Finnlines Plc Stock Exchange Release 3 May, 2007
INTERIM REPORT 1 JANUARY - 31 MARCH 2007
The Finnlines Group recorded revenue from the continuing
operations totalling EUR 157.4 (152.9)meur. Operating profit was
EUR 13.5 (9.7) million. Profit before taxes from the continuing
operations was EUR 8.3 (6.4) million. Return on equity (ROE) was
6.3 (5.0) % and return on investment (ROI) was 5.7 (5.4) %.
Group Structure
Finnlines is one of the largest European shipping companies
specialised in liner cargo services. The Group's operations are
centred on sea transports in the Baltic Sea and North Sea areas
and on providing port services in Finland and Norway. Through its
subsidiaries and sales entities, the Group has operations in
eight northern European countries and in Russia. The Group's
services are also offered throughout Europe via an extensive
network of agents. There was no changes in the Group structure
during the reporting period.
Significant events during the reporting period
At the end of December 2006 Grimaldi Compagnia di Navigazione
S.p.A. had bought Finnlines shares at a higher price than was
paid in the voluntary tender offer in December 2006 and based on
the regulations Grimaldi paid EUR 1.05 to all the shareholders,
who had offered their shares in the voluntary tender offer.
This compensation was paid at the end of January 2007.
In January Grimaldi Compagnia di Navigazione S.p.A (Grimaldi)
offered, by a public mandatory tender offer, to purchase all
shares in Finnlines Plc at a cash consideration of EUR 17,00 for
each share. The Board of Directors of Finnlines evaluated the
offer and its conditions based on Grimaldi's tender offer
document published on 22 January 2007. The Board of Directors
considered the offer to be too low taking into account the
company's new competitive capacity and strong position in the
Baltic Sea's rapidly growing market area. The Board of Directors
stated that shareholders must independently decide for their part
on the acceptance of the Mandatory Tender Offer while taking into
account all information presented in the tender offer document
and the opinion of the Board of Directors. The Board of Directors
drew the attention of Finnlines' shareholders, in particular, to
the fact that Grimaldi already held approximately 50.1 percent of
the votes in Finnlines and was consequently in a position to
nominate a new Board of Directors to the company and resolve on
the distributable amount of dividend at the company's General
Meeting of Shareholders, among other things. The Board of
Directors believed that the composition of the Board of Directors
and the top management of the company was going to change
significantly. The Board of Directors said in their statement
that they had no information about the strategy or dividend
policy of the new Board of Directors to be elected in the General
Meeting of Shareholders. The Board of Directors also noted that,
according to the Finnish Companies Act, shareholders who hold at
least 1/10 of all shares may request at the General Meeting of
Shareholders that a minimum dividend be paid in accordance with
the prerequisites prescribed by law.
The attention of the shareholders was also drawn to the fact that
Grimaldi will not have an obligation to make a mandatory tender
offer regarding the Finnlines shares in the future. There may be
reduced trading in the Finnlines shares and the price formation
of the shares on the stock exchange may be less certain in the
future. The Board of Directors also noted that should Grimaldi
acquire more shares in Finnlines after the lapse of more than
nine months from the expiry of the offer period of the mandatory
tender offer at a price that is higher than the offer
consideration, the shareholders who accepted the mandatory tender
offer will not be entitled to a compensation.
A value for the shares at the level of the mandatory tender offer
or higher may not necessarily be realised in the future.
The members of the Board of Directors, Emanuele Grimaldi, Jukka
Härmälä and Timo Jouhki did not participate in the handling of
the Mandatory Tender Offer in the Board of Directors or the
issuing of the opinion. Mandatum & Co. Ltd was acting as the
financial adviser for the Board of Directors of Finnlines. The
legal counsel for the Board of Directors of Finnlines was Hannes
Snellman Attorneys at Law Ltd.
The offer period in Grimaldi´s mandatory tender offer expired on
16 February 2007. Grimaldi was offered 264,368 shares
and Grimaldi Group's holding and share of votes in Finnlines
rose to 50.7 per cent.
Antti Lagerroos, President and CEO of Finnlines Plc resigned from
his duty on 22 February, 2007. His employment will end on 31
August, 2007.
Finnlines Plc's Annual General Meeting, held on 16 March, 2007,
approved the financial statements and discharged the Company's
Board of Directors and CEO from liability for the 2006 financial
year. The Meeting decided to pay a dividend of EUR 0.42 per
share, i.e. a total of EUR 17.1 million. The dividend payment day
was 28 March, 2007.
The meeting decided that the company's Board of Directors has
seven members. Mr. Emanuele Grimaldi, Managing Director of the
Atlantica S.p.a. di Navigazione was re-elected and as new members
Mr. Gianluca Grimaldi, Managing Director of Grimaldi Compagnia di
Navigazione S.p.a., Mr. Diego Pacella, Managing Director of
Industria Armamento Meridionale, Mr. Heikki Laine, Mr. Antti
Pankakoski, Mr. Olav K. Rakkenes and Mr. Jon-Aksel Torgersen, CEO
of Astrup Fearnley AS, were elected.
The Board of Directors elected Mr. Jon-Aksel Torgersen chairman
and Mr. Diego Pacella vice-chairman of the Company.
The firm of authorised public accountants Deloitte & Touche Oy
was appointed as the company's auditors.
The third newbuilding, MS Finnlady, started the traffic between
Helsinki, Finland and Travemünde, Germany in the middle of
February and the fourth vessel of the series, MS Europalink,
started plying between Malmö, Sweden and Travemünde, Germany in
March 2007. The last vessel of the series of five newbuildings,
MS Nordlink, is assumed to be delivered in June 2007.
MS Finntrader was docked at the Remontowa shipyard in Poland for
conversion since autumn 2006. It started operating in NordöLink
traffic in February 2007. Her sister vessel MS Finnpartner was
docked for conversion in April 2007 and will start plying in
NordöLink traffic in August. These so-called Hansa vessels
are converted into drive-through vessels with increased passenger
capacity. MS Finnclipper, a vessel in FinnLink traffic, was
docked at the shipyard at the end of December 2006 and was back
in FinnLink service in March 2007. The cargo capacity of MS
Finnclipper was increased by 500 lane meters to a total of 2,900
lane metres.
Financial performance
The Finnlines Group recorded revenue from the continuing
operations totalling EUR 157.4 (152.9 in 2006) million. Shipping
and Sea Transport Services generated revenue amounting to EUR
132.5 (129.1) million and Port Operations EUR 33.3 (30.4)
million. Other income from operations amounted to EUR 0.6 (0.5)
million. Operating profit from the continuing operations was EUR
13.5 (9.7) million. Financial income was EUR 2.2 (0.7) million
and financial expenses totalled EUR -7.4 (-4.0) million. Profit
before taxes from the continuing operations was EUR 8.3 (6.4)
million. Return on equity (ROE) was 6.3 (5.0) % and return on
investment (ROI) was 5.7 (5.4) %.
Investments and financing
The Group's investments were EUR 188.7 (13.4) million.
The main part of this amount came from the delivery of two
newbuildings, MS Finnlady and MS Europalink. Interest-bearing net
debt amounted to EUR 633.8 (326.3) million. The equity ratio
calculated from the balance sheet was 32.9 (41.5) %. Gearing was
153.4 (85.2) %.
Personnel
The Group employed an average of 2,235 (2,105) people during the
period, consisting of 1,460 (1,382) employees on shore and 775
(723) persons at sea.
The Finnlines share
The Company's registered share capital on 31 March 2007 was EUR
81,383,916 divided into 40,691,958 shares.
A total of 4,860 million Finnlines shares were traded on the
Helsinki Exchanges during the period. The market capitalisation
of the Company's stock at the end of March was EUR 681.6 million.
Earnings per share (EPS) during the period were EUR 0.16 (0.12).
Shareholders' equity per share was EUR 10.11 (9.37).
Risks
There are no material changes in the risks disclosed in the notes
to the financial statements 2006.
Events after reporting period
In April, Finnlines Group agreed on the sale of the ropax vessels
MS Malmö-Link and MS Lübeck-Link (built 1980) to
external non-related parties. The vessels are currently plying in
NordöLink traffic between Mälmö and Travemünde. They will be
replaced during the third quarter by the newbuilding Nordlink and
MS Finnpartner, which is under conversion since April 2007.
The sales profit, approx. EUR 11 million, will be shown
in the Group's result during the third quarter.
The Board of Directors of Finnlines Plc appointed
Mr. Olav K. Rakkenes, a member of the Board of Directors,
temporary President and CEO of Finnlines Plc as from 24 April,
2007. Mr. Antti Lagerroos will be acting as advisor for
the Board of Directors of Finnlines Plc until 31 August,2007.
In its first meeting in March the Board of Directors decided to
start seeking a new President and CEO for the company.
Outlook for 2007
During the first three months of 2007 unitised cargo volumes have
developed positively on the main routes of Finnlines. This is due
to the good economic development in Finland and in its most
important trading countries and also due to Finnlines' faster
timetable between Finland and Germany.
Despite one-time expenses relating to the new vessels coming into
service, the rotation of the fleet and the vessels being out of
service due to conversion, the whole year operating profit for
2007 is expected to be better than in 2006. Compared to the
previous year, there is and will be an increase in the
depreciations and interest expenses due to the four newbuildings
and two converted vessels which have already come to the service
between August 2006 and March 2007 and due to the last
newbuilding and one converted vessel which are still coming into
the service during the year 2007.
The next interim report for 1 January - 30 June, 2007 will
be published on 2 August, 2007.
Finnlines Plc
The Board of Directors
ENCLOSURES Profit and Loss Account
Balance Sheet
Changes in Shareholders Equity
Cash Flow Statement
Revenue by business division
Financial indicators
Contingencies and Commitments
DISTRIBUTION Helsinki Exchanges
Main media
All figures unaudited
CONSOLIDATED PROFIT AND LOSS
ACCOUNT
1000 EUR 1-3/07 1-3/06 1-12/06
Continuing Operations
Revenue 157,443 152,857 632,666
Other income from 589 493 2,078
operations
Materials and services -42,616 -49,311 -196,042
Personnel expenses -28,755 -25,499 -111,266
Depreciation,
amortisation -11,617 -9,186 -39,875
and other write-offs
Other operating -61,539 -59,609 -229,337
expenses
Total operating expenses - - -576,521
144,528 143,605
Operating profit 13,505 9,745 58,223
Financial income 2,208 726 10,784
Financial expenses -7,385 -4,038 -21,557
Share of associated
companies' profits 0 0 274
Profit before taxes 8,328 6,432 47,725
Income taxes -1,749 -1,425 -9,989
Profit for the reporting
period, continuing 6,579 5,008 37,736
operations
Discontinuing operations
Profit for the reporting
period, discontinuing
operations N/A -278 18,742
Profit for the reporting
period 6,579 4,730 56,477
Attributable to:
Parent company 6,558 4,751 56,053
shareholders
Minority interest 21 -21 425
6,579 4,730 56,477
Profit attributable to parent company shareholders
calculated as earnings per share (EUR/share)
Undiluted earnings per 0.16 0.12 1.38
share
Diluted earnings per 0.16 0.12 1.38
share
Profit attributable to parent company
shareholders,
continuing operations,
calculated as earnings per share (EUR/share)
Undiluted earnings per 0.16 0.12 0.92
share
Diluted earnings per 0.16 0.12 0.92
share
Profit attributable to parent company
shareholders,
discontinuing operations,
calculated as earnings per share (EUR/share)
Undiluted earnings per N/A -0.01 0.46
share
Diluted earnings per N/A -0.01 0.46
share
CONSOLIDATED BALANCE SHEET,
IFRS
1000 EUR 31/3/07 31/3/06 31/12/06
ASSETS
Non-current assets
Property, plant and equipment 995,403 619,934 817,977
Goodwill 108,660 111,763 108,660
Other intangible assets 9,757 12,057 10,136
Investment properties 1,587 1,591 1,588
Share of associated companies 1,526 2,074 2,349
Other financial assets 4,892 4,996 4,892
Receivables 8,440 8,931 5,839
Deferred tax assets 616 1,181 617
1,130,88 762,527 952,057
0
Current assets
Inventories 5,211 6,602 5,412
Accounts receivable and other
receivables 99,583 120,951 91,538
Income tax receivables 613 9,953 512
Bank and cash 21,576 22,697 18,436
126,984 160,203 115,898
Total assets 1,257,86 922,730 1,067,95
4 6
SHAREHOLDER'S EQUITY
Equity attributable to parent company shareholders
Share capital 81,384 81,320 81,384
Share issue 0 64 0
Share premium account 24,525 24,525 24,525
Translation differences 27 -1,413 28
Retained earnings 305,258 276,696 315,791
411,194 381,192 421,728
Minority interest 2,052 1,981 2,028
Total shareholders' equity 413,246 383,173 423,757
LIABILITIES
Long-term liabilities
Deferred tax liabilities 98,697 89,907 98,352
Pension liabilities 2,498 4,604 2,565
Provisions 3,658 4,230 3,659
Interest-bearing liabilities 570,750 263,667 360,067
675,603 362,407 464,643
Current liabilities
Accounts payable and other
liabilities 82,834 90,660 79,155
Income tax liabilities 1,410 1,073 430
Provisions 180 97 230
Current interest-bearing
liabilities 84,591 85,319 99,739
169,014 177,149 179,555
Total liabilities 844,618 539,557 644,199
Total shareholders' equity
and liabilities 1,257,86 922,730 1,067,95
4 6
CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
1000 EUR Share Share Share Trans-
capital issue issue lation
premium diffe-
rences
Shareholder
s´ equity
1.1.2006 81,314 6 24,301 -1,046
Translation
differences -367
Profit for
reporting
period
Total
recognised
income for
the period -367
Dividend
Share issue 70 -6 224
70 -6 224
Shareholder
s´ equity
31.3.2006 81,384 24,525 -1,413
1000 EUR Retained Total Minority Total
earnings interest equity
Shareholder
s´ equity
1.1.2006 271,946 376,520 2,002 378,523
Translation
differences -367 -367
Profit for
reporting
period 4,751 4,751 -21 4,730
Total
recognised
income for
the period 4,751 4,383 -21 4,362
Dividend
Share issue 289 289
289 289
Shareholder
s´ equity
31.3.2006 276,696 381,193 1,981 383,174
CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
1000 EUR Share Share Share Trans-
capital issue issue lation
premium diffe-
rences
Shareholder
s´ equity
1.1.2007 81,384 24,525 28
Translation
differences -2
Profit for
reporting
period
Total
recognised
income for
the period -2
Dividend
Share issue
Shareholder
s´ equity
31.3.2007 81,384 24,525 27
1000 EUR Retained Total Minority Total
earnings interest equity
Shareholder
s´ equity
1.1.2007 315,791 421,728 2,028 423,757
Translation
differences -2 2 0
Profit for
reporting
period 6,558 6,558 21 6,579
Total
recognised
income for
the period 6,558 6,557 23 6,579
Dividend -17,091 -17,091 0 -17,091
Share issue
-17,091 -17,091 0 -17,091
Shareholder
s´ equity
31.3.2007 305,258 411,194 2,051 413,246
CONSOLIDATED CASH FLOW STATEMENT
1000 EUR 1-3/07 1-3/06 1-12/06
Cash flow from operations:
Profit for reporting 6,579 4,730 56,477
period
Adjustments:
Non-cash transactions 12,143 6,927 13,913
Interest expense and
other 5,360 2,674 11,762
financial expenses
Interest income -374 -203 -2,013
Dividend income -34
Taxes 1,749 1,249 9,989
Realized currency
differences 192 1,046 1,028
Changes in working
capital:
Change in accounts
receivable and other
receivables -9,493 -16,061 4,525
Change in current assets 201 38 1,228
Change in accounts
payable 3,125 2,113 -11,646
and other liabilities
Change in provisions -119 -396 -2,096
Interest paid -3,903 -2,651 -11,473
Interest received 336 153 2,008
Taxes -250 -435 7,174
Realized currency -131 -186 1,475
differences
Net cash flow from 15,414 -1,002 82,318
operations
Cash flow from investing
activities:
Acquisition of 0 -1,727 -1,727
subsidiaries
Sale of subsidiaries 35,708
Investments in tangible - -9,851 -
assets 187,504 229,537
Investments in intangible
assets -253 -515 -2,207
Sale of tangible assets 126 43 1,625
Dividends received 0 0 34
Net cash flow from
investing activities - -12,048 -
187,631 196,104
Cash flow from financing
activities:
Proceeds from issue of 0 289 289
shares
Borrowing 229,920 2,881 202,881
Net increase in current
interest-bearing 22,714 11,697 -27,816
liabilities
Repayment of loans -59,270 -7,859 -59,394
Increas/ decrease of long-
term receivables 134 -9 2,190
Dividends paid -17,091 0 -12,600
Financing expenses -1,051 11 -2,063
Net cash flow from
financing activities 175,357 7,010 103,487
Change in cash and cash
equivalents 3,139 -6,040 -10,299
Cash and cash equivalents
on 1 January 18,436 28,735 28,735
Effect of foreign exchange
rate changes 0 2 0
Cash and cash equivalents
on March 31 / December 31 21,576 22,697 18,436
REVENUE AND OPERATING RESULT BY BUSINESS SEGMENTS (PRIMARY
SEGMENT)
1-3/07 1-3/06 1-
12/06
Sales EUR % EUR % EUR %
(1000) (1000) (1000)
Shipping and sea
transport 132,50 84.2 129,14 84.5 538,99 85.2
8 6 6
Port operations 33,324 21.2 30,351 19.9 123,09 19.5
2
Eliminations
(intragroup) -8,389 -5.3 -6,640 -4.3 - -4.7
29,422
External sales 157,44 100. 152,85 100. 632,66 100.
3 0 7 0 6 0
Operating profit
Shipping and sea
transport 11,053 7,868 50,771
Port operations 2,451 1,877 7,452
Operating profit
total 13,505 9,745 58,223
Share of
associated 0 0 274
companies
Financial items -5,177 -3,313 -
10,773
Profit
before taxes 8,328 6,432 47,725
Income taxes -1,749 -1,425 -9,989
Profit for
reporting period
continuing 6,579 5,007 37,736
operations
FINANCIAL INDICATORS
1-3/07 1-3/06 1-12/06
Operating profit as % of
revenue (continuing
operations) 8.6 6.4 9.2
ROE, % 6.3 5.0 14.1
ROI, % 5.7 5.4 9.9
Gearing, % 153.4 85.2 104.2
Gross capital
expenditure, MEUR *) 188.7 13.4 238.8
% of revenue 119.8 8.8 37.7
Equity ratio, % 32.9 41.5 39.7
Shareholders' equity/
share, EUR 10.11 9.37 10.36
Number of shares during
period, average (1000) 40,692 40,663 40,685
Number of shares at
end of period (1000) 40,692 40,692 40,692
Market capitalisation,
EUR million 681.6 663.2 699.9
Average personnel
(continuing operations)
Shore-based personnel 1,460 1,382 1,451
Sea-borne personnel 775 723 745
Personnel total 2,235 2,105 2,196
*) Includes continuing and discontinuing operations
Financial ratios have been calculated according to the same
principles as in financial statements 2006.
CONTINGENCIES AND 31/3/07 31/3/06 31/12/06
COMMITMENTS
1000 EUR
Vessel hires (continuing
operations):
Within 12 months 82,460 91,503 88,258
Between one and five 85,915 139,654 102,301
years
After five years 0 0 0
168,375 231,157 190,559
Other leases (continuing
operations):
Within 12 months 5,432 5,281 5,515
Between one and five 11,568 11,658 11,899
years
After five years 9,355 10,998 9,937
26,355 27,937 27,351
Collateral given:
Borrowings secured by given mortgages
Loans from financial
institutions 393,367 118,859 300,367
Vessel mortgages provided
as guarantees for the 566,000 231,000 461,000
above loans
Other guarantees given on behalf of the Group:
Collateral 2,483 2,769 2,485
Mortgages
Other guarantees given on behalf of the others:
Collateral 1,027 1,910 1,027
Mortgages 431 431 431
Other commitments given by group on behalf of subsidiaries:
Commitments 6,000 6,000
Obligations for capital
expenditure 128,031 399,642 239,768
Other obligations 115 115 115
Open derivative instruments:
1000 EUR 31/3/07 31/12/0 31/3/07 31/12/0
6 6
Net fair values Contract
amounts
Currency forwards -335 0 25,349 0
Interest rate swaps 0 0 0 0
Contingent liabilities
Finnsteve's Leasehold Agreement:
When the new Vuosaari harbour is operational Finnsteve Oy will
transfer its port operations from Helsinki's West Harbour and
North Harbour to Vuosaari. Finnsteve and the Port of Helsinki
have made a leasehold agreement, which obliges the leaseholder to
dismantle and remove any buildings, plants and equipment
(including foundations) located in the area. The extent of the
liabilities arising from this depends on future town planning and
is therefore difficult to estimate.
Related Party Transactions
There were no material related party transactions during the
reporting period.
Reporting
The interim report includes a summary of the financial statements
for the period in accordance with the IAS 34. The accounting
principles are the same as in the financial statements of 2006.
This interim report is unaudited.