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Tallink Grupp

Earnings Release • Jul 27, 2023

2225_rns_2023-07-27_655c5c61-f6a6-48df-89b0-f333578ceb0e.pdf

Earnings Release

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Company AS Tallink Grupp

Type Company Release

Category Half-yearly financial report

Disclosure time 27 Jul 2023 09:00:00 +0300

Attachments:

  • AS Tallink Grupp Q2 2023 Presentation.pdf (http://oam.fi.ee/en/download?id=7586)
  • Tallink Grupp 2023 Q2 ENG.pdf (http://oam.fi.ee/en/download?id=7587)
  • Tallink Grupp 2023 Q2 Financial Data.xlsx (http://oam.fi.ee/en/download?id=7588)
  • Tallink Grupp 2023 Q2 EST.pdf (http://oam.fi.ee/en/download?id=7589)
  • Tallink Grupp 2023 Q2 Financial Data.xlsx (http://oam.fi.ee/en/download?id=7590)
  • AS Tallink Grupp Q2 2023 Presentation.pdf (http://oam.fi.ee/en/download?id=7591)

Currency

Title

AS Tallink Grupp Unaudited Consolidated Interim Report Q2 2023

The Q2 2023 results of AS Tallink Grupp will be introduced at an Investor Webinar held today at 12:00 (EEST). To participate, please join via the following link; (https://teams.microsoft.com/l/meetupjoin/19%3ameeting_MDNmNTgzZDgtNzc1NC00NjBmLWI5MzktZjRhYTQ1MzNjOTlk%40thread.v2/0 ?context=%7b%22Tid%22%3a%2286359415-f0d5-4ea5-bb32- 42128c4493be%22%2c%22Oid%22%3a%22fbc24b3a-8623-42c6-8311-65b8899e63dd%22%2c%22Is BroadcastMeeting%22%3atrue%7d) we kindly ask participants to provide their questions latest by 11:00 am by email to: [email protected] (https://www.globenewswire.com/Tracker?data=sPXC0PO4t9B-uBXRwzpCc9_urHLPH-XBcIT5f9VgaHjBgmHJXdMG7Jg3xYPMniStxcjyWGB1jA5Xo_gPeGTNxXf9rfqgQqnrBPw6kdbTEdo=). Further details are available in a previously published announcement (https://view.news.eu.nasdaq.com/view?id=b5f2d93fc03736bf0f2bef4e681105ec8&lang= en).

In the second quarter (1 April - 30 June) of the 2023 financial year, AS Tallink Grupp and its subsidiaries (the Group) carried 1 541 081 passengers, which is 0.7% less than in the second quarter of 2022. The number of cargo units transported decreased by 22.0% compared to the same period a year ago. The Group's unaudited consolidated revenue amounted to EUR 229.7 million (EUR 206.0 million in Q2 2022), up by 11.5%. Unaudited EBITDA was EUR 68.5 million (EUR 28.7 million in Q2 2022) and the unaudited net profit for the period was EUR 33.4 million (net loss of EUR 0.7 million in Q2 2022).

The following operational factors impacted the Group's revenue and operating results in the second quarter of 2023:

  • * The volume of cargo and passenger transportation was impacted both by less vessels available due to chartering and by 18% less trips made compared to the same period a year ago. At the same time, stable consumer confidence levels in all Group's core markets supported the demand for travelling.
  • * Ongoing war in Ukraine continued to impact the demand.
  • * During the quarter the Group operated 15 vessels including 3 shuttle vessels (shuttle vessel Star was operating the Estonia-Finland route until 5 May 2023), 2 cargo vessels and 4 cruise ferries as well as 7 vessels that were chartered out (3 vessels on long-term and 4 vessels on short-term charter).
  • * The Group operated 3 hotels in Tallinn and 1 in Riga.
  • * Declining global fuel prices and the optimal fleet size had a positive impact on the Group's cost base. However, while the fuel prices have dropped the fuel transportation cost component has increased.
  • * During the quarter the Group repaid long-term loans in the amount of EUR 105 million, bringing net debt to EBITDA ratio down to 3.1 as at 30 June 2023.
  • * The Group continues to focus on cost efficiency from previously implemented measures and achieving profitable operations on its core routes.
  • * The Group regularly monitors the developments on its core routes including the capacity of each route and continues to look for new chartering options for vessels not used on the main routes and to work on extending the existing chartering agreements.

Sales and Segments

In the second quarter of 2023, the Group's total revenue increased by EUR 23.6 million to EUR 229.7 million compared to EUR 206.0 million in the second quarter of 2022.

Revenue from route operations (core business) amounted to EUR 175.0 million, which is on the same level as in the second quarter of 2022.

The number of passengers carried on the Estonia-Finland route increased by 5.0% year-on-year. The number of transported cargo units decreased by 21.4%. The decline is mostly driven by less vessels available and less trips made compared to the same period a year ago. Revenue from the Estonia-Finland route increased by EUR 1.9 million to EUR 79.8 million and the segment result improved by EUR 12.4 million to EUR 24.9 million. The segment reflects the operations of three shuttle vessels until May 2023, and two shuttle vessels from thereon. On 5 May 2023, the shuttle vessel Star was chartered out and is currently operating under the name of Oscar Wilde between Ireland and the United Kingdom. The cruise ferry Silja Europa stopped operating on the Estonia-Finland route in August 2022 due to a charter agreement. The cargo vessel Sea Wind was sold at the end of April 2022.

In the second quarter of 2023, the year-on-year decrease in the number of passengers on Finland-Sweden routes was 16.4%. The number of transported cargo units decreased by 43.2%. The decline was mostly driven by less vessels available and less trips made compared to the same period a year ago. The cruise ferry Galaxy I stopped operating on the Turku-Stockholm route from September

2022 due to a charter agreement. The routes' revenue decreased by EUR 6.3 million to EUR 70.3 million while the segment result improved by EUR 11.3 million to EUR 10.0 million, year-on-year. The segment reflects the operations of one cruise ferry on Turku-Stockholm/Kapellskär routes and two cruise ferries on the Helsinki-Stockholm route.

On Estonia-Sweden routes the number of carried passengers increased by 24.9% and the number of transported cargo units by 6.1% compared to Q2 2022. The revenue of Estonia-Sweden routes increased by EUR 5.1 million to EUR 24.8 million and segment result improved by EUR 7.7 million to EUR 3.3 million, year-on-year. Estonia-Sweden routes reflect the operation of two cargo vessels and one cruise ferry in the second quarter of 2023.

Revenue from the segment Other increased by a total of EUR 23.6 million and amounted to EUR 56.5 million. The increase was mainly driven by chartering out of vessels and accommodation sales. As at the end of second quarter 2023, the Group had 7 vessels on charter including 3 on long-term and 4 on short-term. The vessel Atlantic Vision was chartered to Canada in November 2008. The current agreement has been signed until May 2024 with an extension option for another 12 months. The agreement for chartering the cruise ferry Romantika was signed in March 2022 for three years and with the option to extend the agreement (3+1+1). Recent addition to long-term charters includes the shuttle vessel Star (from 5 May 2023) and the cruise ferry Isabelle (from 1 July 2023, on short-term charter until then) both with a purchase option. Short-term charter agreements have been signed for the cruise ferry Victoria I, Galaxy I and Silja Europa.

Earnings

In the second quarter of 2023, the Group's gross profit improved by EUR 41.0 million to EUR 66.5 million compared to EUR 25.5 million in the second quarter of 2022. EBITDA improved by EUR 39.8 million and amounted to EUR 68.5 million.

Amortisation and depreciation expense increased by EUR 1.5 million to EUR 25.3 million compared to the second quarter of the financial year 2022.

As a result of increased interest rates and increased financing obligations related to the shuttle-vessel Mystar, net finance costs increased by EUR 4.2 million year-on-year to EUR 10.0 million in the second quarter of 2023.

The Group's unaudited net profit for Q2 2023 was EUR 33.4 million or EUR 0.045 per share compared to a net loss of EUR 0.7 million or net loss of EUR 0.001 per share in Q2 2022.

Investments The Group's investments in the second quarter of 2023 amounted to EUR 4.7 million.

Majority of the investments were made in the maintenance and repair works of vessels, IT developments as well as in the re-opening of hotel in Riga in April and in the opening of a new Burger King restaurant in Riga in June.

Financial Position

At the end of Q2 2023, the Group's net debt amounted to EUR 664.9 million having decreased by EUR 70.5 million compared to the end of first quarter of 2023. The net debt to EBITDA ratio was 3.1 at the reporting date (4.2 as at 31 March 2023).

As at 30 June 2023, the Group's cash and cash equivalents amounted to EUR 57.6 million (EUR 96.5 million as at 31 March 2023) and the Group had EUR 135.0 million in unused credit lines (EUR 135.0 million as at 31 March 2023). The total liquidity buffer (cash, cash equivalents and unused credit facilities) amounted to EUR 192.6 million (EUR 231.5 million as at 31 March 2023). In the second quarter of 2023, the Group repaid loans in the total amount of EUR 105.3 million compared to loan repayments of EUR 46.0 million in the second quarter of 2022. The current trade and other payables amounted to EUR 96.3 million (EUR 87.7 million as at 31 March 2023).

Dividends

In 2018, the Group adopted a dividend policy subject to which dividends of a minimum amount of EUR 0.05 per share would be paid if the economic performance enables it.

Due to continued global uncertainties the Annual General Meeting of Shareholders held on 13 June 2023 decided not to pay dividends for the financial year 2022.

Results of the first 6 months of 2023 In the first 6 months (1 January - 30 June) of the 2023 financial year, the Group carried 2.6 million passengers which is 14.0% more compared to the same period last year. The Group's unaudited revenue for the period increased by 28.4% and amounted to EUR 400.9 million. Unaudited EBITDA for the first 6 months was EUR 95.6 million (EUR 17.7 million in January-June 2022) and unaudited net profit was EUR 28.0 million (net loss of EUR 40.7 million in January-June 2022).

The financial result of the first 6 months of 2023 was impacted by the following factors:

  • * Strong demand for travelling supported by stable consumer confidence levels in all Group's core markets. However. the volume of cargo and passenger transportation was impacted both by less vessels available due to chartering of vessels and by less trips made compared to the same period a year ago.
  • * The chartering of 7 vessels including 3 on long-term and 4 on short-term charter.
  • * Planned maintenance works of 45 days which affected the Finland-Sweden segment's first quarter passenger and cargo levels as well as the financial result.
  • * Repayment of long-term loans in the amount of EUR 124.6 million.
  • * The lower operating cost base compared to the same period in 2022 arising from chartering of vessels but also significantly lower global fuel costs.
Jan-Jun Jan-Jun
For the period Q2 2023 Q2 2022 2023 2022
-------------------------------------------------------------------------------
Revenue (EUR million)		 229.7 206.0 400.9 312.2
Gross profit/loss (EUR
million)		 66.5 25.5 91.3 5.6
EBITDA¹ (EUR million) 68.5 28.7 95.6 17.7
EBIT¹ (EUR million) 43.3 4.9 45.1 -29.7
Net profit/loss for the period
(EUR million)		 33.4 -0.7 28.0 -40.7
Depreciation and amortisation
(EUR million)		 25.3 23.8 50.5 47.5
Capital expenditures¹ ²(EUR
million)		 4.7 9.2 16.2 18.1
Weighted average number of
ordinary shares outstanding		 743 569 064 743 569 064 743 569 064 743 569 064
Earnings/loss per share¹ (EUR) 0.045 -0.001 0.038 -0.055
Number of passengers 1 541 081 1 552 174 2 590 858 2 272 435
Number of cargo units 85 359 109 380 172 091 211 318
Average number of employees 4 973 5 251 4 944 4 944
As at
-------------------------------------------------------------------------------		 30.06.2023 31.03.2023 30.06.2022 31.03.2022
Total assets (EUR million) 1 613.6 1 672.1 1 550.1 1 560.2
Total liabilities (EUR
million)		 878.4 970.5 897.8 897.8
Interest-bearing liabilities
(EUR million) 722.5 831.8 746.5 789.5
Net debt¹ (EUR million) 664.9 735.4 655.9 688.5
Net debt to EBITDA¹ 3.1 4.2 8.4 12.8
Total equity (EUR million) 735.2 701.6 652.3 652.5
Equity ratio¹ (%) 46% 42% 42% 42%
Number of ordinary shares
outstanding		 743 569 064 743 569 064 743 569 064 743 569 064
Shareholders' equity per share
(EUR)		 0.99 0.94 0.88 0.88
Jan-Jun Jan-Jun
Ratios¹ Q2 2023 Q2 2022 2023 2022
-------------------------------------------------------------------------------
Gross margin (%)		 28.9% 12.4% 22.8% 1.8%
EBITDA margin (%) 29.8% 13.9% 23.8% 5.7%
EBIT margin (%) 18.8% 2.4% 11.3% -9.5%
Net profit/loss margin (%) 14.6% -0.3% 7.0% -13.0%
ROA (%) 7.0% -1.1% 7.0% -1.1%
ROE (%) 11.8% -5.7% 11.8% -5.7%

1 Alternative performance measures based on ESMA guidelines are disclosed in the Alternative Performance Measures section of this Interim Report. 2 Does not include additions to right-of-use assets.

EBITDA: result from operating activities before net financial items, share of profit of equity-accounted investees, taxes, depreciation and amortization EBIT: result from operating activities Earnings/loss per share: net profit or loss/ 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 profit/loss margin: gross profit / net sales EBITDA margin: EBITDA / net sales EBIT margin: EBIT / net sales Net profit/loss margin: net profit or loss / net sales Capital expenditure: additions to property, plant and equipment - additions to right-of-use assets + additions to intangible assets ROA: earnings before net financial items, taxes 12-months trailing / average total assets ROE: net profit 12-months trailing / average shareholders' equity ROCE: earnings before net financial items, taxes 12-months trailing / (total assets - current liabilities (average for the period)) Net debt: interest-bearing liabilities less cash and cash equivalents Net debt to EBITDA: net debt / EBITDA 12-months trailing

Consolidated statement of profit or loss and other comprehensive income

Jan-Jun Jan-Jun
Unaudited, in thousands of EUR Q2 2023 Q2 2022 2023 2022
-------------------------------------------------------------------------------
Revenue		 229 675 206 028 400 920 312 171
Cost of sales -163 206 -180 511 -309 669 -306 554
-------------------------------------------------------------------------------
Gross profit/loss		 66 469 25 517 91 251 5 617
Sales and marketing expenses -11 292 -10 613 -20 382 -17 942
Administrative expenses -12 207 -11 766 -26 319 -22 894
Other operating income 308 1 841 593 5 575
Other operating expenses -25 -79 -33 -84
-------------------------------------------------------------------------------
Result from operating activities		 43 253 4 900 45 110 -29 728
Finance income 316 142 671 181
Finance costs -10 339 -5 961 -18 296 -11 659
-------------------------------------------------------------------------------
Profit/loss before income tax		 33 230 -919 27 485 -41 206
Income tax 219 248 540 546
Net profit/loss for the period 33 449 -671 28 025 -40 660
Net profit/loss for the period
attributable to equity holders of the
Parent		 33 449 -671 28 025 -40 660
Other comprehensive income
Items that may be reclassified to profit
or loss
Exchange differences on translating
foreign operations		 199 447 273 448
-------------------------------------------------------------------------------
Other comprehensive income for the period		 199 447 273 448
Total comprehensive profit/loss for the
period		 33 648 -224 28 298 -40 212
Total comprehensive profit/loss for the
period attributable to equity holders of
the Parent		 33 648 -224 28 298 -40 212
Profit/loss per share (in EUR)
-------------------------------------------------------------------------------		 0.045 -0.001 0.038 -0.055
Consolidated statement of financial position
Unaudited, in thousands of EUR 30.06.2023 30.06.2022 31.12.2022
-------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents 57 645 90 605 114 935
Trade and other receivables 36 069 40 783 31 380
Prepayments 12 474 18 672 9 379
Prepaid income tax 30 0 37
Inventories 42 254 44 493 39 965
-------------------------------------------------------------------------------
Current assets		 148 472 194 553 195 696
Investments in equity-accounted investees 75 165 75
Other financial assets and prepayments 4 238 3 102 3 622
Deferred income tax assets 21 840 21 840 21 840
Investment property 300 300 300
Property, plant and equipment 1 408 826 1 296 262 1 438 286
Intangible assets 29 895 33 888 31 823
-------------------------------------------------------------------------------
Non-current assets		 1 465 174 1 355 557 1 495 946
TOTAL ASSETS 1 613 646 1 550 110 1 691 642
LIABILITIES AND EQUITY
Interest-bearing loans and borrowings 169 916 254 416 165 049
Trade and other payables 96 272 107 735 86 934
Payables to owners 6 6 6
Income tax liability 35 47 35
Deferred income 59 591 43 490 44 222
-------------------------------------------------------------------------------
Current liabilities		 325 820 405 694 296 246
Interest-bearing loans and borrowings 552 597 492 112 688 465
-------------------------------------------------------------------------------
Non-current liabilities		 552 597 492 112 688 465
-------------------------------------------------------------------------------
Total liabilities 878 417 897 806 984 711
Share capital 349 477 349 477 349 477
Share premium 663 663 663
Reserves 68 401 67 354 66 363
Retained earnings
-------------------------------------------------------------------------------		 316 688 234 810 290 428
Equity attributable to equity holders of the
Parent		 735 229 652 304 706 931
Total equity
-------------------------------------------------------------------------------		 735 229 652 304 706 931
TOTAL LIABILITIES AND EQUITY 1 613 646 1 550 110 1 691 642
Consolidated statement of cash flows
Unaudited, in thousands of EUR Jan-Jun Jan-Jun
------------------------------------------------------------------------------- Q2 2023 Q2 2022 2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/loss for the period 33 449 -671 28 025 -40 660
Adjustments 34 936 29 882 67 438 58 919
Changes in:
Receivables and prepayments related to
operating activities		 844 -13 394 -7 762 -19 856
Inventories -1 411 -3 445 -2 289 -9 862
Liabilities related to operating activities
-------------------------------------------------------------------------------		 16 532 32 523 24 571 38 084
Changes in assets and liabilities 15 965 15 684 14 520 8 366
Cash generated from operating activities 84 350 44 895 109 983 26 625
Income tax repaid/paid
-------------------------------------------------------------------------------		 -44 -35 -91 -76
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, equipment and
intangible assets		 -4 656 -9 242 -16 166 -18 133
Proceeds from disposals of property, plant,
equipment		 1 2 740 80 2 781
Interest received
-------------------------------------------------------------------------------		 316 1 671 2
NET CASH USED IN INVESTING ACTIVITIES -4 339 -6 501 -15 415 -15 350
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans received -105 312 -45 988 -124 619 -45 988
Change in overdraft 15 6 696 0 18 127
Payment of lease liabilities -4 371 -4 297 -8 806 -8 512
Interest paid -9 109 -5 142 -17 230 -11 474
Payment of transaction costs related to
loans		 0 0 -1 112 -303
NET CASH FROM/USED IN FINANCING ACTIVITIES -118 777 -48 731 -151 767 -48 150
TOTAL NET CASH FLOW -38 810 -10 372 -57 290 -36 951
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning
of period		 96 455 100 977 114 935 127 556
Change in cash and cash equivalents -38 810 -10 372 -57 290 -36 951
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of
period		 57 645 90 605 57 645 90 605

NET CASH FROM/USED OPERATING ACTIVITIES 84 306 44 860 109 892 26 549

Anneli Simm Investor Relations Manager

AS Tallink Grupp Sadama 5 10111 Tallinn, Estonia E-mail [email protected]

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