Tallink Grupp — Earnings Release 2020

Feb 25, 2021

Q4 2020

TALLINK GRUPP AS RESULTS WEBINAR

PAAVO NÕGENE CHAIRMAN OF THE MANAGEMENT BOARD

JOONAS JOOST FINANCIAL DIRECTOR

TALLINK GRUPP

The leading European provider of leisure and business travel and sea transportation services in the Baltic Sea region.

OPERATIONS

• Fleet of 15 vessels
• Seven ferry routes (3 suspended)
• Operating four hotels (2 closed until 2021 high season)

KEY FACTS

• Revenue of EUR 443 million in 2020
• Served 3.7 million passengers in 2020
• Transported 360 thousand cargo units
• Operating EUR 1.5 billion asset base
• 4 200 employees (end of 2020)
• 2.8 million loyalty program members

STRONG BRANDS

COVID-19 IMPACT ON TRANSPORTED PASSENGERS 2020 VS 2016-2019 AVERAGE 7-DAY MOVING AVERAGE

OPERATING ENVIRONMENT AND ADJUSTMENTS IN 2020 Q4

• Extensive impact of Covid-19 and suspension of cruise ferries operations
• Effectively operating:
  • Shuttle service on Tallinn-Helsinki route
  • Turku-Stockholm route
  • Muuga-Vuosaari & Paldiski-Kapellskär cargo routes
  • Victoria I weekly Tallinn-Stockholm-Riga roundtrip
  • Silja Europa floating weekend mall in Tallinn
  • Stockholm-Härnösand in October
• Tallink Hotel Riga operations suspended from 18 October 2020 until spring 2021
• Cost cutting and extensive reorganisation in order to bring the costs in line with the income we are currently able to earn

Q4 2020 OVERVIEW – COVID-19 & TRAVEL RESTRICTIONS

Q4 Selected Key Figures (financials in million euros)	2020	2019	Change
Number of passengers	462 859	2 280 805	-79.7%
Number of cargo units	81 861	93 645	-12.6%
Number of passenger cars	134 196	243 025	-44.8%
Revenue	79.3	226.4	-65.0%
Gross profit / loss	-18.4	39.1	-147.0%
EBITDA	1.2	33.4	-96.5%
EBIT	-24.2	9.0	-369.6%
Net result for the period	-26.9	5.5	-590.5%
Capital expenditures	4.8	10.0	-52.0%
As at:	31.12.20	30.09.20	Change
Total assets	1 516.2	1 542.9	-1.7%
Total equity	714.3	741.5	-3.7%
Interest-bearing liabilities	705.1	671.2	5.1%
Net debt	677.3	640.5	5.7%
2020 unaudited

• Revenue EUR 79.3m (EUR -147.1m or -65.0% vs LY)

• Extensive impact from Covid-19 related travel restrictions
• More limited impact on cargo operations
• 26% less departures compared to Q4 2019

• Cost reduction & support

• Cost of sales reduced by 48% or EUR 90m
• Marketing & administrative cost reduced by 33% or EUR 10m
• Net direct financial support of EUR 14.7m in Q4 2020
• Positive EBITDA of EUR 1.2m (EUR -32.2m vs LY)
• Net loss of EUR 26.9m (EUR -32.3m vs LY)

Q4 REVENUE DEVELOPMENT BY OPERATING SEGMENTS (EUR MILLION)

Restaurant and shop sales on-board and onshore and ticket sales decline driven by decline in passengers

Lower cargo sales due to weak market and tight price competition

Effectively only one hotel operated in Q4 2020

REVENUE STRUCTURE IN Q4 2020

Q4 REVENUE DEVELOPMENT BY GEOGRAPHICAL SEGMENTS (EUR MILLION)

Revenues of all routes negatively affected by Covid-19, travel restrictions, suspensions in operations and weak cargo market

Estonia-Finland

The results reflect the operations of the Estonia-Finland Shuttle and cargo service and includes also the operations of Victoria I on the Tallinn-Helsinki route

Estonia-Sweden

Operations of the Paldiski-Kapellskär route and the limited operations of the Tallinn-Stockholm route in September

Latvia-Sweden

No daily operations; The results include limited operations of Victoria I on the Riga-Stockholm route

Finland-Sweden

The results reflect the operations of Turku-Stockholm route and include also limited number of special cruises from Stockholm to Härnösand

RESULTS QUARTERLY SEASONALITY BREAKDOWN

PASSENGERS (MILLIONS)

REVENUE (EUR MILLION)

CARGO (TH. UNITS)

THE DYNAMICS OF HIGH SEASONALITY ON THE PROFIT LEVEL

NET PROFIT BY QUARTERS (EUR MILLION)

MOST OF THE PROFITS ARE TYPICALLY EARNED IN THE SUMMER, THE HIGH SEASON

2020 OVERVIEW – COVID-19 & TRAVEL RESTRICTIONS

Selected Key Figures (financials in million euros)	2020	2019	Change
Number of passengers	3 732 102	9 763 210	-61.8%
Number of cargo units	359 811	379 634	-5.2%
Number of passenger cars	702 702	1 110 314	-36.7%
Revenue	442.9	949.1	-53.3%
Gross profit / loss	-43.5	196.9	-122.1%
EBITDA	8.0	171.1	-95.3%
EBIT	-92.6	74.9	-223.7%
Net result for the period	-108.3	49.7	-317.8%
Capital expenditures	100.1	60.9	64.4%
As at:	31.12.20	31.12.19	Change
Total assets	1 516.2	1 533.0	-1.1%
Total equity	714.3	822.8	-13.2%
Interest-bearing liabilities	705.1	577.9	22.0%
Net debt	677.3	539.0	25.7%
2020 unaudited

• Revenue EUR 442.9m (EUR -506.2m or -53.3% vs LY)

• Extensive impact from Covid-19 related travel restrictions
• More limited impact on cargo operations
• 20% less departures compared to 2019

• Cost reduction & support

• Cost of sales reduced by 35% or EUR 266m
• Marketing & administrative cost reduced by 31% or EUR 38m
• Net direct financial support of EUR 36.6m in 2020
• Positive EBITDA of EUR 8.0m (EUR -163.1m vs LY)
• Net loss of EUR 108.3m (EUR -158.0m vs LY)
• Capital expenditure related mainly to MyStar

FULL YEAR COSTS BREAKDOWN

(EUR million)	(3) 20203	2019	Change
Cost of goods	116 624	221 139	-47.3%
Staff costs	116 818	163 148	-28.4%
Marketing & Administration (1)	71 797	110 974	-35.3%
Port & Stevedoring	68 100	103 446	-34.2%
Fuel cost	56 341	89 614	-37.1%
Ship operating expenses	36 923	72 594	-49.1%
Other costs	3 430	9 005	-61.9%
Total costs from operations	470 033	769 920	-39.0%
Depreciation & amortisation	100 661	96 246	4.6%
Net finance cost (2)	18 000	17 683	1.8%
Total costs	588 694	883 849	-33.4%

Notes:

• (1) Depreciation and amortisation excluded
• (2) Includes share of profit/loss of equity-accounted investees

TALLINK GRUPP (3) Unaudited

INVESTMENT AND FINANCING HIGHLIGHTS IN Q4 2020

ACTIVITIES TOWARD LONG-TERM SUSTAINABILITY

• MyStar prepayments concluded
• EUR 60m working capital loan drawn
• Loan agreement with Nordic Investment Bank, EUR 10m drawn
• Opening of the first Burger King restaurants in Latvia and Lithuania, one more restaurant in Tallinn

Image courtesy of RMC

CONSOLIDATED CASH FLOW STATEMENT

(EUR million)	2019	2020	Q4 2019	(1) Q4 2020
Operating cash flow	175	(7)	49	(12)
Capital expenditure	(61)	(100)	(10)	(17)
Asset disposal	0	0	0	0
Free cash flow	114	(107)	39	(29)
Debt financing (net effect)	(52)	112	12	31
Interests & other financial items	(17)	(16)	(3)	(4)
Dividends & reduction of share capital	(80)	0	(47)	0
Income tax on dividends paid	(8)	0	0	0
Change in cash	(43)	(11)	1	(3)

Totals may not sum due to rounding (1) Unaudited

TALLINK GRUPP

CASH FLOW GENERATION AFFECTED BY COVID-19

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(EUR million)	31.12.2018	31.12.2019	30.09.2020	(2) 31.12.2020	1500	Cash Intangibles	Other liabilities
Total assets	1 501	1 533	1 543	1 516	1000 500	Other
Non-current assets	1 333	1 412	1 443	1 428		assets
Current assets	168	121	100	88			Share holders'
- of which cash	82	39	31	28			equity
Total liabilities	644	710	801	802
Interest bearing liabilities	510	578	671	705
Other liabilities	134	132	130	97
Shareholders' equity	857	823	742	714		Ships
							Loans
Net debt/EBITDA	3.0x	3.1x	15.9x	84.2x
Net debt	428	539	640	677
Equity/assets ratio	57%	54%	48%	47%
(1) BVPS (in EUR)	1.28	1.23	1.11	1.07	0	Assets	Liabilities &
Totals may not sum due to rounding							Equity

(1) Shareholders' equity / number of shares outstanding

(2) Unaudited

TALLINK GRUPP

YEAR END TOTAL LIQUIDITY EUR 147 MILLION (EUR 129 MILLION IN 2019)

DEBT STRUCTURE

LONG TERM BANK LOANS

• EUR 603 million as at 31.12.2020
• 7 loan agreements outstanding: syndicated loans, amortizing project and working capital loans
• Maturities 1-9 years
• EUR denominated, fixed and EURIBOR floating

OVERDRAFTS (as at 31.12.2020)

• EUR 16 million used
• EUR 119 million unused

SIGNED, NOT YET DRAWN

• EUR 198 million from KfW IPEX-Bank GmbH (MyStar)
• EUR 90 million undrawn of EUR 100 million working capital loan from Nordic Investment Bank

Total EUR 705 million interest bearing liabilities as at 31.12.2020

2020 unaudited

2020 WEIGHTED AVERAGE INTEREST RATE 2.16%

EUR million

EVENTS AFTER THE REPORTING PERIOD & OUTLOOK

Image courtesy of RMC

• Tighter restriction for entering Finland and Sweden effective from late January
• Second Burger King restaurant in Latvia opened in January. Ongoing preparations for opening 7 more Burger King restaurants in 2021.
• Due to a deteriorated operating environment and considering the Company's long-term interests, the Management will propose not to pay dividends for the financial year 2020.

Due to the ongoing Covid-19 situation the earnings outlook is uncertain and continues to be largely subject to external factors such as the progress of vaccinations, states' decisions regarding the timing of lifting of the travel restrictions, allowing passenger traffic as well as the duration of the recovery period.

QUESTIONS & ANSWERS

THANK YOU

AS Tallink Grupp Sadama 5, 10111, Tallinn, Estonia investor@tallink.ee