Published: 2018-02-28 08:50:00 CET
Tallink Grupp
Quarterly report

AS Tallink Grupp Unaudited Consolidated Interim Report Q4 2017

Tallinn, 2018-02-28 08:50 CET -- AS Tallink Grupp Unaudited Consolidated Interim Report Q4 2017

In the 2017 financial year (1 January – 31 December), Tallink Grupp AS and its subsidiaries (the Group) carried a record number, a total of 9.8 million passengers, which is 3.2% more compared to the 2016 financial year. The number of cargo units transported increased by 11% compared to the previous financial year. The Group’s unaudited consolidated revenue amounted to EUR 967.0 million (EUR 937.8 million, 2016). Unaudited EBITDA increased almost by EUR 12 million and amounted to EUR 161.1 million (EUR 149.5 million, 2016), unaudited net profit for the financial year was EUR 49.3 million or EUR 0.074 per share (EUR 44.1 million or EUR 0.066 per share, 2016).

The biggest milestone for the Group in the 2017 financial year was the launch of the new LNG powered Shuttle vessel Megastar. On the Tallinn-Helsinki route, the ship carried more than 2 million passengers in its first year. This is the highest ever number of passengers carried on any of the Group’s vessels on the Baltic Sea in one year. Megastar improved the efficiency of the Group’s Shuttle operations and the Group was able to increase the Estonia – Finland segment result despite the tighter competition in the market.

The most positive development in 2017 was the growth of the cargo business. The Cargo volumes increased in all geographical segments in total by 11.0%, the cargo revenues increased by 13.3% or EUR 13.8 million compared to last year and amounted to EUR 117.7 million in 2017. In order to be better positioned to serve our cargo customers and capture increasing cargo volumes, the cargo ship Sea Wind previously operating from Tallinn Old City Harbour started operating from Muuga Harbour in October.

Sales and segments

In the financial year 2017, the revenues in all core operational segments increased compared to the previous year. The shops and restaurants revenue increased by EUR 15.3 million and ticket revenue by EUR 6.7 million, the growth was supported by the 3.2% increase in passenger numbers. The cargo revenue increased by EUR 13.8 million compared to same period in 2016. The growth was driven by the increase of number of transported cargo units in all geographical segments following positive economic developments in our main markets.

In 2017, The Group’s ships carried a total of 5.1 million passengers on the Estonia – Finland routes, which is on the same level compared to last year and the number of transported cargo units on the routes increased by 11.6%. On the Tallinn – Helsinki route there was increased competition from added capacity by competitors, which put pressure on ticket prices. In addition, the Group operated one cruise ferry on the Tallinn – Helsinki route in contrast to two cruise ferries in the period of March to August in 2016. The new Shuttle vessel Megastar improved the efficiency of the Shuttle operations and the Group was able to increase the segment result in a changed competitive environment. The segment revenue increased by EUR 1.2 million and amounted to EUR 354.5 million, the segment result increased by EUR 2.4 million and amounted to EUR 77.9 million.

The Finland-Sweden routes’ revenue increased by EUR 7.5 million and amounted to EUR 344.8 million compared to the previous year. Growth was supported by a 1.1% higher passenger number and by a 7.6% increase in the number of transported cargo units. The segment’s result increased by EUR 3.2 million, compared to the previous year, amounting to EUR 18.5 million.

The Estonia-Sweden routes’ revenue increased by EUR 7.2 million, compared to the previous year. Growth was supported by a 4.8% higher passenger number and by a 2.9% increase in the number of transported cargo units. The segment’s result decreased compared to the previous year due to higher operating costs, as since December 2016 there is larger vessel deployed on the route.

The Latvia-Sweden route’s revenue increased by EUR 21.9 million, compared to the previous year. Growth was supported by a 45.8% higher passenger number and by a 70.1% increase in the number of transported cargo units from added capacity. The cruise ferry Romantika started operating on Riga – Stockholm route in December 2016 as a second ship on this route. Due to the increased capacity, the segment’s result was negative in 2017. However, based on the positive development of the route’s carriage volumes since the second ship was added to the route, management estimates that the segment result will improve in 2018.

Earnings

In 2017, the Group’s EBITDA increased by EUR 11.7 million and amounted to EUR 161.1 million. A higher revenue from all core operational segments supported the growth, however the charter and charter related revenue decreased by EUR 6.7 million compared to the same period last year due to fewer ships in charter.

The rerouting of ships in December 2016 resulted in more optimal operating costs in the financial year 2017. Starting from February 2017 there is no charter hire cost from fast ferry Superstar. At the same time, the total fuel cost was EUR 11.6 million higher compared to the previous year due to the increase in global fuel prices and higher total consumption. The amortisation and depreciation cost increased by EUR 8.5 million to EUR 86.4 million. The increase is driven by the purchase of the new Shuttle ferry Megastar, maintenance works of five ships and renovations and upgrades to the ships.

Net finance costs decreased by EUR 5.6 million compared to the previous year mainly from EUR 4.2 million lower interest expenses. Total gains from exchange rate differences and the revaluation of cross currency and interest rate derivatives increased by EUR 1.3 million.

The Group’s unaudited net profit for the financial year 2017 was EUR 49.3 million or EUR 0.074 per share compared to a net profit of EUR 44.1 million or EUR 0.066 per share last year.

Investments

In the 2017 financial year the Group’s investments amounted to EUR 219.2 million. The largest investment was the purchase of the Shuttle ferry Megastar in January 2017. A number of investments were made to upgrade the ships restaurants, shops and cabins. Investments were made also to the development of the online booking and sales systems.

Dividends

In June 2017 the Annual General Meeting decided to pay a dividend of EUR 0.03 per share from the net profit for 2016. The announced dividends in the total amount of EUR 20.1 million were paid out on 5 July 2017. To the Annual Shareholders’ Meeting in 2018 the management board will propose a dividend of EUR 0.03 per share from the financial year 2017 net profit.

Results of Q4 of 2017

In the fourth quarter (1 October – 31 December) of 2017, the revenues from all geographical segments increased compared to same period last year. Unaudited revenue for the period increased by 3% to EUR 232.9 million, which was supported by a 4% higher passenger number and 14.1% higher transported cargo volumes. Unaudited EBITDA increased by EUR 1.7 million and amounted to EUR 31.6 million, the unaudited net profit for the period was EUR 3.9 million.

Financial position

In January 2017 the EUR 184 million long-term export credit loan was taken to finance the purchase of the new Shuttle vessel. In December 2017 two Superfast vessels were sold for EUR 133.5 million. The proceeds from the sale were used for early repayment of loans in the total amount of EUR 59.6 million.

In the fourth quarter, the Group’s net debt decreased by EUR 163.2 million to EUR 472 million. The net debt to EBITDA ratio improved and was 2.9 at the reporting date.

At the end of the fourth quarter, total liquidity (cash, cash equivalents and unused credit facilities) amounted to EUR 163.9 million (EUR 113.8 million, 31 December 2016) providing a strong financial position for sustainable operations. The Group had EUR 88.9 million (EUR 78.8 million, 31 December 2016) in cash and cash equivalents and EUR 75 million (EUR 35 million, 31 December 2016) in unused credit lines.

 

KEY FIGURES

For the period Q4 2017 Q4 2016 Change %
Revenue (million euros) 232.9 226.1 3.0%
Gross profit (million euros) 38.5 41.1 -6.2%
Net profit for the period (million euros) 3.9 3.5 10.3%
EBITDA (million euros) 31.6 29.9 5.8%
       
Depreciation and amortisation (million euros) 21.8 19.6 11.5%
Capital expenditures (million euros) 7.2 22.5 -68.0%
Weighted average number of ordinary shares outstanding 669 882 040 669 882 040 0.0%
Earnings per share 0.006 0.005 10.3%
       
Number of passengers 2 316 144 2 226 283 4.0%
Number of cargo units 97 345 85 349 14.1%
Average number of employees 7 287 7 061 3.2%
       
As at 31.12.17 30.09.17 Change %
Total assets (million euros)¹ 1 559.9 1 710.8 -8.8%
Total liabilities (million euros) 720.8 875.6 -17.7%
Interest-bearing liabilities (million euros) 560.9 715.3 -21.6%
Net debt (million euros) 472.0 635.2 -25.7%
Net debt to EBITDA 2.9 4.0 -26.5%
Total equity (million euros)¹ 839.1 835.2 0.5%
Equity ratio (%)¹ 53.8% 48.8%  
       
Number of ordinary shares outstanding 669 882 040 669 882 040 0.0%
Equity per share¹ 1.25 1.25 0.5%
       
Ratios Q4 2017 Q4 2016  
Gross margin (%) 16.5% 18.2%  
EBITDA margin (%) 13.6% 13.2%  
Net profit margin (%) 1.7% 1.6%  

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 / revenue
Net debt: interest-bearing liabilities less cash and cash equivalents
Net debt to EBITDA: net debt / 12-months trailing EBITDA
¹ Restated, see Note 13.

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Unaudited, in thousands of EUR Q4 2017 Q4 2016 12M 2017 12M 2016
Revenue (Note 3) 232 856 226 135 966 977 937 805
Cost of sales -194 346 -185 069 -772 372 -745 223
Gross profit 38 510 41 066 194 605 192 582
         
Sales and marketing expenses -17 157 -19 102 -71 339 -72 268
Administrative expenses -13 635 -12 148 -50 869 -50 973
Other operating income 2 429 697 2 873 2 450
Other operating expenses -327 -178 -509 -184
Result from operating activities 9 820 10 335 74 761 71 607
         
Finance income (Note 4) 4 932 1 754 12 738 10 514
Finance costs (Note 4) -10 804 -7 604 -33 987 -37 289
Share of profit of equity-accounted investees 40 13 40 13
Profit/loss before income tax 3 988 4 498 53 552 44 845
         
Income tax  -115 -986 -4 253 -741
         
Net profit/loss for the period 3 873 3 512 49 299 44 104
         
Other comprehensive income/expense        
Exchange differences on translating foreign operations 35 -205 13 -469
Other comprehensive income/expense for the period 35 -205 13 -469
         
Total comprehensive income/expense for the period 3 908 3 307 49 312 43 635
         
Basic and diluted earnings per share (in EUR per share, note 5) 0.006 0.005 0.074 0.066

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

Unaudited, in thousands of EUR 31.12.17 31.12.2016 restated ² 01.01.2016 restated ²
ASSETS      
Cash and cash equivalents 88 911 78 773 81 976
Trade and other receivables 46 466 38 674 36 583
Prepayments 6 705 7 926 5 274
Prepaid income tax 40 91 1 224
Inventories 40 675 38 719 29 197
Current assets 182 797 164 183 154 254
       
Investments in equity-accounted investees 403 363 350
Other financial assets 344 348 308
Deferred income tax assets 18 722 18 791 19 410
Investment property 300 300 300
Property, plant and equipment (Note 7) 1 308 441 1 304 897 1 311 418
Intangible assets (Note 8) 48 900 50 127 52 726
Non-current assets 1 377 110 1 374 826 1 384 512
TOTAL ASSETS 1 559 907 1 539 009 1 538 766
       
LIABILITIES AND EQUITY      
Interest-bearing loans and borrowings (Note 9) 159 938 106 112 81 889
Trade and other payables (Note 13) 94 055 106 970 92 170
Derivatives (Note 6) 29 710 0 0
Payables to owners ¹ 3 4 0
Income tax liability 34 10 4 567
Deferred income 31 429 30 895 28 906
Current liabilities 315 169 243 991 207 532
       
Interest-bearing loans and borrowings (Note 9) 400 968 452 793 467 447
Derivatives (Note 6) 4 688 32 359 42 863
Other liabilities 0 0 192
Non-current liabilities 405 656 485 152 510 502
Total liabilities 720 825 729 143 718 034
       
Share capital (Note 10) 361 736 361 736 404 290
Share premium 639 639 639
Reserves 68 946 68 774 65 083
Retained earnings (Note 13) 407 761 378 717 350 720
Equity attributable to equity holders of the Parent 839 082 809 866 820 732
Total equity 839 082 809 866 820 732
TOTAL LIABILITIES AND EQUITY 1 559 907 1 539 009 1 538 766


¹ Payments related to reduction of share capital.
² See Note 13.

 

CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited, in thousands of EUR 12M 2017 12M 2016
     
CASH FLOWS FROM OPERATING ACTIVITIES    
Net profit/loss for the period 49 299 44 104
Adjustments 106 802 104 247
Changes in:    
Receivables and prepayments related to operating activities -8 017 -4 969
Inventories -1 956 -9 522
Liabilities related to operating activities -9 943 16 785
Changes in assets and liabilities -19 916 2 294
Cash generated from operating activities 136 185 150 645
Income tax paid -7 -3 265
NET CASH FROM OPERATING ACTIVITIES 136 178 147 380
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of property, plant, equipment and intangible assets (Notes 7, 8, 9) -219 207 -68 638
Proceeds from disposals of property, plant, equipment 132 448 169
Interest received 1 74
NET CASH USED IN INVESTING ACTIVITIES -86 758 -68 395
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from loans received (Note 9) 184 000 280 000
Repayment of loans received (Note 9) -134 321 -313 524
Change in overdraft (Note 9) -40 110 36 713
Payments for settlement of derivatives -3 592 -4 289
Payment of finance lease liabilities (Note 9) -102 -99
Interest paid -20 744 -24 083
Payment of transaction costs related to loans -216 -2 989
Dividends paid (Note 11) -20 096 -13 398
Reduction of share capital -1 -40 189
Income tax on dividends paid -4 100 -330
NET CASH FROM/USED IN FINANCING ACTIVITIES -39 282 -82 188
     
TOTAL NET CASH FLOW 10 138 -3 203
     
Cash and cash equivalents at the beginning of period 78 773 81 976
Increase/decrease in cash and cash equivalents 10 138 -3 203
Cash and cash equivalents at the end of period 88 911 78 773

 

         Veiko Haavapuu
         Financial Director
         
         AS Tallink Grupp
         Sadama 5/7
         10111 Tallinn, Estonia
         Tel. +372 640 9914
         E-mail veiko.haavapuu@tallink.ee


Tallink Grupp 2017-Q4 ENG.pdf