2007-10-25 12:21:50 CEST
2007-10-25 12:21:50 CEST
REGULATED INFORMATION
Finnlines - Quarterly report
INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2007
Finnlines Plc Stock Exchange Release 25 October, 2007
INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2007
The Finnlines Group recorded revenue totalling EUR 505.4 (473.5)
meur (continuing operations). Operating profit was EUR 57.2
(42.6) million. Profit before taxes was EUR 35.9 (34.6) million.
Return on equity (ROE) was 8.8 (15.4)% and return on investment
(ROI) was 7.5 (10.3)%.
Significant events during the reporting period
Changes in the Ownership
In January, Grimaldi Group, the majority shareholder in Finnlines
made a public mandatory tender offer for all shares of Finnlines.
The purchase price was EUR 17.00 for each share. 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 has been 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 started plying in
NordöLink traffic at the beginning of September. These so-called
Hansa vessels have been 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 ro-pax
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 was replaced by MS Finnpartner at the
beginning of September. The sales profit, approx. EUR 12 million,
is included in the Group's third quarter result.
At the end of August Finnlines ordered six new ro-ro vessels
from the Chinese Jinling shipyard. Each of the vessels will have
about 3,200 lane meters and the speed will be 20 knots. The
contract price is around EUR 240 million and the vessels are to
be delivered during 2010-2011. The vessels will form an essential
part of Finnlines ice-classified core fleet.
The operations at the terminals of Lübecker Hafengesellschaft in
Lübeck harbours was suffering from actions of the dock workers'
union during the second quarter. The reason was the union's
protest against the planned privatisation of Lübecker
Hafengesellschaft.
Financial performance
The Finnlines Group recorded revenue totalling EUR 505.4 (473.5
from the continuing operations in 2006) million. Shipping and Sea
Transport Services generated revenue amounting to EUR 429.5
(403.4) million and Port Operations EUR 100.4 (91.5) million.
Other income from operations amounted to EUR 14.4 (1.5) million
of which main part comes from the sales gain on the two sold
vessels. Operating profit was EUR 57.2 (42.6,continuing
operations)million. Financial income was EUR 3.3 (2.6) million
and financial expenses totalled EUR -24.6 (-10.5) million. The
increase in financial expenses is due to the investment programs,
which are financed with long-term loans. Profit before taxes was
EUR 35.9 (34.6, continuing operations) million. Return on equity
(ROE) was 8.8 (15.4)% and return on investment (ROI) was 7.5
(10.3)%.
Investments and financing
The Group's investments were EUR 368.3 (206.8) million.
The main part of this amount came from the delivery of three new
buildings, MS Finnlady, MS Europalink and MS Nordlink. Based on
the contract with the Chinese Jinling shipyard, the Group paid
the first instalment of the vessels amounting EUR 72 million in
September. Interest-bearing net debt amounted to EUR 738.5
(444.6) million. The equity ratio calculated from the balance
sheet was 31.0 (37.9)%. Gearing was 170.9 (107.6)%.
Personnel
The Group employed an average of 2,340 (2,190)people during the
period, consisting of 1,478 (1,444) employees on shore and 862
(746) persons at sea.
The Finnlines share
The Company's registered share capital on 30 September 2007 was
EUR 81,383,916 divided into 40,691,958 shares. A total of 8.6
million Finnlines shares were traded on the Helsinki Exchanges
during the period. The market capitalisation of the Company's
stock at the end of September was EUR 594.1 million. Earnings per
share (EPS) during the period were EUR 0.69 (0.65). Shareholders'
equity per share was EUR 10.57 (10.11).
Risks
The loan portfolio of the company has increased substantially
due to the five vessel investment program, which ended in July
and due to the new investment program of six new ro-ro vessels
with the value of approximately EUR 240 million and to be
delivered during the years 2010-2011. The payments of this
program will partly be in USD, but this exposure is 100% hedged
against EUR. These five vessels and the coming ro-ro vessels have
been and will be 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.
Litigation
An arbitration proceedings commenced between the owners of M/V
Finnmill and M/V Finnpulp and Finnlines Plc. The vessels are
chartered by Finnlines and the charter agreements include
purchase options on each of the vessels. The main dispute
concerns the validity of these purchase options.
Outlook for 2007
During the first nine 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 taken 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 report, financial statement bulletin for the year 2007,
will be published on Wednesday 20 February, 2008.
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 7-9/07 7-9/06 1-9/07 1-9/06 1-12/06
Continuing Operations
Revenue 176,525 154,874 505,410 473,529 632,666
Other income from 13,479 477 14,388 1,517 2,078
operations
Materials and services -55,324 -49,727 -146,206 -151,049 -196,042
Personnel expenses -29,276 -27,142 -87,359 -81,561 -111,266
Depreciation,
amortisation -14,035 -10,184 -39,046 -28,602 -39,875
and other write-offs
Other operating -64,641 -53,369 -190,003 -171,251 -229,337
expenses
Total operating expenses - - -462,615 -432,464 -576,521
163,274 140,422
Operating profit 26,730 14,929 57,183 42,582 58,223
Financial income 557 1,099 3,300 2,555 10,784
Financial expenses -9,961 -1,831 -24,553 -10,539 -21,557
Share of associated
companies' profits 0 0 0 0 274
Profit before taxes 17,325 14,198 35,930 34,598 47,725
Income taxes *) -3,637 -3,213 -7,544 -7,961 -9,989
Profit for the reporting
period, continuing 13,688 10,984 28,386 26,637 37,736
operations
Discontinuing operations
Profit for the reporting
period, discontinuing
operations N/A 18,264 N/A 18,976 18,742
Profit for the reporting
period 13,688 29,249 28,386 45,613 56,477
Distribution:
Parent company 13,512 29,064 28,030 45,325 56,053
shareholders
Minority interest 176 185 356 288 425
13,688 29,249 28,386 45,613 56,477
Profit attributable to parent company
shareholders
calculated as earnings per share
(EUR/share)
Undiluted earnings per 0.33 0.71 0.69 1.11 1.38
share
Diluted earnings per 0.33 0.71 0.69 1.11 1.38
share
Profit attributable to parent company
shareholders, continuing operations,
calculated as earnings per share
(EUR/share)
Undiluted earnings per 0.33 0.27 0.69 0.65 0.92
share
Diluted earnings per 0.33 0.27 0.69 0.65 0.92
share
Profit attributable to parent company
shareholders, discontinuing operations,
calculated as earnings per share
(EUR/share)
Undiluted earnings per N/A 0.45 N/A 0.47 0.46
share
Diluted earnings per N/A 0.45 N/A 0.47 0.46
share
*)Taxes have been estimated based on the profit for the reporting
period.
CONSOLIDATED BALANCE SHEET,
IFRS
1000 EUR 30/9/07 30/9/06 31/12/06
ASSETS
Non-current assets
Property, plant and equipment 1,130,77 797,937 817,977
3
Goodwill 108,660 107,103 108,660
Other intangible assets 10,007 9,979 10,136
Investment properties 1,585 1,589 1,588
Share of associated companies 1,526 2,074 2,349
Other financial assets 4,797 4,892 4,892
Receivables 10,612 6,811 5,839
Deferred tax assets 1,862 836 617
1,269,82 931,221 952,057
2
Current assets
Inventories 6,121 5,098 5,412
Accounts receivable and other
receivables 101,348 102,604 91,538
Income tax receivables 505 35 512
Bank and cash 17,998 51,867 18,436
125,972 159,604 115,898
Total assets 1,395,79 1,090,82 1,067,95
4 6 6
SHAREHOLDER'S EQUITY
Equity attributable to parent company shareholders
Share capital 81,384 81,384 81,384
Share premium account 24,525 24,525 24,525
Fair value reserves -2,838
Translation differences 210 323 28
Retained earnings 326,730 305,063 315,791
430,012 411,295 421,728
Minority interest 1,995 1,892 2,028
Total equity 432,006 413,187 423,757
LIABILITIES
Long-term liabilities
Deferred tax liabilities 96,409 90,580 98,352
Pension liabilities 2,454 2,797 2,565
Provisions 3,656 3,952 3,659
Interest-bearing liabilities 610,841 377,202 360,067
713,360 474,531 464,643
Current liabilities
Accounts payable and other
liabilities 94,584 77,752 79,155
Income tax liabilities 9,123 5,763 430
Provisions 435 93 230
Current interest-bearing
liabilities 146,284 119,499 99,739
250,428 203,108 179,555
Total liabilities 963,787 677,638 644,199
Total equity and liabilities 1,395,79 1,090,82 1,067,95
4 6 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 1,369
Profit for
reporting
period
Total
recognised
income for
the period 1,369
Dividend
Share issue 70 -6 224
Teamlines
sale
70 -6 224
Shareholder
s´ equity
30.9.2006 81,384 24,525 323
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 1,369 1,369
Profit for
reporting
period 45,325 45,325 288 45,613
Total
recognised
income for
the period 45,325 46,694 288 46,982
Dividend -12,208 -12,208 -392 -12,600
Share issue 289 289
Teamlines
sale -6 -6
-12,208 -11,919 -6 -12,317
Shareholder
s´ equity
30.9.2006 305,063 411,295 1,892 413,187
CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
1000 EUR Share Share Trans- Fair
capital issue lation value
premiu diffe- reserve
m rences s
Shareholder
s´ equity
1.1.2007 81,384 24,525 28
Cash flow
hedges -2,838
Translation
differences 182
Profit for
reporting
period
Total
recognised
income for
the period 182 -2,838
Dividend
Shareholder
s´ equity
30.9.2007 81,384 24,525 210 -2,838
1000 EUR Retained Total Minority Total
earnings interest equity
Shareholder
s´ equity
1.1.2007 315,791 421,728 2,028 423,757
Cash flow
hedges -2,838 -2,838
Translation
differences 182 3 185
Profit for
reporting
period 28,030 25,374 356 28,386
Total
recognised
income for
the period 28,030 25,374 359 25,733
Dividend -17,091 -17,091 -392 -17,483
-17,091 -17,091 -392 -17,483
Shareholder
s´ equity
30.9.2007 326,730 430,012 1,995 432,007
CONSOLIDATED CASH FLOW STATEMENT
1000 EUR 1-9/07 1-9/06 1-12/06
Cash flows from
operations:
Profit for the reporting 28,386 45,613 56,477
period
Adjustments:
Non-cash transactions 27,623 7,568 13,913
Financial income and 19,978 8,878 10,743
expenses
Taxes 7,544 8,047 9,989
Changes in working
capital:
Change in accounts
receivable and other
receivables -11,406 -6,100 4,525
Change in current assets -709 1,543 1,228
Change in accounts
payable 15,120 -11,340 -11,646
and other liabilities
Change in provisions 86 -2,153 -2,096
Interest paid -19,968 -9,170 -11,473
Interest received 1,020 976 2,008
Taxes -1,152 7,947 7,174
Other financing items -2,278 -1,451 1,475
Net cash from operating 64,244 50,356 82,318
activities
Cash flows from investing
activities:
Acquisition of N/A -1,727 -1,727
subsidiaries
Sale of subsidiaries 35,893 35,708
Investments in tangible - - -
assets 368,471 203,938 229,537
Investments in intangible
assets -1,305 -1,370 -2,207
Sale of tangible assets 29,823 1,329 1,625
Disposal of associated
companies 200
Proceed sale of investment 243
Dividends received 3 34 34
Net cash used in investing
activities - - -
339,507 169,779 196,104
Cash flow from financing
activities:
Proceeds from issue of 289 289
shares
Borrowing 309,307 202,881 202,881
Net increase in current
interest-bearing 64,277 -6,130 -27,816
liabilities
Repayment of loans -81,663 -43,299 -59,394
Increase / decrease of
long-term receivables 383 1,403 2,190
Dividends paid -17,483 -12,600 -12,600
Financing expenses 10 -2,063
Net cash used in financing
activities 274,821 142,555 103,487
Change in cash and cash
equivalents -442 23,132 -10,299
Cash and cash equivalents
on 1 January 18,436 28,735 28,735
Effect of foreign exchange
rate changes 3 0
Cash and cash equivalents
on September 30 / December 17,998 51,867 18,436
31
REVENUE AND OPERATING RESULT BY BUSINESS SEGMENTS (PRIMARY
SEGMENT)
1-9/07 1-9/06 1-
12/06
Sales EUR % EUR % EUR %
(1000) (1000) (1000)
Shipping and sea
transport 429,48 85.0 403,43 85.2 538,99 85.2
0 8 6
Port operations 100,39 19.9 91,484 19.3 123,09 19.5
6 2
Eliminations
(intragroup) - -4.8 - -4.5 - -4.7
24,466 21,393 29,422
External sales 505,41 100. 473,52 100. 632,66 100.
0 0 9 0 6 0
Operating profit
Shipping and sea
transport 50,453 37,168 50,771
Port operations 6,730 5,415 7,452
Operating profit
total 57,183 42,582 58,223
Share of
associated 0 0 274
companies
Financial items - -7,984 -
21,253 10,773
Profit
before taxes 35,930 34,598 47,725
Income taxes -7,544 -7,961 -9,989
Profit for
reporting period
continuing 28,386 26,637 37,736
operations
PROPERTY, PLANT AND EQUIPMENT (INCL. INVESTMENT PROPERTIES)
30/9/07 30/9/06 31/12/0
6
EUR EUR EUR
(1000) (1000) (1000)
Historical cost at
the beginning of the 1,084,49 849,029 849,029
period 1
Translation 159 1,106 5,442
differences
Additions 367,004 202,806 230,470
Acquisition of
subsidiaries 3,219 3,219
Disposals -60,732 -1,328 -2,615
Business disposals -825 -825
Reclassifications -229 -229
Historical cost at 1,390,92 1,053,7 1,084,4
the end of the period 3 78 91
Accumulated
depreciation at the
beginning of the -264,926 - -
period 227,710 227,710
Translation -108 224 -990
differences
Disposals of 373 373
subsidiaries
Cumulative
depreciation on
reclassifications and 44,082 724 2,272
disposals
Cumulative
depreciation on -579 -579
business acquisition
Depreciations -37,612 -27,286 -38,292
Accumulated
depreciations at the -258,564 - -
end of the period 254,254 264,926
Book value 1,132,35 799,525 819,564
8
FINANCIAL INDICATORS
1-9/07 1-9/06 1-12/06
Operating profit as % of
revenue (continuing
operations) 11.3 9.0 9.2
ROE, % 8.8 15.4 14.1
ROI, % 7.5 10.3 9.9
Gearing, % 170.9 107.6 104.2
Gross capital
expenditure, MEUR *) 368.3 206.8 238.8
% of revenue 72.9 43.7 37.7
Equity ratio, % 31.0 37.9 39.7
Shareholders' equity/
share, EUR 10.57 10.11 10.36
Number of shares during
period, average (1000) 40,692 40,682 40,685
Number of shares at
end of period (1000) 40,692 40,692 40,692
Market capitalisation,
EUR million 594.1 651.1 699.9
Average personnel
(continuing operations)
Shore-based personnel 1,478 1,444 1,451
Sea-borne personnel 862 746 745
Personnel total 2,340 2,190 2,196
*) Includes continuing and discontinuing operations
Financial ratios have been calculated according to the same
principles as in financial statements 2006.
CONTINGENCIES AND 30/9/07 30/9/06 31/12/06
COMMITMENTS
1000 EUR
Vessel hires (continuing
operations):
Within 12 months 89,821 80,077 88,258
Between one and five 67,105 101,153 102,301
years
After five years 0 0 0
156,926 181,230 190,559
Other leases (continuing
operations):
Within 12 months 5,278 5,583 5,515
Between one and five 11,955 12,322 11,899
years
After five years 8,462 10,666 9,937
25,695 28,571 27,351
Collateral given:
Borrowings secured by given mortgages
Loans from financial
institutions 540,681 312,221 300,367
Vessel mortgages provided
as guarantees for the 723,500 461,000 461,000
above loans
Other guarantees given on behalf of the Group:
Collateral 2,518 2,892 2,485
Mortgages 606
Other guarantees given on behalf of the others:
Collateral 1,027 1,027 1,027
Mortgages 431 431 431
Other commitments given by group on behalf of subsidiaries:
Commitments 6,000 6,000
Obligations for capital
expenditure 211,319 239,891 239,768
Other obligations 107 115
Open derivative instruments:
1000 EUR 30/9/07 31/12/0 30/9/07 31/12/0
6 6
Net fair values Contract
amounts
Currency forwards -2,495 0 86,325 0
Interest rate swaps -513 0 120,000 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 Q3/0 Q3/0
7 6 7 6 7 6
MEUR MEUR MEUR MEUR MEUR MEUR
Continuing
Operations
Shipping and
sea transport 132. 129. 146. 142. 150. 132.
5 1 4 2 6 1
Port 33.3 30.4 33.5 31.5 33.5 29.6
operations
Eliminations
(intragroup) -8.4 -6.6 -8.5 -7.9 -7.6 -6.8
External sales 157. 152. 171. 165. 176. 154.
4 9 4 8 5 9
Operating
profit
Shipping and
sea transport 11.0 7.9 14.9 16.1 24.5 13.2
Port 2.5 1.9 2.0 1.8 2.2 1.8
operations
Operating
profit total 13.5 9.7 16.9 17.9 26.7 14.9
Share of
associated
companies 0 0 0 0 0 0
Financial -5.2 -3.3 -6.7 -3.9 -9.4 -0.7
items
Profit
before taxes 8.3 6.4 10.2 14.0 17.3 14.2
Income taxes -1.7 -1.4 -2.2 -3.3 -3.6 -3.2
Profit for the
reporting
period,Continu
ing Operations 6.6 5.0 8.1 10.6 13.7 11.0
Discontinuing
Operations 0 -0.3 0 1.0 0 18.3
Profit for the
reporting 6.6 4.7 8.1 11.6 13.7 29.2
period
EPS* 0.16 0.12 0.20 0.28 0.33 0.27
(undiluted)
EPS* (diluted) 0.16 0.12 0.20 0.28 0.33 0.27
* Continuing operations
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.
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