Tallink Grupp

Earnings Release • Apr 6, 2016

The company

— Tallink is the leading European provider of leisure and business travel and sea transportation services in the Baltic Sea region

Operations

• Fleet of 16 vessels
• Operating five hotels

Key facts

• Revenue of EUR 945 million in 2015
• Operating EUR 1.5 billion asset base
• Nearly 7,000 employees
• Serving 9 million passengers annually
• Transporting 308 thousand cargo units annually
• Listed on Nasdaq OMX Baltic TAL1T

Over 50 years of operating and cruising experience

Tallink's business model

Product offering

Overnight cruises & passenger transportation

On-board tax-free shopping

Hotel & travel packages City break

Cargo transportation

Revenue structure in 2015 Shuttle service

4

Tallink's position in the global ferry market

The World's top Duty free & Travel Retail Shops

Ranking by actual and estimated retail sales in 2014

Rank	Location
Sales	> US \$ 1,000 million
	1 Seoul – Incheon Int'l Airport, South Korea	AIRPORT SHOPS
	2 Dubai – Dubai International Airport, U.A.E.	AIRPORT SHOPS
	3 Singapore – Changi Airport	AIRPORT SHOPS
	4 London – Heathrow Airport, UK	AIRPORT SHOPS
	5 Hong Kong – Hong Kong International Airport	AIRPORT SHOPS
	6 Shanghai – Pudong Airport, China P.R	AIRPORT SHOPS
	7 Bangkok – Suvarnabhumi Airport, Thailand	AIRPORT SHOPS
Sales	> US \$ 800 million
	8 Paris – Charles de Gaulle Airport, France	AIRPORT SHOPS
Sales	> US \$ 700 million
	9 Beijing – Capital Airport, China P.R.	AIRPORT SHOPS
	10 Frankfurt – Frankfurt-Main Airport, Germany	AIRPORT SHOPS
Sales	> US \$ 600 million
	11 Tallink	FERRIES
	12 Taipei – Taoyuan International Airport, Taiwan	AIRPORT SHOPS
Sales	> US \$ 500 million
	13 Tokyo – Narita Airport, Japan	AIRPORT SHOPS
	14 Sao Paulo – Guarulhos Int'l Airport, Brazil	AIRPORT SHOPS
	15 Oslo – Gardermoen Airport, Norway	AIRPORT SHOPS
	16 Amsterdam – Schipol Airport, Netherlands	AIRPORT SHOPS

	Rank Company	Gross tons
1	Stena Line	933,618
2	Grimaldi Lines	694,597
3	Tallink	466,960
4	P&O Ferries	409,659
5	Tirrenia	373,911

	Rank Company	Beds
1	Tallink	18,963
2	Stena Line	17,069
3	Viking Line	14,026
4	Grand Navi Veloci	13,680
5	Tirrenia	10,442

		EUR million
	Rank Company	Revenue
1	DFDS Group	1,714
2	Stena Line	1,340
3	Tallink	921
4	Finnlines	533
5	Viking Line	527

Data: Ro/pax / ferries above 1,000 GT Source: ShipPax MARKET:15; Company reports

Source: Generation Research 2015

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	Wide route	Strong market share &	High safety level &
fleet	network	brand awareness	environmental standards

Tallink's passenger market share is 46% of the Northern Baltic Sea

Northern Baltic passenger market ~ 20 million passengers

Market shares Passenger operations

We are targeting new customers from a wider country base More than 10% of our passengers come from outside of our home markets

	Web sales sites in 17 language China	Finland Italy	Lithuania	Poland	Russia
9	Denmark Estonia	France Japan Germany Latvia	Netherlands Noway	Spain Sweden	International

Highlights and milestones

Tallink's performance after the management buyout

• Adoption to the new EU Sulphur Directive
• Positive feedback from upgraded vessels
• Positive effect from charters and re-routings
• 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
• All time high passenger number on Tallinn-Helsinki route
• Lower fuel price and lower total fuel consumption

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

• Silja Europa return to Tallinn-Helsinki route

• Group-wide public areas renovation program continues
• The new logistics center start of operations
• Developments in Tallinn, Helsinki and Stockholm ports
• Nordic economies remain weak
• Geopolitical events in Europe

Focus on public areas modernisation

• Expansion of shop areas and modernizing restaurant areas to improve the performance through retail space
• Modern retail environment visual
• Wider selection of the products
• Developing on-board areas with the goal: approachable, comfortable and customer friendly
• Responding to higher expectations of the passengers

Ready to take the next step on the Tallinn – Helsinki route

LNG powered fast ferry for the Tallinn – Helsinki Shuttle service

Specifications

• Built in Meyer Turku Shipyard
• Gross tonnage 49,000
• Length 212 meters
• Capacity 2,800 passengers
• Dual fuel engine
• Service speed 27 knots
• Delivery in early 2017

Financing

• The vessel cost is approximately EUR 230 million
• 20% will be paid during the construction period
• 80% will be financed with long term bank loan on the delivery of the vessel
• OECD-term export credit loan with CIRR based interest rate

Production of the vessel started on 4th of August 2015

Results Quarterly seasonality breakdown

Passengers (millions )

Cargo (th. units )

The dynamics of high seasonality on the profit level Net result by quarters

2013 net profit 43

2014 net profit 27 2015 net profit 59

Typical to the Tallink business model is that most of the result is made in the summer, the high season

Consolidated Income Statement

(EUR million)	2013	2014	2015 (1)
Sales	942	921	945
Cost of sales (2)	(751)	(740)	(722)
(2) Marketing, general & admin	(108)	(112)	(111)
EBITDA	156	151	181
Margin (%)	16.6%	16.3%	19.2%
Net Profit	43	27	59
EPS	0.06	0.04	0.09

Notes:

(1) Unaudited

(2) Includes amortization and depreciation

Costs breakdown

(EUR million)	2014	2015	Change
Cost of goods	211,211	215,401	2%
Fuel cost	114,008	94,191	-17%
Staff costs	138,660	142,368	3%
Marketing & Administration (1)	103,690	102,839	-1%
Port & stevedoring	95,830	92,213	-4%
Ship operating expenses	77,930	76,249	-2%
Other costs (2)	30,417	40,577	33%
Total costs from operations	771,746	763,838	-1%
Depreciation and amortisation	79,908	78,102	-2%
Net finance cost	40,683	34,156	-16%
Total costs	892,337	876,096	-2%

Notes:

(1) Depreciation and amortisation excluded

(2) Including one-off costs from vessel sale in 2015

Consolidated Cash Flow Statement

(EUR million)	2013	2014	2015 (1)
Operating cash flow	168	151	192
Capital expenditure	(43)	(49)	(44)
Asset disposal	1	0	115
Free cash flow	126	102	263
Debt financing (net effect)	(40)	(46)	(192)
Interests & other financial items	(38)	(37)	(38)
Dividend paid	(33)	(20)	(13)
Dividend tax	(9)	(5)	(3)
Change in cash	6	(7)	17

Notes: (1) Unaudited

Consolidated Statement of Financial Position

(EUR million)	31.12.2012	31.12.2013	31.12.2014	(1) 31.12.2015
Total assets	1,742	1,722	1,686	1,539
Non-current assets	1,599	1,572	1,545	1,385
Current assets	143	150	140	154
- of which cash	66	72	65	82
Total liabilities	981	951	907	714
Interest bearing liabilities	840	794	743	549
Other liabilities	141	157	170	165
Shareholders' equity	761	771	778	824
Net debt/EBITDA	4.7x	4.6x	4.5x	2.6x
Net debt	775	722	678	467
Equity/assets ratio	44%	45%	46%	54%
BVPS (2) (in EUR)	1.14	1.15	1.16	1.23

Notes:

21

(1) Unaudited (2) Shareholders' equity / number of shares outstanding

• Our ice-classed fleet is versatile to operate anywhere
• We have experience in selling and chartering vessels all over the world

Debt structure

Total EUR 549 million interest bearing liabilities as of 31.12.2015

Long term bank loans

• 5 standalone loan agreements with bank syndicates
• Amortizing project loans and commercial term loan
• Maturities 2-5 years
• EUR denominated
• EURIBOR floating,1/3 hedged

Bond

• Senior unsecured NOK 900 m (EUR 120 m)
• Listed in Oslo Stock Exchange
• 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

7

• Network of >1,800 travel agents and tour operators worldwide

5

• Growing online presence and call centres

Modern fleet

• ¹⁰ core vessels have an average age of 14.2 years
• Ice class vessels

1

• Luxurious on-board experience, e.g. spacious shopping areas

• Variety of short cruises between key cities
• Optimised schedules with frequent and reliable departures all year
• Established relationships with port authorities

1

3

Strong quality brands

• Silja Line and Tallink are the most recognised cruise brands in the Northern Baltic Sea Region
• They are associated with a quality customer experience Finland Estonia Sweden

1 1

Comprehensive offer

• Varied on-board experience
• Travel packages and excursions
• Addressing all budget ranges and customer preferences

46% Market share of the Northern Baltic Sea Region passenger market

4

Loyal customer base

• ⁹ million passengers in 2015
• Nearly ² million Club One card holders growing at 10% in 2015
• Every third passenger is a club one member

High safety and environmental standards

2

• We proactively seek compliance with the highest standards
• In 2015, only 6 of the over ⁹⁵⁰⁰ scheduled trips were cancelled for technical reasons

6

Tallink's Fleet

Baltic Queen Built: 2009 Length: 212m Passengers: 2800 Lane meters: 1130

Baltic Princess

Built: 2008 Length: 212m Passengers: 2800 Lane meters: 1130

Victoria I

Built: 2004 Length: 193m Passengers: 2500

Galaxy Built: 2006

Length: 212m Passengers: 2800 Lane meters: 1130

Silja Europa Built: 1993

Length: 202m Passengers: 3123 Lane meters: 932

Silja Serenade Silja Symphony Built: 1990/91

Length 203m Passengers: 2852

Lane meters: 950

Tallink has invested EUR 1.3 billion to create a modern fleet

Tallink's Fleet

Superstar Built: 2008 Length 177m Passengers: 2080 Lane meters: 1930

Star

Built: 2007 Length 186m Passengers: 2080 Lane meters: 2000

Romantika Built: 2002 Length 193m Passengers: 2500 Lane meters: 1030

Isabelle

Built: 1989 Length 171m Passengers: 2480 Lane meters: 850

Superfast VII/VIII/IX

Built: 2001/2002 Length: 203m Passengers: 717

In addition the Group has 2 ro-pax cargo vessels in operation

Ownership structure

Shareholders of AS Tallink Grupp

Top 10 shareholders Institutional investors Retail investors

Ten largest shareholders as of 31.12.2015

Infortar	38%
Baltic Cruises Holding	17%
Nordea Bank Finland clients account	6%
ING Luxemburg S.A. AIF account	4%
ING Luxembourg client account	3%
State Street Bank and Trust Omnibus fund OM01	2%
Clearstream Banking Luxembourg S.A. Clients	2%
Skandinaviska Enskilda Banken client account	1%
Mellon Treaty Omnibus	1%
Firebird Republics fund	1%

Safety, security and environmental protection are a high priority

Policies and certifications

• Safety and Security Policy
• Environmental Policy
• ISO 14001:2004 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