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.