Tallinna Sadam                FINANCIAL RESULTS                 04/09/2003



AUDITED FINANCIAL RESULTS, 2002



Performance results



2002 proved to be another successful year for Port of Tallinn in terms of

cargo flow.

In 2002, Port of Tallinn handled 37.9 m tonnes of cargo, which compared to 

the previous year is by 17.1% more (in 2001, 32.3 m tonnes and a growth of 

10.1%). As a result of the increase in cargo volume, the market share of 

cargo traffic of Port of Tallinn among the ports of the eastern coast of 

the Baltic Sea increased from 15.5% to 16.2%. 

In the conditions of the growing market and

competition we managed to retain our market share and increase it on account

of competitors by 0.7%. By cargo type liquid cargo (64.2%) and general cargo

(17.6%) constituted the main share of the cargo volume (in 2001, 64.9% and

20.4%). By cargo direction transit formed 79%, export 11% and import 10% (in

2001, 76%, 14% and 10%).

In 2002, 5.9 m passengers visited the harbours of Port of Tallinn, which is

3.6% more than in 2001 (in 2001, 5.7 m passengers and a decline of 4.7%). As

the number of line passengers on route Tallinn-Helsinki has stabilised (a

growth of 1.6% in 2002), no relevant changes in the number of passengers have

been observed during the last years. The main share of increase in the 

number of passengers in 2002 was caused by the increase in the number of 

passengers on Tallinn-Stockholm and Paldiski-Kapellskär routes. 

In the coming years the number of passengers is expected to remain on the 

level of 2002, as the market

has already developed and no substantial developments, except the expected

increase in the number of cruise passengers, are anticipated for the coming

years. In the middle long term perspective the loss of tax-free possibilities

upon Estonia’s accession into the European Union may have a negative impact 

on the number of passengers on regular routes operating between Estonia and

Finland.

The 2002 operating income of Port of Tallinn totalled EEK 958.6 m, indicating

a growth of 7.2% during the year (in 2001, EEK 893.8 m and a growth of 5.1%).

Port dues (12.2%) and cargo charges (5.4%) increased most among revenues. The

increase in port dues was due to the increased cargo volume, which brought

along an increase in the number of vessel calls and the gross tonnage of the

vessels calling at the port. Despite a large increase in cargo volume (17.1%)

the increase of cargo charges in 2002 was smaller, as upon increasing of the

cargo volume the cargo charge tariffs are usually lowered for the private

operators and for some operator cargo charge tariffs were lowered to favour

the increase of cargo volumes.

In 2002, finance lease contracts are classified into operating lease

contracts, due to which financial income decreased by ca EEK 16 m and rental

income and depreciation of non-current assets increased. For the purpose of

comparison also the corresponding indicators of previous years were restated.

In 2002, Port of Tallinn also managed to increase its efficiency of company

performance with 7.2% increase in operating revenues exceeding the 5.5%

increase of operating expenses. Total operating expenses were EEK 516.8 m and

operating profit EEK 441.8 m with a profit margin of 46.1% (in 2001, EEK

489.7, EEK 404.1 m and 45.2% respectively). The profitability of the company

is expected to decrease due to extensive investments planned for the

implementing of company strategy.

In 2002 return on assets (ROA) somewhat increased, reaching 11.0% compared to

10.6% in 2001. This was mainly caused by increased efficiency.

Return on owner’s equity ratio (ROE) has followed the similar pattern of

return on assets ratio, being higher by 0.6%. Similarity between the return 

on owner’s equity ratio and return on assets ratio is due to the high share 

of owner’s equity in the company capital structure (95%).

In 2002, EEK 302.7 m was paid out as dividends to the owner, which was 75% of

the restated net profit of the company in 2001.







Investments and development prospects

In 2002, Port of Tallinn invested a total of EEK 340.4 m into the new

infrastructure facilities and improvement of the existing ones, which was

21.6% less than in 2001 (in 2001, EEK 434.3 m and 55.8 % more respectively).

Major part of investments, a total of EEK 179 m or 53% of the total volume,

was used for water transport facilities. The largest investment objects were

related to Paldiski South Harbour: RO-RO terminal of EEK 88.3 m and dredging

of the aquatory of EEK 43.4 m. A lot of attention was also paid to

environmental protection, for the better organization of which boom 

deployment vessel "Karu" with the cost of EEK 9.9 m and environmental 

protection measures with the cost of EEK 13.1 m were acquired.

In addition to the investments of Port of Tallinn into the development of

infrastructure, in 2002 private stevedoring companies and larger lessees 

added investments into Port superstructure and new capacities reaching 

over EEK 1 billion. Larger investors included Galvex (construction of a 

steel galvanising factory) and liquid bulk operator Eurodek in Muuga Harbour 

and liquid bulk

operator Alexela in Paldiski South Harbour (increasing of tank capacity).

In addition to investments, Port of Tallinn incurs substantial research and

development expenses, which in 2002 reached EEK 7.8 m. Research and

development expenses are targeted at attracting new cargo flows and 

developing of new projects with the focus on increasing efficiency and 

innovative technical solutions.

During the next 5 years Port of Tallinn plans to invest over EEK 4.6 billion

into the infrastructure construction and improvement, of which EEK 1 billion

is planned to be invested already in 2003. This ambitious investment plan

would offer the operators and cargo owners the best quality and modern

technology, which would help to increase the cargo volume passing through the

Port and ensure the competitive advantage and constant increasing of the

market share of Port of Tallinn in the market of increasing competition.

EEK 871 m or 86% of the total volume of investments in 2003 is targeted at 

new development projects and EEK 134 m or 14% at the ensuring of the 

throughput capacity of the infrastructure already in use.

2003 passenger traffic investments include a cruise quay in the Old City

Harbour with the cost of EEK 70 m and a cruise quay in Saaremaa with the cost

of EEK 70 m (from which in 2003 ca EEK 20 m will be realised).

Investment priorities lie in Muuga Harbour (71%) and Paldiski South Harbour

(19%). Larger long term projects in Muuga Harbour include the construction of

the steel terminal, eastern breakwater construction, construction of the new

liquid bulk berth, construction of berths no. 14 and 15 and investments

related to the creating of a free zone (industrial park). The continuing

increase of the cargo volumes and market share of Paldiski South Harbour is

ensured by investments into the construction of timber storage areas,

reconstruction of berth no. 1 into a liquid bulk quay, extension of peat quay,

ending of the dredging work of the aquatory and development of railway 

related infrastructure.

We expect to use more outsourced funds to finance our investment projects in

the future. In the long-term perspective the goal is to achieve a 70/30

asset/debt ratio, thus ensuring better rate of return on owner’s equity, 

while lowering the total cost of capital invested into the company.



BALANCE SHEET, audited, in thousands 

                                      EEK                    EUR

ASSETS                     31.12.2002    31.12.2001   31.12.2002 31.12.2001

                                           restated                restated

Current assets

Cash and bank                  17,281        32,968        1,104     2,107

Shares and other secur         43,147       103,570        2,758     6,619

Customer receivables           87,414        80,685        5,587     5,157

Accounts receivable            97,073        98,029        6,204     6,265

Allowance for doubtful re      -9,659       -17,344         -617    -1,108

Other receivables                 473        15,082           30       964

Other short term receivab         473        15,082           30       964

Accrued income                    139           790            9        50

Accrued interest                  139           790            9        50

Prepaid expenses               19,573         8,998        1,251       575

Prepaid and refundable ta      10,432         2,289          667       146

Other prepaid expenses          9,141         6,709          584       429

Inventories                     2,328         5,606          149       358

Raw materials                   2,223         5,492          142       351

Goods bought for resale            99           114            6         7

Prepayments to suppliers            6             0          0.4         0

Total current assets          170,354       247,700       10,888    15,831



Non-current assets

Long term financial inves      21,401         9,071        1,368       580

Other shares and securiti       4,655         4,720          297       302

Miscellaneous long term r      14,228         2,977          909       190

Long term accounts receiv       2,517         1,374          161        88

Tangible fixed assets       3,797,584     3,590,651      242,710   229,484

Land and buildings          4,353,086     4,144,934      278,213   264,910

Machinery and equipment       690,734       746,865       44,146    47,733

Other equipment and fix        77,477        61,649        4,952     3,940

Accumulated depreciation   -1,503,992    -1,444,396      -96,123   -92,314

Construction in process       122,358        78,787        7,820     5,035

Prepayments for tangible       57,921         2,812        3,702       180

Total non-current assets    3,818,984     3,599,722      244,078   230,064



TOTAL ASSETS                3,989,339     3,847,423      254,965   245,895





LIABILITIES AND OWNER’S EQUITY



Liabilities



Current liabilities

Debt obligations                  499        16,083           32     1,028

Debentures                        500        16,083           32     1,028

Customer prepayments for       13,904           665          889        43

Supplier payables              47,807        38,927        3,055     2,488

Accounts payable               47,807        38,927        3,055     2,488

Taxes payable                   8,524         5,961          545       381

Accrued expenses               26,408        15,919        1,688     1,017

Payables to employees          15,663        11,135        1,001       712

Interests payable               2,807           594          179        38

Other accruals                  7,938         4,190          507       268

Short term provisions           1,316        12,623           84       807

Other unearned income           1,864         1,324          119        85

Total current liabilities     100,322        91,501        6,412     5,848



Non-current liabilities

Long term loan liabilities     70,000        70,417        4,474     4,500

Nonconvertible liabilities     70,000        70,417        4,474     4,500

Other long term liabilities    26,000        23,400        1,662     1,496

Customer prepayments           26,000        23,400        1,662     1,496

Total non-current liabili      96,000        93,817        6,136     5,996



Total liabilities             196,322       185,318       12,547    11,844



Owner’s equity

Share capital               2,750,000     2,750,000       175,757   175,757

Reserves                      240,433       218,815        15,366    13,985

Mandatory legal reserve       240,433       218,815        15,366    13,985

Retained earnings             369,013       291,933        23,584    18,658

Profit for the year           433,571       401,358        27,710    25,651

Total owner’s equity        3,793,017     3,662,105       242,418   234,051



TOTAL LIABILITIES AND OWN   3,989,339     3,847,423       254,965   245,895







INCOME STATEMENT, audited, in thousands



                                          EEK                      EUR

                                   2002         2001          2002      2001

                                            restated                restated

Revenue

Net sales                       958,579       893,813       61,264    57,125

Other income                     27,293        17,043        1,744     1,089

Total revenue                   985,872       910,856       63,009    58,214



Expenses

Materials, consumables an        93,074        79,161        5,949     5,059

Miscellaneous operating e       115,272       119,078        7,367     7,610

Personnel expenses              150,598       139,034        9,625     8,886

incl. Salaries                  113,026       104,653        7,224     6,689

      Social taxes               37,572        34,380        2,401     2,197

Depreciation                    157,837       152,407       10,088     9,741

incl. depr. and  val. adj       157,837       152,407       10,088     9,741

Other expenses                   37,485        30,457        2,396     1,947

Total expenses                  554,265       520,137       35,424    33,243



Operating profit                431,607       390,720       27,585    24,972



Financial income                  8,162        13,379          522       855

Income from other non-cur             1            74          0.1         5

Foreign exchange gains              743         1,331           47        85

Other interest and financ         7,418        11,974          474       765



Financial expenses                6,198         2,741          396       175

Interest expense                  3,972         2,067          254       132

Foreign exchange losses           1,054           674           67        43

Other financial expenses          1,171             0           75         0



Profit from normal operat       433,571       401,358       27,710    25,651





Net profit for the year         433,571       401,358       27,710    25,651





Erik Sakkov

Marketing Director

6318067