Finnlines Plc Stock Exchange Release 2 August, 2007 INTERIM REPORT 1 JANUARY - 30 JUNE 2007 The Finnlines Group recorded revenue totalling EUR 328.9 (318.7) meur (continuing operations). Operating profit was EUR 30.5 (27.7) million. Profit before taxes was EUR 18.6 (20.4) million. Return on equity (ROE) was 7.0 (8.6) % and return on investment (ROI) was 6.4 (8.1) %. Significant events during the reporting period Changes in the ownership In January Grimaldi Group, the majority shareholder in Finnlines, 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 published its evaluation of the offer on 26 January 2007. 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. Annual General Meeting Finnlines Plc's Annual General Meeting, held on 16 March, 2007, 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 AGM decided that the company's Board of Directors has seven members. The following were elected to the Board: Emanuele Grimaldi, Mr. Gianluca Grimaldi, Mr. Diego Pacella (vice- chairman), Mr. Heikki Laine, Mr. Antti Pankakoski, Mr. Olav K. Rakkenes and Mr. Jon-Aksel Torgersen (chairman). The firm of authorised public accountants Deloitte & Touche Oy was appointed as the company's auditors. Changes in management Antti Lagerroos, President and CEO of Finnlines Plc resigned from his duty in February and Mr. Olav K. Rakkenes, a member of the Board of Directors, was appointed temporary President and CEO of Finnlines Plc as from 24 April, 2007. Mr. Christer Antson (MSc,Econ), was appointed President and CEO of Finnlines Plc as from 4 July, 2007. Mr. Antson was previously Executive Vice President and Chief Controller of Finnlines Plc. Mrs. Seija Turunen (MSc,Econ) was appointed Deputy CEO and CFO being in charge of finance, accounting, communications, personnel, administration and information technology as from 4 July, 2007. Mrs. Turunen was previously Executive Vice President/Finance and Communications of Finnlines Plc. Vessels and traffic 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 five newbuildings, MS Nordlink, was delivered early July and started the traffic between Malmö/Sweden and Travemünde/Germany at the end of July. The compensation dispute relating to the late delivery of the newbuildings has been settled with the yard and the received EUR 15 million compensation will be booked to balance sheet as deduction of the purchase prices of the vessels. MS Finntrader started operating in NordöLink traffic in February 2007 after conversion. Her sister vessel MS Finnpartner was docked for conversion in April 2007 and will start plying in NordöLink traffic by the beginning of September. These so-called Hansa vessels are converted into drive-through vessels with increased passenger capacity. MS Finnclipper has been back in FinnLink service since March after conversion. The cargo capacity of the vessel was increased by 500 lane meters to a total of 2,900 lane metres. 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 first of these NordöLink vessels was replaced by the newbuilding Nordlink at the end of July and the second will be replaced by MS Finnpartner by the beginning of September. The sales profit, approx. EUR 11 million, will be shown in the Group's result during the third quarter. The operations at the terminals of Lübecker Hafengesellschaft in Lübeck harbours was suffering from actions of the dock workers' union during the reporting period. The reason was the union's protest against the planned privatisation of Lübecker Hafengesellschaft. As a consequence of this protest, there was a total strike for a day in June and all overtime work was stopped until the end of June. Financial performance The Finnlines Group recorded revenue from the continuing operations totalling EUR 328.9 (318.7 in 2006) million. Shipping and Sea Transport Services generated revenue amounting to EUR 278.9 (271.4) million and Port Operations EUR 66.9 (61.9) million. Other income from operations amounted to EUR 0.9 (1.0) million. Operating profit was EUR 30.5 (27.7)million (continuing operations). Financial income was EUR 2.7 (1.5) million and financial expenses totalled EUR -14.6 (-8.7) million. Profit before taxes was EUR 18.6 (20.4) million (continuing operations). Return on equity (ROE) was 7.0 (8.6) % and return on investment (ROI) was 6.4 (8.1) %. Investments and financing The Group's investments were EUR 209.9 (41.1) 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 622.5 (334.1) million. The equity ratio calculated from the balance sheet was 33.4 ( 41.3) %. Gearing was 147.7 (86.9) %. Personnel The Group employed an average of 2,286 (2,120)people during the period, consisting of 1,464 (1,387) employees on shore and 822 (733) persons at sea. The Finnlines share The Company's registered share capital on 30 June 2007 was EUR 81,383,916 divided into 40,691,958 shares. A total of 6,7 million Finnlines shares were traded on the Helsinki Exchanges during the period. The market capitalisation of the Company's stock at the end of June was EUR 638.9 million. Earnings per share (EPS) during the period were EUR 0.36 (0.40). Shareholders' equity per share was EUR 10.30 (9.40). Risks The loan portfolio of the company has increased substantially due to the five vessel investment program, which ended in July. The vessels have been financed with long-term (12-15 years) loans. Otherwise there are no material changes in the risks disclosed in the notes to the financial statements 2006. Outlook for 2007 During the first half 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 investments made into five newbuildings and vessel conversions. The next interim report for 1 January - 30 September, 2007 will be published on 25 October, 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 Property, plant and equipment Financial indicators Contingencies and Commitments Revenue and operating result by quarter DISTRIBUTION Helsinki Exchanges Main media All figures unaudited CONSOLIDATED PROFIT AND LOSS ACCOUNT 1000 EUR 4-6/07 4-6/06 1-6/07 1-6/06 1-12/06 Continuing Operations Revenue 171,442 165,798 328,885 318,655 632,666 Other income from 320 547 909 1,040 2,078 operations Materials and services -48,267 -52,011 -90,883 -101,322 -196,042 Personnel expenses -29,328 -28,920 -58,083 -54,419 -111,266 Depreciation, amortisation and other -13,395 -9,232 -25,012 -18,418 -39,875 write-offs Other operating -63,824 -58,274 -125,363 -117,883 -229,337 expenses Total operating expenses - - -299,340 -292,042 -576,521 154,813 148,437 Operating profit 16,948 17,908 30,453 27,653 58,223 Financial income 536 729 2,743 1,455 10,784 Financial expenses -7,207 -4,670 -14,592 -8,708 -21,557 Share of associated companies' profits 0 0 0 0 274 Profit before taxes 10,277 13,968 18,605 20,400 47,725 Income taxes *) -2,158 -3,323 -3,907 -4,748 -9,989 Profit for the reporting period, continuing 8,119 10,644 14,698 15,652 37,736 operations Discontinuing operations Profit for the reporting period, discontinuing operations N/A 990 N/A 712 18,742 Profit for the reporting period 8,119 11,634 14,698 16,364 56,477 Distribution: Parent company 7,960 11.510 14,518 16,261 56,053 shareholders Minority interest 159 124 180 103 425 8,119 11,634 14,698 16,364 56,477 Profit attributable to parent company shareholders calculated as earnings per share (EUR/share) Undiluted earnings per 0.20 0.28 0.36 0.40 1.38 share Diluted earnings per 0.20 0.28 0.36 0.40 1.38 share Profit attributable to parent company shareholders, continuing operations, calculated as earnings per share (EUR/share) Undiluted earnings per 0.20 0.26 0.36 0.38 0.92 share Diluted earnings per 0.20 0.26 0.36 0.38 0.92 share Profit attributable to parent company shareholders, discontinuing operations, calculated as earnings per share (EUR/share) Undiluted earnings per N/A 0.02 N/A 0.02 0.46 share Diluted earnings per N/A 0.02 N/A 0.02 0.46 share *)Taxes have been estimated based on the profit for the reporting period. CONSOLIDATED BALANCE SHEET, IFRS 1000 EUR 30/6/07 30/6/06 31/12/06 ASSETS Non-current assets Property, plant and equipment 1,002,61 640,580 817,977 4 Goodwill 108,660 112,971 108,660 Other intangible assets 10,248 12,167 10,136 Investment properties 1,586 1,590 1,588 Share of associated companies 1,526 2,074 2,349 Other financial assets 4,892 4,925 4,892 Receivables 7,938 7,471 5,839 Deferred tax assets 614 1,180 617 1,138,07 782,958 952,057 9 Current assets Inventories 6,646 6,386 5,412 Accounts receivable and other receivables 98,566 119,329 91,538 Income tax receivables 531 139 512 Bank and cash 17,543 21,201 18,436 123,286 147,055 115,898 Total assets 1,261,36 930,013 1,067,95 4 6 SHAREHOLDER'S EQUITY Equity attributable to parent company shareholders Share capital 81,384 81,384 81,384 Share issue 0 0 0 Share premium account 24,525 24,525 24,525 Translation differences 45 494 28 Retained earnings 313,218 275,999 315,791 419,172 382,402 421,728 Minority interest 2,211 2,105 2,028 Total shareholders' equity 421,383 384,507 423,757 LIABILITIES Long-term liabilities Deferred tax liabilities 98,745 90,114 98,352 Pension liabilities 2,497 4,577 2,565 Provisions 3,657 4,229 3,659 Interest-bearing liabilities 539,139 202,971 360,067 644,038 301,889 464,643 Current liabilities Accounts payable and other liabilities 91,366 87,336 79,155 Income tax liabilities 3,266 3,856 430 Provisions 411 91 230 Current interest-bearing liabilities 100,900 152,333 99,739 195,943 243,616 179,555 Total liabilities 839,981 545,505 644,199 Total shareholders' equity and liabilities 1,261,36 930,013 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 1,539 Profit for reporting period Total recognised income for the period 1,539 Dividend Share issue 70 -6 224 70 -6 224 Shareholder s´ equity 30.6.2006 81,384 24,525 494 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 1,539 1,539 Profit for reporting period 16,261 16,261 107 16,368 Total recognised income for the period 16,261 17,801 107 17,908 Dividend -12,208 -12,208 -12,208 Share issue 289 289 Teamlines sale -4 -4 -12,208 -11,919 -4 -11,923 Shareholder s´ equity 30.6.2006 275,999 382,402 2,105 384,507 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 16 Profit for reporting period Total recognised income for the period 16 Dividend Share issue Shareholder s´ equity 30.6.2007 81,384 24,525 45 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 16 3 19 Profit for reporting period 14,518 14,518 180 14,698 Total recognised income for the period 14,518 14,534 183 14,717 Dividend -17,091 -17,091 0 -17,091 Share issue -17,091 -17,091 0 -17,091 Shareholder s´ equity 30.6.2007 313,218 419,172 2,211 421,383 CONSOLIDATED CASH FLOW STATEMENT 1000 EUR 1-6/07 1-6/06 1-12/06 Cash flow from operations: Profit for reporting 14,698 16,364 56,477 period Adjustments: Non-cash transactions 25,473 18,110 13,913 Interest expense and other 11,704 5,384 11,762 financial expenses Interest income -696 -485 -2,013 Dividend income -2 -34 Taxes 3,907 4,644 9,989 Realized currency differences 843 2,785 1,028 Changes in working capital: Change in accounts receivable and other receivables -6,979 -16,137 4,525 Change in current assets -1,234 255 1,228 Change in accounts payable 5,804 -2,211 -11,646 and other liabilities Change in provisions 107 -356 -2,096 Interest paid -4,649 -4,314 -11,473 Interest received 695 380 2,008 Taxes -812 9,424 7,174 Other financing items -1,150 -940 1,475 Net cash flow from 47,708 32,903 82,318 operations Cash flow from investing activities: Acquisition of N/A -1,727 -1,727 subsidiaries Sale of subsidiaries 35,708 Investments in tangible - -38,214 - assets 209,683 229,537 Investments in intangible assets -982 -1,150 -2,207 Sale of tangible assets 325 999 1,625 Dividends received 2 1 34 Net cash flow from investing activities - -40,091 - 210,338 196,104 Cash flow from financing activities: Proceeds from issue of 289 289 shares Borrowing 229,920 2,935 202,881 Net increase in current interest-bearing 22,658 25,439 -27,816 liabilities Repayment of loans -74,128 -17,513 -59,394 Increase / decrease of long-term receivables 372 707 2,190 Dividends paid -17,091 0 -12,600 Financing expenses 3 -2,063 Net cash flow from financing activities 161,731 -348 103,487 Change in cash and cash equivalents -899 -7,536 -10,299 Cash and cash equivalents on 1 January 18,436 28,735 28,735 Effect of foreign exchange rate changes 6 2 0 Cash and cash equivalents on June 30 / December 31 17,543 21,201 18,436 REVENUE AND OPERATING RESULT BY BUSINESS SEGMENTS (PRIMARY SEGMENT) 1-6/07 1-6/06 1- 12/06 Sales EUR % EUR % EUR % (1000) (1000) (1000) Shipping and sea transport 278,89 84.8 271,37 85.2 538,99 85.2 7 5 6 Port operations 66,876 20.3 61,863 19.4 123,09 19.5 2 Eliminations (intragroup) - -5.1 - -4.6 - -4.7 16,888 14,583 29,422 External sales 328,88 100. 318,65 100. 632,66 100. 5 0 5 0 6 0 Operating profit Shipping and sea transport 25,955 24,022 50,771 Port operations 4,497 3,631 7,452 Operating profit total 30,453 27,653 58,223 Share of associated 0 0 274 companies Financial items - -7,253 - 11,848 10,773 Profit before taxes 18,605 20,400 47,725 Income taxes -3,907 -4,748 -9,989 Profit for reporting period continuing 14,698 15,652 37,736 operations PROPERTY, PLANT AND EQUIPMENT (INCL. INVESTMENT PROPERTIES) 30/6/07 30/6/0 31/12/ 6 06 EUR EUR EUR (1000) (1000) (1000) Historical cost at the beginning of the 1,084,49 849,02 849,02 period 1 9 9 Translation 96 5,442 differences 1,918 Additions 208,910 34,285 230,47 0 Acquisition of subsidiaries 3,219 3,219 Disposals -856 -261 -2,615 Business disposals -825 Reclassifications -229 -229 Historical cost at 1,292,64 887,96 1,084, the end of the period 1 1 491 Accumulated depreciation at the beginning of the -264,926 - - period 227,71 227,71 0 0 Translation -66 -51 -990 differences Disposals of 373 subsidiaries Cumulative depreciation on reclassifications and 692 200 2,272 disposals Cumulative depreciation on -579 -579 business acquisition Depreciations -24,142 - - 17,652 38,292 Accumulated depreciations at the -288,442 245,79 - end of the period 2 264,92 6 Book value 1,004,19 642,16 819,56 9 9 4 FINANCIAL INDICATORS 1-6/07 1-6/06 1-12/06 Operating profit as % of revenue (continuing operations) 9.3 8.7 9.2 ROE, % 7.0 8.6 14.1 ROI, % 6.4 8.1 9.9 Gearing, % 147.7 86.9 104.2 Gross capital expenditure, MEUR *) 209.8 41.1 238.8 % of revenue 63.8 12.9 37.7 Equity ratio, % 33.4 41.3 39.7 Shareholders' equity/ share, EUR 10.30 9.40 10.36 Number of shares during period, average (1000) 40,692 40,677 40,685 Number of shares at end of period (1000) 40,692 40,692 40,692 Market capitalisation, EUR million 638.9 616.5 699.9 Average personnel (continuing operations) Shore-based personnel 1,464 1,387 1,451 Sea-borne personnel 822 733 745 Personnel total 2,286 2,120 2,196 *) Includes continuing and discontinuing operations Financial ratios have been calculated according to the same principles as in financial statements 2006. CONTINGENCIES AND 30/6/07 30/6/06 31/12/06 COMMITMENTS 1000 EUR Vessel hires (continuing operations): Within 12 months 77,768 138,671 88,258 Between one and five 71,407 151,823 102,301 years After five years 0 0 0 149,175 290,494 190,559 Other leases (continuing operations): Within 12 months 5,536 6,669 5,515 Between one and five 11,918 13,059 11,899 years After five years 8,942 10,477 9,937 26,396 30,205 27,351 Collateral given: Borrowings secured by given mortgages Loans from financial institutions 384,095 112,221 300,367 Vessel mortgages provided as guarantees for the 536,000 231,000 461,000 above loans Other guarantees given on behalf of the Group: Collateral 2,518 2,769 2,485 Mortgages 606 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 137,431 399,642 239,768 Other obligations 112 115 115 Open derivative instruments: 1000 EUR 30/6/07 31/12/0 30/6/07 31/12/0 6 6 Net fair values Contract amounts Currency forwards 18 0 20,733 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. REVENUE AND OPERATING RESULT BY QUARTER Q1/0 Q1/0 Q2/0 Q2/0 7 6 7 6 MEUR MEUR MEUR MEUR Continuing Operations Shipping and sea transport 132. 129. 146. 142. 5 1 4 2 Port 33.3 30.4 33.5 31.5 operations Eliminations (intragroup) -8.4 -6.6 -8.5 -7.9 External sales 157. 152. 171. 165. 4 9 4 8 Operating profit Shipping and sea transport 11.0 7.9 14.9 16.1 Port 2.5 1.9 2.0 1.8 operations Operating profit total 13.5 9.7 16.9 17.9 Share of associated companies 0 0 0 0 Financial -5.2 -3.3 -6.7 -3.9 items Profit before taxes 8.3 6.4 10.2 14.0 Income taxes -1.7 -1.4 -2.2 -3.3 Profit for the reporting 6.6 5.0 8.1 10.6 period,Continu ing Operations Discontinuing Operations 0 -0.3 0 1.0 Profit for the reporting 6.6 4.7 8.1 11.6 period EPS 0.16 0.12 0.20 0.28 (undiluted) EPS (diluted) 0.16 0.12 0.20 0.28 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.