28,3%

NIBD/EBITDA ..................................... 2,77 -215 -9,95 7,80 -23,46

Earnings per share (NOK per share) .... 0,30 -2,76 -5,72 0,26 -0,18

Diluted earnings per share (NOK per

share) ......................................................

0,27 -2,74 -5,63 0,20 -0,16

8.3 Segmentation

The following table shows the total revenues by category of activity for the period covered by the historical financial

information.

Turnover (NOK million) 2011 2010 2009 31.03.12 31.03.11

Marine..................................................................................................................................................................... 2 127,0 2 229,5 2 325,7 456,0 628,7

Port and Logistics................................................................................................................................................... 191,4 299,2 331,0 22,9 49,7 Energy..................................................................................................................................................................... 1 227,6 712,1 1 180,4 380,0 257,8

Group/other. ........................................................................................................................................................... 0,1 0,2 -11,8 - -0,2

SUM. ...................................................................................................................................................................... 3 546,0 3 241,0 3 825,3 858,9 936,0

EBITDA (NOK million) 2011 2010 2009 31.03.12 31.03.11

Marine..................................................................................................................................................................... 172,6 158,7 93,7 56,7 38,8

Port and Logistics................................................................................................................................................... 15,5 20,6 19,6 15,1 -9,7

Energy..................................................................................................................................................................... 20,4 -168,6 -192,0 -4,1 4,6 Group/other. ........................................................................................................................................................... -10,3 -7,0 -5,5 -2,2 -4,1

SUM. ...................................................................................................................................................................... 198,3 3,7 84,3 65,5 29,6

8.4 Capital and indebtedness

The following table shows the actual capitalisation for TTS as of 31 March 2012.

[42]

Amounts in NOK thousands 31 March 2012

Current debt

Secured ............................................................................................................................................................... 577 366

Unsecured .......................................................................................................................................................... 1 607 974

Total current debt ............................................................................................................................................ 2 185 341

Non-current debt

Secured ............................................................................................................................................................... 462 666

Unsecured .......................................................................................................................................................... 26 144

Total non-current debt .................................................................................................................................... 488 810

Shareholder equity

Share capital ....................................................................................................................................................... 38 098

Legal reserves .................................................................................................................................................... 389 126

Other reserves .................................................................................................................................................... 430 716

Total shareholder equity ................................................................................................................................. 857 940

Total capitalisation........................................................................................................................................... 3 532 091

Cash and cash equivalent ................................................................................................................................... 567 150

Trading securities ............................................................................................................................................... 0

Liquidity............................................................................................................................................................ 567 150

Current financial receivable ........................................................................................................................... 909 929

Sum current liquidity and receivables ........................................................................................................... 1 477 079

Current financial debt to financial institutions.......................................................................................... 572 466

First years instalment of long-term debt ............................................................................................................ 4 900

Other current financial debt .............................................................................................................................. 1 112 868

Current financial debt ..................................................................................................................................... 1 690 234

Net current financial indebtedness ................................................................................................................. 213 155

Non-current bank loans ...................................................................................................................................... 312 591

Bonds issued*..................................................................................................................................................... 188 000

Other non-current loans ..................................................................................................................................... 0

Non-current financial indebtedness ............................................................................................................... 500 591

Net financial indebtedness ............................................................................................................................... 713 746

* Convertible subordinate bond loan has been presented at nominal value.

TTS is continuously monitoring financial and liquidity risks. The company works towards ensuring that there is a

reasonable balance between short term and long term financing. The current credit facilities are described in section

8.2.5 above. In addition TTS actively uses joint cash pool arrangements to improve accessibility and flexibility

relating to liquidity.

8.5 Working capital statement

In the opinion of the Company, the Company and the Group, has sufficient working capital for its present

requirements for at least the 12 months’ period following the date of publication of this Information Memorandum.

8.6 Independent auditor

The Group’s auditor is KPMG, represented by state authorized public accountants who are members of Den Norske

Revisorforeningen (The Norwegian Institute of Public Accountants). KPMG’s organisation number is 935 174 627

and its address is Sørkedalsveien 6, 0369 OSLO, Norway.

The annual financial statements for the Group incorporated by reference hereto have been audited by KPMG. KPMG

has issued an audit report on these financial statements without any qualifications or disclaimers. KMPG has not

audited or produced any report on other information provided in this Information Memorandum except for the

[43]

independent assurance report on the pro forma financial information which is enclosed as Appendix 1 to this


[44]

9. PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma consolidated financial information included heir in, has been prepared for illustrative

purposes to show how the sale of the Drilling Equipment business might have affected TTS Group ASA if it had

been sold before 1 January 2011.

The unaudited pro forma financial information does not represent what the actual results of operations or what TTS

Group ASA financial position would have been on the dates assumed. As such, the pro forma financial information

addresses a hypothetical situation, and should be read in conjunction with audited consolidated financial statements

for 2011.

As described in Section 5 in this Information Memorandum the Energy division within the TTS Group has consisted

of a Drilling Equipment business and an Offshore Handling business.

The two business areas have been integrated parts of the legal companies which in sum make up the segmented

Energy division (reference to section 4.3 “Legal structure”), hereof does the legal entity TTS Energy AS represent

the majority part of the activity within the division both related to allocated revenue (> 90%) and allocated equity

(>90%).

The group consolidation process of companies within the TTS Group ASA is limited to the ultimate group structure.

Although the different group companies are allocated to separate divisions, no legal sub-holding structure exists, and

consequently subgroup consolidation is not required by accounting regulation or other legislation. Aggregation and

presentation of divisional information in quarterly report is limited to profit and loss accounts and is presented for

segment purposes only. Segmented balance information in the annual report is presented for segment purposes only.

The divested numbers presented below as “Drilling Equipment Business” is based upon a pro forma consolidation of

the Energy division as if there was a sub holding structure present prior to the selling process. The pro forma

consolidation process is structured as follows;

1. Unaudited local GAAP financial reports from the legal entities which is included in the Energy division.

2. Audit adjustments to local GAAP financial reports are adjusted on a group basis if substantial and

applicable.

3. Numbers is adjusted for interdivisional trade.

4. IFRS adjustments to local GAAP numbers is allocated in order to comply with group reporting accounting

principles as set out in the annual report from TTS Group ASA.

5. Purchase price allocations from prior years acquisition processes on companies that are included in the

Energy division is allocated to the divisional numbers

6. Effects from internal restructuring processes are allocated to the divisional numbers.

7. As part of the divestment of the Drilling Equipment Business, TTS Group has carried out an internal sales

process of the integrated Offshore Handling business from any legal company that is divested as part of the

sale of the Drilling Equipment business. The internal sales process have been carried out in accordance

with the regulation set out in the Norwegian Private Limited Liability Companies Act (Norwegian:

aksjeloven) §3-8. New balances in the companies that have been part of the segregation process is not

separately audited, however opening balances in the new company TTS Offshore Handling Equipment AS

is controlled by the auditor as part of their verification process as set out in the Norwegian Private Limited

Liability Companies Act §3-8. The outcome from this process is allocated to the numbers presented as the

Drilling Equipment Business.

The total number of details that goes into the consolidation process is substantial, and the consolidation process in

itself is complex. In sum the numbers presented as Drilling Equipment Business represent the best estimate for the

figures included in the consolidated financial statements as per 31 December 2011and 31 March 2012.

[45]

9.1 Basis for preparation

The unaudited pro forma consolidated financial information has been prepared for illustrative purposes only. The pro

forma financial information is based on certain management assumptions and adjustments made to illustrate what the

financial results of the Group might have been, had the Transaction (as described in Section 3 Description of The

Transaction) occurred before 1 January 2011. The pro forma financial information should be read in conjunction

with TTS Group ASA’s audited consolidated financial statements for 2011.

The pro forma financial information addresses a hypothetical situation, and therefore, does not represent the

remaining Group’s actual financial position or results as it would have been had the Transaction in fact occurred at

an earlier date, and is not representative of the results of operations for any future periods.

It should be noted that greater uncertainty is attached to the unaudited pro forma financial information than ordinary

historical accounting information. Investors are cautioned against placing undue confidence on this pro forma

financial information.

The pro forma financial information shows how the Transaction might have affected the remaining Group’s

consolidated income statement for 2011 and consolidated income statement of Q1 2012 if the Transaction had taken

place before 1 January 2011. In addition, it is shown below how the Transaction might have affected the unaudited

consolidated balance sheet as per 31 March 2012 if the Transaction had occurred before 1 January 2011.

9.2 Pro forma accounting principles

The accounting principles applied for the unaudited pro forma condensed consolidated financial information are

consistent with the accounting principles used for preparing TTS Group’s audited consolidated financial statements

for 2011 (IFRS), outlined in the Accounting principles note included in TTS Group ASA’s annual report for 2011.

However, the unaudited pro forma consolidated financial information does not include all information required for

financial statements under IFRS, and should be read in conjunction with the historical information for TTS Group

ASA.

9.3 Sources of and basis for preparation of the unaudited pro forma condensed

consolidated financial information

The unaudited pro forma financial information is based on the audited consolidated financial statements for the year

ended 31 December 2011 for the Group, the unaudited income statement of Q1 2012 and the unaudited consolidated

balance sheet as per 31 March 2012.

Selected financial information for TTS Group ASA is available in Section 8 Historical Financial Information. The

2011 audited financial statements for TTS Group ASA as incorporated by reference in this Information

Memorandum (see section 10.3 “Incorporated by reference”). The 2011 audited financial statements for TTS Energy

AS as incorporated by reference in this Information Memorandum (see section 10.3 “Incorporated by reference”).

In the following, TTS Energy AS is used when referring to the legal entity TTS Energy AS. The Drilling business is

used when referring to the Drilling Equipment business which is to be transferred in the Transaction. The Offshore

Handling Equipment business (OHE) is used to refer to the Offshore Handling Equipment business reported under

the Energy division and operating under the legal entity TTS Energy AS. OHE is not part of the Transaction and

will be transferred to TTS Group ASA or its nominee before closing of the Transaction.

[46]

9.4 Pro forma consolidated income statement 2011

9.4.1 Unaudited pro forma condensed consolidated Statement of Income 2011

Notes to Comprehensive statement of income 2011

1) Revenue, raw materials and consumables used have been adjusted to reverse eliminated intercompany sales

between the Drilling Equipment business and OHE, as these transactions would have been external if the

Transaction had taken place before 1 January 2011.

2) Other operating costs have been adjusted to reflect that the Group management fee allocated to the Drilling

Equipment business would not have been passed on if the sale had taken place before 1 January 2011.

3) Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. As such, the pro

forma table includes an adjustment to remove the borrowing costs on the Group’s interest bearing debt from net

financial items in the period.

No adjustment has been made to the Group’s financial income for 2010 to reflect potential interest earned on the

cash proceeds as it is not possible to estimate the actual return on the excess proceeds.

Interest cost in the Group has been adjusted as if the sale back of OHE has been fully financed by a sales credit from

the Drilling Business. Interest costs have been estimated at Group cash pool interest rates.

5) With the exemption of the dislocation of the Drilling Equipment business, the Transaction is within the structure

of the Norwegian tax exemption method, and is not expected to have any tax effect for the Group.

The tax effect of reduced interest cost is incorporated in the pro forma adjustments.

Amounts in NO K thousands

TTS Group ASA Drilling Equipment

business

Pro forma

adjustments

Pro forma TTS

Group ASA

Notes

Income from projects 3 524 372 -965 397 13 051 2 572 026 1

Other operating income 21 586 - - 21 586

Total operating income 3 545 958 -965 397 13 051 2 593 612

-

Raw materials and consumables used 2 388 330 -620 120 13 051 1 781 261 1

Other operating costs 1 006 280 -324 367 6 720 688 633 2

Results from JV -46 936 - - -46 936

EBITDA 198 284 -20 910 -6 720 170 654

Depreciation 59 151 -32 666 - 26 485

Operating profit/loss 139 133 11 756 -6 720 144 169

-

Financial income 64 391 -26 243 - 38 148 3

Financial expense 141 317 -29 576 -59 100 52 641 3

Net financial items -76 926 3 333 59 100 -14 493

Profit before tax 62 207 15 089 52 380 129 676

-

Tax 39 311 -4 370 16 500 51 441 4

Profit for the period 22 896 19 459 35 880 78 235

Unaudited pro forma consolidated statement of Comprehensive Income 2011



business

Pro forma

adjustments

Pro forma TTS

Group ASA

Notes


Foreign currency differences -16 246 -1 337 - -17 583

Total comprehensive income for the period 6 650 18 122 35 880 60 652

[47]

9.4.2 Unaudited pro forma condensed consolidated Statement of Income Q1 2012 and the statement of

financial position end of Q1 2012

Unaudited pro forma condensed consolidated Statement of Income Q1 2012


TTS Group ASA Drilling

Equipment

business

Pro forma

adjustments

Pro forma TTS

Group ASA

Notes

Income from projects 854 761 -319 748 6 473 541 486 1

Other operating income 4 138 - - 4 138

Total operating income 858 899 - 6 473 545 624

-

Raw materials and consumables used 537 097 -201 344 6 473 342 226 1

Other operating costs 269 496 -108 076 3 203 164 623 2

Results from JV -13 187 - - -13 187

EBITDA 65 494 -10 328 -3 203 51 963

Depreciation 13 609 -9 795 - 3 814

Operating profit/loss 51 885 -533 -3 203 48 149

-

Financial income 16 924 -5 912 - 11 012 3

Financial expense 41 768 -9 084 -14 780 17 904 3

Profit before tax 27 041 2 639 11 577 41 257

-

Tax 6 419 -199 4 100 10 320


Unaudited pro forma consolidated statement of Comprehensive Income Q1 2012


TTS Group ASA Drilling

Equipment

business

Pro forma

adjustments

Pro forma TTS

Group ASA

Notes


Foreign currency differences -7 564 - - -7 564

Total comprehensive income for the period 13 058 2 838 7 477 23 373

[48]

Unaudited pro forma condensed consolidated statement of financial position end of Q1 2012

Notes to Comprehensive statement of income Q1 2012 and consolidated statement of financial position Q1

2012

1) Revenue, raw materials and consumables used have been adjusted to reverse eliminated intercompany sales

between the Drilling Equipment business and OHE, as these transactions would have been external if the

Transaction had taken place before 1 January 2011.

2) Other operating costs have been adjusted to reflect that the Group management fee allocated to the Drilling

Equipment business would not have been passed on if the sale had taken place before 1 January 2011.

3) Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. As such, the pro

forma table includes an adjustment to remove the borrowing costs on the Group’s interest bearing debt from net

financial items in the period.

No adjustment has been made to the Group’s financial income for 2010 to reflect potential interest earned on the

cash proceeds as it is not possible to estimate the actual return on the excess proceeds.

Interest cost in the Group has been adjusted as if the sale back of OHE has been fully financed by a sales credit from

the Drilling Business. Interest costs have been estimated at Group cash pool interest rates.

Unaudited pro forma condensed consolidated statement of financial position as per 31 March 2012



Business

Pro forma

adjustments

Pro forma TTS

Group ASA

Notes

Assets

Intangible assets 1 254 199 -785 435 - 468 764

Tangible assets 119 862 -39 791 - 80 071

Financial assets 188 706 -3 599 - 185 107

Total fixed assets 1 562 768 -828 825 - 733 943

-

Inventories 374 780 -220 500 - 154 280

Receivables 1 027 393 -289 587 77 522 815 328 6

Bank deposits, cash in hand, etc. 567 150 -15 230 349 444 901 364 7, 9

Total current assets 1 969 323 -525 317 426 966 1 870 972

-

Total assets 3 532 091 -1 354 142 426 966 2 604 915

-

Equity and liabilities -

Share capital 38 080 -2 000 2 000 38 080 8

Other equity 819 860 -526 123 814 142 1 107 879 8

Equity 857 940 -528 123 816 142 1 145 959

-

Provisions 26 144 - - 26 144 6

Other long-term liabilities 462 666 - -275 000 187 666 9

Total long-term liabilities 488 810 - -275 000 213 810

-

Total current liabilities 2 185 341 -826 019 -114 176 1 245 146 9, 10

-

Total liabilities 2 674 151 -826 019 -389 176 1 458 956

-

Total equity and liabilities 3 532 091 -1 354 142 426 966 2 604 915

Equity to assets ratio 24,3 % 39,0 % 44,0 %

[49]

5) With the exemption of the dislocation of the Drilling Equipment business, the Transaction is within the structure

of the Norwegian tax exemption method, and is not expected to have any tax effect for the Group.

The tax effect of reduced interest cost is incorporated in the pro forma adjustments.

6) Total receivables and short term liabilities have been adjusted to reverse eliminated intercompany balances as the

balances would have been external if the Transaction had taken place before 1 January 2011.

A hold back amount related to the Transaction has been allocated to receivables.

7) The pro forma table includes the expected cash proceeds of the Transaction.

Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. The pro forma table

includes adjustment to net off the cash proceeds from the Transaction and the long- and short-term interest bearing

debt of the Group.

The pro forma table has been adjusted with to reflect corporate transaction costs related to the sale of the Drilling

business.

8) The profit from divestment of the Drilling Equipment business has been allocated to equity.

9) Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. The pro forma table

includes adjustment to net off the cash proceeds from the Transaction and the long term and short term interest

bearing debt in the Group.

10) Short term liabilities have been adjusted to reflect guaranty estimates.

9.4.3 Independent Assurance Report

KPMG has issued an Independent Assurance Report on the unaudited pro forma consolidated financial information

for TTS included in this section, comprising the pro forma consolidated balance sheet as of 31 March 2012, the

related pro forma consolidated statement of income for the 3 months then ended and the pro forma consolidated

statement of income for the year ended 31 December 2011. The report is included in Appendix 1 to this Information

Memorandum.

[50]

10. ADDITIONAL INFORMATION

10.1 Third party information

Market and industry data used throughout this Information Memorandum was obtained from various publicly

available or independent third party sources. Although the Company believes that these independent sources are

generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified

with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data

gathering process and the limitations and uncertainties inherent in any statistical survey of market size or consumer

demand. References in this Information Memorandum to research reports or articles should not be construed as

depicting the complete findings of the entire referenced report or article. The information in each report or article is

not incorporated by reference into this Information Memorandum.

The information in this Information Memorandum that has been sourced from third parties has been accurately

reproduced and, as far as the Company is aware and able to ascertain from the information published by that third

party, no facts have been omitted that would render the reproduced information inaccurate or misleading.

10.2 Documents on display

For the life of this Information Memorandum following documents (or copies thereof) may be inspected at

www.ttsgroup.com or at the Company’s business address:

i. Memorandum of Incorporation and Articles of Association of the Company;

ii. audited historical financial information for the Company’s and its subsidiaries annual accounts for 2009,

2010 and 2011 and unaudited interim report for first quarter ended 31 March 2012; and

iii. stock exchange notices, including quarterly reports, distributed by the Company through Oslo Børs’

information system after the submission of the application for listing.

10.3 Incorporated by reference

The information incorporated by reference in this Information Memorandum shall be read in connection with the

cross-reference list set out in the table below. Except as provided in this section, no information is incorporated by

reference in this Information Memorandum.

All the relevant information can be found on the Company’s webpage www.ttsgroup.com

Section in

Information

Memorandu

m

Disclosure

requirement

s of the

Information

Memorandu

m

Reference document and link Page (P)

in

referenc

e

docume

nt

Section 6 Audited

historical

financial

information

(Annex I,

Section 20.1)

TTS Group – financial statements 2011:

http://www.ttsgroup.com/PageFiles/1572/TTS_AnnualReport2011_Eng_final.pdf

P55-

P122

TTS Group - Director’s report 2011:


P49-P54

TTS Group – financial statements 2010:

http://viewer.zmags.com/publication/856a89fc#/856a89fc/1

P51-

P113

TTS Group – Director’s report 2010:


P45-P50

TTS Group – financial statements 2009: P51-

http://www.ttsgroup.com/






[51]

http://www.ttsgroup.com/PageFiles/1572/TTS_annualreport_2009_ENG_final.pdf P109

TTS Group – Director’s report 2009:

http://www.ttsgroup.com/PageFiles/1572/TTS_annualreport_2009_ENG_final.pdf

P42-P50

TTS Energy AS – financial statements 2011

http://www.ttsgroup.com/PageFiles/420/TTS%20Energy%20AS_Arsregnskap.pdf

Section 6 Audit report

(Annex I,

Section

20.4.1)

TTS Group – Auditor’s report 2011:


P123-

P124



P114-

P115



P110

Section 6 Accounting

policies

(Annex I,

Section 20.1)

TTS Group – Accounting principles:


P61-P73

Section 6 Interim

financial

information

(Annex I,

Section

20.6.1)

TTS Group – first quarter financial statements 2012, with comparable figures for

the same period in 2011:

http://www.ttsgroup.com/PageFiles/1574/INTERIM%20REPORT%201ST%20QUARTER%

202012.pdf

P5-P10



http://www.ttsgroup.com/PageFiles/420/TTS%20Energy%20AS_Arsregnskap.pdf





http://www.ttsgroup.com/PageFiles/1574/INTERIM%20REPORT%201ST%20QUARTER%202012.pdf

http://www.ttsgroup.com/PageFiles/1574/INTERIM%20REPORT%201ST%20QUARTER%202012.pdf

[52]

11. DEFINITIONS

The following glossary applies in this Information Memorandum unless dictated otherwise by the context, including

the foregoing pages of this Information Memorandum.

11.1 Definitions

Agreement:............................... Agreement for the sale and purchase of shares in TTS Energy AS dated 17 April

2012 and entered into by and between TTS Group ASA (as Seller), Cameron

Holding Norge AS (as Purchaser) and Cameron International Corporation (as

Guarantor for the Purchaser's obligations)

Articles of Association: ............... The Articles of Association of the Company.

IFRS: .......................................... International Financial Reporting Standards.

Manager:..................................... Pareto Securities AS.

NOK: .......................................... Norwegian Kroner, the lawful currency of the Kingdom of Norway.

Norwegian Public Limited

Companies Act: ..........................

The Norwegian Public Limited Companies Act of 13 June 1997 no. 45

(“Allmennaksjeloven”).

Norwegian Securities Trading

Act: .............................................

The Securities Trading Act of 29 June 2007 no. 75 (“Verdipapirhandelloven”).

Oslo Børs: ................................... Oslo Børs ASA (translated “the Oslo Stock Exchange”).

Information Memorandum: ......... This Information Memorandum dated 4 June 2012 prepared in connection with

the Transaction.

Share(s): .....................................

“Shares” means common shares in the capital of TTS Group ASA and “Share”

means any one of them.

The Company: ............................ TTS Group ASA

Transaction: ................................ TTS Group ASA's divestment of its drilling equipment business, part of the TTS

Energy division, to Cameron Norge Holding AS, a subsidiary of Cameron

International Corporation (NYSE: CAM), to be carried out by way of sale of all

the shares in TTS Energy AS, being a wholly owned subsidiary of TTS Group

ASA and owning the group of and/or entities carrying out the drilling equipment

business.

USD:........................................... United States Dollars.

VPS account: .............................. An account with VPS for the registration of holdings of securities.

VPS: ........................................... Verdipapirsentralen (Norwegian Central Securities Depository), which organizes

the Norwegian paperless securities registration system.

A 1

Appendix 1 - Auditor assurance report on pro forma financial information

1/56

TTS Group ASA

Folke Bernadottes vei 38

Postboks 3577 Fyllingsdalen

NO 5845 Bergen

Norway

Phone: +47 55 94 74 00

Fax: +47 55 94 74 01

www.ttsgroup.com

Pareto Securities AS

Dronning Mauds gt. 3

P.O. Box 1411 – Vika

0115 Oslo

Norway

Phone: +47 22 87 87 00

Fax: +47 22 87 87 10

www.pareto.no


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