FINANCIAL STATEMENTS 2010 - Finnlines

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The most significant lease payments are based on the land leases of Vuosaari and Turku harbours (EUR 15 million), on leases for the buildings in these ports and on the leases for the head office in Ruoholahti, Helsinki (EUR 24 million). The remaining duration of the above leases is up to 18 years. EUR 1,000 2010 2009 Other leases (Group as lessor) Within 12 months 237 140 237 140 Other leases are rents of business premises included in other income from operations. EUR 1,000 2010 2009 Collateral given Loans secured by mortgages Loans from financial institutions 727,419 699,922 727,419 699,922 EUR 1,000 2010 2009 Vessel mortgages provided as guarantees for the above loans 1,173,500 1,153,500 The Group’s financing agreements include customary covenants relating to the equity ratio and operations. EUR 1,000 2010 2009 Other collateral given on own behalf Pledged deposits 472 468 Corporate mortages 606 606 1,078 1,074 EUR 1,000 2010 2009 Other obligations 103,819 132,943 Other obligations are mainly binding order contracts related to newbuildings. EUR 1,000 2010 2009 Guarantees given by the parent company on behalf of the subsidiaries 6,913 6,913 EUR 1,000 2010 2009 VAT adjustment liability related to real estate investments 11,082 12,430 EUR 1,000 31 Dec 2010 31 Dec 2009 Nominal value Fair value * Nominal value Fair value * Derivative contracts Currency derivatives 22,003 657 20,408 -677 Interest rate swaps 120,000 -2,369 * Net effect if the derivatives had been sold at the market rate at year-end. AUDITOR’S REMUNERATION The Group’s principal auditors were Deloitte & Touche Oy. In 2010, EUR 241 (360) thousand was paid to the auditors in remuneration for the audit of parent company and subsidiaries financial statements and EUR 70 thousand for tax consultation. LEGAL PROCEEDINGS The Helsinki District Court rendered on 3 March 2010 its judgment in the action initiated by Mutual Pension Insurance Company Il- marinen against Finnlines Plc. The District Court approved Ilmarinen’s claim to have the resolution of the Annual General Meeting 2008 amended so that the minimum dividend instead of EUR 180,216.39 should have been EUR 17,181,000. In addition, the District Court or- dered Finnlines to compensate Ilmarinen’s legal costs by an amount of EUR 300,035.15 together with interest at statutory rate. As Finn- lines has assessed Ilmarinen’s claim not being justifiable, no amount relating to the claim has been recorded. Finnlines filed an appeal 44 FINNLINES PLC Financial Statements 2010 (figures in EUR thousand, if not stated otherwise)
with the Helsinki Court of Appeal against the judgement by the Helsinki District Court in April 2010 and the case is under process. Taxation of internal vessel sales carried out in 2007 by Finnlines’ Swedish subsidiary includes uncertainties. The decision of the tax authorities was that a SEK 97.2 million (EUR 9.5) tax debt should be paid. The Company appealed against this decision and requested postponement of the payment of the tax debt, which was granted. The Appeal Court rendered its decision on 10 January 2011 in favour of the tax authorities and the tax debt became payable. The Company submitted on 8 February 2011 the leave for appeal at the Adminis- trative High Court and extension of the postponement of the payment of the tax debt. Both submissions are under process. As the Com- pany recorded a deferred tax liability due to the temporary timing difference in the tax year in question, this matter does not have any significant effect on the Company’s result. At the end of March 2009, there was an oil spill on MS Finneagle on the way from Kapellskär to Naantali. As a result, approximately 4 m 3 of light fuel oil leaked from the vessel into the sea between the Åland Sea and the Port of Naantali. The Company immediately started its own investigations and was working in cooperation with the authorities in order to clarify the matter. The Finnish authorities final- ised their investigations late autumn. The district prosecutor of the District Court of Turku decided in December on the non-prosecution of the Captain of the vessel for spoiling of environment. The vessel or the Company has not received any notice or information on any en- vironmental damage. The former management of Finnlines’ port operations subsidiary had been summoned to the Helsinki District Court to answer for in- fringing the Occupational Safety and Health Act and Working Hours Act in the port of Helsinki. The Helsinki District Court rendered its decision on 3 March 2010 sentencing the former management to pay fines. Finnlines port operations subsidiary has taken rectifying measures in the follow-up system of the working hours in order to avoid any infringements in the future. Finnlines addressed material appeals to the Finnish Customs and the Port of Helsinki for rectification of the paid fairway and port dues based on incorrect tonnage certificates of the Star-class vessels issued by the Swedish and Finnish maritime authorities. The Port of Helsinki has refunded the excess paid harbour dues entirely totalling EUR 2.7 million and Finnish Customs EUR 3.1 million. Two former and 37 current employees of the Company, represented by the Union of Salaried Employees, have brought an action against the Company at the District Court of Helsinki. They claim that the Company is to adhere to the general increases of the collective agreement and to pay the increases accordingly retroactively and in the future. The Company considers the claims groundless. The process is under way. Finnlines’ port operations subsidiaries received summons on 2 February 2011 from 16 employees on weekly resting times and compensation thereof. The claims derive from years 2008 and 2009. The claims might be amended with claims arising from 2010 but this is yet uncertain. The claimants also claim penalty interest and legal expenses. The Company considers the claims groundless. The process is under way. Finnlines received information on the last day of January 2010 that the Finnish Transport Workers' Union (“Union”) has filed legal actions against Finnlines’ port operations subsidiary for compensation of weekend work. The legal actions are handled in three District Courts in Finland and concern 393 employees of the port subsidiary represented by the Union. The claim is based on weekly resting times and compensation thereof. The employees claim that they have not received sufficient weekly rest/ compensation from 2008-2009. The case raised in the District Court of Kotka resulted in a judgement by default in favour of the defendant company. The total amount of all the claims is not firmly specified by the Union but could now be estimated to be about EUR 0.5 million in maximum. The Company considers the basis of the actions groundless. Sub-chartering of MS Birka Transporter and MS Birka Exporter to Scandinavian Shipping Investment A/S (’SSI’) caused Finnlines a loss of time charter hires and expenses in total EUR 326,211, as SSI terminated the charters in summer 2009. Since the parties could not reach an agreement, Finnlines started arbitration proceedings against SSI for payment of the outstanding time charter hires and expenses. Finnlines has received SSI’s counter claim in the amount of EUR 1,182,298. Finnlines considers the basis of the counter claim groundless. The charters are subject to Finnish law and the place of arbitration is Helsinki. The arbitration panel has not yet decided the time for the main hearing of the arbitration proceedings. In 2008, the Administrative Court of Helsinki rendered decisions based on which it can be argued that the Finnish Act on Fairway Dues in force until 1 January 2006 has contained provisions which according to EU law were discriminatory. The Company has been charged excessive fairway dues during 2001-2005. The Company has been refunded the fairway dues only for 2005, amounting to EUR 2.8 million by the Finnish Customs. The Company is preparing the claim for damages and restitution against the Finnish State for the years 2001-2004 at the District Court of Helsinki. The amount of the claim is approximately EUR 8.5 million and has not been recognised as revenue. The Company has also filed applications for reversals in the Supreme Administrative Court concerning the fairway dues decisions of the Finnish Customs. Any amounts received as a result of a successful application to the Supreme Administrative Court would be deducted from the claim for damages or restitution. Finnlines’ German subsidiary has been taken to the City Court of Lübeck in December 2009 by its former Managing Director regard- ing the termination of his Service Agreement. The Company considers the legal grounds for the termination to be valid. The process is under way. (figures in EUR thousand, if not stated otherwise) FINNLINES PLC Financial Statements 2010 45
Page 1 and 2: FINANCIAL STATEMENTS 2010
Page 3 and 4: BOARD OF DIRECTORS’ REPORT THE CO
Page 5 and 6: elated to this. Other significant r
Page 7 and 8: CONSOLIDATED STATEMENT OF COMPREHEN
Page 9 and 10: CONSOLIDATED STATEMENT OF CHANGES I
Page 11 and 12: NOTES TO THE CONSOLIDATED FINANCIAL
Page 13 and 14: ated companies are consolidated usi
Page 15 and 16: egory includes assets held for trad
Page 17 and 18: In defined benefit plans, the emplo
Page 19 and 20: Segment assets, liabilities and inv
Page 21 and 22: 8. PERSONNEL EXPENSES EUR 1,000 201
Page 23 and 24: 13. EARNINGS PER SHARE UNDILUTED Un
Page 25 and 26: Assets leased through finance lease
Page 27 and 28: Main factors used in calculating va
Page 29 and 30: 21. DEFERRED TAX ASSETS AND LIABILI
Page 31 and 32: EUR 1,000 2010 2009 Significant ite
Page 33 and 34: 26. PROVISIONS EUR 1,000 2010 2009
Page 35 and 36: Finance lease liabilities Finance l
Page 37 and 38: 31. PENSION LIABILITIES The Group
Page 39 and 40: Hedge Accounting The Group has orde
Page 41 and 42: The Group had an interest rate swap
Page 43: COMMODITY RISK The Group is exposed
Page 47 and 48: In April 2009, Finnlines Plc's subs
Page 49 and 50: Shares outstanding 31 December 2005
Page 51 and 52: CALCULATION OF KEY RATIOS, IFRS Ear
Page 53 and 54: PROFIT AND LOSS ACCOUNT, PARENT COM
Page 55 and 56: CASH FLOW STATEMENT, PARENT COMPANY
Page 57 and 58: NOTES TO THE FINANCIAL STATEMENTS,
Page 59 and 60: 8. EXTRAORDINARY ITEMS EUR 2010 200
Page 61 and 62: 14. INVENTORIES EUR 2010 2009 Bunke
Page 63 and 64: 18. ACCUMULATED APPROPRIATIONS EUR
Page 65 and 66: CONTINGENCIES AND COMMITMENTS EUR 1
Page 67 and 68: BOARD'S PROPOSAL FOR THE USE OF THE
Page 69 and 70: AUDITOR'S REPORT TO THE ANNUAL GENE

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