Tallink Grupp

Quarterly Report • Aug 14, 2014

AS TALLINK GRUPP

Unaudited Interim Consolidated Financial Statements for the first six months of the 2014 financial year

1 Jaanuar 2014 - 30 June 2014

Beginning of the financial year	1. January 2014
End of the financial year	31. December 2014
Commercial Registry No.	10238429
Address	Sadama 5/7
	10111, Tallinn
	Estonia
Telephone	+372 6 409 800
Fax	+372 6 409 810
Internet homepage	www.tallink.com
Primary activity	maritime transportation (passenger and cargo transportation)
Auditor	KPMG Baltics OÜ

CONTENT

MANAGEMENT REPORT FOR THE INTERIM FINANCIAL STATEMENTS
Unaudited Interim Consolidated Financial Statements First six months of the financial year 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	12
CONSOLIDATED CASH FLOW STATEMENT	13
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT	14
Notes to the unaudited interim consolidated financial statements First six months of the financial year 2014	15-20
MANAGEMENT BOARD'S APPROVAL TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS	21

MANAGEMENT REPORT

In the second quarter (1 April - 30 June) of the 2014 financial year AS Tallink Grupp and its subsidiaries' (the Group) carried nearly 2.4 million passengers which is 0.5% more compared to the same period last year. The number of cargo units transported decreased by 1.0% and the number of passenger vehicles transported increased by 0.7% for the same period as last year.

The Group's consolidated revenue in the second quarter was EUR 246.5 million, being 1.0% or EUR 2.6 million less than a year ago. In the second quarter of the 2014 financial year the Group's gross profit amounted to EUR 51.0 million and EBITDA to EUR 41.1 million being respectively EUR 6.0 million and EUR 5.7 million less compared to the same period last year. The decline in the Group's results is related to maintenance and upgrade works on the vessels Star, Galaxy and Baltic Princess. In the second quarter there were less trips due to ships being out of the operation when compared to the same period in the last year.

In the second quarter the Estonia-Finland route showed a slight decline with passengers numbers decreasing by 2.7%, cargo units transported increased by 6.6%, the sales numbers remained on the last year's level. The operations were affected by the shuttle vessel Star being out of operation for 68 trips in April, undergoing car deck ramp repairs, the ship was only partially replaced during that time. In the same time the competitors on the route have increased the number of departures.

In the second quarter the segment result for the Finland-Sweden segment was EUR 4.9 million lower than last year. The decline came from the Turku-Stockholm route, where revenue decreased due to the vessels Galaxy and Baltic Princess being out of operations for scheduled maintenance works and passengers' spending showing weaknesses in an overall weak macroeconomic development. Meanwhile the recently upgraded cruise ferry Silja Serenade on the Helsinki-Stockholm route has delivered positive developments. Higher customer satisfaction and on-board spending levels are confirming that the investment was successful and has a positive effect to the business in the longer run.

The amortization cost for the 2014 financial year is higher due to the new vessel Isabelle and the group has also changed the useful life estimation of some vessels. In the second quarter the amortization cost was EUR 1.8 million higher when compared to the same period in the last year.

The unaudited net profit for the second quarter of the 2014 financial year was EUR 6.1 million or EUR 0.01 per share compared to the net profit of EUR 9.3 million or EUR 0.01 per share in the same period last year.

In June 2014 the shareholders annual general meeting decided to pay a dividend of 0.03 euros per share. The total dividend amount of EUR 20.1 million was paid out in the beginning of July 2014 (third quarter).

The unstable macro-economic situation in Europe has had a negative impact to the Groups operations. In the first six months of the financial year a noticeable drop in passenger numbers from the Russian market has been observed.

Working together with ship fuel suppliers the Group is preparing for a smooth transition from 1.0% sulphur marine fuel to low sulphur marine fuel in order to meet the new 2015 sulphur emissions regulation.

The total liquidity, cash and unused credit facilities at the end of the first quarter were EUR 75.2 million providing a strong position for sustainable operations. At the end of the second quarter 2014 the Group had EUR 70.2 million in cash and equivalents and the total of unused credit lines were at EUR 5.0 million.

Q2 KEY FIGURES		2014 Apr-Jun	2013 Apr-Jun	Change
Revenue	EUR million	246.5	249.0	-1.0%
Gross profit	EUR million	51.0	57.0	-10.6%
Gross margin (%)		20.7%	22.9%
EBITDA	EUR million	41.1	46.8	-12.3%
EBITDA margin (%)		16.7%	18.8%
Net profit for the period	EUR million	6.1	9.3	-34.2%
Net profit margin (%)		2.5%	3.7%
Depreciation and amortization	EUR million	20.0	18.2	9.6%
Investments	EUR million	20.4	35.9	-43.3%
Weighted average number of ordinary shares outstanding		669 882 040	669 882 040
Earnings per share	EUR	0.01	0.01	-34.2%
Number of passengers		2 363 510	2 352 487	0.5%
Number of cargo units		79 055	79 843	-1.0%
Average number of employees		7 124	7 029	1.6%

		30.06.2014	31.03.2014
Total assets	EUR million	1 712.0	1 711.8	0.0%
Interest-bearing liabilities	EUR million	782.0	811.5	-3.6%
Net debt	EUR million	711.8	748.9	-5.0%
Total equity	EUR million	733.9	747.8	-1.9%
Equity ratio (%)		42.9%	43.7%
Net debt to EBITDA		4.8	4.9
Number of ordinary shares outstanding1		669 882 040	669 882 040	0%
Shareholders' equity per share	EUR	1.10	1.12	-1.9%

EBITDA: Earnings before net financial items, taxes, depreciation and amortization;

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;

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 & SEGMENT RESULTS

The following table provides an overview of the quarterly sales development by operational segments:

	Q2	Q3	Q4	Q1	Q2	change
in millions of euros	2013	2013	2014	2014	2014	y-o-y
Ticket sales	66.0	86.2	53.0	40.6	62.6	-5.2%
Restaurant & shop sales	133.2	142.9	124.9	103.9	133.0	-0.1%
Cargo sales	28.4	25.9	26.7	26.5	26.8	-5.9%
Accommodation sales	4.8	6.1	4.0	3.4	5.3	9.4%
Leases of vessels	7.3	8.9	7.4	8.4	8.4	14.9%
Other sales	9.3	8.5	7.9	5.4	10.5	12.2%
Total revenue	249.0	278.5	224.0	188.2	246.5	-1.0%

The following table provides an overview of the quarterly sales and result development by geographical segments:

								Q2
			Q2	Q3	Q4	Q1	Q2	change
			2013	2013	2013	2014	2014	y-o-y
Finland-	Passengers	th.	1 208	1 371	1 102	935	1 176	-2.7%
Estonia	Cargo units	th.	40	39	39	39	42	6.6%
	Revenue	mil.EUR	84.3	90.9	80.4	65.0	84.5	0.2%
	Segment result	mil.EUR	23.5	28.4	21.8	10.9	22.3	-5.1%
Finland-	Passengers	th.	700	823	656	592	708	1.1%
Sweden	Cargo units	th.	24	22	25	23	22	-11.6%
	Revenue	mil.EUR	86.4	100.9	80.9	68.4	84.2	-2.5%
	Segment result	mil.EUR	5.3	14.9	0.3	-7.9	0.4	-92.9%
Sweden-	Passengers	th.	240	283	218	217	266	11.0%
Estonia	Cargo units	th.	11	10	10	10	11	-1.3%
	Revenue	mil.EUR	27.5	33.2	23.0	20.6	27.8	1.2%
	Segment result	mil.EUR	2.6	7.7	-1.0	-3.5	2.3	-11.4%
Sweden-	Passengers	th.	204	242	172	161	214	4.6%
Latvia	Cargo units	th.	5	4	5	5	4	-8.8%
	Revenue	mil.EUR	18.7	23.8	15.6	13.3	18.6	-0.5%
	Segment result	mil.EUR	0.1	4.7	-1.2	-3.2	0.0	-27.1%
Other	Revenue	mil.EUR	34.9	33.2	26.5	22.7	34.2	-2.0%
	Segment result	mil.EUR	7.9	8.1	3.6	-0.3	9.9	25.6%
	Inter segment sales	mil.EUR	-2.8	-3.6	-2.4	-1.8	-2.9	5.1%
	Total revenue	mil.EUR	249.0	278.4	224.0	188.2	246.5	-1.0%
	EBITDA	mil.EUR	46.8	72.5	29.8	4.5	41.1	-12.3%
	Total segment result	mil.EUR	39.4	63.9	23.5	-4.0	35.0	-11.2%
	Net profit/-loss	mil.EUR	9.3	44.0	7.5	-23.4	6.1	-34.2%

Segment result - result before administrative expenses, financial expenses and taxes

The following graphs provide an overview of the sales distribution in the second quarter on operational and geographical segment based approach.

The following table provides an overview of the passengers, cargo units and passenger vehicles transported during the first half-year and second quarter of 2014 and 2013 financial years.

	Q2	Q2	Q2	I half-year	I half-year	I half-year
	2014	2013	Change	2014	2013	Change
Passengers	2 363 510	2 352 487	0.5%	4 269 065	4 247 830	0.5%
Finland-Sweden	707 753	700 196	1.1%	1 300 006	1 331 158	-2.3%
Estonia-Finland	1 175 829	1 208 082	-2.7%	2 111 077	2 103 381	0.4%
Estonia-Sweden	266 162	239 874	11.0%	483 147	453 282	6.6%
Latvia-Sweden	213 766	204 335	4.6%	374 835	360 009	4.1%
Cargo Units	79 055	79 843	-1.0%	155 846	146 846	6.1%
Finland-Sweden	21 596	24 437	-11.6%	44 618	48 325	-7.7%
Estonia-Finland	42 289	39 672	6.6%	81 042	68 559	18.2%
Estonia-Sweden	10 797	10 940	-1.3%	21 102	20 627	2.3%
Latvia-Sweden	4 373	4 794	-8.8%	9 084	9 335	-2.7%
Passenger Vehicles	299 048	297 042	0.7%	514 061	503 789	2.0%
Finland-Sweden	44 178	46 123	-4.2%	65 066	70 618	-7.9%
Estonia-Finland	210 540	209 106	0.7%	373 251	359 840	3.7%
Estonia-Sweden	20 962	18 665	12.3%	33 938	32 237	5.3%
Latvia-Sweden	23 368	23 148	1.0%	41 806	41 094	1.7%

The following operational factors influenced the development:

LATVIA-SWEDEN

In May 2013 the cruise ferry Isabelle replaced the cruise ferry Silja Festival on the Riga-Stockholm route.

The Group's market shares on the routes operated during a 12 month period ending 30 June 2014 were as follows:

• The Group carried approximately 57% of the passengers and 61% of ro-ro cargo on the route between Tallinn and Helsinki;
• The Group is the only provider of daily passenger transportation between Estonia and Sweden.
• The Group is the only provider of daily passenger and ro-ro cargo transportation between Riga and Stockholm;
• The Group carried approximately 52% of passengers and 35% of ro-ro cargo on the routes between Finland and Sweden;

PERSONNEL

30 June 2014 the Group employed 7 461 employees (7 436, 30 June 2013).The following table provides a more detailed overview of the Group's personnel.

		Average of 2nd quarter		Average of 1st half-year				End of 2nd quarter
	2014	2013	change %	2014	2013	change %	30.06.14	30.06.13	change %
Onshore total	1 584	1 599	-0.9%	1 562	1 578	-1.0%	1 618	1 661	-2.6%
Estonia	810	812	-0.2%	806	805	0.1%	810	823	-1.6%
Finland	494	505	-2.2%	483	499	-3.2%	522	531	-1.7%
Sweden	193	197	-2.0%	187	191	-2.1%	199	217	-8.3%
Latvia	73	71	2.8%	72	68	5.9%	73	76	-3.9%
Germany	4	4	0.0%	4	4	0.0%	4	4	0.0%
Russia	10	10	0.0%	10	11	-9.1%	10	10	0.0%
At sea	4 921	4 843	1.6%	4 839	4 740	2.1%	5 191	5 170	0.4%
Hotel*	619	587	5.5%	605	581	4.1%	652	605	7.8%
Total	7 124	7 029	1.4%	7 006	6 899	1.6%	7 461	7 436	0.3%

* The number of hotel personnel is not included in the total number of ashore personnel.

CORPORATE STRUCTURE

On the report date, the Group consisted of 45 companies. All of the subsidiaries are wholly-owned companies of AS Tallink Grupp. The following chart describes the structure of the Group as on the date of reporting:

The Group also owns:

34% of AS Tallink Takso

SHAREHOLDERS & SHARE PRICE DEVELOPMENT

The following chart displays the shareholder structure of AS Tallink Grupp as of 30 June 2014.

Since the 9 th of December 2005 the shares of AS Tallink Grupp are listed on the Tallinn Stock Exchange, where the shares are traded under the symbol TAL1T. The following chart gives an overview of the share price development in the past twelve months.

Source: Nasdaq OMX Baltic

EVENTS IN Q2

In April the shuttle vessel Star did not operate 11 days due to the car deck repairs, the vessel was partially replaced by cruise ferries Victoria I and Baltic Queen. The cruise ferry Isabelle did not operate for 8 days due to scheduled maintenance, the vessel was not replaced during that time.

In May the cruise ferries Galaxy and Baltic Princess did not operate for 9 and 11 days respectively due to the scheduled maintenance, the vessels were not replaced during that time.

EVENTS AFTER THE BALANCE SHEET DATE AND THE OUTLOOK

The Group's earnings are not generated evenly throughout the year. Summer period is the high season in the Group's operations. In the opinion of the management and based on the experience of the previous financial years the majority of the earnings are generated during summer (June-August).

AS Tallink Grupp and Bridgemans Services Ltd. entered into a charter agreement to charter the cruise ferry Silja Europa to Australia from August 2014 as an accommodation vessel. The period of the charter is at least 14 months with an option to extend up to 48 months. In relation to charter the following re-routings were done in our operations: Baltic Queen which was operating on Tallinn-Stockholm today changed to Tallinn-Helsinki route on 7 August 2014 and Romantika which is was operating on Riga-Stockholm route changed to Tallinn-Stockholm route. Isabelle continues the service on Riga-Stockholm route.

With an aim to increase revenue generation improvements in product development are being made, emphasis is on retail sales and upgrades to the public areas on selected vessels.

Following the successful launch of the refurbished Silja Serenade, the sister ship Silja Symphony will be upgraded similarly, in autumn 2014. In 2014 the Group plans to invest altogether more than EUR 20 million in upgrading the vessels on the Helsinki-Stockholm route.

AS Tallink Grupp does not have any substantial on-going research and development projects.

The Group does not have any major investment commitments currently.

Due to increased competition and continuously weak Nordic economic environment the Management expects the results to be weaker for the 2014 financial year compared to the last year.

RISKS

The Group's business, financial condition and results from operations could be materially affected by various risks. These risks are not the only ones. Additional risks and uncertainties not presently known to us, or that we currently believe are immaterial or unlikely, could also impair our business. The order of presentation of the risk factors below is not intended to be an indication of the probability of their occurrence or of their potential effect on our business.

• Accidents, disasters
• Macroeconomic development
• Changes in laws and regulations
• Relations with trade unions
• Increase in the fuel prices and interest rates
• Market and customer behaviour

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(unaudited, in thousands of euros)	01.04.2014- 30.06.2014	01.04.2013- 30.06.2013	01.01.2014- 30.06.2014	01.01.2013- 30.06.2013
Revenue (Note 3)	246,463	249,027	434,669	439,610
Cost of sales	-195,503	-192,055	-371,922	-366,394
Gross profit	50,960	56,972	62,747	73,216
Marketing expenses	-16,001	-17,583	-31,799	-33,716
Administrative expenses	-13,888	-11,161	-25,277	-22,401
Other income	312	482	525	808
Other expenses	-292	-117	-340	-129
Result from operating activities	21,091	28,593	5,856	17,778
Finance income (Note 4)	551	8,609	3,867	11,213
Finance costs (Note 4)	-10,192	-19,017	-21,637	-28,323
Profit/-loss before income tax	11,450	18,185	-11,914	668
Income tax	-5,349	-8,911	-5,359	-8,919
Net profit/-loss for the period	6,101	9,274	-17,273	-8,251
Other comprehensive income/-expense
Items that may be reclassified to profit or loss
Exchange differences on translating foreign	-51	68	8	77
operations
Other comprehensive income/-expense for the
period	-51	68	8	77
Total comprehensive income/-expense for the
period	6,050	9,342	-17,265	-8,174
Earnings per share (in EUR per share)
- basic (Note 5)	0.01	0.01	-0.03	-0.01
- diluted (Note 5)	0.01	0.01	-0.03	-0.01

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, in thousands of euros)

ASSETS	30.06.2014	31.12.2013
Current assets
Cash and cash equivalents	70,214	72,012
Trade and other receivables	46,544	40,544
Prepayments	10,171	3,185
Derivatives	0	679
Inventories	32,189	33,457
Total current assets	159,118	149,877
Non-current assets
Investments in equity-accounted investees	262	262
Other financial assets	252	385
Deferred income tax assets	17,413	17,413
Investment property	300	300
Property, plant and equipment (Note 7)	1,478,535	1,495,895
Intangible assets (Note 8)	56,095	57,925
Total non-current assets	1,552,857	1,572,180
TOTAL ASSETS	1,711,975	1,722,057
LIABILITIES AND EQUITY
Current liabilities
Interest bearing loans and borrowings (Note 9)	132,445	106,014
Trade and other payables	104,680	97,387
Dividends payable (Note 12, 14)	20,096	0
Deferred income	41,646	28,315
Derivatives (Note 6)	29,600	30,888
Total current liabilities	328,467	262,604
Non-current liabilities
Interest bearing loans and borrowings (Note 9)	649,591	688,327
Other liabilities	61	63
Total non-current liabilities	649,652	688,390
TOTAL LIABILITIES	978,119	950,994
EQUITY
Equity attributable to equity holders of the parent
Share capital	404,290	404,290
Share premium	639	639
Reserves	72,444	70,111
Retained earnings	256,483	296,023
Total equity attributable to equity holders of the parent	733,856	771,063
TOTAL EQUITY	733,856	771,063
TOTAL LIABILITIES AND EQUITY	1,711,975	1,722,057

CONSOLIDATED CASH FLOW STATEMENT

(unaudited, in thousands of euros)	01.01.2014 - 30.06.2014	01.01.2013- 30.06.2013
Cash flows from operating activities
Net profit/-loss for the period	-17,273	-8,251
Adjustments	64,136	66,397
Changes in receivables and prepayments related to operating	-12,844	-15,320
activities
Changes in inventories	1,268	-561
Changes in liabilities related to operating activities	15,615	18,778
Income tax paid	-4	-203
	50,898	60,840
Cash flow used for investing activities
Purchase of property, plant and equipment and intangible assets	-20,351	-35,865
(Notes 7, 8, 9)
Proceeds from disposals of property, plant and equipment	114	265
Interest received	9	16
	-20,228	-35,584
Cash flow from (+)/ used for (-) financing activities
Proceeds from loans	0	24,000
Redemption of loans (Note 9)	-39,920	-148,205
Change in overdraft (Note 9)	26,589	4,812
Proceeds from bonds	0	115,487
Repayment of finance lease liabilities (Note 9)	-97	-3
Interest paid	-17,040	-16,006
Payments for settlement of derivatives	-2,000	-2,247
Payment of transaction costs related to loans	0	-565
	-32,468	-22,727
TOTAL NET CASH FLOW	-1,798	2,529
Cash and cash equivalents:
- at the beginning of period	72,012	65,600
- increase (+) / decrease (-)	-1,798	2,529
Cash and cash equivalents at the end of period	70,214	68,129

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(unaudited, in thousands of euros)	Share	Share	Translation	Ships	Mandatory	Reserve for	Share	Retained	Share	Total
	capital	premium	reserve	revaluation	legal	treasury	option	earnings	holders'	equity
				reserve	reserve	shares	programme reserve		equity
At 31 December 2012	404,290	639	-102	58,993	13,836	-4,163	527	286,810	760,830	760,830
Changes in equity for the period
Transfer from profit for 2012	0	0	0	0	2,815	0	0	-2,815	0	0
Dividends	0	0	0	0	0	0	0	-33,494	-33,494	-33,494
Share-based payment transactions (Note
11)	0	0	0	0	0	0	158	0	158	158
Total comprehensive income and expense
for the period
Net profit/-loss for the period (Note 5)	0	0	0	0	0	0	0	-8,251	-8,251	-8,251
Total other comprehensive income and expense	0	0	77	0	0	0	0	0	77	77
Total comprehensive income and
expense for the period	0	0	77	0	0	0	0	-8,251	-8,174	-8,174
At 30 June 2013	404,290	639	-25	58,993	16,651	-4,163	685	242,250	719,320	719,320
At 31 December 2013	404,290	639	12	56,777	16,651	-4,163	834	296,023	771,063	771,063
Changes in equity for the period
Transfer from profit for 2013	0	0	0	0	2,171	0	0	-2,171	0	0
Dividends (Note 12)	0	0	0	0	0	0	0	-20,096	-20,096	-20,096
Share-based payment transactions (Note
11)	0	0	0	0	0	0	154	0	154	154
Total comprehensive income and expense
for the period
Net profit/-loss for the period (Note 5)	0	0	0	0	0	0	0	-17,273	-17,273	-17,273
Total other comprehensive income and expense	0	0	8	0	0	0	0	0	8	8
Total comprehensive income and
expense for the period	0	0	8	0	0	0	0	-17,273	-17,265	-17,265
At 30 June 2014	404,290	639	20	56,777	18,822	-4,163	988	256,483	733,856	733,856

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 CORPORATE INFORMATION

The interim consolidated financial statements of AS Tallink Grupp and its subsidiaries (hereinafter as "the Group") for the first 6 months of the financial year 2014 were authorised for issue in accordance with a resolution of the Management Board on 14 August 2014. AS Tallink Grupp is a limited company incorporated in Estonia and employed 7,461 people at 30 June 2014 (31 December 2013: 6,907).

Note 2 BASIS OF PREPARATION

The interim consolidated financial statements of AS Tallink Grupp have been prepared in a condensed form in accordance with IFRS as adopted by EU and in accordance with the requirements of International Accounting Standard (IAS) 34 "Interim Financial Reporting".

The same accounting policies and methods of computation are followed in the interim consolidated financial statements as in the annual consolidated financial statements of AS Tallink Grupp for the financial year ended on 31 December 2013.

The interim consolidated financial statements have been prepared in thousand euros (EUR).

Note 3 SEGMENT INFORMATION

The Group's operations are organised and managed separately according to the nature of the different markets. The routes represent different business segments. The following tables present the Group's revenue and profit information regarding reportable segments for the reportable and comparable period.

Geographical segments

(in thousands of euros)

01.01.2014-30.06.2014	Estonia- Finland route	Estonia- Sweden routes	Latvia- Sweden route	Finland- Sweden routes	Others Elimination of intersegment sales		Total
Revenue
Sales to external customers	149,514	48,422	31,965	152,637	52,131	0	434,669
Inter-segment sales	0	0	0	0	4,769	-4,769	0
	149,514	48,422	31,965	152,637	56,900	-4,769	434,669
Segment result	33,164	-1,197	-3,147	-7,491	9,619	0	30,948
Unallocated expenses							-25,092
Net financial items (Note 4)							-17,770
Profit/-loss before income tax							-11,914

01.01.2013-30.06.2013	Estonia- Estonia- Latvia- Finland- Finland Sweden Sweden Sweden route routes route routes		Others	Elimination of intersegment sales
Revenue
Sales to external customers	146,089	48,783	32,546	161,377	50,815	0	439,610
Inter-segment sales	0	0	0	0	4,338	-4,338	0
	146,089	48,783	32,546	161,377	55,153	-4,338	439,610
Segment result	32,759	870	-2,459	145	8,185	0	39,500
Unallocated expenses							-21,722
Net financial items (Note 4)							-17,110
Profit/-loss before income tax							668

Revenue by service

(in thousands of euros)	01.01.2014- 30.06.2014	01.01.2013- 30.06.2013
Ticket sales	103,188	110,036
Sales of cargo transport	53,282	52,962
Sales of accommodation	8,651	7,911
Restaurant and shops sales on-board and on
mainland	236,905	239,464
Income from leases of vessels	16,818	14,526
Other	15,825	14,711
Total revenue of the Group	434,669	439,610

Note 4 FINANCE INCOME AND FINANCE COSTS

(in thousands of euros)	01.01.2014- 30.06.2014	01.01.2013- 30.06.2013
Net foreign exchange gains	1,700	6,112
Income from interest rate swaps	900	5,047
Income from foreign exchange derivatives	1,236	0
Interest income	31	54
Total finance income	3,867	11,213
Interest expenses	-16,958	-17,497
Expenses from interest rate swaps	-3,527	-2,247
Expenses from foreign exchange derivatives	-1,152	-8,579
Total finance costs	-21,637	-28,323

Note 5 EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The outstanding share options have no diluting effect due to their exercise price being higher than the average price in the stock market during the reporting period.

	01.04.2014-	01.04.2013-	01.01.2014-	01.01.2013-
	30.06.2014	30.06.2013	30.06.2014	30.06.2013
Weighted average number of ordinary shares, basic
(pcs)	669,882,040	669,882,040	669,882,040	669,882,040
Effect of share options on issue	0	1,898,207	0	1,558,194
Weighted average number of ordinary shares, diluted
(pcs)	669,882,040	671,780,247	669,882,040	671,440,234
Net profit/-loss attributable to ordinary shareholders	6,101	9,274	-17,273	-8,251
Earnings per share, basic (in EUR per share)	0.01	0.01	-0.03	-0.01
Earnings per share, diluted (in EUR per share)	0.01	0.01	-0.03	-0.01

Weighted average number of ordinary shares

(pcs)	01.04.2014-	01.04.2013-	01.01.2014-	01.01.2013-
	30.06.2014	30.06.2013	30.06.2014	30.06.2013
Issued ordinary shares at the beginning of period	673,817,040	673,817,040	673,817,040	673,817,040
Effect of own shares held	-3,935,000	-3,935,000	-3,935,000	-3,935,000
Weighted average number of ordinary shares at the
end of period	669,882,040	669,882,040	669,882,040	669,882,040

Note 6 DERIVATIVE INSTRUMENTS

The Group uses interest rate swaps to manage its exposure to movements in interest rates. Where the effectiveness of the hedge relationship in a cash flow hedge is demonstrated, changes in the fair value are included in the hedging reserve in shareholders' equity and released to match actual payments on the hedged item. Changes in fair value of derivatives which do not qualify for hedge accounting under IAS 39 are recognized directly in the income statement.

As of 30.06.2014 AS Tallink Grupp had three interest rate derivative contracts with total notional amount of EUR 270,000 thousand with the maturities in years 2014, 2018,2019 and two cross-currency rate derivative contracts with total notional amount of EUR 120,000 thousand with the maturities in year 2018. The fair value of the interest rate derivatives recognized in the current interim financial statements as of 30.06.2014 is EUR-14,586 thousand. The fair value of the cross-currency rate derivatives recognized in the current interim financial statements as of 30.06.2014 is EUR -15,014 thousand.

Note 7 PROPERTY, PLANT AND EQUIPMENT

(in thousands of euros)

	Land and		Plant and
	building	Ships	equipment	Prepayments	Total
Book value as of 31 December
2013		4,841 1,479,030	9,572		2,452 1,495,895
Additions	51	16,768	2,950	-675	19,094
Exchange rate differences	0	0	3	0	3
Disposals	0	0	-95	0	-95
Depreciation for the period	-569	-33,895	-1,898	0	-36,362
Book value as of 30 June 2014		4,323 1,461,903	10,532		1,777 1,478,535

As of 30 June 2014 -gross carrying amount 12,833 1,695,267 30,016 1,777 1,739,893 -accumulated depreciation -8,510 -233,364 -19,484 0 -261,358

	Land and building	Ships	Plant and equipment	Prepayments	Total
Book value as of 31 December
2012		5,653 1,509,889	11,007		446 1,526,995
Additions	221	31,390	2,968	35	34,614
Reclassification	0	2,135	-2,135	0	0
Disposals	-214	0	-779	0	-993
Depreciation for the period	-206	-31,333	-2,115	0	-33,654
Book value as of 30 June 2013		5,454 1,512,081	8,946		481 1,526,962
As of 30 June 2013
-gross carrying amount		12,639 1,681,084	28,448		481 1,722,652
-accumulated depreciation	-7,185	-169,003	-19,502	0	-195,690

Note 8 INTANGIBLE ASSETS

(in thousands of euros)

	Goodwill	Trademark	Others	Total
Book value as of 31 December 2013	11,066	36,418	10,441	57,925
Additions	0	0	1,506	1,506
Amortisation for the period	0	-1,458	-1,878	-3,336
Book value as of 30 June 2014	11,066	34,960	10,069	56,095
As of 30 June 2014
-cost	11,066	58,288	26,978	96,332
-accumulated amortisation	0	-23,328	-16,909	-40,237

	Goodwill	Trademark	Others	Total
Book value as of 31 December 2012	11,066	39,334	8,599	58,999
Additions	0	0	1,251	1,251
Amortisation for the period	0	-1,458	-963	-2,421
Book value as of 30 June 2013	11,066	37,876	8,887	57,829
As of 30 June 2013
-cost	11,066	58,288	23,495	92,849
-accumulated amortisation	0	-20,412	-14,608	-35,020

Note 9 INTEREST BEARING LOANS AND BORROWINGS

(in thousands of euros)	31 December 2013	New loans	Repayments	Exchange rate differences	Other changes [1]	30 June 2014
Liabilities under finance
lease	237	249	-97	0	0	389
Bonds	106,389	0	0	-514	128	106,003
Overdraft	18,456	26,589	0	0	0	45,045
Long-term bank loans	669,259	0	-39,920	0	1,260	630,599
TOTAL	794,341	26,838	-40,017	-514	1,388	782,036
incl. current portion	106,014					132,445
Non-current portion	688,327					649,591

[1] Other changes are related to capitalisation and amortisation of transaction costs.

Bonds are nominated in NOK.

Bank overdrafts are secured with commercial pledge (in the total amount of EUR 20,204 thousand) and ship mortgages.

AS Tallink Grupp has given guarantees to HSH Nordbank AG, Nordea Bank Plc, Danske Bank A/S, Swedbank AS and HSBC Bank Plc for the loans granted to overseas subsidiaries amounting to EUR 245,611 thousand and overseas subsidaris have given guarantees to Nordea Bank Finland Plc and Swedbank AS for the loans granted to AS Tallink Grupp amounting to EUR 384,988 thousand. The primary securities for these loans are the pledge of shares of the overseas subsidiaries and mortgages on the ships belonging to the abovementioned subsidiaries.

Note 10 SHARE CAPITAL

According to the Articles of Association of the Parent effective as of 30 June 2014 the maximum number of authorised common shares is 2,133,333,333.

At 30 June 2014 the Group held 3,935 thousand of the AS Tallink Grupp shares. Total cost of share buyback transactions of 3,935 thousand shares is EUR 4,163 thousand.

Note 11 SHARE OPTION PROGRAMME

In June 2011 the Group issued 7,317,500 share options of which 3,510,000 to the Management Board and Supervisory Board members and 3,807,500 to other Group employees. Each option gives right to purchase one share of AS Tallink Grupp. The share options were issued in accordance of the Share Option Programme which resolution was adopted at the Shareholders General Meeting on 08.02.2011. The options issued represent around 49% of the total authorized limit and 1.1% of the total shares outstanding. The terms and conditions of exercise of the issued share options are following: non-transferable; exercisable not earlier than 36 months from issue or 31.05.2014 and not later than 30.11.2014; exercise price EUR 0.858 in case of new shares issued or average acquisition cost in case existing shares will be purchased from the market; options are to be settled by physical delivery of shares.

The fair value of the services received in return for share options granted is based on the fair value of share options granted, measured using the Black-Scholes model as of grant date. The Group used independent external advisor for the valuation share options who in addition to the share options terms and conditions used the following inputs for measurement: spot price of share EUR 0.72 as of 31.05.2011; expected volatility 30% based on historic analyse; option average time to maturity 42 months; the 3.4% and 8.1% annual dividend yields in 2012 and 2013 result in an effective dividend yield of 11.3% (based on the equity analysts' consensus) and; risk-free interest rate 1.411%.

In June 2011 the fair value of the received services in amount of EUR 527 thousand is recorded as an expense in the consolidated statement of comprehensive income and the fair value of share options in the same amount is held as a share option reserve in the equity.

In December 2012 the Group issued 7,610 thousand share options of which 3,850 thousand to the Management Board and Supervisory Board members and 3,760 thousand to other Group employees. Each option gives right to purchase one share of AS Tallink Grupp. The share options were issued in accordance of

the Share Option Programme which resolution was adopted at the Shareholders General Meeting on 08 February 2011. The terms and conditions of exercise of the issued share options are following: nontransferable; exercisable not earlier than 36 months from issue or 21 December 2015 and not later than 21 June 2016; exercise price EUR 0.858 in case of new shares issued or average acquisition cost in case existing shares will be purchased from the market; options are to be settled by physical delivery of shares.

The fair value of the services received in return for share options granted is based on the fair value of share options granted, measured using the Black-Scholes model as of grant date. The Group used independent external advisor for the valuation share options who in addition to the share options terms and conditions used the following inputs for measurement: spot price of share EUR 0.848 at grant date; expected volatility 30% based on historic analysis; option average time to maturity 42 months; the 3.5% annual dividend yield and; risk-free interest rate 0.336%.

The value of the options issued at the end of 2012 in the amount EUR 951 thousand will be recorded as an expense during the vesting period 36 months from the beginning of 2013.

At 30 June 2014 14,692,768 share options were valid and outstanding. Average remaining time to maturity of the outstanding share options is 2-27 months.

The outstanding share options have not diluting effect due to their exercise price being higher than the average price in the stock market during the period.

Note 12 DIVIDENDS

According to the resolution of the Annual General Meeting there were announced dividends to the shareholders 0.03 euros per share, in the total amount of EUR 20,096,461.20.

Note 13 RELATED PARTY DISCLOSURES

(in thousands of euros)
6 months of 2014	Sales to	Purchases from	Receivables from	Payables
or 30.06.2014	related parties	related parties		related parties to related parties
AS Infortar	49	23	10	5
AS HT Valuuta	59	0	1	0
AS Vara HTG	0	959	0	0
OÜ Mersok	0	5	0	1
AS Vaba Maa	7	276	1	40
OÜ Sunbeam	0	1,726	0	0
AS Gastrolink	0	551	0	91
AS Tallink Takso	1	25	0	10
OÜ Topspa Kinnisvara	0	1,317	0	0
OÜ Hansa Hotell	0	418	0	0
OÜ Fastinvest	0	621	0	0
SIA Happy Trails	0	1,652	0	428
Eesti Laevaomanike Liit	0	7	0	0
SEB Tallink Tennis Team	0	50	0	0
OÜ Inf Maja	1	0	1	0
6 months of 2013	Sales to	Purchases from	Receivables from	Payables
or 30.06.2013	related parties	related parties		related parties to related parties
AS Infortar	34	27	8	5
AS HT Valuuta	58	0	1	0
AS Vara HTG	0	959	0	0
OÜ Mersok	0	5	0	1
AS Vaba Maa	10	281	2	79
OÜ Sunbeam	0	1,684	0	0
AS Gastrolink	1	502	0	83
AS Tallink Takso	0	36	0	8
OÜ Topspa Kinnisvara	0	1,285	0	0
OÜ Hansa Hotell	0	408	0	0
OÜ Fastinvest	0	601	0	0
SIA Happy Trails	0	1,667	0	323
Eesti Laevaomanike Liit	0	6	0	0
SEB Tallink Tennis Team	5	50	5	0

Note 14 SUBSEQUENT EVENTS

Announced dividends were paid out on 08.07.2014.