Aktsiaselts Tallink Grupp - NASDAQ OMX Baltic

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FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED AUGUST 31, 2005 NOTES TO THE FINANCIAL STATEMENTS Note 1 CORPORATE INFORMATION The financial statements of Tallink Grupp AS (both as the Group and the Parent) for the year ended August 31, 2005 were authorized for issue in accordance with a resolution of the Management Board on October 10, 2005. According to the Estonian Business Code, the annual report, including the financial statements, is authorized by the shareholders’ general meeting. The shareholders hold the power not to approve the annual report prepared and presented by the management and the right to request a new annual report to be prepared. Tallink Grupp AS is a limited company incorporated and domiciled in Estonia that employed 2,694 people at August 31, 2005 (2,820 at August 31, 2004). The principal activities of the Group are described in Note 3 Segment Information. Tallink Grupp AS is controlled by Infortar AS, which owns 55.53% of the shares of Tallink Grupp AS as of October 10, 2005. The ultimate parent of the Group is Linandell OÜ. Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial statements of Tallink Grupp AS have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the IASB, and International Accounting Standards and Standing Interpretations Committee interpretations approved by the IASC that remain in effect as of August 31, 2005, except for IAS 16 (revised 2004), which was adopted before its effective date, i.e., financial years beginning on or after January 1, 2005. IAS 16 (revised 2004) was adopted already in the financial year ended August 31, 2004. The financial statements have been prepared in thousands of Estonian kroons (EEK) and based on a historical cost basis, unless indicated otherwise in the accounting principles below (e.g., derivative financial instruments have been measured at fair value). Basis of consolidation The consolidated financial statements comprise the financial statements of Tallink Grupp AS and its subsidiaries drawn up to August 31, each year. The financial statements of the subsidiaries are prepared for the same reporting year as the Parent, using consistent accounting policies. Subsidiaries are consolidated from the date on which control has been transferred to the Group and cease to be consolidated from the date on which control has been transferred out of the Group. All intra-group transactions, balances and unrealized profits on transactions between Group companies have been eliminated in the consolidated financial statements. Unrealized losses are eliminated unless costs cannot be recovered. Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated income statement and balance sheet. New subsidiaries (business combinations) have been included in the consolidated financials statements using the purchase method of accounting. Accordingly, the consolidated income statement and consolidated cash flow statement include the results and cash flows of new subsidiaries for the period from their acquisition date. The purchase consideration is allocated to the fair value of the assets acquired and liabilities and contingent liabilities assumed on the date of acquisition. In the Parent’s financial statements, investments in its subsidiaries are accounted for under the equity method of accounting. Investment in subsidiaries is carried in the balance sheet at cost plus post-acquisition changes in the Parent’s share of net assets of the subsidiaries, less any impairment in value. Changes in accounting polices The accounting policies adopted are consistent with those of the previous financial year except that the Group has adopted those standards designed to form the “stable platform” to be mandatory for the financial years beginning on or after March 31, 2004. F-6
FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED AUGUST 31, 2005 NOTES TO THE FINANCIAL STATEMENTS—(Continued) Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) IFRS 3 “Business combinations”, IAS 36 “Impairment of Assets” and IAS 38 “Intangible assets” Standards IFRS 3, IAS 36 (revised 2004) and IAS 38 (revised 2004), were applied to business combinations for which the agreement date was on or after March 31, 2004 and goodwill and other intangible assets, which arose from such business combinations, already in the previous financial year. In the current financial year, these standards were also applied to goodwill arising from business combinations, the agreement date of which was before March 31, 2004, and to other intangible assets. The adoption of IFRS 3 and IAS 36 (revised 2004) has resulted in the Group ceasing annual goodwill amortization and to test for impairments annually at the cash generating unit level (unless an event occurs during the year which requires the goodwill to be tested more frequently) from September 1, 2004. The transitional provisions of IFRS 3 have required the Group to eliminate the amount of the accumulated amortization by EEK 30,558,000 with a corresponding entry to gross carrying amount of goodwill. Moreover, the useful life of intangible assets are now assessed at the individual asset level as having either a finite or indefinite life. Where an intangible asset has a finite life, it has been amortized over its useful life, which together with the amortization method are reviewed at the earlier of annually or where an indicator of impairment exists. Intangibles assessed as having indefinite useful lives are not amortized, as there is no foreseeable limit to the year over which the asset is expected to generate net cash inflows for the Group. However, intangibles with indefinite useful lives are reviewed annually to ensure that their carrying value does not exceed the recoverable amount irrespective of whether an indicator of impairment is present. Investment in associates The Group’s investment in its associates is accounted for under the equity method of accounting. An associate is an entity in which the Group has significant influence, but which is not a subsidiary of the Group. The investment in an associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate, less any impairment in value. The reporting dates of the associate and the Group are identical and both use consistent accounting policies. The income statement reflects the shares of the results of operations of the associate. Where there has been a change recognized directly in the associate’s equity, the Group recognizes its share of any changes and discloses this, when applicable, in the statement of changes in equity. Foreign exchange transactions The financial statements of the Group companies have been prepared using the currency (measurement currency), which reflects the company’s economic environment the best. The consolidated financial statements of the Group and the separate financial statements of the Parent have been prepared in Estonian kroon, which is the measurement currency of the Parent. Transactions in foreign currencies are recorded at the exchange rate of the transaction date. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate of the balance sheet date. All differences are recognized in the income statement as financial items. The foreign subsidiaries are considered as “foreign operations that are integral to the operations of the Parent”, which means that the individual items in the financial statements of the foreign subsidiaries are translated as if all its transactions had been entered into by the Parent itself. The cost and depreciation of property, plant and equipment is translated using the exchange rate at the date of purchase of the asset. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate at the date of the balance sheet. All differences are taken to the income statement. Goodwill and fair value adjustments arising out of the acquisition of a foreign entity are treated as assets of the acquiring company and are recorded at the exchange rate as of the acquisition date. F-7
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OFFERING MEMORANDUM Aktsiaselts Tal
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TABLE OF CONTENTS Summary .........
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CERTAIN INFORMATION WITH RESPECT TO
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August 31, 2005, with comparative i
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SUMMARY This summary should be read
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The Offering Offering .............
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and there is no obligation on Citig
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RISK FACTORS Before making an inves
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of our vessels, compliance with env
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present, fuel represents approximat
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due to decrease over the next three
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The Offering TERMS AND CONDITIONS O
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Payment Investors in Estonia By sub
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unless the exclusive jurisdiction o
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An investor shall be liable for the
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Exercise of Shareholder Rights by I
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BACKGROUND AND REASONS FOR THE OFFE
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EXCHANGE RATES The Estonian kroon h
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1 EBITDA = Earnings before net fina
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status under the EU regulatory fram
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into the following principal compon
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Following the planned introduction
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increase of 87 percent compared to
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Currently outstanding loan agreemen
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Off-Balance Sheet Guarantees Tallin
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Market Risk Disclosure The manageme
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Our Geographic Market Area The area
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The passenger and ro-ro cargo volum
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Strategy facilities and quality onb
Page 59 and 60: We initially chartered all of our v
Page 61 and 62: St. Petersburg—Estonia/Finland Ro
Page 63 and 64: Sales of Cargo Transport General. I
Page 65 and 66: On the Sweden—Estonia routes, we
Page 67 and 68: New Vessels We have embarked on a s
Page 69 and 70: The table below shows the operators
Page 71 and 72: certificates for all our vessels, w
Page 73 and 74: Protection and indemnity insurance
Page 75 and 76: Legal Structure Aktsiaselts Tallink
Page 77 and 78: MANAGEMENT Structure of Our Managem
Page 79 and 80: Mr. Enn Pant (born 1965) was electe
Page 81 and 82: Some members of our supervisory cou
Page 83 and 84: September 2005, SEB Eesti Ühispank
Page 85 and 86: Changes in the Share Capital The ta
Page 87 and 88: paid for from assets excluding the
Page 89 and 90: equirement also applies where membe
Page 91 and 92: the trading system automatically ac
Page 93 and 94: Recognition and enforcement of judg
Page 95 and 96: exemption does not apply where the
Page 97 and 98: PLAN OF DISTRIBUTION Citigroup Glob
Page 99 and 100: • in any other circumstances that
Page 101 and 102: (6) The purchaser will not deposit
Page 103 and 104: INDEPENDENT AUDITORS Pursuant to th
Page 105 and 106: INDEX TO FINANCIAL STATEMENTS Conso
Page 107 and 108: FINANCIAL STATEMENTS FOR THE FINANC
Page 109: FINANCIAL STATEMENTS FOR THE FINANC
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FINANCIAL STATEMENTS FOR THE FINANC
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ROMANTIKA FANTAASIA REGINA BALTICA
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