Tallinna Sadam                FINANCIAL RESULTS                 04/02/2004



AUDITED FINANCIAL RESULTS



Performance results



2003 was an intense year for Port of Tallinn.

During the year 37.6 m tonnes of cargo passed through the harbours of Port of

Tallinn, 0.6% less than in 2002 (in 2002, 37.9 m tonnes and a growth of 17.1%

respectively). After consecutive growth years it was a year, when the cargo

volume in Port of Tallinn decreased. It was largely influenced by very

difficult ice conditions in the beginning of 2003, causing difficulties for

the movement of vessels in the Gulf of Finland. Due to the lack of the ice

breaking conception of the Estonian state important shipping lanes were not

managed to be kept ice-free, which in turn had a negative impact on the

reputation of the Estonian transit sector, as the planned cargo volumes could

not be handled. To avoid a similar situation in the future the Estonian state

has started developing an ice breaking conception in the summer of 2003.

As a result of the decrease in cargo volume, the market share of Port of

Tallinn compared to the other east coast Baltic Sea ports decreased from 16.2

% to 14.7%. By cargo types, liquid cargo (63.3%), rolling stock (14.1%) and

dry bulk cargo (13.9%) constituted the main share of the cargo volume (in

2002, 64.6%, 12.9% and 15.6% respectively). By destination, transit cargo

amounted to 76%, export 13% and import 11% of total cargo (in 2002, 79%, 11%

and 10% respectively).

In 2003, 5.86 m passengers visited the harbours of Port of Tallinn, 1.4% less

than in 2002 (in 2002, 5.95 m passengers and a growth of 3.6%). As the number

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

0.2%

in 2003), there has been no significant change in the total number of

passengers during the past few years. The main share of the decrease in the

number of passengers in 2003 was caused by the decrease in the number of

overnight cruise passengers (mainly cruises in the Gulf of Finland). In the

upcoming years the number of passengers is expected to remain on the level of

2003, as the passenger market has stabilised and no substantial developments,

except for the expected increase in the number of cruise passengers, are

anticipated. The possible decline in the number of passengers on Tallinn-

Helsinki line could be compensated by a new vessel on the Tallinn-Stockholm

line by Tallink Grupp and the starting of St. Petersburg line.

The 2003 operating revenues of Port of Tallinn totalled EEK 960.6 m (EUR 61.4

m), indicating a growth of 0.2% per year (in 2002, EEK 958.6 m (EUR 61.3 m)

and a growth of 7.2%). Rental income (a growth of 10.8%) increased the most

among revenues. The growth of income from port dues, quay charges and sale of

services remained below 2%. In 2003, income from passenger fee decreased (a

decrease of 15.7%), as a result of implementing the gradual passenger fee

scale (increasing number of passengers serviced by one operator reduces the

fee per passenger) in 2003. As the lowering of the passenger fee did not

result in a growth of the number of passengers, the gradual passenger fee

scale was abolished as of beginning of 2004.

Due to difficult ice conditions and the reduced passenger fee rate in 2003 

the

operating efficiency of the company decreased, which is evidenced by the lag

of 0.2% growth in operating revenues to the 7.7% growth in operating expenses.

Operating expenses totalled EEK 556.6 m (EUR 35.6 m), resulting in an

operating profit of EEK 404.0 m (EUR 25.8 m) and profitability of 42.1% (in

2002, EEK 516.8 m (EUR 33.0 m), EEK 441.8 m (EUR 28.2 m) and 46.1%

respectively). In the upcoming years the efficiency of Port of Tallinn is

expected to somewhat increase, mainly due to the realisation of investment

projects set be strategy and exploitation of land acquired during the past

years.

The 2003 net income of Port of Tallinn amounted to EEK 230.8 m (EUR 14.8 m),

being EEK 202.8 m (EUR 13.0 m) short of net income in 2002. The drop in net

income was mainly caused by the one-time ice breaking expense in 2003 (Port 

of

Tallinn financed ice breaking works in Estonian ports) in the amount of EEK

119.3 m (EUR 7.6 m) and expenses due to changes in the "Income Tax Act"

(starting from 2003 the dividend payments of 100% state owned companies are

subject to income tax) in the amount of EEK 48.4 m (EUR 3.1 m). Without the

aforementioned expenses the 2003 net income of Port of Tallinn would have 

been

EEK 398.5 m (EUR 25,5 m).

In 2003, the return on assets (ROA) of Port of Tallinn declined to 5.2%,

compared to 11.0% in 2002. Without the one-time ice breaking expense and

income tax on dividends, the 2003 return on assets of Port of Tallinn would

have been 9.0%. The difference between 2003 adjusted return on assets 

compared to that of 2002 is mainly caused by decreased efficiency and the 

increase in asset base due to long-term sizable investments, which will 

generate income in future periods.

The return on owner’s equity (ROE) moved by a similar pattern to the return 

on

assets, being slightly, by 0.9% higher. The similarity between the return on

owner’s equity and the return on assets is caused by high share of owner’s

equity in the company’s capital structure (equity/assets ratio 77%). In the

coming years the difference between the return on owner’s equity and return 

on

assets is expected to increase, as more debt capital will be used to finance

port’s large investment plan.

* 2003 amount includes ice breaking work and dividends on income tax

In 2003, EEK 137.7 m (EUR 8.8 m) was paid to the owner in the form of direct

dividend payment accompanied by income tax on dividends in the amount of EEK

48.4 m (EUR 3.1 m), totalling to EEK 186.1 m (EUR 11.9 m). Together with the

financing of ice breaking expense for the Estonian state in the amount of EEK

119.3 m (EUR 7.6 m) the total amount of EEK 305.4 m (EUR 19.5 m) was paid to

(or in behalf) the owner in 2003.



Investments and development plans

In 2003, Port of Tallinn invested a total of EEK 933.9 m (EUR 59.7 m) into 

new infrastructure objects and into improvement of the existing ones, 

almost three times more than in 2002 (in 2002, EEK 340.4 m (EUR 21.7) 

and 21.6 % less

respectively). Major part of the investments, a total of EEK 694.6 m 

(EUR 44.4 m) or 74% of the total volume was invested into water transport 

facilities.

Larger investment objects were related to Muuga Harbour: coal terminal - EEK

291.8 m (EUR 18.6 m), berths no. 14 and 15 - EEK 114.8 m (EUR 7.3 m) and

berths no. 9A and 10A - EEK 105.0 m (EUR 6.7 m). In the Old City Harbour EEK

73.2 m (EUR 4.7 m) was invested into the construction of a new cruise jetty

and in Paldiski South Harbour EEK 57.4 m (EUR 3.7 m) into the reconstruction

of berth no. 1.

In addition to Port of Tallinn’s investments into the development of port

infrastructure, the private port operators invested approximately EEK 1

billion (EUR 64 m) into port superstructure and increasing of the throughput

capacity in 2003. The largest investor was passenger operator Tallink Grupp

with the 2003 investment volume of ca EEK 336 m (EUR 21.5 m). Other larger

investing operators included Termoil in Muuga Harbour (ca EEK 245 m (EUR 15.7

m)) and Eurodek Group companies (ca EEK 206 m (EUR 13.2 m)), investing mainly

into the extension of the liquid cargo tank park and unloading facilities.

In addition to investments, Port of Tallinn incurs substantial annual 

research and development expenses, which in 2003 reached EEK 11.5 m 

(EUR 0.7 m), compared to EEK 7.8 m (EUR 0.5 m) in 2002. Major part of 

research and development expenses is targeted at attracting new cargo flows 

and development

of new projects by conducting profitability studies and providing innovative

technical solutions.

During the next 5 years Port of Tallinn plans to invest approximately EEK 5.3

billion (EUR 339 m) into the construction and improvement of infrastructure,

with EEK 1.2 billion (EUR 77 m) planned to invest already in 2004. This

ambitious investment plan would offer the best quality and modern technology

to port operators and cargo owners, in order to increase the cargo volume and

ensure the competitive advantage and constant increase of market share of 

Port of Tallinn in the increasingly competitive market.

EEK 1 067 m (EUR 68) or 89% of the 2004 investments is targeted at new

development projects and EEK 138 m (EUR 9 m) or 11% at the ensuring of the

throughput capacity of the existing infrastructure.

Major part of new development investments are targeted at the development of

Muuga Harbour  (80%) and Paldiski South Harbour (20%). Larger long-term

projects in Muuga Harbour include the construction of coal and metal

terminals, east part breakwater construction, construction of berths no. 14

and 15 and investments related to the establishing 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 a

grain quay and timber terminal and the possible construction of a dry bulk 

and general cargo terminal in the medium long-term perspective.

Passenger transport related investment plans for 2004 foresee the completion

of the construction of the cruise jetty in the Old City Harbour prior to the

beginning of the summer cruise season.

Port of Tallinn is expecting to use more debt capital to finance new

investments. 5 year’s goal is to achieve a 60/40 equity/debt ratio thus

ensuring greater return on equity and lowering the total cost of invested

capital. Port of Tallinn does not anticipate substantial changes in the

targeted equity/debt ratio to maintain borrowing ability in the long run.



Subsidiaries

In 2003, Port of Tallinn acquired 100% of AS EDI Vektor shares from the State

Infocommunication Foundation and founded AS Green Marine (Port of Tallinn

shares 51%).

100% of AS EDI Vektor shares were acquired on 31 October 2003. The goal of 

the earlier activity of AS EDI Vektor was to provide an electronic data

interchange (EDI) environment to the companies in the logistics sector.

Although EDI service has a great potential, AS EDI Vektor could not implement

the EDI service at level satisfactory to potential users. Since by the end of

2003 AS EDI Vektor was running out of financing received in 2000 and the

company had a negative cash flow, new investors were searched to continue the

EDI project. Port of Tallinn had an interest towards the project as more

efficient information flow provided by the EDI environment would help to

increase the efficiency of cargo and passenger flows in the port. Currently

the work group formed by Port of Tallinn in the summer of 2003 has prepared a

general EDI activity plan focusing on the possibilities of higher operations

efficiency related to the information flows in Port of Tallinn harbours and

between the companies of port community. The goal of the activity plan is to

review the former strategy of AS EDI Vektor and offer possible future steps

for the development of EDI environment. Until the activity plan is finalized

and approved by the project partners, the business activity of AS EDI Vektor

has been frozen.

AS Green Marine is a joint venture established by Port of Tallinn and AS NT

Marine in the end of 2003 dealing with environmental issues. The goal of AS

Green Marine is to process port-generated waste, management, maintenance and

operation of hazardous ship waste and wastewater processing centres, and

cleaning and maintenance of port aquatory and territory, also the quick

localization and liquidation of possible oil pollutions in the port aquatory.

In 2003 no actual business activity occurred in the company, the company was

engaged in preparation of waste handling terminal construction project in

Muuga Harbour.



BALANCE SHEET, consolidated, audited, in EEK th



                                                

                                                

ASSETS                               ConcernGro GroupConce

                                            up        rn

                                     31.12.2003 31.12.2002

CURRENT ASSETS                                  

Cash and bank                          155 516    42 533

Shares and other securities             10 041    17 894

Customer receivables                    83 719    87 414

Other receivables and prepayments       73 934    20 185

Inventories                              2 354     2 328

Total current assets                   325 564   170 354

                                                

NON-CURRENT ASSETS                              

Shares Investment inof subsidiaries          0         0

Other shares and securities              4 655     4 655

Other long-term receivables             14 762    16 745

Tangible fixed assets                4 563 763 3 797 584

Total non-current assets             4 583 180 3 818 984

                                                

TOTAL ASSETS                         4 908 744 3 989 338

                                                

LIABILITIES AND OWNER’S EQUITY                  

                                                        

LIABILITIES                                     

Current liabilities                             

Supplier payables                      207 861    47 807

Taxes payable                           21 041    16 273

Payable to shareholders                100 000         0

Short-term provisions                    1 222     1 316

Other payables                          39 268    34 926

Total current liabilities            368 792369   100 322

                                           392

                                                

Non-current liabilities                         

Long-term loan liabilitiesborrowings   725 866    70 000

Long-term provisions                     3 426         0

Other long-term liabilities             17 997    26 000

Total non-current liabilities          747 289    96 000

                                                

Total liabilities                    1 116 681   196 322

                                                

Minority shareinterest                   1 960         0

                                                

OWNER’S EQUITY                                  

Share capital in at nominal value    2 650 000 2 750 000

Reserves                               262 111   240 433

Retained earnings                      647 205   369 013

Profit for the year                    230 787   433 570

Total owner’s equity                 3 790 103 3 793 016

                                                

TOTAL LIABILITIES AND OWNER’S EQUITY 4 908 744 3 989 338



                                                





BALANCE SHEET, consolidated,

audited, in EUR th

                                                

                                                

ASSETS                               GroupConce GroupConce

                                            rn        rn

                                     31.12.2003 31.12.2002

CURRENT ASSETS                                  

Cash and bank                            9 939     2 718

Shares and other securities                642     1 144

Customer receivables                     5 351     5 587

Other receivables and prepayments        4 725     1 290

Inventories                                150       149

Total current assets                    20 807    10 888

                                                

NON-CURRENT ASSETS                              

Shares ofInvestment in subsidiaries          0         0

Other shares and securities                298       298

Other long-term receivables                943     1 070

Tangible fixed assets                  291 677   242 709

Total non-current assets               292 918   244 077

                                                

TOTAL ASSETS                           313 725   254 965

                                                

LIABILITIES AND OWNER’S EQUITY                  

                                                        

LIABILITIES                                     

Current liabilities                             

Supplier payables                       13 285     3 055

Taxes payable                            1 345     1 040

Payable to shareholders                  6 391         0

Short-term provisions                       78        84

Other payables                           2 510     2 232

Total current liabilities               23 608     6 412

                                                

Non-current liabilities                         

Long term loan liabilitiesborrowings    46 391     4 474

Long-term provisions                       219         0

Other long-term liabilities              1 150     1 662

Total non-current liabilities           47 760     6 136

                                                

Total liabilities                       71 369    12 547

                                                

Minority shareinterest                     125         0

                                                

OWNER’S EQUITY                                  

Share capital in at nominal value      169 365   175 757

Statutory Rreserves                     16 752    15 366

Retained earnings                       41 364    23 584

Profit for the year                  14  75014    27 710

                                           750

Total owner’s equity                   242 231   242 417

                                                

TOTAL LIABILITIES AND OWNER’S EQUITY   313 725   254 965







INCOME STATEMENT, consolidated, audited, in EEK th



                                    GroupCon GroupCon

                                       cern    cern

                                       2003    2002

Sales revenue                       960 560 958 579

Other revenueincomes                 20 249  27 086

Operating expenses                  253 582 208 346

Personnel expenses                  145 631 150 598

Depreciation and value-             157 350 157 837

adjustmentsimpairment

Other expenses                      138 829  37 278

OPERATING PROFIT                    285 417 431 606

Financial income and expenses                

sShares of result of subsidiaries     0-555      00

Interest expense                     -8 405  -3 972

Foreign exchange gain (loss)           -436    -311

Other financial income and expense   2 5893   6 247

                                        144

Total financial income and expenses  -6 252   1 964

Profit from normal                  279 165 433 570

operationsordinary activities

Income tax                          -48 378       0

NET PROFIT FOR THE PERIOD           230 787 433 570



INCOME STATEMENT, consolidated,              

audited,

in EUR th                           GroupCon GroupCon

                                       cern    cern

                                       2003    2002

Sales revenue                        61 391  61 264

Other revenueincome                   1 294   1 731

Operating expenses                   16 207  13 316

Personnel expenses                    9 307   9 625

Depreciation and value-              10 056  10 088

adjustmentsimpairment

Other expenses                        8 873   2 382

OPERATING PROFIT                     18 241  27 585

Financial income and expenses                

sShare of results of subsidiaries      0-35      00

Interest expense                       -537    -254

Foreign exchange gain (loss)            -28     -20

Other financial income and expense   201165     399

Total financial income and expenses    -400     126

Profit from ordinary                 17 842  27 710

activitiesnormal operations

Income tax                           -3 092       0

NET PROFIT FOR THE PERIOD            14 750  27 710





Erik Sakkov

Marketing Director

6318067