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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
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|
01.09.2007-31.08.2008 |
01.09.2006-31.08.2007 |
change |
| |
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 (million) |
318.0 |
20.3 |
1,049.3 |
67.1 |
-69.7% |
| 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 ordinary shares outstanding during 12 months* |
671,245,086 |
673,817,040 |
|
| 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 employees |
6,564 |
6,227 |
5.4% |
| |
|
|
31.08.2008 |
31.08.2007 |
change |
| |
EEK |
EUR |
EEK |
EUR |
% |
| Total assets (million) |
29,701.8 |
1,898.3 |
26,570.9 |
1,698.2 |
11.8% |
| Total liabilities (million) |
19,308.2 |
1,234.0 |
16,436.0 |
1,050.4 |
17.5% |
| Interest-bearing liabilities (million) |
17,524.6 |
1,120.0 |
14,831.7 |
947.9 |
18.1% |
| 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 outstanding |
669,882,040 |
673,817,040 |
-0.6% |
| Shareholders' equity per share |
15.5 |
0.99 |
15.04 |
0.96 |
3.1% |
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.
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CONSOLIDATED CONDENSED INCOME STATEMENT |
| (unaudited, in thousands of EEK) |
01.06.2008-30.08.2008 |
01.06.2007-31.08.2007 |
01.09.2007--31.08.2008 |
01.09.2006-31.08.2007 |
| 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 expenses |
-196,004 |
-243,196 |
-889,377 |
-997,361 |
| Other operating items |
144,441 |
179,794 |
181,115 |
207,265 |
| Income from negative goodwill |
0 |
0 |
0 |
689 |
| Financial income |
94,890 |
56,718 |
143,124 |
203,884 |
| Financial expenses |
-226,328 |
-222,942 |
-933,332 |
-801,219 |
| Income/-expenses from associates |
-3,060 |
1,205 |
-3,060 |
7,698 |
| Profit from normal operation before income tax |
371,178 |
922,382 |
228,412 |
965,210 |
| 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 parent |
460,914 |
1,007,907 |
317,976 |
1,049,287 |
| Earnings per share (in EEK per share) |
|
|
|
|
| - basic |
0.00 |
1.50 |
0.47 |
1.56 |
| - diluted |
0.00 |
1.50 |
0.47 |
1.56 |
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CONSOLIDATED CONDENSED INCOME STATEMENT |
| (unaudited, in thousands of EUR) |
01.06.2008-30.08.2008 |
01.06.2007-31.08.2007 |
01.09.2007--31.08.2008 |
01.09.2006-31.08.2007 |
| 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 expenses |
-12,526 |
-15,543 |
-56,841 |
-63,743 |
| Other operating items |
9,231 |
11,490 |
11,575 |
13,246 |
| Income from negative goodwill |
0 |
0 |
0 |
44 |
| Financial income |
6,064 |
3,625 |
9,147 |
13,031 |
| Financial expenses |
-14,464 |
-14,248 |
-59,650 |
-51,207 |
| Income/-expenses from associates |
-196 |
77 |
-196 |
492 |
| Profit from normal operation before income tax |
23,722 |
58,950 |
14,598 |
61,688 |
| 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 parent |
29,457 |
64,417 |
20,322 |
67,062 |
| Earnings per share (in EEK per share) |
|
|
|
|
| - basic |
0.04 |
0.10 |
0.03 |
0.10 |
| - diluted |
0.04 |
0.10 |
0.03 |
0.10 |
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CONSOLIDATED CONDENSED BALANCE SHEET |
| (unaudited, in thousands) |
EEK |
EUR |
| ASSETS |
31.08.2008 |
31.08.2007 |
31.08.2008 |
31.08.2007 |
| Current assets |
|
|
|
|
| Cash and cash equivalents |
1,043,785 |
1,303,609 |
66,710 |
83,315 |
| Receivables |
1,177,342 |
815,093 |
75,246 |
52,094 |
| Prepayments |
111,522 |
124,134 |
7,127 |
7,934 |
| Derivatives |
51,884 |
1,799 |
3,316 |
115 |
| Inventories |
358,480 |
272,352 |
22,911 |
17,407 |
| Total current assets |
2,743,013 |
2,516,987 |
175,310 |
160,865 |
| |
|
|
|
|
| Non-current assets |
|
|
|
|
| Investments in associates |
2,222 |
3,242 |
142 |
207 |
| Other financial assets and prepayments |
7,700 |
9,279 |
492 |
594 |
| Deferred income tax assets |
199,851 |
153,102 |
12,773 |
9,785 |
| Investment property |
4,694 |
4,694 |
300 |
300 |
| Property, plant and equipment |
25,531,770 |
22,600,001 |
1,631,778 |
1,444,403 |
| Intangible assets |
1,212,551 |
1,283,592 |
77,496 |
82,036 |
| Total non-current assets |
26,958,788 |
24,053,910 |
1,722,981 |
1,537,325 |
| |
|
|
|
|
| TOTAL ASSETS |
29,701,801 |
26,570,897 |
1,898,291 |
1,698,190 |
| |
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
| Current liabilities |
|
|
|
|
| Current portion of interest-bearing liabilities |
2,200,220 |
2,247,390 |
140,620 |
143,634 |
| Payables |
1,621,711 |
1,408,369 |
103,646 |
90,011 |
| Deferred income |
138,752 |
121,008 |
8,868 |
7,734 |
| Derivatives |
5,351 |
7,980 |
342 |
510 |
| Total current liabilities |
3,966,034 |
3,784,747 |
253,476 |
241,889 |
| |
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Interest bearing loans and borrowings |
15,324,355 |
12,584,261 |
979,405 |
804,281 |
| Deferred income tax liability |
16,147 |
63,463 |
1,032 |
4,056 |
| Pension liability |
1,643 |
3,489 |
105 |
223 |
| Total non-current liabilities |
15,342,145 |
12,651,213 |
980,542 |
808,560 |
| TOTAL LIABILITIES |
19,308,179 |
16,435,960 |
1,234,018 |
1,050,449 |
| |
|
|
|
|
| EQUITY |
|
|
|
|
| Equity attributable to equity holders of the parent |
|
|
|
|
| Share capital |
6,738,170 |
6,738,170 |
430,648 |
430,648 |
| Share premium |
9,999 |
9,999 |
639 |
639 |
| Reserves |
1,151,071 |
1,202,991 |
73,566 |
76,885 |
| Retained earnings |
2,494,382 |
2,183,777 |
159,420 |
139,569 |
| Total equity attributable to equity holders of the parent |
10,393,622 |
10,134,937 |
664,273 |
647,741 |
| TOTAL EQUITY |
10,393,622 |
10,134,937 |
664,273 |
647,741 |
| |
|
|
|
|
| TOTAL LIABILITIES AND EQUITY |
29,701,801 |
26,570,897 |
1,898,291 |
1,698,190 |
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CONSOLIDATED CONDENSED CASH FLOW STATEMENT |
| (unaudited, in thousands of) |
EEK |
EUR |
| |
01.09.2007-31.08.2008 |
01.09.2006-31.08.2007 |
01.09.2007-31.08.2008 |
01.09.2006-31.08.2007 |
| Cash flows from operating activities |
|
|
|
|
| Net profit for the period |
317,976 |
1,049,287 |
20,322 |
67,062 |
| Adjustments |
1,661,987 |
1,252,817 |
106,221 |
80,070 |
| Changes in assets related to operating activities |
-339,402 |
203,468 |
-21,692 |
13,004 |
| Changes in inventories |
-85,110 |
-34,964 |
-5,439 |
-2,235 |
| Changes in liabilities related to operating activities |
158,379 |
-346,867 |
10,122 |
-22,169 |
| Income tax repaid |
-1,800 |
-4,083 |
-115 |
-261 |
| |
1,712,030 |
2,119,658 |
109,419 |
135,471 |
| Cash flow used for investing activities |
|
|
|
|
| Purchase of property, plant, equipment and intangible assets |
-4,240,289 |
-2,201,608 |
-271,004 |
-140,708 |
| Proceeds from disposals of property, plant, equipment |
453,242 |
687,540 |
28,967 |
43,942 |
| Proceeds from settlement of derivatives |
64,025 |
164,481 |
4,092 |
10,512 |
| Payments of settlement of derivatives |
-18,146 |
0 |
-1,159 |
0 |
| Proceeds from disposals of associates |
0 |
15,162 |
0 |
969 |
| Acquisition of subsidiary |
1,885 |
-1,157 |
120 |
-74 |
| Acquisition of associate |
-2,040 |
-1,020 |
-130 |
-65 |
| Interest received |
11,511 |
21,636 |
736 |
1,382 |
| |
-3,729,812 |
-1,314,966 |
-238,378 |
-84,042 |
| Cash flow from (+)/ used for (-) financing activities |
|
|
|
|
| Payment of transaction costs |
0 |
-6,520 |
0 |
-417 |
| Repurchase of own shares |
-65,132 |
0 |
-4,163 |
0 |
| Proceeds from loans and bonds |
3,756,212 |
1,357,847 |
240,066 |
86,782 |
| Redemption of loans and bonds |
-1,518,433 |
-1,555,385 |
-97,045 |
-99,407 |
| Change in overdraft |
443,199 |
74,143 |
28,325 |
-4,739 |
| Repayment of finance lease liabilities |
-14,855 |
-27,010 |
-949 |
-1,727 |
| Interest paid |
-843,033 |
-751,766 |
-53,880 |
-48,047 |
| |
1,757,958 |
-908,691 |
112,354 |
-58,077 |
| TOTAL NET CASH FLOW |
|
-103,999 |
-16,605 |
-6,648 |
| Cash and cash equivalents: |
|
|
|
|
| - at the beginning of period |
1,303,609 |
1,407,608 |
83,315 |
89,963 |
| - increase (+) / decrease (-) |
-259,824 |
-103,999 |
-16,605 |
-6,648 |
| Cash and cash equivalents at end of period |
1,043,785 |
1,303,609 |
66,710 |
83,315 |
Janek Stalmeister
AS Tallink Grupp
Financial Director
Tel: +372 6409 800
Fax: +372 6409 810
E-mail: janek.stalmeister@tallink.ee
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