Published: 2018-04-24 09:50:00 CEST

AS Tallink Grupp Audited Annual Report of the 2017 Financial Year

In 2017, the Group carried a record number, a total of 9.8 million passengers, which is 3.2% more than in 2016. The number of cargo units transported increased by 11% compared to the previous financial year. The Group’s consolidated revenue amounted to EUR 967.0 million (EUR 937.8 million in 2016). EBITDA increased by EUR 8.9 million and amounted to EUR 158.3 million (EUR 149.5 million in 2016), net profit for the financial year was EUR 46.5 million or EUR 0.069 per share (EUR 44.1 million or EUR 0.066 per share in 2016).

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

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

In the financial year, the revenues of all core operating segments increased compared to the previous year. Shop and restaurant revenue increased by EUR 15.3 million and ticket revenue by EUR 6.7 million, the growth being supported by a 3.2% increase in passenger numbers. Cargo revenue increased by EUR 13.8 million compared to 2016. The growth was driven by an increase in the number of transported cargo units in all geographical segments, resulting from 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 at the same level as in 2016 and the number of cargo units transported on the routes increased by 11.6%. On the Tallinn – Helsinki route competition intensified due to capacities added 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 March to August 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 compared to the previous year and amounted to EUR 344.8 million. 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 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 result decreased compared to the previous year due to higher operating costs as since December 2016 a larger vessel has been 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, which resulted from added capacity. The cruise ferry Romantika started operating on the Riga – Stockholm route in December 2016 as a second ship on this route. The capacity increased entails also higher operating cost and the segment’s result was negative in 2017.

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 also made in the development of the online booking and sales systems.

The key highlights of the 2017 financial year were the following:

  • All-time high annual passenger number and higher revenue
  • New LNG fast ferry Megastar started shuttle service on the Tallinn - Helsinki route
  • New passenger terminal opened in Helsinki
  • Lower chartering revenues
  • Scheduled maintenance of five ships during the Q1 low season
  • Increased competition on the Tallinn – Helsinki route
  • Lower operating costs from the termination of the charter of fast ferry Superstar
  • Effects from the re-routing of vessels in December 2016
  • Renovated cruise ferry Silja Europa returned to the Tallinn – Helsinki route
  • Two ships on the Riga – Stockholm route
  • Sale of two Superfast vessels in December 2017
  • Group-wide ship renovation programme continued


KEY FIGURES OF THE FINANCIAL YEAR 2017

For the year ended 31 December20172016Change %
Revenue (million euros)967.0937.83.1%
Gross profit (million euros)194.6192.61.0%
Net profit for the period (million euros)46.544.15.4%
EBITDA (million euros)158.3149.55.9%
    
Depreciation and amortisation (million euros)86.477.910.9%
Investments (million euros)219.368.9218.2%
Weighted average number of ordinary shares outstanding1669 882 040669 882 0400.0%
Earnings per share0.0690.0664.5%
    
Number of passengers9 755 7209 457 5223.2%
Number of cargo units364 296328 19011.0%
Average number of employees7 4067 1633.4%
    
As at 31 December20172016Change %
Total assets (million euros)1 558.61 539.01.3%
Total liabilities (million euros)722.3729.1-0.9%
Interest-bearing liabilities (million euros)560.9558.90.4%
Net debt (million euros)472.0480.1-1.7%
Total equity (million euros)836.3809.93.3%
Equity ratio (%)53.7%52.6% 
    
Number of ordinary shares outstanding1669 882 040669 882 0400.0%
Shareholders’ equity per share1.251.213.3%
    
Ratios20172016Change %
Gross margin (%)20.1%20.5% 
EBITDA margin (%)16.4%15.9% 
Net profit margin (%)4.8%4.7% 
Return on assets (ROA)4.3%4.6% 
Return on equity (ROE)5.6%5.4% 
Return on capital employed (ROCE)5.3%5.6% 
Net debt to EBITDA3.03.2-6.9%


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
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
ROA: earnings before net financial items, taxes /average total assets
ROE: net profit/average shareholders’ equity
ROCE: earnings before net financial items, taxes / (total assets – current liabilities (average for the period))
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

The Group’s consolidated revenue amounted to EUR 967.0 million in 2017 (937.8 million in 2016). Restaurant and shop sales on-board and on mainland of EUR 536.7 million (521.5 million in 2016) contributed more than half of total revenue. Ticket sales amounted to EUR 242.7 million (236.0 million in 2016) and sales of cargo transport to EUR 117.7 million (103.9 million in 2016).

Geographically, 36.7% or EUR 354.5 million of revenue came from the Estonia-Finland route and 35.7% or EUR 344.8 million from the Finland-Sweden route. Revenue from the Estonia-Sweden route was EUR 117.2 million or 12.1% and from the Latvia-Sweden route EUR 66.5 million or 6.9%. The share of revenue generated by other geographical segments decreased to 8.7% or EUR 83.9 million.


EARNINGS

Gross profit was EUR 194.6 million (EUR 192.6 million in 2016) and EBITDA EUR 158.3 million (EUR 149.5 million in 2016). Net profit for 2017 was EUR 46.5 million (EUR 44.1 million in 2016). Basic and diluted earnings per share were EUR 0.069 (EUR 0.066 in 2016).

The 2017 financial statements include one-off costs related to the exploration of potential strategic options of EUR 3.6 million. The Group’s like-for-like results (results excluding one-off costs) are as follows: gross profit EUR 194.6 million (EUR 192.6 million in 2016), EBITDA EUR 161.9 million (EUR 149.5 million in 2016), net profit EUR 50.1 million (EUR 44.1 million in 2016), basic and diluted earnings per share EUR 0.075 (EUR 0.066 in 2016). For additional information, please see Note 26 Subsequent Events.

The cost of goods related to sales at shops and restaurants, which is the largest operating cost item, amounted to EUR 227.8 million (EUR 225.0 million in 2016).

Fuel costs for 2017 amounted to EUR 85.9 million (EUR 74.2 million in 2016). Fuel costs were impacted by an increase in carriage capacity and higher fuel prices throughout the year. As a result, total annual fuel costs increased by 15.8%. The Group makes continuous efforts to improve and optimize its day to day operations and lower the fleet’s fuel costs.

The Group’s personnel expenses amounted to EUR 215.2 million (EUR 210.0 million in 2016). The average number of employees in 2017 was 7 406 (7 163 in 2016).

Administrative expenses for the period amounted to EUR 53.7 million, and sales and marketing expenses to EUR 71.3 million (EUR 51.0 million and 72.3 million respectively in 2016). Administrative expenses for 2017 include one-off costs related to the exploration of potential strategic options of EUR 3.6 million. The Group’s like-for-like administrative expenses (expenses excluding one-off costs) are EUR 50.1 million (EUR 51.0 million in 2016).

Depreciation and amortisation of the Group’s assets totalled EUR 86.4 million (EUR 77.9 million in 2016). There were no impairment losses related to the Group’s property, plant and equipment and intangible assets.

The Group’s net finance costs for 2017 amounted to EUR 21.2 million (EUR 26.8 million in 2016).

The Group’s exposure to credit risk, liquidity risk and market risks, and its financial risk management activities are described in the notes to the financial statements.


CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December, in thousands of EUR20172016Notes
Revenue966 977937 8054
Cost of sales-772 372-745 2235
Gross profit194 605192 582 
    
Sales and marketing expenses-71 339-72 2685
Administrative expenses-53 672-50 9735
Other operating income2 8732 450 
Other operating expenses-509-184 
Result from operating activities71 95871 607 
    
Finance income12 73810 5145
Finance costs-33 987-37 2895
Share of profit of equity-accounted investees401312
Profit before income tax50 74944 845 
    
Income tax  -4 253-7416
    
Net profit attributable to equity holders of the Parent46 49644 104 
    
Other comprehensive income/expense   
Exchange differences on translating foreign operations13-469 
Other comprehensive income/expense for the year13-469 
    
Total comprehensive income attributable to equity holders of the Parent46 50943 635 
    
Basic and diluted earnings per share (in EUR per share)0.0690.0667
    


CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

As at 31 December, in thousands of EUR20172016 restated ¹2015 restated ¹Notes
ASSETS    
Cash and cash equivalents88 91178 77381 9768
Trade and other receivables46 46638 67436 5839
Prepayments5 3957 9265 27410
Prepaid income tax40911 224 
Inventories40 67538 71929 19711
Current assets181 487164 183154 254 
     
Investments in equity-accounted investees40336335012
Other financial assets34434830813
Deferred income tax assets18 72218 79119 4106
Investment property300300300 
Property, plant and equipment1 308 4411 304 8971 311 41814
Intangible assets48 90050 12752 72615
Non-current assets1 377 1101 374 8261 384 512 
TOTAL ASSETS1 558 5971 539 0091 538 766 
     
LIABILITIES AND EQUITY    
Interest-bearing loans and borrowings159 938106 11281 88916
Trade and other payables 95 548106 97092 17017
Derivatives29 7100024
Dividends payable to shareholders340 
Income tax liability34104 567 
Deferred income31 42930 89528 90618
Current liabilities316 662243 991207 532 
     
Interest-bearing loans and borrowings400 968452 793467 44716
Derivatives4 68832 35942 86324
Other liabilities00192 
Non-current liabilities405 656485 152510 502 
Total liabilities722 318729 143718 034 
     
Share capital361 736361 736404 29019
Share premium63963963919
Reserves68 94668 77465 08319
Retained earnings404 958378 717350 720 
Equity attributable to equity holders of the Parent836 279809 866820 732 
Equity836 279809 866820 732 
TOTAL LIABILITIES AND EQUITY1 558 5971 539 0091 538 766 

1 For further information see also Note 25 Correction of Errors


CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December, in thousands of EUR20172016Notes
CASH FLOWS FROM OPERATING ACTIVITIES   
Net profit for the period46 49644 104 
Adjustments for:   
Depreciation and amortisation86 37177 85814, 15
Net loss on disposals of property, plant and equipment-1 903-83 
Net interest expense23 74427 9805
Net expense/income from derivatives5 631-6 2155
Profit from equity-accounted investees-40-1312
Net unrealised foreign exchange gain/loss-7 5644 889 
Share option programme reserve0-910 
Income tax4 2537416
Adjustments110 492104 247 
Changes in:   
Receivables and prepayments related to operating activities-6 707-4 969 
Inventories-1 956-9 522 
Liabilities related to operating activities-12 14016 785 
Changes in assets and liabilities-20 8032 294 
Cash generated from operating activities136 185150 645 
Income tax paid-7-3 265 
NET CASH USED IN OPERATING ACTIVITIES136 178147 380 
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Purchase of property, plant, equipment and intangible assets-219 207-68 638 
Proceeds from disposals of property, plant, equipment132 448169 
Interest received174 
NET CASH USED IN INVESTING ACTIVITIES-86 758-68 395 
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from loans184 000280 000 
Repayment of loans-134 321-313 524 
Change in overdraft-40 11036 71316
Payments for settlement of derivatives-3 592-4 289 
Payment of finance lease liabilities-102-99 
Interest paid-20 744-24 083 
Payment of transaction costs related to loans-216-2 989 
Dividends paid-20 096-13 39819
Reduction of share capital-1-40 189 
Income tax on dividends paid-4 100-33019
NET CASH USED IN FINANCING ACTIVITIES-39 282-82 188 
    
TOTAL NET CASH FLOW10 138-3 203 
    
Cash and cash equivalents at the beginning of period78 77381 976 
Increase/decrease in cash and cash equivalents10 138-3 2038
Cash and cash equivalents at the end of period88 91178 773 


Janek Stalmeister
Chairman of the Management Board
         
AS Tallink Grupp
Tel +372 640 9800
E-mail janek.stalmeister@tallink.ee


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


Attachment


Tallink Grupp AR 2017 ENG.pdf