annual report - TTS Group ASA

Transcription

ANNUAL REPORT
TTS GROUP ASA
20
12
the
vision
the
content
P
To be the preferred
global supplier of material
handling equipment to
the maritime and offshore
industries on a sound
financial basis.
• International group with
operations in 13 countries
• Organized into
four divisions:
Marine,
Offshore & Heavy Lift,
Port & Logistic and
Services
Solutions tailored to our customers
2
Positioned for future growth
4
A Sea of Opportunities
6
Ability to perform: Letter from CEO
8
2012 in Brief
10
Key Figures
12
Presentation of Corporate Management
14
Presentation of Board of Directors
15
Operational Excellence
16
The Divisions
18
Stories from TTS:
The Secret
20
The Difference
24
The People
28
The Partner
32
Shareholder information
37
Corporate governance
38
Corporate Social Responsibility
43
• 1,100 employees
Directors’ report for 2012 45
• Headquarter in
Bergen, Norway
Annual account TTS Group
51
Annual account TTS Group ASA
101
• TTS Group ASA listed on
the Oslo Stock Exchange
since 1995
Auditor’s report
123
• Ambitious growth strategy
A story of acquisition-driven growth
126 - 127
The organisation
128
TTS Worldwide
129
Companies in the TTS Group
130
TTS GROUP
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the
scope
Solutions
tailored
to our customers
2
Objective
and Strategy
Core
business
TTS’ main objective is to
develop and supply high
quality solutions and
equipment to customers
within the maritime, oil,
and gas industry, in order to
support their productivity
and value generation.
The group’s expertise and
resources are mainly centered
on design, engineering,
assembling and testing products
- combined with strong
worldwide service support.
International
Marine
Offshore
Port and Logistics
Services
The majority of our employees
are based in Norway, Sweden,
Germany, China, and South
Korea. TTS is also represented
in Italy, the Czech Republic,
Poland, Greece, Singapore,
Vietnam, Finland and the USA.
The Marine division delivers
a wide range of products for
the maritime industry. The
division’s key products include
solutions for RoRo/cargo
vessels, Pure Car and Truck
Carriers (PCTC) and Cruise - in
addition to winches, hatch
covers and side doors.
The Offshore and Heavy Lift
division delivers all types of
cranes, primarily focused
on heavy lift and offshore
cranes, including Active Heave
Compensated cranes.
The Port and Logistics
division delivers production
lines and systems for material
handling in shipyards and
other industries, in addition
to cargo handling systems
and transport systems for
ports.
The Services division support
all divisions within the Group.
This enables TTS to offer
service worldwide for the full
range of its products.
Across the group’s companies
and divisions, work is done
to establish and maintain a
shared corporate culture based
on the core values integrity,
openness, loyalty and initiative.
The maritime industry has
been at the core of TTS’
activities since the business
was founded.
Lifting requirements are
specific to the vessel type. TTS
standardized building blocks
will always be able to match the
needs of each individual vessel.
Over the years, TTS has
developed more advanced and
safer solutions for subsea load
handling in rough and deep
waters.
The division’s product
portfolio ranges from
innovative linkspans, through
to some of the world’s most
forward-looking solutions for
moving goods around ports,
shipyards and industrial sites.
TTS is investing heavily in
a support network. With
qualified, experienced
engineers in key locations
worldwide, TTS can provide
support wherever it is - with
minimal notice.
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the
position
Positioned for
future growth
Growth strengthens our market position and our competitive powers,
while also providing the financial basis for investment and innovation.
The three most important elements for making TTS Group a billion €
company by 2016 are strategic acquisitions, organic growth, and
increased service volume.
1
Strategic Acquisitions
TTS has purchased 25 companies since 1998.
TTS is a leading provider of hatch covers, cranes
and RoRo equipment, therefore further growth
in the marine segment will mainly come from
strategic acquisitions. TTS’ current financial
situation is healthy and solid, thus putting us in a
strong position to plan and execute accordingly.
2
Organic Growth
Organic growth can be achieved in markets
where a company has a competitive edge
without yet having exploited its full potential.
Within the Offshore and Heavy Lift segment,
there is growth potential in expanding both the
product range and the offshore rig market, while
strengthening our position in the market for
offshore vessels.
In addition, within the Port business there are
segments where TTS sees potential for growth,
including expanding the business outside of
Europe through our network in Marine and
Offshore & Heavy Lift Business.
4
3
Increased
Service Volume
The profit margin within this area of
business is relatively higher than it is
within standard sales.
TTS’ service strategy involves
establishing four comprehensive
”service hubs”, which will provide
multiple points of contact for all
operational and funding requirements
across the world.
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ANNUAL REPORT
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the
market
A Sea of
Opportunities
A bird’s eye view of the global markets shows promising areas where
TTS is positioned to continue and expand its operations.
6
Offshore
Marine
Port & Logistics
Services
Positive market conditions, with
significant levels of contracting for
offshore vessels and rigs, provide
high expectations for increased
activities in the offshore sector.
In markets for load handling
equipment for car carriers and
specialized ships, TTS has achieved
good results. The opening of the new
Panamax Canal is expected to boost
the demand for new-builds and
conversions.
Increased activity in repair shipyards
is expected to strengthen the market
for shiplifts. The significant market
for container handling equipment
at container terminals provides a
promising opportunity for the TTS
cassette-system.
A new worldwide service strategy
will position TTS closer to our
customers, and enable us to serve
them more efficiently.
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the
strategy
to repeat the experiment. Not only did we meet both our qualitative and quantitative targets and objectives. Just as
important was the lesson learned that setting very ambitious targets in itself, released levels of energy and creativity
that we had never seen before in our organization. Many competent employees, a lot of guts and the ability to
execute made it possible to build the corporation in a very short time.
Today, TTS is in a very different position than 13 years ago. The world we live in has changed, and we have matured
as an organization. This makes it easier to make predictions about the future. Should there however, be anyone who
doubts the realism in trebling the size of TTS during the next 4 years, we can understand that. When we still insist
that this is possible, we base our view on an analysis of the fundamental developments of the present markets for
our products, and on the opportunities we see in new markets TTS can expand naturally into.
Our capacity to take on new investments and projects was strengthened in 2012 by the sale of our drilling equipment
business to Cameron International. We were convinced by the industrial logic that this part of our business would be
better off in Cameron than in TTS. We made sure however, that TTS and our patient shareholders were rewarded for
the time and effort it took to develop the drilling equipment business during the difficult years of the financial crisis.
Ability to
perform
2016 will be a momentous year for TTS. It will mark the 50th anniversary of the incorporation of TTS Technology.
Even though there are several units within our group of companies today that can trace their origins further back
than 1966, it is this year that marks the beginning for TTS. When a person turns 50 he or she tends to celebrate this
with some kind of festivities. For a company that employs more than 1,100 people and has reached the age of half
a century, a celebration is a prerequisite.
2016 will be important also for another reason. Those who know us and have followed us for many years will
remember that at the start of the year 2000 we painted a scenario for how our business should develop over the
following 4 to 5 years. We set very specific targets for TTS’ areas of expertise, which geographical locations we would
be present in, and also for volume growth and bottom line results. Now, we have drawn up a much simpler scenario,
which states that the target for the anniversary year 2016 is; «Building a global € 1 Billion shipping and offshore
equipment- and service company».
It has been humorously said, that “predictions are hard to make – especially about the future”. Our experience from
setting targets and ambitions for the future development of TTS was however such a positive thing, that we dare
8
Because of this, TTS is in a position to strengthen the strategic development of its product portfolio of equipment for
ships and offshore rigs. Through our acquisition of Neuenfelder Maschinenfabrik (NMF) last year, we have completed
our product range of marine cranes, and through our investment in Sigma Drilling we have strengthenedour position
in the very vibrant market for offshore cranes.
The road ahead for TTS will follow the same course. We will continue to develop
our position as a supplier of high quality equipment, and we will focus even
stronger on providing services. We will also be alert and ready to take advantage
of any opportunity that arises from the weak market and from the global
consolidation that we expect to take place. We have a proven track record of
acquisitions that makes us a very attractive partner.
Through our long-term commitment in the joint-venture companies in China,
TTS has created a unique platform for further growth in the largest ship building
market in the world. Also in South-Korea and in other parts of Asia, TTS is well
positioned and ready for further growth when the market returns.
In addition to a stream-lined organization and high quality products, a top-line
revenue in the order of € 1 billion in 2016 also requires overall market growth. Our
predictions give cause for optimism in this regard. We believe that shareholders,
employees and customers of TTS have a lot to look forward to. We invite you to
join us in our journey towards 2016!
Strategic
Basis
1. Utilise our strong
position in China /
The Far East
2. Strategic mergers
and acquisitions
3. Focus on profitability
in challenging segments
4. Provide global service
5. Utilizing synergies
in our operations
Johannes D. Neteland
President & CEO, TTS Group
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ANNUAL REPORT
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year 2012
the
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
Drilling units
to Brazil
First shiplift
contract in Korea
Contract for
subsea cranes
Sale of drilling
equipment business
Sale of
subsea crane
High activity in the
offshore segments
Acquisition
of NMF
Dividends and repayment of debt
More contracts
in Korea
Side-loading
systems
Entering a new
growth-segment
TTS Energy AS signed
a contract for the delivery of two wellhead
platform drilling units.
The total value of the
TTS drilling packages
for the 2 units was
MNOK 730.
The first ever shiplift
order in Korea was
signed with Samho
Ltd - responsible for
building parts of the
naval base located in
Donghae.
TTS Group signed a
contract with Kleven
Verft AS for the
delivery of a subsea
crane.
TTS entered into an
agreement to sell its
drilling equipment
business, a part of
TTS Energy division,
to Cameron International Corporation
for USD 270 million,
plus a turnover based
earn-out model for a
three-year period with
a gain of MNOK 420
before earn-out.
Contract signed with
DeepOcean AS concerning sale of a subsea
crane. The crane was
the last of its type that
the company had ”on
stock”. The delivery
took place in August
2012.
Four contracts secured
with STX OSV Brattvaag building, STX OSV
Soviknes and Kleven
Maritime.
TTS Group ASA entered
into an agreement to
acquire Neuenfelder
Maschinenfabrik GmbH
(NMF), located in
Hamburg, Germany.
An Extraordinary
General Meeting
decided to pay extra
ordinary dividends of
NOK 1.56 per share.
It was further decided
to repay share capital
of MNOK 365.
Two further contracts
signed in South Korea
– one with Hyundai
Heavy Industries and
the other with Daewoo
Shipbuilding & Marine
Engineering.
Finalization of two
contracts for sideloading systems and
cranes with Star
Reefers of London and
a Norwegian shipowner. The value of the
contracts was approx.
100 MNOK.
TTS secured a contract
for delivery of drillship
crane package for
Sigma Drilling worth
approx. 130 MNOK.
This was a breakthrough deal, entering
a new offshore rig
market.
New credit facility
TTS entered into a
financing agreement
with a bank syndicate
consisting of Nordea,
SEB and Sparebanken
Vest.
10
This agreement was
a result of a longterm focus, and
further strengthened
TTS’ position in this
market.
Bond loan repaid
TTS repaid a bond loan
of MNOK 400.
NMF is the market
leader in heavy-lift
cranes (ranging from
150-1000 tons)
with more than 60%
market share.
DEC
Refinancing
TTS Group refinancing
in place.
Repayment
of capital
TTS repaid capital
to shareholders of
MNOK 365 (NOK 4.21
per share). Total payment to shareholders in
2012 was MNOK 500
(NOK 5.77 per share).
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TTS GROUP
ANNUAL REPORT
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the key
figures
CONSOLIDATED TURNOVER
153 058
158 933
198 284
3 712
-84 265
145 459
Operating profit/loss (EBIT)
105 870
96 373
139 134
-48 267
-230 800
114 616
Pre-tax profit/loss
40 198
448 387
62 207
-156 103
-311 942
36 819
Net profit/loss
32 259
450 421
22 896
-196 656
-248 482
36 392
153
170
2 783
3 168
1 942
2 126
167
172
2 236
2 874
Turnover
142
191
EBITDA
-6.6
15.5
Order backlog per 31.12.
213
99
EBITDA
Turnover
EBITDA
B ALANCE SHE ET (NOK 1 0 0 0 )
869 721
869 721
1 544 438
1 528 039
1 550 755
1 508 802
Current assets
1 480 624
1 480 624
1 984 396
1 923 959
2 138 720
2 871 919
Total assets
2 350 345
2 350 345
3 528 835
3 451 998
3 689 475
4 380 721
Equity
856 195
856 195
840 383
802 734
935 883
989 056
Non-current liabilities
114 038
114 038
214 448
545 691
452 876
532 297
Current liabilities
1 380 112
1 380 112
2 474 006
2 103 572
2 300 715
2 825 808
Total equity and liabilities
2 350 345
2 350 345
3 528 835
3 451 998
3 689 475
4 380 721
NOK Million
285
275
FIN ANCIAL STRENGTH
EBITDA
12.1
-0.5
334
196
36,4 %
23,8 %
23,3 %
25,4 %
22,6 %
EBITDA margin
6,5 %
5,4 %
5,6 %
0,1 %
-2,2 %
3,5 %
EBIT margin
4,5 %
3,3 %
3,9 %
-1,5 %
-6,0 %
2,7 %
Profit margin (before tax)
1,7 %
15,3 %
1,8 %
-4,8 %
-8,2 %
0,9 %
Profit margin (after tax)
1,4 %
15,4 %
0,6 %
-6,1 %
-6,5 %
0,9 %
-33,3 %
3,7 %
Return on total capital
N/A
3,30 %
4,0 %
-4,4 %
-6,3 %
2,6 %
SH ARE S
Earnings per share
0,39
5,42
11,10
10,75
13,78
38,18
Equity per share
9,89
9,89
0,30
-2,76
-5,72
1,41
Number of shares end of year
86 606
86 606
75 690
74 631
67 908
25 908
Average number of shares
83 281
83 281
75 160
71 269
43 408
25 840
0,11
0,11
0,50
0,50
0,50
0,50
Nominal value
2 783
-84
4
2 369
CONSOLIDATED ORDER
BACKLOG
NOK Million
2011
2011
2 593
3 168
4 8196
159
2008
3 3241
996
2 3593
168
3 825
4 510
2009
Offshore
2010
Port & Logistics
2011
2 2369
783
Marine
12
450
Paid to
shareholders
500
Reduced
interest bearing
debt
Numbers include discontinued business.
Definitions
Earnings per share:
Profit after taxes divided on total number of shares at the end of the fiscal year.
Profitability, equity:
Profit before tax as a percentage of average equity.
Profitability, total capital: Operating profit as a percentage of average total capital.
including gain on sale
of drilling unit
MNOK
2012
*)
MNOK
MNOK
2008
-18,0 %
2012
2009
7,6 %
2012
2010
54,10 %
ORDER BACKLOG
2011
N/A
TURNOVER
2012
Return on equity
153
Net profit
PR O F ITABILIT Y
R ATE O F RETURN
EBITDA
CONSOLIDATED EBITDA
OFFSHORE
Turnover
36,4 %
2370
MNOK
PORT & LOGISTICS
K EY RATIOS
Equity to asset ratio (as a total of percentage capital)
Operating
income
MARINE
4 196
Operating profit/loss before depreciation (EBITDA)
2008
2 459 964
145
4 196 482
3 825
3 240 809
2 593
2009
3 545 959
2 369
3 241
2 928 623
NOK Million
Turnover
2010
2 369 906
Non-current assets
2011
GROUP
PR O F IT AND LOSS A CCO U N T ( N O K 1 0 0 0 )
Operating income
2012
NOK Million
2 593
2008*)
2011
2009*)
170
2010*)
2 369
2011*)
2012
2012 2012*)
2012
153
MAIN FIGURES
850
MNOK
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TTS GROUP
ANNUAL REPORT
the
the
management
board
The Senior Management Team, from left Arild Apelthun, Nina Seter, Johannes D. Neteland, Miao Reinlund and Ivar K. Hanson.
The Board of Directors of TTS Group ASA, from left: Kjerstin Fyllingen, Jan Magne Galåen, Mona T. Halvorsen, Trym Skeie, Anne Breive, Bjarne Skeie and Ole Henrik Askvik.
Arild Apelthun
Nina Seter
Miao Reinlund
Ivar K. Hanson
Kjerstin Fyllingen
Jan Magne Galåen
Chief Financial Officer
Vice President HR & HSE
President & CEO
Vice President,
Communications
Chief Operating Officer
Director of the Board
Apelthun (41) has been
CFO of TTS Group ASA
since 2010. Apelthun was
previously 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.
14
Seter (43) was appointed
Vice President for Human
Resource (HR) and Health,
Safety and Environment
(HSE) in December 2012.
She has previously worked
as Vice President HR in
Bergen Energy, an inter
national energy expert.
Seter holds a Bachelor in
Logistics from the Bergen
University College, in
addition to organizational
and personnel psychology
from the University of
Bergen. She has 20 years
of work experience
from sales, consultancy,
management and human
resources.
20
12
Neteland (55) 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. He has
been with TTS for 15 years.
Reinlund (39) is
Vice President for
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.
Hanson (48) serves as
Chief Operating Officer of
TTS Group ASA. He was
previously Executive Vice
President of the TTS Marine
division and President of TTS
Marine AS. He has a Master
of Science in Business
degree from the Norwegian
School of Economics
(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.
Fyllingen (55) is CEO of Haralds
plass Diaconal Hospital in
Bergen. She holds a Bachelor
in Business Administration
and an MSc in Leadership
from the Norwegian School
of Management (BI). Fyllingen
previously worked for Tryg and
Vital Forsikring, and has also
held managerial positions in
DnB, Infodoc International and
with DnV. Fyllingen has been
a member of the board since
2008. Fyllingen is a Norwegian
citizen.
Galåen (41) is portfolio manager in
Rasmussengruppen. He holds an
MSc from the Norwegian University of Science & Technology (NTNU)
and has further formal education
in economics from the Norwegian
School of Management (BI). He has
worked in First Securities and as an
analyst at Fearnley Fonds. Galåen
has also experience from industrial
companies like Aker Maritime and
Hydro Aluminium Maritime. Galåen
is employed by Rasmussengruppen
AS, which is a major shareholder in
TTS. Galåen is a Norwegian citizen.
Bjarne Skeie
Ole Henrik Askvik
Employee representative
Skeie (67) has an engineering
background and is known as
an entrepreneur, industrial
developer and investor in the
offshore equipment and rig
industries. This includes the
founding of Maritime Hydrau
lics 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 from 20022003 and has been a member
of the board since 2008. Skeie
is a Norwegian citizen.
Askvik (41) is Vice President
Spare Parts at TTS Marine
AS in Kristiansand. He was
former Vice president of
Services and has worked
for Hydralift and Ium
Shipmanagement. Askvik
holds a degree in Technical
Exports from Agder
University Collage. Askvik is
a Norwegian citizen.
Mona Lucille
Tellnes Halvorsen
Employee representative
Halvorsen (43) is Sales
Manager at Offshore
Handling Equipment AS
in Bergen. She has held
various positions in different
TTS companies, such as
Vice President HR & HSE
and Mechanical engineer.
Halvorsen holds a degree
in Industrial engineering
from the Bergen University
College and has further
education in Quality
Assessment and Project
Management. Halvorsen is
a Norwegian citizen.
Trym Skeie
Anne Breive
Chairman of the Board
Skeie (44) 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 and
has worked as structural
design engineer in Hydralift.
Skeie holds the equivalent
to a Master’s degree from
the Norwegian School of
Economics and Business
Administration (NHH), and
a MSc from the Norwegian
University of Science and
Technology (NTNU). Skeie
has been chairman of the
board since November 2009.
Skeie is a Norwegian citizen.
Breive (47) is CFO in
Trelleborg Offshore AS.
She has a Bachelor of
Commerce degree from
the Norwegian School
of Management (BI) and
an MBA degree from
Glasgow University.
She has held various
managerial positions in
Norske Skog Group and
Statnett, thereafter as CFO
at Løvenskiold-Vækerø AS.
Breive has been a member
of the TTS Group ASA
board since 2005. Breive
is a Norwegian citizen.
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ANNUAL REPORT
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To be profitable
we have to focus
on our customers
profitability
Operational
excellence
In 2012, TTS has organised its business in three divisions: Marine, Offshore and Port &
Logistics. From 2013 service will be organised as a separate division, called Services. Ivar
K. Hanson, the Chief Operating Officer is taking active measures to improve processes
and reduce costs.
’Our customers should benefit from our services’, says
Chief Operating Officer at TTS Group, Ivar K. Hanson. ’If they are
to succeed with their business, we must also contribute.’
When Hanson was head of the Marine division, he led the
so-called Momentum Project that greatly emphasised profits
through standardisation.
With his significant experience in TTS, Hanson (48) knows the
market and his own company better than most. It is not a cliché
when he repeatedly emphasises the importance of focusing on
the customer.
’We have come a long way in this field. One third of the profits
in our marine business today are results from synergy initiatives
we decided on and implemented two years ago. Herein lies a
great potential for the entire group’, he says.
’Shipyards and shipping companies are under extreme price
pressure. By finding the best solutions for our customers, we
ensure profitability for both them and us.’
’There is significant expertise in TTS, and we see that it can
largely be transferred between our different subsidiaries. We
can also use our employees in different places. For instance, a
crane engineer from Hamburg could easily enter into a project
in Bergen’, he states.
Through his position as COO, Hanson is also responsible for
optimising production, procurement, service and design
processes. In TTS this is called ’operational excellence’: thinking
smarter, improving processes and reducing costs.
’In essence, it means perfecting our operations’, says Hanson.
Improved Results
Hanson began working at TTS in 1994 and has held various
leading positions in the company. He was head of the Marine
division, the largest division in the company, before he became
COO in 2012. In his new position he works across the whole
TTS group, seeking the best solutions by learning from ’best
practice’.
16
Own Production
Procurement and standardization of products are areas that
can lead to both reduced costs and improved earnings.
’We have considered TTS’ purchases as a whole and analysed
our total needs. Through this process we have identified several
areas where it is possible to cut costs. For instance, we have
decided to produce a certain volume of all standard products
ourselves. All standard winches are now to be made within the
company’, Hanson informs. The transition to self-production
has entered the design phase and will be implemented in 2013.
TTS’ custom solutions for the next generation of car carriers expand the available deck area by 5–10 per
cent. The ships built today are also significantly more effective with regards to increased deck space. The
cost of new vessels is reduced and they are more efficient to operate. These good results come from thousands
of hours of development. ’This increases the customer’s confidence in us, which is the best foundation for
success’, Hanson says.
Furthermore, a number of initiatives are carried out to specialise the company.
’One initiative is to increase specialisation in our joint venture companies in China. In TTS Bohai
we will produce marine cranes, whereas offshore cranes will be produced in TTS Marine Shanghai.
This makes production more rational, and ensures increased profitability.’
Close to the Customer
There is a great potential for TTS in the service market, and TTS will establish several service
stations or ’service hubs’ around the world. These will increase the group’s ability to serve the
customer quickly and efficiently, thus creating increased profitability for all parties. TTS has chosen
four locations where these ’hubs’ will be established. The first hub in Bremerhaven is already in
operation.
In order to quickly resolve customer problems, the hubs’ operations should be as independent
as possible. Hanson envisions that each hub could have around 20 to 50 employees – a mix
of engineers and service technicians. The sites will have their own workshops with machining
equipment and will all keep the most critical parts in stock.
The Right Projects
Joint
Profitability
1.Develop better
solutions for
the customer
2. Closeness and
quick response
3.Increased quality
through
specialisation
Hanson emphasises that TTS should work to qualify for the ’right’ projects. ’This means that we
must give customers enough attention to ensure that we get enquiries and opportunities to
submit tenders.
4.Reduced costs
through
standardisation
’We must be swift, flexible and competitive in order to succeed. To obtain this we have an
organisation that is both motivated and willing to change’ says Hanson.
5. Sharing
competence
’Our aim is that the customers find TTS to be both accommodating and solution-oriented. TTS has
a reputation as a trustworthy quality supplier, and we will continue to be just that.’
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the
divisions
For the fiscal year 2012, TTS has been reporting on three divisions: Marine, Offshore and
Port & Logistics. Upon entering 2013, a fourth division has been established: Services.
The new division gathers all service and aftersales resources under one organization.
TTS has implemented a number of initiatives to specialise its business in China; marine cranes will be produced in TTS Bohai whereas offshore cranes will be produced in TTS
Marine Shanghai. This makes production more rational and ensures increased profitability. The photograph shows an offshore crane during testing at TTS Marine in Shanghai
Marine Division
Port & Logistics Division
Offshore & Heavy Lift Division
Services Division
The Marine division designs, supplies and maintains
shipboard handling equipment. The division delivers a wide
range of solutions to the maritime industry; RoRo, Pure Car and
Truck Carriers (PCTC) and Cruise in addition to winches, hatch
covers and side doors. The joint venture companies in TTS are
part of the Marine division.
The Port & Logistics division delivers production lines and
systems for material handling in shipyards and other industries
in addition to cargo handling systems and transport systems for
ports. The operation is located in Sweden, Norway and Finland.
The Offshore & Heavy lift division deliver a full range of
cranes. These are primarily focused on heavy lift and offshore
cranes, including Active Heave Compensated cranes. During
2012, the division’s main activities were around Active Heave
Compensated offshore cranes for offshore vessels.
Closer to customers
A breakthrough contract
A strategy for building ‘service hubs’ around the world is
expected to provide TTS significant opportunities. The market
for service and spare parts appears to be profitable, and
therefore worth pursuing. This is despite the situation in 2012,
where overcapacity within shipping resulted in lower values
and margins in this particular segment.
A mixed market
The market for the Marine division was mixed in 2012. Prices
were under pressure; however some market trends represent
significant opportunities for the division.
High activity in car carriers, reefers and similar special vessels
is expected to continue in 2013. Also a new size limit for ships
traveling through the Panama Canal is expected to affect the
market. The “New Panamax” standard becomes operational in
2015.
Contracting of tank, bulk and container vessels has been at a low
level due to overcapacity in the market - this particularly affects
the more standardized deck equipment that TTS offers. However,
a more positive outlook for the bulk market is predicted.
2012 in brief
• The joint venture businesses in China achieved greater
earnings in 2012 than in 2011.
• The revenue reduction was influenced by the change in
the joint venture structure.
Successful entry for shiplifts
The Port & Logistics division has successfully entered the
shiplift market, creating increased opportunities for this part
of the operations.
In general, the market for Port & Logistics has been weak during
2012. Investments in port infrastructure have been low across
Europe - the main market for the division. The market for
infrastructure in shipyards has also been at a low level.
2012 in brief
• A breakthrough in the shiplift market with 3 contracts
in Korea.
• The order backlog of MNOK 213 at the end of 2012 is more
than twice the backlog at the end of 2011 - mainly related
to shiplift contracts.
• As a consequence of the low activity in the markets for
container terminals and ports, revenue declined in 2012,
resulting in a negative EBITDA for the year.
2011
Turnover
1 942
2 127
EBITDA
167,6
172,6
EBITDA-margin (%)
Order backlog *)
8,6
8,1
2 236
2 874
Previously these activities sat within the former Energy Division
and the drilling equipment unit that was sold in June 2012.
Following the sale the division has been reorganized and will
include the new company, NMF, from 2013.
The new service hubs will bring TTS closer to customers,
offering service on both TTS products and others. Following the
launch of the first hub in Bremerhaven, a second hub will open
in Houston, USA - with a further two locations already decided.
The 2012 results for Services were largely reported as part of
the Marine division.
2012 in brief
• Agreement for complete drillship crane package for
a drillship signed.
• Revenue in line with previous year
• The EBITDA increased due to improved margins on ongoing
projects.
• The reduction in EBITDA is due to lower margins in
Services and in standardized equipment to merchant
vessels.
2012
The drillship crane package contract for Sigma Drilling opens a
new market for TTS. The potential for further contracts for this
type of vessel, or on rigs, is promising.
The market for the Offshore and Heavy Lift division is generally
good. TTS expects the positive market trend to continue in the
near term.
• New company, NMF, is included in operations from
20 August.
MNOK
In November 2012 TTS secured its first order for drillship cranes.
This package, worth MNOK 130, represented a breakthrough
into a market anticipated to have significant future value.
Services is a new division operating from 2013. It provides
service and after-sales support for all divisions within the
Group, enabling TTS to offer service worldwide on the full range
of its products.
• The order backlog has increased during the year and is
MNOK 334 at the end of the year.
2012
2011
Turnover
143
191
EBITDA
-6,6
15,5
EBITDA margin (%)
-4,6
8,1
Order backlog
213
99
MNOK
2012
2011
Turnover
285
275
EBITDA
-12,2
-0,5
EBITDA margin (%)
4,3
-0,2
Order backlog
334
196
MNOK
*) Order backlog includes 50 % of joint venture-companies and NMF from 20 August 2012.
18
19
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ANNUAL REPORT
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12
We have a secret.
That’s why customers
prefer TTS.
the
secret
20
K
isoo Kwon is the most experienced employee in
TTS Korea. He has been there longest and knows
most people. ’The shipyards like TTS’, he says.
’The shipyards like Mr Kwon’, says his colleagues.
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ANNUAL REPORT
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the
secret
From his workplace in Busan in Korea, the 58-year-old works closely
with colleagues in TTS Marine AB in Gothenburg. He has been a
communicator of information and expertise half his life, building bridges
between customer and supplier and between different cultures.
’We must always be willing to listen’ – this is one of
Kwon’s mantras. Another is: ’It is important to be close and
present.’ By this he means that one must follow the entire
sales process, from the planning stage and until the delivery is
installed and approved.
Kwon, whose title is Technical Director, learns about the
challenges the customers face through close collaboration.
Thus TTS enters the decision-making process at an early stage,
before suppliers are decided and contracts are signed. This is
not only important for TTS, but also leads to better results for
the customer.
The Key to Success
Koreans are known to be hard-working. They are demanding
customers and tough negotiators. If you ask Kwon about the
difference in work culture, he replies ’the pace is high here’, and
adds that the typical Koreans have their own saying, ’Quic kly,
quickly.’ This can lead to heated situations. The more important
the issue, the louder the discussions is liable to get.
For Kisoo Kwon, customer satisfaction is a matter of honour.
The secret to his success is actual presence. He follows up on
the yards on a daily basis, a method that puts him in contact
with all the important decision-makers. If problems arise,
Kwon will attempt to fix them himself, or quickly pass on to
his co-workers. And so his network of contacts is reinforced,
relationships are developed and trust is built.
In Korea, this kind of position is extremely valuable. Koreans
feel more comfortable dealing with locals who speak their
language. Koreans know that it is best to avoid the word ’no’.
A ’yes’ does not necessarily mean ’yes’, but an invitation to
be creative and come up with good solutions for all parties
involved. Kisoo Kwon solves this through a combination of
close supervision, experience and know-how that ensures the
customer immediate feedback.
’Immediate feedback is something we Koreans appreciate –
actually we demand it. If we cannot get an answer right away,
we must know when we will get it’, he says.
Base of operations
More and more people are drawn to the business opportunities
in South Korea. Since 1960 the country has evolved from being
one of the world’s poorest nations to entering the list of the
world’s largest economies. TTS’ operations in Korea and nearby
markets are handled from its offices in the country’s second
largest city, Busan, located in the south-east corner of the
Korean peninsula.
TTS is seeing
profitable
results in
the Korean
Ship Building
Industry
The port of Busan is the fifth largest in the world and its
associated industries such as transport and shipping are an
important part of business in the metropolis. The shipbuilding
industry is large, and TTS achieves good results here, even in a
sluggish shipbuilding market. Results are particularly good in
the business area Cargo Access, different types of equipment
for cargo handling.
Work Comes First
Korean culture is built on strong collective group identity.
Koreans are good team players with a strong connection to
their family and other communities. But while Europeans tend
to put family first, and then work, the opposite is often the case
in Korea.
The workplace means a lot, and people show great loyalty. TTS
is important to Kwon, an attribute he demonstrates through
his work. If he must choose, work is always the top priority. If
Kwon’s wife were to describe him, it would be in regards to his
professional position. It might be an answer in two sentences:
’He is an engineer. He works for a Scandinavian company.’
Together they have two sons, 30 and 32 years old. The oldest
is married and has moved out, while the youngest is still living
at home. Both have studied to become engineers. ’This was the
advice I gave them’, says the proud father.
But Kwon is not only interested in guiding his sons, he is also
keen to prepare for his successors.
In Asia it is common not to share expert knowledge, but
things are a little different in Mr Kwon’s world. The idea of
collaboration is strong, and Kwon actively trains young people
who might succeed him.
His goal is for TTS to continue to do better than its competitors.
Inspection of installations: Kwon (right) together with Stefan Falk (left) from TTS Marine AB, Gothenburg.
22
’Those who provide poor service towards shipyards will suffer
losses. TTS are close to the customers, we are more flexible and
handle issues directly at the shipyard. Herein lays our secret.’
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ANNUAL REPORT
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TTS Group is based on
acquisition of worldwide
expertise. Today we consist
of 23 companies in 13
different countries.
the
difference
24
G
erman Günter Strehle knows better than many
others how important it can be to have an open
mind, and to think differently. This is a mindset that
has literally led him to where he is today.
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ANNUAL REPORT
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the
difference
Günter Strehle saw his life turned upside down with the fall of the Berlin
Wall in 1989. Suddenly the welder from the old East German Hanseatic
town of Stralsund had to deal with a whole new world.
The fall of the wall led to new opportunities, but the
37-year-old was personally affected by the order drought in the
shipyard where he worked. He lost his job and asked himself:
what should I do now? For him, this was a question with only
one real answer: Think differently and turn westward.
This is how Strehle came to embark on a journey to find a new
job. And he quickly succeeded. Only 250 kilometres away, on
the other side of the former border between East and West, he
found his new future and a completely different world.
’I got lucky. Neuenfelder Maschinenfabrik (NMF) in Hamburg
was looking for someone with my skills. This was a great
happening in my life! My first thought was that their technology
had to be more modern than I was used to. This had to be the
most modern and advanced equipment there was – the ”world’s
best”!’
NMF is known for good teamwork, high level of expertise and
focus on industrial standards.
Opportunities to develop
It was not long before Strehle realised that his idealised image
had to be somewhat adjusted. What he expected to be ’the
best’ turned out to be quite ordinary. He soon found out that
he was the first welder at NMF with all certificates. ’In that area
NMF was actually more old-fashioned than what I was used to
in East Germany, he says with a smile.
Strehle’s competence provided him with great opportunities. ’I
was met with confidence, and given opportunities to develop’,
he says. Given his expertise, he suggested new and better ways
to improve both products and production lines. He rose quickly
in the ranks, and currently holds the position as production
manager.
In his 23 years at Neuenfelder Maschinenfabrik, Strehle
witnessed how NMF has constantly developed towards
26
becoming ’the world’s best’. NMF is now recognised as a worldleading supplier of quality heavy lift cranes, with a market share
of 60 per cent in this segment.
Industry and Offshore
Neuenfelder Maschinenfabrik is located in the southwest part
of Hamburg, one hour’s drive from the city centre. In a rural
setting at the mouth of the river Este, cranes and hydraulic
equipment have been produced for over 40 years.
Although the factory is located in an area surrounded by apple
and cherry trees, the main focus is on the industry. It is not
without reason that NMF has been the international market
leader in heavy lift cranes for years.
In their deliveries NMF offers the entire value chain, from idea
to service monitoring. Planning, engineering and production
combined with around-the-clock, worldwide customer service
is appreciated by customer.
From the preliminary work to the end product, all mechanical
components are developed and adapted to their desired use,
by means of data analysis and a design programme based on
specifications from the classification societies. Through good
teamwork, high expertise and focus on industrial standards,
130 skilled and highly motivated employees can guarantee
short production time and superior quality on the products
delivery.
NMF’s cranes have a lifting capacity of up to 1500 tons.
Deliveries to the marine market have been the company’s main
business so far, but the offshore market is expected to play an
increasingly important role in the future. NMF has developed
specialised cranes for installation of offshore windmills, an area
in which the company expects to see significant growth. Work
on the new windmill cranes is led by Günter Strehle.
’Now that we’re a part of TTS, that means a positive challenge’,
Strehle claims. He considers TTS’ acquisition as a vote of
confidence, and knows how much trust and new opportunities
can mean for a positive development.
For him it was a strike of fortune that he got employed by
NMF. He has been able to build his future around it. In the first
five years he commuted between Hamburg and his family in
the East, but in the end the time came to bring everyone to
Hamburg: his wife, a son and a daughter.
I was met with trust
and confidence, and
given the opportunity
to develop my
professional skills
works at NMF. He has worked here for seven years now, says
Strehle with great satisfaction.
Strehle’s son works on projects related to production improvements,
and also in project groups that are responsible for new products.
In this sense, his father is a good role model. Even though many
years have passed since Strehle began working at NMF, he is still
fond of challenges.
’We must always be open to innovation. There is always something
that can be improved. If we think that way, we can do anything. It
makes all the difference’, he says.
A Good Match
for TTS
NMF became a part of TTS Group after an acquisition in
the autumn of 2012. ’It was a definite win-win situation’,
says Ralf Ressel, Senior Vice President of NMF.
’We complement each other very well. TTS has expanded its
product range with our heavy lift products, and through TTS’
position we gain access to a much larger market. Together
we can also offer our customers an expanded service
network’, he says.
The story of the NMF acquisition is, in many ways, the
story of TTS Group. TTS has developed gradually through
acquisitions of various companies, all of which are skilled
within their niche, yet able to find their natural place in an
ever more comprehensive and complete TTS.
In total, TTS now consists of 23 companies in 13 different
countries. In order to get the most from our resources, TTS
emphasises preserving the best of the local business culture,
at the same time as each company provides a maximum
contribution to the corporate group.
’The TTS’ trust gives us new opportunities. It gives us the
opportunity to try out even more ideas, and to become even
better for the benefit of the customer. It is a challenge, we
must treasure and want to make the most of’, says Ralf
Ressel.
’This is where we belong now, and today my son Michael also
27
TTS GROUP
ANNUAL REPORT
20
12
TTS Group has 1,100
employees.
Their knowledge and skills
are the very foundation
of the business.
the
people
28
S
killed employees will help TTS consolidate its position
in a large and growing market for offshore handling
equipment. Mr Frank J. Heen (46), head of TTS Offshore
Handling Equipment, is confident: ’There is a lot of
potential for growth!’
29
TTS GROUP
ANNUAL REPORT
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12
the
people
Since the summer of 2012, Frank J. Heen has been at the head of the re
organisation of TTS’ offshore activities. After TTS Group sold its drilling
equipment unit to the American corporation Cameron International, there was
an opening to pursue new markets, new market opportunities and products.
’We adjusted our strategy, and now have our eyes on
a market that is estimated at around 4–5 billion Norwegian
kroner. Opening up for offshore deliveries to Korea and Brazil
in itself will double our sales potential. We hope to double our
turnover in three years’, says Frank J. Heen.
Mr Heen sees many opportunities to sell TTS’ rig cranes, for
instance. He has also noticed the customers’ increased focus
on the subsea market. Offshore activity is moving into deeper
waters. This leads to an increased demand for specialised vessels
that have cranes with so-called active heave compensation –
one of TTS’ hallmark solutions.
More than
half of the coworkers in my
department
have a foreign
background.
It makes us
better prepared
to handle
international
customers.
it, is a mantra for us. Well done is better than well said, and the
two are very different!’
Mr Heen knows the industry well, and as an engineer he also
understands the products. He thinks it is important to have an
organisation that is as project-oriented as possible, with high
customer focus. But he knows that he cannot do this alone.
Skilled employees are the very foundation of the business, and
they secure work for many others. Frank Heen argues that the
organisation must arrange for increased knowledge sharing
in order to maximise results. Not least within the offshore
market, where quality requirements are extremely high. Mr
Heen believes that collaboration across the organisation is
paramount to achieving the best results.
Important Breakthrough
The contracts signed in 2012 show some of the opportunities
for TTS Offshore Handling Equipment. Kleven, a Norwegian
shipyard, ordered five of a new generation cranes with active
heave compensation. TTS also saw an important breakthrough
in the rig market when they signed a contract for the delivery
of a complete crane package for a drilling ship for STX to Sigma
Drilling.
Good Together
The style of Frank Heen is clear and straightforward. He has high
ambitions for TTS. Since he arrived at TTS Offshore Handling
Equipment two years ago he has focused on developing what
in TTS is known as ’operational excellence’.
’Simply put, it means that everyone understands the process
from sales to delivery, and make efforts to ensure progress.
Doing what we say we will do, when we have said we will do
30
The crane package for drilling ships introduces TTS
to a new market, one with great potential. The order
value for one crane package is at around 130 MNOK,
and expectations are high for numerous constructions of
drilling ships in the years to come. Sigma Drilling has
signed an option agreement on the construction of four
additional ships. Sigma’s drilling ship is to be completed
in the second half of 2015 and is designed for missions in
the Gulf of Mexico, Brazil, offshore West Africa and Southeast
Asia. It is constructed by STX Offshore & Shipbuilding in South
Korea, the world’s fourth largest ship builder.
These contracts show the importance of a good interaction
between different TTS companies. Some of the cranes we
deliver will be constructed at NMF in Germany, a world-leading
heavy lift supplier that recently became a part of TTS.
’We are also very pleased that the TTS facilities in Shanghai is
now being specialised for offshore production. Asia is becoming
Eric Andrén (31) came to TTS from Sweden and develops complex systems for active heave compensated offshore cranes. The international community
in TTS attracts a lot of people, and makes us better at cooperating with our international customers.
a large and important market for us, and being this close to the
market is a very convenient solution for our customers’, Heen
says.
International Expertise
Around three out of four TTS employees are engineers. One of
them is Swedish-born Eric Andrén (31). From his workplace in
Bergen, Norway, he develops solutions that affect workers at a
factory in Poland, fitters at a shipyard in Korea and the crew on
a ship in the Gulf of Mexico.
’I have always been interested in how and why things work.
When I was 15 I dismantled my first moped. Unfortunately,
it was more difficult to put the pieces back together than I’d
imagined, but I made it work’, Andrén smiles.
For his engineering degree he specialised in hydraulics and
mechatronics, a field that concerns interaction within complex
systems, such as robots. This type of expertise is important in
the development of offshore cranes. Andrén recently led efforts
to develop a new and improved control system for the future
generation of offshore cranes.
The development of an improved system for active heave
compensation, that is, a way to reduce or neutralise the effects
of ships’ movement in the waves, has been another important
task. ’Minimising the force of wave movements is important
to customers, allowing the load to stand almost completely still
so that it can be lowered in a controlled manner’, he explains.
After completing his engineering degree in Linköping, Eric
Andrén searched for work in Sweden. Soon he widened his
scope, approaching the international job market, and found
opportunities at TTS.
’Here my work matches my interests for real. In other companies
I might only have been allowed to develop a valve or something,
but here I get to work with entire systems’, Andrén says. In his
time at TTS Group he has worked on a lot of projects, initially
connected to winches, and now with crane development.
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ANNUAL REPORT
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TTS arrived in China in the Year of the Tiger, a
year that is associated with incredible bravery
and success by undying courage. 2013, the Year
of Snake, will bring on the grand celebration of
the Crystal Anniversary of CSSC and TTS.
15 Good Years
of Joint Venture in China
32
M
any people may think that a 50/50 shared ownership
equals never being able to agree on anything, and
that nothing gets done. In China, however, this ownership
model has proven to be a key to success. It ensures that
both parties work hard to find good solutions.
33
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ANNUAL REPORT
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the
partner
’Our joint success stems from mutual trust’, says Wu Qiang, Vice President
of China State Shipbuilding Corporation (CSSC). Together with TTS, CSSC
owns TTS Hua Hai Ships Equipment Co. Ltd., a joint venture that was
founded in Shanghai June 1998. Mr. Wu was one of the founders and has
worked with TTS since.
’Collaboration takes place on equal terms here. TTS has
brought its technology into the company and has thus helped
lower the cost of our shipyards. Meanwhile, support from CSSC
has led to significant growth for the joint venture, which has
become the largest provider of hatch covers in China with a
market share has been close to 70 per cent’, says Wu.
Benefit Each Other
Mr Wu is one of the most
influential leaders in the
Chinese shipbuilding industry.
CSSC is enormous by inter
national standards, a great
government business directly
subject to the Chinese central
government. As Vice President
and member of the party leader
group at CSSC, Mr Wu is one of
the people who matters in this
business.
The 56-year-old with a PhD
in Design and Construction of
Naval Architecture and Ocean
Structure, would like to help
develop their collaboration
with TTS further. He believes
TTS can be of support when
CSSC further develop their
global ambitions.
’You need leaders who know the markets and the people. Your
choice of partners and people is the most important decision
you can make when you arrive in
a foreign country’, he emphasises.
’What do you believe to be the
biggest difference between China
and Norway?’
’As a company, we admire the
achievements in the Norwegian
offshore sector. You have many
talented people and a highly
advanced technology in this field.
This is why CSSC is interested
in a closer collaboration with
Norway on offshore technology
development, especially when it
comes to deep-water technology.
We also find Norwegians to be
very honest and direct.’
Long Term
Wu still envisions many good years for TTS in China. The Chinese
focus on long-term thinking and on building relationships,
perhaps to a greater extent than Europeans. China is not a
country where one arrives by plane Monday afternoon, signs
the contract on Tuesday and catches a flight back home on
Wednesday.
Good and equal collaboration and hard work is the key. In this
context, TTS’ ’birth’ in China in the Year of the Tiger is suitable.
In Chinese astrology the Tiger is incredibly brave, evidenced in its
willingness to engage in battle and in its undying courage.
Mr. Wu Qiang , Vice President of CSSC, together with Madame He Pu, President
of TTS Far East, and CEO of TTS, Johannes D. Neteland.
TTS Hua Hai, Shanghai, China
Product areas:
RORO Equipment, Hatch Covers, Winches
Employees:
1998:
28
2012:
79
In the past 15 years, together we have developed a successful
model that has great advantage to both parties, and for CSSC
this Joint venture setup has become a model for cooperation.
Wu says.
Chinese in China
Mr. Wu Qiang believes that one particular advantage of the joint
venture partnership is that all TTS’ activities appear to be Chinese.
’Absolutely not. Open and easy to
work with.’
Offshore Opportunities
The shipbuilding market has always been cyclical. At the
moment, Wu finds the market challenging, but he is expecting
a slow recovery in 2014 - 2015. In 2015 he hopes that the
shipyards will be back to normal capacity.
’We are highly optimistic when it comes to offshore activity.
This is an area where China is looking to increase its market
share significantly in the years to come, and I think there are
very interesting opportunities for collaboration between TTS
and CSSC in this field.’
’We see a great increase in demand, especially in the deep-water
sector that requires much more sophisticated equipment. CSSC
has limited experience in this area, and thus it is a business area
we want to enter into together with TTS’, says Vice president Wu.
TTS and CSSC have worked together for 15 years, developing a successful
model that has great advantage to both parties. Image above: Mr. Neteland
meeting with CSSC executives in spring of 2013.
’We have worked together for 15 years and built great trust in
each other. This is the best foundation for a continued long-term
collaboration’, Wu emphasises.
’Impolite, you mean?’
’To be honest, from our point
of view TTS is still a relatively small company. But we greatly
appreciate TTS’ positive attitude towards innovation. With your
expertise on acquisitions and business development we hope
that you can be a bridgehead for us in our internationalisation
process.’
34
’A non-Chinese president of the joint venture company would
create very different results. Being ”Chinese in China” is as
important here as in other markets. If CSSC is to gain foothold
in Europe, we need a European president there’, says Wu.
Revenue:
1998:
2,21MNOK
1999:
15,92MNOK
2011:1,36 BNOK
2012:1,29 BNOK
Supportive of Each Other
’As long as there is water in the sea, people will need ships, and so there will also be a need for shipbuilding.’
TTS’ representative in China, Madame He Pu, sat on the opposite
side of the table when TTS arrived in 1998. She participated in the
negotiations to found a joint venture company on the Chinese side,
and finally signed the agreement on this. She would eventually
become the general manager of the newly established company.
The story began in 1998 when TTS Ships Equipment in Gothenburg
was looking to enter the growing Chinese market. The process of
establishing a company was surprisingly quick after five to six
negotiation meetings with CSSC. The ownership model was the
most difficult part: both parties wanted 51 per cent ownership,
but in the end they agreed on 50/50. Today, none of them regrets
this choice.
’It was the best solution for both parties. The ownership model
ensures that both sides have to do their best to understand their
partner, and see things from the other’s perspective. As a result,
we have always been able to support each other in a good way,
and have developed bilateral respect and mutual trust’, says He Pu.
TTS Hua Hai Ships Equipment Co. Ltd. designs, produces, installs
and offers training and service for a complete range of cargo
access equipment such as hatch covers and RoRo equipment. The
company has developed in a very positive direction since it was
founded and is now a leading player in the Chinese market.
Madame Pu He has been an important support for TTS’ business
in China since the very beginning, in maintaining contact with
customers and ensuring good operating conditions. She currently
holds a position as President of TTS Far East and is an essential
resource in further developing TTS operations in China.
35
TTS GROUP
ANNUAL REPORT
20
12
Shareholder information
MARKET CAPITALIZATION DEVELOPMENT 2012-2013
TRADE IN TTS SHARES
Number of trades
Value (NOK 1000)
Number of shares
(1000)
Average price
1.1.201215.4.2012
9 302
318 556
23 509
Average per
trading day
30
1 024
75
1 600 000
1 400 000
1 200 000
1 000 000
12,74
800 000
600 000
400 000
The share price has been adjusted to reflect the
1:2 share split in April 1996
FINANCIAL CALENDAR
1. Quarter 2013
2. Quarter 2013
3. Quarter 2013
Annual general meeting
Capital Market Day
36
15 May
15 August
7 November
10 June
19 November
Market cap
05
.04
.12
05
.03
.12
05
.0
2.1
2
05
.01
.12
06
.12
.12
06
.11
.12
06
.10
.12
06
.09
.12
06
.08
.12
06
.07
.12
06
.06
.12
06
.05
.12
0
06
.04
.12
23.00
26.50
25.24
29.26
29.26
10.97
10.24
17.92
12.44
5.67
7.56
14.13
23.43
52.90
73.32
12.47
5.70
7.60
9.47
9,40
200 000
06
.03
.12
Subscription price
at time of offering
03.05.95 Opening price
31.12.95
31.12.96
31.12.97
31.12.98
31.12.99
31.12.00
31.12.01
31.12.02
31.12.03
31.12.04
31.12.05
31.12.06
31.12.07
31.12.08
31.12.09
31.12.10
31.12.11
31.12.12
Price
(in NOK)
06
.02
.12
Date
06
.01
.12
SHARE PRICE PERFORMANCE
Dividends / repayment of capital
20 LARGEST SHAREHOLDERS BY APRIL 23, 2013
Total number of shares 86 605 660
Shareholder
1
2
3
4
5
6
7
RASMUSSENGRUPPEN AS
SKEIE TECHNOLOGY AS
LESK AS
STISK AS
SKANDINAVISKA ENSKILDA BANKEN
BARRUS CAPITAL AS
SKAGEN VEKST
8
9
10
11
12
13
14
15
16
17
18
19
20
SKEIE CAPITAL INVESTMENT AS
JPMCB RE SHB SWEDISH FUNDS LENDING
TAMAFE HOLDING AS
ODIN MARITIM
MERTOUN CAPITAL AS
HOLBERG NORDEN VERDIPAPIRFONDET
HOLBERG NORGE VERDIPAPIRFONDET
ITLUTION AS
VERDIPAPIRFONDET DNB SMB
SKEIE CONSULTANTS AS
EUROCLEAR BANK S.A./N.V. (’BA’)
PIMA AS
GLASTAD INVEST AS
Shares
%
Country
11 512 506
8 929 879
5 306 058
5 306 058
5 233 630
3 455 000
3 222 553
13.29
10.31
6.13
6.13
6.04
3.99
3.72
NOR
NOR
NOR
NOR
FIN
NOR
NOR
2 531 263
2 481 591
2 160 735
1 900 000
1 650 000
1 579 161
1 556 492
1 475 261
1 137 164
953 033
938 670
768 830
751 660
2.92
2.87
2.49
2.19
1.91
1.82
1.80
1.70
1.31
1.10
1.08
0.89
0.87
NOR
SWE
NOR
NOR
NOR
NOR
NOR
NOR
NOR
NOR
BEL
NOR
NOR
37
TTS GROUP
ANNUAL REPORT
20
12
Corporate governance
TTS Group ASA (TTS) use The Norwegian Code of Practice for corporate
governance (NUES), dated 23 October 2012 as guidelines for its work. The
following principles for corporate governance have been adopted by the
Board of TTS Group ASA:
1. Review of corporate governance
The intent of TTS’ principles of corporate governance is to clarify the roles
of the shareholders, the Board of Directors and management beyond what
follows from legislation. These principles constitute part of the company’s
annual report.
“The Spirit of TTS” is available on the company’s website, www.ttsgroup.com
and describes 1) Vision and Strategy 2) Corporate Culture and Core Values 3)
Management and 4) Ethical Guidelines.
As a global group with companies in 13 countries, there is a continuous focus
on our core values and corporate culture. Through a process involving all
companies and divisions, we have examined and established our core values;
which are integrity, openness, loyalty and initiative. Our core values shall
influence all TTS’ activities, in order that that they contribute to cooperation
and progress for each and everyone in the group.
Through clearly defined core values TTS wishes to contribute to development
of the societies in countries where it is present. Much of TTS’ operations
is based on trade across borders and culture. TTS takes social responsibility
through developing increased understanding of cultural differences and in
this way increased tolerance.
TTS has in cooperation with external expertise held seminars to enhance
understanding of cultural differences, and developed our own “Cultural
Handbook”. TTS has also sponsored Chinese cultural activities in Norway, and
Norwegian cultural activities in China.
2. Business
TTS Group ASA’s Articles of Association are available on the company’s
website. Article 3 defines the company’s purpose:
The company’s purpose is to engage in industrial activities related to ship
building, oil and gas production, and port activities, including any related
activities, as well as participation in or acquisition of other enterprises.
3. Equity and dividends
EQUITY
Total balance at 31 December 2012 was MNOK 2 350, with an equity
capital of MNOK 856, giving an equity-to-assets ratio of 36 percent. The
company’s solidity requirement is continuously assessed on the basis of the
company’s goals, strategies and risk profile.
In 2011 TTS issued a subordinated convertible bond of MNOK 200. During
2012 and 2011 MNOK 105 has been converted to 10 464 876 shares.
The strike price has been adjusted to reflect extraordinary dividends and
repayment of capital.
TTS sold Energy AS, its drilling equipment business unit, for MUSD 270
with a gain of MNOK 420.
During an extraordinary general meeting it was resolved to pay NOK 1.56
38
per share in extraordinary dividends and to repay capital to share holders
of NOK 4,2147 per share. Total payment to shareholders was MNOK 500
in 2012.
SHAREHOLDER POLICY
TTS aims to give our shareholders a competitive long-term return that
reflects the risk inherent to the company’s operations. Based on TTS’ growth
strategy, the shareholders’ return should be realised through an increase
in the value of their shares, together with dividends when circumstances
so permit. Growth by means of acquisitions will be implemented through
balanced financing of equity and debt.
•
•
The Annual General Meeting determines the annual dividend, based on the
Board’s proposal.
The Board of TTS Group ASA will propose to the Annual General Meeting on
10 June 2013 that NOK 1.0 per share dividend is paid out for the financial
year 2012.
•
•
STRATEGY FOR FURTHER GROWTH
TTS has, since 1996, completed a number of successful acquisitions,
establishing a leading position in its segments of the market for offshore
and marine handling equipment. This has resulted in a considerable
growth, and turnover has increased from about 260 MNOK in 1997 to a, on
a continued business basis, revenue of MNOK 2 370 in 2012.
TTS has an ambitious growth strategy which is based on combined product
development and organic growth with acquisition of new businesses to
create positive synergies.
With the sale of the drilling equipment business and improved financial
position, TTS sees opportunities for growth within the offshore sector
where the market outlook is positive. At the same time prevailing market
conditions within the maritime sector are expected to give attractive
acquisition opportunities.
AUTHORISATIONS TO THE BOARD
• On the 31 May 2012, the Annual General Meeting adopted a resolution
to give the Board authority to issue a maximum of 8 000 000 shares
against cash or non-monetary redemption including merger relating
to acquistions of business or assets. The authority is valid to the Annual
General Meeting 10.06.2013. No shares have been issued on the basis
of this authorisation as of 17 April 2013.
to give the Board authority to issue a maximum of 500 000 shares
against cash redemption for the benefit of the company’s executive
management. This authorisation is valid until 31.5.2014. 360 000
shares have been issued in the form of options, with a possible first
time exercise of options following the presentation of the first quarterly
results for 2013, equivalent to a maximum of 50 percent of the
allocated options. The number of shares for further exercise of options
constitutes 12.5 percent following the presentation of the results for
the second, third and fourth quarter of 2013 and the first quarter of
2014, in addition to options not previously exercised.
to give the Board authoritiy to issue 420 000 shares against cash
dedemption for the benefit of the company’s excecutive management.
This authorisation is valid to 19 May 2013. 210 000 shares have been
issued in the form of options and additional 150 000 shares have been
issued as options and excercised in 2012. The program was issued with
a possible first time exercise of options following the presentation of
the first quarterly results for 2012, equivalent to a maximum of 50
percent of the allocated options. The number of shares for further
exercise of options constitutes 12.5 percent following the presentation
of the results for the second, third and fourth quarter of 2012 and the
first quarter of 2013, in addition to options not previously exercised.
On the 31 May 2012, the Annual General Meeting adopted a resolution
to give the Board of Directors autorisation to buy own shares to the
benefit of employees of a nominal value of NOK 150.000. The option is
valid to 30 June 2013.
On the 31 May 2012 the Annual General Meeting adopted a resolution
to give the Board authority to buy own shares up to the lowest of
NOK 150 000 000 or nominal value of NOK 4 000 000 for the purpose
of deletion. The authoritiy is valid to 30 June 2013.
On the 31 May 2012, the Annual General Meeting adopted a resolution
to give the Board of directors authority to buy back a portion of the
convertible callable unsecured subordinated bond 2011/2016 up to a
total of NOK 150 000 000. The authoritiy is valid to 30 June 2013.
The company has purchased a total of 259 190 shares with a then
nominal value of NOK 518 380. Total holdings of own shares at 17 April
was 294 400.
4. Equal treatment of shareholders
and transactions with closely related parties
SHARE CAPITAL AND SHAREHOLDERS
The share capital at 31 December 2012 was NOK 9 526 623 divided into
86 605 660 shares at a nominal value of NOK 0.11 each. The company has
only one class of freely negotiable shares, which are listed on the Oslo
Stock Exchange’s Match List under the ticker symbol TTS. Each share is
allocated one vote.
A list of the TTS’ 20 major shareholders is available on the company’s website.
OWN SHARES
Own shares are purchased on the Oslo Stock Exchange. At 17 April 2012,
the company’s own shareholding was 294 400.
THE BOARD OF DIRECTORS AND GROUP MANAGEMENT
TTS Group ASA’s Board of Directors and group management are viewed
as closely related parties of TTS, using the Oslo Stock Exchange for the
transaction of TTS shares.
During 2012 TTS made an investment in Sigma Drilling AS. One of TTS’
main shareholders and board member, Mr Bjarne Skeie has a significant
shareholding in Sigma Drilling AS. Bjarne Skeie and Trym Skeie were
not present during the Board’s deliberation and decision relating to this
investment.
According to the Norwegian code of practice for corporate governance, a
company is advised to implement guidelines assuring that closely related
parties give notice of closely related transactions. Based on the current
Board of Directors and group management, the company has deemed such
guidelines to be unnecessary.
According to the Norwegian code of practice for corporate goverance,
a company should list reasons for deviation from existing shareholders’
preferential status when making a right issue. TTS aims to follow the
Norwegian code when and if applicable.
RELATED COMPANIES
The joint venture companies in the TTS group are treated as related
companies with transactions as shown in Note 22.
5. Freely negotiable shares
As transpires from the Articles of Association posted on the company’s
website, no form of transfer restriction has been effectuated.
6. Annual General Meeting
The Annual General Meeting is usually held at the end of May/beginning of
June. The Annual General Meeting for 2012 will be held on 10 June 2013,
in accordance with the financial calendar for 2013.
Notice including agenda for the Annual General Meeting, including
the nominating committee’s recommendations, are distributed to the
shareholders at least three weeks prior to the Annual General Meeting, and
are available on the company’s website at least three weeks prior to the
meeting. The agenda papers are detailed enough to permit the shareholders
to make a decision on all items up for consideration.
Shareholders unable to attend may vote by proxy. Proxy forms will be sent
out for each shareholder to fill in and return to the administration. On
the proxy form, the shareholder may vote on each individual item. The
registration deadline is set to the day before the Annual General Meeting.
The Chairman of the Board, chairman of the nominating committee,
auditor and CEO are present at the Annual General Meeting, in addition
to other board members when appropriate. The Annual General Meeting
elects its own chair; usually this is the Chairman of the Board.
Due to a low turnout for the general assemblies, TTS does not deem it
necessary for the full Board of Directors to be present. We have, for the same
reason, found it unnecessary to establish routines to secure independent
chairing of the Annual General Meeting. Should there be particular items
on the agenda requiring need for such measures, this will be individually
considered for each individual general assembly.
The Annual General Meeting will be given the opportunity to vote for each
of the candidates up for positions in the company’s bodies.
7. Nominating committee
In TTS, a nominating committee is statutory according to the Articles of
Association. In accordance with the Annual General Meeting on 31 May
2012 a nomination committee was appointed with the following members:
NAME
Johan Aasen
Bjørn Sjaastad
Bjørn Olafsson
STATUS
Not for election
Re-elected
Not for election
POSITION
Trustee, Skagenfondene
Consultant
Consultant
The nominating committee appoints its own chairman of the committee.
Bjørn Olafsson was elected to chair the committee.
39
TTS GROUP
ANNUAL REPORT
No one in the nominating committee is a member of the Board of TTS Group
ASA or part of the management of TTS, as such ensuring independence. The
nominating committee has knowledge of TTS and its shareholders, so that
the interests of the shareholders are protected.
The nominating committee recommends candidates to the Board and
related remuneration, where the nominating committee’s recommendation
is substantiated.
According to the Norwegian Code of Practice for Corporate Governance,
the chairman of the nominating committee should be elected at the Annual
General Meeting and guidelines for its work should be established. In the
opinion of TTS, it as more appropriate that the committee decides on the
distribution of tasks, including the election of a chairperson. The Annual
General Meeting determines the nominating committee’s remuneration.
The members of the committee including practical information as deadlines
for nominations and contact information are listed on the company’s
website.
8. Corporate Assembly and Board of Directors,
composition and independence
Trym Skeie, Chairman of the Board, holds 2 160 735 shares in TTS Group
ASA, through Tamafe Holding AS, where he holds all of the voting shares.
In addition Trym Skeie holds 323 140 shares.
Bjarne Skeie, Director for the Board, holds 12 414 175 shares in TTS Group
ASA, through Skeie Technology, Skeie Consultants and Skeie Capital
investments. Mona Halvorsen owns 1 774 shares and Ole Henrik Askvik
owns 2 032 shares. The other Directors of the Board do not hold any shares
in TTS Group ASA. None of the Directors of the Board holds options. The
attendence at the Board meetings has been high.
A procedure for the Directors and leading employees has been made
relating to trade in the TTS share.
According to the Norwegian code of practice for corporate governance, the
Chairman of the Board should be elected by the Annual General Meeting.
In TTS, the Board appoints the chairman.
9. The work of the Board
The Board of Directors are conducting its work on the basis of established
procedures outlining its responsibilities collectively and individually.
As TTS Group ASA has fewer than 200 employees, the management
model does not include a corporate assembly. There are two employee
representatives on the Board of TTS Group ASA.
The Board has eight scheduled meetings annually, and an annual meeting
plan is set up. Further meetings are held as required. A total of 16 board
meeting were held in 2012.
In accordance with the Annual General Meeting on 31 May 2012, the
shareholders elected the following members to the Board:
The work of the Board has been influenced by the sale of the drilling equipment
business, significant contract reviews, investment decisions, decisions relating
to dividends in addition the the quarterly meetings to review the financial
results.The Board complies with the rules regarding disqualification pursuant
to the Joint Stock Public Companies Act, Section 6-27.
NAME
STATUS
POSITION
Trym Skeie
Anne Breive
Kjerstin Fyllingen
Bjarne Skeie
Jan Magne Galåen
Re-elected
Re-elected
Not for election
Re-elected
Not for election
Chairman, Skagerak Kapital
CFO Trelleborg Offshore AS
CEO Haraldsplass D. Sykehus AS
Skeie Technology AS
Manager, Rasmussengruppen
In accordance with ordinary election of two employee representatives to
the Board of TTS Group ASA, the following were appointed to the Board in
September of 2012:
NAME
COMPANY
POSITION
Mona Halvorsen
TTS Offshore
Handling
TTS Marine
Director
Ole Henrik Askvik
Director
TTS’ Board members are elected for a two-year period. Each Board member’s
CV is available in the Annual Report.
Trym Skeie and Bjarne Skeie are both directly and indirectly major
shareholders in the company. Jan Magne Galåen is employed by
Rasmussengruppen AS which is a major shareholder in the company.The
other shareholder-elected Board members are independent of management,
the company’s major shareholders and primary business connections.
Furthermore, the composition of the Board upholds shareholder interests,
and the company’s requirements for expertise, capacity and diversity in a
fine collegiate body. The complementary expertise of the Board ensures the
Board member’s ability to assess matters from different perspectives before
reaching a final conclusion.
40
The group’s use of nominating committee has been made statutory in
its Articles of Association. In addition, the Board of TTS Group ASA has
appointed an audit committee:
AUDIT COMMITTEE
Kjerstin Fyllingen (Chairman)
Anne Breive
Jan Magne Galåen
The audit committee is selected on the basis of qualification and
independence of the company as described in NUES.
At present, the Board does not have a compensation committee. This is
assessed on an annual basis. TTS previously had a compensation committee.
There are no other committees in the Board. At present, TTS does not have
a deputy chairman. This is assessed on an annual basis. TTS previously had
a deputy chairman.
The Board conducts a self assessment annually.
10. Risk management and internal control
Following the sale of the drilling equipment unit TTS has kept its
organization of divisions, but structured its follow-up more centrally by
appointing a COO and established operational central functions within
finance/controlling, HR and communication. The managers of the business
units report to the COO and have regular reviews and meetings. An
authority matrix has been established detailing which matters may be
dealt with at the various levels.
Procedures and systems upholding uniform reporting have been prepared.
The management prepares monthly reports on results, which are
submitted to and reviewed by the members of the Board. In addition, more
comprehensive quarterly financial reports are prepared, which are reviewed
at the quarterly period board meetings.
20
12
DISTRIBUTION OF OPTIONS AND SHARES AT 31 March 2013
Number
of options
exerciseable
until
31.05.13
Exercise
price
Number
of options
exerciseable
until
31.05.14
Exercise
price
Number
of shares
Name
Position
Company
Johannes D.
Neteland
CEO
TTS Group
ASA
60 000
3,33
120 000
10,83
180 000
Ivar K.
Hanson
COO
TTS Group
ASA
30 000
3,33
60 000
10,83
90 000
Arild
Apelthun
CFO
TTS Group
ASA
60 000
3,33
60 000
10,83
120 000
The Board of Directors undertakes a thorough review of the company’s
financial status in the Directors’ Report. This review includes a further
description of the main elements of HSE and risk aspects.
TTS Group
Miao Reinlund VP
Communi- ASA
cations
0
3,33
60 000
10,83
60 000
60 000
3,33
60 000
10,83
120 000
11. Remuneration of the Board of Directors
Total
Based on the recommendation of the nominating committee, the Annual
General Meeting determines the remuneration of the Board of Directors.
Remuneration is not linked to the company’s result. There is no share
option programme for the Board of Directors.
13. Information and communication
The Board and management undertake as part of an ongoing risk
management effort, specific risk review of major investments and contract
signing. Finally the Board together with the management discuss budget
and strategy as part of a annual process to identify opportunities and
threats for the group.
Members of the Board of Directors, or companies with whom they are
associated, are not usually given separate tasks by TTS in addition to their
function as members of the Board. Still, should such tasks be assigned, this
will be based on the approval of the Board of Directors. There were no such
assignments in 2012.
The nominating committee’s proposal for remuneration of the Board of
Directors is presented in the call for the Annual General Meeting on 10
June 2013.
Lennart
Svensson
EVP, Port & TTS Port
Logistics
Equipment
AB
210 000
360 000
570 000
The company has established guidelines for the handling of information
and communication. These guidelines also address contact with the owners
separate from the general assembly. The reporting by TTS of financial and
other information is based on transparency, respecting the principles of
equal treatment of stock market participants.
A financial calendar is available on the company’s website. Any dividend
proposal is presented in the fourth quarterly report and in the call for an
annual general meeting.
Information for the shareholders of the company is posted on the company’s
website at the same time as it is distributed to the shareholders (with the
exception of the call for an annual general meeting, see Item 6).
12. Remuneration of executive management
The Board has issued guidelines for stipulation of salaries and other
remunerations to executive management. The President and CEO’s terms
are decided by the Board. The guidelines are presented at the annual
general meeting.
The Board’s attitude to management salaries is that these should be
competitive and motivating, but not ahead of the market with regard to
their level. Bonus is calculated on the basis of measured results.
Guidelines are presented in Note 4. According to the note, share
options constitute part of the remuneration. Share options for executive
management (see Item 3 – Authorisations to the Board) include group
management. Exercise of share options is dependent on the share price
listed on the Oslo Stock Exchange. At the end of 2012 and at 31 March
2013, in all 570 000 authorised share options had been issued to group
management. 210 000 options may be exercised up to 31 May 2013 at a
price of NOK 3.33 and 360 000 options that may be excercised up to 31
May 2014 at a price of NOK 10.83.
14. Company takeover
The company’s Articles of Association do not include mechanisms aimed at
preventing takeover, nor are other hindrances in effect to reduce transfer
of the company’s shares.
No main principles have been established for TTS’ response to a prospective
takeover bid, other than that the Norwegian code of practice for corporate
governance will have a normative function.
15. Auditor
The auditor conducts a minimum of two meetings a year with the audit
committee, part of the meeting without management present. One of
the meetings is conducted in connection with the review of the annual
accounts, and one of the meetings deals with the company’s internal
control. The audit committee meets with the auditors to go through the
audit plan for the year where any specific areas are being discussed.
The auditor is present at board meetings as required. The auditors are
always present at the board meeting where the annual accounts are
approved. The management is not present during the meeting between the
auditors and the Board.
Remuneration payable to the auditor, specifying the division between
auditing and other services, is shown in Note 4. The extent of services
other than audit services is addressed in the meeting between the auditor
and the audit committee. It has not been deemed necessary by the Board to
implement additional guidelines with regard to the management’s access
to making use of the auditor for services other than auditing.
41
TTS GROUP
ANNUAL REPORT
20
12
Corporate Social Responsibility
TTS Group and Corporate Social Responsibility
Areas of consideration:
TTS Group ASA has a goal of including Corporate Social Responsibility
(CSR) in the way we conduct our business in all our companies and
locations around the world. For TTS, it is vital that our operations
are based on a sustainable development, both economically,
environmentally and socially. By applying CSR in our business and
operations, we take care to follow international conventions for
business practice, ethical guidelines, and safety regulations and are
conscious to reduce and prevent our impact on the environment.
Environment
Since TTS is operating in the marine and offshore industries, we
have to take special care to prevent and secure that our production
processes do not harm our common environment. At our production
facilities in Germany, The Czech Republic, South-Korea and China,
procedures have been introduced to minimize the impact on the
environment.
All TTS employees are encouraged to comply with the TTS Ethical
and Social Guidelines stated in the “Spirit of TTS” booklet, which
describes the scope and values that guide our actions. The booklet is
available on the TTS Corporate website and is always included in the
startup packages and training for all new employees.
Human rights
Human values such as integrity, honesty, fairness and respect underlie
an active approach to CSR, together with a continuous focus on
ethics and responsibility. TTS will take care to secure that human
rights are not violated through our activities at all our international
locations. This also applies to our joint venture activities.
Employee rights
It is an aim for TTS to secure safe working conditions and facilitate
a favorable working environment where employees can thrive and
develop their professional skills. TTS support the option for employees
to organize through trade and labor unions. The viewpoints of
TTS representatives are secured through annually employees’
representatives meetings and two employee representatives in the
TTS Board of Directors.
Social Responsibility
TTS Group and its subsidiaries are all part of the communities and
regions of which they are located. Our employees live and work and
are part of the social and natural culture in their home country.
TTS companies always comply with national regulations and codes
of conduct, with contributions through fair taxation and to take
measures to prevent corruption and misconduct.
The board of directors, management and all TTS employees has a
responsibility in ensuring that the company always aim to achieve the
goals of CSR. TTS Group ASA will also in 2013 continue to focus on
developing and improving our operations in line with our employees,
our customers, our partners and our common shared environment.
42
43
TTS GROUP
ANNUAL REPORT
20
12
Directors’ report for 2012
INTRODUCTION
For TTS Group ASA (TTS) the year of 2012 was significantly influenced
by the sale of its drilling equipment business in June. TTS sold the
drilling equipment business for MUSD 270 to Cameron International
Corp. resulting in a reported gain of MNOK 420. The proceeds from this
sale enabled the TTS Group to pay dividends and repay share capital
to its owners of MNOK 500 and reduce interest bearing debt of more
than MNOK 800. Furthermore the Board of Directors has proposed an
ordinary dividend relating to 2012 of NOK 1.0 per share to the Annual
General meeting. The Board of Directors has decided that additional
proceeds relating to the transaction (earn-out and hold back) from the
sale of the drilling equipment business will be paid to shareholders.
In the remainder of this report, all numbers refer to continued business
unless otherwise stated.
For the continuing business consisting of the Marine division, Offshore
Handling and Port & Logistics division the revenue dropped 9 % to
MNOK 2 370 compared to 2011. The reduction in activity is mainly
related to standard deck equipment within the Marine division,
changes in the joint venture structure partially offset by the inclusion
of NMF from August.
The EBITDA for the year was MNOK 153, a reduction of 10% from 2011.
The main reason for the reduction relates to low activity and weak
results in the Port and Logistics division.
Net result for 2012 was MNOK 32, down from MNOK 38 in 2011.
Including gains from sale from discontinued operations the net result
for 2012 was MNOK 450.
In August 2012 TTS acquired heavy lift crane provider Neuenfelder
Maschinenfabrik GmbH (NMF) for MEUR 17.5. The acquisition
complements TTS’ total crane offering by including super heavy lift
cranes. The business is reported as part of the Marine division.
The financial position of TTS improved significantly during 2012 due
to the sale of the drilling equipment business. The TTS group is in a
net interest bearing asset position at the end of year of MNOK 97
compared to a net interest bearing debt of MNOK 548 at the end of
2011. The equity ratio of the business was 36% at the end of 2012.
The market outlook for the group is expected to remain relatively
stable. The market for the Marine division is expected to be divided
between a weak market for standardized merchant vessels segments
and high activity within specialized vessels, especially car carriers.
Within Offshore, TTS expects that the contracting of offshore construction
vessels, drill ships and rigs will remain at a high activity level.
44
For Port & Logistics the low activity within container terminals and
ports is expected to continue while infrastructure to repair yards is
expected to improve in 2013.
TARGET AND STRATEG Y
TTS’ main objective is to develop and supply high quality equipment to
customers within maritime and oil and gas industry to support their
productivity and value generation.
The group’s expertise and resources are mainly centered on design
and engineering, assembling and testing of products combined with a
strong service and after sales.
TTS has an ambitious growth strategy which is based on combining
product development and organic growth with acquisition of new
businesses to create positive synergies.
With the sale of the drilling equipment business and improved financial
position, TTS sees opportunities for growth within the offshore
handling sector where the market outlook is positive. At the same time
prevailing market conditions within the maritime sector are expected
to give attractive acquisition opportunities.
OPERATIONS AND DIVISIONS
TTS is an international group established in 13 countries that develop
and supplies handling equipment to the maritime and oil & gas industry.
In 2012 TTS has organized its business in 3 divisions after the sale of
the drilling equipment business.
The Marine division delivers a broad range of products and services to
the maritime industry. The Marine division has operations worldwide
with its main operations located in Norway, Sweden, Germany,
China and South Korea. Organized as part of the division, TTS has
two joint venture companies in China. TTS holds a 50% ownership
in TTS Hua Hai Equipment Co. Ltd and TTS Bohai Machinery Co. Ltd
together with partners China State Shipbuilding Corporation (CSSC)
and Dalian Shipbuilding Industry Co. (DSIC). Furthermore TTS Hua Hai
Ships Equipment holds a 40% stake in Jiangnan TTS (Nantong) Ships
Equipment Co. Ltd which manufactures hatch covers.
The Port and Logistics division delivers production lines and systems
for material handling in shipyards and other industries in addition to
cargo handling systems and transport systems for ports. The operation
is located in Sweden, Norway and Finland.
45
TTS GROUP
ANNUAL REPORT
Offshore Handling division’s main activities include design and supply
of offshore cranes to vessels, drill ship and rigs. Previously it was part
of the Energy division together with the now sold drilling equipment
business, however after the sale it has been organized as a separate
division.
For 2013 TTS has decided to reorganize its businesses into 4 divisions.
THE TTS GROUP
Consolidated statement of financial position
Cash flow
The parent company, TTS Group ASA is located in Bergen, Norway and
has been listed on the Oslo Stock Exchange since 1995.
Total assets at the end of 2012 was MNOK 2 350, significantly reduced
compared to MNOK 3 528 at the end of 2011. The main change relates
to the sale of the drilling equipment business and repayment of debt and
equity.
Net cash flow for the group in 2012 was negative MNOK 284.
In February 2012 TTS entered into a new credit and bonding facility with
a bank syndicate consisting of Nordea, Sparebanken Vest and SEB. The
agreement included credit facilities of MNOK 1 000 and bonding facilities
of MNOK 1 300. In May TTS repaid a bond loan of MNOK 400.
Net proceeds from the sale of the drilling equipment business were
MNOK 1 216.
At the end of 2012, the group had 1080 employees of which 970 was
with regular employment. The geographic distribution is shown below
Country
TTS Group ASA
Marine
Offshore &
Heavy Lift
Port &
Logistics
Services
Marine division delivers a wide range of products to the maritime
industry. Main products include solutions for Roro, PCTC, and Cruise
in addition to cranes, winches, hatch covers and side doors. The joint
venture companies in TTS are part of the Marine division.
Offshore and Heavy lift division, which consists of all types of cranes
primarily focused on heavy lift and offshore cranes, including active
heave compensated cranes.
Port and Logistics division remains unchanged.
Services includes service and after sales for all divisions within TTS. This
enables TTS to offer service and after sale worldwide for the full range
of its products.
Employees
Germany
299
Norway
248
China
129
Sweden
114
South Korea
Other
Following the sale of the drilling equipment business TTS has terminated
and repaid all debt under the facilities and established new bilateral credit
and bonding facilities with Nordea and DNB in December of 2012. TTS has
MNOK 300 in credit facilities under the new 3-year agreement.
66
114
The MNOK 200 subordinated convertible bond loan that TTS issued in
January of 2011 has a nominal value of MNOK 95 at the end of 2012.
REVIEW O F THE ANNUAL ACCOUNTS
TTS Group ASA presents its annual accounts pursuant to the Norwegian
Accounting Act’s Section 3-9 annual accounts, in Accordance with
IFRS, International Financial Reporting Standards. TTS Group ASA’s
group accounts are presented according to generally accepted
accounting principles. The accounting principles are the same as for
the annual accounts for 2011.
Annual result for 2012
Full year
2012
2011
2 370
2 594
EBITDA
153
171
MARKETS
Operating profit
106
144
The market for the Marine division was mixed in 2012 and is expected
to remain relatively stable. High activity in car carriers, reefers and
similar special vessels is expected to continue in 2013 and represents
significant opportunities for the division. However, contracting of tank,
bulk and container vessels has been at a low level due to overcapacity
in the market and affects especially the more standardized deck
equipment that TTS offers. The market for service and spare parts has
been impacted by the overcapacity situation within shipping and has
resulted in lower volumes and margins.
Net financial items
-66
-74
Profit/loss before tax
40
71
Net result continued business
32
38
450
23
MNOK
The new organization will focus and size each division for future
growth. The new organization is effective from 2013.
The market for Offshore Handling was generally good. During Q4 TTS
secured its first order for cranes to a drill ship owned by Sigma Drilling.
TTS expects the positive market trend to continue in the near term.
The market for Port & Logistics has been weak during 2012. Investments
in port infrastructure have generally been low in Europe where it has
traditionally had its main market. The market for infrastructure to
shipyards has also been at a low level, although the successful entry
into the shiplift market gives more opportunities for the division.
46
20
12
Turnover
Total net result included divested business
Turnover in 2012 was MNOK 2 370, down approx. 9 % from 2011. The
reduction in revenue stems from changes in the structure of the joint
venture transaction company and lower activity within standardized
products like cargo cranes, winches and hatch covers while it is
partially offset by acquisition of TTS NMF.
The EBITDA of MNOK 153 was 10% lower than 2011. The main reason
for the lower result is the loss in the Port & Logistics division. Offshore
Handling has improved its result significantly from last year while the
Marine division reported somewhat lower earnings. The result from the
joint ventures increased significantly in 2012 and offset lower earnings
in standardized equipment.
Investments in non- current asset in 2012 were MNOK 27 of which MNOK
5 was relating to product development of offshore cranes. During the year
TTS has written off investment made in container handling equipment of
MNOK 23.
Financial fixed assets were MNOK 164 at the end of the year where
investment in joint venture companies in China and shareholding in Sigma
Drilling AS were the main assets.
Total tax losses carried forward was MNOK 68 at the end of 2012. The
reduction from MNOK 138 last year relates mainly to sale of the drilling
equipment unit. Tax losses not recognized were MNOK 37.
Working capital development has been influenced by the change in Joint
Venture structure and has increased over the last year for continuing
business. TTS continues to focus on efficient capital management through
minimizing working capital.
Reporting currency in TTS is NOK. TTS has a substantial part of both income
and expenses in foreign currency. TTS actively strives to reduce its exposure
to fluctuation in currency through the use of hedging instruments. Please
see additional information in our accounting principles.
The principles used in preparing the TTS Group ASA annual account was
changed from equity method to historical cost to better reflect historical
value of investments in subsidiaries and joint ventures. The change has no
impact on the consolidated accounts.
Cash flow from operations was negative MNOK 53. The negative cash
flow relates primarily to changes in the joint venture structure.
Investments in the year were MNOK 55, where the investment of
MNOK 29 was in Sigma Drilling AS.
Dividends from joint venture were MNOK 48 in 2012.
TTS has repaid MNOK 852 in interest-bearing debt during 2012. The
repayment of syndicated facilities of MNOK 375 and bond loan of
MNOK 400 represent the majority of the repayment.
TTS has paid MNOK 500 in dividends and repayment of share capital
in 2012.
R&D
TTS has invested MNOK 4 in development of offshore cranes during
2012. TTS has written down MNOK 23 relating to automated container
handling equipment based on evaluation of future market prospects
for the products.
Order backlog
Order backlog at the end of 2012 was MNOK 2 783, down from MNOK
3 168 at the end of 2011. The order backlog includes the backlog of
NMF acquired in August 2012, and 50% of the backlog of the joint
ventures.
Continued operation
At 31st of December TTS’ equity ratio was 36%, up from 23.8% last
year. TTS had a net interest bearing asset position of MNOK 97 using
the nominal value of the convertible bond.
In total it is the Board’s evaluation that the requirement for continued
operation pursuant to section 3-3 of the Norwegian Accounting
Act has been fulfilled and the annual financial statement has been
prepared according to this requirement.
BUSINESS AREAS
TTS Group reports on three segments:
The annual accounts have been prepared in accordance with International
Financial Reporting Standard (IFRS). The accounts provide a true picture of
the company’s financial position as of 31 December 2012. The Board and
management are not aware of any unreported events that have occurred
subsequent to the balance sheet date of 31 December 2012 that may be of
material significance to TTS and the annual accounts of 2012. Reference is
made to note 31 Subsequent events.
At the end of 2012, TTS Group ASA had a share capital of 9 526 623 divided
into 86 605 660 shares at 0.11 each. The company holds 294 400 of its
own shares.
Marine division
MNOK
Turnover
EBITDA
EBITDA margin (%)
Order backlog *)
Full year
2012
2011
1 942
2 127
167,6
172,6
8,6
8,1
2 236
2 874
*) Order backlog includes 50% of Joint venture and NMF from 20th of August 2012.
47
TTS GROUP
ANNUAL REPORT
Compared to 2011, the revenue reduction is influenced by the change
in the joint venture structure although this is partly offset by inclusion
of NMF from 20th of August. The reduction in EBITDA is due to lower
margins in Services and in standardized equipment to merchant
vessels. The joint venture businesses in China had better earnings in
2012 than in 2011.
Order backlog is reduced from last year and was MNOK 2 236 at the
end of the 4th quarter.
Offshore Handling
Full year
Turnover
2012
285
2011
275
EBITDA
12,2
-0,5
EBITDA margin (%)
4,3
-0,2
Order backlog *)
334
196
MNOK
In 2012 the revenue was in line with previous year. The EBITDA
increased during 2012 due to improved margins on ongoing projects.
Main activity in 2012 was active heave compensated offshore cranes
to offshore vessels.
The signing of a complete crane package to a drillship was signed in
2012 and represents a new market for Offshore Handling. The potential
for additional contracts within this type of vessel or on rigs do represent
a growth potential for TTS.
The order backlog has increased during the year and is MNOK 334 at
the end of the year.
Port and Logistics division
Full year
RISK F ACTORS AND RISK MANAGEMENT
The TTS group is exposed to various types of risks. The risks have been
categorized into 3 different types; a) market risk which relates to the
demand for its products and services, b) financial risk which relates to
among other things currency risk, credit risk and liquidity risk, and c)
operational risk which represents risk for execution of projects both
technically and commercially.
On a monthly basis the Board reviews operating reports from the
management. In addition to the continuous risk mitigation, the Board
and management carry out specific risk analysis in connection with
major investments, contract signing in addition to monitoring specific
areas or projects continuously.
Market risk
There are risks related to the market development for TTS’ products
and services. TTS monitor the development in markets both through
its extensive sales network, number of enquiries and relevance, and
by monitoring relevant available information on trends like number of
vessels contracted, ship yard utilization indicators, charter development
and investment trends and oil price development.
Contracting of new vessels, both merchant vessels, specialized vessels
like car carriers, offshore vessels and rigs represents risk factors both
related to total business volume and for achieved margins as they
represent the majority of the business opportunities for TTS’ products
and services. Service and aftersales are affected by development in
freight rates, changes in legislation and more generally the development
of demand and supply in the marine market.
At the beginning of 2013 TTS has a solid order backlog for most of its
businesses and delivery times for most products are between 3 months
to 2 years. Uncertainty in global economy and especially development
in the credit markets represents a risk with regards to cancellations or
postponements of orders.
Turnover
2012
143
2011
191
Financial risk
EBITDA
-6,6
15,5
EBITDA margin (%)
-4,6
8,1
TTS is exposed to financial risk consisting of credit risk, liquidity risk
and currency risk.
Order backlog *)
213
99
MNOK
As a consequence of the low activity in the markets for container
terminals and ports, the revenue declined in 2012 and resulted in a
negative EBITDA for the year. During 2012 the division got a breakthrough in the shiplift market with 3 contracts in Korea.
The order backlog of MNOK 213 at the end of 2012 is more than
twice the backlog at the end of 2011 and is mainly related to shiplift
contracts.
48
Credit risk represents the potential financial losses if a contractual
partner fails to fulfill its obligations. The development in the global
economy in general and in the marine business specifically has so
far resulted in only modest losses on accounts receivable. However
the group perceives that there is an increase in credit risk and has
taken actions to limit its risk through limiting credit and evaluating
financial development of its partners. TTS works continuously to limit
its exposure to credit risk.
Liquidity risk is related to TTS being unable to fulfill its obligations
as they fall due. In December 2012 TTS has refinanced its bank and
bond facilities and established MNOK 300 in 3-year credit lines and
MNOK 600 in bonding facilities. The agreement includes covenant
requirements related to equity ratio (similar to prior agreement), and
gearing (net interest-bearing debt to EBITDA).
At 31st of December 2012, TTS had unutilized overdraft facilities of
MNOK 280. In addition the group had a total of MNOK 250 in cash
deposits.
Relating to currency risk, TTS policy is to hedge all significant currency
positions.
Operational risk
The group’s deliveries are primarily organized in form of projects. The
operational risks in projects are mainly related to project management
and technical execution of projects.
During the tender phase projects are monitored and assessed for risk,
both to identify and mitigate technical and commercial risks prior to
submitting a quote. The contracts are being reviewed and approved
according to business norms that define on which basis TTS does
business.
Companies within TTS are reviewing progress and risk mitigation
periodically during the execution of its projects.
The group continuously works to improve its work processes and
develop competence and project management tools. The company has
implemented centralized training and ensures that projects are being
reviewed on a regular basis to mitigate risk.
ORGANISATION
Organisation and environment
At the end of 2012 the number of employees in TTS was 970. In addition
the Group hired in 110 temporary employees.
Absence due to illness was 2.5% in 2012 in line with last year. Lost
time incident rate per million worked hours (LTI) was 11.4, compared
to 12.4 last year.
TTS has committed considerable resources in establishing a crossborder connection between the managers and employees. In all of
the group’s companies and divisions, work is done to establish and
maintain a joint corporate culture based on the core values integrity,
openness, loyalty and initiative. These core values shall influence all of
TTS’ activities, so that they contribute to cooperation and progress for
each and everyone in the TTS Group.
TTS’ activities are primarily related to sale, design and engineering, as
well as assembly, testing of equipment and service. Assembling and
testing are based on a limited use of chemicals that may be 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 orders.
20
12
Equal opportunities
TTS aims to ensure equal working conditions, equal opportunities and
equal treatment regardless of gender, religion or ethnic background.
The aim is equal treatment of all with regard to professional and
personal development.
Among TTS employees, most of them have engineering expertise.
Women are underrepresented in this field. Of a total workforce of 970
a total of 21 per cent are female.
The corporate management team consists of 5 members of which 2
are female.
Three of the seven Board members of the TTS Group ASA board are
female. Two are elected by shareholders and one elected by the
employees.
Pursuant to the law prohibiting discrimination based on disability (the
Norwegian Anti-Discrimination and Accessibility Act), TTS has striven
to locate its operation with an accessibility and office lay out that
does not hinder access for employees who depend on wheelchairs.
It is furthermore the company’s policy to adapt the workplace for
employees with hearing or sight impairment.
Board of Directors
The Chairman of the Board of TTS Group ASA is Trym Skeie. The Board
of Directors of TTS Group ASA at the end of 2012, in addition to Trym
Skeie consisted of Bjarne Skeie, Jan Magne Galåen, Anne Breive,
Kjerstin Fyllingen, Mona Halvorsen and Ole Henrik Askvik.
At the Annual General Meeting in May 2012 Bjarne Skeie, Trym Skeie
and Anne Breive were all re-elected.
During the year there have been changes in the Board were employee
representatives Karen T. Mørkestøl and Jarle Dyrdal were replaced by
Mona Halvorsen and Ole Henrik Askvik.
Auditor
KPMG AS was re-elected to be the company’s auditor for 2012.
CORPORATE GOVERNANCE
Introduction
A more detailed account of the applicable principles for corporate
governance is provided in the section corporate governance in the
annual report. Furthermore resolutions from the general meeting can
be found at the company’s website.
Shareholder structure and limitation
Shares in TTS Group ASA are publically traded at the Oslo Stock
Exchange. Shares are identified by the name of its owner. As reflected
in the company’s Articles of Association there are no restrictions
49
TTS GROUP
ANNUAL REPORT
20
12
Consolidated statement of comprehensive income
TTS group
1 JANUARY – 31 DECEMBER
(A mounts in N O K 10 0 0 )
relating to voting or transfer of ownership of the shares, nor are there
mechanisms aimed at preventing takeovers.
There are no specific representation individual or in total for shares
owned by the employees.
TTS has entered into agreements with financial institutions which are
conditioned upon being listed at Oslo Stock Exchange.
Capital structure
Total group equity at year end was MNOK 856 of which MNOK 159 is
restricted capital and MNOK 697 is other equity. Equity in the parent
company TTS Group ASA was MNOK 483 of which 159 MNOK in
restricted capital and MNOK 325 in other equity.
The Extraordinary General Meeting in TTS Group ASA held 15 August
2012 resolved to pay a dividend of NOK 1.56 per share and to reduce
company capital by MNOK 365 through repayment of capital to
shareholders. The disbursement amount was NOK 4.2147 per share. The
capital reduction was registered at the Register of Business Enterprises
25 October 2012 after opening time of Oslo Stock Exchange.
The final allocation of the reduction amount between share capital and
share premium account, was NOK 33 776 207.40 and NOK 331 239
544.54, respectively. New nominal value per share is NOK 0.11, and the
share was registered with this nominal value as from 26 October 2012.
The new share capital is NOK 9 526 622.60.
product offering both in China and South Korea to the shipbuilding
industry.
Within Offshore handling the Board sees growth potential expanding
both product offering to drill ships and rigs in addition to a strong
market for offshore vessels. TTS has already developed a platform on
which it can expand and develop the offshore product business further.
The European port business has been slow the last few years, but there
are certain segments where TTS sees potential for growth. TTS will
also seek to expand the port business outside of Europe through our
network in Marine and Offshore.
The sale of the drilling equipment business was due to a change in
strategy of TTS. The Board is satisfied with the achieved price for the
drilling equipment business which enabled the company to pay MNOK
500 in repayment and dividends to the shareholders. The Board notes
that there is a further potential gain from the sale of the drilling
equipment business in form of earn-out and holdback amount which
will be distributed to the shareholders.
Allocation of annual profit for TTS Group ASA.
The group reports a consolidated net profit of MNOK 450 and a
consolidated comprehensive profit of MNOK 429. The equity at end of
2012 was MNOK 856.
Notes
IF R S
IFRS
2012
2011
2, 22
2 346 478
23 428
2 572 026
21 586
1
2 369 906
2 593 612
3, 22
4, 5
6, 7
7, 8
4, 21
1 542 167
516 871
24 387
22 801
207 516
10 210
-59 916
1 781 261
467 992
26 485
207 687
12 953
-46 936
2 264 036
2 449 442
105 870
144 171
105 870
144 171
19 788
-42 588
-53 095
34 486
-70 122
-41 620
-65 672
-73 594
40 198
-7 939
70 577
-33 060
32 259
37 517
418 162
-14 621
450 421
22 896
450 421
-21 294
22 896
-16 246
429 127
6 650
Continuing operations
O perating revenue
Project revenue
Other income
Total revenue and income
O P E RATI N G E XP E N S E S
Cost of sales
Personnel costs
Depreciation of fixed assets
Other depreciations/amortisation
Other operating expenses
Losses on accounts receivable
Income from investments in joint ventures (profit = -)
10
Total operating expenses
Operating profit/loss
F I N AN CI AL I N CO M E AN D E XP E N S E S
During 2012 a total of MNOK 97 of the convertible bond was converted
to 10 464 876 shares.
For TTS Group ASA the net profit was MNOK 352. The Board of Directors
will propose to the Annual General Meeting in June that the group pay
NOK 1.0 per share in ordinary dividend payments.
Other financial income
Other interest expenses
Other financial expenses
Future prospects
The allocation of the net profit for the year is therefore proposed to be
MNOK 87 for dividends and MNOK 265 to other equity.
Net financial items
TTS will continue to build on the strong position within the marine
market. With our leading position in China, TTS will seek to expand the
Equity for TTS Group ASA at the end of 2012 was MNOK 483.
Profit before tax from continuing operations
Income tax expenses
25
25
25
1
19
Profit for the period from continuing operations
Discontinued operations
Bergen, 17 April 2013
Board of Directors of TTS Group ASA
Profit / (loss) after tax for the period from discontinued
operations
Trym Skeie
Chairman of the board
Kjerstin Fyllingen
board MEMBER
Anne Breive
board MEMBER
Bjarne Skeie
board MEMBER
Jan Magne Galåen
29
Profit for the period
board MEMBER
S TATE M E N T O F CO M P RE HE N S I VE I N CO M E FO R THE P E RI O D 1 JAN U AR Y TO 31 DE CE M BE R
Ole Henrig Askvik
board MEMBER
Mona Lucille Tellnes Halvorsen
board MEMBER
CEO & President
Foreign currency differences
26
Total comprehensive income for the period
Earnings per share - discontinued operation (NOK per share)
18
18
0,39
5,03
0,50
-0,20
Diluted earnings per share - continuing operation (NOK per share)
Diluted earnings per share - discontinued operation (NOK per share)
18
18
0,32
4,09
0.44
-0,17
Earnings per share - continuing operation (NOK per share)
Profit for the period and total comprehensive income have been allocated to the owners of the parent company.
50
51
TTS GROUP
ANNUAL REPORT
20
12
Consolidated statment of financial position
TTS group
Eq uity and liabilities
ASSETS
( A mounts in N O K 10 0 0 )
Notes
IFRS
IF RS
2012
2011
Notes
IF R S
IF R S
2012
2011
Equity
Non-current assets
IN TAN G I B L E A S S E T S
Deferred tax assets
Research and development
Licences and patents
Other intangible assets
Goodwill
19
7
7
7
7
Total intangible assets
67 825
49 711
5 832
25 180
471 150
137 524
274 843
10 702
3 315
827 184
619 698
1 253 567
Issued share capital
Treasury shares
Share premium reserve
Other equity
Total equity
17
17
17
17
9
9 527
-32
149 378
697 322
37 845
-18
384 891
417 665
856 195
840 383
5
19
1 297
31 411
26 464
32 708
26 464
75 330
6 000
152 620
35 363
81 330
187 983
29 587
245 363
2 141
24 900
501 181
62 365
9 490
505 085
400 000
355 385
339 615
11 142
46 062
616 516
98 843
108 551
497 892
1 380 112
2 474 006
1 494 150
2 688 452
2 350 345
3 528 835
Liabilities
N O N - C U R R E N T A SS E T S
Property
Buildings
Machinery and vehicles
Furniture, office-, and computer equipment
E QU I T Y
6, 13
6, 13
6
6, 13
Total non-current assets
14 620
17 767
35 913
46 734
14 548
19 792
9 407
74 256
115 034
118 004
P RO VI S I O N S F O R LI ABI LI TI E S
Pension fund debt
Deferred tax
Total provisions for liabilites
OTHE R N O N -CU RRE N T LI ABI LI TI E S
F IN AN C I A L N O N - C U R R E N T A S S ET S
Investments in joint ventures
Other receivables
Pensions
134 988
145
-
169 723
145
2 775
Total financial non-current assets
134 988
172 645
869 721
1 544 216
187 111
382 794
187 111
382 794
334 024
121 737
504 574
23 180
53 437
28 895
468 875
213 084
317 756
20 710
146 426
222
1 065 847
1 167 073
Current assets
Inventories
1, 10, 22
5
3, 13
Total inventories
CURRENT RECEIVABLES
Trade receivables
Other receivables
Acquired, non-invoiced production
Derivative financial instruments
Prepayments to suppliers
Assets held for sale
11, 13
11, 13, 22
2, 13
23
2,13
8
Total current receivables
Bank deposits, cash in hand, etc.
14
Total current assets
Total assets
1
227 666
434 750
1 480 624
1 984 618
2 350 345
3 528 835
Convertible Callable Unsecured Subordinated Bond
Debt to financial institutions
Total other non-current liabilities
CU RRE N T LI ABI LI TI E S
Bond loan
Debt to financial institutions
Payables to suppliers
Income tax payable
Other taxes payable
Prepayments from customers
Non-invoiced production costs, suppliers
Derivative financial instruments
Other current liabilities
12, 14, 16
12, 13, 14, 16
22
19
2
2
23
20, 24
Total current liabilities
Total liabilities
1
Trym Skeie
Ole Henrig Askvik
board MEMBER
52
12, 14, 15
12, 13, 14, 16
Kjerstin Fyllingen
board MEMBER
Anne Breive
board MEMBER
board MEMBER
Bjarne Skeie
board MEMBER
Jan Magne Galåen
board MEMBER
CEO & President
53
TTS GROUP
ANNUAL REPORT
Consolidated statment of changes in equity
Consolidated statement of cash flows
TTS group
TTS group
20
12
(IFRS)
Note
Equity as of 31.12.2010
Other comprehensive income
(foreign currency difference)
Total comprehensive income
New issue
New issues expenses
Equity derived from subordinated convertible bond
Share
capital
37 315
Treasury Share premium Other equity
shares
reserve
-18
376 058
389 379
37 315
-
-18
-
26
-
-
17
17
15
530
-
-
37 845
Other comprehensive income
(foreign currency difference)
Total comprehensive income
Treasury shares (purchase of 259 190 shares)
New issue (convertible debt)
New issue (stock option program)
New issues expenses
Dividend paid (NOK 1.56 per share)
Share based payment
Repayment of capital to shareholders
(NOK 4.21 per share)
376 058
-
Total
802 734
389 379
22 896
802 734
22 896
-16 246
-16 246
8 969
-134
-
6 650
21 634
6 650
9 498
-134
21 634
-18
384 891
417 665
840 383
37 845
-
-18
-
384 891
-
417 665
450 421
840 383
450 421
26
-
-
-
-21 294
-21 294
17
17
17
17
15
17
17
5 232
225
-
-129
-
91 923
2 913
-349
-
429 127
-4 349
-12 935
-134 646
2 575
429 127
-4 478
97 155
3 138
-349
-12 935
-134 646
2 575
17
-33 775
115
-330 000
-115
-363 775
9 527
-32
149 378
697 322
856 195
2012
2011
Cash flow from operating activities
Profit/loss before tax
Income tax paid
Depreciation of fixed assets
Depreciation/writedown on non-current assets/goodwill
Interest paid cost
Profit/loss from joint ventures
Share based payment
Difference between pension charges and payments to/from pension schemes
Inventories, customers and suppliers
Other receivables and other short term liabilities
40 198
-19 154
24 387
22 801
42 588
-59 916
1 422
4 441
61 344
-170 757
70 577
-25 007
26 485
70 122
-46 936
5 033
9 065
48 898
Net cash flow from operating activities
-52 647
158 237
-144 300
-22 743
-3 772
47 712
1 216 422
-28 673
9 346
-14 399
-10 874
244 368
-
1 064 647
228 441
-852 071
-134 646
-40 685
-4 478
-363 776
99 944
186 000
-191 544
-81 330
-70 122
9 365
-1 295 712
-147 631
Net change in cash and cash equivalents
Cash and cash equivalents at the start of the period
-283 712
511 377
239 046
272 331
Cash and cash equivalents at the end of the period - continued business
Net cash discontinued business
227 666
-
511 377
-76 627
Cash and cash equivalents at the end of the period - continued and discontinued business
227 666
434 750
227 666
167 100
434 750
119 000
394 766
553 750
Cash flow from investment activities
Acquisition of subsidiaries, net of cash acquired
Proceeds from sale of fixed assets
Disbursements from acquisition of fixed assets
Disbursements on own developement
Dividend received from investments in Joint Ventures
Proceedes from sale of subsidiaries
Changes net investment in discontinued business
Investment in shares
Net cash flow from investment activities
Cash flow from financing activities
Proceeds from issuance of short-term/long-term debt
Disbursement on short-term/ long-term debt
Net change in bank overdraft facility
Dividends paid
Interest paid
Purchase treasury shares
Proceeds from issued new share capital
Net cash flow from financing activities
Net available cash:
Bank deposits etc.
Unused overdraft facility
Total available cash and cash equivalents at the end of the period
54
55
TTS GROUP
ANNUAL REPORT
20
12
Accounting principles
TTS group
1. General information
1.1 Reporting entity
TTS Group ASA is a public company incorporated and domiciled in Norway.
The company is listed on the Oslo Stock Exchange where the shares are
publicly traded. The registered head office is located at Folke Berandottes
vei 38, Fyllingsdalen in Bergen. The Group has companies in Norway,
Sweden, Germany, Finland, China, USA, the Czech Republic, Italy, Singapore,
Korea and Greece, as well as a branch office in Vietnam.
TTS Group is a global company that creates and supplies handling equipment
for ships, ports and offshore installations. TTS reports on three divisions:
Marine, Port and Logistics and Energy (Offshore Handling Equipment). The
TTS Group is among the leading suppliers in its market segments. Further
information of the principal activities of the Group is described in Note 1.
Information on its ultimate parent is presented in Note 17 and Note 22.
1.2 Basis of preparation
The consolidated financial statements for TTS Group ASA have been
prepared in accordance with International Financial Reporting Standards
(IFRS), as adopted by the European Union. Standards and interpretations
effective for annual periods beginning after 1 January 2012 have not been
applied in preparing these consolidated financial statements.
I F RS 7 Financial I nstruments : D isclosures
The amendment requires additional disclosure about financial assets that
have been transferred but not derecognized to enable the user of the
Group’s financial statements to understand the relationship with those
assets that have not been derecognized and their associated liabilities. In
addition, the amendment requires disclosures about the entity’s continuing
involvement in derecognized assets to enable the user to evaluate the
nature of, and risks associated with, such involvement. The amendment is
effective for annual periods beginning on or after 1 July 2011.
On the 6 June 2012, TTS Group ASA finalized the sale of its drilling
equipment business, previously a part of TTS Energy division, Cameron
International Corp. (NYSE: CAM) for MUSD 270, plus a turnover based
earn-out model for a three-year period. Offshore handling (cranes and
winches), which was also part of TTS Energy division, was not included in
the divestment. Please refer to Note 30 which gives further information
related to the transaction.
I AS 1 2 I ncome Taxes (Amendment )
The consolidated financial statements have been prepared on the basis of
historic cost, with the following modifications: Shares held available for
sale and financial derivatives are measured at fair value.
The amendment clarified the determination of deferred tax on investment
property measured at fair value and introduces a rebuttable presumption
that deferred tax on investments property measured using the fair value
model in IAS 40 should be determined on the basis that its carrying
amount will be recovered through sale. The amendments also include
an incorporation of SIC-21 Income tax that includes the requirement
that deferred tax on non-depreciable assets that are measured using the
revaluation model in IAS 16 should always be measured on a sale basis. The
amendment is effective for annual periods beginning on or after 1 January
2012. The amendment has no effect on the Group’s financial statements.
Preparation of financial statements in conformity with IFRS’ requires
management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Future events may lead to these estimates
being changed. Estimates and their underlying assumptions are reviewed
on a regular basis. Changes in accounting estimates are recognized during
the period when the changes take place. If the changes also apply to
future periods, the effect is divided among the present and future periods.
Areas that to a great extent involve such evaluations or high degree of
complexity, or areas where assumptions and estimated are material to the
consolidated financial statements, are described in section 4.
N ew standards and interpretations
approved by EU , but not y et effective:
A number of new standards, amendments to standards and interpretations
are effective for annual periods beginning after 1 January 2012, and have
not been applied in preparing these consolidated financial statements. The
Group has not opted for early application. The adoption of the standards
or interpretations, and the effects on the financial statements for the
Group, beyond the descriptions below, is currently under assessment by the
Group. Except for the standards described below, none is expected to have
a significant effect on the consolidated financial statements of the Group.
The consolidated financial statements of the Group for the year ended 31
December 2012 were approved by the Board on 17 April 2013.
These consolidated financial statements are presented in NOK, which is
the groups reporting currency. All financial information is presented and
rounded to the nearest thousand, except when otherwise is indicated.
2. Summary of the most central accounting principles
The accounting principles set out below have been applied consistently to
all periods presented in the consolidated financial statements, and have
been applied consistently by Group entities.
2.1 Basic principles
N ew accounting standards
The accounting policies adopted are consistent with those of the previous
year, except for the following amendments to IFRS which have been
56
implemented by the Group effective as of January 2012. The adoption of
the standards or interpretations, and the effects on the financial statements
for the Group is described below:
I AS 1 P resentation o f I tems o f Other C omprehensive I ncome –
Amendments to I AS 1
• The amendments to IAS 1 Presentation of Financial Statements change
the grouping of items presented in other comprehensive income (OCI).
Items that could be reclassified (or “recycled”) to profit or loss at a
future point in time (for example, net gain on hedge of net investment,
exchange differences on translation of foreign operations, net
movements on cash flow hedges and net gain or loss on available-forsale financial assets) shall be presented separately from items from
items that will never be reclassified (for example, actuarial gains and
losses on defined benefit plans). The amendments affect the presentation
only and have no impact on the Group’s financial position or performance.
The amendments become effective for annual periods beginning on or
after 1 July 2012, and will therefore be applied in the Group’s first
annual report after becoming effective.
I AS 1 9 E mployee Benef its (R evised)
• The IASB has issued numerous amendments to IAS 19. These range from
57
TTS GROUP
ANNUAL REPORT
fundamental changes such as removing the corridor mechanism and
the concept of expected returns on plan assets to simple clarifications
and rewording.
• Removing the corridor mechanism implies that actuarial gains and
losses shall be recognized in other comprehensive income (OCI) in the
current period. The amendments in IAS 19 will impact the net benefit
expense, as the expected return on plan assets will be calculated using
the same interest rate as applied for the purpose of discounting the
benefit obligation.
• The Group is currently using the corridor mechanism for the treatment
of actuarial gains and losses. Since the amendments to IAS 19 results
in that the corridor mechanism no longer will be permitted, this will have
an effect on the Group’s total equity. Please find additional information
in Note 5 with regards to the effect on the Group’s equity etc.
• The amendments are effective for accounting periods beginning on or
after 1 January 2013.
IAS 2 8 I nvestments in A ssociates and J oint V entures
(as revised in 2 011 )
• As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12
Disclosure of Interests in Other Entities, IAS 28 Investments in Associates,
has been renamed IAS 28 Investments in Associates and Joint Ventures,
and describes the application of the equity method to investments in
joint ventures in addition to associates.
• IAS 28 (2011) supersedes IAS 28 (2008) and carries forward the existing
accounting and disclosure requirements with limited amendments. The
Group does not expect any material impacts on its financial statements.
• Within EU/EAA area, the amendments are effective for accounting
periods beginning on or after 1 January 2014.
IAS 3 2 O f f setting Financial A ssets and Financial L iabilities –
Amendments to I A S 3 2
• IAS 32 Financial Instruments – Presentation and the amendments clarify
the meaning of “currently has a legally enforceable right to set-off”.
These amendments also clarify the application of the IAS 32 offsetting
criteria to settlement systems (such as central clearing house systems)
which apply gross settlement mechanisms that are not simultaneous.
• These amendments are not expected to impact the Group’s financial
position or performance.
• These amendments become effective for annual periods after 1 January
2014.
I F R S 7 D isclosures – O ff setting Financial Assets and Financial
Liabilities – Amendments to I FR S 7
• These amendments require an entity to disclose information about
rights to set-off and related arrangements (for example collateral
agreements). The disclosures would provide users with information that
is useful in evaluating the effect of netting arrangements on an entity’s f
inancial position. The new disclosures are required for all recognized
financial instruments that are set off in accordance with IAS 32
Financial Instruments – Presentations.
• The disclosures also apply to recognized financial instruments that
are subject to an enforceable master netting arrangement or similar
agreement, irrespective of whether they are set off in accordance with
IAS 32.
• The amendments will not impact the Group’s financial position or
performance.
• These amendments become effective for annual periods beginning on or
after 1 January 2013.
I F R S 9 Financial I nstruments : C lassi f ication and Measurement
• IFRS 9, as issued, reflects the first phase of the IASB’s work on the
replacement of IAS 39 and applies to classification and measurement of
financial assets and financial liabilities as defined in IAS 39.
• The classification and measurement rules for financial liabilities
designated as fair value through profit and loss (fair value option), in
which changes in value connected to own credit risk are distinguished
and accounted for over comprehensive income.
• According to IFRS 9, financial assets with standard terms and conditions
for debt shall be accounted at amortized costs, unless one chooses to
58
recognize them at fair value, while other financial assets shall be
accounted at fair value.
• The standard was initially effective for annual periods beginning on or
after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective
Date of IFRS and Transition Disclosures, issued in December 2011, moved
the mandatory effective date to 1 January 2015. In subsequent phases,
the IASB will address hedge accounting and impairment of financial
assets.
• The Group will evaluate potential effects of IFRS 9 in accordance with
the other phases as soon as the final standard, including all phases, is
issued.
I F RS 10 C onsolidated Financial S tatements , IAS 27 S eparate
Financial Statements
• IFRS 10 replaces the portion of IAS 27 Consolidated and Separate
Financial Statements that addresses the accounting for consolidated
financial statements and SIC-12 Consolidation – Special Purpose
Entities.
• IFRS 10 establishes a single control model that applies to all entities
including special purpose entities (SPE). The changes introduced by IFRS
10 will require management to exercise significant judgment to
determine which entities are controlled and therefore are required to be
consolidated by a parent, compared with the requirements that were in
IAS 27.
• As a result, the Group has evaluated the entities to be consolidated
pursuant to IFRS 10 and compared with the requirements of current IAS
27. Based on the analyses performed, IFRS 10 is not expected to have
any impact on the currently held investments of the Group.
• Within the EU/EEA area, IFRS 10 is effective for accounting periods
starting on or after 2014.
A nnual Improvements 2 0 0 9 -2 011
These improvements will have no material impact on the Group, but
include:
I AS 1 presentation o f Financial S tatements
• The amendments to IAS 1 clarify the difference between voluntary
additional comparative information and the minimum required
comparative information. Generally, the presentation of the previous
period’s comparative information will meet the minimum requirements.
The amendments have no impact on the Group’s financial position or
performance, and are effective for accounting periods beginning on or
after 1 January 2013, but have not been approved by the EU.
I AS 1 6 P ropert y, P lant and E quipment
• This amendment clarifies that major spare parts and servicing equipment
that meet the definition of property, plant and equipment are not
inventory. The amendment is effective for accounting periods beginning
on or after 1 January 2013, but has not been approved by the EU.
I AS 3 2 Financial I nstruments , P resentation
• This improvement clarifies that income taxes arising from distributions
to equity holders are accounted for in accordance with IAS 12 Income
Taxes. The amendment is effective for accounting periods beginning on
or after 1 January 2013, but has not been approved by the EU.
I AS 3 4 I nterim Financial R eporting
• The amendment aligns the disclosure requirements for total segment
assets with total segment liabilities in interim financial statements. The
clarification also ensures that interim disclosures are aligned with
annual disclosures.
I F RS 11 J oint A rrangements
• IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC -13 Jointlycontrolled Entities – Non-monetary Contributions by Ventures. IFRS 11
removes the option to account for jointly controlled entities (JCEs) using
proportionate consolidation. All entities meeting the definition of a joint
venture must be accounted for using the equity method.
• Investments in joint ventures are already recognized in the financial
statements in accordance with the equity method, and based on this the
Group does not expect no any material impacts.
I F RS 12 D isclosure o f I nterests in Other Companies
• IFRS 12 applies to entities with interests in subsidiaries, joint
arrangements, associates and structured entities. IFRS 12 replaces the
disclosure requirements that were previously in IAS 27 Consolidated and
Separate Financial Statements, IAS 28 Investments in Associates and
IAS 31 Interests in Joint Ventures. In addition, a number of new
disclosures are also required.
• The changes have no impact on the Group’s financial position or
performance. The adoption of the new standard will increase the
level of disclosure provided for the entity’s interests in subsidiaries, joint
arrangements, associates and structured entities.
I F RS 13 Fair V alue M easurement
• IFRS 13 establishes a single source of guidance under IFRS for all
fair value measurements, i.e. for requirements of all standards related
to measuring fair value for assets and obligations. IFRS 13 does not
change when an entity is required to use fair value, but rather provides
guidance on how to measure fair value under IFRS when fair value is
required or permitted.
• The Group is currently assessing the impact that this standard will have
on the financial position and performance, but based on the preliminary
analyses, no material impact is expected.
• The standard is effective for annual periods beginning on or after 1
January 2013.
2.2 Basis of consolidation
a ) S ubsidiaries
The consolidated financial statements comprise the financial statements of
the Group and its subsidiaries as at 31 December 2012.
The Group’s consolidated financial statements comprise of TTS Group ASA
and its subsidiaries and companies in which TTS Group ASA has a controlling
interest. Subsidiaries are entities controlled by the Group. Control is the
power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities and is normally obtained when the Group
owns more than 50 % of the shares in another company. In assessing
control, the Group takes into consideration potential voting rights that
currently are exercisable. Control is also achieved when the Group owns
less than 50 % of the shares with voting rights through agreements or
when the Group is able to exercise actual control over the entity. Noncontrolling interests are included in the Groups equity. Subsidiaries are fully
consolidated from the date of acquisition, being the date on which the
Group obtains control, and continue to be consolidated until the date when
such control ceases. A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity transaction.
Business combinations are accounted for using the acquisition method
(see section 2.7). The acquired identifiable tangible and intangible assets,
liabilities and contingent liabilities are measured at their fair values at the
date of the date of the acquisition. Goodwill is measured at the acquisition
date as:
The fair value of the consideration transferred,
The recognized amount of any non-controlling interests in the acquire,
If the business combination is achieved in stages, the fair value of the
pre-existing equity interest in the acquire, less
The net recognized amount of the identifiable assets acquired and
liabilities assumed.
20
12
Goodwill is not amortized but tested at least annually for impairment.
Goodwill is allocated to those cash-generating units or groups of cashgenerating units that are expected to get benefits from the business
acquisition. See section 2.7.
If the excess value is negative, a bargain purchase (negative goodwill) is
recognized immediately in profit or loss; see section 2.7.
In cases where changes in the ownership interest of a subsidiary lead to loss
of control, the consideration is measured at fair value. Assets and liabilities
of the subsidiary and non-controlling interest at their carrying amounts
are derecognized at the date when the control is lost. Differences between
the consideration and the carrying amount of the asset are recognized as a
gain or loss in profit or loss.
Investments retained, if any, are recognized at fair value, and surplus or
deficits, if any, are recognized in profit and loss as a part of gain/loss on
subsidiary disposal. Amounts included in other comprehensive income are
recognized in profit or loss or is recognized directly in equity – depending
on the character of the items.
All intra-group transactions, outstanding balances and unrealized internal
gains between group companies are eliminated. Unrealized internal losses
are eliminated, but considered an impairment indicator in relation to writedown of the asset transferred. The financial statements of the subsidiaries
are prepared for the same reporting period as the parent company. The
accounting principles in subsidiaries are revised as required, in order to
achieve compliance with the Group’s accounting principles.
b ) J oint ventures
Joint ventures are entities where the Group by agreement has joint control
together with other parties, but not alone. Investments in joint ventures
are recognized in the financial statements in accordance with the equity
method. Investments in joint ventures are recognized in the financial
statements at the historical cost at the time of acquisition, and include
goodwill (which is reduced by any subsequent write-downs) (ref. section 2.6).
The consolidated financial statements include the Group´s share of the
profit and loss and other comprehensive income of the joint ventures. If
the Group´s share of losses exceeds its interest in an equity-accounted
investee, the carrying amount of the investment, including any long-term
interests that form part thereof, is reduced to zero, and the recognition of
further losses is discontinued except to the extent that the Group has an
obligation or has made payments on behalf of the investee.
The Group’s share of unrealized gains on transactions between the Group
and the joint ventures are eliminated against the investment to the extent
of the Groups interest in the investee. The same applies to unrealized losses
unless the transaction indicates a write-down of the asset transferred.
The financial statements of the associate are prepared for the same
reporting period as the Group. When necessary, adjustments are made to
bring the accounting policies in line with those of the Group.
2.3 Segment information
The Group presents the operating segments based on information provided
to the Board of directors, which are the Group chief operating decision
makers.
An operating segment is a component of a company doing business which
allows the company to receive revenues and incur expenses, including
revenues and expenses related to transactions with other components of
the same group.
The earnings of the operating segment are reviewed regularly by the Board
of directors to consider the need for allocating resources and assess the
achievements of the operating segment.
59
TTS GROUP
ANNUAL REPORT
Profits from operating segments that are reported to the Board of directors
include items that are directly attributable to the segment, as well as items
which can be reasonably allocated to the segment. Items which cannot be
allocated include expenses for the main office. Investment costs consist of
costs related to acquisition of property, facilities and equipment, as well as
intangible assets with the exception of goodwill.
The Group has three segments. These are Marine, Energy and Port and
Logistics.
2.4 Foreign currency
a ) Functional and presentation currencies
The financial statements of the individual entities in the Group are
measured in the currency primarily used in the economic area where the
unit operates (functional currency). The consolidated financial statements
are presented in Norwegian kroner (NOK), which is both the functional and
presentation currency of the parent company, TTS Group ASA.
b ) T ransactions and balance sheet items
Transactions involving foreign currencies are translated into the functional
currency using the exchange rates that are in effect at the time of the
transactions. Foreign currency gains and losses that arise from the payment
of such transactions, and the translation of monetary items (assets and
liabilities) in foreign currencies at the rates in effect at the end of the
balance sheet date, are recognized in the profit and loss. Non-monetary
items measured at historical cost in foreign currency are translated into
functional currency using the exchange rates as at the dates of the initial
transaction.
c ) G roup companies
The profit and loss accounts and balance sheet for Group entities with
a functional currency that differs from the presentation currency are
translated as follows:
i. the balance sheet is translated at the closing rate on the date of the
balance sheet
ii. profit and loss accounts are translated at the average rate during the
year
iii. translation differences are entered directly against other comprehensive
income and presented separately
Goodwill associated with the acquisition of a foreign entity is allocated to
the acquired entity, and translated at the rate in effect on the date of the
balance sheet.
2.5 Tangible fixed assets
The assessment of indicators related to possible impairment requirements
is monitored continuously. When the carrying value of the fixed asset is
higher than the estimated recoverable amount, the value is written down
to the recoverable amount.
Gains and losses on disposals are recognized in the profit and loss accounts
and represent the difference between the sales price and the carrying value.
Depreciation methods, useful lives and residual values are assessed at each
balance sheet date and adjusted if necessary.
2.6 Intangible assets
Intangible assets that have been acquired separately are carried at cost. The
costs of intangible assets acquired through an acquisition are recognized at
their fair value in the Group’s opening balance sheet. Capitalized intangible
assets are recognized at cost less any amortization and impairment losses.
Internally generated intangible assets, excluding capitalized development
costs, are not capitalized but are expensed as occurred.
The economic life is either definite or indefinite. Intangible assets with a
definite economic life are amortized over their economic life and tested
for impairment if there are any indications. The amortization method and
period are assessed at least once a year. Changes to the amortization
method and/or period are accounted for as a change in estimate.
Intangible assets with an indefinite economic life are tested for impairment
at least once a year, either individually or as a part of a cash-generating unit.
Intangible assets with an indefinite economic life are not amortized. The
economic life is assessed annually with regard to whether the assumption
of an indefinite economic life can be justified. If it cannot, the change to a
definite economic life is made prospectively.
Customer relationships and customer port f olio
The customer relationship and customer portfolio are established through
contracts with customers and refers to any contract in place at the date of
the business combination, and the relationship that may extend beyond the
period of actual contract in place. The customer relationship and customer
portfolio have limited useful life, and are depreciated by the straight-line
method over their expected useful life (10 to 15 years).
Patents , technolog y and development
Patents and technology have limited useful life, and are recorded at
historical cost in the balance sheet less depreciation. Patents and
technology are depreciated by the straight-line method over their expected
useful life (2 to 15 years).
Research and development
Tangible fixed assets are recorded in the financial statements at historical
cost less accumulated depreciation and accumulated write-downs.
Historical cost includes the costs directly related to the acquisition of the
fixed asset.
Expenses for research activities, to acquire new scientific or technical
knowledge, are recognized in the profit and loss accounts as incurred.
Development activities include design or planning of production of new or
significantly improved products and processes.
Subsequent expenses are capitalized when it is likely that the Group will
receive future economic benefits from the expense, and the expense can
be measured reliably. Other repair and maintenance costs are recognized in
the profit and loss accounts in the period when the expenses are incurred.
Development costs associated with development of new products are
normally capitalized. Development costs are capitalized only to the extent
that they can be reliably measured, the product or process is technically or
commercially feasible, future financial benefits are likely, and the Group
intends and has sufficient resources to complete the development, and to
sell or use the asset. Capitalized development expenses include materials,
direct labor, directly attributable overheads and capitalized borrowing
costs. Development costs are depreciated over their expected useful life
(2 to 15 years).
Land is not depreciated. Other fixed assets are depreciated based on
the straight-line method, so that the historical cost of the fixed asset is
depreciated to the residual value over expected useful life, which is:
Buildings
Fixtures/office equipment
Computer equipment
25-50 years
3-5 years
5-10 years
3-5 years
Cost related to market surveys, market developments are normally charged
against operating income as they are incurred. Project development related
to orders is charged directly to the individual projects. Other development
expenditure is recognized in the profit and loss accounts when incurred.
Capitalized development expenses are recognized at cost less accumulated
amortization and accumulated impairment losses.
2.7 Business combinations and Goodwill
Business combinations are accounted for using the acquisition method.
Acquisition-related costs are expensed in the periods in which the costs
are incurred and the services are received. Acquisition costs are classified
as administrative expenses.
The consideration paid in a business combination is measured at fair value
at the acquisition date and consist of cash, stocks issued in TTS Group ASA
and contingent consideration. The contingent consideration is classified as
a liability in accordance with IAS 39. Subsequent changes in the fair value
are recognized in profit or loss.
When acquiring a business are all financial assets and liabilities assumed for
appropriate classification and designation in accordance with contractual
terms, economic circumstances and pertinent conditions at the acquisition
date. The acquired assets and liabilities are accounted for by using fair
value in the opening group balance.
The initial accounting for a business combination can be changed if new
information about the fair value at the acquisition date is present. The
allocation can be amended within 12 months of the acquisition date
provided that the initial accounting at the acquisition date was determined
provisionally. The non-controlling interest is set to the non-controlling
interest’s share of identifiable assets and liabilities. The measurement
principle is done for each business combination separately.
When the business combination is achieved in stages are the previously
held equity interest re-measured at its acquisition-date fair value and the
resulting gain or loss, if any, is recognized in profit or loss.
Goodwill is recognized as the aggregate of the consideration transferred
and the amount of any non-controlling interest, and deducted by the
net of the acquisition-date amounts of the identifiable assets acquired
and the liabilities assumed. Goodwill from the acquisition of subsidiaries
is classified as an intangible non-current asset, according to performed
analysis of acquisition showing the distribution of added values between
goodwill and other assets. Goodwill associated with the acquisition of an
interest in joint ventures is included in the investments in joint ventures
according to the equity method. Goodwill is not depreciated, but is tested
at least annually for impairment. In connection with this, goodwill is
allocated to cash-generating units or groups of cash-generating units that
are expected to benefit from synergies from the business combination.
Goodwill is recognized in the balance sheet at historical cost less writedowns. The write-down of goodwill is not reversible.
If the fair value of the equity exceeds the acquisition cost in a business
combination, the difference is recognized as income immediately on the
acquisition date.
2.8 Financial assets
The Group classifies financial assets into the following categories:
a) loans and receivables
b) assets available for sale (investments in shares)
c) assets at fair value in the profit and loss accounts (derivatives)
a ) L oans and other receivables
Loans and receivables are non-derivative financial assets with payments
that are fixed or fixable and that are not quoted in an active market. They
are classified as current assets, unless they are due more than 12 months
after the date of the balance sheet. In this case they are classified as noncurrent assets.
Loans and receivables are initially recognized at fair value plus directly
attributable transaction costs. After initial recognition, loans and
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receivables are measured at amortized cost using the effective interest
method, less any impairment losses. The effective interest method
amortization is included in finance income in the income statement. The
losses arising from impairment are recognized in the income statements
in finance costs for loans and in cost of sales or other operating expenses
for receivables.
Loans and receivables consist of accounts receivable and other outstanding
claims.
b ) A ssets available -f or - sale ( investments in shares )
Financial assets available-for-sale are non-derivative financial assets that
are designated as being available-forsale, and which are not classified
in any of the other categories. Investments in shares are included in noncurrent assets unless management intends to sell the investment within 12
months from the date of the balance sheet.
After initial measurement, available-for-sale financial investments are
subsequently measured at fair value on the balance sheet date. Any
changes in fair value are charged directly against comprehensive income
and presented as revaluation reserve in the equity. However, this does
not apply to impairment losses and exchange rate differences on equity
instruments available-for-sale. When an investment is derecognized, the
cumulative gain or loss from comprehensive income is transferred and
recognized in other operating income.
c ) Financial instruments at f air value in pro f it and loss
Ref. section 2.10.
2.9 Leases
Finance leases
The determination of whether an arrangement is, or contains, a lease is
based on the substance of the arrangement at inception date, and whether
fulfillment of the arrangement is dependent on the use of a specific asset
or the arrangements conveys a right to use the assets, even if that right is
not explicitly specified in the arrangement.
Leases of property, plant and equipment in terms of which the Group
assumes substantially all of the risks and rewards of ownership of the
leased item, are classified as finance leases. On initial recognition, the
leased asset is measured at an amount equal to the lower of the fair value
of the leased asset or the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in accordance
with the accounting policy applicable to that asset.
Lease payments are apportioned between finance charges and reduction
of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognized in
finance costs in the income statements.
The same depreciation period as for the company’s other depreciable
assets is used. If it is not reasonably certain that the company will assume
ownership when the term of the lease expires, the asset is depreciated over
the term of the lease or the asset’s economic life, whichever is the shorter.
Operating leases
Leases where a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments
made under operating leases are posted to the profit and loss accounts on
a straight-line basis over the period of the lease unless another systematic
basis is representative of the time pattern of the user’s benefit
2.10 Derivatives and hedging
In accordance with adopted guidelines and the Group’s strategy, the Group
utilizes hedging of contractual income and cost in a foreign currency at
the date of signature of the contract. The same applies to individual larger
sub-contracts in foreign currencies.
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ANNUAL REPORT
Fair value hedging
The Group has financial derivatives to hedge currency risk. Derivatives
are recognized initially at fair value. Attributable transaction costs are
recognized in the profit and loss accounts as they are incurred. The Group
only enters into forward currency contracts that qualify for fair value
hedging.
At the establishment of a hedging transaction, the relationship between
hedging instruments and hedge objects are documented. The Group makes
an assessment, both at the inception of the hedge relationship as well as
on an ongoing basis, of whether the hedging instruments are expected
to be highly effective in offsetting the changes in the fair value of the
respective hedged items attributable to the hedged risk, and whether the
actual results of each hedge are within a range of 80 % - 125 %.
Fair value of the derivatives used for hedging are set out in Note 23.
Fair value of the derivatives is classified as current assets or short-term
liabilities, as the hedges and derivatives generally fall due within 12
months.
Changes to fair value of the derivatives are recognized in the profit and
loss accounts along with the change in fair value associated with the
corresponding hedged asset or liability. Profit or loss attributable to the
hedged risk is recognized as project revenue if it is associated with hedging
of contract revenue and under operational expenses if it is associated with
hedging of contract costs.
In the event that the hedge no longer fulfils the criteria for hedge
accounting, the derivative is carried at fair value to the profit and loss
accounts. This applies to derivatives where the underlying delivery contract
has been cancelled.
D erivatives at f air value through pro fit and loss
Derivatives that do not fulfill the criteria for hedge accounting are carried
at fair value through profit and loss. Changes to the fair value of the
derivatives are recognized in the profit and loss statement as financial
expenses and financial income.
2.11 Inventories
Inventories are valued at the lower of their historical cost or net realizable
value. The historical cost is calculated by means of the first-in, first-out
principle (FIFO). For finished goods and work in progress, the historical
cost consists of product design expenses, consumption of materials, direct
wage costs, other direct costs, and indirect production costs (based on a
normal capacity level). Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated cost of completion and
estimated costs necessary to make the sale.
Inventories established as a result of a contracts being cancelled are
recognized as inventory. The inventory related to cancelled projects, are
valued at the lowest of production cost and fair value. Any payments
received that the Group has a contractual right to retain at termination are
included in the calculation of the acquisition cost.
2.12 Accounts receivable
Accounts receivable are measured upon initial recognition at fair value.
For subsequent measurements, accounts receivables are measured at
amortized cost determined using the effective interest method, and less
provision for impairment. Provisions for losses are recognized when there
are objective indicators that the Group will not receive settlement in
accordance with the original terms. Considerable financial difficulties on
part of the customer, likelihood of bankruptcy on part of the customer and
significant delays of payment, are all deemed to be indicators of the need
to write down accounts receivables. The losses arising from impairment are
recognized in the income statements in cost of sales or other operating
62
expenses for receivables. Changes in the provisions are recognized in the
profit and loss as losses on accounts receivable. Receivables in foreign
currencies are converted to reporting currency at the exchange rate on the
balance sheet date.
2.13 Cash and cash equivalents
Cash and cash equivalents consist of cash and bank deposits. Bank deposits
in foreign currencies are assessed to the exchange rate on the balance
sheet date. Withdrawals from the bank overdraft constitute part of current
liabilities.
2.14 Share capital and premium
Ordinary shares are classified as equity.
Expenses that are directly attributable to the issuance of new shares or
options less taxes are recognized in equity as a reduction in proceeds.
When the company’s own shares are purchased, the consideration,
including any transaction costs less tax, is entered as a reduction of the
equity (attributable to the company’s shareholders). If the company’s own
shares are subsequently sold or reissued, the proceeds are entered as an
increase in the equity attributable to the company’s shareholders.
2.15 Loans
The Group initially recognizes the bond debt on the issue date. All other
financial liabilities are initially recognized on the agreement date, when
the Group becomes a party to the instrument’s contractual provisions.
Convertible loans are divided into two components, a liability component
and an equity component. The liability component is recognized initially at
fair value of similar loans that does not have an equity conversion option.
The equity component is recognized as the difference between the fair
value of the liability component and the fair value of the convertible loan
in its entirety. The equity component is recognized in the income statement
over the period of the borrowings on an effective interest basis.
The Group derecognizes a financial liability when the contractual
obligations are satisfied or cancelled.
The Group has the following non-derivative financial liabilities: loans,
overdrafts, accounts payable and other liabilities.
Non-derivative financial liabilities are initially recognized at fair value plus
directly attributable transaction costs. After initial recognition, liabilities
are measured at amortized costs using the effective interest method.
Loans are classified as current liabilities unless there is an unconditional
right to postpone payment of the debt by more than 12 months from the
date of the balance sheet. The following year’s payment is classified as
short-term debt.
2.16 Accounts payable
Accounts payable are measured at fair value upon initial recognition in
the balance sheet. Upon subsequent measurement, accounts payable are
valued at amortized cost using the effective interest rate method.
2.17 Taxes
Tax in the profit and loss accounts comprise both tax payable for the period
and change in deferred tax. Tax payable for the period and deferred tax
are recognized in the profit and loss accounts, with the exception of tax
on items related to business combinations or taxes recognized directly in
equity or comprehensive income.
Periodic tax is payable tax or tax receivables on taxable income or loss
for the year, based on tax rates enacted or substantially enacted on the
balance sheet date. Revision of the estimated periodic tax for previous
years is included in the figures.
Deferred tax is calculated on all temporary differences between the tax and
accounting values of assets and liabilities.
For the following temporary differences, no deferred tax is recognized:
Initial recognition of assets or liabilities in a transaction that is not a
business combination and that does not affect accounting or tax-based
results upon inclusion,
Differences related to investments in subsidiaries to the extent that it is
likely that these differences will not be reversed in the foreseeable
future, and
Tax-increasing differences upon initial recognition of goodwill
Temporary differences are only offset between the Norwegian companies
in the Group. Deferred tax assets are recognized when it is probable that
the company will have a sufficient profit for tax purposes in subsequent
periods to utilize the tax asset. The Group recognize previously unrecognized
deferred tax assets to the extent it has become probable that the company
can utilize the deferred tax asset. Similarly, the company will reduce a
deferred tax asset to the extent that the Group no longer regards it as
probable that it can utilize the deferred tax asset.
Deferred tax asset or liability is stipulated using tax rates and tax laws
enacted or substantially enacted on the balance sheet date, and which
presumably may be utilized when the deferred tax advantage is realized or
when the deferred tax is settled.
Deferred tax and deferred tax assets are recognized at their nominal value
and classified as non-current asset investments (long-term liabilities) in
the balance sheet
2.18 Pension obligations, bonus schemes
and other compensation schemes for employees
a ) P ension obligations
The companies in the Group have different pension schemes. The pension
schemes are financed in general by payments to insurance companies or
pension funds, as determined by periodic actuarial calculations. The Group
has both defined contribution plans and defined benefit plans.
A contribution plan is a pension scheme in which the Group pays fixed
contributions to a separate legal entity. The Group has no legal or other
obligation to pay further contributions if the insurance company does not
have sufficient assets to pay all employee benefits relating to employee
service in current and prior periods.
For defined contribution plans, the Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual
or voluntary basis. The Group does not have any further payment obligations
after the contributions have been paid. Contributions are recorded as a
payroll expense in the financial statements as they fall due. Contributions
paid in advance are recognized as an asset in the financial statements if
the contribution can be refunded or can reduce future payments.
A defined benefit plan is a pension scheme that is not a defined contribution
plan. A defined benefit plan is typically a pension scheme defining the
pension payments which employees will receive upon retirement. Pension
payments are normally dependent on one or more factors such as age,
years of service for the company and salary level. Net liability for defined
benefit pension plans is calculated for each plan by estimating the future
benefits employees have earned for services rendered in the current or prior
periods. The benefits are discounted to calculate present value, and the
cost of pension earning for prior periods not yet recognized, along with
the fair value of plan assets, are deducted. The discount rate for Norwegian
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schemes is based on the interest rate on high quality corporate bond (OMF).
See note 5 for further information. For foreign plans, the discount rate is
based on the interest rate on a bond issued by a company with a high credit
rating in the same currency as the benefits will be paid and with a maturity
that is approximately equal to the maturity of the related pension liability.
The pension obligation is calculated annually by independent actuaries
using the projected unit credit method.
Actuarial gains or losses due to new information or changes in the actuarial
assumptions in excess of 10 % of the value of the pension resources or
10 % of the pension obligations will be recorded in the profit and loss
account over a period that corresponds to the employees’ expected average
remaining period of service.
Changes in the pension plan’s benefits are entered as an expense or income
in the profit and loss accounts, unless the rights in accordance with the
new pension plan are contingent on the employee remaining in service for
a specified period of time (accrual period). In this case, the cost related to
the change in benefits is amortized linearly over the accrual period.
The employer’s share of National Insurance contributions are charged
against income based on the pension premiums paid, as well as the accrued
change in the net pension obligation.
Gains and losses on the curtailment or settlement of a defined contribution
plan are recognized at the time that the curtailment or settlement occurs.
A curtailment occurs when the Group adopts a significant reduction in
the number of employees covered by the plan or changes the terms of
a defined contribution plan such that a significant proportion of current
employees’ future earnings will no longer qualify for benefits, or qualify
only for reduced benefits.
b ) E mploy ee options
In accordance with authorities granted by the Annual General Meeting, the
management of the company has been granted options to purchase shares
in the parent company. The fair value of allotted options is calculated as
part of the salary cost with a corresponding increase in equity. The fair
value is measured on the date of allotment and distributed over the terms
until the employee has worked up an unconditional right to exercise the
options. Fair value of allotted options is estimated on the date of allotment
using the Black & Sholes option pricing model. Ref. note 17.
c ) G roup bonuses
The Group records a liability and a cost for any Group bonuses. Whether the
bonus shall be calculated and paid and the size of the bonus is dependent
on the profit for the year. The bonus is paid to all of the employees in the
following year.
2.19 Provisions
The Group The Group recognizes provisions for restructuring, legal
requirements, etc., when: There is a legal or constructive obligation as a
result of earlier events, there is probable that the obligation will be settled
by a transfer of economic resources, and the size of the obligation can be
estimated reliably.
The Group recognizes provisions for expected guarantee liabilities based
on experience and contract. Guarantee liabilities are recognized when the
underlying products or services are sold. Additionally, the Group recognizes
provisions for remaining work or claims from the customer regarding longterm construction contracts.
Appropriations are measured at current value of expected payments in
order to fulfill the obligation. A pre-tax discount rate is utilized, reflecting
the present market situation and risk specific to that obligation. An increase
in the obligation due to altered time frame is recognized on the balance
sheet as a financial cost.
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ANNUAL REPORT
2.20 Recognition of income
The Group’s revenue relates to long-term construction contracts, service
contracts and after-sales.
Income from the sale of goods and services is assessed at net fair value after
the deduction of value added tax, returns, discounts and rebates. Revenue
from the sale of goods is recognized when there is persuasive evidence,
usually in the form of signed sales agreement, that the significant risks and
benefits related to the goods are transferred to the buyer, it is likely that
the payment will be received, related costs and possible return of goods
can be estimated reliably, there is no involvement in the goods normally
associated with owning, and the revenue can be reliably measured. The
date of transfer of risks and benefits varies depending on the conditions of
the individual sales contract.
Revenue from delivery of services is recognized according to percentage of
completion on the balance sheet date. Main principle to recognize degree
of completion is to measure the contract costs incurred to date compared
to estimated total contract costs.
Income from long-term production contracts are recognized in the balance
sheet in accordance with guidelines in IAS 11, using the percentage of
completion method, ref. section 2.21 for more detail. The Group’s products
are frequently sold with a warranty period of +/- two years. As for other
matters, reference is made to information regarding guarantee liabilities in
section 4 and Note 13.
Interest is recognized in the profit and loss account over time in accordance
with the effective interest method. If receivables are written down, the
book value of the receivables are reduced to the recoverable amount.
2.21 Construction contracts
Construction contract revenues and costs are measured using the
percentage of completion method. Degree of completion is determined by
the method that measures reliably the progress of the contract. Depending
on type of contract different methods can be used by TTS Group to measure
the percentage of completeness. The main method in use is to measure
the contract costs incurred to date compared to estimated total contract
costs. In some cases the costs incurred to date compared to estimated
total contract costs gives a misleading view of the grade of completion. In
these cases technical completion is considered to determine the progress
of the contract more reliably than measure degree of completeness based
on costs.
When the final outcome is uncertain and the outcome cannot be reliably
measured, revenues are recognized only to the expected recoverable level
of costs. Losses on contracts are fully recognized when identified. The
recognized revenue in one period consists of the revenue attributable to
the period`s progress and any effect of changes in estimated outcome to
date.
Revenue from construction contracts includes original contract amount,
as well as variation orders, disputed amounts and incentive bonuses to the
extent that it is likely that the income is realized and reliable estimates
are available. Contract costs include all costs attributable to the contract,
and include both costs that related directly to the specific contract and
allocated costs that are attributable to contract activity. Costs that cannot
be attributed to contract activity are expensed. Tender costs are expensed
as incurred.
Upon establishing accrued costs for manufacturing contracts, purchasing
relating to future activities of a contract will not be taken into account. The
purchases/costs are recognized as goods, advance payments or other liquid
assets depending of type of costs.
64
Incurred costs and profits received relating to all construction contracts
in progress, where the incurred costs and profit received (less recognized
losses) exceed the payments on-account invoiced, will be recorded on the
balance sheet as an asset. The asset is classified as accrued, non-invoiced
production. If on-account billings exceed costs incurred and recognized
profits (less losses), this is recorded as received advance payments from
customers as presented as current liabilities. The assessment is made for
each contract at company level. There will be no other net allocation at
corporate level.
For terminated contracts, the loss is accounted as an expense. In assessing
financial loss, the value of the inventory of which the Group takes
ownership is taken into account.
recorded value of any goodwill is first reduced. Subsequently, the remaining
sum is distributed on remaining assets in the unit (group of units).
Impairment relating to goodwill is not reversed. For other assets, it is
assessed on the balance sheet date whether there are indications that
the impairment no longer exists or is reduced. Impairment is reversed if
the estimates in the calculation of the recoverable amount are changed.
Reversals are made only until the carrying value equals the value that
would have been recognized, net of amortization, if the depreciation was
not previously recognized.
2.23 Cash flow statement
The cash flow statement has been prepared based on the indirect method.
2.22 Impairment
Financial assets
On the balance sheet date (reporting date), financial assets that are not
measured at fair value through profit and loss, are measured with regard
to whether there is objective indications of impairment. A financial asset is
considered to be impaired if there are objective indications of one or more
events having had a negative effect on the estimated future cash flow for
the asset, and this can be reliably measured.
Objective evidence that financial assets are impaired may be customer
breach, change of outstanding claims on terms that the Group would
otherwise not have accepted, and indications that a borrower or issuer will
enter bankruptcy or closure of an active market for the security. For equity
instruments, there will be objective evidence of impairment by significant
or prolonged decline to below cost price.
Impairment losses relating to a financial asset measured at amortized
cost is the difference between the carrying value and the present value of
estimated future cash flows discounted with the original effective interest
rate. An impairment loss is recognized in the profit and loss accounts and
the asset’s carrying value is reduced by the use of an allowance account.
Non -f inancial assets
On the balance sheet date (reporting date), assessment is made as to
whether there are indications of depreciation relating to recognized value
of non-financial assets, with the exception of stock and assets in relation
to deferred tax. If such indications exist, the asset’s recoverable sum is
estimated. For goodwill and intangible assets not yet available for use, or
with an indeterminable useful life, the recoverable sum is estimated at the
same time each year.
The recoverable amount for an asset or cash-generating unit is the higher
of value in use and disposal value less sales expenses. In the assessment
of value in use, the estimated future cash flow is discounted to net
present value, with a pretax market-based discount rate. The rate takes
into consideration the time value of money and asset-specific risk. With
the purpose of testing for impairment, assets that have not been tested
individually are grouped in the smallest identifiable group of assets that
generate incoming cash flow which in all material aspects is independent
of incoming cash flows from other assets or group of assets (cash
generating units or CGU). On implementation of a test for the upper limit
for operational segment in the assessment of impairment of goodwill, the
CGUs to which goodwill has been allocated, are gathered so that the level
of impairment being tested reflect the lowest level at which goodwill is
monitored for internal reporting purposes. Goodwill is allocated to the
cash-generating unit expected to gain advantages from the synergies
associated with a merger.
Impairment is recognized in the profit and loss if the carrying value of an
asset or cash-generating unit exceeds the calculated recoverable amount.
Upon recognition of impairment related to cash-generating units, the
2.24 Earnings per share
The basic earnings per share and diluted earnings per share are presented
for ordinary shares. The basic earnings per share is calculated by dividing
the period’s earnings attributable to owners of the ordinary shares, with a
weighted average number of ordinary shares in the period, adjusted for the
number of own shares.
Diluted earnings per share are calculated by adjusting the earnings and
the weighted average number of ordinary outstanding shares, adjusted for
the number of own shares, for potential dilution effects. Dilution effects
are a result of employee share options and the conversion rights related
to a subordinated convertible bond facility issued by TTS Group ASA.
The bondholders have a consecutive right to convert their nominal bond
value into shares in TTS Group ASA. Pursuant to the agreement for the
subordinated convertible bond facility the conversion price and how the
conversion rights is adjusted.
2.25 Financial income and cost
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Contingent assets are not recognized in the annual accounts but are
disclosed if there is a certain probability that a benefit will be added to
the Group.
2.28 Events after the reporting period
New information on the Group’s financial position at the end of the
reporting period which becomes known after the reporting period is
recorded in the financial statements. Events after the reporting period that
do not affect the Group’s financial position at the end of the reporting
period but which will affect the Group’s financial position in the future are
disclosed if significant, ref. Note 31.
2.29 Discontinued operations
A discontinued operation is a component of the Group´s business, the
operations and cash flows of which can be clearly distinguished from rest
of the Group and which:
• represents a separate major line of business or geographical area of
operations
• is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations, or
• is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs on disposal or when the
operation meets the criteria to be classified as held-for-sale, if earlier.
When an operation is classified as a discontinued operation, the
comparative statement of comprehensive income is re-presented as if the
operation had been discontinued from the start of the comparative period.
3. Financial risk management
Financial income consists of capital gains on financial investments and
changes to fair value of financial assets to fair value in the profit and
loss accounts. Interest income is recognized in the profit and loss accounts
using the effective interest rate method.
3.1 Financial risk factors
Financial costs comprises interest costs on loans, the effect of interest in
discounted appropriation, changes to fair value of financial assets to fair
value in the profit and loss accounts, and depreciation of financial assets
in the profit and loss accounts. Borrowing costs not directly attributable to
acquisition, processing or production of the qualifying asset, are included
in the profit and loss accounts using the effective interest rate method.
The Board has primary responsibility for the establishment and supervision
of the Group’s framework for risk management. The principles of risk
management have been established in order to identify and analyze the risk
to which the Group is exposed. Principles and systems for risk management
are regularly reviewed to reflect any changes in activities and market
conditions.
Foreign currency gains and losses are reported as a net amount.
The auditing committee implements follow-up of managements’
supervision of the Group’s principles and procedures for risk management.
2.26 Equity
Convertible bonds and similar instruments which contain both a liability
and equity element are divided into two components when issued, and
these are recognized separately as a liability or equity.
When change in effective terms of the convertible bond, the equity
instrument is measured at carrying value of the liability and no gain or loss
is recognized on reclassification.
Transaction costs directly related to an equity transaction are recognized
directly in equity after deducting tax expenses.
2.27 Contingent liabilities and assets
Contingent liabilities are not recognized in the financial statements.
Significant contingent liabilities are disclosed, with the exception of
contingent liabilities that are unlikely to be incurred.
The Group’s activities entail various types of financial risk; market risk
(including currency risk and floating rate of interest risk), credit risk,
liquidity risk and operational risk.
The Group’s main risk management plan focuses on the unpredictability
of the capital market, and attempts to minimize its potentially negative
effects on the Group’s financial results.
The Group engages in international operations and is especially exposed
to currency risk. The Group makes use of hedging to reduce the risk of
currency exposure.
The Group has a decentralized structure with operational supervision of
the various business units, where the main management of financial risk
is determined by the Board. This applies to areas such as currency risk,
interest rate risk, credit risk and use of financial derivatives.
For the classification of financial assets and liabilities, reference is made
to Note 27.
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TTS GROUP
ANNUAL REPORT
M A RKET R I S K
Market risk is the risk of changes to market prices, such as foreign exchange
rates, interest and stock-exchange values, affecting the income or value of
financial instruments. Management of market risk intends to supervise that
risk exposure lies within a set framework.
The Group is particularly vulnerable to fluctuations in the price of steel.
The Group monitors the development of steel prices on a continuous basis.
The companies of the Group buy and sell derivatives, and incur financial
obligations to control market risk. Transactions are carried out within the
guidelines issued by the Group. To control volatility in the result, hedge
accounting is used whenever possible.
See also directors report for further description of the groups market risk.
a ) C urrenc y risk
The Group operates internationally and is exposed to currency risk in a
number of foreign currencies. The consolidated financial statements are to
a great extent affected by the exchange rate of NOK against SEK, USD, EUR
and RMB. The Group endeavors to reduce the risk of exposure to exchange
rate fluctuations by obtaining an optimal balance between incoming and
outgoing payments in the same currency, in addition to forward exchange
transactions at an acceptable exchange rate. Currency risk is to a large
extent related to contracts for delivery that involve income and expenses
in foreign currencies. Following contract signing, the guidelines are to sell
and purchase foreign currencies on a forward exchange contract, to reduce
the currency risk in cash flows designated in foreign currencies. With a
production process based on the use of an international network of subsuppliers, purchases may further be optimized with regard to currency.
In order to manage the currency risk of future trade transactions and
assets and liabilities recognized in the balance sheet, the Group’s units
use forward exchange contracts. When necessary, forward exchange
contracts are continued as they mature. These hedging activities meet the
requirements of hedge accounting.
Interest on loans is in the currency corresponding with cash flows
generated by the underlying operations, primarily in Euro. This ensures
financial hedging without the use of derivatives, and accordingly does not
necessitate hedging.
For other monetary assets and obligations in foreign currency, net exposure
is kept at an acceptable level by purchasing and selling foreign currency at
spot prices whenever necessary.
The Group has investments in foreign subsidiaries where net assets are
exposed to currency risk at conversion of currency. A more detailed
description of currency conversion differences is presented in Note 26.
S igni f icant currencies throughout the y ear :
Average exchange rates
Q1
Q2
Q3
Q4
Spot rate 31.12.2012
SEK
0.8570
0.8478
0.8763
0.8542
EUR
7.5868
7.5579
7.3910
7.3672
7.3410
USD
5.7896
5.9108
5.9144
5.6774
5.5664
RMB
0.9177
0.9338
0.9310
0.9083
0.8935
0.8549
Sensitivit y analysis
A 10 % strengthening of EUR against NOK at year-end would have
increased equity and result with the figures given below. The analysis is
subject to other variables being constant.
31 December 2012
Equity
Result
after tax
22.520
202
31 December 2011
7.371
1.599
A 10 % weakening of EUR against NOK would have the same effect as
regards to amount, only with the opposite sign, subject to other variables
being constant.
A 10 % strengthening of SEK against NOK at year-end would have
increased equity and result with the figures given below. The analysis is
subject to other variables being constant.
Equity
Result
after tax
31 December 2012
39.996
2.561
31 December 2011
42.259
11.186
A 10 % weakening of SEK against NOK would have the same effect as
regards to amount, only with the opposite sign, subject to other variables
being constant.
b) I nterest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Group’s exposure to the risk of changes in market interest rates
relates primarily to the Group’s long-term liabilities with floating interest
rates. This involves an interest rate risk for the Group’s cash flow. The
Group’s surplus liquidity is in the form of bank deposits. Any divergence
from the use of a floating rate of interest and placement of surplus liquidity
shall be determined by the Board.
Entries exposed to interest rate risk are bank deposits, bank overdrafts and
long-term liabilities.
Sensitivit y analysis of cash flow for instruments of variable
interest
Calculations take into account all interest-bearing entries, except debt
with fixed interest rate. All effects will be carried to the profit and loss
accounts, as the Group has no hedging instruments related to interest that
will be directly charged against equity.
The following table demonstrates the sensitivity to a reasonable possible
change in interest rates on that portion of loans and borrowings affected.
With all other variables held constant, the Group’s profit before tax is
affected trough the impact on floating rate debts as follows:
2012
2011
Fluctuations
in interest
rate
+/- 1 %-point
+/- 1 %-points
Effect on
net result
after taxes
688
4 373
Effect on
equity
688
4 373
C R ED I T R I S K
Credit risk is the risk that counterparty will not meet its obligations under
a financial instrument or customer contract, leading to a financial loss. The
Group is exposed to credit risk from its operating activities (primarily for
trade receivables) and from its financing activities, including deposits with
bank and financial institutions, foreign exchange transactions and other
financial instruments.
20
12
LI QU I DI T Y RI S K
Liquidity risk is the risk of the Group being unable to fulfill its financial
obligations as they fall due. Liquidity management shall, to the extent
possible, ensure that available liquidity is sufficient to meet obligations as
they mature for payment, without this resulting in unacceptable loss or risk
of damage to the Group’s reputation. The availability of sufficient liquidity
to meet expected operating costs, as well as resources to service financial
obligations in the future, shall be secured.
Credit risk is dealt with at a corporate level. The credit risks are reduced
through distribution over several counterparties. Requirements to credit
ratings have been established toward counterparties, and new customers
are subject to credit rating. Furthermore, the Group makes a comprehensive
use of Letters of Credit toward its customers, in order to minimize the risk
of losses.
During the autumn of 2009, the Group implemented actions to reduce
working capital. These actions continued in the following years and in
2012, among other things the Group pursued a project that was initiated
to optimize the Group’s procedures and processes in order to reduce the
need for working capital.
The Group’s customers are mainly located in Europe, including Scandinavia,
and Asia, particularly China. The Group carries out assessment of credit risk
to the political structure depending on the economic importance of the
agreements based on assessments from the OECD and other equivalent
factors.
TTS Group ASA has established a joint cash pool arrangement that
includes most of its subsidiaries. The joint cash pool arrangement improves
accessibility and flexibility in the management of liquidity. Work is being
done to include several of the foreign subsidiaries in the Group accounting
system within national legal frameworks.
Maximum risk exposure is represented by the extent of financial assets
recognized in the balance sheet. Please find detailed information in Note
27.
The Group’s liquidity developments are monitored continuously based on
regular liquidity forecasts from all the units in the Group.
The counterparty for pension resources is a Norwegian insurance company,
and the risk related to this is considered to be insignificant.
The counterparties for derivatives are banks, and the credit risk related to
these is considered to be insignificant. The same applies to bank deposits.
Volatility in the financial markets in 2008 and 2009, with continued
significant European turmoil in 2010, 2011 and 2012 has caused an
increase to the credit risk. As a response, the Group implemented actions
against increased risk through close follow-up of customers and suppliers.
Customers with bad debt or delayed installments payments are particularly
scrutinized. Historically, the Group has had no substantial losses on accounts
receivable, but in 2009 the Group recorded a loss that exceeded MNOK 100
relating to bankruptcies. For 2010 confirmed losses was MNOK 20.9 and in
2011 the Group suffered losses of MNOK 12.9. For 2012 confirmed losses
is MNOK 10.2. Although losses are significantly reduced compared to 2009
and 2010, the Group maintains focus on customer monitoring.
As of 31.12, the Group had the following maturity distribution on its
external customers (including a claim on the joint venture companies):
31.12.2012
31.12.2011
Total
334 024
468 875
Not
due
195 519
226 444
0–3
months
109 162
194 839
3-6
months
13 123
14 278
>6
months
16 220
33 315
For accounts receivable that are not yet due, the assessment is, based on
previous experience, that there is no need to write down the value. These
relate to independent customers who have no previous history of failing to
fulfill their obligations to the Group. Invoicing is to a large extent carried
out in accordance with milestone-based progress in each project. Due to
delay in delivery, a considerable gap between due date and payment date
may arise.
Through the issuance of convertible subordinated loan, the Group improved
its liquidity in January 2011. The facility of MNOK 200 was fully subscribed
in December 2010 and paid to the Group in January 2011. In assessing
equity-based loan terms with Nordea and bond owners, the responsible
convertible loan shall be considered part of the equity.
In December 2011 TTS Group ASA signed a term sheet for a new loan
facility with a bank consortium consisting of Nordea, SEB and Sparebanken
Vest. The loan agreement was signed in February 2012, and replaced former
loan facilities with Nordea and Sparebanken Vest. The agreement secured
the Group bonding and credit facilities of approximately BNOK 2.3.
On the 6th of June 2012 TTS Group ASA finalized the sale of its drilling
equipment business, a part of TTS Energy division, and relevant subsidiaries,
to Cameron International Corporation (NYSE: CAM) for 270 MUSD, plus a
turnover based earn-out model for a three-year period. The proceeds of the
sales transaction enabled the Group to repay most of its long-term debt.
In December 2012 TTS Group ASA signed a new bank agreement with
Nordea and DNB. The new arrangement replaces the existing credit- and
bond facility from December 2011. The new facility is adjusted to the
Group`s financial requirements after the sale of the Energy division. Total
facility in the new arrangement is MNOK 900. See note 16 for further
information.
As of 31 December 2012, the Group has an undrawn overdraft facility of
MNOK 176. Furthermore, the Group has available liquidity in the form of
bank deposits and drawdown facility amounting to MNOK 338.
The Group’s strategy is to have sufficient cash reserves or credit options
to be able to, at any time, finance operations and investments throughout
the year, in accordance with the Group’s strategy plan. The Group regards
it as most likely that it will be able to renew loan agreements or negotiate
alternative financing agreements upon expiry of the current agreements.
Surplus liquidity is placed as deposits in bank on market terms.
Accounts receivable are discussed in further detail in Note 11.
Calculations are made on the basis of an average net interest-bearing debt.
A more detailed account of interest-bearing debt is presented in Note 12.
66
67
TTS GROUP
ANNUAL REPORT
The table below gives an overview of the structure of maturity of the Group’s financial obligations:
R emaining period :
2011
Long-term financial obligations:
Interest-bearing non-current liabilities
Current financial obligations:
First year’s instalment on non-current liabilities
Net derivatives
Accounts payable and other current liabilities
Total financial obligations
2011
Long-term financial obligations:
Interest-bearing non-current liabilities
Current financial obligations:
First year’s instalment on non-current liabilities
Interest-bearing current liabilities 2)
Net derivatives
Accounts payable and other current liabilities
Total financial obligations
<6
months
6-12
months
1-5 years
More than
5 years
Total
-
-
129 954
-
129 954
1 500
6 203
1 042 708
1 050 411
27 109
2 517
342 060
371 686
<6
months
0
403 296
293 793
32 118
1 106 621
1 835 828
4 970
90 918
225 842
-
6-12
months
1-5 years
More than
5 years
Total
0
227 863
0
227 863
58 296
0
23 192
380 146
461 635
0
0
32 530
123 303
383 696
0
0
0
0
0
28 609
13 690
1 475 685
1 647 938
461 592
293 793
87 840
1 610 070
2 681 159
For further information on financial obligations, see Notes 12, 13, 14, 15, 16, 20, 23, 25, 27 and 28.
O P E RATI O NA L R I S K
Operational risk is the risk of direct or indirect losses as a result of a whole
range of causes related to the Group’s processes, personnel, technology
and infrastructure, as well as external factors besides of credit risk, market
risk and liquidity risk that follow from laws, rules and generally accepted
principles for business conduct. Operational risk arises in all of the Group’s
business areas.
The Group’s deliveries are primarily organized in the form of projects.
The Group is continuously striving to improve operations and projects
implementation. This further includes credit rating of major sub-suppliers
in order to ensure implementation of the projects.
The Group’s aim is to deal with operational risk, so that a balance is reached
between avoiding economic loss or damage to the Group’s reputation, and
general cost effectiveness, and to avoid control routines that limit initiative
and creativity.
The main responsibility for development and implementation of controls
designed to handle operational risk is allocated to the top management
within each business area. This responsibility is supported by developing
the overall Group standard for management of operational risk in various
areas.
3.2 Risk related to investment management
The Group’s aim with regard to investment management is to secure
continued operations in order to ensure a return for the owners and other
partners, and maintain an optimum capital structure, so as to reduce
capital costs. To improve the capital structure, the Group may adjust the
68
level of dividend payment to shareholders, issue new shares or sell assets
to repay loans.
The company’s gearing as of 31.12.2012 and 31.12.2011 is illustrated below:
Total interest bearing debt
- cash and cash equivalents
2012
130 932
227 666
2011
983 248
434 750
Net interest bearing debt
Equity
Total
Gearing
-96 734
856 195
759 461
-12.7 %
548 498
840 383
1 388 881
39.5 %
3.3 Estimation of fair market value
Fair value of financial instruments traded in an active market is based on
the market value on the balance sheet date. Examples of this are forward
contracts in foreign currencies where fair value is calculated by using a
market-to-market rate on the balance sheet date.
Fair value of financial instruments not traded in an active market is
stipulated by the use of valuation techniques (primarily discounted
future prospective cash flows) or other relevant information for giving
a best estimate of fair value on the balance sheet date. An example of
this is shares held available-for-sale that have been estimated based on
information regarding transactions involving said shares.
Accounts receivable and accounts payable are assessed at face value, less
deductions for occurred or estimated losses on the balance sheet date, an
amount presumed to be equal to the actual value of the entry.
Fair value of employee share options is measured using the Black & Sholes
formula. The data forming the basis for measurement includes the share
price at the time of measurement, the option’s exercise price, expected
volatility, weighted average expected economic life for the instruments,
expected return, as well as risk free interest rate. Service terms and nonmarket based terms are not considered in the calculation of fair value.
Fair value of customer relations and order backlog acquired in a business
combination is determined using the multi-period exceed earnings method.
The value of the intangible asset is equal to the present value of the
incremental after-tax cash flows attributable only to the subject intangible
asset after deducting contributory asset charges.
Fair value of drawing/technology acquired in a business combination is
determined using the relief of royalty method. The valuation is based on the
concept that if the company owns a technology, it does not have to rent,
and is then relieved from paying a royalty.
The fair value of other intangible assets is based on the discounted cash
flows expected to be derived from the use and eventual sale of the assets.
4. Risk related to key accounting estimates
and evaluations
Accounting estimates and evaluations are based on a best estimate.
Estimates are evaluated on the basis of available information on the
balance sheet date, as well as management’s experience and expectation of
future events deemed likely to occur. When considering the best estimate,
allowance is made for relevant events that have occurred subsequent to
the balance sheet date and up until the Board’s approval of the financial
statements, to the extent that such events are presumed to significantly
alter the estimates. Estimates are always associated with uncertainty and
consequently the recorded balance sheet and result variables. These days’
unrest in the financial market significantly increases the uncertainty of
the premises for estimates and assessments of likely future events. Below
follows a discussion of the key balance sheet items and appropriate profit
and loss items where estimates are considered to be associated with major
risk which forms the basis of the financial statements.
a ) R isk related to signi f icant loss o f value o f goodwill and
other intangible assets
Book value of goodwill and other intangible assets are evaluated on an
annual basis, and for each balance sheet date when there is external or
internal impairment indicators. The assessment is based on implemented
tests of any depreciation performed in accordance with requirements and
guidelines given in IAS 36. As will appear from Note 7, impairment tests
have been carried out indicating that there is no need for impairment as
of 31.12.2012. The premises that form the basis of this assessment may be
significantly affected by future alterations to market conditions or events.
Reference is made to a more detailed discussion of these balance sheet
items in sections 2.6 and 2.7 and accounting values in Note 7.
b ) R isk related to revenue recognition
o f construction contracts
Recognition of income and appropriate contract costs from construction
contracts is done in accordance with the percentage of completion method,
ref. IAS 11. The assessment of project revenues and project costs is based on
a number of estimates and assessments which is subject to a component
of uncertainty. It is particularly more difficult to estimate the outcome of
a project in the beginning of the project period and for more technically
complex projects. The percentage of completion method requires that the
Group prepares reliable estimates (prognosis) for future income and costs
for each project as well as degree of completion on the balance sheet date.
Income forecasts are based on contractual values where future income
in foreign currencies is secured by forward contracts. Forward contracts
and hedging accounting is discussed in section 2.10 and the accounting
value of hedging instruments in Note 23. Estimated contract cost forecast
20
12
is based on evaluation of calculated volume and evaluation of future price
levels. The price of steel, in particular, could significantly alter project costs.
In today’s market, there is particular risk related to delays and cancellations
of firm contracts in some segments. The Group assesses the likelihood of
cancellations and delays on a continuous basis. Delays and cancellation
entail the risk of reduced income, increased costs, and that any previously
estimated margins must be charged as an expense.
c ) R isk related to assessment o f f inancial assets
and obligations
The Group’s financial assets and obligation are further discussed in sections
2.8, 2.9, 2.10, 2.12, 2.13, 2.15 and 2.16. Risk related to currency, interest,
credit and liquidity, as well as asset management is discussed in section
3. These days’ unrest in the financial market could significantly affect the
premises for valuation, estimated cash flow and liquidity in the course of
the next accounting year. For further discussion of this, reference is made
to section 3 and, for accounting values see Note 11, 12, 14, 15, 23, 25,
and 27.
d ) R isk related to guarantee liabilit y
The Group customarily offers a warranty period of +/- two years on its
deliveries. Management estimates appropriation for future guaranty
commitments based on information of historical guarantee claims, together
with information indicating that information regarding previous expenses
may differ from future obligations. Factors that may affect estimated
obligations include the outcome of productivity and quality initiatives,
as well as reference prices and labor costs. Guarantee costs are further
discussed in section 2.18, and accounting values in Note 24.
e) R isk related to pension obligations
Net pension obligations are stipulated according to invoice calculations
based on the premises related to discount rate, future salary developments,
pension adjustment, expected returns on funds, resignation rate as well as
demographic considerations such as disability and mortality. The premises
are stipulated based on observable market prices and historic development
of the Group and society. Changes to these premises could significantly
affect the estimated pension obligation and pension cost. Pension cost
and other compensation payments to employees are further discussed in
section 2.18, and accounting values in Note 5.
f ) R isk related to f air value on shares
Fair value on shares not traded in an active market is stipulated by the use
of valuation techniques. The Group evaluates and chooses the methods
and premises that are primarily based on market conditions on the balance
sheet date. Changes to the market conditions may significantly affect the
fair value of shares. The accounting value of shares is further discussed in
Note 8.
g) D e f erred tax assets
The Group has recognized deferred tax assets primarily related to the
Norwegian and German companies. The following criteria have been
employed to estimate that it is probable that future taxable profit will be
available against which unused tax losses can be utilized:
• The Group probably has sufficient future taxable profit available to utilize
the benefits
• The Group has sufficient temporary differences
• Tax losses as a result of specific identifiable causes
h ) I nventor y
Valuation of inventory is based on estimates on future selling prices in the
ordinary course of business. Changes in market conditions may affect the
value of inventory. See section 2.11 and accounting values in Note 3.
69
TTS GROUP
ANNUAL REPORT
20
12
Notes for consolidated accounts
TTS group
Note 1 Operating segments
(Amounts in NOK 1000)
P rimar y reporting f ormat – business segments
For management purposes the Group is organised into business units based on its products and services and has three reportable segments, as follows:
Marine:
Marine Division
Port & Logistic:
Port and Logistics Division
Energy:
Offshore Handling Equipment
Other:
Parent company and other
Marine Division:
The Marine Division, produces deck equipment such as deck machinery, hatch covers, cargo cranes and yacht equipment, cargo access equipment, such
as RoRo equipment, side loading systems and equipment for cruise ships and services including repairs and maintenance.
Port and Logistic Division:
The Port and Logistic Division produces port equipment, such as heavy load handling, shipyard production lines and cargo handling systems.
Energy (Offshore Handling Equipment):
The Energy Division produces cranes and winches for rigs and offshore vessels.
Each segment is managed separately. Management monitors the operating results of its business separately for the purpose of making decisions about
resource allocation and performance assessment. Information related to the divisions are shown below. Earnings are measured based on segment income
before tax, as evidenced by internal management reports reviewed by the CEO and the Board of Directors.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. These are not recognized
on a separate line, as the amounts are immaterial.
Inter-segment revenues are eliminated upon consolidation and reflected within the individual segments.
K e y pro f it f igures
Year ended 31.12.2012
External turnover
Internal turnover
Intergroup eliminations
Group Turnover
Income from associated companies
Earnings before depreciation, finance and tax (EBITDA)
Depreciation/amortisation
Impairments
Financial income
Financial cost
Segment profit/loss before tax
Marine
1 942 001
488 468
-488 468
1 942 001
Port
142 511
3 077
-3 077
142 511
Energy
285 394
285 394
Other
-
Total
2 369 906
491 545
-491 545
2 369 906
59 916
167 641
15 632
152 009
24 637
42 852
133 794
-6 575
3 415
22 801
-32 791
1 065
2 301
-34 027
12 175
4 973
7 202
433
14 708
-7 073
-20 183
367
-20 550
3 876
35 822
-52 496
59 916
153 058
24 387
22 801
105 870
30 011
95 683
40 198
Marine
2 126 969
615 714
-615 714
2 126 969
Port
191 413
9 944
-9 944
191 413
Energy
275 230
275 230
Other
-
Total
2 593 612
625 658
-625 658
2 593 612
46 936
172 598
13 098
159 500
39 964
54 122
145 342
15 545
7 550
7 995
4 293
2 642
9 646
-496
5 428
-5 924
765
21 614
-26 773
-16 992
409
-17 401
-6 874
33 364
-57 639
46 936
170 655
26 485
144 170
38 148
111 742
70 576
External turnover
Internal turnover
Intergroup eliminations
Group Turnover
Income from associated companies
Earnings before depreciation, finance and tax (EBITDA)
Depreciation/amortisation
Impairments
Financial income
Financial cost
Segment profit/loss before tax
70
71
TTS GROUP
ANNUAL REPORT
20
12
Note 3 Inventories
Note 1 cont.
S egment assets , liabilities and capital expenditure
Assets
Joint ventures
Total segment assets
Liabilities
This year's capital expenditures
Marine
2 041 029
134 988
2 176 017
1 494 523
12 231
Port
209 527
209 527
103 904
2 709
Energy
261 832
261 832
205 602
9 679
Other
-297 031
-297 031
-309 879
2 392
Total
2 215 357
134 988
2 350 345
1 494 150
27 011
Assets
Joint ventures
Total segment assets
Liabilities
This year's capital expenditures
Marine
2 034 397
167 657
2 202 054
1 665 329
16 365
Port
193 075
193 075
113 489
14 096
Energy
1 034 002
2 066
1 036 068
988 166
31 111
Other
97 638
97 638
-78 532
4 226
Total
3 359 112
169 723
3 528 835
2 688 452
65 798
Inventories, incl. non-current
Obsolescence
Total inventories
2012
2011
202 152
-15 041
187 111
393 627
-10 833
382 794
-
-
158 977
351 445
Work in progress
Book value of inventories pledged as security for liabilities
Raw materials removed from storage for use in ongoing production in 2012 is presented along with accrued, non-invoiced production. Consumption of raw materials, supplies, changes in finished goods and changes in work in progress are included under the item cost of sales, and
amounts to MNOK 1 509 in 2012 (2011: MNOK 1 781).
Note 4 Payroll expenses and employee information
Payroll expenses:
Note 2 Construction contracts
Revenue from construction contracts, continued operations
Revenue from service contracts, continued operations
Total revenue from projects, continued operations 1)
Revenue from construction contracts and service contracts, discontinued operations 2)
Total revenue from projects continued operations and discontinued operations 1)
2012
2011
1 962 818
383 660
2 346 478
558 717
2 905 195
2 167 211
404 815
2 572 026
952 346
3 524 372
Prepayments to suppliers
Current liabilities
Completed production
Invoiced production
Non-invoiced production cost, suppliers
2012
2011
405 964
50 560
20 996
16 111
23 240
516 871
369 541
44 132
22 514
13 750
18 055
467 992
Total payroll expenses discontinued operations
Number of employees at the end of the year continued operations
Number of employees at the end of the year discontinued operations
257 150
970
856
-
307
The number of employees in TTS Group was reduced by 83 persons from 2011 to 2012. For Continuing operations, the number of employees
increased by 114.
B alance sheet items related to construction contracts
Current Assets
Completed production
Invoiced production
Accrued, non-invoiced production
Salaries
Employer's social security contribution
Defined benefit pension costs (note 5)
Defined contribution pension costs (note 5)
Other benefits
Total payroll expenses continued operations
774 420
269 846
504 574
1 921 006
1 603 250
317 756
53 437
146 426
558 011
464 182
237 970
739 151
-501 181
1 281 505
1 898 021
-616 516
-62 365
-98 843
-563 546
-715 359
Revenue from projects includes revenues from long-term construction contracts and revenues from service contracts.
Revenue from discontinued operations for 2012 includes revenues from divested Energy division up to 6.6.2012.
Remaining costs on loss-making contract is estimated to MNOK 361. Provisions for losses on contracts is recognized in the income statement when
identified, see section 2.21 in Accounting principles.
1)
2)
Board remunerations*
Trym Skeie
Bjarne Skeie
Rune Selmar
Anne Breive
Kjerstin Fyllingen
Jan Magne Galåen2)
Karen Torine Mørkestøl
Jarle Dyrdal
Ole Henrik Askvik (from 2012)
Mona L. Tellnes Halvorsen (from 2012)
Total
2011
350
200
280
240
240
100
100
1 510
2010
325
200
140
280
240
58
58
1 302
The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next. For the financial year 2012, the same remuneration was stipulated as was determined by the Board at the Annual General Meeting for 2012. The same applies to the nomination committee.
2)
Jan Magne Galåen represents Rasmussengruppen and the board fee is paid to Rasmussengruppen
The board has not received any remuneration beyond director`s fee. No loans or severance pay is given to the directors. 1)
Risks related to the estimation of the posted values are further discussed under accounting principles, in sections 2.21 and 4. 72
73
TTS GROUP
ANNUAL REPORT
20
12
Note 5 Pension
Note 4 cont.
N omination committee remuneration
The TTS nomination committee is comprised of the following members: Bjørn Olafsson (Chairman), Bjørn Sjaastad og Johan Aasen. The nomination committee remuneration for 2012 was TNOK 50 for the chairman and TNOK 30 for each of the members, a total of TNOK 110
STATEMENT REGARDING THE STIPULATION OF REMUNERATION AND OTHER BENEFITS FOR THE PRESIDENT & CEO AND OTHER EXECUTIVES
Regarding Regarding Group management, TTS Group ASA’s remuneration policy is based on offering competitive terms. Remunerations should reflect
that TTS is a listed company with an international focus. The annual remuneration is based on Group management`s part-taking in the results generated by the company and the added value for shareholders
through increased company value.
Remuneration consists of three main components; Base salary, bonus and a share option program.
Bonus is determined on the basis of target results. In certain circumstances where change and development are of decisive nature, the bonus is further
based on specific developmental targets. Bonus targets are revised annually. The maximum bonus is one year’s base salary for the President & CEO, and
up to 50 % of base salary for other executives. Since 1998, a share option program has been active for the Group management of TTS; the goal being that the Group management shall have the same
incentive as the shareholders in respect of increasing company value over time. The Annual General Meeting has each year given the Board authority
to establish share option program with a two year term. Redemption price equals market price on allotment. First exercise is 50 % after one year. Next
12.5 % per quarter, in addition to options not previously utilized. Each option program expires after 2 years. Please refer to note 17 Share capital and
shareholder information for further information regarding option program.
The Group pension scheme in Norway is based on about 65 % of base salary at the age of 67, limited to 12G, with the exception of TTS Offshore
Handling Equipment AS which has a defined contribution plan. For employees hired in other countries, the prevailing schemes in the respective
companies apply.
The period of notice is 6 months with a severance pay of 24 months, including period of notice for the President & CEO and from 6 to 24 months for the
other members in the Senior Executive Group. The share option program is contingent on the Annual General Meeting’s approval, based on the Board being granted authority to make such allotments. The
President & CEO’s remuneration is determined by the Board of TTS Group ASA. Remuneration to other executives is determined by the President & CEO.
R emuneration and other bene fits f or the P resident & C EO and other S enior E xecutives :
2012
Name
Position
President & CEO
Base
salary
1 941
Arild Apelthun
CFO
1 594
14
Miao Reinlund
VP Communications
Ivar K. Hanson
COO
Nina Seter
VP HR & HSE (from 12.2012)
The Norwegian companies within TTS Group, except TTS Offshore Handling Equipment AS, have defined benefit pension plans that give employees the
right to future pension benefits depending on length of service, salary levels, retirement age and the National Insurance benefits received. As of 31.12.12
the pension scheme includes 230 persons, including 29 retirees. The Group’s obligations are covered primarily by an insurance company. Group companies outside Norway have pension plans in accordance with local practice and regulations. All pension plans in companies outside Norway
are of defined contribution nature and the contribution paid during the year is expensed when incurred. Contribution paid and expensed in 2012 is
MNOK 16.1, which also includes paid and expensed regarding defined contribution plan in TTS Offshore Handling Equipment AS . The acquisition of Neuenfelder Maschinenfabrik GmbH (”NMF”) does not affect plan assets or the defined benefit obligation.
The net pension obligations for companies affiliated with the benefit plans are based on the assumptions as of 31.12.2012 and are determined as follows:
2012
Insured
Uninsured
Total
Insured
Uninsured
Total
Fair value of assets at end of year
104 564
-
104 564
96 068
-
96 068
-
Defined benefit obligation at end of year
-159 311
-395
-159 706
-135 994
-764
-136 758
+
Unrecognized net actuarial loss (gain)
61 620
-
61 620
48 944
113
49 057
-
Accrued payroll tax 1)
-7 719
-56
-7 775
-5 484
-108
-5 592
=
Net pension asset (obligation) after payroll taxes
-846
-451
-1 297
3 534
-759
2 775
Accrued payroll tax is calculated based on net funded status at period end. Accrued payroll tax is recognized as pension liability. 1)
Net pension costs are determined as follows:
12 613
13 627
-
13 627
4 458
3 978
28
4 006
-
Expected return on plan assets
-4 253
-
-4 253
-4 157
-
-4 157
+
Administration cost
946
-
946
862
-
862
+
Amortization of net actuarial losses (gains)
5 291
-
5 291
5 813
342
6 155
1 941
-
1 941
2 017
4
2 021
20 996
-
20 996
22 140
374
22 514
+
Payroll tax of net pension cost
=
Net periodic pension cost
-
120
142
64
-
-
-
-
Total
-
103
237
Uninsured
-
237
-
Insured
4 458
705
675
Total
12 613
Pension
cost
1 163
14
Uninsured
Interest cost
Share
options
474
14
Insured
Service cost
Bonus
paid
1 584
882
2011
2012
+
Other
benefits
136
1 524
2011
1
Change in recognized funds:
Book value as of 01.01.
2012
2011
2 775
7 808
20 996
22 514
Remunerations
Other benefits
Taxable remuneration
Car, group life insurance, taxable pension schemes, phone, newspaper, etc.
-
Cost recognized during the year (see above)
+/-
Pension payments and payment of pension premiums
16 924
17 481
Bonus paid
Bonus paid in current year
=
Book value as of 31.12.1)
-1 297
2 775
Share options
Difference between market price and redemption price when exercising options
Total remuneration
Total taxable remuneration
The amount includes TNOK 451 in liabilities related to unsecured liabilities. The unsecured liabilities is related to a closed pension scheme including
three retirees in the age between 62 and 67 years. Payments in this pension scheme will stop when the retirees reaches the age of 67.
Total
Taxable pension scheme is early retirement and top-hat pension (CEO) which used to be an annuity-based solution. In accordance with the new tax
regulations per 1.1.2007, these are considered taxable benefits. The early retirement scheme applies to the President & CEO from the age of 60.
R emuneration o f auditor
Statutory audit
Other attestation services
Tax advisory
Other non-audit service
Total
2012
2011
3 185
597
412
1 336
5 530
3 761
750
148
1 654
6 314
2)
The following economic assumptions have been made for calculation of the pension obligations:
31.12.12
31.12.11
Discount rate
3,90 %
3,30 %
Return on pension funds
4,00 %
4,80 %
Annual wage growth
3,50 %
4,00 %
Annual adjustment of National pension index (G)
3,25 %
3,75 %
Annual adjustment of pensions in payment
3,25 %
3,75 %
8,0-0,0%
10,00 %
N/A
45,00 %
14,10 %
14,10 %
Voluntary retirement
Withdrawal propensity for early retirement (AFP)
Payroll tax
Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.18 and 4.
74
75
TTS GROUP
ANNUAL REPORT
20
12
Note 7 Intangible assets
Note 5 cont.
Actuarial assumptions used in the calculation are based upon the recommendations published as per 31.12.2012. Estimate deviations due
to new information or changes in the actuarial assumptions in excess of 10 % of the value of the pension resources or 10 % of the pension
obligations will be recorded in the profit and loss account over a period that corresponds to the employees’ expected average remaining period
of service. As such the changes in assumptions will not effect the total cost incurred in 2012.
Discount rate used from 2012 is based on high quality corporate bond (Norwegian Covered Bonds, OMF). This represents a change from 2011,
where discount rate was based on government bonds. Norwegian OMF is considered as high quality bond with low risk based on the strong
macroeconomic position in Norway. The use of high quality corporate bond rate instead of government bond is considered as a change in
accounting estimate.
The main changes in assumptions are the discount rate used and assumptions for voluntary retirement. Change in discount rate from
government bonds to corporate bonds has a positive actuarial effect of approximately MNOK 28. Change in assumption for voluntary
retirement has a negative effect of approximately MNOK 31.
Approved changes in the recognition principles in IAS 19 will dilute the current possibility to allocate estimate deviations in the actuarial
assumptions over a period that corresponds to the employees’ expected average remaining period of service. Unrecognized estimate changes
and deviations as per 31.12.2012 are MNOK 61.6, of which implies a decline in equity as of 1.1.2013. The changes in IAS 19 are effective as
from 1.1.2013.
Note 6 Fixed assets
Property Buildings
Furniture,
office-,
Machinery and computer
and vehicles
equipment
Total
As o f 1 . 1 . 2 011
Acquisition cost 1.1.
Accumulated depreciation as of 1.1.
Book value as of 1.1.2011
15 382
-813
14 569
30 300
-9 716
20 584
55 029
-40 539
14 490
179 649
-108 591
71 058
280 360
-159 659
120 701
Customer
portfolio
Patents,
licences etc.
5 741
-2 035
3 706
27 689
-13 121
14 568
309 386 960 115
-38 727 -132 931
270 659 827 184
3 706
-391
3 315
14 568
-69
1 180
-4 977
10 702
270 659
4 132
24 694
-24 642
274 843
827 184
827 184
1 116 117
4 063
25 874
-30 010
1 116 044
5 741
-2 426
3 315
28 800
-18 098
10 702
338 212
-63 369
274 843
960 115
-132 931
827 184
1 332 868
-216 824
1 116 044
3 315
147
25 944
-3 315
-911
25 180
10 702
-64
592
3 050
-7 534
-913
5 832
274 843
-822
4 618
-200 740
-5 387
-22 801
49 711
827 184
-2 783
157 761
-511 012
471 150
1 116 044
-3 522
5 210
186 755
-722 601
-7 212
-22 801
551 873
26 091
-911
25 180
11 005
-5 173
5 832
83 058
-33 347
49 711
471 150
471 150
591 305
-39 432
551 873
R&D
Goodwill 1)
Total
P er 1 . 1 . 2 011
Book value 1.1.2011
1 302 931
-186 814
1 116 117
2 011 Financial y ear
Book value 1.1.
Additions
Acquisition of subsidiary
Disposed during the year
Writedown
Depreciation
Book value 31.12.201
P er 31 . 1 2 . 2 011
2 01 2 Financial y ear
2 011 Financial y ear
Acquisitions
Additions
Disposals
Depreciation
14 569
-97
419
-343
14 548
20 584
4 233
389
-1 389
-4 025
19 792
14 490
-1 685
11 535
-2 064
-12 869
9 407
71 058
-5 596
27 581
-6 882
-11 905
74 256
120 701
-3 145
39 924
-10 335
-29 142
118 003
15 710
-1 162
14 548
33 731
-13 939
19 792
63 084
-53 677
9 407
194 789
-120 533
74 256
307 314
-189 311
118 003
14 548
72
14 620
19 792
-458
-1 567
17 767
9 407
256
25 939
4 408
-4 097
35 913
74 256
-918
4 179
17 393
-36 666
-11 510
46 734
118 003
-1 047
30 118
21 801
-36 666
-17 175
115 034
As o f 31 . 1 2 . 2 011
Book value 1.1.
Additions
Acquisitions
Disposals
Depreciation
Amortisation
P er 31 . 1 2 . 2 01 2
2 01 2 Financial y ear
Acquisitions
Additions
Disposals
Depreciation
B ook value R& D, patents and licences per 31 . 1 2 . 2 01 2 consist o f : Development - Heave compensated VME
36 013
Development - Offshore cranes
3 189
Other
10 509
Total
49 711
For proprietary products a continuous assessment is carried out to ensure the criteria for recognition of development costs have been met.
1)
As o f 31 . 1 2 . 2 01 2
14 620
14 620
29 452
-11 686
17 767
56 592
-20 679
35 913
98 436
-51 702
46 734
199 100
-84 066
115 034
Property in the Norwegian companies has been pledged as security for long-term and short-term debt to credit institutions, see Note 13
TTS Group has no leases classified as financial lease.
TTS Group has entered into different operating leases for offices and other facilities. Most of the leases contain an option
for extension. Lease payment is MNOK 40 for 2012. Estimated payment for 2013 is MNOK 41.
76
Summary of the allocation of goodwill at segment level is as follows: 2012
Total
Port
36 062
Marine
435 088
Energy
-
Other
-
Total
471 150
2011
Port
Marine
Energy
Other
Total
Sum
37 821
308 298
481 065
827 184
Risk related to the estimates that form the basis for the book values are further described in Accounting Principles, under sections 2.6 and 4.
77
TTS GROUP
ANNUAL REPORT
Note 8 Investments in other companies
Note 7 cont.
G oodwill impairment assessmen There was external indicators of the need to test for impairment of the carry value of the three assessments cash generating units (CGU) in accordance
with the IAS 36-structure.
The TTS Group has defined cash generating units (CGU) at the lowest level where cash flows can be identified. If possible CGU is defined on legal entity
level. There are some exceptions where two or more legal entities have cash flows with high degree of intercompany transactions, in these cases the
CGU is based on the aggregated cash flow from these legal entities.
A summary of goodwill in the balance sheet and important assumptions for the test is shown below:
EBITDA Margin
D ivison ( C G U )
Port and Logistic
Marine
Energy 2)
Total
20
12
Goodwill
31.12.12
(MNOK)
36
435
471
Revenue 2012
(MNOK)
143
1 942
285
2 085
Actual 2012
-4,6 %
8,6 %
4,3 %
Est. 2013 1)
5,0 %
7,0 %
>2013 1)
5,0 %
7,2 %
Ownership
Aqcuisition cost
Book value
2012
2011
Shin Young Heavy Industry
13.4 %
222
222
222
Sigma Drilling AS
Total investments in other companies
16.1 %
28 673
28 895
28 673
28 895
222
Fixed assets :
1)
Other investments in shares are wholly defined as available for sale.
1)
TTS Group ASA acquired a 16.1 % share in Sigma Drilling AS in mid-November 2012. The investment was at fair value on the day of
acquisition, and a best estimate for fair value at year-end 2012 is acquisition cost in mid-November 2012, see note 22 Related parties.
WACC 1)
12,9 %
12,6 %
1)
Note 9 Subsidaries
2)
Weighted average
A large part of Energy division is sold in June 2012. There is no goodwill allocated to the part of Energy division that was not included in the sale.
The following subsidiaries are basis for the consolidated accounts:
TTS G RO U P AS A
Test for write down is implemented by estimating a utility value in use for each of the divisions, which is compared to the booked value. Estimated utility
value is based on discounted future cash flows, and is subject to the following premises:
• Expected cash flows are set to EBITDA with deductions made for investments and requirement for working capital, and is based on an actual boardapproved budget for 2013. For periods after 2013 a growth rate of 2.5% is used. Growth rate used represents a conservative estimate based on TTS
Group future growth strategy. TTS expects growth in most markets, and especially in the offshore market the estimated future growth is expected to
be high. • Sales income is based on market analysis and evaluations of the different markets in which the various companies and divisions compete. There is a
varying development between the divisions. Please find additional description in the Board of Directors report - section Market.
• Expected future earnings (EBITDA) is estimated at a level with competing and comparable companies in the marketplace. The positive development in
EBITDA margin is in part the result of increased volume and in part the expectation of generally higher margins.
• Weighted average cost of capital (WACC) is calculated on the basis of the capital asset pricing model. The WACC from the total capital is pre-tax. All
divisions are stipulated at the same WACC after tax (9 %). Beta values are calculated by comparison with other similar listed companies. The basis for
all divisions is a risk-adjustment of 6 % relating to equity. • The investment requirements of each division are based on an investment plan approved by the Board. • Based on the above assumptions, the estimated value in use exceeds the carrying value for each CGU indicating there is no need to impair in any
of the CGUs. Please note, however, that there is a high degree of uncertainty related to the assumptions, and that changes to these could entail
future write downs. The group has conducted sensitivity analysis that show no need for write downs given the following premises:
• 1.0 % increase in the WACC
• 1.0 % decrease in expected growth
• 1.0 % decrease in EBITDA margin
The estimation of recoverable amount is based on assumptions regarding future development of several factors. The level on factors including, but not
limited to, future prices for products sold, future prices for input factors, sales volumes, investments levels, working capital level, foreign exchange
rates, creates an uncertainty when it comes to the outcome of the calculations. The sensitivity analysis shows that the recoverable amount in the CGU
including the newly acquired company Neuenfelder Maschinenfabrik GmbH, is the CGU which tolerates lowest degree of changes in the input factors. A
1% increase in WACC would result in a MNOK 213 decrease in recoverable amount, and a 1% decrease in expected EBITDA would result in a MNOK 254
decrease in recoverable amount.
Change in recoverable amount:
1% increase
in WACC
1% decrease
in expected growth
1% decrease
in EBITDA margin
-11 965
-15 696
-19 311
Marine
-201 273
-211 642
-234 604
Total
-213 239
-227 338
-253 915
Port and Logistic
Acquisition
year
Ownership/
voting share Currency
Share capital
Number of
shares
Equity
31.12.2012
Net Result
2012
950 000
95 000
17 367
4 714
Subsidiary
Registered office
TTS Handling Systems AS
Drøbak, Norway
1994
100 %
NOK
Norlift AS
Bergen, Norway
1994
100 %
NOK
500 000
500
824
162
TTS Ships Equipment AS
Bergen, Norway
1996
100 %
NOK
2 500 000
2 500
46 418
7 558
TTS Marine AB
Gothenburg, Sweden
2002
100 %
SEK
2 000 000
2 000
395 815
124 029
TTS Marine Shanghai Co Ltd
Shanghai, China
2002
100 %
RMB
200 000
3 500
27 759
-78
Hydralift Marine AS
Kristiansand, Norway
2003
100 %
NOK
100 000
1 000
-52
-1
TTS Cranes Norway AS
Bergen, Norway
2007
100 %
NOK
500 000
1 000
-205
195
TTS Marine AS
Bergen, Norway
2009
100 %
NOK
2 000 000
1 000
1 838
-18 569
TTS Singapore Pte. Ltd.
Singapore
2009
100 %
SGD
1 141 813
1 141 813
3 357
1 383
TTS Greece Ltd.
Pireus, Greece
2009
100 %
EUR
200 000
2 000
1 896
198
TTS Marine Holding AB
Gothenburg, Sweden
2011
100 %
SEK
100 000
1 000
85
-
TTS Port & Logistics Holding AB
Gothenburg, Sweden
2011
100 %
SEK
100 000
1 000
79
-7
TTS Offshore Handling Equipment AS
Bergen, Norway
2012
100 %
NOK
1 000 000
100
59 015
-1 084
Neuenfelder Maschinenfabrik GmbH
Hamburg, Germany
2012
100 %
EUR
3 000 000
3 000
-57 356
-7 115
Dalian, China
2005
50 %
Ownership/
Share capital
Number of
shares
Equity
31.12.2012
Net Result
2012
Joint venture
TTS BoHai Machinery Co., Ltd
Joint ventures are accounted for in accordance with the equity method.
TTS M arine AB has the f ollowing subsiudiaries :
Subsidiary
Registered office
Acquisition
year
TTS Marine Inc.
Virginia, USA
1994
100 %
USD
190 000
1 900
-9 804
-4 162
TTS Marine GmbH
Bremen, Germany
1997
100 %
EUR
255 646
5 000
55 294
36 754
TTS Hua Hai AB
Gothenburg, Sweden
2002
100 %
SEK
100 000
1 000
3 707
3 145
TTS Liftec Oy
Tampere, Finland
2004
100 %
EUR
76 500
1 020
12 996
-5 139
TTS Port Equipment AB
Gothenburg, Sweden
2005
100 %
SEK
100 000
1 000
8 612
-31 801
TTS Marine S.r.l
Genova, Italy
2006
100 %
EUR
10 400
1 000
92
-2 181
TTS Hua Hai Ships Equipment Co Ltd
Shanghai, China
2002
50 %
Jiangsu TTS Hua Hai Ships Equipment co. Ltd
Jiangsu, China
2007
50 %
Joint venture
Joint ventures are accounted for in accordance with the equity method, see note 10.
78
79
TTS GROUP
ANNUAL REPORT
Note 9 cont.
Note 10 cont.
T T S M arine G mb H has the f ollowing subsidiaries :
G roup ’ s share o f pro fit / loss , assets and liabilities per 31 . 1 2 . 2 01 2
20
12
Acquisition
year
Ownership/
Share capital
Number of
shares
Equity
31.12.2012
Net Result
2012
Subsidiary
Registered office
TTS Marine Ostrava s.r.o
Ostrava, Czech Republic
2005
100 %
EUR
310 291
1 000
7 885
12
TTS Marine GmbH Korea Co. Ltd
Korea
2007
100 %
KRW
1 513 390 000
1 000
47 177
7 146
TTS Marine Equipment Ltd.
Dalian, China
2008
100 %
RMB
15 728 611
1 000
6 426
-1 029
Long term
assets
2 045
25 396
27 441
TTS Bohai Machinery Co., Ltd
TTS Hua Hai Ships Equipment Co., Ltd incl. Jiangsu
Sense Drillfab (sold)
Total
Current
assets
85 659
230 317
315 976
Long term
liabilities
-
Current
liabilities
72 546
135 883
208 428
Current
assets
79 929
211 794
4 114
295 837
Long term
liabilities
-
Current
liabilities
67 206
132 286
2 303
201 795
Income
Profit/loss
152 339
475 770
628 108
829
59 087
59 916
Income
Profit/loss
134 223
331 002
465 225
877
46 059
46 936
G roup ’ s share o f pro fit / loss , assets and liabilities per 31 . 1 2 . 2 011
Note 10 Investments in joint ventures
Joint ventures are accounted for in accordance with the equity method. Changes in IFRS related to gross consosolidation of joint ventures effective from
1.1.2013 will not have any effect on the accounting presentation in TTS Group.
TTS Hua Hai Ships Equipment Co., Ltd incl. Jiangsu
Sense Drillfab
Total
Long term
assets
2 506
34 587
239
37 331
P er 31 D ecember the G roup has the f ollowing investments in joint ventures : Company
Registered office
Aqcuisition date
Ownership
Voting share
TTS Hua Hai Ships Equipment Co., Ltd
Shanghai, China
2002
50 %
50 %
Dalian, China
2005
50 %
50 %
2007
50 %
50 %
TTS Jiangsu Co. Ltd.
Shanghai, China
Interests in jointly controlled operations
Opening balance 1.1.2012
Disposals/divestment
Reclassifications 1)
Share of profit/loss
Dividends
Currency effect
Closing balance 31.12.2012
Opening balance 1.1.2011
Share of profit/loss
Currency effect
Dividends
Currency effect
Trade receivables
TTS Bohai
Machinery Co., Ltd
15 282
869
-994
15 157
15 157
TTS Hua Hai Ships
Equipment, incl
Jiangsu*)
150 527
-34 910
59 047
-47 502
-7 331
119 831
119 831
TTS Keyon
Marine Eq. Ltd
-
Sense
Drillfab AS
3 914
-3 914
-
Total
169 723
-3 914
-34 910
59 916
-47 502
-8 325
134 988
134 988
14 405
877
15 282
15 282
102 064
46 059
2 404
150 527
2 404
150 527
346
-346
-346
-
3 914
3 914
3 914
120 729
46 936
2 058
169 723
2 058
169 723
Except a guarantee for external debt of total MUSD 6, there are no contingent liabilities or capital committments relating to the Group’s interests in the
joint ventures and no contingent liabilities of the joint ventures themselves.
1)
During 2012 a reclassification from Other receivables to Investments in joint ventures has been recorded related to prior years’ dividends. .
80
Note 11 Trade and other receivables
Trade receivables
Loss provisions
Net trade receivables
2012
364 693
-30 669
334 024
2011
471 366
-2 491
468 875
Trade receivables per currency:
EUR
USD
NOK
Other currencies
Total
118 539
91 950
111 295
12 240
334 024
58 997
172 185
143 967
93 726
468 875
For additional information on accounts receivables and associated risks, see Accounts Principles and sections 2.12, 3.1 and 4 and Note 28.
Other receivables under financial fixed assets:
Loan to associated companies
Other receivables
2012
-
2011
145
145
Other receivables under current receivables:
Foreign currency contracts
Other receivables
Other current receivables
2012
9 490
112 247
121 737
2011
108 551
104 533
213 084
81
TTS GROUP
ANNUAL REPORT
Note 12 Non-current liabilities
Note 13
20
12
Assets pledged as security and guarantees
Repay ment profile and maturit y
Nominal
value
31.12.2012
95 345
34 609
129 954
-28 609
101 345
978
Convertible Subordinated Bond Loan 2011/2016
Total non-current debt incl. first year instalment
- first year instalment of non-current debt
Total non-current debt
Overdraft facilities
Total interest bearing debt, to nominal value
2014
3 000
2015
3 000
2016
95 345
-
28 609
3 000
3 000
95 345
-
102 323
Expected interest payments
S peci f ication o f loans
2013
28 609
2017 and
later
-
9 370
Loan type
Currency
7 952
7 735
400
Nominal
value
2011
Nominal interest rate
Maturity
Installment
terms
Nominal
value
2012
Nibor + 3,375%
8,00 %
5,75 %
2012
2016
2015
balloon
balloon
bi-annually
95 345
9 000
400 000
192 500
12 000
T T S G roup A S A
Norsk Tillitsmann ASA 1)
Innovasjon Norge
Bond loan
NOK
Convertible bond NOK
Mortgage loan
NOK
Mortgage loan
NOK
8,00 %
2012
balloon
-
55 000
Mortgage loan
EUR
Euribor+1,275%
2012
quarterly
367
1 563
Mortgage loan
KRW
3,70 %
2014
quarterly
2 904
3 045
Mortgage loan
Mortgage loan
Mortgage loan
EUR
RMB
USD
China Bank basis + 1,5 %
2013
2013
2013
balloon
balloon
balloon
18 192
4 146
15 625
9 723
-
Total loans
129 954
689 456
Difference between nominal value and effective debt value related to convertible bond (ref. Note 15)
-20 015
-39 880
-
275 000
978
18 793
110 917
943 368
T T S M arine O strava s . r. o.
Unicredit Bank
T T S M arine K orea Ltd .
Pusan Bank
T T S M arine S hanghai C o Ltd
DNB Bank ASA Shanghai Branch
Drawndown facility, operations (ref. Note 13)
Overdraft facilities
Net book value of bond debt and other debt to financial institutions
1)
2)
Annual capitalization of drawdown cost of approximately 0,3 % is recognized as interest costs. The bond matured 24.5.2012.
Additional description of the Convertible Subordinated bond is available in Note 15. Booked value of the debt as per 31.12.2012 is TNOK 75 330.
Recognized nominal value of the Group’s non-current liabilities in various currencies are as follows: 2012
2011
NOK
104 345
934 500
EUR
1 345
20 380
USD
4 146
RMB
18 192
9 723
KRW
2 904
18 645
Total
130 932
983 248
See Note 13 related to assets pledged as security on non-current liabilities
Reference is made to Note 15 related to Convertible Callable Unsecured Subordinated Bond established in 2011.
Reference is made to Note 16 related to debt refinancing in 2012/2013.
Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under sections 2.8, 2.15, 3 and 4. C ovenants
TTS Group has undertaken to meet the following financial covenant requirements from Nordea:
The Group’s equity ratio shall at least be equal to 27.5 %. In addition a multiple of other standard default clauses related to the bond loan inclusive cross default
clauses are apparent. Nordea has accepted that the nominal value of the Subordinated Convertible Bond loan is included as part of the equity calculation.
Including the added back nominal value of the Subordinated Convertible Bond, the relevant covenant equity measure basis as per 31.12.2012 is MNOK 932,
which represents an equity ratio of 37.2 %. Thus, TTS Group meets the financial covenant requirement as per 31.12.2012.
82
TTS Group has the following credit facilities through its facilitators:
2012
2012
2011
2011
Limit
Drawn
Limit
Drawn
200 000
-22 727
119 000
-
Drawdown facility, operations
100 000
-
275 000
275 000
Guarantee limit for Group
600 000
265 900
903 000
888 000
Group cash pool overdraft facility
1)
1)
Cash balance in TTS Group cash pool arrangement; 31.12.2012; MNOK -22.7, 31.12.2011; MNOK 104.4.
As per 31.12.2012 all Norwegian companies (ref Note 9), as well as TTS Marine AB, TTS Port Equipment AB, TTS NMF GmbH and TTS Marine GmbH are
part of the Group cash pool arrangement with Nordea.
All companies within TTS Group utilize the guarantee limit. The guarantee limit cover payment guarantee, performance bonds, advance payment bonds
and tax guarantees. .
For the above mentioned facilities the following assets have been pledged as collateral to Nordea:
Assets pledged as collateral for secured debt:
D rillrig A S
Ability Drilling , bankruptcy estate
The major bank credit facility of TTS Group ASA is established with Nordea Norge ASA (Nordea) and DNB ASA (DNB).
2012
2011
556 734
533 536
Account/Group receivables
286 051
492 299
Inventory/Work in progress, including non-invoiced production
158 977
445 320
29 579
2 944
1 031 341
1 474 099
Shares in TTS Marine AB
Property
Assets pledged as collateral
Other assets pledged as securit y and gurantees :
TTS G roup AS A
TTS M arine S hanghai C o. Ltd.
TTS Group ASA has a loan to Innovasjon Norge for establishment of
TTS Marine Equipment (Dalian, Kina) Co. Ltd. The loan of MNOK 9.0 has
security in the shares of TTS Marine Equipment Co. Ltd.
TTS Marine AB has entered into bank guarantee agreements with Bohus
Banken (part of Den Danske Bank). As per 31.12.2012 total guarantees
were MSEK 44.0 (MNOK 36.6). The bank has received parent company
guarantee from TTS Group ASA of MNOK 150.
TTS Marine Shanghai Co. Ltd. has established a credit facility with DNB
Bank ASA, Shanghai Branch with a credit limit of MEUR 2.0 (MNOK 14.7)
which was drawn with MEUR 0.0 (MNOK 0.0) as per 31.12.2012. A credit
limit has also been established in RMB of MRMB 30.0 (MNOK 26.8) of
which MRMB 20.4 (MNOK 18.2) was drawn as per 31.12.2012. A credit
limit has also been established in USD of MUSD 1.0 (MNOK 5.6) of which
MUSD 0.7 (MNOK 4.0) was drawn as per 31.12.2012. The bank has
receieved parent company guarantee from TTS Group ASA of MEUR 1.0
(MNOK 7.3).
TTS M arine G mb H
TTS M arine O strava s . r . o
TTS M arine AB
As per 31.12.2012, MEUR 5.8 (MNOK 42.6) was drawn in guarantees.
This amount is included in the total guarantee drawn with Nordea of
MNOK 265.9 in the above table.
N euen f elder M aschinen f abrik G mb H
TTS NMF GmbH has outstanding bank guarantees in HSH Nordbank as per
31.12.2012, total guarantees were MEUR 4.0 (MNOK 29.0). In addition per
31.12.2012, MEUR 4.3 (MNOK 31.8) was drawn in guarantees in Nordea.
This amount is included in the total guarantee drawn with Nordea of
MNOK 265.9 in the above table.
TTS P ort E quipment AB
TTS Port Equipment AB has entered into bank guarantee agreements
with Bohus Banken (part of Den Danske Bank). As per 31.12.2012 total
guarantees submitted were MSEK 4.6 (MNOK 3.9 ). The bank has received
parent company guarantee from TTS Group ASA of MNOK 50.
TTS Marine Ostrava s.r.o has established a loan of MEUR 0.05 (MNOK
0.4) with UniCredit Bank Czech Republic a.s in the Czech Republic. The
company also has a credit limit of MCZK 5.0 (MNOK 1.5), of which MCZK 2.6
(MNOK 0.8) has been drawn as per 31.12.2012. The bank has security in
the company’s assets. In addition TTS Group ASA is co-debtor. Pledged
company assets are valued to MCZK 23.3 (MNOK 6.8) as per 31.12.2012
TTS M arine G mb H K orea C o. Ltd
TTS Marine Korea Co., Ltd has established a loan of MKRW 390 (MNOK
2.0) with Pusan Bank in Korea. The company also has a credit limit of
MKRW 3 000 (MNOK 15.7), of which MKRW 165 (MNOK 0.9) was drawn.
The bank has security in the company’s building. In addition TTS Group
ASA is co-debtor. The building is valued to MKRW 3 515 (MNOK 18.4).
TTS L i ftec Oy
TTS Liftec Oy has a bank guarantee limit of MEUR 3.0 (MNOK 22.0) with
Sampo Pankki Oyi (Sampo Bank) in Finland. As per 31.12.2012 this was
drawn with MEUR 0.0 (MNOK 0.0). The bank has a parent company
guarantee from TTS Group ASA of MEUR 3.3 (MNOK 24.2).
83
TTS GROUP
ANNUAL REPORT
Note 14 Net interest-bearing debt
20
12
Note 15 cont.
2012
2011
Bank deposits, cash etc. as of 31.12, exclusive cash pool
250 393
330 350
Cash pool agreement as of 31.12.
-22 727
104 400
-95 345
-192 500
Convertible Bond loan 1)
Other non-current interest bearing debt
-6 000
-35 363
Bond loan
-400 000
Other current interest bearing debt
-29 587
-355 385
Net interest-bearing (debt = - / deposits = +)
96 734
-548 498
1)
Convertible Bond loan included at nominal value as per 31.12.2012. Please find additional information relating to the Convertible Bond loan in Note 15.
2012
2013
2014
2015
2016
Subordinated convertible bond loan - nominal value
95 345
-
-
-
-95 345
Nominal interest cost
11 754
7 628
7 628
7 628
381
Calculated effective interest cost recognized in the accounts
13 654
13 479
14 589
15 910
827
P rincipal bondholders as o f 31 . 1 2 . 2 01 2 :
Bondholders that may acquire, or currently hold or control more than 2.0 % of the shares in TTS Group if bond is converted to shares is stated below.
Drawing facilities, security and covenants are described in Note 13.
Note 15
R epayment pro f ile and maturit y:
Bondholder
Convertible Bond loan
At the Extraordinary General Meeting on 10.1.2011 a subordinated convertible bond facility of MNOK 200 were approved.
The bond has a fixed interest of 8 % p.a. and final maturity date is 18.1.2016.
The bond holder has a consecutive right to convert their nominal bond value into shares in TTS Group ASA. Conversion price is fixed per share.
Conversion price is to be adjusted in several occurrences of which the major is;
i. consolidation or subdivisions of shares
Conversion rights
Share portion if fully converted
MP Pensjon PK
7 005 254
6,78 %
Akershus fylkeskommune - pensjonskasse
3 502 627
3,39 %
Odin Maritim
1 138 354
1,10 %
Holdberg Norden I+III
936 077
0,91 %
Pharos High Yield Verdipapirfond
788 091
0,76 %
Mertoun Capital AS
700 525
0,68 %
Bjørn Bakkevig
350 263
0,34 %
Terra Kombinasjon Verdipapirfond
350 263
0,34 %
Clearstream Banking S.A.
350 263
0,34 %
Other (15 bond holders)
ii. distribution of profits or reserves to shareholders by issue of new shares
Total
iii. dividend payments to shareholders
1 576 182
1,53 %
16 697 898
16,16 %
iv. issue or grant shareholders rights, options, warrants or other subscription rights
The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011. In the Extraordinary General Meeting
on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision in the Extraordinary General
Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share.
In the Extraordinary General Meeting on the 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the
shareholders. The creditor deadline under the Norwegian Public Limited Liability Act section 12-6 expired 17 October 2012, and TTS Group ASA received no
objections to the capital reduction. The capital reduction was registered at the Register of Business Enterprises 25.10.2012 after opening time of Oslo Stock
Exchange. The reduction amount, 365 MNOK, was disbursed to the shareholders at time of the registration. Disbursement per share was NOK 4.2147. Based
on the announced repayment of capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price was NOK 5.71, effective on
26.10.2012 which was the first date the shares traded ex capital repayment. The conversion price is fixed at NOK 5.71 per share on 31.12.2012.
TTS Group ASA has a call option to enforce a conversion of bond into shares. The call option will be effective as of 8.2.2014, given a weighted average
share price that exceeds approximately NOK 8.6 per share for more than 20 days within a 30 days period. TTS Group ASA also has a clean-up call option
which is effective given a prior 90 per cent of bond holders having redeemed or converted their bonds into shares.
The convertible bond contains both a liability and an equity component, which is separated and classified as financial liability and equity according to
IAS 32. Alternative interest calculation rate has been set to 14.25 % p.a. Effective interest is presented as part of finance cost.
Subordinated convertible bond loan - nominal value at drawdown
Converted debt to shares in 2011
Converted debt to shares in 2012 1)
Nominal debt value as per 31.12
2012
200 000
-7 500
-97 155
95 345
Draw down cost
-14 262
Derived equity portion from inherent put option at drawdown
-36 981
Equity derived from converted subordinated convertible bond during 2011
1 387
17 964
Effective interest cost less paid interest - 2011
9 977
1 900
Effective debt value
Note 16
Debt refinancing 2013
On 6.12.2012 TTS Group ASA entered into an agreement related to financing of the Group with Nordea as main bank. In addition,
TTS Group ASA established a bank agreement with DNB on 21.12.2012. The new agreement replaces existing credit- and bond facility.
The new facility is adjusted to the Group’s new financial requirements after the sale of the Energy division.
The credit facility in the new agreement is MNOK 900, and the agreement consists of;
- MNOK 100, 3 year term loan facility
- MNOK 200, 3 year multi-currency overdraft facility
- MNOK 600, 3 year guarantee facility
The agreement includes covenant requirements related to equity ratio (similar to prior agreement), and debt gearing (net interest-bearing
debt to EBITDA).
The existing securities and collateral which were established when TTS Group ASA entered into the agreement with the bank syndicate was
cancelled. New pledges have been established related to TTS Group ASA’s new bank agreements. The agreements include pledges of plant
and machinery, inventory, accounts receivables in the major Norwegian companies. In addition shares in TTS Marine AB have been pledged.
75 330
1)
MNOK 4.5 was converted in February and March 2012. MNOK 76.155 was converted in April, May and June 2012, while MNOK 16.5
were converted in July and August 2012. There has been no conversions during 4th quarter 2012, and no further conversions in 2013.
84
85
TTS GROUP
ANNUAL REPORT
Note 17 Share capital and shareholder information
20
12
Note 17 cont.
(Amounts in NOK)
Date
31.12.2012
31.12.2011
Number of shares
86 605 660
75 690 784
Nominal value
0.11
0.50
Share capital
9 526 623
37 845 392
The Extraordinary General Meeting in TTS Group ASA held on 15.8.2012 resolved to pay a dividend of NOK 1.56 per share and to reduce company capital
by MNOK 365 via repayment of capital to shareholders. The disbursement amount was NOK 4.2147 per share. The capital reduction was registered at the
Register of Business Enterprises on 25.10.2012 after opening time of Oslo Stock Exchange. The final allocation of the reduction amount between share
capital and share premium account, was NOK 33 776 207.40 and NOK 331 239 544.54, respectively. New nominal value per share is NOK 0.11, and the share
was registered with this nominal value from 26.10.2012. The new share capital is NOK 9 526 622.60.
D ividends paid and proposed :
Declared and paid during the year:
Dividends on ordinary shares:
Interim dividends for 2012: NOK 1.56 per share
2012
2011
134 646
-
Dividend for shareholders proposed for 2012, to be paid in 2013: NOK 1.00 per share.
Total dividend amount proposed: NOK 86 605 660.
T reasur y shares :
Treasury shares as of 1.1.2011
Purchase treasury shares in June 2012
Purchase treasury shares in July 2012
Treasury shares as of 25.10.2012 (face value NOK 0.50 per share)
Treasury shares as of 25.10.2012 (face value NOK 0.11 per share)
Number of shares
35 210
35 210
111 261
147 929
294 400
294 400
294 400
Share capital
(in NOK 1 000)
-17 605
-17 605
-55 631
-73 965
-147 200
-32 384
-32 384
A resolution was adapted at the Annual General Meeting on 31.5.2012 that gave the board the authorization to buy own shares up to a total of
MNOK 7.5 to cover the company`s employees share program. The resolution is valid until 30.6.2013. The company has in 2012 bought 259 190 shares
to a total consideration of MNOK 4.5.
P rincipal shareholders of T T S G roup A S A as o f 31. 12.2012:
Shareholder
Rasmussengruppen AS
Skeie Technology AS
Lesk AS
Stisk AS
Skandinaviska Enskilda Banken (nominee acc)
Barrus Capital AS (II)
Skagen Vekst
Skeie Capital Investemt AS
JPMCB re shb Swedish Funds Lending
Tamafe Holding AS
Odin Maritim
Mertoun Capital AS
Holberg Norden Verdipapirfondet
Itlution AS
Holberg Norge Verdipapirfondet
Verdipapirfondet DNB SMB
Euroclear Bank S.A. (nominee acc)
Skeie Consultants AS
Glastad Invest AS
Sal Oppenheim Jr & Cie (nominee acc)
Total, 20 largest shareholders
Total other
Total
86
Number of shares
11 512 506
8 929 879
5 306 058
5 306 058
5 170 678
3 455 000
3 222 553
2 531 263
2 481 591
2 160 735
1 900 000
1 650 000
1 579 161
1 475 261
1 284 423
1 142 895
958 670
953 033
751 660
731 936
62 503 360
24 102 300
Ownership
13,29 %
10,31 %
6,13 %
6,13 %
5,97 %
3,99 %
3,72 %
2,92 %
2,87 %
2,49 %
2,19 %
1,91 %
1,82 %
1,70 %
1,48 %
1,32 %
1,11 %
1,10 %
0,87 %
0,85 %
72,17 %
27,83 %
Voting share
13,29 %
10,31 %
6,13 %
6,13 %
5,97 %
3,99 %
3,72 %
2,92 %
2,87 %
2,49 %
2,19 %
1,91 %
1,82 %
1,70 %
1,48 %
1,32 %
1,11 %
1,10 %
0,87 %
0,85 %
72,17 %
27,83 %
86 605 660
100,00 %
100,00 %
S hares owned by Board members, Group executives and their relatives :
Board
Trym Skeie 1)
Bjarne Skeie 2)
Ole Henrik Askvik
31.12.2012
2 483 875
12 414 175
2 032
1 774
22.03.2013
2 483 875
12 414 175
2 032
1 774
Group Executives
230 000
230 000
Ivar K. Hanson
152 422
152 422
Arild Apelthun
60 000
60 000
1)
Owns 100 % of the shares in Tamafe Holding AS. Tamafe Holding AS owns shares in Skeie Capital Investment AS. 2)
Bjarne Skeie owns 20 % of the shares and 100 % of the voting shares in Skeie Technology AS and Skeie Consultants AS. Skeie Technology AS owns
shares in Skeie Capital Invesment AS.
At the Annual General Meeting on 31.5.2012 the Board was authorized to issue up to 8 000 000 shares in the event of acquisitions or mergers to develop
the company. The authority was valid until the ordinary general meeting for 2013, on 30.06.2013 at the latest. At the Annual General Meeting on 31.5.2012 the Board was authorized to issue up to 500 000 shares as part of an employee share owner program. The
authority is valid until 31.5.2014 at the latest. On 22.5.2012 450 000 new shares were issued as part of the program.
As of 31.12.2012 there has been issued 210 000 options of which can be exercised until 19.5.2013 with a strike price of NOK 3.33, from an authorisation
for a total of 360 000 options granted at the Annual General Meeting on 19.5.2011. Furthermore, there has been issued 360 000 options, of which can be
exercised until 31.5.2014 with a strike price of NOK 10.83. From an authorization for a total of 360 000 options granted at the Ordinary General Meeting on
31.5.2012. Strike price at the date of issue had been adjusted with paid dividend and repayment to shareholders.
Allocation o f options :
Name
Ivar K. Hanson
Arild Apelthun
Position
CEO
COO
CFO
Company
TTS Group ASA
TTS Group ASA
TTS Group ASA
Miao Reinlund
VP, Communications
Lennart Svensson
EVP, Port & Logistic
Total number of options to senior executives
TTS Group ASA
Number
of options
exercisable until
31.5.2013
60 000
30 000
60 000
60 000
210 000
Exercise
price
3,33
3,33
3,33
3,33
3,33
Number
of options
exercisable
until 19.5.2013
120 000
60 000
60 000
60 000
60 000
360 000
Exercise
price
10,83
10,83
10,83
10,83
10,83
Total
180 000
90 000
120 000
60 000
120 000
570 000
During 2012 300 000 share options with a strike price of NOK 5.91, allocated in 2010 were exercised from Senior Management. Further, in 2012 150 000
share options with strike price of NOK 9.10, allocated in 2011 were exercised from Senior Management.
In accordance with authorities granted by the Annual General Meeting in 2011 and 2012, TTS Group ASA has issued share option programes to Senior
Executive Group.
Through these programs, Senior Executive Group in the TTS Group has a future right to purchase a number of shares at an exercise price equal to the
marked rate on the date that the share option program was initiated.
The option premium is estimated on the date of allotment using the Black & Scholes option pricing model (BS). The options have a maximum term of
two years, with a possible first exercise after one year (50 percent), then 12.5 percent per quarter, giving a weighted average of 15 months maturity
which is employed in BS. The option premium is distributed over the option’s two-year term. Implied volatility is based on a combination of historic
data and assumptions. For options issued in 2010, 2011 and 2012 81 % volatility is used. For 2010 a risk-free interest rate of 2.23 % is used, 2.35 % for
2011 and 2.57 % for 2012. For 2012, MNOK 1.4 in option premium has been charged as expenses classified as salary in the profit and loss statement.
Comparable amount in 2011 were MNOK 1.1. Payroll tax is charged when share options are realized. Payroll tax related to realized options in 2012 have
been charged with MNOK 0.6.
S ubordinated convertible loan: On 10.1.2011 the Extraordinary General Meeting approved the issuance of a convertible bond loan of MNOK 200. The loan have been given an 8 %
coupon rate and reaches maturity 18.1.2016. On specific terms the Group has a call option that expires on 8.2.2014. Bondholders have continuous
conversion rights with an exercise price of NOK 5.71 per share.
The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged at 31.12.2011. At the Extraordinary General Meeting
on 15.8.2012 it was decided to pay an extraordinary dividend of NOK 1.56 per share. Subsequent to the dividend decision at the Extraordinary General
Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share. At the Extraordinary General Meeting on 15.8.2012 it was also
decided to reduce the company capital by MNOK 365 via repayment of capital to the shareholders. The creditor deadline under the Norwegian Public
Limited Liability Act section 12-6 expired on 17.10.2012, and TTS Group ASA received no objections to the capital reduction. The capital reduction was
87
TTS GROUP
ANNUAL REPORT
20
12
Note 19 Tax
Note 17 cont.
registered at the Register of Business Enterprises on 25.10.2012 after opening time of Oslo Stock Exchange. The reduction amount, MNOK 365, was
disbursed to the shareholders at time of the registration. Disbursement per share was NOK 4.2147 per share. Based on the announced repayment of
capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price was NOK 5.71, effective on 26.10.2012 which was the
first date the shares traded ex capital repayment.
The maximum number of shares to be issued at full conversion was 21 542 671, equivalent to a dilution effect of 28.87 %. During 2011 debt conversions
of MNOK 7.5 took place, representing 807 849 new shares. During 2012 debt conversions of MNOK 97.2 have taken place, representing 10 464 876 new
shares. Remaining shares that may be converted are 16 697 898, representing a dilution effect of 16 %. Please find additional information relating to
the subordinated convertible loan in Note 15.
Income tax expense :
Payable tax 1)
Not allocated tax losses
Change in deferred tax
Tax cost in the profit and loss statement
1)
Profit before tax
Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
Net profit attributable to ordinary equity holders of the parent from continuing operation
Net profit attributable to ordinary equity holders of the parent from a discontinued operation
Weighted average of issued shares excluding own shares
Earnings per share - continuing operation (NOK per share)
2012
32 259
418 162
83 107
0,39
5,03
2011
37 516
-14 621
75 126
0,50
-0,20
Expected income tax according to income tax rate in Norway (28%)
Prior period adjustment deferred taxes
Not allocated deferred tax losses
Profit from joint ventures
Effect of change in tax rate1)
Permanent differences
Tax rate outside Norway, different from 28%
Tax cost in the profit and loss statement
2012
32 259
418 162
83 107
633
18 523
102 262
0,32
4,09
2011
37 516
-14 621
75 126
630
10 367
86 123
0.44
-0,17
Share structure
Issued shares
Own shares
Unused share options that can be settled by issue
2012
86 605 660
294 400
570 000
2011
75 690 784
35 210
720 000
Conversion right related to convertible bond loan
16 697 898
20 734 821
Profit used to calculate diluted earnings per share - continuing operation
Profit used to calculate diluted earnings per share - discontinued operation
Average of ordinary issued shares excluding own shares
Adjustment for share options
Adjustment for average of coversion right in convertible bond
Average number of ordinary shares for calculation of diluted earnings per share
Diluted earnings per share - continuing operation (NOK per share)
2012
40 198
2011
70 577
11 255
373
8 903
-16 939
-3 647
9 126
-1 132
7 939
19 762
2 947
20 859
-12 344
1 836
33 060
1)
Tax rate in Sweden has with effect from 1.1.2013 changed from 26.3% to 22.0%. TTS has recognized the effect relating to the change in tax
rate. Total effect is MNOK 3.6
Deferred tax liabilities and deferred tax assets are netted if the Group has a legal right to offset deferred tax assets against deferred taxes in the
balance sheet, and if the deferred taxes are owed to the same tax authorities.
D iluted earnings per share
When calculating the diluted result per share, the weighted average of the number of ordinary issued shares in circulation is regulated for the
conversion effect of all potential shares that can cause dilution. The company has share options where a calculation is made to determine the number of shares which could have been acquired at market rate based on
the money value of the subscription rights of the outstanding share options. The number of shares calculated is compared to the number of shares that
would have been issued if all share options were exercised. The difference is attributed to the denominator in the fraction that issued the shares without
compensation.
The company has a convertible callable unsecured subordinated bond, see Note 15. The conversion price is fixed, and was NOK 5.71 per share as
per 31.12.2012. The remaining nominal convertible bond debt is MNOK 95.345, corresponding to 16 697 898 conversion rights based upon the fixed
conversion price as per 31.12.2012.
2011
30 469
29 332
-26 741
33 060
1) Payable tax is relating to the foreign subsidiaries’ taxable profit that cannot be offset against tax losses carryforward in Norway.
A reconciliation o f the e f f ective tax rate in TTS G roup AS A’ s countr y o f registration :
Note 18 Earnings per share
2012
17 196
8 903
-18 160
7 939
2012
2011
112 493
-44 668
67 825
158 961
-29 332
7 895
137 524
67 825
137 524
D e ferred tax assets :
Gross deferred tax assets 1)
- Not allocated tax losses in Norwegian companies
- Offset deferred taxes
- Deferred tax assets to be recovered after 12 months
- Deferred tax assets to be recovered within 12 months
Total recognized deferred tax assets (gross)
D e ferred tax liabilities :
Gross deferred tax
- Netted deferred taxes against deferred tax assets
- Deferred tax to be recovered after 12 months
- Deferred tax to be settled within 12 months
Total recognized deferred tax liabilities (gross)
Net deferred taxes in Group (asset=+, liability=-)
31 411
31 411
34 359
-7 895
26 464
31 411
36 414
26 464
111 060
Change in recognised deferred taxes
Recognized value 1.1.
Deferred tax charged in the income statement
Not allocated tax losses charged in the income statement
Change in deferred taxes related to convertible bond
Sale shares in subsidiaries
Deferred tax related to business combinations
Prior period adjustment of deferred taxes including foreign currency differences
Recognized value 31.12.
111 060
18 160
-8 903
5 030
-79 509
-8 607
-817
36 414
136 901
18 049
-29 332
-11 611
-2 947
111 060
S ubordinated convertible bond issue :
On 10.12011 the Extraordinary General Meeting approved the drawdown of a subordinated convertible bond loan of MNOK 200. The bondholders have
a continuous conversion right at a call price of NOK 5.71 per share as per 31.12.2012. Please find additional information relating to the bond loan in
Note 15.
88
89
TTS GROUP
ANNUAL REPORT
20
12
Note 21 Other operating expenses
Note 19 cont.
Change in deferred tax assets and deferred tax liabilities (excluding netting within the same tax regime):
1.1.2011
Changes 2011
31.12.2011
Changes 2012
31.12.2012
D e ferred tax ( asset = + / liabilit y = - )
Fixed assets
-12 019
-11 297
-23 316
21 637
-1 679
Current assets
9 500
16 191
25 691
-24 599
1 092
Other temporary differences / provisions
-11 935
-7 396
-19 331
-1 026
-20 357
Impairment deferred tax assets
-88 500
-88 500
88 500
Not allocated tax losses
-29 332
-29 332
-9 531
-38 863
Tax losses to carry forward
239 855
17 604
257 459
-155 201
102 258
Deferred taxes related to convertible bond
-11 611
-11 611
5 574
-6 037
Net deferred tax (asset = + / liability = -)
136 901
-25 841
111 060
-74 646
36 414
Deferred tax asset relating to unused tax losses have been recognized as deferred tax asset to the extent that it is probable that future profits will be
available. Unused tax losses are mainly related to losses in Norwegian companies, and have indefinite expiry. Gross deferred tax asset related to tax
losses in Norwegian companies is MNOK 90.8, of these MNOK 37.2 is not recognized. The Group has received and is expecting orders to yield taxable profit in the years to come. Taxable income may be counterbalanced against the
deficit carried forward, enabling utilization of the tax advantage. An assessment has been made based on IFRS’ requirements regarding reversion of
the tax losses taken into consideration the expected tax profit. Tax losses not expected to be utilized within 6 years are not recognized as deferred
tax asset.
The following criteria have been applied to assess the likelihood of taxable income against which unused tax losses may be utilized: - the Group has sufficient temporary differences
- the entities will have taxable profits before unused tax losses expire
- tax losses are induced by specific identifiable causes
Tax payable in the balance sheet
Tax payable
Prepaid tax
Total tax payable in balance sheet at year end
2012
2011
17 196
-15 055
2 141
30 469
-19 327
11 142
Note 20 Other current liabilities
Total other operating expenses discontinued operations
2012
46 746
18 049
37 145
28 696
76 880
207 516
2011
44 218
18 573
35 529
68 548
40 819
207 687
-
60 498
Note 22 Related parties
TTS Group ASA is the ultimate parent based and listed in Norway.
There were no transactions other than dividends paid and repayment of capital, between the Group and the shareholders during the financial year
2012 (2011: MNOK 0).
The subsidiaries (ref Note 9), Investments in joint ventures (ref Note 10), members of the Board (ref Note 4) and members of the Senior Executive
Group are considered as related parties. Transactions with subsidiaries have been eliminated in the consolidation process.
The Group has carried out various transactions with underlying companies and joint ventures. All the transactions have been carried out as part of
the ordinary operations and at arm’s length prices. For the year ended 31 December 2012, the Group has not recorded any impairment of receivables
relating to the amounts owed by related parties (2011: MNOK 0). This assessment is undertaken each financial year through examining the financial
position of the related party and the market in which the related party operates.
Prior to the divestment of TTS Energy AS and the Drilling business, TTS Offshore Handling Equipment AS (OHE) was established. Assets and liabilities
which were related to the nature of the OHE business were carried forward at booked values within the Group. As such the divestment had no
impact on the financial position and profit for the period.
TTS Group has a transaction company, TTS Hua Hai AB, where some of the turnover from Joint Venture companies to external customers has been
recorded. In 2012 there has been an ongoing change to transfer this turnover from the transaction company to Joint Venture company. This change
will continue into 2013, until ongoing contracts in the transaction company are finished and delivered. The amount of transactions between TTS
Group and related parties will after this change be at a lower level than previous years. The transfer of turnover affects the turnover reported in
TTS Group. Not other effects are expected in net profit or in balance sheet relating to the transfer of the turnover from TTS Hua Hai AB to the Joint
Venture company.
TTS Group has invested MUSD 5 (MNOK 29) in Sigma Drilling AS (Sigma) as Sigma has contracted a drillship at STX Offshore and Shipbuilding Co.
Ltd in Korea. The Skeie Group, owning approximately 30 % of the shares in TTS Group ASA, has invested separately in Sigma. TTS Group will produce
and deliver offshore cranes to the drillship. (Amounts in NOK 1000)
Provisions for completed projects (ref Note 24)
Guarantee provisions (ref Note 24)
Other liability provisions (ref Note 24)
Foreign currency contracts (ref Note 23)
Total Other current liabilities
The best estimate for maturity date for completed projects is within 12 months from balance sheet date.
Premises and office expenses
Computer expenses
Marketing and travel expenses
Consultancy and external services
Other expenses
Total other operating expenses
2012
233 484
45 242
10 624
23 180
192 555
505 085
2011
186 816
83 145
15 483
20 710
191 738
497 892
2012
2011
8 853
5 212
116 966
249 825
28 901
98 472
Sales:
Joint ventures
Cost of sales:
Joint ventures
Balance sheet items related to purchase and sale o f goods and services :
Receivables
Joint ventures
Liabilities
Joint ventures
214
84 539
Information about the Board and Senior Executive Group’s shares and options is stated in Note 17.
In addition to the above mentioned transactions and Note 17, there are no further agreements or commitments between the Group and the related
parties.
90
91
TTS GROUP
ANNUAL REPORT
Note 23 Derivatives
Note 25 Financial items and foreign currency gains/losses
2012
2011
Market-to-market value:
Assets
Liabilities
Assets
Forward currency contracts - fair value hedging
22 130
9 490
23 705
Forward currency contracts to fair value in the result
1 050
-2 995
Forward currency contracts - total
23 180
9 490
20 710
Fair value of hedging instruments and derivatives are classified as current assets or current liabilities.
Matures:
Q1 2013
Q2 2013
Q3 2013
Q4 2013
2014
2015 and later
Total
Liabilities
110 161
-1 610
108 551
Net market value
3 207
2 996
2 004
513
4 690
280
13 690
Other interest income
Net other financial income and expenses
Interest on bond loan
Effective interest on convertible bond (ref Note 15)
Interest on debt to financial institutions
Total financial items and foreign currency gains/losses continued operations
Total financial items and foreign currency gains/losses discontinued operations
2011
10 223
-33 307
-15 189
-13 654
-13 745
-65 672
2010
3 662
19 109
-26 762
-19 239
-50 364
-73 594
-
-3 333
20
12
Net other financial income and expenses primarily consist of foreign currency gains and losses as well as transaction costs from banks and
other financial institutions.
Forward currenc y contracts : The nominal value of the outstanding forward currency contracts on 31.12.2012 is MNOK 1 595 compared to MNOK 3 121 in 2011.
Derivatives are on principal recognized at fair value on the date of contract signing. The value is adjusted to fair value at the end of each balance sheet
date. The value is set to observable market price. See note 27
Note 26 Currency effects on equity
TTS Group enters into hedging contracts that qualifies as fair value hedges. In addition to this, the Group may have hedging contracts that no longer
meet the criteria for hedge accounting as the underlying delivery contract has been cancelled. These are recognized at fair value in the financial
statement.
Translation differences consist of all currency differences that arise from translations of the financial statements of the foreign entities
that are not an integrated part of the operation of the company.
Changes to fair value that meet the criteria of an effective fair value hedge is recognized in the financial statement with the change in fair value of the
assets or liabilities that are being hedged.
Per 1.1.2011
The ineffective portion of the recognized hedge value amounts to TNOK 589 and is posted together with the changes in value of derivatives. The asset or liability being hedged is contractual income or cost related to production cost. Hedged assets or liabilities are recognized in the balance
sheet at actual value. The hedged asset or liability represents, among other things, the part of the contractual income or cost that has not been invoiced
on the balance sheet date, or where invoices have not been received from the supplier. The asset or liability is included in Other current assets or Other
current liabilities respectively. Additionally the hedged asset or liability for each contract is represented through bank, client or supplier.
Equity currency differences 2011:
Group company
Joint ventures
Net changes 2011
For additional information on foreign currency and appurtenant risks, please refer to Accounting principles, and see section 2.10 and 3.1.
Note 24 Provisions for liabilities
1.1.2011
Provisions for the year
Utilized provisions during the year
31.12.2011
Completed
projects 1)
139 774
98 608
-51 566
186 816
Guarantees
63 149
42 009
-22 013
83 145
Other
38 012
-18 609
-3 920
15 483
Total
240 936
122 007
-77 499
285 444
1.1.2012
Acquisition
Divestment
Provisions for the year
Utilized provisions during the year
Currency exchange deviation
31.12.2012
Completed
projects 1)
186 816
19 488
-1 173
77 449
-46 362
-2 734
233 484
Guarantees
83 145
4 380
-21 609
43 346
-62 589
-1 431
45 242
Other
15 483
-10 071
50 238
-44 605
-421
10 624
Total
285 444
23 868
-32 853
171 033
-153 556
-4 586
289 350
Total equity currency effects per 31.12.2011
12 844
(16 246)
(16 246)
(3 402)
Equity currency differences 2012:
Group company
Joint ventures
Net changes 2012
(10 586)
(10 708)
(21 294)
Total equity currency effects per 31.12.2012
(24 696)
Classification in the balance
2012
2011
Presented as other current liabilities, see note 20
289 350
285 444
1)
Liabilities related to supplementary work and other demands from clients
92
93
TTS GROUP
ANNUAL REPORT
Note 27
Financial risk management
20
12
Note 27 cont.
Financial assets and liabilities are described in Accounting Principles, under sections 2.8, 2.10, 2.12, 2.13, 2.14 and 2.16.
Risks associated with the underlying estimates of the recognized values and financial risk management is described in Accounting Principles, ref section 3.
Assets measured at fair value
2012
Level 1
Level 2
Level 3
2011
Level 1
Level 2
Level 3
Shares held for sale
28 895
-
-
28 895
222
-
-
222
Foreign exchange contracts - hedging
22 130
-
22 130
-
23 705
-
23 705
-
1 050
-
1 050
-
-2 995
-
-2 995
-
2012
Level 1
Level 2
Level 3
2011
Level 1
Level 2
Level 3
9 490
-
9 490
-
110 161
-
110 161
-
-
-
-
-
-1 610
-
-1 610
-
Foreign exchange contracts - non-hedged
C lassi f ication o f financial assets
2012
Derivatives
related to
hedging
purposes
-
Financial assets:
Shares held for sale
Other receivables
Liabilities measured at fair value
2011
Loans and
receivables
Assets
available
for sale
-
28 895
-
Total
Derivatives
related to
hedging
purposes
28 895
-
-
Foreign exchange contracts - hedging
Loans and
receivables
Assets
available
for sale
Total
-
222
-
222
-
Foreign exchange contracts - non-hedged
Financial current assets:
Trade receivables
368 706
368 706
468 875
468 875
Other current receivables
87 055
87 055
213 084
213 084
Acquired, non-invoiced production
667 486
667 486
317 756
317 756
Derivatives1)
23 180
23 180
20 710
20 710
Prepayment to suppliers
49 306
49 306
146 426
146 426
Cash and cash equivalents
227 666
227 666
434 750
434 750
Total financial assets
23 180 1 400 219
28 895 1 452 294
20 710 1 580 891
222 1 601 823
The Group has no financial assets classified under hold to maturity or available for sale on 31.12.2011 or on 31.12.2012. Note 28 Business combinations
A cquistions in 2012
Acquistion of Neuenfelder Maschinenfabrik GmbH
On 20 August 2012 TTS Group ASA acquired 100 % of the voting shares of Neuenfelder Maschinenfabrik GmbH (”NMF”), an unlisted company based in Hamburg,
Germany. NMF supplies all types of ships cranes for the segment of offshore, super heavy lift, heavy lift, multipurpose, container and bulk. NMF designs, develops
and assembly cranes for the marine sector. The Group acquired NMF because the product range of NMF will complement and strengthen TTS’ market position for
marine and offshore cranes.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities in NMF as on the date of acquisition were:
C lassi f ication o f f inancial liabilities Fair value recognised on acquisition
(20 August 2012)
2012
Derivatives
related to
hedging
purposes
2011
Other
financial
liabilities
Total
Derivatives
related to hedging
purposes
Assets:
Other
financial
liabilities
Total
Other intangible assets (Note 7)
28 991
Machinery and vehicles (Note 6)
25 939
Non-current financial liabilities
Furniture, office-, and computer equipment (Note 6)
Interest-bearing non-current debt
Inventories
-
81 330
81 330
-
187 984
187 984
4 179
242 204
Accounts receivables
58 174
Current financial liabilites
Other current assets
25 785
First year installment of non-current debt
-
3 000
3 000
-
461 593
461 593
10 011
Interest-bearing current liabilities
-
26 587
26 587
-
293 792
293 792
Total identifiable assets
-
454 589
454 589
-
616 516
616 516
Cost related to facilities under construction
-
95 154
95 154
-
98 843
98 843
9 490
-
9 490
108 551
-
108 551
-
950 842
950 842
-
894 709
894 709
9 490
1 611 502
1 620 992
108 551
2 553 437
2 661 988
Derivatives 1)
Accounts payable and other financial debt
Total financial liabilities
395 283
Liabilities:
Deferred tax liability
Other provisions
8 607
120 925
Non-current liabilities to affiliated companies (Note 22)
69 454
Debt to credit institutions
26 457
Fair value of financial liabilities:
The Group’s derivatives consist of forward currency contracts. Fair value of forward currency contracts is determined by utilizing market-to-market rate
on the balance-sheet date as stated by the Group’s bank. Fair value relating to non-current debt is considered approximately equal to carrying value, as
loans are given at market terms and with a floating rate.
Total identifiable liabilities
494 643
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
Total identifiable net assets at fair value
-99 360
1)
94
77 753
183 363
8 084
Goodwill arising on acquisition (Note 7)
157 761
Purchase consideration transferred
58 401
95
TTS GROUP
ANNUAL REPORT
20
12
Note 29 Divestments
Note 28 cont.
The fair value of the trade receivables amounts to MNOK 58.2. The gross amount of trade receivables is approximate MNOK 58.2. However, none of the trade
receivables have been impaired and it is expected that the full contractual amounts can be collected.
Prior to the acquisition, a provision of approximate MNOK 86.8 was recognized as provision for onerous contracts.
The enterprise value not allocated to identified assets and liabilities is estimated at MNOK 159.6 and is classified as goodwill. Goodwill is mainly related to ”know
how” and expected synergies related to complementing and strengthening TTS’ market position arising from the acquisition. None of the goodwill recognized is
expected to be deductible for income tax purposes. Customer portfolio, order backlog and technology of approximate MNOK 28.6 have been recognized as intangible assets as these assets meet the criteria for
recognition as intangible assets under IAS 38. Please see Note 7 for more details of the classification of intangible assets. From the date of acquisition, NMF has contributed MNOK 254 (MEUR 34.5) of revenue and MNOK -7.1 (MEUR -1) to the profit before tax from continuing
operations of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been MNOK 700 (MEUR
95.0) and the profit before tax from continuing operations for the Group would have been MNOK -22.0 (MEUR -3). In determining these amounts, management
have assumed that the fair value adjustments, determined provisionally, that arose on the acquisition date would have been the same if the acquisition had
occurred on 1.1.2012
Purchase consideration
Shares issued at fair value
20 August 2012
(NOK 1000)
58 401
Contingent consideration liability
Total consideration
58 401
Ananlysis of cash flows on acquistion:
Transaction costs of the acquistion (included in cash flows from investment activities)
-1 018
Net cash acquired with the subsidiary (included in cash flows from investment activities)
10 011
Net cash paid for sahres including net interest bearing debt (included in cash flows from investment activities)
Net cash flow on acquistion
-154 312
-145 319
The purchase price expenses are marginal. Some external advisors have been involved. TTS Group has mainly used internal resources. External expenses are estimated
at approximate MNOK 1 (see above) which have been charged to profit and loss. Internal expenses have been charged to profit and loss on a running base.
The acquisition of NMF was recognized in the Group accounts for the first time in 3rd quarter 2012. At that time it was noted that the opening balance and the
purchase price allocation was based on temporary calculation and based on unaudited internal valuations. Due to new information about issues existing at the
date of acquisition the values have changed. The change is relating to estimated profit from ongoing construction contracts. The change increases the goodwill
arising from the acquisition with MNOK 55.
D ivestments in 2 01 2
On 6.6.2012 TTS Group ASA finalized the sale of its drilling equipment business, a part of TTS Energy division, and relevant subsidiaries, to Cameron
International Corporation (NYSE: CAM) for MUSD 270, plus a turnover based earn-out model for a three-year period. Offshore Handling (cranes and
winches), which was also a part of the TTS Energy division, was not included in the divestment.
The sale was announced on 18.4.2012 and on 4.6.2012 an information memorandum relating to the sale of the drilling equipment business to Cameron
International Corp. was approved by the Board of Directors. The transaction before earn-out was at that point estimated to give the Group a profit of
approximately MNOK 300 and was included in the result reported on 30.6.2012. On 27.9.2012 closing of the transaction was concluded with Cameron
International Corp. The gain from the sale increased to MNOK 420 before earn-out and the increase from 2nd quarter was included in 3rd quarter 2012.
The closing had limited cash effect.
Due to the divestment of the Energy division the consolidated statement of comprehensive income for 2011 is reclassified to reflect continued business.
The consolidated cash flow statement for 2011 is not reclassified. The prior period reporting on cash flows does not allow to split the cash flow in
continued and discontinued business for previous periods.
The transaction included 307 employees.
The Profit and Loss account related to the drilling equipment business are included in the Profit after tax for the period from discontinued operations
with the following figures:
2012
(YTD 6 June 2012)
2011
Project revenue (Note 2)
558 717
965 397
Cost of sales (Note 3)
353 602
620 120
Personnel costs (Note 4 and 5)
Profit and loss accounts discontinued business:
158 731
257 150
Other operating expenses (Note 4 and 21)
40 509
67 217
Pro forma adjustments related to Group fee
-6 134
-6 720
12 009
27 630
Operating profit / loss before depreciation (EBITDA)
Depreciation / impairment (Note 6 and 7)
15 372
32 666
Operating profit / loss (EBIT)
-3 363
-5 036
Net financial items (Note 25)
-9 035
-3 333
-12 398
-8 369
9 973
-6 252
Profit after tax
-2 425
-14 621
Gain sale of Energy division
420 587
-
-
-
Profit before income tax
Income tax expenses (Note 19)
Tax on sale of Energy division
Net gain after tax sale of Energy division
420 587
-
Net profit from discontinued operations
(2 425)
(14 621)
Net result from discontinued operations
418 162
(14 621)
5,03
-0,20
4,09
-0,17
A hold-back amount of MUSD 15 is not settled by year end 2012, of which MUSD 7.5 is not included in the net result from discontinued
operations. The hold-back amount is a part of the consideration of MUSD 270 for the sale of Energy division. The three year earn-out model is
based on the revenue exceeding a hurdle amount in each of the three years. First assessment will be in 2nd quarter 2013. Due to uncertainty of
the earn-out, no income from the earn-out has been included in the net result from discontinued operations at year end 2012.
96
97
TTS GROUP
ANNUAL REPORT
20
12
Note 29 cont.
Financial position - Energy division1):
31.12.2011
Assets:
Intangible assets (Note 7)
Fixed assets (Note 6)
Investments in joint ventures (Note 10)
780 435
38 443
3 914
Inventories
226 820
Accounts receivables
189 172
Other current assets
44 325
Total assets
-76 628
1 206 481
Liabilities:
Debt to credit institutions
130 244
109 352
Income tax payable and other taxes payable
25 745
177 607
83 034
Total liabilities
525 982
Net assets directly associated with disposal group
680 499
1)
Numbers represent the group values for the divested Energy division in the consolidated financial position at year end 2011.
Note 30 Contingent liabilities
Regular claims are made against the Group as a result of its ordinary operations. These claims are part of ordinary business and are generally
covered by provisions for guarantee costs and provisions for completed contracts, ref. note 24. TTS Group is in the opinion that already recognized
provisions will cover regular claims resulting from ordinary business.
There are no other on-going cases that are expected to lead to significant commitments for the TTS Group.
Note 31 Subsequent events
No significant events regarding TTS Group ASA. Events regarding TTS Group is as follows:
On 5.2.2013 TTS Group ASA reported that it has, through its subsidiary TTS Offshore Handling Equipment AS, signed a contract worth approximately
MNOK 65. The contract is with Kleven Verft AS in Norway and concerns delivery of an active heave compensated subsea crane for an offshore
construction vessel for REM Offshore ASA. The delivery will take place in the 2nd quarter of 2014.
On 8.2.2013 TTS Group ASA reported that it has, through its subsidiary TTS Marine AB, signed a contract for delivery of equipment worth
approximately MNOK 75. The contract is signed with the Chinese shipyard Xiamen Shipbuilding Industry Co., Ltd and relate to car carriers to be
built for the Norwegian ship-owner Höegh Autoliners.
98
99
TTS GROUP
ANNUAL REPORT
20
12
Profit and loss accounts
TTS group ASA
Notes
NG A A P
NG A A P
2012
2011
O perating income
Group service fee from TTS subsidiaries
16
24 090
28 138
24 090
28 138
24 249
367
16 289
22 634
303
16 992
40 905
39 929
-16 815
-11 791
404 167
28 607
4 780
-5 416
-39 866
-23 329
103 353
48 856
1 017
-11 634
-76 859
1 032
Net financial items
368 943
65 765
Profit before tax
Tax
352 128
61
53 974
5 134
352 067
48 840
-86 606
-
-265 461
-48 840
Total operating income
O perating costs
Personnel costs etc.
Depreciation on tangible fixed assets
Other operating costs
1, 2
3
1, 15
Total operating costs
Operating profit
Financial income and expenses
Income from investments in subsidiaries
Interest received from group companies
Interest expenses to group companies
Other interest expenses
Other financial expenses
17
17
17
17
17
17
12
Profit for the year
Provision dividend
Transferred to other equity
100
11
101
20
12
TTS GROUP
ANNUAL REPORT
Balance sheet
TTS group ASA
ASSETS
EQ UITY AND LIABILITIES
Notes
NGAAP
NGAAP
2012
2011
12
Total intangible assets
33 035
28 005
33 035
28 005
F IXE D A S S E T S
3
166
203
Furniture, office and computer equipment
3
3 599
1 538
3 765
1 741
Total fixed assets
Financial f ixed assets
5, 8
626 093
1 024 821
5
8 683
8 683
6, 8
204 201
174 021
Investments in shares and other financial instruments
4
28 895
222
Pension assets
2
-
186
Loans to companies in the Group
Total financial fixed assets
867 872
1 207 933
904 672
1 237 679
Current assets
CURRENT RECEIVABLES
Trade debtors
Intra-group accounts receivable
Other receivables to Joint Ventures
Other receivables
Other intra-group receivables
NG A A P
NG A A P
2012
2011
9 527
-32
149 377
158 872
37 845
-18
384 891
422 718
Other equity capital
Total retained earnings
324 591
324 591
208 598
208 598
Total equity capital
483 462
631 316
2
7, 9
7, 8
1 045
75 330
6 000
82 375
152 620
9 000
161 620
7
7, 8
8, 13
3 000
22 727
3 098
4 845
1 567
86 606
304 513
18 648
445 004
400 000
203 000
3 873
2 099
1 432
2 932
11 976
625 312
527 379
786 932
1 010 841
1 418 248
Paid up equit y capital
IN TAN G I B L E A S S E T S
Shares in subsidiaries
Notes
Equity
Fixed assets
Deferred tax assets
34 682
-
6, 8, 16
11 631
12 969
6, 16
4 167
4 589
6
11 635
4 974
6, 8
40 907
43 795
103 022
66 327
3 147
114 242
106 168
180 569
1 010 841
1 418 248
Total current receivables
Share capital
Treasury shares
Premium account
Total paid up equity capital
11
11
Retained earnings
Liabilities
Other long-term liabilities
Pension liabilities
Convertible subordinated bond loan
Liabilities to financial institutions
Total other non-current liabilities
CU RRE N T LI ABI LI TI E S
Bond loan
Liabilities to financial institutions
Overdraft
Trade payables
Intra-group trade payables
Social security and employees` tax deduction
Provision for dividends
Other intra-group liabilities
16
11
13
14
Total liabilities
Bank deposits, cash in hand etc.
Total assets
13
Trym Skeie
Ole Henrig Askvik
board MEMBER
102
Kjerstin Fyllingen
board MEMBER
Anne Breive
board MEMBER
board MEMBER
Bjarne Skeie
board MEMBER
Jan Magne Galåen
board MEMBER
CEO & President
103
TTS GROUP
ANNUAL REPORT
Cashflow statement
Equity statement
TTS group ASA
TTS group ASA
20
12
2012
2011
352 128
53 974
-404 167
-103 353
Cash flow from operating activities
Net profit before tax
Income from investments in subsidiaries
Paid tax
-60
-
Depreciation
367
303
1 422
-
16 675
39 637
-
-3 393
1 231
1 032
-1 850
40 836
-34 255
29 036
-28 673
-
Option cost without cash effect
Net interest costs
Foreign currency gains/losses on intra-group loans
Difference between pension charges and payments to/from pension scheme
Other receivables and other short term liabilities
Net cash flow from operating activities
Cashflow from investments
Disbursements on acquisitions of shares and other financial instruments
Acquisition of subsidiaries
-130 318
-
-60 100
-120 172
1 218 074
-
6 055
6 402
-2 391
-4 227
Proceedes from and repayment long-term intra-group loans
-30 180
47 777
Net change cash pool facility
175 850
64 779
-
167 600
1 148 317
162 159
-97 155
-
Additional equity into subsidiaries
Proceedes from sale shares in subsidiaries
Net contribution received from subsidiaries
Disbursements on acquisitions of tangible fixed assets
Received dividends from subsidiaries
Net cashflow from investments
Cashflow from financing
Repayment of convertible subordinated bond loan
Proceedes from liabilities to financial institutions
-
186 000
Repayment of liabilities to financial institutions
-603 000
-156 590
Repayment debt related to Energy before sale
-130 000
-
22 727
-81 330
Disbursements of dividends
-134 646
-
-363 776
-
-4 478
-
-349
-
Interest costs
-14 774
-39 637
Paid in equity capital
100 293
9 365
-1 225 158
-82 192
Net change in cash and cash equivalents
-111 096
109 003
Cash and cash equivalents (opening balance)
114 242
5 239
3 146
114 242
3 147
114 242
177 273
119 000
Net change overdraft facility
Purchase treasury shares
Costs related to changes in convertibel debt and repayment of capital
Net cashflow from financing
Share
capital
Treasury
shares
Effect of change in principles
37 316
-
Treasury shares
New issues
New issues expenses
Option schemes
Currency difference concerning equity method
Dividends
Capital reduction (repayment)
Net profit for the year
Share
premium
reserve
Other
equity
Total
-18
-
376 057 208 221
- -70 098
621 576
-70 098
37 316
530
-
-18
-
376 057 138 123
8 969
-134
21 634
48 840
551 478
9 499
-134
21 634
48 840
37 845
-18
384 891 208 598
631 316
Treasury shares
New issues
New issues expenses
Option schemes
Currency difference concerning equity method
Dividend paid
Provision for dividends
Net profit for the year
37 845
5 457
-33 775
-
-18
-130
116
-
384 891 208 598
-4 348
94 836
-349
2 575
- -12 933
- -134 646
- -86 606
-330 001
-116
- 352 067
631 316
-4 478
100 293
-349
2 575
-12 933
-134 646
-86 606
-363 776
352 067
9 527
-32
149 377 324 591
483 462
Effects of exchange-rate fluctuations on cash and cash equivalents
Cash and cash equivalents (closing balance)
This consists of:
Bank and cash pool deposits
Unused overdraft facility
104
105
TTS GROUP
ANNUAL REPORT
20
12
Accounting principles
TTS group ASA
The financial statements have been prepared in accordance with The
Norwegian Accounting Act and generally accepted accounting principles
in Norway.
Subsidiaries, associated companies
Subsidiaries and associates are valuated at cost, less any impairment
losses. Impairment losses are reversed if the reason for the impairment
loss disappears in a later period. Dividends, contributions and other
distributions from subsidiaries are recognized as financial income, unless
distributions exceed withheld profit after the acquisition date. Any excess
amount represents repayment of invested capital and is recognized as
deduction of cost price. In previous years subsidiaries and associates was
valued according to the equity method in the annual accounts. Profit and
loss statement and balance sheet for 2011 is changed accordingly to reflect
the change in principle, see note 5 for further information.
discount rates, projected salaries, the amount of benefits from the
National Insurance Scheme, future return on pension funds, and actuarial
calculations relating to mortality rate, voluntary retirement, etc. Changes
in the pension obligations due to changes in pension plans are recognized
over the estimated average remaining service period. The accumulated
effect of changes in estimates and in financial and actuarial assumptions
(actuarial gains and losses) that is less than 10 % of the higher of defined
benefit pension obligations and pension plan assets at the beginning of the
year is not recognized. When the accumulated effect is above 10 % limit in
the beginning of the financial period, the excess amount is recognized in
the income statement over the estimated average remaining service period.
The net pension cost for the period is classified as salaries and personnel
costs. Social security fees are expensed on basis of pension premiums paid
for pension schemes and accrued changes in net pension commitment.
Taxes
Operating income
Operating income includes income on delivered products and services
granted over the year. The income is booked once the delivery of services
has taken place and most of the risk and return has been transferred.
Classification and valuation of balance sheet items
Current assets and short term liabilities include items which fall due within
one year, and items related to the operating cycle. Other balance sheet
items are classified as fixed assets / long term liabilities.
Current assets are valued at the lower of cost and fair value. Short term
liabilities are posted in the balance sheet at the nominal value at the time
of initial establishment.
Fixed assets are valued at cost, less depreciation and impairment losses.
Long term liabilities are posted in the balance sheet at the nominal value
at the time of the initial establishment.
Accounts receivables and other receivables
Account receivables and other current receivables are recorded in the
balance sheet at their nominal value less provision for doubtful accounts.
Provisions for doubtful accounts are made on the basis of an individual
assessment of the different receivables. For the remaining receivables, a
general provision is estimated based on expected loss.
Short term investments
Short term investments (stocks and shares seen as assets) are valued at the
lower of acquisition cost and fair value at the balance sheet date. Dividends
and other distributions are recognized as other financial income.
The tax expense in the profit and loss accounts consists of the current tax
payable and changes to deferred tax. Deferred tax/tax assets are calculated
on all differences between the book value and tax value of assets and
liabilities. Deferred tax is calculated as 28 % of temporary differences
and the tax effect of tax losses carried forward. Tax-increasing and taxreducing temporary differences which are reversed, or could be reversed,
during the same period are offset against each other and recorded as a net
sum. Temporary changes are only assessed for the Norwegian companies.
Deferred tax assets are recorded in the balance sheet when it is more likely
than not that tax assets will be utilized.
Taxes payable and deferred taxes are recognized directly in equity to the
extent that they relate to equity transactions.
Foreign currency
Transactions in foreign currency are translated at the rate applicable on
the transaction date. Monetary items in a foreign currency are translated
into NOK using the exchange rate applicable on the balance sheet date.
Non-monetary items that are measured at their historical price expressed
in foreign currency are translated into NOK using the exchange rate
applicable on the transaction date. Non-monetary items that are measured
at their fair value expressed in a foreign currency are translated at the
exchange rate applicable on the balance sheet date.
Changes to exchange rates are recognized in the income statements as
they occur during the accounting period.
Currency rates on year end which is basis for revaluation of balance sheet
items are:
EUR
= 7.3410
SEK
= 0.8549
USD
= 5.5664
= 0.8935
CNY
SGD
= 4.5565
Property, plant and equipment
Property, plant and equipment is capitalized and depreciated linearly over
the estimated useful life the asset’s life span. Costs for maintenance are
expensed as incurred, whereas costs for improving and upgrading property,
plant and equipment are added to the acquisition cost and depreciated
with the related asset. If carrying value of non-current asset exceeds the
estimated recoverable amount, the asset is written down to the recoverable
amount. The recoverable amount is greater of the net value and value in
use. In assessing value in use, the discounted estimated future cash flows
from the asset are discounted are used.
Pensions
The company has a defined benefit pension plan. Defined benefit plans
are valued at the present value of accrued future pension benefits at the
balance sheet date. Pension plan assets are valued at their fair value.
The pension expenses and pension commitments are calculated on a
straight-line earning profile basis, based on assumptions relating to
106
Cash flow statement
The cash flow statement is presented using the indirect method. Cash and
cash equivalents includes cash, bank deposits and other short term, highly
liquid investments with maturities of three months or less.
Cash and cash equivalents consist of cash and bank deposits. Bank deposits
in foreign currencies are translated into NOK using the exchange rate
on the balance sheet date. Withdrawals from the bank overdraft facility
constitute part of current liabilities.
Use of estimates
The management has used estimates and assumptions that have affected
assets, liabilities, incomes, expenses and information on potential liabilities
in accordance with generally accepted accounting principles in Norway.
107
TTS GROUP
ANNUAL REPORT
Notes
Note 1 cont.
Note 1 Personnel costs, number of employees, remunerations, loans to employees etc.
Since 1998, a share option program has been active for the Group management of TTS; the goal being that the Group management shall
have the same incentive as the shareholders in respect of increasing company value over time. The Annual General Meeting has each year
given the Board authority to establish share option program with a two year term. Redemption price equals market price on allotment.
First exercise is 50 % after one year. Next 12.5 % per quarter, in addition to options not previously utilized. Each option program expires
after 2 years.
The Group pension scheme in Norway is based on about 65 % of base salary at the age of 67, limited to 12G, with the exception of TTS
Offshore Handling Equipment AS which has employees partly within defined pension plan and partly within a defined contribution plan.
For employees hired in other countries, the prevailing schemes in the respective companies apply.
The period of notice is 6 months with a severance pay of 24 months, including period of notice for the President & CEO and from 6 to 24
months for the other members in the senior executive group. The share option program is contingent on the Annual General Meeting’s approval, based on the Board being granted authority to make
such allotments. The President & CEO’s remuneration is determined by the Board of TTS Group ASA. Remuneration to other executives is
determined by the President & CEO.
20
12
TTS group ASA
Payroll expenses
Salaries
2012
2011
16 671
15 442
Employer's social security contribution
2 882
2 234
Pension costs
3 532
2 395
Other benefits
Total payroll expenses
Number of employees at the end of the year
1 164
2 563
24 249
22 634
12
11
2012
2011
Trym Skeie
350
325
Bjarne Skeie
200
200
Rune Selmar
-
140
Anne Breive
280
280
Kjerstin Fyllingen
240
240
Jan Magne Galåen
240
-
Karen Torine Mørkestøl
100
58
Jarle Dyrdal
Board remunerations
*
Remuneration and other bene f its f or the P resident & CE O and other S enior E xecutives : Name
Position
President & CEO
Base
salary
1 941
Arild Apelthun
CFO
Miao Reinlund
VP, Communications
Ivar K. Hanson
COO
Nina Seter
VP, HR & HSE (from 12.2012)
Other
benefits
136
Bonus
paid
1 584
Share
options
474
1 594
14
705
237
103
882
14
-
-
120
1 524
14
675
237
142
64
-
-
-
-
100
58
Remunerations
Taxable remuneration
Ole Henrik Askvik
-
-
Other benefits
Car, group life insurance, taxable pension schemes, phone, newspaper, etc.
Mona L. Tellnes Halvorsen
-
-
Bonus paid
Bonus paid in current year
Share options
Difference between market price and redemption price when exercising options
Total
1 510
1 302
The Annual General Meeting determines the remuneration to the Board from one General Meeting to the next. For the financial year 2012, the
same remuneration was stipulated as was determined by the Board at the Annual General Meeting for 2012.
The same applies to the nomination committee.
*)
N omination committee remuneration
The TTS nomination committee is comprised of the following members: Bjørn Olafsson (Chairman), Bjørn Sjaastad og Johan Aasen.
The nomination committee remuneration for 2012 was TNOK 50 for the chairman and TNOK 30 for each of the members, a total of
TNOK 110.
Total
Taxable pension scheme is early retirement and top-hat pension (CEO) which used to be an annuity-based solution. In accordance with the
new tax regulations per 1.1.2007, these are considered taxable benefits. The early retirement scheme applies to the President & CEO from
the age of 60.
Auditors ’ f ees ( excl . VAT)
2012
S TAT E M E N T R E G A R D I N G TH E S T I P UL AT I ON O F R EMUN ER AT I ON AND OTHER BENE F ITS F OR THE PRESID ENT & CEO
AN D OT H E R E X E C U T I V E S
Regarding Group management, TTS Group ASA’s remuneration policy is based on offering competitive terms. Remunerations should
Regarding Group management, TTS Group ASA’s remuneration policy is based on offering competitive terms. Remunerations should
reflect that TTS is a listed company with an international focus. The annual remuneration is based on Group managements part-taking in the results generated by the company and the added value for
shareholders through increased company value.
Remuneration consists of three main components; Base salary, bonus and a share option program.
Bonus is determined on the basis of target results. In certain circumstances where change and development are of decisive nature, the
bonus is further based on specific developmental targets. Bonus targets are revised annually. The maximum bonus is one year’s base
salary for the President & CEO, and up to 50 % of base salary for other executives. 108
Pension
costs
1 163
2011
Statutory audit
915
913
Other attestation services
564
302
Other assistance including tax advice
Total
930
211
2 409
1 426
109
TTS GROUP
ANNUAL REPORT
Note 2 Pension
Note 3 Tangible fixed assets
The company is required to have a company pension scheme under the law on mandatory company pensions. The company has a pension
scheme that meets the requirements under this law. The Norwegian companies in the group have defined benefit pension schemes that entitle
employees to defined future pension benefits depending on length of service, salary level, retirement age and social security pensions received.
The pension scheme included 25 persons per 31.12.2012, including 12 retired persons.
Reported net pension liabilities are as follows:
+
+
=
Market value of pension funds
Net present value of accrued pension obligations
Unrecognized estimate changes and deviations
Unrecognized costs in respect of past period pension earnings
Accrued payroll tax
Net pension fund(+)/obligations(-) after payroll taxes
Net pension costs are determined as follows:
+
+
+
+
+
+
=
Net present value of current year’s pension benefits
Interest payable on pension obligations
Expected return on pension funds
Administration cost
Recognized estimate changes and deviations
Change in payroll social taxes
Costs in relation to accrued pension from prior periods
Loss on reduction of pension scheme
Total costs, included in wage costs
Change in recognized funds (+) / liabilities (-):
Cost recognized during the year (see above)
+/- Pension payments and payment of pension premiums
= Book value as of 31.12.
2012
Insured
25 863
-30 286
4 002
-624
-1 045
2011
Insured
24 700
-26 389
1 986
-111
186
2012
Insured
2 687
857
-832
225
183
414
3 532
2011
Insured
2 044
599
-887
191
174
274
2 395
2012
186
3 532
2 302
-1 045
2011
1 218
2 395
1 363
186
The following economic assumptions have been made for calculation of the pension obligations:
2012
Discount rate
Return on pension funds
Annual wage growth
Annual adjustment of National pension index (G)
Annual adjustment of pensions in payment
Voluntary retirement
Withdrawal propensity for early retirement (AFP)
Payroll tax
2011
31.12.
1.1.
31.12.
1.1.
3,90 %
4,00 %
3,30 %
4,80 %
3,30 %
4,80 %
3,20 %
4,60 %
3,50 %
3,25 %
3,25 %
8%-0%
0,00 %
14,10 %
4,00 %
3,75 %
3,75 %
10,00 %
45,00 %
14,10 %
4,00 %
3,75 %
3,75 %
10,00 %
45,00 %
14,10 %
4,00 %
3,75 %
3,75 %
10,00 %
45,00 %
14,10 %
Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under Pensions.
”Actuarial assumptions used in the calculation is based upon the recommendations published as per 31.12.2012. Estimate deviations due
to new information or changes in the actuarial assumptions in excess of 10 % of the value of the pension resources or 10 % of the pension
obligations will be recorded in the profit and loss account over a period that corresponds to the employees’ expected average remaining period
of service. As such the changes in assumptions will not affect the total cost incurred in 2012.
Discount rate used is from 2012 based on high quality corporate bond (OMF). This represents a change from 2011, where discount rate was
based on government bonds.”
Approved changes in the recognition principles in IAS 19 will dilute the current possibility to allocate estimate deviations in the actuarial
assumptions over a period that corresponds to the employees’ expected average remaining period of service. Unrecognized estimate changes
and deviations as per 31.12.2012 is MNOK 4.0. The changes in IAS 19 are effective as from 1.1.2013.
110
Machinery
and vehicles
Furniture and
office equip.
Total
948
-545
403
3 946
-130
3 816
4 894
-675
4 219
403
-200
203
3 816
4 227
-6 402
-103
1 538
4 219
4 227
-6 402
-303
1 741
948
-745
203
1 771
-233
1 538
2 719
-978
1 741
Acquisitions
Additions
Disposals
Amortization for the year
203
123
-160
1 538
2 269
-207
1 741
2 392
-367
166
3 599
3 765
1 071
-905
166
4 040
-440
3 599
5 111
-1 345
3 765
Linear
5 years
Linear
3-10 years
20
12
As o f 1 . 1 . 2 011
2 011 Fiscal y ear
Acquisitions
Additions
Disposals
Amortization for the year
As o f 31 . 1 2 . 2 011
2 01 2 Fiscal y ear
As o f 31 . 1 2 . 2 01 2
Depreciation schedule
Depreciation period
The company has no leases classified as financial lease.
Operating lease agreements:
TTS Group ASA has entered into a lease agreement for offices. The lease is classified as operational lease. Yearly payment is MNOK 10.5. A part
of the offices are subleased to different subsidiaries. Net received from subsidiaries is MNOK 9.2. The lease agreement for offices expires in 2018.
TTS Group ASA has an option to extend the lease agreement for 5+5 years to market price.
Note 4 Investments in other companies
Ownership
Acquisition
cost
Book value
2012
2011
Fixed assets:
Shin Young Heavy Industry
13.4 %
222
222
222
FastShip Inc. *)
6.7 %
13 326
Sigma Drilling AS
16.1%
28 673
28 673
Other
2
Total investment in other enterprises
42 223
28 895
222
Other investments in shares are wholly defined as available for sale.
*)
In the balance sheet per 31.12. the company has recorded 615 156 shares in FastShip Inc (FSI) with a total book value of NOK 1. There are
currently no ongoing activity in the project and the company’s certificates have expired. The company is per 31.12.2012 still active for judicial
clarifications of a certificate dispute in the US. Since the project is terminated TTS has recorded the whole investment of 19.0 MNOK including
convertible loan as a loss. Please also see Note 6 with regards to the convertible loan.
Risk related to the estimates that form the basis for the book values are further described in Accounting principles, under Investments.
111
TTS GROUP
ANNUAL REPORT
20
12
Note 5 Subsidiaries and joint ventures
TTS GROUP ASA
Investments in subsidiaries valued at cost:
Subsidiary
Norlift AS
TTS Marine AB
Hydralift Marine AS
TTS Marine AS
TTS Greece Ltd.
TTS Energy AS (sold in 2012)
Total
Registered office
Drøbak, Norway
Bergen, Norway
Bergen, Norway
Gothenburg, Sweden
Shanghai, China
Bergen, Norway
Bergen, Norway
Singapore
Pireus, Greece
Gothenburg, Sweden
Gothenburg, Sweden
Bergen, Norway
Hamburg, Germany
Aqcuisition date
1994
1994
1996
2002
2002
2003
2007
2009
2009
2009
2011
2011
2012
2012
2007
Ownership
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
0%
Voting share
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
0%
Currency
NOK
NOK
NOK
SEK
RMB
NOK
NOK
NOK
SGD
EUR
SEK
SEK
NOK
EUR
NOK
Share capital
950 000
500 000
2 500 000
2 000 000
200 000
100 000
500 000
2 000 000
1 141 813
200 000
100 000
100 000
1 000 000
3 000 000
-
Number of shares
95 000
500
2 500
2 000
3 500
1 000
1 000
1 000
1 141 813
2 000
1 000
1 000
100
3 000
-
Equity
31.12.2012
17 367
824
46 418
395 815
27 759
-52
-205
1 838
3 357
1 896
85
79
61 016
-57 356
-
Net Result
2012
4 714
162
7 558
124 029
-78
-1
195
-18 569
1 383
198
-7
916
-7 115
-
Registered office
Dalian, China
Aqcuisition date
2005
Ownership ()
50 %
Voting share
50 %
Currency
RMB
Share capital
22 000 000
Number of shares Equity 31.12.2012
2 200
30 316
Net Result 2012
1 739
Cost
33 296
6 262
36 897
295 816
4 705
115
516
51 020
5 064
1 812
86
86
60 100
130 318
626 093
Net book value
2012
33 296
6 262
36 897
295 816
4 705
115
516
51 020
5 064
1 812
86
86
60 100
130 318
626 093
Net book value
2011
26 493
6 262
28 134
295 816
4 705
115
516
51 020
5 064
1 812
86
86
604 712
1 024 821
Cost
8 683
Net book value
2012
8 683
Net book value
2011
8 683
Investments in J oint V entures , valued at cost:
Joint venture
TTS BoHai Machinery Co., Ltd
TTS Group ASA has changed valuation principle regarding investments in subsidiaries and Joint Ventures from equity method to cost. To value subsidiaries and
Joint Ventures to cost will better reflect the actual historical investments. The financial position for TTS Group is ensured in the consolidated financial statements,
which includes TTS Group ASA and all subsidiaries. The change have effect on net book value on investments in the balance sheet and recognized profit/loss from
investments in the profit and loss statement. The profit and loss and the balance sheet is for 2011 is changed to reflect the changes in valuation principle. In the table below the changes are shown:
Note 6 Trade and other receivables
2012
2011
Customer receivables
34 682
-
Customer receivables within group
11 631
12 969
Reported 2011
after equity method
Effect of change
in principle
Reported 2011
after cost
Net financial items
-14 878
80 641
65 763
Other receivables within group
Net profit before tax
-26 669
80 641
53 972
Profit for the year
-31 803
80 641
48 838
1 007 861
16 960
1 024 821
15 909
-7 226
8 683
621 583
9 734
631 317
Shares in subsidiaries
Equity
Customer receivables to Joint Ventures
4 167
4 589
40 907
43 795
VAT
1 789
1 324
Other receivables, including prepayments
9 846
3 650
103 022
66 327
204 201
174 021
Short-term receivables
Receivables maturing at over one y ear :
Loans to companies in same group
Total
204 201
174 021
There are no credit risk concentrations within customer receivables. Steps have been taken to avoid delays in settling internal receivables.
Other receivables under financial f ixed assets :
Loan capital Fast Ship
1)
Other receivables
2012
2011
-
-
-
-
1)
TTS Group ASA has given a convertible loan of 5 830 TNOK to FastShip Inc. The loan was written down by 4 549 TNOK in 2007, 138 TNOK in 2008
and additionally 1 143 TNOK in 2010.
All are long-term receivables without fixed maturity.
112
113
TTS GROUP
ANNUAL REPORT
Note 7 Non-current liabilities
Note 8 Assets pledged as security and guarantees
R epayment prof ile and maturit y
The major bank credit facility of TTS Group ASA is established with Nordea Norge ASA (Nordea) and DNB ASA (DNB).
Nominal value
31.12.2012
Convertible Subordinated Bond Loan 2011/2016
2013
2014
2015
2016
2017
and later
95 345
-
-
-
95 345
-
9 000
3 000
3 000
3 000
-
-
Total non-current debt incl. first year
installments
- first year installment of non-current debt
104 345
Total non-current debt
101 345
8 168
3 000
7 988
3 000
7 808
95 345
-
636
-
S peci f ication o f loans
Currency
Nominal interest
rate
Maturity
Installment
terms
Book value
2012
Book value
2011
Mortgage loan
NOK
Nibor + 2,6%
2012
balloon
-
200 000
Norsk Tillitsmann ASA
Bond loan
NOK
Nibor + 3,375%
2012
balloon
-
400 000
Convertible bond
NOK
8,00 %
2016
balloon
95 345
192 500
Innovasjon Norge
Mortgage loan
NOK
6,00 %
2015
bi-annually
9 000
12 000
104 345
804 500
Loan type
Nordea ASA
Total
2)
2012
-3 000
Expected interest payments
Long term loans
TTS Group has the following credit facilities through its facilitators:
Group cash pool overdraft facility1)
3 000
Additional description of the Convertible Subordinated bond is available in Note 9. Booked value of the debt as per 31.12.2012 is TNOK 75 330.
Net book value convertible bond and other long term liabilities are TNOK 84 330 in 2012 and TNOK 764 620 in 2011.
With exception of the convertible bond, fair value is estimated to approximately equal to carrying value as the loans are based on market terms and no fixed-rate
terms exists. See Note 8 for security on long-term debt.
1)
2)
C ovenants
20
12
2011
Limit
Drawn
Limit
Drawn
200 000
22 727
119 000
-
Drawdown facility, operations
100 000
-
275 000
275 000
Guarantee limit for Group (including Energy division)
600 000
265 900
903 000
888 000
1)
Cash balance in TTS Group cash pool arrangement; 31.12.2012; MNOK -22.7, 31.12.2011; MNOK 104.4.
As per 31.12.2012 all Norwegian companies (ref Note 5), as well as TTS Marine AB, TTS Port Equipment AB, TTS NMF GmbH and TTS Marine GmbH are
part of the Group cash pool arrangement with Nordea.
All companies within TTS Group utilize the guarantee limit. The guarantee limits covers payment guarantee, performance bonds, advance payment bonds
and tax guarantees.
For the above mentioned facilities the following assets have been pledged as collateral to Nordea:
Mortgage based debt facilities
2012
2011
31 727
212 000
Assets at book value:
Customer / intra-group receivables
254 681
190 098
Shares in TTS Marine AB
295 816
295 816
Shares in TTS Marine Shanghai Co Ltd1)
4 705
4 705
Assets pledged as security
555 202
490 619
) TTS Group ASA has a loan to Innovasjon Norge for establishment of TTS Marine Equipment (Dalian, Kina) Co. Ltd. The loan of 9.0 MNOK has security in
the shares of TTS Marine Equipment Co. Ltd.
1
TTS Group has undertaken to meet the following financial covenant requirements from Nordea:
The Group’s equity ratio shall at least be equal to 27.5 %. In addition a multiple of other standard default clauses related to the bond loan inclusive cross
default clauses are apparent. Nordea has accepted that the nominal value of the Subordinated Convertible Bond loan are included as part of the equity
calculation. TTS Group equity ratio, when the Subordinated Convertible Bond is included as equity, is 39.1 % at year-end 2012.
Note 9 Convertible Bond loan
”At the Extraordinary General Meeting on 10.1.2011 a subordinated convertible bond facility of MNOK 200 were approved.
The bond has a fixed interest of 8 % p.a. and final maturity date is on 18.1.2016.”
”The bond holder have a consecutive right to convert their nominal bond value into shares in TTS Group ASA. Conversion price is fixed per share.
Conversion price are to be adjusted in several occurrences of which the major is;
i. consolidation or subdivisions of shares
ii. distribution of profits or reserves to shareholders by issue of new shares
iii. dividend payments to shareholders
iv. issue or grant shareholders rights, options, warrants or other subscription rights
The conversion price was fixed at NOK 9.2839 per share at the date of issuance and was unchanged on 31.12.2011.
At the Extraordinary General Meeting on 15.8.2012 it was decided to pay out an extraordinary dividend of NOK 1.56 per share.
Subsequent to the dividend decision at the Extraordinary General Meeting, the conversion price was adjusted from NOK 9.2839 to NOK 8.44 per share.
At the Extraordinary General Meeting on 15.8.2012 it was also decided to reduce the company capital by MNOK 365 via repayment of capital to the
shareholders. The creditor deadline under the Norwegian Public Limited Liability Act section 12-6 expired on 17.10.2012, and TTS Group ASA received
no objections to the capital reduction. The capital reduction was registered at the Register of Business Enterprises on 25.10.2012 after opening time of
Oslo Stock Exchange. The reduction amount, MNOK 365, was disbursed to the shareholders at time of the registration. Disbursement per share was NOK
4.2147 per share. Based on the announced repayment of capital on 18.10.2012 the conversion price was adjusted accordingly. The new conversion price
was NOK 5.71, effective on 26.10.2012 which was the first date the shares traded ex capital repayment. The conversion price is fixed at NOK 5.71 per
share per 31.12.2012.
TTS Group ASA has a call option to enforce a conversion of bond into shares. The call option will be effective as of 8.2.2014, given a weighted average
share price that exceed approx. NOK 8,6 per share for more than 20 days within a 30 days period. TTS Group ASA also has a clean-up call option which is
effective given a prior 90 per cent of bond holders having redeemed or converted their bonds into shares.
114
115
TTS GROUP
ANNUAL REPORT
Note 10
Note 9 cont.
20
12
Debt refinancing 2012
The bond being convertible contains both a liability and a equity component, which is separated and classified as financial liability and equity according
to IAS 32. Alternative interest calculation rate has been set to 14.25 % p.a. Effective interest is presented as part of finance cost.
2012
200 000
-7 500
-97 155
95 345
Subordinated convertible bond loan - nominal value at drawdown
Converted debt to shares in 2011
Converted debt to shares in 2012 1)
Nominal debt value as per 31.12
The agreement includes covenant requirements related to equity ratio, and debt gearing (net interest-bearing debt to EBITDA).
Draw dawn cost
-14 262
Derived equity portion from inherent put option at drawdown
-36 981
1 387
17 964
9 977
1 900
Effective debt value
75 330
1)
MNOK 4.5 was converted in February and March 2012. MNOK 76.155 was converted in April, May and June 2012, while MNOK 16.5 was converted in
July and August 2012. There have been no conversions during 4th quarter 2012, and no further conversions in 2013.
Repayment profile and maturity
Subordinated convertible bond loan - nominal value
Nominal interest cost
Calculated effective interest cost recognized in the accounts
2012
95 345
11 754
13 654
2013
7 628
13 479
2014
7 628
14 589
2015
7 628
15 910
2016
-95 345
381
827
P rincipal bondholders as o f 31. 12.2012:
Bondholders that may acquire, or currently hold or control more than 2.0 % of the shares in TTS Group if bond is converted to shares is stated below.
Bondholder
MP Pensjon PK
Akershus fylkeskommune - pensjonskasse
Odin Maritim
Holdberg Norden I+III
Pharos High Yield Verdipapirfond
Mertoun Capital AS
Bjørn Bakkevig
Terra Kombinasjon Verdipapirfond
Clearstream Banking S.A.
Other (15 bond holders)
Total
Conversion
rights
7 005 254
3 502 627
1 138 354
936 077
788 091
700 525
350 263
350 263
350 263
1 576 182
16 697 898
On 6.12.2012 TTS Group ASA entered into an agreement relating to financing of the Group with Nordea as main bank. In addition, TTS Group ASA
established a bank agreement with DNB on 21.12.2012. The new agreement replaces existing credit- and bond facility. The new facility is adjusted
to the Group’s new financial requirements after the sale of the Energy division. The credit facility in the new agreement is MNOK 900, and the
agreement consists of;
- MNOK 100, 3 year term loan facility
- MNOK 200, 3 year multi-currency overdraft facility
- MNOK 600, 3 year guarantee facility
Share portion if
fully converted
6,78 %
3,39 %
1,10 %
0,91 %
0,76 %
0,68 %
0,34 %
0,34 %
0,34 %
1,53 %
16,16 %
The existing securities and collateral which were established when TTS Group ASA entered into the agreement with the bank syndicate is cancelled.
New pledges have been established related to TTS Group ASA’s new bank agreements. The agreements include pledges of plant and machinery,
inventory, accounts receivables in the major Norwegian companies. In addition shares in TTS Marine AB have been pledged.
Note 11 Share capital and shareholder information
(Amounts in NOK)
Date
Number of shares
Nominal value
Share capital
31.12. 2012
86 605 660
0,11
9 526 623
31.12. 2011
75 690 784
0,50
37 845 392
The Extraordinary General Meeting in TTS Group ASA held on 15.8.2012 resolved to pay a dividend of NOK 1.56 per share and to reduce company capital
by MNOK 365 via repayment of capital to shareholders. The disbursement amount was NOK 4.2147 per share. The capital reduction was registered at the
Register of Business Enterprises on 25.10.2012 after opening time of Oslo Stock Exchange. The final allocation of the reduction amount between share
capital and share premium account, was NOK 33 776 207.40 and NOK 331 239 544.54, respectively. New nominal value per share is NOK 0.11, and the
share was registered with this nominal value as from 26.10.2012. The new share capital is NOK 9 526 622.60
D ividends paid and proposed :
Interim dividends for 2012 paid: NOK 1.56 per share
2012
2011
134 645 566
-
Number of shares
Share capital
35 210
-17 605
Dividend for shareholders proposed for 2012, to be paid in 2013: NOK 1.00 per share.
Total dividend amount proposed: NOK 86 605 660.
Treasur y shares :
At 1 January 2011
At 31 December 2011
35 210
-17 605
Purchase treasury shares in June 2012
111 261
-55 631
Purchase treasury shares in July 2012
147 929
-73 965
At 25 October 2012 (face value NOK 0.50 per share)
294 400
-147 200
At 25 October 2012 (face value NOK 0.11 per share)
294 400
-32 384
At 31 December 2012
294 400
-32 384
A resolution was adapted at the Annual General Meeting on 31.5.2012 that gave the board the authorization to buy own shares up to a total of MNOK
7.5 to cover the company`s employees share program. The resolution is valid until 30.6.2013. The company has in 2012 bought 259 190 shares to a total
consideration of MNOK 4.5.
116
117
TTS GROUP
ANNUAL REPORT
20
12
Note 11 cont.
Allocation o f options :
P rincipal shareholders of T T S G roup A S A as o f 31. 12.2012:
Shareholder
Number of shares
Ownership
Voting share
11 512 506
13,29 %
13,29 %
Skeie Technology AS
8 929 879
10,31 %
10,31 %
Lesk AS
5 306 058
6,13 %
6,13 %
Stisk AS
5 306 058
6,13 %
6,13 %
Skandinaviska Enskilda Banken (nominee acc)
5 170 678
5,97 %
5,97 %
Barrus Capital AS (II)
3 455 000
3,99 %
3,99 %
Skagen Vekst
3 222 553
3,72 %
3,72 %
Skeie Capital Investemt AS
2 531 263
2,92 %
2,92 %
JPMCB re shb Swedish Funds Lending
2 481 591
2,87 %
2,87 %
Tamafe Holding AS
2 160 735
2,49 %
2,49 %
Odin Maritim
1 900 000
2,19 %
2,19 %
Mertoun Capital AS
1 650 000
1,91 %
1,91 %
Holberg Norden Verdipapirfondet
1 579 161
1,82 %
1,82 %
Rasmussengruppen AS
Itlution AS
1 475 261
1,70 %
1,70 %
Holberg Norge Verdipapirfondet
1 284 423
1,48 %
1,48 %
Verdipapirfondet DNB SMB
1 142 895
1,32 %
1,32 %
Euroclear Bank S.A. (nominee acc)
958 670
1,11 %
1,11 %
Skeie Consultants AS
953 033
1,10 %
1,10 %
Glastad Invest AS
751 660
0,87 %
0,87 %
Sal Oppenheim Jr & Cie (nominee acc)
731 936
0,85 %
0,85 %
Total, 20 largest shareholders
62 503 360
72,17 %
72,17 %
Total other
24 102 300
27,83 %
27,83 %
Total
86 605 660
100,00 %
100,00 %
S hares owned by board members, Group executives and their relatives :
Board
Trym Skeie 1)
Bjarne Skeie 2)
Ole Henrik Askvik
Group executives
Ivar K. Hanson
Arild Apelthun
Per 31.12.2012
2 483 875
12 414 175
2 032
1 774
Per 22.3.2013
2 483 875
12 414 175
2 032
1 774
230 000
152 422
60 000
230 000
152 422
60 000
Owns 100 % of the shares in Tamafe Holding AS. Tamafe Holding AS owns shares in Skeie Capital Investment AS.
Bjarne Skeie owns 20 % of the shares and 100 % of the voting shares in Skeie Technology AS and Skeie Consultants AS. Skeie Technology AS owns
shares in Skeie Capital Invesment AS.
At the Annual General Meeting on 31.5.2012 the Board was authorized to issue up to 8 000 000 shares in the event of acquisitions or mergers to
develop the company. The authority was valid until the ordinary general meeting for 2013, on 30.06.2013 at the latest. 1)
2)
At the Annual General Meeting on 31.5.2012 the Board was authorized to issue up to 500 000 shares as part of an employee share owner program.
The authority is valid until 31.5.2014 at the latest. On 22.5.2012 450 000 new shares were issued as part of the program.
As of 31.12.2012 there has been issued 210 000 options of which can be exercised until 19.5.2013 with a strike price of NOK 3.33, from an authorisation
for a total of 360 000 options granted at the Annual General Meeting on 19.5.2011. Furthermore, there has been issued 360 000 options, of which can be
exercised until 31.5.2014 with a strike price of NOK 10.83. From an authorization for a total of 360 000 options granted at the Ordinary General Meeting
on 31.5.2012. Strike price at the date of issue had been adjusted with paid dividend and repayment to shareholders.
118
Number of options
exercisable until
31.5.2013
Exercise
price
Number of options
exercisable until
31.5.2014
Exercise
price
Total
Name
Position
Company
Ivar K. Hanson
CEO
COO
TTS Group ASA
TTS Group ASA
60 000
30 000
3,33
3,33
120 000
60 000
10,83
10,83
180 000
90 000
Arild Apelthun
CFO
TTS Group ASA
60 000
3,33
60 000
10,83
120 000
Miao Reinlund
VP Communications TTS Group ASA
0
3,33
60 000
10,83
60 000
Lennart Svensson
EVP, Port &Logistic
60 000
3,33
60 000
10,83
120 000
Total number of options to senior executives
210 000
360 000
570 000
During 2012 300 000 share options with a strike price of NOK 5.91, alloted in 2010 were exercised from Senior Management. Further, in 2012 150 000
share options with strike price of NOK 9.10, alloted in 2011 were exercised from Senior Management.
In accordance with authorities granted by the Annual General Meeting in 2011 and 2012, TTS Group ASA has issued share option programmes to Senior
Executive Group.
Through these programs, Senior Executive Group in the TTS Group have a future right to purchase a number of shares at an exercise price equal to the
marked rate on the date that the share option program was initiated.
The option premium is estimated on the date of allotment using the Black & Scholes option pricing model (BS). The options have a maximum term of
two years, with a possible first exercise after one year (50 percent), then (12.5 percent) per quarter, giving a weighted average of 15 months maturity
which is employed in BS. The option premium is distributed over the option’s two-year term. Implied volatility is based on a combination of historic data
and assumptions. For options issued in 2010, 81 % volatility is used, 81 % volatility for 2011, and 81 % volatility for 2012. For 2010 a risk-free interest
rate of 2.23 % is used, 2.35 % for 2011 and 2.57 % for 2012. For 2012, MNOK 1.4 in option premium has been charged as expenses classified as salary
in the profit and loss statement. Comparable amounts in 2011 were MNOK 1.1. Payroll taxes are charged when share options are realized. Payroll tax
related to realized options in 2012 had been charged with MNOK 0.6.
The f ollowing companies are included in TTS G roup :
Company
Norlift AS
TTS Marine AB
Hydralift Marine AS
TTS Marine AS
TTS Greece Ltd.
TTS Marine Inc.
TTS Marine GmbH
TTS Hua Hai AB
TTS Liftec Oy
TTS Marine S.r.l
TTS Marine Ostrava s.r.o
TTS Marine GmbH Korea Co. Ltd
TTS Marine Equipment Ltd.
Owner
Ownership
interest
Currency
Share
capital
Number
of shares
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Group ASA
TTS Marine AB
TTS Marine AB
TTS Marine AB
TTS Marine AB
TTS Marine AB
TTS Marine AB
TTS Marine GmbH
TTS Marine GmbH
TTS Marine GmbH
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
NOK
NOK
NOK
SEK
RMB
NOK
NOK
NOK
SGD
EUR
SEK
SEK
NOK
EUR
USD
EUR
SEK
EUR
SEK
EUR
EUR
KRW
RMB
950 000
500 000
2 500 000
2 000 000
200 000
100 000
500 000
2 000 000
1 141 813
200 000
100 000
100 000
1 000 000
3 000 000
190 000
255 646
100 000
76 500
100 000
10 400
310 291
1 513 390 000
15 728 611
95 000
500
2 500
2 000
3 500
1 000
1 000
1 000
1 141 813
2 000
1 000
1 000
100
3 000
1 900
5 000
1 000
1 020
1 000
1 000
1 000
1 000
1 000
119
TTS GROUP
ANNUAL REPORT
Note 12 Tax
Note 13 Cash and cash equivalents
Change in deferred tax assets and deferred taxs
(excluding netting within the same tax regime):
1.1.2011
Changes
2011
31.12.2011
Changes
2012
31.12.2012
Fixed assets
Pension fund / liabilities
Credit deduction carried forward
Allowance carried forward
Convertible debt
Loss carried forward
Net deferred tax (assets = - / liabilities = +)
639
341
-6 182
-1 260
-47 191
-53 653
66
-155
11 611
-9 332
2 190
705
186
-6 182
-1 260
11 611
-56 523
-51 463
-350
-478
-5 574
-5 171
-11 574
355
-292
-6 182
-1 260
6 037
-61 695
-63 037
Unrecognized deferred tax assets related tax losses
Unrecognized deferred tax assets related to other temporary differences
Net deferred tax reported (assets = - / liabilities = +)
5 058
-48 595
18 400
20 590
18 400
5 058
-28 005
6 544
-5 029
24 944
5 058
-33 035
D e ferred tax
Breakdown of differences between profit before tax as per the accounts and tax basis for year:
Result before tax
Change to temporary profit/loss differences
Reversed share of profits/losses in subsidiaries and joint ventures
Application of loss to be carried forward
Tax basis for year
Explanation as to why this year’s tax costs are not 28 % of profit before tax:
28 % of profit before tax
Allocated profit from subsidiaries and joint ventures
Allocated reduction of deferred tax asset from group
Withholding taxes
Estimated tax costs
Restricted bank deposits per 31 December were TNOK 206. Of thise TNOK 206 were deposits on tax withdrawal accounts.
TTS Group ASA has a bank guarantee for employees ’tax withholdings of TNOK 750.
TTS Group ASA operates a cash pool account system. The group has been granted a group cash pool overdraft facility of MNOK 200.
TTS Group ASA also has a drawing facility of MNOK 100. Net drawn at the Group cash pool system as per 31.12.2012 was MNOK 22.7.
Net drawn from TTS Group ASA was MNOK 320.2. Drawn from TTS Group ASA which exceeds total drawn is presented as other intragroup liability. Amount classified as intercompany liability is MNOK 297.5. Drawing facilities, security and covenants are described in
Note 7, 8, 9 and 10.
Note 14 Other current liabilities
Provision for holiday pay
Other provisions for costs
Total other current liabilities
Tax payable on balance sheet:
Tax payable
Prepaid tax by foreign subsidiaries
Short/excess provision previous years
Tax effects of group contribution
Tax payable on balance sheet
2011
114 242
43 795
1)
Deferred tax assets related to losses which can be carried forward for tax purposes are reported if the management believes it is likely that the company can use
these against future taxable income.
Breakdown of tax costs:
Tax payable
Withholding tax from activities outside Norway
Not allocated deferred tax related to tax losses
Other changes to deferred tax
Tax cost
2012
3 147
-22 727
Bank deposits, cash etc. as per 31 December 1)
Deposits (+)/withdrawals (-) from cash pool account system as at 31 December
20
12
2012
352 128
4 408
669
-382 547
25 343
-
2011
53 974
91
-89
-98 065
44 090
-
61
7 283
-7 283
61
63
18 400
-13 329
5 134
-
-
98 596
1 234
-107 113
7 283
61
61
15 113
497
-28 939
18 400
63
5 134
2012
1 308
17 340
18 648
2011
1 198
10 778
11 976
2012
1 364
921
4 241
8 071
1 691
16 289
2011
1 432
680
5 427
6 438
3 015
16 992
Note 15 Other operating costs
Building lease, cost of premises
IT costs
Marketing, travel
External services
Other
Total other operating costs
Note 16 Related parties
The subsidiaries (ref Note 5), Investments in joint ventures (ref Note 5), members of the Board (ref Note 4) and members of the Senior
Executive Group are considered as related parties. The Group has engaged in many different transactions with subsidiaries and joint ventures.
All transactions were made in the normal course of business at arm’s length prices.
Sales:
Subsidiaries
Joint ventures
2012
24 090
-
2011
28 138
-
Cost of sales:
Subsidiaries
Joint ventures
-
-
Receivables
Subsidiaries
Joint ventures
11 631
4 167
12 969
4 589
Liabilities
Subsidiaries
Joint ventures
4 845
-
2 099
-
Balance sheet items related to purchase and sale o f goods and services :
Information on the Board and Senior Executive Group’s shares and options are stated in Note 11.
In addition to the above mentioned transactions and Note 11, there are no further agreements or commitments between the Group
and the related parties.
120
121
TTS GROUP
ANNUAL REPORT
Auditor’s report
Note 17 Financial items and exchange rate gains/losses
Dividend from subsidiaries
Contribution from subsidiaries
Gain sale subsidiaries
Interest income from companies in same group
Interest paid to companies in same group
Interest paid to financial institutions
Write down shares in subsidiaries
Other financial costs
Net exchange rate gains (losses)
Total
20
12
2012
2012
30 000
21 620
352 547
28 607
4 780
-5 416
-39 866
-19 148
-4 181
368 943
2011
167 600
5 753
48 856
1 017
-11 634
-76 859
-70 000
-2 360
3 392
65 765
E xchange rate gains / losses
Currency differences booked to income and costs in the profit and loss account are as follows:
FX income
FX costs
Total
2012
20 191
-24 372
-4 181
2011
19 704
-16 312
3 393
FX income and costs are net and shown as other financial costs.
Note 18 Subsequent events
No significant events regarding TTS Group ASA. Events regarding TTS Group is as follows:
On 5.2.2013 TTS Group ASA reported that it has, through its subsidiary TTS Offshore Handling Equipment AS, signed a contract worth
approximately MNOK 65. The contract is with Kleven Verft AS in Norway and concerns delivery of an active heave compensated
subsea crane for an offshore construction vessel for REM Offshore ASA. The delivery will take place in the 2nd quarter of 2014.
On 8.2.2013 TTS Group ASA reported that it has, through its subsidiary TTS Marine AB, signed a contract for delivery of equipment
worth approximately MNOK 75. The contract is signed with the Chinese shipyard Xiamen Shipbuilding Industry Co., Ltd and relate to
car carriers to be built for the Norwegian ship-owner Höegh Autoliners.
122
123
TTS GROUP
ANNUAL REPORT
20
12
Auditor’s report cont.
Confirmation from the Board of Directors and Chief Executive Officer
We confirm, to the best of our knowledge, that the consolidated annual accounts for the period 1 January to 31
December 2012 have been prepared in accordance with the current accounting standards/IFRS and that the information herein gives a true and fair view of the company’s and the group’s assets, liabilities, financial position and profit
as a whole, and that the annual report gives a fair view of the development, results and position of the
company and of the group, together with a description of the principal risks and uncertainties facing the enterprise.
The board of TTS Group ASA
Trym Skeie
Ole Henrig Askvik
board MEMBER
124
Kjerstin Fyllingen
board MEMBER
Anne Breive
board MEMBER
board MEMBER
Bjarne Skeie
board MEMBER
Jan Magne Galåen
board MEMBER
CEO & President
125
TTS GROUP
ANNUAL REPORT
20
12
A story of
acquisition-driven growth
TTS has grown through a series of strategic acquisitions, through partnership
and by organic growth.
1996 1997 1998 1999 2000 2001 2002 2003
2004 2005 2006 2007 2008 2009 2010 2011 2012
TTS Marine Equipment
China
TTS Group turnover (NOKm)
4500
Sense
MUD
Acquisition
Divestment
New company
Closed company
4000
Mongstad
Engineering
2000
Listed on the OSE in 1995
100 %
of
JV in
Shanghai
TTS
Construction
JV in
Shanghai
Norlift
500
Jiangnan TTS
China
TTS Keyon
Marine China
TTS Marine
Italy
2500
Kochs
GMBH
Sense EDM
Singapore
LMG
Cranes
TTS Automation
AS
TTS
Brazil
TTS Keyon
Marine
Sense MUD
Sense EDM
Sense DrillFab
Sense Singapore
TTS Brazil
Sense
DrillFab
Aktro
Intercontrol
AS
NMF
GMBH
Wellquip
Holdings
ICD
Project
3000
1000
TTS Greece
Sense
EDM
3500
1500
TTS Singapore
TTS Mexico
Aktro
TTS Vietnam
Office
in Pusan,
Korea
0
TTS Inc.
Miami
NavCiv
Engineering
TTS Bo Hai
Machinery
Liftec OY
Controlteam AS
Hydralift Marine
Hamworthy KSE
126
127
TTS GROUP
ANNUAL REPORT
the
organisation
20
12
TTS Worldwide
tts group ASA
USA
NORWAY
SWEDEN
FINLAND
Fort Lauderdale
Bergen
Drøbak
Kristiansand
Gothenburg
Pirkkala
TTS JV
CHINA
Dalian
Shanghai
Nantong
Marine
TTS Marine GmbH
Bremen
TTS Marine Ostrava
s.r.o.
Offshore & Heavy Lift
TTS Offshore Handling
Equipment AS
Bergen
Port & Logistics
TTS Liftec Oy
Pirkkala
Services
TTS Marine AS
Services Norway
Kristiansand
TTS NMF GmbH
TTS Marine Inc
GERMANY
Hamburg
Gothenburg
Fort Lauderdale
Hamburg
Bremen
Bremerhaven
Ostrava-Hrabová
TTS Marine Korea Co.
Ltd.
TTS Ships Equipment
AS
TTS Handling Systems
AS
Busan
Bergen
Drøbak
POLAND
Gdansk
TTS Korea
Busan
ITALY
Genova
GREECE
Piraeus
Co.,Ltd.
TTS Marine Shanghai
Co. Ltd.
TTS Singapore
Pte Ltd
Dalian
Shanghai
Singapore
KOREA
Busan
CZECH REP.
Ostrava-Hrabová
TTS Marine AB
TTS Greece Ltd
Gothenburg
Piraeus
TTS Vietnam
TTS Marine s.r.l.
Haiphong City
Genova
VIETNAM
SINGAPORE
Haiphong
Singapore
TTS Poland sp. z o.o.
Gdansk
Updated: April 2013
128
129
TTS GROUP
ANNUAL REPORT
20
12
Companies in the TTS Group
CHIN A
Finland
N OR WAY
S I N G A P OR E
TTS Hua Hai Ships
Equipment Co Ltd
18th floor,
3255 Zhou Jia Zui Road
CN-200093 Shanghai
Tel: +86 21 6539 8257
Fax: +86 21 6539 7400
info@tts-huahai.com
TTS Liftec Oy
Sorkkalantie 394
33980 Pirkkala
Tel: +358 3 3140 1400
Fax: +358 3 3140 1444
sales@tts-liftec.fi
TTS Group ASA
Folke Bernadottes vei 38
Postboks 3577 Fyllingsdalen
NO-5845 Bergen
Tel: +47 55 94 74 00
Fax: +47 55 94 74 01
info@tts-group.no
TTS Singapore Ltd
16 Enterprise Road
Enterprise 10
Singapore 627699
Tel: +65 68 67 90 70
Fax: +65 62 64 47 30
service@tts-singapore.com
Holterkollveien 6
P.O. Box 49
NO-1441 Drøbak
Tel: +47 64 90 79 10
Fax: +47 64 93 16 63
info@tts-hs.no
S WE DE N
Folke Bernadottesvei 38
P.O. Box 3517, Fyllingsdalen
NO-5845 Bergen
Tel: +47 55 11 30 50
Fax: +47 55 11 30 60
info@tts-se.no
Kämpegatan 3
SE-411 04 Göteborg
Tel: +46 31 725 79 00
Fax: +46 31 725 78 04
info@tts-port.se
TTS Bohai Machinery
(Dalian) Co Ltd
Beihai Industrial Park
Sujia, Dalianwan Street
Ganjingzi District
CN-Dalian
Tel: +86 411 8711 2670
Fax: +86 411 8711 2702
info@tts-bohai.com
TTS Marine
(Shanghai) Co Ltd
No.389 GaoDong No 2 Rd
GaoDong Industrial Park
Pudong
CN-Shanghai 200137
Tel: +86 21 5848 5300
Fax: +86 21 5848 5311
office@tts-marine.cn
(Dalian) Co Ltd
Tuchengzi Cun
Dalianwan Street
Ganjingzi District
CN-Dalian 116034
Tel: +86 411 8711 9663
Fax: +86 411 8711 9678
info@tts-me.cn
GE RM ANY
TTS Marine GmbH
Wachtstrasse 17–24
DE-28195 Bremen
P.O. Box 104080
DE-28040 Bremen
Tel: +49 421 52008-0
Fax: +49 421 52008-20
info@tts-marine.de
TTS NMF GmbH
Neuenfelder Fährdeich 120
21129 Hamburg
Tel: +49 40 55 43 61 500
Fax: +49 40 55 43 61 900
info@nmf-crane.de
USA
GRE E CE
TTS Greece Ltd
Skouze 1
18535 Piraeus
Tel: +30 210 42 94 480
Fax: +30 210 42 93 933
info@ttsgreece.gr
ITALY
TTS Marine s.r.l.
Ponte Colombo
IT-16126 Genova
Tel: +39 010 24 81 205
Fax: +39 010 25 43 191
info@tts-marine.it
CZECH REPUB LIC
TTS Kocks Ostrava s.r.o.
U Reky 808
CZ-720 00 Ostrava-Hrabová
Tel: +420 596 782 708
Fax: +420 596 782 707
info@tts-kocks.cz
130
TTS Marine AB
Kämpegatan 3
SE-411 04 Göteborg
Tel: +46 31 725 79 00
Fax: +46 31 725 78 00
info@tts-se.se
TTS Marine AS
Barstølveien 26
Servicebox 602
NO-4606 Kristiansand
Tel: +47 38 04 95 00
Fax: +47 38 04 93 41
service.krs@tts-marine.no
TTS Marine Inc
6555 North Powerline Road,
Suite #410
Fort Lauderdale, FL 33309
Tel: +1 954 493 6405
Fax: +1 954 493 6409
info@tts-se.us
TTS Offshore Handling
Equipment AS
Folke Bernadottesvei 38
Servicebox 3566, Fyllingsdalen
5845 Bergen
Tel. +47 55 34 84 00
Fax. +47 55 34 84 01
sales@tts-ohe.com
VIETNAM
TTS Vietnam
6th Floor, Harbour View Building
No 4, Tran Phu Street
Haiphong City, Vietnam
Tel: +84 31 36 86 518
Fax: +84 31 36 86 516
info@tts-se.vn
K orea
TTS Marine Korea Co Ltd
#1664-10, Songjeong-dong
Gangseo-gu,
Busan 618-819 Korea
Tel: +82 51 831 8401
Fax: +82 51 979 5610
mail@tts-marine.co.kr
P OL A N D
TTS Poland sp. z o.o.
Azymutalna 9 ,
80 - 298 Gdansk
Poland
Tel: +48 58 760 30 40
Mob: +48 608 433 846
dorota.morka@tts-group.pl
131
A L F G U NDE R SE N
TTS Group ASA
Folke Bernadottesvei 38, PO Box 3577 Fyllingsdalen, N-5845 Bergen, Norway
Tel: +47 55 94 74 00, Fax: +47 55 94 74 01
www.ttsgroup.com
132

annual report - TTS Group ASA

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