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Tallink Grupp

Investor Presentation • Jul 29, 2021

2225_ip_2021-07-29_17dc12c5-d0df-4a00-b53d-e6ba1aa15049.pdf

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Q2 2021

TALLINK GRUPP AS

TALLINK GRUPP

The leading European provider of leisure and business travel and sea transportation services in the Baltic Sea region.

OPERATIONS

  • Fleet of 15 vessels
  • Seven ferry routes (3 suspended)
  • Operating four hotels (1 closed)

KEY FACTS

  • Revenue of EUR 443 million in 2020
  • Served 3.7 million passengers in 2020
  • Transported 360 thousand cargo units
  • Operating EUR 1.5 billion asset base
  • 4 352 employees (end of Q2 2021)
  • 2.8 million loyalty program members

STRONG BRANDS

STRATEGIC PLAN

CURRENTLY THE STRATEGIC FOCUS IS ON MANAGING COSTS AND CASH FLOWS TO ENSURE SUSTAINABILITY AND TO BRING TALLINK GRUPP THROUGH THE GLOBAL CRISIS

TALLINK'S VISION

To be the market pioneer in Europe by offering excellence in leisure and business travel and sea transportation services

LONG TERM OBJECTIVES TOWARD INCREASING THE COMPANY VALUE AND PROFITABILITY

  • Strive for the highest level of customer satisfaction
  • Increase volumes and strengthen the leading position on our home markets
  • Develop a wide range of quality services directed at different customers and pursue new growth opportunities
  • Ensure cost efficient operations
  • Manage the optimal debt level that will allow sustainable dividends

CURRENT STRATEGIC CORNERSTONES AND COMPETITIVE ADVANTAGES

MOST MODERN STRONG MARKET SHARE
FLEET & BRAND AWARENESS
WIDE ROUTE
NETWORK		 HIGH SAFETY LEVEL &
ENVIRONMENTAL
STANDARDS
3

Q2 2021 OVERVIEW – COVID-19 & TRAVEL RESTRICTIONS

2021 2020 Change
427 767 388 212 10.2%
91 990 86 755 6.0%
125 713 102 479 22.7%
86.1
-8.7
4.4
-19.4
-24.3		 65.0
-21.9
2.4
-22.7
-27.4		 32.5%
60.2%
80.4%
14.7%
11.1%
3.1 14.4 -78.2%
30.06.21 31.03.21 Change
1 524.7 1 492.5 2.2%
655.7 680.1 -3.6%
744.5 728.3 2.2%
706.7 713.5 -1.0%

• Revenue EUR 86.1m (EUR +21.1m or 32.5% vs LY)

  • Extensive impact from COVID-19 related travel restrictions
  • More limited impact on cargo operations
  • 18% more departures compared to Q2 2020

• Costs & support

  • Cost of sales increased by 9% or EUR 7.9m
  • Costs relating to re-employment of vessels in Q2 2021
  • Administrative & marketing cost increased by 3% or EUR 0.4m
  • Reduced remuneration in Q2 2020
  • Total impact of various support measures: EUR 10.6m in Q2 2021 (EUR -17.1m vs LY)
  • EBITDA of EUR 4.4m (EUR +1.9m vs LY)
  • Net loss of EUR 24.3m (EUR +3.0m vs LY)

TALLINK GRUPP

Q2 2021 SALES & RESULTS BY GEOGRAPHICAL SEGMENTS

Route Key Figures
(financial
in EUR million)		 2021 2020 Change All routes affected by COVID-19, travel restrictions & suspension of operations
Estonia Passengers (thousands) 336 323 4.1%
Finland Cargo units (thousands) 64 60 7.9% The
results
reflect
the
operations
of
the
Estonia-Finland
two
shuttle
Revenue 41.1 33.6 22.2% vessels,
a
cargo
vessel
and
two
cruise
ferries
in
June
Segment result 0.2 -2.4 110.3%
Finland Passengers (thousands) 82 54 52.3%
Sweden
Revenue		 Cargo units (thousands) 17 18 -8.2% The
results
reflect
the
operations
of
two
cruise
ferries
on
Turku
18.8 16.2 15.8% Stockholm
route
and
suspended
Helsinki-Stockholm
route
cruise
ferries
Segment result -11.5 -18.4 37.6%
Estonia Passengers (thousands) 10 8 17.8%
Sweden Cargo units (thousands) 11 9 28.2% The
results
reflect
the
operations
of
two
cargo
vessels
on
Paldiski
Revenue 6.1 5.2 17.2% Kapellskär
route
and
two
suspended
cruise
ferries
Segment result -4.3 -4.9 12.1%
Latvia Passengers (thousands)
0		 3 -100.0%
Sweden Cargo units (thousands) 0 0 -100.0% The
Latvia-Sweden
route
result
reflects
expenses
of
two
suspended
Revenue 0.1 1.3 -91.8% cruise
ferries
Segment result -3.5 -4.2 16.6%
Other Revenue 20.0 8.7 130.4%
Segment result 3.4 0.6 506.7% Effectively
only
one
hotel
operated;
increase
from
various
retail
Intersegment revenue 0.0 -0.1 80.1% activities
and
charter
revenue

GRUPP Segment result is the result before administrative expenses, finance costs and taxes 2021 unaudited

Q2 2021 SALES & RESULTS BY OPERATIONAL SEGMENTS

Revenue (EUR
million)		 2021 2020 Change
Restaurant
and shop sales on-board and onshore		 40.0 26.2 52.4%
Ticket sales 13.4 12.9 3.9%
Sales of cargo transportation 23.7 22.4 5.9%
Accommodation sales 0.1 0.2 -26.5%
Income from charter of vessels 5.7 2.5 126.2%
Other sales 3.2 0.7 335.3%
Total
revenue		 86.1 65.0 32.5%
  • Restaurant and shop sales on-board and onshore increased due to various retail activities and higher volume of purchases by travelling passengers
  • Relatively low increase in ticket sales due to absence of several ad hoc routes/services which were operated in in Q2 2020
  • High competition in cargo transportation market
  • Effectively only one hotel operated in Q2 2021
  • Short-term charter of Silja Europa in June 2021

REVENUE STRUCTURE IN Q2 2021

TALLINK 2021 unaudited

RESULTS QUARTERLY SEASONALITY BREAKDOWN

2.6 2.7 0.4 0.4 2.9 3.0 1.3 2.2 2.3 0.5 2019 2020 2021 9.8 9.8 3.7

PASSENGERS (MILLIONS)

REVENUE (EUR MILLION)

CARGO (TH. UNITS)

Q1 Q2 Q3 Q4

Q1

Q2

Q3

Q4

THE DYNAMICS OF HIGH SEASONALITY ON THE PROFIT LEVEL

NET PROFIT BY QUARTERS (EUR MILLION)

MOST OF THE PROFITS ARE TYPICALLY EARNED IN THE SUMMER, THE HIGH SEASON

2021 Q2 DEVELOPMENTS AND KEY FACTS

OPERATING ENVIRONMENT

  • Extensive impact of COVID-19 and suspension of cruise ferries operations continued
  • Restrictions imposed by the governments

ACTIVITIES AND EVENTS

  • Continuous cost control to ensure efficiency and savings from previously implemented measures
  • Appointment of the new Management Board member Margus Schults
  • Changes in loan agreements
  • Short-term charter agreements for Silja Europa, Victoria I and Romantika
  • Opening of third Burger King restaurant in Latvia
  • Completion of renovation and reopening of Tallink City Hotel on 30 June 2021

Silja Europa at the port of Falmouth

EVENTS AFTER THE REPORTING PERIOD & OUTLOOK

Restaurant at renovated Tallink City Hotel

  • Christening of the new LNG powered shuttle vessel MyStar in Rauma shipyard in August 2021. The godmother of the new vessel will be the President of the Republic of Estonia Kersti Kaljulaid.
  • Continuing preparations for opening new Burger King restaurants in 2021. In the second half of the year altogether six new restaurants are planned to be opened in Latvia and Lithuania.

Due to the ongoing COVID-19 situation the earnings outlook is uncertain and continues to be strongly affected by external factors such as the progress of vaccination, states' decisions regarding the timing of the lifting of travel restrictions and allowing passenger traffic as well as the duration of the recovery period.

Management expects the passenger traffic between Estonia and Finland to recover rapidly after the restrictions and authorities' advice against travelling have been lifted.

CONSOLIDATED INCOME STATEMENT

(EUR million) 2019 2020 Q2
2020		 (3)
Q2
2021
Sales 949 443 65 86
Cost of sales (1) (752) (486) (87) (95)
Marketing & administrative cost (1) (125) (86) (17) (17)
Other operating items, net (2) 2 37 16 7
EBITDA 171 8 2 4
Margin (%) 18.0% 1.8% 3.7% 5.1%
Net Result 50 (108) (27) (24)
EPS 0.074 (0.162) (0.041) (0.036)

Totals may not sum due to rounding

(1) Includes depreciation and amortization

(2) Q2 2021 includes EUR 6.1m direct government assistance; Q2 2020 includes EUR 16.1m direct government assistance; 2020 includes EUR 36.6m net direct government assistance

(3) Unaudited

TALLINK GRUPP

CONSOLIDATED CASH FLOW STATEMENT

(EUR
million)		 2019 2020 Q2 2020 (1)
Q2 2021
Operating cash flow 175 (7) 4 30
Capital expenditure (61) (100) (14) (3)
Asset disposal 0 0 0 0
Free cash flow 114 (107) (10) 27
Debt financing (net effect) (52) 112 19 0
Interests & other financial items (17) (16) (3) (4)
Dividends & reduction of share capital (80) 0 0 0
Income tax on dividends paid (8) 0 0 0
Change in cash (43) (11) 5 23

Totals may not sum due to rounding (1) Unaudited

TALLINK GRUPP

CASH FLOW GENERATION AFFECTED BY COVID-19

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(EUR
million)		 31.12.2019 30.06.2020 31.12.2020 (2)
30.06.2021
Total assets 1 533 1 506 1 516 1 525 1500 Cash
Intangibles		 Other
liabilities
Non-current assets 1 412 1 414 1 427 1 407 Other
assets
Current assets 121 92 89 118
-
of which cash		 39 22 28 38 Share
holders'
equity
Total liabilities 710 741 802 869 1000
Interest bearing liabilities 578 616 705 745
Other liabilities 132 125 97 125
Shareholders' equity 823 765 714 656 Ships
500
Net debt/EBITDA 3.1x 5.0x 84.2x 143.2x Loans
Net debt 539 594 677 707
Equity/assets ratio 54% 51% 47% 43%
(1)
BVPS
(in EUR)		 1.23 1.14 1.07 0.98 0 Assets Liabilities &
Totals may not sum due to rounding Equity

(1) Shareholders' equity / number of shares outstanding

(2) Unaudited

TALLINK GRUPP

TOTAL LIQUIDITY OF EUR 116.7 MILLION + EUR 90.0 MILLION UNDRAWN WORKING CAPITAL LOAN

DEBT STRUCTURE

LONG TERM BANK LOANS

  • EUR 573 million as at 30.06.2021
  • 7 loan agreements outstanding: syndicated loans, amortizing project and working capital loans
  • Maturities 1-8 years
  • EUR denominated, fixed and EURIBOR floating

OVERDRAFTS (as at 30.06.2021)

  • EUR 56 million used
  • EUR 79 million unused

SIGNED, NOT YET DRAWN

  • EUR 198 million from KfW IPEX-Bank GmbH (MyStar)
  • EUR 90 million undrawn of EUR 100 million working capital loan from Nordic Investment Bank

Total EUR 745 million interest bearing liabilities as at 30.06.2021

2021 unaudited

PRINCIPAL PAYMENTS UNDER EXISTING LOAN AGREEMENTS POSTPONED

CORPORATE GOVERNANCE

Enn Pant - Chairman of the Supervisory Board

Toivo Ninnas Kalev Järvelill

Born in 1940, with the Supervisory Board since 1997

Eve Pant

Born in 1968, with the Supervisory Board since 1997

Raino Paron

Born in 1965, with the Supervisory Board since 2019

Born in 1961, with the Supervisory Board since 2005

Born in 1965,

with the Supervisory Board since 2007

Colin Douglas Clark

Born in 1974, with the Supervisory Board since 2013

SHAREHOLDERS AND SHARE PERFORMANCE

  • Institutional investors
  • Retail investors 0.50

SHAREHOLDERS OF AS TALLINK GRUPP TEN LARGEST SHAREHOLDERS AS OF 30.06.2021

Infortar AS 39%
Baltic Cruises Holding, L.P. 16%
ING Luxembourg S.A. AIF Account 7%
Baltic Cruises Investment L.P. 6%
Nordea Bank Abp / Clients FDR 3%
Citigroup Venture Capital International G.P 2%
Clearstream Banking AG 1%
LHV Pensionifond L 1%
State Street Bank And Trust Omnibus Account A Fund No OM01 1%
Mersok OÜ 1%

Share Price in EUR FDR Price in EUR

TALLINK GRUPP

28,715 SHAREHOLDERS AND FDR-HOLDERS AT THE END OF THE QUARTER

THANK YOU

AS Tallink Grupp Sadama 5, 10111, Tallinn, Estonia [email protected]

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