FINNLINES PLC INTERIM REPORT JANUARY – JUNE 2013

Helsinki,Finland, 2013-07-30 14:00 CEST (GLOBE NEWSWIRE) -- Finnlines Plc Stock Exchange Release 30 July 2013 at 15:00

INTERIM REPORT JANUARY – JUNE 2013 (unaudited)

SUMMARY

January – June 2013

• Revenue EUR 283.6 million (EUR 309.6 million prev. year), decrease 8.4%
• Result before interest, taxes, depreciation and amortisation (EBITDA) EUR 34.9 million (EUR 47.3 million), decrease 26.3%
• Result for the reporting period EUR -10.0 million (EUR -0.1 million)
• Earnings per share were -0.21 (0.00) EUR/ share

April – June 2013

• Revenue EUR 149.7 million (EUR 164.6 million prev. year), decrease 9.0%
• Result before interest, taxes, depreciation and amortisation (EBITDA) EUR 23.8 million (EUR 31.4 million), decrease 24.2%
• Result for the reporting period EUR 0.9 million (EUR 5.7 million)
• Earnings per share were 0.02 (0.12) EUR/ share

JANUARY – JUNE 2013 IN BRIEF

Calculation of key ratios is presented under ’Calculation of ratios’.

* The result for the first half-year of 2013 includes a non-recurring cost item of about EUR 1.0 million related to general increases of the collective agreement. The result for the first half-year of 2012 includes a non-recurring compensation of EUR 3.4 million from the Jinling shipyard. The comparable result before interest and taxes (EBIT) for January-June adjusted with above mentioned items was EUR 2.0 (11.1) million.

** Key indicators per share have been adjusted with the share issue adjustment factor.

FINNLINES’ BUSINESS

Finnlines is one of the largest North-European liner shipping companies, providing sea transport services mainly in the Baltic and the North Sea. In addition to freight, the Company’s ro-pax vessels carry passengers between five countries and ten ports. The Company also provides port services in Helsinki, Turku and Kotka. The company has subsidiaries or sales offices in Germany, Belgium, the UK, Sweden, Denmark, Luxembourg and Poland and a representative office in Russia. Finnlines is a Finnish listed company and part of the Italian Grimaldi Group.

GENERAL MARKET DEVELOPMENT

Based on the statistics by the Finnish Transport Agency for January-May, the Finnish seaborne imports carried in container, lorry and trailer units decreased by 4% whereas exports increased by 4% (measured in tons) compared to the same period in 2012. According to the statistics published by Shippax for January-May, trailer and lorry volumes transported by sea between Southern Sweden and Germany increased by 1% compared to 2012. During the same period private and commercial passenger traffic between Finland and Sweden remained on the same level as in 2012. Between Finland and Germany the corresponding traffic decreased by 16% (Finnish Transport Agency).

FINNLINES TRAFFIC

In the first quarter the last of six ro-ro newbuildings (MS Finnwave) entered service. The vessel flies the Finnish flag.

In order to adapt to the current market situation Finnlines has in the second quarter chartered out MS Finnarrow to the Grimaldi Group at market price.

During the second quarter Finnlines operated on average 23 vessels in its own traffic compared to 24 vessels in the same period in 2012.

The cargo volumes transported during January-June totalled approximately 320,000 (324,000) cargo units, 30,000 (30,000) cars (not including passengers’ cars ) and 1,070,000 (1,073,000) tons of freight not possible to measure in units. In addition, some 264,000 (291,000) private and commercial passengers were transported.

FINANCIAL RESULTS

January – June 2013

The Finnlines Group recorded revenue totalling EUR 283.6 (309.6) million, a decrease of 8.4% compared to the same period in 2012. Shipping and Sea Transport Services generated revenue amounting to EUR 269.6 (291.1) million and Port Operations EUR 27.1 (31.0) million. The internal revenue between the segments was EUR 13.1 (12.6) million. The decrease of the revenue is a result of declined transport volumes due to the challenging business environment, especially in the Port Operations segment.

Result before interest, taxes, depreciation and amortisation (EBITDA) was EUR 34.9 (47.3) million, a decrease of 26.3%.

Result before interest and taxes (EBIT) was EUR 1.0 (14.5) million. The result for 2013 includes a non-recurring cost item of about EUR 1.0 million related to general increases of the collective agreement. The result for 2012 includes a non-recurring compensation of EUR 3.4 million from the Jinling shipyard relating to the first two newbuildings covering loss for reduced income. The comparable result before interest and taxes (EBIT) adjusted with above mentioned items was EUR 2.0 (11.1) million. The result is affected by the seasonality of the cargo volumes, which are typically on a lower level in the beginning of the year. Also the number of passengers is modest during the winter period compared to the summer season. Financial income was EUR 0.2 (0.5) million and financial expenses totalled EUR -12.9 (-13.7) million. Result before taxes (EBT) was EUR -11.7 (1.3) million and earnings per share (EPS) were EUR -0.21 (0.00).

April – June 2013

The Finnlines Group recorded revenue totalling EUR 149.7 (164.6) million, a decrease of 9.0% compared to the same period in 2012. Shipping and Sea Transport Services generated revenue amounting to EUR 143.6 (155.8) million and Port Operations EUR 12.8 (15.2) million. The internal revenue between the segments was EUR 6.7 (6.4) million.

Result before interest, taxes, depreciation and amortisation (EBITDA) was EUR 23.8 (31.4) million, a decrease of 24.2%.

Result before interest and taxes (EBIT) was EUR 6.9 (14.7) million. Financial income was EUR 0.1 (0.4) million and financial expenses totalled EUR -6.6 (-6.7) million. Result before taxes (EBT) was EUR 0.4 (8.4) million and earnings per share (EPS) were EUR 0.02 (0.12).

STATEMENT OF FINANCIAL POSITION, FINANCING AND CASH-FLOW

Interest-bearing net debt amounted to EUR 840.1 (882.9) million. The equity ratio calculated from the balance sheet was 30.8% (28.9) and gearing was 187.9% (206.3). Due to the expansion of liner service network vessel lease commitments increased by EUR 13.4 million to EUR 20.8 million compared to the end of June 2012.

At the end of the period, cash and deposits together with unused committed working capital credits amounted to EUR 48.3 (70.9) million. The company has a commercial paper programme amounting to EUR 100 million of which the company has issued EUR 42.5 (12.9) million at the end of June.

The Board of Directors of Finnlines Plc decided on the 7th of May 2013, based on the authorisation granted at the annual general meeting on 16 April 2013, on a rights issue, in which the Company offered a maximum of 4,682,104 new shares to be subscribed by the Company’s existing shareholders. All offered shares were subscribed for in the rights issue completed at the end of May. The gross proceeds raised by Finnlines in the rights issue were approximately EUR 28.8 million. The net proceeds are used to strengthen the Company’s capital structure.

In April, Finnlines’ port subsidiaries sold four container cranes to a financing company and rented them back with a five year financing lease contract. This arrangement released working capital to the group EUR 15 million.

CAPITAL EXPENDITURE

Gross capital expenditure in the review period totalled EUR 3.7 (34.9) million. Total depreciation amounted to EUR 33.8 (32.9) million. The investments are mainly consisting of normal replacement costs of fixed assets and accrued dry-docking cost of ships. The investment programme of six ro-ro newbuildings was finalised in 2012 and there are no decisions on any new vessel investments.

PERSONNEL

The Group employed an average of 1,894 (2,002) persons during the period, consisting of 933 (980) persons on shore and 961 (1,022) persons at sea. Finnsteve-companies' (Finnsteve Oy Ab, Containersteve Oy Ab and FS-Terminals Oy Ab) co-operation negotiations, which started in February 2013 and ended in May, have resulted in the termination of about 100 employments in total. The negotiations were held with all personnel groups in Helsinki.

DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING

The Annual General Meeting of Finnlines Plc approved the Financial Statements and discharged the members of the Board of Directors and President and CEO from liability for the financial year 2012.

It was decided to accept the proposal of the Board of Directors that no dividend shall be paid for the year 2012.

The meeting decided that the number of Board Members be seven. All of the current Board Members were re-elected; Mr Emanuele Grimaldi, Mr Gianluca Grimaldi, Mr Diego Pacella, Mr Olav K Rakkenes, Mr Jon-Aksel Torgersen, Mr Christer Backman and Ms Tiina Bäckman. The yearly compensation to the Board will remain unchanged as follows: the Chairman EUR 50,000, the Vice-Chairman EUR 40,000 and the Member EUR 30,000.

The Annual General Meeting elected KPMG Oy Ab as the Company's auditor for the fiscal year 2013. It was decided that the external auditors will be reimbursed according to invoice.

It was decided to authorise the Board of Directors to resolve on the issuance of shares in one or several tranches. The Board of Directors may, on the basis of the authorisation, resolve on the issuance of shares in one or several tranches, so that the aggregate number of shares to be issued shall not exceed 10,000,000 shares. The Board of Directors decides on all the conditions of the issuance of shares. The issuance of shares may be carried out in deviation from the shareholders' pre-emptive rights (directed issue). The authorisation is valid until the next Annual General Meeting. The authorisation replaces the Annual General Meeting’s authorisation to decide on a share issue of 17 April 2012.

It was also decided to change § 10 of the Articles of Association of the Company regarding the convocation way of announcement of the Shareholder Meeting as follows: “The Shareholders’ Meeting shall be announced in a national newspaper chosen by the Board or on the web site of the company, no earlier than three months before the Shareholders’ Meeting and no later than 21 days before the Shareholders’ Meeting. The invitation must in any event be given no later than nine (9) days before the record date of the Shareholders Meeting.”

SHARE ISSUE

The Board of Directors of Finnlines Plc decided on 7 May 2013, based on the authorisation granted at the annual general meeting on 16 April 2013, on a rights issue, in which the Company offered a maximum of 4,682,104 new shares to be subscribed by the Company’s existing shareholders. The Company’s largest shareholder, Grimaldi Compagnia di Navigazione S.p.A., committed on its own and its subsidiaries’ behalf to subscribe for its relative portion of the new shares and gave an underwriting commitment concerning all new shares that would otherwise possible remain unsubscribed for in the offering.

All offered shares were subscribed for in the rights issue completed at the end of May. A total of 4,008,441 shares, representing approximately 85.6 per cent of the offered shares, were subscribed in the primary subscription. In the secondary subscription 7,451 shares, representing 0.2 per cent of the offered shares, were subscribed for. The remaining 666,212 shares, approximately 14.2 per cent of the offered shares, were subscribed for based on the underwriting commitment.

Shares subcribed for in the primary subscription were subject to public trading on NASDAQ OMX Helsinki Ltd since 3 June 2013. The new shares are traded together with the old shares as of 7 June 2013.

The gross proceeds raised by Finnlines in the rights issue were approximately EUR 28.8 million. The net proceeds are used to strengthen the Company’s capital structure.

Following the registration of the new shares with the Trade Register, the number of Finnlines Plc’s shares amounts to 51,503,141 shares and share capital to EUR 103,006,282.00.

RISKS AND RISK MANAGEMENT

The 2012 Financial statements, published in March 2013, contains a thorough description of Finnlines’ risks and risk management, and there are no essential changes to that report.

CHANGES IN ESSENTIAL LEGAL PROCEEDINGS

The 2012 Financial statements, published in March 2013, contains a thorough description of essential legal proceedings and the following is a description of the changes compared to what was reported in the financial statements:

A number of former and current employees of the Company, represented by the Union of Salaried Employees, has brought an action against the Company at the City Court of Helsinki on adherance to the general increases of the collective agreement. The Court has in February 2012 rendered the decision in favour of the employees and ordered the Company to compensate the employees with about EUR 0.2 million in all. The Company has appealed the decision partly at the Helsinki Court of Appeal. The Helsinki Court of Appeal rendered its decision in April in favour of the employees.

TONNAGE TAXATION

The Finnish Parliament has approved the amended Tonnage Tax Act (476/2002), as amended by the Act 90/2012 which entered into force on 1 March 2012. Finnlines Plc’s board decided on December 2012 to enter into the tonnage taxation regime as from 1 January 2013. In the tonnage taxation regime, the shipping operations will be transferred from business taxation to tonnage-based taxation.

The depreciation difference of EUR 215.1 million recorded in Finnlines Plc’s opening balance as per 1.1.2013 has been divided into two portions: the depreciation difference of EUR 162.4 million (75.5%) and deferred tax liability of EUR 52.7 million (24.5%). The depreciation difference of EUR 162.4 million has been entered in the distributable funds of Finnlines Plc’s equity. The deferred tax of EUR 52.7 million has been entered in the deferred tax liability. The recording has no effect on the equity and the deferred tax liability of the consolidated financial statements of the Finnlines Group.

The fixed assets subject to tonnage tax regime must be revalued in the transition moment 1.1.2013 into their fair values. The fair value of Finnlines Plc’s fixed assets exceeded their net book values by EUR 7.0 million, and out of this amount the company recorded a deferred tax liability of EUR 1.7 million (24.5%). The fair value of the fixed assets exceeded their group values by EUR 1.5 million, and the share of deferred tax liability out of this amount was EUR 0.4 million.

According to the tonnage tax regime in the transition moment 1.1.2013 the value of maximum amount entered as income determined to the fixed assets subject to tonnage tax regime a maximum reduction of 1/9 can be done from the second year onwards. The yearly maximum of deductable amount cannot exceed the maximum value of granted state subsidy. The deferred tax liability will decline respectively according to the valid corporate tax rate.

Finnlines Plc will record the reduction of deferred tax liability as from 1.1.2013 according to the above mentioned tonnage tax act.

EVENTS AFTER THE REPORTING PERIOD

Mr Tom Pippingsköld, Bachelor of Science, MBA, has been appointed CFO of Finnlines Plc as from 1 October 2013. Mrs Seija Turunen, current CFO and Deputy CEO, will retire at the end of July 2013 after which she will continue as Executive Advisor to the Board of Directors.

The Board of Finnlines decided in their meeting on the 30th of July 2013 that Finnlines will sell MS Europalink to the Grimaldi Group at market price, which is slightly above the book value of the vessel. This deal will be done during the third quarter of 2013 and it will have a positive effect on Finnlines’ financial position. The vessel has been chartered out since October last year and has been sailing in Grimaldi traffic in the Mediterranean Sea. The charter and subsequent sale has been undertaken because the capacity of MS Europalink is not to be required by Finnlines under the present sailing pattern.

OUTLOOK AND OPERATING ENVIRONMENT

Finnlines has continued the re-structuring of its fleet and organisation in order to improve cost efficiency of its vessels and its overall logistics system. With the completed deliveries of the six newbuildings the dependency on a volatile charter market has been further reduced.

The Board expects that the year 2013 will still be volatile and challenging.

The third interim report of 2013 for the period of 1 January – 30 September will be published on Tuesday, 5 November 2013.

Finnlines Plc

The Board of Directors

                                                Uwe Bakosch

                                                President/CEO

ENCLOSURES

- Reporting and accounting policies

- Consolidated statement of comprehensive income, IFRS

- Consolidated statement of financial position, IFRS

- Consolidated statement of changes in equity, IFRS

- Consolidated statement of cash flows, IFRS (condensed)

- Revenue and result by business segment

- Property, plant and equipment

- Contingencies and commitments

- Revenue and result by quarter

- Shares, market capitalisation and trading information

- Calculation of ratios

- Related party transactions

DISTRIBUTION

NASDAQ OMX Helsinki Ltd.

Main media

This interim report is unaudited.

REPORTING AND ACCOUNTING POLICIES

This interim report included herein is prepared in accordance with IAS 34 (Interim Financial Reporting) standard. The Company has adopted new or revised IFRS standards and IFRIC interpretations from beginning of the reporting period corresponding to those described in the 2012 Financial Statements.

With effect from 1 January 2013, the Finnlines Group has adopted the revised IAS 19 Employee benefits standard. The amendment has an impact on the Finnlines Group's pension liability and equity on the balance sheet. Resulting from the amendment, the Finnlines's consolidated statement of financial position for 2012 have been updated in compliance with the requirements prescribed in the revised standard. In consequence of the adoption of the revised IAS 19 Employee benefits standard, the Group's equity in the 2012 opening balance will decrease by EUR 1.2 million and in the balance sheet of 31 December 2012 by EUR 0.1 million due to actuarial losses recognised in equity in the consolidated statement of financial position.

Otherwise new or revised standards have not had an effect on the reported figures.

Finnlines Plc was included in tonnage taxation from January 2013. In tonnage taxation, shipping operations shifted from taxation of business income to tonnage-based taxation.

In other respects, the same accounting policies have been followed as in the previous annual financial statements.

All figures in the accounts have been rounded and consequently the sum of individual figures can deviate from the presented sum figure.

The preparation of the financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the valuation of the reported assets and liabilities and other information such as contingent liabilities and the recognition of income and expenses in the income statement. Although the estimates are based on the management’s best knowledge of current events and actions, actual results may differ from the estimates.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, IFRS

* restated due to revised IAS 19 Employee benefit standard.

** key indicators have been adjusted with the share issue adjustment factor

CONSOLIDATED STATEMENT OF FINANCIAL POSITION, IFRS

* With effect from 1 January 2013, the Finnlines Group has adopted the revised IAS 19 Employee benefits standard. The amendment has an impact on the Finnlines Group's pension liability and equity on the balance sheet. Resulting from the amendment, the Finnlines' consolidated statement of financial position for 2012 have been updated in compliance with the requirements prescribed in the revised standard. In consequence of the adoption of the revised IAS 19 Employee benefits standard, the Group's equity in the 2012 opening balance will decrease by EUR 1.2 million and in the balance sheet of 31 December 2012 by EUR 0.1 million due to actuarial losses recognised in equity in the consolidated statement of financial position.

** The revolving credit facilities, of which the company can unilaterally move the final due date over one year after the reporting period, are reclassified from current liabilities to non-current liabilities in accordance with IFRS.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2013, IFRS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2012, IFRS

CONSOLIDATED STATEMENT OF CASH FLOWS, IFRS (CONDENSED)

* Activities related to revolving credit facilities, of which the company can unilaterally move the final due date over one year after the reporting period, have been reclassified within the Cash flows from financing activities group in accordance with IFRS.

REVENUE AND RESULT BY BUSINESS SEGMENTS

PROPERTY, PLANT AND EQUIPMENT 2013

PROPERTY, PLANT AND EQUIPMENT 2012

CONTINGENCIES AND COMMITMENTS

Open derivative instruments:

The Group has no outstanding hedging or other financial instruments at the end of the reporting period, which would be classified in category 2 or 3 in the fair value hierarchy described in Note 30 to the 2012 Financial Statements.

REVENUE AND RESULT BY QUARTER

*Key indicators per share have been adjusted with the share issue adjustment factor.

SHARES, MARKET CAPITALISATION AND TRADING INFORMATION

CALCULATION OF RATIOS

Earnings per share (EPS), EUR :

Result attributable to parent company shareholders

----------------------------------------------------------------------

Weighted average number of outstanding shares

Shareholders’ equity per share, EUR :

Shareholders’ equity attributable to parent company shareholders

-----------------------------------------------------------------------------------------

Undiluted number of shares at the end of period

Gearing, %:

Interest-bearing liabilities – cash and bank equivalents

---------------------------------------------------------------------------  X 100

Total equity

Equity ratio, %:

Total equity

----------------------------------------------  X 100

Assets total – received advances

Taxes corresponding to the result for the reporting period are presented as income taxes in the interim report.

RELATED PARTY TRANSACTIONS

Finnlines has cut its fleet overcapacity in the second quarter by chartering MS Finnarrow for five years to the Grimaldi Group. During the last quarter of 2012, Finnlines has bareboat chartered out MS Europalink to the Grimaldi Group for a period on five years. Otherwise there were no material related party transactions during the reporting period. The business transactions were carried out using market-based pricing.