COMMENTS TO FINANCIAL RESULTS
The comments have been prepared on the basis of consolidated financial
indicators.
The results of operations in 2008 were primarily impacted by sharp drop of
Russia-originating cargo volume seen in mid-2007, which however stayed at a
relatively stable level during the financial year, but nevertheless resulted in
a decrease in cargo volume of 19% in total. As it is known, the decrease in
cargo volume in 2007 started under the circumstances which were neither in the
scope of influence of AS Tallinna Sadam nor related to the competitiveness of AS
Tallinna Sadam. On the other hand, cargo volume reached the budgeted level,
despite the impact of the global economic cool-down on some cargo groups.
However, the number of passengers passing through the port reached a record
level both in respect of line as well as cruise passengers. The factors which
impacted the growth of the number of passengers included Estonia's joining the
Schengen visa zone in December 2007, ongoing upgrading of line vessels together
with special offers being made available to passengers, and with regard to
cruise traffic, the Baltic Sea becoming one of the fastest growing cruise
regions in the world.
In 2008, the cargo volume passing through the ports of AS Tallinna Sadam
decreased by 7 million tons (or 19%), to 29 million tons. The decrease was an
aftermath to an steep drop that had occurred in mid-2007 subsequent to which the
cargo volume has stayed at a relatively stable level. The decrease together with
major changes occurred again in the volumes of bulk cargo and liquid cargo. The
reason behind the decline in these cargo groups was primarily related to the
continuing direction of cargo originating in Russia to Russia's own ports for
the purpose of completely utilising their capacity. The volume of container and
rolling stock primarily related to the development of consumption on the East
Coast of the Baltic Sea and its hinterland did not change (except for new
passenger cars, the volume of which decreased) and their share in the structure
of cargo volume increased due to the decrease in the volumes of the largest
cargo groups. By cargo types, liquid cargo made up 71%, bulk cargo 10%, rolling
stock 12% and containers 5% of cargo volume (2007: 62%, 22%, 10% and 4%,
respectively). With regard to cargo routes, transit made up 77%, exports 11% and
imports 12% of cargo volume (2007: 82%, 8% and 10%, respectively).
In 2008, the number of passengers travelling through the ports of AS Tallinna
Sadam was record-breaking 7.25 million, increasing by almost 730 thousand
passengers or 11% (2007: 6.51 million passengers and a decrease of 3.7%,
respectively). The number of passengers exceeded the expected level in 2008
increasing primarily both with regard to line as well as cruise passengers, the
latter also increased the most in relative terms. In absolute terms, the number
of passengers increased the most on the largest Tallinn-Helsinki line, by 570
thousand passengers or 10%. The number of passengers on the second largest line
Tallinn-Stockholm increased by 100 thousand passengers or 15%. In addition to a
long season of high-speed crafts permitted by mild winter, the growth in the
number of passengers was also fostered by Estonia's joining the Schengen visa
zone at the end of 2007; once again, the addition of several new and larger
passenger ships to the main lines and the effect of several marketing campaigns
offered to passengers which made travelling easier and more convenient. The
number of cruise passengers increased by 83 thousand passengers or 28% and
reached a record-breaking level, 378 thousand passengers. The reputation of
Baltic Sea region as a fast-growing region and the world's fastest growing
cruise tourism region helped to increase the number of cruise passengers.
In 2008, the consolidated revenue of AS Tallinna Sadam amounted to EEK 1,169
million (EUR 74.7 million), increasing by EEK 7 million (EUR 0.4 million) or
0.6% (2007: 1,162 million (EUR 74.3 million) and a decrease of 1.3%,
respectively). Although there was almost no change in revenue, some changes
occurred in the structure of income related to the changes in cargo volume and
the number of passengers. The decrease in the cargo volume was accompanied by a
decrease in income derived from cargo fees by EEK 26 million (EUR 1.7 million)
or 16%, to EEK 138 million (EUR 8.8 million). However, growth in the number of
passengers led to an increase in passenger fee revenue by EEK 20 million (EUR
1.3 million) or 16%, to EEK 148 million (EUR 9.4 million). Rental income
increased by EEK 7 million (EUR 0.5 million) or 6%, to EEK 119 million (EUR 7.6
million). Revenue from port fees, directly related to the number of vessel calls
and total capacity of vessels, did not change significantly, increasing by EEK 1
million (EUR 0.1 million) or 0.2%.
The expenses related to main operations (operating expenses, personnel expenses,
and depreciation and impairment expense) totalled EEK 717 million (EUR 45.8
million), increasing by EEK 27 million (EUR 1.7 million) or 4% in a year. Growth
of expenses was primarily related to depreciation and impairment expense that
increased by EEK 28 million (EUR 1.8 million) or 14% due to higher depreciation
cost related to growth of assets as well as expensing non-feasible development
projects.
The operating profit for 2008 (operating profit before other operating income
and other operating expenses) was EEK 452 million (EUR 28.9 million),
representing a decline of the operating profit by EEK 20.5 million (EUR 1.3
million) or 4% as compared to 2007. Therefore, the efficiency of operations of
AS Tallinna Sadam, expressed as an operating margin (operating profit divided by
sales revenue) fell from 40.7% to 38.7% in 2008.
In 2008, the Group's net profit was EEK 417 million (EUR 26.6 million), which is
EEK 81 million (EUR 5.2 million) higher than in 2007. By adjusting the net
profit for 2008 by the amount of the income tax expense on dividends in the
amount of EEK 26.6 million (EUR 1.7 million) and the profit from sale of
non-current assets in the amount of EEK 16 million (EUR 1 million), the adjusted
net profit equals EEK 427 million (EUR 27.3 million). By adjusting the net
profit for 2007 by the income tax expense on dividends in the amount of EEK 84.6
million (EUR 5.4 million), the adjusted net profit is EEK 420 million (EUR 26.9
million). The growth of the adjusted net profit was related to the increase of
the income derived from contractual penalties included within other operating
income on the one hand and the co-effect of the cost of depreciation and
impairment and growth of the financing expense on the other.
The return on assets of AS Tallinna Sadam (net profit divided by the annual
average volume of assets) was 5.9% which is slightly more than in 2007. However,
the return on assets determined using the adjusted net profit fell in 2008, to
6.0%. This represents the lowest return on assets over the last five years.
However, the declining trend was partially expected, based on the growth in
assets as a result of long-term and large-scale investments, the related income
of which will be earned in future periods. The decline in the return was
impacted by decline in cargo volume which reduced the impact of the growth of
other income. In 2008, the return on equity of AS Tallinna Sadam (adjusted net
profit divided by the average annual volume of equity) was 9.2%. This also
represented a slight decline in the return as compared to the return of 9.4% of
the previous year (which is also based on adjusted net profit). As compared to a
larger decline in the return on assets, the return on equity was somewhat
maintained due to a change in capital structure as the share of debt increased
slightly. The decline in the return on equity was primarily related to a decline
of profitability of the main operations.
In 2008, the Group invested a total of EEK 560 million (EUR 35.8 million) in new
infrastructure objects and improvement of existing infrastructure assets,
representing a decline by EEK 293 million (EUR 18.7 million) and somewhat
smaller volume than budgeted. Most of the investments were made to build new
quays and the hinterland area, totalling EEK 360 million (EUR 23.0 million) or
almost 2/3 of the total volume of investments. Construction of quays for
handling bulk cargo at Paldiski South Harbour and the quay and hinterland area
for container cargo at Muuga Port were launched. The investments related to
other water transportation structures (quays and aquatory) totalled EEK 67
million (EUR 4.3 million) or 12% of the total volume of investments. A total of
EEK 91 million (EUR 5.8 million) was invested in buildings, structures and
servicing, EEK 15 million (EUR 1.0 million) in railway runways, EEK 27 million
(EUR 1.7 million) in necessary networks of utility services and for increasing
the supply security of these services.
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
| in thousands of (unaudited) | EEK | EEK | EUR | EUR |
--------------------------------------------------------------------------------
| as at 31 December | 2008 | 2007 | 2008 | 2007 |
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| ASSETS | | | | |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 217 406 | 269 641 | 13 895 | 17 233 |
--------------------------------------------------------------------------------
| Term deposits with | 193 000 | 0 | 12 335 | 0 |
| maturities greater than 3 | | | | |
| months at banks | | | | |
--------------------------------------------------------------------------------
| Available-for-sale | 2 855 | 2 855 | 182 | 182 |
| financial assets | | | | |
--------------------------------------------------------------------------------
| Derivatives | 2 776 | 11 427 | 177 | 730 |
--------------------------------------------------------------------------------
| Trade and other receivables | 190 113 | 110 880 | 12 150 | 7 087 |
--------------------------------------------------------------------------------
| Total current assets | 606 150 | 394 803 | 38 739 | 25 232 |
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Investments in joint | 4 276 | 2 673 | 273 | 171 |
| venture | | | | |
--------------------------------------------------------------------------------
| Other long-term receivables | 4 453 | 6 959 | 285 | 445 |
--------------------------------------------------------------------------------
| Property, plant and | 6 777 456 | 6 385 769 | 433 158 | 408 125 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Intangible assets | 716 | 0 | 46 | 0 |
--------------------------------------------------------------------------------
| Total non-current assets | 6 786 901 | 6 395 401 | 433 762 | 408 741 |
--------------------------------------------------------------------------------
| Total assets | 7 393 051 | 6 790 204 | 472 501 | 433 973 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | | | |
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| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Current portion of bonds | 1 342 261 | 608 435 | 85 786 | 38 886 |
| and long-term loans | | | | |
--------------------------------------------------------------------------------
| Derivatives | 9 242 | 0 | 591 | 0 |
--------------------------------------------------------------------------------
| Short-term provisions | 20 511 | 18 910 | 1 311 | 1 208 |
--------------------------------------------------------------------------------
| Trade and other payables | 230 950 | 195 190 | 14 760 | 12 475 |
--------------------------------------------------------------------------------
| Total current liabilities | 1 602 964 | 822 535 | 102 448 | 52 569 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Long-term borrowings | 981 194 | 1 453 504 | 62 710 | 92 896 |
--------------------------------------------------------------------------------
| Government grants | 2 386 | 11 455 | 152 | 732 |
--------------------------------------------------------------------------------
| Other long-term payables | 9 835 | 9 400 | 629 | 601 |
--------------------------------------------------------------------------------
| Total non-current | 993 415 | 1 474 359 | 63 491 | 94 229 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Total liabilities | 2 596 379 | 2 296 894 | 165 939 | 146 798 |
--------------------------------------------------------------------------------
| EQUITY | | | | |
--------------------------------------------------------------------------------
| Share capital at nominal | 2 786 204 | 2 786 204 | 178 071 | 178 071 |
| value | | | | |
--------------------------------------------------------------------------------
| Statutory reserve capital | 278 620 | 275 562 | 17 807 | 17 612 |
--------------------------------------------------------------------------------
| Hedge reserve | -4 641 | 8 642 | -297 | 552 |
--------------------------------------------------------------------------------
| Retained earnings | 1 319 845 | 1 087 071 | 84 353 | 69 476 |
--------------------------------------------------------------------------------
| Net profit for the | 416 644 | 335 831 | 26 628 | 21 464 |
| financial year | | | | |
--------------------------------------------------------------------------------
| Total equity | 4 796 672 | 4 493 310 | 306 562 | 287 175 |
--------------------------------------------------------------------------------
| Total liabilities and | 7 393 051 | 6 790 204 | 472 501 | 433 973 |
| equity | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT
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| in thousands of EEK | 2008 | 2007 | 01.07.2008- | 01.07.2007- |
| (unaudited) | | | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
| Sales |1 168 968 |1 162 445 | 553 571 | 509 955 |
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| Other income | 82 726 | 30 174 | 65 117 | 24 640 |
--------------------------------------------------------------------------------
| Operating expenses | -307 871 | -309 252 | -169 578 | -164 305 |
--------------------------------------------------------------------------------
| Personnel expenses | -176 371 | -176 025 | -105 865 | -106 157 |
--------------------------------------------------------------------------------
| Depreciation and | -232 363 | -204 296 | -130 029 | -105 102 |
| impairment | | | | |
--------------------------------------------------------------------------------
| Other expenses | -7 877 | -19 652 | -3 746 | -15 706 |
--------------------------------------------------------------------------------
| Operating profit | 527 212 | 483 394 | 209 470 | 143 325 |
--------------------------------------------------------------------------------
| Finance income and costs | | | | |
--------------------------------------------------------------------------------
| Finance income | 15 632 | 12 798 | 9 519 | 4 488 |
--------------------------------------------------------------------------------
| Finance costs | -101 221 | -76 645 | -55 632 | -40 401 |
--------------------------------------------------------------------------------
| Total finance income and | -85 589 | -63 847 | -46 113 | -35 913 |
| costs | | | | |
--------------------------------------------------------------------------------
| Profit/loss from | 1 603 | 899 | 702 | -145 |
| investments in joint | | | | |
| venture under eguity | | | | |
| method of accounting | | | | |
--------------------------------------------------------------------------------
| Profit before tax | 443 226 | 420 446 | 164 059 | 107 267 |
--------------------------------------------------------------------------------
| Income tax expense | -26 582 | -84 615 | 0 | 0 |
--------------------------------------------------------------------------------
| Net profit for the period | 416 644 | 335 831 | 164 059 | 107 267 |
--------------------------------------------------------------------------------
| Basic earnings and diluted | 1,50 | 1,21 | 0,59 | 0,39 |
| earnings per share (in | | | | |
| kroons) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| in thousands of EUR | 2008 | 2007 | 01.07.2008- | 01.07.2007- |
| (unaudited) | | | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
| Sales | 74 711 | 74 294 | 35 380 | 32 592 |
--------------------------------------------------------------------------------
| Other income | 5 287 | 1 929 | 4 162 | 1 575 |
--------------------------------------------------------------------------------
| Operating expenses | -19 677 | -19 765 | -10 838 | -10 501 |
--------------------------------------------------------------------------------
| Personnel expenses | -11 272 | -11 250 | -6 766 | -6 785 |
--------------------------------------------------------------------------------
| Depreciation and | -14 851 | -13 057 | -8 310 | -6 717 |
| impairment | | | | |
--------------------------------------------------------------------------------
| Other expenses | -503 | -1 256 | -239 | -1 004 |
--------------------------------------------------------------------------------
| Operating profit | 33 695 | 30 895 | 13 389 | 9 160 |
--------------------------------------------------------------------------------
| Finance income and costs | | | | |
--------------------------------------------------------------------------------
| Finance income | 999 | 818 | 608 | 287 |
--------------------------------------------------------------------------------
| Finance costs | -6 469 | -4 899 | -3 556 | -2 582 |
--------------------------------------------------------------------------------
| Total finance income and | -5 470 | -4 081 | -2 948 | -2 295 |
| costs | | | | |
--------------------------------------------------------------------------------
| Profit/loss from | 102 | 58 | 45 | -9 |
| investments in joint | | | | |
| venture under eguity | | | | |
| method of accounting | | | | |
--------------------------------------------------------------------------------
| Profit before tax | 28 327 | 26 872 | 10 486 | 6 856 |
--------------------------------------------------------------------------------
| Income tax expense | -1 699 | -5 408 | 0 | 0 |
--------------------------------------------------------------------------------
| Net profit for the period | 26 628 | 21 464 | 10 486 | 6 856 |
--------------------------------------------------------------------------------
| Basic earnings and diluted | 0,10 | 0,08 | 0,04 | 0,02 |
| earnings per share (in | | | | |
| kroons) | | | | |
--------------------------------------------------------------------------------
Marko Raid
Chief Financial Officer
+372 6318047
Helen Hinno
Head of Marketing Department
+372 6318066
