STATEMENT OF BOARD OF DIRECTORS... 3 REVIEW REPORT ON INTERIM FINANACIAL INFORMATION... 4 SEMI ANNUAL REPORT OF THE BOARD OF DIRECTORS...

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2 CONTENTS STATEMENT OF BOARD OF DIRECTORS... 3 REVIEW REPORT ON INTERIM FINANACIAL INFORMATION... 4 SEMI ANNUAL REPORT OF THE BOARD OF DIRECTORS... 6 INTERIM SEPARATE & CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF FINANCIAL POSITION STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOW INFORMATION AND EXPLANATORY NOTES ON THE INTERIM FINANCIAL STATEMENTS OF THE PERIOD General information for the Company and the Group Preparation basis of the financial statements and accounting principles Seasonal nature of business activities Segmental information Fixed assets Financial assets at fair value through profit & loss Cash and cash equivalents Long term bank borrowings Other long term liabilities Earnings / (losses) per share Income tax Balances and transactions with related parties Commitments Contingent liabilities /receivables - litigious disputes or disputes in arbitration Adjustments and reclassifications Post balance events DATA & INFORMATION FOR SEMI-ANNUAL PERIOD The attached semiannual financial report has been prepared according to article 5 of the law 3556/2007 and has been approved for publishing by the Board of Directors of the parent company at the date of 29 th September 2016 and is disclosed in the web address of the Company The attached semi annual financial report has been translated from the Greek original version. ANEK LINES S.A No of G.E.C.R.: KARAMANLI AVE., CHANIA, CRETE TEL. : , FAX: info@anek.gr 2

3 S t a t e m e n t s o f B o a r d o f D i r e c t o r s STATEMENT OF BOARD OF DIRECTORS (according to article 5 par.2 of Law 3556/2007) The members of the Board of Directors of ANEK SA: - Georgios Katsanevakis, Chairman, - Ioannis Vardinoyannis, Managing Director - Spyridon Protopapadakis, Senior Vice-Chairman as assigned hereby represent that, to the best of our knowledge: a) the semi-annual financial statements (separate and consolidated) for the period 1 st January 2016 to 30 th June 2016, prepared according to the applicable International Financial Reporting Standards, present truly and fairly the assets and liabilities, the equity and the financial results of the Company ANEK LINES SA, as well as of the consolidated companies according to paragraphs 3 to 5 of article 5 of Law 3556/2007, and b) the semi-annual enclosed Report of Board of Directors presents fairly the information required according to paragraph 6 of article 5 of Law 3556/2007. Chania, September 29 th 2016 The Chairman The Managing Director The Senior Vice-Chairman GEORGIOS G. KATSANEVAKIS IOANNIS I. VARDINOYANNIS SPYRIDON I. PROTOPAPADAKIS ID Card No. AI ID Card No. Π ID Card No. AA

4 R e v i e w r e p o r t o n i n t e r i m f i n a n c i a l i n f o r m a t i o n REVIEW REPORT ON INTERIM FINANCIAL INFORMATION To the Shareholders of the Company ANEK LINES S.A. Introduction We have reviewed the accompanying condensed separate and consolidated statement of financial position of the Company ANEK LINES A.E. as at 30 June 2016 and the relative condensed separate and consolidated statements of comprehensive income, changes in equity and cash flows for the six-month period then ended, as well as the selected explanatory notes, that constitute the condensed interim financial information, which is an integral part of the six-month financial report under the L. 3556/2007. Management is responsible for the preparation and presentation of this condensed interim financial information, in accordance with International Financial Reporting Standards, as adopted by the European Union (EU) and which apply to Interim Financial Reporting (International Accounting Standard IAS 34 ). Our responsibility is to express a conclusion on this condensed interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard IAS 34. Emphasis of Matters We draw your attention to: a) note (14) to the interim financial information where reference is made to the maritime incident of the chartered ship Norman Atlantic that occurred in December The incident, which is insured by an international Mutual Insurance Co-operative, is still under investigation and, therefore, reasonable uncertainty exists as to its progress and its contingent effects on the financial statements of the Group. b) note (2) to the interim financial information and in particular to the fact that the working capital of the 4

5 R e v i e w r e p o r t o n i n t e r i m f i n a n c i a l i n f o r m a t i o n Group is negative by Euro 261,13 mil., the capital adequacy of the Group has worsened significantly and are applicable for the Company the provisions of the article 48 of cod. L. 2190/1920, while exist overdue liabilities to banks. The above facts in conjunction with the overall adverse conditions and restrictions in Greek economy, indicate the existence of material uncertainty in respect of the Group s ability to continue unhindered in operation as a going concern. In note (2) to the interim financial information reference is made to the measures taken or planned by the management in order to ensure the Group s continuation in operation as a going concern. Our conclusion is not qualified in respect of these matters. Report on Other Legal and Regulatory Requirements Our review did not identify any inconsistency or mismatching of the other data of the provided by the article 5 of L. 3556/2007 six-month financial report with the accompanying condensed interim financial information. Athens, September 29 th 2016 The Certified Public Accountants KONSTANTINOS EM. ANTONAKAKIS Institute of CPA (SOEL) Reg. No Konstantinos Ath. Arampatzis Institute of CPA (SOEL) Reg. No Certified Public Accountants Member of Crowe Horwath International 3, Fok. Negri str., Athens Registry Number SOEL 125 5

6 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s SEMI ANNUAL REPORT OF THE BOARD OF DIRECTORS The attached report of the Board of Directors of ANONIMI NAFTILIAKI ETAIREIA KRITIS S.A. was prepared according to article 5 of law 3556/2007 and the decision 7/448/ of the Hellenic Capital Committee and regards the interim separate and consolidated financial statements as of 30 June In the attached report is included information regarding the business activities of the Group and the Company, the financial position, the financial results and the significant events during the first half of Additionally, the report includes the main risks and uncertainties that the Company may face in the second semester of the year and the most significant related party transactions. Ι. OVERVIEW OF ACTIVITIES & FINANCIAL POSITION ANEK Group in the fiscal year 2015 returned to profitability, while in the first half of 2016 has further improved its financial results in relation to the corresponding period of previous year. Through a more effective management of vessels and itineraries has been achieved increase in turnover and simultaneous decrease in cost of sales. Additionally, the variation of international oil prices at a relatively lower level compared to previous years is a factor that supports the passenger shipping sector to continue on the path of recovery that began in the previous fiscal year. It is noted that the contribution of the Greek coastal shipping in GDP is very significant, with a crucial role since, in many cases, is the only connecting link between the continental and the island region of Greece. The coastal shipping companies activity is characterized by strong seasonality, which has an impact on revenue and results of the interim financial statements. Higher sales of Group are recorded in the third quarter of each year and are not reflected in the current financial statements, and thus the operating results for the first semester are not indicative of annual results. During the first half of 2016, ANEK Group operated through privately owned and chartered vessels in routes in Adriatic Sea (Ancona and Venice), Crete (Chania and Heraklion), Dodecanese islands and Cyclades. In Cyclades and Dodecanese continued to operate in public service routes. In Crete and Adriatic routes the Group s vessels executed combined itineraries jointly with vessels of ATTICA S.A. HOLDINGS. Finally, under the scope of a more efficient management of the fleet, have been occurred charters of Company s vessels. 6

7 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s In the first half of 2016 ANEK Group in all routes operated has executed a total of 8% less itineraries compared to the corresponding period of 2015 and transferred 339 thousand passengers compared to 386 thousand, 56 thousand private vehicles compared to 58 thousand and 67 thousand trucks compared to 72 thousand in the corresponding period. follows: The most important figures and their variations included in the Group s financial statements are as Turnover for the first half of 2016 has been increased and amounted to 65,0 million compared to 62,9 million in the corresponding period of Cost of Sales for the first half of 2016 has been decreased in 53,8 million from 56,4 million in the first half of As a result of the above, gross profits showed significant improvement and amounted to 11,2 million versus 6,5 million in the comparable period. Selling and administrative expenses remained at same levels and formed at 10,5 million in the first half of 2016 compared to 10,4 million in the first half of Earnings before interest, taxes, depreciation and amortization (EBITDA) as gross profits were respectively improved in the first half of 2016 and amounted to 4,9 million compared to 0,4 million in the corresponding period. The Group s net financial cost for the first half of 2016 amounted to 9,1 million versus 8,1 million in the first half of Net results after tax and minority interests amounted to losses of 9,1 million compared to losses 13,1 million the first half of Key items of the statement of financial position - Group s fixed assets as at amounted to 266,5 million compared to 270,3 million at the end of the previous year. Depreciation for the period amounted to 5,0 million and additions to 1,2 million. - Group s trade receivables were increased by 14,7 million standing at 54,6 million compared to 39,9 million in , mainly due to the seasonality of sales in the first half financial statements. - Cash and cash equivalents as of amounted to 5,0 million compared to 6,4 mil- 7

8 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s lion at the end of the previous year. - The Group s long term bank borrowings amounted to 3,7 million compared to 3,9 million at the end of the previous year. It is noted that from the long-term loans of the Parent Company were reclassified to short-term ones (according to par. 74 of IAS 1), given the fact that terms of the relevant loan contracts were not met, as regard the servicing of the loans (see relevant note 8 of 2016 Semi annual financial report). - Due to the aforementioned reclassification, Group s short-term bank liabilities as of amounted to 288,2 million compared to 279,7 million as at Trade payables as at amounted to 25,5 million from 20,0 million at , while other short term liabilities amounted to 26,5 million compared to 14,5 million, mainly, due to the seasonality of sales (significant increase of deferred income by 10,5 million referred to tickets for trips at a post later time of June 30 th, 2016). Cash flows Group during first half of 2016 showed inflows from operating activities that amounted to 4,4 million compared to 11,0 million in the corresponding period. Investing activities showed outflows of 5,4 million compared to 1,6 million in the first half of Finally, financing activities for the first half of 2016 showed outflows of 0,3 million compared to 9,1 million. Financial ratios - The gross profit margin (%) of the Group for the first half of 2016 was significantly improved standing at 17,2%, compared to 10,4% in the corresponding period. Respectively, EBITDA margin formed at 7,6%, compared to 0,7% in the first half of Indicators of general and immediate liquidity (:1) on stood at 0,23 and 0,22 respectively, versus 0,20 and 0,19 at These indicators have been heavily influenced by the reclassification of long-term loans of the Parent to short-term bank liabilities. - The debt ratios (:1) Liabilities / Equity and Long and short term borrowings / Equity are negative due to the Group s negative equity. The Liabilities / (Equity + Liabilities) ratio formed at 1,05 on from 1,03 at the end of year 2015, while the Long and short term borrowings / (Equity + Liabilities) ratio formed at 0,83 compared to 0,85. All above ratios were significantly affected by the decrease in equity. Equity adequacy Due to the negative results of recent years, the Company s total equity as at is nega- 8

9 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s tive meeting the provisions of article 48 of the codified law 2190/20. Regarding the adoption of measures by the General Assembly in order to remove the reasons for the application of article 48, see below Significant events. ΙΙ. SIGNIFICANT EVENTS (FIRST HALF 2016 & POST BALANCE) In February 2016 was concluded the sale of vessel LATO of the Parent company, that in was presented as non-current assets held for sale and was valuated at its contractual sale value. The proceeds of the sale decreased the bank borrowings of the Company. The annual General Assembly of Parent Company held on June 23 rd 2016 decided, among others, the adoption of measures to restore the equity to share capital ratio in order to remove the reasons for the application of article 48, par. 1c of law 2190/1920, approving the BoD proposal for the calling of an extraordinary General Meeting with agenda s issue a share capital increase according to terms that will be decided by this Meeting. The convergence of the extraordinary General Meeting will be decided by the Board of Directors upon the completion of the restructuring of the Company s long-term debt. During the first half of 2016 the Group proceeded to the acquisition of shares of a non-listed shipping company, while on the date of approval of the interim financial report the value of held shares amounts to 2,4 million. In September 2016, ANEK was chosen as «National Champion» to represent Greece in «European Business Awards» which is the top competition in Europe and aims to promote excellence and best practices in the European business community. ΙΙΙ. MAIN RISKS AND UNCERTAINTIES FOR THE 2ND HALF Risk of fuel prices fluctuation Fuel cost is the key operating cost incurred by the Group which has a direct effect on the results of each period and thus, a rise in fuel prices is the most important risk faced by the Group. Fuel prices are settled in Euro, but they are indirectly affected by the EUR/USD exchange rate used as a basis for the determination of the international prices. The sensitivity of the results and of the equity to a change in the average cost of fuels per metric ton -ceteris paribus- for the first half of 2016 was as follows: 9

10 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s Fuel price change Effect on results and equity ± 5% / metric ton (-/+) 0,69 million ± 10% / metric ton (-/+) 1,38 million ± 20% / metric ton (-/+) 2,75 million Interest rate fluctuation risk ANEK has entered into agreements for long-term syndicated loans and credit accounts with different banks. Interests for all the above loans are calculated on the basis of the Euribor rate plus a margin. Consequently, the Company is exposed to a rate fluctuation risk, as it will be burdened with extra financial cost in the event of an increase in interest rates. The sensitivity of the results and equity to long term debt rate interest rate changes for the first half of 2016 was as follows: Change of interest rate Effect in the results and equity ± 0,5% (-/+) 0,56 million ± 1% (-/+) 1,12 million Liquidity risk The Company has entered into agreements governed by certain terms and conditions. In the event that the Company fails to meet the terms and conditions undertaken, then the loans would be made immediately payable and the Company will be forced to repay the loans to the banks. However, in order to avoid possible inadequate liquidity, Group s management has placed efforts to secure that there is available bank credit at all times to cover any extraordinary needs during low liquidity periods. In the event of breaching one or more conditions laid down in the loan agreements entered into by the Group or of the Group s management being unable to secure bank credit in order to cover extraordinary needs under acceptable terms, it may have a significantly adverse effect on the Group s business activity, operating results, cash flows and financial position. Given the fact that from terms of the agreements were not met, in respect of debt servicing, in the statement of Company s financial position there has been reclassification of the total of long-term loans to short-term ones. Group s management is in contacts with the lender banks in order to modify the terms and conditions of the total of long-term debt and it is expected that during the current fiscal year the procedure will be completed. Moreover, at the scope of strengthening the working capital, Group s management has already taken various measures, such as the further cutting down on operating costs through the redeployment of fleet, the settlement of tax and trade liabilities to a later time, while the Annual General Meeting held on June 2016 decided -according BoD s proposal- the calling of an extraordinary General Meeting with agenda s issue a share capital increase. Finally, Group s management expects a positive outcome from the legal procedure against the company "MINOAN LINES SA" in relation to engagement forfeiture (see note 29 of the 2015 Annual financial report). 10

11 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s Credit risk Under the existing financial conditions, all companies are facing increased credit risks. The Group is following its customers balances closely by applying credit control procedures and defining credit limits and specific credit policies for all the customer categories. Where it is necessary, it has obtained additional guarantees to secure the credit granted even more. The accumulative provisions formed have reached the amount of 28,8 million, and it is considered adequate to deal with credit risk, while, there is significant dispersion of the Group s receivables, therefore, the risk of concentration is limited. As regards cash and cash equivalents, the Group is not exposed to any credit risk as there is natural hedging, given that there are also loan agreements entered into with the cooperating financial institutions. Competition The vessels of ANEK Group perform itineraries in routes where there is intensive competition, particularly in Greece-Italy and Piraeus-Crete routes. The effort made by each company to retain and increase its market share in the above markets may intensify competition even more, thus having an impact on their financial results. Moreover, as part of its shipping activities, the Group is trying to improve the allocation of vessels per route, optimize the profits acquired from existing (and possible new) routes and set its prices at competitive levels. A potential intensification of competition in the markets where the Group operates may have a significantly adverse effect on the Group s operating results, cash flows and financial position. Foreign exchange risk Both the Company and the Group are not exposed to increased foreign exchange risk as almost all their transactions with customers and suppliers outside Greece are made in Euro. There is a very limited potential of foreign exchange risk caused by the market value of spare parts and other materials, or services procured by countries outside the euro-zone, which is extremely limited in relation to the total of purchases and expenses. Moreover, a small part of the loans obtained by the Group is in foreign currency (USD) has been fully repaid during Regulatory risk There is a risk of additional costs or investments of any changes in the environmental - regulatory framework related to the operation and supervision of passenger shipping activities of the Group. 11

12 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s ΙV. PROSPECTS FOR THE 2ND HALF OF 2016 The prospects of the Group at operational level for the second half of 2016 will be depended on the conservation of the factors that led to the increase of turnover in the first half, as well as on the general course of the Greek economy and the international fuel prices up to the end of the year. The fluctuation of fuel prices in much lower levels than those in previous years, if kept up to the end of fiscal year 2016, will lead to a further reduction in operating costs of the Group. However, given that the trend of the international oil price is an unpredictable factor, any further assessment of their impact on the results of the year would be arbitrary. Furthermore, the Group's management estimates that during the current year the procedure of restructuring of long-term loans of the Parent company will be completed, a fact that will have direct positive impact on working capital, financial results and equity due to the reduction of financial costs. After the positive results of 2015, the strategic objectives for the Group for 2016 are focused on improving profitability and strengthening the capital structure of the Parent. V. RELATED PARTY TRANSACTIONS The most important transactions and balances between the Parent Company and its subsidiaries (LANE, ETANAP, LEFKA ORI, AIGAION PELAGOS, ANEK HOLDINGS), its associate (ANEK LINES ITALIA) and its related parties (JV ANEK S.A. & SUPERFAST ENDEKA (HELLAS) INC.), hereinafter JOINT VENTURE, mainly, pertain to vessels chartering, tickets issuance commissions, vessel agency, other services and the purchase of bottled water. Executives fees refer to dependent employment services and BoD members fees pertain to fees paid and remunerations for meetings. The invoicing of transactions between the above companies was done in accordance with the arm s length principle. Following are the most important transactions and balances between the Parent Company and its related parties, in accordance with IAS 24: Income / Expenses During the first half of 2016 ANEK invoiced the subsidiary AIGAION PELAGOS with the amount of thousand ( thousand in the first half of 2015) for chartering of vessels, tickets issuing commissions and management services provided and subsidiary LANE with the amount of

13 S e m i a n n u a l r e p o r t o f t h e B o a r d o f D i r e c t o r s thousand ( 779 thousand in the corresponding period of 2015) for tickets issuing commissions and management services provided. Moreover, the subsidiary ETANAP invoiced ANEK with the amount of 137 thousand for the sale of goods ( 56 thousand in the first half of 2015), while LEFKA ORI had an income from ETANAP an amount of 64 thousand ( 106 thousand in the first half of 2015). Finally, the associated party ANEK LINES ITALIA in the first half of 2016 invoiced ANEK with the amount of 145 thousand ( 140 thousand the comparable period) and the JOINT VENTURE with the amount of 585 thousand (compared to 522 thousand) for tickets issuing commissions. Dividends During the first half of 2016 ΑΝΕΚ received dividends from the subsidiary ETANAP amounted to 151 thousand, compared to 128 thousand in the corresponding period. Receivables / Liabilities As at ΑΝΕΚ had a receivable from the subsidiary ETANAP amounted to 688 thousand (a liability of 113 thousand at ), a receivable from subsidiary LANE amounted to thousand (compared to thousand at ) and a receivable from subsidiary AIGAION PELAGOS amounted to thousand ( 569 thousand at the end of the previous year). Moreover, ANEK at had a receivable from the associate ΑΝΕΚ LINES ITALIA amounting to 905 thousand ( 334 thousand at ) and a receivable from the JOINT VENTURE amounted to thousand ( thousand at ). At AIGAION PELAGOS had a receivable from LANE amounted to thousand ( thousand at ), while ΑΝΕΚ LINES ITALIA had a liability to JOINT VENTURE amounted to thousand ( 291 thousand at the end of the previous year). Finally, at LEFKA ORI had a receivable from ETANAP amounted to 93 thousand ( 100 thousand at ). Fees of BoD members and Directors The gross fees of the Board of Directors and of the Group s executives refer to short term benefits and amount to 816 thousand ( 627 thousand for the Company) for the first half of 2016, compared to 770 thousand ( 616 thousand for the Company) for the first half of Moreover, at the Company had a liability to the above persons of amount 61 thousand and the Group 143 thousand. Chania, September 29 th, 2016 The Board of Directors 13

14 INTERIM SEPARATE & CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE 2016 Financial statements amounts are expressed in thousands. Any differences in totals are due to the rounding of figures. 14

15 I n t e r i m F i n a n c i a l S t a t e m e n t s f o r t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h t h e I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s STATEMENTS OF COMPREHENSIVE INCOME Note The Group The Company Revenue Cost of sales (53.800) (56.350) (47.689) (49.070) Gross profit Other operating income Administrative expenses (4.779) (4.610) (4.236) (4.173) Selling and marketing expenses (5.745) (5.793) (4.887) (5.080) Other operating expenses (1.174) (1.693) (1.129) (1.639) Earnings / (losses) before taxes, financing and investing results (EBIT) 70 (5.038) 933 (4.081) Financial expenses (9.214) (8.153) (9.182) (8.086) Financial income Results from investing activities (133) (235) (124) (47) Results from measurement of investments in associates Earnings / (losses) before taxes (8.993) (13.344) (7.849) (11.990) Income tax 11 (236) (159) (50) (64) Earnings / (losses) after taxes (9.229) (13.503) (7.899) (12.054) Attributable to: Owners of the Parent company (9.137) (13.058) - - Minority interests (92) (445) - - Other comprehensive income / (losses) after taxes Total comprehensive income after taxes (9.229) (13.503) (7.899) (12.054) Attributable to: Owners of the Parent company (9.137) (13.058) - - Minority interests (92) (445) - - Earnings / (losses) per share - basic (in ) 10 (0,0484) (0,0692) (0,0419) (0,0639) Earnings / (losses) before taxes, financing and investing results and depreciation (EBITDA) The additional notes are an integral part of the above interim financial statements. 15

16 I n t e r i m F i n a n c i a l S t a t e m e n t s f o r t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h t h e I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s STATEMENTS OF FINANCIAL POSITION The Group The Company Note ASSETS Tangible fixed assets Investments in property Intangible assets Investments in subsidiaries Investments in associates Other long-term receivables Deferred tax receivables Total non-current assets Inventories Trade receivables Other receivables Financial assets at fair value through profit & loss Cash and cash equivalents Non-current assets for sale Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Share capital ( shares x 0,30) Share premium account Reserves Results carried forward (86.723) (77.564) (80.737) (72.838) Total company shareholders equity (21.972) (12.835) (17.443) (9.544) Minority interest Total equity (17.948) (8.555) (17.443) (9.544) Long-term borrowings Deferred tax liabilities Retirement benefits provisions Other provisions Grants for assets Capital lease liabilities Other long term liabilities Total non-current liabilities Short-term bank borrowings Trade payables Other short term liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES The additional notes are an integral part of the above annual financial statements. 16

17 I n t e r i m F i n a n c i a l S t a t e m e n t s f o r t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h t h e I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s STATEMENTS OF CHANGES IN EQUITY The Group Asset Share Share revaluation Capital premium reserves Other reserves Retained earnings Total Minority interests Total Balance (78.539) (13.799) (9.241) Total comprehensive income for the 1 st half of 2015 (13.058) (13.058) (445) (13.503) Dividends to non-controlling subsidiaries - (138) (138) Purchase of own shares of subsidiary 1 1 (2) (1) Reserves formed of subsidiaries 40 (40) Net equity as of (91.636) (26.856) (22.883) Balance (77.564) (12.835) (8.555) Total comprehensive income for the 1 st half of 2016 (9.137) (9.137) (92) (9.229) Dividends to non-controlling subsidiaries - (164) (164) Reserves formed of subsidiaries 22 (22) Net equity as of (86.723) (21.972) (17.948) The Company Asset Share Share revaluation Capital premium reserves Other reserves Retained earnings Total Balance (79.165) (15.847) Effect from retroactive application of the amended IAS Restated balance (74.023) (10.705) Total comprehensive income for the 1 st half of 2015 (12.054) (12.054) Net equity as of (86.077) (22.759) Balance (78.266) (14.972) Effect from retroactive application of the amended IAS Restated balance (72.838) (9.544) Total comprehensive income for the 1 st half of 2016 (7.899) (7.899) Net equity as of (80.737) (17.443) The additional notes are an integral part of the above interim financial statements. 17

18 I n t e r i m F i n a n c i a l S t a t e m e n t s f o r t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h t h e I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s STATEMENTS OF CASH FLOW Operating activities The Group The Company Earnings / (losses) before taxes (8.993) (13.344) (7.849) (11.990) Adjustments for: Depreciation Impairment of value of fixed assets Grants amortization (94) (101) - - Provisions (30) Results of investing activities (262) (150) Foreign exchange differences (116) 652 (107) 640 Financial expenses (less financial income) Plus /(less) adjustments for changes of working capital accounts or related to operating activities: Reduction / (increase) of inventories 121 (360) Reduction / (increase) of receivables (16.328) (7.189) (15.614) (6.642) Increase/(reduction) of payable accounts (except loan liabilities) Less: Interest and related expenses paid (875) (640) (834) (594) Income tax paid (118) (85) (50) (82) Total cash flows generated from operating activities (a) Investing activities Acquisition of affiliates, securities and other investments (5.819) (916) (5.819) - Acquisition of fixed assets (1.171) (729) (701) (429) Proceeds from the sale of fixed assets Interest received Dividend received Total cash flows generated from investing activities (b) (5.422) (1.614) (4.819) (301) Financing activities Payments for capital leases (560) (360) (559) (360) Proceeds from borrowings Payment of borrowings - (8.681) - (8.609) Dividends paid (33) (59) - - Cash flows from financing activities (c) (339) (9.100) (254) (8.969) Net increase/(decrease) in cash and cash equivalents (a)+(b)+(c) (1.358) 270 (807) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period The additional notes are an integral part of the above interim financial statements. 18

19 INFORMATION AND EXPLANATORY NOTES ON THE INTERIM FINANCIAL STATEMENTS OF THE PERIOD

20 N o t e s o n t h e I n t e r i m F i n a n c i a l S t a t e m e n t s o f t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s - A m o u n t s i n t h o u s a n d s u n l e s s s t a t e d d i f f e r e n t l y 1. General information for the Company and the Group The Parent company was established in 1967 (Government Gazette 201/ ) under the corporate name ANONIMI NAFTILIAKH ETAIREIA KRITIS S.A. trading as ANEK LINES (hereinafter ANEK or the Company, or the Parent company ) and is operating in the passenger ferry shipping sector. The Company s seat is located in the municipality of Chania Crete, and its registered offices are located on 148 Karamanli Ave. ANEK is recorded in General Company Register under number and its website address is The Company s shares have been listed since 1999 on the Athens Stock Exchange. In addition to the Parent company, the Group includes the following subsidiaries and associates with the following participation percentages: Name Group percentage Registered office Activity LANE S.A. 50,11% Chania Passenger shipping ETANAP S.A. 48,01% Stilos, Chania LEFKA ORI S.A. 60,49%* Stilos, Chania ANEK HOLDINGS S.A. 99,48%** Chania AIGAION PELAGOS THALASSIES GRAMMES SHIPPING COMPANY ANEK LINES ITALIA S.r.l. 49% Ancona, Italy Production and sale of bottled water Production and trade of plastic bottles and packaging products Tourism - participation in other companies - consulting, etc. 100% Chania Sailing company under Law 959/79 * direct participation: 24% and indirect via ETANAP: 36,49% ** direct participation: 99% and indirect via ETANAP: 0,48% Factoring and representation of shipping companies The aforementioned companies, in which ANEK participates by more than 50%, as well as ETANAP in which the Parent company has the control, have been included in the consolidated financial statements as at 30 th June 2016 using the full consolidation method. ANEK LINES ITALIA S.r.l. in which the Parent Company participates by 49% was consolidated using the equity method. ANEK HOLDINGS SA participates by 100% in ANEK ENERGY LTD, which has not commenced its activities as of today. The number of personnel employed as at 30 June 2016 was 767 for the Company (out of which 564 were employed as vessels crew) and 875 for the Group (out of which 618 were employed as vessels crew). Respectively, at the end of the comparative period of 2015 the Company had a number of 809 and the Group 909. The interim financial statements as of 30 th June 2016 were approved by the BoD of the Parent Company at the meeting of 29 th September

21 N o t e s o n t h e I n t e r i m F i n a n c i a l S t a t e m e n t s o f t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s - A m o u n t s i n t h o u s a n d s u n l e s s s t a t e d d i f f e r e n t l y 2. Preparation basis of the financial statements and accounting principles The interim separate and consolidated financial statements as of 30 th June, 2016 (hereinafter the financial statements ) have been prepared according to the International Financial Reporting Standards (hereinafter IFRS ), as issued by the International Accounting Standards Board (IASB) and adopted by the European Union, and more specifically to the IAS 34 Interim financial reporting". Therefore, they do not include all the information required for the annual financial statements and should be read in conjunction with the published statements as of 31 December 2015 that have been posted on the Company s website at The basic accounting principles adopted in the preparation of the interim financial statements are the same as those followed in the preparation of the annual financial statements as of , except for the new standards and interpretations which are applicable after January 1 st The preparation of financial statements according to IFRS requires that the management makes estimates, assumptions and assessments that affect the assets and liabilities, the disclosures of contingent receivables and liabilities as of the date of the financial statements, as well as the published amounts of income and expenses. The actual results may differ from these estimates. Ability to smoothly continue performing activities (going concern) The improvement of the results of the Company was continued in the first half of 2016, while it is noted that 2015 was the first profitable fiscal year after The results from year 2008 to 2014 were significantly burdened by extraordinary expenses such as the impairment vessels book value and provisions, as well as the high fuel prices which are the Company s main cost factor and, as a result of the above, the Company s and Group s Equity at are negative by 17,4 million and 17,9 million respectively. Moreover, as described in Note 7 of the interim financial statements of the first half, the total of long-term bank borrowings of the Parent on in the statement of financial position was transferred to current ones, according to paragraph 74 of IAS 1, as terms and conditions of the loan agreements were not met, in terms of loans servicing. As a result of this reclassification, total current liabilities of the Group as at amounted to 340,2 million, while total current assets amounted to 79,1 million. It is noted, however, that the improved results of the year 2015 permitted the elimination of the other due liabilities of the Parent company to employees and third parties. The management of the Group has taken measures in operational, financing and capital level to deal with the above problems by taking a series of actions such as: Contacts with creditor banks in order to agree the restructure in repayment terms of the entire loans. It is expected that during the current year the procedure will be completed, a fact that will enhance significantly the results and the equity of the Company due to reduction in the financial cost. The management of the Group expects a positive outcome on the arbitration proceedings that has commenced in arbitration court in London against the company "MINOAN LINES" for the forfeiture deposit to 21

22 N o t e s o n t h e I n t e r i m F i n a n c i a l S t a t e m e n t s o f t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s - A m o u n t s i n t h o u s a n d s u n l e s s s t a t e d d i f f e r e n t l y acquire 33.35% of "HELLENIC SEAWAYS. Finally, the annual General Assembly held on June 23 th 2016 approved the BoD s proposal for the calling of an extraordinary General Meeting with agenda s issue a share capital increase of amount and according to terms that will be decided by this Meeting. The convergence of the Extraordinary General Meeting will be decided by the Board of Directors upon the completion of the Company s long-term debt restructuring. It is noted that, the past few years, through the implementation of specific strategic actions by Group s management, has been achieved significant cost savings and substantial improvement of results. The decrease in fuel prices from year 2015 onwards led to further decrease of operating cost and helped to reverse the negative trend of previous years and to the return to profitability, while further improvement in2016 financial results is expected. Considering the above facts, the financial statements have been prepared under the principle of going concern, as management believes that these measures will enable the Company to continue its uninterrupted operation. Nevertheless, the possibility of a non-successful completion of the above actions suggests the existence of uncertainty about the ability of smooth continuation of the activities of the Company. New standards and interpretations, revisions and amendments The International Accounting Standards Board (IASB), as well as the Interpretation Committee has issued a range of new IFRS and interpretations, which either are mandatory for accounting periods starting from January 1 st 2016 and thereafter, or are not mandatory, as since the publishing date of the interim financial statements they have not been adopted from the European Union. The Group has adopted all the new IFRS and interpretations which are mandatory after January 1 st 2016 and examines the effect in the financial statements of the potential adoption of the other IFRS and interpretations. The most significant new standards and interpretations are as follows: (α) New Standards, interpretations, revisions and amendments of existing standards that have been adopted from the European Union and their application is mandatory from 1 st January 2016 or after: Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations In May 2014, the IASB issued amendments to IFRS 11. The amendments add new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business and specify the appropriate accounting treatment for such acquisitions. The above are applicable from 1 st January 2016 and do not affect Group s financial statements. Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation In May 2014, the IASB published amendments to IAS 16 and IAS 38. IAS 16 and IAS 38 both establish the 22

23 N o t e s o n t h e I n t e r i m F i n a n c i a l S t a t e m e n t s o f t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s - A m o u n t s i n t h o u s a n d s u n l e s s s t a t e d d i f f e r e n t l y principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset. The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The above amendments are applicable from January 1 st 2016 and do not affect Group s financial statements. Amendments to IAS 27: Equity Method in Separate Financial Statements In August 2014, the IASB published narrow scope amendments to IAS 27. Under the amendments, entities are permitted to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate Financial Statements an option that was not effective prior to the issuance of the current amendments. The Company applied the amendment to IAS 27 on the interim financial statements and valued its investments in subsidiaries and associates using the equity method. The impact of the implementation of the amendment to IAS 27 is presented in note 15. Annual Improvements to IFRS Cycle In September 2014, the IASB issued Annual Improvements to IFRSs Cycle, a collection of amendments to IFRSs, in response to four issues addressed during the cycle. The amendments are effective for annual periods beginning on or after 1 January 2016, although entities are permitted to apply them earlier. The issues included in this cycle are the following: IFRS 5: Changes in methods of disposal, IFRS 7: Servicing Contracts and Applicability of the amendments to IFRS 7 to condensed interim financial statements, IAS 19: Discount rate: regional market issue, and IAS 34: Disclosure of information elsewhere in the interim financial report. The above amendments do not affect Group s financial statements. Amendments to IAS 1: Disclosure Initiative In December 2014, the IASB issued amendments to IAS 1. The aforementioned amendments address settling the issues pertaining to the effective presentation and disclosure requirements as well as the potential of entities to exercise judgment under the preparation of financial statements. The amendments are applicable from 1 st January 2016 and do not affect Group s financial statements. (β) New standards, interpretations and amendments to existing standards that have been published but are not in force and are not adopted earlier by the Group and the Company: IFRS 14 Regulatory Deferral Accounts In January 2014, the IASB issued a new Standard, IFRS 14. The aim of this interim Standard is to enhance the comparability of financial reporting by entities that are engaged in rate-regulated activities. Many countries have industry sectors that are subject to rate regulation, whereby governments regulate the supply and pricing of particular types of activity by private entities. The Group will examine the impact of the above on its financial state- 23

24 N o t e s o n t h e I n t e r i m F i n a n c i a l S t a t e m e n t s o f t h e p e r i o d f r o m 1 J a n u a r y u n t i l 3 0 J u n e i n a c c o r d a n c e w i t h I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s - A m o u n t s i n t h o u s a n d s u n l e s s s t a t e d d i f f e r e n t l y ments. The above standard is effective for annual periods starting on or after January 1 st 2016 and has not been adopted by the European Union. IFRS 15 Revenue from Contracts with Customers In May 2014, the IASB issued a new Standard, IFRS 15. The Standard fully converges with the requirements for the recognition of revenue in both IFRS and US GAAP. The key principles on which the Standard is based are consistent with much of current practice. The new Standard is expected to improve financial reporting by providing a more robust framework for addressing issues as they arise, increasing comparability across industries and capital markets, providing enhanced disclosures and clarifying accounting for contract costs. The new Standard will supersede IAS 11 Construction Contracts, IAS 18 Revenue and several revenue related Interpretations. The Group will examine the impact of the above on its financial statements. The above standard is effective for annual periods starting on or after January 1 st 2018 and has not been adopted by the European Union. IFRS 9 Financial instruments In July 2014, the IAB issued the final version of IFRS 9. This version brings together the classification and measurement, impairment and hedge accounting models and presents a new expected loss impairment model and limited amendments to classification and measurement for financial assets. The Group is not going to adopt earlier the requirements of IFRS 9. The Group is examining the impact of the above on its financial statements. The above standard is effective for annual periods starting on or after January 1 st 2018 and has not been adopted by the European Union. The Group does not intend to apply earlier the IFRS 9. Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture In September 2014, the IASB published narrow scope amendments to IFRS 10 and IAS 28. The objective of the aforementioned amendments is to address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. In December 2015, the IASB postponed the effective date of these amendments indefinitely pending the outcome of its research project on the equity method of accounting. The Group will examine the impact of the above on its financial statements. The above have not been adopted by the European Union. Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidated Exception In December 2014, the IASB published narrow scope amendments to IFRS 10, IFRS 11 and IAS 28. The aforementioned amendments introduce explanation regarding accounting requirements for investment entities, while providing exemptions in particular cases, which decrease the costs related to the implementation of the Standards. The Group will examine the impact of the above on its financial statements. The above amendments are effective for annual periods starting on or after January 1 st 2018 and have not been adopted by the European Union. 24