Consolidated Financial Statements - Minoan Lines

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MINOAN LINES SHIPPING S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENS (Amounts expressed in thousands of drachmae unless otherwise stated) General Business Information The Company, Minoikes Grammes A.N.E. ("Minoan Lines Shipping Societe Anonyme") was established on May 15, 1972 as a "popular based" company under Greek law. The Company started operations by acquiring and operating one vessel (ferryboat) on the Piraeus-Heraklion route. Currently the Company is engaged in a number of different activities either directly, or through subsidiaries and associated companies. The Company's principal activities comprise the operation of four conventional ferries and three High Speed ferries in two principal markets: the Adriatic Sea routes between Italy and Greece and the domestic routes connecting the Island of Crete with two major parts of the mainland, Piraeus and Thessaloniki. The Company's other activities include one day cruises through its subsidiary, Minoan Cruises S.A., telecommunications network services including internet provider services through its associated company, Forthnet S.A., purchasing and selling of currencies to passengers on board the Company’s ferries through its wholly owned subsidiary, Minoan Change S.A., and operation of private air couriers through its associated company Aegean Airlines S.A. In 1999, the Company’s associate, Minoan Flying Dolphins S.A., acquired the majority of the ferry operators of the Aegean Sea thus becoming the biggest ferry operator in the world. It owns 76 vessels including 29 hydrofoils, 8 fast ferries (Catamarans), 4 Ro-Ro vessels and 35 conventional ferries. Minoan Flying Dolphins is preparing its application for an initial public offering on the Athens Stock Exchange. The Company has been listed on the Athens Stock Exchange since May 1998. 1. Significant Accounting Policies The financial statements have been prepared in accordance with International Accounting Standards. The most significant accounting policies adopted are as follows: (a) Basis of preparation The financial statements are presented in drachmae, rounded to the nearest thousand. The consolidated financial statements are prepared on the historical cost basis except that the investment held for trading purposes and investments available for sale are stated at fair value. The accounting policies have been consistently applied by and are consistent with those used in the previous year. (b) Basis of consolidation (i) Subsidiaries Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases (refer to Note 18). 7
MINOAN LINES SHIPPING S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENS (Amounts expressed in thousands of drachmae unless otherwise stated) (ii) (iii) (iv) Associates Associates are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence effectively commences until the date that significant influence effectively ceases (refer to Note 5). Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Company’s interest in the enterprise. Unrealised gains resulting from transactions with associates are eliminated against the investment in the associate. Unrealised losses are eliminated in the same way as unrealised gains except that they are eliminated to the extent that there is no evidence of impairment. Other Non-Current Investments Other non-current investments held by the Company are stated at cost. (c) Significant subsidiaries Country of Incorporation Ownership Interest 1999 Ownership Interest June 30,2000 Minoan Cruises S.A. Greece 53.71% 53.71% Minoan Change S.A. Greece 100% 100% Minoan Lines High Speed Ferries S.A. Greece 57.46% 57.46% Cretan Philoxenia S.A. Greece 99.95% 99.99% (d) Foreign currency translation The Company's functional currency is the Greek drachma. Transactions involving other currencies are converted into Greek drachmae using the exchange rates, which are in effect at the time of the transactions. Monetary assets and liabilities, which are denominated in foreign currencies at the balance sheet date are translated to drachmae at the exchange rate ruling at that date. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated to drachmae at the exchange rate ruling at the dates of the transaction. Gains or losses resulting from foreign currency transactions are reflected in the accompanying consolidated statements of income. (e) Vessels and related depreciation Vessels are stated at historical cost, which consists of the contract price, any material expenses incurred upon acquisition, reconstruction costs and borrowing costs incurred during construction or reconstruction periods. Subsequent expenditures for conversions and improvements are also capitalised when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise they are charged to operations as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the vessels (thirtyfive years) after taking into consideration the estimated salvage value of the vessels (calculated at 20% of the original cost of the vessel). 8
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Consolidated Financial Statements - Minoan Lines

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