Tallink Grupp

Quarterly Report • May 12, 2016

AS TALLINK GRUPP

Unaudited Consolidated Interim Financial Statements for the first quarter of the 2016 financial year

1 January 2016 – 31 March 2016

Beginning of the financial year	1. January 2016
End of the financial year	31. December 2016
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	3
Unaudited Consolidated Interim Financial Statements First quarter of the financial year 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	14
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	15
CONSOLIDATED CASH FLOW STATEMENT	16
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT	17
Notes to the unaudited consolidated interim financial statements First quarter of the financial year 2016	18-23
MANAGEMENT BOARD'S APPROVAL TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS	24

MANAGEMENT REPORT

In the first quarter (1 January - 31 March) of the 2016 financial year AS Tallink Grupp and its subsidiaries (the Group) carried 2.0 million passengers which is 8.9% more compared to the first quarter last year. The Group's unaudited revenue for the first quarter increased by EUR 2.7 million or 1.4% to the total of EUR 192.8 million. Unaudited EBITDA decreased by EUR 3.2 million or 16.3% to the total of EUR 16.3 million, unaudited net result improved by EUR 1.3 million or 9.9% compared to the same period last year and net loss amounted to EUR 12.0 million.

In the first quarter, which is also the low season, the number of passengers increased in all operated routes. The Group also increased the total revenue mainly from higher on-board sales despite less departures due to maintenance and lower revenue from the chartering activity. Compared to the same period last year the first quarter result was affected by noticeably lower revenues from chartering related to the sale of vessels Regina Baltica and Silja Festival, and termination of cruise ferry Silja Europa charter. However, the Group was able to exceed the reduction of charter revenues with higher revenues from main routes. The first quarter profitability was influenced also by onetime expenses from cruise ferry Silja Europa start of operations on Estonia-Finland route. The fast ferry Superstar sale and charter back transaction will impact the result of the current financial year. As a result of these operational changes, in the first quarter there are lower amortization and finance costs but higher operating costs, which resulted lower EBITDA and improved net result.

The Estonia-Finland routes first quarter revenue increased by 4.1% compared to same period last year. The increase is driven mainly by growth in the passenger number, cargo volume was on level with last year. The cruise ferry Silja Europa started daily operations on Tallinn-Helsinki route cruise service on 13th of March 2016. The Estonia-Finland segment result for the first quarter was lower compared to the same period last year due to the cost of charter of the fast ferry Superstar and also onetime costs related to the preparations of the cruise ferry Silja Europa return to the route.

The Finland-Sweden routes first quarter revenue increased by 5.0% compared to same period last year, the increase is supported by a 6.8% growth in the passenger number. The number of cargo units transported increased by 4.0%.

The Estonia-Sweden route revenue increase of 15.5% was mainly driven by a 13.3% increase of passenger number and higher cargo volume. The Latvia-Sweden route showed slightly higher revenue compared with the first quarter last year.

In the first quarter the Group's restaurants and shop sales increased by EUR 8.8 million or 8.7%, compared to the same period last year. The sales growth is supported mainly by the higher number of passengers travelling with the Group's operated ships.

The revenue from the leases of vessels has reduced by EUR 6.8 million or 43.2% in the first quarter due to fewer ships are chartered out, compared to the same period last year.

The Group has continuous focus on improving the public areas and cabins in ships to support the customer satisfaction and revenue growth. In the first quarter, the capital expenditure amounted to total of EUR 12.7 million. Along with the routine maintenance of vessels, number of investments were made to the shops, restaurants and cabins on the cruise ferries Silja Symphony and Silja Europa. On the Tallink Shuttle ferry Star the world's first floating BURGER KING® restaurant was opened.

In the first quarter of the 2016 financial year the Group's gross profit amounted to EUR 26.5 million which is on level compared to the same period last year and EBITDA decreased by EUR 3.2 million to the total of EUR 16.3 million. The first quarter profitability was impacted by lower total fuel cost but also higher marketing costs, cost of charter of the fast ferry Superstar and onetime costs related to changes in operations. Onetime costs from operations were related to preparations of the cruise ferry Silja Europa return to the route and launching of the Group operated Tallink Logistics Center.

In the first quarter, the depreciation and amortization cost reduced by EUR 0.8 due to the sale of three vessels in 2015. Total finance costs decreased by EUR 2.3 million mainly due to lower interest cost from regular repayment of loans and also repayment of loans related to sale of ships.

The unaudited net loss for the first quarter of the 2016 financial year was EUR 12.0 million or EUR 0.018 per share compared to the net loss of EUR 13.3 million or EUR 0.020 per share in the same period last year.

Cash flow from operations was EUR 16.7 million in first quarter, which is a EUR 1.0 million lower compared to the same period last year. The total liquidity, cash and unused credit facilities, at the end of the first quarter was EUR 136.3 million (EUR 68.8 million, 31 March 2015) providing a strong financial position for sustainable operations. The Group had EUR 91.7 million (EUR 66.3 million, 31 March 2015) in cash and equivalents and the total of unused credit lines were at EUR 44.6 million (EUR 2.5 million, 31 March 2015).

Q1 KEY FIGURES

		2016	2015
		Jan-Mar	Jan-Mar	Change
Revenue	EUR million	192.8	190.2	1.4%
Gross profit	EUR million	26.5	26.1	1.4%
Gross margin		13.7%	13.7%
EBITDA	EUR million	16.3	19.5	-16.3%
EBITDA margin		8.4%	10.2%
Net profit for the period	EUR million	-12.0	-13.3	9.9%
Net profit margin adjusted		-6.2%	-7.0%
Depreciation and amortization	EUR million	19.6	20.4	-3.7%
Investments	EUR million	12.6	3.6	251.0%
Weighted average number of ordinary shares outstanding 1		669,882,040	669,882,040	0.0%
Earnings per share	EUR	-0.02	-0.02	9.9%
Number of passengers		1,953,070	1,793,414	8.9%
Number of cargo units		77,279	75,172	2.8%
Average number of employees		6,886	6,642	3.7%
		31.03.2016	31.12.2015

Total assets	EUR million	1,554.8	1,538.8	1.0%
Interest-bearing liabilities	EUR million	564.1	549.3	2.7%
Net debt	EUR million	472.4	467.4	1.1%
Total equity	EUR million	812.3	824.4	-1.5%

Equity ratio	52.2%	53.6%
Net debt to EBITDA	2.7	2.6

Number of ordinary shares outstanding 1		669,882,040	669,882,040	0.0%
Shareholders' equity per share	EUR	1.21	1.23	-1.5%

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:

	Q1	Q2	Q3	Q4	Q1	Q1 change
in EUR millions	2015	2015	2015	2015	2016	y-o-y
Ticket sales	38.1	61.1	78.3	50.4	40.1	5.2%
Restaurant & shop sales	100.6	134.1	141.1	124.9	109.4	8.7%
Cargo sales	25.9	27.2	25.4	25.9	24.7	-4.5%
Accommodation sales	3.0	5.2	6.3	4.3	3.2	5.7%
Leases of vessels	15.7	13.2	12.1	12.4	8.9	-43.2%
Other sales	6.9	13.0	10.3	9.8	6.5	-4.6%
Total revenue	190.2	253.9	273.6	227.6	192.8	1.4%

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

								Q1
			Q1	Q2	Q3	Q4	Q1	change
			2015	2015	2015	2015	2016	y-o-y
Finland-	Passengers	th.	918	1,233	1,443	1,151	1,001	9.0%
Estonia	Cargo units	th.	47	51	51	49	48	1.1%
	Revenue	mil.EUR	66.8	89.7	96.3	85.3	69.5	4.1%
	Segment result	mil.EUR	12.6	24.5	30.0	23.1	10.5	-16.7%
Finland-	Passengers	th.	585	748	843	650	624	6.8%
Sweden	Cargo units	th.	17	17	14	16	18	4.0%
	Revenue	mil.EUR	68.2	88.1	99.6	77.4	71.6	5.0%
	Segment result	mil.EUR	-5.1	6.2	16.4	-0.3	-3.1	39.1%
Sweden-	Passengers	th.	196	253	277	222	222	13.3%
Estonia	Cargo units	th.	9	9	10	11	10	8.9%
	Revenue	mil.EUR	19.3	27.3	32.2	25.6	22.3	15.5%
	Segment result	mil.EUR	-2.9	1.9	6.7	0.7	0.2	106.4%
Sweden-	Passengers	th.	95	123	138	103	107	12.5%
Latvia	Cargo units	th.	2	2	2	2	2	4.5%
	Revenue	mil.EUR	8.1	11.0	13.5	9.4	8.3	3.3%
	Segment result	mil.EUR	-0.4	1.3	3.8	0.6	0.1	122.0%
Other	Revenue	mil.EUR	29.6	40.4	35.2	32.4	22.9	-22.8%
	Segment result	mil.EUR	6.6	12.1	12.7	9.3	0.5	-92.9%
	Inter segment sales	mil.EUR	-1.8	-2.7	-3.3	-2.4	-1.8	0.3%
	Total revenue	mil.EUR	190.2	253.9	273.6	227.6	192.8	1.4%
	EBITDA	mil.EUR	19.5	55.2	76.8	29.9	16.3	-16.3%
	Total segment result	mil.EUR	10.9	45.9	69.7	33.4	8.2	-24.7%
	Net profit/-loss	mil.EUR	-13.3	28.5	45.2	-1.3	-12.0	9.9%

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

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

MARKET DEVELOPMENTS

The following table provides an overview of the passengers, cargo units and passenger vehicles transported during the first quarter of 2016 and 2015 financial years.

	Q1	Q1	Q1
	2016	2015	Change
Passengers	1,953,070	1,793,414	8.9%
Estonia-Finland	1,000,609	918,296	9.0%
Finland-Sweden	624,302	584,799	6.8%
Estonia-Sweden	221,593	195,569	13.3%
Latvia-Sweden	106,566	94,750	12.5%
Cargo Units	77,279	75,172	2.8%
Estonia-Finland	47,517	47,003	1.1%
Finland-Sweden	17,717	17,032	4.0%
Estonia-Sweden	10,055	9,232	8.9%
Latvia-Sweden	1,990	1,905	4.5%
Passenger Vehicles	221,322	211,429	4.7%
Estonia-Finland	171,605	164,916	4.1%
Finland-Sweden	22,826	20,293	12.5%
Estonia-Sweden	15,383	13,870	10.9%
Latvia-Sweden	11,508	12,350	-6.8%

The Group's market shares on the routes operated during a 12 month period ending 31 March 2016 were as follows:

• The Group carried approximately 57% of the passengers and 64% of ro-ro cargo on the route between Tallinn and Helsinki;
• The Group carried approximately 53% of passengers and 26% of ro-ro cargo on the routes between Finland and Sweden;
• 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.

PERSONNEL

31 March 2016 the Group employed 6,941 employees (6,640, 31 March 2015). The following table provides a more detailed overview of the Group's personnel.

	Average of 1st quarter			End of 1st quarter
	2016	2015	change	31.03.16	31.03.15	change
Onshore total	1,574	1,503	4.7%	1,583	1,488	6.4%
Estonia	845	765	10.5%	857	760	12.8%
Finland	469	459	2.2%	468	455	2.9%
Sweden	179	200	-10.5%	179	194	-7.7%
Latvia	65	65	0.0%	65	65	0.0%
Germany	6	4	50.0%	6	4	50.0%
Russia	10	10	0.0%	8	10	-20.0%
At sea	4,700	4 531	3.7%	4,736	4,545	4.2%
Hotel	612	608	0.7%	622	607	2.5%
Total	6,886	6,642	3.7%	6,941	6,640	4.5%

CORPORATE STRUCTURE

On the report date, the Group consisted of 44 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 31 March 2016:

The Group also owns 34% of AS Tallink Takso.

The Group established new 100% owned subsidiary OÜ Baan Thai on 11 th of February 2016. The subsidiary's main activity will be catering services.

SHAREHOLDERS & SHARE PRICE DEVELOPMENT

The following chart displays the shareholder structure of AS Tallink Grupp as of 31 March 2016.

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 Q1

Following the Group's strategy to ensure cost efficient operations, the Tallink Logistics Center project was started and one of the most modern logistics centres in the region was launched in January 2016. The Group operated logistics centre will centralise the logistics of the goods and will be the single hub for distribution of majority of the goods for the Group's fleet, hotels and offices.

On the 9th of February 2016 the keel laying of the new LNG fast ferry Megastar was celebrated at Meyer Turku shipyard. The construction of the vessel is proceeding according to the planned schedule and vessel launching in to the water will take place in early July. The new LNG fast ferry Megastar will be delivered to the Group early 2017 and the vessel will start to operate the Tallink Shuttle service on Tallinn-Helsinki route.

The Group established new 100% owned subsidiary OÜ Baan Thai on 11th of February 2016. The subsidiary's main activity will be providing of catering services.

The charter of the cruise ferry Silja Europa was concluded on 19th of February 2016 and the vessel was handed over to the Group. After preparation works Silja Europa started on Tallinn-Helsinki route on 13th of March with two daily departures next to cruise ferry Baltic Queen and Tallink Shuttle ferries Star and Superstar.

In the first quarter, number of investments were made to the shops, restaurants and cabins on ships. On the cruise ferry Silja Symphony total of 84 Deluxe and Family cabins were fully renewed, the popular Old Port Pub was fully renewed, the new travel accessories shop Step&Shine was opened and also the Conference and Buffet areas were renewed. During the preparations of the cruise ferry Silja Europa return from charter to Tallinn-Helsinki route, the new Superstore, Perfume&Retail store, the very popular Italian restaurant Tavolata and Fast Lane food court were opened on the ship. On the Tallink Shuttle ferry Star the world's first floating BURGER KING® restaurant was opened in February.

EVENTS AFTER THE BALANCE SHEET DATE AND THE OUTLOOK

Looking forward to the second quarter of the 2016 financial year the Group's revenue structure will change compared to the previous year as fewer ships are in charter. The cruise ferry Silja Europa charter was concluded in February 2016 and two ships previously in charter were sold in the second quarter of 2015.

In April 2016 the Group made a EUR 11.5 million down payment for the new LNG fast ferry Megastar. In 2015 financial year the total down payment made for the vessel under construction amounted to EUR 23 million and the final tranche of EUR 11.5 million down payment will be paid in July 2016. The cost of the new vessel is EUR 230 million and the total down payment is 20% or EUR 46 million of the total cost.

The Group's marketing initiatives and solutions were denominated in six categories for renowned Finnish "Blue Arrow" digital industry awards. The jury consisting top experts on the field of digital services selected Tallink Silja Mobile Reservation solution as finalist for "Customer Experience Award". The jury acknowledged that Tallink has made major investments in digital services and created a very efficient and easy-to-use mobile reservation system which creates excellent user experience.

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

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

MANAGEMENT BOARD'S CONFIRMATION TO THE MANAGEMENT REPORT

The Management Board confirms that to the best of their knowledge the management report of AS Tallink Grupp for the first quarter of the 2016 financial year presents true and fair view of the development, results and the financial position of the Group and includes the overview of the main risks and uncertainties.

Janek Stalmeister Chairman of the Management Board

Andres Hunt Vice Chairman of the Management Board

Lembit Kitter Member of the Management Board

Tallinn, 12 May 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(unaudited, in thousands of euros)	01.01.2016- 31.03.2016	01.01.2015- 31.03.2015
Revenue (Note 3)	192,821	190,153
Cost of sales	-166,343	-164,049
Gross profit	26,478	26,104
Sales and marketing expenses	-18,292	-15,235
Administrative expenses	-12,018	-11,715
Other operating income	500	123
Other operating expenses	-16	-191
Result from operating activities	-3,348	-914
Finance income (Note 4)	2,596	5,676
Finance costs (Note 4)	-11,273	-16,608
Profit/-loss before income tax	-12,025	-11,846
Income tax	-2	-1,500
Net profit/-loss for the period	-12,027	-13,346
Other comprehensive income/-expense
Items that may be reclassified to profit or loss Exchange differences on translating foreign	-58	-82
operations
Other comprehensive income/-expense for the
period	-58	-82
Total comprehensive income/-expense for the
period	-12,085	-13,428
Earnings per share (in EUR per share)
- basic (Note 5)	-0.018	-0.020
- diluted (Note 5)	-0.018	-0.020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, in thousands of euros)

ASSETS	31.03.2016	31.12.2015
Current assets
Cash and cash equivalents	91,718	81,976
Trade and other receivables	35,354	36,583
Prepayments	13,075	5,274
Income tax prepayment	439	1,224
Inventories Total current assets	36,506 177,092	29,197 154,254
Non-current assets
Investments in equity-accounted investees	350	350
Other financial assets	361	308
Deferred income tax assets	19,410	19,410
Investment property	300	300
Property, plant and equipment (Note 7)	1,305,045	1,311,418
Intangible assets (Note 8)	52,195	52,726
Total non-current assets	1,377,661	1,384,512
TOTAL ASSETS	1,554,753	1,538,766
LIABILITIES AND EQUITY
Current liabilities
Interest bearing loans and borrowings (Note 9)	108,851	81,889
Trade and other payables	94,287	88,480
Income tax liability	3,586	4,567
Deferred income	38,056	28,906
Total current liabilities	244,780	203,842
Non-current liabilities
Interest bearing loans and borrowings (Note 9)	455,277	467,447
Derivatives (Note 6)	42,359	42,863
Other payables	0	192
Total non-current liabilities	497,636	510,502
TOTAL LIABILITIES	742,416	714,344
EQUITY Equity attributable to equity holders of the parent
Share capital	404,290	404,290
Share premium	639	639
Reserves Retained earnings	65,025 342,383	65,083 354,410
Total equity attributable to equity holders of the parent	812,337	824,422
TOTAL EQUITY	812,337	824,422
TOTAL LIABILITIES AND EQUITY	1,554,753	1,538,766

CONSOLIDATED CASH FLOW STATEMENT

(unaudited, in thousands of euros)	01.01.2016- 31.03.2016	01.01.2015- 31.03.2015
Cash flows from operating activities
Net profit/-loss for the period	-12,027	-13,346
Adjustments	28,192	33,028
Changes in receivables and prepayments related to operating activities	-5,756	-4,811
Changes in inventories	-7,309	2,528
Changes in liabilities related to operating activities	13,719	336
Income tax paid	-160	-33
	16,659	17,702
Cash flow from/used in investing activities
Purchase of property, plant and equipment and intangible assets (Notes 7, 8, 9)	-12,709	-3,612
Proceeds from disposals of property, plant and equipment	134	12
Interest received	18	22
	-12,557	-3,578
Cash flows used in financing activities
Repayment of loans (Note 9)	-14,728	-15,024
Change in overdraft (Note 9)	26,963	10,049
Payment of finance lease liabilities (Note 9)	-24	-20
Interest paid	-5,550	-6,745
Payments for settlement of derivatives	-1,021	-1,419
	5,640	-13,159
TOTAL NET CASH FLOW	9,742	965
Cash and cash equivalents:
- at the beginning of period	81,976	65,311
- increase (+) / decrease (-)	9,742	965
- at the end of period	91,718	66,276

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(unaudited, in thousands of euros)	Share capital	Share premium	Translation reserve	Ships revaluation reserve	Mandatory legal reserve	Reserve for treasury shares	Share option programme reserve	Retained earnings	Equity attributable to equity holders of	Total equity
As at 31 December 2014	404,290	639	298	54,562	18,822	-4,163	610	303,232	the Parent 778,290	778,290
Net profit/-loss for the period (Note 5)	0	0	0	0	0	0	0	-13,346	-13,346	-13,346
Total other comprehensive income and expense Total comprehensive income and expense	0	0	-82	0	0	0	0	0	-82	-82
for the period	0	0	-82	0	0	0	0	-13,346	-13,428	-13,428
Transaction with owners of the company Share-based payment transactions (Note
11)	0	0	0	0	0	0	76	0	76	76
Transactions with owners, recognised
directly in equity	0	0	0	0	0	0	-224	-20,052	-20,320	-20,320
As at 31 March 2015	404,290	639	216	54,562	18,822	-4,163	686	289,886	764,938	764,938
As at 31 December 2015	404,290	639	458	47,693	20,185	-4,163	910	354,410	824,422	824,422
Net profit/-loss for the period (Note 5)	0	0	0	0	0	0	0	-12,027	-12,027	-12,027
Total other comprehensive income and expense Total comprehensive income and expense	0	0	-58	0	0	0	0	0	-58	-58
for the period	0	0	-58	0	0	0	0	-12,027	-12,085	-12,085
As at 31 March 2016	404,290	639	400	47,693	20,185	-4,163	910	342,383	812,337	812,337

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 3 months of the financial year 2016 were authorised for issue in accordance with a resolution of the Management Board on 12 May 2016. AS Tallink Grupp is a limited company incorporated in Estonia and employed 6,640 people at 31 March 2016 (31 December 2015: 6,966).

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 2015.

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)

01.01.2016-31.03.2016	Estonia- Finland route	Estonia- Sweden route	Latvia- Sweden route	Finland- Sweden route	Other	Elimination of intersegment sales	Total
Revenue
Sales to external customers	69,513	22,280	8,346	71,605	21,077	0	192,821
Inter-segment sales	0	0	0	0	1,802	-1,802	0
	69,513	22,280	8,346	71,605	22,879	-1,802	192,821
Segment result	10,529	187	90	-3,086	466	0	8,186
Unallocated expenses							-11,534
Net financial items (Note 4)							-8,677
Profit/-loss before income tax							-12,025

01.01.2015-31.03.2015	Estonia- Finland route	Estonia- Sweden route	Latvia- Sweden route	Finland- Sweden route	Other	Elimination of intersegment sales	Total
Revenue
Sales to external customers	66,766	19,283	8,080	68,204	27,820	0	190,153
Inter-segment sales	0	0	0	0	1,808	-1,808	0
	66,766	19,283	8,080	68,204	29,628	-1,808	190,153
Segment result	12,643	-2,902	-410	-5,069	6,607	0	10,869
Unallocated expenses							-11,783
Net financial items (Note 4)							-10,932
Profit/-loss before income tax							-11,846

Revenue by service

(in thousands of euros)	01.01.2016- 31.03.2016	01.01.2015- 31.03.2015
Ticket sales	40,093	38,119
Sales of cargo transport	24,696	25,853
Sales of accommodation	3,179	3,006
Restaurant and shops sales on-board and on
mainland	109,386	100,612
Income from charter of vessels	8,923	15,700
Other	6,544	6,863
Total revenue of the Group	192,821	190,153

Note 4 FINANCE INCOME AND FINANCE COSTS

(in thousands of euros)	01.01.2016- 31.03.2016	01.01.2015- 31.03.2015
Income from interest rate swaps	0	849
Income from foreign exchange derivatives	2,594	4,820
Interest income arising from financial assets not
measured at fair value through profit or loss	2	7
Total finance income	2,596	5,676
Net foreign exchange losses	-1,867	-3,598
Interest expense arising from financial liabilities
measured at amortised cost	-6,295	-7,945
Expenses from interest rate swaps	-3,111	-5,065
Total finance costs	-11,273	-16,608

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 diluting effect due to their exercise price being lower than the average price in the stock market during the reporting period.

	01.01.2016-	01.01.2015-
	31.03.2016	31.03.2015
Weighted average number of ordinary shares, basic
(pcs)	669,882,040	669,882,040
Effect of share options on issue	172,393	0
Weighted average number of ordinary shares, diluted
(pcs)	670,054,433	669,882,040
Net profit/-loss attributable to ordinary shareholders	-12,027	-13,346
Earnings per share, basic (in EUR per share)	-0.018	-0.020
Earnings per share, diluted (in EUR per share)	-0.018	-0.020

Weighted average number of ordinary shares
(pcs)	01.01.2016-	01.01.2015-
	31.03.2016	31.03.2015
Issued ordinary shares at the beginning of period	673,817,040	673,817,040
Effect of own shares held	-3,935,000	-3,935,000
Weighted average number of ordinary shares at the
end of period	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 31.03.2016 AS Tallink Grupp had two interest rate derivative contracts with total notional amount of EUR 170,000 thousand with the maturities in years 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 31.03.2016 is EUR -14,725 thousand. The fair value of the cross-currency rate derivatives recognized in the current interim financial statements as of 31.03.2016 is EUR -27,634 thousand.

Note 7 PROPERTY, PLANT AND EQUIPMENT

(in thousands of euros)

	Land and		Plant and
	building	Ships	equipment	Prepayments	Total
Book value as at 31 December
2015		2,942 1,270,102	10,160		28,214 1,311,418
Additions	92	7,930	6,114	-2,229	11,907
Disposals	0	0	-4	-19	-23
Depreciation for the period	-295	-16,752	-1,210	0	-18,257
Book value as at 31 March 2016		2,739 1,261,280	15,060		25,966 1,305,045
As at 31 March 2016
-gross carrying amount		10,206 1,564,796	39,239		25,966 1,640,207
-accumulated depreciation	-7,467	-303,516	-24,179	0	-335,162
	Land and building	Ships	Plant and equipment	Prepayments	Total
Book value as at 31 December 2015		3,729 1,451,400	10,000		2,835 1,467,964
Additions	334	1,386	749	685	3,154
Disposals	0	0	-2	0	-2
Depreciation for the period	-286	-17,731	-969	0	-18,986
Book value as at 31 March 2015		3,777 1,435,055	9,778		3,520 1,452,130
As at 31 March 2015
-gross carrying amount		13,120 1,715,283	31,082		3,520 1,763,005

Note 8 INTANGIBLE ASSETS

(in thousands of euros)

	Goodwill	Trademark	Others	Total
Book value as at 31 December 2015	11,066	30,586	11,074	52,726
Additions	0	0	914	914
Disposals	0	0	-78	-78
Amortisation for the period	0	-729	-638	-1,367
Book value as at 31 March 2016	11,066	29,857	11,272	52,195
As at 31 March 2016
-cost	11,066	58,288	30,543	99,897
-accumulated amortisation	0	-28,431	-19,271	-47,702
	Goodwill	Trademark	Others	Total
Book value as at 31 December 2014	11,066	33,502	10,606	55,174
Additions	0	0	458	458
Amortisation for the period	0	-729	-656	-1,385
Book value as at 31 March 2015	11,066	32,773	10,408	54,247
As at 31 March 2015
-cost	11,066	58,288	28,020	97,374
-accumulated amortisation	0	-25,515	-17,612	-43,127

Note 9 INTEREST BEARING LOANS AND BORROWINGS

(in thousands of euros) 31 December 2015 New loans Repayments Exchange rate differences Other changes [1] 31 March 2016 Liabilities under finance lease 298 112 -24 0 -4 382 Unsecured bonds 93,097 0 0 1,864 57 95,018 Overdraft 3,397 26,963 0 0 0 30,360 Long-term bank loans 452,544 0 -14,728 0 552 438,368 TOTAL 549,336 27,075 -14,752 1,864 605 564,128 incl. current portion 81,889 108,851 Non-current portion 467,447 455,277

[1] Other changes are related to capitalisation and amortisation of transaction costs of bonds and bank loans. Other changes of liabilities under finance lease are related to termination of lease agreements.

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 and Swedbank AS for the loans granted to overseas subsidiaries amounting to EUR 154,883 thousand and overseas subsidiaries have given guarantees to Nordea Bank Finland Plc and Swedbank AS for the loans granted to AS Tallink Grupp amounting to EUR 283,485 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 31 March 2016 the maximum number of authorised common shares is 2,133,333,333.

At 31 March 2016 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 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 31 March 2016 7,276,903 share options were valid and outstanding. Average remaining time to maturity of the outstanding share options is 3 months.

The outstanding share options have diluting effect due to their exercise price being lower than the average price in the stock market during the period.

Note 12 RELATED PARTY DISCLOSURES

(in thousands of euros)
3 months of 2016	Sales to	Purchases from	Receivables from	Payables
or 31.03.2016	related parties	related parties		related parties to related parties
AS Infortar	9	12	1	5
AS HT Valuuta	27	0	0	0
AS Vara HTG	0	479	0	794
OÜ Mersok	0	3	0	0
AS Vaba Maa	1	218	1	27
OÜ Sunbeam	0	907	0	347
AS Gastrolink	3	250	1	81
AS Tallink Takso	1	28	0	10
OÜ Topspa Kinnisvara	0	640	0	0
OÜ Hansa Hotell	0	234	0	96
OÜ Fastinvest	0	306	0	0
SIA Happy Trails	0	828	0	636
Eesti Laevaomanike Liit	1	7	0	0
MTÜ SEB Tallink Tennis Team	0	0	0	0
MTÜ Eesti Tennise Liit	12	40	9	0
OÜ Infor Invest	0	240	0	0
3 months of 2015	Sales to	Purchases from	Receivables from	Payables
or 31.03.2015	related parties	related parties		related parties to related parties
AS Infortar	8	12	4	4
AS HT Valuuta	26	0	0	0
AS Vara HTG	0	479	0	1,029
OÜ Mersok	0	2	0	2
AS Vaba Maa	3	164	1	28
OÜ Sunbeam	0	885	0	454
AS Gastrolink	2	207	1	84
AS Tallink Takso	1	20	0	13
OÜ Topspa Kinnisvara	0	675	0	100
OÜ Hansa Hotell	0	200	0	90
OÜ Fastinvest	0	313	0	0
SIA Happy Trails	0	828	0	229
Eesti Laevaomanike Liit MTÜ SEB Tallink Tennis Team	0 3	7 0	0 3	0 0

MANAGEMENT BOARD'S APPROVAL OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Hereby we declare our responsibility for the Interim Consolidated Financial Statements and confirm that the AS Tallink Grupp's Unaudited Interim Consolidated Financial Statements for the first quarter of the financial year 2016 ended 31 March 2016 prepared in accordance with IFRS as adopted by EU and in accordance with IAS 34 give a true and fair view of the financial position of the Group and of the result of its operations and cash flows.

AS Tallink Grupp and its subsidiaries are able to continue as a going concern for a period of at least one year of the date of approving these financial statements.

Janek Stalmeister Chairman of the Management Board

Andres Hunt Vice Chairman of the Management Board

Lembit Kitter Member of the Management Board

Tallinn, 12 May 2016