MAY 2018
TALLINK GRUPP PRESENTATION
TALLINK GRUPP
is the leading European provider of leisure and business travel and sea transportation services in the Baltic Sea region
OPERATIONS
- Fleet of 14 yessels
- Operating five hotels
KEY FACTS
- Revenue of EUR 967 million in 2017
- Operating EUR 1.6 billion asset base
- Over 7000 employees
- Serving 9.8 million passengers annually
- Transporting 364 thousand cargo units annually
- Listed on Nasdaq OMX Baltic TAL1T
GROUP OF STRONG BRANDS V TALLINK SILJA LINE PR V TALLINK Hotels ₹ A CLUBONE
BUSINESS MODEL
REVENUE STRUCTURE IN 2017
POSITION IN THE GLOBAL FERRY MARKET
THE WORLD'S TOP DUTY FREE & TRAVEL RETAIL SHOPS
Ranking by actual and estimated retail sales in 2016
| ank) |
Location |
Country |
Channel |
|
|
iales > US\$ 1,500 million |
|
|
|
| $\mathbf{1}$ |
SEOUL - Incheon Int'l Airport |
South Korea |
Airport Shops |
|
| 2 |
DUBAI - Dubai International Airport |
UAE |
Airport Shops |
|
| 3 |
SINGAPORE - Changi Airport |
Singapore |
Airport Shops |
|
|
iales > US\$ 1,000 million |
|
|
|
| 4 |
LONDON - Heathrow Airport |
UK |
Airport Shops |
|
| 5 |
BANGKOK - Suvarnabhumi Airport |
Thailand |
Airport Shops |
|
|
iales > US\$ 800 million |
|
|
|
| 6 |
HONG KONG - International Airport |
Hong Kong |
Airport Shops |
|
| 7 |
SHANGHAI - Pudong Airport |
China |
Airport Shops |
|
| 8 |
TOKYO - Narita Airport |
Japan |
Airport Shops |
|
|
iales > US\$ 600 million |
|
|
|
| 9 |
BEIJING - Capital Airport |
China |
Airport Shops |
|
| 10 1 |
PARIS - Charles de Gaulle Airport |
France |
Airport Shops |
|
| 11 |
FRANKFURT - Frankfurt-Main Airport |
Germany |
Airport Shops |
|
|
iales > US\$ 500 million |
|
|
|
| 12 ° |
TALLINK - All Routes |
Estonia |
Ferries |
|
| 13 |
TAIPEI - Taoyuan International Airport |
Taiwan |
Airport Shops |
|
|
iales > US\$ 400 million |
|
|
|
| 14 |
AMSTERDAM - Schiphol Airport |
Netherlands |
Airport Shops |
|
| 15 |
ISTANBUL - Atatürk Airport |
Turkey |
Airport Shops |
|
|
|
|
|
|
FERRY OPERATOR BY GROSS TONS
|
Rank Company |
Gross tons |
|
Steng Line |
1064790 |
|
2 Grimaldi Lines |
701340 |
| $3^-$ |
Tallink |
512 817 |
| 4. |
DFDS Seaways |
438 479 |
| 5. |
P&O Ferries |
409 659 |
FERRY OPERATOR BY BEDS
|
Rank Company |
Beds |
|
|
1 Tallink |
24 8 21 |
|
|
2 Stena Line |
16 9 85 |
|
| 3 |
Viking Line |
14 0 26 |
|
|
- Grand Navi Veloci |
13 3 28 |
|
| 5 |
Corsica ferries |
11 676 |
|
FERRY OPERATOR BY REVENUES
(EUR million, 2017)
|
Rank Company |
Revenue |
| $\mathbf{1}$ |
DFDS Group |
1925 |
| 2 |
Stena Line |
1322 |
| 3 |
- Tallink |
967 |
| 4 |
Finnlines |
536 |
| 5 |
Viking Line |
523 |
|
|
|
Data: Ro/pax / ferries above 1,000 GT
Source: ShipPax MARKET:17; Company reports
Source: Generation Research 2017
STRATEGIC PLAN
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 |
PASSENGER MARKET SHARE IS 47% OF THE NORTHERN BALTIC SEA
WE ARE TARGETING NEW CUSTOMERS FROM A WIDER COUNTRY BASE
More than 10% of our passengers come from outside of our home markets
MARKET SHARES PASSENGER OPERATIONS
Tallinn - Stockholm
TALLINK GRUPP
HIGHLIGHTS AND MILESTONES
PERFORMANCE AFTER THE MANAGEMENT BUYOUT
2017 HIGHLIGHTS
- All time high annual passenger number
- Strong growth of the cargo business
- New LNG fast ferry Megastar started on Tallinn Helsinki Shuttle service
- New passenger terminal opened in Helsinki
- Lower chartering revenues compared to last year
- Scheduled maintenances of five ships in Q1 low season
- Group-wide ship renovation program continues
- Increased competition on Tallinn Helsinki route
- Lower operating costs from termination of the fast ferry Superstar charter
- Effects from re-routing of vessels in December 2016
- One cruise ferry on Tallinn Helsinki route
- Two cruise ferries on Riga Stockholm route
- Sale of two Superfast vessels in December 2017
OUTLOOK
- Investments to energy / fuel efficiency across the fleet will continue to reduce fuel consumption and air emissions (CO2, SOx and NOx)
- Fuel monitoring systems
- Shore power and hybrid battery systems
- Competitive landscape on Tallinn Helsinki route is changing
- Tallinn Old City Harbour renovation plans
- Strong economies in the market area
- Investments to digital solutions
ONGOING DEVELOPMENT PROJECTS FOCUS ON IMPROVEMENTS AND EFFICIENCIES OF OPERATIONS
INVESTMENTS TO SUPPORT REVENUE GENERATION
- Digital solutions
- Automated revenue management
- Development of mobile booking apps to capture growing handheld devices online traffic
- Digital Club One loyalty card in mobile app
- Improving online booking solutions user experience
- Customer centric and personalized digital channels development
DELIVERING OPERATIONAL EFFICIENCIES
- Efficient ship operations
- Utilising monitoring systems
- Passenger logistics in terminals
- Self check-in also in mobile, improved boarding pass
- Tallink Logistics Center
- Leveraging and fine tuning the operations
LNG SHUTTLE FERRY MEGASTAR DEVELOPMENT OF THE TALLINN-HELSINKI SHUTTLE SERVICE
SPECIFICATIONS
- Gross tonnage 49 000
- Length 212 meters
- Capacity 2 800 passengers $\bullet$
- Lane meters 3 600 $\bullet$
- Dual fuel engine
- Service speed 27 knots
- · Built in Meyer Turku Shipyard
LNG POWERED SHUTTLE FERRY MEGASTAR CARRIED MORE THAN 2 MILLION PASSENGERS DURING THE FIRST YEAR OF OPERATIONS ON THE TALLINN-HELSINKI SHUTTLE SERVICE
LNG SHUTTLE FERRY MEGASTAR SAFER SHIP WITH SMALLER ECOLOGICAL FOOTPRINT
TECHNICAL INNOVATIONS DELIVER IMPROVED SAFETY, HIGH ENERGY EFFICIENCY AND ENVIRONMENTAL SAVINGS
- Safe Return to Port (SRtP) compliant ship
- Dual fuel ship uses environmentally friendly LNG as main fuel
- LNG produces 25% less CO2, 85% less NOx and almost zero SOx and particles
- Improved ship hull hydrodynamics enable very low hull resistance and high propulsion efficiency to further minimise fuel consumption and emissions
- Ships Green Passport improved waste management and recycling
The Shippax Technology and Design Award 2017 was given to Megastar for being the world's most advanced ro-pax ferry
MEGASTAR COMPLIES WITH THE CURRENT AND KNOWN FUTURE EMISSION REGULATIONS FOR THE EMISSION CONTROL AREAS, INCLUDING THE BALTIC SEA
LNG SHUTTLE FERRY MEGASTAR SHIP WITH NEW SERVICES AND CONCEPTS
ONBOARD CONCEPTS AND BRANDS
- Traveller Superstore expanded to 2 800 sq.m
- Q-shopping self-service solution
- Garage concept with improved shop-to-car access for shop customers
- Seven restaurants, cafes and bars
- Leveraging own brands
- Introducing international premium brands
- Four different travel classes
- Standard Star Class
- Upgraded Comfort Class
- Exclusive Business Lounge
- Sitting Lounge $\bullet$
- A special area with a playroom for the kids
GROUP-WIDE SHIP RENOVATION PROGRAM INVESTMENTS TO UPGRADE THE FLEET IN PERIOD 2014-2017
LARGE SCALE RENOVATION OF THREE CRUISE FERRIES
- Silja Serenade $\bullet$
- Silja Symphony
- Silja Europa $\bullet$
EXPANSION OF SHOPS AND MODERNIZING RESTAURANTS TO IMPROVE THE PERFORMANCE THROUGH RETAIL SPACE
- Modern retail environment visual
- Leveraging own brands
- Introducing international premium brands $\bullet$
- Wider selection of products $\bullet$
UPGRADING OF CABINS
- Responding to higher expectations of the passengers $\bullet$
- Focus on different cabin classes $\bullet$
TALLINK GRUPP HAS INVESTED MORE THAN EUR 75 MILLION SINCE 2014 TO UPGRADE ITS EXISTING FLEET
WIDE RANGE OF DINING CONCEPTS ON OUR SHIPS OWN BRANDS AND INTERNATIONAL PREMIUM BRANDS
RESULTS QUARTERLY SEASONALITY BREAKDOWN
EBITDA (EUR MILLION)
THE DYNAMICS OF HIGH SEASONALITY ON THE PROFIT LEVEL
NET RESULT BY QUARTERS (EUR MILLION)
MOST OF THE RESULT IS MADE IN THE SUMMER, THE HIGH SEASON
| (EUR million) |
2014 |
2015 |
2016 |
2017 |
| Sales |
921 |
945 |
938 |
967 |
| Cost of sales (1) |
(740) |
(722) |
(745) |
(772) |
| Marketing, general & admin (1) |
(112) |
(111) |
(123) |
(125) |
| EBITDA |
151 |
181 |
149 |
158 |
| Margin (%) |
16.3% |
19.2% |
15.9% |
16.4% |
| Net Profit |
27 |
59 |
44 |
46 |
|
|
|
|
|
| EPS |
0.041 |
0.088 |
0.066 |
0.069 |
Notes:
(1) Includes amortization and depreciation
| (EUR million) |
2016 |
2017 |
Change |
| Cost of goods |
225 047 |
227803 |
1% |
| Staff costs |
151 908 |
160 126 |
5% |
| Marketing & Administration (1) |
114 856 |
116 809 |
2% |
| Port & Stevedoring |
101 010 |
104756 |
4% |
| Fuel cost |
74 250 |
85 870 |
16% |
| Ship operating expenses |
89 877 |
79 723 |
$-11%$ |
| Other costs |
32120 |
35 011 |
9% |
| Total costs from operations |
789 068 |
810 098 |
3% |
|
|
|
|
| Depreciation and amortisation |
77858 |
86 371 |
11% |
| Net finance cost |
26775 |
21 209 |
$-21%$ |
| Total costs |
893701 |
917 678 |
3% |
Notes:
(1) Depreciation and amortisation excluded
CONSOLIDATED CASH FLOW STATEMENT
| (EUR million) |
2014 |
2015 |
2016 |
2017 |
| Operating cash flow |
151 |
192 |
147 |
136 |
| Capital expenditure |
(49) |
(44) |
(68) |
(219) |
| Asset disposal |
$\overline{0}$ |
115 |
$\overline{O}$ |
132 |
| Free cash flow |
102 |
263 |
79 |
49 |
| Debt financing (net effect) |
(46) |
(192) |
3 |
10 |
| Interests & other financial items |
(37) |
(38) |
(31) |
(25) |
| Dividend paid |
(20) |
(13) |
(54) |
(20) |
| Dividend tax |
(5) |
(3) |
$\overline{0}$ |
(4) |
| Change in cash |
(7) |
17 |
(3) |
10 |
| (EUR million) |
$31.12.2014$ (2) |
$31.12.2015$ (2) |
$31.12.2016$ (2) |
31.12.2017 |
| Total assets |
1686 |
1539 |
1539 |
1559 |
| Non-current assets |
1546 |
1385 |
1375 |
1377 |
| Current assets |
140 |
154 |
164 |
182 |
| - of which cash |
65 |
82 |
79 |
89 |
| Total liabilities |
911 |
718 |
729 |
722 |
| Interest bearing liabilities |
743 |
549 |
559 |
561 |
| Other liabilities |
168 |
169 |
170 |
161 |
| Shareholders' equity |
775 |
821 |
810 |
836 |
|
|
|
|
|
| Net debt/EBITDA |
4.5x |
2.6x |
3.2x |
3.0x |
| Net debt |
678 |
467 |
480 |
472 |
| Equity/assets ratio |
46% |
54% |
53% |
54% |
| BVPS (1) (in EUR) |
1.16 |
1.23 |
1.21 |
1.25 |
Notes:
(1) Shareholders' equity / number of shares outstanding
(2) Restated
CAPITAL DISTRIBUTION
The management board targets to distribute at least 50% of the net profit, calculated over the long term, as dividends or capital repayment, taking however the Group's financial position into account.
2018 dividend
Management Board will propose dividend EUR 0.03 per share from financial year 2017 net profit, total amount of EUR 20.1 million
2017 dividend
Dividend EUR 0.03 per share, $\overline{\phantom{m}}$ total amount of EUR 20.1 million
TALLINK GRUPP HAS MADE TOTAL OF EUR 141 MILLION DIVIDEND PAYMENTS TO SHAREHOLDERS IN PERIOD 2013 - 2017
DEBT STRUCTURE
Total EUR 561 million interest bearing liabilities as at 31.12.2017
LONG TERM BANK LOANS
- 4 Ioan agreements outstanding: syndicated Ioan and $\overline{\phantom{m}}$ amortizing project loans
- Maturities 1-11 years $\overline{\phantom{m}}$
- EUR denominated
- Fixed and EURIBOR floating
BOND
- Senior unsecured NOK 900 m (EUR 120m) $\overline{\phantom{0}}$
- Listed in Oslo Stock Exchange $\overline{\phantom{0}}$
- 3M NIBOR +5% (3M EURIBOR +4.88%)
- Issue date 18,06,2013
- Maturity date 18.10.2018
- Currency risk eliminated by swapping to EUR
UNRIVALLED SUITE OF COMPETITIVE ADVANTAGES
EXTENSIVE SALES NETWORK
- 21 own sales offices
- Network of >1800 travel agents and tour operators worldwide
- Growing online presence and call centres
$\Omega$
COMPREHENSIVE OFFER
$5\overline{)}$
- Varied on-board experience
- Travel packages and excursions
- Addressing all budget ranges and customer preferences
MODERN FLEET
- 11 core vessels have an average age of 13 years
- Ice class vessels
- Luxurious on-board experience, e.g. spacious shopping areas
47% MARKET SHARE OF THE NORTHERN BALTIC SEA
REGION PASSENGER MARKET
EXTENSIVE ROUTE NETWORK
- Variety of short cruises between key cities
- Optimised schedules with frequent and reliable departures all year
- Established relationships with port authorities
STRONG QUALITY BRANDS
Silja Line and Tallink are the most recognised cruise brands in the Northern Baltic Sea
They are associated with a quality customer $\bullet$ experience
LOYAL CUSTOMER BASE
- 9.8 million passengers in 2017
- 2.3 million Club One card holders growing at 10% $\bullet$ annually
- Every third passenger is a club one member
HIGH SAFETY AND ENVIRONMENTAL STANDARDS
$\overline{2}$
- We proactively seek compliance with the highest standards
- In 2017, there were no cancellations out of the 9966 scheduled trips
AGE OF FLEET
AGE OF FLEET BY VALUE value-weighted average
- AS TALLINK GRUPP SHIPS AGE
- Core fleet 13 years $\overline{\phantom{m}}$
- Superfast vessel 16 years
- Cargo vessels 23 years
April 2018
- Our ice-classed fleet is versatile to operate anywhere
- We have experience in selling and chartering vessels all over the world
FLEET ON 7 ROUTES
OUR FLEET
MEGASTAR
Built: 2017 Length 212 m Passengers: 2 800 Lane meters: 3 600
BALTIC QUEEN Built: 2009 Length: 212 m Passengers: 2 800 Lane meters: 1130
VICTORIA I Built: 2004 Length: 193 m Passengers: 2 500 Lane meters: 1030
STAR Built: 2007 Length 186 m Passengers: 2080 Lane meters: 2000
SILJA EUROPA Built: 1993 Length: 202 m Passengers: 3 123 Lane meters: 932
ROMANTIKA Built: 2002 Length 193 m Passengers: 2 500 Lane meters: 1030
TALLINK HAS INVESTED EUR 1.5 BILLION TO CREATE A MODERN FLEET
OUR FLEET
SILJA SERENADE
Built: 1990 Length 203 m Passengers: 2852 Lane meters: 950
BALTIC PRINCESS Built: 2008 Length: 212 m Passengers: 2 800 Lane meters: 1130
ISABELLE Built: 1989 Length 171 m Passengers: 2 480 Lane meters: 850
SILJA SYMPHONY Built: 1991 Length 203 m Passengers: 2852 Lane meters: 950
GALAXY Built: 2006 Length: 212 m Passengers: 2800 Lane meters: 1 130
ATLANTIC VISION (ex SUPERFAST IX) Built: 2002 Length: 203 m Passengers: 728 Lane meters: 1900
TALLINK HAS INVESTED EUR 1.5 BILLION TO CREATE A MODERN FLEET
OWNERSHIP STRUCTURE
SHAREHOLDERS OF AS TALLINK GRUPP
Top 10 shareholders Institutional investors Retail investors
TEN LARGEST SHAREHOLDERS AS AT 31 MARCH 2017
| 38% |
| 16% |
| 6% |
| 4% |
| 3% |
| 2% |
| 2% |
| 2% |
| 2% |
| 1% |
|
-Share price in EUR
33
TALLINK GRUPP
SAFETY, SECURITY AND ENVIRONMENTAL PROTECTION ARE A HIGH PRIORITY
POLICIES AND CERTIFICATIONS
- Safety and Security Policy
- Environmental Policy
- ISO 14001:2015 Environmental Certificate by Lloyds Register
- MARPOL Sewage Pollution Prevention Certificate
- MARPOL Air Pollution Prevention Certificate
- International Anti-Fouling System Certificate
- MARPOL Oil Pollution Prevention Certificate
- Document of Compliance for Anti-Fouling System
- MARPOL Garbage Pollution Prevention Attestation
- Passenger Ship Safety Certificate
- International Ship Security Certificate
- Safety Management Certificate
- Document for Dangerous Goods
Lloyd's Register
CERTIFICATE OF APPROVAL
This is to certify that the Environmental Management System of:
HT Shipmanagement Ltd Sadama 5/7, 10111 Tallinn, Estonia SIA HT Shipmanagement Eksporta iela 3A, LV-1010 Riga, Latvia Tallink Silja OY Tyynenmerenkatu 9, 00220 Helsinki, Finland
has been approved by Lloyd's Register Quality Assurance to the following Environmental Management System Standard:
ISO 14001:2015
The Environmental Management System is applicable to:
TallinkSilja Fleet Shipmanagement.
This certificate is valid only in association with the certificate schedule bearing the same number on which the locations applicable to this approval are listed.
Approval Certificate No: LTQ6004314 Original Approval: 04 July 2008
Current Certificate: 04 July 2017
Certificate Expiry: 03 July 2020
Issued by: Lloyd's Register EMEA Eesti/filiad/ For and on behalf of: Lloyd's Register Quality Assurance Limited
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