FINANCIAL STATEMENTS 2010 - Finnlines

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GOODWILL IMPAIRMENT TESTING For the purpose of impairment testing, goodwill is allocated to cash-generating units. The allocation principle has been unchanged from 2009 as the business structure and vessel set-up has remained the same. The goodwill related to Finland–Germany traffic is allocated to HansaLink traffic, which is operated as a common vessel system between Finland, Poland and Germany. Goodwill related to south Sweden–Germany traffic is allocated to NordöLink traffic. EUR 1,000 2010 2009 Allocation of goodwill to the cash-generating units NordöLink 68,972 68,972 HansaLink (Finland–Poland–Germany traffic) 36,671 36,671 Total 105,644 105,644 NordöLink and HansaLink are included in Shipping and Sea Transport Services segment. The current recoverable amount of cash-generating units is determined based on their value in use. The cash flow forecasts for the tested units are based on the next year’s budget and the forecasts for the subsequent four years (five year business plans) approved by management. The projections of cash flow for the five year period are based on experience and assumed future development of markets, and are in line with the external information. HansaLink asset structure and traffic pattern has remained unchanged in 2010. During the year 2009, the Finland-Germany traffic (HansaLink) was strengthened by putting all the five Star-class vessels delivered in 2006-2007 on the route. Simultaneously, the vessels started to regularly call at Poland en route. In 2008, the NordöLink traffic was operated with two large Star-class vessels and two smaller ro-pax vessels. In 2009, the two Star- class vessels were transferred to HansaLink and replaced by one smaller ro-pax vessel better adjusted to the market volumes. In 2010 traffics was continued with the same vessel system. The main assumptions in the five-year business plans relate to market growth, market share, price level and development of passenger services. The market growth rates used are derived from recent external economic forecasts adjusted to the relevant market. The company expects the relative growth of passenger business to continue on a stronger level than cargo business growth based on the potential related to the further developing of passenger concept with the ro-pax vessels. The cash flows after the forecast period of five years are extrapolated using the growth factors listed below. The growth factors used do not exceed the actual long-term growth rate in the sector in question. The weighted average pre-tax cost of capital (WACC) is used as a discount rate. The components used to calculate the WACC are risk free interest rate, market risk premium, industry beta-coefficient, target capital structure and the cost of debt. The same common components to calculate the discount rates for all cash generating units are used, adjusted with the relevant tax rates. The usage of the same common components in discount rates is justified as the risks related to the different businesses are interlinked and relate to the general economic development in the Baltic Sea area. Main factors used in calculating value in use in 2010 HansaLink Cash-generating unit NordöLink Discount rate (pre-tax) 6.33% 6.33% LTP period 2011-2015 2011-2015 Growth rate after LTP period 2.00% 2.00% The resulting share of terminal value of the calculated discounted cash flow 84.4% 83.3% 26 FINNLINES PLC Financial Statements 2010 (figures in EUR thousand, if not stated otherwise)
Main factors used in calculating value in use in 2009 HansaLink Cash-generating unit NordöLink Discount rate (pre-tax) 6.87% 6.87% LTP period 2010-2014 2010-2014 Growth rate after LTP period 2.00% 2.00% The resulting share of terminal value of the calculated discounted cash flow 84.0% 82.7% Based on the forecasts, the current recoverable amounts of the Finland–Poland-Germany service (HansaLink) and NordöLink clearly exceed the book value at the end of 2010. Sensitivity tests were conducted for all the key assumptions and parameters in the business plans and in the future extrapolation. The tested parameters were market growth, market share, price level development, passenger business contribution, discount rate and growth rate after five years period which were tested based on their relevance in the cash generating unit. The management views that no reasonably possible change in any of the key parameters would lead to impairment as the recoverable amounts exceed the carrying amounts considerably. The goodwill of the company is related to the lines and corresponding traffic flows, which can be handled with various vessel systems as the vessels are relatively easily movable assets. For both cash generating units, the assumption of infinite cash flow (the Gordon model) is applied. As the goodwill is not dependent of the system of certain vessels and their deterioration due to passage of time, the infinity assumption is a reasonable approach to measure the future cash flows. The share of terminal values (cash flows after five year period) are listed above. When preparing cash flow forecasts, the Company also reviews the differences between the previous forecast and actual outcomes of the key parameters. 17. INVESTMENT PROPERTIES EUR 1,000 2010 2009 Acquisition cost 1 Jan 1,598 1,598 Disposals -1,561 Reclassifications -37 Acquisition cost 31 Dec 0 1,598 Accumulated depreciation and amortisation 31 Dec 0 -21 Book value 31 Dec 0 1,577 In 2010, the properties, consisting of land and buildings in Turku, were sold. An insignificant gain was booked in the consolidated statement of comprehensive income. 18. INVESTMENTS IN ASSOCIATED COMPANIES EUR 1,000 2010 2009 Acquisition cost 1 Jan 1,514 1,526 Disposals -1,514 -13 Acquisition cost 31 Dec 0 1,514 Share of associated companies’ profits 0 0 Book value 31 Dec 0 1,514 EUR 1,000 Registered in Assets Liabilities Revenue Profit / loss Holding (%) 2009 Simonaukion pysäköinti * Helsinki 2,998 2 32 0 50 * Group share of profits consolidated according to the previous year's financial statements. Finnlines shares of Simonaukio Pysäköinti Oy were sold in April 2010, with an insignificant sales gain. The carrying value for associated companies on 31 December 2009 does not include goodwill. (figures in EUR thousand, if not stated otherwise) FINNLINES PLC Financial Statements 2010 27
Page 1 and 2: FINANCIAL STATEMENTS 2010
Page 3 and 4: BOARD OF DIRECTORS’ REPORT THE CO
Page 5 and 6: elated to this. Other significant r
Page 7 and 8: CONSOLIDATED STATEMENT OF COMPREHEN
Page 9 and 10: CONSOLIDATED STATEMENT OF CHANGES I
Page 11 and 12: NOTES TO THE CONSOLIDATED FINANCIAL
Page 13 and 14: ated companies are consolidated usi
Page 15 and 16: egory includes assets held for trad
Page 17 and 18: In defined benefit plans, the emplo
Page 19 and 20: Segment assets, liabilities and inv
Page 21 and 22: 8. PERSONNEL EXPENSES EUR 1,000 201
Page 23 and 24: 13. EARNINGS PER SHARE UNDILUTED Un
Page 25: Assets leased through finance lease
Page 29 and 30: 21. DEFERRED TAX ASSETS AND LIABILI
Page 31 and 32: EUR 1,000 2010 2009 Significant ite
Page 33 and 34: 26. PROVISIONS EUR 1,000 2010 2009
Page 35 and 36: Finance lease liabilities Finance l
Page 37 and 38: 31. PENSION LIABILITIES The Group
Page 39 and 40: Hedge Accounting The Group has orde
Page 41 and 42: The Group had an interest rate swap
Page 43 and 44: COMMODITY RISK The Group is exposed
Page 45 and 46: with the Helsinki Court of Appeal a
Page 47 and 48: In April 2009, Finnlines Plc's subs
Page 49 and 50: Shares outstanding 31 December 2005
Page 51 and 52: CALCULATION OF KEY RATIOS, IFRS Ear
Page 53 and 54: PROFIT AND LOSS ACCOUNT, PARENT COM
Page 55 and 56: CASH FLOW STATEMENT, PARENT COMPANY
Page 57 and 58: NOTES TO THE FINANCIAL STATEMENTS,
Page 59 and 60: 8. EXTRAORDINARY ITEMS EUR 2010 200
Page 61 and 62: 14. INVENTORIES EUR 2010 2009 Bunke
Page 63 and 64: 18. ACCUMULATED APPROPRIATIONS EUR
Page 65 and 66: CONTINGENCIES AND COMMITMENTS EUR 1
Page 67 and 68: BOARD'S PROPOSAL FOR THE USE OF THE
Page 69 and 70: AUDITOR'S REPORT TO THE ANNUAL GENE

FINANCIAL STATEMENTS 2010 - Finnlines

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