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Annual Financial Statements for the 2012 Fiscal Year

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HELLENIC SEAWAYS

Maritime S.A.

Annual Financial Statements For the 2012 fiscal year (01.01.2012 – 31.12.2012)

Consolidated and separate statements

prepared in accordance with the International Financial Reporting Standards (IFRS)

HELLENIC SEAWAYS S.A. Amounts expressed in thousands Euros unless otherwise stated


Table of contents Page

Annual financial statements prepared in accordance with the IFRS for the 2012 fiscal year .......... 4 Audit Report prepared by Independent Certified Public Accountant ................................................ 4 Management Report from the Board of Directors of HELLENIC SEAWAYS S.A. to the Ordinary General Meeting of Shareholders for the 2012 fiscal year .................................................................. 7 STATEMENT OF FINANCIAL POSITION .............................................................................................. 11 STATEMENT OF COMPREHENSIVE INCOME .................................................................................... 13 CHANGES IN EQUITY STATEMENT .................................................................................................... 14 CASH FLOW STATEMENT ................................................................................................................... 15 Notes to the annual financial statements for the 2012 fiscal year .................................................... 16 1. General Information about the Company and the Group .............................................................. 16 2. Basis of preparation of the financial statements ........................................................................... 17 2.1. General framework ................................................................................................... 17 2.2 New standards, amendments to standards and interpretations ...................................... 17

2.2.1. Standards and interpretations mandatory for the 2012 fiscal year ....................... 17 3. Main accounting policies ................................................................................................................. 21 3.1. Use of management judgements and estimates .......................................................... 21 3.2. Basis of consolidation ............................................................................................... 22

3.2.1. Subsidiaries................................................................................................... 22

3.2.2. Inter-group transactions .................................................................................. 22 3.3. Conversion of items to foreign currency ...................................................................... 22

3.4. Intangible assets....................................................................................................... 22 3.5. Tangible fixed assets ................................................................................................ 22 3.6. Impairment of the value of non-current assets ............................................................. 23

3.7. Stocks / inventories ................................................................................................... 23 3.8 Financial instruments ................................................................................................. 23

3.8.1. Trade and other receivables ............................................................................ 24

3.8.2. Available-for-sale financial assets .................................................................... 24

3.8.3. Cash and cash equivalents ............................................................................. 24 3.8.4. Borrowings .................................................................................................... 24

3.8.5. Liabilities to suppliers and other liabilities ......................................................... 24 3.9. Provisions for employee benefits ................................................................................ 24 3.10. Other provisions / Contingent liabilities and contingent assets ..................................... 25

3.11. Income Tax (current and deferred) ........................................................................... 25 3.12. Operating Leases ................................................................................................... 25

3.13 Revenue recognition ................................................................................................ 25

3.14. Expenses recognition .............................................................................................. 26 4. Intangible and tangible assets ......................................................................................................... 27 5. Investments in subsidiaries ............................................................................................................. 29 6. Other non-current assets ................................................................................................................. 29 7. Stocks / inventories .......................................................................................................................... 30 8. Receivables from customers ........................................................................................................... 30 9. Other receivables and other current assets ................................................................................... 31 10. Available-for-sale financial assets ................................................................................................ 31 11. Cash and cash equivalents ............................................................................................................ 32 12. Share capital and premium on capital stock ................................................................................ 32 13. Other reserves ................................................................................................................................. 32 14. Retained earnings ........................................................................................................................... 32 15. Long-term bank liabilities .............................................................................................................. 33 16. Provisions ofr employee benefits and other provisions ............................................................. 33 17. Suppliers and other liabilities ........................................................................................................ 34



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18. Short-term bank liabilities .............................................................................................................. 34 19. Accrued expenses and Prepaid expenses ................................................................................... 35 20. Turnover (sales) .............................................................................................................................. 35 21. Cost of goods sold ......................................................................................................................... 35 22. Other operating income ................................................................................................................. 36 23. Administrative expenses ................................................................................................................ 36 24. Research & Development Expenses ............................................................................................. 36 25. Selling expenses ............................................................................................................................. 36 26. Other operating expenses .............................................................................................................. 37 27. Financial income ............................................................................................................................. 37 28. Financial expenses ......................................................................................................................... 37 29. Results from investing activities ................................................................................................... 38 30. Income tax ....................................................................................................................................... 38 31. Earnings per share net of tax ........................................................................................................ 39 32. Dividends ......................................................................................................................................... 39 33. Contingent liabilities and assets ................................................................................................... 39 33.1. Contingent liabilities ................................................................................................ 39

33.2. Contingent assets ................................................................................................... 40 34. Transactions with related parties .................................................................................................. 40 34.1 Receivables / liabilities involving related parties .......................................................... 40

34.2. Purchases – sales involved related parties ................................................................ 41

34.3. Fees of member sof the Board of Directors and key executives................................... 41 35. Financial risk management ............................................................................................................ 42 35.1. Credit risk ............................................................................................................... 42

35.2. Liquidity Risk .......................................................................................................... 42

35.3. Market conditions risk .............................................................................................. 42 35.4. Capital Management ............................................................................................... 42 36. Events after the balance sheet date .............................................................................................. 43



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Annual financial statements prepared in accordance with the IFRS for the 2012 fiscal

year

It is hereby confirmed that these financial statements are those approved by the Board of Directors of the Company Hellenic Seaways S.A. at its meeting on 24.5.2013. Ioannis I. Vardinogiannis Chairman of the Board of Directors HELLENIC SEAWAYS S.A.

Audit Report prepared by Independent Certified Public Accountant



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To the shareholders of the shipping company HELLENIC SEAWAYS Report on the separate and consolidated financial statements

We have audited the attached separate and consolidated financial statements of HELLENIC SEAWAYS S.A. which consist of the separate and consolidated Statement of Financial Position sheet dated 31 December 2012 and the separate and consolidated statements of comprehensive income, changes to equity statements and cash flow statements for the period ended on that date and a summary of main accounting policies and other explanatory notes. Management responsibility for the separate and consolidated financial statements Company management is responsible for preparing and fairly presenting these financial statements in accordance with the IFRS which have been adopted by the EU, and in line with those internal checks and balances which Management considers necessary to make it possible to draw up the financial statements of material misstatements due to fraud or error. Auditor Responsibility

It is our responsibility to express an opinion on those separate and consolidated financial statements on the basis of our audit. We performed our audit in accordance with the International Standards on Auditing. These standards require that we comply with the code of conduct and that we design and carry out our audit so as to provide a fair assurance as to what extent the separate and consolidated financial statements are free of material misstatements. The audit includes the conduct of procedures for the collection of audit data, relating to the amounts and disclosures included in the separate and consolidated financial statements. The procedures selected are at the auditor’s discretion, including an assessment of the risk of material misstatements in the separate and consolidated financial statements whether due to fraud or error. When carrying out the risk assessment, the auditor examines the internal checks and balances on preparation and fair presentation of the company's separate and consolidated financial statements for the purpose of designing auditing procedures which are suitable under the circumstances, and not to express an opinion on the effectiveness of the company’s internal checks and balances. The audit also includes an evaluation of the suitability of the accounting policies applied and the fairness of the assessments made by Management and an evaluation of the overall presentation of the separate and consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

In our opinion, the aforementioned separate and consolidated financial statements reasonably depict from every substantive perspective the financial position of the shipping company HELLENIC SEAWAYS S.A. and its subsidiaries on 31 December 2012, their financial performance and cash flows for the accounting period which ended on that date in line with the International Financial Reporting Standards as adopted by the European Union.

Matters of emphasis



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We would draw your attention to notes 15 and 30 of the Group’s annual financial report which refers to the following important issues: (a) The Company reclassified part of its long-term bank loans as short-term loans because it failed to comply with the covenants in certain loan agreements. After reclassification the Group’s total short-term borrowings exceeded its current assets by € 157.50 million and there were also other overdue liabilities. This fact and the general unfavourable conditions in the economy overall and the sector, indicate that there is material uncertainty about the Group’s ability to continue as a going concern, Note 35.2 of the annual financial report refers to the measures taken or which management plans to take to ensure that the Group can continue as a going concern without problems. (b) The parent company’s tax liabilities for 2007 to 2011 and those of its subsidiaries for 2007 to 2012 have not yet been examined by the tax authorities. Consequently the tax results for those years have not yet been finalised. The Group has not made an estimate for surtaxes and surcharges which may be imputed to it during any future tax audit, and has not formed a provision for this purpose. Our audit does not allow us to be reasonably certain about the level of the provision which may be required. Our opinion does not contain any reservation about these matters. Report on other legal and regulatory issues

We have verified that the content of the Management Report corresponds to and matches that of the attached separate and consolidated financial statements in the context of the provisions of Articles 43a, 108 and 37 of Codified Law 2190/1920.

Athens, 28.05.2013

The Certified Public Accountant

KONSTANTINOS A. ARAMPATZIS

ICPA (GR) Reg. No. 34351

SOL S.A. member of Crowe Horwath International 3 Fokionos Negri St., Athens GR-11257

Αρ Μ ΣΟΕΛ 125



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Management Report from the Board of Directors of HELLENIC SEAWAYS S.A. to the Ordinary General Meeting of Shareholders for

the 2012 fiscal year

Dear Shareholders, The Company’s Board of Directors would like to present the separate and consolidated financial statements for the 2012 fiscal year for your approval along with this report which makes specific reference to the consolidated financial statements. 1. The Company’s position in the market In 2012 Hellenic Seaways operated routes in the Cyclades, the NE Aegean, the Sporades and the Saronic Gulf and in addition to coastal shipping also continued to have a presence in the cargo sector via its subsidiary Hellenic Seaways Cargo S.A. on the Corinth – Venice rout (transporting unaccompanied cargo on Ro-Ro ships). The Group’s overall transport figures for 2012 are show in the table below:

2012 2011 %

No. of ships sailing 18 22

Passengers 2.913.910 3.688.379 -21,0%

Cars & motorcycles 298.755 390.897 -23,6%

Trucks 59.467 61.121 -2,7%

2. Financial results for 2012 The Company’s and Group’s financial statements have been prepared in accordance with the IFRS and the accounting policies applied are described in detail in the Notes to the Annual financial statements which constitute an integral part thereof. 2012 was the fifth consecutive year in which the Greek economy worsened, with cumulated GDP losses reaching 20%, with cuts in income continuing and the unemployment rising over 25%. In addition, the coastal shipping sector was unfavourably hit by the ongoing and rapid increase in fuel prices by 17% compared to 2011, and by 100% overall over the last 3 years. During that same 3-year period, the coastal shipping sector has lost more than 3 million passengers, while the accumulated losses for companies in the sector exceed € 750 million. The repercussions of this adverse climate directly impacted on Hellenic Seaways’ financial results. Turnover stood at € 111.4 million down some 22.7% compared to 2011. This was primarily due to:

• The reduction in ships sailing and the number of routes sailed (there were 26% fewer routes sailed compared to 2011).

• The decline in the coastal shipping sector overall.

• Increased competition with many coastal shipping lines which resulted in a drop in prices and a decline in our market share.

• The fact that the Nisos Hios and Flyingcat 3 for were out of service for a prolonged period over the summer because of mechanical failure.

Gross Profits



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Despite the significant drop in the cost of goods sold by € 20.3 million (14.6%) the gross results were negative, at € -7.1 million compared to profits of € 5.5 million in 2011. EBITDA As a result of the above, despite the major drop in selling and administrative expenses by € 4 million (20.5%) the Group reported EBITDA losses of € 7.9 million compared to profits of € 5.6 million in 2011. Financial expenses Financial expenses stood at € 9 million compared to € 10.1 million the previous year, primarily due to the drop in the Euribor benchmark rate. Net results The Group’s net results after tax were losses of € 34.9 million compared to losses of € 29.52 million in 2011 and included: a) Extraordinary profits of € 0.8 million which came from the sale of Hellenic Sailor, Nefeli and Flyingcat 2. b) Impairment of the value of fixed assets by € 2.5 million because of the financial impact on the ongoing financial crisis on coastal shipping. 3. Balance sheet and cash flow items for 2012 The Group’s net worth was € 138.5 million down 20% which was due to losses during the year. In 2012 there were changes in the value of tangible assets because of the sale of 3 ships (Hellenic Sailor, Nefeli and Flyingcat 2), impairment in the value of ships and depreciation recorded during the year. Their net value stood at € 308.7 million compared to € 337.4 million in 2011. Group bank borrowing stood at € 157.4 million slightly up compared to 2011 (€ 154.9 million). During 2012 the Group reported outflows in terms of operating activities of € 14.1 million compared to outflows of € 5.3 million in the previous year, primarily due to the worsening in its operating results. Inflows from investing activities of € 10.6 million were primarily due to the sale of the three ships. Cash assets at the end of the year stood at € 0.9 million compared to € 2 million the previous year. 4. Financial indicators

• The gearing ratio (Equity to Debt) stood at 0.70 in 2012 compared to 0.89 in 2011.

• The general liquidity ratio (Current assets / short-term liabilities) stood at 0.15 on 31.12.2012 compared to 0.38 in 2011.

• As far as the debt burden ratios are concerned, the liabilities to equity ratio stood at 1.43 compared to 1.13 last year and the bank liabilities to equity ratio stood at 1.14 compared to 0.89 last year.

5. Main risks and uncertainties The most important business risks and uncertainties relate to: i. Credit risk The Company and Group estimate that credit risk is low given that there is a satisfactory spread of receivables from customers in the coastal shipping sector. In addition the company’s administrative services implement strict credit control procedures which include setting a specific credit limit and payment terms per customer, and bank guarantee letters have also been obtained as collateral for larger receivables.



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As far as ship freight is concerned, there is a higher concentration of receivables, however the credit risk remains low since the largest receivable (50% of the Group’s receivables from customers) relates to the associates ANEK and AEGEAN SEA which the company concluded an interest-bearing debt repayment agreement after negotiations. ii. Fuel price fluctuation risk The Company and Group are exposed to the risk of an increase in the price of fuel given the significant role played by fuel costs in operating costs. An increase or reduction of 1% in the price of fuel each year impacts on results and the Groups net worth by € 0.55 million. Consequently, any increase in fuel prices is expected to have materially adverse impacts on the Group’s financial results, cash flows and financial situation. iii. Risk of change in interest rates The Group’s long-term and short-term loans are in euro with a Euribor floating rate plus a spread. Consequently the Group is exposed to a risk of fluctuating interest rates since if those rates risk, it will have higher interest to pay. For example, a 1% annualised change in the interest rate would impact on the Group’s results and equity by € 1.6 million. iv. Liquidity risk Liquidity risk because of the decline in financials and the serious restriction in the ability to borrow from banks has significantly increased compared to previous years. In order to avoid the possibility of a lack of adequate liquidity, Management ensures that there are bank credit facilities available to meet urgent needs in periods of low liquidity. However, one cannot rule out the possibility of one or more of the covenants in the Group’s loan agreements being violated, which could have material negative repercussions on its business activity, its operating results, its cash flows and the Group’s financial situation overall. Given that the parent company did not meet covenants in certain loan agreements on 31.12.2012 relating to the servicing of loans, part of the long-term loan portfolio was reclassified in the statement of financial position as short-term bank liabilities. The Group’s Management Team is in contact with lending banks in order to agree a restructuring of the repayment terms of all long-term loans. The discussions are underway and a positive outcome will bolster Company liquidity because the payment of instalments will be rolled into the future, the repayment term will be extended and the financial cost may be reduced. Moreover, in order to bolster working capital the Group’s Management team has already taken a series of measures such as further curtailing operating costs, restructuring the fleet and taking ships off routes, shifting the payment of trade liabilities to a subsequent date and is also examining the case of selling off some ships. 6. Important events occurring after the end of the fiscal year up to the date on which this report was prepared At the beginning of 2013 the Company took out a short-term loan and also signed agreements to charter the ships HELLENIC WIND and EXPRESS SANTORINI abroad, moves which bolstered its liquidity. At the same time it signed a 3-year partnership agreement with Cosmote to advertise it on the company’s high-speed boats. .

7. Corporate Social Responsibility Hellenic Seaways takes a responsible approach and is sensitive to the needs of the local communities at the destinations it serves. For that reason it has been supporting initiatives and attempts over the years aimed at improving and protecting the quality of life of the residents of the islands. In 2012 the company supported more than 45 such actions across the entire Aegean, sponsoring free journeys for voluntary organisation and local bodies. Our awareness of the need to safeguard the natural environment is not limited to simply complying with Greek and Community legislation, but also extends to implementing dynamic measures.



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Hellenic Seaways:

• Participates in comprehensive recycling schemes by systematically collecting used and scrap paper and other recyclable materials.

• Implements strict regulations on its fleet to ensure that there is no pollution from ship operations and implements a crew training programme about how to manage all environmentally detrimental substances.

• Implements an ISO 14001-compliant environmental management system for its fleet and the company’s facilities on dry land.

8. The Company and Group’s prospects 2013 is expected to be another difficult year for Greece, despite the temporary resolution of the fiscal crisis. With the recession continuing (-4.2% according to recent IMF forecasts) and unemployment having risen to 27% (Hellenic Statistical Authority, February 2013) we expect a further decline in domestic tourism. Positive developments include:

1. The recent enactment of the bill from the Ministry of Shipping whose provisions are a move in the right direction, and will ensure greater flexibility in the statutory framework for coastal shipping.

2. The optimistic messages concerning tourism inflows, which although limited, could have a positive impact on coastal shipping.

3. The trend in fuel prices which after the rally in the 2009-2012 3-year period during which prices doubled, appears to be dropping off by around 10% in the first 4 months of 2013.

Against that background, in order to address the particularly adverse environment, the Group’s Management team has taken important decisions for this year which relate to selling off ships, radical changes to routes for our fleet and cuts in administrative and operating expenses.

Dear Shareholders, In light of the points we have made above and the financial statements which accompany this Board of Directors management report, you are now able to form a complete picture of the operations and performance of the Company and Group for 2012.

Piraeus, 24 May 2013

THE BOARD OF DIRECTORS On its behalf

The Chairman Ioannis I. Vardinogiannis



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STATEMENT OF FINANCIAL POSITION



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Note 31.12.2012 31.12.2011 31.12.2012 31.12.2011

ASSETS

Non-current assetsIntangible assets 12 51 12 21

Tangible fixed assets 308,724 337,426 289,516 312,847

Investments in subsidiaries 0 0 31,649 31,943

Other non-current assets 151 151 148 148

Total non-current assets 308,886 337,628 321,325 344,959

Current assetsStocks / inventories 2,314 3,009 1,599 1,910

Receivables from customers 19,509 22,128 15,607 17,532

Other receivables and other current assets 5,271 3,889 12,652 13,500Cash and cash equivalents 911 2,038 709 1,896

Total current assets 28,005 31,064 30,567 34,838

TOTAL ASSETS 336,891 368,692 351,892 379,797

EQUITY & LIABILITIES

EquityShare Capital 194,038 194,038 194,038 194,038

Premium on capital stock 9,376 9,376 9,376 9,376

Other reserves 2,687 2,687 2,687 2,687

Retained earnings (67,591) (32,695) (44,599) (15,514)

Equity attributable to company shareholders 138,509 173,405 161,501 190,586

Minority interests 0 0 0 0

Total equity 138,509 173,405 161,501 190,586

Long-term liabilitiesLong-term bank liabilities 11,410 111,750 11,410 111,750

Provisions for employee benefits 1,277 1,346 1,169 1,250

Other provisions 187 140 187 140

Total long-term liabilities 12,874 113,236 12,766 113,140

Short-term liabilitiesSuppliers and other short-term liabilities 32,490 33,642 24,792 27,800

Short-term borrowings 146,010 43,195 146,010 43,195

Accrued expenses and Prepaid expenses 7,009 5,214 6,823 5,076

Total short-term liabilities 185,508 82,051 177,625 76,071

Total liabilities 198,382 195,287 190,391 189,211

TOTAL OWNERS’ EQUITY AND LIABILITIES 336,891 368,692 351,892 379,797

The Group The Company

Any differences in units are due to rounding off



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STATEMENT OF COMPREHENSIVE INCOME

Note

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Turnover (sales) 111,419 144,318 91,517 129,046

Cost of goods sold (118,509) (138,828) (96,833) (114,206)

Gross profit (7,090) 5,490 (5,316) 14,840

Other income 2,631 3,140 2,303 2,384

Administrative expenses (7,283) (8,818) (6,617) (8,019)

Research & Development Expenses: (43) (89) (43) (89)

Selling expenses (8,427) (10,948) (7,322) (9,669)

Other expenses (4,388) (1,221) (867) (754)

Earnings / (losses) before taxes, financial and investment

results (24,600) (12,446) (17,862) (1,307)

Financial income 431 272 390 223

Financial expenses (8,994) (10,137) (8,894) (10,032)

Results from investing activities 811 (4,159) 811 (4,159)

Impairment of subsidiaries 0 0 (2,500) (3,500)

Impairment of ships (2,500) (3,000) (1,000) (3,000)

Earnings / (losses) before tax (34,853) (29,470) (29,055) (21,775)

Income tax (43) (53) (30) (44)

Profits / (losses) net of tax (34,896) (29,523) (29,085) (21,818)

Allocated among:

Company shareholders (34,896) (29,523) (29,085) (21,818)

Minority shareholders 0 0 0 0

Total (34,896) (29,523) (29,085) (21,818)

Earnings / (losses) net of tax per share

Basic earnings / (losses) per share net of tax (in €)(0.4496) (0.3804) (0.3747) (0.2811)

Dividend proposed per share (in euro) 0.00 0.00 0.00 0.00

SUMMARY OF RESULTS

Earnings/(losses) before taxes, financial and investment

results and depreciation (EBITDA)(7,886) 5,567 (5,057) 12,779

Earnings / (losses) before taxes, financial and investment

results (EBIT) (24,600) (12,446) (17,862) (1,307)


Profits / (losses) net of tax (34,896) (29,523) (29,085) (21,818)





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CHANGES IN EQUITY STATEMENT

The Group Share CapitalPremium on

capital stockOther reserves

Fair value

reserves

Retained

earnings Total equity

Balance on 01.01.11 194,038 9,376 2,700 (13) (3,172) 202,928

Results for period 1.1-31.12.2011 0 0 0 0 (29,523) (29,523)Balance on 31.12.2011 194,038 9,376 2,700 (13) (32,695) 173,405

Results for period 1.1-31.12.2012 0 0 0 0 (34,896) (34,896)Balance on 31.12.12 194,038 9,376 2,700 (13) (67,591) 138,509The CompanyBalance on 01.01.11 194,038 9,376 2,700 (13) 6,305 212,405

Results for period 1.1-31.12.2011 0 0 0 0 (21,818) (21,818)

Balance on 31.12.2011 194,038 9,376 2,700 (13) (15,514) 190,586

Results for period 1.1-31.12.2012 0 0 0 0 (29,085) (29,085)Balance on 31.12.12 194,038 9,376 2,700 (13) (44,599) 161,501




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CASH FLOW STATEMENT

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Cash flow from operating activities


Plus/(Minus) adjustments for:

Depreciation 16,713 18,003 12,806 14,075

Provisions 523 790 127 147

Impairments of holdings 0 0 2,500 3,500

Impairment of ships 2,500 3,000 1,000 3,000

Interest charges and related expenses 8,776 9,990 8,763 9,919

Results of investing activities (interest / dividends) (259) (130) (259) (130)

Profits/ (losses) from sale of assets (878) 4,159 (878) 4,159

Operating results before changes in working capital (7,477) 6,342 (4,997) 12,895

Changes in working capital

(Increase) / Decrease: in stocks / inventories 696 (1,106) 311 (697)

(Increase) / Decrease: in receivables from customers 2,123 8,823 1,814 9,539

(Increase)/Decrease: in Other receivables (1,382) 1,248 848 (6,444)

(Increase) / Decrease in advance payments 0 15 0 15

Increase / (decrease) in suppliers and other liabilities (1,160) (14,508) (3,015) (14,588)

Increase / (Decrease) in accrued expenses - unearned and deferred income 2,598 900 2,549 1,214

Operating results after changes in working capital (4,603) 1,714 (2,491) 1,934

Interest charges and related expenses paid (9,454) (7,004) (9,441) (6,933)

Income tax paid (52) (49) (39) (40)

Total inflow / (outflow) from operating activities (a) (14,110) (5,339) (11,970) (5,039)

Cash flows from investing activities

Share capital increases for subsidiaries 0 0 (2,207) 0

Purchases of intangible and tangible assets (30) (64) (24) (60)

Proceeds from sales of assets / compensation 10,436 4,283 10,436 4,283

Proceeds from return of capital to subsidiaries 0 0 1 0

Interest received 259 130 259 130

Total inflow / (outflow) from investing activities (b) 10,666 4,349 8,465 4,353

Cash flow from financing activities

Proceeds from loans issued / taken out 9,358 29,502 9,358 29,502

Loans paid off (7,008) (28,975) (7,008) (28,975)

Dividends paid (32) (57) (32) (57)

Total inflow / (outflow) from financing activities (c) 2,317 470 2,317 470

Net increase/(decrease) in cash and cash equivalents (1,127) (520) (1,187) (216)

(a)+(b)+(c)

Cash assets and equivalents at start of period 2,038 2,558 1,896 2,112

Cash assets and equivalents at end of period 911 2,038 709 1,896





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Notes to the annual financial statements for the 2012 fiscal year

(01/01/2012 - 31/12/2012)

1. General Information about the Company and the Group

The parent company Hellenic Seaways Maritime S.A. (hereinafter the Company or Parent Company) is a shipping company trading as Hellenic Seaways whose name in international dealings is given as HELLENIC SEAWAYS MARITIME S.A. The Company’s previous name was HELLAS FLYING DOLPHINS S.A. and before that it was MINOAN FLYING DOLPHINS S.A. The company was initially SERRES HELLENIC MARITIME ENTERPRISES S.A. (Societes Anonyme & Limited Liabilities Companies Bulletin of the Government Gazette No. 1118/26.2.1999) whose name, scope and business activities were the changed. The company’s registered offices are in the Mun. of Piraeus at 6 Astingos St., Karaiskaki St., GR-18531. The Company’s share capital is divided into 77,615,000 registered shares with a nominal value of € 2.50 each which are today held by more than 2,200 natural persons and legal entities.

The Hellenic Seaways Group (hereinafter the Group) includes the parent company and the following subsidiaries which are entirely controlled (100%) by the parent company

Corporate nameParent company's %

holding Registered in

Hellenic Seaways Cargo N.E. 100% Greece

Hellenic Seaways Management S.A. 100% Liberia

World Cruises Holdings Ltd 100% Liberia

Helcat Lines S.A. 100% Marshall islands

Alpha Ferries Ltd 100% Liberia

Betta Ferries Ltd 100% Liberia

Vertino Shipping Company Limited 100% Cyprus *inactive companies The Group is involved in passenger shipping, carrying passengers and goods by sea in Greece and abroad. The parent company, Hellenic Seaways S.A., is primarily involved in Greek coastal shipping operating privately owned passenger and passenger / vehicle ships flying under the Greek flag, and its subsidiary Hellenic Seaways Cargo S.A. operates privately owned Ro-Ro truck – vehicle ships flying the Greek flag on the Greece – Italy route. The foreign company HELLENIC SEAWAYS MANAGEMENT S.A. which is installed in Greece under Development Law 89/1967 is involved in managing the Group’s ships which sail abroad. World Cruises Holdings Ltd was acquired on 13 July 2009. Helcat Lines S.A. was established on 17 August 2009. Alpha Ferries Ltd Betta Ferries Ltd were founded on 10 June 2010. The financials of those subsidiaries have been included in the consolidated financial statements of the company using the full consolidation method. The number of staff employed on 31.12.2012 was 447 in the case of the company (333 of whom where ship crews) and 530 in the case of the Group (396 were ship crews).



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2. Basis of preparation of the financial statements

2.1. General framework

The annual separate and consolidated financial statements as at 31.12.2012 (hereinafter the financial statements) have been prepared in line with the IAB and IFRS issued by the IASB and IFRIC committee and adopted by the European Union. The financial statements were prepared on the basis that the company is a going concern and on the basis of the historical cost principle as modified by adjusting certain assets and liabilities to fair values. Note too that the Group implemented IFRS 1 First Time Adoption of the IFRS when preparing the 2007 financial statements, which were the first prepared in accordance with the IFRS, and the transition date for the purpose of IFRS 1 was 1.1.2005.

2.2 New standards, amendments to standards and interpretations

2.2.1. Standards and interpretations mandatory for the 2012 fiscal year

New standards, interpretations, revisions and amendments to the existing standards which are in effect and have been adopted by the EU

The IASB and the IFRIC Committee have adopted a series of new IFRS and interpretations which are mandatory for accounting periods starting on or after 1.1.2012. The most important of these new standards and interpretations are set out below:

IFRS 7, Financial instruments: Disclosures (amendment) – Enhanced requirements for derecognition disclosures.

applicable for annual accounting periods beginning on or after 1.7.2011

This amendment requires additional disclosures about financial assets that have been transferred but have not been derecognised in order to allow users of financial statements to be able to understand the

relationship they have with assets that have not been derecognised and with related liabilities. In

addition, this amendment requires disclosures about the ongoing involvement in

recognised assets so that users can compute the nature of the continuing involvement

by the Company in the recognised assets and the risk associated with it. This amendment was approved by the EU in November 2011 and implementation is not expected to have a material impact on the Group’s financial statements.

IFRS 1 – First Time Adoption (amendment) –Hyperinflationary economies

applicable for annual accounting periods beginning on or after 1.7.2011

This amendment provides guidance on the re-adoption of the IFRS after a period of cessation due to the fact that the functional currency of the economic entity was the currency of a hyperinflationary economy. Earlier adoption of this standard is permitted. This amendment was approved by the EU in December 2012 and implementation is not expected to have a material impact on the Group’s financial statements.

IAS 12 (Amendment) Income tax- Deferred tax:

Applicable to annual accounting periods commencing on or after 1.1.2012

The IASB issued an amendment to IAS 12 concerning who deferred tax should be computed in cases where (a) it is not clear how the company will recover the value of a fixed asset and (b) the method for recovering the value of the fixed asset affects the determination of the taxable amount and the tax rate. The revised text of IAS 12 makes it clear that in cases where an asset is classified as investment property and measured at fair value, or is classified as property, plant and equipment, and



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valued using the adjustment method, one can make the reasonable assumption that the book value will be recovered by selling it, and consequently in order to compute the deferred tax one must use the relevant tax rate and the relevant taxable amount. However, in the case of investment properties in particular, the revised standard makes it clear that this reasonable assumption is negated in the case where the fixed asset can be depreciated and is included in a business model which states that the company’s goal is to materially use up all financial rewards deriving from it and not to recover its value by selling it. This amendment was approved by the EU in December 2012 and the Group will examine its impact on the consolidated financial statements.

New standards, interpretations, revisions and amendments to the existing standards which have not yet been put into effect or have not yet been adopted by the EU

The following new standards, interpretations and revisions to standards have been published by are not yet effective or have not yet been approved by the EU:

Amendment to IAS 1: Presentation of financial statements


This amendment changes the way information presented about Other Comprehensive Income is grouped. The information that can be reclassified in the statement of comprehensive income at a certain point in time in the future must be presented separately from other information which will never be reclassified. The Group is examining the impact of this amendment on the consolidated financial statements. This amendment was approved by the EU in June 2012.

IFRS 9: Financial instruments


The IASB is planning to fully replace IAS 39: Financial Instruments: Recognition and Measurement, at the end of 2010, which will take effect for annual financial periods commencing on 1.1.2013. IFRS 9 is the first stage of the overall plan to replace IAS 39. The key stages are as follows:

Stage 1: Recognition and measurement Stage 2: Impairment methodology Stage 3: Hedge accounting In addition there are also additional plans relating to termination of recognition. IFRS 9 seeks to

reduce complexity in how financial instruments are accounted for by providing fewer categories of financial assets. Under the new standard, the economic entity classifies its financial assets at either carried cost of fair value based on:

a) the enterprise’s business model for managing financial assets and b) the features of conventional cash flows for financial assets (if it has not opted to classify the

financial asset at fair value through P&L). The existence of only two categories (carried cost and fair value) means that only one impairment

model will be required under the new standard, thereby reducing complexity. The European Union has not adopted this standard yet.

IFRS 10 Consolidated Financial Statements


This standard replaces IAS 27 Consolidated and Separate Financial Statements and SIC 12: Consolidation – Special Purpose Entities. This new standard changes the definition of ‘control’ which is a defining factor in whether the economic entity must be included in the consolidated financial statements of its parent Company. The standard offers additional guidance to help determine whether control exists, in cases where it is difficult to make this determination. Moreover, the Group must make a series of disclosures about the companies included in the consolidation as subsidiaries and the companies not included in the consolidation in which it has a shareholding. The standard is expected to



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lead to changes in the structures of conventional groups and in some cases its effects may be significant. IFRS 10 was approved by the EU in December 2012 and the Group will examine its impact on the consolidated financial statements.

IFRS 11 Joint Arrangements


The new standard replaces IAS 31 Interests in Joint Venture. Under the new policies laid down, these arrangements are dealt with based more on the rights and obligations deriving from such arrangements rather than on the basis of the legal form of that arrangement. The new standard abolishes the idea of proportional consolidation for joint ventures and also drops the IAS 31 terminology relating to jointly controlled activities or jointly controlled assets. Most joint ventures will relate to joint activities. IFRS 11 was approved by the EU in December 2012 and the Group will examine its impact on the consolidated financial statements.

IFRS 12 Disclosures of interests in other economic entities


This standard combines disclosures requirements for subsidiaries, joint ventures, associates and unconsolidated economic entities in the context of an overall disclosure framework. It also provides more transparency and will assist investors evaluate the degree to which the reporting entity has participated in generating special structures and the risks to which it is exposed. The European Union has not adopted this standard yet.

IFRS 13 - Fair Value Measurement


The standard provides new guidance on fair value measurements and the necessary disclosures. The requirements of the standard do not extend the use of fair values but provide clarifications about how they are to be applied in the case where their use is mandatory under other standards. IFRS 13 describes the acceptable ways in which fair value can be measured and those methods will apply from adoption of the standard onwards. In addition, the necessary disclosures have been expanded and cover all assets and liabilities which are measured at fair value and not just financial assets and liabilities. IFRS 13 was approved by the EU in December 2012 and the Group will examine its impact on the consolidated financial statements.

IAS 27 (Amendment) Separate financial statements


This standard relates to the changes that need to be made as a result of publication of the new IFRS 10 standard. IAS 27 will not deal exclusively with separate financial statements and in effect the requirements for such statements remain unchanged. The European Union has not yet adopted this amendment.

IAS 28 (Amendment) Investments in Associates and Joint Ventures


The purpose of this revised standard is to specify the accounting policies to be used as a result of the changes arising from the publication of IFRS 11. This revised standard continues to state the mechanisms used to account for the equity method. The European Union has not yet adopted this amendment.



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IAS 19 (Amendment) Employee benefits


The amendment to this standard removes the option to recognise profits and losses using the corridor method. Moreover changes resulting from a re-assessment of the value of assets and liabilities deriving from fixed benefit schemes must be presented in the statement of comprehensive income. In addition, other disclosures are now required relating to fixed benefit schemes concerning the characteristics of the fixed benefit schemes and the risks to which operators are exposed by participating in such schemes. The EU approved this amendment in June 2012. The Group is examining the impact of this amendment on the consolidated financial statements. This amendment was approved by the EU in June 2012.

IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine

Applicable for annual accounting periods commencing on or after 1.1.2013

This interpretation only applies to stripping costs incurred during surface mining and during the production phase of a mine. The costs incurred during stripping are considered to generate tow possible benefits (a) the production of reserves in the current year and/or (b) improved access to ores which will be mined in the future (assets from stripping). Where the costs cannot be allocated specifically between the reserves generated in the current period and the assets from stripping, the interpretation requires the company to use an allocation scheme which is based on a unit of measurement for such production. Earlier application of the standard is permitted. This amendment was approved by the EU in December 2012 but does not apply to the Group’s operations.

• Amendment to IAS 31 and IFRS 7 – Offsetting financial receivables and liabilities

Applicable to annual accounting periods commencing on or after 1.1.2014 for IAS 32 and on or after 1.1.2013 for IFRS 7

The amendments of IAS 32 and IFRS 7 relate to offsetting financial receivables and liabilities. The amendment to IAS 32 entails the inclusion of guidelines about when offsetting is permitted while the amendment of IFRS 7 entails the addition of disclosures about this matter. These amendments were approved by the EU in December 2012 and the Group will examine their impact on the consolidated financial statements.

• IFRS 1 – First Time Adoption (amendment) – State loans


This amendment states that economic entities that adopt the IFRS for the first time which have received state loans at a preferential interest rate have the option not to retroactively apply the IFRS to show those loans when making the transition. This amendment has not been adopted by the EU yet and the Group will examine its impact on the consolidated financial statements in due course.

• Annual improvements to the standards, 2009-2011 Cycle


In May 2012, the IASB issued the “Annual Improvements to IFRSs 2009-2011 Cycle”, which incorporates a series of adjustments to 5 standards and forms part of the annual improvement project. These amendments are not expected to have a material impact on the Group’s financial statements and have not yet been adopted by the EU.

• Consolidated financial statements, joint arrangements, Disclosures of interests in

other undertakings: Transition Guide (Amendments to IFRS 10, 11 and 12)



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In June 2012 the IASB issued this document which provides clarifications about the transitional provisions of IFRS 10. The amendments provide additional options during the transition to IFRS 10, IFRS 11 and IFRS 12 reducing the requirements to provide adjusted, comparative information, to the previous comparator period only. Moreover, as far as disclosures for undertakings not included in the consolidation are concerned, the amendments remove the requirement to present comparative information for periods before the first-time application of IFRS 12. The Group will examine the impact of this on the consolidated financial statements. These amendments have not yet been adopted by the European Union.

• Investing entities (amendments to IFRS 10 and 11, and IAS 27)


In October 2012 the IASB issued amendments to IFRS 10, IFRS 11 and IAS 27. These amendments are applicable to investing entities. IASB has used the term ‘investing entities’ to refer to all entities engaged exclusively in investing capital to generate returns from the goodwill on capital, or revenues from investments or both. Investing entities must evaluate the return on investments at fair value. This category may include private venture capital firms, investment capital managers, private pension funds, public investment funds and other investment funds. By way of exception to the requirements in IFRS 10, the amendments state that investing entities must measure specific subsidiaries at fair value through the results and must not include them in the consolidation but provide the necessary disclosures instead. Earlier adoption of these amendments is permitted. The Group will examine the impact of this on the Group’s consolidated financial statements. These amendments have not yet been adopted by the European Union.

3. Main accounting policies

The main accounting policies which have been adopted for preparing the financial statements for the 2012 fiscal year have been consistently implemented when preparing the financial statements in the previous fiscal year (2011) and are as follows:

3.1. Use of management judgements and estimates

Preparing the financial statements in accordance with the IFRS requires that Management make value judgements and estimates which affect the assets and liabilities, the revenues and expenses and the disclosure of contingent receivables and liabilities. These value judgments and estimates are based on the best information Management has as its disposal about the Group and the markets in which it operates and its experience relating to similar transactions or events, and are considered reasonable under the present circumstances. Any possible subsequent changes in current circumstances will be taken into account to revise these judgements and estimates if necessary. The actual results may differ from the estimated ones. Important accounting estimates about the Company and Group’s assets are those about the useful life and residual value of ships, given that they affect the financial statements to a significant degree (see accounting policy 3.5). Moreover, the recoverability of receivables, the evaluation that certain balances are bad debt, the formation of provisions about the recovery of receivables or other contingent liabilities require judgements and estimates which are also important, given that they can significantly affect the financial statements.



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3.2. Basis of consolidation

3.2.1. Subsidiaries

The Company’s consolidated financial statements are comprised of the financial statements of the parent company and its subsidiaries. These companies are directly or indirectly controlled by the parent company via its majority holding in their shares (see note 1) and control over their Boards of Directors. Subsidiaries are fully consolidated using the full consolidation method from the date on which control of them is acquired and they cease to be consolidated from the date on which such control no longer exists. Where required, the subsidiary’s accounting policies have been changed so that they are identical with those adopted by the parent company. Subsidiaries are valued in the parent company’s separate financial statements at acquisition cost less any impairment losses.

3.2.2. Inter-group transactions

Intra-group transactions (between companies in the Group), intra-group balances and unrealised profits from intra-group transactions are crossed out when preparing the consolidated financial statements. Unrealised losses are also crossed out unless the transaction shows indications of impairment of the asset transferred.

3.3. Conversion of items to foreign currency

The items in the financial statements are valued in the currency of the primary economic environment in which the Company operates (‘the functional currency’) which is the euro. Foreign currency transactions are translated into euro using the exchange rates prevailing at the dates of the transactions. On the date the financial statements are prepared, the assets and liabilities expressed in other currencies are computed at the exchange rates on those dates. Foreign exchange gains and losses which result are entered as financial income or expenses in the income statement depending on their nature (credit or debit financial differences).

3.4. Intangible assets

Intangible assets include (a) software licenses and (b) the cost of registering the Company’s trade mark. Software licenses and the trade mark are valued at acquisition cost less accumulated depreciation. Depreciation is recorded using the straight line method over the entire useful life of the assets, which has been set at 3 years for software and 10 years for the trade mark.

3.5. Tangible fixed assets

Tangible fixed assets are valued in the financial statements at acquisition cost plus interest for the construction period less accumulated depreciation and any impairment in their value, plus subsequent additions and improvements. The acquisition cost of fixed assets on 1.1.2005 (the date of transition to the IFRS) was computed as follows: a) Floating craft (ships) were valued at imputed cost in line with the provisions of IFRS 1. The fair value on the

transition date was taken to be the imputed cost, which was computed by an independent valuer and b) Other tangible assets were valued at historic acquisition cost. Depreciation of fixed assets was computed based on the straight line method and is presented in the income statement over the entire estimated useful life of the fixed assets. Company Management estimated the useful life and residual value of the fixed assets which are as follows: a) Estimate useful life



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Asset category Years Conventional ships (passenger – vehicle craft) 35 High speed catamaran (passenger, or passenger / vehicle craft) 25 Flying dolphins (passenger craft) 35 Ro/Ro ships (for trucks and vehicles) 35 Building installations on third party property 9 Machinery 6.67 Passenger cars 6.67 Trucks 5 Motorcycles 6.67 Furniture and other equipment 5 Computers 3.33

b) Residual value Residual value was only computed for ships at 20% of their acquisition cost. These estimates are re-examined at regular intervals and adjusted if necessary but are not expected to be changed over the next 12 months. When selling a tangible fixed asset the difference between the sale price and the carried value, less selling expenses, is entered in the results for the year in which the sale was made as a profit or loss from the sale of fixed assets.

3.6. Impairment of the value of non-current assets

The book value of non-current assets (tangible and intangible assets) is tested for impairment when events or changes in conditions indicate that their book value (carried cost) my not be recoverable. An impairment loss is recognised to the extent that the book value of the asset exceeds its recoverable amount and is entered in the income statement. The recoverable value is either the net sale price or the value in use, whichever is higher. The net sale price is the amount that can be taken into account from the sale of an asset in the context of a transaction in which the parties are fully cognisant and which they enter into freely, having deducted all additional direct selling costs for the asset, while the value in use is the current value of the estimated future cash flows expected to accrue to the enterprise from continuous use of an asset and from the revenue expected to be generated from its sale at the end of its estimated useful life.

3.7. Stocks / inventories

Stocks and inventories include merchandise and fuels – lubricants on ships. The cost of acquisition includes all expenses incurred for the inventories to reach their current location and status. On the balance sheet date, inventories are valued at acquisition cost or net realisable value which is lower. The net realisable value of fuels and lubricants on ships is the replacement cost.

3.8 Financial instruments

Financial instruments are any contract which creates a financial asset for one enterprise and a financial liability for another. The Company and Group only have non-derivative financial instruments which are receivables from customers and other receivables, financial assets available for sale, cash and cash equivalents (financial assets) and loans, liabilities to suppliers and other liabilities (financial liabilities). Non-derivative financial instruments are initially recognised in the financial statements at fair value (which coincides with the cost of the transaction) adjusted to the direct transaction costs when the Company and Group become contracting parties in a transaction involving those instruments.



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A financial asset ceases to be recognised in the financial statements when the Company and Group's contractual rights to the cash flows generated by the asset mature or when the asset is transferred to a third party, without retaining control or all the material risks or rewards associated with it. Purchases and sales of financial assets which are part of the normal business activity of companies in the Group are posted to the financial statements on the transaction date, in other words on the date of the transaction, i.e. the date on which it undertakes to purchase or sell the financial asset. A financial liability ceases to be recognised in the financial statements when the Company and Group's contractual liabilities deriving from it mature or are cancelled.

3.8.1. Trade and other receivables Receivables from customers and other receivables are measured at the value initially recognised (nominal value which coincides with fair value) less any provisions for amounts that cannot be collected. On every balance sheet date all delayed receivables or bad debts are assessed to determine the necessity to form a provision for bad debt or not. When it is clear that a balance will never be able to be collected it will be written off by reducing the provision for bad debt accordingly.

3.8.2. Available-for-sale financial assets

Available-for-sale financial assets are valued at fair value which is the stock exchange price on the balance sheet date. Any gains or losses are recognised in the fair value reserve in equity until they are sold off or it is recognised that there is a permanent impairment in their value, in which case the cumulated gain or loss which had previously been recognised in equity is transferred to the income statement.

3.8.3. Cash and cash equivalents

Cash and cash equivalents include cash on hand, sight deposits and short-term bank deposits of up to 3 months from the balance sheet date.

3.8.4. Borrowings Borrowings include bank loans and corporate bonds. All loans are initially recognised at cost which is the fair value of the consideration received, less the cost of taking out bank loans or the cost of issuing a corporate bond. After initial recognition, loans are valued at the carried amount using the effective interest rate method.

3.8.5. Liabilities to suppliers and other liabilities

Suppliers and other liabilities include trade and other liabilities. These are recognised at their nominal value which is considered to match their value fair unless the impact of the value of money over time is significant.

3.9. Provisions for employee benefits

Obligations to compensate staff (apart from the crew of ships) when they retire are computed at the present value of future benefits which are deemed to have accrued at the end of the year based on recognition of a right to employee benefits during the course of the expected employment relationship. These obligations are calculated based on the financial and actuarial assumptions which are made by an independent valuer and are specified using the actuarial valuation method called the projected unit credit method. The relevant provisions are included in other expenses in the administrative expenses account and selling expenses account and are the present value of benefits which became accrued during the year, interest on the benefit obligation, any cost of previous service and the actuarial gains or losses recognised during the year. Actuarial gains or losses which are not recognised in the case where they are over 10% of



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the estimated benefit provision during the year, are recognised over the average residual period of employment for active employees and included in the net cost of retirement for the year. As far as the crew of ships are concerned, based on the legislation currently in force, crew members do not accumulated compensation entitlement when they leave work due to dismissal or retirement and consequently the financial statements do not include a provision for such amounts.

3.10. Other provisions / Contingent liabilities and contingent assets

Provisions are recognised when the company and Group have current legal or presumed commitments as a result of incidents in the past, their clearance is likely via outflows and the level of the liability can be reliably estimated. Provisions are re-examined on the balance sheet date and are adjusted in order to reflect the current value of the expense which is expected to be required to settle the liability. Contingent liabilities are not recognised in the financial statements but are disclosed unless the likelihood of a resource outflow to settle them being low. Contingent assets are not recognised in the financial statements but are disclosed where the inflow of financial benefits is likely.

3.11. Income Tax (current and deferred)

Under the current legislation on the taxation of ships (Article 2 of Law 27/1975) owners of ships flying the Greek flag are exempt from income tax on the profits from operating their ships. Under the same law, ships are only subject to a special tax based on gross registered tonnage. This tax is deemed to be an income tax. Profits from non-shipping activities are taxed in line with the general income taxation provisions and under the applicable provisions the tax rate is 20% for 2012. The cost of current income tax therefore relates to the current ship tax pursuant to Law 27/1975 and the income tax on non-shipping activities which is computed in the manner specified in the provisions of Article 2 of law 27/1975. The Group and Company do not form provisions for any surtaxes and surcharges for open tax years and recognise any tax audit differences as income tax costs during the year in which the audit was completed. Deferred income tax is the tax which will be paid or recovered in the future for revenues or expenses incurred during a year, but which is deemed to be taxable revenues or deductible expenses in future years. Due to the special tax regime which applies to the Group’s Greek companies, no deferred tax is computed for the Company or the Group.

3.12. Operating Leases

Leases where the lessor transfers the right to use an asset for an agreed time period without transferring the risks and rewards of ownership of the asset are classed as operating leases. Payments made by the lessee for operating leases are recognised as expenses in the income statement over the duration of the lease. The parent company and Group operate as lessees in operating leases.

3.13 Revenue recognition Revenue includes the value of providing services and the value of the sale of goods, before VAT, withholdings payable to third parties, and net of discounts and returns. Revenue is recognised as follows: Income from fares



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The services provided primarily relate to the carriage of passengers and goods by sea and the revenues are the fares charged or the freight charged for chartering ships. Revenues from tickets are recognised at the time the trip for which the ticket has been issued is made, while income from chartering ships is recognised based on the accrual principle. Revenue from services related to services provided later are recognised in a liabilities account (prepaid expenses) and transferred to revenues for the period in which the services are actually provided. Income from sales onboard ship: Income from the sale of goods onboard ship is recognised when the goods are delivered, while income from services provided onboard ship (based on contracts with third parties who have been assigned the right to operate restaurants and ships onboard) is recognised based on the accrual principle in the context of the relevant contracts. Income from interest earned (financial income): Interest earned is recognised based on the time it accrues using the effective interest rate method. Income from dividends of shares available for sale (financial income): Income from dividends from shares is recognised in the income statement on the date distribution is approved.

3.14. Expenses recognition Maintenance and repair costs (cost of goods sold): Operating expenses are recognised in the results on an accrued basis. In line with this principle, the cost of repairs, maintenance and periodic inspections of the ship’s engines are recognised as follows:

a) The cost of maintenance and repairs carried out when ships are out of service each year is recognised in the year in which the cost was incurred after the end of the out of service period, allocated to periods of that year (Q1, Q2, Q3) based on the mileage sailed compared to the estimated mileage. b) The cost of periodic inspections of the ship’s engines which take place at regular intervals (3 to 6 years depending on the manufacturer’s specifications coupled with the number of hours in operation) are recognised in the relevant years based on the actual number of hours in operation each year. Interest payable (financial expenses): Interest payable is recognised when accrued using the effective interest rate method and includes interest from short-term and long-term loans. Interest payable when the loan relates directly to the acquisition or construction of a fixed asset until construction of the asset is completed is recognised in the acquisition cost of that fixed asset. The cost of borrowing is capitalised as part of the cost of the asset where it is likely that it will generate future financial gains for the enterprise which can be reliably estimated.



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4. Intangible and tangible assets

The Group and Company’s tangible and intangible asset accounts for the years 2012 and 2011 can be broken down as follows:



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The Group Floating craft MachineryPassenger &

other

vehicles

Furniture &

other

equipment

Intangible

assetsTotal

Acquisition cost on 01.01.11 436,508 69 29 4,532 2,300 443,438Additions during the period 0 0 0 58 6 64Disposals of the year (12,300) 0 0 (129) (20) (12,449)Impairments during year (3,000) 0 0 (3,000)Acquisition cost on 31.12.11 421,208 69 29 4,461 2,286 428,053Additions during the period 0 0 0 24 6 30Disposals of the year (19,254) 0 0 (44) 0 (19,298)Impairments during year (2,500) 0 0 0 0 (2,500)Acquisition cost on 31.12.12 399,454 69 29 4,441 2,291 406,285

Accumulated depreciation on 01.01.11 70,474 68 29 3,836 2,164 76,571Depreciation charge 17,747 1 0 194 71 18,013Disposals of the year (3,883) 0 0 (125) 0 (4,008)Accumulated depreciation on 31.12.11 84,338 69 29 3,905 2,235 90,576Depreciation charge 16,512 0 0 157 45 16,714Disposals of the year (9,699) 0 0 (42) 0 (9,741)Accumulated depreciation on 31.12.12 91,150 69 29 4,020 2,280 97,548

Carried amount on 31.12.11 336,870 0 0 556 52 337,478Carried amount on 31.12.12 308,304 0 0 421 12 308,737

The Company Floating craft MachineryPassenger &

other

vehicles

Furniture &

other

equipment

Intangible

assetsTotal

Acquisition cost on 01.01.11 393,791 69 29 4,330 2,152 400,371Additions during the period 0 0 0 54 6 60Disposals of the year (12,300) 0 0 (129) (20) (12,449)Impairments during year (3,000) 0 0 0 0 (3,000)Acquisition cost on 31.12.11 378,491 69 29 4,255 2,137 384,981Additions during the period 0 0 0 18 6 24Disposals of the year (19,254) 0 0 (45) 0 (19,299)Impairments during year (1,000) 0 0 0 0 (1,000)Acquisition cost on 31.12.12 358,237 69 29 4,228 2,142 364,706

Accumulated depreciation on 01.01.11 56,137 68 29 3,716 2,086 62,036Depreciation charge 13,873 1 0 181 31 14,086Disposals of the year (3,883) 0 0 (125) 0 (4,008)Accumulated depreciation on 31.12.11 66,127 69 29 3,772 2,116 72,113Depreciation charge 12,638 0 0 153 15 12,806Disposals of the year (9,699) 0 0 (42) 0 (9,741)Accumulated depreciation on 31.12.12 69,066 69 29 3,883 2,130 75,177

Carried amount on 31.12.11 312,364 0 0 483 21 312,868Carried amount on 31.12.12 289,171 0 0 345 12 289,528



The reductions in 2012 in the acquisition value and depreciation relate to sales of the ships Hellenic Sailor, Flying Cat 2 and Nefeli, which were completed in the year ended. The total price of sales was € 10,436,000 and the results of those sales were profits of € 878,000, which were included in the results from investing activities. The Group measures the values of ships on the balance sheet date. In order to determine the current value of ships, it takes into account the valuations prepared by independent firms of experts. Implementing the provisions of IAS 36, impairment of € 2.5 million was recorded for specific ships whose net book value at the end of 2012 was below their current value. The impairment was recorded in the results from investing activities in the statement of comprehensive income for the period 1.1-31.12.2102. Company Management estimates that after this impairment the book value of all the Group’s ships reflects their fair value on 31.12.2012. Ship mortgages have been registered for certain of the Group’s ships, for € 291,840,000 to secure the Group's long-term and short-term loan obligations.

5. Investments in subsidiaries

The parent company’s interests in subsidiaries and the relevant holdings as percentages are referred to in note 1. The value of interests in subsidiaries included in the Company’s financial statements is as follows:

31.12.12 31.12.11

Hellenic Seaways Cargo N.E. 14,000 15,500

Hellenic Seaways Management S.A. 0 0

World Cruises Holdings Ltd 9,698 10,698

Helcat Lines S.A. 7,951 5,745

Alpha Ferries Ltd 0 0

Betta Ferries Ltd 0 0

Vertino Shipping Company Limited 0 0

Total 31,649 31,943

The Company

The value of interests in subsidiaries in the parent Company’s financial statements on 31.12.2012 was € 31,649,000 down some € 293,000 compared to 31.12.2011 which was due to impairment of the value of the subsidiaries Hellenic Seaways Cargo N.E. (€ 1,500,000) and World Cruises Holdings Ltd (€ 1,000,000) and an increase in the share capital of Helcat Lines S.A. by € 2,207,000. Company Management considers that the impaired value of the said subsidiaries reflects their fair value on 31.12.2012. The impairment loss is included in the results from investing activities.

6. Other non-current assets

The Group and Company’s other non-current assets relate to guarantees for rent, electricity, the Piraeus Port Authority, and so on.



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31.12.12 31.12.11 31.12.12 31.12.11Other non-current assets 151 151 148 148

Total 151 151 148 148

The CompanyThe Group

7. Stocks / inventories

The stocks / inventories of the Group and the parent company primarily relate to fuels and lubricants. The Company and Group’s stocks / inventories can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Goods 162 222 156 217

Fuel and lubricants 2,152 2,787 1,442 1,692

Total 2,314 3,009 1,599 1,910


8. Receivables from customers

The Group and parent company’s receivables from customers relate to trade receivables from associated shipping agents, travel agencies, and carriers from issuing tickets and bills of lading. Group and company receivables can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11Customer balances 27,739 28,669 20,790 21,514Cheques receivable 1,425 2,618 884 1,973Less: Provision for bad debt (9,656) (9,159) (6,067) (5,955)Total 19,509 22,128 15,607 17,532


The fair value of these receivables matches their book value. Likewise maximum exposure to credit risk, without taking into account the guarantees received, does not differ from the book value of the receivables. The provisions formed for bad debt for the Group and Company’s customer receivables for 2012 and 2011 can be broken down as follows:


Balance on 01.01.11 9,044 6,468Provision for period 763 135

Reversal of provisions due to bad debt (200) (200)

Reversal of provisions due to compromises (448) (448)Balance on 31.12.11 9,159 5,955Provision for period 507 122

Reversal of provisions due to bad debt (10) (10)Balance on 31.12.12 9,656 6,067 The provision formed is considered to be adequate to cover possible cases of receivables not being recovered. The following collateral has been obtained to secure customer receivables:



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31.12.12 31.12.11 31.12.12 31.12.11Guarantee letters / bonds 2,430 2,668 1,890 2,273Cheques as guarantees 11,706 12,028 8,786 9,118Total 14,136 14,696 10,676 11,391


9. Other receivables and other current assets

The Group and Company’s other receivables and other current assets for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Other receivables 10,833 9,385 10,448 8,816

Short-term receivables from

affiliates 0 0 8,191 10,604

Prepaid expenses 2,108 1,574 1,693 1,190

Non-current receivables from currently earned income22 622 12 582Less: Provision for bad debt (7,692) (7,692) (7,692) (7,692)

Total 5,271 3,889 12,652 13,500


The Group’s ‘prepaid expenses’ account on 31.12.2012 consisted of (i) maintenance and repair costs of € 501,000, ii) ship insurance premiums of € 1,591,000 and iii) other expenses of € 16,000 imputable to the 2013 fiscal year. All the above receivables are short-term and their fair values match their book value. Likewise maximum exposure to credit risk for other receivables does not differ from the book value of those receivables. The provisions formed for bad debt for the Group and Company’s other receivables for 2012 and 2011 can be broken down as follows:


Balance on 01.01.11 7,692 7,692

Provision for period 0 0

Reversal of provisions 0 0

Balance on 31.12.11 7,692 7,692

Provision for period 0 0

Reversal of provisions 0 0

Balance on 31.12.12 7,692 7,692 The provision formed is considered to be adequate to cover possible cases of the specific receivables not being recovered.

10. Available-for-sale financial assets

On 31.12.2012 there were no available-for-sale financial assets. The Company held 11,000 shares in Lesvos Maritime Co. S.A. whose value was almost zero.



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11. Cash and cash equivalents

The Group and Company’s cash and cash equivalent accounts for the years 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Cash on hand 15 21 11 18Bank Deposits 896 2,017 698 1,878

Total 911 2,038 709 1,896


12. Share capital and premium on capital stock

The Parent Company’s share capital stands at € 194,038,000 divided to 77,615,000 shares with a nominal value of € 2.50 each. All shares in the Parent Company afford the same rights to dividends and represent one vote at the General Meeting of Shareholders in the Parent Company. The premium on capital stock was formed during Parent Company share capital increases where the issue price was above the nominal price. After various capitalisations of the premium on capital stock which took place before 2005, the balance of this account is now € 9,376,000.

13. Other reserves

The Group and Company’s other reserves accounts for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Statutory Reserve 2,700 2,700 2,700 2,700Fair value reserves (13) (13) (13) (13)Total 2,687 2,687 2,687 2,687


Statutory Reserve: This reserve is formed based on a mandatory withholding of 5% of the parent company's net profits each year before profit distribution in line with the provisions of Codified Law 2190/1920 until the reserve reaches 1/3 of the share capital. Fair value reserves: This relates to impairment losses of the trade portfolio of shares in NEL S.A. which the company held on 31.12.2012, and reduces the value of the other reserves.

14. Retained earnings

The Group and Company’s retained earnings accounts for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Balance brought forward(32,695) (3,172) (15,514) 6,304

Profits/(Losses) carried forward (34,896) (29,523) (29,085) (21,818)

Total (67,591) (32,695) (44,599) (15,514)


The Company’s retained earnings include € 2,278,000 which comes from the adjustment in the value of a ship belonging to the Group, which will remain in this specific account as long as the Group owns the ship.



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15. Long-term bank liabilities

The Group and Company’s long-term corporate bonds for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Corporate bonds 144,431 134,835 144,431 134,835Less: Short-term portion of corporate bonds (133,021) (23,085) (133,021) (23,085)Total 11,410 111,750 11,410 111,750


Note that the statement of financial position as at 31.12.2012 reclassified € 133,021,000 of the parent company's long-term loans as short-term bank liabilities in line with paragraph 74 of IAS 1 given that on that date the covenants of the relevant loan agreements concerning servicing of the loans were not met. Based on those loan agreements, failure to service the loans is a breach of covenant which requires the Company to repay the loan in full. However, the Group’s Management team is in discussions with lenders to agree a restructuring of the repayment terms of all long-term loans and considers that an agreement will be achieved in the near future. In 2007 the company issued two corporate bonds which were used to finance its investment plan and to refinance previous bank loans. The first corporate bond (the bondholders’ representative is the National Bank of Greece) was for € 154 million while the second (the bondholders' representative is AEGEAN BALTIC BANK S.A.) was for e 23,284,000. Both corporate bonds are for 10 years and have a floating rate (Euribor) plus a spread. On 1.11.2010 a 3-year corporate bond for € 10 million was agreed with Proton Bank. On 23.2.2012 the company concluded a 4-year corporate bond agreement with National Bank of Greece for € 8 million. The change in capital repayments for these long-term loans is shown below:


Payments between 2 and 5 years 11,409,998 11,409,998

Ship mortgages have been registered for certain of the Group’s ships, for € 291,840,000 to secure the Group's long-term and short-term loan obligations.

16. Provisions for employee benefits and other provisions

The change in the liability to compensate retiring staff can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11Balance at start of period 1,346 1,178 1,249 1,097Compensation paid (279) 0 (279) 0Additional provisions for year 210 168 199 152Balance at end of period 1,277 1,346 1,169 1,249


The provisions recognised in the year are included in other expenses in the administrative expenses and selling expenses accounts. The aforementioned cumulated provision relates to the Group’s employees other than the crew of ships since the existing legislation states that they do not amass compensation entitlement in the case where they leave work because of dismissal or retirement.



34

The Group and Company’s obligations (see note 3.9) in this regard were computed based on an actuarial study prepared by a firm of independent actuaries. The main actuarial assumptions used are as follows: Discount Rate : 3.7% on 31.12.2012 Average annual rate of inflation : 2 % Average annual long-term rise in pay: 0 % Expected average residual Working life on 31.12.2012 : 12.33 years Management of both the Company and Group consider that the above provision for seafarers’ receivables is sufficient to cover any costs which are expected to arise (see note 33.1(g)). The Group and Company’s other provisions of € 187,000 relate to (a) provisions of € 142,000 for seafarer’s receivables and (b) provisions of € 45,000 for other expenses. In the year ended provisions of € 50,000 were formed which were included in the payrolling and other expenses of crews account under the Cost of Goods Sold (see note 21) and € 45,000 which was included in Other Expenses.

17. Suppliers and other liabilities

The Group and Company’s suppliers and other liabilities accounts for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11Supplier balances 14,051 20,144 8,777 15,135Cheques payable 1,428 2,975 1,290 2,873Customer down payments 523 544 509 494Amounts due from taxes / duties 4,790 2,474 4,176 2,143

Debts to social security providers 2,652 1,851 2,494 1,715Dividends payable 232 640 232 640Sundry creditors 8,813 5,014 7,299 4,274Obligations to subsidiaries 0 0 15 526Total 32,490 33,642 24,792 27,799


The fair value of these liabilities matches their book value. Liabilities to suppliers are on average payable within 2 months from the balance sheet date.

18. Short-term bank liabilities

The Group and Company’s short-term bank liabilities (including the short-term part of long-term loans and the part of the long-term loans which was reclassified) for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Short-term portion of corporate

bonds 132,414 23,085 132,414 23,085Short-term bank liabilities 13,597 20,110 13,597 20,110Total 146,010 43,195 146,010 43,195




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Short-term bank loans have been obtained and used as working capital. Ship mortgages have been registered for certain of the Group’s ships, for € 291,840,000 to secure the Group's long-term and short-term loan obligations.

19. Accrued expenses and Prepaid expenses

The Group and Company’s accrued expenses and prepaid expenses accounts for 2012 and 2011 can be broken down as follows:

31.12.12 31.12.11 31.12.12 31.12.11

Unearned and deferred income 611 524 611 524

Accrued expenses 6,398 4,690 6,212 4,552Total 7,009 5,214 6,823 5,076


20. Turnover (sales)

The Group and Company’s turnover accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Income from fares 106,943 142,641 87,150 127,400

Income from sales onboard ship 3,268 1,031 3,234 1,018

Other income 1,208 646 1,133 628Total 111,419 144,318 91,517 129,046


21. Cost of goods sold

The Group and Company’s cost of goods sold accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Payrolling and other crew expenses 26,406 33,217 23,602 30,222

Fuels and lubricant 55,079 59,501 43,590 48,353

Repairs, maintenance, spare parts and pay for

technicians 6,677 10,781 5,773 9,442Port expenses 4,307 4,040 3,173 2,408Insurance premiums 4,057 4,425 3,422 3,528Other expenses 6,966 8,993 4,591 6,292Depreciation 15,017 17,870 12,681 13,960Total 118,509 138,828 96,833 114,206




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22. Other operating income

The Group and Company’s other operating income accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Commission for third parties on tickets 149 357 139 357Income from grants and subsidies 9 393 9 393Other income 2,473 2,390 2,155 1,634Total 2,631 3,140 2,303 2,384


23. Administrative expenses

The Group and Company’s administrative expenses accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Payrolling and other staff expenses 4,773 5,758 4,318 5,255Third party fees and expenses 1,184 1,528 1,009 1,292Other expenses 1,254 1,441 1,218 1,381

Depreciation 72 91 72 91Total 7,283 8,818 6,617 8,019


24. Research & Development Expenses

The Group and Company’s R&D expenses accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.10

31.12.10

Payrolling and other staff expenses 39 88 39 88

Other expenses 4 1 4 1

Total 43 89 43 89


25. Selling expenses



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The Group and Company’s selling expenses accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.10

31.12.10

01.01.12

31.12.12

01.01.10

31.12.10

Payrolling and other staff expenses 2,209 2,233 1,798 1,820

Third party fees and expenses 94 89 94 53

Sales commission 5,646 7,629 5,031 7,104

Advertising and promotion expenses 63 358 63 358

Other expenses 377 337 307 253

Provisions for impairment of customer bad debt 0 250 0 46

Depreciation 39 52 29 35Total 8,427 10,948 7,322 9,669


26. Other operating expenses

The Group and Company’s other operating expenses accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Provision for impairment of bad debt 507 517 122 139

Other expenses 3,881 200 745 128

Provisions for crew back-pay 0 504 0 487Total 4,388 1,221 867 754


27. Financial income

The Group and Company’s financial income accounts for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.10

31.12.10

Credit Interest 259 130 259 130

Foreign exchange gains 171 142 131 93Total 431 272 390 223


28. Financial expenses

The Group and Company’s financial expenses accounts for 2012 and 2011 can be broken down as follows:



38

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11Interest charges 8,466 9,566 8,466 9,566

Other financial expenses 310 425 297 353

Foreign exchange differences (debit) 218 147 131 113Total 8,994 10,138 8,894 10,032


Other financial expenses include bank commission and charges for issuing guarantee letters and for settling credit card sales, and the cost of loans which primarily relates to the annual depreciation of the cost of loans (or the cost of issuing corporate bonds) which is computed using the straight line method over the term of those loans.

29. Results from investing activities

The results from the Group and Company’s investing activities 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Profits/ (losses) from sale of assets 811 (4,159) 811 (4,159)

Ship impairment losses (2,500) (3,000) (1,000) (3,000)

Holdings impairment losses 0 0 (2,500) (3,500)

Total (1,689) (7,159) (2,689) (10,659)


During the year the ships the Hellenic Sailor, Flying Cat 2 and Nefeli were sold generating profits of € 878,000 which were included in the gains / (losses) from the sale of assets. Moreover, the gains / (losses) from the sale of assets included expenses of € 67,000 which related to losses incurred from liquidating subsidiaries. Moreover, based on Management’s estimates, impairment testing of the value of ships and investments in the parent company's subsidiaries indicated that it was necessary to apply impairments of € 1 million and € 2.5 million respectively for 2012.

30. Income tax

The parent company and its subsidiaries are not subject to income tax on the profits generated by operating ships but are subject to a tax based on the gross registered tonnage of their ships in line with Law 27/1975 and income tax on non-shipping activities (see note 3.11). The income tax shown in the Group and Company’s income statements for 2012 and 2011 can be broken down as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Income tax on non-shipping activities 0 0 0 0Tax under Law 27/1975 43 53 30 44Total 43 53 30 44


All companies in the Group have been audited by the tax authorities up to and including 2006. The tax audit differences which arose were recognised in 2007. The outcome of the tax audits for the open tax years from 2007 to 2011 inclusion for the parent company and 2007 to 2012 inclusive for the subsidiaries cannot be forecast at present and consequently no provision for them has



39

been made in the financial statements. It is estimated that the amount which will arise will not materially affect the financial statements. During the 2012 fiscal year, the parent company underwent a tax audit by certified public accountants as required by the provisions of Article 82(5) of Law 2238/1994. That audit is underway and the relevant tax certificate is expected to be issued after the 2012 financial statements are published. However, no significant tax liabilities are expected to arise.

31. Earnings per share net of tax

The earnings per share net of tax are computed by dividing the results net of tax corresponding to shareholder sin the parent company by the weighted number of shares in circulation during the year and can be broken down as follows for 2012 and 2011:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Profits / (losses) net of tax corresponding to parent

company shareholders (34,896) (29,523) (29,085) (21,818)Weighted number of shares 77,615,000 77,615,000 77,615,000 77,615,000Basic earnings / (losses) net of tax per share (0.4496) (0.3804) (0.3747) (0.2811)


32. Dividends

The provisions of the legislation of societes anonyme (Codified Law 2190/1920) states that companies are obliged to distribute an initial dividend every year which corresponds to at least 35% of their profits net of tax, having first deducted the amount required for the statutory reserve. In 2012 tehre was no issue of distributing a dividend because of losses.

33. Contingent liabilities and assets

33.1. Contingent liabilities

There are no disputes pending before the courts or arbitration panels or other liabilities relating to the Cop may or Group which could have a major impact on their financial status other than those listed below: (a) 3 actions pending lodged by companies owned by K. Agapitos relating to the guarantee provided for the price of the Company’s share in favour of the persons who registered to take part on the share capital increase when his ships were transferred to the Company in December 1999, which were rejected at first instance. The Company has already won similar cases in judgements handed down by the Hellenic Supreme Court. (b) The company Rabbit Company S.A. (owned by K. Agapitos) has filed an action against the Company claiming € 5.9 million for the alleged failure to hand over shares in the said company during the Company’s share capital increase in 1999. The action was rejected at first instance and an appeal was filed by the other side against that judgement. We are still awaiting a judgement to be handed down and the result is expected to be favourable to the Company. (c) the Company European Shipping Agents Ltd has filed 3 actions against the Company claiming a total of € 4.6 million in relation to the alleged ownership of the booking system MINOWIDE used by the company in 2000 and 2001 and the Company’s cross-action against European Shipping Agents Ltd on that matter is still pending. The Company has not formed a provision for this since it considers that it will be vindicated by the competent courts.



40

(d) The Maritime Recruitment Service has imposed a fine of € 1.56 million on the Company for non-manning its ships in the winter of 1999-2000. The Company has filed administrative appeals against all those decisions. One fine of € 0.28 million has been cancelled by a final court judgement and the petition for cassation filed by the NAT Fund before the Council of State is pending, while 8 other decisions imposing fines worth a total of € 0.82 million have been cancelled by decisions of the Council of State. Another 5 similar cases of fines totalling € 0.70 are pending before the same court, one part of which (€ 0.25 million) was subsequently cancelled by the Maritime Recruitment Service itself. (e) Hellenic Competition Commission decision No. 210/ΙΙΙ/2002 imposed a fine of € 1.8 million on the company for failing to notify a concentration of undertakings in the coastal shipping sector in 1999 and going ahead with the concentration. The company filed an administrative appeal before the Administrative Court of Appeal which reduced the fine to € 0.9 million which the Company paid (plus interest of € 0.15 million). Counter-petitions for cassation were filed before the Council of State by the Company and the Greek State against the Court of Appeal judgement and the Council of State rejected the Greek State’s petition for cassation and accepted the Company’s and referred the case to the Administrative Court of Appeal to be tried again. (f) The Corinth Port Authority has confirmed alleged debts of € 0.79 against companies in the Group for transit fees at the Port of Corinth and the Company has lodged administrative appeals before the Corinth Administrative Court of First Instance and those matters are still pending. The Company has not formed a provision for this since it considers that it will be vindicated by the competent courts. (g) Actions are pending against the Group for claims by seafarers totalling € 1.6 million. It is the Group’s standard practice to make provision based on the estimates of its legal advisors handling these cases concerning the final outcome of each case given that the large number of court rulings which have been handed down in the past in similar cases have awarded amounts below the amounts requested. For this reason the Group has made a provision in its balance sheet for € 142,000 in relation to the said claims, which it considers is adequate to cover any burden which may arise from these actions. On 31.12.2012 there were also bank guarantee letters in effect to secure the Group’s liabilities arising from its normal operations (having been issued in favour of port authorities, the Piraeus Port Authority and the NAT Fund) which amount to € 1,146,000.

33.2. Contingent assets

The Company has filed an action against the Greek State to have € 6.6 million paid to it from discounts imposed by a ministerial decision on the carriage of certain categories of passengers in 2003. The hearing of this case is still pending.

34. Transactions with related parties

34.1 Receivables / liabilities involving related parties

The balances (receivables / liabilities) involving related parties on the balance sheet dates were as follows:



41

31.12.2012 31.12.2011 31.12.2012 31.12.2011

ReceivablesReceivables from subsidiaries 0 0 8,191 10,604

Receivables from other related parties 9,945 13,199 9,945 13,199

Total 9,945 13,199 18,136 23,803

Liabilities

Liabilities to subsidiaries 0 0 15 526

Liabilities to other related parties 31 332 32 332

executives 280 41 230 59

Total 311 373 276 917


The 2012 fiscal year includes among the liabilities of members of the BoD and management executives, the fees of all company managers, while in 2011 only the fees of the key executives had been included.

34.2. Purchases – sales involved related parties

Purchases and sales involving related parties in 2012 and 2011 were as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Purchases

Purchase of goods and services from subsidiaries 0 0 279 0

Purchases of goods and services from other related parties 170 726 170 726Total 170 726 449 726

Sales

Sales of goods and services to subsidiaries 0 0 61 4,799

Sales of goods and services to other related parties1,716 10,840 1,716 10,840

Total 1,716 10,840 1,777 15,639


Transactions between companies in the Group are priced on an ‘at arm’s length’ basis.

34.3. Fees of members of the Board of Directors and key executives The gross pay and remuneration of members of the Board of Directors and key executives of the Group and Company for 2012 and 2011 are as follows:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Pay and remuneration for Board members 504 505 504 505Pay for key management executives 1,208 532 1,091 415Total 1,712 1,037 1,595 920


The figures for 2012 include the fees for all company managers whereas in 2011 they only include the fees of key executives.



42

35. Financial risk management

The Company and Group are exposed to financial risks such as credit risk, liquidity risk and market conditions risks (fluctuations in interest rates, foreign exchange rates and fuel prices). For that reason Company and Group management seek to minimise those risks via a risk management programme. At the same time Management implements policies to manage capital risk to ensure that the Company and Group can continue to operate without problems in the future and to ensure a satisfactory divided is paid to shareholders. This note contains information about the Company and Group’s exposure to each one of the above risks and also about the objectives, policies and procedures implemented by Management to measure and manage risks.

35.1. Credit risk

The Company and Group estimate that credit risk is low given that there is a satisfactory spread of receivables from customers in the coastal shipping sector. In addition the company’s administrative services implement strict credit control procedures which include setting a specific credit limit and payment terms per customer, and bank guarantee letters have also been obtained as collateral for larger receivables. As far as ship freight is concerned, there is a higher concentration of receivables, however the credit risk remains low since the largest receivable (50% of the Group’s receivables from customers) relates to the associates ANEK and AEGEAN SEA which the company concluded an interest-bearing debt repayment agreement after negotiations.

35.2. Liquidity Risk

Liquidity risk because of the decline in financials and the serious restriction in the ability to borrow from banks has significantly increased compared to previous years. In order to avoid the possibility of a lack of adequate liquidity, Management ensures that there are bank credit facilities available to meet urgent needs in periods of low liquidity. However, one cannot rule out the possibility of one or more of the covenants in the Group’s loan agreements being violated, which could have material negative repercussions on its business activity, its operating results, its cash flows and the Group’s financial situation overall. Given that the parent company did not meet covenants in certain loan agreements on 31.12.2012 relating to the servicing of loans, part of the long-term loan portfolio was reclassified in the statement of financial position as short-term bank liabilities. The Group’s Management Team is in contact with lending banks in order to agree a restructuring of the repayment terms of all long-term loans. The discussions are underway and a positive outcome will bolster Company liquidity because the payment of instalments will be rolled into the future, the repayment term will be extended and the financial cost may be reduced. Moreover, in order to bolster working capital the Group’s Management team has already taken a series of measures such as further curtailing operating costs, restructuring the fleet and taking ships off routes, shifting the payment of trade liabilities to a subsequent date and is also examining the case of selling off some ships.

35.3. Market conditions risk

The Group’s long-term and short-term loans are in euro with a Euribor floating rate plus a spread. Consequently the Group is exposed to a risk of fluctuating interest rates since if those rates risk, it will have higher interest to pay. For example, a 1% annualised change in the interest rate would impact on the Group’s results and equity by € 1.6 million. The Company and Group are exposed to the risk of an increase in the price of fuel given the significant role played by fuel costs in operating costs. An increase or reduction of 1% in the price of fuel each year impacts on results and the Groups net worth by € 0.55 million. Consequently, any increase in fuel prices is expected to have materially adverse impacts on the Group’s financial results, cash flows and financial situation.

35.4. Capital Management

The Company and Group’s objective when managing capital is to ensure the ability to continue operations to ensure adequate yields for shareholders and benefits for other stakeholders associated with their operations. In order to retain



43

or adjust the capital structure the Company and Group can adjust the amount of dividends payable, can return capital to shareholders, issue new shares or sell off assets. Group Management controls and monitors its capital adequacy based on the gearing ratio which is computed by deducting total debt (total liabilities) from total capital employed (total equity and liabilities). Management’s objective is to ensure that this ratio over the long term stays before 60% (0.6) for the Group, which is a very satisfactory level for a capital intensive group. This ratio was as follows for the Company and Group on the balance sheet dates:

01.01.12

31.12.12

01.01.11

31.12.11

01.01.12

31.12.12

01.01.11

31.12.11

Total liabilities 198,382 195,287 190,391 189,211Total equity and liabilities 336,891 368,692 351,892 379,797

Gearing ratio 0.59 0.53 0.54 0.50


36. Events after the balance sheet date

At the beginning of 2013 the Company took out a short-term loan and also signed agreements to charter the ships HELLENIC WIND and EXPRESS SANTORINI abroad, moves which bolstered its liquidity. At the same time it signed a 3-year partnership agreement with Cosmote to advertise it on the company’s high-speed boats. Tehre are no other events after 31.12.2013 which could materially affect the Group and Company’s financial position or results, or which need to be reported in the notes to the financial statements.

Piraeus, 24 May 2013

The Chairman of the Board The 1st Vice-Chairman

Ioannis I. Vardinogiannis Antonios V. Agapitos ID Card No. Π966572 ID Card No. Π577380

The CFO The Chief Accountant

Nikolaos D. Artemis Androula N. Portidou ID Card No. ΑΚ 004796 ID Card No. ΑΚ 574970

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