AS Tallink Grupp Unaudited Consolidated Interim Report Q1 2017

AS Tallink Grupp Unaudited Consolidated Interim Report Q1 2017

In the first quarter (1 January - 31 March) of the 2017 financial year AS Tallink Grupp and its subsidiaries (the Group) carried 1.9 million passengers which is 0.7% less compared to the first quarter last year. The Group’s unaudited revenue for the first quarter decreased by 0.7% to the total of EUR 191.5 million. Unaudited EBITDA for the first quarter was EUR 5.5 million (EUR 16.3 million, Q1 2016) and unaudited net loss was EUR 20.3 million (EUR 12.0 million, Q1 2016 net loss).

In the first quarter, which is also the low season, the Group’s revenue and operating result was impacted by following operational factors:

-          The new LNG fast ferry Megastar started to operate the Tallink Shuttle service on Tallinn-Helsinki route.
-          Scheduled maintenance of five cruise ferries in the first quarter of 2017, the service breaks totalled to 52 days.
-          In financial year 2017 the Easter holidays seasonal traffic fell into the beginning of the second quarter, compared to the first quarter last year.
-          Charter and charter related revenue reduced compared to the same period last year due to fewer ships in charter.
-        After the rerouting of ships in December 2016, the carriage capacity increased on number of operated routes.

Delivery of Megastar

On 24 January 2017 Tallink Grupp AS’s subsidiary Tallink Line Ltd. took delivery of the new LNG fast passenger ferry Megastar from Meyer Turku Oy shipyard in Turku, Finland.

The 212 metres long Megastar has capacity for 2 800 passengers and car deck for 800 passenger vehicles. The ship has modern dual-fuel engines capable of running on LNG (liquefied natural gas) and marine diesel oil. Using LNG as a main fuel enables to lower emissions and reduce energy consumption. Megastar complies with the current and known future emission regulations for the ECAs (Emission Control Area), including the Baltic Sea.

On board of the Megastar, there are four different travel classes – standard Star Class, upgraded Comfort Class, exclusive Business Lounge and a new area, Sitting Lounge. There is 2 800 sq.m Traveller Superstore shopping area through two decks with new self-service solutions, seven restaurants, cafes and bars. A special area with a playroom is available for the kids and on garage level a kennel for the pets.

The cost of the ship was over EUR 230 million and the purchase was financed with a loan of EUR 184 million from Finnish Export Credit Ltd. and arranged by Nordea Bank Finland Plc. The maturity of the loan is twelve years and bears OECD Commercial Interest Reference Rate (CIRR) based fixed interest rate.

Megastar started operation on Tallink Shuttle service on 29 January 2017, travelling between Helsinki and Tallinn, she is the most advanced ferry in the Baltic Sea.

Sales and segments

The Estonia-Finland routes first quarter revenue increased by 5.0% compared to same period last year, the increase is driven mainly by growth in the passenger number and cargo volume that was supported by added capacity. In the end of January the new LNG fast ferry Megastar started operating the Tallink Shuttle service on the Tallinn-Helsinki route next to fast ferry Star and replaced fast ferry Superstar, which was returned to its owners. The new ship accommodates approximately 40% more passengers and the car deck capacity is almost doubled compared to the replaced ship. The Group carried out successful marketing campaigns to introduce the new ship and its updated services to its customers in Estonian and Finnish markets. The start of operations was executed according to set plans with smooth service throughout its first two months of operations in the first quarter. The feedback on the new ship has been very positive from all customer groups and partners, thus assuring the successful launch of the new ship. The Estonia-Finland segment result for the first quarter was lower compared to the same period last year due to onetime launching costs related to the delivery of the new ship to the route.

The Finland-Sweden routes first quarter revenue decreased by 3.5% compared to same period last year, due to decline in the passenger number. The number of cargo units transported increased by 8.0%.

The Estonia-Sweden route first quarter revenue increased by 3.4% compared to same period last year, the growth was mainly supported by the higher shop and restaurant sale per passenger. The number of cargo units transported increased by 5.2%. 

The Latvia-Sweden route first quarter revenue increased by 26.7% compared to same period last year, starting from December 2016 two ships are operating on the route compared to one ship in the first quarter last year. The number of cargo units transported increased by 20.8%. 

The charter and charter related revenue decreased by EUR 5.4 million as fewer ships were chartered out compared to the first quarter in previous year. Three Superfast ferries remain chartered out.

Earnings

In the first quarter of the 2017 financial year the Group’s gross profit decreased by EUR 11.6 million compared to the same period last year and amounted to EUR 14.9 million. The first quarter EBITDA decreased by EUR 11.0 million and was EUR 5.3 million. The first quarter profitability was impacted by lower passenger number from holiday season effects, less revenue from chartering, higher fuel cost and higher ships operating costs from more ships in operations.

The total finance costs decreased by EUR 3.9 million compared to the first quarter last year, there are EUR 3.5 million lower losses from exchange rate differences and cross currency and interest derivatives revaluations and EUR 0.4 million lower interest cost compared to same period last year.

The unaudited net loss for the first quarter of the 2017 financial year was EUR 20.3 million or EUR 0.03 per share compared to the loss of EUR 12.0 million or EUR 0.018 per share in the same period last year.

Financial position

In the first quarter the Group’s net debt increased by EUR 210.8 million to a total of EUR 690,9 million, of which EUR 184.0 million from drawdown of the new LNG fast ferry loan. The net debt to EBITDA ratio was 4.99 at the end of the first quarter.

The total liquidity, cash and unused credit facilities, at the end of the first quarter was EUR 74.7 million (EUR 136.3 million, 31 March 2016) providing a sound financial position for sustainable operations. The Group had EUR 72.2 million (EUR 91.7 million, 31 March 2016) in cash and equivalents and the total of unused credit lines were at EUR 2.5 million (EUR 44.6 million, 31 March 2016).

KEY FIGURES OF THE Q1 2017

For the period Q1 2017 Q1 2016 Change %
Revenue (million euros) 191.5 192.8 -0.7%
Gross profit (million euros) 14.9 26.5 -43.8%
Net profit for the period (million euros) -20.3 -12.0 -69.0%
EBITDA (million euros) 5.3 16.3 -67.7%
Depreciation and amortisation (million euros) 20.8 19.6 6.1%
Investments (million euros) 204.2 12.6 1520.6%
Weighted average number of ordinary shares outstanding1 669 882 040 669 882 040 0.0%
Earnings per share  -0.030 -0.018 -69.0%
Number of passengers 1 939 784 1 953 070 -0.7%
Number of cargo units 83 797 77 279 8.4%
Average number of employees 7 209 6 886 4.7%
As at 31.03.2017 31.12.2016 Change %
Total assets (million euros) 1 730.2 1 539.0 12.4%
Total liabilities (million euros) 937.1 725.5 29.2%
Interest-bearing liabilities (million euros) 763.2 558.9 36.6%
Net debt (million euros) 690.9 480.1 43.9%
Net debt to EBITDA 4.99 3.21 55.5%
Total equity (million euros) 793.1 813.6 -2.5%
Equity ratio (%) 45.8% 52.9%
Number of ordinary shares outstanding1 669 882 040 669 882 040 0.0%
Shareholders’ equity per share 1.18 1.21 -2.5%
Ratios Q1 2017 Q1 2016
Gross margin (%) 7.8% 13.7%
EBITDA margin (%) 2.7% 8.4%
Net profit margin (%) -10.6% -6.2%

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
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.

Consolidated statements of profit or loss and other comprehensive income

Unaudited, in thousands of EUR Q1 2017 Q1 2016
Revenue (Note 3) 191 548 192 821
Cost of sales -176 678 -166 343
Gross profit 14 870 26 478
Sales and marketing expenses -17 780 -18 292
Administrative expenses -12 610 -12 018
Other operating income 123 500
Other operating expenses -135 -16
Result from operating activities -15 532 -3 348
Finance income (Note 4) 2 491 2 596
Finance costs (Note 4) -7 273 -11 273
Profit/-loss before income tax -20 314 -12 025
Income tax   -14 -2
Net profit/-loss for the period -20 328 -12 027
Other comprehensive income/-expense
Exchange differences on translating foreign operations -611 -58
Other comprehensive income for the period -611 -58
Total comprehensive income/-expense for the period -20 939 -12 085
Basic and diluted earnings per share (in EUR per share, note 5) -0.030 -0.018

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited, in thousands of EUR 31.03.2017 31.12.2016
ASSETS
Cash and cash equivalents 72 226 78 773
Trade and other receivables 39 806 38 674
Prepayments 15 171 7 926
Income tax prepayments 87 91
Inventories 44 722 38 719
Current assets 172 012 164 183
Investments in equity-accounted investees 363 363
Other financial assets 352 348
Deferred income tax assets 18 791 18 791
Investment property 300 300
Property, plant and equipment (Note 7) 1 488 273 1 304 897
Intangible assets (Note 8) 50 120 50 127
Non-current assets 1 558 199 1 374 826
TOTAL ASSETS 1 730 211 1 539 009
LIABILITIES AND EQUITY
Interest-bearing loans and borrowings (Note 9) 153 657 106 112
Trade and other payables  101 589 103 280
Dividends payable to shareholders 4 4
Income tax liability 0 10
Deferred income 40 971 30 895
Current liabilities 296 221 240 301
Interest-bearing loans and borrowings (Note 9) 609 500 452 793
Derivatives (Note 6) 31 404 32 359
Other liabilities 0 0
Non-current liabilities 640 904 485 152
Total liabilities 937 125 725 453
Share capital (Note 10) 361 736 361 736
Share premium 639 639
Reserves 68 632 68 774
Retained earnings 362 079 382 407
Equity attributable to equity holders of the Parent 793 086 813 556
Equity 793 086 813 556
TOTAL LIABILITIES AND EQUITY 1 730 211 1 539 009

CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited, in thousands of EUR Q1 2017 Q1 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/-loss for the period -20 328 -12 027
Adjustments 25 624 28 192
Changes in:
Receivables and prepayments related to operating activities -9 831 -5 756
Inventories -6 003 -7 309
Liabilities related to operating activities 7 671 13 719
Changes in assets and liabilities -8 163 654
Cash generated from operating activities -2 867 16 819
Income tax paid -18 -160
NET CASH FROM OPERATING ACTIVITIES -2 885 16 659
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, equipment and intangible assets (Notes 7, 8,  9) -204 212 -12 709
Proceeds from disposals of property, plant, equipment 25 134
Proceeds from other financial assets 0 0
Interest received 1 18
NET CASH USED IN INVESTING ACTIVITIES -204 186 -12 557
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 184 000 0
Repayment of loans (Note 9) -10 024 -14 728
Change in overdraft (Note 9) 32 371 26 963
Payments for settlement of derivatives -905 -1 021
Payment of finance lease liabilities (Note 9) -26 -24
Interest paid -4 728 -5 550
Payment of transaction costs related to loans -164 0
NET CASH USED IN FINANCING ACTIVITIES 200 524 5 640
TOTAL NET CASH FLOW -6 547 9 742
Cash and cash equivalents at the beginning of period 78 773 81 976
Increase / -decrease in cash and cash equivalents -6 547 9 742
Cash and cash equivalents at the end of period 72 226 91 718

For further information, please contact:

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