Tallink Grupp

Earnings Release • Mar 2, 2017

AS Tallink Grupp Unaudited Consolidated Interim Report Q4 2016

AS Tallink Grupp Unaudited Consolidated Interim Report Q4 2016

Tallinn, 2017-02-28 08:50 CET (GLOBE NEWSWIRE) -- AS Tallink

Grupp Unaudited

Consolidated Interim Report Q4 2016

AS Tallink Grupp and its subsidiaries (the Group) carried an

all-time high

number, total of 9.5 million passengers in the 2016

financial year (2015: 9.0

million) which is 5.4% more compared to the year before. The

number of cargo

units transported increased by 6.5% and the number of

passenger vehicles

transported increased by 4.2% compared to previous financial

year. The Group's

unaudited consolidated revenue amounted to EUR 937.8 million

(2015: EUR 945.2

million) and EBITDA to EUR 149.5 million (2015: EUR 181.4

million). Unaudited

net profit amounted to EUR 44.1 million or EUR 0.07 per

share (2015: EUR 59.1

million or EUR 0.09 per share).

In the 2016 financial year the revenue structure of the

Group changed compared

to previous financial year. After the conclusion of the

cruise ferry Silja

Europa charter contract in February 2016 the Group increased

the capacity of

its route operations by deploying the ship on Tallinn-

Helsinki route.

Therefore, in 2016 the reduction of charter related revenue

was expected and by

increasing the capacity of its core route operations the

Group increased

passenger number to all-time high level and earned

comparable total annual

revenue. Driven by the higher total passenger number the

shops and restaurant

revenue increased by EUR 20.9 million to EUR 521.5 million

(2015: EUR 500.6

million) and the ticket revenue increased by EUR 8.1 million

to EUR 236.0

million (2015: 228.0 million). The revenue from leases of

vessels (chartering)

declined by EUR 28.0 million to EUR 25.5 million. Due to the

changes in

chartering and routes' operating capacity the Group´s

profits declined as

higher profitability charter activity was replaced by route

operations that

involve higher ship operating costs. In addition the Group

incurred charter

cost of fast ferry Superstar, which was sold in the end of

2015 and was

chartered back until the delivery of new fast ferry

Megastar.

The Estonia-Finland route passenger number increased in 2016

by 7.0% to a

record level of 5.1 million passengers carried annually

(2015: 4.7 million),

the number of cargo units increased by 5.9%. Following the

higher capacity and

passenger number, the Group increased its market share on

the route by 2% to

58%. The segment revenue increased by 4.5%, at the same time

the segment result

fell by 16.4% to EUR 75.4 million (2015: EUR 90.3 million).

The segment result

declined mainly due to the higher ship operating cost from

additional ship,

Silja Europa in operation and charter cost of fast ferry

Superstar.

The Finland-Sweden routes passenger number increased by

2.1%, the cargo units

transported increased by 7.6% and segment revenue increased

by 1.2%. The

segment result fell by 11.0% to EUR 15.3 million (2015: EUR

17.2 million)

mainly due to higher seamen personnel cost related to the

change of the

taxation under Finnish Seamen's Pensions Act.

The positive development of the Estonia-Sweden and Latvia-

Sweden routes

throughout the 2016 financial year resulted in higher

passenger number, revenue

and segment result. The Estonia-Sweden routes segment

revenue increased by 5.5%

and the segment result increased by 81.5% to EUR 11.6

million (2015: EUR 6.4

million). The Latvia-Sweden route segment revenue increased

by 6.2% and segment

result improved by 29.9% to EUR 6.9 million (2015: EUR 5.3

million).

In the 2016 financial year the Group's investments amounted

to EUR 68.9

million. Majority of investments were done to the renewal

and upgrade of the

fleet: down payment for the new LNG fast ferry Megastar,

large scale renovation

of cruise ferry Silja Europa, upgrade of number of

restaurants, shops and

cabins in Group fleets older vessels. Investments were made

also to the

development of online booking and sales systems.

In June 2016 the shareholders annual general meeting decided

to pay a dividend

of EUR 0.02 per share from financial year 2015 net profit.

The total dividend

amount of EUR 13.4 million was paid out on 05 July 2016. In

addition to

dividend payment the annual general meeting decided the

share capital reduction

in amount of EUR 40.2 million or EUR 0.06 per share. The

share capital

reduction payments to the shareholders were made on 23

December 2016.

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. The

management estimates

that for the coming years the distribution per share will be

at least EUR 0.02

or higher.

To the annual shareholders' meeting in 2017 the management

board will propose

dividend of EUR 0.03 per share from financial year 2016 net

profit.

The total liquidity, cash and unused credit facilities, at

the end of the third

quarter was EUR 113.8 million providing a strong financial

position for

sustainable operations. The Group had EUR 78.8 million in

cash and equivalents

and the total of unused credit lines were at EUR 35.0

million.

In the fourth quarter (1 October - 31 December) of the 2016

financial year the

Group carried 2.2 million passengers which is 4.7% more

compared to the fourth

quarter last year, the unaudited revenue decreased by 0.7%

to the total of EUR

226.1 million. The fourth quarter EBITDA was EUR 29.9

million which is at the

same level compared to the fourth quarter of the last year.

The Estonia-Finland route's fourth quarter revenue increased

by 3.1% compared

to same period last year, the increase is driven by a 3.1%

growth in the

passenger number. The number of cargo units transported

increased by 8.3%.

The Finland-Sweden routes fourth quarter revenue increased

by 4.0% compared to

same period last year, the increase is driven by a 5.4%

growth in the passenger

number as there were more departures compared to same period

last year. The

number of cargo units transported increased by 14.2%.

The Estonia-Sweden route revenue and passenger number were

at the same level

compared to fourth quarter last year, cargo volumes

increased by 5.4%. The

Latvia-Sweden route revenue increased by 18.4%, passenger

number by 27.9% and

cargo volume increased by 13.1% compared to fourth quarter

last year. The

increase in revenue and volumes was supported by the added

capacity on the

route.

The Group's restaurant and shop sales increased by 2.2% or

EUR 2.8 million and

ticket revenue increased by 3.9% or EUR 2.0 million in the

fourth quarter

compared to the same period last year. Although the sales

growth was driven by

the growth of the passenger number the average on-board

revenue per passenger

was slightly lower compared to same period last year. The

revenue from the

chartered out vessels has reduced in the fourth quarter

compared to the same

period last year due to fewer ships in charter.

In the fourth quarter of the 2016 financial year the Group's

gross profit

decreased by EUR 9.1 million compared to the same period

last year and amounted

to EUR 41.1 million. The fourth quarter EBITDA was EUR 29.9

million which is on

same level compared to same period last year. The fourth

quarter profitability

was impacted by less revenue from chartering, higher

marketing costs, cost of

charter of the fast ferry Superstar and higher ships

operating costs.

In the fourth quarter the Group's net debt increased by EUR

22.2 million to a

total of EUR 480.1 million and the net debt to EBITDA ratio

was a solid 3.2 at

the end of fourth quarter. The fourth quarter interest cost

was EUR 5.0 million

lower compared to same period last year from regular

repayment of loans,

repayment of loans related to sale of ship in December 2015

and one-off cost of

premature termination of loan contract related to the sale

of ship. Combined

with gain from revaluation of cross currency and interest

derivatives, the

total finance costs decreased by EUR 11.1 million compared

to the fourth

quarter last year.

The unaudited net profit for the fourth quarter of the 2016

financial year was

EUR 3.5 million or EUR 0.005 per share compared to the loss

of EUR 1.3 million

or EUR -0.002 per share in the same period last year.

Q4 KEY FIGURES

2016 2015 Change

Oct-Dec Oct-Dec

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

Revenue EUR million

226.1 227.6 -0.7%

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

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

Gross profit EUR million

41.1 50.2 -18.2%

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

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

Gross margin

18.2% 22.0%

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

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

EBITDA EUR million

29.9 29.9 0.0%

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

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

EBITDA margin

13.2% 13.1%

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

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

Net profit for the EUR million

3.5 -1.3 364.5%

period

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

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

Net profit margin

1.6% -0.6%

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

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

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

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

Depreciation and EUR million

19.6 19.4 0.9%

amortization

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

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

Investments EUR million

22.5 13.8 63.0%

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

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

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

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

Weighted average number of ordinary shares 669,882,040

669,882,040 0.0%

outstanding

1

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

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

Earnings per share EUR

0.005 -0.002 364.5%

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

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

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

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

Number of passengers

2,226,283 2,125,361 4.7%

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

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

Number of cargo

85,349 78,136 9.2%

units

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

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

Average number of

7,061 6,769 4.3%

employees

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

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

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

-------

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

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

31.12.2016 30.09.2016

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

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

Total assets EUR million

1,539.0 1,552.0 -0.8%

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

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

Interest-bearing EUR million

558.9 546.7 2.2%

liabilities

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

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

Net debt EUR million

480.1 457.9 4.9%

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

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

Total equity EUR million

813.6 811.2 0.3%

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

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

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

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

Equity ratio

52.9% 52.3%

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

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

Net debt to EBITDA

3.2 3.1

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

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

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

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

Number of ordinary shares outstanding 1 669,882,040

669,882,040 0.0%

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

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

Shareholders' equity EUR

1.21 1.21 0.3%

per

share

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

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

EBITDA: Earnings before net financial items, taxes,

depreciation and

amortization;

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 STATEMENT OF COMPREHENSIVE INCOME

(unaudited, in thousands of 01.10.2016- 01.10.2015-

01.01.2016- 01.01.2015-

euros)

31.12.2016 31.12.2015

31.12.2016 31.12.2015

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

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

Revenue (Note 3) 226,135 227,631

937,805 945,203

Cost of sales -185,069 -177,439

-745,223 -721,780

Gross profit 41,066 50,192

192,582 223,423

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

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

Sales and marketing expenses -19,102 -16,777

-72,268 -63,578

Administrative expenses -12,148 -13,001

-50,973 -47,311

Other operating income 697

-377 2,450 983

Other operating expenses -178

-9,517 -184 -10,254

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

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

Result from operating 10,335 10,520

71,607 103,263

activities

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

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

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

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

Finance income (Note 4) 1,754 3,301

10,514 12,808

Finance costs (Note 4) -7,604 -14,317

-37,289 -46,964

Share of profit of 13

64 13 64

equity-accounted

investees

Profit/-loss before income 4,498 -432

44,845 69,171

tax

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

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

Income tax -986

-896 -741 -10,101

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

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

Net profit/-loss for the 3,512 -1,328

44,104 59,070

period

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

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

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

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

Other

comprehensive

income/-expense

Items that may

be

reclassified to profit

or

loss

Exchange differences on -205

416 -469 160

translating

foreign

operations

Other comprehensive -205

416 -469 160

income/-expense for

the

period

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

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

Total comprehensive 3,307 -912

43,635 59,230

income/-expense for

the

period

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

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

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

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

Earnings per share (in

EUR

per

share)

- basic (Note 5) 0.005

-0.002 0.065 0.088

- diluted (Note 5) 0.005

-0.002 0.065 0.088

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

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, in thousands of euros)

ASSETS

31.12.2016 31.12.2015

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

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

Current

assets

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

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

Cash and cash

equivalents 78,773

81,976

Trade and other

receivables 38,674

36,583

Prepayments

7,926 5,274

Income tax

prepayment

91 1,224

Inventories

38,719 29,197

Total current assets

164,183 154,254

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

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

Non-current

assets

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

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

Investments in equity-accounted

investees 363 350

Other financial

assets 348

308

Deferred income tax

assets 18,791 19,410

Investment

property

300 300

Property, plant and equipment (Note 7)

1,304,897 1,311,418

Intangible assets (Note

8) 50,127 52,726

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

Total non-current assets

1,374,826 1,384,512

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

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

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

TOTAL ASSETS

1,539,009 1,538,766

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

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

LIABILITIES AND

EQUITY

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

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

Current

liabilities

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

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

Interest bearing loans and borrowings (Note 9)

106,112 81,889

Trade and other payables

103,280 88,480

Payables to shareholders (Note

10) 4 0

Income tax

liability

10 4,567

Deferred

income

30,895 28,906

Total current liabilities

240,301 203,842

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

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

Non-current

liabilities

----

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

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

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

Interest bearing loans and borrowings (Note 9)

452,793 467,447

Derivatives (Note

6) 32,359

42,863

Other

payables

0 192

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

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

Total non-current liabilities

485,152 510,502

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

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

TOTAL LIABILITIES

725,453 714,344

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

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

EQUITY

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

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

Equity attributable to equity holders of the

parent

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

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

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

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

Share capital

361,736 404,290

Share

premium

639 639

Reserves

68,774 65,083

Retained earnings

382,407 354,410

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

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

Total equity attributable to equity holders of the

813,556 824,422

parent

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

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

TOTAL EQUITY

813,556 824,422

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

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

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

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

TOTAL LIABILITIES AND EQUITY

1,539,009 1,538,766

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

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

CONSOLIDATED CASH FLOW STATEMENT

(unaudited, in thousands of euros)

01.01.2016- 01.01.2015-

31.12.2016 31.12.2015

Cash flows from operating

activities

Net profit/-loss for the period

44,104 59,070

Adjustments

104,247 132,851

Changes in receivables and prepayments related to

-4,969 1,463

operating

activities

Changes in inventories

-9,522 2,118

Changes in liabilities related to operating activities

16,785 -4,139

Income tax paid

-3,265 553

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

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

147,380 191,916

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

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

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

Cash flow from/used in investing

activities

Purchase of property, plant and equipment and

-68,638 -43,629

intangible assets (Notes 7, 8,

9)

Proceeds from disposals of property, plant

and 169 115,370

equipment

Proceeds from other financial

assets 0 229

Interest

received

74 74

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

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

-68,395 72,044

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

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

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

Cash flows used in financing

activities

Proceeds from loans (Note 9)

280,000 0

Repayment of loans (Note 9)

-313,524 -133,263

Change in overdraft (Note 9)

36,713 -59,052

Payment of finance lease liabilities (Note

9) -99 -80

Interest paid

-24,083 -33,210

Payments for settlement of derivatives

-4,289 -4,045

Payments of transaction costs related to loans

-2,989 -1,429

Dividend paid (Note 12)

-13,398 -13,398

Income tax on dividends

paid -330 -2,818

Reduction of share capital (Note 10)

-40,189 0

-82,188 -247,295

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

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

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

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

TOTAL NET CASH FLOW

-3,203 16,665

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

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

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

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

Cash and cash

equivalents:

- at the beginning of period

81,976 65,311

- increase (+) / decrease (-)

-3,203 16,665

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

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

- at the end of period

78,773 81,976

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

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

Veiko Haavapuu

Finance Director

AS Tallink Grupp

Sadama 5/7

10111 Tallinn, Estonia

Tel. +372 640 9914

E-mail veiko.haavapuu@tallink.ee