Tallink Grupp 2008/2009 financial year 9 months unaudited interim report

AS Tallink Grupp and its subsidiaries (hereinafter also referred to as the Group) nine months operations (September-May) were affected by weak macro economical situation.

The Group revenues in the nine months of the 2008/2009 financial year were EUR 537 million  (EEK 8 402 million) being 2.3% lower than in the same period of the last financial. The revenues from the passenger operations increased by EUR 17 million (EEK 266 million) supported by higher passenger volumes. However, this increase was able to compensate only part of EUR 37 million (EEK 579 million) decrease in the cargo revenues.

During the third quarter (March-May), the decrease of total Group revenues was EUR 12 million (EEK 184 million) driven by the cargo revenue decrease by almost EUR 14 million (EEK 221 million) compared to the third quarter of the previous financial year. While passenger volume increased by 12% during the third quarter, the revenues from the passenger operations did not increase. The slowdown in passenger spending, weak SEK/EUR exchange rate, extensive sales campaigns and passengers overall expectations to the lower ticket pricing have resulted in the decrease of average income per passenger. The above described changes have impacted mostly the Sweden-Estonia and Sweden-Finland routes which segment result decreased by EUR 7.8 million and EUR 10.8 million (EEK 122 and 169 million) respectively.

SEK exchange rate against Euro has been highly volatile during the nine months of the current financial year, being at the lowest point nearly 25% weaker compared to the last financial year. The estimated negative impact to the Group sales from weak SEK/EUR exchange rate was EUR 15 million (EEK 234 million) during the nine months period

In April the Group's newest cruise ferry Baltic Queen started operations on Tallinn-Stockholm route where cruise ferry Romantika was replaced and moved to Riga-Stockholm route. The re-routing and launch related start-up costs were around EUR 2 million (EEK 31 million).

The Group EBITDA for the nine months of 2008/2009 financial year amounted to EUR 59.6 million (EEK 932 million) which is 23% less than in the nine months of the last financial year.

Due to the lower operational performance, increased depreciation and higher financial items the net loss for the nine months of 2008/2009 financial year was EUR 39.9 million (EEK 624 million) compared to the net loss of EUR 9.1 million (EEK 143 million) in the nine months of the previous financial year.

The management is not pleased with the Group's performance in the third quarter and is looking for the additional cost cuttings in the Group operations. The sales or rent of older vessels has high priority. The administrative costs have decreased by 20% or EUR 9 million (EEK 141 million) during the nine months of the 2008/2009 financial year, but additional cost savings will be implemented in order to justify to the changed situation. The Management Board will propose to the Supervisory Council to cut its salary by 20% and the pays for the rest of Group's top and middle level executives by up to 15%. Management works to find different solutions for the reduction of staff costs in the operations and plans different restructuring scenarios, including potential changes in the routes and sales or rent of the ships.

Despite the passenger volume has shown strong growth, the positive effect is zeroed already on the revenue level by significant cargo decrease, Swedish krona weakness on the retail sales and by the change in the customers' behavior. The lower average income per passenger continues to impact the Group revenues and thereby also the earnings. Also the booking behavior has changed as the passengers book their journeys later than in the past. This adds uncertainty for the outlook of the coming future. Although the last quarter is high season in the passenger operations and will be profitable, it will probably not be sufficient to cover the loss accumulated during the nine months of the current financial year.

CONSOLIDATED CONDENSED INCOME STATEMENT

(unaudited, in thousands of EEK)	01.03.2009-31.05.2009	01.03.2008-31.05.2008	01.09.2008-31.05.2009	01.09.2007-31.05.2008
Net sales	2,752,006	2,936,043	8,402,366	8,599,203
Cost of sales	-2,389,378	-2,322,753	-7,080,942	-6,837,587
Gross profit	362,628	613,290	1,321,424	1,761,616
Marketing expenses	-220,619	-208,673	-623,253	-588,913
Administrative and general expenses	-183,610	-224,196	-552,614	-693,373
Other income	382	19,308	4,127	37,699
Other expences	-1,459	-151	-4,586	-1,025
Financial income	21,829	17,622	119,601	48,234
Financial expenses	-249,784	-251,302	-889,305	-707,004
Income from associates	782	0	782	0
Profit/-loss from normal operation before income tax	-269,851	-34,102	-623,824	-142,766
Income tax	18	-62	0	-172
Net profit/-loss for the period	-269,833	-34,164	-623,824	-142,938
Attributable to:
Equity holders of the parent	-269,833	-34,164	-623,824	-142,938
Earnings per share (in EEK per share)
- basic	-0.40	-0.05	-0.93	-0.21
- diluted	-0.40	-0.05	-0.93	-0.21

(unaudited, in thousands of EUR)	01.03.2009-31.05.2009	01.03.2008-31.05.2008	01.09.2008-31.05.2009	01.09.2007-31.05.2008
Net sales	175,885	187,647	537,009	549,589
Cost of sales	-152,709	-148,451	-452,555	-437,001
Gross profit	23,176	39,196	84,454	112,588
Marketing expenses	-14,100	-13,336	-39,833	-37,638
Administrative and general expenses	-11,734	-14,329	-35,318	-44,315
Other income	23	1,234	263	2,409
Other expences	-93	-10	-293	-65
Financial income	1,395	1,127	7,644	3,083
Financial expenses	-15,964	-16,061	-56,837	-45,186
Income from associates	50	0	50	0
Profit/-loss from normal operation before income tax	-17,247	-2,179	-39,870	-9,124
Income tax	1	-4	0	-11
Net profit/-loss for the period	-17,246	-2,183	-39,870	-9,135
Attributable to:
Equity holders of the parent	-17,246	-2,183	-39,870	-9,135
Earnings per share (in EEK per share)
- basic	-0.03	-0.00	-0.06	-0.01
- diluted	-0.03	-0.00	-0.06	-0.01

CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited, in thousands of EEK)

ASSETS	31.05.2009	31.08.2008
Current assets
Cash and cash equivalents	453,159	1,043,785
Receivables	878,659	1,177,342
Prepayments	122,045	111,522
Derivatives	147,814	51,884
Inventories	307,630	358,480
Total current assets	1,909,307	2,743,013
Non-current assets
Investments in associates	8,342	2,222
Other financial assets and prepayments	7,602	7,700
Deferred income tax assets	199,849	199,851
Investment property	4,694	4,694
Property, plant and equipment	27,299,068	25,518,298
Intangible assets	1,166,807	1,226,023
Total non-current assets	28,686,362	26,958,788
TOTAL ASSETS	30,595,669	29,701,801
LIABILITIES AND EQUITY
Current liabilities
Current portion of interest-bearing liabilities	2,721,171	2,200,220
Payables	1,495,356	1,621,711
Deferred income	225,187	138,752
Derivatives	120,526	5,351
Total current liabilities	4,562,240	3,966,034
Non-current liabilities
Interest bearing loans and borrowings	16,262,435	15,324,355
Deferred income tax liability	16,147	16,147
Other liability	1,236	1,643
Total non-current liabilities	16,279,818	15,342,145
TOTAL LIABILITIES	20,842,058	19,308,179
EQUITY
Equity attributable to equity holders of the parent
Share capital	6,738,170	6,738,170
Share premium	9,999	9,999
Reserves	1,150,783	1,151,071
Retained earnings	1,854,659	2,494,382
Total equity attributable to equity holders of the parent	9,753,611	10,393,622
TOTAL EQUITY	9,753,611	10,393,622
TOTAL LIABILITIES AND EQUITY	30,595,669	29,701,801

CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited, in thousands of EUR)

ASSETS	31.05.2009	31.08.2008
Current assets
Cash and cash equivalents	28,962	66,710
Receivables	56,157	75,246
Prepayments	7,800	7,127
Derivatives	9,447	3,316
Inventories	19,661	22,911
Total current assets	122,027	175,310
Non-current assets
Investments in associates	533	142
Other financial assets and prepayments	486	492
Deferred income tax assets	12,773	12,773
Investment property	300	300
Property, plant and equipment	1,744,728	1,630,917
Intangible assets	74,573	78,357
Total non-current assets	1,833,393	1,722,981
TOTAL ASSETS	1,955,420	1,898,291
LIABILITIES AND EQUITY
Current liabilities
Current portion of interest-bearing liabilities	173,915	140,620
Payables	95,571	103,646
Deferred income	14,392	8,868
Derivatives	7,703	342
Total current liabilities	291,581	253,476
Non-current liabilities
Interest bearing loans and borrowings	1,039,359	979,405
Deferred income tax liability	1,032	1,032
Other liability	79	105
Total non-current liabilities	1,040,470	980,542
TOTAL LIABILITIES	1,332,051	1,234,018
EQUITY
Equity attributable to equity holders of the parent
Share capital	430,648	430,648
Share premium	639	639
Reserves	73,548	73,566
Retained earnings	118,534	159,420
Total equity attributable to equity holders of the parent	623,369	664,273
TOTAL EQUITY	623,369	664,273
TOTAL LIABILITIES AND EQUITY	1,955,420	1,898,291

CONSOLIDATED CONDENSED CASH FLOW STATEMENT

(unaudited, in thousands of EEK)	01.09.2008-31.05.2009	01.09.2007-31.05.2008
Cash flows from operating activities
Net profit/-loss for the period	-623,824	-142,938
Adjustments	1,508,012	1,339,130
Changes in assets related to operating activities	115,809	-411,372
Changes in inventories	50,850	-52,273
Changes in liabilities related to operating activities	37,136	279,939
Income tax repaid/-paid	6	288
	1,087,989	1,012,774
Cash flow used for investing activities
Purchase of property, plant, equipment and intangible assets	-2,521,923	-2,142,902
Proceeds from disposals of property, plant, equipment	17,693	200,536
Acquisition of subsidiary	0	1,885
Acquisition of associate	-6,120	-2,040
Dividends received	782	0
Proceeds/-payments from settlement of derivatives	-37,388	35,221
Interest received	5,519	8,501
	-2,541,437	-1,898,799
Cash flow from (+)/ used for (-) financing activities
Payment of transaction costs	0	-65
Repurchase of own shares	0	-65,067
Proceeds from loans	2,427,150	1,401,617
Redemption of loans	-1,315,471	-1,192,822
Change in overdraft	330,076	531,195
Repayment of finance lease liabilities	-6,763	-10,030
Interest paid	-572,170	-637,450
	862,822	27,378
TOTAL NET CASH FLOW	-590,626	-858,647
Cash and cash equivalents:
- at the beginning of period	1,043,785	1,303,609
- increase (+) / decrease (-)	-590,626	-858,647
Cash and cash equivalents at end of period	453,159	444,962

Janek Stalmeister
Financial Director
AS Tallink Grupp
Tel. +372 6409 800
e-mail: janek.stalmeister@tallink.ee