COMMENTS TO FINANCIAL RESULTS
Comments are prepared based on consolidated figures.
The cargo volume passing through the ports of AS Tallinna Sadam increased in the
first half of 2007. The number of passenger decreased somewhat as a result of
changes in the liner market. However, the growth of cargo volume turned negative
in June due to significant reduction of cargo flows from Russia as a result of
cargo redirection to the ports of Russia and other Baltic countries.
In the first half of 2007, the cargo volume passing through the ports of AS
Tallinna Sadam increased by 1 million tonnes (or 4.9%), reaching 21.7 million
tonnes. The increase in cargo volume was caused mainly by the increase in dry
bulk and to a lesser degree also in liquid cargo volumes. The cargo volume of
the new coal terminal, operating in Muuga Port for two years, was the main
contributor to the growth of dry bulk. Container and rolling stock volumes
continued their growth at a stable rate, but their share in the total cargo
volume remained insignificant.
The market share of AS Tallinna Sadam in cargo transport among the largest ports
on the eastern coast of the Baltic Sea decreased slightly compared to the
previous year, falling from 12.4% to 11.8%.
By cargo types, the share of dry bulk increased as expected. The majority of the
cargo volume was still made up of liquid cargo with 60%, followed by dry bulk
with 26% and rolling stock with 8% (in the first half of 2006, the respective
figures were 61%, 24% and 8%).
By transport directions, the cargo volume included 86% transit, 8% export and 6%
import goods (in the first half of 2006, the respective figures were 85%, 8% and
7%).
As of May this year, the volume of transit goods arriving in Estonia from Russia
by the railway decreased approximately by a third. As railway is also the main
channel of cargo transport to the ports of AS Tallinna Sadam, the volume of
cargo passing through the ports also decreased as of June. There are currently
no dependable data that would enable to predict reliably the duration of this
situation.
In the first half of 2007, the total number of passengers travelling through the
ports of AS Tallinna Sadam was 2.9 million, which was 4.1% less than in the same
period a year ago (the respective figures stood at 3.0 million passengers and a
decrease of 4.6%). The reduction in the number of passengers continued after the
sudden increase following the accession to the European Union.
The number of passengers continued to grow on the Tallinn-Stockholm line
(increase by 34 thousand passengers or 12%), amounting to 308 thousand
passengers. On other lines, the number of passengers decreased: on the
Tallinn-Helsinki line by 91 thousand passengers (or 4%) to 2.44 million
passengers, and on the Paldiski-Kapellskär line by 41 thousand passengers (62%)
to 25 thousand passengers. The Hanko-Paldiski-Rostock line, which operated as a
new line in the second quarter of the last year, was not reopened in this year.
The number of traditional cruise passengers increased slightly, amounting to 103
thousand passengers (increase by 2 thousand passengers or 2%). As expected,
Saaremaa Harbour that was opened in the last year for receiving cruise
passengers did not yet achieve a significant volume of cruise passengers.
The consolidated sales of AS Tallinna Sadam continued to grow in the first half
of 2007 and amounted to EEK 652.4 million (EUR 41.7 million), increasing by 3.8%
(in 2006, the respective figures were EEK 628.3 million (EUR 40.2 million) and
8.5% growth). The increase in sales was mainly due to the increase in port dues,
offsetting the decrease in the cargo charges and sale of services. Income from
port dues rose by EEK 31 million (EUR 2.0 or 9%), while the income from cargo
charges and sale of services decreased by EEK 4.4 million (EUR 0.3 million or
4%) and EEK 3.4 million (EUR 0.2 million or 6%), respectively. The increased
sales from port dues was caused by the increase in the gross tonnage of
passenger vessels that visited the ports of AS Tallinna Sadam, as well as by the
indexation of port dues. The total number of vessel visits and the gross tonnage
of cargo vessels did not change significantly. The sale of services, comprising
mainly the sale of utilities, decreased as a result of a drop in consumption
volumes in the first months of the year. Decrease in the income from cargo
charges on the background of increased cargo volume was caused by some changes
in the cargo structure and tariffs. Income from passenger fees remained
unchanged, because the reduction in the income caused by the decline in the
number of passengers was offset by the effect of indexation of passenger fees.
The operating profit (operating profit before other income and other expenses)
for the first half of 2007 amounted to EEK 340 million (EUR 21.8 million), which
exceeds the operating profit for the same period last year by EEK 2 million (EUR
0.1 million or 0.6%).
The expenses related to operating activities totalled EEK 312 million (EUR 20.0
million), increasing by EEK 22 million (EUR 1.4 million or 7.6%). The increase
in personnel expenses as a result of higher wages (increase by EEK 10.3 million
(EUR 0.7 million or 17%)) was the main contributor to the growth of expenses.
Depreciation and impairment of fixed assets amounted to EEK 99 million (EUR 6.3
million), increasing by EEK 7.8 million (EUR 0.5 million) as a result of growth
in the total volume of fixed assets and a one-time impairment. Operating
expenses did not change significantly and amounted to EEK 142 million (EUR 9.1
million), increasing only by 2.8%.
The operating margin (operating profit/sales) of the Group was 52%, which once
again meant slight reduction compared with the same period last year (the
corresponding figure was 54%), mainly due the relatively higher growth of
expenses related to operating activities compared with the increase in sales.
The operating profit amounted to EEK 342 million (EUR 21.9 million), which is
EEK 134 million (EUR 8.6 million) less than the respective indicator from the
last year. The drop in operating profit was mainly caused by the decrease in
other income, which in the same period last year included one-time profit from
the sales of fixed assets amounting to EEK 131 million (EUR 8.4 million). The
company sold a number of its buildings, mainly at the ports of Paljassaare and
Muuga, as continuing their use for a long term was not justified.
The interest expenses totalled EEK 36.2 million (EUR 2.3 million), increasing by
EEK 7.7 million (EUR 0.5 million) or 27% over the same period in the last year.
The increase in interest expenses is associated with higher interest rates,
which made the use of loan capital more expensive. However, the impact of the
rise of interest rates for AS Tallinna Sadam remained limited as a result of the
reduction of interest rate risk through use of derivative instruments.
The consolidated net profit for the first six months in 2007 amounted to EEK
229.6 million (EUR 14.7 million), which meant a reduction of net profit by EEK
133 million (EUR 8.5 million) or 37% compared with the same period a year
earlier. The decrease in the net profit was caused mainly by the non-recurrence
of the last year's profit from the sale of fixed assets (EEK 131 million (EUR
8.4 million)) and increase in interest expenses.
The return on assets of AS Tallinna Sadam (annualized net profit divided by the
average volume of assets in the period) was 7.1%, which was significantly lower
than the 12.1% return on assets in the last year, which was achieved as a result
of the one-time profit from the sale of fixed assets. When calculating the
return on assets on the basis of adjusted net profit (net profit has been
adjusted by income tax expense on dividends and by the profit from the sale of
fixed assets that are not associated with principal business), the return on
assets in the first half of the year would be 9.7% compared with 10.5% a year
earlier. Lower return on assets was caused by the increased volume of assets.
In the first half of 2007, the return on equity of AS Tallinna Sadam (annualized
net profit divided by the average volume of equity in the period) was 10.4%,
which was also lower than the 17.5% return on equity in the last year, which was
gained as a result of the one-time profit from the sale of fixed assets. The
corresponding figure based on adjusted net profit was 14% (and 15.2% a year
earlier) and the decrease was associated with the increase in the average volume
of equity.
In the first half of 2007, the Group invested a total of EEK 405 million (EUR
25.9 million) in new infrastructure objects and improvement of existing
infrastructure, which surpassed the investments made in the same period last
year (EEK 195 million (EUR 12.5 million) in total) by EEK 210 million (EUR 13.4
million) or 108%. Most of the investments were traditionally related to water
transport facilities (quays and aquatory), with the greatest part used to
improve passenger vessel reception conditions at the Old City Port.
Additionally, investments were made in the improvement of cargo vessel service
opportunities, purchase of land to increase the area at the rear of the port,
development of Muuga industrial park, and expansion of the network of access
routes to the port.
In addition to investments, AS Tallinna Sadam incurs each year substantial
research and development costs, which totalled nearly EEK 6 million (EUR 0.4
million) in the first half of 2007, remaining at the last year's level. The main
part of research and development costs are directed at finding lucrative trade
flows and analysis of potential development projects in terms of their
environmental, structural and economic feasibility.
BALANCE SHEET
--------------------------------------------------------------------------------
| in thousands of | EEK | EEK | EUR | EUR |
| (unaudited) | | | | |
--------------------------------------------------------------------------------
| | 30.06.2007 | 31.12.2006 | 30.06.2007 | 31.12.2006 |
--------------------------------------------------------------------------------
| ASSETS | | | | |
--------------------------------------------------------------------------------
| CURRENT ASSETS | | | | |
--------------------------------------------------------------------------------
| Cash and cash | 201 392 | 514 693 | 12 871 | 32 895 |
| equivalents | | | | |
--------------------------------------------------------------------------------
| Available for sale | 2 855 | 2 855 | 182 | 182 |
| financial assets | | | | |
--------------------------------------------------------------------------------
| Other financial assets | 0 | 34 855 | 0 | 2 228 |
| through profit and loss | | | | |
--------------------------------------------------------------------------------
| Trade and other | 154 108 | 111 783 | 9 849 | 7 144 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Total current assets | 358 355 | 664 186 | 22 902 | 42 449 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | | | | |
--------------------------------------------------------------------------------
| Other long-term | 8 585 | 8 585 | 549 | 549 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Property, plant and | 6 194 000 | 5 757 872 | 395 871 | 367 995 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Total non-current | 6 202 585 | 5 766 457 | 396 420 | 368 544 |
| assets | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 6 560 940 | 6 430 643 | 419 322 | 410 993 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABITLITIES | | | | |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Current portion of | 107 244 | 185 282 | 6 854 | 11 842 |
| long-term debt | | | | |
--------------------------------------------------------------------------------
| Supplier and other | 182 060 | 112 617 | 11 636 | 7 196 |
| short-term payables | | | | |
--------------------------------------------------------------------------------
| Payable to shareholders | 200 000 | 0 | 12 782 | 0 |
--------------------------------------------------------------------------------
| Short-term provisions | 650 | 17 839 | 42 | 1 141 |
--------------------------------------------------------------------------------
| Total current | 489 954 | 315 738 | 31 314 | 20 179 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Long-term borrowings | 1 661 386 | 1 661 386 | 106 182 | 106 182 |
--------------------------------------------------------------------------------
| Long-term provisions | 3 712 | 3 712 | 237 | 237 |
--------------------------------------------------------------------------------
| Government grants | 16 851 | 18 358 | 1 077 | 1 173 |
--------------------------------------------------------------------------------
| Other long-term | 6 017 | 3 000 | 386 | 192 |
| payables | | | | |
--------------------------------------------------------------------------------
| Total non-current | 1 687 966 | 1 686 456 | 107 882 | 107 784 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 2 177 920 | 2 002 194 | 139 196 | 127 963 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital and reserves | | | | |
| attributable to equity | | | | |
| holders of the Parent | | | | |
| Company | | | | |
--------------------------------------------------------------------------------
| Share capital at | 2 777 369 | 2 755 619 | 177 506 | 176 116 |
| nominal value | | | | |
--------------------------------------------------------------------------------
| Statutory reserve | 275 562 | 275 000 | 17 612 | 17 576 |
| capital | | | | |
--------------------------------------------------------------------------------
| Hedge reserve | 11 746 | 8 494 | 751 | 543 |
--------------------------------------------------------------------------------
| Retained earnings | 1 087 071 | 792 908 | 69 476 | 50 676 |
--------------------------------------------------------------------------------
| Net profit for the | 228 565 | 594 724 | 14 608 | 38 010 |
| period | | | | |
--------------------------------------------------------------------------------
| Capital and reserves | 4 380 313 | 4 426 745 | 279 953 | 282 921 |
| attributable to equity | | | | |
| holders of the Parent | | | | |
| Company | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Minority interest | 2 707 | 1 704 | 173 | 109 |
--------------------------------------------------------------------------------
| Total equity | 4 383 020 | 4 428 449 | 280 126 | 283 030 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities and | 6 560 940 | 6 430 643 | 419 322 | 410 993 |
| equity | | | | |
--------------------------------------------------------------------------------
INCOME STATEMENT
--------------------------------------------------------------------------------
| in thousands of (unaudited) | EEK | EEK | EUR | EUR |
--------------------------------------------------------------------------------
| | 6 months | 6 months | 6 months | 6 months |
| | 2007 | 2006 | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales | 652 380 | 628 316 | 41 695 | 40 157 |
--------------------------------------------------------------------------------
| Other income | 5 544 | 135 688 | 354 | 8 672 |
--------------------------------------------------------------------------------
| Operating expenses | -141 999 | -138 071 | -9 076 | -8 824 |
--------------------------------------------------------------------------------
| Personnel expenses | -70 728 | -60 436 | -4 521 | -3 863 |
--------------------------------------------------------------------------------
| Depreciation and impairment | -99 196 | -91 388 | -6 339 | -5 841 |
--------------------------------------------------------------------------------
| Other expenses | -3 948 | -1 789 | -252 | -114 |
--------------------------------------------------------------------------------
| Operating profit | 342 053 | 472 320 | 21 861 | 30 187 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income and costs | | | | |
--------------------------------------------------------------------------------
| Interest expenses | -36 211 | -28 492 | -2 314 | -1 821 |
--------------------------------------------------------------------------------
| Other finance income and | 8 342 | 4 279 | 533 | 273 |
| costs, net | | | | |
--------------------------------------------------------------------------------
| Total finance income and | -27 869 | -24 213 | -1 781 | -1 548 |
| costs | | | | |
--------------------------------------------------------------------------------
| Profit before tax | 314 184 | 448 107 | 20 080 | 28 639 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income tax expense | -84 616 | -85 130 | -5 408 | -5 441 |
--------------------------------------------------------------------------------
| Net profit for the period | 229 568 | 362 977 | 14 672 | 23 198 |
--------------------------------------------------------------------------------
| attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the Parent | 228 565 | 362 594 | 14 608 | 23 174 |
| Company | | | | |
--------------------------------------------------------------------------------
| Minority interest | 1 003 | 383 | 64 | 24 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic earnings and diluted | 0,83 | 1,32 | 0,05 | 0,08 |
| earnings per share (in | | | | |
| kroons, euros) | | | | |
--------------------------------------------------------------------------------
Marko Raid
Chief Financial Officer
6318047
Sven Ratassepp
Public Relations Manager
6318064
