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