Information Memorandum
TTS Group ASA
(a public limited liability company organized under the laws of the Kingdom of Norway)
Business Registration number 932 142 104
Information memorandum has been prepared in connection with the sale of
the Drilling Equipment Business to Cameron Holding Norge AS
This Information Memorandum does not constitute an offer to buy, subscribe or sell the securities
described herein.
Manager
4 June 2012
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Important Notice
This information memorandum (“Information Memorandum”) has been prepared in order to provide information
about TTS Group ASA (“TTS” or the “Company”), and, together with its consolidated subsidiaries (excluding TTS
Energy AS and its subsidiaries following the completion of the Transaction, the “Group” or “TTS Group”) and its
business in connection with the divestment of its drilling equipment business, the TTS Energy division, excluding
the offshore handling (cranes and winches), which is also part of the TTS Energy division, to Cameron Holding
Norge AS, a subsidiary of Cameron International Corporation (NYSE: CAM). The contemplated divestment shall be
carried out by way of sale of all the shares in TTS Energy AS (“TTS Energy”), being a wholly owned subsidiary of
TTS and owning the group of and/or entities carrying out the business as discussed in Section 5 (Information
regarding the drilling equipment business) (the “Drilling Equipment Business”), pursuant to which TTS Group
ASA (as seller) on 17 April 2012 entered into a share purchase agreement with Cameron Norge Holding AS
(“Cameron”) (as purchaser) and Cameron International Corporation (as guarantor for the purchaser's obligations)
(the “Agreement”), with regards to the contemplated sale of all the shares in TTS Energy (the “Transaction”).
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Capitalized terms used in this Section and not defined herein shall have the meaning ascribed to them in the Section
headed “Definitions”.
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This Information Memorandum serves as information document as required under Section 3.5 of Oslo Børs'
“Continuing Obligations for Listed Companies”, and has been submitted to Oslo Børs for inspection and review
before it was published. This Information Memorandum is not a prospectus and has neither been inspected nor
approved by the Financial Supervisory Authority of Norway (Nw: Finanstilsynet) in accordance with the rules that
apply to prospectuses. This Information Memorandum has been prepared in an English version only.
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This Information Memorandum does not constitute an offer or solicitation to buy, subscribe or sell the
securities described herein, and no securities are being offered or sold pursuant to this Information
Memorandum.
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Investing in the shares issued by the Company (the “Shares”) involves risk. In reviewing this Information
Memorandum, you should carefully consider the matters described in Section 1 (Risk Factors) beginning on
page 5.
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This Information Memorandum is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising
in respect of this Information Memorandum is subject to the exclusive jurisdiction of the Norwegian courts, with
Bergen District Court as legal venue.
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IMPORTANT INFORMATION
The Company has furnished the information in this Information Memorandum. See Section 2 (Responsibility
Statement) for the board of the Company's responsibility statement in relation to the information contained herein.
The information contained herein is current as of the date hereof and subject to change, completion and amendment
without notice. There may have been changes affecting TTS subsequent to the date of this Information
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Memorandum. The publication and distribution of this Information Memorandum shall not under any circumstances
create any implication that there has been no change in the affairs of TTS or that the information herein is correct as
of any date subsequent to the date of this Information Memorandum.
All inquiries relating to this Information Memorandum should be directed to the Company. No other person has been
authorized to give any information about, or to make any representation on behalf of, the Company in connection
with the Transaction. If any such information is given or representation made, it must not be relied upon as having
been authorized by the Company.
The contents of this Information Memorandum are not to be construed as legal, business or tax advice. Each reader
of this Information Memorandum should consult with its own legal, business or tax adviser as to legal, business or
tax advice.
The distribution of this Information Memorandum in certain jurisdictions may be restricted by law. The Company
requires persons in possession of this Information Memorandum to inform themselves about, and to observe, any
such restrictions. No action has been taken or will be taken in any jurisdiction by the company that would permit
publication or distribution, directly or indirectly, or any documents relating to the Transaction or any amendment or
supplement thereto, including, but not limited to, this Information Memorandum, in any country or jurisdiction
where specific action for that purpose is required. The Company has not registered, and does not intend to register,
any of the shares issued by the Company (the “Shares”) under the Unites States Securities Act of 1933, as amended
(the “U.S. Securities Act”).
INFORMATION INCORPORATED BY REFERENCE
Oslo Børs' “Continuing Obligations for Listed Companies” allow TTS to incorporate by reference information in
this Information Memorandum that has been previously filed with Oslo Børs or the Financial Supervisory Authority
of Norway in other documents. The audited historical financial statements for TTS Group as of and for the years
ended 31 December 2011, 2010 and 2009 (the “Annual Financial Statements”), prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (“IFRS”), and the director's reports
and auditor's reports in respect of the Annual Financial Statements, have been incorporated as a part of his
Information Memorandum; see Sections 10.3 Incorporated by reference. The same applies to TTS' accounting
principles, the financial statements of Q1 2012 and the appurtenant director's report. Accordingly, this Information
Memorandum is to be read in conjunction with these documents.
The Information Memorandum also includes unaudited pro forma condensed consolidated financial information
giving effect to the Transaction, as if the Transaction had taken place on 1 January 2011 for the purpose of the
consolidated income statement for 2011 and of Q1 2012, and for the purpose of the unaudited consolidated balance
sheet as per 31 March 2012. . The unaudited pro forma condensed consolidated financial information has been
prepared on a basis consistent with IFRS and has been based on the audited consolidated financial statements for the
ended 31 December 2011for the Group, the unaudited income statement of Q1 2012 and the unaudited consolidated
balance sheet as per 31 March 2012. See Section 9 for further details.
INFORMATION SOURCED FROM THIRD PARTIES
The information in this Information Memorandum that has been sourced from third parties has been accurately
reproduced and, as far as TTS is aware and able to ascertain from information published by that third party, no facts
have been omitted that would render the reproduced information inaccurate or misleading.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Information Memorandum contains forward-looking statements. These statements involve known and unknown
risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to
be materially different from any future results, performances or achievements expressed or implied by the forward-
looking statements.
In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “could”,
“should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the
negative of such terms or other comparable terminology. These statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, prospective investors should specifically consider
various factors, including the risks outlined in the Risk Factors Section above. These factors may cause our actual
results to differ materially from any forward-looking statement. Although the Company believes that the
expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of
activity, performance or achievement.
Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statements
for any reason after the date of this Information Memorandum to conform these statements to actual results or to
changes in our expectations or publicly release the result of any revisions to these forward-looking statements which
the Company may make to reflect events or circumstances after the date of this Information Memorandum or to
reflect the occurrence of unanticipated events. Investors are advised, however, to consult any further public
disclosures made by the Company, such as filings made with Oslo Børs or press releases.
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Table of contents
1. Risk Factors .................................................................................................... 5
2. Responsibility Statement .............................................................................. 11
3. Description of The Transaction ................................................................... 12
4. Presentation of TTS Group ASA ................................................................. 14
5. Information regarding the Drilling Equipment Business ........................... 23
6. Market overview ........................................................................................... 28
7. Presentation of TTS Group ASA after the transaction .............................. 32
8. Historical Financial Information ................................................................. 35
9. Pro Forma Financial Information ............................................................... 44
10. Additional Information ................................................................................ 50
11. Definitions ..................................................................................................... 52
Appendices
Appendix 1: Auditor’s Independent Assurance Report on pro forma financial information..................... A1
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1. RISK FACTORS
In addition to the other information set out in this Information Memorandum, the following risk factors should be
carefully considered when analyzing TTS Group and/or the Transaction. Any of the risks described below could
have a material adverse impact on TTS Group, financial condition and results of operations and could therefore
have a negative effect on the trading price of the shares in the TTS Group and affect a prospective investor's
investment. The information below does not purport to be exhaustive. Additional risks and uncertainties not
presently known to TTS Group currently deems immaterial may also have a material adverse effect on TTS Group,
following the Transaction, the Group's business, financial condition and operating results.
1.1 Risk factors related to the Company and the industry
As with any other development business, time itself may be characterised as a risk factor. In the following sub-
chapters, time and delays are inherent parts of many of the risk factors. Most challenges may be solved with time,
but there is a risk for delays and that a delay itself may cause a product to fail or that the delay and incurred cost may
become a challenge to the Company.
1.1.1 Dependency on the shipbuilding, offshore and Port and Terminals industries
• The demand for TTS's products and services is largely dependent upon developments in the shipbuilding
industry. Historically number of vessels contracted world-wide varies from year to year. A reduction in
contracting of vessels could negatively affect demand for TTS's products and services, which again could
have an adverse effect on its business, financial condition and result of operations. TTS can provide no
assurance with respect to future contracting in the shipbuilding industry.
• TTS through its offshore activities is dependent on demand for offshore services in connection with
exploration, development and production in the oil and gas sector. Historically, demand for exploration,
development and production has been volatile and closely linked to the price of hydrocarbons. Low oil
prices typically lead to a reduction in the demand for offshore services and thereby also the demand for
offshore and onshore handling equipment as well as other related equipment and services in demand within
the offshore industry. Decreased demand in the offshore industry could have an adverse impact on the
financial position of the Company.
• Until 2007 the Port and Terminals industry for some years had an annual growth of approximately 10%.
Following the difficulties in the financial markets in 2008 and later the financial turmoil in the Eurozone,
there has been a weakening of the economic performance in the "big three" container markets (China, North
Europe and the US) which has slowed down the growth, and this could possibly have an adverse impact on
the financial position of the Company in the years ahead.
1.1.2 Success in the market and the competitive situation in the industry
The global market is highly competitive and competition might limit TTS's ability to maintain or increase its market
share. TTS's current and future competitors may have considerably greater financial and other resources, and may be
better positioned to withstand and adjust to changing market conditions. If TTS is not able to maintain its
competitive position in the market it could have an adverse effect on its business, financial condition and result of
operations.
1.1.3 Manufacturing risks
TTS relies, and will continue to rely, upon subcontractors when producing their products. TTS cannot be certain that
they will be able to enter into satisfactory agreements with subcontractors. TTS’s failure to enter into agreements
with such subcontractors on reasonable terms, if at all, could have a material and adverse effect on the business,
financial condition and results of operations. TTS also needs to ensure that the manufacturing process complies with
applicable regulations and manufacturing practises as well as TTS's own high standards. Poor manufacturing
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performance by third party manufactures could have a significant adverse effect on the Company's business,
financial condition or result of operations.
1.1.4 Technology and new products
The markets TTS operates in are characterized by tough competition. Commitment to technologies/suppliers that
does not obtain market acceptance or lacks the ability to adapt to different market segments, may have a severe
effect on the Company's prospects for the future. Even though the Company believes it can offer a solid product
spectre within its areas of concentration, the industry and the customer demands can change. TTS cannot assure that
the company makes the right decisions regarding product development and marketing, or that future focus areas will
accommodate the customers altering requirements. TTS may also be exposed to severe risks with regard to possible
disruptive technologies, i.e. unforeseen technologies that may change the marketplace significantly.
1.1.5 Fluctuation in revenues
TTS's future revenues may fluctuate significantly from period to period and from year to year as a result of various
factors. Such fluctuations may have a material adverse impact on TTS's results of operational and financial
condition.
1.1.6 Obtaining acceptable prices and cost levels
TTS's financial position and future development depend to a considerable extent on the price it is able to obtain for
its products. The demand for the company's products is affected by a large number of different factors, over which
the Company has little control. A relative change in demand could lead to lower sales prices, which would have a
negative impact on TTS's operating revenues and profits. Certain cost factors such as steel prices may also affect
TTS's future operational result if the Company is unable to shift any increases in prices on to their customers.
Additionally, there will always be a risk that the costs of product development exceeds the original estimated costs,
that development takes longer than expected or that product fails to meet the demands from the potential customers.
1.1.7 Possibility of operating losses
TTS has a long performance record, operating history and historical financial statements upon which its financial
performance, services, products, processes or its ability to implement and achieve its business strategy can be
evaluated. TTS cannot assure that it, in the future, will be successful in implementing its business strategy or
developing internal processes to manage its growth and business prospects or continue to make profits.
1.1.8 Ability to raise additional capital
TTS may in the future seek to raise capital through equity and debt financings or from other sources. However, the
Company may prove unable to raise such additional capital in a timely manner and on commercially acceptable
terms, if at all. If TTS is unable to generate adequate funds from operations or from additional sources, then the
business, results of operations and financial condition may be materially and adversely affected.
1.1.9 Counter party risks
TTS's operations are mainly within the shipping and offshore industry, and many parts of the shipping and offshore
industry was affected by the global financial crisis and recession from 2009 and onwards. Such events are outside
the control of TTS and have increased TTS’s counter party risk. While the global market has been facing a slow
recovery, the shipping and offshore industry is still somewhat vulnerable.
1.1.10 Liability claims
Any claims against TTS, regardless of their merit, could materially and adversely affect its financial condition,
because litigation related to these claims would strain the financial resources in addition to consuming the time and
attention of the management. This also relates to product liability claims as TTS, as a producer and provider of
technology products, is exposed to product liability claims that may adversely affect TTS' profitability. TTS will not
necessarily be able to recover losses incurred due to such liability from its suppliers, nor will TTS' insurance
schemes necessarily cover such liabilities.
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1.1.11 Reliance upon key personnel
TTS is highly dependent upon the senior management and engineering team, the loss of whose services might
impede the achievement of the company's objectives. Competition for key personnel with the experience that is
required is tough and is expected to continue to increase. There is no assurance that the Company will be able to
retain key personnel, nor can assurances be given that the Company will be able to recruit new key personnel in the
future.
1.1.12 Exchange rate risks
The value of non-Norwegian currency denominated revenues and costs will be affected by changes in currency
exchange rates or exchange control regulations. The majority of the Company’s future revenues in addition to NOK,
are expected to be in USD and EUR. TTS does engage in foreign exchange hedging transactions, but there can be no
assurance that these actions will adequately protect its operating results from the effects of exchange rate
fluctuations.
1.1.13 Labour interruptions
At the end of the first quarter of 2012, TTS had 1 474 employees (excl. Joint Ventures) (of which 268 were hired),
whereas the corresponding number after completion of the Transaction is budgeted to be approx. 990 (of which
approx. 180 will be hired personnel). Certain of TTS's employees are members of labour unions and future
employees may also be members of unions. Any labour unrest could prevent or hinder TTS's services from being
carried out normally and, if not resolved in a timely and cost-effective manner, could have a material adverse effect
on its business, results of operations, cash flows and financial condition.
1.1.14 Risks affecting international operations
TTS's business and results of operations are subject to a range of risks inherent in international operations. These
risks include:
Instable foreign governments and volatile foreign economies
New laws or regulations with obligations for TTS that will restrict its functionality or increase the cost of
operation
Risk of war or terrorist activities
Renegotiations or nullification of existing contracts and agreements
Foreign exchange restrictions or other regulations and policies affecting trade and investment
Interferences of production or services due to labour or political disturbance
1.1.15 Environmental risks
TTS works systematically to increase the level of quality on all deliveries. The TTS Group’s activities are primarily
related to design, engineering, assembly and testing of equipment. Assembly and testing of TTS products is based on
a very limited use of chemicals harmful to human health or to the environment. The products supplied by TTS are
primarily electro-hydraulically powered, and there is little risk of environmental pollution. The TTS Group’s
operations are not regulated by licenses or regulatory.
1.1.16 Taxation risks
The Company is exposed to a risk regarding the correct application of the tax regulations in the jurisdictions in
which it operates as well as possible future changes in the tax legislation of those relevant jurisdictions. New and
changed regulations could have an impact on TTS' profitability.
1.2 Risk factors relating to the Transaction
1.2.1 No completion of the Transaction
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The completion of the Transaction is expected to take place primo June. The Transaction may not be completed or
may not be completed as described in this Information Memorandum, if certain conditions to such completion are
not satisfied or waived. Should the Transaction be significantly delayed or not be completed, this could have a
material adverse effect on the financial conditions of TTS.
1.2.2 Unaudited pro forma financial information
This Information Memorandum contains unaudited pro forma financial information, which gives effect to the
Transaction. The unaudited pro forma financial information is based on preliminary estimates and assumptions
which TTS believes to be reasonable and is being furnished solely for illustrative purposes and is not necessarily
indicative of what TTS and TTS Energy's separate results of operations and financial conditions would have been
had the Transaction occurred on the dates assumed, see further information in Section 9 (Pro forma financial
information). The readers should not place undue reliance on TTS' unaudited pro forma financial information
presented in this Information Memorandum.
1.2.3 Less diversified company
By completion of the Transaction, TTS will depart from the drilling equipment industry, both offshore and onshore.
Following completion of the Transaction, TTS will thus become a less diversified company. TTS will, however,
retain and continue to develop and grow offshore handling (cranes and winches), which is not included in the
Transaction.
1.2.4 Risks relating to claims for breaches of the Agreement
After completion of the Transaction, TTS may be exposed to claims related to the extensive set of representation and
warranties and other undertakings included in the Agreement; see Section 3 (Description of the Transaction) for
further information. If TTS is in breach of such representation and warranties and other undertakings, TTS may be
subject to claims from Cameron Holding Norge AS. Resolving such a claim can be costly and time consuming, and a
successful claim under the Agreement against TTS could subject TTS for significant damages which may have a
material adverse effect on the results and financial position of TTS.
1.3 Risk factors relating to the Shares
1.3.1 Volatility of share price
The market price of the Shares can fluctuate widely in response to a number of factors, including the following:
actual or anticipated variations in operating results;
changes in financial estimates or recommendations by stock market analysts regarding the Company or its
competitors;
announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint
ventures, capital commitments or significant contracts;
matters announced in respect of major customers;
sales or purchases of substantial blocks of stock;
additions or departures of key personnel;
future equity or debt offerings by the Company and its announcements of these offerings;
changes to the regulatory environment in which the Company operates; and
general market and economic conditions.
Moreover, in recent years, the stock market in general has experienced large price fluctuations. These broad market
fluctuations may adversely affect the Company's stock price, regardless of its operating results.
1.3.2 Possibility of waiver of pre-emptive subscription right
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In order to raise equity on short notice in the investor market, TTS may undertake private placements with a
minimum subscription amount, and the general meeting may in that connection decide to waive the shareholders'
pre-emptive subscription rights.
1.3.3 Shareholders not participating in future offerings may be diluted
Unless otherwise resolved or authorised by the general meeting, shareholders in Norwegian public companies such
as the Company have pre-emptive rights proportionate to the aggregate amount of the shares they hold with respect
to new shares issued by the company. For reasons relating to US securities laws (and the laws in certain other
jurisdictions) or other factors, US investors (and investors in such other jurisdictions) may not be able to participate
in a new issuance of shares or other securities and may face dilution as a result.
1.3.4 Exception from the right to vote
Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other
third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the
Norwegian Central Securities Depository (the “VPS”) prior to the Company's general meetings. The Company
cannot guarantee that beneficial owners of the Shares will receive the notice of a general meeting in time to instruct
their nominees to either affect a re-registration of their Shares or otherwise vote for their Shares in the manner
desired by such beneficial owners.
1.3.5 Future sales of Shares
Sales of substantial amounts of the Shares by certain principal shareholders, directors and key management members
or the perception that such sales could occur, could have an adverse effect on the market value of the Shares and the
Company’s ability to raise capital through future capital increases.
1.3.6 Transfer restrictions under the securities law of the United States and other jurisdictions
The Shares are not registered under the U.S. Securities Act of 1933, as amended, or the securities laws of other
jurisdictions other than the Kingdom of Norway, and the Company does not expect to do so in the future. The Shares
may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the U.S.
Securities Act) nor may they be offered or sold in any other jurisdiction in which the registration of the Shares is
required but has not taken place, unless an exemption from the applicable registration requirement is available or the
offer or sale of the Shares occurs in connection with a transaction that is not subject to these provisions. In addition,
there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in
future capital increases or rights offerings.
1.3.7 Ability to pay dividends
Norwegian corporate legislation provides that any proposal of distribution of dividends must be adopted by TTS'
general meeting of shareholders. Dividends may only be distributed to the extent that TTS has distributable funds
and TTS' board of directors find such distribution to be prudent in consideration of the size, nature, scope and risks
associated with TTS' operations and its liquidity and financial position.
As a principal rule, the Company's general meeting of shareholders may not resolve to distribute higher dividends
than the Company's board of directors has proposed or approved. If, for any reason the general meeting does not
declare dividends in accordance with the above, a shareholder will generally have no claim in respect of such non-
distribution, and TTS will, as a general rule, have no obligation to pay any dividend in respect of the relevant period.
1.3.8 Enforceability of civil liabilities
TTS is a public limited liability company organised and existing under the laws of Norway. The majority of the
members of the board of directors or the Company's executive management reside in Norway. As a result, it may not
be possible for investors to effect services of process in other jurisdictions upon such persons or the Company, to
enforce against such persons or the Company judgements obtained in non-Norwegian courts, or to enforce
judgements on such persons or the Company in other jurisdictions.
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1.3.9 Shareholders' limited ability to take legal proceedings against the Company
The rights of the Company's shareholders are governed by Norwegian law and by the articles of association of the
Company. These rights may differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law
limits the circumstances under which shareholders of Norwegian companies may bring derivative actions. For
instance, under Norwegian law, any action brought by a company in respect of wrongful acts committed against the
Company will be prioritised over actions brought by shareholders claiming compensation in respect of such acts. In
addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated
upon, securities laws in other jurisdictions.
1.3.10 Exchange rate risk for foreign shareholders
The Shares are priced in Norwegian kroner (NOK), the lawful currency of Norway, and any future payments of
dividends on the Shares will be denominated in NOK. Accordingly, any investor outside Norway is subject to
adverse movements in the NOK against their local currency, as the foreign currency equivalent of any dividends
paid on the Shares or price received in connection with any sale of the Shares could be materially adversely affected.
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2. RESPONSIBILITY STATEMENT
Statement from the Board of Directors of TTS Group ASA
This Information Memorandum has been prepared by TTS Group ASA to provide information regarding the
contemplated Transaction.
The Board of Directors of the Company confirms that, having taken all reasonable care to ensure that such is the
case, the information contained in the Information Memorandum is, to the best of our knowledge, in accordance with
the facts and contains no omission likely to affect its import.
Bergen, 4 June 2012
The Board of Directors of TTS Group ASA
Trym Skeie
Chairman of the Board
Kjerstin Fyllingen
Board member
Anne Breive
Board member
Bjarne Skeie
Board member
Jan Magne Galåen
Board member
Jarle Dyrdal
Employee Representative
Karen Mørkestøl
Employee Representative
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3. DESCRIPTION OF THE TRANSACTION
3.1 Overview of the Transaction
On April 17, 2012 TTS Group ASA entered into an agreement to sell its drilling equipment business, a part of TTS
Energy division, and relevant subsidiaries, to Cameron Norge Holding AS for USD 270 million (less target net
debt), plus a turnover based earn-out model for a three-year period. The divestment shall be carried out by way of
sale of 100 per cent of the shares in TTS Energy AS, a wholly-owned subsidiary of TTS Group ASA and owning the
group of and/or entities carrying out the drilling equipment business; se Section 3.2 below for more information. The
transaction strengthens TTS Group financially and enables it to focus upon further growing and developing the
group.
The divestment is an active step by TTS to participate in the on-going further developments of the drilling
equipment industry, and is industrially right for both the Group as whole and for its drilling equipment business unit.
With the divestment, TTS Group will depart the drilling equipment industry, both offshore and onshore.
Offshore Handling (cranes and winces), which is also a part of the TTS Energy division, is not included in the
divestment, and TTS Group will thus continue to develop and grow Offshore Handling. After the transaction, TTS
Group will consist of TTS Marine, TTS P&L (Port & Logistics) and Offshore Handling.
3.2 TTS drilling equipment business
TTS drilling equipment business delivers high performance drilling equipment, multifunctional rigs and world class
control systems to the international energy industry. It provides unique solutions and advanced technologies based
on a highly skilled workforce and many years of experience. The designs offer efficient and cost competitive
solutions for rigs and vessels.
TTS delivers on- and offshore drilling equipment for platform rigs, jack ups and semi submersibles. The company
delivers integrated drilling packages to international drilling contractors. TTS also delivers offshore modular rigs
based on the internationally patented rack & pinion hoisting principle, tailored to meet the specific requirements of a
field development, whether the rig is for workover, drilling, P&A or a combination of well services. TTS also
delivers land rigs based on the same technology.
Additionally, TTS delivers a wide range of modern, innovative and cost-effective mud systems and equipment for
both on- and offshore applications.
Automated drilling equipment allows the entire operation to be remote controlled making the products safer, more
reliable and easier to use.
3.3 Consideration
Total consideration is USD 270 million less target net date (as further specified in the Agreement), plus a turnover
based earn-out model for a three-year period starting from the closing of the transaction. The consideration shall be
settled by way of cash payment. The value of the earn-out is highly uncertain and is contingent on the Drilling
Equipment Business achieving certain revenue growth targets in the next 3 years. The earn-out model is based on the
revenue exceeding a hurdle amount in each of the 3 years. TTS would be entitled to a per cent of the amount
exceeding the hurdle amount in each year.
The transaction before earn out will give TTS Group a profit of approximately NOK 300 million. Due to the
uncertainty of the earn-out, no income from the earn-out has been assumed in the estimated profit calculation.
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3.4 Completion & Conditions
The transaction is expected to close in the second quarter of 2012.
The transaction is subject to customary closing conditions, including inter alia the following conditions:
the Norwegian Competition Authority (Nw.: Konkurransetilsynet) has cleared the Transaction;
neither the Seller nor the Purchaser is in material breach of its obligations under the Agreement;
there exists no material breach of the Seller's warranties which is not remedied, as further specified in the
Agreement;
TTS Group ASA and TTS Energy AS have entered into and completed a saleback agreement relating to the
offshore handling business;
certain named material agreements have been terminated with no further obligation or liability to TTS
Energy AS or any of its subsidiaries;
TTS Energy AS has obtained in writing all necessary approvals from third parties as further specified in the
Agreement;
the parties agree on certain project estimates as of 31 March 2012 to be binding for purposes of generating a
completion balance sheet;
TTS Group ASA and TTS Energy AS agree, execute and deliver certain named side agreements; and
no material adverse change shall have occurred prior to completion.
3.5 Expenses relating to the Transaction
Expenses relating to the transaction mainly relate to a success fee for Pareto Securities and cost relating to legal
advisory services. Total expenses relating to the transaction is estimated to NOK 28 million.
3.6 Interest of certain persons in the Transaction
No agreements have currently been entered into providing benefits for certain persons as a result of the Transaction.
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4. PRESENTATION OF TTS GROUP ASA
4.1 Incorporation, registered office and registration number
The Company’s legal and commercial name is TTS Group ASA. The Company is a Norwegian Public Limited
Company organised under Norwegian law, and the Company and its business activities are governed by the
provisions of the Norwegian Public Limited Companies Act (Norwegian: allmennaksjeloven). The Company’s
registered organization number is 932 142 104. The Company was incorporated in 1974 under the name TTS
Technology ASA.
The Company’s registered office is at Folke Bernadottes vei 38, Postboks 3577 Fyllingsdalen, NO 5845 Bergen
Norway. The Company’s telephone number is +47 55 94 74 00.
4.2 History
The list below outlines the key historical events for TTS Group ASA.
Year Historical event Year Historical event
1966 Company established 2006 Established TTS Marine s.r.l., Genova, Italy
1995 Listed on Oslo Stock Exchange 2006 Established TTS Vietnam, Hai Phong
1996 Acquired Mongstad Engineering AS 2007 Acquired ICD Projects AS, Ålesund, Norway
1997 Acquired Norlift AS 2007 Acquired Sense EDM AS, Norway
2000 Acquired Aktro AS 2007 Acquired 100% Sense MUD AS, Kristiansand, Norway
2001 Established Joint Venture in Shanghai, China 2007 Established Sense DrillFab AS, Norway
2001 Sold TTS Construction AS 2007 Established Sense EDM pte LTd, Singapore
2001 Acquired HamworthyKSE AB, Dry Cargo 2007 Established TTS Keyon Marine, China
2001 Acquired Hydralift Marine and sold TTS Aktro 2008 Acquired Wellquip Holding AS, Norway
2002 Established office in Pusan, Korea 2008 Established Jiangnan -TTS, China
2004 Acquired 100% of JV in Shanghai, China 2008 Established TTS Marine Equipment (Dalian), China
2004 Acquired LMG Cranes in Lubeck, Germany 2009 Established TTS Singapore Pte.Ltd, Singapore
2004 Acquired Liftec Oy in Tampere, Finland 2009 Established TTS Greece Ltd, Greece
2005 Established TTS BoHai Machinery in Dalian, China 2009 Established TTS Mexico, Mexico
2005 Etablished TTS Inc. in Miami, USA 2009 Established TTS Brazil, Brazil
2005 Acquired NavCiv Engineering AB, Sweden 2011 Established TTS Poland
2005 Acquired Kocks GmbH in Bremen, Germany
[15]
4.3 Legal structure
4.4 Share capital and historical development of share capital
Conversion rights related to convertible subordinated bond is 20,734,821 as per 31.12.2011.
4.5 Business overview
4.5.1 Introduction
Bergen-headquartered TTS is a global enterprise that designs, develops and supplies equipment for marine industry
and the oil & gas industry. The operations are split into three separate divisions: Marine, Energy and Port and
Logistics. TTS is one of the top three largest suppliers in its market segments. TTS is listed on the Oslo Stock
Exchange and the group’s annual turnover is in the region of NOK 4,200 million. With a worldwide workforce of
around 1,400 (prior to closing of the Transaction), TTS has over 40 years of experience in the marine industry. The
group has, prior to the closing of the Transaction, subsidiaries in Norway, Sweden, Germany, USA, China, Finland,
Korea, Czech Republic, Vietnam, Canada, Singapore, Italy, Greece and Brazil.
Colour Codes
TTS Sense Drillfab AS
Kristiansand, Norway
Drill Finance AS
Holding/dormant
Marine
Energy
Port & Logistics
TTS Mexico S.A. de C.V
Mexico
Servicios TTS Sense Tihuantlan S.A.
Mexico
Brazil
TTS Sense Mud BV
TTS Energy Canada Ltd
de CV
Kristiansand, Norway
Netherlands
Drillrig AS
Kristiansand, Norway
TTS Port Equipment AB
Dalian, China
TTS Marine Equipment Ltd
TTS Marine GmbH
Bremen, Germany
TTS EDM Inc
USA
Maskinering og Sveiseservice AS
Bryne, Norway
TTS Energy (China) Company Ltd
Shanghai, China
TTS Sense -Ind C S P Ltda
Shanghai, China TTS Port Equipment Holding AB
Gotenburg, Sweden
Dalian, China
TTS Liftec Oy
Tampere, Finland TTS Greece Ltd
Piraesus, Greece
Norlift AS
Bergen, Norway
TTS Marine Inc
Virginia, USA TTS Bohai Machinery, Co. Ltd
Alberto, Canada
Gotenburg, Sweden
Gotenburg, Sweden TTS Singapore Ltd
Singapore
TTS Hua Hai AB
Gotenburg, Sweden TTS Marine AS
Kristiansand, Norway
TTS Hua Hai Ships Equipment Co. Ltd
Shanghai, China TTS Marine Holding AB
TTS JV Jiangsu
Shanghai, China
TTS Marine Co. Ltd
Busan, Korea TTS Handling System
Drøbak Norway
TTS Cranes Norway AS
Bergen, Norway
TTS Kocks Ostrava s.r.o
Ostrava, Czech Republic TTS Shanghai Co. Ltd
Bergen, Norway
TTS Group ASA
Bergen, Norway
TTS Energy AS TTS Marine AB
Kristiansand, Norway Gotenburg, Sweden
Hydralift Marine AS
Kristiansand, Norway
TTS Marine S.r.l
Genova, Italy TTS Ships Equipment ASSingapore
TTS Energy Pte Ltd
Date Type of transaction Share capital # of shares Nominal in NOK Subscription price
01.01.2009 Opening balance 12 954 140 25 908 279 0,50
30.07.2009 Public offering 33 954 140 67 908 279 0,50 6,0000
13.07.2010 Private placement 37 315 600 74 631 199 0,50 6,3000
07.06.2011 Private placement 37 405 600 74 811 199 0,50 7,5500
02.07.2011 Debt conversion 37 674 883 75 349 765 0,50 9,2839
10.10.2011 Private placement 37 710 751 75 421 501 0,50 8,2000
31.10.2011 Debt conversion 37 845 392 75 690 784 0,50 9,2839
[16]
4.5.2 Marine
The Marine Division delivers products to the marine industry. This has been at the core of TTS Group’s activities
since the business was founded. The division has an unmatched range of shipboard equipment enabling operators to
carry out tasks quickly, efficiently and safely, both at sea and in port. Focus is on creating and delivering solutions
that allow vessels to operate to their full capacity at all times.
TTS Marine division comprises the three former divisions Dry Cargo handling, Deck Machinery and Marine Cranes.
The division is headquartered in Bergen and employs approximately 740 people. Operations are split into three
business units, Cargo Access, Deck Equipment and Services. Cargo Access is responsible for RoRo equipment, side
doors, cruise and mega yacht equipment and marine cranes. Deck Equipment is responsible for deck machinery,
hatch covers and cargo cranes. Services are the Marine division’s global service network and comprises services
department in the Norwegian, Swedish and German companies.
TTS’ joint venture companies: TTS Hua Hai Ships Equipment and TTS Bohai Machinery are also part of the Marine
Division. The joint venture companies are located in China.
The division is headed by Ivar K Hanson.
4.5.3 Port & Logistics
The Port and Logistics Division, employing approximately 85 people, operates through the companies TTS
Handling System, TTS Liftec Oy and TTS Port Equipment AB. The division, headquartered in Gothenburg, Sweden
is responsible for linkspans, mooring systems, RoRo and container terminal systems, and shipyard systems.
The division is headed by Lennart Svensson.
TTS Group ASA
Port & Logistics (Gøteborg)Marine (Bergen) Energy (Kristiansand)
Design and development of cargo and
materials handling equipment:
• Block and heavy load handling
• Cargo Handling
• Consulting
• Container terminal
• Port equipment
• Shiplift and transfer systems
• Shipyard production lines
Design and development of shipboard
equipment such as:
• Cruise vessel equipment
• Electric winches
• Hatch covers
• Hydraulic winches
• Marine cranes
• Mega yacht equipment
• RoRo equipment
• Sideloading systems
Design and development of onshore
adn offshore drilling equipment:
• Drilling packages
• Land rigs
• Mud systems
• Offshore cranes
• Offshore ships equipment
• Offshore winches
• Roll compensation systems
TTS Marine
Cargo Access Deck Equipment Services Joint Ventures
• RoRo equipment
• Side Doors
• Cruise and Mega
Yachts equipment
• Custom Marine
Cranes
• Deck Machinery
• Hatch Covers
• Cargo Cranes
• Spare parts
• Inspection & survey
• In voyage repairs
• Modernisation &
conversions
• Service agreements
• Remote access
surveillance
• Hatch Covers
• Cranes
[17]
4.5.4 Energy
The TTS Energy Division focuses on development and delivery of advanced drilling and handling solutions for oil
and gas industry globally. The division delivers high performance products including; drilling equipment,
multifunctional rigs, offshore cranes, offshore winches and world class control systems. The division focuses on
providing unique solutions based on advanced technologies. TTS Energy provides efficient and cost competitive
solutions for your rigs and vessels based on a combination of innovative technology, experienced engineers and use
of best practice.
TTS Energy has been an active partner in developing equipment capable of withstanding the extremes of harsh
environment, from the inception of the offshore industry in the North Sea.
TTS Energy is headquartered in Kristiansand, Norway employing approximately 550 people. Operations are split
into two business areas, Drilling and Offshore Handling. Drilling comprises drilling packages, drilling equipment,
land rigs and mud systems. Offshore handing comprises cranes and winches for rigs and offshore vessels.
The division is headed by Inge Gabrielsen.
4.6 Patents and licenses
TTS Energy holds a number of patents related to the development of products relating to drilling equipment. TTS
Group does hold a number of patents although these are not viewed as material to the current business.
4.7 Trend information
The Group has not experienced any changes or trends outside the ordinary course of business that are significant to
the Group between 31 December 2011 and the date of this Information Memorandum, other than those described
elsewhere in this Information Memorandum. Please see Section 4 “Presentation of TTS Group ASA” and Section 6
“Market Overview” for more information about significant recent trends in the Group’s business and relevant
markets.
TTS Port & Logistics
Production Equipment Heavy Load Equipment Port Equipment
TTS Energy
Drilling Packages
and systems
Drilling
equipment
Rack & Pinion
rigs
Offshore Handling
& Winches
Offshore cranes
and Davits
[18]
4.8 Board of Directors and Management
The Company’s registered business address, Folke Bernadottes vei 38, Postboks 3577 Fyllingsdalen, NO 5845,
Bergen, Norway, serves as c/o address for the members of the Company’s directors and management.
4.8.1 Board of directors
Chairman Trym Skeie – Skeie (43) is one of the main founders of Skagerak Venture Capital AS (SVC), where he
currently is a partner and holds the Chairman seat. Skeie has been Investment Manager in Kistefos Venture Capital,
Vice President at Silicon Capital Ltd., Manager of Accenture and structural design engineer in Hydralift ASA. He
has also had Board seats in several offshore industry companies. Skeie holds the equivalent of a Masters degree from
the Norwegian School of Economics and Business Administration (NHH), and a MSc. from the Norwegian
University of Science and Technology (NTH). Skeie has been chairman of the board since November 2009. Skeie is
a Norwegian citizen.
Director Kjerstin Fyllingen – Fyllingen (54) is corporate director of Tryg, Private & Commercial Norway. She
holds a Diploma in Economics and an MSc in Leadership,both from the Norwegian School of Management BI.
Fyllingen previously worked for Vital Forsikring, where she held various managerial positions in charge of the
business segments Public Sector, as well as Customer Service Private & Commercial. Fyllingen has furthermore
held various managerial positions in DnB within the areas of IT and Economics. She has been head of Infodoc
International and held various positions within Economics in DnV. Fyllingen has been a member of the board since
2008. Fyllingen is a Norwegian citizen.
Director Anne Breive – Breive (46) is an independent consultant. She has a Bachelor of Commerce degree from the
Norwegian School of Management (BI) and an MBA degree from Glasgow University. During the period 1994-
2005, she held various managerial positions in the Norske Skog Group, including that of Vice President Corporate
Funding and Vice President Corporate Controlling. From 2005 – 2008 Breive was CFO at Statnett, thereafter CFO at
Løvenskiold-Vækerø AS. Breive has been a member of the TTS Group ASA board since 2005. Breive is a
Norwegian citizen.
Director Bjarne Skeie – Skeie (66) has an engineering background and is known as an entrepreneur, industrial
developer and investor in the rig, offshore and equipment industries. This includes the founding of Maritime
Hydraulics AS (1970), as well as acquisitions and restructuring of a number of companies that were merged and
listed on the Oslo Stock Exchange as Skeie Group (1986/87). Skeie was Chairman of the Board of TTS Group ASA
in the period 2002-2003 and has been a member of the board since 2008. Skeie is a Norwegian citizen.
Director Jan Magne Galåen – Galøen (40) is a Portfolio Manager in Rasmussen Gruppen. He holds an MSc from
Norwegian University of Science & Technology (NTH) and has further formal education in economics from BI.
Prior to joining Rasmussengruppen he was head of the Oil Service Research team in First Securities and has
previously worked as analysis at Fearnley Fonds. Galåen has also experience from industrial companies like Aker
Maritime and Hydro Aluminium Maritime. He currently holds a position as director of the board of Metallkraft AS.
Galåen is employed by Rasmussengruppen AS which is a major shareholder in the company. Galåen is a Norwegian
citizen.
Director Karen T. Mørkestøl – Mørkestøl (59) has completed upper secondary school with emphasis on English
language and music, and has further completed a one-year course at a college of commerce. Mørkstøl worked for
ship chandler Oskar Pedersen AS from 1972 to 1980 and was later employed by Maritime Hydraulics/Aker Solution.
Mørkestøl has held a position with Sense Technology/TTS Energy since 2000. Her responsibilities have included
accounting, wages, secretarial duties, administration and human resources. In 2006, Mørkestøl was appointed
Manager HR & Administration. She was appointed employee representative of the Board of TTS Group ASA in
2010. Mørkestøl is a Norwegian citizen.
Director Jarle Dyrdal – Dyrdal (40) holds a Bachelor’s degree in Industrial Electronics from the University of
Agder. He has worked with design and development of drilling equipment for Sense Technology, now TTS, since
2001. He currently holds the position of Vice President Products & Technology in the TTS Energy division in
[19]
Kristiansand. From 1996 to 2001, he worked for Aker Solution MH in Kristiansand. Dyrdal was a member of the
Board of Directors of TTS Offshore Handling Equipment from 2008 to 2010, and was appointed employee
representative on the Board of TTS Group ASA in 2010. Dyrdal is a Norwegian citizen.
4.8.2 Management
Johannes D. Neteland – President & CEO – Neteland (54) is President & CEO of TTS Group ASA. He has a
Master of Science in Business degree from the Norwegian School of Economics (NHH). Neteland worked for Statoil
from 1981 to 1988. He was the deputy managing director of Block Watne Boliger from 1988 to 1989 and the
marketing director of the Ekornes Group from 1989 to 1991. He was the division director of Vital Forsikring from
1991 to 1998 until he assumed his current position.
Ivar K. Hanson – Executive VP – Hanson (47) is Executive Vice President of the TTS Marine division and
President of TTS Marine AS. He holds a Master of Science in Business degree from the Norwegian School of
Economics and Business Administration (NHH) and is a mechanical engineer. He started at TTS as a shipyard
consultant in 1994 and was appointed managing director of TTS Automation AS in 1999 and TTS Handling Systems
AS in 2000. From 2003 to 2004, Hanson was director of Prosafe Drilling Services AS for Technology and Projects
in the engineering division.
Lennart Svensson – Executive VP – Svensson (55) is Executive Vice Presiden of the TTS Port and Logistics
division. Svensson is a Naval Architect and Mechanical Engineer. He has eight years of experience from various
enterprises that are currently part of the MacGregor Group and two years as Marketing Director at Daros Piston
Rings AB. Svensson has worked for TTS since 1996 and as President in TTS Port Equipment AB since the company
was established in 2005.
Inge Gabrielsen – Executive VP – Gabrielsen (59) is Executive Vice President of the TTS Energy division and
President of TTS Energy AS. Gabrielsen holds a degree as M.Sc. Naval Architect and Marine Engineering from the
Norwegian Institute of Technology (NTH) in Trondheim. Gabrielsen started in TTS Sense in 2007. Before that, he
was Vice President for Vessel Mangement and Equipment Group in Subsea 7 ASA. He has also worked for different
companies in Aker Maritime for ten years.
Arild Apelthun – CFO – Apelthun (40) is CFO of TTS Group ASA. Apelthun comes from the position as CFO of
Aker Process, based in the Netherlands. Apelthun has held various positions in subsidiaries of Aker Solutions in the
USA and Europe over the last seven years. Prior to that, he worked for ABB, Aker Maritime and Ementor in
Norway. Arild Apelthun has a Master of Science in Business degree from Bodø Graduate School of Business.
Miao Reinlund – Vice President, Communications – Reinlund (38) is Vice President, Communications of TTS
Group ASA. She holds a Bachelor of Art degree in Journalism, in addition to Psychology and Economics. Ms.
Reinlund has worked for seven years as a business executive at several international corporations, and as a journalist,
executive producer and director of various international media networks for a further seven years. Reinlund is on the
Board of Directors of Den Nationale Scene theatre in Bergen, and is Personal Deputy for the Chairman of the Board
of Bergen International Festival, Norway.
4.8.3 Shareholdings, stock options, service contracts with the Group and benefits upon termination of
employment
The following table sets forth, as of the date of this Information Memorandum, the number of shares owned directly
or indirectly by each of TTS’s directors and management, and the number of options held by such persons:
Name Position No. of Shares No. of Options
Trym Skeie 1)
Chairman 2,483,875 0
Bjarne Skeie 2)
Boardmember 23,026,291 0
[20]
Karen T. Mørkestøl Boardmember 3,949 0
Jarle Dyrdal Boardmember 30,227 0
Johannes Neteland CEO 200,000 240,000
Related daughter Anna S. Neteland 100 0
Arild Apelthun CFO 0 120,000
Ivar K. Hanson Executive VP 92,422 120,000
Lennart Svensson Executive VP 200 120,000
Inge Gabrielsen Executive VP 450 120,000
1) Owns 100% of the shares in Tamafe Holding
2) Bjarne Skeie owns 20% of the shares and 100% of the voting shares in Skeie Technology AS, Skeie Consultants AS and Skeie Capital
Investment AS. Lesk AS is owned by related daughter Lena Skeie. Stisk AS is owned by related daughter Stina Skeie.
Johannes D. Neteland’s employment agreement specifies 24 months in termination benefits in the case of
involuntary termination. Members of the group management are entitled to 12 month termination benefit.
Except for the above, no members of the administrative management or supervisory bodies have entered into any
service contracts with the Company or any of its subsidiaries providing for benefits upon termination of their
employment.
No members of the Board of Directors are entitled to severance payments.
4.9 Employees
At the date of the Information Memorandum, the Group had 1,379 employees in 14 countries.
The table below reflects a breakdown of the geographical location of the Group’s employees as of the date of this
Information Memorandum.
Location Number of employees Percentage of total employees
Norway……………………………………… 645 46.7%
China………………………………………... 205 14.9%
Germany……………………………………. 169 12.3%
Sweden……………………………………… 145 10.5%
Korea……………………………………….. 62 4.5%
Czech Republic……………………………... 34 2.5%
Canada……………………………………… 30 2.2%
Finland……………………………………… 28 2.0%
Singapore…………………………………… 25 1.8%
USA………………………………………… 14 1.0%
Vietnam……………………………………. 10 0.7%
Greece……………………………………… 6 0.4%
Italy………………………………………… 5 0.4%
Brazil……………………………………….. 1 0.1%
[21]
Total 1,379 100.0%
4.10 Corporate governance
The Norwegian Code of Practise for Corporate Governance (the “Corporate Governance Code”) applies to the
Company. The Company provides the market with an annual statement concerning compliance and non-compliance
with the various recommendation of the Corporate Governance Code. It is the opinion of the Company that it
maintains high standards of corporate governance and is committed to ensure that all shareholders of the Company
are treated equally. TTS Group’s principles of corporate governance have been adopted by the Board of TTS Group
ASA in compliance with the recommendations set out in the Corporate Governance Code. For further information
regarding the corporate governance of the Company, reference is made to the annual report 2011 of the Company.
TTS Group ASA applies the Norwegian code of practice for corporate governance, dated 21 October 2010, as
amended 20 October 2011. Principally, TTS Group ASA acts in accordance with this code of practise and, with the
following few exceptions:
In accordance with the Norwegian Public Limited Companies Act and the Company’s articles of
association, the Chairman of the Board is elected by the Board unless already elected by the Annual
General Meeting.
The Company’s shareholders have on a general meeting held 3 June 2010 granted the Board of Directors
authorizations to increase the Company’s share capital by issuing discounted shares to employees with a
maximum of NOK 250,000. The authorizations are granted for a period of two years, due to the share
options programs for executive management of the Company being of terms of two years.
The Company's shareholders have on a general meeting held 19 May 2011 granted the Board of Directors:
o authorizations to increase the Company’s share capital by up to NOK 3,500,000 by issuance of
shares through one or more directed share issues, such authorization to remain effective until the
next annual general meeting and latest 30 June 2012;
o authorization to increase the company's share capital by up to NOK 220,000 by issuance of shares
to leading employees – for allocation in 2011, such authorizations remaining effective for two
years;
o similar authorizations as mentioned in item (ii) above – for allocation in 2010, however such that
any such authorizations will remain effective until the next annual general meeting; and
o authorization to increase the company's share capital by a maximum of NOK 250,000 through the
issuance of discounted shares to employees, such authorization to remain effective until the next
annual general meeting.
TTS Group ASA’s Articles of Association are available on the company’s website. The same applies to ethical
guidelines.
4.11 Major shareholders
An overview of the Company’s 20 largest shareholder as of 11 May 2012 is set out in the table below:
Name of shareholder Number of Shares
Ownership (%)
1 Rasmussengruppen AS 11,512,506 13.7
2 Skeie Technology AS 8,929,879 10.7
3 Lesk AS 5,306,058 6.3
4 Stisk AS 5,306,058 6.3
5 Skandinavia Enskilda Banken (nominee acc) 5,152,752 6.2
6 Barrus Capital AS (II) 3,455,000 4.1
7 Skagen Vekst 3,222,553 3.8
[22]
8 Skeie Capital Investment AS 2,531,263 3.0
9 Shb Stockholm (nominee acc) 2,484,641 3.0
10 Tamafe Holding AS 2,160,735 2.6
11 Odin Maritim 2,000,000 2.4
12 Mertoun Capital AS 1,534,847 1.8
13 Itlution AS 1,475,261 1.8
14 Holberg Norge 1,462,581 1.7
15 DNB NOR SMB 1,169,114 1.4
16 Skeie Consultants AS 953,033 1.1
17 Holberg Norden 876,329 1.0
18 Sal oppenheim Jr & Cie (nominee acc) 821,162 1.0
19 State Street bank and trust Co. 700,000 0.8
20 Euroclear Bank S.A. (nominee acc) 624,132 0.7
Total 20 largest shareholders 61,677,904 73.7
Others 22,054,211 26.3
Total 83,732,115 100.0
Pursuant to the Norwegian Securities Trading Act, a person, entity or group acting in concert that acquires shares,
options for shares or other rights to shares resulting in its beneficial ownership, directly or indirectly, in the
aggregate meeting or exceeding the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 and 90% of
the share capital and/or the voting rights in the Company has an obligation under Norwegian law to notify Oslo Børs
and the Company immediately. The same applies to disposals of shares) resulting in a beneficial ownership, directly
or indirectly, in the aggregate meeting or falling below said thresholds. A change in ownership level due to other
circumstances may also trigger the notification obligations when said thresholds are passed, e.g changes in the
Company’s share capital.
The Company is not aware of any shareholders or consolidated groups of shareholders owning a number of Shares
sufficient to control the Company.
4.12 Legal and arbitration proceedings
The Company is currently not involved in any governmental, legal or arbitration proceedings (including any such
proceedings which are pending or threatened of which the Company is aware), and has not been involved in any
such proceedings during the previous twelve months, which may have, or have had in the recent past, significant
effects on the Company financial position or profitability.
4.13 Material contracts
In relation to the completion of the Transaction, the Company has entered into an agreement for the sale and
purchase of the Offshore Handling Business and Interwell Contract with TTS Energy AS dated 22 May 2012, as a
consequence of the Offshore Handling Business (cranes and winches) not being included in the Transaction. The
said agreement is deemed to be a material contract.
Except for the agreement above, the Company has not entered into any material agreements outside its ordinary
course of business the last two years prior to the date of this Information Memorandum.
[23]
5. INFORMATION REGARDING THE DRILLING EQUIPMENT
BUSINESS
5.1 Corporate information
The Drilling Equipment Business is a part of TTS Energy division. TTS Energy AS (“TTS Energy”) is a Norwegian
Private Limited Company organised under Norwegian law and governed by the provisions of the Norwegian Private
Limited Companies Act (Norwegian: aksjeloven). The Company’s registered organization number is 981 919 971.
The Company was incorporated in 2000 under the name Sense Technology AS.
The Company’s registered office is at Andøyfaret 3, NO 4623 Kristiansand S, Norway. The Company’s telephone
number is +47 38 00 05 70.
Offshore Handling (cranes and winches), which is also a part of TTS Energy division, is not included in the
divestment.
5.2 History
The Drilling Equipment Division was created through the acquisition of TTS Sense AS (former Sense EDM AS) in
May 2007.
EDM Engineering & Drilling Machinery AS was established in 1997 and has designed and patented a
multifunctional rig based Rak & Pinion technology. The multifunctional rig includes state of the art technology for
efficient work over, well intervention and under balanced drilling. The company has also established a series od
advanced tubular racking systems for both onshore and offshore drilling operations.
Sense Technology was established in 2000, and has been recognised as a leading supplier of advanced drilling
control systems worldwide. Sense Technology’s drilling systems enables the drilling rigs to achieve high efficiency
and quality in their drilling operations through innovative technology combining advanced control systems and
mechanical design.
In December 2005, Sense Technology and EDM Engineering & Drilling Machinery AS merged to form Sense EDM
AS. The company changed name to TTS Sense AS in May 2008.
[24]
5.3 Legal structure
5.4 Business overview
5.4.1 Introduction
The Drilling Equipment Business delivers high performance drilling equipment, multifunctional rigs and world class
control systems to the international energy industry. It provides efficient and cost competitive solutions for onshore
and offshore rigs based on a combination of innovative technology, experienced engineers and use of best practice.
The Drilling Equipment Business is headquartered in Kristiansand, Norway employing approximately 550 people.
Inge Gabrielsen is the head of the Drilling Equipment Business.
The Business delivers high performance drilling equipment together with controls and utilities in one package, ready
for integration into any type of drilling operation. The drilling product portfolio includes:
49%
34%
Servicios TTS Sense Tihuantlan S.A.
de CV
Mexico
TTS Mexico S.A. de C.V
Mexico
TTS Energy Canada Ltd
Alberto, Canada
Drill Finance AS
Kristiansand, Norway
Drillrig AS
Kristiansand, Norway
TTS Sense Mud BV
Netherlands
TTS Sense -Ind C S P Ltda
Brazil
TTS Energy (China) Company Ltd
Shanghai, China
Maskinering og Sveiseservice AS
Bryne, Norway
TTS EDM Inc
USA
TTS Sense Drillfab AS
Kristiansand, Norway
TTS Energy Pte Ltd
Singapore
TTS Energy AS
Kristiansand, Norway
[25]
5.4.2 Offshore Drilling Packages
The Drilling Equipment Business offers high-end and complete drilling packages both for drillships,
semisubmersible rigs and jack-up rigs. The illustration below illustrates their offshore offering.
Source: TTS
National Oilwell Varco (NOV) is the biggest provider today, controlling ~60% of the market. Aker Solutions is the
second largest provider, while TTS Drilling Equipment is currently ranked as number three. The table below
illustrates their offshore product line compared to NOV and Aker Solutions.
Source: TTS. Table compares high-end equipment only.
1) TTS has not delivered Motion Compensation equipment, but has the technology to deliver such equipment
2) Only TTS and NOV has active heave compensated drawworks
3) Only TTS and NOV has column racker, catwalk machine with tail-in arm and other preferred pipehandling machines
Drilling Product Portfolio
Integrated Drilling Packages Drilling Equipment
Drilling Package for
Semi Submersibles and DrillshipsHMI & Control Systems
Hoisting & Rotation EquipmentDrilling Package for
JU / Fixed Platforms Tubular Handling
Drill Floor Tools150-400T R&P Modular Rigs
Motion Compensation250-400T Land Rigs
BOP Handling
100-150T R&P Workover Rigs LP & HP Mud Systems
Services
Drilling equipment
& packages for
Semis & Drill ships1.
Drilling equipment
& packages for
Jack Ups & Fixed
platforms
2.
Drilling equipment
for offshore
modular rigs3.
Product line AKER MH NOV TTS
Derrick Structures Yes Yes Yes
Hoisting & Rotation Yes Yes Yes(2)
Tubular Handling Yes Yes Yes(3)
Drill Floor Tools Yes Yes Yes
Motion Compensation Yes Yes Yes(1)
BOP Handling Yes Yes Yes
HMI & Controls Yes Yes Yes
Mud Systems Yes Yes Yes
[26]
5.5 Board of Directors and management
5.5.1 Board of Directors
The board of directors consists of:
Johannes D. Neteland (Chairman)
Bjarne Skeie
Arild Apelthun
Erling Oftedal (Employee representative)
Alv Repstad, (Employee representative)
5.5.2 Management
The management the Drilling Equipment Business consists of:
Inge Gabrielsen – President
Dag Stenevik – SVP Finance
Arne Lindekleiv – SVP Sales & Marketing
Tor O. Askildsen – SVP Drilling Operation
Thomas Myrvold – SVP MUD Operation
Frank H. Hansen – SVP Global Sourcing
Pål Larsen – SVP Service
5.6 Employees
At the date of the Information Memorandum, TTS Energy had 546 employees in 4 countries.
The table below reflects a breakdown of the geographical location of TTS Energy’s employees as of the date of this
Information Memorandum.
Location Number of employees Percentage of total employees
Norway……………………………………... 500 91.6%
Canada……………………………………... 30 5.5%
Singapore...…………………………………. 15 2.7%
Brazil...……………………………………… 1 0.2%
Total 546 100.0%
5.7 Selected financial information
Key financial information
The Drilling Equipment business unit has not been reported as a separate business area. The table below show the
Drilling Equipment business unit as included in the consolidated financial statements.
Amounts in NOK thousands
2011 2010
[27]
Revenue 965 397 439 069
Operating result -11 765 -108 427
Net financial result -3 333 -28 154
Profit before tax -15 089 -140 221
Tax -4 370 40 671
Profit of the year -19 459 -180 892
Total assets 1 273 369 1 288 468
Total equity 528 123 477 245
Total liabilities 745 246 811 223
[28]
6. MARKET OVERVIEW
6.1 Shipbuilding industry
One of the most important factors for the development of TTS’ markets is the shipbuilding industry. Accordingly, in
the following a short overview of the ship building market is given.
World contracting measured in number of vessels, reached a top level in 2007-2008 with more than 5,000 new
vessel orders in a single year. There was a large drop in activity following the financial turmoil and collapse in the
major shipping markets in 2008. However, the market has regained some momentum in 2010 and 2011 driven by
scrapping, slow steaming, delays and cancellations.
More than 2,000 vessels expected to be contracted during 2012 and between 2,000-2,500 vessels annually the next 8
years.
Number of new ship orders
Source: IHS Fairplay Global Fleet Statistics per February 2012
World fleet outlook
Source: IHS Fairplay Global Fleet Statistics per February 2012
6.2 Offshore market
The level of activity in the offshore market, in which the oil price is a fundamental factor, is also important for the
development of TTS. Following is a short overview of the offshore market going forward.
[29]
The US Energy Information Administration (“EIA”) expects that global oil and gas production will grow by an
average of 1% per annum over the next 20 years. Of the nearly 140 million barrels of oil equivalents (figures include
approximately 55 mmboe gas) of current global petroleum production, approximately 45 mmboe (32%) comes from
offshore (source: BP Statistical Review 2011, EIA International Energy Outlook 2011). By 2020, offshore
production is expected to increase to 75 mmboe, an increase of approximately 67%. In order to achieve this, global
exploration and production (“E&P”) spending is expected to increase further.
As shown in the chart below, E&P spending is closely related to the oil price. The financial crisis and the sharp drop
in the oil price in 2008 had a significant impact on 2009 E&P spending which showed a year on year double-digit
decline. Following the improved economic outlook and increasing oil prices, 2011 E&P spending is expected to
have shown a double digit year on year growth, bouncing back from the retreat in 2009. Going forward it is expected
that the current strong oil prices combined with a continued strengthening of the global economic outlook, will
provide support for further increase in E&P spending. This is among others driven by oil companies planning prices
are well below the current oil price and the breakeven oil price for new investments.
Oil price vs. E&P capex (left); E&P spending growth estimates (right)
Source: Schlumberger and Citigroup (various years), GlobalData (2011), ParetoResearch E&P Survey 2011
Oil planning prices (left); Breakeven of new investments (right)
Source: Pareto Research E&P Survey 2011
The increase in E&P spending is has fuelled the demand both for offshore and land rigs. This can be seen from the
graphs below.
There has been an increase in the mobile offshore drilling unit fleet of approximately 20% over the last five years to
approximately 730 units at year-end 2011. There are currently approximately 150 units under construction for
delivery from 2012 onwards, including 49 drillships and 17 semis.
0
100
200
300
400
500
600
0
10
20
30
40
50
60
70
80
90
100
1970 1975 1980 1985 1990 1995 2000 2005 2010
USD
billions
USD
/barrel
Oil Price USD/barrel (l.a)
E&P Expenditures USD billion (r.a)
0
20
40
60
80
100
120
-30%
-20%
-10%
0%
10%
20%
30%
40%1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011e
2012e
USD/bbl
Upside Nominal spending growth (lhs) Average Brent (rhs)
Y/Y change
38
7055
7080 80
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012
Oil planning price (USD/bbl)
55 58
0
20
40
60
80
100
120
140
2010 2011
Breaveven on new investments (USD/bbl)
[30]
The onshore drilling market experienced a severe downturn following the financial crisis, reaching a bottom mid-
2009. Since then the total land rigs in operation in North America has more than doubled to approximately 2,000
units.
Newbuild rig activity (left); Total land rigs in operation in North America (right)
Source: ODS Petrodata per March 2012, Baker Hughes Rig Count per January 2012
Jack up flee age (left); Semi fleet age (right)
Source: ODS Petrodata per March 2012
North Sea AHTS Fixture Rates (BHP>15,000) (left); North Sea PSV Fixture Rates (DWT>3,999) (right)
Source: ODS-Petrodata per May 2012, Pareto Research May 2012
6.3 Port and terminals industry
The third large factor impacting TTS’s development is the Port and Terminals market. Global shipping volumes
drive the demand for port equipment, which has shown continuous growth the last decades, below represented by the
0
5
10
15
20
25
30
35
40
2003 2004 2005 2006 2008 2009 2010 2011
# o
f ri
gs
Jackup Semisubmersible Drillship
0
500
1,000
1,500
2,000
2,500
Jan-0
0
Jan-0
1
Jan-0
2
Jan
-03
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
0
10
20
30
40
50
60
70
80
90
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
# o
f ri
gs
0
5
10
15
20
25
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
# o
f ri
gs
[31]
container fleet capacity. The container terminals have lately had a global growth of approximately 10% per year. The
increasing port utilization around the world has driven the demand for more effective handling systems. With lower
global activity, the demand for equipment is expected to be somewhat reduced.
Global container fleet capacity
Source: Clarksons vessel database per May 2012
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
'000 TEU
[32]
7. PRESENTATION OF TTS GROUP ASA AFTER THE
TRANSACTION
7.1 Legal structure
7.2 Business overview
7.2.1 Introduction
After the divestment TTS will have three business units: Marine, Port and Logistics and Offshore Handling. The
group will have a worldwide workforce of 955 and 2011 proforma turnover was NOK 2,594 million. The Marine
Division will be the largest division with a turnover of NOK 2,127 in 2011 and 740 employees, accounting for ~82%
of the total turnover. Port & Logistics and Offshore Handling will account for 7.4% and 10.6% of 2011 turnover
respectively. The illustration below outlines the key products per division.
Colour Codes
Holding/dormant
Marine
Offshore Handling Equipment AS
Port & Logistics
TTS Marine Holding AB
Gotenburg, Sweden
TTS Marine AS
Gotenburg, Sweden
Shanghai, China
TTS JV Jiangsu
Shanghai, China
TTS Hua Hai Ships Equipment Co. Ltd
TTS Port Equipment Holding AB
Kristiansand, Norway
TTS Hua Hai AB
Gotenburg, Sweden
TTS Marine Co. Ltd
Busan, Korea
TTS Singapore Ltd
Singapore
Gotenburg, Sweden
TTS Port Equipment AB
TTS Marine Equipment Ltd
Dalian, China
TTS Bohai Machinery, Co. Ltd
Dalian, China
TTS Marine Inc
TTS Greece Ltd
Piraesus, Greece
Shanghai, China
Norlift AS
Bergen, Norway
TTS Handling System
Drøbak Norway
TTS Group ASA
Bergen, Norway
Virginia, USA
TTS Kocks Ostrava s.r.o
TTS Marine GmbH
Bremen, Germany
Ostrava, Czech Republic
Hydralift Marine AS
Kristiansand, Norway
TTS Marine AB
Gotenburg, Sweden
TTS Shanghai Co. Ltd
Genova, Italy TTS Ships Equipment AS
Bergen, Norway
TTS Cranes Norway AS
Bergen, Norway
TTS Offshore Handling Equipment AS
Bergen, Norway
TTS Marine S.r.l
TTS Liftec Oy
Tampere, Finland
[33]
7.2.2 Marine
The Marine Division delivers products to the marine industry. This has been at the core of TTS Group’s activities
since the business was founded. The division has an unmatched range of shipboard equipment enabling operators to
carry out tasks quickly, efficiently and safely, both at sea and in port. Focusing is on creating and delivering
solutions that allow vessels to operate to their full capacity at all times.
TTS Marine division comprises the three former divisions Dry Cargo Handling, Deck Machinery and Marine
Cranes. The division is headquartered in Bergen and employs approximately 740 people. Operations are split into
three business units, Cargo Access, Deck Equipment and Services. Cargo Access is responsible for RoRo equipment,
side doors, cruise and mega yacht equipment and marine cranes. Deck Equipment is responsible for deck machinery,
hatch covers and cargo cranes. Services are the Marine division’s global service network and comprises services
department in the Norwegian, Swedish and German companies.
TTS’ joint venture companies: TTS Hua Hai Ships Equipment and TTS Bohai Machinery Equipment are also part of
the Marine Division. The joint venture companies are located in China.
The division is headed by Ivar K Hanson.
7.2.3 Port & Logistics
The Port and Logistics Division, employing approximately 85 people, operates through the companies TTS
Handling System, TTS Liftec Oy and TTS Port Equipment AB. The division, headquartered in Gothenburg, Sweden
is responsible for linkspans, mooring systems, RoRo and container terminal systems, and shipyard systems.
The division is headed by Lennart Svensson.
7.2.4 Offshore Handling
The Offshore Handling division, employing approximately 125 people, operates through TTS Offshore Handling
Equipment AS.. The division, headquartered in Bergen, Norway is responsible for offshore cranes, offshore ships
equipment and offshore winches.
The division is headed by Frank Heen.
7.3 The transaction’s significance for the earnings, assets and liabilities of TTS
The transaction will influence the group’s financial position substantially where net interest bearing debt of MNOK
511 at the end of 1st quarter 2012 to a net interest bearing asset exceeding MNOK 600 for the group. The proforma
equity ratio after the transaction is 44%.
As a result of the transaction the group will repay its debt to bank and bondholders (exception being convertible
bond where TTS has not the option to repay before maturity). The Board of Directors will later decide on strategic
TTS Group ASA
Port & Logistics (Gøteborg)Marine (Bergen) Offshore Handling (Bergen)
Design and development of cargo and
materials handling equipment:
• Block and heavy load handling
• Cargo Handling
• Consulting
• Container terminal
• Port equipment
• Shiplift and transfer systems
• Shipyard production lines
Design and development of shipboard
equipment such as:
• Cruise vessel equipment
• Electric winches
• Hatch covers
• Hydraulic winches
• Marine cranes
• Mega yacht equipment
• RoRo equipment
• Sideloading systems
Design and development offshore
equipment:
• Offshore cranes
• Offshore ships equipment
• Offshore winches
[34]
matters including the future capital structure of the group and decisions relating to extraordinary dividends in 2012,
if any.
The transaction represents a significant portion of the group’s activity. Turnover for the Drilling business was NOK
952m which represents approx. 26.8% of the total turnover for the group. In 1st quarter the turnover was NOK 313m
or approx. 36.4 % of the group’s turnover. In 2011 the Drilling business reported an EBITDA of NOK 20.9m, which
represents approximately 10.6% of total EBITDA for the group. In 1st quarter 2012 the EBITDA was NOK 10.3m
which represents approx. 15.7% of the group’s total EBITDA.
With the sale of the drilling division a substantial part of the intangible assets for the group has been sold. In addition
to goodwill, research and development reflecting the last 2 years investments in drilling products and the deferred
tax assets has been reduced significantly.
Working capital was influenced by the 3 land rigs that have been in stock for the last 3 years. These are included in
the sale of the drilling unit and will cause the working capital to be reduced. This is offset by a positive cash flow
from the large drilling projects.
[35]
8. HISTORICAL FINANCIAL INFORMATION
8.1 Summary of significant accounting policies
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU. The IFRS principles have been applied consistently for 2011, 2010 and
2009.
Please see Section 10.3 “Incorporated by Reference” in this Information Memorandum for link to the Company’s
significant accounting policies.
8.2 Historical financial accounts
The selected historical consolidated financial information for TTS Group ASA set forth in this section has been
derived from the Company’s audited group financial statements for the financial years 2011, 2010 and 2009, and the
unaudited quarterly reports for Q1 2012 and Q1 2011. The tables should be read in conjunction with the financial
statements as incorporated by reference in this Information Memorandum (see section 10.3 “Incorporated by
reference”).
These financial statements have been prepared in accordance with IFRS and the Company`s accounting principles
may be found in the related Annual Reports.
8.2.1 Consolidated income statement
Amounts in NOK thousands Year Year Year
31 Dec 31 Dec 31 Dec
2011 2010 2009
Audited Audited Audited
Project revenue .................................................... 3 524 372 3 225 819 3 784 087
Other income ....................................................... 21 586 14 990 41 232
Total revenues and income ............................... 3 545 959 3 240 809 3 825 319
Cost o f goods sold .............................................. 2 388 330 2 396 428 2 900 892
Employee benefits expense ................................. 725 142 617 148 663 467
Depreciation and impairment charges ................. 59 151 51 979 47 306
Other depreciation/amortisation .......................... 0 0 99 229
Other operating expenses .................................... 268 185 233 609 277 917
Losses on accounts receivables ........................... 12 953 20 848 88 949
Income from investments in joint ventures ........ -46 936 -30 936 -21 641
Operating profit ................................................. 139 134 -48 267 4 056 118
Other interest income .......................................... 3 662 17 994 24 459
Other financial income ........................................ 60 729 26 898 37 581
Other interest costs .............................................. -99 698 -146 426 -97 337
Other financial expenses ...................................... -41 620 -6 302 -45 844
Profit before income tax ................................... 62 207 -156 103 -81 142
Income tax expense ......................................... -39 311 -40 553 -63 460
Profit/(loss) for the year .................................... 22 896 -196 656 -248 482
Comprehensive Income
Net profit (loss).................................................... 22 896 -196 656 -248 482
Foreign currency difference................................. -16 246 21 998 -41 337
Total comprehensive income ............................ 6 650 -174 658 -289 819
Earnings per share (NOK per share).................... 0,30 -2,76 -5,72
Diluted earnings per share (NOK per share) ....... 0,27 -2,74 -5,63
Consolidated statement of comprehensive income Q1 2012 and Q1 2011
Amounts in NOK thousands Period Period
[36]
31 March 2012 31 March 2011
Unaudited Unaudited
Income from projects 854 761 932 250
Other operating income 4 138 4 010
Total operating income 858 899 936 261
Raw materials and consumables used 537 097 693 478
Other operating costs 269 496 224 694
Result from JV ( - is income) -13 187 -11 512
EBITDA 65 494 29 601
Depreciation 13 609 13 622
Operating profit 51 885 15 979
Financial income 16 924 10 875
Financial expense 41 768 28 013
Profit/loss before tax 27 041 -1 159
Tax 6 419 11 886
Net profit/loss for the period 20 622 -13 045
Comprehensive income
Net profit/loss for the period 20 622 -13 045
Currency differences -7 564 1 309
Comprehensive income 13 057 -11 736
Earnings per share (NOK) 0,26 -0,18
Diluted earnings per share (NOK) 0,20 -0,16
[37]
8.2.2 Consolidated balance sheet
Amounts in NOK thousands Year Year Year
31 Dec 31 Dec 31 Dec
2011 2010 2009
Audited Audited Audited
Assets
Non-current assets
Intangible assets
Deferred tax assets ................................................................. 137 524 162 460 187 630
Research and development .................................................... 274 793 270 659 279 818
Licences and patents .............................................................. 10 752 14 568 10 708
Other intangible assets ........................................................... 3 315 3 706 3 575
Goodwill ................................................................................ 827 184 827 184 828 083
Total intangible assets ......................................................... 1 253 567 1 278 577 1 309 814
Fixed assets
Property ................................................................................. 14 548 14 569 13 489
Buildings................................................................................ 19 792 20 584 27 040
Machinery and vehicles ......................................................... 9 407 14 490 24 111
Furniture, office-, and computer equipment .......................... 74 256 71 059 65 143
Total fixed assets .................................................................. 118 004 120 702 129 783
Financial fixed assets
Investment in joint ventures .................................................. 169 723 120 730 93 960
Investment in shares .............................................................. 222 222 1 945
Other receivables ................................................................... 145 0 5 584
Pensions ................................................................................. 7 802 7 758 9 668
Total financial fixed assets .................................................. 172 867 128 760 111 157
Current assets
Inventories ............................................................................. 382 794 422 587 462 693
Trade receivable .................................................................... 486 875 488 799 565 141
Other receivable ..................................................................... 213 084 192 717 192 348
Acquired, non-invoiced production ......................................... 317 756 368 057 456 185
Derivative financial instruments ............................................ 20 710 48 777 53 210
Prepayments to suppliers ....................................................... 146 426 130 690 217 741
Cash and cash equivalents ..................................................... 435 750 272 331 191 907
Total current assets ............................................................ 1 984 396 1 923 959 2 138 720
Total assets ........................................................................... 3 528 835 3 451 998 3 689 474
Equity
Capital and reserves attributable to equity holders of the Company
Issued share capital ................................................................ 37 845 37 316 33 954
Treasury shares ...................................................................... -18 -18 -18
Share premium reserve .......................................................... 384 891 376 057 337 911
Other equity ........................................................................... 417 665 389 308 564 036
Total equity .......................................................................... 840 383 802 734 935 883
Liabilities
Provision for liabilities
Deferred tax ................................................... 26 464 25 559 22 339
Total provision for liabilities ...................... 26 464 25 559 22 339
Liabilities
Non-current liabilities
Convertible Callable Unsecured Subordinated Bond ............ 152 620 0 0
Bond loan............................................................................... 0 400 000 400 000
Debt to financial institutions ................................................. 35 363 45 132 30 537
Other long-term liabilities ..................................................... 0 75 000 0
Total non-current liabilities ............................................... 187 984 520 132 430 537
Liabilities
Current liabilities
Bond loan............................................................................... 400 000 0 0
Debt to credit institutions ...................................................... 355 385 550 758 600 005
Payables to suppliers ............................................................. 339 615 332 513 339 466
Income taxes payable ............................................................ 11 142 5 680 19 308
Other taxes payable ............................................................... 46 062 33 667 37 706
Prepayments from costumers ................................................ 616 516 447 214 639 938
Non-invoiced production costs, suppliers ............................. 98 843 336 732 149 791
Derivative financial instruments ............................................ 108 551 69 666 91 876
Other current liabilities .......................................................... 497 892 327 342 422 624
Total current liabilities ....................................................... 2 474 006 2 103 572 2 300 715
[38]
Total liabilities ..................................................................... 2 688 452 2 649 264 2 753 591
Total equity and liabilities .................................................. 3 528 835 3 451 998 3 689 474
Consolidated statement of financial position Q1 2012 and Q1 2011
Amounts in NOK thousands Period Period
31 March 2012 31 March 2011
Unaudited Unaudited
Intangible assets 1 254 199 1 255 430
Tangible assets 119 862 111 488
Financial assets 188 706 141 633
Total fixed assets 1 562 768 1 508 550
Inventories 374 780 399 585
Total receivables 1 027 393 1 132 222
Bank deposits/cash 567 150 460 355
Total current assets 1 969 323 1 992 162
Total assets 3 532 091 3 500 713
Share capital 38 080 37 298
Other equity 819 860 776 333
Total equity 857 940 813 631
Provisions 26 144 26 889
Other long-term liabilities 462 666 633 977
Long term liabilities 488 810 660 866
Current liabilities 2 185 341 2 026 216
Total liabilities 2 674 151 2 687 081
Total equity and liabilities 3 532 091 3 500 713
[39]
8.2.3 Consolidated cash flow statement
Amounts in NOK thousands Year Year Year
31 Dec 31 Dec 31 Dec
2011 2010 2009
Audited Audited Audited
Profit before income tax .................................... 62 207 -156 103 -311 942
Adjusted for:
Income taxes paid .............................................. -25 007 -19 308 -13 903
Amortisation ...................................................... 59 151 51 979 47 305
Depreciation shares ........................................... 0 2 800 0
Depreciation fixed assets/goodwill .................... 99 229
Interest paid cost ................................................ 99 698 107 836 77 737
Profit/loss from JV ............................................ -46 936 -30 936 -21 641
Difference between pension changes and payments
to/from pension schemes ................................... 5 033 1 860
1 694
Inventories, customers and suppliers ................. 66 819 108 990 -371 704
Other receivables and short term liabilities ....... 187 812 65 169 134 396
Net cash generated from operating activities 408 777 132 287 -358 829
Cash flows from investing activities
Proceeds from sale of fixed assets ..................... 9 346 6 000 4 531
Disbursements from acquisition of fixed assets -39 924 -20 404 -44 674
Disbursements of own development ................. -25 874 -12 904 -68 218
Payments on other claims (loans) ...................... -2 185
Foreign currency gains/loss related to investments 604
Net cash used in investing activities ............... -56 452 -27 308 -109 942
Cash flows from financing activities
Proceeds from issuance of short- term/long-term debt 186 000 75 000 0
Disbursements on short- term/long –term debt . -204 242 -114 710 -98 092
Net change in bank overdraft facility ................ -81 330 81 482 351 703
Interest paid ....................................................... -99 698 -107 836 -77 737
Proceeds from issued new share capital ............ 9 635 41 509 231 208
Net cash used in financing activities .............. -189 905 -24 555 407 082
Net (decrease)/ increase in cash, cash equivalents and
bank overdrafts ................................................ 162 419 80 424 -61 689
Cash, cash equivalents and bank overdrafts at beginning
of year 01.01 ...................................................... 272 331 191 907 253 596
Cash, cash equivalents and bank overdrafts at end of
year 31.12.......................................................... 434 750 272 331 191 907
Consolidated cash flow statement Q1 2012 and Q1 2011
Amounts in NOK thousands Period Period
31 March 2012 31 March 2011
Unaudited Unaudited
EBITDA 65 494 29 601
Change in net current assets 1 029 117 325
Cash from operations 66 523 146 926
Acquisition of tangible fixed assets -11 118 -4 670
Other investing activities - -
Cash from investments -11 118 -4 670
New loans and repayment 95 500 65 263
Paid-in equity 4 500 -
Net interest paid -23 004 -19 495
Cash from financing 76 996 45 768
Change in cash 132 400 188 024
Cash position OB 434 750 272 331
Cash position CB 567 150 460 355
[40]
8.2.4 Consolidated statement of changes in equity
Amounts in NOK thousands Year Year Year Q1 Q1
31 Dec 31 Dec 31 Dec 31 March 31 March
2011 2010 2009 2012 2011
Audited Audited Audited Unaudited Unaudited
Paid in equity
Share capital ................................................. 37 845 37 316 33 954 38 087 37 316
Treasury shares ............................................ -18 -18 -18 -18 -18
Share premium reserve ................................ 384 891 376 058 337 912 389 149 376 057
Total paid in equity ...................................... 422 718 413 356 371 848 427 218 413 356
Retained earnings
Retained earnings and minority 1 Jan. ......... 389 379 564 035 853 277 417 665 389 379
Acquisition/disposal of own shares ............. 0 0 576 0 0
Dividends ..................................................... 0 0 0 0 0
Foreign currency differences ....................... -16 246 21 998 -41 337 -7 564 -1 309
Other items ................................................... 21 634 0 0 0 22 633
Profit/loss for the year .................................. 6 650 -196 656 -248 481 20 622 -11 736
Retained earnings 31 Des. ........................ 417 665 389 379 564 035 430 722 400 276
Equity in total .............................................. 840 383 802 734 935 883 857 940 813 631
8.2.5 Net interest bearing debt
Amounts in NOK thousands 31 Dec 2011 31 Dec 2010 31 Dec 2009 1Q 2012 1Q 2011
Interest bearing debt* ........................... 983
248
1 070
890
1 030
537
1 077
957
1 154
814 - Net cash ...................................... 434
750
272
331
191
907
567
150
460
355
Net interest bearing debt ................... 548
498
798
559
838
630
510
807
694
459
* Convertible subordinate bond loan has been presented at nominal value.
In February 2012 TTS entered into a financing agreement with a bank syndicate consisting of Nordea, SEB and
Sparebanken Vest which included a NOK 100m 1-year term loan, a NOK 500m 3 year multi-currency credit facility
and a NOK 1.3 billion bonding facility. The financing agreement replaces the previous 1 year revolving funding
arrangement with Nordea and Sparebanken Vest. In addition the agreement includes a 12 month NOK 400m
“bridge to bond” facility to improve flexibility relating to the refinancing of the NOK 400m senior unsecured bond
loan that is due in May 2012. In May TTS utilized the facility and repaid the bond loan. TTS aims to repay all
outstanding debt under the agreement in connection with the completion of the Transaction.
There are certain covenants related to the finance agreement relating to a minimum equity ratio, minimum amount of
equity and leverage ratio. TTS is not in breach nor does it expect to be in breach of these covenants.
8.2.6 Significant changes to TTS’s financial or trading positions since 31 March 2012
Since 31 March 2012, there has been no significant change in TTS’s financial or trading positions.
8.2.7 Key ratios
The table below sets forth some consolidated key ratios for TTS for the financial years 2011, 2010 and 2009, and 1Q
2012 and 2011.
Key ratios 31 Dec 2011 31 Dec 2010 31 Dec 2009 1Q 2012 1Q 2011
[41]
Booked Equity ratio .............................. 23,8% 23,3% 25,4% 24,3% 23,3% Equity ratio adjusted for convertible
subordinated bond .................................
28,7% N/A N/A 29,0% 28,3%
NIBD/EBITDA ..................................... 2,77 -215 -9,95 7,80 -23,46
Earnings per share (NOK per share) .... 0,30 -2,76 -5,72 0,26 -0,18
Diluted earnings per share (NOK per
share) ......................................................
0,27 -2,74 -5,63 0,20 -0,16
8.3 Segmentation
The following table shows the total revenues by category of activity for the period covered by the historical financial
information.
Turnover (NOK million) 2011 2010 2009 31.03.12 31.03.11
Marine..................................................................................................................................................................... 2 127,0 2 229,5 2 325,7 456,0 628,7
Port and Logistics................................................................................................................................................... 191,4 299,2 331,0 22,9 49,7 Energy..................................................................................................................................................................... 1 227,6 712,1 1 180,4 380,0 257,8
Group/other. ........................................................................................................................................................... 0,1 0,2 -11,8 - -0,2
SUM. ...................................................................................................................................................................... 3 546,0 3 241,0 3 825,3 858,9 936,0
EBITDA (NOK million) 2011 2010 2009 31.03.12 31.03.11
Marine..................................................................................................................................................................... 172,6 158,7 93,7 56,7 38,8
Port and Logistics................................................................................................................................................... 15,5 20,6 19,6 15,1 -9,7
Energy..................................................................................................................................................................... 20,4 -168,6 -192,0 -4,1 4,6 Group/other. ........................................................................................................................................................... -10,3 -7,0 -5,5 -2,2 -4,1
SUM. ...................................................................................................................................................................... 198,3 3,7 84,3 65,5 29,6
8.4 Capital and indebtedness
The following table shows the actual capitalisation for TTS as of 31 March 2012.
[42]
Amounts in NOK thousands 31 March 2012
Current debt
Secured ............................................................................................................................................................... 577 366
Unsecured .......................................................................................................................................................... 1 607 974
Total current debt ............................................................................................................................................ 2 185 341
Non-current debt
Secured ............................................................................................................................................................... 462 666
Unsecured .......................................................................................................................................................... 26 144
Total non-current debt .................................................................................................................................... 488 810
Shareholder equity
Share capital ....................................................................................................................................................... 38 098
Legal reserves .................................................................................................................................................... 389 126
Other reserves .................................................................................................................................................... 430 716
Total shareholder equity ................................................................................................................................. 857 940
Total capitalisation........................................................................................................................................... 3 532 091
Cash and cash equivalent ................................................................................................................................... 567 150
Trading securities ............................................................................................................................................... 0
Liquidity............................................................................................................................................................ 567 150
Current financial receivable ........................................................................................................................... 909 929
Sum current liquidity and receivables ........................................................................................................... 1 477 079
Current financial debt to financial institutions.......................................................................................... 572 466
First years instalment of long-term debt ............................................................................................................ 4 900
Other current financial debt .............................................................................................................................. 1 112 868
Current financial debt ..................................................................................................................................... 1 690 234
Net current financial indebtedness ................................................................................................................. 213 155
Non-current bank loans ...................................................................................................................................... 312 591
Bonds issued*..................................................................................................................................................... 188 000
Other non-current loans ..................................................................................................................................... 0
Non-current financial indebtedness ............................................................................................................... 500 591
Net financial indebtedness ............................................................................................................................... 713 746
* Convertible subordinate bond loan has been presented at nominal value.
TTS is continuously monitoring financial and liquidity risks. The company works towards ensuring that there is a
reasonable balance between short term and long term financing. The current credit facilities are described in section
8.2.5 above. In addition TTS actively uses joint cash pool arrangements to improve accessibility and flexibility
relating to liquidity.
8.5 Working capital statement
In the opinion of the Company, the Company and the Group, has sufficient working capital for its present
requirements for at least the 12 months’ period following the date of publication of this Information Memorandum.
8.6 Independent auditor
The Group’s auditor is KPMG, represented by state authorized public accountants who are members of Den Norske
Revisorforeningen (The Norwegian Institute of Public Accountants). KPMG’s organisation number is 935 174 627
and its address is Sørkedalsveien 6, 0369 OSLO, Norway.
The annual financial statements for the Group incorporated by reference hereto have been audited by KPMG. KPMG
has issued an audit report on these financial statements without any qualifications or disclaimers. KMPG has not
audited or produced any report on other information provided in this Information Memorandum except for the
[43]
independent assurance report on the pro forma financial information which is enclosed as Appendix 1 to this
Information Memorandum.
[44]
9. PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma consolidated financial information included heir in, has been prepared for illustrative
purposes to show how the sale of the Drilling Equipment business might have affected TTS Group ASA if it had
been sold before 1 January 2011.
The unaudited pro forma financial information does not represent what the actual results of operations or what TTS
Group ASA financial position would have been on the dates assumed. As such, the pro forma financial information
addresses a hypothetical situation, and should be read in conjunction with audited consolidated financial statements
for 2011.
As described in Section 5 in this Information Memorandum the Energy division within the TTS Group has consisted
of a Drilling Equipment business and an Offshore Handling business.
The two business areas have been integrated parts of the legal companies which in sum make up the segmented
Energy division (reference to section 4.3 “Legal structure”), hereof does the legal entity TTS Energy AS represent
the majority part of the activity within the division both related to allocated revenue (> 90%) and allocated equity
(>90%).
The group consolidation process of companies within the TTS Group ASA is limited to the ultimate group structure.
Although the different group companies are allocated to separate divisions, no legal sub-holding structure exists, and
consequently subgroup consolidation is not required by accounting regulation or other legislation. Aggregation and
presentation of divisional information in quarterly report is limited to profit and loss accounts and is presented for
segment purposes only. Segmented balance information in the annual report is presented for segment purposes only.
The divested numbers presented below as “Drilling Equipment Business” is based upon a pro forma consolidation of
the Energy division as if there was a sub holding structure present prior to the selling process. The pro forma
consolidation process is structured as follows;
1. Unaudited local GAAP financial reports from the legal entities which is included in the Energy division.
2. Audit adjustments to local GAAP financial reports are adjusted on a group basis if substantial and
applicable.
3. Numbers is adjusted for interdivisional trade.
4. IFRS adjustments to local GAAP numbers is allocated in order to comply with group reporting accounting
principles as set out in the annual report from TTS Group ASA.
5. Purchase price allocations from prior years acquisition processes on companies that are included in the
Energy division is allocated to the divisional numbers
6. Effects from internal restructuring processes are allocated to the divisional numbers.
7. As part of the divestment of the Drilling Equipment Business, TTS Group has carried out an internal sales
process of the integrated Offshore Handling business from any legal company that is divested as part of the
sale of the Drilling Equipment business. The internal sales process have been carried out in accordance
with the regulation set out in the Norwegian Private Limited Liability Companies Act (Norwegian:
aksjeloven) §3-8. New balances in the companies that have been part of the segregation process is not
separately audited, however opening balances in the new company TTS Offshore Handling Equipment AS
is controlled by the auditor as part of their verification process as set out in the Norwegian Private Limited
Liability Companies Act §3-8. The outcome from this process is allocated to the numbers presented as the
Drilling Equipment Business.
The total number of details that goes into the consolidation process is substantial, and the consolidation process in
itself is complex. In sum the numbers presented as Drilling Equipment Business represent the best estimate for the
figures included in the consolidated financial statements as per 31 December 2011and 31 March 2012.
[45]
9.1 Basis for preparation
The unaudited pro forma consolidated financial information has been prepared for illustrative purposes only. The pro
forma financial information is based on certain management assumptions and adjustments made to illustrate what the
financial results of the Group might have been, had the Transaction (as described in Section 3 Description of The
Transaction) occurred before 1 January 2011. The pro forma financial information should be read in conjunction
with TTS Group ASA’s audited consolidated financial statements for 2011.
The pro forma financial information addresses a hypothetical situation, and therefore, does not represent the
remaining Group’s actual financial position or results as it would have been had the Transaction in fact occurred at
an earlier date, and is not representative of the results of operations for any future periods.
It should be noted that greater uncertainty is attached to the unaudited pro forma financial information than ordinary
historical accounting information. Investors are cautioned against placing undue confidence on this pro forma
financial information.
The pro forma financial information shows how the Transaction might have affected the remaining Group’s
consolidated income statement for 2011 and consolidated income statement of Q1 2012 if the Transaction had taken
place before 1 January 2011. In addition, it is shown below how the Transaction might have affected the unaudited
consolidated balance sheet as per 31 March 2012 if the Transaction had occurred before 1 January 2011.
9.2 Pro forma accounting principles
The accounting principles applied for the unaudited pro forma condensed consolidated financial information are
consistent with the accounting principles used for preparing TTS Group’s audited consolidated financial statements
for 2011 (IFRS), outlined in the Accounting principles note included in TTS Group ASA’s annual report for 2011.
However, the unaudited pro forma consolidated financial information does not include all information required for
financial statements under IFRS, and should be read in conjunction with the historical information for TTS Group
ASA.
9.3 Sources of and basis for preparation of the unaudited pro forma condensed
consolidated financial information
The unaudited pro forma financial information is based on the audited consolidated financial statements for the year
ended 31 December 2011 for the Group, the unaudited income statement of Q1 2012 and the unaudited consolidated
balance sheet as per 31 March 2012.
Selected financial information for TTS Group ASA is available in Section 8 Historical Financial Information. The
2011 audited financial statements for TTS Group ASA as incorporated by reference in this Information
Memorandum (see section 10.3 “Incorporated by reference”). The 2011 audited financial statements for TTS Energy
AS as incorporated by reference in this Information Memorandum (see section 10.3 “Incorporated by reference”).
In the following, TTS Energy AS is used when referring to the legal entity TTS Energy AS. The Drilling business is
used when referring to the Drilling Equipment business which is to be transferred in the Transaction. The Offshore
Handling Equipment business (OHE) is used to refer to the Offshore Handling Equipment business reported under
the Energy division and operating under the legal entity TTS Energy AS. OHE is not part of the Transaction and
will be transferred to TTS Group ASA or its nominee before closing of the Transaction.
[46]
9.4 Pro forma consolidated income statement 2011
9.4.1 Unaudited pro forma condensed consolidated Statement of Income 2011
Notes to Comprehensive statement of income 2011
1) Revenue, raw materials and consumables used have been adjusted to reverse eliminated intercompany sales
between the Drilling Equipment business and OHE, as these transactions would have been external if the
Transaction had taken place before 1 January 2011.
2) Other operating costs have been adjusted to reflect that the Group management fee allocated to the Drilling
Equipment business would not have been passed on if the sale had taken place before 1 January 2011.
3) Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. As such, the pro
forma table includes an adjustment to remove the borrowing costs on the Group’s interest bearing debt from net
financial items in the period.
No adjustment has been made to the Group’s financial income for 2010 to reflect potential interest earned on the
cash proceeds as it is not possible to estimate the actual return on the excess proceeds.
Interest cost in the Group has been adjusted as if the sale back of OHE has been fully financed by a sales credit from
the Drilling Business. Interest costs have been estimated at Group cash pool interest rates.
5) With the exemption of the dislocation of the Drilling Equipment business, the Transaction is within the structure
of the Norwegian tax exemption method, and is not expected to have any tax effect for the Group.
The tax effect of reduced interest cost is incorporated in the pro forma adjustments.
Amounts in NO K thousands
TTS Group ASA Drilling Equipment
business
Pro forma
adjustments
Pro forma TTS
Group ASA
Notes
Income from projects 3 524 372 -965 397 13 051 2 572 026 1
Other operating income 21 586 - - 21 586
Total operating income 3 545 958 -965 397 13 051 2 593 612
-
Raw materials and consumables used 2 388 330 -620 120 13 051 1 781 261 1
Other operating costs 1 006 280 -324 367 6 720 688 633 2
Results from JV -46 936 - - -46 936
EBITDA 198 284 -20 910 -6 720 170 654
Depreciation 59 151 -32 666 - 26 485
Operating profit/loss 139 133 11 756 -6 720 144 169
-
Financial income 64 391 -26 243 - 38 148 3
Financial expense 141 317 -29 576 -59 100 52 641 3
Net financial items -76 926 3 333 59 100 -14 493
Profit before tax 62 207 15 089 52 380 129 676
-
Tax 39 311 -4 370 16 500 51 441 4
Profit for the period 22 896 19 459 35 880 78 235
Unaudited pro forma consolidated statement of Comprehensive Income 2011
Amounts in NO K thousands
TTS Group ASA Drilling Equipment
business
Pro forma
adjustments
Pro forma TTS
Group ASA
Notes
Profit for the period 22 896 19 459 35 880 78 235
Foreign currency differences -16 246 -1 337 - -17 583
Total comprehensive income for the period 6 650 18 122 35 880 60 652
[47]
9.4.2 Unaudited pro forma condensed consolidated Statement of Income Q1 2012 and the statement of
financial position end of Q1 2012
Unaudited pro forma condensed consolidated Statement of Income Q1 2012
Amounts in NO K thousands
TTS Group ASA Drilling
Equipment
business
Pro forma
adjustments
Pro forma TTS
Group ASA
Notes
Income from projects 854 761 -319 748 6 473 541 486 1
Other operating income 4 138 - - 4 138
Total operating income 858 899 - 6 473 545 624
-
Raw materials and consumables used 537 097 -201 344 6 473 342 226 1
Other operating costs 269 496 -108 076 3 203 164 623 2
Results from JV -13 187 - - -13 187
EBITDA 65 494 -10 328 -3 203 51 963
Depreciation 13 609 -9 795 - 3 814
Operating profit/loss 51 885 -533 -3 203 48 149
-
Financial income 16 924 -5 912 - 11 012 3
Financial expense 41 768 -9 084 -14 780 17 904 3
Profit before tax 27 041 2 639 11 577 41 257
-
Tax 6 419 -199 4 100 10 320
Profit for the period 20 622 2 838 7 477 30 937
Unaudited pro forma consolidated statement of Comprehensive Income Q1 2012
Amounts in NO K thousands
TTS Group ASA Drilling
Equipment
business
Pro forma
adjustments
Pro forma TTS
Group ASA
Notes
Profit for the period 20 622 2 838 7 477 30 937
Foreign currency differences -7 564 - - -7 564
Total comprehensive income for the period 13 058 2 838 7 477 23 373
[48]
Unaudited pro forma condensed consolidated statement of financial position end of Q1 2012
Notes to Comprehensive statement of income Q1 2012 and consolidated statement of financial position Q1
2012
1) Revenue, raw materials and consumables used have been adjusted to reverse eliminated intercompany sales
between the Drilling Equipment business and OHE, as these transactions would have been external if the
Transaction had taken place before 1 January 2011.
2) Other operating costs have been adjusted to reflect that the Group management fee allocated to the Drilling
Equipment business would not have been passed on if the sale had taken place before 1 January 2011.
3) Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. As such, the pro
forma table includes an adjustment to remove the borrowing costs on the Group’s interest bearing debt from net
financial items in the period.
No adjustment has been made to the Group’s financial income for 2010 to reflect potential interest earned on the
cash proceeds as it is not possible to estimate the actual return on the excess proceeds.
Interest cost in the Group has been adjusted as if the sale back of OHE has been fully financed by a sales credit from
the Drilling Business. Interest costs have been estimated at Group cash pool interest rates.
Unaudited pro forma condensed consolidated statement of financial position as per 31 March 2012
Amounts in NO K thousands
TTS Group ASA Drilling Equipment
Business
Pro forma
adjustments
Pro forma TTS
Group ASA
Notes
Assets
Intangible assets 1 254 199 -785 435 - 468 764
Tangible assets 119 862 -39 791 - 80 071
Financial assets 188 706 -3 599 - 185 107
Total fixed assets 1 562 768 -828 825 - 733 943
-
Inventories 374 780 -220 500 - 154 280
Receivables 1 027 393 -289 587 77 522 815 328 6
Bank deposits, cash in hand, etc. 567 150 -15 230 349 444 901 364 7, 9
Total current assets 1 969 323 -525 317 426 966 1 870 972
-
Total assets 3 532 091 -1 354 142 426 966 2 604 915
-
Equity and liabilities -
Share capital 38 080 -2 000 2 000 38 080 8
Other equity 819 860 -526 123 814 142 1 107 879 8
Equity 857 940 -528 123 816 142 1 145 959
-
Provisions 26 144 - - 26 144 6
Other long-term liabilities 462 666 - -275 000 187 666 9
Total long-term liabilities 488 810 - -275 000 213 810
-
Total current liabilities 2 185 341 -826 019 -114 176 1 245 146 9, 10
-
Total liabilities 2 674 151 -826 019 -389 176 1 458 956
-
Total equity and liabilities 3 532 091 -1 354 142 426 966 2 604 915
Equity to assets ratio 24,3 % 39,0 % 44,0 %
[49]
5) With the exemption of the dislocation of the Drilling Equipment business, the Transaction is within the structure
of the Norwegian tax exemption method, and is not expected to have any tax effect for the Group.
The tax effect of reduced interest cost is incorporated in the pro forma adjustments.
6) Total receivables and short term liabilities have been adjusted to reverse eliminated intercompany balances as the
balances would have been external if the Transaction had taken place before 1 January 2011.
A hold back amount related to the Transaction has been allocated to receivables.
7) The pro forma table includes the expected cash proceeds of the Transaction.
Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. The pro forma table
includes adjustment to net off the cash proceeds from the Transaction and the long- and short-term interest bearing
debt of the Group.
The pro forma table has been adjusted with to reflect corporate transaction costs related to the sale of the Drilling
business.
8) The profit from divestment of the Drilling Equipment business has been allocated to equity.
9) Parts of the funds received in the Transaction will be used to reduce the Group’s borrowings. The pro forma table
includes adjustment to net off the cash proceeds from the Transaction and the long term and short term interest
bearing debt in the Group.
10) Short term liabilities have been adjusted to reflect guaranty estimates.
9.4.3 Independent Assurance Report
KPMG has issued an Independent Assurance Report on the unaudited pro forma consolidated financial information
for TTS included in this section, comprising the pro forma consolidated balance sheet as of 31 March 2012, the
related pro forma consolidated statement of income for the 3 months then ended and the pro forma consolidated
statement of income for the year ended 31 December 2011. The report is included in Appendix 1 to this Information
Memorandum.
[50]
10. ADDITIONAL INFORMATION
10.1 Third party information
Market and industry data used throughout this Information Memorandum was obtained from various publicly
available or independent third party sources. Although the Company believes that these independent sources are
generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified
with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data
gathering process and the limitations and uncertainties inherent in any statistical survey of market size or consumer
demand. References in this Information Memorandum to research reports or articles should not be construed as
depicting the complete findings of the entire referenced report or article. The information in each report or article is
not incorporated by reference into this Information Memorandum.
The information in this Information Memorandum that has been sourced from third parties has been accurately
reproduced and, as far as the Company is aware and able to ascertain from the information published by that third
party, no facts have been omitted that would render the reproduced information inaccurate or misleading.
10.2 Documents on display
For the life of this Information Memorandum following documents (or copies thereof) may be inspected at
www.ttsgroup.com or at the Company’s business address:
i. Memorandum of Incorporation and Articles of Association of the Company;
ii. audited historical financial information for the Company’s and its subsidiaries annual accounts for 2009,
2010 and 2011 and unaudited interim report for first quarter ended 31 March 2012; and
iii. stock exchange notices, including quarterly reports, distributed by the Company through Oslo Børs’
information system after the submission of the application for listing.
10.3 Incorporated by reference
The information incorporated by reference in this Information Memorandum shall be read in connection with the
cross-reference list set out in the table below. Except as provided in this section, no information is incorporated by
reference in this Information Memorandum.
All the relevant information can be found on the Company’s webpage www.ttsgroup.com
Section in
Information
Memorandu
m
Disclosure
requirement
s of the
Information
Memorandu
m
Reference document and link Page (P)
in
referenc
e
docume
nt
Section 6 Audited
historical
financial
information
(Annex I,
Section 20.1)
TTS Group – financial statements 2011:
http://www.ttsgroup.com/PageFiles/1572/TTS_AnnualReport2011_Eng_final.pdf
P55-
P122
TTS Group - Director’s report 2011:
http://www.ttsgroup.com/PageFiles/1572/TTS_AnnualReport2011_Eng_final.pdf
P49-P54
TTS Group – financial statements 2010:
http://viewer.zmags.com/publication/856a89fc#/856a89fc/1
P51-
P113
TTS Group – Director’s report 2010:
http://viewer.zmags.com/publication/856a89fc#/856a89fc/1
P45-P50
TTS Group – financial statements 2009: P51-
[51]
http://www.ttsgroup.com/PageFiles/1572/TTS_annualreport_2009_ENG_final.pdf P109
TTS Group – Director’s report 2009:
http://www.ttsgroup.com/PageFiles/1572/TTS_annualreport_2009_ENG_final.pdf
P42-P50
TTS Energy AS – financial statements 2011
http://www.ttsgroup.com/PageFiles/420/TTS%20Energy%20AS_Arsregnskap.pdf
Section 6 Audit report
(Annex I,
Section
20.4.1)
TTS Group – Auditor’s report 2011:
http://www.ttsgroup.com/PageFiles/1572/TTS_AnnualReport2011_Eng_final.pdf
P123-
P124
TTS Group – Auditor’s report 2010:
http://viewer.zmags.com/publication/856a89fc#/856a89fc/1
P114-
P115
TTS Group – Auditor’s report 2009:
http://www.ttsgroup.com/PageFiles/1572/TTS_annualreport_2009_ENG_final.pdf
P110
Section 6 Accounting
policies
(Annex I,
Section 20.1)
TTS Group – Accounting principles:
http://www.ttsgroup.com/PageFiles/1572/TTS_AnnualReport2011_Eng_final.pdf
P61-P73
Section 6 Interim
financial
information
(Annex I,
Section
20.6.1)
TTS Group – first quarter financial statements 2012, with comparable figures for
the same period in 2011:
http://www.ttsgroup.com/PageFiles/1574/INTERIM%20REPORT%201ST%20QUARTER%
202012.pdf
P5-P10
[52]
11. DEFINITIONS
The following glossary applies in this Information Memorandum unless dictated otherwise by the context, including
the foregoing pages of this Information Memorandum.
11.1 Definitions
Agreement:............................... Agreement for the sale and purchase of shares in TTS Energy AS dated 17 April
2012 and entered into by and between TTS Group ASA (as Seller), Cameron
Holding Norge AS (as Purchaser) and Cameron International Corporation (as
Guarantor for the Purchaser's obligations)
Articles of Association: ............... The Articles of Association of the Company.
IFRS: .......................................... International Financial Reporting Standards.
Manager:..................................... Pareto Securities AS.
NOK: .......................................... Norwegian Kroner, the lawful currency of the Kingdom of Norway.
Norwegian Public Limited
Companies Act: ..........................
The Norwegian Public Limited Companies Act of 13 June 1997 no. 45
(“Allmennaksjeloven”).
Norwegian Securities Trading
Act: .............................................
The Securities Trading Act of 29 June 2007 no. 75 (“Verdipapirhandelloven”).
Oslo Børs: ................................... Oslo Børs ASA (translated “the Oslo Stock Exchange”).
Information Memorandum: ......... This Information Memorandum dated 4 June 2012 prepared in connection with
the Transaction.
Share(s): .....................................
“Shares” means common shares in the capital of TTS Group ASA and “Share”
means any one of them.
The Company: ............................ TTS Group ASA
Transaction: ................................ TTS Group ASA's divestment of its drilling equipment business, part of the TTS
Energy division, to Cameron Norge Holding AS, a subsidiary of Cameron
International Corporation (NYSE: CAM), to be carried out by way of sale of all
the shares in TTS Energy AS, being a wholly owned subsidiary of TTS Group
ASA and owning the group of and/or entities carrying out the drilling equipment
business.
USD:........................................... United States Dollars.
VPS account: .............................. An account with VPS for the registration of holdings of securities.
VPS: ........................................... Verdipapirsentralen (Norwegian Central Securities Depository), which organizes
the Norwegian paperless securities registration system.
1/56
TTS Group ASA
Folke Bernadottes vei 38
Postboks 3577 Fyllingsdalen
NO 5845 Bergen
Norway
Phone: +47 55 94 74 00
Fax: +47 55 94 74 01
www.ttsgroup.com
Pareto Securities AS
Dronning Mauds gt. 3
P.O. Box 1411 – Vika
0115 Oslo
Norway
Phone: +47 22 87 87 00
Fax: +47 22 87 87 10
www.pareto.no