ANNUAL REPORT 2020
Group Annual Report 2020
Commercial Registry no. 10137319
VAT registration no. EE100068489
Postal address Sadama 25, 15051 Tallinn, Estonia
Registered office Sadama 25, 15051 Tallinn, Estonia
Country of incorporation Republic of Estonia
Phone +372 631 8555
E-mail ts@ts.ee
Corporate website www.ts.ee
Beginning of financial year 1 January
End of financial year 31 December
Legal form Limited company (AS)
Auditor KPMG Baltics OÜ
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Consolidated statement of profit or loss and other comprehensive income 77 Note 17. Derivative instruments 127
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Note 11. Intangible assets 117 Note 31. Unbundling of activities based on the electricity market act
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1. Tallinna Sadam at a Glance | page 6
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1 Tallinna Sadam at a Glance
1.1 Business model
The business model of AS Tallinna Sadam (Port of Tallinn) and its subsidiaries (together: ‘Tallinna
Sadam’ or ‘the Group’) is based on four balanced business lines: passengers, cargo, shipping and
real estate.
Tallinna Sadam owns the largest cargo and passenger harbour complex in Estonia. Our harbours are
navigable and easily accessible throughout the year and deep enough to receive all vessels passing
through the Danish Straits. Estonia’s geographical location is favourable for handling both north-
south and east-west passenger and cargo flows.
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Tallinna Sadam owns two passenger harbours (Old City Harbour and Saaremaa Harbour)
and two cargo harbours
1
(Muuga Harbour and Paldiski South Harbour). In terms of the number
of passengers served, Tallinn Old City Harbour is the second-largest harbour on the Baltic Sea
(aer Helsinki) and the third-largest in Northern Europe. Muuga Harbour is Estonia’s largest cargo
harbour. Tallinna Sadam offers port services as a landlord port, i.e. it owns, administers and develops
berths, port basins and the surrounding areas, leases land to cargo operators, organises vessel
traffic in port basins and ensures safe navigation in port waters.
Tallinna Sadam owns passenger terminals and other facilities required for passenger service.
Cargo harbour superstructure belongs to cargo operators. Waste management service in
the harbours is provided by AS Green Marine (Green Marine), an associate of Tallinna Sadam,
which offers innovative waste handling solutions.
We have been operating ferries and providing passenger transport between Estonia’s mainland and
two largest islands – Saaremaa and Hiiumaa – through our subsidiary OÜ TS Laevad (TS Laevad)
since 2016. The Group has five ferries and the routes served are the busiest domestic ferry routes
in Estonia. Our other subsidiary, OÜ TS Shipping (TS Shipping), is also involved in shipping. It owns
the multifunctional icebreaker Botnica, which provides icebreaking services along the northern
Estonian coast during the winter season and icebreaking, ice management and escort services
in the Arctic waters of northern Canada during the summer season.
The real estate business line is still largely in the preparatory phase. Detailed plans for the areas
included in the Old City Harbour real estate development plan have been initiated and are being
processed by Tallinn City Government.
The Group’s operating segments for financial accounting purposes differ somewhat from its
business lines. Operating segments are Passenger harbours, Cargo harbours, Ferry and Other.
The Passenger harbours segment comprises the provision of port services at the harbours mainly
involved in passenger service – Old City Harbour and Saaremaa Harbour – and real estate
development activities in Old City Harbour. The Cargo harbours segment comprises the provision
of port services at the harbours mainly involved in cargo handling – Muuga Harbour and Paldiski
South Harbour – and the activities related to the industrial parks located in these harbours.
The Ferry segment comprises the activities of the subsidiary TS Laevad, i.e. the provision of
passenger transport between Estonia’s mainland and two biggest islands. The segment Other mainly
includes the operation of the multifunctional icebreaker Botnica by the subsidiary TS Shipping and
profits and losses on the investments made in the associate Green Marine (accounted for under the
equity method). Segment results are presented in section 6.9 of the management report and note 3
to the consolidated financial statements.
Structure of Tallinna Sadam Group
1
Tallinna Sadam also owns Paljassaare Harbour but has discontinued active operations in that harbour in connection with a planned exit.
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1.2 Key performance indicators for 2020
2
On this page change compared to 2019.
3
ESI – Environmental Ship Index.
4
Greenhouse gases (GHG) – CO
2
, N
2
O and CH
4
converted into tonnes of CO
2
equivalent.
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1.3 Significant events and recognitions in 2020
COMPLETION OF THE BUILDING AND MULTISTOREY CAR PARK OF PASSENGER TERMINAL D
DIGITAL CONSTRUCTION CLUSTER: ACT OF THE YEAR 2020
MAPPING OF THE ECOLOGICAL FOOTPRINT
OF TALLINNA SADAM
COMPLETION OF A CARGO CHECKIN
BUILDING AT MUUGA HARBOUR
DREDGING WORKS AT PALDISKI SOUTH HARBOUR
TECHNICAL DESIGN OF THE RAIL BALTICA
MUUGA FREIGHT STATION BEGAN
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FIRST ELECTRONIC ANNUAL GENERAL MEETING
COVID19 RELATED RESTRICTIONS AND TESTING
AT PASSENGER TERMINALS (Photo: Siim Lõvi, ERR)
INVESTOR DAYS
NASDAQ BALTIC AWARDS 2021:
INVESTOR RELATIONS OF THE YEAR AWARD
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HYBRID FERRY TÕLL STARTED SERVING PASSENGERS
ONE OF THE 5 MOST VALUABLE COMPANIES IN ESTONIA
SUPPLY CHAIN MAKER
AWARD 2020
ENVIRONMENTAL CAMPAIGNS
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1.4 Letter from the chairman of the supervisory board
The year 2020 will go down in history and be remembered as the year of the global pandemic
for a long time. The COVID-19 crisis undoubtedly affected all people and businesses. The new
situation called for new approaches — we were the first listed company in Estonia to conduct
the annual general meeting using an innovative electronic voting solution. Our excellent financial
performance in 2019 enabled us to keep the promise made to shareholders and pay a dividend
in the range pledged during the IPO. Underpinned by a balanced business model, Tallinna Sadam
continued to deliver strong financial results and to earn a profit despite the hardships of 2020.
The Port of Tallinn was one of the few ports on the Baltic Sea that was able to increase its cargo
throughput in this unprecedented situation. The number of passengers passing through harbours
plummeted due to the restrictions but with the support of governments vessel calls largely
continued. This, in turn, helped preserve cargo traffic between neighbouring countries and thus
maintain the operation of the Estonian economy and much-needed jobs during the crisis. In shipping,
passenger flows recovered when the spring lockdown ended and in several summer months a surge
in domestic tourism allowed us to set new records in the transport of vehicles. Our icebreaker
Botnica broke ice in the Canadian Arctic for the third year in a row.
Besides business goals, we must pay increasing attention to the environment, sustainable
development and people in order to ensure our long-term success and continuity. Being a forward-
looking company, we updated our strategy, which is now more closely linked to our sustainable
development goals, and will continue to develop our performance indicators and sustainable
development action plan. The key to future success lies in the attitude and mindset that our
daily business decisions and investments should equally support the company’s profitability,
the surrounding environment and the development of society as a whole.
I thank the dedicated staff of Tallinna Sadam and the company’s nearly 16 thousand shareholders.
Thanks to you, Tallinna Sadam has been named the company with the best investor relations in the
Baltic countries. This is high recognition and an indicator that we continue to be a strong and reliable
listed company. I hope that the success story of Tallinna Sadam will encourage other (state-owned)
companies to go public, which would increase the interest of both domestic and foreign investors
and improve the liquidity of our local stock exchange.
AARE TARK
Chairman of the Supervisory Board of Tallinna Sadam
VIEW VIDEO SUMMARY OF THE YEAR 2020 BY AARE TARK,
CHAIRMAN OF THE SUPERVISORY BOARD
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1.5 Letter from the Chief Executive
The year 2020 was dominated by the outbreak of COVID-19. The global pandemic affected
the operations of Tallinna Sadam Group at every level and in every segment. Despite the challenges,
we coped quite well — we had the past five years’ largest cargo throughput and stable ship calls,
carried on with our investment and development projects, and completed several new facilities
and solutions.
Despite the challenges, we coped quite well —
we had the past five years’ largest cargo throughput
and stable ship calls, carried on with our investment
and development projects, and completed several
new facilities and solutions.
In terms of business lines, the public health crisis hit our passenger business the hardest. Passenger
numbers fell sharply and we had to respond to disruptions quickly — ferry timetables changed
daily while we had to reinstate border controls, try out thermal imaging cameras, enforce social
distancing, disinfect premises, and so on. Although we had no cruise ship calls and the number
of international route passengers dropped, there were also some positive developments — there
was a record number of ferry trips between Estonia and Finland in the summer and temporary
new ferry routes were launched at both Old City Harbour and Paldiski South Harbour. We opened
a completely renovated passenger terminal D at Old City Harbour in July and completed a nearby
multi-storey car park by the year end. We continued to build a cruise terminal and a footbridge
across the canal of the Admiralty Basin and made preparations for the next phase in our real estate
development activities.
In the cargo business, we succeeded in achieving the past five years’ highest cargo throughput.
We renovated a berth for ro-ro ships and opened a new service building for truck drivers at Muuga
Harbour. We built new dry bulk cargo facilities in collaboration with customers. Dredging works
carried out at Paldiski South Harbour have made us more competitive: we can now offer the handlers
of oil products an opportunity to receive larger vessels.
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In 2020, TS Laevad, a subsidiary of Tallinna Sadam, took an important step towards a cleaner Väina-
meri Sea and zero emissions. Since autumn, the Virtsu-Kuivastu route has been served by Estonia’s
first hybrid ferry Tõll. Passenger and vehicle numbers on domestic ferry routes were less affected
by the global crisis. The most difficult period, when the two largest islands and the ferries’ passenger
lounges were closed and access to the service was restricted, lasted from mid-March to the first
days of May. When restrictions were eased, the number of passengers and vehicles began to recover
rapidly, occasionally exceeding the 2019 level during the summer months. TS Shipping’s icebreaker
Botnica provided ice management and escort services to Panamax-type cargo ships in the Canadian
Arctic for the third year in a row. We also won a tender for the delivery of icebreaking services
in Estonia, ensuring Botnica with work in Estonia’s coastal waters for another ten winters.
Certainly, we all became more environmentally aware in 2020. Nature sent us a message that
we need to make changes in our behaviour and habits, both as individuals and businesses.
In cooperation with the Estonian Maritime Academy, we mapped the ecological footprint of Tallinna
Sadam Group. We have already taken tangible action to reduce greenhouse gas emissions and make
the Baltic Sea cleaner. As a port operating in the centre of Tallinn, we have contributed to improving
air quality by building onshore power supply systems for ferries and installing automated mooring
systems for ships. To ensure the purity of the Baltic Sea, we have built sewage reception facilities
and launched various environmental campaigns. Our goal is to achieve climate neutrality by 2050
at the latest.
VALDO KALM
Chairman of the Management Board of Tallinna Sadam
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1.6 Vision, mission, values
The vision of Tallinna Sadam is to become the most innovative port on the Baltic Sea by offering
its customers a sustainable environment and development opportunities.
Tallinna Sadam is a modern gateway to the Baltic Sea. We are a growth-oriented development and
service organisation. We create a sustainable environment and development opportunities for our
customers and employees by combining services to people and cargo, shipping, and waterfront real
estate development into an integrated logistics business. We listen to the communities and protect
the environment. We are open, smart and reliable. We represent the image of Estonia and are one
of the engines of its economy.
The core values of Tallinna Sadam are openness, smartness and reliability.
We are open to new ideas and innovation and find opportunities to implement them. We share
information about our intentions and activities both internally and externally.
We make sensible and smart decisions and do the right things at the right time and in the right
way. We seek, seize and offer resourceful and forward-looking solutions to improve the company’s
competitiveness.
We are reliable. We keep our promises and deliver quality. We are professional, competent and
influential experts in our area and treat ourselves as well as others with respect and consideration.
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1.7 Strategy 2021–2025
Tallinna Sadam’s strategy is focused on implementing the vision of the company – to become
the most innovative port on the Baltic Sea, meeting owners’ expectations and the dividend promise,
promoting a strong business culture and ensuring sustainable development.
Business strategy
By the year 2025, Tallinna Sadam will have moderate growth opportunities in all its business lines:
cargo, passengers, real estate, and shipping. In the next five years, we will continue to increase the
competitiveness of cargo corridors passing through Estonia together with other members of the
logistics chain. We see opportunities in the growth of the liquefied gas market as well as north-
south cargo flows, among other things through the opening of new ro-ro and container cargo routes.
The replacement of fossil fuels with renewable and biofuels and alternative energy sources also
presents new opportunities. Additionally, we intend to make wider use of the areas of the industrial
parks located at Muuga Harbour and Paldiski South Harbour.
In the passenger business, which has been hit the hardest by the COVID-19 crisis, we will focus
on restoring traffic volumes on regular routes and the services provided to cruise ships.
Investments in the area will be aimed at improving passenger service infrastructure and providing
environmentally friendly solutions for ships, buildings and passengers. We will also continue
to create an attractive urban space by executing the development plan of Old City Harbour, that is,
Masterplan 2030.
In shipping, the main focus in 2021–2025 will be on the electrification of the fleet, the launch
of a new and more environmentally friendly ferry on the routes between the mainland and
the two largest islands, and the finding year-round work for the icebreaker Botnica.
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Development opportunities Sustainable development
Tallinna Sadam consistently strives to reduce the adverse environmental impacts of its business and
development activities. Environmental priorities and the pursuit of climate neutrality by 2050 are
keys to ensuring the company’s sustainable development. We recognise that the Baltic Sea has one
of the most vulnerable marine ecosystems in the world and that clean air is an important indicator
of the quality of life as well as a critical factor in ensuring our ability to continue business and
development activities in the vicinity of residential areas. Our goals also include supporting growth
in the circular economy and improving energy efficiency, while using natural resources efficiently and
promoting more sustainable consumption.
In addition to environmental priorities, we monitor the achievement of goals set in our economic
and social focus areas. Being a forward-looking company, we use modern science-based digital
solutions to increase our competitiveness. In selecting partners, we evaluate their approach
to sustainability. We ensure the company’s profitability and stable shareholder returns by complying
with the dividend policy and applying modern management principles consistent with the company’s
core values.
As Estonia’s largest gateway to the sea, we are responsible for Estonia’s image as a maritime nation.
Therefore, our priority is to create high-quality public space for both people visiting the country and
living in the city. It is equally important to contribute to regional development by providing essential
high-quality ferry service to the residents and visitors of Estonia’s largest islands. Health, safety and
security remain among our top priorities.
We implement the strategy by setting annual goals and adopting related action plans, and
involving all our employees in their achievement. The key to Tallinna Sadam’s future success lies
in the attitude and mindset that our daily business decisions and investments should equally
support the company’s profitability, the surrounding environment and the development of society as
a whole. Through its activities, Tallinna Sadam contributes to the achievement of Estonia’s climate
neutrality goal as well as the implementation of the European Green Deal and the UN sustainable
development goals.
PASSENGERS
• Restoring passenger traffic volumes on the Helsinki, Stockholm and St. Petersburg routes
• Restoring the numbers of cruise ship calls and cruise passengers
• Implementing a new concept of travel security
• Providing automated mooring systems for ships
CARGO
• Increasing market share in Estonia
• Seizing opportunities to increase north-south cargo flows (incl. Rail Baltica)
• Continuing the development of ro-ro/con-ro routes at Muuga Harbour
and Paldiski South Harbour
• Creating a harbour for wind farm construction and maintenance
• Harnessing the opportunities arising from nearshoring
SHIPPING
• Bringing additional ferries on the routes between Estonia’s mainland and two largest islands
• Increasing operational efficiency
• Electrification of ships
• Growth in demand for icebreaking and ice management services in international projects
• Providing services to Estonian wind farms (Botnica)
REAL ESTATE
• Executing Masterplan 2030+ created for the development of Old City Harbour
• Developing industrial parks and providing added value
• Renting out surplus resources and vacant premises
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In 2020, our sustainable development working group continued to interpret the sustainable
development goals and priorities and to plan activities for achieving those goals in collaboration
with our in-house experts and members of the management board. As a result, at the year end
the supervisory board approved the Group’s updated strategy, which is driven by the principles
of sustainable development, and the activities listed in the sustainable development action plan
for 2021 were incorporated into the goals set in the framework of the performance management
programme.
We developed the metrics and action plan for monitoring progress towards goals set in cooperation
with Tallinn University of Technology and assessed our environmental impacts, mapped our
ecological footprint and developed measures to reduce greenhouse gas emissions in collaboration
with the Estonian Maritime Academy. In addition to adopting the Group-wide concept of sustainable
development, our subsidiary TS Laevad has developed its own sustainable development programme,
which is linked to the Group’s goals.
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1.8 Tallinna Sadam’s stakeholder groups
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2 Service Responsibility
2.1 Safety and security
We invest daily in ensuring and promoting safety and security in all our business lines. Our main
challenge is to make sure that all employees, passengers, cargo and companies are safe and secure.
We do it by implementing innovative security systems.
Due to COVID-19, since early 2020 our main focus has been on preventing the spread of the virus
in our harbours and the port community. We have participated in various working groups set up
to develop virus containment measures to ensure optimal application of restrictions which take
into account the nature of harbour operations and maritime transport. Also, we have been working
closely with the Police and Border Guard Board and Health Board to make sure that our harbours
comply with pandemic-related requirements (including the arrangement of health checks and tests)
as well as across borders with other harbours to harmonize security measures and ensure smooth
and swi exchange of information.
The harbours of Tallinna Sadam have implemented a safety and security assurance system
to meet the requirements of the Estonian Ports Act in areas such as marine traffic safety, security,
environmental protection, and safe cargo handling. We assess potential safety risks regularly
and update our safety measures when necessary. General safety requirements are set out in the
Port Rules. Our structural units’ roles in preventing and responding to dangerous situations at the
harbours of Tallinna Sadam are described in the procedure for preventing and resolving dangerous
situations and each harbour has developed and implemented a plan for responding to safety
incidents. To cope with dangerous situations, we carry out regular drills and exercises and work
with supervision authorities, local communities and all operators, including handlers of hazardous
substances operating on the premises of our harbours.
All detected incidents are recorded and continuous monitoring provides important input
to the planning of additional safety measures.
Trainings
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To ensure fire safety, our harbours are supplied with basic fire extinguishing equipment (dry
powder, gas and water extinguishers, hose systems, fire blankets, etc.), automatic alarm systems
(fire alarm, sprinkler, gas extinguishing, water curtain and alarm transmission systems) and external
fire extinguishing water systems (fire hydrants, sea water extraction places). We conduct regular fire
drills and checks of firefighting equipment, systems and installations in cooperation with the Rescue
Board.
The Rescue Board’s Muuga unit, which is based at Muuga Harbour, ensures swi response
to possible rescue incidents. To increase rescuers’ capabilities, we have acquired the following
equipment for responding to possible incidents at Muuga Harbour: foam extinguishers and hose
systems that can supply water from sources up to 3 km away and a HydroSub sea water pump with
a capacity of 11,000 litres per minute. Also, there is a slip for launching watercra in the eastern
part of Muuga Harbour, which enables rescue units to respond quickly to incidents at sea.
The purpose of implementing security requirements at harbours is to assure the safety and
security of ships, passengers, cargo and harbour employees and to prevent wrongdoing. All harbours
in the composition of the Port of Tallinn apply the heightened ISPS
5
security code. Old City Harbour
has been designated as a facility essential for national security and, accordingly, is subject
to additional security measures.
All harbours in the composition of Tallinna Sadam have a security plan, which is based on a risk
analysis carried out by the Transport Administration
6
and the Estonian Internal Security Service.
According to the plan, each harbour consists of different facilities for which the plan outlines
appropriate security measures. The effectiveness of the security plan is tested during drills and
exercises carried out every three months. Compliance with security requirements is reviewed
by the Transport Administration, which carries out relevant audits on an annual basis. Access to all
harbours is restricted: entry is granted on the basis of permits. All harbours have manned guarding
and consistently upgraded modern technical surveillance systems, which support security assurance.
Thanks to extensive preventive work, Tallinna Sadam has had only a few serious incidents in the past
decade. There have been no safety incidents resulting in a large number of fatalities or injuries.
TS Shipping has implemented a safety and quality management system for its icebreaker Botnica,
which integrates the requirements of the main international maritime conventions (SOLAS,
MARPOL, STCW, etc.) and ISO standards (9001:2015, 14001:2015, 45001:2018). International
offshore industry guidelines and best practices are also followed. TS Shipping is a member
of the International Marine Contractors Association (IMCA) and complies with the Association’s
guidelines, recommendations and practices. Nearly twenty different safety and security drills and
exercises are conducted on board the icebreaker in conformity with international conventions and
the recommendations and practices of the offshore industry every year. In addition, joint emergency
response drills to practice cooperation between the crew and the onshore team are held twice
a year. The ship’s main engines and other mechanisms and systems have been supplied with remote
surveillance equipment. Besides improving safety, it allows using the vessel’s engines and systems
more efficiently and reducing its costs and emissions. Smooth operation of the vessel’s propeller
systems and their controls is also ensured with a remote management solution.
TS Laevad applies the safety and security requirements of the ISPS Code. Fire safety is ensured
by conducting weekly rescue and firefighting drills on board the vessels as required by SOLAS.
As a rule, various on-board and onshore emergency response drills are conducted in partnership
with the Police and Border Guard Board, the Estonian Internal Security Service and the Rescue Board
but in 2020 no joint exercises were organised due to pandemic related restrictions. In preventing
the pollution of marine environment and managing waste, TS Laevad observes the requirements
of MARPOL. All vessels of TS Laevad have implemented a comprehensive safety management
system and the Transport Administration conducts separate audits of all vessels and the office
on an annual basis.
5
International Code for the Security of Ships and Port Facilities.
6
The Transport Administration was established on 1 January 2021 by merging the then Civil Aviation, Road and Maritime Administrations (and is their legal successor).
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2.2 Quality management and risks
The Group’s parent, AS Tallinna Sadam, has been applying an integrated management system,
which complies with the requirements of international quality and environmental management
standards ISO 9001 and ISO 14001, since 2003 already. Conformity with international
standards proves that the management system of AS Tallinna Sadam ensures the satisfaction
of customers and other stakeholder groups, efficiency of work flows, and effective control of risks
and environmental aspects. In March 2020, we successfully passed a recertification audit carried
out by the certification agency Bureau Veritas Eesti OÜ, which confirmed our compliance with the
requirements of ISO 9001:2015 and ISO 14001:2015. The next recertification audit will be carried
out in March 2021. The main quality and environmental management system development goals
included performing customer satisfaction, corporate reputation and employee engagement surveys
and analysing the results. We also continued with several digitalisation projects, which are aimed
at digitalising human resource management activities, implementing digital asset and incident
management solutions and paperless teamwork tools.
TS Shipping has been applying an integrated management system, which complies with the require-
ments of quality management standard ISO 9001:2015, environmental management standard
ISO 14001:2015 and occupational health and safety management standard OHSAS 18001 since
2017. In May 2020, the certification agency Bureau Veritas Eesti OÜ conducted a recertification
audit of the integrated management system in accordance with quality management standard
ISO 9001:2015, environmental management standard ISO 14001:2015 and occupational health and
safety standard ISO 45001: 2018. TS Shipping achieved its key targets for 2020: a ship availability
indicator of at least 90% and a customer satisfaction index of at least 80%.
The risks which influence the activities of Tallinna Sadam are reviewed in accordance with
the Group’s risk management framework. The risks affecting the operations of Tallinna Sadam
have been classified into three main categories: risks resulting from the external environment
(external risks), risks associated with specific business lines and operational risks. Each risk has been
assigned a level of severity (low, moderate, high, extreme) and mitigation measures that depend
on the nature of the risk. The Group’s financial risks are managed separately and a comprehensive
overview of their hedging and mitigation principles and means is provided in note 4 to the financial
statements.
External risks which affect the Group’s operations the most include long-term impacts
of the COVID-19 pandemic on passenger and cargo flows, stricter environmental requirements
resulting from climate change and possible unfavourable changes in national tax policy (including
alcohol excise duties). Other significant risks include the business risks of the Group’s major
customers and prospective customers’ unwillingness to invest due to the instability of the global
economy. In the passenger business, significant risks in the long-term perspective include
the construction of a competing passenger harbour and possible incidents with passengers on
harbour premises. The cargo business is exposed to the continuation and expansion of the EU and
US economic sanctions against Russia, increasing competition (including domestic competition)
between the Baltic Sea ports, and Russia’s ongoing restriction of rail transport volumes. In the real
estate business, significant risks are related to possible delays in local governments’ planning
processes and possible legal disputes. In shipping, ferry operations may be affected in the long-
term perspective by the possible construction of the Saaremaa bridge and the operations of the
icebreaker Botnica may be affected by our inability to secure regular summer work for the vessel.
High operational risks include the risks related to occupational health and safety, the planning and
execution of business projects and a possible decrease in the market value of significant assets.
According to the risk assessment, other risks, including environmental risks (such as the risk
of pollution of the port basin and harbour premises, noise and odour nuisances), safety and security
risks, personnel risks, etc., are not as high (taking into account the risk mitigation measures) and,
depending on the specific risk, fall into the low or moderate category.
In keeping with our values and ethics and to prevent corruption, we have put in place a Group-wide
procedure for avoiding conflicts of interest. The procedure requires, among other things, members
of Group companies’ management and supervisory boards (16 persons in total) and employees
who can influence transactions (13% of the Group’s employees) to declare their business interests.
We also observe the requirements of the General Data Protection Regulation (GDPR) and pay
increasing attention to ensuring cyber security. We address the topics at regularly organised training
events and share relevant information (e.g. on our intranet) with employees and members
of the governing bodies. Additionally, we regularly test our information systems with the assistance
of external experts to improve our cyber security and mitigate related risks.
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2.3 Customers and suppliers
We have a broad customer base, which largely consists of stable big Estonian and international
companies, many of which are listed on different stock exchanges. Our largest customers are ferry
operators, cargo terminal operators, and the state (Republic of Estonia) through contracts for the
provision of public ferry service and icebreaking service delivered by Botnica. Our customers also
include the end consumers of our services: passengers travelling on our ferries to the islands
of Saaremaa and Hiiumaa, passengers travelling on international routes, and cargo carriers and owners.
We wish to offer the highest possible service quality. To achieve this, we monitor customer
satisfaction for six major customer groups: cargo terminal operators, ferry operators, shipping
agents, tenants, passengers, and customers of the marina. In 2020, the customer satisfaction
index was 5.13 on a 6-point scale (2019: 4.87). TS Laevad, which provides ferry service, measures
its customers’ satisfaction with services provided using the net promoter score (NPS) methodology.
In 2020, the NPS was +73 on the scale of –100 to +100 (2019: +65).
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In customer relations, we observe the principles of openness and engagement. Our management
and heads of business lines regularly meet our key customers. At least once a year, we organise
a Customer Information Day to inform the general public about the company’s significant plans,
projects and investments.
In 2020, there were several events and conferences that brought together customers and other
stakeholders in the Group’s business lines: WDBE online seminar: Data flow in the construction
lifecycle, Transestonia 2020, The Baltic Sea Day public discussion: Towards a cleaner Baltic Sea –
looking for solutions together, BPO webinar: The new reality of the ports sector, Paldiski Association
of Entrepreneurs’ Investment Conference: A different Paldiski, XVI International Maritime Conference,
etc. Although we could host fewer business delegations because of the pandemic, a number of public
events were held to promote the cargo handling, passenger service and environmental protection
capabilities of Estonian logistics companies and harbours. For example: a press conference
on the 2019 results of the Estonian tourism sector at passenger terminal D, a press conference
on the design of the Rail Baltica freight station at Muuga Harbour, a presentation of the Seabin
floating trash collector and a presentation showcasing the harbour development ideas
of the students of the Estonian Academy of Arts.
To harmonise service quality across passenger terminals, in 2019 we joined forces with ferry
operators and developed the Old City Harbour Community Service Compass, which is a set
of common principles and agreements on providing services to visitors of the harbour. In 2020,
an Old City Harbour Community Day was held and we published the Service Compass on our
website. TS Laevad wishes to offer its passengers the best travel experience in Estonia. To that end,
we continued to renovate the shops and restaurants on board our ferries in 2020. Together with our
partners, we make every effort to make visitors and passengers feel welcome and to develop
an open and hospitable culture and vibe in our harbours and on board our ferries.
In ordering products and services, we prefer, where possible, sustainable solutions, which are
aligned with the values of Tallinna Sadam. We observe the sustainability criteria already in preparing
the procurement requirements and exclude bids which offer solutions that burden the environment.
In 2020, we adopted the Port Community Internal Regulations, which set out our expectations
to partner organisations that provide services on harbour premises. The regulations include
expectations regarding sustainability, safety and hospitality. Our partners have been informed about
the Port Community Internal Regulations and the obligation to observe the regulations has been
included in all partnership agreements signed since the end of 2020.
We wish that all our partners would share our values and would contribute to the wellbeing
of society and the sustainability of the environment. This means that in selecting our partners
we assess whether they observe sustainability and corporate social responsibility principles.
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3 Environment
Tallinna Sadam’s environmental strategic priorities for sustainable development are:
• Energy efficiency and sustainable consumption
• A clean Baltic Sea and increasing our contribution to the circular economy
• Clean air.
Tallinna Sadam consistently strives to reduce the adverse environmental impacts of its business
and development activities. We recognise that the Baltic Sea has one of the most vulnerable marine
ecosystems in the world and that clean air is an important indicator of the quality of life as well as
a critical factor in ensuring our ability to continue business and development activities in the vicinity
of residential areas. Our goals also include increasing our contribution to the circular economy
and improving energy efficiency, while using natural resources efficiently and promoting more
sustainable consumption. We take responsibility for the natural and marine environment, listen
to local communities and work with local authorities and research organisations as well as other
major ports on the Baltic Sea to ensure the company’s sustainable development and operation.
We have an environmental management system by which we identify significant environmental
aspects and their impacts, and determine our environmental goals and tasks to improve the
effectiveness of our activities.
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3.1 Energy efficiency and sustainable consumption
We have set ourselves the goals of improving energy efficiency, increasing the use of renewable
energy to 90% and consuming natural resources sustainably. Our long-term goals in this priority
area are to reach climate neutrality by 2050 and to maximise the use of renewable energy.
We measure our progress towards these goals using the following energy efficiency and sustainable
consumption indicators.
In planning buildings and infrastructure, we use digital building information modelling (BIM),
which enables us to improve the functionality of the building or infrastructure asset and to
implement sustainable solutions already in the design phase. The construction of passenger terminal
D was the first project where we required the use of BIM technology. The information obtained was
used to ensure the quality of the design and construction work, and to reduce subsequent building
management costs. It was a project in which we worked closely with the contractor and developed
our own BIM requirements. Various digital solutions were used, and the requirements developed
changed work processes and improved communication between the designers, the builders and
the customer. Implications for the sector have been significant and broad-based: BIM has influenced
the practices of numerous companies, from Tallinna Sadam to site contractors.
Our BIM requirements have triggered widespread interest in the use of BIM, particularly in the build-
ing management phase. The building of terminal D, completed in 2020, is equipped with rooop
solar panels, which allow its energy needs to be partly covered with renewable energy, and a
double-skin façade, which reduces the need for cooling. In interior design, we have used real wood
and wildlife: a multitude of plants and decorative trees. In 2020, we continued to build the cruise
terminal, which is scheduled to be completed in 2021. It will be heated and cooled by a sea water
system and additionally powered by solar panels.
In 2020, we continued to implement innovative solutions initiated in earlier years and to use energy
generated from renewable sources. Our main and largest office and service buildings are equipped
with building automation systems which allow us to monitor their performance in real time. A major
step in the renovation of passenger terminal D was its conversion from electric heating to district
heating and automating the control of energy consumption to further improve heating efficiency.
During the year, we also invested in increasing the energy efficiency of outdoor lighting in streets
and storage areas. We analysed lighting needs and timing and implemented dimming of LED
lights, which has considerably reduced the energy consumption of lighting. A new cargo check-in
building was opened at Muuga Harbour to offer better services to shipping companies and truck
drivers travelling on the Muuga-Vuosaari route. This is the first energy class A building in the Port
of Tallinn. The building has rooop solar panels and is heated by an air-source heat pump.
Energy efficiency and sustainable consumption indicators
Indicator Target 2030 2020 2019
MPSV Botnica Energy Efficiency Operational Index (EEOI)
7
In the range of 0.3–0.4 0.3 0.4
Outdoor lighting upgrade rate 100% 31% 31%
Energy efficiency of buildings (kWh/m
2
per year) 130 184 197
Share of renewable energy in total energy consumption
Own production 10%
Purchases 80%
Own production 0.9%
Purchases 0%
Own production 0.4%
Purchases 0%
7
EEOI = FC * CF / D * m, where FC is fuel consumption in tonnes, CF is the conversion factor for the diesel fuel used, D is the distance travelled in miles, m is the quantity of cargo (m=1).
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We reduced the energy consumption of outdoor lighting in the port area by 12.5% (526.7 MWh)
compared to 2019 by increasing the dimming of LED lights and reviewing where and when lighting
is required. The use of heating energy grew in 2020 due to the significant expansion of passenger
terminal D at Old City Harbour and the conversion of the terminal from electric heating to district
heating. Electricity consumption decreased by 4%, mainly due to a warm winter and energy
savings initiatives, such as the outdoor lighting project and the conversion of passenger terminal D
to district heating.
TS Shipping implemented a Shipboard Energy Efficiency Management Plan (SEEMP) for its icebreaker
Botnica in 2013 already. SEEMP is a part of the integrated management system, which describes
procedures and measures for optimising energy consumption. Botnica’s navigation management
system incorporates a service which allows monitoring the movement of the vessel in real time
and programs which allow the onshore staff to analyse the changes in the weather systems and
the movement of the vessel and thus to suggest optimum routes and speeds, helping the captains
to avoid strong headwinds and rough seas (weather routing). This has created considerable fuel
savings and helped ensure safer ocean passage for the icebreaker.
At the end of 2019, TS Laevad equipped the ferry Piret with an innovative Blueflow Energy
Management system to monitor its fuel consumption. The system helps to improve the deck
officers’ navigation methods in real time, to optimise vessel speed based on the navigation area,
and to plan the maintenance of the underwater hull, which lowers the vessel’s fuel consumption
and reduces the negative environmental impacts of marine fuel. As a result, Piret achieved a 9%
fuel saving per trip in 2020. The ferries Tõll, Leiger and Tiiu were supplied with the Blueflow Energy
Management system in July 2020.
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3.2 A clean Baltic Sea and increasing circular economy
Our long-term goals in this priority area are to recycle or reuse 70% of waste in the circular
economy, to minimise the risks and hazards of marine pollution and to maintain biodiversity
in coastal areas in the places where the Group operates. We monitor our progress towards these
goals using the following indicators.
Tallinna Sadam works hard to ensure that the ecological footprint of its activities is kept to a mini-
mum. We recognise that the marine ecosystem of the Baltic Sea is among the most vulnerable ones
in the world. The harbours of Tallinna Sadam have adequate capacities to receive bilge water and
oily sludges, sewage, garbage and scrubber waste from all ships calling at them. The volumes
of ship-generated waste usually grow year by year but in 2020 the volumes declined, mainly
because cruise ship calls were cancelled and the number of passengers travelling on regular routes
dropped significantly due to the COVID-19 pandemic.
Unlike many other European ports, we support ships that have invested in scrubber systems in order
to reduce sulphur compounds (SO
x
) in their emissions and we accept scrubber waste without extra
charges.
In 2020, 53% of ship-generated waste was recycled or reused in the circular economy
8
(2019:
54%). The waste calculation method changed in 2020: bilge water, oily sludges and other hazardous
waste were excluded from the reuse figures to focus on the management of those categories
of waste, which have the strongest environmental impact.
Ship-generated waste received
Ecological footprint indicators
Indicator Target 2030 2020 2019
Share of ship-generated waste recycled or reused in the circular economy 70% 53% 54%
Share of port calls by cruise ships that disposed of sewage at Old City Harbour 100% 83% 81%
Number of pollution incidents in harbour basins 0 18 9
Benthic biodiversity indicator for Muuga Bay (compared with the reference area) 100% 100% 100%
Benthic biodiversity indicator for Tallinn Bay (compared with the reference area) 100% 71% 100%
8
https://www.keskkonnaamet.ee/sites/default/public/taaskasutus.png.
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Tallinna Sadam contributes to ensuring the purity of the Baltic Sea by helping prevent
the discharge of ship sewage into the sea. For this purpose, we have provided Old City Harbour
with a sewage pipeline for cruise berths and more frequently used ferry quays and a micro-tunnel
with a sewage reception capacity of 1,200 m
3
per hour. Thanks to the new onshore sewer system,
cruise ships and ferries calling at Old City Harbour can dispose of unlimited amounts of sewage
without any additional charges. To protect the marine environment of the Baltic Sea by enabling
ferries to dispose of sewage at port, we decided that from January 2020 we will receive unlimited
quantities of sewage from ferries visiting Old City Harbour (previously the limit was 7 m
3
).
Following the liing of the limit in 2020, the annual volume of sewage received from ferries at Old
City Harbour surged to 47,000 m
3
compared with 1,000–2,000 m
3
in previous years. The volume
for cruise ships comprises only sewage received during technical calls as there were no regular
cruise ship calls due to the COVID-19 pandemic. The share of ferries disposing of sewage is not
relevant because of their frequent timetables and generally short call times.
In 2020, we continued to contribute to recycling and the circular economy by collecting waste
by type in our offices and passenger terminals as well as on board the ferries of TS Laevad.
Reuse of ship-generated waste in the circular economy Volume of sewage received from cruise ships and ferries at Old City Harbour
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The approach canal and waters of Paldiski South Harbour were dredged from 19 December
2019 to 12 March 2020; the total dredged volume was 685 thousand m
3
. During dredging,
suspended solids, birdlife, benthic fauna and flora, and fish were monitored by researchers from OÜ
Maves, the Institute of Marine Systems at TalTech, the Estonian Marine Institute of the University of
Tartu, and the Estonian University of Life Sciences. Monitoring did not reveal any significant changes
in the status of the environment due to harbour operations.
Because of the potential impacts of harbour operations, we monitor marine biodiversity. The long-
term goal is that the number benthic community species near Old City Harbour (Tallinn Bay) and
Muuga Harbour should not differ from the average values for the reference area (Kakumäe Bay).
This is a good indicator of the effect of harbour operations on marine ecosystems because
the number of benthic community species directly reflects changes in water transparency,
the intensity of eutrophication, the volume of dredging and pollutant load. We use the benthic
biodiversity data for Muuga and Tallinn Bays obtained from the national environmental monitoring
programme (conducted annually by the Estonian Marine Institute and the Estonian Environment
Agency of the Ministry of the Environment). According to the 2020 data, the condition of the sea
near Muuga Harbour is the same as at the reference station (indicator 100%). A somewhat worse
ecological condition near Old City Harbour (70%) is attributable to highly unusual environmental
conditions during the winter, when a high level of precipitation and a large number of stormy days
(the absence of ice cover) caused major changes in sea water transparency and eutrophication.
There were several environmental events and campaigns focusing on the Baltic Sea in 2020 –
the Baltic Sea Day, floating trash collection with Seabin and a cigarette litter campaign The Sea
Starts Here. For further information, see section 5.2. of the report.
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3.3 Clean air
Our long-term goals in this priority area are to achieve climate neutrality and zero emissions from
ships staying in our harbours by 2050. We monitor our progress towards these goals using the
following indicators.
Our goal is to make sure that outdoor air in our locations of operation is clean and of high quality.
To achieve this, we employ innovative solutions and work closely with our customers and partners.
In addressing possible air pollution from our operations we focus on several key areas: mapping
of GHG emission sources and measuring carbon emissions, odour issues at oil terminals, air pollution
from ships and differentiating port dues based on ships’ investments in reducing air pollution.
GHG emission of Tallinna Sadam
Air pollution indicators
Indicator Target 2030 2020 2019
GHG
9
emissions (tonnes of CO
2
equivalent) 2,050=0 25,070 27,069
CO
2
emissions of TS Laevad per trip (%; 2019=100%) 26% 94% 100%
Share of vessel calls with Environmental Ship Index (ESI) discounts 50% 18% 18%
Time during which ferries use onshore power supply as a percentage of total call time at Old City Harbour 60% 0% 0%
Share of cargo harbours’ ro-ro units in the total number of ro-ro units 50% 29% 29%
9
Greenhouse gases (GHG) - CO
2
, N
2
O and CH
4
converted into CO
2
equivalent.
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Mapping the GHG emissions of Tallinna Sadam
In 2020, Tallinna Sadam and the Estonian Maritime Academy at Tallinn University of Technology
developed a methodology and mapped the GHG emissions of our harbours and vessels based
on the 2019 data. GHG emissions, which were mapped and calculated, were categorised into three
scopes based on the ownership or control of the emission source and the operational boundaries:
In addition to measuring the volume of our GHG emissions, measures with significant effect
on reducing the emissions were worked out. Several of the measures are already in partial use
or under development, such as the onshore power supply for ferries at Old City Harbour, use
of renewable energy, discounts on port dues for environmentally friendly vessels, implementation
of economical hybrid solutions in ferry traffic between the mainland and the largest islands,
preparation for transition to complete renewable energy solutions, etc. Activities which have
the strongest direct impact on Tallinna Sadam’s GHG emissions are power and heat consumption
and the choice of fuels and means of transport. Therefore, energy efficiency and a wider use
of renewable energy sources are the keys to reducing our GHG emissions.
All direct and indirect GHG emissions from Tallinna Sadam’s operations, including emissions from
operators, tenants and port calls (scopes 1–3) was 97,426 tonnes of CO
2
equivalent in 2019.
Ship traffic, i.e. the GHG emissions of vessels calling at our harbours, accounted for over a half
of this, followed by electricity consumption of which just a quarter was attributable to Tallinna
Sadam itself. The total GHG figure for 2020 (scopes 1–3) will be available in autumn 2021 because
the parties included in the calculation need to update large volumes of data.
Tallinna Sadam’s own direct and indirect emissions (scopes 1 and 2) was 25,070 tonnes of CO
2
equivalent in 2020
10
, of which 59% was attributable to ferry traffic between the mainland and
the largest islands which is operated by TS Laevad.
In 2020, the Group’s CO
2
emissions decreased by around 7% year on year. This was mainly due
to an increase in the energy efficiency of the ferries of TS Laevad (reduced fuel consumption),
a decrease in the charter days of TS Shipping and a pandemic related decline in the parent’s power
and heat consumption.
• Scope 1 – Direct emissions from sources owned or controlled by Tallinna Sadam (ships,
motor vehicles, other equipment and boiler plants owned by Tallinna Sadam).
• Scope 2 – Indirect emissions from energy purchased and used by Tallinna Sadam (electricity
and heat purchased for the buildings and infrastructure owned by Tallinna Sadam).
• Scope 3 – All other indirect emissions (from tenants, operators, shops calling at harbours,
traffic and ro-ro cargo passing through the harbours, cargo handling equipment, rail traffic).
2019 total GHG emission (incl. operators, tenants, marine traffic)
10
Emissions from electricity consumption have been calculated based on the specific emission factor for 2018 (National Inventory Report NIR 2020).
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Other solutions to achieve clean air
Smart Port traffic management system (automated vehicle check-in and direction to the waiting
area and boarding), which has been implemented at Old City Harbour, simplifies and speeds up
the check-in of passengers with vehicles and their movement in the harbour area, which in turn
reduces emissions on the harbour premises. In 2020, we made preparations for implementing
the system at Muuga Harbour and Paldiski South Harbour, which has been scheduled for 2021.
Taking heavy goods vehicles and cars out of the city centre. Due to restrictions imposed on cruise
travel because of the COVID-19 pandemic, the Tallinn-Stockholm route was suspended and cargo
traffic between Estonia and Sweden, including heavy goods vehicles and cars, was transferred
to the Paldiski-Kapellskär route, which was served by two ro-pax vessels
11
(previously there was
one). The Muuga-Vuosaari route continued to be served by two ro-pax vessels, which during the
state of emergency in spring 2020 temporarily departed from Old City Harbour. Heavy goods
vehicles passing through Paldiski South Harbour and Muuga Harbour accounted for 24% of the total
number of the ro-ro units handled by the Port of Tallinn. Taking heavy traffic out of the city centre
has reduced the traffic burden and improved air quality in Old City Harbour and the surrounding area.
According to estimates, carbon emissions have dropped by around 167 tonnes.
Odour issues caused by the cargo handled by oil terminals are mitigated by three stationary air
quality monitoring systems and an electronic nose (e-nose) network installed in the area of Muuga
Harbour. The e-nose network is a preventive round-the-clock warning system consisting of 16 odour
sensors. In 2020, we adjusted the locations and number of e-noses based on prior years’ analyses.
The system enables us to promptly identify the location and source of the issue and start resolving it
without delay. In 2020, the Environmental Inspectorate received 121 complaints about odour issues
(related to oil, gas and chemicals) in the area (2019: 135). In 114 cases, the wind was not blowing
from the direction of the harbour or there were no loading works in progress at the time mentioned
in the complaint. The figure also includes cases when loading was in progress at the harbour
and a brief change in the composition of air was detected by a far-off e-nose but not by those
in the immediate vicinity of the harbour. An analysis of complaints and e-nose reports reflects that
only 7 of the complaints made in 2020 (2019: 17) are directly attributable to operations at Muuga
Harbour because loading was in progress at the time and a change in the composition of air was
also flagged by e-noses. This indicates that in addition to Muuga Harbour there are other companies
in the area that are responsible for odour issues. Air quality monitoring results by year are available
on the website of Tallinna Sadam at www.ts.ee/en/air-monitoring.
A map of e-noses in the area of Muuga Harbour and Maardu
11
Ro-pax vessel (roll-on/roll-off passenger vessel) is a ro-ro ship that is permitted to carry more than 12 passengers. The ship may have amenities and services similar to a ferry but its main purpose is to carry wheeled cargo.
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In 2020, we invested in creating an onshore power supply system for line ferries on five quays
(3, 5, 7, 12 and 13) of Old City Harbour. The system enables ferries to connect to an onshore
electricity network and stop their engines, which reduces ship-generated emissions, particulate
matter and noise pollution. The project was funded from TWIN-PORT 3, a project co-financed
by the European Union, and the total investment was EUR 3.5 million. The offshore power supply
system at Old City Harbour can be used by ferries serving the Tallinn-Helsinki and Tallinn-Stockholm
routes. This helps improve air quality and reduce noise and vibration both in the harbour and the city.
A multi-storey car park with one underground and four above ground levels was completed near
passenger terminal D at the end of 2020. The car park can accommodate nearly 400 vehicles
and will have up to 40 electric vehicle charging points, which is Tallinna Sadam’s contribution
to supporting carbon-free transport.
In 2020, we started installing automated mooring systems at Old City Harbour to reduce vessels’
emissions by shortening their manoeuvring and mooring times. Automated mooring systems will be
installed on quays 5, 12 and 13 for ferries serving the Tallinn-Helsinki route. Testing of the systems
on quays 5 and 12 was completed by the end of 2020. A total of 18 automated mooring systems
will be installed in the framework of the project, which is funded from TWIN-PORT 3, a project
co-financed by the European Union. The total cost of the investment exceeds EUR 8 million.
We grant eco-friendly vessels a discount on port dues based on the Environmental Ship Index
(ESI).
12
In 2020, we gave an ESI-based discount on 1,309 port calls, i.e. 18% of all port calls,
similarly to 2019.
In 2020, Tallinna Sadam’s subsidiary TS Laevad took a significant step towards a cleaner sea,
discontinuing the use of fossil fuels and reaching zero emissions. Since September 2020, the Virtsu-
Kuivastu route has been served by Estonia’s first environmentally friendly hybrid ferry Tõll.
When it was rebuilt, the vessel was equipped with storage batteries which enable it to partly run
on electricity, thereby reducing diesel fuel consumption, noise and air pollution. TS Laevad plans
to also implement the hybrid technology on other newer ferries in its fleet. The storage batteries
of Tõll allow replacing about a fih of its diesel fuel consumption with electricity. According to
estimates, this should reduce the vessel’s carbon emissions by up to 1,600 tonnes per year.
Setting environmental goals and linking them to our sustainable development goals helps us meet
both our climate neutrality goal as well as other ambitious long-term environmental targets.
12
ESI is based on the emissions of nitrogen compounds (NO
x
), sulphur compounds (SO
x
), particulate matter (PM) and carbon dioxide.
It also takes into account whether the ship is connected to the onshore electricity network and uses electricity while in port.. https://www.environmentalshipindex.org/Public/Home.
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4 Our People
4.1 Employees
Tallinna Sadam employs nearly 500 people. The Group’s average number of employees in 2020 was
465 (2019: 492). The dynamics of the number of staff are presented in the graph below.
In recent years, our headcount has mainly been influenced by two factors: more effective work
arrangement and the addition of new business lines. We have streamlined harbour administration
and implemented digital planning and scheduling tools. As a result, we have been able to optimize
the workforce in the harbour business. On the other hand, we have created new business lines.
We started providing ferry service between Estonia’s mainland and two biggest islands in 2016 and
fully filled relevant positions in 2017. The corona crisis of 2020 has also influenced Tallinna Sadam’s
operations (particularly the passenger business) and it has been necessary to find cost savings
in the human resources department.
The company’s sustainable development is underpinned by its diverse and highly competent
workforce.
Number of employees and personnel expenses
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At the end of 2020, 17% (2019: 11%) of the people working for the Group were up to 35 years
old. We have set ourselves a long-term sustainable development goal to raise the indicator to 25%
by 2030 in order to improve competitiveness and promote innovative thinking. To make sure that
the positions of more experienced specialists will be filled by young talent, we signed an agreement
with the Estonian Maritime Academy in 2019, which will support our collaboration in the field of
internship and research. In 2020, we offered internships to 15 students from the Estonian Maritime
Academy and the Estonian Nautical School. We have begun similar collaboration with the Tallinn
Lasnamäe School of Mechanics.
The average length of employee service at Tallinna Sadam is 8.4 years. The figure is the highest
for employees involved in the harbour business (nearly 17 years) and the lowest at our more
recently established subsidiary TS Laevad (3.1 years). The gender balance (ratio of men to women)
is related to the nature of our main business lines: harbour operations and shipping. Men are more
interested in becoming crew members, dockers and repairmen. Out of the 14 members of Tallinna
Sadam’s extended management team and subsidiaries’ managers, 5 are women, i.e. 36% (2019:
36%) of senior management positions are held by women. Our goal is to increase the share
of women among senior managers to 45% by 2030.
Workforce by age at 31 December 2020 Workforce by gender at 31 December 2020
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4.2 Human resource strategy
The focus areas of our human resource strategy for the coming years are: unity and good
cooperation, learning and development, smart work processes and effective work arrangement, and
innovation. We maintain and develop the focus areas in our daily work through specific actions and
a management culture that is driven by our values. The main performance indicators for the human
resource strategy are our people’s engagement index and the voluntary employee turnover rate.
We monitor employee engagement with annual employee engagement surveys. In 2020, 71%
of our people responded to the survey and the engagement index rose to 3.5 points on a 4-point
scale (2019: 3.4 points). The voluntary employee turnover rate for 2020 was 4.9% (2019: 10.8%)
and it decreased at all Group entities.
In 2020, we started recognising our people for their hard work and strong results on a quarterly
basis (Stars of the Quarter). Each quarter management recognises one or several employees who
have stood out in recent months for working hard, representing our values or showing initiative.
Tallinna Sadam supports the learning and professional development activities of its employees
and invests in systematic employee engagement. We introduced a basic computer skills programme
in 2020, which was completed by 124 employees. We offer employees whose mother tongue
is Russian an opportunity to participate in Estonian language courses for beginners. In addition
to developing digital skills, our near-term focus is on improving management quality based
on the management principles of Tallinna Sadam. In 2020, we introduced a development
programme for our extended management team and in 2021 we will offer it to other managers.
We organise a staff day for new employees on a quarterly basis to make sure that new joiners know
the company’s goals, business lines and management structure. However, due to the COVID-19
pandemic the staff day was held twice in 2020.
Due to the restrictions imposed on classroom training in connection with COVID-19, we implemented
our own e-learning portal. The purpose is to enable our people to learn and gain new knowledge
at a suitable time and location and at their own pace. We add new courses and materials to
the portal continuously. We provided employees with an opportunity to improve their remote work
skills by means of an Online Meetings course.
We maintain a common information environment by organising regular staff days, which in 2020
mostly took place online. At staff days, we provide an overview of the company’s performance and
important projects and discuss developments in the business environment. As our employees work
in different locations (at eight harbours and on six vessels) and at different times, we use different
internal communication channels: live broadcasts/recordings of staff days and internal training
events, the intranet, the Microso Teams application, an internal newsletter (published both on paper
and in electronic format) and social networks. In 2020, we supplemented our corporate website with
a section about work at Tallinna Sadam, where one can read exciting stories about our colleagues’
careers and activities.
To achieve our common goals, we have implemented a performance management system to make
sure that the company’s strategic objectives are communicated to each team and team member.
Our goal-setting approach is that expected results should be clearly agreed and measurable. Based
on the achievement of agreed goals, employees are eligible to either annually or quarterly provided
performance-related bonuses. To improve goal-setting and feedback, we offered managers training
in conducting performance review interviews: at the beginning of the year in the classroom and later
as a moderated online course. We also implemented StaffLogic in 2020. This is a new user-friendly
work time management soware, which enables our managers to plan and track their teams’
working time more efficiently and effectively.
When recruiting or promoting employees, we take into account their values, experience and
competence and avoid discrimination on the basis of gender, age, ethnicity or other factors. In 2020
and previous years, there were no reported incidents of employee discrimination at Tallinna Sadam.
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4.3 Occupational health and safety
Tallinna Sadam cares about the health and wellbeing of its people. In connection with the corona-
virus pandemic, we decided in 2020 that we are going to provide compensation for sick leave days
from the second day an employee is sick. In addition, we offer mental health counselling by the
psychologists of our chosen partner Meeletervis OÜ. To help employees stay healthy, we cover their
sport expenses within an agreed limit, give them an extra week off in the winter and support
team sports. To raise awareness of the importance of health, we organise annual health weeks,
where we invite interesting speakers to talk about health topics and introduce new opportunities
for keeping and improving one’s health through sports, physical activity, a healthy diet and stress
management.
Occupational safety is one of our main priorities. Out of all our employees, 40% are office staff
whose work environment risk factors include lack of exercise (forced position) and work with
a computer. 60% have high risk jobs because they have to work at night or at height. Risks are also
higher for those who work with fire, use dangerous equipment (landing bridges, ramps), or work on
ferries or quays, with equipment, or in passenger terminals. We analyse work environment risks and
improve our work environment continuously, taking into account employee proposals for improving
their working conditions. We send employees to regular health checks, make sure that they are
aware of work environment risks and protective measures, provide personal protective and special
equipment, and promote healthy lifestyles. The most recent serious work accident was in 2017.
In 2018–2020 there were no work-related accidents.
In 2020, we created an occupational safety e-learning portal (based on Microso LMS365)
for our office staff where they can familiarise themselves with safety instructions, video materials
and various guidelines and manuals. The e-course ends with a test to make sure that the employee
knows occupational health, fire and occupational safety topics. We are going to include the e-learning
environment in our new employee onboarding process to provide introductory training in occupa-
tional safety.
In connection with the COVID-19 pandemic, we have updated the company’s work environment
risk analysis and prepared additional guidelines for remote work and occupational hygiene.
Due to the pandemic we have also implemented various practical measures to protect our frontline
staff (including in shipping), such as personal protective equipment and distancing in work flows.
In addition, we regularly update our internal safety measures and instructions which have been
established to prevent the spread of the virus in the work environment and are available to all
staff on our intranet.
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5 Giving Back to Society
5.1 Participation in organisations
Tallinna Sadam works with the following organisations:
• AmCham Estonia
• Baltic Ports Organization (BPO)
• British-Estonian Chamber of Commerce
• Cruise Baltic
• Cruise Europe
• Digital Construction Cluster
• EcoPorts (an environmental initiative of the European ports sector)
• Estonian Association for Environmental Management
• Estonian Chamber of Commerce and Industry
• Estonian Employers' Confederation
• Estonian Logistics and Transit Association
• Estonian Power Plants and District Heating Association
• Estonian Ports Association
• Estonian Responsible Business Forum
• Estonian Taxpayers Association
• German-Baltic Chamber of Commerce
• Green Tiger
• PARE
• PIANC
• Rail Baltica
• The European Sea Ports Organisation (ESPO)
• The Institute of Internal Auditors Estonia
• The International Harbour Masters Association
INVESTMENT CONFERENCE OF THE PALDISKI ASSOCIATION OF ENTREPRENEURS "DIFFERENT PALDISKI 2020"
• The Paldiski Association of Entrepreneurs
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5.2 Sustainable development
cooperation and volunteer work
In conducting our business activities and making plans for the future, we prioritise awareness
of sustainable development principles, sharing our knowledge and insights, and engaging with
stakeholders on topics related to the impacts of our operations.
Tallinna Sadam and 23 other companies in which the state is a shareholder signed an agreement
in 2019 by which they undertook to uphold the principles of responsible business conduct and
to promote those principles in their business activities and society as a whole by setting a good
example. We enhanced our sustainable development strategy in 2020 and will continue
to develop and implement related performance indicators and an action plan in 2021. Our cargo
harbours’ socio-economic impact assessment and the design of our sustainable development
action plan were developed in a master's thesis of a student of Tallinn University of Technology.
In partnership with the Maritime Academy, we mapped our ecological footprint and relevant
improvement measures and created an application to monitor our progress towards our sustain-
able development goals.
In 2019, Tallinna Sadam, the Estonian Academy of Arts and the City of Tallinn launched a research
project “Tallinn Old Town: Sustainable Management and Presentation”
13
. The purpose is to obtain
academic input on how to manage and present Tallinn Old Town, which is a UNESCO World Heritage
Site, in a dignified and sustainable manner, how to improve tourist logistics between the harbour
and the old town, and how to develop new services which would support sustainable development
of Tallinna Sadam’s passenger business and create opportunities to increase the number
of passengers. The project term is 2019–2022 and the support granted by Tallinna Sadam to meet
the project’s objectives amounts to EUR 231 thousand, including taxes. We have involved experts
from Tallinn University of Technology to develop a logistical solution for the Old Town Circle Bus.
13
I interim report, II interim report.
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Through our cooperation with the Estonian Maritime Academy we contribute to improving
the education of seafarers and ensuring the availability of future talent as well as projects
addressing vessels’ cyber security and digitalisation of the logistics chain. We also work with other
research institutions in Estonia and abroad in developing digital solutions and analysing innovative
engineering options. We introduce the Port of Tallinn to students and offer internship opportunities,
and our people volunteer as lecturers in their areas of expertise.
Twice a year we organise traditional blood donation events in collaboration with the Blood Centre
of the North Estonia Medical Centre where our employees and those of our business partners as well
as other voluntary blood donors have an opportunity to donate blood. In 2020, a total of 84 people
donated blood at the events, including 25 employees of Tallinna Sadam Group.
Tallinna Sadam has joined the charity initiative Let's Donate Time. Our people contribute by doing
volunteer work in the field of nature conservation, education and healthcare. Due to COVID-19,
major traditional community events were cancelled in 2020 (such as Tallinn Maritime Days and
Viimsi Safety Day). Despite that, we engaged with the community and contributed to society in our
impact areas.
Kersti Täht, a member of the customer service staff of TS Laevad, was named Tallinna Sadam’s
Star of the Quarter in recognition of her performance during the emergency situation as well
as her volunteer work. As a member of the Defence League, she volunteered on her days off
to help the police control access to the islands of Muhu and Saaremaa at Virtsu Harbour.
BLOOD DONATION DAY AT TALLINNA SADAM 2020 KERSTI TÄHT, CUSTOMER SERVICE STAFF OF TS LAEVAD, VOLUNTEERING AT VIRTSU HARBOUR
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A clean Baltic Sea is a sustainable development priority for Tallinna Sadam. During the summer
season, the floating trash collector Seabin, set up in the waters of Old City Marina in collaboration
with the City of Tallinn and the Finnish Embassy, helped collect municipal waste from the sea.
The students of Tallinn University environmental management programme sent the collected data
to a global project database created for environmental education purposes. For the purity
of the Baltic Sea it is important to tackle cigarette litter pollution because a single cigarette butt
can pollute up to 100 litres of water if it ends up in the sea. In the summer of 2020, we carried out
a campaign against cigarette litter pollution together with the City of Tallinn, the World Cleanup
initiative and shipping companies. As part of the campaign, rainwater hatch covers at Old City
Harbour were supplied with the marking The Sea Starts Here and special Ballot Bins for cigarette
butts were set up on the premises of our harbours and on board the ferries of TS Laevad. During
the World Cleanup Day, our employees voluntarily collected nearly 10,000 cigarette butts from
the premises of Old City Harbour and nearby areas which were later used in an art project. In August
we celebrated the Baltic Sea Day with the Finnish Institute, the Embassy of Finland, and the City
of Tallinn by holding a panel discussion on how to ensure the purity of the Baltic Sea.
Tallinna Sadam contributed to the preparations for the City of Tallinn Green Capital campaign:
we helped prepare a presentation of Tallinn’s Green Capital activities, which highlighted Tallinna
Sadam’s efforts in improving air quality (Smart Port, onshore power supply and automated mooring
systems for ferries), ensuring the purity of the Baltic Sea (the marine trash collector, sewage
reception facilities, anti-cigarette litter campaign) and environmentally friendly urban development
activities (the cruise terminal, a walking trail called the Culture Kilometre). We work closely with the
City of Tallinn in executing Masterplan 2030, created for developing Old City Harbour into a modern
and vibrant city centre with attractive public areas.
Tallinna Sadam is involved in the Green Tiger project where we work with various Estonian
companies with a view to increasing the role of the circular economy in waste management and
achieving a balanced economic model.
CAMPAIGN AGAINST CIGARETTE BUTT POLLUTION "THE SEA STARTS HERE" TESTING OF THE FLOATING TRASH COLLECTOR SEABIN AT THE OLD CITY MARINA
5. Giving Back to Society | page 42
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A clean Baltic Sea is a sustainable development priority for Tallinna Sadam. During the summer
season, the floating trash collector Seabin, set up in the waters of Old City Marina in collaboration
with the City of Tallinn and the Finnish Embassy, helped collect municipal waste from the sea.
The students of Tallinn University environmental management programme sent the collected data
to a global project database created for environmental education purposes. For the purity
of the Baltic Sea it is important to tackle cigarette litter pollution because a single cigarette butt
can pollute up to 100 litres of water if it ends up in the sea. In the summer of 2020, we carried out
a campaign against cigarette litter pollution together with the City of Tallinn, the World Cleanup
initiative and shipping companies. As part of the campaign, rainwater hatch covers at Old City
Harbour were supplied with the marking The Sea Starts Here and special Ballot Bins for cigarette
butts were set up on the premises of our harbours and on board the ferries of TS Laevad. During
the World Cleanup Day, our employees voluntarily collected nearly 10,000 cigarette butts from
the premises of Old City Harbour and nearby areas which were later used in an art project. In August
we celebrated the Baltic Sea Day with the Finnish Institute, the Embassy of Finland, and the City
of Tallinn by holding a panel discussion on how to ensure the purity of the Baltic Sea.
Tallinna Sadam contributed to the preparations for the City of Tallinn Green Capital campaign:
we helped prepare a presentation of Tallinn’s Green Capital activities, which highlighted Tallinna
Sadam’s efforts in improving air quality (Smart Port, onshore power supply and automated mooring
systems for ferries), ensuring the purity of the Baltic Sea (the marine trash collector, sewage
reception facilities, anti-cigarette litter campaign) and environmentally friendly urban development
activities (the cruise terminal, a walking trail called the Culture Kilometre). We work closely with the
City of Tallinn in executing Masterplan 2030, created for developing Old City Harbour into a modern
and vibrant city centre with attractive public areas.
Tallinna Sadam is involved in the Green Tiger project where we work with various Estonian
companies with a view to increasing the role of the circular economy in waste management and
achieving a balanced economic model.
CAMPAIGN AGAINST CIGARETTE BUTT POLLUTION "THE SEA STARTS HERE" TESTING OF THE FLOATING TRASH COLLECTOR SEABIN AT THE OLD CITY MARINA
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6 Business Review
6.1 Key performance indicators
Figure Unit 2020 2019 Change %
Revenue EUR ‘000 107,358 130,536 –23,178 –17.8%
Operating profit EUR ‘000 35,562 51,679 –16,117 –31.2%
Adjusted EBITDA
14
EUR ‘000 58,423 74,292 –15,869 –21.4%
Depreciation, amortisation and impairment EUR ‘000 –24,094 –23,037 –1,057 4.6%
Income tax EUR ‘000 –4,913 –5,764 851 –14.8%
Profit for the period EUR ‘000 28,518 44,404 –15,886 –35.8%
Investment EUR ‘000 37,138 29,484 7,654 26.0%
Number of employees (average) 465 492 –27 –5.5%
Cargo volume t ‘000 21,327 19,931 1,396 7.0%
Number of passengers ‘000 4,333 10,639 –6,306 –59.3%
Number of vessel calls 7,088 7,855 –767 –9.8%
Total assets at period-end EUR ‘000 628,093 625,532 2,561 0.4%
Net debt at period-end EUR ‘000 184,901 172,663 12,238 7.1%
Equity at period-end EUR ‘000 375,432 377,018 –1,586 –0.4%
Number of shares at period-end ‘000 263,000 263,000 0 0.0%
Operating profit/revenue 33.1% 39.6%
Adjusted EBITDA/revenue 54.4% 56.9%
Profit for the period/revenue 26.6% 34.0%
EPS: Profit for the period/ weighted average number of shares EUR 0.11 0.17 –0.06 –35.8%
Equity/ number of shares EUR 1.43 1.43 –0.0 –0.0%
Profit for the period/ total assets 4.5% 7.1%
Profit for the period/ equity 7.6% 11.8%
14
Adjusted EBITDA = profit before depreciation,
amortisation and impairment losses, finance
income and costs (net), and income tax expense,
adjusted for amortisation of government grants
Share price at period-end 1.80 1.99 –0.19 –9.5%
P/E: Share price/ earnings per share 16.6 11.8 4.8 40.7%
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6.2 Economic environment
The COVID-19 pandemic, which emerged in China in autumn 2019 and broke out in Europe in early
2020, has disrupted the global economic environment in an unprecedented and significant manner,
causing the world economy to develop unexpectedly differently from earlier forecasts. Hence,
according to current estimates in 2020 the global economy declined by 3.5% instead of growing by
2.9% as was forecast a year ago. Tourism, transport and services have been the hardest-hit sectors.
Assessments of the state of the world economy have changed rapidly during the crisis because
both the downside factors and their mitigation measures have extensive impacts and it is difficult to
estimate their combined effect at a certain point in time. Nevertheless, in the second half of 2020
the world economy performed better than expected. According to current projections, global growth
should recover to a vigorous 5.5% in 2021. The forecast is based on the assumptions that the
COVID-19 infection rate will decrease and restrictions will be eased in the first quarter already and
that large-scale support programmes will continue. However, growth will differ widely from country
to country, depending mainly on the success of the vaccination and the implementation of economic
support measures for which countries have varying capacities. Green investment support coupled
with the taxation of CO
2
emissions is expected to be as an important measure for the recovery of
economic growth.
15
It is generally believed that things turned out better than expected for the Estonian economy in
2020, including compared to other European countries. It is estimated that the economy contracted
by around 3%, which is less than in most European countries. According to forecasts, in 2021
Estonia’s economy will see a turnaround and annual growth in the range of 2–3.5%.
Recovery should begin in the second quarter when restrictions are expected to be eased and
vaccination is expected to succeed. Recovery should be supported by consumers’ purchase and
travel decisions which were postponed during the restrictions and savings growth. Economic growth
projections are also supported by good prospects for export of services in the second half of the year
because the downturn in our main export markets, Finland and Sweden, has been less steep than
expected. Full recovery of the tourism sector, however, is expected to take longer than that of other
sectors which were hit the hardest by the COVID-19 crisis. Unemployment is forecast to rise to 10%
in the first half of the year and to start falling rapidly thereaer. Consumer prices, which fell by 0.4%
in 2020, are not expected to increase significantly in 2021; price increase should remain in the range
of 1–2%.
16
The COVID-19 crisis, which evolved into a pandemic in early 2020, has had a direct impact on the
performance of Tallinna Sadam through the cross-border travel restrictions imposed by countries.
In 2020, the restrictions caused a drastic fall in the number of international route passengers and
the cancellation of the entire summer cruise season. The summer charter of the icebreaker Botnica
was also shorter than in 2019 because COVID-19 related restrictions disrupted the production
operations of the Canadian charterer. Since the slowdown in economic activity had a strong impact
on specific sectors only, cargo volumes remained largely stable and the throughput of some cargo,
particularly liquid bulk cargo, even grew. As a result, the economic environment of 2020 affected
the Group primarily through the decline in international passenger business and related revenue in
the Passenger harbours segment. On the other hand, the changes in the economic situation have
forced us to streamline the organisation to further increase our efficiency and to reduce or postpone
planned costs.
15
IMF World Economic Outlook Update, January 2021.
16
According to the media, Statistics Estonia, Swedbank, SEB.
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6.3 Impacts of the COVID-19 pandemic
The protective measures imposed by countries due to the COVID-19 pandemic began to affect
the Group from the second half of March 2020. As the measures focused on minimizing contact
between people and cross-border movement, they had the greatest impact on the tourism sector
and passenger traffic, which in turn mainly affected the performance of the Group’s Passenger
harbours segment.
The state of emergency declared in Estonia in March 2020 lasted until 17 May and at the time
foreign citizens were banned from entering the country in both Estonia and Finland. Labour
migration between Estonia and Finland resumed in the middle of May. Estonia opened its border to
arrivals from most European countries from 1 June and Finland opened its border to all arrivals from
Estonia on 15 June. Due to changing restrictions and quarantine requirements in most European
countries, cruise companies cancelled the cruises they had scheduled and there were no cruise
ship calls in 2020. In connection with a rise in the infection rate in September, Finland re-imposed
restrictions on arrivals from Estonia from 28 September. Only people who travel for work, are in
transit, or have other compelling reasons can enter Finland without the quarantine requirement.
From 15 June 2020, people arriving in Estonia from other countries are subject to a two-week self-
isolation requirement, depending on the weekly infection rate per 100,000 inhabitants in the country
of departure and the established limit. Cruises between Estonia and Sweden are banned and Sweden
has been classified as a high-risk country since spring, which means that all arrivals from Sweden
are subject to the two-week self-isolation requirement.
Due to the fall in demand caused by the restrictions, international ferry operators have made a
number of adjustments to their timetables and the ferries serving the routes. The Tallinn-Stockholm
and the Tallinn-St Petersburg routes have been closed since the middle of March while new
temporary routes have been added, such as Paldiski-Sassnitz (from Estonia to Germany) during the
state of emergency in Estonia, Tallinn-Mariehamn from June, and Tallinn-Turku from July, but these
have had a smaller effect. At the end of June, a record number of vessels sailed between Estonia
and Finland and ferry traffic was busier than ever. However, the total number of passengers was
almost half smaller than it was in the same period in 2019 and began to decline again towards the
end of the year.
There have been no restrictions on cargo transport between countries and cargo throughput at
the Group’s harbours increased due to growth in the volume of liquid bulk cargo and ro-ro cargo.
According to management’s assessment, cargo transport may be affected by the general economic
crisis, caused by the virus containment measures, in the next quarters, mainly through container and
ro-ro cargo, although the impacts feared for the second half of 2020 did not materialise.
Domestic ferry service on routes between mainland Estonia and the islands of Saaremaa and
Hiiumaa that are operated by OÜ TS Laevad, a subsidiary of AS Tallinna Sadam, continued through
the state of emergency but with reduced timetables. The restrictions on movement between
mainland and the two islands were lied on 8 May and normal passenger traffic has resumed with
measures taken to prevent the spread of the virus. During the summer months, the number of
vehicles carried even increased year on year. The changes resulting from the restrictions did not
have a significant impact on the Ferry segment because a major share of ferry service revenue is
made up of a fixed fee that does not depend on the number of trips or passengers.
The multifunctional icebreaker Botnica, which is operated by OÜ TS Shipping, a subsidiary of AS
Tallinna Sadam, has continued its normal operations and its revenue (segment Other) has not
been significantly affected by the COVID-19 pandemic. The number of charter days decreased by 5%
year on year because Botnica’s summer charter was shorter than a year earlier due to COVID-19
containment measures, which disrupted the Canadian charterer’s production operations.
The Group has taken all the necessary measures and cooperates closely with the authorities
to prevent the spread of the virus and to protect people’s lives and health. From 1 September,
passengers arriving from high-risk countries can take a COVID-19 test in the passenger terminals of
Old City Harbour in order to reduce the period of self-isolation and to be able to return to work more
quickly.
To compensate for the decrease in revenue in the changed circumstances, we have critically
reviewed all of the Group’s expenses but due to a large share of fixed costs, a decline in the Group’s
profitability, particularly in the Passenger harbours segment, is inevitable. To improve the Group’s
cash flow, some planned investments have been postponed but ongoing investments have not
been suspended. The Group’s management believes that the impacts of COVID-19 do not endanger
the Group’s ability to continue as a going concern.
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6.4 Overview of the market: passengers
In terms of vessel traffic, the Baltic Sea is one of the busiest inland seas in the world. Almost 85
million people live in the catchment area of the Baltic Sea and vessels are one of the main means of
transport for internal tourists in the region. It is estimated that usually over 40 million passengers a
year use vessels to travel across the eastern part of the Baltic Sea, which is why international ferry
traffic in this area is the busiest in the Baltic Sea region. Tallinn is the second-largest passenger
port in the area aer Helsinki. The largest ferries of the Baltic Sea, mostly designed for passenger
traffic, also travel between those ports. Compared to other areas around the Baltic Sea, busy vessel
traffic between Estonia, Finland and Sweden is supported by the facts that the distance between the
destination ports is optimal for ferry traffic and most of the traffic is between the countries’ capitals
which are all located on the coast.
Other contributing factors are close economic relations between Estonia and Finland, and the
region’s growing attractiveness as a destination for Asian tourists who aer arriving by airplane
increasingly travel between the countries of the Baltic Sea region by ferry. Accordingly, international
ferry traffic between Tallinn and its main destination ports – Helsinki and Stockholm – accounts for a
significant share of the business of Tallinna Sadam.
Number of passengers in the eastern part ports of the Baltic Sea
* Excluding ports where most of the number of passengers results from short trips (lasting up to 1 hour)
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Due to the global COVID-19 crisis that broke out in early 2020 and the restrictions on cross-border
movement imposed by European countries in early spring to prevent the spread of the virus, the
number of passengers in the Baltic Sea region plummeted in 2020 as it did all over the world.
Passenger traffic on international routes, which had been at the usual level in the first months of
the year, essentially ceased in the Baltic Sea from mid-March, recovered somewhat in a couple of
summer months and declined again in the autumn due to the tightening of restrictions during the
second wave of the pandemic. Therefore, the results for 2020 are not directly comparable with those
of previous years. The largest ports on the Baltic Sea remained the largest but Tallinn rose from the
third to the second place, mainly because passenger traffic through Stockholm dropped more. The
largest port in terms of the number of passengers was Helsinki (4.8 million passengers), followed by
Tallinn (4.3 million passengers) and Stockholm (3.6 million passengers). Altogether, the number of
passengers passing through the largest ports in the eastern part of Baltic Sea decreased by 66% in
2020, falling from 44.1 million passengers to 15.1 million passengers.
The Baltic Sea region has had a reputation of being a rapidly developing and swily growing global
cruise tourism area. Because of the COVID-19 pandemic, in 2020 international tourism, including
cruise tourism, essentially halted across the world, including in the ports of the Baltic Sea where
the main cruise season is during the warm summer months.
In 2020, the number of traditional cruise passengers in the region was practically zero compared
with 5.4 million a year earlier (5.1 million for the reference group in the graph). Copenhagen and Kiel
are usually the busiest cruise ports in terms of the number of cruise passengers. They are also the
main ports where the Baltic Sea cruises start and end and in previous years they saw the biggest
growth in cruise passenger numbers. Tallinn was the third-largest cruise port but the lead over the
next ones was small.
Largest cruise ports of the Baltic Sea
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6.5 Overview of the market: cargo
The cargo market overview comprises major ports of countries situated on the east coast of the
Baltic Sea (Poland, Lithuania, Latvia, Estonia, and Russia) and large Finnish ports on the Gulf of
Finland, many of which are also involved in handling east-west transit cargo flows. In previous years,
the operations of large ports on the eastern coast of the Baltic Sea grew steadily but in 2020 their
cargo throughput declined due to the global COVID-19 crisis. In 2020, the total cargo turnover of the
ports was 511 million tonnes, a decline of 42 million tonnes (roughly –8%) year on year.
Together with the cargo throughput of smaller Estonian ports (8.1 million tonnes), the market
volume of cargo handled by Tallinna Sadam and its competitors in 2020 was 518.9 million tonnes,
a decrease of 42.8 million tonnes (–7.6%) year on year.
In terms of cargo types, the biggest decline of 2020 was in the volume of liquid bulk cargo, which
dropped by 27.5 million tonnes (–11%), mainly through a decrease in the volume of crude oil at
Russian and Lithuanian ports. The volume of container cargo decreased by 4 million tonnes (–5%)
because of a decline at Russian, Lithuanian and Polish ports. The volume of dry bulk cargo decreased
by 6 million tonnes (–4%), mainly due to a decrease in the volume of coal at Latvian ports. The
decrease in dry bulk cargo was somewhat offset by an increase of almost 5 million tonnes in
the volume of grain (+28.5%), mainly at Polish and Lithuanian ports. The volume of ro-ro cargo
remained stable year on year. The volume of general cargo decreased by 5 million tonnes (–13.8%),
primarily through a decrease in general cargo at Finnish ports.
The largest growth in cargo throughput was achieved by Tallinna Sadam (+ 1.4 million tonnes,
+7%, mainly due to liquid bulk cargo) and the Port of Gdynia (+0.6 million tonnes, +2.7%, mainly
due to dry bulk cargo). Cargo throughput decreased the most at the Port of Primorsk (–11.7 million
tonnes, –19%, due to liquid bulk cargo) and the ports of Riga and Ventspils (mainly due to coal and
liquid bulk cargo) by –9.1 million tonnes (–-28%) and –7.6 million tonnes (–37%), respectively.
Because of the above changes, in the comparison of Russian and Baltic ports the market shares of
Russian, Lithuanian and Estonian ports increased while the market share of Latvian ports decreased.
The market shares were: Russian ports 63.7%, Estonian ports 10.3%, Latvian ports 11.4% and
Lithuanian ports 14.7% (the corresponding figures for 2019: 62.3%, 9.5%, 14.7% and 13.4%).
Cargo volume of the largest ports on the eastern coast of the Baltic Sea
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The largest cargo ports on the eastern coast of the Baltic Sea were Ust-Luga (103 million tonnes,
market share 20%), St Petersburg (60 million tonnes, 12%) and Klaipeda (56 million tonnes, 11%).
Tallinna Sadam was in the ninth position with a market share of 4.1% (2019: 3.5%).
The volume of cargo handled in Estonian ports amounted to 39 million tonnes in 2020. Tallinna
Sadam as the largest port accounted for 55% of the total Estonian ports’ cargo volume (2019:
51%).
Market share of the largest ports on the eastern part of the Baltic Sea Market share of the Estonian ports
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6.6 Results of operations
As a result of the COVID-19 pandemic, the year 2020 was both turbulent and fairly stable for
Tallinna Sadam because the crisis affected our four main operating segments in different ways. Our
largest business segment, Passenger harbours, was hit hard: due to the crisis, its various business
volumes declined by 50–100%. The other harbour operations segment, Cargo harbours, remained
strong, however, and delivered the past five years’ highest cargo throughput. The full-year results
of the Ferry segment and the segment Other remained stable. Due to the weaker performance of
Passenger harbours, our revenue, operating profit and EBITDA decreased significantly: –18%, –31%
and –21%, respectively. At the same time, cargo throughput grew by 1.4 million tonnes to 21.3
million tonnes (+7.0%). Growth was driven by a strong increase in liquid bulk cargo (+1.5 million
tonnes) and supported by growth in ro-ro cargo (+0.2 million tonnes, +3.7%). Aer 12 consecutive
years of growth, the number of passengers dropped by 59% to 4.33 million. Travel restrictions
affected all routes as well as traditional summer cruises, which practically ceased in the Baltic Sea
region in 2020.
In the provision of ferry service between Estonia’s mainland and two largest islands, the pandemic
brought about a halt in passenger traffic in March and April and a slight decline in the number of
trips (–4%). A lower number of trips, operation without an additional vessel during the summer
months (additional trips were made by the existing replacement ferry) and a decrease in some
contractual fee rates due to a decline in the Estonian fuel price index caused a certain decrease in
revenue, which was offset by comparable cost savings and the segment ended the year with its
highest-ever adjusted EBITDA.
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The year was stable and therefore successful for the multifunctional icebreaker Botnica. Aer the
end of the icebreaking season in Estonian waters, Botnica was chartered out for the summer and
provided escort and ice management services in Arctic waters around the Baffin islands in Northern
Canada. Although the charter period was 5% shorter than in 2019 due to COVID-19 restrictions
which affected the Canadian charterer, this can be considered as a rather small impact.
In terms of segments, revenue and operating result decreased mainly in the Passenger harbours
segment. However, the operating result improved in the Cargo harbours segment, weakened slightly
in the segment Other and remained stable in the Ferry segment.
The Group’s revenue decreased by EUR 23.2 million (–18%) to EUR 107.4 million in 2020. In terms
of revenue streams, vessel dues and passenger fees revenue decreased in the Passenger harbours
segment due to travel restrictions imposed in the region. Expenses related to operating activities
declined by EUR 5.1 million (–6.4%), operating profit decreased by EUR 16.1 million (–31%) and
net profit decreased by EUR 15.9 million (–36%). The added value created by the Group
17
, that is
the Group’s contribution to the Estonian economy, was EUR 79.1 million in 2020 (2019: EUR 94.6
million). The figure declined due to a decrease in operating profit brought about by the pandemic.
17
Added value = operating profit + personnel expenses + depreciation, amortisation and impairment losses.
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6.6.1 Number of passengers
The COVID-19 pandemic which spread across the world in 2020 and the resulting cross-border
travel restrictions have caused an unprecedented drop in passenger numbers. The number of
passengers passing through our harbours, which had been growing steadily for more than ten years,
dropped from a record 10.64 million to 4.33 million in 2020, a decrease of 6.3 million passengers
year on year (–59%). The decline was sharp but it is attributable to a non-recurring external factor.
Based on current information, it will not affect the increasingly closer relations between Estonia
and Finland, both in tourism and economy, which has underpinned continuous growth in passenger
numbers. The services required for the recovery of the passenger business are still available. Ferry
operators are ready to ensure frequent ferry service. Our harbours have modern and comfortable
passenger facilities, which we continued to improve in 2020. All this has made travelling by ferry
increasingly easier and more convenient.
The number of passengers fell sharply on all routes in 2020. The biggest drop occurred on the
busiest route, Tallinn-Helsinki, where the number of passengers fell by 4.8 million (–55%). The
number of passengers on the Tallinn-Stockholm route declined by 0.8 million (–85%) and the
number of traditional cruise passengers dropped by 0.7 million (–100%). Due to the restrictions
imposed to prevent the spread of the virus and the resulting decrease in the demand for travel
services, ferry operators reduced timetables on the Tallinn-Helsinki route, but it was done flexibly
based on the situation during the year. The Tallinn-Stockholm route was closed in March and at
the date of release of this report it has not yet been reopened. There were no traditional cruise
ship calls in 2020. Despite a major decline in the number of passengers, ferry operators did not
reduce their timetables accordingly because they continued to operate mostly as ro-ro cargo
carriers. Governments have supported such operations during the COVID-19 outbreak due to their
economic significance. Because of the decrease in the number of passengers on the main routes, in
the summer ferry operators sought opportunities to transport passengers on other and new routes
but the number of relevant port calls remained small. All in all, the number of port calls by ferries
serving international routes decreased by 5.5% in 2020.
The high season for cruise ship calls usually lasts from May to September. The seasonality in the
number of passengers is regular by nature and, therefore, in normal circumstances, has no particular
impact on the financial performance of Tallinna Sadam.
Number of passengers by routes
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6.6.2 Cargo volume
Despite the crisis caused by COVID-19, which had an unprecedented effect on the global economic
environment in 2020, cargo throughput at our harbours grew by 1.4 million tonnes (+7%) to 21.3
million tonnes, which is the highest level recorded in the past five years. In terms of cargo types,
growth was driven by an increase in liquid bulk cargo (+1.5 million tonnes, +20%) and ro-ro cargo
(+0.2 million tonnes, +3.7%) and partly offset by a slight decrease in other cargo types.
In 2020, the volumes of liquid bulk cargo continued to fluctuate by quarter due to the project-
based nature of the freight, changes in the world market prices of different liquid bulk products and
the business opportunities found by the terminals or their customers. The volume of ro-ro cargo
grew fairly evenly throughout the year, reaching a record level of 5.6 million tonnes. Most of the
ro-ro cargo moved in the north-south direction on the Tallinn-Helsinki and Muuga-Vuosaari routes,
reflecting busy trade between and through the neighbouring countries, which was not significantly
affected by the COVID-19 crisis. Since most of the ro-ro cargo moves on the Tallinn-Helsinki route,
passing through Old City Harbour, relevant revenue is recognised in the Passenger harbours segment.
The volume of general cargo decreased by 0.19 million tonnes (–31%), primarily because pulpwood
exports declined and in 2019 there was one-off project cargo (building materials for the Baltic
Connector gas pipeline). The volumes of other cargo types remained more or less stable. The volume
of dry bulk cargo decreased somewhat (–97 thousand tonnes, –2.1%) as did the volume of container
cargo (–27 thousand tonnes, –1.5%). The volume of container cargo in TEUs
18
decreased by 9
thousand units to 214 thousand TEUs.
In terms of transport directions, the biggest changes occurred in transit cargo which grew by 1.0
million tonnes (+9.9%) and Estonia’s exports which grew by 0.4 million tonnes (+7.8%). In terms of
the main cargo types, liquid bulk accounted for 43%, ro-ro for 26%, dry bulk for 21% and container
cargo for 9% of the total cargo volume (2019: 38%, 27%, 23% and 9% respectively). In terms of
transport directions, transit accounted for 52%, exports for 26% and imports for 21% of the total
cargo volume (2019: 51%, 26% and 23% respectively).
Cargo throughput at our harbours is not seasonal by nature. Typically, fluctuations in cargo volumes
result from changes in market conditions (including changes in the world market prices of the cargo)
or volatility in the volumes of project cargo.
Cargo volume by cargo types
18
TEU (Twenty-foot Equivalent Unit) – Standard unit for counting containers and describing
the capacities of container ships or terminals. One 20-foot container equals one TEU.
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6.6.3 Ferry service 6.6.4 Multifunctional icebreaker Botnica
In October 2016, TS Laevad entered a new business line: providing domestic ferry service between
Estonia’s mainland and biggest islands (Saaremaa and Hiiumaa) under a public transport service
contract with the state (effective from 1 October 2016 to 30 September 2026). The service must be
provided according to the schedule approved by the state with up to four ferries at a time (during
the summer peak periods with up to five ferries). Most of contract revenue is fixed but some fixed
revenue components are adjusted for price indices to reflect changes in the cost of living. A minor
part of contract revenue is variable, depending on the number of trips made. Variable revenue is also
adjusted for movements in indices. Contract revenue is covered by ticket sale revenue and public
transport support received from the state to cover the difference between ticket sale revenue and
the service revenue agreed in the contract.
In 2020, the Group’s ferries made a total of 20,118 trips, which is 4.2% less than a year earlier,
serving 2.0 million passengers (–18%) and 1.0 million vehicles (–8%). The figures declined because
in spring passenger traffic between the mainland and the islands was suspended to contain the
spread of the pandemic. Based on an agreement with the state (the customer of the ferry service),
346 additional trips were made by a stand-by vessel to increase service capacity during the summer
(June-August). In the summer of 2019, 534 additional trips were made by an additional vessel,
which was put in service in agreement with the state.
Since the beginning of 2013, we have been providing Estonian ports on the Gulf of Finland with
icebreaking service during the icebreaking period, which lasts from December to April, according to
10-year agreement. In early 2021, TS Shipping won the public contract for delivering icebreaking
service also during the next 10-year period. The contract pays a fixed fee for a season of 120 days
that is adjusted for changes in the consumer price index. Outside the icebreaking season, we charter
the icebreaker Botnica out for different maritime support operations. The availability and profitability
of summer work depends on the situation in the charter market for offshore support vessels. The
price and demand levels are strongly influenced by oil producers, which have been the main buyers
of relevant services. Aer the crash of the oil price in 2015, demand for the services of offshore
support vessels plummeted and relevant charter fees dropped to their ten years’ lowest levels where
they have more or less remained to date.
To secure work for Botnica outside the icebreaking season, in June 2018 TS Shipping signed a five-
year frame agreement with the Canadian company Baffinland Iron Mines. The customer confirms its
needs at the beginning of each year and, where necessary, commissions additional days during the
season. In 2020, the charter period was 12 days shorter than in 2019 because COVID-19 related
restrictions disrupted the charterer’s production operations. The fee was adjusted for changes in the
consumer price index.
Ferry segment volumes MPSV Botnica charter
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6.7 Revenue and expenses
Revenue and EBITDA Revenue streams
Tallinna Sadam ended the year 2020 with revenue of EUR 107.4 million, EUR 23.2 million (–18%)
less than in 2019. Adjusted EBITDA for 2020 was EUR 58.4 million, EUR 15.9 million (–21%) down
from 2019. Due to a slightly larger change in the latter figure, adjusted EBITDA margin also declined
slightly: from 57% to 54%. In October 2016, the Group’s business lines were supplemented with
ferry service, which has increased both revenues and expenses.
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All revenue streams decreased. The fall was the sharpest in passenger fee revenue, which dropped
by EUR 10.0 million (–59%) to EUR 7.0 million due to an equivalent fall in the number of passengers.
Vessel dues revenue also decreased significantly, dropping by EUR 9.1 million (–20%) to EUR 37.6
million. The decline is mainly attributable to the cancellation of the cruise season as well as reduced
ferry timetables and a slight decrease in the volumes of general, dry bulk and container cargo.
Growth in the volume of liquid bulk cargo had a positive effect on vessel dues revenue.
Revenue from the provision of domestic ferry service decreased by EUR 1.2 million to EUR 29.0
million, mainly because the number of extra trips made during the summer season was smaller and
they were provided without an additional ferry and because voyage fee revenue declined due to
fewer trips (COVID-19 restrictions) and a lower fee rate, resulting from a fall in the fuel price index
(negative indexation). Revenue from electricity sales decreased by EUR 1.0 million (–17.8%) to EUR
4.5 million, mostly because demand at cargo harbours declined, the volume of electricity sold as an
agent decreased and the weather was warmer than in 2019. Revenue from other services dropped
by EUR 0.6 million (–26%) through a COVID-19 related decrease in the volume of services, such as
sales of water to cruise ships and advertising space at passenger terminals. Charter fee revenue
from the icebreaker Botnica decreased by EUR 0.5 million (–5.5%) to EUR 9.1 million because the
summer charter was somewhat shorter due to COVID-19 related restrictions, which disrupted the
charterer’s production operations. The effect was mitigated by the indexation of charter fees. Lease
income declined by EUR 0.4 million (–3.2%) to EUR 11.6 million, primarily due to rent reductions at
Old City Harbour where pandemic related restrictions have had the strongest impact. Cargo charge
revenue decreased by EUR 0.3 million (–4.8%) despite growth in cargo volumes, because the volume
and share of liquid bulk cargo (particularly the handling of vessel-terminal-vessel cargo), whose
cargo charges are lower, increased and penalty income decreased.
Other income grew by EUR 2.0 million to EUR 3.0 million in 2020. The main sources of growth were
gain on the sale of assets used in the operations of Paljassaare Harbour and, to a lesser extent,
disposal of land in the Industrial Park of Muuga Harbour with a view to expanding the operations of
a hinterland logistics terminal. Income from government grants decreased (EUR –0.1 million, –14%)
due to a decline in costs eligible to external support.
Expenses related to operating activities (operating expenses, personnel expenses, and depreciation,
amortisation and impairment losses) totalled EUR 74.4 million, EUR 5.1 million down from 2019
(–6.4%).
Expenses of operating activities
In terms of expense items, the biggest decrease was in operating expenses, which dropped by
EUR 5.8 million (–15.8%) through a decline in different cost items. Fuel and energy costs decreased
the most (EUR –2.9 million, –25.9%), both in ferry operations, where fuel costs dropped due to
lower fuel prices and optimisation of the vessels’ operating modes, and in harbour operations,
where consumption decreased and the price of electricity sold as an agent declined. Non-current
asset repair costs decreased (EUR –1.9 million, –26.8%), mainly through the cost-cutting measures
implemented in harbour operations due to the COVID-19 crisis which included reducing and deferring
planned repairs.
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Expenses on services purchased to provide services to ships declined as well (EUR –1.1 million,
–20.2%), primarily due to the cancellation of the cruise season, reduced ferry timetables and a
significantly lower number of passengers (less waste received from ships). Expenses on port dues
incurred from the provision of public ferry service increased due to the rise in port dues but the state
(the customer of ferry service) covered the difference with an equivalent increase in the service fee.
Expenses on short-term leases decreased (EUR –0.6 million, –100%) because the Ferry segment
did not lease an additional vessel for the summer season. Expenses on the acquisition of assets
of insignificant value grew (EUR +0.5 million, +36.6%) in connection with the reconstruction and
refurbishment of Terminal D at Old City Harbour but they were of a one-off nature. Within other
operating expenses, allowances for expected credit losses grew, mainly because of the deterioration
of the economic environment.
Personnel expenses decreased by EUR 0.4 million (–1.9%) due to the combined effect of a reduction
of the number of employees and a temporary reduction of salaries, and one-off downsizing
expenses.
Depreciation, amortisation and impairment expenses grew by EUR 1.1 million (+4.6%), mainly
through growth in depreciation and amortisation in harbour operations where non-current assets
increased at Old City Harbour in connection with the reconstruction of Terminal D, the construction of
onshore electricity supply systems for ships and the completion of a shore promenade,
and at Muuga Harbour in connection with the completion of several projects undertaken to increase
the capacity to serve ro-ro traffic. Depreciation, amortisation and impairment expenses also grew in
the Ferry segment due to the installation of an innovative energy saving battery bank solution on
the ferry Tõll and somewhat due to growth in depreciable assets, which resulted from scheduled dry
dock maintenance of ferries. Impairment losses on non-current assets increased by EUR 0.35 million.
Other expenses did not change significantly (EUR +0.07 million).
Operating profit for 2020 was EUR 35.6 million. Compared to 2019, operating profit decreased by
EUR 16.1 million (–31.2%) through a revenue decline, which significantly exceeded the combined
effect of a decrease in expenses of a mostly fixed cost nature and growth in other income. Due to
the decrease in operating profit, operating margin, which reflects the Group’s operating efficiency,
also dropped: from 39.6% to 33.1%. Operating profit decreased in the Passenger harbours segment
and, to a lesser extent, in the segment Other. The decrease was partly offset by growth in the
operating profit of the Cargo harbours segment.
Adjusted EBITDA (earnings before depreciation, amortisation and impairment losses, finance income
and costs, and income tax expense, adjusted for amortisation of government grants) declined by EUR
15.9 million (–21.4%) to EUR 58.4 million, mostly due to a fall in the Passenger harbours segment.
Adjusted EBITDA margin declined from 56.9% to 54.4%.
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6.8 Profit
The development of profit was also influenced by finance income and costs, and income tax on
dividends. Finance income did not change but finance costs decreased by EUR 0.1 million (–5.1%),
mostly due to a decrease in expenses on derivative financial instruments. In 2020, the Group’s loss
on its investment in the associate Green Marine, which is accounted for using the equity method,
amounted to EUR 0.46 million, compared with a profit of EUR 0.24 million for 2019 (EUR –0.71
million). The associate incurred a loss due to a decline in the handling of ship-generated waste ,
caused by a decrease in the number of cruise ship and ferry calls and a significant fall in the number
of passengers. In addition, the performance of the associate Green Marine was affected by a record
low oil price in the middle of the year, which temporarily suspended profitable sales of the oil
product recovered from oil-containing waste. Profit before income tax amounted to EUR 33.4 million,
a decrease of EUR 16.7 million (–33.4%) compared to 2019.
The Group achieved a net profit of EUR 28.5 million in 2020, EUR 15.9 million less than in 2019.
Net profit decreased less than profit before tax because income tax on dividends was about EUR 0.9
million lower due a smaller dividend distribution (EUR 30.2 million in 2020 compared with EUR 35.2
million in 2019).
In the comparison of the Group’s profit for different years, profit is adjusted for significant one-
off income and expenses and income tax expense on dividends. Aer adjustments for income tax
on dividends of EUR 4.9 million and one-off items consisting of gains on non-current asset sales
and impairment losses of EUR 1.72 million, adjusted profit for 2020 amounts to EUR 31.7 million.
Profits for 2019, 2018, 2017 and 2016 have been adjusted for income tax expense on dividends
of EUR 5.8 million, EUR 26.2 million, EUR 12.0 million and EUR 8.75 million, respectively, and one-
off impairment losses of EUR 0.25 million, EUR 0.3 million, EUR 5.95 million and EUR 0.27 million,
respectively. The decrease in adjusted profit (EUR –18.7 million) is mainly attributable to a decrease
in operating profit.
Profit
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6.9 Segment reporting
The Group’s segments are Passenger harbours, Cargo harbours, Ferry and Other. Further information
about segments is provided in note 3 to the financial statements.
In terms of segments, annual revenue dropped primarily in the Passenger harbours segment (EUR
–21.1 million, –42.3%) and slightly in other segments: in the Ferry segment by EUR –1.1 million
(–3.6%), in the segment Other by EUR –0.6 million (–5.9%) and in the Cargo harbours segment by
EUR –0.4 million (–1.1%). Adjusted EBITDA for the year declined in the Passenger harbours segment
and in the segment Other but increased in the Cargo harbours segment and, to a lesser extent, in
the Ferry segment.
The revenue of the Passenger harbours segment decreased because the number of passengers
declined in connection with COVID-19 related restrictions, which led to the reduction of ferry
timetables and the cancellation of the cruise season. As a result, revenue from vessel dues and
passenger fees contracted. The segment’s revenue was supported by the temporary transfer of the
Muuga-Vuosaari route (Cargo harbours segment) to Old City Harbour, effective from mid-March to
late June, due to the temporary reinstatement of border checks. Revenue from the sale of electricity
and services decreased, as did lease income due to rent concessions provided to lessees.
The revenue of the Cargo harbours segment decreased only slightly because cargo throughput
grew in spite of the crisis. In terms of revenue streams, vessel dues revenue grew although it was
negatively affected by the temporary transfer of the Muuga-Vuosaari route to Old City Harbour as
described above (Passenger harbours segment). Revenue from the sale of electricity declined due
to a decrease in the volume of electricity distribution service and the volume and price of electricity
sold as an agent. Cargo charge revenue also decreased somewhat, both due to the temporary
transfer of the Muuga-Vuosaari route to Old City Harbour and growth in the volume and share of
liquid bulk cargo whose cargo charges are lower.
The revenue of the Ferry segment decreased mostly during the summer season when the state (the
customer) ordered a smaller number of extra trips and did not order an additional ferry to be put in
service. Instead, extra trips were made with an existing stand-by vessel. Contract revenue decreased
through a smaller number of trips (due to COVID-19 related restrictions) and a fall in the voyage fee
rate (due to a decrease in the fuel price index).
The revenue of the segment Other decreased because the summer charter of the icebreaker
Botnica was shorter than in 2019 due to COVID-19 related restrictions, which disrupted the
production operations of the Canadian charterer. The indexation of the ice-breaking and charter fee
rates to the inflation index had a slight positive effect on revenue.
Revenue by EBITDA and segments
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In terms of segments, adjusted EBITDA for the year decreased the most in the Passenger harbours
segment (EUR –17.7 million, –54%), due to revenue decline. This was partly offset by growth of
EUR 3.1 million (+14%) in the adjusted EBITDA of the Cargo harbours segment, where cost savings
exceeded the decrease in revenue. In the segment Other, adjusted EBITDA dropped by EUR 1.5
million (–29%) because, in addition to a decrease in revenue, expenses increased somewhat and
the Group incurred a loss from its associate Green Marine, which is accounted for under the equity
method. Adjusted EBITDA for the Ferry segment increased somewhat, because the decrease in
expenses slightly exceeded the decrease in revenue, and reached an all-time high of EUR 14.1
million.
Adjusted EBITDA margin dropped from 56.9% to 54.4% as a result of a steep decrease in the
Passenger harbours segment due to COVID-19 related restrictions.
Results by segments
2020 2019
EUR '000
Passenger
harbours
Cargo
harbours
Ferry Other Total
Passenger
harbours
Cargo
harbours
Ferry Other Other
Revenue 28,770 39,683 29,705 9,200 107,358 49,826 40,113 30,825 9,772 130,536
Adjusted EBITDA 15,140 25,377 14,101 3,805 58,423 32,792 22,248 13,932 5,320 74,292
Operating profit 8,665 16,685 8,209 2,003 35,562 26,367 14,151 8,289 2,872 51,679
Adjusted EBITDA margin 52.6% 63.9% 47.5% 41.4% 54.4% 65.8% 55.5% 45.2% 54.4% 56.9%
Changes 2020/2019
2020
EUR '000
Passenger
harbours
Cargo
harbours
Ferry Other Total
Revenue –21,056 –430 –1,120 –572 –23,178
Adjusted EBITDA –17,652 3,129 169 –1,515 –15,869
Operating profit –17,702 2,534 –80 –869 –16,117
Adjusted EBITDA margin –13.2% 8.5% 2.3% –13.1% –2.5%
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6.10 Investments and development prospects
The Group’s capital investments in 2020 amounted to EUR 37.1 million, which is EUR 7.7
million (+26%) more than in the prior year and recent years’ highest figure. Investments in harbour
infrastructure assets, acquisition of non-current assets and improvements to existing infrastructure
assets totalled EUR 39.6 million but the figure was lowered by prepayments made for investments
in 2019. Investments in the icebreaker Botnica amounted to EUR 0.9 million and investments in the
provision of ferry service totalled EUR 2.1 million.
The investments of 2020 were mainly related to Old City Harbour, where major investments in
the improvement of the environment and travel conditions continued despite the crisis. The largest
completed projects were the reconstruction of passenger terminal D and the construction of a
nearby multi-storey car park. The installation of on-shore power supply systems and auto-mooring
equipment for ferries reached the final phase and the construction of a cruise terminal and a
footbridge across the canal of the Admiralty Basin was started. The largest works at Muuga Harbour
were related to improving the conditions of ro-ro traffic. Dredging works were carried out in the
turning basin and approach canal of Paldiski South Harbour to be able to receive larger vessels. The
largest projects in the Ferry segment were the installation of a battery bank energy solution on the
ferry Tõll in order to achieve energy savings and make the ferry more environmentally friendly and
scheduled smaller-scale dry dock maintenance of ferries. On the icebreaker Botnica, the second part
of the machinery control system was renewed and other technical systems were also upgraded.
The largest investment planned for 2021 is the start of the construction of a new ferry, which
depends on the order to be placed by the state. Other investments are mainly related to harbour
operations at Old City Harbour where we are planning to complete the construction of a cruise
terminal and a footbridge. We are also planning to begin the reconstruction of the area surrounding
passenger terminal D, which is part of the project designed to transform the harbour area into a
modern and vibrant urban space. The investments made at Old City Harbour are aimed at creating
a modern, environmentally friendly and comfortable environment for growing ferry traffic and
developing the harbour area into an integrated and attractive part of the city. At Muuga Harbour,
we will continue to invest in the quay equipment to increase our capacity to serve ro-ro traffic. Our
icebreaker Botnica will undergo scheduled dry docking. Ferries will also undergo their scheduled dry
docking and we will continue to improve their customer service and ticket sale systems.
Investments
In addition to capital investments, every year we incur substantial research and development
expenditures, which in 2020 amounted to EUR 0.25 million (2019: EUR 0.35 million). Research
and development expenditures of the period were mainly related to environmental studies
and observations, assessments and monitoring of the impacts of harbour operations, and the
preparation of the assessments and dra and detailed plans required for our development plans.
In 2020, we continued planning activities for the execution of various phases of Masterplan 2030
at Old City Harbour. This included studies and surveys for the proceedings carried out by the City of
Tallinn for the adoption of detailed plans for the areas to be developed (6 detailed plans). We are
planning to develop the areas in stages (within 10–15 years), in a manner that will support busy
passenger traffic and integrate the harbour more closely with the city.
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We hope that the impacts of the COVID-19 pandemic will start to subside in 2021 and, as a result,
the business volumes of the Passenger harbours segment will recover slightly, which would also
increase the Group’s total revenue somewhat compared to 2020. It will not be possible continue with
all the cost-cutting measures implemented in 2020 on a long-term basis, which is why operating
expenses will inevitably increase in 2021. However, we expect that revenue growth will exceed the
increase in expenses and, accordingly, we will be able to increase the Group’s profit.
We forecast that in 2021 investments in harbour operations will fall to the usual level of EUR 20
million. Investments in shipping will mainly depend on whether or not the state wishes to order a
new ferry to develop traffic between the Estonian mainland and two largest islands.
6.11 Dividends
The dividend policy of AS Tallinna Sadam sets the target to pay the shareholders regular post-tax
dividends, which from 2021 should amount to at least 70% of the preceding year’s profit, subject
to market conditions, the company’s growth and development plans, taking into account the need
to maintain a reasonable level of liquidity and excluding the impact of non-recurring transactions.
The target for the period 2019–2020 was to distribute a dividend of at least EUR 30 million per
year. The target was met despite the COVID-19 pandemic which had an unprecedented effect on the
global economy in 2020.
In 2020, we distributed our shareholders a dividend of EUR 0.115 per share and EUR 30.2 million
in total on which we paid income tax of EUR 4.9 million, the gross distribution amounting to EUR
35.1 million. We withheld income tax from payments to individuals, making a net distribution of
EUR 30.0 million. In 2019, we distributed our shareholders a dividend of EUR 0.134 per share and
EUR 35.2 million in total on which we paid income tax of EUR 5.8 million, the gross distribution
amounting to EUR 41.0 million. We withheld income tax from payments to individuals, making a net
distribution of EUR 35.0 million. For further information, see note 19 to the financial statements.
Dividends paid
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6.12 Share and shareholders
Tallinna Sadam was listed in the Baltic Main List of the Nasdaq Tallinn Stock Exchange on 13 June
2018. The ticker symbol of the share is TSM1T and the ISIN code is EE3100021635. The company
has 263,000,000 ordinary shares of which 176,295,032, that is 67.03%, are held by the Republic
of Estonia. The par value of a share is EUR 1. Each share carries one vote at the general meeting of
the shareholders. The dynamics of the closing price of the AS Tallinna Sadam share and the daily
turnover of shares traded since listing on the Nasdaq Tallinn Stock Exchange, that is from 13 June
2018 to 31 December 2020, is presented in the graph below.
The opening price of the share at the beginning of 2020 was EUR 1.99. The closing price of the
share at 31 December 2020 was EUR 1.8. The company’s market capitalisation at 31 December
2020 was EUR 473.4 million (2019: EUR 522.1 million). The dynamics of the price of the Tallinna
Sadam share in comparison with the OMX Baltic Benchmark GI index is presented in the graph below.
The dynamics of the closing price of the AS Tallinna Sadam share and the
daily turnover of shares traded since listing on the Nasdaq Tallinn Stock
Exchange, that is from 13 June 2018 to 31 December 2020
The dynamics of the price of the Tallinna Sadam share
in comparison with the OMX Baltic Benchmark GI index
Source: nasdaqbaltic.com
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In 2020, there were 47,555 transactions (2019: 9,412 transactions) with the Tallinna Sadam share
in which 20.4 million shares (2019: 15.5 million shares) changed hands and the total turnover of
the transactions was EUR 36.1 million (2019: EUR 31.1 million). The number of transactions has
increased significantly year on year because banks have lowered their transaction fees, which has
triggered a surge in retail investors’ trading activity. Turnover has increased as well but at a slower
pace.
At 31 December 2020, the company had 15,433 shareholders (31 December 2019: 12,796) but
only the Republic of Estonia had an ownership interest exceeding 5% (through the Ministry of
Economic Affairs and Communications).
The shareholder structure has changed somewhat compared to the end of 2019. The share of
international investment funds has decreased from 14% to 12% (–5 million shares), the share of
Estonian retail investors has increased from 10% to 12% (+5.2 million shares) and the share of
Estonian and other Baltic investment and pension funds has remained more or less stable.
The five largest shareholders at 31 December 2020
Name of shareholder Number of shares Interest, %
Ministry of Economic Affairs and Communications 176,295,032 67.0%
State Street Bank and Trust Omnibus (USA) 9,850,682 3.7%
European Bank for Reconstruction and Development (EBRD) 9,350,000 3.6%
SEB Progressiivne Pensionifond 6,484,365 2.5%
LHV Pensionifond L 5,536,570 2.1%
Shareholder structure as at 31 December 2020
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7 Corporate Governance
The governing bodies of Tallinna Sadam are the general meeting, the supervisory board and
the management board. The supervisory board and the management board of Tallinna Sadam
are guided in their activities by the company’s strategy, values, applicable legislation and the
principles of the Corporate Governance Code (CGC) promulgated by the Nasdaq Tallinn Stock
Exchange. Instances of non-compliance with CGC are disclosed and explained in section 7.10 of the
management report.
The controlling shareholder is the Republic of Estonia, which holds an interest in Tallinna Sadam
mainly to:
•
Earn optimal and stable shareholder return through the company’s profitable and efficient
operation in each of its chosen business lines
•
Involve the company in achieving national strategic objectives, taking into account the
company’s field of activity and business interests as well as applicable laws and regulations
•
Apply and promote good corporate governance, corporate social responsibility and business
culture.
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7.1 General meeting
The general meeting is the highest governing body of Tallinna Sadam whose primary
responsibilities include changing the articles of association; increasing and decreasing share capital;
appointing, recalling and remunerating members of the supervisory board (based on the proposal
of the nomination committee); approving the annual report and allocating the company’s profit;
approving a share option programme; appointing and recalling the auditor(s); establishing the rules
of procedure of the supervisory board; deciding the acquisition or disposal of a significant interest
in another company; establishing the management and reporting principles of the subsidiaries; and
adopting other decisions within its power in accordance with the law and the company’s articles of
association.
A general meeting is called by the company’s management board. The annual general meeting is
held once a year, not later than within six months aer the end of the financial year. The agenda
of the general meeting, the proposals of the management and supervisory boards, any dra
resolutions and other relevant materials are made available to shareholders at least three weeks
before the general meeting on the company’s website and through a stock exchange announcement.
Shareholders entitled to participate in a general meeting are determined based on the share register
seven days before the meeting. Each share carries one vote at a general meeting. No shares with
special controlling or voting rights have been issued.
In 2020, the company had an annual general meeting, which was conducted without physical
attendance, and no extraordinary general meetings. Physical attendance was not possible due to
COVID-19 related restrictions on public gatherings in Estonia.
On 29 June 2020, the shareholders of Tallinna Sadam passed resolutions on the approval of
the annual report for 2019, allocating the profit and distributing a dividend of EUR 30.245 million
in total and elected a new supervisory board. Shareholders could vote remotely from 22 June to
29 June and this was the first known occasion in the history of Estonian publicly traded companies
where shareholders could express their opinion solely by voting remotely, either by e-mail or
regular mail or by casting a vote at the head office of the company. Shareholders who did not vote
were deemed to have voted against the resolutions. Votes on the resolutions were cast by 106
shareholders whose shares represented 218,876,934 votes, that is 83.22% of the company’s total
share capital.
Prior to the beginning of the voting period, Tallinna Sadam arranged a public webinar, which was
held on 19 June 2020, to discuss the agenda and explain the voting procedure of the general
meeting. The chairman of the supervisory board Aare Tark, the chairman of the management board
Valdo Kalm and the chairman of the nomination committee Veiko Tali presented the shareholders’
dra resolutions and answered the questions received.
Tallinna Sadam has made available on its website at www.ts.ee the resolutions adopted by general
meetings since July 2017 and the invitations, materials and minutes of general meetings since the
general meeting of 14 May 2019.
The Republic of Estonia (through the Ministry of Economic Affairs and Communications) holds a
67.03% interest in Tallinna Sadam. 32.97% of the shares are held by Estonian and international
investment funds, banks, pension funds and Estonian retail investors. An overview of the shareholder
structure and the largest shareholders as at 31 December 2020 is provided in section 6.12 of the
management report.
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7.2 Supervisory board
The supervisory board is responsible for planning the company’s activities, organising the company’s
management and supervising the activities of the management board. The supervisory board is
accountable to the general meeting. The supervisory board of Tallinna Sadam has six to eight
members, who are appointed for a term of up to five years. At least half of the members of the
supervisory board (31 December 2020: 6 out of 8, including the chairman of the supervisory board)
are independent as required by the CGC. The work of the supervisory board is managed by the
chairman of the supervisory board.
The members of the supervisory board are appointed by the general meeting based on the proposal
of the nomination committee of Tallinna Sadam (through a committee formed by the government for
nominating members of the supervisory boards of companies in which the state has an ownership
interest), which also makes proposals regarding the number of the members of the supervisory board
and their remuneration. Further information on the nomination committee is provided in section 7.4. of
the management report.
The supervisory board has the power to approve the Group’s annual budget and annual report as
well as the Group’s strategy, goals and development directions. In addition, the supervisory board
discusses in its meetings the risks associated with the Group’s operating activities, legal and regulatory
topics, investments, large-scale financing projects and other significant matters related to the Group’s
business.
At 31 December 2020, the composition of the supervisory board was as follows: Aare Tark
(chairman), Urmas Kaarlep, Üllar Jaaksoo, Ahti Kuningas, Raigo Uukkivi, Maarika Honkonen, Riho Unt
and Veiko Sepp. The members that meet the definition of independence as provided in the annex to
the CGC are Aare Tark, Urmas Kaarlep, Üllar Jaaksoo, Maarika Honkoken (formerly Liivamägi), Riho
Unt and Veiko Sepp. In 2020, the general meeting approved a new composition of the supervisory
board (effective from 1 July 2020), consisting of all members of the previous composition and Riho
Unt and Veiko Sepp as new members, and appointed all members of the supervisory board for a
term of two years, that is until 30 June 2022. The new supervisory board re-elected Aare Tark as the
chairman. There were no changes in the remuneration of the members of the supervisory board.
The members of the supervisory board do not include former members of the management board of
Tallinna Sadam or its subsidiaries.
The work of the supervisory board is organised in accordance with the rules of procedure of the
supervisory board approved by the general meeting. Meetings of the supervisory board take place
as needed and are generally held once a month, except during the summer months. In 2020, there
were 10 meetings (2019: 8 meetings). The rules of procedure of the supervisory board and the
supervisory board’s reports to the general meeting (on the annual report of Tallinna Sadam and the
activities of the supervisory board) have been made available on the website of Tallinna Sadam
since 2017 (within the information concerning the general meeting since 2019).
AARE TARK
Chairman of the
Supervisory Board
URMAS KAARLEP
Member of the
Supervisory Board
ÜLLAR JAAKSOO
Member of the
Supervisory Board
AHTI KUNINGAS
Member of the
Supervisory Board
RAIGO UUKKIVI
Member of the
Supervisory Board
MAARIKA HONKONEN
Member of the
Supervisory Board
RIHO UNT
Member of the
Supervisory Board
VEIKO SEPP
Member of the
Supervisory Board
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The appointment and remuneration of a member of the supervisory board is regulated by section 85
of the State Assets Act. The amount of the remuneration of a member of the supervisory board
is determined by the general meeting based on the proposal by the nomination committee. The
remuneration determined for a member of the supervisory board is EUR 1,000 per month and the
remuneration determined for the chairman of the supervisory board is EUR 2,000 per month. The
remuneration is paid out once a month. A member of the supervisory board is not remunerated for
the month in which a meeting of the supervisory board was held but the member did not participate
in adopting resolutions. Additional remuneration is paid to the members of the supervisory board
who are also members of the audit committee, which is a body set up by the supervisory board.
In 2020, the compensation provided to the members of the supervisory board totalled EUR 98.8
thousand (2019: EUR 82.9 thousand), including the remuneration of the members of the supervisory
board of EUR 96 thousand (2019: EUR 81 thousand). The members of the supervisory board of
Tallinna Sadam are not entitled to termination benefits or any additional remuneration (besides the
remuneration for participating in the activities of the audit committee).
Tallinna Sadam has conducted a limited number of minor transactions with the members of its
supervisory board, which are disclosed in note 24 to the financial statements. All transactions have
been ordinary business transactions conducted on an arm’s length basis. At the date of release
of this annual report, the members of the supervisory board have not notified Tallinna Sadam of
any conflicts of interest during the financial year. Where there has been a risk of a conflict of
interest, the exposed member of the supervisory board has refrained from discussing, and adopting
resolutions on, the relevant agenda item.
The members of the supervisory board are subject to the Group’s procedure for preventing conflicts
of interest (including the obligation to declare their business interests) and the prohibition on
competition set forth in the Commercial Code.
An overview of the shares in Tallinna Sadam held by the members of the supervisory board and
persons closely associated with them
19
at 31 December 2020:
Number of shares in Tallinna Sadam
held at 31 December 2020
Member of the supervisory board Personally
Through closely
associated persons
Aare Tark 44,171 0
Urmas Kaarlep 24,039 0
Raigo Uukkivi 6,626 1,486
Maarika Honkonen 0 1,300
Üllar Jaaksoo 148 0
Veiko Sepp 7,258 2,500
82,242 5,286
As at 31 December 2020, Ahti Kuningas and Riho Unt did not hold any shares in Tallinna Sadam
either personally or through persons closely associated with them.
Participation in meetings in 2020 Remuneration in euros in 2020
Member of the supervisory board
Term of office
Supervisory board Audit committee Supervisory board Audit committee
Aare Tark (chairman) 3 Oct 2015–30 Jun 2022 10/10 – 24,000 0
Urmas Kaarlep 3 Oct 2015–30 Jun 2022 10/10 8/8 12,000 1,065
Üllar Jaaksoo 3 Oct 2015–30 Jun 2022 10/10 – 12,000 0
Ahti Kuningas 8 Sept 2017–30 Jun 2022 10/10 – 12,000 0
Raigo Uukkivi 8 Sept 2017–30 Jun 2022 10/10 8/8 12,000 709
Maarika Honkonen 17 Apr 2018–30 Jun 2022 10/10 8/8 12,000 709
Riho Unt 1 Jul 2020–30 Jun 2022 4/4 4/4 6,000 355
Veiko Sepp 1 Jul 2020–30 Jun 2022 4/4 – 6,000
96,000 2 838
19
In accordance with the definition of the market abuse regulation (Article 3, 1.25) of EU 596/2014).
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7.3 Audit committee and internal audit unit
Consistent with the requirements of the Auditors Activities Act, the company has set up an audit
committee, which is a body that advises the supervisory board and is responsible for monitoring
and analysing the processing of financial information, the effectiveness of the development
and operation of the risk management and internal control system, the process of the audit of
the consolidated financial statements, and the independence of the audit firm and the certified
public accountant representing the audit firm as well as their compliance with the requirements
related to auditors’ activities. The audit committee makes proposals and recommendations to the
supervisory board on matters within its remit. The committee has four members that are appointed
by the supervisory board. The following members of the supervisory board have been on the audit
committee since 15 May 2018: Urmas Kaarlep (chairman), Raigo Uukkivi and Maarika Honkonen.
On 3 July 2020, the supervisory board approved a new composition for the audit committee,
reappointing all former members and appointing Riho Unt as the fourth member of the committee.
The audit committee conducts its activities in accordance with the requirements of the Auditors
Activities Act and the rules of procedure approved by the supervisory board. The audit committee
carries out its work in meetings and in 2020 eight meetings were held (2019: six meetings). All
members of the audit committee attended all meetings.
The rates of the remuneration provided to the members of the audit committee are based on
a resolution adopted by the shareholder on 24 November 2011. When a member of the audit
committee does not participate in a meeting, the member is not remunerated for the month in which
the meeting was held. In 2020, the members of the audit committee were paid EUR 89 per month
and the chairman of the audit committee was paid EUR 133 per month for participating in the work
of the committee. Further information on the remuneration of the members of the audit committee
in 2020 is provided in the table presented in section 7.2 of the management report.
Tallinna Sadam has also formed a Group-wide internal audit unit. Functionally, the internal audit
unit reports to the company’s supervisory board. The composition of the unit is approved and the
head of the unit is appointed and recalled by the supervisory board which also decides matters
related to the remuneration of the head of the unit. There internal audit unit comprises three
employees: the head of the unit, the internal auditor and the chief information security officer who is
responsible for monitoring the Group’s compliance with information security requirements.
In conducting its internal audit activities, the internal audit unit observes the requirements of the
Auditors Activities Act, International Standards for the Professional Practice of Internal Auditing
and the rules of procedure of the internal audit unit which have been approved by the supervisory
board. In the field of information security, the unit acts in compliance with the Cybersecurity Act,
information security standards and guidelines and the information security policy of Tallinna
Sadam. The activities of the unit are based on a risk-based work plan approved by the supervisory
board. Where necessary, the unit engages external experts. The unit also takes into account the
results of other external audits and control procedures. Reports on internal audits and advisory and
consultative work performed are submitted to the audit committee and more significant findings
and recommendations are communicated on an ad hoc basis at meetings of the supervisory board.
At least once a year, the head of the internal audit unit provides the supervisory board with a
summarised overview of the activities of the unit. The head of the internal audit unit is invited to
all meetings of the supervisory board and the audit committee of Tallinna Sadam. In addition, the
head of the unit participates in regular meetings of the management team and, where possible and
necessary, at other important meetings of Group entities.
Additionally, the internal audit unit is responsible for collecting and handling the declarations of
the business interests of the members of the Group’s governing bodies and key personnel. The
declarations are used as a basis for checking the compliance of related party transactions with the
arm’s length principle (related party transactions with the members of the governing bodies are
disclosed in note 24 to the financial statements).
In 2020, the employees of the internal audit unit participated actively in the work of professional
organisations: the internal auditor was a member of the board of the Institute of Internal Auditors
Estonia and the chief information security officer participated in the preparation of the European
Union Agency for Cybersecurity (ENISA) guidelines Cyber Risk Management for Ports.
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7.4 Nomination committee 7.5 Management board
In 2019, the general meeting decided to form the nomination committee for nominating the
members of the supervisory board of AS Tallinna Sadam. The committee is responsible for
evaluating the suitability of candidates to the supervisory board and making proposals to the
general meeting regarding the election and removal of the members of the supervisory board,
the composition of the supervisory board, and the duration of the mandate and remuneration
of the members of the supervisory board. The nomination committee comprises the secretary
general of the Ministry of Finance, the secretary general of the Ministry of Economic Affairs and
Communications and the chairman of the nomination committee formed by the Republic of Estonia
who represent the Republic of Estonia based on the office they hold, and two representatives
of small shareholders whose term of office is five years. At 31 December 2020, the nomination
committee comprised the chairman Ando Leppiman (secretary general of the Ministry of Economic
Affairs and Communications) and the members Veiko Tali (secretary general of the Ministry of
Finance), Kaido Padar (chairman of the nomination committee formed by the Republic of Estonia),
Elena Kiseleva (principal banker of transport team of European Bank for Reconstruction and
Development) and Sven Kunsing (member of the management board of AS SEB Varahaldus). In
connection with the resignation of the former chairman of the nomination committee Veiko Tali as
the secretary general of the Ministry of Finance from 1 January 2021 and, accordingly, from the
nomination committee of Tallinna Sadam, Ando Leppiman was elected as the new chairman of the
nomination committee on 8 December 2020.
In 2020, the nomination committee had 10 meetings (2019: 2 meetings) in order to make
proposals to the annual general meeting of 2020 regarding the election of the members of
the supervisory board because the term of office of the members of the supervisory board was
about to expire. During the meetings, the nomination committee approved the principles for the
selection of candidates, coordinated the self-assessment of the supervisory board in office, met
with the members of the supervisory board and conducted group interviews with each member of
the supervisory board and potential new candidates. On 3 June 2020, the nomination committee
submitted to the general meeting the proposal to re-elect all current members of the supervisory
board for a new term lasting from 1 July 2020 to 30 June 2022 and to elect additional two new
members, Riho Unt and Veiko Sepp. The proposal was submitted through the management board of
Tallinna Sadam, The general meeting approved the proposal as submitted.
The management board is a governing body that represents and manages the day-to-day operations
of Tallinna Sadam in accordance with the law and the articles of association of Tallinna Sadam. The
management board must act in a manner that is most reasonable from the economic point of view
and make sure that risk management and internal controls function effectively. In conducting its
activities, the management board observes the long-term strategy and annual operational targets
approved by the supervisory board. In accordance with the articles of association, the management
board has two to five members, who are appointed by the supervisory board for up to five years.
The company may be represented by the chairman of the management board and a member of
the management board acting together. All members of the management board have signed service
contracts with the company. On 29 September 2020, the supervisory board extended the terms
of office of Valdo Kalm and Marko Raid for another three-year period starting from the end of the
previous term of office: from 1 March 2021 to 28 February 2024 for Valdo Kalm and from 18 April
2021 to 17 April 2024 for Marko Raid. The extension of the term of office of Margus Vihman was
not yet discussed as his service contract expires on 31 October 2021.
No member of the management board is a member of the management board or the chairman of
the supervisory board of another listed company. Information about the appointment of members
of the management board to the supervisory boards of the subsidiaries and associates of Tallinna
Sadam is provided in section 7.6 of the management report.
In addition to remuneration calculated for 2020, the members of the management board may
be eligible to a bonus for the results for 2020, which is decided by the supervisory board aer
the approval of the annual report for 2020. The limits to additional remuneration and termination
benefits payable to members of the management board are provided in section 86 (subsections 2
and 3) of the State Assets Act.
Remuneration provided to the management board
in thousands of euros 2020 tasud 2019 tasud 2019 preemia
Valdo Kalm 122.1 132.0 40.3
Marko Raid 99.9 108.0 33.0
Margus Vihman 95.5 103.2 31.5
Total 317.5 343.2 104.8
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Accordingly, the total additional remuneration paid to a member of the management board of
Tallinna Sadam may not exceed fourfold average monthly remuneration paid to the member of the
management board in the previous financial year and termination benefits paid to a member of the
management board may not exceed three months’ remuneration effective at the time the contract is
terminated.
Based on the service contracts in force, at 31 December 2020 Tallinna Sadam had the obligation to
pay the members of its management board termination benefits in an amount equal to their three
months’ remuneration (service fees). A member of the management board is eligible to termination
benefits only when Tallinna Sadam terminates the service contract without due cause, that is if the
member of the management board breaches the contract, no termination benefits will be paid. For
complying with the non-compete clause, the company has to pay a member of the management
board monthly compensation equal to 50% of the board member’s service fee for a period of 12
months.
The company’s short-term bonus system is based on the performance management system
described in section 4 of the management report. The system was adopted in 2017 for both the
members of the management board and employees in order to monitor the achievement of strategic
goals. According to the system, every year three of the Group’s main goals (revenue, EBITDA and
the implementation of the most important projects) and some subsidiary goals (business volumes,
business projects, changes in processes, etc.) are set and the achievement of those goals determines
a person’s eligibility to performance-related pay (a bonus). Usually 40% of an employee’s
performance-related bonus depends on the achievement of the company’s overall goals (the main
goals) and 60% depends on the achievement of personals goals (subsidiary goals). The supervisory
board sets the goals for the management board and assesses the achievement of these goals once
a year, on the approval of the annual report for the relevant year. The Group has currently no long-
term bonus programmes and the short-term bonus system is not linked to the company’s shares.
In the reporting period, Tallinna Sadam conducted a limited number of minor transactions with the
members of its management board, which are disclosed in note 24 to the financial statements. All
transactions were ordinary business transactions conducted on an arm’s length basis. At the date of
release of this annual report, members of the management board have not notified Tallinna Sadam
of any conflicts of interest during the financial year.
From among the members of the management board, Valdo Kalm and Marko Raid hold shares in
Tallinna Sadam (2,828 shares and 5,000 shares respectively). Margus Vihman and persons closely
associated with the members of the management board do not hold any shares in Tallinna Sadam.
VALDO KALM
Chairman of the Management Board,
appointed to the board until 28 February 2024
Valdo Kalm has been the chairman of the management board of
Tallinna Sadam since March 2016. Previously, he was chief executive at
several telecommunication companies for over 20 years: Eesti Telefon,
EMT, Eesti Telekom (currently Telia Eesti). Valdo Kalm was appointed as
the chairman of the management board of Tallinna Sadam in February
2016. He has a master’s degree in automation and telemechanics from
Tallinn University of Technology.
MARKO RAID
Member of the Management Board, Chief Financial Officer
appointed to the board until 17 April 2021
Marko Raid has been working for Tallinna Sadam since 1997 and has
been the chief financial officer since 2006. He was appointed to the
management board in 2015. Marko Raid has a master’s degree in
business administration (MBA) from Concordia International University
Estonia.
MARGUS VIHMAN
Member of the Management Board, Chief Commercial Officer,
appointed to the board until 31 October 2021
Margus Vihman has been on the management board of Tallinna Sadam
since 2016. He is responsible for the company’s commercial activities,
that is customer relations and sales. Previously, Margus Vihman was
sales director at Krimelte OÜ, regional sales director at the construction
company Ruukki and regional chief executive at the construction
chemicals company Henkel Makroflex. He has a degree in international
business administration (MBA) from the Estonian Business School.
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7.6 Supervisory and management boards
of subsidiaries and associates
As a rule, the supervisory boards of Tallinna Sadam’s 100% subsidiaries have three members: two
are members of the management board of Tallinna Sadam and one is a civil servant from the
Ministry of Economic Affairs and Communications that represents and administers the shareholding
of the controlling shareholder, the Republic of Estonia.
At the end of 2020, the members of the supervisory board of TS Shipping were Valdo Kalm
(chairman), Marko Raid and Ahti Kuningas (deputy secretary general for the Ministry of Economic
Affairs and Communications). The management board of TS Shipping had one member: Ülo Eero.
At 31 December 2020, the members of the supervisory board of TS Laevad were Valdo Kalm
(chairman), Marko Raid and Johann Peetre (expert from the transport development and investments
department of the Ministry of Economic Affairs and Communications). Johann Peetre replaced Tiit
Rebane (head of the legal department of the Ministry of Economic Affairs and Communications)
as a member of the supervisory board on 6 February 2020. The management board of TS Laevad
had three members: Guldar Kivro (acting chairman) and Ave Metsla. The position of the chairman
of the board was vacant at 31 December 2020. Jaak Kaabel was the chairman of the management
board until 10 September 2020, but decided not to apply for a new term on the expiry of his
contract. An open competition was held for the position and in November the supervisory board of
TS Laevad appointed Indrek Randveer as the new chairman of the management board, effective
from 4 January 2021. Pille Kauber was a member of the management board until the expiry of her
term of office on 3 January 2020. She was replaced by Ave Metsla (from 12 March 2020) who was
appointed based on the results of an open competition.
At 31 December 2020, the members of the supervisory board of Green Marine, an associate
of Tallinna Sadam, were Valdo Kalm (chairman), Marko Raid, Carl-Jüri Piht, Innar Susi and Ahti
Kuningas. This composition of the supervisory board took office on 1 October 2020. Before that,
the composition of the supervisory board was the same except that Andres Lukin was a member
of the supervisory board instead of Carl-Jüri Piht. The management board of the associate has two
members: the chairman Ain Kuusik (from 20 July 2020) and Aivar Sülla. Carl-Jüri Piht served as
the chairman of the management board until 19 July 2020, when he stepped down to become a
member of the supervisory board.
7.7 Cooperation of the management
and supervisory boards
The management and supervisory boards collaborate closely in developing and executing the
goals and strategy of Tallinna Sadam. The two bodies mainly exchange information at meetings
of the supervisory board and the audit committee. The management board observes the strategic
instructions of the supervisory board and notifies the supervisory board of any significant risks and
other matters arising in the course of business that may affect the financial performance and the
achievement of the goals of Tallinna Sadam. At meetings, the supervisory board is provided with
regular overviews of the Group’s operating and financial results.
7.8 Disclosure of information and communication
Since the listing of the Tallinna Sadam shares on the Nasdaq Tallinn Stock Exchange on 13 June
2018, Tallinna Sadam observes the rules of the stock exchange and the requirements of the EU
market abuse regulation and discloses information in accordance with the principle of fair and equal
treatment of all investors and the rules for handling and disclosing inside information.
The main information channels of Tallinna Sadam are stock exchange announcements, press
releases, newsletters and the corporate website www.ts.ee. On the website, we have made available
information about the company and the governing bodies, the articles of association and the
strategy, the dividend policy, the IPO documents, the contacts of analysts and the auditor, the current
year’s financial calendar with the dates on which our operating results and financial statements are
released, quarterly operational statistics, and interim and annual reports. The management board
of Tallinna Sadam presents the company’s results on a quarterly basis at interactive webinars (on
the disclosure of interim reports). The recordings and presentations of the webinars are available on
the website. We organise meetings and teleconferences with investors according to need and at the
request of investors. In communicating with investors and analysts, we use only such information
which has previously been disclosed.
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In 2020, there were 16 personal meetings with investors, six investor webinars and one group
meeting for pension funds. We participated in two investor conferences in London and New York
(online) and there were two investor days for local investors in the newly renovated building of
passenger terminal D.
Resolutions of the general meeting and the reports of the supervisory board are available on the
website of Tallinna Sadam at www.ts.ee.
In our marketing and communication activities, we prioritise not only investor relations but also
direct communication with different target and stakeholder groups as well as multidirectional
information exchange and building a strong brand image, which is a key factor in successfully
implementing our business strategy. As a responsible company, we respect the principles of
openness, integrity and ethical conduct in our messages and marketing and communication
activities.
7.10 Statement of compliance with
the Corporate Governance Code
Tallinna Sadam does not comply with section 6.2.2 of the Corporate Governance Code (CGC) and
complies with section 1.3.3 partially:
CGC section 6.2.2 – Before entering a contract for auditing services with an auditor, the
management board shall present the supervisory board with the dra contract for approval. /…/
The management board of Tallinna Sadam does not consider it necessary to have the dra contract
for audit services to be approved by the supervisory board because the auditor is chosen through
public procurement proceedings. The contract is signed based on the result of the procurement
tender and all significant terms and conditions of the contract (including the terms for the
qualification of the bidders and the evaluation of the bids, the term of the contract and the scope
of the work) are agreed with the audit committee, which is a body that advises the supervisory
board, before a procurement tender is announced. In accordance with the regulation of the Estonian
Financial Supervision and Resolution Authority regarding the rotation of auditors of certain entities
subject to public financial supervision, we organise the rotation of auditors and thus ensure the
independence of the auditor.
CGC Section 1.3.3 – Issuers shall make participation in the general meeting possible by means
of communication equipment (Internet) if the technical equipment is available and where doing
so is not too cost prohibitive for the issuer.
Due to COVID-19 related restrictions on public gatherings with a large number of participants,
Tallinna Sadam as a responsible company organised the adoption of resolutions at its annual
general meeting of 2020 without calling a meeting – the shareholders could vote electronically
(remotely) during the voting period. Before the start of the voting period, all interested parties were
invited to participate in an interactive webinar, where they were given an overview of the dra
resolutions and the voting procedure and received answers to their questions.
7.9 Financial reporting
The preparation of financial statements is the responsibility of the company’s management board.
The consolidated financial statements are prepared in accordance with the Estonian Accounting Act
and International Financial Reporting Standards as adopted by the European Union (IFRS EU).
The auditor of Tallinna Sadam is KPMG Baltics OÜ and the signatory of the independent auditors’
report is Andris Jegers. The contract with the auditor has been made for three years (for the audit
of the financial statements for 2018–2020). The audit firm has not provided the company with
any services that could jeopardise the auditor’s independence. In 2020, the fees paid or payable
for services provided by audit firms totalled EUR 44 thousand (2019: EUR 62 thousand). The fees
comprise fees for the financial audit of EUR 23 thousand (2019: EUR 18 thousand), the fees for the
translation of our financial reports and the fees paid to Grant Thornton Baltic OÜ for the interim
audit of the TWIN-PORT 3 project and appraisal of the market value of the assets of Paljassaare
Harbour.
CONSOLIDATED
FINANCIAL
STATEMENTS
Management’s Confirmation and Signatures | page 75
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Management’s Conrmation
and Signatures
By authorising the consolidated annual financial statements as at and for the period ended 31
December 2020 for issue, the management board confirms that the information about AS Tallinna
Sadam and its subsidiaries, as set out on pages 76 to 154, is correct and complete and that:
1. the consolidated financial statements have been prepared in accordance with the Estonian
Accounting Act and International Financial Reporting Standards as adopted by the
European Union (IFRS EU);
2. the consolidated annual financial statements give a true and fair view of the financial
position, cash flows and financial performance of the Group;
3. all significant events that occurred until the date on which the financial statements were
authorised for issue (15 March 2021) have been properly recognised and disclosed in the
consolidated financial statements; and
4. AS Tallinna Sadam and its subsidiaries are going concerns.
15 March 2021
VALDO KALM
Chairman of the Management Board
MARKO RAID
Member of the Management Board
MARGUS VIHMAN
Member of the Management Board
Consolidated Financial Statements | page 76
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Consolidated Financial Statements
Consolidated statement of financial position
In thousands of euros Note 31.12.2020 31.12.2019 In thousands of euros Note 31.12.2020 31.12.2019
ASSETS LIABILITIES
Current assets Current liabilities
Cash and cash equivalents 7 26,679 35,183 Loans and borrowings 16 17,266 16,266
Trade and other receivables 8 10,183 10,614 Derivative financial instruments 17 102 243
Inventories 360 408 Provisions 13 1,289 1,915
Total other current assets 37,222 46,205 Government grants 18 1,919 193
Non-current assets held for sale 10 114 142 Taxes payable 15 744 893
Total current assets 37,336 46,347 Trade and other payables 14 9,149 11,755
Non-current assets Total current liabilities 30,469 31,265
Investments in an associate 9 1,147 1,609 Non-current liabilities
Other long-term receivables 8 0 294 Loans and borrowings 16 194,314 191,580
Property, plant and equipment 10 587,506 575,267 Government grants 18 26,145 24,754
Intangible assets 11 2,104 2,015 Other payables 14 1,733 915
Total non-current assets 590,757 579,185 Total non-current liabilities 222,192 217,249
Total assets 628,093 625,532 Total liabilities 252,661 248,514
EQUITY
Share capital 263,000 263,000
Share premium 44,478 44,478
Statutory capital reserve 20,262 18,520
Hedge reserve –102 –243
Retained earnings (prior periods) 19,276 6,859
Profit for the period 28,518 44,404
Total equity 19 375,432 377,018
Total liabilities and equity 628,093 625,532
Consolidated Financial Statements | page 77
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Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of profit or loss Consolidated statement of other comprehensive income
In thousands of euros Lisa 31.12.2020 31.12.2019 In thousands of euros Lisa 31.12.2020 31.12.2019
Revenue 3, 20 107,358 130,536 Profit for the period 28,518 44,404
Other income 22 3,015 1,017
Operating expenses 21 –30,858 –36,669 OTHER COMPREHENSIVE INCOME
Personnel expenses 21 -19,491 -19,867 Items that may be reclassified subsequently to profit or loss:
Depreciation, amortisation and impairment 10, 11 –24,094 –23,037
Net fair value gain on hedging instruments
in cash flow hedges
17 141 182
Other expenses –368 –301
Operating profit 35,562 51,679 Total other comprehensive income 141 182
Total comprehensive income for the period 28,659 44,586
FINANCE INCOME AND COSTS Attributable to:
Finance income 36 42 Owners of the Parent 28,659 44,586
Finance costs 23 –1,705 –1,797
Finance costs – net –1,669 –1,755
Share of profit or loss of an associate
accounted for under the equity method
9 –462 244
Profit before income tax 33,431 50,168
Income tax expense 19 –4,913 –5,764
Profit for the period 28,518 44,404
Attributable to:
Owners of the Parent 28,518 44,404
Basic earnings and diluted net earnings per share
(in euros)
19 0.11 0.17
Basic earnings and diluted net earnings per share –
continuing operations (in euros)
Consolidated Financial Statements | page 78
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Consolidated statement of cash flows
In thousands of euros Note 2020 2019
Cash receipts from sale of goods and services 114,378 138,690
Cash receipts related to other income 94 193
Payments to suppliers -41,354 –47,210
Payments to and on behalf of employees –15,713 –16,892
Payments for other expenses –376 –377
Other payments 14 -2,600 0
Income tax paid on dividends 19 –4,913 –10,985
Cash from operating activities 49,516 63,419
Purchases of property, plant and equipment 26 –35,811 –27,965
Purchases of intangible assets 26 –661 –550
Proceeds from sale of property, plant and equipment 2,863 39
Government grants received 3,561 0
Dividends received 9 0 204
Interest received 15 28
Cash used in investing activities –30,033 –28,244
Redemption of debt securities 16 –9,000 –9,000
Proceeds from loans received 16 20,000 10,000
Repayments of loans received 16 –7,266 –6,766
Dividends paid 19 –30,008 –34,970
Interest paid 16 –1,694 –1,769
Other payments related to financing activities –19 –50
Cash used in financing activities –27,987 –42,555
Net cash flow –8,504 –7,380
Cash and cash equivalents at beginning of the period 7 35,183 42,563
Change in cash and cash equivalents –8,504 –7,380
Cash and cash equivalents at end of the period 7 26,679 35,183
Consolidated Financial Statements | page 79
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Consolidated statement of changes in equity
In thousands of euros Note Share capital Share premium
Statutory
capital reserve Hedge reserve
Retained
earnings
Total equity
attributable
to owners
of the Parent
Equity at 31 December 2018 263,000 44,478 18,520 –425 42,101 367,674
Profit for the period 0 0 0 0 44,404 44,404
Other comprehensive income for the period 17, 19 0 0 0 182 0 182
Total comprehensive income for the period 0 0 0 182 44,404 44,586
Dividend declared 19 0 0 0 0 –35,242 –35,242
Total transactions with owners 0 0 0 0 –35,242 –35,242
Equity at 31 December 2019 263,000 44,478 18,520 –243 51,263 377,018
Profit for the period 0 0 0 0 28,518 28,518
Other comprehensive income for the period 17, 19 0 0 0 141 0 141
Total comprehensive income for the period 0 0 0 141 28,518 28,659
Dividend declared 19 0 0 0 0 –30,245 –30,245
Total transactions with owners 0 0 0 0 –30,245 –30,245
Increase of capital reserve 0 0 1,742 0 –1,742 0
Equity at 31 December 2020 263,000 44,478 20,262 –102 47,794 375,432
Notes to the Consolidated Financial Statements: NOTE 1 | page 80
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Notes to the Consolidated Financial Statements
Note 1. Reporting entity
AS Tallinna Sadam (also referred to as the ‘Parent’ or the ‘Company’) is a company incorporated and
registered in the Republic of Estonia on 5 November 1996. The consolidated financial statements
of AS Tallinna Sadam as at and for the year ended 31 December 2020 comprise the Parent and its
subsidiaries (together referred to as the ‘Group’). The Group’s core business lines are rendering of
The Group owns five harbours: Old City, Saaremaa, Muuga, Paljassaare, and Paldiski South. Old City
Harbour in the centre of Tallinn together with Old City Marina for small vessels (opened in 2010) and
Saaremaa Harbour designed for receiving cruise ships provide mainly passenger harbour services.
Muuga Harbour, which is Estonia’s largest cargo harbour, Paldiski South Harbour and Paljassaare
Harbour that serves mostly ship repair companies provide mainly cargo harbour services. The Group
has ceased active operations in Paljassaare Harbour and is making preparations to exit from the
harbour. In connection with this, in 2020 the Group sold a lot of assets belonging to Paljassaare
Harbour.
In addition, the Group has a 51% interest in the associate AS Green Marine but it does not have
control over the entity’s decision-making. In the Group’s financial statements, the interest in the
associate is accounted for using the equity method.
The address of the Parent’s registered office is Sadama 25, Tallinn 15051, the Republic of Estonia.
The ultimate controlling party of AS Tallinna Sadam is the Republic of Estonia (ownership interest of
67.03% through the Ministry of Economic Affairs and Communications ).
The management board authorised these consolidated financial statements for issue on 12 March
2021. Under the Estonian Commercial Code, the annual report must also be approved by the
supervisory board and the shareholders. The shareholders may decide not to approve the annual
report prepared by the management board and approved by the supervisory board and may demand
the preparation of a new annual report.
The Group’s subsidiaries as at 31 December 2020 and 31 December 2019
Subsidiary Domicile
Ownership interest
(%) 2020
Ownership interest
(%) 2019
Core business line
OÜ TS Shipping Republic of Estonia 100 100 Rendering icebreaking and other offshore support services with the multi-functional icebreaker Botnica
OÜ TS Laevad Republic of Estonia 100 100 Rendering domestic ferry service between the mainland and the biggest islands
Notes to the Consolidated Financial Statements: NOTE 2 | page 81
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Note 2. Accounting policies
Basis of preparation
The Group’s consolidated financial statements as at and for the year ended 31 December 2020 have
been prepared in accordance with the Estonian Accounting Act and International Financial Reporting
Standards as adopted by the European Union (IFRS).
The consolidated financial statements have been prepared on the historical cost basis except for
certain financial assets and financial liabilities (including derivatives), which are carried at fair value.
The preparation of the consolidated financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other relevant
factors the results of which form the basis for making judgements about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates. The management board reviews the estimates regularly and any change in
an estimate is recognised prospectively or in the period the change in an estimate relates to. Most
significant estimates made by management are disclosed in note 5 to these consolidated financial
statements.
Changes in accounting policies in the reporting period
Until recently, the approach in Estonia was that corporate income tax is not paid when profit
is earned but when profit, e.g. a dividend is distributed. In June 2020, the IFRS Interpretations
Committee decided that companies preparing IFRS financial statements have to recognised deferred
income tax on their investments even if the investments are domiciled in jurisdictions where income
tax is paid only when profit is distributed.
Deferred tax is recognised for temporary differences that arise between the carrying amounts
of assets and liabilities and their tax bases (the tax base is the amount attributed to an asset or
liability for tax purposes).
Under Estonian laws, corporate profit for the year is not subject to taxation. The obligation to pay
income tax arises on the distribution of profit and is recognised as an expense (in profit or loss for
the period) when the dividend is declared. Due to the nature of the taxation system, companies
registered in Estonia generally have no deferred tax assets or liabilities.
The Group incurs deferred tax liabilities only in connection with investments in entities domiciled
in countries where profit for the year is subject to income tax and investments in subsidiaries and
associates domiciled in Estonia except to the extent that the Group is able to control the timing of
the reversal of the temporary differences and it is probable that the temporary differences will not
reverse in the foreseeable future. Examples of the reversal of taxable temporary differences include
the distribution of a dividend, the disposal of an investment, and similar transactions.
Since the Group is able to control its subsidiaries’ dividend policy and to block, where necessary, the
profit distribution decisions of the associate AS Green Marine, it is able to control the timing of the
reversal of the temporary differences associated with those investments.
AS Tallinna Sadam has decided not to distribute the profits of the subsidiaries and the associate AS
Green Marine in the foreseeable future. Therefore, it has not recognised any deferred tax liabilities.
If profit is expected to be distributed in the foreseeable future, a deferred tax liability will be
recognised for the planned profit distribution, assuming that at the reporting date there are sufficient
funds and equity from which profit can be distributed in the foreseeable future.
The Group measures deferred tax liabilities using tax rates that, based on the tax rates enacted at
the reporting date, are expected to apply to the taxable temporary differences in the periods in which
the temporary differences are expected to reverse.
The change in the interpretation of the standard does not require the Group to recognise any
deferred tax liabilities associated with profit distributions because the subsidiaries and the associate
are not planning to distribute dividends in the foreseeable future.
Notes to the Consolidated Financial Statements: NOTE 2 | page 82
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Changes taking effect in the future
Standards, interpretations and amendments
to published standards that are not yet effective
The following new standards, interpretations and amendments were not yet effective for the annual
reporting period ended 31 December 2020 and have therefore not been applied in preparing these
consolidated financial statements. The Group plans to adopt these pronouncements when they
become effective.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 –
Interest Rate Benchmark Reform (IBOR) (Phase two)
Effective for annual periods beginning on or aer 1 January 2021; to be applied prospectively. Early
application is permitted.
The amendments address issues that might affect financial reporting as a result of the interest
rate benchmark reform, including the effects of changes to contractual cash flows or hedging
relationships arising from the replacement of an interest rate benchmark with an alternative
benchmark rate. The amendments provide practical relief from certain requirements in IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16 relating to:
• changes in the basis for determining contractual cash flows of financial assets, financial
liabilities and lease liabilities; and
• hedge accounting.
Change in basis for determining cash flows
The amendments will require the Group to account for a change in the basis for determining the
contractual cash flows of a financial asset or financial liability that is required by interest rate
benchmark reform by updating the effective interest rate of the financial asset or financial liability.
Hedge accounting
The amendments provide exceptions to the hedge accounting requirements in the following areas:
• Allow amendment of the designation of a hedging relationship to reflect changes that are
required by the reform. This amendment will not result in a discontinuation of the hedge or
designation of a new hedging relationship.
• When a hedged item in a cash flow hedge is amended to reflect the changes that are
required by the reform, the amount accumulated in the cash flow hedge reserve will be
deemed to be based on the alternative benchmark rate on which the hedged future cash
flows are determined.
• When a group of items is designated as a hedged item and an item in the group is amended
to reflect the changes that are required by the reform, the hedged items are allocated to
sub-groups based on the benchmark rates being hedged.
• If an entity reasonably expects that an alternative benchmark rate will be separately
identifiable within a period of 24 months, it can designate the rate as a non-contractually
specified risk component if it is not separately identifiable at the designation date.
Disclosure
The amendments will require the Group to disclose additional information to enable users to
understand the effect of the interest rate benchmark reform on its financial instruments, including
information about the Group’s exposure to risks arising from interest rate benchmark reform and
related risk management activities.
The Group does not expect the amendments to have a material impact on its financial statements
when initially applied.
Notes to the Consolidated Financial Statements: NOTE 2 | page 83
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New standards and amendments that have been published
by the IASB but not yet adopted by the EU
Amendments to IFRS 10 and IAS 28 – Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture
The European Commission has decided to defer the endorsement indefinitely.
The amendments clarify that in a transaction involving an associate or joint venture, the extent of
gain or loss recognition depends on whether the assets sold or contributed constitute a business,
such that:
• a full gain or loss is recognised when a transaction between an investor and its associate or
joint venture involves the transfer of an asset or assets which constitute a business (whether
it is housed in a subsidiary or not), while
• a partial gain or loss is recognised when a transaction between an investor and its associate
or joint venture involves assets that do not constitute a business, even if these assets are
housed in a subsidiary.
However, the quantitative impact of the adoption of the amendments can only be assessed in the
year of their initial application as this will depend on the transfers of assets or businesses to the
associate or joint venture that take place during that reporting period.
Basis of consolidation
The consolidated financial statements comprise the financial statements of AS Tallinna Sadam and
its subsidiaries, consolidated line by line.
Subsidiaries
A subsidiary is any entity controlled by the Group. The Group controls an entity when it:
• has power over the entity;
• has exposure, or rights, to variable returns from its involvement with the entity; and
• has the ability to use its power over the entity to affect the amount of the returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Parent gains control of the subsidiary and ceases
when the Parent loses control of the subsidiary. The income and expenses of a subsidiary acquired
or disposed of during the year are included in the consolidated statement of profit or loss and other
comprehensive income from the date the Parent gains control until the date the Parent loses control
of the subsidiary.
The profit or loss and each component of other comprehensive income are attributed to the owners
of the Parent and to the non-controlling interests. The total comprehensive income of subsidiaries
is attributed to the owners of the Parent and the non-controlling interests even if this results in the
non-controlling interests having a deficit balance. The Group owns 100% of each of its subsidiaries,
therefore no non-controlling interest has been recognised for the period ended 31 December 2020.
Where necessary, the financial information of subsidiaries is adjusted to ensure conformity with the
Group’s accounting policies. All intragroup assets, liabilities, equity, income, expenses and cash flows
relating to transactions between Group entities are eliminated in full in consolidation.
Notes to the Consolidated Financial Statements: NOTE 2 | page 84
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Associates
An associate is an entity over which the Group has significant influence but not control. Significant
influence is presumed to exist when the Group holds between 20% and 50% of the voting power of
another entity.
In the consolidated financial statements, investments in associates are accounted for using the
equity method. Under the equity method, the initial investment is subsequently adjusted for the
profits/losses and dividend distributions received from the investee. Unrealised gains arising from
transactions with equity-accounted investees are eliminated against the investment to the extent of
the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment. When the Group’s share of
losses equals or exceeds its interest in an equity-accounted associate, the carrying amount of the
investment is reduced to zero and further losses are accounted for off the statement of financial
position. When the Group has incurred legal or constructive obligations or made payments on behalf
of the associate, both the liability and loss under the equity method are recognised in the statement
of financial position. Where necessary, associates’ accounting policies are adjusted so that they
comply with the Group’s accounting policies.
Any reversal of an impairment loss is recognised in accordance with IAS 36 to the extent that the
recoverable amount of the investment subsequently increases.
Foreign currency
Functional and presentation currency
Items included in the financial statements of Group entities are measured in the currency of the
primary economic environment in which the entities operate – the euro (the functional currency of
all Group entities).
The consolidated financial statements are also presented in euros (the presentation currency). All
amounts in these consolidated financial statements are presented in thousands of euros, unless
stated otherwise.
Foreign currency transactions and financial assets
and financial liabilities denominated in foreign currencies
In preparing the financial statements of the Group, transactions in currencies other than the
functional currency (foreign currencies) are recognised at exchange rates at the dates of the
transactions. At the end of each reporting period, monetary items denominated in foreign currencies
are translated at the rates at that date. Non-monetary items carried at fair value in a foreign
currency are translated at the exchange rate at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-
translated at the end of the reporting period.
Exchange differences on monetary items are recognised in profit and loss in the period which they
arise. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents
are presented as finance income and finance costs; other foreign exchange gains and losses are
presented as other income and other expenses. Non-monetary items measured in terms of historical
cost in a foreign currency are not re-translated at the end of the reporting period.
Revenue
The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’
of the goods or services underlying the particular performance obligation is transferred to the
customer.
The Group recognises the following major types of revenue from contracts with customers:
• Vessel dues
• Cargo charges
• Passenger fees
• Sale of electricity
• Sale of ferry services
• Sale of other services.
Notes to the Consolidated Financial Statements: NOTE 2 | page 85
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Revenue is measured based on the consideration specified in a contract with a customer and it
excludes amounts collected on behalf of third parties.
Vessel dues
Vessel dues are calculated and collected either aer each port call or twice a month and consist of
the following:
• tonnage charge (on the basis of the gross tonnage of the vessel for each port call of the
vessel);
• waste fee (on the basis of the gross tonnage of the vessel for each port call of the vessel; in
the case of ferries for one port call per day;)
• mooring charge (for each mooring operation based on the gross tonnage of the vessel).
An entrance of a vessel into any of the Group’s harbours is considered a port call. Vessel dues are
charged for each port call.
Tonnage charges are fees charged from customers, i.e. shipping companies, in exchange for a
vessel’s entry into any of the Group’s harbours and the use of a quay (tonnage service). Waste
reception and mooring services are rendered in exchange for waste fees and mooring charges.
A contract with a customer can either include a vessel schedule in which a number of port calls is
determined in advance or it may be a contract for a non-recurring tramp vessel call.
Tonnage service, and waste reception and mooring services, when elected, form separate
performance obligations. Additionally, the Group grants volume discounts on tonnage service to
certain types of vessels based on the accumulated number of port calls by the vessel during the
calendar year. Such volume discounts represent options to purchase additional tonnage service
in the future (but only up to the end of the calendar year) at a discount, thus granting a material
right to the customer. Therefore, each port call that contributes to the cumulative number of port
calls, and hence to probable future discounts on tonnage service, consists of between two and four
performance obligations – (1) tonnage service, (2) grant of an option to the customer to acquire
discounted tonnage service in the future, (3) waste reception (if elected), and (4) mooring service (if
elected).
For tramp vessels and vessels visiting the port based on a pre-agreed schedule but without the
right to receive prospective volume discounts, the transaction price is based on public or agreed
prices and conditions and is allocated entirely to the tonnage service based on its standalone selling
price. For vessels visiting the port based on a pre-agreed schedule and having the right to receive a
prospective volume discount, the transaction price is allocated between the tonnage service and the
option to purchase discounted tonnage service based on the estimated total number of port calls by
that vessel during the calendar year. The estimates for the number of total port calls for each vessel
are reassessed at each reporting date.
Revenue from tonnage service is recognised over time, as the vessels use the quay during each
port call, using a time-based measure of progress because the customer receives the benefit of
the tonnage service equally throughout the port call. Similarly, revenue from waste reception and
mooring services is recognised over time, as those services are performed. Revenue from options to
acquire future discounted tonnage service is recognised over the time, as the options are exercised
and the discounted tonnage service is used by the customers.
Notes to the Consolidated Financial Statements: NOTE 2 | page 86
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Cargo charges
Cargo charges are levied for using the general harbour infrastructure. Contracts with customers, i.e.
cargo operators, are normally signed for 20 to 50 years but sometimes for a longer period. Cargo
charges are normally calculated and collected monthly based on the cargo volumes handled by the
cargo operator during the period.
The Group’s performance obligation is to provide the cargo operator with access to the harbour
infrastructure throughout the duration of the contract. The performance obligation is made up of a
series of distinct services that are considered a single performance obligation over the duration of
the contract. Revenue from cargo charges charged from a customer is based on the cargo handling
tariff(s) stipulated in the contract, which generally decrease based on the cargo volume handled by
the cargo operator within a calendar year. The agreements signed with cargo operators generally
set out a minimum annual cargo volume. If the cargo operator handles less than the minimum, the
Group is entitled to charge the customer at the end of the calendar year based on the minimum
cargo volume.
To estimate the amount of variable consideration for cargo charges, the Group uses the most likely
amount method. The most likely amount is measured by reference to minimum contractual cargo
volumes as well as actual and expected cargo volumes, which requires estimates and judgments
by management. These estimates are complex because cargo volumes fluctuate. The estimates of
variable consideration are revised at each reporting date.
As cargo operators simultaneously receive and consume access to infrastructure, revenue from
cargo charges is recognised over time using a time-based measure of progress because customers
derive the benefits of their access equally throughout the duration of the contract.
Passenger fees
Passenger fees are charged in exchange for services provided to passengers embarking and
disembarking at the harbour, such as the use of passenger terminals, connecting walkways, traffic
areas, etc. The fees are paid by the customer, i.e. the ferry operator, based on the actual number
of passengers (no fee is charged for passengers under 12 years). Passenger fees are based on a
public price list, which sets out the rates, and fees are collected aer each port call or twice a month.
Revenue from passenger fees is recognised over time, as the service is delivered to the customer (as
the passengers arrive at or depart from the harbour), which typically happens in a single day.
Sale of electricity
The Group derives revenue from the sale of electricity and network services. Fees from the sale
of electricity and network services are collected monthly, in the month following the month of
consumption. Prices are fixed per unit of electricity consumed. As the customers simultaneously
receive and consume the benefits provided, the delivery of these services takes place over a period
of time. The Group is responsible for maintaining the electricity network required to deliver electricity
to customers and has full discretion to establish network prices. Thus, it acts as a principal in
providing this service.
When connecting to the electricity network, customers pay a connection fee based on the expenses
incurred in enabling connection to the network. The connection service does not represent a separate
performance obligation as the customer does not benefit from this service separately from the
consumption of electricity. Therefore, connection fees form part of the consideration for electricity
and are recognised as revenue over the estimated period during which customers consume
electricity. Amounts received for connection fees not yet included in revenue are recognised in the
statement of financial position as contract liabilities.
Notes to the Consolidated Financial Statements: NOTE 2 | page 87
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Sale of ferry services – revenue from ticket sales
The Group earns revenue from the sale of tickets to domestic ferry routes operated by it.
Consideration is received when a ticket is sold (for customers who do not buy tickets against their
credit limit or prepayments made), when a prepayment is received or once a month (based on
the ticket, in the month following the month in which the ferry service was used). Ticket prices are
fixed and set by the state. No volume or other discounts are granted. Revenue from ticket sales
is recognised over time, as the ferry transfers the passengers and/or vehicles, which happens in a
single day, or at the time when the ticket expires.
Consideration for tickets sold to trips not yet performed is deferred and recognised as a contract
liability within current liabilities. Income from additional services (ticket information sent by SMS,
return of tickets and similar services) is recognised when the service has been rendered.
Revenue from other sources
Rental income
Rental income is earned from operating leases and recognised on a straight-line basis over the term
of the lease.
Charter fees
Charter revenue is derived under time charter agreements which specify the charter period (the
period for which the vessel is rented out) and the consideration receivable (normally a fixed rate per
day). Charter income is recognised on a straight-line basis over the term of the charter period.
Sale of ferry services – government support
Government grants received by the Group include public transport support received for operating
ferries at the fee rates stated in the passenger transport public service contract (PTPSC) minus
revenue from ticket sales (the item Sale of ferry services – revenue from ticket sales).
Government support for PTPSC comprises fixed fee components and a trip (voyage) component,
which make up the total PTPSC fee. The fixed components are recognised on a straight-line basis
over the term of the PTPSC and the trip component is recognised based on the number of trips made
during the period. Revenue recognised from the sale of passenger and/or vehicle tickets during a
reporting period is deducted from the total PTPSC fee and the difference is recognised and paid out
as government support for public transport (a government grant).
Financial instruments
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through profit or loss) are added to the fair
value of the financial assets and deducted from the fair value of the financial liabilities on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade
date basis. Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost
or fair value, depending on the classification of the financial asset.
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Classification
The classification and subsequent measurement depend on the business model for managing
the financial assets and the contractual cash flow characteristics. Management determines the
classification of its financial assets at initial recognition.
Financial assets measured at amortised cost
Debt instruments are subsequently measured at amortised cost using the effective interest rate
method only if both of the following criteria are met:
• the asset is held within a business model with the objective of collecting the contractual cash
flows; and
• the contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal outstanding.
The Group classifies cash and cash equivalents, and trade and other receivables as financial assets
measured at amortised cost.
The effective interest method is a method of calculating the amortised cost of a debt instrument
and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts (including
all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts but excluding expected credit losses) through the
expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying
amount of the debt instrument on initial recognition.
Interest income is recognised in profit or loss in Finance income.
Financial assets measured at fair value through
other comprehensive income (FVTOCI)
Debt instruments that meet the following conditions are subsequently measured at FVTOCI:
• the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling the financial assets; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
The Group does not have any financial assets at fair value through other comprehensive income.
Financial assets measured at fair value through profit or loss (FVTPL)
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are
measured at FVTPL. Specifically:
• investments in equity instruments are classified as at FVTPL, unless the Group designates an
equity investment that is neither held for trading nor contingent consideration arising from a
business combination as at FVTOCI on initial recognition;
• debt instruments that do not meet the amortised cost or the FVTOCI criteria are classified
as at FVTPL. In addition, debt instruments that meet either the amortised cost or the FVTOCI
criteria may be designated as at FVTPL upon initial recognition if such designation eliminates
or significantly reduces a measurement or recognition inconsistency that would arise from
measuring assets or liabilities or recognising the gains and losses on them on different
bases. The Group has not designated any debt instruments as at FVTPL.
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The Group measures derivative financial assets at fair value through profit or loss unless they are
designated as effective hedging instruments (see below).
Gains and losses on changes in the fair value of financial assets at fair value through profit or loss
are recognised in profit or loss in Finance income and Finance costs, respectively, in the period in
which they arise.
The allocation of financial assets and liabilities to categories is presented in note 6.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments
that are measured at amortised cost or at FVTOCI and lease receivables. The amount of expected
credit losses (ECL) is updated at each reporting date to reflect changes in credit risk since the initial
recognition of the financial instrument.
The Group applies the simplified approach provided in IFRS 9 for recognising lifetime ECL for trade
receivables and lease receivables (see note 4). The Group always recognises lifetime ECL for trade
receivables and lease receivables. Expected credit losses on these assets are estimated using a
provision matrix, which is based on the Group’s historical credit loss experience, adjusted for factors
that are specific to the debtors, general economic conditions and an assessment of both the current
as well as the forecast conditions and trends at the reporting date, including the time value of
money where appropriate. Lifetime ECL represents the expected credit losses that will result from all
possible default events over the expected life of a financial instrument.
For all other financial instruments whose credit risk has increased significantly since initial
recognition the Group recognises lifetime ECL. If, on the other hand, the credit risk of the financial
instrument has not increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12 months’ ECL.
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired includes observable data about the following events:
• significant financial difficulty of the issuer or the borrower;
• a breach of contract, such as a default or past due event;
• the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, have granted to the borrower a concession(s) that the lender(s) would not
otherwise consider;
• it is becoming probable that the borrower will enter bankruptcy or other financial
reorganisation; or
• the disappearance of an active market for that financial asset because of financial difficulties.
Irrespective of the above, the Group considers that a default has occurred when a financial asset
is more than 90 days past due unless the Group has reasonable and supportable information to
demonstrate that a more lagging default criterion is more appropriate.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is
in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty
has been put into liquidation or declared to be bankrupt and the Group’s management estimates
that collection is improbable. Financial assets written off may still be subject to enforcement
activities under the Group’s recovery procedures, with the assistance of legal advice where
appropriate. Any recoveries of amounts previously written off are recognised in profit or loss.
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Financial liabilities
All financial liabilities are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method (trade and other payables and loans and borrowings) or at
FVTPL (negative value of interest rate swaps).
Financial liabilities are classified as current when they are due to be settled within 12 months aer
the reporting date or if the Group does not have an unconditional right to defer settlement for more
than 12 months aer the reporting date. Loans and borrowings that the lender has the right to recall
at the reporting date due to a breach of contract terms are also classified as current.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement
of financial position when there is a legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default, insolvency or bankruptcy
of the company or the counterparty.
Derivative instruments and hedge accounting
Derivatives are measured at fair value both at the date the derivative contract is entered into and
subsequently. The Group has designated several long-term interest rate swap contracts as cash flow
hedges in order to fix interest expense on floating rate borrowings.
At the inception of the transaction the Group documents the relationship between hedging
instruments and hedged items, as well as its risk management objectives and strategy for
undertaking various hedging transactions. The Group also documents its assessment, both at the
inception of the hedge and on an ongoing basis as at the end of each financial year, of whether the
derivatives that are used in hedging transactions are highly effective in mitigating the changes in the
fair values or cash flows of the hedged items.
The fair values of derivatives used for hedging purposes and movements in the hedge reserve in
equity are disclosed in the statement of other comprehensive income and notes 17 and 19 to these
consolidated financial statements.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify
as cash flow hedges is recognised in other comprehensive income. The gain or loss attributable to
the ineffective portion is recognised immediately in the statement of profit or loss within Finance
costs or Finance income. Amounts accumulated in equity are reclassified to the statement of
profit or loss in the same periods in which the hedged item affects profit or loss. The gain or loss
attributable to the effective portion of the instrument hedging variable rate borrowings is recognised
in the statement of profit or loss within Finance costs. If a hedging instrument expires or is sold,
or no longer meets the criteria for hedge accounting, any cumulative gain or loss recognised in
other comprehensive income at that time remains in equity and is recognised when the future
transaction is ultimately recognised in the statement of profit or loss. If the future transaction is no
longer expected to occur, the cumulative gain or loss recognised in other comprehensive income is
immediately recognised in the statement of profit or loss in Finance costs.
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Fair value measurement
In estimating the fair value of an asset or liability, the Group uses observable market data to the
extent it is available. Fair values are categorised into different levels in the fair value hierarchy
based on the inputs used in the valuation techniques as follows:
• Level 1 – quoted prices in active markets for identical assets or liabilities.
• Level 2 – inputs other than quoted prices included in level 1 that are observable for an asset
or liability, either directly or indirectly.
• Level 3 – inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
If the inputs used to measure the fair value or an asset or a liability fall into different levels of the
fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level
of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred
Cash and cash equivalents
Cash and cash equivalents recognised in the statements of financial position and cash flows
comprise cash on hand, current account balances, funds that have not yet been transferred to the
current account by cash-in-transit service providers or other payment intermediaries, and term
deposits with original maturities of up to three months from the date of acquisition.
Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is determined using
the first in, first out (FIFO) method. The cost of inventories does not include borrowing costs as
inventories of the Group do not represent qualifying assets. The cost of raw and other materials
comprises the purchase price, transport costs and other costs directly attributable to the acquisition
of the inventories.
The Group recognises fuel, lubricants and food products purchased for its ferries and icebreaker as
inventories.
Non-current assets held for sale
An item of property, plant and equipment or an intangible asset is classified as held for sale if the
sale of the asset is highly probable within the next 12 months and it is being actively marketed for
sale at a sales price reasonable in relation to its fair value.
Non-current assets held for sale are not depreciated. They are presented separately in the statement
of financial position within Non-current assets held for sale and measured at the lower of their
carrying amount and fair value less costs to sell.
Property, plant and equipment
Property, plant and equipment are tangible items that are held for use in the Group’s operations,
are expected to be used for more than one year and have a cost exceeding EUR 5 thousand. Items
of property, plant and equipment are measured at cost less any accumulated depreciation and any
accumulated impairment losses.
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Cost
An item of property, plant and equipment is initially recognised at cost, which comprises the
purchase price and any costs directly attributable to acquisition which are necessary for bringing the
asset to its operating condition and location. Expenditures on subsequent improvements are added
to the carrying amount of the asset if they meet the definition of property, plant and equipment
and recognition criteria. If a part of an item of property, plant and equipment is replaced, the cost
of the new part is added to the carrying amount of the item and the replaced part is written off
the statement of financial position. Current repair and maintenance expenditures are expensed as
incurred.
The Group’s items of property, plant and equipment also include several vessels (an icebreaker
and ferries), which are subject to periodic major overhauls (dry-dockings) during their useful lives
(normally at intervals of 2.5-5 years). Using the component approach, the Group at initial recognition
and subsequently (a) identifies the non-physical component that represents a major overhaul, (b)
estimates the cost of the non-physical component (if possible, with reference to current market
prices), (c) depreciates the non-physical component separately over its useful life (i.e. the dry-
docking component separately from the vessel), and (d) derecognises the remaining carrying amount
of a non-physical item when the next overhaul (dry-docking) is performed and recognised as a new
non-physical component.
Borrowing costs
Borrowing costs are expensed as incurred, except for the costs that are directly attributable to the
acquisition, construction or production of assets whose preparation for intended use or disposal
lasts for an extended period (e.g. vessels under construction). Borrowing costs attributable to the
acquisition, construction or production of such assets are capitalised as part of the cost of the asset
until the date when the assets are ready for their intended use.
Depreciation
Depreciation of property, plant and equipment is calculated on the difference between cost and
residual value using the straight-line method over the estimated useful life of the asset. The value
of vessels at the end of their period of use (residual value) is equal to the value of scrap metal.
If an item of property, plant and equipment consists of significant parts that have different useful
lives, the parts are accounted for as separate items and assigned depreciation rates that correspond
to their useful lives.
Based on management’s estimates and standard practice in the shipping sector, a vessel’s two
significant parts – the vessel itself and dry docking expenses – that have different useful lives are
depreciated separately.
The estimated useful lives and residual values of items of property, plant and equipment are
reviewed at each reporting date, on recognising subsequent improvements, and when significant
changes are made to the Group’s development plans. If the estimated useful life of an asset
differs significantly from the previous estimate, the remaining useful life of the asset is adjusted
prospectively, resulting in a change in the asset’s depreciation charge for subsequent periods.
The estimated useful lives of items of property, plant and equipment are as follows:
• Quays and berths: 10–50 years
• Dredging areas in port basins: 20 years
• Buildings and other structures and facilities: 5–50 years
• Plant and equipment: 3.3–10 years
• Vessels: 10–25 years
• Capitalised dry docking costs: 2.5–5 years
• Other items of property, plant and equipment: 2–10 years
Land is not depreciated.
Depreciation of an asset commences when the item is in the location and condition necessary for it
to be capable of operating in the manner intended by management. Depreciation of an asset ceases
when its carrying amount equals its residual value, the asset is fully depreciated or reclassified to
Non-current assets held for sale. The appropriateness of the useful life and residual value of the
asset is assessed at each reporting date.
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Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less
accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a
straight-line basis over their estimated useful lives which do not exceed 5 years. Estimated useful
lives and amortisation methods are reviewed at the end of each reporting period and any changes
in estimates are recognised prospectively. Intangible assets with indefinite useful lives that are
acquired separately are carried at cost less accumulated impairment losses.
Internally generated intangible assets such as assets arising from soware development
expenditures are recognised when the Group can demonstrate the following:
• the technical feasibility of completing the intangible asset so that it will be available for use
or sale;
• its intention to complete the intangible asset and use or sell it;
• its ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to complete development
and use or sell the asset;
• its ability to measure reliably the expenditure incurred during development.
Other research and development expenditures that do not meet the criteria for classification as
intangible assets are recognised as an expense as incurred.
Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication that its non-financial
assets may be impaired. The Group assesses impairment indicators from both external and internal
sources, including significant changes in the global market specifically as they relate to the political
environments of neighbouring countries such as Russia and Finland, significant changes in global
trade in oil and other liquid bulk cargo as well as dry bulk cargo, significant changes in the travel
industry, and significant changes in weather patterns that could impact the use of the Group’s
multifunctional icebreaker. Non-financial assets include property, plant and equipment and intangible
assets. Impairment losses can be estimated for an individual asset or a group of assets (a cash-
generating unit). A cash-generating unit is defined as the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from other assets or groups
of assets. If there is indication of impairment, the recoverable amount of the asset is assessed
and compared to its carrying amount in the statement of financial position. An impairment loss is
recognised in the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in
use. Value in use is determined by using discounted cash flow projections that are based on financial
estimates reviewed by the management board and made for a period corresponding to the expected
lifespan of the asset but normally not more than 50 years. The amount of the impairment loss of a
cash generating unit is allocated to more significant non-current items of the unit on a pro rata basis
so that their value does not fall below their fair value less cost of disposal.
Impairment losses are recognised as an expense in the period in which they are incurred.
Assets that have been previously written down to their recoverable amount are reviewed at each
reporting date to assess whether there is any indication that an impairment loss recognised in
a prior period may no longer exist or may have decreased. A reversal of an impairment losses is
recognised in the statement of profit or loss as a reduction of impairment losses on non-current
assets.
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Corporate income tax
Deferred tax is recognised for temporary differences that arise between the carrying amounts
of assets and liabilities and their tax bases (the tax base is the amount attributed to an asset of
liability for tax purposes).
Under Estonian laws, corporate profit for the year is not subject to taxation. The obligation to pay
income tax arises on the distribution of profit and is recognised as an expense (in profit or loss for
the period) when the dividend is declared. Due to the nature of the taxation system, companies
registered in Estonia generally have no deferred tax assets or liabilities.
The Group incurs deferred tax liabilities only in connection with investments in entities domiciled
in countries where profit for the year is subject to income tax and investments in subsidiaries and
associates domiciled in Estonia except to the extent that the Group is able to control the timing of
the reversal of the temporary differences and it is probable that the temporary differences will not
reverse in the foreseeable future. Examples of the reversal of taxable temporary differences include
the distribution of a dividend, the disposal of an investment, and similar transactions.
Since the Group is able to control its subsidiaries’ dividend policy and to block, where necessary, the
profit distribution decisions of the associate AS Green Marine, it is able to control the timing of the
reversal of the temporary differences associated with those investments.
AS Tallinna Sadam has decided not to distribute the profits of the subsidiaries and the associate AS
Green Marine in the foreseeable future. Therefore, it has not recognised any deferred tax liabilities.
If profit is expected to be distributed in the foreseeable future, a deferred tax liability will be
recognised for the planned profit distribution, assuming that at the reporting date there are sufficient
funds and equity from which profit can be distributed in the foreseeable future.
The corporate income tax rate in Estonia is 20% (the amount of tax payable is calculated as 20/80
of the net distribution). From 2019, regular dividend distributions are subject to a lower, 14% tax
rate (the amount of tax payable is calculated as 14/86 of the net distribution). Every calendar year,
the lower tax rate may be applied to dividend and other profit distributions to an extent that does
not exceed the three prior calendar years’ average amount of dividend and other profit and equity
distributions on which tax has been paid.
The maximum income tax liability which would arise if all of the unrestricted equity were distributed
as dividends is disclosed in note 19 to the financial statements.
Employee benefits
Short-term employee benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are
due to be settled within 12 months aer the end of the period in which the employees render the
related service. Short-term employee benefits include wages, salaries, bonuses and social security
contributions; short-term compensated absences (such as paid annual leave) where the absence
is expected to occur within 12 months aer an employee has rendered the related service; and
incentive payments that are due to be settled within 12 months aer the end of the period in
which an employee renders the related services. When an employee has rendered services during
the accounting period in exchange for which a benefit may be expected to be paid (within next 12
months), the Group recognises a liability in the undiscounted amount of the benefit expected to be
paid (accrued expense), less any amount already paid.
Termination benefits
Termination benefits are employee benefits payable as a result of either the Group’s decision to
terminate an employee’s employment before the normal retirement date or an employee’s decision
to accept voluntary redundancy in exchange for those benefits. The Group recognises termination
benefits as a liability and an expense when, and only when, the Group is clearly committed to either
terminate the employment of an employee or group of employees before the normal retirement
date, or provide termination benefits as a result of an offer made in order to encourage voluntary
redundancy.
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Provisions and contingent liabilities
A provision is recognised only if, as a result of a past event, the Group has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are not recognised for future operating
losses. A provision is recognised based on management’s estimates of the timing and amount of
the expenditure required to settle the obligation. A provision is recognised in the amount which
management estimates as required to settle the obligation at the reporting date or to transfer it to
a third party at that time. If an obligation has to be settled later than 12 months aer the reporting
date, the provision is recognised at the present value of the expected future cash flows. A provision
is used to cover only those the expenditures for which it was originally recognised.
A contingent liability is a possible obligation that arises from a past event and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Group or a present obligation that has arisen from a past event but
is not recognised because it is either not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation or the amount of the obligation cannot be measured
with sufficient reliability.
Statutory capital reserve
The statutory capital reserve has been recognised to meet the requirements of the Estonian
Commercial Code. Each financial year, 1/20 (5%) of profit is transferred to the statutory capital
reserve until it amounts to 1/10 (10%) of share capital. The statutory capital reserve may be used
for covering accumulated losses or for increasing share capital. No distributions may be made from
the statutory capital reserve.
Earnings per share
Basic earnings per share are calculated by dividing profit for the year attributable to the equity
holders of the Parent by the average number of ordinary shares issued during the period. Diluted
earnings per share are calculated by adjusting profit attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares.
Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control and use an identified
asset for a period of time in exchange for consideration. In assessing whether a contract conveys the
right to control and use an identified asset, the Group applies the definition of a lease as set out in
IFRS 16.
The Group as a lessee
When entering into or modifying a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of their stand-alone price.
The Group recognises a right-of-use asset and a lease liability at the commencement date of the
lease. The right-of-use asset is initially measured at cost, which comprises the amount of the initial
measurement of the lease liability. The amount of the initial measurement of the lease liability is
adjusted for any advance lease payments, any direct costs incurred and any restoration costs to be
incurred (in dismantling the asset and restoring the site or the asset). Any lease incentives received
are deducted from this amount.
Right-of-use assets are depreciated on a straight-line basis from the commencement date of the
lease to the expiry of the lease term unless the ownership of the underlying asset transfers to the
Group at the end of the lease term or the carrying amount of the right-of-use assets indicates that
the Group plans to exercise the purchase option.
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In that case, the underlying asset is depreciated over its entire estimated useful life, which is
determined using the same approach that is used for similar items of property, plant and equipment
that are owned. Right-of-use assets are also adjusted for impairment losses, if any. In addition,
right-of-use assets are adjusted to reflect certain remeasurements of the lease liabilities.
The lease liability is initially measured at the present value of the lease payments not paid by the
commencement date of the lease, using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the incremental borrowing rate. The Group generally applies the incremental
borrowing rate as the discount rate.
The incremental borrowing rate is determined by reference to different sources of financing. The
inputs received are adjusted to reflect the terms of the lease and the type of underlying asset, to
find the incremental borrowing rate appropriate for the asset.
Lease payments included in the measurement of the lease liability comprise the following:
• Fixed payments (including in-substance fixed payments)
• Penalties for terminating the lease (if termination is reasonably certain)
• The exercise price of a purchase option (if the lessee is reasonably certain to exercise the
option)
• Amounts expected to be payable by the lessee under residual value guarantees
• Lease payments that depend on an index or rate.
The lease liability is measured at amortised cost. It is remeasured if there is a change in future lease
payments reflecting a change in the index or rate used to determine the payments, if the amounts
expected to be payable under a residual value guarantee are reassessed or if the Group changes
its assessment of whether it intends to exercise the option to purchase the underlying asset or the
option to extend or terminate the lease. The lease liability is also remeasured to reflect changes in
fixed payments (including in-substance fixed payments).
If the lease liability is remeasured due to the above reasons, a corresponding adjustment is made
to the carrying amount of the right-of-use asset. The effect of the change in the lease liability is
recognised in profit or loss if the carrying amount of the right-of-use asset has been reduced to
zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term
leases and leases for which the underlying asset is of low value. The Group recognises these lease
payments as an expense on a straight-line basis over the lease term.
The Group as a lessor
When entering into a contract that contains a lease component or modifies a lease, the Group
allocates the consideration in the contract to each lease component on the basis of their stand-
alone price.
For contracts under which the Group is the lessor, the Group determines at the commencement date
whether the lease is an operating lease or a finance lease.
The Group assesses in each case whether the lease transfers substantially all the risks and rewards
incidental to ownership of the underlying asset. If yes, the lease is classified as a finance lease.
If not, the lease is classified as an operating lease. As part of this assessment, the Group also
considers certain other indicators (e.g. whether the lease term is for the major part of the economic
life of the underlying asset).
If the contract contains both lease and non-lease components, the Group applies the accounting
policies of IFRS 15 to allocate the consideration in the contract to the components.
The Group applies the derecognition and impairment requirements of IFRS 9 to the lessor’s net
investment in the lease. The Group reviews regularly estimated unguaranteed residual values used
in computing the lessor’s gross investment in the lease.
For operating leases, the Group recognises lease payments as income in profit or loss on a straight-
line basis over the lease term.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will
comply with the conditions associated with the grant and the grant will be received. Government
grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate.
A government grant that becomes repayable is accounted for as a change in an accounting estimate.
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Government grants related to assets
Government grants related to the acquisition of assets are presented in the statement of financial
position by setting up the grant as deferred income (a liability), which is recognised in profit or loss
on a systematic basis over the useful life of the asset. Assets acquired through government grants
are initially recognised at full cost (i.e. using the gross method). Acquired assets are depreciated
and the liability arising from the government grant is recognised in other income over the estimated
useful life of the acquired asset.
The liabilities arising from the grants related to non-depreciable assets (e.g. land) are recognised
as income when the asset is ultimately retired or sold. Repayment of a grant related to an asset
is recognised by reducing the deferred income balance by the amount repayable. The cumulative
additional depreciation that would have been recognised in the statement of profit or loss to date in
the absence of the grant is recognised immediately in the statement of profit or loss.
Government grants related to income
Government grants related to income are recognised in the statement of profit or loss over the
periods in which the Group recognises as expenses the related costs for which the grant is intended
to compensate. In the statement of profit or loss, the costs to be compensated and income from the
grant are recognised separately. Amounts received for which additional conditions are required to
be met prior to recognition as other income are presented in the statement of financial position as
deferred income (a liability).
Repayment of a grant related to income is applied first against any unamortised deferred credit
recognised in respect of the grant. To the extent that the repayment exceeds any such deferred
credit, or when no deferred credit exists, the repayment is recognised immediately in the statement
of profit or loss.
Government grants related to domestic ferry service
Government grants received in support of providing domestic ferry service are presented in the
statement of profit or loss in Revenue. According to the passenger transport public service contract,
the Group is paid the difference between the revenue calculated on the basis of the contract and
revenue from ticket sales. As there are no other conditions besides the provision of ferry service,
the grants are recognised as revenue as received. The policies for the recognition of income from
government grants related to domestic ferry service are described in this note under Sale of ferry
services – government support.
Statement of cash flows
The statement of cash flows has been prepared using the direct method.
Tehingud seotud osapooltega
For the purposes of these consolidated financial statements, related parties include the members
of the supervisory and management boards of Group companies and their close family members,
companies under the control or significant influence of the above persons, associates, government
agencies, and companies under the control or significant influence of the Republic of Estonia.
Notes to the Consolidated Financial Statements: NOTE 3 | page 98
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Note 3. Operating segments
Services whose revenues make up segment revenues
The Group’s business activities are organised and managed based on its core business lines. The
information used by the chief operating decision maker to make decisions about resources to be
allocated and assess segment performance focuses on its core business lines. The Group’s chief
operating decision maker is the management board. No operating segments have been aggregated
in presenting reportable segments. The Group’s reportable segments under IFRS 8 are as follows:
• Passenger harbours
• Cargo harbours
• Ferry
• Other
Passenger harbours segment comprises the rendering of port services in the capacity of a landlord
port in the harbours belonging to the Group that are focused on providing services to passengers
– Old City Harbour and Saaremaa Harbour. The segment’s revenue includes all revenues of these
harbours, consisting primarily of vessel dues collected from ferries and cruise ships, and passenger
fees charged for using the buildings and structures designed for providing services to passengers
and their vehicles. It also includes other revenue generated by harbours mainly involved in providing
services to passengers and ferries such as rental income for leasing out premises (office and
commercial premises), cargo charges, sale of electricity and various other services.
Expenses related to this segment are primarily the costs incurred in these harbours in connection
with the revenue generating activities outlined above. Expenses also include allocated corporate
expenses, based on the ratio of revenue from this segment to total revenue from harbour operations
(the Passenger harbours and Cargo harbours segments combined). All corporate operating expenses
are fully allocated between the Passenger harbours and Cargo harbours segments as the provision
of landlord port operations is the main activity of the corporate head office (the port authority).
Cargo harbours segment comprises the rendering of port services in the capacity of a landlord port
in the harbours belonging to the Group that are focused on cargo handling – Muuga Harbour, Paldiski
South Harbour and Paljassaare Harbour. The segment’s revenues include all revenues of these
harbours, consisting primarily of revenue from vessel dues for cargo vessels, revenue from cargo
charges paid by cargo operators for using the harbour infrastructure, and rental income from the
use of premises by cargo operators and other customers under contracts on the right of superficies
and lease contracts. It also includes passenger fees and revenue from the sale of electricity and
other services.
Expenses related to this segment are primarily the costs incurred in these harbours in connection
with the revenue generating activities outlined above. Expenses also include allocated corporate
expenses based on the ratio of revenue from this segment to total revenue from harbour operations
(the Passenger harbours and Cargo harbours segments combined). All corporate operating expenses
are fully allocated between the Passenger harbours and Cargo harbours segments as the provision
of landlord port operations is the main activity of the corporate head office (the port authority).
Ferry segment comprises the rendering of ferry service by the subsidiary OÜ TS Laevad between
Estonia´s mainland and two largest islands, Saaremaa and Hiiumaa, under a passenger transport
public service contract signed with the state (in total two routes are operated). Revenues include
revenues from ticket sales to the end-users of ferry service and government support to the extent
that revenue from ticket sales does not cover the contract revenue agreed for rendering the ferry
service. It also includes rental income and revenue from the provision of other services collected
from tenants providing commercial services to passengers on board the ferries.
The segment’s expenses include all costs related to owning and operating the ferries required for the
two routes. The segment’s revenues and results comprise the revenues and results of the subsidiary
OÜ TS Laevad that provides the service. No corporate expenses are allocated to the Ferry segment.
Notes to the Consolidated Financial Statements: NOTE 3 | page 99
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The segment Other comprises the business of the subsidiary OÜ TS Shipping that owns and
operates the multifunctional icebreaker Botnica and the profit or loss on investments in an associate
accounted for under the equity method. The segment’s revenues and expenses comprise the
revenues and expenses of OÜ TS Shipping. No corporate expenses are allocated to the segment
Other.
Segment revenues and results
Reportable segments apply the same accounting policies as the Group. Segment revenue comprises
only revenue (does not contain Other income). Segment performance indicators reported to the chief
operating decision maker comprise segment operating profit and segment adjusted EBITDA. Segment
operating profit represents profit before finance income and costs (net), profit from investments in
an associate accounted for under equity method, and income tax expense. Segment adjusted EBITDA
represents segment operating profit before depreciation and amortisation, impairment losses, and
amortisation of government grants received, and profit from investments in an associate accounted
for under equity method. Compared to profit for the period, segment adjusted EBITDA represents
profit for the period before depreciation and amortisation, impairment losses, amortisation of
government grants received, finance income and costs (net), and income tax expense.
Segment results are reported to the chief operating decision maker for making decisions about
allocating resources to the segment and assessing its performance on a monthly basis.
Geographical information
In 2020, the Group generated EUR 4,263 thousand, i.e. 4% of its revenue (2019: EUR 4,958
thousand, i.e. 4%) outside Estonia (in Canada) and 96% (2019: 96%) of its revenue in Estonia.
Revenue generated outside Estonia consisted of services provided with the icebreaker Botnica (the
segment Other) in Canada during the period June to November. All non-current assets of the Group
were located in Estonia, with the exception described above.
Information about major customers
The Group’s total revenue of EUR 107,358 thousand (2019: 130,536 thousand) includes revenue of
EUR 23,439 thousand (2019: EUR 23,357 thousand) attributable to its largest customer, which is
reported in the Ferry segment and the segment Other. In 2020, the Group’s second largest customer
also contributed 10% or more to the Group’s total revenue. Revenue attributable to this customer of
EUR 17,195 thousand (2019: EUR 24,695 thousand) is reported in the Passenger harbours segment
and the Cargo harbours segment. No other customer contributed 10% or more to the Group’s total
revenue for 2020 or 2019.
Notes to the Consolidated Financial Statements: NOTE 3 | page 100
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Segment revenues and results
In thousands of euros
2020
Passenger harbours Cargo harbours Ferry Other Total
Vessel dues 17,614 19,990 0 0 37,604
Cargo charges 1,439 5,358 0 0 6,797
Passenger fees 6,883 156 0 0 7,039
Sale of electricity 584 3,882 0 0 4,466
Sale of ferry services – revenue from ticket sales 0 0 10,479 0 10,479
Sale of other services 654 994 51 69 1,768
Operating lease income 1,596 9,303 674 0 11,573
Charter fees 0 0 0 9,131 9,131
Sale of ferry services – government support 0 0 18,501 0 18,501
Total segment revenue
*
(note 20) 28,770 39,683 29,705 9,200 107,358
Adjusted segment EBITDA 15,140 25,377 14,101 3,805 58,423
Depreciation and amortisation -6,604 -8,913 -5,892 -2,264 -23,673
Impairment loss (note 10) -69 -352 0 0 -421
Amortisation of government grants received (note 18) 198 573 0 0 771
Share of loss of an associate accounted for under the equity method 0 0 0 462 462
Segment operating profit 8,665 16,685 8,209 2,003 35,562
Finance income and costs, net -1,669
Share of loss of an associate accounted for under the equity method -462
Income tax expense -4,913
Profit for the period 28,518
* Total segment revenue represents revenue from external customers and excludes inter-segment revenue of EUR 82 thousand and EUR 114 thousand
for the Passenger harbours and Cargo harbours segments, respectively, which was eliminated during consolidation.
Notes to the Consolidated Financial Statements: NOTE 3 | page 101
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In thousands of euros
2019
Passenger harbours Cargo harbours Ferry Other Total
Vessel dues 27,581 19,139 0 0 46,720
Cargo charges 1,475 5,666 0 0 7,141
Passenger fees 16,905 169 0 0 17,074
Sale of electricity 742 4,691 0 0 5,433
Sale of ferry services - revenue from ticket sales 0 0 11,583 0 11,583
Sale of other services 1,174 1,063 45 107 2,389
Operating lease income 1,949 9,385 626 0 11,960
Charter fees 0 0 0 9,665 9,665
Sale of ferry services – government support 0 0 18,571 0 18,571
Total segment revenue
*
(note 20) 49,826 40,113 30,825 9,772 130,536
Adjusted segment EBITDA 32,792 22,248 13,932 5,320 74,292
Depreciation and amortisation -6,475 -8,468 -5,643 -2,204 -22,790
Impairment loss (note 10) -154 -93 0 0 -247
Amortisation of government grants received (note 18) 204 464 0 0 668
Share of profit of an associate accounted for under the equity method 0 0 0 -244 -244
Segment operating profit 26,367 14,151 8,289 2,872 51,679
Finance income and costs, net -1,755
Share of profit of an associate accounted for under the equity method 244
Income tax expense -5,764
Profit for the period 44,404
* Total segment revenue represents revenue from external customers and excludes inter-segment revenue of EUR 51 thousand and EUR 154 thousand
for the Passenger harbours and Cargo harbours segments, respectively, which was eliminated during consolidation.
Notes to the Consolidated Financial Statements: NOTE 4 | page 102
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Note 4. Financial risk management
The Group’s operations are exposed to several financial risks: market risk (including cash flow
interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects
on the Group’s financial performance. The Group uses derivative instruments to hedge interest rate
risk.
Risk management is performed by the Group’s risk management professionals in accordance
with the policies approved by the management board. The management board establishes risk
management policies and regulations governing specific risk areas in writing.
The COVID-19 pandemic has affected and continues to affect the operation of financial markets. To
mitigate the risks involved, we monitor our customers’ payment behaviour more closely than earlier,
maintain an open dialogue with banks and other potential financing providers to make sure that we
can obtain credit when necessary, and observe developments in the economic environment, including
changes in interest rates. We forecast and monitor the Group’s cash flows in the long- and short-
term perspective to make sure that the required credit limits and liquidity buffers would be available
in time, before they need to be used. For further information about the impacts of the COVID-19
pandemic on the Group’s performance, see section 6.3 in the management report.
Market risk
Currency risk
Currency risk is exposure to any future fluctuation in the fair value of the Group’s financial
instruments or cash flows arising from movements in foreign exchange rates. The Group has no
material liabilities or receivables denominated in any currency other than its functional currency
(the euro). All outstanding long-term loans and borrowings are also denominated in euros. In 2020,
96.9% of receipts (2019: 97.4%) and 99.4% of payments (operating expenses, investments, finance
costs, etc.) (2019: 99.5%) were denominated in euros. Since nearly all receipts and payments as
well as loans and borrowings are denominated in euros, it may be concluded that the Group is not
exposed to any significant currency risk.
Price risk
At 31 December 2020 and the previous financial year end, the Group’s statement of financial
position did not include any investments in equity instruments exposing the Group to price risks
resulting from financial instruments.
Interest rate risk
The Group’s interest rate risk results from long-term loans and borrowings. Term deposit contracts
are concluded at fixed interest rates and do not expose the Group to any cash flow interest rate risk.
Floating rate loans and borrowings expose the Group to interest rate risk. The Group’s policy is to
maintain some of its debt portfolio in fixed rate instruments by using floating-to-fixed interest rate
swaps when appropriate.
At 31 December 2020, loans and borrowings with rates fixed through derivative transactions
accounted for 7% (31 December 2019: 14%) of the portfolio. Thus, 93% of loans and borrowings
that are not hedged are exposed to interest rate risk. Further information on interest rate swaps
acquired for the purpose of hedging interest rate risk is provided in note 17.
The exposure of the Group’s loans and borrowings to the risk of changes in interest rates and the
contractual re-pricing dates of loans and borrowings at the end of the reporting period are as
follows at page 103.
The percentage of total shows the proportion of loans and borrowings that at the date presented
had variable or fixed rates in relation to the total amount of loans and borrowings.
To assess the Group’s exposure to interest rate risk, a sensitivity analysis is used which describes
the impact of interest rate risk exposure on the Group’s profit through an estimated fluctuation in
the market interest rate. If the market interest rate as at 31 December 2020 had been higher/lower
by 100 basis points, i.e. 1 percentage point, the Group’s profit for the financial year would have
increased/decreased by EUR 1,976 thousand (31 December 2019: EUR 1,796 thousand), assuming
all other variables remained constant.
Notes to the Consolidated Financial Statements: NOTE 4 | page 103
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In thousands of euros
At 31 December 2020 % of total 2019 % of total
Variable rate borrowings 197,580 93.38% 179,646 86.43%
Fixed rate borrowings – remaining terms to repricing dates 14,000 6.62% 28,200 13.57%
< 6 months 2,000 0.95% 2,000 0.96%
6–12 months 2,000 0.95% 2,000 0.96%
1–5 years 10,000 4.74% 24,200 11.65%
Total loans and borrowings (note 16) 211,580 207,846
Credit risk
Credit risk exposure mostly results from trade receivables, cash and cash equivalents and
derivative transactions. At 31 December 2020, the Group’s maximum exposure to credit risk was
EUR 33,101 thousand (31 December 2019: EUR 42,181 thousand).
Cash and cash equivalents were considered as financial assets with low credit risk at the reporting
date, as they were held at reputable international banks.
To reduce customer-related credit risk exposure, advance payments or bank guarantees are required
from customers whose solvency is doubtful. To mitigate credit risk, due diligence on the customer is
performed prior to entering into any major contracts. Other methods for managing customer-related
credit risk exposures include day-to-day monitoring of customers’ settlement behaviour and prompt
application of appropriate measures. Based on the Group’s analysis, a loss allowance for credit-
impaired receivables has been recognised. Further information on the credit quality of financial
assets is disclosed in note 6.2.
Credit risk exposure from financial transactions is mitigated by using financial institutions with high
credit ratings in performing investment or derivative transactions.
Receivables not past due as at the reporting date accounted for 73.1% (2019: 70.3%) of total trade
receivables. Further information on trade receivables is disclosed in note 8.
For all trade receivables, the Group recognises expected credit losses (ECL) using the simplified
approach provided in IFRS 9, which permits recognising an allowance for lifetime expected credit
losses. The measurement principles are described in the Impairment of financial assets section of
accounting policies (note 2).
In thousands of euros
At 31 December 2020 2019
Current accounts and term deposits at banks with
original maturities of less than 3 months (note 7)
26,651 35,159
Receivables from customers
*
(note 8) 6,127 6,689
Other receivables (note 8) 323 333
Total 33,101 42,181
*
Impairment allowances have been deducted from receivables from customers.
Notes to the Consolidated Financial Statements: NOTE 4 | page 104
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Trade receivables – expected credit loss matrix
In thousands of euros
Not past due
Days past due
0-30 31-60 61-90 >90 Total
AT 31 DECEMBER 2020
Expected credit loss rate 0.80% 1.50% 3.00% 80.00% 100.00%
Total trade and other receivables 5,713 460 6 6 1,636 7,820
Lifetime expected credit loss (ECL) -46 -7 0 -4 -1,636 -1,693
6,127
AT 31 DECEMBER 2019
Expected credit loss rate 0.80% 1.50% 3.00% 80.00% 100.00%
Total trade and other receivables 6,220 467 52 45 2,065 8,849
Lifetime expected credit loss (ECL) -50 -7 -2 -36 -2,065 -2,160
6,689
Notes to the Consolidated Financial Statements: NOTE 4 | page 105
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The following table shows movements in lifetime ECL recognised for trade receivables.
Trade receivables lifetime expected credit loss (ECL)
*
In thousands of euros
Collectively assessed
receivables
not credit-impaired Credit-impaired receivables Total
At 31 December 2018 89 1,931 2,020
Transfer to credit impaired 0 458 458
Amounts written off as uncollectible 0 -93 -93
Amounts recovered (previously written down/off) 0 -231 -231
Change in loss allowance due to new trade receivables 6 0 6
At 31 December 2019 95 2,065 2,160
Transfer to credit impaired 0 1,530 1,530
Amounts written off as uncollectible 0 -1,383 -1,383
Amounts recovered (previously written down/off) 0 -577 -577
Change in loss allowance due to new trade receivables -37 0 -37
At 31 December 2020 58 1,635 1,693
* In 2020 and 2019, there were no individually assessed not-credit impaired trade receivables for which a lifetime ECL was recognised.
Other receivables are assessed using the 12 months’ ECL method. At 31 December 2020, the credit
risk of those financial assets had not increased significantly and therefore no additional provision
was needed. At 31 December 2020, a major share of other receivables was made up of instalment
plan receivables.
Notes to the Consolidated Financial Statements: NOTE 4 | page 106
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Liquidity risk
The Group manages its liquidity risk using a combination of the following solutions: available
funds in current accounts, term deposits, overdras and other investment and working capital
management solutions offered by banks, regular monitoring of cash flows and matching the
maturities of financial assets and liabilities.
The liquidity buffer maintained and available upon short notice to be able to settle quickly liabilities
arising in the ordinary course of the Group’s business amounts to EUR 5,000 thousand on average.
The liquidity reserve comprises of cash and cash equivalents, term deposits with original maturities
of less than 3 months, and overdras where necessary. Based on cash flow forecasts, management
monitors, on an ongoing basis, changes in the Group’s liquidity reserve and if the reserve falls below
the required level, short-term external financing in the form of various debt instruments is used. The
minimum level of the liquidity reserve must be at least EUR 2,000 thousand at any time.
At 31 December 2020, current assets exceeded current liabilities by EUR 6.9 million (31 December
2019: by EUR 15.1 million). The Group continues to generate positive net cash flow. Thus, it does not
need additional financing for its daily operations.
In the following liquidity analysis, the Group’s financial liabilities are grouped by contractual maturity.
The balances shown in the table are contractual undiscounted cash flows, which comprise the
principal and accrued interest of interest-bearing loans and borrowings. On calculating interest
accrued on interest-bearing loans and borrowings (bank loans and issued debt securities), the
forward-looking yield curves of interest rate swap transactions from market information providers
have been used as the basis for the Euribor forecast as follows: as at 28 January 2021 for year-end
2020 and as at 10 February 2020 for year-end 2019.
For intra-Group management of subsidiaries’ liquidity, internal credit limits are used, if necessary.
Liquidity analysis
In thousands of euros
Loans
outstanding
*
Debt securities
issued
**
Trade and other
payables
Derivative
instruments Total
AT 31 DECEMBER 2020
< 6 months 3,506 408 9,058 32 13,004
6–12 months 5,170 9,394 0 71 14,635
1–5 years 43,982 38,869 0 108 82,959
> 5 years 12,388 105,385 0 0 117,773
Total 65,046 154,056 9,058 211 228,371
AT 31 DECEMBER 2019
< 6 months 3,495 318 11,998 42 15,853
6–12 months 4,046 9,502 0 81 13,629
1–5 years 28,145 39,720 0 221 68,086
> 5 years 15,899 115,706 0 0 131,605
Total 51,585 165,246 11,998 344 229,173
*
Including principal outstanding of EUR 62,330 thousand (2019: EUR 49,596 thousand) and estimated total future interest payments of EUR 2,716 thousand (2019: EUR 1,989 thousand).
**
Including principal outstanding of EUR 149,250 thousand (2019: EUR 158,250 thousand) and estimated total future interest payments of EUR 4,806 thousand (2019: EUR 6,996 thousand).
Notes to the Consolidated Financial Statements: NOTE 5 | page 107
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Note 5. Significant accounting estimates and judgements
RThe preparation of financial statements requires the use of accounting estimates which, by
definition, seldom equal actual results. Management also needs to exercise judgement in applying
accounting policies.
This note provides an overview of areas that involve a higher degree of judgement or complexity,
and items which are more likely to be materially adjusted due to estimates and assumptions proving
inaccurate.
Classification of assets leased out
The Group owns land and buildings in its harbours which it leases out to third parties under
operating leases. Management has assessed whether the leased-out land and buildings should
be classified as property, plant and equipment or investment property. The Group has classified all
such assets as property, plant and equipment since the assets are held to earn revenue from its
core harbour operations or activities supporting core operations by increasing cargo or passenger
flows. Therefore, according to the assessment of the Group’s management, the main objective of
holding such assets is not to earn rentals; they are primarily held to help increase revenue from
core operating activities. Accordingly, the main revenue related to those assets does not result from
rentals.
Property that cannot be directly attributable to the Group’s core operations in increasing cargo or
passenger flows or activities supporting core operations and that cannot be sold or leased out under
a finance lease, is recognised as investment property only if an insignificant part (less than 10%) of
the asset is used for providing services or for administrative purposes. At 31 December 2020, the
Group did not have such assets.
Useful life of property, plant and equipment
The Group owns a large amount of high-value infrastructure assets classified as items of property,
plant and equipment that have very long estimated useful lives (up to 50 years). The useful lives
of such items of property, plant and equipment are based on management’s best estimate of
the period over which an asset is expected to be available for use. These estimates are based on
historical experience with similar assets because even though construction technologies evolve,
the impact of new solutions on the physical and useful lives of such items of property, plant and
equipment may not yet have been proved in practice.
At 31 December 2020, the carrying amount of the Group’s property, plant and equipment was
EUR 587,506 thousand; depreciation for the year amounted to EUR 23,094 thousand. At 31
December 2019, the respective figures were EUR 575,267 thousand and EUR 22,266 thousand (note
10). If depreciation rates were reduced by 10%, the annual depreciation charge would decrease and
profit would increase by EUR 2,309 thousand (2019: EUR 2,226 thousand).
The useful lives of property, plant and equipment are reviewed at each reporting date. If new
estimates differ significantly from the previous ones, the changes are accounted for as changes in
accounting estimates.
Notes to the Consolidated Financial Statements: NOTE 5 | page 108
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Impairment of property, plant and equipment
The Group assesses whether there is any indication that an item of property, plant and equipment
may be impaired. If such indications exist, the recoverable amount of the asset is estimated and
compared to its carrying amount in the statement of financial position. The recoverable amount
of an asset is the higher of its fair value less costs to sell and its value in use. Fair value can be
derived from recent transactions conducted by the Group with similar assets or measured with the
assistance of professional valuators using the market information available to them. If the fair
value of an asset cannot be determined reliably or is likely to be lower, a future cash flow model
is developed to calculate its value in use. Value in use calculations require estimates which are
based on projections of general economic conditions, actual market trends, project-based cargo
and/or passenger flows and the price level of services sold used as inputs to estimate future cash
flows expected to arise from the asset or cash-generating unit and a suitable discount rate and
growth rate to calculate present value. If circumstances change in the future, either an additional
impairment loss is recognised or the previously recognised impairment loss is reversed either in part
or in full.
Assets are tested for impairment at the end of each reporting period when circumstances indicate
that assets might be impaired or events that led to a previous write-down may have ceased to exist.
Information about impairment losses is disclosed in note 10.
Revenue recognition
For recognising monthly and/or quarterly revenue, the Group needs to make significant estimates
about the expected annual vessel calls and/or cargo volumes. Such estimates are made based on
the latest information available from customers and the latest market information available to the
Group. See note 2, the Revenue section for further details.
Classification of passenger transport public service contract
The Group owns four ferries which it uses to provide domestic ferry service to the state (Republic
of Estonia) under a passenger transport public service contract signed aer winning a public tender.
According to the contract, the state has control over the volume and price of the ferry service
provided by the Group with its ferries. Under the contract, the state also has the right to exercise
an option to purchase one to four of the ferries used to provide the ferry service. However, as the
majority interest in the Parent belongs to the state, in management’s judgement the criteria for
public-to-private service are not satisfied and the Group has not applied the accounting treatment
for service concessions provided in IFRIC 12 and has instead recognised the ferries belonging to it
as items of property, plant and equipment and has classified the revenue received from the state as
revenue from government grants.
Notes to the Consolidated Financial Statements: NOTE 6 | page 109
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Note 6. Financial instruments
Financial instruments by category
Financial assets
In thousands of euros
At 31 December 2020 2019
Financial assets carried at amortised cost 35,586 44,515
Cash and cash equivalents (note 7) 26,679 35,183
Trade and other receivables – financial assets (note 8) 8,907 9,332
Total financial assets 35,586 44,515
Financial liabilities
In thousands of euros
At 31 December 2020 2019
Financial liabilities carried at amortised cost 218,486 217,670
Trade and other payables – financial liabilities (note 14) 6,906 9,824
Loans and borrowings (note 16) 211,580 207,846
Liabilities at fair value 102 243
Derivatives (note 17) 102 243
Total financial liabilities 218,588 217,913
Notes to the Consolidated Financial Statements: NOTE 6 | page 110
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Fair value
According to the Group’s estimates, the fair values of assets and liabilities recognised at amortised
cost do not differ significantly from their carrying amounts stated in the Group’s consolidated
statement of financial position as at 31 December 2020, except for loans and borrowings. For
the purposes of disclosure, the fair value of loans and borrowings is found by discounting future
contractual cash flows at current market interest rates that would be available to the Group for
similar financial instruments. The fair value of loans and borrowings was found by discounting future
contractual cash flows at current market interest rates for similar financial instruments as at 31
December 2020 and 31 December 2019 available to companies with an S&P BBB rating (the rating
indicated by the banks as the internal shadow rating for the Group).
A more detailed comparison of the carrying amounts and fair values of loans and borrowings is disclosed in
note 16. The carrying amounts of trade receivables and trade payables, less any write-downs, is estimated
to be equal to their fair value.
All derivatives are measured at fair value in the statement of financial position. The fair value of derivatives
is estimated on monthly basis using pricing provided by banks based on the forward-looking yield curves of
interest rate swap transactions from market information providers. In the value hierarchy, this qualifies as a
level 2 measurement.
Credit quality of financial assets
The credit quality of financial assets which are neither past due nor impaired is assessed by
reference to ratings provided to creditors by independent rating agencies (if available for the
counterparty).
Cash in current accounts and deposits by rating
*
In thousands of euros
At 31 December 2020 2019
Aa2 26,530 22,597
Baa1 121 12,562
Total amount reported in cash and cash equivalents 26,651 35,159
* The remaining portion of the balance of Cash and cash equivalents (EUR 28 thousand at 31 December 2020 and EUR 24 thousand at 31 December 2019)
not included in the table above consists of cash on hand and in transit, i.e. funds that cash-in-transit service providers and other payment intermediaries have not yet transferred to the Group’s current accounts.
Notes to the Consolidated Financial Statements: NOTE 7 | page 111
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Note 7. Cash and cash equivalents
In thousands of euros
At 31 December 2020 2019
Cash on hand 12 13
Cash at banks 26,651 25,159
Short-term deposits 0 10,000
Cash in transit 16 11
Total cash and cash equivalents (notes 4 and 6) 26,679 35,183
All balances included in cash and cash equivalents are denominated in euros (as at 31 December
2020 and 31 December 2019).
The interest accrued as at the reporting date is recognised in Trade and other receivables.
Notes to the Consolidated Financial Statements: NOTE 8 | page 112
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Note 8. Trade and other receivables
In thousands of euros
At 31 December 2020 2019
FINANCIAL ASSETS
Receivables from customers (note 4) 7,820 8,849
Incl. from contracts with customers 5,358 6,936
Allowance for credit losses (note 4) -1,693 -2,160
Incl. from contracts with customers -257 -1,324
Government grants receivable (note 18) 2,487 2,287
Receivables from an associate (note 24) 15 36
Other receivables (note 4) 278 320
Total financial assets (note 6) 8,907 9,332
Incl. receivables for non-current assets 55 143
NONFINANCIAL ASSETS
Prepaid taxes (note 15) 744 1,093
Other prepayments 487 470
Other receivables (note 4) 45 13
Total non-financial assets 1,276 1,576
Total trade and other receivables 10,183 10,908
Of which current receivables 10,183 10,614
non-current receivables 0 294
Notes to the Consolidated Financial Statements: NOTE 9 | page 113
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Note 9. Investments in an associate
AS Green Marine
The company is a waste management entity established at the end of 2003. Its principal place of
business and country of incorporation is Estonia.
Although AS Tallinna Sadam holds 51% (both as at 31 December 2020 and 31 December 2019)
of the ownership interest and voting rights in AS Green Marine and two other shareholders hold
the remaining interest, to have control of AS Green Marine, the Group’s voting or contractual rights
should be substantive and provide the Group with the ability to direct AS Green Marine’s activities.
The articles of association of AS Green Marine specify that at least 75% of voting rights are required
to make decisions about the entity’s activities.
Even though AS Tallinna Sadam can block any decision, it does not have control of AS Green Marine
because it needs the consent of other shareholders for the adoption of a decision. Thus, the Group
does not have control of the entity.
The business lines of AS Green Marine include management of waste generated in harbours;
management, administration and operation treatment plants for hazardous ship-generated waste
and wastewater; and cleaning and maintenance of port basins and harbour premises.
The Group’s investments in the associate are accounted for using the equity method in these
consolidated financial statements.
Changes in investments in an associate
In thousands of euros
At 31 December 2020 2019
Carrying amount at beginning of period 1,609 1,569
Share of profit or loss under the equity method -462 244
Dividends paid 0 -204
Carrying amount at end of period 1,147 1,609
Notes to the Consolidated Financial Statements: NOTE 9 | page 114
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Associate AS Green Marine
In thousands of euros
At 31 December 2020 2019
Current assets 518 1,335
Non-current assets 4,101 3,974
Current liabilities 798 915
Non-current liabilities 1,572 1,240
The above amounts of assets and liabilities include the following:
Cash and cash equivalents 3 543
Current loans and borrowings 383 300
Non-current loans and borrowings 1,572 1,240
In thousands of euros 2020 2019
Revenue 2,906 5,279
Profit or loss from continuing operations -856 500
Profit or loss for the period -856 500
Total comprehensive income for the period -856 500
The above profit or loss for the period includes the following:
Depreciation and amortisation 547 345
Interest expense 41 23
Income tax expense 0 88
In thousands of euros
At 31 December 2020 2019
Net assets of the associate 2,249 3,154
The Group’s ownership interest in the associate, % 51% 51%
Carrying amount of the Group’s investments in the associate 1,147 1,609
AS Tallinna Sadam has no obligation to provide additional financial or other support to AS Green
Marine.
Notes to the Consolidated Financial Statements: NOTE 10 | page 115
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Note 10. Property, plant and equipment
In thousands of euros
Land and
building
Plant and
equipment
Other items of
property, plant
and equipment
Assets under
construction
*
Pre-payments Total
At 31 December 2018
Cost 604,312 236,509 6,983 5,648 31 853,483
Accumulated depreciation and impairment losses -210,846 -68,586 -5,086 0 0 -284,518
Carrying amount at 31 December 2018 393,466 167,923 1,897 5,648 31 568,965
Movements in 2019
Purchases and reconstruction (note 26) 128 2,236 747 20,385 5,473 28,969
Disposal at carrying amount 0 0 -12 0 0 -12
Depreciation charge -11,370 -10,402 -494 0 0 -22,266
Impairment losses -233 -14 0 0 0 -247
Transferred to non-current assets held for sale at carrying amount
*
-128 -14 0 0 0 -142
Reclassified at carrying amount 15,848 2,403 83 -18,334 0 0
At 31 December 2019
Cost 614,182 240,253 7,399 7,699 5,504 875,037
Accumulated depreciation and impairment losses -216,471 -78,121 -5,177 0 0 -299,769
Carrying amount at 31 December 2019 397,711 162,132 2,221 7,699 5,504 575,267
Movements in 2020
Purchases and reconstruction (note 26) 327 2,174 1,377 32,592 0 36,470
Disposal at carrying amount -591 -40 0 0 0 -631
Depreciation charge -11,599 -10,857 -638 0 0 -23,094
Impairment losses -237 -184 0 0 0 -421
Transferred to non-current assets held for sale at carrying amount -74 0 0 0 0 -74
Other adjustments 0 0 0 0 -11 -11
Reclassified at carrying amount 14,529 5,612 89 -14,737 -5,493 0
At 31 December 2020
Cost 627,291 246,929 8,614 25,554 0 908,388
Accumulated depreciation and impairment losses -227,225 -88,092 -5,565 0 0 -320,882
Carrying amount at 31 December 2020 400,066 158,837 3,049 25,554 0 587,506
Notes to the Consolidated Financial Statements: NOTE 10 | page 116
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*At 31 December 2020, assets under construction of EUR 25,554 thousand included the following
major items:
• Construction of the cruise terminal and promenade of EUR 10,573 thousand
• Construction of automated mooring systems of EUR 7,562 thousand
• Construction of a footbridge of EUR 3,648 thousand
• Design and construction of a multi-storey car park of EUR 3,482 thousand.
*At 31 December 2019, assets under construction of EUR 7,699 thousand included the following
major items:
• Construction of on-shore power supply systems for ferries of EUR 2,562 thousand
• Dredging works in the approach canal and harbour waters of EUR 1,039 thousand
• Construction of an extension to passenger terminal D of EUR 1,026 thousand
• Design and construction of the Pikksilma promenade of EUR 1,006 thousand.
The Group’s assets have not been pledged.
At 31 December 2020, the carrying amount of fully depreciated items still in use was EUR 30,825
thousand, at 31 December 2019 EUR 29,524 thousand.
Commitments related to property, plant and equipment are disclosed in note 25.
Under the passenger transport public services contract signed on 11 December 2014, the Republic
of Estonia, represented by the Ministry of Economic Affairs and Communications, has the right to
acquire any of the four passenger ferries (Leiger, Tiiu, Tõll and Piret) that are in the possession of
the Group. The ministry has the right to exercise the option to purchase one to four of the ferries by
giving four years’ notice before the expiry of the contract (i.e. on 30 September 2022 at the latest).
The acquisition price of each ferry is EUR 26.6 million. The ministry has no obligation to exercise the
option to purchase the ferries.
In 2020, the Group recognised write-downs of EUR 310 thousand and write-offs of EUR 111
thousand in impairment losses within Depreciation, amortisation and impairment in the statement of
profit or loss, including:
• Write-down of facilities (infrastructure assets) of EUR 138 thousand
• Write-down of measuring equipment of EUR 172 thousand
• Write-off of buildings of EUR 34 thousand
• Write-off of facilities (infrastructure assets) of EUR 65 thousand
• Write-off of other equipment of EUR 12 thousand.
According to the segment information provided in note 3, the assets that were written down or off
belonged to the Passenger harbours segment (EUR 69 thousand) and the Cargo harbours segment
(EUR 352 thousand).
In 2019, the Group recognised write-downs of EUR 50 thousand and write-offs of EUR 197 thousand
in impairment losses within Depreciation, amortisation and impairment in the statement of profit or
loss, including:
• Write-down of a property of EUR 50 thousand
• Write-off of buildings of EUR 14 thousand
• Write-off of a connecting covered walkway of EUR 91 thousand
• Write-off of other facilities (infrastructure assets) of EUR 78 thousand
• Write-off of other equipment of EUR 14 thousand.
According to the segment information provided in note 3, the assets that were written down or off
belonged to the Passenger harbours segment (EUR 154 thousand) and the Cargo harbours segment
(EUR 93 thousand).
Notes to the Consolidated Financial Statements: NOTE 11 | page 117
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Note 11. Intangible assets
In thousands of euros Computer soware
Internally developed soware
under construction Total
At 31 December 2018
Cost 4,293 0 4,293
Accumulated amortisation and impairment losses -2,269 0 -2,269
Carrying amount at 31 December 2018 2,024 0 2,024
Movements in 2019
Purchases and upgrades (note 26) 194 321 515
Amortisation charge -524 0 -524
At 31 December 2019
Cost 4,486 321 4,807
Accumulated amortisation and impairment losses -2,793 0 -2,793
Carrying amount at 31 December 2019 1,694 321 2,015
Movements in 2020
Purchases and upgrades (note 26) 274 394 668
Amortisation charge -579 0 -579
Reclassification from assets under construction 574 -574 0
At 31 December 2020
Cost 5,296 141 5,437
Accumulated amortisation and impairment losses -3,333 0 -3,333
Carrying amount at 31 December 2020 1,963 141 2,104
Notes to the Consolidated Financial Statements: NOTE 12 | page 118
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Note 12. Leases
Carrying amount of property, plant and equipment leased out under operating leases
In thousands of euros
At 31 December 2020 2019
Land 44,989 42,320
Incl. with the right of superficies 36,590 36,537
Buildings 9,124 7,698
Plant and equipment 18 21
Other items of property, plant and equipment 498 642
Total carrying amount of property, plant and equipment leased out under operating leases 54,629 50,681
Depreciation charge on property, plant and equipment leased out under operating leases
In thousands of euros 2020 2019
Buildings 522 509
Plant and equipment 3 3
Other items of property, plant and equipment 143 144
Total depreciation charge on property, plant and equipment leased out under operating leases 668 656
Rental income from property, plant and equipment leased out under operating leases
In thousands of euros 2020 2019
Land 7,923 7,867
Buildings 2,782 3,254
Plant and equipment 760 709
Other items of property, plant and equipment 108 130
Total rental income from property, plant and equipment leased out under operating leases (note 20) 11,573 11,960
Notes to the Consolidated Financial Statements: NOTE 12 | page 119
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Rental income in subsequent periods under
non-cancellable operating lease contracts
Operating leases are agreements whereby the lessor transfers to the lessee, in return for a payment
or series of payments, the right to use an asset for an agreed period in accordance with a contract
entered into. Operating lease contracts are entered into for periods ranging from 2 years to 20
years. Operating lease rentals can generally be increased once a year based on changes in the
consumer price index for the previous year (depending on the contract, either the relevant index
in Estonia, the euro area, or Germany). Improvements to a leased asset made by the lessee are
normally not compensated by the lessor at the end of the lease term.
Under the right of superficies contracts, many significant risks and rewards from the possession
of the asset (land) are transferred to the lessees. However, as land has an unlimited economic life,
there are significant risks and rewards associated with the land at the end of the lease term, which
do not pass to the lessee. Therefore, the right of superficies contracts are accounted for as operating
leases.
The right of superficies contracts entered into by the Group and its customers set out payments for
the right of superficies and the duration of the contract (usually ranging from 36 years to 50 years).
Payments for the right of superficies are generally subject to an increase aer a certain period
has passed based mostly either on changes in the assessed value of land (for older contracts) or
changes in the consumer price index (for more recent contracts). Contractual payments for rights of
superficies are generally not covered by guarantees. At the expiry of a contract the lessee generally
has the right to remove the construction erected on the land under the right of superficies; apply for
an extension of the term of the right of superficies contract up until the end of the construction’s
remaining life; or the constructions are subject to compensation by the lessor for the usual value of
the constructions (see also note 27).
In thousands of euros
At 31 December 2020 2019
< 1 years 9,857 9,856
1–2 years 9,739 9,307
2–3 years 9,736 9,530
3–4 years 9,574 9,335
4–5 years 9,376 9,111
> 5 years 325,382 332,585
Total rental income in subsequent periods under
non-cancellable operating lease contracts
373,664 379,724
Notes to the Consolidated Financial Statements: NOTE 13 | page 120
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Note 13. Provisions
In thousands of euros 2020 2019
Provision for bonuses
The provision for bonuses is accrued for estimated bonuses payable to Group companies’
management board members and employees for the results of the reporting period. The provision
also includes social security charges and unemployment insurance contributions. The payment of
bonuses is decided aer the annual reports of relevant companies for the year ended 31 December
2020 have been approved.
Other provisions
Other provisions at 31 December 2020 include expected costs of EUR 61 thousand (31 December
2019: EUR 459 thousand) related to various ongoing court cases.
In connection with the obligation to pay compensation to members of the management board of AS
Tallinna Sadam under the non-compete clauses of their service contracts, a provision of EUR 228
thousand has been recognised (31 December 2019: EUR 228 thousand).
Provision for bonuses
At beginning of year 1,229 1,440
Recognised 1,045 1,233
Reversed -9 -121
Used -1,265 -1,323
At end of year 1,000 1,229
Other provisions
At beginning of period 686 517
Recognised 0 169
Reversed -397 0
At end of period 289 686
Total provisions 1,289 1,915
Notes to the Consolidated Financial Statements: NOTE 14 | page 121
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Note 14. Trade and other payables
In thousands of euros
At 31 December 2020 2019
Financial liabilities
Trade payables 5,764 5,281
Interest payable (note 16) 388 405
Payables to an associate (note 24) 78 127
Other payables
*
676 4,011
Total financial liabilities (note 6) 6,906 9,824
Incl. liabilities for property, plant and equipment (note 26) 2,758 2,162
liabilities for intangible assets (note 26) 33 26
Non-financial liabilities
Payables to employees 1,233 1,092
Accrued taxes payable on remuneration 621 596
Payables related to contracts with customers 925 946
Advances for goods and services 414 212
Other payables 783 0
Total non-financial liabilities 3,976 2,846
Total trade and other payables 10,882 12,670
Of which current liabilities 9,149 11,755
non-current liabilities 1,733 915
* At 31 December 2019, other payables included a liability related to the sale of assets of EUR 2,600 thousand
and a liability related to overpayments of EUR 1,284 thousand received from a customer, which were settled in the reporting period.
Notes to the Consolidated Financial Statements: NOTE 15 | page 122
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Note 15. Taxes payable
In thousands of euros
At 31 December 2020 2019
Personal income tax 241 266
Corporate income tax 10 33
Pollution charge 8 6
Social security tax 434 512
Unemployment insurance contributions 26 28
Funded pension contributions 18 18
Excise duties 7 30
Total taxes payable 744 893
At 31 December 2020, the Group’s prepaid taxes amounted to EUR 744 thousand (31 December
2019: EUR 1,093 thousand). Prepaid taxes are disclosed in note 8.
At 31 December 2020 and 31 December 2019 the Group had no deferred tax assets or liabilities. At
31 December 2020, temporary differences associated with the Group’s investments in subsidiaries
and associates totalled EUR 27,851 thousand (31 December 2019: EUR 21,257 thousand) and the
related deferred tax liability amounted to EUR 5,362 thousand (31 December 2019: EUR 3,959
thousand).
Since the Group is able to control the timing of the reversal of the temporary differences, it has not
recognised the deferred tax liability.
For further information about deferred tax, see the section Corporate income tax in note 2.
Notes to the Consolidated Financial Statements: NOTE 16 | page 123
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Note 16. Loans and borrowings
In thousands of euros
At 31 December 2020 2019
Current portion
Loan liabilities 8,266 7,266
Debt securities 9,000 9,000
Total current portion 17,266 16,266
Non-current portion
Loan liabilities 54,064 42,330
Debt securities 140,250 149,250
Total non-current portion 194,314 191,580
Total loans and borrowings (note 6) 211,580 207,846
Issue and redemption of debt securities
At 31 December 2020, AS Tallinna Sadam had two debt security (bond) issues with final maturities
in 2026 and 2027. The bonds have been issued in euros with a floating interest rate (with the base
interest rate of 3 month or 6 month Euribor plus a fixed risk margin). None of the debt securities
issues is listed on the stock exchange.
The Group has met all obligations set out in the terms of the bonds, including those which relate
to complying with covenants, providing information and meeting the requirements set to financial
ratios.
In 2020, principal payments of EUR 9,000 thousand (2019: EUR 9,000 thousand) were made in
accordance with the payment schedules.
At 31 December 2020, the weighted average interest rate of the bonds was 0.54% (31 December
2019: 0.63%). The interest rate risk of bonds issued has not been hedged with interest rate swaps.
Notes to the Consolidated Financial Statements: NOTE 16 | page 124
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Loans
All loan agreements are denominated in euros and have floating interest rates (the base rate is
6-month Euribor). At 31 December 2020, the weighted average interest rate on drawn loans was
0.89% (31 December 2019: 0.68%). Considering the effect of derivative transactions used to hedge
interest rate risk, at 31 December 2020 the average interest rate of loans was 1.24% (31 December
2019: 1.37%).
The loan agreements are unsecured liabilities, i.e. no assets have been pledged to cover the loans.
The Group has performed all its contractual obligations set out in the loan agreements which
concern meeting special terms, the obligation of giving notice and minimum requirements set to the
company’s financial ratios.
Principal repayments made in 2020 amounted to EUR 7,266 thousand (2019: EUR 6,766 thousand).
In the second quarter of 2020 a loan agreement was signed with SEB Pank on an amount of EUR
20 million. The first portion of EUR 10 million was drawn down in July 2020 and the second portion,
also EUR 10 million, was drawn down in October 2020. The base interest rate of the loan is 6-month
Euribor and the purpose of the loan is to finance capital investments in Old City Harbour and Muuga
Harbour. Taking into account the repayment term of the new loan, the final maturities of outstanding
loan liabilities fall in the period 2024 to 2029.
Contractual maturities of loans and borrowings
In thousands of euros
At 31 December 2020 2019
< 6 months 3,383 3,383
6–12 months 13,883 12,883
1–5 years 78,064 63,064
> 5 years 116,250 128,516
Total loans and borrowings (note 4) 211,580 207,846
Notes to the Consolidated Financial Statements: NOTE 16 | page 125
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Carrying amounts and fair values of loans and borrowings
*
In thousands of euros
At 31 December 2020 2019
Carrying amount
Debt securities 149,250 158,250
Loan liabilities 62,330 49,596
Total carrying amount 211,580 207,846
Fair value
Debt securities 145,145 153,755
Loan liabilities 61,763 39,112
Total fair value 206,908 192,867
* Due to inputs used, all measurements of fair value qualify as level 2 measurements in the fair value hierarchy.
The discounted cash flow method was used to calculate the fair value of loans and borrowings.
Future cash flows were estimated based on forward interest rates (extrapolated from observable
corporate yield curves and 3-month and 6-month Euribor swap rates at the end of the reporting
period) and contractual interest rates, discounted at a rate that reflected the credit risk of the Group.
At 31 December 2020, the fair value of financial liabilities calculated using the discounted cash flow
method was 2.2% lower than their carrying amount (31 December 2019: 7.2% lower). The Group’s
loan agreements and bonds set certain limits to the Group’s consolidated financial indicators. At
31 December 2020 and 31 December 2019 the Group was in compliance with all the financial
covenants.
Notes to the Consolidated Financial Statements: NOTE 16 | page 126
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Reconciliation of liabilities arising from financing activities
In thousands of euros 1 January 2020
Cash flows from
financing activities
Non-cash changes
31 December 2020
Interest expense
(note 23)
Fair value
adjustments
(note 17)
Loan liabilities 49,596 12,734 0 0 62,330
Debt securities 158,250 -9,000 0 0 149,250
Derivatives (note 17) 243 0 0 -141 102
Interest payable (note 14) 405 -1,694 1,677 0 388
Total 208,494 2,040 1,677 -141 212,070
In thousands of euros 1 January 2019
Cash flows from
financing activities
Non-cash changes
31 December 2019
Interest expense
(note 23)
Fair value
adjustments
(note 17)
Loan liabilities 46,362 3,234 0 0 49,596
Debt securities 167,250 -9,000 0 0 158,250
Derivatives (note 17) 425 0 0 -182 243
Interest payable (note 14) 446 -1,769 1,728 0 405
Total 214,483 -7,535 1,728 -182 208,494
Notes to the Consolidated Financial Statements: NOTE 17 | page 127
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Note 17. Derivative instruments
In thousands of euros 2020 2019
Notional amount at 31 December 14,000 28,200
Fair value at beginning of period (liability) (note 16) -338 -524
Incl. market value of derivative -243 -425
interest payable -95 -99
Change in derivative’s market value (notes 16 and 19) 141 182
Change in interest payable 49 4
Fair value at end of period (liability) (note 16) -148 -338
Incl. market value of derivative (note 6) -102 -243
interest payable -46 -95
At 31 December 2020, the notional amount of interest rate swaps entered into by AS Tallinna
Sadam to hedge the interest rate risk of its long-term loans was EUR 14,000 thousand (31
December 2019: EUR 28,200 thousand). All terms, conditions and maturities of the interest rate
swap instruments follow the repayment schedule of the hedged loans and the interest rate swap
instruments are designated as hedging instruments under cash flow hedging relationships.
At 31 December 2020, AS Tallinna Sadam had one interest rate swap to hedge the interest rate
risk of one long-term loan with a maturity of 7 years and the remaining maturity of 0.5 years. The
floating interest rate to be swapped by the derivative instrument is 6-month Euribor. The fair value
of the derivative instrument is based on the quote of the relevant transaction party (bank). The
payments related to the derivative instrument are made in euros.
The effectiveness of the derivative instrument is assessed using the qualitative Critical Terms Match
Method. The Group assesses the existence of an economic relationship between the hedged item
and the hedging instrument which is based on interest rates, maturities, currencies and payment
schedules.
At 31 December 2020, the underlying amount of the hedging instrument equalled the outstanding
balance of the hedged instrument and the amortisation schedule of the instrument was in line; the
hedged interest payments were calculated on the same basis (6-month Euribor); the payments were
denominated in the same currency (in euros) and were made at the same dates. Therefore, it was
assumed that hedging had been and would be effective.
Counterparty credit risk and the Group’s credit risk are the sources of ineffective hedging. Due to
the impact of credit risk, the economic relationship between the hedged item and the hedging
instrument may become imbalanced and there may arise a situation where the values of the hedged
item and the hedging instrument no longer move in the opposite direction.
At 31 December 2020, the weighted average fixed interest rate of derivatives was 0.64%
(31 December 2019: 0.57%); the floating interest rate is based on 6-month Euribor. Gains and
losses on interest rate swap transactions included in the hedge reserve in equity are recognised
in the statement of profit or loss on the expiry of derivative contracts or when hedging is deemed
ineffective.
Notes to the Consolidated Financial Statements: NOTE 18 | page 128
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Note 18. Government grants
Non-current government grant liabilities
In thousands of euros
At 31 December 2020 2019
Cohesion Fund 20,669 21,105
“Extension of the eastern part of Muuga Harbour” (2006–2011) 16,410 16,625
“Connecting the eastern part and the Industrial Park of Muuga Harbour” (2010–2014) 4,259 4,480
TEN-T 5,400 3,560
"The Baltic Sea hub and spokes project” (2010–2013) 4 7
TWIN-PORT (2012-2015) 953 1,021
TWIN-PORT 2 (2014-2018) 2,240 2,340
TWIN-PORT 3 (2018-2023) 1,174 192
TWIN-PORT 4 (2020-2023) 446 0
Dredging works at Paldiski South Harbour (2019–2020) 583 0
State budget of the Republic of Estonia 76 89
“Grant for small ports” (2010) 54 60
“Atmospheric air protection programme” (2011–2013) 22 29
Total non-current government grant liabilities 26,145 24,754
Incl. non-depreciable assets 13,902 13,902
Notes to the Consolidated Financial Statements: NOTE 18 | page 129
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Recognised as income
In thousands of euros 2020 2019
Grants related to assets 771 668
Grants related to income 18,425 18,712
Total recognised as income 19,196 19,380
Incl. Revenue from other sources (note 20) 18,501 18,571
Other income (note 22) 695 809
Short-term deferred government grant income
In thousands of euros
At 31 December 2020 2019
TEN-T 1,600 0
Other foreign aid 83 0
State budget of the Republic of Estonia 236 193
Total short-term deferred government grant income 1,919 193
Notes to the Consolidated Financial Statements: NOTE 18 | page 130
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TEN-T programme “Motorways of the Sea”
TWIN-PORT 2 (2014-2020)
TWIN-PORT 2 is a follow-up project to TWIN-PORT. In the framework of the project, the Port of
Helsinki built a new Western Terminal, AS Tallink Grupp brought a new LNG vessel “Megastar”
to the Tallinn–Helsinki route, and AS Tallinna Sadam has invested in the development of various
infrastructure assets in Old City Harbour.
In 2020, investments amounted to EUR 6,468 thousand and no expenses were incurred (2019:
investments amounted to EUR 2,481 thousand and expenses amounted to EUR 29 thousand).
Short-term project receivables amounted to EUR 2,079 thousand at 31 December 2020 and 31
December 2019. The grant amount is related to investments of 2017–2019, which at 31 December
2020 had not yet been paid.
In 2018, a request was submitted to the European Commission for extending the project by two
years. The new end date of the project was 31 December 2020. The project was extended because
in the preparatory phase there arose unforeseeable circumstances that deferred several activities
both in Old City Harbour in Tallinn and the Helsinki West Harbour. The last project activities in Old
City Harbour will be completed in 2021 and the costs incurred in that period will not eligible for the
project funding.
TWIN-PORT 3 (2018-2023)
TWIN-PORT 3 is a follow-up project to TWIN-PORT and TWIN-PORT 2. The project began in 2018 and
is scheduled to be completed on 31 December 2023. The participants in the project are AS Tallinna
Sadam, the Port of Helsinki, the City of Helsinki and three ferry operators (Tallink, Viking Line and
Eckerö Line). AS Tallinna Sadam is the coordinating partner of the project. The purpose of the project
is to build onshore power supply systems (OPS) in both ports and on the ferries travelling between
Tallinn and Helsinki to enable the ferries (while at the quay) to use electricity from the mainland
electricity network and switch off their diesel engines. In addition, an auto-mooring system will be
built in both harbours, which offers faster and safer mooring for ferries.
In Tallinn, the security systems in Old City Harbour will be upgraded and in Helsinki, new street lanes
will be built, the throughput capacity of intersections will be improved, a tramway leading to the
harbour will be relocated and a new bridge will be built in the harbour area.
In 2020, investments amounted to EUR 4,064 thousand and expenses amounted to EUR 99
thousand (2019: EUR 7,099 thousand and EUR 127 thousand, respectively).
In 2020, support of EUR 1,770 thousand was received. At 31 December 2020, the balance of
deferred grant income was EUR 552 thousand (31 December 2019: EUR nil).
TWIN-PORT 4 (2020-2023)
TWIN-PORT 4 is the fourth follow-up project in the series. The purpose of the project is to improve
the convenience of the maritime connection between Tallinn and Helsinki by developing the
infrastructure of the ports on both shores of the Gulf of Finland. The participants in the project are
AS Tallinna Sadam and the Port of Helsinki.
Compared to previous ones, the project includes a new feature: investments in the development of
the Muuga-Vuosaari shipping route in order to divert a significant share of the heavy goods vehicles
traffic between Estonia and Finland from the city centres of the two capitals to the Muuga and
Vuosaari harbours, respectively. One berth in both harbours will be supplied with a second level ramp
for more efficient servicing of ro-ro traffic and at Muuga the first level ramp of the same berth will
be fully reconstructed.
In addition, at Old City Harbour in Tallinn one of the passenger gangways from the terminal to
the ferry and the area in front of terminal D along with all underground utility networks will be
reconstructed. The Port of Helsinki will supply one berth in its city-centre harbours with onshore
power supply systems and one berth with automooring systems. The coordinating partner of the
project is also AS Tallinna Sadam.
In 2020, investments amounted to EUR 1,509 thousand and support received amounted to EUR
1,500 thousand. At 31 December 2020, the balance of deferred grant income was EUR 1,047
thousand.
Notes to the Consolidated Financial Statements: NOTE 18 | page 131
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Dredging works in the approach canal and waters
of Paldiski South Harbour (2019–2020)
The purpose of the project was to increase the depth of the fairway and harbour basin of Paldiski
South Harbour by 1 meter so that the minimum depth would be 15.5 metres in place of the previous
14.5 metres. The length of the dredged canal is approx. 1,800 metres. Also, the width of the canal
has increased from 120 metres to 180 metres. With the works completed, the harbour will be able
to receive large cargo carriers and tankers (60-70 thousand GT). The use of larger vessels for cargo
transport allows transporting the same quantity of cargo with fewer vessel calls and thereby to
reduce CO
2
emissions per unit of cargo. Moreover, if the canal is deeper, navigation to the port is
safer.
Investments made in 2020 amounted to EUR 2,035 thousand and expenses amounted to EUR 54
thousand (2019: EUR 1,033 thousand and EUR nil, respectively) .
Short-term project receivables amounted to EUR 409 thousand at 31 December 2020 (31 December
2019: EUR nil).
State budget of the Republic of Estonia
Public transport support (2016–2026)
In December 2014 a passenger transport public service contract was signed with the Ministry of
Economic Affairs and Communications (currently administered by the Transport Administration) for
providing ferry service on the Kuivastu–Virtsu and Rohuküla–Heltermaa ferry routes in the period
from 1 October 2016 to 30 September 2026. The final amount of the contractual support depends
on the difference between the revenue base calculated annually on the basis of the tariff rates fixed
in the contract and the ticket sales revenue recognised in the same period.
In 2020, support was calculated in the amount of EUR 18,501 thousand (2019: EUR
18,571 thousand) and received in the amount of EUR 18,544 thousand (2019: EUR
18,590 thousand). The public transport support is treated as part of the Group’s ordinary activity and
recognised as revenue (sale of ferry services – government support) (note 20).
At 31 December 2020, the Group had short-term deferred income of EUR 236 thousand related to
public transport support provided from the state budget (31 December 2019: EUR 193 thousand).
Other foreign aid – INTERREG Baltic Sea Region programme
Project "Green Cruise Port – Sustainable Development of Cruise Port
Locations" (2016–2019)
The project was aimed at enhancing the cooperation of cruise ports in the Baltic Sea region in
developing port facilities and services, with a focus on the aspects of environmentally friendly
and economically beneficial solutions. Project partners were the ports of Hamburg, Klaipeda,
Riga, Rostock, Helsinki, Bergen, Esbjerg and Kaliningrad, and the Maritime Institute Gdansk. In the
framework of the project, a master project together with the technical solutions for Old City Harbour
cruise terminal was prepared and surveys for developing ecological solutions feasible for a cruise
terminal in the northern climate were carried out. The surveys provided valuable inputs for the
design of a new cruise terminal and the solutions for its technological systems. The construction of
the cruise terminal began at the end of 2019 and it will be completed in 2021.
At 31 December 2020, the balance of deferred grant income was EUR 84 thousand.
European Regional Development Fund (ERDF)
Project “Digital Construction Cluster”
The purpose of the project is to undertake joint activities in the Digital Construction Cluster to
promote co-operation between the Estonian construction sector and research institutions and to
increase the international competitiveness of companies belonging to the Digital Construction
Cluster.
AS Tallinna Sadam is a real estate owner, developer and manager and thus its interest in
participating in the project is mainly related to new digital opportunities that could be seized in the
development and management of its buildings and real estate including the implementation of
Building Information Modelling (BIM) throughout the life cycle of a building.
In 2020, support of EUR 8 thousand was received (2019: EUR 1 thousand). In 2020, expenses
incurred in the project amounted to EUR 13 thousand. In 2019, no expenses were incurred.
Notes to the Consolidated Financial Statements: NOTE 19 | page 132
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Note 19. Equity
Share capital Capital management
At 31 December 2020 and 31 December 2019, AS Tallinna Sadam had 263,000,000 registered
ordinary shares, of which 67.03% were held by the Republic of Estonia (through the Ministry
of Economic Affairs and Communications) and 32.97% were held by Estonian and international
investment funds, banks, pension funds and retail investors. The par value of a share is EUR 1.
The maximum number of ordinary shares stipulated in the Articles of Association of AS Tallinna
Sadam is 664,000,000 (2019: also 664,000,000). At 31 December 2020 and at 31 December 2019
all shares issued had been fully paid for.
The purpose of the Group’s capital management is to ensure that Group entities will be able to
continue as going concerns and the Group can generate maximum long-term return through an
optimal balance between debt and equity capital. The Group’s capital management strategy has not
changed significantly compared to 2019.
The Group’s capital structure consists of net debt (loans and borrowings as detailed in note 16 less
cash and cash equivalents) and equity (comprising share capital, reserves and retained earnings).
The Group is not subject to any externally imposed capital requirements.
The Group’s CFO reviews the capital structure of the Group at least twice a year. As part of this
review, the CFO assesses the cost of capital and the risks associated with each class of capital. The
Group’s long-term target is to ensure that its equity to assets ratio (calculated as the ratio of total
equity to total assets) is 60%.
Earnings per share
2020 2019
Weighted average number of shares 263,000,000 263,000,000
Consolidated profit for the period (in thousands of euros) 28,518 44,404
Basic and diluted earnings per share (in euros)
*
0.11 0.17
Weighted average number of ordinary shares 263,000,000 263,000,000
*
In the years ended 31 December 2020 and 31 December 2019 there were no dilutive instruments outstanding.
Capital management
In thousands of euros
At 31 December 2020 2019
Loans and borrowings 211,580 207,846
Cash and cash equivalents -26,679 -35,183
Net debt 184,901 172,663
Notes to the Consolidated Financial Statements: NOTE 19 | page 133
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Equity to assets ratio
Statutory capital reserve
At 31 December 2017, the statutory capital reserve was in compliance with the requirements of
the Estonian Commercial Code. As a result of the increase of share capital by EUR 77,796 thousand
in 2018, the Parent’s capital reserve does not comply with the amount required by the articles of
association. According to the Estonian Commercial Code, each financial year 1/20 (5%) of profit is to
be transferred to the statutory capital reserve until the reserve reaches the amount required by the
articles of association. Aer that profit transfers to the capital reserve will be discontinued.
The capital reserve was increased by 1,742 thousand in 2020 (2019: capital reserve was not
increased).
Hedge reserve
The hedge reserve comprises the effective portion of the cumulative net change in the fair value of
hedging instruments used in cash flow hedges pending subsequent recognition of the hedged cash
flows (note 17).
In thousands of euros
At 31 December 2020 2019
Total equity 375,432 377,018
Total assets 628,093 625,532
Equity to assets ratio 60% 60%
At 31 December 2020, the Group’s equity to assets ratio, i.e. the ratio of total equity to total assets
was 60%. The ratio did not change compared to 2019.
Unrestricted equity
At 31 December 2020, the Group’s unrestricted equity amounted to EUR 46,785 thousand (31
December 2019: EUR 49,521 thousand). According to the Estonian Commercial Code, shareholders
will not be paid dividends if the company’s net assets which have been recognised in the annual
report approved at the end of the previous financial year are or would be less than total share
capital and reserves which under the law or the articles of association are not be paid out to
shareholders. At 31 December 2020 and 31 December 2019, the Parent could have distributed all
of its unrestricted equity without contravening the law.
Hedge reserve
In thousands of euros 2020 2019
Hedge reserve
at beginning of period
-243 -425
Change in market value of the derivative (net)
(note 17)
141 182
Hedge reserve at end of period -102 -243
Notes to the Consolidated Financial Statements: NOTE 19 | page 134
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Dividends
Based on the resolution of the general meeting that convened on 29 June 2020, the Group paid
in 2020 a dividend of EUR 0.115 per share, i.e. EUR 30,245 thousand in total for 2019. The list of
shareholders entitled to receive the dividend was determined on 13 July 2020 (the ex-dividend date:
10 July 2020) and the dividend was paid out to the shareholders on 20 July 2020 (through Nasdaq
CSD).
In thousands of euros 2020 2019
Dividend declared in the reporting period 30,245 35,242
Dividend distributed in the reporting period 30,008 34,970
Income tax withheld on dividends in the reporting period 237 272
Dividend per share (in euros) 0.12 0.13
Income tax on dividends
In thousands of euros 2020 2019
Tasumata tulumaks dividendidelt 0 4,949
Dividendidelt arvestatud tulumaks Eesti Vabariigis 4,913 5,764
Dividendidelt tasutud tulumaks Eesti Vabariigis -5,150 -10,985
sh kinnipeetud tulumaks dividendidelt -237 -272
Sh tasutud rahas -4,913 -10,985
tasaarvestatud käibemaksuga -237 0
The Group’s unrestricted equity as at 31 December 2020 amounted to EUR 46,785 thousand
(2019: EUR 49,521 thousand). The maximum possible income tax liability which would arise if all
of the unrestricted equity were distributed as dividends is EUR 6,550 thousand (2019: EUR 7,100
thousand).
At 31 December 2020, the tax rate used to calculate the maximum possible tax liability for 2021
was 14% (calculated as 14/86 of the net distribution and applied to the maximum possible dividend
in an amount equal to one third of profit distributed and taxed in 2018, 2019 and 2020).
Notes to the Consolidated Financial Statements: NOTE 20 | page 135
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Note 20. Revenue
In thousands of euros 2020 2019
Revenue from contracts with customers
Vessel dues 37,604 46,720
Cargo charges 6,797 7,141
Passenger fees 7,039 17,074
Sale of electricity 4,466 5,433
Sale of ferry services – ticket sales 10,479 11,583
Sale of other services 1,768 2,389
Total revenue from contracts with customers 68,153 90,340
Revenue from other sources
Rental income from operating leases (note 12) 11,573 11,960
Charter fees 9,131 9,665
Sale of ferry services - government support (note 18) 18,501 18,571
Total revenue from other sources 39,205 40,196
Total revenue (note 3) 107,358 130,536
In 2020, revenue from services provided in Estonia and Canada amounted to EUR 103,095 thousand
and EUR 4,263 thousand (including charter fees of EUR 4,194 thousand), respectively. In 2019,
revenue from services provided in Estonia and Canada amounted to EUR 125,578 thousand and EUR
4,958 thousand (including charter fees of EUR 4,854 thousand), respectively.
Notes to the Consolidated Financial Statements: NOTE 20 | page 136
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Disaggregation of revenue
Transaction price allocated to the remaining performance obligations
At the end of the reporting period, performance obligations related to cargo charges, sale of
electricity and sale of other services were partially unsatisfied. The Group applies the practical
expedient in paragraph 121(b) of IFRS 15 for those revenue streams (single performance obligation
that is made up of a series of distinct services) and does not disclose the transaction price allocated
to the remaining performance obligation as the Group has a right to consideration from customers
in an amount that corresponds directly to the value that the Group’s performance obligations
completed to date have for the customer and the Group has recognised revenue in the amount in
which it has a right to invoice the customers.
Partially unsatisfied performance obligation related to connection fees as at 31 December 2020
amounted to EUR 892 thousand (31 December 2019: EUR 913 thousand).
Revenue for 2020 includes connection fees of EUR 44 thousand (2019: EUR 43 thousand).
Management expects that the transaction price allocated to unsatisfied performance obligations
will be recognised as revenue over the next 7-29 years (the average remaining useful life of the
investments made to enable connection) on a straight-line basis.
Notes to the Consolidated Financial Statements: NOTE 21 | page 137
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Note 21. Operating expenses
In thousands of euros 2020 2019
Fuel, oil and energy costs 8,440 11,388
Technical maintenance and repair of non-current assets 5,142 7,022
Services purchased for infrastructure 2,875 2,780
Tax expenses 2,738 2,762
Incl. land tax 2,688 2,709
Consultation and development expenses 647 757
Incl. research and development expenses 254 347
Services purchased 4,410 5,523
Incl. mooring service 1,034 1,035
reception of ship-generated waste 893 2,351
port dues 2,418 2,091
Purchase and maintenance of insignificant assets 1,733 1,269
Advertising expenses 229 349
Lease expenses 562 566
Expenses on short-term leases 12 581
Insurance expenses 767 809
Other operating expenses 3,303 2,863
Incl. expenses from credit-impaired financial assets 931 233
Total operating expenses 30,858 36,669
Notes to the Consolidated Financial Statements: NOTE 21 | page 138
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Personnel expenses
In thousands of euros 2020 2019
Wages and salaries 14,681 14,965
Social security charges 4,810 4,902
Total personnel expenses 19,491 19,867
Incl. short-term benefits of members of management and supervisory boards of Group companies 768 856
social security charges on members of management and supervisory boards of Group companies 253 283
Total expenses on members of management and supervisory boards of Group companies 1,021 1,139
Under contracts in force at 31 December 2020, AS Tallinna Sadam has an obligation to pay the members
of its management board (key management personnel) compensation on their removal from the board in
an amount equal to their three months’ remuneration (EUR 85.8 thousand in 2020 and EUR 85.8 thousand
in 2019). Also, in return for observing the non-compete clause, AS Tallinna Sadam has an obligation to pay
management board members monthly compensation in an amount equal to 50% of their remuneration (EUR
171.6 thousand in 2020 and EUR 171.6 thousand in 2019) during 12 months aer the expiry of the contract.
Under contracts in force at 31 December 2020, the subsidiaries of AS Tallinna Sadam had an obligation
to pay compensation to their members of the management board on their removal from the board in an
amount equal to their three months’ remuneration (EUR 57.0 thousand in 2020 and EUR 67.5 thousand in
2019).
Number of employees
2020 2019
People working under employment contracts 465 492
People working under contracts for services excluding self-employed people 9 14
Members of legal person’s management or control bodies 7 7
Total 481 513
Notes to the Consolidated Financial Statements: NOTES 22 and 23 | page 139
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Note 22. Other income
In thousands of euros 2020 2019
Gain on sale of non-current assets
*
2,140 25
Penalties, interest on arrears
*
164 137
Income from government grants (note 18) 695 809
Other income 16 46
Total other income 3,015 1,017
*
Gain on sale of non-current assets in 2020 includes gain on the sale of assets classified as held for sale of EUR 1,584 thousand (2019: EUR nil).
Note 23. Finance costs
In thousands of euros 2020 2019
Interest expense on loans and borrowings:
Interest expense on loans (note 16) 410 316
Interest expense on debt securities (note 16) 1,091 1,147
Interest expense on derivatives (note 16) 176 265
Total interest expense on loans and borrowings 1,677 1,728
Foreign exchange loss 10 18
Other finance costs 18 51
Total finance costs 1,705 1,797
Notes to the Consolidated Financial Statements: NOTE 24 | page 140
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Note 24. Related party transactions
67.03% of the shares in AS Tallinna Sadam are held by the Republic of Estonia (through the Ministry
of Economic Affairs and Communications).
In thousands of euros 2020 2019
Transactions with an associate
Revenue 164 238
Operating expenses 1,004 2,426
Transactions with companies over which members of supervisory
and management boards of group companies have significant influence
Operating expenses 9 15
Other expenses 22 22
Transactions with government agencies and companies of which the state has control
Revenue 24,110 24,117
Other income 66 10
Operating expenses 6,772 7,747
Other expenses 57 15
Purchase of property, plant and equipment 64 2,579
Notes to the Consolidated Financial Statements: NOTE 24 | page 141
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In thousands of euros
At 31 December 2020 2019
Trade receivables from and payables to an associate
Receivables (note 8) 15 36
Payables (note 14) 78 127
Trade receivables from and payables to companies over which members
of supervisory and management boards of group companies have significant influence
Receivables 2 4
Payables 1 1
Trade receivables from and payables to government agencies
and companies of which the state has control
Receivables 245 412
Payables 1,331 1,202
All purchases and sales of services were transactions conducted in the ordinary course of business
on an arm’s length basis.
Benefits payable to the members of the management and supervisory boards are disclosed in note
21.
Revenue and operating expenses from transactions with related parties comprise only revenue and
expenses from sales and purchases of business-related services.
Information presented on companies over which members of the supervisory and management
boards of group companies have significant influence is based on the declarations presented in
respect of the related parties.
Notes to the Consolidated Financial Statements: NOTES 25 and 26 | page 142
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Note 25. Commitments
At 31 December 2020, the Group’s contractual commitments related to purchases of property, plant
and equipment, repairs, and research and development expenditures totalled EUR 9,448 thousand
(31 December 2019: EUR 19,810 thousand).
Note 26. Non-cash investing activities
Purchases of property, plant and equipment
In thousands of euros 2020 2019
Purchases of property, plant and equipment -35,811 -27,965
Offsetting -63 -58
Paid for previous period 2,162 1,216
Trade payables outstanding at end of period (note 14) -2,758 -2,162
Total adjustments -659 -1,004
Purchases and reconstruction (note 10) 36,470 28,969
Purchases of intangible assets
In thousands of euros 2020 2019
Purchases of intangible assets -661 -550
Offsetting 0 -4
Paid for previous period 26 65
Trade payables outstanding at end of period (note 14) -33 -26
Total adjustments -7 35
Purchases and upgrades (note 11) 668 515
Notes to the Consolidated Financial Statements: NOTE 27 | page 143
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Note 27. Contingent liabilities
The tax authorities may inspect the Group’s tax accounting records for up to 5 years as from the
term for the submission of tax returns and upon identifying any misstatement, impose additional tax
and penalties. The tax authorities did not initiate or conduct any tax inspections at Group companies
or single-case inspections in the reporting or the comparative period. According to the assessment
of the Group’s management, there are no circumstances that could cause the tax authorities to
determine a significant amount of additional tax to be paid by Group companies.
Under several lease and right of superficies contracts, upon the expiry of the contract, AS Tallinna
Sadam has an obligation to compensate the cost of the constructions built by the lessee or the
improvements made to the assets of AS Tallinna Sadam at the usual value of the respective
construction or improvement. Taking into account the extended duration of these contracts
(especially right of superficies contracts) and the fact that the constructions are mostly special
purpose facilities (port terminals), no valid experience in measuring the usual value of such
constructions upon the expiry of the contracts exists. Based on the above, the value of those
obligations could not be estimated reliably at the reporting date.
In June 2019, the court accepted a statement of claim for damages of EUR 23.8 million in total
filed against Group companies OÜ TS Laevad and OÜ TS Shipping in relation to alleged unjustified
use of confidential information in a public tender to provide public passenger transport service
on the Saaremaa and Hiiumaa routes. The statement of claim is identical to the one filed by the
same plaintiffs in a previous civil case which was dismissed by Harju County Court on 8 March
2019 because the plaintiffs did not provide security of EUR 14,000 in total ordered by the court for
covering the estimated costs of the proceedings. The Group challenged the claim and defends
itself in the action. The management board believes that the claim is not substantiated and
according to the assessment of legal advisers it is not probable that a liability will arise. Thus, the
management board has not considered it necessary to recognise a provision for the claim.
Due to a significant decrease in cargo volumes handled, one of the Group’s long-term customers
has lodged a claim to void select conditions in a long-term cooperation contract concluded between
the Group and the customer retrospectively as from 1 January 2015. The conditions set out the
minimum cargo volume that the customer is required to handle each calendar year as well as the
customer’s minimum annual cargo charge obligation, which are related to the contractual penalty
charged for failure to meet the minimum cargo charge obligation. The customer’s contractual
penalties for failure to meet the minimum cargo charge obligation in the years 2015–2017 amount
to EUR 0.45 million. The customer’s minimum annual cargo charge obligation is EUR 0.31 million.
On 19 January 2021, Harju County Court decided that the statement of claim is to be denied and
procedural expenses are to be borne by the customer. The decision has not entered into force
because the customer has filed an appeal against it.
At the end of 2019, the customer filed an application to the Competition Authority, requesting the
initiation of supervision proceedings in connection with the same claim to establish whether the
Group had violated the Competition Act. The supervision proceedings by the Competition Authority
are still ongoing.
The management board believes that the claim is not substantiated and according to the
assessment of legal advisers it is not probable that a liability will arise. Thus, the management
board has not considered it necessary to recognise a provision for the claim.
Notes to the Consolidated Financial Statements: NOTE 28 | page 144
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Note 28. Investigations concerning the group
On 26 August 2015, the Estonian Internal Security Service detained Ain Kaljurand and Allan
Kiil, long-term members of the management board of the Group’s Parent, AS Tallinna Sadam,
in connection with suspected large-scale bribery during several prior years. Aer long-term
investigation, on 31 July 2017 the Group filed a civil action lawsuit against Ain Kaljurand, Allan
Kiil and other private and legal persons involved in the episodes under investigation. By the order
of Harju County Court dated 19 November 2018, the civil action was included in the criminal
proceedings against the above persons. On 28 October 2020, Harju County Court issued an order
terminating the criminal proceedings concerning Allan Kiil in connection with his terminal illness
and rejected the application to involve Allan Kiil as a civil defendant and/or a third party. On 17
December 2020, Tallinn Circuit Court issued an order by which it partially annulled the order of
Harju County Court of 28 October 2020 and granted the application filed by the victims, AS Tallinna
Sadam and TS Laevad OÜ, to involve Allan Kiil in the criminal proceedings as a civil defendant,
required that the proceedings in the civil action lawsuit of the victims, AS Tallinna Sadam and TS
Laevad OÜ, against Allan Kiil be continued, did not amend the action securing measure applied
by the order of Harju County Court of 5 March 2020, and maintained the seizure of the property
of Allan Kiil. The order has not yet entered into force. At the date of release of these financial
statements, court hearings in the criminal matter are ongoing and the court case concerning
the other accused persons continues. Based on information available at the reporting date, the
management board believes that the above events will not have a material adverse impact on the
Group’s financial performance or financial position. However, they may continue to cause significant
damage to the Group’s reputation.
Notes to the Consolidated Financial Statements: NOTE 29 | page 145
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Note 29. Additional information on the parent
The financial information on the Parent comprises the primary financial statements of the Parent,
which are required to be disclosed in accordance with the Estonian Accounting Act, but which are
not separate financial statements as defined in IAS 27. The primary financial statements of the
Parent have been prepared using the same accounting policies as were applied on preparing the
consolidated financial statements, except that investments in subsidiaries and associates are
measured at cost.
Statement of financial position
In thousands of euros 31 December 2020 31 December 2019
ASSETS
Current assets
Cash and cash equivalents 12,970 18,607
Trade and other receivables 17,474 18,665
Inventories 0 6
Total other current assets 30,444 37,278
Non-current assets held for sale 114 142
Total current assets 30,558 37,420
Non-current assets
Investments in subsidiaries 8,774 8,774
Investments in an associate 132 132
Other long-term receivables 96,326 113,874
Property, plant and equipment 457,669 439,272
Intangible assets 1,389 1,270
Total non-current assets 564,290 563,322
Total assets 594,848 600,742
Continues on page 144
Notes to the Consolidated Financial Statements: NOTE 29 | page 146
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In thousands of euros 31 December 2020 31 December 2019
LIABILITIES
Current liabilities
Loans and borrowings 17,266 16,266
Derivative financial instruments 102 243
Provisions 1,147 1,755
Government grants 1,683 0
Taxes payable 399 555
Trade and other payables 7,090 9,772
Total current liabilities 27,687 28,591
Non-current liabilities
Loans and borrowings 194,314 191,580
Government grants 26,145 24,754
Other payables 1,733 916
Total non-current liabilities 222,192 217,250
Total liabilities 249,879 245,841
EQUITY
Share capital 263,000 263,000
Share premium 44,478 44,478
Statutory capital reserve 20,262 18,520
Hedge reserve -102 -243
Accumulated losses (prior periods) -2,841 -5,694
Profit for the period 20,172 34,840
Total equity 344,969 354,901
Total liabilities and equity 594,848 600,742
Notes to the Consolidated Financial Statements: NOTE 29 | page 147
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Statement of profit or loss and other comprehensive income
Statement of profit or loss
In thousands of euros 31 December 2020 31 December 2019
Revenue 69,003 90,384
Other income 2,997 971
Operating expenses -20,179 -24,250
Personnel expenses -10,252 -11,167
Depreciation, amortisation and impairment -15,938 -15,189
Other expenses -282 -232
Operating profit 25,349 40,517
FINANCE INCOME AND COSTS
Finance income 1,432 1,822
Finance costs -1,696 -1,735
Finance costs – net -264 87
Profit before income tax 25,085 40,604
Income tax expense -4,913 -5,764
Profit for the period 20,172 34,840
Statement of other comprehensive income
In thousands of euros 31 December 2020 31 December 2019
Profit for the period 20,172 34,840
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Net fair value gain on hedging instruments in cash flow hedges 141 182
Total other comprehensive income 141 182
Total comprehensive income for the period 20,313 35,022
Notes to the Consolidated Financial Statements: NOTE 29 | page 148
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Statement of cash flows
In thousands of euros 31 December 2020 31 December 2019
Cash receipts from sale of goods and services 73,588 96,236
Cash receipts related to other income 94 193
Payments to suppliers -27,878 -31,813
Payments to and on behalf of employees -7,049 -8,522
Payments for other expenses -235 -205
Other payments -2,600 0
Income tax paid on dividends -4,913 -10,985
Cash from operating activities 31,007 44,904
Purchases of property, plant and equipment -34,007 -25,346
Purchases of intangible assets -454 -451
Proceeds from sale of property, plant and equipment 2,863 39
Government grants received 3,561 0
Repayment of loans provided 17,944 8,289
Dividends received 0 204
Interest received 1,436 1,629
Cash used in investing activities -8,657 -15,636
Redemption of debt securities -9,000 -9,000
Proceeds from loans received 20,000 10,000
Repayments of loans received -7,266 -6,766
Dividends paid -30,008 -34,970
Interest paid -1,694 -1,769
Other payments related to financing activities -19 -5
Cash used in financing activities -27,987 -42,510
Net cash flow -5,637 -13,242
Cash and cash equivalents at beginning of the period 18,607 31,849
Change in cash and cash equivalents -5,637 -13,242
Cash and cash equivalents at end of the period 12,970 18,607
Notes to the Consolidated Financial Statements: NOTE 29 | page 149
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Statement of changes in equity
In thousands of euros Share capital Share premium
Statutory capital
reserve Hedge reserve
Retained
earnings Total equity
Equity at 31 December 2019 263,000 44,478 18,520 -243 29,146 354,901
Profit for the period 0 0 0 0 20,172 20,172
Other comprehensive income for the period 0 0 0 141 0 141
Total comprehensive income for the period 0 0 0 141 20,172 20,313
Dividend declared 0 0 0 0 -30,245 -30,245
Total transactions with owners 0 0 0 0 -30,245 -30,245
Increase of capital reserve 0 1,742 0 -1,742 0
Equity at 31 December 2020 263,000 44,478 20,262 -102 17,331 344,969
Carrying amount of interests under control and significant influence 0 0 0 0 -2,003 -2,003
Value of interests under control and significant influence under the equity method 0 0 0 0 32,466 32,466
Adjusted unconsolidated equity at 31 December 2020 263,000 44,478 20,262 -102 47,794 375,432
Equity at 31 December 2018 263,000 44,478 18,520 -425 29,548 355,121
Profit for the period 0 0 0 0 34,840 34,840
Other comprehensive income for the period 0 0 0 182 0 182
Total comprehensive income for the period 0 0 0 182 34,840 35,022
Dividend declared 0 0 0 0 -35,242 -35,242
Total transactions with owners 0 0 0 0 -35,242 -35,242
Equity at 31 December 2019 263,000 44,478 18,520 -243 29,146 354,901
Carrying amount of interests under control and significant influence 0 0 0 0 -2,003 -2,003
Value of interests under control and significant influence under the equity method 0 0 0 0 24,120 24,120
Adjusted unconsolidated equity at 31 December 2019 263,000 44,478 18,520 -243 51,263 377,018
In accordance with the Estonian Accounting Act, adjusted unconsolidated retained earnings represent the
amount that is available for distribution to shareholders.
Notes to the Consolidated Financial Statements: NOTE 30 | page 150
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Note 30. Events aer the reporting period
OÜ TS Shipping, a subsidiary of AS Tallinna Sadam, won the public tender organised by the Estonian
Transport Administration for the delivery of icebreaking service and ensuring navigation in the Gulf
of Finland during the period 20 December 2022 to 20 April 2032. Similarly to the previous 10-year
charter agreement, the multifunctional icebreaker Botnica will deliver icebreaking service in Estonia’s
coastal waters annually from 20 December to 20 April. The contract will be signed in the near future
in accordance with the terms and conditions of the tender and the offer made.
The total estimated contract price is EUR 54.2 million, that is EUR 5.4 million per year. Starting from
the season of 2025/2026, the contractual fee may be indexed to the Estonian consumer price index,
but the annual change, if any, may not exceed 3%. The contractual fee is fixed, that is the Transport
Administration will pay for all charter days, regardless of whether or not the icebreaker is used for
icebreaking. Compared to the previous 10-year icebreaking contract, there is a new requirement to
provide a replacement vessel for delivering the service within 10 days should Botnica, the vessel
specified in the contract, be out of commission. We will mitigate this risk, among other things, by
improving the reliability of Botnica’s critical systems.
On 1 March 2021, AS Tallink Grupp, the operator of several international ferry routes and a major
and long-term customer of the Group, filed of claim of EUR 15.4 million against AS Tallinna
Sadam with Harju County Court. In the statement of claim, AS Tallink Grupp is claiming back part
of allegedly excessive port dues paid to the Group for services provided in Old City Harbour in the
period 2017–2019. According to AS Tallink Grupp, AS Tallinna Sadam has established excessively
high port dues at Old City Harbour, allegedly abusing its dominant position in the market.
The Group considers the claim submitted by AS Tallink Grupp for compensation of allegedly unfair
port dues to be baseless. AS Tallinna Sadam has a long-term and transparent pricing policy. The port
dues for ferries have been at the same level since 2016 and have not been indexed despite a rise
in consumer prices. Nor has the Group made any special deals with any ferry operators at prices
outside the official price list. AS Tallinna Sadam intends to contest the claim and to defend itself in
the case. Management believes that the claim is not substantiated and therefore the Group has not
recognised a provision for it.
Notes to the Consolidated Financial Statements: NOTE 31 | page 151
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Note 31. Unbundling of activities based on the electricity market act
Accounting policies
These financial statements have been prepared in compliance with section 17 subsection 3 of the
Electricity Market Act. According to the above subsection an electricity undertaking has to present a
statement of financial position and statement of profit or loss for each area of activity in the notes
to its financial statements.
The financial statements include a statement of financial position and statement of profit or loss for
each of the following areas of activity:
• provision of network services;
• sale of electricity;
• other activities.
During the financial year income, expenses and non-current assets directly attributable to the
areas of activity are accounted for separately for each area of activity. Indirect and administrative
expenses are allocated, in the case of personnel expenses, based on the estimated distribution of
personnel between the areas of activity and, in the case of other expenses, based on the proportion
of sales of each area of activity.
At the end of the financial year, the items of the statement of financial position are allocated as
described below.
Trade receivables
Sales invoices for connection fees, maintenance services, sale of electricity and provision of network
service
Inventories
Inventories attributable to network service
Non-current assets
Non-current assets directly attributable to the provision of network service and sale of electricity
Trade payables
Trade payables are allocated according to factual data, the analysis is based on invoices issued by
suppliers.
Taxes payable, short-term provisions, other payables
The items are related to remuneration (wages and salaries, bonuses, taxes) and allocated to the
areas of activity according to the allocation of personnel expenses.
Government grants
Liabilities arising from government grants related to non-current assets directly attributable to the
provision of network service and the sale of electricity
Contract liabilities
Due to the nature of connection fees, deferred income is allocated to network service and other
operating activities.
Notes to the Consolidated Financial Statements: NOTE 31 | page 152
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Statement of financial position
In thousands of euros Sale of electricity
Provision of electrical
distribution network service
Other operations
At 31 December 2020 2019 2020 2019 2020 2019 2020 2019
ASSETS
Current assets
Cash and cash equivalents 26,679 35,183 0 0 0 0 26,679 35,183
Trade and other receivables 10,183 10,614 191 173 370 360 9,622 10,081
Inventories 360 408 0 0 0 0 360 408
Non-current assets held for sale 114 142 0 0 0 0 114 142
Total current assets 37,336 46,347 191 173 370 360 36,775 45,814
Non-current assets
Investments in associates 1,147 1,609 0 0 0 0 1,147 1,609
Other long-term receivables 0 294 0 0 0 0 0 294
Property, plant and equipment 587,506 575,267 0 0 16,023 15,741 571,483 559,526
Intangible assets 2,104 2,015 0 0 0 0 2,104 2,015
Total non-current assets 590,757 579,185 0 0 16,023 15,741 574,734 563,444
Total assets 628,093 625,532 191 173 16,393 16,101 611,509 609,258
Continues on page 151
Notes to the Consolidated Financial Statements: NOTE 31 | page 153
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In thousands of euros Sale of electricity
Provision of electrical
distribution network service
Other operations
At 31 December 2020 2019 2020 2019 2020 2019 2020 2019
LIABILITIES
Current liabilities
Loans and borrowings 17,266 16,266 0 0 0 0 17,266 16,266
Derivative financial instruments 102 243 0 0 0 0 102 243
Provisions 1,289 1,915 0 0 46 68 1,243 1,847
Government grants 1,919 193 0 0 0 0 1,919 193
Taxes payable 744 893 0 0 27 66 717 827
Trade and other payables 9,149 11,755 344 372 242 252 8,563 11,131
Total current liabilities 30,469 31,265 344 372 315 386 29,810 30,507
Non-current liabilities
Loans and borrowings 194,314 191,580 0 0 0 0 194,314 191,580
Government grants 26,145 24,754 0 0 1,288 1,111 24,857 23,643
Other payables 1,733 915 0 0 884 913 849 2
Total non-current liabilities 222,192 217,249 0 0 2,172 2,024 220,020 215,225
Total liabilities 252,661 248,514 344 372 2,487 2,410 249,830 245,732
EQUITY
Share capital 263,000 263,000 0 0 0 0 0 0
Share premium 44,478 44,478 0 0 0 0 0 0
Statutory capital reserve 20,262 18,520 0 0 0 0 0 0
Hedge reserve -102 -243 0 0 0 0 0 0
Retained earnings (prior periods) 19,276 6,859 0 0 0 0 0 0
Profit/loss for the period 28,518 44,404 -4 -53 222 487 28,300 43,970
Total equity 375,432 377,018 -153 -34 13,906 13,841 361,679 373,848
Total liabilities and equity 628,093 625,532 191 173 16,393 16,101 611,509 609,258
Notes to the Consolidated Financial Statements: NOTE 31 | page 154
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Statement of profit or loss
In thousands of euros Sale of electricity
Provision of electrical
distribution network service
Other operations
2020 2019 2020 2019 2020 2019 2019 2019
Revenue 107,358 130,536 1,198 1,894 3,268 3,637 102,892 125,005
Other income 3,015 1,017 0 0 48 42 2,967 975
Operating expenses -30,858 -36,669 -1,112 -1,835 -1,719 -1,948 -28,027 -32,886
Personnel expenses -19,491 -19,867 -83 -108 -438 -482 -18,970 -19,277
Depreciation, amortisation and impairment -24,094 -23,037 -7 -4 -937 -762 -23,150 -22,271
Other expenses -368 -301 0 0 0 0 -368 -301
Operating profit/loss 35,562 51,679 -4 -53 222 487 35,344 51,245
FINANCE INCOME AND COSTS
Finance income 36 42 0 0 0 0 36 42
Finance costs -1,705 -1,797 0 0 0 0 -1,705 -1,797
Finance costs - net -1,669 -1,755 0 0 0 0 -1,669 -1,755
Share of profit/loss of an associate accounted for under the equity method -462 244 0 0 0 0 -462 244
Profit/loss before income tax 33,431 50,168 -4 -53 222 487 33,213 49,734
Income tax expense -4,913 -5,764 0 0 0 0 -4,913 -5,764
Profit/loss for the period 28,518 44,404 -4 -53 222 487 28,300 43,970
The figures presented for 2019 have been adjusted compared to the report for 2019 due to the
reallocation of expenses.
Independent Auditors’ Report | page 155
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Independent Auditors’ Report
Independent Auditors’ Report | page 156
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Independent Auditors’ Report | page 157
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Independent Auditors’ Report | page 158
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Statement of the supervisory board | page 159
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Statement of the supervisory board
The supervisory board of AS Tallinna Sadam has approved the group annual report of AS Tallinna
Sadam as at and for the year ended 31 December 2020, which consists of the management report
and the financial statements, and the accompanying independent auditors’ report.
25 March 2021
AARE TARK AHTI KUNINGAS MAARIKA HONKONEN URMAS KAARLEP
ÜLLAR JAAKSOO RAIGO UUKKIVI RIHO HUNT VEIKO SEPP
Profit allocation proposal | page 160
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Prot allocation proposal
At 31 December 2020, the Group’s retained earnings amounted to EUR 47,794,087, including profit
for the period of EUR 28,518,457. Based on the dividend policy approved by the general meeting
under which dividend payments have to amount to at least EUR 30 million in 2019 and 2020 and at
least 70% of profit from 2021, the management board proposes that the Group allocate a dividend
of EUR 20,251,000. The expected dividend per share is EUR 0.077.
Based on section 332 of the Commercial Code of Estonia, the management board proposes that the
profit for the year ended 31 December 2020 be allocated as follows:
Dividend distribution EUR 20,251,000
Transfer to statutory capital reserve EUR 1,008,654
Transfer to retained earnings EUR 7,258,803
VALDO KALM
Chairman of the Management Board
MARKO RAID
Member of the Management Board
MARGUS VIHMAN
Member of the Management Board