Interim report January - March 2010
Finnlines Plc Stock Exchange Release 11 May 2010
INTERIM REPORT JANUARY - MARCH 2010 (Unaudited)
JANUARY – MARCH 2010 IN BRIEF
|MEUR||1-3 2010||1-3 2009||1-12 2009|
|Result before interest and taxes||1.4||-16.0||-23.6|
|% of revenue||1.2||-13.7||-4.8|
|Result before taxes||-3.8||-26.6||-51.4|
|EPS, EUR *||-0.07||-0.51||-0.96|
|Equity ratio, %||29.2||28.5||29.4|
|Shareholders’ equity/share, EUR *||9.03||10.52||9.07|
Calculation of key ratios is presented on the page 12.
GENERAL MARKET DEVELOPMENT
The sharp drop in volumes that was experienced especially during the last quarter of 2008 and the first quarter of 2009, stabilised during the rest of the year 2009, and the market volumes remained on the new lower level. Based on statistics by the Finnish Maritime Administration (FMA), the Finnish seaborne imports carried in container, lorry and trailer units increased by 4% and exports by 6% during the first quarter of 2010 compared to the previous year (measured in tons). According to statistics published by Shippax, trailer and lorry volumes transported by sea between Southern Sweden and Germany decreased in January-March by 8% compared to 2009. Private and commercial passenger traffic between Finland and Germany increased by 1% and decreased between Finland and Sweden by 5% (FMA).
During the first quarter of the year, traffic was influenced by a number of external disturbances. Severe ice conditions in the northern parts of the Baltic Sea, stevedores' overtime ban in Finnish ports and the 16 days’ stevedores' strike in Finland all caused several temporary schedule changes, reroutings and even stoppages. Especially the stevedores' strike had big impacts as practically all ro-ro traffic to and from Finnish ports was halted during the strike. By the end of March, the situation normalised and the traffic has returned to normal pattern. During the first quarter of 2010, the company operated on average of 23 vessels in its own traffic compared to 30 during the same period in 2009.
The cargo volumes transported during January-March totalled approximately 148,000 (155,000 in 2009) units, 9,000 (11,000) cars (not including cars of the passengers) and, in addition 390,000 (485,000) tons of freight not possible to measure in units. In addition, some 121,000 private and commercial passengers were transported (around 102,000), an increase of 19%. Compared to the first quarter of 2009, the number of private passengers (excluding lorry drivers) transported by the company increased by 59%.
The fleet capacity has been adjusted to new market requirements both on number of ships as well as the correct allocation of tonnage in specific trades. These measures have mainly been taken at the end of 2009 and will therefore generate most part of the savings from 2010 onwards.
The average number of personnel has decreased by 14% compared to the same period of the previous year mainly due to temporary lay offs in ports and personnel cuttings in offices.
During 2009 the Group started a significant process to merge group companies and businesses. This process will continue during 2010 and will result in a much leaner company structure thus creating savings in administration and personnel costs.
The Finnlines Group recorded revenue totalling EUR 121.5 million (117.4), an increase of 3.5%. Shipping and Sea Transport Services generated revenue amounting to EUR 110.9 million (103.3) and Port Operations EUR 14.8 million (20.1). The internal revenue between the segments was EUR 4.2 million (6.1).
Result before depreciation and amortisation (EBITDA) was EUR 16.1 million (-0.2). Personnel expenses have decreased by EUR 3.7 million and vessel lease expenses decreased by EUR 6.1 million compared to the same period of the previous year. Other operating expenses totalled EUR -39.4 million (-54.2) and included EUR 2.9 million (2.7) reimbursement of fairway dues.
Result before interest and taxes (EBIT) was EUR 1.4 million (-16.0). Financial income was EUR 1.4 million (1.2) and financial expenses totalled EUR -6.7 million (-11.8). Result before taxes (EBT) was EUR -3.8 million (-26.6), an improvement of EUR 22.8 million compared to the same period in 2009. Earnings per share (EPS) were EUR -0.07 (-0.51).
BALANCE SHEET, FINANCING AND CASH-FLOW
Interest-bearing net debt decreased by EUR 47.6 million compared to the same period 2009 and amounted to EUR 858.2 million (905.7). The equity ratio calculated from the balance sheet was 29.2% (28.5) and gearing was 202.7% (206.7). Vessel lease commitments decreased by EUR 65.5 million from the end of March 2009 due to the redelivery of chartered tonnage.
At the end of the period, cash and deposits together with unused committed working capital credits and the undrawn part of committed credits for newbuildings amounted to EUR 159.5 million.
Gross capital expenditure in the review period totalled EUR 5.0 million (13.7). Depreciation amounted to EUR 14.7 million (15.9).
The timetable of the 6 vessels under construction in China has been adapted to meet scheduled further redeliveries of the chartered tonnage. The new delivery times are for vessels Nos. 1 and 2 end of first quarter of 2011, vessels Nos. 3 and 4 during the fourth quarter of 2011, vessel No. 5 end of the third quarter 2012 and vessel No. 6 during the fourth quarter of 2012.
The Group employed an average of 1,950 (2,267) persons during the period, consisting of 1,035 (1,302) persons on shore and 915 (965) persons at sea. The average number of employees has been calculated by converting the regular working hours performed during the reporting period to correspond to a full-time employee, and the average number of persons was recalculated accordingly for 2009.
DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
The Annual General Meeting of Finnlines Plc approved the Financial Statements.
The Meeting approved the Board of Directors proposal not to pay any dividend.
The Annual General Meeting decided that the Board of Directors shall have six members. The following were re-elected to the Board: Mr. Emanuele Grimaldi, Mr. Diego Pacella, Mr. Gianluca Grimaldi, Mr. Antti Pankakoski, Mr. Olav Rakkenes and Mr. Jon-Aksel Torgersen. The Board elected Mr. Emanuele Grimaldi Chairman and Mr. Diego Pacella Vice-Chairman.
The firm of authorised public accountants Deloitte & Touche was appointed as the company’s auditors for 2010.
The Annual General meeting authorised the Board of Directors to decide on the issuance of new shares in one or several tranches so that the total number of shares issued based on the authorization is 20 000 000 at maximum. The authorization is valid until the next Annual General Meeting. The authorization replaces the Annual General Meeting’s authorization to decide on a share issue of 15 April 2009.
The main business risk in the shipping is the overcapacity of the tonnage. Overall the ro-ro market looks better than other maritime transport sectors, where newbuildings are further increasing the imbalance of supply and demand of tonnage. For the ro-ro sector this does not apply. Moreover, around 50% of the current global ro-ro fleet is over 25 years old and needs to be scrapped for environmental reasons.
Finnlines monitors constantly the stability and the payment habits of its customers and currently there are no significant risks related to this.
Finnlines holds adequate credit lines to maintain liquidity in the current business environment.
The annual report 2009 contains a thorough description of Finnlines’ risks and risk management, and there are no essential changes to that report.
ESSENTIAL CHANGES IN LEGAL PROCEEDINGS
The Annual report 2009 contains a thorough description of legal proceedings and the following is a description of changes compared to what was reported in the annual report:
The Helsinki District Court rendered on 3 March 2010 its judgment in the action initiated by Mutual Pension Insurance Company Ilmarinen against Finnlines Plc. In its action Ilmarinen objected to the decision by Finnlines’ General Meeting held on 20 May 2008 to distribute 180,216.39 euros as a minimum dividend and demanded that the minimum dividend be increased. The District Court has approved Ilmarinen’s claim to have the resolution of the General Meeting amended so that the minimum dividend instead of 180,216.39 euros as above should have been 17,181,000 euros. In addition, the District Court has ordered Finnlines to compensate Ilmarinen’s legal costs by an amount of 300,035.15 euros together with interest at statutory rate. Finnlines filed an appeal with the Helsinki Court of Appeal against the judgement by the Helsinki District Court in April 2010.
The former management of Finnlines’ port operations subsidiary had been summoned to the Helsinki District Court to answer for infringing the Occupational Safety and Health Act and Working Hours Act in the port of Helsinki. The Helsinki District Court rendered its decision on 3 March 2010 sentencing the former management to pay fines. Finnlines port operations subsidiary has taken rectifying measures in the follow-up system of the working hours in order to avoid any infringements in the future.
Taxation of internal vessel sales carried out in 2007 by Finnlines’ Swedish subsidiary includes uncertainties. The decision of the tax authorities was that a SEK 97.2 million (EUR 9.5) tax debt should be paid. The Company has been granted postponement of this payment as it has appealed in the matter and the court proceedings are under way. As the company recorded a deferred tax liability due to the temporary timing difference in the tax year in question, this matter does not have any significant effect on the company’s result.
Finnlines received information on the last day of January 2010 that the Finnish Transport Workers' Union has filed legal actions against Finnlines’ port operations subsidiary for compensation of weekend work. The Company considers the basis of the action groundless and will reply to the submission of the Union in the given time limit.
ESSENTIAL EVENTS AFTER REPORTING PERIOD
In April 2009, Finnlines subsidiary Hanseatic Shipping sold MS Finnhansa to Grimaldi Group at the market price of EUR 40 million with a call option to repurchase the vessel at the same price. In April 2010, Finnlines exercised this call option. MS Finnhansa will start plying in Finnlines’ traffic in July 2010.
FINNLINES PROSPECTS FOR 2010
Since April there have been signs of good recovery in transport volumes. In some lines the Company has been able to improve the freights and the passenger bookings for the summer season have increased considerably compared to last year.
The Company expects the whole year 2010 result to be positive due to the improved volumes and the significantly lower cost structure in 2010.
The second interim report of the year 2010, 1 January – 30 June, will be published on Thursday, 29 July 2010.
The Board of Directors
- Consolidated statement of comprehensive income, IFRS
- Consolidated balance sheet, IFRS
- Consolidated statement of changes in equity, IFRS
- Consolidated statement of cash flows, IFRS
- Revenue and result by business segment
- Property, plant and equipment
- Contingencies and commitments
- Shares, market capitalisation and trading information
- Calculation of ratios
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