Tallink Grupp

Earnings Release • Aug 10, 2017

AS Tallink Grupp Unaudited Consolidated Interim Report Q2 2017

AS Tallink Grupp Unaudited Consolidated Interim Report Q2 2017

Tallinn, 2017-08-10 08:50 CEST (GLOBE NEWSWIRE) --

AS Tallink Grupp Unaudited Consolidated Interim Report Q2 2017

In the second quarter (1 April ? 30 June) of the 2017 financial year Tallink

Grupp AS and its subsidiaries (the Group) carried 2.6 million passengers which

is 6.8% more compared to the second quarter last year. The Group?s unaudited

revenue for the second quarter increased by 6.0% to the total of EUR 259.9

million. Unaudited EBITDA for the second quarter increased by 35.1% to the

total of EUR 48.9 million (EUR 36.2 million, Q2 2016) and unaudited net profit

increased by 83.2% to the total of EUR 17.9 million (EUR 9.8 million, Q2 2016).

In the second quarter, the Group?s revenue and operating result was impacted by

following operational factors:

- After the rerouting of ships in December 2016, the carriage capacity

increased on number of operated routes;

- In the second quarter of 2017, one cruise ferry operated the Tallinn

? Helsinki route cruise service compared to two cruise ferries in the same

period last year;

- In financial year 2017 the Easter holidays seasonal traffic fell

into the beginning of the second quarter, last year the holidays were in the

first quarter.

Sales and segments

The Estonia-Finland routes second quarter revenue increased by 3.0% compared to

same period last year, the increase is driven mainly by growth in the passenger

number and cargo volume that was supported by added capacity. In the end of

January, the new LNG fast ferry Megastar started operating the Tallink Shuttle

service on the Tallinn-Helsinki route next to fast ferry Star and replaced fast

ferry Superstar. The new ship accommodates approximately 40% more passengers

and the car deck capacity is almost doubled compared to the replaced ship. The

feedback on the new ship has been very positive from all customer groups and

partners.

The Estonia-Finland segment result for the second quarter increased by 24.7%

compared to the same period last year and amounted to EUR 19.8 million, the

growth is derived mostly from the new Shuttle vessel Megastar. The segment

result was supported by growth of passenger number, higher average revenue per

passenger, increase of number of transported cargo units and lower operating

expenses. Starting from February 2017 there is no charter hire cost from fast

ferry Superstar.

The Finland-Sweden routes second quarter revenue increased by 4.8% compared to

same period last year, the growth was supported by 7.1% higher passenger number

on the routes. The number of cargo units transported increased by 2.4%. The

segment second quarter result increased by EUR 6,4 million, compared to same

period last year and amounted to EUR 9.4 million.

The Estonia-Sweden routes second quarter revenue increased by 5.6% compared to

same period last year, the growth was supported by 6,8% higher passenger number

on the routes. The number of cargo units transported increased by 2.8%. The

segment result decreased by 12.5% in the second quarter and amounted to EUR 3.7

million compared to same period last year.

The Latvia-Sweden route second quarter revenue increased by 55.7% compared to

same period last year and the number of cargo units transported increased by

59.3%. The second quarter segment result decreased to EUR -0.6 million,

starting from December 2016 two ships are operating on the route compared to

one ship in the second quarter last year.

Earnings

In the second quarter of the 2017 financial year the Group?s gross profit

increased by EUR 11.0 million compared to the same period last year and

amounted to EUR 59.3 million. The second quarter EBITDA increased by EUR 12.7

million and was EUR 48.9 million. The second quarter growth was driven by

higher passenger number from holiday season effects and added capacity, more

optimal operating cost on Tallinn ? Helsinki route with three vessels but the

result was also impacted by higher fuel cost compared to same period last year.

The net finance costs decreased by EUR 1.4 million compared to the second

quarter last year, there are EUR 1.7 million lower interest cost and total EUR

0.3 million lower losses from exchange rate differences and cross currency and

interest derivatives revaluations compared to same period last year.

The income tax on dividends in amount of EUR 4.1 million was recorded in the

second quarter costs, compared to EUR 0.3 million in same period last year.

The Groups pretax profit for the second quarter more than doubled compared to

the same period last year and amounted to EUR 22.0 million. The unaudited net

profit for the second quarter of the 2017 financial year was EUR 17.9 million

or EUR 0.027 per share compared to the net profit of EUR 9.8 million or EUR

0.015 per share in the same period last year.

Results of the first 6 months of 2017

In the first 6 months (1 January ? 30 June) of the 2017 financial year the

Group carried 4.5 million passengers which is 3.4% more compared to the same

period last year. The Group?s unaudited revenue for the period increased by

3.0% to the total of EUR 451.4 million. Unaudited EBITDA for the first 6 months

was EUR 54.1 million (EUR 52.4 million, 6M 2016) and unaudited net loss was EUR

2.4 million (EUR 2.2 million, 6M 2016 net loss).

The financial result of the first 6 months of 2017 was impacted by the

scheduled maintenances of five cruise ferries in the first quarter of 2017 and

carriage capacity increase on number of routes from the rerouting of vessels in

December 2016. In the first half of the year the competition on the maritime

traffic in between Estonia and Finland has increased which has put pressure on

ticket prices.

Financial position

In the second quarter the Group?s net debt decreased by EUR 37.2 million to a

total of EUR 653.7 million. The net debt to EBITDA ratio was 4.3 at the end of

the second quarter.

The total liquidity, cash and unused credit facilities, at the end of the

second quarter was EUR 92.2 million (EUR 123.6 million, 30 June 2016) providing

a strong financial position for sustainable operations. The Group had EUR 82.0

million (EUR 92.3 million, 30 June 2016) in cash and equivalents and the total

of unused credit lines were at EUR 10.2 million (EUR 31.3 million, 30 June

2016).

KEY FIGURES OF THE Q2 2017

For the period Q2 2017 Q2 2016 Change

%

--------------------------------------------------------------------------------

Revenue (million euros) 259.9 245.2 6.0%

Gross profit (million euros) 59.3 48.3 22.8%

Net profit for the period (million euros) 17.9 9.8 83.2%

EBITDA (million euros) 48.9 36.2 35.1%

Depreciation and amortisation (million euros) 21.5 19.4 11.1%

Investments (million euros) 5.3 18.7 -71.7%

Weighted average number of ordinary shares 669 882 040 669 882 040 0.0%

outstanding1

Earnings per share 0.027 0.015 83.2%

Number of passengers 2 587 033 2 423 057 6.8%

Number of cargo units 91 819 84 392 8.8%

Average number of employees 7 582 7 281 4.1%

As at 30.06.17 31.03.17 Change

%

--------------------------------------------------------------------------------

Total assets (million euros) 1 739.0 1 730.2 0.5%

Total liabilities (million euros) 948.0 937.1 1.2%

Interest-bearing liabilities (million euros) 735.7 763.2 -3.6%

Net debt (million euros) 653.7 690.9 -5.4%

Net debt to EBITDA 4.33 4.99 -13.2%

Total equity (million euros) 791.1 793.1 -0.3%

Equity ratio (%) 45.5% 45.8%

Number of ordinary shares outstanding1 669 882 040 669 882 040 0.0%

Shareholders? equity per share 1.18 1.18 -0.3%

Ratios Q2 2017 Q2 2016

--------------------------------------------------------------------------------

Gross margin (%) 22.8% 19.7%

EBITDA margin (%) 18.8% 14.7%

Net profit margin (%) 6.9% 4.0%

EBITDA: Earnings before net financial items, share of profit of equity

accounted investees, taxes, depreciation and amortisation

Earnings per share: net profit / weighted average number of shares outstanding

Equity ratio: total equity / total assets

Shareholder?s equity per share: shareholder?s equity / number of shares

outstanding

Gross margin: gross profit / net sales

EBITDA margin: EBITDA / net sales

Net profit margin: net profit / net sales

Net debt: Interest-bearing liabilities less cash and cash equivalents

Net debt to EBITDA: Net debt / 12-months trailing EBITDA

1 Share numbers exclude own shares.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Unaudited, in thousands of EUR Q2 2017 Q2 2016 6M 2017 6M 2016

--------------------------------------------------------------------------------

Revenue (Note 3) 259 858 245 234 451 406 438 055

Cost of sales -200 579 -196 972 -377 257 -363 315

--------------------------------------------------------------------------------

Gross profit 59 279 48 262 74 149 74 740

Sales and marketing expenses -19 334 -18 303 -37 114 -36 595

Administrative expenses -12 844 -14 259 -25 454 -26 277

Other operating income 213 1 073 336 1 573

Other operating expenses -9 -12 -144 -28

--------------------------------------------------------------------------------

Result from operating activities 27 305 16 761 11 773 13 413

Finance income (Note 4) 5 417 1 766 7 908 4 362

Finance costs (Note 4) -10 696 -8 413 -17 969 -19 686

--------------------------------------------------------------------------------

Profit/-loss before income tax 22 026 10 114 1 712 -1 911

Income tax -4 112 -333 -4 126 -335

Net profit/-loss for the period 17 914 9 781 -2 414 -2 246

\================================================================================

Other comprehensive income/-expense

Exchange differences on translating 629 -107 18 -165

foreign operations

--------------------------------------------------------------------------------

Other comprehensive income for the 629 -107 18 -165

period

Total comprehensive income/-expense for 18 543 9 674 -2 396 -2 411

the period

Basic and diluted earnings per share (in 0,027 0,015 -0,004 -0,003

EUR per share, note 5)

\================================================================================

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited, in thousands of EUR 30.06.2017 31.12.2016

---------------------------------------------------------------------------

ASSETS

Cash and cash equivalents 81 959 78 773

Trade and other receivables 49 412 38 674

Prepayments 14 274 7 926

Income tax prepayments 0 91

Inventories 51 623 38 719

---------------------------------------------------------------------------

Current assets 197 268 164 183

Investments in equity-accounted investees 363 363

Other financial assets 354 348

Deferred income tax assets 18 795 18 791

Investment property 300 300

Property, plant and equipment (Note 7) 1 471 712 1 304 897

Intangible assets (Note 8) 50 236 50 127

---------------------------------------------------------------------------

Non-current assets 1 541 760 1 374 826

TOTAL ASSETS 1 739 028 1 539 009

\===========================================================================

LIABILITIES AND EQUITY

Interest-bearing loans and borrowings (Note 9) 152 803 106 112

Trade and other payables 109 410 103 280

Dividends payable to shareholders 20 100 4

Income tax liability 4 087 10

Deferred income 44 935 30 895

---------------------------------------------------------------------------

Current liabilities 331 335 240 301

Interest-bearing loans and borrowings (Note 9) 582 880 452 793

Derivatives (Note 6) 33 749 32 359

---------------------------------------------------------------------------

Non-current liabilities 616 629 485 152

Total liabilities 947 964 725 453

\===========================================================================

Share capital (Note 10) 361 736 361 736

Share premium 639 639

Reserves 70 998 68 774

Retained earnings 357 691 382 407

---------------------------------------------------------------------------

Equity attributable to equity holders of the Parent 791 064 813 556

Equity 791 064 813 556

\===========================================================================

TOTAL LIABILITIES AND EQUITY 1 739 028 1 539 009

\===========================================================================

CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited, in thousands of EUR 6M 2017 6M 2016

--------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit/-loss for the period -2 414 -2 246

Adjustments 56 637 54 141

Changes in:

Receivables and prepayments related to operating activities -18 542 -13 999

Inventories -12 904 -10 133

Liabilities related to operating activities 18 511 26 228

--------------------------------------------------------------------------------

Changes in assets and liabilities -12 935 2 096

Cash generated from operating activities 41 288 53 991

Income tax paid 40 -2 138

--------------------------------------------------------------------------------

NET CASH FROM OPERATING ACTIVITIES 41 328 51 853

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant, equipment and intangible assets -209 411 -31 325

(Notes 7, 8, 9)

Proceeds from disposals of property, plant, equipment 189 121

Interest received 1 35

--------------------------------------------------------------------------------

NET CASH USED IN INVESTING ACTIVITIES -209 221 -31 169

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from loans 184 000 0

Repayment of loans (Note 9) -26 050 -35 458

Change in overdraft (Note 9) 24 682 40 246

Payments for settlement of derivatives -1 819 -2 180

Payment of finance lease liabilities (Note 9) -52 -49

Interest paid -9 466 -12 944

Payment of transaction costs related to loans -216 0

--------------------------------------------------------------------------------

NET CASH USED IN FINANCING ACTIVITIES 171 079 -10 385

TOTAL NET CASH FLOW 3 186 10 299

\================================================================================

Cash and cash equivalents at the beginning of period 78 773 81 976

Increase / -decrease in cash and cash equivalents 3 186 10 299

--------------------------------------------------------------------------------

Cash and cash equivalents at the end of period 81 959 92 275

\================================================================================

Veiko Haavapuu

Finance Director

AS Tallink Grupp

Sadama 5/7

10111 Tallinn, Estonia

Tel. +372 640 9914

E-mail veiko.haavapuu@tallink.ee