Tallink Grupp

Audited Annual Report of the 2013 Financial Year

Tallinn, 2014-04-30 12:30 CEST (GLOBE NEWSWIRE) --

The growth experienced during the previous years has turned into a more stable

market environment. During the 2013 financial year the Nordic economies

continued to experience a slowdown that in turn had an effect on the Group?s

customer spending behaviour. At the same time several competitors invested in

new built or newer vessels resulting in a changed competitive landscape.

Compared to the previous period an increased number of the Group?s vessels went

through scheduled maintenance works resulting in fewer voyages and hence lower

passenger volumes. In addition, the cruise ferries Silja Europa and Baltic

Princess switched their operating routes resulting temporarily in fewer

sailings due to the change. These various factors had an effect to the slight

decline in the volumes resulting in a somewhat weaker annual result.

During the 2013 financial year a total of 9.11 million passengers travelled on

the Group?s vessels. The Group?s consolidated revenue for 2013 was EUR 942.0

million (EUR 943.9 million in 2012). Gross profit was EUR 190.2 million (EUR

201.2 million in 2012), EBITDA EUR 156.2 million (EUR 165.5 million in 2012).

Net profit for 2013 was EUR 43.3 million (EUR 56.3 million in 2012),

representing earnings per share of EUR 0.065 (EUR 0.084 in 2012).

During the 2013 financial year the Group?s increased focus was on developing

the on-board concept. It is our vision for the long term on-board development

of new business concepts for bars, restaurants, shops, boutiques, servicing,

technical innovations, customer communication etc, we call this ?Newboard?.

Aside from smaller upgrades the first noticeable improvement comes from Silja

Serenade where restaurants, shops and other public areas were upgraded in the

first quarter of 2014.

Active development of the on-line sales channels continued throughout the year.

The volume and share of on-line bookings has increased.

In 2013 spring the Group invested around EUR 30 million in the development of

the Riga ? Stockholm route by purchasing the cruise ferry Isabelle. In the

recent years the Riga ? Stockholm route has been the fastest growing route and

this investment supports the further development. The upgrade helped to achieve

8.4% higher revenue and a positive segment result for 2013.

In 2013 June the Group issued a NOK 900 million (EUR 118 million) senior

unsecured bond to pre-pay an existing bank loan. The bond was listed on the

Oslo stock exchange in October. The access to capital markets is important for

improving financial flexibility through diversified funding sources.

The key highlights of the 2013 financial year were the following:

-- Operations impacted by an overall weak economic environment in the region

-- Changed competitive landscape

-- Development of the online sales channels

-- Development of ?Newboard?

-- Purchase of the cruise ferry Isabelle

-- Bond issue

In management?s opinion, the Group?s financial position allows the Group to pay

dividends. Management will propose to the 2014 shareholders? general meeting a

dividend distribution of EUR 0.03 per share, i.e. EUR 20,096,461 in aggregate.

KEY FIGURES OF THE FINANCIAL YEAR 2013

2013 2012 Change

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EUR EUR %

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

Revenue (million) 942.0 943.9 -0.2%

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

Gross profit (million) 190.2 201.2 -5.5%

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

Net profit for the period (million) 43.3 56.3 -23.1%

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

EBITDA (million) 156.2 165.5 -5.6%

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

Depreciation and amortisation (million) 73.2 71.0 3.1%

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

Investments (million) 43.3 9.4 358.2%

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

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

outstanding

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

Earnings per share 0.065 0.084 -23.1%

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

Number of passengers 9,114,812 9,264,561 -1.6%

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

Number of cargo units 301,660 283,973 6.2%

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

Average number of employees 6,948 6,868 1.2%

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

31.12.2013 31.12.2012

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

Total assets (million) 1,722.1 1,741.8 -1.1%

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

Total liabilities (million) 951.0 981.0 -3.1%

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

Interest-bearing liabilities (million) 794.3 840.4 -5.5%

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

Net debt (million) 722.3 774.8 -6.8%

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

Total equity (million) 771.1 760.8 1.3%

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

Equity ratio (%) 44.8% 43.7%

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

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

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

Shareholders? equity per share 1.15 1.14 1.3%

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

Ratios

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Gross margin (%) 20.19% 21.3%

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

EBITDA margin (%) 16.6% 17.5%

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

Net profit margin (%) 4.6% 6.0%

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

Return on assets (ROA) 4.8% 5.4%

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

Return on equity (ROE) 5.7% 7.8%

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

Return on capital employed (ROCE) 5.6% 6.4%

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

Net debt to EBITDA 4.6 4.7 -2.1%

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

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 942.0 million in 2013 (943.9

million in 2012). Restaurant and shop sales on-board and on mainland of EUR

507.3 million (517.5 million in 2012) contributed more than half of total

revenue. Ticket sales amounted to EUR 249.2 million (241.0 million in 2012) and

sales of cargo transport to EUR 105.6 million (102.8 million in 2012). The

distribution of sales between operational segments remained more or less stable

compared to the previous financial year.

Geographically, 36.4% or EUR 343.2 million of revenue came from the

Finland-Sweden route and 33.7% or EUR 317.4 million from the Estonia-Finland

route. Revenue from the Sweden-Estonia route was EUR 104.9 million or 11.2% and

from the Sweden-Latvia route EUR 71.9 million or 7.6%. The share of revenue

generated by other geographical segments increased to 11.1% (EUR 114.8

million).

EARNINGS

Gross profit was EUR 190.2 million (EUR 201.2 million in 2012), EBITDA EUR

156.2 million (EUR 165.5 million in 2012). Net profit for 2013 was EUR 43.3

million (EUR 56.3 million in 2012). Basic and diluted earnings per share were

EUR 0.065 (EUR 0.084 in 2012).

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

largest operating cost item, amounted to EUR 220.2 million (EUR 213.7 million

in 2012). Accordingly, the proportion of sales on the tax- paid routes

(Finland-Estonia and Latvia-Sweden routes), where the margin is lower,

increased, whereas the share of the Finland-Sweden tax-free routes decreased.

Fuel costs for 2013 were EUR 129.8 million (EUR 143.9 million in 2012). Fuel

costs were impacted by lower fuel price levels throughout the year. Measured in

euros, in 2013 the average market price of the reference fuel (Fuel oil 1%

sulphur content) was approximately 13% lower than in the 2012 calendar year.

The Group?s personnel expenses amounted to EUR 182.4 million (EUR 180.5 million

in 2012). The average number of employees in the 2013 financial year was 6,948

(6,868 in 2012).

Administrative expenses for 2013 amounted to EUR 45.1 million and marketing

expenses to EUR 63.3 million (EUR 44.1 million and 65.4 million respectively in

2012).

Depreciation and amortisation of the Group?s assets was EUR 73.2 million (EUR

71.0 million in 2012). There were no changes in depreciation policies in 2013.

There were no impairment losses related to the Group?s property, plant,

equipment and intangible assets.

The Group?s net finance costs for 2013 amounted to EUR 36.0 million (EUR 41.0

million in 2012).

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

For the year ended 31 December

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

In thousands of EUR

2013 2012

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

Revenue 941,983 943,868

Cost of sales -751,827 -742,669

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

Gross profit 190,156 201,199

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

Marketing expenses -63,292 -65,407

Administrative expenses -45,148 -44,081

Other income 2,120 3,659

Other expenses -805 -1,654

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

Result from operating activities 83,031 93,716

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

Finance income 21,547 5,269

Finance costs -57,503 -46,249

Profit from the sale of a subsidiary 0 783

Share of profit of equity-accounted investees 17 19

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

Profit before income tax 47,092 53,538

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

Income tax -3,786 2,764

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

Net profit for the period 43,306 56,302

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

Other comprehensive income/ expense

Items that may be reclassified to profit or loss

Exchange differences on translating foreign operations 114 -563

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

Other comprehensive income/expense for the period 114 -563

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

Total comprehensive income for the period 43,420 55,739

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

Basic and diluted earnings per share 0.065 0.084

(in EUR per share)

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

Basic and diluted earnings per share ? continuing 0.065 0.084

operations

(in EUR per share)

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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

In thousands of EUR

As of 31 December 2013 2012

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

ASSETS

Current assets

Cash and cash equivalents 72,012 65,600

Trade and other receivables 40,544 42,555

Prepayments 3,185 5,151

Derivatives 679 0

Inventories 33,457 29,426

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

149,877 142,732

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

Non-current assets

Investments in equity-accounted investees 262 245

Other financial assets 385 296

Deferred income tax assets 17,413 12,264

Investment property 300 300

Property, plant and equipment 1,495,895 1,526,995

Intangible assets 57,925 58,999

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

1,572,180 1,599,099

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

TOTAL ASSETS 1,722,057 1,741,831

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

LIABILITIES AND EQUITY

Current liabilities

Interest-bearing loans and borrowings 106,014 103,685

Trade and other payables 97,387 92,982

Income tax 0 6

Deferred income 28,315 25,458

Derivatives 30,888 22,102

262,604 244,233

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

Non-current liabilities

Interest-bearing loans and borrowings 688,327 736,699

Other liabilities 63 69

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

688,390 736,768

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

Total liabilities 950,994 981,001

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

Equity

Equity attributable to equity holders of the Parent

Share capital 404,290 404,290

Share premium 639 639

Reserves 70,111 69,091

Retained earnings 296,023 286,810

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

Total equity attributable to equity holders of the Parent 771,063 760,830

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

Total equity 771,063 760,830

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

TOTAL LIABILITIES AND EQUITY 1,722,057 1,741,831

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

CONSOLIDATED STATEMENT OF CASH FLOWS

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

For the year ended 31 December In thousands of

EUR

2013 2012

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

Cash flows from operating activities

Net profit for the period 43,306 56,302

Adjustments: 118,619 109,768

Depreciation and amortisation 73,176 71,001

Net gain/loss on disposals of property, plant and equipment 1,300 -45

Net interest expense 36,687 39,637

Net expense from derivatives 12,558 3,410

Profit from subsidiaries 0 -783

Profit from equity-accounted investees -17 -19

Net unrealised foreign exchange gain -9,178 -669

Share option programme reserve 307 0

Income tax 3,786 -2,764

Changes in receivables and prepayments related to operating 4,229 -5,568

activities

Changes in inventories -4,031 -4,228

Changes in liabilities related to operating activities 6,649 6,782

Income tax paid -378 -40

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

168,394 163,016

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

Cash flows used in investing activities

Purchase of property, plant, equipment and intangible assets -43,291 -9,449

Proceeds from disposals of property, plant, equipment 1,318 50

Proceeds from subsidiaries 0 1,992

Acquisition of other investments 0 -34

Interest received 114 297

-41,859 -7,144

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

Cash flows used in financing activities

Proceeds from loans 24,000 440,000

Redemption of loans -198,126 -557,848

Change in overdraft 18,456 0

Proceeds from bonds 115,487 0

Payments for settlement of derivatives -4,451 -3,976

Payment of finance lease liabilities -96 -56

Interest paid -32,439 -36,434

Payment of transaction costs related to loans -557 -7,379

Dividends paid -33,494 0

Income tax on dividends paid -8,903 0

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

-120,123 -165,693

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

TOTAL NET CASH FLOW 6,412 -9,821

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

Cash and cash equivalents:

- at the beginning of period 65,600 75,421

- increase / decrease 6,412 -9,821

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

- at the end of period 72,012 65,600

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

Janek Stalmeister

Member of the Management Board, CFO

AS Tallink Grupp

Tel +372 640 9800

E-mail [email protected]

Harri Hanschmidt

Head of the Finance Department

AS Tallink Grupp

Sadama 5/7. 10111 Tallinn

Tel +372 640 8981

E-mail [email protected]

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Audited Annual Report of the 2013 Financial Year

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