Market announcement

Title

AS Tallink Grupp Audited Annual Report of the 2021 Financial Year

Message

Dear shareholders

The 2021 was another year defined by serious COVID-19 related challenges for us,
the entire industry, the whole global society. When 2020 was a year of initial
reactions to the COVID-19 shock, then 2021 can be characterised as a year of
carrying out decisive actions to end the pandemic. Be it through continuous
restrictions, immunization of entire societies or developments of medical
treatments.

We witnessed first-hand the extreme impact Finland's approach with its harsh
restrictions had on our operating environment in the first half of the year as
well as in the summer. On a flip side, it also contributed to relatively low
numbers of COVID-19 infections in Finland and a high level of immunization by
the autumn, which allowed to open the society and travel again.

I would like to express my gratitude to our loyal customers. It was very
gratifying and encouraging to see how rapid and strong the recovery in the
number of passengers from our home markets was in October and November last
year, particularly on the routes between Finland and Sweden. But also on the re-
opened Tallinn-Stockholm route with Baltic Queen. A strong signal that of our
services are highly appreciated and were dearly missed. A loud and clear
statement that Tallink Grupp has a mission to carry out - to continue offering
our customers an enjoyable and return-worthy travel experience.

As a result of the painful cuts and concerted efforts made in 2020 we became a
much more lean and efficient company in 2021 - a 'slim-fit' Tallink, which
allowed us to drastically improve financial results and earn a profit in the
second half of the year despite higher fuel prices and a significantly lower
amount of financial support from our home markets' governments.

In 2021 many our own efforts were also aimed at helping the societies in our
region open up again - we provided support to our home countries by bringing
testing and vaccination services on board our vessels and into the terminals.
I'm very proud that the rate of employee vaccination across the entire Group and
our markets well exceeded 90% already by beginning of the autumn and that
despite some inevitable infection cases there were no outbreaks of the virus on
board our vessels as we were able to provide a safe environment for our
customers and staff.

Throughout the year our focus remained on optimising the costs, ensuring
liquidity and finding ways to earn new revenue streams in an extremely low
demand and high uncertainty environment. We provided domestic cruises for
Finnish and Swedish markets in the summer before reopening traffic on our
regular routes, as well as managed to secure several short-term charter deals.
All these efforts helped us to limit losses in the first half of the year and
return to small profits in the second half. My total respect and appreciation
goes to the entire professional team of our Group who pulled this off.

It has, no doubt, been a continuously difficult period for all our employees and
words will fall short in expressing my gratitude and the pride I have for the
dedication and hard work demonstrated by everyone within Tallink Grupp.

Although we were not yet able to earn profits in 2021 together with additional
capital and a grace period for debt service agreed with our financing partners
as well as shareholders, we ended the year with a very strong liquidity
position. My sincere gratitude also to both all our shareholders and financing
partners for the trust. Yet as we are still not completely out of the COVID
crisis and did not reach profits in 2021, it will not be surprising to our
shareholders that we are prioritising the long-term prospects of the company for
now and are thus not going to propose any distributions this year.

From 2022 we expect continuous recovery, maintaining the efficiencies of a
leaner organisation and improvements in financial results, although the events
with the Omicron strain and even more the recent events threatening regional and
global security complicate the outlook considerably and force us to make changes
in our plans yet again.

At the time of writing this message to you in late-March we have seen a further
significant hike in fuel prices and increases in the price volatility. We are
also seeing high inflation nibbling away at purchasing power and a lower number
of passengers arriving from many areas outside our home markets as a result of
the military conflict in Europe. Planning has become even more difficult and, to
reduce the risks, we have postponed the return of our laid-up vessels further
into the high season.

In a way we find ourselves in a similar position as we did two years ago -
looking optimistically ahead for a good year at the start, only to have global-
scale shocks threatening to derail the outlook a few months later. The
difference between 2020 and today is that the last two years have seasoned us
well and taught us many lessons in crisis preparedness. So, although we find
ourselves in a completely different kind of crisis in March 2022, our experience
has taught us well and we have not only plans A, B and C up our sleeves, but
also plans X, Y and Z.

Similarly to the previous years we will continue keeping our costs under control
and weigh and calculate the steps we take. Through vaccination and many people
already recovered from COVID, the immunity levels in our region are high going
into the high season of 2022. This is also reflected in the fact that by now
COVID-19 restrictions have been abolished in Finland and Sweden and recently
there has been a substantial easing of restrictions in Estonia, with final
restrictions anticipated to be removed in a matter of weeks. With much less
restrictions the operating environment looks much improved for our sales effort
from the second quarter onward.

One of the distinctive highlights of last year were alternative revenue streams
from the numerous short-term charters hunted down and delivered by our fast,
agile and hungry-for-business mentality. Chartering activity will be important
also in 2022 - in addition to Atlantic Vision in Canada our vessel Romantika has
started a long-term charter deal from late March. Furthermore, we continue to
actively look for more opportunities for other assets in our fleet.

The highlights of 2022 are yet to be discovered as the year unfolds, but there
is no doubt that one of them will be the delivery of our brand new and the most
efficient and environmentally friendly vessel in our fleet - shuttle vessel
MyStar. Together with Megastar they will effectively create a 'green bridge'
between Estonia and Finland and the development will underpin our increased
environmental efforts towards a more sustainable future.

Dear shareholders, it is clear that 2022 will be another year of gradual
recovery together with its own challenges, but we are confident it will also
bring opportunities and positive developments. Our experience has shown that our
customers want to travel with us once they're given the opportunity and we
remain optimistic regarding the continuous recovery path we are on. The changes
that we have made on our part, and the 'slim-fit' Tallink that we have become,
gives us confidence that good financial results and sustainable operations can
be achieved well before we are fully back to pre-pandemic levels of passengers.
And the whole team of our Group will continue to do their very best to achieve
this.

Yours sincerely,

Paavo Nõgene
Chairman of the Management Board



AS Tallink Grupp Audited Annual Report of the 2021 Financial Year
The Group carried a total of 2 961 975 passengers in 2021, which is 21% less
than in 2020. The number of cargo units transported increased by 2.6% compared
to 2020. The Group's revenue amounted to EUR 476.9 million (EUR 442.9 million in
2020). EBITDA was EUR 58.3 million (EUR 8.0 million in 2020) and net loss
EUR 56.6 million or EUR 0.08 per share (net loss of EUR 108.3 million or
EUR 0.16 per share in 2020).

In 2021, the Group's total revenue increased by EUR 34.0 million to EUR 476.9
million compared to the previous year. Total revenue for 2020 and 2019 amounted
to EUR 442.9 million and EUR 949.1 million, respectively. Revenue from route
operations (core business) decreased by EUR 7.6 million to EUR 392.6 million.

In 2021, the Group's revenue and operating results were continuously affected by
the COVID-19 situation and the imposed travel restrictions. The significant
events in 2021 include:

  * Temporary suspensions of vessel and hotel operations due to COVID-19 and
    related restrictions
  * Chartering out vessels
  * Reopening of Tallinn-Stockholm & Helsinki-Stockholm routes
  * Public offering of shares and increase in share capital
  * Ongoing construction of the new LNG-based vessel MyStar
  * Completion of renovation of Tallink City Hotel
  * Opening of Burger King restaurants in Latvia and Lithuania
  * Amendments to loan agreements
  * Exit from onshore fashion retail business



Operations during the year
The Group's operations were impacted by extensive travel restrictions in the
first half of the year. Only the two shuttle vessels, Turku-Stockholm route
cruise ferries and cargo vessels were operated throughout 2021. Cruise ferry
Silja Europa was chartered out in June and restarted cruise operations on
Tallinn-Helsinki route from the end of June. Tallinn-Stockholm route was
reopened from July with one cruise ferry, Baltic Queen. Cruise ferries Silja
Serenade and Silja Symphony operated special domestic cruises during the summer
and restarted the Helsinki-Stockholm route from August. Cruise ferries Romantika
and Victoria I were chartered out to Morocco in July-September. Cruise ferries
Silja Europa and Romantika were chartered out to Scotland in the autumn for
about a month. Riga-Stockholm route and cruise ferry Isabelle remained inactive
throughout the year.

Tallink Spa & Conference Hotel and Tallink Express Hotel operated throughout the
year, Tallink City Hotel was reopened after renovation in the end of June.
Tallink Hotel Riga remained closed during the year. During the year, six new
Burger King restaurants were opened in the Baltics.



Key figures

 (For the year ended 31 December)           (2021 )       (2020 )       (2019 )
-------------------------------------------------------------------------------
 (Revenue (EUR million))                    (476.9)       (442.9)       (949.1)

 (Gross profit/loss (EUR million))           (21.7)       (-43.5)       (196.9)

 (EBITDA¹ (EUR million))                     (58.3)         (8.0)       (171.1)

 (EBIT¹ (EUR million))                      (-37.0)       (-92.6)        (74.9)

 (Net profit/loss for the period (EUR
 million))                                  (-56.6)      (-108.3)        (49.7)



 (Depreciation and amortisation (EUR
 million))                                   (95.3)       (100.7)        (96.2)

 (Capital expenditures¹ ²(EUR
 million))                                   (20.2)       (100.1)        (60.9)

 (Weighted average number of ordinary
 shares outstanding)                  (694,444,381) (669,882,040) (669,881,045)

 (Earnings/loss per share¹)                 (-0.08)       (-0.16)        (0.07)



 (Number of passengers¹)                (2,961,975)   (3,732,102)   (9,763,210)

 (Number of cargo units¹)                 (369,170)     (359,811)     (379,634)

 (Average number of employees¹)             (4,360)       (6,104)       (7,270)



 (As at 31 December)                        (2021 )       (2020 )       (2019 )
-------------------------------------------------------------------------------
 (Total assets (EUR million))             (1,585.9)     (1,516.2)     (1,533.0)

 (Total liabilities (EUR million))          (893.4)       (801.9)       (710.1)

 (Interest-bearing liabilities (EUR
 million))                                  (779.9)       (705.1)       (577.9)

 (Net debt¹ (EUR million))                  (652.4)       (677.3)       (539.0)

 (Net debt to EBITDA¹)                       (11.2)        (84.2)         (3.1)

 (Total equity (EUR million))               (692.5)       (714.3)       (822.8)

 (Equity ratio¹ (%))                        (43.7%)       (47.1%)       (53.7%)



 (Number of ordinary shares
 outstanding)                         (743,569,064) (669,882,040) (669,882,040)

 (Equity per share¹)                         (0.93)        (1.07)        (1.23)



 (Ratios¹)                                  (2021 )       (2020 )       (2019 )
-------------------------------------------------------------------------------
 (Gross margin (%))                          (4.5%)       (-9.8%)       (20.7%)

 (EBITDA margin (%))                        (12.2%)        (1.8%)       (18.0%)

 (EBIT margin (%))                          (-7.8%)      (-20.9%)        (7.9%)

 (Net profit/loss margin (%))              (-11.9%)      (-24.5%)        (5.2%)



 (ROA (%))                                  (-2.4%)       (-6.1%)        (4.8%)

 (ROE (%))                                  (-8.2%)      (-14.1%)        (6.0%)

 (ROCE (%))                                 (-2.8%)       (-7.2%)        (5.7%)

 (Current ratio)                              (0.6)         (0.4)         (0.5)

((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
The Group's revenue amounted to EUR 476.9 million in 2021 (442.9 million in
2020). Restaurant and shop sales on board and on shore of EUR 233.4 million in
total (228.5 million in 2020) contributed nearly half of the total revenue.
Ticket sales amounted to EUR 99.1 million (95.6 million in 2020) and sales of
cargo transport to EUR 94.8 million (94.0 million in 2020).

Geographically, 38.7% or EUR 184.5 million of revenue was generated by the
Estonia-Finland routes and 33.3% or EUR 158.7 million by the Finland-Sweden
routes. Revenue from the Estonia-Sweden routes was EUR 49.1 million or 10.3% and
from the Latvia-Sweden route EUR 0.3 million or 0.1%. The share of revenue
generated by other geographical segments increased to 17.9% or EUR 85.2 million.

In 2021, the Group's ships carried a total of 1.8 million passengers on the
Estonia-Finland routes, a 27.7% decrease compared to 2020, but the number of
cargo units transported on the routes increased by 2.1%. Estonia-Finland routes'
revenue decreased by EUR 15.9 million to EUR 184.5 million. The Estonia-Finland
routes' results also include the operations of the Tallinn-Visby and Tallinn-
Mariehamn routes.

The Finland-Sweden routes' revenue increased by EUR 9.2 million and amounted to
EUR 158.7 million. The Helsinki-Stockholm route was reopened from August 2021.
The Finland-Sweden routes' results include also the special cruises from
Stockholm to Visby, Härnösand and Ystad.

The Estonia-Sweden routes' revenue increased by EUR 14.2 million, compared to
the previous year, and amounted to EUR 49.1 million. The Estonia-Sweden routes'
results reflect the operations of the Paldiski-Kapellskär route and the
operations of the Tallinn-Stockholm route that was reopened in July 2021.

The Latvia-Sweden route operations were suspended during the year. The EUR -12.5
million segment result reflects the expenses of the suspended cruise ferries
Isabelle as well as Romantika after the conclusion of the charter period.

Revenue from the segment other increased by a total of EUR 40.0 million and
amounted to EUR 85.2 million. The increase was mainly driven by significantly
higher charter revenue, increase in online shop sales and the opening of Burger
King restaurants.



Earnings
Gross profit for 2021 was EUR 21.7 million (gross loss of EUR 43.5 million in
2020) and EBITDA EUR 58.3 million (EUR 8.0 million in 2020). Net loss for 2021
was EUR 56.6 million (net loss of EUR 108.3 million in 2020). Net loss per share
was EUR 0.08 (net loss per share was EUR 0.16 in 2020).

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

  * COVID-19 and related restrictions on travelling
  * A significant cut in operating expenses and cost savings from previously
    implemented measures
  * Short-term chartering of vessels and reopening of Tallinn-Stockholm and
    Helsinki-Stockholm routes
  * A positive impact from various government support measures in the total net
    amount of EUR 12.8 million
  * A positive impact from the exemption from and reduction of ships' fairway
    dues in Estonia in the amount of EUR 2.8 million
  * An increase in global fuel prices

The cost of goods sold at shops and restaurants amounted to EUR 110.5 million
(EUR 116.6 million in 2020).

Fuel costs for 2021 totalled EUR 72.2 million (EUR 56.3 million in 2020). Fuel
costs were impacted by an increase in global prices. As a result, annual fuel
costs increased by 28.2%. The Group makes continuous efforts to improve and
optimise its day-to-day operations and lower the fleet's fuel costs.

The Group's total personnel expenses amounted to EUR 124.0 million (EUR 161.7
million in 2020). Staff costs related to administrative staff and sales &
marketing staff were EUR 21.2 million and EUR 16.8 million, respectively (EUR
23.3 million and EUR 21.7 million, respectively, in 2020). The average number of
employees in 2021 was 4 360 (6 104 in 2020).

Excluding personnel and depreciation expenses, administrative expenses for the
period amounted to EUR 13.5 million and sales and marketing expenses to EUR
10.5 million (EUR 13.1 million and 13.7 million, respectively, in 2020).

During the year the Group received a net total of EUR 12.8 million in direct
financial support through various government assistance measures in all its home
markets (EUR 36.6 million in 2020).

Depreciation and amortisation totalled EUR 95.3 million (EUR 100.7 million in
2020). There were no impairment losses related to the Group's property, plant
and equipment and intangible assets.

As a result of increased interest-bearing liabilities, net finance costs
increased by EUR 4.0 million to EUR 21.9 million compared to 2020.

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 2021 was positive at EUR 59.4 million
(negative at EUR 7.0 million in 2020).

Net cash used in investing activities was EUR 19.4 million (EUR 99.9 million in
2020).

In 2021, the Group's loan repayments totalled EUR 14.7 million (EUR 14.7 million
in 2020). Interest payments were EUR 19.3 million (EUR 16.3 million in 2020).

At 31 December 2021, the Group's cash and cash equivalents totalled EUR 127.6
million (EUR 27.8 million at 31 December 2020). In addition, available unused
overdraft credit lines amounted to EUR 134.8 million (EUR 119.3 million in
2020).



Dividends
In June 2021, the shareholders' annual general meeting decided not to pay a
dividend from net loss for 2020.

Due to a complicated operating environment and considering the Company's long-
term interests, the Management Board has decided to prepare a proposal to the
shareholders' annual general meeting not to pay a dividend for 2021.



Consolidated statement of profit or loss and other comprehensive income

 (For the year ended 31 December, in thousands of EUR)        (2021)     (2020)
-------------------------------------------------------------------------------
 (Revenue (Note 4))                                        (476,937)  (442,934)

 (Cost of sales (Note 5))                                 (-455,282) (-486,388)
-------------------------------------------------------------------------------
 (Gross profit/loss)                                        (21,655)  (-43,454)



 (Sales and marketing expenses (Note 5))                   (-29,262)  (-37,817)

 (Administrative expenses (Note 5))                        (-45,633)  (-48,263)

 (Impairment loss on receivables (Note 25))                    (-99)     (-128)

 (Other operating income (Note 22))                         (16,336)   (37,339)

 (Other operating expenses)                                    (-28)     (-298)
-------------------------------------------------------------------------------
 (Result from operating activities)                        (-37,031)  (-92,621)



 (Finance income (Note 5))                                      (34)        (1)

 (Finance costs (Note 5))                                  (-21,921)  (-17,843)

 (Share of profit/loss of equity-accounted investees
 (Note 12))                                                    (-80)     (-158)
-------------------------------------------------------------------------------
 (Profit/loss before income tax)                           (-58,998) (-110,621)



 (Income tax (Note 6))                                       (2,422)    (2,313)



 (Net profit/loss)                                         (-56,576) (-108,308)

 (Net profit/loss attributable to equity holders of the
 Parent)                                                   (-56,576) (-108,308)



 (Other compherensive income)

 (Items that may be reclassified to profit or loss)

 (Exchange differences on translating foreign operations)      (123)     (-193)
-------------------------------------------------------------------------------
 (Other comprehensive income)                                  (123)     (-193)



 (Total comprehensive income)                              (-56,453) (-108,501)

 (Total comprehensive income attributable to equity
 holders of the Parent)                                    (-56,453) (-108,501)



 (Basic and diluted loss per share (in EUR, Note 7))        (-0.081)   (-0.162)
-------------------------------------------------------------------------------



Consolidated statement of financial position

 (As at 31 December, in thousands of EUR)                    (2021)      (2020)
-------------------------------------------------------------------------------
 (ASSETS)

 (Cash and cash equivalents (Note 8))                     (127,556)    (27,834)

 (Trade and other receivables (Note 9))                    (29,298)    (25,463)

 (Prepayments (Note 10))                                   (11,924)     (7,216)

 (Inventories (Note 11))                                   (34,631)    (28,707)
-------------------------------------------------------------------------------
 (Current assets)                                         (203,409)    (89,220)



 (Investments in equity-accounted investees (Note 12))        (165)       (245)

 (Other financial assets and prepayments(Note 13))            (555)     (2,233)

 (Deferred income tax assets (Note 6))                     (21,840)    (20,270)

 (Investment property)                                        (300)       (300)

 (Property, plant and equipment (Note 14))              (1,323,353) (1,363,485)

 (Intangible assets (Note 15))                             (36,293)    (40,448)
-------------------------------------------------------------------------------
 (Non-current assets)                                   (1,382,506) (1,426,981)

 (TOTAL ASSETS)                                         (1,585,915) (1,516,201)



 (LIABILITIES AND EQUITY)

 (Interest-bearing loans and borrowings (Notes 16, 24))   (244,436)   (111,601)

 (Trade and other payables (Note 18))                      (91,687)    (73,477)

 (Payables to owners)                                           (6)         (6)

 (Income tax liability)                                        (47)        (10)

 (Deferred income (Note 19))                               (21,734)    (23,253)
-------------------------------------------------------------------------------
 (Current liabilities)                                    (357,910)   (208,347)



 (Interest-bearing loans and borrowings (Notes 16, 17))   (535,489)   (593,518)
-------------------------------------------------------------------------------
 (Non-current liabilities)                                (535,489)   (593,518)
-------------------------------------------------------------------------------
 (Total liabilities)                                      (893,399)   (801,865)



 (Share capital (Note 20))                                (349,477)   (314,844)

 (Share premium (Note 20))                                    (663)       (663)

 (Reserves (Note 20))                                      (67,930)    (69,854)

 (Retained earnings)                                      (274,446)   (328,975)
-------------------------------------------------------------------------------
 (Equity attributable to equity holders of the Parent)    (692,516)   (714,336)

 (Total equity)                                           (692,516)   (714,336)
-------------------------------------------------------------------------------
 (TOTAL LIABILITIES AND EQUITY)                         (1,585,915) (1,516,201)



Consolidated statement of cash flows

 (For the year ended 31 December, in thousands of EUR)        (2021)     (2020)
-------------------------------------------------------------------------------


 (CASH FLOWS FROM OPERATING ACTIVITIES)

 (Net profit/loss for the period)                          (-56,576) (-108,308)

 (Adjustments for:)

 (Depreciation and amortisation (Notes 14, 15))             (95,313)  (100,660)

 (Net gain/loss on disposals of property, plant and
 equipment)                                                   (-494)      (110)

 (Net interest expense (Note 5))                            (21,843)   (17,273)

 (Loss from equity-accounted investees (Note 12))               (80)      (158)

 (Net unrealised foreign exchange gain/loss)                   (118)     (-179)

 (Loss from investments)                                        (75)        (0)

 (Income tax (Note 6))                                        (-852)     (-717)
-------------------------------------------------------------------------------
 (Adjustments)                                             (116,083)  (117,305)

 (Changes in:)

 (Receivables related to operating activities)              (-3,918)   (12,377)

 (Prepayments related to operating activities)              (-3,007)   (-1,555)

 (Inventories)                                              (-6,513)    (8,548)

 (Liabilities related to operating activities)              (13,447)  (-35,307)
-------------------------------------------------------------------------------
 (Changes in assets and liabilities)                             (9)  (-15,937)

 (Cash generated from operating activities)                 (59,516)   (-6,940)

 (Income tax paid)                                            (-137)     (-107)
-------------------------------------------------------------------------------
 (NET CASH FROM/USED IN OPERATING ACTIVITIES)               (59,379)   (-7,047)



 (CASH FLOWS FROM INVESTING ACTIVITIES)

 (Purchase of property, plant and equipment and intangible
 assets)                                                   (-20,192) (-100,024)

 (Proceeds from disposals of property, plant and
 equipment)                                                    (816)      (115)

 (Interest received)                                             (3)        (1)
-------------------------------------------------------------------------------
 (NET CASH USED IN INVESTING ACTIVITIES)                   (-19,373)  (-99,908)



 (CASH FLOWS FROM FINANCING ACTIVITIES)

 (Proceeds from loans received)                             (90,000)  (125,000)

 (Repayment of loans received)                             (-14,667)  (-14,667)

 (Change in overdraft (Note 16))                           (-15,556)   (15,736)

 (Payment of lease liabilities)                            (-14,903)  (-12,565)

 (Interest paid)                                           (-19,296)  (-16,290)

 (Payment of transaction costs related to loans)              (-495)   (-1,302)

 (Issue of shares (Note 20))                                (34,633)        (0)
-------------------------------------------------------------------------------
 (NET CASH FROM FINANCING ACTIVITIES)                       (59,716)   (95,912)



 (TOTAL NET CASH FLOW)                                      (99,722)  (-11,043)
-------------------------------------------------------------------------------


 (Cash and cash equivalents at the beginning of period)     (27,834)   (38,877)

 (Change in cash and cash equivalents (Note 8))             (99,722)  (-11,043)
-------------------------------------------------------------------------------
 (Cash and cash equivalents at the end of period)          (127,556)   (27,834)



Joonas Joost
Financial director

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