In 2017, the Group carried a record number, a total of 9.8 million passengers, which is 3.2% more than in 2016. The number of cargo units transported increased by 11% compared to the previous financial year. The Group’s consolidated revenue amounted to EUR 967.0 million (EUR 937.8 million in 2016). EBITDA increased by EUR 8.9 million and amounted to EUR 158.3 million (EUR 149.5 million in 2016), net profit for the financial year was EUR 46.5 million or EUR 0.069 per share (EUR 44.1 million or EUR 0.066 per share in 2016).
The period’s biggest milestone for the Group was the launch of the new LNG-powered shuttle vessel Megastar. The ship carried more than 2 million passengers in its first year on the Tallinn-Helsinki route. This is the highest-ever number of passengers carried by any of the Group’s vessels on the Baltic Sea per year. Megastar improved the efficiency of the Group’s shuttle operations and the Group was able to increase the result of the Estonia – Finland segment despite tighter competition in the market.
The most positive development in 2017 was the growth of the cargo business. Cargo volumes increased in all geographical segments by 11.0% in total, while cargo revenues increased by 13.3% or EUR 13.8 million compared to the previous year and amounted to EUR 117.7 million. In order to be better positioned to serve our cargo customers and capture increasing cargo volumes, the cargo ship Sea Wind going in between Estonia and Finland, previously operating from Tallinn Old City Harbour, started operating from Muuga Harbour to Vuosaari in October.
In the financial year, the revenues of all core operating segments increased compared to the previous year. Shop and restaurant revenue increased by EUR 15.3 million and ticket revenue by EUR 6.7 million, the growth being supported by a 3.2% increase in passenger numbers. Cargo revenue increased by EUR 13.8 million compared to 2016. The growth was driven by an increase in the number of transported cargo units in all geographical segments, resulting from positive economic developments in our main markets.
In 2017, the Group’s ships carried a total of 5.1 million passengers on the Estonia – Finland routes, which is at the same level as in 2016 and the number of cargo units transported on the routes increased by 11.6%. On the Tallinn – Helsinki route competition intensified due to capacities added by competitors, which put pressure on ticket prices. In addition, the Group operated one cruise ferry on the Tallinn – Helsinki route in contrast to two cruise ferries in the period March to August 2016. The new shuttle vessel Megastar improved the efficiency of the shuttle operations and the Group was able to increase the segment result in a changed competitive environment. The segment revenue increased by EUR 1.2 million and amounted to EUR 354.5 million, the segment result increased by EUR 2.4 million and amounted to EUR 77.9 million.
The Finland-Sweden routes revenue increased by EUR 7.5 million compared to the previous year and amounted to EUR 344.8 million. Growth was supported by a 1.1% higher passenger number and by a 7.6% increase in the number of transported cargo units. The segment result increased by EUR 3.2 million compared to the previous year, amounting to EUR 18.5 million.
The Estonia-Sweden routes revenue increased by EUR 7.2 million compared to the previous year. Growth was supported by a 4.8% higher passenger number and by a 2.9% increase in the number of transported cargo units. The segment result decreased compared to the previous year due to higher operating costs as since December 2016 a larger vessel has been deployed on the route.
The Latvia-Sweden route’s revenue increased by EUR 21.9 million compared to the previous year. Growth was supported by a 45.8% higher passenger number and by a 70.1% increase in the number of transported cargo units, which resulted from added capacity. The cruise ferry Romantika started operating on the Riga – Stockholm route in December 2016 as a second ship on this route. The capacity increased entails also higher operating cost and the segment’s result was negative in 2017.
In the 2017 financial year, the Group’s investments amounted to EUR 219.2 million. The largest investment was the purchase of the shuttle ferry Megastar in January 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.
The key highlights of the 2017 financial year were the following:
KEY FIGURES OF THE FINANCIAL YEAR 2017
| For the year ended 31 December | 2017 | 2016 | Change % |
| Revenue (million euros) | 967.0 | 937.8 | 3.1% |
| Gross profit (million euros) | 194.6 | 192.6 | 1.0% |
| Net profit for the period (million euros) | 46.5 | 44.1 | 5.4% |
| EBITDA (million euros) | 158.3 | 149.5 | 5.9% |
| Depreciation and amortisation (million euros) | 86.4 | 77.9 | 10.9% |
| Investments (million euros) | 219.3 | 68.9 | 218.2% |
| Weighted average number of ordinary shares outstanding1 | 669 882 040 | 669 882 040 | 0.0% |
| Earnings per share | 0.069 | 0.066 | 4.5% |
| Number of passengers | 9 755 720 | 9 457 522 | 3.2% |
| Number of cargo units | 364 296 | 328 190 | 11.0% |
| Average number of employees | 7 406 | 7 163 | 3.4% |
| As at 31 December | 2017 | 2016 | Change % |
| Total assets (million euros) | 1 558.6 | 1 539.0 | 1.3% |
| Total liabilities (million euros) | 722.3 | 729.1 | -0.9% |
| Interest-bearing liabilities (million euros) | 560.9 | 558.9 | 0.4% |
| Net debt (million euros) | 472.0 | 480.1 | -1.7% |
| Total equity (million euros) | 836.3 | 809.9 | 3.3% |
| Equity ratio (%) | 53.7% | 52.6% | |
| Number of ordinary shares outstanding1 | 669 882 040 | 669 882 040 | 0.0% |
| Shareholders’ equity per share | 1.25 | 1.21 | 3.3% |
| Ratios | 2017 | 2016 | Change % |
| Gross margin (%) | 20.1% | 20.5% | |
| EBITDA margin (%) | 16.4% | 15.9% | |
| Net profit margin (%) | 4.8% | 4.7% | |
| Return on assets (ROA) | 4.3% | 4.6% | |
| Return on equity (ROE) | 5.6% | 5.4% | |
| Return on capital employed (ROCE) | 5.3% | 5.6% | |
| Net debt to EBITDA | 3.0 | 3.2 | -6.9% |
EBITDA: earnings before net financial items, share of profit of equity-accounted investees, taxes, depreciation and amortisation
Earnings per share: net profit / weighted average number of shares outstanding
Equity ratio: total equity / total assets
Shareholder’s equity per share: shareholder’s equity / number of shares outstanding
Gross margin: gross profit / net sales
EBITDA margin: EBITDA / net sales
Net profit margin: net profit / net sales
ROA: earnings before net financial items, taxes /average total assets
ROE: net profit/average shareholders’ equity
ROCE: earnings before net financial items, taxes / (total assets – current liabilities (average for the period))
Net debt: interest-bearing liabilities less cash and cash equivalents
Net debt to EBITDA: net debt / 12-months trailing EBITDA
1 Share numbers exclude own shares.
SALES
The Group’s consolidated revenue amounted to EUR 967.0 million in 2017 (937.8 million in 2016). Restaurant and shop sales on-board and on mainland of EUR 536.7 million (521.5 million in 2016) contributed more than half of total revenue. Ticket sales amounted to EUR 242.7 million (236.0 million in 2016) and sales of cargo transport to EUR 117.7 million (103.9 million in 2016).
Geographically, 36.7% or EUR 354.5 million of revenue came from the Estonia-Finland route and 35.7% or EUR 344.8 million from the Finland-Sweden route. Revenue from the Estonia-Sweden route was EUR 117.2 million or 12.1% and from the Latvia-Sweden route EUR 66.5 million or 6.9%. The share of revenue generated by other geographical segments decreased to 8.7% or EUR 83.9 million.
EARNINGS
Gross profit was EUR 194.6 million (EUR 192.6 million in 2016) and EBITDA EUR 158.3 million (EUR 149.5 million in 2016). Net profit for 2017 was EUR 46.5 million (EUR 44.1 million in 2016). Basic and diluted earnings per share were EUR 0.069 (EUR 0.066 in 2016).
The 2017 financial statements include one-off costs related to the exploration of potential strategic options of EUR 3.6 million. The Group’s like-for-like results (results excluding one-off costs) are as follows: gross profit EUR 194.6 million (EUR 192.6 million in 2016), EBITDA EUR 161.9 million (EUR 149.5 million in 2016), net profit EUR 50.1 million (EUR 44.1 million in 2016), basic and diluted earnings per share EUR 0.075 (EUR 0.066 in 2016). For additional information, please see Note 26 Subsequent Events.
The cost of goods related to sales at shops and restaurants, which is the largest operating cost item, amounted to EUR 227.8 million (EUR 225.0 million in 2016).
Fuel costs for 2017 amounted to EUR 85.9 million (EUR 74.2 million in 2016). Fuel costs were impacted by an increase in carriage capacity and higher fuel prices throughout the year. As a result, total annual fuel costs increased by 15.8%. 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 215.2 million (EUR 210.0 million in 2016). The average number of employees in 2017 was 7 406 (7 163 in 2016).
Administrative expenses for the period amounted to EUR 53.7 million, and sales and marketing expenses to EUR 71.3 million (EUR 51.0 million and 72.3 million respectively in 2016). Administrative expenses for 2017 include one-off costs related to the exploration of potential strategic options of EUR 3.6 million. The Group’s like-for-like administrative expenses (expenses excluding one-off costs) are EUR 50.1 million (EUR 51.0 million in 2016).
Depreciation and amortisation of the Group’s assets totalled EUR 86.4 million (EUR 77.9 million in 2016). There were no impairment losses related to the Group’s property, plant and equipment and intangible assets.
The Group’s net finance costs for 2017 amounted to EUR 21.2 million (EUR 26.8 million in 2016).
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.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| For the year ended 31 December, in thousands of EUR | 2017 | 2016 | Notes |
| Revenue | 966 977 | 937 805 | 4 |
| Cost of sales | -772 372 | -745 223 | 5 |
| Gross profit | 194 605 | 192 582 | |
| Sales and marketing expenses | -71 339 | -72 268 | 5 |
| Administrative expenses | -53 672 | -50 973 | 5 |
| Other operating income | 2 873 | 2 450 | |
| Other operating expenses | -509 | -184 | |
| Result from operating activities | 71 958 | 71 607 | |
| Finance income | 12 738 | 10 514 | 5 |
| Finance costs | -33 987 | -37 289 | 5 |
| Share of profit of equity-accounted investees | 40 | 13 | 12 |
| Profit before income tax | 50 749 | 44 845 | |
| Income tax | -4 253 | -741 | 6 |
| Net profit attributable to equity holders of the Parent | 46 496 | 44 104 | |
| Other comprehensive income/expense | |||
| Exchange differences on translating foreign operations | 13 | -469 | |
| Other comprehensive income/expense for the year | 13 | -469 | |
| Total comprehensive income attributable to equity holders of the Parent | 46 509 | 43 635 | |
| Basic and diluted earnings per share (in EUR per share) | 0.069 | 0.066 | 7 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| As at 31 December, in thousands of EUR | 2017 | 2016 restated ¹ | 2015 restated ¹ | Notes |
| ASSETS | ||||
| Cash and cash equivalents | 88 911 | 78 773 | 81 976 | 8 |
| Trade and other receivables | 46 466 | 38 674 | 36 583 | 9 |
| Prepayments | 5 395 | 7 926 | 5 274 | 10 |
| Prepaid income tax | 40 | 91 | 1 224 | |
| Inventories | 40 675 | 38 719 | 29 197 | 11 |
| Current assets | 181 487 | 164 183 | 154 254 | |
| Investments in equity-accounted investees | 403 | 363 | 350 | 12 |
| Other financial assets | 344 | 348 | 308 | 13 |
| Deferred income tax assets | 18 722 | 18 791 | 19 410 | 6 |
| Investment property | 300 | 300 | 300 | |
| Property, plant and equipment | 1 308 441 | 1 304 897 | 1 311 418 | 14 |
| Intangible assets | 48 900 | 50 127 | 52 726 | 15 |
| Non-current assets | 1 377 110 | 1 374 826 | 1 384 512 | |
| TOTAL ASSETS | 1 558 597 | 1 539 009 | 1 538 766 | |
| LIABILITIES AND EQUITY | ||||
| Interest-bearing loans and borrowings | 159 938 | 106 112 | 81 889 | 16 |
| Trade and other payables | 95 548 | 106 970 | 92 170 | 17 |
| Derivatives | 29 710 | 0 | 0 | 24 |
| Dividends payable to shareholders | 3 | 4 | 0 | |
| Income tax liability | 34 | 10 | 4 567 | |
| Deferred income | 31 429 | 30 895 | 28 906 | 18 |
| Current liabilities | 316 662 | 243 991 | 207 532 | |
| Interest-bearing loans and borrowings | 400 968 | 452 793 | 467 447 | 16 |
| Derivatives | 4 688 | 32 359 | 42 863 | 24 |
| Other liabilities | 0 | 0 | 192 | |
| Non-current liabilities | 405 656 | 485 152 | 510 502 | |
| Total liabilities | 722 318 | 729 143 | 718 034 | |
| Share capital | 361 736 | 361 736 | 404 290 | 19 |
| Share premium | 639 | 639 | 639 | 19 |
| Reserves | 68 946 | 68 774 | 65 083 | 19 |
| Retained earnings | 404 958 | 378 717 | 350 720 | |
| Equity attributable to equity holders of the Parent | 836 279 | 809 866 | 820 732 | |
| Equity | 836 279 | 809 866 | 820 732 | |
| TOTAL LIABILITIES AND EQUITY | 1 558 597 | 1 539 009 | 1 538 766 |
1 For further information see also Note 25 Correction of Errors
CONSOLIDATED STATEMENT OF CASH FLOWS
| For the year ended 31 December, in thousands of EUR | 2017 | 2016 | Notes |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net profit for the period | 46 496 | 44 104 | |
| Adjustments for: | |||
| Depreciation and amortisation | 86 371 | 77 858 | 14, 15 |
| Net loss on disposals of property, plant and equipment | -1 903 | -83 | |
| Net interest expense | 23 744 | 27 980 | 5 |
| Net expense/income from derivatives | 5 631 | -6 215 | 5 |
| Profit from equity-accounted investees | -40 | -13 | 12 |
| Net unrealised foreign exchange gain/loss | -7 564 | 4 889 | |
| Share option programme reserve | 0 | -910 | |
| Income tax | 4 253 | 741 | 6 |
| Adjustments | 110 492 | 104 247 | |
| Changes in: | |||
| Receivables and prepayments related to operating activities | -6 707 | -4 969 | |
| Inventories | -1 956 | -9 522 | |
| Liabilities related to operating activities | -12 140 | 16 785 | |
| Changes in assets and liabilities | -20 803 | 2 294 | |
| Cash generated from operating activities | 136 185 | 150 645 | |
| Income tax paid | -7 | -3 265 | |
| NET CASH USED IN OPERATING ACTIVITIES | 136 178 | 147 380 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Purchase of property, plant, equipment and intangible assets | -219 207 | -68 638 | |
| Proceeds from disposals of property, plant, equipment | 132 448 | 169 | |
| Interest received | 1 | 74 | |
| NET CASH USED IN INVESTING ACTIVITIES | -86 758 | -68 395 | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from loans | 184 000 | 280 000 | |
| Repayment of loans | -134 321 | -313 524 | |
| Change in overdraft | -40 110 | 36 713 | 16 |
| Payments for settlement of derivatives | -3 592 | -4 289 | |
| Payment of finance lease liabilities | -102 | -99 | |
| Interest paid | -20 744 | -24 083 | |
| Payment of transaction costs related to loans | -216 | -2 989 | |
| Dividends paid | -20 096 | -13 398 | 19 |
| Reduction of share capital | -1 | -40 189 | |
| Income tax on dividends paid | -4 100 | -330 | 19 |
| NET CASH USED IN FINANCING ACTIVITIES | -39 282 | -82 188 | |
| TOTAL NET CASH FLOW | 10 138 | -3 203 | |
| Cash and cash equivalents at the beginning of period | 78 773 | 81 976 | |
| Increase/decrease in cash and cash equivalents | 10 138 | -3 203 | 8 |
| Cash and cash equivalents at the end of period | 88 911 | 78 773 |
Janek Stalmeister
Chairman of the Management Board
AS Tallink Grupp
Tel +372 640 9800
E-mail janek.stalmeister@tallink.ee
Veiko Haavapuu
Financial Director
AS Tallink Grupp
Sadama 5/7, 10111 Tallinn
Tel +372 640 9914
E-mail veiko.haavapuu@tallink.ee
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