Market announcement

Title

AS Tallink Grupp Audited Annual Report for the Financial Year 2023

Message

Dear investors and business partners

After  several years of writing  this message to you  with mainly challenges and
turbulence  and uncertainties  to report  in addition  to a constant struggle to
keep  our company's  nose above  water, I  am pleased  to be  able to write this
year's message with a slightly more positive tone.

As  a result of almost a  herculean effort, dedication, perseverance, commitment
and  many sacrifices, Tallink Grupp has achieved the near-impossible in 2023 and
has  risen like a  phoenix from the  ashes of the  last four years of crises and
challenges.  To get to a point of  reporting significant profits from nearly all
operations  being suspended  for long  periods almost  four years ago today, has
required  the management and all employees of Tallink Grupp to put everything we
have  into  the  game  -  creativity, flexibility, speed, knowledge, experience,
courage, determination and so much more.

The  positive results we  are reporting for  2023 speak volumes about the people
who  work in our  company, our business  partners, our suppliers, our customers,
our investors and everyone who has had and continues to have faith in us.

The  crisis years have forced us to  re-think and re-evaluate our strategies and
operations  more than once. Things that once seemed like temporary solutions and
business  opportunities  have  now  developed  into  fullyfledged  new strategic
business  areas  and  are  an  important  part  of  our  company's plans for the
foreseeable  and possibly also long-term future, helping us reduce risks for our
core business.

For  example, the chartering out of company  vessels, which has been part of our
activities  and operations for  a long time,  but not to  the extent of the last
four  years, is now firmly  a part of our  strategy for the years ahead. Keeping
the  most optimum number of our vessels in  regular traffic on our core and most
profitable  routes and chartering out  other vessels in the  medium to long term
has enabled us to turn our results around in the last few years and will be part
of our business strategy for the years ahead. Tallink Grupp's vessels are highly
sought  after across the globe for a wide range of projects, and we have proven,
in  recent years in particular, that both our vessels and crews are able to meet
the demands of any global project that we have the opportunity to support.

Closer  to home,  our focus  must be  and will  continue to be on developing our
products and services to ensure we meet the changing customer needs, the demands
of  the fastchanging world around us  and regulatory requirements. To secure our
place  in the future 20 to 30 years from now,  we must put even more emphasis on
innovation  and investment in sustainable development today. With regulations on
the  one hand and ambitious  goals for tackling climate  change on the other, we
must  pick  up  pace  and  get  ahead  in this race for a carbon-neutral future,
responsible value chains and zero waste.

There is no denying that achieving all the goals set for a sustainable future is
extremely challenging, especially for sectors like transport where solutions are
still  few and  far between,  but we  are focusing  our efforts on ever stronger
cooperation  with research  institutions, tech  start-ups, industry peers, other
industries  and many others to find more and better solutions to benefit us all.
And find them urgently.

The  targets  that  have  been  set  cannot  be  achieved  if  everyone works in
isolation.  Fighting climate change  should no longer  be about competition, but
all about collaboration. In summary, we look back on 2023 with gratitude for our
colleagues'  dedication  and  passion  for  our  recovery,  our  investors'  and
partners'  continued faith  in and  support for  us, and  our customers' loyalty
towards  us. On behalf of  everyone at Tallink Grupp,  I can promise you that we
will  continue working with  the same passion  and determination in 2024 and the
years to come to deserve your trust and loyalty also in the future. Our ambition
is still to be the best place to work for our people, the first
choice  for  our  customers,  and  the  most  innovative and sustainable service
provider  on and around the  Baltic Sea. With your  continued faith and trust, I
know we can be all that.

Yours sincerely

Paavo Nõgene
Chairman of the Management Board

AS Tallink Grupp Audited Annual Report of the 2023 Financial Year

In  the financial year 2023 (1 January -  31 December), AS Tallink Grupp and its
subsidiaries (the Group) carried 5.7 million passengers, which is 4.5% more than
in  the financial year 2022. The number  of cargo units transported decreased by
20.9% compared  to the  previous financial  year, while  the number of passenger
cars transported exhibited a positive year-on-year growth of 2.6%.

The  Group's  audited  consolidated  revenue  amounted to EUR 835.3 million (EUR
771.4 million in the financial year 2022), up by 8.3% year-on-year. Revenue from
route  operations (core  business) increased  by EUR  16.9 million to EUR 645.8
million  compared  to  the  financial  year  2022. Audited EBITDA was EUR 214.5
million  (EUR 135.8 million  in the  financial year  2022) and the unaudited net
profit  for the period  was EUR 78.9 million  (EUR 13.9 million in the financial
year 2022), up 58.0% and 466.0%, respectively.

The  following operational  factors impacted  the Group's  revenue and operating
results in 2023:

  * Cargo and passenger transportation volumes were impacted by fewer vessels in
    operation due to chartering and by fewer trips compared to the previous
    year.
  * Demand was also affected by low consumer and business confidence levels, and
    the weak economic environment in all of the Group's core markets as well as
    global geopolitical instability.
  * At the end of the financial year, the Group operated 15 vessels, including
    2 shuttle vessels, 2 cargo vessels and 5 operating cruise ferries, as well
    as 5 vessels chartered out (3 vessels on long-term and 2 vessels on short-
    term charter) and 1 vessel in lay-up.
  * During the financial year, 2 charter agreements ended. The charter agreement
    of the cruise vessel Romantika was terminated in September 2023 prior to its
    expiry date. The short-term charter agreement of the cruise ferry Victoria I
    expired in July 2023. In addition, the Group extended the charter agreements
    of the cruise vessels Galaxy I and Silja Europa until April 2024 and the end
    of 2024, respectively. The shuttle vessel Oscar Wilde (formerly Star) was
    chartered out in May 2023 for 20 months with an option to extend the charter
    period by 2+2 years and included a purchase option.
  * The planned maintenance works of the vessels totalled to 61 days.
  * The Group operated 3 hotels in Tallinn and 1 in Riga.
  * Declining global fuel prices, an optimal fleet size and strict cost control
    had a positive impact on the Group's cost base. However, while the fuel
    prices have dropped, the fuel transportation cost component has increased
    due to the change in the country of origin of the fuel.
  * The Group repaid loans in the amount of EUR 487.6 million, which includes
    the refinancing of loans of EUR 298 million. The net repayment of interest-
    bearing loans was EUR 189.6 million.
  * The Group's net debt to EBITDA ratio was 2.8 as at the end of the financial
    year 2023, compared to 5.4 as at the end of the financial year 2022.
  * The Group continues to focus on cost efficiencies from previously
    implemented measures and maintaining profitable operations on its core
    routes.
  * The Group regularly monitors the developments on its core routes, including
    the capacity of each route, and continues to seek new chartering options for
    vessels not used on the main routes, as well as working to extend the
    existing charter agreements.

Key figures

                                                   2023        2022        2021
-------------------------------------------------------------------------------
 Revenue (EUR million)                            835.3       771.4       476.9

 Gross profit/loss (EUR million)                  203.8       113.5        21.7

 EBITDA¹ (EUR million)                            214.5       135.8        58.3

 EBIT¹ (EUR million)                              113.3        37.7       -37.0

 Net profit/loss for the period (EUR
 million)                                          78.9        13.9       -56.6



 Depreciation and amortisation¹ (EUR
 million)                                         101.2        98.1        95.3

 Capital expenditures¹ ²(EUR million)              28.2       203.3        20.2

 Weighted average number of ordinary shares
 outstanding                                743 569 064 743 569 064 694 444 381

 Earnings/loss per share¹ (EUR)                    0.11        0.02       -0.08



 Number of passengers¹                        5 705 600   5 462 085   2 961 975

 Number of cargo units¹                         323 990     409 769     369 170

 Average number of employees¹                     4 879       5 023       4 360



 As at 31 December                                 2023        2022        2021
-------------------------------------------------------------------------------
 Total assets (EUR million)                     1 555.2     1 691.6     1 585.9

 Total liabilities (EUR million)                  769.5       984.7       893.4

 Interest-bearing liabilities¹ (EUR
 million)                                         649.3       853.5       779.9

 Net debt¹ (EUR million)                          607.3       738.6       652.4

 Net debt to EBITDA¹                                2.8         5.4        11.2

 Total equity (EUR million)                       785.8       706.9       692.5

 Equity ratio¹ (%)                                50.5%       41.8%       43.7%



 Number of ordinary shares outstanding      743 569 064 743 569 064 743 569 064

 Shareholders' equity per share (EUR)              1.06        0.95        0.93



 Ratios¹                                           2023        2022        2021
-------------------------------------------------------------------------------
 Gross margin (%)                                 24.4%       14.7%        4.5%

 EBITDA margin (%)                                25.7%       17.6%       12.2%

 EBIT margin (%)                                  13.6%        4.9%       -7.8%

 Net profit/loss margin (%)                        9.4%        1.8%      -11.9%



 ROA (%)                                           7.0%        2.4%       -2.4%

 ROE (%)                                          10.6%        2.1%       -8.2%

 ROCE (%)                                          8.4%        3.1%       -2.8%

 Current ratio                                      0.5         0.7         0.6

¹ Alternative performance measures based on ESMA guidelines are disclosed in the
"Alternative performance measures" section of the report.
(2) Does not include additions to right-of-use assets.

Sales and segments

In  the financial  year 2023, the  Group's total  revenue increased by EUR 63.9
million to EUR 835.3 million compared to EUR 771.4 million in the financial year
2022.

Revenue from route operations (core business) amounted to EUR 645.8 million, EUR
16.9 million more than in the financial year 2022. The segment result from route
operations  (core business) amounted to EUR  107.2 million compared to EUR 39.7
million in the financial year 2022.

In  the financial year 2023, the Group's  vessels carried a total of 3.5 million
passengers  on the Estonia-Finland route, an increase of 10.8% year-on-year. The
number  of cargo units transported decreased by 20.4%. Revenue from the Estonia-
Finland route increased by EUR 20.2 million to EUR 298.0 million and the segment
result  improved by EUR 27.3 million to  EUR 79.0 million. In the financial year
2023, the segment reflects the operations of the following vessels:

  * 1 January - 1 May 2023: the shuttle vessels MyStar, Megastar and Oscar Wilde
    (formerly Star). The latter stopped operating on the route in May 2023 due
    to a charter agreement.
  * 2 May - 11 October 2023: the shuttle vessels MyStar and Megastar.
  * 12 October - 31 December 2023: the shuttle vessels MyStar and Megastar and
    the cruise ferry Victoria I, which was added to the route in October 2023.

The  cruise ferry Silja Europa stopped operating on the Estonia-Finland route in
August 2022 due to a charter agreement.

In  the financial year 2023, the Group carried a total of 1.7 million passengers
on  Finland-Sweden routes, down by 9.9% year-on-year.  The number of cargo units
transported decreased by 41.6%. The routes revenue decreased by EUR 17.2 million
to EUR 257.1 million while the segment result improved by EUR 24.7 million year-
on-year  to EUR 23.8 million. The decline in passenger numbers and cargo volumes
was  mainly due to one less vessel in operation, 26% fewer trips compared to the
financial  year  2022 and  the  change  of  route  to  Turku-Kapellskär.  In the
financial  year 2023, the segment reflects the operations of one cruise ferry on
Turku-Stockholm/Turku-Kapellskär  routes and two cruise ferries on the Helsinki-
Stockholm  route.  The  cruise  ferry  Galaxy  I stopped operating on the Turku-
Stockholm route from September 2022 due to a charter agreement.

On  Estonia-Sweden routes the number of passengers carried increased by 19.0% to
0.6 million  in the financial  year 2023. The number  of cargo units transported
increased  by 3.0% year-on-year.  Revenue of  Estonia-Sweden routes increased by
EUR  13.9 million to  EUR 90.8 million  and the  segment result  improved by EUR
15.5 million  to EUR 4.5 million year-on-year. Estonia-Sweden routes reflect the
operation  of two cargo vessels on  the Paldiski-Kapellskär route and one cruise
ferry on the Tallinn-Stockholm route.
 Revenue  from the segment Other increased by a total of EUR 48.6 million to EUR
196.0 million  due to increase  in the number  of chartered vessels. The segment
result improved by EUR 19.5 million year-on-year to EUR 54.5 million. At the end
of  the financial year 2023, the Group had 5 vessels on charter, of which 3 were
on long-term and 2 on short-term charter.

At the end of the 2023 financial year, long-term charters were as follows:

  * The vessel Atlantic Vision was chartered to Canada in November 2008. The
    current agreement runs until May 2024 with an option to extend for another
    12 months.
  * The shuttle vessel Oscar Wilde (formerly Star) was chartered out from 5 May
    2023 for 20 months with an option to extend the charter by 2+2 years and an
    option to purchase the vessel.
  * The cruise ferry Isabelle has been chartered out on a long-term basis since
    1 July 2023 with a purchase option.

At the end of the 2023 financial year, short-term charters were as follows:

  * The cruise ferry Galaxy I was chartered out in September 2022. In September
    2023, the agreement was extended by six months until April 2024.
  * The cruise ferry Silja Europa was chartered out in August 2022. In October
    2023, the charter agreement was extended until the end of 2024.

During  the  year,  the  charter  agreements  of  2 vessels  ended.  The charter
agreement  for the cruise ferry Romantika,  signed in March 2022, was terminated
on  1 September 2023. The cruise ferry Victoria  I, the charter of which expired
in July, started operating on the Tallinn-Helsinki route on 12 October 2023.

Restaurant  and shop sales on board and on shore totalled EUR 391.0 million (EUR
378.2 million in 2022) accounting for almost half of total revenue. Ticket sales
amounted  to EUR  217.5 million (EUR  191.9 million in  2022) and sales of cargo
transport  to  EUR  91.0 million  (EUR  103.2 million in 2022). Revenue from the
chartering of vessels amounted to EUR 101.2 million compared to EUR 65.8 million
in the financial year 2022.

Earnings

In  the financial  year 2023, the  Group's gross  profit increased  by EUR 90.4
million to EUR 203.8 million compared to EUR 113.5 million in the financial year
2022. EBITDA improved by EUR 78.7 million to EUR 214.5 million.

The Group's profitability was mainly influenced by the following factors:

  * strong pricing and chartering strategy;
  * continued strong focus on cost efficiency through previously implemented
    measures;
  * lower global fuel prices and lower consumption due to chartering of vessels.

The  Group's audited net profit for the financial year 2023 was EUR 78.9 million
or  EUR 0.106 per  share compared  to a  net profit  of EUR  13.9 million or EUR
0.019 per share in 2022 financial year.

The  cost of goods sold  at shops and restaurants  amounted to EUR 170.6 million
(EUR 160.6 million in 2022).

Fuel  costs for the financial year 2023 amounted to EUR 97.2 million (EUR 144.1
million  in 2022). The decline in fuel cost  was driven by an approximately 23%
drop  in global fuel prices,  but also by lower  consumption and more vessels on
charter  compared to the previous financial year. At the same time, the share of
the  Group's fuel transport cost component  in the fuel price increased year-on-
year due to the increased distance of the fuel sourcing.

The  Group's total personnel expenses amounted  to EUR 181.0 million (EUR 162.9
million  in 2022). Personnel expenses related  to administrative staff and sales
and  marketing staff  were EUR  27.8 million and  EUR 21.5 million, respectively
(EUR  23.3 million and  EUR 19.6 million,  respectively, in 2022). The personnel
expenses  related to  servicing and  technical personnel  amounted to EUR 131.7
million  compared to EUR 120.0 million in  2022. The average number of employees
in the financial year 2023 was 4 879 (5 023 in 2022).

Marketing  and administrative expenses  for the financial  year 2023 amounted to
EUR 83.0 million (EUR 74.3 million in 2022). Excluding personnel, administrative
expenses  for the  period amounted  to EUR  15.1 million and sales and marketing
expenses   to   EUR   18.7 million   (EUR  14.1 million  and  EUR  17.3 million,
respectively, in 2022).

The  increase in the amortisation and depreciation expense by EUR 3.1 million to
EUR  101.2 million compared to the financial  year 2022 was mostly driven by the
delivery  of the shuttle-vessel MyStar to the Tallinn-Helsinki route in December
2022. There were no impairment losses related to the Group's property, plant and
equipment and intangible assets.

As a result of higher interest rates and increased financing obligations related
to the delivery of the shuttle-vessel MyStar, net finance costs increased by EUR
10.9 million year-on-year to EUR 35.5 million in the financial year 2023.

Liquidity and cash flow

The  Group's net operating cash flow for the financial year 2023 was positive at
EUR 203.4 million (EUR 144.3 million in 2022).

Net cash used in investing activities was EUR 26.2 million (EUR 200.3 million in
2022).

In the financial year 2023, the net repayment of interest-bearing loans amounted
to  EUR 189.6 million. Interest payments were EUR 32.8 million (EUR 23.5 million
in 2022).

At  31 December 2023, the Group's  cash and cash  equivalents totalled EUR 41.9
million  (EUR 114.9 million on 31 December  2022). In addition, available unused
overdraft  credit  lines  amounted  to  EUR  75.0 million  (EUR 135.0 million in
2022). The  total  liquidity  buffer  (cash,  cash equivalents and unused credit
facilities) amounted to EUR 116.9 million on 31 December 2023 (EUR 249.9 million
on 31 December 2022).

In  management's  opinion,  the  Group  has  sufficient liquidity to support its
operations.

Dividends

In  2018, the Group adopted  a dividend policy  subject to which  dividends of a
minimum  amount of EUR 0.05 per share would  be paid if the economic performance
allows it.

Due   to  the  ongoing  global  uncertainties  the  Annual  General  Meeting  of
Shareholders held on 13 June 2023 decided not to pay dividends for the financial
year 2022.

In  agreement with  the Supervisory  Board of  the Group, the Group's Management
Board  has decided to prepare a proposal  to the General Meeting of Shareholders
to pay a dividend of EUR 0.06 per share in 2024 for the financial year of 2023.

Consolidated statement of profit or loss and other comprehensive income

 For the year ended 31 December, in thousands of EUR              2023     2022
-------------------------------------------------------------------------------
 Revenue                                                       835 325  771 387

 Cost of sales                                                -631 491 -657 917
-------------------------------------------------------------------------------
 Gross profit/loss                                             203 834  113 470



 Sales and marketing expenses                                  -42 162  -38 796

 Administrative expenses                                       -52 401  -47 555

 Impairment loss on receivables                                    -71     -153

 Other operating income                                          4 275   10 871

 Other operating expenses                                         -171     -164
-------------------------------------------------------------------------------
 Result from operating activities                              113 304   37 673



 Finance income                                                  1 332      215

 Finance costs                                                 -36 864  -24 871

 Share of profit/loss of equity-accounted investees                -75      -90
-------------------------------------------------------------------------------
 Profit/loss before income tax                                  77 697   12 927



 Income tax                                                      1 175    1 008



 Net profit/loss                                                78 872   13 935

 Net profit/loss attributable to equity holders of the Parent   78 872   13 935



 Other compherensive income

 Items that may be reclassified to profit or loss

 Exchange differences on translating foreign operations           -172      480
-------------------------------------------------------------------------------
 Other comprehensive income                                       -172      480



 Total comprehensive income                                     78 700   14 415

 Total comprehensive income attributable to equity holders of
 the Parent                                                     78 700   14 415



 Basic and diluted loss per share (in EUR)                       0.106    0.019
-------------------------------------------------------------------------------

Consolidated statement of financial position

  As at 31 December, in thousands of EUR                     2023        2022
------------------------------------------------------------------------------
  ASSETS

  Cash and cash equivalents                                41 921     114 935

  Trade and other receivables                              31 766      31 380

  Prepayments                                               7 661       9 379

  Prepaid income tax                                          193          37

  Inventories                                              41 411      39 965
------------------------------------------------------------------------------
  Current assets                                          122 952     195 696



  Investments in equity-accounted investees                     0          75

  Other financial assets and prepayments                    4 794       3 622

  Deferred income tax assets                               21 840      21 840

  Investment property                                         300         300

  Property, plant and equipment                         1 377 664   1 438 286

  Intangible assets                                        27 671      31 823
------------------------------------------------------------------------------
  Non-current assets                                    1 432 269   1 495 946

  TOTAL ASSETS                                          1 555 221   1 691 642



  LIABILITIES AND EQUITY

  Interest-bearing loans and borrowings                   104 097     165 049

  Trade and other payables                                 85 406      86 934

  Payables to owners                                            6           6

  Income tax liability                                         10          35

  Deferred income                                          34 788      44 222
------------------------------------------------------------------------------
  Current liabilities                                     224 307     296 246



  Interest-bearing loans and borrowings                   545 160     688 465
------------------------------------------------------------------------------
  Non-current liabilities                                 545 160     688 465
------------------------------------------------------------------------------
  Total liabilities                                       769 467     984 711



  Share capital                                           349 477     349 477

  Share Premium                                               663         663

  Reserves                                                 67 056      66 363

  Retained earnings                                       368 558     290 428
------------------------------------------------------------------------------
  Equity attributable to equity holders of the Parent     785 754     706 931

  Total equity                                            785 754     706 931
------------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                          1 555 221   1 691 642

 Consolidated statement of cash flows

 For the year ended 31 December, in thousands of EUR              2023     2022
-------------------------------------------------------------------------------


 CASH FLOWS FROM OPERATING ACTIVITIES

 Net profit/loss for the period                                 78 872   13 935

 Adjustments for:

 Depreciation and amortisation                                 101 224   98 136

 Net gain/loss on disposals of property, plant and equipment       -15      -34

 Net interest expense                                           35 290   24 622

 Loss from equity-accounted investees                               75       90

 Net unrealised foreign exchange gain/loss                        -198      341

 Loss from investments                                             123        0

 Income tax                                                     -1 175   -1 008
-------------------------------------------------------------------------------
 Adjustments                                                   135 324  122 147

 Changes in:

 Receivables related to operating activities                      -378   -2 036

 Prepayments related to operating activities                     1 718   -1 602

 Inventories                                                    -1 446   -5 334

 Liabilities related to operating activities                   -10 457   17 415
-------------------------------------------------------------------------------
 Changes in assets and liabilities                             -10 563    8 443

 Cash generated from operating activities                      203 633  144 525

 Income tax paid                                                  -186     -227
-------------------------------------------------------------------------------
 NET CASH FROM/USED IN OPERATING ACTIVITIES                    203 447  144 298



 CASH FLOWS FROM INVESTING ACTIVITIES

 Purchase of property, plant and equipment and intangible
 assets                                                        -28 131 -203 322

 Proceeds from disposals of property, plant and equipment          613    2 768

 Interest received                                               1 332      215
-------------------------------------------------------------------------------
 NET CASH USED IN INVESTING ACTIVITIES                         -26 186 -200 339



 CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from loans received                                   59 972  196 290

 Repayment of loans received                                  -251 431 -110 055

 Change in overdraft                                               -15     -165

 Payment of lease liabilities                                  -21 519  -17 157

 Interest paid                                                 -32 827  -23 516

 Payment of transaction costs related to loans                  -4 455   -1 977

 NET CASH FROM FINANCING ACTIVITIES                           -250 275   43 420



 TOTAL NET CASH FLOW                                           -73 014  -12 621
-------------------------------------------------------------------------------


 Cash and cash equivalents at the beginning of period          114 935  127 556

 Change in cash and cash equivalents                           -73 014  -12 621
-------------------------------------------------------------------------------
 Cash and cash equivalents at the end of period                 41 921  114 935

Anneli Simm
Investor Relations Manager

AS Tallink Grupp
Sadama 5
10111 Tallinn, Estonia
E-mail [email protected]