Tallink Grupp

Earnings Release • May 11, 2017

AS Tallink Grupp Unaudited Consolidated Interim Report Q1 2017

AS Tallink Grupp Unaudited Consolidated Interim Report Q1 2017

Tallinn, 2017-05-11 08:50 CEST (GLOBE NEWSWIRE) --

AS Tallink Grupp Unaudited Consolidated Interim Report Q1 2017

In the first quarter (1 January - 31 March) of the 2017 financial year AS

Tallink Grupp and its subsidiaries (the Group) carried 1.9 million passengers

which is 0.7% less compared to the first quarter last year. The Group?s

unaudited revenue for the first quarter decreased by 0.7% to the total of EUR

191.5 million. Unaudited EBITDA for the first quarter was EUR 5.5 million (EUR

16.3 million, Q1 2016) and unaudited net loss was EUR 20.3 million (EUR 12.0

million, Q1 2016 net loss).

In the first quarter, which is also the low season, the Group?s revenue and

operating result was impacted by following operational factors:

- The new LNG fast ferry Megastar started to operate the Tallink

Shuttle service on Tallinn-Helsinki route.

- Scheduled maintenance of five cruise ferries in the first quarter of

2017, the service breaks totalled to 52 days.

- In financial year 2017 the Easter holidays seasonal traffic fell

into the beginning of the second quarter, compared to the first quarter last

year.

- Charter and charter related revenue reduced compared to the same

period last year due to fewer ships in charter.

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

increased on number of operated routes.

Delivery of Megastar

On 24 January 2017 Tallink Grupp AS?s subsidiary Tallink Line Ltd. took

delivery of the new LNG fast passenger ferry Megastar from Meyer Turku Oy

shipyard in Turku, Finland.

The 212 metres long Megastar has capacity for 2 800 passengers and car deck for

800 passenger vehicles. The ship has modern dual-fuel engines capable of

running on LNG (liquefied natural gas) and marine diesel oil. Using LNG as a

main fuel enables to lower emissions and reduce energy consumption. Megastar

complies with the current and known future emission regulations for the ECAs

(Emission Control Area), including the Baltic Sea.

On board of the Megastar, there are four different travel classes ? standard

Star Class, upgraded Comfort Class, exclusive Business Lounge and a new area,

Sitting Lounge. There is 2 800 sq.m Traveller Superstore shopping area through

two decks with new self-service solutions, seven restaurants, cafes and bars. A

special area with a playroom is available for the kids and on garage level a

kennel for the pets.

The cost of the ship was over EUR 230 million and the purchase was financed

with a loan of EUR 184 million from Finnish Export Credit Ltd. and arranged by

Nordea Bank Finland Plc. The maturity of the loan is twelve years and bears

OECD Commercial Interest Reference Rate (CIRR) based fixed interest rate.

Megastar started operation on Tallink Shuttle service on 29 January 2017,

travelling between Helsinki and Tallinn, she is the most advanced ferry in the

Baltic Sea.

Sales and segments

The Estonia-Finland routes first quarter revenue increased by 5.0% 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, which was returned to its owners. The new ship accommodates

approximately 40% more passengers and the car deck capacity is almost doubled

compared to the replaced ship. The Group carried out successful marketing

campaigns to introduce the new ship and its updated services to its customers

in Estonian and Finnish markets. The start of operations was executed according

to set plans with smooth service throughout its first two months of operations

in the first quarter. The feedback on the new ship has been very positive from

all customer groups and partners, thus assuring the successful launch of the

new ship. The Estonia-Finland segment result for the first quarter was lower

compared to the same period last year due to onetime launching costs related to

the delivery of the new ship to the route.

The Finland-Sweden routes first quarter revenue decreased by 3.5% compared to

same period last year, due to decline in the passenger number. The number of

cargo units transported increased by 8.0%.

The Estonia-Sweden route first quarter revenue increased by 3.4% compared to

same period last year, the growth was mainly supported by the higher shop and

restaurant sale per passenger. The number of cargo units transported increased

by 5.2%.

The Latvia-Sweden route first quarter revenue increased by 26.7% compared to

same period last year, starting from December 2016 two ships are operating on

the route compared to one ship in the first quarter last year. The number of

cargo units transported increased by 20.8%.

The charter and charter related revenue decreased by EUR 5.4 million as fewer

ships were chartered out compared to the first quarter in previous year. Three

Superfast ferries remain chartered out.

Earnings

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

decreased by EUR 11.6 million compared to the same period last year and

amounted to EUR 14.9 million. The first quarter EBITDA decreased by EUR 11.0

million and was EUR 5.3 million. The first quarter profitability was impacted

by lower passenger number from holiday season effects, less revenue from

chartering, higher fuel cost and higher ships operating costs from more ships

in operations.

The total finance costs decreased by EUR 3.9 million compared to the first

quarter last year, there are EUR 3.5 million lower losses from exchange rate

differences and cross currency and interest derivatives revaluations and EUR

0.4 million lower interest cost compared to same period last year.

The unaudited net loss for the first quarter of the 2017 financial year was EUR

20.3 million or EUR 0.03 per share compared to the loss of EUR 12.0 million or

EUR 0.018 per share in the same period last year.

Financial position

In the first quarter the Group?s net debt increased by EUR 210.8 million to a

total of EUR 690,9 million, of which EUR 184.0 million from drawdown of the new

LNG fast ferry loan. The net debt to EBITDA ratio was 4.99 at the end of the

first quarter.

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

quarter was EUR 74.7 million (EUR 136.3 million, 31 March 2016) providing a

sound financial position for sustainable operations. The Group had EUR 72.2

million (EUR 91.7 million, 31 March 2016) in cash and equivalents and the total

of unused credit lines were at EUR 2.5 million (EUR 44.6 million, 31 March

2016).

KEY FIGURES OF THE Q1 2017

For the period Q1 2017 Q1 2016 Change

%

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Revenue (million euros) 191.5 192.8 -0.7%

Gross profit (million euros) 14.9 26.5 -43.8%

Net profit for the period (million euros) -20.3 -12.0 -69.0%

EBITDA (million euros) 5.3 16.3 -67.7%

Depreciation and amortisation (million euros) 20.8 19.6 6.1%

Investments (million euros) 204.2 12.6 1520.6%

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

outstanding1

Earnings per share -0.030 -0.018 -69.0%

Number of passengers 1 939 784 1 953 070 -0.7%

Number of cargo units 83 797 77 279 8.4%

Average number of employees 7 209 6 886 4.7%

As at 31.03.2017 31.12.2016 Change

%

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Total assets (million euros) 1 730.2 1 539.0 12.4%

Total liabilities (million euros) 937.1 725.5 29.2%

Interest-bearing liabilities (million euros) 763.2 558.9 36.6%

Net debt (million euros) 690.9 480.1 43.9%

Net debt to EBITDA 4.99 3.21 55.5%

Total equity (million euros) 793.1 813.6 -2.5%

Equity ratio (%) 45.8% 52.9%

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

Shareholders? equity per share 1.18 1.21 -2.5%

Ratios Q1 2017 Q1 2016

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Gross margin (%) 7.8% 13.7%

EBITDA margin (%) 2.7% 8.4%

Net profit margin (%) -10.6% -6.2%

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 Q1 2017 Q1 2016

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Revenue (Note 3) 191 548 192 821

Cost of sales -176 678 -166 343

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Gross profit 14 870 26 478

Sales and marketing expenses -17 780 -18 292

Administrative expenses -12 610 -12 018

Other operating income 123 500

Other operating expenses -135 -16

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Result from operating activities -15 532 -3 348

Finance income (Note 4) 2 491 2 596

Finance costs (Note 4) -7 273 -11 273

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Profit/-loss before income tax -20 314 -12 025

Income tax -14 -2

Net profit/-loss for the period -20 328 -12 027

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Other comprehensive income/-expense

Exchange differences on translating foreign operations -611 -58

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Other comprehensive income for the period -611 -58

Total comprehensive income/-expense for the period -20 939 -12 085

Basic and diluted earnings per share (in EUR per share, note -0.030 -0.018

5)

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited, in thousands of EUR 31.03.2017 31.12.2016

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ASSETS

Cash and cash equivalents 72 226 78 773

Trade and other receivables 39 806 38 674

Prepayments 15 171 7 926

Income tax prepayments 87 91

Inventories 44 722 38 719

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Current assets 172 012 164 183

Investments in equity-accounted investees 363 363

Other financial assets 352 348

Deferred income tax assets 18 791 18 791

Investment property 300 300

Property, plant and equipment (Note 7) 1 488 273 1 304 897

Intangible assets (Note 8) 50 120 50 127

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Non-current assets 1 558 199 1 374 826

TOTAL ASSETS 1 730 211 1 539 009

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LIABILITIES AND EQUITY

Interest-bearing loans and borrowings (Note 9) 153 657 106 112

Trade and other payables 101 589 103 280

Dividends payable to shareholders 4 4

Income tax liability 0 10

Deferred income 40 971 30 895

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Current liabilities 296 221 240 301

Interest-bearing loans and borrowings (Note 9) 609 500 452 793

Derivatives (Note 6) 31 404 32 359

Other liabilities 0 0

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Non-current liabilities 640 904 485 152

Total liabilities 937 125 725 453

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

Share capital (Note 10) 361 736 361 736

Share premium 639 639

Reserves 68 632 68 774

Retained earnings 362 079 382 407

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Equity attributable to equity holders of the Parent 793 086 813 556

Equity 793 086 813 556

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TOTAL LIABILITIES AND EQUITY 1 730 211 1 539 009

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

CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited, in thousands of EUR Q1 2017 Q1 2016

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CASH FLOWS FROM OPERATING ACTIVITIES

Net profit/-loss for the period -20 328 -12 027

Adjustments 25 624 28 192

Changes in:

Receivables and prepayments related to operating activities -9 831 -5 756

Inventories -6 003 -7 309

Liabilities related to operating activities 7 671 13 719

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Changes in assets and liabilities -8 163 654

Cash generated from operating activities -2 867 16 819

Income tax paid -18 -160

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NET CASH FROM OPERATING ACTIVITIES -2 885 16 659

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant, equipment and intangible assets -204 212 -12 709

(Notes 7, 8, 9)

Proceeds from disposals of property, plant, equipment 25 134

Proceeds from other financial assets 0 0

Interest received 1 18

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NET CASH USED IN INVESTING ACTIVITIES -204 186 -12 557

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from loans 184 000 0

Repayment of loans (Note 9) -10 024 -14 728

Change in overdraft (Note 9) 32 371 26 963

Payments for settlement of derivatives -905 -1 021

Payment of finance lease liabilities (Note 9) -26 -24

Interest paid -4 728 -5 550

Payment of transaction costs related to loans -164 0

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NET CASH USED IN FINANCING ACTIVITIES 200 524 5 640

TOTAL NET CASH FLOW -6 547 9 742

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

Increase / -decrease in cash and cash equivalents -6 547 9 742

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Cash and cash equivalents at the end of period 72 226 91 718

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Veiko Haavapuu

Finance Director

AS Tallink Grupp

Sadama 5/7

10111 Tallinn, Estonia

Tel. +372 640 9914

E-mail veiko.haavapuu@tallink.ee