FINANCIAL STATEMENTS 2010 - Finnlines

also the investment properties in Turku were sold in 2010.
Interest-bearing net debt amounted to EUR 852.6 (844.1) mil-
lion. The equity ratio calculated from the statement of financial
position was 29.1 (29.4) per cent. Gearing was 198.8 (198.3)
per cent. The Company is in complete compliance with the finan-
cial covenants of its loan portfolio. At the end of the period, cash
and deposits together with unused committed working capital
credits and the undrawn part of committed credits for newbuild-
ings amounted to EUR 147 million.
PERSONNEL
The Group employed an average of 2,096 (2,050) persons dur-
ing 2010, consisting of 1,141 (1,086) persons on shore and 954
(964) persons at sea. The increase in the average number of
shore personnel was due to two main reasons: in 2010 there
were less temporary layoffs both in the ports and in the offices
than in 2009, and the passenger department’s personnel has in-
creased considerably.
The personnel expenses (including other social costs) for the
reporting period in 2010 totalled EUR 110.6 (108.8) million.
In the middle of December 2010, the Group’s port operations
companies Finnsteve Oy Ab, Containersteve Oy Ab and FS-
Terminals Oy Ab started employer-employee adaptation negotia-
tions in the Port of Helsinki according to the collective agreement
of FinnishTransport Workers’ Union. Finnsteve and Container-
steve had already earlier started similar negotiations in the ports
of Turku and Kotka. These negotiations concerned all person-
nel groups in all three ports. Finnsteve-companies employ 700
persons in Helsinki, Turku and Kotka. Finnlines Plc is the par-
ent company of these stevedoring companies. The co-operation
negotiations with the personnel, which started late 2010 in the
ports of Kotka, Turku and Helsinki, resulted in the termination of
160 employments in total.
Personnel costs are specified in more detail in the Notes to
the Consolidated Financial Statements, in Note 8. Personnel
Expenses, for the reporting period and the comparison period.
GROUP STRUCTURE
In 2009, the Group started a significant restructuring process
mainly by merging group companies with an aim to gain efficien-
cies and a more transparent group structure. This process con-
tinued in 2010: Finnlines Plc acquired all the shares in the Danish
subsidiary Finnlines Danmark A/S and in the Swedish subsidiary
Finnlines Ship Management AB from AB Finnlines Scandinavia
Ltd and Oy Finnlink Ab sold all the shares in its Swedish subsidi-
ary Finnlink AB to AB Finnlines Scandinavia Ltd. In addition, Oy
Finnlink Ab and Oy Hanseatic Shipping Ab were merged with
Finnlines Plc’s Shipping and Sea Transport Services segment.
In the Port Operations segment, Containersteve Oy Ab and Finn-
care Oy Ab were merged with TBE System Oy Ltd followed by
the rename of the TBE System Oy Ltd to Containersteve Oy Ab,
which continues container handling operations. Further, some
smaller subsidiaries were dissolved.
As a result of the restructuring process the Group consisted
4 FINNLINES PLC Financial Statements 2010 (figures in EUR thousand, if not stated otherwise)
of the parent company and 21 subsidiaries at the beginning of
2011, whereas at the beginning of 2009 there were 49 subsidi-
aries.
RESEARCH AND DEVELOPMENT
The aim of Finnlines' research and development work is to find
and introduce new practical solutions and operating methods,
which enable the company to better and more cost-efficiently
meet customer needs. In 2010, the focus of system development
has been on passenger traffic and procurement.
The new state-of-the-art IT system for day-to-day marketing
and sales in Passenger Services is aimed at enhancing efficiency
and improving purchasing experience for customers. Develop-
ment of procurement procedures and systems is done under the
Grimaldi Group framework. Best practices of Grimaldi Group’s
wide procurement are available, which with local application en-
sures efficient local and global sourcing.
Finnlines has ordered six ro-ro vessels from Jinling shipyard
in China. For these newbuildings the R&D engineered a design,
which allows substituting the present vessels with new ones
which not only have an average of 1,000 lane metres of additional
capacity but also 9,000 m 2 more car capacity thanks to hoista-
ble decks. These modern ships are being built to ice-class 1A,
are capable of 20 knots, and have capacity for 3,326 lane metres
of rolling cargo. The first two ships will enter Finnlines traffic dur-
ing spring 2011 and the rest of the newbuildings later in 2011 and
during 2012.
THE FINNLINES SHARE
The Company's registered share capital on 31 December 2010
was EUR 93,642,074 divided into 46,821,037 shares. A total of
2.9 (2.7) million shares were traded on the NASDAQ OMX Hel-
sinki during the period. The market capitalisation of the Com-
pany's stock at the end of December was EUR 373.2 (323.1)
million. Earnings per share (EPS) were EUR 0.05 (-0.96). Share-
holders' equity per share was EUR 9.14 (9.07). At the end of the
year, Grimaldi Group’s holding and share of votes in Finnlines
was 65.84 per cent.
The shares, shareholders and management's holding are
dealt with in more detail in the Notes to the Consolidated Finan-
cial Statements, in Note 36. Shares and Shareholders.
RISKS AND RISK MANAGEMENT
The Group's business, financial conditions and results could be
materially affected by various risks.
The main business risk in shipping is overcapacity of tonnage.
Overall the global 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 per cent of the current
global ro-ro fleet is over 25 years old and needs to be scrapped
for environmental reasons.
Finnlines constantly monitors the stability and the payment be-
havior of its customers and currently there are no significant risks