AS Tallink Grupp Unaudited Consolidated Interim Report Q3 2016
In the third quarter (1 July - 30 September) of the 2016 financial year AS Tallink Grupp and its subsidiaries’ (the Group) carried 2.9 million passengers which is 5.7% more compared to the third quarter last year. The number of cargo units transported increased by 6.7% and the number of passenger vehicles transported increased by 6.2% compared to same period last year.
The Group’s unaudited consolidated revenue for the third quarter was EUR 273.5 million, which is on the same level with the third quarter last year. The Group’s unaudited EBITDA for the third quarter amounted to EUR 67.1 million compared to EUR 76.8 million last year and unaudited net profit was EUR 42.8 million compared to EUR 45.2 million in same period last year.
In the third quarter, the revenue increased in all Group’s operated routes. The revenue growth of core operations from onboard and ticket sale was supported by the larger number of passengers travelling with the Group’s operated ships. The revenue from chartering of ships is visibly lower as there were fewer ships chartered out compared to third quarter last year. The Group’s operating result is lower compared to same period last year mainly due to lower result from chartering and cost of charter of the fast ferry Superstar.
The new LNG fast ferry Megastar was christened and launched in July 2016. The construction is proceeding according to the schedule and the interior works of the ship have started. The new LNG fast ferry Megastar will be delivered to the Group in January 2017 and the vessel will start to operate the Shuttle service on Tallinn-Helsinki route. At the same time, the Group has initiated number of marketing activities to introduce the new vessel and its qualities to main markets, more info on project http://megastar.tallink.com/.
In expectation of the new LNG fast ferry Megastar to the market next year, the Group operated the cruise ferry Silja Europa on Tallinn-Helsinki route day cruise service in 2016 third quarter July and August. This operational change has enabled the Group to increase its market share on the route by 2% to 58%, compared to same period last year. The Estonia-Finland route’s third quarter revenue increased by 7.0%, the increase is driven mainly by growth in the passenger number and cargo volume from the added capacity, compared to last year. The Estonia-Finland segment result for the third quarter was lower compared to the same period last year due to the cost of charter of the fast ferry Superstar.
The Finland-Sweden routes third quarter revenue increased by 0.9%, compared to same period last year. The revenue growth was supported by the higher passenger number on the routes. The Group’s Finland-Sweden routes market share increased in the third quarter by 2% to 54%. The number of cargo units transported on Finland-Sweden routes increased by 5.2% compared to same period last year. The segment result for the third quarter is slightly lower due to higher marketing and operating costs.
Similarly to previous quarters of 2016, the Estonia-Sweden and Latvia-Sweden routes positive development continues, the routes revenue growth was driven mainly by higher ticket revenue and on-board sales. The Estonia-Sweden routes revenue increased by 2.5% and segment result improved by 10.9% or EUR 0.7 million. The Latvia-Sweden route revenue increased by 3.2% and segment result improved by 10.9% or EUR 0.4 million compared to third quarter last year.
In the third quarter the Group’s total ticket revenue increased by 5.4% or EUR 4.3 million and restaurants and shop sales increased by 4.0% or EUR 5.7 million, compared to the same period last year. The sales growth is supported mainly by the higher number of passengers travelling with the Group’s operated ships.
The revenue from chartering activities has reduced in total by EUR 7.3 million in the third quarter due to fewer ships are chartered out, compared to the same period last year.
In the third quarter of the 2016 financial year the Group’s gross profit decreased by EUR 8.0 million and amounted to EUR 76.8 million, compared to the same period last year, EBITDA decreased by EUR 9.7 million to the total of EUR 67.1 million. The third quarter profitability was impacted by less revenue from chartering, higher marketing costs, cost of charter of the fast ferry Superstar and higher ships operating costs.
In the third quarter the Group’s net debt decreased by EUR 8.3 million to a total of EUR 457.9 million and the net debt to EBITDA ratio was a solid 3.1 at the end of third quarter. The third quarter interest cost was EUR 1.4 million lower compared to same period last year from regular repayment of loans and also repayment of loans related to sale of ships. Combined with gain from revaluation of cross currency and interest derivatives, the total finance costs decreased by EUR 4.2 million compared to the third quarter last year.
The unaudited net profit for the third quarter of the 2016 financial year was EUR 42.8 million or EUR 0.064 per share compared to the net profit of EUR 45.2 million or EUR 0.067 per share in the same period last year.
In June 2016 the shareholders annual general meeting decided to pay a dividend of EUR 0.02 per share from financial year 2015 profits. The total dividend amount of EUR 13.4 million was paid out on 05 July 2016 (third quarter). In addition to dividend payment the annual general meeting decided the share capital reduction in amount of EUR 40.2 million or EUR 0.06 per share. According to the procedures set out in Commercial Code the share capital reduction payments to the shareholders will be made on 23 December 2016.
The total liquidity, cash and unused credit facilities, at the end of the third quarter was EUR 116.3 million providing a strong financial position for sustainable operations. The Group had EUR 88.8 million in cash and equivalents and the total of unused credit lines were at EUR 27.5 million.
Q3 KEY FIGURES
| 2016 July-Sep |
2015 July-Sep |
Change | |||
| Revenue | EUR million | 273.5 | 273.6 | -0.0% | |
| Gross profit | EUR million | 76.8 | 84.8 | -9.4% | |
| Gross margin | 28.1% | 31.0% | |||
| EBITDA | EUR million | 67.1 | 76.8 | -12.6% | |
| EBITDA margin | 24.6% | 28.1% | |||
| Net profit for the period | EUR million | 42.8 | 45.2 | -5.3% | |
| Net profit margin | 15.7% | 16.5% | |||
| Depreciation and amortization | EUR million | 19.3 | 18.4 | 4.5% | |
| Investments | EUR million | 15.1 | 11.3 | 33.6% | |
| Weighted average number of ordinary shares outstanding 1 | 669,882,040 | 669,882,040 | 0.0% | ||
| Earnings per share | EUR | 0.06 | 0.07 | -5.3% | |
| Number of passengers | 2,855,112 | 2,701,412 | 5.7% | ||
| Number of cargo units | 81,170 | 76,062 | 6.7% | ||
| Average number of employees | 7,366 | 7,040 | 4.6% | ||
| 30.09.2016 | 30.06.2016 | ||||
| Total assets | EUR million | 1,552.0 | 1,567.4 | -1.0% | |
| Interest-bearing liabilities | EUR million | 546.7 | 558.5 | -2.1% | |
| Net debt | EUR million | 457.9 | 466.2 | -1.8% | |
| Total equity | EUR million | 811.2 | 807.7 | 0.4% | |
| Equity ratio | 52.3% | 51.5% | |||
| Net debt to EBITDA | 3.1 | 2.9 | |||
| Number of ordinary shares outstanding 1 | 669,882,040 | 669,882,040 | 0.0% | ||
| Shareholders’ equity per share | EUR | 1.21 | 1.21 | 0.4% | |
EBITDA: Earnings before net financial items, taxes, depreciation and amortization;
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 STATEMENT OF COMPREHENSIVE INCOME
| (unaudited, in thousands of euros) | 01.07.2016- | 01.07.2015- | 01.01.2016- | 01.01.2015- | |
| 30.09.2016 | 30.09.2015 | 30.09.2016 | 30.09.2015 | ||
| Revenue (Note 3) | 273,615 | 273,557 | 711,670 | 717,572 | |
| Cost of sales | -196,839 | -188,803 | -560,154 | -544,341 | |
| Gross profit | 76,776 | 84,754 | 151,516 | 173,231 | |
| Sales and marketing expenses | -16,571 | -15,085 | -53,166 | -46,801 | |
| Administrative expenses | -12,548 | -10,992 | -38,825 | -34,310 | |
| Other operating income | 180 | -125 | 1,753 | 1,360 | |
| Other operating expenses | 22 | -156 | -6 | -737 | |
| Result from operating activities | 47,859 | 58,396 | 61,272 | 92,743 | |
| Finance income (Note 4) | 4,398 | 2,210 | 8,760 | 9,507 | |
| Finance costs (Note 4) | -9,999 | -12,039 | -29,685 | -32,647 | |
| Profit/-loss before income tax | 42,258 | 48,567 | 40,347 | 69,603 | |
| Income tax | 580 | -3,355 | 245 | -9,205 | |
| Net profit/-loss for the period | 42,838 | 45,212 | 40,592 | 60,398 | |
| Other comprehensive income/-expense | |||||
| Items that may be reclassified to profit or loss | |||||
| Exchange differences on translating foreign operations | -99 | -202 | -264 | -256 | |
| Other comprehensive income/-expense for the period | -99 | -202 | -264 | -256 | |
| Total comprehensive income/-expense for the period | 42,739 | 45,010 | 40,328 | 60,142 | |
| Earnings per share (in EUR per share) | |||||
| - basic (Note 5) | 0.064 | 0.067 | 0.061 | 0.090 | |
| - diluted (Note 5) | 0.064 | 0.067 | 0.061 | 0.090 | |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited, in thousands of euros)
| ASSETS | 30.09.2016 | 31.12.2015 | |
| Current assets | |||
| Cash and cash equivalents | 88,772 | 81,976 | |
| Trade and other receivables | 41,986 | 36,583 | |
| Prepayments | 9,592 | 5,274 | |
| Income tax prepayment | 1,482 | 1,224 | |
| Inventories | 37,624 | 29,197 | |
| Total current assets | 179,456 | 154,254 | |
| Non-current assets | |||
| Investments in equity-accounted investees | 350 | 350 | |
| Other financial assets | 361 | 308 | |
| Deferred income tax assets | 19,410 | 19,410 | |
| Investment property | 300 | 300 | |
| Property, plant and equipment (Note 7) | 1,301,226 | 1,311,418 | |
| Intangible assets (Note 8) | 50,904 | 52,726 | |
| Total non-current assets | 1,372,551 | 1,384,512 | |
| TOTAL ASSETS | 1,552,007 | 1,538,766 | |
| LIABILITIES AND EQUITY | |||
| Current liabilities | |||
| Interest bearing loans and borrowings (Note 9) | 125,995 | 81,889 | |
| Trade and other payables | 83,257 | 88,480 | |
| Payments to shareholders (Note 14) | 40,193 | 0 | |
| Income tax liability | 2,500 | 4,567 | |
| Deferred income | 33,986 | 28,906 | |
| Total current liabilities | 285,931 | 203,842 | |
| Non-current liabilities | |||
| Interest bearing loans and borrowings (Note 9) | 420,685 | 467,447 | |
| Derivatives (Note 6) | 34,232 | 42,863 | |
| Other payables | 0 | 192 | |
| Total non-current liabilities | 454,917 | 510,502 | |
| TOTAL LIABILITIES | 740,848 | 714,344 | |
| EQUITY | |||
| Equity attributable to equity holders of the parent | |||
| Share capital | 361,736 | 404,290 | |
| Share premium | 639 | 639 | |
| Reserves | 71,026 | 65,083 | |
| Retained earnings | 377,758 | 354,410 | |
| Total equity attributable to equity holders of the parent | 811,159 | 824,422 | |
| TOTAL EQUITY | 811,159 | 824,422 | |
| TOTAL LIABILITIES AND EQUITY | 1,552,007 | 1,538,766 | |
CONSOLIDATED CASH FLOW STATEMENT
| (unaudited, in thousands of euros) | 01.01.2016- | 01.01.2015- | |
| 30.09.2016 | 30.09.2015 | ||
| Cash flows from operating activities | |||
| Net profit/-loss for the period | 40,592 | 60,398 | |
| Adjustments | 79,014 | 91,250 | |
| Changes in receivables and prepayments related to operating activities | -9,914 | -8,089 | |
| Changes in inventories | -8,427 | 2,639 | |
| Changes in liabilities related to operating activities | -326 | -7,103 | |
| Income tax paid | -1,621 | -490 | |
| 99,318 | 138,605 | ||
| Cash flow from/used in investing activities | |||
| Purchase of property, plant and equipment and intangible assets (Notes 7, 8, 9) | -46,197 | -29,823 | |
| Proceeds from disposals of property, plant and equipment | 144 | 25,004 | |
| Interest received | 51 | 57 | |
| -46,002 | -4,762 | ||
| Cash flows used in financing activities | |||
| Repayment of loans (Note 9) | -55,039 | -68,962 | |
| Change in overdraft (Note 9) | 44,096 | -8,700 | |
| Payment of finance lease liabilities (Note 9) | -74 | -60 | |
| Interest paid | -18,434 | -21,485 | |
| Payments for settlement of derivatives | -3,341 | -3,195 | |
| Payments of transaction costs related to loans | 0 | -1,429 | |
| Dividend paid (Note 12) | -13,398 | -13,398 | |
| Income tax on dividends paid | -330 | -2,818 | |
| -46,520 | -120,047 | ||
| TOTAL NET CASH FLOW | 6,796 | 13,796 | |
| Cash and cash equivalents: | |||
| - at the beginning of period | 81,976 | 65,311 | |
| - increase (+) / decrease (-) | 6,796 | 13,796 | |
| - at the end of period | 88,772 | 79,107 |
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