Quarterly Report • May 18, 2018
Quarterly Report
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| Beginning of the financial year | 1 January 2018 |
|---|---|
| End of the financial year | 31 December 2018 |
| Interim reporting period | 1 January 2018 – 31 March 2018 |
| MANAGEMENT REPORT |
|---|
| MANAGEMENT BOARD'S CONFIRMATION |
| UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 16 |
| Consolidated statement of profit or loss and other comprehensive income 16 |
| Consolidated statement of financial position |
| Consolidated statement of cash flows |
| Consolidated statement of changes in equity |
| NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 20 |
| Note 1 Corporate information |
| Note 2 Basis of preparation |
| Note 3 Segment information |
| Note 4 Financial items |
| Note 5 Earnings per share |
| Note 6 Derivative instruments |
| Note 7 Property, plant and equipment |
| Note 8 Intangible assets |
| Note 9 Interest-bearing loans and borrowings |
| Note 10 Share capital |
| Note 11 Dividends |
| Note 12 Related party disclosures |
| STATEMENT BY THE MANAGEMENT BOARD |
| CONTACT INFORMATION |
In the first quarter (1 January - 31 March) of the 2018 financial year Tallink Grupp AS and its subsidiaries (the Group) carried 1.9 million passengers, which is 0.5% less than in the first quarter last year. The Group's unaudited revenue for the first quarter decreased by 3.9 % to a total of EUR 184.2 million. Unaudited EBITDA for the first quarter was EUR 4.2 million (EUR 5.3 million in Q1 2017) and unaudited net loss was EUR 19.6 million (net loss of EUR 20.3 million in Q1 2017).
In the first quarter, which is also the low season, the Group's revenue and operating result were impacted by the following operational factors:
In the first quarter, the number of passengers travelling on the Group's ships on the Estonia-Finland routes increased by 1.3% or 13.3 thousand to a total of 1025 thousand. Due to the higher competition, there was pressure on ticket prices that resulted in a decline in average ticket prices and lower ticket revenue. The segment revenue decreased by 0.9% to EUR 72.3 million. The Estonia-Finland segment result increased by 7.0% and was EUR 8.6 million. The better segment result was achieved mainly due to lower marketing costs as in the first quarter last year there were marketing costs related to the launch of the Shuttle ferry Megastar.
The maintenance and repair of the cruise ferry Baltic Princess, which is one of the four ships operating on the Finland-Sweden routes, affected the routes' first-quarter carriage volumes and financial results. The number of passengers on the Finland-Sweden routes decreased by 9.9% to 523 thousand. The segment revenue decreased by 9.2% to EUR 62.7 million. The segment result improved by EUR 0.5 million as fewer trips resulted in lower ship operating and marketing costs.
Interim report Q1 2018 Management report
The Estonia-Sweden route's first-auarter revenue increased bu 6.2% compared to the same period last year. The growth was supported by a 5.7% rise in the number of passengers and 15.9% increase in transported cargo units.
The Latvia-Sweden route's first-quarter revenue increased by 24.0% compared to same period last year. The growth was supported by a 16.8% rise in the number of passengers and a 62.6% increase in transported cargo units.
The charter and charter related revenue decreased by EUR 2.8 million as fewer ships were chartered out compared to the first quarter in the previous year. Two Superfast ferries were sold in December 2017, and one Superfast ferry remains chartered out.
In the first quarter of 2018, the Group's gross profit decreased by EUR 1.2 million compared to the same period last year, amounting to EUR 13.7 million. First-quarter EBITDA decreased by EUR 1.1 million to EUR 4.2 million. The Group's first quarter result from operations was impacted by charter and charter related revenue, which was EUR 2.8 million lower than in the same period last year because fewer ships were chartered out.
Amortisation and depreciation expense decreased by EUR 1.4 million to EUR 19.4 million compared to the first quarter of 2017. The decline is a result of less depreciation cost from two sold Superfast ferries and addition of depreciation cost of Shuttle ferry Megastar, compared to the first quarter last year.
Net finance costs decreased by EUR 0.5 million compared to the first quarter last year. The change includes decline of EUR 1.0 million in interest costs compared to same period the previous year and increase of EUR 0.5 million in losses from foreign exchange differences and the revaluation of cross currency and interest rate derivatives.
The Group's unaudited net loss for the first quarter of 2018 was EUR 19.6 million or EUR 0.029 per share compared to a net loss of EUR 20.3 million or EUR 0.030 per share in the same period last year.
Interim report Q1 2018 Management report
In the first quarter, the Group's investments amounted to EUR 8.4 million. Most of the investments were made in the fleet's technical dockings and upgrades of the ships public areas. Investments were also made in the development of online booking and sales systems.
To the shareholders' annual general meeting in 2018, the Management Board will propose a dividend of EUR 0.03 per share from net profit for 2017.
In the last twelve months the Group has reduced its interest bearing liabilities by EUR 212.2 million to EUR 551.0 million (EUR 763.2 million at 31 March 2017). Total bank debt at the end of the first quarter of 2018 is comparable to the level at the end of 2016, before the drawdown of a EUR 184 million loan in January 2017, which was used to finance the purchase of the Shuttle ferry Megastar. The repayment of bank debt (scheduled and early repayment of loans and repayment of an overdraft) was supported by positive cash flow from operations and the sale of two Superfast ferries in December 2017.
In the first quarter, the Group's net debt increased by EUR 8.9 million to EUR 480.9 million and the net debt to EBITDA ratio was 3.1 at the reporting date.
At the end of the first quarter, total liquidity (cash, cash equivalents and unused credit facilities) amounted to EUR 142.8 million (EUR 74.7 million at 31 March 2017) providing a strong financial position for sustainable operations.
The Group had EUR 70.1 million (EUR 72.2 million at 31 March 2017) in cash and cash equivalents and EUR 72.7 million (EUR 2.5 million at 31 March 2017) in unused credit lines.
| For the period | Q1 2018 | Q1 2017 | Change % |
|---|---|---|---|
| Revenue (million euros) | 184.2 | 191.5 | $-3.9%$ |
| Gross profit (million euros) | 13.7 | 14.9 | $-7.8%$ |
| Net loss for the period (million euros) | $-19.6$ | $-20.3$ | 3.7% |
| EBITDA (million euros) | 4.2 | 5.3 | $-20.3%$ |
| Depreciation and amortisation (million euros) | 19.4 | 20.8 | $-6.6%$ |
| Capital expenditures (million euros) | 8.4 | 204.2 | |
| Weighted average number of ordinary shares outstanding | 669 882 040 | 669 882 040 | 0.0% |
| Earnings per share | $-0.029$ | $-0.030$ | 3.7% |
| Number of passengers | 1930 449 | 1939784 | $-0.5%$ |
| Number of cargo units | 90 687 | 83797 | 8.2% |
| Average number of employees | 7 2 4 2 | 7 2 0 9 | 0.5% |
| As at | 31.03.18 | 31.12.17 | Change % |
| Total assets (million euros) | 1531.6 | 1558.6 | $-1.7%$ |
| Total liabilities (million euros) | 714.6 | 722.3 | $-1.1%$ |
| Interest-bearing liabilities (million euros) | 551.0 | 560.9 | $-1.8%$ |
| Net debt (million euros) | 480.9 | 472.0 | 1.9% |
| Net debt to EBITDA | 3.06 | 2.98 | 2.7% |
| Total equity (million euros) | 817.1 | 836.3 | $-2.3%$ |
| Equity ratio (%) | 53.3% | 53.7% | |
| Number of ordinary shares outstanding | 669 882 040 | 669 882 040 | 0.0% |
| Equity per share | 1.22 | 1.25 | $-2.3%$ |
| Ratios | Q1 2018 | Q1 2017 | |
| Gross margin (%) | 7.4% | 7.8% | |
| EBITDA margin (%) | 2.3% | 2.7% | |
| Net profit margin (%) | $-10.6%$ | $-10.6%$ |
EBITDA: Earnings before net financial items, share of profit of equity accounted investees,
taxes, depreciation and amortisation
Earnings per share: net profit / weighted average number of shares outstanding
Equity ratio: total equity / total assets
Equity per share: shareholder's equity / number of shares outstanding
Gross margin: gross profit / revenue
EBITDA margin: EBITDA / revenue
Net profit margin: net profit or loss / revenue
Net debt: interest-bearing liabilities less cash and cash equivalents
Net debt to EBITDA: net debt / 12-months trailing EBITDA
The following tables provide an overview of the quarterly sales and result development by geographical segments.
| Q1 2017 | O 2 2017 | Q3 2017 | O4 2017 | Q1 2018 | Q1 Change | ||
|---|---|---|---|---|---|---|---|
| Estonia - | Passengers (thousands) | 1012 | 1349 | 1485 | 1217 | 1025 | 1.3% |
| Finland | Cargo units (thousands) | 52 | 60 | 60 | 62 | 58 | 12.9% |
| Revenue (million euros) | 73.0 | 95.5 | 96.9 | 89.1 | 72.3 | $-0.9%$ | |
| Segment result 1 (million euros) | 8.1 | 19.8 | 28.8 | 21.2 | 8.6 | 7.0% | |
| Finland - | Passengers (thousands) | 580 | 765 | 878 | 695 | 523 | $-9.9%$ |
| Sweden | Cargo units (thousands) | 19 | 18 | 17 | 20 | 16 | $-15.6%$ |
| Revenue (million euros) | 69.1 | 88.9 | 104.4 | 82.4 | 62.7 | $-9.2%$ | |
| Segment result 1 (million euros) | $-6.0$ | 9.4 | 17.9 | $-2.9$ | $-5.5$ | 8.5% | |
| Estonia - | Passengers (thousands) | 215 | 276 | 303 | 237 | 227 | 5.7% |
| Sweden | Cargo units (thousands) | 11 | 11 | 11 | 11 | 12 | 15.9% |
| Revenue (million euros) | 23.0 | 30.8 | 35.9 | 27.5 | 24.5 | 6.2% | |
| Segment result 1 (million euros) | $-1.6$ | 3.7 | 7.8 | 0.6 | $-1.8$ | $-12.5%$ | |
| Latvia - | Passengers (thousands) | 133 | 197 | 247 | 167 | 155 | 16.8% |
| Sweden | Cargo units (thousands) | 2 | 3 | 3 | 4 | 4 | 62.6% |
| Revenue (million euros) | 10.6 | 17.4 | 23.2 | 15.3 | 13.1 | 24.0% | |
| Segment result 1 (million euros) | $-4.7$ | $-0.6$ | 4.4 | $-0.3$ | $-4.1$ | 12.1% | |
| Other | Revenue (million euros) | 17.8 | 30.0 | 25.6 | 20.8 | 13.1 | $-26.1%$ |
| Segment result 1 (million euros) | 1.3 | 7.7 | 5.9 | 2.6 | 0.2 | $-87.2%$ | |
| Intersegment revenue (million euros) | $-1.9$ | $-2.9$ | $-3.3$ | $-2.2$ | $-1.6$ | 15.4% | |
| Total revenue (million euros) | 191.5 | 259.9 | 282.7 | 232.9 | 184.2 | $-3.9%$ | |
| EBITDA (million euros) | 5.3 | 48.9 | 75.4 | 28.8 | 4.2 | $-20.3%$ | |
| Total segment result 1 (million euros) | $-2.9$ | 39.9 | 64.9 | 21.4 | $-2.6$ | 10.4% | |
| Net profit/loss | $-20.3$ | 17.9 | 47.8 | 1.1 | $-19.6$ | 3.7% |
1 Segment result is the result before administrative expenses, finance costs and taxes.
The following tables provide an overview of the quarterly sales development by operating segments:
| Revenue (million euros) | O1 2017 | O 2 2017 | O3 2017 | O4 2017 | O1 2018 | Q1 Change |
|---|---|---|---|---|---|---|
| Restaurant and shop sales on-board and onshore | 107.8 | 145.6 | 149.8 | 133.5 | 105.1 | $-2.5%$ |
| Ticket sales | 42.1 | 65.2 | 83.8 | 51.7 | 40.2 | -4.4% |
| Sales of cargo transportation | 28.2 | 29.7 | 28.9 | 30.9 | 29.2 | 3.3% |
| Accommodation sales | 3.3 | 5.8 | 7.1 | 4.6 | 3.3 | $-0.3%$ |
| Income from charter of vessels | 4.8 | 4.8 | 4.9 | 4.3 | 2.0 | $-58.5%$ |
| Other sales | 5.4 | 8.6 | 8.3 | 7.9 | 4.4 | $-17.8%$ |
| Total revenue | 191.5 | 259.9 | 282.7 | 232.9 | 184.2 | $-3.9%$ |
The following charts provide an overview of the Group's first quarter sales by operational and geographical segments.
The following table provides an overview of the passengers, cargo units and passenger vehicles transported during the first quarter of 2018 and 2017.
| Passengers | O1 2018 | O1 2017 | Change |
|---|---|---|---|
| Estonia - Finland | 1025036 | 1011706 | 1.3% |
| Finland - Sweden | 522 945 | 580 234 | $-9.9%$ |
| Estonia - Sweden | 227 279 | 214 948 | 5.7% |
| Latvia - Sweden | 155 189 | 132896 | 16.8% |
| Total | 1930 449 | 1939784 | $-0.5%$ |
| Cargo units | O1 2018 | O1 2017 | Change |
|---|---|---|---|
| Estonia - Finland | 58 376 | 51 688 | 12.9% |
| Finland - Sweden | 16 145 | 19 128 | $-15.6%$ |
| Estonia - Sweden | 12 258 | 10 577 | 15.9% |
| Latvia - Sweden | 3 9 0 8 | 2 404 | 62.6% |
| Total | 90 687 | 83797 | 8.2% |
| Passenger vehicles | O1 2018 | O1 2017 | Change |
|---|---|---|---|
| Estonia - Finland | 174 110 | 168 906 | 3.1% |
| Finland - Sweden | 18 219 | 21763 | -16.3% |
| Estonia - Sweden | 14 496 | 13 915 | 4.2% |
| Latvia - Sweden | 15 545 | 12861 | 20.9% |
| Total | 222 370 | 217 445 | 2.3% |
The Group's market shares on the routes operated during the 12-month period ended 31 March 2018 were as follows:
At the reporting date, the Group consisted of 46 companies. All subsidiaries are wholly owned by Tallink Grupp AS. The following diagram represents the Group's structure at the reporting date:
The Group also owns 34% of Tallink Takso AS.
At 31 March 2018, the Group employed 7 379 employees (7 291 at 31 March 2017). The following table provides a more detailed overview of the Group's personnel.
| Average of Q1 | End of Q1 | ||||||
|---|---|---|---|---|---|---|---|
| 2018 | 2017 | Change | 2018 | 2017 | Change | ||
| Onshore total | 1631 | 1631 | 0.0% | 1638 | 1625 | 0.8% | |
| Estonia | 910 | 894 | 1.8% | 919 | 892 | 3.0% | |
| Finland | 468 | 478 | $-2.1%$ | 464 | 477 | $-2.7%$ | |
| Sweden | 166 | 174 | $-4.6%$ | 166 | 169 | $-1.8%$ | |
| Latvia | 70 | 68 | 2.9% | 72 | 70 | 2.9% | |
| Russia | 11 | 12 | $-8.3%$ | 11 | 12 | $-8.3%$ | |
| Germany | 6 | 5 | 20.0% | 6 | 5 | 20.0% | |
| On-board | 5 0 0 9 | 5025 | $-0.3%$ | 5 1 3 5 | 5 114 | 0.4% | |
| Hotel 1 | 602 | 553 | 8.9% | 606 | 552 | 9.8% | |
| Total | 7 2 4 2 | 7 2 0 9 | 0.5% | 7 3 7 9 | 7 2 9 1 | 1.2% |
1 The number of hotel personnel is not included in the total number of onshore personnel.
The following chart displays the shareholder structure of Tallink Grupp AS as at 31 March 2018.
Since 9 December 2005 the shares of Tallink Grupp AS have been listed on the Tallinn Stock Exchange, where the shares are traded under the ticker symbol TAL1T. The closing share price at the reporting date was EUR 1.085 per share. The following charts give an overview of the share price development in the past twelve months.
In March 2018, the Supervisory Board of Tallink Grupp AS appointed Mr Paavo Nõgene as the Chairman of the Management Board from 1 May 2018 for a period of 3 years.
The Supervisory Board extended the term of office of the Member of the Management Board Mr. Lembit Kitter for the next term of office of a member of the Management Board as from 2 May 2018.
Since 1 May 2018, Tallink Grupp AS has had a four-member Management Board, consisting of Mr Paavo Nõgene, Mr Janek Stalmeister, Mr Andres Hunt and Mr Lembit Kitter.
In March 2018, the Supervisory Board of Tallink Grupp AS decided to end the exploratory process relating to potential strategic options for the Group that was started in July of 2017. In the course of the process various strategic options were considered with the purpose of supporting the long-term strategy and development of the Group. The Group will take the proposals and feedback received during the process into account in further planning and development of its business.
In January 2018, Baltic Retail OÜ a new subsidiary of Tallink Grupp AS was registered in the Commercial Registry. The main activity of the subsidiary is retail sales.
In January 2018, TLG Agent OÜ and TLG Stividor OÜ, new subsidiaries of Tallink Grupp AS were registered in the Commercial Registry. The subsidiaries were established on the division of the Group company HTG Invest AS, which was deleted from the Commercial Registry.
The cruise ferry Baltic Princess, operating on the Turku-Stockholm route, was out of service from 10 January to 8 March 2018. During this period technical maintenance works and a retrofit of the ship's dining, shopping and children's areas were carried out. The upgrade of public areas is part of our ongoing ship renovation programme and follows our recent brand renewal in August 2017.
The Group's management estimates the financial result for 2018 high season (June-August) to be higher compared to the same period previous year. The estimation is based on the positive pick-up of bookings for the coming high season and changed competition landscape on the busiest Tallinn-Helsinki passenger market.
The Group's earnings are not generated evenly throughout the year. The summer period is the high season in the Group's operations. In management's opinion and based on prior experience most of the Group's earnings are generated during the summer (June-August).
Tallink Grupp AS does not have any substantial on-going research and development projects. The Group is engaged continuously to find various opportunities for expanding the Group's operations, in order to improve the results.
The Group's business, financial position and operating results could be materially affected by various risks. These risks are not the only ones we face. 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.
We confirm that to the best of our knowledge, the management report of Tallink Grupp AS for the first quarter of 2018 presents a true and fair view of the Group's development, results and financial position and includes an overview of the main risks and uncertainties.
Paavo Nõgene Chairman of the Management Board
Andres Hunt Member of the Management Board
Janek Stalmeister Member of the Management Board
Lembit Kitter Member of the Management Board
Tallinn, 2018-05-18
| Unaudited, in thousands of EUR | O1 2018 | O1 2017 |
|---|---|---|
| Revenue (Note 3) | 184 155 | 191548 |
| Cost of sales | $-170+48$ | $-176678$ |
| Gross profit | 13707 | 14 870 |
| Sales and marketing expenses | $-16313$ | $-17780$ |
| Administrative expenses | $-12728$ | $-12610$ |
| Other operating income | 113 | 123 |
| Other operating expenses | $-27$ | $-135$ |
| Result from operating activities | $-15248$ | $-15532$ |
| Finance income (Note 4) | 3078 | 2 4 9 1 |
| Finance costs (Note 4) | $-7373$ | $-7273$ |
| Loss before income tax | $-19543$ | $-2031+$ |
| Income tax | $-23$ | $-14$ |
| Net loss for the period | $-19566$ | $-20328$ |
| Other comprehensive income | 411 | $\mathbf 0$ |
| Exchange differences on translating foreign operations | $-68$ | $-142$ |
| Other comprehensive income/expense for the period | 343 | $-142$ |
| Total comprehensive expense for the period | $-19223$ | $-20$ 470 |
| Earnings per share (in EUR per share, Note 5) | $-0.029$ | $-0.030$ |
| Unaudited, in thousands of EUR | 31.03.2018 | 31.12.2017 |
|---|---|---|
| ASSETS | ||
| Cash and cash equivalents | 70 129 | 88 911 |
| Trade and other receivables | 42 630 | 46 466 |
| Prepayments | 15 261 | 5395 |
| Prepaid income tax | 44 | 40 |
| Inventories | 37499 | 40 675 |
| Current assets | 165 563 | 181 487 |
| Investments in equity-accounted investees | 403 | 403 |
| Other financial assets | 338 | 344 |
| Deferred income tax assets | 18718 | 18722 |
| Investment property | 300 | 300 |
| Property, plant and equipment (Note 7) | 1 298 412 | 1308 441 |
| Intangible assets (Note 8) | 47885 | 48 900 |
| Non-current assets | 1366056 | 1377110 |
| TOTAL ASSETS | 1531619 | 1558 597 |
| LIABILITIES AND EQUITY | ||
| Interest-bearing loans and borrowings (Note 9) | 164 282 | 159 938 |
| Trade and other payables (Note 13) | 93 472 | 95 548 |
| Derivatives (Note 6) | 31 3 21 | 29 710 |
| Payables to owners 1 | 3 | 3 |
| Income tax liability | 0 | 34 |
| Deferred income | 38727 | 31429 |
| Current liabilities | 327805 | 316 662 |
| Interest-bearing loans and borrowings (Note 9) | 386742 | 400 968 |
| Derivatives (Note 6) | 0 | 4688 |
| Other liabilities | 16 | 0 |
| Non-current liabilities | 386758 | 405 656 |
| Total liabilities | 714 563 | 722 318 |
| Share capital (Note 10) | 361736 | 361736 |
| Share premium | 639 | 639 |
| Reserves | 68 367 | 68 946 |
| Retained earnings | 386 314 | 404 958 |
| Equity attributable to equity holders of the Parent | 817056 | 836 279 |
| Total equity | 817056 | 836 279 |
| TOTAL LIABILITIES AND EQUITY | 1531619 | 1558597 |
1 Payments related to reduction of share capital.
| Unaudited, in thousands of EUR | Q1 2018 | Q1 2017 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net loss for the period | $-19566$ | $-20328$ |
| Adjustments | 24 403 | 25 624 |
| Changes in: | ||
| Receivables and prepayments related to operating activities | $-6025$ | $-9831$ |
| Inventories | 3 177 | $-6003$ |
| Liabilities related to operating activities | 6 3 5 6 | 7671 |
| Changes in assets and liabilities | 3508 | $-8163$ |
| Cash generated from operating activities | 8 3 4 5 | $-2867$ |
| Income tax paid | $-52$ | -18 |
| NET CASH FROM/USED IN OPERATING ACTIVITIES | 8 2 9 3 | $-2885$ |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Purchase of property, plant, equipment and intangible assets (Notes 7, 8, 9) | $-8365$ | $-2042$ |
| Proceeds from disposals of property, plant, equipment | 26 | 25 |
| Interest received | 1 | 1 |
| NET CASH USED IN INVESTING ACTIVITIES | $-8338$ | $-20 + 186$ |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from loans received (Note 9) | 0 | 184 000 |
| Repayment of loans received (Note 9) | $-14500$ | $-10024$ |
| Change in overdraft (Note 9) | 2 3 3 1 | 32 371 |
| Payments for settlement of derivatives | $-837$ | $-905$ |
| Payment of finance lease liabilities (Note 9) | $-25$ | -26 |
| Interest paid | $-5706$ | $-4728$ |
| Payment of transaction costs related to loans | 0 | $-164$ |
| NET CASH USED IN/FROM FINANCING ACTIVITIES | $-18737$ | 200 524 |
| TOTAL NET CASH FLOW | $-18782$ | $-6547$ |
| Cash and cash equivalents at the beginning of period | 88 911 | 78 773 |
| Decrease in cash and cash equivalents | $-18782$ | $-6547$ |
| Cash and cash equivalents at the end of period | 70 129 | 72 2 2 6 |
| Unaudited, in thousands of EUR | Share capital | Share premium |
Translation reserve |
Ships re- valuation reserve |
Mandatory legal reserve |
Retained earnings |
Equity attributable to equity holders of the Parent |
Total equity |
|---|---|---|---|---|---|---|---|---|
| As at 31 December 2017 | 361736 | 639 | $\overline{c}$ | 43599 | 25 345 | 404 958 | 836 279 | 836 279 |
| Net loss for the period (Note 5) | 0 | 0 | 0 | 0 | 0 | $-19566$ | $-19566$ | $-19566$ |
| Other comprehensive income | 0 | 0 | $-68$ | 0 | 0 | 411 | 343 | $3 - 3$ |
| Total comprehensive expense for the period | 0 | $\mathbf 0$ | $-68$ | 0 | O | $-19155$ | $-19223$ | $-19223$ |
| Transactions with owners of the Company | ||||||||
| Transfer from revaluation reserve | 0 | 0 | 0 | $-511$ | 0 | 511 | 0 | 0 |
| Transactions with owners of the Company, | 0 | 0 | 0 | $-511$ | 0 | 511 | 0 | 0 |
| recognised directly in equity | ||||||||
| As at 31 March 2018 | 361736 | 639 | $-66$ | 43 088 | 25 345 | 386 314 | 817056 | 817056 |
| As at 31 December 2016 | 361736 | 639 | $-11$ | 45 646 | 23 139 | 378 717 | 809 866 | 809 866 |
| Net loss for the period (Note 5) | O | 0 | O | 0 | 0 | $-20328$ | $-20328$ | $-20328$ |
| Total other comprehensive expense | 0 | 0 | $-142$ | 0 | 0 | $\Omega$ | $-142$ | $-142$ |
| Total comprehensive expense for the period | O | $\Omega$ | $-142$ | 0 | 0 | $-20328$ | $-20$ 470 | $-20$ 470 |
| As at 31 March 2017 | 361736 | 639 | $-153$ | 45 646 | 23 139 | 358 389 | 789 396 | 789 396 |
The consolidated interim financial statements of Tallink Grupp AS (the "Parent") and its subsidiaries (together referred to as the "Group") for the first quarter of 2018 were authorised for issue by the Management Board on 18 May 2018.
Tallink Grupp AS is a public limited company incorporated and domiciled in Estonia, with a registered office at Sadama 5/7, Tallinn. Tallink Grupp AS shares have been publicly traded on the Tallinn Stock Exchange since 9 December 2005.
The principal activities of the Group are related to marine transportation in the Baltic Sea (passenger and cargo transportation). As at 31 March 2018, the Group employed 7 379 people (7 291 as at 31 March 2017).
These interim consolidated financial statements of Tallink Grupp AS have been prepared in a condensed form in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting".
These interim consolidated financial statements have been prepared using the same accounting policies and measurement bases that were applied in the preparation of the consolidated financial statements of Tallink Grupp AS for the financial year ended on 31 December 2017. The Group prepares its consolidated annual financial statements in accordance with IFRS as adopted by the EU. The Group adopted IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" from 1 January 2018.
The interim consolidated financial statements are presented in thousand euros (EUR).
The Group's operations are organized and managed separately according to the nature of the different markets. Different routes represent different business segments.
The following tables present the Group's revenue and profit by reportable segments for the reporting and the comparative period.
| Estonia-Finland Estonia-Sweden Latvia-Sweden Finland-Sweden | Intersegment | ||||||
|---|---|---|---|---|---|---|---|
| For the period 1 January - 31 March, in thousands of EUR | route | route | route | route | Other | elimination | Total |
| 2018 | |||||||
| Sales to external customers | 72 289 | 24 465 | 13 114 | 62734 | 11 553 | 0 | 184 155 |
| Intersegment sales | 0 | 0 | 0 | 0 | 1593 | $-1593$ | $\Omega$ |
| Revenue | 72 289 | 24 465 | 13 114 | 62734 | 13 146 | $-1593$ | 184 155 |
| Segment result | 8 6 2 8 | $-1776$ | $-4141$ | $-5485$ | 168 | 0 | $-2606$ |
| Unallocated expenses | $-12642$ | ||||||
| Net financial items (Note 4) | $-4295$ | ||||||
| Loss before income tax | $-19543$ |
| Estonia-Finland Estonia-Sweden Latvia-Sweden Finland-Sweden | Intersegment | ||||||
|---|---|---|---|---|---|---|---|
| For the period 1 January - 31 March, in thousands of EUR | route | route | route | route | Other | elimination | Total |
| 2017 | |||||||
| Sales to external customers | 72 971 | 23 0 37 | 10 571 | 69 071 | 15898 | 0 | 191 548 |
| Intersegment sales | 0 | 0 | 0 | 0 | l 882 | $-1882$ | 0 |
| Revenue | 72 971 | 23 0 37 | 10 571 | 69 071 | 17780 | $-1882$ | 191 548 |
| Segment result | 8061 | $-1578$ | $-4709$ | $-5994$ | 1310 | 0 | $-2910$ |
| Unallocated expenses | $-12622$ | ||||||
| Net financial items (Note 4) | $-4782$ | ||||||
| Loss before income tax | $-20.314$ |
| In thousands of EUR | O1 2018 | O1 2017 |
|---|---|---|
| Restaurant and shop sales on-board and onshore | 105 064 | 107808 |
| Ticket sales | 40 222 | 42 054 |
| Sales of cargo transport | 29 161 | 28 2 25 |
| Sales of accommodation | 3 3 2 1 | 3 3 3 0 |
| Income from charter of vessels | 1980 | 4770 |
| Other | 4407 | 5360 |
| Total revenue of the Group | 184 155 | 191548 |
| In thousands of EUR | Q1 2018 | O1 2017 |
|---|---|---|
| Net foreign exchange gain | O | 1029 |
| Income on foreign exchange derivatives | 2092 | 0 |
| Interest income on financial assets not measured at fair value through profit or loss | O | |
| Income on interest rate swaps | 985 | 1461 |
| Income from other financial assets | 0 | |
| Total finance income | 3078 | 2 4 9 1 |
| Net foreign exchange loss | $-1646$ | $\Omega$ |
| Expenses on foreign exchange derivatives | $-905$ | |
| Interest expense on financial liabilities measured at amortised cost | -4890 | $-5862$ |
| Expenses on interest rate swaps | $-837$ | -506 |
| Total finance costs | -7 373 | $-7273$ |
| Net finance costs | $-4295$ | -4782 |
Earnings per share (EPS) are calculated by dividing the net loss for the period attributable to ordinary shareholders of the Parent by the weighted average number of ordinary shares outstanding during the period.
| In thousands | O1 2018 | O1 2017 |
|---|---|---|
| Shares issued | 669882 | 669882 |
| Shares outstanding | 669882 | 669882 |
| In thousands of EUR | O1 2018 | O1 2017 |
|---|---|---|
| Weighted average number of ordinary shares outstanding (in thousands) | 669882 | 669882 |
| Net loss attributable to equity holders of the Parent | $-19566$ | $-20.328$ |
| EPS (EUR per share) | $-0.029$ | $-0.030$ |
V TALLINK
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 equity and released to match actual payments on the hedged item. Changes in the fair value of derivatives which do not qualify for hedge accounting under IFRS 9 are recognised directly in profit or loss.
As at 31 March 2018, Tallink Grupp AS had one interest rate derivative contract with a notional amount of EUR 100 000 thousand with maturity in 2019 and two cross-currency derivative contracts with a total notional amount of EUR 120 000 thousand with maturities in 2018. As at 31 March 2018, the fair value of the interest rate derivatives was EUR -3 703 thousand and the fair value of the crosscurrency derivatives was EUR -27 618 thousand.
| In thousands of EUR | Land and buildings |
Ships | Plant and equipment |
Assets under construction |
Total |
|---|---|---|---|---|---|
| Book value as at 31 December 2017 | 2 3 0 8 | 1268 604 | 32 958 | 4571 | 1308 441 |
| Additions | 0 | $-1632$ | 2979 | 6 680 | 8027 |
| Reclassification | O | 5949 | 1952 | $-7901$ | $\Omega$ |
| Disposals | 0 | O | $-13$ | O | $-13$ |
| Depreciation for the period | $-131$ | $-15505$ | $-2407$ | O | $-18043$ |
| Book value as at 31 March 2018 | 2 177 | 1 257 416 | 35 469 | 3 3 5 0 | 1 298 412 |
| As at 31 March 2018 | |||||
| Gross carrying amount | 8 1 6 1 | 1632196 | 63 488 | 3 3 5 0 | 1707195 |
| Accumulated depreciation | $-5984$ | $-374780$ | $-28019$ | O | $-408783$ |
| Book value as at 31 December 2016 | 2525 | 1230 437 | 23 063 | 48 872 | 1304897 |
| Additions | 0 | 190 048 | 3 3 0 3 | 9 3 5 3 | 202 704 |
| Reclassification | 0 | 46 341 | 0 | $-463+1$ | $\Omega$ |
| Disposals | O | 0 | -58 | 0 | -58 |
| Depreciation for the period | $-134$ | $-17 + 20$ | $-1716$ | O | $-19270$ |
| Book value as at 31 March 2017 | 2 3 9 1 | 1449406 | 24 592 | 11884 | 1488273 |
| As at 31 March 2017 | |||||
| Gross carrying amount | 10 630 | 1813720 | 53 153 | 11884 | 1889387 |
| Accumulated depreciation | $-8239$ | $-364314$ | $-28561$ | $\Omega$ | $-401114$ |
| In thousands of EUR | Goodwill | Trademark | Other | Assets under construction |
Total |
|---|---|---|---|---|---|
| Book value as at 31 December 2017 | 11066 | 24754 | 9166 | 3 9 1 4 | 48 900 |
| Additions | 0 | 0 | 375 | 0 | 375 |
| Reclassification | 0 | 0 | 1151 | $-1151$ | $\Omega$ |
| Amortisation for the period | 0 | $-729$ | $-661$ | 0 | $-1390$ |
| Book value as at 31 March 2018 | 11066 | 24 0 25 | 10 0 31 | 2763 | 47885 |
| As at 31 March 2018 | |||||
| Cost | 11066 | 58 288 | 27830 | 2763 | 99 947 |
| Accumulated amortisation | $\mathbf 0$ | $-34263$ | $-17799$ | 0 | $-52062$ |
| Book value as at 31 December 2016 | 11066 | 27 670 | 9 3 5 8 | 2033 | 50 127 |
| Additions | 0 | 0 | 1508 | 0 | 1508 |
| Amortisation for the period | 0 | $-729$ | $-786$ | 0 | $-1515$ |
| Book value as at 31 March 2017 | 11066 | 26 941 | 10 080 | 2033 | 50 120 |
| As at 31 March 2017 | |||||
| Cost | 11066 | 58 288 | 32 015 | 2033 | 103 402 |
| Accumulated amortisation | 0 | $-313+7$ | $-21935$ | 0 | $-53282$ |
| In thousands of EUR | 31.12.17 | Exchange Addition Repayments differences |
Other changes 1 |
31.03.18 | ||
|---|---|---|---|---|---|---|
| Finance leases | 287 | 37 | $-25$ | $-12$ | $\Omega$ | 287 |
| Unsecured bonds | 91 288 | $\Omega$ | O | 1957 | 55 | 93 300 |
| Overdrafts | 0 | 2 3 3 1 | 0 | 0 | 0 | 2 3 3 1 |
| Long-term bank loans | 469 331 | O | $-14500$ | 0 | 275 | 455 106 |
| Total borrowings | 560 906 | 2 3 6 8 | $-14525$ | 1945 | 330 | 551024 |
| Current portion | 159 938 | 164 282 | ||||
| Non-current portion | 400 968 | 386742 | ||||
| Total borrowings | 560 906 | 551024 |
1 Other changes in bonds and bank loans are related to the capitalisation and amortisation of transaction costs. Other changes in finance lease liabilities are related to the termination of lease agreements.
Bonds are nominated in NOK.
Bank overdrafts are secured with commercial pledges (in the total amount of EUR 20 204 thousand) and ship mortgages.
Tallink Grupp AS has given guarantees to Nordea Bank Plc and Danske Bank A/S for loans of EUR 217 542 thousand granted to its ship-owning subsidiaries. Ship-owning subsidiaries have given guarantees to Nordea Bank Finland Plc for a loan of EUR 237 564 thousand granted to Tallink Grupp AS. The primary securities for these loans are pledges of the shares in the ship-owning subsidiaries and mortgages on the ships belonging to the aforementioned subsidiaries.
According to the articles of association of the Parent effective as from 31 December 2016, the maximum number of common shares is 2 400 000 000. Each share grants one vote at the shareholders' general meeting. Shares acquired by the transfer of ownership are eligible for participating in and voting at a general meeting only if the ownership change has been recorded in the Estonian Central Registry of Securities by the time the list of shareholders entitled to participate in the general meeting is determined.
Tallink Grupp AS has 669 882 040 registered shares without nominal value and the notional value of each share is EUR 0.54.
Since the year 2016, the Management Board's long-term goal has been to distribute at least 50% of net profit as dividends or capital repayments, taking into account the Group's financial position. The management has estimated that in the coming years the distribution per share will be at least EUR 0.02. To the annual general meeting of 2018 the Management Board will propose a dividend of EUR 0.03 per share from the net profit for 2017.
In May 2018, the Management Board of Tallink Grupp AS decided to raise the minimum dividend rate by 50% to EUR 0.03 per share. The management board of Tallink Grupp AS states that the company is working to ensure that Tallink Grupp AS is a stable dividend payer and that the dividend paid to investors will increase over time.
The Group has entered into the following transactions with related parties and has the following balances with them.
| For the period ended 31 March 2018, in thousands of EUR |
Sales to related parties |
related parties | Purchases from Receivables from related parties |
Payables to related parties |
|---|---|---|---|---|
| Companies controlled by the Key Management Personnel |
176 | 6 164 | 39 | 502 |
| Associated companies | 51 | 16 | ||
| Total | 176 | 6.215 | 41 | 518 |
| For the period ended 31 March 2017, in thousands of EUR |
Sales to related parties |
related parties | Purchases from Receivables from related parties |
Payables to related parties |
|---|---|---|---|---|
| Companies controlled by the Key Management Personnel |
76 | 6.214 | 12 | 3985 |
| Associated companies | 35 | 16 | ||
| Total | 76 | 6249 | 12 | 4001 |
Hereby we acknowledge our responsibility for the Tallink Grupp AS Unaudited Condensed Consolidated Interim Financial Statements for the first quarter of 2018 and confirm that these financial statements have been prepared in accordance with IAS 34 and give a true and fair view of the Group's financial position, financial performance and cash flows.
Tallink Grupp AS and its subsidiaries are able to continue as going concerns for a period of at least one year after the date of approval of these interim financial statements.
Paavo Nõgene
Chairman of the Management Board
Andres Hunt Member of the Management Board
Janek Stalmeister Member of the Management Board
Lembit Kitter Member of the Management Board
Tallinn, 18 May 2018
| Commercial Registry no. | 10238429 |
|---|---|
| Address | Sadama 5/7 |
| 10111, Tallinn | |
| Republic of Estonia | |
| Phone | +372 6 409 800 |
| Fax | +372 6 409 810 |
| Website | www.tallink.com |
| Main activity | maritime transport |
| (passenger & cargo transport) |
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