OREANDA-NEWS. AS Tallink Grupp Unaudited Consolidated Interim Report Q3 2015.

In the third quarter (1 July – 30 September) of the 2015 financial year AS Tallink Grupp and its subsidiaries’ (the Group) carried 2.7 million passengers which is 5.5% more compared to the third quarter last year. The Group’s unaudited revenue for the third quarter of 2015 increased by EUR 10.9 million or 4.2% year on year to the total of EUR 273.6 million, EBITDA increased by EUR 12.8 million or 20.1% to the total of EUR 76.8 million, compared to the same period last year. Net profit increased by EUR 9 million or 25.1% to the total of EUR 45.2 million, compared to the same period last year.

The Group’s revenue for the first nine months of 2015 was EUR 717.6 million and increased by EUR 20.3 million or 2.9% year on year comparison. EBITDA increased by EUR 41.9 million to the total of EUR 151.5 million and net profit increased by EUR 41.5 million to the total of EUR 60.4 million, compared to the same period last year.

The Estonia-Finland route third quarter revenue increased by 5.6% compared to same period last year. The increase is driven mainly by an 8.9% growth in the passenger number. The passenger number peaked in July when Group served a record number of 600 thousand passengers, which is an all-time high monthly passenger number on that route. The growth of 15.3% in cargo units transported is supported mainly by added capacity.

The Finland-Sweden routes third quarter revenue increased by 6.5% compared to the same period last year, driven by 8.4% growth in the passenger number. The number of cargo units transported decreased by 28.8% due to reduced capacity.

The Estonia-Sweden route passenger number increased by 1.5% and cargo volumes decreased by 8.3%. The Latvia-Sweden route, operating with only one vessel compared to two vessels last year, showed a 25.6% decline in the passenger number and cargo units transported decreased by 35.2%.

The Group’s restaurants and shop sales increased by EUR 9 million or 6.8% in the third quarter, compared to the same period last year, the sales growth is supported mainly by the growth in the passenger number. The upgrades to restaurant and shop concept throughout the fleet in past year, combined with the operational changes, have resulted in higher average on-board revenue per passenger.

The revenue from the chartered out vessels has reduced in the third quarter compared to the same period last year due to fewer ships in charter. Two ships previously in charter were sold in the second quarter of 2015.

In the third quarter, the summer period high season, the Group experienced strong price competition. The proactive marketing activities, improved visibility of sales campaigns and earlier investments into increasingly important online sales solutions has enabled the Group to reclaim the market share on its main routes and increase the total revenue.

In February 2015 AS Tallink Grupp signed a contract for the construction of the new generation LNG powered fast ferry. The new fast ferry is being built by Meyer Turku Oy and will cost around 230 million euros. The start of production of the new LNG fast ferry was celebrated on the 4th of August 2015 at Meyer Turku shipyard and the delivery of the vessel is planned in the beginning of 2017. The new LNG fast ferry is going to operate on the Tallinn-Helsinki route shuttle service.

In order to be ready for the delivery of the new generation LNG fast ferry to the Tallinn-Helsinki route early 2017, the Group has decided to sell the fast ferry Superstar, at present operating on the route shuttle service. The fast ferry Superstar will be sold to Corsica Ferries Group, concurrently the parties have entered into bareboat charter agreement and the Group will continue to operate the fast ferry Superstar on its Tallinn-Helsinki route shuttle service until the beginning of 2017, when the new LNG fast ferry will start to operate on the route. Change of the ownership of the fast ferry Superstar and start of the charter period is planned in December 2015.

In the third quarter of the 2015 financial year the Group’s gross profit amounted to EUR 84.8 million and EBITDA to EUR 76.8 million being respectively EUR 15.2 million and EUR 12.9 million more compared to the same period last year. The increase in the Group’s results is mainly attributed to the growth in passenger number, higher on-board revenue per passenger and decreased costs related to operations.

The Group’s net debt decreased by EUR 30.8 million to a total of EUR 583.6 million and the net debt to EBITDA ratio was 3.0 at the end of third quarter. The Group’s interest cost reduced by EUR 2.9 million, combined with less gain from foreign exchange revaluations, the total finance costs increased by EUR 1.3 million compared to the third quarter last year.

The unaudited net profit for the third quarter of the 2015 financial year was EUR 45.2 million or EUR 0.07 per share compared to the net profit of EUR 36.2 million or EUR 0.05 per share in the same period last year. The Group’s net profit for the nine months of the 2015 financial year was EUR 60.4 million or EUR 0.09 per share compared to the EUR 18.9 million or EUR 0.03 per share in the same period last year.

The total dividend of EUR 13.4 million (0.02 euros per share) was paid out in the beginning of July 2015 according to the decision of Annual General Meeting from June 2015.

Cash flow from operations increased by EUR 4.5 million in third quarter compared to the same period last year. The total liquidity, cash and unused credit facilities, at the end of the third quarter was EUR 100.4 million providing a strong financial position. At the end of the third quarter of 2015 the Group had EUR 79.1 million in cash and equivalents and the total of unused credit lines were at EUR 21.3 million.
  

Q3 KEY FIGURES   2015
July-Sep		 2014
July-Sep		 Change
Revenue EUR million 273.6 262.7 4.2%
Gross profit EUR million 84.8 69.6 21.8%
Gross margin   31.0% 26.5%  
EBITDA EUR million 76.8 64.0 20.1%
EBITDA margin   28.1% 24.4%  
Net profit for the period EUR million 45.2 36.2 25.1%
Net profit margin   16.5% 13.8%  
         
Depreciation and amortization EUR million 18.4 19.3 -4.7%
Investments EUR million 11.3 10.6 6.6%
         
Weighted average number of ordinary shares outstanding 669,882,040 669,882,040 0.0%
Earnings per share EUR 0.07 0.05 25.1%
         
Number of passengers   2,701,412 2,561,257 5.5%
Number of cargo units   76,062 76,830 -1.0%
Average number of employees   7,040 7,181 -2.0%
         
    30.09.2015 30.06.2015  
Total assets EUR million 1,652.6 1,665.5 -0.8%
Interest-bearing liabilities EUR million 662.7 695.5 -4.7%
Net debt EUR million 583.6 614.5 -5.0%
Total equity EUR million 825.3 780.2 5.8%
         
Equity ratio   49.9% 46.8%  
Net debt to EBITDA   3.0 3.4  
         
Number of ordinary shares outstanding1 669,882,040 669,882,040 0.0%
Shareholders’ equity per share EUR 1.23 1.16 5.8%
           

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) 01.07.2015- 01.07.2014- 01.01.2015- 01.01.2014-
  30.09.2015 30.09.2014 30.09.2015 30.09.2014
         
Revenue (Note 3) 273,557 262,656 717,572 697,325
Cost of sales -188,803 -193,085 -544,341 -565,007
Gross profit 84,754 69,571 173,231 132,318
           
Marketing expenses -15,085 -15,084 -46,801 -46,883
Administrative expenses -10,992 -10,296 -34,310 -35,573
Other income -125 462 1,360 987
Other expenses -156 -18 -737 -358
Result from operating activities 58,396 44,635 92,743 50,491
         
Finance income (Note 4) 2,210 3,270 9,507 7,137
Finance costs (Note 4) -12,039 -11,747 -32,647 -33,384
           
Profit/-loss before income tax 48,567 36,158 69,603 24,244
           
Income tax -3,355 -8 -9,205 -5,367
           
Net profit/-loss for the period 45,212 36,150 60,398 18,877
         
Other comprehensive income/-expense        
Items that may be reclassified to profit or loss        
Exchange differences on translating foreign operations -202 36 -256 44
Other comprehensive income/-expense for the period -202 36 -256 44
Total comprehensive income/-expense for the period 45,010 36,186 60,142 18,921
         
Earnings per share (in EUR per share)        
  - basic (Note 5) 0.07 0.05 0.09 0.03
  - diluted (Note 5) 0.07 0.05 0.09 0.03

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, in thousands of euros)

ASSETS 30.09.2015 31.12.2014
       
Current assets    
Cash and cash equivalents 79,107 65,311
Trade and other receivables 42,022 38,210
Prepayments 10,938 5,448
Inventories 28,676 31,315
Total current assets 160,743 140,284
       
Non-current assets    
Investments in equity-accounted investees 286 286
Other financial assets 315 252
Deferred income tax assets 21,349 21,338
Investment property 300 300
Property, plant and equipment (Note 7) 1,416,648 1,467,964
Intangible assets (Note 8) 52,941 55,174
Total non-current assets 1,491,839 1,545,314
       
TOTAL ASSETS 1,652,582 1,685,598
       
       
LIABILITIES AND EQUITY    
     
Current liabilities    
Interest bearing loans and borrowings (Note 9) 139,672 149,850
Trade and other payables 83,546 91,236
Income tax liability 6,800 1,300
Deferred income 30,254 29,408
Derivatives (Note 6) 43,985 41,982
Total current liabilities 304,257 313,776
       
Non-current liabilities    
Interest bearing loans and borrowings (Note 9) 523,062 593,532
Total non-current liabilities 523,062 593,532
TOTAL LIABILITIES 827,319 907,308
       
EQUITY    
Equity attributable to equity holders of the parent    
Share capital 404,290 404,290
Share premium 639 639
Reserves 71,465 70,129
Retained earnings 348,869 303,232
Total equity attributable to equity holders of the parent 825,263 778,290
TOTAL EQUITY 825,263 778,290
       
TOTAL LIABILITIES AND EQUITY 1,652,582 1,685,598

CONSOLIDATED CASH FLOW STATEMENT

(unaudited, in thousands of euros) 01.01.2015- 01.01.2014-
    30.09.2015 30.09.2014
Cash flows from operating activities    
Net profit/-loss for the period 60,398 18,877
Adjustments 91,250 92,806
Changes in receivables and prepayments related to operating activities -8,089 -6,165
Changes in inventories 2,639 5,077
Changes in liabilities related to operating activities -7,103 -3,973
Income tax paid -490 108
  138,605 106,730
Cash flow used in investing activities    
Purchase of property, plant and equipment and intangible assets (Notes 7, 8, 9) -29,823 -30,919
Proceeds from disposals of property, plant and equipment 25,004 180
Interest received 57 78
  -4,762 -30,661
Cash flow used in financing activities    
Repayment of loans (Note 9) -68,962 -59,946
Change in overdraft (Note 9) -8,700 31,069
Payment of finance lease liabilities (Note 9) -60 -54
Interest paid -21,485 -24,574
Payments for settlement of derivatives -3,195 -3,033
Payment of transaction costs related to loans -1,429 0
Dividends paid (Note 12) -13,398 -20,096
Income tax on dividends paid -2,818 -5,342
  -120,047 -81,976
       
TOTAL NET CASH FLOW 13,796 -5,907
       
Cash and cash equivalents:    
- at the beginning of period 65,311 72,012
- increase (+) / decrease (-) 13,796 -5,907
- at the end of period 79,107 66,105