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Ettevõte AS Tallink Grupp
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Kategooria Juhtkonna vaheteadaanne või kvartaalne finantsaruanne
Avaldamise aeg 09 mai 2019 09:30:00 +0300
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Pealkiri AS Tallink Grupp Unaudited Consolidated Interim Report Q1 2019
Tekst
In the first quarter (1 January - 31 March) of the 2019 financial year Tallink
Grupp AS and its subsidiaries (the Group) carried 1.9 million passengers, which
is 3.9% less than in the first quarter last year. The Group's unaudited revenue
for the first quarter decreased by 2.9% to a total of EUR 178.9 million.
Unaudited EBITDA for the first quarter was EUR 3.8 million (EUR 4.2 million in
Q1 2018) and unaudited net loss was EUR 25.3 million (net loss of EUR 19.6
million in Q1 2018).

In the first quarter, which is also the low season, the Group's revenue and
operating result were impacted by the following operational factors:

  * Planned dockings of seven ships. Among other ships, the maintenance and
    repair of the cruise ferry Baltic Queen lasted for 42 days, which affected
    the Estonia-Sweden segment's first quarter carriage volumes and financial
    result.
  * In 2019 the Easter holidays, when traffic volumes usually increase, were in
    April, last year the holidays were in March.

Sales and segments

In the first quarter of 2019, the Group's total revenue decreased by EUR 5.3
million and amounted to EUR 178.9 million. The revenue in the first quarter of
2018 and 2017 was EUR 184.2 and EUR 191.5 million, respectively.

  * The total revenue from the shipping operations in the Baltic Sea (core
    business) decreased by 1.8% or EUR 3.1 million to EUR 169.5 million. Due to
    numerous scheduled dockings, there were 1.5% less trips compared to the
    first quarter of 2018.
  * The revenue from the other segment, including intra-group eliminations,
    decreased by total of EUR 2.2 million and amounted to EUR 9.4 million. The
    decrease was driven largely by lower sales at shops on land (in Tallinn Old
    Harbour areas). In addition, operations of Tallink Pirita Spa Hotel in
    Tallinn were ceased from November 2018 due to sale of the hotel property by
    its owner.

The positive development of the cargo business continued in the first quarter of
2019 financial year. The transported cargo volumes increased in total by 2.7%,
the cargo revenues increased by 1.5% or EUR 0.4 million and amounted to EUR
29.6 million in the first quarter.

In the first quarter of 2019, The Group's ships carried a total of 1.0 million
passengers on the Estonia-Finland routes, which is a 2.7% decrease compared to
last year, while the total passenger volume on the routes decreased by 4%. The
number of transported cargo units on the routes increased by 2.4%. On the
Tallinn - Helsinki route, added capacity by competitors resulted in increased
pressure on ticket prices. The Estonia-Finland segment revenue decreased by EUR
1.9 million and amounted to EUR 70.4 million. The segment result decreased by
EUR 1.7 million and amounted to EUR 6.9 million.

The Finland-Sweden routes' revenue increased by EUR 5.2 million and amounted to
EUR 67.9 million. The developments were largely affected by the lengthy
maintenance and repair works of the cruise ferry Baltic Princess in the first
quarter of 2018.

The Estonia-Sweden routes' revenue decreased by EUR 5.9 million, compared to the
previous year. The maintenance and repair of the cruise ferry Baltic Queen in
the first quarter affected the Estonia-Sweden segment's carriage volumes and
financial result.

While the number of passengers carried on the Latvia-Sweden route decreased by
10.9%, affected by maintenance and repair of the cruise ferry Isabelle in the
period, the revenue decreased by only 3.8% or EUR 0.5 million, compared to the
previous year. The positive development of the route's cargo carriage volumes
continued in the first quarter of 2019 financial year.

Earnings

In the first quarter of 2019, the Group's gross profit decreased by EUR 3.2
million compared to the same period last year, amounting to EUR 10.5 million.
First quarter EBITDA amounted to EUR 3.8 million. First quarter comparable
EBITDA, i.e. without IFRS 16 adoption effect, decreased by EUR 4.6 million
compared to the same period last year and was EUR -0.4 million.

The Group's first quarter result was impacted negatively by the planned dockings
of seven vessels, Easter holiday traffic in April and nonrecurring costs from
compensations paid to resigned management board members.

Amortisation and depreciation expense increased by EUR 5.2 million to EUR 24.7
million compared to the first quarter of 2018. The increase was mainly a result
of the IFRS 16 adoption effect in the amount of EUR 3.6 million.

Net finance costs decreased by EUR 34 thousand compared to the first quarter
last year. The change includes a decline of EUR 1.2 million in interest costs
compared to same period the previous year and EUR 0.6 million less profit from
foreign exchange differences and the revaluation of cross currency and interest
rate derivatives. In addition, in Q1 there is EUR 0.6 million interest expense
from right-of-use assets liabilities (IFRS 16 adoption effect).

The Group's unaudited net loss for the first quarter of 2019 was EUR 25.3
million or EUR 0.038 per share compared to a net loss of EUR 19.6 million or EUR
0.029 per share in the first quarter of 2018 and compared to a net loss of EUR
20.3 million or EUR 0.030 per share in the first quarter of 2017.

Investments

In the first quarter of 2019 financial year the Group's investments amounted to
EUR 25.3 million. Majority of the investments were made to technical dockings of
seven vessels (Baltic Queen, Galaxy, Regal Star, Star, Silja Symphony, Victoria
I, Isabelle).

A number of investments were made to upgrade the ships restaurants, shops and
other public areas. On cruise ferry Baltic Queen the Fast Lane restaurant was
built, Grande Buffet and show bar Starlight were renewed. On cruise ferry Galaxy
the Fast Lane restaurant was built, Grande Buffet and show bar Starlight were
renewed, on the Fashion Street the SuperDry shop in shop was added and kids area
Silja Land was renewed. On cruise ferry Silja Symphony the Starlight show bar
was refurbished according to a new concept, restaurant Grill House, Bon Vivant
and Sea Pub were renewed, the new Tommy Hilfiger shop was added and cabin
renovation project was concluded.

Investments were also made to the ships' technical maintenance to keep the ships
in good technical working condition and innovative energy efficiency solutions
were introduced, like upgrade of HVAC systems, fuel monitoring systems,
preparations for high voltage shore power connections and hybrid battery
solutions.

Dividends

To the shareholders' annual general meeting on 23 May 2019 the Management Board
will propose a dividend of EUR 0.05 per share from net profit for 2018. The
total proposed dividend amounts to EUR 33.5 million and equals to 83.6% of 2018
net profit. In addition, to improve the Company's capital structure, the
Management will propose to reduce the Company's share capital by EUR 0.07 per
share or by EUR 46.9 million.

Financial position

In the first quarter, the Group's net debt increased by EUR 128.8 million to EUR
556.8 million and the net debt to EBITDA ratio was 3.9 at the reporting date.
The increase in net debt was mainly a result of the IFRS 16 adoption effect in
the amount of EUR 104.3 million.

At the end of the first quarter, total liquidity (cash, cash equivalents and
unused credit facilities) amounted to EUR 112.9 million (EUR 142.8 million at
31 March 2018) providing a strong financial position for sustainable operations.

At 31 March 2018, the Group's cash and cash equivalents amounted to EUR 47.8
million (EUR 70.1 million at 31 March 2018) and the Group had EUR 65.1 million
in unused credit lines (EUR 72.7 million at 31 March 2018).

Economic Environment

The Group considers Finland, Sweden, Estonia and Latvia its home markets as
these are the countries to and from which its shipping routes are operated. In
terms of exposure to economic conditions, the Group is exposed the most to
developments in Finland as nearly half of the passenger originate from that
country. Exposure is also high to economic developments in Estonia (19% of total
passengers in 2018) and Sweden (11%). The number of passengers from Latvia
accounted for 5% of the total passengers in 2018 while the remaining 19% came
from the rest of the world, mainly Europe.

There is no data yet available for the GDP for the first quarter of 2019 for any
of the home markets, however, the apparent census of various sources for 2019 in
general has projected the real GDP growth rate to slow relative to 2018 for all
the home markets.

According to the OECD indicators the business confidence declined across all of
the home markets in the first quarter of 2019 from the peaks achieved in the
first half of 2018 (for Finland and Sweden) and in late 2018 (for Estonia). The
decline in the first quarter of 2019 was particularly steep in Estonia. Business
confidence in Latvia remained the highest among the Group's home markets,
however with distinct decline from the end of 2018 throughout the quarter. That
said, the underlying cargo operations still remained fundamentally robust in the
first quarter of 2019.

The developments of the confidence of consumers in the first quarter of 2019
were more encouraging. Although there was a decline in the confidence indicator
in Finland and Sweden, a theme throughout 2018, it appears to have levelled off
based on the data of the first quarter of 2019, if only at least for the short
term. While the situation of consumer confidence remained relatively stable in
Latvia the confidence among consumer increased to new recent highs in Estonia
supported by the labour market situation.

The labour situation remained challenging in the first quarter of the year
reflecting the recent low unemployment rates in the home markets, particularly
in Estonia. The situation on the Estonian labour market has apparently
contributed to the divergence of business and consumer confidence developments,
which steepened well in the first quarter of 2019.

Key risks to the economic environment in all of the home markets have to do with
uncertainties from increasing protectionist tendencies (including a potential
trade war between China and the US, the UK's withdrawal from the EU) and
potential deferral of investments leading to decreasing trade for all of open
economies around the Baltic Sea. Also, the global fuel prices are expected to
remain volatile due to uncertainties in the global economy and politics.

Events in Q1

Shipbuilding contract between Tallink Grupp and Rauma Marine Constructions
The contract for the construction of a new LNG-powered fast ferry for the
Tallinn - Helsinki route shuttle operations entered into force on 27 March 2019.

The new vessel will cost approximately 250 million euros and it will be built at
the Rauma shipyard in Finland. The delivery of the vessel is expected in January
2022.
According to the contract, 30 percent of the total cost will be paid during the
construction period and the rest after the delivery of the vessel, 70 percent of
the new ship cost will be financed in 2022 by long-term loan, the loan terms
will be concluded in the near future.

Changes in the Management Board
On 4 February 2019, it was announced that the Tallink Grupp AS Supervisory Board
appointed Mrs Kadri Land and Mr Harri Hanschmidt as Members of the Management
Board and recalled from the Management Board Mr Janek Stalmeister following his
resignation. The mandate of Mr Janek Stalmeister ended on 2 February 2019. The
mandate of Mrs Kadri Land and Mr Harri Hanschmidt started on 4 February 2019 and
lasts for a period of three years.
On 22 February 2019, it was announced that the Supervisory Board appointed Mrs
Piret Mürk-Dubout as a Member of the Management Board and recalled from the
Management Board Mr Andres Hunt following his resignation. The mandate of Mr
Andres Hunt ended on 26 February 2019, the mandate of Mrs Mürk-Dubout started on
15 April 2019 and lasts for a period of three years.

Fuel price risk management
As a result of the agreements with the fuel suppliers in December 2018 and
during the first quarter of 2019 the fuel price has been fixed for 41% of total
fuel purchasing volume for the 2019 financial year.

Events after the reporting period and outlook

Prepayment for the new ship
The first instalment of the prepayment according to the shipbuilding contract
was made to Rauma Marine Constructions in an amount of EUR 12.4 million in April
2019.

Earnings
The Group's earnings are not generated evenly throughout the year. The summer
period is the high season in the Group's operations. In management's opinion and
based on prior experience most of the Group's earnings are generated during the
summer (June-August).

Research and development projects
Tallink Grupp AS does not have any substantial ongoing research and development
projects. The Group is continuously seeking opportunities for expanding its
operations in order to improve the results. The Group is looking for innovative
ways to upgrade our ships and passenger area technology to improve the overall
performance of our company through modern solutions. A collaboration with the
Tallinn University of Technology (TalTech) was started to develop so-called
?Smart Car Deck" solutions for the Group's vessels over the next two years.

In addition to that, the Group is participating in a programme, funded by the
European Space Agency, with a goal to develop techniques for autonomous
navigation for ships, using a combination of different sensors, machine learning
and artificial intelligence.

Risks
The Group's business, financial position and operating results could be
materially affected by various risks. These risks are not the only ones we face.
Additional risks and uncertainties not presently known to us, or that we
currently believe are immaterial or unlikely, could also impair our business.
The order of presentation of the risk factors below is not intended to be an
indication of the probability of their occurrence or of their potential effect
on our business.

  * Accidents, disasters
  * Macroeconomic developments
  * Changes in laws and regulations
  * Relations with trade unions
  * Increase in the fuel prices and interest rates
  * Market and customer behaviour


Key figures

 For the period                                    Q1 2019     Q1 2018 Change %
-------------------------------------------------------------------------------
 Revenue (million euros)                             178.9       184.2    -2.9%

 Gross profit (million euros)                         10.5        13.7   -23.4%

 EBITDA¹ (million euros)                               3.8         4.2    -9.5%

 EBITDA adjusted² (million euros)                     -0.4         4.2  -108.7%

 EBIT¹ (million euros)                               -20.9       -15.2   -37.5%

 Net loss for the period (million euros)             -25.3       -19.6   -29.1%



 Depreciation and amortisation³ (million
 euros)                                               24.7        19.4    27.3%

 Capital expenditures¹ (million euros)                25.3         8.4

 Weighted average number of ordinary shares
 outstanding                                   669 878 007 669 882 040     0.0%

 Earnings per share¹                                -0.038      -0.029   -29.1%



 Number of passengers¹                           1 855 772   1 930 449    -3.9%

 Number of cargo units¹                             93 114      90 687     2.7%

 Average number of employees¹                        7 097       7 242    -2.0%



 As at                                            31.03.19    31.12.18 Change %
-------------------------------------------------------------------------------
 Total assets³ (million euros)                     1 572.3     1 500.9     4.8%

 Total liabilities (million euros)                   744.0       644.0    15.5%

 Interest-bearing liabilities? (million euros)       604.6       510.1    18.5%

 Net debt¹ (million euros)                           556.8       428.0    30.1%

 Net debt to EBITDA¹                                  3.91        3.00    30.4%

 Total equity (million euros)                        828.3       856.9    -3.3%

 Equity ratio¹ (%)                                   52.7%       57.1%



 Number of ordinary shares outstanding         669 882 040 669 865 540     0.0%

 Equity per share¹                                    1.24        1.28    -3.3%



 Ratios                                            Q1 2019     Q1 2018
-------------------------------------------------------------------------------
 Gross margin¹ (%)                                    5.9%        7.4%

 EBITDA margin¹ (%)                                   2.1%        2.3%

 EBITDA margin adjusted² (%)                         -0.2%        2.3%

 EBIT margin¹ (%)                                   -11.7%       -8.3%

 Net profit margin¹ (%)                             -14.1%      -10.6%



 ROA¹ (%)                                             3.8%        4.4%

 ROE¹ (%)                                             4.1%        5.8%

 ROCE¹ (%)                                            4.6%        5.4%

¹ Alternative performance measures based on ESMA guidelines are disclosed in the
Alternative Performance Measures section of this Interim Report.
² Comparable EBITDA for Q1 2019 without IFRS 16 adoption effect.
³ Please see note 6 for IFRS 16 adoption effect on assets.
? Please see note 8 for IFRS 16 adoption effect on interest-bearing liabilities.

EBITDA: result from operating activities before net financial items, share of
profit of equity-accounted investees, taxes, depreciation and amortization
EBIT: result from operating activities
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
EBIT margin: EBIT / net sales
Net profit margin: net profit / net sales
Capital expenditure: additions to property, plant and equipment + additions to
intangible assets
ROA: earnings before net financial items, taxes 12-months trailing / average
total assets
ROE: net profit 12-months trailing / average shareholders' equity
ROCE: earnings before net financial items, taxes 12-months trailing / (total
assets - current liabilities (average for the period))
Net debt: interest-bearing liabilities less cash and cash equivalents
Net debt to EBITDA: net debt / EBITDA 12-months trailing


Consolidated statement of profit or loss and other comprehensive income

 Unaudited, in thousands of EUR                                Q1 2019  Q1 2018
-------------------------------------------------------------------------------
   Revenue (Note 3)                                            178 870  184 155

   Cost of sales                                              -168 371 -170 448
-------------------------------------------------------------------------------
 Gross profit                                                   10 499   13 707



   Sales and marketing expenses                                -17 042  -16 313

   Administrative expenses                                     -15 068  -12 728

   Other operating income                                          724      113

   Other operating expenses                                        -14      -27
-------------------------------------------------------------------------------
 Result from operating activities                              -20 901  -15 248



   Finance income (Note 4)                                       1 002    3 078

   Finance costs (Note 4)                                       -5 331   -7 373
-------------------------------------------------------------------------------
 Loss before income tax                                        -25 230  -19 543



 Income tax                                                        -25      -23



 Net loss for the period                                       -25 255  -19 566

   Net loss for the period attributable to equity holders of
 the Parent                                                    -25 255  -19 566



 Other comprehensive income

   Items that may be reclassified to profit or loss

   Exchange differences on translating foreign operations          165      -68
-------------------------------------------------------------------------------
 Other comprehensive income/loss for the period                    165      -68



 Total comprehensive loss for the period                       -25 090  -19 634

   Total comprehensive loss for the period attributable to
 equity holders of the Parent                                  -25 090  -19 634



 Earnings per share (in EUR, Note 5)                            -0.038   -0.029
-------------------------------------------------------------------------------


Consolidated statement of financial position

 Unaudited, in thousands of EUR                    31.03.19  31.03.18  31.12.18
-------------------------------------------------------------------------------
 ASSETS

   Cash and cash equivalents                         47 775    70 129    82 175

   Trade and other receivables                       42 023    42 630    43 805

   Prepayments                                       11 831    15 261     6 084

   Prepaid income tax                                    81        44        46

   Inventories                                       36 305    37 499    35 741
-------------------------------------------------------------------------------
 Current assets                                     138 015   165 563   167 851



   Investments in equity-accounted investees            407       403       407

   Other financial assets                               307       338       320

   Deferred income tax assets                        17 934    18 718    17 934

   Investment property                                  300       300       300

   Property, plant and equipment (Note 6)         1 369 715 1 298 412 1 267 928

   Intangible assets (Note 7)                        45 581    47 885    46 164
-------------------------------------------------------------------------------
 Non-current assets                               1 434 244 1 366 056 1 333 053

 TOTAL ASSETS                                     1 572 259 1 531 619 1 500 904



 LIABILITIES AND EQUITY

   Interest-bearing loans and borrowings
   (Note 8)                                         100 646   164 282    78 658

   Trade and other payables                          97 845    93 472   100 682

   Derivatives                                            0    31 321       918

   Payables to owners                                     2         3         2

   Income tax liability                                 116         0       116

   Deferred income                                   41 465    38 727    32 113
-------------------------------------------------------------------------------
 Current liabilities                                240 074   327 805   212 489



   Interest-bearing loans and borrowings
   (Note 8)                                         503 930   386 742   431 477

   Other liabilities                                      0        16        22
-------------------------------------------------------------------------------
 Non-current liabilities                            503 930   386 758   431 499
-------------------------------------------------------------------------------
 Total liabilities                                  744 004   714 563   643 988



   Share capital (Note 9)                           361 736   361 736   361 736

   Share premium                                        663       639       662

   Reserves                                          69 145    68 367    69 474

   Retained earnings                                396 711   386 314   425 044
-------------------------------------------------------------------------------
 Equity attributable to equity holders of the
 Parent                                             828 255   817 056   856 916

 Total equity                                       828 255   817 056   856 916
-------------------------------------------------------------------------------
 TOTAL LIABILITIES AND EQUITY                     1 572 259 1 531 619 1 500 904


Consolidated statement of cash flows

 Unaudited, in thousands of EUR                                 Q1 2019 Q1 2018
-------------------------------------------------------------------------------


 CASH FLOWS FROM OPERATING ACTIVITIES

 Net loss for the period                                        -25 255 -19 566

 Adjustments                                                     29 244  24 403

 Changes in:

   Receivables and prepayments related to operating activities   -3 952  -6 025

   Inventories                                                     -564   3 177

   Liabilities related to operating activities                    7 550   6 356
-------------------------------------------------------------------------------
 Changes in assets and liabilities                                3 034   3 508

 Cash generated from operating activities                         7 023   8 345

   Income tax paid                                                  -82     -52
-------------------------------------------------------------------------------
 NET CASH FROM OPERATING ACTIVITIES                               6 941   8 293



 CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of property, plant, equipment and intangible assets
 (Notes 6, 7)                                                   -25 262  -8 365

   Proceeds from disposals of property, plant, equipment             78      26

   Interest received                                                  1       1
-------------------------------------------------------------------------------
 NET CASH USED IN INVESTING ACTIVITIES                          -25 183  -8 338



 CASH FLOWS FROM FINANCING ACTIVITIES

   Repayment of loans received (Note 8)                         -16 500 -14 500

   Change in overdraft (Note 8)                                   9 857   2 331

   Payments for settlement of derivatives                        -1 029    -837

   Payment of lease liabilities (Note 8)                         -3 467     -25

   Interest paid                                                 -5 019  -5 706
-------------------------------------------------------------------------------
 NET CASH USED IN FINANCING ACTIVITIES                          -16 158 -18 737



 TOTAL NET CASH FLOW                                            -34 400 -18 782
-------------------------------------------------------------------------------


   Cash and cash equivalents at the beginning of period          82 175  88 911

   Increase in cash and cash equivalents                        -34 400 -18 782
-------------------------------------------------------------------------------
 Cash and cash equivalents at the end of period                  47 775  70 129


Veiko Haavapuu
Financial Director

AS Tallink Grupp
Sadama 5/7
10111 Tallinn, Estonia
E-mail veiko.haavapuu@tallink.ee