Tallink Grupp

AS Tallink Grupp Audited Annual Report of the 2015 Financial Year

Tallinn, 2016-04-27 08:50 CEST (GLOBE NEWSWIRE) --

AS Tallink Grupp Audited Annual Report of the 2015 Financial Year

In the 2015 financial year the Group carried a total of 9.0 million passengers

which is 1.1% more compared to the year before. The Group?s revenue increased

by 2.6% to all-time high of EUR 945.2 million (EUR 921.5 million in 2014) and

EBITDA increased by 20.5% to a record EUR 181.4 million (EUR 150.6 million in

2014). Net profit more than doubled compared to last year and amounted to EUR

59.1 million (EUR 27.3 million in 2014) or EUR 0.09 per share (EUR 0.04 in

2014). The cash flow from operating activities increased by EUR 41.2 million

and totalled to EUR 191.9 million. The increase in the Group?s results is

mainly attributed to the growth in passenger number, higher on-board revenue

per passenger, higher charter revenue and lower operating costs. The results

improved in all geographical segments compared to the previous financial year.

In 2015 financial year the proactive marketing and sales activities led to an

increase of the passenger number. The number of passengers traveling with the

Tallink and Silja Line branded ships grew steadily in most of the operated

routes and the Group regained market share from the direct competition. On

Tallinn-Helsinki route all time high number of 4.7 million passengers travelled

with the Group?s vessels during the year. Tallink and Enterprise Estonia joint

campaign ?Epic Estonia? targeting Swedish market was recognised as the ?Best

marketing campaign of the year? in Estonia, it is biggest ever Estonian

campaign made in collaboration of public and private sector organizations.

More passengers with higher average on-board sales per passenger resulted in

increase of shop and restaurant sales. The on-board sales growth was achieved

thanks to the Group?s continuous focus on development of the product offering

and expansion of the shops and restaurants in the vessels. The large scale

investments to the vessels Silja Symphony and Silja Serenade shops, restaurants

and cabins in the previous financial year showed positive impact on the

earnings in 2015 by attracting more passengers and increasing on-board sales

per passenger. In 2015 the Group continued with the updates of the public areas

and introduced new concepts in number of vessels, also the existing successful

shop and restaurant concepts are expanded to more vessels. The modernisation

program is extended over several years and the Group will continue to update

the shops, restaurants and cabins in selected vessels to develop and improve

the product offering. In 2015 the Group took the next step and entered into

partnership with world known fast food brand BURGER KING®. The world?s first

floating BURGER KING® restaurant on Tallink Shuttle ferry Star opened in

January 2016.

The charter revenue increased compared to the previous period as more vessels

were chartered out in 2015. Two of the chartered out vessels Silja Festival and

Regina Baltica were sold in the first half of financial year 2015. Three

Superfast ferries remain chartered out. Cruise ferry Silja Europa returned from

charter to Tallinn-Helsinki route on March 2016.

The Group signed a contract with Meyer Turku Oy in February 2015 for the

construction of its new EUR 230 million LNG powered fast ferry. The production

of the new LNG fast ferry started on the 4th of August 2015 at Meyer Turku

shipyard and the delivery of the vessel is planned in the beginning of 2017.

In order to be ready for the delivery of the new generation LNG fast ferry to

the Tallinn-Helsinki route Shuttle service early 2017, the Group decided to

sell and charter back the fast ferry Superstar. The ownership of the vessel was

transferred to the buyer in December 2015. The Group continues to operate the

vessel under the charter agreement until the beginning of 2017, when the new

LNG fast ferry will start to operate on Tallinn-Helsinki route Shuttle service.

In 2015 financial year the lower energy prices globally enabled smooth adoption

to the more environmental friendly low sulphur fuel and the previously

highlighted risk of increasing fuel cost did not materialise. Following the

market prices the Group?s average fuel price in 2015 was 5% lower compared to

2014. The total annual fuel consumption reduced by 13%, the saving is

attributed to optimisations in vessel operations and changes in the fleet.

Lower total fuel consumption and price resulted in EUR 20 million less fuel

cost compared to previous year.

Following the Group?s strategy to ensure cost efficient operations, the Tallink

Logistics Center project was started and one of the most modern logistics

centres in the region was launched in January 2016. The Group operated

logistics centre will consolidate the logistics of the goods and will be the

single hub for distribution of majority of the goods for the fleet, hotels and

offices. In addition, the Group is in final phase with the implementation of

its new enterprise resource planning system. The system improves the Groups

resource management capacity and enables further efficiencies in operations and

support functions.

The key highlights of the 2015 financial year were the following:

-- Record revenue and EBITDA result, net profit more than doubled

-- All time high passenger number on Tallinn-Helsinki route

-- Positive effect from charters and re-routings

-- Positive feedback from upgraded vessels

-- Adoption to the new EU Sulphur Directive

-- Lower fuel price and lower total fuel consumption

-- Sale of vessels Silja Festival and Regina Baltica

-- Start of production of the new generation LNG powered fast ferry

-- Sale and charter-back of fast ferry Superstar

KEY FIGURES OF THE FINANCIAL YEAR 2015

2015 2014 Change

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EUR EUR %

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

Revenue (million) 945.2 921.5 2.6%

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Gross profit (million) 223.4 181.7 23.0%

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Net profit for the period (million) 59.1 27.3 116.7%

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

EBITDA (million) 181.4 150.6 20.5%

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Depreciation and amortisation (million) 78.1 79.9 -2.3%

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

Investments (million) 43.6 49.1 -11.2%

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Weighted average number of ordinary shares 669,882,040 669,882,040 0%

outstanding1

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Earnings per share 0.088 0.041 116.7%

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

Number of passengers 8,976,226 8,881,732 1.1%

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Number of cargo units 308,029 310,492 -0.8%

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

Average number of employees 6,835 6,952 -1.7%

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31.12.2015 31.12.2014

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Total assets (million) 1,538.8 1,685.6 -8.8%

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Total liabilities (million) 714.3 907.3 -21.3%

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

Interest-bearing liabilities (million) 549.3 743.4 -26.1%

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

Net debt (million) 467.3 678.1 -31.1%

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

Total equity (million) 824.4 778.3 5.9%

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

Equity ratio (%) 53.6% 46.2%

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

Number of ordinary shares outstanding1 669,882,040 669,882,040 0%

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

Shareholders? equity per share 1.23 1.16 6.0%

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Ratios

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Gross margin (%) 23.6% 19.7%

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EBITDA margin (%) 19.2% 16.3%

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Net profit margin (%) 6.3% 3.0%

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Return on assets (ROA) 6.3% 4.1%

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

Return on equity (ROE) 7.4% 3.6%

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

Return on capital employed (ROCE) 7.7% 5.0%

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

Net debt to EBITDA 2.6 4.5 -42.2%

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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

ROA: Earnings before net financial items, taxes /Average total assets

ROE: Net profit/Average shareholders? equity

ROCE: Earnings before net financial items, taxes / (Total assets ? Current

liabilities (average for the period))

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.

SALES

The Group?s consolidated revenue amounted to EUR 945.2 million in 2015 (921.5

million in 2014). Restaurant and shop sales on-board and on mainland of EUR

500.6 million (487.6 million in 2014) contributed more than half of total

revenue. Ticket sales amounted to EUR 228.0 million (230.5 million in 2014) and

sales of cargo transport to EUR 104.4 million (103.1 million in 2014).

The revenue growth 2.6% was driven by higher restaurant and shop sales and

charter revenues. The restaurant and shop sales increase 2.7% or EUR 13.1

million was supported by higher passenger number and also higher on-board sales

per passenger. The charter revenues increased by 13.6% or EUR 6.4 million and

the cargo revenues by 1.3% compared to 2014. Marketing and sales activities led

to an increase of passenger number and resulted in lower ticket revenue per

passenger, the total ticket revenue declined by 1.1%.

Geographically, 35.8% or EUR 338.2 million of revenue came from the

Estonia-Finland route and 35.3% or EUR 333.3 million from the Finland-Sweden

route. Revenue from the Sweden-Estonia route was EUR 104.3 million or 11.0% and

from the Sweden-Latvia route EUR 42.0 million or 4.4%. The share of revenue

generated by other geographical segments increased to 13.5% (EUR 127.4

million).

EARNINGS

Gross profit was EUR 223.4 million (EUR 181.7 million in 2014), EBITDA EUR

181.4 million (EUR 150.6 million in 2014). Net profit for 2015 was EUR 59.1

million (EUR 27.3 million in 2014). Basic and diluted earnings per share were

EUR 0.088 (EUR 0.041 in 2014).

The cost of goods related to sales at shops and restaurants, which is the

largest operating cost item, amounted to EUR 215.4 million (EUR 211.2 million

in 2014).

Fuel cost for 2015 was EUR 94.2 million (EUR 114.0 million in 2014). Fuel cost

was impacted by lower fuel price levels throughout the year. Measured in euros,

in 2015 the Group?s average fuel price was approximately 5% lower than in the

2014 calendar year. Combined with one vessel less in Riga-Stockholm route and

savings from more efficient vessel operations, the total annual fuel cost

reduced by 17%.

The Group?s personnel expenses amounted to EUR 193.8 million (EUR 189.8 million

in 2014). The average number of employees in the 2015 financial year was 6,835

(6,952 in 2014).

Administrative expenses for 2015 amounted to EUR 47.3 million, and sales and

marketing expenses to EUR 63.6 million (EUR 49.2 million and 62.7 million

respectively in 2014).

Depreciation and amortisation of the Group?s assets was EUR 78.1 million (EUR

79.9 million in 2014). There were no impairment losses related to the Group?s

property, plant, equipment and intangible assets.

The Group?s net finance costs for 2015 amounted to EUR 34.2 million (EUR 40.7

million in 2014).

The Group?s exposure to credit risk, liquidity risk and market risks, and its

financial risk management activities are described in the notes to the

financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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

In thousands of EUR

2015 2014

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

Revenue 945,203 921,466

Cost of sales -721,780 -739,789

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

Gross profit 223,423 181,677

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

Sales and marketing expenses -63,578 -62,654

Administrative expenses -47,311 -49,211

Other operating income 983 1,696

Other operating expenses -10,254 -854

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

Result from operating activities 103,263 70,654

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

Finance income 12,808 11,760

Finance costs -46,964 -52,443

Share of profit of equity-accounted investees 64 24

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

Profit before income tax 69,171 29,995

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

Income tax -10,101 -2,734

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

Net profit for the year 59,070 27,261

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

Other comprehensive income

Items that may be reclassified to profit or loss

Exchange differences on translating foreign operations 160 286

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

Other comprehensive income for the year 160 286

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

Total comprehensive income for the year 59,230 27,547

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

Basic and diluted earnings per share 0.088 0.041

(in EUR per share)

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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

In thousands of EUR

As at 31 December 2015 2014

restated

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

ASSETS

Current assets

Cash and cash equivalents 81,976 65,311

Trade and other receivables 36,583 38,210

Prepayments 5,274 3,798

Income tax prepayment 1,224 1,650

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

Inventories 29,197 31,315

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

154,254 140,284

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

Non-current assets

Investments in equity-accounted investees 350 286

Other financial assets 308 252

Deferred income tax assets 19,410 21,338

Investment property 300 300

Property, plant and equipment 1,311,418 1,467,964

Intangible assets 52,726 55,174

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

1,384,512 1,545,314

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

TOTAL ASSETS 1,538,766 1,685,598

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

LIABILITIES AND EQUITY

Current liabilities

Interest-bearing loans and borrowings 81,889 149,850

Trade and other payables 88,480 91,236

Income tax liability 4,567 1,300

Deferred income 28,906 29,408

203,842 271,794

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

Non-current liabilities

Interest-bearing loans and borrowings 467,447 593,532

Derivatives 42,863 41,982

Other liabilities 192 0

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

510,502 635,514

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

Total liabilities 714,344 907,308

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

Equity

Equity attributable to equity holders of the Parent

Share capital 404,290 404,290

Share premium 639 639

Reserves 65,083 70,129

Retained earnings 354,410 303,232

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

Total equity attributable to equity holders of the Parent 824,422 778,290

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

Total equity 824,422 778,290

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

TOTAL LIABILITIES AND EQUITY 1,538,766 1,685,598

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

CONSOLIDATED STATEMENT OF CASH FLOWS

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

For the year ended 31 December In thousands of

EUR

2015 2014

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

Cash flows from operating activities

Net profit for the period 59,070 27,261

Adjustments for:

Depreciation and amortisation 78,102 79,908

Net gain/loss on disposals of property, plant and equipment 9,164 -76

Net interest expense 36,099 35,336

Net expense from derivatives 4,926 15,758

Gain on disposal of financial assets -186 0

Profit from equity-accounted investees -64 -24

Net unrealised foreign exchange gain -5,591 -7,783

Share option programme reserve 300 -224

Income tax 10,101 2,734

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

132,851 125,629

Changes in:

Receivables and prepayments related to operating activities 1,463 -2,291

Inventories 2,118 2,142

Liabilities related to operating activities -4,139 -2,103

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

Cash generated from operating activities 191,363 150,638

Income tax paid 553 71

191,916 150,709

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

Cash flows from/used in investing activities

Purchase of property, plant, equipment and intangible assets -43,629 -49,148

Proceeds from disposals of property, plant, equipment 115,370 215

Proceeds from other financial assets 229 0

Interest received 74 140

72,044 -48,793

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

Cash flows used in financing activities

Repayment of loans -133,263 -89,842

Change in overdraft -59,052 43,993

Payments for settlement of derivatives -4,045 -3,985

Payment of finance lease liabilities -80 -75

Interest paid -33,210 -33,270

Payment of transaction costs related to loans -1,429 0

Dividends paid -13,398 -20,096

Income tax on dividends paid -2,818 -5,342

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

-247,295 -108,617

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TOTAL NET CASH FLOW 16,665 -6,701

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

Cash and cash equivalents:

- at the beginning of period 65,311 72,012

- increase / decrease 16,665 -6,701

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

- at the end of period 81,976 65,311

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

Janek Stalmeister

Chairman of the Management Board

AS Tallink Grupp

Tel +372 640 9800

E-mail [email protected]

Veiko Haavapuu

Finance Director

AS Tallink Grupp

Sadama 5/7, 10111 Tallinn

Tel. +372 640 9914

E-mail [email protected]

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AS Tallink Grupp Audited Annual Report of the 2015 Financial Year

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