In the second quarter and first half of 2018, the volume of cargo handled and the number of passengers served increased as did the Group’s revenue, forming EUR 32.8 million in the second quarter and EUR 62.2 million in the first half of 2018. The adjusted EBITDA was stable, increasing 3.6% to EUR 17.9 million in the second quarter, but the profit for the period decreased by EUR 13.8 million. The loss in the second quarter and first half of the year was caused by the impact of the anticipated income tax expense (EUR 26.3 million) on the record high dividend amount (EUR 105 million), which was announced in April 2018. Based on the management’s estimates, the Group shall achieve the profit target set for 2018 and will be capable of paying dividends in 2019 in accordance with the set dividend policy, i.e. at least EUR 30 million.
The results of the second quarter were mainly driven by the following trends:
Key figures (in million EUR):
| Q2 | Q2 | +/- | 6 months | 6 months | +/- | |
| 2018 | 2017 | 2018 | 2017 | |||
| Revenue | 32.8 | 31.7 | 3.4% | 62.2 | 61.5 | 1.1% |
| Adjusted EBITDA | 17.9 | 17.3 | 3.6% | 35.5 | 36.5 | -2.7% |
| Adjusted EBITDA margin | 54.8% | 54.7% | -0.1 | 57.2% | 59.4% | 2.2 |
| Operating profit | 12.6 | 12.3 | 2.9% | 25.0 | 27.0 | -7.5% |
| Income tax | -26.3 | -12.0 | 118.8% | -26.3 | -12.0 | 118.8% |
| Profit/loss for the period | -14.1 | -0.3 | 4301.3% | -2.3 | 14.0 | -116.1% |
| Investments | 3.3 | 9.2 | -64.4% | 5.2 | 24.5 | -78.8% |
| 30.06.2018 | 30.06.2017 | +/- | |
| Total assets | 656.4 | 651.9 | 0.7% |
| Interest bearing debt | 228.4 | 241.4 | -5.4% |
| Other liabilities | 87.1 | 93.6 | -7.0% |
| Equity | 340.9 | 316.9 | 7.6% |
| Number of shares | 263.0 | 185.2 | 42.0% |
Revenue
Revenue grew in second quarter by EUR 1.1 million, i.e. 3%, triggering a rise in the half-year revenue, which grew by EUR 0.7 million, i.e. 1% year on year, to EUR 62.2 million. In the second quarter the revenue grew the most in the ferry segment (by EUR 0.8 million, i.e. 11.8%) due to the additional ferry and trips added for the summer period.
In the passenger harbours’ segment the half-year revenue decreased because in 2017 the average rate of vessel dues was higher and in October 2017 M/V Sea Wind was transferred from the Old City Harbour to Muuga Harbour.
In the cargo harbours’ segment the half-year revenue decreased, mainly due to a decline in cargo charges and rental income (primarily rental income from the former Muuga coal terminal area).
In the segment “other” the revenue grew due to the indexation of the charter fee rate for M/V Botnica.
EBITDA
Both in the first half and second quarter of 2018, adjusted EBITDA grew in the ferry segment and decreased in other segments (year on year). In the second quarter adjusted EBITDA growth in the ferry segment exceeded the decreases in other segments but in the first half-year the impact of decreases proved stronger. In the ferry segment, the adjusted EBITDA margin for the first half-year improved as expected, rising from 31.5% to 42.1%, while in other segments the margins decreased. As a result, the Group’s margin dropped from 59.4% to 57.2%. The changes in the segments’ second-quarter margins were mostly of the same nature but the Group’s margin rose slightly compared with the second quarter of 2017.
Net profit
In connection with the declaration of a record dividend of EUR 105 million in the second quarter of 2018 compared with EUR 48 million in 2017, income tax expense increased by EUR 14.3 million to EUR 26.3 million, which resulted in a loss of EUR 2.3 for the first half of 2018. The net result for the second quarter was a loss of EUR 14.1 million compared with a loss of EUR 0.3 million for the second quarter of 2017. According to the management estimates, the Group shall achieve the profit target set for the 2018 and there will be no deviations from the dividend policy.
Investments
Investments made in the second quarter totaled EUR 3.3 million, in the first half of 2018 the Group made investments of EUR 5.2 million. In 2017 half-year the investments totaled EUR 24.5 million of which around EUR 20 million was related to the construction of new ferries. In the first half of 2018, the largest investments were made in the reconstruction of traffic areas and the implementation of automated traffic control systems at the Old City Harbour and the dry docking of M/V Botnica which is carried out every five years.
Interim condensed consolidated statement of financial position:
| In thousands of euros | 30 June 2018 | 31 December 2017 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 68,404 | 6,954 |
| Trade and other receivables | 10,137 | 9,271 |
| Contract assets | 419 | 0 |
| Inventories | 407 | 301 |
| Total current assets | 79,367 | 16,526 |
| Non-current assets | ||
| Investments in joint ventures | 1,126 | 1,256 |
| Other long-term receivables | 198 | 272 |
| Property, plant and equipment | 573,657 | 577,125 |
| Intangible assets | 2,058 | 1,958 |
| Total non-current assets | 577,039 | 580,611 |
| Total assets | 656,406 | 597,137 |
| LIABILITIES | ||
| Current liabilities | ||
| Loans and borrowings | 18,172 | 21,989 |
| Derivative financial instruments | 511 | 609 |
| Payables to owners | 20,000 | 0 |
| Provisions | 1,027 | 1,503 |
| Government grants | 53 | 303 |
| Taxes payable | 21,931 | 698 |
| Trade and other payables | 15,116 | 7,777 |
| Contract liabilities | 3,860 | 33 |
| Total current liabilities | 80,671 | 32,912 |
| Non-current liabilities | ||
| Loans and borrowings | 210,228 | 213,611 |
| Government grants | 23,607 | 23,826 |
| Other payables | 64 | 64 |
| Contract liabilities | 928 | 932 |
| Total non-current liabilities | 234,827 | 238,433 |
| Total liabilities | 315,498 | 271,345 |
| EQUITY | ||
| Share capital at par value | 263,000 | 185,203 |
| Share premium | 44,477 | 0 |
| Statutory capital reserve | 18,520 | 18,520 |
| Hedge reserve | -511 | -609 |
| Retained earnings | 15,422 | 122,678 |
| Total equity | 340,908 | 325,792 |
| Total liabilities and equity | 656,406 | 597,137 |
Interim condensed consolidated statement of profit or loss ans other comprehensive income:
| In thousands of euros | Q2 2018 | Q2 2017 | 6 months 2018 | 6 months 2017 |
| Revenue | 32,752 | 31,662 | 62,166 | 61,513 |
| Other income | 241 | 238 | 444 | 4,135 |
| Operating expenses | -10,004 | -9,948 | -17,587 | -20,110 |
| Personnel expenses | -4,782 | -4,483 | -8,972 | -8,541 |
| Depreciation, amortisation and impairment | -5,546 | -5,176 | -10,949 | -9,726 |
| Other expenses | -50 | -39 | -152 | -290 |
| Operating profit | 12,611 | 12,254 | 24,950 | 26,981 |
| Finance income and costs | ||||
| Finance income | 8 | 14 | 8 | 18 |
| Finance costs | -527 | -613 | -1,038 | -1,088 |
| Finance costs - net | -519 | -599 | -1,030 | -1,070 |
| Share of profit of a joint venture accounted for under the equity method | 74 | 25 | 74 | 76 |
| Profit before income tax | 12,166 | 11,680 | 23,994 | 25,987 |
| Income tax | -26,250 | -12,000 | -26,250 | -12,000 |
| Profit/loss for the period | -14,084 | -320 | -2,256 | 13,987 |
| Of which attributable to owners of the Parent | -14,084 | -320 | -2,256 | 13,987 |
| Basic and diluted earnings per share (in euros) | -0.07 | 0.00 | -0.01 | 0.08 |
| Basic and diluted earnings per share - continuing operations (in euros) | -0.07 | 0.00 | -0.01 | 0.08 |
| In thousands of euros | Q2 2018 | Q2 2017 | 6 months 2018 | 6 months 2017 |
| Profit/loss for the period | -14,084 | -320 | -2,256 | 13,987 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently to profit or loss: | ||||
| Net fair value gain on hedging instruments in cash flow hedges | 33 | 107 | 98 | 276 |
| Total other comprehensive income | 33 | 107 | 98 | 276 |
| Total comprehensive income/ expense for the period | -14,051 | -213 | -2,158 | 14,263 |
| Of which attributable to owners of the Parent | -14,051 | -213 | -2,158 | 14,263 |
Interim condensed consolidated statement of cash flows:
| In thousands of euros | 6 months 2018 | 6 months 2017 |
| Cash receipts from sale of goods and services | 67,535 | 67,309 |
| Cash receipts related to other income | 56 | 433 |
| Payments to suppliers | -20,676 | -22,976 |
| Payments to and on behalf of employees | -8,019 | -7,631 |
| Payments for other expenses | -185 | -677 |
| Income tax paid on dividends | 0 | -8,657 |
| Cash from operating activities | 38,711 | 27,801 |
| Purchases of property, plant and equipment | -5,908 | -15,854 |
| Purchases of intangible assets | -385 | -362 |
| Proceeds from sale of property, plant and equipment | 0 | 501 |
| Interest received | 2 | 8 |
| Cash used in investing activities | -6,291 | -15,707 |
| Contributions to share capital | 122,287 | 0 |
| Redemption of debt securities | -1,250 | -1,250 |
| Repayments of loans received | -3,383 | -3,383 |
| Change in overdraft (liability) | -2,566 | 0 |
| Repayments of finance lease principal | -1 | -1 |
| Dividends paid | -85,000 | 0 |
| Interest paid | -1,020 | -1,239 |
| Other payments related to financing activities | -37 | -1 |
| Cash from/used in financing activities | 29,030 | -5,874 |
| NET CASH FLOW | 61,450 | 6,220 |
| Cash and cash equivalents at beginning of the period | 6,954 | 49,918 |
| Change in cash and cash equivalents | 61,450 | 6,220 |
| Cash and cash equivalents at end of the period | 68,404 | 56,138 |
Tallinna Sadam is one of the largest cargo- and passenger port complexes in the Baltic Sea region, which in 2017 serviced 10.6 million passengers and 19.2 million tons of cargo. In addition to passenger and freight services, Tallinna Sadam group also operates in shipping business via its subsidiaries – OÜ TS Laevad provides ferry services between the Estonian mainland and the largest islands, and OÜ TS Shipping charters its multifunctional vessel m/v Botnica for icebreaking and construction services in Estonia and offshore projects abroad. Tallinna Sadam group is also a shareholder of a joint venture AS Green Marine, which provides waste management services. Tallinna Sadam group's sales in 2017 totaled EUR 121.3 million, adjusted EBITDA EUR 66.5 million and net profit EUR 26.4 million.
Marko Raid
CFO, Member of the Management Board
Additional information:
Marju Zirel
Head of Investor Relations
m.zirel@ts.ee
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