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Title

AS Tallink Grupp Audited Annual Report of the 2018 Financial Year

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Tallink Grupp AS and its subsidiaries (the Group) carried a record number of
9 756 611 passengers in 2018, 891 passengers more than in 2017. The number of
cargo units transported increased by 5.7%. The Group's revenue amounted to EUR
949.7 million (EUR 967.0 million in 2017). EBITDA was EUR 142.8 million
(EUR 158.3 million, 2017) and net profit for the year EUR 40.0 million or EUR
0.06 per share (EUR 46.5 million or EUR 0.07 per share in 2017).

In 2018, the Group's total revenue decreased by EUR 17.3 million to EUR 949.7
million.

  * Total revenue from route operations (core business segments) increased by
    EUR 0.7 million to EUR 883.7 million despite a EUR 7.4 million decrease in
    revenue from the Finland-Sweden segment, which was mainly due to the 68-day
    maintenance of the cruise ferry Baltic Princess.
  * Other revenue streams (segment other) decreased by EUR 19.4 million to EUR
    74.8 million. The largest decrease occurred in charter revenue, which
    dropped by EUR 10.8 million because fewer ships were chartered out. There
    was also lower revenue from onshore shops (in Tallinn Old Harbour area) as
    the price level of products sold in onshore shops in Estonia has become less
    competitive after recent years' excise duty increases. In addition, there
    was lower revenue from hotels because Tallink Pirita Spa Hotel in Tallinn
    ceased operations from November 2018 due to the sale of the hotel property
    by its owner.

The cargo business sustained growth in 2018. Transported cargo volumes increased
by 5.7% and cargo revenues grew by 6.1% or EUR 7.1 million to EUR 124.9 million.
The number of transported cargo units grew in all geographical segments,
supported by positive economic developments in the Group's main markets.

In 2018, the Group's ships carried a total of 5.1 million passengers on the
Estonia-Finland routes, 0.3% more than the year before, and the number of cargo
units transported on the routes increased by 5.4%. On the Tallinn-Helsinki route
competition increased through capacity added by competitors, which put pressure
on ticket prices. However, the new shuttle vessel Megastar improved the
efficiency of shuttle operations and the Group was able to improve the segment
result despite a challenging competitive environment. The segment's revenue
increased by EUR 1.5 million to EUR 356.0 million and the segment's result
increased by EUR 2.4 million to EUR 80.3 million.

The Finland-Sweden routes' revenue decreased by EUR 7.4 million to EUR 337.5
million and the segment's result decreased by EUR 2.3 million to EUR 16.2
million. The first-quarter maintenance and repair of the cruise ferry Baltic
Princess affected the Finland-Sweden segment's carriage volumes and financial
result. The segment's result was also weakened by a rise in bunker prices which
increased fuel costs.

The Estonia-Sweden routes' revenue grew by EUR 1.7 million compared to 2017.
Growth was supported by a 0.4% higher number of passengers and a 10.9% increase
in the number of transported cargo units. The segment's result decreased
compared to the previous year due to higher fuel costs attributable to a rise in
bunker prices.

The Latvia-Sweden route's revenue increased by EUR 4.8 million compared to
2017. Growth was supported by a 7.0% higher number of passengers and a 24.5%
increase in the number of transported cargo units. Positive development of the
route's carriage volumes and revenue continued in 2018. However, due to higher
fuel costs resulting from an increase in bunker prices, the segment result
improved by only EUR 0.2 million to EUR -1.0 million.

In 2018, the Group's revenue and operating result were influenced by the
following operational factors:

  * The number of passengers travelling on the Group's ships increased in almost
    all geographical segments (Estonia-Finland, Estonia-Sweden and Latvia-
    Sweden).
  * The number of cargo units transported on the Group's ships increased in all
    geographical segments.
  * The first-quarter maintenance and repair of the cruise ferry Baltic Princess
    affected the Finland-Sweden segment's carriage volumes and financial result.
  * Charter revenue decreased compared to the same period last year as fewer
    ships were chartered out.
  * An increase in bunker prices drove up fuel costs.

Key figures

 For the year ended 31 December                    2018        2017        2016
-------------------------------------------------------------------------------
 Revenue (million euros)                          949.7       967.0       937.8

 Gross profit (million euros)                     183.8       194.6       192.6

 EBITDA¹ (million euros)                          142.8       158.3       149.5

 EBIT¹ (million euros)                             63.5        71.9        71.6

 Net profit for the period (million euros)         40.0        46.5        44.1



 Depreciation and amortisation (million
 euros)                                            79.3        86.4        77.9

 Capital expenditures¹ (million euros)             36.4       219.3        68.9

 Weighted average number of ordinary shares
 outstanding                                669 859 148 669 882 040 669 882 040

 Earnings per share¹                               0.06        0.07        0.07



 Number of passengers¹                        9 756 611   9 755 720   9 457 522

 Number of cargo units¹                         384 958     364 296     328 190

 Average number of employees¹                     7 430       7 406       7 163



 As at 31 December                                 2018        2017        2016
-------------------------------------------------------------------------------
 Total assets (million euros)                   1 500.9     1 558.6     1 539.0

 Total liabilities (million euros)                644.0       722.3       729.1

 Interest-bearing liabilities (million
 euros)                                           510.1       560.9       558.9

 Net debt¹ (million euros)                        428.0       472.0       480.1

 Net debt to EBITDA¹                                3.0         3.0         3.2

 Total equity (million euros)                     856.9       836.3       809.9

 Equity ratio¹ (%)                                57.1%       53.7%       52.6%



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

 Equity per share¹                                 1.28        1.25        1.21



 Ratios                                            2018        2017        2016
-------------------------------------------------------------------------------
 Gross margin¹ (%)                                19.4%       20.1%       20.5%

 EBITDA margin¹ (%)                               15.0%       16.4%       15.9%

 EBIT margin¹ (%)                                  6.7%        7.4%        7.6%

 Net profit margin¹ (%)                            4.2%        4.8%        4.7%



 ROA¹ (%)                                          4.1%        4.3%        4.6%

 ROE¹ (%)                                          4.8%        5.6%        5.4%

 ROCE¹ (%)                                         5.2%        5.3%        5.6%

¹ Alternative performance measures based on ESMA guidelines are disclosed in the
"Alternative performance measures" section of the report.

Sales

The Group's revenue amounted to EUR 949.7 million in 2018 (967.0 million in
2017). Restaurant and shop sales on board and on shore in the total amount of
EUR 524.4 million (536.7 million in 2017) contributed more than half of total
revenue. Ticket sales amounted to EUR 243.8 million (242.7 million in 2017) and
sales of cargo transport to EUR 124.9 million (111.7 million in 2017).

Geographically, 37.5% or EUR 356.0 million of revenue was generated by the
Estonia-Finland routes and 35.5% or EUR 337.5 million by the Finland-Sweden
routes. Revenue from the Estonia-Sweden routes was EUR 119.0 million or 12.5%
and from the Latvia-Sweden route EUR 71.3 million or 7.5%. The share of revenue
generated by other geographical segments decreased to 7.9% or EUR 74.8 million.

Earnings

Gross profit for 2018 amounted to EUR 183.8 million (EUR 194.6 million in 2017)
and EBITDA to EUR 142.8 million (EUR 158.3 million in 2017). Net profit for
2018 was EUR 40.0 million (EUR 46.5 million in 2017). Net profit per share was
EUR 0.06 (EUR 0.07 in 2017).

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

  * Fuel costs grew by EUR 16.6 million due to an increase in bunker prices. At
    the same time, the Group achieved fuel savings. Through various energy
    efficiency initiatives, in 2018 the ships' average fuel consumption per
    nautical mile decreased by 3.2%.
  * Charter revenue decreased because fewer ships were chartered out compared to
    the previous year.
  * Revenue from onshore shops (in the port area) decreased because the price
    level in onshore shops in Estonia has become less competitive after recent
    years' excise duty increases.
  * Nonrecurring costs incurred and proceeds received in 2018:

      * Costs of EUR 1.5 million from the listing of shares on the Nasdaq
        Helsinki Stock Exchange.
      * Costs of EUR 0.9 million from the termination of the lease of an old
        fuel tank.
      * Other proceeds of EUR 1.0 million received under a compensation
        agreement with the former owner of the Superfast vessels.

The cost of goods sold at shops and restaurants, which is the largest operating
cost item, amounted to EUR 217.2 million (EUR 227.8 million in 2017).

Fuel costs for 2018 amounted to EUR 102.5 million (EUR 85.9 million in 2017).
Fuel costs were impacted by an increase in carriage capacity and higher fuel
prices throughout the year. As a result, annual fuel costs increased by 19.3%.
The Group makes continuous efforts to improve and optimize its day to day
operations and lower the fleet's fuel costs.

The Group's personnel expenses amounted to EUR 218.1 million (EUR 215.2 million
in 2017). The average number of employees in 2018 was 7 430 (7 406 in 2017).

Administrative expenses for the period amounted to EUR 55.5 million and sales
and marketing expenses to EUR 69.3 million (EUR 53.7 million and 71.3 million
respectively in 2017).

Depreciation and amortisation of the Group's assets totalled EUR 79.3 million
(EUR 86.4 million in 2017). There were no impairment losses related to the
Group's property, plant and equipment and intangible assets.

Net finance costs decreased by EUR 2.3 million compared to the previous year,
mainly through EUR 3.9 million lower interest expenses. Total gains from
exchange rate differences and the revaluation of cross currency and interest
rate derivatives decreased by EUR 1.6 million.

The Group's exposure to credit risk, liquidity risk and market risks, and its
financial risk management activities are described in the notes to the financial
statements.

Liquidity and cash flow

The Group's net operating cash flow for 2018 was EUR 156.8 million (EUR 136.2
million in 2017).

The Group's cash used in investing activities was EUR 35.7 million (EUR 86.8
million in 2017). A number of investments were made to upgrade the ships'
restaurants, shops and cabins. Investments were also made in the development of
the online booking and sales systems.

In 2018, the Group's loan repayments totalled EUR 190.0 million (EUR 174.4
million in 2017), including the repayment of senior unsecured bonds of NOK 900
million issued in 2013. A term loan of EUR 110.0 million was taken to partly
refinance the redemption of the bond issue.

Interest payments were EUR 19.4 million (EUR 20.7 million in 2017).

At 31 December 2018, the Group's cash and cash equivalents totalled EUR 82.2
million (EUR 88.9 million at 31 December 2017). In addition, available unused
overdraft credit lines amounted to EUR 75.0 million (EUR 75.0 million in 2017).

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


Consolidated statement of profit or loss and other comprehensive income

 For the year ended 31 December, in thousands of EUR              2018     2017
-------------------------------------------------------------------------------
 Revenue (Note 4)                                              949 723  966 977

 Cost of sales (Note 5)                                       -765 892 -772 372
-------------------------------------------------------------------------------
 Gross profit                                                  183 831  194 605



 Sales and marketing expenses (Note 5)                         -69 315  -71 339

 Administrative expenses (Note 5)                              -55 223  -53 012

 Impairment loss on receivables (Note 23)                         -272     -660

 Other operating income                                          4 633    2 873

 Other operating expenses                                         -153     -509
-------------------------------------------------------------------------------
 Result from operating activities                               63 501   71 958



 Finance income (Note 5)                                         8 631   12 738

 Finance costs (Note 5)                                        -27 552  -33 987

 Share of profit of equity-accounted investees (Note 12)             4       40
-------------------------------------------------------------------------------
 Profit before income tax                                       44 584   50 749



 Income tax  (Note 6)                                           -4 535   -4 253



 Net profit                                                     40 049   46 496

 Net profit attributable to equity holders of the Parent        40 049   46 496



 Other compherensive income

 Items that may be reclassified to profit or loss

 Exchange differences on translating foreign operations            267       13
-------------------------------------------------------------------------------
 Other comprehensive income                                        267       13



 Total comprehensive income                                     40 316   46 509

 Total comprehensive income attributable to equity holders of
 the Parent                                                     40 316   46 509



 Basic and diluted earnings per share (in EUR, Note 7)           0.060    0.069
-------------------------------------------------------------------------------


Consolidated statement of financial position

  As at 31 December, in thousands of EUR                     2018        2017
------------------------------------------------------------------------------
  ASSETS

  Cash and cash equivalents (Note 8)                       82 175      88 911

  Trade and other receivables (Note 9)                     43 805      46 466

  Prepayments (Note 10)                                     6 084       5 395

  Prepaid income tax                                           46          40

  Inventories (Note 11)                                    35 741      40 675
------------------------------------------------------------------------------
  Current assets                                          167 851     181 487



  Investments in equity-accounted investees (Note 12)         407         403

  Other financial assets (Note 13)                            320         344

  Deferred income tax assets (Note 6)                      17 934      18 722

  Investment property                                         300         300

  Property, plant and equipment (Note 14)               1 267 928   1 308 441

  Intangible assets (Note 15)                              46 164      48 900
------------------------------------------------------------------------------
  Non-current assets                                    1 333 053   1 377 110

  TOTAL ASSETS                                          1 500 904   1 558 597



  LIABILITIES AND EQUITY

  Interest-bearing loans and borrowings (Note 16)          78 658     159 938

  Trade and other payables (Note 17)                      100 682      95 548

  Derivatives (Note 23)                                       918      29 710

  Payables to owners                                            2           3

  Income tax liability                                        116          34

  Deferred income (Note 18)                                32 113      31 429
------------------------------------------------------------------------------
  Current liabilities                                     212 489     316 662



  Interest-bearing loans and borrowings (Note 16)         431 477     400 968

  Derivatives (Note 23)                                         0       4 688

  Other liabilities                                            22           0
------------------------------------------------------------------------------
  Non-current liabilities                                 431 499     405 656
------------------------------------------------------------------------------
  Total liabilities                                       643 988     722 318



  Share capital (Note 19)                                 361 736     361 736

  Share premium (Note 19)                                     662         639

  Reserves (Note 19)                                       69 474      68 946

  Retained earnings                                       425 044     404 958
------------------------------------------------------------------------------
  Equity attributable to equity holders of the Parent     856 916     836 279

  Total equity                                            856 916     836 279
------------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                          1 500 904   1 558 597


Consolidated statement of cash flows

 For the year ended 31 December, in thousands of EUR              2018     2017
-------------------------------------------------------------------------------


 CASH FLOWS FROM OPERATING ACTIVITIES

 Net profit for the period                                      40 049   46 496

 Adjustments for:

 Depreciation and amortisation (Notes 14, 15)                   79 280   86 371

 Net loss on disposals of property, plant and equipment           -104   -1 903

 Net interest expense (Note 5)                                  19 806   23 744

 Net income/expense from derivatives (Note 5)                   -5 055    5 631

 Profit from equity-accounted investees (Note 12)                   -4      -40

 Net unrealised foreign exchange loss/gain                       4 294   -7 564

 Treasury shares                                                     6        0

 Income tax (Note 6)                                             4 535    4 253
-------------------------------------------------------------------------------
 Adjustments                                                   102 758  110 492

 Changes in:

 Receivables and prepayments related to operating activities     2 407   -6 707

 Inventories                                                     4 934   -1 956

 Liabilities related to operating activities                     6 723  -12 140
-------------------------------------------------------------------------------
 Changes in assets and liabilities                              14 064  -20 803

 Cash generated from operating activities                      156 871  136 185

 Income tax paid                                                   -87       -7
-------------------------------------------------------------------------------
 NET CASH FROM OPERATING ACTIVITIES                            156 784  136 178



 CASH FLOWS FROM INVESTING ACTIVITIES

 Purchase of property, plant, equipment and intangible assets  -36 037 -219 207

 Proceeds from disposals of property, plant, equipment             368  132 448

 Interest received                                                   7        1
-------------------------------------------------------------------------------
 NET CASH USED IN INVESTING ACTIVITIES                         -35 662  -86 758



 CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from loans received                                  110 000  184 000

 Repayment of loans received                                   -69 666 -134 321

 Repayment of bonds (Note 16)                                 -120 303        0

 Change in overdraft (Note 16)                                       0  -40 110

 Payments for settlement of derivatives                         -3 569   -3 592

 Payment of finance lease liabilities                             -108     -102

 Interest paid                                                 -19 440  -20 744

 Payment of transaction costs related to loans                  -1 113     -216

 Dividends paid (Note 19)                                      -20 096  -20 096

 Reduction of share capital                                         -1       -1

 Income tax on dividends paid (Note 19)                         -3 562   -4 100
-------------------------------------------------------------------------------
 NET CASH USED IN FINANCING ACTIVITIES                        -127 858  -39 282



 TOTAL NET CASH FLOW                                            -6 736   10 138
-------------------------------------------------------------------------------


 Cash and cash equivalents at the beginning of period           88 911   78 773

 Decrease/increase in cash and cash equivalents (Note 8)        -6 736   10 138
-------------------------------------------------------------------------------
 Cash and cash equivalents at the end of period                 82 175   88 911


?Veiko Haavapuu
Financial Director

AS Tallink Grupp
Sadama 5/7, 10111 Tallinn
E-mail [email protected]