A N N U A L R E P O R T 2 0 0 4

Content

This is TTS 4

Report from the CEO 6

Historical developments 8

Highlights 2004 9

Dry Cargo Handling Division 10

Marine Cranes Division 12

Material Handling Division 14

Financial highlights 16

Directors’ report 17

Profit and loss account 23

Balance sheet 24

Cash flow statement 26

Accounting principles 27

Notes 29

Auditor’s report 40

Shareholder information 40

Corporate governance 42

Senior management 45

Acquisitions 46

Companies in the TTS Group 50

TTS – continiously generating profits by being the preferred global supplier for handling equipment to

the maritime industry.

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TTS Ships Equipment GmbHTTS-LMG Marine Cranes GmbH TTS IncTTS is an international group

which develops and supplies

maritime equipment. The

operations are divided into the

divisions Dry Cargo Handling,

Marine Cranes and Material

Handling. TTS is the second

largest supplier in the world

within its market segments.

TTS including joint ventures,

has a workforce of 385

employees with main emphasis

on engineering expertise.

The group has subsidiaries in

Norway, Sweden, Finland,

Germany, China and USA,

and a branch office in Korea.

TTS Marine ASA is headquartered

in Bergen, Norway and listed

on the Oslo Stock Exchange.

This is TTS

Business conceptThe TTS group’s ambition is to

develop and supply equipment

for the maritime industry that

satisfies the market’s demands

and expectations in a way that

strengthens our customers’

productivity and economic

results. Our expertise and

resources are aimed at design

and engineering as well as

the assembly and testing of

products. All other activities

that fall under the total

delivery will normally be

purchased from subcontractors.

After-sale and service is a

prioritized area.

”Handling your requirements”

is the group’s motto. For us

this means two things. First

of all, our ambition is to be

a company that handles the

customers’ demands and

requirements.We shall supply

the solution the customer

wants, either as a standard

product or as a custom-made

solution.We take care of the

delivery from the early stages

on the drawing board until

the finished product has

been assembled and tested

at the customer’s premises.

”Handling” is the common

denominator for all our

deliveries. Our solutions

handle the customers’ loading

or transportation needs.

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TTS Marine ASATTS Ships Equipment ASTTS Handling Systems AS

TTS Ships Equipment AB

TTS Liftec Oy

TTS Marine Shanghai Co., LtdTTS Hua Hai Ships Equipment Co., LtdTTS Bohai Machinery Co., Ltd

TTS Korea

Salgs- og servicenettverk

RoRo equipmentCarcarrier equipmentSide-loading systemsCruise ship equipmentHatch coversMega yacht equipment

Dry Cargo Handling

Hose handling cranesService cranesCargo cranesSpecial cranesDavits

Marine Cranes

Heavy-load handlingTerminal systemsProduction systemsMaterial handling

Material Handling

TTS Marine ASA

Sales and service network

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The year 2004 will go down in history as a very

successful year for TTS Marine ASA. This is reflected

by our turnover and profits, as well as our share price

performance. The summary of the year’s highlights later

on in this report shows that last year was also a very

active year for the group. The acquisition of three

companies in China, Germany and Finland, as well as

the establishment of a new joint venture company,

confirm that our growth strategy has moved from talk

to action. We are proud of our success in reaching our

objectives in several demanding processes, while we

have improved the creation of value in our established

operations at the same time, in some cases dramati-

cally. We are also greatful that the owners followed

up by contributing some of the capital necessary to

finance our growth strategy.

The favourable markets for ship equipment in 2004

were of course an important factor in the Group’s

positive development. Just as important, however, have

been the strategic moves made in recent years to place

the Group in a position to capitalize on better market

conditions. Furthermore, we took another step towards

making TTS one of the leading players in the maritime

cargo handling markets through acquisitions and new

establishments last year. We have shown that we

have the ability to build the company, integrate new

operations and exploit synergies so as to strengthen

the overall group performance. We have also taken

In position for further growth

Market position (Japan excluded)

Dry Cargo HandlingRoRo equipment 25 %

Dry Cargo HandlingHatch covers 15 %

Marine CranesService-/Hose-handling cranes 35 %

Material HandlingHeavy load handling 30 %

Material HandlingProduction systems 10 %

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opportunities that arise in industries and niches that it

may be natural to include under the TTS umbrella. This

means that our goal must be to continue our growth at

the same pace as in recent years.

Our strategy for continued growth is demanding. If

we do not consistently achieve good

results, our opportunities for financing

new strategies will be limited. Hence

there must be a continuous, strong

focus on operations and earnings. The

consolidation of the newly-acquired

companies will be a top priority in the

first half of 2005.

TTS has a total of 12 companies in

seven countries around the globe.

The fact that our core market has

moved to Asia is no obstacle to further

progress and growth. The volume of

new contracts has been record high,

and we are working on handling the demand and

delivering high quality. Our objective is to be the

preferred supplier of ships equipment and terminal

systems in selected product and market segments.

We have shown in the past that we can manage our

operations sensibly in periods of low demand, and now

we are exploiting the opportunities presented by a

strong market.

TTS Marine is well-positioned for further growth!

the necessary structural measures to strengthen our

competitive ability in the crane division. As a result of

these processes, TTS has now a functional organization

of personnel and expertise in the different markets

we work in. However, success brings an expectation

of continued growth and earnings

improvement. This is only natural. Our

work on positioning TTS for further

growth in Europe and Asia is by no

means complete. The addition of new

operations along with higher levels

of activity in the established TTS

companies, means that we may exceed

a turnover of NOK 1 billion in 2005,

which would be a milestone for the

company. We must however admit

that our operations are still limited in

scope both on a Norwegian and on

an international scale. We are big in

certain key niches, but in the overall market for

deliveries to ships and ship-related operations we are

still a small player. We are therefore vulnerable to

changes in the building activity and market

fluctuations in international shipping. In order to

strengthen our position and role, we have to expand

our operations in the product areas where we are

established, and strengthen our activity in areas where

we are just beginning. We will also be considering any

J O H A N N E S D . N E T E L A N D

President & CEO

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MILL NOK

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

100

200

300

400

500

600

700

800

1966 TTS is established.

1995 TTS is listed on Oslo Stock Exchange.

1996 TTS acquires Mongstad Engineering AS, Bergen, Norway.

1997 TTS acquires Norlift AS, Bergen, Norway.

2000 TTS acquires Aktro AS, Molde, Norway.

2001 TTS establishes joint venture in Shanghai, China.

2001 TTS acquires HamworthyKSE AB, Dry Cargo division.

2001 TTS acquires Hydralift Marine AS, Kristiansand, Norway

and sells TTS Aktro.

2001 TTS is selling TTS Construction AS.

2002 TTS establishes branch office in Pusan, Korea.

2004 TTS acquires 100% of joint venture in Shanghai, China.

2004 TTS acquires LMG Cranes GmbH, Lübeck, Germany.

2004 TTS acquires Liftec Products Oy, Tampere, Finland.

2005 TTS establishes TTS Bohai Machinery Co., Ltd in Dalian, China.

The growth of TTS H I S TO R I C A L D E V E L O P M E N T S

Material Handling Equipment Marine Equipment

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Highlights 2004

IN 2004 TTS achieved a turnover of NOK 786.2

million, which was its highest ever, and had its best

ever operating profit before depreciation (EBITDA)

of NOK 42.1 million. At the end of the year orders in

hand totalled NOK 941 million, the highest ever, and

the volume of new contracts was especially good in

the Dry Cargo Handling Division. The activity in China

and other shipbuilding markets in Asia is growing

strongly.

IN JUNE TTS ENTERED into an agreement to acquire

50 per cent of the shares in TTS Hydralift Co., Ltd. in

Shanghai from National Oilwell, the joint venture

partner. The purchase sum was USD 0.1 million and

TTS now owns 100 per cent of the crane company

that was set up in 2001. The company changed its

name to TTS Marine (Shanghai) Co., Ltd., and as at

31 December 2004 employed 28 people. This had

increased to 35 employees by the end of April. The

company will focus on exports from China to other

shipbuilding markets in Asia.

WITH EFFECT FROM NOVEMBER 2004 TTS acquired

the crane division of Maschinenbau Gesellschaft

GmbH (LMG) for EUR 3.6 million. TTS-LMG Marine

Cranes GmbH, the new wholly owned company, has

21 employees in engineering, service and sales.

TTS-LMG has products that complement TTS’ crane

portfolio and the company has substantial deliveries

to German ship-owners, who build a large number

of ships in China.

IN DECEMBER TTS ENTERED into an agreement to

acquire Liftec Products Oy, a Finnish company that

supplies systems and products for loading and

unloading at ports, an area in which TTS is investing.

The price was EUR 4.0 million, of which EUR 3.5

million was paid in cash and EUR 0.5 million in TTS

shares. The company, which employs 21 people in

Tampere, Finland, changed its name to TTS Liftec Oy.

AT THE BEGINNING OF THE YEAR TTS entered into

an agreement with Dalian New Shipbuilding Heavy

Industry Co. concerning the establishment of TTS

Bohai Machinery Co., Ltd., a joint venture company.

The company will supply cranes to ships built at

Chinese yards. Each party will inject approximately

NOK 10 million into the company and operations will

begin in autumn 2005 in a new industrial building

in Dalian. During 2005 the company will take on

30-40 engineers and production workers.

THE OWNERSHIP OF TTS MARINE changed when

National Oilwell, the largest shareholder, sold its stake

in the company in November and the two Board

members from National Oilwell left the Board of

Directors. Einar Pedersen, the deputy chairman of

the Board, was elected as chairman. The share capital

was increased by NOK 734 800 to NOK 8 157 552,

equivalent to 16 315 104 shares, through a private

offering. The number of shareholders increased

throughout the year from 362 to 769, and the share

price increased by 93 per cent.

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Dry Cargo Handling DivisionThe market for deliveries of ships equipment in the Dry Cargo Handling Division was very buoyant in

2004, and the increase in demand for car carrier equipment was especially high for TTS.

TTS is the world’s second largest supplier of cargo handling

systems such as side loading systems, RoRo equipment, hatch

covers and special equipment for yachts and cruise ships.The

Dry Cargo Handling Division has operations in five countries

and is managed from Gothenburg, Sweden.The company

comprises mainly design and engineering, and all production

is carried out by sub-suppliers.

As a result of the takeover of Hamworthy KSE - Dry Cargo

Division in 2001,TTS gained a worldwide network of sales

agents and service stations.This has strengthen the group’s

market position significantly.

OperationsThe products supplied by the Dry Cargo Handling Division

include bow and stern doors, internal doors and ramps, car

decks and hatch covers.TTS Ships Equipment AB in Sweden

has considerable expertise with equipment for car carriers,

called Pure Car Truck Carriers (PCTC), which is a separate

niche in the RoRo market. In 2004 TTS received an order

to supply this type of equipment to a total of 29 car carriers

which are specially designed to carry large quantities of cars

between the continents.TTS also supplies equipment for

other types of RoRo ships and passenger ships.

TTS Ships Equipment AS in Norway has considerable

expertise in side-loading systems, cruise ships and other

smaller RoRo ships.The companies in Germany and China

have special expertise in the construction of hatch covers for

container ships, dry cargo ships and dry bulk carriers.

In 2004 TTS launched Terminal Systems, a new business

area with a product portfolio that includes systems for fully-

automated container handling on land.The fourth quarter

saw the first breakthrough for the new business area with an

important linkspan contract.The products have been jointly

developed by the Dry Cargo Handling Division and Material

Handling Division.

In December TTS acquired Liftec Products Oy (now TTS

Liftec Oy) in Tampere, Finland.The company, which has

considerable operations relating to terminal systems, is an

important factor in the investment in the new business area.

The acquisition of Liftec Products means that the group can

offer systems for handling container and container cassettes,

a product that is primarily supplied to European ports. Liftec

also has service and after-sales activities for its products.We

have high expectations for the future development of the new

business area.

Market outlookTTS has a market position for RoRo equipment and hatch

covers that allows the company to compete for all major

contracts.

The market for equipment for RoRo ships is driven by the

volume growth in the building of new ships and trade activities

that depend on RoRo ships for transport.The growth in

demand for RoRo ships, especially car carriers, continued in

2004, and so far in 2005 TTS has received orders for equipment

for a further four car carriers. In the dry cargo sector, however,

2004 saw only slight increase in contracting of ships, while

the contracting of cruise ships was moderate.

The high demand for ships equipment is expected to con-

tinue in 2005, and demand for TTS’ products in the following

years is also expected to be good.

StrategyIn 2005 the Dry Cargo Handling Division will continue to

focus on developing the market in Europe and Asia.TTS is

investing in the expansion of the Dry Cargo Handling Division

through the acquisition of other companies within established

and related areas of operation.

Edgar Bethmann (48)is Managing Directorof TTS Ships Equipment GmbH.

Jan Magnar Grøtte(51) is ManagingDirector of TTSShips Equipment AS.

Göran K. Johansson(61) is Director of the Dry CargoHandling divisionand ManagingDirector of TTSShips Equipment.

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Jorma Mäkinen (55)is ManagingDirector of TTS Liftec Oy.

Sverker Möller (62)is Executivechairman in TTS Hua Hai Ships EquipmentCo., Ltd.

Madame He Pu(52) is Director in TTS Hua HaiShips EquipmentCo., Ltd.

TTS Hua Hai ShipsEquipment Co., Ltd (50%)SHANGHAI, CHINA

- Hatch covers- RoRo equipment

40 EMPLOYEES

TTS Liftec OyTAMPERE, FINLAND

- Cargo- and container cassettes

- Robotised cargo handling (AGV)

18 EMPLOYEES

TTS Ships Equipment GmbHBREMEN, GERMANY

- Hatch covers- Yacht equipment

42 EMPLOYEES

TTS Ships Equipment ASBERGEN, NORWAY

- Side-loading systems- Smaller RoRo equipment- Hatch covers

20 EMPLOYEES

TTS Ships Equipment ABGOTHENBURG, SWEDEN

- RoRo equipment- RoPax equipment- Car Carriers equipment

78 EMPLOYEES

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Marine Cranes Division

TTS develops and delivers cranes for ships and is the world’s

largest supplier of hose handling cranes.TTS is also a consid-

erable supplier of provision cranes and cargo cranes. In 2004

workforce reductions were made in the operations in Norway.

All shares in the crane company in Shanghai, China were

purchased.This company was previously run as a joint venture

with National Oilwell.TTS also purchased the crane division

at Lübecker Maschinenbau Gesellschaft (LMG). At the

beginning of 2005 TTS entered into an agreement with Dalian

New Shipbuilding Heavy Industry Co. (DNS) to start the joint

venture company TTS Bohai Machinery Co., Ltd., which will

supply cranes to ships built at Chinese shipyards.

The Marine Cranes division has operations in four countries,

and is managed from Bergen, Norway.The operation in Norway

is organised as part of the parent company TTS Marine ASA

with offices in Bergen and Kristiansand.The operation is

specialized in that product development, sales and engineering

of cranes primarily takes place in Bergen, while after-sales and

service and industrial products are supplied from the office in

Kristiansand.When TTS Bohai Machinery Co., Ltd starts up

operations towards the end of 2005,TTS Marine Shanghai Co.,

Ltd shall see to the marketing, production and follow-up of

deliveries to shipping companies and shipyards in Asia, outside

China.TTS-LMG Marine Cranes GmbH focuses on deliveries

of larger cargo cranes in the international ships equipment

market, while TTS Korea takes care of sales and service in the

Korean market.

OperationsThe product range in the Marine Cranes Division primarily

consists of deck cranes, ranging from small service cranes to

large cranes for cargo handling, as well as davits. Following

the purchase of the crane division at LMG,TTS also supplies

wire cranes and gantry cranes.

TTS’s production of steel and equipment for cranes is based

on subcontractors in low-cost countries. Deliveries in Europe

are assembled and tested in Bergen and in Lübeck.TTS

also sees to the testing of cranes that are manufactured and

assembled by business partners in other countries.

Market outlookCrane sales are driven by the activity levels for newbuilds and

ship modernization.The generally weak market in Europe

showed signs of improvement in 2004. However, in the Asian

markets the level of activity was high. Profitability has been

under pressure as a consequence of unfavourable exchange

rates, because components and fixtures are purchased in euro,

while the finished deliveries are settled in dollars.

Contracting of new tankers has shown a positive development

in recent years. In the market for medium sized and large

hose handling cranes, in which TTS has a dominant position,

the order intake was good in 2004.Work to strengthen the

division’s position in other market segments, including cargo

cranes, container cranes and davits, is beginning to show results

in terms of the volume of new orders.

So far in 2005 the generally positive market trend has

become stronger, and the currency situation is more favourable

than in parts of the previous year.

StrategyAs a consequence of developments in the market and low

profitability, the crane sector operations were reorganized

during 2004.TTS is now well-organized so as to handle the

increasing demand for cranes. Marketwise the division will

focus on maintaining its strong market position for hose

handling cranes and strengthening its market position in other

crane segments.The market for cargo cranes and various

special cranes is considerable.TTS has established the right

crane range to get the ship owners and shipyards attention,

and also has a market and service network that makes it

possible to have a position in after-market activities.

TTS is well-positioned in the Asian and European markets

through the acquisition of the crane division at LMG and

investments in two operations in China, as well as the sales

offices in South Korea.

In 2004 TTS went through a major reorganization of its crane operations in Norway. The company

strengthened its competitive edge through acquisitions made in Germany and China, in addition to

starting new operations in the Chinese market in 2005.

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Ivar K. Hanson(40) is Directorof the MarineCranes Division.

Arne Knudsen (44)is ManagingDirector of TTS Marine(Shanghai) Co., Ltd.

Per Sigurd Aulin (58)is Managing Directorof TTS-LMG MarineCranes GmbH.

Wanho Kuk (54)is Director of TTS Korea.

TTS-LMG Marine CranesGmbHLÜBECK, GERMANY

- Wire cranes- Gantry cranes- Service

20 EMPLOYEES

TTS Marine (Shanghai) Co., LtdSHANGHAI, CHINA

- Sales- Service- Assembling

35 EMPLOYEES

TTS KoreaPUSAN, KOREA

- Sales- Service

6 EMPLOYEES

TTS Marine ASABERGEN AND KRISTIANSAND,NORWAY- Hose handling cranes- Service cranes- Cargo cranes- Special cranes - Davits - Service120 EMPLOYEES

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TTS is an international supplier of heavy-load systems and

different solutions for material handling with a focus on efficient

handling and good logistics.The deliveries are primarily to

shipyards and heavy industry.TTS has also developed tech-

nology for container terminals and ships that involves a radical

improvement in the throughput time for containers at the

ports.

The Material Handling Division has operations in Drøbak,

Norway through TTS Handling Systems AS. Marketwise,

the division benefits from the group’s strong position in the

international ships equipment market.

OperationsThe largest product area for the division is production lines for

shipyards.The heavy-load systems are also primarily aimed at

the shipbuilding industry and comprise a number of solutions

for the transport of ships and ship sections at the shipyards in

connection with ship launches, lifting from the water and

repairs.

The deliveries of systems for material handling in connection

with industry production are primarily to steel and aluminium

works.The development of patented technology for container

terminals has mainly been related to the FastShip project.

FastShip is a concept for rapid door-to-door container transport

between the USA and Europe where TTS may receive orders

totalling NOK 1 300 million if the project is realized.

Market outlookThe increased demand for ships has meant that investment in

the shipbuilding industry has increased dramatically in the last

year.This has generated growth in the market for TTS’ pro-

duction lines at shipyards and a significant number of projects

within this product area are expected in the coming years.

In recent years TTS has expanded its heavy-load product

range.The new system is primarily designed to handle small

vessels and sections that require greater flexibility and cost-

efficient solutions.These systems is expected to expand the

market segment.

In 2004 demand for TTS’ heavy-load and material handling

products was low. In 2005 several new contracts were signed

and the outlook for the year is more positive.

The American authorities allocated USD 40 million to the

FastShip project in connection with plans for a terminal at

Philadelphia.The project has changed its strategy, and it aims to

secure financing and build the ships in Europe. In 2003 a letter

of intent was entered into with Izar, a Spanish shipbuilding

company, concerning the building of three ships with an option

for one additional ship. Clarification concerning financing is

expected in 2005.Through its cooperation agreement,TTS

has the right to supply technology for container terminals and

equipment for cargo handling to the ships.

StrategyIn 2005 the Material Handling Division will focus on cooperation

with other TTS companies in connection with the development

of the new Terminal Systems business area.The current

cooperation with Syncrolift on the development and delivery

of heavy load systems will continue. In the area of production

lines and material handling, we are considering acquisitions

and the development of alliances to increase our volume in a

growing market.

Material Handling DivisionTTS had several sizeable deliveries in the Material Handling Division in 2004. The market for

material handling contracts was slow for a large part of the year, but improved significantly at

the beginning of 2005.

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Bjørn O Hansen (59)is Director of theMaterial HandlingDivision andManaging Directorof TTS HandlingSystems AS.

TTS Handling Systems ASDRØBAK, NORWAY

- Material handling for the heavy industry- Production lines and heavy lifting equpimnet for

the shipbuilding industry- Special equipment for container terminals

18 EMPLOYEES

Financial highlights

2 0 0 4 2 0 0 3 2 0 02 2 0 01 2 0 0 0

P R O F I T A N D L O S S A C C O U N T ( N O K 1 0 0 0 )

Operating income 786 174 621 505 744 169 398 352 358 431

Operating profit/loss before depresiation 42 142 13 705 31 662 13 442 6 418

Operating profit/loss 24 579 -2 657 13 936 6 704 89

Pre-tax profit/loss 19 774 -1 225 9 509 4 049 -1 910

Net profit/loss 10 463 655 11 336 4 135 -1 187

B A L A N C E S H E E T ( N O K 1 0 0 0 )

Fixed assets 323 826 268 849 263 264 274 434 90 732

Current assets 465 029 454 738 418 701 470 882 189 118

Total assets 788 855 723 587 681 965 745 316 279 850

Equity 256 281 223 669 213 053 104 292 97 489

Long-term liabilities 81 696 41 695 65 190 80 079 34 430

Current liabilities 450 878 458 222 403 723 560 945 147 931

Total equity and liabilities 788 855 723 587 681 965 745 316 279 850

K E Y R AT I O S

F I N A N C I A L S T R E N G T H

Equity to assets ratio (as a percentage of total capital) 32.5 % 30.9 % 31.2 % 14.0 % 34.8 %

P R O F I T A B I L I T Y

Operating margin (adjusted for goodwill) 4.6 % 1.4 % 3.5 % 2.1 % 0.4 %

Profit margin (pre-tax) 2.5 % -0.2 % 1.3 % 1.0 % -0.5 %

Profit margin (after tax) 1.3 % 0.1 % 1.5 % 1.0 % -0.3 %

R A T E O F R E T U R N

Return on equity 7.7 % -0.5 % 4.5 % 3.9 % -2.0 %

Return on total capital 3.1 % -0.4 % 2.0 % 0.9 % 0.0 %

S H A R E S

Equity per share 17.05 15.07 15.64 15.05 15.31

Earnings per share (NOK) 0.70 0.04 0.83 0.60 -0.19

Number of shares, end of year 16 315 14 845 14 845 6 988 6 873

Average number of shares 15 029 14 845 13 625 6 931 6 367

Nominal value, end of year 0.50 0.50 0.50 0.50 0.50

D E F I N I T I O N SOperating margin: Operating profit after depreciation (excluding depreciation on goodwill), divided on total operating income.Profit margin: Profit before taxes divided on total operating income.Earnings per share: Profit after taxes divided on total number of shares at the end of the fiscal year.Profitability, equity Profit before tax as a percentage of equity.Profitability, total capital: Operating profit as a percentage of total capital.

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D I V I S I O N S B U S I N E S S A R E A S T T S S U B S I D I A R I E S L O C AT I O N

DRY CARGO RoRo equipment TTS Ships Equipment AB Gothenburg, Sweden

HANDLING Side-loading systems TTS Ships Equipment AS Bergen, Norway

(DCH) Hatch covers TTS Ships Equipment GmbH Bremen, Germany

Cruise ship equipment TTS Inc Louisiana/California, USA

TTS Hua Hai Ships Equipment Shanghai, Kina

Co Ltd (50 %)

Terminal Equipment TTS Liftec Oy Tampere, Finland

MARINE Cargo cranes TTS Marine ASA Bergen and Kristiansand,

CRANES Service cranes Norway

(MC) Hose handling cranes TTS-LMG Marine Cranes GmbH Lübeck, Germany

Davits TTS Marine (Shanghai) Co., Ltd Shanghai, China

Special cranes TTS Marine ASA,

Branch Office South Korea Pusan, South Korea

TTS Bohai Machinery Co., Ltd (50 %) Dalian, China

MATERIAL Production lines TTS Handling Systems AS Drøbak, Norway

HANDLING Heavy lifting equipment

(MH) Container terminals

With the exception of the joint venture companies in China, all the companies in the above table are wholly owned by TTS Marine ASA. The joint venture company TTS Bohai Machinery Co., Ltd will be operational in 2nd quarter 2005. TTS Marine ASA, Branch Office South Korea in Pusan, provides services to all the divisions in the Korean market

17

Directors’ report for 2004

TTS Marine ASA develops and supplies maritime equipment.

The activities are divided into 3 divisions; Marine Cranes

(MC), Dry Cargo Handling (DCH) and Material Handling

(MH).TTS is the second largest supplier in the world within

its markets. At the end of the year,TTS had 347 employees, of

which 155 in Norway. In addition,TTS has one joint venture

company in China with 38 employees.The parent company,

TTS Marine ASA, is listed on the Oslo Stock Exchange.

The divisional business areas and the corresponding TTS

companies are as follows:

Strategy for growthAs stated in the directors’ report for 2003,TTS will further

expand the group’s activities within the ships equipment

markets.The strategy is also to increase the product portfolio

by using existing skills and expertise in less cyclical markets

like the fast growing port terminal market.

M A R I N E C R A N E S

TTS Marine (Shanghai) Co Ltd With effect from 30 June 2004 TTS Marine ASA acquired

50% of the shares of TTS Hydralift Co. Ltd. from National

Oilwell Norway AS, which was the joint venture partner in

the company.The company is now 100 % owned by TTS

Marine ASA.The acquisition price was equal to the nominal

value of the shares, USD 100 000 (NOK 694 000).The

company is renamed TTS Marine (Shanghai) Co. Ltd.The

effect of the change in ownership on the profit and loss

account for 2004 was marginal.

TTS Marine (Shanghai) Co. Ltd. was established in 2001

and had 28 employees at the end of 2004.The company will

focus on export from China to other shipbuilding markets.

TTS-LMG Marine Cranes GmbH With effect from 1 November 2004,TTS acquired the Crane

Shareholder policyAs part of the development of the company’s strategy,TTS has

clarified the company’s shareholder policy.The policy states

that the shareholders in time shall gain competitive returns

reflecting the risk of the company’s operations. According

to the growth strategy, the shareholders’ short term return

should be realized through an increase in the value of their

shares. In the long term, however, the aim is to be able to pay

out dividends to the shareholders.

Corporate structure and the environmentAt the beginning of 2004, the TTS Group had 310 employees,

as compared to 347 at the end of the year.

The total sickness absence in the group was 3.2 % in 2004,

the same as in 2003. No personal injuries were reported during

the year, compared to three personal injuries the previous year.

The working environment and employee relations are

considered to be good and continuous improvements are being

implemented.

The operations of the TTS Group are primarily related to the

design, assembly and testing of equipment. Steel production is

carried out by a network of international subcontractors.The

company does not pollute the external environment. Further-

more, the assembly and testing of TTS products is not depen-

dent on the use of chemicals, which are hazardous to human

health or the environment.

The products supplied by TTS are primarily electro hydrau-

lically powered and hence, there is little risk of polluting the

external environment.The operations of the TTS Group are

not regulated by any licences or directives.

Equal opportunitiesThe objective for the TTS Group is to provide equal working

conditions and opportunities and treatment regardless of sex

or ethnic background.The policy for the group is based on

well-established principles focusing on equal treatment when

it comes to recruitment, remuneration and promotion.

TTS has a workforce of 347 employees with a main emphasis

on engineering expertise. In this business, women are typically

underrepresented. 67 (19.3 %) of the total workforce are

women. 52 of the women are engaged in support functions like

administration, finance, sales/marketing which give a 45/55

distribution between women and men within these areas.

Division of Lübecker Maschinenbau Gesellschaft GmbH (LMG)

at a price of EUR 3.6 million (NOK 29.3 million).The

acquisition is financed by equity and debt (EUR 1.2 million).

The acquisition was organized as an asset deal by the newly

established 100 % owned TTS company TTS-LMG Marine

Cranes GmbH.The yearly turnover is in the order of NOK

60 million with good margins due to a high level of after sales

service.

TTS-LMG Marine Cranes GmbH had 21 employees at year

end 2004.TTS-LMG has expertise within engineering, service

and sales.The product range is complementary to TTS’, and

the company has considerable deliveries to German ship

owners, who have a significant number of new buildings from

Chinese shipyards.

TTS Bohai Machinery Co Ltd TTS Marine ASA has entered into an agreement with Dalian

New Shipbuilding Heavy Industry Co. (DNS) regarding the

establishment of the joint venture company TTS Bohai Machinery

Co Ltd for supplying cranes to ships built at Chinese shipyards.

Recruitment of new employees will start when the registra-

tion of the company has been formally completed in April 2005.

According to the plan, a total of 23 engineers, sales represen-

tatives, fitters and administrative staff will be in place in the

factory building of 4 500 square meters by the end of the year.

Each party will invest approximately NOK 10 million as

share capital in the company.

P O R T T E R M I N A L A R E A

TTS Liftec Oy With effect from 31 December 2004 TTS Ships Equipment AB

acquired Liftec Products Oy in Finland at a price of EUR

4.0 million, out of which EUR 3.5 million was paid in cash

and EUR 0.5 million in TTS shares.The price might increase

by maximum EUR 2.0 million depending on the company’s

financial results the next 3 years (see note 21).The company

is renamed TTS Liftec Oy. Last year turnover (1 October 2003 –

30 September 2004) was EUR 7.0 million with an operating

profit of EUR 1.1 million.

Liftec Products Oy was established in 1991, had 21 employees

at the end of year 2004 and is located in Tampere.The founder

and former owner, Jorma Mäkinen, will continue to manage

the company for a minimum of three years.

18

In the board of directors for TTS Marine ASA there is one

woman out of five Board members.

The working time arrangements in TTS are linked to the

employee’s functions, not the employee’s sex. However, the

number of part time employees is larger for women than

for men.There is a higher level of overtime work among

the men.

Accounts 2004R E S U L T

Earnings per share in 2004 were NOK 0.70 based on a turn-

over of NOK 786.2 million, earnings before depreciation

(EBITDA) of NOK 42.1 million, an operating profit of NOK

24.6 million and a profit before tax of NOK 19.8 million.

Net profit for the year was NOK 10.5 million.The operating

profit includes a goodwill amortisation of NOK 11.5 million.

Earnings per share in 2003 were NOK 0.04 based on a turn-

over of NOK 621.5 million, earnings before depreciation (EBITDA)

of NOK 13.7 million and an operating loss of NOK 2.7 million.

The operating loss included a goodwill amortization of NOK

11.5 million and a loss for the real estate company of NOK 10.2

million. Pre-tax losses last year were NOK 1.2 million, while net

profit was NOK 0.7 million, including a tax benefit of NOK 4.4

million due to liquidation of companies.

The turnover increased by 26.5 % and EBITDA by 307.5 %,

which is an all-time high both for the top and bottom line.The

operation for Dry Cargo Handling division has been good with

an EBITDA margin of 10.0 %, with excellent performance

for TTS Ships Equipment AB.The performance for Material

Handling division has also been satisfactory with an EBITDA

margin of 6.2 %. 2004 has been difficult for the Marine Cranes

division, but the results have shown improvement during the

year and the underlying operation showed positive figures in

the 4th quarter.The EBITDA margin for 2004 was –4.7 %,

which is not satisfactory even taken the difficult market and

operational conditions into account.

B A L A N C E S H E E T

Total assets as of 31 December 2004 were NOK 788.9 million

and the equity was NOK 256.3 million, giving an equity to

assets ratio of 32.5 %. One year ago total assets were NOK

723.6 million with an equity NOK 223.7 million, giving an

equity to assets ratio of 30.9 %.

Net interest-bearing debt as of 31 December 2004 was NOK

42.8 million compared with net interest-bearing debt of NOK

5.8 million a year earlier. Cash reserves as of 31 December

2004 were NOK 53.0 million, compared to NOK 62.6 million

one year before which gave a net negative change in cash

reserves during the year of NOK 9.6 million.

The cash flow statement shows that NOK 7.1 million was

generated from operations, NOK –60.1 million from invest-

ments and NOK 43.4 million from financing. Increased activity

especially for Marine Cranes required cash, which was the

main reason for the difference between the result and cash

generated from the operation.

The TTS group generates income and costs in foreign

currencies where financial risk is reduced by using hedging

instruments as described more in detail in note 2.

The board of directors and management are not aware of

events subsequent to the balance date that have any material

impact on TTS or the financial statements for 2004.The accounts

have been prepared in accordance with the same accounting

principles as for the 2003 annual accounts.

TTS Marine ASA had a share capital of NOK 8 157 552,

divided on 16 315 104 shares of NOK 0.50 each, as of

31 December 2004.

O R D E R S I N H A N D

Orders in hand at the 31 December 2004 were NOK 941 million,

compared to NOK 502 million at the same time in 2003.

The order backlog at the 31 December 2004 includes a

total of NOK 55 million from the new companies TTS-LMG

Marine Cranes GmbH and TTS Liftec Oy.

Business areasTTS reports on two business areas: Marine Equipment, which

consists of the divisions Dry Cargo Handling and Marine

Cranes, and Material Handling Equipment.

M A R I N E E Q U I P M E N T

The positive market conditions continued during the whole

year 2004 for the Dry Cargo Handling Division, especially

for TTS Ships Equipment AB in Gothenburg. From May 2003

to February 2005 the company has concluded contracts for

45 car carriers in total, with a value of approximately NOK

590 million. The market for hatch covers has also been satis-

19

20

M A R I N E E Q U I P M E N T

NOK million 2004 2003

Turnover 719.6 553.6

Operating profits

(ex. goodwill) 33.1 14.5

Pre tax profit

(ex. goodwill) 28.8 16.3

Order backlog 865.0 441.0

factory.TTS Ships Equipment GmbH, Germany has amongst

other agreements concluded the first hatch cover contract

for construction and supply of key components for large size

container vessels (8200 TEU).The market for side-loading

systems has been difficult with a lack of orders for TTS Ships

Equipment AS, Norway.

The joint venture company TTS Hua Hai Ships Equipment

Co. Ltd. was established in 1998 and has focused on hatch

covers and RoRo equipment for the Chinese market.The

operation has grown continuously, and the company achieved

a market share in China for hatch covers in 2004 of about 70 %

and 80% for RoRo equipment. In 2004,TTS’ 50 % portion

gave a result of NOK 2.7 million after tax which is included

as financial income in the TTS Group accounts.

The Marine Cranes division in Norway had a difficult year in

2004.The market for marine cranes has been improving, but

the profitability of the Asian operations is negatively impacted

by a weak US dollar.With the business developing in China,

TTS expects a larger volume of crane deliveries in the Far East

with a reduction of its USD exposure. As a consequence, the

Marine Cranes division in Norway has been reorganised.

For the new company TTS-LMG Marine Cranes GmbH, the

order intake in November and December was better (NOK

14 million) than expected. Furthermore, in January 2005, the

company concluded the first crane supply contract since TTS

acquired the company.The contract (NOK 16 million) consists

of 4 wire luffing cargo cranes and is an important first step in

entering this new market segment for TTS.

M AT E R I A L H A N D L I N G E Q U I P M E N T

The order backlog at year end 2004 included NOK 45 million

from TTS Liftec Oy.

The division started the year with a good order reserve, but

obtained few new contracts during the year. In the forth quarter

the division managed to sign new contracts for NOK 29 million.

Taking the market conditions into account the operation for

Material Handling Equipment was as expected in 2004.

In the 4th quarter the company was awarded two new

important contracts, where one was within the new business

area,Terminal Systems.The contract concerns the delivery

of an automatic mooring system (NOK 3 million).The other

contract concerns a newly developed modular Ship Transfer

System (NOK 12 million) with the ability to move ships up

to 800 tons efficiently on shore.

M AT E R I A L H A N D L I N G E Q U I P M E N T

NOK million 2004 2003

Turnover 65.8 67.5

Operating profit

(ex. goodwill) 3.2 4.5

Pre tax profit

(ex. goodwill) 3.0 4.4

Order backlog 76.0 61.0

T T S G R O U P

NOK million 2004 2003

Turnover 786.2 621.5

EBITDA 42.1 13.7

Operating profit 24.6 -2.7

Pre tax profit 19.8 -1.2

Net profit

for the period 10.5 0.7

21

T T S G R O U P

In addition to the operational activities described under the

business areas, the group’s accounts include goodwill amorti-

zation of NOK 11.5 million and an operating loss for the real

estate company of NOK 0.2 million.

TTS has been involved in the FastShip project since 1996.

FastShip is a concept under development for fast, door-to-door

container transport between Europe and the United States via

the ports of Cherbourg in France and Philadelphia in the US.

Through patented technology,TTS has landed contracts worth

approximately NOK 1 300 million with FastShip Inc., provided

the project is realized.TTS also has ownership interests in Fast-

Ship Inc, capitalized in the balance sheet by NOK 19.2 million.

If the project is not realized and TTS has to write off the assets,

the equity will be reduced with a corresponding figure.The

write off will have no liquidity effect.The technology develo-

ped in the FastShip project can also be applied in the general

container terminal markets.

Board changesAt the ordinary general meeting 27 May 2004 the following

five members were re-elected:

NAME POSITION

Birger Skeie (54) Man. dir., National Oilwell

Norway AS

Nils O. Aardal (57) Director, JO Tankers AS

Einar Pedersen (64) Shareholder/Board chairman

FastShip, Inc.

Michael S. Mathews (64) Corp. Dir.,Westgate Capital Co.

Byron Dunn (47) VP. Business Development,

National Oilwell

THE BOARD ALSO CONSISTED OF TWO EMPLOYEEREPRESENTATIVES:

Anne G. Lie (41) Employee represent from TTS Marine ASA

Arne Sodefjed (52) Employee represent from TTS Marine ASA

The board appointed Byron Dunn as chairman and Einar

Pedersen as vice chairman.

In accordance with the ordinary election of employee

representatives to the board, new board members were

elected on 12 August 2004:

NAME COMPANY/POSITION

Mona L.T. Halvorsen (35) TTS Handling Systems AS

Member of the board

Oddmund Hatletun (58) TTS Marine ASA

Member of the board

Jan Hopland (37) TTS Ships Equipment AS

1. deputy board member

Hege M. Laberg (35) TTS Marine ASA

2. deputy board member

National Oilwell Norway AS sold all their shares (35.6 %) in

TTS Marine ASA 27 November 2004. As a consequence of

the sale and due to a high workload related to other business

matters, Byron Dunn and Birger Skeie resigned from the board

with immediate effect.Vice-Chairman Einar Pedersen was

elected as new Chairman of the board of TTS Marine ASA.

Increase of share capitalOn 6 October 2004, the company completed the sale of

1 469 600 shares at NOK 15.50 per share in a directed share

offering.The company’s share capital after the share issue

(registered 15 October 2004) was NOK 8 157 552 distributed

on 16 315 104 shares at NOK 0.50 each.

On 31 January 2005, the company completed the sale of

1 400 000 shares at NOK 21.90 per share in a directed share

offering.The company’s share capital after the share issue

(registered 14 February 2005) was NOK 8 857 552 divided

on 17 715 104 shares at NOK 0.50 each.

As part of the payment for the acquisition of TTS Liftec Oy

(former Liftec Products Oy) 226 000 shares (EUR 0.5 million)

were registred on 22 February 2005. The share price of NOK

18.26 corresponds to the market price as of the signing of the

purchase agreement on 21 December 2004.The company’s

share capital after the share issue was NOK 8 970 552 divided

on 17 941 104 shares at NOK 0.50 each.

In accordance with the General Meeting’s resolution of

31 October 2003, the Board of TTS Marine ASA has issued

225 000 share purchase options. 112 500 share purchase

options were exercised at a share price of NOK 10.00 per

share on 10 March 2005.The company’s share capital after the

22

share issue (registered 31 March 2005) was NOK 9 026 802

divided on 18 053 604 shares at NOK 0.50 each.

TTS purchased 40 000 own shares (7 July 2004) each at a

price of NOK 13.95 with the purpose of selling the shares

at reduced prices to the employees.The employees received

an offer to purchase 400 shares each at a price of NOK 14.70,

equivalent to a 20 % discount of the closing price as of

17 December 2004. TTS’ holdings of own shares after the

sale amounted to 27 200.

Future prospectsThe international shipbuilding industry has experienced a

considerable upturn in 2004 resulting in significantly improved

market conditions for the ships equipment business. For the

TTS group this has produced a record backlog of profitable

contracts at the end of 2004 and with a steady order intake

continuing into 2005.

Although the record pace of new contracts experienced in

2003/2004 is not likely to continue, indications are that the

continued growth in China, India and other ASEAN nations

will support a continued increase in world trade and continued

strong demand for new vessels. For the TTS ships equipment

business it is expected that volumes will allow for additional

growth as the shipyards work through their current backlog

and as new vessels are ordered over the next couple of years.

TTS expects to improve its competitive position as steps are

already being implemented, such as cost cutting, reorganization

of the Crane division, relocating manufacturing activities and

broadening of its product portfolio.

TTS is also actively engaged in developing its business in

the port terminal area in which the business profile is less

cyclical than in the ships equipment segment.This activity will

contribute to turnover and profits in 2005 and is expected to

grow significantly over the next years.

Allocation of annual profits by TTS Marine ASAThe company’s equity of NOK 256.3 million as of 31 December

2004 represents NOK 10 882 195 in unrestricted equity.

TTS Marine ASA’s profit after tax was NOK 10 463 480

The board of TTS Marine ASA proposes the following

allocation of the profits for 2004:

A L L O C AT I O N O F P R O F I T S :

Allocated to other reserves NOK 10 463 480

Total allocations NOK 10 463 480

The board of TTS Marine ASA proposes that no dividend is

paid for 2004.

B E R G E N, 3 0 M A R C H 2 0 0 5

The board of TTS Marine ASA

Johannes D. NetelandP R E S I D E N T & C E O

Nils O. AardalD I R E C TO R

Einar PedersenC H A I R M A N

Mona L.Tellnes HalvorsenD I R E C TO R

Oddmund HatletunD I R E C TO R

Michael S. MathewsD I R E C TO R

23

Profit and loss account01.01. - 31.12.

TTS Marine ASA TTS Marine Group2 0 0 4 2 0 0 3 2 0 0 2 ( N O K 1 0 0 0 ) N O T E 2 0 0 4 2 0 0 3 2 0 0 2

O P E R A T I N G I N C O M E

232 625 231 502 86 249 Income from projects 1 785 239 613 966 716 277

2 421 5 000 2 797 Other operating income 1 935 7 540 27 892

4 541 2 776 9 140 Group contribution from TTS subsidiaries 0 0 0

239 587 239 278 98 186 Total operating income 786 174 621 505 744 169

O P E R A T I N G C O S T

156 980 152 667 51 677 Raw materials and consumables used 502 353 383 837 446 491

66 724 70 580 27 206 Personel costs 5 164 803 156 108 169 019

3 191 3 847 907 Depreciation 7 17 563 16 362 17 726

948 -2 344 3 783 Loss on receivables 1 907 -2 475 5 812

24 784 27 027 16 290 Other operating costs 20 74 969 70 330 91 185

252 627 251 778 99 863 Total operating cost 761 595 624 162 730 233

-13 040 -12 501 -1 677 Operating profit/loss 24 579 -2 657 13 936

F I N A N C I A L I T E M S

25 556 10 557 9 605 Result from subsidiaries 10 0 0 0

-466 -1 981 0 Result from associated companies 10 2 234 3 003 2 499

454 3 072 951 Other interest income 2 269 6 259 6 327

0 5 074 734 Other financial income 119 5 392 743

5 540 11 316 10 772 Other interest expenses 7 436 12 166 13 162

1 848 777 291 Other financial expenses 1 992 1 055 834

18 156 4 628 227 Net financial items -4 805 1 432 -4 4275 116 -7 872 -1 450 Profit/loss before taxes 19 774 -1 225 9 509

-5 347 -8 527 -12 786 Tax 15 9 310 -1 880 -1 827

10 463 655 11 336 Net profit 10 463 655 11 336

Earnings per share (NOK) 0.70 0.04 0.83

Diluted earnings per share (NOK) 0.69 0.04 0.83

24

Balance sheetASSETS 31 .12 .

TTS Marine ASA TTS Marine Group2 0 0 4 2 0 0 3 2 0 0 2 ( N O K 1 0 0 0 ) N O T E 2 0 0 4 2 0 0 3 2 0 0 2

F I X E D A S S E T S

I N T A N G I B L E A S S E T S

0 0 0 Research and development 7, 8 8 269 5 000 5 000

0 0 314 Patents, etc. 7 984 1 135 1 480

21 432 17 506 521 Deferred tax asset 15 17 117 12 966 0

22 800 24 293 20 012 Goodwill 7 251 555 201 246 212 717

44 232 41 798 20 847 Total intangible assets 277 925 220 348 219 197

T A N G I B L E A S S E T S

0 0 0 Land, etc. 7 180 180 180

0 0 0 Buildings 7 3 388 3 472 3 575

1 560 1 395 1 993 Machinery and vehicles 7 4 907 5 667 4 562

1 112 2 109 3 474 Furniture and office equipment 7 6 310 4 410 5 741

2 673 3 504 5 467 Total tangible assets 14 785 13 729 14 058

F I N A N C I A L A S S E T S

238 903 237 775 283 457 Investments in subsidiaries 10 0 0 0

0 2 062 997 Investments in associated companies 10 8 288 13 060 5 067

13 548 13 615 13 615 Investments in shares 9 13 548 13 615 13 615

31 139 5 830 8 481 Other receivables 11 5 997 5 916 8 615

959 973 2 004 Pension fund assets 6 3 283 2 181 2 712

284 548 260 255 308 554 Total financial assets 31 116 34 773 30 009

331 453 305 557 334 868 Total fixed assets 323 826 268 849 263 264

C U R R E N T A S S E T S

D E B I T O R S

21 525 27 758 32 746 Inventories 4,13 34 424 32 789 36 376

5 385 4 402 0 Inventories in production 4,13 35 478 31 236 12 715

53 123 37 907 55 488 Accounts receivables 11,13 182 045 167 368 146 188

0 0 5 282 Group accounts receivables 0 0 0

4 463 4 360 10 830 Other receivables 11 17 646 14 323 22 895

23 375 20 445 18 650 Other group accounts receivables 0 0 0

82 431 54 464 87 943 Accrued, non-invoiced production, customers 3,13 129 095 136 384 136 751

7 178 5 686 5 988 Advance payments to suppliers 13 367 10 036 16 246

197 480 155 021 216 927 Total debitors 412 054 392 134 371 171

210 40 1 383 Cash and bank deposits 16 52 974 62 604 47 530

197 690 155 061 218 310 Total current assets 465 029 454 738 418 701

529 143 460 618 553 178 Total assets 788 855 723 587 681 965

E Q U I T Y A N D L I A B I L I T I E S 31 . 1 2 .

Einar Pedersen Nils O. AardalC H A I R M A N D I R E C T O R

Michael S. Mathews Mona L. Tellnes Halvorsen Oddmund Hatletun Johannes D. NetelandD I R E C T O R D I R E C T O R D I R E C T O R P R E S I D E N T & C E O

TTS Marine ASA TTS Marine Group2 0 0 4 2 0 0 3 2 0 0 2 ( N O K 1 0 0 0 ) N O T E 2 0 0 4 2 0 0 3 2 0 0 2

E Q U I T Y

R E S T R I C T E D E Q U I T Y

8 158 7 423 7 423 Share capital 17 8 158 7 423 7 423

-14 0 0 Own stock -14

193 009 171 649 168 849 Share premium reserve 0 0 0

201 153 179 071 176 272 Total restricted equity 8 144 7 423 7 423

R E T A I N E D E A R N I N G S

55 128 44 598 36 781 Other equity 17 248 137 216 247 205 630

55 128 44 598 36 781 Total retained earnings 248 137 216 247 205 630

256 281 223 669 213 053 Total equity 256 281 223 669 213 053

L I A B I L I T I E S

P R O V I S I O N S

0 0 0 Deferred tax 15 12 663 9 908 5 689

0 0 0 Other provisions 393 135 22 059

0 0 0 Total provisions 13 056 10 043 27 748

O T H E R L O N G - T E R M L I A B I L I T I E S

47 842 26 650 27 250 Liabilities to financial institutions 12 68 640 31 652 32 442

0 0 5 000 Other long-term liabilities 0 0 5 000

47 842 26 650 32 250 Total other long-term liabilities 68 640 31 652 37 442

C U R R E N T L I A B I L I T I E S

111 829 109 160 102 059 Liabilities to financial institutions 16 42 890 46 793 26 483

37 159 25 786 46 602 Trade creditors 101 823 68 048 68 226

0 0 835 Trade creditors, subsidiaries 0 0 0

0 0 0 Tax payable 1 290 2 003 8 879

5 140 5 025 15 709 Public duties payable 11 802 11 297 23 180

5 909 7 280 11 775 Advanced payments from customers 3 64 347 66 431 42 582

45 763 41 497 43 038 Non-invoiced production costs, suppliers 85 125 124 105 95 564

5 102 5 751 38 565 Other group liabilities 0 0 0

14 119 15 799 49 292 Other liabilities 19 143 600 139 545 138 808

225 020 210 298 307 875 Total current liabilities 450 878 458 222 403 722

272 861 236 948 340 125 Total liabilities 532 574 499 917 468 912

529 143 460 618 553 178 Total equity and liabilities 788 855 723 587 681 965

BERGEN, 30 MARCH 2005

The board of TTS Marine ASA

Cash flow statement

TTS Marine ASA TTS Marine Group2004 2003 2002 2004 2003 2002

C A S H F L O W F R O M O P E R AT I O N S

5 116 -7 872 -1 450 Result before taxes 19 774 -1 225 9 509

-25 556 -10 557 -9 605 Result from investment in subsidiaries

466 1 981 Result from investment in associated companies -2 234 -3 003

Taxes paid in the period -8 991 -8 879 -4 036

Gains/losses from sale of fixed assets -41

3 191 3 847 907 Ordinary depreciation 17 563 16 362 17 726

825 -18 487 -853 Change in stocks, trade debtors and trade creditors 27 468 -56 577 -132 911

-26 565 48 031 -11 790 Change in accruals relating to construction contracts -43 164 79 251 47 698

15 1 031 330 Difference between expensed pensions -1 102 531 -796

and payments in/out of the pension scheme

10 881 Effect of other currency fluctuations 7 860 13 749 -2 265

-1 621 -20 652 40 143 Change in other provisions -10 064 -29 497 55 189

-33 249 -2 678 17 682 Net cash flow from operations 7 110 10 712 -9 927

C A S H F L O W F R O M I N V E S T M E N T S

295 Proceeds from sale of fixed assets 401 186

-1 042 -27 011 -28 913 Purchase of fixed assets -37 719 -2 621 -34 468

4 240 Currency effect for final settlement regarding HamworthyKSE

20 409 20 242 24 956 Receivables (including group contributions) repaid -81 1 383

16 495 Proceeds from sale of shares and investments in other companies

-20 625 -2 522 Increase in long term receivables -2 474

-693 -115 -99 Purchase of shares and investments in other companies -22 715 -67

-1 656 -5 166 12 439 Net cash flow from investments -60 114 -5 095 -32 966

C A S H F L O W F R O M F I N A N C I N G

21 192 Proceeds from long term loans 31 543

-600 -24 750 Repayment of long term loans -790 -25 717

-44 254 Repayment of short term loans

-8 212 7 101 -60 540 Net change in short-term line of credit -10 264 10 247 -76 095

22 095 100 000 Net equity received 22 095 100 000

35 075 6 501 -29 544 Net cash flow from financing 43 374 9 457 -1 812

E F F E C T O F E X C H A N G E D I F F E R E N C E S O N C A S H A N D C A S H E Q U I V A L E N T S

171 -1 343 577 Net change in cash and cash equivalents -9 630 15 074 -44 705

40 1 383 806 Cash and cash equivalents 62 604 47 530 92 235

at the beginning of the period

210 40 1 383 Cash and cash equivalents at the end of the period 52 974 62 604 47 530

Acquisition of companies, ref. note 21

26

27

Accounting principles

The financial statements have been prepared in accordance with TheNorwegian Accounting Act of 1998 and generally accepted accountingprinciples.

Consolidation principlesThe consolidated accounts include the parent company TTS Marine ASAand the subsidiaries according to notes.

The consolidated accounts have been made based on uniformprinciples, i.e. the subsidiary applies the same accounting principles asthe parent company. Inter-group transactions, assets and liabilities are eliminated.

Acquired subsidiaries are recorded in the consolidated accountsaccording to the acquisition cost to the parent company. Acquisitioncost is allocated to identifiable assets and liabilities in the subsidiary,which are recorded in the consolidated accounts at actual value at the date of acquisition. Any additional or reduced value which cannotbe allocated to identifiable assets and liabilities is recorded in thebalance sheet as goodwill. Additional value in the consolidatedaccounts is depreciated over the acquired assets’ expected life span.

Associated companies are valuated according to the equity method in the consolidated accounts.

Foreign subsidiaries and associated companies are included in theconsolidated balance sheet at the currency rate on 31 December, and in the consolidated profit and loss account at the average rate. Theforeign subsidiaries are to be considered as independent legal entities.

Structural changesIn 2004 the TTS Group acquired the rest of the shares (50 %) in TTSHydralift Co. Ltd. in China, 100 % of the shares in Liftec Products Oy in Finland, in addition to the Crane Division of Lübecker MaschinenbauGesellschaft GmbH in Germany. The acquisitions are described more in detail in note 21.

In 2003, TTS-Norlift AS and Hydralift Marine AS were liquidated. The operations of the subsidiaries were sold to the parent company TTS Marine ASA, effective from 1 October 2002. The transfer was madeas a real value transaction. In the consolidated accounts and in theparent company, the effect of the transaction has been eliminated,since the transaction does not apply to the group as a whole.

Subsidiaries, associated companiesSubsidiaries are valuated according to the equity method in the annualaccounts. The parent company’s share of the result is based on theinvested companies’ post-tax result after allowing for internal gainsand possible depreciation of any additional value arising because thecost price of the shares was higher than the acquired share of the bookequity. In the profit and loss account, the share of the profit is postedunder financial items, while the assets in the balance sheet are postedunder financial assets.

As of 31 December 2002 the associated companies (joint ventures)were included in the accounts in accordance with the cost methodbased on a materiality assessment. That means that the cost price wasincluded under financial assets, any income in the form of dividends

was recorded under financial income. With effect from 1 January 2003TTS changed the accounting principles from cost method to equitymethod. This means that the result is included as financial income andportion of equity is included under financial assets. The figures for2002 are not re-modeled.

Operating incomeOperating income includes income on delivered products and servicesgranted over the year. For long-term contracts with partial invoicing,parts of expected future profits are entered as current income incorrelation with the progress of the project. All loss on long-termproduction contracts is expensed when the loss is demonstrated. Inaddition, reference is made to work in progress included as a separatesubject.

Development costsThe costs in relation to market surveys, market development and thedevelopment of new products are normally expensed to the operatingresult as incurred. Order-related development is expensed directly tothe projects. For special projets the development costs are activated,see note 8.

Classification and valuation of balance sheet itemsCurrent assets and short term liabilities include items which fall duewithin one year of the end of the financial year, as well as itemsrelated to the operating cycle. Other items are classified as fixedassets/long-term liabilities.

Current assets are valued at the lowest of cost and market value.Short-term liabilities are posted in the balance sheet at the nominalvalue at the time of initial establishment.

Fixed assets are recorded at cost, but are written down to netrealizable value if the diminution in value is not expected to betemporary. Long-term liabilities are posted in the balance sheet at the nominal value at the time of the initial establishment.

Accounts receivablesTrade debtors and other accounts receivables are recorded in thebalance sheet at their nominal value reduced by a provision for baddebts. The provisions are made on the basis of an individual assessmentof each item. In addition, an unspecified provision is made to coverexpected losses.

InventoryInventory of purchased goods is valued at the lower of acquisition costaccording to the FIFO principle and real value. Depreciation is appliedfor foreseeable obsolete inventory.

Fixed assetsFixed assets are booked on the balance sheet and depreciated over theasset’s life span if the expected life span exceeds 3 years and has acost price higher than NOK 15 000. Direct maintenance of assets isexpensed as incurred under operating expenses, while renovation orupgrading is added to the asset’s cost price and is depreciated in linewith the asset.

PENSIONSDefined-benefit pensionThe pension expenses and pension commitments are calculated on astraight-line earning profile basis, based on assumptions relating todiscount rates, projected salaries, the amount of benefits from theNational Insurance Scheme, future return on pension funds, andactuarial calculations relating to mortality rate, voluntary retirement,etc. Pension funds are valued at net realizable value and deducted inthe net pension commitment in the balance sheet. Changes in thecommitment due to changes in the pension plans are written downover the expected remaining service period. The same applies toestimated differences if they exceed 10 % of the largest of the pensioncommitment and pension funds (corridor).

Social security fees are expensed based on pension premiums paid for pension schemes and accrued changes in net pension commitment.

Defined-contribution pensionDefined-contribution pension is posted as expense as incurred. Thecompany has no future obligations to the pension plans.

TaxesThe tax expense in the profit and loss account includes both the currenttax payable and change in deferred tax. Deferred tax is estimated to 28 % based on the temporary changes between taxation and accountingvalues, as well as tax losses carried forward to the end of the fiscalyear. Tax-increasing and tax-reducing temporary differences which are reversed, or could be reversed, during the same period are offsetagainst each other and recorded as a net sum. Temporary changes areonly assessed for the Norwegian companies.

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Foreign currencyItems in foreign currency are converted to NOK at the exchange rateon the balance sheet date. For future contracts, forward rates are used.

Forward rates are converted to an average rate of exchange for allfuture contracts in connection with each individual long-term project.

Work in progressProfits on work in progress are estimated according to percentage ofcompletion method. TTS uses the Norwegian Accounting Standard for long-term production contracts, and income is therefore postedaccording to the degree of completion for each project. Income onsmaller deliveries with short production lead time and contracts whereown added value is limited is recognized at delivery.

Each project is evaluated individually. Projects with net, completedbut not billed orders are posted as accounts receivables, and projectswhere advance payment from clients exceeds the completed order is posted as a liability. Completed orders are classified as operatingincome in the profit and loss account.

Cash flow statementThe cash flow statement has been prepared according to the indirectmethod. Cash and cash equivalents include cash, bank deposits, andother short term investments which immediately and with minimalexchange risk can be converted into known cash amounts, with duedate less than three months from purchase date.

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Notes

Note 1 Divisions – TTS Marine ASA Group

M A I N F I G U R E S 2 0 0 4 M A I N F I G U R E S 2 0 0 3

MC DCH MH Other Total MC DCH MH Other Total236 069 483 663 65 748 694 786 174 Operating income 236 502 317 083 67 481 439 621 505-11 164 48 147 4 096 1 063 42 142 EBITDA -8 655 27 470 4 835 -9 945 13 705

EBIT before goodwill -13 009 46 088 3 193 -196 36 076 depreciation -10 984 25 478 4 482 -10 163 8 813

-7 281 2 985 -180 -329 -4 805 Net financial items -5 928 7 733 -114 -258 1 433-20 290 49 073 3 014 -526 31 271 Result before tax and goodwill -16 912 33 211 4 368 -10 421 10 246

1 493 10 004 11 497 Goodwill depreciation 1 518 9 953 - - 11 471 -21 833 39 120 3 014 -526 19 774 Result before tax -18 430 23 258 4 368 -10 421 -1 225

Intra-group transactions are eliminated within each individual division. Goodwill amortizations have been assigned to the division where they belong. In 2003 MC included NOK 5 million in income compensation for the discontinuation of the offshore operations in TTS-Norlift.

MC: Marine Cranes DCH: Dry Cargo Handling MH: Material Handling

Note 2 Financial market risk

The international operations of the TTS Group generate income and costs in foreign currency. At the time contracts are signed, foreign exchangefutures are sold and purchased. Since the production process employs a global network of subcontractors, TTS is also able to optimize thepurchasing to reflect foreign exchange rates. With a typical 30-40 % of turnover generated in Norway, the TTS Group is still rather vulnerable tofluctuations in the Norwegian krone at macro levels. However, TTS’ high degree of flexibility on the purchasing side enables TTS to offset theeffects of a strong krone. In an overall context, therefore, TTS’ currency-related risk exposure is limited.

Note 4 Inventories

T T S M A R I N E G R O U P 2004 2003Inventories, incl. non-current 41 043 36 137Non-current inventories -6 619 -3 348Total Inventories 34 424 32 789Inventories in production 35 478 31 236

T T S M A R I N E A S A 2004 2003Inventories, incl. non-current 28 144 31 106Non-current inventories -6 619 -3 348Total Inventories 21 525 27 758Inventories in production 5 385 4 402

Inventories in production are related to contracts with use of contractof completion. This mean contracts with short delivery time or whereown added value is limited.

Note 3 Work in progress

T T S M A R I N E G R O U P 2004 2003Production performed 350 447 188 389Invoiced production 414 794 254 821Advanced payments from customers -64 347 -66 431

Production performed 294 991 338 316Invoiced production 165 897 201 932Accrued, non-invoiced production, customers 129 095 136 384

T T S M A R I N E A S A 2004 2003Production performed 71 997 42 690Invoiced production 77 905 49 970Advanced payments from customers -5 909 -7 280

Production performed 118 006 111 490Invoiced production 35 575 57 026Accrued, non-invoiced production, customers 82 431 54 464

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Note 5 Personnel expenses, number of employees, remuneration, loans to employees etc.

T T S M A R I N E G R O U P T T S M A R I N E A S A

Personnel expenses 2004 2003 2004 2003Wages 124 109 117 080 52 649 55 972Employers’ social security contribution 21 329 19 901 7 952 8 484Pension costs 3 723 4 588 3 302 3523Other personnel expenses * 15 643 14 539 2 822 2 601Total personnel expenses 164 803 156 108 66 724 70 580No. of employees as of 31.12 347 282 118 131

*) Includes pension costs related to defined-contribution method (TTS Ships Equipment AB and TTS Ships Equipment GmbH use defined-contribution method).

Wage and other remuneration to President & CEO and board of directors Wage to President & CEO 1 417Pension costs for President & CEO 500Remuneration to board of directors 740

The pension costs for President & CEO is based on pension payment corresponding to app. 65 % of basic wage turning 67 years, in addition topension from turning 60 years corresponding to 60 % of basic wage. According to agreement the President & CEO with dismissal with notice getseveral payments in maximum 24 months. Share options for the President & CEO is described in note 18.

Audit fees T T S M A R I N E G R O U P T T S M A R I N E A S A

Audit fees and audit related services 782 200Technical assistance (statutory accounts preparation and tax assistance) 1 002 789

Consultancy services in the form of legal, tax- and accounts preparation are related to the restructuring process for the group.

Note 6 Pensions

T T S M A R I N E G R O U P

The Norwegian companies in the group have a pension plan that gives employees the right to defined future earnings dependent on the number of years of participation, salary level at retirement age and the amount received from social security. The plan includes 169 people at 31 December2004. The group pension obligations are mainly covered through an insurance company.

2004 2003Net accrued pension costs (return) Insured Uninsured Total Insured Uninsured TotalCurrent service cost 3 418 226 3 644 3 234 218 3 452

+ Interest costs for pension obligations 2 432 35 2 467 2 043 31 2 075- Expected return on pension funds 2 763 0 2 763 2 252 0 2 252+ Experience adjustments and deviations booked to the P&L 336 18 354 775 0 775+ Change in employers’ national insurance contributions 11 9 20 503 35 538

Net pension costs 3 435 288 3 723 4 304 285 4 588

Pension obligations in the balance sheetMarket value of pension funds 43 711 0 43 711 35 690 0 35 690

- Estimated pension obligations 45 455 746 46 201 38 785 699 39 484= Pension funds prior to payroll tax -1 744 -746 -2 490 -3 096 -699 -3 795+ Experience adjustments and deviations not booked to the P&L 5 743 187 5 930 5 900 213 6 113- Accrued employers’ national insurance contributions 78 79 157 67 70 137

Net pension fund 3 921 -638 3 283 2 738 -556 2 181

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Note 6 continued

T T S M A R I N E A S A

The pension plan includes 137 people at 31.12.2004.

2004 2003Net accrued pension costs (return) Insured Uninsured Total Insured Uninsured TotalCurrent service cost 2 543 226 2 769 2 503 218 2 720

+ Interest costs for pension obligations 1 501 35 1 536 1 238 31 1 269- Expected return on pension funds 1 608 0 1 608 1 319 0 1 319+ Experience adjustments and deviations booked to the P&L 336 18 354 506 0 506+ Change in employers’ national insurance contributions 7 9 15 311 35 346

Net pension costs 2 778 288 3 066 3 239 285 3523

Pension obligations in the balance sheetMarket value of pension funds 25 518 0 25 518 20 959 0 20 959

- Estimated pension obligations 28 496 746 29 242 24 037 699 24 736= Pension obligations/funds prior to payroll tax -2 978 -746 -3 724 -3 078 -699 -3 777+ Experience adjustments and deviations not booked to the P&L 4 648 187 4 834 4 674 213 4 887- Accrued employers’ national insurance contributions 73 79 152 67 70 137

Net pension fund 1 597 -638 959 1529 -556 973

Economic assumptions: 2004 2003Return on pension funds 7.0 % 7.0 %Discount rate 6.0 % 6.0 %Yearly salary increase 3.0 % 3.0 %Yearly adjustment of social security base amount (G) 2.0 % 2.0 %Yearly adjustment of pension payments 2.0 % 2.0 %Voluntary retirement 10.0 % 10.0 %Possibility for use of AFP 45.0 % 45.0 %National insurance contributions 14.1 % 14.1 %

Note 7 Specification of fixed assets

Furniture/ Patents/ Machinery/ Office- Computers technology/

T T S M A R I N E G R O U P Vehicles equipment etc. Buildings RAD Land etc. Goodwill TotalPurchase costs 01.01. 17 328 7 025 22 940 4 582 10 380 180 223 379 314 102Additions during the year 2 961 61 2 946 0 3 411 0 61 754 42 844Disposals during the year 401 0 0 0 0 0 0 401Total depreciation 31.12. 14 981 5 519 21 143 1 194 4 538 0 33 578 80 952Book value 31.12. 4 907 1 567 4 743 3 388 9 253 180 251 555 275 593

Depreciation for the year 1 745 1 757 2 024 84 456 0 11 497 17 563Depreciation values (%) 20-30 % 20 % 33 % 2 % 0-20 % 0 % 5 %

Furniture/ Patents/ Machinery/ Office- Computers technology/

T T S M A R I N E A S A Vehicles equipment etc. Buildings RAD Land etc. Goodwill TotalPurchase costs 01.01. 5 701 4 441 5 824 0 1 020 0 26 104 43 091Additions during the year 922 61 59 0 0 0 0 1 042Disposals during the year 295 0 0 0 0 0 0 295Total depreciation 31.12. 4 768 3 435 5 838 0 1 020 0 3 304 18 365Book value 31.12. 1 560 1 067 45 0 0 0 22 800 25 473

Depreciation for the year 582 583 534 0 0 0 1 493 3 191Depreciation values (%) 20-30 % 20 % 33 % 5 %

Goodwill related to acquired companies is amortized over 20 years on the basis that the business value is material for the company in theamortization period. Due to technology, market contacts and understanding, including references, the acquired companies have established a long term earnings potential. This basis is also crucial for growth in new markets.

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Note 8 Capitalized research and development costs

T T S M A R I N E G R O U P

The development project ”Technology for container terminals” represents a new business area with a potential for long-term business value.Project costs of TNOK 5 000 are activated corresponding to a SND high risk loan tied up to this project. If this project does not lead toeconomically exploitable results, the loan may be remitted. As a consequence, the result/balance will not be affected. TTS Ships Equipment ABhave included capitalized costs TNOK 3 269 related to development of "Terminal Systems" as a part of EU projects.

Note 9 Shares in other companies - subsidiaries

T T S M A R I N E G R O U P

Ownership Original-costs Book value

Fixed assetsShin Young Heavy industry 13.4 % 222 222FastShip Inc. * 6.7 % 13 326 13 326 Total fixed assets other companies 13 548 13 548

*) The balance sheet dated 31 December includes 615 156 FastShip Inc (FSI) shares with a book value of NOK 13.3 million. In addition, the balancesheet includes three convertible loans of NOK 5.8 million, equivalent to 408 257 shares. Shares and convertible loans are recorded to USD 2.80 and USD 2.04 per share respectively, giving an average value of USD 2.50 per share. During 2004, FSI issued shares at a price of USD 3.11 per share.If the FSI project does not become a reality, TTS will have to write off NOK 19.2 million. Provided that the project becomes a reality, there is greatpotential for TTS to win orders worth approximately NOK 1 300 million. See also the director’s report.

Note 10 Investments in subsidiaries and associated companies

T T S M A R I N E A S A

Subsidiaries Head office location Acquisition date Owner share Voting rightsTTS Handling Systems AS Drøbak, Norway 1994 100 % 100 %TTS Ships Equipment AS Bergen, Norway 1996 100 % 100 %Norlift AS (formerly TTS Eiendom AS) Bergen, Norway 1994 100 % 100 %Hydralift Marine AS Kristiansand, Norway 2003 100 % 100 %TTS Ships Equipment AB Gothenburg, Sweden 2002 100 % 100 %TTS Marine (Shanghai) Co Ltd (formerly TTS Hydralift Co Ltd)* Shanghai, China 2002 100 % 100 % *)

*) From 50 % ownership in 2002 to 100 % ownership in 2004.

TTS Ships Equipment AB has the following investments:

Subsidiaries Head office location Acquisition date Owner share Voting rights TTS Ships Equipment GmbH Bremen, Germany 1997 100 % 100 %TTS Inc. Virginia, USA 1994 100 % 100 %TTS Hua Hai AB Gothenburg, Sweden 2002 100 % 100 %TTS Liftec Oy Tampere, Finland 2004 100 % 100 %

Associates Head office location Acquisition date Owner share Voting rights

TTS Hua Hai Ships Equipment Co Ltd Shanghai, China 2002 50 % 50 %

TTS Ships Equipment GmbH has the following investment:

Subsidiaries Head office location Acquisition date Owner share Voting rights TTS-LMG Marine Cranes GmbH Lübeck, Germany 2004 100 % 100 %

The companies are accounted for using the equity method.

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TTS HS Norlift TTS SE AS TTS SE AB TTS Ma. Shanghai TotalPurchase cost at time of acquisition 9 589 500 14 232 213 880 1 386 239 587Goodwill of this 7 129 190 575 2 053 199 757Excess value of this -453 -453

Unamortized excess value /goodwill at 31.12.Goodwill 5 433 171 520 2 053 179 006Depreciation of goodwill -424 -9 529 -51 -10 004 Unamortized goodwill at 31.12. 0 0 5 009 161 991 2 002 169 002

Computation of result for the yearShare of profits for the year 2 247 -400 1 627 35 578 -572 38 479Depreciation of goodwill -424 -9 529 -51 -10 004Elimination of group transactions 150 -3 069 -2 919 Result from investment in subsidiaries 2 397 -400 1 203 22 980 -624 25 556

Shares in subsidiaries:Opening balance 01.01. 10 557 1 110 20 958 205 150 0 237 775 Acquisition of company/subsidiary 0 0 0 0 -938 -938Liquidation of subsidiaries 0 0 0 0 0 0Result from investment in subsidiaries 2 397 -400 1 203 22 980 -624 25 556Equity transfers 0 0 0 0 0 0Group contributions 0 0 -3 654 0 0 -3 654Dividends from subsidiaries 0 0 0 -18 264 0 -18 264Foreign currency differences 0 0 0 -1 962 391 -1 571 Closing balance 31.12. 12 953 710 18 507 207 904 -1 171 238 903

T T S M A R I N E G R O U P T T S M A R I N E A S A

TTS Marine TTS Hua Hai TTS MarineShares in associated companies Shanghai Ships Equipment Total Shanghai Total

Opening balance 01.01. -3 111 10 998 7 887 -3 111 -3 111Portion (50 %) of profit/loss -466 2 700 2 234 -466 -466Dividends 0 -4 121 -4 121 0 0Wave of debt 2 053 0 2 053 2 053 2 053Currency effect -106 -1 289 -1 395 -106 -106Disposals of portion (50 %) of associated company 1 631 0 1 631 1 631 1 631Book value at 31.12. 0 8 288 8 288 0 0

Note 11 Debtors which fall due later that one year

T T S M A R I N E G R O U P T T S M A R I N E A S A

2004 2003 2004 2003Other receivables 5 997 5 916 5 830 5 830Loan to companies in the group 0 0 25 309 0Total 5 997 5 916 31 139 5 830

Note 12 Long-term liabilitiesT T S M A R I N E G R O U P

Long-term liabilities amount to TNOK 68 640. TNOK 5 002 of this amount is high risk loan, product development, SND. Maturity and repaymentprofile for the loan depend on the development of the project the loan is related to. Remaining long-term liabilities will be repaid within 7 yearsafter the balance sheet date.

I N N O K 1 0 0 0

Repayment profile 2005 2006 2007 AfterwardsLiabilities to financial institutions 12 321 12 960 12 079 26 278

T T S M A R I N E A S A

At 31 December 2004, TTS Marine ASA’s long-term liabilities amount to TNOK 47 842 with a repayment profile as mentioned below.

I N N O K 1 0 0 0

Repayment profile 2005 2006 2007 AfterwardsLiabilities to financial institutions 7 849 7 849 7 143 25 001

Interest-bearing debt constitutes long-term liabilities according to note 12, plus withdrawals from the cash pool according to note 16.

Note 13 Mortgages and guaranteesThe credit agreement for TTS Marine ASA in Norway is established (50/50) with Nordea Norge ASA (Nordea) and Sparebanken Vest ASA(SparebankenVest) with Nordea as agent. As security for the company’s participation in a cash pool system, the following assets in Norway havebeen placed as security for Nordea

I N N O K 1 0 0 0 T T S M A R I N E G R O U P T T S M A R I N E A S A

Book value of assets 2004 2003 2004 2003Trade-/group debtors 103 163 92 729 53 123 37 908Not invoiced production 118 677 91 281 82 431 54 464Inventories/inventories in production 27 182 32 416 26 910 32 159Prepayment to suppliers 12 956 0 7 178 5 686Buildings etc. 3 568 3 652 0 0Total assets placed as security 265 546 220 077 169 642 130 217

In addition, in Norway the tenancy rights and property associated with the operations have been mortgaged, in addition to the shares for TTS Ships Equipment AB.

The TTS group has a contractual requirement to solidity in relation to Nordea corresponding to:The operating result before depreciation (EBITDA) for the last 12 months shall be larger than 25 % of the interest bearing debt. At 31 December2004 the interest bearing debt was NOK 95.7 million of which 25 % corresponds to NOK 23.9 million. For the last 12 months the EBITDA was NOK 42.2 million. The requirements further require equity above NOK 200 million and an equity ratio of 27 % for the rest of 2004 increasing to 30 % for 2005. With equity of NOK 256.3 million and equity ratio of 32.5 %, the TTS group satisfy the covenants.

T T S - L M G M A R I N E C R A N E S G M B H

The credit agreement for TTS-LMG Marine Cranes GmbH is established with Bayerische Hypo- und Vereinsbank Aktiengesellshaft (HypoVereinsbank)in Germany with a total limit of EUR 3.3 million with an utilization equal EUR 2.5 million at 31 December 2004. The security for the bank is thecompany assets, in addition to a parent company guaranty from TTS Marine ASA with a limit of EUR 3.3 million.

T T S L I F T E C OY

The credit agreement for TTS Liftec Oy is established with Sambo Pankki Oyj (Sampo Bank) in Finland with a total limit of EUR 2.1 million with a utilization equal EUR 1.4 million at 31 December 2004. The security for the bank is a parent company guaranty from TTS Marine with a limit of EUR 2.1 million.

Note 14 Guarantee commitments, joint and several liabilityThe Norwegian companies, as well as TTS Ships Equipment AB and TTS Ships Equipment GmbH participate in a guarantee pool system which coverspayment guarantees, contract guarantees, advance payment guarantees and tax guarantees within a total limit of TNOK 60 000. As security forthis guarantee pool, the Norwegian companies’ inventory, accounts receivables, tenancy rights and property associated with the operations andcredit balance on advance payment accounts have been mortgaged. The companies in Norway share a joint responsibility.

Total withdrawals from the guarantee pool system at 31 December 2004 was TNOK 47 566 for the group.

At 31 December 2004, TTS Marine ASA had withdrawn TNOK 10 274 from the guarantee pool.

TTS-LMG Marine Cranes GmbH has a separate guarantee ceiling with a limit of TEUR 500, with withdrawals of TEUR 121 at 31 December 2004.TTS Liftec Oy has also a separate guarantee ceiling with a limit of TEUR 1 400, with withdrawals of TEUR 723 at December 2004.

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Note 15 Deferred taxes / tax chargeDeferred taxes are computed on the basis of temporary differences between the carrying value of an asset or liability in the balance sheet and its tax base at year-end. The following items are included in the calculation of deferred tax:

F I G U R E S I N N O K 1 0 0 0 T T S M A R I N E G R O U P

Computation of deferred tax assets or liabilities 2004 2003

Temporary differencesFixed assets 5 068 5 155Pension funds 3 283 2 181Receivables 575 -1 561Inventories -7 119 - 3 348Construction contracts 116 102 83 549Other temporary differences 2 584 3 230Other provisions for obligations -5 596 -12 907Net temporary differences 114 897 76 229Tax credits carryforward -22 078 -22 078Dividend tax refund carryforward -4 501 -4 501Tax losses carryforward -110 106 -65 245Basis for deferred tax/deferred tax asset -21 788 -15 42328 % deferred tax asset -6 100 -4 347To much allocated 386 29Dividend tax refund not included in deferred tax asset 1 260 1 260Net deferred tax asset in the balance sheet -4 454 -3 058

Balance sheet classificationDeferred tax asset -17 117 -12 966Deferred tax liability 12 663 9 908Net deferred tax asset in the balance sheet -4 454 -3 058

Basis for tax charge, change in deferred tax liability and payable tax: 2004 2003Result before tax charges 19 784 -1 225Permanent differences 9 073 4 470Tax loss on shares sold 0 -36 087Change in tax assessment compared to financial statement of previous year -1 242 -3 305Basis for tax charge in the year 27 615 -36 147Change in temporary differences -38 599 -60 014Dividend received 0 20 409Utilization of tax loss carryforward -2 167 0Basis for payable tax in profit & loss account -13 150 -75 752Taxable income (basis for payable tax in the tax charge) -13 150 -75 752

Allocation of tax chargePayable tax (28 % of the basis of payable tax in the tax charge)* 10 368 2 003Effect of insufficient allocation to deferred tax benefit 545 3 558Effect of currency changes 179 0Change in deferred taxes -1 781 -7 441Tax charge (28 % of basis for tax charge in the year) 9 310 -1 880

*) Payable tax relates to foreign subsidiaries, whose taxable profits cannot be offset against carryforward

tax loss in Norway

Payable tax in the balance sheet 2004 2003Payable tax (28 % of basis for payable tax in the balance sheet) 10 368 2 003Prepaid tax in foreign subsidiaries -9 017 0Insufficient/excess tax provision previous year 10 0Tax credit related to dividend received -71 0Payable tax in the balance sheet 1 290 2 003

Explanations of why taxes not are 28% of the net profit/loss before taxes 2004 200328 % of the net profit/loss before tax (the subsidiaries in Germany have higher tax ratio) 6 166 -343Too much/too little allocated deferred tax 393 83Deferred tax asset related to liquidation of subsidiaries 2003 0 -4 419Permanent differences, including goodwill amortization 2 751 2 799Calculated tax change 9 310 -1 880

35

Note 15 continued

F I G U R E S I N N O K 1 0 0 0 T T S M A R I N E A S A

Computation of deferred tax assets or liabilities 2004 2003

Temporary differencesFixed assets 6 417 5 530Pension funds 959 973Receivables 748 -1 375Inventories -6 619 - 3 348Construction contracts 25 276 12 615Other provisions for obligations -3 667 -4 638Net temporary differences 23 114 9 757Tax credits carryforward -22 078 -22 078Dividend tax refund carryforward -4 501 -4 501Tax losses carryforward -78 956 -50 201Basis for deferred tax/deferred tax asset -82 421 -67 021

Balance sheet classificationDeferred tax asset -23 078 -18 766Too much / too little allocated deferred tax 386 0Dividend tax refund not included in deferred tax asset 1 260 1 260Deferred tax asset in the balance sheet -21 432 -17 506

Balance sheet classificationDeferred tax asset -21 432 -17 506Net deferred tax asset in the balance sheet -21 432 -17 506

Basis for tax charge, change in deferred tax liability and payable tax: 2004 2003Result before tax charges 5 116 -7 872Permanent differences -139 648Reset of investor’s share of profit and loss from subsidiaries -25 090 -8 576Tax loss on shares sold 0 -36 087Change in tax assessment compared to financial statement of previous year -217 535Basis for tax charge in the year -20 330 -51 352

Change in temporary differences -13 357 -2 339Dividend received 0 20 409Taxable income -33 687 -33 282Group contributions received 5 076 0Taxable income (basis for payable tax in the tax charge) -28 612 -33 282

Allocation of tax chargeTax effect of group contributions on deferred taxes -1 421 0Effect of insufficient allocation to deferred tax benefit in 2002 for result booked to equity 386 2 772Effect of tax benefit eliminated at liquidation of subsidiaries in 2002 5 686Change in deferred taxes -4 312 -16 985Tax charge (28 % of basis for tax charge in the year) -5 347 -8 527

Payable tax in the balance sheet Payable tax (28 % of basis for payable tax in the balance sheet) 1 421 0Tax credit related to dividend received -1 421 0Payable tax in the balance sheet 0 0

Explanations of why taxes not are 28 % of the net profit/loss before taxes 2004 200328 % of the net profit/loss before tax 1 433 -2 204Too much/too little allocated deferred tax for 2002 284 316Deferred tax asset related to liquidation of subsidiaries 2003 0 -4 419Permanent differences, including goodwill amortization -7 064 -2 220Calculated deferred tax -5 347 -8 527

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Note 16 Liquid assets/current interest bearing liabilities

T T S M A R I N E G R O U P T T S M A R I N E A S A

Cash and bank deposits as of 31.12. 52 974 210Cash+/liabilities in cash pool system as of 31.12. -26 446 -97 641Other interest bearing liabilities -638 0

TTS Marine ASA administers a cash pool account system. The group has been granted a credit limit of TNOK 60 000. The companies participating inthe arrangement share a joint absolute guarantee for the total cash pool.

Note 17 Reconciliation of change in equity

T T S M A R I N E A S A T T S M A R I N E G R O U P

ShareShare- premium- Other Share- Othercapital reserve equity Total capital equity Total7 423 171 649 44 598 223 669 Equity 01.01. 7 423 216 247 223 669

-14 -309 -322 Own shares -14 -309 -322- - 10 463 10 463 Net profit/loss for the year - 10 463 10 463

735 22 044 - 22 779 Equity increase 735 22 044 22 779- -683 - -683 Equity increase - related costs - -683 -683- 2 053 2 053 Waive of debt JV-company - 2 053 2 053- - -1 678 -1 678 Currency difference - -1 678 -1 678

8 144 193 009 55 128 256 281 Equity 31.12. 8 144 248 137 256 281

Note 18 Share capital and shareholder information

No. of shares as of 31.12. Value Book share capital16 315 104 0.50 8 157 552

The following companies are included in the TTS Marine group:I N N O K

Company Owner Ownership Share capital No. of sharesNorlift AS (formerly TTS Eiendom AS) TTS Marine ASA 100 % NOK 500 000 500TTS Handling Systems AS TTS Marine ASA 100 % NOK 950 000 95 000TTS Ships Equipment AS TTS Marine ASA 100 % NOK 2 500 000 2 500Hydralift Marine AS TTS Marine ASA 100 % NOK 100 000 1 000TTS Ships Equipment AB TTS Marine ASA 100 % SEK 2 000 000 2 000TTS Marine (Shanghai) Co Ltd (formerly TTS Hydralift Co Ltd) TTS Marine ASA 100 % USD 200 000 3 500TTS Ships Equipment GmbH TTS Ships Equipment AB 100 % EUR 255 646 5 000TTS Inc. TTS Ships Equipment AB 100 % USD 190 000 1 900TTS-LMG Marine Cranes GmbH TTS Ships Equipment GmbH 100 % EUR 25 000 1TTS Liftec Oy TTS Ships Equipment AB 100 % EUR 76 500 1 020

37

38

Note 18 continued

The largest shareholders in TTS Marine ASA as of 31 December 2004, were :

I N N O K

Shareholder No. of shares Ownership Vote for (%)MP Pensjon 1 342 000 8.23 % 8.23 %Skeie Group AS 1 144 285 7.01 % 7.01 %Odin Maritim 1 128 000 6.91 % 6.91 %Skagen Vekst 1 100 000 6.74 % 6.74 %Firstnordic Norge Vekst 946 915 5.80 % 5.80 %Starefossen Forvaltning AS 809 923 4.96 % 4.96 %Delphi Norge 700 000 4.29 % 4.29 %Gambak 600 000 3.68 % 3.68 %Svenska Handelsbanken Depot 377 500 2.31 % 2.31 %Danske Bank A/S 375 500 2.30 % 2.30 %Vital Forsikring ASA 307 943 1.89 % 1.89 %NHO’s arbeidsmiljøfond 291 947 1.79 % 1.79 %Orkla Finans Investment Fund 291 600 1.79 % 1.79 %Odin Europa 267 000 1.64 % 1.64 %Andenæs 250 000 1.53 % 1.53 %15 largest shareholders 9 932 613 60.87 % 60.87 %Remaining shareholders 6 382 491 39.13 % 39.13 %Totalt 16 315 104 100.00 % 100.00 %

Chairman of the board Einar Pedersen represent Starefossen Forvaltning AS which owns 809 923 shares. Board member Oddmund Hatletun owns693 shares. while President and CEO Johannes D. Neteland owns 40 000 shares and options to purchase 200 000 shares.

At 30 January 2004, an Extraordinary General Meeting (EGM) accepted the proposal to give the board the proxy to issue up to 4.0 mill. shares in case of acquisitions or mergers. The authorization is valid until the Annual General Meeting (AGM) for 2004, latest 30 June 2005. As aconsequence of the acquisitions performed totally 3 095 600 shares have been used as of 30 March 2005.

At 31 December 2004, allocations were made of 225 000 options which may be exercised up to 31 October 2005. at redemption price of NOK 10 (of a proxy of 275 000 options given at the extraordinary general meeting 31 October 2003). In addition 300 000 options which can be exercised up to 27 May 2006 at a redemption price of NOK 14. (Of a proxy of 300 000 options given at the extraordinary general meeting 27 May 2004).

The allocation of options is as follows:No. of shares No. of shares

with due date with due datName Position Company 31.10.05 27.05.06 TotalJohannes D. Neteland President & CEO TTS Marine ASA 100 000 100 000 200 000Olav Bruåsdal Financial dir. TTS Marine ASA 50 000 40 000 90 000Hans-Jan Erstad HR Manager TTS Marine ASA 25 000 40 000 65 000Göran K. Johansson Man. Dir. TTS Ship Equipment AB 25 000 40 000 65 000Bjørn O. Hansen Man. Dir. TTS Handling Systems AS 25 000 40 000 65 000Ivar K. Hanson Division director TTS Marine ASA 40 000 40 000Total amount of options for leading employees 225 000 300 000 525 000

Of the share options with due date 31 October 2005 all executed 50 % at 10 March 2005, totally 112 500 share options.

TTS purchased 40 000 own shares (7 July 2004) each at a price of NOK 13.95 with the purpose to sell at reduced prices to its employees. The employees received an offer to purchase 400 shares each at price NOK 14.70. equivalent to a 20 % discount (NOK 1 500) of the closing at 17 December 2004. TTS’ holding of own shares after the sale amount to 27 200. At 25 May 2004, the General Meeting (GM) accepted the proposalto give the board the proxy to issue up to 0.3 mill. own shares. The authorization is valid until the Annual General Meeting (AGM) for 2004, latest 30 June 2005.

39

Note 19 Other current liabilities

( I N N O K 1 0 0 0 ) T T S M A R I N E G R O U P T T S M A R I N E A S A

Provisions for projects 101 192 4 492Other provisions 42 408 9 627Total other current liabilities 143 600 14 119

Note 20 Other expenses

T T S M A R I N E G R O U P T T S M A R I N E A S A

( I N N O K 1 0 0 0 ) 2004 2003 2004 2003Rent costs (incl. all related costs like electricity etc.) 13 791 *) 26 223 6 881 8 133IT system costs (incl. all related costs) 4 810 7 291 1 250 2 488Marketing costs. travelling 18 833 12 956 6 046 5 825Other 37 535 23 860 10 607 10 581Other expenses 74 969 70 330 24 784 27 027

*) Including provisions for NOK 6.7 million covering potential loss of rental income

Note 21 Acquisition of companies

At June 30 2004 TTS Marine ASA acquired 50 % of the shares in TTS Hydralift Co Ltd from National Oilwell Norway AS, which was the jointventure partner in the company. The company is now 100 % owned by TTS Marine ASA. The purchase price was equal to the nominal value of theshares USD 100 000 (NOK 694 000). As part of the agreement National Oilwell Norway AS waived a debt of USD 675 000 to TTS Hydralift Co. Ltd.The company is renamed TTS Marine (Shanghai) Co. Ltd. Own cash finances the purchase.

With effect as of 1 November 2004 TTS acquired the Crane Division of Lübecker Maschinenbau Gesellschaft GmbH (LMG) at a price of EUR 3.6million (NOK 29.3 million as of 1 November 2004). The purchase is financed with equity and loan (EUR 1.2 million). The acquisition is organized asasset deal to the newly established 100 % owned TTS company TTS-LMG Marine Cranes GmbH.

With effect from 31 December 2004 TTS Ships Equipment AB acquired Liftec Products Oy in Finland at a price of EUR 4.0 million out of which EUR 3.5 million were paid in cash (paid at signing the agreement 22 December 2004) and EUR 0.5 million in TTS shares issued 22 February 2005.The purchase price may increase with up to EUR 2.0 million depending on the company’s net profit the next three years. The cost price at 31 December 2004 is NOK 39.1 million which includes the purchase price of NOK 33.0 million (EUR 4.0 million) in addition to provisions forcomingearnings NOK 4.9 million (EUR 0.6 million) and activated purchase costs. The company is renamed TTS Liftec Oy.

Note 22 Related parties

FastShip is a concept under development for fast. door-to-door container transport between Europe and the United States via the ports ofCherbourg in France and Philadelphia in the US. Through patented technology. TTS has landed contracts worth approximately NOK 1 300 million,provided the project is realized. Einar Pedersen is shareholder and board chairman of FastShip Inc. as well as shareholder and chairman of theboard of TTS Marine ASA.

Note 23 Transition to International Financial Reporting Standards (IFRS)

As of 1 January 2005 TTS Marine ASA’s consolidated accounts will be prepared according to IFRS with reporting according to IFRS for 1 quarter2005. Ongoing work shows that for TTS Marine Group the most significant effects occur in the following areas:

F I N A N C I A L I N S T R U M E N T S

The main difference for TTS Marine Group is that IFRS has stricter requirements than what is presently the case in Norway for hedging valuation of foreign currency positions. No significant effects are expected as almost all derivates are used for hedging purposes.

G O O D W I L L

Under IFRS, goodwill is no longer amortized, but is subjected to annual impairment testing. At the transition to IFRS, goodwill will be recorded at its value as of 1 January 2004 (reversal of 2004 amortization) and subjected to impairment testing.

P E N S I O N S

According to transition practice, IFRS allows for unamortized estimate deviations to be offset against equity at the time IFRS opening balance is established. Reduction in amortization interest will be evaluated. The transition will have negative impact on the equity.

Auditor’s report Shareholder information

Share price performanceIn March 1995, TTS Marine ASA completed a publicshare issue, and 3 May 1995, the company was listedon the SMB list of the Oslo Stock Exchange.

Date Kurs

Subscription price at time of offering NOK 23.00Opening price 03.05.95 NOK 26.5031.12.95 NOK 32.5031.12.96 NOK 41.0031.12.97 NOK 40.0031.12.98 NOK 15.0031.12.99 NOK 14.0031.12.00 NOK 23.5131.12.01 NOK 16.0031.12.02 NOK 7.5131.12.03 NOK 9.7131.12.04 NOK 18.90(The share price has been adjusted to reflect the 1:2 share split in April 1996.

In 2004, there has been a substantial increase of tradesin the TTS share, and this has also increased thenumber of shareholders with the following key ratios:

Period 01.01.2004 09.05.2005

Number of shareholders 362 1 010

Average per 01.01.04-09.05.05 trading day

Number of trades 11 175 33

Value (NOK 1 000) 742 022 2 182

Number of shares (1 000) 38 472 113

Average price 19.3

InformationTTS emphasizes the importance of giving the share-holders, the stock market and the general public thebest possible knowledge of the Group’s operationsand performance. Relevant information will be madeavailable through stock market reports and pressreleases. Regular financial reports are issued in theform of annual reports and quarterly interim reports.The company is also in constant contact withfinancial analysts.

The company’s financial calendar is as follows:4. quarter 2004/ preliminary annual result 2004 21 February1. quarter 2005 12 May2. quarter 2005 18 August3. quarter 2005 28 OctoberAnnual general meeting 9 June

Annual general meeting will be held at thecompany’s premises in Bergen.

Auditor’s report for 2004

We have audited the annual financial statements of TTS Marine ASA as ofDecember 31, 2004, showing a profit of NOK 10 463 480 for the parentcompany and a profit of NOK 10 463 480 for the group. We have also auditedthe information in the directors’ report concerning the financial statements,the going concern assumption, and the proposal for the allocation of the profit.The financial statements comprise the balance sheet, the statements of incomeand cash flows, the accompanying notes and the group accounts. Thesefinancial statements are the responsibility of the Company’s Board of Directorsand Managing Director. Our responsibility is to express an opinion on thesefinancial statements and on other information according to the requirementsof the Norwegian Act on Auditing and Auditors.

We conducted our audit in accordance with the Norwegian Act on Auditingand Auditors and auditing standards and practices generally accepted inNorway. Those standards and practices require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating theoverall financial statement presentation. To the extent required by law andauditing standards an audit also comprises a review of the management ofthe Company’s financial affairs and its accounting and internal controlsystems. We believe that our audit provides a reasonable basis for our opinion.

In our opinion• the financial statements have been prepared in accordance with the law and

regulations and present the financial position of the Company and of theGroup as of December 31, 2004, and the results of its operations and itscash flows for the year then ended, in accordance with accountingstandards, principles and practices generally accepted in Norway

• the company’s management has fulfilled its duty to produce a proper andclearly set out registration and documentation of accounting informationas required by law and accounting standards, principles and practicesgenerally accepted in Norway

• the information given in the directors’ report concerning the financialstatements, the going concern assumption, and the proposal for theallocation of the profit are consistent with the financial statements andcomply with the law and regulations.

Bergen, March 30, 2005PricewaterhouseCoopers AS

Geir Inge LundeState Authorised Public Accountant (Norway)

Note: This translation from Norwegian has been prepared for informationpurposes only.

40

To the Annual Shareholders’ Meeting of TTS Marine ASA

051015202530

'000

NOK

10.05.04 23.06.04 02.08.04 07.09.04 12.10.04 16.11.04 21.12.04 27.01.05 03.03.05 12.04.05 09.05.050

1000

2000

3000

4000

5000

6000

41

Movements in share capital, RISK adjustmentDate Type of Share capital Number Nominal

transaction after transaction of shares value in NOK03.05.95 Public offering 1 911 000 1 911 000 1.0019.04.96 Share split 1 911 000 3 822 000 0.5020.05.96 Private placing 2 101 000 4 202 000 0.5010.12.96 Private placing 2 146 130 4 292 260 0.5010.01.97 Private placing 2 223 879 4 447 758 0.5016.01.97 Private placing 2 348 149 4 696 298 0.5023.04.97 Private placing 2 578 149 5 146 298 0.5026.05.98 Private placing 2 680 649 5 361 298 0.5004.10.99 Private placing 2 930 649 5 861 298 0.5017.04 00 Private placing 3 220 649 6 441 298 0.5026.04.00 Private placing 3 436 681 6 873 362 0.5010.05.01 Private placing 3 494 181 6 988 362 0.5018.01.02 Private placing 3 851 323.5 7 702 647 0.5028.02.02 Private placing 7 422 752 14 845 504 0.5015.10.04 Private placing 8 157 552 16 315 104 0.5014.02.05 Private placing 8 857 552 17 715 104 0.5022.02.05 Private placing 8 970 552 17 941 104 0.5031.03.05 Private placing 9 026 802 18 053 604 0.50

TTS Share Value 2004 – 2005

Volume Price

RISK adjustments as of 1 January - per share: 1996 NOK –2.281997 NOK 0.121998 NOK 0.941999 NOK 1.302000 NOK 0.002001 NOK 0.002002 NOK 0.022003 NOK -0.072004 NOK 0.00

42

Corporate governance

The Norwegian Code of Practice for Corporate GovernanceTTS Marine will strive to apply the Norwegian Code of Practice witheffect from the 2005 financial year as recommended by Oslo Børs. To agreat extent TTS Marine ASA is already complying with the Code. Thereare, however, some exceptions which will be explained in the following.

TTS Marine ASA has presently no Nomination Committee elected bythe general meeting. This will be prepared and elected in the AGM forthe financial year 2005.

According to the Public Limited Companies Act, the chairman of theboard is elected by the board and not by the general meeting.

Shareholder PolicyTTS aims to give our shareholders over time a competitive return oninvestments reflecting the risk of the company’s operations. Accordingto the growth strategy, the shareholders’ short term return should berealized through an increase in the value of their shares. In the longterm, however, the aim is to be able to pay out dividends to theshareholders. Growth in the form of acquisitions will be carried outthrough a balanced financing between equity and debt.

Strategy for growthTTS has since 1997 executed seven successful acquisitions and willbecome a billion NOK company in 2005. TTS wishes in the comingyears to further expand the group’s activities within the shipsequipment business. The strategy is also to increase the productportfolio by using existing skills and expertise in less cyclical marketslike the fast growing port business.

Share capital and share holdersThe share capital as of 31 December 2004 was NOK 8 157 552 dividedbetween 16 315 104 shares with a nominal value of NOK 0.50. Thecompany has only one class of shares, and all the shares are freelytransferable and listed on the Oslo Stock Exchange, with ticker TTS.After the biggest shareholder, National Oilwell Norway AS, sold all oftheir shares in November, the liquidity of the TTS shares has improvedand is listed on Oslo Børs’ match list.

As of 31 December 2004 the company had 769 shareholders,compared with 362 at the beginning of the year. Of the shareholdersat the end of the year, 29 were foreign nationals with a combinedholding of 5.0 % of the total share capital.

43

The company’s 15 largest shareholders as of 31 December 2004were as follows:

Number Shareholding VotingShareholder of shares percentage shareMP Pensjon 1 342 000 8.22 % 8.22 %Skeie Group AS 1 144 285 7.01 % 7.01 %Odin Maritim 1 128 000 6.91 % 6.91 %Skagen Vekst 1 100 000 6.74 % 6.74 %Firstnordic Norge Vekst 946 915 5.80 % 5.80 %Starefossen forvaltning AS 809 923 4.96 % 4.96 %Delphi Norge 700 000 4.29 % 4.29 %Gambak 600 000 3.67 % 3.67 %Svenska Handelsbanken 377 500 2.31 % 2.31 %Danske Bank A/S 375 500 2.30 % 2.30 %Vital Forsikring ASA 307 943 1.88 % 1.88 %NHO’s Arbeidsmiljøfond 291 947 1.79 % 1.79 %Orkla Finans 291 600 1.79 % 1.79 %Odin Europa 267 000 1.63 % 1.63 %Kjell Andenæs 250 000 1.53 % 1.53 %15 largest shareholders 9 932 613 60.87 % 60.87 %Remaining shareholders 6 382 491 39.13 % 39.13 %Total 16 315 104 100.00 % 100.00 %

The board of TTS Marine ASAIn 2004 the board of TTS Marine ASA consisted of five members electedby the shareholders and two employee representatives. Two of the boardmembers withdraw after National Oilwell sold all their shares in TTS inNovember 2004. The board at present consists of the followingmembers:

Navn PositionNils O. Aardal (57) Director, JO Tankers ASEinar Pedersen (64) Shareholder/Board chairman FastShip, Inc.Michael S. Mathews (64) Corp. Dir., Westgate Capital Co.Mona Tellnes Halvorsen (35) Employee rep.

from TTS Handling Systems ASOddmund Hatletun (58) Employee rep. from TTS Marine ASA

Einar Pedersen is elected chairman by the board.

S H A R E S O W N E D B Y B O A R D O F D I R E C T O R S

Einar Pedersen represents Starefossen Forvaltning AS, which owned809 923 shares as of 31 Descember 2004. Board member OddmundHatletun owned 693 shares as of 31 December 2004. The otherdirectors do not have shares or share options in TTS Marine ASA.

T H E TOTA L R E M U N E R AT I O N TO T H E B O A R D I S B A S E D O N T H E

R E S O L U T I O N F R O M T H E A N N U A L G E N E R A L M E E T I N G 2 5 M AY 2 0 0 4

( N O K 1 0 0 0 )

Chairman of the board 180 Deputy Chairman 160Board members elected by the shareholders 450 150 to 3 board membersBoard members elected by the employee’s 100 1) 50 to 2 board membersCompensation committee 100 60 to the chairman,

20 to 2committee members

Audit committee 100 60 60 to the chairman, 20 to 2 committee members.

In total 1090

1) Board members elected by the employees receive ordinary salarywhen they are on the board and therefore receive reducedcompensation as board members compared to board memberselected by shareholders.

The above figures are based on a board consisting of five boardmembers (two employee representatives), one deputy chairman andone chairman. Furthermore, the figures are based on a compensationcommittee and an audit committee with three members, of whom one is leader.

Remuneration of the board of directors, president & CEO andauditor is shown in note 5 in the consolidated accounts.

C L O S E P A R T N E R S

FastShip is a concept under development for fast, door-to-doorcontainer transport between Europe and the United States via theports of Cherbourg in France and Philadelphia in the US. Throughpatented technology, TTS has landed contracts worth approximatelyNOK 1 300 million, provided the project is realized. Einar Pedersen isshareholder and board chairman of FastShip Inc, as well as shareholderand board chairman of TTS Marine ASA.

44

D I S T R I B U T I O N A F T E R E X E C U T I O N O F O P T I O N S / S A L E S O F S H A R E S :

Name Company, position Options SharesJohannes D. Neteland TTS Marine ASA, President 150 000 50 000Olav Bruåsdal TTS Marine ASA, Fin. dir. 52 500 12 500Hans-Jan Erstad TTS Marine ASA, HR Man. 52 500 12 500Göran K. Johansson Dry Cargo Handling, Div. dir. 65 000 25 000Bjørn Hansen Material Handling, Div. dir. 52 500 0Ivar K. Hanson Marine Cranes, Div. dir. 40 000 25 000

Board MeetingsThe structure of the board of directors satisfies the requirement forindependence from the company’s management, and the comple-mentary expertise within the board helps to ensure that boardmembers are able to evaluate issues from varying perspectives beforefinal resolutions are met.

The auditor is present together with audit committee where theannual accounts are reviewed and presents a comprehensive statementin accordance with audit requirements. In connection with the pre-paration of the annual accounts, the audit committee also meets withthe auditor without company management present.

In 2003 the board established an audit committee and a compensationcommittee:

Audit CommitteeMichael S. Mathews (chairman)Nils Olav AardalMona T. Halvorsen

Compensation CommitteeEinar Pedersen (chairman)Nils Olav Aardal

The board has six scheduled meetings a year, but may hold specialmeetings, also by telephone, on special occasions. During 2004 therewere 15 board meetings.

Insiders’ trading with securitiesThe Board has established a policy in respect of trading with securitiesissued by the company. The policy is in line with the guidelines forinsiders issued by Oslo Stock Exchange and applies to the Board, thepresident/CEO and senior management as well as other employees,who in connection with their position have access to non-publicinformation.

Authorization to the boardAt 30 January 2004, an Extraordinary General Meeting (EGM) acceptedthe proposal to give the board the proxy to issue up to 4.0 mill. sharesin case of acquisitions or mergers. The authorization is valid until theAnnual General Meeting (AGM) for 2004, latest 30 June 2005. As aconsequence of the acquisitions performed totally 3 095 600 shareshave been used as of 30 March 2005.

At 25 May 2004, the General Meeting (GM) accepted the proposalto give the board the proxy to issue up to 0.3 mill. own shares. Theauthorization is valid until the Annual General Meeting (AGM) for2004, latest 30 June 2005. In June 2004 TTS Marine ASA purchased 40 000 own shares with the purpose to sell at reduced prices to itsemployees. TTS’ holding of own shares as of 30 March 2005 amount to 27 200.

Share optionsAt the end of 2004, a total of 525 000 authorized options wasallocated to senior executives of the TTS Group. 225 000 options maybe exercised up to and including 31 October 2005 at an exercise price of NOK 10.00, and 300 000 options may be exercised up to andincluding 27 May 2006 at an exercise price of NOK 14.00.

D I S T R I B U T I O N O F O P T I O N S A N D S H A R E S W A S A S F O L L O W S A S

O F 31 D E C E M B E R 2 0 0 4 :

Name Number of Number of share options shares owned

Johannes D. Neteland 200 000 40 000Olav Bruåsdal 65 000 6 000Hans-Jan Erstad 65 000 5 000Göran K. Johansson 90 000 0Bjørn O. Hansen 65 000 0Ivar K. Hanson 40 000 25 000Total 525 000 76 000

At 10 March 2005, management exercised 112 500 purchase optionsto a share price of NOK 10.00 per share. 63 500 shares was at thesame time sold to an average share price of NOK 25.08 with adistribution as shown below:

E X E R C I S E O F P U R C H A S E O P T I O N S / S A L E S O F S H A R E S :

Name Exercise of Sales of purchase options shares

Johannes D. Neteland 50 000 40 000Olav Bruåsdal 12 500 6 000Hans-Jan Erstad 12 500 5 000Göran K. Johansson 25 000 0Bjørn Hansen 12 500 12 500Total 112 500 63 500

Senior management

Johannes D. Neteland (47) is

President and CEO of TTS Marine

ASA. He has an advanced business

administration degree from the

Norwegian School of Economics

and Business Administration.

Neteland worked for Statoil from

1981-1988, was the deputy

managing director of Block Watne

Boliger from 1988-1989 and the

marketing director of the Ekornes

Group from 1989-1991. He was the

division director of Vital Forsikring

from 1991-1998 until he assumed

his current position.

Olav Bruåsdal (49) is financial

director of TTS Marine ASA. He has

an advanced engineering degree

from the Norwegian Institute of

Technology at the University of

Trondheim and a higher degree in

business administration from the

Norwegian School of Economics and

Business Administration. Bruåsdal

worked with engineering, project

and department management for

12 years before he started at TTS in

1994. He started out as a project

manager and was subsequently

appointed as the director of projects

and administration. He assumed his

current position in 1997.

Hans-Jan Erstad (61) is HR

manager with corporate responsi-

bility for IT, personnel and quality

assurance at TTS. He is an auto-

mation engineer and has also

studied economics, management

and contract management. Erstad

has among others worked at Nera

and Petrovest. He started working

at TTS in 1995 and has been

responsible for IT, logistics and

industrial development. He assumed

his current position in 2002.

Ivar K. Hanson (40) is division

director for Marine Cranes. He has

an advanced degree in business

administration from the Norwegian

School of Economics and Business

Administration (NHH) and is a

mechanical engineer. Hanson has

worked as a contract coordinator

and bid manager. 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 1 January 2003 to

30 May 2004, Hanson was director

in Prosafe Drilling Services AS for

Technology and Projects in the

engineering division.

Göran K. Johansson (61) is

director of the Dry Cargo Handling

division and managing director of

TTS Ships Equipment AB. Johansson

is a naval architect and engineer.

He has 20 years of experience

from various enterprises that are

currently part of the MacGregor

Group. Johansson was the

managing director of Hamworthy

KSE AB from 1995 until the

company was integrated into the

TTS Group on 1 January 2002.

Bjørn O. Hansen (59) is managing

director of TTS Handling Systems

and is director of the Material

Handling division. Hansen has a

degree in engineering. He started

working for TTS Handling Systems

in 1971 and has previously held

positions in the company as project

manager, marketing director and

managing director (1995 – 2000,

and again from 1 January 2003).

Hansen has also been responsible

for TTS’ involvement in the

development project for FastShip

from 1995.

45

46

TTS Liftec OyTTS acquired Liftec Products Oy in Finland in 2004.

After incorporation into TTS the company was

renamed TTS Liftec Oy and will continue with

the same management and workforce.

IFTEC HAS BEEN OWNED and managed by Jorma Mäkinen

(55) since the start in 1991.The company, which has

its head office in Tampere (Tammerfors) in Finland

and a sales office in Söderhamn in Sweden, has 21

employees. Mäkinen will continue to manage the operations.

This acquisition gives TTS access to established product and

market concepts, and sales channels, for a company that has

been very profitable for several years. During the period from

1 October 2003 to 30 September 2004 the company reported

a turnover of EUR 7.0 million and an operating profit of EUR

1.1 million.The products manufactured by Liftec include

systems for handling containers and cassettes with advanced

hydraulics and electrical control systems.The cassettes have

been developed to handle special transport needs for the steel

and paper industries etc. Around 60 % of the sales are outside

Finland, primarily to European

ports.The company also

provides service and aftersales

activities for their deliveries.

Cooperation on roboticcargo handlingTTS Ships Equipment in

Gothenburg has cooperated in

recent years with Liftec on the

development of products for robotic cargo handling (AGV).The

development and delivery of terminal systems makes it possible

to exploit the existing expertise of the TTS Group in an area

that is commercially interesting and less sensitive to business

cycles than the other activities.The acquisition of Liftec is

accordingly strategically important and of great significance

to the overall development of the operations and profitability

of the group. Liftec is organised with a product development

department with five persons, a sales and marketing department

with three persons, and a production and installation department

with seven persons. One person is responsible for service and

aftersales, while the administrative work is taken care of by

Mäkinen and one employee.The market outlook for TTS

Liftec’s products and deliveries is good. Orders in hand stood

at NOK 44.5 million at the start of 2005, and the new order

volume in the first quarter was good.

In 2004 TTS made several

strategic acquisitions to

ensure further growth

within the Group. Details

of the new TTS companies

follows.

Acquisitions

L

47

HE COMPANY WAS REGISTERED at the end of April

and will start operations in the autumn. Around

30-40 engineers and production workers will be

hired initially. A workshop building measuring 4 500

square metres has been erected in Dalian, and an office building

is under construction. Dalian has a population of five million

and is located in northeastern China. Only Shanghai has more

shipbuilding activities than Dalian. Each of the parties will

inject NOK 10 million into the company.The company will

manufacture and market the entire TTS crane range, and TTS

will receive a royalty of 2 % of the turnover for this.The

company’s profit will be shared equally between the parties.

The aftersales activities will be performed by TTS. President

and CEO Johannes D. Neteland of TTS Marine is the board

chairman of TTS Bohai. Li Dali (50) has been employed as

the general manager. He earned a degree from the Harbin

Shipbuilding Engineering College in 1980 and has worked

at Dalian Shipyard since 1970. Dalian New Shipyard was

established as an independent company in 1990, and Mr. Li

Dali has been the assistant director since 2000.The rest of

the workforce will also be Chinese.

Same model as TTS Hua Hai Ships Equipment Co., Ltd.In China the state’s shipbuilding activities are organised into

two companies and they cover their own geographic areas:

CSIC (China State Industrial Corporation) in the north and

CSSC (China State Shipbuilding Corporation) in the south.

DNS is part of the CSIC group in the north.There are a total

of 600 large and small yards in the two groups.The agreement

between TTS Marine and DNS follows the same model as the

joint venture company TTS Hua Hai Ships Equipment Co.,

Ltd., which is based in Shanghai. Europeans and Chinese have

cooperated on the development, production and sales of hatch

covers and RoRo equipment here for six years.

Aiming for rapid growthChina is responsible for over 15 % of all shipbuilding in the

world, and it aims to become the world leader by 2015.TTS

has obtained a strategically important position to become the

leading supplier of most types of marine cranes to shipyards

in China through the cooperation with DNS.This will also

contribute to strengthening the crane operations in Norway

and Germany, especially because the service and aftersales

activities must be based to a great extent on the expertise TTS

has in Europe.TTS Bohai Machinery Co., Ltd. is expected to

have a turnover of NOK 100–150 million in three to four

years.The total market for marine cranes in China was around

NOK 500 million in 2004.This is expected to triple by 2015.

TTS Bohai Machinery Co., Ltd.TTS has established the joint venture company TTS Bohai Machinery Co., Ltd. together

with the Chinese state-owned company Dalian New Shipbuilding Heavy Industry Co. (DNS).

The company will supply cranes to ships built at Chinese yards.

T

48

TTS-LMG Marine Cranes GmbHTTS acquired the crane operations of Lübecker Maschinenbau

Gesellschaft GmbH (LMG) in 2004 and incorporated these

operations into the company TTS-LMG Marine Cranes GmbH.

grab.The so-called gantry cranes are another important special

product.These cranes are mounted on rails on deck and thus

make the ships independent of port cranes for loading and

unloading. LMG also delivers other special large cranes with

wire hoisting rope.The company has also developed several

cylinder cranes for both marine and land-based operations.

Good profitability – good outlookLMG’s crane division reported an overall turnover of NOK 45

million for the period from 1 August 2003 to 31 July 2004,

and close to NOK 40 million of this was related to aftersales.

Profit before tax was around NOK 8 million.TTS expects

increased sales of LMG’s products and services as a result of

the affiliation with TTS’s sales network.The marketing of

LMG’s products can also have a positive effect on the crane

operations in Norway, because the engineering capacity in

Germany is limited.To date in 2005 TTS-LMG Marine Cranes

has won two major contracts for the delivery of cargo cranes

to ships that German shipping companies are building in

Indonesia and Portugal.The market outlook is considered

good for both new sales and service.

HIS ACQUISITION has given TTS access to a range of

products that the group did not previously have,

in addition to a large market for service and sale

of spare parts. LMG has significant deliveries to

German shipping companies, who build a large number of ships

in China. Our competitive power has thus been strengthened

in important markets areas.TTS-LMG Marine Cranes GmbH

has 21 employees and is managed by Per S. Aulin (58). He has

an advanced engineering degree from the Norwegian Institute

of Technology at the University of Trondheim (NTH) and was

the manager of TTS Marine Cranes in Kristiansand prior to

the takeover. All the managers and employees in the operations

have continued after TTS became the owner.Their expertise

is related to engineering, service and sales.TTS has entered

into an agreement to rent premises at the LMG’s yard area in

Lübeck, initially for one year.

Crane operations for 40 yearsThe history of LMG goes all the way back to 1846.The

operations related to the construction of marine cranes started

in 1965. In the following year, the world’s first twin crane was

introduced. LMG’s crane division has developed and marketed

wire cranes, which dominate the cargo crane market.These

cranes have all the machinery in the crane tower, and all the

control and lifting components have so-called PLC control.

LMG has also developed special cranes for heavy lifts, i.e.

cargo up to 500 tonnes, as well as cranes with a motorized

T

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TTS Marine (Shanghai) Co., Ltd.

HE CRANE COMPANY IN SHANGHAI has been 50 %

owned together with a joint venture partner since

the start in 2001.The acquisition of National Oilwell’s

50 % interest is a consequence of the commercial

development of the company, which has focused primarily on

TTS’s products and deliveries.The company, which has 35

employees, has been engaged in the sale, service and installation

of cranes for ships built at Chinese yards.TTS Marine (Shanghai)

Co., Ltd. delivered a total of 12 cranes, 6 davits and 6 component

sets in 2004, and achieved a turnover of NOK 17.4 million.

Focus on exportsThe Shanghai company has marketed and delivered davits and

small and medium-sized marine cranes with different functio-

nality. Now the market strategy is changing due to the fact

that TTS is establishing a new company that will deliver cranes

TTS acquired all the shares in the joint venture company TTS Hydralift Co., Ltd. in Shanghai in 2004.

The crane company changed its name to TTS Marine (Shanghai) Co., Ltd. After the start-up of TTS Bohai

Machinery Co. Ltd., the company will focus on exports from China to other shipbuilding markets in Asia.

to the Chinese shipbuilding market. In addition to exports

from China to other Asian countries TTS Marine (Shanghai)

Co., Ltd. will also consider the production and assembly of

cranes that are delivered to shipyards in Europe.The target

for 2005 is to double last year’s volume. In addition to hose

handling cranes, the company will also focus stronger on the

production and sales of smaller service and provision cranes.

TTS Marine (Shanghai) Co., Ltd. is managed by the Norwegian

Arne Knudsen (44). He started at the company as the technical

manger in 2002. Knudsen has an engineering degree and

worked for Hydralift for ten years before he moved to China.

The rest of the workforce is Chinese.

T

50

Companies in the TTS Group

TTS Marine ASAC O R P O R A T E O F F I C E :

Laksevågneset 12P.O. Box 32 Laksevåg5847 BergenNorwayTel.: +47 55 94 74 00Fax: +47 55 94 74 01E-mail: info@tts-marine.noWeb: www.tts-marine.com

R E G I O N A L O F F I C E :

Barstølveien 26P.O. Box 6024606 KristiansandNorwayTel.: +47 38 04 95 00Fax: +47 38 04 95 01E-mail: info@tts-marine.noWeb: www.tts-marine.com

TTS-LMG Marine Cranes GmbHEinsiedelstr. 6D-23554 LübeckGermanyTel: +49 (0) 451 4501 547 Fax: +49 (0) 451 4501 392E-mail: Info@tts-lmg.deWeb: www.ttsmarine.com

TTS Marine (Shanghai) Co., LtdNo. 433 Gao Xiang Huan RoadGaoDong Industrial Park, PuDongShanghai 200137P.R. ChinaTel.: +86 21 5848 5300Fax: +86 21 5848 5311E-mail: sales@tts-hydralift.comWeb: www.tts-marine.com

TTS Bohai Machinery Co., LtdSujia, Dalian Wan StreetDalian,P.R. ChinaTel: +86 411 8448 2518Fax: +86 411 8440 9356E-mail: sung@tts-bohai.comWeb: www.tts-marine.com

TTS Ships Equipment ASLaksevågneset 12P.O. Box 165 Laksevåg5847 BergenNorwayTel.: +47 55 11 30 50Fax: +47 55 11 30 60 E-mail: info@tts-se.noWeb: www.tts-se.com

TTS Ships Equipment ABKämpegatan 3SE-411 04 GöteborgSwedenTel.: +46 31 725 79 00Fax: +46 31 725 78 00E-mail: info@tts-se.seWeb: www.tts-se.com

TTS Ships Equipment GmbHWachtstrasse 17-24D-28195 BremenP.O. Box 103840D-28038 BremenGermanyTel.: +49 421 3 35 84 0Fax: +49 421 3 35 84 98E-mail: info@tts-se.deWeb: www.tts-se.com

TTS Hua Hai Ships Equipment Co., Ltd18th floor3255 Zhou Jia Zui RoadShanghai CH-200093P.R. ChinaTel.: +86 21 6539 8257Fax: +86 21 6539 7400 E-mail: info@tts-huahai.comWeb: www.tts-se.com

TTS Liftec Oy Tuotekatu 8FI-33840 TAMPEREFinlandTel: +358 3 31401400Fax: +358 3 31401444E-mail: liftec@tts-liftec.fiWeb: www.tts-liftec.fi

TTS Handling Systems ASHolterkollvn. 6P.O. Box 49 1441 DrøbakNorwayTel.: +47 64 90 79 10Fax: +47 64 93 16 63E-mail: info@tts-hs.noWeb: www.tts-hs.no

TTS IncAlf Sundsboe401 Moonraker DriveSlidell, LA 70458USA Tel.: +1 504 616 3712Fax: +1 985 641 7442E-mail: alf.sundsboe@tts-se.seWeb: www.tts-se.com

TTS IncJoe Connolly6 Neal CourtSan Pablo, CA 94806 USATel.: +1 510 724 4625Fax: +1 510 724 8639E-mail: joe.connolly@tts-se.seWeb: www.tts-se.com

TTS KoreaRM 625, Ocean Tower# 760-3 Woo 1-Dong, Haeundae-Gu, BusanSouth-Korea (612-726)Tel.: +82 51 740 6081-3Fax: +82 51 740 6084E-mail: info@ttskorea.co.krWeb: www.tts-marine.com

TTS Marine ASALaksevågneset 12P.O. Box 32 LaksevågN-5847 Bergen, NorwayTel: +47 55 94 74 00Fax: +47 55 94 74 01E-mail: info@tts-marine.nowww.tts-marine.com

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