Turismo
AS Tallink Grupp Audited Annual Report for the Financial Year 2023
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:
Key figures
¹ Alternative performance measures based on ESMA guidelines are disclosed in the “Alternative performance measures” section of the report.
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:
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:
At the end of the 2023 financial year, short-term charters were as follows:
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:
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
Consolidated statement of financial position
Consolidated statement of cash flows
Anneli Simm
Investor Relations Manager
AS Tallink Grupp
Sadama 5
10111 Tallinn, Estonia
E-mail anneli.simm@tallink.ee
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