The 2007/2008 financial year for AS Tallink Grupp (hereinafter also
referred to as the Group) was one of the most eventful. In one year we took
delivery of two new vessels, made several changes in route operations and
launched a new booking reservation and check-in system. The 2007/2008
financial year ended before the full effect of these the positive changes
and developments have become visible. However, the start of the new
2008/2009 financial year is very positive with traffic volumes indicating
strong growth in autumn 2008 as a result of the developments implemented in
the previous financial year.
The Group's revenues increased strongly on the newest Sweden-Latvia route
and also on the Finland-Estonia route where the new Tallink Shuttle service
is the main contributing factor . This was partly offset by worse than
expected performance on the Finland - Sweden route and the Germany -
Finland route. As a result, the group revenues for the financial year
increased by 3.4% totalling EUR 786.8 million (EEK 12,310 million). The
Group's sales in the fourth quarter amounted to EUR 237 million (EEK 3,710
million) EBITDA was EUR 49.7 million (EEK 777.6 million) and net profit for
the quarter was EUR 29.5 million (EEK 460.9 million).
The 2007/2008 financial year was largely influenced by significantly
increased fuel costs, higher interest costs and weak traffic volumes on
some routes. During the year the total fuel cost increased nearly 700
million EEK (45 million EUR) million compared to the previous financial
year as the market price for fuel was at record high levels.
In the fourth quarter the Group delivered the newest cruise ferry M/S
Baltic Princess. The delivery of the new vessel was delayed which resulted
in significant route changes during the high season. The timing of the new
vessel and consequent route changes were unclear until very late and as a
result of which the pre-marketing period was too short, resulting in an
immediate weaker result compared to our previous deliveries. This further
delayed other re-routings which altogether affected negatively the Group
result in the fourth quarter as the associated start-up costs were not
covered by the end of August 2008.
As a result of the above, high fuel cost, weaker than expected traffic
numbers and with the negative development on the Germany route the EBITDA
for the full year decreased to EUR 126.7 million (EEK 1,982 million), down
by EUR 32.3 million (EEK 505 million). The net profit for the Group during
the last financial year was EUR 20.3 million (EEK 318 million).
Management have taken a number of operational steps to address the issues
seen in the last financial year and to try to deliver significantly
improved financial performance in the current financial year. At the time
of this report the signs for the Group result improvement are clearly
noticeable providing an encouraging outlook for the current financial year.
We can highlight the following:
· The new booking reservation and check-in system launch which disturbed
our sales last year is now running at its full functionality.
· New cruise vessel delivery and related vessels' route changes have
been successfully implemented.
· Passenger bookings for the coming months are increasing.
· Steps taken to address the situation on the Germany route: we now
operate with only two vessels on a decreased cost base with the third
vessel heading to a profitable charter in the coming weeks. Other
possibilities are being actively explored to further address the issues on
this route.
· The fuel price which has been very high last summer has now decreased
significantly and, in EUR, is back to the levels that were seen in the
years 2006-2007. Given the high market volatility, management has decided
to use the current situation in order to hedge a portion of the fuel cost
for the year 2009.
· The competition on the Tallinn-Helsinki route has reduced as two of
the fast craft operators have exited from the market. These operators are
unlikely to restart operations and their total annual passenger volume has
been close to one million. Given the recently launched Tallink Shuttle
service and our available capacity we believe that a noticeable portion of
this passenger volume will be served by Tallink.
So far, besides the interest rate decrease in last summer, we do not notice
other significant direct impact of the global financial crisis on Tallink's
operations. The Group's loans have on average 10 years maturity and are
being repaid based on agreed repayment schedule served from the business
cash flows. Currently we do not see the need for refinancing any of the
loans as there will not be any large bullet repayments due before the year
2013. The loan agreement for the new Cruise 5 vessel (to be delivered in
2009) has also been concluded earlier stating the financing on time of the
delivery of the vessel.
From the operational liquidity aspect the new 2008/2009 financial year will
be in many areas better for the Group. The capital down payments needed for
the new vessels is only EUR 6 million. In comparison during the 2007/2008
financial year ended the Group was paying 38 million EUR to the shipyards
before the agreed 80% bank financing. Given the (a) reduction of capacity
and thereby lower costs on the Germany route (b) visible positive
development on the traffic volumes and (c) lower fuel costs and reduced
exposure to rising fuel prices going forward, the operational cash flows
and company's liquidity is expected to be healthy.
KEY EVENTS IN 4th QUARTER
· Delivery of M/S Baltic Princess;
· Sale of M/S Fantaasia.
12 MONTHS KEY FIGURES
01.09.2007- 01.09.2006- change
31.08.2008 31.08.2007 %
EEK EUR EEK EUR
Net sales (million) 12,310.0 786.8 11,903.3 760.8 3.4%
Gross profit (million) 2,580.9 165.0 3,136.6 200.5 -17.7%
Gross margin (%) 20.9% 26.4%
EBITDA (million) 1,982.4 126.7 2,487.3 159.0 -20.3%
EBITDA margin (%) 16.1% 20.9%
Net profit for the period 318.0 20.3 1,049.3 67.1 -69.7%
(million)
Net profit margin (%) 2.6% 8.8%
Depreciation (million) 964.3 61.6 925.5 59.1 4.2%
Investments (million) 4,240.3 271.0 2,203.5 140.8 92.4%
Weighted average number of 671,245,086 673,817,040
ordinary shares
outstanding during 12
months*
Earnings per share 0.47 0.03 1.56 0.100 -69.8%
Number of passengers 7,070,264 6,873,339 2.9%
Cargo units 331,149 359,781 -8%
Average number of 6,564 6,227 5.4%
employees
31.08.2008 31.08.2007 change%
Total assets (million) 29,701.8 1,898.3 26,570.9 1,698.2 11.8%
Total liabilities 19,308.2 1,234.0 16,436.0 1,050.4 17.5%
(million)
Interest-bearing 17,524.6 1,120.0 14,831.7 947.9 18.1%
liabilities (million)
Total equity (million) 10,393.6 664.3 10,134.9 647.7 2.6%
Equity ratio (%) 35.2% 38.1%
Number of ordinary shares 669,882,040 673,817,040 -0.6%
outstanding*
Shareholders' equity per 15.5 0.99 15.04 0.96 3.1%
share
Net profit margin - net profit / net sales;
EBITDA - Earnings before net financial items, share of profit of
associates, taxes, depreciation and amortization, income from negative
goodwill;
EBITDA margin - EBITDA / net sales;
Gross margin - gross profit / net sales
Equity ratio - total equity / total assets;
Earnings per share - net profit / weighted average number of shares
outstanding;
Shareholder's equity per share - shareholder's equity / number of shares
outstanding.
* Share numbers have been adjusted in connection with the bonus issue in
January 2007. Numbers exclude own shares.
CONSOLIDATED CONDENSED INCOME STATEMENT
(unaudited, in thousands of 01.06.2008- 01.06.2007- 01.09.2007- 01.09.2006
EEK) -
31.08.2008 31.08.2007 31.08.2008 31.08.2007
Net sales 3,710,812 3,552,013 12,310,015 11,903,286
Cost of sales -2,891,498 -2,254,045 -9,729,085 -8,766,651
Gross profit 819,314 1,297,968 2,580,930 3,136,635
Marketing expenses -262,075 -147,165 -850,988 -792,381
Administrative and general -196,004 -243,196 -889,377 -997,361
expenses
Other operating items 144,441 179,794 181,115 207,265
Income from negative 0 0 0 689
goodwill
Financial income 94,890 56,718 143,124 203,884
Financial expenses -226,328 -222,942 -933,332 -801,219
Income/-expenses from -3,060 1,205 -3,060 7,698
associates
Profit from normal 371,178 922,382 228,412 965,210
operation before income tax
Income tax 89,736 85,525 89,564 84,077
Net profit for the period 460,914 1,007,907 317,976 1,049,287
Attributable to:
Equity holders of the 460,914 1,007,907 317,976 1,049,287
parent
Earnings per share (in EEK
per share)
- basic 0.69 1.50 0.47 1.56
- diluted 0.69 1.50 0.47 1.56
(unaudited, in thousands of 01.06.2008- 01.06.2007- 01.09.2007- 01.09.2006
EUR) -
31.08.2008 31.08.2007 31.08.2008 31.08.2007
Net sales 237,164 227,015 786,753 760,759
Cost of sales -184,801 -144,060 -621,802 -560,291
Gross profit 52,363 82,955 164,951 200,468
Marketing expenses -16,750 -9,406 -54,388 -50,643
Administrative and general -12,526 -15,543 -56,841 -63,743
expenses
Other operating items 9,231 11,490 11,575 13,246
Income from negative 0 0 0 44
goodwill
Financial income 6,064 3,625 9,147 13,031
Financial expenses -14,464 -14,248 -59,650 -51,207
Income/-expenses from -196 77 -196 492
associates
Profit from normal 23,722 58,950 14,598 61,688
operation before income tax
Income tax 5,735 5,467 5,724 5,374
Net profit for the period 29,457 64,417 20,322 67,062
Attributable to:
Equity holders of the 29,457 64,417 20,322 67,062
parent
Earnings per share (in EUR
per share)
- basic 0.04 0.10 0.03 0.10
- diluted 0.04 0.10 0.03 0.10
CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited, in thousands of EEK)
ASSETS 31.08.2008 31.08.2007
Current assets
Cash and cash equivalents 1,043,785 1,303,609
Receivables 1,177,342 815,093
Prepayments 111,522 124,134
Derivatives 51,884 1,799
Inventories 358,480 272,352
Total current assets 2,743,013 2,516,987
Non-current assets
Investments in associates 2,222 3,242
Other financial assets and 7,700 9,279
prepayments
Deferred income tax assets 199,851 153,102
Investment property 4,694 4,694
Property, plant and equipment 25,531,770 22,600,001
Intangible assets 1,212,551 1,283,592
Total non-current assets 26,958,788 24,053,910
TOTAL ASSETS 29,701,801 26,570,897
LIABILITIES AND EQUITY
Current liabilities
Current portion of interest-bearing 2,200,220 2,247,390
liabilities
Payables 1,621,711 1,408,369
Deferred income 138,752 121,008
Derivatives 5,351 7,980
Total current liabilities 3,966,034 3,784,747
Non-current liabilities
Interest bearing loans and borrowings 15,324,355 12,584,261
Deferred income tax liability 16,147 63,463
Other liability 1,643 3,489
Total non-current liabilities 15,342,145 12,651,213
TOTAL LIABILITIES 19,308,179 16,435,960
EQUITY
Equity attributable to equity holders
of the parent
Share capital 6,738,170 6,738,170
Share premium 9,999 9,999
Reserves 1,151,071 1,202,991
Retained earnings 2,494,382 2,183,777
Total equity attributable to equity 10,393,622 10,134,937
holders of the parent
TOTAL EQUITY 10,393,622 10,134,937
TOTAL LIABILITIES AND EQUITY 29,701,801 26,570,897
CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited, in thousands of EUR)
ASSETS 31.08.2008 31.08.2007
Current assets
Cash and cash equivalents 66,710 83,315
Receivables 75,246 52,094
Prepayments 7,127 7,934
Derivatives 3,316 115
Inventories 22,911 17,407
Total current assets 175,310 160,865
Non-current assets
Investments in associates 142 207
Other financial assets and 492 594
prepayments
Deferred income tax assets 12,773 9,785
Investment property 300 300
Property, plant and equipment 1,631,778 1,444,403
Intangible assets 77,496 82,036
Total non-current assets 1,722,981 1,537,325
TOTAL ASSETS 1,898,291 1,698,190
LIABILITIES AND EQUITY
Current liabilities
Current portion of interest-bearing 140,620 143,634
liabilities
Payables 103,646 90,011
Deferred income 8,868 7,734
Derivatives 342 510
Total current liabilities 253,476 241,889
Non-current liabilities
Interest bearing loans and borrowings 979,405 804,281
Deferred income tax 1,032 4,056
Other liability 105 223
Total non-current liabilities 980,542 808,560
TOTAL LIABILITIES 1,234,018 1,050,449
EQUITY
Equity attributable to equity holders
of the parent
Share capital 430,648 430,648
Share premium 639 639
Reserves 73,566 76,885
Retained earnings 159,420 139,569
Total equity attributable to equity 664,273 647,741
holders of the parent
TOTAL EQUITY 664,273 647,741
TOTAL LIABILITIES AND EQUITY 1,898,291 1,698,190
CONSOLIDATED CONDENSED CASH FLOW STATEMENT
(unaudited, in thousands of EEK) 01.09.2007 01.09.2006 -
-
31.08.2008 31.08.2007
Cash flows from operating activities
Net profit for the period 317,976 1,049,287
Adjustments 1,661,987 1,252,817
Changes in assets related to -339,402 203,468
operating activities
Changes in inventories -85,110 -34,964
Changes in liabilities related to 158,379 -346,867
operating activities
Income tax paid -1,800 -4,083
1,712,030 2,119,658
Cash flow used for investing
activities
Purchase of property, plant, -4,240,289 -2,201,608
equipment and intangible assets
Proceeds from disposals of property, 453,242 687,540
plant, equipment
Proceeds from settlement of 64,025 164,481
derivatives
Payments of settlement of derivatives -18,146 0
Proceeds from disposals of associates 0 15,162
Acquisition of subsidiary 1,885 -1,157
Acquisition of associate -2,040 -1,020
Interest received 11,511 21,636
-3,729,812 -1,314,966
Cash flow from (+)/ used for (-)
financing activities
Payment of transaction costs 0 -6,520
Repurchase of own shares -65,132 0
Proceeds from loans and bonds 3,756,212 1,357,847
Redemption of loans and bonds -1,518,433 -1,555,385
Change in overdraft 443,199 74,143
Repayment of finance lease -14,855 -27,010
liabilities
Interest paid -843,033 -751,766
1,757,958 -908,691
TOTAL NET CASH FLOW -103,999
Cash and cash equivalents:
- at the beginning of period 1,303,609 1,407,608
- increase (+) / decrease (-) -259,824 -103,999
Cash and cash equivalents at end of 1,043,785 1,303,609
period
(unaudited, in thousands of EUR) 01.09.2007 01.09.2006 -
-
31.08.2008 31.08.2007
Cash flows from operating activities
Net profit for the period 20,322 67,062
Adjustments 106,221 80,070
Changes in assets related to -21,692 13,004
operating activities
Changes in inventories -5,439 -2,235
Changes in liabilities related to 10,122 -22,169
operating activities
Income tax paid -115 -261
109,419 135,471
Cash flow used for investing
activities
Purchase of property, plant, -271,004 -140,708
equipment and intangible assets
Proceeds from disposals of property, 28,967 43,942
plant, equipment
Proceeds from settlement of 4,092 10,512
derivatives
Payments of settlement of derivatives -1,159 0
Proceeds from disposals of associates 0 969
Acquisition of subsidiary 120 -74
Acquisition of associate -130 -65
Interest received 736 1,382
-238,378 -84,042
Cash flow from (+)/ used for (-)
financing activities
Payment of transaction costs 0 -417
Repurchase of own shares -4,163 0
Proceeds from loans and bonds 240,066 86,782
Redemption of loans and bonds -97,045 -99,407
Change in overdraft 28,325 -4,739
Repayment of finance lease -949 -1,727
liabilities
Interest paid -53,880 -48,047
112,354 -58,077
TOTAL NET CASH FLOW -16,605 -6,648
Cash and cash equivalents:
- at the beginning of period 83,315 89,963
- increase (+) / decrease (-) -16,605 -6,648
Cash and cash equivalents at end of 66,710 83,315
period
Janek Stalmeister
AS Tallink Grupp
Financial Director
Tel: +372 6409 800
Fax: +372 6409 810
e-mail: janek.stalmeister@tallink.ee
