Aktsiaselts Tallink Grupp - NASDAQ OMX Baltic

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Summary Financial Information The table below presents certain summary consolidated financial information as of and for the financial years ended August 31, 2003, 2004 and 2005. This information has been derived from our audited consolidated financial statements included elsewhere in this offering memorandum. This information should be read in conjunction with, and is qualified in its entirety by reference to, such financial statements and the related notes. Our financial statements are prepared in accordance with IFRS. As of and for the financial year ended August 31, 2003 2004 2005 (EEK in millions, unless otherwise indicated) Income Statement Information Revenue ................................................ 2,996 3,406 4,063 Operating profit .......................................... 481 446 629 Profit before income tax and minority interests .................. 382 313 474 Net profit for the financial year .............................. Balance Sheet Information 382 313 473 Currentassets ............................................ 443 676 614 Non-current assets ........................................ 4,107 6,232 6,313 Cash and cash equivalents .................................. 232 367 327 Totalassets .............................................. 4,549 6,908 6,927 Total liabilities ........................................... 3,076 4,726 4,271 Interest-bearing liabilities ................................... 2,794 4,234 3,836 Equity .................................................. Cash Flow Information 1,473 2,182 2,656 Cash flow from operating activities ........................... 842 804 891 Cash flow used in investing activities ......................... (620) (2,386) (352) Cash flow from (used in) financing activities ................... Per Share Information (144) 1,717 (579) Adjusted weighted average number of Shares (thousands) ......... 89,600 109,050 110,000 Earnings per Share (EPS), EEK .............................. Ratios and Indicators 4.3 2.9 4.3 1 EBITDA2 ............................................... 803 720 901 EBITDA margin, % 3 ...................................... 27 21 22 Operating profit margin, % 4 ................................. 16 13 15 Return on investment (ROI), % 5 ............................. 12 9 10 Return on assets (ROA), % 6 ................................ 11 8 9 Return on equity (ROE), % 7 ................................ 30 17 20 Equity ratio, % 8 .......................................... 32 32 38 Number of passengers, persons .............................. 2,597,917 2,828,364 3,274,177 Number of ro-ro cargo units ................................. 94,945 103,425 131,349 Number of personnel, average ............................... 1,921 2,371 2,710 1 See “Selected Financial Information” for further explanation of the use and purpose of the ratios and indicators. EBITDA is not a measure of operating performance calculated in accordance with IFRS. EBITDA should not be considered as a substitute for operating profit, net income, cash flow from operations or other profit or loss or cash flow data determined in accordance with IFRS. EBITDA is included herein as a supplemental item because we believe that EBITDA, when considered in connection with cash flows from operating, investing and financing activities, may provide useful information. 2 EBITDA = Earnings before net financial items, share of profit of associates, taxes, depreciation and amortization 3 EBITDA margin = EBITDA / Revenue 4 Operating profit margin = Operating profit / Revenue 5 Return on investment (ROI) = (Profit after net financial cost + Interest expense) / (Average total assets – Average interest free liabilities) 6 Return on assets (ROA) = Operating profit / Average total assets 7 Return on equity (ROE) = Net profit / Average equity 8 Equity ratio = Equity / Total assets 6
RISK FACTORS Before making an investment decision, you should carefully review the specific risk factors described below, in addition to the other information contained in this offering memorandum. Our business, financial condition and results from operations could be materially affected by each of these risks. The market price of the Shares following the Offering may decline as a result of each of these risks, and you may lose the value of your investment in whole or in part. These risks are not the only ones we face. Additional risks and uncertainties not presently known to us, or that we currently believe are immaterial, could also impair our business. Certain other matters regarding our operations that should be considered before making an investment in the Shares are set out in “Business” and “Operating and Financial Review and Prospects.” The order of presentation of the risk factors below is not intended to be an indication of the probability of their occurrence or of their potential effect on our business. Risks Relating to Our Business We operate in a highly competitive market. We face considerable competition in our operations, both from other ferry operators and from providers of other means of transport. In particular, many other ferry companies compete on the Helsinki—Tallinn route in both passenger and cargo traffic. The number of passengers on the Helsinki—Tallinn route has more or less stabilized over recent years at around six million passengers annually. Although we anticipate that these numbers will grow in the future, there can be no assurance that this will be the case. We have made significant investments to modernize our fleet and we believe that we have a strong customer base, an attractive fleet and product offering and a respectable brand which offer us a competitive advantage. However, we cannot guarantee that we will be successful in retaining or improving our current market position or in expanding our business through, for example, potential new routes. In the past, other ferry operators have on occasion entered the Northern <strong>Baltic</strong> Sea market through relocation of their existing vessels. Thus, there can be no assurance that new competitors will not enter the market and further increase competition. Future acquisitions by or consolidation among our competitors could also increase competition in our markets. Failure to adapt to the changes in the market, whether caused by political decision-making or otherwise, or to increased competition could have a material adverse effect on our business, results of operations and financial condition. See “Business— Competition.” The introduction of new vessels and routes and related capacity increases involves risks and uncertainties. We continuously evaluate possibilities to introduce new vessels, to expand into alternative routes and to expand our business generally. There are risks related to our current plans regarding capacity increases on the Finland—Estonia and Sweden—Estonia routes. We currently operate two cruise ferries on the Finland—Estonia route and three cruise ferries on the Sweden—Estonia route. We have ordered the New Cruise Ferry scheduled to be introduced in the spring of 2006 on the Helsinki—Tallinn route. We believe that traffic on the Sweden— Estonia routes has future growth potential and, thus, we expect to move the 2,500 passenger cruise ferry Romantika to operate alongside her sister vessel Victoria I on the Stockholm—Tallinn route. The Regina <strong>Baltic</strong>a would be removed from the Stockholm—Tallinn route and could be used for new business opportunities. Furthermore, we recently placed orders for two new high-speed ro-pax ferries to be used on the Helsinki— Tallinn route. We are also studying the potential to commence traffic between Sweden and Latvia and to recommence traffic to and from St. Petersburg. Although we believe that the restructuring of the vessels on the different routes will improve our revenue and profitability per passenger and facilitate growth in passenger numbers, the New Cruise Ferry and high-speed ro-pax ferries represent substantial investments for us and, thus, involve risks. In order to market the New Cruise Ferry to the Finnish public as well as the improved fleet to the Swedish public and to launch the new high-speed ro-pax concept, we will have to increase our marketing expenditures, which could affect the profitability of our operations. It is also possible that the interest of the public will not meet our expectations. For example, an economic downturn in the markets in which we operate could negatively affect disposable income and, as a result, leisure preferences. In addition, the introduction of new routes involves potential difficulties in obtaining necessary permits and dealing with local authorities. For example, after almost one year of operation, we suspended our services to St. Petersburg at the beginning of 2005 as a result of factors such as high port taxes, difficulties arising from the visa regime imposed upon both European Union and Russian citizens and an underdeveloped infrastructure. The materialization of any of these risks could have a material adverse effect on our business, results of operations and financial condition. 7
Page 1 and 2: OFFERING MEMORANDUM Aktsiaselts Tal
Page 3 and 4: TABLE OF CONTENTS Summary .........
Page 5 and 6: CERTAIN INFORMATION WITH RESPECT TO
Page 7 and 8: August 31, 2005, with comparative i
Page 9 and 10: SUMMARY This summary should be read
Page 11 and 12: The Offering Offering .............
Page 13: and there is no obligation on Citig
Page 17 and 18: of our vessels, compliance with env
Page 19 and 20: present, fuel represents approximat
Page 21 and 22: due to decrease over the next three
Page 23 and 24: The Offering TERMS AND CONDITIONS O
Page 25 and 26: Payment Investors in Estonia By sub
Page 27 and 28: unless the exclusive jurisdiction o
Page 29 and 30: An investor shall be liable for the
Page 31 and 32: Exercise of Shareholder Rights by I
Page 33 and 34: BACKGROUND AND REASONS FOR THE OFFE
Page 35 and 36: EXCHANGE RATES The Estonian kroon h
Page 37 and 38: 1 EBITDA = Earnings before net fina
Page 39 and 40: status under the EU regulatory fram
Page 41 and 42: into the following principal compon
Page 43 and 44: Following the planned introduction
Page 45 and 46: increase of 87 percent compared to
Page 47 and 48: Currently outstanding loan agreemen
Page 49 and 50: Off-Balance Sheet Guarantees Tallin
Page 51 and 52: Market Risk Disclosure The manageme
Page 53 and 54: Our Geographic Market Area The area
Page 55 and 56: The passenger and ro-ro cargo volum
Page 57 and 58: 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
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On the Sweden—Estonia routes, we
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New Vessels We have embarked on a s
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The table below shows the operators
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certificates for all our vessels, w
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Protection and indemnity insurance
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Legal Structure Aktsiaselts Tallink
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MANAGEMENT Structure of Our Managem
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Mr. Enn Pant (born 1965) was electe
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Some members of our supervisory cou
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September 2005, SEB Eesti Ühispank
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Changes in the Share Capital The ta
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paid for from assets excluding the
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equirement also applies where membe
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the trading system automatically ac
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Recognition and enforcement of judg
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exemption does not apply where the
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PLAN OF DISTRIBUTION Citigroup Glob
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• in any other circumstances that
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(6) The purchaser will not deposit
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INDEPENDENT AUDITORS Pursuant to th
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INDEX TO FINANCIAL STATEMENTS Conso
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FINANCIAL STATEMENTS FOR THE FINANC
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ROMANTIKA FANTAASIA REGINA BALTICA
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Aktsiaselts Tallink Grupp - NASDAQ OMX Baltic

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